Table of Contents
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange
Act of 1934 (Amendment No. )
Filed by the Registrant
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Filed by a Party other than
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Check the appropriate
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Preliminary Proxy
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Soliciting Material Under Rule
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Confidential, For Use of
the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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[X] |
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Definitive Proxy
Statement |
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Definitive Additional
Materials |
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STARBUCKS
CORPORATION |
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(Name of Registrant as
Specified In Its Charter) |
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of Person(s) Filing Proxy Statement, if Other Than the
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Table of Contents
Notice of 2015
Annual
Meeting of Shareholders
and Proxy Statement
Wednesday, March 18, 2015 at 10:00 a.m., Pacific
Time
Marion Oliver McCaw Hall at
Seattle Center, 321 Mercer Street Seattle, Washington 98109
Table of Contents
Seattle,
Washington
January 23, 2015
Dear Shareholders:
You are cordially
invited to attend the Starbucks Corporation 2015 Annual Meeting of Shareholders
on March 18, 2015 at 10:00 a.m. (Pacific Time) (the Annual Meeting or the
Annual Meeting of Shareholders). The meeting will be held at Marion Oliver
McCaw Hall at the Seattle Center, located at 321 Mercer Street, in Seattle,
Washington. More information appears on the back cover of this proxy
statement.
As in prior years, Starbucks has elected
to deliver our proxy materials to the majority of our shareholders over the
Internet. This delivery process allows us to provide shareholders with the
information they need, while at the same time conserving natural resources and
lowering the cost of delivery. On January 23, 2015, we mailed to our
shareholders a Notice of Internet Availability of Proxy Materials (the Notice)
containing instructions on how to:
● |
Access our proxy statement for our
2015 Annual Meeting of Shareholders and our fiscal 2014 Annual Report on
Form 10-K for the year ended September 28, 2014, as filed with the
Securities and Exchange Commission (the Annual Report); |
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Vote online, by telephone or by mail;
and |
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Receive a paper copy of the proxy
materials by mail. |
On January 23, 2015, we also first mailed
this proxy statement and the enclosed proxy card to certain shareholders.
Proof of share ownership will be
required to enter the Starbucks Annual Meeting. In addition, each attendee must present a
government-issued photo identification (such as a drivers license or
passport). See the back
cover of this proxy statement TICKETING AND TRANSPORTATION INFORMATION FOR
THE STARBUCKS CORPORATION 2015 ANNUAL MEETING OF SHAREHOLDERS for
details.
The matters to be acted upon are
described in the notice of Annual Meeting of Shareholders and proxy statement.
At the Annual Meeting of Shareholders, we will also report on our operations and
respond to questions from shareholders.
As always, we anticipate a large number
of attendees at the Annual Meeting of Shareholders. Again this year, seating
will be limited to McCaw Hall only, and we cannot guarantee
seating for all shareholders. Doors will open at 8:00 a.m. (Pacific Time) on the
day of the event. Shareholders also may view a live webcast of the meeting;
please see details on our Investor Relations website at http://investor.starbucks.com.
YOUR VOTE IS VERY IMPORTANT. Whether or
not you plan to attend the Annual Meeting of Shareholders, we urge you to please
cast your vote as soon as possible by Internet, telephone or mail. We look
forward to seeing you at the meeting.
Warm regards, |
|
Howard
Schultz chairman and chief executive
officer |
Table of Contents
STARBUCKS
CORPORATION
2401 Utah Avenue
South
Seattle, Washington 98134
NOTICE OF ANNUAL
MEETING OF SHAREHOLDERS
The Annual
Meeting of Shareholders of Starbucks Corporation will be held at Marion Oliver
McCaw Hall at the Seattle Center, located at 321 Mercer Street, in Seattle,
Washington, on March 18, 2015 at 10:00 a.m. (Pacific Time) for the following
purposes:
Only shareholders of record at the close
of business on January 8, 2015 will be entitled to notice of, and to vote at,
the Annual Meeting of Shareholders and any adjournments thereof.
YOUR VOTE IS VERY
IMPORTANT. Whether or not you plan to
attend the Annual Meeting of Shareholders, we urge you to cast your vote and
submit your proxy in advance of the meeting by one of the methods
below.
1.
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By Internet: go to
www.proxyvote.com; |
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2. |
By toll-free
telephone: call 1-800-690-6903; or |
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3. |
By mail (if you
received a paper copy of the proxy materials by mail): mark, sign, date
and promptly mail the enclosed proxy card in the postage-paid
envelope. |
Shareholders may also vote in person at
the Annual Meeting. If you are a registered shareholder (that is, you hold your
shares in your name), you must present valid identification to vote at the
meeting. If you are a beneficial shareholder (that is, your shares are held in
the name of a broker, bank or other holder of record), you will also need to
obtain a legal proxy from the holder of record to vote at the
meeting.
By order of the board of
directors, |
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Lucy Lee
Helm executive vice president, general
counsel and secretary |
Seattle, Washington
January 23,
2015
Important Notice Regarding the
Availability of Proxy Materials for the Annual Meeting of Shareholders to be
held on March 18, 2015. Our proxy statement is attached. Financial and other
information concerning Starbucks is contained in our Annual Report. The proxy
statement and Annual Report are available on our website at
http://investor.starbucks.com. Additionally, you may access our proxy materials
at www.proxyvote.com, a site that does not have cookies that identify visitors
to the site.
Starbucks
Corporation |
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2015 Proxy Statement |
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Table of Contents
Table of Contents
Starbucks
Corporation |
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2015 Proxy Statement |
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Table of Contents
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Starbucks Corporation
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2015 Proxy
Statement |
Table of Contents
PROXY STATEMENT
SUMMARY
This summary highlights information
contained elsewhere in this proxy statement. It does not contain all of the
information that you should consider, and you should read the entire proxy
statement carefully before voting.
ANNUAL MEETING INFORMATION |
10:00 a.m. (Pacific Time) on Wednesday, March 18, 2015 Doors open at 8:00 a.m.
(Pacific Time) |
Marion Oliver
McCaw Hall at the Seattle Center 321 Mercer Street Seattle, WA
98109 |
Voting: |
● Shareholders as of the record date, January 8, 2015, are
entitled to vote.
● Your broker will NOT be able to vote your shares with respect
to any of the matters presented at the meeting other than the ratification
of the selection of our independent registered public accounting firm,
unless you give your broker specific voting
instructions.
● In Person. To be admitted, you will be
required to present a government-issued photo identification (such as a
drivers license or passport) and proof of share ownership. More
information can be found on the back cover of this proxy
statement. |
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Attending
the Annual
Meeting: |
● Via Webcast. Shareholders may view and listen to a live
webcast of the meeting. The webcast will start at 10:00 a.m. (Pacific
Time). See our Investor Relations website at http://investor.starbucks.com for
details.
● You do not need to attend the Annual Meeting of Shareholders to
vote if you submitted your proxy in advance of the
meeting. |
ANNUAL MEETING AGENDA AND VOTING RECOMMENDATIONS
Starbucks
Corporation |
|
2015 Proxy Statement |
1 |
Table of Contents
BOARD
NOMINEES
The following table provides summary
information about each director nominee. Each director nominee is elected
annually by a majority of votes cast.
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Director |
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Committee
Memberships |
Name |
Age |
Since |
Principal
Occupation |
Independent |
ACC |
CMDC |
NCGC |
Howard Schultz |
61 |
1985 |
chairman and chief executive officer |
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of
Starbucks Corporation |
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William W. Bradley |
71 |
2003 |
managing director of Allen & |
X |
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X |
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Company |
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Robert M. Gates |
71 |
2012 |
former United States Secretary of |
X |
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X |
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Defense |
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Mellody Hobson |
45 |
2005 |
president and director of Ariel |
X |
C |
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Investments |
|
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Kevin R. Johnson* |
54 |
2009 |
president and chief operating officer |
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of
Starbucks Corporation |
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Olden Lee |
73 |
2003 |
retired executive of PepsiCo |
X |
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X |
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Joshua Cooper Ramo |
46 |
2011 |
vice chairman of Kissinger |
X |
X |
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X |
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Associates |
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James G. Shennan, Jr. |
73 |
1990 |
general partner emeritus of Trinity |
X |
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X |
C |
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Ventures |
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Clara Shih |
33 |
2011 |
chief executive officer of Hearsay |
X |
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X |
X |
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Social |
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Javier G. Teruel |
64 |
2005 |
retired vice chairman of Colgate- |
X |
X |
X |
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Palmolive Company |
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Myron E. Ullman, III |
68 |
2003 |
chief executive officer of J.C. Penney |
X |
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C |
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Company, Inc. |
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Craig E. Weatherup |
69 |
1999 |
retired chief executive officer of |
X, P |
X |
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X |
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Pepsi-Cola |
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C |
Chair |
ACC |
Audit and Compliance Committee |
CMDC |
Compensation and Management Development
Committee |
NCGC |
Nominating and Corporate Governance
Committee |
P |
Presiding (lead) independent
director |
* |
Mr. Johnson was an
independent member of the board of directors, the chair of the CMDC and a
member of the ACC until his appointment as president and chief operating
officer of Starbucks in January 2015, after which time he continued to
serve as a non-independent member of the board of directors. |
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2 |
Starbucks Corporation
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2015 Proxy
Statement |
Table of Contents
PROXY STATEMENT
SUMMARY
CORPORATE GOVERNANCE HIGHLIGHTS
Board Independence |
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Independent
director |
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nominees |
10 of 12 |
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Independent presiding |
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director |
Craig E. Weatherup |
● |
Independent
board |
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committees |
All |
● |
Age limit |
75 |
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Director Elections |
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● |
Frequency of
board |
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elections |
Annual |
● |
Voting standard for |
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uncontested elections |
Majority of votes cast |
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Board Meetings in Fiscal 2014 |
● |
Full board
meetings |
8 |
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Independent director-only |
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sessions |
8 |
Board Committee Meetings in Fiscal 2014 |
● |
Audit and
Compliance |
10 |
● |
Compensation and |
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Management Development |
6 |
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Nominating and
Corporate |
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Governance |
6 |
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Evaluating and Improving Board |
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Performance |
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● |
Board
evaluations |
Annually |
● |
Committee evaluations |
Annually |
● |
Board
orientation |
Yes |
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Aligning Director and Shareholder Interests |
● |
Director stock
ownership |
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guidelines |
Yes |
● |
Director equity grants |
Yes |
Starbucks delivered record results
in fiscal 2014, increasing net revenue by 11% and non-GAAP operating
income(1) by 25% year over year; 3-year cumulative total shareholder
return (TSR) was 110%.
Starbucks delivered exceptional financial
performance in fiscal 2014. Total net revenue increased 11% to a record $16.4
billion. Global comparable store sales grew 6% driven by a 3% increase in the
number of transactions and a 3% increase in average ticket. In addition, we
returned $1.6 billion to shareholders in the form of cash dividend payments and
share repurchases in fiscal 2014. Starbucks results for fiscal 2014 demonstrate
the continued strength of our global business model and our ability to
successfully execute new growth initiatives in a disciplined manner.
11%
Revenues |
25%
Operating
Income1 |
110%
3-yr Cumulative
TSR |
(1) Fiscal 2014
non-GAAP operating income was $3,063.3 million and excludes a litigation
credit reflecting a reduction to our estimated prejudgment interest
payable as a result of paying our obligation under the Kraft Foods Global,
Inc. (Kraft) arbitration matter earlier than anticipated ($20.2 million)
as well as certain transaction costs incurred in fiscal 2014 related to
the planned acquisition of Starbucks Japan and costs related to the sale
of our Australia retail operations in fiscal 2014 ($2.4 million).
Including these items, fiscal 2014 operating income was $3,081.1 million.
Fiscal 2013 non-GAAP operating income was $2,458.7 million and excludes
the impact of a charge in the amount of $2,784.1 million resulting from
the conclusion of our arbitration with Kraft. Including the impact of this
charge, fiscal 2013 operating loss was $325.4
million. |
Starbucks Corporation |
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2015 Proxy Statement |
3 |
Table of Contents
Financial Results Under
Incentive Plans
The charts below compare fiscal 2014, 2013
and 2012 results1 under financial performance metrics that are used
in determining (i) payouts under our Executive Management Bonus Plan (EMBP)
and (ii) the number of performance-based Restricted Stock Units (performance
RSUs) earned. Note that these financial measures differ
from the comparable GAAP measures reported
in our financial statements, as the measures below are adjusted to exclude the
impact of certain non-recurring and other items in accordance with the terms of
our EMBP and our 2005 Long-Term Equity Incentive Plan.
Dollar amounts below, except per share data, are in millions.
(1) |
Our fiscal year ends on the Sunday closest to September 30. Fiscal
years 2014, 2013 and 2012 each included 52 weeks. |
|
|
(2) |
The fiscal 2014 consolidated adjusted net revenue results exclude
the impact of foreign currency fluctuations. Fiscal 2013 consolidated
adjusted net revenue results exclude the impact of the acquisition and
results of the Teavana business, certain asset dispositions, and foreign
currency fluctuations. Net revenue was not a performance measure under our
incentive plans during fiscal 2012. The fiscal 2012 number shown here is
the GAAP result previously reported by the Company and does not reflect
adjustments we might have made if it had been a performance measure under
our fiscal 2012 incentive plans. |
|
|
(3) |
The fiscal 2014 consolidated adjusted operating income results
exclude the impact of mark to market adjustments from the investments that
our Management Deferred Compensation Plan (MDCP) invests in, foreign
currency fluctuations and a litigation credit reflecting a reduction to
our estimated prejudgment interest payable as a result of paying our
obligation under the Kraft arbitration matter earlier than anticipated.
Fiscal 2013 consolidated adjusted operating income results exclude the
impact of a significant litigation charge resulting from the conclusion of
our arbitration with Kraft, the acquisition and results of the Teavana
business, certain asset dispositions, mark to market adjustments from the
investments that our MDCP invests in, foreign currency fluctuations and
certain other items. Fiscal 2012 consolidated adjusted operating income
results exclude the impact of significant acquisitions, restructuring,
mark to market adjustments from the investments that our MDCP invests in,
foreign currency fluctuations and certain other items. |
|
|
(4) |
Return on Invested Capital (ROIC) is calculated as adjusted net
operating profit after taxes (adjusted for implied interest expense on
operating leases), divided by average invested capital. Invested capital
is calculated on a five-point average and includes shareholders equity,
short- and long-term debt, all other long-term liabilities, and
capitalized operating leases, less cash, cash equivalents and short- and
long-term investments. Fiscal 2014 ROIC results exclude the impact of a litigation credit
reflecting a reduction to our estimated prejudgment interest payable as a
result of paying our obligation under the Kraft arbitration matter earlier
than anticipated, the portion of the Companys cash balance at fiscal 2013
year-end attributable to the accrued liability for the Kraft arbitration
matter, the impact of certain divestitures that closed during the year and
transaction costs related to the Starbucks Japan acquisition process which
began in 2014. Fiscal 2013 ROIC results exclude the impact of a
significant litigation charge resulting from the conclusion of our
arbitration with Kraft, the acquisition and results of the Teavana
business, certain asset dispositions, mark to market adjustments from the
investments that our MDCP invests in, foreign currency fluctuations and
certain other items. Fiscal 2012 ROIC results exclude the impact of
significant acquisitions, restructuring, mark to market adjustments from
the investments that our MDCP invests in, foreign currency fluctuations
and certain other items. |
|
|
(5) |
Fiscal 2014 adjusted earnings per
share results exclude the impact of a litigation credit reflecting a
reduction to our estimated prejudgment interest payable as a result of
paying our obligation under the Kraft arbitration matter earlier than
anticipated, the impact of certain divestitures that closed during the
year and transaction costs related to the Starbucks Japan acquisition
process which began in 2014. Earnings per share was not measured for
purposes of our incentive plans during fiscal 2013 and the number shown
here is the reported non-GAAP number which was adjusted to exclude the
impact of a significant litigation charge resulting from the conclusion of
our arbitration with Kraft, and certain asset dispositions. Fiscal 2012
adjusted earnings per share results exclude the impact of significant
acquisitions, restructuring and certain other
items. |
4 |
Starbucks Corporation |
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2015 Proxy Statement |
Table of Contents
PROXY STATEMENT
SUMMARY
EXECUTIVE COMPENSATION HIGHLIGHTS
Our executive compensation program is
designed to achieve the following key objectives:
●Enable the attraction and
retention of top talent by competing
effectively for the highest quality people who will help shape our long-term
success;
●Pay for
performance through aligning compensation
with the achievement of both short-term and long-term financial objectives that
build shareholder value; and
●Be true to our
values by supporting our mission
statement and guiding principles.
Some of the compensation best practices
we employ to achieve these objectives include:
What We Do |
What We Dont Do |
●Deliver a majority of
executives target total direct compensation in the form of variable,
at-risk, performance-based compensation
●Utilize performance-based
RSUs with vesting requirements
●Require our executives and
directors to satisfy rigorous stock ownership guidelines
●Maintain a clawback
policy
●Prohibit partners from
engaging in hedging transactions in Starbucks stock or pledging Starbucks
stock
●Conduct annual say-on-pay
advisory votes |
●Have single-trigger
change-in-control equity acceleration provisions
●Provide cash-based
change-in-control benefits
●Provide excise tax gross-ups
of perquisites
●Provide significant
perquisites
●Maintain a supplemental
executive retirement plan (SERP) |
As a matter of good corporate governance,
the Audit Committee is asking our shareholders to ratify the selection of
Deloitte & Touche LLP to serve as our independent registered public
accounting firm for fiscal 2015. The following table sets forth the aggregate
fees billed by Deloitte for fiscal 2014 and fiscal 2013.
Type of
Fees |
Fiscal
2014 |
Fiscal
2013 |
Audit Fees |
$ |
5,805,000 |
$ |
5,317,000 |
Audit-Related Fees |
$ |
124,000 |
$ |
130,000
|
Tax Fees |
$ |
354,000 |
$ |
362,000 |
All Other Fees |
$ |
20,000 |
$ |
44,000 |
Total |
$ |
6,303,000 |
$ |
5,853,000 |
Starbucks Corporation |
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2015 Proxy Statement |
5 |
Table of Contents
PROXY
STATEMENT
STARBUCKS
CORPORATION
2401 Utah
Avenue South
Seattle, Washington 98134
We are making this proxy statement
available to you on or about January 23, 2015 in connection with the
solicitation of proxies by our board of directors for the Starbucks Corporation
2015 Annual Meeting of Shareholders. At Starbucks and in this proxy statement,
we refer to our employees as partners. Also in this proxy statement we
sometimes refer to Starbucks as the Company, we or us, and to the 2015
Annual Meeting of Shareholders
as the Annual Meeting or the Annual
Meeting of Shareholders. When we refer to the
Companys fiscal year, we mean the annual period ending on the Sunday closest to
September 30 of the stated year. Information in this proxy statement for 2014
generally refers to our 2014 fiscal year, which was from September 30, 2013
through September 28, 2014 (fiscal 2014). Fiscal years 2014, 2013 and 2012
each included 52 weeks.
VOTING INFORMATION
Record
Date. The record date for the Annual Meeting
is January 8, 2015. On the record date, there were 750,096,888 shares of our
common stock outstanding and there were no outstanding shares of any other class
of stock.
Voting Your
Proxy. Holders of shares of common stock are
entitled to cast one vote per share on all matters. Proxies will be voted as
instructed by the shareholder or shareholders granting the proxy. Unless
contrary instructions are specified, if the proxy is completed and submitted
(and not revoked) prior to the Annual Meeting, the shares of Starbucks common
stock represented by the proxy will be voted: (i) FOR the election of each of the twelve
director candidates nominated by the board of directors; (ii) FOR approval of the
advisory resolution on our executive compensation; (iii) FOR the ratification of the
selection of Deloitte & Touche LLP as our independent registered public
accounting firm for the fiscal year ending September 27, 2015 (fiscal 2015);
(iv) AGAINST the shareholder proposal regarding a board committee on sustainability;
(v) AGAINST
the shareholder proposal to require an independent board chairman and (vi) in
accordance with the best judgment of the named proxies on any other matters
properly brought before the Annual Meeting.
Revoking Your
Proxy. If you are a registered shareholder
(meaning, a shareholder who holds share certificates issued in his or her name
and therefore appears on the share register) and have executed a proxy, you may
revoke or change your proxy at any time before it is exercised by (i) executing
and delivering a later-dated proxy card to our corporate secretary prior to the
Annual Meeting; (ii) delivering written notice of revocation of the proxy to our
corporate secretary prior to the Annual Meeting; or (iii) attending and voting
in person at the Annual Meeting. Attendance at the Annual Meeting, in and of
itself, will not constitute a revocation of a proxy. If you voted by telephone
or the Internet and wish to change your vote, you may call the toll-free number
or go to the Internet site, as may be applicable in the case of your earlier
vote, and follow the
directions for revoking or changing your
vote. If your shares are held in the name of a broker, bank or other holder of
record, you should follow the voting instructions you receive from the holder of
record to revoke or change your vote.
Vote
Required. The presence, in person or by
proxy, of holders of a majority of the outstanding shares of Starbucks common
stock is required to constitute a quorum for the transaction of business at the
Annual Meeting. Abstentions and broker non-votes (shares held by a broker or
nominee that does not have discretionary authority to vote on a particular
matter and has not received voting instructions from its client) are counted for
purposes of determining the presence or absence of a quorum for the transaction
of business at the Annual Meeting.
We have adopted majority voting procedures
for the election of directors in uncontested elections. If a quorum is present,
a nominee for election to a position on the board of directors will be elected
as a director if the votes cast for the nominee exceed the votes cast against
the nominee. The term of any incumbent director who does not receive a majority
of votes cast in an election held under the majority voting standard terminates
on the earliest to occur of (i) 90 days from the date on which the voting
results of the election are certified; (ii) the date the board of directors
fills the position; or (iii) the date the director resigns. If a quorum is
present, approval of the advisory resolution on executive compensation,
ratification of the selection of Deloitte & Touche LLP as our independent
registered public accounting firm and approval of the shareholder proposals, and
any other matters that properly come before the meeting, require that the votes
cast in favor of such actions exceed the votes cast against such actions. The
following will not be considered votes cast and will not count towards the
election of any director nominee or approval of the other proposals: (i) broker
non-votes; (ii) a share whose ballot is marked as abstain; (iii) a share
otherwise present at the Annual Meeting but for which there is an abstention;
and (iv) a share otherwise present at the Annual Meeting as to which a
shareholder gives no authority or direction.
6 |
Starbucks Corporation |
|
2015 Proxy Statement |
Table of Contents
PROXY STATEMENT
Unless you provide voting instructions
to any broker holding shares on your behalf, your broker may not use
discretionary authority to vote your shares on any of the matters to be
considered at the Annual Meeting other than the ratification of our independent
registered
public accounting firm. Please vote
your proxy so your vote can be counted. Proxies and ballots will be received and tabulated by Broadridge
Financial Services, our inspector of elections for the Annual
Meeting.
Starbucks Corporation |
|
2015 Proxy Statement |
7 |
Table of Contents
PROPOSAL 1 ELECTION OF
DIRECTORS
Our board of directors currently has
twelve members. Under our bylaws, the number of directors may be changed at any
time by a resolution of the board of directors. Each of the twelve current
directors was elected at the 2014 Annual Meeting, upon the recommendation of the
Nominating and Corporate Governance Committee (the Nominating/Governance
Committee). The terms of all the directors expire upon the election and
qualification of the directors to be elected at the Annual Meeting. The board of
directors has nominated all twelve of the current directors for election at the
Annual Meeting, to serve until the 2016 Annual Meeting of Shareholders and until
their respective successors have been elected and qualified.
Unless otherwise directed, the persons
named in the proxy intend to vote all proxies FOR the election of the nominees, as
listed below, each of whom has consented to serve as a director if elected. If,
at the time of the Annual Meeting, any nominee is unable or declines to serve as
a director, the discretionary authority provided in the enclosed proxy will be
exercised to vote for a substitute candidate designated by the board of
directors, unless the board chooses to reduce its own size. The board of
directors has no reason to believe that any of the nominees will be unable or
will decline to serve if elected. Proxies cannot be voted for more than twelve
persons since that is the total number of nominees.
Set forth below is certain information
furnished to us by the director nominees. There are no family relationships
among any of our current directors or executive officers. None of the
corporations or other organizations referenced in the biographical information
below is a parent, subsidiary or other affiliate of Starbucks.
We believe that our directors should
satisfy a number of qualifications, including demonstrated integrity, a record
of personal accomplishments, a commitment to participation in board activities
and other traits discussed below in Our Director Nominations Process. We also
endeavor to have a board representing a range of skills and depth of experience
in areas that are relevant to and contribute to the boards oversight of the
Companys global activities. Following the biographical information for each
director nominee, we describe the key experience, qualifications and skills our
directors bring to the board that, for reasons discussed below, are important in
light of Starbucks businesses and structure. The board considered these
experiences, qualifications and skills and the directors other qualifications
in determining to recommend that the directors be nominated for
election.
● |
Food and beverage industry experience. As the premier roaster, marketer and retailer of specialty coffee
in the world, we seek directors who have knowledge of and experience in
the food and beverage industry, which is useful in understanding the
products that we develop and our licensing operations. |
|
|
● |
Consumer products and foodservice experience. We seek directors with expertise in consumer products
and foodservice as we continue to increase our focus on expanding our
Channel Development business on a global scale. |
|
|
● |
Brand marketing experience. Brand
marketing experience is important for our directors to have because of the
importance of image and reputation in the specialty coffee business and
our objective to maintain Starbucks standing as one of the most recognized
and respected brands in the world. |
|
|
● |
International operations and distribution experience. Starbucks has a strong global presence with operations
in 66 countries around the world (as of the date of this proxy statement)
and had approximately 50,000 partners (employees) employed outside the
U.S. as of the end of fiscal 2014. Accordingly, international operations
and distribution experience is important for our directors to have,
especially as we continue to expand globally and develop new channels of
distribution. |
|
|
● |
Domestic and international public policy experience. We believe that it is important for our directors to
have domestic and international public policy experience in order to help
us address significant public policy issues, adapt to different business
and regulatory environments and facilitate our work with governments all
over the world. |
|
|
● |
Digital and social media experience. As a consumer retail company, it is important for our directors to
have digital and social media experience which can provide insight and
perspective with respect to our marketing, sales and customer service
functions. |
|
|
● |
Public company board experience. Directors who have served on other public company boards can offer
advice and perspective with respect to board dynamics and operations,
relations between the board and Starbucks management and other matters,
including corporate governance, executive compensation and oversight of
strategic, operational and compliance-related matters. |
|
|
● |
Senior leadership experience. We
believe that it is important for our directors to have served in senior
leadership roles at other organizations, which demonstrates strong
abilities to motivate and manage others, to identify and develop
leadership qualities in others and to manage organizations.
|
8 |
Starbucks Corporation |
|
2015 Proxy Statement |
Table of Contents
PROPOSAL 1 ELECTION OF
DIRECTORS
NOMINEES
HOWARD SCHULTZ, 61, is the founder of
Starbucks Corporation and serves as our chairman and chief executive officer. Mr.
Schultz has served as chairman of the board of directors since our inception in
1985, and in January 2008, he reassumed the role of president and chief
executive officer. From June 2000 to February 2005, Mr. Schultz also held the
title of chief global strategist. From November 1985 to June 2000, he served as
chairman of the board and chief executive officer. From November 1985 to June
1994, Mr. Schultz also served as president. From January 1986 to July 1987, Mr.
Schultz was the chairman of the board, chief executive officer and president of
Il Giornale Coffee Company, a predecessor to the Company. From September 1982 to
December 1985, Mr. Schultz was the director of retail operations and marketing
for Starbucks Coffee Company, a predecessor to the Company. Mr. Schultz
previously served on the Board of Directors of Groupon, Inc. through April of
2012.
|
DIRECTOR
QUALIFICATIONS: |
|
|
●As the founder of Starbucks,
Mr. Schultz has demonstrated a record of innovation, achievement and
leadership. This experience provides the board of directors with a unique
perspective into the operations and vision for Starbucks. Through his
experience as the chairman and chief executive officer, Mr. Schultz is
also able to provide the board of directors with insight and information
regarding Starbucks strategy, operations and business. In addition, Mr.
Schultz brings to the board more than 30 years of experience with
Starbucks and extensive experience in the food and beverage industry,
brand marketing and international distribution and
operations. |
|
WILLIAM W. BRADLEY, 71, has been a
Starbucks director since June 2003. Since 2000, Senator Bradley has been a
Managing Director of Allen & Company LLC, an investment banking firm. From
2001 until 2004, he acted as Chief Outside Advisor to McKinsey & Companys
non-profit practice. In 2000, Senator Bradley was a candidate for the Democratic
nomination for President of the United States. He served as a Senior Advisor and
Vice Chairman of the International Council of JP Morgan & Co. from 1997
through 1999. During that time, Senator Bradley also worked as an essayist for
CBS Evening News, and as a Visiting Professor at Stanford University, the University of
Notre Dame and the University of Maryland. Senator Bradley served in the U.S.
Senate from 1979 until 1997, representing the State of New Jersey. Prior to
serving in the U.S. Senate, he was an Olympic gold medalist in 1964, and from
1967 through 1977 he played professional basketball for the New York Knicks,
during which time they won two world championships. Senator Bradley previously
served on the Boards of Directors of Seagate Technology and Willis Group
Holdings Limited and currently serves on the Board of Directors of QuinStreet,
Inc.
|
DIRECTOR
QUALIFICATIONS: |
|
|
●Based on over 18 years in
the U.S. Senate, Senator Bradley has a deep understanding of U.S.
governmental and regulatory affairs, public policy and international
relations. He is able to provide the board of directors with unique
insights into Starbucks strategy, operations and business. Senator Bradley
also has extensive experience in the private sector, including in
consulting, financial services and media and communications. In addition,
Senator Bradley brings to the board extensive experience as a director on
the boards of other publicly traded companies, with knowledge in a number
of important areas, including leadership and corporate
governance. |
|
ROBERT M. GATES, 71, has been a Starbucks
director since May 2012. In October 2013, Secretary Gates was elected to the
National Executive Board of the Boy Scouts of America. In May 2014, he was named
its National President for a two-year term. Secretary Gates served in numerous
roles in the Executive Branch of the U.S. government for nearly half a century,
culminating as Secretary of Defense from December 2006 to June 2011. In
September 2011, Secretary Gates was named Chancellor of the College of William
& Mary. From August 2002 to December 2006, he served as president of Texas
A&M University. Secretary Gates has previously been a member of the Board of
Directors of several companies, including Brinker International, Inc., NACCO
Industries, Inc., Parker Drilling Company and the Board of Independent Trustees
of the Fidelity Funds.
|
DIRECTOR
QUALIFICATIONS: |
|
|
●Secretary Gates extensive
career in various leadership roles in the executive branch of government
provides the board of directors with invaluable perspective on domestic
and international issues and risks affecting Starbucks business throughout
the world. The board of directors also benefits from his leadership
experience at large institutions that deal with problem solving in which
many, often conflicting, public and private cultural, political, economic
and other interests are involved. Additionally, his experience as a member
of the board of directors of several public companies, including his roles
as the chair of audit committees, strengthens the depth of corporate
governance and risk assessment knowledge of the board. |
|
Starbucks Corporation |
|
2015 Proxy Statement |
9 |
Table of Contents
MELLODY HOBSON, 45, has been a Starbucks
director since February 2005. Ms. Hobson has served as the President and a
Director of Ariel Investments, LLC, a Chicago-based investment management firm
since 2000, and as the Chairman since 2006 and a Trustee since 1993 of the
mutual funds it manages. She previously served as Senior Vice President and
Director of Marketing at Ariel Capital Management, Inc. from 1994 to 2000, and
as Vice President of Marketing at Ariel Capital Management, Inc. from 1991 to
1994. Ms. Hobson works with a variety of civic and professional institutions,
including serving as a Board Member of the Chicago Public Education Fund and as
Chairman of After School Matters, which provides Chicago teens with high quality
out-of-school time programs. Ms. Hobson also serves on the Boards of Directors
of The Estee Lauder Companies, Inc. and DreamWorks Animation SKG, Inc., where
she is Chairman of the Board. Additionally, she is on the Board of Governors of
the Investment Company Institute. Ms. Hobson served on the Board of Directors of
Groupon, Inc. through May 20, 2014.
|
DIRECTOR
QUALIFICATIONS: |
|
|
●As the president and a director of a large investment
company, Ms. Hobson brings significant leadership, operational, investment
and financial expertise to the board of directors. Ms. Hobsons experience
as an on-air CBS news contributor and analyst on finance and the economy
provides insight into media and communications and public relations
considerations. Ms. Hobson also brings to the board of directors valuable
knowledge of corporate governance and similar issues from her service on
other publicly traded companies boards of directors as well as her
service on the Securities and Exchange Commission (SEC) Investment
Advisory Committee, which advises the SEC on matters of concern to
investors in the securities markets. In addition, Ms. Hobson has brand
marketing experience through her service on the Board of Directors of
DreamWorks Animation and The Estee Lauder Companies. |
|
KEVIN R. JOHNSON, 54, was appointed as our
president and chief operating officer by our board of directors in January 2015
and has been a Starbucks director since March 2009. Mr. Johnson served as Chief
Executive Officer of Juniper Networks, Inc., a leading provider of
high-performance networking products and services, from September 2008 to
December 2013. He also served on the Board of Directors of Juniper Networks from
September 2008 through February 2014. Prior to joining Juniper Networks, Mr.
Johnson served as President, Platforms and Services Division for Microsoft
Corporation, a worldwide provider of software, services and solutions. Mr.
Johnson was a member of Microsofts Senior Leadership Team and held a number of
senior executive positions over the course of his 16 years at Microsoft. Prior
to joining Microsoft in 1992, Mr. Johnson worked in International Business
Machine Corp.s systems integration and consulting business. He also serves on
the Board of Directors of Auction.com.
|
DIRECTOR
QUALIFICATIONS: |
|
|
●Mr. Johnson has extensive experience in the technology
industry and is able to provide the board of directors with his unique
insights into platforms for global integration of information systems as
well as the use of technology in our brand marketing and media and
communications efforts. Through his various senior leadership positions,
including his experience as Chief Executive Officer of Juniper Networks
and extensive senior executive experience with a large, multinational
company, Mr. Johnson also has experience with the challenges inherent in
managing a complex organization, leading global businesses focused on both
consumer and business needs and utilizing technology to drive business
productivity and experience. |
|
OLDEN LEE, 73, has been a Starbucks
director since June 2003. Mr. Lee also served as our interim executive vice
president, Partner Resources from April 2009 to March 2010. Mr. Lee previously
worked with PepsiCo, Inc., a global food, snack and beverage company, for 28
years in a variety of positions, including serving as Senior Vice President of
human resources of its Taco Bell division and Senior Vice President and Chief
Personnel Officer of its KFC division. Mr. Lee retired from PepsiCo in 1998.
Since 1998, Mr. Lee has served as Principal of Lee Management Consulting, a
management consulting firm he founded. Mr. Lee previously served on the Board of
Directors of TLC Vision Corporation. He currently serves on the National Board
of Advisors of Eller College of Management at the University of
Arizona.
|
DIRECTOR
QUALIFICATIONS: |
|
|
●Through his prior experience as a senior human resources
executive of a large, global food, snack and beverage company, Mr. Lee
brings to the board experience in managing a complex international
workforce in the food and beverage industry, as well as senior leadership
experience. From this experience as well as his public company board
experience, Mr. Lee offers the board of directors a unique perspective and
insight into a number of important areas, including leadership, executive
compensation, risk assessment, compliance and corporate governance. Mr.
Lee also has significant experience in dealing with international
operational and management issues. |
|
10 |
Starbucks Corporation |
|
2015 Proxy Statement |
Table of Contents
PROPOSAL 1 ELECTION OF
DIRECTORS
JOSHUA COOPER RAMO, 46, has been a
Starbucks director since May 2011. Mr. Ramo is Vice Chairman of Kissinger
Associates, a strategic advisory firm where he has been employed since 2005. He
was previously the Managing Partner and a senior advisor for the Office of John
L. Thornton, a corporate advisory specialist and an advisor to Goldman Sachs,
from 2003 to 2005. Mr. Ramo spent his early career as a journalist, most
recently with TIME magazine, from 1996 to 2003 serving as Senior Editor and Foreign Editor.
He is a leading China scholar and has written several papers on Chinas
development that have been distributed in China and abroad. In 2008, Mr. Ramo
served as China Analyst for NBC during the Summer Olympics in Beijing. He is the
author of the New York Times best-selling book, The Age
of the Unthinkable. Mr. Ramo has been a term
member of the Council on Foreign Relations, Asia 21 Leaders Program, World
Economic Forums Young Global Leaders and Global Leaders for Tomorrow, and
co-founder of the U.S. - China Young Leaders Forum. He also serves on the Board
of Directors and Audit Committee of FedEx Corporation.
|
DIRECTOR
QUALIFICATIONS: |
|
|
●Mr. Ramos broad international experience provides the
board of directors with his unique insights related to Starbucks strategy,
operations and business as a global company. Mr. Ramo brings to the board
significant domestic and international public policy experience and media
and communications experience from his career as a journalist and author
and service with several international non-governmental organizations as
well as public company board experience. Mr. Ramo has extensive knowledge
in a number of important areas, including innovative problem-solving
related to global risks and opportunities, particularly with regard to
China. |
|
JAMES G. SHENNAN, JR., 73, has been a
Starbucks director since March 1990. Mr. Shennan served as a General Partner of
Trinity Ventures, a venture capital organization, from September 1989 to July
2005, when he became General Partner Emeritus. Prior to joining Trinity
Ventures, he served as the Chief Executive of Addison Consultants, Inc., an
international marketing services firm, and two of its predecessor companies. Mr.
Shennan previously served on the Board of Directors of P.F. Changs China
Bistro, Inc. until July of 2012.
|
DIRECTOR
QUALIFICATIONS: |
|
|
●As a member of our board of directors since 1990, Mr.
Shennan brings valuable knowledge of Starbucks culture, operations and
development into a worldwide brand to the board of directors. In addition,
Mr. Shennan provides the benefits of service on the boards of other
publicly traded companies, including food and beverage industry experience
and board leadership experience from his service as the lead independent
director of P.F. Changs China Bistro and extensive knowledge of executive
compensation and corporate governance issues. Mr. Shennan also brings to
the board brand marketing experience, international distributions and
operations experience and finance experience from his roles with Trinity
Ventures, Addison Consultants and Procter & Gamble. |
|
CLARA SHIH, 33, has been a Starbucks
director since December 2011. Ms. Shih is Chief Executive Officer and a Board
Member of Hearsay Social, Inc., an enterprise software company serving Fortune
500 brands that she co-founded in August 2009. From June 2006 to June 2009, she
served as Product Management Director, AppExchange of salesforce.com, inc., an
enterprise software company. From 2004 to 2006, she served as Associate,
Strategy and Business Operations for Google, Inc. Previously, Ms. Shih was a
software engineer at Microsoft Corporation. Ms. Shih, the creator of the first
business application on Facebook, is the author of The Facebook Era, a marketing textbook
at Harvard Business School. In 2011, she was named one of Businessweeks Top Young
Entrepreneurs, one of Fortunes Most Powerful Women
Entrepreneurs and one of CNN Moneys 40 under 40: Ones to Watch.
|
DIRECTOR
QUALIFICATIONS: |
|
|
●Ms. Shih brings to the board digital and social media
expertise, brand marketing, innovation and entrepreneurial experience from
her position with Hearsay Social, as well as her prior experience at other
technology companies. She provides unique insights to Starbucks related to
technology innovation and growth of business on social networking sites
across marketing, sales, customer service, recruiting and R&D
functions. |
|
Starbucks Corporation |
|
2015 Proxy Statement |
11 |
Table of Contents
JAVIER G. TERUEL, 64, has been a Starbucks
director since September 2005. Mr. Teruel served as Vice Chairman of
Colgate-Palmolive Company, a consumer products company, from July 2004 to April
2007, when he retired. Prior to being appointed Vice Chairman, Mr. Teruel served
as Colgate-Palmolives Executive Vice President responsible for Asia, Central
Europe, Africa and Hills Pet Nutrition. After joining Colgate in Mexico in
1971, Mr. Teruel served as Vice President of Body Care in Global Business
Development in New York and President and General Manager of Colgate-Mexico. He
also served as President of Colgate-Europe, and as Chief Growth Officer
responsible for the companys growth functions. Mr. Teruel currently serves as a
Partner of Spectron Desarrollo, SC, an impact investment and consulting firm and
as Chairman of Alta Growth Capital, a private equity firm. He previously served
on the Boards of Directors of The Pepsi Bottling Group, Inc. and Corporaciòn Geo
S.A.B. de C.V. He currently serves on the Boards of Directors of J.C. Penney
Company, Inc. and the Nielsen Company B.V.
|
DIRECTOR
QUALIFICATIONS: |
|
|
●Mr. Teruel brings to the board extensive brand marketing
experience and international distribution and operations experience from
his various executive roles at a large, multinational consumer products
company, including considerable product development, merchandising and
marketing skills and perspectives. His international background provides
unique insights relevant to Starbucks strategy, operations and business as
a global company. Through his senior leadership and public company board
experience, Mr. Teruel also possesses extensive knowledge in a number of
important areas, including leadership, finance and risk
assessment. |
|
MYRON E. ULLMAN, III, 68, has been a
Starbucks director since January 2003. Mr. Ullman has served as Chief Executive
Officer and a member of the Board of Directors of J.C. Penney Company, Inc., a
chain of retail department stores, since April 2013. Mr. Ullman previously
served as Executive Chairman of J.C. Penney Company, Inc., from November 2011 to
January 2012, and as the Chairman of the Board of Directors and Chief Executive
Officer from December 2004 to November 2011. Mr. Ullman served as Directeur
General, Group Managing Director of LVMH Möet Hennessy Louis Vuitton, a luxury
goods manufacturer and retailer, from July 1999 to January 2002. From January
1995 to June 1999, he served as Chairman and Chief Executive Officer of DFS
Group Limited, a retailer of luxury branded merchandise. From 1992 to 1995, Mr.
Ullman served as Chairman and Chief Executive Officer of R.H. Macy & Co.,
Inc. Mr. Ullman previously served on the Boards of Directors for Ralph Lauren
Corporation, Taubman Centers, Saks, Inc. and Pzena Investment Management, Inc.
He served as the Chairman of the Federal Reserve Bank of Dallas through the end
of 2013.
|
DIRECTOR
QUALIFICATIONS: |
|
|
●Through Mr. Ullmans senior leadership and public
company board experience with U.S. and international retailers, he brings
to the board of directors extensive knowledge in important areas,
including leadership of global businesses, finance, executive
compensation, risk assessment and compliance. He also brings to the board
brand marketing experience and international distribution and operations
experience from his roles at major U.S. and international retailers, as
well as insights and perspectives from positions he has held in the
technology and real estate industries and the public sector. Mr. Ullmans
experiences as chairman and chief executive officer of various entities
during his career provide the board of directors with insight into the
challenges inherent in managing a complex organization. |
|
CRAIG E. WEATHERUP, 69, has been a
Starbucks director since February 1999. Mr. Weatherup worked for PepsiCo, Inc.
for 24 years and served as Chief Executive Officer of its worldwide Pepsi-Cola
business and President of PepsiCo, Inc., retiring in 1999. He also led the
initial public offering of The Pepsi Bottling Group, Inc., where he served as
Chairman and Chief Executive Officer from March 1999 to January 2003. Mr.
Weatherup also serves on the Board of Directors of Macys, Inc.
|
DIRECTOR
QUALIFICATIONS: |
|
|
●Through Mr. Weatherups public company board experience
from his service on the board of directors of Macys, as well as his prior
senior leadership experience as a chairman and chief executive officer, he
is able to bring to the board of directors extensive knowledge in
important areas, including finance, leadership, executive compensation,
corporate governance, risk assessment and compliance. In addition, Mr.
Weatherup brings to the board food and beverage industry experience, as
well as brand marketing experience and international distribution and
operations experience from his prior role as chief executive officer of a
large, global food and beverage business. Mr. Weatherup also possesses
valuable knowledge of and insight into Starbucks business and operations
from his 15 years of service as a member of our board of
directors. |
|
THE BOARD OF DIRECTORS
RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE ELECTION OF EACH OF THE NOMINEES TO THE BOARD OF
DIRECTORS. |
12 |
Starbucks Corporation |
|
2015 Proxy Statement |
Table of Contents
CORPORATE
GOVERNANCE
The board of directors is responsible for
overseeing the exercise of corporate power and seeing that Starbucks business
and affairs are managed to meet the Companys stated goals and objectives and
that the long-term interests of the shareholders are served.
Howard Schultz currently serves as the
chairman of the board and our chief executive officer. On November 8, 2011, the
independent directors of the board elected Craig Weatherup, a non-employee
independent director, to serve as the presiding (lead) independent director
pursuant to our Corporate Governance Principles and Practices. Mr. Weatherups
term as presiding independent director expires at the board meeting immediately
following the 2016 Annual Meeting of Shareholders. Mr. Weatherup will not be
eligible to be elected for a subsequent term as presiding independent director,
as directors are limited to serving two consecutive two-year terms in that
role.
Our board leadership structure supports
the independence of our non-management directors. The independent directors meet
in an executive session at each board meeting, and each of the standing board
committees (discussed below) is comprised solely of and led by independent
directors. The presiding independent director presides at the scheduled
executive sessions of independent directors as well as all meetings of the board
at which the chairman is not present. The presiding independent director and the
chairman each have the authority to call meetings of the independent directors
and the entire Board. Pursuant to our Corporate Governance
Principles and Practices, the duties of
the presiding independent director also include:
● |
serving as a liaison between the
independent directors and the chairman of the board; |
|
|
● |
approving the scheduling of board
meetings, as well as the agenda and materials for each board meeting and
executive session of the independent directors; |
|
|
● |
approving and coordinating the
retention of advisors and consultants to the board; and |
|
|
● |
such other responsibilities as the
independent directors may designate from time to
time. |
The board believes that combining the
chairman and chief executive officer positions is currently the most effective
leadership structure for Starbucks given Mr. Schultzs in-depth knowledge of
Starbucks business and industry and his ability to formulate and implement
strategic initiatives. Mr. Schultz is intimately involved in positioning
Starbucks for on-going global growth, working closely with the Companys senior
leadership team to ensure continued disciplined growth and operational
excellence around the world. Mr. Schultz is thus in a position to elevate the
most critical business issues for consideration by the independent directors of
the board. In addition, having a combined chairman and chief executive officer
enables Starbucks to speak with a unified voice to shareholders, customers and
other stakeholders. The board believes that the combination of the chairman and
chief executive officer roles as part of a governance structure that includes a
presiding independent director, as well as the exercise of key board oversight
responsibilities by independent directors, provides an effective balance for the
management of the Company in the best interest of Starbucks
shareholders.
The board of directors has overall
responsibility for risk oversight, including, as part of regular board and
committee meetings, general oversight of executives management of risks
relevant to the Company. A fundamental part of risk oversight is not only
understanding the material risks a company faces and the steps management is
taking to manage those risks, but also understanding what level of risk is
appropriate for the Company. The involvement of the board of directors in
reviewing Starbucks business strategy is an integral aspect of the boards
assessment of managements tolerance for risk and also its determination of what
constitutes an appropriate level of risk for the Company.
While
the full board has overall responsibility for
risk oversight, the board has delegated oversight responsibility related to
certain risks to the Audit and Compliance Committee (the Audit Committee) and
the Compensation and Management Development Committee (the Compensation
Committee). The Audit Committee is
responsible for reviewing the Companys
risk assessment and risk management policies, as well as discussing the major
risk exposures Starbucks faces and the steps management takes to monitor and
control such exposures. The Audit Committee receives regular reports from
management including our chief compliance officer and vice president, Internal
Audit on risks facing the Company at its regularly scheduled meetings and other
reports as requested by the Audit Committee from time to time. The Compensation
Committee is responsible for reviewing and overseeing the management of any
potential material risks related to Starbucks compensation policies and
practices. The Compensation Committee reviews a summary and assessment of such
risks annually and in connection with discussions of various compensation
elements and benefits throughout the year.
The boards role in risk oversight has not
had any effect on the boards leadership structure.
Starbucks Corporation |
|
2015 Proxy Statement |
13 |
Table of Contents
AFFIRMATIVE DETERMINATIONS REGARDING DIRECTOR
INDEPENDENCE AND
OTHER MATTERS
Our board of directors has determined that
each of the following director nominees is an independent director as such
term is defined under NASDAQ rules:
William W.
Bradley |
James G. Shennan,
Jr. |
Robert M. Gates |
Clara Shih |
Mellody Hobson |
Javier G.
Teruel |
Kevin R. Johnson* |
Myron E. Ullman, III |
Olden Lee |
Craig E.
Weatherup |
Joshua Cooper Ramo |
|
* |
Mr. Johnson was an independent
member of the board of directors, the chair of the Compensation Committee
and a member of the Audit Committee until his appointment as president and
chief operating officer of Starbucks in January 2015, after which time he
continued to serve as a non-independent member of the board of
directors. |
Prior to his appointment as president and
chief operating officer, in determining that Mr. Johnson was independent, the
board of directors considered his position as an officer and director of a
public company, for a portion of fiscal 2014, from which Starbucks purchased
equipment in fiscal 2014, in an amount less than 1% of the annual revenues of
such company. In determining that Mr. Lee is independent, the board of directors
considered that he previously served,
at the request of Starbucks, as our
interim executive vice president, Partner Resources. Mr. Lee served in this
interim role for less than a year from April 2009 to March of 2010. The board of
directors determined that neither of these relationships constitutes a
related-person transaction under applicable SEC rules or would interfere with
the directors exercise of independent judgment in carrying out their
responsibilities as directors.
BOARD
COMMITTEES AND RELATED MATTERS
During fiscal 2014, our board of directors
had three standing committees: the Audit Committee, the Compensation Committee
and the Nominating/Governance Committee. The board of directors makes committee
and committee chair assignments annually at its meeting immediately preceding
the annual meeting of shareholders, although further changes to committee
assignments are made from
time to time as deemed appropriate by the
board. The committees operate pursuant to written charters, which are available
on our website at www.starbucks.com/about-us/company-information/corporate-governance.
The
current composition of each board committee
is set forth below.
Director |
Audit
and Compliance Committee |
Compensation and
Management Development Committee |
Nominating
and Corporate Governance Committee |
Board of
Directors |
Howard Schultz |
|
|
|
Chair |
William W. Bradley |
|
|
X |
X |
Robert M. Gates |
|
|
X |
X |
Mellody Hobson |
Chair |
|
|
X |
Kevin R. Johnson |
|
|
|
X |
Olden Lee |
|
X |
|
X |
Joshua Cooper
Ramo |
X |
|
X |
X |
James G. Shennan, Jr. |
|
X |
Chair |
X |
Clara Shih |
|
X |
X |
X |
Javier G. Teruel |
X |
X |
|
X |
Myron E. Ullman,
III |
|
Chair |
|
X |
Craig E. Weatherup |
X |
|
X |
X |
Fiscal 2014
Meetings |
10 |
6 |
6 |
8 |
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS,
ANNUAL
MEETING
During fiscal 2014, each director attended
at least 75% of all meetings of the board and board committees on which he or
she served (held during the period that such director served). Our Corporate
Governance Principles and Practices require each board member to attend our
annual
meeting of shareholders except for
absences due to causes beyond the reasonable control of the director. All of the
directors who then served on the board attended our 2014 Annual Meeting of
Shareholders.
14 |
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CORPORATE
GOVERNANCE
AUDIT
AND COMPLIANCE COMMITTEE
The Audit Committee annually reviews and
reassesses the adequacy of its charter. As more fully described in its charter,
the primary responsibilities of the Audit Committee are to:
● |
oversee our accounting and financial
reporting processes, including the review of the Companys quarterly and
annual financial results; |
|
|
● |
appoint the Companys independent
registered public accounting firm and oversee the relationship; including
monitoring the auditors independence and reviewing the scope of the
auditors work, including preapproval of audit and non-audit
services; |
|
|
● |
review the annual audit and
quarterly review processes with management and the independent registered
public accounting firm; |
|
|
● |
review managements assessment of
the effectiveness of the Companys internal controls over financial
reporting and the independent registered public accounting firms related
attestation; |
|
|
● |
oversee the Companys internal audit
function, including review of internal audit staffing and review of the
internal audit plan; |
● |
review and approve or ratify all
transactions with related persons and potential conflicts of interests
that are required to be disclosed in the proxy statement;
and |
|
|
● |
review the Companys risk assessment
and risk management policies. |
Each of Ms. Hobson and Messrs. Ramo,
Teruel and Weatherup currently (i) meets the independence criteria prescribed by
applicable law and the rules of the SEC for audit committee membership and is an
independent director as defined by NASDAQ rules; and (ii) meets NASDAQs
financial knowledge and sophistication requirements. Mr. Johnson met such
criteria during the entire time he served on the Audit Committee and ceased to
serve on the Audit Committee prior to his appointment as our president and chief
operating officer in January 2015. Each of Ms. Hobson and Messrs. Teruel and
Weatherup have been determined by the board of directors to be an audit
committee financial expert under SEC rules. The Audit and Compliance Committee Report describes in more detail the Audit Committees responsibilities with
regard to our financial statements and its interactions with our independent
auditor, Deloitte & Touche LLP.
COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE
The Compensation Committee annually
reviews and reassesses the adequacy of its charter. As more fully described in
its charter, the primary responsibilities of the Compensation Committee are
to:
● |
conduct an annual review of and
recommend to the independent directors of the board for their review and
approval the compensation package for the chairman and chief executive
officer; |
|
|
● |
conduct an annual review and approve
the compensation package for the Companys executive officers and senior
officers (as defined in its charter); |
|
|
● |
annually review and approve
objective performance measures and performance targets for all executive
officers and senior officers participating in the annual incentive bonus
plan and long-term incentive plans, and certify achievement of performance
measures after the measurement period; |
|
|
● |
approve, modify and administer
partner-based equity plans, the Executive Management Bonus Plan and
deferred compensation plans; |
|
|
● |
after consulting with the
independent directors, together with the chair of the
Nominating/Governance Committee, the chair of the Compensation Committee
annually reviews the performance of our chairman and chief executive officer and
meets with him to share the findings of the review; |
|
|
● |
annually review and approve our
management development and succession planning practices and
strategies; |
|
|
● |
annually review and approve the
Companys peer group companies and review market
data; |
● |
provide recommendations to the board
of directors on compensation-related proposals to be considered at the
Companys annual meeting, including Say-on-Pay and any related shareholder
feedback; |
|
|
● |
determine management stock ownership
guidelines and periodically review ownership levels for compliance;
and |
|
|
● |
annually review a report from
management regarding potential material risks, if any, created by the
Companys compensation policies and practices and inform the board of any
necessary actions. |
Messrs. Johnson, Lee, Shennan, Teruel and
Ullman and Ms. Shih served on the Compensation Committee during fiscal 2014. Mr.
Johnson ceased membership on the Compensation Committee prior to his appointment
as our president and chief operating officer in January 2015. At least annually,
the Compensation Committee reviews and approves our executive compensation
strategy and principles to confirm that they are aligned with our business
strategy and objectives, shareholder interests, desired behaviors and corporate
culture.
The Compensation Committees charter
allows it to delegate its authority to subcommittees of the committee, as may be
necessary or appropriate. In March 2010, the Compensation Committee formed a
special subcommittee, the Performance Compensation Subcommittee (the
Subcommittee), which is responsible for establishing, administering, reviewing
and approving any award intended to qualify for the performance-based
compensation exception of Section 162(m) of the Internal Revenue Code (Section
162(m)). The Subcommittee may establish, administer, review and approve any
compensation or compensatory award as may be requested by the
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Compensation Committee from time to
time. The current composition of the Subcommittee is: Messrs. Shennan, Teruel
and Ullman and Ms. Shih. Each member of the Subcommittee meets applicable
independence requirements as prescribed by NASDAQ, the SEC and the IRS. Since
Mr. Lee was an executive officer of the Company for a period of time, he does
not sit on the Subcommittee and does not vote on performance-based compensation.
Since March 2010, all decisions related to performance-based compensation were
made by the Subcommittee.
Managements Role in the
Executive Compensation Process
Mr. Schultz, our chairman and chief executive
officer, Scott Pitasky, our executive vice president, chief Partner Resources
officer and other key members of our human resources function (Partner
Resources) each help support the Compensation Committees executive
compensation process and regularly attend portions of committee meetings. As
part of the executive compensation process, Mr. Schultz provides his perspective
to the Compensation Committee regarding the performance of his Senior Leadership
Team, which includes all of our executive officers and certain other senior
officers of the Company. Members of the Partner Resources team present
recommendations to the Compensation Committee on the full range of annual
executive compensation decisions, including (i) annual and long-term incentive
compensation programs; (ii) target competitive positioning of executive
compensation; and (iii) target total direct compensation for each executive
officer. These recommendations are developed in consultation with Mr. Schultz
and are accompanied by market data provided by the Companys compensation
consultant, Towers Watson & Co. (Towers
Watson).
In accordance with NASDAQ rules, Mr.
Schultz was not present when his compensation was being discussed or approved
and did not vote on executive compensation matters, and neither he nor other
members of management attended executive sessions of the Compensation
Committee.
The Role of Consultants
in the Executive Compensation Process
For fiscal 2014, the Compensation
Committee engaged Frederic W. Cook & Co., Inc. (F.W. Cook) as its outside
independent compensation consultant. The Compensation Committees consultant
regularly attends committee meetings and attends executive sessions as requested
by the Compensation Committees chair. Without the Compensation Committees
prior approval, F.W. Cook will not perform any services for Starbucks
management,
although the Compensation Committee has
directed that F.W. Cook work in cooperation with management as required to
gather and review information necessary to carry out its obligations. During
fiscal 2014, F.W. Cook did not perform any services for Starbucks other than
making recommendations with respect to executive compensation under its
engagement by the Compensation Committee. Its tasks also included reviewing,
validating and providing input on information, programs and recommendations made
by management and Towers Watson.
For more information about the
Compensation Committees activities, see Compensation Discussion and Analysis
and Compensation Committee Report.
Compensation Committee
Interlocks and Insider Participation
Messrs. Johnson, Lee, Shennan, Teruel and
Ullman and Ms. Shih served on the Compensation Committee during fiscal 2014. Mr.
Johnson served on the Compensation Committee until his appointment as our
president and chief operating officer in January 2015. As discussed above, Mr.
Lee served as our interim executive vice president, Partner Resources for a
portion of fiscal 2010. Mr. Lee rejoined the Compensation Committee in April
2010 as an independent director under the applicable NASDAQ independence
requirements.
Compensation Consultant
Independence
In furtherance of maintaining the
independence of the Compensation Committees compensation consultant, the
Committee has the sole authority to retain, terminate and obtain the advice of
F.W. Cook (at the Companys expense). Further, as discussed above, the
Compensation Committees compensation consultant will not perform any services
for Starbucks management unless approved in advance by the Committee.
In connection with its engagement of F.W.
Cook, the Compensation Committee considered various factors bearing upon F.W.
Cooks independence including, but not limited to, the amount of fees received
by F.W. Cook from Starbucks as a percentage of F.W. Cooks total revenue, F.W.
Cooks policies and procedures designed to prevent conflicts of interest, and
the existence of any business or personal relationship that could impact F.W.
Cooks independence. After reviewing these and other factors, the Compensation
Committee determined that F.W. Cook was independent and that its engagement did
not present any conflicts of interest. F.W. Cook also determined that it was
independent from management and confirmed this in a written statement delivered
to the Chair of the Compensation Committee.
Senior Management
Succession Planning
In light of the critical importance of
executive leadership to Starbucks success, we have an annual succession planning
process. This process is enterprise wide for managers up to and including our
chief executive officer.
Our board of directors involvement in
our annual succession planning process is outlined in our Corporate Governance
Principles and Practices. The Principles provide that each year, the chair of
the Compensation Committee, together with the chairman and chief executive officer, will
review succession plans with the board, and
16 |
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CORPORATE
GOVERNANCE
provide the board with a recommendation as
to succession in the event of each senior officers termination of employment
with Starbucks for any reason (including death or disability).
Our Compensation Committee, pursuant to
its charter, annually reviews and discusses with the panel of independent
directors of the board the performance of the executive officers and senior
officers of the Company and the succession plans for each such officers
position including recommendations and evaluations of potential successors to
fill these positions. The Compensation Committee also conducts an annual review
of, and provides approval for, our management development and succession
planning practices and strategies.
ceo Succession
Planning
Mr. Schultz provides an annual review to
the board of directors assessing the members of the Senior Leadership Team and
their potential to succeed him. This review, which is developed in consultation
with our executive vice president, chief Partner Resources officer, and the
chair of our Compensation Committee, includes a discussion about development
plans for the Companys executive officers and senior officers to help prepare
them for future succession and contingency plans in the event of our ceos
termination of employment with Starbucks for any reason (including death or
disability) as well as our ceos recommendation as to his successor. The full
board has the primary responsibility to develop succession plans for the ceo
position.
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
The Nominating/Governance Committee
annually reviews and reassesses the adequacy of its charter. As described more
fully in its charter, the Nominating/Governance Committee is responsible for
providing leadership with respect to the corporate governance of Starbucks and
advising and making recommendations to the board of directors regarding
candidates for election as directors of the Company. Among its specific duties,
the Nominating/ Governance Committee:
●makes recommendations to the board about our corporate governance processes;
●assists in identifying and screening board candidates;
●administers the Director Nominations Policy;
●considers shareholder nominations to the board;
●makes recommendations to the board regarding membership and chairs of the boards committees;
●oversees the annual evaluation of the effectiveness of the board and each of its committees;
●biennially recommends the boards presiding independent director;
●biennially reviews the type and amount of board compensation for independent directors;
●annually reviews the Companys corporate political
contributions and expenditures to confirm alignment with Company policies and
values; and
●annually reviews and assesses the effectiveness of the Companys
environmental and social responsibility policies, goals and programs through the
annual Global Responsibility Report, and makes recommendations as deemed
appropriate based on such review and assessment.
The Nominating/Governance Committee also
annually assists the board of directors with its affirmative independence and
expertise determinations. After consulting with the panel of independent
directors, together with the chair of the Compensation Committee, the chair of
the Nominating/Governance Committee annually reviews the performance of our
chairman and chief executive officer and meets with him to share the findings of
the review.
OUR
DIRECTOR NOMINATIONS PROCESS
Our Policy on Director Nominations is
available at www.starbucks.com/about-us/company-information/
corporate-governance. The purpose of the
nominations policy is to describe the process by which candidates are identified
and assessed for possible inclusion in our recommended slate of director
nominees (the candidates). The nominations policy was approved by the full
board of directors and is administered by the Nominating/Governance
Committee.
Minimum Criteria for
Board Members
Each candidate must possess at least the
following specific minimum qualifications:
●each candidate shall be prepared to represent
the best interests of all shareholders and not just one particular
constituency;
●each candidate shall be an individual who has demonstrated integrity and
ethics in his or her personal and professional life and has established a record
of professional accomplishment in his or her chosen field;
●no candidate, or family
member (as defined in NASDAQ rules) or affiliate or associate (as defined in
federal securities laws) of a candidate, shall have any material personal,
financial or professional interest in any present or potential competitor of
Starbucks;
●each candidate shall be prepared to participate fully in board
activities, including active membership on at least one board committee and
attendance at, and active participation in, meetings of the board and the
committee(s) of which he or she is a member, and not have other personal or
professional commitments that
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Table of Contents
would, in the
Nominating/Governance Committees sole judgment, interfere with or limit his or
her ability to do so; and
●each candidate shall be willing to
make, and financially capable of making, the required investment in our stock in
the amount and within the time frame specified in the director stock ownership
guidelines described in this proxy statement.
Desirable Qualities and
Skills
In addition, the Nominating/Governance
Committee also considers it desirable that candidates possess the following
qualities or skills:
●each candidate should contribute
to the board of directors overall diversity diversity being broadly construed
to mean a variety of opinions, perspectives, personal and professional
experiences and backgrounds, such as gender, race and ethnicity differences, as
well as other differentiating characteristics;
●each candidate should contribute
positively to the existing chemistry and collaborative culture among board
members; and
●each candidate should possess
professional and personal experiences and expertise relevant to our goal of
being one of the worlds leading consumer brands. At this stage of our
development, relevant experiences might include, among other things, sitting CEO
of a large global company, large-company CEO experience, international CEO
experience, senior-level international experience, senior-level multi-unit small
box retail or restaurant experience and relevant senior-level expertise in one
or more of the following areas: finance, accounting, sales and marketing,
organizational development, information technology, social media and public
relations.
The Nominating/Governance Committee is
responsible for reviewing the appropriate skills and characteristics required of
directors in the context of prevailing business conditions and existing
competencies on the board, and for making recommendations regarding the size and
composition of the board, with the objective of having a board that brings to
Starbucks a variety of perspectives and skills derived from high quality
business and professional experience. The Nominating/Governance Committees
review of the skills and experience it seeks in the board as a whole, and in
individual directors, in connection with its review of the boards composition,
enables it to assess the effectiveness of its goal of achieving a board with a
diversity of experiences. The Nominating/Governance Committee considers these
criteria when evaluating director nominees in accordance with the procedures set
forth below.
Internal Process for
Identifying Candidates
The Nominating/Governance Committee has
two primary methods for identifying candidates (other than those proposed by
shareholders, as discussed below). First, on a periodic basis, the
Nominating/Governance Committee solicits ideas for possible candidates from a
number of sources: members of the board; senior-level Starbucks
executives; individuals personally known
to the members of the board; and research, including database and Internet
searches.
Second, the Nominating/Governance
Committee may from time to time use its authority under its charter to retain at
our expense one or more search firms to identify candidates (and to approve such
firms fees and other retention terms). If the Nominating/Governance Committee
retains one or more search firms, they may be asked to identify possible
candidates who meet the minimum and desired qualifications expressed in the
nominations policy, to interview and screen such candidates (including
conducting appropriate background and reference checks), to act as a liaison
among the board of directors, the Nominating/Governance Committee and each
candidate during the screening and evaluation process, and thereafter to be
available for consultation as needed by the Nominating/Governance
Committee.
The nominations policy divides the process
for candidates proposed by shareholders into the general nomination right of all
shareholders and proposals by qualified shareholders (as described
below).
General Nomination Right
of All Shareholders
Any registered shareholder may nominate
one or more persons for election as a director at an annual meeting of
shareholders if the shareholder complies with the advance notice, information
and consent provisions contained in our bylaws. See Proposals of Shareholders
below for more information.
The procedures described in the next
paragraph are meant to establish an additional means by which certain
shareholders can contribute to our process for identifying and evaluating
candidates and is not meant to replace or limit shareholders general nomination
rights in any way.
Director Recommendations
by Qualified Shareholders
In addition to those candidates identified
through its own internal processes, in accordance with the nominations policy,
the Nominating/Governance Committee will evaluate a candidate proposed by any
single shareholder or group of shareholders that has beneficially owned more
than 5% of our common stock for at least one year (and will hold the required
number of shares through the annual meeting of shareholders) and that satisfies
the notice, information and consent provisions in the nominations policy (a
qualified shareholder). Any candidate proposed by a qualified shareholder must
be independent of the qualified shareholder in all respects as determined by the
Nominating/Governance Committee or by applicable law. Any candidate submitted by
a qualified shareholder must also meet the definition of an independent
director under NASDAQ rules.
In order to be considered by the
Nominating/Governance Committee for an upcoming annual meeting of shareholders,
notice from a qualified shareholder
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CORPORATE
GOVERNANCE
regarding a potential candidate must be
received by the Nominating/ Governance Committee not less than 120 calendar days
before the anniversary of the date of our proxy statement released to
shareholders in connection with the previous years annual meeting.
Evaluation of
Candidates
The Nominating/Governance Committee will
consider and evaluate all candidates identified through the processes described
above, including incumbents and candidates proposed by qualified shareholders,
based on the same criteria.
Future Revisions to the
Nominations Policy
The nominations policy is intended to
provide a flexible set of guidelines for the effective functioning of our
director nominations process. The Nominating/Governance Committee intends to
review the nominations policy at least annually and anticipates that
modifications will be necessary from time to time as our needs and circumstances
evolve, and as applicable legal or listing standards change. The
Nominating/Governance Committee may amend the nominations policy at any time, in
which case the most current version will be available on our
website.
CORPORATE GOVERNANCE MATERIALS AVAILABLE ON THE STARBUCKS WEBSITE
Our Corporate Governance Principles and
Practices are intended to provide a set of flexible guidelines for the effective
functioning of the board of directors and are reviewed regularly and revised as
necessary or appropriate in response to changing regulatory requirements,
evolving best practices and other considerations. They are posted on the
Corporate Governance section of our website at www.starbucks.com/about-us/company-information/
corporate-governance.
In addition to our Corporate Governance
Principles and Practices, other information relating to corporate governance at
Starbucks is available on the Corporate Governance section of our website,
including:
●Restated Articles of
Incorporation
●Amended and Restated
Bylaws
●Audit and Compliance Committee
Charter
●Compensation and Management
Development Committee Charter
●Nominating and Corporate
Governance Committee Charter
●Policy on Director Nominations
●Standards of Business Conduct
(applicable to directors, officers and partners)
●Code of Ethics for CEO and Finance
Leaders
●Procedure for Communicating
Complaints and Concerns
●Audit and Compliance Committee
Policy for Pre-Approval of Independent Auditor Services
You may obtain copies of these materials,
free of charge, by sending a written request to: executive vice president,
general counsel and secretary, Starbucks Corporation, 2401 Utah Avenue South,
Mail Stop S-LA1, Seattle, Washington 98134. Please specify which documents you
would like to receive.
CONTACTING THE BOARD OF DIRECTORS
The Procedure for Communicating Complaints
and Concerns describes the manner in which interested persons can send
communications to our board of directors, the committees of the board and to
individual directors and describes our process for determining which
communications will be relayed to board members. Interested persons may
telephone their complaints and concerns by calling the Starbucks Audit line at
1-800-300-3205 or sending written communications to the
board, committees of the board and
individual directors by mailing those communications to our third-party service
provider for receiving these communications at:
Starbucks Corporation
P.O. Box
34507
Seattle, Washington 98124
Shareholders may address their
communication to an individual director, to the board of directors, or to one of
our board committees.
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COMPENSATION OF DIRECTORS
FISCAL
2014 COMPENSATION PROGRAM FOR NON-EMPLOYEE DIRECTORS
For fiscal 2014, the annual compensation
program for non-employee directors provided for a total of $240,000 per year
comprised of one or more of the following (as selected by the director each
year): (i) cash (up to 50%); (ii) stock options; and (iii) time-based restricted
stock units (RSUs). The program has remained unchanged since fiscal 2012 in
both amount and design. New non-employee directors are entitled to payment of a
pro-rated portion of the annual non-employee director compensation based on the
number of days remaining in the fiscal year from the date the director joins the
board. Such compensation may be in the form of stock options, time-based
restricted stock units or a combination thereof (as selected by the director).
Our non-employee directors are expected to satisfy stock ownership guidelines of
$480,000, as discussed below under the caption Director Stock Ownership Guidelines. Stock options have an exercise price equal to the closing market
price of our common stock on the grant date. Annual stock option and RSU grants
vest one year after
the date of grant. Stock options and RSUs granted to non-employee directors generally cease
vesting as of the date he or she no longer serves on the board of directors.
However, unvested stock options (but not unvested RSUs) will vest in full upon a
non-employee directors death or retirement (defined as ceasing to be a director
pursuant to election by the Companys shareholders or by voluntary resignation
with the approval of the boards chair, and after attaining age 55 and at least
six years of continuous board service) or upon a change in control of Starbucks.
Six of the boards ten current non-employee directors meet the retirement
criteria.
Mr. Schultz does not participate in the
compensation program for non-employee directors, but rather is compensated as an
executive officer, as described in the Compensation Discussion and Analysis
section of this proxy statement. Upon his appointment as our president and chief
operating officer, Mr. Johnson ceased participation in the compensation program
for non-employee directors.
FISCAL
2014 NON-EMPLOYEE DIRECTOR COMPENSATION
The following table shows fiscal 2014
compensation for non-employee directors.
|
Fees Earned
or |
Stock |
Option |
|
|
Paid in
Cash |
Awards |
Awards |
Total |
Name |
($) |
($)(1)(2) |
($)(3)(4) |
($) |
William W. Bradley |
|
119,946 |
113,256 |
233,202 |
Robert M. Gates |
|
239,973 |
|
239,973 |
Mellody Hobson |
|
239,973 |
|
239,973 |
Kevin R. Johnson(5) |
|
239,973 |
|
239,973 |
Olden Lee |
|
|
226,587 |
226,587 |
Joshua Cooper Ramo |
|
239,973 |
|
239,973 |
James G. Shennan, Jr. |
|
239,973 |
|
239,973 |
Clara Shih |
120,000 |
119,946 |
|
239,946 |
Javier G. Teruel |
|
239,973 |
|
239,973 |
Myron E. Ullman, III |
|
|
226,587 |
226,587 |
Craig E.
Weatherup |
|
|
226,587 |
226,587 |
(1) |
The amounts shown in
this column represent the aggregate grant date fair values of the
restricted stock units (RSU) awarded to each of the non-employee
directors on November 11, 2013. |
|
|
(2) |
As of September 28,
2014 the aggregate number of shares of Starbucks common stock underlying
outstanding RSU awards for each non-employee director were: Sen. Bradley
1,481, Sec. Gates 2,963, Ms. Hobson 2,963, Mr. Johnson 2,963, Mr.
Lee 0, Mr. Ramo 2,963, Mr. Shennan 2,963, Ms. Shih 1,481, Mr.
Teruel 2,963, Mr. Ullman 0 and Mr. Weatherup 0. |
|
|
(3) |
The amounts shown in
this column represent the aggregate grant date fair values of the stock
options awarded to each of the non-employee directors on November 11,
2013. The grant date fair values have been determined based on the
assumptions and methodologies set forth in the Companys 2014 Form 10-K
(Note 12: Employee Stock and Benefit Plans). |
|
|
(4) |
As of September 28,
2014, the aggregate number of shares of Starbucks common stock underlying
outstanding option awards for each non-employee director were: Sen.
Bradley 122,862; Sec. Gates 0; Ms. Hobson 153,825; Mr. Johnson
11,695; Mr. Lee 159,756; Mr. Ramo 30,000; Mr. Shennan 102,090; Ms.
Shih 3,348; Mr. Teruel 264,175; Mr. Ullman 244,036; and Mr.
Weatherup 244,036. |
|
|
(5) |
Mr. Johnson was an
independent member of the board of directors, the chair of the
Compensation Committee and a member of the Audit Committee until his
appointment as president and chief operating officer of Starbucks in
January 2015, after which time he continued to serve as a non-independent
member of the board of directors. |
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COMPENSATION OF
DIRECTORS
Deferred Compensation
Plans
In fiscal 2011, the board adopted a
Deferred Compensation Plan for Non-Employee Directors under which non-employee
directors may, for any fiscal year starting in fiscal 2012, irrevocably elect to
defer receipt of shares of common stock the director would have received upon
vesting of restricted stock units. The purpose of the plan is to enhance the
Companys ability to attract and retain non-employee directors with training,
experience and ability who will promote the interests of the Company and to
directly align the interests of such non-employee directors with the interests
of the Companys shareholders. Prior to 2006, non-employee directors could defer
all or a portion of their compensation in the form of unfunded deferred stock
units under the Directors Deferred Compensation Plan.
Director Stock Ownership
Guidelines
The board of directors adopted stock
ownership guidelines for non-employee directors in fiscal 2003 requiring a
$200,000 level of ownership within four years. In June 2012, the board increased
the guidelines to $480,000 to further align the interests of our non-employee
directors to those of our shareholders. Directors initially appointed or elected
to the board prior to January 1, 2011 were expected to meet the new guidelines
by December 1, 2014. Directors initially appointed or elected after January 1,
2011 and prior to June 5, 2012 have five years from their appointment or
election to meet the new guidelines. Directors appointed or elected after June
5, 2012 have four years from their date of appointment or election to meet the
new guidelines. Stock options and RSUs do not count toward meeting the
guidelines, but deferred stock units resulting from deferrals under the deferred
compensation plans for directors described above do count toward meeting the
guidelines. Each director is expected to continue to meet the ownership
requirement for as long as he or she serves on our board. All non-employee
directors have met these guidelines as of the date of this proxy
statement.
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PROPOSAL 2
ADVISORY RESOLUTION TO APPROVE OUR EXECUTIVE COMPENSATION
We are asking shareholders to approve
an advisory resolution (commonly referred to as a say-on-pay resolution) on
the Companys executive compensation as reported in this proxy
statement.
We urge shareholders to read the
Compensation Discussion and Analysis section of this proxy statement, which
describes how our executive compensation policies and procedures operate and are
designed to achieve our compensation objectives, as well as the Summary Compensation Table and other related compensation tables and narrative, which
provide detailed information on the compensation of our named executive
officers. The Compensation Committee and the board of directors believe that the
policies and procedures articulated in the Compensation Discussion and Analysis are effective in achieving our goals and that the compensation of our
named executive officers reported in this proxy statement has contributed to the
Companys recent and long-term success.
The board has adopted a policy
providing for an annual say-on-pay advisory vote. In accordance with this
policy and Section 14A of the Securities Exchange Act of 1934,
as
amended, and as a matter of good
corporate governance, we are asking shareholders to approve the following
advisory resolution at the Annual Meeting of Shareholders:
RESOLVED,
that the shareholders of Starbucks Corporation (the Company) approve, on an
advisory basis, the compensation of the Companys named executive officers
disclosed in the Compensation Discussion and Analysis, the Summary Compensation
Table and the related compensation tables, notes and narrative in the Proxy
Statement for the Companys Annual Meeting of Shareholders.
This advisory say-on-pay resolution
is non-binding on the board of directors. Although non-binding, the board and
the Compensation Committee will review and consider the voting results when
making future decisions regarding our executive compensation program. Unless the
board modifies its policy on the frequency of future say-on-pay advisory
votes, the next say-on-pay advisory vote will be held at the 2016 Annual
Meeting of Shareholders.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
APPROVAL OF THE ADVISORY RESOLUTION ON EXECUTIVE
COMPENSATION. |
22 |
Starbucks Corporation |
|
2015 Proxy Statement |
Table of Contents
EXECUTIVE
COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and
Analysis provides information on our executive compensation program and the
amounts shown in the executive compensation tables that follow. In this proxy
statement, the term Named Executive Officers or NEOs means our ceo and cfo,
our coo (who served as cfo for a portion of fiscal 2014 prior to being promoted
to coo and, as announced on January 8, 2015, is taking an extended unpaid leave (i.e., a Starbucks Coffee Break or sabbatical) from the Company effective
March 1,
2015), two of our business unit presidents and our general counsel. These six
executive officers are named in the compensation tables of this proxy statement.
Compensation Committee or Committee refers to the Compensation and
Management Development Committee of the board of directors.
We refer to all of our employees as
partners, due to the significant role they all play in the success of the
Company.
EXECUTIVE SUMMARY
Starbucks delivered record
results in fiscal 2014, increasing net revenue by 11% and non-GAAP operating
income(1) by 25% year
over year; 3-year cumulative total shareholder return (TSR) was 110%.
Starbucks delivered exceptional
financial performance in fiscal 2014. Total net revenue increased 11% to a
record $16.4 billion. Global comparable store sales grew 6% driven by a 3%
increase in the number of transactions and a 3% increase in average ticket. In
addition, we returned $1.6 billion to shareholders in the form of cash dividend
payments and share repurchases in fiscal 2014. Starbucks results for fiscal 2014
demonstrate the continued strength of our global business model and our ability
to successfully execute new growth initiatives in a disciplined
manner.
11%
Revenues |
25%
Operating
Income1 |
110%
3-yr Cumulative
TSR |
(1) Fiscal 2014 non-GAAP
operating income was $3,063.3 million and excludes a litigation credit
reflecting a reduction to our estimated prejudgment interest payable as a
result of paying our obligation under the Kraft Foods Global, Inc.
(Kraft) arbitration matter earlier than anticipated ($20.2 million) as
well as certain transaction costs incurred in fiscal 2014 related to the
planned acquisition of Starbucks Japan and costs related to the sale of
our Australia retail operations in fiscal 2014 ($2.4 million). Including
these items, fiscal 2014 operating income was $3,081.1 million. Fiscal
2013 non-GAAP operating income was $2,458.7 million and excludes the
impact of a charge in the amount of $2,784.1 million resulting from the
conclusion of our arbitration with Kraft. Including the impact of this
charge, fiscal 2013 operating loss was $325.4
million. |
Starbucks Corporation |
|
2015 Proxy Statement |
23 |
Table of Contents
Financial Results
Under Incentive Plans
The charts below compare fiscal 2014, 2013
and 2012 results under financial performance metrics that are used in
determining (i) payouts under our Executive Management Bonus Plan (EMBP) and
(ii) the number of performance-based Restricted Stock Units (performance RSUs)
earned. Note that these financial measures differ from
the comparable GAAP measures reported in
our financial statements, as the measures below are adjusted to exclude the
impact of certain non-recurring and other items in accordance with the terms of
our EMBP and our 2005 Long-Term Equity Incentive Plan.
Dollar amounts below, except per share data, are in
millions. Additional detail on the adjustments made to these results are described above in the Proxy Statement Summary
under Financial Results Under Incentive Plans on page 4.
|
Consolidated
Adjusted Net
Revenue |
|
Consolidated
Adjusted Operating
Income |
|
|
|
|
|
|
|
|
|
|
|
|
Return on Invested
Capital (ROIC) |
|
Adjusted Earnings Per Share (EPS) |
|
|
|
|
|
|
Pay for
Performance
Our executive compensation program
reflects a strong pay for performance alignment tied with Company and business
unit performance.
In line with our emphasis on
pay-for-performance and our performance relative to our peers, compensation
awarded to our NEOs for fiscal 2014 reflected Starbucks strong financial
results.
Annual Incentive
Plan:
● |
Our ceo, coo, cfo and general
counsel all earned EMBP awards at 111.5% of target, reflecting our strong
performance against challenging overall Company goals based on adjusted
operating income, adjusted net revenue and ROIC. Our two other NEOs are
business unit presidents and earned 105.8% and 114.5% of target,
respectively, primarily reflecting the strong performance of their
businesses against these goals. For reference, earned awards at 100% of
target are designed to approximate the market median, and maximum awards
at 200% of target are designed to reward at top-quartile market
levels. |
Long-Term Incentive
Awards:
● |
Our Long-Term Incentive Awards are
granted in the form of performance RSUs where the number of shares earned
is dependent on the achievement of future EPS and ROIC goals; and stock
options where the realizable value is dependent on future share price
appreciation. |
|
|
● |
The values of the Long-Term
Incentive Awards granted to our NEOs after the end of fiscal 2014
recognized the strong performance of our NEOs and the businesses for which
our NEOs were responsible in fiscal
2014. |
24 |
Starbucks Corporation |
|
2015 Proxy Statement |
Table of Contents
EXECUTIVE
COMPENSATION
Shared
Success
Our partners share in
the Companys success.
In recognition of
our record fiscal 2014 performance, our board of directors approved the
following broad-based benefits.
● |
Broad-Based Equity Program (Bean
Stock): A long-term incentive grant of time-based RSUs was made
in November 2014 to approximately 135,000 eligible non-executive partners
in 22 markets around the world, including qualified part-time partners.
Bean Stock participants include those partners that work in our stores and
serve our customers directly. We refer to this broad-based equity program
as our Bean Stock program. |
|
|
|
|
○ |
In fiscal 2014, Bean Stock
participants realized approximately $210 million in pre-tax gains from
previously-granted Bean Stock awards. |
|
|
|
● |
Future Roast
401(k) 2015 Starbucks Match: A
match under the Starbucks Future Roast 401(k) plan for the calendar 2015
plan year was approved at 100% of the first 4%
of |
|
eligible compensation deferred. The
Starbucks Match is immediately 100% vested and is contributed to each
participants 401(k) account each pay period along with their
contributions. |
|
|
● |
College Achievement Plan:
The Starbucks College Achievement Plan was
launched in fiscal 2014. The Starbucks College Achievement plan provides
eligible partners in the U.S. with the opportunity to earn a bachelors
degree online from Arizona State University with discounted tuition for
all four years and full tuition reimbursement in the junior and senior
years. More than 1,000 partners have enrolled in the plan to
date. |
Shareholder
Engagement
We actively engage with, and listen
to, our shareholders.
For several years we have maintained a
year-round shareholder engagement program in which we proactively reach out to
our top shareholders throughout the year. Our engagement team consists of
partners from our Total Pay, Legal and Investor Relations groups. In fiscal
2014, we reached out to our top shareholders and had dialogue, through a
combination of meetings, calls and email exchanges, with 10 of our top 50
shareholders. Collectively, the holders we had conversations with held
approximately 159 million shares representing approximately 20% of total shares
outstanding (measured as of December 31, 2013).
Through our outreach program, we listen to
shareholder feedback regarding our executive compensation program, disclosure
practices and corporate governance. We share the feedback received during our
engagement process with
the Compensation Committee and our board
of Directors. The Committee and board value our shareholders insights and
consider their feedback, in addition to other factors, when formulating our
executive compensation program design and making pay decisions.
In recent years, shareholder feedback has
influenced certain of our compensation design changes, including the addition of
ROIC as a performance measure under our EMBP, the replacement of EPS as a
performance measure under our EMBP with adjusted net revenue (recognizing that
EPS remains a performance measure under our performance RSUs), and the
lengthening of the performance period under our performance RSU design from one
year to two years.
Performance versus
Peer Companies
We
outperformed our entire peer group in three-year compound annual revenue growth,
EPS* growth, and net income* growth and ranked towards the top of our peer group
in the 1-year performance period in each of these metrics.
* |
Starbucks results used for
purposes of this comparison are reported GAAP results, except for fiscal
2013 EPS and net income results which exclude the impact of a significant litigation charge resulting from the
conclusion of our arbitration with
Kraft. |
In 2014, we ranked first among our peer
companies in three-year compound annual revenue growth, EPS growth and net
income growth. We ranked towards the top of our peer group in all but one
category in the one-year performance period.
Our three-year TSR through the end of
fiscal 2014 was 110% (3rd in our peer group).
|
Ranking |
|
2014 |
2013 |
One-Year
Performance |
(rank out
of 13) |
(rank out
of 13) |
Revenue
growth |
2nd |
2nd |
EPS growth |
3rd |
4th |
Net Income
growth |
4th |
3rd |
TSR |
11th |
2nd |
|
Starbucks Corporation |
|
2015 Proxy Statement |
25 |
Table of Contents
|
2014 |
2013 |
Three-Year
Performance |
(rank out
of 13) |
(rank out
of 13) |
Revenue
growth |
1st |
1st |
EPS growth |
1st |
1st |
Net Income
growth |
1st |
1st |
TSR (Cumulative) |
3rd |
1st |
Our Total Pay
Philosophy
Our Total Pay philosophy is designed to
recognize and reward the contributions of all partners, including executives. We
offer a comprehensive benefits package to all eligible full- and part-time
partners in the United States and locally competitive benefit packages in other
countries. In addition to the Bean Stock plan discussed above, we offer an
employee stock purchase plan to partners in the United States and Canada that
allows participants to purchase Starbucks stock at a 5% discount to the fair
market value at the end of each offering period under the plan. We believe our
Total Pay practices motivate our executives to build long-term shareholder value
and reward the partners who take care of our customers.
In keeping with this philosophy, our
executive compensation program is designed to:
● |
Enable the attraction and retention of top talent by
competing effectively for the highest quality people who will help shape
our long-term success; |
|
|
● |
Pay for performance through aligning compensation with the
achievement of both short-term and long-term financial objectives that
build shareholder value; and |
|
|
● |
Be true to our values by supporting our mission statement and guiding
principles. |
ELEMENTS
OF OUR EXECUTIVE COMPENSATION PROGRAM
The following table provides information
regarding the elements of our fiscal 2014 executive compensation
program.
Element |
Form |
Objectives and
Basis |
Base
Salary |
Cash |
●Attract and retain high
quality executives to drive our success
●Competitive for each role,
responsibilities and experience
●Targeted within the median
range of our peer group |
Annual Incentive
Bonus (EMBP) |
Cash |
●Drive Company and business
unit results
●Target bonus amount is set
as a percentage of base salary
●Actual payout determined by
Company and business unit financial performance
●Target total cash (base
salary + target bonus) designed to deliver cash compensation within the
median range of peers based on performance at target |
Long-Term
Incentive Compensation |
Performance RSUs,
stock options |
●Drive Company performance;
align interests of executives with those of shareholders; retain
executives through long-term vesting; and provide potential wealth
accumulation
●Target long-term incentive
award size designed to deliver target total direct compensation (base
salary + target bonus + target long-term incentive) within a reasonable
range of the market median
●Actual awards of annual
stock options and performance RSUs based on individual and Company
performance for the previous year |
Special Equity
Awards |
Time-based restricted stock units
(time-based RSUs) and Stock Options |
●Reward extraordinary
performance
●Retain executives and
advance succession-planning goals and incentives through long-term vesting
and potential wealth accumulation
●Attract top executive
talent, includes new hire and promotion-related equity awards and special
retention awards |
Perquisites and
Other Executive Benefits |
Various (see discussion
below) |
●Provide for the safety and
wellness of our executives, and other purposes as discussed
below |
Deferred
Compensation |
401(k) plan,
non-qualified Management Deferred Compensation Plan
(MDCP) |
●Provide tax-deferred methods
for general savings including for retirement |
General
Benefits |
Health and welfare plans, stock
purchase plan and other broad-based partner benefits |
●Offer competitive benefits
package that generally includes benefits offered to all
partners |
26 |
Starbucks Corporation |
|
2015 Proxy Statement |
Table of Contents
EXECUTIVE
COMPENSATION
OUR
EXECUTIVE COMPENSATION PROCESS
Target total direct compensation for our
NEOs is comprised of base salary, target bonus, and target value of long-term
equity incentives. Target total direct compensation for on-target performance is
designed to deliver compensation within the median range of our peer group, as
explained below under Peer Group Companies and Benchmarking.
The Compensation
Committee reviews target total direct compensation and approves target bonuses
(as a percentage of base salary) annually at its September
meeting. Actual base salaries, bonus
payments and long-term equity incentives are approved after the end of each
fiscal year at the November meeting. This process allows the Compensation
Committee to consider comprehensive information, including the performance of
each NEO during the prior fiscal year, when making final compensation
decisions.
ANALYSIS
OF EXECUTIVE COMPENSATION DECISIONS
The vast majority of compensation value we deliver to our executives is
in the form of compensation that is variable and at-risk.
A core principle of our executive
compensation program is that a significant percentage of compensation awarded to
our NEOs, especially our ceo, be variable, performance-based compensation and
at-risk. This type of compensation is dependent on the financial success of
our Company and our business units, and the performance of Starbucks common
stock. This means that our executives are rewarded when they produce value for
our shareholders
and our partners. Elements of our
program that fall within this category include our annual incentive bonus
program (EMBP) and the stock options and performance RSUs that are granted under
our Long-Term Incentive Program.
The charts below show the significant
percentage of performance-based compensation reported for fiscal 2014 in the
Summary Compensation Table for Mr. Schultz, our ceo, and for our other NEOs as a
group.
Fiscal Year 2014
Total Compensation Mix
1 Variable compensation as a
percentage of total compensation equals 93% for ceo and 88% for all other
NEOs.
Starbucks Corporation |
|
2015 Proxy Statement |
27 |
Table of Contents
Compensation for
Fiscal 2014 Performance Table
The table below provides an overview
comparing each element of fiscal 2014 target, versus actual, total direct
compensation for each of the NEOs currently serving the Company.
The long-term incentive compensation
awards shown below are those granted in fiscal 2015 in recognition of the
performance of our NEOs in fiscal 2014. We believe this
provides better insight into the
compensation decisions driven by fiscal 2014 performance than the Summary Compensation Table which, in accordance with SEC rules, shows 2014 compensation
as including annual long-term incentive compensation awards that were granted in
recognition of fiscal 2013 performance and exclude the 2015 awards reported
below.
|
Base Pay |
|
Bonus |
Long-Term
Incentive(5) |
Total Direct Compensation |
Percentage |
|
$(1) |
Target(2) |
Target(3) |
Actual
$(4) |
Target |
Actual |
Target |
Actual |
of Target(6) |
Howard Schultz |
1,500,000 |
175% |
2,625,000 |
2,926,875 |
9,215,000 |
13,000,000 |
13,340,000 |
17,426,875 |
131% |
Troy Alstead(7) |
858,329 |
112% |
962,125 |
1,072,769 |
2,500,000 |
4,400,000 |
4,320,454 |
6,331,098 |
147% |
Scott Maw |
511,633 |
70% |
356,183 |
397,144 |
1,400,000 |
2,474,000 |
2,267,816 |
3,382,777 |
149% |
Clifford Burrows |
786,116 |
95% |
746,811 |
790,412 |
2,000,000 |
3,500,000 |
3,532,927 |
5,076,528 |
144% |
John Culver |
625,205 |
85% |
531,424 |
608,481 |
1,400,000 |
2,664,000 |
2,556,629 |
3,897,686 |
152% |
Lucy Helm |
493,172 |
75% |
369,879 |
412,415 |
1,100,000 |
1,400,000 |
1,963,051 |
2,305,587 |
117% |
(1) |
The base salaries shown above
reflect prorated annualized salary numbers. Messrs. Alstead, Maw, Burrows,
and Culver and Ms., Helm received merit increases in December 2013. In
connection with their promotions, Messrs. Alstead and Maw received base
salary increases in February 2014. Mr. Alsteads salary was increased at
that time from $810,000 to $900,000 and Mr. Maws salary was increased
from $443,080 to $550,000. Mr. Maws salary was increased again to
$632,500 in September 2014. |
|
|
(2) |
The Target % bonus column
reflects prorated bonus target percentages for Messrs. Alstead and Maw.
Mr. Alsteads target increased from 95% to 120% in February 2014. Mr.
Maws target increased from 55% to 75% in February 2014. |
|
|
(3) |
The amounts in the Target bonus
column were calculated using the prorated annualized salary numbers
described in footnote 1 above. |
|
|
(4) |
The Actual bonus column
represents bonus payouts under the EMBP, which are disclosed in the
Non-Equity Incentive Plan Compensation column of the Summary Compensation Table. |
|
|
(5) |
The Actual Long-Term Incentive
column represents the value of annual long-term incentive awards granted
in November 2014 based on fiscal 2014 performance. The Target Long-Term
Incentive column represents the value of Long-Term Incentive Awards that
were established for purposes of setting Target Total Direct
Compensation. |
|
|
(6) |
The actual total direct
compensation our NEOs received varied from their target total direct
compensation based on the performance of the business units for which they
were responsible in fiscal 2014, the performance of the Company as a whole
and the overall contributions and leadership of our NEOs. |
(7) |
On January 8, 2015, the Company
announced that Mr. Alstead would be taking an extended unpaid leave (i.e., a Starbucks Coffee Break or sabbatical) from
the Company effective March 1, 2015. |
Target Versus
Actual Total Direct Compensation
Overall target total direct compensation
(base salary, target bonus, and target value of long-term equity incentives) of
our NEOs approximates the 50th percentile of the market and aligns
with Starbucks Total Pay philosophy. Actual total direct compensation of our
NEOs delivered for fiscal 2014 performance approximates the 75th
percentile of the market, reflecting Starbucks record performance in fiscal
2014.
Mr. Schultzs target total direct
compensation approximates the 50th percentile of the market. Mr.
Schultzs actual total direct compensation delivered for fiscal 2014
approximates the 75th percentile of the market, reflecting Mr.
Schultzs leadership in delivering record results and our strong performance
relative to our peers.
Base
Salary
The Compensation Committee generally
reviews and adjusts base salaries annually at its November meeting, with new
salaries effective in late November or early December. In November 2013, the
Committee approved (and with respect to Mr. Schultz, the Committee recommended
and the independent directors approved), the following base salaries, which
became effective in December 2013 (except for Mr. Alstead, whose salary
was
increased in February 2014 to $900,000 in
connection with his promotion to chief operating officer, and Mr. Maw, whose
salary was increased in February 2014 to $550,000 in connection with his
promotion to chief financial officer and again in September 2014 to $632,500 to
better align his target total cash to the market median and recognize his
initial performance as cfo):
|
|
Base Salary(1) |
|
|
|
|
|
|
Fiscal 2014 |
|
Fiscal 2013 |
|
|
|
|
Named Executive
Officer |
|
($) |
|
($) |
|
|
% Change |
|
Howard Schultz |
|
1,500,000 |
|
|
1,500,000 |
|
|
|
0% |
|
Troy
Alstead |
|
900,000 |
|
|
750,000 |
|
|
|
20.0% |
|
Scott Maw |
|
632,500 |
|
|
|
(2) |
|
|
N/A |
|
Clifford Burrows |
|
796,300 |
|
|
737,300 |
|
|
|
8.0% |
|
John Culver |
|
633,300 |
|
|
586,400 |
|
|
|
8.0% |
|
Lucy
Helm |
|
500,300 |
|
|
|
(2) |
|
|
N/A |
|
(1) |
The base salaries shown above
reflect year-end annualized salary numbers. |
|
|
(2) |
Mr. Maw and Ms. Helm were not
NEOs prior to Fiscal 2014 and compensation information for such periods is
therefore not provided in this proxy
statement. |
28 |
Starbucks Corporation |
|
2015 Proxy Statement |
Table of Contents
EXECUTIVE
COMPENSATION
Mr. Schultzs fiscal 2014 base salary and
his target bonus percentage positioned his fiscal 2014 target total cash at the
market median. His base salary was not increased for fiscal 2014.
Fiscal 2014 base salary increases were
approved for all other NEOs in recognition of their individual performance in
fiscal 2013. These increases and our other NEOs target bonus percentages
positioned their fiscal 2014 target total cash within the range of market
median.
Annual Incentive
Bonus
For fiscal 2014, each NEO participated in
the EMBP. Fiscal 2014 target annual incentive bonuses as a percentage of base
salary were increased for all of our NEOs in recognition of their individual
performance in fiscal 2013 and to better position their target total direct
compensation to the market median for their roles.
The total EMBP award actually delivered to
each executive for fiscal 2014 was determined based on the extent to which the
objective performance goals under the EMBP were achieved based on fiscal 2014
performance. The possible payouts for each NEO based on achievement of
threshold, target and maximum performance levels are disclosed in the Fiscal
2014 Grants of Plan-Based Awards Table.
Objective
Performance Goals
For fiscal 2014, annual incentive bonuses
were based on the achievement of the objective performance
goals
of adjusted operating income, adjusted net
revenue and ROIC. We chose these measures because we believe they motivate our
executives to further drive Company and business unit growth and profitability.
Starting in fiscal 2013, we replaced adjusted EPS with adjusted net revenue
under the EMBP in order to increase our executives focus on this important
growth metric, recognizing that EPS remains a performance measure under our
performance RSU design.
To reflect performance above or below targets, adjusted
operating income and adjusted net revenue have sliding scales that provide for
annual incentive bonus payouts greater than the target bonus if results are
greater than target (up to a maximum 200% payout) or less than the target bonus
if results are lower than the target (down to a threshold of 20% of target
payout, below which the payout would be $0).
In setting the objective performance
scales, we considered target Company performance under the challenging
board-approved annual operating and long-term strategic plans, the potential
payouts based on achievement at different levels on the sliding scale and
whether the portion of incremental earnings paid as bonuses rather than returned
to shareholders was appropriate.
In November 2013 the Committee established
the corporate and business unit performance goals under the EMBP. The targets
were designed to be challenging while recognizing economic uncertainties
existing at the time the goals were established, including continued consumer
spending restraint.
EMBP Goal
Weighting
EMBP goal weighting (as a percentage of
each executives target annual incentive bonus amount) for fiscal 2014 was as
follows:
Named Executive
Officer |
Adjusted BU/Consolidated
Operating Income |
Adjusted Net
Revenue |
Howard Schultz |
50% |
50% |
Troy Alstead |
50% |
50% |
Scott Maw |
50% |
50% |
Clifford Burrows |
50% |
50% |
John Culver |
50% |
50% |
Lucy Helm |
50% |
50% |
ROIC operated as a potential downward
modifier of the adjusted operating income and adjusted net revenue result. The
fiscal 2014 ROIC target was met and therefore ROIC did not operate as a downward
modifier on fiscal 2014 payouts.
Adjusted Operating
Income. For Messrs. Schultz, Alstead,
Maw and Ms. Helm, 50% of their total EMBP award was based on a consolidated
adjusted operating income goal. For the two group business president NEOs, 20%
of their total EMBP award was based on the consolidated adjusted operating
income goal and 30% was based on adjusted operating income goals of the
businesses for which they had responsibility during fiscal 2014; in the case of
Mr. Burrows, Americas, EMEA and Teavana for
approximately 4 months of the fiscal year
and Americas and Teavana for approximately 8 months of the fiscal year; and in
the case of Mr. Culver, China & Asia Pacific, and Channel Development &
Emerging Brands. In fiscal 2014, consolidated adjusted operating income equaled
the total of all business units operating income less total unallocated
corporate expenses; and business unit operating income equaled the revenues of
the business unit less the business units operating
expenses.
Starbucks Corporation |
|
2015 Proxy Statement |
29 |
Table of Contents
The fiscal 2014 performance targets and
results for Adjusted Operating Income are as follows:
Adjusted Operating
Income(1) |
|
Threshold (Millions
US$) |
|
Target (Millions
US$) |
|
Maximum (Millions
US$) |
|
Adjusted
Actual Performance (Millions US$) |
|
|
Payout |
|
Consolidated (Schultz, Alstead, Maw and Helm) |
|
|
$ |
2,855.8 |
|
|
$ |
3,004.9 |
|
|
$ |
3,247.8 |
|
|
$ |
3,087.4 |
|
|
133% |
|
Americas, EMEA and Teavana (Burrows- approx. 4
months) |
|
|
$ |
2,768.8 |
|
|
$ |
2,929.0 |
|
|
$ |
3,164.2 |
|
|
$ |
2,932.3 |
|
|
100% |
|
Americas and Teavana (Burrows-approx. 8 months) |
|
|
$ |
2,702.5 |
|
|
$ |
2,811.0 |
|
|
$ |
3,028.6 |
|
|
$ |
2,820.1 |
|
|
105% |
|
CAP and Channel
Development & Emerging Brands (Culver) |
|
|
$ |
831.6 |
|
|
$ |
881.2 |
|
|
$ |
974.9 |
|
|
$ |
927.8 |
|
|
143% |
|
(1) |
The performance plan measures
under the EMBP that were approved at the beginning of the performance
period provided for certain non-GAAP adjustments so that the performance
measures would better reflect underlying business operations than the
comparable GAAP measures. The fiscal 2014 consolidated and business unit
operating income results set forth above were adjusted to exclude the
impact of mark to market adjustments from the investments that our MDCP
invests in, foreign currency fluctuations, a litigation credit reflecting
a reduction to our estimated prejudgment interest payable as a result of
paying our obligation under the Kraft arbitration matter earlier than
anticipated and, in the case of CAP and Channel Development & Emerging
Brands, an asset disposition. We used the same adjusted measures for our
broader-based management incentive plan. |
Adjusted Net
Revenue. For Messrs. Schultz, Alstead
and Maw and Ms. Helm, 50% of their EMBP award was based on a consolidated
adjusted net revenue goal. For NEOs responsible for a single business unit, 50%
of their EMBP award was based on adjusted net revenue goals of the businesses
for which they had responsibility during fiscal
2014; in the case of Mr. Burrows,
Americas, EMEA and Teavana for approximately 4 months of the fiscal year and
Americas and Teavana for approximately 8 months of the fiscal year; and for Mr.
Culver, China & Asia Pacific, and Channel Development & Emerging
Brands.
The fiscal 2014 performance targets and
results for Adjusted Net Revenue are as follows:
Adjusted Net Revenue(1) |
|
Threshold (Millions
US$) |
|
Target (Millions
US$) |
|
Maximum (Millions
US$) |
|
Adjusted
Actual Performance (Millions US$) |
|
|
Payout |
|
Consolidated (Schultz, Alstead, Maw and Helm) |
|
|
$ |
16,179.1 |
|
|
$ |
16,518.8 |
|
|
$ |
17,065.3 |
|
|
$ |
16,509.9 |
|
|
90% |
|
Americas, EMEA and Teavana (Burrows- approx. 4
months) |
|
|
$ |
13,282.5 |
|
|
$ |
13,541.7 |
|
|
$ |
13,926.7 |
|
|
$ |
13,538.2 |
|
|
90% |
|
Americas and Teavana (Burrows-approx. 8 months) |
|
|
$ |
12,075.0 |
|
|
$ |
12,299.2 |
|
|
$ |
12,649.3 |
|
|
$ |
12,304.4 |
|
|
100% |
|
CAP and Channel
Development & Emerging Brands (Culver) |
|
|
$ |
2,841.9 |
|
|
$ |
2,922.5 |
|
|
$ |
3,084.0 |
|
|
$ |
2,916.1 |
|
|
90% |
|
(1) |
The performance plan measures
under the EMBP that were approved at the beginning of the performance
period provided for certain non-GAAP adjustments so that the performance
measures would better reflect underlying business operations than the
comparable GAAP measures. The fiscal 2014 consolidated and business unit
net revenue results were adjusted to exclude the impact of foreign
currency fluctuations and for Americas, EMEA and Teavana and CAP and
Channel Development & Emerging Brands, certain asset dispositions.
Channel Development and Emerging Brands net revenue was also adjusted to
exclude the impact of the immaterial error correction described in Note 1
of the Companys fiscal 2014 Form 10-K. |
ROIC.
For each of our NEOs, ROIC (measured
on a consolidated basis) operated as a potential downward modifier of their
combined adjusted operating income and adjusted net revenue result. The fiscal
2014 ROIC result
was 27.2%, above the target of 23.8%.
Accordingly, ROIC did not operate as a downward modifier on fiscal 2014 EMBP
payouts.
The fiscal 2014 performance targets and
results for ROIC are as follows:
Return on Invested Capital |
Threshold |
Target |
Actual |
ROIC (Return on Invested Capital) (1) |
22.7% |
23.8% |
27.2% |
(1) |
ROIC was adjusted to exclude the
impact of a litigation credit reflecting a reduction to our estimated
prejudgment interest payable as a result of paying our obligation under
the Kraft arbitration matter earlier than anticipated, the portion of the
Companys cash balance at fiscal 2013 year-end attributable to the accrued
liability for the Kraft arbitration matter, the impact of certain
divestitures that closed during the year and transaction costs related to
the Starbucks Japan acquisition process which began in
2014. |
EMBP
PAYOUTS
Payouts under the EMBP are
aligned with Starbucks fiscal 2014 performance.
After the end of fiscal 2014, the
Compensation Committee determined the extent to which the performance goals were
achieved, and subsequently approved and certified the amount of the EMBP award
to be paid to each NEO other than Mr. Schultz, whose award was recommended by
the Committee and approved by all of our independent directors.
The table below shows the fiscal 2014
actual payout levels for each component of the EMBP, based on achievement of the
performance metrics, and the aggregate fiscal 2014 annual incentive payouts,
which are also disclosed in the Non-Equity Incentive Compensation Plan column
of the Summary Compensation Table. The EMBP payouts to Messrs. Schultz, Alstead,
Maw and Ms. Helm, which were based on our very challenging Company
revenue
30 |
Starbucks Corporation |
|
2015 Proxy Statement |
Table of Contents
EXECUTIVE COMPENSATION
and operating income growth targets,
reflected the record fiscal 2014 financial performance achieved by the Company.
EMBP payouts to Messrs. Burrows and Culver
reflected Starbucks overall record
performance and the relative performance of our business units against our very
challenging operating plan.
|
Fiscal 2014 Executive Management Bonus Plan Payout
(1) |
|
|
|
|
Payout on |
|
|
|
|
|
EMBP Bonus Payout |
|
|
|
|
Business
Unit/ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
Payout on |
|
|
|
|
|
|
|
|
|
|
|
Adjusted |
|
Consolidated |
|
Payout on |
|
|
|
|
|
|
|
|
|
Operating |
|
Adjusted |
|
Adjusted Net |
|
|
|
|
|
|
|
|
|
Income(2) |
|
Operating
Income |
|
Revenue |
|
(%) of |
|
|
|
|
|
Named Executive
Officer |
|
(30% Weighting)
|
|
(20%
Weighting) |
|
(50%
Weighting) |
|
Target
|
|
|
($) |
|
|
Howard
Schultz |
|
133% |
|
133%
|
|
90% |
|
111.5% |
|
$ |
2,926,875 |
|
|
Troy Alstead |
|
133% |
|
133%
|
|
90% |
|
111.5% |
|
$ |
1,072,769 |
|
|
Scott
Maw |
|
133% |
|
133%
|
|
90% |
|
111.5% |
|
$ |
397,144 |
|
|
Clifford Burrows |
|
103% |
|
133%
|
|
97% |
|
105.8% |
|
$ |
790,412 |
|
|
John
Culver |
|
143% |
|
133%
|
|
90% |
|
114.5% |
|
$ |
608,481 |
|
|
Lucy Helm |
|
133% |
|
133% |
|
90% |
|
111.5% |
|
$ |
412,415 |
|
(1) |
As discussed above, ROIC has the
potential to operate as a downward modifier under the EMBP, if the target
goal is not met. The target ROIC goal was exceeded under the EMBP in
fiscal 2014. |
|
|
(2) |
For Messrs. Culver and Burrows,
based on the Adjusted Operating Income of their respective business units.
For Messrs. Schultz, Alstead, Maw and Ms. Helm, based on Consolidated
Adjusted Operating Income. |
Long-Term Incentive
Compensation
Overview of Annual Long-Term Incentive
Awards. We grant our executives long-term
performance-based compensation in the form of stock options and performance
RSUs. The Compensation Committee believes stock options and performance RSUs
incentivize executives to drive long-term company performance, thereby aligning
our executives interests with the long-term interests of shareholders. In
fiscal 2014, the Committee determined to grant 50% of the total award values in
stock options and 50% in performance RSUs. Beginning in fiscal 2015 with the
November 2014 annual stock awards, the Committee determined to grant 60% of the
total award values in performance RSUs and 40% in stock options. This change in
mix reflects the Compensation Committees consideration of competitive market
practices, desire to reduce potential share dilution on existing shareholders
and also to further tie awards to financial goals that directly measure the
Companys earnings growth. Stock options provide value only if our stock price
increases over time. Performance RSUs are earned only to the extent
pre-established performance
goals are met and, if earned, are subject
to additional time-based vesting requirements. Although the value of performance
RSUs is impacted by our stock price during the vesting period, performance RSUs
serve to retain executives as they have a more stable value than stock options
during periods of stock price volatility.
The table below reflects the value of
annual long-term incentive awards approved by the Committee for each of the last
two fiscal years. We determined the number of RSUs to be delivered by dividing
half of the value approved by the Committee by the closing price of our stock on
the grant date. For options, we divided half of the value by a closing price
multiplier. This multiplier was calculated by multiplying the closing price of
our common stock on the grant date by a Black-Scholes factor. Because it is
calculated in advance of the awards being granted and may use different
assumptions than are applied to the awards for accounting purposes, the value of
awards approved by the Committee may be different than the grant date fair value
of equity awards as disclosed in the Summary Compensation Table.
|
Value of Annual Long-Term Incentive Compensation
Awards |
|
|
Awarded in Fiscal 2015 |
|
|
Awarded in Fiscal
2014(1) |
|
|
|
|
|
Named Executive
Officer |
(for fiscal 2014
performance) |
|
|
(for fiscal 2013
performance) |
|
|
% Change |
|
|
Howard
Schultz |
|
$ |
13,000,000 |
|
|
|
$ |
13,000,000 |
|
|
0% |
|
|
Troy Alstead |
|
$ |
4,400,000 |
|
|
|
$ |
3,500,000 |
|
|
25.7% |
|
|
Scott
Maw |
|
$ |
2,474,000 |
|
|
|
|
|
(2)
|
|
N/A |
|
|
Clifford Burrows |
|
$ |
3,500,000 |
|
|
|
$ |
3,500,000 |
|
|
0% |
|
|
John
Culver |
|
$ |
2,664,000 |
|
|
|
$ |
2,450,000 |
|
|
8.7% |
|
|
Lucy Helm |
|
$ |
1,400,000 |
|
|
|
|
|
(2) |
|
N/A |
|
(1) |
Does not include special
retention awards (Mr. Burrows: $3,000,000; Mr. Culver $3,000,000 and Ms.
Helm $2,000,000) or promotional awards (Mr. Alstead: $1,250,000; Mr. Maw:
$600,000) granted in fiscal 2014. |
|
|
(2) |
Mr. Maw and Ms. Helm were not
NEOs prior to fiscal 2014 and compensation information for such periods is
therefore not provided in this proxy statement. |
|
Starbucks
Corporation |
|
2015 Proxy Statement |
31 |
Table of Contents
Performance
RSUs. As part of our annual long-term
incentive program for fiscal 2014, we sought to deliver half of the value of the
long-term incentive award in the form of performance RSUs. The extent to which
performance RSUs vest is based on our achievement of two-year adjusted earnings
per share and ROIC goals. To further incentivize performance, the adjusted EPS
performance measure has a sliding scale so each NEO may achieve from 0% to 200%
of the target award amount. If the target ROIC goal under the performance RSUs
is not met, the number of performance RSUs to be delivered based on achievement
of the adjusted EPS goal will be adjusted downward by as much as 50%. To the
extent the performance targets are met, earned RSUs vest 50% on each of the
second and third anniversaries of the grant date.
The Compensation Committee believes that:
(1) having a multi-year performance period increases executive focus on
long-term performance and better aligns the interests of our executives with
those of our shareholders; and (2) the inclusion of ROIC as a potential downward
modifier increases executive focus on ROIC, which we believe is an important
measure of the Companys success.
The table below shows the fiscal 2014
actual payout levels for performance RSUs granted in November 2012, which were
based on the achievement of fiscal 2014 adjusted EPS and ROIC goals. The
Committee established the performance goals for the fiscal 2014 performance RSUs
at the time of grant in November 2012.
The fiscal 2014 performance RSU payouts
were based on our very challenging EPS and ROIC growth targets and reflected the
record fiscal 2014 financial performance achieved by the Company.
Adjusted Earnings |
|
|
|
|
Per Share(1) |
Threshold |
Target |
Maximum |
Actual |
Targets and |
|
|
|
|
FY14 Actual |
$2.36 |
$2.51 |
$2.91 |
$2.66 |
Payout % |
50% |
100% |
200% |
145% |
(1) |
Fiscal 2014 EPS was adjusted to
exclude the impact of a litigation credit reflecting a reduction to our
estimated prejudgment interest payable as a result of paying our
obligation under the Kraft arbitration matter earlier than anticipated,
the impact of certain divestitures that closed during the year and
transaction costs related to the Starbucks Japan acquisition process which
began in 2014. |
Return on Invested Capital |
Threshold |
Target |
Actual |
ROIC (Return on |
|
|
|
Invested Capital)(1) |
22.4% |
23.5% |
27.2% |
(1) |
Fiscal 2014 ROIC was adjusted to
exclude the impact of a litigation credit reflecting a reduction to our
estimated prejudgment interest payable as a result of paying our
obligation under the Kraft arbitration matter earlier than anticipated,
the portion of the Companys cash balance at fiscal 2013 year-end
attributable to the accrued liability for the Kraft arbitration matter,
the impact of certain divestitures that closed during the year and
transaction costs related to the Starbucks Japan acquisition process which
began in 2014. |
Special Equity
Awards. In certain circumstances we
grant discretionary equity awards in order to advance succession-planning goals
and incentivize and retain key executives, recognize expanded roles and
responsibilities, or recognize exceptional performance.
In February 2014, Mr. Alstead and Mr. Maw
were each granted time-based RSUs in connection with their promotions to chief
operating officer and executive vice president, chief financial officer,
respectively. The value of Mr. Alsteads award was $1,250,000 and the value of
Mr. Maws award was $600,000. Each of these awards is scheduled to vest over a
four-year period.
In July 2014, Mr. Burrows, Mr. Culver and
Ms. Helm were each granted a special long-term time-based RSU award that vests
60% on the third anniversary of the grant date, and 20% on each of the fourth
and fifth anniversaries of the grant date.
The Committee approved a $3,000,000 award
for Mr. Burrows to recognize his exceptional leadership in delivering growth and
consistently strong performance in the Americas operating segment, which
accounts for the majority of our revenue and operating income. The Committee
approved a $3,000,000 award for Mr. Culver to recognize his strong performance
in leading the growth of the China & Asia Pacific and Channel Development
operating segments, which are focal points for the Companys growth strategy.
The Committee approved a $2,000,000 award for Ms. Helm to recognize her
outstanding performance in managing the Companys legal risk.
Additionally, each of these awards were
granted to promote the retention of these key executives as the Company pursues
its path toward continued growth and innovation.
Sign-on Bonuses and
New Hire Equity Awards. We provide
sign-on bonuses and new-hire equity awards when necessary and appropriate,
including to attract top-executive talent from other companies. Sign-on bonuses
and new hire equity awards are an effective means of offsetting the compensation
opportunities executives forfeit when they leave a former employer to join
Starbucks. We typically require newly recruited executives to return a pro rata
portion of their sign-on bonus if they voluntarily leave Starbucks within a
certain period of time (usually one to two years) after joining us, and new-hire
equity awards are subject to a time-based vesting period. We did not award a
sign-on cash bonus or new-hire equity award to any NEO for fiscal
2014.
Perquisites and
Other Executive Benefits. Our
executive compensation program includes limited executive perquisites and other
benefits. The aggregate incremental cost of providing perquisites and other
benefits to the NEOs is detailed in the Fiscal 2014 All Other Compensation
Table.
We believe the perquisites and other
executive benefits we provide are representative of those offered by the
companies that we compete with for executive talent, and therefore offering
these benefits serves the objective of attracting and retaining top executive
talent.
32 |
Starbucks
Corporation |
|
2015 Proxy
Statement |
Table of Contents
EXECUTIVE
COMPENSATION
We provided the following perquisites to
NEOs in fiscal 2014:
● |
Security. Pursuant to our executive
security program, we may from time to time provide personal security
services to Mr. Schultz and certain other executives. Security services
include home security systems and monitoring and, in the case of Mr.
Schultz, personal security services. These protections are provided due to
the range of security issues encountered by senior executives of large,
multinational corporations, and particularly with respect to high-profile
CEOs such as Mr. Schultz. We believe that the personal safety and security
of our senior executives is of the utmost importance to the Company and
its shareholders. For fiscal 2014, the Company paid $200,000 toward Mr.
Schultzs personal security. Mr. Schultz reimbursed the Company for
personal security costs in excess of $200,000. The Company did not pay
personal security costs for any executive other than Mr. Schultz in fiscal
2014, except in connection with business-related travel. |
|
|
● |
Hart-Scott-Rodino Filing Fee Reimbursement. In fiscal 2014, our board of directors approved the payment of a
$280,000 filing fee by the Company on Mr. Schultzs behalf under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR). This amount
was imputed as income to Mr. Schultz. The Company did not provide any tax
gross-up on this payment. The filing was required in fiscal 2014 in order
to continue to compensate and motivate him through equity-based
arrangements that further advance his interests in continued stock price
appreciation and align his interests to those of our shareholders. Without
this regulatory filing, Mr. Schultz would not be able to participate in
our equity-based compensation programs and therefore, the board determined
that it was appropriate for the Company to reimburse Mr. Schultz for this
filing fee. |
|
|
● |
Executive Physicals, Life and Disability Insurance. We offer to pay for annual physical examinations for all
partners at the senior vice president level and above. These examinations
provide a benefit to the Company and the executive at a relatively small
cost to the Company. We also provide life and disability insurance to all
partners at the vice president level and above at a
|
|
higher level
than is provided to partners generally. The amounts paid in respect of
these benefits to our NEOs in fiscal 2014 is detailed in the Fiscal 2014
All Other Compensation Table. |
|
|
● |
Relocation and Expatriate Expenses. We provide relocation assistance to some manager-level partners and
all partners at the director level and above. Under limited circumstances,
we provide certain reimbursements and benefits to partners that expatriate
to another country for work on the Companys behalf. |
|
|
Deferred Compensation.
Executives, as well as partners at the
director level and above, are eligible to defer cash compensation under
the Management Deferred Compensation Plan (MDCP). The MDCP is primarily
intended to provide eligible partners an additional before-tax means of
saving over and above that available under the 401(k) plan. We do not pay
or guarantee above-market returns. The appreciation, if any, in the
account balances of plan participants is due solely to contributions by
participants and the underlying performance of the measurement funds
selected by the participants. The measurement fund alternatives available
to MDCP participants are identical to the investment funds available to
401(k) plan participants. Effective January 1, 2011, we ceased making
Company matching contributions under the MDCP. |
|
General Benefits.
Executives are eligible to participate in
all benefit plans we offer to partners generally. This helps us attract
and retain top executive talent. |
|
● |
We offer a
comprehensive benefits package, including health care insurance, to all
eligible partners in the United States and locally competitive benefits
packages in other countries. |
|
|
● |
Among the
plans we offer to United States and Canadian partners generally, including
executive officers, is our U.S. tax-qualified employee stock purchase
plan. Under the plan, eligible partners may acquire our stock through
payroll deductions at a 5% discount to the market price on the last
trading day of the purchase period. No plan participant is allowed to
purchase more than $25,000 in market value of our stock under the plan in
any calendar year. |
Starbucks Corporation |
|
2015 Proxy Statement |
33 |
Table of Contents
PEER GROUP COMPANIES AND
BENCHMARKING
The Compensation Committee refers to
executive compensation surveys prepared by Towers Watson when it reviews and
approves executive compensation. The surveys reflect compensation levels and
practices for executives holding comparable positions at peer group companies,
which help the Compensation Committee set compensation at competitive levels.
The Compensation Committee, with assistance from F.W. Cook, annually reviews
specific criteria and recommendations regarding companies to add or remove from
the peer group. The Committees primary selection criteria are industry
(specialty retail, consumer products and restaurants), size
(revenue and market capitalization), and
geography or scope (global reach); secondary selection criteria are brand
recognition, performance (revenue growth, earnings per share growth and total
shareholder return growth), as well as other considerations, including companies
with which we compete for executive talent or customers, and companies known for
innovation.
For a comparison of our recent performance
to that of our peer group companies, please refer to the tables in the Performance Versus Peer Companies section of the Executive Summary
above.
Starbucks
Fiscal 2014 Executive Compensation Peer Group
Companies |
Specialty
Retail |
Consumer
Products |
Restaurants |
Coach |
Avon Products |
McDonalds |
Gap |
Colgate-Palmolive |
YUM! Brands |
Polo Ralph
Lauren |
General Mills |
|
|
Kellogg |
|
|
Mondelēz International |
|
|
Nike |
|
|
PepsiCo |
|
This peer group was used by the
Compensation Committee and independent directors in connection with their fiscal
2014 target total direct compensation decisions, and fiscal 2014
performance-driven compensation decisions made in November 2014.
The Compensation Committee compares each
executive officers base salary, target total cash and target long-term
incentive compensation value to amounts paid for similar positions at peer group
companies. The Compensation Committee generally sets target total direct
compensation for executives within a reasonable range of the median
(50th percentile) of peer group companies.
The Compensation Committee believes that
the market median is a useful reference point in helping to achieve the
executive compensation programs objectives described above. However, the
Committee also considers other factors when setting compensation and target
total direct compensation for each executive may vary from the market median
based on the factors the Compensation Committee considers relevant each year,
including particular job responsibilities and scope, adjustments for individual
skills and expertise and internal pay equity. Fiscal 2014 target total direct
compensation for the NEOs (including Mr. Schultz) was positioned within the
median range.
OTHER POLICIES AND
CONSIDERATIONS
2014 Say-on-Pay
Advisory Vote to Approve Executive Compensation
Starbucks provides shareholders an
advisory vote to approve its executive compensation program under Section 14A of
the Securities Exchange Act of 1934, as amended. At our 2014 Annual Meeting of
Shareholders, 87% of shareholders approved our advisory vote on executive
compensation.
As discussed above, our executive
compensation program was one of the topics discussed as part of our investor
engagement process. During this process, we received overall positive feedback
regarding the core structure and elements of our executive compensation program.
These investors also were enthusiastic about the performance of the
Company.
The Compensation Committee evaluated these
results, considered investor feedback and also considered many other factors in
evaluating Starbucks executive compensation programs as discussed in this
Compensation Discussion and Analysis, including the Committees assessment of
the interaction of our compensation programs with our business objectives, input
from F.W. Cook, and review of peer data, each of which is evaluated in the
context of the Committees fiduciary duty to act as the directors determine to
be in shareholders best interests. While each of these factors bore on the
Compensation Committees decisions regarding our NEOs compensation, the
Committee did not make any changes to our executive compensation program and
policies as a result of the strong 87% approval of our 2014 advisory vote on
executive compensation.
34 |
Starbucks Corporation |
|
2015 Proxy Statement |
Table of Contents
EXECUTIVE
COMPENSATION
Risk
Considerations
We believe that the design and objectives
of our executive compensation program provide an appropriate balance of
incentives for executives and avoid inappropriate risks. In this regard, our
executive compensation program includes, among other things, the following
design features:
● |
Balanced mix
of fixed versus variable compensation and cash-based versus equity-based
compensation; |
|
|
● |
Variable
compensation based on a variety of performance goals, including Company,
business unit and, where appropriate, individual performance
goals; |
|
|
● |
Compensation
Committee discretion to lower annual incentive award amounts; |
|
|
● |
Balanced mix
of short-term and long-term incentives; |
|
|
● |
Additional
time-based vesting requirements for earned performance RSUs; |
|
|
● |
Stock
ownership and holding requirements; |
|
|
● |
Prohibition
on hedging and pledging Company stock that applies to all partners;
and |
|
|
● |
Clawback
policy (our Recovery of Incentive Compensation Policy, described below in
this section). |
Management performed an annual assessment
of our compensation objectives, philosophy, and forms of compensation and
benefits for all partners, including executives, to determine whether the risks
arising from such policies or practices are reasonably likely to have a material
adverse effect on the Company. Based upon this review, management concluded that
our compensation practices and policies do not create risks that are reasonably
likely to have a material adverse effect on the Company, and F.W. Cook supported
this conclusion. A report summarizing the results of this assessment was
reviewed and discussed with the Compensation Committee at its September 2014
meeting.
Review of Tally Sheet
Information
The Compensation Committee generally
considers the following information for each executive when setting
compensation: (i) the targeted value of base pay, annual incentive bonus target,
equity grants and other benefits; and (ii) the accumulated value of
in-the-money outstanding equity grants broken out by (a) exercisable value for
options and (b) unvested value for options and RSUs. This information helps the
Compensation Committee to understand the total compensation being delivered to
executives and the long-term retentive elements in place for executives. This
information is considered by the Compensation Committee, along with market data,
performance and the other factors discussed above in setting executive
compensation.
Internal Pay
Equity
The Compensation Committee considers
internal pay equity, among other factors, when making compensation decisions.
However, the Compensation Committee does not use a fixed ratio or formula when
comparing compensation among executive officers.
Our ceo is compensated at a significantly
higher level than other executive officers due to his higher level of
responsibility, authority, accountability and experience. For fiscal 2014, Mr.
Schultzs base salary was set at $1.5 million, which was unchanged from 2013.
Mr. Schultz receives more of his pay in the form of long-term incentive
compensation, rather than annual cash compensation, as compared to the
compensation of the other NEOs. Given Mr. Schultzs responsibility for overall
Company performance, the independent directors believe that compensating the ceo
at a higher level than the other executives and weighting the ceos total
compensation more heavily toward long-term incentive compensation is consistent
with market practices and appropriately reflects the contributions of our
ceo.
We believe the fiscal 2014 target total
direct compensation for Mr. Schultz in relation to the compensation targeted for
the other NEOs and to one another was reasonable and appropriate given each
executives responsibilities and fiscal 2013 performance. For fiscal 2014, the
differences in pay among our NEOs relative to each other and Mr. Schultz are
based on market differences for the particular job, job responsibilities and
scope, professional experience and adjustments for individual
performance.
Employment Agreements and
Termination Arrangements
Although we typically deliver an offer
letter to an executive officer upon hire or promotion noting that the executive
is employed at will, these letters typically do not provide for severance upon
termination. None of our NEOs have employment or severance
agreements.
We may from time-to-time offer severance
benefit arrangements for terminated or separated executives as part of a
negotiated termination of employment in exchange for a release of claims against
the Company and other covenants in the best interests of the Company.
None of our NEOs have any such severance
benefit arrangement.
Change-in-Control
Arrangements
We do not provide any special
change-in-control benefits to executives. Our only change-in-control
arrangement, which applies to all partners with equity compensation awards, is
double-trigger accelerated vesting of equity. This means that under our equity
plan, unvested stock options and unvested restricted stock units will accelerate
vesting if (i) there is a change in control and (ii) either (a) stock options
and RSUs are assumed or substituted with equivalent stock options or restricted
stock units of the surviving company and the partner is terminated or resigns
for good reason within one year after the change in control or (b) stock options
or RSUs are not assumed or substituted with stock options or RSUs of the
surviving company, in which case they vest immediately upon a change in control.
We believe it is appropriate to provide double-trigger accelerated equity
vesting because it aligns executives interests with the interests of
shareholders without providing an undue benefit to executives who continue to be
employed following a change-in control transaction.
Starbucks Corporation |
|
2015 Proxy Statement |
35 |
Table of Contents
Executive Stock
Ownership Guidelines
In September 2007, stock ownership
guidelines were established for executive officers to encourage them to have a
long-term equity stake in Starbucks, align their interests with shareholders,
and mitigate potential compensation-related risk. Those guidelines were amended
in November 2010 to provide that each executive officer must hold a multiple of
his or her annual base salary in Starbucks stock and to introduce a holding
requirement as follows:
|
Ownership |
|
Requirement |
|
(multiple of
base |
Position |
salary) |
ceo |
6x |
president and coo, evp
presidents and cfo |
3x |
other evps |
2x |
Each executive officer generally has five
years to achieve the minimum ownership requirement. Until the ownership
requirement is satisfied, the executive officer is required to hold 50% of the
net shares received upon the exercise of stock options and the vesting of
RSUs.
In addition to shares held outright, the
unrealized value of vested, in-the-money stock options counts for up to 25% of
the ownership requirement. Unrealized value is measured as the difference
between aggregate exercise price and aggregate market value of underlying
shares. Unvested time-based and performance RSUs do not count towards the
ownership threshold. All NEOs, except Mr. Maw, who became subject to the
guidelines upon his recent promotion to the position of cfo in fiscal 2014,
exceed the current ownership requirement. We anticipate Mr. Maw will meet the
ownership guidelines by the applicable deadline.
Clawback Policy
(Recovery of Incentive Compensation Policy)
During its November 2009 meeting, the
board of directors, upon the recommendation of the Compensation Committee,
approved the Recovery of Incentive Compensation Policy, which many companies
refer to as a Clawback policy. This policy allows the Company to seek
reimbursement with respect to incentive compensation paid or awarded to
executive officers (as designated by the board) where (i) the payment of a bonus
or equity award (or the vesting of such award) was predicated upon the
achievement of financial results that were the product of fraudulent activity or
that were subsequently the subject of a material negative restatement and (ii) a
lower or no bonus payment or equity award would have been made to executive
officers (or lesser or no vesting would have occurred with respect to such
award) based on the restated financial results (the financial results that would
have pertained absent such fraudulent activity). The policy became effective,
with respect to equity awards, beginning with awards granted in fiscal 2010 and,
with respect to annual incentive bonuses, beginning with bonuses earned for
fiscal 2010.
Equity Grant Timing
Practices
Most equity grants occur on
pre-established dates pursuant to our equity grant guidelines, with annual
grants generally occurring on the later of the second business day after the
public release of fiscal year-end earnings, or (if later) the Monday following
the date the Compensation Committee approves the awards. Annual awards for
partners are granted pursuant to a formula based on a specified dollar amount,
with the number of shares and exercise price for each option grant determined
based on the closing market price of our stock on the grant date and the number
of shares for each RSU grant determined by dividing the dollar amount by the
closing market price of our stock on the grant date. The Compensation Committee
approves annual awards for partners at the senior vice president level and
above. The Compensation Committee has delegated authority to the ceo to make
annual grants, within certain parameters, to partners at the vice president
level and below, and to newly hired or newly promoted partners with titles of
senior vice president or below. All other new hire and promotion grants are
approved by the Compensation Committee. Annual and initial awards for
non-employee directors are approved by the board of directors. Annual awards for
directors are granted at the same time as annual awards to executives, and
initial awards are granted on the date the new director is appointed or elected
to the board, or the first open trading date after the appointment or election
date.
Anti-Hedging
Policy
In November 2010, the board of directors
amended our Insider Trading Policy to prohibit Starbucks partners from engaging
in hedging transactions designed to offset decreases in the market value of
Starbucks securities, including certain forms of hedging and monetization
transactions, such as zero-cost collars and prepaid variable forward
contracts.
Anti-Pledging
Policy
As of the date of this proxy statement,
there are no executive officers or directors who hold Starbucks securities in a
margin account or have Starbucks securities pledged as collateral for a loan. In
June 2013, the board of directors amended our Insider Trading Policy to prohibit
Starbucks partners from holding Starbucks stock in a margin account or pledging
Starbucks stock as collateral for a loan.
There is a limited exception to our policy
prohibiting the pledging of Starbucks stock as collateral for a loan (not
including margin debt, for which there is no exception to the prohibition). In
order to be granted an exception, the partner must clearly demonstrate the
financial capacity to repay the loan without resorting to the pledged securities
and must request and receive approval from the general counsel of Starbucks
prior to the documentation of the proposed pledge.
36 |
Starbucks Corporation |
|
2015 Proxy Statement |
Table of Contents
EXECUTIVE
COMPENSATION
Tax Deductibility
of Executive Compensation
Section 162(m) of the Internal Revenue
Code prevents us from taking a tax deduction for compensation that does not
qualify as performance-based and that is in excess of $1 million paid in any
fiscal year to the ceo and the three other most highly compensated named
executive officers serving at fiscal year-end (excluding the chief financial
officer). The Compensation Committee considers the potential tax deductibility
of executive compensation under Section 162(m) of the Internal Revenue Code and
may seek to qualify certain elements of these executives compensation as
performance-based while also delivering competitive levels and forms of
compensation. To address one of the conditions for qualifying as
performance-based compensation under Section 162(m), certain executive
compensation decisions were approved by
the Performance Compensation
Subcommittee (the Subcommittee) of the Compensation Committee, and reference
to the Compensation Committee includes the Subcommittee. The Committee operates
the EMBP under a stockholder-approved plan with the goal of satisfying the
conditions to obtain deductibility of the annual bonus under Section
162(m).
We generally intend annual incentive
bonuses and long-term incentive awards (stock options and performance RSUs) to
be eligible to qualify as tax-deductible to Starbucks but we have the
flexibility to pay non-deductible compensation when necessary to achieve our
executive compensation objectives. In addition, because there are uncertainties
as to the application of regulations under Section 162(m), as with most tax
matters it is possible that our efforts to satisfy the conditions of Section
162(m) may be challenged or disallowed.
COMPENSATION COMMITTEE
REPORT
The Compensation Committee has reviewed
and discussed the foregoing Compensation Discussion and Analysis with
management. Based on this review and discussion, the Compensation Committee
recommended to the board of directors that the Compensation Discussion and
Analysis be included in the Starbucks 2014 Form 10-K and this proxy
statement.
Respectfully submitted,
Kevin R. Johnson* (Chair)
Olden Lee
James G. Shennan,
Jr.
Clara Shih
Javier G. Teruel
Myron E. Ullman,
III
* |
Mr. Johnson was an independent
member of the board of directors, the chair of the Compensation Committee
and a member of the Audit Committee until his appointment as president and
chief operating officer of Starbucks in January 2015, after which time he
continued to serve as a non-independent member of the board of directors.
Mr. Ullman became the chair of the Compensation Committee in January
2015. |
Starbucks Corporation |
|
2015 Proxy Statement |
37 |
Table of Contents
EXECUTIVE
COMPENSATION TABLES
SUMMARY
COMPENSATION TABLE
The following
table sets forth information regarding the fiscal 2014, 2013 and 2012
compensation for our NEOs, except fiscal 2013 and 2012 information for Mr. Maw
and Ms. Helm is not provided because they were not NEOs in either of those
years.
Name and Principal
Position |
Year |
Salary ($) |
Bonus ($)(1) |
Stock Awards ($)(2) |
Option Awards ($)(2) |
Non-Equity Incentive
Plan Compensation ($)(3) |
All
Other Compensation ($)(4) |
Total ($) |
Howard Schultz |
2014 |
1,500,000 |
|
6,294,559 |
10,242,944 |
2,926,875 |
502,076 |
21,466,454 |
chairman and chief |
2013 |
1,500,000 |
|
5,999,987 |
7,276,587 |
2,250,000 |
215,933 |
17,242,507 |
executive officer |
2012 |
1,482,692 |
|
18,000,000 |
6,897,848 |
2,308,500 |
220,733 |
28,909,773 |
Troy Alstead |
2014 |
858,329 |
|
2,296,077 |
1,874,942 |
1,072,769 |
17,781 |
6,119,898 |
chief operating officer5 |
2013 |
741,058 |
|
874,976 |
751,631 |
637,500 |
17,133 |
3,022,298 |
|
2012 |
697,702 |
|
1,499,994 |
1,302,512 |
613,522 |
18,989 |
4,132,719 |
Scott Maw |
2014 |
511,633 |
|
712,367 |
576,242 |
397,144 |
18,004 |
2,215,390 |
executive vice president, |
|
|
|
|
|
|
|
|
chief financial officer |
|
|
|
|
|
|
|
|
Clifford Burrows |
2014 |
786,116 |
|
4,599,897 |
1,407,441 |
790,412 |
53,513 |
7,637,379 |
group president, US, Americas and |
2013 |
733,838 |
|
874,976 |
751,631 |
1,140,603 |
45,486 |
3,546,534 |
Teavana |
2012 |
713,363 |
|
1,499,994 |
1,302,512 |
666,676 |
62,253 |
4,244,798 |
John Culver |
2014 |
625,205 |
|
4,091,435 |
985,214 |
608,481 |
22,584 |
6,332,919 |
group president, China & Asia Pacific, |
2013 |
582,054 |
179,438 |
1,950,007 |
816,054 |
260,362 |
17,130 |
3,805,045 |
Channel Development and |
2012 |
561,412 |
|
874,982 |
759,803 |
621,061 |
25,047 |
2,842,305 |
Emerging Brands |
|
|
|
|
|
|
|
|
Lucy Helm |
2014 |
493,172 |
|
2,614,633 |
562,972 |
412,415 |
23,123 |
4,106,315 |
executive vice president, general |
|
|
|
|
|
|
|
|
counsel and
secretary |
|
|
|
|
|
|
|
|
(1) |
This amount represents a
discretionary bonus payment made to Mr. Culver for fiscal
2013. |
|
|
(2) |
Represents the aggregate grant
date fair value, as computed in accordance with FASB ASC Topic 718. These
amounts do not reflect whether the recipient has actually realized or will
realize a financial benefit from the awards (such as by exercising stock
options). The grant date fair values have been determined based on the
assumptions and methodologies set forth in the Companys 2014 Form 10-K
(Note 12: Employee Stock and Benefit Plans). The grant date fair value for
performance RSUs is reported based upon the probable outcome of the
performance conditions on the grant date in accordance with SEC rules. The
value of the annual performance RSU awards assuming achievement of the
maximum performance level of 200% would have been: Mr. Schultz -
$12,589,118; Mr. Alstead - $3,389,432; Mr. Maw $847,358; Mr. Burrows -
$3,389,432; Mr. Culver - $2,372,508; Ms. Helm - $1,355,742. The value of
the special RSU awards granted in July of 2014 to Mr. Burrows, Mr. Culver
and Ms. Helm shown in the Stock Awards column above reflects a payout
value based on achievement of the highest level of performance for those
awards, which is for Mr. Burrows - $2,905,181; Mr. Culver - $2,905,181;
and Ms. Helm - $1,936,762. The assumed expected term of stock options
shown in the Companys 2014 Form 10-K (Note 12: Employee Stock and Benefit
Plans) is a weighted average expected term covering all optionees.
However, Mr. Schultzs historical practice of not exercising stock options
until very late in their term requires us to apply a unique expected term
assumption that exceeds eight years when valuing options granted to him
for purposes of GAAP. In addition, in accordance with GAAP, the fair value
of a stock option granted to a retirement-eligible partner will be
expensed earlier than an identical stock option granted to a partner who
is not retirement eligible. Mr. Schultz waived the accelerated vesting
feature for options granted subsequent to fiscal year 2006. |
|
|
(3) |
These amounts represent annual
bonus awards under the EMBP earned for fiscal 2014. |
|
|
(4) |
The table below shows the
components of All Other Compensation for the named executive
officers. |
|
|
(5) |
On January 8, 2015, the Company
announced that Mr. Alstead would be taking an extended unpaid leave (i.e., a Starbucks Coffee Break or sabbatical) from the Company effective March 1, 2015. |
38 |
Starbucks Corporation
|
|
2015 Proxy
Statement |
Table of Contents
EXECUTIVE
COMPENSATION TABLES
FISCAL 2014 ALL
OTHER COMPENSATION TABLE
|
Insurance |
Retirement
Plan |
|
|
|
HSR |
|
|
Premiums |
Contributions |
Security |
Other |
|
Filing
Fee |
Total |
Name |
($)(1) |
($)(2) |
($)(3) |
($) |
|
($)(4) |
($) |
Howard
Schultz |
6,476 |
15,600 |
200,000 |
|
|
280,000 |
502,076 |
Troy Alstead |
4,177 |
13,604 |
|
|
|
|
17,781 |
Scott Maw |
2,404 |
15,600 |
|
|
|
|
18,004 |
Clifford Burrows |
4,177 |
15,600 |
|
33,736 |
(5) |
|
53,513 |
John
Culver |
3,984 |
15,600 |
|
3,000 |
(6) |
|
22,584 |
Lucy Helm |
4,628 |
15,495 |
|
3,000 |
(6) |
|
23,123 |
(1) |
These amounts represent the
premiums paid on behalf of our NEOs under our executive life and
disability insurance plans. |
|
|
(2) |
These amounts represent Company
matching contributions to the accounts of our NEOs in the Companys 401(k)
plan. |
|
|
(3) |
This amount represents the
aggregate incremental costs to the Company of providing home security
services and equipment to the chairman and ceo. |
|
|
(4) |
This amount represents the HSR
filing fee described above in Other Compensation Hart-Scott-Rodino
Filing Fee Reimbursement. |
|
|
(5) |
This amount includes $30,736 in
expenses related to Mr. Burrows expatriate tax preparation fees and
$3,000 in incremental costs of providing an annual physical
examination. |
|
|
(6) |
This amount is the cost of
providing an annual physical examination. |
Starbucks
Corporation |
|
2015 Proxy Statement |
39 |
Table of Contents
FISCAL 2014 GRANTS
OF PLAN-BASED AWARDS TABLE
The
following table sets forth information regarding fiscal 2014 annual incentive
bonus awards and equity awards granted to our named executive officers in fiscal
2014.
|
|
|
|
|
|
|
|
|
|
All |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
Grant |
|
|
|
|
|
|
|
|
|
|
Awards: |
All
Other |
|
Date |
|
|
|
|
|
|
|
|
|
|
Number |
Option |
|
Fair |
|
|
|
|
|
|
|
|
|
|
of |
Awards: |
Exercise |
Value of |
|
|
|
|
Potential Future Payouts |
Potential Future Payouts |
Shares |
Number
of |
or
Base |
Stock |
|
|
|
|
Under Non-Equity Incentive Plan |
Under Equity Incentive Plan |
of |
Securities |
Price
of |
and |
|
|
|
|
Awards |
Awards |
Stock
or |
Underlying |
Option |
Option |
|
|
Approval |
Grant |
Threshold |
Target |
Maximum |
Threshold |
Target |
Maximum |
Units |
Options |
Awards |
Awards |
Name |
Award |
Date |
Date(1) |
($) |
($) |
($) |
(#) |
(#) |
(#) |
(#) |
(#) |
($/Sh) |
($)(2) |
Howard Schultz |
Annual3 Incentive |
|
|
131,250 |
2,625,000 |
5,250,000 |
|
|
|
|
|
|
|
|
Stock4 Options |
11/05/13 |
11/11/13 |
|
|
|
|
|
|
|
343,712 |
80.99 |
10,242,944 |
|
Performance5 RSUs |
11/05/13 |
11/11/13 |
|
|
|
40,129 |
80,257 |
160,514 |
|
|
|
6,294,559 |
Troy Alstead |
Annual3 Incentive |
|
|
48,106 |
962,125 |
1,924,249 |
|
|
|
|
|
|
|
|
Stock4 Options |
11/05/13 |
11/11/13 |
|
|
|
|
|
|
|
92,538 |
80.99 |
1,407,441 |
|
Stock6 Options |
01/27/14 |
02/18/14 |
|
|
|
|
|
|
|
34,740 |
73.97 |
467,501 |
|
Performance5 RSUs |
11/05/13 |
11/11/13 |
|
|
|
10,804 |
21,608 |
43,216 |
|
|
|
1,694,716 |
|
Time
Based7 RSUs |
01/27/14 |
02/18/14 |
|
|
|
|
|
|
8,449 |
|
|
601,361 |
Scott Maw |
Annual3 Incentive |
|
|
17,809 |
356,183 |
712,366 |
|
|
|
|
|
|
|
|
Stock4 Options |
11/05/13 |
11/11/13 |
|
|
|
|
|
|
|
23,134 |
80.99 |
351,848 |
|
Stock6 Options |
01/27/14 |
02/18/14 |
|
|
|
|
|
|
|
16,675 |
73.97 |
224,394 |
|
Performance5 RSUs |
11/05/13 |
11/11/13 |
|
|
|
2,701 |
5,402 |
10,804 |
|
|
|
423,679 |
|
Time-Based7 RSUs |
01/27/14 |
02/18/14 |
|
|
|
|
|
|
4,056 |
|
|
288,687 |
Clifford Burrows |
Annual3 Incentive |
|
|
37,341 |
746,811 |
1,493,621 |
|
|
|
|
|
|
|
|
Stock4 Options |
11/05/13 |
11/11/13 |
|
|
|
|
|
|
|
92,538 |
80.99 |
1,407,441 |
|
Performance5 RSUs |
11/05/13 |
11/11/13 |
|
|
|
10,804 |
21,608 |
43,216 |
|
|
|
1,694,716 |
|
Performance8 RSUs |
07/16/14 |
07/16/14 |
|
|
|
|
38,105 |
38,105 |
|
|
|
2,905,181 |
John Culver |
Annual3 Incentive |
|
|
26,571 |
531,424 |
1,062,848 |
|
|
|
|
|
|
|
|
Stock4 Options |
11/05/13 |
11/11/13 |
|
|
|
|
|
|
|
64,777 |
80.99 |
985,214 |
|
Performance5 RSUs |
11/05/13 |
11/11/13 |
|
|
|
7,563 |
15,125 |
30,250 |
|
|
|
1,186,254 |
|
Performance8 RSUs |
07/16/14 |
07/16/14 |
|
|
|
|
38,105 |
38,105 |
|
|
|
2,905,181 |
40 |
Starbucks Corporation
|
|
2015 Proxy
Statement |
Table of Contents
EXECUTIVE
COMPENSATION TABLES
|
|
|
|
|
|
|
|
|
|
All |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
Grant |
|
|
|
|
|
|
|
|
|
|
Awards: |
All
Other |
|
Date |
|
|
|
|
|
|
|
|
|
|
Number |
Option |
|
Fair |
|
|
|
|
|
|
|
|
|
|
of |
Awards: |
Exercise |
Value of |
|
|
|
|
Potential Future Payouts |
Potential Future Payouts |
Shares |
Number
of |
or
Base |
Stock |
|
|
|
|
Under Non-Equity Incentive Plan |
Under Equity Incentive Plan |
of |
Securities |
Price
of |
and |
|
|
|
|
Awards |
Awards |
Stock
or |
Underlying |
Option |
Option |
|
|
Approval |
Grant |
Threshold |
Target |
Maximum |
Threshold |
Target |
Maximum |
Units |
Options |
Awards |
Awards |
Name |
Award |
Date |
Date(1) |
($) |
($) |
($) |
(#) |
(#) |
(#) |
(#) |
(#) |
($/Sh) |
($)(2) |
Lucy Helm |
Annual3 Incentive |
|
|
18,494 |
369,879 |
739,757 |
|
|
|
|
|
|
|
|
Stock4 Options |
11/05/13 |
11/11/13 |
|
|
|
|
|
|
|
37,015 |
80.99 |
562,972 |
|
Performance5 RSUs |
11/05/13 |
11/11/13 |
|
|
|
4,322 |
8,643 |
17,286 |
|
|
|
677,871 |
|
Performance8 RSUs |
07/16/14 |
07/16/14 |
|
|
|
|
25,403 |
25,403 |
|
|
|
1,936,762 |
(1) |
Annual option awards granted in
November 2013 were approved by the independent directors on the
recommendation of the Compensation Committee except for grants to Mr.
Schultz which were approved by the independent members of the board. In
accordance with our equity grant timing policy in place at the time of the
November 2013 grant, the grant date for the regular annual equity grant
was the second business day after our fiscal 2013 earnings release;
however, since the earnings release was before the November Compensation
Committee and board meetings (November 5-6, 2013), the grant date,
according to the policy, was the Monday following such meetings (Monday,
November 11, 2013). |
|
|
(2) |
The grant date fair value for
performance RSUs is reported based upon the probable outcome of the
performance conditions at the grant date in accordance with SEC
rules. |
|
|
(3) |
Reflects information regarding
awards under the EMBP. |
|
|
(4) |
Reflects stock options that will
vest in four equal installments (subject to rounding of partial shares)
beginning on the first anniversary of the grant date. |
|
|
(5) |
Reflects performance RSUs that
vest 50% on the second anniversary of the grant date and 50% on the third
anniversary of the grant date. |
|
|
(6) |
Reflects options granted in
connection with mid-year promotion, that will vest in four equal
installments (subject to rounding of partial shares) beginning on the
first anniversary of the grant date. |
|
|
(7) |
Reflects promotion time-based
RSUs granted in February 2014 that will vest 50% on the second anniversary
of the grant date and 50% on the fourth anniversary of the grant
date. |
|
|
(8) |
Reflects performance RSUs that
vest 60% on the third anniversary of the grant date, and 20% on each of
the fourth and fifth anniversaries of the grant date, subject to the
attainment of a performance threshold of positive fiscal 2015 adjusted net
income. |
The following narrative provides further
detail with respect to the information in the table above.
Equity Awards.
The amount of stock options granted to
executive officers for the fiscal 2014 annual equity award was based on a target
value for the total equity award value. The number of stock options granted was
calculated by dividing 50% of the total equity award value by a closing price
multiplier. The closing price multiplier was equal to the closing market price
of Starbucks stock on the date of grant multiplied by a Black-Scholes factor.
The stock options shown in the table were awarded in early fiscal 2014. The
target amount of performance RSUs for executive officers for fiscal 2014 was
based on a target value for the total equity award value. The number of
performance RSUs granted was calculated by dividing 50% of the total equity
award value by the closing price of Starbucks stock on the date of
grant.
All equity awards shown in this table were
granted under the 2005 Key Employee Plan Sub-Plan (2005 Key Employee Plan) to
our 2005 Long-Term Equity Incentive Plan. The stock options have an exercise
price equal to the closing market price of our common stock on the date of
grant. The options will vest in four equal annual installments beginning on the
first anniversary of the grant date, subject to continued employment with the
Company, and expire 10 years after the date of grant. Earned performance RSUs
awarded to our NEOs in fiscal 2014 will vest, subject to continued employment,
50% on the second anniversary of the date of grant and 50% on the third
anniversary of the date of grant. The final
number of Performance RSUs earned will be
based on achievement of two-year EPS and ROIC goals, as further discussed in the Long-Term Incentive Compensation section of the Compensation Discussion and
Analysis. All stock options will become fully vested and exercisable (i) if the
recipient terminates his employment at or after the age of 55 and with at least
10 years of credited service with Starbucks (other than with respect to Mr.
Schultz, as explained below) and (ii) under the circumstances described in the
section below entitled Potential Payments Upon Termination or Change in Control Equity Acceleration. Restricted stock units do not accelerate upon retirement
or death.
Annual Incentive
Plan Awards. These amounts reflect the
potential threshold, target and maximum annual incentive bonus awards payable to
our named executive officers under the EMBP for fiscal 2014. Amounts shown are
calculated as a percentage of fiscal 2014 year-end base salary. See the
discussion and analysis regarding the EMBP in the Compensation Discussion and Analysis section above for further information. Target bonus amounts assume
achievement of the objective goals at the target amounts. Maximum bonus amounts
assume achievement of the objective goals at the maximum amount of 200%. The
named executive officers received actual bonus payouts under the Executive
Management Bonus Plan for fiscal 2014 in the amounts shown in the Non-Equity
Incentive Plan Compensation column of the Summary Compensation Table.
Starbucks
Corporation |
|
2015 Proxy Statement |
41 |
Table of Contents
OUTSTANDING EQUITY
AWARDS AT FISCAL 2014 YEAR-END TABLE
The following table provides information regarding stock options and
restricted stock units held by our named executive officers as of September 28,
2014. No named executive officer has any other form of equity award
outstanding.
|
|
Option
Awards |
Stock Awards |
|
|
|
|
|
|
|
|
|
|
Equity |
Equity |
|
|
|
|
|
|
|
|
|
|
Incentive |
Incentive Plan |
|
|
|
|
|
|
|
|
|
|
Plan
Awards: |
Awards: |
|
|
|
|
|
|
|
|
Number
of |
Market
Value |
Number
of |
Market or |
|
|
|
Number
of |
Number
of |
Number
of |
|
|
Shares
or |
of Shares
or |
Unearned |
Payout Value |
|
|
Number
of |
Securities |
Securities |
Securities |
|
|
Units
of |
Units
of |
Shares, |
of Unearned |
|
|
Securities |
Underlying |
Underlying |
Underlying |
|
|
Stock |
Stock |
Units
or |
Shares, Units |
|
|
Underlying |
Unexercised |
Unexercised |
Options |
Option |
|
That
Have |
That
Have |
Other
Rights |
or Other |
|
|
Options |
Options |
Options |
(#) |
Exercise |
Option |
Not |
Not |
That
Have |
Rights That |
|
Grant |
(#) |
(#) |
(#) |
Previously |
Price |
Expiration |
Vested |
Vested |
Not
Vested |
Have Not |
Name |
Date |
Total
Grant |
Exercisable |
Unexercisable |
Exercised |
($) |
Date |
(#) |
($)(1) |
(#) |
Vested ($)(2) |
Howard |
|
|
|
|
|
|
|
|
|
|
|
Schultz |
11/16/20053 |
966,469 |
566,469 |
|
400,000 |
30.42 |
11/16/2015 |
|
|
|
|
|
11/20/20064 |
544,218 |
544,218 |
|
|
36.75 |
11/20/2016 |
|
|
|
|
|
11/19/20074 |
687,113 |
687,113 |
|
|
22.87 |
11/19/2017 |
|
|
|
|
|
11/16/20094 |
610,224 |
410,224 |
|
200,000 |
22.06 |
11/16/2019 |
|
|
|
|
|
11/15/20104 |
525,466 |
394,100 |
131,366 |
|
30.79 |
11/15/2020 |
|
|
|
|
|
11/14/20114 |
429,652 |
214,826 |
214,826 |
|
43.64 |
11/14/2021 |
|
|
|
|
|
11/14/20115 |
|
|
|
|
|
|
71,494 |
5,374,204 |
|
|
|
11/15/20116 |
|
|
|
|
|
|
|
|
272,541 |
20,486,907 |
|
11/19/20124 |
430,812 |
107,703 |
323,109 |
|
49.74 |
11/19/2022 |
|
|
|
|
|
11/19/20129 |
|
|
|
|
|
|
|
|
174,909 |
13,147,910 |
|
11/11/20134 |
343,712 |
|
343,712 |
|
80.99 |
11/11/2023 |
|
|
|
|
|
11/11/20137 |
|
|
|
|
|
|
|
|
80,257 |
6,032,919 |
Troy |
|
|
|
|
|
|
|
|
|
|
|
Alstead |
11/15/20104 |
100,316 |
|
25,079 |
75,237 |
30.79 |
11/15/2020 |
|
|
|
|
|
11/15/20108 |
|
|
|
|
|
|
16,241 |
1,220,836 |
|
|
|
11/14/20114 |
107,413 |
|
53,706 |
53,707 |
43.64 |
11/14/2021 |
|
|
|
|
|
11/14/20115 |
|
|
|
|
|
|
17,873 |
1,343,513 |
|
|
|
11/19/20124 |
62,827 |
|
47,120 |
15,707 |
49.74 |
11/19/2022 |
|
|
|
|
|
11/19/20129 |
|
|
|
|
|
|
|
|
25,507 |
1,917,361 |
|
11/11/20134 |
92,538 |
|
92,538 |
|
80.99 |
11/11/2023 |
|
|
|
|
|
11/11/20137 |
|
|
|
|
|
|
|
|
21,608 |
1,624,273 |
|
2/18/20144 |
34,740 |
|
34,740 |
|
73.97 |
2/18/2024 |
|
|
|
|
|
2/18/20148 |
|
|
|
|
|
|
8,449 |
635,111 |
|
|
Scott |
|
|
|
|
|
|
|
|
|
|
|
Maw |
8/15/20114 |
23,442 |
5,860 |
5,860 |
11,722 |
38.42 |
08/15/2021 |
|
|
|
|
|
8/15/20118 |
|
|
|
|
|
|
3,904 |
293,464 |
|
|
|
11/15/20128 |
|
|
|
|
|
|
8,259 |
620,829 |
|
|
|
11/19/20124 |
12,565 |
3,142 |
9,423 |
|
49.74 |
11/19/2022 |
|
|
|
|
|
11/19/20129 |
|
|
|
|
|
|
|
|
5,101 |
383,442 |
|
11/11/20134 |
23,134 |
|
23,134 |
|
80.99 |
11/11/2023 |
|
|
|
|
|
11/11/20137 |
|
|
|
|
|
|
|
|
5,402 |
406,068 |
|
2/18/20144 |
16,675 |
|
16,675 |
|
73.97 |
02/18/2024 |
|
|
|
|
|
2/18/20148 |
|
|
|
|
|
|
4,056 |
304,890 |
|
|
Clifford |
|
|
|
|
|
|
|
|
|
|
|
Burrows |
11/16/20094 |
81,363 |
20,340 |
|
61,023 |
22.06 |
11/16/2019 |
|
|
|
|
|
11/15/20104 |
100,316 |
75,237 |
25,079 |
|
30.79 |
11/15/2020 |
|
|
|
|
|
11/15/20108 |
|
|
|
|
|
|
16,241 |
1,220,836 |
|
|
|
11/14/20114 |
107,413 |
53,707 |
53,706 |
|
43.64 |
11/14/2021 |
|
|
|
|
|
11/14/20115 |
|
|
|
|
|
|
17,873 |
1,343,513 |
|
|
|
11/19/20124 |
62,827 |
15,707 |
47,120 |
|
49.74 |
11/19/2022 |
|
|
|
|
|
11/19/20129 |
|
|
|
|
|
|
|
|
25,507 |
1,917,361 |
|
11/11/20134 |
92,538 |
|
92,538 |
|
80.99 |
11/11/2023 |
|
|
|
|
|
11/11/20137 |
|
|
|
|
|
|
|
|
21,608 |
1,624,273 |
|
7/16/201410 |
|
|
|
|
|
|
|
|
38,105 |
2,864,353 |
John |
|
|
|
|
|
|
|
|
|
|
|
Culver |
11/16/20094 |
56,373 |
14,093 |
|
42,280 |
22.06 |
11/16/2019 |
|
|
|
|
|
12/15/20094 |
49,668 |
12,417 |
|
37,251 |
22.73 |
12/15/2019 |
|
|
|
|
|
11/15/20104 |
83,597 |
62,698 |
20,899 |
|
30.79 |
11/15/2020 |
|
|
|
|
|
11/14/20114 |
62,658 |
31,330 |
31,328 |
|
43.64 |
11/14/2021 |
|
|
|
|
|
11/14/20115 |
|
|
|
|
|
|
10,426 |
783,722 |
|
|
|
11/19/20124 |
68,212 |
17,053 |
51,159 |
|
49.74 |
11/19/2022 |
|
|
|
|
|
11/19/20128 |
|
|
|
|
|
|
20,105 |
1,511,293 |
|
|
|
11/19/20129 |
|
|
|
|
|
|
|
|
27,694 |
2,081,758 |
|
11/11/20134 |
64,777 |
|
64,777 |
|
80.99 |
11/11/2023 |
|
|
|
|
|
11/11/20137 |
|
|
|
|
|
|
|
|
15,125 |
1,136,946 |
|
7/16/201410 |
|
|
|
|
|
|
|
|
38,105 |
2,864,353 |
42 |
Starbucks Corporation
|
|
2015 Proxy
Statement |
Table of Contents
EXECUTIVE
COMPENSATION TABLES
|
|
Option Awards |
Stock Awards |
|
|
|
|
|
|
|
|
|
|
Equity |
Equity |
|
|
|
|
|
|
|
|
|
|
Incentive |
Incentive
Plan |
|
|
|
|
|
|
|
|
|
|
Plan
Awards: |
Awards: |
|
|
|
|
|
|
|
|
Number
of |
Market
Value |
Number
of |
Market or |
|
|
|
Number
of |
Number
of |
Number
of |
|
|
Shares
or |
of Shares
or |
Unearned |
Payout
Value |
|
|
Number
of |
Securities |
Securities |
Securities |
|
|
Units
of |
Units
of |
Shares, |
of
Unearned |
|
|
Securities |
Underlying |
Underlying |
Underlying |
|
|
Stock |
Stock |
Units
or |
Shares,
Units |
|
|
Underlying |
Unexercised |
Unexercised |
Options |
Option |
|
That
Have |
That
Have |
Other
Rights |
or Other |
|
|
Options |
Options |
Options |
(#) |
Exercise |
Option |
Not |
Not |
That
Have |
Rights
That |
|
Grant |
(#) |
(#) |
(#) |
Previously |
Price |
Expiration |
Vested |
Vested |
Not
Vested |
Have Not |
Name |
Date |
Total
Grant |
Exercisable |
Unexercisable |
Exercised |
($) |
Date |
(#) |
($)(1) |
(#) |
Vested
($)(2) |
Lucy |
|
|
|
|
|
|
|
|
|
|
|
Helm |
11/15/20104 |
11,942 |
|
2,985 |
8,957 |
30.79 |
11/15/2020 |
|
|
|
|
|
11/14/20114 |
6,713 |
3,357 |
3,356 |
|
43.64 |
11/14/2021 |
|
|
|
|
|
11/14/20115 |
|
|
|
|
|
|
1,117 |
83,965 |
|
|
|
01/17/20128 |
|
|
|
|
|
|
2,096 |
157,556 |
|
|
|
06/15/20124 |
19,622 |
9,812 |
9,810 |
|
52.54 |
06/15/2022 |
|
|
|
|
|
06/15/20128 |
|
|
|
|
|
|
3,331 |
250,391 |
|
|
|
11/19/20124 |
39,491 |
9,873 |
29,618 |
|
49.74 |
11/19/2022 |
|
|
|
|
|
11/19/20129 |
|
|
|
|
|
|
|
|
16,033 |
1,205,201 |
|
11/11/20134 |
37,015 |
|
37,015 |
|
80.99 |
11/11/2023 |
|
|
|
|
|
11/11/20137 |
|
|
|
|
|
|
|
|
8,643 |
649,694 |
|
07/16/201410 |
|
|
|
|
|
|
|
|
25,403 |
1,909,544 |
(1) |
Value is calculated by
multiplying the number of restricted stock units (RSUs) that have not
vested by the closing market price of our stock ($75.17) as of the close
of trading on September 26, 2014 (the last trading day prior to our
September 28, 2014 fiscal year-end.) |
|
|
(2) |
Value is calculated by
multiplying the number of RSUs that may be earned upon achievement of
target performance by the closing market price of our stock ($75.17) as of
the close of trading on September 26, 2014; actual number of RSUs earned
is based on fiscal 2014 adjusted EPS and ROIC goals. |
|
|
(3) |
Options vest in three equal
annual installments (subject to rounding of partial shares) beginning on
the first anniversary of the grant date. |
|
|
(4) |
Options vest in four equal annual
installments (subject to rounding of partial shares), beginning on the
first anniversary of the grant date. |
|
|
(5) |
Earned Performance RSUs vest 50%
on the second anniversary of the grant date and 50% on the third
anniversary of the grant date. |
|
|
(6) |
Earned Performance RSUs that vest
100% on the third anniversary of the grant date, subject to the attainment
of a performance threshold of positive cumulative net income over the
vesting period. |
|
|
(7) |
Reflects the number of RSUs that
may be earned upon achievement of target performance; actual number of
RSUs earned is based on the fiscal 2015 adjusted EPS and ROIC
goals. |
|
|
(8) |
Time-based RSUs vest 50% on the
second anniversary of the grant date and 50% on the fourth anniversary of
the grant date. |
|
|
(9) |
Reflects the number of RSUs that
may be earned upon achievement of target performance; actual number of
RSUs earned is based on fiscal 2014 adjusted EPS and ROIC
goals. |
|
|
(10) |
Performance RSUs that vest 60% on
the third anniversary of the grant date, and 20% on each of the fourth and
fifth anniversaries of the grant date, subject to the attainment of a
performance threshold of positive fiscal 2015 adjusted net
income. |
Starbucks
Corporation |
|
2015 Proxy Statement |
43 |
Table of Contents
FISCAL 2014 OPTION
EXERCISES AND STOCK VESTED
The
following table provides information regarding stock options that were exercised
by our named executive officers and stock awards (restricted stock units) that
vested during fiscal 2014. Option award value realized is calculated by
subtracting the aggregate exercise price of the options exercised from the
aggregate market value of the shares of common stock acquired on the date of
exercise. Stock award value realized is calculated by multiplying the number of
shares shown in the table by the closing price of our stock on the date the
stock awards vested. As illustrated by the Grant Date column in the table
below, Value Realized on Exercise and Value Realized on Vesting represent
long-term gain over many years.
|
|
Option
Awards |
Stock Awards |
|
|
Number of
Shares |
|
|
|
|
|
Acquired
on |
Value
Realized |
Number of
Shares |
Value
Realized |
|
|
Exercise |
on
Exercise |
Acquired on
Vesting |
on
Vesting |
Name |
Grant
Date |
(#) |
($) |
(#) |
($) |
Howard Schultz |
11/16/2004 |
82,000 |
4,427,700 |
|
|
|
11/16/2005 |
400,000 |
20,425,466 |
|
|
|
11/17/2008 |
75,000 |
5,453,328 |
|
|
|
11/16/2009 |
200,000 |
9,812,000 |
|
|
|
11/15/2010 |
|
|
144,713 |
11,749,248 |
|
11/14/2011 |
|
|
71,495 |
5,801,104 |
Troy Alstead |
11/16/2009 |
20,340 |
1,191,741 |
|
|
|
11/15/2010 |
25,079 |
1,250,552 |
27,627 |
2,243,036 |
|
11/14/2011 |
26,853 |
993,787 |
17,874 |
1,450,296 |
|
11/19/2012 |
15,707 |
485,497 |
|
|
Scott Maw |
|
|
|
|
|
Clifford Burrows |
11/15/2010 |
|
|
27,627 |
2,243,036 |
|
11/14/2011 |
|
|
17,874 |
1,450,296 |
John Culver |
11/15/2010 |
|
|
23,022 |
1,869,156 |
|
11/14/2011 |
|
|
10,426 |
845,966 |
Lucy Helm |
11/16/2009 |
11,029 |
606,201 |
|
|
|
11/15/2010 |
8,957 |
397,897 |
3,288 |
266,953 |
|
11/14/2011 |
|
|
1,117 |
90,633 |
|
01/17/2012 |
|
|
2,096 |
156,990 |
|
06/15/2012 |
|
|
3,331 |
250,125 |
NONQUALIFIED
DEFERRED COMPENSATION
Management Deferred
Compensation Plan
The NEOs are eligible to participate in
the Management Deferred Compensation Plan (MDCP), a nominally funded,
non-qualified plan, the benefits of which are paid by Starbucks out of our
general assets. The plan is subject to the requirements of Section 409A of the
Internal Revenue Code. In September 2008, the board of directors approved an
amended and restated plan document to conform it to Section 409A requirements
effective January 1, 2009. Deferred compensation earned prior to 2005 is not
subject to Section 409A requirements and continues to be governed under the
terms of the plan and the tax laws in effect on or before December 31, 2004, as
applicable.
We maintain a trust agreement with an
independent trustee establishing a rabbi trust for the purpose of funding
benefits payable to participants (including each of our NEOs) under our MDCP. It
is currently funded with a nominal amount of cash.
Deferrals.
Participants may defer up to 70% of
base salary to the MDCP and up to 95% of bonuses paid under the EMBP so long as
they are eligible and enroll during the annual enrollment window that takes
place prior to the start of each fiscal year. Prior to January 1, 2011, certain
participants were eligible to receive matching contributions from Starbucks to
replace the similar benefits not available to them under our 401(k) plan due to
limitations imposed by the Internal Revenue Code and the 401(k) plan document.
In June 2010, the board of directors approved an amendment to the Company 401(k)
plan allowing for safe harbor matching contributions and eliminating certain
limits imposed by the 401(k) plan document for certain highly compensated
employees effective as of January 1, 2011. In conjunction with the 401(k) plan
amendment, in June 2010, the board of directors approved an amendment and
restatement of the MDCP, which eliminated matching contributions to the plan
effective beginning with calendar year 2011.
44 |
Starbucks Corporation
|
|
2015 Proxy
Statement |
Table of Contents
EXECUTIVE
COMPENSATION TABLES
Earnings.
As a nominally funded, non-qualified
plan, the MDCP uses measurement benchmarks to credit earnings on compensation
deferred under the plan. Those measurement benchmarks are based on the same
funds available under our 401(k) plan. Participants select which measurement
funds they wish to have their account allocated to and may change how deferred
compensation is allocated to the measurement funds at any time, subject to
certain redemption fees and other limitations imposed by frequent trading
restrictions and plan rules. Changes generally become effective as of the first
trading day following the change.
In-Service
Withdrawals and Separations from Service Distributions. At the time of making the deferral election for a particular
year, a participant elects when the associated deferred compensation will be
distributed. In general, the participant can receive scheduled in-service
withdrawals or hardship withdrawals while still employed or have distributions
paid on separation from service. The specific distribution options depend on
whether the deferred compensation was earned before or after January 1, 2005 and
is subject to other plan rules.
For separation from service distributions,
account balances resulting from the Company match and deferred compensation
earned on and after January 1, 2005 can be paid either in a lump sum or in up to
10 annual installments, in each case beginning within 60 days of separation or
one year after separation. For partners who became newly eligible on or after
October 1, 2010 and certain other partners, separation from service
distributions can be paid either in a lump sum or amortized over a period of two
to five years, in each case beginning within 60 days of separation or one year
after separation. If a participant is considered a specified employee on his
or her separation date, Section 409A requires that the payments be delayed for
six months after such separation date. Account balances resulting from pre-2005
deferred compensation can be distributed either in a lump sum within 60 days of
separation or, if the participant is at least age 65 on his or her separation
date, in up to 10 annual installments. Retirement age under the MDCP is age 65,
and no NEO was retirement eligible under the MDCP during fiscal
2014.
FISCAL 2014
NONQUALIFIED DEFERRED COMPENSATION TABLE
The following table shows contributions, earnings, withdrawals and
distributions during fiscal 2014 and the account balances as of September 28,
2014 for our NEOs under the Management Deferred Compensation Plan.
|
Executive
Contributions |
Aggregate
Earnings |
|
Aggregate Balance at |
|
in Fiscal
2014 |
(Loss) in Fiscal
2014 |
Aggregate
Withdrawals/ |
Fiscal 2014 Year-End |
Name |
($)(1) |
($)(2) |
Distribution
($) |
($)(3) |
Howard Schultz |
|
64,677 |
|
671,972 |
Troy Alstead |
|
113,727 |
|
937,163 |
Scott Maw |
|
|
|
|
Clifford Burrows |
|
31,077 |
|
428,735 |
John Culver |
97,431 |
166,002 |
|
1,718,053 |
Lucy Helm |
|
54,520 |
|
644,434 |
(1) |
This amount was deferred from Mr.
Culvers fiscal 2014 base salary which is reported in the Salary column
of the Summary Compensation Table for fiscal 2014. |
|
|
(2) |
We do not provide above-market or
preferential earnings on MDCP contributions, so these amounts were not
reported in the Summary Compensation Table. MDCP participants can select
only from the investment funds that are available under our 401(k)
plan. |
|
|
(3) |
Of these balances, the following
amounts were reported as executive and Company contributions in Summary
Compensation Tables in prior-year proxy statements: Mr. Schultz
$437,631; Mr. Alstead $0; Mr. Burrows $317,558; and Mr. Culver
$684,022. Compensation for Mr. Maw and Ms. Helm was not subject to
reporting in prior-year proxy statements. The information in this footnote
is provided to clarify the extent to which amounts payable as deferred
compensation represent compensation reported in our prior proxy
statements, rather than additional currently earned
compensation. |
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
We do not provide special
change-in-control benefits to executives. Our only change-in-control
arrangement, which applies to all partners, is accelerated vesting of certain
equity awards. We may from time-to-time offer a severance benefit arrangement
for terminated or separated executives as part of a negotiated termination of
employment in exchange for a release of claims against the Company and other
covenants determined to be in the best interests of the Company. None of our
NEOs for fiscal 2014 had any such severance benefit
arrangement.
Equity
Acceleration
Acceleration Upon
Change in Control. No named executive
officer is entitled to any payment or accelerated benefit in connection with a
change in control of Starbucks, or a change in his or her responsibilities
following a change in control, except for accelerated vesting of stock options
and restricted stock units granted under our 2005 Key Employee Plan. The 2005
Key Employee Plan has detailed definitions of change in control and resigning
for good reason.
Starbucks
Corporation |
|
2015 Proxy Statement |
45 |
Table of Contents
Generally speaking, a change in control
occurs if (i) we sell or liquidate all our assets; (ii) someone acquires 25% or
more of our stock without prior approval of our board of directors; (iii) a
majority of our directors is replaced in any 36-month period other than by new
directors approved by existing directors; or (iv) Starbucks is not the surviving
company after any merger.
The 2005 Key Employee Plan is a double
trigger plan, meaning that unvested stock options and unvested restricted stock
units vest immediately only if (i) there is a change in control and (ii) if
stock options and restricted stock units are assumed or substituted with stock
options or restricted stock units of the surviving company, the partner is
terminated or resigns for good reason within one year after the change in
control. Generally speaking, a resignation is for good reason if it results
from the resigning partner: (i) having materially reduced responsibilities; (ii)
being placed in a new role that is inconsistent with the pre-change-in-control
role; (iii) having his or her base salary or target incentive compensation
reduced; or (iv) having his or her primary work location moved by more than 50
miles. If stock options or restricted stock units are not assumed or substituted
with stock options or restricted stock units of the surviving company, they vest
immediately upon a change in control. We believe double-trigger acceleration
is appropriate because vesting is accelerated only if the retention purpose of
time-vested equity compensation is defeated, which occurs upon a change in
control only for partners who lose their long-term incentive compensation
opportunity because the acquiring company does not assume or substitute awards
or the partners lose their jobs or resign for good reason. Performance RSUs
granted are treated in the same manner as restricted stock units noted above
once the performance period is complete and the amount of award is determined.
Prior to completion of the performance period, performance RSUs do not
accelerate upon a change in control and are forfeited if not assumed or
substituted with awards of the surviving company.
Acceleration Upon Retirement or
Death. The vesting of all options accelerates
in full upon the voluntary termination
of employment of any partner who satisfies
the criteria for retirement under the 2005 Key Employee Plan, meaning the
partner is at least 55 years old and has a minimum of 10 years of credited
service with Starbucks, unless otherwise provided in the grant agreement.
Vesting of all options also accelerates upon the partners death. Restricted
stock units do not accelerate upon retirement or death.
Basis of Valuation. The following table shows the estimated potential incremental
value of additional stock options and restricted stock units that would have
vested for our NEOs as of September 26, 2014 (the last business day of fiscal
2014) under the acceleration scenarios described above. For stock options, the
value is based on the difference between the aggregate exercise price of all
accelerated options and the aggregate market value of the underlying shares as
of September 26, 2014 calculated based on the closing market price of our stock
on that day ($75.17). Accelerated restricted stock unit award value is
calculated by multiplying the number of accelerated shares by the closing market
price of our stock on September 26, 2014 ($75.17). Of the named executive
officers, Messrs. Schultz and Burrows and Ms. Helm satisfied the criteria for
retirement under the 2005 Key Employee Plan as of September 28, 2014.
Retirement, as defined under the Plan, means voluntary termination of
employment after attainment of age 55 and at least 10 years of service with the
Company. Mr. Schultz has voluntarily waived accelerated vesting of options upon
retirement for each stock option grant he has received since he became
retirement eligible. Mr. Schultz agreed to forgo this accelerated retirement
vesting so the Company would not be required to immediately accelerate the
recognition of expense for his option awards in our financial statements. Due to
the number of factors that affect the nature and amount of any benefits provided
upon the events discussed below, any actual amounts paid or distributed may be
different. Factors that could affect these amounts include the time during the
year of any such event, the Companys stock price and the executives
age.
|
Value of Accelerated Equity
Awards ($) |
|
|
Change
in |
Change
in |
|
|
|
|
Control |
Control |
|
|
|
Change
in |
with
No |
plus |
|
|
|
Control |
Replacement |
Qualifying |
|
|
Name |
Only |
Equity |
Termination |
Death |
Retirement |
Howard
Schultz |
|
65,862,745 |
65,862,745 |
20,820,806 |
N/A |
Troy Alstead |
|
10,787,526 |
10,787,526 |
4,046,431 |
N/A |
Scott Maw |
|
2,483,685 |
2,483,685 |
474,992 |
N/A |
Clifford Burrows |
|
12,975,080 |
12,975,080 |
4,004,743 |
4,004,743 |
John Culver |
|
11,594,420 |
11,594,420 |
3,216,347 |
N/A |
Lucy Helm |
|
5,469,841 |
5,469,841 |
1,213,490 |
1,213,490 |
46 |
Starbucks Corporation |
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2015 Proxy Statement |
Table of Contents
PROPOSAL 3
RATIFICATION OF SELECTION OF
DELOITTE & TOUCHE LLP AS OUR
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee is directly
responsible for the appointment, compensation, retention and oversight of the
independent external audit firm retained to audit the Companys financial
statements. As a matter of good corporate governance, the Audit Committee
requests that shareholders ratify its selection of Deloitte & Touche LLP
(Deloitte) to serve as our independent registered public accounting firm for
fiscal 2015. If the selection is not ratified, the Audit Committee will consider
whether it is appropriate to select another registered public accounting firm.
Even if the selection is ratified, the Audit Committee in its discretion may
select a different independent registered public accounting firm at any time
during fiscal 2015 if it determines that such a change would be in the best
interests of the Company and our shareholders. In
addition to the selection of the firm and
in conjunction with the mandated rotation of Deloittes lead engagement partner,
the Audit Committee and its chairperson are directly involved in the selection
of Deloittes new lead engagement partner. Deloitte audited our consolidated
financial statements and internal controls over financial reporting for fiscal
2014 and fiscal 2013. The members of the Audit Committee and the board believe
that the continued retention of Deloitte to serve as the Companys independent
external auditor is in the best interests of the Company and its investors. We
expect that representatives of Deloitte will be present at the Annual Meeting,
and they will have an opportunity to make a statement if they so desire and are
expected to be available to respond to appropriate questions by
shareholders.
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM FEES
The Audit Committee reviews a description
of the scope of services falling within pre-designated fee categories and
imposes specific budgetary guidelines. The following table sets forth the
aggregate fees from Deloitte, which were in compliance with the pre-approval
policy, for fiscal 2014 and fiscal 2013:
Type of
Fees |
Fiscal
2014 |
Fiscal
2013 |
Audit Fees |
$ |
5,805,000 |
$ |
5,317,000 |
Audit-Related
Fees |
$ |
124,000 |
$ |
130,000 |
Tax Fees |
$ |
354,000 |
$ |
362,000 |
All Other
Fees |
$ |
20,000 |
$ |
44,000 |
Total |
$ |
6,303,000 |
$ |
5,853,000 |
Audit
Fees consist of fees paid to Deloitte
for:
● |
the audit of
the Companys annual financial statements included in the Annual Report on
Form 10-K and review of financial statements included in the Quarterly
Reports on Form 10-Q; |
|
|
● |
the audit of
the Companys internal control over financial reporting with the objective
of obtaining reasonable assurance about whether effective internal control
over financial reporting was maintained in all material respects;
and |
|
|
● |
services
that are normally provided by the independent registered public accounting
firm in connection with statutory and regulatory filings or
engagements. |
Audit-Related
Fees consist of fees for assurance and
related services that are reasonably related to the performance of the audit or
review of the Companys financial statements and are not reported under
Audit
Fees. This category includes fees related
to audit and attest services not required by statute or regulations, due
diligence related to mergers, acquisitions and investments and consultations
concerning financial accounting and reporting standards.
Tax
Fees consist of fees for professional
services for tax compliance, tax advice and tax planning. These services include
assistance regarding federal, state and international tax compliance, return
preparation, tax audits and customs and duties.
All Other
Fees consist of fees for permitted
services other than those that meet the criteria above and include research
subscriptions.
The Audit Committee has considered whether
the provision of non-audit services is compatible with maintaining the
independence of Deloitte and has concluded that it is.
Starbucks Corporation |
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2015 Proxy Statement |
47 |
Table of Contents
POLICY ON AUDIT
COMMITTEE PRE-APPROVAL OF AUDIT AND
PERMISSIBLE NON-AUDIT SERVICES OF THE
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee is responsible for
appointing, setting compensation for and overseeing Deloittes work. The Audit
Committee has established a policy requiring its pre-approval of all audit and
permissible non-audit services provided by Deloitte. The policy is available at
www.starbucks.com/about-us/company-information/
corporate-governance. The policy provides for
the general pre-approval of specific types of services and gives detailed
guidance to management as to the specific services that are eligible for general
pre-approval, and provides specific cost limits for each such service on an
annual basis. The policy requires specific pre-approval of all other permitted
services. For both types of pre-approval, the Audit Committee considers whether
such services are consistent with the rules of the SEC on auditor independence. The Audit Committees charter delegates to
its chair the authority to address any requests for pre-approval
of services between Audit Committee
meetings, and the chair must report any pre-approval decisions to the Audit
Committee at its next scheduled meeting. The policy prohibits the Audit
Committee from delegating to management the Audit Committees responsibility to
pre-approve any permitted services.
Requests for pre-approval for services
that are eligible for general pre-approval must be submitted to our controller
and be detailed as to the services to be provided and the estimated total cost.
The controller then determines whether the services requested fall within the
detailed guidance of the Audit Committee in the policy as to the services
eligible for general pre-approval. Deloitte and management must report to the
Audit Committee on a timely basis regarding the services provided by Deloitte in
accordance with general pre-approval.
AUDIT COMMITTEE REPORT
As part of fulfilling its
responsibilities, the Audit Committee reviewed and discussed the audited
consolidated financial statements for fiscal 2014 with management and Deloitte
and discussed those matters required to be discussed under Public Company
Accounting Oversight Board standards with Deloitte. The Audit Committee received
the written disclosures and the letter from Deloitte required by applicable
requirements of the Public Company Accounting Oversight Board regarding
Deloittes communications with the Audit Committee concerning independence, and
has discussed with Deloitte its independence.
Based upon the reviews and discussions
referred to above, the Audit Committee recommended to the board of directors
that the audited consolidated financial statements for fiscal 2014 be included
in Starbucks Annual Report on Form 10-K filed with the SEC.
Respectfully submitted,
Mellody Hobson (Chair)
Kevin R.
Johnson*
Joshua Cooper Ramo
Javier G. Teruel
Craig E.
Weatherup
* |
Mr. Johnson was an independent
member of the board of directors, the chair of the Compensation Committee
and a member of the Audit Committee until his appointment as president and
chief operating officer of Starbucks in January 2015, after which time he
continued to serve as a non-independent member of the board of
directors. |
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR THE RATIFICATION
OF THE SELECTION OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL
2015. |
48 |
Starbucks Corporation |
|
2015 Proxy Statement |
Table of Contents
PROPOSAL 4
SHAREHOLDER PROPOSAL TO
ESTABLISH A BOARD
COMMITTEE ON SUSTAINABILITY
Mr. John Harrington has notified the
Company that he intends to submit the following proposal at this years Annual
Meeting. As explained below, our board unanimously recommends that you vote
AGAINST this shareholder proposal. Mr. Harrington beneficially
owns
800 shares of Starbucks common stock. We
will provide the address of the individual submitting this proposal promptly
upon a shareholders oral or written request. The proponent is responsible for
the content of the proposal, for which we and our board accept no
responsibility.
SHAREHOLDER PROPOSAL TO
ESTABLISH A BOARD
COMMITTEE ON SUSTAINABILITY
RESOLVED: Amend Article II of the bylaws of the corporation to add a new section
2.11 authorizing the board to establish a Board Committee on
Sustainability.
2.11 Board Committee on
Sustainability:
A)
|
The Board is authorized and
encouraged to appoint a Board Committee on Sustainability. Such committee
could engage in ongoing review of corporate policies, above and beyond
matters of legal compliance, to assess the Corporations response to
changing conditions and knowledge of the natural environment, including
but not limited to, waste creation and disposal, natural resource
limitations, energy use, waste usage, and climate change. |
|
B) |
The Board of Directors is
authorized in its discretion, consistent with these Bylaws and the
Washington Business Corporation Act, by resolution adopted by a majority
of the Board members to: |
|
|
(1) select the members of the
Committee, (2) provide said committee with funds for operating expenses,
(3) prescribe guidelines for said
Committees |
|
operations, (4) empower said
Committee to solicit public input and to issue periodic reports to
shareholders and the public, at reasonable expense and excluding
confidential information, on the Committees activities, findings and
recommendations, (5) articulate any impact of committee membership on the
members fiduciary responsibility, and (6) adopt any other measures within
the Boards discretion consistent with these Bylaws and applicable
law. |
|
C)
|
Nothing herein shall restrict the
power of the Board of Directors to manage the business and affairs of the
company. The Board Committee on Sustainability shall not incur any costs
to the company except as authorized by the Board of
Directors. |
The Board Committee on Sustainability
would be authorized on an ongoing basis to initiate, review, and make policy
recommendations regarding the companys preparedness for changing environmental
conditions that may affect the sustainability of our business. Issues related to
sustainability might include, but are not limited to: global climate change,
emerging concerns regarding toxicity of materials, resource shortages,
biodiversity loss, and political instability due to changing environmental
conditions. As things stand now, the Nominating and Governance Committee has
responsibility to conduct an annual review of the Companys Global
Responsibility Report, but this is just one among 18 other duties
which
primarily relate to the recruitment,
election, duties, and compensation of the Board members. The proponent believes
it is important for an independent committee to be created with focused
fiduciary duties for oversight of company sustainability policies and
practices.
Adoption of this resolution would enhance
our reputation and reinforce our companys position as an industry leader in
this area of increasing and long term concern to investors and policy makers.
The proposed by-law would authorize and encourage the creation of a Board
Committee, but would retain discretion for appointment and implementation with
the full Board of Directors.
The Starbucks Board of Directors
recommends that shareholders vote AGAINST this proposal for the following
reasons:
We do not believe that authorizing or
establishing a board committee solely dedicated to environmental sustainability
is necessary for us to continue to be a leader in this area nor would such
committee enhance the effectiveness of the boards current oversight
framework.
Starbucks is committed to being a
responsible leader and has a demonstrated history of performance in the area of
environmental and social responsibility. Our efforts, programs and initiatives
have been designed to remain relevant to our business and positively impact the
communities we serve. As evident in our Global Responsibility Report, which we
have issued annually for the past thirteen years (available through our website
at
Starbucks Corporation |
|
2015 Proxy Statement |
49 |
Table of Contents
http://www.starbucks.com/responsibility/global-report), we have a long history and proven and recognized record of
acting in an environmentally and socially responsible manner and prioritizing
sustainability issues. The way we carry out our business and the programs and
partnerships in which we have invested have produced significant and documented
positive results.
A few recent highlights of our progress,
performance and recognition with respect to sustainability issues
include:
● |
In 2014,
Starbucks was included in key sustainability-related rankings such as the
Dow Jones Sustainability Index, FTSE4Good Index Series, Newsweek Green
Rankings, Climate Counts (sector-leader) and the Carbon Disclosure
Project. |
|
|
● |
We have
advocated for and been active with respect to sustainability-related
issues via the Copenhagen Communiqué, the Avoid Deforestation Partners and
the UN Global Compact. |
|
|
● |
Starbucks is
a founding member of and has been active in the Business for Innovative
Climate Energy Partnership Coalition (BICEP), which aims to positively
impact US legislation on climate change and energy policy. |
|
|
● |
We have been
a leader in global responsibility reporting since 2001 and are one of the
few publicly traded companies in the United States that have consistently
published a report on this topic in each of the last thirteen years. In
2015 we will publish our fourteenth Global Responsibility Report.
|
|
|
● |
We also have
continued to meet a variety of environmental reporting standards,
including the Carbon Disclosure Project and the Global Reporting
Initiative Sustainability Reporting Framework (GRI).
|
The Starbucks board of directors is
responsible for organizing its functions and conducting its business in the
manner it deems most effective and efficient, consistent
with its duties of good faith and due
care. Accordingly, the board has established committees with responsibility for
oversight of certain Starbucks activities, businesses and functions. In 2011, in
order to provide the board with more direct oversight of our environmental and
social responsibility policies, we amended the charter of our
Nominating/Governance Committee to make the Nominating/Governance Committee
responsible for annually reviewing and assessing the effectiveness of the
Companys environmental and social responsibility policies, goals and programs
through our annual Global Responsibility Report, and to authorize the
Nominating/ Governance Committee to make recommendations as deemed appropriate
based its review and assessment. Our senior vice president, global
responsibility and public policy, meets formally with the Nominating/Governance
Committee at least annually, presents and discusses with the Committee the
Global Responsibility Report, provides the Committee with updates and additional
information as requested by the Committee, and obtains the Committees feedback,
guidance and recommendations. With the Committees input and oversight, and as
part of our strategic planning process, our senior vice president, global
responsibility and public policy, guides our overall environmental and social
responsibility strategy and leads a global cross-company team that reports
regularly to our senior executives.
The board believes that a committee on
sustainability would dilute the existing committee structure, would be
duplicative of the functions already performed by the Nominating/Governance
Committee and could impair the boards efficiency and effectiveness by
establishing an additional, single issue committee, which the board believes to
be undesirable.
The Companys existing governance
framework and commitment to strong performance in the area of environmental and
social responsibility makes the additional board committee the proponent
suggests unnecessary.
FOR THESE REASONS, THE
BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE AGAINST PROPOSAL NUMBER
4. |
50 |
Starbucks Corporation |
|
2015 Proxy Statement |
Table of Contents
PROPOSAL 5
SHAREHOLDER PROPOSAL FOR AN
INDEPENDENT BOARD
CHAIRMAN
Mr. James McRitchie and Ms. Myra K. Young
have notified the Company that they intend to submit the following proposal at
this years Annual Meeting. As explained below, our board unanimously recommends
that you vote AGAINST this shareholder proposal. Mr. McRitchie and Ms. Young
beneficially own 100 shares of Starbucks common stock.
We will provide the address of the
individuals submitting this proposal promptly upon a shareholders oral or
written request. The proponents are responsible for the content of the proposal,
for which we and our board accept no responsibility.
SHAREHOLDER PROPOSAL
FOR AN INDEPENDENT
BOARD CHAIRMAN
RESOLVED: Shareholders request that our Board of Directors adopt a policy, and
amend other governing documents as necessary, to require the Chair of the Board
of Directors to be an independent member of the Board. This independence
requirement shall apply prospectively, with the next CEO, so as not to violate
any contractual
obligation at the time this resolution is
adopted. Compliance with this policy is waived if no independent director is
available and willing to serve as Chair. The policy should also specify how to
select a new independent chairman if a current chairman ceases to be independent
between annual shareholder meetings.
When our CEO is also our board chairman,
this arrangement can hinder our boards ability to monitor our CEOs
performance. Many companies already have an independent Chairman. An independent
Chairman is the prevailing practice in the United Kingdom and many international
markets.
A 2012 report by GMIRatings,
The Costs of a Combined Chair/CEO (available at http://origin.library.constantcontact.
com/download/get/file/1102561686275-208/GMIRatinqs_CEOChairComp_062012.pdf),
found that companies with a separate CEO and chair provide investors with
five-year shareholder returns that are nearly 28% higher than those helmed by a
party of one.
Although the study also found that
companies with a combined CEO/Chair earned slightly more than those with
separate positions over a one-year period, that is because a CEO, unopposed by
an independent chairman, has more freedom to make decisions that immediately
benefit the company and their own pay. However, those decisions are often at
odds with a successful long-term model.
The study also found that corporations
with combined CEO and chair roles are 86% more likely to register as
Aggressive in GMIs Accounting and Governance Risk (AGR®) model.
Still, the biggest reason to split the
roles is to bring more accountability and oversight to the CEOs job and to free
the board to truly act as the CEOs boss.
Some argue a lead director is enough.
However, lead directors are not considered the equivalent of board chairmen by
the board or shareowners, even when such directors are provided with comparable
authorities.
The Council of Institutional Investors,
whose members invest over $3 trillion, clearly favors an independent chair in
the following policy: The board should be chaired by an independent director.
Evolution of the role of the board has
created an array of significant duties, difficult to reconcile with the time
required to manage the demands of a large company. According to a survey by the
National Association of Corporate Directors, 72.8% of directors serving on
boards with an independent chair opined that companies greatly benefit, while
6.7% stated they did not. (See http://web.law.columbia.edu/sites/
default/files/microsites/millstein-center/2009%2003%
2030%20Chairing%20The%20Board%20final.pdf)
According to a Spencer Stewart survey of
board members, 64% agree or strongly agree that splitting the positions results
in more independent thought by directors, while 60% affirm that it leads to more
effective CEO evaluations. (http://www.corpgov.deloitte.com/binary/com.epicentric.contentmanagement.servlet.ContentDeliveryServlet/USEng/Documents/Board%
20Governance/What%20Directors%20Think%202014_CorporateBoardMember.pdf, page
21.)
Please vote to protect and enhance
long-term shareholder value:
Independent
Board Chairman - Proposal 5
Starbucks Corporation |
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2015 Proxy Statement |
51 |
Table of Contents
The Starbucks Board of Directors
recommends that shareholders vote AGAINST this proposal for the following
reasons:
We believe that our current board leadership
structure, where we have delegated many oversight responsibilities to
independent board committees, have appointed a presiding (lead) independent
director, and have the ability to determine whether to combine the chairman and
chief executive positions, best serves our shareholders and is currently the
most effective leadership structure for Starbucks. Currently, the board has
determined that it is best for Mr. Schultz to serve as chairman given his
in-depth knowledge of Starbucks business and industry and his ability to
formulate and implement strategic initiatives. Mr. Schultz is intimately
involved in positioning Starbucks for on-going global growth, working closely
with the Companys senior leadership team to ensure continued disciplined growth
and operational excellence around the world. Mr. Schultz is thus in a position
to elevate the most critical business issues for consideration by the
independent directors of the board. In addition, having a combined chairman and
chief executive officer enables Starbucks to speak with a unified voice to
shareholders, customers and other stakeholders.
Additionally, we believe that our
corporate governance structure, which includes a presiding (lead) independent
director as well as the exercise of key board oversight responsibilities by
independent directors, provides an effective balance for management of the
Company that has operated effectively and in the best interests of
shareholders.
Our presiding independent director is
elected every two years by the independent directors and may not serve more than
two consecutive terms. The presiding independent director presides at the
scheduled executive sessions of independent directors, presides at all meetings
of the
board at which the chairman is not
present, and has the authority to call meetings of the independent directors and
of the entire board. Pursuant to our Corporate Governance Principles and
Practices, the duties of the presiding independent director also include:
● |
serving as a
liaison between the independent directors and the chairman; |
|
|
● |
approving
the scheduling of board meetings, as well as the agenda and materials for
each board meeting and executive session of the independent
directors; |
|
|
● |
approving
and coordinating the retention of advisors and consultants to the board;
and |
|
|
● |
such other
responsibilities as the independent directors may designate from time to
time. |
Our board leadership structure supports
the independence of our non-management directors. The independent directors meet
in executive session at each board meeting without the presence of management.
All board members also have access to senior management. Additionally, as more
fully described earlier in this proxy statement, each of the standing board
committees is comprised solely of and led by independent directors and has
oversight responsibilities over critical matters of the Company, such as
overseeing our financial and reporting process, including review of the
Companys quarterly and annual financial results, the compensation of executive
officers, including the chairman and chief executive officer, and the nomination
of directors and the evaluation of the board and its committees.
We believe that the flexibility that our
board currently has to determine whether having the chief executive officer or
another director serve as chairman is a more appropriate and responsible
approach to addressing effective board leadership structures and serving the
best interests of shareholders.
FOR THESE REASONS, THE
BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE AGAINST PROPOSAL NUMBER
5. |
52 |
Starbucks Corporation |
|
2015 Proxy Statement |
Table of Contents
OTHER
BUSINESS
The board of directors knows of no other
matters that properly may be brought before the Annual Meeting. However, if any
other matters are properly brought
before the Annual Meeting, the persons
appointed in the accompanying proxy intend to vote the shares represented
thereby in accordance with their best judgment.
EQUITY COMPENSATION
PLAN INFORMATION
The following table provides information
as of September 28, 2014 regarding total shares subject to outstanding stock
options and rights and total additional shares available for issuance under our
existing equity incentive and employee stock purchase plans.
|
|
|
|
|
|
|
|
|
Number of Securities |
|
|
|
|
|
|
|
|
|
|
|
Remaining Available for |
|
|
|
Number of Securities to |
|
|
Weighted-Average |
|
|
Future Issuance Under |
|
|
|
be Issued Upon Exercise |
|
|
Exercise Price of |
|
|
Equity Compensation Plans |
|
|
|
of Outstanding Options, |
|
|
Outstanding Options, |
|
|
(Excluding Securities |
|
|
(a) Plan
Category |
Warrants and Rights |
|
|
Warrants and Rights |
|
|
Reflected in Column (a)) |
|
|
Equity compensation
plans |
|
|
|
|
|
|
|
|
|
|
|
|
approved by security holders |
|
19,749,954 |
|
|
|
$29.73 |
(1) |
|
|
62,125,972 |
(2) |
|
Equity
compensation plans not |
|
|
|
|
|
|
|
|
|
|
|
|
approved by security holders |
|
47,630 |
(3) |
|
|
$27.32 |
|
|
|
1,310,781 |
(4) |
|
Total |
|
19,797,584 |
|
|
|
$29.72 |
(1) |
|
|
63,436,753 |
(5) |
|
(1) |
The weighted-average exercise
price takes into account 5,417,555 shares under approved plans issuable
upon vesting of outstanding restricted stock units, which have no exercise
price. The weighted average exercise price solely with respect to options
outstanding under the approved plans is $37.88. |
|
|
(2) |
Consists of 56,018,357 shares
remaining available for issuance under the 2005 Long-Term Equity Incentive
Plan and 6,107,615 shares remaining available for issuance under the 1995
Employee Stock Purchase Plan. Shares available for issuance under the 2005
Long-Term Equity Incentive Plan may be issued pursuant to stock options,
restricted stock, restricted stock units and stock appreciation
rights. |
|
|
(3) |
Consists of shares under our 1991
Company-Wide Bean Stock Option Plan (the 1991 Bean Stock
Plan). |
|
|
(4) |
Consists of shares remaining
available for issuance under the UK Share Incentive Plan. |
|
|
(5) |
Consists of the following shares
remaining available for issuance: 56,018,357 under the 2005 Long-Term
Equity Incentive Plan, 6,107,615 under the 1995 Employee Stock Purchase
Plan and 1,310,781 under the UK Share Incentive
Plan. |
The 1991 Bean Stock Plan is our former
broad-based stock option plan and provided for the annual issuance of stock
options to eligible partners. The 1991 Bean Stock Plan was approved and adopted
by our board of directors in 1991 and did not require shareholder approval.
Generally, options were granted annually under the 1991 Bean Stock Plan. These
grants required board approval, were linked to overall Company performance in
the prior year and
were granted to partners as a percentage
of base salary. The 1991 Bean Stock Plan was replaced by the 2005 Company-Wide
Sub-Plan to the Starbucks Corporation 2005 Long-Term Equity Incentive Plan. The
Starbucks Corporation 2005 Long-Term Equity Incentive Plan, as amended and
restated, was approved by our shareholders on March 20,
2013.
Starbucks Corporation |
|
2015 Proxy Statement |
53 |
Table of Contents
CERTAIN
RELATIONSHIPS AND RELATED
TRANSACTIONS
REVIEW AND
APPROVAL OF RELATED-PERSON TRANSACTIONS
Under the Audit Committees charter, and
consistent with NASDAQ rules, any material potential or actual conflict of
interest or transaction between Starbucks and any related person of Starbucks
must be reviewed and approved or ratified by the Audit Committee. SEC rules
define a related person of Starbucks as any Starbucks director (or nominee),
executive officer, 5%-or-greater shareholder or immediate family member of any
of these persons.
Our board of directors has adopted a
written Policy for the Review and Approval of Related-Person Transactions
Required to Be Disclosed in Proxy Statements, which states that it is the policy
of Starbucks not to participate in related person transactions. In select
circumstances, if the transaction provides Starbucks with a demonstrable and
significant strategic benefit that is in the best interests of Starbucks and its
shareholders and has terms that are competitive with terms available from
unaffiliated third parties, then the Audit Committee may approve the
transaction. The policy also provides that any related person as defined above
must notify the chair of the Audit Committee before becoming a party to, or
engaging in, a potential related-person transaction that may require disclosure
in our proxy statement under SEC rules, or if prior approval is not practicable,
as soon as possible after engaging in the transaction. Based on current SEC
rules, transactions covered by the policy include:
● |
any individual or
series of related transactions, arrangements or relationships (including,
but not limited to, indebtedness or guarantees of indebtedness), whether
actual or proposed; |
|
|
● |
in which Starbucks
was or is to be a participant; |
|
|
● |
the amount of which
exceeds $120,000; and |
|
|
● |
in which the related
person has or will have a direct or indirect material interest. Whether
the related person has a direct or indirect material interest depends on
the significance to investors of knowing the
information |
in light of all
the circumstances of a particular case. The importance to the person having the
interest, the relationship of the parties to the transaction with each other and
the amount involved in the transaction are among the factors to be considered in
determining the significance of the information to investors.
The Audit Committee chair has the
discretion to determine whether a transaction is or may be covered by the
policy. If the chair determines that the transaction is covered by the policy,
then the transaction is subject to full Audit Committee review and approval. The
Audit Committees decision is final and binding. Additionally, the Audit
Committee chair has discretion to approve, disapprove or seek full Audit
Committee review of any immaterial
transaction involving a related person (i.e., a
transaction not otherwise required to be disclosed in the proxy
statement).
In considering potential related-person
transactions, the Audit Committee looks to SEC and NASDAQ rules, including the
impact of a transaction on the independence of any director. Once the Audit
Committee has determined that (i) the potential related-person transaction will
provide Starbucks with a demonstrable and significant strategic benefit that is
in the best interests of Starbucks and its shareholders and (ii) that the terms
of the potential related-person transaction are competitive with terms available
from unaffiliated third parties, the Audit Committee may consider other factors
such as:
● |
whether the
transaction is likely to have any significant negative effect on
Starbucks, the related person or any Starbucks
partner; |
|
|
● |
whether the
transaction can be effectively managed by Starbucks despite the related
persons interest in it; |
|
|
● |
whether the
transaction would be in the ordinary course of our business;
and |
|
|
● |
the availability of
alternative products or services at comparable
prices. |
RELATED-PERSON
TRANSACTIONS SINCE THE BEGINNING OF FISCAL 2014
During fiscal 2014, Mr. Schultz made
personal use of a Company-owned aircraft for which he reimbursed the Company at
its aggregate incremental cost. Mr. Schultzs reimbursements for flights taken
on the Company-owned aircraft during fiscal 2014 totaled $113,356. The Audit
Committee approved this aircraft transaction.
Additionally, at the end of fiscal 2013,
Starbucks entered into a series of agreements under which Starbucks acquired the
right to use an aircraft leased by an entity owned by Mr. Schultz (Sublessor)
to address the Companys need for additional flight capacity for business
purposes. Under an exclusive sublease agreement with the Sublessor, Starbucks
subleases and operates the aircraft for a monthly rent of $269,297 and is
responsible for the operation of the aircraft, aircraft maintenance, insurance
and all other overhead costs. The sublease will terminate upon Mr. Schultzs
discontinuation of day-to-day activities in Starbucks management or may be
terminated sooner by either party upon 45 days notice.
Starbucks
54 |
Starbucks Corporation
|
|
2015 Proxy
Statement |
Table of Contents
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
and Mr. Schultz also entered into an
agreement pursuant to which Mr. Schultz pays Starbucks for his personal use of
the aircraft. These amounts are calculated on a fully allocated cost basis and
include, among other things, crew services, maintenance, insurance, fuel,
support services and associated overhead. Pursuant to the agreement, Mr. Schultz
paid to Starbucks a one-time deposit of $498,477, equal to one and one-half
times the estimated monthly costs for his personal use of the aircraft in the
first year. The deposit is subject to adjustment by Starbucks based on changes
to the estimated annual costs for Mr. Schultzs personal use in future years.
The agreement also provides for Mr. Schultz to pay to Starbucks monthly advance
payments based upon estimated annual costs for his personal use. For certain
personal flights for which Mr. Schultz is not permitted by the Federal Aviation
Administration to reimburse Starbucks on a fully allocated basis, he reimburses
Starbucks for twice the cost of fuel under a separate time sharing agreement
between the Company and Mr. Schultz. At the end of each fiscal year the amounts
required to be paid by Mr. Schultz under these aircraft use agreements are
reconciled with the amounts advanced by Mr. Schultz. For fiscal 2014, after
reconciliation, including reimbursement to Mr. Schultz for advance overpayments
made in fiscal 2014, the amounts paid by Mr. Schultz under these aircraft use
agreements totaled $2,783,674. For fiscal 2015, Mr. Schultzs monthly payments
are $337,779 based upon his estimated annual usage in fiscal 2015. At the end of
fiscal 2015 the costs required to be paid by Mr. Schultz for his actual personal
use in fiscal 2015 will be reconciled with his advance payments.
Starbucks also entered into a hangar space
lease with an entity owned by Mr. Schultz (Tenant) under which Starbucks
leases a portion of the Companys hangar to the Tenant for parking the aircraft
and Starbucks receives rent calculated based on a pro-rata portion of the
maintenance, utilities and other expenses paid by Starbucks for the hangar. The
hangar space lease became effective on June 1, 2014 after approval by the lessor
of the ground lease on which the hangar is located. For fiscal 2014, the total
rent paid by Tenant under the hangar space lease was
$94,000. Prior to the effective date of
the hangar space lease, the value of the hangar space was included in the fully
allocated cost paid by Mr. Schultz for the use of the aircraft. For 2015,
monthly rent under the hangar lease is estimated to be $23,303, subject to
adjustment based on Starbucks actual costs. The hangar space lease terminates no
later than the tenth anniversary of Mr. Schultzs discontinuation of day-to-day
activities in Starbucks management or the expiration of the underlying ground
lease on which the hangar is located.
Additionally, (i) each of Starbucks and
Mr. Schultz entered into separate non-exclusive sublease agreements for the
aircraft with Sublessor and (ii) Starbucks and Mr. Schultz entered into a
support services agreement to take effect upon the termination of the exclusive
sublease agreement described above and to continue for a period of ten years
after Mr. Schultzs discontinuation of day-to-day activities in Starbucks
management. Under this follow-on arrangement, Mr. Schultz will sublease the
aircraft directly from the Sublessor and operate it (using support services
provided by the Company) for all flights (other than business flights operated
by Starbucks) and will be responsible for all costs associated with the aircraft
other than the direct operating cost of Starbucks flights. Starbucks will pay to
Sublessor hourly rent (under a formula based on the amount of hours the aircraft
is flown). Under the support services agreement, Mr. Schultz will pay Starbucks
a fee for support services and will also be responsible for all aircraft
operating costs, including crew services, maintenance, insurance, fuel and
associated overhead that are required to enable Mr. Schultz to operate his own
personal flights. The support services fee to be paid to Starbucks under the
support services agreement will be determined based on market rates when the
agreement takes effect based on an evaluation of third-party support/management
fees for support services similar to those provided under the support services
agreement.
The Audit Committee and independent members of the board of directors
reviewed and approved these transactions pursuant to our Policy for the Review and
Approval of Related-Person Transactions Required to Be Disclosed in Proxy
Statement.
Starbucks Corporation |
|
2015 Proxy Statement |
55 |
Table of Contents
BENEFICIAL
OWNERSHIP OF COMMON STOCK
The following table sets forth information
concerning the beneficial ownership of our common stock by (i) those persons
who we know to beneficially own more than 5% of our outstanding common stock;
(ii) our current directors and nominees; (iii) the named executive officers
listed in the Summary Compensation Table; and (iv) all of our current directors
and executive officers as a group. Under SEC rules, beneficial ownership for
purposes of this table takes into account shares as to which the individual has
or shares voting and/or investment power as well as shares that may be acquired
within 60 days (such as by exercising vested stock options) and is different
from beneficial ownership for purposes of Section 16 of the Exchange Act, which
may result in a number that is different than the beneficial ownership number
reported in forms filed pursuant to Section 16. Information is provided as of
December 3, 2014. An asterisk in the percent of class column indicates
beneficial ownership of less than 1%. The beneficial owners listed have sole
voting and investment power with respect to shares beneficially owned, except as
to the interests of spouses or as otherwise indicated.
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
Deferred
Stock |
|
Beneficial |
|
Percent |
|
|
Name of Beneficial Owner |
Shares(1) |
|
Options(2) |
|
Units(3) |
|
Ownership |
|
of
Class(4) |
|
|
Directors and
Officers |
|
|
|
|
|
|
|
|
|
|
|
|
Howard Schultz |
19,801,103 |
5 |
|
3,357,063 |
|
|
|
23,158,166 |
|
3.07% |
|
|
William W. Bradley |
8,245 |
|
|
122,862 |
|
9,755 |
|
140,862 |
|
* |
|
|
Robert M. Gates |
3,300 |
|
|
|
|
9,691 |
|
12,991 |
|
* |
|
|
Mellody Hobson |
167,992 |
6 |
|
153,825 |
|
2,975 |
|
324,792 |
|
* |
|
|
Kevin R. Johnson |
32,322 |
|
|
11,695 |
|
|
|
44,017 |
|
* |
|
|
Olden Lee |
18,922 |
|
|
169,005 |
|
4,911 |
|
192,838 |
|
* |
|
|
Joshua Cooper
Ramo |
5,499 |
|
|
30,000 |
|
7,886 |
|
43,385 |
|
* |
|
|
James G. Shennan, Jr. |
248,484 |
7 |
|
102,090 |
|
13,562 |
|
364,136 |
|
* |
|
|
Clara Shih |
|
|
|
3,348 |
|
9,856 |
|
13,204 |
|
* |
|
|
Javier G. Teruel |
12,600 |
|
|
273,424 |
|
13,562 |
|
299,586 |
|
* |
|
|
Myron E. Ullman,
III |
7,000 |
|
|
253,285 |
|
|
|
260,285 |
|
* |
|
|
Craig E. Weatherup |
37,503 |
8 |
|
253,285 |
|
|
|
290,788 |
|
* |
|
|
Troy Alstead |
80,548 |
|
|
90,774 |
|
|
|
171,322 |
|
* |
|
|
Clifford Burrows |
72,306 |
|
|
402,899 |
|
|
|
475,205 |
|
* |
|
|
John Culver |
86,433 |
|
|
207,402 |
|
|
|
293,835 |
|
* |
|
|
Lucy Helm |
47,899 |
|
|
141,748 |
|
|
|
189,647 |
|
* |
|
|
Scott Maw |
4,853 |
|
|
17,927 |
|
|
|
22,780 |
|
* |
|
|
All current directors and executive officers
as a group |
|
|
|
|
|
|
|
|
|
|
|
|
(17) persons |
20,635,009 |
|
|
5,590,632 |
|
72,198 |
|
26,297,839 |
|
3.50% |
|
|
5% Shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
FMR LLC |
45,887,308 |
9 |
|
|
|
|
|
45,887,308 |
|
6.12% |
|
|
BlackRock, Inc. |
40,973,788 |
10 |
|
|
|
|
|
40,973,788 |
|
5.46% |
|
(1) |
Represents the number of shares
of common stock beneficially owned on December 3, 2014. |
|
(2) |
Represents options that were
exercisable on December 3, 2014 and options that become exercisable within
60 days of December 3, 2014. |
|
(3) |
Represents the number of common
stock units held under our Deferred Compensation Plan for Non-Employee
Directors. |
|
(4) |
Based on 749,923,886 shares of
Starbucks common stock outstanding on December 3, 2014. Percent of class
as of December 3, 2014 is calculated for each person and group by dividing
the number of shares beneficially owned by the sum of the total shares
outstanding plus the number of shares subject to securities beneficially
owned by that person or group. |
|
(5) |
Includes 637,650 shares of common
stock held by the Schultz Family Foundation as to which Mr. Schultz
disclaims beneficial ownership and 295,000 shares held by a family-owned
limited liability company. Also includes 1,000,000 shares of common stock
held by Mr. Schultzs spouse and 1,000,000 shares held in a grantor
retained annuity trust for which Mr. Schultz is the sole trustee and sole
beneficiary. |
|
(6) |
Includes 141,573 shares of common
stock held by The GWL Living Trust as to which Ms. Hobson disclaims
beneficial ownership. |
|
(7) |
Consists of 62,440 shares held by
Shennan Family Investments LLC, a limited liability company in which Mr.
Shennan is a manager, 156,044 shares held by Shennan LLC, a limited
liability company in which Mr. Shennan is a manager and 30,000 shares held
in a trust of which Mr. Shennan or his spouse is a trustee for the benefit
of members of the Shennan family. |
|
(8) |
Consists of 37,503 shares held in
a trust of which Mr. Weatherup and his wife are trustees for the benefit
of members of the Weatherup family. |
|
(9) |
FMR LLC stated in its Schedule
13G filing with the SEC on February 14, 2014 (the FMR 13G filing) that,
of the 45,887,308 shares beneficially owned at December 31, 2013, it has
(a) sole voting power with respect to 2,934,268 shares, (b) shared voting
power with respect to no shares, and (c) sole investment power with
respect to all 45,887,308 shares. According to the FMR 13G filing, the
address of FMR LLC is 245 Summer Street, Boston, Massachusetts 02210.
Fidelity Management & Research Company (Fidelity), a wholly-owned
subsidiary of FMR LLC and an investment adviser registered under the
Investment Advisers Act of 1940, is the beneficial owner of 41,573,770
shares as a result of acting as investment adviser to various investment
companies registered under the Investment Company Act of 1940. Edward C.
Johnson 3d (Chairman of FMR LLC) and FMR LLC, through its control of
Fidelity, and the funds each has sole power to dispose of the 41,573,770
shares owned by the funds. Neither FMR LLC, nor Edward C. Johnson 3d has
the sole power to vote or direct the voting of the shares owned directly
by the Fidelity funds, which power resides with the funds Boards of
Trustees. Fidelity carries out the voting of the shares under written
guidelines established by the funds Boards of Trustees. |
|
(10) |
BlackRock, Inc. stated in its
Schedule 13G filing with the SEC on February 4, 2014 (the BlackRock 13G
filing) that, of the 40,973,788 shares beneficially owned at December 31,
2013, it has (a) sole voting power with respect to 32,592,290 shares, (b)
shared voting power with respect to 18,710 shares, and (c) sole investment
power with respect to all 40,973,788 shares. According to the BlackRock
13G filing, the address of BlackRock, Inc. is 40 East 52nd Street, New
York, New York 10022. |
56 |
Starbucks Corporation
|
|
2015 Proxy
Statement |
Table of Contents
BENEFICIAL
OWNERSHIP OF COMMON STOCK
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange
Act of 1934, as amended, requires our directors and executive officers, and
persons who beneficially own more than 10% of our common stock, to file reports
of beneficial ownership and changes in beneficial ownership with the SEC. Our
directors, executive officers and greater-than-10% shareholders are required by
SEC rules to furnish us with copies of all Section 16(a) reports that they file.
We file Section 16(a) reports on behalf of our directors and executive officers
to report their initial and subsequent changes in beneficial ownership of our
common stock. To
our knowledge, based solely on a review of
the reports we filed on behalf of our directors and executive officers, written
representations from these persons that no other reports were required and all
Section 16(a) reports provided to us, we believe that during fiscal 2014 our
directors, executive officers and holders of more than 10% of our common stock
filed the required reports on a timely basis under Section 16(a), except for one
Form 4 to report the withholding of shares for taxes upon the vesting of
restricted stock units that was inadvertently filed late on behalf of Lucy
Helm.
ADDITIONAL
INFORMATION
Expenses of
Solicitation. We will bear the expense
of preparing, printing and mailing this proxy statement and the proxies we
solicit. Proxies will be solicited by mail, telephone, personal contact and
electronic means and may also be solicited by directors, officers and Starbucks
partners in person, by the Internet, by telephone or by facsimile transmission,
without additional remuneration. We have retained Alliance Advisors, LLC to act
as a proxy solicitor in conjunction with the Annual Meeting. We have agreed to
pay Alliance $18,500, plus reasonable out-of-pocket expenses, for proxy
solicitation services.
We also will request brokerage firms,
banks, nominees, custodians and fiduciaries to forward proxy materials to the
beneficial owners of shares of our stock as of the record date and will
reimburse them for the cost of forwarding the proxy materials in accordance with
customary practice.
Your cooperation in promptly voting your
shares and submitting your proxy by the Internet or telephone, or by completing
and returning the enclosed proxy card (if you received your proxy materials in
the mail), will help to avoid additional expense.
Internet Voting. The Company is incorporated under Washington law, which
specifically permits electronically transmitted proxies, provided that the
transmission set forth or be submitted with information from which it can
reasonably be determined that the transmission was authorized by the
shareholder. The electronic voting procedures provided for the Annual Meeting
are designed to authenticate each shareholder by use of a control number to
allow shareholder to vote their shares and to confirm that their instructions
have been properly recorded.
INTERNET
AVAILABILITY OF ANNUAL MEETING MATERIALS
Under SEC rules, Starbucks has elected to
make our proxy materials available to the majority of our shareholders over the
Internet rather than mailing paper copies of those materials to each
shareholder. On January 23, 2015, we mailed to the majority of our shareholders
a Notice of Internet Availability of Proxy Materials (the Notice) directing
shareholders to a website where they can access
the proxy statement for our Annual Meeting
of Shareholders and Annual Report and view instructions on how to vote their
shares via the Internet or by phone. If you received the Notice only and would
like to receive a paper copy of the proxy materials, please follow the
instructions printed on the Notice to request that a paper copy be mailed to
you.
Starbucks Corporation |
|
2015 Proxy Statement |
57 |
Table of Contents
PROPOSALS OF
SHAREHOLDERS
Pursuant to SEC Rule 14a-8, shareholder
proposals intended for inclusion in our 2016 proxy statement and acted upon at
our 2016 Annual Meeting of Shareholders (the 2016 Annual Meeting) must be
received by us at our executive offices at 2401 Utah Avenue South, Mail Stop
S-LA1, Seattle, Washington 98134, Attention: Corporate Secretary, on or prior to
September 25, 2015.
Shareholder proposals submitted for
consideration at the 2016 Annual Meeting of Shareholders but not submitted for
inclusion in our proxy statement for our 2016 Annual Meeting pursuant to SEC
Rule 14a-8, including shareholder nominations for candidates for election as
directors, generally must be delivered to the Corporate Secretary at our
executive offices not later than 120 days nor earlier than 150 days before the
first anniversary of the date of the 2015 Annual Meeting of Shareholders. As a
result, any notice given by a shareholder pursuant to the provisions
of
our bylaws (other than notice pursuant to
SEC Rule 14a-8) must be received no earlier than October 20, 2015, and no later
than November 19, 2015. However, if the date of the 2016 Annual Meeting occurs
more than 30 days before or more than 60 days after March 18, 2016, notice by
the shareholder of a proposal must be delivered no earlier than the close of
business on the 150th day prior to the date of such annual meeting
and no later than the close of business on the later of the 120th day
prior to the date of such annual meeting or, if the first public announcement of
the date of the annual meeting is less than 100 days prior to the date of such
annual meeting, the 10th day following the day on which we first make
a public announcement of the date of the annual meeting. Shareholder proposals
or nominations must include the specified information concerning the shareholder
and the proposal or nominee as described in our bylaws.
SHAREHOLDERS
SHARING THE SAME ADDRESS
We have adopted a procedure called
householding, which has been approved by the SEC. Under this procedure, we
will deliver only one copy of our Notice of Internet Availability of Proxy
Materials, and for those shareholders that received a paper copy of proxy
materials in the mail, one copy of our fiscal 2014 annual report on Form 10-K to
shareholders and this proxy statement, to multiple shareholders who share the
same address (if they appear to be members of the same family) unless we have
received contrary instructions from an affected shareholder. Shareholders who
participate in householding will continue to receive separate proxy cards if
they received a paper copy of proxy materials in the mail. This procedure
reduces our printing costs, mailing costs and fees, and also supports our
environmental goals set forth in our annual report on Global
Responsibility.
If you are a shareholder, share an address
and last name with one or more other shareholders and would like to revoke your
householding consent or you are a shareholder eligible for householding and
would like to participate in householding, please contact Broadridge, either by
calling toll free at (800) 542-1061 or by writing to Broadridge, Householding
Department, 51 Mercedes Way, Edgewood, New York 11717. You will be removed from
the householding program within 30 days of receipt of the revocation of your
consent.
A number of brokerage firms have
instituted householding. If you hold your shares in street name, please
contact your bank, broker or other holder of record to request information about
householding.
58 |
Starbucks Corporation |
|
2015 Proxy Statement |
Table of Contents
ADDITIONAL
INFORMATION
ANNUAL REPORT TO
SHAREHOLDERS ON FORM 10-K
The fiscal 2014 Annual Report on Form
10-K, is being mailed with this proxy statement to those shareholders that
received a copy of the proxy materials in the mail. For those shareholders that
received the Notice of Internet Availability of Proxy Materials, this proxy
statement and our Annual Report are available at our website at http://investor.starbucks.com. Additionally, and in accordance with SEC rules, you may access our
proxy statement at www.proxyvote.com. Upon request by any
shareholder, we will furnish, without charge, a copy of the Annual
Report.
To submit your request by telephone,
call 1-800-579-1639. To request by email, contact
sendmaterial@proxyvote.com
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By order of the board of
directors, |
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Lucy Lee
Helm |
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executive vice president, general counsel and
secretary |
Seattle, Washington January 23, 2015 |
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Annual Meeting Voting |
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Investor Relations |
Web links and QR codes throughout this
document are provided for convenience only, and the content on the referenced
websites does
not constitute a part of this proxy statement.
Starbucks
Corporation |
|
2015 Proxy Statement |
59 |
Table of Contents
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WE SHARE
YOUR COMMITMENT TO THE ENVIRONMENT. |
“Our comprehensive approach to reducing our environmental impact means looking at all aspects of our business, how they intersect and how we can integrate new solutions to create meaningful and sustained change. By building more energy-efficient stores and facilities, conserving the energy and water we use, and scaling front-of-store recycling for customers, we are pushing ourselves to reduce the environmental footprint of our business operations.” |
We have used 30% post-consumer waste recycled paper for the proxy statement and Annual Report, and printed all proxy materials using soy-based inks. This, combined with our adoption of electronic delivery of proxy materials, has reduced the impact on the environment by:
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Saving 11 tons of paper, or about 76
trees; |
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Using 34 million fewer BTUs of energy,
enough to power an American home for 136 days; |
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Producing 6,532 fewer pounds of CO2, the
equivalent of removing one car from the road for 217 days; |
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Saving 35,426 gallons of
water; |
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Saving approximately 2,371 pounds of solid
waste; and |
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Reducing hazardous pollutants by 6lbs. |
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Responsibility |
Environmental impact estimates were made
using the Environmental Paper Network Paper
Calculator Version 3.2. For more information
visit www.papercalculator.org. |
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Table of Contents
TICKETING AND TRANSPORTATION INFORMATION FOR
THE STARBUCKS CORPORATION 2015 ANNUAL MEETING OF
SHAREHOLDERS |
Date: Wednesday, March 18,
2015
Time: 10:00 a.m. (Pacific Time) - Doors
open at 8:00 a.m. (Pacific Time)
Place: Marion Oliver McCaw Hall at
Seattle Center, 321 Mercer Street, Seattle, Washington
98109
Admission Requirements: As noted in this document, to be admitted to the meeting you
will be required to present a government-issued photo identification (such as a
drivers license or passport) and valid proof of ownership, meaning one of the
following.
● |
Notice of Internet Availability of Proxy
Materials; |
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Proxy Card; |
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Voting Information
Form; |
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Legal proxy provided by your bank, broker,
or nominee; |
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Email notice of the Annual Meeting (if you received notice that way); or |
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Other proof of share
ownership (such as your brokerage statement) as of the January 8, 2015
record date. |
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Shareholders holding
shares in a joint account may be admitted to the meeting if they provide
proof of joint ownership and both shareholders follow the
admission requirements described above. We will not be able to accommodate
non-shareholder guests at the Annual
Meeting. |
How to Vote:
Whether or not you plan to attend the
Annual Meeting of Shareholders, we urge you to vote and submit your proxy in
advance of the meeting by one of the methods below.
● |
By Internet: go to
www.proxyvote.com; |
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By toll-free telephone:
call 1-800-690-6903; or |
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By mail (if you received a
paper copy of the proxy materials by mail): mark, sign, date and promptly
mail the enclosed proxy card in the postage-paid
envelope. |
Shareholders may also vote in person at
the Annual Meeting. If you are a registered shareholder (that is, you hold your
shares in your name), you must present valid identification to vote at the
meeting. If you are a beneficial shareholder (that is, your shares are held in
the name of a broker, bank or other holder of record), you will also need to
obtain a legal proxy from the holder of record to vote at the meeting.
Please Note:
● |
As always, we
anticipate a large number of attendees at the Annual Meeting of
Shareholders and cannot guarantee seating. Shareholders may also log onto a live video webcast of the
meeting; please see details on our Investor Relations website at
http://investor.starbucks.com. |
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● |
Due to the Alaskan Way
Viaduct and Mercer Corridor projects, there is significant construction in
the area around McCaw Hall, which may impact traffic and
parking options. |
Parking - Mercer Street Garage (650 3rd
Avenue North):
Parking is available at the Mercer Street
Garage, conveniently located across the street from McCaw Hall. A covered
skybridge provides easy access between level C of the garage and McCaw
Hall.
For more information on local
transportation to the Annual Meeting of Shareholders, please visit
www.seattlecenter.com/transportation.
Table of Contents
STARBUCKS CORPORATION
2401
UTAH AVENUE SOUTH
SEATTLE, WASHINGTON 98134
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs as well as the
environmental impact of mailing proxy materials, we encourage you to consent to
receiving all future proxy statements, proxy cards and annual reports
electronically via e-mail or the Internet. To sign up for electronic delivery,
please follow the instructions below to vote using the Internet and, when
prompted, indicate that you agree to receive or access proxy materials
electronically in future years.
VOTE BY INTERNET - go to
www.proxyvote.com or scan the above QR code from your mobile
device
Use the Internet to transmit your
voting instructions and for electronic delivery of information up until 11:59
P.M. Eastern Time the day before the meeting date. Have your proxy card in hand
when you access the website and follow the instructions.
VOTE BY PHONE -
1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the
postage-paid envelope we have provided or return it to Vote Processing, c/o
Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
VOTE IN PERSON
If you are a registered shareholder (that is, you hold your
shares in your name), you must present valid identification to vote at the
meeting. If you are a beneficial shareholder (that is, your shares are held in
the name of a broker, bank or other holder of record), you will also need to
obtain a "legal proxy" from the holder of record to vote at the
meeting.
TO VOTE, MARK
BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: |
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M80642-P58160 |
KEEP THIS PORTION FOR YOUR
RECORDS |
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DETACH AND
RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND
DATED. |
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STARBUCKS
CORPORATION |
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The Board of Directors
recommends you vote FOR the following proposals: |
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1. |
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Election of Directors |
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Nominees: |
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For |
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Against |
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Abstain |
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1a. |
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Howard
Schultz |
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☐ |
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☐ |
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☐ |
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1b. |
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William W. Bradley |
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☐ |
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☐ |
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1c. |
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Robert
M. Gates |
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☐ |
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☐ |
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☐ |
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1d. |
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Mellody Hobson |
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☐ |
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☐ |
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☐ |
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1e. |
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Kevin
R. Johnson |
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☐ |
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☐ |
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☐ |
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1f. |
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Olden
Lee |
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☐ |
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☐ |
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☐ |
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1g. |
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Joshua
Cooper Ramo |
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☐ |
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☐ |
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☐ |
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1h. |
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James
G. Shennan, Jr. |
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☐ |
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☐ |
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☐ |
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1i. |
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Clara
Shih |
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☐ |
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☐ |
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☐ |
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For address changes and/or comments, please check this box and
write them on the back where indicated. |
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☐ |
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For |
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Against |
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Abstain |
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1j. |
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Javier G. Teruel |
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☐ |
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☐ |
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☐ |
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1k. |
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Myron
E. Ullman, III |
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☐ |
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☐ |
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☐ |
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1l. |
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Craig
E. Weatherup |
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☐ |
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☐ |
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☐ |
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2. |
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Advisory resolution to approve our executive
compensation. |
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☐ |
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☐ |
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☐ |
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3. |
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Ratification of selection of Deloitte & Touche LLP as our
independent registered public accounting firm for fiscal 2015. |
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☐ |
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☐ |
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☐ |
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The Board of Directors recommends you vote AGAINST the following
shareholder proposals: |
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For |
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Against |
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Abstain |
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4. |
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Establish a Board Committee on sustainability. |
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☐ |
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☐ |
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☐ |
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5. |
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Require an Independent Board Chairman. |
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☐ |
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☐ |
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☐ |
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Please sign exactly as your
name(s) appear(s) hereon. When signing as attorney, executor,
administrator, or other fiduciary, please give full title as such. Joint
owners should each sign personally. All holders must sign. If a
corporation or partnership, please sign in full corporate or partnership
name by authorized officer. |
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Signature
[PLEASE SIGN WITHIN BOX] |
Date |
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Signature (Joint
Owners) |
Date |
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Table of Contents
Important Notice Regarding the
Availability of Proxy Materials for the Annual Meeting of
Shareholders:
The Notice and Proxy
Statement and Fiscal 2014 Annual Report are available at
www.proxyvote.com.
STARBUCKS CORPORATION
Annual Meeting of
Shareholders
March 18, 2015 10:00 AM Pacific Time
This proxy is solicited
by the Board of Directors
The shareholder(s) hereby appoint(s)
Howard Schultz and Lucy Lee Helm, or either of them, as proxies, each with the
power to appoint his/her substitute, and hereby authorizes them to represent and
to vote, as designated on the reverse side of this proxy, all of the shares of
stock of STARBUCKS CORPORATION that the shareholder(s) is/are entitled to vote
at the Annual Meeting of Shareholders to be held at 10:00 AM, PT on Wednesday,
March 18, 2015, at the Marion Oliver McCaw Hall, Seattle Center, 321 Mercer
Street, Seattle, WA 98109, and any adjournment or postponement thereof. This
proxy, when properly executed, will be voted in the manner directed herein and,
in the proxyholders' discretion, upon any other business that properly comes
before the meeting. If no such direction is
made, this proxy will be voted in accordance with the Board of Directors'
recommendations.
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Address
Changes/Comments: |
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(If you noted any Address
Changes/Comments above, please mark corresponding box on the reverse
side.) |
Continued and to be signed on
reverse side
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