<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Coca-Cola Enterprises Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] 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. Logo
Summerfield K. Johnston, Jr.
Chairman
March 18, 1999
Dear Share Owner,
We are holding the 1999 Annual Meeting of Share Owners of Coca-Cola
Enterprises Inc. in Wilmington, Delaware on Friday, April 23, 1999, at 10:30
a.m. You are cordially invited to attend.
The enclosed proxy statement contains details concerning the business to be
discussed at the meeting.
Your vote is important. You can vote in person at the annual meeting, or
you can grant a proxy by signing and returning your proxy card. If you are a
share owner of record, you can grant a proxy by telephone or via the internet.
We urge you to sign and return a proxy to assure your vote is represented.
If you decide to attend, you can revoke your proxy and vote in person.
/s/ SUMMERFIELD K. JOHNSTON, JR.
Summerfield K. Johnston, Jr.
<PAGE> 3
Coca-Cola Enterprises Inc Logo
NOTICE OF 1999 ANNUAL MEETING OF SHARE OWNERS
<TABLE>
<S> <C>
Time: 10:30 a.m. (local time), Friday, April 23, 1999
Place: Hotel du Pont, 11th and Market Streets, Wilmington, Delaware
Agenda: Consider and act upon the following:
</TABLE>
1. The election of the following persons to the Board of Directors:
to serve until the 2001 annual meeting of share owners of Coca-Cola
Enterprises Inc. (the "Company"):
James E. Chestnut
to serve until the 2002 annual meeting of share owners:
<TABLE>
<S> <C>
John L. Clendenin Summerfield K. Johnston, Jr.
Joseph R. Gladden, Jr. Robert A. Keller
John E. Jacob
</TABLE>
2. Approval of the Company's 1999 Stock Option Plan;
3. Approval of the Company's Long-Term Incentive Plan (Effective January 1,
1999);
4. Approval of the Company's Executive Management Incentive Plan (Effective
January 1, 1999);
5. Ratification of the appointment of Ernst & Young LLP as independent auditors
of the Company for the 1999 fiscal year;
6. To vote upon a share-owner proposal to create an independent nominating
committee; and
7. The transaction of such other business as may properly come before the
meeting and any adjournments of it.
<TABLE>
<S> <C>
Record Date: Holders of common stock of the Company at the close of
business on February 26, 1999 are entitled to vote.
</TABLE>
The attached proxy statement contains more information about the agenda.
By Order of the Board of Directors
J. GUY BEATTY, JR.
Secretary
Atlanta, Georgia
March 18, 1999
WE URGE YOU TO GRANT A PROXY.
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD. IF YOU ARE A SHARE OWNER
OF RECORD, YOU CAN GRANT A PROXY OVER THE TELEPHONE OR INTERNET BY FOLLOWING THE
INSTRUCTIONS ON THE PROXY CARD. IF YOU DECIDE TO ATTEND THE MEETING, YOU MAY
REVOKE YOUR PROXY AND VOTE YOUR SHARES IN PERSON.
<PAGE> 4
Coca-Cola Enterprises Inc. Logo
2500 WINDY RIDGE PARKWAY
ATLANTA, GEORGIA 30339
MARCH 18, 1999
PROXY STATEMENT
FOR ANNUAL MEETING OF
SHARE OWNERS
TO BE HELD 10:30 A.M. APRIL 23, 1999
AT THE HOTEL DU PONT, 11TH AND MARKET STREETS, WILMINGTON, DELAWARE
-------------------------
We are furnishing this proxy statement to our share owners in connection
with our 1999 annual meeting of share owners.
Our Board of Directors is soliciting your proxy to vote your shares of the
Company's common stock ("Company Stock") at the annual meeting. These proxy
materials, which have been prepared by our management for the Board, are first
being sent to our share owners on or about March 18, 1999.
"We," "our" and the "Company" each refers to Coca-Cola Enterprises Inc. The
mailing address for our principal executive offices is Post Office Box 723040,
Atlanta, Georgia 31139-0040.
VOTING
You are entitled to vote your Company Stock at the annual meeting if our
records show that you held your shares as of the close of business on February
26, 1999, the date our Board has selected as the record date for this meeting.
At that time, a total of 423,388,553 shares of Company Stock were outstanding
and entitled to vote. Each share of Company Stock has one vote. The accompanying
proxy card shows the number of shares you are entitled to vote.
Share owners at the annual meeting will consider the election of directors
and the other items listed on the preceding page. You can vote in favor of all
nominees for director or you can withhold your vote from some or all of the
nominees. For all other proposals, you may vote for or against, or you may
abstain from voting.
You can vote in person at the annual meeting, or you can grant a proxy by
signing, dating and returning the proxy card in the postage-paid envelope
provided. All of our share owners of record also have the option of granting a
proxy by telephone or internet. Check your proxy card or the information
forwarded by your bank, broker or other holder of record for instructions.
Telephone and internet proxy facilities will close at 8:00 a.m., Eastern
daylight time, on the morning of the annual meeting. (A share owner of record is
one whose stock is registered in the name of that share owner.)
<PAGE> 5
Your shares will be voted as you instruct. The persons named as proxies on
the proxy card will vote as recommended by our Board of Directors on any matter
for which you have not given instructions. The Board's recommendations appear on
page 3.
We are not aware of any other matters to be presented at the annual meeting
except for those described in this proxy statement. If any other matters
properly come before the annual meeting, your shares will be voted in the
discretion of the persons named as proxies on the proxy card.
If the annual meeting is adjourned, your shares will be voted when the
meeting is reconvened as well, unless you have revoked your proxy.
REVOKING YOUR PROXY
You can revoke your proxy and change your votes any time before your proxy
is voted. There are three ways to do this:
(1) Give written notice of revocation to the Secretary of the Company
prior to the annual meeting;
(2) Change your vote by granting a later-dated proxy (you can sign,
date and deliver a later-dated proxy card prior to the meeting or, prior to
8:00 a.m. on the morning of the annual meeting, you can grant a later proxy
by telephone or internet); or
(3) Come to the annual meeting and vote your shares in person.
QUORUMS AND VOTE COUNTING
The annual meeting requires the presence of a quorum, which for this
meeting means a majority of the shares issued and outstanding at the record
date. If you grant a proxy or attend the meeting in person, your shares will be
counted to determine whether a quorum is present, even if you abstain from
voting on some or all matters introduced at the meeting. "Broker nonvotes" also
count for quorum purposes. If you hold your shares through a broker, bank or
other nominee, generally the nominee may vote the shares it holds for you in
accordance with your instructions. However, if the nominee has not received your
instructions within ten days of the meeting, the nominee may vote in its
discretion only on matters that the New York Stock Exchange determines to be
routine. If a nominee cannot vote on a particular matter because it is not
routine, there is a "broker nonvote" on that matter.
The six nominees for director who receive the highest vote totals will be
elected as directors. All other matters must be approved by a majority of the
votes cast by the holders of Company Stock who are present or represented and
entitled to vote at the annual meeting. Abstentions and broker nonvotes are
counted as present and entitled to vote, but they are not counted as votes for
or against any proposal.
First Chicago Trust Company, a division of Equi-Serve, is our transfer
agent and will tabulate all proxies and votes for the annual meeting.
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<PAGE> 6
COSTS OF PROXY SOLICITATION
We are paying the costs of the proxy solicitation. These costs include
charges of brokers, banks, fiduciaries and custodians for forwarding proxy
materials to their principals and obtaining their proxies. Additionally, some of
our directors, officers or employees may solicit proxies by mail, telephone or
personal contact. None of these solicitors will receive any additional or
special compensation for doing this.
RECOMMENDATIONS OF THE BOARD OF DIRECTORS
FOR the election of the following persons to the Board of Directors:
to serve until the 2001 annual meeting of share owners:
James E. Chestnut
to serve until the 2002 annual meeting of share owners:
<TABLE>
<S> <C>
John L. Clendenin Summerfield K. Johnston, Jr.
Joseph R. Gladden, Jr. Robert A. Keller
John E. Jacob
</TABLE>
FOR approval of the Company's 1999 Stock Option Plan;
FOR approval of the Company's Long-Term Incentive Plan (Effective January
1, 1999);
FOR approval of the Company's Executive Management Incentive Plan
(Effective January 1, 1999);
FOR ratification of Ernst & Young LLP's appointment as independent auditors
of the Company for the 1999 fiscal year; and
AGAINST a share-owner proposal to create an independent nominating
committee.
PRINCIPAL SHARE OWNERS
The identity of every share owner known to us to hold beneficial ownership
of more than five percent of the Company Stock at February 26, 1999 appears
below.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
NAME SHARES OWNED CLASS
- ---- ------------ ----------
<S> <C> <C>
The Coca-Cola Company................................... 168,956,718 39.9
One Coca-Cola Plaza
Atlanta, Georgia 30313
Summerfield K. Johnston, Jr............................. 33,352,887 7.8
2500 Windy Ridge Parkway
Atlanta, Georgia 30339
</TABLE>
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<PAGE> 7
1. ELECTION OF DIRECTORS
NOMINEES
Our Board of Directors currently has fourteen members; about one-third of
the Board is elected each year for a three-year term. Our bylaws disqualify
anyone who has reached the age of 70 from being nominated or renominated for
election as director.
Our share owners are being asked to elect directors in two classes at the
annual meeting in order to make the composition of each of the Board's three
classes more equal.
The Board has nominated James E. Chestnut for a term expiring at our 2001
annual meeting of share owners. Mr. Chestnut was appointed to the Board in
February 1999 when the Board expanded from thirteen to fourteen directors. His
current term expires at the 1999 annual meeting.
The Board has nominated: John L. Clendenin, Joseph R. Gladden, Jr., John E.
Jacob, Summerfield K. Johnston, Jr., and Robert A. Keller for terms expiring at
our 2002 annual meeting of share owners.
Each of the nominees has consented to serve if elected. If, before the
annual meeting, any of them becomes unable to serve, or chooses not to serve,
the Board may nominate a substitute, and if that happens, the persons named as
proxies in the proxy card will vote for the substitute. Alternatively, the Board
could either choose to let the vacancy stay unfilled until an appropriate
candidate is located, or to reduce the size of the Board to eliminate the
unfilled seat.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of the Company recommends that you vote FOR the
election of James E. Chestnut as a director to hold office until the 2001 annual
meeting of share owners, and that you vote FOR the election of John L.
Clendenin, Joseph R. Gladden, Jr., John E. Jacob, Summerfield K. Johnston, Jr.,
and Robert A. Keller as directors to hold office until the 2002 annual meeting
of share owners, and until their respective successors are elected and
qualified.
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<PAGE> 8
INFORMATION CONCERNING DIRECTORS
Information regarding the principal occupations (which have continued for
at least the past five years unless otherwise noted) of the directors and
nominees for directors of the Company, as well as certain other information, is
set forth below. The information is given as of the date of this proxy
statement.
NOMINEE FOR ELECTION
TO TERM EXPIRING 2001
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<S> <C>
JAMES E. CHESTNUT.................... 48, is Senior Vice President and Chief Financial
(PHOTO OF JAMES E. CHESTNUT) Officer of The Coca-Cola Company, having served
in that position since July 1994. He had been
Vice President and Controller of The Coca-Cola
Company since October 1993. Mr. Chestnut serves
as a director of Coca-Cola FEMSA, S.A. de C.V.
and Coca-Cola Nestle Refreshments Company S.A. He
has been a director of the Company since his
election by the Board in February 1999 to fill a
vacancy when the Board was expanded to fourteen
members.
</TABLE>
NOMINEES FOR ELECTION
TO TERM EXPIRING 2002
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<S> <C>
JOHN L. CLENDENIN.................... 64, is Chairman Emeritus of BellSouth Corporation
(PHOTO OF JOHN L. CLENDENIN) (telecommunications holding company), a director
of Equifax Inc. (credit information provider),
RJR Nabisco Holdings Corp. (manufacturer of
tobacco products and packaged foods), The Kroger
Co. (retail grocery chain), Wachovia Corp. (bank
holding company), Springs Industries, Inc.
(producer of finished fabrics, home furnishings,
and industrial fabrics), National Service
Industries, Inc. (producer of lighting equipment,
envelopes, and chemicals and provider of linen
services), The Home Depot, Inc. (retailer of home
improvement products), and Powerwave Technologies
(manufacturer of radio amplifier equipment). From
1984 through 1996, Mr. Clendenin was President
and Chief Executive Officer of the BellSouth
Corporation, serving on its board of directors
from 1984 until 1996, when he retired as Chairman
of the Board. He has been a director of the
Company since 1986.
</TABLE>
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<PAGE> 9
<TABLE>
<S> <C>
JOSEPH R. GLADDEN, JR................ 56, has been Senior Vice President and General
(PHOTO OF JOSEPH R. GLADDEN, JR.) Counsel of The Coca-Cola Company since 1991. He
is a director and chairman-designate of Coca-Cola
Amatil Limited (soft drink bottler). He has been
a director of the Company since October 1997 and
was elected Vice Chairman of the Board in
December 1997.
JOHN E. JACOB........................ 64, has been Executive Vice President of
(PHOTO OF JOHN E. JACOB) Anheuser-Busch Companies, Inc. (brewer) since
1994 and a director of that company since 1990.
He served as President and Chief Executive
Officer of the National Urban League, Inc.
(community-based social service and advocacy
agency) from 1982 to 1994. He is a director of
LTV Corporation (manufacturer of steel and energy
products). He has been a director of the Company
since 1986.
SUMMERFIELD K. JOHNSTON JR........... 66, has served as Chairman of the Board of
(PHOTO OF SUMMERFIELD K. JOHNSTON Directors since October 1997 and Chief Executive
JR.) Officer of the Company from December 1991 until
April 1998. He was Vice Chairman of the Board
from December 1991 to October 1997. Mr. Johnston
is a director of SunTrust Banks, Inc. (bank
holding company). He has been a director of the
Company since 1991.
ROBERT A. KELLER..................... 68, is retired. He was a director of The
(PHOTO OF ROBERT A. KELLER) Coca-Cola Bottling Company of New York, Inc.
until its acquisition by the Company in 1997. He
has been a director of the Company since 1986.
</TABLE>
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<PAGE> 10
INCUMBENT DIRECTORS
TERMS EXPIRING 2000
<TABLE>
<S> <C>
HOWARD G. BUFFETT.................... 44, has been Chairman of the Board of The GSI
(PHOTO OF HOWARD G. BUFFETT) Group (manufacturer of agricultural equipment)
since June 1996 and President of Buffett Farms
since 1989. Mr. Buffett served as Chairman of the
Executive Committee and President, International
Operations, of The GSI Group from September 1995
to June 1996. Mr. Buffett was Corporate Vice
President and Assistant to the Chairman and a
director of Archer Daniels Midland Company
(agricultural processor and merchandiser) from
1992 to 1995. He is a director of Berkshire
Hathaway Inc. (investment holding company) and
Lindsay Manufacturing (manufacturer of
agricultural irrigation equipment). He has been a
director of the Company since 1993.
JOHNNETTA B. COLE.................... 62, has been Presidential Distinguished Professor
(PHOTO OF JOHNNETTA B. COLE) of Anthropology, Women's Studies and African
American Studies at Emory University, Atlanta,
Georgia since August 1998, and is President
Emerita of Spelman College, Atlanta, Georgia. She
was President of Spelman College from 1987 to
June 1997. Dr. Cole is also a director of Merck &
Co., Inc. (manufacturer of health maintenance and
restoration products), Management Training
Corporation (a privately held company that
manages Job Corps centers and offers educational
programs to correctional institutions), and The
Home Depot, Inc. (retailer of home improvement
products). She has been a director of the Company
since 1990.
CLAUS M. HALLE....................... 71, is an international consultant to The
(PHOTO OF CLAUS M. HALLE) Coca-Cola Company. He was a director of The
Coca-Cola Bottling Company of New York, Inc.
until its acquisition by the Company in 1997. He
has been a director of the Company since 1988.
</TABLE>
7
<PAGE> 11
<TABLE>
<S> <C>
JEAN-CLAUDE KILLY................... 55, has been Chairman and Chief Executive Officer of The Company
(PHOTO OF JEAN-CLAUDE KILLY) of the Tour de France (organizer and promoter of sporting
events) since 1994 and Chairman of the Board of Coca-Cola
Entreprise (the Company's French bottler) since 1993. From 1992
until 1996, he served as Chairman of the Board of Amaury Sport
Organization (organizer of recreational, cultural, and sporting
activities). Mr. Killy is a director of Amaury Sport
Organization and The Philippe Amaury Editions, S.A. (publisher)
and serves as a member of the International Olympic Committee.
He has been a director of the Company since 1997.
HENRY A. SCHIMBERG.................. 66, has served as President and a director of the Company since
(PHOTO OF HENRY A. SCHIMBERG) December 1991. He has been Chief Executive Officer of the
Company since April 1998, and was the Company's Chief Operating
Officer from December 1991 until April 1998.
</TABLE>
INCUMBENT DIRECTORS
TERMS EXPIRING 2001
<TABLE>
<S> <C>
J. TREVOR EYTON...................... 64, has been Senior Group Chairman and a senior
(PHOTO OF J. TREVOR EYTON) officer of EdperBrascan Corporation (natural
resources; integrated power systems; real estate
development and management; and banking and
brokerage services) since 1979. Since 1990, he
has been a member of the Senate of Canada. Sen.
Eyton is also a director of Barrick Gold
Corporation (gold production company), Noranda
Inc. (diversified natural resources
company -- mining and metals, forest products,
and oil and gas), EdperBrascan Corporation,
Trilon Financial Corporation (management of
companies and enterprises, finance, and
insurance), and M.A. Hanna Company (specialty
chemicals firm). He was a director of Coca-Cola
Beverages Ltd. until its acquisition by the
Company in 1997. He has been a director of the
Company since 1998.
</TABLE>
8
<PAGE> 12
<TABLE>
<S> <C>
L. PHILLIP HUMANN.................... 53, has served as Chairman of the Board and Chief
(PHOTO OF L. PHILLIP HUMANN) Executive Officer of SunTrust Banks, Inc. (bank
holding company) since March 1998, and prior to
that, served as President. He is a director of
SunTrust Banks, Inc., Equifax Inc. (information
services company), and Haverty Furniture
Companies, Inc. (furniture retailer). He has been
a director of the Company since 1992.
SCOTT L. PROBASCO JR................. 70, is a director and Chairman of the Executive
(PHOTO OF SCOTT L. PROBASCO JR.) Committee of the Board of SunTrust Bank,
Chattanooga, N.A. He is also a director of
Chattem, Inc. (branded consumer products),
Provident Companies, Inc. (insurance holding
company), and SunTrust Banks, Inc. (bank holding
company). He has been a director of the Company
since 1991.
</TABLE>
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
Our Board of Directors has established eight standing committees: an
Executive Committee, an Audit Committee, a Compensation Committee, a Committee
on Directors, a Public Issues Review Committee, a Retirement Plan Review
Committee, a Capital Projects Review Committee, and an Affiliated Transaction
Committee.
The Executive Committee, 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, and the dissolution of the Company. Members are Summerfield K.
Johnston, Jr. (Chairman), Joseph R. Gladden, Jr., L. Phillip Humann, Scott L.
Probasco, Jr., and Henry A. Schimberg. The Executive Committee met once and took
action by written consent on three occasions in 1998.
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 deems appropriate. Members are
L. Phillip Humann (Chairman), John L. Clendenin, Johnnetta B. Cole, and J.
Trevor Eyton. The Audit Committee met four times in 1998.
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
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<PAGE> 13
restricted stock plans, incentive plans, and certain other compensation plans.
Members are John L. Clendenin (Chairman), J. Trevor Eyton, Claus M. Halle, and
Robert A. Keller. The Compensation Committee met four times in 1998 and took one
action by written consent.
The Committee on Directors recommends to the Board of Directors candidates
for election to the Board and reviews matters relating to potential director
conflicts of interest and directors' fees and retainers. The Committee on
Directors also considers candidates for election to the Board 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 2000 Annual Meeting."
Members are Claus M. Halle (Chairman), Joseph R. Gladden, Jr., John E. Jacob,
Summerfield K. Johnston, Jr., and Jean-Claude Killy. The Committee on Directors
met once in 1998.
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. Members are Howard G. Buffett (Chairman), Johnnetta B. Cole, Jean-Claude
Killy, Scott L. Probasco, Jr., and Henry A. Schimberg. The Public Issues Review
Committee met once in 1998.
The Retirement Plan Review Committee reviews the administration of all
employee retirement plans for the Company and the financial condition of all
trusts and other funds established pursuant to those plans. Members are John E.
Jacob (Chairman), Howard G. Buffett, and L. Phillip Humann. The Retirement Plan
Review Committee met once in 1998.
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 require approval of the full Board of Directors. Members
are Summerfield K. Johnston, Jr., Joseph R. Gladden, Jr., and Henry A.
Schimberg. The Capital Projects Review Committee took action by written consent
on eight occasions in 1998.
The Affiliated Transaction Committee reviews, considers, and negotiates any
proposed merger or consolidation or purchase of an equity interest or assets,
other than in the ordinary course of business, from any entity in which The
Coca-Cola Company has a 20 percent or greater equity or other ownership
interest, and which transaction has an aggregate value exceeding $10 million.
The Affiliated Transaction Committee considers whether any proposed transaction,
as described above, should be approved by a vote of the share owners of the
Company which is greater than or in addition to any vote required by law.
Members are John L. Clendenin (Chairman), J. Trevor Eyton, and John E. Jacob.
The Affiliated Transaction Committee did not meet in 1998.
In 1998, the Board of Directors held five meetings. Each director attended
at least 75 percent of the total of all meetings of the Board and each committee
on which he or she served.
COMPENSATION OF DIRECTORS
We pay outside directors (directors who are not our officers or employees)
annual retainer fees of $35,000 and meeting fees of $1,000 for each meeting of
the Board and Board committees attended, plus $3,000 to each director who chairs
a Board committee. Outside directors who are also employees of The Coca-Cola
Company receive the same
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<PAGE> 14
retainer fees and meeting fees for attendance at Board meetings, but they do not
receive fees for attendance at committee meetings or for chairing a committee.
Our Board's Chairman receives the same retainer fees noted in the preceding
paragraph, even if he is not an outside director, and the same fees for
attending Board meetings and for chairing a committee. The Chairman does not
receive fees for attending meetings of Board committees.
During 1998, we paid the directors a total of $546,250 in retainers and
fees. Each director is entitled to be reimbursed for reasonable expenses of
attending a meeting of the Board or a Board committee.
The nonemployee directors have a deferred compensation plan under which
one-third of all meeting fees and $15,000 of the annual retainer are
automatically paid into deferred compensation accounts that are valued in
Company Stock. The directors may also elect to have some or all of the rest of
their retainers and fees deferred into these stock accounts or deferred into
accounts which earn interest at the prevailing rate. Under the terms of this
plan, the Chairman of the Board participates, regardless of whether he is an
employee of the Company or The Coca-Cola Company. However, he is not permitted
to make voluntary deferrals into the plan. Each nonemployee director's stock
account in the deferred compensation plan was credited with phantom stock equal
to $16,000 on January 2, 1998. This credit of phantom stock will be made each
year on the first trading day of the year in lieu of further participation in
the retirement plan for nonemployee directors, which was terminated in 1997.
In 1998, each nonemployee director was granted an option to purchase 4,250
shares of Company Stock. The options are divided into five subgrants of 850
options, having exercise prices of $40.1422, $46.1635, $53.0880, $61.0512, and
$70.2089. The options become vested in stages: one-third will vest upon each of
the first three anniversaries of the grant date, January 2, 1998; however, if
before all options have vested, the director dies, becomes disabled, or
completes a term and cannot be renominated because of the Company's mandatory
retirement age for directors, then all unvested options will become vested. The
options, once vested, remain exercisable until January 2, 2008, or for shorter
periods following the director's death, disability, resignation, or mandatory
retirement from the Board. Each nonemployee director received a grant of 4,250
shares in 1999 on the same general terms, except that the grant date was January
4, 1999 and the options remain exercisable until January 4, 2009. The exercise
prices for the five subgrants were $40.3218, $46.3700, $53.3255, $61.3243, and
$70.5229.
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<PAGE> 15
SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS
The following table shows the number of shares of Company Stock and of the
common stock of The Coca-Cola Company ("Coca-Cola Stock") owned beneficially by
each director, each nominee for director, each other "named executive officer"
(see "Executive Compensation -- Summary of Cash and Certain Other Compensation"
below), and by all directors and named executive officers as a group. The
amounts are as of February 26, 1999 except as otherwise indicated. All persons
shown in the table have sole voting and investment power with regard to the
shares shown, unless otherwise indicated.
<TABLE>
<CAPTION>
NUMBER OF SHARES BENEFICIALLY OWNED
-----------------------------------------------------
COCA-COLA
COMPANY STOCK STOCK
------------------------- -------------------------
NUMBER OF PERCENTAGE NUMBER OF PERCENTAGE
NAME SHARES OWNED OF CLASS SHARES OWNED OF CLASS
- ---- ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C>
Howard G. Buffett(1)(2).......... 30,509 * 26,786 *
James E. Chestnut(3)............. 0 * 430,989 *
John L. Clendenin(2)(4).......... 36,501 * 0 *
Johnnetta B. Cole(5)(6).......... 29,720 * 500 *
J. Trevor Eyton(7)............... 2,527 * 0 *
Joseph R. Gladden, Jr.(8)(9)..... 3,918 * 759,867 *
Claus M. Halle(2)(10)............ 56,117 * 1,652,180 *
L. Phillip Humann(5)(11)......... 27,433 * 40 *
John E. Jacob(2)(12)............. 39,111 * 0 *
Summerfield K. Johnston,
Jr.(13)........................ 33,352,887 7.8 90,400 *
Robert A. Keller(2)(14).......... 23,670 * 551,749 *
Jean-Claude Killy(8)(15)......... 10,938 * 5,000 *
Scott L. Probasco, Jr.(2)(16).... 1,605,999 * 5,000 *
Henry A. Schimberg(17)........... 6,120,041 1.4 44,639 *
John R. Alm(18).................. 2,171,247 * 0 *
Lowry F. Kline(19)............... 767,799 * 0 *
G. David Van Houten, Jr.(20)..... 715,059 * 2,792 *
All directors and executive
officers as a group (26
persons), including those
directors and nominees named
above(21)...................... 49,794,462 11.5 3,667,705 *
</TABLE>
- -------------------------
* Less than one percent
(1) Includes 15,000 shares of Company Stock owned jointly with his wife, 60
shares held by his minor children, and his stock account balance in the
Company's Deferred Compensation Plan for Non-Employee Director Compensation
(the "Deferred Compensation Plan") which will be paid in 6,534 shares of
Company Stock upon distribution from the plan. Includes 26,696 shares of
Coca-Cola Stock owned jointly with his wife and 90 shares held by his minor
children.
(2) With respect to Messrs. Buffett, Clendenin, Halle, Jacob, Keller, and
Probasco, beneficial ownership as reported in the table includes 8,915
shares of Company Stock which may be acquired by each such director upon
the exercise of outstanding stock options.
12
<PAGE> 16
(3) Includes 1,500 shares of Coca-Cola Stock owned by his wife, 900 shares of
Coca-Cola Stock owned by his children, 137,500 restricted shares of
Coca-Cola Stock, 266,911 shares of Coca-Cola Stock which may be acquired
upon the exercise of outstanding stock options, and 2,596 shares of
Coca-Cola Stock held in trust through The Coca-Cola Company Thrift and
Investment Plan as of December 31, 1998.
(4) Includes his stock account balance in the Deferred Compensation Plan which
will be paid in 19,586 shares of Company Stock upon distribution from the
plan.
(5) With respect to Dr. Cole and Mr. Humann, beneficial ownership as reported
in the table includes 13,415 shares of Company Stock which may be acquired
by each such director upon the exercise of outstanding stock options.
(6) Includes her stock account balance in the Deferred Compensation Plan which
will be paid in 16,080 shares of Company Stock upon distribution from the
plan. Includes 500 shares of Coca-Cola Stock owned jointly with her
husband.
(7) Includes 1,500 shares held indirectly and his stock account balance in the
Deferred Compensation Plan which will be paid in 1,027 shares of Company
Stock upon distribution from the plan.
(8) With respect to Messrs. Gladden and Killy, beneficial ownership as reported
in the table includes 1,415 shares of Company Stock which may be acquired
by each such director upon the exercise of outstanding stock options.
(9) Includes his stock account balance in the Deferred Compensation Plan which
will be paid in 1,503 shares of Company Stock upon distribution from the
plan. Includes 320,000 restricted shares of Coca-Cola Stock, 37 shares of
Coca-Cola Stock held in trust through The Coca-Cola Company Thrift and
Investment Plan as of December 31, 1998, 153,778 shares of Coca-Cola Stock
which may be acquired upon the exercise of outstanding stock options, and
295 shares of Coca-Cola Stock owned by his daughter.
(10) Includes 30,000 shares of Company Stock held in a trust of which he is
co-trustee and beneficiary, 3,262 shares of Company Stock held in a
revocable trust, and his stock account balance in the Deferred Compensation
Plan which will be paid in 13,940 shares of Company Stock upon distribution
from the plan. Includes 36,880 shares of Coca-Cola Stock owned by his wife
and as to which shares he has disclaimed beneficial ownership, 97,000
shares of Coca-Cola Stock owned by a foundation of which he is a
co-trustee, and 55,180 shares of Coca-Cola Stock held in a charitable trust
of which he is a donor.
(11) Includes 4,091 shares of Company Stock held in the Company's dividend
reinvestment plan and his stock account balance in the Deferred
Compensation Plan which will be paid in 7,927 shares of Company Stock upon
distribution from the plan. Includes 40 shares of Coca-Cola Stock held in
trust for his son.
(12) Includes his stock account balance in the Deferred Compensation Plan which
will be paid in 30,196 shares of Company Stock upon distribution from the
plan.
(13) Includes 9,936 shares of Company Stock owned by his wife, 1,245,731 shares
of Company Stock held in trusts for his daughter, 1,598,831 shares of
Company Stock held in a trust for his son of which he is a co-trustee, and
3,943,968 shares of Company Stock held in a trust of which he is a
co-trustee. Also includes options to
13
<PAGE> 17
acquire 4,680,600 shares of Company Stock which are exercisable or will be
exercisable within sixty days from the date of this table, his balance in
the Deferred Compensation Plan which will be paid in 577 shares of Company
Stock upon distribution from the plan, 12,841 shares of Company Stock held
in the Company's Matched Employee Savings and Investment Plan ("MESIP"),
and 78,250 shares of Company Stock held pursuant to the Company's
Supplemental Matched Employee Savings and Investment Plan ("SuppMESIP"),
both plans as of December 31, 1998. Includes 88,000 shares of Coca-Cola
Stock held by two trusts of which he is a co-trustee, 960 shares of
Coca-Cola Stock held in a trust for his daughter, and 1,440 shares of
Coca-Cola Stock held in a trust, of which he is a co-trustee, for his son.
(14) Includes 309 shares of Company Stock owned by his wife, as to which shares
he has disclaimed beneficial ownership, and his stock account balance in
the Deferred Compensation Plan which will be paid in 2,524 shares of
Company Stock upon distribution from the plan. Includes 11,593 shares of
Coca-Cola Stock owned by his wife and 90,893 shares of Coca-Cola Stock held
in trusts of which his wife is a trustee, as to all of which he has
disclaimed beneficial ownership, 10,000 shares of Coca-Cola Stock which may
be acquired upon the exercise of outstanding stock options, and 5,046
shares of Coca-Cola Stock held in a family foundation.
(15) Includes his stock account balance in the Deferred Compensation Plan which
will be paid in 3,523 shares of Company Stock upon distribution from the
plan.
(16) Includes 7,500 shares of Company Stock held in trust for his wife, of which
he has disclaimed beneficial ownership, 1,579,473 shares of Company Stock
held in a trust of which he is trustee, and his stock account balance in
the Deferred Compensation Plan which will be paid in 10,111 shares of
Company Stock upon distribution from the plan.
(17) Includes 4,650 shares of Company Stock owned by his wife, 1,165,047 shares
of Company Stock held pursuant to his Deferred Compensation Agreement (See
"Executive Compensation -- Employment Contracts and Termination of
Employment Arrangements"), options to acquire 1,896,900 shares of Company
Stock which are exercisable or will be exercisable within sixty days from
the date of this table, and 1,275,000 restricted shares of Company Stock
which are subject to forfeiture. Includes 5,923 shares of Company Stock and
40,393 shares of Coca-Cola Stock held in trust through the MESIP and 44,421
shares of Company Stock and 4,246 shares of Coca-Cola Stock held pursuant
to the SuppMESIP, all as of December 31, 1998.
(18) Includes 10,775 shares of Company Stock owned by his wife, 8,356 of which
are held in trust through the MESIP, 354 shares of Company Stock owned by
his children, as to which he has disclaimed beneficial ownership, 450
shares held in a family foundation of which he is a trustee, 598,038 shares
of Company Stock held pursuant to his Deferred Compensation Agreement (See
"Executive Compensation -- Employment Contracts and Termination of
Employment Arrangements"), options to acquire 534,000 shares of Company
Stock which are exercisable or will be exercisable within sixty days from
the date of this table, 600,000 restricted shares of Company Stock which
are subject to forfeiture, 56,331 shares of Company Stock held in trust
through the MESIP, and 38,799 shares of Company Stock held pursuant to the
SuppMESIP, both plans as of December 31, 1998.
14
<PAGE> 18
(19) Includes options to acquire 221,700 shares of Company Stock which are
exercisable or will be exercisable within sixty days from the date of this
table, 420,000 restricted shares of Company Stock which are subject to
forfeiture, 869 shares of Company Stock held in trust through the MESIP,
and 2,144 shares of Company Stock held pursuant to the SuppMESIP, both
plans as of December 31, 1998.
(20) Includes options to acquire 376,200 shares of Company Stock which are
exercisable or will be exercisable within sixty days from the date of this
table, 81,000 restricted shares of Company Stock which are subject to
forfeiture, 62,005 shares of Company Stock held in the Company's dividend
reinvestment plan, 8,053 shares of Company Stock held in trust through the
MESIP, and 44,101 shares of Company Stock and 2,792 shares of Coca-Cola
Stock held pursuant to the SuppMESIP, both plans as of December 31, 1998.
(21) Includes options to acquire 9,530,840 shares of Company Stock which are
exercisable or will be exercisable within sixty days from the date of this
table, 2,793,000 restricted shares of Company Stock which are subject to
forfeiture and includes 457,500 shares of Coca-Cola Stock which are subject
to transfer restrictions, and options to acquire 430,689 shares of
Coca-Cola Stock which are exercisable or will be exercisable within sixty
days from the date of this table.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 and regulations
thereunder require the Company's executive officers and directors and certain
persons who own more than ten percent of Company Stock to file initial reports
of ownership and reports of changes in ownership with the Securities and
Exchange Commission and the New York Stock Exchange. Executive officers,
directors, and certain persons owning more than ten percent of Company Stock are
required by Securities and Exchange Commission regulations to furnish the
Company with copies of all Section 16(a) forms they file. Based on its review of
the copies of such forms received by it and written representations from each
such person who did not file an Annual Statement of Changes in Beneficial
Ownership on Form 5 that no Form 5 was due, and except as reported in prior
proxy statements, the Company believes that all filing requirements applicable
to such persons have been complied with in 1998 and prior years, except for the
following inadvertent omissions, which have been subsequently reported: a
purchase of Company Stock in October 1998 by a corporation owned by J. Trevor
Eyton, a director of the Company; the closing in 1996 of a custodial account for
which Summerfield K. Johnston III, Senior Vice President and President, Eastern
North America Group, was custodian; and the failure to report Company Stock held
in a defined contribution account for the spouse of John R. Alm, Executive Vice
President and Chief Financial Officer, which report should have occurred on the
Form 5 reporting 1996 transactions.
15
<PAGE> 19
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 certain of its
officers during its fiscal year ending December 31, 1998 and the two preceding
fiscal years. The officer group, referred to as the named executive officers, is
composed of the two persons who served as Chief Executive Officer during 1998,
Mr. Johnston, who served until April 17, 1998 and Mr. Schimberg, who served
thereafter, together with the three other most highly compensated executive
officers, determined as of December 31, 1998:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------- -------------------------------------
AWARDS PAYOUTS
OTHER ------------------------- ---------
ANNUAL RESTRICTED SECURITIES
COMPEN- STOCK UNDERLYING LTIP ALL OTHER
SALARY BONUS SATION AWARDS OPTIONS/ PAYOUTS COMPENSATION
NAME AND PRINCIPAL OCCUPATION YEAR ($) ($) ($)(1) ($)(2)(3)(6) SARS(#)(3) ($) ($)(4)
- ----------------------------- ---- --------- ------- --------- ------------ ---------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Summerfield K. Johnston,
Jr........................ 1998 843,017 435,500 205,021 0 0 1,321,539 47,228
Chairman of the Board 1997 1,055,670 871,517 167,739 0 0 474,924 71,570
1996 985,000 935,750 2,908,199 0 2,700,000 380,439 104,102
Henry A. Schimberg.......... 1998 1,053,846 770,500 139,947 0 600,000 1,179,869 17,228
President and Chief 1997 950,000 788,500 92,865 0 0 421,013 52,495
Executive Officer 1996 885,000 840,750 2,951,493 11,687,500 0 336,570 623,317
John R. Alm................. 1998 500,000 284,500 88,445 0 0 405,416 30,472
Executive Vice President 1997 430,000 310,030 65,511 0 0 144,561 27,888
and Chief Financial Officer 1996 410,000 332,100 574,604 5,550,000 0 113,322 52,162
Lowry F. Kline.............. 1998 400,000 227,600 2,935(7) 0 0 262,632 12,394
Executive Vice President 1997 280,000 201,880 (5) 0 0 98,125 6,711
and General Counsel 1996 250,000 202,500 (5) 3,850,000 0 0 11,311
G. David Van Houten, Jr..... 1998 320,000 232,000 1,430(7) 0 0 239,688 20,127
Senior Vice President 1997 300,000 167,400 (5) 4,801,005 0 79,821 22,975
1996 285,000 240,750 (5) 0 126,300 55,463 21,404
</TABLE>
- -------------------------
(1) "Other Annual Compensation" in 1998 includes the following reportable
perquisites and other personal benefits, securities, or property: for Mr.
Johnston, $139,528 for nonbusiness use of Company aircraft; for Mr.
Schimberg, $64,856 for nonbusiness use of Company aircraft; and for Mr. Alm,
$45,100 for nonbusiness use of Company aircraft and $23,785 for financial
and legal services.
(2) Dividends are paid on all shares of restricted stock at the same rate paid
on shares of Company Stock generally. Restricted stock awarded to executive
officers in 1996 is subject to vesting only upon the attainment of certain
increases in the market price of Company Stock (which have occurred) and the
grantee's continued employment with the Company.
(3) 1996 and 1997 are adjusted to reflect a three-for-one stock split effective
May 1, 1997.
(4) "All Other Compensation" in 1998 includes: for Mr. Johnston, $35,000 paid
and/or credited to qualified and nonqualified retirement plans, $12,228 in
income imputed for term life insurance; for Mr. Schimberg, $5,000 paid to a
qualified retirement plan, $12,228 in income imputed for term life
insurance; and for Mr. Alm, $25,000 paid
16
<PAGE> 20
and/or credited to qualified and nonqualified retirement plans, $5,472 in
income imputed for term life insurance; for Mr. Kline, $5,000 paid to a
deferred compensation pension plan, $7,394 for term life insurance; and
for Mr. Van Houten, $17,059 paid to a deferred compensation pension plan,
$3,068 in income imputed for term life insurance.
(5) Perquisites and other personal benefits, securities or property for this
named executive officer during the fiscal year did not exceed the lesser of
$50,000 or 10% of salary and bonus, and there were no other items of "Other
Annual Compensation."
(6) At December 31, 1998, Mr. Schimberg held 1,275,000 restricted shares of
Company Stock, having a market value at that date of $45,581,250; Mr. Alm
held 600,000 restricted shares of Company Stock, having a market value at
that date of $21,450,000; Mr. Kline held 420,000 restricted shares of
Company Stock, having a market value at that date of $15,015,000; and Mr.
Van Houten held 135,000 restricted shares of Company Stock, having a market
value at that date of $4,826,250.
(7) Perquisites and other personal benefits, securities or property for this
named executive officer during the fiscal year did not exceed the lesser of
$50,000 or 10% of salary and bonus.
STOCK OPTIONS GRANTED
The following table contains information concerning the grant of stock
options during 1998 to the named executive officers.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------------------------------
% OF TOTAL
NUMBER OF OPTIONS GRANT DATE
SECURITIES GRANTED EXERCISE OR PRESENT
UNDERLYING TO EMPLOYEES BASE/PRICE VALUE
NAME OPTIONS GRANTED IN FISCAL YEAR ($/SH) EXPIRATION DATE ($)(2)
- --------------------- --------------- -------------- ----------- --------------- ----------
<S> <C> <C> <C> <C> <C>
Mr. Johnston......... 0 0 N/A N/A N/A
Mr. Schimberg(1)..... 120,000 2.4% 45.8204 April 17, 2008 1,503,600
120,000 2.4% 52.6935 April 17, 2008 1,251,600
120,000 2.4% 60.5975 April 17, 2008 1,016,400
120,000 2.4% 69.6871 April 17, 2008 804,000
120,000 2.4% 80.1402 April 17, 2008 618,000
Mr. Alm.............. 0 0 N/A N/A N/A
Mr. Kline............ 0 0 N/A N/A N/A
Mr. Van Houten....... 0 0 N/A N/A N/A
</TABLE>
(1) Pursuant to an employment agreement dated April 17, 1998, Mr. Schimberg
received a grant of options to purchase 600,000 shares of Company Stock. The
options are divided into five subgrants. One-half of each subgrant vests on
April 1, 2000, and the remainder of each subgrant vests in equal amounts
annually over a three-year period ending May 1, 2003.
(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, the executive may realize upon exercise of the option will
depend on the excess of the
17
<PAGE> 21
stock price over the exercise price on the date the option is exercised, so
there is no assurance the value realized by the 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 are as follows: (i)
dividend yield of .4%, (ii) expected volatility of 27%, (iii) risk-free
interest rate of 5.61%, and (iv) expected life of six years. No assumptions
were made regarding nontransferability or risk of forfeiture. The
assumptions chosen materially impact the resulting valuations.
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/SAR EXERCISES IN LAST FISCAL YEAR,
AND FISCAL YEAR-END OPTION AND SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY
AND SARS AT FISCAL OPTIONS/SARS AT
NUMBER YEAR-END(#) FISCAL YEAR-END($)
OF SHARES VALUE -------------------- --------------------
ACQUIRED REALIZED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE ($) UNEXERCISABLE UNEXERCISABLE
- ---- ----------- -------- -------------------- --------------------
<S> <C> <C> <C> <C>
Mr. Johnston........... 0 0 4,680,600/ 0 132,853,553 / 0
Mr. Schimberg.......... 0 0 1,896,900/ 600,000 58,131,863 / 0
Mr. Alm................ 0 0 534,000/ 0 16,346,400 / 0
Mr. Kline.............. 0 0 221,700/ 0 6,796,608 / 0
Mr. Van Houten......... 0 0 376,200/ 0 10,938,749 / 0
</TABLE>
LONG-TERM INCENTIVE PLANS
The following table provides information concerning awards made during the
last fiscal year to the named executive officers under the Company's long-term
incentive plans. Payouts, if any, under the long-term incentive plans of the
Company are reported in the Summary Compensation Table for the year of payout.
Under the 1998-2000 plan, payouts are based upon the annual growth rate of the
Company's cash operating profit (operating income plus depreciation and
amortization) over a three-year period. Whether a payout is at the threshold,
target or maximum amount depends on the amount of the percentage increase in the
Company's cash operating profit over the relevant three-year period. Any payouts
earned under the plans would be made either (i) in the first year following the
end of the relevant three-year period, or (ii) in the year following a
participant's death or disability. The plans provide that awards may be prorated
when, during a performance
18
<PAGE> 22
period, a participant retires, dies, becomes disabled or leaves the Company for
immediate employment at The Coca-Cola Company or certain of its related
companies.
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
NON-STOCK PRICE-BASED PLANS
--------------------------------
PERFORMANCE OR OTHER PERIOD THRESHOLD TARGET MAXIMUM
NAME UNTIL MATURATION OR PAYOUT ($)(1) ($)(1) ($)(1)
- ---- --------------------------- ---------- -------- --------
<S> <C> <C> <C> <C>
Mr. Johnston......... 3-year period ending 40% of 80% of 160% of
December 31, 2000 salary salary salary
Mr. Schimberg........ 3-year period ending 40% of 80% of 160% of
December 31, 2000 salary salary salary
Mr. Alm.............. 3-year period ending 30% of 60% of 120% of
December 31, 2000 salary salary salary
Mr. Kline............ 3-year period ending 30% of 60% of 120% of
December 31, 2000 salary salary salary
Mr. Van Houten....... 3-year period ending 30% of 60% of 120% of
December 31, 2000 salary salary salary
</TABLE>
- -------------------------
(1) "Salary" is the average annual base salary, as reported in the Summary
Compensation Table, over the same three-year period.
PENSION PLANS
The Company sponsors a noncontributory, qualified defined benefit pension
plan which provides benefits for substantially all employees, excluding
employees who are included in a unit of employees covered by a collective
bargaining agreement. Retirement income benefits are based upon a participant's
highest average annual compensation during any three of the last ten consecutive
calendar years and the participant's years of credited service.
The Company also maintains two unfunded, nonqualified defined benefit
pension plans, one that provides retirement benefits in excess of those provided
by the qualified plan due to the limits set forth in the Internal Revenue Code,
and the other that provides retirement benefits in excess of such limits as well
as an enhanced benefit formula. The combined benefit provided by the qualified
and nonqualified plans is limited to 300% of the maximum annual benefit allowed
at age 65 under Section 415 of the Internal Revenue Code. The maximum benefit
for 1998 was $390,000.
19
<PAGE> 23
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 5 10 15 20 25 30 35 40 45
- ------------ -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 750,000 $ 51,645 $103,290 $154,935 $206,580 $258,225 $309,870 $361,515 $390,000 $390,000
800,000 55,145 110,290 165,435 220,580 275,725 330,870 386,015 390,000 390,000
900,000 62,145 124,290 186,435 248,580 310,725 372,870 390,000 390,000 390,000
1,000,000 69,145 138,290 207,435 276,580 345,725 390,000 390,000 390,000 390,000
1,250,000 86,645 173,290 259,935 346,580 390,000 390,000 390,000 390,000 390,000
1,500,000 104,145 208,290 312,435 390,000 390,000 390,000 390,000 390,000 390,000
1,750,000 121,645 243,290 364,935 390,000 390,000 390,000 390,000 390,000 390,000
2,000,000 139,145 278,290 390,000 390,000 390,000 390,000 390,000 390,000 390,000
2,250,000 156,645 313,290 390,000 390,000 390,000 390,000 390,000 390,000 390,000
2,500,000 174,145 348,290 390,000 390,000 390,000 390,000 390,000 390,000 390,000
2,750,000 191,645 383,290 390,000 390,000 390,000 390,000 390,000 390,000 390,000
3,000,000 209,145 390,000 390,000 390,000 390,000 390,000 390,000 390,000 390,000
</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 for 1998 includes salary and bonuses (annual and
long-term) earned, but excludes Other Annual Compensation, Restricted Stock
Awards, and All Other Compensation described in the Summary Compensation Table.
Covered compensation for 1998 as well as years of credited service at the
end of the fiscal year for the executive officers is summarized below:
<TABLE>
<CAPTION>
CREDITED
OFFICER COMPENSATION SERVICE
- ------- ------------ --------
<S> <C> <C>
Mr. Johnston.......................................... $3,009,723 44 Years
Mr. Schimberg......................................... 3,022,215 17 Years
Mr. Alm............................................... 1,215,446 21 Years
Mr. Kline............................................. 864,512 7 Years
Mr. Van Houten........................................ 727,088 28 Years
</TABLE>
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
Mr. Johnston has an employment agreement with the Company dated April 17,
1998. The agreement provides that he will remain an employee of the Company
until such time as determined by the Board of Directors. At that time he will
become a consultant to the Company for a term ending January 1, 2003. The
agreement set his annual base salary at $650,000 until December 31, 1998;
thereafter, his base salary will be as determined by the Compensation Committee
of the Board. Currently, that committee has set his annual base salary at
$690,000. He continues to participate in employee and fringe benefit plans. Once
he becomes a consultant, the agreement sets the compensation at $50,000 per
month. Until January 1, 2003, he will be considered an active employee for
crediting service toward the vesting and exercise of any stock awards he may
hold. Mr. Johnston has agreed to remain on the board until the end of the
consulting period, subject to election by the
20
<PAGE> 24
Company's share owners. He is also bound by a noncompetition agreement, which
extends for two years beyond the end of his consulting period.
Mr. Schimberg has an employment agreement with the Company dated April 17,
1998. The agreement runs though April 17, 2000, until which he will serve as
President and Chief Executive Officer of the Company. Afterwards, he will become
a consultant to the Company and/or The Coca-Cola Company for a period expiring
May 1, 2003. The agreement set his annual base salary at $1,150,000 until
December 31, 1998; thereafter, his base salary will be as determined by the
Compensation Committee of the Board. Currently, that Committee has set his
annual base salary at $1,215,000. He continues to participate in employee and
fringe benefit plans. Once he becomes a consultant, the agreement sets the
annual compensation at $400,000. At the time of signing the agreement Mr.
Schimberg received a grant of options to purchase 600,000 shares of the Company
Stock. The options are divided into five subgrants, each with an exercise price
reflecting an approximate 15% annual growth in the market value of the Company's
stock, which was approximately $39.84 per share at the time of grant. One-half
of each subgrant vests on April 1, 2000, and the remainder of each subgrant
vests in equal amounts annually over the subsequent three-year consultation
period. Mr. Schimberg has agreed to remain on the Board until the end of the
consulting period, subject to election by the Company's share owners. He is also
bound by a noncompetition agreement, which extends for two years beyond the end
of his consulting period.
Mr. Schimberg's Restated Compensation Agreement with Johnston Coca-Cola
Bottling Group, Inc. ("Johnston Coca-Cola") dated December 16, 1991, as amended,
had a balance of $10,396,108 in cash and 1,165,047 shares of Company Stock at
December 31, 1998. The cash is credited with interest semiannually, at a rate
paid by SunTrust Bank, Atlanta, on six-month certificates of deposit of like
amount, and any dividends earned on the Company Stock are credited to the cash
account. The stock and amounts held in cash will be paid to Mr. Schimberg upon
the termination of his employment. 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 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's Deferred Compensation Agreement with Johnston Coca-Cola, dated
December 16, 1991, as amended, had a balance at December 31, 1998 of $197,864 in
cash and 598,038 shares of Company Stock. Dividends earned on the Company Stock
are held as cash in the account, which earns interest in the same manner
provided for Mr. Schimberg and described above. 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.
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COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee establishes and reviews the salaries and other
compensation paid to the Company's executive officers. This report summarizes
the compensation of the Company's executive officers for 1998.
COMPENSATION PHILOSOPHY. Conditioning a high percentage of the
compensation of executive officers on successes in increasing both cash
operating profit and the price of the Company Stock, the Committee has
established compensation programs for executive officers that are intended to
reward superior leaders within a highly competitive business. Four types of pay
make up an executive officer's compensation:
- an annual base salary
- an annual performance-based bonus
- a long-term performance-based bonus
- periodic grants of performance-based stock options.
In addition to an executive officer's base salary, the bonuses and stock
option grants create a compensation program that has potential for both high
risk and high reward. For 1998, the Committee approved a total compensation
program for executive officers that would fall near the 80th percentile of the
total compensation paid to similar positions at other Fortune 125 industrial
companies and other consumer goods companies if the performance goals of the
bonus programs are met. The Committee's independent compensation consultants
report that the performance goals of the bonus plans and stock option grants
continue to rank among the most difficult when compared to compensation programs
at other Fortune 125 industrial companies.
ANNUAL BASE SALARY. For 1998, the Committee set each executive officer's
base salary within the 50th to 75th percentile range of the base salaries paid
to a similar position at other Fortune 125 industrial companies and other
consumer goods companies. The Committee also considered the financial
performance of the Company in 1997, changes in the duties and responsibilities
of each executive officer and the individual's performance during the prior
year. Senior human resources executives, the Chief Executive Officer and the
Company's independent compensation consultants assist the Committee with
decisions regarding the executive officers' base salaries. Mr. Johnston, the
Chief Executive Officer at the time the Committee approved executive officers'
compensation for 1998, did not participate in discussions regarding his own
compensation.
ANNUAL PERFORMANCE-BASED BONUS. The Company's management believes that
growth in cash operating profit is the appropriate measure of the Company's
performance for purposes of rewarding the performance of its executive officers.
For 1998, the Committee continued the annual incentive bonus program that
conditions the payment of an executive officer's bonus on specific increases in
the Company's cash operating profit. Based on recommendations from management,
the Committee established the cash operating profit performance goals for each
of the Company's business units and the award levels of the executives.
Under the 1998 annual bonus plan, an executive officer will receive 100% of
the bonus that is earned if the Company reaches its budgeted cash operating
profit goal. An executive officer can also receive a lower percentage of the
bonus if the budgeted cash
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operating profit is not attained but a specific minimum goal is reached. The
executive can also earn a larger bonus if the budgeted cash operating profit
goal is exceeded.
Under the 1998 annual bonus plan, executive officers with corporate-wide
responsibilities received bonuses ranging from 32.4% to 67% of their base
salaries. These bonuses were based on the Company's having attained 100.2% of
budgeted cash operating profit. Executive officers with group-wide
responsibilities reached cash operating profit goals for their business units of
between 98% and 102.3% and received bonuses ranging from 26.7% to 72.5% of their
base salaries. These bonuses were paid in the first quarter of 1999.
LONG-TERM PERFORMANCE-BASED BONUS. The Committee approved a cash bonus
plan for the three-year performance period of 1998 through 2000. The Committee
established specific goals for increases in the Company's cash operating profit
over this three-year period. The Committee also established bonus levels ranging
from 10% to 160% of executives' salaries. No bonuses are payable under the
1998-2000 long-term bonus plan until 2001 unless the executive officer
terminates employment because of death or disability.
In the first quarter of 1999, executives received long-term performance
bonuses based on the Company achieving a 1.8% average annual increase in the
cash operating profit over the amount budgeted for the performance period of
1996 through 1998. These bonuses ranged from 48% to 128% of the executive
officers' base salaries.
GRANTS OF PERFORMANCE-BASED STOCK OPTIONS. The Committee believes that it
is important for a significant part of the compensation of each executive
officer to be tied to ownership of Company Stock so that each executive's
interest in the growth and performance of the Company is closely aligned with
the interests of the Company's share owners. To further this belief, the
Committee has established stock ownership guidelines for its executive officers.
Under these guidelines, an executive officer is expected to own Company Stock
with a value equal to a multiple of his or her salary. The multiples range from
two to seven times the executive's base salary. An executive officer must
satisfy the guidelines within a specific time period to qualify for future
grants of stock options.
In 1998 the Committee granted 5,646,590 stock options. Of these, 752,000
options were granted to executive officers. Reflecting aggressive performance
goals, the Committee designed the options granted to executives so that the
market price of the Company Stock must increase substantially before the
individual realizes compensation upon exercise of the options. Specifically,
each grant to an executive is divided into five equal subgrants. Each subgrant
carries a 15% higher exercise price than the prior subgrant. These higher
exercise prices are intended to reflect a 15% annual increase in the market
price of the Company Stock, measured from January 2, 1998, the date of grant.
One-third of each subgrant becomes exercisable after the first, second and third
anniversaries of the grant date.
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<PAGE> 27
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. The Committee established the
compensation guidelines for 1998 for the Company's Chief Executive Officer.
These guidelines, discussed below, were applied to Mr. Johnston until his
resignation as Chief Executive Officer on April 17, 1998, after which date he
retained senior executive officer responsibilities and remained Chairman of the
Board. The same guidelines became applicable to Mr. Schimberg on that date as he
assumed the duties of Chief Executive Officer.
- The Committee believes that the Chief Executive Officer's base salary and
cash incentive compensation should reflect the responsibilities of that
officer. To ensure that the compensation is competitive, the Committee
also considers the compensation of executives in similar businesses who
have comparable experience and qualifications. For 1998, the Committee
approved a 9.5% increase in Mr. Johnston's annual base salary. Effective
April 17, 1998, however, Mr. Johnston's salary was reduced by
approximately 43.5% to reflect his resignation as Chief Executive
Officer. As of that same date, the Committee increased Mr. Schimberg's
base salary to the amount Mr. Johnston had previously received in his
capacity as Chief Executive Officer.
- The Committee also believes that the Chief Executive Officer's cash
bonuses should be tied to the Company's financial performance and that
the primary measure of the Company's performance is the growth of its
cash operating profit. Therefore, the annual and long-term cash bonus
plans condition the Chief Executive Officer's bonus on the Company's cash
operating profit performance. Under the 1998 annual bonus plan, the
maximum bonus payable to the Chief Executive Officer was 115% of his base
salary. Both Messrs. Johnston and Schimberg received annual bonuses
equaling 67% of their base salaries. These bonuses were based on the
Company's having reached 100.2% of its budgeted cash operating profit. In
the first quarter of 1999, Messrs. Johnston and Schimberg also received
bonuses under the long-term cash bonus plan for the 1996 through 1998
performance period of 128% of their salaries. These bonuses were based on
the Company's having achieved a 1.8% average annual increase in the cash
operating profit over the amount budgeted for the performance period.
- Consistent with the Committee's belief that significant stock ownership
by senior officers is important to the growth in share-owner value, the
Committee granted 600,000 stock options to Mr. Schimberg on the date he
assumed responsibilities as the Company's Chief Executive Officer. Mr.
Schimberg received a grant that is divided into five subgrants, with the
exercise price of each subgrant set so that it represents an additional
15% increase in the fair market value of Company Stock. The exercise
prices are based on the fair market value of Company Stock on April 17,
1998. One-half of each subgrant vests on April 1, 2000. The remainder of
each subgrant vests in three equal installments on the next three
anniversaries, so long as Mr. Schimberg is at that time either an
employee or consultant to the Company or The Coca-Cola Company. The
Committee did not grant stock options to Mr. Johnston in 1998 because he
had received a multiple-year grant in 1996.
SECTION 162(M) OF THE INTERNAL REVENUE CODE. Section 162(m) of the
Internal Revenue Code generally disallows a tax deduction to public corporations
for compensation over $1,000,000 paid for any fiscal year to the corporation's
chief executive officer and the four other most highly compensated executive
officers. However, compensation that is "performance-based" is exempt from this
limit on deductibility if it satisfies certain
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<PAGE> 28
requirements of Section 162(m). Therefore, the Committee has designed the annual
cash bonus program, the long-term cash bonus program and the stock option grants
to qualify as performance-based compensation under Section 162(m).
For 1999, the Committee approved the Executive Management Incentive Plan
(Effective January 1, 1999), the Long-Term Incentive Plan (Effective January 1,
1999), and the 1999 Stock Option Plan. The Board of Directors has adopted these
plans and directed that they be submitted to the Company's share owners for
approval. The Committee intends for the compensation paid to officers covered by
Section 162(m) to satisfy the requirements of performance-based compensation.
The Company will not make any awards under these plans, therefore, unless the
share owners approve them.
John L. Clendenin, Chairman
J. Trevor Eyton
Claus M. Halle
Robert A. Keller
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COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
A line graph presentation appears below, showing a five-year comparison of
the cumulative total return on Company 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 The Coca-Cola Company, PepsiCo, Inc., Coca-Cola Bottling Co.
Consolidated, Cadbury Beverages plc and Whitman Corporation. The graph assumes
$100 invested on December 31, 1993, in Company Stock and in each index, with the
subsequent reinvestment of dividends on a quarterly basis.
COMPARISON OF FIVE-YEAR CUMULATIVE RETURNS AMONG
COMPANY, PEER GROUP INDEX AND S&P 500 INDEX
[GRAPH]
<TABLE>
<CAPTION>
Date CCE Peer Group S&P 500
- -------- ------- ---------- -------
<S> <C> <C> <C>
12/31/93 $100.00 $100.00 $100.00
12/31/94 118.36 106.74 101.32
12/31/95 177.08 158.12 139.37
12/31/96 320.40 204.75 171.35
12/31/97 706.97 265.66 228.50
12/31/98 713.85 287.00 293.79
</TABLE>
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. The Coca-Cola Company remains the largest share owner of the
Company, owning as of February 26, 1999, directly and indirectly through its
subsidiaries, 168,956,718 shares of Company Stock, representing approximately
40% of the outstanding Company Stock. 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.
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<PAGE> 30
AGREEMENTS AND TRANSACTIONS WITH THE COCA-COLA COMPANY
The Company and The Coca-Cola Company have entered into 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 1998 are described below.
BEVERAGE AGREEMENTS AND PURCHASES OF FINISHED PRODUCT. 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 beverage agreements with The
Coca-Cola Company. These agreements give the Company the right to produce and
market beverage products of The Coca-Cola Company in bottles and cans in
specified territories. The beverage agreements 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 or fountain syrup for sale within its
territories.
During 1998, the Company purchased from The Coca-Cola Company approximately
$3.4 billion of syrups, concentrates, and finished product under the beverage
agreements and other agreements relating to fountain syrup, net of amounts paid
by The Coca-Cola Company to the Company to settle obligations upon the amendment
of certain agreements.
PURCHASE OF FINISHED PRODUCT FROM JOINT VENTURE. The Company purchases
finished product from Coca-Cola Nestle Refreshments Company, USA, a joint
venture between The Coca-Cola Company and Nestle S.A. During 1998, total
payments to The Coca-Cola Company, for the benefit of the joint venture, were
approximately $26.1 million.
MANAGEMENT SERVICES. During 1998, the Company charged The Coca-Cola
Company approximately $5.6 million for management fees, manufacturing expenses,
rent, and other miscellaneous expenses associated with the Company's management
of a syrup plant in Eagan, Minnesota.
DISPENSING EQUIPMENT. During 1998, The Coca-Cola Company reimbursed the
Company approximately $36 million for the cost of parts and labor in connection
with repairs on cooler, dispensing, or post-mix equipment owned by The Coca-Cola
Company.
LEASE OF OFFICE SPACE. The Company's Belgian offices occupy approximately
39,000 square feet of office space leased from The Coca-Cola Company. In 1998,
the Company incurred approximately $1 million in rental and related charges. The
Coca-Cola Company paid the Company approximately $2.8 million for rental and
related charges for real property leased from the Company in the United States,
Canada, France, and the Netherlands.
POINT-OF-SALE EXPENSES. The Company purchases point-of-sale and other
advertising items from The Coca-Cola Company. In 1998, the Company paid The
Coca-Cola Company approximately $11.3 million for such items and will continue
to purchase such materials in 1999.
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SWEETENER REQUIREMENTS AGREEMENT. The Company and The Coca-Cola Company
are parties to a sweetener requirements agreement for the purchase by the
Company of substantially all of its requirements for sweetener in the United
States. The amount paid by the Company to The Coca-Cola Company under this
agreement during 1998 totaled approximately $252 million. This agreement runs
through 2002.
SALES OF SYRUPS, BOTTLE AND CAN PRODUCTS AND 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 addition to the fountain syrup sales, the Company 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 1998, the amounts
paid by The Coca-Cola Company to the Company for fountain syrups, bottle and can
beverage products, and delivery, billing and collection totaled approximately
$383 million.
MARKETING AND OTHER SUPPORT ARRANGEMENTS. For 1998, total direct marketing
support paid or payable to the Company by The Coca-Cola Company, or on behalf of
the Company by The Coca-Cola Company, approximated $899 million. Pursuant to
cooperative advertising and trade arrangements with The Coca-Cola Company, the
Company paid The Coca-Cola Company approximately $173 million for local media
and marketing 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 beverage agreements
similar to those of the Company bottlers. In addition, funding for costs
associated with market or infrastructure development paid or payable to the
Company by The Coca-Cola Company approximated $324 million.
Additionally, the Company and Coca-Cola Bottling Co. Consolidated, a
bottler in which the Company and The Coca-Cola Company own equity interests,
bought from and sold to each other finished beverage products. 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 1998, the Company's sales to that bottler totaled
approximately $15.9 million and purchases were approximately $23.2 million. The
Company expects that additional sales and purchases will occur in 1999.
RELATIONSHIPS AND TRANSACTIONS WITH MANAGEMENT AND OTHERS
In 1992, the Company made a relocation loan to Gary P. Schroeder, Senior
Vice President and Western North America Group President, in the amount of
$200,000. In 1992, the Company made a relocation loan to Patrick J. Mannelly,
Vice President Finance and Administration, in the amount of $317,500. The loans,
which are generally on the same terms as other relocation loans made by the
Company are secured by second mortgages on the residences, do not accrue
interest, and do not become due until either executive officer leaves the
Company or sells the residence. Upon the sale of the residence,
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<PAGE> 32
the Company will share in any appreciation in price. The original principal
amounts of both loans remain outstanding.
The Company paid approximately $85,000 in rental and associated charges in
1998 to Messrs. Johnston and Summerfield K. Johnston III, Senior Vice President
and President, Eastern North America Group, for the Company's use of certain
facilities owned by them.
Jean-Claude Killy, a member of the Company's Board of Directors, entered
into an agreement in 1993 with the Company's French bottler under which the
bottler pays him approximately $50,000 per year for consulting services and the
use of his name and likeness. This agreement expired December 31, 1998.
Additionally, Mr. Killy had a consulting agreement with an affiliate of The
Coca-Cola Company obligating Mr. Killy to provide consultation, assistance and
reports on the beverage business in Europe, Latin America and Southeast Asia.
The Company's French bottler reimbursed The Coca-Cola Company for half of the
amounts due to Mr. Killy under this agreement. In 1998, the Company's
reimbursement under this agreement was approximately $274,000. This agreement
expired December 31, 1998.
2. APPROVAL OF THE 1999 STOCK OPTION PLAN
The Board of Directors of the Company has adopted the 1999 Stock Option
Plan and directed that it be submitted to the share owners for their approval at
the annual meeting. The Option Plan will become effective only upon the approval
of the Company's share owners. The purpose of the Option Plan is to align the
financial interests of the Company's officers and other key employees with those
of the share owners by encouraging and enabling the acquisition of a financial
interest in the Company. The following summary describes the Option Plan, the
full text of which is attached as Exhibit A.
The total number of shares of Company Stock that may be issued upon
exercise of options granted under the 1999 Option Plan may not exceed 20,000,000
shares. Options may be granted to executive officers, employees in executive
positions, and other management employees of the Company and its subsidiaries.
Nonemployee officers and consultants are also eligible to receive grants under
the Option Plan. No person will be granted options to acquire more than 20
percent of the number of shares authorized for issuance. Approximately 4,800
employees and officers of the Company and its subsidiaries are currently
eligible to participate.
The Option Plan will be administered by the Compensation Committee of the
Board of Directors. At least two members who are both "outside directors" within
the meaning of Section 162(m) of the Internal Revenue Code and "nonemployee
directors" within the meaning of Rule 16b-3 under the Securities Exchange Act of
1934 will serve on the committee. The committee will determine the officers and
employees to whom grants are made, the number of shares subject to each option,
and the terms of each grant. The committee may, however, delegate the authority
to make option grants to the Chief Executive Officer unless such delegation
would jeopardize the benefits of complying with Rule 16b-3 under the Securities
Exchange Act of 1934 or Section 162(m) of the Internal Revenue Code.
Options granted under the 1999 Option Plan must have an exercise price of
at least 100% of the fair market value of the Company Stock on the date of
grant. Options granted under the Option Plan will become exercisable upon
satisfaction of conditions established by the committee and expire ten years
from the date of grant. The committee may extend the duration of any option for
a period of up to one year without changing the exercise
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<PAGE> 33
price of the option. The committee may permit an optionee to surrender and
exercise options for cancellation, receiving in exchange either shares of
Company Stock, a new option, or both.
Options granted under the 1999 Option Plan may be transferred by will, by
the laws of descent and distribution, or in compliance with a domestic relations
order issued by court. Optionees may transfer options to an immediate family
member, which includes only the optionee's spouse, child, grandchild, parent, or
a trust established for the benefit of such family members. The Compensation
Committee will establish, from time to time, the conditions under which
optionees may transfer options to immediate family members.
Conditioned on the approval of the Option Plan by share owners, the
Compensation Committee has granted to executives options with exercise prices
higher than the fair market value of the Company Stock on the date of grant. The
fair market value of the Company Stock on January 4, 1999, the date of grant,
was $35.0625. Each executive's grant is divided into five equal subgrants. The
exercise price of the first subgrant is 15% higher than the fair market value of
the Company Stock on the date of grant, and the exercise price of each
successive subgrant is 15% higher than the preceding subgrant. Specifically, the
exercise prices of the five subgrants are $40.3218, $46.3700, $53.3255,
$61.3243, and $70.5229.
One-third of the executive's grant becomes exercisable on each of the first
three anniversaries of the date of grant. If, however, an executive retires from
the Company or a related company on or after reaching 65 years of age with at
least ten years of service, dies, or becomes disabled, his or her options become
immediately vested. Following an optionee's termination because of retirement,
death, or disability, any vested options remain exercisable for 36 months from
the date of the termination. If an optionee terminates for any other reason,
vested options will only remain exercisable for six months. If an optionee
leaves the employment of the Company to become an employee of a related company,
the optionee is treated as continuously employed by the Company for purposes of
satisfying any service-related vesting conditions and extending the period for
exercising options. A "related company" includes The Coca-Cola Company or any
company in which The Coca-Cola Company owns at least 25% of the voting stock and
capital if such company provides for the continuation of certain employee
benefits upon the participant's immediate employment and the Company approves
the subsequent employment.
The Board of Directors or the Compensation Committee may terminate,
suspend, or amend the Option Plan at any time without the approval of share
owners unless such approval would be required to retain the benefits of Section
162(m) of the Internal Revenue Code. No such amendment, suspension or
termination will, however, affect participant's right under outstanding options
unless the committee determines that the change is in the best interest of all
optionees.
The committee, subject to approval of the Option Plan by the share owners,
has granted options as outlined in the table titled "New Plan Benefits" in this
proxy statement.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of the Company recommends that you vote FOR the
proposal to adopt the 1999 Stock Option Plan.
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<PAGE> 34
3. APPROVAL OF THE LONG-TERM INCENTIVE PLAN
(EFFECTIVE JANUARY 1, 1999)
The Board of Directors of the Company has adopted the Long-Term Incentive
Plan (Effective January 1, 1999) and directed that it be submitted to the share
owners for their approval at the annual meeting. The Long-Term Incentive Plan
will become effective only upon the approval by the Company's share owners. The
purpose of the Long-Term Incentive Plan is to provide incentives to key
management employees to meet and exceed certain business goals. The following
summary describes the Long-Term Incentive Plan, the text of which is attached as
Exhibit B.
Executive officers, employees in executive positions and certain senior
staff of the Company and its subsidiaries may participate in the Long-Term
Incentive Plan. Approximately 2,800 employees are currently eligible to
participate in this plan.
The Long-Term Incentive Plan will be administered by the Compensation
Committee of the Board of Directors. No fewer than two members who are "outside
directors," within the meaning of Section 162(m) of the Internal Revenue Code,
will serve on the committee. The committee may interpret provisions of the
Long-Term Incentive Plan.
The Company has designed the Long-Term Incentive Plan so that the
compensation earned by participants will be "performance-based" within the
meaning of Section 162(m) of the Internal Revenue Code. Cash awards made under
the Long-Term Incentive Plan will only be paid if specific performance goals
related to increases in the cash operating profit of the Company are attained.
These performance goals relate to any period of three calendar years the
committee designates as a "performance period." Award levels are based on a
participant's position and stated as a percentage of the participant's average
annual base salary during the performance period. The plan provides, however,
that the average annual base salary used to compute an award cannot be more than
133 1/3% of the base salary in effect on the first day of any performance
period. The maximum award level under the Long-Term Incentive Plan is 160% of
the participant's average annual base salary.
The maximum amount of compensation that can be earned by any individual
under the Long-Term Incentive Plan would be payable to Henry A. Schimberg
because it would be based on the highest award level of 160% of his average
annual base salary. If the maximum performance goals were met over the
three-year period beginning January 1, 1999 and Mr. Schimberg's base salary
increased by the maximum percentage considered under the plan, he could earn
$2,591,935 for the performance period of 1999 through 2001. With respect to the
past three completed performance periods of 1994-1996, 1995-1997, and 1996-1998,
however, the awards paid to the Chief Executive Officer of the Company have
averaged $846,750. The awards for the majority of the participants under the
Long-Term Incentive Plan would be much lower.
The Compensation Committee may not increase awards to participants or pay
awards if the cash operating profit goals are not met. However, the committee
may reduce or eliminate any award under the plan.
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<PAGE> 35
The Long-Term Incentive Plan provides that prorated awards may be paid if,
during the performance period one of the following circumstances occurs:
(i) A participant transfers within the Company or a subsidiary to a
position that is ineligible for participation or leaves the Company and
obtains employment with a related company;
(ii) A participant dies, retires, or becomes disabled;
(iii) An individual is hired or promoted into a position eligible for
participation in the plan; or
(iv) A participant transfers from one eligible position to another.
A "related company" includes The Coca-Cola Company and any company in which The
Coca-Cola Company owns at least 25% of the voting stock or capital if such
company provides for the continuation of certain employee benefits upon the
participant's immediate employment with such company and if the Company approves
the subsequent employment.
The Board of Directors or the committee may terminate, suspend, or amend
the Long-Term Incentive Plan at any time. No such action shall be taken,
however, without the approval of the share owners unless the committee
determines that the approval of the share owners would not be necessary to
attain the benefits of Section 162(m) of the Internal Revenue Code.
Subject to the approval of the Long-Term Incentive Plan by the share
owners, the table titled "New Plan Benefits" in this proxy statement illustrates
a pro forma computation of amounts that could become payable for the performance
period of 1999 through 2001. This pro forma calculation uses assumptions based
on the Company's past cash operating profit performance rather than predictions
about future performance.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of the Company recommends that you vote FOR the
proposal to adopt the Long-Term Incentive Plan (Effective January 1, 1999).
4. APPROVAL OF THE EXECUTIVE MANAGEMENT INCENTIVE PLAN
(EFFECTIVE JANUARY 1, 1999)
The Company's Board of Directors has adopted the Executive Management
Incentive Plan (Effective January 1, 1999) and directed that it be submitted to
the share owners for their approval at the annual meeting. The Executive
Management Incentive Plan will become effective only upon the approval of the
Company's share owners. The purpose of the Executive Management Incentive Plan
is to provide an incentive to the Company's executive officers and managers to
meet or exceed the Company's business goals. The following summary describes the
Executive Management Incentive Plan, the full text of which is attached as
Exhibit C.
Executive officers and employees in executive positions may participate in
the Executive Management Incentive Plan. Approximately 180 officers and
employees of the Company and its subsidiaries are currently eligible to
participate.
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<PAGE> 36
The Executive Management Incentive Plan will be administered by the
Compensation Committee of the Board of Directors. No fewer than two members who
are "outside directors," within the meaning of Section 162(m) of the Internal
Revenue Code, will serve on the committee. The committee may interpret the
provisions of the Executive Management Incentive Plan.
The Company has designed the Executive Management Incentive Plan so that
the compensation earned by participants will be "performance-based" within the
meaning of Section 162(m) of the Internal Revenue Code. Cash awards made under
the Executive Management Incentive Plan will only be paid if the budgeted cash
operating profit of the participant's business unit is attained. The relevant
business units under the plan are company-wide, group, region (in Europe only),
and division. The period during which the cash operating profit performance goal
is measured begins on January 1 of any calendar year that the committee
designates as a performance period. Award levels are stated as a percentage of
the participant's annual base salary. The base salary used to compute an award
cannot, however, be more than 110% of the participant's base salary on the
preceding January 1. The maximum award level is 115% of the base salary in
effect on December 31 of a performance period.
The maximum amount of compensation that can be earned by any individual
under the Executive Management Incentive Plan would be payable to Henry A.
Schimberg because it would be based upon the highest award level of 115% of his
annual base salary. If the maximum performance goal were met for the 1999
performance period, Mr. Schimberg could earn $1,536,975 under the plan. With
respect to the past three performance periods, however, awards to the Chief
Executive Officer of the Company have averaged only $859,256. The award payable
to the majority of participants would be much lower.
The Compensation Committee may not increase awards to participants or pay
awards if the cash operating profit goals are not met. However, the committee
may reduce or eliminate any award.
The Executive Management Incentive Plan provides that prorated awards may
be paid if, during the performance period, one of the following circumstances
occurs:
(i) A participant transfers within the Company or a subsidiary to a
position that is ineligible for participation or leaves the Company and
obtains employment with a related company;
(ii) A participant dies, retires, or becomes disabled;
(iii) An individual is hired or promoted into a position eligible for
participation in the plan; or
(iv) A participant transfers from one eligible position to another.
A "related company" includes The Coca-Cola Company and any company in which The
Coca-Cola Company owns at least 25% of the voting stock or capital if such
company provides for the continuation of certain employee benefits upon the
participant's immediate employment with such company and if the Company approves
the subsequent employment.
The Board of Directors or the committee may terminate, suspend, or amend
the Executive Management Incentive Plan at any time. No such action shall be
taken,
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<PAGE> 37
however, without the approval of the share owners unless the approval of the
share owners would not be necessary to attain the benefits of Section 162(m) of
the Internal Revenue Code.
Subject to the approval of the Executive Management Incentive Plan by the
share owners, the table titled "New Plan Benefits" in this proxy statement
illustrates a pro forma computation of amounts that could become payable for the
1999 performance period. The pro forma calculation in the "New Plan Benefits"
table in this proxy statement uses assumptions based on the Company's cash
operating profit performance in 1998 rather than predictions about 1999
performance.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of the Company recommends that you vote FOR the
proposal to adopt the Executive Management Incentive Plan (Effective January 1,
1999).
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<PAGE> 38
NEW PLAN BENEFITS
The following table shows: (i) grants of options under the Company's 1999
Stock Option Plan; (ii) pro forma amounts which would be earned for the
1999-2001 period under the Long-Term Incentive Plan (Effective January 1, 1999);
and (iii) pro forma amounts which would be earned for 1999 under the Executive
Management Incentive Plan (Effective January 1, 1999). The table assumes
approval of each plan by the share owners and, in the case of the Executive
Management Incentive Plan and the Long-Term Incentive Plan, the amounts shown
are further subject to the assumptions noted in the footnotes.
<TABLE>
<CAPTION>
NUMBER PRO FORMA 1999 BONUS
OF SHARES PAYOUT UNDER
DOLLAR SUBJECT UNDER LONG- EXECUTIVE
VALUE TO TERM MANAGEMENT
OF OPTIONS INCENTIVE INCENTIVE
NAME AND POSITION OPTIONS(1) GRANTED PLAN(2) PLAN(3)
- ----------------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Summerfield K. Johnston, Jr...... 0 $ 1,179,977 $ 467,105
Chairman of the Board
Henry A. Schimberg............... 0 $ 1,311,808 $ 793,615
President and Chief Executive
Officer
John R. Alm...................... 70,000 $ 441,664 $ 293,035
Executive Vice President and
Chief Financial Officer
Lowry F. Kline................... 70,000 $ 306,528 $ 234,428
Executive Vice President and
General Counsel
G. David Van Houten, Jr. ........ 70,000 $ 303,232 $ 238,960
Senior Vice President
Executive Group.................. 312,000 $ 1,318,598 $ 862,635
Non-Executive Director Group..... 46,750 N/A N/A
Non-Executive Officer Employee
Group.......................... 5,537,100 $29,330,120 $60,283,145
</TABLE>
- -------------------------
(1) The actual value an optionee may realize will depend on the excess of the
stock price over the exercise price on the date the vested options are
exercised.
(2) Awards under the Long-Term Incentive Plan would not be determined until 2002
when the results of the three-year performance period (1999 through 2001)
are available. The table discloses pro forma payments as if the terms of the
Long-Term Incentive Plan applied to the financial results for the period
1996 through 1998 and assumes a 3% annual salary increase for salaries of
all participants over salaries at December 31, 1998.
(3) Awards under the Executive Management Incentive Plan would not be determined
until 2000 because they would be based upon financial results for 1999. The
table discloses 1999 pro forma bonuses as if the terms of the Executive
Management Incentive Plan applied to 1998 financial results and assumes a 3%
increase in salaries of all participants over salaries at December 31, 1998.
35
<PAGE> 39
5. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company has followed the recommendation of
its Audit Committee and appointed the firm of Ernst & Young LLP as independent
auditors of the Company for the fiscal year ending December 31, 1999. This
appointment is subject to your ratification at the annual meeting. Ernst & Young
LLP has served as independent auditors of the Company since 1986, and management
of the Company considers the firm to be well qualified. Ernst & Young LLP has
advised the Company that neither the firm nor any member of the firm has any
direct or indirect financial interest, in any capacity, in the Company or any of
its subsidiaries.
Representatives of Ernst & Young LLP will have the opportunity to make a
statement at the annual meeting, if they desire to do so, and will be otherwise
available at the meeting to respond to appropriate questions from the share
owners.
If the share owners do not ratify this appointment of Ernst & Young LLP, it
will be reconsidered by the Board.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of the Company recommends that you vote FOR the
proposal to ratify the appointment of Ernst & Young LLP as Independent Auditors
of the Company for the 1999 Fiscal Year.
6. SHARE-OWNER PROPOSAL
The New York City Employees' Retirement System, which owns 418,002 shares
of Company Stock, has notified the Company that it intends to submit the
following proposal at the Annual Meeting:
Creation of an Independent Nominating Committee
Submitted on behalf of the New York City Employees' Retirement System by
Alan G. Hevesi, 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
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<PAGE> 40
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 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) is not remunerated by the company for personal services,
consisting of legal, accounting, investment banking, and management consulting
services whether or not as an employee, for a corporation, division, or similar
organization that actually provides the personal services, nor an entity from
which the company derives more than 50 percent of its gross revenues; (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) is not part of an interlocking directorate in which the CEO or other
executive officers of the corporation serves on the board of another corporation
that employs the director.
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."
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of the Company recommends that you vote AGAINST the
proposal to establish an independent nominating committee.
This is substantially the same proposal submitted by this proponent and
turned down by the share owners every year since 1994.
The Board of Directors continues to be opposed to the proposal, because it
believes there is no tenable link between the composition of a nominating
committee and the creation of share-owner value.
The Board's existing Committee on Directors is currently composed of five
members. Two of the members would be barred from a nominating committee that was
constituted in line with the proposal: Joseph R. Gladden, Jr., because he is an
employee of The Coca-Cola Company, a significant supplier, and Summerfield K.
Johnston, Jr., because he is an employee of the Company. Both The Coca-Cola
Company and Mr. Johnston are significant share owners of the Company, and the
effect of the proposal would be to bar significant share owners from being
represented on the committee charged with evaluating potential directors. This
is a result which the Board believes to be inappropriate and unlikely to result
in any benefit to the share owners of the Company generally.
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<PAGE> 41
SHARE-OWNER PROPOSALS FOR 2000 ANNUAL MEETING
If you intend to submit either a nomination to the Board of Directors or a
share-owner proposal and request its inclusion in the 2000 proxy statement and
form of proxy, those submissions must be in writing and received by the Company
no later than November 12, 1999.
If we have not received your submissions by that date, the nominations and
share-owner proposals that are otherwise appropriate for consideration by the
share owners may nevertheless be presented to the share owners at the 2000
annual meeting even if they do not appear in the proxy statement, but only if
they have been submitted to the Company in writing in accordance with Article I,
Section 10 of the Company's bylaws. The bylaws require submissions to be made in
writing and received by us not less than 30 days and not more than 60 days prior
to the 2000 annual meeting. Submissions should be sent to the Company by
certified mail return receipt requested, at Post Office Box 723040, Atlanta,
Georgia 31139-0040.
OTHER MATTERS
We do not know of anything else that will come before the annual meeting,
including any adjournments of it, that has not been discussed in this proxy
statement. If other matters properly come before the meeting, the persons named
in the proxy card will vote your Company Shares in their discretion.
J. GUY BEATTY, JR.
Secretary
Atlanta, Georgia
March 18, 1999
-------------------------
THE COMPANY'S 1998 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.
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<PAGE> 42
Coca-Cola Enterprises Inc. Logo EXHIBIT A
1999 STOCK OPTION PLAN
SECTION 1. PURPOSE
The purpose of the 1999 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 "nonemployee directors" 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) of the Internal Revenue Code of 1986, as amended
("Internal Revenue Code"), and the regulations thereunder.
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
to the Chief Executive Officer the authority to make awards under the Plan, to
extend the period for exercise of Options awarded or to make such other
determinations that the Committee is authorized to make under the Plan, unless
such delegation would jeopardize the benefits of Section 162(m) of the Internal
Revenue Code or Rule 16b-3 under the Securities and Exchange Act of 1934.
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
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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. 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 shall not exceed 20,000,000. 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 in the senior
executive band, and in the executive band, branch managers, sales center
managers, other officers and management employees of the Company and its
Subsidiaries, as well as a consultant or other person providing key services to
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 such
Option.
No person shall be granted the right to acquire pursuant to Options granted
under the Plan more than 20% 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. 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.
(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 other means, including delivery
of shares of Stock owned by the optionee.
(c) DURATION OF OPTIONS. Subject to the terms of the Option, the duration
of Options shall be 10 years from date of grant.
(d) OTHER TERMS AND CONDITIONS. Options may contain such other provisions,
as the Committee shall determine appropriate from time to time, including
provisions related to the vesting of Options and the time periods within which
an Option shall be exercisable. The grant of an Option to any officer or
employee shall not affect in any way the right of
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<PAGE> 44
the Company and any Subsidiary to terminate the relationship between the Company
or Subsidiary and the optionee.
(e) OPTIONS GRANTED TO INTERNATIONAL OPTIONEES. Options granted to an
optionee who is subject to the laws of a country other than the United States of
America may contain terms and conditions inconsistent with provisions of the
Plan (except those necessary to retain the benefits of Section 162(m) of the
Internal Revenue Code and Rule 16b-3 of the Securities Exchange Act of 1934), or
may be granted under such supplemental documents, as required or appropriate
under such country's laws.
(f) WITHHOLDING OF TAXES. 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 optionee the amount of any federal, state or local taxes
required by law to be withheld with respect to Options granted hereunder or the
Stock acquired pursuant to the exercise of such Options.
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 unless such extension or change
would result in less favorable tax treatment than the optionee would have
received under the original option.
SECTION 8. TRANSFERABILITY OF OPTIONS
An Option shall be transferable by will or by the laws of descent and
distribution or pursuant to a domestic relations order issued by a court of
competent jurisdiction. Further, an Option is transferable to an immediate
family member of the optionee under such terms and conditions as may be
determined, from time to time, by the Committee. For purposes of this Section 8,
an "immediate family member" is defined as the optionee's spouse, child,
grandchild, parent or a trust established for the benefit of such family
members. With respect to any Option transferred pursuant to the terms of this
Section 8, any such Option shall be exercisable only by the designated
transferee or the designated transferee's legal representative.
SECTION 9. EFFECT OF TERMINATION OF EMPLOYMENT
(a) All Options exercisable upon an optionee's termination of employment
(whether due to Committee action or otherwise) or becoming exercisable
thereafter shall expire in accordance with the terms of such Options, unless the
Committee determines otherwise. The Committee, in its sole discretion, may cause
all outstanding Options held by an optionee upon his or her termination of
employment for any reason, including retirement, death, and disability, to
become immediately exercisable.
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<PAGE> 45
(b) For purposes of this Section 9, "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 the terms of the defined benefit pension plan sponsored by the
Company or a Subsidiary in which the optionee participates. If the optionee does
not participate in such a plan, the date shall be determined as if the optionee
participated in the Company's defined benefit plan covering the majority of its
nonbargaining employees in the United States. With respect to nonemployee
officers or consultants, "retirement" means termination, or cessation, of
services at or after age 55. Notwithstanding the foregoing, Options may contain
such other definitions of "retirement," as the Committee determines appropriate.
(c) For purposes of this Section 9, "disability" shall have the same
meaning as the definition "disability" in effect at the time of the
determination in the defined benefit pension plan sponsored by the Company or a
Subsidiary in which the optionee participates. If the optionee does not
participate in such a plan or such plan does not define "disability,"
"disability" shall mean the optionee's inability, by reason of a medically
determinable physical or mental impairment, to engage in any substantial gainful
activity, which condition, in the opinion of a physician approved of by the
Committee, is expected to have a duration of not less than one year.
SECTION 10. NO RIGHTS AS A SHARE OWNER
An optionee or a transferee of an Option 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 (except for stock dividends) 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 acquired 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 or countries
(including tax laws) or to correct any defect or supply any omission or
reconcile any inconsistency in the Plan or in any Option granted thereunder. Any
such action may be taken without the approval of the share owners of the Company
unless the Committee determines that the approval of share
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<PAGE> 46
owners would be necessary to retain the benefits of Section 162(m) of the
Internal Revenue Code.
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 necessary to retain the benefits of Section 162(m)
of the Internal Revenue Code or that it is not adverse to the interest of
holders of outstanding Options.
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, United States of America,
and construed in accordance therewith.
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<PAGE> 47
Coca-Cola Enterprises Inc. EXHIBIT B
LONG-TERM INCENTIVE PLAN
(EFFECTIVE JANUARY 1, 1999)
SECTION 1. PURPOSE
The purpose of the 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) of the
Internal Revenue Code of 1986, as amended (the "Internal Revenue Code")), and
the regulations thereunder.
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 persons who are
executive officers; in the senior executive band; in the executive band;
corporate directors; and, as such positions are defined by the Compensation
Committee, senior staff of the Company and its Subsidiaries ("Participants").
"Subsidiary" shall mean any corporation or other
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<PAGE> 48
business organization in which the Company owns, directly or indirectly, 25% or
more of the voting stock or capital during a Performance Period.
SECTION 4. PERFORMANCE GOAL CRITERIA
Awards made under the Plan shall be paid solely on account of the
attainment of specified increases in cash operating profit ("COP"), as measured
on a corporate-wide basis, over the period of three consecutive calendar years
(the "Performance Period") beginning on January 1 of any year the Compensation
Committee designates as the beginning of a Performance Period for which an Award
shall be made. The Committee shall preestablish the specific COP targets for
each Performance Period in accordance with Section 162(m) of the Internal
Revenue Code and regulations thereunder. 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.
SECTION 5. CALCULATION OF THE AWARD
The Committee shall establish 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
increases in the corporate-wide COP. "Average Annual Base Salary" means the
average of the base salary in effect on the last day of each year of the
three-year Performance Period for which an Award is made. Notwithstanding the
preceding, the Average Annual Base Salary used to calculate an Award paid to a
Participant (under this Section 5 or Section 6) may not exceed such
Participant's annual base salary in effect on January 1 that constitutes the
beginning of the Performance Period for which the Award is being paid, increased
by 33 1/3%. No Award under the Plan shall exceed 160% of a Participant's Average
Annual Base Salary.
SECTION 6. PRORATED AWARDS
(i) If, after the commencement of a Performance Period, an employee is
hired or promoted into a position eligible for participation in the Plan
("Eligible Position"), the employee shall be eligible to receive a prorated
Award for the period during which the Participant was employed in an Eligible
Position. To calculate the Average Annual Base Salary for a prorated Award, each
year's annual base salary shall be prorated based on the period in which the
employee was employed in the Eligible Position.
(ii) If, within a Performance Period, a Participant is transferred from one
Eligible Position to another Eligible Position, the Participant's Award shall be
prorated for the period of time the Participant was employed within each such
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.
(iii) If, within a Performance Period, a Participant transfers from an
Eligible Position to a position ineligible for participation under the Plan, a
prorated Award shall be paid to such Participant for the period of time the
Participant was employed within the Eligible Position. The Participant's annual
base salary in effect on the last day of the Participant's employment in the
Eligible Position shall be included in the calculation of the Participant's
Average Annual Base Salary.
(iv) Prorated Awards under this Section 6 shall not be paid to a
Participant whose employment is terminated prior to the last day of the
Performance Period unless the
B-2
<PAGE> 49
reason for such termination was the Participant's death, disability, or
retirement (as defined in Section 6). A prorated Award paid to a Participant
whose employment is terminated on account of death or disability shall be
calculated based on the increase in COP as of December 31st of the year
preceding the Participant's termination and shall be paid in the year following
such Participant's termination of employment. A prorated Award paid to a
Participant whose employment is terminated on account of retirement shall be
paid in the year following the end of the Performance Period for which the Award
is made, and subject to the Committee's discretion described in Section 7, shall
be calculated on the basis of the increase in COP through the end of the
Performance Period. To determine the Average Annual Base Salary to be used in
calculating a prorated Award under this Section 6(iv), each year's base salary
shall be prorated for the period in which the Participant was employed in an
Eligible Position during the Performance Period.
(v) For purposes of this Section 6:
(a) "Retirement" means 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 the terms of the defined benefit pension plan sponsored by the Company
or a Subsidiary in which the Participant participates. If the Participant
does not participate in such a plan, the date shall be determined as if the
Participant participated in the Company's defined benefit plan covering the
majority of its non-bargaining employees in the United States.
(b) "Disability" shall be determined according to the definition of
"total and permanent disability," in effect at the time of the
determination, in the defined benefit plan sponsored by the Company or a
Subsidiary in which the Participant participates. If the Participant does
not participate in such a plan or such plan does not define "disability,"
"disability" shall mean the Participant's inability, by reason of a
medically determinable physical or mental impairment, to engage in any
substantial gainful activity, which condition, in the opinion of a
physician approved of by the Committee, is expected to have a duration of
not less than one year
(c) "Prorated" means the determination of the amount of an Award for
partial participation in a particular Eligible Position, which amount is
determined according to the nearest number of whole months in which the
Participant was employed in the relevant Eligible Position(s) during the
Performance Period for which the Award is made.
(d) A Participant's employment with the Company or any Subsidiary will
be deemed not to be a termination of employment if the Participant's reason
for termination is due to immediate employment with any other Subsidiary or
any Related Company; however, in such event, the Participant's Award shall
be subject to proration as if the Participant transferred to a position
within the Company that is ineligible for participation in the Plan. The
term "Related Company" 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 if (i)
such company is a party to an active reciprocity agreement with the Company
and (ii) the Company has assented to the Participant's subsequent
employment.
B-3
<PAGE> 50
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 that 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
Prior to payment of an Award, the Committee shall certify in writing that
the performance targets described in Section 4 have, in fact, been satisfied.
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. Such action may be
taken 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) of the Internal Revenue Code.
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.
B-4
<PAGE> 51
Coca-Cola Enterprises Inc. EXHIBIT C
EXECUTIVE MANAGEMENT INCENTIVE PLAN
(EFFECTIVE JANUARY 1, 1999)
SECTION 1. PURPOSE
The purpose of the 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) of the
Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), and the
regulations thereunder.
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 persons who are
executive officers, in the senior executive band, and in the executive band of
the Company and its Subsidiaries ("Participants").
"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 during any Performance Period (as defined).
C-1
<PAGE> 52
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, over a period of a calendar year (the
"Performance Period") designated by the Compensation Committee as a Performance
Period for which an Award shall be made. Awards under the Plan shall be paid
solely on account of the attainment of these targets, which shall be
preestablished in accordance with Section 162(m) of the Internal Revenue Code
and regulations thereunder. For the purposes of the Plan, cash operating profit
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, group, region or division, or as otherwise determined by the
Committee prior to the beginning of the Performance Period.
SECTION 5. CALCULATION OF AWARDS
The Committee shall establish 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. No Award under the Plan shall exceed 115% percent of a Participant's annual
base salary. An Award paid to a Participant shall be calculated using the annual
base salary in effect on December 31 of the year for which the Award is made.
Notwithstanding the preceding sentence, the annual base salary used to calculate
an Award paid to a Participant (under this Section 5 or Section 6) may not
exceed such Participant's annual base salary in effect on January 1 of any
Performance Period for which the Award is made, increased by 10%.
SECTION 6. PRORATED AWARDS
(i) A person hired or promoted into a position identified in Section 3
("Eligible Position") during a Performance Period shall receive a prorated Award
for the period of time the person was employed in an Eligible Position, using
the Participant's base salary in effect on December 31 of the Performance Period
for which the Award is made.
(ii) A Participant who is transferred from one Eligible Position to another
Eligible Position during a Performance Period shall receive an Award that is
prorated for the period of time the Participant was employed within each
Eligible Position, using the Participant's annual base salary in effect on
December 31 of the Performance Period for which the Award is made.
(iii) A Participant who is not employed in an Eligible Position on the last
day of the Performance Period due to the Participant's transfer to a position
with the Company or a Subsidiary that is not an Eligible Position shall receive
an Award that is prorated for the period of time the Participant was employed in
an Eligible Position, using the Participant's annual salary on the last day that
the Participant is employed in that Eligible Position.
(iv) A Participant whose employment with the Company or any Subsidiary
terminates prior to the last day of the Performance Period shall not receive any
Award under the Plan unless the reason for such termination was the
Participant's death, disability, or retirement. In the event a Participant
terminates on account of such circumstances, the Participant shall receive a
prorated Award determined as if the
C-2
<PAGE> 53
Participant transferred to a position within the Company that is ineligible for
participation in the Plan as of the date of such termination.
(v) For purposes of this Section 6:
(a) "Retirement" means 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 the terms of the defined benefit pension plan sponsored by the Company
or a Subsidiary in which the Participant participates. If the Participant
does not participate in such a plan, the date shall be determined as if the
Participant participated in the Company's defined benefit plan covering the
majority of its non-bargaining employees in the United States.
(b) "Disability" shall be determined according to the definition of
"total and permanent disability," in effect at the time of the
determination, in the defined benefit plan sponsored by the Company or a
Subsidiary in which the Participant participates. If the Participant does
not participate in such a plan or such plan does not define "disability,"
"disability" shall mean the Participant's inability, by reason of a
medically determinable physical or mental impairment, to engage in any
substantial gainful activity, which condition, in the opinion of a
physician approved of by the Committee, is expected to have a duration of
not less than one year.
(c) "Prorated" means the determination of the amount of an Award for
partial participation in a particular Eligible Position, which amount is
determined according to the nearest whole number of months in which a
Participant was employed in the relevant Eligible Position(s) during the
Performance Period for which the Award is made.
(d) For purposes of this Section 6, a Participant's employment with
the Company or any Subsidiary will be deemed not to be a termination of
employment if the Participant's reason for termination is due to immediate
employment with any other Subsidiary or any Related Company; however, in
such event, the Participant shall receive a prorated Award as if the
Participant transferred to a position that is not eligible for
participation under the Plan. The term "Related Company" 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 if (i) such company is a party to an active reciprocity
agreement with the Company and (ii) the Company has assented to the
Participant's subsequent employment.
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 that 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.
C-3
<PAGE> 54
SECTION 8. COMMITTEE CERTIFICATION
Prior to payment of an Award, the Committee shall certify in writing that
the performance targets in Section 4 have, in fact, been satisfied.
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. Any such action may
be taken 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) of the Internal Revenue Code.
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-4
<PAGE> 55
(RECYCLED PAPER LOGO)
<PAGE> 56
PROXY
[COCA-COLA ENTERPRISES INC. LOGO]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF COCA-COLA ENTERPRISES INC.
The undersigned hereby (a) appoints J. Guy Beatty, Jr. and Lowry F. Kline, each
as proxies with full power of substitution, to vote all shares of Common Stock
of Coca-Cola Enterprises Inc. owned of record by the undersigned and (b)
directs (i) SunTrust Bank, Atlanta, Trustee under the Coca-Cola Enterprises
Inc. Matched Employee Savings and Investment Plan, and/or (ii) SunTrust Bank,
Atlanta, Trustee under the Lansing Matched Employee Savings and Investment
Plan, and/or (iii) SunTrust Bank, Atlanta, Trustee under the Coca-Cola
Enterprises Savings and Investment Plan for Certain Bargaining Employees,
and/or (iv) Institutional Trust Company, Trustee under The Coca-Cola Bottling
Company of New York, Inc. 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 1999 Annual Meeting
of Share Owners to be held at the Hotel du Pont, 11th and Market Streets,
Wilmington, Delaware, on April 23, 1999 at 10:30 a.m. local time, and any
adjournments thereof, unless otherwise specified herein.
Proposal 1:
Election of Directors, Nominees:
For term to expire at the 2001 Annual Meeting of Share Owners: (1) James E.
Chestnut.
For terms to expire at the 2002 Annual Meeting of Share Owners: (2) John L.
Clendenin, (3) Joseph R. Gladden, Jr., (4) John E. Jacob, (5) Summerfield K.
Johnston, Jr., and (6) Robert A. Keller.
The number appearing before the name of each nominee is for use in Internet
and Telephone voting.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE --------------------
APPROPRIATE BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK SEE REVERSE
ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD SIDE
OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR --------------------
SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
- --------------------------------------------------------------------------------
-- FOLD AND DETACH HERE IF YOU ARE RETURNING YOUR VOTED PROXY CARD BY MAIL. --
A G E N D A
================================================================================
ELECTION OF SIX DIRECTORS
-
APPROVAL OF 1999 STOCK OPTION PLAN
-
APPROVAL OF LONG-TERM INCENTIVE PLAN (EFFECTIVE JANUARY 1, 1999)
-
APPROVAL OF EXECUTIVE MANAGEMENT INCENTIVE PLAN
(EFFECTIVE JANUARY 1, 1999)
-
RATIFICATION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS
-
TRANSACTION OF OTHER BUSINESS, INCLUDING ONE SHARE-OWNER
PROPOSAL, AS MAY COME PROPERLY BEFORE THE MEETING
================================================================================
IF YOU CHOOSE TO VOTE YOUR SHARES OVER THE INTERNET OR TELEPHONE,
THERE IS NO NEED TO MAIL BACK YOUR PROXY CARD.
THE INTERNET AND TELEPHONE VOTING FACILITIES WILL CLOSE AT 8:00 A.M.
ON APRIL 23, 1999.
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.
- --------------------------------------------------------------------------------
-- ADMISSION TICKET ON REVERSE. PLEASE BRING THIS TICKET WITH YOU
IF ATTENDING THE ANNUAL MEETING. --
D I R E C T I O N S T O H O T E L D U P O N T :
<TABLE>
<S> <C>
FROM BALTIMORE, THE DELAWARE MEMORIAL BRIDGE, or FROM COMMODORE BARRY BRIDGE (NEW JERSEY), or
DOWNSTATE DELAWARE: PHILADELPHIA ON I-95 SOUTH, OR I-478 (THE
Take I-95 North to Wilmington, Exit 7 marked BLUE ROUTE), or ROUTE 202 (IF TRAVELING
"Route 52, Delaware Avenue." From right lane ROUTE 202, FOLLOWING ROUTE 202 TO INTERSECTION
take Exit 7 onto Adams Street. At the third WITH I-95 SOUTH):
traffic light on Adams Street, turn right onto Follow I-95 South to Exit 7A marked "Route 52,
11th Street. At Delaware Avenue intersection South Delaware Avenue" (11th Street). Follow
stay left, continuing on 11th Street. Follow exit road (11th Street) to intersection with
11th Street through four traffic lights. Delaware Avenue marked "52 South, Business
Hotel du Pont is on the right. District." At Delaware Avenue stay left,
continuing on 11th Street. Follow 11th Street
through four traffic lights. Hotel du Pont
is on the right.
</TABLE>
<PAGE> 57
[X] PLEASE MARK YOUR VOTES 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, AND 5, AGAINST PROPOSAL 6, 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, AND 5.
- --------------------------------------------------------------------------------
1. Election of Directors
(See reverse)
FOR [ ] WITHHELD [ ]
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------
2. To approve the Company's 1999 Stock Option Plan;
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To approve the Company's Long-Term Incentive Plan (Effective January 1,
1999);
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. To approve the Company's Executive Management Incentive Plan (Effective
January 1, 1999);
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. To ratify the appointment of Ernst & Young LLP as independent auditors of the
Company for the 1999 fiscal year; and
FOR [ ] AGAINST [ ] ABSTAIN [ ]
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 6.
- --------------------------------------------------------------------------------
6. Share-Owner Proposal to create an independent nominating committee.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
- --------------------------------------------------------------------------------
If you plan to attend the Annual Meeting, please mark this box. [ ]
To discontinue Annual Report mailing (for multiple account holders only), mark
this box [ ]
If you would be interested in receiving future proxy materials electronically,
mark this box [ ]
SIGNATURE(S) DATE
--------------------------------------------- ------------------
Please sign exactly as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
your full title as such.
- FOLD AND DETACH HERE IF YOU ARE RETURNING YOUR VOTED PROXY CARD BY MAIL -
- CONTROL NUMBER -
VOTE YOUR PROXY OVER THE INTERNET OR BY TELEPHONE.
SHARE OWNERS may now choose one of three methods to vote during the 1999 proxy
season: 1. Vote by Internet, 2. Vote by Telephone, or 3. Vote by mailing the
above proxy card. Using either Internet or Telephone voting will eliminate the
need for you to return the proxy card and will help to reduce expenses for
Coca-Cola Enterprises. For electronic (Internet/Telephone) voting, you must
enter the Control Number printed in the box above, just below the perforation,
to access the system, Your electronic vote (Internet/Telephone) authorizes the
named proxies in the same manner as if you marked, signed, dated, and mailed
the proxy card.
TO VOTE BY INTERNET:
1. Log on to the Internet and go to the web site HTTP://WWW.VOTE-BY-NET.COM, 7
days a week, 24 hours a day.
2. Follow the instructions that appear on your computer screen. You must enter
the Control Number printed in the above box to vote by Internet.
TO VOTE BY TELEPHONE:
1. Call TOLL-FREE on a touch-tone Telephone 1-800-OK2-VOTE (1-800-652-8683)
(United States and Canada only), 7 days a week, 24 hours a day.
2. Follow the instructions to vote your shares. You must enter the Control
Number printed in the above box to vote by Telephone.
If you choose to vote your shares by Internet or by Telephone,
there is no need to mail your proxy card.
The Internet and Telephone voting facilities will close at 8:00 a.m.
on April 23, 1999.
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.
- --------------------------------------------------------------------------------
- BRING THIS ADMISSION TICKET WITH YOU IF ATTENDING THE ANNUAL MEETING -
ADMISSION TICKET
[COCA-COLA ENTERPRISE INC. LOGO]
Annual Meeting of Share Owners
Friday, April, 23, 1999, 10:30 a.m. local time
Hotel du Pont
11th and Market Street, Wilmington, Delaware
