Starbucks Shareholders Reject Executive Pay Proposal
March 17 2021 - 6:01PM
Dow Jones News
By Heather Haddon
Starbucks Corp. shareholders rejected the coffee company's
executive compensation proposal, a rare rebuke to a major U.S.
company.
The plan voted down by Starbucks shareholders Wednesday includes
millions of dollars in bonus and retention pay for Starbucks' chief
executive, though the resolution was nonbinding and may not affect
executives' compensation. Only 10 S&P 500 companies have had
shareholders reject annual say-on-pay resolutions in the last year,
according to ISS Corporate Solutions, an executive compensation
consulting firm run by investment adviser Institutional Shareholder
Services.
The compensation proposal for the company's executives included
a one-time bonus award to CEO Kevin Johnson of $1.86 million for
its 2020 fiscal year. Starbucks's board also agreed in late 2019 to
provide Mr. Johnson with a three-year retention bonus of up to $50
million if he helped to boost the company's stock to established
targets and remained at Starbucks through the end of its 2022
fiscal year.
The company said in a filing to shareholders that Mr. Johnson
had helped Starbucks's market value grow by more than $39 billion
since becoming CEO in 2017 and had helped deliver stronger results
compared with most peers.
ISS and fellow proxy-advisory firm Glass Lewis had advised
shareholders to vote against the pay resolutions. ISS wrote that
Starbucks hadn't adequately explained why the long-term award was
made in cash and said that the frequency of the one-time awards was
concerning. Starbucks's rationale for the performance-cash pay
wasn't adequate given the size of the potential $50 million bonus,
ISS said.
Mary Dillon, the CEO of Ulta Beauty Inc. and a Starbucks
director who chairs its compensation committee, said that the board
unanimously backed the performance awards, which reflect
Starbucks's support of paying for high performance. Mr. Johnson's
role is vital to the company particularly during the pandemic, Ms.
Dillon said in a statement.
"Our board and management team will continue to engage with
investors in the months ahead to understand their perspectives as
part of our ongoing evaluation of our executive compensation
programs," she said.
Rosalind Brewer, the company's outgoing chief operating officer
who left to become the CEO of Walgreens Boots Alliance Inc.,
forfeited her $5 million retention bonus, Starbucks said.
Also on Wednesday, Starbucks elevated Ariel Investments LLC
co-CEO and president Mellody Hobson to board chairwoman. Ms.
Hobson, a prominent investor and Starbucks board member since 2005,
officially became the only Black chairwoman of an S&P 500
company.
Starbucks turns 50 years old in 2021, expanding from a single
Seattle store into a global brand that has sought to address
societal issues such as racism and the environment, while also
drawing criticism for growing too rapidly. The company last year
said it would tie executive compensation to increasing minority
representation within its ranks and slash its water and waste
usage. It is also closing hundreds of U.S. stores as it shifts to
new ones that offer more to-go options.
Write to Heather Haddon at heather.haddon@wsj.com
(END) Dow Jones Newswires
March 17, 2021 18:46 ET (22:46 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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