Coke Announces $192.5 Million Settlement

The Coca-Cola Co. agreed today to pay $192.5 million to settle a racial discrimination suit by black workers.

The amount includes $113 million in cash, $43.5 million to adjust salaries, $36 million for oversight of the company’s employment practices. Coke also will pay $20 million in attorneys’ fees and plans to donate $50 million to its foundation for community programs.

The soft drinks maker also agreed to have its employment practices reviewed by an outside group.

To cover the cost of the settlement, the company will take a $188 million charge in the fourth quarter.

Shares of Coca-Cola fell 6 cents to $61.44 in afternoon trading on the New York Stock Exchange.

The settlement was approved by U.S. District Judge Richard Story, in whose court the suit was filed in April 1999. Details of the settlement will be sent to about 2,000 class members beginning next month.

The lawsuit claimed Coca-Cola discriminated against black salaried employees in pay, promotions and evaluations. The company denied the claims.

The settlement covers salaried black employees in the United States who worked for Coke between April 22, 1995, and June 14, 2000.

Watchdog Group At Center of Suit

The seven-member watchdog group, charged with making sure Coca-Cola is fair in pay, promotions and performance evaluations, was a centerpiece of the settlement. Three members will be appointed by the plaintiffs’ lawyers, three by Coke and a chairman jointly appointed by both. The task force will recommend changes and ensure they are carried out; Coke retains the option of challenging changes it feels are not financially or technically feasible.

A toll-free telephone line will be established to receive complaints 24 hours a day.

A newly created ombudsman will investigate all complaints, report to Coca-Cola Chairman Doug Daft and give periodic reviews to the task force.

The agreement also requires Coke’s board of directors to monitor the company’s progress in meeting its new obligations, including:

—Reviewing and changing policies and practices on pay, promotions and performance evaluations as necessary.

—Compiling employment data and working with the task force to improve working conditions.

—Ensuring managers make fair decisions about employee compensation, including initial salaries, merit increases, bonuses and stock options.

The task force is modeled after a similar group established four years ago in the settlement of a discrimination lawsuit against Texaco.

Coca-Cola’s will include former government officials in labor and civil rights, professors, lawyers and diversity consultants.

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