ATLANTA -- The Coca-Cola Co. paid $8.4 million in bonuses to
its top six executives last year, the equivalent of about $2,300
for each of the 3,700 employees the world's largest beverage maker
laid off during the same period, a federal filing shows.
The company also said the present value of retiring chief
executive Doug Daft's restricted stock awards is $86 million, and
it paid out millions last year to companies that some of its
directors own or hold a major stake in.
Corporate governance experts credited Coke for the disclosures
in its proxy Thursday, but some question the justification for the
compensation and business ties at a time when the company is
downsizing and there is a heightened awareness toward
accountability in corporate America.
"The reality is things aren't changing very much," said Paul
Lapides, a corporate governance expert at Kennesaw State
University near Atlanta.
The company noted that the bonuses and the layoffs -- which
represented 7 percent of Coke's work force -- are not related and
should not be linked.
"Separating employees is always a difficult decision," Coke
spokesman Ben Deutsch said. "But out senior management took these
actions to ensure that our organization delivers against the
ever-evolving needs of our business and position the company for
long-term success."
The filing said four shareholder proposals facing the company
at its annual meeting next month seek restrictions on executive
compensation-related issues. Coke's board is asking shareholders
to reject each of the proposals.
Deutsch said the company achieved record results in 2003 in
revenue and earnings. He also noted the company increased its
return to shareholders 18 percent.
The company noted that 12 of its 16 directors are independent,
meaning they aren't Coke employees. The company also said high
salaries are important to retain key executives, and that it
always ties its decisions to performance.
The company said the majority of the restricted stock awards
are tied to the company hitting a certain growth target over a
certain period and Daft being with the company through 2005. It is
not clear how much of the stock awards Daft will ultimately
receive or when.
Among the highlights in the filing:
Coke paid Daft a $4 million bonus last year, $1.5 million to
president Steve Heyer, $874,531 to executive vice president
Alexander Allan, $650,000 to chief financial officer Gary Fayard,
$589,875 to executive vice president Mary Minnick and $787,000 to
former vice chairman Brian Dyson. Daft announced last month that
he would retire at the end of 2004, and Dyson retired from the
company in August.
At the end of 2003, Daft's 1.7 million restricted stock shares
were valued at $86.3 million.
McLane Co., a subsidiary of billionaire investor and Coke
director Warren Buffett's Berkshire Hathaway holding company, paid
Coke $103.9 million last year for fountain syrup and other
products.
Fast-food and ice cream chain Dairy Queen, another company
Buffett owns, and its subsidiaries, paid Coke $2.2 million for
fountain syrup and other products. Coke and its subsidiaries last
year gave Dairy Queen and its subsidiaries $688,000 for
promotional and marketing incentives for corporate and franchise
stores.
Coke paid The Washington Post Co., in which Buffett holds a
significant stake, $400,000 in 2003 for advertising fees.
In 2003, Coke paid King & Spalding, an Atlanta law firm, $13.8
million for legal services. Coke director Sam Nunn, a former U.S.
senator, was a member of the law firm until he retired on Dec. 31.
Nunn did not personally provide any legal services to Coke.
Daft's base salary of $1.5 million in 2003 was unchanged from
the past two years.
Deutsch said the company takes corporate governance seriously.
"These relationships arise in the normal course of business,"
Deutsch said. "We have a committee on directors and corporate
governance that reviews and evaluates any transactions that could
be possible conflicts of interest for directors. The committee,
which is composed of four independent directors, ensures that the
transactions are reasonable and fair to the company and are in the
best interest of shareowners."
Coca-Cola’s strategy has been to distance itself from its
Colombian bottling subsidiary, although it recently acquired the
company and holds bottling agreements with it, says Terry
Collingsworth, executive director of the International Labor
Rights Fund. “Clearly, Atlanta has the power to tell their
bottlers, ‘you can’t do this.’ They just refuse to.”
