Teamsters Call for Independent Board Chair at Coke, Urge Investor Support

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International Brotherhood of Teamsters

Apr 06, 2010, 12:25 ET

Teamsters Cite Proposed CCE Transaction Among Urgent Reasons for Governance Reform

WASHINGTON, April 6 /PRNewswire-USNewswire/ -- The International Brotherhood of Teamsters today asked shareholders of The Coca-Cola Company [NYSE: KO] to support the union's proposal for an independent board chairman at Coca-Cola's upcoming annual meeting on April 21 in Duluth, Ga.

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In a letter to shareholders, Teamsters General Secretary-Treasurer C. Thomas Keegel said that an independent chairman at Coca-Cola is critical to ensuring rigorous oversight of management -- particularly as the company moves forward with plans to acquire its largest bottler, Coca-Cola Enterprises, Inc.'s [NYSE: CCE], North American operations.

In the proposed transaction, Coca-Cola will absorb the bulk of CCE's business and its 59,000-strong workforce in North America. The proposed transaction leaves little room for error. With 50 percent of Coca-Cola's revenue to come from North America, up from 30 percent currently, pressures on management will increase dramatically because the mature North American market has more limited growth opportunities than other parts of the world.

In addition, the proposed transaction will greatly increase the company's focus on bottling operations which historically have narrower margins than Coca-Cola's current business. Adding to the pressure, the company's main competitor PepsiCo, which acquired its two largest North American bottlers in February this year, has now a significant head start in integrating its business operations.

"Coca-Cola's revolving door of overpaid, underperforming chairmen/CEO's over the years has led many large investors to join our call for independent board leadership," Keegel said. "With such significant management challenges ahead, independent board leadership is needed now more than ever."

The Teamsters' letter to investors also raised concerns regarding Coca-Cola's board composition, which includes long-tenured and potentially conflicted directors with leadership roles on the board's key committees, further exacerbating the need for independent board leadership.

Founded in 1903, the International Brotherhood of Teamsters represents 1.4 million hardworking men and women in the United States, Canada and Puerto Rico including more than 15,000 who produce, package and distribute Coca-Cola products.

SOURCE International Brotherhood of Teamsters