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Coca-Cola execs bonuses are now discretionary

February 24, 2009
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The Coca-Cola Co.executives will get bonuses on a discretionary basis starting for 2008, according to a filing with the Securities and Exchange Commission, as reported by the Associated Press. The Atlanta-based beverage giant, like many publicly traded companies, awards bonuses based on specific formulas. But SEC rules require companies to disclose their formula for awarding bonuses. Coca-Cola argues that disclosure would put it at risk against its competitors because it would have to publicly disclose the specific volume, net income and pre-tax profit targets that would result in payments under its plan. Those figures come from Coca-Cola’s confidential business plan, and it argues disclosure of the targets would allow its competitors to figure out its business plan and pricing strategy, and then adjust their own business plans and strategies accordingly. Rather than make that disclosure, Coca-Cola is doing away with formula-based bonuses. Instead, the company will now give bonuses to executives on a discretionary basis. Coca-Cola said this will include a mix of internal goals and compensation committee judgment.

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