1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to[ ] Preliminary Proxy Statement [ ] Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under
Rule 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):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------------------------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
-------------------------------------------------------------------------------------------------------------------------------------------------------
[ ] 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 Formform or Scheduleschedule and the date of its filing.
(1) Amount Previously Paid:
---------------------------------------------------------------------------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------------------------------------------------------------------------------------------
(3) Filing Party:
---------------------------------------------------------------------------------------------------------------------------------------------------
(4) Date Filed:
---------------------------------------------------------------------------------------------------------------------------------------------------
2
(THE COCA-COLA COMPANY LOGO)
ATLANTA, GEORGIA
DOUGLAS N. DAFT
CHAIRMAN OF THE BOARD
AND
CHIEF EXECUTIVE OFFICER
March 2, 20014, 2002
Dear Share Owner:
We cordially inviteI would like to extend a personal invitation for you to join us at our
Annual Meeting of Share Owners. The meeting
will be heldOwners on Wednesday, April 18,17, 2002, at 9:30 a.m. in The
Theater at Madison Square Garden in New York City. The theater entrance is
located on Seventh Avenue between W. 31st and W. 33rd Streets.
We chose to hold this year's meeting in New York City in memory of the
tragic events of September 11, 2001 at 9:00 a.m., local time, at The
Playhouse Theatreand in Wilmington, Delaware.support of this great city's efforts
to recover and rebuild. I think it will be a particularly special and memorable
meeting in light of the past months, and I sincerely hope you can join us.
To help with your travel arrangements, we have worked with our hotel
partners and our restaurant customers in New York City to provide special rates
for you. To find out more information on these special rates and other
attractions in New York City, please go to www.Coca-ColainNYC.com or call
1-866-924-0001.
At this year's meeting, you will vote on the election of threesix Directors,
ratification of Ernst & Young LLP's appointment as independent auditors,
an
amendment toapproval of the 1989 RestrictedCompany's 2002 Stock AwardOption Plan, of The Coca-Cola Company to
include performance criteria for certain awards, and threefour proposals of share
owners.
We also have attachedAttached you will find a notice of meeting and a proxy statement that
contains morefurther information about these items and the meeting itself,
including:
- howHow to obtain an admission card, if you plan to attend, the meeting,
and
- differentDifferent methods you can use to vote your proxy, including the
telephone and Internet.
Your vote is 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.
If you do plan to attend, please mark the appropriate box on your proxy
card to help us plan for the meeting. Your vote is importantI hope to the Company. We encouragesee you to sign and return
your proxy card, or use telephone or Internet voting, before the meeting, so
that your shares will be represented and voted at the meeting even if you cannot
attend.in New York.
/s/ Douglas N. Daft DOUGLAS N. DAFT
DOUGLAS N. DAFT
3
(THE COCA-COLA COMPANY LOGO)
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 (the "Company")
will be held in The Theater at The Playhouse Theatre, Du Pont Building, 10thMadison Square Garden, Seventh Avenue between W.
31st and MarketW. 33rd Streets, Wilmington, Delaware,New York, New York, on Wednesday, April 18, 2001,17, 2002, at
9:0030 a.m., local time. The purposes of the meeting are:
1. To elect threefour Directors to serve until the 2005 Annual Meeting of
Share Owners and two Directors to serve until the 2004 Annual Meeting of
Share Owners,
2. To ratify the appointment of Ernst & Young LLP as independent
auditors of the Company to serve for the 20012002 fiscal year,
3. To approve an amendment to the 1989 Restricted2002 Stock AwardOption Plan of The Coca-Cola Company,
to include performance criteria for certain awards
and to ratify certain awards,
4. To vote on threefour proposals submitted by share owners if properly
presented at the meeting, and
5. To transact such other business as may properly come before the
meeting and at any adjournments or postponements of the meeting.
The Board of Directors set February 20, 2001,22, 2002, as the record date for the
meeting. This means that owners of Common Stock at the close of business on that
date are entitled toto:
- receive this notice of the meeting, and
- vote at the meeting and any adjournments or postponements of the
meeting.
We will make available a list of share owners as of the close of business
on February 20, 2001,22, 2002, for inspection by share owners during normal business
hours from April 75 through April 17, 2001,16, 2002, at the Company's principal place of
business, One Coca-Cola Plaza, Atlanta, Georgia 30313. This list also will be
available to share owners at the meeting.
By Order of the Board of Directors
SUSAN E. SHAW
Secretary
Atlanta, Georgia
March 2, 20014, 2002
WE URGE EACH SHARE OWNER TO PROMPTLY SIGN AND RETURN THE ENCLOSED PROXY CARD OR
TO USE TELEPHONE OR INTERNET VOTING. SEE OUR QUESTION AND ANSWER SECTION FOR
INFORMATION ABOUT VOTING BY TELEPHONE OR INTERNET, HOW TO REVOKE A PROXY, AND
HOW TO VOTE SHARES IN PERSON.
4TABLE OF CONTENTS
PROXY STATEMENT............................................. 1
QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING.......... 2
ELECTION OF DIRECTORS....................................... 5
EXECUTIVE COMPENSATION...................................... 17
CERTAIN INVESTEE COMPANIES.................................. 31
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS......... 32
REPORT OF THE AUDIT COMMITTEE............................... 32
PROPOSAL TO APPROVE THE 2002 STOCK OPTION PLAN OF THE
COCA-COLA COMPANY......................................... 35
PROPOSALS OF SHARE OWNERS................................... 38
EXPENSES OF SOLICITATION.................................... 45
PROPOSALS OF SHARE OWNERS FOR 2003 ANNUAL MEETING........... 45
HOUSEHOLDING................................................ 46
OTHER INFORMATION........................................... 46
APPENDIX I -- THE COCA-COLA COMPANY 2002 STOCK OPTION
PLAN...................................................... 47
THE COCA-COLA COMPANY
ONE COCA-COLA PLAZA
ATLANTA, GEORGIA 30313
March 2, 20014, 2002
PROXY STATEMENT
FOR ANNUAL MEETING OF SHARE OWNERS
TO BE HELD APRIL 18, 200117, 2002
Our Board of Directors is furnishing you this proxy statement to solicit
proxies on its behalf to be voted at the 20012002 Annual Meeting of Share Owners of
The Coca-Cola Company (the "Company"). The meeting will be held in The Theater
at The Playhouse
Theatre, Du Pont Building, 10thMadison Square Garden, Seventh Avenue between W. 31st and MarketW. 33rd Streets,
Wilmington, Delaware,New York, New York, on April 18, 2001,17, 2002, at 9:0030 a.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 One Coca-Cola
Plaza, Atlanta, Georgia 30313. We are first sending the proxy materials to share
owners on March 2, 2001.4, 2002.
All properly executed written proxies, and all properly completed proxies
submitted by telephone or by the 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 before the meeting.
Only owners of record of shares of Common Stock at the close of business on
February 20, 2001,22, 2002, are entitled to notice of and to vote at the meeting, or at
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
20, 2001,22, 2002, there were 2,487,036,5322,484,715,366 shares of Common Stock issued and
outstanding.
5
QUESTIONS AND ANSWERS ABOUT
THE MEETING AND VOTING
1. WHAT IS A PROXY?
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. As is
our usual practice, three of our outside Directors have been designated as
proxies for the 20012002 Annual Meeting of Share Owners. These three Directors are
Ronald W. Allen, Cathleen P. BlackDonald F. McHenry, Paul F. Oreffice and Sam Nunn.Peter V. Ueberroth.
2. WHAT IS A PROXY STATEMENT?
It is a document thethat SEC regulations require us to give you when we ask
you to sign a proxy card designating Ronald W. Allen, Cathleen P. BlackDonald F. McHenry, Paul F. Oreffice and
Sam NunnPeter V. Ueberroth each as proxies to vote on your behalf.
3. WHAT IS THE DIFFERENCE BETWEEN A SHARE OWNER OF RECORD AND A SHARE OWNER WHO
HOLDS STOCK IN STREET NAME?
- If your shares are registered in your name, you are a share owner of
record.
- If your shares are in the name of your broker or bank, your shares are
held in street name.
4. HOW DO YOU GET AN ADMISSION CARD TO ATTEND THE MEETING?
If you are a share owner of record, your admission card is attached to your
proxy card. You will need to bring it with you to the meeting.
If you own shares in street name, you will need to ask your broker or bank
for an admission card in the form of a legal proxy. You will need to bring the
legal proxy with you to the meeting. If you do not receive the legal proxy in
time, bring your most recent brokerage statement with you to the meeting. We can
use that to verify your ownership of Common Stock and admit you to the meeting;
however, you will not be able to vote your shares at the meeting without a legal
proxy. Please note that if you own shares in street name and 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.
You will also need to bring a photo ID to gain admission.
5. WHAT DIFFERENT METHODS CAN YOU USE TO VOTE?
(a) In Writing:By Written Proxy: All share owners can vote by written proxy card.
(b) By Telephone and Internet:Internet Proxy: All share owners of record also can
votehave their proxiesshares voted by proxy by touchtone telephone from the U.S. and
Canada, using the toll-free telephone number on the proxy card, or by the
Internet, using the procedures and instructions described on the proxy card and
other enclosures. Street name holders may vote by telephone or the Internet if
their bank or broker makes those methods available, in which case the bank or
broker will enclose the instructions with the proxy statement. The telephone and
Internet voting procedures, including the use of control numbers, are designed
to authenticate share owners' identities, to allow share owners to vote their
shares, and to confirm that their instructions have been properly recorded.
(c) In Person: All share owners may vote in person at the meeting (unless
they are street name holders without a legal proxy, as described in question 4).
2
6
6. WHAT IS THE RECORD DATE AND WHAT DOES IT MEAN?
The record date for the 20012002 Annual Meeting of Share Owners is February 20,
2001.22,
2002. The record date is established by the Board of Directors as required by
Delaware law. Owners of record of Common Stock at the close of business on the
record date are entitled to:
(a) to receive notice of the meeting, and
(b) to vote at the meeting and any adjournments or postponements of the
meeting.
7. HOW CAN YOU REVOKE A PROXY?
A share owner can revoke a proxy by any oneprior to the completion of voting at the
following three actions:meeting by:
(a) giving written notice to the Secretary of the Company,
(b) delivering a later-dated proxy, or
(c) voting in person at the meeting.
8. ARE VOTES CONFIDENTIAL? WHO COUNTS THE VOTES?
We will continue our long-standing practice of holding the votes of all
share owners in confidence from Directors, officers and employees except: (a) as
necessary to meet applicable legal requirements and to assert or defend claims
for or against the Company, (b) in case of a contested proxy solicitation, (c)
if a share owner makes a written comment on the proxy card or otherwise
communicates his/her vote to management, or (d) to allow the independent
inspectors of election to certify the results of the vote. We will also
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.
9. WHAT ARE YOUR VOTING CHOICES WHEN VOTING FOR DIRECTOR NOMINEES, AND WHAT VOTE
IS NEEDED TO ELECT DIRECTORS?
In votingthe vote on the election of threefour Director nominees to serve until the
2005 Annual Meeting of Share Owners and two Director nominees to serve until the
2004 Annual Meeting of Share Owners, share owners maymay:
(a) vote in one of the
following ways:
(a) in favor of all nominees,
(b) vote to withhold votes as to all nominees, or
(c) withhold votes as to specific nominees.
Directors will be elected by a plurality.plurality vote.
The Board recommends a vote "FOR" each of the nominees.
10. WHAT ARE YOUR VOTING CHOICES WHEN VOTING ON THE RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP, AND WHAT VOTE IS NEEDED TO RATIFY THEIR
APPOINTMENT?
In votingthe vote on the ratification of the appointment of Ernst & Young LLP as
independent auditors, share owners maymay:
(a) vote in one of the following ways:
(a) in favor of the ratification,
(b) vote against the ratification, or
3
7
(c) abstain from voting on the ratification.
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" this proposal.
11. WHAT ARE YOUR VOTING CHOICES WHEN VOTING ON THE AMENDMENT TOADOPTION OF THE 1989
RESTRICTED2002 STOCK
AWARDOPTION PLAN OF THE COCA-COLA COMPANY?COMPANY, AND WHAT VOTE IS NEEDED TO ADOPT THE
PLAN?
In votingthe vote on the amendment toadoption of the 1989 Restricted2002 Stock AwardOption Plan of The Coca-Cola
Company, share owners maymay:
(a) vote in one of the following ways:
(a) in favor of the amendment,adoption,
(b) vote against the amendment,adoption, or
(c) abstain from voting on the amendment.adoption.
The proposal to approve the amendment toadoption of the 1989 Restricted2002 Stock AwardOption Plan of The
Coca-Cola Company 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" this proposal.
12. WHAT ARE THE VOTING CHOICES WHEN VOTING ON EACH SHARE-OWNER PROPOSAL
PROPERLY PRESENTED AT THE MEETING, AND WHAT VOTE IS NEEDED TO APPROVE ANY OF
THE SHARE-OWNER PROPOSALS?
A separate vote will be held on each of the threefour share-owner proposals.proposals that
is properly presented at the meeting. In voting on each of the proposals, share
owners maymay:
(a) vote in one of the following
ways:
(a) in favor of the proposal,
(b) vote against the proposal, or
(c) abstain from voting on the proposal.
In order to be approved, each share-owner proposal would 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" each of the threefour share-owner
proposals.
13. WHAT IF A SHARE OWNER DOES NOT SPECIFY A CHOICE FOR A MATTER WHEN RETURNING
A PROXY?
Share owners should specify their choice for each matter on the enclosed
form of proxy. If no specific instructions are given, proxies which are signed and
returned will be voted FOR the election of all Director nominees, FOR the
proposal to ratify the appointment of Ernst & Young LLP, FOR the amendment toadoption of the
1989 Restricted2002 Stock AwardOption Plan of The Coca-Cola Company, and AGAINST each share-owner
proposal.
14. HOW ARE ABSTENTIONS AND BROKER NON-VOTES COUNTED?
Abstentions and broker non-votes will not be included in vote totals and
will not affect the outcome of the vote.
4
8
ELECTION OF DIRECTORS
(ITEM 1)
BOARD OF DIRECTORS
The share owners elect approximately one-third of the members of the Board
of Directors annually. The Directors are divided into three classes. Each class
serves for a period of three years, although occasionally a Director may be
elected for a shorter term in order to keep the number of Directors in each
class approximately equal. This has been the Company's practice since 1945.
The terms of Herbert A. Allen, James D. Robinson IIICathleen P. Black, Warren E. Buffett, Douglas N. Daft and
Peter V. UeberrothSusan B. King will expire at the 20012002 Annual Meeting. Messrs. Allen, Robinson, and Ueberroth
eachEach has been nominated by
the Board of Directors to stand for reelection at the meeting to hold office
until our 2005 Annual Meeting and until his or her successor is elected and
qualified. In February 2002, the Board of Directors, pursuant to the By-Laws of
the Company, determined that the number of Directors of the Company should be
increased from 12 to 14, effective as of the 2002 Annual Meeting. The Board of
Directors has nominated Barry Diller and Robert L. Nardelli to stand for
election at the meeting to hold office until our 2004 Annual Meeting and until
his successor istheir successors are elected and qualified.
We have no reason to believe that any of the nominees will be unable or
unwilling for good cause to serve if elected. However, if any nominee should
become unable or unwilling for good cause to serve for any reason, proxies may
be voted for another person nominated as a substitute by the Board of Directors,
or the Board of Directors may reduce the number of Directors.
5
9
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF HERBERT A.
ALLEN, JAMES D. ROBINSON IIICATHLEEN P.
BLACK, WARREN E. BUFFETT, DOUGLAS N. DAFT, SUSAN B. KING, BARRY DILLER AND
PETER V. UEBERROTH AS DIRECTORS.ROBERT L. NARDELLI.
- --------------------------------------------------------------------------------
NOMINEES FOR ELECTION TO TERM EXPIRING 20042005
- -------------------------------------------------------------------------------------------------------
(PHOTO) HERBERT A. ALLEN Director since 1982
Herbert A. Allen New York, New York Age 60
Mr. Allen is President and Chief Executive Officer of Allen & Company
Incorporated, a privately held investment banking firm, and has held these
positions for more than the past five years. He is a Director of Convera
Corporation.
Chairman of the Compensation Committee and a member of the Executive and
Finance Committees of the Board of Directors of the Company.
- -------------------------------------------------------------------------------------------------------
(PHOTO) JAMES D. ROBINSON III Director since 1975
James D. Robinson III New York, New York Age 65
Mr. Robinson is co-founder, Chairman and Chief Executive Officer of RRE
Investors, LLC, a private information technology venture investment firm, and
a General Partner of RRE Ventures, L.P. He is also Chairman of Violy, Byorum &
Partners Holdings, LLC, a private firm specializing in financial advisory and
investment banking activities in Latin America. He previously served as
Chairman and Chief Executive Officer of American Express Company from 1977 to
1993. Mr. Robinson is a Director of Bristol-Myers Squibb Company, Cambridge
Technology Partners (Massachusetts), Inc., First Data Corporation,
ScreamingMedia, Inc. and Sunbeam Corporation.
Chairman of the Committee on Directors and a member of the Public Issues
Review Committee of the Board of Directors of the Company.
- -------------------------------------------------------------------------------------------------------
(PHOTO) PETER V. UEBERROTH Director since 1986
Peter V. Ueberroth Newport Beach, California Age 63
Mr. Ueberroth is an investor and Chairman of the Contrarian Group, Inc., a
business management company, and has held these positions since 1989. He is
Chairman of Ambassadors International, Inc., a Director of Hilton Hotels
Corporation and serves as Co-Chairman of Pebble Beach Company.
Chairman of the Audit Committee and a member of the Compensation Committee
(including its Restricted Stock and Stock Option Subcommittees) of the Board
of Directors of the Company.
- -------------------------------------------------------------------------------------------------------
(PHOTO) Herbert A.
Allen
(PHOTO) James D.
Robinson III
(PHOTO) Peter V.
Ueberroth
6
10
- -------------------------------------------------------------------------------------------------------
INCUMBENT DIRECTORS -- TERM EXPIRING 2002
- -------------------------------------------------------------------------------------------------------
(PHOTO) CATHLEEN P. BLACK Director since 1993
Cathleen P. Black New York, New York Age 5657
Ms. Black is President, Hearst Magazines, a unit of The Hearst Corporation, a
major media and communications company, and has held these positionsthis position since
November 1995, and1995. Ms. Black has been a Director of The Hearst Corporation since
January 1996. Until that timeFrom May 1991 to November 1995, she served as President and
Chief Executive Officer of Newspaper Association of America, a newspaper
industry organization, since May
1991.organization. She served as a Director of the Company from April 1990
to May 1991, and was again elected as a Director in October 1993. Ms. Black is
a Director of International Business Machines Corporation and Women.com Networks, Inc.
MemberiVillage.com.
Chairman of the Compensation Committee (including its Restricted Stock and
Stock Option Subcommittees) and a member of the Audit and Public Issues and
Diversity Review Committees of the Board of Directors of the Company.
- -------------------------------------------------------------------------------------------------------
(PHOTO) WARREN E. BUFFETT Director since 1989
Warren E. Buffett Omaha, Nebraska Age 7071
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. He 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.
- -------------------------------------------------------------------------------------------------------
(PHOTO) DOUGLAS N. DAFT Director since 1999
Douglas N. Daft Atlanta, Georgia Age 5758
Mr. Daft is Chairman of the Board and Chief Executive Officer of the Company,
and has held these positions since February 17, 2000. He served as President
and Chief Operating Officer of the Company from December 5, 1999 until
February 17, 2000. He previously served as Senior Vice President of the
Company from 1991 until December 5, 1999 and1999. Mr. Daft also served as President of
the Middle and Far East Group. That positionGroup which also included management responsibility
for the Africa Group and the Schweppes Beverage Division from October 29, 1999
until December 5, 1999. Mr. Daft has worked in the Company since 1969, and has
held various executive positions since 1984. Mr. Daft is a Director of
SunTrust Banks, Inc.
Chairman of the Executive Committee of the Board of Directors of the Company.
- -------------------------------------------------------------------------------------------------------
(PHOTO) Cathleen P.
Black
(PHOTO) Warren E.
Buffett
(PHOTO) Douglas N. Daft
76
11
- ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(PHOTO) SUSAN B. KING Director since 1991
Susan B. King Durham, North Carolina Age 6061
Ms. King is PresidentChairman of the Board of The Leadership Initiative, a support corporation of
Duke University, charged with the establishment of undergraduate college leadership
programs, and has held this position since September 1999.2001. From September 1999 to September
2001, she served as President of The Leadership Initiative. From January 1995 until
September 1999, she served as Leader in Residence, Hart Leadership Program, Sanford
Institute of Public Policy, Duke University, a
program for the development and advancement of leadership and management
skills in the public and private sectors.University. 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 and Diversity Review Committee of the Board of
Directors of the Company.
- ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
NOMINEES FOR ELECTION TO TERM EXPIRING 2004
- ---------------------------------------------------------------------------------------------------------------------
(PHOTO) BARRY DILLER
Barry Diller New York, New York Age 60
Mr. Diller is Chairman of the Board and Chief Executive Officer of USA Networks, Inc. (or
its predecessors), an information, entertainment and direct selling company, a position he
has held since August 1995. He was Chairman of the Board and Chief Executive Officer of QVC,
Inc. from December 1992 through December 1994. From 1984 to 1992, Mr. Diller served as the
Chairman of the Board and Chief Executive Officer of Fox, Inc. Prior to joining Fox, Inc.,
Mr. Diller served for ten years as Chairman of the Board and Chief Executive Officer of
Paramount Pictures Corporation. He is a Director of Expedia, Inc., Ticketmaster and The
Washington Post Company.
- ---------------------------------------------------------------------------------------------------------------------
(PHOTO) ROBERT L. NARDELLI
Robert L. Nardelli Atlanta, Georgia Age 53
Mr. Nardelli is Chairman of the Board, President and Chief Executive Officer of The Home
Depot, Inc., a major home improvement retailer, a position he has held since December 2000.
From 1995 to December 2000, he served as President and Chief Executive Officer of GE Power
Systems.
- ---------------------------------------------------------------------------------------------------------------------
(PHOTO) Susan B. King
(PHOTO) Barry Diller
(PHOTO) Robert L.
Nardelli
7
- ---------------------------------------------------------------------------------------------------------------------
INCUMBENT DIRECTORS -- TERM EXPIRING 2003
- ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(PHOTO) RONALD W. ALLEN Director since 1991
Ronald W. Allen Atlanta, Georgia Age 5960
Mr. Allen is a consultant to and advisoryAdvisory Director of Delta Air Lines, Inc., a major U.S.
air transportation company, and has held these positions since July 1997. He retired as
Delta's Chairman of the Board, of Directors, President and Chief Executive Officer in July 1997, and had
been its Chairman of the Board
of Directors and Chief Executive Officer since 1987. He is a Director of
Aaron Rents, Inc.
Member of the Executive and Audit Committees and the Committee on Directors of the Board of
Directors of the Company.
- ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(PHOTO) DONALD F. MCHENRY Director since 1981
Donald F. McHenry Washington, D.C. Age 6465
Mr. McHenry is Distinguished Professor in the Practice of Diplomacy and International
Affairs at the School of Foreign Service, Georgetown University, and a principal owner and
President of The IRC Group, LLC, 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, FleetBoston Financial Corporation, International Paper Company and
GlaxoSmithKline plc.
Chairman of the Public Issues and Diversity Review Committee and a member of the Executive
Committee and the Committee on Directors of the Board of Directors of the Company.
- -------------------------------------------------------------------------------------------------------
(PHOTO) Susan B. King
(PHOTO) Ronald W. Allen
(PHOTO) Donald F.
McHenry
8
12
- ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(PHOTO) SAM NUNN Director since 1997
Sam Nunn Atlanta, Georgia Age 6263
Mr. Nunn is a partner in the law firm of King & Spalding, and has held this position since
January 1997. He is also Co-Chairman and Chief Executive Officer of Nuclear Threat
Initiative, and has held this position since 2001. He served as a member of the United
States Senate from 1972 through 1996. He is a Director of Community Health Systems, Inc.,ChevronTexaco Corporation, Dell
Computer Corporation, General Electric Company, Internet Security Systems, Inc.,
National Service Industries, Inc., Scientific-Atlanta, Inc.,
Texaco Inc. and Total System Services, Inc.
Member of the Executive and Finance Committees of the Board of Directors of the Company.
- ---------------------------------------------------------------------------------------------------------------------
(PHOTO) Ronald W. Allen
(PHOTO) Donald F.
McHenry
(PHOTO) Sam Nunn
8
- -------------------------------------------------------------------------------------------------------
(PHOTO) PAUL F. OREFFICE Director since 1985
Paul F. Oreffice Lake Tahoe, Nevada Age 7374
Mr. Oreffice retired as Chairman of the Board of Directors and Chief Executive Officer of
The Dow Chemical Company in 1992, which position he had held for more than
five years.
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.
- -------------------------------------------------------------------------------------------------------
(PHOTO) JAMES B. WILLIAMS Director since 1979
James B. Williams Atlanta, Georgia Age 6768
Mr. Williams retired in March 1998 as Chairman of the Board of Directors and Chief
Executive Officer of SunTrust Banks, Inc., a bank holding company, which
positions he had held for more than five years. He continues to serve as a
Director and Chairman of the Executive Committee of SunTrust Banks, Inc. and
is also a Director of Genuine Parts Company, Georgia-Pacific Corporation,
Marine Products Corporation, Rollins, Inc. and RPC, Inc.
Chairman of the Finance Committee and a member of the Executive Committee of
the Board of Directors of the Company.
- -------------------------------------------------------------------------------------------------------
INCUMBENT DIRECTORS -- TERM EXPIRING 2004
- -------------------------------------------------------------------------------------------------------
(PHOTO) HERBERT A. ALLEN Director since 1982
Herbert A. Allen New York, New York Age 61
Mr. Allen is President, Chief Executive Officer, Director 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. He is a
Director of Convera Corporation.
Member of the Executive and Finance Committees of the Board of Directors of
the Company.
- -------------------------------------------------------------------------------------------------------
(PHOTO) Sam Nunn
(PHOTO) Paul F.
Oreffice
(PHOTO) James B.
Williams
(PHOTO) Herbert A.
Allen
9
13
- -------------------------------------------------------------------------------------------------------
(PHOTO) JAMES D. ROBINSON III Director since 1975
James D. Robinson III New York, New York Age 66
Mr. Robinson is co-founder, Chairman and Chief Executive Officer of RRE
Investors, LLC and general partner of RRE Ventures GP II, LLC, private
information technology venture investment firms. He is also Chairman of Violy,
Byorum & Partners Holdings, LLC, a private firm specializing in financial
advisory and investment banking activities in Latin America, and President of
JD Robinson, Inc. He previously served as Chairman and Chief Executive Officer
of American Express Company from 1977 to 1993. Mr. Robinson is a Director of
Bristol-Myers Squibb Company, Claxson Interactive Group Inc., First Data
Corporation, Novell, Inc., ScreamingMedia, Inc., and Sunbeam Corporation.
Chairman of the Committee on Directors and a member of the Public Issues and
Diversity Review Committee of the Board of Directors of the Company.
- -------------------------------------------------------------------------------------------------------
(PHOTO) PETER V. UEBERROTH Director since 1986
Peter V. Ueberroth Newport Beach, California Age 64
Mr. Ueberroth is an investor and Chairman of the Contrarian Group, Inc., a
business management company, and has held this position since 1989. He is also
Co-Chairman of Pebble Beach Company. He is Chairman of Ambassadors
International, Inc., and a Director of Hilton Hotels Corporation and Bank of
America Corporation.
Chairman of the Audit Committee and a member of the Compensation Committee
(including its Restricted Stock and Stock Option Subcommittees) of the Board
of Directors of the Company.
- -------------------------------------------------------------------------------------------------------
(PHOTO) James D.
Robinson III
(PHOTO) Peter V.
Ueberroth
10
OWNERSHIP OF EQUITY SECURITIES IN THE COMPANY
The following table sets forth information regarding beneficial ownership
of Common Stock by each Director and nominee, our five most highly compensated
executive officers, our former Chief Executive Officer, and our Directors, nominees and executive officers as a
group, all as of February 20, 2001, except where noted.22, 2002.
AGGREGATE NUMBER PERCENT OF
OF SHARES PERCENT OFOUTSTANDING
NAME BENEFICIALLY OWNED OUTSTANDING SHARES(19)SHARES(20)
---- ------------------ -----------------------------------------
Herbert A. Allen...................................... 9,317,435(1)Allen.................................. 8,958,719(1) *
Ronald W. Allen....................................... 15,827(2)Allen................................... 17,426(2) *
Cathleen P. Black..................................... 20,188(3)Black................................. 23,083(3) *
Warren E. Buffett..................................... 200,009,021(4) 8.04%Buffett................................. 200,011,900(4) 8.05%
Barry Diller...................................... 0(5) *
Susan B. King......................................... 15,649(5)King..................................... 18,048(6) *
Donald F. McHenry..................................... 32,420(6)McHenry................................. 33,151(7) *
Robert L. Nardelli................................ 0(8) *
Sam Nunn.............................................. 6,583(7)Nunn.......................................... 9,408(9) *
Paul F. Oreffice...................................... 81,449(8)Oreffice.................................. 56,790(10) *
James D. Robinson III................................. 20,016(9)III............................. 22,333(11) *
Peter V. Ueberroth.................................... 93,497(10)Ueberroth................................ 96,558(12) *
James B. Williams..................................... 105,668,012(11)Williams................................. 105,671,138(13) 4.25%
Douglas N. Daft....................................... 2,523,187(12)Daft................................... 2,539,533(14) *
JackBrian G. Dyson.................................... 494,920(15) *
Steven J. Heyer................................... 381,377(16) *
Deval L. Stahl......................................... 1,525,317(13) *
James E. Chestnut..................................... 640,690(14) *
Charles S. Frenette................................... 865,164(15)Patrick.................................. 215,777(17) *
Carl Ware............................................. 674,743(16) *
M. Douglas Ivester.................................... 4,294,083(17)Ware......................................... 721,713(18) *
All Directors, Nominees and Executive Officers as
a Group (20(23 Persons)............................................ 326,978,632(18) 12.94%............................ 320,431,168(19) 12.83%
- ------------
* Less than 1% of issued and outstanding shares of Company Common Stock.
(1) Includes 2,347,920 shares ownedheld by Allen & Company Incorporated ("ACI").
Also includes 21,00016,000 shares ownedheld by Allen Capital International L.P., 12,63412,872
shares ownedheld by Allen Capital L.P. and 240,045244,564 shares ownedheld by Allen Capital II,
L.P., each of which is an affiliate of ACI's parent company, 258,938 shares
which represent certain family members' interests in a partnership and 73,16072,103
shares ownedheld by his children; Mr. Allen exercises no investment discretion or
control over and has disclaimed beneficial ownership of such shares. Does not
include 200,000 shares held by ACI's pension plan nor 11,97710,000 shares managed by
Mr. Allen's son in a fiduciary capacity, over which he does not have voting or
investment power. Also includes 4,6076,322 share units accrued under the Deferred
Compensation Plan for Non-Employee Directors.
(2) Includes 2,000 shares ownedheld by Mr. Allen's wife and 200100 shares ownedheld by
her children;child; Mr. Allen has disclaimed beneficial ownership of such shares. Also
includes 3,6275,326 share units accrued under the Deferred Compensation Plan for
Non-Employee Directors.
(3) Includes 10,000 shares jointly ownedheld with Ms. Black's husband. Also
includes 9,98812,883 share units accrued under the Deferred Compensation Plan for
Non-Employee Directors.
(4) Shares ownedIncludes 200,000,000 shares held indirectly through subsidiaries of
Berkshire Hathaway Inc., the capital stock of which is owned 31.4%31.1% by Mr.
Buffett and three trusts of which he is trustee but in which he has no
beneficial interest and 2.3% by his wife. Also includes 9,02111,900 share units
accrued under the Deferred Compensation Plan for Non-Employee Directors.
(5) Includes 3,649 share units accrued under Ms. King's account under the
Deferred Compensation PlanNominee for Non-Employee Directors.
10Director.
11
14
(6) Includes 420700 shares ownedheld by Mr. McHenry's grandchildren.her husband. Also includes 5,8935,348 share
units accrued under the Deferred Compensation Plan for Non-Employee Directors.
(7) Includes 5,583426 shares held by Mr. McHenry's grandchildren. Also includes
7,628 share units accrued under the Deferred Compensation Plan for Non-Employee
Directors.
(8) Nominee for Director.
(9) Includes 8,408 share units accrued under Mr. Nunn's account under the
Deferred Compensation Plan for Non-Employee Directors.
(8)(10) Includes 1,296809 shares ownedheld by Mr. Oreffice's wife and 6,0003,000 shares held
by a trust of which his wife is sole trustee. Also includes 8,57910,357 share units
accrued under the Deferred Compensation Plan for Non-Employee Directors.
(9)(11) Does not include 4,552,880 shares ownedheld by three trusts of which Mr.
Robinson is a beneficiary. Includes 8,01610,333 share units accrued under the
Deferred Compensation Plan for Non-Employee Directors.
(10)(12) Includes 22,000 shares ownedheld by a trust of which Mr. Ueberroth is one
of two trustees and a beneficiary, 10,000 shares ownedheld by his wife, 8,000 shares
held by a foundation of which he is one of six Directors and 12,000 shares held
by an investment trust for his children. Also includes 20,49723,558 share units
accrued under the Deferred Compensation Plan for Non-Employee Directors.
(11)(13) Includes 89,806,654 shares ownedheld by four foundations of which Mr.
Williams is, in all cases, one of five trustees, and 15,786,700 shares ownedheld by a
foundation of which he is one of three trustees. Also includes 24,65827,784 share
units accrued under the Deferred Compensation Plan for Non-Employee Directors.
(12)(14) Includes 5,927351,625 shares held jointly with his wife, 6,569 shares
credited to Mr. Daft's accounts under The Coca-Cola Company Thrift & Investment
Plan, 1,700,000700,000 shares which are subject to transfer restrictions, 1,000,000
shares which are subject to performance criteria and 43,66051,400 shares held by a
foundation of which his wife is sole trustee. Also includes 389,250 shares which may be acquired upon
the exercise of options which are presently exercisable or which will become
exercisable on or before April 30, 2001. Also includes 239 shares ownedheld by
his son and 65,200 shares held by two trusts of which his wife is sole trustee;
Mr. Daft has disclaimed beneficial ownership of such shares. (13) Includes 40,716 shares credited to Mr. Stahl's accounts under The
Coca-Cola Company Thrift & Investment Plan, 556,000 shares which are subject to
transfer restrictions, 47,990 shares owned by his wife and 2,919 shares owned by
his children. Does not include 3,200 shares owned by a trust of which he is a
beneficiary. Also includes
628,250364,500 shares which may be acquired upon the exercise of options which are
presently exercisable or which will become exercisable on or before April 30,
2001.
(14)2002.
(15) Includes 3,923411,500 shares held by a family limited partnership of which
he is a general partner and a family trust of which his wife is trustee and
15,765 shares held by a foundation of which he is the sole trustee.
(16) Includes 127 shares credited to Mr. Chestnut'sHeyer's accounts under The
Coca-Cola Company Thrift & Investment Plan 272,500and 175,000 shares which are subject
to transfer restrictions, 4,960 shares owned by his wife and 2,997 shares owned by
his children.performance criteria. Also includes 328,175201,250 shares which may be acquired upon
the exercise of options which are presently exercisable or which will become
exercisable on or before April 30, 2001.
(15)2002.
(17) Includes 76,032127 shares credited to Mr. Frenette'sPatrick's accounts under The
Coca-Cola Company Thrift & Investment Plan, 72,50066,000 shares which are subject to transfer
restrictions, 17,800125,000 shares ownedwhich are subject to performance criteria and 50
shares held by his wife and 1,000 shares owned by
his son.daughter. Also includes 297,37519,500 shares which may be acquired
upon the exercise of options which are presently exercisable or which will
become exercisable on or before April 30, 2001.
(16)2002.
(18) Includes 31,43932,065 shares credited to Mr. Ware's accounts under The
Coca-Cola Company Thrift & Investment Plan, 337,000212,000 shares which are subject to
transfer restrictions, 7,411125,000 shares ownedwhich are subject to performance criteria,
7,528 shares held by his wife, 941519 shares ownedheld by his son, 170 shares ownedheld by
his daughter-in-law and 1,8791,909 shares ownedheld by his grandchildren. Also includes
291,550333,256 shares which may be acquired upon the exercise of options which are
presently exercisable or which will become exercisable on or before April 30,
2001.
112002.
12
15
(17)(19) Includes one share owned by his wife. Also includes 2,650,000 shares
which could have been acquired upon the exercise of options which were
exercisable on or before April 30, 2000 which were all of Mr. Ivester's options.
Information is as of February 17, 2000, the date of Mr. Ivester's retirement,
except that he no longer holds shares in The Coca-Cola Company Thrift &
Investment Plan. For information on subsequent option exercises, see pages 20
and 21 of this proxy statement.
(18) Includes 3,422,000993,400 shares which are subject to transfer restrictions,
and 4,976,3341,925,000 shares which are subject to performance criteria, 1,491,396 shares
which may be acquired upon the exercise of options which are presently
exercisable or which will become exercisable on or before April 30, 2001.2002 and
64,952 shares credited to accounts under The Coca-Cola Company Thrift &
Investment Plan. Includes the share units listed in the above footnotes.
(19)(20) Share units accrued under the Deferred Compensation Plan for
Non-Employee Directors and shares which may be acquired upon the exercise of
options are not counted as outstanding shares in calculating these percentages.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Executive officers, Directors and certain persons who own more than ten
percent of the Common Stock are required by Section 16(a) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and related regulationsregulations:
- to file reports of their ownership of Common Stock with the Securities
and Exchange Commission (the "SEC")SEC and the
New York Stock Exchange (the "Exchange"), and
- to furnish us with copies of the reports.
We received written representations from each such person who did not file
an annual report with the SEC on Form 5 that no Form 5 was due. Based on our
review of the reports and representations, we believe that all required Section
16(a) reports were timely filed in 2000,2001, except that Mr. Herbert A. Allen, a
Director of the Company, reported onAllen's Form 5
rather than a timely Form 4,for the purchase of 100,000 shares of Company Common Stock on February 1, 2000 by Allen
Capital, L.P., an affiliate of Allen Holding Inc., of which Mr. Allen is a
principal share owner. Mr. Allen exercises no investment discretion or control
over the portfolio of Allen Capital, L.P. and expressly disclaims beneficial
ownership of such shares.year ended December 31, 2001 was filed two days late.
PRINCIPAL SHARE OWNERS
Set forth in the table below is information as of December 31, 20002001 about
persons we know to be the beneficial owners of more than five percent of the
issued and outstanding Common Stock:
PERCENT OF CLASS
NUMBER OF SHARES AS OF
NAME AND ADDRESS BENEFICIALLY OWNED PERCENT OF CLASSDECEMBER 31, 2001
- ---------------- ------------------ ----------------------------------
Berkshire Hathaway Inc.(1) 200,000,000 8.04%
1440 Kiewit Plaza 200,000,000 8.05%
Omaha, Nebraska 68131
SunTrust Banks, Inc.(2) 136,064,428 5.47%
303 Peachtree Street 143,299,030 5.77%
Atlanta, Georgia 30308
- ------------
(1) Berkshire Hathaway Inc. ("Berkshire Hathaway"), a diversified holding
company, has informed the Company that, as of December 31, 2001, certain of its
subsidiaries hold an aggregate of 200,000,000 shares of Common Stock. The
capital stock of Berkshire Hathaway Inc. is beneficially owned 31.4%31.1% by Warren E.
BuffetBuffett, one of our Directors, and three trusts of which he is a trustee but in
which he has no beneficial interest and 2.3% by his wife. All of such 12
16
shares of
the Company are included in the share ownership of Mr. BuffetBuffett 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, 2000,2001, certain subsidiaries of SunTrust held
either individually or in various fiduciary and agency capacities an aggregate
of 143,299,030136,064,428 shares of Common Stock, of which 95,032,53487,797,932 shares, or 3.8%3.5% of
the 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 owns individually 25,373,952 shares of Common Stock and SunTrust
Bank Holding Company owns individually 12,212,54422,892,544 shares
of Common Stock and
Preferred Surety Corporation, a direct subsidiary of SunTrust Bank Holding
Company and an indirect subsidiary of SunTrust, owns individually 10,680,000
shares13
of 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 78,740,53281,044,940 shares, shared voting power
with respect to 12,630,1673,484,138 shares, sole investment power with respect to
53,260,07350,593,337 shares and shared investment power with respect to 30,288,01028,112,240 shares.
As to the shares described above, SunTrust has further informed the Company that
95,032,53487,759,706 of such shares, or 3.8%3.5% of the Common Stock, are held in various
fiduciary and agency capacities by SunTrust Bank, which is a direct subsidiary
of SunTrust Bank Holding Company and an indirect subsidiary of SunTrust.
INFORMATION ABOUT COMMITTEES, MEETINGS AND COMPENSATION OF DIRECTORS
As called for by our By-Laws, 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 and Diversity Review
Committee. All committees except the Executive Committee are composed entirely
of outside Directors. The Directors' committee memberships are indicated on
pages 6 through 910 of this proxy statement.
The Executive Committee, between meetings of the Board of Directors, may
exercise the powers of the Board of Directors except, the power to the extent prohibited
by law, amendingamend the
By-Laws, or adoptingadopt or recommendingrecommend to the share owners any matter required by the
Delaware General Corporation Law to be submitted to share owners for approval.
The Executive Committee met two timesdid not meet in 2000.2001.
The Finance Committee reviews and recommends to the Board of Directors the
policies formulated by management with respect to our financial affairs and
accounting policies. The Finance Committee has oversight of the budget and all
of the financial operations of the Company. The Finance Committee met sixfive times
in 2000.2001.
The Audit Committee recommends to the Board of Directors the engagement of
the independent auditors and reviews with the independent auditors the scope and
results of the audits, the internal accounting controls and the professional
services furnished by the independent auditors. The Board of Directors has
adopted the Charter ofa written charter for the Audit Committee which is attached as Appendix I.Committee. All four members of the Audit
Committee are "independent" as this term is defined in the New York Stock Exchange listing
standards. The Audit Committee met three times in 2000.2001.
The Compensation Committee reviews and approves all salary arrangements and
other remuneration for officers. The Compensation Committee, or its
subcommittees, also are responsible for the administration of the Stock Option
Plans, the Long-Term Performance Incentive Plan, the Executive Performance
Incentive Plan, the Executive Incentive Plan and the Restricted Stock Award
Plans. In 2000,2001, the Compensation Committee met sevenfive times, the Stock Option
Subcommittee met sixfive times and the Restricted Stock Subcommittee met five
times.
13
17
The Committee on Directors recommends to the Board of Directors candidates
for election to the Board of Directors. It also 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. Share owners who wish the Committee on Directors to
consider their recommendations for nominees for the position of Director should
submit their recommendations in writing to the Committee on Directors in care of
the Secretary of the Company at our principal executive offices. The Committee
on Directors met fourthree times in 2000.2001.
The Public Issues and Diversity Review Committee reviews our 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 and
Diversity Review Committee also reviews the Company's policies and initiatives
with respect to racial, ethnic and gender diversity among employees. The Public
Issues and Diversity Review Committee met threetwo times in 2000.2001.
14
In 2000,2001, the Board of Directors held sevensix meetings and Committees of the
Board of Directors held a total of 2530 meetings. Overall attendance at such
meetings was 95%97%. Each Director attended more than 75% of the aggregate of all
meetings of the Board of Directors and the Committees on which he/she served
during 2000.2001.
Officers 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. During 2000,2001, outside Directors received an annual retainer fee of
$125,000, with $50,000 paid in cash and $75,000 accrued in share units to the
account of each Director under the Deferred Compensation Plan for Non-Employee
Directors (the "Deferred"Director Deferred Compensation Plan"). During 2000,2001, outside
Directors also received a $1,000 fee for each Board or Committee meeting
attended and, where applicable, a $3,000 committee chairman fee.
The Director Deferred Compensation Plan provides that outside Directors may
elect to defer receipt of all or part of their annual cash retainer fee until
date(s) no earlier than the year following the year in which they leave the
Board.Board of Directors. Under this plan, retainer fees may be deferred in share
units or cash. Cash deferrals are credited with interest at the prime lending
rate of SunTrust Bank. Share units accrue phantom dividends and appreciate (or
depreciate) as would an actual share of Common Stock purchased on the deferral
date. After a participant's service as a Director terminates, cash deferrals
will be paid in cash, and share unit deferrals will be paid in shares of Common
Stock.
In addition, the Company provides insurance benefits to members of the
Board of Directors who are not employees, 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. The Company also provides health and dental coverage. Costs for all
such benefits for 20002001 totaled $40,375.$53,658.
In 2000,2001, the Company entered into a one-year agreement with The IRC Group,
LLC ("IRC"), a company of which Donald F. McHenry, one of our Directors, is
President and a principal owner. Under the agreement, IRC provides consulting
services to the Company on international affairs and business activities and is
paid $185,000. We expect to use the services of IRC in 2001.2002.
CERTAIN TRANSACTIONS AND RELATIONSHIPS
James B. Williams, one of our Directors, retired as Chairman of the Board
and Chief Executive Officer of SunTrust in March 1998, and continues to serve as
a Director and Chairman of the Executive Committee of SunTrust. Subsidiary banks
of SunTrust engageengages
in ordinary course of business banking transactions with the Company and its
subsidiaries, including the making of loans on customary terms, for which we
paid fees totaling approximately $287,000$340,000 in 2000.2001. SunTrust Bank, (formerly SunTrust Bank, Atlanta), aan indirect
subsidiary of SunTrust, has extended a $75$100 million fixed line of credit, a $200 million variable364-day line of credit and a
$3.6 million letter of credit to the Company, for which we paid 14
18
fees totaling
approximately $114,000$95,000 in 2000.2001. SunTrust Bank also holds equipment leases under
which we paid approximately $208,000$209,000 in 20002001 for the lease of trailers used to
haul syrup. A SunTrust subsidiary leases office space in a building owned by one
of our subsidiaries and located at 711 Fifth Avenue, New York, New York. Our
subsidiary acquired that building in 1982 as an incidental part of a much larger
transaction. In 2000,2001, our subsidiary was paid $332,500approximately $328,000 and it is
expected that it will be paid a similar amount in 20012002 under the terms of the
current lease. In the opinion of management, the terms of such banking and
credit arrangements and leaseleases are fair and reasonable and as favorable to the
Company and its subsidiaries as those which could have been obtained from
unrelated third parties at the time of their execution.
Warren E. Buffett, one of our Directors, is Chairman of the Board, of
Directors, Chief
Executive Officer and the major share owner of Berkshire Hathaway Inc. ("Berkshire Hathaway"). Berkshire Hathaway holds a significant
equity interest in American Express Company. In 2000, we paid fees for credit
card memberships, business travel and other services in the ordinary course of
business to subsidiaries of that company.Hathaway. International
Dairy Queen, Inc. ("IDQ") is a wholly owned subsidiary of Berkshire Hathaway. In
2000,2001, IDQ and its subsidiaries made payments totaling approximately $1,030,000$1.12
million to the Company and its subsidiaries directly and through bottlers and
15
other agents in respect of fountain syrup and other products in the ordinary
course of business. Also in 2000,2001, IDQ and its subsidiaries received promotional
and marketing incentives (such as funding and loans for menu boards bearing the
Company's logo) for corporate and franchised stores totaling approximately $1,410,000$1.3
million from the Company and its subsidiaries in the ordinary course of
business. This business relationship was in place for many years prior to
Berkshire Hathaway's acquisition of IDQ and is on terms substantially similar to
the Company's relationships with other customers. FlightSafety International,
Inc. ("FlightSafety") is also a wholly owned subsidiary of Berkshire Hathaway.
For the years 1998, 1999 and 2000, the Company paid FlightSafety approximately
$207,000, $262,000 and $347,000, respectively, for providing pilot training
services to the Company in the ordinary course of business. In 2001, the Company
paid FlightSafety approximately $269,000 for these services. Berkshire Hathaway
also holds a significantan equity interest in Moody's Corporation, and Jones Apparel Group, Inc. In 2000,to which the Company paid fees
totaling approximately $154,000 to Moody's Corporation$242,000 in 2001 for rating our commercial paper programs
and other services in the ordinary course of business. Berkshire Hathaway also
holds an equity interest in The Dun & Bradstreet Corporation. In 2000,2001, the
Company paid approximately $535,000$200,000 to Jones Apparel
Group, Inc.The Dun & Bradstreet Corporation for
apparel used for promotional purposes.providing credit reporting services and other services in the ordinary course of
business.
Herbert A. Allen, one of our Directors, is President, Chief Executive
Officer, Director and Managing Director of Allen & Company Incorporated ("ACI")
and a principal share owner of ACI's parent. ACI has leased and subleased office
space since 1977 in the building located at 711 Fifth Avenue, New York, New
York. A subsidiary of the Company acquired that building in 1982 as an
incidental part of a much larger transaction. In 2001, ACI paid approximately
$2.5 million under the lease and it is expected that ACI will pay a similar
amount in 2002 under the terms of the current lease. In 2001, the Company
entered into a one-year agreement with ACI to provide financial advisory
services under which we incurred fees to ACI totaling $3.5 million. We expect to
use the services of ACI in 2002. In the opinion of management, the terms of the
lease, as modified, and the financial advisory services 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 their execution.
Sam Nunn, one of our Directors, is a partner in the law firm King &
Spalding. King & Spalding, among numerous other law firms in the U.S. and
abroad, provided legal services to the Company and its subsidiaries in 2000, and2001. In
2001, we paid King & Spalding fees totaling approximately $7.56 million for
legal services which represents less than 5% of King & Spalding's gross revenues
for 2001. We expect that theyKing & Spalding will provide services to the Company
and its subsidiaries in 2001.2002. Mr. Nunn does not personally provide any legal
services to the Company.
See "Information about Committees, Meetings and Compensation of Directors"
on pages 1314 and 1415 and "Compensation Committee Interlocks and Insider
Participation" on pages 3130 and 32.
1531.
16
19
EXECUTIVE COMPENSATION
The following tables and narrative text discuss the compensation paid in
2001, 2000 and 1999 and 1998 to both our current and former Chief Executive OfficersOfficer and our four other most
highly compensated executive officers.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------------------------- ----------------------------------------------------------------------------
SECURITIES
RESTRICTED UNDERLYING
OTHER ANNUAL STOCK OPTIONS/SAR LTIP
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(4)BONUS(2) COMPENSATION AWARDS(8/9) AWARDS(11) PAYOUTS(12)AWARDS(7) AWARDS PAYOUTS
- --------------------------- ---- ---------- ---------- ------------ ----------- ----------- ----------------------- --------
Douglas N. Daft(1) 2000 $1,268,750 $3,000,000 $131,554(5) $87,281,250 650,0002001 $1,500,000 $3,500,000 $118,765(4) $47,880,000 1,000,000 $ 0
Chairman of the Board 1999 459,833 0 0 0 125,0002000 1,268,750 3,000,000 131,554 29,093,750 650,000 0
and Chief Executive 1998 415,250 275,0001999 459,833 0 2,700,000-- 0 351,900125,000 0
Officer
Jack L. Stahl(2)Brian G. Dyson 2001 416,667 875,000 89,238(5) 0 900,000 --
Vice Chairman and 2000 734,792 1,275,000 0 8,728,125 500,000 0-- -- -- -- -- --
Chief Operating Officer 1999 -- -- -- -- -- --
Steven J. Heyer 2001 643,333 1,562,000(3) -- 8,272,500 1,145,000 --
Executive Vice President, 2000 -- -- -- -- -- --
President and Chief 1999 485,000 0 0 0 125,000 0-- -- -- -- -- --
Operating Officer,
1998 465,000 275,000 0 2,700,000 0 429,300
James E. ChestnutCoca-Cola Ventures
Deval L. Patrick 2001 359,583 995,000(3) -- 9,004,500 378,000 --
Executive Vice President 2000 455,000 687,500 0 7,273,438 270,000-- -- -- -- -- --
and General Counsel 1999 -- -- -- -- -- --
Carl Ware 2001 541,667 725,000 89,859(6) 5,985,000 300,000 0
Executive Vice President, 1999 400,000 0 0 543,125 117,500 0
1998 365,000 275,000 0 2,531,250 0 351,900
Charles S. Frenette 2000 466,115 668,750 77,787(6) 7,273,438(10) 270,000 0
Executive Vice President 1999 390,000 0 0 271,563 117,500 0
1998 282,500 225,000 0 2,531,250 0 277,200
Carl Ware 2000 439,167 668,750 -- 0 7,273,438 270,000 0
Executive Vice PresidentPublic Affairs and 1999 350,000 0 0-- 0 93,750 0
1998 335,000 200,000 0 0 50,000 277,200
M. Douglas Ivester(3) 2000 250,000 0 81,850(7) 0 0 0
Former Chairman of the 1999 1,354,167 0 0 0 250,000 0
Board and Chief 1998 1,250,000 1,500,000 0 16,875,000 0 702,000
Executive OfficerAdministration
ALL OTHER
NAME AND PRINCIPAL POSITION COMPENSATION(13)YEAR COMPENSATION(8)
- --------------------------- -------------------- ---------------
Douglas N. Daft(1) $ 67,1712001 $117,779
Chairman of the Board 33,9322000 67,171
and Chief Executive 33,7491999 33,932
Officer
Jack L. Stahl(2) 70,946Brian G. Dyson 2001 209,159
Vice Chairman and 2000 --
Chief Operating Officer 1999 --
Steven J. Heyer 2001 0
Executive Vice President, 2000 --
President and Chief 63,5661999 --
Operating Officer,
61,716
James E. Chestnut 26,445Coca-Cola Ventures
Deval L. Patrick 2001 0
Executive Vice President 25,529
28,125
Charles S. Frenette 54,7642000 --
and General Counsel 1999 --
Carl Ware 2001 37,603
Executive Vice President, 52,502
48,995
Carl Ware2000 24,246
Executive Vice PresidentPublic Affairs and 1999 27,267
27,891
M. Douglas Ivester(3) 51,121
Former Chairman of the 17,819,697(14)
Board and Chief 142,799
Executive OfficerAdministration
- ------------
(1) Mr. Daft was elected President and Chief Operating Officer of the
Company on December 5, 1999. Mr. Daft was elected a Director on December 15,
1999. He was elected Chairman of the Board and Chief Executive Officer on
February 17, 2000.
(2) Mr. Stahl was elected Executive Vice President on January 18, 2000.
Previously he was Senior Vice President. Also on February 17, 2000, he was
elected President and Chief Operating Officer.
(3) Mr. Ivester retired as Chairman of the Board and Chief Executive
Officer of the Company on February 17, 2000.
(4) The amounts in the Bonus column for 2000 represent payments from one or more
incentive plans of the Executive Performance Incentive Plan andCompany and/or discretionary payments made to the
executive officers. No senior officer, including the named executive officers,
received an annual incentive award for 1999. The amounts in the Bonus column for
1998 for Messrs. Daft, Stahl, Chestnut, Ware and Ivester were discretionary
awards. Under the Executive Performance Incentive Plan approved by share owners
of the Companyincentive plans, 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 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,
prorated to reflect the number of months a participant was employed in the plan
year.
No
awards
16
20
were made to any executives under the Executive Performance Incentive Plan for
1998.(3) The amountamounts in the Bonus column for Mr. Frenette for 1998 was an award
under the Annual Incentive Performance Plan (the "Annual Plan"). The Annual Plan
does not cover any executive who is selectedHeyer and Mr. Patrick include
$500,000 payable to participate in the Executive
Performance Incentive Plan.
(5)each pursuant to their employment contracts.
(4) Mr. Daft's other annual compensation includes $121,762$103,898 for personal use
of Company aircraft. Mr. Daft is required by the Company to use Company aircraft
for all travel. Such travel for Mr. Daft and his spouse includes a gross-up for
taxes due.
(6)(5) Mr. Frenette'sDyson's other annual compensation includes $47,810$70,425 accrued in 2001
for relocation expenses above those covered under normal relocation programs and
$21,250 representingpayments relating to the assumption by the Company of lease payments on his
fractional ownership of a payment equivalent to dividend income under the terms of
the performance-based future grant of restricted stock tojet.
(6) Mr. Frenette
(described in footnote 10 on page 18 of this proxy statement).
(7) Mr. Ivester'sWare's other annual compensation consistedincludes $53,161 in back pay
received as part of paymentsa settlement of a class action discrimination case against
the Company.
(7) The awards of performance-based restricted stock made to Mr. Daft and
other executive officers in October 2000 were cancelled in May 2001. New awards,
for office and secretarial services asthe same number of shares, were concurrently issued with performance targets
aligned with restated earnings per share targets disclosed by the Company in
the Company's most recent
proxy statement.
(8) 500,000April 2001.
In 2001, all of the restricted shares awarded to Messrs. Daft, Heyer and
Ware and 125,000 of the restricted shares for Mr. Patrick were performance-based
restricted stock awards. The restricted shares awarded to Mr. Daft in 2000 and
the 66,000 shares awarded to Mr. Patrick in 2001 were
17
awards of restricted shares for Messrs. Daft, Stahl, Chestnutwith five and Frenette
granted prior to 2000three-year terms, respectively. All grants were awards from the
1989 Restricted Stock Award Plan.
Restrictions on those awards lapse when the recipient retires (at or after age
62 on a date that isThe value at least 5 years from the award date), becomes disabled or
dies, or upon a change in control.
1,000,000 of theyear-end for restricted shares, awarded toincluding performance-based
restricted shares, held by each executive was, respectively, for Mr. Daft,
$80,155,000, for Mr. Heyer, $8,251,250, for Mr. Patrick, $9,005,650, and all of the
restricted shares for Messrs. Stahl, Chestnut andMr.
Ware, granted from the 1989
Restricted Stock Award Plan in 2000 were performance-based restricted stock
awards as described under Item 3. To ensure tax deductibility of the awards, the
awards are contingent upon share-owner approval of Item 3.
(9) Under the 1983 Restricted Stock Award Plan, restrictions on awards
granted through July 1991 to executive officers lapse when the recipient
retires, becomes disabled or dies, or upon a change in control. Generally,
restrictions on awards granted to executive officers after July 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.$15,889,550. The shares awarded under thesethe restricted stock plans have been
adjusted, as necessary, to reflect the 2-for-1 stock splits that occurred on May
1, 1996, May 1, 1992 and May 1, 1990, and the 3-for-1 stock split that occurred
on June 16, 1986.
Under
these plans, Mr. Daft was originally awarded 1,595,000 shares, which, adjusted
for such stock splits, at the end of 2000 aggregated 1,700,000 of which
1,000,000 are performance-based shares (value at year end equaled $103,593,750);
Mr. Stahl was originally awarded 262,000 shares, which, adjusted for such stock
splits, at the end of 2000 aggregated 556,000 shares of which 150,000 are
performance-based shares (value at year end equaled $33,881,250); Mr. Chestnut
was originally awarded 243,500 shares, which, adjusted for such stock splits, at
the end of 2000 aggregated 272,500 shares of which 125,000 are performance-based
shares (value at year end equaled $16,605,469); Mr. Frenette was originally
awarded 62,500 shares, which, adjusted for such stock splits, at the end of 2000
aggregated 72,500 shares (value at year end equaled $4,417,969); and Mr. Ware
was originally awarded 156,000 shares, which, adjusted for such stock splits, at
the end of 2000 aggregated 337,000 shares of which 125,000 are performance-based
shares (value at year end equaled $20,535,938).
Dividends on all stock awards are paid at the same rate as paid to all
share owners.
The 1983 Restricted Stock Award Plan provides for the Company to
make cash payments to recipients of awards made under these plans in amounts
equal to the recipients' income tax liability on these
17
21
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.
(10) Mr. Frenette was provided with a promise to award a future grant of
restricted stock equivalent to 125,000 shares if performance criteria are met.
To ensure tax deductibility of the award, the award is subject to share-owner
approval of Item 3. To ensure tax-effective delivery of the award, the award was
not a direct grant of restricted shares. Instead, Mr. Frenette received a
promise to award such shares in January 2006 with subsequent release of the
award in March 2006, if performance related to earnings per share growth for the
period from January 1,(8) For 2001, to December 31, 2005 is met. Payments will be made
under the award to Mr. Frenette during the period equivalent to the dividend
income of an equivalent number of shares of the Company.
(11) Messrs. Daft, Stahl, Chestnut, Frenette and Ware received a stock
option award in February 2000 to ensure retention of Company leadership during a
critical time of the Company's transition. Messrs. Stahl, Chestnut, Frenette and
Ware also received option awards at the time of the Company's annual award of
such grants. The amounts of the separate awards are detailed on the Option/SAR
Grants in Last Fiscal Year chart on page 19 of this proxy statement.
(12) No awards were made to any participant under the Long-Term Performance
Incentive Plan for the three-year periods ending December 31, 2000 or December
31, 1999. The award under the Long-Term Performance Incentive Plan for the
three-year period ending December 31, 1998 represents the full award, although
one-half of the amount was subject to forfeiture if the recipient left the
Company prior to December 31, 2000, except by reason of retirement, death or
disability or unless pursuant to a change in control.
(13) For 2000, includes for Mr. Daft: $5,100 contributed by the Company to
The Coca-Cola Company Thrift & Investment Plan (the "Thrift Plan" described
below) and $62,071$112,679 accrued under The Coca-Cola Company Supplemental Benefit
Plan (the "Supplemental Plan" described below); and for Mr. Stahl:Ware: $5,100
contributed by the Company to the Thrift Plan $36,399and $32,503 accrued under the
Supplemental Plan, and
$29,447Plan. For Mr. Dyson, includes 32,908 in above-market interest
credited on amounts deferred under the Company's 1986 Compensation Deferral and
Investment Program (the "CDIP" described below); for Mr. Chestnut: $4,500 contributed, $126,250 in consulting fees
prior to his entering into a consulting contract with the Company and $50,001
paid pursuant to a consulting contract prior to his reemployment by the Company to the
Thrift Plan, and $21,945 accrued under the Supplemental Plan; for Mr. Frenette:
$5,100 contributed by the Company to the Thrift Plan, $20,217 accrued under the
Supplemental Plan and $29,447 in above-market interest credited on amounts
deferred under the CDIP; for Mr. Ware: $5,100 contributed by the Company to the
Thrift Plan and $19,146 accrued under the Supplemental Plan; and for Mr.
Ivester: $5,100 contributed by the Company to the Thrift Plan, $18,075 accrued
under the Supplemental Plan, and $27,946 in above-market interest credited on
amounts deferred under the CDIP.Company.
The Thrift Plan is a tax-qualified defined contribution plan intended to
satisfy the requirements of Sections 401(a), 401(k) and 401(m) of the Internal
Revenue Code of 1986.1986, as amended (the "Code"). The Company contributes an amount
to the Company Stock Fund of each participant's account maintained under the
Thrift Plan equal to 100% of the participant's contributions but not more than
(a) 3% of the participant's earnings or (b) the amount allowable under the
limits imposed under Sections 401(a) and 415(c) of the Internal Revenue Code, of 1986, 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 18
22
permitted under law
is used to determine the number of theoretical shares of Company Common Stock
which would have been purchased forcontributed to the participant's account in the absence of
the IRS's limitations on earnings and contributions that can be considered for
purposes of tax-qualified plans. 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, as
defined by the plan, following termination of employment.
The CDIP 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. Participants are credited with interest on their deferrals.
Effective January 1, 1998, the rate was set at 14% per annum.
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.
(14) In addition to the amounts listed in footnote 13, the amount in the
All Other Compensation column for Mr. Ivester for 1999 also includes accruals of
$17,687,141 made during 1999 regarding those portions of Mr. Ivester's
retirement arrangement which had not already been reported in prior proxy
statements. The arrangement was fully described in the Company's most recent
proxy statement.18
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
--------------------------------------------------------
% OF
NUMBER OF TOTAL
SECURITIES OPTIONS/
UNDERLYING SARS
OPTIONS/SARS GRANTED EXERCISE OR
GRANTED TO EMPLOYEES BASE PRICE EXPIRATION
NAME (#)(1) IN FISCAL YEAR ($/SHARE) DATE
- ---- ------------ -------------- ----------- ----------
Douglas N. Daft 650,000 2.1% $54.34375 2/15/2015
Jack1,000,000 2.2% $48.21 5/29/2016
Brian G. Dyson 900,000 2.0% 49.455 9/16/2008
Steven J. Heyer 805,000 1.8% 45.255 4/16/2016
340,000 .7% 48.21 5/29/2016
Deval L. Stahl 200,000 0.6% 54.34375 2/15/2015Patrick 78,000 .2% 45.255 4/16/2016
300,000 1.0% 57.84375 10/17/2015
James E. Chestnut 100,000 0.3% 54.34375 2/15/2015
170,000 0.5% 57.84375 10/17/2015
Charles S. Frenette 100,000 0.3% 54.34375 2/15/2015
170,000 0.5% 57.84375 10/17/2015.7% 48.21 5/29/2016
Carl Ware 100,000 0.3% 54.34375 2/15/2015
170,000 0.5% 57.84375 10/17/2015
M. Douglas Ivester 0 N/A N/A N/A300,000(2) .7% 48.21 5/29/2016
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
FOR OPTION TERM (15 YEARS)*TERM*
-----------------------------------------------------------
5% 10%
---------------------------- ----------------------------
PRICE
PRICE PER AGGREGATE PER AGGREGATE
NAME SHARE VALUE(2)VALUE(3) SHARE VALUE(2)VALUE(3)
- ---- --------- ---------------- --------- ----------------
Douglas N. Daft $113.035 $ 38,149,313 $227.1569100.28 $ 112,328,531
Jack52,070,000 $ 201.52 $ 153,310,000
Brian G. Dyson 69.73 18,247,500 96.44 42,286,500
Steven J. Heyer 94.13 39,344,375 189.17 115,851,575
100.28 17,703,800 201.52 52,125,400
Deval L. Stahl 113.035 11,738,250 227.1569 34,562,625
120.315 18,741,375 241.7869 55,182,938
James E. Chestnut 113.035 5,869,125 227.1569 17,281,313
120.315 10,620,113 241.7869 31,270,331
Charles S. Frenette 113.035 5,869,125 227.1569 17,281,313
120.315 10,620,113 241.7869 31,270,331Patrick 94.13 3,812,250 189.17 11,225,370
100.28 15,621,000 201.52 45,993,000
Carl Ware 113.035 5,869,125 227.1569 17,281,313
120.315 10,620,113 241.7869 31,270,331
M. Douglas Ivester N/A N/A N/A N/A100.28 15,621,000 201.52 45,993,000
All Share Owners as a
Group (weighted
average option
price per share).... $116.044 $149,715,305,212 $ 233.203 $440,828,460,80091.44 $108,461,157,433 $ 173.19 $311,719,912,866
Named executives' portion of assumed value gained by all share owners is less
than .0008equal
to .0015 of such gain.
- ------------
* The term for options granted to Messrs. Daft, Heyer, Patrick and Ware is
15 years. The term for options granted to Mr. Dyson is seven years. The dollar
gains under these columns result from calculations assuming 5% and 10% growth
rates as set by the Securities and Exchange CommissionSEC and are not intended to forecast future price
appreciation of Company Common Stock. 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.
19
23
It is important to note that options have value to recipients, including
the listed executives, 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 1999 Stock Option Plan. Under
this plan,Options
awarded vest one-fourth on the first, second, third and fourth anniversaries of
the grant date, except that options awarded to Mr. Dyson vest on the earliest to
occur of (a) two years from the grant date, (b) the date Mr. Dyson resumes
retirement status and (c) as provided in the stock option plan. The option price
must be not less than 100% of the fair market value of Company Common Stock on
the date the option is granted. The fair market value of a share of Company
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. The grants provide that stock options
may not be exercised during the first twelve months after the date of grant.
Forgrant,
except that stock options awarded on February 16, 2000,granted to Mr. Dyson may be exercised following the
options vest only at the endearliest to occur of three(a) two years from the grant date, of grant. Options awarded(b) the date Mr. Dyson
resumes retirement status and (c) as provided in October vest
one-fourth on the first, second, third and fourth anniversaries of the grant
date.stock option plan.
The plan allows shares of Company Common Stock 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. The 1999 Stock Option Plan allows options to remain
exercisable for 15 years from the date of grant. The plan has provisions about
the impact of a change of control, death, disability, retirement and termination
of employment on the exercisability of options, with change of control, death,
disability and retirement, with certain exceptions, causing acceleration of
vesting.
(2) Mr. Ware also received four stock option grants as a part of the
settlement of a class action discrimination case against the Company. These
option grants were from shares set aside for payment of the settlement.
(3) 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. Daft's award is $7,973,372 at a 5% annual rate
of stock price appreciation and $23,477,151 at a 10% annual rate of stock price
appreciation; of Mr. Stahl's February 16, 2000 award is $2,453,345 at a 5%
annual rate of stock price appreciation and $7,223,739 at a 10% annual rate of
stock price appreciation and Mr. Stahl's October 18, 2000 award is $3,917,029 at
a 5% annual rate of stock price appreciation and $11,533,474 at a 10% annual
rate of stock price appreciation; of Messrs. Chestnut, Frenette and Ware's
February 16, 2000 award is $1,266,673 at a 5% annual rate of stock price
appreciation and $3,611,869 at a 10% annual rate of stock price appreciation and
of Messrs. Chestnut, Frenette and Ware's October 18, 2000 award is $2,219,650 at
a 5% annual rate of stock price appreciation and $6,535,635 at a 10% annual rate
of stock price appreciation.19
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTIONS/SAR VALUES(1)
VALUE OF
NUMBER OF UNEXERCISED
SECURITIES IN-THE-MONEY
UNDERLYING OPTIONS/SARS AT
UNEXERCISED FY-END ($) (BASED
OPTIONS/SARS AT ON $60.9375$47.1500 PER
FY-END (#) SHARE)
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE VALUE REALIZED(2)REALIZED UNEXERCISABLE UNEXERCISABLE
- ---- --------------- ----------------- --------------- -----------------
Douglas N. Daft 56,000 $2,005,185 364,500/ $2,204,563/
1,712,500 0
Brian G. Dyson 0 N/A 389,250/ $23,719,922/
743,750 45,322,266
Jack L. Stahl0/ 0/
900,000 0
Steven J. Heyer 0 N/A 628,250/ 38,283,984/
593,750 36,181,641
James E. Chestnut0/ 0/
1,145,000 1,525,475
Deval L. Patrick 0 N/A 328,175/ 19,998,164/
358,125 21,823,242
Charles S. Frenette 48,000 $ 1,723,773(3) 297,375/ 18,121,289/
358,125 21,823,2420/ 0/
378,000 147,810
Carl Ware 0 N/A 291,550/ 17,766,328/
354,200 21,584,063
M. Douglas Ivester 770,866 $28,631,022(4) 750,000/ 45,703,125/
031,248 $ 855,958 342,008/ 2,659,663/
574,375 0
- ------------
(1) The share numbers, and market and exercise prices have been adjusted,
as necessary, for the 2-for-1 stock splits that occurred on May 1, 1996, May 1,
1992 and May
1, 1990.
20
24
(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 Company 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.
(3) The exercise price of the stock option was $9.75781, which is equal to
the fair market value of a share of Company Common Stock on the grant date,
which was April 19, 1990.
(4) Mr. Ivester's exercises took place after his retirement. The exercise
prices of the stock options were $9.75781, which is equal to the fair market
value of a share of Company Common Stock on the grant date, which was April 19,
1990; $13.95313, which is equal to the fair market value of a share of Company
Common Stock on the grant date, which was April 17, 1991; $20.5625, which is
equal to the fair market value of a share of Company Common Stock on the grant
date, which was April 15, 1992; $19.9375, which is equal to the fair market
value of a share of Company Common Stock on the grant date, which was April 15,
1993; and $25.375, which is equal to the fair market value of a share of Company
Common Stock on the grant date, which was October 19, 1994.1992.
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR(1)
PERFORMANCE
NUMBER OF OR OTHER ESTIMATED FUTURE PAYOUTS
SHARES, PERIOD UNTIL UNDER NON-STOCK PRICE-BASED PLANS(2)
UNITS OR MATURATION OR --------------------------------------
NAME OTHER RIGHTS PAYOUT THRESHOLD TARGET MAXIMUM
- ---- ------------ ------------- ---------- ----------- -----------
Douglas N. Daft...................... $1,389,300Daft.................. $1,542,200 3 years $277,860 $1,389,300 $2,431,275
Jack L. Stahl........................ 834,000$154,220 $1,542,200 $2,698,850
Brian G. Dyson................... 0 N/A N/A N/A N/A
Steven J. Heyer.................. 1,050,000 3 years 166,800 834,000 1,459,500
James E. Chestnut.................... 531,000105,000 1,050,000 1,837,500
Deval L. Patrick................. 494,820 3 years 106,200 531,000 929,250
Charles S. Frenette.................. 531,000 3 years 106,200 531,000 929,25049,482 494,820 865,935
Carl Ware............................ 531,000 3 years 106,200 531,000 929,250
M. Douglas Ivester...................Ware........................ 0 N/A N/A N/A N/A
- ------------
(1) The Company has established a Long-Term Performance Incentive Plan
which has been approved by share owners. The Compensation Committee, which
administers the plan, awards incentive compensation to certainsets award targets for executive and senior officers of
the Company as well as designated other key executives of the Company. The
Committee determines a base for each participant. The base is
calculated on the participant's salary grade midpoint and level of
responsibility, for a three-year plan period,participant, and the base cannot be
increased for that period. The Committee also sets a matrix which contains the
target levels for the performance measures selected. 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 Company 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 "Contingent 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 during such
two-year period.Company. The participant is entitled to accrueaccrued interest on the Contingent Award
during suchthe 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 .20 times the targeted payout, and ifIf actual Company performance falls below certain parameters, no
payouts are made. The target amount is earned if special performance targets are
achieved.
The
maximum amount that can be earned is 1.75 times the targeted amount.
2120
25
PENSION PLAN TABLE
ASSUMED AVERAGE
ANNUAL COMPENSATION YEARS OF CREDITED SERVICE WITH THE COMPANY
FOR FIVE-YEAR PERIOD -----------------------------------------------------------------------------------------------------------------------------
PRECEDING RETIREMENT 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- -------------------- -------- -------- -------- -------- ------------------- ---------- ---------- ---------- ----------
$ 500,000 $ 175,000 $ 200,000 $ 225,000 $ 250,000 $ 275,000
1,000,000 350,000 400,000 450,000 500,000 550,000
1,500,000 525,000 600,000 675,000 750,000 825,000
2,000,000 700,000 800,000 900,000 1,000,000 1,100,000
2,500,000 875,000 1,000,000 1,125,000 1,250,000 1,375,000
3,000,000 1,050,000 1,200,000 1,350,000 1,500,000 1,650,000
3,500,000 1,225,000 1,400,000 1,575,000 1,750,000 1,925,000
4,000,000 1,400,000 1,600,000 1,800,000 2,000,000 2,200,000
4,500,000 1,575,000 1,800,000 2,025,000 2,250,000 2,475,000
5,000,000 1,750,000 2,000,000 2,250,000 2,500,000 2,750,000
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, 2001.2002. 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 Thrift Plan and Supplemental Plan
are not included in the calculation of the named executive officer'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) $170,000 for 20002001 (the limit set by the Internal
Revenue Code of 1986)Code),
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.Code. Those
limitations in 20002001 include a maximum annual benefit at age 65 of $135,000.$140,000. 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 decides otherwise.1993.
In addition, a participant will forfeit all rights to future pension benefits
under the Supplemental Plan if the participant competes against 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
22
26 within two years after 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
21
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%). Of the named executive
officers, only Mr. Daft and Mr. Ware participate in the Key Executive Retirement
Plan. 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 starts
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. These vested benefits are
payable on termination of employment. 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. 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 competes against
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 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 under the Employee Retirement Planretirement plans as of February 17, 2000 for Mr. Ivester and December 31,
2000,2001, for the other persons named in the Summary Compensation Table are as follows:
Mr. Daft, 24.325.3 years; Mr. Stahl, 21.5Dyson, 32.1 years; Mr. Chestnut, 28.4Heyer, 0 years; Mr. Frenette, 26.6
years; Mr. Ware, 27Patrick, 0
years; and Mr. Ivester, 20.3Ware, 28 years. The years of service credited for Mr. Dyson
include his prior employment with the Company. Pursuant to contractual
arrangements, Mr. Heyer and Mr. Patrick are each credited with 10 years of
service for purposes of determination of benefits under the retirement plans.
Mr. Dyson received $34,386 in Supplemental Retirement Plan payments in
2001.
OTHER COMPENSATION MATTERS
In connection with the hiring of Messrs. Dyson, Heyer and Patrick, the
Company entered into contractual arrangements with each executive as described
below:
Brian G. Dyson -- The Company entered into an agreement with Chatham
International Corporation, a consulting firm owned by Mr. Dyson, on May 1,
2001. The arrangement called for payment to Chatham International of
$16,667 per month and reimbursement of expenses. Upon Mr. Dyson's
reemployment by the Company on August 1, 2001, the Company ended the
agreement with Chatham International and entered into an employment
agreement with Mr. Dyson. The agreement with Mr. Dyson dated September 17,
2001 is for a two-year period starting August 1, 2001. The terms of Mr.
Dyson's employment include an annual salary of $1 million, participation in
the Company's annual incentive program and a stock option award of 900,000
shares. The option award has a seven year term and will vest on the
earliest of (a) two year's from the grant date, (b) the date Mr. Dyson
resumes retirement status and (c) as provided in the stock option plan. The
Company also agreed, during his employment, to assume the lease and fee
payments of a fractional ownership of a jet owned by Mr. Dyson. Mr. Dyson
continues to receive retirement payments from Coca-Cola Enterprises Inc.
and Supplemental Retirement and Compensation Deferral Investment Program
payments from the Company, although his Employee Retirement Plan payments
are suspended during his reemployment. The agreement also provides Mr.
Dyson with the use of a car and driver.
Steven J. Heyer -- The Company entered into an agreement with Mr.
Heyer on March 2, 2001 for a five-year period. The contract is
automatically renewed unless Mr. Heyer or the Company take specific actions
to terminate it. Mr. Heyer's arrangement includes an annual salary of
$850,000, subject to increase, as well as cash incentive and Long Term
Incentive
22
("LTI") participation. For 2001, Mr. Heyer's annual incentive will not be
less than 80% of his target award for that year. Mr. Heyer's contract also
calls for the grant of annual equity awards in the range of $9 to $12
million based upon Black-Scholes valuations. The agreement with Mr. Heyer
includes a supplemental pension providing an additional ten years of
service credit under the Company's Employee Retirement Plan and
Supplemental Retirement Plan. However, payments relating to the additional
ten years of service shall be paid outside of such plans. As a hiring
inducement and make-whole for compensation Mr. Heyer was forfeiting from
his former employer, the Company provided a restricted stock award in the
amount of 50,000 shares with a five-year vesting period, a
performance-based restricted stock award in the amount of 125,000 shares
requiring specific Company earnings per share ("EPS") performance for
release after a five year measurement period and a $1,000,000 payment, half
paid at commencement of employment and the other half paid in 2002. The
Company also provided Mr. Heyer with a stock option award providing value
for forfeited options and LTI participation at Mr. Heyer's former employer.
The contract has specific provisions for treatment of all compensation in
the event of Mr. Heyer's termination. Specifically, in the event of
termination of Mr. Heyer's employment by the Company for Cause or by Mr.
Heyer for Other than Good Reason, the make-whole option would become fully
vested and be exercisable for six months following such termination. In the
event of termination of Mr. Heyer's employment by the Company for reasons
other than Cause, by Mr. Heyer for Good Reason or as a result of
Disability, Mr. Heyer is to receive an annual incentive award determined,
prorated and paid according to the terms of the plan, a lump sum payment
equivalent to three times base salary plus the average of the three
preceding bonus payments, offset by applicable severance payments; the
make-whole option will become fully vested and the 50,000 share restricted
stock award shall be released; other stock and restricted stock awards
shall be paid according to their terms; and company paid COBRA coverage and
the pension credit.
Deval L. Patrick -- The Company entered into an agreement with Mr.
Patrick on February 21, 2001 for a five year period. The contract is
automatically renewed unless Mr. Patrick or the Company take specific
actions to terminate it. Mr. Patrick's arrangement includes an annual
salary of $475,000, subject to increase, as well as cash incentive and Long
Term incentive participation. For 2001, Mr. Patrick's annual incentive will
not be less than 80% of his target award for that year. Mr. Patrick's
contract also calls for the grant of annual equity awards using ranges set
for peer executives. The agreement with Mr. Patrick includes a supplemental
pension providing an additional ten years of service credit under the
Company's Employee Retirement Plan and Supplemental Retirement Plan.
However, payments relating to the additional ten years of service shall be
paid outside of such plans. As a make-whole for compensation Mr. Patrick
was forfeiting from his former employer, the Company provided a payment of
$1,000,000, half paid at commencement of employment and the other half paid
in 2002, a restricted stock award in the amount of 66,000 shares, with a
three-year vesting period, and an option award providing value for
forfeited options at Mr. Patrick's former employer. The contract has
specific provisions for treatment of all compensation in the event of Mr.
Patrick's termination. Specifically, in the event of termination of Mr.
Patrick's employment by the Company for Cause or by Mr. Patrick for Other
than Good Reason, the make-whole option would become fully vested and be
exercisable and, if such termination occurs prior to the third anniversary
of the election of Mr. Patrick as an officer, a payment of $1,550,000 would
be made. In the event of termination of Mr. Patrick's employment by the
Company for reasons other than Cause, by Mr. Patrick for Good Reason or as
a result of Disability, Mr. Patrick is to receive an annual incentive award
determined, prorated and paid according to the terms of the plan, a lump
sum payment equivalent to two times base salary plus an amount equal to the
average of the three preceding bonus payments, offset by applicable
severance payments; the make-whole option will become fully vested and the
make-whole restricted stock award shall be released; other stock and
restricted stock awards shall be paid according to their terms; and company
paid COBRA coverage and the pension credit.
23
27
The Company has made previous filings under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, that incorporate
future filings, including this proxy statement, in whole or in part. However,
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
(PERFORMANCE GRAPH APPEARS HERE)
=============================================================================================================================
MEASUREMENT PERIOD THE COCA-COLA THEDOW JONES FOOD,
(FISCAL YEAR ENDING)DATE COMPANY S&P 500 BEVERAGE, AND TOBACCO*
- -----------------------------------------------------------------------------------------------------------------------------TOBACCO
---- ------------- ------- ---------------------
12/31/95 $100 $10096............................................ $100.00 $100.00 $100.00
12/31/97............................................ $127.86 $133.32 $133.89
12/31/98............................................ $129.56 $171.33 $148.71
12/31/99............................................ $113.91 $207.33 $106.98
12/31/00............................................ $120.66 $188.42 $147.94
12/31/01............................................ $ 100
12/31/96 $143 $123 $ 120
12/31/97 $183 $164 $ 159
12/31/98 $186 $211 $ 176
12/31/99 $163 $255 $ 128
12/31/00 $173 $232 $ 179
- -----------------------------------------------------------------------------------------------------------------------------94.83 $166.12 $155.82
* 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:
Adolph Coors Company, American Italian Pasta Company, Anheuser-Busch
Companies, Inc., Archer-Daniels-Midland Company, Brown-Forman Corporation,
Campbell Soup Company, Coca-Cola Enterprises Inc., ConAgra Foods, Inc.,
Constellation Brands, Inc., Corn Products International, Inc., Dean Foods
Company, Dole Food Company, Inc., Dreyer's Grand Ice Cream, Inc., Flowers Industries,Foods,
Inc., General Mills, Inc., H.J. Heinz Company, Hershey Foods Corporation, Hormel
Foods Corporation, IBP, inc., International Multifoods Corporation, Interstate Bakeries
Corporation, Keebler Foods Company, Kellogg Company, Krispy Kreme Doughnuts,Kraft Foods Inc., Lancaster Colony Corporation,
McCormick & Company, Incorporated, Michael Foods,NBTY, Inc., NBTY,PepsiAmericas, Inc., PepsiCo,
Inc., Philip Morris Companies Inc., Ralcorp Holdings, Inc., Ralston Purina Company, RJR.J. Reynolds
Tobacco Holdings, Inc., Sara Lee Corporation, Smithfield Foods, Inc., Suiza Foods Corporation, The Earthgrains Company, The Hain
Celestial Group, Inc., The Pepsi Bottling Group, Inc.,
24
28
Inc., The Quaker Oats Company,
The Robert Mondavi Corporation, Tootsie Roll Industries, Inc., Triarc Companies,
Inc., Tyson Foods, Inc., Universal Corporation, UST Inc., Whitman Corporation and Wm. Wrigley Jr.
Company.
The Wall Street Journal periodically changes the companies reported as a
part of the Food, Beverage and Tobacco Groups of companies. At the time last
year's proxy statement was printed, the Groups excluded American Italian Pasta
Company, Constellation Brands, Inc., Corn Products International, Inc., Dean
Foods Company, Dreyer's Grand Ice Cream, Inc., Flowers Industries, Inc., IBP,
inc., International Multifoods Corporation, Interstate Bakeries Corporation,
Keebler Foods Company, Krispy Kreme Doughnuts, Inc., Lancaster Colony
Corporation, Michael Foods, Inc.,
NBTY, Inc., Ralcorp Holdings, Inc., SmithfieldKraft Foods Inc., Suiza Foods Corporation, The Earthgrains Company, The Hain
Celestial Group, and Tootsie Roll Industries, Inc., The Pepsi Bottling Group, Inc., The Robert Mondavi
Corporation, Triarc Companies, Inc. and Universal Corporation. Those companies are included
in the Groups this year. BestfoodsThe Earthgrains Company, Flowers Industries, Inc., IBP
inc., Keebler Foods Company, Krispy Kreme Doughnuts, Inc., Michael Foods, Inc.,
Ralston Purina Company, Suiza Foods Corporation and Nabisco Group Holdings
Corp., companiesThe Quaker Oats Company,
which were included in the Groups last year, are excluded from the Groups this
year. Additionally, ConAgra Inc.Whitman Corporation changed its name to ConAgra Foods,PepsiAmericas, Inc.
The total return assumes that dividends were reinvested quarterly and is
based on a $100 investment on December 31, 1995.1996.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS OF THE COCA-COLA COMPANY
AND ITS SUBCOMMITTEES ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors of The Coca-Cola
Company and related subcommittees (the "Committees") offer this report regarding
compensation policies for executive officers and the Chief Executive Officer of
the Company.
The overall goal of the Committees is to develop executive compensation
policies and practices that are consistent with and linked to the Company's
strategic business objectives. As the year 2000 represented a year of
significant change for the Company, theThe Committees undertook a comprehensive
review of the Company's total compensation philosophyadhere to ensure that that
philosophy remained aligned with our strategic business objectives. To begin the
process, the Committees reaffirmed certain key principles
related to structuring the compensation packages of executive officers. They are
as follows:
Long-Term and At-Risk Focus. The majority of pay for executive
officers should be composed of long-term, at-risk pay to focus management
on the long-term interests of share owners. While base salary, annual
incentives and employee benefits should be at competitive levels, the
continued focus for top executives is the long-term growth of the Company.
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 has established
ownership guidelines for executives with consequences for shortfalls.
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.
25
29
Competitiveness. The Company emphasizes total compensation
opportunities while at the same time focusing attention on the competitive
posture of each component of compensation. The development of at-risk pay
policies is influenced by competitive practice. Competitiveness of base
salary and annual incentives is independent of stock performance. However,
overall competitiveness of total compensation will remain contingent on
long-term, stock-based compensation programs. 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 text section of this proxy statement.companies.
25
These principles apply to compensation policies for all executive
officers. The Committees do not follow the principles in a mechanistic
fashion; rather, the Committees use experience and judgment in determining
the appropriate mix of compensation for each individual.
The sections that follow illustrate these principles.
COMPONENTS OF EXECUTIVE COMPENSATION
The primary components of executive compensation are:
- ANNUAL CASH COMPENSATION, including base salary and annual incentives.
- LONG-TERM INCENTIVE COMPENSATION, including cash long-term incentives,
stock options and restricted stock.
Executive officers receive compensation structured to meet varying business
objectives, and to cumulatively provide a level of total compensation in the top
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 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 companies exhibiting 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.
ANNUAL CASH COMPENSATION
Base Salary. The purpose of base salary is to create a secure base of cash
compensation for executive officers that is competitive with the U.S. market for
global talent. Generally, total cash compensation (base salary plus cash
incentives) for executive officers will be
targeted within the third quartile versus the relevant talent market. The
Committees exercise their discretion in making salary decisions and rely to a
large extent on the Chief Executive Officer's evaluations of individual
executive officer performance after reviewing such performance with him. Salary
increases for executive officers do not follow a preset schedule or formula.
Base salary will provide an income level that is sufficient to minimize
day-to-day distractions of executives from their focus on long-term business
growth. However, base pay levels are not intended to be the vehicle for
significant long-term capital and wealth accumulation for executives.
26
30
With individual variation, base pay for the executive officer group
generally falls within the targeted third quartile of the relevant talent
market.
Annual Incentives. The purpose of annual incentives is to provide cash
compensation that is at-risk on an annual basis and is contingent on the
achievement of annual business and operating objectives. Annual incentives
measure business performance, include performance for operating groups and
divisions where responsibilities are group and division responsibilities, and
are a primary program for measuring individual performance. Annual incentives
provide a payout scale with high up-side opportunity for high performance and
zero payout for low performance. Additionally, annual incentives provide income
levels that are sufficient to allow for modest capital and wealth accumulation
for executive officers in the presence of high levels of business performance.
26
The Company has maintainedmaintains the Annual Performance Incentive Plan and adopted the
Executive Performance Incentive Plan effective January 1, 1994.Plan. 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 has created a companion incentive plan that allows a
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 executive officers not
expected to be subject to Section 162(m) of the Internal Revenue Code of
1986.executives. The actual award is based on
operating income and volume performance, as well as 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, income
growth and volume increases are weighted higher than personal performance,
but the weightings may be adjusted to take into account unusual
circumstances.
Executive Performance Incentive Plan. (EPIP) The Committees may
approve some or all of the executive officers for participation in this
plan each year, and executive officers selected for participation are not
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 ("EPS") gain, unit case volume
increases 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,EPS,
with the remaining amount determined by change in share of sales. Payments
from this plan are intended to qualify as tax-deductible performance-based
compensation under the terms of Section 162(m). of the Code.
Executive Incentive Plan. This plan is a companion plan to the
Executive Performance Incentive Plan (the "EPIP") so that theallows executive officers covered
under that plan may alsothe EPIP to be measured for individual performance and for
achievement of goals such as those related to diversity, quality and the
environment which are not currently part of the share-owner approved EPIP.
A portion of the total target annual incentive is payable under this plan
and the determination of individual performance against goals is made by
the Committees for the Chairman and by the Chairman for his direct reports.
Payments from this plan are not intended to qualify as tax-deductible
performance-based compensation under the terms of Section 162(m).
27
31 of the
Code.
LONG-TERM INCENTIVE COMPENSATION
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. In the presence of high levels of business performance, long-term
incentives will provide income levels that are sufficient to allow for capital
and wealth accumulation for executive officers. As framed by the guiding
principles described earlier, the Company targets a level of total compensation
for executive officers in the top quartile of the comparator group range.
Because base salary and annual incentives are targeted within the third
quartile, the compensation focus for executive officers is clearly on long-term
incentives. The scope of long-term incentive opportunities targeted for each
executive officer is determined primarily by the variance between the desired
level of total compensation and the combined amount of base salary, employee
benefits and annual incentives. The actual long-term incentive amount is
determined by both individual and Company performance.
27
Factors which influence decisions regarding what form of long-term
incentives to grant to a particular executive officer include individual
performance, 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 award type for all executive officers.
Each form of long-term incentive is discussed below.
Stock Options. The purpose of stock options is to provide equity
compensation whose value is entirely at-risk based on the increase in
Company stock price and the creation of share-owner value. Stock options
also allow executive officers to have equity ownership and to share in the
appreciation of the value of the stock in the Company. Stock options only
have value if the stock price appreciates in value from the date the
options are granted.
Stock option awards are based on business and individual performance
with high up-side award opportunity for high performance and no award
opportunity for low performance.
Approximately 8,7008,200 employees received option awards in 2000.2001. The
named executive officers received option awards for 1,960,0003,723,000 shares in
2000.2001, including option awards for 1,783,000 shares granted to Messrs.
Dyson, Heyer and Patrick as a result of contractual obligations.
Long-Term Performance Incentive Plan. The Long-Term Performance
Incentive Plan is a three-year performance plan. The plan includesallows the
followingCommittee to choose from a number of performance measures: unit case volume growth, growth in economic
profit, operating profit margin and share of sales. It also providesmeasures that the
Committee may, at the beginning of a performance period, designate two
or more of such measures to apply in calculating long-term incentive awards
for such period. The Compensation Committee believes that these factors are key contributors, over time, to the creation of
share-owner value. Below a threshold level of performance, no awards can be
earned. Restrictions are
attached on one-half of any award earned for two years after the end of the
performance period. 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
equity markets caused by external factors.
Long-term incentives only measure Company business performance and not
individual performance and link all executive actions to total Company
business results.
Participation in the Long-Term Incentive Plan has been
expanded to include levels of key management who can directly impact
Company results, including the Division President level.
28
32
Restricted Stock. The Restricted Stock Award Plan is also designed to
focus executives, including executive officers, on the long-term
performance of the Company for the duration of their careers. Restricted
stockand is not used not as a guaranteed element of any
executive's total compensation, but as a special compensation tool for
various reasons:
- to provide equity compensation whose value is at-risk and based on the
achievement of medium term goals (3 to 5 years) and the enhancement of
share-owner value over that time,
- to provide an effective retention mechanism for key executive talent
over the medium term, and
- to provide a mechanism for grants to executives that vest only upon
retirement to ensure their continuing commitment to long-term business
success.
Subject to share-owner approval, specific,Specific, measurable, performance measures such as earnings per share
will be used when restricted stock is performance-related. Individual
performance is not a measure used in determining restricted stock
performance vesting.
Executive officers, as a group, received or were promised 1,675,000
shares of restricted stock in 2000. All of the awards to executive
officers, with the exception of Mr. Daft who is discussed below, were made
with performance measurement targets.
ADDITIONAL INFORMATION
Stock Ownership Guidelines. In keeping with the principles set forth at
the beginning of this report, the Compensation Committee has established stock
ownership guidelines for officers and key
28
employees of the Company. The guidelines for stock ownership range from stock
valued at two to eight times base salary, depending on job 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 is 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
the guidelines.
Benefits. Benefits offered to executive officers serve a different purpose
than do the other elements of total compensation. In general, they are designed
to provide a safety net of protection against the financial catastrophes that
can result from illness, disability or death, and to provide a reasonable level
of retirement income based on years of service with the Company. Benefits
offered to executive officers 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 other 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 that maximizes the creation of long-term share-owner value.
29
33
In 1994, shareShare owners have approved the Executive Performance Incentive Plan, and
a revisedthe
Long-Term Performance Incentive Plan, both ofthe Company Stock Option Plans and certain
awards under the 1989 Restricted Stock Plan which meet the conditions necessary
for deductibility. Both plans were re-approved by share
owners in 1999 and the Company's Stock Option Plans meet the necessary
conditions,deductibility evidencing the intent of the Committees to comply with this
Act. It must be noted, 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.
COMPENSATION FOR THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER
TheIn his second year 2000 was a pivotal year for The Coca-Cola Company.as Chairman, Mr. Daft was in
his first year of leadership; it is the expectation of the Compensation
Committee and of the Board that he will demonstratehas demonstrated highly effective
leadership and vision in a uniquely complex marketplace and willhas consistently
drivedriven business results through innovation and creative solutions. Mr. Daft has
put in place a key executive leadership team critical to the future success of
the Company.
The Compensation Committee met and made several pay decisions related to
the Chairman'sMr. Daft's compensation package both as a result of his being elected
Chairman and also as a result of a comprehensive review of executive
compensation.in 2001. Those pay decisions are as follows:
ANNUAL CASH COMPENSATION
Mr. Daft did not receive a base salary increase by the Committee during
2001. Base salary for Mr. Daft is $1.5 million and was increased to $1,200,000 upon his election as
Chairman in February. After a full review of competitive market data, an
adjustment in annual base salary to $1,500,000 was made effective August 1, 2000.
Mr. Daft's base pay falls in the lower part of the fourth quartile for comparable positions.
Annual incentive targets were developed for Mr. Daft based upon established
methodology and targets. After a review of competitive pay information, the
Committee concluded that annual incentive targets for executive positions,
including the Chairman's, had fallen below competitive levels. Therefore, the
Committee selectively increased the target awards for 2000. As a result, for the
year 2000, Mr. Daft's annual incentive award includes both a portion payable
accordingof $3.5 million reflects payments under two
plans. The Executive Performance Incentive Plan measured his achievement of
financial goals set for him by the Committee. The Executive Incentive Plan
allowed the Committee to established EPIP targets, $928,305, which is tax deductible,also assess his achievement of
29
goals related to strategic Company-wide objectives, including efforts toward
quality, environment and a
portion that represents the higher target award, which for this year will not
qualify for tax deductibility under the provisions of Section 162(m). That
amount, $2,071,695, includes the 50% advance payment of incentives which was
made in August of 2000 to all incentive-eligible employees.enhancing our brand and corporate reputation as well as
efforts toward diversity and people management.
LONG-TERM INCENTIVE COMPENSATION
Long-Term Incentives. Mr. Daft did not earn an award for the performance
period ended December 31, 2000. Actual growth in unit case volume and economic
profit for the three-year period determined the level of payout, and performance
fell below the minimum of the range, therefore yielding no payout for the
performance period to any plan participants.
Stock Options. Mr. Daft received a retention stock optionan award of 650,000
shares with a three-year cliff vesting schedule in February 2000. This1,000,000 stock options on
May 30, 2001 to recognize his performance.
Restricted Stock. The award was
made to Mr. Daft and appropriate other awards were made to other key employees
to ensure retention of Company leadership in this critical time of the Company's
transition. No additional stock option award was made to Mr. Daft at the
30
34
annual grant time, although competitive information indicated that such an award
would be within appropriate market competitive levels.
Restricted Stock. Mr. Daft received a restricted stock award inOctober 2000 of 500,000 shares. These grants of1,000,000
performance-based restricted shares are subjectwas cancelled by the Committee in May 2001.
A new award, for the same amount of shares was issued on that date with
performance targets aligned with the restated EPS growth targets that the
Company disclosed to forfeiture
until retirement (not to occur before age 62 and before five years have elapsed
from the dateshare owners in April of the grant), death, disability or a change in control. This
restricted stock award was within the competitive ranges for long-term awards
for comparable positions.
Subject to share-owner approval,2001. Mr. Daft also received anDaft's award of
1,000,000 performance-based restricted shares which are subject to specific EPS
performance targets over a five-year measurement period. For example, if average
annual EPS performance is 15%11% over the five-year measurement period beginning
JanuaryApril 1, 2001, 50% of the award will be released to Mr. Daft. For each percent
increase above 15%11% in realized average annual growth in EPS, a higher percent of
restricted shares are released. If EPS performance is at least 20%16% over the same
period, the entire award will be released to Mr. Daft in March 2006. If EPS
performance is less than 15%11% over the measurement period, no shares will be
released. The Restricted Stock Subcommittee made this award to incent Mr. Daft
to achieve share-owner objectives for significant Company growth. The award
allows Mr. Daft to achieve significant wealth only in the presence of
significant performance, and the targets set are very aggressive.performance. If those targets are met, share owners will also
experience significant growth in the value of their holdings.
The Committees believe that the pay decisions made for Mr. Daft in his
first year2001
reflect market-competitive pay for comparable positions and set
significant goals for his achievement of share-owner value over time. Mr. Daft's performance against established business objectives will determineobjectives. The
Committees expect that future pay levelsdecisions will continue to reflect Mr. Daft's
progress toward achieving share-owner value over time.
Long-Term Incentives. Mr. Daft did not earn an award for the performance
period ended December 31, 2001. Actual growth in unit case volume and awards.
Subcommittees. Based on requirementsaverage
operating profit margin for the three-year period determined the level of
various taxpayout, and securities rules
and regulations, two subcommitteesperformance fell below the minimum of the Compensation Committee (the Restricted
Stock Subcommittee andrange, therefore yielding
no payout for the Stock Option Subcommittee) met and took action in
2000.performance period to any plan participants.
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 cautionnote 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,Cathleen P. Black, 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 2000.2001. Compensation Committee members do not
have any non-trivial professional, familial or
30
financial relationship with the Chief Executive Officer, other executive
officers or the Company, other than his or her directorship.
31
35
Herbert A. Allen, who serves as Chairman of the Compensation Committee of
the Company's Board of Directors, is President and Chief Executive Officer of
Allen & Company Incorporated ("ACI") and a principal share owner of ACI's
parent. ACI has leased and subleased office space since 1977 in the building
located at 711 Fifth Avenue, New York, New York. A subsidiary of the Company
acquired that building in 1982 as an incidental part of a much larger
transaction. The current lease, as modified from time to time, was entered into
in 1985. In 2000, ACI paid approximately $2.5 million under the lease and it is
expected that ACI will pay a similar amount in 2001 under the terms of the
current lease. In the opinion of management, the terms of the lease, as
modified, 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 and its subsidiaries together currently hold approximately
40.41%37.84% of the issued and outstanding shares of Coca-Cola Enterprises Inc.
("Enterprises"), and approximately 45.49%41.48% of the issued and outstanding shares
of Coca-Cola Embonor S.A.Erfrischungsgetraenke AG ("Embonor"CCEAG"). We call Enterprises and EmbonorCCEAG
the "Investee Companies" in this proxy statement.
CERTAIN TRANSACTIONS AND RELATIONSHIPS WITH THE INVESTEE COMPANIES
James B. Williams, one of our Directors, retired as Chairman of the Board
and Chief Executive Officer of SunTrust in March 1998, and continues to serve as
a Director and Chairman of the Executive Committee of SunTrust. Subsidiary banks
of SunTrust engaged
in ordinary course of business banking transactions in 2000,2001, and areis expected to
engage in similar transactions in 2001,2002, with Enterprises and its subsidiaries,
including the making of loans on customary terms. Fees for those transactions of
approximately $1,190,000$1.1 million were paid in 2000.2001. Also in 2000,2001, Enterprises paid
SunTrust approximately $331,000 for vehicle leases for the
transport of product, approximately $110,000$167,000 for letter of credit fees and approximately
$135,000$672,000 for interest and financing expenses.
Warren E. Buffett, one of our Directors, is Chairman of the Board, of
Directors, Chief
Executive Officer and a major share owner of Berkshire Hathaway. Berkshire
Hathaway which company holds a significantan equity interest in American Express
Company.Moody's Corporation to which Enterprises
paid approximately $341,000 in 2001 for maintaining its long-term and short-term
credit ratings. In 2001, CCEAG paid fees totaling approximately $72,000 to
American Express Company for credit card
memberships, business travel and other services in the ordinary course of
businessMoody's Corporation to subsidiaries of that company. In 2000, Embonor realizedobtain a gain of
$260,000 on an interest rate swap fromrating associated with a subsidiary of American Express Company.bond issuance.
Berkshire Hathaway also holds a significantan equity interest in The Dun & Bradstreet
Corporation, to whichCorporation. In 2001, Enterprises paid annualapproximately $177,000 to The Dun &
Bradstreet Corporation for providing credit service feesreporting services. In 2001,
Enterprises paid FlightSafety, a wholly owned subsidiary of Berkshire Hathaway,
approximately $147,000 in 2000.
32$79,000 for providing airplane maintenance training.
31
36
OWNERSHIP OF SECURITIES IN THE INVESTEE COMPANIES
The following table sets forth information regarding ownership of the stock
of the Investee Companies, if any, by each Director and nominee, our five most
highly compensated executive officers, our former Chief Executive Officer, and our Directors, nominees and executive
officers as a group, all as of February 16, 2001, except
where noted.20, 2002.
AGGREGATE NUMBER PERCENT OF
OF SHARES OUTSTANDING
NAME COMPANY BENEFICIALLY OWNED SHARES(6)SHARES(5)
- ---- ---------------------------- ------------------ -----------
Herbert A. Allen.......................Allen..................... Coca-Cola Enterprises 4,315,918(1) 1.03%2,490,000(1) *
Donald F. McHenry......................McHenry.................... Coca-Cola Enterprises 1,0201,029 *
Peter V. Ueberroth.....................Brian G. Dyson....................... Coca-Cola Enterprises 3,086(2)67,998 *
Jack L. Stahl..........................Steven J. Heyer...................... Coca-Cola Enterprises 3,0001,815(2) *
James E. Chestnut......................Deval L. Patrick..................... Coca-Cola Enterprises 7,633(3) *
M. Douglas Ivester..................... Coca-Cola Enterprises 53,476(4)1,048(3) *
All Directors, Nominees and Executive
Officers as a Group (20(23 Persons).................... Coca-Cola Enterprises 4,398,625(5) 1.04%2,562,891(4) *
- ------------
* Less than 1% of issued and outstanding shares of common stock of the
indicated entity.
(1) Includes 3,683,400 shares owned by Allen & Company Incorporated
("ACI"). Also includes 17,5002,390,000 shares held by Allen Capital, L.P., 332,500 shares
held by Allen Capital II, L.P. and 45,000 shares held by Allen Capital
International L.P., each of which is an affiliate of ACI's parent company, and
27,000 shares owned by his children; Mr. Allen exercises no investment
discretion or control over and has disclaimed beneficial ownership of such
shares.ACI. Does not include 105,000 shares
held by ACI's pension plan nor 25,000
shares managed by Mr. Allen's son in a fiduciary capacity over which Mr. Allen
does not have voting or investment power.plan.
(2) Shares are owned by a trust of which Mr. Ueberroth is one of two
trustees.
(3) Includes 4,983 phantomPhantom units issued under the Coca-Cola Enterprises Inc. Deferred
Compensation Plan for Non-Employee Director Compensation (the "Enterprises
Plan").
Also includes 1,650 shares which may be acquired upon(3) Phantom units issued under the exercise of options which are presently exercisable on or before April 30, 2001.Enterprises Plan.
(4) Includes 630 shares jointly owned with Mr. Ivester's parents and 10,0963,864 phantom units issued under the Enterprises Plan.
Also includes 2,388 shares
owned by his wife and 255 shares jointly owned by his wife and his
mother-in-law; Mr. Ivester has disclaimed beneficial ownership of such shares.
Information is as of February 17, 2000, the date of Mr. Ivester's retirement,
except for phantom units.
(5) Includes 10,385 shares which may be acquired upon the exercise of
currently exercisable options and 19,836 phantom units issued under the
Enterprises Plan listed in the above footnotes.
(6) Phantom units issued under the Enterprises Plan and shares which may be
acquired upon the exercise of options are not counted as
outstanding in calculating these percentages.
33
37
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(ITEM 2)
The Board of Directors, upon the recommendation of the Audit Committee, has
appointed Ernst & Young LLP to serve as independent auditors for the fiscal year
ending December 31, 2001,2002, subject to ratification of the appointment by the
share owners. Ernst & Young LLP has served as the Company's independent auditors
for many years and is considered by management to be well qualified.
REPORT OF THE AUDIT COMMITTEE
For many years, the Company has had an Audit Committee composed entirely of
non-management directors. The members of the Audit Committee meet the
independence and experience requirements of the New York Stock Exchange. In
2000,2001, the Committee met three times. Our Audit Committee has long followed the
substance of the procedures recommended in the report of the Blue Ribbon
Committee on Improving the Effectiveness of Corporate Audit Committees,
sponsored by the major securities markets, issued in February 1999, and our
Committee has long been advised by independent legal counsel, in its role of
overseeing financial reporting and internal control matters. Thus, when last
year the SEC and the Exchange adopted new audit committee requirements, no
significant changes in the practices of our Audit Committee were required. The Committee has adopted, and in February
20012002 our Board of Directors reapproved, a charter outlining
32
the practices it follows; a copyfollows. Additionally, the Committee has continued its
long-standing practice of the charter is attached as
Appendix I to this proxy statement.having independent legal counsel.
During the year 2000,2001, at each of its meetings, the Committee met with the
senior members of the Company's financial management team, our director of
internal audit, the Company's general counsel and our independent auditors. The
Committee's agenda is established by the Committee's chairman and the director
of internal audit. The Committee had private sessions, at each of its meetings,
with the Company's independent auditors and, separately, with the director of
internal audit, at which candid discussions of financial management, accounting
and internal control issues took place.
The Committee recommended to the Board of Directors the engagement of Ernst
& Young LLP as our independent auditors and reviewed with the Company's
financial managers, the independent auditors, and the director of internal
audit, overall audit scopes and plans, the results of internal and external
audit examinations, evaluations by the auditors of the Company's internal
controls and the quality of the Company's financial reporting.
Management has reviewed the audited financial statements in the Annual
Report with the Audit Committee including a discussion of the quality, not just
the acceptability, of the accounting principles, the reasonableness of
significant judgments, and the clarity of disclosures in the financial
statements. In addressing the quality of management's accounting judgments,
members of the Audit Committee asked for management's representations that the
audited consolidated financial statements of the Company have been prepared in
conformity with generally accepted accounting principles, and have expressed to
both management and auditors their general preference for conservative policies
when a range of accounting options is available.
34
38
In its meetings with representatives of the independent auditors, the
Committee asks them to address, and discusses their responses to several
questions that the Committee believes are particularly relevant to its
oversight. These questions include:
- Are there any significant accounting judgments made by management in
preparing the financial statements that would have been made differently
had the auditors themselves prepared and been responsible for the
financial statements?
- Based on the auditors' experience, and their knowledge of the Company, do
the Company's financial statements fairly present to investors, with
clarity and completeness, the Company's financial position and
performance for the reporting period in accordance with generally
accepted accounting principles, and SEC disclosure requirements?
- Based on the auditors' experience, and their knowledge of the Company,
has the Company implemented internal controls and internal audit
procedures that are appropriate for the Company?
The Committee believes that, by thus focusing its discussions with the
independent auditors, it can promote a meaningful dialogue that provides a basis
for its oversight judgments.
The Committee also discussed with the independent auditors other matters
required to be discussed by the auditors with the Committee under Statement on
Auditing Standards No. 61, (communicationas amended by Statement on Auditing Standards No. 90
(communications with audit committees). The Committee received and discussed
with the auditors their annual written report on their independence from the
Company and its management, which is made under Independence Standards Board
Standard No. 1 (independence discussions with audit committees), and considered
with the auditors whether the provision of financial
information systems design and implementation and other non-audit services provided by them
to the Company during 20002001 was compatible with the auditors' independence.
33
In performing all of these functions, the Audit Committee acts only in an
oversight capacity. The Committee does not complete its reviews prior to the
Company's public announcements of financial results and, necessarily, in its
oversight role, the Committee relies on the work and assurances of the Company's
management, which has the primary responsibility for financial statements and
reports, and of the independent auditors, who, in their report, express an
opinion on the conformity of the Company's annual financial statements to
generally accepted accounting principles.
In reliance on these reviews and discussions, and the report of the
independent auditors, the Audit Committee has recommended to the Board of
Directors, and the Board has approved, that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2000,2001, for filing with the Securities and Exchange Commission.
Peter V. Ueberroth, Chairman
Ronald W. Allen
Cathleen P. Black
Warren E. Buffett
35
39
AUDIT FEES, FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES AND ALL OTHER FEES.FEES
Fees for the last annual audit were approximately $5.5 million,$5 million. There were no
financial information systems design and implementation fees were approximately
$3.7 million and allservices provided by
Ernst & Young LLP. All other fees were approximately $20.5$23.9 million, including
audit related services of approximately $9.5$10.3 million and nonaudit services of
approximately $11$13.6 million. Audit related services generally include fees for
statutory audits, information systems audits, business acquisitions, and
accounting consultations. Financial information systems designNonaudit services include primarily expatriate and
implementation fees consist entirely of fees billed by the Ernst & Young LLP
consulting group prior to its sale on May 27, 2000 to Cap Gemini, a separate
French public company.corporate tax services.
We have been advised by Ernst & Young LLP that neither the firm, nor any
member of the firm, has any financial interest, direct or indirect, in any
capacity in the Company or its subsidiaries.
One or more representatives of Ernst & Young LLP will be present at this
year's Annual Meeting of Share Owners. The representatives will have an
opportunity to make a statement if they desire 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 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.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR
THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT
AUDITORS.
PROXIES RECEIVED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS SHARE
OWNERS SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
34
PROPOSAL TO APPROVE
THE AMENDMENT TO THE 1989 RESTRICTED2002 STOCK AWARDOPTION PLAN OF THE COCA-COLA COMPANY
AUTHORIZING THE GRANT OF PERFORMANCE-BASED AWARDS
AND THE ESTABLISHMENT OF PERFORMANCE CRITERIA THEREUNDER,
WHICH APPROVAL SHALL ALSO CONSTITUTE APPROVAL OF
ALL PERFORMANCE-BASED AWARDS GRANTED
DURING FISCAL YEAR 2000
(ITEM 3)
SUMMARY
We are asking for your approvalDESCRIPTION OF THE PLAN AND VOTE REQUIRED
On February 20, 2002 the Stock Option Subcommittee of an Amendment to the 1989 RestrictedCompensation
Committee recommended that the Board of Directors adopt the 2002 Stock AwardOption
Plan of The Coca-Cola Company (the "Plan""2002 Plan"). The Amendment would
permit the Restricted Stock Subcommittee to make Awards conditioned on
performance criteria. The Plan, which was approved by share owners on April 19,
1989, currently has no performance measures. The Amendment would not cause any
additional costs to share owners, would give the Company the benefit of a tax
deduction and would provide the performance-based compensation element for use
in appropriate circumstances. The closing price of a share of Company stock on
the New York Stock Exchange onOn February 20, 2001 was $58.47.
36
40
The Plan itself does not require that this Amendment be approved by share
owners. Share owners approved the Plan on April 19, 1989 without performance
requirements. However, the Restricted Stock Subcommittee and21, 2002, the Board
of Directors made the Amendment and the awards made under it contingent on
share-owner approval. Share-owner approval is required for the amount of the
Awards, if earned, to be deductible by the Company under Code Section 162(m).
That section limits deductibility of certain compensation in excess of $1
million per year paid by a publicly traded corporation to a Covered Employee.
Covered Employees are the Chief Executive Officer and the four other highest
compensated executive officers. Please note that whether or not the Amendment is
approved, the Restricted Stock Subcommittee may continue to make Awards that are
not performance-based.
The Plan has been amended from time to time and on October 18, 2000 the
Restricted Stock Subcommittee made performance-based Awards and established
performance criteria and targets for these Awards, subject to share-owner
approval of the Amendment. On February 15, 2001, the Board adopted the Restricted Stock Subcommittee's recommendation2002 Plan and directed that the 2002 Plan be submitted
to amend the share owners for approval at the 2002 Annual Meeting. The 2002 Plan to establish
performance criteria with respect to future grantswill
become effective upon the affirmative vote of performance-based Awards
under the Plan. Share-owner approvala majority of the Amendment will also constitute
approval of all grants of performance-based Awards made under the Plan during
the 2000 calendar year that apply the performance criteria set out in the
Amendment. The performance criteria described below and all performance-based
Awards applying such criteria that were granted in fiscal year 2000 under the
Plan are contingent upon approval by the majority of votes cast by
holders of the shares of Company Common Stock voting in person or by proxy at
the Annual Meeting. These performance criteria are intendedThe Company will continue to alignmake awards under the 1999
Stock Option Plan of The Coca-Cola Company, as amended (the "1999 Plan").
The purpose of the 2002 Plan is to advance the interests of key
executives more closely with the interestsCompany by
encouraging and enabling acquisition of share owners.
TAX ISSUES
Code Section 162(m) limits the deductibility of compensation of Covered
Employees to $1 million per year unless the compensation qualifies as
"performance-based." Compensationa financial interest in the formCompany by
its officers and other key employees. The 2002 Plan is intended to aid the
Company in attracting and retaining key employees, to stimulate the efforts of
restricted stock can be
excluded from this limit on deductibility if four conditions set forth bysuch employees and to strengthen their desire to remain in the Internal Revenue Service are met. These conditions are: (i) the compensation is
payable on the attainment of one or more pre-established, objective performance
criteria; (ii) the performance criteria are established by a committee that is
comprised solely of two or more outside directors (such as the Restricted Stock
Subcommittee); (iii) the material terms of the compensation and performance
criteria are disclosed to and approved by share owners before payment; and (iv)
the committee that established the performance criteria certifies that the
performance criteria have been satisfied before payment.Company's employ.
SUMMARY DESCRIPTION OF THE 2002 PLAN AND PERFORMANCE CRITERIA
The following summary of the 2002 Plan is qualified in its entirety by
reference to the text of the 2002 Plan, and the Amendment.which is attached as Appendix I. The
2002 Plan iswill be administered by the Restricted Stock Subcommittee of the Board of Directors.Option Subcommittee. Eligibility
requirements for the members of the Restricted Stock Option Subcommittee shall comply with
the provisions of Rule 16b-3 promulgated pursuant to the Securities Exchange1934 Act of 1934, as amended, or any
successor rule or regulation and currently meets the requirements for
37
41
"outside directors" under Code Section 162(m).regulation. The Restricted Stock Option Subcommittee has full and final
authority, in its discretion, to determineselect the officers and key employees who would be granted
Awards of restricted stock under the Plan,options and would determine the number of shares subject to each such Award,option,
the period during whichduration of each Award shall be subject to forfeiture,option and all otherthe terms and conditions of each Award, including whether the Award will be performance-based and the performance
criteria applicable to any such performance-based Award.option granted.
The material termsmajor provisions of the 2002 Plan as amended, and the performance criteria
established thereunder for performance-based Awards are as follows:
Eligibility. The Restricted Stock Option Subcommittee is authorized to grant Awards of restricted stock
under the Planoptions to any officer, including officers and other key employees
(as determined by the Restricted Stock Subcommittee)who are also Directors of the
Company. Awards may
also be grantedCompany, and to officers and other key employees of athe Company and its Majority-Owned
Related CompanyCompanies (as defined in the 2002 Plan), but only if. In certain circumstances, the
Stock Option Subcommittee also may grant stock options to key employees of
Related Companies (as defined in the 2002 Plan) and to consultants.
Option Price. The option price will be 100% of the fair market value of
the Company's Common Stock on the date the option is granted. In order to comply
with the laws of certain foreign jurisdictions, the Stock Option Subcommittee in
its discretion may grant options at an option price that is less than 100% of
the fair market value of the Company's Common Stock on the date the option is
granted. Fair market value for purposes of the 2002 Plan is the average of the
high and low market price of the Company's Common Stock as reported on the New
York Stock Exchange Composite Transactions listing on the relevant date.
Duration of Options. Each stock option will terminate on the date fixed by
the Stock Option Subcommittee, which shall be not more than (a) ten years after
the date of the grant for ISOs (as defined below) and (b) 15 years after the
date of grant for options that are not ISOs.
35
Vesting. Options become exercisable when they have vested. The period
before the options become exercisable is sometimes called the accrual period.
The Stock Option Subcommittee shall specify the relevant vesting provisions at
the time of the grant, including, vesting based upon the Company owns,
directly or indirectly, either, (i) at least 50%achievement of
specified performance targets. When performance targets are specified, the voting stock or capitalStock
Option Subcommittee will determine the period for which such targets must be
maintained. Generally, no portion of any option is exercisable for a period of
12 months after the Related Company or (ii) an interest that causes the Related Company's
financial results to be consolidated with the Company's financial results for
financial reporting purposes. Although the classdate of employees that is generally
eligible for restricted stock Awards under the Plan is broader, it is expected
that the employees who will receive performance-based Awards tied to the
performance criteria shall be limited to executive officers, senior
vice-presidents and other key executives of the Company and subsidiaries
(approximately 50 persons), as determined by the Restricted Stock Subcommitteegrant. All options automatically become exercisable
in its sole discretion. No person is automatically eligible to participatefull in the Plan in any plan year. The Restricted Stock Subcommittee may make occasional
Awards to key employees who are not included in the group of 50 persons in
particular circumstances.
Awards and Performance Criteria. All Awards under the Plan are in the form
of restricted stock or a promise to award restricted stock. Generally,
restrictions on Awards of restricted stock under the Plan lapse and shares are
released upon the earlierevent of a Change in Control (as defined in the 2002 Plan), death
or disability of the participant'soptionee or as decided by the Stock Option Subcommittee.
Upon retirement, options held at least one year shall become exercisable in
full.
Exercise Period. The exercise period for ISOs granted under the 2002 Plan
may not exceed 10 years from the date of grant and, for options that are not
ISOs, 15 years from the date of grant. If an optionee's employment by the
Company is terminated for any reason, except death, disability or retirement,
the optionee has six months in which to exercise an option (but only to the
extent exercisable immediately after attaining age 62, but
only if such retirement occurs at least five years aftertermination) unless the date of grant.
Underoption by its terms
expires earlier. Termination or other changes in employment status affects the
Plan, however, the Restrictedexercise period. The Stock Option Subcommittee has discretionthe right to alter the terms
of any option at grant Awards that are subjector while outstanding pursuant to such other conditions and different periods of
restriction as it determines appropriate from time to time. The Restricted Stock
Subcommittee exercised such discretion in fiscal year 2000, subject to
share-owner approval of this proposal, to make grants of performance-based
restricted stock Awards that are conditioned upon the attainment of the
performance criteria described below. The Amendment was subsequently adopted by
the Board on February 15, 2001, effective October 18, 2000, to specifically
authorize the grant of performance-based Awards and to establish performance
criteria for such Awards.
Under the terms of the Amendment, shares underlying2002
Plan; provided, that such amendment is not detrimental to the performance-based
Awards will generallyoptionee. No
outstanding option may be released on March 1 followingrepriced without the completionapproval of the "measurement period," basedshare owners. The
occurrence of a Change in Control while an optionee is an employee shall have no
effect on the levelduration of attainment during the measurement
periodexercise period.
Payment. Payment for stock purchased on the exercise of certain performance targets established by the Restricted Stock
Subcommittee at or prior to the time of grant. If the performance targets are
not attained during the measurement period, all shares underlying the Award willa stock option
must be forfeited. The measurement period will be determined by the Restricted Stock
Subcommitteemade in full at the time of grant and will be a period of years commencing on
January 1the stock option is exercised. Cashless
exercises are permitted, where the plan administrator sells some of the first yearshares
acquired upon exercise and delivers the proceeds to the Company within three
business days of the measurement period
38
42
and ending on December 31st of the last year of the measurement period. Grants
will be made no later than ninety days after commencement of the applicable
measurement period, or in the case of deferred grants, after the measurement
period, but prior to the release date.
The Restrictedexercise. Also, Company Common Stock Subcommitteewhich has complete discretion to establish the
performance criteria that will be applicable to each grant and to determine the
percentage of shares that will be released upon various levels of attainment of
the performance criteria. To comply with Code Section 162(m), the establishment
of the performance criteria and the determination of the release formula must be
made at the time of grant, but in no event later than ninety days after the
commencement of the measurement period. The Restricted Stock Subcommittee may
select the performance criteria that will be applicable to an Award from the
following list:
(i) average annual growth in earnings per share;
(ii) increase in share-owner value;
(iii) earnings per share;
(iv) net income;
(v) return on assets;
(vi) return on share-owners' equity;
(vii) increase in cash flow;
(viii) operating profit or operating margins;
(ix) revenue growth of the Company;
(x) operating expenses; and
(xi) quality as determinedbeen held by
the Company's Quality Index.
Even if the performance criteria are met, the Restricted Stock Subcommittee
has discretion (whichoptionee at least six months may be exercised at any time before shares are finally
released)tendered in payment for the exercise
price. The 2002 Plan allows U.S. taxpayers to decrease, but not increase, the number of shares that will be
released upon the various levels of attainment of the performance criteria. No
shares shall be released until the Controller and the Restricted Stock
Subcommittee certify the level of attainment of the applicable performance
criteria.
For individuals resident outside the United States, the Restricted Stock
Subcommittee may award contractual promises to grant restricted stock at a
future date. Such Awards will be subject to one or more of the performance
criteria set forth in the Amendment, and no grant of restricted stock shall be
released unless the Controller and Restricted Stock Subcommittee certify that
the performance criteria have been achieved.
A copy of the Amendment is included as Appendix II.
39
43
Limitation of Awards. As adopted in 1989, the Plan authorized the issuance
of up to 5,000,000use shares of Common Stock
(or 40,000,000withheld upon exercise to satisfy U.S. Federal, state and local income tax
liabilities due to the exercise.
Shares That May Be Issued under the 2002 Plan. A maximum of 120,000,000
shares of the Company's Common Stock -- which number may be adjusted as
adjusteddescribed below -- would be issued or transferred pursuant to stock options
granted under the 2002 Plan. If any stock option terminates or is canceled for
subsequentany reason without having been exercised in full, the shares of stock splits). As of December 31, 2000, a total of 27,579,980 shares
remainnot issued
or transferred will then become available for issuanceadditional grants of options. The
shares available under the Plan. This2002 Plan represent approximately 4.83% of the
Company's Common Stock issued and outstanding on February 22, 2002. The number reflects the
performance-based Awards made in 2000, except where the Award consisted of a
contractual promise. No more than 20%
of shares available for issuance under the 2002 Plan may be issued to any one participant. The aggregate number of shares
issuable under the Plan, and the aggregate amount issuable to any one
participant, areis subject to adjustment in the event of
any changes in the Common
Stock due to stock dividends,split, stock splits ordividend, recapitalization, merger,
consolidation, combination of sharesspin-off or other similar
action or event.
ESTIMATE OF BENEFITSaction. No individual may be awarded stock options on more than 5% of the shares
authorized under the 2002 Plan, as adjusted.
Estimate of Benefits. The number of shares of restricted stock options that willwould be awarded to
the Company's Chief Executive Officer and the other four most highly compensated
executive officers of the Company pursuant to the 2002 Plan as amended, is within
the discretion of the Restricted Stock Subcommittee and therefore isare not currently
determinable. The numberIn 2001, an aggregate of shares of restricted3,723,000 stock thatoptions were awarded under the Plan (including both performance-based Awards and Awards that
were not subject to performance criteria and both restricted stock and
contingent contracts to grant restricted stock at a future date) to
the Company's Chief Executive Officer and the four other four most highly compensated
executive officers of the Company and to other persons participating in the Plan
for fiscal year 2000 are as follows:
PERFORMANCE NON-PERFORMANCE
NAME AND POSITION SHARES SHARES
- ----------------- ----------- ---------------
Douglas N. Daft, Chairman of the Board and Chief Executive
Officer................................................... 1,000,000 500,000
Jack L. Stahl, President.................................... 150,000 0
James E. Chestnut, Executive Vice President................. 125,000 0
Charles S. Frenette, Executive Vice President............... 125,000 0
Carl Ware, Executive Vice President......................... 125,000 0
M. Douglas Ivester, former Chairman of the Board and Chief
Executive Officer......................................... 0 0
Executive Officers (including the persons named above)...... 1,675,000 500,000
Non-Executive Director Group................................ 0 0
Non-Executive Officer Employee Group........................ 1,000,000 0
FISCAL YEAR 2000 PERFORMANCE-BASED AWARDS
In the fourth quarter of 2000, the Restricted Stock Subcommittee granted
performance-based Awardsa group under the 1999 Plan (including 1,783,000 stock
options granted pursuant to certainemployment agreements). Additionally in 2001,
1,625,000 stock options under the 1999 Stock Option Plan were granted to all
current executive officers senior
vice-presidentsas a group and approximately 40,400,000 options were
granted to approximately 8,200 other key executives of the Company. These grantsemployees, including all current officers
who are subjectnot executive officers. No awards were made to the approval of the Amendment by the Company's share owners at the
2001 Annual Meeting and will be voided if such approval isDirectors who are not
obtained. The
applicable performance criteria for these grants are based on annual average
growth in "earnings per share" during the measurement period, as established by
the Restricted Stock Subcommittee on
40executive officers.
36
44
October 18, 2000. No shares will be released unless the Controller and the
Restricted Stock Subcommittee certify that average annual growth in earnings per
share during the measurement period met the then applicable target. In the case
of Mr. Daft's award of 1,000,000 performance-based restricted shares, no shares
will be released unless annual average growth in earnings per share is at least
15% over the five-year measurement period beginning January 1, 2001, in which
case 50% of the award will be released to Mr. Daft. Additional shares will be
released for each additional one percent increase above 15% in average annual
growth in earnings per share. If such growth is 20% or more over the measurement
period, the entire award will be released. For this purpose, earnings per share
will be determined using the formula for diluted earnings per share defined in
FAS 128 (excluding nonrecurring items), which is: (a) the sum of income
available to common Stock Owners (excluding nonrecurring items) plus the effect
of assumed conversions, over (b) the sum of weighted-average shares plus
dilutive potential common shares. Because the performance criterion established
for the fiscal year 2000 performance-based Awards is consistent with the
performance criteria set out in the Amendment, approval of the Amendment by the
Company's share owners will also constitute approval of the performance
criterion for the fiscal year 2000 grants for purposes of Code Section 162(m).
FEDERAL INCOME TAX CONSEQUENCES TO THE COMPANY AND THE OPTIONEES
Incentive Stock Options. Some of the options granted under the 2002 Plan
may constitute "Incentive Stock Options" ("ISOs") within the meaning of Section
422 of the Code. Under present United StatesFederal tax laws, there will be no Federal income
tax laws, participantsconsequences to either the Company or an optionee upon the grant of an ISO,
nor will an optionee's exercise of an ISO result in Federal income tax
consequences to the Company. Although an optionee will not realize ordinary
income upon his exercise of an ISO, the excess of the fair market value of the
Common Stock acquired at the time of exercise over the option price may
constitute an adjustment in computing alternative minimum taxable income under
Section 56 of the Code and, thus, may result in the taxableimposition of the
"alternative minimum tax" pursuant to Section 55 of the Code on the optionee. If
an optionee does not dispose of Common Stock acquired through an ISO within one
year thatof the awarded shares are released from
restrictions (and are thus no longer subjectISO's date of exercise, any gain realized upon a subsequent
disposition of Common Stock will constitute long-term capital gain to the
optionee. If an optionee disposes of the Common Stock within such one-year
period, an amount equal to the lesser of (i) the excess of the fair market value
of the Common Stock on the date of exercise over the option price or (ii) the
actual gain realized upon a substantial risksubsequent disposition will constitute ordinary
income to the optionee in the year of forfeiture)the disposition. Any additional gain upon
such disposition will be taxed as short-term capital gain. The Company will
receive a deduction in an amount equal to the fair market valueamount constituting ordinary
income to an optionee.
Nonstatutory Options. Certain stock options which do not constitute ISOs
("nonstatutory options") may be granted under the 2002 Plan. Under present
Federal income tax regulations, there will be no Federal income tax consequences
to either the Company or the optionee upon the grant of a nonstatutory option.
However, the shares at the
time of release. A participant may, however, elect within 30 days of the Award
grant date tooptionee will realize ordinary income inupon the taxable yearexercise of the granta
nonstatutory option in an amount equal to the excess of fair market value of the
shares atCommon Stock acquired upon the timeexercise of grant. Thesuch option over the option price,
and the Company will receive a deduction forcorresponding deduction. The gain, if any,
realized upon a subsequent disposition of such Common Stock will constitute
short- or long-term capital gain, depending on the amount constituting ordinaryoptionee's holding period.
The Federal income totax consequences described in this section are based on
U.S. laws and regulations in effect on February 22, 2002, and there is no
assurance that the participantlaws and regulations will not change in the year that the participant realizes such ordinary income
provided that the Plan satisfies the requirements of Code Section 162(m). It is
the Company's intention that the Plan be construedfuture and administered in a manner
that maximizes the deductibility of compensation for the Company under Code
Section 162(m). For individuals resident outside the United States,affect
the tax consequences of the matters discussed in this section. Tax consequences
in other countries may vary.
TERMINATION OF AND AMENDMENTS TO THE 2002 PLAN; NO REPRICING OR REPLACING
OPTIONS WITHOUT A SHARE-OWNER VOTE.
The Board of Directors may terminate or amend the 2002 Plan from time to
time in any manner permitted by applicable laws and regulations, except that no
additional shares of the Company's Common Stock may be allocated to the individual2002
Plan, and tono outstanding option may be repriced or replaced, without the
Company (and/or its subsidiaries) are
determined by the applicable tax lawsapproval of the foreign jurisdiction.share owners.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR
THE PROPOSAL TO APPROVE THE AMENDMENT TO THE 1989 RESTRICTED2002 STOCK AWARDOPTION PLAN OF THE COCA-COLA COMPANY AUTHORIZING THE GRANT OF PERFORMANCE-BASED AWARDS AND THE
ESTABLISHMENT OF PERFORMANCE CRITERIA THEREUNDER, WHICH APPROVAL SHALL ALSO
CONSTITUTE APPROVAL OF ALL PERFORMANCE-BASED AWARDS GRANTED DURING FISCAL YEAR
2000.COMPANY.
PROXIES RECEIVED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS SHARE
OWNERS SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
4137
45
PROPOSALS OF SHAREOWNERSSHARE OWNERS
ITEMS 4 THROUGH 67
The following threefour proposals were submitted by share owners. If the
share-owner proponent, or a representative who is qualified under state law, is
present and submits his or her proposal for a vote, then the proposal will be
voted upon at the Annual Meeting. In accordance with Federal securities
regulations, we include the share-owner proposals plus any supporting statement
exactly as submitted by the proponents. To make sure readers can easily
distinguish between material provided by the proponents and material provided by
the Company, we have put a box around material provided by the proponents. If
proposals are submitted by more than one share owner, we will only list the
primary filer's name, address and number of shares held. We will provide the
information regarding co-filers to share owners promptly if we receive an oral
or written request for the information.
SHARE-OWNER PROPOSAL THAT THE COMPANY REPORT ON GENETIC ENGINEERINGBEVERAGE CONTAINER RECYCLING
GOALS (ITEM 4)
William C. Wardlaw III, c/o Harrington Investments, Inc.,Walden Asset Management, 40 Court Street, 9th Floor, Boston, Massachusetts
02108, owner of 1001 Second
Street, Suite 325, Napa, California 94559, owner personally of 103,5197,400 shares of The Coca-Cola Company Common Stock, submitted,
along with other co-filers, the following proposal:
- --------------------------------------------------------------------------------
WHEREAS:
International markets for genetically engineered (GE) foods are threatened by
extensive resistance:
- - Europe's larger food retailers, including Tesco, Sainsbury Group, Carrefour,
and Rewe, have committed to removing GE ingredients from their store-brand
products, as have U.S. retailers Whole Foods Market, Wild Oats Markets, and
Genuardi's Family Markets;
- - In the UK, three fast-food giants -- McDonald's, Burger King, and Kentucky
Fried Chicken -- exclude GE soy and corn ingredients from their menus;
- - McCain Foods of Canada, the world's largest potato and frozen French fry
processor, announced it would no longer accept GE Bt potatoes for their
brand-name products (11/99);
- - Gerber Products announced it would not allow GE corn or soybeans in any of
their baby foods (7/99);
- - Pepsico's Frito Lay asked farmers that supply corn for their chips to provide
only non-GE corn (1/2000);
- - Philip Morris' Kraft Foods had to recall 2.5 million taco shells discovered to
contain genetically engineered corn not approved for human consumption
(9/2000);
- - Once in effect, the Biosafety Protocol, approved by representatives of more
than 130 countries (1/2000), will require that genetically engineered
organisms (GEOs) intended for food, feed and processing must be labeled "may
contain" GEOs, and countries can decide whether to import those commodities
based on a scientific risk assessment.
There is scientific concern that genetically engineered agricultural products
may be harmful to humans, animals, or the environment:
- - The USDA has acknowledged (7/13/1999) the need to develop a comprehensive
approach to evaluating long-term and secondary effects of GE products;
- --------------------------------------------------------------------------------
42
46
- --------------------------------------------------------------------------------
- - Some GE crops have been engineered to have higher levels of toxins, such as
Bacillus thuringiensis (Bt), to make them insect-resistant;
- - Research has shown that Bt crops are building up Bt toxins in the soil,
thereby disturbing soil ecology and impacting beneficial organisms and insects
(12/1999, 5/2000);
- - The National Academy of Sciences report, Genetically Modified Pest-Protected
Plants, recommends development of improved methods for identifying potential
allergens in genetically engineered pest-protected plants. The report found
the potential for gaps in regulatory coverage. (4/2000)
The long U.S. tradition of citizens' "right to know" is expressed in laws
requiring nutritional labeling of foods:
- - Nineteen polls in the U.S. show that 75-95% of people surveyed want GE food to
be labeled as such.
- - GE crops may incorporate genes from animal species. Individuals wishing to
avoid them for religious or ethical reasons cannot unless they are labeled;
- - The European Union requires labeling of GE foods, and labeling has been
proposed by governmental authorities in Japan, New Zealand, South Korea and
Australia.
RESOLVED: Shareholders request that the Board of Directors adopt a policy to
phase out genetically engineered crops, organisms, or products thereof from all
products sold or manufactured by the company as quickly as feasible, unless
long-term safety testing shows that they are not harmful to humans, animals, and
the environment; and provide the interim step of labeling and identifying
products that may contain these ingredients, and reporting to the shareholders
by August 2001.
- --------------------------------------------------------------------------------
STATEMENT AGAINST SHARE-OWNER PROPOSAL ON GENETIC ENGINEERING
We recognize the views of those who oppose genetic engineering in
agriculture, and respect their right to those views. We are continually
monitoring this field ourselves. However, with respect to this specific
proposal, we can assureWHEREAS our share owners that the new crop varieties at issue
here do not alter the safety or quality of our products in any way.
Our soft drinks and juice drinks do not contain the protein or DNA modified
through biotechnology that is at issue here. This is true because any DNA or
protein, genetically-modified or not, is removed from our sweeteners during the
refining process. Therefore, any attempt to stamp our products as containing
"biotech" or "nonbiotech" would be misleading.
The Coca-Cola Company has been a leading proponent of the purity, safety
and quality of food and beverage products for more than a century. That remains
our top priority today. We have a firm policy of using only ingredients that
have been thoroughly evaluated for safety and accepted for food use by all
appropriate regulatory authorities.
We will continue to support the efforts of national and international
food-safety and regulatory authorities to take whatever steps are necessary,
based on sound scientific principles, to assure that any new food technology is
safe for consumers and the environment. This proposal would require our Company
to depart from that time-honored policy.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
AGAINST
THE PROPOSAL ON GENETIC ENGINEERING.
43
47
SHARE-OWNER PROPOSAL ON RECYCLING (ITEM 5)
Walden Asset Management of 40 Court Street, 9th Floor, Boston,
Massachusetts 02108, owner of 6,500 shares of The Coca-Cola Company Common
Stock, submitted, along with other co-filers, the following proposal:
- -------------------------------------------------------------------------------
WHEREAS Our Company has repeatedly emphasized its commitment to
environmental leadership, and its brand value depends on excellence. CEO Douglas
Daft has stated "Our long-term success depends on quenching the thirst of
consumers each day in an environmentally sound and sustainable way."
Yet Coca-Cola has no comprehensive recycling strategy that includes publicly
stated, quantitative goals for boosting significantly the recycled content in
its U.S. beverage containers or for enhanced rates of beverage container
recovery in the U.S.
Nearly one-third of Coca-Cola's bottled products are bottled in plastic
(polyethylene terephthalate or PET) beverage containers, yet Coca-Cola's plastic
beverage containers in the U.S. contain a mere 2.5% recycled content. This is
not "an environmentally sound and sustainable" path. At the same time Coca-Cola
bottles in Australia, New Zealand, Switzerland and Sweden use at least 25%
recycled-content plastic and the company has the technological capability to
utilize a similar level of recycled content in the U.S.
Several competitors, including Gatorade and Veryfine use 25% recycled content in
their containers. Major consumer product companies such as Unilever and Procter
& Gamble containers also use at least 25% recycled content.
WHEREAS theThe majority of Coca-Cola's beverage containers in the U.S. are being
needlessly throwncontinue to be
disposed in landfills, incinerated or littered and are therefore diverted from
the national supply of recycled plastic.
We commend the Coca-Cola Company for making substantive progress in the use
of recycled content in 2001 by incorporating the equivalent of 7.5% recycled
content resin into its plastic beverage containers in North America, and
encourage further efforts toward 25% recycled content.
We commend the company for engaging in a process known as the
Multi-Stakeholder Recovery Project with Businesses and Environmentalists Allied
for Recycling (BEAR). In this project, stakeholders throughout the beverage and
recycling value chain are working together on a Task Force to identify
innovative strategies to increase beverage container recycling rates from 40% to
80%. However, the task force's work has been completed and the company remains
without publicly stated, quantitative goals for enhanced rates of beverage
container recovery in the U.S.
The U.S. recycling rate for plastic soft drink containers declined from 50%
in 1994 to 35% in 1999,2000, with rates of 72% and Coca-Cola has actively lobbied against bottlehigher achieved in 10 states with
container deposit systems (i.e.,legislation (or bottle bill legislation) that are the only proven method
to increase recovery significantly, thereby increasing the supply of recycled
content for beverage containers.bills). Significant container recovery
rates are possible, as evidenced by the
experience of U.S.in these 10 states, with bottle bills, and ofin countries like
GermanyNorway and Sweden where companies have achieved beverage container recovery
rates of more than 80%. In the U.S., states with beverage container deposit
systems recover three times as many bottles as states without deposits.
Recycled PET content can be less costly than its virgin counterpart ifNevertheless, Coca-Cola actively opposes a greater
supply of used containers is available from recycling. Yet our company is
currently selling some of its own collected PET containers that could providebottle container deposit system, the
raw materialsonly method proven to boost the recycled content level of Coke containers.increase recovery significantly.
WHEREAS setting quantitative goals for boosting the recycled content in its
beverage containers and for higher rates of beverage container
recovery will begin to fulfillcomplement the company's stated commitment to "focus on minimizing our
impact on the environment and striveCoca-Cola Company's quantitative goals for continuous improvement."higher
rates of recycled content in beverage containers.
BE IT RESOLVED THAT Shareowners of The Coca-Cola Company request that the
board of directors report to shareholders by September 1, 2002, on its efforts
to adopt a comprehensive recycling strategy.
The strategyreport should aim
to achieve,detail the means and feasibility of achieving, by January 1,
2005, a system-wide average of 25% recycled content in
all plastic beverage containers, and a recovery rate of 80% for its beverage containers bottled in the United States. The board shall prepare a report, by
October 1, 2001, onNorth
America as well as the company's effortsplans to achieve,increase recycled content in beverage
containers. The report should:
- - include a cost-benefit analysis of the different options available, such as
curbside recycling, drop-off programs, container deposit systems, and
progressvoluntary company and industry programs;
- --------------------------------------------------------------------------------
38
- --------------------------------------------------------------------------------
- - explain the Coca-Cola Company's position on container deposit systems.
SUPPORTING STATEMENT: The Coca-Cola Company has some programs in achieving,
this strategy.place to
improve beverage container recovery rates. However, Coca-Cola does not have a
quantitative goal or timeline to increase beverage container recovery rates
equivalent to its goals for the use of recycled content.
- -------------------------------------------------------------------------------
44
48--------------------------------------------------------------------------------
STATEMENT AGAINST SHARE-OWNER PROPOSAL ONTHAT THE COMPANY REPORT BEVERAGE
CONTAINER RECYCLING TheGOALS
As never before, the Coca-Cola Companysystem is committedworking to demonstrating clear leadership and
innovation in sustaining the environment. We are proud that over the yearsimprove our
efforts have helped to make soft drink containers the most recycled packaging in
the world. However, we do realize that the fate of discarded product packagesenvironmental performance in the marketplace and in every community where we do
business.
On the issue of recycling, because of a number of initiatives we have
undertaken in North America and the progress we are making, we are confident
that our current approach is one ofthat makes the most sense for our most visible environmental issues.
Our Company doesbusiness and
is consistent with our core business objectives.
Among the initiatives we have a comprehensive recycling strategy. It takes into
account the reality that the solid waste issue requires different solutions for
different localities. To this end, our new environmental management system
ensures that measurable, locally relevant goals, action plans and programs are
put into place that will significantly reduce the environmental impact of
packaging resulting from the operation of our enterprise.
And as part of our recycling strategy,undertaken in the U.S.past year are the
following:
- Challenging our bottlers are in the
process of setting meaningful goalsNorth America system to an aggressive action plan on
recycling and to quantitative targets for increasing our use of recycled plastic.
It is important to note that we are already using 10% recycled content in one
out of every four plastic bottles. Beyond that, we will work towards increasing
the use of recycled material based on local market conditions and emerging
technologies.
We do plan to increase our use of recycled plastic but the timeframein
our PET bottles; and, goals set forth in this share-owner proposal would displace significant levelsas a result,
- Achieving a level of material currently being used by other industries. Clearly, there is not an
environmental benefit if we create a situation where increased useusage of recycled plastic byin our system simply resultsPET bottles
equivalent to 3 out of 4 bottles containing recycled plastic, one full
year ahead of schedule;
- Continuing to provide leadership and support to suppliers and technology
developers on additional ways to use recycled plastic in our packaging;
- Engaging with a variety of constituents, including share owners and
environmental groups, in an increased useeffort to better understand existing
recycling infrastructure and leverage our contacts in the recycling
community to make real progress on the issue;
- Beginning a new internal process of virgin material by
others that currently use recycled plastic.
Another goalevaluating and re-evaluating any and
all programs for increasing recovery and recycling rates for our
Company is to encourage more participation bypackages; and,
- Formalizing our consumers in recycling programsresearch and to assist in developing new recyclingdevelopment program aimed at exploring
"ecoeffective" options to increase the amount offor our packaging -- looking both at material recovered. We will shortly begin a
program to integrate environmental messages into our advertising campaigns and
marketing initiatives. And at colleges, stadiumsuse
options and other venuesways to design our packaging in a more
environmentally-conscious way.
At Coca-Cola, we believe the best environment for our success is the best
possible environment. That belief, and our core operating principles, guide us
as we devote our resources to conducting our business in ways that offer
opportunities for collecting beverage containers, local Coca-Cola bottlers have
begun working with our customers on collectionprotect,
preserve and recycling programs.
We are committed to being part ofenhance the solution to beverage container
recycling and litter issues and will continue to take a strong leadership
position in this regard.environment.
We believe this proposal, however well intentioned, is not in the best
interest of our business.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
AGAINST
THE PROPOSAL THAT THE COMPANY REPORT ON RECYCLING.
45BEVERAGE CONTAINER RECYCLING GOALS.
PROXIES RECEIVED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS
SHARE OWNERS SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
39
49SHARE-OWNER PROPOSAL ON GLOBAL SET OF CORPORATE STANDARDS (ITEM 5)
Christian Brothers Investment Services, Inc., 90 Park Avenue, 29th Floor,
New York, New York 10016, owner of 98,685 shares of The Coca-Cola Company Common
Stock, submitted, along with other co-filers, the following proposal:
- --------------------------------------------------------------------------------
WHEREAS, our company, as a global corporation, faces numerous complex challenges
as the international context within which our company operates is becoming
culturally, politically and economically diverse.
These challenges require management to address issues that include human rights,
workers' right to organize and bargain collectively, non-discrimination in the
workplace and sustainable community development. Companies should find effective
ways to eliminate the use of child labor, forced labor, bribery, harmful
environmental practices and human rights abuses.
A "Millennium Poll on Corporate Social Responsibility" interviewed over 25,000
citizens in 23 countries and found that two in three citizens want corporations
to contribute to broader societal goals. (Environics International Ltd., October
1999)
As shareholders, we are concerned about the lawsuit filed on July 20, 2001 in US
District Court for the Southern District of Florida, which accuses Coca-Cola
bottlers in Colombia of "using a right-wing paramilitary group to intimidate
and, in some cases, assassinate labor organizers." (New York Times, 7/26/01) The
widespread negative publicity and the seriousness of the allegations could
damage our company's image as a good corporate citizen.
We believe Coca-Cola needs to adopt a comprehensive code of conduct, based on
the "Principles for Global Corporate Responsibility: Bench Marks for Measuring
Business Performance," developed by an international group of religious
investors. In addition, Coca-Cola needs to develop clear standards for its
suppliers, vendors and bottlers.
Our company should be in a position to assure shareholders that its employees
are treated fairly and paid a sustainable living wage wherever they work in the
global economy. Shareholders and other stakeholders should be assured that
Coca-Cola, and Coca-Cola suppliers and bottlers, make business decisions based
on high ethical standards and internationally recognized human rights
conventions. We believe the development of a credible code of conduct that is
independently monitored will assist our company in the implementation of
policies designed to protect basic human rights and our company's image.
RESOLVED, the shareholders request the Board of Directors to adopt a code of
conduct, and standards for its suppliers and report to shareholders by October
2002 on progress towards their implementation.
SUPPORTING STATEMENT
We recommend the code and supplier standards include:
1. Policies designed to protect human rights -- civil, political, social,
cultural and economic -- consistent with respect for human dignity and
International Labor Organizations' core labor standards.
2. Policies to ensure that the company does not employ children under the age of
fifteen, or younger than the age of completing compulsory education in the
country of manufacture where such age is higher than fifteen.
- --------------------------------------------------------------------------------
40
- --------------------------------------------------------------------------------
3. Policies to ensure that there is no use of forced labor, whether in the form
of prison labor, indentured labor or bonded labor.
4. Consistent standards for workers' health and safety, practices for handling
hazardous wastes and protecting the environment, as well as promoting a fair
and dignified quality of life for workers and their communities.
We believe a company needs comprehensive global standards to guide its decisions
in order to compete successfully in the 21st Century.
- --------------------------------------------------------------------------------
STATEMENT AGAINST SHARE-OWNER PROPOSAL ON GLOBAL SET OF CORPORATE STANDARDS
We believe that the Company's existing policies address substantially all
of the concerns raised in this proposal, and that the proposal is therefore
unnecessary.
The Coca-Cola Company's commitment to human rights emanates from our core
value to treat each individual with dignity, fairness and respect. We are
committed to demonstrating our leadership in the area of respect for the rights
of our employees.
We already have in place a program designed to ensure that the rights of
our employees are respected and protected in our day-to-day operations. Our
Company is also committed to ensuring that those with whom we do business are
also committed to the human and labor rights of their respective workers. Our
commitment extends to ensuring that we and those with whom we do business make
decisions based on internationally recognized human rights conventions. This
commitment is further demonstrated by our Company's endorsement of the Global
Sullivan Principles.
Both Company policy and the Global Sullivan Principles substantially
address the subjects raised in the proposal. For example, both our policy and
the Principles specifically provide that we (i) will not condone the
exploitation of children, physical punishment or involuntary servitude; and (ii)
will pay wages that enable our employees to meet their basic needs. These
commitments are essentially identical to the principles set forth in the
proposal.
Of course, our Company must continually review both its policies and
operations not only to assure that the principles set forth above are
appropriately implemented, but also to address new concerns or issues that are
raised by our participation in a global marketplace whose standards continue to
evolve.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
AGAINST
THE PROPOSAL ON GLOBAL SET OF CORPORATE STANDARDS. PROXIES RECEIVED BY THE BOARD
OF DIRECTORS WILL BE SO VOTED UNLESS SHARE OWNERS SPECIFY IN THEIR PROXIES A
CONTRARY CHOICE.
41
SHARE-OWNER PROPOSAL ON THE CHINA BUSINESS PRINCIPLES (ITEM 6)
William C. Wardlaw III, c/o Harrington Investments, Inc., P.O. Box 6108,
Napa, California 94851, owner personally of 103,519 shares of The Coca-Cola
Company Common Stock, submitted the following proposal:
- --------------------------------------------------------------------------------
WHEREAS: our company's business practices in China respect human and labor
rights of workers. The eleven principles below were designed to commit a company
to a widely accepted and thorough set of human and labor rights standards for
China. They were defined by the International Labor Organization and the United
Nations Covenants on Economic, Social and Cultural Rights, and Civil, and
Political Rights. They have been signed by the Chinese government and China's
national laws.
(1) No goods or products produced within our company's facilities or those of
suppliers shall be manufactured by bonded labor, forced labor, within
prison camps or as part of reform-through-labor or
reeducation-through-labor programs.
(2) Our facilities and suppliers shall adhere to wages that meet workers' basic
needs, fair and decent working hours, and at a minimum, to the wage and
hour guidelines provided by China's national labor laws.
(3) Our facilities and suppliers shall prohibit the use of corporal punishment,
any physical, sexual or verbal abuse or harassment of workers.
(4) Our facilities and suppliers shall use production methods that do not
negatively affect the worker's occupational safety and health.
(5) Our facilities and suppliers shall not call on police or military to enter
their premises to prevent workers from exercising their rights.
(6) We shall undertake to promote the following freedoms among our employees
and the employees of our suppliers: freedom of association and assembly,
including the rights to form unions and bargain collectively; freedom of
expression, and freedom from arbitrary arrest or detention.
(7) Company employees and those of our suppliers shall not face discrimination
in hiring, remuneration or promotion based on age, gender, marital status,
pregnancy, ethnicity or region of origin.
(8) Company employees and those of our suppliers shall not face discrimination
in hiring, remuneration or promotion based on labor, political or religious
activity, or on involvement in demonstrations, past records of arrests or
internal exile for peaceful protest, or membership in organizations
committed to non-violent social or political change.
(9) Our facilities and suppliers shall use environmentally responsible methods
of production that have minimum adverse impact on land, air and water
quality.
(10) Our facilities and suppliers shall prohibit child labor, at a minimum
comply with guidelines on minimum age for employment within China's
national labor laws.
(11) We will issue annual statements to the Human Rights for Workers in China
Working Group detailing our efforts to uphold these principles and to
promote these basic freedoms.
- --------------------------------------------------------------------------------
42
- --------------------------------------------------------------------------------
RESOLVED: Stockholders request the Board of Directors to make all possible
lawful efforts to implement and/or increase activity on each of the principles
named above in the People's Republic of China.
SUPPORTING STATEMENT: As U.S. companies import more goods, consumer and
shareholder concern is growing about working conditions in China that fall below
basic standards of fair and humane treatment. We hope that our company can prove
to be a leader in its industry and embrace these principles.
- --------------------------------------------------------------------------------
STATEMENT AGAINST SHARE-OWNER PROPOSAL ON THE CHINA BUSINESS PRINCIPLES
We believe that the Company's existing policies address substantially all
of the concerns raised in this proposal, and that the proposal is therefore
unnecessary.
The Coca-Cola Company's commitment to human rights emanates from our core
value to treat each individual with dignity, fairness and respect. We are
committed to demonstrating our leadership in the area of respect for the rights
of our employees.
We already have in place a program designed to ensure that the rights of
our employees are respected and protected in our day-to-day operations. Our
Company is also committed to ensuring that those with whom we do business are
also committed to the human and labor rights of their respective workers. Our
commitment extends to ensuring that we and those with whom we do business make
decisions based on internationally recognized human rights conventions. This
commitment is further demonstrated by our Company's endorsement of the Global
Sullivan Principles.
Both Company policy and the Global Sullivan Principles substantially
address the subjects raised in the proposal. For example, both our policy and
the Principles specifically provide that we (i) will not condone the
exploitation of children, physical punishment or involuntary servitude; and (ii)
will pay wages that enable our employees to meet their basic needs. These
commitments are essentially identical to the principles set forth in the
proposal.
Of course, our Company must continually review both its policies and
operations not only to assure that the principles set forth above are
appropriately implemented, but also to address new concerns or issues that are
raised by our participation in a global marketplace whose standards continue to
evolve.
Further, as a truly global corporation with operations in many countries,
we believe that a single uniform set of operating standards and principles
applicable to all our worldwide operations, like the one we have in place, is
the best course. Consequently, we do not believe that the proposal is in the
best interests of our business or our share owners.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
AGAINST
THE PROPOSAL ON THE CHINA BUSINESS PRINCIPLES. PROXIES RECEIVED BY THE BOARD OF
DIRECTORS WILL BE SO VOTED UNLESS SHARE OWNERS SPECIFY IN THEIR PROXIES A
CONTRARY CHOICE.
43
SHARE-OWNER PROPOSAL ON STOCK OPTIONS (ITEM 6)7)
International Brotherhood of Teamsters General Fund of 25 Louisiana Avenue,
N.W., Washington, D.C. 20001-2198, owner of 100 shares of The Coca-Cola Company
Common Stock, submitted the following proposal:
- ---------------------------------------------------------------------------------------------------------------------------------------------------------------
RESOLVED: That Coca-Cola Company stockholders urge the Board of Directors take
the necessary steps to adopt a policy that no executives may cash in on stock
options within one year of the announcement of a significant workforce (more
than 1% of total workforce) reduction.
SUPPORTING STATEMENT: Stock options were created to reward good performance.
This proposal would help to ensure that options reward real improvements in
performance, rather than short-term stock boosts, which are sometimes associated
with the announcement of major layoffs.
In 2000, Coca-Cola cut over 5,000 jobs --- 20% of the workforce. Turnover at
Coca-Cola is at 12%, even with the elimination of 5,200 jobs. From 1996-1998 the
turnover rate was 6.7%.
While Wall Street may give a temporary boost to stock prices at layoff
announcements, there is growing concern that downsizings do not translate into
long-term benefits for shareholders. Author Timothy Carpenter likens such
layoffs to "converting your favorite horse to the commodity status of refined
glue. Yes, it can be more efficient and profitable, but who or what will replace
the horse?"
A recent 7-year study of 25 large corporations noted that a 10% reduction in
employment caused an average of only a 1.5% reduction in operating costs. After
three years, the average downsized company's stock was up only 4.7%, compared
with a typical increase of 34.4% for similar companies in the same field that
didn't reduce staff to the same extent.
As investors with a long-term horizon interested in building our investments
into the next century, we believe long-term growth at Coca-Cola is served by
linking options to long-term company growth, rather than stock market blips that
have more to do with the zeitgeistclimate on Wall Street than with the real value of the
company.
Given the state of the economy in the United States, the business downturn and
the after-effects of the September 11th attacks, we believe that the Coca-Cola
Company has an opportunity to show true leadership as our nation attempts to get
back to business. Mass layoffs have proliferated in the past year, particularly
since September 11th. Shareholders need to see a clear commitment from
management that workers are not the only sector of a corporation making
sacrifices. Not exercising options is a clear signal that management will do
whatever is necessary to return to profitability.
For the above reasons we urge you to vote FOR this proposal.
- -------------------------------------------------------------------------------
46
50--------------------------------------------------------------------------------
STATEMENT AGAINST SHARE-OWNER PROPOSAL ON STOCK OPTIONS
We believe this proposal is not contractually permissible, would supercede
previous share-owner action and would unduly limit management's ability to
operate the Company's business in the best interest of our share owners,
is not contractually permissible, and would supercede previous share-owner
action.owners.
The Company's stock option plans have been approved by share owners. Once
options are awarded, the stock option contracts are legally binding obligations
with the participating employees. It is not within management's purview, as this
proposal suggests, to alter terms of the contracts, once accepted.
44
The workforce reduction mentioned in the proposal resulted from effortswas a necessary action to
improve our business. It was the result of a careful review of our business
functions and a strategic decision to deploy our resources to better serve local
markets. Management has publicly stressed that this decision was a painful one,
and we do not want to go through it again.one.
But there can be times when improving the operation of the business results innecessitates
reductions in staff; for our Company, the year 2000 was such a time.
The contractual obligation of our options program aside, we believe that an
options program that served to limit management in taking steps to improve
performance would be, on its face, counterproductive.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
AGAINST
THE PROPOSAL ON STOCK OPTIONS. PROXIES RECEIVED BY THE BOARD OF DIRECTORS WILL
BE SO VOTED UNLESS SHARE OWNERS SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
EXPENSES OF SOLICITATION
We bear all expenses incurred in connection with the solicitation of
proxies. We have engaged Georgeson Shareholder Communications 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 held in their
names.
Our Directors, and officers and employees may also solicit proxies by mail,
telephone and personal contact. They will not receive any additional
compensation for these activities.
PROPOSALS OF SHARE OWNERS FOR 20022003 ANNUAL MEETING
We must receive proposals of share owners intended to be presented at the
20022003 Annual Meeting of Share Owners on or before November 2, 2001,4, 2002, in order for
the proposals to be eligible for inclusion in our proxy statement and proxy
relating to that meeting. These proposals should be sent to our Corporate
Secretary by fax to 404-676-8409 or by mail to the Office of the Secretary, P.O.
Box 1734, NAT 2616, Atlanta, Georgia 30301-1734 or by e-mail to sshaw@na.ko.com.
According to our By-Laws, 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 and shall
not be acted upon unless
- specifically described in our notice to all share owners of the meeting
and the matters to be acted upon thereat, or
- the proposal shall have been submitted in writing to the Chairman of the
Board of Directors in care of the Office of the Secretary at the
above fax number or mailing address or e-mail address and received at our
principal executive offices at least 60 days prior to the date of such
meeting,December 18, 2002, and such proposal
is, under law, an appropriate subject for share-owner action.
4745
51HOUSEHOLDING
As permitted by the 1934 Act, only one copy of this proxy statement is
being delivered to share owners residing at the same address, unless such share
owners have notified the Company of their desire to receive multiple copies of
the proxy statement.
The Company will promptly deliver, upon oral or written request, a separate
copy of the proxy statement to any share owner residing at an address to which
only one copy was mailed. Requests for additional copies should be directed to
Share-Owner Affairs, by phone (404) 676-2777 or by fax at (404) 515-0358 or by
mail to Share-Owner Affairs, P.O. Box 1734, NAT 2614, Atlanta, Georgia
30301-1734 or by e-mail to shareowner affairs@na.ko.com.
Share owners residing at the same address and currently receiving only one
copy of the proxy statement may contact Share-Owner Affairs by fax at (404)
515-0358 or by mail to Share-Owner Affairs, P.O. Box 1734, NAT 2614, Atlanta,
Georgia 30301-1734 or by e-mail to shareowner affairs@na.ko.com to request
multiple copies of the proxy statement in the future.
Share owners residing at the same address and currently receiving multiple
copies of the proxy statement may contact Share-Owner Affairs, P.O. Box 1734,
NAT 2614, Atlanta, Georgia 30301-1734 or by e-mail to shareowner
affairs@na.ko.com to request that only a single copy of the proxy statement be
mailed in the future.
OTHER INFORMATION
Management does not know of any items, 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 item or proposal that may properly come before the meeting,
including voting on a proposal omitted from this proxy statement pursuant to the
rules of the Securities and Exchange Commission,SEC, it is intended that proxies 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 2, 20014, 2002
------------------------
THE 20002001 ANNUAL REPORT TO SHARE OWNERS INCLUDES OUR FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000.2001. WE HAVE MAILED THE 20002001 ANNUAL
REPORT TO ALL SHARE OWNERS. THE 20002001 ANNUAL REPORT DOES NOT FORM ANY PART OF THE
MATERIAL FOR THE SOLICITATION OF PROXIES.
------------------------
4846
52
APPENDIX I
AUDIT COMMITTEE CHARTER
ORGANIZATION
This charter governsTHE COCA-COLA COMPANY
2002 STOCK OPTION PLAN
SECTION 1. PURPOSE
The purpose of The Coca-Cola Company 2002 Stock Option Plan (the "Plan") is
to advance the operationsinterest of The Coca-Cola Company (the "Company") and its Related
Companies (as defined in Section 2) by encouraging and enabling the acquisition
of a financial interest in the Company by officers and other key employees of
the Audit Committee (the
"Committee")Company or its Related Companies. In addition, the Plan is intended to aid
the Company and furthers its descriptionRelated Companies in attracting and retaining key employees,
to stimulate the efforts of such employees and to strengthen their desire to
remain in the Company's By-laws. The charter
willemploy of the Company and its Related Companies. Also, the Plan is
intended to help the Company and its Related Companies, in certain instances, to
attract and compensate consultants to perform key services.
SECTION 2. DEFINITIONS
"Business Day" means a day on which the New York Stock Exchange is open for
securities trading.
"Change in Control" shall mean a change in control of a nature that would
be reviewedrequired to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A under the Securities Exchange Act of 1934, as amended ("1934
Act"), as in effect on January 1, 2002, provided that such a change in control
shall be deemed to have occurred at such time as (i) any "person" (as that term
is used in Sections 13(d) and reassessed14(d)(2) of the 1934 Act), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the 1934 Act as in effect on
January 1, 2002) directly or indirectly, of securities representing 20% or more
of the combined voting power for election of directors of the then outstanding
securities of the Company or any successor of the Company; (ii) during any
period of two (2) consecutive years or less, individuals who at the beginning of
such period constituted the Board of Directors of the Company cease, for any
reason, to constitute at least a majority of the Board of Directors, unless the
election or nomination for election of each new director was approved by a vote
of at least two-thirds of the Committee and willdirectors then still in office who were directors
at the beginning of the period; (iii) the share owners of the Company approve
any merger or consolidation as a result of which the KO Common Stock (as defined
below) shall be approvedchanged, converted or exchanged (other than a merger with a
wholly owned subsidiary of the Company) or any liquidation of the Company or any
sale or other disposition of 50% or more of the assets or earning power of the
Company; or (iv) the share owners of the Company approve any merger or
consolidation to which the Company is a party as a result of which the persons
who were share owners of the Company immediately prior to the effective date of
the merger or consolidation shall have beneficial ownership of less than 50% of
the combined voting power for election of directors of the surviving corporation
following the effective date of such merger or consolidation; provided, however,
that no Change in Control shall be deemed to have occurred if, prior to such
times as a Change in Control would otherwise be deemed to have occurred, the
Board of Directors determines otherwise.
"Board" means the Board of Directors of the Company.
"Committee" means a committee appointed by the Board of Directors (the "Board"), at least annually. Thein
accordance with the Company's By-Laws from among its members. Unless and until
its members are not qualified to serve on the Committee shall be
appointed bypursuant to the
Board and shall comprise at least three directors, each of whom
are independent of management and the Company. Membersprovisions of the Committee will be
considered independent if, inPlan, the determinationStock Option Subcommittee of the Compensation
Committee of the Board they meet the New
York Stock Exchange definition of "independence." All committee members will be
financially literate, or will become financially literate within a reasonable
period of time after appointment to the committee, and at least one member will
have accounting or related financial management expertise as determined by the
Board.
The Committee will meet as often as may be deemed necessary or appropriate
in its judgment, generally at least three times each year, and at such times and
places and in such mannershall function as the Committee shall determine. The Committee shall
report to the Board with respect to its meetings. The Board will designate a
ChairpersonCommittee. Eligibility requirements
47
for the Committee. The majority of the members of the Committee shall constitute a quorum.
STATEMENT OF POLICY
The Committee will provide assistance tocomply with Rule 16b-3 under the Board in fulfilling its
oversight responsibility to1934 Act, or
any successor rule or regulation.
"Disabled" or "Disability" means the share owners and others relating tooptionee meets the Company's financial statements anddefinition of
"disabled" under the financial reporting process, the systems
of internal accounting and financial controls, the internal audit function, the
annual independent auditterms of the Company's financial statements, and the legal
compliance and ethics programs as established by management and the Board,
including the Company's Code of Business Conduct. In so doing, it is the
responsibility of the Committee to maintain free and open communication between
the Committee, independent auditors, the internal auditors and management of the
Company. In discharging its oversight role, the Committee is empowered to
investigate any matter brought to its attention with full access to all books,
records, facilities, and personnel of the Company and the power to retain
outside counsel or other experts for this purpose.
RESPONSIBILITIES AND PROCESSES
The primary responsibility of the Committee is to oversee the Company's
financial reporting process on behalf of the Board and report the results of its
activities to the Board. Management is responsible for preparing the Company's
financial statements, and the independent auditors are responsible for auditing
those financial statements. The CommitteeLong-Term Disability Income Plan in
carrying out its responsibilities
believes its policies and procedures should remain flexible, in order to best
react to changing conditions and circumstances. The Committee should take the
appropriate actions to set the overall corporate "tone" for quality financial
reporting, sound business risk practices, and ethical behavior.
The following shall be the principal recurring processes of the Committee
in carrying out its oversight responsibilities. The processes are set forth as a
guide with the understanding that the Committee may supplement them as
appropriate.
- The Committee shall have a clear understanding with management and the
independent auditors that the independent auditors are ultimately
accountable to the Board and the Committee, as representatives of the
Company's share owners. The Committee and the Board
49
53
shall have the ultimate authority and responsibility to evaluate and,
where appropriate, replace the independent auditors. The Committee shall
discuss the auditors' independence from management and the Company and
the matters included in the written disclosures required by the
Independence Standards Board. Annually, the Committee will review and
recommend to the Board the selection of the Company's independent
auditors, subject to share owner approval.
- The Committee shall discuss with the internal auditors and the
independent auditors the overall scope and plans for their respective
audits including the adequacy of staffing and the compensation. Also, the
Committee will discuss with management, the internal auditors, and the
independent auditors the adequacy and effectiveness of the accounting and
financial controls, including the Company's system to monitor and manage
business risk, and legal and ethical compliance programs, including the
Code of Business Conduct. Further, the Committee will meet separately
with the internal auditors and the independent auditors, with and without
management present, to discuss the results of their examinations and will
provide sufficient opportunity for the internal auditors and the
independent auditors to meet privately with the members of the Committee
to discuss any matters the internal auditors or the independent auditors
wish to discuss in the absence of management.
- The Committee shall review the interim financial statements with
management and the independent auditors prior to the filing of the
Company's Quarterly Report on Form 10-Q. Also, the Committee will discuss
the results of the quarterly review and any other matters required to be
communicated to the Committee by the independent auditors under generally
accepted auditing standards. The Chairman of the Committee may represent
the entire Committee for the purposes of this review.
- The Committee shall review with management and the independent auditors
the financial statements to be included in the Company's Annual Report on
Form 10-K, (or the annual report to share owners if distributed prior to
the filing of the Form 10-K) including their judgment about the quality,
not just acceptability, of accounting principles, the reasonableness of
significant judgments, and the clarity of the disclosures in the
financial statements. The Committee will review with management and the
independent auditors significant changes in the accounting policies of
the Company and accounting and financial reporting proposals that may
have a significant impacteffect on the Company's financial reports. Also,date in question, whether or not the Committee will discussoptionee is covered by such
plan.
"ISO" means an incentive stock option within the results of the annual audit and any other
matters required to be communicated to the Committee by the independent
auditors under generally accepted auditing standards. Based on these
reviews, the Committee will make a recommendation to the Board as to
whether the audited financial statements should be included in the
Company's Annual Report on Form 10-K.
50
54
APPENDIX II
AMENDMENT TO THE 1989 RESTRICTED STOCK AWARD PLAN OF THE COCA-COLA COMPANY
AUTHORIZING THE GRANT OF PERFORMANCE-BASED AWARDS
The 1989 Restricted Stock Award Plan of The Coca-Cola Company be, and it hereby
is, amended effective October 18, 2000 by adding the following new paragraph (d)
to Section 5:
(d) Performance-Based Awards.
1. The Restricted Stock Subcommittee of the Board which shall be
comprised of two or more outside directors meeting the requirementsmeaning of Section 162(m)422 of
the Internal Revenue Code of 1986, as amended (the
"Code")(amended.
"KO Common Stock" means the "Subcommittee") may select from time to time,common stock of The Coca-Cola Company, par
value $.25 per share.
"Majority-Owned Related Company" means a Related Company in its
discretion, executive officers, senior vice-presidents and other key
executives ofwhich the
Company to receive awards of restricted stock under the
Plan, in such amounts as the Subcommittee may, in its discretion, determine
(subject to any limitations provided in the Plan), the release of which
will be conditioned upon the attainment of certain performance targets
("Performance-Based Awards"). With respect to individuals residing in
countries other than in the United States, the Subcommittee may authorize
alternatives that deliver substantially the same value, including, but not
limited to, promises of future restricted stock awards provided that the
grant and subsequent release is contingent upon attainment of certain
performance targets under this section.
2. At the time of each grant, the Subcommittee shall determine the
performance targets and the Measurement Period (as defined below) that will
be applied with respect to such grant. Grants of Performance-Based Awards
may be made, and the performance targets applicable to such
Performance-Based Awards may be defined and determined, by the Subcommittee
no later than ninety days after the commencement of the Measurement Period.
The performance criteria applicable to Performance-Based Awards will be oneowns, directly or indirectly, 50% or more of the following criteria:
(i) average annual growthvoting stock or capital
on the date an Option is granted.
"NSO" means a stock option that does not constitute an ISO.
"Options" means ISOs and NSOs granted under this Plan.
"Related Company" or "Related Companies" means corporation(s) or other
business organization(s) in earnings per share;
(ii) increase in share-owner value;
(iii) earnings per share;
(iv) net income;
(v) return on assets;
(vi) return on share-owners' equity;
(vii) increase in cash flow;
(viii) operating profitwhich the Company owns, directly or operating margins;
(ix) revenue growthindirectly, 20%
or more of the Company;
(x) operating expenses;voting stock or capital at the relevant time.
"Retire" means to enter Retirement.
"Retirement" means an employee's termination of employment on a date which
is on or after the earliest date on which such employee would be eligible for an
immediately payable benefit pursuant to (i) for those employees eligible for
participation in the Company's Supplemental Retirement Plan, the terms of that
plan and (xi) quality as determined(ii) for all other employees, the terms of the Employee Retirement Plan
(the "ERP"), whether or not the employee is covered by the Company's Quality Index.
The Measurement PeriodERP. Notwithstanding
the above, if an employee receiving severance payment(s) would have been
eligible for Retirement as defined above had the employee continued his
employment for a period equal to the period of the proposed severance
payments(s), the employee will be a perioddeemed retired under this plan as of years, determinedthe date
severance begins.
SECTION 3. OPTIONS
The Company may grant ISOs and NSOs to those persons meeting the
eligibility requirements in Section 6(a) and NSOs to those persons meeting the
eligibility requirements in Sections 6(b) and 6(c).
SECTION 4. ADMINISTRATION
The Plan shall be administered by the Subcommittee in its discretion, commencing on January 1Committee. No person, other than
members of the first yearCommittee, shall have any discretion concerning decisions
regarding the Plan. The Committee shall determine the key employees of the
Measurement PeriodCompany and ending on December 31its Related Companies (including officers, whether or not they are
directors) and consultants to whom, and the time or times at which, Options will
be granted; the number of shares to be subject to each Option; the duration of
each Option; the time or times within which the Option may be exercised; the
cancellation of the last yearOption (with the consent of the Measurement Period.holder thereof); and the
other conditions of the grant of the Option, at grant or while outstanding,
pursuant to the terms of the Plan. The Measurement Period willprovisions and conditions of the Options
need not be the same with respect to each optionee or with respect to each
Option.
48
The Committee may, subject to the provisions of the Plan, establish such
rules and regulations as it deems necessary, or advisable, for the proper
administration of the Plan, and may make determinations and may take such other
action in connection with or in relation to the Plan as it deems necessary or
advisable. Each determination or other action made or taken pursuant to the
Plan, including interpretation of the Plan and the specific conditions and
provisions of the Options granted hereunder by the Committee, shall be final and
conclusive for all purposes and upon all persons including, but without
limitation, the Company, its Related Companies, the Committee, the Board,
officers and the affected employees and consultants to the Company and/or its
Related Companies, optionees and the respective successors in interest of any of
the foregoing.
SECTION 5. STOCK
The KO Common Stock to be issued, transferred and/or sold under the Plan
shall be made available from authorized and unissued KO Common Stock or from the
Company's treasury shares. The total number of shares of KO Common Stock that
may be issued or transferred under the Plan pursuant to Options granted
thereunder may not exceed 120,000,000 shares (subject to adjustment as described
below); provided, however, that in no event shall the number of shares of KO
Common Stock that may be issued, transferred or sold under the Plan exceed 5% of
the number of shares of KO Common Stock outstanding on a given date. Such number
of shares shall be subject to adjustment in accordance with Section 5 and
Section 11. KO Common Stock subject to any unexercised portion of an Option
which expires or is canceled, surrendered or terminated for any reason may again
be subject to Options granted under the Plan.
SECTION 6. ELIGIBILITY
Options may be granted to:
(a) employees of the Company and its Majority-Owned Related Companies,
(b) particular employee(s) of a Related Company, who within the past
eighteen (18) months were employee(s) of the Company or a Majority-Owned
Related Company, and in rare instances to be determined by the Committee at
its sole discretion, employees of a Related Company who have not been
employees of the Company or a Majority-Owned Related Company within the
past eighteen (18) months, and
(c) consultants providing key services to the Company or its Related
Companies (provided that consultants are natural persons and are not former
employees of the Company or any Related Company, and that consultants shall
be eligible to receive only NSOs and shall not be eligible to receive
ISOs).
No person shall be granted the right to acquire, pursuant to Options granted
under the Plan, more than 5% of the aggregate number of shares of KO Common
Stock originally authorized under the Plan, as the Subcommittee may provide in the terms of each award.
3.adjusted pursuant to Section 11.
SECTION 7. AWARDS OF OPTIONS
Except as otherwise specifically provided in this Plan, Options granted
pursuant to the Plan shall be subject to the following terms and conditions:
(a) Option Price. The option price shall be 100% of the fair market
value of the KO Common Stock on the date of grant. The fair market value of
a share of KO Common Stock shall be the average of the high and low market
prices at which a share of KO Common Stock
49
shall have been sold on the date of grant, or on the next preceding trading
day if such date was not a trading date, as reported on the New York Stock
Exchange Composite Transactions listing. If necessary to comply with
foreign laws, the Committee may, at its sole discretion, grant Options at
an option price less than 100% of the fair market value of the KO Common
Stock on the date of grant.
(b) Payment. The option price shall be paid in full at the time of
exercise, except as provided in the termsnext sentence. If an exercise is
executed by the plan administrator using the cashless method, the exercise
price shall be paid in full no later than the close of business on the
third Business Day following the exercise.
Payment may be in cash or, upon conditions established by the
Committee, by delivery of shares of KO Common Stock owned by the optionee
for at least six (6) months prior to the date of exercise.
The optionee, if a U.S. taxpayer, may elect to satisfy Federal, state
and local income tax liabilities due by reason of the award,exercise by the
withholding of shares awardedof KO Common Stock.
If shares are delivered to pay the option price or if shares are
withheld for U.S. taxpayers to satisfy such tax liabilities, the value of
the shares delivered or withheld shall be computed on the basis of the
reported market price at which a share of KO Common Stock most recently
traded prior to the time the exercise order was processed. Such price will
be determined by reference to the New York Stock Exchange Composite
Transactions listing.
(c) Exercise May Be Delayed Until Withholding is Satisfied. The
Company may refuse to recognize the exercise of an Option if the optionee
has not made arrangements satisfactory to the Company to satisfy the tax
withholding which the Company determines is necessary to comply with
applicable requirements.
(d) Duration of Options. The duration of Options shall be determined
by the Committee, but in no event shall the duration of an ISO exceed ten
(10) years from the date of its grant or the duration of an NSO exceed
fifteen (15) years from the date of its grant.
(e) Vesting. Options shall contain such vesting terms as are
determined by the Committee, at its sole discretion, including, without
limitation, vesting upon the achievement of certain specified performance
targets. In the event that no vesting determination is made by the
Committee, Options shall vest as follows: (1) 25% on the first anniversary
of the date of the grant; (2) 25% on the second anniversary of the date of
the grant; (3) 25% on the third anniversary of the date of the grant; and
(4) 25% on the fourth anniversary of the date of the grant.
(f) Other Terms and Conditions. Options may contain such other
provisions, not inconsistent with the provisions of the Plan, as the
Committee shall determine appropriate from time to time; provided, however,
that, except in the formevent of Performance-Based Awardsa Change in Control, Retirement, Disability or
death of the optionee, no grant shall provide that an Option shall be
exercisable in whole or in part for a period of twelve (12) months from the
date on which the Option is granted. The grant of an Option to any employee
shall not affect in any way the right of the Company and any Related
Company to terminate the employment of such employee. The grant of an
Option to any consultant shall not affect in any way the right of the
Company and any Related Company to terminate the services of such
consultant.
(g) ISOs. The Committee, with respect to each grant of an Option to
an optionee, shall determine whether such Option shall be an ISO, and, upon
determining that an Option shall be an ISO, shall designate it as such in
the written instrument evidencing such Option. If the
50
written instrument evidencing an Option does not contain a designation that
it is an ISO, it shall not be an ISO.
The aggregate fair market value (determined in each instance on the
date on which an ISO is granted) of the KO Common Stock with respect to
which ISOs are first exercisable by any optionee in any calendar year shall
not exceed $100,000 for such optionee (or such other time limit as may be
required by the Internal Revenue Code of 1986, as amended). If any
subsidiary or Majority-Owned Related Company of the Company shall adopt a
stock option plan under which options constituting ISOs may be granted, the
fair market value of the stock on which any such incentive stock options
are granted and the times at which such incentive stock options will first
become exercisable shall be taken into account in determining the maximum
amount of ISOs which may be granted to the optionee under this Plan in any
calendar year.
(h) Deferral of Gains. Gains associated with any exercise of Options
shall be eligible for release (the "Release Date") on March 1 next followingdeferral in accordance with the completionterms and subject to
the conditions of The Coca-Cola Company Deferred Compensation Plan.
SECTION 8. NONTRANSFERABILITY OF OPTIONS
No Option granted pursuant to the Measurement Period.
4. Shares awarded inPlan shall be transferable otherwise than
by will or by the formlaws of Performance-Based Awards willdescent and distribution. During the lifetime of an
optionee, the Option shall be releasedexercisable only ifby the Controlleroptionee personally or by
the optionee's legal representative.
SECTION 9. EFFECT OF TERMINATION OF EMPLOYMENT, OTHER CHANGES OF EMPLOYMENT OR
EMPLOYEE STATUS, DEATH, RETIREMENT, OR A CHANGE IN CONTROL
(a) For Employees. For optionees who are employees of the Company or its
Related Companies on the date of grant, the following provisions shall
apply:
EVENT IMPACT ON VESTING IMPACT ON EXERCISE PERIOD
- ----- ----------------- -------------------------
Employment terminates upon All Options become The Option expiration date
Disability. immediately vested. provided in the grant
continues to apply.
Employment terminates upon Options held at least 12 full The Option expiration date
Retirement. calendar months become provided in the grant
immediately vested; Options continues to apply.
held less than 12 full
calendar months are
forfeited.
Employment terminates upon All Options become Right of executor,
death. immediately vested. administrator of estate (or
other transferee permitted by
Section 8) to exercise
Options terminates on earlier
of (1) 12 months from the
date of death, or (2) the
Option expiration date
provided in the grant.
Employment terminates upon All Options become The Option expiration date
Change in Control. immediately vested. provided in the grant
continues to apply.
Termination of employment Unvested Options are Options expire upon the
where optionee receives forfeited. earlier of (1) the end of the
severance payment(s). severance period, but not
less than 6 months from the
termination date, or (2) the
Option expiration date
provided in grant.
Termination of employment Unvested Options are Expires upon earlier of (1) 6
where optionee does not forfeited. months from termination date,
receive severance payment(s). or (2) the Option expiration
date provided in the grant.
51
EVENT IMPACT ON VESTING IMPACT ON EXERCISE PERIOD
- ----- ----------------- -------------------------
US military leave. Vesting continues during The Option expiration date
leave. provided in the grant
continues to apply.
Eleemosynary service. Committee's discretion. Committee's discretion.
US FMLA leave of absence. Vesting continues during The Option expiration date
leave. provided in the grant
continues to apply.
Optionee's employer is no Unvested Options are Expires upon earlier of (1) 6
longer a Related Company forfeited. months from termination date
(this constitutes a or (2) the Option expiration
termination of employment date provided in the grant.
under the Plan, effective the
date the Company's investment
falls below 20%).
Employment transferred to Vesting continues after The Option expiration date
Related Company. transfer. provided in the grant
continues to apply.
Death after employment has Not applicable. Right of executor,
terminated but before the administrator of estate (or
Option has expired. Note: other transferee permitted by
Termination of employment may Section 8) terminates on
have resulted in a change to earlier of (1) 12 months from
the original Option the date of death, or (2) the
expiration date provided in Option expiration date that
the grant. applied at the date of death.
In the case of other leaves of absence not specified above, optionees
will be deemed to have terminated employment (so that Options unvested will
expire and the Subcommittee certifyoption exercise period will end on the earlier of 6 months
from the date the leave began or the option expiration date provided in the
grant), unless the Committee identifies a valid business interest in doing
otherwise, in which case it may, specify what provisions it deems
appropriate at its sole discretion; provided that the performance targetsCommittee shall have
no obligation to consider any such matters.
(b) For Consultants. For optionees who are consultants, the provisions
relating to changes of work assignment, death, disability, Change in
Control, or any other provision of an Option shall be determined by the
Committee at the date of the grant.
(c) Committee Retains Discretion To Establish Different Terms Than
Those Provided in Sections 9(a) or 9(b). Notwithstanding the foregoing
provisions, the Committee may, at its sole discretion, establish different
terms and conditions pertaining to the effect of an optionee's termination
on the expiration or exercisability of Options at the time of grant or
(with the consent of the affected optionee) on the expiration or
exercisability of outstanding Options. However, no Option can have a term
of more than fifteen years.
SECTION 10. NO RIGHTS AS A SHARE OWNER
An optionee or a transferee of an optionee pursuant to Section 8 shall have
no right as a share owner with respect to any KO Common Stock covered by an
Option or receivable upon the exercise of an Option, until the optionee or
transferee shall have become the holder of record of such KO Common Stock. No
adjustments shall be made for dividends in cash or other property or other
distributions or rights in respect to such KO Common Stock covered by any Option
for which the record date is prior to the date on which the optionee or
transferee shall have in fact become the holder.
SECTION 11. ADJUSTMENT IN THE NUMBER OF SHARES AND IN OPTION PRICE
In the event there is any change in the shares of KO Common Stock through
the declaration of stock dividends, or stock splits, or through recapitalization
or merger or consolidation or combination of shares or spin-offs or otherwise,
the Committee or the Board shall make such adjustment, if any, as it may deem
appropriate in the number of shares of KO Common Stock available for Options as
52
well as the number of shares of KO Common Stock subject to any outstanding
Option and the option price thereof. Any such adjustment may provide for the
elimination of any fractional shares, which might otherwise become subject to
any Option, without payment therefor.
SECTION 12. AMENDMENTS, MODIFICATIONS AND TERMINATION OF THE PLAN
The Board or the Committee may terminate the Plan at any time. From time to
time, the Board or the Committee may suspend the Plan, in whole or in part. From
time to time, the Board or the Committee may amend the Plan, in whole or in
part, including the adoption of amendments deemed necessary or desirable to
qualify the Options under the laws of various countries (including tax laws) and
under rules and regulations promulgated by the Securities and Exchange
Commission with respect to optionees who are subject to the provisions of
Section 16 of the 1934 Act, or to correct any defect or supply an omission or
reconcile any inconsistency in the Plan or in any Option granted thereunder, or
for any other purpose or to any effect permitted by applicable laws and
regulations, without the approval of the share owners of the Company. However,
in no event may additional shares of KO Common Stock be allocated to the Plan or
any outstanding Option be repriced or replaced without share-owner approval.
Without limiting the foregoing, the Board or the Committee may make amendments
applicable or inapplicable only to participants who are subject to Section 16 of
the 1934 Act.
No amendment or termination or modification of the Plan shall in any manner
affect any Option theretofore granted without the consent of the optionee,
except that the Committee may amend or modify the Plan in a manner that does
affect Options theretofore granted upon a finding by the Committee that such
amendment or modification is in the best interest of holders of outstanding
Options affected thereby. Grants of ISOs may be made under this Plan until April
17, 2012 or such earlier date as this Plan is terminated, and grants of NSOs may
be made until all of the 120,000,000 shares of KO Common Stock authorized for
issuance hereunder (adjusted as provided in Sections 5 and 11) have been achieved duringissued
or until this Plan is terminated, whichever first occurs. The Plan shall
terminate when there are no longer Options outstanding under the Measurement
Period.
5. Performance-Based Awards grantedPlan, unless
earlier terminated by the Board or by the Committee.
SECTION 13. GOVERNING LAW
The Plan and all determinations made and actions taken pursuant to this Section 5(d) are
intended to qualify as performance-based compensation under Section 162(m)thereto
shall be governed by the laws of the Code and shall be administeredState of Georgia and construed accordingly.
51in
accordance therewith.
53
55
[RECYCLING LOGO]
Printed on recycled paper
56
PROXY
[THE COCA-COLA COMPANY LOGO]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE COCA-COLA COMPANY
The undersigned, having received the Notice of Annual Meeting and Proxy
Statement, hereby (i) appoints Ronald W. Allen, Cathleen P. BlackDonald F. McHenry, Paul F. Oreffice and Sam Nunn,Peter V.
Ueberroth, 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)
Merrill Lynch Trust Company, FSB, Trustee under The Coca-Cola Company Thrift &
Investment Plan, and/or (b) Banco Santander De Puerto Rico, Inc., Trustee under
the Caribbean Refrescos, Inc. Thrift Plan, 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 20012002 Annual
Meeting of Share Owners to be held in The Theater at The Playhouse Theatre, Du Pont Building, 10th and Market Streets,
Wilmington, Delaware,Madison Square Garden, New
York, New York, on April 18, 2001,17, 2002, at 9:0030 a.m., local time, and any
adjournments or postponements thereof, unless otherwise specified herein. THE
PROXIES, IN THEIR DISCRETION, ARE FURTHER AUTHORIZED TO VOTE (X) 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, (Y) 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 (Z) ON OTHER
MATTERS WHICH MAY PROPERLY COME BEFORE THE 20012002 ANNUAL MEETING AND ANY
ADJOURNMENTS OR POSTPONEMENTS THEREOF.
Election of Directors:
Nominees (terms expiring in 2005)
01. Cathleen P. Black 02. Warren E. Buffett
03. Douglas N. Daft 04. Susan B. King
Nominees (terms expiring in 2004)
01. Herbert A. Allen 02. James D. Robinson III 03. Peter V. Ueberroth05. Barry Diller 06. Robert L. Nardelli
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES
(SEE REVERSE SIDE), BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT
VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
-----------
SEE REVERSE
SIDE
-----------
- ---------------------------------------------------------------------------------------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
NOTICE OF ANNUAL MEETING OF SHARE OWNERS
OF
[THE COCA-COLA COMPANY LOGO]
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 OR TO USE OUR
TELEPHONE OR INTERNET VOTING SYSTEM.
FOR TELEPHONE AND INTERNET VOTING INSTRUCTIONS, SEE REVERSEThe Annual Meeting of Share Owners of The Coca-Cola Company (the
"Company") will be held in The Theater at Madison Square Garden, New York, New
York, on Wednesday, April 17, 2002, at 9:30 a.m., local time. The purposes of
the meeting are:
1. To elect four Directors to serve until the 2005 Annual
Meeting of Share Owners and two Directors to serve until the
2004 Annual Meeting of Share Owners,
2. To ratify the appointment of Ernst & Young LLP as independent
auditors of the Company to serve for the 2002 fiscal year,
3. To approve the 2002 Stock Option Plan of The Coca-Cola
Company,
4. To vote on four proposals submitted by share owners, and
5. To transact such other business as may properly come before
the meeting and at any adjournments or postponements of the
meeting.
The Board of Directors set February 22, 2002, as the record date for
the meeting. This means that owners of Common Stock at the close of business on
that date are entitled to receive this notice of the meeting, and vote at the
meeting and any adjournments or postponements of the meeting.
We will make available a list of share owners as of the close of
business on February 22, 2002, for inspection during normal business hours from
April 5 through April 16, 2002, at the Company's principal place of business,
One Coca-Cola Plaza, Atlanta, Georgia 30313. This list also will be available
at the meeting.
By Order of the Board of Directors
SUSAN E. SHAW
Secretary
- --------------------------------------------------------------------------------
COMMENTS
- ---------------------------------------------------------------------------------------------------------------------------------------------------------------
(ADMISSION TICKET ON REVERSE)
(BRING THE ADMISSION TICKET WITH YOU IF ATTENDING THE MEETING)
DIRECTIONS TO THE PLAYHOUSE THEATRE:THEATER AT MADISON SQUARE GARDEN:
By Subway:
1, 2, 3 or 9 (Seventh Avenue Lines), A, C or E (Eighth Avenue Subway)
to 34th Street/Penn Station.
Also B, D, F, N, Q, R or Path to 34th Street/Avenue of the Americas
(one block walk).
By Train:
To Penn Station: Long Island Railroad, New Jersey Transit, Amtrak.
From Baltimore,Westchester/Connecticut: Metro-North to Grand Central Station,
subway shuttle to Times Square to 1, 2, 3, or 9 subway trains downtown
one stop.
By Car:
Drive into Manhattan via any connecting bridge, tunnel or road. Meyers
Parking, 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 third traffic light
on Adamsofficial facility of Madison Square Garden, has locations
at:
230 W. 31st Street turn right onto 11th Street. At Delawarebetween 7th & 8th Avenues, (212) 736-8233
325 W. 34th Street between 8th & 9th Avenues, (212) 279-7310
441 9th Avenue, intersection
stay left, continuing on 11th Street. At the fourth traffic light (Market
Street), turn right. The Playhouse Theatre is on the right in the Du Pont
Building.
From Commodore Barry Bridge (New Jersey), or Philadelphia on I-95, 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. At the fourth traffic light (Market
Street), turn right. The Playhouse Theatre is on the right in the Du Pont
Building.(212) 594-5242
57
[X] PLEASE MARK YOUR 0282
VOTES AS IN THIS
EXAMPLE.
THIS PROXY WHEN PROPERLY SIGNED 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" PROPOSALS 2 AND 3, AND "AGAINST" PROPOSALS 4, 5,
6, AND 6.7.
- ---------------------------------------------------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, andAND 3.
- ---------------------------------------------------------------------------------------------------------------------------------------------------------------
FOR WITHHELD FOR AGAINST ABSTAIN
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of 2. Ratification of the
Directors [ ] [ ] 2. Ratificationappointment of theErnst & [ ] [ ] [ ]
Directors appointment of Ernst &
(See reverse) Young LLP as
Independent Auditors
For, except vote withheld from the following nominee(s):
3. Proposal to amendApproval of the 2002
- -------------------------------------------------------- Stock Option Plan of [ ] [ ] [ ]
1989 Restricted Stock
- -------------------------------------------------------- Award Plan of The Coca-Cola Company
- ---------------------------------------------------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSALS 4, 5, 6, AND 6.
FOR AGAINST ABSTAIN
4. Approval of Share-Owner [ ] [ ] [ ]
Proposal on Genetic Engineering
5. Approval of Share-Owner [ ] [ ] [ ]
Proposal on Recycling
6. Approval of Share-Owner [ ] [ ] [ ]
Proposal on Stock Options7.
- --------------------------------------------------------------------------------
SPECIAL ACTION [ ] Mark here if [ ]
- -------------- you plan to
Mark here to discontinue Annual Report attend the
mailing for this account (for multiple Annual
account holders only) Meeting
- ---------------------------------------------------------------------------------------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
4. Approval of Share-owner
Proposal on Company Report on [ ] [ ] [ ]
Beverage Container Recycling
Goals
5. Approval of Share-owner
Proposal on Global Set of [ ] [ ] [ ]
Corporate Standards
6. Approval of Share-owner
Proposal on The China Business [ ] [ ] [ ]
Principles
7. Approval of Share-owner
Proposal on Stock Options [ ] [ ] [ ]
- -------------------------------------------------------------------------------
SPECIAL ACTION
- --------------
Mark here if you
plan to attend the [ ]
Annual Meeting
- -------------------------------------------------------------------------------
SIGNATURE (S) DATE
------------------------------------------ ---------------
NOTE: 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
- --------------------------------------------------------------------------------
*FOLD-------------------------------------------------------------------------------
* FOLD AND DETACH HERE*
Dear Share Owner:HERE *
The Coca-Cola Company encourages you to take advantage of convenient ways by
which you can vote your shares. You can vote your shares electronically through
the Internet or the telephone. This eliminates the need to return the proxy
card.
To vote your shares electronically, you must use the control number which
is the series of numbers printed in the box above, just below the perforation.
This control number must be used to access the system.
1. To vote over the Internet:
- Log on to the Internet and go to the web site
http:HTTP://www.eproxyvote.com/koWWW.EPROXYVOTE.COM/KO
2. To vote over the telephone:
- On a touch-tone telephone, call 1-877-PRX-VOTE
(1-877-779-8683) 24 hours a day, 7 days a week
Your electronic vote authorizes the named proxies in the same manner as if you
marked, signed, dated and returned the proxy card.
If you choose to vote your shares electronically, there is no need for you to
mail back your proxy card.
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.
Sign up to receive next year's annual report and proxy materials via the
Internet. Next year when the materials are available, we will send you an
e-mail with instructions which will enable you to review these materials
on-line. To sign up for this optional service, visit www.econsent.com/ko
- ---------------------------------------------------------------------------------------------------------------------------------------------------------------
(BRING THIS TICKET WITH YOU IF ATTENDING THE MEETING)
ADMISSION TICKET
ANNUAL MEETING OF SHARE OWNERS
OF THE COCA-COLA COMPANY
WEDNESDAY, APRIL 18, 200117, 2002
9:0030 A.M., LOCAL TIME
THE PLAYHOUSE THEATRE
DU PONT BUILDING
10THTHEATER AT MADISON SQUARE GARDEN
SEVENTH AVENUE BETWEEN W. 31ST AND MARKETW. 33RD STREETS
WILMINGTON, DELAWARENEW YORK, NEW YORK
58
PROXY
[THE COCA-COLA COMPANY LOGO]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE COCA-COLA COMPANY
The undersigned, having received the Notice of Annual Meeting and Proxy
Statement, hereby (i) appoints Ronald W. Allen, Cathleen P. BlackDonald F. McHenry, Paul F. Oreffice and Sam Nunn,Peter V.
Ueberroth, 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 Putnam Fiduciary
Trust Company, Trustee under the Coca-Cola Enterprises, Inc. Matched Employee
Savings and Investment Plan, The Lansing Matched Employee Savings and Investment
Plan, The Coca-Cola Bottling Company of New York, Inc. Savings Plan for Southern
New England, Central States Coca-Cola Bottling Company 401(k) Plan for St. Louis
Bargaining Employees 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 20012002 Annual Meeting of Share Owners to be held
in The Theater at The Playhouse Theatre, Du Pont Building, 10th and Market Streets, Wilmington,
Delaware,Madison Square Garden, New York, New York, on April 18, 2001,17, 2002,
at 9:0030 a.m., local time, and any adjournments or postponements thereof, unless
otherwise specified herein. THE PROXIES, IN THEIR DISCRETION, ARE FURTHER
AUTHORIZED TO VOTE (X) 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, (Y) 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 (Z) ON OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE 20012002 ANNUAL
MEETING AND ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.
Election of Directors:
Nominees (terms expiring in 2005)
01. Cathleen P. Black 02. Warren E. Buffett 03. Douglas N. Daft
04. Susan B. King
Nominees (terms expiring in 2004)
01. Herbert A. Allen 02. James D. Robinson III 03. Peter V. Ueberroth05. Barry Diller 06. Robert L. Nardelli
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES (SEE
REVERSE SIDE), BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR
SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
-----------
SEE REVERSE
SIDE
-----------
- --------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
NOTICE OF ANNUAL MEETING OF SHARE OWNERS
OF
[THE COCA-COLA COMPANY LOGO]
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 OR TO USE OUR
TELEPHONE OR INTERNET VOTING SYSTEM.
FOR TELEPHONE AND INTERNET VOTING INSTRUCTIONS, SEE REVERSE
- --------------------------------------------------------------------------------
COMMENTSThe Annual Meeting of Share Owners of The Coca-Cola Company (the
"Company") will be held in The Theater at Madison Square Garden, New York, New
York, on Wednesday, April 17, 2002, at 9:30 a.m., local time. The purposes of
the meeting are:
1. To elect four Directors to serve until the 2005 Annual Meeting
of Share Owners and two Directors to serve until the 2004
Annual Meeting of Share Owners,
2. To ratify the appointment of Ernst & Young LLP as independent
auditors of the Company to serve for the 2002 fiscal year,
3. To approve the 2002 Stock Option Plan of The Coca-Cola
Company,
4. To vote on four proposals submitted by share owners, and
5. To transact such other business as may properly come before
the meeting and at any adjournments or postponements of the
meeting.
The Board of Directors set February 22, 2002, as the record date for
the meeting. This means that owners of Common Stock at the close of business on
that date are entitled to receive this notice of the meeting, and vote at the
meeting and any adjournments or postponements of the meeting.
We will make available a list of share owners as of the close of
business on February 22, 2002, for inspection during normal business hours from
April 5 through April 16, 2002, at the Company's principal place of business,
One Coca-Cola Plaza, Atlanta, Georgia 30313. This list also will be available at
the meeting.
By Order of the Board of Directors
SUSAN E. SHAW
Secretary
- --------------------------------------------------------------------------------
(ADMISSION TICKET ON REVERSE)
(BRING THE ADMISSION TICKET WITH YOU IF ATTENDING THE MEETING)
DIRECTIONS TO THE PLAYHOUSE THEATRE:THEATER AT MADISON SQUARE GARDEN:
By Subway:
1, 2, 3 or 9 (Seventh Avenue Lines), A, C or E (Eighth Avenue Subway)
to 34th Street/Penn Station.
Also B, D, F, N, Q, R or Path to 34th Street/Avenue of the Americas
(one block walk).
By Train:
To Penn Station: Long Island Railroad, New Jersey Transit, Amtrak.
From Baltimore,Westchester/Connecticut: Metro-North to Grand Central Station,
subway shuttle to Times Square to 1, 2, 3, or 9 subway trains downtown
one stop.
By Car:
Drive into Manhattan via any connecting bridge, tunnel or road. Meyers
Parking, 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 third traffic light
on Adamsofficial facility of Madison Square Garden, has locations
at:
230 W. 31st Street turn right onto 11th Street. At Delawarebetween 7th & 8th Avenues, (212) 736-8233
325 W. 34th Street between 8th & 9th Avenues, (212) 279-7310
441 9th Avenue, intersection
stay left, continuing on 11th Street. At the fourth traffic light (Market
Street), turn right. The Playhouse Theatre is on the right in the Du Pont
Building.
From Commodore Barry Bridge (New Jersey), or Philadelphia on I-95, 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. At the fourth traffic light (Market
Street), turn right. The Playhouse Theatre is on the right in the Du Pont
Building.(212) 594-5242
59
[X] PLEASE MARK YOUR 9907
VOTES AS IN THIS
EXAMPLE.
THIS PROXY WHEN PROPERLY SIGNED 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" PROPOSALS 2 AND 3, AND "AGAINST" PROPOSALS 4, 5,
6, AND 6.7.
- ---------------------------------------------------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, AND 3.
- ---------------------------------------------------------------------------------------------------------------------------------------------------------------
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):
3. Proposal to amendApproval of the 2002 [ ] [ ] [ ]
1989 Restricted Stock - -------------------------------------------------------- AwardOption Plan of
- --------------------------------------------------------- The Coca-Cola Company
- ---------------------------------------------------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSALS 4, 5, 6, AND 6.
FOR AGAINST ABSTAIN
4. Approval of Share-Owner [ ] [ ] [ ]
Proposal on Genetic Engineering
5. Approval of Share-Owner [ ] [ ] [ ]
Proposal on Recycling
6. Approval of Share-Owner7.
- -------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
4. Approval of Share-owner [ ] [ ] [ ]
Proposal on Company Report on
Beverage Container Recycling
Goals
5. Approval of Share-owner [ ] [ ] [ ]
Proposal on Global Set of
Corporate Standards
6. Approval of Share-owner [ ] [ ] [ ]
Proposal on The China Business
Principles
7. Approval of Share-owner [ ] [ ] [ ]
Proposal on Stock Options
- ---------------------------------------------------------------------------------------------------------------------------------------------------------------
SPECIAL ACTION
- --------------
Mark here if - -------------- you [ ]
plan to Mark here to discontinue Annual Report [ ] attend the
[ ]
mailing for this account (for multiple Annual
account holders only) Meeting
- ---------------------------------------------------------------------------------------------------------------------------------------------------------------
SIGNATURE (S) DATE
----------------------------------------- ----------------
NOTE: 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
- --------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
Dear Share Owner:
The Coca-Cola Company encourages you to take advantage of convenient ways by
which you can vote your shares. You can vote your shares electronically through
the Internet or the telephone. This eliminates the need to return the proxy
card.
To vote your shares electronically, you must use the control number which
is the series of numbers printed in the box above, just below the perforation.
This control number must be used to access the system.
1. To vote over the Internet:
- Log on to the Internet and go to the web site
http:HTTP://www.eproxyvote.com/koWWW.EPROXYVOTE.COM/KO
2. To vote over the telephone:
- On a touch-tone telephone, call 1-877-PRX-VOTE
(1-877-779-8683) 24 hours a day, 7 days a week
Your electronic vote authorizes the named proxies in the same manner as if you
marked, signed, dated and returned the proxy card.
If you choose to vote your shares electronically, there is no need for you to
mail back your proxy card.
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.
Sign up to receive next year's annual report and proxy materials via the
Internet. Next year when the materials are available, we will send you an e-mail
with instructions which will enable you to review these materials on-line. To
sign up for this optional service, visit www.econsent.com/ko
- --------------------------------------------------------------------------------
(BRING THIS TICKET WITH YOU IF ATTENDING THE MEETING)
ADMISSION TICKET
ANNUAL MEETING OF SHARE OWNERS
OF THE COCA-COLA COMPANY
WEDNESDAY, APRIL 18, 200117, 2002
9:0030 A.M., LOCAL TIME
THE PLAYHOUSE THEATRE
DU PONT BUILDING
10THTHEATER AT MADISON SQUARE GARDEN
SEVENTH AVENUE BETWEEN W. 31ST AND MARKETW. 33RD STREETS
WILMINGTON, DELAWARENEW YORK, NEW YORK