1. Interview with Kathleen Cole.
2. Interviews with Jamie Dimon, Jeffrey Immelt.
3. Berkshire Hathaway 2004 chairman’s letter, annual report.
4. Betsy Morris, “The Real Story,” Fortune, May 31, 2004.
5. Investors felt that Coke should move aggressively into noncarbonated drinks, but the company insisted that international growth in carbonated beverages—the highest-margin product—was the only way to go. At $50, the stock was also still expensive at 24x earnings and 8.6x book value.
6. Coca-Cola Enterprises took a $103 million charge for the European recall during Ivester’s reign. In 1999, Daft had to report the first loss in a decade and take a total of $1.6 billion of charges. Then, in 1Q2000, Daft reported Coke’s second quarterly loss in a row—charges for massive restructuring/layoffs and a write-down of excess bottling capacity in India. In 2000, Coke took more charges and cut its projection for annual worldwide unit case volume growth to 5% to 6%, from 7% to 8%. Coke revised its targets again after 9/11.
7. Suppose Berkshire demanded a special deal. On $120 million of purchases, this might be worth, say, a dime a share, estimating liberally. Berkshire earned $5,309 per A equivalent share in 2003. (The company doesn’t present cents per share in its financial statements.) To a B shareholder, it would be 3/10 of a penny per share. It’s very hard to make a case that an amount so small would incent Buffett to do something so contrary to Coca-Cola’s interests as to force it to turn down a big contract with Burger King in order to keep selling Coca-Cola at Dairy Queen. That would be so even if Berkshire owned zero Coca-Cola stock. The problem with the ISS approach was its absolutist checklist approach that applies no reasoning and proportionality.
8. CalPERS also opposed the election of Herbert Allen, former U.S. Senator Sam Nunn, and Don Keough because of their business relationships with the company.
9. Herbert Allen, “Conflict-Cola,” Wall Street Journal, April 15, 2004.
10. Excerpts from a survey of corporate board members conducted by PricewaterhouseCoopers, as reported in Corporate Board Member, November/December 2004. PWC identified no comments or sentiment against Buffett.
11. Deborah Brewster, Simon London, “CalPERS Chief Relaxes in the Eye of the Storm,” Financial Times, June 2, 2004.
12. Interview with Don Graham.
13. The GMP International Union, which also spoke at the meeting.
14. Transcript, Coca-Cola shareholder meeting 2004, courtesy of the Coca-Cola Company; Adam Levy and Steve Matthews, “Coke’s World of Woes,” Bloomberg Markets, July 2004; interviews with several directors and company employees.
15. Transcript, Coca-Cola shareholder meeting 2004, courtesy of the Coca-Cola Company.
16. Adam Levy and Steve Matthews, “Coke’s World of Woes.” The New York Times blasted Coke over severance payments to Heyer and other executives in “Another Coke Classic,” June 16, 2004. The criticism was not universal; the Economist said Isdell was “welcomed by investors and analysts as a safe pair of hands” (“From Old Bottles,” May 8, 2004).
17. For example, Constance L. Hays, in The Real Thing: Truth and Power at the Coca-Cola Company (New York: Random House, 2004), makes this inference.