(Reuters) - Wintergreen Advisers, a minority shareholder in Coca-Cola Co (KO.N), said Chief Executive Muhtar Kent was “incapable of leading Coke’s turnaround and should be replaced.”
Wintergreen, which owns less than 1 percent of Coca-Cola, said the company's shares were deeply discounted because of poor management and governance. (bit.ly/1zgoDKY)
“The strategic investments made by CEO Muhtar Kent have destroyed shareholder value. His blunders on failed acquisitions alone have cost shareholders $16.3 billion,” Wintergreen said in a statement accompanying an analysis of Coca-Cola’s performance.
The investment firm also said Coca-Cola’s new equity compensation guidelines could continue to reward its top managers unjustly, and an emphasis on cash bonuses could cost shareholders as much as $10.20 per share.
“We utterly reject David Winters’ (Wintergreens CEO) claims,” Coca-Cola said in an email.
“Muhtar Kent and the company’s leadership team have outlined meaningful strategic plans to accelerate sustainable and profitable growth and deliver long-term value to our shareowners.”
Coca-Cola bought Glaceau, the maker of Vitaminwater, for $4.1 billion in 2007 and Coca-Cola Enterprises Inc’s CCE.N North American business for $12.2 billion in 2010. Wintergreen said the two acquisitions have destroyed shareholder value.
This year alone, Coca-Cola spent $3.5 billion in buying minority stakes in beverage companies Monster Beverage Corp (MNST.O) and Keurig Green Mountain Inc GMCR.O.
Following criticism from Warren Buffett and other investors for its outsized employee share rewards, Coca-Cola said in October it had adopted new guidelines that would limit its executive compensation plan starting next year.
The company had said the guidelines would facilitate a shift toward performance shares and cash awards and be less weighted toward stock options.
Wintergreen said on Monday Coke’s problems could be resolved by fixing its compensation plan, cutting expenses and replacing the board and management.
Kent has served as Coke’s CEO and chairman since April 2009.
Up to Friday’s close, Coke’s shares had fallen about 1 percent this year, compared with an 8 percent rise in the S&P 500 index .SPX.
(this story corrects to fix typo in paragraph 5)
Reporting by Shailaja Sharma in Bangalore; Editing by Saumyadeb Chakrabarty