8-K/ALeadership ChangesExhibits & Filings

COCA COLA CO 8-K/A Report, Executive Changes (Dec 15, 2010)

Filed December 15, 2010For Securities:KO

Summary

This 8-K/A filing by The Coca-Cola Company primarily announces the election of Howard G. Buffett to its Board of Directors, effective December 9, 2010. Mr. Buffett, son of Berkshire Hathaway Chairman Warren E. Buffett, will serve on the Public Issues and Diversity Review Committee. His compensation as a director will be $175,000 annually, with a portion paid in cash or deferred share units and the remainder in deferred share units. The filing also details several related-party transactions, predominantly with subsidiaries of Berkshire Hathaway, given Warren E. Buffett's significant ownership and influence. These transactions, including services from Business Wire and FlightSafety, and product purchases and sales with International Dairy Queen and McLane Company, are presented as being conducted in the ordinary course of business and on terms deemed fair and reasonable by management, comparable to those with unrelated third parties.

Key Highlights

  • 1Howard G. Buffett, son of Warren E. Buffett, was elected to the Board of Directors, increasing its size to 15 members.
  • 2Howard G. Buffett will serve on the Public Issues and Diversity Review Committee starting January 1, 2011.
  • 3Howard G. Buffett's annual compensation as a director will be $175,000, paid partly in cash/deferred share units and partly in deferred share units.
  • 4The company disclosed related-party transactions with Berkshire Hathaway subsidiaries: Business Wire, FlightSafety, International Dairy Queen, McLane Company, XTRA Lease, American Express, Moody's, and The Washington Post Company.
  • 5These transactions involve services such as news dissemination, pilot training, equipment leasing, and financial services, as well as product sales (fountain syrup) and marketing incentives.
  • 6Management stated that all related-party transactions were conducted in the ordinary course of business and on fair and reasonable terms, comparable to those with unrelated parties.
  • 7The filing is an amendment (8-K/A), indicating a correction or supplement to a previous filing, although the specific nature of the amendment is not detailed in the provided text, only the new information is presented.

Frequently Asked Questions

Howard G. Buffett is the son of Warren E. Buffett, Chairman and CEO of Berkshire Hathaway. His appointment to the Board of Directors of The Coca-Cola Company is notable due to the significant stake Berkshire Hathaway holds in Coca-Cola and the established relationship between the two individuals and their respective entities. This brings a new perspective and likely strengthens the ties between the companies.

Howard G. Buffett will receive $175,000 in annual compensation for his services as a director. This will be paid in a combination of cash or deferred share units at his discretion for up to $50,000, and the remaining $125,000 will be paid in deferred share units. This is a standard compensation arrangement for non-employee directors.

The filing outlines several ongoing business relationships. These include purchasing news dissemination services from Business Wire, pilot and flight crew training from FlightSafety, fountain syrup and other products from International Dairy Queen and McLane Company, and equipment leases from XTRA Lease. Coca-Cola also receives services from American Express (credit card and travel), Moody's (credit ratings), and The Washington Post Company (advertising).

The filing explicitly states that management believes these related-party transactions are fair, reasonable, and conducted in the ordinary course of business. They are asserted to be on terms as favorable as those that could be obtained from unrelated third parties. Given Warren Buffett's significant influence and investment in Coca-Cola, these relationships are expected and are managed under established protocols to ensure they are beneficial and not disadvantageous to the company or its shareholders.