Coke shares fizz as Buffett steps down from board

Billionaire investor Warren Buffett will step down as a director of Coca-Cola Co this year because of time constraints after 17 years on the board of the world's biggest soft-drink company.

Buffett, 75, told Coca-Cola that he did not plan to seek re-election to the board that he has sat on since 1989, the beverage giant said.

The announcement brings to an end a controversial episode in Buffett's illustrious career, which saw him steer the company away from the acquisition of Quaker Oats, delaying Coke's entry into the lucrative sports drinks market.

"On the whole it is a plus for Coca-Cola. Their board is stale," said Marc Heilweil, president of Spectrum Advisory Services in Atlanta, which owns about 130,000 shares of Coke.

Shares of Coke rose almost 1.5 per cent on the news to close at US$41.34. The company's shares have fallen 20 per cent since 62-year-old Neville Isdell succeeded Doug Daft as CEO in June 2004 and are 54 per cent off their lifetime high of US$88.94 set in July 1998.

Buffett, an active Coca-Cola board member, was influential in the company backing out on its plans to buy Quaker Oats and its Gatorade sports drink in 2000. Rival PepsiCo eventually acquired Quaker Oats, which has been key to the No 2 soft drink maker's revenue and earnings growth.

"Buffett bears considerable responsibility for some of the mistakes that have been made by Coca-Cola, namely in choosing two ineffectual CEOs, Mr Ivester and Mr Daft and the failure of Coke to buy Gatorade," Spectrum's Heilweil said. "And the third thing was for overpaying CEOs, particularly the departure package of Ivester."

When Douglas Ivester left the company in 2000 he walked away with a golden parachute worth US$119 million ($176 million) including a company car and country club dues.

- REUTERS