FORTUNE — Although Coca-Cola’s (KO) controversial equity compensation plan was apparently approved by a majority of shareholders at the company’s annual meeting in Atlanta this week, it appears to be a half-hearted approval.
Under the plan, Coke’s managers are to be paid generously with company shares if they achieve specific performance goals. Critics have said the plan would dilute the holdings of current shareholders too much, but it still passed at Coke’s annual meeting.
Warren Buffett’s insurance conglomerate Berkshire Hathaway (BRKA) is one of the largest owners of Coke’s stock, with a little over 9% of the company’s shares. Buffett thought the compensation plan was excessive too, but instead of voting against it he, rather ineffectively, abstained.
Other shareholders with stronger stomachs did vote against the plan, including the Florida State Board of Administration, Wintergreen Advisers — which has been waging a proxy war against the plan since it was first proposed on March 7 — and the Ontario Teachers’ Pension Plan. CalSTRS, the California State Teachers Retirement System, reversed its vote and approved the plan only days before the annual meeting.
MORE: How women can respond to that other B-word: Bossy
Coke’s preliminary voting results, released shortly after the meeting, indicate that the “Coca-Cola Company 2014 Equity Plan,” as it is officially called, was approved by 83% of the “votes cast.” Since the “votes cast” excluded Buffett’s votes, as well as any other abstentions, this figure looks questionable. It significantly overestimates the level of approval. In fact, the official vote count filed with the SEC late yesterday showed that less than half of the outstanding shares voted for the plan — 49.77%, to be precise, with the rest opposing, abstaining, or simply not voting. This calculation uses all of Coke’s shares outstanding (4.4 billion, according to SEC filings). Coke’s calculation ignores abstentions and shares not voted.
In a release, David Winters, CEO of Wintergreen Advisers, LLC, said:
Coca-Cola’s plan failed to attract support from a majority of shareholders, including its largest shareholder, Berkshire Hathaway. Wintergreen believes that no company should implement an equity plan without the support of a majority of its shareholders, least of all a great company like Coca-Cola. It is clear to us that Coca-Cola failed to earn a shareholder mandate to fully implement the 2014 equity plan and we call on Coca-Cola’s Board of Directors to withdraw or scale back the plan. According to SEC filings, Coca-Cola had more than 66 million shares available for issuance under existing equity plans as of February 20th, which we believe would allow it to continue to issue stock awards while developing a more shareholder friendly plan.
Late Thursday, Coke sent Fortune the following statement in response to Winters:
As we reported following our Annual Meeting, Coca-Cola shareowners strongly supported our 2014 Equity Plan, which passed with 83 percent of the votes cast. Mr. Winters’ calculation attempts to account for abstentions and other shares not voted which, by law, are not accepted in the tally.
While it’s true that Coke isn’t legally required to account for abstentions and shares not voted, from a moral and ethical standpoint it seems clear that saying the company’s shareowners have strongly approved a plan without accounting for every shareholder’s position is somewhat misleading.
As Winters had earlier noted, the problem with the plan is it essentially transfers value from shareholders to management. Basically, in order to reward executives and other senior employees with stock — stock options, performance shares, or restricted stock — companies must reserve a certain number of shares to use as rewards, and they need to gain stockholder approval in order to do this. In Coke’s case, the shareholders who voted against the plan felt Coke would be taking too many shares to give to management, and that shareholders would lose out as a result — a process called “dilution.”
MORE: A battered UAW retreats to rethink its ‘Southern Strategy’
The new plan called for 500 million shares to be reserved, but there were already hundreds of millions of shares committed, so the dilution level had also to include those shares. Indeed, Coke included a handy formula for calculating dilution in its proxy. (It included the formula, but not the answer.) There have been as many figures for dilution thrown around, so using Coke’s formula I performed my own calculation and came up with a figure of 15.9%. In other words, more than a sixth of the firm’s stock will be set aside to reward management.
Many Coke shareholders felt the company’s compensation plan was a transfer of ownership, and they voted against it, or abstained. Neither of the two major proxy advisory firms — ISS and Glass Lewis (which is partly owned by Ontario Teachers’) — told their clients to vote against the plan, but many did anyway.
Coke has offered a lot of complicated reasons to mitigate this figure, but however you slice it, 16% of the company’s shares could be used for management and for nothing else.
Editor’s note: This story was updated Friday to include a comment from Coca-Cola.