Coca-Cola

Remarks of Scott Klinger at Coca-Cola Annual Meeting

Wilmington, Delaware, April 21, 2004

Good Morning. My name is Scott Klinger and I am here to present this shareholder proposal on behalf of shareholder Helen Flannery and other members of Responsible Wealth, who are also Coca-Cola shareholders. Responsible Wealth is a national network of affluent Americans who are concerned about widening economic inequality in America.

This resolution calls upon Coca-Cola to report on the race and gender of those receiving stock options from the Company. We offer this resolution not to criticize Coca-Cola’s diversity efforts, but rather to acknowledge that the company has taken real and important steps to address diversity concerns. This proposal invites Coca-Cola into a position of greater leadership in the arena of corporate diversity.

In discussions with Coke managers, one of the questions we were asked is “who else is reporting the race and gender break-down of stock option grants?”  This is a fair question, but not the question a leader asks. A couple of years ago, Coke stepped forward and became a leader in expensing stock options, something very few other companies were doing at the time. Nearly a hundred other companies followed Coke’s leadership in short order, setting a new corporate standard and earning Coca-Cola significant praise and good will.

We think the same will be true of the first companies that take the lead in extending diversity disclosures to the wealth created by stock options. A decade ago, companies regularly protested the release of EEO-1 diversity data. Arguments of “no one else is doing this” or “why do you need to know” were regularly heard. But slowly a few companies began to release this information and now it is standard operating procedure for large companies with a strong commitment to diversity. Coca-Cola is one of these companies.

EEO-1 data is important for it paints a picture of the changing face of the corporate workforce, including the jobs opened to those groups historically excluded from positions of greater authority and responsibility. While EEO-1 disclosures are important, they are not sufficient.

Stock options are the most valuable player awards given by company. The distribution of stock options maps where real power and responsibility lie within the corporation. We believe it is important for shareholders to see whether the stock option distribution map corresponds with the picture painted by EEO-1 disclosures.

Stock options represent a powerful way of distributing the wealth of the corporation, wealth we believe that is created not simply by executive officers, but by all employees working together to create shareholder value. It is often said, that no one got rich off of a paycheck, and while this is perhaps less true for senior executives of America’s corporations, few would argue with the contention that it is stock options that convey significant wealth.

It has been 35 years since Martin Luther King was assassinated and yet the racial wealth divide in America persists. In 2001 the average net worth of African American families was just $19,000 compared to $121,000 for white families. And in 2003 a black college graduate continues to earn $500,000 less over their lifetime than their white college classmates. What role do corporate compensation policies play in these disparities? Is the stock option wealth imparted by corporations flowing beyond its historical concentration in the hands of white men? These are the diversity questions of the future.

Coca-Cola knows the answer to the question we pose in this resolution. To their credit, they’ve asked the same question internally. But to publicly disclose this answer requires an act of courage and leadership that our company is not yet prepared to make. Please support this resolution and send a message of affirmation and encouragement to Coca-Cola’s board and management.

Thank you.

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