THE COCA-COLA COMPANY | DEI Goals in Executive Pay at THE COCA-COLA COMPANY..

Status
Filed
AGM date
Previous AGM date
Proposal number
7
Resolution details
Company ticker
KO
Lead filer
National Legal and Policy Center
Resolution ask
Adopt or amend a policy
ESG theme
  • Social
  • Governance
ESG sub-theme
  • Diversity, equity & inclusion (DEI)
  • Remuneration or pay
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Consumer Staples
Company HQ country
United States
Resolved clause
RESOLVED: Shareholders request the Board of Directors’ Talent and Compensation Committee to revisit its incentive guidelines for executive pay, to
identify and consider eliminating discriminatory DEI goals from compensation inducements.
Whereas clause
WHEREAS: Since the June 2023 U.S. Supreme Court decision in Students for Fair Admissions v. Harvard College,1 hundreds of higher education
institutions have shuttered their diversity, equity and inclusion (DEI) programs and positions.2
Consequently, “there has been a sharp uptick in litigation challenging corporate DEI programs and initiatives, alleging that they require unlawful
employment and contracting decisions to be made on the basis of race, in violation of Title VII of the Civil Rights Act of 1964... “3
Corporations’ compliance lawyers now advise clients that “DEI initiatives and programs that are not open to all applicants or those that apply an explicit
race- or gender-based focus will likely face continued and heightened scrutiny.” Also: “We also expect to see ongoing scrutiny of perceived hiring quotas
and set-asides, particularly those that may appear to be incentivized by bonuses for management or company leadership.”4
Further, “companies, and their management teams and boards, should be prepared for increased employment-related litigation including litigation that
seeks to hold executive officers and directors personally liable for purported breaches of their fiduciary duties in connection with the corporation’s DEI
policies.”5
Many corporations dramatically reduced or eliminated their DEI programs,6 and companies face retribution for their discrimination. For example,
Starbucks was the subject of a $28.3 million judgment after a former worker claimed she was fired for being white.7

Supporting statement
SUPPORTING STATEMENT: The Coca-Cola Company maintains “employee representation goals” designed to achieve diversity so the company
“mirror[s] the markets we serve.”8 The Company expects “by 2030, our employee population across all job levels will align with U.S. census data by
race/ethnicity: Black: 13%; Hispanic: 18%; Asian: 6%.”
Pay for the Company’s executives includes annual cash incentives for “progress toward diversity, equity and inclusion aspirations,”9 which “reinforce their
collective accountability” to reach those goals. These incentives account for “10% of the Business Performance Factor” and are based on predefined
“Diversity, Equity and Inclusion Components.” These components “foster the design and implementation of sustainable diversity, equity and inclusion
strategies, as well as to encourage progress toward the Company’s 2030 aspirations, for example, to be 50% led by women globally.”
These discriminatory quotas leave Coca-Cola ripe for regulatory, reputational and litigation risk. Its attempt to cram DEI’s non-GAAP nature into the
proxy statement’s compensation discussion demands either a legally dubious quota regime, or it fails SEC compliance.10 The Council of Institutional
Investors’ general counsel stated that research shows “companies are engaging in an opportunistic use of non-GAAP earnings to justify higher executive
pay.”
FTI Consulting advises there is a “heightened focus” on “litigation risk,” which “has transitioned from being merely an operational concern to becoming a
strategic priority for the highest levels of corporate governance.”1

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