US: Coke reforms executive severance packages
The Coca-Cola Company has introduced new measures to prevent excessive pay-offs to departing executives.
According to US workers union the International Brotherhood of Teamsters, an executive compensation reform will enhance shareholder rights at Coke.
Teamsters said that, after "years of rewarding failed executives with lavish severance packages," a new policy will empower shareholders to approve severance agreements above 2.99 times annual salaries plus bonuses.
Teamsters' general secretary-treasurer Thomas Keegel said: "In the last decade, Coca-Cola shareholders have seen a revolving door of top executives cash in big rewards while financial performance lagged. It's time Coke invested in the long-term growth of the company rather than country club dues for outgoing bosses."
Teamsters proposed the reform at Coca-Cola's 2005 annual meeting, and although just 40% of the shares cast voted in favour of the proposal, Coke took the idea on board. The proposal argued that, while sales and earnings suffered, Coke was paying out massive severance costs - including those to former CEO Douglas Ivester, who when departing in 1999 after three years in the job, received a severance package worth US$119m.
Sectors: Soft drinks
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