Coca-Cola heeds shareholders' demands for their approval of big exec severance deals

<p>The Coca-Cola Co. has quietly heeded shareholders' demands that the world's largest beverage maker seek their approval before awarding big severance packages to executives who leave.</p><p>The International Brotherhood of Teamsters General Fund had sponsored a shareholder proposal on the issue at the Atlanta-based company's annual meeting in April, but it failed with only 40 percent of votes. No Coke shareholder proposal has ever passed, the company has said.</p><p>Even so, Coke continued to discuss the issue internally, and its board decided in October to adopt the proposal that all future executive severance agreements that amount to more than 2.99 times annual salary plus bonus be approved by shareholders.</p><p>Coke opted not to announce the decision, but did confirm it after the Teamsters released a statement Wednesday.</p><p>"We adopted the policy and just moved on," company spokesman Charles Sutlive said.</p><p>Other companies have adopted similar policies in recent years, including Bank of America Corp. and defense contractor Raytheon Co., Sutlive said.</p><p>"We believe this new policy both responds to and is in the best interests of shareowners," Sutlive said.</p><p>C. Thomas Keegel, general secretary-treasurer of the International Brotherhood of Teamsters, said in a statement that Coke's decision is good for investors.</p><p>"It's time Coke invest in the long-term growth of the company rather than country club dues for outgoing bosses," Keegel said.</p><p>The Teamsters proposal said that Coke's board is rewarding leaders who have failed to meet shareholders' performance expectations. The company's board of directors, which had recommended shareholders reject the proposal at the annual meeting, said at the time that substituting an arbitrary numeric standard for the judgment of an independent compensation committee would not be in the company's best interest.</p><p>The proposal cited hefty compensation packages received by several former executives, including former chief executive Doug Daft and former president and chief operating officer Steve Heyer, who was with the company a little more than 3 1/2 years.</p><p>Heyer left the company in October 2004 with a severance agreement worth at least $9.2 million, according to Coke's proxy. The package also included a potential for another $5.2 million in restricted stock awards, but there is no guarantee he will get that money. For him to do so the company must meet certain performance targets by the end of 2005.</p><p>From 2001-2004, Coke's average annual earnings per share growth was 8.4 percent.</p>