COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS OF THE COCA-COLA COMPANY
Published on April 5, 2006
Exhibit
99.1
COMPENSATION
PLAN FOR NON-EMPLOYEE DIRECTORS OF
THE
COCA-COLA COMPANY
The
Compensation Plan for Non-Employee Directors of The Coca-Cola Company (the
“Plan”) is established effective as of January 1, 2006. This Plan is in lieu of
retainer, committee chair and meeting fees. However,
the Board of Directors may decide to make a one-time cash award to any new
Director.
ARTICLE
I
DEFINITIONS
The
following words and phrases as used herein shall have the meaning specified
below, unless a different meaning is plainly required by the
context.
“Account”
shall
mean an account maintained under the Plan for a Participant in accordance
with
Article III.
“Beneficiary”
shall
mean the person, persons or trust designated in writing by the Participant
to receive any benefits from the Plan due to the death of the Participant.
If no
Beneficiary is designated, the Beneficiary shall be the Participant’s spouse. If
no Beneficiary is designated and the Participant has no current spouse, the
Beneficiary shall be the Participant’s estate.
“Board”
shall
mean the Board of Directors of The Coca-Cola Company.
“Change
in Control”
shall
mean a change in control of a nature that would be required to be reported
in
response to Item 6(e) of Schedule 14A of Regulation 14A under the
Securities Exchange Act of 1934, as amended ("1934 Act"), as in effect on
January 1, 2002, provided that such a change in control shall be deemed to
have occurred at such time as (i) any "person" (as that term is used in
Sections 13(d) and 14(d)(2) of the 1934 Act), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the 1934 Act as in
effect on January 1, 2002) directly or indirectly, of securities
representing 20% or more of the combined voting power for election of directors
of the then outstanding securities of the Company or any successor of the
Company; (ii) during any period of two (2) consecutive years or
less, individuals who at the beginning of such period constituted the Board
of
the Company cease, for any reason, to constitute at least a majority of the
Board, unless the election or nomination for election of each new director
was
approved by a vote of at least two-thirds of the directors then still in
office
who were directors at the beginning of the period; (iii) the shareowners of
the Company approve any merger or consolidation as a result of which the
Stock
(as defined below) shall be changed, converted or exchanged (other than a
merger
with a wholly owned subsidiary of the Company) or any liquidation of the
Company
or any sale or other disposition of 50% or more
of
the
assets or earning power of the Company; or (iv) the shareowners of the
Company approve any merger or consolidation to which the Company is a party
as a
result of which the persons who were shareowners of the Company immediately
prior to the effective date of the merger or consolidation shall have beneficial
ownership of less than 50% of the combined voting power for election of
directors of the surviving corporation following the effective date of such
merger or consolidation; provided, however, that no Change in Control shall
be
deemed to have occurred if, prior to such times as a Change in Control would
otherwise be deemed to have occurred, the Board determines otherwise.
“Company”
shall
mean The Coca-Cola Company.
“Director”
shall
mean a duly-appointed or elected member of the Board.
“Grant
Date”
shall
mean the first day of the first regular meeting of the Board in a calendar
year.
“Majority-Owned
Related Company”
shall
mean a corporation(s) or other business organization(s) in which the
Company owns, directly or indirectly, 50% or more of the voting stock or
capital
at the relevant time.
“Participant”
shall
mean a Director who is eligible for the Plan in accordance with Article II
and/or a former Director for whom an Account is maintained under the
Plan.
“Performance
Period”
shall
mean a period of years over which the Company’s performance is measured for the
purposes of benefits under this Plan.
“Performance
Target”
shall
mean a quantifiable financial measure (such as growth in earnings per share,
economic profit, etc.) that is set at the beginning of each Performance Period
and that must be achieved during the Performance Period for the credited
Share
Units to be payable to a Director.
“Plan”
shall
mean The Compensation Plan for Non-Employee Directors of The Coca-Cola
Company.
“Share
Unit”
shall
mean a hypothetical share of Stock that is credited to a Participant’s
Account.
“Stock”
shall
mean the common stock of the Company.
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ARTICLE
II
ELIGIBILITY
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2.1
|
Limitation
to Non-Employee Directors.
Only Directors who are not employed by the Company or a Majority-Owned
Related Company shall be eligible for the
Plan.
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2.2
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Date
of Eligibility.
Directors who are on the Board as of January 1, 2006 shall be eligible
to
participate as of January 1, 2006. Thereafter, a new Director shall
be
eligible as of the date he or she is appointed to the Board. Directors
who
are not standing for reelection at the 2006 Annual Meeting of Shareowners
shall be paid for the period from January 1, 2006 to April 19,
2006 under
the prior compensation structure.
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ARTICLE
III
PLAN
ACCOUNTS AND PERFORMANCE TARGETS
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3.1
|
Accounts
and Sub-Accounts.
Each Participant shall have an Account administered in his or her
name.
Such Account shall be a bookkeeping entry only and no Stock or
other
assets shall be placed in the Participant’s name. There shall be separate
sub-Accounts for each Performance
Period.
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3.2
|
Crediting
of Share Units.
On the Grant Date, each Participant’s Account shall be credited with Share
Units. The dollar amount for the period beginning January 1, 2006,
shall
be $175,000 and may be adjusted in subsequent years by the Board
of
Directors. The number of Share Units credited to each Participant
shall be
determined by dividing this dollar amount by the average of the
high and
low price of Stock on the Grant
Date.
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3.3
|
Setting
of Performance Target.
On the Grant Date, the Board of Directors shall set the Performance
Period
and the Performance Target applicable for that Performance Period.
The
Performance Target may not thereafter be
changed.
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3.4
|
Hypothetical
Dividends.
As of each date on which dividends on the Stock are payable to
shareowners, each Participant’s Account shall be credited with the value
of the dividends that would be payable on Share Units if they were
shares
of Stock. These hypothetical dividends shall be converted to additional
Share Units using the average of the high and low price of Stock
on the
dividend payment date or if such date is not a trading day, the
next
trading day.
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3.5
|
New
Directors Appointed Mid-Year.
For individuals who become Directors in a particular year after
the Grant
Date, his or her account shall
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be
credited with Share Units under this paragraph. A new Participant shall be
credited with Share Units equal to the dollar amount determined for the year
pursuant to subparagraph 3.2, prorated for the number of days in the calendar
year during which the Participant served as a Director. This proration shall
be
a fraction, the numerator of which is the number of days remaining in the
calendar year (measured from the date the Director is appointed to the Board)
and the denominator of which is 365. Once the dollar amount is prorated,
Share
Units shall be credited to the Participant’s Account, using the average of the
high and low price of Stock on the date of the Director’s appointment to the
Board.
ARTICLE
IV
PAYMENT
OF PLAN ACCOUNTS
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4.1
|
Payment
only if Performance is Achieved.
No amounts shall be payable under this Plan unless the applicable
Performance Target is achieved during the applicable Performance
Period.
The performance shall be certified by the Audit Committee of the
Board of
Directors at the regularly-scheduled February meeting of the Audit
Committee following the end of the Performance
Period.
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4.2
|
Payment
of Account Balance.
If the Performance Target has been achieved during the Performance
Period,
the Participant shall be paid his or her Account balance attributable
to
that Performance Period on February 28 following the certification
of
results, unless the Participant elected to defer the compensation
as
provided in Section 4.7 below. The value of the Share Units attributable
to the Performance Period shall be determined by using the average
of the
high and low price of Stock on the date the performance is certified.
If
the Performance Target is not achieved, the entire Account balance
attributable to the Performance Period shall be forfeited as of
the date
the performance is certified.
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4.3
|
Form
of Payment.
All payments under this Plan shall be in
cash.
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4.4
|
Resignation
of Director.
If a Director resigns from the Board during the Performance Period,
the
Share Units attributable to each Performance Period shall be prorated.
The
proration shall be a fraction, the numerator of which is the number
of
days from the beginning of the applicable Performance Period to
the date
of the Director’s resignation and the denominator of which is the number
of days in the Performance Period. No payment shall be made unless
the
Performance Target is achieved and payment, if any, shall be made
at the
same time and valued in the same manner as the Share Units for
the other
Participants. Hypothetical dividends on the prorated Share Units
are
credited for the remainder of the Performance
Period.
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4.5
|
Death
of Director.
If a Director dies during the Performance Period, the Share Units
attributable to each Performance Period shall be prorated. The
proration
shall be a fraction, the numerator of which is the number of days
from the
beginning of the applicable Performance Period to the date of the
Director’s death and the denominator of which is the number of days in the
Performance Period. In addition, each Performance Period shall
be
shortened to end as of the quarter in which the Director dies.
The results
against the Performance Target shall be measured for the shortened
Performance Period and, if the Performance Target is achieved,
payment
shall be made to the Director’s Beneficiary as soon as administratively
feasible following certification of results. The Share Units shall
be
valued by using the average of the high and low Stock price as
of the date
the performance is certified.
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4.6
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Change
in Control.
In
the event of a Change in Control during a Performance Period, the
Performance Target shall be deemed to have been met for each of
the
Performance Periods that are not completed and the Share Units
attributable to each Performance Period shall be prorated. The
proration
shall be a fraction, the numerator of which is the number of days
from the
beginning of the applicable Performance Period to the date of the
Change
in Control and the denominator of which is the number of days in
the
Performance Period. The value of the prorated Share Units shall
be paid 30
days following the Change in Control and shall be valued by using
the
average of the high and low Stock price as of the date of the Change
in
Control.
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4.7
|
Deferral
Under Directors’ Deferred Compensation Plan.
Compensation payable under this Plan may be deferred pursuant to
the
provisions of the Directors’ Deferred Compensation
Plan.
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ARTICLE
V
ADMINISTRATION
AND MISCELLANEOUS PROVISIONS
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5.1
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Administration
of the Plan.
The Committee on Directors and Corporate Governance of the Board
of
Directors shall oversee the administration of the Plan. The Committee
on
Directors and Corporate Governance has the exclusive responsibility
and
complete discretionary authority to control the operation and
administration of the Plan, with all powers necessary to enable
it to
properly carry out such responsibility, including but not limited
to the
power to construe the terms of the Plan, to determine status, coverage
and
eligibility for benefits and to resolve all interpretive, equitable,
and
other questions, including questions of fact, that shall arise
in the
operation and administration of the Plan. All actions or
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determinations
of the Committee on Directors and Corporate Governance shall be final,
conclusive and binding on all persons.
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5.2
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Amendment
and Termination of the Plan.
The Board may amend, modify, suspend or terminate the Plan in whole
or in
part, except that no amendment, modification, suspension or termination
may retroactively adversely affect any Participant’s right to a benefit
which has been earned under the Plan before such date.
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5.3
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Controlling
Law.
This Plan shall be subject to the laws of the State of Georgia,
and the
parties agree all disputes arising from or related to this Plan
shall be
litigated in the state or federal courts located in Fulton County,
Georgia. The parties agree that such courts shall be the exclusive
forum
for such disputes and hereby submit to the jurisdiction and venue
of such
courts for the litigation of all such disputes. The parties hereby
waive
any claims of improper venue or lack of personal or subject matter
jurisdiction as to any such
disputes.
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5.4
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Limitation
of Responsibility.
Neither the establishment of this Plan nor any modification thereof,
nor
the creation of any Account, nor the payment of any benefits, shall
be
construed as giving to any Participant or other person any legal
or
equitable right against the Company, or its subsidiaries, or any
officer
or employee thereof; and in no event shall the terms of any Director’s
Board appointment be modified or in any way affected
thereby.
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5.5
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Unsecured
General Creditor.
Participants and their Beneficiaries, heirs, successors, and assigns
shall
have no legal or equitable rights, claims, or interest in any specific
property or assets of the Company. No assets of the Company shall
be held
in any way as collateral security for the fulfilling of the obligations
of
the Company under this Plan. The Company's obligation under the
Plan shall
be merely that of an unfunded and unsecured promise of the Company
to pay
money in the future, and the rights of the Participants and Beneficiaries
shall be no greater than those of unsecured general creditors.
Nothing
contained in this Plan, and no actions taken pursuant to the provisions
of
this Plan shall create or be construed to create a trust or any
kind of
fiduciary relationship between the Company and any Participant,
Beneficiary, or any other person.
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5.6
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Taxes.
Federal, state, FICA/Medicare and all other taxes shall be solely
the
responsibility of the Participant. The Company will report all
payments as
required by the Internal Revenue Code or other tax regulations
and
withhold any applicable taxes where
required.
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