Evolution of an AJC executive pay story

Going through my RSS feeds last night, I was surprised to see a fairly rational account of The Coca Cola Company”s proxy filing and executive pay disclosures in the Atlanta Journal-Constitution. But, alas, that was just the initial filing of the story. The original piece, which my reader said came across at 1:36 p.m. (maybe still available here if you”ve given ajc.com a fake email address) was headlined “Coke CEO gets $7 mil in cash pay for “06 and was written thusly:

Coca-Cola Chairman and Chief Executive Neville Isdell earned $7 million in salary and incentive pay in 2006, plus stock awards and other perks worth millions more, the soft drink maker reported Friday.

The payout included a one-time award of $5.5 million based on the company”s total performance for the year, as determined by Coke”s board of directors using a preset award range.

Isdell”s base salary in 2006 was $1.5 million, the same as he earned in 2005. Isdell also received stock awards and options worth millions more, according to a filing with the federal Securities and Exchange Commission. Many of the stock awards and options can be cashed in only after meeting certain targets or remaining with the company for a set period of time.

In addition, Isdell got the benefit of the company”s corporate jet, a car and driver, and security that were all worth nearly $320,000, according to Coke”s filing.

The SEC requires publicly-traded companies to disclose compensation for the top five highest paid employees.

The rest of the piece talks about other proxy matters.

OK, so it headlines the $7 million in cash, mentions Isdell got stock and options “worth millions more” and correctly states that a lot of that compensation “can be cashed in only after meeting certain targets”. It would be far too much to ask, of course, for the AJC to put the compensation in context of the company”s performance – such as the $17 billion in market cap added in 2006 – and there”s no chance in hell the AJC would reference any of the exhaustive explanation Coke lists about how pay is determined.

But for the AJC, this was a relatively fair bit of reporting.

However, by the time the story was massaged for today”s physical paper – which apparently some people actually still buy – the headline had become “Coke chief”s compensation $32.3 million in “06” and the story read:

Coca-Cola Chairman and Chief Executive Neville Isdell earned $7.5 million in salary, incentive pay and perks in 2006, the soft drink maker reported Friday.

But including stock options and awards, pension benefits, deferred compensation and other benefits, Isdell”s total compensation hit $32.3 million in 2006, according to a filing with the Securities and Exchange Commission.

The SEC requires publicly traded companies to disclose annually the compensation for the five highest-paid employees. New rules this year greatly expand how companies disclose compensation. The rules aim to give investors a more transparent view into executive compensation.

Had the rules been in place last year, Isdell”s total compensation would have been reported as a little more than $26 million for 2005, according to Coke”s calculations.

Isdell”s pay included a one-time cash award of $5.5 million based on the company”s total performance for the year, as determined by Coke”s board of directors using a preset award range. That was up from the $4.5 million bonus Isdell received in 2005.

Isdell”s base salary in 2006 was $1.5 million, the same as he earned in 2005.

In addition to the cash and benefits compensation, Isdell received stock awards and options currently worth roughly $19.4 million, according to the SEC filing. Isdell won”t be able to cash in these stock awards and options until the company meets certain financial targets and he remains with the company for a set period of time.

Isdell received other pension benefits and deferred compensation worth nearly $5.4 million.

Isdell”s perks included the use of the company”s corporate jet, a car and driver and security that were all worth nearly $320,000, according to Coke”s filing.

If you”re a bit lazy, here are the changes:

- Headline focuses on the big money (which he may not actually get)

- Value of “perks” added to the “cash” received to raise that total by $500K

- Stock value pushed up with not-at-all-agenda-driven “But …” lead in and value stated

- Paragraph about SEC rules added to reinforce how you poor people now get to know exactly how much these fatcats “make”

- Paragraph added to report what the big number would have been in 2005

- Note added that cash award was up from 2005

- Conditions of his options award changed from “Many of the stock awards and options can be cashed in only after meeting certain targets” to “Isdell won”t be able to cash in these stock awards and options until the company meets certain financial targets”. Key change there is “after meeting” becomes “until the company meets”, which implies much more certainty that the gain will be realized.

- The note “In addition, Isdell got the benefit of the company”s corporate jet, a car and driver, and security that were all worth nearly $320,000″ became “Isdell”s perks included the use of the company”s corporate jet, a car and driver and security that were all worth nearly $320,000″. That”s a classic and telling AJC twist – “perks” is a much better wealth-envy term than “benefits”. The information is exactly the same, just twisted to better suit the AJC “Business” section”s anti-business agenda.

I”m sure the AJC editors would say the changes merely represent the difference between an immediate, breaking story and one written after the reporter had more time to examine the SEC filing. Yes, there”s more information in the follow-on piece, but it all serves the purpose of making Isdell”s package look fatter.

The paper also had the time to read Coke”s 40-page explanation of how executive compensation is determined, but they included none of the context provided by the company. I”m sure the AJC read the part where Coke explains in great detail why Isdell is required by the company (for security reasons) to always travel on corporate planes and how the car and driver he”s provided with are used for other company purposes when not transporting Isdell, but again they saw no reason to use any of that information in their expanded story.

Of course, none of this is surprising. I just wanted to point it out.

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