Institutional Shareholder Services’ Response to Coca-Cola Director

Institutional Shareholder Services (ISS), the leading provider of proxy voting and corporate governance solutions, reiterated today its recommendation to its clients to withhold votes for Coca-Cola audit committee member Warren Buffett. The recommendation is based on ISS’s best practice corporate governance guidelines that call for completely independent audit committees.

Under the ISS definition of independence, Mr. Buffett is considered an “affiliated outsider” because of the many transactional relationships that Berkshire Hathaway subsidiaries have with Coca-Cola. The economic relationships and transactions are numerous and significant. As disclosed in Coca-Cola’s proxy statement, Berkshire Hathaway subsidiaries with business ties to Coke include McLane Company, International Dairy Queen, FlightSafety International, NetJets and XTRA Corporation. There are additional business ties to organizations in which Berkshire Hathaway holds significant equity interests.

“To suggest that ISS is calling for Mr. Buffett to step down from Coca- Cola’s board is completely inaccurate and, quite frankly, utterly ridiculous,” said John M. Connolly, president and chief executive officer of ISS. “We have absolutely no issues with Warren Buffett serving on the Coke board. However, under our view of best practice corporate governance, we believe that Mr. Buffett should move off of the audit committee to ensure that Coca-Cola shareholders benefit from complete independence on that key panel,” clarified Connolly.

In the wake of the accounting scandals of the past few years, most boards have adopted stringent standards for audit panel membership. Fewer than 10% of S&P 500 companies have current audit committee members who have significant ties to the company that trigger ISS’s “withhold” vote policy. Each of these affiliated outside audit committee members who stands for re-election draws a withhold recommendation from ISS.

Coca-Cola Proxy Statement Disclosures Regarding Independence of Certain Directors

Warren E. Buffett is Chairman of the Board, Chief Executive Officer and the major shareowner of Berkshire Hathaway. Coca-Cola discloses in its proxy statement the following ties with Berkshire Hathaway:

McLane Company (“McLane”), a wholly owned subsidiary of Berkshire, made payments in 2003 totaling approximately $103.9 million to Coke to purchase fountain syrup and other products. Also in 2003, McLane received from Coke approximately $11 million in agency commissions relating to the sale of Coke’s products to customers, and approximately $231,000 in freight cost associated with the transport of syrup. McLane also received from Coke approximately $397,000 for advertising and marketing payments and other fees in the ordinary course of business. (Coke contends that this business relationship was in place prior to Berkshire’s acquisition of McLane in 2003 and is on terms similar to Coke’s relationships with other customers.)

International Dairy Queen, Inc. (“IDQ”), a wholly owned subsidiary of Berkshire, made payments in 2003 totaling approximately $2.2 million to Coke directly and through bottlers and other agents to purchase fountain syrup and other products. Also in 2003, IDQ and its subsidiaries received promotional and marketing incentives for corporate and franchised stores totaling approximately $688,000 from Coke and its subsidiaries. (Coke notes that this business relationship was in place for many years prior to Berkshire’s acquisition of IDQ and is on terms substantially similar to the Company’s relationships with other customers.)

FlightSafety International, Inc. (“FlightSafety”), a wholly owned subsidiary of Berkshire, is party to a four-year agreement with Coke signed in 2002 under which FlightSafety provides pilot, flight attendant and mechanic training services to Coke. In 2003, Coke paid FlightSafety approximately $579,000 for providing these services to the company.

NetJets Inc., a wholly owned subsidiary of Berkshire, received in 2003 from Coke approximately $54,000 for management fees and approximately $46,000 for other services associated with its use of an aircraft leased from Chatham International Corporation.

XTRA Corporation is a wholly owned subsidiary of Berkshire. In 2003, Coke paid approximately $129,000 to XTRA Corporation for equipment leases of trailers used to transport syrup in the ordinary course of business. (In the opinion of Coke’s management, the terms of the lease are fair and reasonable and as favorable to the company as those which could have been obtained from unrelated third parties at the time of its execution.)

Berkshire also holds a significant equity interest in Moody’s Corporation, to which Coke paid fees totaling approximately $142,000 in 2003 for rating Coke’s commercial paper programs and other services in the ordinary course of business.

Berkshire holds a significant equity interest in The FINOVA Group, Inc. In 2003, one of Coke’s subsidiaries paid approximately $137,000 to The FINOVA Group, Inc. for the lease of coolers. The original lease was entered into prior to Berkshire’s acquisition of its interest in The FINOVA Group, Inc. (In the opinion of Coke’s management, the terms of the flight training services contract and the lease are fair and reasonable and as favorable to the company as those which could have been obtained from unrelated third parties at the time of their execution.)

Berkshire also holds a significant equity interest in The Washington Post Company. In 2003, Coke paid approximately $400,000 to The Washington Post Company for advertising fees.

Berkshire also holds a significant equity interest in American Express Company (“American Express”). In 2003, Coke paid fees for credit card memberships, business travel and other services in the ordinary course of business to American Express or its subsidiaries. Additionally in 2003, American Express and its subsidiaries made payments totaling approximately $104,000 to Coke to purchase fountain syrup in the ordinary course of business.

Coca-Cola deems Buffett to be an independent director. In contrast, the Coca-Cola board does not consider Herbert A. Allen to be independent “because of his significant indirect interest in Allen & Company LLC (“ACL”) of which his son is President. Coca-Cola has paid fees to ACL or its predecessors in connection with investment advisory services during the past three years.”

Allen is President and Chief Executive Officer and a Director of Allen & Company Incorporated (“ACI”) and a principal share owner of ACI’s parent. ACI is indirectly a principal equity holder of Allen & Company LLC (“ACL”). Mr. Allen’s son is President of ACL. ACI has leased and subleased office space since 1977 in a building owned by one of Coke’s subsidiaries and located at 711 Fifth Avenue, New York, New York. In 2003, ACI paid approximately $4.3 million for office space under the current lease, which included hold-over charges for temporary office space in the building. Since the temporary space was surrendered in 2003, Coke expects that ACI will pay a lesser amount in 2004. In 2003, Coke paid ACL fees totaling approximately $1.0 million for services as a financial advisor in connection with a potential transaction. Coke disclosed that ACL may provide financial advisory services to the company in 2004. (In the opinion of Coke’s management, the terms of the lease, as modified, and the terms of the financial advisory services arrangement are fair and reasonable and as favorable to the company as those which could have been obtained from unrelated third parties at the time of their execution.)

About Institutional Shareholder Services
ISS is the world’s leading provider of proxy voting and corporate governance solutions. ISS provides proxy research, vote recommendations and governance advisory services to financial institutions worldwide. Founded in 1985, ISS is headquartered in Maryland and has offices in New York, London, Toronto, Tokyo, Manila and Chicago.

CONTACT: Cheryl Gustitus, Senior Vice President, Communications, of Institutional Shareholder Services, +1-301-556-0538, or cheryl.gustitus@issproxy.com