Coca-Cola

In a recent annual report, Coca-Cola assured its shareholders that it had plenty of room for growth. The company only sold one billion of the world’s 48 billion beverage servings, the annual report noted. “A billion a day is just the beginning,” the company proclaimed, “because people still say, ‘for all the tea in China.'”
You might think that a company with these kinds of aspirations would be particularly sensitive to ensure that it was respectful of all ethnic groups, that it would go out of its way to avoid providing any basis for charges of racial discrimination.

Apparently, you would be wrong.

A lawsuit filed last year by Coke employees charges the company with a pattern and practice of racial discrimination against African-American employees.

Last week, 30 current and former African-American Coke employees took a “justice ride” on a bus from Atlanta, where the company is headquartered, to Wilmington, Delaware, where the company was holding its annual shareholder meeting.

The Justice Riders traveled to Wilmington to publicize their case and demand that Coke move to a quick and fair settlement of the dispute.

In their lawsuit, the Coke employees marshal an impressive array of statistical and anecdotal evidence to buttress their claim of discrimination. They allege:

• The African-American median salary at Coke’s headquarters is about a third less than those of whites at the headquarters. In 1998, the African-American mean was $45,215 while the Caucasian mean was$72,045.

• A “glass ceiling” blocks African-Americans from rising to top positions in the company. Although African-Americans make up more than 15 percent of the employees at the headquarters, they are vastly underrepresented at top pay-grade levels — and not one member of the senior management team is African-American.

• Coke’s evaluation system “permits excessively subjective managerial discretion” leading to racial discrimination in evaluations. Since salary and raises are based on this performance evaluation system, this leads to race-based discrimination in pay scales.

• “Since at least 1995, Coca-Cola’s senior management and officers, up to and including CEO M. Douglas Invester [since replaced], have known of company-wide discrimination against African-Americans.”

• In one poignant allegation, the Coke employees charge that “in or about 1996 or 1997, one of the few African-American Assistant Vice Presidents attended a meeting in Atlanta with some representatives of bottling companies. He was the only African-American at the meeting, but high-level Caucasian marketing executives from Coca-Cola were present. The head of marketing of the bottling company for the state of Alabama introduced himself as the ‘Grand Cyclops’ of Alabama. Despite the obvious Ku Klux Klan reference, no Company employee responded to this outrageous comment at the Company meeting.”

Coke denies the particular allegations in the lawsuit, but says it is “working hard” to resolve the suit quickly. Company Chair Douglas Daft told shareholders, “This is the most diverse company in the world, and we will be the company that leads the world into a diverse business structure in the twenty-first century.”

There is no mystery as to why Coke is eager to settle the suit. Not only does the suit present the company with a substantial outstanding potential liability, but a high proportion of Coke’s U.S. sales are to African-Americans (as well as Latinos). The employees estimate that about a quarter of Coke Classic and Sprite sales in the United States are to African-Americans. Publicity about the case would endanger Coke’s sales to these customers.

Indeed, in Wilmington, one of the Coke employee Justice Riders, Larry Jones, called for a Coke boycott.

“In 114 years, you’ve only had one black senior vice president,” he said. “In 114 years, you only found one of us qualified? How long do we wait? We are never going to be anything but black employees. Let’s stop buying Coca-Cola.”

Unless Coke resolves the lawsuit fairly and quickly, it is likely to find the Justice Riders’ boycott call gaining momentum around the country.