TheFiresideCEO 235teachers in society and responded generously to the upheaval re-
flected in the Los Angeles riots of 1992.
Eisner’s exorbitant stoc koptions remain controversial and a
sticky issue (as was his decision to hire talent tsar Mike Ovitz, who
lasted at Disney for 14 months but cost the company several hundred
million dollars in severance payments). These options warrant care-
ful scrutiny in his case, as with all managers. Eisner makes no bones
about his pay level, arguing that his performance at Disney justifies
it. Whether you agree is a judgment call. Some investors could rea-
sonably adjust their valuation of Disney on the basis of both the
awards and Eisner’s defense of them; the question is what his ac-
count tells you about whether you want to entrust your wealth to
him.
TRUST
The Coca-Cola Company remains one of the world’s premier cor-
porations.^5 Three priorities guided Coke’s actions under its late
CEO, Roberto C. Goizueta: creating value, strengthening the com-
pany’s trademarks, and focusing on the long term. These priorities
pervade and define Coke, a $150 billion operation when Goizueta
died in 1997, up from a $4 billion operation when he became CEO
a little more than a decade earlier. The lively pages of Goizueta’s
passionate and clear writings, some cowritten with his former right-
hand man, Donald Keough, explain why.
Consider first a few of the benchmarks. In 1995 and 1996 Coca-
Cola ledFortune’s ranking of wealth creators. As of year end 1995
its market cap was $93 billion, an increase in shareowner wealth of
$38 billion over the prior year. As of year end 1996 that figure had
increased to $131 billion, adding another $38 billion. While in 1976
Coca-Cola was the twentieth best wealth creator among publicly
traded U.S.-based companies, by 1995 it was fourth and in 1996 it
was first.
In 1995 and 1996 the total return on Coca-Cola stoc kexceeded
40%, and during the preceding 15 years it produced an average com-
pound annual total return rate of 30% (counting reinvested divi-
dends). From 1980 through 1995 Coca-Cola’s share price grew at an
average annual compound rate of 24%, creating nearly $89 billion
in shareowner wealth, compared with increases of 12% in the Dow
and 11% in the S&P 500. The annualized total return from 1981