An article in yesterday's Business section, relying on information from Coca-Cola Co.'s World Wide Web site, misidentified board member James B. Williams. He is a former chairman and chief executive of SunTrust Banks Inc. (Published 12/08/1999)
The 52-year-old chairman of Coca-Cola, M. Douglas Ivester, unexpectedly decided to retire after a little more than two years on the job, just as the embattled company's fortunes appeared to be on the rebound.
Ivester's announcement yesterday caught Wall Street off guard, and many investors, who in recent weeks had been bidding up Coke shares, promptly began selling. Shares of the company--one of the 30 blue-chip stocks in the Dow Jones industrial average--tumbled $3.70-5/16, or more than 5 percent, to close at $68.60-15/16.
The company said that Coca-Cola's board of directors met Sunday to elect Douglas N. Daft president and chief operating officer effective immediately and that Daft will become chairman and chief executive when Ivester retires in April 2000.
Daft, four years older than Ivester, was one of three Coca-Cola executives given broad new power just over a month ago in a management restructuring that some described as setting up a contest to be Ivester's replacement. But no one anticipated at the time that the relatively young Ivester would step down so soon.
"After extensive reflection and thought, I have concluded that it is time for me to move on to the next stage of my life and, therefore, to put into place an orderly transition for this great company," Ivester said in a statement released yesterday.
"I have no idea what was the exact reason, but I'm quite sure this was an extremely personal decision," said Martin Romm, who follows the company for Credit Suisse First Boston.
"I don't believe he was pushed, and I don't believe he was asked" to retire, Romm said.
Ivester is in good health, a Coca-Cola spokesman said.
Coca-Cola has endured a rough two years since Invester became chairman, much of it for reasons beyond his control.
Hard hit by the global economic slowdown, the company's stock has been pummeled as it suffered through questions about tainted products in Europe and a lawsuit by former and current employees alleging race discrimination.
In October, it hit a low of $47.31 1/4--down from a high of $75.43 3/4 in November 1998.
The company also stumbled in its proposed acquisition of France's Orangina soda, which it dropped last month after failing to win regulatory approval.
But recently the company appeared to have regained its footing, aided by an economic recovery in Asia. In fact, at the same time it announced the management shifts, Coke said the number of cases of products shipped grew faster in October and November than it had in the third quarter.
Before the announcement of his retirement, there had been virtually no signs that Ivester planned to step down. He hadn't named a number two during his tenure as chairman, although in October he increased the responsibilities held by Daft, Senior Vice President Jack Stahl and Chief Financial Officer James Chestnut.
In a letter to employees, Ivester didn't elaborate much on his decision to retire.
"Simply put, I have concluded that it is time for a change, both for me and for our great company," he said. "The focus should now be on the positive--not on the challenges of the recent past, and not on me, but on the opportunities ahead."
Daft is a 30-year veteran of Coca-Cola who has been president of the Middle and Far East group and who added Africa and the new Schweppes Beverages Division to his portfolio in the October shake-up.
Ivester yesterday described Daft as "perfectly suited to lead this company."
Daft, a native of Australia, began his career with Coke there. After many years of working in planning, marketing and operations in Asia, he was named president of the Central Pacific Division in 1984. That division included China, Indonesia and Thailand.
In 1988 he was named president of the North Pacific Division and president of Coca-Cola (Japan) Co. In 1991, he moved to corporate headquarters in Atlanta as president of the Pacific group.
"He's very well qualified for the position," said Emanuel Goldman of Merrill Lynch Globa Securities. "He's had to run Japan, which is one of the toughest markets," he said, adding that in most of Asia, Coca-Cola "basically left Pepsi in the dust."
Ivester took over as head of Coke in October 1997, stepping into the top job just days after the well-liked Roberto C. Goizueta died of lung cancer.
Polite, analytical and hard-driving, Ivester has been described as a relentless promoter of Coca-Cola and its products who seldom took any time away from his work.
Ivester, born in rural Gainesville, Ga., the son of a factory foreman, was an outside auditor for the company who joined Coke as an assistant controller in 1979 and was named chief financial officer in 1981 at age 37.
According to Fortune magazine, he set personal goals in the 1980s that included becoming chief executive by Nov. 1, 1996, and chairman by Nov. 1, 1998. He was named president and chief operating officer of Coke in 1994.
James B. Williams, chairman and chief executive of SunTrust Banks Inc. and a member of Coke's board, said in a statement issued by the company yesterday that the board "reluctantly accepted" Ivester's decision to retire.
"Over the last 20 years, the Coca-Cola Company has been fortunate to have someone of Doug's wisdom and dedication in its leadership ranks," he said.
Coke stock has had a few rough years, buffeted by contaminated products and antitrust concerns in Europe, among other trials.
October '97: Douglas Ivester named chairman and chief executive; Ivester had already been performing many duties for the previous CEO, Roberto Goizueta, who was ill.
June: Some European countries ban or recall Coke for two weeks after contaminated products are found in Belgium and France.
Yesterday: Coke stock falls 5.4 percent after Ivester announces his resignation.
SOURCE: Bloomberg News