Shareholders of The Coca-Cola Co. are being urged to withhold their votes for billionaire investor Warren Buffett for re-election to the beverage giant's board and to support a proposal to separate Coke's chairman and chief executive positions.
Institutional Shareholder Services, which advises shareholders on corporate governance issues, argues that Buffett can't be considered an independent director because of ties between Coke and some of his outside business interests.
The Atlanta-based soft drink company is asking shareholders to vote for Buffett and against the chairman-chief executive separation proposal, according to a filing Friday with the Securities and Exchange Commission.
"Mr. Buffett is a man of unimpeachable integrity, and his effectiveness as an audit-committee member is widely regarded," said Coke spokesman Ben Deutsch.
The issues will be voted on at the company's annual meeting on April 21 in Wilmington, Del.
A previous Coke filing shows that McLane Co., a subsidiary of Buffett's Berkshire Hathaway holding company in Nebraska, paid Coke $103.9 million last year for fountain syrup and other products. Coke also gave McLane $11 million in agency commissions in 2003 related to the sale of the company's products to customers.
Fast-food and ice cream chain Dairy Queen, another company Buffett owns, paid Coke $2.2 million for fountain syrup and other products, documents show. Coke last year gave Dairy Queen and its subsidiaries $688,000 for promotional and marketing incentives for corporate and franchise stores.
Deutsch contended that Buffett's independence is consistent with the standards set by the New York Stock Exchange, of which Coca-Cola is a member.
"ISS is using different standards in its analysis," Deutsch said. "We disagree with their analysis."
Coke also paid The Washington Post Co., in which Buffett holds a significant stake, $400,000 in 2003 for advertising fees.
Coke argued in its SEC filing Friday that Buffett is well suited to be a director because his significant stake in the company means that there are "few people more closely aligned with the interests" of Coke's shareholders than him.
As for the proposal to separate the CEO and board chairman positions, which are both currently held by the same person, Coke says that is unnecessary because it has a corporate governance structure that provides balance in making appropriate business decisions.
Institutional Shareholder Services analyzes companies' proxies and issues research and vote recommendations for thousands of shareholder meetings in the United States and abroad each year.