<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
COCA-COLA ENTERPRISES INC.
Summerfield K. Johnston, Jr. PO Box 1778
Vice Chairman and Atlanta, GA 30301
Chief Executive Officer 404 676-2100
March 8, 1994
Dear Share Owner,
You are cordially invited to attend the 1994 Annual Meeting of Share
Owners of Coca-Cola Enterprises Inc. which will be held in Wilmington, Delaware,
on Wednesday, April 13, 1994, at 10:30 a.m. The enclosed meeting notice and
proxy statement contain details concerning the business to be discussed at the
meeting.
Please sign, date and return your proxy card in the enclosed envelope at
your earliest convenience to assure that your shares will be represented and
voted at the meeting, even if you cannot attend.
[SIG CUT]
Summerfield K. Johnston, Jr.
<PAGE> 3
COCA-COLA ENTERPRISES INC.
NOTICE OF ANNUAL MEETING OF SHARE OWNERS
TO BE HELD APRIL 13, 1994
TO THE OWNERS OF COMMON STOCK
OF COCA-COLA ENTERPRISES INC.
The 1994 Annual Meeting of Share Owners of Coca-Cola Enterprises Inc., a
Delaware corporation, will be held in the du Barry Room of the Hotel du Pont,
11th and Market Streets, Wilmington, Delaware, on Wednesday, April 13, 1994, at
10:30 a.m., local time, for the purpose of considering and voting upon the
following proposals:
1. To elect five Directors to serve until the 1997 Annual Meeting of
Share Owners;
2. To approve the Company's 1992 Restricted Stock Award Plan (as
amended and restated effective as of February 7, 1994);
3. To approve the Company's 1994 Stock Option Plan;
4. To approve the Company's 1994 Executive Management Incentive Plan;
5. To approve the Company's 1994-1996 Long-Term Incentive Plan;
6. To ratify the appointment of Ernst & Young as independent auditors
of the Company for the 1994 fiscal year; and
7. To transact such other business, including a share-owner proposal,
as may properly come before the meeting and any adjournments thereof.
Information relating to the above matters is set forth in the attached
proxy statement. Share owners of record at the close of business on February 18,
1994 are entitled to notice of and to vote at the meeting and any adjournments
thereof. A list of share owners of the Company as of the close of business on
February 18, 1994 will be available for inspection during normal business hours
from March 30 through April 12, 1994 at the offices of Morris, Nichols, Arsht
and Tunnell, 1201 North Market Street, Wilmington, Delaware.
By Order of the Board of Directors
J. GUY BEATTY, JR.
Secretary
Atlanta, Georgia
March 8, 1994
EACH SHARE OWNER IS URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY
PROMPTLY. A SHARE OWNER WHO DECIDES TO ATTEND THE MEETING MAY, IF SO DESIRED,
REVOKE THE PROXY AND VOTE THE SHARES IN PERSON.
<PAGE> 4
COCA-COLA ENTERPRISES INC.
ONE COCA-COLA PLAZA, N.W.
ATLANTA, GEORGIA 30313
March 8, 1994
PROXY STATEMENT
FOR ANNUAL MEETING OF SHARE OWNERS
TO BE HELD APRIL 13, 1994
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Coca-Cola Enterprises Inc. (the "Company")
to be voted at the 1994 Annual Meeting of Share Owners of the Company and at any
adjournments thereof. The Annual Meeting will be held in the du Barry Room of
the Hotel du Pont, 11th and Market Streets, Wilmington, Delaware, on Wednesday,
April 13, 1994, at 10:30 a.m., local time.
The mailing address of the principal executive offices of the Company is
Post Office Box 1778, Atlanta, Georgia 30301. The approximate date on which this
proxy statement and form of proxy are first being sent or given to share owners
is March 8, 1994.
VOTING
Only owners of record of shares of common stock of the Company at the close
of business on February 18, 1994 are entitled to notice of and to vote at the
Annual Meeting or any adjournments thereof. Each share owner of record on the
record date is entitled to one vote for each share of common stock of the
Company so owned. On February 18, 1994, there were 129,475,351 shares of common
stock of the Company issued and outstanding. Under the Company's bylaws, the
holders of a majority of the issued and outstanding shares of common stock,
present in person or represented by proxy at the Annual Meeting, will constitute
a quorum for the transaction of business.
Share owners may vote in favor of all nominees for election as Directors or
withhold their votes as to all nominees or withhold their votes as to specific
nominees. With respect to all other proposals, share owners may vote in favor of
or against each proposal or may abstain from voting. Share owners should specify
their choices on the enclosed form of proxy card. If no specific instructions
are given with respect to the matters to be acted upon, the shares represented
by a properly signed proxy card will be voted FOR the election of all nominees
for Director; FOR approval of the Company's 1992 Restricted Stock Award Plan (as
amended and restated effective as of February 7, 1994); FOR approval of the
Company's 1994 Stock Option Plan; FOR approval of the Company's 1994 Executive
Management Incentive Plan; FOR approval of the Company's 1994-1996 Long-Term
Incentive Plan; FOR the ratification of the appointment of Ernst & Young as
independent auditors and AGAINST the share-owner proposal relating to the
establishment of an independent nominating committee. If any other matters
properly come before the Annual Meeting, the persons named as proxies will vote
upon such matters according to their judgment of what is in the best interest of
the Company.
With respect to the election of Directors, the five nominees receiving the
highest vote totals will be elected as Directors of the Company. Accordingly,
abstentions and broker nonvotes* will have no effect on the vote for the
election of Directors.
- ---------------
*"Broker nonvotes" are limited proxies submitted by brokers who do not have the
required voting authority from the beneficial owners.
<PAGE> 5
With respect to all other proposals, the affirmative vote of the holders of
a majority of the shares of stock of the Company present, or represented and
entitled to vote, at the Annual Meeting, will be required to approve such
proposals. Abstentions will be counted as present and entitled to vote, and will
have the effect of "No" votes. Broker nonvotes will not be included in vote
totals and will have no effect on the outcome of each vote.
Proxies and votes will be tabulated by First Chicago Trust Company of New
York, the transfer agent for the shares of common stock of the Company. Because
certain holders of more than a majority of the Company's common stock have
advised the Company of their intention to vote all such shares for the election
of all Directors nominated by the Board of Directors for election to the Board;
for approval of the Company's 1992 Restricted Stock Award Plan (as amended and
restated effective as of February 7, 1994); for approval of the Company's 1994
Stock Option Plan; for approval of the Company's 1994 Executive Management
Incentive Plan; for approval of the Company's 1994-1996 Long-Term Incentive
Plan; for the ratification of Ernst & Young as independent auditors of the
Company for the 1994 fiscal year and against the share-owner proposal relating
to the establishment of an independent nominating committee (see "Principal
Share Owners"), the presence of a quorum and approval of all proposals except
the share-owner proposal are reasonably assured.
All proxies delivered pursuant to this solicitation are revocable at any
time prior to voting at the option of the persons executing them by giving
written notice to the Secretary of the Company, by delivering a proxy bearing a
later date or by voting in person at the Annual Meeting. All properly executed
proxies delivered pursuant to this solicitation and not revoked will be voted at
the Annual Meeting in accordance with the directions given.
All expenses incurred in connection with the solicitation of proxies will
be borne by the Company. Such costs include charges by brokers, banks,
fiduciaries and custodians for forwarding proxy materials to beneficial owners
of stock held in their names. Solicitation may be undertaken by mail, telephone
and personal contact by Directors, officers and employees of the Company without
additional compensation.
PRINCIPAL SHARE OWNERS
Set forth in the table below is information as of February 18, 1994 (except
as otherwise noted) with respect to persons known to the Company to be the
beneficial owners of more than five percent of the Company's issued and
outstanding common stock:
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
NAME AND ADDRESS BENEFICIALLY OWNED OF CLASS
----------------------------------------------------------- ------------------ --------
<S> <C> <C>
The Coca-Cola Company...................................... 56,318,906(1) 43.5%
One Coca-Cola Plaza, N.W.
Atlanta, Georgia 30313
Brinson Partners, Inc...................................... 11,494,360(2) 8.9%
209 South LaSalle
Chicago, Illinois 60602-1295
Summerfield K. Johnston, Jr................................ 10,209,307(3) 7.9%
One Coca-Cola Plaza, N.W.
Atlanta, Georgia 30313
Southeastern Asset Management, Inc......................... 8,986,810(4) 6.9%
Suite 301
860 Ridgelake Boulevard
Memphis, Tennessee 38120
</TABLE>
- ---------------
(1) The Coca-Cola Company has advised the Company that it intends to vote its
shares of common stock of the Company in favor of (i) the election of all
Directors nominated by the Board of Directors for election to the Board;
(ii) approval of the Company's 1992 Restricted Stock Award
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Plan (as amended and restated effective as of February 7, 1994); (iii)
approval of the Company's 1994 Stock Option Plan; (iv) approval of the
Company's 1994 Executive Management Incentive Plan; (v) approval of the
Company's 1994-1996 Long-Term Incentive Plan; (vi) the ratification of Ernst
& Young as independent auditors of the Company for the 1994 fiscal year; and
against the share-owner proposal relating to the establishment of an
independent nominating committee.
(2) As of February 11, 1994, Brinson Partners, Inc., a registered investment
advisor, together with its subsidiary, Brinson Trust Company, had sole
voting and dispositive power with regard to all of the shares shown.
(3) Summerfield K. Johnston, Jr. is Vice Chairman of the Board and Chief
Executive Officer of the Company. See "Election of Directors (Proposal No.
1) -- Information Concerning Directors" and " -- Security Ownership of
Directors and Officers" below. Mr. Johnston has advised the Company that he
intends to vote his shares of common stock of the Company in favor of (i)
the election of all Directors nominated by the Board of Directors for
election to the Board; (ii) approval of the Company's 1992 Restricted Stock
Award Plan (as amended and restated effective as of February 7, 1994); (iii)
approval of the Company's 1994 Stock Option Plan; (iv) approval of the
Company's 1994 Executive Management Incentive Plan; (v) approval of the
Company's 1994-1996 Long-Term Incentive Plan; (vi) the ratification of Ernst
& Young as independent auditors of the Company for the 1994 fiscal year; and
against the share-owner proposal relating to the establishment of an
independent nominating committee.
(4) As of January 18, 1994, Southeastern Asset Management, Inc., a registered
investment advisor, had sole voting and dispositive power with regard to
7,402,610 of the shares held by it, had shared voting and dispositive power
with regard to 1,324,700 of the shares held by it, and had no voting or
dispositive power with regard to 259,500 of the shares held by it.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
NOMINEES
The Board of Directors of the Company, pursuant to the bylaws of the
Company, has set the number of Directors of the Company at fourteen. The
Directors are divided into three classes, with approximately one-third of the
members of the Board of Directors to be elected by the share owners annually to
serve three-year terms. The terms of Howard G. Buffett, Johnnetta B. Cole, T.
Marshall Hahn, Jr., Claus M. Halle and Henry A. Schimberg as Directors of the
Company expire at the Annual Meeting.
The Board of Directors has named Howard G. Buffett, Johnnetta B. Cole, T.
Marshall Hahn, Jr., Claus M. Halle and Henry A. Schimberg to stand for election
as Directors at the Annual Meeting. Each of the nominees has consented to serve
as a Director if elected at the Annual Meeting.
Should any one or more of these nominees become unable to serve for any
reason, or choose not to serve (which is not anticipated), the Board of
Directors may designate a substitute nominee or nominees (in which event the
persons named in the enclosed proxy card will vote all valid proxy cards for the
election of such substitute nominee or nominees), allow the vacancy or vacancies
to remain open until a suitable candidate or candidates are located, or by
resolution provide for a lesser number of Directors.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE FOR THE
ELECTION OF HOWARD G. BUFFETT, JOHNNETTA B. COLE, T. MARSHALL HAHN, JR., CLAUS
M. HALLE AND HENRY A. SCHIMBERG AS DIRECTORS TO HOLD OFFICE UNTIL THE 1997
ANNUAL MEETING OF SHARE OWNERS, AND UNTIL THEIR RESPECTIVE SUCCESSORS ARE
ELECTED AND QUALIFIED.
3
<PAGE> 7
INFORMATION CONCERNING DIRECTORS
Set forth below with respect to the Directors and nominees for Director of
the Company is information regarding their principal occupations (which have
continued for at least the past five years unless otherwise noted) and certain
other information.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
NOMINEES FOR ELECTION TO TERM EXPIRING 1997
- ------------------------------------------------------------------------------------------
<S> <C>
- ------------------- HOWARD G. BUFFETT, 39, has been Corporate Vice President and Assistant
- ------------------- to the Chairman and a director of Archer Daniels Midland Company
- ------------------- (agricultural processor and merchandiser) since 1992 and President of
- ------------------- Buffett Farms since 1989. From 1989 to 1992, Mr. Buffett served on the
- ------------------- Douglas County Board of Commissioners in Omaha, Nebraska. From 1989 to
- ------------------- 1991, Mr. Buffett served as Chairman of the Nebraska Ethanol Authority
- ------------------- and Development Board. He is also a director of Berkshire Hathaway Inc.
- ------------------- Mr. Buffett is a member of the Public Issues Review Committee of the
- ------------------- Board of Directors of the Company. He has been a Director of the Company
since December 1993.
- ------------------- JOHNNETTA B. COLE, 57, is President of Spelman College, Atlanta,
- ------------------- Georgia. She is also a director of NationsBank of Georgia, N.A. and
- ------------------- Management Training Corporation. Dr. Cole is a member of the Audit and
- ------------------- Public Issues Review Committees of the Board of Directors of the
- ------------------- Company. She has been a Director of the Company since December 1990.
- -------------------
- -------------------
- -------------------
- -------------------
- ------------------- T. MARSHALL HAHN, JR., 67, has been Honorary Chairman of the Board of
- ------------------- Directors of Georgia-Pacific Corporation (manufacturer and distributor
- ------------------- of pulp, paper and building products) since December 1993. Mr. Hahn
- ------------------- served as Chairman of the Board and Chief Executive Officer of
- ------------------- Georgia-Pacific Corporation from 1985 to 1993. He is also a director of
- ------------------- Norfolk Southern Corporation (railway holding company), SunTrust Banks,
- ------------------- Inc., Trust Company of Georgia, and Cincinnati, Inc. (manufacturer of
- ------------------- machine tools). Mr. Hahn is Chairman of the Compensation Committee and a
- ------------------- member of the Executive and Audit Committees of the Board of Directors
of the Company. He has been a Director of the Company since October
1986.
- ------------------- CLAUS M. HALLE, 66, is Chief International Consultant to The Coca-Cola
- ------------------- Company. Mr. Halle retired from The Coca-Cola Company in June 1989 as
- ------------------- Senior Executive Vice President, where he had also served as President
- ------------------- of the International Soft Drink Business Sector. He is also a director
- ------------------- of The Coca-Cola Bottling Company of New York, Inc. Mr. Halle is a
- ------------------- member of the Executive and Compensation Committees of the Board of
- ------------------- Directors of the Company. He has been a Director of the Company since
- ------------------- October 1988.
- -------------------
</TABLE>
4
<PAGE> 8
<TABLE>
<S> <C>
- ------------------- HENRY A. SCHIMBERG, 61, has served as President, Chief Operating Officer
- ------------------- and a Director of the Company since December 1991, when the Company
- ------------------- acquired all of the stock of Johnston Coca-Cola Bottling Group, Inc.
- ------------------- ("Johnston Coca-Cola"), of which he had been President and Chief
- ------------------- Operating Officer since 1984 and a director since 1982. Mr. Schimberg is
- ------------------- a member of the Public Issues Review and Capital Projects Review
- ------------------- Committees of the Board of Directors of the Company.
- -------------------
- -------------------
- ---------------------------------------------------------------------------------------------
INCUMBENT DIRECTORS -- TERMS EXPIRING 1995
- ---------------------------------------------------------------------------------------------
- ------------------- L. PHILLIP HUMANN, 48, is President and a director of SunTrust Banks,
- ------------------- Inc. (bank holding company). He is also a director of Equifax Inc.
- ------------------- (information services company) and Haverty Furniture Companies, Inc. He
- ------------------- was elected Chairman of the Board and Chief Executive Officer of Trust
- ------------------- Company Bank in 1985. Mr. Humann was elected Executive Vice President of
- ------------------- SunTrust Banks, Inc. in 1989, promoted to Senior Executive Vice
- ------------------- President-Banking in 1990, and elected President in 1991. Mr. Humann is
- ------------------- Chairman of the Audit Committee of the Board of Directors of the
- ------------------- Company. He has been a Director of the Company since April 1992.
- ------------------- SCOTT L. PROBASCO, JR., 65, is a director and Chairman of the Executive
- ------------------- Committee of the Board of American National Bank and Trust Company of
- ------------------- Chattanooga. He is also a director of Chattem, Inc. (branded consumer
- ------------------- products and specialty chemicals), Provident Life and Accident Insurance
- ------------------- Company of America and SunTrust Banks, Inc. Mr. Probasco also served as
- ------------------- a director of Johnston Coca-Cola from 1962 to 1991. Mr. Probasco is a
- ------------------- member of the Audit and Compensation Committees of the Board of
- ------------------- Directors of the Company. He has been a Director of the Company since
- ------------------- December 1991.
- ------------------- E. NEVILLE ISDELL, 50, has been Senior Vice President of The Coca-Cola
- ------------------- Company since January 1989 and President of the Northeast Europe/Middle
- ------------------- East Group since January 1993. From 1989 to 1993, Mr. Isdell served as
- ------------------- President of the Northeast Europe/Africa Group of The Coca-Cola Company.
- ------------------- He is also a director of Amalgamated Beverages Great Britain Limited
- ------------------- (holding company of a United Kingdom bottling joint venture), Coca-Cola
- ------------------- FEMSA, S.A. de C.V. (Mexican soft drink bottler and distributor) and
- ------------------- Coca-Cola Amatil Limited (Australian-based soft drink bottler and
- ------------------- distributor). Mr. Isdell is a member of the Executive and Capital
Projects Review Committees of the Board of Directors of the Company. He
has been a Director of the Company since July 1993.
</TABLE>
5
<PAGE> 9
<TABLE>
<S> <C>
- ------------------- FRANCIS A. TARKENTON, 54, is Chairman of the Board of Directors and
- ------------------- Chief Executive Officer of KnowledgeWare, Inc. (computer software
- ------------------- company). Mr. Tarkenton is a member of the Executive, Compensation and
- ------------------- Public Issues Review Committees of the Board of Directors of the
- ------------------- Company. He has been a Director of the Company since October 1986.
- -------------------
- -------------------
- -------------------
- -------------------
- --------------------------------------------------------------------------------------------
INCUMBENT DIRECTORS -- TERMS EXPIRING 1996
- --------------------------------------------------------------------------------------------
- ------------------- JOHN L. CLENDENIN, 59, is Chairman of the Board, President and Chief
- ------------------- Executive Officer of BellSouth Corporation (telephone holding company).
- ------------------- He is also a director of Equifax Inc., Capital Holding Corporation
- ------------------- (insurance holding company), National Service Industries, Inc.
- ------------------- (diversified manufacturing company), The Kroger Co. (retail grocery
- ------------------- chain), Wachovia Corp. (bank holding company), Springs Industries, Inc.
- ------------------- (producer of finished fabrics, home furnishings and industrial fabrics)
- ------------------- and the New York Stock Exchange, Inc. Mr. Clendenin is Chairman of the
- ------------------- Committee on Directors and a member of the Executive and Public Issues
Review Committees of the Board of Directors of the Company. He has been
a Director of the Company since October 1986.
- ------------------- M. DOUGLAS IVESTER, 46, has served as Executive Vice President and
- ------------------- Principal Operating Officer/North America of The Coca-Cola Company since
- ------------------- April 1993 and as President, Coca-Cola USA since 1990. In January 1985,
- ------------------- Mr. Ivester was elected Senior Vice President and Chief Financial
- ------------------- Officer of The Coca-Cola Company and served in that capacity until June
- ------------------- 1989 when he was elected President of the European Community Group of
- ------------------- the International Soft Drink Business Sector. In 1991 he was appointed
- ------------------- Senior Vice President of The Coca-Cola Company and President of its
- ------------------- North America Business Sector. He is a director of Georgia-Pacific
Corporation. He is a member of the Executive and Capital Projects Review
Committees of the Board of Directors of the Company. Mr. Ivester has
been Chairman of the Board of Directors of the Company since April 1993.
- ------------------- JOHN E. JACOB, 59, is President and Chief Executive Officer of the
- ------------------- National Urban League, Inc. (community-based social service and advocacy
- ------------------- agency). He is a director of Anheuser-Busch Companies, Inc. (brewer),
- ------------------- NYNEX Corporation (telecommunications products and services), The
- ------------------- Continental Corporation (insurance holding company), National
- ------------------- Westminster Bancorp Inc. (bank holding company) and LTV Corporation
- ------------------- (manufacturer of steel and energy products). Mr. Jacob is Chairman of
- ------------------- the Public Issues Review Committee and a member of the Audit Committee
- ------------------- and the Committee on Directors of the Board of Directors of the Company.
He has been a Director of the Company since October 1986.
</TABLE>
6
<PAGE> 10
<TABLE>
<S> <C>
- ------------------- SUMMERFIELD K. JOHNSTON, JR., 61, has served as Vice Chairman of the
- ------------------- Board of Directors and Chief Executive Officer of the Company since
- ------------------- December 1991 when the Company acquired all of the stock of Johnston
- ------------------- Coca-Cola, of which he had been Chairman of the Board and Chief
- ------------------- Executive Officer since 1979. He is also Chairman of the Board of
- ------------------- Coca-Cola Bottling Company of Northwest Georgia, Inc. and is a director
- ------------------- of SW Centrifugal, Inc. (bronze foundry) and American National Bank and
- ------------------- Trust Company of Chattanooga. Mr. Johnston is Chairman of the Executive
- ------------------- Committee and a member of the Capital Projects Review Committee and the
Committee on Directors of the Board of Directors of the Company.
- ------------------- ROBERT A. KELLER, 63, is a consultant to The Coca-Cola Company and a
- ------------------- senior counsel at the law firm of King & Spalding. He served as Senior
- ------------------- Vice President and General Counsel of The Coca-Cola Company from 1978
- ------------------- until his retirement in 1991. He is also a director of The Coca-Cola
- ------------------- Bottling Company of New York, Inc. Mr. Keller is a member of the
- ------------------- Committee on Directors of the Board of Directors of the Company. He has
- ------------------- been a Director of the Company since August 1986.
- -------------------
- -------------------
</TABLE>
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
In accordance with the bylaws of the Company, the Board of Directors has
established six standing committees: an Executive Committee, an Audit Committee,
a Compensation Committee, a Committee on Directors, a Public Issues Review
Committee and a Capital Projects Review Committee. The members of these
committees are indicated in the immediately preceding section of this proxy
statement.
The Executive Committee, during the intervals between meetings of the Board
of Directors, may exercise the powers of the Board of Directors except with
respect to a limited number of matters which include amending the Certificate of
Incorporation or the bylaws of the Company and recommending to the share owners
of the Company a merger of the Company, the sale of all or substantially all of
the assets of the Company or the dissolution of the Company. The Executive
Committee did not meet in 1993.
The Audit Committee recommends to the Board of Directors the engagement of
the independent auditors of the Company and reviews with the independent
auditors the scope and results of the audits, reviews the adequacy and
effectiveness of the Company's internal controls, reviews the quality and
integrity of the Company's annual and interim external financial reports,
reviews the professional services furnished by the independent auditors to the
Company and handles any other matters the Board of Directors deems appropriate.
The Audit Committee met four times in 1993.
The Compensation Committee reviews and approves all salary arrangements,
including annual and long-term incentive awards and other remuneration, for
officers of the Company. It also is responsible for administration of the
Company's stock option and restricted stock plans, incentive plans, and certain
other compensation plans. The Compensation Committee met three times in 1993.
The Committee on Directors recommends to the Board of Directors candidates
for election to the Board of Directors and reviews matters relating to potential
Director conflicts of interest and Directors' fees and retainers. The Committee
on Directors considers nominees for directorships submitted by share owners. All
nominations by share owners must be made in accordance with the bylaws of the
Company. See "Share-Owner Proposals for 1995 Annual Meeting." The Committee on
Directors met three times in 1993.
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<PAGE> 11
The Public Issues Review Committee reviews Company policy and practice
relating to significant public issues of concern to the share owners, the
Company, its employees, the communities served by the Company and the general
public. The Public Issues Review Committee met once in 1993.
The Capital Projects Review Committee reviews and approves all proposed
capital projects for property, plant and equipment of the Company where the
amount involved for a specific project is $1 million or more. Capital projects
of $10 million or more also require approval of the Board of Directors. During
1993, the Capital Projects Review Committee conducted its approval process by
written consent and did not formally meet.
In 1993, the Board of Directors held six meetings. Each Director attended
at least 75 percent of the total of all meetings of the Board and each committee
on which such Director served.
COMPENSATION OF DIRECTORS
In 1993, Directors of the Company, except for Directors who were also
officers or employees of the Company, received an annual retainer fee of $20,000
and an annual fee of $3,000 if they were chairmen of committees. Additionally,
each Director received an attendance fee of $800 per meeting, except for
Directors who were also officers or employees of the Company or The Coca-Cola
Company. The Chairman of the Board of Directors received an annual retainer fee
of $28,000 and was entitled to the same committee chairman fees and attendance
fees regardless of his officer or employee status. Additionally, the Directors
are entitled to reimbursement for expenses in attending meetings of the Board or
their committees. The aggregate of all retainers and fees paid to the Directors
in 1993 was $371,150. Under the Deferred Compensation Plan for Non-Employee
Director Compensation (the "Deferred Compensation Plan"), each Director may
elect to defer receipt of all or part of his or her annual retainer fee and
meeting attendance fee, and all such deferred amounts are, at the option of the
Director, either credited with interest until payment, based on the prime
lending rate of Trust Company Bank, Atlanta, Georgia (the "Interest Account"),
or placed in an account to reflect the amount of the common stock of the Company
which could have been purchased with the amount deferred (the "Stock Value
Account").
In February 1994, the Board raised the fees payable and amended the
Deferred Compensation Plan to require that a portion of the fees be paid into a
Stock Value Account for each Director. The annual retainer fee for Directors,
including the Chairman of the Board of Directors, was raised to $30,000, and the
meeting fees increased to $1,000 per meeting. The additional annual retainer fee
payable to each chairman of a committee remains at $3,000, and the exceptions
based upon their status as officer or employee of the Company or The Coca-Cola
Company remain unchanged. For amounts payable to Directors after March 31, 1994,
$7,500 of the annual retainer fee and $200 of any meeting fee will be paid into
the Stock Value Account; in 1995 and thereafter, one-third of all fees will be
paid into the Stock Value Account. Non-employee Directors will still be entitled
to elect to defer any of the remaining fees into either the Interest Account or
the Stock Value Account.
Current and retired Directors are eligible to participate in the Company's
Matching Gifts Program for gifts to nonprofit organizations in the United
States, under which the Company will match a maximum of $4,000 of gifts per
participant each year on a two-for-one basis.
In November 1986, each Director who was not an officer of the Company or
The Coca-Cola Company was awarded an option to acquire up to 1,500 shares of
common stock of the Company at a price of $16.50 per share, the price at which
the Company's common stock was sold to the public in the Company's November 21,
1986 initial public offering. Options to acquire up to 1,500 shares of common
stock of the Company at a price of $16.50 per share were awarded to Dr. Cole in
December 1990 and to Mr. Humann in April 1992. None of such options has been
exercised. See "Security Ownership of Directors and Officers" below.
8
<PAGE> 12
The Retirement Plan for the Board of Directors provides that all Directors
who are not employed by or retired from either the Company, The Coca-Cola
Company, or the subsidiaries of either company, and who, upon their retirement
from the Board, have (i) served at least five years on the Board, and (ii)
attained at least age 55 at retirement, shall be entitled to a monthly
retirement benefit equal to one-twelfth of the annual retainer then in effect
for Directors. The retirement benefit will be paid to the retired Director or
surviving spouse of such Director for a term not to exceed the Director's total
number of months of service on the Board.
SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS
The number of shares of common stock of the Company and of The Coca-Cola
Company owned beneficially by each Director and each nominee for Director of the
Company and by all Directors and executive officers of the Company as a group as
of February 18, 1994 is set forth in the table below. Unless otherwise
indicated, all persons shown in the table have sole voting and investment power
with regard to the shares shown.
<TABLE>
<CAPTION>
NUMBER OF SHARES BENEFICIALLY OWNED
-------------------------------------------------------
COCA-COLA ENTERPRISES
INC. THE COCA-COLA COMPANY
COMMON STOCK COMMON STOCK
------------------------- -------------------------
NUMBER OF PERCENTAGE NUMBER OF PERCENTAGE
NAME SHARES OWNED OF CLASS SHARES OWNED OF CLASS
- --------------------------------- ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C>
Howard G. Buffett................ 5,000 * 14,998 *
John L. Clendenin(1)............. 2,000 * 0 *
Johnnetta B. Cole(1)............. 1,575 * 0 *
T. Marshall Hahn, Jr.(1)(2)...... 8,394 * 22,126,397 1.7%
Claus M. Halle(3)................ 10,000 * 855,708 *
L. Phillip Humann(1)............. 3,000 * 0 *
E. Neville Isdell(4)............. 2,000 * 406,074 *
M. Douglas Ivester(5)............ 12,460 * 1,721,066 *
John E. Jacob(1)(6).............. 3,390 * 0 *
Summerfield K. Johnston,
Jr.(7)......................... 10,209,307 7.9% 45,200 *
Robert A. Keller(8).............. 4,076 * 405,942 *
Scott L. Probasco, Jr.(9)........ 1,251,097 * 32,500 *
Henry A. Schimberg(10)........... 831,051 * 19,120 *
Francis A. Tarkenton(1)(11)...... 14,169 * 0 *
John R. Alm(12).................. 315,623 * 0 *
Norman P. Findley(13)............ 85,427 * 35,852 *
Robert F. Gray(14)............... 48,642 * 0 *
All Directors and executive
officers as a group (25
persons), including those
directors and nominees named
above(15)...................... 13,834,800 10.7% 25,727,434 2.0%
</TABLE>
- ---------------
<TABLE>
<S> <C>
* Less than one percent
(1) Beneficial ownership as reported in the table includes, with respect to Messrs.
Clendenin, Hahn, Humann, Jacob and Tarkenton and to Dr. Cole, 1,500 shares of
common stock of the Company which may be acquired by each such Director upon the
exercise of outstanding stock options.
(2) Includes 1,894 shares held pursuant to the Deferred Compensation Plan. Includes
22,126,397 shares of common stock of The Coca-Cola Company held by Emory
University, Atlanta, Georgia, as of December 31, 1993; Mr. Hahn is one of seven
members of Emory University's investment committee.
</TABLE>
9
<PAGE> 13
<TABLE>
<S> <C>
(3) Includes 10,000 shares of common stock of the Company held in a trust of which he
is co-trustee and beneficiary, 18,440 shares of common stock of The Coca-Cola
Company owned by his wife and of which he has disclaimed beneficial ownership,
16,000 shares of common stock of The Coca-Cola Company owned by a foundation of
which he is a co-trustee, and 59,708 shares of common stock of The Coca-Cola
Company held in a charitable trust of which he is a donor and of which he has
disclaimed beneficial ownership.
(4) Includes 500 shares of common stock of The Coca-Cola Company owned by his daughter,
137,500 shares of common stock of The Coca-Cola Company which are subject to
transfer restrictions, options to acquire 266,666 shares of common stock of The
Coca-Cola Company which are exercisable or will be exercisable on or before April
30, 1994, and 1,408 shares of common stock of The Coca-Cola Company held in trust
through The Coca-Cola Company Thrift Plan as of December 31, 1993.
(5) Includes 796 shares of common stock of the Company owned by his wife, 210 shares
jointly owned with his parents and 85 shares of common stock of the Company owned
by his mother-in-law, all of which he has disclaimed beneficial ownership, 700,000
shares of common stock of The Coca-Cola Company which are subject to transfer
restrictions, options to acquire 913,331 shares of common stock of The Coca-Cola
Company which are exercisable or will be exercisable on or before April 30, 1994,
and 47,735 shares of common stock of The Coca-Cola Company held in trust through
The Coca-Cola Company Thrift Plan as of December 31, 1993.
(6) Includes 1,890 shares held pursuant to the Deferred Compensation Plan.
(7) Includes 11,516 shares of common stock of the Company held in two custodial
accounts and 108,538 shares of common stock of the Company held in trust for Mr.
Johnston's minor child, 561,847 shares of common stock of the Company owned by his
son and of which he has disclaimed beneficial ownership and 1,784,656 shares of
common stock of the Company held in a trust of which he is a co-trustee. Also,
includes options to acquire 149,233 shares of common stock of the Company which are
exercisable or will be exercisable on or before April 30, 1994, 295,000 shares of
common stock of the Company awarded under the Company's 1992 Restricted Stock Award
Plan which are subject to forfeiture and 1,970 shares held in trust through the
Company's Matched Employee Savings and Investment Plan as of December 31, 1993.
Includes 44,000 shares of common stock of The Coca-Cola Company held by two trusts
of which he is a trustee and 1,200 shares of common stock of The Coca-Cola Company
held as custodian for two of his children.
(8) Includes 102 shares of common stock of the Company owned by his wife and of which
he has disclaimed beneficial ownership, 5,513 shares of common stock of The
Coca-Cola Company owned by his wife and of which he has disclaimed beneficial
ownership and 35,554 shares of common stock of The Coca-Cola Company held in trusts
of which his wife is a trustee and of which he has disclaimed beneficial ownership.
Includes options to acquire 30,000 shares of common stock of The Coca-Cola Company
which are exercisable on or before April 30, 1994.
(9) Includes 2,500 shares of common stock of the Company owned by his wife and 21,500
shares of common stock of The Coca-Cola Company held in trust by two foundations
and by an endowment fund of an educational institution of which he is a trustee.
</TABLE>
10
<PAGE> 14
<TABLE>
<S> <C>
(10) Includes 388,349 shares held pursuant to his Deferred Compensation Agreement (See
"Executive Compensation -- Employment Contracts and Termination of Employment
Arrangements"), options to acquire 148,366 shares of common stock of the Company
which are exercisable or will be exercisable on or before April 30, 1994, and
294,000 shares of common stock of the Company awarded under the Company's 1992
Restricted Stock Award Plan which are subject to forfeiture. Includes 336 shares of
common stock of the Company and 19,120 shares of common stock of The Coca-Cola
Company held in trust through the Company's Matched Employee Savings and Investment
Plan as of December 31, 1993.
(11) Includes 169 shares of common stock of the Company held in trust through the
Company's Dividend Reinvestment Plan as of December 31, 1993.
(12) Includes 199,346 shares held pursuant to his Deferred Compensation Agreement (See
"Executive Compensation -- Employment Contracts and Termination of Employment
Arrangements"), options to acquire 38,799 shares of common stock of the Company
which are exercisable or will be exercisable on or before April 30, 1994, 61,000
shares of common stock of the Company awarded under the Company's 1992 Restricted
Stock Award Plan which are subject to forfeiture and 14,728 shares held in trust
through the Company's Matched Employee Savings and Investment Plan as of December
31, 1993.
(13) Includes options to acquire 65,666 shares of common stock of the Company which are
exercisable or will be exercisable on or before April 30, 1994, 10,000 shares of
common stock of the Company awarded under the Company's 1986 Restricted Stock Award
Plan which are subject to forfeiture, 8,000 shares of common stock of the Company
awarded under the Company's 1992 Restricted Stock Award Plan which are subject to
forfeiture and 1,761 shares held in trust through the Company's Matched Employee
Savings and Investment Plan as of December 31, 1993. Includes options to acquire
26,500 shares of common stock of The Coca-Cola Company which are exercisable or
will be exercisable on or before April 30, 1994 and 9,352 shares of common stock of
The Coca-Cola Company held in trust through The Coca-Cola Thrift Plan as of
December 31, 1993.
(14) Includes options to acquire 19,999 shares of common stock of the Company which are
exercisable or will be exercisable on or before April 30, 1994, 27,000 shares of
common stock of the Company awarded under the Company's 1992 Restricted Stock Award
Plan which are subject to forfeiture, 69 shares of common stock of the Company held
in trust through the Company's Dividend Reinvestment Plan as of December 31, 1993,
and 1,574 shares held in trust through the Company's Matched Employee Savings and
Investment Plan as of December 31, 1993.
(15) Includes options to acquire 611,560 shares of common stock of the Company which are
exercisable or will be exercisable on or before April 30, 1994, 10,000 shares of
common stock of the Company awarded under the Company's 1986 Restricted Stock Award
Plan which are subject to forfeiture and 800,400 shares of common stock of the
Company awarded under the Company's 1992 Restricted Stock Award Plan which are
subject to forfeiture. Includes 837,500 shares of common stock of The Coca-Cola
Company which are subject to transfer restrictions and 1,259,313 shares of common
stock of The Coca-Cola Company subject to options which are exercisable or will be
exercisable on or before April 30, 1994.
</TABLE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 and regulations of the
Securities and Exchange Commission thereunder require the Company's executive
officers and Directors and certain persons who own more than 10% of the
Company's common stock, as well as certain affiliates of such persons, to file
initial reports of ownership and changes in ownership with the Securities and
Exchange Commission and the New York Stock Exchange. Executive officers,
Directors and certain persons owning more than 10% of the Company's common stock
are required
11
<PAGE> 15
by Securities and Exchange Commission regulations to furnish the Company with
copies of all Section 16(a) forms they file. Based solely on its review of the
copies of such forms received by it and written representations, the Company
believes that, during 1992 and 1993, all filing requirements applicable to its
executive officers, Directors, persons owning more than 10% of the Company's
common stock and their affiliates who are required to file such forms, were
complied with, except as follows: (i) Forms 3 filed in 1991 for S.K. Johnston,
Jr. and a family trust understated the shares held by the family trust; (ii)
Forms 4 timely filed in June 1993 for John R. Alm and Philip H. Sanford,
understated the derivative securities acquired under their respective deferred
compensation agreements; (iii) a Form 5 reporting the acquisition of shares in
August 1993 by E. Neville Isdell was not filed by September 10, as required;
(iv) Forms 5 timely filed for Robert F. Gray, John D. Heinrich and Mr. Sanford
omitted shares acquired during 1993 through dividend reinvestment; and (v) a
Form 5 was filed late for Lowry F. Kline reporting shares acquired through
dividend reinvestment. In each case an appropriate filing was made upon
discovery of the error.
CERTAIN LEGAL PROCEEDINGS
Howard G. Buffett, a Director of the Company, is also a director and
executive officer of Archer Daniels Midland Company, one of several defendants
in a civil antitrust lawsuit brought by the Company and other plaintiffs against
suppliers of carbon dioxide. The plaintiffs, each a purchaser of carbon dioxide,
have alleged price-fixing, customer allocation, and other unlawful activities on
the part of the suppliers and have sued for treble damages. The action was filed
on September 11, 1992 and is styled Anheuser Busch Companies, Inc. et al. v. The
BOC Group, Inc. et al. (No. 92-1133-CIV-ORL-19) and is pending in the United
States District Court, Middle District of Florida, Orlando Division. The case is
still in discovery. To avoid a conflict of interest with Mr. Buffett's service
on the Company's Board of Directors, the Board has given its Audit Committee, of
which Mr. Buffett is not a member, the oversight responsibility for this
lawsuit.
12
<PAGE> 16
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning
compensation paid or accrued by the Company to or on behalf of the Company's
Chief Executive Officer and each of the four other most highly compensated
executive officers (determined as of the end of the last fiscal year) (hereafter
referred to as the named executive officers) for the fiscal years ended December
31, 1991, 1992 and 1993:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------------------- -----------------------------------
AWARDS
----------------------- PAYOUTS
RESTRICTED SECURITIES --------
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
SALARY BONUS COMPENSATION AWARD OPTIONS/ PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) ($)(2) SARS (#) ($) ($)(3)
- ----------------------------- ---- -------- -------- ------------ ---------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Summerfield K. Johnston, Jr.. 1993 800,000 502,400 134,855 1,010,000(4) 123,300 0 38,217
Vice Chairman and Chief 1992 750,000 345,000 336,896 2,956,250(4) 324,400 0 11,250
Executive Officer 1991(5) 28,847 0 0 0
Henry A. Schimberg........... 1993 700,000 439,600 139,192 1,376,125(6) 164,000 0 348,611
President and Chief 1992 650,000 299,000 213,239 2,543,750(6) 281,100 0 13,464,930
Operating Officer 1991(5) 25,000 0 0 0
John R. Alm.................. 1993 340,000 180,880 59,532 202,000(7) 32,000 0 1,037,755
Senior Vice President, 1992 300,000 108,000 183,631 618,750(7) 84,400 0 1,561,122
Chief Financial Officer 1991(5) 11,539 0 0 0
Norman P. Findley............ 1993 207,500 109,353 (8) 101,000(9) 17,000 0 9,902
Vice President, Domestic 1992 195,000 70,200 (8) 0(9) 0 0 7,878
and International Marketing 1991 183,600 48,352 86,875(9) 30,000
Robert F. Gray............... 1993 200,000 105,400 (8) 88,375(10) 16,000 0 8,992
Vice President, Information 1992(11) 170,000 66,600 106,021 275,000(10) 44,000 0 3,132
Systems 1991(11)
</TABLE>
- ---------------
(1) "Other Annual Compensation" includes only amounts earned for the fiscal
years ended December 31, 1992 and 1993. Includes for Mr. Johnston in 1992:
relocation expenses, $99,206, nonbusiness use of Company aircraft, $140,797;
in 1993 includes nonbusiness use of Company aircraft, $94,196. Includes for
Mr. Schimberg in 1992: relocation expenses, $99,179, nonbusiness use of
Company aircraft, $53,522; in 1993 includes housing allowance, $26,400,
nonbusiness use of Company aircraft, $53,096. Includes for Mr. Alm in 1992:
relocation expenses, $135,316; in 1993 includes temporary supplemental
salary, $24,000; nonbusiness use of Company aircraft, $20,458. Includes for
Mr. Gray in 1992: relocation expenses, $52,983.
(2) Dividends are payable on the shares of restricted stock to the same extent
as payable on the common stock generally. Restricted stock awarded in 1992
(the "1992 Restricted Stock") is subject to forfeiture if the officer's
employment with the Company terminates for any reason other than (i) death,
(ii) disability or (iii) retirement at least six years after the date of
grant; provided, however, if the executive retires within four years after
the date of grant, all restricted stock is forfeited; if within five years,
two-thirds is forfeited and one-third is vested; if within six years,
one-third is forfeited and two-thirds is vested. Under the terms of the
grant of the 1992 Restricted Stock, these shares will vest earlier and all
restrictions will be removed if the price per share of the Company's common
stock reaches specified levels: at $27.75 per share, one-half of the
original grant will vest; at $34.6875 per share, an additional one-fourth of
the original grant will vest; and at $41.625 per share, the balance will
vest. Restricted stock awarded in 1993 (the "1993 Restricted Stock") is
subject to forfeiture if the officer's employment with the Company
terminates for any reason other than (i) death, (ii) disability, (iii)
retirement at age 65 with ten years of service, or (iv) retirement at least
six years after the date of grant; provided, however, if the executive
retires within four years after the date of grant, all restricted stock is
forfeited; if within five years, two-thirds is forfeited and one-third is
vested; if within six years, one-third is forfeited and two-thirds is
vested. Under the terms of the grant of the 1993 Restricted Stock, these
shares will vest earlier and all restrictions will be removed if the price
per share of the Company's common stock reaches specified levels: at $25.00
per share, one-half of the original grant will vest; at $31.25 per share, an
additional one-fourth of the original grant will vest; and at $37.50 per
share, the balance will vest. Restricted stock awarded in 1991 is subject to
forfeiture if the executive's employment with the Company terminates for any
reason other than death, disability, or retirement, unless the Compensation
Committee specifies otherwise.
13
<PAGE> 17
(3) "All Other Compensation" includes only amounts paid, payable or accrued by
the Company for the fiscal years ended December 31, 1992 and 1993. For Mr.
Johnston, in 1992 consists of $11,250 to a defined contribution pension
plan; in 1993 consists of $34,350 to a defined contribution pension plan,
$2,484 paid for term life insurance and $1,383 paid under the medical
reimbursement plan. For Mr. Schimberg in 1992, consists of $13,447,288
(valued at December 31, 1992) to which he is entitled upon termination of
employment (the "Schimberg Agreement") (See "Executive Compensation --
Employment Contracts and Termination of Employment Arrangements"), $14,114
to a defined contribution pension plan, and $3,528 paid under the medical
reimbursement plan; in 1993 consists of $29,970 to a defined contribution
pension plan, $2,484 paid for term life insurance, $1,173 paid under the
medical reimbursement plan and $314,984 in interest and dividends accrued
under the Schimberg Agreement. For Mr. Alm, in 1992 consists of $1,551,610
(valued at December 31, 1992) to which he would have been entitled upon
termination of employment had it occurred before December 18, 1993 (the
"Alm Agreement") (See "Executive Compensation -- Employment Contracts and
Termination of Employment Arrangements"), $9,000 to a defined contribution
pension plan, and $512 paid under the medical reimbursement plan; in 1993
consists of $13,440 to a defined contribution pension plan, $1,118 paid for
term life insurance, $689 paid under the medical reimbursement plan and an
additional $1 million to which he was entitled under the Alm Agreement
because his employment continued after December 18, 1993, plus interest and
dividends accrued during 1993 in the amount of $22,508. For Mr. Findley,
in 1992 consists of $7,300 to a defined contribution pension plan and $578
paid for term life insurance; in 1993 consists of $8,995 to a defined
contribution pension plan and $907 paid for term life insurance. For
Mr. Gray, in 1992 consists of $2,775 paid to a defined contribution pension
plan and $357 paid for term life insurance; in 1993, consists of $7,998
paid to a defined contribution pension plan and $994 paid for term life
insurance.
(4) At December 31, 1992, Mr. Johnston held 215,000 shares of the Company's
common stock as restricted stock, having a market value at that date of
$2,633,750; at December 31, 1993, he held an aggregate of 295,000 shares of
restricted stock, having a market value at that date of $4,498,750.
(5) The officer was not employed by the Company until December 18, 1991.
(6) At December 31, 1992, Mr. Schimberg held 185,000 shares of the Company's
common stock as restricted stock, having a market value at that date of
$2,266,250; at December 31, 1993, he held an aggregate of 294,000 shares of
restricted stock, having a market value at that date of $4,483,500.
(7) At December 31, 1992, Mr. Alm held 45,000 shares of the Company's common
stock as restricted stock, having a market value at that date of $551,250;
at December 31, 1993, he held an aggregate of 61,000 shares of restricted
stock, having a market value at that date of $930,250.
(8) Perquisites and other personal benefits, securities or property for this
officer did not exceed the lesser of $50,000 or 10% of his salary and bonus,
and there were no other items of "Other Annual Compensation."
(9) At December 31, 1991, Mr. Findley held 10,000 shares of the Company's Common
Stock as restricted stock, having a market value at that date of $153,750;
at December 31, 1992, he held 10,000 shares of the Company's common stock as
restricted stock, having a market value at that date of $122,500; at
December 31, 1993, he held an aggregate of 18,000 shares of restricted
stock, having a market value at that date of $274,500.
(10) At December 31, 1992, Mr. Gray held 20,000 shares of the Company's common
stock as restricted stock, having a market value at that date of $245,000;
at December 31, 1993, he held an aggregate of 27,000 shares of restricted
stock, having a market value at that date of $411,750.
(11) The officer was not employed by the Company until February 3, 1992.
14
<PAGE> 18
STOCK OPTIONS GRANTED
The following table contains information concerning the grant of stock
options during the last fiscal year under the Company's 1991 Stock Option Plan
to the named executive officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------------------------------------
NUMBER OF % OF TOTAL GRANT DATE
SECURITIES OPTIONS GRANTED EXERCISE OR PRESENT
UNDERLYING TO EMPLOYEES IN BASE PRICE VALUE
NAME OPTIONS GRANTED(1) FISCAL YEAR ($/SH) EXPIRATION DATE ($)(2)
- --------------------- ------------------ --------------- ----------- ----------------- ----------
<S> <C> <C> <C> <C> <C>
Mr. Johnston......... 123,300 11.1% 15.00 February 10, 2003 414,288
Mr. Schimberg........ 164,000 14.8% 15.00 February 10, 2003 598,600
Mr. Alm.............. 32,000 2.9% 15.00 February 10, 2003 180,160
Mr. Findley.......... 17,000 1.5% 15.00 February 10, 2003 95,710
Mr. Gray............. 16,000 1.4% 15.00 February 10, 2003 90,080
</TABLE>
- ---------------
(1) The options vest upon the earliest of (1) the officer's death or disability,
or (2) February 10, 1994 (as to one-third of the options), February 10, 1995
(as to one-third of the options), and February 10, 1996 (as to one-third of
the options). If the officer's employment with the Company or The Coca-Cola
Company, or an affiliate of either, terminates for any reason other than
death, disability or retirement at age 65 with ten years of vesting service,
all rights to unvested options are forfeited. Under the 1991 Stock Option
Plan, the option price was set at a 20% premium over the fair market value
(defined as the average of the high and low trading prices) of the common
stock of the Company on the date of grant, February 10, 1993.
(2) The "grant date present value" is based upon the Black-Scholes option
pricing model adapted for use in valuing executive stock options. The actual
value, if any, an executive may realize upon exercise of the option will
depend on the excess of the stock price over the exercise price on the date
the option is exercised, so there is no assurance the value realized by an
executive will be at or near the value estimated by the Black-Scholes model.
The principal assumptions incorporated into the valuation model by the
Company include the following: expected volatility, risk-free rate of
return, dividend yield, and anticipated term. The expected volatility
assumption was established based on five years of end-of-the-week closing
prices immediately preceding the option grant date. The risk-free rate of
return was based on the yield to maturity of U.S. Treasury strip securities
with terms approximating the assumed option term. The dividend yield is
derived by dividing total dividends paid on common stock during the
immediately preceding fiscal year prior to the grant by the stock price on
the grant date. The anticipated term was based on a term of ten years, or
six months after normal retirement date, whichever comes first. No
assumptions were made regarding nontransferability and risk of forfeiture.
The assumptions chosen materially impact the resultant valuations.
15
<PAGE> 19
OPTION/SAR EXERCISES AND HOLDINGS
The following table provides information with respect to the named
executive officers concerning the exercise of options and/or stock appreciation
rights ("SARs") during the last fiscal year and the number of unexercised
options and SARs held as of the end of the fiscal year.
AGGREGATED OPTION AND SAR EXERCISES IN LAST FISCAL YEAR,
AND FISCAL YEAR-END OPTION AND SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS VALUE OF
AND SARS AT UNEXERCISED IN-THE-MONEY
FISCAL OPTIONS -- SARS AT
NUMBER YEAR-END(#) FISCAL YEAR-END($)
OF SHARES ----------------- ------------------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED($) UNEXERCISABLE UNEXERCISABLE
- -------------------- ----------- ----------- ----------------- ------------------------
<S> <C> <C> <C> <C>
Mr. Johnston........ -- -- 0 / 447,700 0 / 476,875
Mr. Schimberg....... -- -- 0 / 445,100 0 / 427,513
Mr. Alm............. -- -- 0 / 116,400 0 / 124,050
Mr. Findley......... -- -- 73,333 / 18,667 33,750 / 4,250
Mr. Gray............ -- -- 0 / 60,000 0 / 64,500
</TABLE>
LONG-TERM INCENTIVE PLANS
The following table provides information concerning awards made during the
last fiscal year to the named executive officers under the Company's Long-Term
Incentive Plans. Payouts, if any, under the Long-Term Incentive Plans of the
Company will be reported in the Summary Compensation Table for the year of
payout. Under these plans, payouts are based upon the compound annual growth
rate of the Company's cash operating profit (operating income plus depreciation
and amortization) over a three-year period. Whether a payout is at the
threshold, target or maximum amount depends upon the amount of the percentage
increase in the Company's cash operating profit over the relevant three-year
period. Any payouts earned under the plans would be made either (i) 50 percent
in the first year following the end of the relevant three-year period and the
balance two years after that, assuming continued employment of the executive
officer, or (ii) in full in the year following death, retirement or disability.
Any executive officer whose employment is terminated for any reason besides
death, retirement or disability has no right to any further payout.
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
PERFORMANCE OR NON-STOCK PRICE BASED PLANS
OTHER PERIOD UNTIL ---------------------------------
MATURATION OR THRESHOLD TARGET MAXIMUM
NAME PAYOUT ($)(1) ($)(1) ($)(1)
- ------------------------------------ --------------------- --------- --------- ---------
<S> <C> <C> <C> <C>
Mr. Johnston........................ 3-year period ending 35% of 70% of 140% of
December 31, 1995 salary salary salary
Mr. Schimberg....................... 3-year period ending 35% of 70% of 140% of
December 31, 1995 salary salary salary
Mr. Alm............................. 3-year period ending 25% of 50% of 100% of
December 31, 1995 salary salary salary
Mr. Findley......................... 3-year period ending 20% of 40% of 80% of
December 31, 1995 salary salary salary
Mr. Gray............................ 3-year period ending 20% of 40% of 80% of
December 31, 1995 salary salary salary
</TABLE>
- ---------------
(1) "Salary" is the average annual salary, as reported in the Summary
Compensation Table, over the three-year period.
16
<PAGE> 20
PENSION PLANS
The Company sponsors a noncontributory, qualified defined benefit plan
which provides benefits for substantially all nonunion, full-time employees.
Retirement income benefits are based upon a participant's highest average annual
compensation during any three of the last 10 consecutive calendar years and the
participant's years of credited service.
The Company also maintains an unfunded, nonqualified defined benefit
pension plan which provides benefits which are not provided by the qualified
plan due to the limits set forth in the Internal Revenue Code. The combined
benefit provided by the qualified and nonqualified plans is limited to 200% of
the maximum annual benefit allowed under Section 415 of the Internal Revenue
Code. The maximum benefit for 1993 was $231,282.
The following table shows the estimated annual benefits payable at normal
retirement age (65) under the defined benefit qualified and nonqualified plans.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE AT RETIREMENT
-------------------------------------------------------------------------
REMUNERATION 15 20 25 30 35 40
- ------------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 125,000 ......... $ 21,563 $ 28,750 $ 35,938 $ 43,125 $ 50,313 $ 57,500
150,000 ......... 25,875 34,500 43,125 51,750 60,375 69,000
175,000 ......... 30,188 40,250 50,313 60,375 70,438 80,500
200,000 ......... 34,500 46,000 57,500 69,000 80,500 92,000
225,000 ......... 38,813 51,750 64,688 77,625 90,563 103,500
250,000 ......... 43,125 57,500 71,875 86,250 100,625 115,000
300,000 ......... 51,750 69,000 86,250 103,500 120,750 138,000
350,000 ......... 60,375 80,500 100,625 120,750 140,875 161,000
400,000 ......... 69,000 92,000 115,000 138,000 161,000 184,000
450,000 ......... 77,625 103,500 129,375 155,250 181,125 207,000
500,000 ......... 86,250 115,000 143,750 172,500 201,250 230,000
550,000 ......... 94,875 126,500 158,125 189,750 221,375 231,282
600,000 ......... 103,500 138,000 172,500 207,000 231,282 231,282
650,000 ......... 112,125 149,500 186,875 224,250 231,282 231,282
700,000 ......... 120,750 161,000 201,250 231,282 231,282 231,282
750,000 ......... 129,375 172,500 215,625 231,282 231,282 231,282
800,000 ......... 138,000 184,000 230,000 231,282 231,282 231,282
900,000 ......... 155,250 207,000 231,282 231,282 231,282 231,282
1,000,000 ......... 172,500 230,000 231,282 231,282 231,282 231,282
1,250,000 ......... 215,625 231,282 231,282 231,282 231,282 231,282
1,500,000 ......... 231,282 231,282 231,282 231,282 231,282 231,282
</TABLE>
Benefits shown in the table above are computed as straight-life annuity
amounts upon retirement at age 65 and are not subject to reduction for Social
Security or other amounts.
Covered compensation includes salary and bonuses, in each case computed as
of the year actually paid rather than as of the year in which it was earned. In
comparison to the Summary Compensation Table, covered compensation excludes
Other Annual Compensation, Restricted Stock Awards and All Other Compensation.
17
<PAGE> 21
Covered compensation for 1993 as well as years of credited service at the
end of the fiscal year for the executive officers is summarized below:
<TABLE>
<CAPTION>
OFFICER COMPENSATION CREDITED SERVICE
-------------------------------------- ------------ ----------------
<S> <C> <C>
Mr. Johnston.......................... $1,302,400 39 Years
Mr. Schimberg......................... 1,139,600 12 Years
Mr. Alm............................... 520,880 16 Years
Mr. Findley........................... 316,853 5 Years
Mr. Gray.............................. 305,400 2 Years
</TABLE>
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
Mr. Schimberg has a Restated Compensation Agreement with Johnston
Coca-Cola, dated December 16, 1991, as amended, which provides that he is
entitled to a payment of $13 million (plus accrued interest and dividends) upon
the termination of his employment, with or without cause, from Johnston
Coca-Cola, a subsidiary of Johnston Coca-Cola, or the Company. Of the $13
million principal balance of the account: (i) $8 million earns interest at the
rate specified in the agreement, which is the interest rate paid by Trust
Company Bank, Atlanta, Georgia, on six-month certificates of deposit of a like
amount, with interest being reset every six months; and (ii) pursuant to Mr.
Schimberg's election in April 1993, $5 million was invested in the common stock
of the Company and will appreciate or depreciate with the market value of the
common stock. Dividends on the stock will be added to the cash portion of the
account and earn interest at the rate provided. Upon the termination of Mr.
Schimberg's employment, the stock and amounts held in cash will be paid to Mr.
Schimberg. Mr. Schimberg may elect installment payments over a period not to
exceed ten years, but if he makes no such election, the Company may pay in
installments over a period of not more than five years. Payments will commence
within 60 days after the termination of Mr. Schimberg's employment; interest on
installment payments of cash would accrue at the rate of interest equal to the
yield to maturity on ten-year United States Treasury bonds having an issue date
nearest the date on which amounts become payable, unless another interest rate
is agreed upon by Johnston Coca-Cola and Mr. Schimberg. Mr. Schimberg has the
right to request payment of all or any part of the value of his account prior to
his termination of employment, but any such payments are at the sole discretion
of the Board of Directors of Johnston Coca-Cola.
Mr. Alm has a Deferred Compensation Agreement with Johnston Coca-Cola,
dated December 16, 1991, which became effective upon the Company's acquisition
of Johnston Coca-Cola. The agreement originally provided for a payment to Mr.
Alm of $2.5 million plus accrued interest upon his termination of employment
with the Company, which payment would have been reduced to $1.5 million plus
accrued interest if Mr. Alm had voluntarily terminated his employment prior to
December 18, 1993. Pursuant to an amendment of this agreement in April 1993, Mr.
Alm elected to have the credit balance of this account, subject to reduction as
described in the preceding sentence, invested in common stock of the Company.
Mr. Alm's account value will appreciate or depreciate with the market value of
the common stock. Dividends on the stock are held as cash in his account and
accrue interest at the rate paid by Trust Company Bank, Atlanta, Georgia on
six-month certificates of deposit or like amount, with interest being determined
every six months. Mr. Alm is entitled to the value of his account only upon the
termination of his employment with the Company. Mr. Alm may elect an installment
period not to exceed ten years, but if no such election is made, the Company may
pay installments over a period not to exceed five years. Payments will commence
within 60 days after Mr. Alm's termination of employment.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation of the Company's officers and executives is reviewed and
set annually by the four-member Compensation Committee, which is comprised
entirely of outside, non-employee Directors of the Company. Under the
supervision of the Compensation Committee, the Company
18
<PAGE> 22
has implemented compensation policies and plans which closely link the Company's
financial performance and share-owner value.
Compensation Philosophy. There are three primary elements of the Company's
compensation program applicable to all of the executive officers, each of which
is determined by the factors summarized in this report:
- Base salary compensation
- Annual cash incentive compensation
- Long-term incentive compensation
Changes in the Company's executive officers and management in 1992,
including a new Vice Chairman and Chief Executive Officer, President and Chief
Operating Officer, and Senior Vice President and Chief Financial Officer,
necessitated a complete review by the Committee of the Company's compensation
programs. In 1993 the Committee continued the compensation policies and plans
which were implemented in 1992.
Base Salary Compensation. For fiscal 1993, the Committee reviewed the base
salary compensation levels for all officers. 1993 salaries were established
using existing salary levels as a base, and making adjustments for each
individual where appropriate. Increases were approved for individual positions
in instances where duties and responsibilities had expanded, existing base
compensation was less than amounts paid to senior officers with comparable
qualifications and experience at other companies engaged in the same or a
similar business, and significant individual performance (determined on a
subjective basis) merited such increases. The relative significance of each of
the above circumstances and factors varied by executive position. In its review
of base salary compensation, the Committee established amounts for each
individual within the middle range (approximate 50th percentile) to slightly
higher (up to the 75th percentile) salary levels for comparable positions among
consumer products companies of comparable size, without weighing the comparable
companies' financial performance, and did not limit its review to the companies
comprising the peer group used in this proxy statement for a comparison of the
Company's five-year cumulative total return, since the peer group consists
solely of publicly traded soft drink bottlers. The Committee believes that a
group of consumer products companies which is broader than its peer group should
be considered in establishing compensation levels for the Company's executives.
With respect to each executive, the Committee received and evaluated
recommendations of the Company's senior human resources executives and its Chief
Executive Officer (who did not participate in discussions relating to his
compensation), and also the advice of a firm of independent compensation
consultants.
Annual Incentive Compensation. For fiscal 1993, the Committee approved a
new Annual Incentive Plan for the officers and executive managers of the Company
which was a continuation of the 1992 plan in all respects. The new plan
establishes target award levels based solely upon financial results in attaining
budgeted cash operating profit increases over the prior year, and is therefore
consistent with management's belief that cash operating profit growth is the
primary measure of the Company's financial performance. Under the plan, 100% of
the targeted award is earned in the event the Company achieves its budgeted cash
operating profit growth, with reduced awards payable if budgeted cash operating
profit growth is not attained and increased awards payable if budgeted cash
operating profit growth is exceeded.
A significant portion of the cash compensation payable to the Company's
officers and executive managers is tied to the Annual Incentive Plan, with
potential awards ranging from 2% to 90% of salary, the percentage for each
recipient commensurate with his or her level of responsibility and thus ability
to contribute to growth in cash operating profit. Cash awards under the Annual
Incentive Plan for 1993 were paid to the Company's named executive officers
based upon attaining 100% of the Company's budgeted cash operating profit
growth, and ranged from 52.7% to 62.8% of salary, depending on the individual's
position with the Company. Corporate officers other than named
19
<PAGE> 23
executive officers received cash awards based upon cash operating profit results
for their territories, compared to budget; these awards ranged from 33% to 79%
of salary.
Long-Term Incentive Compensation. Both the Company's management and the
Compensation Committee believe that significant stock ownership in the Company
links the economic interests of share owners and management and therefore is a
major incentive for management. The Company's long-term incentive plans and
programs are designed to provide the recipient with a proprietary interest in
the growth and performance of the Company and the value of its shares.
The Company's long-term incentive compensation consists of a three-year
cash incentive plan, a restricted stock award plan and a stock option plan. In
1993, the Committee approved a three-year cash incentive plan for the years 1993
through 1995, and made grants under the Restricted Stock and Stock Option Plans.
Three-year Cash Incentive Plan. In 1993, the Committee approved a
three-year cash incentive plan for the years 1993 through 1995, based entirely
upon prospective cash operating profit increases, and providing potential cash
compensation to the senior officers and certain executive managers based solely
upon compounded annual cash operating profit growth for such three-year period.
Assuming the increases are achieved, potential awards under the plan range from
20% to 140% of salary, the percentage for each participant commensurate with his
or her level of responsibility and thus ability to contribute to growth in cash
operating profit.
Restricted Stock Plan and Stock Option Plan. In furtherance of the
Committee's belief that significant ownership by executive management of the
Company's shares is essential for long-term growth in share-owner value, the
Company has in place a 1991 Stock Option Plan and a 1992 Restricted Stock Award
Plan. No individual executive could have been awarded more than 450,000 option
shares under the 1991 Stock Option Plan nor more than 300,000 shares under the
1992 Restricted Stock Award Plan.
A total of 1,109,900 option shares were awarded during fiscal 1993 under
the 1991 Stock Option Plan; 123,300 option shares were awarded to the Vice
Chairman and Chief Executive Officer and 164,000 option shares were awarded to
the President and Chief Operating Officer. All options were awarded at a premium
exercise price of 120% of market price on date of grant. Since stock options
awarded under this plan are tied to the future performance of the Company's
stock, they provide value to the recipient only when the value of the Company's
stock increases above the option grant price. The number of individual option
grants approved by the Committee was determined by a common formula based upon a
percentage of base salary in relation to the current market value of the
Company's shares, the amount of which percentage varies with each individual's
level of responsibility, with the highest percentages being assigned to the
Chief Executive Officer and the Chief Operating Officer. No consideration is
given to the number of shares already owned by a recipient.
The Compensation Committee believes that the Restricted Stock Award Plan,
in building stock ownership among the Company's officers and management
executives, enhances the potential for profitability and share-owner value.
Shares are earned under the Plan based upon a schedule which is indexed to
increases in market price of the Company's stock, such that 50% of the award
vests if the market price of the Company's stock reaches two times the market
price on the grant date, and thereafter based on further increases in the market
price of the Company's stock. Shares also vest at retirement, death or
disability. A total of 463,100 shares were awarded under the Restricted Stock
Award Plan in fiscal 1993; 80,000 shares were awarded to the Vice Chairman and
Chief Executive Officer and 109,000 shares to the President and Chief Operating
Officer. The number of individual awards made to the officers and executive
managers was determined by a formula based upon a percentage of base salary in
relation to the current market value of the Company's shares, the amount of
which percentage varies with each individual's level of responsibility, with the
highest percentages being assigned to the Chief Executive Officer and the Chief
Operating Officer.
20
<PAGE> 24
The guidelines established by the Committee for the 1993 grants of option
shares and restricted stock awards for officers and executive managers were
reviewed on the basis of advice from the Company's independent compensation
consulting firm, which stated to the Committee that it relied upon its review of
similar plans and incentive compensation practices at comparable companies and
used data from its own compensation surveys. The Committee's guidelines called
for total individual compensation package (salary, bonus and incentives) to fall
within the 50th to 75th percentile ranges for comparable positions at comparable
companies. The grants to the officers and executive officers fall within the
framework of these guidelines.
Compensation of Chief Executive Officer. The Committee established fiscal
1993 compensation for the Company's Chief Executive Officer on the basis of the
following principles and guidelines:
- The Chief Executive Officer's base salary and incentive compensation
should reflect his performance in that capacity, measured primarily by
the extent to which the Company attained its specified cash operating
profit growth target. For fiscal 1992, the Company's cash operating
profit increased eight percent, the goal established by the budget
approved by the Company's Board of Directors. This circumstance was the
most significant factor to the Committee in deciding the amount of
increase to the Chief Executive Officer's salary.
- The Chief Executive Officer's base salary compensation should also be
reviewed in the context of amounts paid to chief executives with
comparable levels of experience and qualifications at other corporations
engaged in the same or similar businesses, considering also the historic
salary levels paid by the Company to its Chief Executive Officer. The
Committee concluded, based on data furnished by its independent
consultants, that the Chief Executive Officer's 1993 base salary
satisfied the test referred to above in all respects.
- A significant portion of the Chief Executive Officer's cash compensation
should be directly tied to the Company's financial performance, with the
result under the Company's 1993 Annual Incentive Compensation Plan that
the Chief Executive Officer could earn a bonus of as much as 90% of
salary depending upon the amount of the Company's 1992 cash operating
profit in relation to the increase set forth in the Company's budget
approved by the Board of Directors. The other executive officers of the
Company earn annual bonuses based upon the same formula, although their
respective award percentages of salary may be less, commensurate with
their levels of responsibility.
- In line with the Committee's belief that long-term incentive compensation
should be structured so that cash incentives are payable only in the
event the Company achieves specified cash operating profit growth
targets, and that significant ownership by management is essential for
long-term growth in share-owner value, stock options and restricted stock
awards should provide share-owner value by providing the potential for
additional stock ownership to the Chief Executive Officer. Accordingly,
the Committee determined to structure long-term incentive compensation to
the Chief Executive Officer in line with the principles followed in
setting long-term incentive compensation for the other executive officers
(see the preceding discussion). Therefore, the Chief Executive Officer's
long-term incentive compensation was set without adjustment to reflect
his ownership of the Company's stock he obtained in 1991 in exchange for
his interest in Johnston Coca-Cola.
Section 162(m) of the Internal Revenue Code. The new Section 162(m) of the
Internal Revenue Code limits a corporation's ability to take a deduction for
federal tax purposes for certain compensation paid to its executives. There is
an exception to this limitation for "performance-based" compensation, which
requires share-owner approval. Consequently, the Company's Board of Directors
has recommended that the following compensation plans applicable to executive
21
<PAGE> 25
officers be submitted to the Company's share owners for approval under the
provisions of Section 162(m).
- 1992 Restricted Stock Award Plan (as amended and restated effective as of
February 7, 1994)
- 1994 Stock Option Plan
- 1994 Executive Management Incentive Plan
- 1994-1996 Long-Term Incentive Plan
If approved by the Company's share owners, the Company believes that all
compensation paid or payable under the terms of the above plans to its executive
officers covered under Section 162(m) of the Internal Revenue Code will qualify
for deductibility under such Section.
T. Marshall Hahn, Chairman
Claus M. Halle
Scott L. Probasco, Jr.
Francis A. Tarkenton
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
Set forth below is a line graph presentation showing a five-year comparison
of the cumulative total return on the Company's common stock to both the S&P
Composite 500 Index and an index of peer group companies selected by the
Company. The peer group consists of three publicly traded soft drink bottlers:
Coca-Cola Beverages Ltd., Coca-Cola Bottling Co. Consolidated and Whitman
Corporation. The graph assumes $100 invested on December 30, 1988 in common
stock of the Company and in each index, with the subsequent reinvestment of
dividends on a quarterly basis. Each date shown is a fiscal year-end of the
Company.
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Company peer group S&P 500
<S> <C> <C> <C>
12/30/88 100 100 100
12/29/89 106.97 96.20 131.59
12/28/90 103.96 65.60 127.49
12/31/91 103.44 93.36 166.17
12/31/92 82.73 97.55 178.81
12/31/93 103.32 121.38 196.75
</TABLE>
22
<PAGE> 26
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
STOCK OWNERSHIP BY AND DIRECTOR RELATIONSHIPS WITH THE COCA-COLA COMPANY
The Company was formed initially as a wholly owned subsidiary of The
Coca-Cola Company, and The Coca-Cola Company remains the largest share owner of
the Company, owning as of February 18, 1994, directly and indirectly through its
subsidiaries, 56,318,906 shares of common stock of the Company, representing
approximately 43.5% of the outstanding common stock of the Company. In addition,
two Directors of the Company are executive officers of The Coca-Cola Company,
and two other Directors of the Company are former executive officers of The
Coca-Cola Company.
AGREEMENTS AND TRANSACTIONS WITH THE COCA-COLA COMPANY
The Company and The Coca-Cola Company have entered into significant
transactions and agreements with one another, incident to their respective
businesses, and the Company and The Coca-Cola Company are expected to enter into
material transactions and agreements from time to time in the future.
Material agreements and transactions between the Company and The Coca-Cola
Company during 1993 are described below.
Bottle Contracts and Purchases of Finished Product. For operations within
the United States and the Caribbean, the Company and its subsidiaries (referred
to collectively as the "Company") purchase syrups and concentrates from The
Coca-Cola Company and manufacture, package, distribute and sell liquid
nonalcoholic refreshment products under bottle contracts with The Coca-Cola
Company. These contracts give the Company the exclusive right to produce and
market beverage products of The Coca-Cola Company in bottles and cans in
specified territories. The bottle contracts also provide The Coca-Cola Company
with the ability to set prices of the syrups and concentrates for the beverages
of The Coca-Cola Company, as well as the terms of payment and other terms and
conditions under which the Company purchases such syrups and concentrates. The
Company has other agreements with The Coca-Cola Company under which it purchases
finished product for sale within its territories. Under the international bottle
contract applicable to the Company's Dutch subsidiary, Coca-Cola Beverages
Nederland B.V. ("CCB Nederland"), CCB Nederland purchases concentrate and syrup
from The Coca-Cola Company and manufactures, packages, distributes and sells its
principal liquid nonalcoholic refreshment products in bottles in its territory.
Additionally, CCB Nederland is required to purchase from The Coca-Cola Company
(but does not itself have the right to produce) such products in cans for
distribution and sale on a nonexclusive basis within its territory. During the
Company's fiscal year ended December 31, 1993, the Company purchased from The
Coca-Cola Company approximately $1.2 billion of syrups, concentrates, finished
product and, in the Netherlands canned product, under the bottle contracts and
other agreements relating to one-year appointments of the Company to sell
fountain syrup. The Company anticipates that in 1994, based on volume comparable
to that purchased in 1993, the amount to be paid by the Company to The Coca-Cola
Company will be substantially the same as paid in 1993, even after giving effect
to a 2.5% increase in the price of concentrate purchased by the Company under
the bottle contracts.
Administrative Services Agreements. The Coca-Cola Company provides the
Company with services relating to some of the administrative,
telecommunications, personnel and transportation activities of the Company. In
general, the Company pays The Coca-Cola Company for each service rendered at a
rate believed by management of the Company to approximate an arms-length rate
for such services. The amount paid by the Company in fiscal 1993 to The
Coca-Cola Company for services supplied to the Company for data processing,
telephone service, administrative, shipping and miscellaneous supplies was
approximately $800,000.
23
<PAGE> 27
Lease of Office Space. The Company leases as its headquarters
approximately 104,000 square feet of office space in a building owned by The
Coca-Cola Company. In 1993, the existing lease was renewed to provide for an
annual base rental of approximately $1.7 million until June 30, 1997. The rental
rate is fixed with escalation provisions applicable only to operating costs.
Operating costs subject to escalation include taxes, normal utilities, security,
parking, building maintenance and cleaning services. Services not included will
be separately charged on an "as used" basis, based upon market rates. In the
opinion of management, the terms of the lease agreement are fair and reasonable
and as favorable to the Company as those which could have been obtained from
unrelated third parties at the time of its execution. During the Company's
fiscal year ended December 31, 1993, lease and related payments made by the
Company to The Coca-Cola Company totaled approximately $1.7 million. During
1994, most of the Company's space in The Coca-Cola Company's building will be
relinquished when the Company moves certain offices to another office complex in
the Atlanta metropolitan area. The annual rental payments will be reduced
proportionately to reflect the space being relinquished.
Tolling Agreements. Most Company locations produce syrup from concentrate
and sweeteners purchased from The Coca-Cola Company. However, a Company location
in San Leandro, California purchases concentrate from The Coca-Cola Company
under a "tolling" agreement and pays a fee to The Coca-Cola Company to combine
the concentrate and sweetener to produce syrup. The tolling fee is based on The
Coca-Cola Company's cost per gallon of syrup produced and delivered and may be
adjusted every three months during the term of the agreement to reflect
increases or decreases in production and/or delivery costs. The amount of
tolling fees paid by the Company to The Coca-Cola Company under this tolling
agreement during the fiscal year ended December 31, 1993 totaled approximately
$1.8 million.
Production of Syrup. The Company produces syrup at its Eagan, Minnesota
facility for The Coca-Cola Company. In 1993, The Coca-Cola Company paid the
Company approximately $5.1 million for these services.
Point-of-Sale Expenses. The Company purchases point-of-sale and other
advertising items from The Coca-Cola Company. In 1993, the Company paid The
Coca-Cola Company approximately $6.9 million for such items and will continue to
purchase such materials in 1994.
Sweetener Requirements Agreement. The Company and The Coca-Cola Company
were parties in 1993 to an arm's-length agreement for the purchase by the
Company from The Coca-Cola Company of substantially all of the Company's 1993
requirements for sweetener. The amount paid by the Company to The Coca-Cola
Company under this agreement during 1993 totaled approximately $211 million. The
Company and The Coca-Cola Company have made a similar arrangement that provides
for fixed pricing for sweetener in 1994.
Transshipping. Under the terms of its bottle contracts with The Coca-Cola
Company, the Company is prohibited from directly or indirectly selling any of
the beverage products of The Coca-Cola Company outside its exclusive
territories. Under such contracts, The Coca-Cola Company has the right to assess
transshipment damages on behalf of bottlers in other territories for beverage
products of The Coca-Cola Company produced by the Company and found in another
bottler's territory, regardless of fault. In 1993, the Company paid The
Coca-Cola Company approximately $600,000 in transshipment assessments. The
Coca-Cola Company generally retains a small proportion of the assessments to
offset its administrative and investigation costs and remits the remainder to
the bottlers into whose territories the beverages were transshipped.
Agency Billing and Delivery Arrangements. The Company has entered into
agreements with The Coca-Cola Company pursuant to which it sells fountain syrup
back to The Coca-Cola Company at prices which generally equate to the prices
charged by The Coca-Cola Company to the Company. The Company then delivers such
syrup to certain of the major fountain accounts of The Coca-Cola Company, and
sometimes, on behalf of The Coca-Cola Company, invoices and collects the
receivables with respect to such sales. In 1993, the amounts paid by The
Coca-Cola Company to the
24
<PAGE> 28
Company under these agency arrangements for delivery, billing and collection
totaled approximately $11 million.
Sales of Syrups and Bottle/Can Products. In addition to the fountain syrup
sales described above, the Company also, from time to time, sells bottle and can
beverage products to The Coca-Cola Company at prices which generally equate to
the prices charged by the Company to its major customers. In 1993, the amounts
paid by The Coca-Cola Company to the Company for fountain syrups and bottle and
can beverage products totaled approximately $209 million. Additionally, the
Company and Coca-Cola Bottling Co. Consolidated, another bottler in which The
Coca-Cola Company owns an equity interest, bought from and sold to each other
finished soft drink product. These transactions occurred in instances where the
proximity of one party's production facilities to the other party's markets, as
well as other economic considerations, made it more efficient for one bottler to
buy finished product than produce it. In 1993, the Company's sales to that
bottler totaled approximately $9.8 million and purchases were approximately
$18.4 million. The Company expects that additional sales and purchases will
occur in 1994.
Marketing Support Arrangements. Under the Company's bottle contracts with
The Coca-Cola Company, The Coca-Cola Company may, but is not obligated to,
provide advertising, cooperative marketing or media funding to the Company. The
Coca-Cola Company also provides additional funds for the Company's fountain
product marketing programs. The Coca-Cola Company provided such support for the
Company's 1993 marketing activities and has informed the Company that it intends
to provide such funds for the Company's 1994 marketing activities. The Company
believes that the aggregate of base marketing funds (excluding special or
one-time marketing programs) for 1994 will be at a level comparable to the base
marketing funds provided in 1993. Annually, after its review of the Company's
marketing and advertising plans for the following year, The Coca-Cola Company
formulates a marketing support budget for the Company. During the course of the
year, that marketing support level may change due to the competitive environment
or other factors. To qualify for all of the formulated marketing support, the
Company must commit to local media spending and marketing programs and is
expected by The Coca-Cola Company to satisfy certain sales objectives. For 1993,
total direct marketing support provided to the Company and its bottlers by The
Coca-Cola Company was approximately $256 million, for which the Company was
required to pay approximately $65 million for local media and program expense.
In the opinion of management of the Company, the amount and terms of such
marketing support provided to the Company by The Coca-Cola Company are generally
as favorable as provided by The Coca-Cola Company to other Coca-Cola bottlers
who have entered into bottle contracts similar to those of the Company bottlers.
Financing Arrangements. Coca-Cola Financial Corporation ("CCFC") is a
wholly owned subsidiary of The Coca-Cola Company. The business of CCFC includes
loans of funds on a secured basis and leases of equipment to Coca-Cola bottlers,
their customers and other customers of The Coca-Cola Company. Interest rates
charged in connection with such transactions are at competitive levels, but for
some transactions, interest rates may be, to an extent, subsidized by The
Coca-Cola Company. During the Company's 1993 fiscal year, CCFC did not advance
funds or enter into any new equipment leases with the Company or any of its
bottlers. In 1993, the Company paid CCFC approximately $1.2 million under
existing equipment leases.
Purchase of Coca-Cola Bottlers
On June 30, 1993, the Company purchased CCB Nederland in the Netherlands
and majority interests in both Roddy Coca-Cola Bottling Company, Inc. in
Knoxville, Tennessee and Coca-Cola Bottling Company of Johnson City in Johnson
City, Tennessee from The Coca-Cola Company for a purchase price of approximately
$366 million, which includes both cash paid and debt assumed.
On January 4, 1994, the Company purchased approximately 4% of the
outstanding shares of The Coca-Cola Bottling Company of New York, Inc. ("KONY")
from The Coca-Cola Company for
25
<PAGE> 29
approximately $6 million. These shares represent an approximate 9% voting
interest. The Company has the right of first refusal, exercisable within five
years after the initial purchase of KONY shares, to purchase The Coca-Cola
Company's other KONY shares, which would give the Company control of KONY. The
Company has the right to nominate one Director to the KONY Board of Directors.
RELATIONSHIPS AND TRANSACTIONS WITH MANAGEMENT AND OTHERS
Johnston Technology Investments Inc ("JTI"), a subsidiary of Johnston
Coca-Cola, currently owns approximately 20% of the capital stock of Debitek,
Inc. ("Debitek"), a debit card company located in Chattanooga, Tennessee, and
holds warrants and $1.5 million principal amount of convertible subordinated
debentures which, if exercised, would increase this percentage of ownership to
approximately 45%. The debentures bear interest at the one-year Treasury bill
rate plus 1.0% and are payable in full on January 29, 1995. At December 31,
1993, Summerfield K. Johnston, Jr., Vice Chairman of the Board of Directors and
Chief Executive Officer of the Company, and Scott L. Probasco, a Director of the
Company, each owned approximately 10.8% of the outstanding stock of Debitek;
Henry A. Schimberg, John R. Alm, S.K. Johnston III, Philip H. Sanford and Lowry
F. Kline, each an executive officer of the Company, owned, in the aggregate,
approximately 5.5% of Debitek's outstanding stock, computed in each case
assuming no exercise of warrants or conversion of the debentures held by JTI.
Mr. Johnston holds proxies to vote a majority of Debitek's stock. JTI has
obtained an irrevocable letter of credit (the "Letter of Credit") to secure a
revolving credit facility in the aggregate principal amount of $2 million
provided to Debitek by a bank. The loan bears interest at a floating rate equal
to the lending bank's base rate minus 0.5% per annum and matures on August 1,
1994. The Letter of Credit expires August 9, 1994. If Debitek defaults on the
loan, the lending bank may accelerate the loan and draw the amount then due
against the Letter of Credit. Debitek also has in place an unsecured revolving
credit agreement (the "Revolving Credit Agreement") pursuant to which JTI has
agreed to advance up to $3 million. This Revolving Credit Agreement carries a
floating rate of interest equal to the one-year Treasury bill rate plus 1.5%.
During 1993, JTI advanced additional funds to Debitek under the Revolving Credit
Agreement aggregating approximately $970,000; total advances to Debitek
outstanding at December 31, 1993 under this agreement totaled approximately $1.8
million. No interest payments are currently being made to JTI under Debitek's
convertible debentures. Under the Revolving Credit Agreement, no repayment of
principal has yet been demanded and interest due has been added to the principal
of the note. To date, Debitek has not generated sufficient cash flow from its
operations to make payments under the debentures and the Revolving Credit
Agreement. Debitek has entered into a letter of intent with another company
which provides for a merger with that company. If that merger occurs, the
amounts due under the convertible debentures, the Revolving Credit Agreement and
any amounts required to be paid by JTI if the bank should draw upon the Letter
of Credit would be converted into equity securities of Debitek, resulting in
JTI's ownership of approximately 31% of the outstanding capital stock of the
merged entity. Additionally, it is anticipated that JTI would provide a $1.5
million line of credit to the merged entity, to be repaid within one year.
The Company sells to the Coca-Cola Bottling Company of Northwest Georgia in
Fort Oglethorpe, Georgia, substantially all of that company's requirements for
liquid nonalcoholic refreshments. Mr. Johnston is the Chairman of the Board,
Treasurer and a 50%-share owner of the Coca-Cola Bottling Company of Northwest
Georgia. All such products are produced, shipped and sold at prices equal to the
Company's fully absorbed cost, which is usually less than prices that the
Company charges to other agency customers, plus reimbursement of product
handling charges. These sales totaled $5.8 million in 1993. During 1993, the
Company provided loading, administrative and miscellaneous services to the
Coca-Cola Bottling Company of Northwest Georgia, which paid the Company
approximately $171,000 for such services.
The Company paid approximately $103,000 of rental and associated charges in
1993 to Mr. Johnston and S. K. Johnston III for the Company's use of certain
facilities owned by them.
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<PAGE> 30
During 1993, the Company and its subsidiaries, paid approximately $1.6
million to Archer Daniels Midland Company ("ADM") for carbon dioxide. Howard G.
Buffett, a Director of the Company, is also a director and executive officer of
ADM.
Lowry F. Kline, General Counsel of the Company, is a partner in the law
firm of Miller & Martin, counsel to the Company, which received approximately $3
million in legal fees from the Company during that firm's 1993 fiscal year.
APPROVAL OF THE 1992 RESTRICTED STOCK AWARD PLAN
(AS AMENDED AND RESTATED EFFECTIVE AS OF FEBRUARY 7, 1994)
(PROPOSAL NO. 2)
The Board of Directors of the Company has adopted an amendment and
restatement of the Company's 1992 Restricted Stock Award Plan effective as of
February 7, 1994 (the "Restricted Stock Plan"; the 1992 Restricted Stock Award
Plan as originally approved by the share owners of the Company is referred to
herein as the "Original Restricted Stock Plan") and directed that the Restricted
Stock Plan be submitted to the share owners for their approval at the Annual
Meeting. The Restricted Stock Plan would become effective upon the approval by
the holders of a majority of the shares of common stock of the Company
represented and entitled to vote at the Annual Meeting. The purpose of the
Restricted Stock Plan is to stimulate officers' and key employees' efforts to
enhance the Company's financial performance and strengthen their loyalty to the
Company. The following summary description of the Restricted Stock Plan is
qualified in its entirety by reference to the full text of the Restricted Stock
Plan attached hereto as Exhibit A.
The Original Restricted Stock Plan provided that all restrictions on shares
of common stock subject to awards would be removed upon the attainment of
specified increases in the price of the Company's common stock, or upon death,
disability, or retirement at least six years after the date of grant, and
restrictions would be removed from an increasing portion of the shares of common
stock subject to the award upon retirement occurring more than four, but less
than six, years after the date of the award. The Board of Directors deleted
these provisions from the Restricted Stock Plan in favor of provisions described
below that link the removal of restrictions from the common stock to increases
in the fair market value of the common stock. Shares of common stock subject to
awards granted prior to February 7, 1994 are subject to the provisions of the
Original Restricted Stock Plan. In addition, the provisions of the Original
Restricted Stock Plan for a cash payment to the recipient equal to the federal,
state and local tax obligations due to the award have been eliminated.
The Company intends that awards under the Restricted Stock Plan be
"performance-based" compensation within the meaning of Section 162(m) of the
Internal Revenue Code of 1986, as amended.
The Company has reserved a total of 725,000 shares of common stock of the
Company for issuance in connection with awards granted under the Restricted
Stock Plan on or after February 7, 1994. Such shares may be awarded from either
authorized and unissued shares or treasury shares. The maximum number of shares
that may be awarded under the Restricted Stock Plan to any individual on or
after February 7, 1994 is 25% of the aggregate number of shares reserved for
issuance as of February 7, 1994 under the Restricted Stock Plan, compared to 20%
of the 1,500,000 shares reserved for issuance under the Original Restricted
Stock Plan.
The Restricted Stock Plan is to be administered by a committee of the Board
of Directors (the "Restricted Stock Committee"), and will be comprised of no
fewer than two members who must be "disinterested persons" within the meaning of
Rule 16b-3 under the Securities and Exchange Act of 1934, as amended, and
"outside directors" within the meaning of Section 162(m) and the regulations
thereunder (including the transition rules of Proposed Treasury Regulations
Section 1.162-27) of the Internal Revenue Code of 1986, as amended. The
Restricted Stock Committee will determine, among other things, the officers
(including nonemployee officers) and key employ-
27
<PAGE> 31
ees to whom awards are to be granted and the number of shares that may be
awarded to each such officer and key employee, as well as to interpret the
provisions of the Restricted Stock Plan. Initially, and until a separate
committee is appointed, the Restricted Stock Committee will be the Compensation
Committee of the Board of Directors.
Shares of stock awarded under the Restricted Stock Plan may not be sold,
exchanged, transferred, pledged, hypothecated or otherwise disposed of while the
recipient is an officer or employee of the Company, The Coca-Cola Company, or a
25%-or-more-owned subsidiary of the Company or The Coca-Cola Company, unless
specifically authorized by the Restricted Stock Committee. Approximately 114
officers (including nonemployee officers) and employees of the Company and its
25%-or-more-owned subsidiaries are currently eligible to participate in the
Restricted Stock Plan.
The Restricted Stock Plan allows restrictions to be removed during
employment only upon stated increases in fair market value of the common stock.
Under the Original Restricted Stock Plan restrictions could be removed for
reasons other than increases in the price of the common stock. Restrictions on
all shares of stock awarded under the Restricted Stock Plan will be removed
solely on account of requisite increases in the price of the common stock within
five years from the date of grant (with respect to the 1994 award, the date of
grant is February 7, 1994, with a fair market value on that date of $17.6875)
and to the extent described below:
- If the average fair market value of the Company's common stock over
twenty consecutive trading days is at least 50% more than the fair market
value on the date of grant, all restrictions shall be removed from 50% of
the stock under the award;
- If the average fair market value of the Company's common stock over
twenty consecutive trading days is at least 75% more than the fair market
value on the date of grant, all restrictions shall be removed from 75% of
the stock under the award;
- If the average fair market value of the Company's common stock over
twenty consecutive trading days is at least 100% more than the fair market
value on the date of grant, all restrictions shall be removed from 100% of
the stock under the award.
"Fair market value" is defined as the average of the high and low market
prices for a share of the Company's common stock, as reported on the New York
Stock Exchange -- Composite Transactions Listing or as otherwise determined by
the Restricted Stock Committee.
The stock under an award will be forfeited upon termination of the
employment of a recipient by the Company, The Coca-Cola Company and any of their
25%-or-more-owned subsidiaries for any reason (including, but not limited to,
termination by the Company with or without cause) other than retirement, death
or disability.
Upon the retirement, death or disability of a participant, the Restricted
Stock Plan provides for an additional period during which the requisite
increases in the price of the common stock can be achieved in order for
restrictions to be removed from the stock, or some portion of the stock. The
additional period would be for a maximum of three years from the date of
retirement, death or disability, not to exceed five years from the date of the
grant.
During the period stock is subject to forfeiture, the participant is
entitled to receive dividends and other distributions on the stock and is
entitled to vote such stock on all matters submitted to share owners.
The Restricted Stock Plan will terminate when all of the stock authorized
for award thereunder has been issued and is no longer subject to forfeiture,
unless terminated earlier by the Board of Directors or the Restricted Stock
Committee.
The Board of Directors or the Restricted Stock Committee may amend, suspend
or terminate the Restricted Stock Plan at any time without the approval of share
owners except for amendments
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<PAGE> 32
for which share-owner approval would be required to retain the benefits of Rule
16b-3 under the Exchange Act or Section 162(m)(3)(C) of the Internal Revenue
Code of 1986, as amended. Nevertheless, no such amendment, suspension or
termination will affect previously granted awards without the participants'
consent unless the Restricted Stock Committee determines that the change is in
the best interests of all participants who have received awards.
The Restricted Stock Committee, subject to the approval of the Restricted
Stock Plan by the share owners, has awarded shares of common stock under the
Restricted Stock Plan as outlined in the table entitled "New Plan Benefits" in
this proxy statement.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE FOR THE
PROPOSAL TO ADOPT THE 1992 RESTRICTED STOCK AWARD PLAN (AS AMENDED AND RESTATED
EFFECTIVE AS OF FEBRUARY 7, 1994)
APPROVAL OF THE 1994 STOCK OPTION PLAN
(PROPOSAL NO. 3)
The Board of Directors of the Company has adopted the Company's 1994 Stock
Option Plan (the "Option Plan") and directed that the Option Plan be submitted
to the share owners for their approval at the Annual Meeting. The Option Plan
will become effective upon the approval by the holders of a majority of the
shares represented and entitled to vote at the Annual Meeting. The purpose of
the Option Plan is to advance the interest of the Company and its
25%-or-more-owned subsidiaries by encouraging and enabling the acquisition of a
financial interest in the Company by officers and other key employees through
grants of stock options ("Options"). The following summary description of the
Option Plan is qualified in its entirety by reference to the full text of the
Option Plan attached hereto as Exhibit B.
The Company intends that Options granted under the Stock Option Plan be
"performance-based" within the meaning of Section 162(m) of the Internal Revenue
Code of 1986, as amended.
The total number of shares of common stock that may be issued under the
Option Plan pursuant to Options granted may not exceed 2,000,000 shares. Options
may be granted to executive officers, other persons within the senior executive
band and executive band, branch managers, sales center managers, and other
officers and management employees (including nonemployee officers) of the
Company and its 25%-or-more-owned subsidiaries who are employed in a position
determined by the Option Committee (as defined below) to be eligible to
participate in the Option Plan. No person will be granted Options to acquire
more than 15% of the aggregate number of shares originally authorized for
issuance under the Option Plan. Approximately 800 employees and officers of the
Company and its 25%-or-more-owned subsidiaries are currently eligible to
participate in the Option Plan.
The Option Plan is to be administered by a committee of the Board of
Directors (the "Option Committee"), and will be comprised of no fewer than two
members who must be "disinterested persons" within the meaning of Rule 16b-3
under the Securities Exchange Act of 1934, as amended, and "outside directors"
within the meaning of Section 162(m) and the regulations thereunder (including
the transition rules of Proposed Treasury Regulations Section 1.162-27) of the
Internal Revenue Code of 1986, as amended. Initially, and until a separate
committee is appointed, the Option Committee will be the Compensation Committee
of the Board of Directors. The Option Committee will determine the persons to
whom and the times at which Options will be granted, the number of shares to be
subject to each Option, the duration of each Option, the times within which the
Option may be exercised, the cancellation of the Option (with the consent of the
holder thereof) and the other conditions of the grant of an Option. The Option
Committee, however, may delegate from time to time to the Chief Executive
Officer, the authority to make awards under the Option Plan,
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<PAGE> 33
unless such delegation would jeopardize the benefits of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended, or Section 162(m)(3)(C) or
regulations thereunder of the Internal Revenue Code of 1986, as amended. The
Option Committee also may interpret provisions of the Option Plan. The
conditions of the grants of Options need not be the same with respect to each
optionee or with respect to each Option.
No Option granted pursuant to the Option Plan will be transferable
otherwise than by will or by the laws of descent and distribution or pursuant to
a qualified domestic relations order as defined by the Internal Revenue Code of
1986, as amended, or Title I of the Employee Retirement Income Security Act or
the rules thereunder.
Options will be granted with an exercise price of one hundred percent or
more of the fair market value of the common stock of the Company on the date of
grant. Grants described in the table entitled "New Plan Benefits" in this proxy
statement carry an exercise price of one hundred percent of the fair market
value of the stock on the date of grant (one hundred twenty percent in the case
of certain premium options). With respect to the 1994 grants, the date of grant
is February 7, 1994, with the fair market value on that date being $17.6875.
Payment of the exercise price may be in cash, or with the prior approval and
upon the conditions established by the Options Committee, by delivery of shares
of the common stock of the Company owned by the Optionee.
No Option will be exercisable until at least six months after the later of
the date of grant or the date of approval of the Option Plan by share owners.
Thereafter, each Option will be exercisable within such time periods as
established by the Option Committee on the date of grant, or, in the absence of
the Option Committee's establishment of exercise periods: (i) one-third of the
total number of shares subject to the Option shall be exercisable after twelve
months following the date of grant; (ii) an additional one-third of the total
number of shares subject to the Option shall be exercisable after twenty-four
months following the date of grant; and (iii) all shares subject to the option
shall be exercisable after thirty-six months following the date of grant.
The Option Committee has the authority to permit an optionee under the
Option Plan to surrender for cancellation any unexercised outstanding stock
option and receive in exchange from the Company either shares of stock, an
Option for shares of stock, or both, in amounts and with features designated by
the Option Committee. Furthermore, the Option Committee may extend the duration
of any Option for a period not to exceed one year without changing the Option
price and on such other terms and conditions as the Option Committee may deem
advisable. Unless so extended by the Option Committee, the duration of an option
is ten years.
The Option Committee, in its sole discretion, may cause all outstanding
Options held by an optionee upon retirement to become immediately exercisable.
Options exercisable upon the retirement of an optionee (whether due to Option
Committee action or otherwise) or becoming exercisable thereafter, will expire
no later than thirty-six months from the date of such optionee's retirement, or
twelve months after the optionee's death, whichever occurs first, unless the
Option Committee determines otherwise.
Upon the death or disability of an optionee prior to termination of
employment, all outstanding Options held by such optionee will expire no later
than twelve months after such death or disability, unless the Option Committee
determines otherwise.
If an optionee's employment with the Company, The Coca-Cola Company and
their 25%-or-more-owned subsidiaries is terminated for any reason except death,
disability or retirement, then such optionee's Options will expire no later than
six months after the date of such termination of employment; however, any Option
held by such optionee may become exercisable at the discretion of the Option
Committee.
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<PAGE> 34
In accordance with its authority under the Option Plan, the Option
Committee has determined, and the Board has approved, that after the initial
six-month holding period, all grants made in 1994 to Senior Executive Band
employees will be subject to the following conditions:
(i) If the average fair market value of the common stock over 20
consecutive trading days exceeds by 60% such value on the date of grant
within 60 months of the date of grant, Options will become exercisable to
the extent of 50% of the total number of shares subject to the Option; and
(ii) If the average fair market value of the common stock over 20
consecutive trading days exceeds by 100% such value on the date of grant
within 60 months of the date of grant, Options will become exercisable to
the extent of all of the shares subject to the Option.
The Option Committee has also determined that with respect to all grants
made in 1994 to Senior Executive Band employees, Options will not become
exercisable simply due to the passage of time. If an Option has not yet become
exercisable and the optionee should die, become disabled, or retire at or after
age 65, the Option will not expire for 36 months from the date of the Optionee's
death, disability, or retirement, during which time the Option may become
exercisable upon the occurrence of the requisite price increases, except in no
event shall the period in which the increases must occur be extended past five
years from the date of grant.
The Board of Directors of the Company or the Option Committee may amend,
suspend or terminate the Option Plan at any time without the approval of share
owners, except for amendments for which share-owner approval would be required
to retain the benefits of Rule 16b-3 under the Exchange Act or Section
162(m)(3)(C) of the Internal Revenue Code of 1986, as amended. Nevertheless, no
such amendment, suspension or termination will affect previously granted awards
without the participant's consent unless the Option Committee determines that
the change is in the best interest of all participants who have received
Options.
All Options that do not qualify for federal income tax purposes as
incentive stock options (discussed below) are referred to as nonqualified
options. An optionee will not recognize any taxable income at the time of grant
of a nonqualified option. Upon exercise of a nonqualified option, the optionee
will recognize ordinary income for tax purposes measured by the excess of the
then fair market value of the shares over the exercise price.
The income recognized by an optionee who is also an employee of the Company
will be subject to tax withholding. Upon resale of such shares by the optionee,
any difference between the sale price and the exercise price, to the extent not
recognized as ordinary income upon exercise as provided above, will be treated
as either short-term or long-term capital gain or loss (depending on the holding
period). The Company will be entitled to a deduction in the same amount as the
ordinary income recognized by the optionee.
If an Option granted under the Option Plan is an incentive stock option for
federal income tax purposes, the optionee will recognize no income upon grant of
the Option and incur no tax liability upon exercise of the Option, unless the
optionee is subject to the alternative minimum tax. The Company will not be
allowed a deduction for federal income tax purposes as a result of the exercise
of an incentive stock option, regardless of the applicability of the alternative
minimum tax.
Upon the sale or exchange of the shares received from the exercise of any
incentive stock option, at least two years after the grant of the Option and one
year after receipt of the shares by the optionee, any gain will be treated as
long-term capital gain. If these holding periods are not satisfied, the optionee
will recognize ordinary income, generally measured as the difference between the
exercise price and the lower of the fair market value of the stock on the date
the Option is exercised or the sales price of the stock. The Company will be
entitled to a deduction in the same amount as the ordinary income recognized by
the optionee. Any gain recognized on such a premature disposition of the shares
in excess of the amount treated as ordinary income will be characterized as a
long-term or short-term capital gain, depending on the optionee's holding period
for the
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optioned stock. The capital gain is fully includable in gross income. Currently,
the maximum individual federal income tax rate on net capital gains (i.e., the
excess of net long-term capital gains over short-term capital losses) is 28%.
The Option Committee, subject to the approval of the Option Plan by the
share owners, has awarded options under the Option Plan as outlined in the table
entitled "New Plan Benefits" in this proxy statement.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE FOR THE
PROPOSAL TO ADOPT THE 1994 STOCK OPTION PLAN.
APPROVAL OF THE 1994 EXECUTIVE MANAGEMENT INCENTIVE PLAN
(PROPOSAL NO. 4)
The Board of Directors of the Company has adopted the Company's 1994
Executive Management Incentive Plan (the "Executive Incentive Plan") and
directed that the Executive Incentive Plan be submitted to the share owners for
their approval at the Annual Meeting. The Executive Incentive Plan will become
effective upon the approval by the holders of a majority of the shares of the
common stock of the Company represented and entitled to vote at the Annual
Meeting. The purpose of the Executive Incentive Plan is to advance the interests
of the Company by providing executive officers and managers of the Company with
incentive to assist the Company in meeting and exceeding its business goals. The
following summary description of the Executive Incentive Plan is qualified in
its entirety by reference to the full text of the Executive Incentive Plan
attached hereto as Exhibit C.
The Company intends that the cash awards paid pursuant to the Executive
Incentive Plan be "performance-based" compensation within the meaning of Section
162(m) of the Internal Revenue Code of 1986, as amended.
The Executive Incentive Plan will be administered by a committee of the
Board of Directors (the "Executive Incentive Plan Committee") and will be
comprised of no fewer than two members who must be "outside directors" within
the meaning of Section 162(m) and the regulations thereunder (including the
transition rules of Proposed Treasury Regulations Section 1.162-27) of the
Internal Revenue Code of 1986, as amended. Initially, the Executive Incentive
Plan Committee will be the Compensation Committee of the Board of Directors. The
Executive Incentive Plan Committee may interpret provisions of the Executive
Incentive Plan.
Cash awards may be made under the Executive Incentive Plan to the chief
executive officer, the chief operating officer, senior vice presidents, region
vice presidents/general managers, and corporate vice presidents -- levels 1 and
2. Approximately 28 officers and employees of the Company are currently eligible
to participate in the Executive Incentive Plan.
Awards made under the Executive Incentive Plan will be paid solely on
account of attainment of the budgeted cash-operating profit of each performance
unit of the Company. Performance units are classified as corporate, region or
any combination thereof. A minimum award is paid if a specified percentage of
the budgeted cash operating profit is attained, the award is increased upon the
attainment of budgeted cash operating profit and increased further upon the
attainment of specified percentages above budgeted cash operating profit. Awards
are granted as a percentage of base salary. For the chief executive officer and
the chief operating officer, the award range is 13% to 115%; for a senior vice
president, the award range is 11% to 95%. For a region vice president/general
manager, a corporate vice president-level 1 and a corporate vice president-level
2, the award ranges vary from 7.15% to 90%.
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<PAGE> 36
The Executive Incentive Plan Committee will have no authority to increase
the amount of an award payable to a participant which would otherwise be due
upon the attainment of a performance goal, but the Executive Incentive Plan
Committee will have the authority to reduce or eliminate any award under the
Executive Incentive Plan.
The Board or the Executive Incentive Plan Committee may terminate or
suspend the Executive Incentive Plan in whole or in part, from time to time, and
may amend the Executive Incentive Plan from time to time to correct any defect
or supply any omission or reconcile any inconsistency in the Executive Incentive
Plan or in the awards made thereunder that does not constitute the modification
of a material term of the Executive Incentive Plan, without the approval of the
share owners of the Company. No action shall be taken, however, without the
approval of the share owners unless the Committee determines that the approval
of share owners would not be necessary to retain the benefits of Section
162(m)(3)(C) of the Internal Revenue Code of 1986, as amended.
Subject to the approval of the Executive Incentive Plan by the share
owners, the table entitled "New Plan Benefits" in this proxy statement shows,
for illustrative purposes only, the amounts which would have been payable to the
participants in this plan had it applied to actual 1993 cash operating profit as
compared to budgeted 1993 cash operating profit.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE FOR THE
PROPOSAL TO ADOPT THE 1994 EXECUTIVE MANAGEMENT INCENTIVE PLAN.
APPROVAL OF THE 1994-1996 LONG-TERM INCENTIVE PLAN
(PROPOSAL NO. 5)
The Board of Directors of the Company has adopted the Company's 1994-1996
Long-Term Incentive Plan (the "Long-Term Incentive Plan"), and directed that the
Long-Term Incentive Plan be submitted to the share owners for their approval at
the Annual Meeting. The Long-Term Incentive Plan will become effective upon the
approval by the holders of a majority of the shares of common stock of the
Company represented and entitled to vote at the Annual Meeting. The purpose of
the Long-Term Incentive Plan is to advance the interests of the Company by
providing key management and sales employees with incentive to assist the
Company in meeting and exceeding its business goals. The following summary
description of the Long-Term Incentive Plan is qualified in its entirety by
reference to the full text of the Long-Term Incentive Plan attached hereto as
Exhibit D.
The Company intends that the compensation paid pursuant to the Long-Term
Incentive Plan be "performance-based" within the meaning of Section 162(m) of
the Internal Revenue Code of 1986, as amended.
Cash awards may be made under the Long-Term Incentive Plan to the chief
executive officer, the chief operating officer, senior vice presidents, region
vice presidents/general managers, corporate vice presidents, region vice
presidents, division general managers, directors of corporate departments and
division senior staff. Approximately 1,200 employees are currently eligible to
participate in the Long-Term Incentive Plan.
The Long-Term Incentive Plan will be administered by a committee of the
Board of Directors (the "Long-Term Incentive Plan Committee") and will be
comprised of no fewer than two members who must be "outside directors" within
the meaning of Section 162(m) and the regulations thereunder (including the
transition rules of Proposed Treasury Regulations Section 1.162-27) of the
Internal Revenue Code of 1986, as amended. Initially, and until a separate
committee is appointed, the Long-Term Incentive Plan Committee will be the
Compensation Committee of the Board of Directors. The Long-Term Incentive Plan
Committee may interpret provisions of the Long-Term Incentive Plan.
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<PAGE> 37
Awards made under the Long-Term Incentive Plan will be paid solely on
account of the attainment of specified compounded increases in cash operating
profit over the period of three calendar years (the "Performance Period")
beginning January 1, 1994, as measured on a corporate-wide basis. The awards
payable to participants upon the attainment of specified minimum, target and
maximum increases in cash operating profit over the Performance Period are as
follows, in each case stated as a percentage of base salary:
<TABLE>
<S> <C> <C> <C>
Chief Executive Officer................................................ 20% 40% 80%
Chief Operating Officer................................................ 20% 40% 80%
Senior Vice President.................................................. 15% 30% 60%
Region Vice President/General Manager.................................. 12.5% 25% 50%
Corporate Vice President............................................... 12.5% 25% 50%
Region Vice President.................................................. 10% 20% 40%
Division General Manager............................................... 10% 20% 40%
Director of a Corporate Department..................................... 10% 20% 40%
Division Senior Staff.................................................. 7.5% 15% 30%
</TABLE>
Awards will be paid in cash in two installments. Fifty percent of the award
will be paid in the next calendar year after the end of the Performance Period.
The remaining fifty percent will be paid two years after the first payment. With
the exception of termination due to death, disability or retirement, a
participant must be employed with the Company on the date each installment of
the award is paid. Immediate reemployment with The Coca-Cola Company or one of
its 25%-or-more-owned subsidiaries is not deemed to be a termination of
employment under the Long-Term Incentive Plan.
The Board or the Long-Term Incentive Plan Committee may terminate or
suspend the Long-Term Incentive Plan in whole or in part, from time to time, and
may amend the Long-Term Incentive Plan from time to time to correct any defect
or supply any omission or reconcile any inconsistency in the Long-Term Incentive
Plan or in the awards made thereunder that does not constitute the modification
of a material term of the Long-Term Incentive Plan, without the approval of the
share owners of the Company. No action shall be taken, however, without the
approval of the share owners unless the Committee determines that the approval
of share owners would not be necessary to retain the benefits of Section
162(m)(3)(C) of the Internal Revenue Code of 1986, as amended.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE FOR THE
PROPOSAL TO ADOPT THE 1994-1996 LONG-TERM INCENTIVE PLAN.
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<PAGE> 38
NEW PLAN BENEFITS
The following table shows: (i) awards of restricted stock under the 1992
Restricted Stock Award Plan (as amended and restated effective as of February 7,
1994); and (ii) grants of Options under the 1994 Stock Option Plan, approved by
the Compensation Committee on February 7, 1994, subject to approval by the share
owners at the Annual Meeting. The table further shows the awards which would
have been paid under the 1994 Executive Management Incentive Plan using, for
illustrative purposes, attainment of actual versus budgeted 1993 cash operating
profit. However, no illustration is made of the effect of the 1994-1996
Long-Term Incentive Plan since payouts, if any, depend upon compounded cash
operating profits over the three-year period ending in 1996 and historical data
would not be meaningful, in the opinion of management, because of the change in
the Company's principal management and operating strategies commencing at the
end of 1991.
<TABLE>
<CAPTION>
PRO FORMA
1993 BONUS
NUMBER OF NUMBER OF UNDER
SHARES OF SHARES EXECUTIVE
DOLLAR VALUE RESTRICTED DOLLAR SUBJECT TO MANAGEMENT
OF RESTRICTED STOCK VALUE OF OPTIONS INCENTIVE
NAME AND POSITION STOCK(1) GRANTED OPTIONS GRANTED PLAN(3)
- ------------------------------------------- ------------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Summerfield K. Johnston, Jr................ $ 2,051,750 116,000 (2) 147,000 $ 502,400
Vice Chairman and Chief Executive Officer
Henry S. Schimberg......................... 3,148,375 178,000 (2) 129,000 439,600
President and Chief Operating Officer
John R. Alm................................ 442,188 25,000 (2) 43,000 180,880
Senior Vice President, Chief Financial
Officer
Norman P. Findley.......................... 194,563 11,000 (2) 21,000 109,353
Vice President, Domestic and
International Marketing
Robert F. Gray............................. 194,563 11,000 (2) 20,000 105,400
Vice President, Information Systems
Executive Group............................ 6,774,313 383,000 (2) 434,000 1,586,523
Non-Executive Director Group............... 0 0 0 0 0
Non-Executive Officer Employee Group....... 5,377,000 304,000 (2) 1,361,300 19,423,772
</TABLE>
- ---------------
(1) The figures shown for the dollar value of restricted stock are derived by
multiplying the number of shares of restricted stock granted by the fair
market value of the common stock of the Company on February 7, 1994,
$17.6875 per share.
(2) Options have an exercise price equal to the fair market value of the common
stock of the Company on February 7, 1994, $17.6875 per share, except for
certain "premium options" granted to the officers in the executive band,
which have an exercise price of $21.225. The actual value an optionee may
realize will depend on the excess of the stock price over the exercise price
on the date the Option is exercised.
(3) Awards for 1994 under the 1994 Executive Management Incentive Plan are not
determinable, because they would be based upon full-year financial results
for 1994. The table discloses pro forma bonuses for 1993 based on a
comparison of budgeted 1993 cash operating profit to actual 1993 cash
operating profit. There can be no assurance that 1993 results are in any way
indicative of 1994 results.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL NO. 6)
The Board of Directors of the Company, upon the recommendation of the Audit
Committee, has appointed the firm of Ernst & Young to serve as independent
auditors of the Company for the fiscal year ending December 31, 1994, subject to
ratification of this appointment by the share owners of the Company at the 1994
Annual Meeting. Ernst & Young has served as independent auditors of the
35
<PAGE> 39
Company since 1986 and is considered by management of the Company to be well
qualified. The Company has been advised by that firm that neither it nor any
member thereof has any financial interest, direct or indirect, in the Company or
any of its subsidiaries in any capacity.
Representatives of Ernst & Young will be present at the Annual Meeting, and
they will have an opportunity to make a statement, if they desire to do so, and
will be available to respond to appropriate questions.
If the share owners do not ratify the appointment of Ernst & Young, the
Board of Directors will reconsider the appointment.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE FOR THE
PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG AS INDEPENDENT AUDITORS OF
THE COMPANY FOR THE 1994 FISCAL YEAR.
SHARE-OWNER PROPOSAL
(PROPOSAL NO. 7)
The New York City Employees' Retirement System, which owns 239,834 shares
of the Company's common stock, has notified the Company that it intends to
submit the following proposal at the Annual Meeting:
CREATION OF AN INDEPENDENT NOMINATING COMMITTEE
SHAREHOLDER PROPOSAL
COCA-COLA ENTERPRISES INC.
Submitted on behalf of the New York City Employees' Retirement System by
Elizabeth Holtzman, Comptroller of the City of New York.
WHEREAS, the board of directors is meant to be an independent body elected
by shareholders and charged by law and shareholders with the duty, authority and
responsibility to formulate and direct corporate policies, and
WHEREAS, this company has provided that the board may designate from among
its members one or more committees, each of which, to the extent allowed, shall
have certain designated authority, and
WHEREAS, we believe that directors independent of management are best
qualified to act in the interest of shareholders and can take steps necessary to
seek, nominate and present new directors to shareholders, and
WHEREAS, we believe the selection of new directors is an area in which
inside directors may have a conflict of interest with shareholders, and
WHEREAS, we believe that an increased role for the independent directors
would help our company improve its long-term financial condition, stock
performance and ability to compete, NOW THEREFORE BE IT RESOLVED, that the
shareholders request the company establish a Nominating Committee to recommend
candidates to stand for election to the board of directors. The committee shall
be composed solely of independent directors. For these purposes, an independent
director is one who: (1) has not been employed by the company or an affiliate in
an executive capacity within the last five years; (2) is not, and has not been,
a member of a company that is one of this company's paid advisors or
consultants, (3) is not employed by a significant customer or supplier; (4) does
not, and did not, have a personal services contract with the company; (5) is not
employed by a tax-exempt organization that receives significant contributions
from the company; (6) is not a relative of the management of the company; and
(7) has not had any business relationship that
36
<PAGE> 40
would be required to be disclosed under Regulation S-K. Also, to the extent
possible within the standards stated above, no individual shall serve on the
Committee in the year preceding the expiration of that individual's term as a
director. The Committee's responsibilities shall include establishing procedures
for the nominating process and developing for board approval the criteria for
nomination.
The proponent has submitted the following statement in support of the
proposal:
"As long-term shareholders we are concerned about our company's
prospects for profitable growth. This proposal is intended to strengthen
the process by which nominees are selected. We believe that this will
strengthen the board of directors in its role of advising, overseeing and
evaluating management.
We urge you to vote FOR this proposal."
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THE PROPOSAL
TO ESTABLISH AN INDEPENDENT NOMINATING COMMITTEE.
We do not think the composition of the nominating committee has any tenable
link to the profitability of the Company, as suggested by the proponent.
We already have a Committee on Directors, which recommends to the entire
Board nominees for directors. This committee currently consists of four
directors, only one of whom, Mr. Johnston, is an employee of the Company.
Under the proposal, Mr. Johnston, who is a substantial individual share
owner of the Company, would not be eligible to serve on the nominating
committee. Also, depending on the definition of "affiliate," this proposal could
deny certain employees and former employees of The Coca-Cola Company the ability
to serve on this committee. We see no useful purpose in barring any of these
persons from the committee.
SHARE-OWNER PROPOSALS FOR 1995 ANNUAL MEETING
Director nominations and other proposals of share owners intended to be
presented at the 1995 Annual Meeting of Share Owners must be made in writing and
received by the Company on or before November 8, 1994 to be eligible for
inclusion in the Company's proxy statement and form of proxy relating to that
meeting. If not received within such time period, Director nominations and other
share-owner proposals may be submitted to share owners at the 1995 Annual
Meeting (although excluded from the Company's proxy statement and form of proxy
relating to that meeting) only if submitted in writing in accordance with
Article I, Section 10 of the bylaws of the Company and received by the Company
not less than 30 days nor more than 60 days prior to the 1995 Annual Meeting.
All share-owner proposals should be submitted by certified mail, return receipt
requested, to the Secretary of the Company, Post Office Box 1778, Atlanta,
Georgia 30301.
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<PAGE> 41
OTHER MATTERS
Management does not know of any matters other than those referred to in the
accompanying notice of the Annual Meeting of Share Owners that may properly come
before the meeting or any adjournments thereof. As to any other matters that may
properly come before the meeting, it is intended that all properly executed
proxies delivered pursuant to this solicitation will be voted on any such
matters in accordance with the discretion of the persons named on the enclosed
proxy.
J. GUY BEATTY, JR.
Secretary
Atlanta, Georgia
March 8, 1994
---------------------
THE COMPANY'S 1993 ANNUAL REPORT, WHICH INCLUDES AUDITED FINANCIAL
STATEMENTS, HAS BEEN MAILED TO SHARE OWNERS OF THE COMPANY. THE ANNUAL REPORT
DOES NOT FORM ANY PART OF THE MATERIAL FOR THE SOLICITATION OF PROXIES.
---------------------
38
<PAGE> 42
EXHIBIT A
COCA-COLA ENTERPRISES INC.
1992 RESTRICTED STOCK AWARD PLAN
(AS AMENDED AND RESTATED EFFECTIVE FEBRUARY 7, 1994)
SECTION 1. PURPOSE
The purpose of the 1992 Restricted Stock Award Plan (the "Plan") is to
advance the interest of Coca-Cola Enterprises Inc. (the "Company") and its
Subsidiaries (as defined in Section 4) by stimulating officers' and employees'
efforts to meet and exceed its business goals and strengthening their desire to
remain in the service of the Company and its Subsidiaries through financial
rewards that offer officers (including non-employee officers) and other key
employees the opportunity to acquire a financial interest in the Company through
grants of restricted shares of the Company's common stock ("Awards").
SECTION 2. ADMINISTRATION
The Plan shall be administered by a Compensation Committee (the
"Committee") appointed by the Board of Directors of the Company (the "Board")
from among its members and shall be comprised of not fewer than two members who
shall be "disinterested directors" within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended, and "outside directors" within the
meaning of Section 162(m) and the regulations thereunder (including the
transition rules of Proposed Treasury Regulations Section 1.162-27) of the
Internal Revenue Code of 1986, as amended.
The Committee shall determine the persons to whom and the times at which
Awards will be granted, the number of shares to be awarded, the times within
which the Awards may be subject to or released from forfeiture, the cancellation
of any Award (with the consent of the holder thereof), and all other conditions
of the Award. The terms and conditions of the Awards need not be the same with
respect to each recipient.
The Committee may, subject to the provisions of the Plan, establish such
rules and regulations for the proper administration of the Plan, may make
interpretations and may take other action in relation to the Plan as it deems
necessary or advisable. Each interpretation or other action made or taken
pursuant to the Plan shall be final and conclusive for all purposes and binding
upon all persons, including but not limited to the Company, its Subsidiaries,
the Committee, the Board, the affected recipients and their respective
successors in interest. In addition to such other rights of indemnification as
they have as directors or as members of the Committee, the members of the
Committee shall be indemnified by the Company against reasonable expenses
(including, without limitation, attorneys' fees) incurred in connection with the
defense of any action, suit or proceeding, or in connection with any appeal, to
which they may be a party by reason of any action taken or failure to act in
connection with the Plan or any Award granted hereunder, and against all amounts
paid by them in settlement thereof (provided such settlement is approved to the
extent required by and in the manner provided by the Certificate of
Incorporation or Bylaws of the Company relating to indemnification of directors)
or paid by them in satisfaction of a judgment in any such action, suit or
proceeding, except in relation to matters as to which it shall be adjudged in
such action, suit or proceeding that such Committee member or members did not
act in good faith and in a manner he, she or they reasonably believed to be in
or not opposed to the best interests of the Company.
SECTION 3. STOCK
The stock to be issued under the Plan pursuant to the Awards shall be
shares of common stock, $1 par value, of the Company (the "Stock"). The Stock
shall be made available from authorized and unissued common stock of the Company
or from shares of Stock held by the Company in its
A-1
<PAGE> 43
treasury. On or after February 7, 1994, the total number of shares of Stock that
may be issued pursuant to the Awards under the Plan may not exceed 725,000
shares. Such number of shares shall be subject to adjustment in accordance with
Section 8. Shares of Stock that are issued pursuant to the Awards under the Plan
and subsequently forfeited shall not be added back to the number of shares of
Stock available to be issued under the Plan. Any of the 1,500,000 shares
previously authorized for issuance under the Plan and not issued prior to
February 7, 1994 shall not thereafter be available for issuance under the Plan.
SECTION 4. ELIGIBILITY
Awards may be granted to executive officers, other persons within the
senior executive band and the executive band (including non-employee officers)
of the Company and its Subsidiaries. "Subsidiary" shall mean any corporation or
other business organization in which the Company owns, directly or indirectly,
25% or more of the voting stock or capital at the time of the granting of an
Award. No recipient shall acquire, pursuant to the Awards granted under the
Plan, more than 25% of the aggregate number of shares of Stock issuable pursuant
to Awards under the Plan.
SECTION 5. RESTRICTIONS UPON THE STOCK
(a) Restrictions shall apply to all Stock awarded under the Plan and shall
be removed solely on account of requisite increases in the price of the Stock
within five years of the date of grant of an Award and to the extent described
below:
(1) If the fair market value of Stock under the Award increases by 50%
from such value on the date of grant, determined as the average fair market
value of the Stock over twenty consecutive trading days, all restrictions
shall be removed from 50% of the Stock under the Award;
(2) If the fair market value of Stock under the Award increases by 75%
from such value on the date of grant, determined as the average fair market
value of the Stock over twenty consecutive trading days, all restrictions
shall be removed from 75% of the Stock under the Award;
(3) If the fair market value of Stock under the Award increases by
100% from such value on the date of grant, determined as the average fair
market value of the Stock over twenty consecutive trading days, all
restrictions shall be removed from 100% of the Stock under the Award.
The Committee shall certify in writing that such increases have occurred before
restrictions are removed from the certificates evidencing such Stock. Any stock
from which restrictions have not been removed within five-years of the date of
grants shall be forfeited to the Company.
(b) Any Stock from which restrictions have not been removed shall be
forfeited to the Company upon the termination of the employment of the recipient
by the Company and its Subsidiaries for any reason (including, but not limited
to, termination with or without cause) other than retirement, death or
disability.
(c) If a recipient retires, dies or becomes disabled at any time within the
five years after an Award, the Stock from which restrictions have not been
removed shall not be forfeited to the Company for three years from the date of
retirement, death or disability, during which time restrictions upon the Stock
may be removed upon occurrence of the price increases described in Section 5(a),
except that in no event shall the period to which the provisions of Section 5(a)
apply be extended past five years from the date of the Award.
(d) For purposes of this Section 5, the "fair market value" of a share of
Stock shall be the average of the high and low market prices on the applicable
trading day or on the next preceding
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<PAGE> 44
trading day, if such date is not a trading day, as reported on the New York
Stock Exchange -- Composite Transactions listing or as otherwise determined by
the Committee.
(e) Awards may contain such other provisions, not inconsistent with the
provisions of the Plan, as the Committee shall determine to be appropriate at
the time of the Award, including the removal of all forfeiture provisions
contained in this Section and the nontransferability provisions of Section 6.
(f) For non-employee officers, termination of services as an officer shall
constitute termination of employment for purposes of this Plan, and termination
of services as a non-employee officer at age 55 or older shall constitute
retirement for purposes of this Plan.
(g) As used in this Section 5, the term "retirement" shall mean a
recipient's voluntary termination of employment on a date which is on or after
the earliest date on which such recipient would be eligible for an immediately
payable benefit pursuant to (i) for those recipients eligible for participation
in the Company's Supplemental Retirement Plan, the terms of that Plan and (ii)
for all other recipients, the terms of the Company's Employees' Pension Plan,
assuming such recipients were eligible to participate in such Plan, or such
comparable plan applicable to such recipient.
(h) For purposes of this Section 5, a recipient's employment shall not be
deemed to have terminated if the recipient obtains immediate employment with an
Affiliate of the Company, and termination from such subsequent employment shall
be deemed a termination from the Company unless the recipient obtains immediate
retirement with the Company or its Subsidiaries. The 'Affiliate" shall include
The Coca-Cola Company or any corporation or business entity in which The
Coca-Cola Company owns, directly or indirectly, 25% or more of the voting stock
or capital.
(i) "Disability" shall be determined according to the definition of
"permanent disability" in the Company's health and welfare plan in effect at the
time of the determination.
SECTION 6. NONTRANSFERABILITY OF AWARDS
Shares of Stock subject to Awards shall not be transferable and shall not
be sold, exchanged, transferred, pledged, hypothecated or otherwise disposed of
while the recipient is an officer or employee of the Company or an Affiliate (as
defined in Section 5(h)) unless the restrictions described in Section 5 are
removed.
SECTION 7. RIGHTS AS A SHARE OWNER
A recipient who receives an Award shall have rights as a share owner with
respect to Stock covered by such Award to receive dividends in cash or other
property or other distributions or rights in respect to such Stock, and to vote
such Stock as the beneficial owner thereof.
SECTION 8. ADJUSTMENT IN THE NUMBER OF SHARES
In the event there is any change in the number of shares of Stock
outstanding through the declaration of stock dividends, through stock splits or
through recapitalization or merger, share exchange, consolidation, combination
of shares or otherwise, the Committee or the Board shall make such adjustment,
if any, as it may deem appropriate in the number of shares of Stock subject to
an Award, the number available for Awards, or in the requisite price increases
described in Section 5(a).
SECTION 9. TAXES
(a) If a recipient properly elects within 30 days of the date on which an
Award is granted to include in gross income for federal income tax purposes an
amount equal to the fair market value (on the date of grant of the Award) of the
Stock subject to the Award, such person shall make
A-3
<PAGE> 45
arrangements satisfactory to the Committee to pay to the Company in the year of
such Award any federal, state or local taxes required to be withheld with
respect to such shares.
(b) Each recipient who does not make the election described in subsection
(a) of this Section shall, no later than the date as of which the restrictions
referred to in Section 5 and such other restrictions as may have been imposed as
a condition of the Award lapse, pay to the Company, or make arrangements
satisfactory to the Committee regarding payment, of any federal, state or local
taxes of any kind required by law to be withheld with respect to the Stock
subject to such Award.
(c) If the recipient shall fail to make the tax payments described in this
Section 9, the Company and its Subsidiaries shall, to the extent permitted by
law, have the right to deduct from any payment of any kind otherwise due to the
recipient the amount of any federal, state or local taxes required by law to be
withheld with respect to the Stock subject to such Award.
SECTION 10. RESTRICTIVE LEGEND AND STOCK POWER
Each certificate evidencing Stock subject to an Award shall bear an
appropriate legend referring to the restrictions applicable to such Award. Any
attempt to dispose of Stock in contravention of such restrictions shall be
ineffective. The Committee may adopt rules which provide that the certificates
evidencing such shares may be held in custody by a bank or other institution, or
that the Company may itself hold such shares in custody until the restrictions
thereon shall have lapsed and may require as a condition of any Award that the
recipient shall have delivered a stock power endorsed in blank relating to the
Stock covered by such Award.
SECTION 11. AMENDMENTS, MODIFICATION AND TERMINATION OF THE PLAN
The Board or the Committee may terminate the Plan in whole or in part, may
suspend the Plan in whole or in part from time to time, and may amend the Plan
from time to time, including the adoption of amendments deemed necessary or
desirable to qualify the Awards under the laws of the United States and various
states (including tax laws) and under rules and regulations promulgated by the
Securities and Exchange Commission with respect to persons who are subject to
the provisions of Section 16 of the Securities Exchange Act of 1934, or to
correct any defect or supply an omission or reconcile any inconsistency in the
Plan or in any Award granted thereunder, without the approval of the share
owners of the Company.
However, no such action shall be taken without the approval of the share
owners unless the Committee determines that approval of the share owners would
not be necessary to retain the benefits of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended, or Section 162(m)(3)(C) of the Internal
Revenue Code of 1986, as amended.
No amendment or termination or modification of the Plan shall in any manner
affect Awards theretofore granted without the consent of the recipient unless
the Committee has made a determination that an amendment or modification is in
the best interest of all persons to whom Awards have theretofore been granted.
The Plan shall terminate when all shares of Stock subject to Awards under
the Plan have been issued and are no longer subject to forfeiture under the
terms hereof unless earlier terminated by the Board or the Committee.
SECTION 12. GOVERNING LAW
The Plan and all determinations made and actions taken pursuant thereto
shall be governed by the laws of the State of Georgia and construed in
accordance therewith.
A-4
<PAGE> 46
SECTION 13. SECTION 16(B) OF THE SECURITIES EXCHANGE ACT OF 1934
Any action taken by the Committee or the Board of Directors pursuant to the
Plan, and any provision of the Plan, is null and void if it does not comply with
the requirements of Rule 16b-3 under the Securities Exchange Act of 1934 and
would otherwise result in liability under Section 16(b) of that Act.
A-5
<PAGE> 47
EXHIBIT B
COCA-COLA ENTERPRISES INC.
1994 STOCK OPTION PLAN
SECTION 1. PURPOSE
The purpose of the 1994 Stock Option Plan (the "Plan") is to advance the
interest of Coca-Cola Enterprises Inc. (the "Company") and its Subsidiaries (as
defined in Section 4) by encouraging and enabling the acquisition of a financial
interest in the Company by officers and other key employees through grants of
stock options ("Options").
SECTION 2. ADMINISTRATION
The Plan shall be administered by a Compensation Committee (the
"Committee") appointed by the Board of Directors of the Company (the "Board")
from among its members and shall be comprised of not fewer than two members who
shall be "disinterested directors" within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended, and "outside directors" within the
meaning of Section 162(m) and the regulations thereunder (including the
transition rules of Proposed Treasury Regulations Section 1.162-27) of the
Internal Revenue Code of 1986, as amended.
The Committee shall determine the persons to whom and the times at which
Options will be granted, the number of shares to be subject to each Option, the
duration of each Option, the times within which the Option may be exercised, the
cancellation of the Option (with the consent of the holder thereof) and the
other conditions of the grant of an Option. The Committee, however, may
delegate, from time to time, to the Chief Executive Officer the authority to
make Awards under the Plan, unless such delegation would jeopardize the benefits
of Rule 16b-3 under the Securities Exchange Act of 1934, as amended, or Section
162(m)(3)(C) regulations thereunder of the Internal Revenue Code of 1986, as
amended. The conditions of the grants of Options need not be the same with
respect to each optionee or with respect to each Option.
The Committee may, subject to the provisions of the Plan, establish such
rules and regulations for the proper administration of the Plan, may make
interpretations and take other action in relation to the Plan as it deems
necessary or advisable. Each interpretation or other action made or taken
pursuant to the Plan shall be final and conclusive for all purposes and upon all
persons including, but without limitation, the Company, its Subsidiaries, the
Committee, the Board, the affected optionees, and their respective successors in
interest.
In addition to such other rights of indemnification as they have as
directors or as members of the Committee, the members of the Committee shall be
indemnified by the Company against reasonable expenses (including, without
limitation, attorneys' fees) incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal, to which they or
any of them may be a party by reason of any action taken or failure to act in
connection with the Plan or any Option granted hereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
to the extent required by and in the manner provided by the Certificate of
Incorporation or Bylaws of the Company relating to indemnification of directors)
or paid by them in satisfaction of a judgment in any such action, suit or
proceeding, except in relation to matters as to which it shall be adjudged in
such action, suit or proceeding that such Committee member or members did not
act in good faith and in a manner he, she or they reasonably believed to be in
or not opposed to the best interest of the Company.
B-1
<PAGE> 48
SECTION 3. STOCK
The stock to be issued under the Plan shall be shares of common stock, $1
par value, of the Company (the "Stock"). The Stock shall be made available from
authorized and unissued Stock or from shares of Stock held by the Company in its
treasury. The total number of shares of Stock that may be issued under the Plan
pursuant to Options granted hereunder may not exceed 2,000,000 shares. Stock
subject to any unexercised portion of an Option which expires or is canceled,
surrendered or terminated for any reason may again be subject to Options granted
under the Plan. Stock received in payment upon the exercise of an Option may not
be the subject of a subsequent Option.
SECTION 4. ELIGIBILITY
Options may be granted to executive officers, other persons within the
senior executive band, the executive band, branch managers, sales center
managers, and other officers and management employees (including non-employee
officers) of the Company and its Subsidiaries who are employed in a position
determined by the Committee eligible to participate in the Plan on the date on
which any grant is made.
"Subsidiary" shall mean any corporation or other business organization in
which the Company owns, directly or indirectly, 25% or more of the voting stock
or capital at the time of the granting of such Option.
No person shall be granted the right to acquire pursuant to Options granted
under the Plan more than 15% of the aggregate number of shares of Stock
originally authorized for issuance under the Plan.
SECTION 5. AWARDS OF OPTIONS
(a) Option Price. The option price shall be 100% or more of the fair
market value of the Stock on the date of grant.
(b) Payment. The option price shall be paid in full at the time of
exercise. No shares shall be issued until full payment has been received
therefor. Payment may be made in cash or, with the prior approval of and upon
the conditions established by the Committee, by delivery of shares of Stock
owned by the optionee.
(c) Value. The fair market value of shares of Stock shall be computed on
the basis of the average of the high and low market prices at which a share of
Stock shall have been sold on the date for which the valuation is made, or on
the next preceding trading day if such date was not a trading day, as reported
on the New York Stock Exchange Composite Transactions Listing, or as otherwise
determined by the Committee.
(d) Withholding. The Company and its Subsidiaries shall, to the extent
permitted by law, have the right to deduct from any payment of any kind
otherwise due to the recipient the amount of any federal, state or local taxes
required by law to be withheld with respect to the Stock subject to such Award.
(e) Duration of Options. Subject to the provisions of Section 9, the
duration of Options shall be 10 years from date of grant.
(f) Time Period for Exercise of Options. Subject to the provisions of
Section 9, no Option shall be exercisable, in whole or in part, for a period of
six months after the date on which the Option is granted or, if later, six
months after the date of approval of the Plan by share owners. Thereafter, it
shall be exercisable (i) within such time periods as established by the
Committee on the date of grant, or (ii) in the absence of Committee-established
time periods, (A) to the extent of one-third of the total number of shares
subject to the Option after 12 months following the date on which the Option is
granted, (B) to the extent of an additional one-third of the total number of
shares subject
B-2
<PAGE> 49
to the Option after 24 months following the date on which the Option is granted;
and (C) in full after 36 months following the date on which the Option is
granted.
(g) Other Terms and Conditions. Options may contain such other provisions,
not inconsistent with the provisions of the Plan, as the Committee shall
determine appropriate from time to time. The grant of an Option to any officer
or employee shall not affect in any way the right of the Company and any
Subsidiary to terminate the relationship between the Company and the optionee.
SECTION 6. REPLACEMENT
The Committee from time to time may permit an optionee under the Plan to
surrender for cancellation any unexercised outstanding stock option or stock
appreciation rights of the Company and receive in exchange from the Company
either shares of Stock, an option for such number of shares of Stock, or both,
in amounts and with features as designated by the Committee.
SECTION 7. EXTENSION OF THE TERMS OF OPTIONS
The Committee may extend the duration of any Option for a period not to
exceed one year without changing the option price and on such other terms and
conditions as the Committee may deem advisable.
SECTION 8. NONTRANSFERABILITY OF OPTION
No Option granted pursuant to the Plan shall be transferable otherwise than
by will or by the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined by the Internal Revenue Code of 1986, as
amended, or Title 1 of the Employee Retirement Income Security Act or the rules
thereunder. Certificate(s) representing the shares of Stock issued upon exercise
of an Option shall be issued only in the name of the optionee or in the name of
such optionee's duly authorized representative. During the lifetime of an
optionee, the Option shall be exercisable only by the optionee personally or by
the optionee's legal representative.
SECTION 9. EFFECT OF TERMINATION OF EMPLOYMENT
(a) Retirement.
(i) The Committee, in its sole discretion, may cause all outstanding
options held by an optionee upon his or her retirement to become immediately
exercisable.
(ii) All Options exercisable upon retirement of an optionee (whether due to
Committee action or otherwise) or becoming exercisable thereafter shall expire
no later than (A) 36 months from the date of such optionee's retirement, or (B)
12 months after the optionee's death, whichever occurs first, unless the
Committee determines otherwise.
(b) Death or Disability While Employed.
Upon the death or disability of an optionee prior to termination of
employment, all outstanding options held by such employee expire no later than
12 months after the employee's death or determination of disability, whichever
occurs first, unless the Committee determines otherwise.
(c) Other Termination of Employment.
(i) Upon the termination of employment of an optionee other than for death,
disability or retirement ("Other Termination of Employment"), then the
Committee, in its sole discretion, may cause all outstanding nonexercisable
Options held by such optionee to become immediately exercisable.
B-3
<PAGE> 50
(ii) All Options exercisable upon the Other Termination of Employment
(whether due to Committee action or otherwise) or becoming exercisable
thereafter, shall expire no later than six months after the Other Termination of
Employment, unless the Committee determines otherwise.
(d) Definitions and other Determinations.
(i) "Retirement" means an optionee's voluntary termination of employment on
a date which is on or after the earliest date on which such optionee would be
eligible for an immediately payable benefit pursuant to (A) for those optionees
eligible for participation in the Company's Supplemental Retirement Plan, the
terms of that Plan and (B) for all other optionees, the terms of the Company's
Employees' Pension Plan, assuming such optionees were eligible to participate in
such Plan, or a comparable plan applicable to such optionee. With respect to
non-employee officers, "retirement" means termination of services as an officer
at or after age 55.
(ii) "Disability" shall be determined according to the definition of
"permanent disability" in the Company's health and welfare plan in effect at the
time of the determination.
(iii) For purposes of this Section 9, a recipient's employment shall not be
deemed to have terminated if the recipient obtains immediate employment with an
Affiliate of the Company, and termination from such subsequent employment shall
be deemed a termination from the Company, unless the recipient obtains immediate
reemployment with the Company or its Subsidiaries. The term "Affiliate" shall
include The Coca-Cola Company or any corporation or business entity in which The
Coca-Cola Company owns, directly or indirectly, 25% or more of the voting stock
or capital.
SECTION 10. NO RIGHTS AS A SHARE OWNER
An optionee or a transferee of an optionee pursuant to Section 8 shall have
no right as a share owner with respect to any Stock covered by an Option or
receivable upon the exercise of an Option until the optionee or transferee shall
have become the holder of record of such Stock. No adjustments shall be made for
dividends in cash or other property or other distributions or rights in respect
of such Stock for which the record date is prior to the date on which the
optionee or transferee shall have in fact become the holder of record of the
share of Stock pursuant to the Option.
SECTION 11. ADJUSTMENT IN THE NUMBER OF SHARES AND IN OPTION PRICE
In the event there is any change in the shares of Stock through the
declaration of stock dividends or stock splits or through recapitalization or
merger, share exchange, consolidation, combination of shares or otherwise, the
Committee or the Board shall make such adjustment, if any, as it may deem
appropriate in the number of shares of Stock available for Options as well as
the number of shares of Stock subject to any outstanding Option and the option
price thereof. Any such adjustment may provide for the elimination of any
fractional shares which might otherwise become subject to any Option without
payment therefor.
SECTION 12. AMENDMENTS, MODIFICATION AND TERMINATION OF THE PLAN
The Board or the Committee may terminate the Plan in whole or in part, may
suspend the Plan in whole or in part from time to time, and may amend the Plan
from time to time, including the adoption of amendments deemed necessary or
desirable to qualify the Options under the laws of various states (including tax
laws) and under rules and regulations promulgated by the Securities and Exchange
Commission with respect to persons who are subject to the provisions of Section
16 of the Securities Exchange Act of 1934, or to correct any defect or supply
any omission or reconcile any inconsistency in the Plan or in any Option granted
thereunder, without the approval of the share owners of the Company.
B-4
<PAGE> 51
However, no action shall be taken without the approval of the share owners
of the Company if the Committee determines that the approval of share owners
would be necessary to retain the benefits of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended, or Section 162(m)(3)(C) of the Internal
Revenue Code of 1986, as amended.
No amendment or termination or modification of the Plan shall in any manner
affect any Option theretofore granted without the consent of the optionee,
except that the Committee may amend or modify the Plan in a manner that does
affect Options theretofore granted upon a finding by the Committee that such
amendment or modification is in the best interest of holders or outstanding
Options affected thereby.
The Plan shall terminate five years after the date of approval of the Plan
by the share owners of the Company unless earlier terminated by the Board or by
the Committee.
SECTION 13. GOVERNING LAW
The Plan and all determinations made and actions taken pursuant thereto
shall be governed by the laws of the State of Georgia and construed in
accordance therewith.
SECTION 14. SECTION 16(B) OF THE SECURITIES EXCHANGE ACT OF 1934
Any action taken by the Committee or the Board pursuant to the Plan, and
any provision of the Plan, shall be null and void if it does not comply with the
requirements of Rule 16b-3 under the Securities Exchange Act of 1934 and would
otherwise result in liability under Section 16(b) of that Act.
B-5
<PAGE> 52
EXHIBIT C
COCA-COLA ENTERPRISES INC.
1994 EXECUTIVE MANAGEMENT INCENTIVE PLAN
(EFFECTIVE JANUARY 1, 1994)
SECTION 1. PURPOSE.
The purpose of the 1994 Executive Management Incentive Plan (the "Plan") is
to advance the interest of Coca-Cola Enterprises Inc. (the "Company") by
providing executive officers and managers of the Company with incentive to
assist the Company in meeting and exceeding its business goals.
SECTION 2. ADMINISTRATION.
The Plan shall be administered by a Compensation Committee (the
"Committee") appointed by the Board of Directors of the Company (the "Board")
from among its members and shall be comprised of not fewer than two members who
shall be "outside directors" within the meaning of Section 162(m) and the
regulations thereunder, (including the transition rules of Proposed Treasury
Regulations Section 1.162-27) of the Internal Revenue Code of 1986, as amended.
The Committee may, subject to the provisions of the Plan, establish such
rules and regulations or take such action as it deems necessary or advisable for
the proper administration of the Plan. Each interpretation made or action taken
pursuant to the Plan shall be final and conclusive for all purposes and binding
upon all persons, including, but not limited to, the Company, the Committee, the
Board, the affected Participants (as defined in Section 3), and their respective
successors in interest.
In addition to such other rights of indemnification as they have as
directors or as members of the Committee, the members of the Committee shall be
indemnified by the Company against reasonable expenses (including, but not
limited to, attorneys' fees) incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal, to which they or
any of them may be a party by reason of any action taken or failure to act in
connection with the Plan, and against all amounts paid by them in settlement
thereof (provided such settlement is approved to the extent required by and in
the manner provided by the certificate of incorporation or bylaws of the Company
relating to indemnification of directors) or paid by them in satisfaction of a
judgment in any such action, suit, or proceeding, except in relation to matters
as to which it shall be adjudged in such action, suit or proceeding that such
Committee member or members did not act in good faith and in a manner he, she or
they reasonably believed to be in or not opposed to the best interest of the
Company.
SECTION 3. ELIGIBILITY.
Cash awards ("Awards") may be made under this Plan to executive officers
and the senior executive band ("Participants").
SECTION 4. PERFORMANCE GOAL CRITERIA.
The Committee shall establish specific objective targets in relation to the
cash operating profit, as budgeted by the Company ("budgeted COP") for each
performance unit of the Company, including targets at below 100% of budgeted
COP. Awards made under the Plan shall be paid solely on account of the
attainment of these pre-established targets. For the purposes of the Plan, COP
shall be determined as operating income plus depreciation and amortization,
normalized for acquisitions, divestitures and other significant financial
events. For purposes of the Plan, performance units shall be classified as
corporate or region, or any combination thereof.
C-1
<PAGE> 53
SECTION 5. CALCULATION OF AWARDS.
The Committee has established Award levels, described as percentages by
which a Participant's annual base salary shall be multiplied, to determine the
amount of an Award payable upon the attainment of specified targets of budgeted
COP. The annual base salary used in calculating a Participant's Award shall be
that which is in effect on December 31 of the year for which the Award is made.
For example, Awards payable upon the attainment of the target of 100% of
budgeted COP and the maximum amount that may be awarded under the Plan are set
forth in the following table:
<TABLE>
<CAPTION>
AWARD AS A PERCENTAGE OF
ANNUAL BASE SALARY UPON
ATTAINMENT OF GOAL
-----------------------------------
AWARD IF 100% OF
BUDGETED COP MAXIMUM AWARD
PARTICIPANT IS ATTAINED UNDER THE PLAN
- ------------------------------------------------------------- ---------------- --------------
<S> <C> <C>
Chief Executive Officer...................................... 65% 115%
Chief Operating Officer...................................... 65% 115%
Senior Vice President........................................ 55% 95%
Region Vice President/General Manager........................ 50% 90%
Corporate Vice President -- Level 1.......................... 50% 90%
Corporate Vice President -- Level 2.......................... 40% 80%
</TABLE>
SECTION 6. PRORATED AND PARTIAL AWARDS.
Persons hired or promoted during the Plan year into positions identified in
Section 3 shall be eligible to receive prorated Awards for periods of partial
participation. If a Participant is promoted from one eligible position to
another eligible position under the Plan, the Participant's Award shall be
prorated for the period of time the Participant was employed within each
position, using the Participant's annual base salary in effect on December 31 of
the year for which the Award is made. Prorated Awards shall be measured
according to the nearest whole number of months in which a Participant was
employed in each position for which the Award is made.
Subject to the Committee's discretion, as described in Section 7, partial
Awards shall be made to Participants who are not employed in positions described
in Section 3 on the last day of the year for which Awards are to be made. A
partial Award shall be prorated to the date of the break in service or change in
position with the Company or an Affiliate and shall be calculated on the basis
of the Participant's annual base salary on the last day in which the Participant
is employed in such position. The Committee shall have the authority to reduce
or eliminate Awards to a Participant whose employment terminates prior to the
last day of the Plan year. For the purposes of this Section 6, "Affiliate" shall
include The Coca-Cola Company or any corporation or business entity in which The
Coca-Cola Company owns, directly or indirectly, 25% or more of the voting stock
or capital.
SECTION 7. DISCRETION OF THE COMPENSATION COMMITTEE.
All Awards shall be made solely on the basis of the performance goals set
forth by the Committee pursuant to Section 4 and only in accordance with the
standards set forth in Section 5. The Committee shall have no authority to
increase the amount of an Award payable to a Participant which would otherwise
be due upon the attainment of the performance goal. The Committee shall,
however, have the authority to reduce or eliminate any Award under the Plan.
SECTION 8. COMMITTEE CERTIFICATION.
The Committee shall present to the Board written certification that the
performance goal of Section 4 has, in fact, been satisfied for any Award made
under the Plan.
C-2
<PAGE> 54
SECTION 9. AMENDMENTS, MODIFICATION AND TERMINATION OF THE PLAN.
The Board or the Committee may terminate the Plan in whole or in part, may
suspend the Plan in whole or in part from time to time, and may amend the Plan
from time to time to correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in the Awards made thereunder that does not
constitute the modification of a material term of the Plan, without the approval
of the share owners of the Company. No action shall be taken, however, without
the approval of the share owners unless the Committee determines that the
approval of share owners would not be necessary to retain the benefits of
Section 162(m)(3)(C) of the Internal Revenue Code of 1986, as amended.
SECTION 10. GOVERNING LAW.
The Plan and all determinations made and actions taken pursuant thereto
shall be governed by the laws of the State of Georgia and construed in
accordance therewith.
C-3
<PAGE> 55
EXHIBIT D
COCA-COLA ENTERPRISES INC.
1994-1996 LONG-TERM INCENTIVE PLAN
SECTION 1. PURPOSE.
The purpose of the 1994-1996 Long-Term Incentive Plan (the "Plan") is to
advance the interest of Coca-Cola Enterprises Inc. (the "Company") by providing
key management and sales employees with incentive to assist the Company in
meeting and exceeding its business goals.
SECTION 2. ADMINISTRATION.
The Plan shall be administered by a Compensation Committee (the
"Committee") appointed by the Board of Directors of the Company (the "Board")
from among its members and shall be comprised of not fewer than two members who
shall be "outside directors" within the meaning of Section 162(m) and the
regulations thereunder, (including the transition rules of Proposed Treasury
Regulations Section 1.162-27) of the Internal Revenue Code of 1986, as amended.
The Committee may, subject to the provisions of the Plan, establish such
rules and regulations or take such action as it deems necessary or advisable for
the proper administration of the Plan. Each determination made or action taken
pursuant to the Plan, including interpretation of the Plan, shall be final and
conclusive for all purposes and upon all persons, including, but not limited to,
the Company, the Committee, the Board, officers, the affected Participants (as
defined in Section 3), and their respective successors in interest.
In addition to such other rights of indemnification as they have as
directors or as members of the Committee, the members of the Committee shall be
indemnified by the Company against reasonable expenses (including, but not
limited to, attorneys' fees) incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal, to which they or
any of them may be a party by reason of any action taken or failure to act in
connection with the Plan, and against all amounts paid by them in settlement
thereof (provided such settlement is approved to the extent required by and in
the manner provided by the certificate of incorporation or bylaws of the Company
relating to indemnification of directors) or paid by them in satisfaction of a
judgment in any such action, suit, or proceeding, except in relation to matters
as to which it shall be adjudged in such action, suit or proceeding that such
Committee member or members did not act in good faith and in a manner he, she or
they reasonably believed to be in or not opposed to the best interest of the
Company.
SECTION 3. ELIGIBILITY.
Cash awards ("Awards") may be made under this Plan to the chief executive
officer, the chief operating officer, senior vice presidents, region vice
presidents/general managers, corporate vice presidents, region vice presidents,
division general managers, directors of corporate departments, and division
senior staff ("Participants").
SECTION 4. PERFORMANCE GOAL CRITERIA.
Awards made under the Plan shall be paid solely on account of the
attainment of specified compounded increases in cash operating profit ("COP")
over the period of three calendar years (the "Performance Period") beginning
January 1, 1994, as measured on a corporate-wide basis. For the purposes of the
Plan, COP is determined as operating income plus depreciation and amortization,
normalized for acquisitions, divestitures and other significant financial
events.
D-1
<PAGE> 56
SECTION 5. CALCULATION OF THE AWARD.
The Committee has established Award levels, described as percentages by
which a Participant's average annual base salary shall be multiplied, to
determine the amount of an Award payable upon the attainment of specified
compounded increases in the corporate-wide COP. The Participant's average annual
base salary used in the calculation of an Award shall be the average of the base
salary in effect on the last day of each year of the three year period to which
the Plan applies ("Average Annual Base Salary"). The Awards payable upon
attainment of specified minimum, target and maximum increases for Participants
are set forth in the following table:
<TABLE>
<CAPTION>
AWARD AS A PERCENTAGE OF AVERAGE
ANNUAL BASE SALARY UPON
ATTAINMENT OF
--------------------------------------
MINIMUM TARGET MAXIMUM
PARTICIPANT INCREASE INCREASE INCREASE
- --------------------------------------------------------- --------- -------- -------
<S> <C> <C> <C>
Chief Executive Officer.................................. 20% 40% 80%
Chief Operating Officer.................................. 20% 40% 80%
Senior Vice President.................................... 15% 30% 60%
Region Vice President/General Manager.................... 12.5% 25% 50%
Corporate Vice President................................. 12.5% 25% 50%
Region Vice President.................................... 10% 20% 40%
Division General Manager................................. 10% 20% 40%
Director of a Corporate Department....................... 10% 20% 40%
Division Senior Staff.................................... 7.5% 15% 30%
</TABLE>
SECTION 6. PAYMENT OF AWARD.
(i) Awards shall be paid in cash in two installments. Fifty percent of the
Award shall be paid in the next calendar year after the end of the Performance
Period. The remaining fifty percent shall be paid two years after the first
payment. With the exception of termination due to death, disability or
retirement, a Participant must be employed with the Company on the date each
installment of the Award is paid.
(ii) For the purposes of this Plan, retirement shall mean a Participant's
voluntary termination of employment on a date which is on or after the earliest
date on which such Participant would be eligible for an immediately payable
benefit pursuant to (A) for those employees eligible for participation in the
Company's Supplemental Retirement Plan, under the terms of that Plan and (B) for
all other Participants, the terms of the Company's Employee's Pension Plan,
assuming such Participants were eligible to participate or such comparable plan
applicable to such Participant.
(iii) A Participant's employment with the Company will be deemed not to be
a termination of employment if the Participant's reason for termination with the
Company is due to immediate employment with any Affiliate, however, the
Participants' Award shall be subject to proration in accordance with Section 7.
For of this Section 6, the term "Affiliate" shall include The Coca-Cola Company
or any corporation or business entity in which The Coca-Cola Company owns,
directly or indirectly, 25% or more of the voting stock or capital.
(iv) "Disability" shall be determined according to the definition of
"permanent disability" in the Company's health and welfare plan in effect at the
time of the determination.
SECTION 7. PRORATED AND PARTIAL AWARDS.
(i) If during the years to which the Plan applies, an employee is hired or
promoted into a position eligible for participation in the Plan, the employee
shall be eligible to receive a prorated Award for the period of partial
participation. To calculate the average base salary for a prorated Award, each
year's base salary shall be prorated based on the period in which the employee
was employed in the eligible position.
D-2
<PAGE> 57
(ii) If a Participant is promoted from one position to another position
eligible for participation under the Plan, the Participant's Award shall be
prorated for the period of time the Participant was employed within each
position. The base salary in effect on the last day of each year shall be
included in the calculation of the Participant's Average Annual Base Salary,
irrespective of the changes of positions. Prorated awards shall be measured
according to the number of months in which a Participant was employed within
each position for which the Award is made.
(iii) Partial Awards shall not be paid to a Participant if the
Participant's employment is terminated prior to the last day of the Performance
Period, unless the Participant's employment is terminated on account of death,
disability, or retirement (as defined in Section 6). Partial Awards shall be
paid in one installment in the year following the Participant's termination of
employment. To determine the Average Annual Base Salary to be used in
calculating a partial Award, each year's base salary shall be prorated for the
period in which the Participant was employed, and the Average Annual Base Salary
shall be determined as the average for the years to which the Plan applies
preceding the year of termination. The partial Award shall be calculated on the
basis of the compounded increase in COP through the end of the year preceding
the Participant's termination of employment.
SECTION 9. COMMITTEE CERTIFICATION.
Prior to making an Award under the Plan, the Committee shall present to the
Board written certification that the performance-based goal of Section 4 has, in
fact, been satisfied.
SECTION 10. AMENDMENTS, MODIFICATION AND TERMINATION OF THE PLAN.
The Board or the Committee may terminate the Plan in whole or in part, may
suspend the Plan in whole or in part from time to time, and may amend the Plan
from time to time to correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in the Awards made thereunder that does not
constitute the modification of a material term of the Plan, without the approval
of the share owners of the Company. No action shall be taken, however, without
the approval of the share owners of the Company unless the Committee determines
that the approval of share owners would not be necessary to retain the benefits
of Section 162(m)(3)(C) of the Internal Revenue Code of 1986, as amended.
SECTION 11. GOVERNING LAW.
The Plan and all determinations made and actions taken pursuant thereto
shall be governed by the laws of the State of Georgia and construed in
accordance therewith.
D-3
<PAGE> 58
COCA-COLA ENTERPRISES INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF COCA-COLA ENTERPRISES INC.
P
R The undersigned hereby (a) appoints J. Guy Beatty, Jr., Lowry F.
O Kline, and Philip H. Sanford, each as proxies with full power of
X substitution, to vote all shares of Common Stock of Coca-Cola
Y Enterprises Inc. owned of record by the undersigned and (b) directs
Trust Company Bank, Trustee under the Coca-Cola Enterprises Inc.
Matched Employee Savings and Investment Plan, to vote in person or by
proxy all shares of Common Stock of Coca-Cola Enterprises Inc.
allocated to any accounts of the undersigned under such Plan, and
which the undersigned is entitled to vote, on all matters which may
come before the 1994 Annual Meeting of Share Owners to be held at
the Hotel du Pont, 11th and Market Streets, Wilmington, Delaware, on
April 13, 1994, at 10:30 a.m. EST, and any adjournments thereof, unless
otherwise specified herein.
Proposal 1:
Election of Directors, Nominees:
For terms to expire at the 1997 Annual Meeting of Share Owners:
Howard G. Buffett, Johnnetta B. Cole, T. Marshall Hahn, Jr.,
Claus M. Halle, and Henry A. Schimberg.
You are encouraged to specify your choices by marking the
appropriate boxes, SEE REVERSE SIDE, but you need not mark any
boxes if you wish to vote in accordance with the Board of
Directors' recommendations. The proxies cannot vote your shares
unless you sign and return this card.
SEE REVERSE SIDE
FOLD AND DETACH PROXY CARD HERE
COCA-COLA ENTERPRISES INC.
[LOGO]
PRODUCTS OF THE COCA-COLA COMPANY
PRODUCED AND MARKETED BY COCA-COLA ENTERPRISES INC.:
Coca-Cola, Coca-Cola classic, caffeine free Coca-Cola classic,
diet Coke, caffeine free diet Coke, Sprite, diet Sprite, cherry Coke, diet
cherry Coke, Fanta brand soft drinks, Fresca, Hi-C brand soft drinks,
Mello Yello, diet Mello Yello, Minute Maid and diet Minute Maid brand soft
drinks and Juices To Go, Mr. PiBB, diet Mr. PiBB, Nestea, PowerAde, Ramblin'
root beer, TAB, and caffeine free TAB.
<PAGE> 59
<TABLE>
<S> <C>
/ X / Please mark your 2516
vote as in this
example.
This proxy, when properly executed, will be voted in the manner directed herein. If no directions are given,
this proxy will be voted FOR the election of directors, FOR Proposals, 2, 3, 4, 5, and 6, AGAINST Proposal 7, and as
the proxies deem advisable on all other matters that may properly come before the Meeting.
The Board of Directors recommends a vote FOR Proposals 1, 2, 3, 4, 5, and 6.
FOR WITHHELD FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
1. Election of / / / / 2. To approve the / / / / / / 4. To approve the Company's / / / / / /
Directors Company's 1992 1994 Executive Managment
(See Reverse) Restricted Stock Incentive Plan;
Award Plan
For, except vote withheld from the (as amended and 5. To approve the Company's / / / / / /
following nominee(s): restated); 1994-1996 Long-Term
Incentive Plan;
3. To approve the / / / / / /
Company's 1994 6. To ratify the appointment / / / / / /
Stock Option Plan; of Ernst & Young as independent
- -------------------------------------- auditors of the Company for
the 1994 fiscal year; and
The Board of Directors recommends a vote AGAINST Proposal 7.
7. Share-Owner Proposal on / / / / / /
creation and composition of
a nominating committee.
Do you plan to attend the / / / /
Annual Meeting? Yes No
SIGNATURE(S) DATE
---------------------------------------- ---------------
Please sign exactly as your name appears hereon. Joint owners should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give your full title as such.
</TABLE>
FOLD AND DETACH PROXY CARD HERE
ADMISSION TICKET
COCA-COLA ENTERPRISES INC.
ANNUAL MEETING OF SHARE OWNERS
Wednesday, April 13, 1994, 10:30 a.m. EST
du Barry Room, Hotel du Pont
11th and Market Streets, Wilmington, Delaware
AGENDA
-------------------------------------------------------------
ELECTION OF FIVE DIRECTORS
-
APPROVAL OF 1992 RESTRICTED STOCK AWARD PLAN,
AS AMENDED AND RESTATED
-
APPROVAL OF 1994 STOCK OPTION PLAN
-
APPROVAL OF 1994 EXECUTIVE MANAGEMENT INCENTIVE PLAN
-
APPROVAL OF 1994-1996 LONG-TERM INCENTIVE PLAN
-
RATIFICATION OF ERNST & YOUNG AS INDEPENDENT AUDITORS
-
TRANSACTION OF OTHER BUSINESS, INCLUDING A SHARE-OWNER PROPOSAL,
AS MAY PROPERLY COME BEFORE THE MEETING
It is important that your shares are represented at this meeting, whether or
not you attend the meeting in person. To make sure your shares are represented,
we urge you to complete and mail the proxy card above.
If you and your guest plan on attending the Annual Meeting, please mark the
appropriate box on the proxy card above. Present this Admission Ticket to the
Coca-Cola Enterprises representative at the entrance to the du Barry Room.
