Coca-Cola Holders Reject Pay, Restricted-Stock Proposals
Wall Street Journal
April 18, 2007

WILMINGTON, Del. -- Coca-Cola Co. shareholders rejected proposals calling for limits on executive compensation, annual publication of results of product testing, and a study of its water usage in India, at its annual meeting here.

Coke's annual meeting has become a gathering place for a panoply of critics and activists who come to press their concerns on the company, which has faced accusations in recent years that it is ignoring workers' rights, draining water from poor communities and contributing to obesity, among other issues.

This year's meeting, in a hotel ballroom here with heavy security, was no exception, with several groups in attendance. Still, it was more subdued than in recent years, with only about 200 people.

In a speech to shareholders, Coke Chairman and Chief Executive E. Neville Isdell said the company is meeting all its long-term operating objectives. "We are on our way to be a truly great company again" he said.

He said the global beverage giant has "significant upside potential" because as big as it is, it is still capturing only 20% of beverage sales opportunities. Among the company's accomplishments, Mr. Isdell said, is the rapid growth of its new no-calorie soda, Coca-Cola Zero. The drink has now sold more than 200 million unit cases world-wide since its launch in June 2005. A unit case is the equivalent of 24 eight-ounce bottles.

Shareholders rejected five proposals in this year's proxy. The company said 96% of shares voted were cast against a proposal to cap compensation of the company's top five executives to $500,000 a year, plus nominal perks. A proposal for an advisory resolution that would allow shareholders to ratify compensation of top executives was rejected by 69% of shares voted, while 68% of shares voted were cast against a proposal to make restricted stock and performance share units tied to performance -- a step Mr. Isdell said the company had already taken.

Coke also said 93% of shares voted were cast against each of the two remaining proposals. One called for an annual report publicizing the results of chemical and biological testing of the company's drinks. Proponents of the idea said it was necessary after pesticides were detected in Coke drinks in India and after a recall in 2004 of Dasani water in Great Britain when excessive levels of bromate were detected. Coke says it tests its products frequently and its measures are adequate.

The other proposal called for a study and report on the "potential environmental and public health damage" of each of the company's plants and ventures that extract water in India.

Despite efforts to establish itself as a leader in global water stewardship, with water conservation projects in numerous countries, Coke has failed thus far to satisfy vociferous critics who accuse the company of depleting groundwater needed by local communities in India.

"The company has not taken care of its problems in India," Amit Srivastava, director of the India Resource Center, a group pressing for safe water. "People across India are really fed up with the Coca-Cola Company's response to the grave crisis in India today."

Mr. Isdell said Coke is "not even close to being the largest user" of water there, and that the company is nevertheless taking steps to ease groundwater depletion such as building 350 structures by the end of this year to harvest rainwater. Coke has also commissioned an assessment of its water use in India that should be completed by the middle of this year, he said.

Coke said 2.03 billion shares were used to cast votes, out of 2.32 billion that were eligible to vote.

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