urged its shareholders not to heed the advice of an advisory group that thinks the soft-drink giant should kick Warren Buffett off its board and split the position of chief executive and chairman at an April 21 meeting.
Institutional Shareholder Services said Buffett shouldn't be re-elected to the board because companies controlled by his
holding company, McLane and Dairy Queen, do business with Coca-Cola. The proxy group, whose opinions on corporate governance often hold sway with institutional investors, thinks Berkshire's ownership of the companies creates a conflict of interest for Buffett and could influence his independence with Coke.
Buffett is the richest man in American and Coke's largest shareholder. He has been a tireless champion of above-board corporate governance practices, particularly in the area of options compensation, which Coke in 2002 agreed to expense at his urging. In a filing with the
Securities and Exchange Commission
, Coca-Cola said it opposed the ISS recommendation.
"We disagree with their analysis," the company said. "Mr. Buffett is a man with an eminent reputation for integrity and his effectiveness as an audit committee member is widely regarded."
The company also disputed another ISS recommendation that it split its CEO and chairman posts, both of which are currently held by Douglas Daft, who is retiring. The group proposed that an independent director be named chairman.
In its filing, the company noted that its board currently has a member serving as a de facto lead director, an arrangement that "provides a satisfactory counterbalance to the combined chairman and CEO post." Coke said it might split the roles when "circumstances warrant it."1.