Coke CEO to step down in ‘08, replaced by COO

Neville Isdell’s tenure as Coca-Cola Co.’s leader saw senior management changes, a big acquisition and a focus on improving employee morale. After his unexpected announcement Thursday that he would step down as chief executive next year, Isdell said more challenges were ahead for the world’s biggest beverage company.

Isdell, 64, who has been CEO since 2004, will be replaced as chief executive by his second-in-command, Chief Operating Officer Muhtar Kent, effective July 1. But Isdell will remain chairman of the Atlanta-based company’s board until Coke’s annual meeting in April 2009. Isdell’s role after that is unclear.

The split of the chairman and CEO roles will be a first at Coke. Isdell said the board would decide later whether to keep that arrangement.

Asked why he chose now to set a date for his departure as CEO, Isdell said simply, “because it’s the right time.” He added, “I’ve been working on succession since Day One.”

Coke shares rose 2 cents to $63.07.

During Isdell’s tenure as Coke’s chief executive profit has steadily risen, particularly on the international side. Also during his tenure, a Justice Department investigation of business practices at Coke concluded with a settlement and the final chapter closed in a nearly $200-million discrimination settlement involving the company.

As COO, Kent, 55, has overseen significant initiatives, including this year’s $4.1-billion acquisition of Glaceau, maker of Vitaminwater. He will continue to hold the title of president.

Deutsche Bank analyst Marc Greenberg said in a research note that he believed the challenges for Kent would be investor reaction if Coke merely hit its long-term growth targets, the reaction if sales volume of Vitaminwater stalled in a transition year and the effect if other key executives departed.