Company: Coca Cola
Coca Cola director's role questioned
|13th Apr 2004
||Questionable Business Practice
|An advisor to shareholders on corporate governance issues has questioned Warren Buffett's independence as a director of soft drinks giant Coca-Cola.
Institutional Shareholder Services (ISS) has urged investors not to re-appoint Mr Buffett, citing his business links to the company.
Coca-Cola dismissed the complaint and called Mr Buffett "a man of unimpeachable integrity".
It added that Mr Buffett's position was in line with stock exchange rules.
The problem, according to ISS is that companies controlled by Mr Buffett's Berkshire Hathaway investment firm buys millions of dollars of products from Coca-Cola every year.
A subsidiary called McLane, for example, last year purchased $104m of syrup and other goods from Coca-Cola.
The drinks maker, meanwhile, buys services such as advertising from companies controlled by Mr Buffett.
ISS argues that because of these relationships, Mr Buffett - one of the world's most successful investors - is far from independent and has compromised his position on the company's audit committee.
Coca-Cola, however, are keen to retain Mr Buffett's services.
The company says that his position as the company's biggest shareholders gives him a unique position and it would be a waste not to benefit from his experience.
It also said that ISS was basing its complaint on rules that applied only to the Nasdaq index and not the New York Stock Exchange. Coca-Cola shares are not traded on the technology-dominated Nasdaq.
In a statement the company said: "We think our investors would seriously question our judgement if we were to forfeit Mr Buffett's counsel based only on a definition of independence promulgated by a stock exchange where our shares are not listed."
ISS also called on shareholders to split the roles of chief executive and chairman, which are currently held by Douglas Daft.
Separately, Deval Patrick resigned as Coca-Cola's general counsel amid a probe into the company's accounts.
It has been alleged that Coca-Cola artificially inflated sales.