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Ethical Dilemma at Coca-Cola


Is the Ethical Dilemma Facing the Coca-Cola Company Illegal?

The AFLCIO (2003b) describes a situation that is widespread among American corporations wherein (a) retirement benefits for top executives are inequitable in comparison with retirement benefits for rank and file employees and (b) excessive retirement benefits for top executives have been de-linked from company performance. The AFLCIO (2003a) provided specific evidence linked to selected major American corporations (of which Coca-Cola is one) of the existence of such inequities.

In the case of Coca-Cola, the AFLCIO describes a situation in which corporate executives at several levels of the organization receive generous retirement benefit packages, while offering only limited (and partly self-funded) retirement plans for rank and file employees. The company's own Proxy Statement for 2003 (Coca-Cola, Inc., 2003b) and Annual Report for 2002 (Coca-Cola, Inc., 2003a), however, provide details relevant to executive retirement compensation and employee retirement savings plans that show that the inequities are greater even that indicated in the AFLCIO (2003a) assessment.

While the company has an ethical dilemma relative to inequity in retirement compensation benefits, there is little evidence to indicate that the company views the dilemma in an ethical context. Rather, the company appears to view the dilemma in a legal context. Relevant federal retirement funding legislation would cause the company's executive retirement compensation plans to be illegal if the funding for these plans were structured as retirement compensation obligations. The company circumvented this legal dilemma by structuring the funding for the plans as general obligations of the company.

What Is the Company's Stance on Social Responsibility?

There is no direct evidence from the company in the fo...

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