UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

 

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No.      )

 

Filed by the Registrant þ

 

Filed by a Party other than the Registrant o

 

Check the appropriate box:

 

o  Preliminary Proxy Statement

o  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

þ  Definitive Proxy Statement

o  Definitive Additional Materials

o  Soliciting Material Pursuant to §240.14a-12

 

The Coca-Cola Company

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

 

 

 

 

 

 

 

 

 

 

 

 

o  Fee paid previously with preliminary materials.

 

 

 

 

 

 

 

 

 

 

ATLANTA, GEORGIA

 

MUHTAR KENT

CHAIRMAN OF THE BOARD AND

   CHIEF EXECUTIVE OFFICER

 

March 10, 2011

 

Dear Shareowner:

 

I hope you will join our Board of Directors and senior leadership at our 2011 Annual Meeting of Shareowners in Coca-Cola’s headquarters city and birthplace, Atlanta. This year’s meeting will be a special gathering because it will give us an opportunity to proudly celebrate our 125th anniversary.

 

The meeting will take place on April 27, 2011, at 1:00 p.m., local time, at the Cobb Galleria Centre, Two Galleria Parkway, Atlanta, Georgia 30339. The attached Notice of Annual Meeting of Shareowners and Proxy Statement contain details of the business to be conducted at the meeting.

 

You will see some changes this year as a result of our continuing effort to more simply and effectively explain the matters to be addressed at our meeting. We are committed to providing clear information to you about corporate governance, executive compensation and other aspects of our Company. For example, we have simplified the Compensation Discussion and Analysis that begins on page 50 in order to more clearly explain our executive compensation policies and practices and how executive pay is linked to performance. In addition, we have introduced a shareowner forum that will enable you to learn more about our Company, participate in a shareowner survey and submit questions in advance of the meeting. See page 123 for more details.

 

We have also sought to demonstrate why we believe the candidates for Director are the right people to represent you. We believe it is important to provide detailed information about the qualifications of our Director candidates and why their particular qualifications are important to our business. Beginning on page 17, we have detailed the factors that we believe are key to ensuring the Director candidates are able to effectively represent your interests.

 

Your vote is very important to us and to our business. I encourage you to sign and return your proxy card, or use telephone or Internet voting prior to the meeting, so that your shares will be represented and voted at the meeting even if you cannot attend. Instructions on how to vote are found beginning on page 2.

 

I hope to see you at the meeting. However, if you are unable to attend in person, please consider accessing our shareowner forum and viewing a live webcast of the event. Instructions on how to view the live webcast appear on page 3.

 

 

 

Muhtar Kent

NOTICE OF ANNUAL MEETING OF SHAREOWNERS

 

TO THE OWNERS OF COMMON STOCK
OF THE COCA-COLA COMPANY:

 

 

The Annual Meeting of Shareowners of The Coca-Cola Company (the “Company”) will be held at the Cobb Galleria Centre, Two Galleria Parkway, Atlanta, Georgia 30339, on Wednesday, April 27, 2011, at 1:00 p.m., local time. The purposes of the meeting are:

 

 

The Board of Directors set February 28, 2011 as the record date for the meeting. This means that owners of record of shares of Common Stock of the Company as of the close of business on that date are entitled to:

 

 

We will make available a list of shareowners of record as of the close of business on February 28, 2011 for inspection by shareowners for any purpose germane to the meeting during normal business hours from April 15 through April 26, 2011 at the Company’s principal place of business, One Coca-Cola Plaza, Atlanta, Georgia 30313. This list also will be available to shareowners for any such purpose at the meeting.

 

By Order of the Board of Directors

 

 

Gloria K. Bowden
Associate General Counsel and Secretary

 

Atlanta, Georgia

March 10, 2011

 

We urge each shareowner to promptly sign and return the enclosed proxy card or to use telephone or Internet voting. See our questions and answers about the meeting and voting section for information about voting by telephone or Internet, how to revoke a proxy, and how to vote shares in person.

 

TABLE OF CONTENTS

 

THE COCA-COLA COMPANY
One Coca-Cola Plaza
Atlanta, Georgia 30313

 

 

March 10, 2011

 

 

PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREOWNERS
TO BE HELD APRIL 27, 2011

 

Our Board of Directors (the “Board”) is furnishing you this proxy statement to solicit proxies on its behalf to be voted at the 2011 Annual Meeting of Shareowners of The Coca-Cola Company (the “Company”). The meeting will be held at the Cobb Galleria Centre, Two Galleria Parkway, Atlanta, Georgia 30339 on April 27, 2011, at 1:00 p.m., local time. The proxies also may be voted at any adjournments or postponements of the meeting.

 

The mailing address of our principal executive offices is The Coca-Cola Company, P.O. Box 1734, Atlanta, Georgia 30301. We are first furnishing the proxy materials to shareowners on March 10, 2011.

 

All properly executed written proxies, and all properly completed proxies submitted by telephone or Internet, that are delivered pursuant to this solicitation will be voted at the meeting in accordance with the directions given in the proxy, unless the proxy is revoked prior to completion of voting at the meeting.

 

Only owners of record of shares of Common Stock of the Company (the “Common Stock”) as of the close of business on February 28, 2011, the record date, are entitled to notice of and to vote at the meeting, or at any adjournments or postponements of the meeting. Each owner of record on the record date is entitled to one vote for each share of Common Stock held. On February 28, 2011, the record date, there were 2,295,128,449 shares of Common Stock issued and outstanding.

 

 

It is your legal designation of another person to vote the stock you own. That other person is called a proxy. If you designate someone as your proxy in a written document, that document also is called a proxy or a proxy card. We have designated three of our officers as proxies for the 2011 Annual Meeting of Shareowners. These three officers are Alexander B. Cummings, Jr., Gary P. Fayard and Geoffrey J. Kelly.

 

 

It is a document that Securities and Exchange Commission (“SEC”) regulations require us to give you when we ask you to sign a proxy card designating Alexander B. Cummings, Jr., Gary P. Fayard and Geoffrey J. Kelly as proxies to vote on your behalf.

 

 

If your shares are registered directly in your name with the Company’s registrar and transfer agent, Computershare Trust Company, N.A., you are considered a shareowner of record with respect to those shares.

 

If your shares are held in a brokerage account or bank, you are considered the “beneficial owner” of those shares.

 

 

You need to bring documentation showing that you owned Common Stock on the record date, February 28, 2011. If you are a shareowner of record and received your proxy materials by mail, your admission ticket is attached to your proxy card. If you received your proxy materials by e-mail and voted your shares electronically via the Internet, you can print an admission ticket after you have voted by clicking on the link provided.

 

If you are a beneficial owner, bring the notice or voting instruction form you received from your bank, brokerage firm or other nominee for admission to the meeting. You also may bring your brokerage statement reflecting your ownership of Common Stock as of February 28, 2011 with you to the meeting. Please note that upon admittance to the meeting, you will not be able to vote your shares at the meeting without a legal proxy, as described in the response to question 5.

 

You also will need to bring a photo ID to gain admission.

 

Please note that cameras, sound or video recording equipment, cellular telephones, smartphones or other similar equipment, electronic devices, large bags, briefcases or packages will not be allowed in the meeting room.

 

 

You will need to ask your broker, bank or other intermediary to furnish you with a legal proxy. You will need to bring the legal proxy with you to the meeting and hand it in with a signed ballot

that will be provided to you at the meeting. You will not be able to vote your shares at the meeting without a legal proxy.

 

Please note that if you request a legal proxy, any previously executed proxy will be revoked, and your vote will not be counted unless you appear at the meeting and vote in person or legally appoint another proxy to vote on your behalf.

 

If you do not receive the legal proxy in time, you can follow the procedures described in the response to question 4 to gain admission to the meeting. However, you will not be able to vote your shares at the meeting.

 

 

If you are a shareowner of record you will receive only one proxy card for all the shares of Common Stock you hold:

 

 

If you hold shares of Common Stock in any Company benefit plan and do not vote your shares or specify your voting instructions on your proxy card, the administrators of the benefit plans will not vote your benefit plan shares. To allow sufficient time for voting by the administrators, your voting instructions must be received by April 22, 2011.

 

 

To view the live webcast of the meeting, visit our website at www.thecoca-colacompany.com, click on “Investors”, click on “Investor Webcasts” and click on the link to the webcast. An archived copy of the webcast will be available until May 31, 2011.

 

We have included our website address for reference only. The information contained on our website is not incorporated by reference into this proxy statement.

 

Shareowners may also access the webcast through our shareowner forum located at www.theinvestornetwork.com/forum/KO. In order to log in to the shareowner forum, you must have your control number, which can be found on your notice or proxy card.

 

 

By Written Proxy.  All shareowners of record can vote by written proxy card. If you are a beneficial owner, you may request a written proxy card or a vote instruction form from your bank or broker.

 

By Telephone or Internet.  All shareowners of record also can vote by touchtone telephone from the U.S., Puerto Rico and Canada, using the toll-free telephone number on the proxy card, or through the Internet, using the procedures and instructions described on the proxy card. Beneficial owners may vote by telephone or Internet if their bank or broker makes those methods available, in which case the bank or broker will include the instructions with the proxy materials. Shareowners may also vote through the Internet via our shareowner forum located at www.theinvestornetwork.com/forum/KO. The telephone and Internet voting procedures are designed to authenticate shareowners’

identities, to allow shareowners to vote their shares, and to confirm that their instructions have been recorded properly.

 

In Person.  All shareowners of record may vote in person at the meeting. Beneficial owners may vote in person at the meeting if they have a legal proxy, as described in the response to question 5.

 

 

The record date for the 2011 Annual Meeting of Shareowners is February 28, 2011. The record date is established by the Board as required by the Delaware General Corporation Law (“Delaware Law”) and the Company’s By-Laws. Owners of record of Common Stock as of the close of business on the record date are entitled to:

 

 

 

Shareowners can revoke a proxy prior to the completion of voting at the meeting by:

 

 

 

We will continue our long-standing practice of holding the votes of all shareowners in confidence from Directors, officers and employees except:

 

 

We also will continue, as we have for many years, to retain an independent tabulator to receive and tabulate the proxies and independent inspectors of election to certify the results.

 

 

In the vote on the election of 15 Director nominees identified in this proxy statement to serve until the 2012 Annual Meeting of Shareowners, shareowners may:

 

 

 

Directors will be elected by a majority of the votes cast by the holders of the shares of Common Stock voting in person or by proxy at the meeting.

 

The Board recommends a vote FOR each of the nominees.

 

 

In the vote on the approval of the appointment of Ernst & Young LLP as independent auditors, shareowners may:

 

 

The proposal to ratify the appointment of Ernst & Young LLP as independent auditors will require approval by a majority of the votes cast by the holders of the shares of Common Stock voting in person or by proxy at the meeting.

 

The Board recommends a vote FOR the ratification.

 

 

In the vote on the approval of the performance measures available under the Performance Incentive Plan to preserve the tax deductibility of the awards, shareowners may:

 

 

The proposal to approve the performance measures available under the Performance Incentive Plan will require approval by a majority of the votes cast by the holders of the shares of Common Stock voting in person or by proxy at the meeting.

 

The Board recommends a vote FOR the approval of the performance measures available under the Performance Incentive Plan to preserve the tax deductibility of the awards.

 

In the vote on the approval of the performance measures available under the 1989 Restricted Stock Plan to preserve the tax deductibility of the awards, shareowners may:

 

 

The proposal to approve the performance measures available under the 1989 Restricted Stock Plan will require approval by a majority of the votes cast by the holders of the shares of Common Stock voting in person or by proxy at the meeting.

 

The Board recommends a vote FOR approval of the performance measures available under the 1989 Restricted Stock Plan to preserve the tax deductibility of the awards.

 

 

In the advisory proposal on executive compensation, shareowners may:

 

 

The favorable vote of a majority of the votes cast by the holders of the shares of Common Stock voting in person or by proxy at the meeting will be required for the approval, on an advisory basis, of the say on pay vote. As an advisory vote, this proposal is not binding upon the Company. However, the Compensation Committee, which is responsible for designing and administering the Company’s executive compensation program, values the opinions expressed by shareowners and will consider the outcome of the vote when making future compensation decisions.

 

The Board recommends a vote FOR the advisory vote on executive compensation.

 

 

In the advisory proposal on the frequency of holding the say on pay vote, shareowners may:

 

 

The favorable vote of a majority of the votes cast by the holders of the shares of Common Stock voting in person or by proxy at the meeting will be required for the approval, on an advisory basis, of

the frequency of holding the say on pay vote in the future. As an advisory vote, this proposal is not binding upon the Company. The Board will consider the outcome of the vote when determining the frequency of holding the say on pay vote. While the Board is making a recommendation with respect to this proposal, shareowners are being asked to vote on the choices specified above, and not whether they agree or disagree with the Board’s recommendation.

 

The Board recommends a vote for holding the say on pay vote EVERY YEAR at the Annual Meeting of Shareowners.

 

 

A vote will be held on one shareowner proposal if properly presented at the meeting. In voting on the proposal, shareowners may:

 

 

In order to be approved, the shareowner proposal will require approval by a majority of the votes cast by the holders of the shares of Common Stock voting in person or by proxy at the meeting.

 

The Board recommends a vote AGAINST the shareowner proposal.

 

 

Shareowners should specify their choice for each matter on the proxy card. If no specific instructions are given, proxies which are signed and returned will be voted:

 

 

 

As a beneficial owner, in order to ensure your shares are voted in the way you would like, you must provide voting instructions to your bank, broker or other nominee by the deadline provided in the materials you receive from your bank, broker or other nominee. If you do not provide voting instructions to your bank, broker or other nominee, whether your shares can be voted by such person depends on the type of item being considered for vote.

Non-Discretionary Items.  The election of Directors, approval of the performance measures available under the Performance Incentive Plan, approval of the performance measures available under the 1989 Restricted Stock Plan, advisory say on pay vote, advisory vote on the frequency of holding the say on pay vote and approval of the shareowner proposal are non-discretionary items and may not be voted on by brokers, banks or other nominees who have not received specific voting instructions from beneficial owners.

 

Discretionary Items.  The ratification of the appointment of Ernst & Young LLP as independent auditors is a discretionary item. Generally, brokers, banks and other nominees that do not receive voting instructions from beneficial owners may vote on this proposal in their discretion.

 

 

Abstentions and broker non-votes are included in determining whether a quorum is present, but will not be included in vote totals and will not affect the outcome of the vote on any matter.

 

 

The Company does not have a policy about Directors’ attendance at the Annual Meeting of Shareowners. All of the persons who were serving as Directors at the time attended the 2010 Annual Meeting of Shareowners, except for three Directors who were unable to attend due to extraordinary circumstances outside of their control.

 

 

The Notice of Annual Meeting, Proxy Statement and Annual Report on Form 10-K for the fiscal year ended December 31, 2010 (the “Form 10-K”) are available at www.edocumentview.com/coca-cola. In addition, shareowners will be able to access these documents on our shareowner forum at www.theinvestornetwork.com/forum/KO. Instead of receiving future copies of our Notice of Annual Meeting, Proxy Statement and Form 10-K by mail, shareowners of record and most beneficial owners can elect to receive an e-mail that will provide electronic links to these documents. Opting to receive your proxy materials online will save us the cost of producing and mailing documents to your home or business, and also will give you an electronic link to the proxy voting site.

 

Shareowners of Record.  If you vote on the Internet at www.envisionreports.com/coca-cola, simply follow the prompts for enrolling in the electronic proxy delivery service. You also may enroll in the electronic proxy delivery service at any time in the future by going directly to www.eTree.com/coca-cola and following the enrollment instructions. As a thank you to each shareowner enrolling in electronic delivery, the Company will have a tree planted on the shareowner’s behalf at no cost to the shareowner.

 

Beneficial Owners.  If you hold your shares in a bank or brokerage account, you also may have the opportunity to receive copies of these documents electronically. Please check the information provided in the proxy materials provided to you by your bank or broker regarding the availability of this service.

 

We bear all expenses incurred in connection with the solicitation of proxies. We have engaged Georgeson Inc. to assist with the solicitation of proxies for an estimated fee of $25,000 plus expenses. We will reimburse brokers, fiduciaries and custodians for their costs in forwarding proxy materials to beneficial owners of Common Stock.

 

Our Directors, officers and employees also may solicit proxies by mail, telephone and personal contact. They will not receive any additional compensation for these activities.

 

 

 

Board of Directors

 

Election Process

 

The Company’s By-Laws provide for the annual election of Directors. The Company’s By-Laws also provide that the number of Directors shall be determined by the Board, which has set the number at 15. The Company’s By-Laws further provide that, in an election of Directors where the number of nominees does not exceed the number of Directors to be elected, each Director must receive the majority of the votes cast with respect to that Director. If a Director is not elected, he or she has agreed that an irrevocable letter of resignation will be submitted to the Board. The Committee on Directors and Corporate Governance will make a recommendation to the Board on whether to accept or reject the resignation, or whether other action should be taken. The Board will act on the resignation taking into account the recommendation of the Committee on Directors and Corporate Governance and publicly disclose its decision and its rationale within 100 days of the certification of the election results. The Director who tenders his or her resignation will not participate in the decisions of the Committee on Directors and Corporate Governance or the Board that concern the resignation.

 

Director Nominations

 

The Committee on Directors and Corporate Governance is responsible for identifying and evaluating nominees for Director and for recommending to the Board a slate of nominees for election at each Annual Meeting of Shareowners. Nominees may be suggested by Directors, members of management, shareowners or, in some cases, by a third-party firm. In identifying and considering candidates for nomination to the Board, the Committee on Directors and Corporate Governance considers, in addition to the requirements set out in the Company’s Corporate Governance Guidelines and its charter, quality of experience, the needs of the Company and the range of talent and experience already represented on the Board.

 

The Committee on Directors and Corporate Governance will consider recommendations for directorships submitted by shareowners. Shareowners who wish the Committee on Directors and Corporate Governance to consider their recommendations for nominees for the position of Director should submit their recommendations in writing to the Committee on Directors and Corporate Governance in care of the Office of the Secretary, The Coca-Cola Company, P.O. Box 1734, Atlanta, Georgia 30301. Recommendations by shareowners that are made in accordance with these procedures will receive the same consideration by the Committee on Directors and Corporate Governance as other suggested nominees.

 

For detailed information concerning Directors’ qualifications, see the discussion beginning on page 17.

 

2011 Nominees for Director

 

Upon the recommendation of the Committee on Directors and Corporate Governance, the Board has nominated each of Herbert A. Allen, Ronald W. Allen, Howard G. Buffett, Barry Diller, Evan G. Greenberg, Alexis M. Herman, Muhtar Kent, Donald R. Keough, Maria Elena Lagomasino, Donald F. McHenry, Sam Nunn, James D. Robinson III, Peter V. Ueberroth, Jacob Wallenberg and James B.

Williams for election as Director. All of the nominees are independent under New York Stock Exchange (“NYSE”) corporate governance rules, except Herbert A. Allen, Muhtar Kent and Donald R. Keough.

 

Each of our Director nominees currently serves on the Board and was elected by the shareowners at the 2010 Annual Meeting of Shareowners, other than Messrs. Buffett and Greenberg, who were appointed to the Board on December 9, 2010 and February 17, 2011, respectively. Messrs. Buffett and Greenberg were each identified as a potential Director by the Committee on Directors and Corporate Governance, who determined that each were qualified under the Committee’s criteria. If elected, each nominee will hold office until the 2012 Annual Meeting of Shareowners and until his or her successor is elected and qualified.

 

We have no reason to believe that any of the nominees will be unable or unwilling to serve if elected. However, if any nominee should become unable for any reason or unwilling for good cause to serve, proxies may be voted for another person nominated as a substitute by the Board, or the Board may reduce the number of Directors.

 

 

The Board of Directors recommends a vote FOR the election of each of the following nominees.

 

Director Qualifications

 

Directors are responsible for overseeing the Company’s business consistent with their fiduciary duty to shareowners. This significant responsibility requires highly-skilled individuals with various qualities, attributes and professional experience. The Board believes that there are general requirements for service on the Board that are applicable to all Directors and that there are other skills and experience that should be represented on the Board as a whole but not necessarily by each Director. The Board and the Committee on Directors and Corporate Governance consider the qualifications of Directors and Director candidates individually and in the broader context of the Board’s overall composition and the Company’s current and future needs.

 

Qualifications for All Directors

 

In its assessment of each potential candidate, including those recommended by shareowners, the Committee on Directors and Corporate Governance considers the nominee’s judgment, integrity, experience, independence, understanding of the Company’s business or other related industries and such other factors the Committee on Directors and Corporate Governance determines are pertinent in light of the current needs of the Board. The Committee on Directors and Corporate Governance also takes into account the ability of a Director to devote the time and effort necessary to fulfill his or her responsibilities to the Company.

 

The Board and the Committee on Directors and Corporate Governance require that each Director be a recognized person of high integrity with a proven record of success in his or her field. Each Director must demonstrate innovative thinking, familiarity with and respect for corporate governance requirements and practices, an appreciation of multiple cultures and a commitment to sustainability and to dealing responsibly with social issues. In addition to the qualifications required of all Directors, the Board conducts interviews of potential Director candidates to assess intangible qualities including the individual’s ability to ask difficult questions and, simultaneously, to work collegially.

 

The Board does not have a specific diversity policy, but considers diversity of race, ethnicity, gender, age, cultural background and professional experiences in evaluating candidates for Board membership. Diversity is important because a variety of points of view contribute to a more effective decision-making process.

 

Qualifications, Attributes, Skills and Experience to be Represented on the Board

 

The Board has identified particular qualifications, attributes, skills and experience that are important to be represented on the Board as a whole, in light of the Company’s current needs and the business priorities as set forth in the Company’s 2020 Vision and Roadmap for Winning Together (the “2020 Vision”). The 2020 Vision, produced based on collective input from bottlers, associates and other key stakeholders, is an action plan that sets forth a common set of strategies guiding the Coca-Cola system to succeed in the changing environment over the next decade. Additional information regarding the 2020 Vision may be found on the Company website, www.thecoca-colacompany.com.

The following table summarizes certain key characteristics of the Company’s business and the associated qualifications, attributes, skills and experience that the Board believes should be represented on the Board.

 

Summary of Qualifications of 2011 Nominees for Director

 

Set forth below are a chart and a description of the specific qualifications, attributes, skills and experiences of our Directors. While we look to each Director to be knowledgeable in these areas, an “X” in the chart below indicates that the item is a specific qualification, attribute, skill or experience that the Director brings to the Board. The lack of an “X” for a particular item does not mean that the Director does not possess that qualification, attribute, skill or experience.

 

 

Herbert A. Allen

 

 

 

Ronald W. Allen

 

 

Howard G. Buffett

 

 

 

Barry Diller

 

 

Evan G. Greenberg

 

 

Alexis M. Herman

 

 

Muhtar Kent

 

 

Donald R. Keough

 

 

Maria Elena Lagomasino

 

 

Donald F. McHenry

 

 

Sam Nunn

 

 

James D. Robinson III

 

 

Peter V. Ueberroth

 

 

Jacob Wallenberg

 

 

James B. Williams

 

 

 

The Board believes that the combination of the various qualifications, skills and experiences of the 2011 Director nominees would contribute to an effective and well-functioning Board. The Board and the Committee on Directors and Corporate Governance believe that, individually and as a whole, the Directors possess the necessary qualifications to provide effective oversight of the business and quality advice and counsel to the Company’s management.

 

Information about the Board of Directors and Corporate Governance

 

The Board is elected by the shareowners to oversee their interest in the long-term health and the overall success of the business and its financial strength. The Board serves as the ultimate decision-making body of the Company, except for those matters reserved to or shared with the shareowners. The Board selects and oversees the members of senior management, who are charged by the Board with conducting the business of the Company.

 

Board Leadership Structure

 

Our governance documents provide the Board with flexibility to select the appropriate leadership structure for the Company. In making leadership structure determinations, the Board considers many factors, including the specific needs of the business and what is in the best interests of the Company’s shareowners. Our current leadership structure is comprised of a combined Chairman of the Board and Chief Executive Officer, an independent Director serving as Presiding Director and strong, active independent Directors. The Board believes this structure provides a very well-functioning and effective balance between strong Company leadership and appropriate safeguards and oversight by non-employee Directors.

 

Under the Company’s By-Laws, the Chairman of the Board presides over meetings of the Board, presides over meetings of shareowners, consults and advises the Board and its committees on the business and affairs of the Company, and performs such other duties as may be assigned by the Board. The Chief Executive Officer is in general charge of the affairs of the Company, subject to the overall direction and supervision of the Board and its committees and subject to such powers as reserved by the Board. Muhtar Kent serves as both Chairman of the Board and Chief Executive Officer.

 

The Company also has designated the Chairman of the Committee on Directors and Corporate Governance, who must be an independent Director, as the Presiding Director. James D. Robinson III serves in this position. The Presiding Director:

 

 

 

Importantly, all Directors play an active role in overseeing the Company’s business both at the Board and committee level. As set forth in our Corporate Governance Guidelines, the core responsibility of the Directors is to exercise their business judgment to act in what they reasonably believe to be in the best interests of the Company and its shareowners. Our Board is comprised of one Director who serves as a member of management and 14 non-employee Directors. Our non-employee Directors are skilled and experienced leaders in business, education, government and public policy. They currently serve or have served as CEOs and members of senior management of Fortune 500 companies and investment banking firms and members of the U.S. Cabinet, the U.S. Senate and academia. In these roles, our non-employee Directors have been called upon to provide solutions to various complex issues, and most importantly are expected to, and do, ask hard questions of management. We believe that this is one of the many reasons our non-employee Directors are well-equipped to oversee the success of the business and to provide advice and counsel to the Chief Executive Officer and other senior officers of the Company.

 

Under our By-Laws, regular meetings of the Board are held at such times as the Board may determine. As part of each regularly scheduled Board meeting, the non-employee Directors meet without the Chief Executive Officer present. These meetings allow non-employee Directors to discuss issues of importance to the Company, including the business and affairs of the Company as well as matters concerning management, without any member of management present. In addition, the independent Directors meet separately several times a year at regularly scheduled Board meetings. Also, pursuant to our By-Laws, a majority of the Directors may call a special meeting of the Board in addition to the Chief Executive Officer or the Secretary of the Company. All of the Board committees, except the Management Development Committee and the Executive Committee, are chaired by independent Directors.

 

The Board believes that this leadership structure – a combined Chairman of the Board and Chief Executive Officer, a Presiding Director, active and strong non-employee Directors and committees led primarily by independent Directors – is the most effective for the Company at this time. The Company’s business is complex and its products are sold in more than 200 countries around the world. Because the Chief Executive Officer travels extensively and is closest to the many facets of our business, the Board believes the Chief Executive Officer is in the best position to lead most effectively and to serve in the critical role of Chairman of the Board. In addition, having a Chairman who also serves as the Chief Executive Officer allows timely communication with the Board on critical business matters given the complexity and global reach of our business. Further, most of the Company’s products are manufactured and sold by bottling partners around the world, most of which are separate, unconsolidated companies. This franchise structure requires our leader to have strong relationships with the leaders of the bottlers. Having a single person in both roles ensures that the Company is represented by a single voice to bottlers, customers and consumers. The Board believes that leadership of both the Board and the Company by Mr. Kent is the optimal structure to guide the Company and maintain the focus required to achieve the business goals set forth in the Company’s 2020 Vision.

Board Meetings and Committees

 

In 2010, the Board held nine meetings and committees of the Board held a total of 30 meetings. Overall attendance at such meetings was approximately 97%. Each Director attended 75% or more of the aggregate of all meetings of the Board and the Committees on which he or she served during 2010.

 

The Board has an Audit Committee, a Compensation Committee, a Committee on Directors and Corporate Governance, an Executive Committee, a Finance Committee, a Management Development Committee and a Public Issues and Diversity Review Committee. The Board has adopted a written charter for each of these committees. The Company has adopted a Code of Business Conduct for Non-Employee Directors. In addition, the Company has adopted a Code of Business Conduct applicable to the Company’s employees, including each individual named in the Summary Compensation Table on page 73. The full text of each committee charter, the Company’s Corporate Governance Guidelines and each of the Company’s Codes of Business Conduct is available on the Company’s website located at www.thecoca-colacompany.com, click on “Investors” and click on “Corporate Governance”.

 

The following table describes the current members of each of the committees and the number of meetings held during 2010.

 

 

 

 

The following summarizes the responsibilities of the various committees. The committee charters are located at www.thecoca-colacompany.com, click on “Investors” and click on “Corporate Governance”.

 

Audit Committee

 

Under the terms of its charter, the Audit Committee represents and assists the Board in fulfilling its oversight responsibility relating to the integrity of the Company’s financial statements and the financial reporting process, the systems of internal accounting and financial controls, the internal audit function and the annual independent audit of the Company’s financial statements. The Audit Committee also oversees the Company’s compliance with legal and regulatory requirements and its ethics program, the independent auditors’ qualifications and independence, the performance of the Company’s internal audit function and the performance of its independent auditors.

 

Each member of the Audit Committee meets the independence requirements of the NYSE, the Securities Exchange Act of 1934, as amended (the “1934 Act”) and the Company’s Corporate Governance Guidelines. Each member of the Audit Committee is financially literate, knowledgeable and qualified to review financial statements. The “audit committee financial expert” designated by the Board is Peter V. Ueberroth.

 

Compensation Committee

 

Under the terms of its charter, the Compensation Committee has overall responsibility for evaluating and approving compensation plans, policies and programs of the Company applicable primarily to elected officers and senior executives of the Company.

 

The Compensation Committee also makes decisions that affect a larger group of employees. For example, the Compensation Committee approves all stock option awards and all awards of restricted stock and performance share units that may be awarded to employees who are not elected officers or senior executives.

 

To assist the Compensation Committee with its responsibilities, through May 2010, it retained the services of the compensation consulting firm, Towers Watson. In July 2010, the Compensation Committee engaged a new independent compensation consulting firm, Exequity LLP (“Exequity”). The compensation consultant reports to the Compensation Committee Chair. Additional information regarding the Compensation Committee’s engagement of Towers Watson and Exequity is disclosed beginning on page 65.

Each member of the Compensation Committee meets the independence requirements of the NYSE, the Internal Revenue Code of 1986, as amended (the “Tax Code”) and the Company’s Corporate Governance Guidelines.

 

Committee on Directors and Corporate Governance

 

Under the terms of its charter, the Committee on Directors and Corporate Governance is responsible for considering and making recommendations concerning the function and needs of the Board, and the review and development of corporate governance guidelines. As discussed on page 26, the Chairman of the Committee on Directors and Corporate Governance is designated as the Presiding Director.

 

Each member of the Committee on Directors and Corporate Governance meets the independence requirements of the NYSE and the Company’s Corporate Governance Guidelines.

 

Executive Committee

 

Under the terms of its charter, the Executive Committee has the authority to exercise the power and authority of the Board between meetings, except the powers reserved for the Board or the shareowners by Delaware Law.

 

Finance Committee

 

Under the terms of its charter, the Finance Committee helps the Board fulfill its responsibilities relating to oversight of the Company’s financial affairs, including reviewing and recommending capital expenditures and dividend policy to the Board.

 

Management Development Committee

 

Under the terms of its charter, the Management Development Committee helps the Board fulfill its responsibilities relating to oversight of talent development for senior positions and succession planning.

 

Public Issues and Diversity Review Committee

 

Under the terms of its charter, the Public Issues and Diversity Review Committee helps the Board fulfill its responsibilities relating to diversity, corporate social responsibility and public issues of significance, which may affect the shareowners, the Company, the business community and the general public.

 

The Board’s Role in Risk Management

 

The Board’s responsibilities include ensuring that the assets of the Company are properly safeguarded, that the appropriate financial and other internal controls are maintained and that the Company’s business is conducted wisely and in compliance with applicable laws and regulations and proper governance. Included in these responsibilities is the Board’s understanding and oversight of the various risks facing the Company. The Board does not view risk in isolation. Risks are considered in virtually every business decision and as part of the Company’s business strategy. The Board recognizes that it is neither possible nor prudent to eliminate all risk. Indeed, purposeful and appropriate risk-taking is essential for the Company to be competitive on a global basis and to achieve the objectives set forth in its 2020 Vision.

Effective risk oversight is an important priority of the Board. The Board has implemented a risk governance framework designed to:

 

 

While the Board oversees risk management, Company management is charged with managing risk. The Company has robust internal processes and a strong internal control environment which facilitate the identification and management of risks and regular communication with the Board. These include an enterprise risk management program, a risk management committee co-chaired by the Chief Financial Officer and the General Counsel, regular internal management disclosure committee meetings, Codes of Business Conduct, robust product quality standards and processes, a strong ethics and compliance office and a comprehensive internal and external audit process. The Board and the Audit Committee monitor and evaluate the effectiveness of the internal controls and the risk management program at least annually. Management communicates routinely with the Board, Board committees and individual Directors on the significant risks identified and how they are being managed. Directors are free to, and indeed often do, communicate directly with senior management.

 

The Board implements its risk oversight function both as a whole and through delegation to Board committees, which meet regularly and report back to the full Board. All committees play significant roles in carrying out the risk oversight function. In particular:

 

 

In addition, annually, one meeting of the full Board is dedicated primarily to evaluating and discussing risk, risk mitigation strategies and the Company’s internal control environment. Topics examined at this meeting include, but are not limited to, financial risks, political and regulatory risks, legal risks, supply chain and quality risks, information technology risks, economic risks and risks related to the Company’s transformation efforts. Because overseeing risk is an ongoing process and inherent in the Company’s strategic decisions, the Board also discusses risk throughout the year at other meetings in relation to specific proposed actions.

 

The Company believes that its leadership structure, discussed in detail beginning on page 26, supports the risk oversight function of the Board. While the Company has a combined Chairman of the Board and Chief Executive Officer, strong Directors chair the various committees involved with risk oversight, there is open communication between management and Directors, and all Directors are actively involved in the risk oversight function.

 

Anti-Hedging Policy

 

The Company’s anti-hedging policy prohibits Directors, the Company’s executive officers and certain other employees from purchasing any financial instrument that is designed to hedge or offset any decrease in the market value of the Company’s stock, including prepaid variable forward contracts, equity swaps, collars and exchange funds. All other employees are discouraged from entering into hedging transactions related to Company stock.

 

Independence and Related Person Transactions

 

Independence Determinations

 

Under the corporate governance listing standards of the NYSE and the Company’s Corporate Governance Guidelines, the Board must consist of a majority of independent Directors. In making independence determinations, the Board observes NYSE and SEC criteria and considers all relevant facts and circumstances. Under NYSE corporate governance rules, to be considered independent:

 

 

To aid in the Director independence assessment process, the Board has adopted categorical standards that identify categories of relationships that the Board has determined would not affect a Director’s independence. As a result, these relationships are not considered by the Board in determining Director independence. The categorical standards, which are part of the Company’s Corporate Governance Guidelines, provide that the following will not be considered material relationships that would impact a Director’s independence:

 

 

 

In addition, the Board did not consider transactions with entities in which a Director or an immediate family member served only as a director or trustee when determining Director independence. Nor did the Board consider transactions of less than $120,000 or transactions with entities in which the Director or an immediate family member had a less than 10% interest.

 

The Board, through its Committee on Directors and Corporate Governance, annually reviews all relevant business relationships any Director or nominee for Director may have with the Company. As a result of its annual review, the Board has determined that none of the following Directors has a material relationship with the Company and, as a result, such Directors are independent: Ronald W. Allen, Howard G. Buffett, Barry Diller, Evan G. Greenberg, Alexis M. Herman, Maria Elena Lagomasino, Donald F. McHenry, Sam Nunn, James D. Robinson III, Peter V. Ueberroth, Jacob Wallenberg and James B. Williams. None of the Directors who were determined to be independent had any relationships that were outside the categorical standards identified above.

 

The Board examined the Company’s relationship with Berkshire Hathaway Inc. (“Berkshire Hathaway”) and its subsidiaries. Howard G. Buffett, one of our Directors, is a director of Berkshire Hathaway and his father, Warren E. Buffett, is the Chairman of the Board, Chief Executive Officer and major stockholder of Berkshire Hathaway. This relationship is described beginning on page 35. Berkshire Hathaway’s holdings constituted approximately 8.71% of the Company’s outstanding Common Stock as of February 28, 2011. The Board determined that the relationship was not material since (i) the amounts involved were less than 1% of the consolidated gross revenue of both the Company and Berkshire Hathaway, (ii) the payments made and received were for various products and services in the ordinary course of business and (iii) the Company has had a relationship with many of the applicable subsidiaries of Berkshire Hathaway for many years prior to when they were owned by Berkshire Hathaway and prior to Mr. Buffett’s service as a Director of the Company. This relationship does not disqualify Mr. Buffett as an independent director under the rules of the NYSE and falls within categorical standard number 1 above.

 

The Board examined payments made by the Company to IAC/InterActiveCorp and its subsidiaries (“IAC”) where Barry Diller, one of our Directors, is Chairman of the Board and Senior Executive, and during 2010, was Chief Executive Officer. The Board determined that the relationship was not material since (i) the amounts involved were less than 1% of the consolidated gross revenues of both the Company and IAC, (ii) the payments were for online advertising and digital media

promotions in the ordinary course of business and (iii) the Company has had a relationship with the predecessors of IAC for many years prior to Mr. Diller’s service as a Director of the Company. This relationship does not disqualify Mr. Diller as an independent director under the rules of the NYSE and falls within categorical standard number 1 above.

 

The Board examined payments made by the Company to ACE Limited and its subsidiaries (collectively “ACE”) where Evan G. Greenberg, one of our Directors, is Chairman, President and Chief Executive Officer. This relationship is described beginning on page 37. The Board determined that the relationship was not material since (i) the amounts involved were less than 1% of the consolidated gross revenues of both the Company and ACE Limited, (ii) the payments were for insurance related products and services in the ordinary course of business and (iii) the Company has had a relationship with ACE for many years prior to Mr. Greenberg’s service as a Director of the Company. This relationship does not disqualify Mr. Greenberg as an independent director under the rules of the NYSE and falls within categorical standard number 1 above.

 

The Board examined the Company’s charitable donations and sponsorships to Points of Light Institute, where a daughter of Sam Nunn, one of our Directors, serves as Chief Executive Officer and a Director. The Board determined that this relationship was not material since (i) the amounts involved were a small percentage of the revenues or donations received by Points of Light Institute and a small percentage of the Company’s overall charitable donations and sponsorships and (ii) the payments were within the Company’s philosophy of supporting local and civic organizations in the communities where we operate. This relationship does not disqualify Mr. Nunn as an independent director under the rules of the NYSE and falls within categorical standard number 5 above.

 

A daughter-in-law of James D. Robinson III, one of our Directors, has an indirect minority equity interest in Delaware North Companies, Inc. (“Delaware North”), with which the Company has a contractual relationship, including a sponsorship agreement relating to the TD Banknorth Garden in Boston. The Board determined that this relationship was not material since (i) the amounts involved were less than 1% of the consolidated gross revenues of both the Company and Delaware North, (ii) the marketing and sponsorship payments and the payments made to purchase fountain syrups and other products were in the ordinary course of business, (iii) Mr. Robinson’s daughter-in-law holds a less than 10% indirect interest in Delaware North and (iv) the Company has had a business relationship with Delaware North for over 75 years. This relationship does not disqualify Mr. Robinson as an independent director under the rules of the NYSE and falls within categorical standard number 1 and categorical standard number 4 above.

 

A daughter of Peter V. Ueberroth, one of our Directors, is an executive officer of the National Basketball Association (the “NBA”), with which the Company has a contractual relationship. This relationship is described on page 38. The Board determined that this indirect relationship was not material since (i) the amounts involved were less than 1% of the consolidated gross revenues of both the Company and the NBA and (ii) the Company’s relationship with the NBA has been in existence since the late 1980s, long before Mr. Ueberroth’s daughter served as an executive officer of that organization. This relationship does not disqualify Mr. Ueberroth as an independent director under the rules of the NYSE and falls within categorical standard number 1 above.

 

Muhtar Kent, the Chairman of the Board, also serves as the Company’s Chief Executive Officer and therefore is not an independent Director. Even though Herbert A. Allen and Donald R. Keough are not currently determined to be independent, they contribute greatly to the Board and the Company through their wealth of experience, expertise and judgment.

All of our Directors who serve as members of the Audit Committee, Compensation Committee and Committee on Directors and Corporate Governance are independent as required by the NYSE corporate governance rules. Under these rules, Audit Committee members also satisfy the separate SEC independence requirement that provides that no member may accept directly or indirectly any consulting, advisory or other compensatory fee from the Company or any of its subsidiaries other than compensation for services as a Director.

 

Related Person Transactions

 

Set forth below are certain related person transactions for 2010. On October 2, 2010, the Company completed its acquisition (the “CCE Transaction”) of the North American operations of Coca-Cola Enterprises Inc. (“CCE”). Immediately prior to the completion of the CCE Transaction, the Company owned approximately 33% of the outstanding common stock of CCE. In connection with the CCE Transaction, CCE was renamed Coca-Cola Refreshments USA, Inc. (“CCR”). Where there were transactions with both the Company and CCR, disclosure includes amounts related to CCR for the period of October 2 to December 31, 2010. Where there were transactions related to CCE prior to the CCE Transaction, separate disclosure is provided for the period of January 1 to October 1, 2010.

 

Certain Related Person Transactions

 

Herbert A. Allen

 

Herbert A. Allen, one of our Directors, is President, Chief Executive Officer and a Director of Allen & Company Incorporated (“ACI”) and a principal shareowner of ACI’s parent. ACI is an indirect equity holder of Allen & Company LLC (“ACL”). ACI transferred its investment and financial advisory services business to ACL in September 2002.

 

ACI has leased and subleased office space since 1977 in a building owned by one of our subsidiaries and located at 711 Fifth Avenue, New York, New York. In June 2005, ACI assigned the lease and sublease to ACL. In 2010, ACL paid approximately $5.0 million in rent and related expenses and it is expected that ACL will pay a similar amount in 2011 under the terms of the current lease. In the opinion of management, the terms of the lease are fair and reasonable and as favorable to the Company as those that could have been obtained from unrelated third parties at the time of the execution of the lease.

 

In 2010, in connection with the consummation of the CCE Transaction, the Company paid ACL $1.0 million for investment banking services and $11.5 million for a success fee. Under the terms of the investment banking services agreement, the Company was required to pay ACL a success fee equal to $15.0 million, less any advisory fees payable under the agreement ($1.5 million in 2008, $1.0 million in 2009 and, as noted above, $1.0 million in 2010), upon consummation of the CCE Transaction. In the opinion of management, the terms of the investment banking services agreement are fair and reasonable and as favorable to the Company as those that could have been obtained from unrelated third parties.

 

Howard G. Buffett and Berkshire Hathaway

 

The father of Howard G. Buffett, one of our Directors, is Warren E. Buffett, the Chairman of the Board, Chief Executive Officer and major stockholder of Berkshire Hathaway. Berkshire Hathaway’s

holdings constituted approximately 8.71% of the Company’s outstanding Common Stock as of February 28, 2011.

 

Business Wire, Inc. (“Business Wire”) is a wholly-owned subsidiary of Berkshire Hathaway. In 2010, the Company paid approximately $337,000 to Business Wire to disseminate news releases for the Company in the ordinary course of business. This business relationship was in place prior to Berkshire Hathaway’s acquisition of Business Wire in 2006, is fair and reasonable and is on terms as favorable to the Company as those that could have been obtained from unrelated third parties.

 

FlightSafety International, Inc. (“FlightSafety”) is a wholly-owned subsidiary of Berkshire Hathaway. Effective January 2009, the Company agreed to a new five-year agreement with FlightSafety to provide flight attendant and mechanic training services to the Company. In August 2009, the Company agreed to a new five-year agreement with FlightSafety to provide pilot training services to the Company and, effective August 2010, entered into an addendum to the agreement for additional pilot training services. In 2010, the Company paid FlightSafety approximately $658,000 for pilot, flight attendant and mechanic training services provided to the Company in the ordinary course of business. From January 1 to October 1, 2010, CCE paid FlightSafety approximately $6,000 for training services in the ordinary course of business. In the opinion of management, the terms of the FlightSafety agreements are fair and reasonable and as favorable to the Company as those that could have been obtained from unrelated third parties at the time of the execution of the agreements.

 

International Dairy Queen, Inc. (“IDQ”) is a wholly-owned subsidiary of Berkshire Hathaway. In 2010, IDQ and its subsidiaries paid approximately $2.3 million to the Company directly and through bottlers and other agents to purchase fountain syrup and other products for its corporate stores in the ordinary course of business, of which approximately $13,000 was paid by CCR from October 2 to December 31, 2010. From January 1 to October 1, 2010, IDQ and its subsidiaries paid CCE approximately $8,500 to purchase products in the ordinary course of business. Payments from franchised stores are not included. Also in 2010, IDQ and its subsidiaries received promotional and marketing incentives based on the volume of both corporate and franchised stores, totaling approximately $1.7 million from the Company in the ordinary course of business. This business relationship was in place for many years prior to Berkshire Hathaway’s acquisition of IDQ. In the opinion of management, the Company’s business relationship with IDQ is fair and reasonable and is on terms substantially similar to the Company’s relationships with other customers.

 

McLane Company, Inc. (“McLane”) is a wholly-owned subsidiary of Berkshire Hathaway. In 2010, McLane paid approximately $169 million to the Company to purchase fountain syrup and other products in the ordinary course of business, of which approximately $973,000 was paid to CCR from October 2 to December 31, 2010. From January 1 to October 1, 2010, McLane paid CCE approximately $2.5 million to purchase products in the ordinary course of business. Also in 2010, McLane received from the Company approximately $7.8 million in agency commissions, marketing payments and other fees relating to the sale of the Company’s products to customers in the ordinary course of business. This business relationship was in place for many years prior to Berkshire Hathaway’s acquisition of McLane in 2003. In the opinion of management, the Company’s business relationship with McLane is fair and reasonable and is on terms substantially similar to the Company’s relationships with other customers.

 

XTRA Lease LLC (“XTRA”) is a wholly-owned subsidiary of Berkshire Hathaway. In 2010, the Company paid XTRA approximately $668,000 for the rental of trailers used to transport and store finished product in the ordinary course of business, of which approximately $485,000 was paid by

CCR from October 2 to December 31, 2010 under a national account agreement entered into between XTRA and CCE in September 2009. From January 1 to October 1, 2010, CCE paid XTRA approximately $1.4 million for equipment leases of trailers used to transport and store finished product in the ordinary course of business under the terms of its national account agreement with XTRA. In the opinion of management, the terms of the leases and the national account agreement are fair and reasonable and as favorable to the Company as those that could have been obtained from unrelated third parties at the time of the execution of the leases and the agreement.

 

Berkshire Hathaway holds a significant equity interest in American Express Company (American Express Company, together with its subsidiaries, “American Express”). In March 2010, the Company and American Express entered into a new five-year agreement under which American Express provides global credit card services to the Company. In 2010, American Express made a one-time advance payment to the Company of approximately $3.7 million, which was based on a minimum charge volume and is to be earned over the term of the agreement. Also in 2010, American Express paid the Company approximately $903,000 in rebates and incentives in the ordinary course of business. In 2010, the Company paid American Express fees of approximately $1.0 million for credit card memberships, business travel and other services in the ordinary course of business. From January 1 to October 1, 2010, CCE paid fees of approximately $6,000 to American Express for services in the ordinary course of business. In the opinion of management, the terms of the new agreement and the Company’s relationship with American Express are fair and reasonable.

 

Berkshire Hathaway holds a significant equity interest in Moody’s Corporation (“Moody’s”). In 2010, the Company paid a subsidiary of Moody’s fees of approximately $242,000 for rating the Company’s and CCE’s commercial paper programs, of which approximately $47,000 was for services provided to CCE prior to October 2, 2010. From January 1 to October 1, 2010, CCE paid a subsidiary of Moody’s fees of approximately $347,000 for providing long-term and short-term credit rating services. In the opinion of management, the Company’s relationship with Moody’s is fair and reasonable and is on terms substantially similar to the Company’s relationships with similar companies.

 

Berkshire Hathaway holds a significant equity interest in The Washington Post Company (“Washington Post”). In 2010, the Company paid fees of approximately $2.0 million to Washington Post for print media and online advertising in the ordinary course of business. From January 1 to October 2, 2010, CCE paid a subsidiary of Washington Post approximately $121,000 for advertising fees. In the opinion of management, the relationship with Washington Post is fair and reasonable and is on terms as favorable to the Company as those that could have been obtained from unrelated third parties.

 

Evan G. Greenberg

 

Evan G. Greenberg, one of our Directors, is Chairman, President and Chief Executive Officer of ACE Limited. ACE has provided insurance related products and services to the Company since 1986. ACE provides traditional insurance coverage where the Company seeks to transfer risk and fronting services where the Company seeks to retain risk. The Company renews its insurance coverage on an annual basis. For the one-year period of November 1, 2009 to November 1, 2010, ACE was the primary insurer in the Company’s Directors’ and Officers’ (“D&O”) liability tower and the fiduciary liability tower and the only insurer for employed lawyers liability. During this period, it also provided insurance coverage, but was not considered the primary insurer, for property insurance covering the Company’s plants and buildings. For the one-year period of November 1, 2010 to

November 1, 2011, the Company changed its insurance coverage and ACE is no longer the primary insurer in the D&O liability tower, although it provides D&O liability coverage on an excess basis. Also, ACE no longer provides employed lawyers liability insurance but continues to provide the Company with primary coverage for fiduciary liability. Since October 2, 2010, CCR is covered under the Company’s insurance policies. ACE also provides fronting services to the Company by issuing contracts for U.S. and international general and product liability insurance, U.S. workers’ compensation insurance and global property insurance on behalf of the Company. In 2010, the Company paid ACE approximately $3.0 million for insurance premiums and approximately $937,000 in fronting fees for property and casualty insurance premiums. From January 1 to October 1, 2010, CCE paid ACE approximately $576,000 for insurance premiums and other services in the ordinary course of business. In the opinion of management, the terms of the Company’s insurance coverage and fronting arrangements with ACE are fair and reasonable and as favorable to the Company as those that could have been obtained from unrelated third parties.

 

Donald R. Keough

 

A son of Donald R. Keough, one of our Directors, is an executive officer of, and holds a significant equity interest in, Marsys Digital LLC (“Marsys Digital”). In 2009, the Company and Marsys Digital entered into a five-year services agreement relating to the Company’s use of Marsys Digital’s platform technology and infrastructure. Under the terms of the services agreement, the Company is required to pay Marsys Digital $2.9 million annually over the five-year period for services associated with the operation, maintenance and support of the platform technology and infrastructure. In 2009, the Company also entered into a warrant agreement with Marsys Digital whereby the Company was granted the right to purchase, for a period of up to six years, a 5% equity interest in Marsys Digital for an exercise price that is to be determined by the terms of the warrant agreement. The exercise price is based on a formula dependent on the fair market value of such equity interest and is subject to credit adjustments based on revenues recognized by Marsys Digital pursuant to its services agreement with the Company. In 2010, the Company paid Marsys Digital approximately $3.8 million for services associated with the design, operation, maintenance and support of the platform technology and infrastructure and additional hardware. Since Marsys Digital is a startup company, the value of the Company’s equity interest is not currently determinable.

 

Peter V. Ueberroth

 

A daughter of Peter V. Ueberroth, one of our Directors, is an executive officer of the NBA. In 2010, the Company and the NBA entered into a new four-year marketing, sponsorship and advertising agreement. Also in 2010, the Company and the NBA entered into a three-year marketing, sponsorship and advertising agreement associated with the Women’s National Basketball Association. The Company paid approximately $5.6 million to the NBA’s affiliated companies in 2010 for marketing, media placement, advertising and sponsorship in the ordinary course of business. From January 1 to October 1, 2010, CCE paid the NBA approximately $73,000 for marketing in the ordinary course of business. The Company has had a relationship with the NBA since the late 1980s. In the opinion of management, the terms of the Company’s agreements with the NBA are fair and reasonable.

 

BlackRock, Inc.

 

BlackRock, Inc.’s holdings constitute approximately 5.00% of the Company’s outstanding Common Stock as of February 28, 2011. The Coca-Cola Company Master Retirement Trust (the

“Trust”), a trust established by the Company for purposes of providing retirement benefits under certain employee benefit plans, and BlackRock Realty Advisors, Inc., a subsidiary of BlackRock, Inc., are parties to an investment management agreement. Certain assets of the Company’s U.S. defined benefit pension plans (the “Trust Assets”) are invested in a fund that is managed by a subsidiary of BlackRock, Inc. In 2010, the Trust paid fees of approximately $189,000 to BlackRock Realty Advisors, Inc. for its services as an investment manager in the ordinary course of business. The Trust Assets have been invested in the fund since the 1990s, when it was managed by an entity that was acquired by BlackRock, Inc. in 2006. Also, certain assets of the U.K. Pension Scheme, which was established by the Company to provide retirement benefits under its employee benefit plans in the United Kingdom, are invested in funds managed by a subsidiary of BlackRock, Inc. In 2010, the U.K. Pension Scheme paid fees of approximately $482,000 to a subsidiary of BlackRock, Inc. for its services as an investment manager in the ordinary course of business.

 

Since the CCE Transaction, the Coca-Cola Enterprises Master Trust for Defined Benefit Plans (the “CCE Trust”), a trust established by CCE for purposes of providing retirement benefits under CCE employee benefit plans in the United States, continues in effect for CCR employees. Similarly, the Coca-Cola Bottling Company Master Trust (the “Canadian Trust”), a trust established by a Canadian subsidiary of CCE to provide retirement benefits under a CCE employee benefit plan in Canada, continues in effect for CCR employees. Certain assets of CCR’s U.S. and Canadian defined benefit pension plans are invested in funds managed by subsidiaries of BlackRock, Inc. pursuant to investment management agreements with entities that were acquired by BlackRock, Inc. in 2009. From January 1 to October 1, 2010, the CCE Trust and the Canadian Trust paid fees of approximately $468,000 and from October 2 to December 31, 2010, the CCE Trust paid fees of $70,000 to subsidiaries of BlackRock, Inc. for their services as investment managers in the ordinary course of business. No fees were paid by the Canadian Trust subsequent to October 2, 2010. In the opinion of management, the Company’s relationship with the subsidiaries of BlackRock, Inc. is fair and reasonable and is on terms substantially similar to the Company’s relationship with other investment managers.

 

Approval of Related Person Transactions

 

Our policies and procedures regarding related person transactions are in writing in the charters for the Committee on Directors and Corporate Governance and the Audit Committee and in our Codes of Business Conduct. These documents can be found on the Company’s website, www.thecoca-colacompany.com, under the “Investors” section.

 

A “Related Person Transaction” is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which the Company (including any of its subsidiaries) was, is or will be a participant and, as relates to Directors or shareowners who have an ownership interest in the Company of more than 5%, the amount involved exceeds $120,000, and in which any Related Person had, has or will have a direct or indirect material interest. Under our policy, there is no threshold amount applicable to executive officers with regard to Related Person Transactions.

 

A “Related Person” means:

 

 

 

In general, the Company will enter into or ratify Related Person Transactions only when the Board, acting through the Committee on Directors and Corporate Governance, determines that the Related Person Transaction is reasonable and fair to the Company.

 

When a new Related Person Transaction is identified, it is brought to the Committee on Directors and Corporate Governance to determine if the proposed transaction is reasonable and fair to the Company. The Committee on Directors and Corporate Governance considers, among other things, the evaluation of the transaction by employees directly involved and the recommendation of the Chief Financial Officer.

 

However, many transactions that constitute Related Person Transactions are ongoing and some arrangements predate any relationship with the Director or predate the Director’s relationship with the Company. For example, ACI’s lease of space at 711 Fifth Avenue predates Herbert Allen’s service as a Director and was in place when the Company acquired the property as part of the purchase of Columbia Pictures in 1982.

 

When a transaction is ongoing, any amendments or changes are reviewed and the transaction is reviewed annually for reasonableness and fairness to the Company.

 

Identifying possible Related Person Transactions involves the following procedures, in addition to the completion and review of the customary annual questionnaires by Directors, executive officers and shareowners who have an ownership interest of more than 5% of the Common Stock and complete a questionnaire.

 

 

Verification Process

 

When the Company receives the requested information from its Directors (including nominees), executive officers and shareowners who own more than 5% of the outstanding Common Stock, the Company compiles a list of all persons and entities, including all subsidiaries of the entities identified, that may give rise to a Related Person Transaction. The Office of the Secretary reviews the updated list and expands the list if necessary, based on a review of SEC filings, Internet searches and applicable websites.

 

Once the list of approximately 2,450 persons and entities has been reviewed and updated, it is distributed within the Company to identify any potential transactions. This list also is sent to each of the Company’s approximately 380 accounting locations to be compared to payments and receipts. As a result of the CCE Transaction, in 2010, the Office of the Secretary reviewed information provided by CCE on transactions between CCE and these persons and entities.

 

All ongoing transactions, along with payment and receipt information, are compiled for each person and entity. The information is reviewed and relevant information is presented to the Committee on Directors and Corporate Governance or the Audit Committee, as the case may be, in order to obtain approval or ratification of the transactions and to review in connection with its recommendations to the Board on the independence determinations of each Director.

 

Directors who also serve as employees of the Company do not receive payment for services as Directors. The Committee on Directors and Corporate Governance is responsible for reviewing and making recommendations to the Board regarding all matters pertaining to fees and retainers paid to Directors for Board, committee and committee chair services. Under the Committee on Directors and Corporate Governance’s charter, it is authorized to engage consultants or advisors in connection with its review and analysis, though it did not engage any consultants in 2010.

 

In making non-employee Director compensation recommendations, the Committee on Directors and Corporate Governance takes various factors into consideration, including, but not limited to, the responsibilities of Directors generally, as well as committee chairs, and the forms of compensation paid to directors by comparable companies. The Board reviews the recommendations of the Committee on Directors and Corporate Governance and determines the form and amount of Director compensation.

 

The current compensation program for non-employee Directors, The Coca-Cola Company Compensation and Deferred Compensation Plan for Non-Employee Directors (the “Directors’ Plan”), has been in effect since January 1, 2009 and is described further below.

 

Prior Directors’ Plan

 

In 2006, the Board adopted the Compensation Plan for Non-Employee Directors of The Coca-Cola Company, which was amended on December 13, 2007 (the “Prior Directors’ Plan”). The Prior Directors’ Plan, which was effective through December 31, 2008, tied the Directors’ annual pay to the Company’s performance over a three-year period. For all of the performance periods, the Board set a target of 8% compound annual growth in comparable earnings per share. For the 2007–2009 performance period, the Company’s 2006 comparable earnings per share of $2.37 was used as the base for this calculation. For the 2008–2010 performance period, the Company’s 2007 comparable earnings per share of $2.70 was used as the base for this calculation. For all performance periods, the calculation of comparable earnings per share growth was adjusted for significant structural changes, accounting changes and nonrecurring charges and gains.

 

Under the Prior Directors’ Plan, each Director, except a new Director, was credited with share units as compensation for each year in an amount equal to the number of shares of Common Stock that could be purchased for $175,000 on the date of the first regularly scheduled Board meeting each year. When a dividend was paid on Common Stock, the number of units was increased by the number of shares of Common Stock that could be purchased with the amount of the dividend on the dividend payment date. If the performance goal was met at the end of the three-year period, each participating Director was paid in cash an amount equal to the number of units multiplied by the fair market value of a share of Common Stock on the date the Audit Committee certified performance results. If performance goals had not been met, the participating Directors would have received nothing for that year of service. Pursuant to the terms of this plan, new Directors were paid $175,000 in cash for their first twelve months of service and thereafter were eligible to participate in the performance portion of this plan.

The Prior Directors’ Plan is now complete. The final payouts under the Prior Directors’ Plan to each eligible Director are summarized in the table below.

 

 

 

2010 Annual Compensation

 

Under the Directors’ Plan, 2010 annual compensation to non-employee Directors consisted of $50,000 (or approximately 29%) paid in cash in quarterly installments and $125,000 (or approximately 71%) credited in deferred share units. Non-employee Directors have the option of deferring all or a portion of their cash compensation in share units. The number of share units awarded to non-employee Directors is equal to the number of shares of Common Stock that could be purchased for $125,000 on April 1st (or the next business day if April 1st is not a business day). Share units do not have voting rights but are credited with hypothetical dividends that are reinvested in additional units to the extent dividends on Common Stock are received by shareowners. Share units will be paid out in cash to non-employee Directors on the later of (i) January 15 of the year following the year in which the Director leaves the Board or (ii) six months after the Director leaves the Board. Directors may elect to take their payout in a lump sum or in up to five annual installments.

 

In addition, each non-employee Director who served as a committee chair in 2010 received an additional $20,000 in cash. Directors do not receive fees for attending Board or committee meetings. Non-employee Directors are reimbursed for reasonable expenses incurred in connection with Board-related activities.

 

The Board believes that the Directors’ Plan:

 

 

The following table details the total compensation of the Company’s non-employee Directors for the year ended December 31, 2010.

 

2010 Director Compensation

 

 

 

Fees Earned or Paid in Cash (Column (b))

 

Under the terms of the Directors’ Plan, up to $50,000 of the $175,000 annual retainer may be paid in cash to each non-employee Director. Each of Ms. Black and Messrs. Keough, McHenry, Robinson, Ueberroth and Williams received an additional $20,000 for service as a committee chair in 2010. Messrs. Diller and Nunn each deferred $37,500 of their 2010 cash compensation into 678 share units and Mr. Williams deferred $52,500 of his 2010 cash compensation into 950 share units. The number of share units is equal to the number of shares of Common Stock that could be purchased for the deferred amount based on the average of the high and low prices of a share of Common Stock on April 1, 2010.

Stock Awards (Column (c))

 

The amounts reported in the Stock Awards column reflect the grant date fair value associated with each Director’s share units that are required to be deferred under the Directors’ Plan, calculated in accordance with the provisions of the Financial Accounting Standards Board Accounting Standards Codification 718, Compensation–Stock Compensation (“FASB Topic 718”).

 

All Other Compensation (Column (g))

 

The amounts reported in the All Other Compensation column reflect, where applicable, the premiums for business travel accident insurance, life insurance (including accidental death and dismemberment coverage), medical and dental insurance, Company matching gifts to non-profit organizations and certain amenities provided to Directors at a Board meeting held at the Vancouver Olympic Games, which the Company sponsored.

 

For Directors who elected coverage prior to 2006 (Messrs. Nunn, Ueberroth and Williams), the Company provides health and dental insurance coverage on the same terms and at the same cost as available to U.S. employees. For Directors who elected coverage prior to 2006, the Company also provides life insurance coverage, which includes $30,000 term life insurance and $100,000 group accidental death and dismemberment insurance. The premiums for this life insurance (including accidental death and dismemberment, if applicable) for participating Directors were: for each of Messrs. Ronald Allen and Diller and Ms. Black — $611, for Mr. Williams — $1,021 and for each of Messrs. McHenry, Nunn, Robinson and Ueberroth — $1,033. This coverage was discontinued in 2006 for all other Directors. Group travel accident insurance coverage of $200,000 is provided to all Directors while traveling on Company business, at a Company cost of $4 per Director. The total cost for these insurance benefits to all of the non-employee Directors in 2010 was $45,496.

 

The Directors are eligible to participate in the Company’s matching gifts program, which is the same program available to all U.S. based employees and retirees. In 2010, this program matched up to $10,000 of charitable contributions to tax-exempt arts, cultural, environmental or educational organizations, on a two for one basis. The total cost of matching contributions on behalf of the non-employee Directors for 2010 gifts was $70,000. Messrs. Nunn’s and Robinson’s and Ms. Lagomasino’s designated charities received $20,000 each. Mr. Williams’ designated charity received $10,000. In addition, the table does not include matching contributions of $20,000 paid in 2010 because they relate to gifts made in late 2009 by Mr. Robinson.

 

The Company provides its products to Directors’ offices without charge. The total cost of Company products provided during 2010 to all of the non-employee Directors was approximately $17,075, which is not reflected in the table.

 

Directors and Executive Officers

 

The following table sets forth information regarding beneficial ownership of Common Stock by each Director, each individual named in the Summary Compensation Table on page 73, and our Directors and Executive Officers as a group, all as of February 28, 2011.

 

 

Principal Shareowners

 

Set forth in the table below is information about the number of shares held by persons we know to be the beneficial owners of more than 5% of the issued and outstanding Common Stock.

 

 

 

Executive officers, Directors and certain persons who own more than 10% of the outstanding shares of Common Stock are required by Section 16(a) of the 1934 Act and related regulations:

 

 

We received written representations from each such person who did not file an annual statement on Form 5 with the SEC that no Form 5 was due. Based on our review of the reports and representations, we believe that all Section 16(a) reports were filed timely in 2010.

 

Executive Summary

 

This Compensation Discussion and Analysis provides you with a detailed description of our executive compensation philosophy and programs, the compensation decisions we have made under those programs, and the factors we considered in making those decisions. The Compensation Discussion and Analysis focuses on the compensation of our Named Executive Officers for 2010, who were:

 

 

Executive Compensation Practices

 

Our compensation programs are designed to reward employees for producing sustainable growth consistent with the Company’s 2020 Vision, to attract and retain world-class talent and to align compensation with the long-term interests of our shareowners.

 

The table below highlights our current executive compensation practices – both the practices we believe drive performance (left column) and the practices we have not implemented because we do not believe they would serve our shareowners’ long-term interests (right column).

 

 

How Pay is Tied to Company Performance

 

2010 Financial Highlights

 

In 2010, the Company continued to deliver strong operating performance, meeting or exceeding all of its long-term growth targets. In addition, the Company successfully completed the CCE Transaction, which we believe will increase operating effectiveness and efficiency in North America. Financial highlights include:

 

 

 

Comparable currency neutral net revenue, comparable currency neutral operating income and comparable earnings per share differ from what is reported under U.S. generally accepted accounting principles, or GAAP. See the “Investors” section of the Company’s website, www.thecoca-colacompany.com, for a reconciliation of non-GAAP financial measures to our results as reported under GAAP.

 

Relationship Between Company Performance and Chairman and Chief Executive Officer Compensation

 

The following illustrates the directional relationship between Company performance, based on two of our key financial metrics, and Chairman and Chief Executive Officer compensation from 2008 to 2010. These metrics were chosen because they are key components of our long-term growth model and contribute directly to long-term shareowner value.