Coca-Cola Co., the world’s largest soft-drink maker, overhauled its director compensation and said it will only pay them if the company meets its financial goals, a move pushed by board member Warren Buffett.
Directors will be given share grants each year equal to $175,000. The grants will be payable in cash in three years provided the company increases earnings per share 8 percent each year, Atlanta-based Coca-Cola said Wednesday in a statement. Board members previously received an annual fee of $125,000, of which $50,000 was in cash and $75,000 in stock units.
“It’s a good idea,” Buffett said in an interview Wednesday. “I’m delighted it’s happening now.”
Buffett said the change was approved Tuesday night.
Buffett’s Berkshire Hathaway Inc. is Coca-Cola’s largest shareholder. He is leaving the board on April 19 after 17 years.
Shareholders have been scrutinizing the performance of corporation directors recently. Two percent of the 2,000 largest public companies tie a portion of director pay to performance, according to a recent survey by Corporate Library, a corporate governance adviser.
