Food Dive examined the most recent proxy filings for nearly a dozen of the largest companies in the food and beverage sector to compile the compensation for each CEO as well as how their company’s shares have performed during its last three fiscal years compared to its peers.
To see the information on each company and its top executive, read to the bottom of this story, or click here.
After being long mired in uncertainty, how much CEOs are paid in food, beverage and other industries is more transparent following a requirement from the country’s top Wall Street regulator.
The new measure, required by the U.S. Securities and Exchange Commission in late 2022, mandates publicly traded companies to tabulate gains and losses in the stock awards given to top executives. The awards are often the largest part of their pay packages and can total tens of millions of dollars. These numbers have gradually become public as companies release their annual proxy statements throughout the year.
Terry Adamson, a partner at Infinite Equity, a consulting firm that has helped about 400 companies compile the new “compensation actually paid” figures, said the measure does a better job highlighting which executives are being fairly compensated and which ones could be overpaid.
“The actual payments that executives have had had always been kind of opaque. And there hasn’t been a lot of transparency to it,” Adamson said. “Now, if they’re underperforming the market in terms of performance, I think it really quickly stands out.”
Rationale behind the new requirements
The new rule put in place by the SEC requires companies to provide in their annual proxy filings more up-to-date information on executive pay compared to the “snapshot-in-time” they provided in the past.
In addition to their base pay and bonuses, executives receive stock options and restricted stock. The value of these awards fluctuates over time and often is not vested or earned by the executive for several years.
In the past, companies valued these awards on the day they were granted rather than updating the figures in the future. This failed to consider things such as changes in a company’s stock price, or if the executive received more shares later because certain performance targets were met — factors that increased the compensation the individual eventually received.
The SEC now requires these updated figures to be displayed under a category called “compensation actually paid,” placing it next to the old snapshot-in-time method. The table shows information for the company’s three most recent fiscal years but will ultimately grow to show five years.
In addition, the same table includes information on how the company’s stock price has performed over the period compared to a basket of peers selected by the firm. This allows investors to review the compensation paid to the executive versus the company’s performance over that same time.
A review of major food and beverage companies by Food Dive found Coca-Cola CEO James Quincey disclosed a point-in-time pay of $22.8 million in 2022 and a compensation-actually-paid figure under the new calculation of $54.5 million.
In its annual proxy filing, the beverage giant said $100 invested in Coca-Cola at the beginning of 2020 would be worth $126 after three years versus $132 for its peers. Coca-Cola posted net income in its 2022 fiscal year of $9.6 billion compared to $9.8 billion a year earlier.
At archrival PepsiCo, the snack and beverage manufacturer noted in its proxy that it gave CEO Ramon Laguarta a total compensation of $28.4 million under the old measure in 2022, compared to $39.5 million in compensation actually paid.
The Doritos, Aquafina and Diet Pepsi maker said its stock climbed from $100 at the beginning of 2020 to $144 after three years versus $133 for its peer group. Net income at PepsiCo was $9 billion in 2022 compared to $7.7 billion in 2021.
“The actual payments that executives have had had always been kind of opaque. And there hasn't been a lot of transparency to it. Now, if they're underperforming the market in terms of performance, I think it really quickly stands out.”
Partner, Infinite Equity
Top executives at other food and beverage giants, including Conagra Brands, Kellogg & Co., General Mills and Hershey, saw a gap in their summary compensation total compared to the compensation they were actually paid of between $13 million and $17 million in the most recent fiscal year in which these companies reported.
J.M. Smucker’s CEO Mark Smucker, and Robert Gamgort, who oversees Keurig Dr Pepper, had total compensation and compensation figures actually paid for their most recent fiscal year that were nearly the same. For Smucker, the figures were around $11.5 million, while Gamgort’s were roughly $12.5 million.
Rosanna Landis Weaver, director of wage justice and executive pay at As You Sow, said the enhanced data “is a step in the right direction” in showing the “extraordinary gaps” between what executives make compared to their rank-and-file employees.
The nonprofit highlights what it calls “excessive executive compensation” paid to CEOs through its annual report highlighting who it considers the 100 most overpaid executives of companies in the S&P 500. Coca-Cola’s Quincey was the highest CPG food or beverage company CEO on the list in 2023, coming in at No. 13.
Weaver said while the new measure “gives shareholders more awareness of how exorbitant some particular packages are,” it is too early to know whether the newly public information will be used by investors to push back against executive compensation.
A burden for companies
Coca-Cola declined to comment beyond the information in its proxy, while PepsiCo did not respond to multiple requests for a response.
A Conagra Brands spokesman also pointed to its proxy, which noted that the Slim Jim and Healthy Choice maker’s executive compensation program is “designed to encourage and reward behavior that promotes attainment of our annual and long-term goals. In turn, those goals are intended to lead to sustainable, profitable growth, and long-term shareholder value.”
General Mills said the compensation program for Jeff Harmening, its CEO, is centered around the company’s business strategy, tied to returns delivered to shareholders and continues to be externally competitive. The cereal and snacking giant noted that 90% of Harmening’s annual compensation opportunity is variable based on the company’s annual- and three-year performance, and 71% of it is tied to long-term incentives.
“Jeff Harmening has led General Mills out of a period of slow growth and into its current chapter as a stronger and more nimble company, achieving the highest sales in the company’s history,” Jessica Stevens, a spokesperson for General Mills, said in an email to Food Dive. “He has rallied the business around a strategy to accelerate growth by laying out the categories and geographies where General Mills has a right to win and advanced our digital and analytics capabilities for the future.”
Among companies, the new calculations have proven to be “a significant burden,” said Heather Marshall, a senior director at Willis Towers Watson where she works with companies to compile their executive compensation data. The average company conducts 30 to 40 calculations to determine an executive’s equity valuations, she estimated, and then another 200 to 300 to figure out the compensation actually paid figure.
Marshall added that stock options tend to be used more in the CPG industry, including food and beverage, than in larger manufacturing sectors. This ultimately creates additional work and complexity when it comes to figuring out these totals and meeting the SEC requirements.
“It’s not that this wasn’t something that compensation committees weren’t already doing as part of the typical good oversight processes that most embrace,” she said. “I think [the new requirement] is viewed more as incremental work than a meaningful value-add.”