Shareholders: Don’t Let Coke Bottle Up Stock Option Data

Press Release from United for a Fair Economy
For immediate release - April 14, 2004
Contact: Betsy Leondar-Wright, (617) 423-2148 x13

Shareholders: Don’t Let Coke Bottle Up Stock Option Data

Campaign Targets Corporate Pay and Predatory Lending at 6 Firms

BOSTON – “Do corporate stock options fuel the growing racial and gender wealth gap in America?” This question will be considered by shareholders of Coca-Cola at the company’s annual meeting, April 21 in Wilmington, Delaware.

The proposal at Coca-Cola asks the company’s Board to report on the 2003 distribution of stock options by the race and gender of option recipients.

The proposal is one of six filed by Responsible Wealth members to be voted on this spring. Four proposals challenge companies on stock option diversity reports; two target predatory lending practices.

A proposal introduced with Lehman Brothers was withdrawn after the company agreed to publish additional information about its investment banking client selection criteria. In its disclosure, Lehman Brothers became the first large investment bank to include evaluation of a client’s corporate social responsibility record as a part of the client selection process.

“Options are the ”˜most valuable player’ awards given by companies. We want to make sure that those whom company diversity reports say are rising in power and responsibility, are in fact receiving a fair share of the wealth created by the corporation,” said Scott Klinger, Co-Director of Responsible Wealth. Klinger will present the proposal to Coca-Cola shareholders.

“With this first-time resolution, Responsible Wealth hopes to ensure that all of the corporation’s employees receive wealth-creating opportunities that fairly reflect their role and contribution to the company. The report will help investors ensure that there is no stock option glass ceiling at Coke that might create future liabilities for the company and its shareholders,” Klinger said.

In 2000, Coca-Cola settled one of the nation’s largest racial discrimination suits for $192 million. In 2003, the court-appointed task force assigned to review Coke’s diversity progress found that while the company had been successful at promoting women and minorities at faster rates than white men overall, they had failed to meet objectives in the most senior positions. It is in these positions where stock options are concentrated.

Coca-Cola Company is now one of hundreds of large companies to publish a diversity report, including its EEO-1 workforce diversity data, allowing shareholders and other interested parties to see the Company’s progress in creating opportunities for women and people of color.

“Coca-Cola has made significant strides in its diversity initiatives, but being a leader means forging new ground. Just as Coke was a leader in expensing stock options, we want Coke to be the leader in examining whether the distribution of stock options furthers the company’s overall diversity goals. Stock options can allow employees to share billions of dollars of wealth that they have collectively created. Being transparent about who gets wealth-creating options is an important first step,” said Klinger.

The Federal Reserve Survey of Consumer Finance reports that the racial wealth gap in America continues to widen. Corporate pay practices are just one cause of this trend, where the highest levels of executive pay and the overwhelming majority of stock options go to white males.

“Corporate compensation practices play an important role in the racial wealth divide. Corporations that practice predatory lending and base their executive pay on increasing profits are, in effect, transferring wealth from low-income people in their communities, to already wealthy and powerful corporate leaders,” said Klinger.

Responsible Wealth will also bring stock option glass ceiling proposals to shareholder meetings of Verizon Communications (April 28 in Richmond, VA), Exxon Mobil (May 26 in Dallas, TX) and Wal-Mart (June 6 in Fayetteville, AR), requesting stock option glass ceiling reports from the corporations.

In addition, Responsible Wealth has filed resolutions on predatory lending practices, by which financial institutions target low-income customers, the elderly and communities of color and strip equity from those who are economically vulnerable. Responsible Wealth has filed resolutions with Wells Fargo (meeting April 27 in San Francisco) and American International Group (meeting May 19 in New York) seeking to link executive pay to the goal of eradicating predatory lending.

Responsible Wealth (www.responsiblewealth.org) is a national network of affluent Americans who are concerned about deepening economic inequality and advocate widespread prosperity.

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