December
19, 2007
Ms.
Ellie
Quarles
Special
Counsel
United
States Securities and Exchange Commission
100
F
Street, N.E.
Washington,
D.C. 20549-3561
RE: The
Coca-Cola Company
Definitive
Proxy Statement on Schedule
14A
Filed
March 9, 2007
File
No. 1-02217
Dear
Ms.
Quarles:
Thank
you for your letter of December
6, 2007, following up on our response letter dated October 26, 2007, concerning
the Definitive Proxy Statement on Schedule 14A filed on March 9, 2007 by
The
Coca-Cola Company (the “Company”). We have responded to your
additional comment below.
Annual
Compensation, page 30
|
1.
|
We
note your response to comment 7 in our letter dated August 21,
2007 and we
reissue that comment. Please provide us on a supplemental basis
a detailed analysis regarding how disclosure of each of the volume
and net
income targets for the company and operating units and volume and
profit
before tax targets would cause you competitive harm. Also, you
state that disclosure of the 2007 targets is not “relevant” to a fair
understanding of compensation for 2006. Please confirm that
disclosure of such information is not
material.
|
Response:
As
stated
in our response to comment 7 in our letter dated October 26, 2007, we did
not
disclose the specific performance targets for the 2006 annual incentive awards
because we believe that to do so would result in competitive harm to the
Company. As we stated in that letter, the financial criteria
are applied against internal business plan targets that are set
annually. The internal business plan is highly confidential and
competitively-sensitive information. This letter provides additional,
specific detail on how the disclosure of this information would result in
competitive harm.
As
stated
in our letter, performance measures for the Company as a whole were volume
and
net income and, for operating units, volume and profit before
tax. The following is an example further elaborating on how
disclosure of our targets, which incorporate our internal business plan,
would
cause competitive harm.
Assume
that a Named Executive Officer was the President of ABC operating
group. This Named Executive Officer’s annual incentive would be based
50% on Company performance and 50% on ABC Group performance. The
portion related to ABC Group performance is weighted 50% on ABC Group volume
and
50% on ABC Group profit before tax. Before the beginning of the
year, ABC Group establishes an internal business plan, which includes volume
and
profit before tax goals. Then, at the beginning of each year, the
Compensation Committee approves targets against this internal business
plan. In this example, if the ABC Group met 100% of the volume
against the business plan and 100% of the profit before tax against the business
plan, then the Named Executive Officer’s financial performance factor for the
ABC Group would be 100%. If the ABC Group met less than the target
against the business plan for either measure, the financial performance factor
for the ABC Group would be less than 100%. If the ABC Group exceeded
target against the business plan for the measures, the financial performance
factor would be greater than 100% for the ABC Group. In addition, the
Named Executive Officer would be required to achieve certain targets for
particular types of products in order to receive greater than 100% for the
volume measure.
As
you
can see, the primary driver of the financial performance component of the
annual
incentive is how the ABC Group performs against the internal business plan
targets. This business plan is not public information. If
we were required to disclose this information, then coupled with the
publicly-available information about actual volume and profit results,
competitors would obtain the following information:
|
·
|
Our
expectations for volume growth in the ABC Group and our performance
against that expectation, giving competitors information on how
we may be
deploying resources in future years. For example, if we
disclosed that, to receive a target incentive, volume must exceed
X% in
ABC Group, if we did not achieve that expected result, competitors
would
obtain information on potential necessary future investments in
the ABC
Group.
|
|
·
|
The
potential upside expectations of the ABC Group, which would give
competitors information on areas we believe have potential for
strong
growth and areas which may be
weaker.
|
|
·
|
Our
potential investment in marketing since profit before tax and volume
targets could be used to infer marketing
spending.
|
|
·
|
The
rate at which we expect a specific category of beverages to grow,
which
allows competitors to focus their own resources on these
categories.
|
For
the
Company as a whole, the same kind of competitive information could be discerned
by competitors if internal business plan targets for volume and net income
were
required to be disclosed.
We
believe that our letter of October 26, 2007, along with this supplemental
discussion, clearly establishes that disclosure of the annual incentive targets
would cause the Company competitive harm. We have no objection
to disclosing performance targets where competitive harm would not
result. Indeed, as set forth on pages 26 and 35 of the Definitive
Proxy Statement, we disclosed performance targets for our two other
performance-based plans: the Directors’ Compensation Plan and the
performance share units.
If
disclosure of this type of highly confidential information is required, the
Compensation Committee would consider changing the annual incentive plan
for
2008 so that only information that would not cause competitive harm if disclosed
would be used. The annual incentive is intended to focus employees, including
Named Executive Officers, on metrics that drive long-term sustainable
growth. The Compensation Committee has, in the past, designed
the annual incentive plan with the sole focus on incenting behaviors that
drive
business results. Should disclosure of competitively-sensitive
information be required, the Compensation Committee could be forced to design
the plan to avoid disclosure of competitive information rather than to set
performance measures in the best interests of our business and our
shareowners. Any benefit of disclosure of this information is
outweighed by the detriment of forcing the Compensation Committee to take
the
risk of disclosure into account in setting the terms of the annual
incentive.
In
addition, since the measures are disclosed (see page 32 of the Definitive
Proxy
Statement), the ranges of possible payouts for each Named Executive Officer
are
disclosed (see the 2006 Grants of Plan-Based Awards table on page 51 of the
Definitive Proxy Statement), and the resulting incentive payments are disclosed
(see column (g) of the 2006 Summary Compensation Table on page 44 of the
Definitive Proxy Statement), the Company does not believe that disclosure
of the
specific targets is material to investors.
Finally,
we confirm that disclosure of the 2007 targets is not material to an
understanding of the compensation for 2006.
Please
direct any questions or comments concerning this letter to me at
404-676-5622.
Sincerely,
/s/
Carol
Crofoot Hayes
Carol
Crofoot Hayes
Associate
General Counsel and Secretary
cc: E.
Neville Isdell, Chairman and Chief Executive Officer
