Annual board elections for Coke

SOFT drinks giant Coca-Cola is to put its board directors up for election every year, in what has been billed as a major breakthrough for shareholder democracy.

Until now, election to the board has been staggered, with only a third of directors standing for reelection every three years.

Coke's decision is likely to encourage a growing number of companies that are considering the move after years of campaigning by institutional investors, which want to see boardrooms made more accountable.

The company gave no reasons for the decision. In the past Coke and other big US corporations have said staggered elections were necessary to ensure there were always experienced members of the board.

Shareholder activists say, however, that annual elections make the board more accountable.

Earlier this week, Procter & Gamble shareholders voted to change a similar three-year staggered system to annual elections. The consumer products giant is considering whether to adopt the measure.

P&G chairman and chief executive-AG Lafley, said the proposals were merely 'advisory in nature' but the board would take account of the shareholder views.

Pressure for annual elections is growing, says the Investor Responsibility Research Centre in New York. Carol Bowie, the centre's director of governance research, said proposals on certain issues, including annual election of directors and eliminating 'poison pill' anti-takeover defences, have been averaging more than 50% support.

Boeing is expected to reach a decision soon on a shareholder proposal to introduce annual elections, while Home Depot has already adopted the measure.

Former New York Stock Exchange director H Carl McCall, in his recent resignation letter, called for annual election and evaluation of directors as part of widespread NYSE reforms.

Earlier, Coke reported a 12% jump in third-quarter net profit to $1.22bn (£730m) due to strong sales in western Europe, lower taxes and a weaker dollar.

But sales were sluggish for its core brands in North America and Japan, two of its largest markets.

Chief financial officer Gary Fayard said earnings in 2004 would get another lift if current trends in the dollar's value against the euro and yen continued.

The soft drinks maker's volume sales in Asia, one of its brightest spots last year, grew only 1% due in part to declines in Japan. The company defended its performance. 'Japan is not imploding,' president and chief operating officer Steve Heyer said. 'We're pleased, but we're not satisfied. We still have some opportunities for improvement.'