06 April 2018 by Henry Ker
The secretariat team of the ICSA Awards 2017 Governance Project of the Year speak about their ambitious merger, undertaken while moving head office and maintaining stock exchange listings in four countries
In August 2015, Coca-Cola Enterprises, Coca-Cola Iberian Partners and the German bottling business of The Coca-Cola Company announced plans to merge and create Coca-Cola European Partners plc.
The new company would be the world’s largest bottler of Coca-Cola products, employing some 23,500 people, generating €11 billion in revenue and serving more than 300 million consumers across 13 countries in Western Europe.
The company would demand a brand new governance model, built from scratch, and among the various challenges, the model would have to be produced while moving the head office from Atlanta to London and maintaining listings on stock exchanges in four countries.
Paul van Reesch, vice president legal – corporate and deputy company secretary; Helen Baker, head of secretariat; Danica Malloy, foreign qualified legal counsel; and Ines Watson, assistant company secretary, talk us through the project.
Ines Watson: [who accepted the award on the night] I was surprised! I was delighted and surprised because the award relates to the company’s first year and it is still relatively unknown. So, I am very pleased that we have made an impact.
Paul van Reesch: The scale of this project is such that its hard to remember what we have achieved over the course of a year. So, from that perspective, it was really nice to put together the nomination and reflect on everything.
To then receive that recognition for the team is brilliant, because I cannot understate the amount of effort that the team put in just to get us where we are today.
Helen Baker: I was still relatively new when we entered. It is good to have the internal recognition and push to enter ourselves for an award, as well as now the external recognition.
PVR: Our story is interesting. We were not able to sit down on May 28 2016, when the company was created, and go: we have got a whole bunch of governance processes to set up, where do we start?
This was because, as part of the merger, the decision was made to transfer our Atlanta headquarters to Europe. This meant the corporate team in the US had a finite time to transition work over to Europe.
“If you think you do not have to do something in one jurisdiction, you probably have to do it in another”
They had to find a replacement lead for that team, which was me. We had to build a team, transition everything out of Atlanta and build governance processes, while still running the administration of the company. There were two parts to it.
The first was advice. I was very new to this area, so we had to get advice from the law firms about what it is we needed to do and how we needed to set it up.
IW: And that advice then needed to be checked for application in each jurisdiction in which we operate.
PVR: It was a bit chaotic, out of necessity. Not just because we were trying to start up a secretariat from scratch but also because of the complexity of our governance model. We were always discovering, asking questions and finding new things that we had to do. It is hard to plan all of that.
HB: It is difficult, because out of necessity, we had to do it that way. In an ideal world, we would all like plenty of time to plan these things.
What we would have liked was for all of us to have been in our roles for a year before the merger, so we could have understood it better and been involved in setting out these governance processes pre-merger.
There are some things, inevitably, with the benefit of hindsight you think if we had been involved from the start, we would have spotted that because of our particular knowledge or experience.
So yes, I would like to have been appointed to this job a year before the merger happened, but until the merger happened this job did not exist. So it is a bit chicken and egg!
Danica Malloy: One of the great thing about this team, is that everyone comes from a different background. We have diverse experiences and all bring something different to the team. That made a hard process much easier because everyone had different ideas to bring to the table. Variety helped.
IW: It is interesting. We are a UK public limited company, but we have to look at the governance requirements of a number of jurisdictions because we are listed on multiple exchanges.
Helen and I have worked in company secretarial roles for UK plcs for some time and feel we should know what we are doing, and yet at Coca-Cola European Partners you have to consider the requirements of the multiple stock exchanges on which we are listed.
Having said that, even the UK presented something different from what we were used to, because we have a standard listing rather than a premium listing.
HB: You could argue it is seven listings because we are actually listed on four exchanges in Spain. So we are listed in four jurisdictions but have seven listings.
PVR: There is some methodology behind it all. Historically, what is now 48% of the company was a New York Stock Exchange-listed business. So, most of the liquidity for the company was in the US.
When you undertake a transaction, and you are transitioning from a US-headquartered company to a European headquartered company, focused in Europe, it makes sense to have listings in Europe.
But your liquidity is not going to move overnight, so it also made sense to retain the New York listing. As a UK PLC, having a UK listing is logical.
“With multiple listings, there will be challenges in the way you communicate with shareholders”
We already had a Euronext listing, and so there was already some liquidity there, and it seemed to be the easiest place to start to build some liquidity for us in Europe. The Spanish listing is reflective of the importance of our largest shareholder.
Regarding the challenges, nothing ever has a simple answer. If you think that you need to make an announcement on something in one jurisdiction, you have to check all the others. Or if you think you do not have to do something in one jurisdiction, actually, you probably have to do it in another.
HB: We have been talking about a good example today, around what we need to do to comply with the market abuse regulation in the UK. But then also we need to comply with the relevant rules around material, non-public information in the US, because they are not quite the same.
PVR: But we are subject to both.
HB: You have to comply with the rules of all of them and cannot have one that takes preference over another. You just have to work out how to make them all work together and keep everyone happy.
There are some things that help. For example, in New York as a foreign private issuer you do not have to follow US governance rules, and you are allowed to adopt another set.
So we voluntarily comply with the UK Corporate Governance Code, despite not being required to because we only have a standard listing. There are times when you get some flexibility, but you have still got to report on the differences.
Things may change if our shareholder base moves, so that we end up with more shareholders in Europe. For example, at the moment we still release quarterly earnings.
We do not have to do that. Under New York rules, because we are a foreign private issuer, we could do twice-yearly (as you would in the UK), but so many of our US shareholders are used to seeing quarterly earnings.
IW: Getting to our wider shareholder base was challenging, however. Many of our shareholders hold their interests via participants in the DTC [Depository Trust Company], meaning they are beneficial holders, so getting information to them on our AGM proposals and receiving votes back was particularly complex.
HB: Although, interestingly, one of the hardest bits was getting to the European shareholders. There is quite a good and well-oiled machine around the US shareholder base.
The problem we have in reaching the European shareholders is the depositories who hold them, such as Iberclear and Euroclear, still go through that same DTC route but the linkage does not always quite work and information does not always flow in the way that we would expect it to.
IW: The challenge in that process was the number of levels of intermediaries that we had to go through to check that the information was getting to individuals. And then back through those levels to receive their responses. There were at times three or four different levels between us and the beneficial owner.
PVR: With multiple listings, there will be challenges in the way in which you communicate with your shareholders, so it takes a lot of work to ensure that we properly reach out to our entire shareholders base.
PVR: One challenge was, as you might expect, a few of the directors did not have significant listed UK PLC experience previously.
All of them have large company directorial expertise and many of them had US-listed company expertise. They had a strong experience and knowledge base.
But one part of the induction for some of the directors was building on that experience and knowledge base from a PLC perspective. However, that was a pretty easy job, because of their backgrounds.
The other half of it is how you help the board come together as an effective operating unit, when a large part of them, in various ways, are new to working together.
The board has spent a lot of time ensuring that they operate as effectively as possible, and that means that we have a strong board. They are all deeply knowledgeable and passionate about the business, which makes for great discussions within the boardroom.
HB: Ensure you have the right people in the team. We needed a mix of people who knew the company and its predecessors, as well as those who were subject matter experts.
We have got three of us who are quite new. Paul and Karen Schutyser [director, legal – corporate], who is also on the team, had not done these types of roles before but have that historical knowledge of the company.
DM: You definitely need to work as a team. Not to just go ahead as individuals, but to ask questions and discuss before doing something.
“We had a diverse team, in the widest possible sense of the word, of experience and backgrounds”
IW: And never assume that you know the correct answer in every case. Always check.
PVR: Not just asking questions, but listening, because we all have a voice in this team, and it is not necessarily the leader or the most experienced who are always right. We are able to leverage the expertise of everyone.
The quality of the people we have been able to bring together is great. Every team has different personalities and different dynamics, and we have formed a team that works so well together, one with a strong knowledge base across a range of subjects. A diverse team, in the widest possible sense of the word, of experience and backgrounds.
We all enjoy working together, which is the other secret. It has been a highly stressful environment, in a lot of ways, because you are trying to build the plane while flying it. It takes a special person to be able to succeed under those conditions and still be happy with it, and we have got a team full of those people.
HB: It is also about being pragmatic and prioritising. You cannot do everything at once and you are not going to get everything perfect first time, so it is going to be an evolution.
DM: I have learnt a lot about the company secretarial profession because I came from an American law firm, so it has been quite a big change and a lot of new information since I started. It was a big learning experience, but a lot of fun.
IW: Working on this project reminded me how stimulating the company secretary’s role can be.
HB: A lot of company secretaries go through their career with the idea that you are aiming for the pinnacle, where you are the company secretary who is sitting in the boardroom taking minutes. For some company secretaries that also means being a trusted advisor, but minute taking may still be the central aspect of the job in some companies.
What I have realised is that minute taking might be part of what I have to do, but I really enjoy the technical side of the role. That is what has grown a lot in recent years in the profession: the technical side – interpreting requirements and providing advice.
PVR: For me, this has reinforced that there is no one way to lead people. The way to get the best out of a team is to adapt your leadership style, be flexible and work hard to build a strong team.