SIGN UP NOW!
It's FREE!

Create a Profile and Start Networking with HR Professionals
Register Now - It's Free Registration info
 
Member Content
Blogs | Questions | Files | Events | HR Groups | Members


  • Upcoming Events
  • Past Events
  • Public Events

More Virtual Conferences

Live Conference
24 April - 25 April 2014 - In Progress

Rewards and Recognition

Upcoming Conference
29 April - 30 April 2014

Quality of Hire

Upcoming Conference
5 May - 6 May 2014

Performance Management

My Events
View and edit your current events.
Add Event

Click the "add event" button to create a listing for your event

Advertise Here
 
  • Currently 3.0/5 Stars.
  • 1
  • 2
  • 3
  • 4
  • 5
3.0 from 36 votes
 

Coca-Cola, Race, And The Future


By: 
Date: May 7 2001

Coca-Cola, Race, And The Future

In the widely reported settlement, Coca-Cola agreed to pay out a $192.5 million and revamp its human resources policies to settle a class action lawsuit alleging racial discrimination.   The settlement included payment of $113 million to 2,000 African Americans who were part of the class-action lawsuit with an average payment of approximately $40,000.   The original four plaintiffs will receive approximately $300,000 each, $43.5 million paid out over 10 years will be used to eliminate compensation disparities between African Americans and white employees, approximately $36 million will be used to establish diversity programs and separately, Coke plans to donate $50 million to its foundation to fund programs in minority communities.   Not surprisingly, the settlement also included payment of $20.6 million to the team of the plaintiff´s attorneys (only in America).   The settlement will go final if less than 200 employees object to its terms (as of March 19, 2001, only 23 declined the offer.)

What I´d like to do is to put this settlement in perspective.   First of all, I heard through the insurance grapevine that approximately $75 million worth of the settlement was paid by three different insurance companies.   Since I love Coca-Cola, and tend to invest in what I love, I just received their 2000 annual report.   According to Chairman Douglas Daft, "...while we work to put behind us a difficult discrimination law suit, we resolve that we will strive to create the world´s most diverse workforce."   The only other mention of the suit came in the financial section, which stated that, "In the fourth quarter of 2000, we recorded charges of approximately $188 million related to the settlement terms of, and direct costs related to, a class action discrimination lawsuit.....of the $188 million, $50 million was donated to the Coca-Cola foundation to continue its broad range of community support programs."

Simply by looking at the above numbers, we can see how Coca-Cola benefited from the contributions of the insurance companies towards this lawsuit.   If you add the $75 million to the $188 million you end up with an impact of $263 million.   Now lets put this in perspective.   Last year Coke´s advertising expenses were $1.7 billion.   The value of the land they own is $225 million.   In 2000 the company recorded a non-recurring charge of approximately $306 million to reduce the carrying value of its investment in the Philippines. A $196 million charge was associated with vending operations in Japan.   $216 million was paid out in severance arrangements for employees involuntarily separated during the corporate realignment and $353 million was paid out to employees voluntarily separated during the realignment.

If we were to take a look at Coca-Cola´s stock price last year, you would see that on November 1st, Coke was trading at $60 per share.   Shortly after the announcement of the settlement it dropped to $55 per share but by December 1st it was trading once again at $62 per share.

So, the reality is, even though it garnered a great deal of negative publicity, the bottom-line impact on Coca-Cola was rather negligible when compared to its total operations.   Questions I have that were not answered in the financial reports are as follows:   What impact did the lawsuit have on the production of workers of all races?   Just how is this "task force," which will be headed by Alexis Herman (former Labor Secretary to President Clinton), going to do to make it a more diverse workplace?   How is it that Coca-Cola, which has always been viewed as a global operation, and is located in a city known for the Civil Rights movement, finds itself on the back-end of a discrimination lawsuit?   What type of training and programs will be implemented that will have a substantial impact on race relations at Coca-Cola?



Comments

Sitemap   |   Advertise With Us