COCA COLA CO filed this DEF 14A on 03/09/17
COCA COLA CO (Form: DEF 14A, Received: 03/09/2017 11:04:47)

UNITED STATES

 

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

SCHEDULE 14A

 

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Exchange Act of 1934 (Amendment No. )

 

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2017 Proxy Statement

Notice of Annual Meeting of Shareowners

 

 

 

Wednesday, April 26, 2017

8:30 a.m., local time
World of Coca-Cola
Atlanta, Georgia

 

TABLE OF CONTENTS

 

LETTER TO SHAREOWNERS FROM OUR BOARD OF DIRECTORS 2
   
Q&A WITH OUR CHAIRMAN AND CEO 4
   
NOTICE OF 2017 ANNUAL MEETING OF SHAREOWNERS 6
   
PROXY SUMMARY 7
Roadmap of Voting Matters 7
Governance Highlights 7
Director Nominees 8
2016 Performance at a Glance 9
Key Linkages between Pay and Performance 10
Compensation Program Enhancements 10
2016 Compensation 11
Questions and Answers 11
Learn More About Our Company 11
   
PROXY STATEMENT 12
   
GOVERNANCE 13
Message from Sam Nunn, Lead Independent Director 13
Item 1 - Election of Directors 14
Board and Committee Governance 25
Additional Governance Matters 31
Director Compensation 33
Director Independence and Related Person Transactions 36
   
SHARE OWNERSHIP 40
Ownership of Equity Securities of the Company 40
Section 16(a) Beneficial Ownership Reporting Compliance 42
   
COMPENSATION 43
Item 2 - Advisory Vote to Approve Executive Compensation 44
Compensation Discussion and Analysis 44
Message from the Compensation Committee 44
Compensation Program Enhancements 44
2016 Performance at a Glance 45
Our Compensation Philosophy 46
Key Linkages between Pay and Company Performance 46
2016 Compensation Decisions for Named Executive Officers 47
Checklist of Compensation Practices 50
Elements of Compensation and Link to Strategy 51
How We Make Compensation Decisions 56
Additional Compensation Information 58
Report of the Compensation Committee 60
Compensation Committee Interlocks and Insider Participation 60
Compensation Tables 61
Payments on Termination or Change in Control 69
Equity Compensation Plan Information 74
Item 3 - Advisory Vote on the Frequency of Holding the Advisory Vote to Approve Executive Compensation 76
   
AUDIT MATTERS 77
Report of the Audit Committee 77
Item 4 - Ratification of the Appointment of Ernst & Young LLP as Independent Auditors 79
   
SHAREOWNER PROPOSAL 81
Item 5 - Shareowner Proposal Regarding a Human Rights Review 81
   
ANNEXES 83
Annex A - Questions and Answers  83
Proxy Materials and Voting Information 83
Meeting Information 87
Company Documents, Communications, Shareowner Proposals and Director Nominees 89
Annex B - Summary of Plans  91
Annex C - Reconciliation of GAAP and Non-GAAP Financial Measures 94
   
  2017 Proxy Statement         

1

 

LETTER TO SHAREOWNERS
FROM OUR BOARD OF DIRECTORS

 

 

As Directors, we remain accountable to shareowners through a variety of ever-improving governance practices that are informed by our ongoing engagement with shareowners.

 

Dear Fellow Shareowner:

 

Thank you for your investment in The Coca-Cola Company and for trusting us to oversee your interests in this business. Your Board understands that it is elected by you, the shareowners, to oversee the long-term health and overall success of our Company. As Directors, we remain accountable to shareowners through a variety of ever-improving governance practices that are informed by our ongoing engagement with shareowners. Please see Governance, including the message from our Lead Independent Director Sam Nunn, beginning on page 13 .

 

Chief Executive Officer Succession

 

One of your Board’s most important responsibilities is to ensure an orderly and stable CEO succession process. To that end, in December 2016, we unanimously approved a new leadership structure for the Company under which Company veteran James Quincey, currently President and Chief Operating Officer, will succeed Muhtar Kent as CEO, effective May 1, 2017. In addition, the Board has nominated James to stand for election as a Director at the 2017 Annual

 

  2017 Proxy Statement         

2

 

Meeting of Shareowners. Muhtar will continue to serve as CEO until May 1, 2017, and then will continue as Chairman of the Board.

 

This CEO succession plan reinforces our belief in the strength of the Company’s leadership team and underscores our confidence in James as the Company’s next long-term leader. Importantly, this transition maintains the successful partnership between Muhtar and James into 2017. We are fortunate to have two executives with the talent and experience of Muhtar and James to lead your Board and Company, respectively.

 

This transition comes at an important time, as we are overseeing the Company’s strategy to refocus on our core business model of building strong global brands, enhancing sustainable customer value and leading a strong, dedicated franchise system. This transformation is well under way, and we, along with management, are optimistic about the future of the business.

 

Board Composition

 

Just as effective management succession is essential to the Company’s success, we view Board succession planning in the same way. We continually focus on ensuring that the Board is composed of high-integrity, highly capable Directors to represent the long-term interests of shareowners. Refreshing our Board with new perspectives and new ideas is critical to a forward-looking and strategic Board. Ensuring diverse perspectives, including a mix of skills, experience and backgrounds, and healthy turnover are also key to representing the interests of shareowners effectively. Since 2009, eight new Directors have been elected and we have one new Director nominee for 2017; we have had a full rotation of Board committee chairs; we elected a new Lead Independent Director; and we expanded diversity representation on the Board. These benchmarks are just a snapshot in time, but we believe they signal our commitment to Board refreshment.

 

Shareowner Engagement

 

As always, a priority for this Board is listening to the views of our shareowners and considering these views as we make decisions in the boardroom. We accomplish this through robust outreach and engagement with you, the owners of this Company. Partnering with management, we engage with shareowners throughout the year on a variety of topics.

 

Please continue to share your thoughts or concerns at any time. We have established a process to facilitate communication by shareowners with the Board. Please see Communicate with the Board on page 33 .

 

As always, thank you for the trust that you have placed in us.

 

March 9, 2017

 

Muhtar Herbert A. Ronald W. Marc Ana Howard G. Richard M.
Kent Allen Allen Bolland Botín Buffett Daley
             
Barry Helene D. Alexis M. Robert A. Maria Elena Sam David B.
Diller Gayle Herman Kotick Lagomasino Nunn Weinberg

 

Note: Howard G. Buffett (pictured) is not standing for election at the 2017 Annual Meeting. James Quincey (not pictured) has been nominated for election as a Director at the 2017 Annual Meeting.

 

  2017 Proxy Statement         

3

 

Q&A WITH OUR CHAIRMAN AND CEO

 

 

Throughout the year, we engage with shareowners on a variety of topics. Here are answers to a few commonly raised questions.

 

 

 

Muhtar Kent

 

Chairman of the Board and Chief Executive Officer
The Coca-Cola Company


 

Could you talk about The Coca-Cola Company’s performance in 2016?

 

In 2016, we continued our journey to transform our Company to a brand-centric organization leading a great franchise system. We began in late 2014, when we got behind a set of strategic actions designed to invigorate growth and increase profitability. Since then, we’ve been advancing on a path to deliver greater long-term sustainable value to our shareowners, associates, partners and stakeholders.

 

2016 was a critical year, as we continued to make strong progress in transforming our Company, while keeping focused on consumers. We continued to gain momentum in building sustainable revenue growth through segmented market roles and disciplined brand investments. We strengthened our brands and portfolio through better and more marketing, innovation and targeted acquisitions. We brought to market more than 500 new products, nearly 400 of which were teas, juices, coffees, waters or other still beverages. And we generated over $600 million in productivity.

 

In addition to delivering our profit target for the full year, I am encouraged by the strategic actions taken during 2016 to strengthen our global bottling system. In the fourth quarter of 2016, we reached a definitive agreement to refranchise all Company-owned bottling operations in China, and we took important steps to further the evolution of Coca-Cola Beverages Africa. During the year, we successfully completed the creation of Coca-Cola European Partners, and we supported the ongoing transformation of the franchise bottling system in Japan. And last, we remain on track to complete the refranchising of Company-owned bottling operations in the U.S. by the end of 2017. In total, half of our global system revenue has been in motion through our recent actions to strengthen the system. The progress demonstrated by these actions is foundational in positioning our system for prosperity long into the future.

 

While we accomplished a lot in 2016, we know we have more work to do. In the year ahead, we will be focused on building and expanding our portfolio of consumer-centric drinks, including those with less sugar and calories, further evolving our approach to growing revenues from our global sparkling soft drink portfolio, and driving productivity through the organization to reduce complexity and redirect resources to drive revenue growth in a world with fast-changing consumer patterns.

 

James Quincey will be your successor as CEO effective May 1, 2017. Can you talk about this leadership change?

 

One of the most meaningful legacies I can leave is a solid foundation for James, my successor as CEO, to take this business successfully into the next decade and beyond.

 

I have worked closely with James during the past ten years of his 20 year career at the Company. He has vast industry knowledge, expertise with the Company’s brands, values and global bottling system and an acute understanding of evolving consumer tastes. James has the strategic vision and inspirational leadership to usher in the next phase of growth for the Company’s great business.

 

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James is also passionate about developing people, building strong teams and creating winning cultures everywhere he has been. I am confident he is the ideal person to effectively lead our Company.

 

As CEO, James will assume accountability for the Company’s strategic direction and operations, from setting the long-term strategy, to leading our bottling system, to making portfolio and organizational decisions, to driving long-term sustainable growth. After May 1 st , I will continue to lead the Board of Directors and do everything possible to create an environment that allows James to successfully run this business and deliver long-term value for our shareowners.

 

Why has the Board decided to separate the roles of Chairman and Chief Executive Officer and will this separation of the roles be permanent?

 

I recommended, and the Board agreed, that continuing the partnership between James and myself, with an adjusted focus for each of us, would enable us both to apply our strongest skills to continuing the sustained growth of our business. To put it simply, I will lead the Board and focus on Board governance, and James will run the business.

 

As described in our Corporate Governance Guidelines, the Board has flexibility to decide whether to have the same person occupy the offices of the Chairman of the Board and CEO. This structure allows the Board to exercise its business judgment after considering relevant factors, including the specific needs of the business and what is in the best interests of the Company’s shareowners.

 

We will continue to evaluate the Board leadership structure. At least one executive session of the non-management Directors each year will include a review of the Board’s leadership structure and consideration of whether the position of the Chairman of the Board should be held by the CEO or be separated.

 

The Company and the industry continue to face some significant challenges. How do you think about these challenges and what strategies are in place to handle them?

 

The changing consumer landscape will continue to be a key priority as well as portfolio mix and performance. We are addressing evolving consumer preferences by expanding product offerings, introducing smaller package sizes, and most recently, working to reduce added sugar in our products, with over 500 initiatives in progress.

 

I will add that this leadership transition comes at a time of important evolution for our Company. Our journey to refocus on the Company’s core business model of building strong global brands, enhancing sustainable customer value and leading a strong, dedicated franchise system is well under way.

 

James has been a major component of this evolution and is committed to continuing to build the long-term sustainability of the Company and the bottling system, from the health of our operations, to the health of our bottling partners, to the health of the communities we serve.

 

You have commented recently about the importance of gender diversity in the workplace and on boards of directors. Why do you believe diversity is valuable?

 

I am convinced that we must do everything possible to promote gender equality. It is simply good for business and for economic and social progress around the world. As a business leader, I know our Company can’t reach its full potential unless we recruit, hire, develop and retain women associates as part of a diverse, multicultural workforce.

 

And I don’t think we need academic studies to see why. You just need the simple logic that would tell you any organization is setting itself up for failure if it isn’t welcoming the experience and expertise of half the world’s people. That is why, at The Coca-Cola Company, we’ve been on a journey to attract and retain more women employees and leaders and more women on our Board of Directors.

 

We’ve made progress in recent years, but we are not satisfied. Women have gained significant ground, but we still have a long way to go to achieve true gender equality. We know we can do more, and we are working on multiple fronts to do so.

 

What are your current sustainability focus areas, and how are we progressing toward our sustainability initiatives?

 

While sustainability is an integrated component of our business strategy, over the past few years we have stepped up the Company’s progress on many social and environmental issues. One example is the 5by20 initiative to support the economic empowerment of five million women entrepreneurs globally by 2020.

 

We remain focused on water stewardship and replenishment. For example, last year we announced that, together with our bottling partners, we met our goal to replenish at least 100% of the equivalent amount of water we use in our finished beverage sales volume five years earlier than our initial target. While we are pleased with our progress, we know our water stewardship work is unfinished and remain focused on exploring additional steps to advance our water programs and performance.

 

We also continue to create partnerships across the “golden triangle” of business, government and civil society in order to successfully address issues and leverage opportunities in communities where we operate.

 

In all we do, our business tries to take the approach of staying “constructively discontent.” We’re always encouraging our partners, our colleagues and ourselves to achieve more, work more holistically and be more efficient. We look forward to continuing to share progress on our sustainability journey. You can learn more about our sustainability efforts at www.coca-colacompany.com/sustainability .

 

  2017 Proxy Statement         

5

 

NOTICE OF 2017

ANNUAL MEETING OF SHAREOWNERS

 

When: Wednesday, April 26, 2017, 8:30 a.m., local time

Where: World of Coca-Cola, 121 Baker Street NW, Atlanta, Georgia 30313

 

We are pleased to invite you to join our Board of Directors and senior leadership at The Coca-Cola Company’s 2017 Annual Meeting of Shareowners.

 

Items of Business:

 

1. To elect the 14 Director nominees identified in the accompanying proxy statement to serve until the 2018 Annual Meeting of Shareowners. (Item 1)
   
2. To hold an advisory vote to approve executive compensation. (Item 2)
   
3. To hold an advisory vote on the frequency of future advisory votes to approve executive compensation. (Item 3)
   
4. To ratify the appointment of Ernst & Young LLP as Independent Auditors of the Company to serve for the 2017 fiscal year. (Item 4)
   
5. To vote on a shareowner proposal regarding a human rights review, if properly presented at the meeting. (Item 5)
   
6. To transact such other business as may properly come before the meeting and at any adjournments or postponements of the meeting.

 

Record Date:

 

The Board of Directors set February 27, 2017 as the record date for the meeting. This means that our shareowners 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. On the record date, there were 4,292,014,609 shares of common stock of The Coca-Cola Company (the “Company”) issued and outstanding and entitled to vote at the meeting.

 

Important Meeting Information:

 

If you plan to attend the Annual Meeting in person, you must register in advance. See question 21 on page 87 for information about the location, format and how to register to attend the meeting.

 

We will provide free admission to World of Coca-Cola to Annual Meeting attendees and other shareowners on April 26, 2017 (after the conclusion of the Annual Meeting). See question 26 on page 89 for how to gain admission.

 

Audiocast of the 2017 Annual Meeting:

 

If you are unable to attend the meeting in person, you can listen to a live audiocast of the meeting by visiting the 2017 Annual Meeting page of the Company’s website, at www.coca-colacompany.com/investors/annual-meeting-of-shareowners . On the website, you can also vote through the Internet, access the proxy materials, submit questions in advance and learn more about our Company.

 

March 9, 2017

 

By Order of the Board of Directors

Jennifer D. Manning

Associate General Counsel and Secretary

Voting 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 2017 Annual Meeting of Shareowners and follow the instructions below to cast your vote on all of the voting matters.

 

How to Vote: Please vote using one of the following advance voting methods. Make sure to have your proxy card or voting instruction form (VIF) in hand and follow the instructions.

 

SHAREOWNERS OF RECORD BENEFICIAL OWNERS
(shares registered on the books of (shares held through your
the Company via Computershare) bank or brokerage account)
   
   
Via the Internet Via the Internet
Visit Visit
www.envisionreports.com/coca-cola www.proxyvote.com
   
   
Scan this QR code Scan this QR code
to vote with your mobile device to vote with your mobile device
   
   
By phone By phone
Call 1-800-652-VOTE Call 1-800-454-8683
or the telephone number or the telephone number
on your proxy card on your voting instruction form
   
   
By mail By mail
Sign, date and return Sign, date and return
your proxy card your voting instruction form

 

All shareowners of record may vote in person at the meeting. Beneficial owners may vote in person at the meeting if they have a legal proxy, as described in the response to question 8 on page 85 .

 


 

       
       
  Electronic Shareowner Document Delivery    
         
  Instead of receiving future proxy materials 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, over 375,000 trees have been planted on behalf of Company shareowners.  
         

 

  2017 Proxy Statement         

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PROXY SUMMARY

 

This summary highlights information contained in the 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 2016 performance, please review the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

 

ROADMAP OF VOTING MATTERS

 

Shareowners are being asked to vote on the following matters at the 2017 Annual Meeting of Shareowners:

 

      Our Board’s Recommendation
ITEM 1. Election of Directors ( page 14 )    
The Board and the Committee on Directors and Corporate Governance believe that the 14 Director nominees possess the necessary qualifications and experiences to provide quality advice and counsel to the Company’s management and effectively oversee the business and the long-term interests of shareowners.   FOR each
Director Nominee
ITEM 2. Advisory Vote to Approve Executive Compensation ( page 43 )    
The Company seeks a non-binding advisory vote to approve the compensation of its Named Executive Officers as described in the Compensation Discussion and Analysis beginning on page 44 and the Compensation Tables beginning on page 61 . 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. Advisory Vote on the Frequency of Holding the Advisory Vote to Approve Executive Compensation ( page 76 )    
Shareowners are being provided the opportunity to vote on how often they believe we should hold an advisory vote to approve executive compensation in the future. The frequency options are to hold the advisory vote to approve executive compensation each year, every two years or every three years. The Board believes that an annual advisory vote on executive compensation is the most appropriate policy for our shareowners and the Company at this time.   FOR One Year
ITEM 4. Ratification of the Appointment of Ernst & Young LLP as Independent Auditors ( page 79 )    
The Audit Committee and the Board believe that the retention of Ernst & Young LLP to serve as the Independent Auditors for the fiscal year ending December 31, 2017 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 a Human Rights Review, if properly presented ( page 81 )    
Shareowners can be assured that this Company is committed to respecting human rights and that we apply that commitment consistently around the world. The Board recommends a vote AGAINST this proposal because the review being requested is unnecessary.   AGAINST

 

GOVERNANCE HIGHLIGHTS

 

We are 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 Governance section beginning on page 13 describes our governance framework, which includes the following highlights:

 

 

GOVERNANCE HIGHLIGHTS
     
Board Practices   Shareowner Matters
  11 of 14 Director nominees independent     Long-standing active shareowner engagement
  Commitment to Board refreshment     Annual “say on pay” advisory vote
  Regular Board, committee and Director evaluations     Adopted a proxy access right
  Robust Director nominee selection process     Shareowner right to call special meeting
  Annual election of Directors with majority voting standard    
  Lead Independent Director, elected by the independent Directors   Other Best Practices

  Independent Audit, Compensation and Directors/Governance Committees

  Regular executive sessions of independent Directors

  Strategy and risk oversight by full Board and committees

    Long-standing commitment toward sustainability
  Transparent public policy engagement
  Stock ownership guidelines for executives
  Anti-hedging, anti-short sale and anti-pledging policies


 

 

  2017 Proxy Statement         

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DIRECTOR NOMINEES

 

Snapshot of 2017 Director Nominees
                 
All Director nominees exhibit:
                 
    High integrity     A commitment to sustainability and social issues     A proven record of success
                 
  An appreciation of multiple cultures   Innovative thinking   Knowledge of corporate governance requirements and practices
                 
Our Director nominees exhibit an effective mix of skills, experience, diversity and fresh perspective
 

 

        Director        Committee Memberships 1   Other  
Name   Age   Since   Primary Occupation   A   C   DCG   E   F   MD   PIDR   Boards 2  
Herbert A. Allen   77   1982   President, Chief Executive Officer and Director, Allen & Company Incorporated                             0  
Ronald W. Allen*   75   1991   Former Chairman of the Board, President and Chief Executive Officer, Aaron’s Inc.                               2  
Marc Bolland*   57   2015   Head of European Portfolio Operations, Blackstone Group L.P.                               2  
Ana Botín*   56   2013   Executive Chair, Banco Santander, S.A.                               2  
Richard M. Daley*   74   2011   Executive Chairman, Tur Partners LLC; Of Counsel, Katten Muchin Rosenman LLP                               0  
Barry Diller*   75   2002   Chairman of the Board and Senior Executive, IAC/InterActiveCorp and Expedia, Inc.                               2  
Helene D. Gayle*   61   2013   Chief Executive Officer, McKinsey Social Initiative                               1  
Alexis M. Herman*   69   2007   Chair and Chief Executive Officer, New Ventures LLC                               3  
Muhtar Kent 3   64   2008   Chairman of the Board and Chief Executive Officer, The Coca-Cola Company                               1  
Robert A. Kotick*   54   2012   President, Chief Executive Officer and Director, Activision Blizzard, Inc.                               1  
Maria Elena Lagomasino*   67   2008   Chief Executive Officer and Managing Partner, WE Family Offices                           1  
Sam Nunn*   78   1997   Co-Chairman and Chief Executive Officer, Nuclear Threat Initiative                           0  
James Quincey 3   52     President and Chief Operating Officer, The Coca-Cola Company                               0  
David B. Weinberg*   65   2015   Chairman and Chief Executive Officer, Judd Enterprises, Inc.                               0  

 

* Independent Director   Chair   Member
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 Other public company boards.
3 Effective May 1, 2017, James Quincey, will succeed Muhtar Kent as CEO of the Company. In addition, the Board has nominated Mr. Quincey to stand for election as a Director at the 2017 Annual Meeting. Mr. Kent will serve as CEO until May 1, 2017, and then will continue as Chairman of the Board.


 

  2017 Proxy Statement         

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2016 PERFORMANCE AT A GLANCE

 

We Are Transforming Our Company

 

In 2016, we continued to focus and make progress on our five strategic initiatives: drive revenue growth through segmented market roles, make disciplined brand and growth investments, drive efficiency through aggressive productivity, streamline and simplify, and focus on our core business model.

 

2016 Achievements

Expanded our operating margin through 3% price/mix growth and balancing productivity with disciplined investments

 

Continued momentum in developed markets, led by North America which grew net operating revenues by 4%

 

Remained committed and consumer-focused in developing and emerging markets amidst persistent macroeconomic pressures

 

Introduced 500+ new products into the market worldwide, including the successful launch of smartwater and Honest Tea in Western Europe

 

Continued to expand our growing portfolio through strategic investments, including fairlife milk in the U.S. and Chi, Nigeria’s leading value-added dairy and juice company

 

Advanced our strategy to grow revenues in our sparkling portfolio, through actions including the Coca-Cola “one-brand” strategy and an integrated marketing campaign

 

Delivered over $600 million in productivity, which drove operating margin expansion

 

Strengthened our global bottling system for the long term with strategic actions taken in North America, Latin America, Europe, Africa and Asia

 

On track to complete refranchising of our Company-owned bottling operations in the U.S. by the end of 2017    

 

 

Operating Results

 

VALUE SHARE       REVENUE (5)%
Reported Net Operating Revenues
+3%
Organic Revenues (Non-GAAP)
UNIT CASE VOLUME +1%     PROFIT (15)%
Reported Income Before Income Taxes
+8%
Comparable Currency Neutral Income Before Income Taxes (Structurally Adjusted) (Non-GAAP)

 

Note: Organic revenues is a non-GAAP financial measure that excludes or has otherwise been adjusted for the impact of acquisitions, divestitures and structural items, as applicable, as well as the impact of changes in foreign currency exchange rates. Comparable currency neutral income before income taxes (structurally adjusted) is a non-GAAP financial measure that excludes or has otherwise been adjusted for items impacting comparability, the impact of changes in foreign currency exchange rates, and the impact of structural changes. See Annex C for a reconciliation of non-GAAP financial measures to our results as reported under accounting principles generally accepted in the U.S. (“GAAP”).

 

Return to Shareowners

 

 

1 Cumulative stock price appreciation plus dividends, with dividends reinvested quarterly.
2 Total does not add due to rounding. Net share repurchases do not include approximately $1.4 billion related to proceeds from employee stock activity. See Annex C.
3 Source: Standard & Poor’s Research Insight. This chart shows how a $100 investment in the Company’s Common Stock on December 31, 2011 would have grown to $137 on December 31, 2016, 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 2016 compensation comparator group (see page 57 ) over the same period, with dividends reinvested quarterly. Includes the Company’s 2016 compensation comparator group 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.

 

  2017 Proxy Statement         

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KEY LINKAGES BETWEEN PAY AND PERFORMANCE

 

In the context of our compensation programs, we view Company performance in two primary ways:

 

1. the Company’s operating performance, including results against long-term growth targets; and

 

2. return to shareowners over time, both on an absolute basis and relative to other companies.

 

In addition to Company performance, we take into account individual performance when making compensation decisions.

 

Our compensation plans are designed to link pay and performance. As reflected above, 2016 was a critical year for the Company as we continued to make strong progress in transforming our Company while keeping focused on our consumers. Despite ongoing volatile global economic conditions, the Company delivered its profit target for the full year and took strategic actions to strengthen its global bottling system.

 

When evaluating pay reported in the 2016 Summary Compensation Table against Company performance, it is important to consider the timing of compensation decisions and which performance period informs each of the annual and long-term incentive awards. For instance:

 

long-term incentive awards reported for 2016 were granted in February 2016 and reflect Company and individual performance in 2015, among other factors (see page 53 ); and
   
annual incentive awards reported for 2016 were decided in February 2017 and reflect Company and individual performance in 2016 (see page 52 ).

 

The following highlights linkages between pay and Company performance over the last three years.

 

PAY AND PERFORMANCE AT A GLANCE

 

CEO Pay Decreased   Annual Incentives Driven by
from 2014   Company Performance

Reported Pay*

(in millions)

  Company Performance Factor*
 
*     Reported pay in the 2016 Summary Compensation Table on page 61 , excluding change in pension value and nonqualified deferred compensation earnings.   *   Does not include individual performance amounts (see page 52 ).

 

Performance Share Unit (PSU) Payouts   Stock Options
Linked to Key Metrics Over a   Linked Directly to Stock Price
Three-Year Performance Period   Intrinsic Value* of Last Three Annual Stock Option Grants:
Last Three PSU Performance Periods* Certified:     2016 = $0
  2 Below Threshold     2015 = $0
  1 Above Target     2014 = $4.26
*     2012-2014, 2013-2015 and 2014-2016 PSUs. See page 55 for metrics, targets and status of outstanding annual PSU programs.   *    Per option, based on the 2016 year-end closing price of $41.46.

 

COMPENSATION PROGRAM ENHANCEMENTS

 

Over the last several years, we have made several key enhancements to our compensation programs to continue to improve the link between compensation and the Company’s business and talent strategies as well as the long-term interests of our shareowners. We:

 

 

  2017 Proxy Statement         

10

 

 

2016 COMPENSATION

 

Set forth below is the 2016 compensation for each Named Executive Officer as determined under Securities and Exchange Commission (“SEC”) rules. See the 2016 Summary Compensation Table and the accompanying notes to the table beginning on page 61 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.

 

Name
and Principal Position
  Salary
($)
    Stock
Awards
($)
    Option
Awards
($)
    Non-Equity
Incentive Plan
Compensation
($)
    Change
in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings 1
($)
    All Other
Compensation
($)
    Total
($)
  Total Without
Change in
Pension
Value 2
($)
Muhtar Kent                                                            
Chairman of the Board and Chief Executive Officer   $ 1,600,000     $ 7,552,779     $ 1,983,748     $ 4,100,000     $ 1,523,003     $ 792,414     $ 17,551,944   $ 16,028,941
Kathy N. Waller                                                            
Executive Vice President and Chief Financial Officer     749,365       2,794,510       733,987       1,056,805       1,601,929       82,826       7,019,422     5,417,493
James Quincey                                                            
President and Chief Operating Officer     923,625       4,229,542       1,110,901       2,021,355       321,839       96,448       8,703,710     8,381,871
Marcos de Quinto                                                            
Executive Vice President and Chief Marketing Officer     778,379       3,143,858       825,735       1,156,530       459,734       1,270,819       7,635,055     7,175,321
Irial Finan                                                            
Executive Vice President and President, Bottling Investments and Supply Chain     908,108       3,146,995       826,561       1,358,432       368,701       170,489       6,779,286     6,410,585
1 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. For 2016, the discount rate assumption used to determine the actuarial present value of accumulated pension benefits, as required by SEC rules, was lower than in 2015. For Mr. Kent, this lower discount rate assumption was the primary reason for the increase in pension value.
2 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).

 

QUESTIONS AND ANSWERS

 

Please see Questions and Answers in Annex A beginning on page 83 for important information about the proxy materials, voting, the 2017 Annual Meeting, Company documents, communications and the deadlines to submit shareowner proposals and Director nominees for the 2018 Annual Meeting of Shareowners. Additional questions may be directed to Shareowner Services at (404) 676-2777 or shareownerservices@coca-cola.com .

 

LEARN MORE ABOUT OUR COMPANY

 

You can learn more about the Company by visiting our website, www.coca-colacompany.com . Please also visit our 2017 Annual Meeting website, www.coca-colacompany.com/investors/annual-meeting-of-shareowners , to easily access the Company’s interactive proxy materials, vote through the Internet, submit questions in advance of the 2017 Annual Meeting of Shareowners, register to attend the 2017 Annual Meeting, access the live audiocast of the meeting and learn more about free admission to World of Coca-Cola on April 26, 2017.

 

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11

 

 

 

ONE COCA-COLA PLAZA

ATLANTA, GEORGIA 30313

 

MARCH 9, 2017

 

PROXY STATEMENT

 

The Board of Directors (the “Board”) of The Coca-Cola Company (the “Company”) is furnishing you this Proxy Statement to solicit proxies on its behalf to be voted at the 2017 Annual Meeting of Shareowners of The Coca-Cola Company. The meeting will be held at World of Coca-Cola, 121 Baker Street NW, Atlanta, Georgia 30313 on April 26, 2017, at 8:30 a.m., local time. The proxies also may be voted at any adjournments or postponements of the meeting.

 

The mailing address of our principal executive offices is The Coca-Cola Company, P.O. Box 1734, Atlanta, Georgia 30301. We are first furnishing the proxy materials to shareowners on March 9, 2017.

 

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 27, 2017, 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 by such shareowner. On February 27, 2017, there were 4,292,014,609 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 26, 2017.

 

The Notice of Annual Meeting, Proxy Statement and Annual Report on Form 10-K for the year ended December 31, 2016 are available at www.edocumentview.com/coca-cola.

 

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GOVERNANCE

 

Message from Sam Nunn, Lead Independent Director

 

As outlined in the Board letter beginning on page 2 , your Board is overseeing a CEO leadership transition for the Company. This work is perhaps the most important responsibility the Board has to our shareowners, and I assure you that we are committed to seeing an orderly and seamless management succession.

We have been fortunate to have Muhtar Kent as our CEO for the past eight years. He has shown visionary leadership with a clear focus on the long-term health of this business. In this regard, he has refocused the Company on its core business model of building strong global brands, enhancing sustainable customer value and leading a strong, dedicated franchise system. Along the way, Muhtar continued to deliver increased value to you, the shareowners, through continued annual increases in dividends and growth in the Company’s share price.

I appreciate the trust you
place in me as your Lead
Independent Director.

 

 

On May 1, the new leadership structure will become effective. James Quincey w ill succeed Muhtar as our CEO, Muhtar will continue as the Chairman of the Board, and I will continue to serve as your Lead Independent Director. In addition, James has been nominated for election as a Director at the 2017 Annual Meeting. See Board Leadership Structure beginning on page 26 .

 

As we make decisions about the Board’s leadership structure, we do so within a governance framework that provides the Board flexibility to select the best structure based on the specific needs of the business at the time and what we believe is in the best interests of shareowners.

 

I join with all of my fellow Board members in a shared commitment to strong independent Board leadership and a commitment to good corporate governance practices. To that end, at least one executive session of the non-employee Directors each year will continue to include a review of the Board’s leadership structure and whether the position of Chairman of the Board should be held by the Chief Executive Officer or separated.

 

A continuing focus of mine as Lead Independent Director is ensuring the Directors have practical, hands-on experiences to help deepen our understanding of the business and also of the key leaders who run the business. The Company has continued to facilitate market visits for the Directors as a way for us to see how the strategy that we discuss in the boardroom comes to life in the field. In the last two years, Directors have visited Argentina, Bolivia, Brazil, Chile, China, France, Italy, Japan, Mexico, Panama, Russia, South Africa, Spain, the UK, as well as operations in the U.S.

 

We also believe that, as Directors, we should help move this business forward in ways that we may be uniquely able to do. This year, we implemented innovation awards that come directly from the Board and recognize each year Company associates who lead innovation initiatives throughout the year. I will note that the idea for this award originated from feedback provided during our Board self-evaluation process.

 

Finally, as I reported to you last year, we continue to conduct a robust Board evaluation process. This is a point of interest among many of our investors who have said that a robust evaluation process is an essential component of Board effectiveness. We agree.

 

The Committee on Directors and Corporate Governance oversees our annual multi-step evaluation process, which provides Directors an opportunity to assess the Board and Board committees and conduct a self-assessment. We remain committed to incorporating evaluation best practices and enhancing our disclosure to demonstrate how the process works. See page 15 for a description of our current evaluation process. We look forward to continued engagement with shareowners on this important topic.

 

I appreciate the trust you place in me as your Lead Independent Director. I commit to you that your Board will continue to promote the long-term interests of shareowners and remains accountable to you through a variety of good governance practices, which are evolving based on shareowner input. I encourage you to review the following Governance section to learn more.

 

 

 

Sam Nunn

 

  2017 Proxy Statement         

13

 

ITEM 1 - ELECTION OF DIRECTORS

 

   
   
  What am I voting on?
   
Shareowners are being asked to elect 14 Director nominees for a one-year term.
   
Voting recommendation:
   
FOR the election of each Director nominee. The Board and the Committee on Directors and Corporate Governance believe the 14 Director nominees possess the necessary qualifications and experiences to provide quality advice and counsel to the Company’s management and effectively oversee the business and the long-term interests of shareowners.

 

 

Board Composition and Refreshment

 

Ensuring the Board is composed of Directors who bring diverse viewpoints and perspectives, exhibit a variety of skills, professional experience and backgrounds, and effectively represent the long-term interests of shareowners, is a top priority of the Board and the Committee on Directors and Corporate Governance. The Board and the Committee on Directors and Corporate Governance believe that new perspectives and ideas are critical to a forward-looking and strategic Board as is the ability to benefit from the valuable experience and familiarity that longer-serving Directors bring.

 

When recommending to the Board the slate of Director nominees for election at the Annual Meeting of Shareowners, the Committee on Directors and Corporate Governance strives to maintain an appropriate balance of tenure, turnover, diversity and skills on the Board. The committee focuses on this through an ongoing, year-round process, which includes the annual Board evaluation process described below.

 

  Board Refreshment  
   
  Under Muhtar Kent’s leadership of the Board since 2009
     
  Eight new Directors elected through 2016
     
  One new Director nominee for the 2017 Annual Meeting
     
  Full rotation of Board committee chairs
     
  New Lead Independent Director elected
     
  Expanded qualifications and diversity represented on the Board
     

 

Board Membership Criteria

 

The Board and the Committee on Directors and Corporate Governance believe there are general qualifications that all Directors must exhibit and other key qualifications and experience that should be represented on the Board as a whole, but not necessarily by each Director.

 

Qualifications Required of All Directors

 

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 and have the ability to devote the time and effort necessary to fulfill his or her responsibilities to the Company. 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. When recommending Director nominees for election by shareowners, the Board and the Committee on Directors and Corporate Governance focus on how the experience and skill set of each Director nominee complements those of fellow Director nominees to create a balanced Board with diverse viewpoints and deep expertise.

 

Key Qualifications and Experience to be Represented on the Board

 

The Board has identified key qualifications and experience that are important to be represented on the Board as a whole, in light of the Company’s business strategy and expected future business needs. The table below summarizes how these key qualifications and experience are linked to our Company’s business.

 

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Linking Business Characteristics with Key Qualifications and Experience Represented on the Board  
                   
The Company’s business is multifaceted and involves complex financial transactions in many countries and in many currencies.     Marketing and innovation are core focuses of the Company’s business and the Company seeks to develop and deploy the world’s most effective marketing and innovative products and technology.
                   
Key Qualifications and Experience     Key Qualifications and Experience
                   
High level of financial Experience Relevant senior leadership/ Chief Executive Officer experience     Marketing experience Innovation/technology experience
                   
                   
The Company’s business is truly global and multicultural, with its products sold in over 200 countries around the world.     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.
                   
Key Qualifications and Experience     Key Qualifications and Experience
                   
Broad international exposure/emerging market experience     Diversity of race, ethnicity, gender, age, cultural background and professional experience       Governmental or geopolitical expertise
                   
                   
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.     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.
                   
Key Qualifications and Experience     Key Qualifications and Experience
                   
Extensive knowledge of the Company’s business and/or industry     Risk oversight/management expertise
                   

 

Board Evaluation Process

 

The Board recognizes that a robust and constructive evaluation process is an essential component of good corporate governance and Board effectiveness. Through this process, Directors provide feedback and assess Board, committee and Director performance, including areas where the Board believes it is functioning effectively and areas where the Board believes it can improve.

 

Evaluation Components – Board, Committee, Directors

 

Under the leadership of the Lead Independent Director, the Committee on Directors and Corporate Governance oversees our annual evaluation process focused on three components: (1) the Board, (2) Board committees and (3) individual Directors. In addition, the Committee on Directors and Corporate Governance regularly discusses Board composition and effectiveness during its committee meetings.

 

  Evaluation Components  
   
  The Board conducts an annual self-evaluation
     
  Each committee conducts an annual self-evaluation
     
  Each Director evaluates the Board and the committees on which he or she serves and conducts a self-assessment
     

 

Multi-Step Evaluation Process

 

The Committee on Directors and Corporate Governance periodically reviews the format of the evaluation process, including whether to utilize a third-party facilitator, to ensure that actionable feedback is solicited on the operation and effectiveness of the Board, Board committees and Director performance. In 2016, the evaluation process included the steps described below. An additional component of the evaluation process is undertaken every other year, when the Lead Independent Director conducts separate one-on-one discussions with each Director to obtain additional and direct feedback. This component will take place as part of the 2017 evaluation process.

 

Questionnaire   Committee
Chairs Meet
  Committee/Board Closed
Sessions
  Feedback Incorporated

Directors provide feedback regarding:

 

   Board composition and structure.

 

   Meetings and materials.

 

   Board interaction with management.

 

   Effectiveness of the Board.

 

  Committee chairs meet to provide feedback and input prior to the annual Board self- evaluation closed sessions.   Each committee and the full Board conduct separate closed self-assessment sessions. The results of the questionnaire, the committee self-assessments and other feedback are discussed by the Board.   Based on evaluation results, changes in practices or procedures are considered and implemented, as appropriate.

 

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15

 

Incorporation of Feedback

 

Our multi-step evaluation process generates robust comments and discussion at all levels of the Board, including with respect to Board composition and processes. These evaluation results have led to changes designed to increase Board effectiveness and efficiency. For example, over the last few years enhancements have been made regarding meeting materials, the structure of the Board, committee and executive session discussions, the Board evaluation process and providing Directors with more opportunities to have hands-on experiences with our business and leaders around the world.

 

Director Nominee Selection Process

 

The Committee on Directors and Corporate Governance is responsible 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.

 

The Committee on Directors and Corporate Governance considers a wide range of factors when assessing potential Director nominees. This assessment includes a review of the potential nominee’s judgment, experience, independence, understanding of the Company’s business or other related industries and such other factors as the Committee concludes are pertinent in light of the current needs of the Board. A potential nominee’s qualifications are considered to determine whether they meet the qualifications required of all Directors and the key qualifications and experience to be represented on the Board, as described above. Further, the Committee on Directors and Corporate Governance assesses how each potential nominee would impact the skills and experience represented on the Board as a whole in the context of the Board’s overall composition and the Company’s current and future needs.

 

Shareowner-Recommended Director Candidates

 

Shareowners who would like 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 asktheboard@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.

 

Shareowner-Nominated Director Candidates

 

In 2015, our Board adopted a “Proxy Access for Director Nominations” bylaw after engaging with a number of our shareowners to understand their views on the desirability of proxy access and the appropriate proxy access structure for the Company. The proxy access bylaw permits a shareowner, or a group of up to 20 shareowners, owning 3% or more of the Company’s outstanding Common Stock continuously for at least three years to nominate and include in the Company’s proxy materials Director nominees constituting up to two individuals or 20% of the Board (whichever is greater), provided that the shareowner(s) and the nominee(s) satisfy the requirements specified in Article I, Section 12 of our By-Laws. See question 31 on page 90 for more information.

 

Annual Elections of Directors; Majority Voting Standard

 

Directors are elected each year, at the Annual Meeting of Shareowners, to hold office until the next annual meeting and until their successors are elected and qualified. Because term limits may cause the loss of experience and expertise important to the optimal operation of the Board, there are no limits on the number of terms a Director may serve. However, 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.

 

In addition, pursuant to our 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.

 

Our 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 does not receive a majority vote, 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, which will include consideration of the vote and any relevant input from shareowners. The Board will 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.

 

  2017 Proxy Statement         

16

 

2017 Director Nominees

 

Our By-Laws provide that the number of Directors shall be determined by the Board, which has set the number at 14. Upon the recommendation of the Committee on Directors and Corporate Governance, the Board has nominated each of Herbert A. Allen, Ronald W. Allen, Marc Bolland, Ana Botín, Richard M. Daley, Barry Diller, Helene D. Gayle, Alexis M. Herman, Muhtar Kent, Robert A. Kotick, Maria Elena Lagomasino, Sam Nunn, James Quincey and David B. Weinberg for election as a Director. All of the nominees are independent under New York Stock Exchange (“NYSE”) corporate governance rules, except Herbert A. Allen, Muhtar Kent and James Quincey. See Director Independence and Related Person Transactions beginning on page 36 . Howard G. Buffett, a current Director, will not be standing for reelection at the 2017 Annual Meeting of Shareowners.

 

Each of the Director nominees currently serves on the Board and was elected by the shareowners at the 2016 Annual Meeting of Shareowners, except for Mr. Quincey, currently the President and Chief Operating Officer of the Company, who was nominated by the Board in February 2017 to stand for election at the meeting. In connection with the announcement that Mr. Quincey will become Chief Executive Officer effective May 1, 2017, the Committee on Directors and Corporate Governance determined he was qualified under the Committee’s criteria to join the Board. If elected, each Director will hold office until the 2018 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.

 

Included in each Director nominee’s biography below is a description of select key qualifications and experience of such nominee based on the qualifications described above. The Board and the Committee on Directors and Corporate Governance believe that the combination of the various qualifications 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.

 

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

 

      Snapshot of 2017 Director Nominees    
           
      All Director nominees exhibit:    
           
High integrity A commitment to sustainability and social issues A proven record of success
           
An appreciation of multiple cultures Innovative thinking Knowledge of corporate governance requirements and practices
           
  Our Director nominees exhibit an effective mix of skills, experience, diversity and fresh perspective
   
   

 

  2017 Proxy Statement         

17

 
Herbert A. Allen      
   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.

Director since 1982

 

Age: 77

 

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

 

Other Public Company Boards: None

 

     
Key Qualifications and Experience:  

High Level of Financial Experience

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 Senior Leadership/Chief Executive Officer 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 and/or Industry

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 Experience

Significant marketing experience through ownership of a controlling interest and management of Columbia Pictures, a film production and distribution studio, from 1973 to 1982, and through a 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.

Risk Oversight/Management Expertise

Extensive experience managing risk as President and Chief Executive Officer of Allen & Company Incorporated, including overseeing and advising on principal investments, public and private capital markets transactions and merger and acquisition transactions.

 

Ronald W. Allen      
   Mr. Allen served as Chief Executive Officer of Aaron’s, Inc. from February 2012 until his retirement in August 2014. Mr. Allen served as a Director of Aaron’s, Inc. from 1997 until August 2014. Mr. Allen also served as President of Aaron’s, Inc. from February 2012 to April 2014 and as Chairman of the Board of Aaron’s, Inc. from November 2012 until April 2014. Mr. Allen served as interim President and Chief Executive Officer of Aaron’s, Inc. from November 2011 to 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 Guided Therapeutics Inc. from 2008 to January 2014.

Director since 1991

 

Age: 75

 

Board Committees: Audit (Chair), Finance

 

Other Public Company Boards: Aircastle Limited (since 2006) and Forward Air Corporation (2011-2013 and since 2014)

 

 

     
Key Qualifications and Experience:  

High Level of Financial Experience

Oversaw 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, and also served on its Audit Committee prior to becoming interim President and Chief Executive Officer. Serves on the Audit Committee of Aircastle Limited, a global company that acquires, leases and sells 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 Senior Leadership/Chief Executive Officer Experience

Served as Chief Executive Officer of Aaron’s, Inc. from February 2012 to August 2014 and as its President from February 2012 to April 2014. 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/Emerging Market Experience

Former Chairman and Chief Executive Officer of Delta, a global carrier with service to countries on six continents. Serves as a Director at Aircastle Limited and served as a Director at Interstate Hotels & Resorts, Inc. from 2006 to 2010, each of which has international operations.

Extensive Knowledge of the Company’s Business and/or Industry

Director of the Company since 1991. Significant manufacturing experience as a senior executive at Aaron’s, Inc., whose business includes a furniture manufacturing division.

Risk Oversight/Management Expertise

Extensive risk oversight and management experience as Chief Executive Officer of both Delta and Aaron’s, Inc., and experience overseeing risk as a member of the Audit Committee of Aircastle Limited and as Chair of the Audit Committee of the Company.

 

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Marc Bolland      
   Mr. Bolland is Head of European Portfolio Operations, The Blackstone Group L.P., one of the world’s leading investment firms, and has held this position since September 2016. He was Chief Executive Officer and a Director of Marks & Spencer Group p.l.c. (“Marks & Spencer”), from May 2010 through April 2016. He served as the Chief Executive Officer and a Director of WM Morrison Supermarkets PLC, a leading supermarket chain in the UK, from September 2006 to April 2010. He served as Chief Operating Officer of Heineken N.V., one of the world’s largest brewers, from 2005 to July 2006, and as an executive board member of Heineken N.V. from 2001 to July 2006. Mr. Bolland started his career at Heineken N.V. in the Netherlands in 1987, serving in several international management positions including Managing Director of Heineken Export Group Worldwide, a subsidiary of Heineken N.V., from 1999 to 2001, and Managing Director of Heineken Slovensko, a subsidiary of Heineken N.V., from 1995 to 1998. He previously served as a Director of ManpowerGroup Inc. from 2004 to February 2015.

Director since 2015

 

Age: 57

 

Board Committees: Audit

 

Other Public Company Boards: International Consolidated Airlines Group, S.A. (since 2016) and Exor N.V. (since 2016)

 

 

     
Key Qualifications and Experience:  

High Level of Financial Experience

Extensive operational and financial experience as Chief Executive Officer of Marks & Spencer, Chief Executive Officer of WM Morrison Supermarkets PLC and Chief Operating Officer of Heineken N.V., all public companies, and as Head of European Portfolio Operations, The Blackstone Group L.P.

Relevant Senior Leadership/Chief Executive Officer Experience

From 2010 to 2016, served as Chief Executive Officer of Marks & Spencer, an international, multi-channel retailer based in the UK. From 2006 to 2010, served as Chief Executive Officer of WM Morrison Supermarkets PLC where he successfully led the development and implementation of its long-term strategy, turning around the business.

Broad International Exposure/Emerging Market Experience

Appointed a UK Business Ambassador by the British Prime Minister to promote the UK in overseas markets and highlight trade and investment opportunities. Led international expansion of Marks & Spencer, which has stores in the UK and international locations. In addition, while at Heineken N.V., he was Managing Director in Slovakia, Managing Director for Heineken Export Worldwide and had responsibility for Western Europe, the U.S., Latin America, Northern Africa and Global Marketing. Vice Co-Chair of The Consumer Goods Forum.

Marketing Expertise

Extensive marketing and retail expertise as Chief Executive Officer of Marks & Spencer and WM Morrison Supermarkets PLC, as well as serving as Chief Operating Officer and head of Global Marketing for Heineken N.V., where he was responsible for brand and marketing strategies.

Risk Oversight/Management Expertise

Extensive experience overseeing risk as Chief Executive Officer of Marks & Spencer and WM Morrison Supermarkets PLC, and as Chief Operating Officer of Heineken N.V. Additional risk management experience as Director and Safety Committee member of International Consolidated Airlines Group, S.A., one of the world’s largest airline groups, and as a member of the Audit Committee of the Company.

 

Ana Botín

     
   Ms. Botín is Executive Chair of Banco Santander, S.A., the parent bank of Grupo Santander, and has held this position since September 2014. She has served as a Director of Banco Santander, S.A. since 1989. Ms. Botín served as Chief Executive Officer of Santander UK plc, a leading financial services provider in the UK and subsidiary of Banco Santander, S.A., from December 2010 to September 2014. She has served as a Director of Santander UK plc since December 2010. Ms. Botín served as Executive Chair of Banco Español de Crédito, S.A., also a subsidiary of Banco Santander, S.A., from 2002 to 2010. She started her career in the banking industry at J.P. Morgan in New York in 1981 and in 1988 joined Banco Santander, S.A., where she established and led its international corporate banking business in Latin America in the 1990s.

Director since 2013

 

Age: 56

 

Board Committees: Directors and Corporate Governance

 

Other Public Company Boards: Banco Santander, S.A. (since 1989) and Santander UK plc (since 2010)

 

 

     
Key Qualifications and Experience:  

High Level of Financial Experience

Internationally recognized expert in the investment banking industry with knowledge of global macroeconomic issues. Over 36 years of experience in investment and commercial banking. Has served as Executive Chair of Banco Santander, S.A. since September 2014 and a member of Banco Santander, S.A.’s Board and Executive Committee since 1989 and of its Management Committee since 1994. Began career at J.P. 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, and subsequently served as Executive Chair of Banco Español de Crédito, S.A. from 2002 to 2010 and as Chief Executive Officer of Santander UK plc from 2010 to September 2014.

Relevant Senior Leadership/Chief Executive Officer Experience

Executive Chair of Banco Santander, S.A. since September 2014. Also served as Chief Executive Officer of Santander UK plc from 2010 to September 2014.

Broad International Exposure/Emerging Market Experience

Executive Chair of Banco Santander, S.A., a global financial institution with operations in Europe, North America, Latin America and Asia. Board member of the Institute of International Finance, a global association of the financial industry. Founder and Vice Chair of Fundación Empresa y Crecimiento, which finances small and medium sized companies in Latin America, and founder and Chair of CyD Foundation, a nonprofit organization that supports and promotes the contribution of Spanish universities to the country’s economic and social development. Co-founder and Chair of Fundación Empieza Por Educar, the Spanish member of the global Teach For All network.

Diversity

Spanish national; female.

Risk Oversight/Management Expertise

Extensive experience in the oversight and management of risks associated with retail and commercial banking activities as Executive Chair of Banco Santander, S.A., Chief Executive Officer of Santander UK plc and Executive Chair of Banco Español de Crédito, S.A.

 

  2017 Proxy Statement         

19

 
Richard M. Daley      
   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 attorneys in locations across the U.S. and in London and Shanghai, and has held this position since June 2011. Mr. Daley also has been a distinguished senior fellow at the University of Chicago Harris School of Public Policy since May 2011. From October 2011 to October 2016, he served as a senior advisor to JPMorgan Chase & Co., where he chaired 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. He previously served as a Director of Diamond Resorts International, Inc. from July 2013 to September 2016.

Director since 2011

 

Age: 74

 

Board Committees: Audit, Directors and Corporate Governance

 

Other Public Company Boards: None

 

 

     
Key Qualifications and Experience:  

High Level of Financial Experience

Significant financial experience as Executive Chairman of Tur Partners LLC, a North American principal investment firm, Executive Chairman of DaleyTang, LLC, an international strategic advisory and investment management firm, and as Mayor of Chicago, where he managed the city’s budget.

Relevant Senior Leadership/Chief Executive Officer Experience

As Mayor of Chicago, managed 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/Emerging Market Experience

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.

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, public school system and infrastructure, strengthening the 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      
   Mr. Diller has served as Chairman and Senior Executive of IAC/InterActiveCorp, a leading media and Internet company, since December 2010. Prior to that time, Mr. Diller held the positions of Chairman and Chief Executive Officer of IAC/InterActiveCorp (and its predecessor companies) since August 1995. Mr. Diller has also served as Chairman and Senior Executive of Expedia, Inc., one of the world’s leading travel companies, since August 2005. Mr. Diller has also served as Special Advisor to the Chief Executive Officer of TripAdvisor, Inc., an online travel company, since April 2013, and served as its Chairman and Senior Executive from December 2011, when it was spun off from Expedia, Inc., until December 2012, and as a member of its Board until April 2013. Mr. Diller also served as the non-executive Chairman of Live Nation Entertainment, Inc. (and its predecessor companies, Ticketmaster Entertainment, Inc. and Ticketmaster) from August 2008 to October 2010 and was a member of its Board until January 2011. He previously served as a Director of Graham Holdings Company from 2000 to January 2017.

Director since 2002

 

Age: 75

 

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

 

Other Public Company Boards: Expedia, Inc. (since 2005) and IAC/InterActiveCorp (since 1995)

 

 

     
Key Qualifications and Experience:  

High Level of Financial Experience

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. Served on the Finance Committee of Graham Holdings Company, a diversified education and media company.

Relevant Senior Leadership/Chief Executive Officer Experience

Served as Chief Executive Officer of IAC/InterActiveCorp (and its predecessors) from 1995 to 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. (“Fox”) from 1984 to 1992 and was responsible for the creation of Fox Broadcasting Company, in addition to Fox’s motion picture operations. Prior to joining Fox, served for ten years as Chief Executive Officer of Paramount Pictures Corporation.

Broad International Exposure/Emerging Market Experience

Chairman of the Board and Senior Executive of IAC/InterActiveCorp, a leading media and Internet company focused on the areas of search and applications, dating, education and fitness businesses, media and e-commerce, whose family of websites is one of the largest in the world. Chairman of the Board and Senior Executive of Expedia, Inc., one of the world’s leading online travel companies. Served as Chairman of the Board and Senior Executive of TripAdvisor, Inc., the world’s largest travel site. Served as a member of the Council on Foreign Relations.

Marketing Experience

Chairman and Senior Executive of IAC/InterActiveCorp, a leading media and Internet company comprised of widely known consumer brands, such as HomeAdvisor, Vimeo, Dictionary.com, The Daily Beast, Investopedia, and Match Group’s online dating portfolio. Chairman and Senior Executive of Expedia, Inc., an online travel company which markets a variety of leisure and business travel products.

Innovation/Technology Experience

Significant experience and leadership roles in the media and Internet sectors, including experience at IAC/InterActiveCorp, with businesses in the marketing and technology industries, with brands such as Ask.com, About.com, Match, HomeAdvisor, DailyBurn and Vimeo, at Expedia, Inc., an online travel company, which empowers business and leisure travelers through technology with tools to efficiently research, plan, book and experience travel, and at TripAdvisor, Inc., which operates the flagship TripAdvisor-branded websites and numerous other travel brands.

 

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20

 
Helene D. Gayle      
   Dr. Gayle is the Chief Executive Officer of McKinsey Social Initiative, an independent nonprofit organization founded by McKinsey & Company, which brings together expert problem solvers to develop innovative approaches to complex social challenges, and has held this position since July 2015. Dr. Gayle held the positions of President and Chief Executive Officer of CARE USA, a leading international humanitarian organization, from 2006 to 2015. From 2001 to 2006, she served as program director in the Global Health Program at the Bill & Melinda Gates Foundation. Dr. Gayle started her career in public health at the U.S. Centers for Disease Control and Prevention (“CDC”) in 1984 where she held various positions over a span of 20 years, ultimately becoming the director of the CDC’s National Center for HIV, STD and TB Prevention in 1995.

Director since 2013

 

Age: 61

 

Board Committees: Compensation, Public Issues and Diversity Review

 

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

 

 

     
Key Qualifications and Experience:  

Relevant Senior Leadership/Chief Executive Officer Experience

Chief Executive Officer of McKinsey Social Initiative, a nonprofit focused on developing innovative approaches to complex social challenges, and former President and Chief Executive Officer of CARE USA, a leading humanitarian organization fighting global poverty, with operating support and revenues exceeding $500 million per year.

Broad International Exposure/Emerging Market Experience

Currently implementing the McKinsey Social Initiative’s Generation program, which is aimed at fighting unemployment globally, including an initial goal of connecting one million young people across five countries with skills and jobs by 2020. Experience managing international operations at CARE USA, which has long-term programs in 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. Serves on the Board of Trustees of the Center for Strategic and International Studies and the Rockefeller Foundation, and on the Advisory Board of the Harvard Business School Social Enterprise Initiative. Member of the Council on Foreign Relations.

Diversity

African-American; female.

Innovation/Technology Experience

As Chief Executive Officer of McKinsey Social Initiative, significant experience using innovative approaches and initiatives to solve complex social challenges. As former Chief Executive Officer of CARE USA, extensive experience working to find innovative and sustainable solutions to challenging development problems. Former Chair of the Presidential Advisory Council on HIV/AIDS, advising the Secretary of Health and Human Services on innovative solutions, policies and programs to combat HIV/AIDS. Member of the National Academy of Medicine, an organization which works to address critical issues in health, medicine and related policy through its domestic and global initiatives.

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 Advisory Committee on International Economic Policy and the Secretary of State’s Advisory Committee on Public-Private Partnerships, and serves on the President’s Commission on White House Fellowships. Achieved the rank of Assistant Surgeon General and Rear Admiral in the U.S. Public Health Service. Serves on the Board of Trustees of the Brookings Institution, a think tank whose mission is to improve governance at the local, national, regional and global levels. Also serves as a Director of New America Foundation, a nonpartisan public policy institute and think tank, and ONE, an international, nonpartisan advocacy and campaigning organization that fights extreme poverty and preventable disease, particularly in Africa. Member of the Board of Trustees of the Center for Strategic and International Studies, a preeminent international policy institution.

 

Alexis M. Herman      
   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 Chair of Toyota Motor Corporation’s Diversity Advisory Board and 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.

Director since 2007

 

Age: 69

 

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

 

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

 

 

     
Key Qualifications and Experience:  

Relevant Senior Leadership/Chief Executive Officer Experience

Chief Executive Officer of New Ventures LLC, a corporate consulting company. Former U.S. Secretary of Labor from 1997-2001.

Broad International Exposure/Emerging Market Experience

Director of Cummins Inc., a global power leader that designs, manufactures, distributes and services diesel and natural gas engines and related technologies and serves customers in more than 190 countries and territories. Serves as Chair on Toyota’s Diversity Advisory Board. 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 intergovernmental economic organization helping governments improve the economic and social well-being of people around the world.

Diversity

African-American; female.

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. Served as a Trustee of the Clinton Bush Haiti Fund, and as Chair of the Working Party for the Role of Women in the Economy for OECD. Serves as Chair of the Corporate Social Responsibility 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 as Lead Director and Chair of the Governance and Nominating Committee of Cummins Inc. Served as Chair of The Business Advisory Board at Sodexo, Inc. and member of the Audit Committee of MGM Resorts International.

 

  2017 Proxy Statement         

21

 
Muhtar Kent      
   Mr. Kent is Chairman of the Board and Chief Executive Officer of the Company. Effective May 1, 2017, Mr. Kent will continue as Chairman of the Board of Directors of the Company following James Quincey’s succession to the position of Chief Executive Officer of the Company. He has held the position of Chairman of the Board since April 2009 and the position of Chief Executive Officer since July 2008. Mr. Kent served as President of the Company from December 2006 through August 2015 and as Chief Operating Officer of the Company from December 2006 through June 2008. 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.

Director since 2008

 

Age: 64

 

Board Committees: Executive (Chair)

 

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

 

 

     
Key Qualifications and Experience:  

High Level of Financial Experience

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

Relevant Senior Leadership/Chief Executive Officer 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/Emerging Market Experience

Over 36 years of Coca-Cola system experience including extensive experience in international markets. Director of 3M Company, a diversified technology company with a global presence. Immediate past Chairman of the International Business Council of the World Economic Forum, member of the Board of Directors of the National Committee on United States-China Relations and a fellow of the Foreign Policy Association. Member of the Board of Directors and past Chairman of the United States-China Business Council and member of the Board of Directors and past Co-Chair of The Consumer Goods Forum. Chairman Emeritus of the US-ASEAN Business Council and a member of the Eminent Persons Group for ASEAN appointed 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.

Extensive Knowledge of the Company’s Business and/or Industry

Chairman of the Board (since 2009), Chief Executive Officer (since 2008), Chief Operating Officer (2006 to 2008) and President (2006 to 2015) 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.

Governmental or Geopolitical Expertise

Serves as Trustee for the Center for Strategic and International Studies, a preeminent international policy institution. Serves as Director of the American Turkish Society whose mission is to enhance business, economic, political and cultural ties between the U.S. and Turkey. Also serves as a Director of the National Committee on United States-China Relations, Special Olympics International, the Hellenic Initiative and Suu Foundation.

 

Robert A. Kotick      
   Mr. Kotick is President, Chief Executive Officer and a Director of Activision Blizzard, Inc., a leading global developer and publisher of interactive entertainment content and services, 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. Mr. Kotick is the co-founder of the Call of Duty Endowment, a nonprofit, public benefit corporation that seeks to help organizations that provide job placement and training services for veterans.

Director since 2012

 

Age: 54

 

Board Committees: Finance, Management Development

 

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

 

 

     
Key Qualifications and Experience:  

High Level of Financial Experience

Over 25 years of experience as Chief Executive Officer of Activision Blizzard, Inc. and its predecessor, including managing complex international operations and financial transactions.

Relevant Senior Leadership/Chief Executive Officer Experience

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

Marketing Experience

Significant marketing experience with Activision Blizzard, Inc. and its predecessor, bringing extensive insight about key demographic groups and utilization of technology and social media in marketing.

Innovation/Technology Experience

As Chief Executive Officer of Activision Blizzard, Inc., a worldwide leader in the development, publishing and distribution of high-quality interactive entertainment content and services and other media, is responsible for some of the most successful entertainment franchises, including Call of Duty ® , Candy Crush , Destiny ® , Hearthstone ® , Overwatch ® , Skylanders ® and World of Warcraft ® .

Risk Oversight/Management Expertise

Extensive experience overseeing risk as Chief Executive Officer of Activision Blizzard, Inc., including developing new intellectual properties and investments in complementary business opportunities.

 

  2017 Proxy Statement         

22

 
Maria Elena Lagomasino    
       
   Ms. Lagomasino is 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 The Chase Manhattan Bank since 1983 in various positions in private banking. She served as a Director of the Company from April 2003 to April 2006. She previously served as a Director of Avon Products, Inc. from October 2000 to March 2016.

Director since 2008

 

Age: 67

 

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

 

Other Public Company Boards: The Walt Disney Company (since 2015)

 

 

     
Key Qualifications and Experience:  

High Level of Financial Experience

Over 34 years of experience in the financial industry and a recognized leader in the wealth management industry. Chief Executive Officer and Managing Partner of 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. 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 Senior Leadership/Chief Executive Officer 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.

Broad International Exposure/Emerging Market Experience

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 39 years of experience working with Latin America. Exposure to international issues as a Board member of the Americas Society and the Cuba Study Group, as a Trustee of the National Geographic Society and as a member of the Council on Foreign Relations.

Diversity

Hispanic; female.

Risk Oversight/Management Expertise

Extensive oversight of risks associated with wealth management and investment strategies as Chief Executive Officer and Managing Partner of WE Family Offices, and as Chief Executive Officer of GenSpring Family Offices, LLC and JPMorgan Private Bank.

 

Sam Nunn      
   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 is Chairman Emeritus of the Board of Trustees of the Center for Strategic and International Studies. He served as a member of the U.S. Senate from 1972 through 1996. He previously served as a Director of General Electric Company from 1997 to April 2013 and Hess Corporation from August 2012 to May 2013.

Director since 1997;

 

Lead Independent Director since  2014

 

Age: 78

 

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

 

Other Public Company Boards: None

 

     
Key Qualifications and Experience:  

High Level of Financial Experience

Has served on the Company’s Finance Committee for over 19 years. Served on the Finance Committee of Dell Inc. and the Audit Committees of Dell Inc. and Scientific-Atlanta, Inc.

Relevant Senior Leadership/Chief Executive Officer Experience

Serves as Co-Chairman and Chief Executive Officer of the Nuclear Threat Initiative and served as Chairman of the Board of Trustees of the Center for Strategic and International Studies from 1999 to 2015. Former Senior Partner of King & Spalding LLP, a global law firm. Served as a U.S. Senator from Georgia from 1972 to 1996.

Broad International Exposure/Emerging Market Experience

16-year public company directorship at General Electric Company, a global digital industrial company which serves customers in approximately 180 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. Chairman Emeritus of the Board of Trustees of the Center for Strategic and International Studies, a preeminent international policy institution, where he served as Chairman from 1999 to November 2015.

Marketing Experience

Regular exposure to marketing and marketing-related technology through directorships at Dell Inc., a global information technology company, General Electric Company, a global digital industrial company, and Chevron Corporation, one of the world’s leading 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. Continues his service in the public policy arena as Distinguished Professor in the Sam Nunn School of International Affairs at Georgia Institute of Technology. Served as Chair of the Public Responsibilities Committee at General Electric Company and served as Chair of the Public Policy Committee at Chevron Corporation.

 

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23

 
James Quincey      
   Mr. Quincey is President and Chief Operating Officer of the Company and has served in this position since August 2015. Effective May 1, 2017, Mr. Quincey will succeed Muhtar Kent as Chief Executive Officer of the Company and will continue as President of the Company. Mr. Quincey served as President of the Company’s Europe Group from January 2013 to August 2015, and as President of the Northwest Europe and Nordics business unit from October 2008 to January 2013. From December 2005 to October 2008, he served as President of the Mexico Division, and from December 2003 to December 2005, he served as President of the South Latin Division. Mr. Quincey joined the Company in 1996 as Director, Learning Strategy for the Latin America Group, and went on to serve in a series of operational roles of increasing responsibility in Latin America, leading to his appointment as President of the South Latin Division in 2003.

Director nominee

Age: 52

 

Board Committees: N/A

 

Other Public Company Boards: None

 

     
Key Qualifications and Experience:  

High Level of Financial Experience

Extensive financial experience as President and Chief Operating Officer and in other leadership positions in the Company, managing complex financial transactions, mergers and acquisitions, business strategy and international operations.

Relevant Senior Leadership/Chief Executive Officer Experience

President and Chief Operating Officer of the Company since August 2015, and will become Chief Executive Officer as of May 1, 2017. He also served as President of the Europe Group from January 2013 to August 2015.

Broad International Exposure/Emerging Market Experience

Over 20 years of Coca-Cola system experience including extensive experience in international markets, such as Latin America and Europe. As President and Chief Operating Officer, Mr. Quincey has responsibility for all of the Company’s operating units worldwide.

Extensive Knowledge of the Company’s Business and/or Industry

President and Chief Operating Officer (since 2015), President of the Europe Group (2013-2015), President of the Northwest Europe and Nordics business unit (2008-2013), and President of the Mexico Division (2005-2008) of the Company. Joined the Company in 1996 as Director, Learning Strategy for the Latin America Group and held various operational roles within the Coca-Cola system.

Innovation/Technology Experience

Extensive innovation experience at the Company. As President and Chief Operating Officer, Mr. Quincey is responsible for the Company’s information technology function. In addition, as President of the Europe Group, Mr. Quincey implemented innovative strategies to improve the Company’s execution and brand portfolio. As President of the Northwest Europe and Nordics business unit, he oversaw the Company’s acquisition of innocent juice in 2009, which is now sold in more than 14 countries. During his tenure in Latin America, Mr. Quincey was instrumental in developing and executing a successful brand, pack, price and channel strategy, which has now been replicated in various forms throughout the Company’s global system, and in creating the Company’s current juice platform in Mexico under the Del Valle trademark through joint ventures with our bottling partners.

 

David B. Weinberg      
   Mr. Weinberg is Chairman of the Board and Chief Executive Officer of Judd Enterprises, Inc., a private, investment-management office with diverse interests in a variety of asset classes, and President of Digital BandWidth LLC, its private, early-stage technology investing affiliate, and has held these positions since 1996. From September 1989 to June 1996, Mr. Weinberg was a partner in the corporate, securities and investment-management practice of Mayer, Brown & Platt, a leading international law firm.

Director since 2015

 

Age: 65

 

Board Committees: Audit

 

Other Public Company Boards: None

 

     
Key Qualifications and Experience:  

High Level of Financial Experience

In his position as Chairman and Chief Executive Officer of Judd Enterprises, Inc., oversees substantial assets in a wide variety of asset classes. Significant experience in reviewing financial statements as an investor, and as a securities lawyer when structuring transactions. Previously served on the Audit Committee and currently serves on the Executive, Finance and Investment Committees of Northwestern University.

Relevant Senior Leadership/Chief Executive Officer Experience

Since 1996, has served as Chairman and Chief Executive Officer of Judd Enterprises, Inc., a private, investment-management office, and President of Digital BandWidth LLC, its private early-stage technology investing affiliate.

Broad International Exposure/Emerging Market Experience

As Chief Executive Officer of Judd Enterprises, Inc., oversees international investments. As a partner in the corporate, securities and investment-management practice of the Mayer, Brown & Platt law firm, structured cross-border investment-management transactions. Serves on the Board of Trustees of the Brookings Institution, a think tank whose mission includes improving governance at the global level. Also serves on the Investment Committee of Northwestern University, overseeing substantial exposure to emerging markets. Exposure to international issues as a member of the Council on Foreign Relations.

Innovation/Technology Experience

Extensive entrepreneurial experience as President of Digital Bandwidth LLC, overseeing investments in early stage companies focusing on technologies, including wireless networks, speech recognition, network security and radio frequency identification tags.

Risk Oversight/Management Expertise

Extensive risk oversight and management experience overseeing a private investment management office as Chief Executive Officer of Judd Enterprises, Inc. As a partner in the corporate, securities and investment-management practice of the Mayer, Brown & Platt law firm, advised clients on a broad range of regulatory and transactional matters. Additional risk oversight experience through former service on the Audit Committee and current service on the Executive, Finance and Investment Committees of Northwestern University and current service on the Audit Committee of the Company.

 

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24

 

BOARD AND COMMITTEE GOVERNANCE

 

Role of the Board - Oversight of Strategy and Risk

 

The Board is elected by the shareowners to oversee their interests in the long-term health and overall success of the Company’s business and 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 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. The Board selects and oversees the members of senior management, who are charged by the Board with conducting the business of the Company.

 

  KEY RESPONSIBILITIES OF THE BOARD  
             
  Oversight of Strategy   Oversight of Risk  
 

  The Board oversees and monitors strategic planning.

  Business strategy is a key focus at the Board level and embedded in the work of Board committees.

  Company management is charged with executing business strategy and provides regular performance updates to the Board.

 

 

  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.

 

 

Oversight of Strategy

 

Strategic planning and oversight of the Company’s business strategy is a key responsibility of the Board. The Board believes that overseeing and monitoring strategy is a continuous process and takes a multilayered approach in exercising its duties. The Board dedicates one meeting each year to focus on business strategy and elements of strategy are addressed in every Board meeting and embedded in the work of Board committees. This ongoing effort enables the Board to focus on Company performance over the short, intermediate and long term, as well as the quality of operations. In addition to financial and operational performance, non-financial measures, including sustainability efforts, are discussed regularly by the Board and Board committees.

 

While the Board and its committees oversee strategic planning, Company management is charged with executing the business strategy. To monitor performance against the Company’s strategic goals, the Board receives regular updates and actively engages in dialogue with our Company’s senior leaders. These boardroom discussions are enhanced with “hands-on” experiences, such as market visits, which provide Directors an opportunity to see strategy execution first hand.

 

The Board’s oversight and management’s execution of business strategy are viewed with a long-term mindset and a focus on assessing both opportunities for and potential risks to the Company.

 

Oversight of Risk

 

Inherent in the Board’s responsibilities is an 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. 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 Company’s long-term strategic objectives. 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.

 

The Company believes that its Board leadership structure supports the risk oversight function of the Board (see page 26 ). 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 Board. Board Committees beginning on page 28 includes a summary of the risk oversight focus area of the committees.

 

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While the Board and its committees oversee risk management, Company management is charged with managing risk. The Company has robust internal processes and an effective internal control environment that facilitate the identification and management of risks and regular communication with the Board. These include an enterprise risk management program, a Risk Council and Risk Steering Committee under the leadership of the Chief Financial Officer and Chief Operating Officer, regular internal management Disclosure Committee meetings, Codes of Business Conduct, robust product quality standards and processes, a strong Legal Department and 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. 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.

 

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, 2016 (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 Leadership Structure

 

The Company’s governance framework provides the Board with flexibility to select the appropriate Board 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.

 

Having the flexibility to select the appropriate structure based on the specific needs of the business is critical, and it is part of the judgment the Board believes it should exercise. The Board understands that Board leadership structure is an important topic for many shareowners, and the Board takes shareowner feedback into account when making determinations around Board leadership structure.

 

Details and Rationale – Current Structure

 

Our current Board leadership structure comprises a “combined” Chairman of the Board and Chief Executive Officer, a Lead Independent Director, Board committees led primarily by independent Directors and active engagement by all Directors.

 

The duties and responsibilities of the Chairman of the Board, the Lead Independent Director and the Chief Executive Officer are described in the table below and are set forth in the Company’s By-Laws and Corporate Governance Guidelines.

 

Since Mr. Kent took on the combined Chairman of the Board and Chief Executive Officer role in 2009, the Board has been satisfied that having one person in the combined role provides certain synergies and efficiencies that enhance the functioning of the Board and serve the business and shareowners well over time. The Company’s business is complex and its products are sold in more than 200 countries around the world. Most of the Company’s products are manufactured and sold by independent bottling partners throughout the world. This franchise structure requires the Chief Executive Officer to maintain strong, hands-on relationships with the leaders of the bottlers wherever they exist and to be close to the many facets of the business existing in so many places in the world. Because the Chief Executive Officer is the Board member closest to our complex business, he is best able to identify many of the business issues that need to be on the Board agenda, and, as Chairman of the Board, he can focus Directors’ attention on the most critical business matters.

 

Further, a combined Chairman of the Board and Chief Executive Officer helps facilitate timely and unfiltered communication with the Board on critical business issues. The Board also believes that there are benefits when having the same person represent both the Company and the Board throughout the world with bottlers, customers, consumers and other stakeholders.

 

Importantly, all Directors play an active role in overseeing the Company’s business both at the Board and committee levels. 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.

 

Details and Rationale – New Structure in Connection with CEO Transition

 

In December 2016, the Board decided to split the Chairman of the Board and Chief Executive Officer roles when they appointed James Quincey to succeed Muhtar Kent as Chief Executive Officer, effective May 1, 2017. As part of the Chief Executive Officer transition, Mr. Kent will continue as Chairman of the Board of Directors and Mr. Quincey has been nominated for election as a Director at the 2017 Annual Meeting. Sam Nunn will continue to serve as the Lead Independent Director.

 

As noted above, the Board has flexibility to choose a different Board leadership structure if and when it believes circumstances so warrant. The Board believes that instituting an orderly transition period while continuing the partnership between Mr. Kent and Mr. Quincey, with an adjusted focus for each, will enable both executives to apply their strongest skills to continuing the sustained growth of our business. Mr. Quincey, as Chief Executive Officer, will assume complete accountability for the Company’s strategic direction and operations, and Mr. Kent, as Chairman of the Board, will lead the Board and focus on governance.

 

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Mr. Kent and the Board will continue to periodically evaluate the Board leadership structure to ensure that the Board’s structure is appropriate in light of the needs of the business. Consistent with our commitment to good corporate governance practices, at least one executive session of the non-employee Directors each year will include a review of the Board’s leadership structure and consideration of whether the position of Chairman of the Board should be held by the Chief Executive Officer.

 

  DUTIES AND RESPONSIBILITIES  
             
  Chairman of the Board   Chief Executive Officer  
         
 

  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.

  Performs such other duties as may be assigned by the Board.

 

  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.

 
       
    Lead Independent Director  
       
 

  Presides at all meetings of the Board at which the Chairman of the Board is not present, including all meetings of independent Directors and non-employee Directors.

  Encourages and facilitates active participation of all Directors.

  Serves as a liaison between the independent Directors and the Chairman of the Board on sensitive issues and otherwise when appropriate.

  Approves Board meeting materials for distribution to and consideration by the Board.

  Approves Board meeting agendas after conferring with the Chairman of the Board and other members of the Board, as appropriate, and may add agenda items at his or her discretion.

  Approves Board meeting schedules to assure that there is sufficient time for discussion of all agenda items.

 

 

  Has the authority to call meetings of the independent Directors.

  Leads the Board’s annual evaluation of the Chairman of the Board and Chief Executive Officer.

  Monitors and coordinates with management on corporate governance issues and developments.

  Available to advise the committee chairs in fulfilling their designated roles and responsibilities to the Board.

  Available for consultation and communication with shareowners where appropriate, upon reasonable request.

  Performs such other functions as the Board or other Directors may request.

 

 

 

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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.” Information about each committee is provided below.

 

AUDIT COMMITTEE

 

Meetings Held in 2016: 12
Members 1   Independence 2   Skills/qualifications
Ronald W. Allen
(Chair)
   
Marc Bolland    
Richard M. Daley    
David B. Weinberg    
   
1 Ronald W. Allen was appointed Chair of the Audit Committee in October 2016 following the resignation of Evan G. Greenberg. Richard M. Daley was appointed to the Audit Committee in December 2016.
   
2 The Board has designated each of Messrs. Allen and Weinberg as an “Audit Committee financial expert”. Each member is financially literate and 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.
   
Additional information regarding the Audit Committee can be found beginning on page 77 .

 

COMPENSATION COMMITTEE

 

Meetings Held in 2016: 8
Members 1   Independence 2   Skills/qualifications
Maria Elena
Lagomasino (Chair)
   
Helene D. Gayle    
Alexis M. Herman      
   
1 Ronald W. Allen also served on the Compensation Committee in 2016 through the October 2016 meeting, when he was appointed Chair of the Audit Committee.
   
2 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.
   
Additional information regarding the Compensation Committee can be found beginning on page 44 .

 

Primary Responsibilities:

 

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.

 

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.

 

Oversees the Company’s enterprise risk management (“ERM”) program and has direct oversight over certain risks within the ERM framework. Periodically receives reports on and discusses governance of the Company’s risk assessment and risk management processes and reviews significant risks and exposures identified to the Committee (whether financial, operating or otherwise), and management’s steps to address them.

 

Risk Oversight Focus Area:

 

The Company’s financial statements, the financial reporting process, accounting and legal matters, the internal audit function, ethics programs (including the Codes of Business Conduct), quality, safety, environmental assurance and information technology security programs, including cybersecurity.

 

Primary Responsibilities:

 

Responsible 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.

 

Approves all equity awards to employees, including stock options, performance share units, restricted stock and restricted stock units.

 

Sole authority to retain, terminate, approve fees and other terms of engagement of its compensation consultant and to obtain advice and assistance from internal or external legal, accounting or other advisors.
   
Understands and considers shareowner viewpoints on compensation.

 

Risk Oversight Focus Area:

 

 

The Company’s compensation philosophy and programs, including incorporating features that mitigate risk without diminishing the incentive nature of the compensation.


 

Legend: Key Qualifications and Experience (see page 15 )

 

High level
of financial
experience
Relevant senior leadership/
Chief Executive Officer
experience
Broad international
exposure/emerging
market experience
Diversity of race, ethnicity, gender,
age, cultural background or
professional experience
Extensive knowledge of
the Company’s business
and/or industry
Marketing
experience
Innovation/
technology
experience
Governmental
or geopolitical
expertise
Risk oversight/
management
expertise

 

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COMMITTEE ON DIRECTORS AND CORPORATE GOVERNANCE

 

Meetings Held in 2016: 5
Members   Independence 1   Skills/qualifications
Sam Nunn (Chair)    
Ana Botín    
Richard M. Daley    
Barry Diller    
Maria Elena
Lagomasino
   
   
1 Each member of the Committee on Directors and Corporate Governance meets the independence requirements of the NYSE and the Company’s Corporate Governance Guidelines.
   
Additional information regarding the Committee on Directors and Corporate Governance can be found beginning on page 13 .

 

Primary Responsibilities:

 

Responsible for considering and making recommendations concerning Director nominees and the function and needs of the Board and its committees.

 

Regularly reviews the Company’s Corporate Governance Guidelines and provides oversight of the corporate governance affairs of the Board and the Company consistent with the long-term best interests of the Company and its shareowners.

 

Coordinates the annual Board, committee and Director evaluation process, which is led by the Lead Independent Director.

 

Understands and considers shareowner viewpoints on corporate governance matters.

 

Risk Oversight Focus Area:

 

The Company’s governance practices, Board composition and refreshment and committee leadership.


 

EXECUTIVE COMMITTEE

 

Meetings Held in 2016: 0
Members   Independence   Skills/qualifications
Muhtar Kent
(Chair)
   
Herbert A. Allen    
Barry Diller    

 

Primary Responsibilities:

 

Authorized 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 may act at a meeting or by written consent in lieu of a meeting.

FINANCE COMMITTEE

 

Meetings Held in 2016: 6
Members 1   Independence   Skills/qualifications
Barry Diller (Chair)    
Herbert A. Allen    
Ronald W. Allen    
Robert A. Kotick    
Sam Nunn    
   
1 Evan G. Greenberg also served as a member of the Finance Committee in 2016 prior to his resignation on October 1. Ronald W. Allen was added as a member in October 2016.

 

Primary Responsibilities:

 

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.

 

Oversees the Company’s policies and procedures on risk management, hedging, swaps and other derivative transactions.

 

Risk Oversight Focus Area:

 

The Company’s capital structure, pension plan investments, currency risk and hedging programs, taxes, mergers and acquisitions and capital projects.


 

Legend: Key Qualifications and Experience (see page 15 )

 

High level
of financial
experience
Relevant senior leadership/
Chief Executive Officer
experience
Broad international
exposure/emerging
market experience
Diversity of race, ethnicity, gender,
age, cultural background or
professional experience
Extensive knowledge of
the Company’s business
and/or industry
Marketing
experience
Innovation/
technology
experience
Governmental
or geopolitical
expertise
Risk oversight/
management
expertise

 

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MANAGEMENT DEVELOPMENT COMMITTEE

 

Meetings Held in 2016: 4
Members   Independence   Skills/qualifications
Herbert A. Allen (Chair)    
Barry Diller    
Robert A. Kotick    
Maria Elena Lagomasino    

 

Primary Responsibilities:

 

Helps the Board fulfill its responsibilities relating to oversight of talent development for senior positions and succession planning.

 

Risk Oversight Focus Areas:

 

Management development and succession planning across senior management positions.

PUBLIC ISSUES AND DIVERSITY REVIEW COMMITTEE

 

Meetings Held in 2016: 4
Members 1   Independence   Skills/qualifications
Alexis M. Herman (Chair)    
Helene D. Gayle    
Sam Nunn    
   
1 Howard G. Buffett will serve on the Public Issues and Diversity Review Committee until the 2017 Annual Meeting. Mr. Buffett is not standing for reelection at the 2017 Annual Meeting.

 

Primary Responsibilities:

 

Helps the Board fulfill its responsibilities relating to diversity, sustainability, corporate social responsibility and public issues of significance, which may affect the shareowners, the Company, the business community and the general public.

 

Risk Oversight Focus Areas:

 

Issues that could pose significant reputational risk to the Company.


 

Meetings and Attendance

 

Regular meetings of the Board are held at such times as the Board may determine. Special meetings of the Board may be called by the Chairman, the Company’s Secretary or by a majority of the Directors by written request to the Secretary. Committee meetings can be called by the committee’s chair or by a majority of committee members.

 

In 2016, the Board held six meetings and committees of the Board held a total of 39 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 2016.

 

Legend: Key Qualifications and Experience (see page 15 )

 

High level
of financial
experience
Relevant senior leadership/
Chief Executive Officer
experience
Broad international
exposure/emerging
market experience
Diversity of race, ethnicity, gender,
age, cultural background or
professional experience
Extensive knowledge of
the Company’s business
and/or industry
Marketing
experience
Innovation/
technology
experience
Governmental
or geopolitical
expertise
Risk oversight/
management
expertise

 

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ADDITIONAL GOVERNANCE MATTERS

 

Shareowner Engagement

 

Our Board believes that shareowners should have line of sight into decisions made in the boardroom. We do this by making a full-time effort of building relationships and trust over time with our shareowners. We have for some time cultivated meaningful and value-added relationships with our shareowners through an engagement program that is management led and overseen by the Board.

 

                          
Shareowner Engagement    
Our longstanding commitment to shareowner engagement includes:
An engagement program that is management led and overseen by the Board
Dedicated resources to actively engage with shareowners on a variety of topics throughout the year
Engagements designed to address questions and concerns, seek input and provide perspective on Company policies and practices
Feedback provided to the Board on a regular basis and reflected in enhancements to policies and practices

 

The Board long ago established dedicated resources to actively engage with shareowners. The Company engages with shareowners on a variety of topics throughout the year to ensure we are addressing questions and concerns, to seek input and to provide perspective on Company policies and practices.

 

Shareowner feedback from this engagement is considered by the Board and reflected in enhancements to policies and practices. One recent example is our adoption of a proxy access bylaw, which the Board adopted following several months of thoughtful discussions with shareowners.

 

In addition to 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:

 

the annual election of Directors and a majority vote standard (see page 16 );
   
the annual advisory vote to approve executive compensation (see page 43 );
   
our commitment to thoughtfully consider shareowner proposals submitted to the Company (see page 90 );
   
the ability to attend and voice opinions at the Annual Meeting of Shareowners (see page 87 );
   
our dedicated 2017 Annual Meeting page on our Company website (see page 88 );
   
the ability to direct communications to individual Directors or the entire Board (see page 89 );
   
adoption of a proxy access bylaw (see page 90 ); and
   
a quarterly newsletter for our shareowners (see www.coca-colacompany.com/shareowner-newsletter-signup ).

 

Public Policy Engagement

 

We participate in public policy discussions on issues related to our industry and business priorities, our more than 700,000 system associates, our shareowners and the communities we serve.

 

In the U.S., our Company and our affiliated political action committees comply with applicable laws and other requirements regarding contributions to political organizations; candidates for federal, state and local public office; ballot measure campaigns; political action committees; and trade associations. We engage with these organizations and individuals to make our views clear and uphold our commitment to help support the communities in which we operate. We base our U.S. political contributions on many considerations, supporting candidates whose priorities align with those of our Company when it comes to core issues that affect our business.

 

The Public Issues and Diversity Review Committee of our Board of Directors reviews our advocacy efforts, including political contributions. See page 30 for more information about the Public Issues and Diversity Review Committee. Additional information about our public policy engagement efforts, including our 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

 

We are committed to integrating sustainability into our everyday actions to help create value for shareowners and the communities in which we operate. In everything we do, we aim to strengthen the foundations of our business and the communities we serve so that all thrive long into the future. Our approach to sustainability is guided by our shared vision for how we strive to create social value and make a positive difference for the communities we serve through enhancing people’s well-being, building stronger communities and working

 

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to protect the environment we all share. We believe the majority of innovation over the next decade will happen at the intersection of sustainability and the supply chain. Working collaboratively with our bottling partners, we share best practices and knowledge to better manage water resources and we partner at every stage of our value chain, from ingredient sourcing to packaging recovery, to build business resiliency and add value across our system, enabling the economic empowerment of women along the way.

 

The Public Issues and Diversity Review Committee of our Board of Directors reviews the nature and scope of the Company’s sustainability goals and the Company’s progress toward achieving those goals. The Committee also receives, at least annually, presentations by the Chief Sustainability Officer, and others as required, related to the accomplishment of the Company’s sustainability goals. See page 30 for more information about the Public Issues and Diversity Review Committee.

 

In addition, our pay-for-performance philosophy awards executives in a way that motivates them to operate the Company’s business in a profitable and sustainable manner.

 

To learn more about the Company’s sustainability efforts, including our comprehensive sustainability commitments, please view our 2015/2016 Sustainability Report on the Company’s website, by visiting www.coca-colacompany.com/sustainability .

 

Special Meeting of Shareowners

 

Our 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 or the 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.

 

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

 

The Company’s anti-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 prohibited 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 Common Stock.

 

The Company’s anti-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.

 

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 at www.coca-colacompany.com , by clicking on “Investors”, then “Corporate Governance” and then “Code of Business Conduct.” 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.

 

View the Company’s Governance Materials

 

You can view the Company’s governance materials, including the Certificate of Incorporation, By-Laws, Corporate Governance Guidelines and Board Committee Charters on the Company’s website, www.coca-colacompany.com , click on “Investors” and then “Corporate Governance.” Instructions on how to obtain copies of these materials are included in the response to question 27 , on page 89 .

 

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Communicate 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 asktheboard@coca-cola.com .

 

Communications may be distributed to all Directors, or to any individual Director, as appropriate. At the direction of the Board, all mail received may be opened and screened for security purposes. In addition, items that are unrelated to the duties and responsibilities of the Board shall not be distributed. Such items include, but are not limited to:

 

spam;
   
junk mail and mass mailings;
   
product complaints or inquiries;
   
new product suggestions;
   
resumes and other forms of job inquiries;
   
surveys; and
   
business solicitations or advertisements.

 

In addition, material that is trivial, obscene, unduly hostile, threatening or illegal or similarly unsuitable items will be excluded; however, any communication that is excluded will be made available to any independent, non-employee Director upon request.

 

To answer the many questions we receive about our Company and our products, we offer detailed information about common areas of interest on the “Contact Us” page of our website, www.coca-colacompany.com/contact-us .

 

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, although it did not engage any consultants or advisors in 2016. Directors who also serve as employees of the Company do not receive payment for service 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 form and amount 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.

 

Director compensation is provided under The Coca-Cola Company Directors’ Plan effective January 1, 2013 (the “Directors’ Plan”), which is described further below. The Committee on Directors and Corporate Governance and the Board believe that the Directors’ Plan:

 

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

 

2016 Annual Compensation

 

No changes were made to Director compensation in 2016. Under the Directors’ Plan, 2016 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 that are paid out in cash after leaving the Board. 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 on the later of (i) January 15 of the year following the year in which the Director leaves the Board and (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 2016 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.

 

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The following table details the total compensation of the Company’s non-employee Directors for the year ended December 31, 2016.

 

2016 Director Compensation Table

 

Name 1
(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   $ 70,000     $ 200,000     $ 0     $ 0     $ 0     $ 292     $ 270,292  
Ronald W. Allen 2     58,000       200,000       0       0       0       1,198       259,198  
Marc Bolland     50,000       200,000       0       0       0       292       250,292  
Ana Botín     50,000       200,000       0       0       0       43       250,043  
Howard G. Buffett 3     50,000       200,000       0       0       0       7,742       257,742  
Richard M. Daley     50,000       200,000       0       0       0       3,699       253,699  
Barry Diller     70,000       200,000       0       0       0       1,773       271,773  
Helene D. Gayle     50,000       200,000       0       0       0       43       250,043  
Evan G. Greenberg 2     51,356       127,245       0       0       0       249       178,850  
Alexis M. Herman     70,000       200,000       0       0       0       21,366       291,366  
Robert A. Kotick     50,000       200,000       0       0       0       43       250,043  
Maria Elena Lagomasino     70,000       200,000       0       0       0       14,161       284,161  
Sam Nunn     70,000       200,000       0       0       0       33,151       303,151  
David B. Weinberg     50,000       200,000       0       0       0       1,277       251,277  
1 Muhtar Kent is a Company employee and therefore receives no compensation under the Directors’ Plan.
2 Mr. Greenberg resigned from the Board effective October 1, 2016. Therefore, the information above reflects his service on the Board through the end of September 2016. Ronald W. Allen became Chair of the Audit Committee in October 2016, succeeding Mr. Greenberg, and therefore the information above reflects the prorated Chair fee for each.
3 Mr. Buffett is not standing for election at the 2017 Annual Meeting of Shareowners.

 

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 2016, 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 Messrs. H. Allen, R. Allen, Diller, Greenberg and Nunn received an additional $20,000 (or prorated portion thereof) for service as a committee chair.

 

Ms. Botín and Messrs. Daley, Kotick and Weinberg each deferred their 2016 cash compensation into 1,076 share units. Ms. Lagomasino and Messrs. Diller and Nunn each deferred their 2016 cash compensation into 1,506 share units. Mr. R. Allen deferred his 2016 cash compensation into 1,269 share units, which reflects a prorated number of share units as Chair of the Audit Committee. Mr. Greenberg deferred his 2016 cash compensation into 1,065 share units, which reflects a prorated number of share units due to his resignation. 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, 2016.

 

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 (“ASC Topic 718”). The number of share units reported for Mr. Greenberg represents a prorated number of share units due to his resignation.

 

The table below shows the number of outstanding share units held by each Director as of December 30, 2016, the last trading day of the year.

 

Director Outstanding Share Units
as of 12/30/2016
Mr. H. Allen 80,113
Mr. R. Allen 79,747
Mr. Bolland 9,704
Ms. Botín 21,137
Mr. Buffett 29,710
Mr. Daley 31,960
Mr. Diller 113,624
Ms. Gayle 19,846
Mr. Greenberg 35,996
Ms. Herman 42,130
Mr. Kotick 30,183
Ms. Lagomasino 45,527
Mr. Nunn 140,081
Mr. Weinberg 10,814

 

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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, certain amenities and gifts provided to Directors in a connection with a Board meeting and a global system meeting, and the premiums for life insurance (including accidental death and dismemberment and business travel accident 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 Other 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 2016, this program matched up to $10,000 of charitable contributions on a two-for-one basis to tax-exempt arts, cultural, environmental and educational organizations. The amounts paid by the Company in 2016 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 2016 gifts was $40,000.

 

Name   Matching Gifts  
Ms. Herman   $     20,000  
Mr. Nunn     20,000  

 

For Directors who elected coverage prior to 2006 (Mr. Nunn), 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 in 2016 was $10,654.

 

To help expand the Directors’ knowledge of the Company’s products, the Company provides certain products to Directors’ offices without charge. The total cost of Company products provided during 2016 to non-employee Directors was $30,087.

 

In connection with a Board meeting and a global system meeting, Directors received certain amenities and gifts, the total cost of which was $2,114.

 

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 2016 was $2,158.

 

Name   Life Insurance Premiums  
Mr. R. Allen     $ 738  
Mr. Diller     682  
Mr. Nunn     738  

 

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 per year.

 

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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 the 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 and any person who served as a Director during 2016 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, Marc Bolland, Ana Botín, Richard M. Daley, Barry Diller, Helene D. Gayle, Alexis M. Herman, Robert A. Kotick, Maria Elena Lagomasino, Sam Nunn and David B. Weinberg. In addition, the Board previously determined that Evan G. Greenberg, who served as a Director for a portion of 2016, and Howard G. Buffett, who will serve as a Director until the 2017 Annual Meeting, are independent. 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. James Quincey currently serves as the Company’s President and Chief Operating Officer and therefore, if elected, will not be 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.

 

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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
Ana Botín   Immaterial Sales/Purchases   The Board examined the interest received on the Company’s investment of certain cash with Banco Santander, S.A. where Ana Botín, one of our Directors, is Executive Chairman. 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 Banco Santander, S.A., (ii) the investments were made in the ordinary course of business and generated market rate returns and (iii) the Company has had a relationship with Banco Santander, S.A. for many years prior to Ms. Botín’s service as a Director of the Company.
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 38 . 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 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 most of 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 IAC’s predecessor companies 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 Chubb Limited and its subsidiaries (“Chubb”) where Evan G. Greenberg, one of our Directors until October 1, 2016, is Chairman and Chief Executive Officer. Prior to ACE Limited’s acquisition of The Chubb Corporation in January 2016, Mr. Greenberg was Chairman and Chief Executive Officer of ACE Limited, and both ACE Limited and The Chubb Corporation had provided coverage to the Company. The combined company was named Chubb Limited. This relationship is described on page 39 . 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 Chubb, (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 Chubb for many years prior to Mr. Greenberg’s service as a Director of the Company. The Board also examined payments made by the Company to C.V. Starr and Co., Inc. where Mr. Greenberg’s father is Chairman and Chief Executive Officer and a brother is Executive Vice President. The Board determined that the relationship was not material since (i) the amounts involved were less than $1 million, (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 C.V. Starr and Co., Inc. prior to Mr. Greenberg’s service as a Director of the Company.

 

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 (defined below) 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 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.

 

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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. The Committee considers, among other things, 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 Director nominees 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 educational 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.

 

For 2016, the list of approximately 3,800 persons and entities was distributed within the Company to identify any potential transactions. This list was also sent to each of the Company’s approximately 400 accounting locations to be compared to payments and receipts. All ongoing transactions, along with payment and receipt information, were compiled for each person and entity. The information was reviewed and relevant information was presented to the Committee on Directors and Corporate Governance or the Audit Committee, as applicable.

 

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 in New York City. ACI was a tenant prior to the subsidiary’s acquisition of the building. In June 2005, ACI assigned the lease and sublease to ACL. In November 2015, the lease was renewed for a term of approximately 18 years. In 2016, ACL paid approximately $1.1 million in rent and related expenses, which included a rent abatement for 2016. 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.

 

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 9.32% of the Company’s outstanding Common Stock as of February 27, 2017.

 

Berkshire Hathaway Specialty Insurance Company (“BHSI”) is a wholly owned subsidiary of Berkshire Hathaway. In May 2016, the Company and BHSI renewed a one-year insurance contract under which BHSI provides two of the Company’s subsidiaries with insurance covering property on a primary basis. In 2016, the Company’s subsidiaries paid an aggregate of approximately $183,000 to BHSI for insurance coverage in the ordinary course of business.

 

Burlington Northern Santa Fe, LLC (“BNSF”) is a wholly owned subsidiary of Berkshire Hathaway. In 2016, the Company paid BNSF approximately $152,000 in demurrage fees in the ordinary course of business.

 

Business Wire, Inc. (“Business Wire”) is a wholly owned subsidiary of Berkshire Hathaway. In July 2015, the Company and Business Wire entered into a new three-year services agreement under which Business Wire disseminates news releases for the Company. In 2016, the Company paid approximately $228,000 to Business Wire in the ordinary course of business. This business relationship was in place prior to Berkshire Hathaway’s acquisition of Business Wire in 2006.

 

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FlightSafety International Inc. (“FlightSafety”) is a wholly owned subsidiary of Berkshire Hathaway. In 2014, the Company entered into a new five-year agreement with FlightSafety to provide pilot training services to the Company and a new three-year agreement with FlightSafety to provide flight attendant and mechanic training services to the Company. In 2016, the Company entered into a new three-year agreement with FlightSafety to provide flight attendant and mechanic training services to the Company, which replaced the previous three-year agreement. In 2016, the Company paid FlightSafety approximately $616,000 for training services in the ordinary course of business.

 

International Dairy Queen, Inc. (“IDQ”) is a wholly owned subsidiary of Berkshire Hathaway. In 2016, IDQ and its subsidiaries received promotional and marketing incentives from the Company totaling approximately $3.4 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 2016, McLane and its subsidiaries paid approximately $266 million to the Company to purchase fountain syrup and other products in the ordinary course of business. Also in 2016, McLane and its subsidiaries received from the Company approximately $13.1 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.

 

Marmon Holdings, Inc. (“Marmon”) is a wholly owned subsidiary of Berkshire Hathaway. In January 2014, Marmon acquired Cornelius, Inc., Display Technologies, LLC and 3Wire Group, Inc. In 2016, the Company paid Cornelius, Inc. approximately $8.4 million for fountain equipment under a 2006 master agreement, which is renewed on an annual basis. In 2016, the Company paid Display Technologies, LLC approximately $4.4 million for shelving for in-store promotional programs under a three-year supply agreement entered into in February 2014. The term of this agreement has been extended to December 31, 2017. In 2016, the Company paid 3Wire Group, Inc. approximately $14.2 million for fountain equipment parts under a 2005 master agreement, which is renewed on an annual basis. These business relationships were in place for many years prior to Marmon’s acquisition of these three entities and all payments were made in the ordinary course of business.

 

XTRA Lease LLC (“XTRA”) is a wholly owned subsidiary of Berkshire Hathaway. In 2016, the Company paid XTRA approximately $591,000 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 2016, American Express paid the Company approximately $1.4 million in rebates and incentives under the terms of the agreement and in the ordinary course of business. In 2016, the Company paid American Express fees of approximately $817,000 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 was renewed in 2015 for an additional two-year period. In 2016, the Company paid a subsidiary of Moody’s fees of approximately $1.4 million for rating services.

 

Berkshire Hathaway holds a significant equity interest in Wells Fargo & Company (together with its subsidiaries, “Wells Fargo”). In 2016, the Company paid Wells Fargo approximately $399,000 for commercial banking services 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 as favorable to the Company as those that could have been obtained from unrelated third parties.

 

Evan G. Greenberg. Evan G. Greenberg is Chairman and Chief Executive Officer of Chubb Limited. ACE Limited acquired The Chubb Corporation in January 2016 and changed its name to Chubb Limited. Prior to this acquisition, Mr. Greenberg was Chairman and Chief Executive Officer of ACE Limited. Chubb Limited, through its subsidiaries (collectively, “Chubb”), has provided a broad range of insurance related products and services to the Company and its subsidiaries since 1986. During 2016, Chubb provided traditional insurance coverage where the Company sought to transfer risk and fronting services where the Company sought to retain risk. During 2016, Chubb provided the Company and its subsidiaries with insurance covering directors’ and officers’ liability, employment practices liability, property and excess liability on an excess basis, and insurance covering property, auto, product recall, fiduciary liability, employed lawyers’ liability, cyber, prize (hole in one) on a primary basis and an ERISA bond. In 2016, the Company paid Chubb approximately $2.2 million for insurance premiums and approximately $7.3 million in fronting fees. In the opinion of management, the terms of the Company’s insurance coverage and fronting arrangements with Chubb were fair and reasonable and as favorable to the Company as those that could have been obtained from unrelated third parties.

 

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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 Director nominee, each individual named in the 2016 Summary Compensation Table on page 61 , and our Directors, Director nominees and executive officers as a group, all as of February 27, 2017. 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
Shares 1
  Additional Information
Herbert A. Allen   18,098,846   *   Includes 6,000,000 shares held by ACI, 31,315 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. Also includes 37,531 shares held by a family member over which Mr. Allen has disclaimed beneficial ownership. Does not include 80,113 share units deferred under the Directors’ Plan which are settled in cash.
Ronald W. Allen   24,000   *   Includes 4,000 shares held by a family member over which Mr. Allen has disclaimed beneficial ownership. Does not include 79,747 share units deferred under the Directors’ Plan which are settled in cash.
Marc Bolland   10,000   *   Does not include 9,704 share units deferred under the Directors’ Plan which are settled in cash.
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 21,137 share units deferred under the Directors’ Plan which are settled in cash.
Howard G. Buffett   48,592   *   Shares jointly held by Mr. Buffett and a family member. Does not include 29,710 share units deferred under the Directors’ Plan which are settled in cash. Also does not include shares owned by Berkshire Hathaway which are included in the “Principal Shareowners” table on page 42 .
Richard M. Daley   6,500   *   Shares held by a trust of which Mr. Daley is sole trustee and beneficiary. Does not include 31,960 share units deferred under the Directors’ Plan which are settled in cash.
Barry Diller   6,000,000   *   Includes 2,144,034 shares held by a trust of which Mr. Diller is sole trustee and beneficiary, 1,855,966 shares held by a grantor retained annuity trust for the benefit of Mr. Diller and his family members and 2,000,000 shares that may be acquired by a grantor retained annuity trust for the benefit of Mr. Diller and his family members upon the exercise of call options, purchased from an unrelated third party, which are presently exercisable. Does not include 113,624 share units deferred under the Directors’ Plan which are settled in cash.
Helene D. Gayle   3,000   *   Does not include 19,846 share units deferred under the Directors’ Plan which are settled in cash.
Alexis M. Herman   2,000   *   Does not include 42,130 share units deferred under the Directors’ Plan which are settled in cash.
Robert A. Kotick   70,018   *   Includes 18 shares held by a family member through the Uniform Transfers to Minors Act. Does not include 30,183 share units deferred under the Directors’ Plan which are settled in cash.
Maria Elena Lagomasino   23,631   *   Does not include 45,527 share units deferred under the Directors’ Plan which are settled in cash.
Sam Nunn   2,000   *   Does not include 140,081 share units deferred under the Directors’ Plan which are settled in cash.

 

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Name   Aggregate
Number of Shares
Beneficially Owned
  Percent of
Outstanding
Shares 1
  Additional Information
David B. Weinberg   11,424,280   *   Includes 770,430 shares held by family members over which Mr. Weinberg has sole dispositive power, 505,764 shares held by a family member’s grantor retained annuity trust of which Mr. Weinberg is sole trustee and one of three contingent remainder beneficiaries, and 647,166 shares held by a family member’s living trust of which Mr. Weinberg is one of three trustees and is a contingent remainder beneficiary but over which he also has sole dispositive power. Also includes 2,466,558 shares held by a family member’s marital grantor trust of which Mr. Weinberg is one of three trustees and contingent remainder beneficiaries but over which he also has sole dispositive power, and 3,000,000 shares held by three family trusts of which Mr. Weinberg is a current or contingent remainder beneficiary and one of three trustees but over which he also has sole dispositive power. Also includes 48,000 shares held by two family trusts of which Mr. Weinberg is neither a trustee nor a beneficiary but over which he has sole dispositive power. Also includes 3,540,000 shares held by two family limited partnerships over which Mr. Weinberg has sole investment control and shares beneficial ownership interest. Also includes 48,888 shares held by two foundations over which Mr. Weinberg shares investment power with other family members but over which he also has sole dispositive power, and 42,260 shares held by two foundations over which other family members have investment power but over which Mr. Weinberg also has sole dispositive power. Does not include 10,814 share units deferred under the Directors’ Plan which are settled in cash.
Muhtar Kent   14,581,957   *   Includes 160,792 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 82,083 shares credited to Mr. Kent under The Coca-Cola Company 401(k) Plan (the “401(k) Plan”) and 13,673,799 shares that may be acquired upon the exercise of options which are presently exercisable or that will become exercisable on or before April 28, 2017. Does not include 65,062 share units credited under The Coca-Cola Company Supplemental 401(k) Plan (the “Supplemental 401(k) Plan”) which are settled in cash post employment. Also does not include 300,940 unvested performance share units which will be settled in shares upon vesting.
Kathy N. Waller   959,235   *   Includes 15,937 shares credited to Ms. Waller under the 401(k) Plan, 200 shares of restricted stock and 875,295 shares that may be acquired upon the exercise of options which are presently exercisable or that will become exercisable on or before April 28, 2017. Does not include 6,989 share units credited under the Supplemental 401(k) Plan which are settled in cash post employment. Also does not include 28,873 unvested performance share units which will be settled in shares upon vesting.
James Quincey   780,490   *   Includes 44,678 shares held by a family member, 733 shares credited to Mr. Quincey under the 401(k) Plan, 200 shares of restricted stock and 710,384 shares that may be acquired upon the exercise of options which are presently exercisable or that will become exercisable on or before April 28, 2017. Does not include 39 share units credited under the Supplemental 401(k) Plan which are settled in cash post employment. Also does not include 46,504 unvested performance share units and 72,838 unvested restricted stock units which will be settled in shares upon vesting.
Marcos de Quinto   847,102   *   Includes 200 shares of restricted stock and 719,261 shares that may be acquired upon the exercise of options which are presently exercisable or that will become exercisable on or before April 28, 2017. Does not include 22,570 unvested performance share units which will be settled in shares upon vesting.
Irial Finan   3,646,819   *   Includes 1,631 shares credited to Mr. Finan under the 401(k) Plan and 3,317,822 shares that may be acquired upon the exercise of options which are presently exercisable or that will become exercisable on or before April 28, 2017. Does not include 1,959 share units credited under the Supplemental 401(k) Plan which are settled in cash post employment. Also does not include 98,746 unvested performance share units which will be settled in shares upon vesting.
All Directors and
executive officers as
a group (29 persons)
  65,291,055   1.51%   Includes 219,100 shares credited under the 401(k) Plan, 1,400 shares of restricted stock, 27,367,505 shares that may be acquired upon the exercise of options which are presently exercisable or that will become exercisable on or before April 28, 2017 and 20,603 shares held in margin accounts by an executive officer who is not a Named Executive Officer. Does not include 144,494 share units credited under the Supplemental 401(k) Plan and 654,576 share units deferred under the Directors’ Plan, all of which will be settled in cash. Also does not include 871,603 unvested performance share units and 141,883 unvested restricted stock units, which will be settled in shares upon vesting.
* 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 performance share units and restricted stock units, which will be settled in shares upon vesting, also are not included.

 

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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 Shares 4
Berkshire Hathaway Inc. 1
3555 Farnam Street, Suite 1440
Omaha, Nebraska 68131
  400,000,000   9.32%
The Vanguard Group 2
100 Vanguard Blvd.
Malvern, Pennsylvania 19355
  285,883,494   6.66%
BlackRock, Inc. 3
55 East 52 nd Street
New York, New York 10055
  238,477,707   5.56%
1 Berkshire Hathaway, a diversified holding company, has informed the Company that, as of December 31, 2016, it held an aggregate of 400,000,000 shares of Common Stock through subsidiaries.
2 The information is based on a Schedule 13G/A filed by The Vanguard Group with the SEC on February 10, 2017 reporting beneficial ownership as of December 31, 2016. The Vanguard Group reported that it has sole voting power with respect to 6,152,146 shares of Common Stock, sole dispositive power with respect to 278,961,304 shares of Common Stock, shared voting power with respect to 818,420 shares of Common Stock and shared dispositive power with respect to 6,922,190 shares of Common Stock.
3 The information is based on a Schedule 13G/A filed by BlackRock, Inc. with the SEC on January 23, 2017 reporting beneficial ownership as of December 31, 2016. BlackRock, Inc. reported that it has sole voting power with respect to 203,145,281 shares of Common Stock, sole dispositive power with respect to 238,421,331 shares of Common Stock and shared voting and dispositive power with respect to 56,376 shares of Common Stock.
4 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 27, 2017.

 

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 2016.

 

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COMPENSATION

 

ITEM 2 - ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

 

What am I voting on?
   
Shareowners are being asked to approve, on an advisory basis, the compensation of the Named Executive Officers as described in the Compensation Discussion and Analysis beginning on page 44 and the Compensation Tables beginning on page 61 .
   
Voting recommendation:
   
FOR the advisory vote to approve executive compensation. The Compensation Committee takes very seriously its role in the governance of the Company’s compensation programs and values thoughtful input from shareowners. The Compensation Committee will take into account the outcome of the advisory vote when considering future executive compensation decisions.

 

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 beginning on page 44 and the Compensation Tables beginning on page 61 .

 

In deciding how to vote on this proposal, the Board encourages you to read the Compensation Discussion and Analysis and Compensation Tables sections. Over the last several years, we have made several key enhancements to our compensation programs to continue to improve the link between compensation and the Company’s business and talent strategies as well as the long-term interests of our shareowners.

 

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 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 has adopted a policy of providing for annual advisory votes from shareowners on executive compensation. The next such vote will occur at the 2018 Annual Meeting of Shareowners, subject to the outcome of the advisory vote on the frequency of holding the advisory vote to approve executive compensation (see page 76 ).

 

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

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

Message from the Compensation Committee

 

As we have discussed in the last several proxy statements, the Compensation Committee has engaged in a multi-year process of evaluating the Company’s compensation programs and objectives. The results of this evaluation have included redesigning the annual and long-term incentive programs and adopting Equity Stewardship Guidelines. In 2016, we did not make material changes to the design of the compensation programs, but have taken important steps that we want to share with you. We also want you to know what is top of mind for this Committee now and going forward.
   
Aligning compensation and strategy: Our Company is undergoing an important evolution to refocus on our core business model of building strong global brands and leading a dedicated franchise bottling system. The Company is taking clear strategic actions to drive long-term growth for the future. This transformation will cause the Company to look different, both financially and in terms of the number of employees, as territories are refranchised to independent bottlers around the world. As the Company’s strategy evolves, so must our compensation programs. This Committee will be focused on fostering a high-performance culture and continuing to align pay and performance against the key strategic drivers of long-term growth.
   
Target setting: As we highlighted last year, the Compensation Committee enhanced the process by which we set performance goals and test the rigor of incentive targets and performance curves. We devoted an additional in-person meeting in 2016 to this topic, which will become an additional standing meeting each year. See page 51 for additional information.
   
Role of non-financial results in pay programs: We believe an important component of driving long-term value creation is considering the broad range of our Company’s stakeholders, including our shareowners. While we believe the majority of incentive pay should be based on financial metrics tied to our long-term business strategy, progress toward non-financial goals that are critical to our business, including our sustainability focus areas, also adds value for our shareowners and other stakeholders. We have started to take these areas into account in a more structured way in 2016 as part of the annual incentive program (see page 53 ) and will continue to work on this concept in the coming years.
   
You will see in the rest of this Compensation Discussion & Analysis the details of our compensation programs, including the specific decisions we made for the 2016 Named Executive Officers and the rationale for them. We remain committed to listen to your feedback as we continue to refine and evaluate the Company’s compensations programs.

 

     
Maria Elena Helene D. Alexis M.
Lagomasino Gayle Herman

 

 

Compensation Program Enhancements

 

Over the last several years, we have made several key enhancements to our compensation programs to continue to improve the link between compensation and the Company’s business and talent strategies as well as the long-term interests of our shareowners. We:

 

 

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44

 

2016 Performance at a Glance

 

We Are Transforming Our Company

 

In 2016, we continued to focus and make progress on our five strategic initiatives: drive revenue growth through segmented market roles, make disciplined brand and growth investments, drive efficiency through aggressive productivity, streamline and simplify, and focus on our core business model.

 

2016 Achievements

   Expanded our operating margin through 3% price/mix growth and balancing productivity with disciplined investments

 

   Continued momentum in developed markets, led by North America which grew net operating revenues by 4%

 

   Remained committed and consumer-focused in developing and emerging markets amidst persistent macroeconomic pressures

 

   Introduced 500+ new products into the market worldwide, including the successful launch of smartwater and Honest Tea in Western Europe

 

   Continued to expand our growing portfolio through strategic investments, including fairlife milk in the U.S. and Chi, Nigeria’s leading value-added dairy and juice company

 

   Advanced our strategy to grow revenues in our sparkling portfolio, through actions including the Coca-Cola “one-brand” strategy and an integrated marketing campaign

 

   Delivered over $600 million in productivity, which drove operating margin expansion

 

   Strengthened our global bottling system for the long term with strategic actions taken in North America, Latin America, Europe, Africa and Asia

 

   On track to complete refranchising of our Company-owned bottling operations in the U.S. by the end of 2017

 

 

Operating Results

 

VALUE SHARE     REVENUE   (5)%
Reported Net Operating Revenues
  +3%
Organic Revenues (Non-GAAP)
UNIT CASE VOLUME +1%     PROFIT   (15)%
Reported Income Before
Income Taxes
  +8%
Comparable Currency Neutral
Income Before Income Taxes
(Structurally Adjusted) (Non-GAAP)

 

Note: Organic revenues is a non-GAAP financial measure that excludes or has otherwise been adjusted for the impact of acquisitions, divestitures and structural items, as applicable, as well as the impact of changes in foreign currency exchange rates. Comparable currency neutral income before income taxes (structurally adjusted) is a non-GAAP financial measure that excludes or has otherwise been adjusted for items impacting comparability, the impact of changes in foreign currency exchange rates, and the impact of structural changes. See Annex C for a reconciliation of non-GAAP financial measures to our results as reported under accounting principles generally accepted in the U.S. (“GAAP”).

 

Return to Shareowners

 

 

1 Cumulative stock price appreciation plus dividends, with dividends reinvested quarterly.
2 Total does not add due to rounding. Net share repurchases do not include approximately $1.4 billion related to proceeds from employee stock activity. See Annex C.
3 Source: Standard & Poor’s Research Insight. This chart shows how a $100 investment in the Company’s Common Stock on December 31, 2011 would have grown to $137 on December 31, 2016, 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 2016 compensation comparator group (see page 57 ) over the same period, with dividends reinvested quarterly. Includes the Company’s 2016 compensation comparator group 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.

 

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Our Compensation Philosophy

 

While we consider a number of factors in our pay decisions, we are guided by three core principles:

 

1. Pay for Performance. The great majority of pay for executives should be at-risk and performance-based with metrics aligned to the Company’s financial results and business strategy and have a clear connection to the employee’s individual performance.
   
2. Maintain programs that will attract and retain critical talent, while reinforcing a high-performing and accountable culture. Our compensation programs should be competitive in the marketplace and designed to retain talent over the longer term, while holding employees accountable to the Company’s strategy and values.
3. Consider the Coca-Cola system. Our employees are required to operate and have influence in the context of our broad and complex global Coca-Cola system, which includes our independent bottling partners. While the Company had approximately $42 billion in reported net operating revenues in 2016, the Coca-Cola system generates more than $100 billion in revenues, operates in over 200 countries and employs more than 700,000 people. Our executives and employees must not only manage our business but also support our bottlers and other partners. This alignment and a shared vision of success are critical to drive long-term growth.


 

Key Linkages between Pay and Company Performance

 

In the context of our compensation programs, we view Company performance in two primary ways:

 

1. the Company’s operating performance, including results against long-term growth targets; and
   
2. return to shareowners over time, both on an absolute basis and relative to other companies.

 

In addition to Company performance, we take into account individual performance when making compensation decisions.

 

Our compensation plans are designed to link pay and performance. As reflected above, 2016 was a critical year for the Company as we continued to make strong progress in transforming our Company while keeping focused on our consumers. Despite ongoing volatile global economic conditions, the Company delivered its profit target for the full year and took strategic actions to strengthen its global bottling system.

 

When evaluating pay reported in the 2016 Summary Compensation Table against Company performance, it is important to consider the timing of compensation decisions and which performance period informs each of the annual and long-term incentive awards. For instance:

 

long-term incentive awards reported for 2016 were granted in February 2016 and reflect Company and individual performance in 2015, among other factors (see page 53 ); and
   
annual incentive awards reported for 2016 were decided in February 2017 and reflect Company and individual performance in 2016 (see page 52 ).

 

The following highlights linkages between pay and Company performance over the last three years.

 

PAY AND PERFORMANCE AT A GLANCE
         
  CEO Pay Decreased
from 2014
  Annual Incentives Driven by
Company Performance
 
  Reported Pay*   Company Performance Factor*  
  (in millions)      
         
         
  *       Reported pay in the 2016 Summary Compensation Table on page 61 , excluding change in pension value and nonqualified deferred compensation earnings.   *     Does not include individual performance amounts (see page 52 ).  
         
  Performance Share Unit (PSU) Payouts   Stock Options  
  Linked to Key Metrics Over a   Linked Directly to Stock Price  
  Three-Year Performance Period   Intrinsic Value* of Last Three Annual Stock Option Grants:  
  Last Three PSU Performance Periods* Certified:     2016 = $0  
    2    Below Threshold     2015 = $0  
    1    Above Target     2014 = $4.26  
  *     2012-2014, 2013-2015 and 2014-2016 PSUs. See page 55 for metrics, targets and status of outstanding annual PSU programs.   *     Per option, based on the 2016 year-end closing price of $41.46.  

 

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46

 

2016 Compensation Decisions for Named Executive Officers

 

The 2016 compensation decisions were approved for our Named Executive Officers as a result of Company and individual performance.

 

Chief Executive Officer  

 

Muhtar Kent

Chairman of the Board and Chief Executive Officer

 

 

2016 Performance Highlights:

 

KEY ACCOMPLISHMENTS

 

STRATEGIC AND BOARD LEADERSHIP

 

Mr. Kent set the groundwork for continued transformative change as the Company refocuses on its core business model of building strong global brands, enhancing sustainable customer value and leading a strong, dedicated franchise system. As Chairman of the Board, Mr. Kent continued to lead the Board effectively and actively engage Directors and Committee Chairs in all aspects of the business. He created open lines of communication between Directors and management, including through meetings between Directors and Company leaders around the world.

 

REFRANCHISING

 

Mr. Kent led efforts to achieve our goal to refranchise our U.S. bottling operations by the end of 2017. We signed definitive agreements to refranchise our Company-owned bottling operations in China, furthered the evolution of Coca-Cola Beverages Africa, completed the creation of Coca-Cola European Partners and supported the ongoing transformation of the franchising bottling system in Japan.

 

ORDERLY LEADERSHIP SUCCESSION

 

Mr. Kent led a very orderly CEO leadership transition process. 2016 was the first full year of James Quincey serving as President and Chief Operating Officer. Mr. Kent personally saw to the successful onboarding of Mr. Quincey in his new role, leading to the announcement in December 2016 that Mr. Quincey would succeed Mr. Kent as CEO in May 2017.

 

 

 

SUSTAINABILITY FOCUS AREAS

 

WATER REPLENISHMENT
 
The Company and its global bottling partners achieved 115% water replenishment, becoming the first Fortune 500 company to replenish all of the water it uses globally. We also achieved a water use ratio below 2.0 for the first time in Company history.
   
WOMEN
 
Leadership and Diversity: Continued strong leadership in accelerating the development of diverse leadership talent. Continued to be the executive sponsor of the Women’s Leadership Council.
   
  Economically Empowering Women: Our 5by20 initiative had enabled more than 1.2 million women entrepreneurs across our global value chain through the end of 2015, with additional progress in 2016.
   

WELL-BEING

 

Led significant progress in innovations focused on reduced, low and no-calorie products, with over 500 reformulation initiatives underway to reduce added sugar in our beverages.

 

 

Compensation Decisions:

 

Base Salary: No change was made to Mr. Kent’s base salary in 2016. Base salary has remained the same since 2013. No executive officer received an annual increase for 2017 (see page 51 ).

 

Annual Incentive: $4,100,000, comprised of $2,688,000 from applying the Company Performance Factor under the plan formula (84% for 2016) and $1,412,000 for individual performance (see page 52 ). The individual performance amount was determined based on the 2016 performance highlights described above. The key accomplishments above were the primary driver of the individual performance determination, and the Committee also considered progress in our sustainability focus areas.

 

Long-Term Incentive: Mr. Kent received a long-term incentive grant in February 2016 valued at $9,536,527 split into performance share units and stock options.

 


 

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CEO Reported and Realized Pay:

 

The reported pay of the Chairman and Chief Executive Officer in the 2016 Summary Compensation Table (excluding the change in pension value) has decreased since 2014. Since the vast majority of reported pay represents potential pay, we also look at pay actually realized each year, which may include the value of long-term equity compensation granted many years earlier. The following graphic shows reported pay included in the 2016 Summary Compensation Table (excluding the change in pension value) and the realized pay over the last three years.

 

Reported and Realized Pay (2014-2016)

 

 

Reported pay decreased from 2014.

 

In 2015 and 2016, realized pay was higher than reported pay because Mr. Kent exercised expiring stock options.

 

Realized pay (excluding exercising of expiring stock options) decreased from 2015 to 2016.

 

Mr. Kent continues to hold all shares received from vested PSU releases and stock option exercises, other than those withheld for taxes.


 

*     Mr. Kent continues to hold all shares received from vested PSU releases and stock option exercises, other than those withheld for taxes.

 

Reported pay includes base salary, actual annual incentive earned, the grant date fair value of long-term equity compensation and all other compensation, each as reported in the 2016 Summary Compensation Table on page 61 .

 

Realized pay includes base salary, actual annual incentive earned and all other compensation, each as reported in the 2016 Summary Compensation Table on page 61 and the value of stock options exercised or stock awards released in the applicable year, net of tax withholdings.


 

Chief Financial Officer  

Kathy N. Waller

Executive Vice President and Chief Financial Officer

 

 

2016 Performance Highlights:

 

Ms. Waller delivered a strong performance in 2016, leading the Finance function to maintain high standards of excellence in financial reporting and analysis, governance and controls and value creation. She continues to deliver and create value for the Company by managing cash and capital structure and taking advantage of unique and timely opportunities in the evolving and challenging global markets. In addition, she continues to build and manage currency and commodity hedging programs to address volatility risks in the market and create a competitive advantage for the Company. Under her leadership, the Company successfully completed several important bottler refranchising initiatives, including the creation of Coca-Cola European Partners, the largest independent bottler in the system based on total revenue. She continued the aggressive programs to drive process and cost efficiencies and delivered against those targets. Ms. Waller is committed to ensuring a capable and diverse finance organization. She continued to develop women and diverse talent for leadership roles and focus on attracting and retaining talented associates in the Finance organization and across the Company.

 

 

Compensation Decisions:

 

Base Salary: Ms. Waller received a merit increase of 3% on April 1, 2016. No executive officer received an annual increase for 2017 (see page 51 ).

 

Annual Incentive: $1,056,805, comprised of $792,604 from applying the Company Performance Factor under the plan formula (84% for 2016) and $264,201 for individual performance (see page 52 ). The individual performance amount was determined based on the 2016 performance highlights described above.

 

Long-Term Incentive: Ms. Waller received a long-term incentive grant in February 2016 valued at $3,528,497, split into performance share units and stock options.


 

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48

 
Other Named Executive Officers  

James Quincey

President and Chief Operating Officer in 2016; will assume role as Chief Executive Officer on May 1, 2017

 

 

2016 Performance Highlights:

 

2016 was Mr. Quincey’s first full year as President and Chief Operating Officer. He completed a seamless transition with solid operating results, and, in December 2016, was elected to succeed Mr. Kent as CEO in May 2017. Mr. Quincey was a key leader in refranchising efforts around the world in 2016, including a significant role in the creation of Coca-Cola European Partners and the refranchising progress in the U.S. Mr. Quincey led continued innovations in packaging, including coordination with bottlers and customers to enhance availability of smaller packaging options. He focused on addressing evolving consumer preferences by expanding product offerings and working to reduce added sugar in our products, with over 500 initiatives in progress. Following the death of the Chief Information Officer, Mr. Quincey assumed these duties on an interim basis while providing leadership to the IT team. He helped develop an updated plan to address cybersecurity threats and worked with the new Chief Information Officer to restructure IT services for greater efficiency and effectiveness. Mr. Quincey led global efforts around employee engagement and the employee experience. This included the launch of “Elevating the Employee Experience”, a multi-year initiative focused on operating effectiveness, leadership, culture and communications. He was a key driver of the Company’s continued progress in its sustainability focus areas of water replenishment, women and well-being.

 

 

Compensation Decisions:

 

Base Salary: Mr. Quincey received a merit increase of 3.5% on April 1, 2016. No executive officer received an annual increase for 2017 (see page 51 ).

 

Annual Incentive: $2,021,355, comprised of $1,369,305 from applying the Company Performance Factor under the plan formula (84% for 2016) and $652,050 for individual performance (see page 52 ). The individual performance amount was determined based on the 2016 performance highlights described above.

 

Long-Term Incentive: Mr. Quincey received a long-term incentive grant in February 2016 valued at $5,340,443, split into performance share units and stock options.

 

 

Marcos de Quinto

Executive Vice President and Chief Marketing Officer

 

 

2016 Performance Highlights:

 

Mr. de Quinto continued his effective leadership of the Global Marketing function, providing thought leadership, strategic and creative direction, strong governance and innovative operating models and analytical tools to address category challenges. He grew the Company’s brands, and strengthened worldwide marketing capabilities, while improving productivity. Mr. de Quinto was the chief architect for the development and execution of the new Coca-Cola “one brand” strategy, the “Taste the Feeling” campaign, and integrated marketing communications and a visual identity system to drive greater long-term growth. He was involved in the development of the Company’s overall Stills portfolio vision and strategy to capitalize on evolving consumer trends toward health, natural and functional benefits as core drivers of future growth. Mr. de Quinto also led key initiatives to accelerate the development of talent and differentiating capabilities across the Global Marketing function, with a particular focus on enhanced people assessment and training programs, new digital skills and approaches, more comprehensive business planning, processes and tools. He also focused on greater value-creating ways of managing marketing assets, partnerships and external agency networks to drive more strategic and innovative thinking and consistently higher quality work, while achieving productivity objectives.

 

 

Compensation Decisions:

 

Base Salary: Mr. de Quinto received a merit increase of 3% on April 1, 2016. No executive officer received an annual increase for 2017 (see page 51 ).

 

Annual Incentive: $1,156,530 comprised of $823,292 from applying the Company Performance Factor under the plan formula (84% for 2016) and $333,238 for individual performance (see page 52 ). The individual performance amount was determined based on the 2016 performance highlights described above.

 

Long-Term Incentive: Mr. de Quinto received a long-term incentive grant in February 2016 valued at $3,969,593, split into performance share units and stock options.


 

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49

 

Irial Finan

Executive Vice President and President, Bottling Investments and Supply Chain

 

 

2016 Performance Highlights:

 

Mr. Finan’s leadership of the Bottling Investments Group (BIG) resulted in solid contributions to the Company’s performance against challenging market headwinds. He led the BIG team in successfully refranchising the German and South African Company-owned bottling operations to newly created franchise partners and accelerating the refranchising of Coca-Cola Refreshments to franchise partners in the U.S. Mr. Finan oversaw the opening of two new bottling plants in Cambodia and Qatar and key innovations, including the launch of the “affordable single serve package” in India and the expansion of sales force automation across BIG territories. Mr. Finan also created a culture of people development while expanding the diversity of BIG’s leadership team.

 

 

Compensation Decisions:

 

Base Salary: Mr. Finan received a merit increase of 3% on April 1, 2016. No executive officer received an annual increase for 2017 (see page 51 ).

 

Annual Incentive: $1,358,432, comprised of $1,152,609 from applying the Company Performance Factor under the plan formula (84% for 2016) and $205,823 for individual performance (see page 52 ). The individual performance amount was determined based on the 2016 performance highlights described above.

 

Long-Term Incentive: Mr. Finan received a long-term incentive grant in February 2016 valued at $3,973,556, split into performance share units and stock options.


 

 

CHECKLIST OF COMPENSATION PRACTICES
         
  What We Do   What We Don’t Do  
         
 

   Vast majority of pay is performance-based and not guaranteed

 

   Align pay and performance

 

   Engage in a rigorous target-setting process for incentive metrics

 

   Adhere to Equity Stewardship Guidelines

 

   Apply stringent share ownership and share retention policies

 

   Provide limited perquisites with sound business rationale  

 

   Include “double-trigger” change in control provisions in equity awards

 

   Prohibit hedging and short sales by executive officers and Directors

 

   Discourage pledging of Company stock and require pre-approval

 

   Mitigate undue risk in compensation programs

 

   Include clawback provisions in our key compensation programs

 

   Generally do not utilize employment contracts (unless required by law)

 

   No dividends or dividend equivalents on unearned PSUs

 

   No repricing of underwater stock options

 

   No tax gross-ups for personal aircraft use or financial planning

 

   No special change in control severance provisions for executive officers  

 

   No tax gross-ups related to change in control

 

 

 

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Elements of Compensation and Link to Strategy

 

We have three elements of total direct compensation: base salary, annual incentives and long-term incentives, which are described below. We also provide limited perquisites (see page 59 ) and standard retirement and benefit plans (see pages 59 and 91 ).

 

2016 Total Direct Compensation Mix *

 

 

 

* Base salary, actual annual incentive and the grant date fair value of the annual long-term incentive award for 2016.

 

Base Salary

 

Base salary is fixed cash compensation. Salary is reviewed annually and adjusted when appropriate. To promote a performance culture, increases are not automatic or guaranteed. No Named Executive Officer received an annual merit increase in 2017 as the Company focuses on productivity.

 

Base salary is designed to recognize individual performance, scope of responsibility, leadership skills and experience.

 

Competitive base salaries help attract and retain executive talent.

 

Annual and Long-Term Incentives

 

IMPORTANT FACTS ABOUT OUR INCENTIVE TARGETS
         
  Choice of Incentive Metrics   Rigor of Incentive Metrics  
 

The key financial metrics in our incentive plans (net operating revenue, profit before tax, volume and economic profit growth) align with our strategy for long-term value creation.

We make certain adjustments when calculating results, such as for the impact of foreign currency exchange rates, changes in financial accounting reporting regulations, and costs and other financial implications associated with corporate transactions.

Our targets are currency neutral because we believe incentive targets should measure the underlying results of the business and that business leaders should be encouraged to make decisions that drive long-term sustainable growth rather than to address short-term currency fluctuations or short-term and nonrecurring items. This philosophy has been in place for several years, and we review this issue regularly, as it is an important concern for companies like ours with significant exposure to foreign currency exchange rate fluctuations.

 

 

In 2016, we enhanced the target-setting process to test the robustness of our already strong incentive targets and performance curve setting.

The setting of our performance curves considered the following:

Performance levels necessary to achieve our long-term goals and deliver superior shareowner returns.

The likelihood of achieving various levels of performance based on historical results over a ten-year period.

Metrics, program designs and results at companies in our comparator group.

Performance relative to our comparator companies.

We have added a standing meeting each year to devote additional time to this important process.

 

 

 

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Annual Incentive Compensation

 

Overview

 

Annual incentives are determined under the Performance Incentive Plan of The Coca-Cola Company (the “Performance Incentive Plan”). In 2016, approximately 14,000 employees participated in the Performance Incentive Plan.

 

Awards for executive officers are determined based on a formula with predetermined financial measures aligned with the Company’s long-term growth metrics (“Company Performance Factor”), as well as the executive’s individual performance (“Individual Performance Amount”). In 2016, we reduced the maximum payout from 300% to 250% of the executive officer’s target amount.

 

See 2016 Compensation Decisions for Named Executive Officers beginning on page 47 for details of the 2016 annual incentives paid to the Named Executive Officers.

 

2016 Annual Incentive Formula

 

  Base Salary X Target Percentage X   Company
Performance
Factor
Individual
Performance
Amount
Annual
Incentive

Amount*
 

 

* The annual incentive plan includes a pool funding feature intended to allow the awards to Named Executive Officers to meet the requirements for tax deductibility under Section 162(m) of the Tax Code. The maximum pool that can be used to pay annual incentives to Named Executive Officers is 0.40% of the Company’s comparable income before income taxes and there is an additional cap of 0.15% of comparable income before income taxes for the Chief Executive Officer. The Compensation Committee does not expect to award the full amount authorized by this pool funding and the amounts awarded for 2016 are well below these maximums.

 

2016 Named Executive Officer Target Annual Incentive
Name Base
Salary
(12/31/2016)
Target (%) Target
Annual
Incentive
($)
Mr. Kent $ 1,600,000 200% $ 3,200,000
Ms. Waller 754,861 125% 943,576
Mr. Quincey 931,500 175% 1,630,125
Mr. de Quinto 784,088 125% 980,110
Mr. Finan 914,769 150% 1,372,154

 

Company Performance Factor

 

Targets are informed by our long-term growth target ranges and our annual business plan. Targets are designed to be challenging but achievable.

 

Actual results (rounded to the nearest half percent) are compared to the target and then the percentage achieved is weighted to determine the final Company Performance Factor.

 

The payout curve is linear from 0% to 200% of the target. Maximum is 200% of the target and set to be difficult to achieve. For example, to achieve the maximum payout for net operating revenue growth, the Company would have had to achieve 10% growth in the year.

 

2016 Targets and Results
Performance Metric*   Target     Actual
Performance
    Result (% of the
Target Achieved)
    Weighting     Weighted
Result
 
Profit Before Tax Growth     7 %     8.5 %     121 %     50 %     61 %
Net Operating Revenue Growth     5 %     3.5 %     70 %     25 %     18 %
Unit Case Volume Growth     2.5 %     0.5 %     20 %     25 %     5 %
    Company Performance Factor     84 %
* Profit before tax growth and net operating revenue growth are calculated after adjusting for the impact of currency and certain nonrecurring items affecting comparability. These measures differ from profit before tax growth and net operating revenue growth reported under GAAP, primarily due to the impact of currency, asset impairments/restructuring, productivity and reinvestment program, net charges by equity investees, transaction gains/losses and other items. In addition, these measures are calculated after adjusting for the impact of structural items. Structural items generally refer to acquisitions or dispositions of bottling, distribution or canning operations and consolidation or deconsolidation of bottling and distribution entities for accounting purposes. We believe using these adjusted measures of profit before tax growth and net operating revenue growth are appropriate because they provide a more consistent comparison against the prior year.

 

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Individual Performance Amounts

 

An Individual Performance Amount (maximum of 50% of target) may be awarded based on an assessment of an executive’s individual performance throughout the year. For the Named Executive Officers, consideration is given for contributions toward the Company’s strategic initiatives on People, Planet, Productivity, Partners, Portfolio, and Profit. This also includes quantitative and qualitative factors (for example, each executive’s contribution to overall Company results and attainment of business/operating unit goals) and other priorities such as volume and value share, total shareowner return and sustainability. As discussed above, the Committee had an increased focus on individual performance through the lens of non-financial initiatives that benefit the long-term strength of the Company. See 2016 Compensation Decisions for Named Executive Officers beginning on page 47 .

 

Long-Term Incentive Compensation

 

Overview

 

The Company grants long-term incentive compensation to reward performance over the longer term. The vast majority of these awards are performance based. Beginning in 2015 and continuing in 2016, annual long-term incentive awards are equity-based for Named Executive Officers and other senior executives and leaders, and cash-based for other eligible employees. In 2016, approximately 6,600 employees received long-term incentive compensation, of which approximately 700 employees received equity awards.

 

Annual long-term incentive awards are made in February of each year.

 

A limited number of other awards may be granted throughout the year.

 

See 2016 Compensation Decisions for Named Executive Officers beginning on page 47 for details of the 2016 long-term equity awards granted to Named Executive Officers.

 

All equity awards made under our long-term incentive program are subject to our Equity Stewardship Guidelines implemented in 2014. An update regarding our 2016 progress against these guidelines is included below under Equity Stewardship Guidelines and Scorecard.

 

Long-Term Incentive Annual Awards: Amounts and Performance Measures

 

The Compensation Committee sets ranges for long-term incentive compensation for each job grade at the senior executive levels. The ranges were informed by a survey of our comparator group’s and similar companies’ pay practices. The Compensation Committee does not target a specific percentile ranking against our comparator group and may grant long-term incentive awards at the higher end of the range for a variety of factors, including individual performance and to reflect support of the larger Coca-Cola system. The actual grant date value of long-term incentive compensation awarded within such ranges is individually determined at the discretion of the Compensation Committee. Consideration is given to the individual’s skills, experience and future potential, the prior year’s award value, as well as the individual’s and Company’s performance in the prior year.

 

Once the value of the long-term incentive award is determined, the Compensation Committee grants a portion of the award in stock options and a portion in PSUs. When determining the number of stock options awarded, a Black-Scholes value is first calculated and, beginning in 2015 and continuing in 2016, a floor and ceiling are applied based on a 30-day average stock price. This stock option “guardrail” increases predictability, helps manage the burn rate commitment and is intended to mitigate against excessively high and low Black-Scholes values. For stock option grants in 2016, the low end of our guardrail was used, which valued options at 20% of the 30-day average stock price. This resulted in fewer stock options actually being granted than the pure Black-Scholes model would have suggested. PSUs are valued based on a 30-day average stock price for purposes of determining target award values.

 

Due to the rules for how the grant date fair value of long-term incentive awards must be calculated for accounting purposes, the 2016 Summary Compensation Table may not reflect the same stock option and PSU values described above.

 

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How PSU Targets are Determined

 

Beginning in 2007, growth in economic profit has been the performance measure for the annual PSU awards because it is an important measure of the Company’s long-term strength. 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.

 

Beginning in 2015 and continuing with the 2016 awards, growth in net operating revenue was added as a performance measure for our annual PSU awards (30% weighting) because it is a key component of our business strategy.

 

Performance targets for growth in economic profit and net operating revenue are originally derived from the three-year business plan and then set by the Compensation Committee after a detailed review which included conducting probability analyses, benchmarking performance and evaluating the practices of comparator companies. Participants receive 35% of the award at the threshold level, 100% of the award at the target level and 150% of the award at the maximum level, prior to application of the total shareowner return multiplier. With the total shareowner return multiplier, payouts can range from 0% to 187.5%.

 

Performance Share Units: Relative Total Shareowner Return Modifier and Status of Programs

 

Relative Total Shareowner Return Modifier

 

The Compensation Committee added a relative total shareowner return modifier to PSU awards beginning with the 2014-2016 performance period to further link awards to shareowner value creation.

 

The number 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 57 ) falls outside of a defined range. Specifically, after the 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 75 th percentile of the comparator group The award will be increased 25%
At or above the 25 th and below the 75 th percentile of our comparator group No change to the award
Below the 25 th percentile of our comparator group The award will be decreased 25%

 

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Status of Annual PSU Programs

 

Performance Period   Performance Measure   Threshold, Target and
Maximum Performance
Levels
  Status
2013-2015 1,3   Compound annual growth in economic profit   Threshold = 4.4%
Target = 6.4%
Maximum = 8.4%
  Results were certified in February 2016.
      No shares were earned from these awards because performance was below the threshold level.
2014-2016 1,3   Compound annual growth in economic profit   Threshold = 6.9%
Target = 8.9%
Maximum = 10.9%
  Results were certified in February 2017.
      Economic profit growth was at the maximum level and the relative total shareowner return modifier was not triggered up or down, as total shareowner return was above the 25 th percentile and below the 75 th percentile (see page 54 ). Final payout was certified at 150%, which was driven by effective management of currency neutral operating results and capital. The shares earned are subject to an additional holding period through February 2018.
2015-2017 2,3   70% compound annual growth in economic profit

30% net operating revenue growth 4
  Threshold = 4.5%
Target = 7.1%
Maximum = 9.1%

Threshold = 2.3%
Target = 5.0%
Maximum = 7.1%
  Through December 31, 2016, payout is projected above target. Company performance over the remaining year of the performance period will determine the number of shares earned, if any.
      Results will be certified in February 2018, including applying the relative total shareowner return modifier, and any shares earned will be subject to an additional holding period through February 2019.
2016-2018 2,3   70% compound annual growth in economic profit

30% compound annual growth in net operating revenue 4
  Threshold = 3.9%
Target = 7.9%
Maximum = 11.9%

Threshold = 3.0%
Target = 5.0%
Maximum = 7.0%
  Through December 31, 2016, payout is projected near the target level. Company performance over the remaining two years of the performance period will determine the number of shares earned, if any.
      Results will be certified in February 2019, including applying the relative total shareowner return modifier, and any shares earned will be subject to an additional holding period through February 2020.
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 Participants receive 35% 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.
3 The calculation of economic profit growth for the 2013-2015 and 2014-2016 periods was adjusted, and the 2015-2017 and 2016-2018 periods will be adjusted, to exclude items impacting comparability and to exclude structural items that are significant to the Company as a whole, including the refranchising of territories in North America. For the 2014-2016, 2015-2017 and 2016-2018 periods, economic profit growth is calculated on a currency neutral basis.
4 The 2015-2017 PSU program provides for net operating revenue growth to be based on three one-year comparable currency neutral net operating revenue growth targets tied to total Company or group/business unit results, as applicable. The net operating revenue growth target for the 2015-2017 PSU program included in the table above is the one-year 2016 total Company target. The 2016-2018 PSU program provides for net operating revenue growth to be based on a three-year compound annual growth target tied to total Company results. This measure differs from net operating revenue growth reported under GAAP, primarily due to the impact of currency and other items. In addition, the calculation of net operating revenue growth for the 2015 and 2016 periods were adjusted, and the 2017 and 2016-2018 periods will be adjusted, to exclude items impacting comparability and to exclude structural items that are significant to the Company as a whole, including the refranchising of territories in North America.

 

Other Long-Term Incentive Awards

 

The vast majority of equity awards are made as part of the annual long-term incentive grants in February of each year. During the year, a limited number of additional equity awards may be granted, either as time-based restricted stock units or PSUs.

 

Time-based restricted stock units are typically used for critical retention situations, make-whole awards for newly hired employees who forfeited equity awards at a prior employer, awards when employees return to the Company from bottlers, special recognition, promotions or when other forms of awards are not available for legal or tax reasons.
   
From time to time, we establish additional PSU programs related to specific performance goals to motivate and reward for specific initiatives.

 

No Named Executive Officer received such awards in 2016.

 

Equity Stewardship Guidelines and Scorecard

 

In 2014, we adopted Equity Stewardship Guidelines which specify how we will use long-term equity compensation. The Equity Stewardship Guidelines can be viewed on the Company’s website at www.coca-colacompany.com/equity-stewardship-guidelines .

 

Primary features of the Equity Stewardship Guidelines include:

 

A burn rate commitment of 0.8% in 2015 and an average of 0.4% thereafter, which makes availability of shares used for equity awards more certain.
   
Significant reduction in our use of stock options.
   
Significant reduction in the number of equity-eligible participants in the long-term incentive program by introduction of performance cash awards.
   
Increased transparency by providing an Equity Scorecard.
   
Commitment to continue share repurchases with 100% of proceeds from the exercise of stock options, which reduces potential dilution.

 

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The Equity Scorecard below provides information for 2016:

 

The annual equity awards represent the vast majority of equity awards granted during the year.
   
Overhang primarily includes outstanding awards granted under plans (“Prior Plans”) in place prior to adoption of The Coca-Cola Company 2014 Equity Plan, as amended (the “2014 Equity Plan”). Awards from Prior Plans that expire or are forfeited will not be issued or available for future issuance. Overhang will decline each year as equity awards are exercised or realized, and as awards from Prior Plans expire or are forfeited.
   
In the Equity Scorecard, actual dilution is how much the equity issued to employees reduces the value of existing shares. Actual dilution is expected to continue to be less than 1% per year going forward, because 100% of the proceeds received from employee stock option exercises are used to repurchase shares and our burn rate is below 1%. The Company repurchases additional shares through its share repurchase program, which resulted in a decrease in Common Stock outstanding in 2016.
   
EQUITY SCORECARD