The last thing Coca-Cola
The campaign against Coca-Cola's board is part of CalPERS' ongoing battle to improve corporate governance, which is not targeted solely at Coca-Cola. Also put on the target list yesterday were members of Citigroup's
Three board members facing CalPERS' wrath because their objectivity is questioned are Herbert Allen, an investment banker; Donald Keough, retired company president; and former U.S. Sen. Sam Nunn. Both Allen and Keough are officers in Allen & Co., which is an investment banking firm that advises Coca-Cola and its bottlers. Nunn until the end of last year was a member of the company's law firm, King & Spalding LLP, which earned $13.8 million for legal services to the company.
In addition to these members being challenged for objectivity, CalPERS is also challenging Coca-Cola's entire audit committee, including member Warren Buffett, because the committee allowed the company's auditor, Ernst & Young, to do "nonaudit services." These services include tax advice and tax planning, plus general consulting on acquisitions or internal-control matters.
CalPERS is not the only one that believes a company's non-audit business should be done by an unrelated consulting group. Given that many of the recent scandals -- including the mother of them all, Enron -- were tied to too much crossover between audit and non-audit work, individual investors are also becoming increasingly aware of the potential dangers in allowing auditors to perform non-audit work.
What do you think? Is CalPERS going too far by withholding its support for certain board members? Talk about it with other Fools on the Coca-Cola discussion board.