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The Real Reason Warren Buffett Didn't Stand Up Against Coca-Cola

Coca-Cola's (NYSE: KO  ) recent controversial compensation plan for its executives could cost shareholders billions over the next four years, and Warren Buffett's Berkshire Hathaway (NYSE: BRK-A  ) (NYSE: BRK-B  ) is the company's largest shareholder. Buffett himself has expressed his lack of agreement with the plan, but when it came time for a vote, he and Berkshire stayed silent, and abstained.

In the following video segment from the show Where the Money Is, Motley Fool financial analysts Matt Koppenheffer and David Hanson look at Berkshire's relationship with Coca-Cola, and whether or not Buffett is deserving of some criticism for the move. Matt admits that he is disappointed not to see Buffett take a more critical stance. However, Matt understands that because Coca-Cola is one of Berkshire Hathaway's largest holdings, any fight with Coca-Cola indirectly impacts his shareholders at Berkshire.

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  • Report this Comment On May 01, 2014, at 2:48 PM, beachboy19 wrote:

    About Buffet & Coke...

    You said Buffet might not have wanted to vote against the compensation plan because he did not want to hurt the company.

    A vote against a proposed compensation plan isn't a vote about what management is doing. It's about how they are going to get paid for what they are doing.

    Buffet's voting against the compensation plan for executives would have no effect on the running of or the revenue generated by the business of Coke.

    It will have an effect on the company's future earnings. Money that would have gone into the corporate treasury and managed for the benefit of the shareholders will be going out the door - for the benefit of the executives.

    If Buffet believes voting against the compensation plan would hurt the company he's lost it.

    Basically Buffet enabled them to divert $13 billion from the shareholders to themselves. It's like a grocery store manager letting shoppers walk out with cases of Coke without paying for them.

    That can't be good for business.

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Matt Koppenheffer

Matt is the Managing Director of The Motley Fool GmbH, The Fool's German business. Besuch uns bei!

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9/3/2015 4:00 PM
BRK-A $199665.00 Up +305.00 +0.15%
Berkshire Hathaway… CAPS Rating: ****
BRK-B $132.15 Down -0.07 -0.05%
Berkshire Hathaway CAPS Rating: *****
KO $39.16 Up +0.26 +0.67%
Coca-Cola CAPS Rating: ****