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Buffett disapproves of Coca-Cola's highly contested pay plan

NEW YORK--Warren Buffett says he disapproves of Coca-Cola's highly contested pay plan for its executives.

Buffett, whose company is the beverage maker's largest shareholder, called the plan “excessive” in an interview on CNBC after it was approved at the company's annual meeting. But he said Berkshire Hathaway abstained from voting against the pay plan because he didn't want to express disapproval of the company's management.

Buffett also noted during the interview how difficult it can be to sit on company boards and oppose a pay plan. His son, Howard Buffett, serves on Coke's board and supported the pay plan. Buffett said that he has never heard anyone speak out against a compensation committee's plan in 55 years of serving on company boards.

“Taking them on is a little bit like belching at the dinner table. You can't do it too often,” Buffett said. He added that he's voted in favor of compensation plans he hasn't agreed with in the past.

Coca-Cola Co.'s pay plan came under scrutiny after Wintergreen Advisers took public issue with it last month. Wintergreen chief executive David Winters said the plan was a “raw deal” for shareholders that would transfer roughly US$13 billion to management over the next four years. He urged Buffett to vote against the plan.

Buffett has long been a critic of excessive executive compensation. Berkshire Hathaway does not award stock options to Buffett or any other executive, and Buffett himself receives a salary of US$100,000.

“Too often, executive compensation in the U.S. is ridiculously out of line with performance,” Buffett wrote in his letter to shareholders in 2005. “That won't change, moreover, because the deck is stacked against investors when it comes to the CEO's pay.”

Last year, Coca-Cola CEO Muhtar Kent was given a pay packages worth US$18.2 million, according to an Associated Press analysis. That was a drop of 16 percent from the US$21.6 million he earned the previous year, primarily because the company failed to meet its long-term growth targets.

Buffett said he discussed his concerns with Kent, but not until after he voted Berkshire's 400 million shares.

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In this May 6, 2013 photo, Berkshire Hathaway CEO and Chairman Warren Buffett speaks during an interview in Omaha, Nebraska. Buffett says he disapproves of Coca-Cola's highly contested pay plan for its executives. Buffett, the beverage maker's largest shareholder.

(AP)

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