Coke Chief Touts Improved Stock Returns

Annual meeting also features gripes on water usage, exec pay

The Atlanta Journal-Constitution
April 18, 2007

Wilmington, Del. Coke's top executive opened Wednesday's annual meeting with a number close to the hearts of shareholders in the crowd. One-hundred dollars worth of Coke stock in 2006 returned $23 to investors in appreciation and dividends.

"My message to you today is, we are keeping our promise," said Coca-Cola Chairman and Chief Executive Neville Isdell, who presided over his third annual meeting since taking over the Atlanta-based beverage giant in mid-2004.

While many in the audience of about 200 shareholders embraced the message, others used the meeting as a way to rail against Coke for ongoing issues, such as water usage in developing countries and executive compensation.

The meeting turned into a protest rally twice, as critics of Coke refused to stop talking after their allotted two minutes. When the microphones were turned off, they resorted to shouting before Isdell regained control of the meeting.

Aside from that, the meeting was tame in comparison to some of Coke's annual meetings in recent years, which have drawn as many as 600. In 2004, labor activist Ray Rogers, protesting alleged worker abuses overseas, was wrestled to the floor and pulled out of the meeting by security when he refused to stop speaking.

On Wednesday, Rogers, who works to convince colleges to drop exclusive Coke supply contracts, spoke out but followed the rules.

"Look, five seconds left and I'm done," Rogers said before sitting down.

Ten of Coke's 11 board members attended Wednesday's meeting, staged in an ornate gold and green wood-trimmed ballroom at the plush Hotel du Pont. All were re-elected handily to their posts, with no more than 4 percent of shares cast going against any one board member.

Board Member Barry Diller did not attend. Diller received the highest percentage of no votes for re-election 14.48 percent, which represented nearly 292 million Coke shares.

Shareholders, most voting by mail, also approved the board's performance incentive plan for company executives, despite calls for greater restrictions on how bonuses and stock options are handled.

Coke doesn't disclose exactly what performance measures board members use to determine executive incentive pay. But getting shareholder approval for the broad strokes of the plan allows Coke to take advantage of tax breaks related to incentive pay.

Shareholders turned back a proposal that would have allowed them to ratify the compensation amount for the company's top five executives. Isdell said shareholders who disagree with executive pay amounts can vote out board members who sit on the compensation committee.

Shareholders also didn't accept a proposal that would have stopped the premature release of unvested restricted stock. The measure drew nearly 32 percent of the more than 2 billion shares voted, showing the topic is still a hot button issue for investors.

Much of Wednesday's dissent centered on Coke's policies regarding water. Coke has been accused of depleting or contaminating water in drought-prone areas of India, selling soft drinks tainted with pesticides in India and undermining water systems by turning consumers away from tap water toward more costly bottled water.

"This is a huge, huge crime," said Amit Srivastava, director of the India Resource Center, an activist group that fights corporate globalization of the country.

Two shareholder proposals related to the allegations, which Coke has denied, were defeated.

A representative from the Teamsters union warned that there could be widespread work shortages and picket lines at the company's largest bottler, Coca-Cola Enterprises, if it eliminates union workers as part of a reorganization that will cut 3,500 jobs. The Teamsters represent about 14,000 CCE workers.

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