DEF 14A 1 lcocacola2014_def14a.htm THE COCA-COLA COMPANY - DEF 14A The Coca-Cola Company - DEF 14A

UNITED STATES

 

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

SCHEDULE 14A

 

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No. )

 

   Filed by the Registrant  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))
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to §.240.14a-12

 

 

(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):
  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 Form or Schedule and the date of its filing.
  (1)  Amount Previously Paid:
  (2)  Form, Schedule or Registration Statement No.:
  (3) Filing Party:
  (4)  Date Filed:
 


 

 

TABLE OF CONTENTS

 

   
 
LETTER TO SHAREOWNERS FROM OUR BOARD OF DIRECTORS 2
 
MESSAGE AND Q&A FROM OUR CHAIRMAN AND CEO 4
 
NOTICE OF ANNUAL MEETING OF SHAREOWNERS 6
 
PROXY SUMMARY 7
Voting and Meeting Information 7
Questions and Answers 8
Governance 9
Director Nominees 9
Changes to Compensation Programs as a Result of Shareowner Engagement and Consideration of Last Year’s Say on Pay Vote 10
2013 Compensation 10
How Pay is Tied to Company Performance 11
 
PROXY STATEMENT 15
 
GOVERNANCE 16
Item 1 - Election of Directors 16
2014 Nominees for Director 19
Summary of Director Nominees 28
Board of Directors and Committees 29
Director Compensation 34
Director Independence and Related Person Transactions 37
Additional Governance Features 41
 
SHARE OWNERSHIP 43
Ownership of Equity Securities of the Company 43
Section 16(a) Beneficial Ownership Reporting Compliance 45
   
COMPENSATION 46
Item 2 - Advisory Vote to Approve Executive Compensation 46
Compensation Discussion and Analysis 47
Report of the Compensation Committee 62
Compensation Committee Interlocks and Insider Participation 62
Compensation Tables 63
Payments on Termination or Change in Control 74
Summary of Plans 80
Item 3 - Approval of The Coca-Cola Company 2014 Equity Plan 83
Equity Compensation Plan Information 92
 
AUDIT MATTERS 93
Report of the Audit Committee 93
Item 4 - Ratification of the Appointment of Ernst & Young LLP as Independent Auditors 95
 
SHAREOWNER PROPOSAL 97
Item 5 - Shareowner Proposal Regarding an Independent Board Chairman 97
 
QUESTIONS AND ANSWERS 99
Proxy Materials and Voting Information 99
Annual Meeting Information 103
Company Documents, Communications and Shareowner Proposals 104
 
ANNEX A 106
Reconciliation of GAAP and Non-GAAP Financial Measures 106

 

2014 Proxy Statement  

1

 

 

 

“As your Board, we take very seriously the fact that you, the shareowners, have elected us to protect and enhance your interests in The Coca-Cola Company. We believe that accountability to shareowners is a mark of good governance and critical to our Company’s success.”

 

  LETTER TO SHAREOWNERS FROM OUR BOARD OF DIRECTORS

 

Dear Fellow Shareowner:

 

As your Board, we take very seriously the fact that you, the shareowners, have elected us to protect and enhance your interests in The Coca-Cola Company. We believe that accountability to shareowners is a mark of good governance and critical to our Company’s success. We welcome this opportunity to communicate with you.

 

In stewarding this Company, we seek to achieve long-term, sustainable performance and create value through the right business strategies, prudent risk management, effective compensation programs and well-functioning talent and succession planning.

 

We also believe that, as a Board, we are responsible for helping to establish the correct tone at the top, one that permeates throughout the entire organization. We are committed to helping create a culture which promotes and values integrity, ethics and a long-term view consistent with the Company’s mission:

 

   To refresh the world.

 

   To inspire moments of optimism and happiness.

 

   To create value and make a difference.

 

As we go about our work, a long-standing priority of the Board is ensuring robust outreach and engagement with our shareowners. Partnering with management, we engage with shareowners throughout the entire year on a variety of topics.

 

Over the last few years, we have spent a significant amount of time talking with some shareowners about executive compensation. These discussions were valuable because we heard that most shareowners believed that the structure of the Company’s executive compensation programs was sound and has proven over time to appropriately reward employees for producing sustainable growth consistent with the Company’s long-term strategy. However, we also heard that there were certain elements of our executive compensation programs that some shareowners believed we should consider doing differently.

 

2014 Proxy Statement  

2

 

“Our Board continues to evolve and we remain committed to ensuring that the Board is composed of a highly capable and diverse group of Directors who are well-equipped to oversee the success of the business and effectively represent the interests of shareowners.”

 

We listened and have incorporated this feedback into several enhancements to our executive compensation programs. These changes further enhance the link between pay and performance and continue to align our executive compensation programs with shareowners’ long-term interests. We encourage you to read the Compensation Discussion and Analysis section of the Proxy Statement beginning on page 47 for details of our executive compensation programs and these recent enhancements.

 

Our Board continues to evolve and we remain committed to ensuring that the Board is composed of a highly capable and diverse group of Directors who are well-equipped to oversee the success of the business and effectively represent the interests of shareowners.

 

We encourage you to review the qualifications, skills and experience that we have identified as important attributes for our Directors, and how they match up to each of us individually beginning on page 16 of the Proxy Statement.

 

Finally, we hope shareowners will continue to appreciate our efforts to present the information in this Proxy Statement in a clear and easy to read manner. As we redesigned the Proxy Statement over the last few years, we have received great feedback, which we incorporate into the continued evolution of the Proxy Statement.

 

Please continue to share your thoughts or concerns with us on any topic. Communications can be addressed to Directors in care of the Office of the Secretary, The Coca-Cola Company, P.O. Box 1734, Atlanta, Georgia 30301 or by e-mail to shareownerservices@coca-cola.com.

 

We value your input, your investment and your support. Thank you.

 

 
Muhtar Herbert A. Ronald W. Ana Howard G. Richard M. Barry Helene D. Evan G.
Kent Allen Allen Botín Buffett Daley Diller Gayle Greenberg

 

Alexis M. Robert A. Maria Elena Donald F. Sam James D. Peter V. Jacob
Herman Kotick Lagomasino McHenry Nunn Robinson III Ueberroth Wallenberg

 

March 7, 2014

 

2014 Proxy Statement  

3

 

  MESSAGE AND Q&A FROM OUR CHAIRMAN AND CEO  
   
 

Muhtar Kent

 

Chairman of the Board
and Chief Executive Officer
The Coca-Cola Company
March 7, 2014

 

 

 

 

 

“Throughout the year, we engage with shareowners on a variety of topics. Below, I address a number of questions and comments that are commonly raised.”

 

How would you rate The Coca-Cola Company’s performance in 2013 and what is the Company doing to accelerate growth in 2014?

 

While 2013 was a challenging year, it has not deterred us from our commitment to our 2020 Vision. The year was marked by ongoing global macroeconomic challenges in many markets around the world. While our business was not immune to these pressures leading to moderated global volume growth, we still delivered on profit goals in line with our long-term growth targets. We also gained global value share in total nonalcoholic ready-to-drink beverages.

 

We are not content with these results, but we are no less enthusiastic about the future ahead of us and the beverage industry. We have the strongest portfolio of refreshing brands in the nonalcoholic beverage industry. The Coca-Cola system is healthy and committed to investment. In 2014, you are going to see strategic actions we are taking to restore our momentum. We are aligned on five strategic priorities:

 

1.Accelerate growth of sparkling, led by brand Coca-Cola.

 

2.Strategically expand our profitable still portfolio.

 

3.Increase brand investments by maximizing productivity.

 

4.Win at the point of sale by unlocking the power of the Coca-Cola system.

 

5.Invest in our next generation of leaders.

 

By focusing on these five strategic priorities and our ongoing pursuit of driving sustainable shareowner value, we firmly believe that we can restore our momentum and continue with confidence on our exciting journey to 2020.

 

How is the Board taking appropriate steps to ensure that shareowner interests are protected?

 

Shareowners can be confident that I, along with every other Director, remain focused on ensuring that our corporate governance practices protect and enhance long-term shareowner value. We perform our role as a Board knowing that you have elected us, and entrust us, to protect and grow your interests in this business.

 

Our commitment to good corporate governance can be seen through practices such as:

 

   Annual election of Directors.

 

   A majority vote by-law in uncontested Director elections.

 

   Annual advisory vote on executive compensation.

 

   The right of shareowners to call a special meeting.

 

   An independent Presiding Director.

 

   Requiring shareowner approval of certain executive severance agreements.

 

   Long-standing active shareowner engagement.

 

Another important way our Board works to protect shareowner interests is by helping to create a positive, high-integrity and winning culture throughout the entire organization. This has to start with the Board and it is critical in my role as Chairman and CEO. Shareowners can be assured that we place the highest priority on ethics and integrity.

 

I encourage you to read more about our governance practices on our website, www.coca-colacompany.com and in the Proxy Statement beginning on page 16.

 

2014 Proxy Statement  

4

 
What do you consider to be today’s major governance issues?

 

One thing that we have learned through our shareowner engagement is that all shareowners’ views are not the same. You do not always share the same opinion about important topics, nor do you all place the same degree of importance on the same topics.

 

So many issues are important today, including understanding and oversight of the various risks facing a company, understanding shareowner perspectives through effective Board-shareowner communication, recruiting and retaining highly qualified and diverse Directors, public policy engagement and sustainability.

 

That said, the way in which executives are compensated, whether such pay is appropriately tied to performance and how well a company discloses that information, are, in my opinion, bound to remain among the most focused on issues. Shareowners rightly demand executive compensation programs that pay for performance along with a plain English explanation of how boards arrive at pay decisions. I encourage you to read the Compensation Discussion and Analysis section of the Proxy Statement beginning on page 47 for details of our executive compensation programs and our pay-for-performance philosophy.

 

What attributes are considered essential to ensure our Directors are the best representatives of the Company and its shareowners?

 

There are qualities that all Directors should have – solid judgment, high integrity, innovative thinking, a good understanding of our business, familiarity with and respect for corporate governance requirements and practices, an appreciation of multiple cultures and a commitment to sustainability and to dealing responsibly with social issues. Further, I expect them to be well-equipped to provide advice and counsel to me as CEO, as well as to our other senior leaders.

 

Our Board is comprised of a group of highly capable Directors and I believe it is one of the most knowledgeable, strategic and engaged boards in the business world today. Beginning on page 19 of the Proxy Statement, you can review the qualifications, attributes, skills and experience of each Director nominee that we believe qualifies them to be on the Board.

 

You serve as both Chairman and CEO of the Company. What steps are taken to ensure independent oversight at the Board level?

 

The Company’s existing Board leadership structure provides independent oversight. A combined Chairman of the Board and CEO is one element of this leadership structure, which also includes an independent Presiding Director, active and strong non-employee Directors and Board committees led primarily by independent Directors. This structure has been effective for some time and the Board believes it currently serves the business and shareowners well. The Board has the discretion to change this leadership structure if it believes it would better serve shareowners. As recently as 2008, the roles of Chairman and CEO were separated for a period of time.

 

In addition, to help keep our Board committees strong and engaged, I, along with our Presiding Director and the Committee on Directors and Corporate Governance, have worked together over the last few years to rotate the chairs of our Audit, Compensation, Finance, Management Development and Public Issues and Diversity Review committees. Most recently, in February 2014 it was decided that effective after the 2014 Annual Meeting of Shareowners, Sam Nunn will succeed James D. Robinson III as the chair of the Committee on Directors and Corporate Governance and the Board’s Presiding Director.

 

What is your view on Board diversity?

 

Our Company’s business is truly global and multicultural, with its products sold in over 200 countries around the world. I assure you that diversity is a cornerstone value of the Company and it remains a priority. While the Board does not have a specific diversity policy, we consider diversity of race, ethnicity, gender, age, cultural background and professional experience in evaluating candidates for Board membership. This commitment is evident when looking at the evolution of the Board over the past few years.

 

How does the Board ensure that the Company’s business is managed in a sustainable way?

 

Sustainability is at the heart of Coca-Cola. As a Board, we fully understand that our business can only be as healthy, vibrant and resilient as the communities we proudly serve.

 

We feel a special accountability as a business that operates on a global scale to help improve the well-being of our communities while doing what we can to responsibly steward the natural resources of the planet we all share. Our efforts are focused on advancing solutions by partnering across the golden triangle of business, government and civil society.

 

In addition, the Public Issues and Diversity Review Committee helps the Company remain focused on key issues that impact our business. Further, the Compensation Committee has adopted executive compensation programs that are designed to motivate executives to operate the Company’s business in a profitable and sustainable manner.

 

The Governance section of the Proxy Statement, which begins on page 16, includes additional information about all of our Board committees and our commitment to sustainability.

 

2014 Proxy Statement  

5

 

 

  NOTICE OF ANNUAL MEETING OF SHAREOWNERS

 

Wednesday, April 23, 2014

12:30 p.m., local time

Cobb Galleria Centre, Two Galleria Parkway, Atlanta, Georgia 30339

 

We are pleased to invite you to join our Board of Directors, senior leadership and other associates and alumni of The Coca-Cola Company (the “Company”) for The Coca-Cola Company’s 2014 Annual Meeting of Shareowners in our hometown of Atlanta. The Annual Meeting of Shareowners of the Company will be held at the Cobb Galleria Centre, Two Galleria Parkway, Atlanta, Georgia 30339, on Wednesday, April 23, 2014, at 12:30 p.m., local time. The purposes of the meeting are:

 

1.   to elect the 15 Director nominees identified in the accompanying proxy statement to serve until the 2015 Annual Meeting of Shareowners;
   
2. to hold an advisory vote to approve executive compensation;
   
3. to approve The Coca-Cola Company 2014 Equity Plan;
   
4. to ratify the appointment of Ernst & Young LLP as Independent Auditors of the Company to serve for the 2014 fiscal year;
   
5. to vote on a shareowner proposal if properly presented at the meeting; and
   
6. 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 24, 2014 as the record date for the meeting. This means that owners of record of shares of common stock of the Company as of the close of business on that date are entitled to:

 

    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 shareowners of record as of the close of business on February 24, 2014 for inspection by shareowners for any purpose germane to the meeting during normal business hours from April 9 through April 22, 2014 at the Company’s principal place of business, One Coca-Cola Plaza, Atlanta, Georgia 30313. This list also will be available to shareowners for any such purpose at the meeting.

 

March 7, 2014

 

Atlanta, Georgia

 

By Order of the Board of Directors
Gloria K. Bowden
Associate General Counsel and Secretary

 

We urge each shareowner to promptly sign and return the enclosed proxy card or to use telephone or Internet voting. See the Voting and Meeting Information section on page 7 for information about voting by telephone or Internet, and how to attend the annual meeting and vote shares in person.

 

2014 Proxy Statement  

6

 

 

  PROXY SUMMARY

 

This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider and you should read the entire proxy statement before voting. For more complete information regarding the Company’s 2013 performance, please review the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

 

VOTING AND MEETING INFORMATION

 

It is very important that you vote in order to play a part in the future of the Company. Please carefully review the proxy materials for the 2014 Annual Meeting of Shareowners, which will be held on Wednesday, April 23, 2014 at 12:30 p.m., local time, at the Cobb Galleria Centre in Atlanta, Georgia, and follow the instructions below to cast your vote on all of the voting matters.

 

Who is Eligible to Vote

 

You are entitled to vote at the 2014 Annual Meeting of Shareowners if you were a shareowner of record at the close of business on February 24, 2014, the record date for the meeting. On the record date, there were 4,405,893,150 shares of common stock issued outstanding and entitled to vote at the annual meeting.

 

Advance Voting Methods

 

Even if you plan to attend the 2014 Annual Meeting of Shareowners in person, please vote right away using one of the following advance voting methods (see page 99 for additional details). Make sure to have your proxy card or voting instruction form (VIF) in hand and follow the instructions.

 

You can vote in advance in one of three ways:

 

Visit the website listed on your proxy card/voting instruction form to vote VIA THE INTERNET
Call the telephone number on your proxy card/voting instruction form to vote BY TELEPHONE
Sign, date and return your proxy card/voting instruction form in the enclosed envelope to vote BY MAIL

 

Attending and Voting at the Annual Meeting

 

All shareowners of record may vote in person at the 2014 Annual Meeting of Shareowners. Beneficial owners may vote in person at the meeting if they have a legal proxy, as described in the response to question 19 on page 104.

 

Important Note About Meeting Admission Requirements: If you plan to attend the meeting in person, see the answer to question 18 on page 103 for important details on admission requirements.

 

Unable to Attend the Meeting in Person

 

If you are unable to attend the meeting in person, you can view the live webcast of the meeting by visiting the annual meeting page of the Company’s website, at www.coca-colacompany.com/investors/annual-meeting-of-shareowners.

 

We have greatly enhanced the annual meeting page of our website to allow our shareowners to easily access the Company’s proxy materials, learn more about our Company, submit written or video questions in advance of the 2014 Annual Meeting of Shareowners, vote through the Internet and access the webcast of the meeting. To learn more about the enhanced annual meeting page of our website, see the answer to question 21 on page 104.

 


 

2014 Proxy Statement  

7

 
       
       
  Electronic Shareowner Document Delivery    
     
  Instead of receiving future copies of our Notice of Annual Meeting, Proxy Statement and the Annual Report on Form 10-K by mail, shareowners of record and most beneficial owners can elect to receive an e-mail that will provide electronic links to these documents. Opting to receive your proxy materials online will save us the cost of producing and mailing documents, and also will give you an electronic link to the proxy voting site. In addition, the Company has a tree planted on behalf of each shareowner that signs up for electronic delivery. Since we began offering electronic delivery in 2005, approximately 360,000 trees have been planted on behalf of Company shareowners.   
         

 

Roadmap of Voting Matters

 

Shareowners are being asked to vote on the following matters at the 2014 Annual Meeting of Shareowners:

 

  Our Board’s Recommendation
ITEM 1. Election of Directors (page 16)    
The Board and the Committee on Directors and Corporate Governance believe that the combination of the various qualifications, skills and experiences of the Director nominees would contribute to an effective and well-functioning Board and that, individually and as a whole, the Director nominees possess the necessary qualifications to provide effective oversight of the business and quality advice and counsel to the Company’s management.   FOR each
Director Nominee
ITEM 2. Advisory Vote to Approve Executive Compensation (page 46)    
The Company has designed its compensation programs to reward employees for producing sustainable growth consistent with the Company’s 2020 Vision, to attract and retain world-class talent and to align compensation with the long-term interests of our shareowners. The Company seeks a non-binding advisory vote from its shareowners to approve the compensation of its Named Executive Officers as described in the Compensation Discussion and Analysis section beginning on page 47 and the Compensation Tables section beginning on page 63. The Board values shareowners’ opinions and the Compensation Committee will take into account the outcome of the advisory vote when considering future executive compensation decisions.   FOR
ITEM 3. Approval of The Coca-Cola Company 2014 Equity Plan (page 83)    
We are asking shareowners to approve The Coca-Cola Company 2014 Equity Plan, which the Compensation Committee and the Board have adopted, subject to shareowner approval, to enable the Company to continue making equity awards to executives and other employees. The Coca-Cola Company 2014 Equity Plan is an important part of our pay-for-performance philosophy as it allows the Company to award compensation that is tied to performance and aligned with the interests of our shareowners.   FOR
ITEM 4. Ratification of the Appointment of Ernst & Young LLP as Independent Auditors (page 95)    
The Audit Committee has appointed Ernst & Young LLP to serve as Independent Auditors for the fiscal year ending December 31, 2014. The Audit Committee and the Board believe that the continued retention of Ernst & Young LLP to serve as the Independent Auditors is in the best interests of the Company and its shareowners. As a matter of good corporate governance, shareowners are being asked to ratify the Audit Committee’s selection of the Independent Auditors.   FOR
ITEM 5. Shareowner Proposal Regarding an Independent Board Chairman, if properly presented (page 97)    
The Board believes that leadership of both the Board and the Company by Mr. Kent is the optimal structure to guide the Company and maintain the focus required to achieve the business goals set forth in the Company’s 2020 Vision. The Board believes that having the flexibility to select the appropriate leadership structure based on the specific needs of the business is critical and that a specifically defined approach that ties the Board’s hands will not serve shareowners well over time.   AGAINST

 

QUESTIONS AND ANSWERS (PAGE 99)

 

Please see the Questions and Answers section beginning on page 99 for important information about the proxy materials, voting, the annual meeting, Company documents, communications and the deadlines to submit shareowner proposals for the 2015 Annual Meeting of Shareowners. Additional questions may be directed to Shareowner Services at (404) 676-2777 or shareownerservices@coca-cola.com.


 

2014 Proxy Statement  

8

 

GOVERNANCE (PAGE 16)

 

The Company is committed to good corporate governance, which promotes the long-term interests of shareowners, strengthens Board and management accountability and helps build public trust in the Company. Highlights include:

 

    Annual Election of Directors
   
Majority Voting for Directors
   
15 Director Nominees
   
13 Independent Director Nominees
   
Independent Presiding Director
   
Independent Audit, Compensation and Directors/Governance Committees
   
Regular Executive Sessions of Independent Directors
   
Risk Oversight by Full Board and Committees
   
Regular Board and Committee Self-Evaluations
   
Long-standing Active Shareowner Engagement
   
Shareowner Right to Call Special Meeting
   
Transparent Public Policy Engagement
   
Long-standing Commitment toward Sustainability
   
Anti-Hedging, Anti-Short Sale and Anti-Pledging Policies
   
Executive Compensation Driven by Pay-For-Performance Philosophy
   
Share Ownership Guidelines and Share Retention Policy for Executives
   
Equity Awards with Clawback Provisions

 

DIRECTOR NOMINEES (PAGE 19)

 

The following table provides summary information about each Director nominee.

 

Name   Age   Director Since   Primary Occupation   Committee
Memberships1
  Other Public
Company
Boards
Herbert A. Allen   74   1982   President, Chief Executive Officer and Director, Allen & Company Incorporated   E, F, MD (Chair)   0
Ronald W. Allen*   72   1991   Chairman of the Board, President and Chief Executive Officer, Aaron’s Inc.   A, C   2
Ana Botín*   53   2013   Chief Executive Officer and Executive Director, Santander UK plc   2   1
Howard G. Buffett*   59   2010   President, Buffett Farms Chairman and Chief Executive Officer, Howard G. Buffett Foundation   PIDR   2
Richard M. Daley*   71   2011   Executive Chairman, Tur Partners LLC Of Counsel, Katten Muchin Rosenman LLP   DCG   1
Barry Diller*   72   2002   Chairman of the Board and Senior Executive, IAC/InterActiveCorp and Expedia, Inc.   DCG, E, F (Chair),
MD
  3
Helene D. Gayle*   58   2013   President and Chief Executive Officer, CARE USA   C2   1
Evan G. Greenberg*   59   2011   Chairman and Chief Executive Officer, ACE Limited   A (Chair), F   1
Alexis M. Herman*   66   2007   Chair and Chief Executive Officer, New Ventures LLC   C, PIDR (Chair)   3
Muhtar Kent   61   2008   Chairman of the Board, Chief Executive Officer and President, The Coca-Cola Company   E (Chair)   1
Robert A. Kotick*   51   2012   President, Chief Executive Officer and Director, Activision Blizzard, Inc.   MD   1
Maria Elena
Lagomasino*
  64   2008   Chief Executive Officer and Managing Partner, WE Family Offices   C (Chair), DCG,
MD
  1
Sam Nunn*   75   1997   Co-Chairman and Chief Executive Officer, Nuclear Threat Initiative   DCG2, F, PIDR   0
James D. Robinson III*   78   1975   Co-Founder and General Partner, RRE Ventures President, J.D. Robinson, Inc.   C, DCG (Chair)2,
MD
  0
Peter V. Ueberroth*   76   1986   Investor and Chairman, Contrarian Group, Inc.   A, F   1

 

* Independent Director
1 A = Audit Committee; C = Compensation Committee; DCG = Committee on Directors and Corporate Governance; E = Executive Committee; F = Finance Committee; MD = Management Development Committee; PIDR = Public Issues and Diversity Review Committee
2 If reelected, Ms. Botín will serve on the Committee on Directors and Corporate Governance, Ms. Gayle will also serve on the Public Issues and Diversity Review Committee and Mr. Nunn will become Chair of the Committee on Directors and Corporate Governance, in each case immediately following the 2014 Annual Meeting of Shareowners.

 

2014 Proxy Statement  

9

 

CHANGES TO COMPENSATION PROGRAMS AS A RESULT OF SHAREOWNER ENGAGEMENT AND CONSIDERATION OF LAST YEAR’S SAY ON PAY VOTE (PAGE 47)

 

The Company has a long-standing shareowner outreach program and routinely interacts with shareowners on a number of matters, including executive compensation (see page 41). The Compensation Committee carefully considers feedback received about executive compensation. After publication of the Company’s 2013 Proxy Statement, a number of shareowners expressed concerns with certain elements of our executive compensation programs. As a result, in an April 4, 2013 letter filed with the Securities and Exchange Commission (“SEC”), the Compensation Committee announced that the 2013 annual incentive awards for all executive officers would be capped at a maximum of 175% of the target award if the Company’s 2013 total shareowner return was below the median total shareowner return of the S&P 500 index. In addition, the Compensation Committee committed to review the design of the annual incentive plan and to evaluate ways to incorporate relative performance metrics into the Company’s executive compensation programs.

 

At the 2013 Annual Meeting of Shareowners, approximately 77% of the votes cast were in favor of the advisory vote to approve executive compensation. While this reflected continued support of our executive compensation programs, this level of support was a decline from the prior two years’ advisory votes. The Compensation Committee considered this outcome and asked management to seek additional shareowner input.

 

Since then, the Compensation Committee has taken shareowner feedback into account and, along with its commitments in the April 4, 2013 letter, has approved certain changes to the Company’s compensation programs. While shareowners expressed a wide variety of views about executive compensation, we believe these changes are responsive to most of the comments we routinely heard and are in the best interests of the Company and its shareowners. The chart below summarizes the key points we heard, what action the Compensation Committee has taken, and when the changes are effective.

 

  What we heard       What we did       When effective  
Annual incentive plan is difficult to understand and determine how incentives are awarded   Redesigned the annual incentive plan (see pages 53 and 54).   Annual incentive awards for 2014
Annual incentive plan targets should be more challenging   Incorporated challenging performance measures consistent with the Company’s long-term growth model (see pages 53 and 54).   Annual incentive awards for 2014
Annual incentive plan should utilize a wider variety of performance measures   Included an additional performance measure, operating income, into the annual incentive plan formula (see pages 53 and 54).   Annual incentive awards for 2014
Incorporate a relative performance measure into executive compensation program   Added a relative performance modifier to performance share units (PSUs) based on relative total shareowner return versus comparator companies (see page 58).   PSU awards for 2014-2016 performance period
Evaluate mix of long-term equity awards (although no shareowner consensus on preferred mix) and better explain use of each form of equity   Undertook a review and determined the current mix of long-term equity awards (approximately 60% options/40% PSUs) continues to be the most optimal for our employees for the reasons set forth on page 56. Although no change was made, the Compensation Committee will continue to evaluate the mix of long-term equity awards each year.   2013 and annually thereafter
Provide clearer explanation of how performance targets were set and year-to-year differences   Expanded explanation of performance targets and the reasons they may vary from year to year (see page 57).   2014 and annually thereafter

 

At the 2014 Annual Meeting of Shareowners, the Company will again hold an annual advisory vote to approve executive compensation (see page 46). The Compensation Committee will continue to engage with our shareowners throughout the year and consider the results from this year’s and future advisory votes on executive compensation, as well as feedback from shareowners.

 

2013 COMPENSATION (PAGE 63)

 

Set forth below is the 2013 compensation for each Named Executive Officer as determined under SEC rules. See the notes accompanying the 2013 Summary Compensation Table beginning on page 63 for more information.

 

In order to show the effect that the year-over-year change in pension value had on total compensation, as determined under applicable SEC rules, we have included an additional column to show total compensation minus the change in pension value. The amounts reported in the Total Without Change in Pension Value column may differ substantially from the amounts reported in the Total column required under SEC rules and are not a substitute for total compensation. The change in pension value is subject to many external variables, such as interest rates, that are not


 

2014 Proxy Statement  

10

 

related to Company performance. Therefore, we do not believe a year-over-year change in pension value is helpful in evaluating compensation for comparative purposes and instead, believe shareowners may find the accumulated pension benefits in the 2013 Pension Benefits table on page 71 a more useful calculation of the pension benefits provided to the Named Executive Officers.

 

Name
and Principal Position
  Salary   Stock
Awards
   Option
Awards
   Non-Equity
Incentive Plan
Compensation
   Change
in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings*
   All Other
Compensation
   Total   Total Without
Change
in Pension
Value**
 
Muhtar Kent                                        
Chairman of the Board and Chief Executive Officer  $1,600,000   $6,399,988   $7,113,946   $2,200,000   $2,204,814   $861,912   $20,380,660   $18,175,846 
Gary P. Fayard                                        
Executive Vice President and Chief Financial Officer   844,278    2,250,016    2,500,997    820,000    59,653    109,229    6,584,173    6,524,520 
Ahmet C. Bozer                                        
Executive Vice President and President, Coca-Cola International   681,663    2,199,998    2,445,420    770,000    0    275,133    6,372,214    6,372,214 
Steven A. Cahillane***                                        
Former Executive Vice President and President, Coca-Cola Americas   815,420    3,828,014    2,689,962    820,000    0    93,865    8,247,261    8,247,261 
José Octavio Reyes                                        
Vice Chairman, The Coca-Cola Export Corporation   751,701    1,649,998    1,834,064    590,000    669,424    381,872    5,877,059    5,208,010 

 

* For all Named Executive Officers, the change in actuarial present value of accumulated pension benefits for 2013 was significantly less than the change in 2012 primarily due to a higher discount rate assumption for 2013. For Messrs. Bozer and Cahillane, $0 is reported because there was a decrease of $56,161 and $57,918, respectively, in the actuarial present value of their pension values for 2013.
** Total Without Change in Pension Value represents total compensation, as determined under applicable SEC rules, minus the change in pension value reported in the Change in Pension Value and Nonqualified Deferred Compensation Earnings column (but including the nonqualified deferred compensation earnings reported in that column, if any).
***   Mr. Cahillane left the Company on February 28, 2014. For details on his separation arrangements, including the forfeiture of all unvested stock and option awards granted in 2013, see page 74.

 

HOW PAY IS TIED TO COMPANY PERFORMANCE (PAGE 48)

 

We understand that there are different views about how to assess whether a company “pays for performance.” This section highlights how the Compensation Committee views pay and Company performance and why we believe the Company’s compensation programs are appropriately aligned with performance.

 

Our compensation programs are designed to reward employees for producing sustainable growth consistent with the Company’s 2020 Vision, to attract and retain world-class talent and to align compensation with the long-term interests of our shareowners. The Compensation Committee strongly believes that executive compensation — pay opportunities, realizable pay and pay actually realized — should be tied to Company performance. The Compensation Committee views Company performance in two primary ways:

 

    the Company’s operating performance, including results against our long-term growth targets; and
   
return to shareowners over time, both on an absolute basis and relative to other companies, including the S&P 500 companies and our compensation comparator group (see page 59).

 

2014 Proxy Statement  

11

 

Operating Performance

 

In a year marked by ongoing global macroeconomic challenges in many markets around the world, the Company was not immune to these pressures. Despite global volume growth below its expectations and long-term growth target, the Company delivered sound financial results in line with its long-term profit targets. Company operating performance highlights included:

 

    Global volume grew 2% for the full year, with sparkling beverage volume up 1% and still beverage volume up 5%.
   
The Company grew global value share in nonalcoholic ready-to-drink beverages, with volume and value share gains in core sparkling and still beverages.
   
Full-year reported net revenues declined 2% and, excluding the impact of structural changes, comparable currency neutral net revenues grew 3%.
   
Full-year reported operating income declined 5% and, excluding the impact of structural changes, comparable currency neutral operating income grew 6%, in line with the Company’s long-term growth target.
   
Full-year reported earnings per share (“EPS”) was $1.90, down 3%, and comparable EPS was $2.08, up 3%. Comparable currency neutral EPS was up 8% for the full year, in line with the Company’s long-term growth target.

 

The following illustrates the three-year directional relationship between Company performance, based on two of our key operating metrics, and the compensation (as defined below) of our Chairman and Chief Executive Officer. These key metrics, unit case volume and comparable earnings per share, were chosen because we believe they correlate to long-term shareowner value.

 

 

1 2012 does not include Beverage Partners Worldwide (“BPW”) unit case volume for those countries in which BPW was phased out in 2012, nor does it include unit case volume of products distributed in the U.S. under a sublicense from a subsidiary of Nestlé S.A. (“Nestlé”) which terminated at the end of 2012.
2 Reflects the Company’s two-for-one stock split effected on July 27, 2012. Comparable EPS differs from what is reported under accounting principles generally accepted in the U.S. (“GAAP”). See Annex A for a reconciliation of non-GAAP financial measures to our results as reported under GAAP.
3 Total compensation for Mr. Kent in each of 2011, 2012 and 2013, as reported in the 2013 Summary Compensation Table on page 63, excluding “change in pension value and nonqualified deferred compensation earnings.” We believe it is appropriate to exclude this component when analyzing the relationship between pay and performance because there are no enhanced or special pension plans for the Named Executive Officers and change in pension value is subject to many variables, such as external interest rates, that are not related to Company performance.

 

2014 Proxy Statement  

12

 

Return to Shareowners

 

The Company has delivered consistent positive return to shareowners over time, and has a long history of increasing dividends and conducting share repurchases, which continued in 2013.

 

 

The following chart shows how a $100 investment in the Company’s common stock on December 31, 2008 would have grown to $211 on December 31, 2013, with dividends reinvested quarterly. The chart also compares the total shareowner return on the Company’s Common Stock to the same investment in the S&P 500 Index and the Company’s 2013 compensation comparator group (see page 59) over the same period, with dividends reinvested quarterly.

 

 

* Source: Standard & Poor’s Research Insight. Includes the Company’s 2013 comparator group (see page 59) for the five-year period whether or not a company was included in the group for the entire period. For foreign companies included in the comparator group, market value has been converted to U.S. dollars and excludes the impact of currency. Market returns are weighted by relative market capitalization and are adjusted for spin-offs and special dividends.

 

2014 Proxy Statement  

13

 

Impact of Company performance on compensation – reported, realizable and realized pay

 

As described above, over the last several years the Company has continued to have solid operating performance and return positive value to shareowners. In 2011 and 2012, the Company met or exceeded its long-term growth targets and its three-year cumulative total shareowner return from 2011 to 2013 was 36.5%. The Company’s results in 2013 can be described as mixed, as the Company met some, but not all, of its long-term growth targets, and its one-year cumulative total shareowner return was 17.2%.

 

The following graphic provides a more complete view of total direct compensation (base salary, annual incentive and long-term equity compensation) by providing “reported,” “realizable” and “realized” pay of the Chairman and Chief Executive Officer for 2011, 2012 and 2013. We believe that “reported” pay (compensation reported in the 2013 Summary Compensation Table) is useful, but is only part of an overall view of how pay is aligned with performance. We believe it is also helpful to look at performance-based compensation from the perspective of what is “realizable” and what is “realized.” Generally, the value of pay that is earned or realizable as of a specific date is referred to as “realizable pay” and pay actually received over a specified period is referred to as “realized pay.”

 

 

2014 Proxy Statement  

14

 

 

 

ONE COCA-COLA PLAZA

ATLANTA, GEORGIA 30313

 

March 7, 2014

 

   PROXY STATEMENT

 

The Board of Directors of The Coca-Cola Company (the “Board”) is furnishing you this proxy statement to solicit proxies on its behalf to be voted at the 2014 Annual Meeting of Shareowners of The Coca-Cola Company (the “Company”). The meeting will be held at the Cobb Galleria Centre, Two Galleria Parkway, Atlanta, Georgia 30339 on April 23, 2014, at 12:30 p.m., local time. The proxies also may be voted at any adjournments or postponements of the meeting.

 

The mailing address of our principal executive offices is The Coca-Cola Company, P.O. Box 1734, Atlanta, Georgia 30301. We are first furnishing the proxy materials to shareowners on March 7, 2014.

 

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

 

Only owners of record of shares of common stock of the Company (“Common Stock”) as of the close of business on February 24, 2014, the record date, are entitled to notice of, and to vote at, the meeting or at any adjournments or postponements of the meeting. Each owner of record on the record date is entitled to one vote for each share of Common Stock held. On February 24, 2014, there were 4,405,893,150 shares of Common Stock issued and outstanding.

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREOWNERS TO BE HELD ON APRIL 23, 2014.

 

The Notice of Annual Meeting, Proxy Statement and Annual Report on Form 10-K for the year ended December 31, 2013 are available at www.edocumentview.com/coca-cola.

 

2014 Proxy Statement  

15

 

  GOVERNANCE

The Company is committed to good corporate governance, which promotes the long-term interests of shareowners, strengthens Board and management accountability and helps build public trust in the Company. The Board of Directors has established Corporate Governance Guidelines which provide a framework for the effective governance of the Company. The guidelines address matters such as the Board’s mission, Director responsibilities, Director qualifications, determination of Director independence, Board committee structure, Chief Executive Officer performance evaluation and management succession. The Board regularly reviews developments in corporate governance and updates the Corporate Governance Guidelines and other governance materials as it deems necessary and appropriate. The dashboard below provides a snapshot of the Company’s governance materials and highlights.

 

 

GOVERNANCE DASHBOARD

 

Governance Materials

 

    Certificate of Incorporation      Charter for Each Board Committee
         
    By-Laws       Codes of Business Conduct and EthicsLine
         
    Corporate Governance Guidelines       Public Policy Engagement and Political Contributions Policy

 

You can access the governance materials on the Company’s website, www.coca-colacompany.com, click on “Investors” and then “Corporate Governance.” Instructions on how to obtain copies of the Company’s corporate governance materials are included in the response to question 23 in the Questions and Answers section on page 104.

 

Governance Highlights

 

   Annual Election of Directors

 

   Majority Voting for Directors

 

   15 Director Nominees

 

   13 Independent Director Nominees

 

   Independent Presiding Director

 

   Independent Audit, Compensation and Directors/Governance Committees

 

   Regular Executive Sessions of Independent Directors

 

   Risk Oversight by Full Board and Committees

 

   Regular Board and Committee Self-Evaluations

 

   Long-standing Active Shareowner Engagement

 

   Shareowner Right to Call Special Meeting

 

   Transparent Public Policy Engagement

 

   Long-standing Commitment toward Sustainability

 

 

   Anti-Hedging, Anti-Short Sale and Anti-Pledging Policies

 

   Executive Compensation Driven by Pay-For-Performance Philosophy

 

   Share Ownership Guidelines and Share Retention Policy for Executives

 

   Equity Awards with Clawback Provisions

 

 

ITEM 1 -  ELECTION OF DIRECTORS

 

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

 

2014 Proxy Statement  

16

 

Election Process and Voting Standard

 

The Company’s By-Laws provide that the number of Directors shall be determined by the Board, which has set the number at 15 effective at the 2014 Annual Meeting of Shareowners. The Company’s By-Laws also provide for the annual election of Directors. There are no limits on the number of terms a Director may serve because term limits may cause the loss of experience and expertise important to the optimal operation of the Board. However, to ensure that the Board remains composed of high-functioning members able to keep their commitments to Board service, the Committee on Directors and Corporate Governance evaluates the qualifications and performance of each incumbent Director before recommending the nomination of that Director for an additional term.

 

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

 

In addition, pursuant to the Corporate Governance Guidelines, Directors whose job responsibilities change or who reach the age of 74 are asked to submit a letter of resignation to the Board. These letters are considered by the Board and, if applicable, annually thereafter.

 

Director Nominations

 

The Committee on Directors and Corporate Governance is responsible for identifying and evaluating nominees for Director and for recommending to the Board a slate of nominees for election at each Annual Meeting of Shareowners. Nominees may be suggested by Directors, members of management, shareowners or, in some cases, by a third-party firm.

 

Shareowners who wish the Committee on Directors and Corporate Governance to consider their recommendations for nominees for the position of Director should submit their recommendations in writing by mail to the Committee on Directors and Corporate Governance in care of the Office of the Secretary, The Coca-Cola Company, P.O. Box 1734, Atlanta, Georgia 30301, by e-mail to shareownerservices@coca-cola.com or by fax to (404) 676-8409. Recommendations by shareowners that are made in accordance with these procedures will receive the same consideration by the Committee on Directors and Corporate Governance as other suggested nominees. Nominations for the 2015 Annual Meeting of Shareowners must be received by December 24, 2014.

 

Director Qualifications

 

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

 

Qualifications Required of All Directors

 

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

 

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

 

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

 

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

 

The Board has identified particular qualifications, attributes, skills and experience that are important to be represented on the Board as a whole, in light of the Company’s current needs and the business priorities as set forth in the Company’s 2020 Vision. The 2020 Vision

 

2014 Proxy Statement  

17

 

is an action plan that sets forth a common set of strategies guiding the Coca-Cola system to succeed in the changing environment over this decade. Additional information regarding the 2020 Vision may be found on the Company’s website, www.coca-colacompany.com.

 

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

 

  Business Characteristics       Qualifications, Attributes, Skills and Experience  
The Company’s business is multifaceted and involves complex financial transactions in many countries and in many currencies.  

   High level of financial literacy

 

   Relevant Chief Executive Officer/President experience

The Company’s business is truly global and multicultural, with its products sold in over 200 countries around the world.  

   Diversity of race, ethnicity, gender, age, cultural background or professional experience

 

   Broad international exposure
The Company’s business is a complicated global enterprise and most of the Company’s products are manufactured and sold by bottling partners around the world.  

   Extensive knowledge of the Company’s business, industry and/or manufacturing

Marketing is the core focus of the Company’s business and the Company seeks to develop and deploy the world’s most innovative and effective marketing and technology.  

   Marketing/marketing-related technology experience

The Company’s business requires compliance with a variety of regulatory requirements across a number of countries and relationships with various governmental entities and non-governmental organizations.      Governmental or geopolitical expertise
The Board’s responsibilities include understanding and overseeing the various risks facing the Company and ensuring that appropriate policies and procedures are in place to effectively manage risk.      Risk oversight/management expertise

 

2014 Proxy Statement  

18

 

2014 NOMINEES FOR DIRECTOR

 

Upon the recommendation of the Committee on Directors and Corporate Governance, the Board has nominated each of Herbert A. Allen, Ronald W. Allen, Ana Botín, Howard G. Buffett, Richard M. Daley, Barry Diller, Helene D. Gayle, Evan G. Greenberg, Alexis M. Herman, Muhtar Kent, Robert A. Kotick, Maria Elena Lagomasino, Sam Nunn, James D. Robinson III and Peter V. Ueberroth for election as Director. All of the nominees are independent under New York Stock Exchange (“NYSE”) corporate governance rules, except Herbert A. Allen and Muhtar Kent. See “Director Independence and Related Person Transactions” beginning on page 37.

 

Each of the Director nominees currently serves on the Board and was elected by the shareowners at the 2013 Annual Meeting of Shareowners, except for Ms. Botín who was appointed to the Board in July 2013. Ms. Botín was identified as a potential Director by the Committee on Directors and Corporate Governance, who determined that she was qualified under the committee’s criteria. If elected, each nominee will hold office until the 2015 Annual Meeting of Shareowners and until his or her successor is elected and qualified.

 

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

 

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

 

Included in each Director nominee’s biography below is an assessment of the specific qualifications, attributes, skills and experience of such nominee based on the qualifications described above. Immediately after the biographies, we have also included a summary describing the qualifications of the nominees.

 

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

 


 

2014 Proxy Statement  

19

 

 

 

Herbert A. Allen

 

Director since 1982

 

Age: 74

 

Board Committees: Executive, Finance, Management Development (Chair)

 

Other Public Company Boards: None

 

Mr. Allen is President, Chief Executive Officer and a Director of Allen & Company Incorporated, a privately held investment firm, and has held these positions for more than the past five years. He previously served as a Director of Convera Corporation from 2000 to 2010.

 

Specific Qualifications, Attributes, Skills and Experience:

 

 

High Level of Financial Literacy

Extensive experience in venture capital, underwriting, mergers and acquisitions, private placements and money management services at Allen & Company Incorporated. Supervises Allen & Company Incorporated’s principal financial and accounting officers on all matters related to the firm’s financial position and results of operations and the presentation of its financial statements.

 

Relevant Chief Executive Officer/President Experience

President and Chief Executive Officer of Allen & Company Incorporated, a preeminent investment firm focused on the media, entertainment and technology industries.

 

Extensive Knowledge of the Company’s Business

Director of the Company since 1982 and through Allen & Company Incorporated, has served as financial advisor to the Company and its bottling partners on numerous transactions.

 

Marketing/Marketing-Related Technology Experience

Significant marketing experience through ten-year public company directorship at Convera Corporation, a company that used technology to help clients build an online community and increase their Internet advertising revenues.

 

 

 

Ronald W. Allen

 

Director since 1991

 

Age: 72

 

Board Committees: Audit, Compensation

 

Other Public Company Boards: Aaron’s, Inc. (since 1997), Aircastle Limited (since 2006)

 

Mr. Allen is Chairman of the Board, President and Chief Executive Officer of Aaron’s, Inc. In November 2012, he was appointed Chairman of the Board of Aaron’s, Inc., where he has served as a Director since 1997. Mr. Allen has served as President and Chief Executive Officer of Aaron’s, Inc. since February 2012 and served as interim President and Chief Executive Officer of Aaron’s, Inc. from November 2011 until February 2012. Mr. Allen retired as the Chairman of the Board, President and Chief Executive Officer of Delta Air Lines, Inc. (“Delta”), one of the world’s largest global airlines, in July 1997. From July 1997 through July 2005, Mr. Allen was a consultant to and Advisory Director of Delta. He previously served as a Director of Interstate Hotels & Resorts, Inc. from 2006 to 2010, Forward Air Corporation from 2011 to 2013 and Guided Therapeutics Inc. from 2008 to January 31, 2014.

 

Specific Qualifications, Attributes, Skills and Experience:

 

 

High Level of Financial Literacy

In addition to overseeing the financial matters in his role as Chairman of the Board, President and Chief Executive Officer of Aaron’s, Inc., a leader in the sales and lease ownership and specialty retailing of residential furniture, consumer electronics, home appliances and accessories, also served on its Audit Committee. Serves on the Audit Committee of Aircastle Limited, a global company that acquires, leases and sells high-utility commercial jet aircraft to customers throughout the world. Served on the Investment Committee of Interstate Hotels & Resorts, Inc., a large independent hotel management company of major global brands.

 

Relevant Chief Executive Officer/President Experience

Chief Executive Officer and President of Aaron’s, Inc. Served as Chief Executive Officer and President of Delta from 1987 to 1997. During his tenure at Delta, he managed the company through very difficult times, brought it back to sustained profitability, established a program to lower the airline’s cost structure and grew the business through expansion into foreign markets.

 

Broad International Exposure

Former Chairman and Chief Executive Officer of Delta, a leading global carrier with service to 59 countries on six continents. Serves as a Director at Aircastle Limited and served as a Director at Interstate Hotels & Resorts, Inc., each of which has international operations.

 

Extensive Knowledge of the Company’s Business and Manufacturing

23-year directorship at the Company. Significant manufacturing experience as a senior executive at Aaron’s, Inc., whose business includes a furniture manufacturing division.

 

2014 Proxy Statement  

20

 

 

 

Ana Botín

 

Director since 2013

 

Age: 53

 

Other Public Company Boards: Santander UK plc (since 2010)

 

Ms. Botín is Chief Executive Officer and Executive Director of Santander UK plc, a leading financial services provider in the United Kingdom and subsidiary of Banco Santander, S.A., and has held these positions since December 2010. Ms. Botín served as Executive Chairman of Banco Español de Crédito, S.A., also a subsidiary of Banco Santander, S.A., from 2002 to 2010. She started her 33-year career in the banking industry at JP Morgan in New York in 1981 and in 1988 joined Banco Santander, S.A., a global, multinational bank, where she established and led its international banking business in Latin America in the 1990s. She previously served as a director of Assicurazioni Generali S.p.A., a global insurance company based in Italy, from 2004 to 2011.

 

Specific Qualifications, Attributes, Skills and Experience:

 

 

High Level of Financial Literacy

Internationally recognized expert in the investment banking industry with knowledge of global macroeconomic issues as well as significant experience in oversight and management of financial risks. Over 33 years of experience in investment and commercial banking. Began career at JP Morgan in New York in 1981 where she worked in its investment banking and treasury service areas until 1988. Joined Banco Santander, S.A. in 1988 where she established and led its international corporate banking business in Latin America in the 1990s. Subsequently served as Executive Chairman of Banco Español de Crédito, S.A. from 2002 to 2010 and has served as Chief Executive Officer of Santander UK plc since 2010, both of which are banking subsidiaries of Banco Santander, S.A. Served as a member of Banco Santander, S.A.’s Board and Executive Committee since 1989 and of its Management Committee since 1994.

 

Relevant Chief Executive Officer/President Experience

Chief Executive Officer of Santander UK plc, a leading financial services provider in the United Kingdom and subsidiary of Banco Santander, S.A. since 2010. Previously served as Executive Chairman of Banco Español de Crédito, S.A. from 2002 to 2010 and as Chief Executive Officer of Banco Santander de Negocios, both banking subsidiaries of Banco Santander, S.A.

 

Diversity

Spanish national; female; significant experience with non-U.S. companies and non-profit organizations.

 

Broad International Exposure

Founder and Vice Chairman of Fundación de Empresa y Crecimiento, which finances small and medium sized companies in Latin America, and co-founder and Chairman of the Fundación de Conocimiento y Desarrollo, a not-for-profit organization that promotes the contribution of universities in Spain to the country’s economic and social development. Co-founder and Chairman of Fundación de Empieza Por Educar, the Spanish member of the global Teach For All network. Trustee of the Mayor’s Fund for London, which addresses child poverty through education initiatives. Serves on the Board of Directors of Georgetown University and on the Advisory Council of INSEAD, one of the world’s leading graduate business schools. Director of Assicurazioni Generali S.p.A., a global insurance company based in Italy, from 2004 to 2011.

 

 

 

Howard G. Buffett

 

Director since 2010

 

Age: 59

 

Board Committees: Public Issues and Diversity Review

 

Other Public Company Boards: Berkshire Hathaway Inc. (since 1993), Lindsay Corporation (since 1995)

 

Mr. Buffett is President of Buffett Farms, a commercial farming operation, and has held this position since 1986. Mr. Buffett is Chairman and Chief Executive Officer of the Howard G. Buffett Foundation, a charitable foundation that supports initiatives focused on food and water security, conservation and conflict management, and has held these positions since December 2013. He previously served as President of the Howard G. Buffett Foundation from 1999 to December 2013.

 

Specific Qualifications, Attributes, Skills and Experience:

 

 

Broad International Exposure

The Howard G. Buffett Foundation, of which Mr. Buffett is Chairman and Chief Executive Officer, focuses much of its work in communities in Africa and Latin America. In 2007, the Foundation launched the Global Water Initiative to address productive and household water resource constraints in Africa and Central America. In 2013, the Global Water Initiative refocused its efforts to more closely align with the Foundation’s core mission of improving global food security by enabling farmers to better access, manage and use water resources for sustainable agricultural production. Served in various management roles at Archer- Daniels-Midland Company, one of the largest agricultural processors in the world, including a lead business development role for Latin America.

 

Extensive Knowledge of the Company’s Business

From 1993 to 2004, served as a Director of Coca-Cola Enterprises Inc., then the world’s largest Coca-Cola bottler, which enabled Mr. Buffett to acquire extensive knowledge of its bottling operations and an understanding of the Coca-Cola system.

 

Governmental or Geopolitical Expertise

Served on two United States Trade Representative Committees and was appointed a United Nations Goodwill Ambassador Against Hunger in 2007. Gained governmental experience through service in elected office in Douglas County, Nebraska from 1989 to 1992. Extensive experience on international socioeconomic and regulatory issues including agricultural resource development and supply chain and water resource management as Chairman and Chief Executive Officer of the Howard G. Buffett Foundation, which works to improve subsistence agriculture and resolve conflicts tied to food shortages. Served as Chairman of Coca-Cola Enterprises Inc.’s Public Issues Review Committee.

 

Risk Oversight/Management Expertise

Oversees and manages operational risks as President of Buffett Farms and Chairman and Chief Executive Officer of the Howard G. Buffett Foundation and as a Director of Berkshire Hathaway Inc., a complex and diversified multinational company, Lindsay Corporation, a worldwide leader in the manufacturing of agricultural irrigation products, and Sloan Implement, a privately owned distributor of John Deere agricultural equipment.

 

2014 Proxy Statement  

21

 

 

 

Richard M. Daley

 

Director since 2011

 

Age: 71

 

Board Committees: Directors and Corporate Governance

 

Other Public Company Boards: Diamond Resorts International, Inc. (since 2013)

 

Mr. Daley was the Mayor of Chicago from 1989 to 2011. Mr. Daley is the Executive Chairman of Tur Partners LLC, an investment and advisory firm focusing on sustainable solutions within the urban environment, and has held this position since May 2011. He is an Of Counsel at Katten Muchin Rosenman LLP, a full-service law firm with more than 600 attorneys in locations across the United States and an affiliate in London and Shanghai, and has held this position since June 2011. In October 2011, he was appointed a senior advisor to JPMorgan Chase & Co., where he chairs the “Global Cities Initiative,” a joint project of JPMorgan Chase & Co. and the Brookings Institution to help cities identify and leverage their greatest economic development resources. Mr. Daley also has been a distinguished senior fellow at the University of Chicago Harris School of Public Policy since May 2011.

 

Specific Qualifications, Attributes, Skills and Experience:

 

 

Relevant Chief Executive Officer/President Experience

As Mayor of Chicago, served as the chief executive of one of the world’s largest cities, managing all aspects of a complex governmental organization, including its multi-billion dollar budget and over 30 departments with over 35,000 employees. Serves as Executive Chairman of Tur Partners LLC.

 

Broad International Exposure

As Mayor, helped Chicago become a prominent player in the global economy. Particular focus on developing relationships in China through efforts such as the Chicago-China Friendship Initiative campaign. Ongoing international exposure with policymakers from around the world as distinguished senior fellow at the University of Chicago Harris School of Public Policy and as a member of the International Advisory Board for the Russian Direct Investment Fund.

 

Governmental or Geopolitical Expertise

Over a 42-year career in public service. Mayor of Chicago for 22 years and the longest serving Mayor in Chicago’s history. As Mayor, earned a reputation for improving Chicago’s quality of life, acting to improve public schools, strengthening its economy and helping Chicago become among the most environmentally friendly cities in the world.

 

Risk Oversight/Management Expertise

Significant expertise in managing and overseeing risks as Mayor of Chicago, including emergency and crisis management, and oversight of governmental, economic, environmental, human resources and social risks.

 

 

 

Barry Diller

 

Director since 2002

 

Age: 72

 

Board Committees: Directors and Corporate Governance, Executive, Finance (Chair), Management Development

 

Other Public Company Boards: Expedia, Inc. (since 2005), IAC/InterActiveCorp (since 1995), Graham Holdings Company (formerly The Washington Post Company, since 2000)

 

Mr. Diller is Chairman of the Board and Senior Executive of IAC/InterActiveCorp, a leading media and Internet company. Mr. Diller held the positions of Chairman of the Board and Chief Executive Officer of IAC/InterActiveCorp and its predecessors since August 1995 and ceased serving as Chief Executive Officer in December 2010. Mr. Diller is also Chairman of the Board and Senior Executive of Expedia, Inc., an online travel company. Mr. Diller has served as Special Advisor to TripAdvisor, Inc., an online travel company, since April 2013 and served as its Chairman of the Board and Senior Executive from December 2011, when it was spun off from Expedia, Inc., until December 2012, and was a member of its Board until April 2013. Mr. Diller served as the non-executive Chairman of the Board of Ticketmaster Entertainment, Inc. from 2008 to 2010, when it merged with Live Nation, Inc. to form Live Nation Entertainment, Inc. Mr. Diller served as the non-executive Chairman of the Board of Live Nation Entertainment, Inc. from January 2010 to October 2010 and was a member of its Board until January 2011.

 

Specific Qualifications, Attributes, Skills and Experience:

 

 

High Level of Financial Literacy

Extensive experience in financings, mergers, acquisitions, investments and strategic transactions, including transactions with Silver King Broadcasting, QVC, Inc., Ticketmaster Entertainment, Inc. and Home Shopping Network, Inc. Serves on the Finance Committee of Graham Holdings Company, a diversified education and media company.

 

Relevant Chief Executive Officer/President Experience

Served as Chief Executive Officer of IAC/InterActiveCorp (and its predecessors) from August 1995 to November 2010. Beginning with QVC, Inc. in 1992, served as chief executive for a number of predecessor companies engaged in media and interactivity prior to the formation of IAC/InterActiveCorp. Previously served as Chief Executive Officer of Fox, Inc. from 1984 to 1992. Prior to joining Fox, Inc., served for ten years as Chief Executive Officer of Paramount Pictures Corporation.

 

Broad International Exposure

Chairman of the Board and Senior Executive of IAC/InterActiveCorp, a leading media and internet company with website visits across more than 100 countries. Chairman of the Board and Senior Executive of Expedia, Inc., one of the world’s leading online travel companies, which provides localized travel services to customers throughout North America, Asia, Australia, Europe and Mexico. Served as Chairman of the Board and Senior Executive of TripAdvisor, Inc., the world’s largest online travel company, with sites operating in 34 countries worldwide. Served as a member of the Council on Foreign Relations.

 

Marketing/Marketing-Related Technology Experience

Extensive experience and leadership roles in the consumer Internet and digital media sectors that are of particular relevance to the Company’s marketing strategy. This includes experience at IAC/InterActiveCorp, which has several business units/websites that operate in the marketing and technology industries, including Ask. com, About.com, Match.com, Vimeo.com, HomeAdvisor.com and CityGrid Media, at Expedia, Inc., which operates travel websites, including Expedia.com, Hotels. com and Hotwire.com, and at TripAdvisor, Inc., which operates the flagship TripAdvisor-branded websites and numerous other travel brands.

 

2014 Proxy Statement  

22

 

 

Helene D. Gayle

 

Director since 2013

 

Age: 58

 

Board Committees: Compensation

 

Other Public Company Boards: Colgate-Palmolive Company (since 2010)

 

Dr. Gayle has been President and Chief Executive Officer of CARE USA, a leading international humanitarian organization, since 2006. From 2001 to 2006, she served as program director in the Global Health Program at the Bill & Melinda Gates Foundation. Dr. Gayle started her 20-year career in public health at the U.S. Centers for Disease Control and Prevention (“CDC”) in 1984 where she held various positions, ultimately becoming the director of the CDC’s National Center for HIV, STD and TB Prevention in 1995.

 

Specific Qualifications, Attributes, Skills and Experience:

 

 

Relevant Chief Executive Officer/President Experience

President and Chief Executive Officer of CARE USA, a leading international humanitarian organization with operating support and revenues exceeding $500 million per year.

 

Diversity

African-American; female; a medical specialist with a masters of public health; an expert on health, global development and humanitarian issues.

 

Broad International Exposure

Experience managing international operations at CARE USA, which has long-term programs in 84 countries around the world, including in many emerging markets. Helped develop global health initiatives in leadership roles at the CDC and the Bill & Melinda Gates Foundation. Currently serves on the Board of the Center for Strategic and International Studies, the Rockefeller Foundation and the Harvard Business School Social Enterprise Initiative. Member of the Council on Foreign Relations.

 

Governmental or Geopolitical Expertise

Extensive leadership experience in the global public health field through service at the CDC and through a leadership position with the Bill & Melinda Gates Foundation, directing programs on HIV/AIDS and other global health issues. Member of the U.S. Department of State’s Foreign Affairs Policy Board and serves on the President’s Commission on White House Fellowships. Achieved the rank of Assistant Surgeon General and Rear Admiral in the United States Public Health Service. Director of New America Foundation, a nonprofit, nonpartisan public policy institute and think tank.

 

 

 

Evan G. Greenberg

 

Director since 2011

 

Age: 59

 

Board Committees: Audit (Chair), Finance

 

Other Public Company Boards: ACE Limited (since 2002)

 

Mr. Greenberg is the Chairman and Chief Executive Officer of ACE Limited, the parent company of the ACE Group of Companies, a global insurance and reinsurance organization. He served as President and Chief Operating Officer of ACE Limited from June 2003 to May 2004, when he was elected to the position of President and Chief Executive Officer. Mr. Greenberg has served on the Board of ACE Limited since 2002 and was elected as Chairman of the Board in May 2007. Prior to joining the ACE Group in 2001, Mr. Greenberg held a number of senior management positions at American International Group, Inc. (“AIG”), most recently serving as President and Chief Operating Officer from 1997 until 2000.

 

Specific Qualifications, Attributes, Skills and Experience:

 

 

High Level of Financial Literacy

Over 38 years of experience in the insurance industry, including managing global businesses and overseeing complex financial transactions involving numerous countries and currencies.

 

Relevant Chief Executive Officer/President Experience

President and Chief Executive Officer of ACE Limited since 2004. President and Chief Operating Officer of ACE Limited from 2003 to 2004. Chief Executive Officer of ACE Overseas General from 2002 to 2003 and Chief Executive Officer of ACE Tempest Re from 2001 to 2002. President of AIG, a leading international insurance organization, from 1997 to 2000.

 

Broad International Exposure

Chairman and Chief Executive Officer of ACE Limited, the parent company of the ACE Group of Companies, one of the world’s largest multiline property and casualty insurers, with operations in 54 countries. Extensive experience and business relationships in Asia, including serving as Chief Executive Officer of AIG Far East, based in Japan. Serves on the Board of the National Committee on United States-China Relations and the US-China Business Council, is Chairman of the US-ASEAN Business Council and is a trustee of the Center for the National Interest.

 

Risk Oversight/Management Expertise

Extensive risk oversight/management experience through various underwriting and management positions in the global property, casualty and life insurance sectors.

 

2014 Proxy Statement  

23

 

 

 

Alexis M. Herman

 

Director since 2007

 

Age: 66

 

Board Committees: Compensation, Public Issues and Diversity Review (Chair)

 

Other Public Company Boards: Cummins Inc. (since 2001), Entergy Corporation (since 2003), MGM Resorts International (since 2002)

 

Ms. Herman is the Chair and Chief Executive Officer of New Ventures LLC, a corporate consulting company, and has held these positions since 2001. She served as Chair of the Business Advisory Board of Sodexo, Inc., an integrated food and facilities management services company, through 2013 and serves as a member of Toyota Motor Corporation’s Global Advisory Board. As chair of the Company’s Human Resources Task Force from 2001 to 2006, Ms. Herman worked with the Company to identify ways to improve its human resources policies and practices following the November 2000 settlement of an employment lawsuit. From 1997 to 2001, she served as U.S. Secretary of Labor.

 

Specific Qualifications, Attributes, Skills and Experience:

 

 

Diversity

African-American; female; professional experience in government, nonprofit/charitable organizations and business. Vice Chair of the Board of Trustees of the National Urban League, a civil rights organization.

 

Broad International Exposure

13-year public company directorship at Cummins Inc., a global power leader that designs, manufactures, distributes and services diesel and natural gas engines and related technologies and serves customers in approximately 190 countries and territories through a network of approximately 600 company-owned and independent distributor locations and approximately 6,500 dealer locations. Served as Chair of the Working Party for the Role of Women in the Economy for the Organisation for Economic Co-operation and Development (“OECD”), an international organization helping governments tackle the economic, social and governance challenges of a globalized economy.

 

Governmental or Geopolitical Expertise

Former U.S. Secretary of Labor from 1997 to 2001. Former White House Assistant to President Clinton and Director of the White House Office of Public Liaison. Served as Director of the Labor Department’s Women’s Bureau under President Jimmy Carter. Former Chief of Staff and former Vice Chair of the Democratic National Committee. Serves as a Trustee of the Clinton Bush Haiti Fund. Served as Chair of the Working Party for the Role of Women in the Economy for OECD. Serves as Chair of the Community Affairs Committee for MGM Resorts International, a global hospitality company.

 

Risk Oversight/Management Expertise

Significant expertise in management and oversight of labor and human relations risks, including handling the United Parcel Service workers’ strike in 1997 while U.S. Secretary of Labor. Chair of the Company’s Human Resources Task Force following the November 2000 settlement of an employment lawsuit. Serves on the Audit Committee of Cummins Inc. and served on the Audit Committee of MGM Resorts International.

 

 

 

Muhtar Kent

 

Director since 2008

 

Age: 61

 

Board Committees: Executive (Chair)

 

Other Public Company Boards: 3M Company (since 2013)

 

Mr. Kent is Chairman of the Board, Chief Executive Officer and President of the Company. He has held the position of Chairman of the Board since April 23, 2009, the position of Chief Executive Officer since July 1, 2008 and the position of President since December 7, 2006. From December 2006 through June 2008, Mr. Kent served as President and Chief Operating Officer of the Company. From January 2006 through December 2006, Mr. Kent served as President of Coca-Cola International and was elected Executive Vice President of the Company in February 2006. From May 2005 through January 2006, he was President and Chief Operating Officer of the Company’s North Asia, Eurasia and Middle East Group, an organization serving a broad and diverse region that included China, Japan and Russia. Mr. Kent originally joined the Company in 1978 and held a variety of marketing and operations roles until 1995, when he became Managing Director of Coca-Cola Amatil Limited-Europe covering bottling operations in 12 countries. From 1999 until his return to the Company in May 2005, he served as President and Chief Executive Officer of the Efes Beverage Group, a diversified beverage company with Coca-Cola and beer operations across Southeast Europe, Turkey and Central Asia.

 

Specific Qualifications, Attributes, Skills and Experience:

 

 

High Level of Financial Literacy

Substantial financial experience gained in roles as Chief Executive Officer and President of the Company and Efes Beverage Group, both multi-national companies. Oversight of complex financial transactions and profit and loss responsibility during prior operations and leadership roles with the Company. Serves on the Audit Committee and Finance Committee of the Board of Directors of 3M Company.

 

Relevant Chief Executive Officer/President Experience

In addition to serving as the Company’s Chief Executive Officer, served as President and Chief Executive Officer of Efes Beverage Group.

 

Broad International Exposure

Over 33 years of Coca-Cola system experience including extensive experience in international markets. Director of 3M Company, a global innovation company. Chair of the International Business Council of the World Economic Forum, member of the Board of Directors of the Council on Foreign Relations and fellow of the Foreign Policy Association. Chairman Emeritus of the US-ASEAN Business Council and appointed as a member of the Eminent Persons Group for ASEAN by President Obama and then Secretary of State Clinton. Member of the Board of Trustees of the United States Council for International Business and the Center for Strategic and International Studies and member of the Board of Directors of the Special Olympics. Former Chairman of the Board of the US-China Business Council.

 

Extensive Knowledge of the Company’s Business, Industry and Manufacturing

Chairman of the Board (since 2009), Chief Executive Officer (since 2008), Chief Operating Officer (December 2006 to June 2008) and President (since 2006) of the Company. Joined the Company in 1978, holding a variety of marketing and operations leadership positions over the course of his career in the Coca-Cola system.

 

2014 Proxy Statement  

24

 

 

 

Robert A. Kotick

 

Director since 2012

 

Age: 51

 

Board Committees: Management Development

 

Other Public Company Boards: Activision Blizzard, Inc. (since 1991)

 

Mr. Kotick is President, Chief Executive Officer and a Director of Activision Blizzard, Inc., an interactive entertainment software company, and has held these positions since 2008. Mr. Kotick served as Chairman and Chief Executive Officer of the predecessor to Activision Blizzard, Inc. from 1991 to 2008.

 

Specific Qualifications, Attributes, Skills and Experience:

 

 

High Level of Financial Literacy

Over 22 years of experience as Chief Executive Officer of Activision Blizzard, Inc. and its predecessor, including managing complex international operations and financial transactions.

 

Relevant Chief Executive Officer/President Experience

Served as Chief Executive Officer of Activision Blizzard, Inc.’s predecessor for over 17 years and has served as President of Activision Blizzard, Inc. since 2008.

 

Broad International Exposure

President and Chief Executive Officer of Activision Blizzard, Inc., an interactive entertainment software company with operations in the United States, Europe and Asia, whose software products are sold globally. In addition, he gained international business experience during his service on the Board of Directors of Yahoo! Inc., a global technology company, from 2003 to 2008.

 

Marketing/Marketing-Related Technology Experience

Significant marketing and technology experience with Activision Blizzard, Inc. and its predecessor. As a leader in the gaming industry, brings extensive marketing insight about key demographic groups and utilization of technology and social media in marketing.

 

 

 

Maria Elena Lagomasino

 

Director since 2008

 

Age: 64

 

Board Committees: Compensation (Chair), Directors and Corporate Governance, Management Development

 

Other Public Company Boards: Avon Products, Inc. (since 2000)

 

Maria Elena Lagomasino is the Chief Executive Officer and Managing Partner of WE Family Offices, a global family office serving high net worth families, and has held these positions since March 2013. Ms. Lagomasino served as Chief Executive Officer of GenSpring Family Offices, LLC, an affiliate of SunTrust Banks, Inc., from November 2005 through October 2012. From 2001 to 2005, Ms. Lagomasino was Chairman and Chief Executive Officer of JPMorgan Private Bank, a division of JPMorgan Chase & Co., a global financial services firm. Prior to assuming this position, she was Managing Director of The Chase Manhattan Bank in charge of its Global Private Banking Group. Ms. Lagomasino had been with Chase Manhattan since 1983 in various positions in private banking. She served as a Director of the Company from April 2003 to April 2006.

 

Specific Qualifications, Attributes, Skills and Experience:

 

 

High Level of Financial Literacy

Over 31 years of experience in the financial industry and a recognized leader in the wealth management industry. Chief Executive Officer and Managing Partner at WE Family Offices, a global family office serving high net worth families. Former Chief Executive Officer of GenSpring Family Offices, LLC, a wealth management firm that is an affiliate of SunTrust Banks, Inc. Founding member of the Institute for the Fiduciary Standard, a nonprofit formed in 2011 to provide research, education and advocacy of the fiduciary standard’s importance to investors receiving investment and financial advice.

 

Relevant Chief Executive Officer/President Experience

Serves as Chief Executive Officer of WE Family Offices and served as Chief Executive Officer of GenSpring Family Offices, LLC and JPMorgan Private Bank.

 

Diversity

Hispanic; female; professional experience in global capital markets.

 

Broad International Exposure

Significant international experience as Chief Executive Officer of GenSpring Family Offices, LLC and Chairman and Chief Executive Officer of JPMorgan Private Bank. During tenure with The Chase Manhattan Bank, served as Managing Director of the Global Private Banking Group, Vice President of private banking in the Latin America region and head of private banking for the western hemisphere. Over 36 years of experience working with Latin America. Exposure to international issues as a director of the Americas Society, as a director of the Cuba Study Group, as a trustee of the National Geographic Society and as a member of the Council on Foreign Relations.

 

2014 Proxy Statement  

25

 

 

 

Sam Nunn

 

Director since 1997

 

Age: 75

 

Board Committees: Directors and Corporate Governance, Finance, Public Issues and Diversity Review

 

Other Public Company Boards: None

 

Mr. Nunn is Co-Chairman and Chief Executive Officer of the Nuclear Threat Initiative, a position he has held since 2001. The Nuclear Threat Initiative is a nonprofit organization working to reduce the global threats from nuclear, biological and chemical weapons. He has served as the Chairman of the Board of the Center for Strategic and International Studies since 1999. He served as a member of the U.S. Senate from 1972 through 1996. He previously served as a Director of Chevron Corporation from 1997 to 2011, Dell Inc. from 1999 to 2011 where he served as Lead Director, General Electric Company from 1997 to April 2013 and Hess Corporation from 2012 to May 2013.

 

Specific Qualifications, Attributes, Skills and Experience:

 

 

High Level of Financial Literacy

Has served on the Company’s Finance Committee for over 16 years. Served on the Finance Committee of Dell Inc. and the Audit Committees of Dell Inc. and Scientific-Atlanta, Inc.

 

Broad International Exposure

16-year public company directorship at General Electric Company, one of the largest and most diversified infrastructure and financial services corporations in the world which serves customers in more than 100 countries. 14-year public company directorship at Chevron Corporation, which has U.S. and international subsidiaries that engage in fully integrated petroleum operations, chemicals operations, mining activities, power generation and energy services. 12-year public company directorship at Dell Inc., a global information technology company. Also served as a Director of Hess Corporation, a global independent energy company. Since 1999, Chairman of the Board of Trustees of the Center for Strategic and International Studies, a preeminent international policy institution.

 

Marketing/Marketing-Related Technology Experience

Regular exposure to marketing and marketing-related technology through directorships at Dell Inc., a global information technology company, General Electric Company, a diversified technology, media and financial services company and Chevron Corporation, one of the world’s largest integrated energy companies.

 

Governmental or Geopolitical Expertise

Recognized leader in the U.S. on national security and foreign policy. Extensive experience in government, public and social policy and international affairs as a result of his 24 years of service as a U.S. Senator from Georgia and since 2001 as Co-Chairman and Chief Executive Officer of the Nuclear Threat Initiative. During his tenure in the U.S. Senate, chaired the Senate Committee on Armed Services and the Permanent Subcommittee on Investigations. Also served on the Senate Intelligence and Small Business Committees. Continued his service in the public policy arena as Chairman of the Board of the Center for Strategic and International Studies and as Distinguished Professor in the Sam Nunn School of International Affairs at Georgia Institute of Technology. Chair of the Public Responsibilities Committee at General Electric Company and served as Chair of the Public Policy Committee at Chevron Corporation.

 

 

 

James D. Robinson III

 

Director since 1975

 

Age: 78

 

Board Committees: Compensation, Directors and Corporate Governance (Chair), Management Development

 

Other Public Company Boards: None

 

Mr. Robinson is Co-Founder and General Partner of RRE Ventures, an early stage technology-focused venture capital firm, and has held this position since 1994. He is also President of J.D. Robinson, Inc., a strategic advisory firm. He served as non-executive Chairman of the Board of Bristol-Myers Squibb Company from 2005 to 2008 and as Chairman and Chief Executive Officer of American Express Company from 1977 to 1993. He previously served as a Director of Novell, Inc. from 2001 to 2009.

 

Specific Qualifications, Attributes, Skills and Experience:

 

 

High Level of Financial Literacy

Long and distinguished career in the banking, finance and venture capital industries, including over 20 years of experience at American Express Company. Co-founded RRE Ventures, an early-stage venture capital firm.

 

Relevant Chief Executive Officer/President Experience

Served as Chief Executive Officer of American Express Company, a major, multinational corporation with a well-recognized global brand, from 1977 to 1993. During his tenure at American Express Company, engineered a number of strategic acquisitions and dispositions.

 

Extensive Knowledge of the Company’s Business, Industry and Manufacturing

39-year directorship at the Company. Presiding Director of the Company’s Board of Directors until April 2014.

 

Marketing/Marketing-Related Technology Experience

As Co-Founder and General Partner of RRE Ventures, has been an active strategic, operational and financial partner with the companies it finances, providing innovative, public relations and marketing support to ventures focused on products or services enabled by information technology. Eight-year public company directorship at Novell, Inc., a company that develops, sells and installs enterprise-quality software.

 

2014 Proxy Statement  

26

 

 

 

Peter V. Ueberroth

 

Director since 1986

 

Age: 76

 

Board Committees: Audit, Finance

 

Other Public Company Boards: Aircastle Limited (since 2006)

 

Mr. Ueberroth is an investor and Chairman of the Contrarian Group, Inc., a business management company, and has held this position since 1989. He serves as Chairman of the Board of Aircastle Limited and non-executive Co-Chairman of Pebble Beach Company.

 

Specific Qualifications, Attributes, Skills and Experience:

 

 

High Level of Financial Literacy

Investor and Chairman of Contrarian Group, Inc., a business management company. As President of the 1984 Los Angeles Olympic Organizing Committee, employed innovative strategies to ensure financial success, resulting in a significant budget surplus.

 

Extensive Knowledge of the Company’s Business, Industry and Manufacturing

28-year directorship at the Company. Significant experience from a customer perspective in the hospitality industry, including as a Director of Hilton Hotels Corporation from 2000 to 2007. Significant involvement with the Olympic Games, with which the Company has had a partnership since 1928.

 

Marketing/Marketing-Related Technology Experience

As former Commissioner of Major League Baseball, gained extensive marketing experience and successfully increased attendance, improved financial condition of teams and doubled national television revenue. As organizer of the 1984 Olympic Games and as Chairman of the United States Olympic Committee, his experience with the development of sponsorship models, the torch relay and the negotiation of media rights provided him with a valuable understanding of marketing strategies.

 

Risk Oversight/Management Expertise

Chairman of the Company’s Audit Committee for over 14 years. Significant risk management experience as investor and Chairman of Contrarian Group, Inc., a business management company focused on providing independent financial investment services.

 

2014 Proxy Statement  

27

 

SUMMARY OF DIRECTOR NOMINEES

 

The following summarizes the qualifications of the 2014 nominees for Director that led the Board to conclude that each Director nominee is qualified to serve on the Board.

  

             
  All Director Nominees Exhibit        
               
      High integrity     An appreciation of multiple cultures     Innovative thinking  
               
      A proven record of success     A commitment to sustainability and social issues     Knowledge of corporate governance requirements and practices  
               

 

 

 

 

2014 Proxy Statement  

28

 

BOARD OF DIRECTORS AND COMMITTEES

 

Board Leadership Structure

 

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

 

  Board Leadership Structure
      Chairman of the Board and CEO: Muhtar Kent
  Independent Presiding Director: James D. Robinson III (through April 2014); Sam Nunn (from April 2014)
  Committees led primarily by independent Directors
  Active engagement by all Directors

 

The Board believes this is the optimal structure to guide the Company and maintain the focus required to achieve the business goals set forth in the Company’s 2020 Vision.

 

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

 

The Company has designated the Chairman of the Committee on Directors and Corporate Governance, who must be an independent Director, as the Presiding Director. James D. Robinson III serves in this position. If reelected, Sam Nunn will become the Chairman of the Committee on Directors and Corporate Governance immediately following the 2014 Annual Meeting of Shareowners and become the Presiding Director.

 

The Presiding Director:

 

    presides at all meetings of non-employee Directors;
   
presides at all meetings of independent Directors;
   
leads the evaluation of the performance of the Chief Executive Officer;
   
encourages and facilitates active participation of all Directors;
   
confers with the Chief Executive Officer and other members of the Board on meeting agendas;
   
monitors and coordinates with management on corporate governance issues and developments;
   
acts as a liaison between shareowners and the Board where appropriate; and
   
performs any other duties requested by the other Directors.

 

Importantly, all Directors play an active role in overseeing the Company’s business both at the Board and committee levels. As set forth in the Company’s Corporate Governance Guidelines, the core responsibility of the Directors is to exercise their business judgment to act in what they reasonably believe to be in the best interests of the Company and its shareowners. The 2014 Director nominees consist of one Director nominee who serves as a member of management and 14 non-employee Director nominees. The non-employee Director nominees are skilled and experienced leaders in business, education, government and public policy. They currently serve or have served as chief executives and members of senior management of Fortune 1000 companies, investment banking and financial services firms, private for-profit and nonprofit organizations, and as U.S. federal, state and local government officials. In these roles, the non-employee Director nominees have been called upon to provide solutions to various complex issues and are expected to, and do, ask hard questions of management. This is one of the many reasons the non-employee Director nominees are well-equipped to oversee the success of the business and to provide advice and counsel to the Chief Executive Officer and Company management.

 

As part of each regularly scheduled Board meeting, the non-employee Directors meet in executive session without the Chief Executive Officer present. These meetings allow non-employee Directors to discuss issues of importance to the Company, including the business and affairs of the Company as well as matters concerning management, without any member of management present. In addition, the independent Directors meet in executive session several times a year at regularly scheduled Board meetings. All of the Board committees, which are described below, except the Management Development Committee and the Executive Committee, are chaired by independent Directors.

 

The Board believes that this leadership structure – a combined Chairman of the Board and Chief Executive Officer, an independent Presiding Director, active and strong non-employee Directors and committees led primarily by independent Directors – is effective and currently serves the business and shareowners well.

 

2014 Proxy Statement  

29

 

The Company’s business is complex and its products are sold in more than 200 countries around the world. Because the Chief Executive Officer travels extensively and is closest to the many facets of the business, the Board believes the Chief Executive Officer is in the best position to lead most effectively and to serve in the critical role of Chairman of the Board. In addition, having a Chairman who also serves as the Chief Executive Officer allows timely communication with the Board on critical business matters given the complexity and global reach of our business. Further, most of the Company’s products are manufactured and sold by bottling partners around the world, most of which are separate, unconsolidated companies. This franchise structure requires the Chief Executive Officer to have strong relationships with the leaders of the bottlers. Having a single person as both Chairman of the Board and Chief Executive Officer ensures that the Company is represented by a single voice to bottlers, customers, consumers and other stakeholders.

 

The Board believes that leadership of both the Board and the Company by Mr. Kent is the optimal structure to guide the Company and maintain the focus required to achieve the business goals set forth in the Company’s 2020 Vision.

 

Board Meetings

 

Under the Company’s By-Laws, regular meetings of the Board are held at such times as the Board may determine. Special meetings of the Board may be called by a majority of the Directors and the Chairman of the Board and Chief Executive Officer of the Company.

 

In 2013, the Board held five meetings and committees of the Board held a total of 32 meetings. Overall attendance at such meetings was approximately 98%. Each Director attended 75% or more of the aggregate of all meetings of the Board and the committees on which he or she served during 2013.

 

Board Committees

 

The Board has an Audit Committee, a Compensation Committee, a Committee on Directors and Corporate Governance, an Executive Committee, a Finance Committee, a Management Development Committee and a Public Issues and Diversity Review Committee. The Board has adopted a written charter for each of these committees, which is available on the Company’s website www.coca-colacompany.com, by clicking on “Investors” and then “Corporate Governance.” Additional information about the committees is provided below.

 

Audit Committee

 

 

Additional Committee Members: Ronald W. Allen, Donald F. McHenry*, Peter V. Ueberroth

 

Meetings Held in 2013: 9

Evan G. Greenberg
Committee Chair

 

Primary Responsibilities:

 

The Audit Committee represents and assists the Board in fulfilling its oversight responsibility relating to the integrity of the Company’s financial statements and the financial reporting process, the systems of internal accounting and financial controls, the internal audit function and the annual independent audit of the Company’s financial statements. The Audit Committee also oversees the Company’s compliance with legal and regulatory requirements, the Independent Auditors’ qualifications and independence, the performance of the Company’s internal audit function and the Independent Auditors, the Company’s ethical compliance programs, including the Company’s Codes of Business Conduct, and the Company’s quality, safety, environmental assurance and information technology security programs. The committee periodically receives reports on and discusses governance of the Company’s risk management process and reviews significant risks and exposures identified to the committee (whether financial, operating or otherwise), and management’s steps to address them. In exercising its duties, the Audit Committee acts independently while maintaining free and open communication between the committee, the Independent Auditors, the internal auditors and management of the Company. Additional information regarding the Audit Committee’s responsibilities can be found beginning on page 93.

 

Independence:

 

Each member of the Audit Committee meets the independence requirements of the NYSE, the Securities Exchange Act of 1934, as amended (the “1934 Act”), and the Company’s Corporate Governance Guidelines. Each member of the Audit Committee is financially literate, knowledgeable and qualified to review financial statements. The Board has designated both Mr. Greenberg and Mr. Ueberroth as “Audit Committee financial experts.”

 

* Mr. McHenry will serve on the committee until April 2014.

 

2014 Proxy Statement  

30

 

Compensation Committee

 

 

Additional Committee Members: Ronald W. Allen, Helene D. Gayle, Alexis M. Herman, James D. Robinson III

 

Meetings Held in 2013: 6

Maria Elena Lagomasino
Committee Chair

 

Primary Responsibilities:

 

The Compensation Committee has overall responsibility for evaluating and approving compensation plans, policies and programs applicable primarily to the Company’s senior executive group, which includes all individuals subject to Section 16 of the 1934 Act. The Compensation Committee also makes decisions that affect a larger group of employees. For example, the Compensation Committee approves all stock option awards and all awards of performance share units, restricted stock and restricted stock units to employees. The Compensation Committee has the sole authority to retain and terminate a compensation consultant, as well as to approve the consultant’s fees and other terms of engagement. It also has the authority to obtain advice and assistance from internal or external legal, accounting or other advisors. The Compensation Committee may form and delegate authority to subcommittees, including management subcommittees, when appropriate. Additional information regarding the Compensation Committee’s engagement of a compensation consulting firm can be found beginning on page 59.

 

Independence:

 

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

 

Committee on Directors and Corporate Governance

 

 

Additional Committee Members: Richard M. Daley, Barry Diller, Maria Elena Lagomasino, Donald F. McHenry**, Sam Nunn, Jacob Wallenberg**

 

Meetings Held in 2013: 4

James D. Robinson III*
Committee Chair, Presiding Director

 

Primary Responsibilities:

 

The Committee on Directors and Corporate Governance is responsible for considering and making recommendations concerning Director nominees and the function and needs of the Board and its committees. The Committee on Directors and Corporate Governance also leads the annual review of the Board’s performance and the regular review and development of the Company’s Corporate Governance Guidelines. As discussed on page 29, the Chairman of the Committee on Directors and Corporate Governance is designated as the Presiding Director.

 

Independence:

 

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

 

*Mr. Robinson will serve as Chair until April 2014. If reelected, Sam Nunn will become Chair of the committee immediately following the 2014 Annual Meeting of Shareowners.
  
** Messrs. McHenry and Wallenberg will serve on the committee until April 2014. If reelected, Ana Botín will join the committee immediately following the 2014 Annual Meeting of Shareowners.

 

Executive Committee

 

 

Additional Committee Members: Herbert A. Allen, Barry Diller

 

Meetings Held in 2013: 0

Muhtar Kent
Committee Chair

 

Primary Responsibilities:

 

The Executive Committee has the authority to exercise the power and authority of the Board between meetings, except the powers reserved for the Board or the shareowners by Delaware General Corporation Law. If matters are delegated to the Executive Committee by the Board, the committee typically acts by written consent in lieu of a meeting.

 

2014 Proxy Statement  

31

 

Finance Committee

 

 

Additional Committee Members: Herbert A. Allen, Evan G. Greenberg, Sam Nunn, Peter V. Ueberroth

 

Meetings Held in 2013: 5

Barry Diller
Committee Chair

 

Primary Responsibilities:

 

The Finance Committee helps the Board fulfill its responsibilities relating to oversight of the Company’s financial affairs, including reviewing and recommending to the Board dividend policy, capital expenditures, debt and other financings, major strategic investments and other transactions. The Finance Committee also oversees the Company’s policies and procedures on risk management, hedging, swaps and other derivative transactions.

 

Management Development Committee

 

 

Additional Committee Members: Barry Diller, Robert A. Kotick, Maria Elena Lagomasino, James D. Robinson III

 

Meetings Held in 2013: 4

Herbert A. Allen
Committee Chair

 

Primary Responsibilities:

 

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

 

Public Issues and Diversity Review Committee

 

 

Additional Committee Members: Howard G. Buffett, Donald F. McHenry*, Sam Nunn, Jacob Wallenberg*

 

Meetings Held in 2013: 4

Alexis M. Herman
Committee Chair

 

Primary Responsibilities:

 

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

 

* Messrs. McHenry and Wallenberg will serve on the committee until April 2014. If reelected, Helene D. Gayle will join the committee immediately following the 2014 Annual Meeting of Shareowners.
2014 Proxy Statement  

32

 

Board Oversight of Risk

 

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

 

  Oversight of Risk
     
      The Board oversees risk management.
     
  Board committees, which meet regularly and report back to the full Board, play significant roles in carrying out the risk oversight function.
     
  Company management is charged with managing risk, through robust internal processes and effective internal controls.

 

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

 

    understand critical risks in the Company’s business and strategy;
   
allocate responsibilities for risk oversight among the full Board and its committees;
   
evaluate the Company’s risk management processes and whether they are functioning adequately;
   
facilitate open communication between management and Directors; and
   
foster an appropriate culture of integrity and risk awareness.

 

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

 

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

 

    the Audit Committee oversees risks related to the Company’s financial statements, the financial reporting process and accounting and legal matters. The committee oversees the internal audit function, the Company’s ethics programs, including the Codes of Business Conduct, and the Company’s quality, safety, environmental assurance and information technology security programs. The committee periodically receives reports on and discusses governance of the Company’s risk management process and reviews significant risks and exposures identified by management, the internal auditors or the Independent Auditors (whether financial, operating or otherwise), and management’s steps to address them. In connection with its oversight of these matters, the committee members will regularly meet separately with the Company’s General Counsel, Chief of Internal Audit and representatives of the Independent Auditors;
   
the Compensation Committee evaluates the risks and rewards associated with the Company’s compensation philosophy and programs. As discussed in more detail in the Compensation Discussion and Analysis beginning on page 47, the committee reviews and approves compensation programs with features that mitigate risk without diminishing the incentive nature of the compensation. Management discusses with the committee the procedures that have been put in place to identify and mitigate potential risks in compensation;
   
the Finance Committee oversees certain financial matters and risks relating to pension plan investments, currency risk and hedging programs, mergers and acquisitions, and capital projects;
   
the Management Development Committee oversees management development and succession planning across senior management positions; and
   
the Public Issues and Diversity Review Committee oversees issues that could pose significant reputational risk to the Company.

 

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

 

The Company believes that its leadership structure, discussed in detail beginning on page 29, supports the risk oversight function of the Board. While the Company has a combined Chairman of the Board and Chief Executive Officer, strong Directors chair the various

 

2014 Proxy Statement  

33

 

committees involved with risk oversight, there is open communication between management and Directors, and all Directors are actively involved in the risk oversight function.

 

To learn more about risks facing the Company, you can review the factors included in Part I, “Item 1A. Risk Factors” in the Annual Report on Form 10-K for the year ended December 31, 2013 (the “Form 10-K”). The risks described in the Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known or that may currently be deemed to be immaterial also may materially adversely affect the Company’s business, financial condition or results of operations in future periods.

 

Board and Committee Self-Evaluations

 

The Board of Directors conducts annual self-evaluations to assess the qualifications, attributes, skills and experience represented on the Board and to determine whether the Board and its committees are functioning effectively. During the year, the Committee on Directors and Corporate Governance receives input on the Board’s performance from Directors and, through its Chairman, discusses the input with the full Board and oversees the full Board’s review of its performance. The self-assessments focus on the Board’s contribution to the Company and on areas in which the Board or management believes that the Board or any of its committees could improve.

 

Communication with the Board

 

The Board has established a process to facilitate communication by shareowners and other interested parties with Directors. Communications can be addressed to Directors in care of the Office of the Secretary, The Coca-Cola Company, P.O. Box 1734, Atlanta, Georgia 30301 or by e-mail to shareownerservices@coca-cola.com. At the direction of the Board, all mail received may be opened and screened for security purposes. All mail, other than trivial, obscene, unduly hostile, threatening, illegal or similarly unsuitable items, will be forwarded. Mail addressed to a particular Director will be forwarded or delivered to that Director. Mail addressed to “Outside Directors” or “Non-Employee Directors” will be forwarded or delivered to the Chairman of the Committee on Directors and Corporate Governance. Mail addressed to the “Board of Directors” will be forwarded or delivered to the Chairman of the Board.

 

DIRECTOR COMPENSATION

 

The Committee on Directors and Corporate Governance is responsible for reviewing and making recommendations to the Board regarding all matters pertaining to compensation paid to Directors for Board, committee and committee chair services. Under the Committee on Directors and Corporate Governance’s charter, the committee is authorized to engage consultants or advisors in connection with its review and analysis of Director compensation, though it did not engage any consultants or advisors in 2013. Directors who also serve as employees of the Company do not receive payment for services as Directors.

 

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

 

In December 2012, the Board of Directors approved The Coca-Cola Company Directors’ Plan effective January 1, 2013 (the “Directors’ Plan”), which is described further below. The Directors’ Plan amended and restated the prior Directors’ compensation plan (the “Prior Plan”) and increased the value of the annual deferred share units granted to non-employee Directors from $125,000 to $200,000. Prior to approving the Directors’ Plan, the Committee on Directors and Corporate Governance reviewed the compensation payable to Directors pursuant to the Prior Plan. As part of this review, the Committee on Directors and Corporate Governance compared the Prior Plan to the director compensation plans at the Company’s compensation comparator group (see page 59) and determined that the total compensation payable under the Prior Plan was significantly below the average total compensation payable to directors at the Company’s compensation comparator group. The Committee on Directors and Corporate Governance also took into account that the Company had not made any changes in Director compensation since 2009 and the Company’s strong performance during this period.

 

The Committee on Directors and Corporate Governance and the Board believe that the Directors’ Plan continues to:

 

    tie the majority of Directors’ compensation to shareowner interests because the value of share units fluctuates up or down depending on the stock price;
   
focus on the long term, since the share units are not paid until after the Director leaves the Board;
   
be simple to understand and communicate; and
   
be equitable based on the work required of Directors serving an entity of the Company’s size and scope.

 

2014 Proxy Statement  

34

 

2013 Annual Compensation

 

Under the Directors’ Plan, 2013 annual compensation to non-employee Directors consisted of $50,000 paid in cash in quarterly installments and $200,000 credited in deferred share units. Non-employee Directors have the option of deferring all or a portion of their cash compensation into share units. The number of share units awarded to non-employee Directors is equal to the number of shares of Common Stock that could be purchased on the open market for $200,000 on April 1 (or the next business day if April 1 is not a business day). Share units do not have voting rights but are credited with hypothetical dividends that are reinvested in additional units to the extent dividends on Common Stock are received by shareowners. Share units will be paid out in cash to non-employee Directors on the later of (i) January 15 of the year following the year in which the Director leaves the Board or (ii) six months after the Director leaves the Board. Directors may elect to take their payout in a lump sum or in up to five annual installments.

 

In addition, each non-employee Director who served as a committee chair in 2013 received an additional $20,000 in cash, or a prorated portion thereof where applicable. Directors do not receive fees for attending Board or committee meetings. Non-employee Directors are reimbursed for reasonable expenses incurred in connection with Board-related activities.

 

The following table details the total compensation of the Company’s non-employee Directors for the year ended December 31, 2013.

 

2013 Director Compensation Table

 

Name1
(a)
  Fees Earned or
Paid in Cash
($)
(b)
   Stock Awards
($)
(c)
   Option
Awards
($)
(d)
   Non-Equity
Incentive Plan
Compensation
($)
(e)
   Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings
($)
(f)
   All Other
Compensation
($)
(g)
   Total
($)
(h)
 
Herbert A. Allen  $66,000   $200,000   $0   $0   $0   $1   $266,001 
Ronald W. Allen   50,000    200,000    0    0    0    1,567    251,567 
Ana Botín2   30,000    120,000    0    0    0    1    150,001 
Howard G. Buffett   50,000    200,000    0    0    0    8,239    258,239 
Richard M. Daley   50,000    200,000    0    0    0    931    250,931 
Barry Diller   66,000    200,000    0    0    0    1,823    267,823 
Helene D. Gayle3   40,000    160,000    0    0    0    1    200,001 
Evan G. Greenberg   66,000    200,000    0    0    0    20,558    286,558 
Alexis M. Herman   70,000    200,000    0    0    0    7,225    277,225 
Donald R. Keough4   16,500    40,000    0    0    0    0    56,500 
Robert A. Kotick   50,000    200,000    0    0    0    201    250,201 
Maria Elena Lagomasino   70,000    200,000    0    0    0    25,983    295,983 
Donald F. McHenry5   50,000    200,000    0    0    0    1,536    251,536 
Sam Nunn   50,000    200,000    0    0    0    34,979    284,979 
James D. Robinson III   70,000    200,000    0    0    0    22,588    292,588 
Peter V. Ueberroth   54,000    200,000    0    0    0    14,033    268,033 
Jacob Wallenberg5   50,000    200,000    0    0    0    1    250,001 
James B. Williams4   16,500    40,000    0    0    0    30,115    86,615 

 

1 Muhtar Kent is a Company employee and therefore receives no compensation under the Directors’ Plan.
   
2 Ms. Botín was appointed to the Board on July 18, 2013.
   
3 Ms. Gayle was elected to the Board at the 2013 Annual Meeting of Shareowners on April 24, 2013.
   
4 Messrs. Keough and Williams did not stand for election at the 2013 Annual Meeting of Shareowners. Therefore, the information above reflects their service on the Board until April 24, 2013.
   
5 Messrs. McHenry and Wallenberg are not standing for election at the 2014 Annual Meeting of Shareowners.

 

2014 Proxy Statement  

35

 

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

 

The amounts reported in the Fees Earned or Paid in Cash column reflect the cash fees earned by each non-employee Director in 2013, whether or not such fees were deferred. In addition to the $50,000 annual cash fees (or prorated portion thereof), each of Mses.  Herman and Lagomasino and Mr. Robinson received an additional $20,000 for service as a committee chair and each of Messrs. Allen, Diller, Greenberg, Keough, Ueberroth and Williams received a prorated portion of the committee chair fee based on their service as a committee chair for a portion of 2013. Messrs. Daley, Kotick and Nunn each deferred $50,000 of their 2013 cash compensation into 1,240 share units, Messrs. Diller and Greenberg each deferred $66,000 of their 2013 cash compensation into 1,637 share units and Mr. Williams deferred $16,500 of his 2013 cash compensation into 409 share units. The number of share units is equal to the number of shares of Common Stock that could be purchased for the deferred amount based on the average of the high and low prices of a share of Common Stock on April 1, 2013.

 

Stock Awards (Column (c))

 

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

 

All Other Compensation (Column (g))

 

As described further below, the amounts reported in the All Other Compensation column reflect, where applicable, Company matching gifts to nonprofit organizations, medical and dental insurance, the costs of Company products provided to Directors without charge, and the premiums for life insurance (including accidental death and dismemberment and business travel coverage). In addition, infrequently, spouses and guests of Directors may ride along on Company aircraft for personal reasons when the aircraft is already going to a specific destination for a business reason, which has minimal incremental cost to the Company. When this occurs, a nominal amount is included in the All Other Compensation column. In addition, income is imputed to the Director for income tax purposes and the Director is not provided a tax reimbursement.

 

Perquisites and Personal Benefits

 

The Directors are eligible to participate in the Company’s matching gifts program, which is the same program available to all U.S. based employees and retirees. In 2013, this program matched up to $10,000 of charitable contributions on a two-for-one basis to tax-exempt arts, cultural, environmental or educational organizations. The amounts paid by the Company in 2013 to match gifts made by the non-employee Directors under this program are set forth in the table below. The total cost of matching contributions on behalf of the non-employee Directors for 2013 gifts was $100,000. In addition, the table does not include matching contributions of $30,000 paid in 2013 because they relate to gifts made in late 2012 by Messrs. McHenry and Robinson.

 

Name  Matching Gifts 
Mr. Greenberg    $20,000 
Ms. Lagomasino     20,000 
Mr. Nunn     20,000 
Mr. Robinson     20,000 
Mr. Williams     20,000 

 

For Directors who elected coverage prior to 2006 (Messrs. Nunn, Ueberroth and Williams), the Company provides medical and dental coverage on the same terms and at the same cost as available to U.S. Company employees. This coverage was discontinued in 2006 for all other Directors. The total cost for this health coverage for the participating non-employee Directors in 2013 was $27,011.

 

To help expand the Directors’ knowledge of the Company’s products, the Company provides its products to Directors’ offices without charge. The total cost of Company products provided during 2013 to non-employee Directors was $32,122.

 

Insurance Premiums

 

For Directors who elected coverage prior to 2006, the Company provides life insurance coverage, which includes $30,000 term life insurance and $100,000 group accidental death and dismemberment insurance. This coverage was discontinued in 2006 for all other Directors. The Company cost for this insurance for participating non-employee Directors is set forth in the table below. The total cost for these insurance benefits to the participating non-employee Directors in 2013 was $3,164.

 

Name  Life Insurance Premiums 
Mr. R. Allen    $534 
Mr. Diller     534 
Mr. McHenry     514 
Mr. Nunn     534 
Mr. Robinson     514 
Mr. Ueberroth     534 

 

Business travel accident insurance coverage of $200,000 is provided to all non-employee Directors while traveling on Company business, at a Company cost of $1 per Director.

 

2014 Proxy Statement  

36

 

DIRECTOR INDEPENDENCE AND RELATED PERSON TRANSACTIONS

 

Independence Determinations

 

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

 

    the Director must not have a disqualifying relationship, as defined in these NYSE standards; and
   
the Board must affirmatively determine that the Director otherwise has no material relationship with the Company directly, or as an officer, shareowner or partner of an organization that has a relationship with the Company. To aid in the Director independence assessment process, the Board has adopted categorical standards that identify categories of relationships that the Board has determined would not affect a Director’s independence. These categorical standards, which are part of the Company’s Corporate Governance Guidelines, are described below.

 

Categorical Standards

 

The following will not be considered material relationships that would impair a Director’s independence:

 

Immaterial Sales/Purchases   The Director is an executive officer or employee or any member of his or her immediate family is an executive officer of any other organization that does business with the Company and the annual sales to, or purchases from, the Company are less than $1 million or 1% of the consolidated gross revenues of such organization, whichever is more.  
Immaterial Indebtedness   The Director or any member of his or her immediate family is an executive officer of any other organization which is indebted to the Company, or to which the Company is indebted, and the total amount of either company’s indebtedness to the other is less than $1 million or 1% of the total consolidated assets of the organization on which the Director or any member of his or her immediate family serves as an executive officer, whichever is more.  
Immaterial Position   The Director is a director or trustee, but not an executive officer, or any member of his or her immediate family is a director, trustee or employee, but not an executive officer, of any other organization (other than the Company’s outside auditing firm) that does business with, or receives donations from, the Company.  
Immaterial Ownership   The Director or any member of his or her immediate family holds a less than 10% interest in any other organization that has a relationship with the Company.  
Immaterial Nonprofit
Relationship
  The Director or any member of his or her immediate family serves as an executive officer of a charitable or educational organization which receives contributions from the Company in a single fiscal year of less than $1 million or 2% of that organization’s consolidated gross revenues, whichever is more.  

 

In addition, when determining Director independence, the Board does not consider transactions:

 

    with entities for which a Director or an immediate family member served only as a director or trustee;
   
of less than $120,000; and
   
with entities in which the Director’s or an immediate family member’s only interest is a less than 10% ownership interest.

 

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

 

Muhtar Kent, the Chairman of the Board, also serves as the Company’s Chief Executive Officer and therefore is not an independent Director. Even though Herbert A. Allen is not currently determined to be independent, he contributes greatly to the Board and the Company through his wealth of experience, expertise and judgment.

 

All of the Directors who serve as members of the Audit Committee, Compensation Committee and Committee on Directors and Corporate Governance are independent as required by the NYSE corporate governance rules. Under these rules, Audit Committee members also satisfy the separate SEC independence requirement and the Compensation Committee members satisfy the additional NYSE independence requirement.

 

2014 Proxy Statement  

37

 

The table below summarizes the relationships that were considered in connection with the independence determinations. None of the transactions described below were considered material relationships that impacted the applicable Director’s independence.

 

Director   Categorical Standard   Description of Relationship  
Howard G. Buffett   Immaterial Sales/
Purchases
  The Board examined the Company’s relationship with Berkshire Hathaway Inc. (“Berkshire Hathaway”) and its subsidiaries and affiliates. Howard G. Buffett is a Director of Berkshire Hathaway and his father, Warren E. Buffett, is the Chairman of the Board, Chief Executive Officer and major stockholder of Berkshire Hathaway. This relationship is described beginning on page 39. The Board determined that this indirect relationship was not material since (i) the amounts involved were less than 1% of the consolidated gross revenues of both the Company and Berkshire Hathaway, (ii) the payments made and received were for various products and services in the ordinary course of business and (iii) the Company has had a relationship with these entities for many years prior to when they were owned by Berkshire Hathaway and prior to Mr. Buffett’s service as a Director of the Company.  
Barry Diller   Immaterial Sales/
Purchases
  The Board examined payments made by the Company to IAC/InterActiveCorp and its subsidiaries (“IAC”) where Barry Diller, one of our Directors, is Chairman of the Board and Senior Executive. The Board determined that the relationship was not material since (i) the amounts involved were less than 1% of the consolidated gross revenues of both the Company and IAC, (ii) the payments were for online advertising and digital media promotions in the ordinary course of business and (iii) the Company has had a relationship with the predecessors of IAC for many years prior to Mr. Diller’s service as a Director of the Company.  
Evan G. Greenberg   Immaterial Sales/
Purchases
  The Board examined payments made by the Company to ACE Limited and its subsidiaries (“ACE”) where Evan G. Greenberg, one of our Directors, is Chairman, President and Chief Executive Officer. This relationship is described on page 40. The Board determined that the relationship was not material since (i) the amounts involved were less than 1% of the consolidated gross revenues of both the Company and ACE, (ii) the payments were for insurance-related products and services in the ordinary course of business and (iii) the Company has had a relationship with ACE for many years prior to Mr. Greenberg’s service as a Director of the Company.  
Sam Nunn   Immaterial
Nonprofit
Relationship
  The Board examined the Company’s charitable donations and sponsorships to Points of Light Institute, where a daughter of Sam Nunn, one of our Directors, served as Chief Executive Officer and a Director prior to taking a leave of absence in 2013. The Board determined that this indirect relationship was not material since (i) the amounts involved were a small percentage of the revenues or donations received by Points of Light Institute and a small percentage of the Company’s overall charitable donations and sponsorships and (ii) the payments were within the Company’s philosophy of supporting local and civic organizations in the communities where the Company operates.  
James D. Robinson III   Immaterial Sales/
Purchases
  The Board examined payments made by pension trusts of the Company and one of its subsidiaries to subsidiaries of BlackRock, Inc. (“BlackRock”). The wife of James D. Robinson III, one of our Directors, is an executive officer of BlackRock. The Board determined that this indirect relationship was not material since (i) the amounts involved were less than 1% of the consolidated gross revenues of both the Company and BlackRock, (ii) the payments were for investment management and investment manager transition services provided to the pension trusts in the ordinary course of business, (iii) certain assets of the pension trusts have been invested in BlackRock’s and its predecessor’s funds since the 1990s and (iv) the Company’s relationship with BlackRock has been in existence long before Mr. Robinson’s wife served as an executive officer of that organization.  
Peter V. Ueberroth   Immaterial Sales/
Purchases
  The Board examined payments made by the Company to the National Basketball Association (the “NBA”), where a daughter of Peter V. Ueberroth, one of our Directors, was an executive officer until December 2013. This relationship is described on page 40. The Board determined that this indirect relationship was not material since (i) the amounts involved were less than 1% of the consolidated gross revenues of both the Company and the NBA and (ii) the Company’s relationship with the NBA has been in existence since the late 1980s, long before Mr. Ueberroth’s daughter served as an executive officer of that organization.  

 

Related Person Transaction Policy and Process

 

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

 

A “Related Person” means:

 

    any person who is, or at any time during the applicable period was, a Director of the Company or a nominee for Director or an executive officer;
   
any person who is known to the Company to be the beneficial owner of more than 5% of the outstanding Common Stock;
   
any immediate family member of any of the persons referenced in the preceding two bullets, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of the

 

2014 Proxy Statement  

38

 

  Director, nominee for Director, executive officer or more than 5% beneficial owner of Common Stock, and any person (other than a tenant or employee) sharing the household of such Director, nominee for Director, executive officer or more than 5% beneficial owner of Common Stock; and
   
    any firm, corporation or other entity in which any of the foregoing persons is a partner or principal or in a similar position or in which such person has a 10% or greater beneficial ownership interest.

 

In general, the Company will enter into or ratify Related Person Transactions only when the Board, acting through the Committee on Directors and Corporate Governance, determines that the Related Person Transaction is reasonable and fair to the Company. When considering whether a Related Person Transaction is reasonable and fair to the Company, among other things, the committee considers the evaluation of the transaction by employees directly involved and the recommendation of the Chief Financial Officer. In addition, any Related Person Transaction involving an executive officer must be pre-approved by the Chief Executive Officer and any Related Person Transaction involving the Chief Executive Officer or a beneficial owner of more than 5% of the outstanding Common Stock must be submitted to the Audit Committee for approval.

 

Many transactions that constitute Related Person Transactions are ongoing and some arrangements predate any relationship with the Director or predate the Director’s relationship with the Company. When a transaction is ongoing, any amendments or changes are reviewed and the transaction is reviewed annually for reasonableness and fairness to the Company.

 

Identifying possible Related Person Transactions involves the following procedures:

 

    Directors, executive officers and beneficial owners of more than 5% of the outstanding Common Stock are asked to complete customary annual questionnaires.
   
Directors and nominees for Directors are required to annually verify and update information about (i) where the Director is an employee, director or executive officer, (ii) each entity where an immediate family member of a Director is an executive officer, (iii) each firm, corporation or other entity in which the Director or an immediate family member is a partner or principal or in a similar position or in which such person has a 5% or greater beneficial ownership interest and (iv) each charitable or nonprofit organization where the Director or an immediate family member is an employee, executive officer, director or trustee.

 

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

 

Once the list of approximately 2,800 persons and entities has been reviewed and updated, it is distributed within the Company to identify any potential transactions. This list also is sent to each of the Company’s approximately 380 accounting locations to be compared to payments and receipts. All ongoing transactions, along with payment and receipt information, are compiled for each person and entity. The information is reviewed and relevant information is presented to the Committee on Directors and Corporate Governance or the Audit Committee, as the case may be.

 

Details regarding Related Person Transactions are included in the charters for the Committee on Directors and Corporate Governance and the Audit Committee and in our Codes of Business Conduct. These documents can be found on the Company’s website, www.coca-colacompany.com, by clicking on “Investors” and then clicking on “Corporate Governance.”

 

Certain Related Person Transactions

 

The Board, acting through the Committee on Directors and Corporate Governance, believes that the following related person transactions are reasonable and fair to the Company.

 

Herbert A. Allen. Herbert A. Allen, one of our Directors, is President, Chief Executive Officer and a Director of Allen & Company Incorporated (“ACI”) and a principal shareowner of ACI’s parent. ACI is an indirect equity holder of Allen & Company LLC (“ACL”).

 

ACI has leased and subleased office space since 1977 in a building owned by one of our subsidiaries and located at 711 Fifth Avenue, New York, New York. In June 2005, ACI assigned the lease and sublease to ACL. In 2013, ACL paid approximately $5.4 million in rent and related expenses. In the opinion of management, the terms of the lease are fair and reasonable and as favorable to the Company as those that could have been obtained from unrelated third parties at the time of the execution of the lease. In 2013, ACI paid approximately $52,000 to the Company to purchase products in the ordinary course of business.

 

Howard G. Buffett and Berkshire Hathaway. The father of Howard G. Buffett, one of our Directors, is Warren E. Buffett, the Chairman of the Board, Chief Executive Officer and major stockholder of Berkshire Hathaway. Berkshire Hathaway’s holdings constituted 9.08% of the Company’s outstanding Common Stock as of February 24, 2014.

 

Business Wire, Inc. (“Business Wire”) is a wholly owned subsidiary of Berkshire Hathaway. In July 2013, the Company and Business Wire entered into a new two-year services agreement under which Business Wire disseminates news releases for the Company. In 2013, the Company paid approximately $302,000 to Business Wire to disseminate news releases for the Company in the ordinary course of business. This business relationship was in place prior to Berkshire Hathaway’s acquisition of Business Wire in 2006.

 

FlightSafety International, Inc. (“FlightSafety”) is a wholly owned subsidiary of Berkshire Hathaway. In 2009, the Company entered into two new five-year agreements with FlightSafety to provide flight attendant, mechanic and pilot training services to the Company. In 2013, the Company paid FlightSafety approximately $484,000 for these training services provided to the Company in the ordinary course of business.

 

International Dairy Queen, Inc. (“IDQ”) is a wholly owned subsidiary of Berkshire Hathaway. In 2013, IDQ and its subsidiaries received

 

2014 Proxy Statement  

39

 

promotional and marketing incentives from the Company based on the volume of corporate stores, totaling approximately $1.1 million in the ordinary course of business. This business relationship was in place for many years prior to Berkshire Hathaway’s acquisition of IDQ.

 

McLane Company, Inc. (“McLane”) is a wholly owned subsidiary of Berkshire Hathaway. In 2013, McLane paid approximately $190 million to the Company to purchase fountain syrup and other products in the ordinary course of business. Also in 2013, McLane received from the Company approximately $4.3 million in agency commissions, marketing payments and other fees relating to the sale of the Company’s products to customers in the ordinary course of business. This business relationship was in place for many years prior to Berkshire Hathaway’s acquisition of McLane in 2003.

 

XTRA Lease LLC (“XTRA”) is a wholly owned subsidiary of Berkshire Hathaway. In 2013, the Company paid XTRA approximately $1.3 million for the rental of trailers used to transport and store finished product in the ordinary course of business under the terms of a national account agreement with XTRA.

 

Berkshire Hathaway holds a significant equity interest in American Express Company (together with its subsidiaries, “American Express”). In 2013, the Company and American Express entered into a new five-year agreement under which American Express provides global credit card services to the Company. In 2013, American Express paid the Company approximately $4.3 million in rebates and incentives under the terms of the new agreement and in the ordinary course of business. In 2013, the Company paid American Express fees of approximately $1.0 million for credit card memberships, business travel and other services in the ordinary course of business.

 

Berkshire Hathaway holds a significant equity interest in Moody’s Corporation (“Moody’s”). In 2012, the Company and a subsidiary of Moody’s entered into a two-year agreement for rating services related to the Company’s commercial paper programs and debt offerings, which in 2013 was renewed for an additional two-year period. In 2013, the Company paid a subsidiary of Moody’s fees of approximately $1.7 million for these rating services.

 

Berkshire Hathaway holds a significant equity interest in Graham Holdings Company (“Graham”), formerly The Washington Post Company. In 2013, the Company paid fees of approximately $868,000 to Graham for print and broadcast media and online advertising in the ordinary course of business.

 

In the opinion of management, all of the relationships between the Company and the entities affiliated with Berkshire Hathaway described above are fair and reasonable and are as favorable to the Company as those that could have been obtained from unrelated third parties or are on terms substantially similar to the Company’s relationship with other companies, as applicable.

 

Evan G. Greenberg. Evan G. Greenberg, one of our Directors, is Chairman, President and Chief Executive Officer of ACE Limited. ACE has provided insurance-related products and services to the Company since 1986. ACE provides traditional insurance coverage where the Company seeks to transfer risk and fronting services where the Company seeks to retain risk. The Company renews its insurance coverage on an annual basis. During 2013, ACE provided the Company with insurance covering directors’ and officers’ liability, employment practices liability, property and excess liability on an excess basis, and fiduciary liability and employed lawyers’ liability on a primary basis. ACE also provided fronting services to the Company by issuing policies for U.S. and international general and product liability, U.S. workers’ compensation and global property. In 2013, the Company paid ACE approximately $2.1 million for insurance premiums and approximately $7.8 million in fronting fees. In the opinion of management, the terms of the Company’s insurance coverage and fronting arrangements with ACE are fair and reasonable and as favorable to the Company as those that could have been obtained from unrelated third parties.

 

Donald R. Keough. A son of Donald R. Keough, a former Director (retired in April 2013), was an executive officer of Marsys Digital, LLC (“Marsys Digital”) during 2013 and continues to hold a 20% equity interest in Marsys Digital. In 2009, the Company and Marsys Digital entered into a five-year services agreement relating to the Company’s use of Marsys Digital’s platform technology and infrastructure. Under the terms of the services agreement, the Company is required to pay Marsys Digital $2.9 million annually over the five-year period for services associated with the operation, maintenance and support of the platform technology and infrastructure. In 2009, the Company also entered into a warrant agreement with Marsys Digital whereby the Company was granted the right to purchase, for a period of up to six years, a 5% equity interest in Marsys Digital for an exercise price that is to be determined by the terms of the warrant agreement. The exercise price is based on a formula dependent on the fair market value of such equity interest and is subject to credit adjustments based on revenues recognized by Marsys Digital pursuant to its services agreement with the Company. In 2013, the Company paid Marsys Digital approximately $3.4 million for services associated with the operation, maintenance and support of the platform technology and infrastructure. Since Marsys Digital is a startup company, the value of the Company’s equity interest is not currently determinable. Mr. Keough receives no benefit from this relationship.

 

Peter V. Ueberroth. A daughter of Peter V. Ueberroth, one of our Directors, was an executive officer of the NBA until December 2013. In 2010, the Company and an NBA affiliated company entered into a new four-year marketing, sponsorship and advertising agreement. Also in 2010, the Company and NBA affiliated companies entered into a three-year marketing, sponsorship and advertising agreement associated with the Women’s National Basketball Association and a three-year advertising agreement associated with the NBA Development League. As a result of a settlement reached with the NBA relative to the 2011 NBA lockout, these three agreements were extended by one year. Certain subsidiaries of the Company have also entered into four-year marketing, sponsorship, advertising and media purchase agreements with NBA affiliated companies in China. In 2013, the Company paid approximately $12.6 million to the NBA’s affiliated companies for marketing, media purchases, advertising and sponsorship in the ordinary course of business. The Company has had a relationship with the NBA since the late 1980s. In the opinion of management, the terms of the Company’s agreements with the NBA and the Company’s business relationship with the NBA are fair and reasonable.

 

BlackRock, Inc. BlackRock, Inc.’s holdings constitute 5.52% of the Company’s outstanding Common Stock as of February 24, 2014. The Coca-Cola Company Master Retirement Trust (the “Company Trust”), a trust established by the Company for purposes of providing

 

2014 Proxy Statement  

40

 

retirement benefits under certain employee benefit plans, and BlackRock Realty Advisors, Inc., a subsidiary of BlackRock, Inc., were parties to an investment management agreement. Until December 31, 2012, certain assets of the Company’s U.S. defined benefit pension plans (the “Trust Assets”) were invested in a fund that was managed by a subsidiary of BlackRock, Inc. The Trust Assets had been invested in the fund since the 1990s, when it was managed by an entity that was acquired by BlackRock, Inc. in 2006. In 2012, the Company Trust and BlackRock Execution Services (“BES”), a subsidiary of BlackRock, Inc., entered into a Transition Manager Agreement in anticipation that the Company Trust might use BES’ expertise in manager restructurings to assist in transitioning assets from fund managers that were being terminated to fund new managers. During 2013, the Company Trust selected BES to provide such services after having reviewed competing bids submitted through a formal request for proposal process. In addition, Towers Watson opined that the fees payable to BES were reasonable. In 2013, the Company Trust paid fees totaling approximately $1.5 million to BES for investment manager transition services in the ordinary course of business.

 

Effective January 1, 2012, The Coca-Cola Company Master Trust for Canadian Retirement Plans (the “CCR Canada Trust”), a trust established by Coca-Cola Refreshments Canada Company (“CCR Canada”), provides retirement benefits to certain CCR Canada employees under the CCR Canada plan. Certain assets of CCR’s Canadian defined benefit pension plan are invested in funds managed by a subsidiary of BlackRock, Inc., pursuant to an investment management agreement with an entity that was acquired by BlackRock, Inc. in 2009. In 2013, the CCR Canada Trust paid fees of approximately $584,000 to a subsidiary of BlackRock, Inc. for its services as an investment manager in the ordinary course of business. Effective December 20, 2013, the investment management agreement was amended to allow for investment in an additional fund. In the opinion of management, the Company’s relationship with the subsidiaries of BlackRock, Inc. is fair and reasonable and is on terms substantially similar to the Company’s relationship with other investment managers.

 

ADDITIONAL GOVERNANCE FEATURES

 

Shareowner Engagement

 

The Board believes that accountability to shareowners is a mark of good governance and critical to the Company’s success. To that end, the Board long ago established dedicated resources to actively engage with shareowners. The Company regularly engages with shareowners on a variety of topics throughout the year to ensure we are addressing their questions and concerns, to seek input and to provide perspective on Company policies and practices.

 

In addition to this direct engagement, the Company has instituted a number of complementary mechanisms that allow shareowners to effectively communicate a point of view with the Board, including:

 

    our dedicated Annual Meeting page on our Company website (see page 104);
   
the annual election of Directors and a majority vote standard (see page 17);
   
the annual advisory vote to approve executive compensation (see page 46);
   
the ability to submit shareowner proposals (see page 105);
   
the ability to direct communications to individual Directors or the entire Board (see page 34); and
   
the ability to attend and voice opinions at the Annual Meeting of Shareowners (see page 103).

 

See page 47 for additional information about our engagement with shareowners regarding executive compensation.

 

Special Meeting of Shareowners

 

At the 2013 Annual Meeting of Shareowners, our shareowners approved an amendment to the Company’s By-Laws to allow shareowners to call a special meeting of shareowners. As a result, our current By-Laws provide that a special meeting of shareowners may be called by the Chairman of the Board, the Chief Executive Officer, a majority of our Board of Directors or the Corporate Secretary, if appropriately requested by a person (or group of persons) beneficially owning at least a 25% “net long position” of the Company’s Common Stock. A shareowner’s “net long position” is generally defined as the amount of Common Stock in which the shareowner holds a positive (also known as “long”) economic interest, reduced by the amount of Common Stock in which the shareowner holds a negative (also known as “short”) economic interest.

 

We believe that requiring an ownership threshold of at least 25% in order for a shareowner (or group of shareowners) to request a special meeting strikes an appropriate balance between enhancing shareowner rights and avoiding situations that could arise if the threshold were set so low that a small minority of shareowners could force the Company to incur the time and expense of convening a special meeting to consider a matter of little or no interest to other shareowners. Organizing and preparing for a special meeting involves significant costs as well as the attention of our Directors and management, which could divert their attention from performing their primary functions, to oversee and operate our business in the best interests of our shareowners.

 

2014 Proxy Statement  

41

 

Public Policy Engagement

 

Public policy affects the Company’s business, its people and the communities where it does business. Through engagement, the Company seeks to responsibly use its resources to advance public policy that is consistent with the sustainability of its business and Company values.

 

Pursuant to the Company’s political contributions policy, contributions are based on several criteria, including legal compliance, Board and management oversight, public policy support and public transparency. The Company’s political contributions policy and a report of U.S. political contributions from our Company and from associate-funded programs, which include The Coca-Cola Company Nonpartisan Committee for Good Government and various other state political action committees, can be viewed on our Company website, www.coca-colacompany.com, by clicking on “Investors” and then “Public Policy Engagement.”

 

Sustainability

 

It remains a long-standing priority of the Company to operate in an environmentally and socially responsible manner. Our “Me, We, World” sustainability framework highlights how the Company is trying to grow our business as we enhance people’s well-being (Me), build strong communities (We), and protect the environment we all share (World). We are continuing to embed sustainability-minded innovations into every aspect of our business, including sourcing ingredients, increasing beverage options, aspiring to be water neutral and recovering packages for recycling. In addition, our strong pay-for-performance philosophy awards executives in a way that motivates them to operate the Company’s business in a profitable and sustainable manner, consistent with the six areas highlighted in the Company’s 2020 Vision—people, portfolio, partners, planet, profit and productivity.

 

To learn more about the Company’s sustainability efforts, please view our 2012/2013 Sustainability Report on the Company’s website, by visiting www.coca-colacompany.com/sustainability. For additional information about the Company’s executive compensation policies and programs see the Compensation Discussion and Analysis beginning on page 47.

 

Anti-Hedging, Anti-Short Sale and Anti-Pledging Policies

 

The Company’s hedging policy prohibits Directors, the Company’s executive officers and other designated employees from purchasing any financial instrument that is designed to hedge or offset any decrease in the market value of the Company’s Common Stock, including prepaid variable forward contracts, equity swaps, collars and exchange funds. Directors, the Company’s executive officers and other designated employees are also restricted from engaging in short sales related to the Company’s Common Stock. All other employees are discouraged from entering into hedging transactions and engaging in short sales related to the Company’s Common Stock. The Company’s pledging policy discourages any pledging of the Company’s Common Stock, including holding Common Stock in a margin account. In addition, Directors and the Company’s executive officers are required to obtain pre-approval from the Company’s General Counsel before pledging shares of Common Stock. Such approval will be granted only if the individual can clearly demonstrate the financial capacity to repay the loan without resorting to the pledged securities.

 

Executive Compensation Policies

 

See the Compensation Discussion and Analysis beginning on page 47 for a detailed discussion of the Company’s executive compensation programs and pay-for-performance philosophy.

 

Codes of Business Conduct

 

The Company has adopted a Code of Business Conduct for Non-Employee Directors. In addition, the Company has adopted a Code of Business Conduct applicable to the Company’s employees, including the Named Executive Officers. Our associates, bottling partners, suppliers, customers and consumers can ask questions about our Code and other ethics and compliance issues, or report potential violations, through EthicsLine, a global Internet and telephone information and reporting service. The Codes of Business Conduct and information about EthicsLine are available on the Company’s website located at www.coca-colacompany.com, by clicking on “Investors” and then “Corporate Governance.” In the event the Company amends or waives any of the provisions of the Code of Business Conduct applicable to our principal executive officer, principal financial officer or controller that relates to any element of the definition of “code of ethics” enumerated in Item 406(b) of Regulation S-K under the 1934 Act, the Company intends to disclose these actions on the Company’s website.

 

2014 Proxy Statement  

42

 
   SHARE OWNERSHIP

 

OWNERSHIP OF EQUITY SECURITIES OF THE COMPANY

 

Directors and Executive Officers

 

The following table sets forth information regarding beneficial ownership of Common Stock by each Director, each individual named in the 2013 Summary Compensation Table on page 63, and our Directors and executive officers as a group, all as of February 24, 2014. Unless otherwise noted, voting power and investment power in Common Stock are exercisable solely by the named person.

 

Name   Aggregate
Number of Shares
Beneficially Owned
  Percent of
Outstanding
Shares1
  Additional Information  
Herbert A. Allen   18,062,700   *   Includes 6,000,000 shares held by ACI, 32,700 shares held by 12 trusts of which Mr. Allen, in each case, is one of three to five trustees, and 30,000 shares held by a foundation of which he is one of six directors. Mr. Allen disclaims beneficial ownership of the 30,000 shares held by the foundation. Does not include 58,922 share units deferred under the Directors’ Plan which are settled in cash after retirement.  
Ronald W. Allen   24,000   *   Includes 4,000 shares held by Mr. Allen’s wife. Mr. Allen has disclaimed beneficial ownership of his wife’s shares. Does not include 56,203 share units deferred under the Directors’ Plan which are settled in cash after retirement.  
Ana Botín   2,500   *   Shares held by a Spanish limited company of which Ms. Botín and her husband are the indirect beneficial owners. Does not include 3,018 share units deferred under the Directors’ Plan which are settled in cash after retirement.  
Howard G. Buffett   48,592   *   Does not include 13,033 share units deferred under the Directors’ Plan which are settled in cash after retirement. Also, does not include shares owned by Berkshire Hathaway which are included in the “Principal Shareowners” table on page 45.  
Richard M. Daley   4,000   *   Shares held by a trust of which Mr. Daley is sole trustee and beneficiary. Does not include 11,577 share units deferred under the Directors’ Plan which are settled in cash after retirement.  
Barry Diller   4,000,000   *   Does not include 84,527 share units deferred under the Directors’ Plan which are settled in cash after retirement.  
Helene D. Gayle   1,000   *   Does not include 4,052 share units deferred under the Directors’ Plan which are settled in cash after retirement.  
Evan G.
Greenberg
  28,058   *   Does not include 15,851 share units deferred under the Directors’ Plan which are settled in cash after retirement.  
Alexis M. Herman   2,000   *   Does not include 24,341 share units deferred under the Directors’ Plan which are settled in cash after retirement.  
Robert A. Kotick   70,018   *   Includes 18 shares held by his daughter through the Uniform Transfers to Minors Act. Does not include 9,959 share units deferred under the Directors’ Plan which are settled in cash after retirement.  
Maria Elena
Lagomasino
  23,631   *   Does not include 24,341 share units deferred under the Directors’ Plan which are settled in cash after retirement.  
Donald F.
McHenry
  51,904   *   Includes 1,094 shares held by Mr. McHenry’s grandchildren. Does not include 62,488 share units deferred under the Directors’ Plan which are settled in cash after retirement.  
Sam Nunn   2,000   *   Does not include 108,718 share units deferred under the Directors’ Plan which are settled in cash after retirement.  
James D.
Robinson III
  117,650   *   Includes 53,196 shares held by a trust of which Mr. Robinson is a co-trustee. Does not include 2,350,000 shares held by a trust of which Mr. Robinson is a beneficiary with no voting or investment power. Does not include 102,365 share units deferred under the Directors’ Plan which are settled in cash after retirement.  

 

2014 Proxy Statement  

43

 
Name   Aggregate
Number of Shares
Beneficially Owned
  Percent of
Outstanding
Shares1
   Additional Information  
Peter V. Ueberroth   122,000   *   Includes 44,000 shares held by a trust of which Mr. Ueberroth is one of two trustees and a beneficiary, 20,000 shares held by his wife and 16,000 shares held by a foundation of which he is one of six directors. Does not include 117,535 share units deferred under the Directors’ Plan which are settled in cash after retirement.  
Jacob Wallenberg   2,000   *   Does not include 24,341 share units deferred under the Directors’ Plan which are settled in cash after retirement.  
Muhtar Kent   10,456,239   *   Includes 13,000 shares held by a foundation of which Mr. Kent, his wife and children are trustees, 129,000 shares held by a trust of which Mr. Kent’s wife and his children are beneficiaries and an independent trust company is trustee and 134,000 shares held by a trust of which Mr. Kent and his children are beneficiaries and an independent trust company is trustee. Also includes 72,498 shares credited to Mr. Kent under The Coca-Cola Company 401(k) Plan (the “401(k) Plan”) and 9,856,123 shares that may be acquired upon the exercise of options which are presently exercisable or that will become exercisable on or before April 25, 2014. Does not include 50,714 share units credited under The Coca-Cola Company Supplemental 401(k) Plan (the “Supplemental 401(k) Plan”) which are settled in cash after retirement. Also, does not include 10,500 shares purchased on February 25, 2014.  
Gary P. Fayard   5,406,047   *   Includes 4,054 shares held by his wife, 142,600 shares held by a limited liability limited partnership of which Mr. Fayard’s wife and children are beneficiaries and over which Mr. Fayard has investment control, 187,900 shares held by a limited liability limited partnership of which Mr. Fayard’s children are beneficiaries and over which Mr. Fayard has investment control, 22,931 shares credited to Mr. Fayard under the 401(k) Plan, 28,000 shares of restricted stock and 4,902,052 shares that may be acquired upon the exercise of options which are presently exercisable or that will become exercisable on or before April 25, 2014. Does not include 32,174 share units credited under the Supplemental 401(k) Plan which are settled in cash after retirement.  
Ahmet C. Bozer   2,439,417   *   Includes 17,124 shares credited to Mr. Bozer under the 401(k) Plan and 2,246,633 shares that may be acquired upon the exercise of options which are presently exercisable or that will become exercisable on or before April 25, 2014. Does not include 15,723 share units credited under the Supplemental 401(k) Plan which are settled in cash after retirement.  
Steven A.
Cahillane
  1,495,603   *   Includes 540 shares credited to Mr. Cahillane under the 401(k) Plan and 1,314,162 shares that may be acquired upon the exercise of options which are presently exercisable or that will become exercisable on or before April 25, 2014. Does not include 3,785 share units credited under the Supplemental 401(k) Plan which are settled in cash after retirement. Also, does not include 43,172 unvested restricted stock units which will be forfeited under the terms of the Separation Agreement (see page 74).  
José Octavio
Reyes
  5,034,342   *   Includes 376,284 shares held by a trust in which Mr. Reyes has an indirect beneficial interest. Also includes 4,586,494 shares that may be acquired upon the exercise of options which are presently exercisable or that will become exercisable on or before April 25, 2014. All options become vested upon Mr. Reyes’ retirement effective March 31, 2014.  
All Directors,
Director nominees
and executive
officers as a group
(32 persons)
  62,297,476   1.40%   Includes 230,518 shares credited under the 401(k) Plan, 101,738 shares of restricted stock and 36,635,702 shares that may be acquired upon the exercise of options which are presently exercisable or that will become exercisable on or before April 25, 2014. Does not include 181,226 share units credited under the Supplemental 401(k) Plan and 721,271 share units deferred under the Directors’ Plan, all of which will be settled in cash upon retirement.  

 

* Less than 1% of issued and outstanding shares of Common Stock.
   
1 Share units credited under the Directors’ Plan and the Supplemental 401(k) Plan are not included as outstanding shares in calculating these percentages. Unvested PSUs and restricted stock units, which will be settled in shares upon vesting, also are not included.

 

2014 Proxy Statement  

44

 

Principal Shareowners

 

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

Name and Address  Aggregate Number of Shares
Beneficially Owned
    Percent of
Outstanding Shares3
 
Berkshire Hathaway Inc.1
3555 Farnam Street, Suite 1440
Omaha, Nebraska 68131
   400,000,000    9.08%
BlackRock, Inc.2
40 East 52nd Street
New York, New York 10022
   243,187,805    5.52%

 

1 Berkshire Hathaway, a diversified holding company, has informed the Company that, as of December 31, 2013, it held an aggregate of 400,000,000 shares of Common Stock through subsidiaries.
   
2 The information is based on a Schedule 13G filed by BlackRock, Inc. with the SEC on February 11, 2014 reporting beneficial ownership as of December 31, 2013. BlackRock, Inc. reported that it has sole voting power with respect to 203,768,487 shares of Common Stock and sole dispositive power with respect to 243,187,805 shares of Common Stock.
   
3 The ownership percentages set forth in this column are based on the assumption that each of the principal shareowners continued to own the number of shares reflected in the table above on February 24, 2014.

 

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

 

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

 

    to file reports of their ownership of Common Stock with the SEC and the NYSE; and
   
to furnish us with copies of the reports.

 

We received written representations from each such person who did not file an annual statement on Form 5 with the SEC that no Form 5 was due. Based on our review of the reports and representations, we believe that all Section 16(a) reports were filed timely in 2013, except for the late filing of a Form 3 to include a stock holding for Nathan Kalumbu and the late filing of a Form 4 to include the acquisition of phantom share units by Helene D. Gayle.

 

2014 Proxy Statement  

45

 
  COMPENSATION

 

ITEM 2 - ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

 

The Company seeks a non-binding advisory vote from its shareowners to approve the compensation of its Named Executive Officers as described in the Compensation Discussion and Analysis section beginning on page 47 and the Executive Compensation section beginning on page 63.

 

The Company has designed its compensation programs to reward employees for producing sustainable growth consistent with the Company’s 2020 Vision, to attract and retain world-class talent and to align compensation with the long-term interests of our shareowners. The Compensation Committee strongly believes that executive compensation — pay opportunities, realizable pay and pay actually realized — should be tied to Company performance.

 

In deciding how to vote on this proposal, the Board encourages you to read the Compensation Discussion and Analysis and Executive Compensation sections for a detailed description of our executive compensation philosophy and programs, the compensation decisions the Compensation Committee has made under those programs, the factors considered in making those decisions, and changes made to such programs as a result of shareowner feedback and the results of last year’s advisory vote to approve executive compensation.

 

The Board recommends that shareowners vote FOR the following resolution:

 

“RESOLVED, that the shareowners approve, on an advisory basis, the compensation of the Company’s Named Executive Officers, as disclosed in this proxy statement, including the Compensation Discussion and Analysis, the executive compensation tables and the related narrative.”

 

Because your vote is advisory, it will not be binding upon the Board. However, the Board values shareowners’ opinions and the Compensation Committee will take into account the outcome of the advisory vote when considering future executive compensation decisions.

 

The Board of Directors recommends a vote FOR the advisory vote to approve executive compensation.

 


 

 

2014 Proxy Statement  

46

 

COMPENSATION DISCUSSION AND ANALYSIS

 

This Compensation Discussion and Analysis provides a detailed description of our executive compensation philosophy and programs, the compensation decisions the Compensation Committee has made under those programs and the factors considered in making those decisions. This Compensation Discussion and Analysis focuses on the compensation of our Named Executive Officers for 2013, who were:

 

Name Title
Muhtar Kent Chairman of the Board and Chief Executive Officer
Gary P. Fayard* Executive Vice President and Chief Financial Officer
Ahmet C. Bozer Executive Vice President and President, Coca-Cola International
Steven A. Cahillane** Former Executive Vice President and President, Coca-Cola Americas
José Octavio Reyes*** Vice Chairman, The Coca-Cola Export Corporation

   
* Mr. Fayard will be retiring in May 2014.
** Mr. Cahillane left the Company on February 28, 2014. Details of his separation arrangements can be found on page 74.
***   Mr. Reyes will be retiring in March 2014.

 

Changes to Compensation Programs as a Result of Shareowner Engagement and Consideration of Last Year’s Say on Pay Vote

 

The Company has a long-standing shareowner outreach program and routinely interacts with shareowners on a number of matters, including executive compensation (see page 41). The Compensation Committee carefully considers feedback received about executive compensation. After publication of the Company’s 2013 Proxy Statement, a number of shareowners expressed concerns with certain elements of our executive compensation programs. As a result, in an April 4, 2013 letter filed with the SEC, the Compensation Committee announced that the 2013 annual incentive awards for all executive officers would be capped at a maximum of 175% of the target award if the Company’s 2013 total shareowner return was below the median total shareowner return of the S&P 500 index. In addition, the Compensation Committee committed to review the design of the annual incentive plan and to evaluate ways to incorporate relative performance metrics into the Company’s executive compensation programs.

 

At the 2013 Annual Meeting of Shareowners, approximately 77% of the votes cast were in favor of the advisory vote to approve executive compensation. While this reflected continued support of our executive compensation programs, this level of support was a decline from the prior two years’ advisory votes. The Compensation Committee considered this outcome and asked management to seek additional shareowner input.

 

Since then, the Compensation Committee has taken shareowner feedback into account and, along with its commitments in the April 4, 2013 letter, has approved certain changes to the Company’s compensation programs. While shareowners expressed a wide variety of views about executive compensation, we believe these changes are responsive to most of the comments we routinely heard and are in the best interests of the Company and its shareowners. The chart below summarizes the key points we heard, what action the Compensation Committee has taken, and when the changes are effective.

 

  What we heard       What we did       When effective  
Annual incentive plan is difficult to understand and determine how incentives are awarded   Redesigned the annual incentive plan (see pages 53 and 54).   Annual incentive awards for 2014
Annual incentive plan targets should be more challenging   Incorporated challenging performance measures consistent with the Company’s long-term growth model (see pages 53 and 54).   Annual incentive awards for 2014
Annual incentive plan should utilize a wider variety of performance measures   Included an additional performance measure, operating income, into the annual incentive plan formula (see pages 53 and 54).   Annual incentive awards for 2014
Incorporate a relative performance measure into executive compensation program   Added a relative performance modifier to performance share units (PSUs) based on relative total shareowner return versus comparator companies (see page 58).   PSU awards for 2014-2016 performance period
Evaluate mix of long-term equity awards (although no shareowner consensus on preferred mix) and better explain use of each form of equity   Undertook a review and determined the current mix of long-term equity awards (approximately 60% options/40% PSUs) continues to be the most optimal for our employees for the reasons set forth on page 56. Although no change was made, the Compensation Committee will continue to evaluate the mix of long-term equity awards each year.   2013 and annually thereafter
Provide clearer explanation of how performance targets were set and year-to-year differences   Expanded explanation of performance targets and the reasons they may vary from year to year (see page 57).   2014 and annually thereafter

 

2014 Proxy Statement  

47

 

At the 2014 Annual Meeting of Shareowners, the Company will again hold an annual advisory vote to approve executive compensation (see page 46). The Compensation Committee will continue to engage with our shareowners throughout the year and consider the results from this year’s and future advisory votes on executive compensation, as well as feedback from shareowners.

 

Pay for Performance Analysis

 

We understand that there are different views about how to assess whether a company “pays for performance.” This section highlights how the Compensation Committee views pay and Company performance and why we believe the Company’s compensation programs are appropriately aligned with performance.

 

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

 

The Compensation Committee strongly believes that executive compensation — pay opportunities, realizable pay and pay actually realized — should be tied to Company performance. The Compensation Committee views Company performance in two primary ways:

 

    the Company’s operating performance, including results against our long-term growth targets; and
   
return to shareowners over time, both on an absolute basis and relative to other companies, including the S&P 500 companies and our compensation comparator group (see page 59).

 

Operating Performance

 

In a year marked by ongoing global macroeconomic challenges in many markets around the world, the Company was not immune to these pressures. Despite global volume growth below its expectations and long-term growth target, the Company delivered sound financial results in line with its long-term profit targets. Company operating performance highlights included:

 

    Global volume grew 2% for the full year, with sparkling beverage volume up 1% and still beverage volume up 5%.
   
The Company grew global value share in nonalcoholic ready-to-drink beverages, with volume and value share gains in core sparkling and still beverages.
   
Full-year reported net revenues declined 2% and, excluding the impact of structural changes, comparable currency neutral net revenues grew 3%.
   
Full-year reported operating income declined 5% and, excluding the impact of structural changes, comparable currency neutral operating income grew 6%, in line with the Company’s long-term growth target.
   
Full-year reported EPS was $1.90, down 3%, and comparable EPS was $2.08, up 3%. Comparable currency neutral EPS was up 8% for the full year, in line with the Company’s long-term growth target.

 

The following illustrates the three-year directional relationship between Company performance, based on two of our key operating metrics, and the compensation (as defined below) of our Chairman and Chief Executive Officer. These key metrics, unit case volume and comparable earnings per share, were chosen because we believe they correlate to long-term shareowner value.

 

 

1 2012 does not include Beverage Partners Worldwide (“BPW”) unit case volume for those countries in which BPW was phased out in 2012, nor does it include unit case volume of products distributed in the U.S. under a sublicense from a subsidiary of Nestlé S.A. (“Nestlé”) which terminated at the end of 2012.
   
2 Reflects the Company’s two-for-one stock split effected on July 27, 2012. Comparable EPS differs from what is reported under GAAP. See Annex A for a reconciliation of non-GAAP financial measures to our results as reported under GAAP.
   
3 Total compensation for Mr. Kent in each of 2011, 2012 and 2013, as reported in the 2013 Summary Compensation Table on page 63, excluding “change in pension value and nonqualified deferred compensation earnings.” We believe it is appropriate to exclude this component when analyzing the relationship between pay and performance because there are no enhanced or special pension plans for the Named Executive Officers and change in pension value is subject to many variables, such as external interest rates, that are not related to Company performance.

 

2014 Proxy Statement  

48

 

Return to Shareowners

 

The Company has delivered consistent positive return to shareowners over time, and has a long history of increasing dividends and conducting share repurchases, which continued in 2013.

 

 

The following chart shows how a $100 investment in the Company’s Common Stock on December 31, 2008 would have grown to $211 on December 31, 2013, with dividends reinvested quarterly. The chart also compares the total shareowner return on the Company’s Common Stock to the same investment in the S&P 500 Index and the Company’s 2013 compensation comparator group (see page 59) over the same period, with dividends reinvested quarterly.

 

* Source: Standard & Poor’s Research Insight. Includes the Company’s 2013 comparator group (see page 59) for the five-year period whether or not a company was included in the group for the entire period. For foreign companies included in the comparator group, market value has been converted to U.S. dollars and excludes the impact of currency. Market returns are weighted by relative market capitalization and are adjusted for spin-offs and special dividends.

 

2014 Proxy Statement  

49

 

Impact of Company performance on compensation – reported, realizable and realized pay

 

As described above, over the last several years the Company has continued to have solid operating performance and return positive value to shareowners. In 2011 and 2012, the Company met or exceeded its long-term growth targets and its three-year cumulative total shareowner return from 2011 to 2013 was 36.5%. The Company’s results in 2013 can be described as mixed, as the Company met some, but not all, of its long-term growth targets, and its one-year cumulative total shareowner return was 17.2%.

 

The following graphic provides a more complete view of total direct compensation (base salary, annual incentive and long-term equity compensation) by providing “reported,” “realizable” and “realized” pay of the Chairman and Chief Executive Officer for 2011, 2012 and 2013. We believe that “reported” pay, (compensation reported in the 2013 Summary Compensation Table), is useful, but is only part of an overall view of how pay is aligned with performance. We believe it is also helpful to look at performance-based compensation from the perspective of what is “realizable” and what is “realized.” Generally, the value of pay that is earned or realizable as of a specific date is referred to as “realizable pay” and pay actually received over a specified period is referred to as “realized pay.”

 

 

2014 Proxy Statement  

50

 

Performance Share Units (PSUs)

 

For the 2011-2013 PSU performance period, the Company did not meet the threshold goal for economic profit growth. The Company is not expected to meet the threshold goal for the 2012-2014 PSU performance period. Based on the target number of shares underlying the 2011-2013 and 2012-2014 PSU awards and the stock price as of December 31, 2013, this would result in the forfeiture of $16.8 million worth of stock for Mr. Kent and $36.6 million worth of stock for all of the Named Executive Officers as a group. The following graphic illustrates the reported value in the Summary Compensation Table compared to the certified or expected value of Mr. Kent’s PSU awards. See page 57 for the status of all outstanding PSU awards.

 

 

Summary of Executive Compensation Practices

 

Below we summarize certain executive compensation practices, both the practices we have implemented to drive performance and the practices we have not implemented because we do not believe they would serve our shareowners’ long-term interests.

 

 

 

2014 Proxy Statement  

51

 

What We Pay and Why: Elements of Compensation

 

We have three elements of total direct compensation: base salary, annual incentive and long-term equity compensation. The vast majority of total direct compensation is performance-based and not guaranteed. We also provide various retirement and benefit programs and modest business-related perquisites. To provide a clear picture of all elements of our executive compensation program, the dashboard below provides a single snapshot and describes why each element is provided. Additional information about the key elements of our compensation programs is included below the dashboard.

 

 

2014 Proxy Statement  

52

 

Base Salary

 

Base salaries for the executive officers are individually determined by the Compensation Committee within a salary range after consideration of the scope and complexity of the role, fairness (employees with similar responsibilities, experience and historical performance are rewarded comparably) and individual performance. We do not set the base salary of any employee, including any Named Executive Officer, at a certain multiple of the salary of another employee. There are three situations that may warrant an adjustment to base salary:

 

    annual merit increases;
   
promotions or changes in role; or
   
market adjustments

 

No increase in base salary is automatic or guaranteed.

 

The Compensation Committee made the following decisions about the base pay of the Named Executive Officers in 2013 and 2014:

 

    No change was made to Mr. Kent’s base salary in 2013 or 2014. The Compensation Committee determined that Mr. Kent’s base pay was competitive from a market perspective, and in light of his continued strong performance, decided to continue to focus on long-term performance-based awards.
   
Mr. Fayard received a 3.5% merit increase in 2013 and no change in 2014 due to his upcoming retirement.
   
Mr. Bozer received an 11.7% increase in 2013 to reflect his increased responsibilities as President, Coca-Cola International and a merit increase of 4% in 2014.
   
Mr. Cahillane received a 4.2% increase in 2013 to reflect his increased responsibilities as President, Coca-Cola Americas. Mr. Cahillane left the Company on February 28, 2014.
   
No change was made to Mr. Reyes’ base salary in 2013 or 2014 due to his upcoming retirement.

 

Annual Incentive

 

Annual incentives are determined under the Performance Incentive Plan of The Coca-Cola Company (the “Performance Incentive Plan”). In 2013, approximately 14,500 employees participated in the Performance Incentive Plan.

 

New Annual Incentive Plan Design (in effect for 2014)

 

 

Redesigned Annual Incentive Plan: What changed?

   
      Method of funding a pool for Named Executive Officer annual incentives simplified to be based on a small percentage of Company’s profit before tax
     
  Incorporated more challenging and varied financial measures aligned with Company long-term growth targets
     
  Increased transparency in determining the final amount of the annual incentive

The Compensation Committee redesigned the annual incentive program, which will be applied starting in 2014. The new design has two steps:

 

Step 1: Determine maximum incentive funding – The new design includes a simple formula to arrive at the maximum pool that can be used to pay annual incentives to Named Executive Officers. There is an additional cap for the CEO’s incentive award. The purpose of a pool is to ensure incentives are based only on a small percentage of the Company’s profit before tax and to meet requirements for tax deductibility. This funding mechanism determines the maximum payment amount and the Compensation Committee does not expect to award the full amount. The incentive pool will be funded as follows:

 

  Cap for All NEOs  
Metric for Pool Funding (including CEO) Cap for CEO
Income Before Income Tax 0.40% 0.15%
(recurring, not currency neutral)    

 

Step 2: Determine individual amount for each Named Executive Officer – The new design provides that annual incentive awards will be determined based on a formula, with the majority of the incentive determined based on pre-determined financial targets. In addition to earnings per share and unit case volume, which were metrics under the prior plan’s formula, operating income was added as a new metric for determining the Company Performance Factor. Importantly, the targets in the new design are consistent with the Company’s long-term growth targets.

 

Specifically, the Named Executive Officers’ incentive payments will be determined by the following formula:

 

[Base Salary x Target Percentage x Company Performance Factor] + Individual Performance Factor Amount

 

2014 Proxy Statement  

53

 

The Company Performance Factor will be determined based on the Company’s actual performance against the long-term growth targets set forth in the table below:

 

Company Target Midpoint
Performance Factor Range of Target Range
Unit Cases Volume Growth 3-4% 3.5%
Operating Income Growth* 6-8% 7.0%
EPS Growth* 7-9% 8.0%

* Comparable currency neutral. Operating income will also be adjusted for structural items.

 

To calculate the Company Performance Factor, actual results will be compared to the midpoint of each target range to determine the percentage above or below the midpoint. These percentages will then be averaged to determine the overall Company Performance Factor. For example, if actual results equal the midpoint of each target range, the overall Company Performance Factor will be 100%.

 

Then, the Compensation Committee may award an Individual Performance Factor Amount to reflect the Compensation Committee’s assessment of each individual’s performance, contributions to the Company’s performance for the year, and achievements in areas that are not as readily quantifiable (such as sustainability and diversity). This amount may range from $0 to a maximum of 75% of the Named Executive Officer’s target incentive. The Compensation Committee believes this new design more closely ties annual incentive payments to measurable and challenging financial goals, strikes an appropriate balance between rewarding financial results and other goals, and is responsive to much of the shareowner feedback we received.

 

Discontinued Annual Incentive Plan Design (in effect for 2013)

 

In 2013, the following formula was used to calculate the maximum payment that may be awarded to a Named Executive Officer.

 

Base Salary x Base Salary Factor x Business Performance Factor (0 – 300%)

 

Once the maximum was determined pursuant to the formula, the quantitative and qualitative factors described below were used by the Compensation Committee to determine where within the range of potential payments (from $0 to the maximum) the actual award should fall.

 

In addition, as the Compensation Committee committed in the April 4, 2013 letter, annual incentives for 2013 were capped at no greater than 175% of target because the Company’s total shareowner return was below the median of the S&P 500’s total shareowner return in 2013.

 

Summary of Payments

 

The following table shows how the formula was applied and the actual amounts awarded for 2013:

 

 

2014 Proxy Statement  

54

 

Calculating the Business Performance Factor for 2013

 

The targets used to determine the business performance factor were set in February 2013. For all Named Executive Officers, the Company targets and results for 2013 were as follows:

 

 

Unit Case Volume Business Performance Factor 75%  
Comparable Currency Neutral Earnings Per Share Business Performance Factor 138%  
TOTAL 213%  
* Comparable currency neutral earnings per share growth is calculated after adjusting for the impact of currency and certain other nonrecurring items affecting comparability. Comparable currency neutral earnings per share, therefore, differs from reported earnings per share, which was $1.90 in 2013. The primary differences between comparable currency neutral earnings per share and earnings per share as reported under GAAP were the impact of currency, asset impairments/restructuring, productivity and reinvestment programs, charges by equity investees and transaction gains/losses. We believe using comparable currency neutral earnings per share is appropriate because it ensures a more consistent comparison against the prior year.

 

Quantitative and Qualitative Factors

 

In setting the amount of each Named Executives Officer’s actual award within the range determined by the formula, the Compensation Committee considered a number of factors. In 2013, all Named Executive Officers received annual incentives that were below the target amount (base salary x base salary factor). The following items were the primary factors considered in determining the amounts awarded:

 

  Factor       Result  
Performance against long-term growth targets The Compensation Committee considered results against the Company’s long-term growth targets, including unit case volume growth, comparable currency neutral operating income growth and comparable currency neutral earnings per share growth. Although the new Annual Incentive plan design which incorporates these targets is not effective until 2014 (see page 53), the Compensation Committee considered the following 2013 results:
      Unit case volume growth was 2%, below the 3-4% growth target.
  Comparable currency neutral operating income growth was 6%, meeting the 6-8% target.
  Comparable currency neutral earnings per share growth was 8%, meeting the 7-9% target.
Volume and value share gains The Company continued to gain value share globally in nonalcoholic ready-to-drink beverages, with volume and value share gains in core sparkling and still beverages.
Total return to shareowners The Company returned $9.8 billion to shareowners and its total shareowner return (including stock price appreciation and dividends) was 17%. Total shareowner return was below the median of both the compensation comparator group and the S&P 500 for 2013.
Productivity and reinvestment The Company continued progress on its productivity and reinvestment program to deliver $550 million to $650 million in productivity, which will further enable efforts to strengthen the Company’s brands and reinvest its resources to drive long-term profitable growth.
Sustainability The Company and the global Coca-Cola system remained focused on operating in an environmentally and socially responsible manner. The Company is continuing to embed sustainability-minded innovations into every aspect of its business, including sourcing ingredients, increasing beverage options, aspiring to be water neutral and recovering packages for recycling.

 

2014 Proxy Statement  

55

 

Long-Term Equity Compensation

 

We use three primary forms of equity compensation:

 

    Stock Options: provide the opportunity for compensation only if the Company’s stock price increases from the date of grant.
   
Performance Share Units (PSUs): provide an opportunity for employees to receive Common Stock if a pre-defined performance measure is met for a specified performance period. No outstanding PSU awards provide for the payment of dividends or dividend equivalents during the performance period. Starting with the annual grant of PSUs in 2011, dividends or dividend equivalents were eliminated during the holding period. We currently have the following two types of PSU awards outstanding:
   
–   Annual awards: We provide annual PSU awards (with three-year performance periods and a one-year holding period) to eligible employees.
   
–   2020 Vision awards: In 2012, we adopted a separate PSU program for a limited number of employees which is directly tied to goals related to the Company’s 2020 Vision. No Named Executive Officers have received such awards.
   
Restricted Stock/Restricted Stock Units (RSUs): may be performance-based or time-based and in the form of restricted stock or RSUs. Time-based restricted stock awards are used in limited circumstances, such as for critical retention situations, make-whole awards, special recognition or when other forms of awards are not available for tax or legal reasons. None of the Named Executive Officers received a restricted stock award in 2013, except for Mr. Cahillane, who received an RSU award in conjunction with the discontinuance of a former CCE executive pension plan.

 

In 2013, we granted long-term equity compensation to approximately 6,400 employees. We mitigate the potential dilutive effect of granting long-term equity compensation through a robust share repurchase program. In 2013, we repurchased $4.8 billion of Common Stock, which included $1.3 billion related to proceeds from employee stock activity. Additional details concerning our long-term equity compensation plans can be found on page 76 and 82.

 

Annual Awards: Value and Mix

 

In February of each year, the Compensation Committee grants a mix of stock options and PSUs to eligible employees. Importantly, equity-eligible employees receive the same mix of stock options and PSUs with the same performance terms and other conditions (except where differences may be needed in countries outside the U.S.).

 

The Compensation Committee sets ranges for long-term equity compensation for each job grade at the senior executive levels. The ranges were informed by a survey of our comparator group’s pay practices. The Compensation Committee does not target a specific percentile ranking against our comparator group.

 

The actual value of long-term equity compensation within such ranges awarded to each senior executive, including the Named Executive Officers, is individually determined, at the discretion of the Compensation Committee. Consideration is given to the individual’s skills, experience, time in role and future potential, the prior year’s award value, as well as the individual’s and Company’s performance in the prior year. In determining the value of long-term equity compensation awards to the Named Executive Officers in February 2013, the Compensation Committee took into consideration the above factors, including without limitation, the Company’s strong operating performance in 2012 and the committee’s continued desire to focus on performance-based long-term equity compensation as the Company progresses toward its 2020 Vision.

 

Once the value of the long-term equity compensation award is determined, the Compensation Committee grants approximately 60% of this value in stock options and 40% in PSUs. Due to differences in how the grant date fair value of option awards must be calculated for accounting purposes, the amounts reported in the Summary Compensation Table may not reflect the same proportion of stock options and PSUs.

 

The Compensation Committee carefully considered this mix of equity vehicles in 2013 and determined that it continues to strike the appropriate balance between rewarding increases in the market value of our Common Stock (stock options and PSUs) and the achievement of Company-specific performance measures (PSUs). As noted above, we measure performance based on both Company results and return to shareowners. Because both annual incentives and PSUs are earned based on Company-specific performance measures, we believe that granting a slightly higher percentage of long-term equity awards in the form of stock options is appropriate. Importantly, unlike some companies, none of our annual long-term equity awards are provided in the form of time-based restricted stock. The Compensation Committee believes that all annual equity awards should be dependent upon performance – either operating measures, growth in stock price, or both.

 

  Why options?       Why PSUs?  
         

   Performance-based because their value is solely tied to the Company’s stock price, which directly correlates to our shareowners’ interests.

 

   Fosters an innovative environment focused on long-term growth of the Company and shareowner value.

 

   Declines in stock price following the grant of stock options have a negative impact on executive pay (i.e., when a stock option is “underwater” it has no value).

 

   Highly valued by employees and an important retention tool.

 

   Stringent share ownership requirements and share retention policies mitigate perception that options may cause a focus on short-term stock price movement.

 

   Performance-based both because number of shares earned depends on performance against pre-defined goals and the value of the shares fluctuates based on the stock price.

 

   Tied to economic profit, a key financial metric.

 

   Aligns all equity-eligible employees to perform against economic profit goals.

 

2014 Proxy Statement  

56

 

Performance Share Units: Targets, Status and New Relative Total Shareowner Return Modifier

 

Since 2007, growth in economic profit has been chosen as the performance measure for the annual PSU awards because it is an important measure of the Company’s long-term strength and is historically correlated with stock price over time. Economic profit is net operating profit after tax less the cost of capital used in the business, after adjusting for the impact of structural changes that are significant to the Company as a whole, accounting changes and certain other nonrecurring items affecting comparability. A three-year performance period was selected to mirror our long-term business planning cycle.

 

How targets are determined and why they vary from year to year

 

The economic profit growth target is derived from our long-term growth targets and our three-year business plan. The specific economic profit growth target is then determined based on assumptions about the three-year performance period, such as the global economic environment and the impact of currency exchange.

 

Targets underlying PSU awards are designed to be challenging but achievable and consistent with our 2020 Vision. While public information is generally not available on comparator companies’ economic profit growth, we believe that the targets we set for each performance period are competitive on a relative basis.

 

The decrease in the economic profit growth target between the 2012-2014 PSU award and the 2013-2015 PSU award was due to the projected negative impact of currency exchange and the expectation of a more challenging macroeconomic environment over the three-year performance period. This target is not intended to be less challenging than in prior years. For all PSU programs prior to 2014-2016, the impact of currency exchange is magnified when calculating economic profit growth because a significant portion of net operating profit after tax is denominated in foreign currency while a significant proportion of capital is U.S. dollar denominated, primarily due to the acquisition of Coca-Cola Enterprises Inc.’s (“CCE”) former North America business (the “CCE Transaction”).

 

Starting with the 2014-2016 PSU award, economic profit will be measured on a currency neutral basis, which is consistent with our long-term growth targets. In addition, we believe that a currency neutral economic profit growth target will help ensure that PSU awards are based on the underlying results of the business and not be subject to fluctuations largely outside the control of those running the business day to day.

 

Status of Current Plans

 

Performance       Threshold, Target and    
Period   Performance Measure   Maximum Performance Levels1   Status
2010-20122   Compound annual growth in economic profit   Threshold = 5.7%
Target = 8.7%
Maximum = 10.7%
  Results were certified in February 2013. Results were above the maximum, with 150% of the target number of shares awarded. Shares are subject to an additional holding period through February 2014.
2011-20132   Compound annual growth in economic profit   Threshold = 8.7%
Target = 11.7%
Maximum = 13.7%
  Results were certified in February 2014. Performance was below the threshold level and therefore no shares were earned from these awards.  
2012-20142   Compound annual growth in economic profit   Threshold = 7.7%
Target = 10.7%
Maximum = 12.7%  
  Results will be certified in February 2015. Any shares earned will be subject to an additional holding period through February 2016. Through December 31, 2013, performance is projected below the threshold level and therefore we do not currently expect any shares to be earned from these awards.
2013-20152   Compound annual growth in economic profit   Threshold = 4.4%
Target = 6.4%
Maximum = 8.4%
  Results will be certified in February 2016. Any shares earned will be subject to an additional holding period through February 2017. Through December 31, 2013, payout is projected near the target level. The global economic environment and the impact of currency over the remaining two years of the performance period will have a significant impact on the number of shares earned, if any.
2014-20162   Compound annual growth in economic profit (currency neutral)   Threshold = 6.9%
Target = 8.9%
Maximum = 10.9%
  Results will be certified in February 2017 including applying the new relative total shareowner return modifier (see page 58). Any shares earned will be subject to an additional holding period through February 2018.
   
1 Participants receive 50% of the award at the threshold level, 100% of the award at the target level and 150% of the award at the maximum level. Results are rounded and the number of shares is extrapolated on a linear basis between performance levels.
   
2 The calculation of economic profit for the 2010-2012 and 2011-2013 periods was adjusted, and the 2012-2014, 2013-2015 and 2014-2016 periods will be adjusted, to exclude items impacting comparability. In addition, as a result of the CCE Transaction, the 2009 base year for the 2010-2012 period and the 2010 base year for the 2011-2013 period were adjusted to assume the Company owned CCE’s former North America business for the full base year.

 

2014 Proxy Statement  

57

 

New Relative Total Shareowner Return Modifier for 2014

 

The Compensation Committee added a relative total shareowner return modifier to PSU awards beginning with the 2014-2016 performance period. As described above, PSUs provide an opportunity to receive Common Stock if economic profit targets are attained. Beginning in 2014, the amount of shares earned from PSU awards will be reduced or increased if total shareowner return over the three-year performance period relative to our compensation comparator group (see page 59) falls outside of a defined range. Specifically, after the economic profit performance results are certified, the award will be modified up or down as follows:

 

If total shareowner return over the three-year performance period is:   Then:
At or above the 75th percentile of the comparator group   The award will be increased 25%
At or above the 25th and below the 75th percentile of our comparator group   No change to the award
Below the 25th percentile of our comparator group   The award will be decreased 25%

 

Perquisites

 

The table below summarizes and provides the business rationale for each of the perquisites provided to the Named Executive Officers. For more information about these perquisites and their values, see the discussion beginning on page 65.

 

Perquisite Description and Business Rationale
Aircraft Usage     The Board requires Mr. Kent, but not the other Named Executive Officers, to fly on Company aircraft for business and personal travel. This is required to allow travel time to be used productively for the Company, for security purposes due to the high profile and global nature of our business and our highly symbolic and well-recognized brands, as well as to ensure that Mr. Kent can be immediately available to respond to business priorities from any location around the world.
  The Company does not provide tax gross-ups for imputed income due to personal aircraft use. A tax reimbursement is provided for taxes incurred when a spouse travels for business purposes. In contrast to personal use, the Company does not believe an employee should pay personally when travel is required or important for business purposes.
Car and Driver A car and driver are provided only where necessary for security and/or productivity reasons.
  Messrs. Kent, Bozer and Reyes (and Mr. Reyes’ spouse) use a Company car and driver. No other Named Executive Officer is provided with a Company car or driver.
Security The Company provides personal security to Named Executive Officers when circumstances warrant.
  The Company considers security to be a business necessity to protect our employees given the global visibility of our brands and the extensive locations where we operate.
International Service
Program
Mr. Bozer, who was based in Turkey prior to 2013, participated in the Company’s international service program. He is provided the same benefits offered to all employees eligible to participate in such program.
Financial and Tax
Planning
The Company reimburses its senior executives, including the Named Executive Officers, for financial and tax planning up to $13,000 per year for Mr. Kent and up to $10,000 per year for other Named Executive Officers.
  A significant percentage of our senior executives have dual nationalities, or work or have worked outside their home country, which complicates their tax and financial situations. This benefit helps to ensure they are compliant with local country laws.
  No tax gross-up is provided for this benefit.
Other Executive physicals are provided to encourage senior leaders of the Company to set the example for living positively and active healthy living.
  Modest additional perquisites are made available to the Named Executive Officers outside the U.S. consistent with local policies and practices.
  Tax protection may be provided for prior assignments in foreign countries in order to avoid an executive being penalized from a tax perspective for overseas service on behalf of the Company.

 

How We Make Compensation Decisions

 

Decision-Making Process and Role of Executive Officers

 

The Compensation Committee reviews and discusses the Board’s evaluation of the Chairman and Chief Executive Officer and makes preliminary determinations about his base salary, annual incentive and long-term equity compensation. The Compensation Committee then discusses the compensation recommendations with the full Board and the Compensation Committee approves final compensation

 

2014 Proxy Statement  

58

 

decisions after this discussion. Executive officers do not determine the compensation of the Chairman and Chief Executive Officer.

 

For other Named Executive Officers, the Chairman and Chief Executive Officer considers performance and makes individual recommendations to the Compensation Committee on base salary, annual incentive and long-term equity compensation. The Compensation Committee reviews, discusses, modifies and approves, as appropriate, these compensation recommendations.

 

In making these compensation decisions, the Compensation Committee uses several resources and tools, including competitive market information. One such tool is a “tally sheet,” which assigns a dollar amount to each of the compensation elements discussed above as well as accumulated outstanding long-term equity awards and deferred compensation. The Compensation Committee believes that the tally sheet is useful in evaluating the total compensation opportunity for each Named Executive Officer.

 

Compensation Comparator Group

 

We use a comparator group of companies when making certain compensation decisions. While the Compensation Committee examines data about executive compensation at other comparator companies, compensation paid at other companies is not a primary factor in the decision-making process. No changes to the comparator group were made in 2013. The table below shows how the comparator group was chosen and how the comparator group is used.

  

  How the comparator group was chosen       How we use the comparator group*  
         

  Comparable size based on revenue.

  Market capitalization in excess of $100 billion.

  Major global presence with sales in a minimum of 100 countries.

  Large consumer products business.

  Market-leading brands or category positions as defined by Interbrand.

  Sustained growth over one, three and five year periods.

  Available compensation data.

 

  As an input in developing base salary ranges, annual incentive targets and long-term incentive award ranges.

  To evaluate share utilization by reviewing overhang levels and annual run rate.

  To benchmark the form and mix of equity awarded to employees.

  To benchmark share ownership guidelines.

  To assess the competitiveness of total direct compensation awarded to senior executives.

  To validate whether executive compensation programs are aligned with Company performance.

  As an input in designing compensation plans, benefits and perquisites.

 
 
 
 
 
 
 
 
 
 
 
 
     
  * Since some of the comparator group companies are not U.S. based, a subgroup of the companies may be used for some of these purposes when data is not publicly available for the foreign companies.
   

 

The comparator group for 2013 was:

 

Abbott Laboratories Mondelēz International, Inc.
Apple Inc. Nestlé S.A.
AT&T Inc. NIKE, Inc.
Colgate-Palmolive Company PepsiCo, Inc.
General Mills, Inc. Philip Morris International Inc.
International Business Machines Corporation The Procter & Gamble Company
Johnson & Johnson Unilever PLC
Kimberly-Clark Corporation Wal-Mart Stores, Inc.
McDonald’s Corporation  

 

Role of the Compensation Consultant

 

Pursuant to its charter, the Compensation Committee is authorized to retain and terminate any consultant, as well as to approve the consultant’s fees and other terms of the engagement. The Compensation Committee also has the authority to obtain advice and assistance from internal or external legal, accounting or other advisors. In 2013, the Compensation Committee engaged Exequity LLP (“Exequity”) as its compensation consultant. The Compensation Committee did not engage any other advisor in 2013.

 

2014 Proxy Statement  

59

 

Exequity provides research, data analyses, survey information and design expertise in developing compensation programs for executives and incentive programs for eligible employees. In addition, Exequity keeps the Compensation Committee apprised of regulatory developments and market trends related to executive compensation practices. Exequity does not determine or recommend the exact amount or form of executive compensation for any of the Named Executive Officers. A representative of Exequity generally attends meetings of the Compensation Committee, is available to participate in executive sessions and communicates directly with the Compensation Committee.

 

Prior to the retention of a compensation consultant or any other external advisor, and from time to time as the Committee deems appropriate, the Compensation Committee assesses the independence of such advisor from management, taking into consideration all factors relevant to such advisor’s independence, including the factors specified in the NYSE listing standards.

 

Pursuant to the Compensation Committee’s Independence Policy, if the Compensation Committee chooses to use a compensation consultant, the consultant must be independent. Under the policy, a consultant is considered independent if (i) the representative of the consultant does not provide services or products of any kind to the Company or any of its consolidated subsidiaries, or to their management, (ii) the consulting firm does not derive more than 1% of its consolidated gross revenues from the Company and (iii) the consulting firm is precluded from providing any other services to the Company and its consolidated subsidiaries.

 

The Compensation Committee assessed Exequity’s independence, taking into account the following factors:

 

    compliance with the Independence Policy;
   
the policies and procedures the consultant has in place to prevent conflicts of interest;
   
any business or personal relationships between the consultant and the members of the Compensation Committee;
   
any ownership of Company stock by the individuals at Exequity performing consulting services for the Compensation Committee; and
   
any business or personal relationship of Exequity with an executive officer of the Company.

 

Exequity has provided the Compensation Committee with appropriate assurances and confirmation of its independent status pursuant to the Independence Policy and other factors. The Compensation Committee believes that Exequity has been independent throughout its service for the committee and there is no conflict of interest between Exequity and the Compensation Committee.

 

Risk Considerations

 

The Compensation Committee reviews the risks and rewards associated with the Company’s compensation programs. The programs are designed with features that mitigate risk without diminishing the incentive nature of the compensation. We believe our compensation programs encourage and reward prudent business judgment and appropriate risk-taking over the short term and the long term.

 

Management and the Compensation Committee regularly evaluate the risks involved with compensation programs globally and do not believe any of the Company’s compensation programs create risks that are reasonably likely to have a material adverse impact on the Company. In 2013, the Company conducted, and the Compensation Committee reviewed, a comprehensive global risk assessment. The risk assessment included conducting a global inventory of incentive plans and programs and considered factors such as the plan metrics, number of participants, maximum payments and risk mitigation factors.

 

Since base salary is a fixed amount and a relatively small percentage of total direct compensation, we do not believe it encourages risk-taking. In addition, we believe that the Company’s annual incentive and long-term equity compensation programs contain appropriate risk mitigation factors, as summarized in the graphic below.

 

    Risk Mitigation Factor    
  Award Cap    
Annual Multiple Performance Factors    
Incentive Clawback Feature Long-term
Equity
Compensation
(stock options
and PSUs)
 
(cash) Range of Awards (not “all or nothing”)
    Anti-Hedging Policy
    Share Ownership/Retention Guidelines
    Additional Holding Period on PSUs

 

Additional Information

 

Share Ownership Guidelines

 

For many years, the Company has had share ownership guidelines for executives, including the Named Executive Officers. These guidelines are designed to align the executives’ long-term financial interests with those of shareowners. All Named Executive Officers exceed their share ownership guidelines.

 

2014 Proxy Statement  

60

 

The ownership guidelines, which cover 70 executives, are as follows:

 

Role Value of Common Stock to be Owned*
Chief Executive Officer 8 times base salary
Operating Business Presidents 5 times base salary
Executive Vice Presidents, Group Presidents and President of CCR 4 times base salary
Other senior executives 2 times base salary
Business Unit Presidents below senior executive level 1 times base salary
* Shares are valued based on the average closing price of Common Stock for the prior one-year period.

 

The Chairman of the Board and Chief Executive Officer and the Compensation Committee monitor compliance annually. Each executive has five years from the date he or she becomes subject to the share ownership guidelines to meet his or her target. If an executive is promoted and the target is increased, an additional two-year period is provided to meet the target. Stock options do not count toward the ownership guideline and PSUs count only after the performance criteria have been met.

 

Further, to ensure compliance with the guidelines, the Compensation Committee may direct that up to 50% of the annual cash incentive be withheld if an executive is not compliant. The Compensation Committee also may mandate the retention of 100% of net shares, after settlement of taxes and transaction fees, acquired pursuant to equity awards granted on or after January 1, 2009.

 

Starting in 2009, once an executive has met and maintained the ownership objective for a year, the Compensation Committee had the discretion to grant a one-time long-term equity award. This award is generally delivered in stock options valued up to 15% of the executive’s annual equity award value. In 2012, the Compensation Committee decided to phase out this component of the program, so final awards were made in 2014 to eligible executives that met their ownership objective in 2012 and maintained it through 2013. Mr. Cahillane received such an award in 2013 but the unvested portion of this award was forfeited upon his departure.

 

Share Retention Policy

 

In February 2013, the Compensation Committee approved a new share retention policy for the Company’s executive officers which requires the retention of 50% of the shares (after paying taxes) obtained from option exercises or from the release of PSUs or restricted stock awards for the earlier of one year after exercise/release of shares or separation from the Company. The policy includes limited exceptions such as donations of stock to charities, educational institutions or family foundations and sales or divisions of property in the case of divorce, disability or death, and the Compensation Committee is authorized to grant waivers in other exceptional circumstances. This policy applies to equity awards granted in and after February 2013 and is in addition to the share ownership guidelines described above.

 

Trading Controls and Anti-Hedging, Anti-Short Sale and Anti-Pledging Policies

 

Executive officers, including the Named Executive Officers, are required to receive the permission of the Company’s General Counsel prior to entering into any transactions in Company securities, including purchases, sales, gifts, grants and those involving derivatives. Generally, trading is permitted only during announced trading periods. Employees who are subject to trading restrictions, including the Named Executive Officers, may enter into a trading plan under Rule 10b5-1 of the 1934 Act. These trading plans may be entered into only during an open trading period and must be approved by the Company. The Company requires trading plans to include a waiting period and the trading plans may not be amended during their term. The Named Executive Officer bears full responsibility if he or she violates Company policy by permitting shares to be bought or sold without pre-approval or when trading is restricted.

 

Executive officers are prohibited from entering into hedging and short sale transactions and are subject to restrictions on pledging Common Stock, as described on page 42.

 

Contracts and Agreements

 

Generally, we have no employment contracts with our employees, unless required or customary based on local law or practice. We do not have a contract with Mr. Kent or any of the other Named Executive Officers except for Mr. Reyes, who is based in Mexico where contracts are required.

 

Clawback Provisions

 

Most of our compensation plans and programs contain provisions that allow the Company to recapture amounts paid to employees under certain circumstances. The annual Performance Incentive Plan allows the Company to recapture any award from a participant if the amount of the award was based on achieving certain financial results that were later required to be restated due to the participant’s misconduct. In addition, all equity awards since 2004 contain provisions under which employees may be required to forfeit equity awards or profits from equity awards if they engage in certain conduct including, but not limited to, violating Company policies, such as the Code of Business Conduct or competing against the Company. In addition, effective February 16, 2011, the Performance Incentive Plan, The Coca-Cola Company 2008 Stock Option Plan (the “2008 Stock Option Plan”), The Coca-Cola Company 1999 Stock Option Plan (the “1999 Stock Option Plan”), The Coca-Cola Company 1989 Restricted Stock Award Plan (the “1989 Restricted Stock Plan”) and The Coca-Cola Company 1983 Restricted Stock Award Plan (the “1983 Restricted Stock Plan”) were each amended to include a clawback provision with respect to the recapture of awards as may be required by the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act or any other law or the listing standards of the NYSE. The Coca-Cola Company 2014 Equity Plan, which shareowners are being asked to approve, also contains a clawback provision.

 

2014 Proxy Statement  

61

 

Change in Control

 

The Company has change in control provisions in its annual Performance Incentive Plan, its equity compensation plans and some of its retirement plans in which the Named Executive Officers participate. These provisions apply equally to all plan participants. The Board can determine prior to the potential change in control that no change in control will be deemed to have occurred. We have no special change in control agreements or arrangements with any of the Named Executive Officers and we do not provide a tax gross-up for any change in control situation. In 2011, equity plans were amended to provide a “double-trigger” change in control provision for future awards (see page 76).

 

The change in control provisions were adopted to mitigate the concern that, in the event the Company is considering a change in control transaction, the employees involved in considering the transaction will be motivated to act in their own interests rather than the interests of the shareowners. Thus, the provisions are designed to make any transaction neutral to the employees’ economic interests. Employees likely would not be in a position to influence the Company’s performance after a change in control and might not be in a position to earn their incentive awards or vest in their equity awards. The Company also believes that the change in control provisions in the pension plans provide some security with respect to pension benefits in the event of a change in control. Therefore, the Company believes that the change in control provisions are fair and protect shareowner value.

 

For a more detailed discussion of change in control arrangements, see Payments on Termination or Change in Control beginning on page 74.

 

Tax and Accounting Implications of Compensation

 

The Compensation Committee considers the tax and accounting implications of compensation, but they are not the only factors considered. In some cases, other important considerations outweigh tax or accounting considerations.

 

Section 162(m) of the Tax Code limits deductibility of certain compensation to $1 million per year for the Chief Executive Officer and the three other executive officers (other than the Chief Financial Officer) who are highest paid and employed at year-end. If certain conditions are met, performance-based compensation may be excluded from this limitation. Stock option gains are tax deductible and the value of most PSUs and performance-based restricted stock and restricted stock units is deductible when income is realized.

 

Most compensation paid by the Company is designed to be deductible under Section 162(m) of the Tax Code. However, the Compensation Committee may exercise discretion to pay nondeductible compensation if following the requirements of Section 162(m) of the Tax Code would not be in the interests of shareowners. Our shareowner-approved incentive plans, stock option plans and performance-based awards under the 1989 Restricted Stock Plan are designed to permit awards to meet the conditions necessary for deductibility. In 2013, all annual incentive payments to the Named Executive Officers were deducted.

 

Generally under GAAP, compensation is expensed as earned. Equity compensation is expensed in accordance with FASB Topic 718, which is generally over the vesting period.

 

REPORT OF THE COMPENSATION COMMITTEE

 

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management. Based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference into the Form 10-K.

 

Maria Elena Lagomasino, Chair
Ronald W. Allen
Helene D. Gayle
Alexis M. Herman
James D. Robinson III

 

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

 

The Compensation Committee is comprised entirely of the five independent Directors listed above. No member of the Compensation Committee is a current, or during 2013 was a former, officer or employee of the Company or any of its subsidiaries. During 2013, no member of the Compensation Committee had a relationship that must be described under the SEC rules relating to disclosure of related person transactions. In 2013, none of our executive officers served on the board of directors or compensation committee of any entity that had one or more of its executive officers serving on the Board or the Compensation Committee of the Company.

 

2014 Proxy Statement  

62

 

COMPENSATION TABLES

 

The following tables, narrative and footnotes discuss the compensation of the Chairman and Chief Executive Officer, the Chief Financial Officer and the three other most highly compensated executive officers during 2013, who are referred to as the Named Executive Officers. Mr. Cahillane left the Company on February 28, 2014. The information included in the tables, narrative and footnotes in this section does not reflect the impact of Mr. Cahillane’s departure from the Company on his compensation. Details of his separation arrangements can be found on page 74.

 

2013 Summary Compensation Table

 

Name
and Principal
Position
(a)
  Year
(b)
  Salary
($)
(c)
   
Stock Awards
($)
(e)
  Option
Awards
($)
(f)
  Non-Equity
Incentive Plan
Compensation
($)
(g)
  Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings
($)
(h)
  All Other
Compensation
($)
(i)
  Total
($)
(j)
  Total Without
Change
in Pension
Value
($)*
Muhtar Kent   2013   $ 1,600,000   $ 6,399,988   $ 7,113,946   $ 2,200,000   $ 2,204,814   $ 861,912   $ 20,380,660   $ 18,175,846
Chairman of   2012     1,550,000     6,239,977     6,854,958     6,000,000     8,851,435     963,816     30,460,186     21,608,751
the Board and Chief Executive Officer   2011     1,350,000     5,600,141     7,454,880     6,000,000     7,953,762     756,790     29,115,573     21,161,811
Gary P. Fayard   2013     844,278     2,250,016     2,500,997     820,000     59,653     109,229     6,584,173     6,524,520
Executive Vice   2012     814,772     1,835,210     2,016,060     1,804,000     1,648,001     104,919     8,222,962     6,574,961
President and Chief Financial Officer   2011     785,280     1,836,575     2,443,110     1,760,000     1,599,292     100,315     8,524,572     6,925,280
Ahmet C. Bozer   2013     681,663     2,199,998     2,445,420     770,000     0     275,133     6,372,214     6,372,214
Executive Vice   2012     622,089     1,649,978     1,812,605     1,263,000     1,170,198     825,249     7,343,119     6,172,921
President and President,   2011     602,550     1,706,602     2,414,280     1,131,000     1,185,505     750,968     7,790,905     6,605,400
Coca-Cola                                                    
International                                                    
Steven A. Cahillane1   2013     815,420     3,828,014     2,689,962     820,000     0     93,865     8,247,261     8,247,261
Former Executive   2012     786,047     1,716,009     1,885,116     1,273,000     367,277     121,635     6,149,084     5,781,807
Vice President and President,   2011     764,063     1,706,602     2,267,340     1,570,000     350,697     231,145     6,889,847     6,539,150
Coca-Cola Americas                                                    
José Octavio Reyes2   2013     751,701     1,649,998     1,834,064     590,000     669,424     381,872     5,877,059     5,208,010
Vice Chairman,   2012     717,167     1,649,978     1,812,605     1,545,000     3,286,256     551,590     9,562,596     6,277,614
The Coca-Cola   2011     655,060     1,836,575     2,443,110     1,621,000     1,103,392     457,230     8,116,367     7,012,975
Export Corporation                                                    

 

* In order to show the effect that the year-over-year change in pension value had on total compensation, as determined under applicable SEC rules, we have included an additional column to show total compensation minus the change in pension value. The amounts reported in the Total Without Change in Pension Value column may differ substantially from the amounts reported in the Total column required under SEC rules and are not a substitute for total compensation. Total Without Change in Pension Value represents total compensation, as determined under applicable SEC rules, minus the change in pension value reported in the Change in Pension Value and Nonqualified Deferred Compensation Earnings column (but including the nonqualified deferred compensation earnings reported in that column, if any). The change in pension value is subject to many external variables, such as interest rates, that are not related to Company performance. Therefore, we do not believe a year-over-year change in pension value is helpful in evaluating compensation for comparative purposes and instead, believe shareowners may find the accumulated pension benefits in the 2013 Pension Benefits table on page 71 a more useful calculation of the pension benefits provided to the Named Executive Officers.
1 Mr. Cahillane left the Company on February 28, 2014. For details on his separation arrangements, including the forfeiture of all unvested stock and option awards granted in 2013, see page 74.
2 Compensation for Mr. Reyes, a Mexico based employee, is delivered in Mexican pesos. In calculating the dollar equivalent for items that are not denominated in U.S. dollars, the Company converts each payment into dollars based on an average exchange rate. For purposes of converting the pension value into dollars, the December accounting rate of exchange is used.

 

2014 Proxy Statement  

63

 

Stock Awards (Column (e))

 

The amount in the Stock Awards column is the grant date fair value of stock awards determined pursuant to FASB Topic 718. All of the stock awards reported in the Stock Awards column are PSUs, except for Mr. Cahillane, who also received a one-time award of 43,172 time-based restricted stock units in 2013 in connection with the freezing of a supplemental executive pension plan that was assumed as part of the CCE Transaction. Mr. Cahillane forfeited this time-based award in connection with his departure from the Company in February 2014.

 

PSUs provide an opportunity for employees to receive Common Stock if a performance measure is met for a three-year performance period. If the minimum performance measure is not met, no award is earned. If at least the minimum performance measure is attained, awards can range from 50% to 150% of the target number of shares. The amounts in the table above reflect the value of the PSUs at the target (or 100%) level. The table below provides the potential value of the PSUs at the threshold, target and maximum levels for each of these awards. The status of each annual PSU program is described on page 57 of the Compensation Discussion and Analysis.

 

   2013-2015 Performance Share Units
Granted 02/21/2013
  2012-2014 Performance Share Units
Granted 02/16/2012
  2011-2013 Performance Share Units
Granted 02/17/2011
Name  Value at
Threshold
Level
(50%)
   Value at
Target (100%)
(Reported in
Column (e)
Above)
   Value
at Maximum
Level (150%)
   Value at
Threshold
Level
(50%)
   Value at
Target (100%)
(Reported in
Column (e)
Above)
   Value at
Maximum
Level (150%)
   Value at
Threshold
Level
(50%)
   Value at
Target (100%)
(Reported in
Column (e)
Above)
   Value at
Maximum Level
(150%)
 
Mr. Kent  $3,199,994   $6,399,988   $9,599,982   $3,119,989   $6,239,977   $9,359,966   $2,800,071   $5,600,141   $8,400,212 
Mr. Fayard   1,125,008    2,250,016    3,375,024    917,605    1,835,210    2,752,815    918,288    1,836,575    2,754,863 
Mr. Bozer   1,099,999    2,199,998    3,299,997    824,989    1,649,978    2,474,967    853,301    1,706,602    2,559,903 
Mr. Cahillane   1,099,999    2,199,998    3,299,997    858,005    1,716,009    2,574,014    853,301    1,706,602    2,559,903 
Mr. Reyes   824,999    1,649,998    2,474,997    824,989    1,649,978    2,474,967    918,288    1,836,575    2,754,863 

 

The assumptions used by the Company in calculating these amounts are incorporated herein by reference to Note 12 to the Company’s consolidated financial statements in the Form 10-K. The PSUs and restricted stock included in column (e) above were granted under the 1989 Restricted Stock Plan, the material provisions of which are described on pages 76 and 82.

 

To see the value actually received upon vesting of stock by the Named Executive Officers in 2013, refer to the 2013 Option Exercises and Stock Vested table on page 71. Additional information on all outstanding stock awards is reflected in the 2013 Outstanding Equity Awards at Fiscal Year-End table beginning on page 69.

 

Option Awards (Column (f))

 

The amounts reported in the Option Awards column represent the grant date fair value of stock option awards granted to each of the Named Executive Officers, calculated in accordance with FASB Topic 718. The amounts reported in 2011 for Mr. Bozer and in 2013 for Mr. Cahillane include a one-time award for having achieved the Company’s share ownership guidelines. The Company’s share ownership guidelines and share retention policy are described beginning on page 60.

 

The assumptions used by the Company in calculating these amounts are incorporated herein by reference to Note 12 to the Company’s consolidated financial statements in the Form 10-K. The options included in column (f) above were awarded under the 2008 Stock Option Plan, the material provisions of which are described on pages 76 and 82.

 

To see the value actually received upon exercise of options by the Named Executive Officers in 2013, refer to the 2013 Option Exercises and Stock Vested table on page 71. Additional information on all outstanding option awards is reflected in the 2013 Outstanding Equity Awards at Fiscal Year-End table beginning on page 69.

 

Non-Equity Incentive Plan Compensation (Column (g))

 

The amounts reported in the Non-Equity Incentive Plan Compensation column reflect the amounts earned by each Named Executive Officer under the Company’s annual Performance Incentive Plan in 2013, 2012 and 2011, as applicable. The Annual Incentive section of the Compensation Discussion and Analysis, which begins on page 53, describes how the 2013 Performance Incentive Plan awards to the Named Executive Officers were determined. The Performance Incentive Plan is also described on pages 75 and 82.

 

Change in Pension Value and Nonqualified Deferred Compensation Earnings (Column (h))

 

The amounts reported in the Change in Pension Value and Nonqualified Deferred Compensation Earnings column for 2013, 2012 and 2011 are comprised entirely of changes between December 31, 2012 and December 31, 2013, between December 31, 2011 and December 31, 2012 and between December 31, 2010 and December 31, 2011, respectively, in the actuarial present value of the accumulated pension benefits of each of the Named Executive Officers under the applicable pension plan, except for the 2012 and 2013 amounts reported for Mr. Reyes as described below.

 

2014 Proxy Statement  

64

 

Pension values may fluctuate significantly from year to year depending on a number of factors, including age, years of service, average annual earnings and the assumptions used to determine the present value, such as the discount rate. The assumptions used by the Company in calculating the change in pension value are described on page 72. For all Named Executive Officers, the change in actuarial present value of accumulated pension benefits for 2013 was significantly less than the change in 2012 primarily due to a higher discount rate assumption for 2013. For Messrs. Bozer and Cahillane, $0 is reported for 2013 because there was a decrease of $56,161 and $57,918, respectively, in the actuarial present value of their pension values for 2013.

 

The Company cautions that the values reported in the Change in Pension Value and Nonqualified Deferred Compensation Earnings column are theoretical as those amounts are calculated pursuant to SEC requirements and are based on assumptions used in preparing the Company’s audited financial statements for the applicable fiscal years. The Company’s retirement plans utilize a different method of calculating actuarial present value for the purpose of determining a lump sum payment, if any. The change in pension value from year to year as reported in the table is subject to market volatility and may not represent the value that a Named Executive Officer will actually accrue or receive under the Company’s retirement plans during any given year.

 

Except for the amount reported in 2012 and 2013 for Mr. Reyes, none of the Named Executive Officers received above-market or preferential earnings (as these terms are defined by the SEC) on their nonqualified deferred compensation accounts. The 2013 amount for Mr. Reyes includes $669,049 in change in pension value and $375 in nonqualified deferred compensation earnings. The 2012 amount for Mr. Reyes includes $3,284,982 in change in pension value and $1,274 in nonqualified deferred compensation earnings. The nonqualified deferred compensation earnings represent the above-market or preferential earnings (as these terms are defined by the SEC) on Mr. Reyes’ balance in The Coca-Cola Export Corporation International Thrift Plan (the “International Thrift Plan”), which was frozen effective December 31, 2011.

 

The material provisions of the Company’s retirement plans and deferred compensation plans in which the Named Executive Officers participate are described beginning on page 80.

 

All Other Compensation (Column (i))

 

The amounts reported in the All Other Compensation column reflect, for each Named Executive Officer, the sum of (i) the incremental cost to the Company of all perquisites and other personal benefits, (ii) the amount of any tax reimbursements, (iii) the amounts contributed by the Company to applicable Company 401(k) and savings plans and (iv) the dollar value of life insurance premiums paid by the Company. Amounts contributed to Company 401(k) and savings plans are calculated on the same basis for all participants in the relevant plan, including the Named Executive Officers. The material provisions of the Company 401(k) and savings plans in which the Named Executive Officers participate are described beginning on page 81.

 

The following table outlines those perquisites and other personal benefits and additional all other compensation required by SEC rules to be separately quantified. A dash indicates that the Named Executive Officer received the perquisite or personal benefit but the amount was not required to be disclosed under SEC rules. The narrative following the table describes all categories of perquisites and other personal benefits provided by the Company in 2013.

 

      Perquisites and Other Personal Benefits  Additional All Other Compensation
Name  Year   Aircraft
Usage
   Car and
Driver
   Security   International
Service
Program
Benefits
   Financial
and Tax
Planning
   Other   Tax
Reimbursement
   Company
Contributions
to Company 401(k)
and Savings Plans
   Life Insurance
Premiums
 
Mr. Kent   2013   239,924   176,013   135,788    N/A   $   $   $27,951   $266,000   $1,692 
    2012    292,676    196,755    144,183    N/A            48,350    264,250    1,682 
    2011    122,917    192,224    132,134    N/A        0    59,078    235,500    1,937 
Mr. Fayard   2013    0    0    0    N/A            3,303    92,690    1,692 
    2012        0    0    N/A            0    90,117    1,682 
    2011        0    0    N/A            2,445    83,468    1,937 
Mr. Bozer   2013            116,030   $76,901            0    68,063    648 
    2012    0    91,135    226,279    434,295            0    61,358    816 
    2011    0    92,493    211,709    387,008    0        6    58,277    918 
Mr. Cahillane   2013    0    0    0    N/A            1,029    73,095    1,497 
    2012    0    0    0    N/A        27,911    804    80,400    2,520 
    2011        0    0    N/A    0    136,685    3,961    88,119    2,280 
Mr. Reyes   2013    0    204,946    115,978    N/A            0    18,131    29,990 
    2012        364,777    125,759    N/A            0    17,719    29,003 
    2011    0    280,165    118,992    N/A            0    20,706    24,279 

 

2014 Proxy Statement  

65

 

Aircraft Usage

 

The Company owns and operates business aircraft to allow employees to safely and efficiently travel for business purposes around the world. Given the Company’s significant global presence, we believe it is a business imperative for senior leaders to be on the ground at our global operations. The Company-owned aircraft allow employees to be far more productive than if commercial flights were utilized, as the aircraft provide a confidential and highly productive environment in which to conduct business without the schedule constraints imposed by commercial airline service.

 

The Company aircraft are made available to the Named Executive Officers for their personal use in the following situations:

 

    Mr. Kent is required by the Board to use the Company aircraft for all travel, both business and personal. This is required for security purposes due to the high profile and global nature of our business and our highly symbolic and well-recognized brands, as well as to ensure that he can be immediately available to respond to business priorities from any location around the world. This arrangement also allows travel time to be used productively for the Company. Mr. Kent and his immediate family traveling with him use the Company aircraft for a reasonable number of personal trips. Personal use of Company aircraft results in imputed taxable income. Mr. Kent is not provided a tax reimbursement for personal use of aircraft.
   
No other Named Executive Officer uses Company aircraft for personal purposes except in extraordinary circumstances. Company aircraft was not used solely for personal purposes by the other Named Executive Officers in 2013.
   
Infrequently, spouses and guests of Named Executive Officers ride along on the Company aircraft when the aircraft is already going to a specific destination for a business purpose. This use has minimal cost to the Company and, where applicable, a nominal amount is included in the All Other Compensation table above. Income is imputed to the Named Executive Officer for income tax purposes, but no tax reimbursement is provided since such persons are not traveling for a business purpose.

 

In determining the incremental cost to the Company of the personal use of Company aircraft, the Company calculates, for each aircraft, the direct variable operating cost on an hourly basis, including all costs that may vary by the hours flown. Items included in calculating this cost are as follows:

 

    aircraft fuel and oil;
   
travel, lodging and other expenses for crew;
   
prorated amount of repairs and maintenance;
   
prorated amount of rental fee on airplane hangar;
   
catering;
   
logistics (landing fees, permits, etc.);
   
telecommunication expenses and other supplies; and
   
the amount, if any, of disallowed tax deductions associated with such use.

 

When the aircraft is already flying to a destination for business purposes, only the direct variable costs associated with the additional passenger (for example, catering) are included in determining the aggregate incremental cost to the Company. While it happens very rarely, if an aircraft flies empty before picking up or after dropping off a passenger flying for personal reasons, this “deadhead” segment would be included in the incremental cost.

 

Car and Driver

 

Mr. Kent is provided with a car and driver in the U.S. both for security purposes and to maximize his efficiency during business hours. When not being utilized by Mr. Kent, the car and driver are used for other Company business. However, the Company has included the entire cost of the car and driver, including all salary, benefits and related employment costs. A car and driver are made available to Messrs. Kent and Bozer in Turkey for security purposes. Mr. Reyes and his spouse are each provided with a specially equipped car and driver for security purposes in Mexico City. No other Named Executive Officer is provided with a car or driver.

 

Security

 

The Company provides a security program for Mr. Kent. This includes monitoring equipment at his homes and Company-paid security personnel. Mr. Bozer, who was based in Turkey prior to 2013, is provided with security at his residence in Turkey. Mr. Reyes, based in Mexico City, is provided with security at his residence as well as monitoring of his and his spouse’s cars. No other Named Executive Officer is provided with Company-paid security, except where necessary when traveling overseas.

 

International Service Program Benefits

 

The Company provides benefits to globally mobile associates under various international service programs, the material provisions of which are described on page 83. These programs are designed to relocate and support employees who are sent on an assignment outside of their home country. The purpose of the programs is to make sure that when the Company requests that an employee move outside his or her home country, economic considerations do not play a role. This helps the Company quickly meet its business needs around the world and develop its employees.

 

Prior to January 1, 2013, Mr. Bozer participated in an international service program because he was a U.S. citizen based in Turkey. Currently, Mr. Bozer is based in the U.S. and therefore no longer participates in this program. However, certain benefits and payments related to his prior assignments and his relocation to the U.S. were paid in 2013 and may be paid in future years.

 

2014 Proxy Statement  

66

 

The costs to the Company were as follows:

 

Name  Year  Relocation   Home Leave   Host Country
Allowance
   Tax Equalization   Other Program
Allowances
 
Mr. Bozer  2013  $26,202   $0   $0   $49,866   $833 
   2012   0    23,484    102,839    283,967    24,005 
   2011   0    23,544    120,539    219,684    23,241 

 

Financial and Tax Planning

 

The Company provides a taxable reimbursement to the Named Executive Officers for financial planning services, which may include tax preparation and estate planning services. No tax reimbursements are provided to the Named Executive Officers for this benefit.

 

Other Perquisites

 

Certain additional limited perquisites are made available to executives, including the Named Executive Officers. The Company makes available executive physicals to all Named Executive Officers. In Mexico, Mr. Reyes is eligible for supplemental medical coverage.

 

For Mr. Cahillane, the amounts reported in 2011 and 2012 are tax equalization payments related to his international service while employed by CCE prior to the CCE Transaction. These payments relate to trailing tax liabilities in the United Kingdom on former CCE equity awards.

 

Additional All Other Compensation

 

Tax Reimbursement

 

The amounts reported in the table on page 65 represent tax reimbursements paid to certain Named Executive Officers. All amounts for 2013 are related to business use of the Company aircraft. No Named Executive Officer is provided a tax reimbursement for personal use of aircraft, but Named Executive Officers are provided a tax reimbursement for taxes incurred when a spouse travels for business purposes. These taxes are incurred because of the Internal Revenue Service’s extremely limited rules concerning business travel by spouses. It is sometimes necessary for spouses to accompany Named Executive Officers to business functions. In contrast to personal use, the Company does not believe an employee should pay personally when travel is required or important for business purposes.

 

To calculate taxable income, the Standard Industry Fare Level rates set by the Internal Revenue Service are used. Where a tax reimbursement is authorized, it is calculated using the highest marginal federal tax rate, applicable state rate and Medicare rates. The rate used to calculate taxable income has no relationship to the incremental cost to the Company associated with the use of the aircraft.

 

Company Contributions to Company 401(k) and Savings Plans

 

The Company makes matching contributions to each Named Executive Officer’s account under the applicable Company 401(k) or savings plan on the same terms and using the same formulas as other participating employees. In 2013, Messrs. Kent, Fayard, Bozer and Cahillane participated in The Coca-Cola Company 401(k) Plan (the “401(k) Plan”) and The Coca-Cola Company Supplemental 401(k) Plan (the “Supplemental 401(k) Plan”). Mr. Reyes participated in the thrift plan component of the Coca-Cola Mexico Pension Plan (the “Mexico Plan”) in 2013.

 

The amounts reported in the table on page 65 represent the following contributions in 2013:

 

    Mr. Kent - $8,925 to the 401(k) Plan and $257,075 to the Supplemental 401(k) Plan;
   
Mr. Fayard - $8,925 to the 401(k) Plan and $83,765 to the Supplemental 401(k) Plan;
   
Mr. Bozer - $8,925 to the 401(k) Plan and $59,138 to the Supplemental 401(k) Plan;
   
Mr. Cahillane - $8,925 to the 401(k) Plan and $64,170 to the Supplemental 401(k) Plan; and
   
Mr. Reyes - $2,412 to a savings fund and $15,719 to the defined contribution component of the Mexico Plan.

 

Life Insurance Premiums

 

The Company provides limited life insurance to U.S. based employees, including the U.S. based Named Executive Officers, and International Service Associates. In 2013, for employees of the Company and non-union employees of CCR, this coverage was equal to the lesser of 1.5 times pay or $2 million. The Company provides life insurance to Mexico based employees equal to 30 months of base salary. The amounts reported in the table on page 65 represent the premiums paid for this insurance by the Company.

 

2014 Proxy Statement  

67

 

2013 Grants of Plan Based Awards

 

      Estimated Future Payouts Under
Non-Equity Incentive Plan Awards
  Estimated Future Payouts
Under Equity Incentive
Plan Awards
  All Other
Stock
Awards:
  All Other
Option
Awards:
  Exercise       
Name
(a)
  Grant Date
(b)
  Threshold
($)
(c)
  Target
($)
(d)
  Maximum
($)
(e)
  Threshold
(#)
(f)
  Target
(#)
(g)
  Maximum
(#)
(h)
  Number
of Shares
or Stock
Units
(#)
(i)
  Number of
Securities
Underlying
Options
(#)
(j)
  or Base
Price of
Option
Awards
($/Sh)
(k)
  Closing
Price on
Grant
Date
  Grant Date
Fair Value
of Stock and
Option
Awards
(l)
 
Muhtar  02/21/2013  $0  $3,200,000  $9,600,000                                
Kent  02/21/2013               97,949   195,898   293,847                 $6,399,988 
   02/21/2013                              1,912,351  $37.61  $37.71   7,113,946 
Gary P.  02/21/2013   0   1,064,345   3,193,035                                
Fayard  02/21/2013               34,436   68,871   103,307                  2,250,016 
   02/21/2013                              672,311   37.61   37.71   2,500,997 
Ahmet C.  02/21/2013   0   1,050,000   3,150,000                                
Bozer  02/21/2013               33,670   67,340   101,010                  2,199,998 
   02/21/2013                              657,371   37.61   37.71   2,445,420 
Steven A.  02/21/2013   0   1,237,500   3,712,500                                
Cahillane  02/21/2013               33,670   67,340   101,010                  2,199,998 
   02/21/2013                              723,108   37.61   37.71   2,689,962 
   02/21/2013                          43,172               1,628,016 
José  02/21/2013   0   842,283   2,526,848                                
Octavio  02/21/2013               25,253   50,505   75,758                  1,649,998 
Reyes  02/21/2013                              493,028   37.61   37.71   1,834,064 

 

Estimated Future Payouts Under Non-Equity Incentive Plan Awards (Annual Incentive) (Columns (c), (d) and (e))

 

The amounts relate to the possible awards under the annual Performance Incentive Plan as described beginning on page 54. See page 54 for details of the cap applicable to the 2013 annual incentive award. Actual payments under these awards were determined in February 2014, will be paid in March 2014 and are included in the Non-Equity Incentive Plan Compensation column (column (g)) of the 2013 Summary Compensation Table.

 

Estimated Future Payouts Under Equity Incentive Plan Awards (PSUs) (Columns (f), (g) and (h))

 

The awards represent PSUs granted in February 2013 under the 1989 Restricted Stock Plan. The performance period for the awards is January 1, 2013 to December 31, 2015. The awards are subject to an additional holding period through February 2017. The grant date fair value is included in the Stock Awards column (column (e)) of the 2013 Summary Compensation Table. For additional details of the PSU awards granted in 2013, see the discussion beginning on page 56.

 

All Other Stock Awards: Number of Shares or Stock Units (Column (i))

 

In February 2013, Mr. Cahillane received a one-time award of 43,172 time-based restricted stock units in connection with the freezing of a supplemental executive pension plan that was assumed as part of the CCE Transaction. Mr. Cahillane forfeited this time-based award in connection with his departure from the Company on February 28, 2014.

 

All Other Option Awards (Stock Options) (Columns (j) and (k))

 

The awards represent stock options granted in February 2013 under the 2008 Stock Option Plan. These options have a term of ten years from the grant date and vest 25% on the first, second, third and fourth anniversaries of the grant date. The exercise price of stock options is the average of the high and low price of the Common Stock on the grant date.

 

2014 Proxy Statement  

68

 

2013 Outstanding Equity Awards at Fiscal Year-End

 

   Option Awards  Stock Awards
Name
(a)
  Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
(b)
   Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(c)
   Option
Exercise Price
($)
(e)
   Option
Expiration
Date
(f)
  Number
of Shares
or Units of
Stock That
Have Not
Vested (#)
(g)
   Market Value
of Shares or
Units of Stock
That Have Not
Vested ($)
(h)*
   Equity Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other Rights
That Have Not
Vested (#)
(i)
   Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Shares, Units or
Other Rights That
Have Not Vested
($)
(j)*
 
Muhtar Kent