27 Apr 2016 Coke Management Urges Shareholders to Oppose Transparency Proposal
Annual Report Requirement Would Let Shareholders Know Why Management Donated to Groups that Promote Restrictions on Soda, for Instance
Company Might Also Have to Explain to Shareholders Why It Agreed to Stop Meeting with Conservative State Legislators
National Center for Public Policy Research Says Such Reports Can Be Helpful to Management, as Public Companies Often Have No Idea About the More Unsavory Aspects of Some of the Left-Wing Groups They Support
Atlanta, GA / Washington, D.C. – Shareholder activists affiliated with the National Center for Public Policy Research today asked Coca-Cola CEO Muhtar Kent and Coke’s board of directors to address growing shareholder concerns that the beverage giant is promoting public policies that are at odds with its stated goals and values.
A representative of the National Center addressed the CEO and board and assembled shareholders at the annual shareholder meeting in Atlanta today, asking shareholders to vote for a shareholder resolution that asks management to issue annual reports telling shareholders whether its activities have been consistent with company goals and values, and providing information and explanations when they do not.
“The shareholder resolution will not change any of the company’s policies, goals or values or place them in the hands of shareholders instead of management,” said the National Center’s Demetrius Minor, who addressed the board and shareholders at the meeting. “It simply will tell shareholders if management believes it has lived up to its own values and goals.”
The National Center’s shareholder activism division, its Free Enterprise Project, believes Coca-Cola has increasingly been moving leftward, and that shareholders of the beverage giant are largely unaware.
The National Center says it is unclear to what extent management is fully aware of the impacts of some of its liberal policies, especially its major contributions to certain groups. The National Center says it also is unclear whether the company’s increasing trend toward left-wing activism is the intentional result of the political philosophies of the firm’s senior management, or if Coca-Cola believes it can placate liberal critics by making strategic contributions to groups on the left and occasionally being willing to take marching orders from liberal activists.
In an April 26 press release, National Center FEP director Justin Danhof noted that Coca-Cola withdrew from a 40-year-old group of conservative and free-market state legislators, the American Legislative Exchange Council (ALEC), at the request of left-wing activists. Participation in the group had allowed Coca-Cola executives an opportunity to efficiently explain to state legislators its position on certain “nanny state” initiatives, such as New York City-style bans on large beverage cups.
“Nanny state” regulations typically include some combination of new taxes and bans on the sale of beverages or food items that are not high in nutrition. These regulations are extremely unpopular with the public, so their advocates usually promote them with a degree of stealth. Efforts to shut down groups such as ALEC is one such method.
“Coca-Cola may have thought it could placate left-wing critics by leaving ALEC,” said Amy Ridenour, chairman of the National Center for Public Policy Research, “and give itself some breathing room. But, invariably, when leftists get a corporation to do what they want once, the activists sense weakness. Instead of making left-wing activists go away, concessions make them come back â€“ over and over and over.”
“We gave shareholders three more reasons to be concerned about Coca-Cola’s leftward drift,” added Ridenour. “One of them was a very surprising instance of Coca-Cola reportedly intervening in a court case about gay marriage by telling a law firm it worked with that the law firm would lose Coca-Cola’s business if it allowed one of its partners to represent one of the parties in the lawsuit. This is a very, very direct form of activism that goes against the traditional American philosophy, enshrined in the Constitution, that everyone has a right to legal counsel.”
“I want to be clear,” Ridenour added. “We cannot prove Coca-Cola intervened to pressure a law firm to drop an unpopular, non-PC client, but when I and two of my National Center colleagues wanted to find out for sure, we met with senior Coca-Cola executives at Coca-Cola’s offices and asked. An executive promised to find out and get back to us. He did not get back to us, and my followup phone calls and emails were not returned. The company never denied the truth of this to us.”
“Coca-Cola also has made significant donations to controversial organizations,” Ridenour said. “For example, in support of green groups that reportedly push poor people in developing nations off their land so that trees can be planted so rich western movie stars and business executives can purchase co-called ‘carbon offsets’ to excuse what they believe is the impact on global warming of their huge yachts and private jets.”
“In at least one tragic case, death occurred when a company allegedly hired by a green group to rid an area of residential huts so trees could be planted set fire to the huts when children were inside. In other cases, poor people in the millions have been driven from their homes to increase habitat for wildlife,” Ridenour said. “Now, we don’t believe for a minute anyone in Coca-Cola wants to kill children, but what we don’t know is whether Coca-Cola has put a system in place to make certain any future contributions to environmental organizations are not used in a manner that harms people â€“ especially people who are poor and who lack the political power to defend themselves.”
“Our shareholder proposal calling for an annual report on these matters from management to shareholders seems a reasonable way to begin to address these issues,” Ridenour concluded. “Regrettably, management decided to oppose our suggestion, and many shareholders and institutional investors are more concerned with money than basic civil and human rights. The irony, though, is that our proposed annual report would probably have resulted in a net positive impact on Coca-Cola’s bottom line. The institutional investors could have had their cake and eat it, too.”
The National Center’s shareholder resolution, and Coca-Cola’s statement urging shareholders to vote against it, can be found on pages 92 and 93 of the company’s proxy statement, available here.
The National Center’s Free Enterprise Project is the nation’s preeminent free-market activist group. It uses shareholder activism to address activities by big corporations that grow government, engage in corporate cronyism or promote a left-of-center public policy agenda. It also calls out corporate CEOs and business leaders who make misleading or false statements about public policy issues, typically to advance a policy agenda in a dishonest way.
In 2014-15, National Center representatives participated in 69 shareholder meetings advancing free-market ideals in the areas of health care, energy, taxes, subsidies, regulations, religious freedom, food policies, media bias, gun rights, workers’ rights and many other important public policy issues. It has attended and participated in six shareholder meetings so far in 2016.
The National Center for Public Policy Research, founded in 1982, is a non-partisan, free-market, independent conservative think-tank. Ninety-four percent of its support comes from individuals, less than four percent from foundations, and less than two percent from corporations. It receives over 350,000 individual contributions a year from over 96,000 active recent contributors. Sign up for free issue alerts here or follow us on Twitter at @NationalCenter.