Coca-Cola Amatil boss to be rewarded for 'pretty decent' growth

Proxy advisers have given a tentative thumbs-up to Coca-Cola Amatil's plan to hand over at least $1.7 million in bonuses to managing director Alison Watkins if she manages to restore earnings-per-share growth to a modest 5 per cent.

Coca-Cola Amatil managing director Alison Watkins is aiming to restore earnings growth to about 5 per cent. Photo: Daniel Munoz

Coca-Cola Amatil is seeking approval at the annual meeting in May to issue between 195,312 and 390,624 share rights worth between $1.7 million and $3.5 million to Ms Watkins as part of the beverage company's 2016 to 2018 long-term incentive plan.

CCA plans to issue the share rights despite conceding in its latest annual report that the outcome of long-term incentive grants over the past five years had been "disappointing."

Since 2011, none of the share rights issued as part of long-term incentive plans vested because total shareholder returns and average earnings-per-share growth fell well short of targets.

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Average earnings per share between 2012 and 2014 fell 10.3 per cent, compared with a 7 per cent EPS growth target, and total shareholder returns fell 13.2 per cent, ranking CCA in the bottom 20 per cent of its peers.

Ms Watkins, who took the helm from Terry Davis in March 2014, has vowed to restore earnings-per-share growth to mid-single digits over the next few years.

Ms Watkins will need to deliver average annual earnings-per-share growth of 5 per cent, total shareholder returns (TSR) of 8 per cent and outperform about 50 per cent of peer companies (relative TSR) to achieve 100 per cent of her target award of 65,104 share rights each year.

If she manages to lift earnings-per-share growth to more than 8 per cent, TSR to more than 12 per cent and beat 75 per cent of peers, she stands to receive 200 per cent of the target issue, or 130,208 shares a year.

Much lower performance thresholds

While the performance thresholds are much lower than those during Mr Davis's 13-year regime, shareholders and proxy advisers said that, at first glance, they looked reasonable given structural challenges in the non-alcoholic beverages market.

"If you look at [EPS growth] in isolation and compare it with other companies that are growing quickly it does look low," said CGI Glass Lewis general manager Daniel Smith.

"But if you go back in time, CCA hasn't hit 5 per cent [EPS growth] in one year since 2010."

"We think that 5 to 8 per cent CAGR would be pretty decent growth given the maturity of the markets in which CCA operates," he said.

After a 33 per cent slump in profits during the previous two years, CCA's underlying net profit rose 4.8 per cent to $393.4 million in 2015 and earnings per share by 4.7 per cent.

Ms Watkins' total remuneration rose from $2.66 million to $4.5 million in 2015, boosted by $1.5 million in short-term bonuses, $694,518 in long-term incentives and a full 12 months' base pay of $2.26 million.

CCA is also seeking approval to increase the annual fee pool for non-executive directors by $500,000 to $2.8 million. The bottler has reached its fee cap after lifting the number of directors from eight to nine.

Long-serving non-executive directors Catherine Brenner and Tony Froggatt are seeking re-election, as is Virgin Australia chief John Borghetti, who joined the board last December.

Mr Borghetti is in line to eventually take the chairman's role from David Gonski, who is not expected to seek re-election when his current term expires.

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