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In response to the growing political and regulatory pressure on US corporations, Coca-Cola has announced that it is to deduct stock options for its executives and employees from its profits.

Coca-Cola's decision, announced by chairman and CEO, Doug Daft, was backed by Warren Buffett, the influential investor who is a director and major shareholder in Coca-Cola. However, it is still likely to send shockwaves through corporate America as many US companies remain strongly opposed to this stricter treatment of options.

The move follows calls for political action in the wake of the succession of corporate scandals. Some observers have commented that there is a race among top US executives to gain the moral high ground as support grows for tougher corporate governance to restore faith in the US corporate system.

While Lawrence Lindsey, President George W. Bush's chief economic adviser, has said the solution is to enforce existing laws rather than draw up new legislation, Sandy Weill, chairman and CEO of the Citigroup banking corporation, has called for new laws, laying out proposals for wide-reaching legislative reforms.


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