Special Issue: Coke Starts Search for Next Chairman.
Keough Returns.

Coke Says Daft Will Retire at End of 2004.
Company Will Do Search for New Chairman.
Heyer Included in Search and Seen as Strong Candidate.
Keough Elected to Coke Board of Directors.

Following its Feb. 19 board meeting, Coke makes three important announcements: 1) chairman/CEO Doug Daft will retire at year-end. 2) company will start search for its next chairman. 3) former president/COO Don Keough is elected to board.

Daft. Daft says decision to retire at end of year "is consistent with my own personal wishes that I previously shared with the board." He became president/COO in Dec. 1999 and chairman/CEO in Feb. 2000, after former chairman/CEO Doug Ivester departed. Recently there has been much speculation re Daft's plans, as some Coke system executives have predicted that he would stay for five years, and 2004 is fifth year of his tenure. Observers give Daft good grades for job performance in recent years. When he took on chairman/CEO role, he had little experience that would have prepared him to be chairman and CEO of huge, complex, international, public company like Coke. But, as time went on, Daft gained confidence and traction. Coke director. Asked about Daft's major contributions, board member Jimmy Williams tells BD: "He's done a lot for relationships with our bottlers. He's set a strong strategic course to accelerate our growth and restore our vital relationships." Adds: "He's worked hard at improving bottler economics, he's led that charge." Plus: "He's expanded the beverage offerings that we have." Daft, from the start, stressed importance of innovation. And Coke's beverage portfolio has expanded significantly in recent years.

Search. Daft says -- with announcement of his retirement at year-end -- company begins "transition process." Coke's board will engage executive search firm. Williams says search is for both chairman and CEO. So that appears to mean that company will keep those roles combined; there had been speculation that Coke might split jobs of chairman and CEO. Heyer. Coke says it will "carefully consider external candidates along with the internal candidate we have in (president/COO) Steve Heyer." Asked if Heyer is strong candidate for chairman/CEO job, Williams says: "He sure is." Announcement sparked questions re why company is doing search. BD talks to several executives. Essence is that Heyer, in fact, is considered strong candidate for job. However, they add, in this day and age, good corporate governance means a company should do this kind of search and look at all available candidates. Views. Coke system executives: 1) "The fact that Daft and the board will be managing succession in an orderly way will be good for morale." 2) "Steve has done a good job." 3) "It's good that the process of succession will be orderly."

Keough I. Coca-Cola Co also says Keough will rejoin its board. Asked why, Williams summed up well what many others said: "You want all of Keough you can get." Coke system executive: "This will be good for morale. Keough being on the board is a positive." Industry expert: "Keough is considered the heart of the Coca-Cola company." Plus. Keough -- one of industry's legends -- retired as president/director of Coke in 1993. He served for over a decade alongside chairman/CEO Roberto Goizueta. Keough became advisor to board, both in early years following his retirement and during Daft's tenure. Though Keough formally held only advisory positions of late, multiple Coke system executives say he has been "influential," "helpful," "strong presence" in recent years. And in fact, in Coke's statement, Daft says: "I have always sought and been guided by Don's wisdom." Age and by-laws. Keough is 77. At its Feb. 19 meeting, Coke board amended its by-laws; previously, directors were not permitted to stand for election after age 74. Under new policy, directors submit letter of resignation to board when they reach 74; letters are then reviewed and considered annually. New policy re age also permits continued service on board by Warren Buffett.

Keough II. Since his retirement from company, Keough has served as chairman of NYC investment bank Allen & Co. Herbert Allen is CEO of firm and also Coke director. Keough is also known to have extremely close relationship with Buffett, who is largest Coke shareholder. He recently joined board of Buffett's Berkshire Hathaway. Background at Coke. Keough's role with Coke goes back to 1950. He became president of company's food division in 1971. He ran Coke U.S.A. and businesses in North/South America. He became president/COO in 1981 and served in that role until his retirement in 1993. In addition, from 1986 to 1993, he served as chairman of CCE.