SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
[X] Definitive Proxy Statement Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
THE COCA-COLA COMPANY
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(Name of Registrant as Specified In Its Charter)
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pursuant to Exchange ActRule 0-11 (Set forth the amount on which the
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[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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Notes:
[LOGO OF THE COCA-COLA COMPANY APPEARS HERE]
ATLANTA, GEORGIA
ROBERTO C. GOIZUETA
CHAIRMAN OF THE BOARD
AND
CHIEF EXECUTIVE OFFICER
March 3, 1997
Dear Share Owner:
You are cordially invited to attend the Annual Meeting of Share Owners which
will be held on Wednesday, April 16, 1997, at 9:00 a.m., local time, in
Wilmington, Delaware.
The enclosed Notice and Proxy Statement contain details concerning the
business to come before the meeting. You will note that the Board of Directors
of the Company recommends a vote "FOR" the election of five Directors to serve
until the 2000 Annual Meeting of Share Owners and "FOR" the ratification of
Ernst & Young LLP as independent auditors of the Company for the 1997 fiscal
year. Please sign and return your proxy card in the enclosed envelope at your
earliest convenience to assure that your shares will be represented and voted
at the meeting even if you cannot attend.
To assist us in planning for the meeting, please mark the appropriate box on
your proxy card if you plan to attend. An admission card is included if you
are a share owner of record. If your shares are held in street name, an
admission card in the form of a legal proxy will be sent to you by your
broker. If you do not receive the legal proxy in time, you will be admitted to
the meeting by showing your most recent brokerage statement verifying your
ownership of Company stock.
/s/ Roberto C. Goizueta
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Roberto C. Goizueta
[LOGO OF THE COCA-COLA COMPANY APPEARS HERE]
NOTICE OF ANNUAL MEETING OF SHARE OWNERS
TO THE OWNERS OF COMMON STOCK
OF THE COCA-COLA COMPANY
The Annual Meeting of Share Owners of The Coca-Cola Company, a Delaware
corporation (the "Company"), will be held at The Playhouse Theatre, Du Pont
Building, 10th and Market Streets, Wilmington, Delaware, on Wednesday, April
16, 1997, at 9:00 a.m., local time, for the following purposes:
1. To elect five Directors to serve until the 2000 Annual Meeting of
Share Owners;
2. To ratify the appointment of Ernst & Young LLP as independent auditors
of the Company to serve for the 1997 fiscal year; and
3. To transact such other business as may properly come before the
meeting and any adjournments or postponements thereof.
Share owners of record at the close of business on February 21, 1997, are
entitled to notice of and to vote at the meeting and any adjournments or
postponements thereof. A list of share owners of the Company as of the close
of business on February 21, 1997, will be available for inspection during
normal business hours from April 2 through April 15, 1997, at the offices of
Morris, Nichols, Arsht & Tunnell, 1201 North Market Street, Wilmington,
Delaware, and will also be available at the meeting.
By Order of the Board of Directors
Susan E. Shaw
Secretary
Atlanta, Georgia
March 3, 1997
EACH SHARE OWNER IS URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY.
IN THE EVENT A SHARE OWNER DECIDES TO ATTEND THE MEETING, HE OR SHE MAY, IF SO
DESIRED, REVOKE THE PROXY AND VOTE THE SHARES IN PERSON.
THE COCA-COLA COMPANY
ONE COCA-COLA PLAZA
ATLANTA, GEORGIA 30313
March 3, 1997
PROXY STATEMENT
FOR ANNUAL MEETING OF SHARE OWNERS
TO BE HELD APRIL 16, 1997
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of The Coca-Cola Company (the
"Company") to be voted at the Annual Meeting of Share Owners of the Company to
be held at The Playhouse Theatre, Du Pont Building, 10th and Market Streets,
Wilmington, Delaware, on April 16, 1997, at 9:00 a.m., local time, and at any
adjournments or postponements thereof.
All proxies delivered pursuant to this solicitation are revocable at any
time at the option of the persons executing them by giving written notice to
the Secretary of the Company, by delivering a later dated proxy or by voting
in person at the Annual Meeting.
The mailing address of the principal executive offices of the Company is One
Coca-Cola Plaza, Atlanta, Georgia 30313. The approximate date on which this
Proxy Statement and form of proxy are first being sent or given to share
owners is March 3, 1997.
All properly executed proxies delivered pursuant to this solicitation and
not revoked will be voted at the Annual Meeting in accordance with the
directions given. Regarding the election of Directors to serve until the 2000
Annual Meeting of Share Owners, in voting by proxy, share owners may vote in
favor of all nominees or withhold their votes as to all nominees or withhold
their votes as to specific nominees. With respect to the ratification of the
appointment of Ernst & Young LLP as independent auditors, share owners may
vote in favor of the proposal, against the proposal or may abstain from
voting. Share owners should specify their choices on the enclosed form of
proxy. If no specific instructions are given with respect to the matters to be
acted upon, the shares represented by a signed proxy will be voted FOR the
election of all nominees and FOR the proposal to ratify the appointment of
Ernst & Young LLP. Directors will be elected by a plurality, and ratification
of the appointment of Ernst & Young LLP will require approval by a majority,
of the votes cast by the holders of the shares of Common Stock of the Company
voting in person or by proxy at the Annual Meeting. Accordingly, abstentions
and broker non-votes will not be included in vote totals and will have no
effect on the outcome of the vote.
Only owners of record of shares of Common Stock of the Company at the close
of business on February 21, 1997, are entitled to vote at the meeting or
adjournments or postponements thereof. Each owner of record on the record date
is entitled to one vote for each share of Common Stock of the Company so held.
On February 21, 1997, there were 2,480,211,124 shares of Common Stock of the
Company issued and outstanding.
ELECTION OF DIRECTORS
(ITEM 1)
BOARD OF DIRECTORS
In December 1996, the Board of Directors of the Company, pursuant to the By-
Laws of the Company, determined that the number of Directors of the Company
should be increased from thirteen to fourteen, effective January 3, 1997. The
Directors are divided into three classes, each class serving for a period of
three years, which has been the practice of the Company since 1945.
Approximately one-third of the members of the Board of Directors are elected
by the share owners annually. The Directors whose terms will expire at the
1997 Annual Meeting of Share Owners are Ronald W. Allen, Donald F. McHenry,
Sam Nunn, Paul F. Oreffice and James B. Williams, all of whom have been
nominated to stand for reelection as Directors at the 1997 Annual Meeting of
Share Owners to hold office until the 2000 Annual Meeting of Share Owners and
until their successors are elected and qualified.
Should any one or more of these nominees become unable to serve for any
reason, or for good cause will not serve, which is not anticipated, the Board
of Directors may, unless the Board by resolution provides for a lesser number
of Directors, designate substitute nominees, in which event the persons named
in the enclosed proxy will vote proxies that would otherwise be voted for all
named nominees for the election of such substitute nominee or nominees.
RECOMMENDATION OF THE BOARD OF DIRECTORS CONCERNING THE ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR RONALD W. ALLEN,
DONALD F. MCHENRY, SAM NUNN, PAUL F. OREFFICE AND JAMES B. WILLIAMS AS
DIRECTORS TO HOLD OFFICE UNTIL THE 2000 ANNUAL MEETING OF SHARE OWNERS AND
UNTIL THEIR SUCCESSORS ARE ELECTED AND QUALIFIED. PROXIES RECEIVED BY THE
BOARD OF DIRECTORS WILL BE SO VOTED UNLESS SHARE OWNERS SPECIFY IN THEIR PROXY
A CONTRARY CHOICE.
NOMINEES FOR ELECTION TO TERM EXPIRING 2000
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RONALD W. ALLEN Director since 1991
[PHOTO] Atlanta, Georgia Age 55
Mr. Allen is Chairman of the Board of Directors, President and
Chief Executive Officer of Delta Air Lines, Inc., a major U.S.
air transportation company. He has been Chairman of the Board
and Chief Executive Officer since 1987, holding the additional
title of President from August 1990 through April 1991 and
since March 1993. He is a director of NationsBank Corporation.
Member of the Executive Committee and the Committee on
Directors of the Board of Directors of the Company.
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[PHOTO] DONALD F. MCHENRY Director since 1981
Washington, D.C. Age 60
Mr. McHenry is University Research Professor of Diplomacy and
International Affairs at Georgetown University and a principal
owner and President of The IRC Group, Inc., a New York City
and Washington, D.C. consulting firm. He has held these
positions for more than the past five years. He is a director
of AT&T Corporation, Bank of Boston Corporation, International
Paper Company and SmithKline Beecham PLC.
Chairman of the Public Issues Review Committee and a member of
the Audit Committee and the Committee on Directors of the
Board of Directors of the Company.
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2
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SAM NUNN Director since
[PHOTO] Atlanta, Georgia January 3, 1997
Age 58
Mr. Nunn has been a partner in the law firm of King & Spalding
since January 1997. He served as a member of the United States
Senate from 1972 through 1996. He is a director of General
Electric Company, National Service Industries, Inc.,
Scientific-Atlanta, Inc. and Total System Services, Inc.
Member of the Executive and Finance Committees of the Board of
Directors of the Company.
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PAUL F. OREFFICE Director since 1985
[PHOTO] Lake Tahoe, Nevada Age 69
Mr. Oreffice retired as Chairman of the Board of Directors of
The Dow Chemical Company in 1992, which position he had held
for more than five years. He is a director of Ben-Abraham
Technologies Inc., CIGNA Corporation and Northern Telecom
Limited.
Member of the Finance Committee and the Compensation Committee
(including its Restricted Stock and Stock Option
Subcommittees) and the Committee on Directors of the Board of
Directors of the Company.
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JAMES B. WILLIAMS Director since 1979
[PHOTO] Atlanta, Georgia Age 63
Mr. Williams is Chairman of the Board of Directors and Chief
Executive Officer of SunTrust Banks, Inc., a bank holding
company, and has held these positions for more than the past
five years. He is a director of Genuine Parts Company,
Georgia-Pacific Corporation, Rollins, Inc., RPC, Inc. and
Sonat Inc.
Chairman of the Finance Committee and a member of the
Executive Committee of the Board of Directors of the Company.
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INCUMBENT DIRECTORS -- TERM EXPIRING 1999
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CATHLEEN P. BLACK Director since 1993
[PHOTO] New York, New York Age 52
Ms. Black has been President of the Hearst Magazines Division
of The Hearst Corporation, a major media and communications
company, since November 1995. Until that time she had served
as President and Chief Executive Officer of Newspaper
Association of America, a newspaper industry organization,
since May 1991. She served as a Director of the Company from
April 1990 to May 1991, and was again elected as a Director in
October 1993. She is a director of International Business
Machines Corporation.
Member of the Audit and Public Issues Review Committees of the
Board of Directors of the Company.
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3
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WARREN E. BUFFETT Director since 1989
[PHOTO] Omaha, Nebraska Age 66
Mr. Buffett is Chairman of the Board of Directors and Chief
Executive Officer of Berkshire Hathaway Inc., a diversified
holding company, and has held these positions for more than
the past five years. From August 1991 until June 1992, he
assumed the additional positions of Interim Chairman of the
Board and Interim Chief Executive Officer of both Salomon Inc
and Salomon Brothers Inc. He remains a director of Salomon Inc
and is also a director of The Gillette Company and The
Washington Post Company.
Member of the Audit and Finance Committees of the Board of
Directors of the Company.
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M. DOUGLAS IVESTER Director since 1994
[PHOTO] Atlanta, Georgia Age 49
Mr. Ivester has been President, Chief Operating Officer and a
Director of the Company since July 1994. He served as
President of the North America Business Sector of the Company
from September 1991 until elected to the positions of
Executive Vice President and Principal Operating Officer/North
America effective April 1993. He is Chairman of the Board of
Directors of Coca-Cola Enterprises Inc. and a director of
Georgia-Pacific Corporation.
Member of the Executive Committee of the Board of Directors of
the Company.
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SUSAN B. KING Director since 1991
[PHOTO] Durham, North Carolina Age 56
Ms. King has been Leader in Residence, Hart Leadership
Program, Duke University, a program for the development and
advancement of leadership and management skills in the public
and private sectors, since January 1995. She was Senior Vice
President--Corporate Affairs of Corning Incorporated from
March 1992 through April 1994, and served as President of
Corning's Steuben Glass division from 1987 to March 1992. She
is a director of Guidant Corporation.
Member of the Compensation Committee (including its Restricted
Stock and Stock Option Subcommittees) and the Public Issues
Review Committee of the Board of Directors of the Company.
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INCUMBENT DIRECTORS -- TERM EXPIRING 1998
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[PHOTO] HERBERT A. ALLEN Director since 1982
New York, New York Age 56
Mr. Allen is President, Chief Executive Officer and Managing
Director of Allen & Company Incorporated, a privately held
investment banking firm, and has held these positions for more
than the past five years.
Chairman of the Compensation Committee and a member of the
Executive and Finance Committees of the Board of Directors of
the Company.
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4
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CHARLES W. DUNCAN, JR. Director since 1981
[PHOTO] Houston, Texas Age 70
Mr. Duncan is a private investor and has been a private
investor for more than the past five years. He previously
served as a Director of the Company from 1964 to 1977.
Mr. Duncan is a director of American Express Company, Newfield
Exploration Co., Inc., PanEnergy Corporation and United
Technologies Corporation, and is a member of the International
Advisory Board of Elf Aquitaine, Inc.
Chairman of the Audit Committee and a member of the Executive
Committee of the Board of Directors of the Company.
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ROBERTO C. GOIZUETA Director since 1980
[PHOTO] Atlanta, Georgia Age 65
Mr. Goizueta is Chairman of the Board of Directors and Chief
Executive Officer of the Company and has held these positions
since March 1981. He is a director of Eastman Kodak Company,
Ford Motor Company, Sonat Inc., SunTrust Banks, Inc., SunTrust
Banks of Georgia, Inc. and SunTrust Bank, Atlanta.
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JAMES D. ROBINSON III Director since 1975
[PHOTO] New York, New York Age 61
Mr. Robinson is Chairman and Chief Executive Officer of RRE
Investors, LLC, a private venture investment firm, and
President of J.D. Robinson Inc., a strategic advisory company.
He is also Chairman of Violy, Byorum & Partners, LLC and
Senior Advisor to Trust Company of the West. He previously
served as Chairman, Chief Executive Officer and a director of
American Express Company from 1977 to 1993. He is a director
of Bristol-Myers Squibb Company, Cambridge Technology
Partners, First Data Corporation and Union Pacific
Corporation.
Chairman of the Executive Committee of the Board of Directors
of the Company.
Chairman of the Committee on Directors and a member of the
Public Issues Review Committee of the Board of Directors of
the Company.
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PETER V. UEBERROTH Director since 1986
[PHOTO] Newport Beach, California Age 59
Mr. Ueberroth has been an investor and Managing Director of
The Contrarian Group, Inc., a management company, since 1989.
He is a director of Ambassadors International, Inc., CB
Commercial Real Estate Services Group, Inc., Candlewood Hotel
Company, Inc., Doubletree Corporation and Transamerica
Corporation.
Member of the Audit Committee and the Compensation Committee
(including its Restricted Stock Subcommittee) of the Board of
Directors of the Company.
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5
OWNERSHIP OF EQUITY SECURITIES IN THE COMPANY
The following table sets forth information regarding beneficial ownership of
the Company's Common Stock by each Director, the Company's five most highly
compensated executive officers at year end and the Directors and executive
officers of the Company as a group.
AGGREGATE NUMBER PERCENT OF
OF SHARES OUTSTANDING
NAME BENEFICIALLY OWNED SHARES
- ---- ------------------ -----------
Herbert A. Allen............................ 9,499,574/1/ *
Ronald W. Allen............................. 8,000 *
Cathleen P. Black........................... 10,200/2/ *
Warren E. Buffett........................... 200,000,000/3/ 8.1%
Charles W. Duncan, Jr....................... 6,964,076/4/ *
Susan B. King............................... 12,000 *
Donald F. McHenry........................... 24,526/5/ *
Sam Nunn.................................... 1,000 *
Paul F. Oreffice............................ 108,800/6/ *
James D. Robinson III....................... 12,000/7/ *
Peter V. Ueberroth.......................... 59,000/8/ *
James B. Williams........................... 90,497,362/9/ 3.6%
Roberto C. Goizueta......................... 71,178,889/10/ 2.9%
M. Douglas Ivester.......................... 4,838,594/11/ *
E. Neville Isdell........................... 982,828/12/ *
Jack L. Stahl............................... 1,127,339/13/ *
Sergio S. Zyman............................. 498,249/14/ *
All Directors and Executive Officers as a
Group (26 persons)......................... 356,544,467/15/ 14.3%
- --------
* Less than 1% of issued and outstanding shares of Common Stock of the
Company.
/1/ Includes 2,347,920 shares owned by Allen & Company Incorporated ("ACI"),
21,000 shares owned by Allen Capital International L.P. and 149,000 shares
owned by Allen Capital L.P., each of which is an affiliate of ACI's parent
company. Also includes 240,812 shares which represent Mr. Allen's children's
interests in a partnership and 75,154 shares owned by his children; Mr. Allen
has disclaimed beneficial ownership of all such shares. Does not include
200,000 shares held by ACI's pension plan, over which he does not have voting
or investment power.
/2/ Includes 10,000 shares jointly owned with Ms. Black's husband.
/3/ Shares owned indirectly through subsidiaries of Berkshire Hathaway Inc.,
the capital stock of which is owned 38.8% by Mr. Buffett and three trusts of
which he is trustee but in which he has no beneficial interest and 3.0% by his
wife.
/4/ Includes 5,749,844 shares held as community property with Mr. Duncan's
wife, 85,152 shares owned by his wife, 304,776 shares owned by a partnership
of which he is a general partner and 336,000 shares owned by a trust of which
he is one of three trustees. Does not include 24,000 shares owned by a
foundation of which he is one of five directors and as to which he disclaims
beneficial ownership.
/5/ Includes 400 shares owned by Mr. McHenry's grandchildren.
/6/ Includes 800 shares owned by Mr. Oreffice's wife.
/7/ Does not include 4,626,900 shares owned by two trusts of which Mr.
Robinson is a beneficiary.
/8/ Includes 22,000 shares owned by a trust of which Mr. Ueberroth is one of
two trustees and a beneficiary, 10,000 shares owned by his wife and 6,000
shares held by a foundation of which he is one of six directors.
/9/ Includes 55,258,322 shares owned by three foundations of which Mr.
Williams is, in all cases, one of five trustees, and 35,189,040 shares owned
by a foundation of which he is one of five trustees, another of whom is Mr.
Goizueta.
6
/10/ Includes 369,220 shares credited to Mr. Goizueta's accounts under The
Coca-Cola Company Thrift Plan, 11,232,000 shares which are subject to transfer
restrictions, 35,189,040 shares owned by a foundation of which he is one of
five trustees, another of whom is Mr. Williams, and 15,868,910 shares owned by
a foundation of which he is one of three trustees. Also includes 3,133,319
shares which may be acquired upon the exercise of options which are presently
exercisable or which will become exercisable on or before April 30, 1997.
/11/ Includes 101,930 shares credited to Mr. Ivester's accounts under The
Coca-Cola Company Thrift Plan and 1,550,000 shares which are subject to
transfer restrictions. Also includes 2,666,024 shares which may be acquired
upon the exercise of options which are presently exercisable or which will
become exercisable on or before April 30, 1997.
/12/ Includes 3,433 shares credited to Mr. Isdell's accounts under The
Coca-Cola Company Thrift Plan, 305,000 shares which are subject to transfer
restrictions and 1,200 shares owned by his daughter. Also includes 644,999
shares which may be acquired upon the exercise of options which are presently
exercisable or which will become exercisable on or before April 30, 1997.
/13/ Includes 37,234 shares credited to Mr. Stahl's accounts under The
Coca-Cola Company Thrift Plan, 366,000 shares which are subject to transfer
restrictions, 46,068 shares owned by his wife and 2,838 shares owned by his
children. Does not include 3,200 shares owned by a trust of which he is a
beneficiary. Also includes 587,999 shares which may be acquired upon the
exercise of options which are presently exercisable or which will become
exercisable on or before April 30, 1997.
/14/ Includes 2,197 shares credited to Mr. Zyman's accounts under The
Coca-Cola Company Thrift Plan, 150,000 shares which are subject to transfer
restrictions and 8,840 shares owned by his daughters. Also includes 269,498
shares which may be acquired upon the exercise of options which are presently
exercisable or which will become exercisable on or before April 30, 1997.
/15/ Includes 9,739,222 shares which may be acquired upon the exercise of
options which are presently exercisable or which will become exercisable on or
before April 30, 1997.
PRINCIPAL SHARE OWNERS
Set forth in the table below is information as of February 21, 1997 (except
as otherwise noted) with respect to persons known to the Company to be the
beneficial owners of more than five percent of the Company's issued and
outstanding stock:
NUMBER OF SHARES PERCENT
NAME AND ADDRESS BENEFICIALLY OWNED OF CLASS
---------------- ------------------ --------
Berkshire Hathaway Inc. /1/ 200,000,000 8.1%
1440 Kiewit Plaza
Omaha, Nebraska 68131
SunTrust Banks, Inc. /2/ 217,326,174 8.8%
303 Peachtree Street
Atlanta, Georgia 30308
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/1/ Berkshire Hathaway Inc., a diversified holding company, has informed the
Company that certain of its subsidiaries hold an aggregate of 200,000,000
shares of the Company's Common Stock. The capital stock of Berkshire Hathaway
Inc. is beneficially owned 38.8% by Warren E. Buffett and three trusts of
which he is a trustee but in which he has no beneficial interest and 3.0% by
his wife. All of such shares of the Company are included in the share
ownership of Mr. Buffett disclosed in the table of beneficial ownership of
securities above.
/2/ SunTrust Banks, Inc. ("SunTrust"), a bank holding company, has informed
the Company that, as of December 31, 1996, certain subsidiaries of SunTrust
held either individually or in various fiduciary and agency capacities an
aggregate of 217,326,174 shares, of which 169,059,678 shares, or 6.8%, of the
Company's Common Stock are held in various fiduciary and agency capacities as
to which SunTrust and certain of its subsidiaries may be deemed beneficial
owners, but as to which SunTrust and such subsidiaries disclaim any beneficial
interest. SunTrust Bank, Atlanta owns individually 25,373,952 shares of the
Company's Common
7
Stock, SunTrust Banks of Georgia, Inc. owns individually 12,212,544 shares of
the Company's Common Stock and Preferred Surety Corporation, a direct
subsidiary of SunTrust Banks of Georgia, Inc. and an indirect subsidiary of
SunTrust, owns individually 10,680,000 shares of the Company's Common Stock as
to which SunTrust may be deemed a beneficial owner. Of the shares held in
fiduciary or agency capacities, such subsidiaries of SunTrust have sole voting
power with respect to 81,182,802 shares, shared voting power with respect to
45,169,192 shares, sole investment power with respect to 51,064,581 shares and
shared investment power with respect to 74,907,416 shares. As to the shares
described above, SunTrust has further informed the Company that 160,854,930 of
such shares, or 6.5%, of the Company's Common Stock are held in various
fiduciary and agency capacities by SunTrust Bank, Atlanta, which is a direct
subsidiary of SunTrust Banks of Georgia, Inc. and an indirect subsidiary of
SunTrust. Also, of such shares held in fiduciary and agency capacities,
39,772,691 shares of the Company's Common Stock are held by SunTrust Bank,
Atlanta, as Trustee under The Coca-Cola Company Thrift Plan, a portion of
which is included in the share ownership of the executive officers disclosed
in the table of beneficial ownership of securities above.
COMMITTEES OF THE BOARD OF DIRECTORS; MEETINGS AND COMPENSATION OF DIRECTORS
In accordance with the By-Laws of the Company, the Board of Directors has
established an Executive Committee, a Finance Committee, an Audit Committee, a
Compensation Committee, a Committee on Directors and a Public Issues Review
Committee. The members of these Committees are indicated on pages 2 through 5
of this Proxy Statement.
The Executive Committee, during the intervals between meetings of the Board
of Directors, may exercise the powers of the Board of Directors except, to the
extent prohibited by law, amending the By-Laws of the Company or adopting or
recommending to the share owners of the Company any matter required by the
Delaware General Corporation Law to be submitted to share owners for approval.
The Executive Committee did not meet in 1996.
The Finance Committee, which is composed entirely of outside Directors,
reviews and recommends to the Board of Directors the policies of the Company
formulated by management with respect to the financial affairs and accounting
policies of the Company. The Finance Committee has oversight of the budget and
of all of the financial operations of the Company. The Finance Committee met
five times in 1996.
The Audit Committee, which is composed entirely of outside Directors,
recommends to the Board of Directors the engagement of the independent
auditors of the Company and reviews with the independent auditors the scope
and results of the Company's audits, the Company's internal accounting
controls and the professional services furnished by the independent auditors
to the Company. The Audit Committee met three times in 1996.
The Compensation Committee, which is composed entirely of outside Directors,
reviews and approves all salary arrangements and other remuneration for
officers of the Company. It or its subcommittees also are responsible for
review of certain benefit plans and for administration of the Stock Option
Plans, the Long Term Performance Incentive Plan, the Executive Performance
Incentive Plan and the Restricted Stock Award Plans. The Compensation
Committee met four times in 1996 and the Restricted Stock and Stock Option
Subcommittees each met once.
The Committee on Directors, which is composed entirely of outside Directors,
recommends to the Board of Directors candidates for election to the Board of
Directors and reviews matters relating to potential conflicts of interest and
Directors' fees and retainers. The Committee on Directors will consider
recommendations for nominees for directorships submitted by share owners. The
Committee on Directors met three times in 1996.
The Public Issues Review Committee, which is composed entirely of outside
Directors, reviews Company policy and practice relating to significant public
issues of concern to share owners, the Company, the business community and the
general public. The Public Issues Review Committee met once in 1996.
8
In 1996, the Board of Directors held seven meetings and Committees of the
Board of Directors held a total of 16 meetings. Overall attendance at such
meetings was 96%. All of the Directors attended more than 75% of the aggregate
of all meetings of the Board of Directors and the Committees on which they
served during 1996.
Officers of the Company who are also Directors do not receive any fee or
remuneration for services as members of the Board of Directors or of any
Committee of the Board of Directors. Nonmanagement Directors receive a
retainer fee of $50,000 per annum, $1,500 for each Board meeting attended and
$1,500 for each Committee meeting attended. The chairman of each Committee
receives an additional retainer fee of $5,000 per annum. Nonmanagement
Directors may elect to defer receipt of all or part of their annual retainer
fee until a date or dates no earlier than the year following the year in which
their service as a Director terminates.
In addition, the Company provides certain insurance and retirement benefits
to members of the Board of Directors who are not employees of the Company,
including $30,000 term life insurance for each Director, $100,000 group
accidental death and dismemberment insurance and $200,000 group travel
accident insurance coverage while traveling on Company business. Health and
dental coverage is also provided. Costs to the Company for all such benefits
for 1996 totaled $35,277. The Directors' Retirement Plan, as amended, provides
that all Directors who are not employees of the Company and who, upon their
retirement from the Board of Directors, (i) have served at least five years on
the Board of Directors, and (ii) are at least 55 years old on the date of such
retirement, shall be entitled to an annual retirement benefit equal to the
annual retainer then payable to the Directors. Such retirement benefit will be
paid to the retired Director or his or her surviving spouse for a period of
time not to exceed the retired Director's total number of years of service on
the Board of Directors or the retired Director may elect, no less than one
year prior to retirement, to receive a lump sum payment upon retirement or
pre-retirement death.
In 1996, the Company entered into a one-year agreement with The IRC Group,
Inc. ("IRC"), a company of which Donald F. McHenry, a Director of the Company,
is President and a principal owner. Under this agreement, IRC provides
consulting services to the Company on international affairs and business
activities and is paid $185,000. The Company contemplates utilizing the
services of and paying a similar amount to IRC in 1997.
CERTAIN TRANSACTIONS
James B. Williams, a Director of the Company, is Chairman of the Board and
Chief Executive Officer of SunTrust. Subsidiary banks of SunTrust engage in
ordinary course of business banking transactions with the Company and its
subsidiaries, including the making of loans on customary terms, for which fees
of approximately $279,000 were paid in 1996. SunTrust Bank, Atlanta, a
subsidiary of SunTrust, has extended a line of credit to the Company,
averaging $75 million in 1996, for which it received fees of $55,000 for such
period. SunTrust Bank, Atlanta also holds in its portfolio equipment leases
pursuant to which the Company paid approximately $193,000 in 1996 for the
lease of trailers used to haul syrup. A SunTrust subsidiary leases office
space in a building owned by a Company subsidiary and located at 711 Fifth
Avenue, New York, New York. A new lease became effective in May 1996,
expanding the tenant's space to 7,353 rentable square feet for a term of ten
years, through June 2006. In 1996, the Company subsidiary was paid
approximately $103,000, and will be paid an estimated $201,000 in 1997 and
escalating payments in future years, under the new lease. In the opinion of
management, the terms of such banking and credit arrangements and lease are
fair and reasonable and as favorable to the Company as those which could have
been obtained from unrelated third parties at the time of their execution.
Warren E. Buffett, a Director of the Company, is Chairman of the Board of
Directors, Chief Executive Officer and the major share owner of Berkshire
Hathaway Inc. ("Berkshire Hathaway"). In 1996, the Company paid approximately
$221,000 to a subsidiary of Berkshire Hathaway for leased office space.
Berkshire Hathaway also holds a significant equity interest in American
Express Company and in USAir Group, Inc. In 1996, the Company paid
approximately $123,000 in interest payments to a banking subsidiary of
American Express Company and also paid fees for credit card memberships and
other services in the ordinary course of business to
9
subsidiaries of that company. Also, the Company paid $701,000 to USAir Group,
Inc. under marketing incentive arrangements in 1996.
Sam Nunn, who was elected to the Board of Directors on January 3, 1997,
became a partner of the law firm of King & Spalding on that same date. King &
Spalding rendered legal services to the Company and its subsidiaries in 1996
and is expected to render services in 1997.
See "Committees of the Board of Directors; Meetings and Compensation of
Directors" on pages 8 and 9 and "Compensation Committee Interlocks and Insider
Participation" on page 23.
EXECUTIVE COMPENSATION
The following tables and narrative text discuss the compensation paid in
1996 and the two prior fiscal years to the Company's Chief Executive Officer
and the Company's four other most highly compensated executive officers.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
--------------------------------------
SECURITIES
UNDERLYING ALL
ANNUAL COMPENSATION RESTRICTED OPTIONS/ OTHER
----------------------------- STOCK SAR LTIP COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARDS/6/ AWARDS(#) PAYOUTS/9/ SATION/10/
- --------------------------- ---- ---------- ---------- ---------- ---------- ---------- ----------
Roberto C. Goizueta 1996 $1,713,333/3/ $3,500,000/5/ $ 0 0 $1,848,054 $187,640
Chairman of the Board 1995 1,680,000/3/ 3,200,000/5/ 0 2,000,000/8/ 1,463,616 176,446
and Chief Executive 1994 1,548,167/3/ 2,823,000/5/ 0 0 1,463,616 150,522
Officer
M. Douglas Ivester/1/ 1996 725,000 1,200,000/5/ 7,387,500/7/ 0 797,877 85,530
President and Chief 1995 646,250 1,000,000/5/ 0 500,000/8/ 574,560 67,287
Operating Officer 1994 567,500 600,000/5/ 0 500,000/8/ 522,288 50,337
Jack L. Stahl/2/ 1996 422,000 300,000/5/ 0 90,000 659,547 54,356
Senior Vice President 1995 401,583 290,000/5/ 0 120,000/8/ 522,288 49,302
1994 400,140/4/ 260,000/5/ 0 120,000/8/ 522,288 36,527
Sergio S. Zyman 1996 390,000 300,000/5/ 985,000/7/ 85,000 440,568 47,740
Senior Vice President 1995 370,000 270,000/5/ 1,435,000/7/ 100,000/8/ 338,976 43,087
1994 348,333 235,000/5/ 759,375/7/ 150,000/8/ 332,640 24,857
E. Neville Isdell 1996 387,500 270,000/5/ 0 85,000 440,568 29,804
Senior Vice President 1995 372,625 267,000/5/ 1,076,250/7/ 80,000/8/ 348,864 28,075
1994 350,814/4/ 245,000/5/ 0 66,000/8/ 348,864 23,167
- --------
/1/ Compensation for the first 6 1/2 months of 1994 reflects service in
position as Principal Operating Officer of the Company's North America
Business Sector. Compensation for the last 5 1/2 months of 1994 reflects
service in new position as President and Chief Operating Officer.
/2/ Compensation for 1994 reflects 5 1/2 months of service in new position
as President of the Company's Coca-Cola USA Division.
/3/ Includes $180,000 in deferred compensation. The Company credits $15,000
monthly to a deferred account for Mr. Goizueta on the Company's books. Amounts
credited to the account plus interest thereon will be paid to him in ten
annual installments, commencing one year after termination of his employment
with the Company. In the event of Mr. Goizueta's disability or death prior to
payment of all amounts deferred under this agreement, the balance will be paid
to Mr. Goizueta or his beneficiary.
10
/4/ Includes director's fees of approximately U.S.$13,140 paid to Mr. Stahl
and approximately U.S.$26,814 paid to Mr. Isdell in 1994 by Coca-Cola Amatil
Limited, in which the Company then held a temporary majority interest. The
Company played no role in the determination or authorization of such fees.
/5/ Under the Executive Performance Incentive Plan approved by the share
owners of the Company in 1994, cash awards are made to participants based upon
the individual's contributions to the improvement of operating results,
growth, profitability and efficient operation of the Company. Awards are paid
to participants annually during the year following the Executive Performance
Incentive Plan year after certification of performance goals. In the event of
a change in control, participants earn the right to receive awards equal to
the target percentage of their annual salaries as if their performance goals
had been met, pro-rated to reflect the number of months a participant was
employed in the plan year. Under this plan, awards for 1996 were made as
follows: $2,587,000 to Mr. Goizueta, $706,000 to Mr. Ivester, $265,000 to Mr.
Stahl, $235,000 to Mr. Zyman and $228,000 to Mr. Isdell. In consideration of
the contributions of each executive officer, the Compensation Committee also
granted discretionary awards for 1996 as follows: $913,000 to Mr. Goizueta,
$494,000 to Mr. Ivester, $35,000 to Mr. Stahl, $65,000 to Mr. Zyman and
$42,000 to Mr. Isdell.
/6/ Share owners should be aware that the Company's restriction periods are
significantly longer than those customarily found in restricted stock award
plans. For example, restrictions on one named executive officer's first award
under the 1983 Restricted Stock Award Plan will not lapse, assuming he does
not die or become disabled and that no change in control occurs, for a minimum
of 22 years and a maximum of 32 years from the date of grant.
Under the 1983 Restricted Stock Award Plan, restrictions on awards granted
prior to 1991 lapse when the recipient retires, becomes disabled or dies, or
upon a change in control. Currently, restrictions on awards granted in and
after 1991 pursuant to the 1983 Restricted Stock Award Plan and awards granted
pursuant to the 1989 Restricted Stock Award Plan lapse when the recipient
retires at or after age 62 on a date which is at least five years from the
award date, becomes disabled or dies, or upon a change in control.
Restrictions on the award granted under the 1982 Restricted Stock Award
Agreement between the Company and Mr. Goizueta lapse when he retires, becomes
disabled or dies, or upon a change in control.
The shares awarded under these plans have been adjusted, as necessary, to
reflect the 2-for-1 stock split that occurred on May 1, 1996, the 2-for-1
stock split that occurred on May 1, 1992, the 2-for-1 stock split that
occurred on May 1, 1990, and the 3-for-1 stock split that occurred on June 16,
1986. Under these plans, Mr. Goizueta was originally awarded 1,468,000 shares,
which, adjusted for such stock splits, at the end of 1996 aggregated
11,232,000 shares (value at year end equaled $591,084,000, which is 669% of
the value at grant dates); for Mr. Ivester, originally awarded 289,000 shares,
which, adjusted for such stock splits, at the end of 1996 aggregated 1,550,000
shares (value at year end equaled $81,568,750, which is 575% of the value at
grant dates); for Mr. Stahl, originally awarded 72,000 shares, which, adjusted
for such stock splits, at the end of 1996 aggregated 366,000 shares (value at
year end equaled $19,260,750, which is 462% of the value at grant dates); for
Mr. Zyman, originally awarded 85,000 shares, which, adjusted for such stock
splits, at the end of 1996 aggregated 150,000 shares (value at year end
equaled $7,893,750, which is 176% of the value at grant dates); and for Mr.
Isdell, originally awarded 70,000 shares, which, adjusted for such stock
splits, at the end of 1996 aggregated 305,000 shares (value at year end
equaled $16,050,625, which is 410% of the value at grant dates). The
restricted stock was awarded pursuant to the 1982 Restricted Stock Award
Agreement, the 1983 Restricted Stock Award Plan and the 1989 Restricted Stock
Award Plan.
Dividends on all stock awards are paid at the same rate as paid to all share
owners. The 1983 Restricted Stock Award Plan and the 1982 Restricted Stock
Award Agreement provide for the Company to make cash payments to recipients of
awards made pursuant to these plans in amounts equal to the recipients' income
tax liability on these awards when the restrictions lapse. Receipt of these
cash payments also causes recipients to incur income tax liability, but no
cash payments are made to the recipients to offset this liability. No cash
payments for reimbursement of any income tax liability are provided under the
1989 Restricted Stock Award Plan.
/7/ These restricted stock awards were made pursuant to the 1989 Restricted
Stock Award Plan. Thus, as was discussed in footnote 6, all income taxes
resulting from these awards are the responsibility of the recipient.
11
/8/ Adjusted for the 2-for-1 stock split that occurred on May 1, 1996.
/9/ Includes the entire amounts of the awards for the three-year periods
ending December 31, 1996, 1995 and 1994, respectively, although one-half of
each such amount is subject to forfeiture if the recipient leaves the employ
of the Company prior to December 31, 1998, and December 31, 1997,
respectively, except by reason of retirement, death or disability or unless
pursuant to a change in control. Mr. Zyman's awards for 1994 and 1995 reflect
theoretical participation and are meant to reimburse him for loss of income
incurred upon joining the Company.
/10/ For 1996, includes: for Mr. Goizueta: $4,500 contributed by the
Company to The Coca-Cola Company Thrift Plan (the "Thrift Plan", described
below), $180,166 accrued under The Coca-Cola Company Supplemental Benefit Plan
(the "Supplemental Plan", described below), and $2,974 in above-market
interest credited on amounts deferred under the Company's 1986 Compensation
Deferral and Investment Program (the "CDIP", described below); for Mr.
Ivester: $4,500 contributed by the Company to the Thrift Plan, $63,259 accrued
under the Supplemental Plan, and $17,771 in above-market interest credited on
amounts deferred under the CDIP; for Mr. Stahl: $4,500 contributed by the
Company to the Thrift Plan, $32,085 accrued under the Supplemental Plan, and
$17,771 in above-market interest credited on amounts deferred under the CDIP;
for Mr. Zyman: $4,500 contributed by the Company to the Thrift Plan, $25,469
accrued under the Supplemental Plan, and $17,771 in above-market interest
credited on amounts deferred under the CDIP; and for Mr. Isdell: $4,500
contributed by the Company to the Thrift Plan and $25,304 accrued under the
Supplemental Plan.
The Thrift Plan is a tax-qualified defined contribution plan intended to
satisfy the requirements of Section 401(k) of the Internal Revenue Code of
1986. The Company contributes to each participant's account maintained under
the Thrift Plan an amount of Company stock equal to 100% of the participant's
contributions to the Thrift Plan but not more than 3% of (a) the participant's
earnings or (b) $150,000 for 1996, whichever is lower.
The Supplemental Plan provides a benefit to any eligible individual for whom
the 3% matching contribution would otherwise be in excess of the maximum
permitted under the Thrift Plan. The difference between the theoretical
Company matching contribution under the Thrift Plan for each participant,
without regard to the legally imposed maximum, and the maximum contribution
permitted under law is used to determine the number of theoretical shares of
Common Stock of the Company which would have been purchased for the
participant's account in the absence of the IRS limitation on participant
earnings of $150,000 for 1996. The value of the accumulated theoretical
shares, including dividends, is paid in cash to the individual at termination
of employment. A participant will forfeit all rights to future benefits under
the Supplemental Plan if the participant engages in competition with the
Company following termination of employment.
The CDIP, as amended, permitted salaried employees of the Company and
certain of its subsidiaries whose base annual salary was at least $50,000, to
defer, on a one-time basis, up to $50,000 of the compensation earned between
May 1986 and April 1987. Amounts deferred have historically been credited with
an annual compound interest rate of at least 16%. The rate for the period from
May 1996 through April 1997 is 16.0%. At enrollment, each participant elected
a method of distribution either (a) as a level annuity payable from the date
of retirement until attainment of age 80, or (b) split between pre-retirement
payments commencing no earlier than 1993 and a level annuity payable from the
date of retirement until attainment of age 80. Participants are allowed to
make a one-time election to defer the commencement of monthly annuity payments
until the earlier of age 65 or death. This election is, generally, only
effective if the participant terminates employment at least one year after
making the election and after reaching early retirement age under the
Company's pension plan. If a participant terminates employment prior to early
retirement age, the amounts credited, generally, will be paid out in a lump
sum in cash when the participant no longer is an employee of the Company or of
any participating subsidiary.
12
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
---------------------------------------------
% OF
TOTAL POTENTIAL REALIZABLE VALUE AT ASSUMED
OPTIONS/ ANNUAL RATES OF STOCK PRICE APPRECIATION
NUMBER OF SARS FOR OPTION TERM (10 YEARS)*
SECURITIES GRANTED --------------------------------------------------------
UNDERLYING TO EXERCISE 5% 10%
OPTIONS/SARS EMPLOYEES OR BASE ------------------------- ---------------------------
GRANTED IN FISCAL PRICE EXPIRATION PRICE PER AGGREGATE PRICE PER AGGREGATE
NAME (#) YEAR ($/SHARE) DATE SHARE VALUE SHARE VALUE
- ---- ------------ --------- --------- ---------- --------- --------------- ---------- ----------------
Roberto C.
Goizueta 0 -- -- -- -- -- -- --
M. Douglas
Ivester 0 -- -- -- -- -- -- --
Jack L. Stahl 90,000/1/ .6% 48.875/1/ 10/16/2006 $79.66625 $2,771,213/2/ $126.58625 $6,994,013/2/
Sergio S. Zyman 85,000/1/ .6% 48.875/1/ 10/16/2006 79.66625 2,617,256/2/ 126.58625 6,605,456/2/
E. Neville
Isdell 85,000/1/ .6% 48.875/1/ 10/16/2006 79.66625 2,617,256/2/ 126.58625 6,605,456/2/
All Share Owners as a Group $79.66625 $76,392,873,987/2/ $126.58625 $192,801,062,919/2/
Named executives' portion of assumed value gained by all
share owners $79.66625 .0001 $126.58625 .0001
- --------
* The dollar gains under these columns result from calculations assuming 5%
and 10% growth rates as set by the Securities and Exchange Commission and are
not intended to forecast future price appreciation of the Common Stock of the
Company. The gains reflect a future value based upon growth at these
prescribed rates. The Company did not use an alternative formula for a grant
date valuation, an approach which would state gains at present, and therefore
lower, value. The Company is not aware of any formula which will determine
with reasonable accuracy a present value based on future unknown or volatile
factors.
It is important to note that options have value to the listed executives and
to all option recipients only if the stock price advances beyond the grant
date price shown in the table during the effective option period.
/1/ These awards were made pursuant to the 1991 Stock Option Plan. Under
this plan, the option price must be not less than 100% of the fair market
value of the Company's Common Stock on the date the option is granted. The
fair market value of a share of the Company's Common Stock is the average of
the high and low market prices at which a share of stock was sold on the date
of grant. These stock options may not be exercised during the first twelve
months after the date of grant. Thereafter, these options may be exercised
only to the extent of a fraction, the numerator of which is the number of
whole months from the date of grant and the denominator of which is thirty-
six. All unexercisable stock options granted pursuant to the plan become
exercisable upon an optionee's retirement, death or disability or upon a
change in control. The plan allows shares of Common Stock of the Company to be
used to satisfy any resulting Federal, state and local tax liabilities, but
does not provide for a cash payment by the Company for income taxes payable as
a result of the exercise of a stock option award. This plan is the same in all
material respects as the 1983 Stock Option Plan and the 1987 Stock Option
Plan, except that this plan was amended in 1995, with share owner approval, to
permit that options granted after February 15, 1995, which are held by persons
who become disabled while employed or within six months after leaving the
employ of the Company or who retire, retain the exercise period originally
provided in the option grant.
/2/ Not discounted to present value. Using a discount rate of 11%, which
approximates the Company's cost of capital, the present value of the assumed
potential realizable value of Mr. Stahl's award is $975,978 at a 5% annual
rate of stock price appreciation and $2,463,183 at a 10% annual rate of stock
price appreciation; of Mr. Zyman's award is $921,757 at a 5% annual rate of
stock price appreciation and $2,326,339 at a 10% annual rate of stock price
appreciation; and of Mr. Isdell's award is $921,757 at a 5% annual rate of
stock price appreciation and $2,326,339 at a 10% annual rate of stock price
appreciation.
13
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES/1/
NUMBER OF VALUE OF UNEXERCISED
SECURITIES IN-THE-MONEY
UNDERLYING OPTIONS/SARS
UNEXERCISED AT FY-END ($)
OPTIONS/SARS AT (BASED ON
FY-END (#) $52.625 PER SHARE)
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE VALUE REALIZED/2/ UNEXERCISABLE UNEXERCISABLE
- ---- --------------- ----------------- --------------- --------------------
Roberto C. Goizueta 200,000 $ 9,009,374/3/ 2,911,079/ $112,864,156/
888,921 21,195,210
M. Douglas Ivester 281,000 11,863,469/4/ 2,554,914/ 91,764,447/
444,446 8,979,215
Jack L. Stahl 48,000 1,757,250/5/ 561,332/ 20,711,595/
196,668 2,492,530
Sergio S. Zyman 7,500 194,766/6/ 241,720/ 6,516,065/
187,780 2,493,107
E. Neville Isdell -- -- 628,777/ 26,435,596/
152,223 1,649,465
- --------
/1/ The share numbers, and market and exercise prices have been adjusted, as
necessary, for the 2-for-1 stock split that occurred on May 1, 1996, the 2-
for-1 stock split that occurred on May 1, 1992, the 2-for-1 stock split that
occurred on May 1, 1990, and the 3-for-1 stock split that occurred on June 16,
1986.
/2/ An individual, upon exercise of an option, does not receive cash equal
to the amount contained in the Value Realized column of this table. Instead,
the amounts contained in the Value Realized column reflect the increase in the
price of the Company's Common Stock from the option grant date to the option
exercise date. No cash is realized until the shares received upon exercise of
an option are sold. Mr. Goizueta has not sold any shares of Company Common
Stock in more than 20 years.
/3/ The exercise price of the stock option was $4.64063, which is equal to
the fair market value of a share of the Company's Common Stock on the date of
grant, which was July 21, 1988.
/4/ The exercise price of the stock option was $4.84375, which is equal to
the fair market value of a share of the Company's Common Stock on the date of
grant, which was October 16, 1986.
/5/ The exercise prices of the stock options were $4.84375 for 24,000 shares
and $4.4375 for 24,000 shares. The exercise prices are equal to the fair
market value of a share of the Company's Common Stock on the grant dates,
which were October 16, 1986 and October 20, 1987, respectively.
/6/ The exercise price of the stock option was $21.90625, which is equal to
the fair market value of a share of the Company's Common Stock on the date of
grant, which was October 21, 1993.
14
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR/1/
PERFORMANCE ESTIMATED FUTURE PAYOUTS/2/
NUMBER OF OR OTHER UNDER NON-STOCK PRICE-
SHARES, UNITS PERIOD UNTIL BASED PLANS
OR OTHER MATURATION OR -------------------------------
NAME RIGHTS PAYOUT THRESHOLD TARGET MAXIMUM
- ---- ------------- ------------- --------- ---------- ----------
Roberto C. Goizueta 1,375,000 3 years $343,750 $1,375,000 $2,406,250
M. Douglas Ivester 780,000 3 years 195,000 780,000 1,365,000
Jack L. Stahl 477,000 3 years 119,250 477,000 834,750
Sergio S. Zyman 391,000 3 years 97,750 391,000 684,250
E. Neville Isdell 477,000 3 years 119,250 477,000 834,750
- --------
/1/ Effective January 1, 1982, and as amended and approved in 1994 by share
owners of the Company, the Company has established a Long Term Performance
Incentive Plan. The Compensation Committee, which administers the plan, awards
incentive compensation to certain executive and senior officers of the
Company. The Committee determines a base for each participant, calculated on
the participant's salary grade midpoint and level of responsibility, for a
three-year plan period, which base cannot be increased for that period. The
Committee also sets a matrix which contains the target levels for the two
performance measures: "Growth in Unit Case Sales" and "Growth in Economic
Profit". Actual awards are determined after the end of the three-year period
and range from 0% to 175% of the participant's base. The plan is not based on
the price of the Company's Common Stock. Subject to continued employment of
the participant, unless death, disability or retirement occurs, one-half of
each award earned is paid at the close of each three-year performance period.
Payment of the other half of each award, the "Restricted Award", is deferred
for two years and is subject to forfeiture if the participant's employment
with the Company terminates for any reason other than death, disability,
retirement or a change in control of the Company in such two-year period. The
participant is entitled to accrue interest on the Restricted Award during such
two-year period, calculated at rates not in excess of prevailing market
interest rates. Upon a change in control of the Company, all awards or
portions of awards earned up until such date become fully vested and payable,
and additional payments will be made in an amount equal to the participant's
liability for any taxes attributable to such payments.
/2/ The threshold amount is equal to .25 times the targeted payout, and if
actual Company performance falls below certain parameters, no payouts are
made. The target amount is earned if specified performance targets are
achieved. The maximum amount that can be earned is 1.75 times the targeted
amount.
PENSION PLAN TABLE
ASSUMED AVERAGE ANNUAL YEARS OF CREDITED SERVICE WITH THE COMPANY
COMPENSATION FOR FIVE-YEAR ----------------------------------------------------------------------------
PERIOD PRECEDING RETIREMENT 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS 40 YEARS 45 YEARS
- --------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
$ 500,000 $ 175,000 $ 200,000 $ 225,000 $ 250,000 $ 275,000 $ 294,889 $ 331,139
1,000,000 350,000 400,000 450,000 500,000 550,000 593,639 666,139
1,500,000 525,000 600,000 675,000 750,000 825,000 892,389 1,001,139
2,000,000 700,000 800,000 900,000 1,000,000 1,100,000 1,191,139 1,336,139
2,500,000 875,000 1,000,000 1,125,000 1,250,000 1,375,000 1,489,889 1,671,139
3,000,000 1,050,000 1,200,000 1,350,000 1,500,000 1,650,000 1,788,639 2,006,139
3,500,000 1,225,000 1,400,000 1,575,000 1,750,000 1,925,000 2,087,389 2,341,139
4,000,000 1,400,000 1,600,000 1,800,000 2,000,000 2,200,000 2,386,139 2,676,139
4,500,000 1,575,000 1,800,000 2,025,000 2,250,000 2,475,000 2,684,889 3,011,139
5,000,000 1,750,000 2,000,000 2,250,000 2,500,000 2,750,000 2,983,639 3,346,139
5,500,000 1,925,000 2,200,000 2,475,000 2,750,000 3,025,000 3,282,389 3,681,139
6,000,000 2,100,000 2,400,000 2,700,000 3,000,000 3,300,000 3,581,139 4,016,139
6,500,000 2,275,000 2,600,000 2,925,000 3,250,000 3,575,000 3,879,889 4,351,139
7,000,000 2,450,000 2,800,000 3,150,000 3,500,000 3,850,000 4,178,639 4,686,139
7,500,000 2,625,000 3,000,000 3,375,000 3,750,000 4,125,000 4,477,389 5,021,139
8,000,000 2,800,000 3,200,000 3,600,000 4,000,000 4,400,000 4,776,139 5,356,139
8,500,000 2,975,000 3,400,000 3,825,000 4,250,000 4,675,000 5,074,889 5,691,139
15
This table sets forth the annual retirement benefits payable under the
Employee Retirement Plan of The Coca-Cola Company (the "Retirement Plan",
described below), the retirement portion of the Supplemental Plan and The
Coca-Cola Company Key Executive Retirement Plan (the "Key Executive Plan",
described below) upon retirement at age 65 or later based on an employee's
assumed average annual compensation for the five-year period preceding
retirement and assuming actual retirement on January 1, 1997. The benefits
listed in the table are not subject to any reduction for Social Security or
other offset amounts.
Generally, compensation utilized for pension formula purposes includes
salary and annual bonus reported in the Summary Compensation Table. Awards
under the Long Term Performance Incentive Plan are also included in the
computation of benefits under the Retirement Plan, the Key Executive Plan and
the Supplemental Plan. Company contributions received under the Company's
Thrift Plan and Supplemental Plan are not included in the calculation of the
named executive's compensation for purposes of the pension benefit.
The Retirement Plan is a tax-qualified defined benefit plan and, subject to
certain maximum and minimum provisions, bases pension benefits on a percentage
of (a) the employee's final average compensation (the five highest consecutive
calendar years of compensation out of the employee's last eleven years of
credited service) or (b) $150,000 for 1996 (the limit set by the Internal
Revenue Code of 1986), whichever is lower, times the employee's years of
credited service. Age requirements for early retirement and benefit reductions
for early retirement are reduced for participants who terminate for any reason
within two years after a change in control. The term "compensation" includes
salary, overtime, commissions and performance incentive awards of the
participants.
The Supplemental Plan also provides a benefit to eligible persons whenever
100% of their pension benefits under the Retirement Plan are not permitted to
be funded or paid through that plan because of limits imposed by the Internal
Revenue Code of 1986, which limitations include a maximum annual benefit at
age 65 of $120,000 in 1996. If a participant terminates employment before
early retirement age (for any reason other than death), the participant will
forfeit the portion of the Supplemental Plan pension benefit attributable to
credited service after December 31, 1993, unless the Compensation Committee of
the Board of Directors otherwise expressly elects. In addition, a participant
will forfeit all rights to future pension benefits under the Supplemental Plan
if the participant engages in competition with the Company following
termination of employment. If a participant is entitled to a pension benefit
from the Retirement Plan because of termination of employment for any reason
within two years subsequent to a change in control, then the change in control
provisions in the Retirement Plan will apply to the calculation of the
participant's pension benefit under the Supplemental Plan. These vested
benefits are payable on termination of employment.
The Key Executive Plan provides certain executive and other key senior
officers of the Company annually, upon retirement, 20% of the average pay,
including awards pursuant to the Long Term Performance Incentive Plan, for the
five highest consecutive years out of the employee's last eleven years of
credited service, increased 1% for each year of vested service with the
Company up to a maximum of 35 years (i.e., up to 55%). The amount any
participant will receive under the Key Executive Plan will be reduced, dollar
for dollar, by amounts payable under the Retirement Plan. Eligibility for
early retirement benefits under the Key Executive Plan commences when the
participant has completed ten years of service with the Company and is 55
years old, or when the participant reaches age 60. Normal retirement benefits
may commence when the participant reaches age 65. If a participant should die
prior to retirement, his or her surviving spouse will receive accrued benefits
under the Key Executive Plan, less any other survivor income benefits payable
under the Retirement Plan. These vested benefits are payable on termination of
employment. There is also a benefit to a participant's surviving spouse if the
participant dies after retirement. A participant will forfeit all rights to
future benefits under the Key Executive Plan if the participant engages in
competition with the Company following termination of employment. In the event
of a change in control, all benefits accrued to participants would immediately
vest and, if a participant's employment terminates within two years after a
change in control, his or her benefits would be paid in cash in a lump sum. In
certain cases, such benefits are calculated assuming continuation of
employment to the first date on which the employee would have satisfied the
eligibility requirements with assumed increases of 8% per annum in covered
compensation. Also in such event, the Company will pay the employee an
additional amount
16
equal to the liability, if any, under Section 4999 of the Internal Revenue
Code of 1986 attributable to lump sum payments under the Key Executive Plan.
The respective years of credited service as of December 31, 1996, for the
persons named in the Summary Compensation Table are as follows: Mr. Goizueta,
42.5 years; Mr. Ivester, 17.2 years; Mr. Stahl, 17.5 years; Mr. Zyman, 11.7
years; and Mr. Isdell, 29.2 years.
As reported in previous Proxy Statements, the Company entered into an
Incentive Unit Agreement with Mr. Goizueta in 1988. Each Incentive Unit is
equal to the market value of one share of the Company's Common Stock, and is
payable, in cash, upon the recipient's death, retirement or disability or upon
a change in control of the Company. Dividends are not paid on Incentive Units.
The Incentive Unit Agreement provides for the Company to make a cash payment
to the recipient of the award made pursuant to this agreement in an amount
equal to the recipient's income tax liability on this award when the
restrictions lapse. Receipt of this cash payment also causes the recipient to
incur income tax liability, but no cash payment is made to the recipient to
offset this liability. Under this agreement, 1,600,000 Incentive Units were
awarded to Mr. Goizueta. The units awarded under this agreement have been
adjusted to reflect the 2-for-1 stock split that occurred on May 1, 1996, the
2-for-1 stock split that occurred on May 1, 1992, and the 2-for-1 stock split
that occurred on May 1, 1990. The award was made in 1988 and no further award
can be made pursuant to this agreement.
As reported in previous Proxy Statements, the Company entered into a
Performance Unit Agreement with Mr. Goizueta in 1985. Pursuant to this
agreement, Mr. Goizueta received 2,880,000 Performance Units. The value of
each Performance Unit is equal to the increase in the market value of a share
of the Company's Common Stock over $2.57813, the price of a share of the
Company's Common Stock on January 2, 1985. The number of Performance Units and
the base price thereof reflect adjustments for the 2-for-1 stock split that
occurred on May 1, 1996, the 2-for-1 stock split that occurred on May 1, 1992,
the 2-for-1 stock split that occurred on May 1, 1990, and the 3-for-1 stock
split that occurred on June 16, 1986. The value of the Performance Units will
be determined and paid in cash as of the date of the recipient's death,
disability or retirement, or upon a change in control of the Company. The
award was made in 1985 and no further award can be made pursuant to the
Performance Unit Agreement.
17
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this Proxy Statement, in whole or in part, the following
Performance Graph and the Report of the Compensation Committee of the Board of
Directors of The Coca-Cola Company and its Subcommittees on Executive
Compensation shall not be incorporated by reference into any such filings.
PERFORMANCE GRAPH
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG
THE COCA-COLA COMPANY, S&P 500 INDEX AND FOOD, BEVERAGE AND TOBACCO GROUPS
TOTAL RETURN
STOCK PRICE PLUS REINVESTED DIVIDENDS
[GRAPH APPEARS HERE]
The
Measurement period Coca-Cola The Food, Beverage
(Fiscal Year Covered) Company S&P 500 & Tobacco Groups
- --------------------- -------- -------- ----------------
Measurement PT -
12/31/91 $ 100 $ 100 $ 100
FYE 12/31/92 $ 106 $ 108 $ 103
FYE 12/31/93 $ 115 $ 118 $ 91
FYE 12/31/94 $ 134 $ 120 $ 97
FYE 12/31/95 $ 197 $ 165 $ 136
FYE 12/31/96 $ 282 $ 203 $ 163
* Based on information for a self-constructed peer group of the Food,
Beverage and Tobacco Groups of companies as published in The Wall Street
Journal, which includes the following companies, but from which the Company
has been excluded:
Anheuser-Busch Companies, Inc., Brown-Forman Corporation, Adolph Coors Co.,
Coca-Cola Enterprises Inc., PepsiCo, Inc., Whitman Corporation, Archer
Daniels Midland Company, Campbell Soup Company, ConAgra, Inc., CPC
International Inc., Dole Food Company, Inc., General Mills, Inc., H.J. Heinz
Co., Hershey Foods Corporation, Geo. A. Hormel & Co., Kellogg Company,
McCormick & Company, Incorporated, Nabisco Holdings Corp., The Quaker Oats
Company, Ralston Purina Company, Sara Lee Corporation, Tyson Foods, Inc.,
Wm. Wrigley Jr. Co., American Brands, Inc., Philip Morris Companies, Inc.,
Universal Corp. and UST Inc.
The Company's performance graph in its 1996 Proxy Statement did not include
Nabisco Holdings Corp., which is now reported as a part of the Food, Beverage
and Tobacco Groups of companies as published in The Wall Street Journal, and
included Dean Foods Company, which is no longer reported as a part of such
Groups.
The total return assumes that dividends were reinvested quarterly and is
based on a $100 investment on December 31, 1991.
18
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS OF THE COCA-COLA COMPANY
AND ITS SUBCOMMITTEES ON EXECUTIVE COMPENSATION
In accordance with rules adopted in 1992 by the Securities and Exchange
Commission, as amended in 1993, the Compensation Committee of the Board of
Directors of The Coca-Cola Company and related subcommitteees (the
"Committees") offer this report regarding compensation policies for executive
officers and the Chief Executive Officer of the Company.
The Company's primary objective is to maximize share-owner value over time.
To accomplish this objective, the Company has adopted a comprehensive business
strategy. The overall goal of the Committees is to develop executive
compensation policies and practices which are consistent with and linked to
the Company's strategic business objectives.
There are certain principles to which the Committees adhere in structuring
the compensation packages of executive officers. They are as follows:
LONG-TERM AND AT-RISK FOCUS: The majority of pay for senior executive
officers should be composed of long-term, at-risk pay to focus management
on the long-term interests of share owners. Less emphasis is placed on
salary and annual incentives.
EQUITY ORIENTATION: Equity-based plans should comprise a major part of
the at-risk portion of total compensation to instill ownership thinking and
to link compensation to corporate performance and share-owner interests.
Consistent with this philosophy, the Company encourages and in some plans
requires executives to hold stock delivered through equity-based plans.
MANAGEMENT DEVELOPMENT: To support the Board of Directors in fulfilling
its responsibility of identifying future business leaders, compensation
opportunities should be structured to attract and retain those individuals
who can maximize the creation of share-owner value. The compensation
structure should support the Company's philosophy of moving potential
leaders throughout the system, exposing them to many types of markets and
operations.
COMPETITIVENESS: The Company emphasizes total compensation opportunities
and focuses less attention on the competitive posture of each component of
compensation. The development of at-risk pay policies is driven more by
Company strategy than by competitive practice. Over time, the level of the
Company's competitiveness in compensation opportunities should be based on
the Company's stock price performance relative to other large companies. In
line with this principle, current total compensation competitiveness is
targeted in the top quartile of the range of total compensation of a
comparator group of companies described in the next section of this report.
These principles apply to compensation policies for all executive officers,
and there is no differentiation in application to officers named in the
compensation table, other executive officers or other key individuals covered
by the executive compensation plans of the Company. Further, the Committees do
not follow the principles in a mechanical fashion; rather, the Committees use
experience and judgment in determining the mix of compensation for each
individual. The Committees believe that current compensation practices and
levels meet the principles described herein.
The principles have guided action of the Committees since a restructuring of
the executive compensation approach was adopted in 1983. From January 1983
through the end of 1996, earnings per share have grown at a compound annual
rate of 17% and share-owner value has increased by $124 billion.
Continued growth in global volume, earnings and economic profit contributed
to an addition in 1996 of $38 billion in the Company's market value. In 1996,
the return to share owners, including dividends, was 43%, following a 46%
return in 1995. The Committees believe that the long-term focus on value
creation engendered by the compensation principles kept management focus on
the strategies that position the Company for sustained
19
growth. For precisely this reason, the Committees affirm their commitment to
continuing the compensation policies that have contributed to past success and
which ensure continuity of executive leadership.
The sections that follow illustrate these policies.
COMPONENTS OF EXECUTIVE COMPENSATION
The four primary components of executive compensation are:
. Base Salary
. Annual Incentives
. Long-Term Incentives
. Benefits
Each category is offered to key executives in various combinations,
structured in each case to meet varying business objectives, to cumulatively
provide a level of total compensation that places in the top (fourth) quartile
of the range of total compensation offered by a comparator group. The
companies selected for comparison of total compensation differ from those
included in the Performance Graph in an earlier section of this Proxy
Statement, because the Company seeks talent from a broader group of companies
than the Food, Beverage and Tobacco Groups against which performance is
compared.
Total compensation comparators are selected by screening large public
companies for such performance characteristics as profit growth and return on
equity. Those which exhibit leadership in the performance measures over
sustained periods are selected as benchmarks for the Company's total
compensation standards.
The philosophy underlying each category is discussed herein.
BASE SALARY. Base salary is targeted at the third quartile of the range for
the comparator group. Increases in base salary are at competitive levels but
occur at frequencies ranging from 12 months to 36 months, depending upon
recent performance, time in job, level of pay and other factors. The lag
between increases in base pay is designed to ensure that focus remains on the
long-term portion of the total compensation package. Increases in base pay are
determined by individual performance rather than Company performance, and are
based on subjective evaluations of all factors.
Base salary for Mr. Goizueta was increased by 11.9% effective in November
1996. This is the first change to his base salary in 27 months, the previous
increase being dated August 1994. The amount and timing of the increase were
determined in accordance with the principles discussed in the previous
paragraph, and were based on a subjective evaluation by the Compensation
Committee of the leadership Mr. Goizueta has demonstrated in the past 27
months.
With individual variation, base pay for the executive officer group
generally falls within the targeted third quartile. Mr. Goizueta's base pay
falls in the fourth quartile.
ANNUAL INCENTIVES. The Company has maintained the Annual Performance
Incentive Plan, and adopted the Executive Performance Incentive Plan effective
January 1, 1994. Executive officers may be selected for participation in
either, but not both, of these plans. For those executive officers
participating in the Executive Performance Incentive Plan, the Compensation
Committee reserves the right to grant discretionary bonuses based on
subjective evaluation of each executive officer's individual performance. Each
plan is described below.
ANNUAL PERFORMANCE INCENTIVE PLAN. Target annual incentives are
established for certain key executives, including participating executive
officers. The actual award is based on profit growth, economic value added,
unit volume increase and personal performance, and may be greater or less
than the target annual incentive. Below a threshold level of performance,
no awards may be granted. Generally, profit growth, economic value added
and unit volume increase are weighted higher than personal performance,
20
but the weightings may be adjusted to take into account unusual
circumstances. Opportunities are targeted at the third quartile of the
range of the comparator group.
EXECUTIVE PERFORMANCE INCENTIVE PLAN. This Plan was approved by share
owners in 1994. The Committees may approve some or all of the executive
officers for participation in the Plan each year, and executive officers
selected for participation shall not be eligible for participation in the
Annual Performance Incentive Plan. Target annual incentives are established
for each approved executive officer. The award is based on earnings per
share gain, unit volume increase and change in share of soft drink sales,
and may be greater or less than the target annual incentive set under this
Plan. Nearly 95% of the award is determined from equal weightings on volume
growth and earnings per share, with the remaining amount determined by
market share change. Payments from this Plan are intended to qualify as
tax-deductible performance-based compensation under the terms of Section
162(m) of the Internal Revenue Code of 1986. Opportunities are targeted at
the third quartile of the range of the comparator group.
Competitive 1996 annual incentive data is not yet available. Measured
against historical competitive standards, cumulative annual incentives paid
to executive officers generally fell within the targeted third quartile,
with individual variation.
Mr. Goizueta earned an annual incentive award of $3,500,000 for 1996, of
which $2,587,000 was made under the Executive Performance Incentive Plan
and $913,000 as a discretionary award. The total award, which falls in the
fourth quartile of the historical competitive standards, was made in
consideration of the Company's outstanding performance, the high return
provided to share owners and his leadership and strategic vision that
guided the global Coca-Cola business system so successfully through a year
of profound changes in competitive positions in the soft drink industry in
key markets around the world.
Annual incentives from various plans may be earned by about 5,800
employees each year.
LONG-TERM INCENTIVES. Long-term incentives comprise the largest portion of
the total compensation package for executive officers. There are three forms
of long-term incentives utilized for executive officers, including stock
options, restricted stock and long-term incentive plans with cash awards. In
any given year, an executive officer may be offered participation in a single
plan or in a combination of plans.
As framed by the guiding principles listed earlier, the Company targets a
level of total compensation in the top (fourth) quartile of the comparator
group range. Because base salary and annual incentives are targeted in the
third quartile, the compensation focus for executive officers is clearly on
long-term incentives. The scope of long-term incentive opportunities offered
to each executive officer is determined first by the difference between
desired level of total compensation and the combined amount of base salary and
annual incentives, and, with respect to grants of stock-related items, by
adjustment for recent Company performance.
Factors which influence decisions regarding what form of long-term
incentives to grant to a particular executive officer include tenure with the
Company, history of past grants, time in current job and level of, or
significant changes in, responsibility. These subjective criteria are used for
determining grant type for all executive officers.
In keeping with the principles set forth at the beginning of this report, in
1996 the Compensation Committee established stock ownership guidelines for
officers and key employees of the Company. The guidelines range from two to
ten times base salary, depending on level, and are particularly aggressive
compared to guidelines set by other companies. Only stock purchased by the
individual is considered for purposes of meeting the ownership guidelines.
Stock granted as matching contributions in the Thrift Plan or as restricted
stock are not considered in measuring compliance with the guidelines.
Penalties in the form of reduced future option grants may be applied to those
who do not meet the guidelines within five years of becoming covered by them.
Each form of long-term incentive is discussed below.
RESTRICTED STOCK. The Restricted Stock Award Plans are designed to focus
executives, including executive officers, on the long-term performance of
the Company for the duration of their careers. Contrary to competitive
practice, grants of restricted shares are subject to forfeiture until
retirement, death, disability or a change in control. In addition, all
grants after July 1991 are forfeited if separation from the Company
21
occurs before age 62 and before five years have elapsed from the date of
the grant. These features result in the Company's ability to retain,
throughout their entire careers, those individuals who are key to the
creation of share-owner value.
Currently, 55 key employees hold shares of restricted stock.
In 1996, no award of restricted stock was made to Mr. Goizueta.
STOCK OPTIONS. Options provide executives with the opportunity to buy and
maintain an equity interest in the Company and to share in the appreciation
of the value of the stock. Stock options only have value if the stock price
appreciates in value from the date the options are granted.
Approximately 6,500 people received option grants in 1995. This number
grew to 7,200 in 1996.
Executives are encouraged to hold shares received upon the exercise of
the options, linking their interests to those of share owners. Mr. Goizueta
has not sold any Company stock in over 20 years.
In 1996, no stock options were granted to Mr. Goizueta.
LONG TERM PERFORMANCE INCENTIVE PLAN. The Long Term Performance Incentive
Plan is a three-year performance plan. The Plan has previously measured
performance against a matrix pairing return on equity and growth in income
from continuing operations, and awards have varied based on the Company's
level of attainment against these parameters. Below a threshold level of
performance, no awards could be earned. Restrictions are attached on one-
half of any award earned for two years after the end of the performance
period.
In 1994, the Compensation Committee recommended, and share owners
approved a revision to the Plan which establishes unit case volume growth
and growth in economic profit as the two performance measures which drive
this Plan. The Compensation Committee believes that these factors are the
key contributors, over time, to the creation of share-owner value. The role
of this Plan is to maintain executive focus on the drivers of the business
at all times, regardless of periodic distortions in the capital markets
caused by external factors.
The weight of each factor varies throughout the matrix. Considering the
entire matrix, each factor carries approximately a 50% weight.
Currently, 17 key employees participate in the long term incentive plan
described above.
Mr. Goizueta earned an award of $1,848,054 for the performance period
ended December 31, 1996. Actual growth in unit case volume and economic
profit for the three-year period determined the amount of this award, which
fell in the high end of the spectrum of potential awards.
BENEFITS. Benefits offered to key executives serve a different purpose than
do the other elements of total compensation. In general, they provide a safety
net of protection against the financial catastrophes that can result from
illness, disability or death. Benefits offered to key executives are largely
those that are offered to the general employee population, with some
variation, primarily to promote tax efficiency and replacement of benefit
opportunities lost due to regulatory limits.
TAX COMPLIANCE POLICY. A feature of the Omnibus Budget Reconciliation Act of
1993 limits deductibility of certain compensation for the Chief Executive
Officer and the additional four executive officers who are highest paid and
employed at year end to $1 million per year, effective for tax years beginning
on or after January 1, 1994. If certain conditions are met, including the
removal of positive discretion in the determination of individual rewards,
compensation may be excluded from consideration of the $1 million limit. The
policy of the Committees related to this Act is to establish and maintain a
compensation program which maximizes the creation of long-term share-owner
value.
In 1994, share owners approved the Executive Performance Incentive Plan and
a revised Long Term Performance Incentive Plan, both of which meet the
conditions necessary for exclusion from consideration of non-deductibility.
The Company's Stock Option Plan by its terms meets the necessary conditions.
The actions taken evidence the approach of the Committees to complying with
the intent of this Act. It must be noted,
22
however, that the Committees are obligated to the Board and the share owners
of the Company to recognize and reward performance which increases the value
of the Company. Accordingly, the Committees will continue to exercise
discretion in those instances where the mechanistic approaches necessary under
tax law considerations would compromise the interests of share owners.
SUBCOMMITTEES. Based on changes to various tax and securities rules and
regulations, two subcommittees of the Compensation Committee (the Restricted
Stock Subcommittee and the Stock Option Subcommittee) were established, met
and took action in 1996.
SUMMARY. The Committees believe the executive compensation policies and
programs described in this Report serve the interests of the share owners and
the Company. Pay delivered to executives is intended to be linked to, and
commensurate with, Company performance and with share-owner expectations. The
Committees caution that the practice and the performance results of the
compensation philosophy described herein should be measured over a period
sufficiently long to determine whether strategy development and implementation
are in line with, and responsive to, share-owner expectations.
Herbert A. Allen, Chairman
Susan B. King
Paul F. Oreffice
Peter V. Ueberroth
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Company is composed entirely of the four
outside Directors named as signatories to the Compensation Committee report
above, as was the case during fiscal 1996.
Herbert A. Allen, who serves as Chairman of the Compensation Committee of
the Company's Board of Directors, is President, Chief Executive Officer and a
director of Allen & Company Incorporated ("ACI") and a principal share owner
of ACI's parent. Allen & Company Incorporated has leased and subleased office
space since 1977 in the building now owned by a subsidiary of the Company and
located at 711 Fifth Avenue, New York, New York. The current lease, as
modified from time to time, was entered into in 1985 and in May 1996 was again
modified to provide for ACI to lease an additional 3,008 rentable square feet
of office space. The May 1996 modification assigned new escalation rent base
years and adjusted base rental amounts to portions of ACI's space. In 1996,
ACI paid approximately $2.195 million under this lease and it is expected ACI
will pay approximately $2.239 million in 1997, and escalating payments in
future years, under the terms of the renegotiated lease. In the opinion of
management, the terms of the lease agreement are fair and reasonable and as
favorable to the Company as those which could have been obtained from
unrelated third parties at the time of its execution.
CERTAIN INVESTEE COMPANIES
The Company currently holds approximately 45% of the issued and outstanding
shares of common stock of Coca-Cola Enterprises Inc. ("Coca-Cola
Enterprises"), approximately 48% of Coca-Cola Beverages Ltd. ("Coca-Cola
Beverages") and approximately 49% of The Coca-Cola Bottling Company of New
York, Inc.
CERTAIN TRANSACTIONS WITH INVESTEE COMPANIES
James B. Williams, a Director of the Company, is Chairman of the Board of
Directors and Chief Executive Officer of SunTrust. Subsidiary banks of
SunTrust engaged in ordinary course of business banking transactions in 1996,
and are expected to engage in similar transactions in 1997, with Coca-Cola
Enterprises and its subsidiaries, including the making of loans on customary
terms, for which fees of approximately $722,000 were paid in 1996.
23
SunTrust Bank, Atlanta participates in a syndicate of lenders which provides
a senior credit facility to Coca-Cola Beverages in the aggregate amount of
Cdn.$425 million, and under which SunTrust Bank, Atlanta's commitment as at
December 31, 1996 was Cdn.$51.4 million. In 1996, SunTrust Bank, Atlanta
received fees and interest of approximately Cdn.$2.8 million with respect to
SunTrust's proportionate share of the amount extended under such facility
which as at December 31, 1996 was Cdn.$45.7 million. In the opinion of
management, the terms of such arrangements are fair and reasonable and as
favorable to Coca-Cola Beverages as could have been obtained from a wholly
unrelated party.
SunTrust Bank, Atlanta serves as co-agent for a syndicate of banks for a
$315 million credit facility dated November 21, 1995 for The Coca-Cola
Bottling Company of New York, Inc. In 1996, that company paid approximately
$500,000 in commitment and other fees and interest payments to SunTrust Bank,
Atlanta for its $55 million commitment under this facility. In the opinion of
management, the terms of such arrangements are fair and reasonable and as
favorable to The Coca-Cola Bottling Company of New York, Inc. as could have
been obtained from a wholly unrelated party.
Warren E. Buffett, a Director of the Company, is Chairman of the Board of
Directors, Chief Executive Officer and a major share owner of Berkshire
Hathaway Inc., which company holds a significant equity interest in Salomon
Inc and USAir Group, Inc. A subsidiary of Salomon Inc, Salomon Brothers Inc,
served as underwriter for $300 million of debentures offered in October 1996
and $250 million of debentures offered in November 1996 by Coca-Cola
Enterprises, for which it received fees of approximately $1.17 million. In
1996, USAir Group, Inc. paid approximately $116,000 to Coca-Cola Enterprises
or its affiliates and approximately $178,000 to The Coca-Cola Bottling Company
of New York, Inc. for soft drink products.
OWNERSHIP OF SECURITIES IN COCA-COLA ENTERPRISES AND COCA-COLA BEVERAGES
The following table sets forth information regarding ownership of the common
stock of Coca-Cola Enterprises and Coca-Cola Beverages of the Directors, the
Company's five most highly compensated executive officers and the Directors
and executive officers of the Company as a group who own any shares of such
common stock.
AGGREGATE
NUMBER
OF SHARES PERCENT OF
BENEFICIALLY OUTSTANDING
NAME ENTITY OWNED SHARES
- ---- ------ ------------ -----------
Herbert A. Allen............... Coca-Cola Enterprises 2,426,861/1/ 1.93%
Charles W. Duncan, Jr.......... Coca-Cola Enterprises 35,000/2/ *
Peter V. Ueberroth............. Coca-Cola Enterprises 1,000/3/ *
Roberto C. Goizueta............ Coca-Cola Enterprises 5,000 *
M. Douglas Ivester............. Coca-Cola Enterprises 12,960/4/ *
E. Neville Isdell.............. Coca-Cola Enterprises 2,500/5/ *
Jack L. Stahl.................. Coca-Cola Enterprises 1,000 *
All Directors and Executive
Officers as a group
(26 persons).................. Coca-Cola Enterprises 2,484,321 1.97%
Coca-Cola Beverages 17,600/6/ *
- --------
* Less than 1% of issued and outstanding shares of common stock of the
indicated entity.
/1/ Includes 2,350,000 shares owned by Allen & Company Incorporated ("ACI").
Also includes 49,761 shares which represent Mr. Allen's children's interests
in a partnership and 12,000 shares owned by his children; Mr. Allen has
disclaimed beneficial ownership of all such shares. Does not include 35,000
shares held by ACI's pension plan over which Mr. Allen does not have voting or
investment power.
/2/ Includes 30,000 shares held as community property with Mr. Duncan's wife
and 5,000 shares owned by a partnership of which he is a general partner.
/3/ Shares are owned by a trust of which Mr. Ueberroth is one of two
trustees.
24
/4/ Includes 210 shares jointly owned with Mr. Ivester's parents and 500
shares which may be acquired upon the exercise of currently exercisable
options. Also includes 796 shares owned by his wife and 85 shares jointly
owned by his wife and his mother-in-law; Mr. Ivester has disclaimed beneficial
ownership of all such shares.
/5/ Includes 500 shares which may be acquired upon the exercise of currently
exercisable options.
/6/ Includes 12,000 shares which may be acquired upon the exercise of
currently exercisable options held by executive officers of the Company.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(ITEM 2)
The Board of Directors of the Company, upon the recommendation of the Audit
Committee, has appointed the firm of Ernst & Young LLP to serve as independent
auditors of the Company for the fiscal year ending December 31, 1997, subject
to ratification of this appointment by the share owners of the Company. Ernst
& Young LLP has served as independent auditors of the Company for many years
and is considered by management of the Company to be well qualified. The
Company has been advised by that firm that neither it nor any member thereof
has any financial interest, direct or indirect, in the Company or any of its
subsidiaries in any capacity.
One or more representatives of Ernst & Young LLP will be present at this
year's Annual Meeting of Share Owners, will have an opportunity to make a
statement if he or she desires to do so and will be available to respond to
appropriate questions.
Ratification of the appointment of the independent auditors requires the
affirmative vote of a majority of the votes cast by the holders of the shares
of Common Stock of the Company voting in person or by proxy at the Annual
Meeting of Share Owners. If the share owners should not ratify the appointment
of Ernst & Young LLP, the Board of Directors will reconsider the appointment.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE PROPOSAL TO
RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS OF THE
COMPANY FOR THE 1997 FISCAL YEAR. PROXIES RECEIVED BY THE BOARD OF DIRECTORS
WILL BE SO VOTED UNLESS SHARE OWNERS SPECIFY IN THEIR PROXIES A CONTRARY
CHOICE.
PROXY PROCEDURE AND
EXPENSES OF SOLICITATION
The Company will continue its long-standing practice of holding the votes of
all share owners in confidence from the Company, its Directors, officers and
employees except: (i) as necessary to meet applicable legal requirements and
to assert or defend claims for or against the Company; (ii) in case of a
contested proxy solicitation; (iii) in the event that a share owner makes a
written comment on the proxy card or otherwise communicates his/her vote to
management; or (iv) to allow the independent inspectors of election to certify
the results of the vote. The Company will also continue, as it has for many
years, to retain an independent tabulator to receive and tabulate the proxies
and independent inspectors of election to certify the results.
All expenses incurred in connection with the solicitation of proxies will be
borne by the Company. The Company has engaged Georgeson & Company to assist
with the solicitation of proxies for an estimated fee of $19,000 plus
expenses. The Company will reimburse brokers, fiduciaries and custodians for
their costs in forwarding proxy materials to beneficial owners of Common Stock
held in their names.
Solicitation may be undertaken by mail, telephone and personal contact by
Directors, officers and employees of the Company without additional
compensation.
25
SHARE-OWNERS' PROPOSALS
Proposals of share owners/shareholders intended to be presented at the 1998
Annual Meeting of Share Owners must be received by the Company on or before
November 3, 1997, to be eligible for inclusion in the Company's Proxy
Statement and proxy relating to that meeting.
According to the By-Laws of the Company, a proposal for action to be
presented by any share owner at an annual or special meeting of share owners
shall be out of order unless specifically described in the Company's notice to
all share owners of the meeting and the matters to be acted upon thereat or
unless the proposal shall have been submitted in writing to the Chairman of
the Board of Directors and received at the principal executive offices of the
Company at least 60 days prior to the date of such meeting, and such proposal
is, under law, an appropriate subject for share-owner action.
OTHER INFORMATION
Management does not know of any matters other than those referred to in the
accompanying Notice of Annual Meeting of Share Owners which may properly come
before the meeting or other matters incident to the conduct of the meeting. As
to any other matter or proposal that may properly come before the meeting,
including voting for the election of any person as a Director in place of a
nominee named herein who becomes unable to serve or for good cause will not
serve and voting on a proposal omitted from this Proxy Statement pursuant to
the rules of the Securities and Exchange Commission, it is intended that
proxies received will be voted in accordance with the discretion of the proxy
holders.
The form of proxy and this Proxy Statement have been approved by the Board
of Directors and are being mailed and delivered to share owners by its
authority.
Susan E. Shaw
Secretary
Atlanta, Georgia
March 3, 1997
----------------
THE ANNUAL REPORT TO SHARE OWNERS OF THE COMPANY FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1996, WHICH INCLUDES FINANCIAL STATEMENTS, HAS BEEN MAILED TO
SHARE OWNERS OF THE COMPANY. THE ANNUAL REPORT DOES NOT FORM ANY PART OF THE
MATERIAL FOR THE SOLICITATION OF PROXIES.
----------------
26
LOGO
PRINTED ON RECYCLED PAPER
(THE COCA-COLA COMPANY LOGO)
P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R OF THE COCA-COLA COMPANY
O
X The undersigned, having received the Notice of Annual Meeting and Proxy
Y Statement, hereby (i) appoints Herbert A. Allen, Warren E. Buffett and
Susan B. King, and each of them, proxies with full power of substitution,
for and in the name of the undersigned, to vote all shares of Common
Stock of The Coca-Cola Company owned of record by the undersigned, and
(ii) directs (a) SunTrust Bank, Atlanta, Trustee under The Coca-Cola
Company Thrift Plan (or any successor trustee, including Barclays Global
Investors, N.A.), and/or (b) SunTrust Bank, Atlanta, Trustee under the
Coca-Cola Enterprises Inc. Matched Employee Savings and Investment Plan,
and/or (c) Banco Popular de Puerto Rico, Trustee under the Caribbean
Refrescos, Inc. Thrift Plan (or any successor trustee, including Oriental
Bank & Trust), to vote in person or by proxy all shares of Common Stock
of The Coca-Cola Company allocated to any accounts of the undersigned
under such Plans, and which the undersigned is entitled to vote, in each
case, on all matters which may come before the 1997 Annual Meeting of
Share Owners to be held at The Playhouse Theatre, Du Pont Building,
10th and Market Streets, Wilmington, Delaware, on April 16, 1997, at
9:00 a.m., local time, and any adjournments or postponements thereof,
unless otherwise specified herein. The proxies, in their discretion,
are further authorized to vote for the election of a person to the Board
of Directors if any nominee named herein becomes unable to serve or for
good cause will not serve, are further authorized to vote on matters
which the Board of Directors did not know would be presented at the
meeting by a reasonable time before the proxy solicitation was made,
and are further authorized to vote on other matters which may properly
come before the 1997 Annual Meeting and any adjournments or
postponements thereof.
Election of Directors:
Nominees (terms expiring in 2000):
Ronald W. Allen, Donald F. McHenry, Sam Nunn, Paul F. Oreffice,
James B. Williams
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE -----------
APPROPRIATE BOXES (SEE REVERSE SIDE), BUT YOU NEED NOT MARK SEE REVERSE
ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD SIDE
OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR -----------
SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
- DETACH AND RETURN PROXY CARD; RETAIN ADMISSION TICKET -
ADMISSION TICKET (SEE REVERSE)
DIRECTIONS TO THE PLAYHOUSE THEATRE:
From Baltimore, the Delaware Memorial Bridge or downstate Delaware:
Take I-95 North to Wilmington Exit 7 marked "Route 52, Delaware Avenue."
From right lane take Exit 7 onto Adams Street. At the third traffic light
on Adams Street, turn right onto 11th Street. At Delaware Avenue
intersection stay left, continuing on 11th Street. Follow 11th Street
through four traffic lights. The Playhouse Theatre is on the right in the
Du Pont Building.
From Commodore Barry Bridge (New Jersey), or Philadelphia on I-95 South,
or I-476 (The Blue Route), or Route 202 (if traveling Route 202, follow
Route 202 to intersection with I-95 South):
Follow I-95 South to Exit 7A marked "Route 52, South Delaware Avenue"
(11th Street). Follow exit road (11th Street) to intersection with
Delaware Avenue marked "52 South, Business District." At Delaware
Avenue intersection stay left, continuing on 11th Street. Follow 11th
Street through four traffic lights. The Playhouse Theatre is on the
right in the Du Pont Building.
- --------------------------------------------------------------------------------
DO NOT DETACH
ANNUAL MEETING OF SHARE OWNERS OF THE COCA-COLA COMPANY
=======================================================================
AGENDA
------
- Election of five Directors
- Ratification of appointment of Ernst & Young LLP as independent
auditors
- Transaction of such other business as may properly come before
the meeting
=======================================================================
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THIS MEETING,
WHETHER OR NOT YOU ATTEND THE MEETING IN PERSON. TO MAKE SURE YOUR
SHARES ARE REPRESENTED, WE URGE YOU TO COMPLETE AND MAIL THE PROXY
CARD ON THE REVERSE.
[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF
NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" ALL OF THE BOARD OF DIRECTORS'
NOMINEES AND "FOR" PROPOSAL 2.
-------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2
-------------------------------------------------------------------------------------------
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of [ ] [ ] 2. Ratification of the [ ] [ ] [ ]
Directors appointment of Ernst &
(See reverse) Young LLP as
independent auditors
For, except vote withheld from
the following nominee(s):
_____________________________________
-------------------------------------------------------------------------------------------
Do you plan to attend [ ] [ ]
the Annual Meeting? YES NO
Please sign exactly as name appears hereon. Joint
owners should each sign. When signing as attorney,
executor, administrator, trustee or guardian, please
give full title as such.
-----------------------------------------------------
-----------------------------------------------------
SIGNATURE(S) DATE
- ---------------------------------------------------------------------------------------------
- DETACH AND RETURN PROXY CARD; RETAIN ADMISSION TICKET -
ADMISSION TICKET
ANNUAL MEETING OF SHARE OWNERS
OF THE COCA-COLA COMPANY
WEDNESDAY, APRIL 16, 1997
9:00 A.M., LOCAL TIME
THE PLAYHOUSE THEATRE
DU PONT BUILDING
10TH AND MARKET STREETS
WILMINGTON, DELAWARE
- ---------------------------------------------------------------------------------------------
DO NOT DETACH
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THIS MEETING, WHETHER OR NOT YOU
ATTEND THE MEETING IN PERSON. TO MAKE SURE YOUR SHARES ARE REPRESENTED, WE URGE YOU
TO COMPLETE AND MAIL THE PROXY CARD ABOVE.
------------------------------------------------------------------------------------------
If you plan to attend the 1997 Annual Meeting of Share Owners, please mark the appropriate
box on the proxy card above. Present this ticket to The Coca-Cola Company representative
at the entrance to The Playhouse Theatre.
------------------------------------------------------------------------------------------