Why Share-Owner Value?

At The Coca-Cola Company, our publicly stated mission is to create value over time for the
owners of our business. In fact, in our society, that is the mission of any business: to create
value for its owners.

Why? The answer can be summed up in three reasons.

First, increasing share-owner value over time is the job our economic system
demands of us. We live in a democratic capitalist society, and here, people create specific
institutions to help meet specific needs. Governments are created to help meet civic needs.
Philanthropies are created to help meet social needs. And companies are created to help
meet economic needs. Business distributes the lifeblood that flows through our economic
system not only in the form of goods and services, but also in the form of taxes, salaries and
philanthropy.

Creating value is a core principle on which our economic system is based; it is the
job we owe to those who have entrusted us with their assets. We work for our share owners.
That is – literally – what they have put us in business to do.

Saying that we work for our share owners may sound simplistic - but we frequently
see companies that have forgotten the reason they exist. They may even try in vain to be all
things to all people and serve many masters in many different ways. In any event, they miss
their primary calling, which is to stick to the business of creating value for their owners.

Furthermore, we must always be mindful of the fact that while a healthy company can
have a positive and seemingly infinite impact on others, a sick company is a drag on the
social order of things. It cannot sustain jobs, much less widen the opportunities available to
its employees. It cannot serve customers. It cannot give to philanthropic causes.

And it cannot contribute anything to society, which is the second reason we work to
create value for our share owners: If we do our jobs, we can contribute to society in very
meaningful ways. Our Company has invested millions of dollars in Eastern Europe since the
fall of the Berlin Wall, and people there will not soon forget that we came early to meet their
desires and needs for jobs and management skills. In the process, they are becoming loyal
consumers of our products, while we are building value for our share owners – which was
our job all along.
 Certainly, we – as a Company – take it upon ourselves to do good deeds that directly
raise the quality of life in the communities in which we do business. But the real and lasting
benefits we create don’t come because we do good deeds, but because we do good work –
work focused on our mission of creating value over time for the people who own the
Company. Among those owners, for example, are university endowments, philanthropic
foundations and other similar nonprofit organizations. If The Coca-Cola Company is worth
more, those endowments are similarly enriched to further strengthen the educational
institutions’ operations; if The Coca-Cola Company is worth more, those foundations have
more to give, and so on. There is a beneficial ripple effect throughout society.

Please note that I said creating value “over time,” not overnight. Those two words
are at the heart of the third reason behind our mission: Focusing on creating value over the
long term keeps us from acting shortsighted.

I believe share owners want to put their money in companies they can count on, day
in and day out. If our mission were merely to create value overnight, we could suddenly
make hundreds of decisions that would deliver a staggering short-term windfall. But that
type of behavior has nothing to do with sustaining value creation over time. To be of unique
value to our owners over the long haul, we must also be of unique value to our consumers,
our customers, out bottling partners, our fellow employees and all other stakeholders – over
the long haul.

Accordingly, that is how the long-term interests of the stakeholders are served – as
the long-term interests of the share owners are served. Likewise, unless the long-term
interests of the share owners are served, the long-term interests of the stakeholders will not
be served. The real possibility for conflict, then, is not between share owners and
stakeholders, but between the long-term and the short-term interests of both. Ultimately,
everyone benefits when a company takes a long-term view. Ultimately, no one benefits when
a company takes a short-term view.

The creation of unique value for all stakeholders, including share owners, over the
long haul, presupposes a stable, health society. Only in such an environment can a
company’s profitable growth be sustained. Thus, the exercise of what is commonly referred
to as “corporate responsibility” is a supremely rational, logical corollary of a company’s
essential responsibility to the long-term interests of its share owners. A company will only
exercise this essential responsibility effectively if it promotes that social well-being necessary
for a healthy business environment. It is as irrational to suppose that a company is primarily
a welfare agency as it is to suppose that a company should not be concerned at all about the
social welfare. Both views sacrifice the long-term common good to short-term benefits –
whether share-owner benefits or stakeholder benefits.
 Certainly, harsh competitive situations can sometimes call for harsh medicine. But in
the main, our share owners look to us to deliver sustained, long-term value. We do that by
building our businesses and growing them profitably.

At The Coca-Cola Company, we have built our business and grown it profitably for
more than 110 years, because we have remained disciplined to our mission.

Not long ago, we came up with an interesting set of facts: A billion hours ago, human
life appeared on Earth. A billion minutes ago, Christianity emerged. A billion seconds ago,
the Beatles changed music forever. A billion Coca-Colas ago was yesterday morning.

The question we ask ourselves now is: What must we do to make a billion Coca-Colas
ago be this morning? By asking that question, we discipline ourselves to the long-term view.

Ultimately, the mission of this Atlanta soft-drink salesman – and my 26,000

That’s what our economic system demands of us. That’s what allows us to contribute
meaningfully to society. That’s what keeps us from acting shortsighted. As businessmen and
businesswomen, we should never forget that the best way for us to serve all our stakeholders
– not just our share owners, but our fellow employees, our business partners and our
communities – is by creating value over time for those who have hired us.

That, ultimately, is our job.

Roberto C. Goizueta
Chairman, Board of Directors,
and Chief Executive Officer
February 20, 1997

[This essay originally appeared in the Coca-Cola Company’s 1997 annual report.]