UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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☑ |
Filed by the Registrant |
☐ |
Filed by a party other than the Registrant |
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CHECK THE APPROPRIATE BOX: |
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material under §240.14a-12 |
STARBUCKS CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
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PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX): |
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No fee required. |
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Fees paid previously with preliminary materials. |
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Fee computed on table in exhibit required by Item 25(b) per
Exchange Act Rules 14a-6(i)(1) |
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To inspire and nurture the human spirit – one person, one cup and
one neighborhood at a time. |
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With our partners, our coffee and our customers at our core, we
live these values: |
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1
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Creating a culture of warmth and belonging, where everyone is
welcome. |
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2
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Acting with courage, challenging the status quo and finding new
ways to grow our company and each other. |
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3
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Being present, connecting with transparency, dignity and
respect. |
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4
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Delivering our very best in all we do, holding ourselves
accountable for results. |
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We are performance driven, through the lens of
humanity. |
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Notice of Annual Meeting of Shareholders |
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When |
Where |
Record Date |
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March 23, 2023, Thursday,
at 10:00 a.m. (Pacific Time) |
Via Webcast.
www.virtualshareholdermeeting.com/SBUX2023
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Shareholders as of January 13, 2023, are entitled to vote at the
meeting |
ITEMS OF BUSINESS
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PROPOSAL
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BOARD VOTING
RECOMMENDATION |
PAGE REFERENCE
(FOR MORE DETAIL)
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Management Proposals
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1. To elect the eight directors named in this proxy
statement |
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FOR each director nominee |
18 |
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2. To approve, on a nonbinding, advisory basis, the compensation
paid to our named executive officers (“say-on-pay
vote”)
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FOR
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39 |
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3. To conduct an advisory vote on the frequency of future
say-on-pay votes |
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FOR
one year frequency
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72 |
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4. To ratify the selection of Deloitte & Touche LLP as our
independent registered public accounting firm for fiscal
2023
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FOR
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73 |
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Shareholder Proposals 5-9
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To consider and act upon the shareholder proposals described in
this proxy statement, if properly presented at the Annual Meeting
(as defined below)
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AGAINST |
75 |
Shareholders will also transact such other business as may properly
come before the annual meeting of shareholders to be held on March
23, 2023 (the “Annual Meeting”), or any adjournment or postponement
thereof.
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Voting |
Attending the Annual Meeting |
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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. |
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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.
You do not need to attend the Annual Meeting to vote if you
submitted your proxy in advance of the meeting.
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We are committed to ensuring, to the extent possible, that
shareholders will be afforded the ability to participate at the
virtual meeting similarly to how they would participate at an
in-person meeting. The question and answer session will include
questions submitted in advance of, and questions submitted live
during, the Annual Meeting. You may submit a question in advance of
the meeting at
www.proxyvote.com
after logging in with your unique 16-digit control number (“Control
Number”) found on your proxy card or voting instruction form
(“VIF”). Questions may be submitted during the Annual Meeting
through
www.virtualshareholdermeeting.com/SBUX2023.
We encourage you to access the Annual Meeting before it begins.
Online check-in will start
approximately thirty minutes
before the Annual Meeting begins at 10:00 a.m. (Pacific Time) on
March 23, 2023. If you have difficulty accessing the meeting,
please call 1-844-986-0822 (toll free) or 303-562-9302
(international). Technicians will be available to assist
you.
YOUR VOTE IS VERY IMPORTANT.
Even if you plan to attend our Annual Meeting, please cast your
vote as soon as possible. Make sure to have your proxy card or VIF
in hand.
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By internet
go to
www.proxyvote.com;
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By toll-free telephone
from the United States, U.S. territories, and Canada: call
1-800-690-6903;
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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; or
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By scanning
the QR code using your mobile device.
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Submitting your proxy now will not prevent you from voting your
shares at the Annual Meeting as your proxy is revocable at your
option. Whether or not you participate in the Annual Meeting, it is
important that your shares be part of the voting process. You may
log on to
www.proxyvote.com
and enter your Control Number to vote your shares. You can also
vote in advance of or during the meeting. If you attend the Annual
Meeting virtually, please follow the instructions at
www.virtualshareholdermeeting.com/SBUX2023
to vote or submit questions during the meeting.
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Important Notice Regarding the Availability of Proxy Materials for
the Annual Meeting of Shareholders to be held on March 23, 2023. On
or about January 27, 2023, 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, Annual Report,
and view instructions on how to vote their shares by Internet or
telephone. Our proxy statement follows. Financial and other
information concerning Starbucks is contained in our Annual Report
on Form 10-K (the “Annual Report”). The Notice of Annual Meeting,
proxy statement, and Annual Report are available on our Investor
Relations 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.
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Jennifer L. Kraft
senior vice president, deputy general, counsel and corporate
secretary
Starbucks Corporation
2401 Utah Avenue South
Seattle, Washington 98134
January 27, 2023
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement contains forward-looking statements. All
statements contained in this proxy statement other than statements
of historical fact, including statements relating to trends in or
expectations relating to the expected effects of our initiatives,
strategies, and plans, as well as trends in or expectations
regarding our financial results and long-term growth model and
drivers, and regarding our business strategy and plans and our
objectives for future operations, are forward-looking statements.
The words ‘”can,” “believe,” “may,” “will,” “continue,”
“anticipate,” “intend,” “expect,” “seek,” and similar expressions
are intended to identify forward-looking statements. We have based
these forward-looking statements largely on our current
expectations and projections about future events and trends. These
statements are subject to a variety of risks and uncertainties that
could cause actual results to differ materially from expectations.
These risks and uncertainties include, but are not limited to, the
risks detailed in our filings with the Securities and Exchange
Commission, including the Risk Factors section of our Annual Report
on Form 10-K for the fiscal year ended October 2, 2022.
New risks emerge from time to time. It is not possible for our
management to predict all risks, nor can we assess the impact of
all factors on our business or the extent to which any factor, or
combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements
we may make. In light of these risks, uncertainties, and
assumptions, the future events and trends discussed in this proxy
statement may not occur and actual results could differ materially
and adversely from those anticipated or implied in the
forward-looking statements. You should not rely upon
forward-looking statements as predictions of future events. The
events and circumstances reflected in the forward-looking
statements may not be achieved or occur. Although we believe that
the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results. We assume no
obligation to update any of these forward-looking statements after
the date of this proxy statement, except as may be required by law.
Given these risks and uncertainties, readers are cautioned not to
place undue reliance on such forward-looking
statements.
Over the years and throughout our years of joint service on the
board, we have returned often to the origin story of 1912 Pike
Place, our first and still-beloved storefront in the heart of
Seattle. When you step inside the front doors of this tiny space,
you are transported into another world. This is a place where on
either side of the well-worn wood counters, visitors and baristas
converse like old friends and celebrate the craft and care that
goes into every cup of Starbucks coffee. There’s an enduring energy
and spirit in the air that inspires us and reminds us of the
extraordinary journey Starbucks has traveled over five
decades.
We’ve grown from just four stores to nearly 36,000; from serving a
few hundred customers a day to now more than 100 million customer
occasions daily around the world.
At the heart of it all is the Starbucks secret sauce – our people
and their ability to create magic through coffee and
connection.
Reinvention
Last summer, we set off in a new direction. Together with our
partners, we have co-created a Reinvention plan that touches every
aspect of the
Starbucks Experience.
For our customers, we are using technology to make their visits to
our stores personalized and effortless, while also freeing up store
partners to focus on creating more moments of connection. We are
meeting them where they are, whether that’s a Cold Brew on the go
from a Pick-Up store, a quiet moment with a cappuccino inside one
of our cafés, or a deep-dive into coffee education with a workshop
at our new Starbucks Reserve location at the Empire State Building.
For our partners, we are equipping them with better tools and
training and have committed more than $1 billion in partner and
store experience investments. We are bringing coffee excellence,
coffee craft, and joy and a little bit of love back into being a
Starbucks barista.
Over the past year, we have seen that the demand for Starbucks is
greater than ever. In fiscal 2022, global revenues grew 13 percent*
over the prior year to a record $32.3 billion, driven by phenomenal
8 percent global growth in comparable store sales.
Starbucks International continues to drive growth for the company,
and we expect two-thirds of global retail growth over the next
three years to come from our international business. As we continue
to navigate the COVID pandemic and its impacts in China, we are
focused on supporting our partners and leaders in the market and
look forward to a bright future ahead.
Our impact at Starbucks ripples on a global scale. We take this
responsibility seriously and strive to make a positive difference
in the lives of the people we serve and the planet we share. We
believe that every partner and every customer should have a sense
of belonging at Starbucks, and should be able to be their authentic
selves every day. We are dedicated to advancing racial and social
equity, and we are committed to furthering that work with
intention, transparency, and accountability. We are striving to be
a resource-positive company, to give back more of the planet’s
resources than we consume. To help us get there, we have clear and
ambitious sustainability targets to reduce our carbon, water, and
waste footprints in half by 2030. Additionally, we are integrating
sustainability throughout our Reinvention efforts, working to
ensure we are considering the impacts to sustainability with each
one of our strategies.
Onward
The new fiscal year also marks a new chapter with incoming ceo,
Laxman Narasimhan. Since joining the company in October, he has
been traveling around the world and immersing in our company and
culture. Each day we have together, including time in Origin with
our extended leadership team this Fall in Hacienda Alcasia, Costa
Rica, we are reminded he is an extraordinary global citizen and
servant leader who is embracing the vision of Starbucks in his own
way.
We are both so proud of the company Starbucks is today and will be
tomorrow, and profoundly grateful to the more than 400,000
Starbucks partners who are a part of this great odyssey. We would
also like to extend our appreciation to the Starbucks Board of
Directors for their leadership and support during this time of
reinvention and renewal. We are laying the foundation for the
future of a Starbucks even more true to our shared mission: To
inspire and nurture the human spirit – one person, one cup and one
neighborhood at a time.
With respect and gratitude,
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Howard Schultz
chief executive officer
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Mellody Hobson
independent chair of the board
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*Growth rate is based on a 52-week basis. Please refer to Appendix
A for Reconciliation of Extra Week.
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Fiscal 2022 Business Highlights |
Starbucks is the premier roaster, marketer, and retailer of
specialty coffee globally, with a presence in 83 markets worldwide.
Since 1971 we have been committed to ethically sourcing and
roasting high-quality
arabica
coffee. Through over 35,000 specialty retail stores and a growing
presence in consumer packaged goods, we strive to bring the
unique
Starbucks Experience
to life for every customer in every cup.
In fiscal 2022, we saw accelerating demand for Starbucks coffee
around the world. Our performance underscores the relevance of the
Starbucks brand and deep relationships with our partners and
customers amid today’s challenging operating environment, including
the global economic uncertainties and COVID-19 related disruptions.
We also announced our plan in the U.S. market to increase
efficiency while elevating the partner and customer experience,
which we refer to as “Reinvention.” Through Reinvention, Starbucks
is poised to embark on a new next era of growth through co-creation
with our green apron partners.
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Our strong performance in fiscal 2022, despite unprecedented global
economic uncertainties, underscores the relevance of the Starbucks
brand and deep relationships with our partners and customers
globally.
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| Business
Highlights |
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Strong Demand and Diverse Portfolio
•Global
comparable store sales increased 8%, driven by a 5% increase in
average ticket and a 2% increase in
comparable transactions
•Record
global revenue with highest levels of U.S. average ticket, food
attach, cold beverage sales and unique customer count; beverage
modifier sales exceeded $1 billion in the U.S.
•China
market opened its 6,000th store and achieved record customer
connection scores despite COVID-19
related headwinds
•Channel
Development continued to amplify our brand, with Starbucks
remaining a market leader in both the total U.S. at-home coffee and
ready-to-drink categories
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Prioritizing Partners
•Approximately
$1 billion in investments to uplift the U.S. retail partner
experience, including:
•Wage
floor increase ($15/hour minimum)
•Enhanced
wages for tenured partners
•Doubled
training hours for new barista and shift supervisors; additional
training for existing partners with focus on coffee, craft, and
connection
•Coffee
Master, Black Apron program, and Origin trip
relaunches
•A
new partner app pilot launch, designed to create one digital
community
•Announced
new financial benefits, including My Starbucks Savings and a
Student Loan Management Benefit, designed to help partners manage
student loan repayments and achieve greater financial
stability
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Experiential Convenience
•More
than 58 million Starbucks Rewards members around the world; in the
U.S., approximately one in 10 adults is a Starbucks Rewards
member
•Elevated
our seamless digital experience across stores, with nearly 25% of
our U.S. licensed portfolio live with Starbucks
Connect
•Unveiled
Starbucks Odyssey powered by Web3 technology, which will offer U.S.
Starbucks Rewards members the opportunity to earn and purchase
digital collectible assets, unlocking access to new benefits and
immersive coffee experiences
•Completed
the deployment of Starbucks Cold Brewer in the U.S. and rolled out
Mastrena II espresso machines to nearly all stores across the U.S.;
additional throughput-enhancing initiatives underway
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The Company shared a set of principles and a new partnership for
the reinvention of the next chapter of the Company. Starbucks
Reinvention, co-created
in partnership with our partners, will touch and elevate every
aspect of our Starbucks partner, customer, and store experience.
The Reinvention includes five major strategic shifts:
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Mission
Re-envision how we bring our mission to life
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Partner
Renew the well-being of retail partners by radically improving
their experience
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Customer
Reconnect with our customers by delivering memorable and
personalized moments
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Store
Reimagine our store experience for greater connection, ease and a
planet positive impact
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Together
Redesign partnership by creating new ways to thrive
together
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Through Reinvention, we believe Starbucks is positioned for
sustainable profitable
growth, setting the stage for another year of record
performance.
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FISCAL 2022 BUSINESS HIGHLIGHTS
Fiscal 2022 Results
Fiscal 2022 results reflect record revenue underpinned by strong
demand in nearly all major markets across the globe, as well as
significant investments, including enhanced store partner wages and
new partner training, coupled with inflationary
headwinds.
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Total Consolidated Revenues
(+13%
year-over-year)
$32.3 Billion
U.S. 90-day active Starbucks®
Rewards members grew 16% year-over-year to
28.7 Million
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Operating Margin
(-250
basis points year-over-year)
14.3%
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Total Consolidated EPS
(-20.1%
year-over-year)
$2.83
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Expanded global retail store base 6% to
35,711 Stores
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Non-GAAP Operating Margin
(-290
basis points year-over-year,)
15.1%*
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Total Consolidated non-GAAP EPS
(-7.5%
year-over-year, or -5% on a 52 week basis)
$2.96*
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* Appendix A includes a reconciliation of
non-GAAP operating margin and non-GAAP EPS to the most directly
comparable measure reported under accounting principles generally
accepted in the United States (“GAAP”). Year over year growth is
based on a 52-week basis. For the annual revenue growth, please
refer to Appendix A, Reconciliation of Extra Week.
Starbucks returned $6.3 billion of capital to shareholders in
fiscal 2022. In April 2022, Starbucks suspended its share
repurchase program for the balance of the fiscal year to allow us
to enhance our investments in our partners and stores. In September
2022, Starbucks announced it expects to return approximately $20
billion to shareholders in the next three years through dividends
and share repurchases and subsequently resumed its share repurchase
program in November 2022. Five-year cumulative total shareholder
return (“TSR”) was 74% as of October 2, 2022.
This summary highlights information contained in the proxy
statement. This summary does not contain all the information that
you should consider, and you should read the entire proxy statement
before voting.
BOARD HIGHLIGHTS
Director Nominees
The following tables provide summary information about our director
nominees. Directors are elected annually by a majority of votes
cast. Your board of directors recommends that you vote “FOR” the
election of each of the eight nominees. Please see page 18 in this
proxy statement for this proposal.
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Committee Memberships |
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Name & Principal Occupation |
Age |
Director
Since |
Independent |
Audit and
Compliance
Committee |
Compensation
and Management
Development
Committee |
Nominating
and Corporate
Governance
Committee |
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Richard E. Allison, Jr.
Retired
Chief Executive Officer and Director of Domino’s Pizza,
Inc.
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55 |
2019 |
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Andrew Campion
Chief
Operating Officer of
NIKE, Inc.
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51 |
2019 |
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Beth Ford
Chief
Executive Officer of
Land
O'Lakes
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58 |
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Mellody Hobson
Co-Chief
Executive Officer, President, and Director of Ariel Investments,
LLC
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53 |
2005 |
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Jørgen Vig Knudstorp
Executive
Chairman of
LEGO Brand Group
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54 |
2017 |
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Satya Nadella
Chief
Executive Officer and Director of
Microsoft Corporation
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55 |
2017 |
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Laxman Narasimhan
chief
executive officer-elect of Starbucks Corporation
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55 |
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Howard Schultz
interim chief executive officer of Starbucks
Corporation
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69 |
2022 |
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Member |
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Chair of the Board |
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Committee Chair |
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Audit Committee Financial Expert |
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Board Nominees Snapshot |
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INDEPENDENCE |
DIRECTOR TENURE |
AGE DISTRIBUTION |
DIVERSITY |
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Independent |
6 |
0-4 years |
4 |
<50 years |
0 |
Female |
25% |
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Not-Independent |
2 |
5-9 years |
2 |
50-60 years |
7 |
National Diversity |
25% |
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10-14 years |
0 |
61-75 years |
1 |
Ethnic Diversity |
38% |
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15+ years* |
2 |
Average Age:
56.3
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Director Self-Identification of
Race/Ethnicity:
2
Asian
1
Black
0
Hispanic or Latinx
5
White
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Average Director Tenure:
8.4
years*
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*This
figure includes Howard Schultz prior tenure on the board of
directors.
EXPERIENCE/QUALIFICATIONS/SKILLS/ATTRIBUTES
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Industry Experience |
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Governmental & Public Policy Experience |
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2/8 |
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3/8 |
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Financial/Capital Allocation Experience |
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Technology Experience |
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4/8 |
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4/8 |
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Gender, Ethnic or National Diversity |
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Human Capital Management Experience |
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5/8 |
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5/8 |
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Corporate Social Responsibility
Experience
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Environmental/Climate Change
Experience
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6/8
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5/8
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Brand Marketing Experience |
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Public Company Board Experience |
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6/8 |
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8/8 |
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International Operations &
Distribution Experience |
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Senior Leadership Experience |
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7/8 |
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8/8 |
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BOARD INDEPENDENCE |
BOARD AND COMMITTEE
MEETINGS IN FISCAL 2022 |
DIRECTOR ELECTIONS |
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Independent Board Committees:
All
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6 |
Independent
Director-Only Sessions |
ANNUAL
Frequency of Board Elections
MAJORITY
Voting Standard for Uncontested Elections
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Independent Director Nominees
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9 |
Audit and Compliance (“ACC”)
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8 |
Compensation and
Management Development (“CMDC”)
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75 |
Mandatory
Retirement Age |
4 |
Nominating and
Corporate Governance (“NCGC”)
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Independent Chair of the Board:
Mellody Hobson
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6
FULL BOARD MEETINGS
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Proxy Access for Director Nominations |
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3 |
years |
Holding Period
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3 |
% |
Ownership
Threshold |
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Nominees
Greater of 2 or 20% of board
Group Formation
Up to 20 shareholders
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SHAREHOLDER ENGAGEMENT
Starbucks has a history of actively engaging with our shareholders.
We believe that strong corporate governance includes year-round
engagement with our shareholders.
We have a long-standing, robust shareholder outreach program in
which we solicit feedback on our corporate governance, executive
compensation program, and disclosure practices, as well as
environmental and social impact programs and goals. Additionally,
shareholder feedback is shared with our board of directors on an
ongoing basis.
Corporate Governance Cycle
Throughout the year, highlights of our shareholder engagement
include:
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•Publish
Annual Report and proxy statement
•Conduct
active outreach with top investors to discuss items to be
considered at the Annual Meeting
•Hold
the Annual Meeting of Shareholders
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•Review
vote results from our most recent Annual Meeting and incorporate
insights into Starbucks shareholder
engagement program
•Publish
Global Environmental and Social Impact Report: Informs
stakeholders, including shareholders, about recent developments
relating to environmental, social, and governance (“ESG”)
topics
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•Evaluate
proxy season trends, corporate governance best practices, and
regulatory developments to inform our current practices, policies,
and disclosures
•Conduct
active outreach with top shareholders to understand their
priorities
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2022 Outreach
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Engagement
As part of our regular shareholder outreach, we engaged with our
top shareholders, representing nearly 30% of our total shares
outstanding. We also engaged with certain proponents who submitted
shareholder proposals included in this proxy statement to better
understand the rationale and requests of their
proposals.
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Participants
Outreach was conducted by a cross-functional team
including:
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Selected Key Topics
Key areas of discussion included:
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•Global
Coffee, Sustainability and Social Impact
•Inclusion
and Diversity
•Investor
Relations
•Law
& Corporate Affairs
•Partner
Resources Organization
•Public
Affairs
Additionally, our ceo, cfo and the board of directors engage in
meaningful dialogue with our shareholders through our quarterly
earnings calls and investor-related
outreach events.
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•Animal
Welfare
•Brand/Public
Affairs
•Company
Policy
•Corporate
Governance
•Executive
Compensation
•Financial
Performance
•Human
Capital Management
•Human
Rights
•Inclusion
and Diversity
•Long-term
Growth Strategy
•Risk
Management
•Succession
Planning
•Supply
Chain
•Sustainability
Programs
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EXECUTIVE COMPENSATION ADVISORY VOTE
Our board of directors recommends that shareholders vote to
approve, on a nonbinding, advisory basis, (1) the compensation paid
to the Company’s named executive officers (“NEOs”), and (2) an
annual frequency of future executive compensation voting, as
described in this proxy statement. Please see pages 39 and 72 of
this proxy statement for these proposals.
Pay Delivery Aligned with Performance
Based on effective program design and best practices, and
consistent with our pay-for-performance philosophy, our executive
compensation is aligned with Company performance. The vast majority
of our NEOs’ target total direct compensation is in the form of
compensation that is variable or “at-risk” based on our financial,
operating, and ESG performance and the value of our stock
price.
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FORMER CEO Compensation Mix* |
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Other NEOs** Compensation Mix |
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* The chart above does not include Mr.
Schultz, who, in connection with his appointment as interim chief
executive officer, received a base salary of only $1, and was not
eligible to earn an annual cash incentive award under the Annual
Incentive Bonus Plan, and did not receive any equity award
grants.
** This chart also does not include Mr.
Narasimhan, who did not commence employment with the Company until
October 1, 2022, the day immediately preceding the end of fiscal
2022.
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Strong Governance Standards and Best Practices
The Compensation and Management Development Committee
(“Compensation Committee”) of our board of directors is fully
engaged to respond to the dynamic business environment in which we
operate. As discussed in the Compensation Discussion and Analysis
section of this proxy statement, the Compensation Committee acts
to:
•Conduct
an annual say-on-pay advisory vote and regularly engage with
shareholders on executive compensation
•Adapt
our compensation program to match the needs of
our business
•Attract
and retain top talent in a dynamic and challenging business
environment
•Foster
shareholder value creation and pay-for-performance alignment by
creating meaningful cash and equity incentives linked to rigorous
financial objectives
•Mitigate
compensation-related risk to the organization
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Effective Program Design
•Competitive
total rewards package benchmarked against comparable
peers
•Vast
majority of executive pay is at risk and/or based on performance,
primarily in the form of stock-based compensation
•Combination
of absolute and relative performance metrics in incentive
programs
•Promotion
of retention through multi-year vesting of stock
awards
•Stock
ownership policy, including rigorous share
ownership requirements
•Clawback
policy that covers cash and equity
•No
fixed-term or evergreen employment agreements; No severance
agreements
•Incorporation
of ESG goals into our short-term and long-term incentive plans
(including inclusion and diversity goals)
•Double-trigger
equity acceleration upon a change-in-control
•Our
insider trading policy prohibits short sales and derivative
transactions in Starbucks stock
•No
tax gross-ups upon a change-in-control or on perquisites
or benefits
•No
excessive executive perquisites
•No
executive pension plans or supplemental executive
retirement plans
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GLOBAL ENVIRONMENTAL AND SOCIAL IMPACT
INTRODUCTION
When Starbucks opened in 1971, our vision for success included
becoming a different kind of company with a mission to inspire and
nurture the human spirit—one person, one cup and one neighborhood
at a time.
Starting in fiscal 2022, we embarked on an ambitious journey to
reinvent ourselves, building on more than 50 years of global impact
with our partners and coffee at the core of our business. This
journey includes making key investments in ESG strategies that help
us uplift our partners and customers, give back more than we take
from our planet, create responsible growth for our company, and
operate in a manner that supports the resilience of our
business.
We work to improve our communities and our planet and advance our
ESG strategies with the same creativity and consistency our
partners bring to their work every day. Three priorities guide
our ongoing efforts to evolve the way we sustainably operate, grow,
and enhance our business: (1) Investing in our Partners, (2)
Building a More Sustainable, Equitable, and Resilient Future for
Coffee and our Communities and Planet, and (3) Leadership and
Governance.1
PRIORITY 1: INVESTING IN OUR PARTNERS
At Starbucks, we are working side-by-side with partners to create
meaningful change. Our shared vision2
is a better future for each other, our customers and the
communities we serve. We invest in our partners because we know
that when we put them first—and work to exceed their
expectations—the result is a great experience for our customers and
communities. Our world-class benefits are designed to meet the
needs of our partners in our different markets and are generally
available to full- and part-time partners. In the U.S., those
benefits include comprehensive health coverage, mental health
benefits, retirement plans with company match, Bean Stock, our
equity reward program, 100 percent tuition coverage for a
first-time bachelor’s degree and more.3
Starbucks took significant action in fiscal 2022 to improve our
partners’ experience through increased wages, additional training,
and comprehensive benefits. Our wage increases and training program
expansion for U.S. retail partners in fiscal 2022 totaled $1
billion, and we updated our family expansion reimbursement benefit,
while also introducing access to financial well-being tools and the
opportunity to accrue sick time at a faster rate.
Starbucks effort to improve our partners’ experience is founded on
a deep commitment to advance inclusion, diversity, and equity—and
the belief that we are at our best when we create inclusive and
welcoming environments, where we uplift one another with dignity,
respect, and kindness. We are committed to hiring from communities
that may face barriers to employment, including people of color,
Veterans and military spouses; people who are in LGBTQIA+
communities; and those who are disabled. Starbucks aims to achieve
and maintain gender pay equity in all global company-operated
markets annually, in addition to racial pay equity in the United
States. We commit to transparent data collection and reporting on
our hiring practices, partner demographics, and partner support
initiatives to hold us accountable as we continue to build a
diverse and inclusive company. For example, Starbucks began
publishing regular Civil Rights Assessments4
in 2019 to address our progress and present recommendations for
reaching new heights in our work to develop and sustain an
inclusive, diverse workforce.
PRIORITY 2: BUILDING A MORE SUSTAINABLE, EQUITABLE, AND RESILIENT
FUTURE FOR COFFEE AND OUR COMMUNITIES AND PLANET
We are building a more sustainable, equitable, and resilient future
for coffee and our communities and planet. We will create that
future with a deep commitment to global human rights and
responsible and ethical sourcing, community leadership from our
partners, and a focus on giving more than we take from the
planet.
Starbucks takes seriously our commitment to responsible and ethical
sourcing led by Coffee and Farmer Equity
(“C.A.F.E.”)5
Practices, the company’s third-party verification program, and the
cornerstone of our approach to ethical sourcing. We believe in
investing in the health and well-being
of the nearly 500,000 farmers who grow high-quality arabica coffee
from diverse regions around the world as we work together to ensure
a sustainable future of coffee for all.
For example, the Starbucks Global Farmer Fund was created to
improve supply chain resiliency and ensure a long-term supply of
coffee by addressing the unmet business financing needs of farmers.
Starbucks is also working to deliver 100 million disease-resistant
coffee trees to farmers globally. Together, we help farmers
increase their productivity, quality of life, and profitability by
driving solutions that support our communities globally and support
a healthy planet.
Starbucks global commitment to fundamental human rights is a core
component of how we live our mission and values wherever we do
business around the world.6
We respect the inherent dignity of all people and seek to enable
partners to do their best work by embracing and valuing the unique
combination of talents, experiences, and perspectives they each
bring to our work. Our goal is to be one of the most inclusive
companies globally, working toward full equity, inclusion, and
accessibility for those whose lives we touch.
Starbucks strives to give back more than we take from our planet.
This priority includes a commitment to operating our business in a
way that is environmentally sustainable. Starbucks is working to
cut our carbon, water, and waste footprints by half by 2030. We can
only achieve these ambitious goals by working together with our
stakeholders—every partner, supplier, farmer, and customer is part
of our journey.
Our work to uplift one another extends beyond our partners to the
communities we serve around the world. With our partners, we are
strengthening our communities and co-creating a more resilient
future. From Neighborhood Grants nominated by partners who know
their neighbors and communities best, to our commitment to farmers
around the globe, to championing their communities, Starbucks
partners are deeply invested in their communities.
And our commitment to build a more equitable, sustainable, and
resilient future includes a commitment to the environment.
Starbucks strives to give more than we take from the planet and to
cut our carbon, water, and waste footprints by half by 2030. We can
only achieve these ambitious goals by working together with our
stakeholders—every partner, supplier, farmer, and customer is part
of our journey.
PRIORITY 3: LEADERSHIP AND GOVERNANCE
Starbucks strives to lead by example. Our commitment to
transparency, intentionality, and accountability underpins all our
efforts to share extensive data on our progress against our
ambitious ESG goals, business practices, work in sustainability,
and our commitment to the communities we serve. As part of that
commitment, since 2001, Starbucks has proactively published the
Global Environmental & Social Impact report, an annual fiscal
year update on key ESG programs and progress.
We promote ethical leadership and business practices to deliver our
very best in all we do, while holding ourselves accountable for
results. Our board and its committees are responsible for
overseeing the effectiveness of our global environmental and social
impact strategy. We govern our sustainability commitments through
the Global Environmental Council, which is comprised of senior
leaders across Starbucks whose compensation is tied to performance
against our goals. We continue to implement an executive
compensation program that includes benchmarks for achieving
sustainability goals and building inclusive and diverse teams. All
Starbucks partners are governed by internal policies addressing
ethics and human rights issues, including Anti-Harassment,
Anti-Discrimination, Conflicts of Interest, Gifts &
Entertainment, Anti-Bribery, and Equal Employment Opportunity. And,
we practice rigorous data collection, including third-party data
verification, to ensure our reporting is accurate and
representative of the great strides we are making to support our
partners, customers, communities, and planet.
Starbucks is also committed to being a force for global good by
advancing equity and civic engagement so our partners can share
their vision for stronger communities. In the U.S., we provide
tools and resources for partners to ensure their voice is heard in
each and every election. Globally, we work with partners,
licensees, and business partners to advocate for policies that
support our partners, the health of our business and the
communities we serve through the lens of our Mission and
Values.
Starbucks is building on over 50 years of great business through
the lens of humanity to a future of exceptional service—service to
our partners, service to our customers, and service to our planet.
We believe this focus will support the success of our business and
drive value for our shareholders as we continue to pursue our
strategic priorities.
1 Additional
programmatic updates and performance against these priorities and
publicly stated goals will be shared in Starbucks forthcoming FY22
Global Environmental and Social Impact Report.
2 Starbucks.
(2022, November 21). One.Starbucks.
https://one.starbucks.com/
3 Starbucks.
(2022, November 22). Benefits and Perks.
https://www.starbucks.com/careers/working-at-starbucks/benefits-and-perks/
4 Starbucks.
(2022, November 21). Starbucks Civil Rights Assessments.
https://stories.starbucks.com/stories/civil-rights-assessments/
5 Starbucks.
(2022, November 22).
Coffee.
https://www.starbucks.com/responsibility/sourcing/coffee/
6 Starbucks.
(2020, November 17).
Global Human Rights Statement.
https://stories.starbucks.com/press/2020/global-human-rights-statement/
We are making this proxy statement available to you on January 27,
2023, in connection with the solicitation of proxies by our board
of directors for the Starbucks Corporation 2023 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 2023 Annual Meeting of Shareholders as the “Annual Meeting.”
When we refer to the Company’s 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 2022 generally refers
to our 2022 fiscal year, which was from October 4, 2021,
through October 2, 2022 (“fiscal 2022”).
VOTING INFORMATION
Record Date.
The record date for the Annual Meeting is January 13, 2023. On the
record date, there were 1,148,558,716 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 our
common stock represented by the proxy will be voted as shown in the
table below and in accordance with the best judgment of the named
proxies on any other matters properly brought before the Annual
Meeting.
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Proposal No.
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Vote
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Board
Recommendation
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Broker Non-vote
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Vote Required
for Approval
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Advisory
Proposal?
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Effect of
Abstentions
and Broker
Non-votes
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1 |
Election of each of the eight director nominees.
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FOR
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This matter is non-routine, thus if you hold your shares in street
name, your broker
may not
vote your shares for you.
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Majority of votes cast
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No
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No effect
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2 |
Approval, on a nonbinding, advisory basis, of the compensation paid
to our named executive officers.
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FOR
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This matter is non-routine, thus if you hold your shares in street
name, your broker
may not
vote your shares for you.
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Majority of votes cast
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Yes
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No effect
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3 |
Approval, on a nonbinding, advisory basis, of the frequency of
future advisory votes on executive compensation.
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FOR EVERY YEAR
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This matter is non-routine, thus if you hold your shares in street
name, your broker
may not
vote your shares for you.
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Majority of votes cast
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Yes
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No effect
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4 |
Ratification of the selection of Deloitte & Touche LLP as our
independent registered public accounting firm for the fiscal year
ending October 1, 2023.
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FOR
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This matter is routine, thus if you hold your shares in street
name, your broker
may
vote your shares for you absent any other instructions from
you.
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Majority of votes cast
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Yes
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Abstention has no effect and broker has discretion to
vote
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5 |
Shareholder proposal regarding a report on plant-based
milk pricing.
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AGAINST
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This matter is non-routine, thus if you hold your shares in street
name, your broker
may not
vote your shares for you.
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Majority of votes cast
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Yes
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No effect
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6 |
Shareholder proposal regarding ceo succession planning policy
amendment. |
AGAINST
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This matter is non-routine, thus if you hold your shares in street
name, your broker
may not
vote your shares for you.
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Majority of votes cast
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Yes
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No effect
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7 |
Shareholder proposal regarding annual report on company operations
in China. |
AGAINST
|
This matter is non-routine, thus if you hold your shares in street
name, your broker
may not
vote your shares for you.
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Majority of votes cast
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Yes
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No effect
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8 |
Shareholder proposal regarding assessment of worker rights
commitments. |
AGAINST
|
This matter is non-routine, thus if you hold your shares in street
name, your broker
may not
vote your shares for you.
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Majority of votes cast
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Yes
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No effect
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9 |
Shareholder proposal regarding creation of Board committee on
corporate sustainability. |
AGAINST
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This matter is non-routine, thus if you hold your shares in street
name, your broker
may not
vote your shares for you.
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Majority of votes cast
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Yes
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No effect
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Revoking Your Proxy.
If you are a registered shareholder (meaning a shareholder who
holds shares issued in their name and therefore appears on the
Company’s 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 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 website provided on the next page, 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 your proxy or change your vote.
Vote Required.
The presence, in person or by proxy, of holders of a majority of
the outstanding shares of our capital 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 on that matter but are deemed to be
present at the Annual Meeting) are counted for purposes of
determining the presence or absence of a quorum for the transaction
of business at the Annual Meeting.
We have 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, the approval of the nonbinding, advisory vote on
the compensation paid to our named executive officers, the approval
of the nonbinding, advisory vote on the frequency of advisory votes
on executive compensation, the ratification of the selection of
Deloitte & Touche LLP as our independent registered public
accounting firm, and the approval of any shareholder proposal, 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.
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 a
representative of Broadridge Financial Solutions, Inc., our
inspector of elections for the Annual Meeting.
Please cast your vote as soon as possible. Make sure to have your
proxy card or VIF in hand:
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By internet
go to
www.proxyvote.com;
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By toll-free telephone
from the United States, U.S. territories, and Canada: call
1-800-690-6903;
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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; or
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By scanning
the QR code using your mobile device.
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PROPOSAL 1
ELECTION OF DIRECTORS
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Our board of directors regularly reviews and assesses its
composition to evaluate the right mix of experience,
qualifications, skills, tenure, and diversity. The Nominating and
Corporate Governance Committee believes that board refreshment is
critical as the Company transitions its leadership to a new chief
executive officer, continues the implementation of its Reinvention
Plan, and navigates a key inflection point in the emergence from
the COVID-19 pandemic. In furtherance of ongoing board refreshment,
the Nominating and Corporate Governance Committee is currently
engaged in an ongoing recruitment process, with Beth Ford, the
chief executive officer of Land O Lakes, being nominated to stand
for election as a director at the 2023 annual meeting of
shareholders. The board is committed to ensuring that it remains
composed of directors who are equipped to oversee the success of
the business, striving to maintain an appropriate balance of
diversity, skills, and tenure in its composition, and intends to
increase its gender diversity over the next few years.
Our board of directors currently has nine members. The board of
directors has nominated six of the existing nine directors for
election at the Annual Meeting, to serve until the 2024 Annual
Meeting of Shareholders or until their respective successors have
been elected and qualified. Mr. Narasimhan and Ms. Ford are
first-time nominees to our board of directors. Mr. Narasimhan’s
offer letter setting forth the terms of his employment provides
that he will be nominated for election as a director at each annual
meeting of shareholders following his appointment as chief
executive officer. Assuming the election of each of our director
nominees, our board of directors will have eight members following
the Annual Meeting. Isabel Ge Mahe, Clara Shih, and Joshua Cooper
Ramo have not been renominated and their service on our board will
end at the 2023 Annual Meeting of Shareholders. Ms. Ge Mahe, Ms.
Shih, and Mr. Ramo have been valuable members of the Board since
2019, 2011, and 2011, respectively, and our board and Starbucks
wish them the best in their future endeavors. Starbucks and their
fellow directors sincerely appreciate the thoughtful leadership and
insight and the perspectives that they brought to the
board.
Unless otherwise directed, the persons named in the proxy as
proxyholders 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 eight
persons since that is the total number of nominees.
PROPOSAL 1 – ELECTION OF DIRECTORS
STARBUCKS BOARD OF DIRECTORS
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 attributes discussed below in Our Director
Nominations Process section on page 33. We also endeavor to have a
board that represents a range of qualifications, skills, and depth
of experience in areas that are relevant to and contribute to the
board’s oversight of the Company’s global activities. Following the
biographical information for each director nominee, we describe the
key experiences, qualifications, skills, and attributes the
director nominee brings to the board that, for reasons discussed in
the chart below, are important to Starbucks businesses and
structure. The board considered these key experiences,
qualifications, skills, attributes, and the nominees’ other
qualifications in determining to recommend that they be nominated
for election.
Experience/Qualifications/Skills/Attributes
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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 consumer products, retail, food, and beverage
industries, which is useful in understanding our product
development, retail, and licensing operations. |
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Financial/Capital Allocation Experience |
As a large public company, Starbucks is committed to strong
financial discipline, effective allocation of capital, an
appropriate capital structure, risk management, legal, and
regulatory compliance, and accurate disclosure practices. We
believe that directors who have senior financial leadership
experience at large global organizations and financial
institutions, and directors who are experienced allocators of
capital are instrumental to Starbucks success. |
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Gender, Ethnic, or National Diversity |
We value representation of gender, ethnic, geographic, cultural,
and other perspectives that expand the board’s understanding of the
needs and viewpoints of our customers, partners, governments, and
other stakeholders worldwide. |
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Brand Marketing Experience |
We seek directors with brand marketing experience 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. |
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International Operations & Distribution Experience |
Starbucks has a strong global presence. The Company has a presence
in over 35,000 stores in 83 markets around the globe. Accordingly,
we value international operations and distribution experience,
especially as we continue to expand globally and develop new
channels of distribution. |
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Governmental & Public Policy Experience |
We seek directors with domestic and international experience in
corporate responsibility, sustainability, and public policy to help
us address significant public policy issues, adapt to different
business and regulatory environments, and facilitate our work with
various governmental entities and non-governmental organizations
all over the world. This experience is particularly relevant during
times of increased volatility in global politics and
economics. |
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Technology Experience |
Our business has become increasingly complex as we have enhanced
our offerings, expanded our global footprint, and increased online
customer ordering capabilities. This increased complexity requires
a sophisticated level of technology resources and infrastructure as
well as technological expertise. And, as a consumer retail company,
we seek directors who have digital and social media experience,
which can provide insight and perspective with respect to our
various business functions. |
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Human Capital Management Experience |
At Starbucks, our people are one of our most valuable assets. We
seek to live our values through the culture we develop with our
partners and our customers. We value directors with experience
managing and developing values and culture in a large global
workforce so that we can continue to live our mission to inspire
and nurture the human spirit—one person, one cup, and one
neighborhood at a time. |
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Corporate Social Responsibility Experience
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We believe that directors who have experience in advocating for
gender and racial equality, human rights, and effective corporate
citizenship ensure that the Company remains at the forefront of
advancing social justice, diversity,
and inclusivity.
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Environmental/Climate Change Experience
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We value directors with experience in environmental and climate
change topics strengthens the board’s oversight and assures that
strategic business imperatives and long-term value creation for
shareholders are achieved within a responsible and sustainable
business model.
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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, risk management and oversight of strategic,
operational, compliance-related matters, and relations with
shareholders. |
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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. Starbucks global scale and complexity requires
aligning multiple areas of operations, including marketing,
merchandising, supply chain, human resources, real estate, and
technology. Directors with senior leadership experience are
uniquely positioned to contribute practical insight into business
strategy and operations, and support the achievement of strategic
priorities and objectives. |
PROPOSAL 1 – ELECTION OF DIRECTORS
Board Nominee Skills Matrix
The table below summarizes the key experience, qualifications, and
attributes for each director nominee and highlights the balanced
mix of experience, qualifications, and attributes of the board as a
whole. This high-level summary is not intended to be an exhaustive
list of each director nominee’s skills or contributions to the
board. No individual experience, qualification, or attribute is
solely dispositive of becoming a member of
our board.
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Industry
Experience |
Financial/
Capital
Allocation
Experience |
Gender,
Ethnic, or
National
Diversity |
Brand
Marketing
Experience |
International
Operations &
Distribution
Experience |
Governmental
& Public
Policy
Experience |
Technology
Experience |
Human
Capital
Management
Experience |
Corporate
Social
Responsibility
Experience
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Environmental/
Climate
Change
Experience |
Public
Company
Board
Experience |
Senior
Leadership
Experience |
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Richard E. Allison, Jr. |
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Andrew Campion |
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Beth Ford |
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Mellody Hobson |
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Jørgen Vig Knudstorp |
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Satya Nadella |
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Laxman Narasimhan |
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Howard Schultz |
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PROPOSAL 1 – ELECTION OF DIRECTORS
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Board Recommendation |
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The board of directors recommends that shareholders vote
FOR
the election of each of the nominees to the board of directors
described below.
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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.
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RICHARD E. ALLISON, JR. Independent
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Age:
55
Director Since:
2019
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Committees:
CMDC (chair), NCGC
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Flat White
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RICHARD E. ALLISON, JR. has been a Starbucks director since
September 2019. He served as Chief Executive Officer and a member
of the board of directors of Domino’s Pizza, Inc., the largest
pizza company in the world based on global retail sales, from July
2018 until April 30, 2022, then served as a senior advisor until
his retirement in July 2022. He joined Domino’s in March 2011 as
Executive Vice President of International and then served as
President, Domino’s International from October 2014 to July 2018.
During the period that Mr. Allison led the international division
and served as Chief Executive Officer, Domino’s expanded by more
than 20 countries and grew by more than 8,000 stores. Prior to
joining Domino’s, Mr. Allison worked at Bain & Company, Inc.
for more than 13 years, serving as a Partner from 2004 to
2010, and as co-leader of Bain’s restaurant
practice.
DIRECTOR QUALIFICATIONS
Throughout
Mr. Allison’s extensive experience in the restaurant industry,
particularly his years spent at Domino’s, he has cultivated a deep
understanding of large- and small-scale operations, strategic
planning initiatives, market development objectives, packaging and
recycling initiatives, and other critical elements of steering a
global restaurant chain. The growth of Domino’s global brand under
Mr. Allison’s direction highlights his strong leadership
capabilities and dedication to excellence, qualities that he brings
to his role as director.
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ANDREW CAMPION Independent
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Age:
51
Director Since:
2019
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Committees:
ACC (chair), CMDC
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Brown Sugar Oatmilk Latte
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ANDREW CAMPION has been a Starbucks director since September 2019.
He has served as the Chief Operating Officer of NIKE, Inc., a
multinational athletic footwear, apparel, equipment, and services
corporation, since March 2020. Previously, Mr. Campion served as
Executive Vice President and Chief Financial Officer of NIKE, Inc.
from 2015 to 2020. From 2014 to 2015, he served as Senior Vice
President, Strategy, Finance, and Investor Relations for NIKE,
Inc., which he assumed in addition to his prior role as Chief
Financial Officer of the NIKE Brand, to which he was appointed in
2010. Mr. Campion joined NIKE, Inc. in 2007, leading Global
Strategic Planning, Global Financial Planning, and Market
Intelligence. From 1996 to 2007, he held leadership roles in
strategic planning, mergers and acquisitions, financial planning
and analysis, operations planning, investor relations, and tax at
The Walt Disney Company, a multinational mass media and
entertainment corporation. Mr. Campion also currently serves on the
Board of Directors of The Springhill Company, the Board of
Directors of the Los Angeles 2028 Olympic and Paralympic Games, and
the Board of Advisors of the UCLA Anderson Graduate School of
Management.
DIRECTOR QUALIFICATIONS
As
a chief operating officer and former chief financial officer of a
large multinational company, Mr. Campion has a broad range of
leadership experience in the public company sector, including
overseeing global brand and business growth strategies, operational
excellence, environmental sustainability efforts, talent and team
development, and enterprise financial management. His background in
finance and law enables him to provide unique macro- and
micro-level insights into business decisions and their potential
impact on the Company’s strategic objectives. Mr. Campion
brings his deep knowledge of investor relations, among his other
skills and passions, to his role as director.
PROPOSAL 1 – ELECTION OF DIRECTORS
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BETH FORD
Independent
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Age: 58
Director Nominee
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Vanilla Red Eye With Whole Milk
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BETH FORD serves as president and chief executive officer of Land
O’Lakes, Inc., a Fortune 200 food production and agribusiness
company that is also a century-old farmer-owned cooperative. Land
O’ Lakes operates Land O’Lakes Dairy Foods, Purina Animal
Nutrition, WinField United and Truterra and operates in more than
60 countries. Ms. Ford joined Land O’ Lakes in 2011 and held a
variety of roles across all businesses before becoming chief
executive officer in 2018. She is a passionate advocate on behalf
of farmers and rural America with the goal of connecting people,
particularly in urban areas, to the farmers and rural communities
who grow their food. In addition, she is the convener of The
American Connection Project to help bridge the digital divide.
Beth's 36-year career spans six industries at seven companies. Ms
Ford serves on the board of directors of PACCAR, Inc. and
previously served on the boards of directors of Blackrock, Inc. and
Clearwater Paper, where she was chairperson. She also serves on the
board of directors for the Business Roundtable and the Columbia
University Business School – Deming Center Board of Advisors. She
recently was inducted into the Supply Chain Hall of Fame by the
Council of Supply Chain Management Professionals (CSCMP) and
received a Doctor of Humane Letters honorary degree from Iowa State
University in 2022.
DIRECTOR QUALIFICATIONS
Ms. Ford brings to the board extensive leadership experience in
food and agribusiness, as well as 35 plus years in supply chain
operations across multiple industries. As the chief executive
officer of a farmer-owned cooperative, she knows the challenges
that small and large farmers face, including those related to
climate change. Ms. Ford also brings experience in operating
multiple consumer-facing brands, managing a complex, multinational
enterprise, and overseeing extensive supply chain operations. Her
service on other publicly traded companies’ boards of directors
will enable her to contribute valuable insights into corporate
governance and other ESG considerations. As a member of the board
of directors of the Business Roundtable, she has well-developed
acumen in a wide variety of public policy issues linked to business
and the economy.
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MELLODY HOBSON Independent,
chair of the board
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Age:
53
Director Since:
2005
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Pike Place®
Roast, black*
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MELLODY HOBSON has served as chair of the board since
March 17, 2021. She served as vice chair of the board
from June 2018 to March 2021 and has been a Starbucks director
since February 2005. Ms. Hobson has served as Co-CEO,
President, and Director of Ariel Investments, LLC, an investment
management firm, since 2019. She previously served as President of
Ariel Investments, LLC from 2000 to 2019. In addition, she serves
as the President and Chairman of the Board of Trustees of the Ariel
Investment Trust, a registered investment company advised by
Ariel Investments. 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 Co-Chair of the Lucas Museum of Narrative Arts and as
Chairman of After School Matters, which provides Chicago teens with
high quality out-of-school time programs. Additionally, she is on
the Board of Governors’ Executive Committee of the Investment
Company Institute. Ms. Hobson also serves on the Board of Directors
of JPMorgan Chase & Co., and, she previously served on the
Board of Directors of DreamWorks Animation SKG, Inc. and The Estée
Lauder Companies Inc.
DIRECTOR QUALIFICATIONS
As
the president, Co-CEO, and a director of a large investment
company, Ms. Hobson brings significant leadership, operational,
investment, and financial expertise to the board of directors. She
brings a strong investor perspective to the boardroom and infuses
discussions with insights from a shareholder, capital markets, and
capital allocation lens. Ms. Hobson’s prior experience as an on-air
CBS news contributor and analyst on finance and the economy
provides insight into media, 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 Investment Company Institute’s Board
of Governors’ Executive Committee and her prior service on the
Securities and Exchange Commission (“SEC”) Investment Advisory
Committee. In addition, Ms. Hobson has brand marketing
experience through her past service on the Board of Directors of
The Estée Lauder Companies Inc. and DreamWorks Animation SKG prior
to its acquisition by Comcast Corporation.
*Pike
Place is a registered trademark of The Pike Place Market PDA, used
under license.
PROPOSAL 1 – ELECTION OF DIRECTORS
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JØRGEN VIG KNUDSTORP Independent
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Age:
54
Director Since:
2017
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Committees:
ACC, NCGC (chair)
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Caramel Macchiato
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JØRGEN VIG KNUDSTORP has been a Starbucks director since March
2017. Since January 2017, Mr. Knudstorp has served as Executive
Chairman of LEGO Brand Group, owner of the LEGO brand and part of
the controlling company of the LEGO Group, a leading manufacturer
of construction toys. From October 2004 to December 2016, he served
as President and Chief Executive Officer of the LEGO Group. He
previously held various leadership positions at the LEGO Group from
2001 to 2004, including Senior Vice President, Corporate Affairs
from 2003 to 2004; Vice President, Strategic Development in 2003;
Senior Director, Global Strategic Development & Alliance
Management from 2002 to 2003; and Director, Strategic Development
from 2001 to 2002. Prior to joining the LEGO Group, Mr. Knudstorp
served as a Management Consultant at McKinsey & Company, a
management consulting firm, from 1998 to 2001.
DIRECTOR QUALIFICATIONS
Mr.
Knudstorp brings to the board his top executive leadership
experiences at one of the world’s most renowned toy manufacturers,
which has a highly recognizable brand and a record of innovation.
His extensive global leadership experience provides the board with
unique insights and knowledge of brand and digital marketing,
strategy, consumer products, development and nurturing of human
capital and organizational culture and values, environmental
impact, finance, capital allocation, international operations and
distribution, and formation and management of strategic alliances.
The LEGO Brand is ranked as the world’s best reputed by RepTrak,
and Mr. Knudstorp brings experience in building an authentic brand
across ESG considerations in addition to product and employee
experiences.
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SATYA NADELLA Independent
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Age:
55
Director Since:
2017
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Committees:
NCGC
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Double Espresso Shot
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SATYA NADELLA has been a Starbucks director since March 2017.
Mr. Nadella has served as Chief Executive Officer and a member
of the Board of Directors of Microsoft Corporation, a global
technology provider, since February 2014. He has held various
leadership positions at Microsoft Corporation since joining in
1992, and most recently, Mr. Nadella was executive vice president
of Microsoft Corporation’s Cloud and Enterprise group. In this
role, he led the transformation to the cloud infrastructure and
services business. Previously, Nadella led research and development
for the Online Services Division and was vice president of the
Microsoft Business Division. Before joining Microsoft Corporation,
Nadella was a member of the technology staff at Sun Microsystems.
Mr. Nadella currently serves on the University of Chicago Board of
Trustees, and previously served on the Board of Trustees of Fred
Hutchinson Cancer Research Center.
DIRECTOR QUALIFICATIONS
Mr.
Nadella brings to the board of directors global business leadership
experience, extensive experience in the technology industry, and an
understanding of how technology will be used and experienced around
the world, in addition to deep expertise in allocating capital and
optimizing productivity. He also provides the board with invaluable
insights as Starbucks continues its focus on innovative ways to use
technology to elevate its brand and grow its business. His
experience in leading a multinational, complex enterprise, aligning
teams, motivating employees, addressing corporate and environmental
responsibility, developing human capital and talent, fostering a
robust culture, and his strategic and operational expertise have
facilitated important contributions to board discussions and
oversight. Mr. Nadella also brings insight and knowledge in
international operations and distribution gained from his service
as Chief Executive Officer and other senior leadership positions at
one of the world’s largest public technology
companies.
PROPOSAL 1 – ELECTION OF DIRECTORS
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LAXMAN NARASIMHAN chief
executive officer-elect
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Age:
55
Director Nominee
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Doppio Macchiato with steamed skim milk
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LAXMAN NARASIMHAN joined Starbucks as its chief executive
officer-elect on October 1, 2022. Prior to joining Starbucks,
Mr. Narasimhan served as Chief Executive Officer of Reckitt
Benckiser Group Plc (“Reckitt”), a FTSE 12 listed British
multinational consumer health, hygiene, and nutrition company,
since September 2019. Prior to joining Reckitt, Mr. Narasimhan held
various roles at PepsiCo from 2012 to 2019. He served as PepsiCo’s
Group Chief Commercial Officer until July 2019, and prior to that,
beginning in 2012, he served as Chief Executive Officer - Latin
America, Europe, and Sub-Saharan Africa, Chief Executive Officer -
Latin America, and Chief Financial Officer of PepsiCo Americas
Foods. Prior to joining PepsiCo, Mr. Narasimhan spent 19 years at
McKinsey & Company, where he focused on its consumer, retail,
and technology practices in the U.S., Asia, and India. Mr.
Narasimhan is a trustee of the Brookings Institution and a member
of the Council on Foreign Relations.
DIRECTOR QUALIFICATIONS
Mr.
Narasimhan brings to the board extensive experience in beverage,
food, retail, and consumer businesses. Through his previous chief
executive officer roles, he has substantial experience operating
multinational, consumer-facing businesses. As a trustee of the
Brookings Institute and a member of the Council on Foreign
Relations, Mr. Narasimhan would also bring to the board a unique
understanding of numerous public policy matters. As a member of the
Verizon board of directors and its Corporate Governance and Policy
Committee, he has experience with myriad issues--including those
related to ESG--facing public companies.
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HOWARD SCHULTZ interim
chief executive officer
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Age:
69
Director Since:
2022
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Doppio Macchiato
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HOWARD SCHULTZ is the founder of Starbucks Corporation and has
served as interim chief executive officer and a member of the
Starbucks board since April 2022. Mr. Schultz previously served as
chairman of the board of directors of Starbucks since its inception
in 1985 and until June 2018, and since 2018 has held the role of
founder and chairman emeritus of Starbucks. He also previously
served as chief executive officer from January 2008 to April 2017
and from November 1985 to June 2000, and as president from January
2008 until March 2015 and from November 1985 to June 1994. From
June 2000 to February 2005, Mr. Schultz also held the title of
chief global strategist. Mr. Schultz also held leadership and
director roles with Il Giornale Coffee Company and Starbucks Coffee
Company, which were predecessors to Starbucks.
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 prior 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 35 years of
experience with Starbucks and extensive experience in the food and
beverage industry, brand marketing, and international distribution
and operations.
BOARD STRUCTURE AND RESPONSIBILITIES
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BOARD OF DIRECTORS |
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Audit and Compliance Committee
(“Audit Committee”)
Oversees the accounting and financial reporting processes and the
internal and external audit processes, and reviews the financial
information that will be provided to shareholders, the systems of
internal control, risk management practices, and compliance with
the Company’s standards of business conduct and laws
and regulations.
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Compensation and Management Development Committee
(“Compensation Committee”)
Oversees compensation practices and determines compensation and
other benefits for officers. Also oversees the development and
implementation of human capital development plans and succession
planning practices to foster sufficient management depth at the
Company to support its continued growth and the talent needed to
execute long-term strategies.
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Nominating and Corporate Governance Committee
(“Nominating/Governance Committee”)
Oversees corporate governance, advises and makes recommendations to
the board regarding candidates for election as directors of the
Company, reviews and makes recommendations regarding the Company’s
non-employee director compensation policy, oversees ESG
policies and practices, and addresses any related
matters.
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Board Leadership
The board of directors is responsible for overseeing the exercise
of corporate power and ensuring that Starbucks business and affairs
are managed to meet the Company’s stated goals and objectives and
that the long-term interests of the shareholders and stakeholders
are served. Our Governance Principles and Practices for the Board
of Directors (“Governance Principles”) require the
Nominating/Governance Committee to recommend to the board on a
biennial basis, a board member who should be appointed to serve as
the chair of the board. The board believes that it should maintain
flexibility to select Starbucks chair of the board and board
leadership structures. It believes that a two-year term for the
chair provides continuity for the board.
Our ceo is the principal executive officer of the Company and has
general charge and supervision of the business and strategic
direction of the Company. Our independent chair of the board
facilitates the board’s oversight of management and the Company’s
long-range strategy and business initiatives and serves as a
liaison between management and independent directors.
The duties of the chair of the board include the
following:
•Preside
over and manage the meetings of the board;
•Support
a strong board culture by fostering an environment of open
dialogue, ensuring effective information flow and constructive
feedback among the members of the board and senior management,
facilitating communication among the chair, the board as a whole,
board committees, and senior management, and encouraging director
participation in discussions;
•Approve
the scheduling of meetings of the board, lead the preparation of
the agenda for each meeting, and approve the agenda and materials
for each meeting;
•Serve
as liaison between management and independent
directors;
•Represent
the board at annual meetings of shareholders and be available, when
appropriate, for consultations with shareholders;
•Act
as an advisor to the ceo on strategic aspects of the business;
and
•Such
other duties as prescribed by the board.
Independent Chair of the Board
Ms. Hobson, an independent, non-employee board member, has served
as the chair of the board since March 2021. Our board believes that
its leadership structure is appropriate because it effectively
allocates authority, responsibility, and oversight between
management and the independent members of our board and supports
the independence of our non-management directors.
Board Meeting Annual Calendar
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•Fiscal
Year in Review
•Management
and Financial Update
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•Strategic
Plan and Brand
•Social
Impact Agenda
•Management
and Financial Update
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•Talent
and Succession Planning (Inclusion and Diversity
Update)
•Management
and Financial Update
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•Annual
Financial Plan
•Management
and Financial Update
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BOARD OVERSIGHT OF STRATEGY
The board is deeply engaged and involved in overseeing the
Company’s long-range strategy, including evaluating key market
opportunities, consumer trends, and competitive developments. This
also includes aspects of our sustainability initiatives and social
impact agenda that relate to our strategy. The board’s oversight of
risk is another integral component of the board’s oversight and
engagement on strategic matters. Strategy-related matters are
regularly discussed at board meetings and, when relevant, at
committee meetings. We also dedicate at least one board meeting
every year to an even more intensive review and discussion of the
Company’s strategic plan. Matters of strategy also inform
committee-level discussions of many issues, including business
risk. Engagement of the board on these issues and other matters of
strategic importance continues in between meetings, including
through updates to the board on significant items and discussions
by the ceo with the independent chair of the board on a periodic
basis. Each director is expected to and does bring to bear their
own talents, insights, and experiences to these
strategy discussions.
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BEYOND THE BOARDROOM
In order to increase each director’s engagement with and
understanding of our strategy, each director participates in an
extensive orientation program upon joining the board, including
meeting with members of our executive leadership team and other key
leaders of the Company to gain a deeper understanding of Starbucks
businesses and operations, attending cultural immersion programs,
and visiting our stores to engage with store partners and customers
first-hand. Periodic briefing sessions are also provided to members
of the board on subjects that would assist them in discharging
their duties. Our directors also have the opportunity through our
periodic investor day presentations to understand and assess how we
are communicating our strategy to our investors and other important
stakeholders.
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Risk Oversight
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Board of Directors |
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The board of directors has overall responsibility for risk
oversight. 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 that company. The involvement
of the board in reviewing Starbucks business strategy is an
integral aspect of the board’s assessment of management’s 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 Committee, the Compensation Committee, and the
Nominating/Governance Committee.
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Audit
Committee |
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Compensation
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Nominating/Governance
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•Responsible
for reviewing and overseeing the Company’s major and emerging
risk exposures, including financial, operational, legal, and
regulatory risks; discussing the steps the Company is taking to
monitor and control such exposures; and overseeing the Company’s
risk assessment and risk management policies, including with
respect to data privacy and cybersecurity
risk exposures.
•Receives
regular reports from management including from our chief financial
officer, vice president of Internal Audit, general counsel, and
chief ethics and compliance officer on risks facing the Company at
its regularly scheduled meetings and other reports as requested by
the Audit Committee.
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•Responsible
for reviewing and overseeing the management of any potential
material risks related to Starbucks compensation policies and
practices, including as they relate to the workforce
generally.
•Oversees
the development, implementation, and effectiveness of the Company’s
practices, policies, and strategies relating to human capital
management regarding recruiting, selection, talent development,
progression, and regression, and diversity, equity,
and inclusion.
•Reviews
a summary and assessment of such risks annually and in connection
with discussions of various compensation elements and benefits
throughout the year.
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•Oversees
risks associated with shareholder concerns, board governance and
composition, political contributions, and ESG matters, including
compliance matters relating to emerging political, environmental,
and global citizenship trends.
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Starbucks also maintains the Risk Management Committee, a
management-level committee, which is co-managed by Starbucks chief
financial officer and general counsel and reports to senior
leadership.
The board believes that its leadership structure, coupled with the
structure and work of the various committees referenced here, is
appropriate and effective in facilitating board-level risk
oversight.
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Board and Committee Evaluations
Our board is committed to continual corporate governance
improvement, and the board and each committee annually conduct a
self-evaluation to review and assess the overall effectiveness of
the board and each committee, including with respect to strategic
oversight, board structure and operation, interactions with and
evaluation of management, governance policies, and committee
structure and composition. Committee self-assessments of
performance are shared with the full board. The
Nominating/Governance Committee also reviews the Governance
Principles each year in light of changing conditions and
shareholders’ interests and recommends appropriate changes to the
board for consideration and approval. Matters with respect to board
composition, the nomination of directors, board processes, and
topics addressed at board and committee sessions are also
considered part of our self-assessment process. As appropriate,
these assessments result in updates or changes to our practices as
well as commitments to continue existing practices that our
directors believe contribute positively to the effective
functioning of our board and its committees. There is an
independent external review process, which is ordinarily conducted
every three years, in addition to pre-existing annual board and
committee evaluations.
Affirmative Determinations Regarding Director Independence and
Other Matters
Our board conducts an annual review of the independence of our
directors. Our board has determined that each of the members of
our board who served in fiscal 2022 (which includes each of
non-employee directors whose names are disclosed in the Fiscal 2022
Non-Employee Director Compensation Table) and each director
nominee, other than Mr. Schultz, and Mr. Narasimhan, and Mr.
Kevin Johnson prior to his retirement from the Company and our
board, is “independent” as that term is defined under the
rules of The Nasdaq Stock Market (“Nasdaq”). Our board has also
determined that all directors and director nominees who served, or
will serve upon election at this Annual meeting, on each of our
Audit Committee, Compensation Committee, and Nominating/Governance
Committee are independent and satisfy the relevant SEC and Nasdaq
independence requirements for such committees. In assessing
independence, our board determined that none of the members of our
board, other than Mr. Schultz and Mr. Narasimhan has a
relationship that would interfere with the exercise of independent
judgment in carrying out the responsibilities of a director, as Mr.
Schultz and Mr. Narasimhan are executive officers, and in the case
of Mr. Schultz, the founder of Starbucks.
In determining that Ms. Ge Mahe is independent, the board
considered payments in the ordinary course of business in fiscal
2022 between Starbucks and the public company in which she serves
as an officer, which were for amounts representing less than 2% of
the annual revenues of the company receiving the payments and did
not constitute a related party transaction under SEC rules. The
board determined that these transactions would not interfere with
Ms. Ge Mahe’s exercise of independent judgment in carrying out her
responsibilities as a director. Also, in determining that Mr.
Nadella is independent, the board considered payments in the
ordinary course of business in fiscal 2022 between Starbucks and
the public company in which he serves as an executive officer and
as a director, which were for amounts representing less than 2% of
the annual revenues of the company receiving the payments and did
not constitute a related party transaction under SEC rules. The
board determined that these transactions would not interfere with
Mr. Nadella’s exercise of independent judgment in carrying out his
responsibilities as a director. Lastly, in determining that Ms.
Shih is independent, the board considered payments in the ordinary
course of business in fiscal 2022 between Starbucks and the public
company in which she serves as an officer, which were for amounts
representing less than 2% of the annual revenues of the company
receiving the payments and did not constitute a related party
transaction under SEC rules. The board determined that these
transactions would not interfere with Ms. Shih’s independent
judgement in carrying out her responsibilities as
a director.
Succession Planning and Talent Management Oversight
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 ceo.
Our board’s involvement in our annual succession planning process
is outlined in our Governance Principles. The Governance Principles
provide that our Compensation Committee has general oversight
responsibility for management development and succession planning
practices and strategy. Our Compensation Committee, pursuant to its
charter, annually reviews and discusses with the independent
directors of the board the performance of certain senior officers
of the Company and the succession plans for each such officer’s
position including
recommendations and evaluations of potential successors to fill
these positions. The Compensation Committee also conducts a
periodic review of, and provides approval for, our management
development and succession planning practices and strategies,
including the review and oversight of risks and exposures
associated with the succession planning practices and
strategies.
ceo Succession Planning
As discussed in the board’s recommendation on Proposal 6 -
Regarding ceo Succession Planning Policy Amendment, which is set
forth on page 77, the board recently amended the Governance
Principles to expand on ceo succession planning. A primary
responsibility of the board is planning for ceo succession. The
chair of our Nominating/Governance Committee, together with the
chair of the board (or, if the chair of the board is not
independent, the lead independent director), the chair of the
Compensation Committee, and the ceo (collectively, the “succession
planning team”) will annually evaluate and update as appropriate
the skills, experience, and attributes that the board believes are
important to be an effective ceo in light of our business strategy.
The succession planning team will also annually review with the
board, our ceo succession planning process, including the
identification, development, and progress of internal candidates
and how candidates have been assessed. Chief executive officer
succession planning should be an ongoing process, with the goal of
providing sufficient lead time before an expected transition while
also being prepared for and responsive to
unexpected developments.
Oversight of ESG
Our board is highly engaged in ESG matters given that our global
social impact, sustainability goals, and human capital are
intricately linked to our strategic direction. Our board considers
these matters at least annually in connection with the strategic
plan. In addition, except where explicitly delegated to other board
committees or retained by the board, our Nominating/Governance
Committee is tasked with the responsibility of overseeing the
effectiveness of our environmental, social, and corporate
governance strategies, policies, practices, goals, and programs,
including review of our annual Global Environmental and Social
Impact Report. Further, our Compensation Committee is responsible
for overseeing the development and implementation of human capital
development plans and succession planning practices to foster
sufficient management depth at the Company to support its continued
growth and the talent needed to execute long-term strategies, while
our Audit Committee is tasked with overseeing the Company’s risk
management, including with respect to certain
ESG topics.
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Board
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Our board is responsible for ensuring ESG risks and opportunities
are integrated into Starbucks long-term strategy.
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Nominating/Governance Committee
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Oversees, reviews, and assesses the effectiveness of Starbucks ESG
strategies, policies, practices, goals, and programs; annually
reviews Starbucks corporate political contributions and
expenditures to ensure alignment with Starbucks policies and
values.
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Compensation Committee
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Audit Committee
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Oversees the development, implementation, and effectiveness of
Starbucks practices, policies, and strategies relating to human
capital management as they relate to Starbucks
workforce generally.
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Oversees certain ESG risks, as part of overall risk management, and
also reviews ESG disclosures in SEC filings.
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Data Privacy and Cybersecurity Risk Oversight
We maintain comprehensive technologies and programs to ensure our
systems are effective and prepared for data privacy and
cybersecurity risks, including regular oversight of our programs
for security monitoring for internal and external threats to ensure
the confidentiality, availability, and integrity of our information
assets. We regularly perform evaluations of our security program
and continue to invest in our capabilities to keep our customers,
partners, and information assets safe. Our chief information
security officer is ultimately responsible for our cybersecurity
program, which includes the implementation of controls aligned with
industry guidelines and applicable statutes and regulations to
identify threats, detect attacks, and protect these information
assets. We have implemented security monitoring capabilities
designed to alert us to suspicious activity and developed an
incident response program that includes periodic testing and is
designed to restore business operations as quickly and as orderly
as possible in the event of a breach. In addition, partners
participate in ongoing mandatory annual trainings and receive
communications regarding the cybersecurity environment to increase
awareness throughout the Company. Our Audit Committee, which
oversees data privacy and cybersecurity risk matters, is comprised
entirely of independent directors, one of whom has significant work
experience related to information security issues and oversight.
Management will report security instances to the Audit Committee as
they occur, if material, and will also provide a summary multiple
times per year to the Audit Committee. Additionally, our chief
information security officer meets at least twice annually with the
board of directors or the Audit Committee to brief them on
technology and information security matters. We carry insurance
that provides protection against the potential losses arising from
a cybersecurity incident. In the last three years, the expenses we
have incurred from information security breach incidences were
immaterial. This includes penalties and settlements, of which there
were none.
Shareholder Engagement
We have a year-round shareholder outreach program through which we
solicit feedback on diverse business areas, ranging from our
executive compensation program and corporate governance practices
to disclosure practices and environmental and social impact
programs and goals. We share feedback we receive with our board of
directors, as well as other board committees such as the
Compensation Committee and the Nominating/Governance Committee, as
appropriate. Our board considers feedback received from
shareholders throughout the year, and such input influences changes
to our compensation program and the adoption of new governance
practices. Every year, our outreach effort is conducted by a
cross-functional team including: Investor Relations, Law &
Corporate Affairs, Inclusion and Diversity, Public Affairs, Global
Coffee, Sustainability and Social Impact, and Partner Resources
Organization. Additionally, our ceo and cfo are engaged in
meaningful dialogue with our shareholders through our quarterly
earnings calls and investor-related outreach events. For more
information about our shareholder engagement, see page
11.
ROLE OF OUR BOARD COMMITTEES
During fiscal 2022, our board of directors had three standing
committees: the Audit Committee, the Compensation Committee, and
the Nominating/Governance Committee. The board of directors, upon
recommendation of the Nominating/Governance Committee, makes
committee and committee chair assignments annually at its meeting
immediately preceding the annual meeting of shareholders, and makes
changes to committee assignments 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.
ATTENDANCE AT BOARD
AND COMMITTEE MEETINGS,
ANNUAL MEETING
During fiscal 2022, each director attended at least 75% of all
meetings of the board and board committees on which they served
(held during the period that such director served). In fiscal 2022,
our board held six meetings. Our Governance Principles 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 2022 Annual Meeting of Shareholders.
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AUDIT AND COMPLIANCE COMMITTEE |
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Current Committee Members: |
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Number of meetings in fiscal 2022:
9
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Andrew Campion (Chair)
Jørgen Vig Knudstorp |
Isabel Ge Mahe
Joshua Cooper Ramo
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Report:
page 74
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The Audit Committee annually reviews and reassesses the adequacy of
its charter and recommends any proposed changes to the charter to
the board for approval. As more fully described in its charter, the
primary responsibilities of the Audit Committee are
to:
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•oversee
our accounting and financial reporting processes, including focused
review of higher-risk areas
•appoint
the independent registered public accounting firm and oversee
the relationship
•review
the annual audit and quarterly review processes with management and
the independent registered public accounting firm
•review
the Company’s quarterly and annual financial statements
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management and the independent registered public accounting
firm
•review
management’s assessment of the effectiveness of the Company’s
internal control over financial reporting and the independent
registered public accounting firm’s related
attestation
•oversee
the Company’s internal audit function
•discuss
any material weakness or significant deficiency and any steps taken
to resolve the issue
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•review
any significant findings and recommendations from internal
audit
•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
•review
periodically, discuss with management, and regularly report to the
board major and emerging risk exposures, risk assessment, and risk
management policies
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Each of Mr. Campion, Ms. Ge Mahe, Mr. Knudstorp, Mr. Ramo, and Mr.
Teruel served on the Audit Committee during fiscal 2022. In October
2022, Mr. Teruel resigned from the Board and stepped down from the
Committee, and Mr. Campion was appointed Chair of the Audit
Committee. Currently, each of Mr. Campion, Ms. Ge Mahe, Mr.
Knudstorp, and Mr. Ramo: (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 Nasdaq’s financial knowledge and
sophistication requirements. Each of Mr. Campion and Mr. Knudstorp
has been determined by the board of directors to be an “audit
committee financial expert” under SEC rules. The Audit Committee
Report describes in more detail the Audit Committee’s
responsibilities with regard to our financial statements and its
interactions with our independent auditor, Deloitte & Touche
LLP. Following the election of directors at the Annual Meeting, the
board intends to refresh committee assignments as deemed
appropriate by the board.
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COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE |
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Current Committee Members: |
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Number of meetings in fiscal 2022:
8
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Richard E. Allison, Jr. (Chair)
Andrew Campion
Clara Shih |
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Report:
page 63
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The Compensation Committee annually reviews and reassesses the
adequacy of its charter and recommends any proposed changes to the
charter to the board for approval. As more fully described in its
charter, the primary responsibilities of the Compensation Committee
are to:
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•oversee, review, and approve as
appropriate, the Company’s overall compensation policies,
structure, and programs (including with respect to wages, salaries,
bonuses, equity plans, employee benefit plans, and other benefits)
for partners and officers
•conduct
an annual review of, and recommend to the independent directors of
the board, the compensation package for the ceo
•conduct
an annual review and approve the compensation packages for
executive officers and senior officers
•annually
review and approve performance measures and targets for all
executive officers and senior officers participating in the annual
incentive bonus plan and long-term incentive plans, and certify
achievement of such measures and targets
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•approve,
modify, and administer partner-based equity plans, the Executive
Management Bonus Plan, and deferred compensation plans
•annually
establish the evaluation process for reviewing the ceo’s
performance
•periodically
review and approve our management development and succession
planning practices
•review
and approve the Company’s peer group companies and review
market data
•oversee
the development, implementation, and effectiveness of the Company’s
practices, policies, and strategies relating to human capital
management as they relate to the Company’s workforce generally,
including policies and strategies regarding recruiting, selection,
talent development, progression and retention, and diversity,
equity, and inclusion
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•provide
recommendations to the board on compensation-related proposals to
be considered at the Company’s annual meeting
•determine
stock ownership guidelines and periodically review ownership
levels
•annually
review a report regarding potential material risks, if any, created
by the Company’s compensation policies and practices and inform the
board of any necessary actions
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The charter allows the Compensation Committee to form and delegate
any or all of its responsibilities to a subcommittee or
subcommittees of the Compensation Committee, as may be necessary or
appropriate, and within certain limits. 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.
Each of Mr. Allison, Mr. Campion, Ms. Dillon, Ms. Shih, and Mr.
Teruel served on the Compensation Committee during fiscal 2022. Ms.
Dillon and Mr. Teruel resigned from the Board in September and
October 2022, respectively and stepped down from the Compensation
Committee. Mr. Allison was appointed Chair of the Compensation
Committee in September 2022. Following the election of directors at
the Annual Meeting, the board intends to refresh committee
assignments as deemed appropriate by the board.
Compensation Committee Interlocks and Insider
Participation
As referenced above, each of Mr. Allison, Mr. Campion, Ms. Dillon,
Ms. Shih, and Mr. Teruel served on the Compensation Committee
during fiscal 2022. No member of the Compensation Committee was, at
any time during fiscal 2022 or at any other time, an officer or
employee of Starbucks, and no member of this committee had any
relationship with Starbucks requiring disclosure under Item 404 of
Regulation S-K under the Exchange Act. No executive officer of
Starbucks has served on the board of directors or compensation
committee of any other entity that has or has had one or more
executive officers who served as a member of the Compensation
Committee during fiscal 2022.
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NOMINATING AND CORPORATE GOVERNANCE COMMITTEE |
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Current Committee Members: |
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Number of meetings in fiscal 2022:
4
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Jørgen Vig Knudstorp (chair)
Richard E. Allison, Jr.
Isabel Ge Mahe |
Satya Nadella
Joshua Cooper Ramo |
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The Nominating/Governance Committee annually reviews and reassesses
the adequacy of its charter and recommends any proposed changes to
the charter to the board for approval. As more fully described in
its charter, the primary responsibilities of the
Nominating/Governance Committee are to:
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•make recommendations to the
board regarding board leadership and membership and chairs of the
board’s committees
•make
recommendations to the board about our corporate
governance processes
•assist
in identifying and screening board candidates, administer the
Policy on Director Nominations, and consider shareholder
nominations to the board
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•annually
assess the evaluation process for the effective performance of the
governance responsibilities of the board and its committees and
recommend any changes to that process to the board
•annually
review board compensation for independent directors
•annually
review corporate political contributions and
expenditures
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•provide
recommendations to the board on shareholder proposals to be
considered at the Company’s annual meeting
•annually
review and assess the effectiveness of the Company’s ESG
strategies, policies, practices, goals, and programs and make
recommendations as appropriate
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Mr. Allison, Ms. Dillon, Ms. Ge Mahe, Mr. Knudstorp, Mr. Nadella,
and Mr. Ramo served on the Nominating/Governance Committee during
fiscal 2022. In September 2022, Ms. Dillon resigned from the Board
and stepped down from the Nominating/Governance Committee.
Following the election of directors at the Annual Meeting, the
board intends to refresh committee assignments as deemed
appropriate by the board.
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 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 or any entity
with which the candidate may be affiliated;
•each
candidate shall be an individual who has demonstrated integrity and
ethics in their personal and professional life and has established
a record of professional accomplishment in their chosen
field;
•no
candidate, or family member (as defined in Nasdaq rules),
affiliate, or associate (as defined under 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 they are a member, and
not have other personal or professional commitments that would, in
the Nominating/Governance Committee’s sole judgment, interfere with
or limit their ability to do so;
•each
candidate shall intend to serve as a director at least until the
next annual meeting of shareholders or until a successor has been
qualified and preferably would intend to make a long-term
commitment to serve on the board if re-nominated;
•each
candidate shall acknowledge and comply with the Company’s
confidentiality, corporate governance, and other policies and
guidelines applicable to directors;
•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;
•each
candidate shall not have made any commitments or assurance to any
person as to how the candidate would vote or act on any issue or
question that has not been disclosed to the Company (with the
understanding that the existence of any such commitment or
assurance to a third party is likely to be deemed disqualifying by
the Nominating/Governance Committee) nor any such commitments or
assurances that could limit or interfere with the candidate’s
ability to comply with their fiduciary duties; and
•each
candidate will not be a party to any compensation or incentive
arrangements with any person or entity other than the Company with
respect to service or action as a director that has not been
disclosed to the Company (with the understanding that the existence
of any such arrangement is likely to be deemed disqualifying by the
Nominating/Governance Committee in light of the conflicts that may
result).
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
identities, perspectives, and personal and professional experiences
and backgrounds. This can be represented in both visible and
non-visible
characteristics that include but are not limited to race,
ethnicity, national origin, gender, and sexual orientation. In
addition, each candidate should affirm a commitment to furthering
inclusion and diversity;
•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 world’s leading
consumer brands. At this stage of our development, relevant
experiences might include, among other qualifications or experience
as the Nominating/Governance Committee deems appropriate: sitting
chief executive officer of a large global company; large-company
chief executive officer experience; international chief executive
officer experience; senior-level international experience;
senior-level consumer products, food, food service, and beverage
industry experience; multi-unit small box retail or restaurant
experience; technology expertise; and relevant senior-level
expertise in one or more of the following areas: finance,
accounting, branding, sales and marketing, organizational
development, international or large-scale operations, logistics and
distribution, information technology, social media, public
relations, corporate social responsibility, sustainability, and
public policy. Public company board experience is also
valued.
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 Committee’s 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 board’s
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.
Internal Process for Identifying Candidates
The Nominating/Governance Committee has two primary methods for
identifying candidates (other than those proposed by shareholders,
as discussed later).
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1 |
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The Nominating/Governance Committee may 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), to assist in the identification of possible
candidates to serve on our board who meet the minimum and desired
qualifications being sought in candidates, interview and screen
such candidates (including conducting reference checks), and assist
in scheduling candidate interviews with board members. To reflect
the Company’s commitment to diversity, in connection with the use
of any search firm to identify potential candidates, the
Nominating/Governance Committee will require the search firm to
include in its initial list of candidates qualified candidates who
reflect diverse backgrounds, including, but not limited to,
diversity of race, ethnicity, national origin, gender, and sexual
orientation. |
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2 |
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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; advisors to the
Company (including the board); individuals personally known to the
members of the board; and research, including database and Internet
searches. |
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Board Diversity Matrix as of January 27, 2023
The table below summarizes certain self-identified demographic
attributes of our current directors, to the extent disclosed to us
by such directors.
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African American or Black |
Alaskan Native or American Indian |
Asian |
Hispanic or Latinx |
Native Hawaiian or Pacific Islander |
White |
Two or More Races or Ethnicities |
LGBTQ+ |
Male
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Female |
Non-Binary |
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Richard E. Allison, Jr. |
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Andrew Campion |
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Isabel Ge Mahe |
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Mellody Hobson |
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Jørgen Vig Knudstorp |
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Satya Nadella |
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Joshua Cooper Ramo |
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Howard Schultz |
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Clara Shih |
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Shareholder Nominations
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 our Proposals of
Shareholders section on page 89 for more information.
The procedures described in “Director Recommendations by Qualified
Shareholders” below 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 and 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 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
year’s annual meeting.
Proxy Access
In addition, our bylaws permit a shareholder, or a group of up to
20 shareholders, owning at least 3% of the Company’s outstanding
shares of common stock continuously for at least three years, to
nominate and include in our annual meeting proxy materials director
nominees constituting up to the greater of two nominees or 20% of
the board, subject to the requirements specified in our
bylaws.
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 Policy on
Director Nominations
The Policy on Director Nominations is intended to provide a set of
flexible guidelines for the effective functioning of our director
nominations process. The Nominating/Governance Committee reviews
the nominations policy at least annually and makes modifications 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.
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Review and Approval of Related
Person Transactions
Under the Audit Committee’s 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 an 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 generally
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 chair of the Audit Committee 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 Committee’s decision is final and binding.
Additionally, the chair of the Audit Committee 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 person’s 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
2022
In fiscal 2022, the following are the only transactions or series
of similar transactions to which we were or will be a party in
which the amount involved exceeds $120,000 and in which any
director, nominee for director, executive officer, beneficial
holder of more than 5% of our capital stock, or any member of their
immediate family or any entity affiliated with any of the foregoing
persons had or will have a direct or indirect material interest,
other than equity and other compensation, termination, change of
control. and other arrangements, which are described under
“Executive Compensation.”
Starbucks and entities owned by Mr. Schultz previously entered into
a management services agreement and a hangar space lease for
Mr. Schultz’s aircraft. Pursuant to the management services
agreement, an entity owned by Mr. Schultz operates his aircraft
using services provided by Starbucks and pays Starbucks fees for
such services, the amounts of which were set at market rates. Under
the terms of the hangar space lease, an entity owned by Mr. Schultz
pays Starbucks rent based on its pro-rata portion of the
maintenance, utilities and other expenses paid by Starbucks
for the hangar. In fiscal 2022, Mr. Schultz’s entities paid
Starbucks approximately $579,000 in fees and approximately $745,000
in rent.
CORPORATE GOVERNANCE MATERIALS AVAILABLE ON THE STARBUCKS
WEBSITE
Our Governance Principles 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 Governance Principles, 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, COO, CFO, and Finance Leaders
•Procedure
for Communicating Complaints and Concerns
•Audit
and Compliance Committee Policy for Pre-Approval of Independent
Auditor Services
You may obtain print copies of these materials, free of charge, by
sending a written request to: Starbucks Corporation, 2401 Utah
Avenue South, Mail Stop S-LA1, Seattle, Washington 98134,
Attention: corporate secretary. 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 feedback 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 communications to an individual
director, to the board of directors, or to one of our board
committees.
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Compensation of Directors |
FISCAL 2022 COMPENSATION PROGRAM FOR NON-EMPLOYEE
DIRECTORS
Under its charter, the Nominating/Governance Committee annually
reviews and recommends the type and amount of board compensation
for non-employee directors. Compensation decisions for non-employee
directors are made by the Nominating/Governance Committee for each
“Plan Year,” as defined in the Deferred Compensation Plan for
Non-Employee
Directors, which begins after the annual meeting of shareholders
and concludes immediately before the following annual meeting of
shareholders.
Non-Employee Director Compensation Highlights
•Additional
fees for board chair and committee chairs to differentiate
individual pay based on workload.
•Emphasis
on equity in the overall compensation mix.
•Equity
grants under a fixed-value annual grant policy with immediate
vesting.
•No
performance-based equity awards.
•A
robust stock ownership guideline set at five times the portion of
the annual retainer that can be paid in cash to support shareholder
alignment.
•Deferred
stock unit program to facilitate stock ownership.
2022 Plan Year Compensation (March 2022 – March 2023)
Our non-employee director compensation for the 2022 Plan year was
$310,000, representing a $15,000 increase from the prior year, and
was paid at the election of the director as follows:
(i) $130,000 either entirely in cash (in one lump sum) or
entirely in fully-vested restricted stock units (“RSUs”), and (ii)
$180,000 entirely in fully-vested RSUs. For the 2022 Plan year,
stock options were eliminated as an equity alternative. Additional
compensation for the non-executive chair of the board and chairs of
the board’s committees remained unchanged at $185,000 (board
chair), $25,000 (Audit Committee chair) and $20,000
(Nominating/Governance and Compensation Committee chairs)
respectively, payable entirely in cash or entirely in fully-vested
RSUs, at the election of the director. For the 2023 Plan year, the
additional compensation to be paid to the Audit Committee chair
will increase to $30,000 given the duties and responsibilities
associated with this role and to remain competitive with peer
compensation. A single board member who occupies both the
non-executive chair of the board role and a chair of a committee
role shall receive only the additional compensation specified for
their role as non-executive board chair.
When considering and ultimately recommending changes to the
compensation program for our non-employee directors, the
Nominating/Governance Committee considers peer data, analysis, and
recommendations provided by an independent compensation consulting
firm.
Terms of Non-Employee Director Equity
Stock options, granted under prior plan years, have an exercise
price equal to the closing market price of our common stock on the
grant date and have a 10-year term from the date of grant.
Directors generally have 36 months to exercise their stock options
after ceasing to be a board member. RSUs granted to non-employee
directors in Plan Year 2022 vested immediately.
With respect to RSUs, elective deferral will continue to be
available for “in-service” or “separation” as described on the next
page. Non-employee directors are expected to satisfy stock
ownership guidelines of five times the maximum portion of annual
compensation that can be paid in cash, not including cash
payable as additional retainer for serving as chair of the board or
for serving as a committee chair, as discussed below under the
caption “Director Stock Ownership Guidelines.”
COMPENSATION OF DIRECTORS
FISCAL 2022 NON-EMPLOYEE DIRECTOR COMPENSATION TABLE
The following table shows fiscal 2022 compensation for non-employee
directors.
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Name(1)
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Fees Earned or
Paid in Cash
($)
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Stock
Awards ($)(2)
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Option
Awards
($)(3)
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Total
($)
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Richard E. Allison, Jr. |
— |
$309,956 |
— |
$309,946 |
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Andrew Campion |
— |
$309,956 |
— |
$309,956 |
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Mary N. Dillon(4)
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— |
$329,973 |
— |
$329,973 |
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Isabel Ge Mahe |
— |
$309,956 |
— |
$309,956 |
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Mellody Hobson
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— |
$494,915 |
— |
$494,915 |
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Jørgen Vig Knudstorp |
— |
$329,573 |
— |
$329,573 |
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Satya Nadella |
— |
$309,956 |
— |
$309,956 |
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Joshua Cooper Ramo |
— |
$309,956 |
— |
$309,956 |
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Clara Shih |
— |
$309,956 |
— |
$309,956 |
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Javier G. Teruel(5)
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— |
$334,955 |
— |
$334,955 |
(1)Mr.
Schultz does not participate in the compensation program for
non-employee directors. Information on compensation paid to Mr.
Schultz in this role as interim ceo in fiscal 2022 is described in
the CD&A section and the executive compensation tables of this
proxy statement.
(2)The
amounts shown in this column represent the grant date fair values
of the RSU awards granted to each of the non-employee directors on
March 16, 2022. The grant date fair values have been determined
based on the assumptions and methodologies set forth in the
Company’s fiscal 2022 Annual Report (Note 1: Summary of Significant
Accounting Policies & Estimates).
(3)As
of October 2, 2022, the aggregate number of shares of Starbucks
common stock underlying outstanding option awards for each
non-employee director were: Mr. Allison, 0; Mr. Campion, 0;
Ms. Ge Mahe, 0; Ms. Hobson, 0; Mr. Knudstorp, 49,289; Mr. Nadella,
6,876; Mr. Ramo, 0; Ms. Shih, 5,166; and Mr. Teruel, 87,635. As of
the date of her departure from the Board, Ms. Dillon held 32,108
shares of Starbucks common stock underlying outstanding option
awards.
(4)Ms.
Dillon resigned from the board on September 1, 2022.
(5)Mr.
Teruel resigned from the board on October 5,
2022.
Deferred Compensation Plan
Under the Deferred Compensation Plan for Non-Employee Directors, a
non-employee director may irrevocably elect to defer receipt of
shares of common stock the director would have received upon
vesting of RSUs until (1) the earlier of three years from the
vesting of the RSU and separation from the board or (2) separation
from the board. The purpose of the plan is to enhance the Company’s
ability to attract and retain non-employee directors by providing
individual financial and tax planning flexibility.
Non-Employee Director Stock Ownership Guidelines
The minimum Company stock ownership guideline for non-employee
directors is five times the maximum portion of annual compensation
that can be paid in cash, not including cash payable as
additional
retainer for serving as chair of the board or for serving as a
committee chair. The guidelines serve to align the interests of our
non-employee directors to those of our shareholders. Under this
formula, the current ownership requirement is $650,000 (5 x
$130,000) of Company stock. Directors have a period of five years
to comply with this requirement.
Deferred stock units resulting from deferrals under the deferred
compensation plan for non-employee directors described above are
counted toward meeting the guidelines. Each director is expected to
continue to meet the ownership requirement for as long as they
serve as a non-employee director of the board. All current
non-employee directors are in compliance with these guidelines as
of the date of this proxy statement.
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PROPOSAL 2
ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER
COMPENSATION
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We are asking shareholders to approve, on a nonbinding, advisory
basis, the compensation paid to our named executive officers as
reported in this proxy statement (commonly referred to as a
“say-on-pay”).
We encourage 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 Company’s 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 (the “Exchange
Act”) and as a matter of good corporate governance, we are asking
shareholders to approve, on a nonbinding, advisory basis, the
following resolution at the Annual Meeting:
RESOLVED,
that the shareholders of Starbucks Corporation approve, on a
nonbinding, advisory basis, the compensation of the Company’s 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 Company’s 2023 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 2024 Annual Meeting
of Shareholders.
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Board Recommendation |
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The board of directors recommends a vote
FOR
approval, on a nonbinding, advisory basis, of the compensation paid
to our named executive officers.
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Compensation Discussion and Analysis |
This Compensation Discussion and Analysis (“CD&A”) provides
information on our executive compensation program including
Starbucks global compensation philosophy, which focuses on
rewarding partners for their central role in our growth. While the
principles underlying this philosophy extend to all levels of the
organization, this CD&A primarily covers the compensation of
our named executive officers (“NEOs”). For fiscal 2022, our NEOs
are the current executive officers and former executive officers
named below. We use “Compensation Committee” or “Committee” in the
CD&A to refer to the Compensation and Management Development
Committee of the Starbucks board of directors. We refer to all our
employees as “partners,” including throughout this proxy statement,
to reflect the significant role they play in our
success.
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Howard Schultz |
Laxman Narasimhan |
Rachel Ruggeri |
Michael Conway |
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interim chief executive officer |
chief executive officer-elect |
executive vice president
and chief financial officer |
group president,
International and Channel
Development |
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John Culver* |
Kevin Johnson** |
Rachel A. Gonzalez*** |
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former group president and chief operating officer |
former president and chief executive officer |
former executive vice president,
general counsel |
* Effective
October 1, 2022,
we eliminated the chief operating officer role, and following the
elimination of that role, Mr. Culver remained employed with the
Company in a senior advisor role through January 1, 2023. Due to
there no longer being an equivalent role for Mr. Culver, his
employment was involuntarily terminated on January 2,
2023.
** Mr. Johnson retired as president and
chief executive officer, effective April 4, 2022, and remained
employed with the Company in a senior advisor role through October
2, 2022.
*** Ms. Gonzalez's employment as executive
vice president, general counsel was involuntarily terminated
effective April 4, 2022, in connection with changes in executive
leadership, and Ms. Gonzalez remained employed with the Company in
a senior advisor role through May 20, 2022.
EXECUTIVE SUMMARY
Business Highlights
In fiscal 2022, our executive leadership team experienced
significant changes, commencing with the retirement of Kevin R.
Johnson as president and chief executive officer, and the
appointment of Starbucks founder, Howard Schultz, as interim chief
executive officer in April 2022. Our board of directors selected
Mr. Schultz based on his role in building Starbucks into one of the
world’s most recognized and respected businesses, a company focused
on delivering best-in-class financial performance, through
exceeding the expectations of our people and our customers. Under
his leadership, Starbucks grew from 11 stores with 100 partners to
more than 28,000 stores in 77 countries, and he pioneered programs
like comprehensive healthcare, stock ownership, and free college
tuition for full and part-time partners.
Additional leadership and organizational changes followed in fiscal
2022, which concluded with the appointment of Laxman Narasimhan, as
chief executive officer-elect in October 2022. Mr. Narasimhan is
expected to be appointed as our permanent chief executive officer
in April 2023. Mr. Narasimhan brings nearly 30 years of
experience leading and advising global consumer-facing brands.
Known for his considerable operational expertise, he has a proven
track record in developing purpose-led brands, and building on
companies’ histories, he has succeeded in rallying talent to
deliver on future ambitions by driving consumer-centric and digital
innovations.
Guided by Mr. Schultz and our partners, in fiscal 2022, we began to
implement our Reinvention Plan, an inspired roadmap to build the
future of Starbucks, while staying true to our mission of uplifting
communities through a shared love for coffee and further extending
our coffee leadership and innovation. Starbucks partners are at the
core of the Reinvention Plan, and we are committed to investing in
our partner base through recruiting, training, and onboarding
initiatives. As part of the Reinvention Plan, we also are
continuing to unlock the intersection of convenience and connection
by introducing enhancements to the customer experience across the
retail and digital realms. Finally, we are seeking to continue to
accelerate our leadership position in international markets through
the strength of our licensing model, the digital Starbucks
Experience, and purpose-driven growth in China.
In fiscal 2022, we continued to manage the business through global
economic uncertainties, inflationary pressures, a resurgence of
COVID-19 in China, and lower government subsidies. In fiscal 2022,
we grew global revenues 13%* year-over-year to a record $32.3
billion, driven by 8% comparable stores sales growth globally and
12% comparable stores sales growth in North America as we saw
meaningful growth in our global customer base. In the U.S., we grew
our unique customers 9% year-over-year, and we saw a 16%* increase
in U.S. Starbucks Rewards membership year-over-year to nearly 29
million members. However, international comparable store sales
decreased 9%, primarily attributable to COVID-19 related
restrictions in China, and our operating income and operating
margin for the International segment decreased, driven primarily by
lower sales related to COVID-19 restrictions in China, investments
in our partners, and lower government subsidies.
Despite such challenges, we remain confident in our long-term
strategy as we continue to execute on our Reinvention Plan, which
we believe will touch, and elevate our Starbucks partner, customer
and store experiences, and position Starbucks to deliver
sustainable, long-term, profitable growth, and value
creation.
*Growth rate is based on a 52-week basis. Please refer to Appendix
A for Reconciliation of Extra Week.
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Total Consolidated Revenues
(+13%
year-over-year)
$32.3 Billion
U.S. 90-day active Starbucks®
Rewards members grew 16% year-over-year to
28.7 Million
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|
|
|
|
Operating Margin
(-250
basis points year-over-year)
14.3%
|
Total Consolidated EPS
(-20.1%
year-over-year)
$2.83
|
|
|
|
|
Expanded global retail store base 6% to
35,711 Stores
|
Non-GAAP Operating Margin
(-290
basis points year-over-year,)
15.1%*
|
Total Consolidated non-GAAP EPS
(-7.5%
year-over-year, or -5% on a 52 week basis)
$2.96*
|
|
|
|
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|
|
* Appendix A includes a reconciliation of
non-GAAP operating margin and non-GAAP EPS to the most directly
comparable measure reported under GAAP. Year over year growth is
based on a 52-week basis. For the annual revenue growth, please
refer to Appendix A, Reconciliation of Extra Week.
Fiscal 2022 Executive Compensation Payouts
Our fiscal 2022 executive program payouts are aligned with our
business performance. Each of our NEOs who was eligible to earn an
annual cash incentive award under the annual Executive Management
Bonus Plan (“Annual Incentive Bonus Plan”) would have earned an
award based on our financial and operational results, progress
against our ESG initiatives, and their individual performance.
However, given our overall financial and operational performance in
fiscal 2022 and given that transformation efforts under our
Reinvention Plan remain ongoing, our Compensation Committee elected
not to pay any such awards for fiscal 2022. Our fiscal 2020 PRSUs
(awarded in November 2019) paid out at only 61.25% due to our
inability to achieve the rigorous earnings targets and our total
shareholder return performance compared to the S&P 500 during
the last three fiscal years. Further, Mr. Johnson’s long-term cash
performance-based award that was originally granted in December
2019 did not pay out given the challenging relative total
shareholder return targets that were set for such award were not
achieved.
Listening to Our Shareholders and Changes to Fiscal 2023
Compensation
Every year, Starbucks provides shareholders with the opportunity to
approve its executive compensation program on an advisory basis. At
our 2022 Annual Meeting of Shareholders, approximately 92.4% of our
shareholders who cast votes supported our advisory vote on
executive compensation. In addition, every year, we engage with
shareholders representing a significant portion of our outstanding
shares on a variety of topics, including our executive compensation
program. During 2022, as part of our regular shareholder outreach,
we engaged with our top shareholders, representing nearly 30% of
our total shares outstanding. The shareholders with whom we engaged
generally expressed support for our executive compensation program,
and were also supportive of the meaningful enhancements that we
made to our program in fiscal 2022, which included, among other
things, clarifying that the non-financial individual performance
factor portion of our Annual Incentive Bonus Plan would be weighted
at 30% in the aggregate, and providing for more formulaic payout
metrics for ESG goals.
In evaluating our compensation practices for fiscal 2023, the
Compensation Committee was mindful of the feedback provided by
shareholders and continued to refine our Annual Incentive Bonus
Plan to more closely align compensation with company financial
performance and further demonstrate our commitment to value
creation for shareholders, including an increased focus on sales
and earnings given the effects of COVID-19, supply chain and
materials costs, potential difficulties in China, and the Company’s
transformation in connection with our Reinvention Plan. Beginning
with the fiscal 2023 Annual Incentive Bonus Plan, 70% of each
participant’s target incentive opportunity will be earned based on
adjusted net revenue and adjusted operating income financial
metrics, increased from 50%, and the remaining 30% will be earned
based on ESG metrics (15% increased from 10% in fiscal 2022) and
individual performance (15% decreased from 30% in fiscal 2022).
Profit specific goals, which included operating margin, comparable
store sales, and net new stores, were eliminated from the Annual
Incentive Bonus Plan as the Compensation Committee determined that
performance against these metrics was largely reflected in the
adjusted net revenue and adjusted operating income metrics and
wanted to focus and simplify the plan, as described in more detail
below in the section entitled “2023 Executive
Compensation.”
Fiscal 2022 Target Total Direct Compensation
The vast majority of our NEOs’ target total direct compensation is
in the form of compensation that is variable or “at-risk” based on
our financial, operating, and ESG performance and the value of our
stock price. The at-risk elements of our fiscal 2022 program
include (i) our Annual Incentive Bonus Plan, an annual cash
incentive award program, and (ii) our Leadership Stock Plan,
through which PRSUs and RSUs were granted as long-term incentive
awards.
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FORMER CEO Compensation Mix* |
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Other NEOs** Compensation Mix |
|
* The chart above does not include Mr.
Schultz, who, in connection with his appointment as interim chief
executive officer, received a base salary of only $1, was not
eligible to earn an annual cash incentive award under the Annual
Incentive Bonus Plan, and did not receive any equity award
grants.
** This chart also does not include Mr.
Narasimhan, who did not commence employment with the Company until
October 1, 2022, the day immediately preceding the end of fiscal
2022.
Rigorous Goal Setting
Our management and the Committee worked collaboratively to set
targets reflective of our ambitious performance goals and to drive
long-term value creation for our shareholders.
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2022 Annual Incentive Bonus Plan |
Leadership Stock Plan |
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* The three radial slices shown
here are not meant to be representative of their categorical
value. |
Annual Incentive Bonus Plan
We set our fiscal 2022 performance target above our fiscal 2021
performance consistent with our challenging strategic growth plans
and our rigorous goal setting philosophy. For fiscal 2022, the
types of goals and the weightings of such goals were unchanged from
fiscal 2021. However, the Compensation Committee elected to refine
the Annual Incentive Bonus Plan for fiscal 2022 by clarifying that
the Individual Performance Factor (“IPF”) portion of our Annual
Incentive Bonus Plan for fiscal 2022 would be weighted at 30% in
the aggregate. The IPF portion was limited to Mission and Values
and strategic and operational goals specific to each individual
participant (20% overall weighting), and inclusion and diversity
goals whose achievement will vary by participant (10% overall
weighting), while our planet- and profit-positive goals for fiscal
2022 were separate and distinct factors, with each having a 10%
weighting and more formulaic payout metrics. Our planet-positive
and profit-positive goals were applied consistently across the
executive officer team.
The Annual Incentive Bonus Plan and the results of our fiscal 2022
performance are described in detail starting on page 47. While each
of our NEOs who was eligible to earn an annual cash incentive award
would have earned an award based on certain financial results and
their individual performance, our Compensation Committee made a
determination not to pay any such awards for fiscal 2022, given our
overall earnings performance in fiscal 2022 and given that
transformation efforts under our Reinvention Plan remain
ongoing.
Leadership Stock Plan
Given the positive feedback received from shareholders in respect
of our fiscal 2021 executive compensation program, the Compensation
Committee did not make any changes to the Leadership Stock Plan for
fiscal 2022. For fiscal 2022, long-term incentives were awarded in
the form of: (1) PRSUs, where the number of shares earned is based
on three-year EPS performance against pre-established annual
targets, subject to a downward or upward adjustment of 25% based on
relative TSR performance and an additional downward or upward
adjustment of up to 10% based on achievement of inclusion and
diversity goals and (2) time-based RSUs. The Leadership Stock Plan
and the results of our fiscal 2022 performance are described in
detail starting on page 52.
Compensation Policy Highlights
INTERIM CEO COMPENSATION
In connection with his appointment as interim chief executive
officer, Mr. Schultz received a base salary of only $1, was not
eligible to earn an annual cash incentive award under the Annual
Incentive Bonus Plan and did not receive any equity award grants.
Mr. Schultz was entitled to receive benefits on the same basis as
similarly situated partners, including with respect to personal
security as described in more detail below.
CEO-ELECT NEW HIRE PACKAGE
In connection with Mr. Narasimhan’s appointment as ceo-elect, we
entered into an offer letter with Mr. Narasimhan, which provides
for, among things, his compensation and employment terms. The
Compensation Committee spent significant time reviewing Mr.
Narasimhan’s compensation terms with its independent compensation
consultant, and in approving the final terms, considered the
importance of his role and responsibilities and aligning his
compensation with the median compensation of our peer group. The
rationale for each of the elements of Mr. Narasimhan’s compensation
and how each element aligns with our compensation philosophy is
summarized in the table below.
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|
| Compensation
Element |
Description |
Rationale |
|
Base Salary |
$1,300,000 |
Provides executives with a predictable level of income; reflects
role and responsibilities as well as market
competitiveness. |
|
Annual Incentive Bonus |
200% of base salary |
Reflects role and responsibilities as well as market
competitiveness and internal equity considerations. Ties additional
upside earning opportunity to Company and individual performance
results. |
|
Annual Equity Incentives |
Annual equity awards with a target value of $13,600,000 |
Reflects role and responsibilities as well as market
competitiveness and internal equity considerations |
|
Replacement Equity Grants |
Replacement equity grant with a target value of
$9,250,000:
60%
in PRSUs, which vest based on performance, and 40% in RSUs, which
vest annually over three years
Awards are forfeited if Mr. Narasimhan’s employment terminates
within twelve months of his start date, except in certain limited
circumstances as described below under Employment Agreements and
Termination Arrangements
|
The replacement equity grants were made in respect of certain
outstanding equity awards that Mr. Narasimhan forfeited when he
left his previous employer to join Starbucks, consistent with
market practice
To provide alignment with the other members of the Company’s
leadership team, 50% of the PRSUs provide for participation in the
Company’s
in-progress FY2021-2023 PRSU cycle, 25% of the PRSUs provide for
participation in the Company’s in-progress FY2022-2024 PRSU cycle,
and 25% of the PRSUs provide for participation in the Company’s
FY2023-2025 PRSU cycle, in the latter case for awards granted in
November.
|
|
Perquisites and Other Executive Benefits |
Reimbursement for relocation expenses (including tax
reimbursements) and up to $50,000 in legal fees |
Supports our objective of attracting and retaining top executive
talent; consistent with market practice and the Company’s
relocation policy.
Mr. Narasimhan’s relocation benefits are provided for pursuant to
the Company’s international relocation policy, which applies to all
partners at the vice president level and above.
|
|
Signing Bonus |
$1,600,000
Awards are forfeited if Mr. Narasimhan’s employment terminates
within twelve months of his start date, except in certain limited
circumstances as described below under Employment Agreements and
Termination Arrangements
|
In consideration of Mr. Narasimhan’s cash incentive opportunity
that was forfeited from his previous employer; consistent with
market practice |
|
Severance Benefits |
Cash severance and equity vesting benefits in the event of
termination without misconduct or resignation for good reason,
conditioned on a release of claims against the Company; will be
entitled to participate in the Starbucks Severance and CIC Plan
upon becoming permanent ceo, which is expected to occur on or
before April 1, 2023 |
Supports our objective of attracting and retaining top executive
talent; consistent with market practice. Please see Executive
Compensation Agreements and Arrangements below for more
information |
2022 EXECUTIVE COMPENSATION PROGRAM
Fiscal 2022 Executive Compensation Overview
The following table provides information regarding the elements of
our fiscal 2022 executive compensation program.
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|
Element |
Form |
Objectives and Basis |
|
Base Salary |
Cash |
 Attract
and retain highly qualified executives to drive our
success |
|
Annual Incentive Bonus |
Cash |
Drive
short-term Company performance and promote our financial goals and
our people-, planet-, and profit-positive initiatives
Actual
payout based on financial performance against pre-established net
revenue and operating income targets and company planet- and
profit-positive goals and an individual performance
factor.
|
|
Long-term Incentive |
PRSUs and time-based RSUs |
Drive
long-term Company performance, align interests of executives with
those of shareholders, promote our people-positive
initiatives, retain executives through long-term vesting, and
provide potential wealth accumulation
Delivered
60% in PRSUs and 40% in time-based RSUs
PRSUs
are earned based on three-year EPS performance against
pre-established
annual targets, subject to downward or upward adjustment of 25%
based on our relative TSR performance and downward or upward
adjustment of up to 10% based on achievement of three-year
inclusion and diversity goals; shares are only able to vest after
the full three-year performance period
RSUs
vest over a four-year period, subject to continued service with the
Company, and become more valuable as our stock price increases,
which benefits all of our shareholders
|
Perquisites and Other
Executive Benefits |
Limited enhanced benefits (See “Other Compensation Policies -
Perquisites and Other Executive Benefits”) |
Provide for the safety and wellness of our executives and
support our objective of attracting and retaining top executive
talent
|
|
Deferred Compensation |
401(k) plan and non-qualified Management Deferred Compensation
Plan |
Provide
methods for general savings, including for retirement and benefits
generally consistent with our peer group
|
|
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
|
Financial Results Under Performance Goals
In determining the design of our fiscal 2022 Annual Incentive Bonus
Plan and the PRSUs granted under the Leadership Stock Plan, we
considered prior year incentive plan targets and results as well as
our financial and operating performance in fiscal 2021, with the
targets for fiscal 2022 financial goals set at a level
significantly above the prior year’s results.
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|
CONSOLIDATED ADJUSTED NET REVENUE(1)
(IN
MILLIONS)
|
CONSOLIDATED ADJUSTED OPERATING INCOME(2)
(IN
MILLIONS)
|
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|
ADJUSTED EARNINGS PER SHARE(3)
|
TOTAL SHAREHOLDER RETURN |
|
|
|
(1)Adjusted
net revenue is a non-GAAP measure. The fiscal 2022 consolidated
adjusted net revenue result excludes foreign currency fluctuations.
The fiscal 2021 consolidated adjusted net revenue result excludes
foreign currency fluctuations and the impact of the 53rd week. The
fiscal 2020 consolidated adjusted net revenue result excludes
foreign currency fluctuations; Channel Development transition
impacts; accounting changes and other items.
(2)Adjusted
operating income is a non-GAAP measure. The fiscal 2022
consolidated adjusted operating income result excludes foreign
currency fluctuations. The fiscal 2021 consolidated adjusted
operating income result excludes foreign currency fluctuations and
the impact of the 53rd week. The fiscal 2020 consolidated adjusted
operating income result excludes foreign currency fluctuations;
Channel Development transition impacts; accounting changes and
other items.
(3)Adjusted
earnings per share is a non-GAAP measure. The fiscal 2022 adjusted
earnings per share result excludes foreign currency fluctuations.
The fiscal 2021 adjusted earnings per share result excludes foreign
currency fluctuations, effects of tax law changes, and the 53rd
week. The fiscal 2020 adjusted earnings per share result excludes
foreign currency fluctuations and the Channel Development
transition impact.
Elements of Fiscal 2022 Executive Compensation
Base Salary
The Compensation Committee generally reviews and approves base
salaries annually at its November meeting, and makes periodic
adjustments in connection with promotions, changes in roles and/or
responsibilities, or to reward individual performance and promote
market competitiveness. In making any such adjustments, the
Compensation Committee will also consider the breadth, scope, and
complexity of the NEO’s role, internal equity, and whether the
NEO’s base salary is appropriately positioned relative to similarly
situated executives in our peer group. For fiscal 2022, the
Committee reviewed and approved the base salaries shown below (and
with respect to Mr. Johnson in his role as our president and ceo,
the Committee recommended, and the independent directors approved,
his base salary). In fiscal 2022, Ms. Ruggeri and Ms. Gonzalez each
received base salary increases based on their performance and
market competitiveness and internal equity considerations, which
became effective on
November 29, 2021.
In connection with his appointment as interim chief executive
officer, Mr. Schultz received a base salary of only $1. Mr.
Narasimhan did not receive a base salary in fiscal 2022 as his
employment did not commence until October 1, 2022, the day
immediately preceding the end of fiscal 2022.
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|
Base Salary
(Annualized Rate)
|
|
Named Executive Officer |
Fiscal 2022 |
Fiscal 2021 |
% Change |
|
Howard Schultz |
|
$1 |
|
|
N/A |
N/A |
|
Rachel Ruggeri |
|
$840,000 |
|
|
$800,000 |
5 |
% |
|
Michael Conway |
|
$925,000 |
|
|
$925,000 |
0 |
% |
|
Kevin R. Johnson* |
|
$1,550,000 |
|
|
$1,550,000 |
0 |
% |
|
John Culver |
|
$1,000,000 |
|
|
$1,000,000 |
0 |
% |
|
Rachel A. Gonzalez** |
|
$761,250 |
|
|
$725,000 |
5 |
% |
* Mr. Johnson retired as president and chief
executive officer, effective April 4, 2022, and remained employed
with the Company in a senior advisor role through October 2, 2022.
During his time in a senior advisor role, Mr. Johnson’s base salary
was reduced by 50%.
** Ms. Gonzalez’s employment as executive
vice president, general counsel was involuntarily terminated
effective April 4, 2022, in connection with changes in executive
leadership, and Ms. Gonzalez remained employed with the Company in
a senior advisor role through May 20, 2022. During Ms. Gonzalez’s
time in a senior advisor role, Ms. Gonzalez’s base salary was
reduced by 50%.
Annual Incentive Bonus Plan
Starbucks annual cash incentive awards for NEOs are paid pursuant
to our Annual Incentive Bonus Plan. The Annual Incentive Bonus Plan
is designed to ensure that awards are differentiated based on
individual performance and align compensation with the execution of
strategic initiatives that drive long-term performance. Fifty
percent (50%) of the overall Annual Incentive Bonus Plan payout
would have been based on adjusted net revenue and adjusted
operating income goals on a consolidated Company basis, with a
payout between 0-200% of target, depending on performance. The
remaining 50% of the overall Annual Incentive Bonus Plan payout
would have been based on profit-positive (10% overall weighting),
planet-positive (10% overall weighting), and IPF goals (30% overall
weighting) with a payout between 0-200% of target for each
component, depending on performance. As described in detail
starting on page
51,
the IPF is composed of goals that were specific to each individual
participant related to our Mission and Values, strategic and
operational goals and diversity and inclusion metrics, with a 10%
overall weighting assigned to diversity and inclusion and a 20%
overall weighting assigned to the remaining IPF goals. The graphic
below illustrates the weighting of the performance goals and the
calculation of the financial performance goals and individual
performance factor components of the annual cash incentive awards
for fiscal 2022.
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|
FY22 Design |
BASE ($) |
|
TARGET ANNUAL INCENTIVE OPPORTUNITY (%) |
|
PERFORMANCE
FACTORS (Illustrated Below) |
No Fiscal 2022 Annual Incentive Bonus Plan Payouts
As discussed above, each of our NEOs who was eligible to earn an
annual cash incentive award would have earned an award based on our
financial results and people positive, profit positive, and planet
positive goals. However, after considering the recommendations of
our interim chief executive officer, the Committee exercised its
discretion to adjust all payouts under the Annual Incentive Bonus
Plan to $0 for fiscal 2022, given our overall financial performance
in fiscal 2022, and where we are currently in our Reinvention Plan
(except with respect to Ms. Gonzalez, who received a prorated
payout, pursuant to the terms of her separation
agreement).
Target Opportunities
The target opportunities as a percentage of base salary for fiscal
2022 for our NEOs other than Mr. Schultz and Mr. Narasimhan are
shown below. Neither Mr. Schultz nor Mr. Narasimhan were eligible
to participate in the Annual Incentive Bonus Plan for fiscal
2022.
Such target opportunities were determined by the Compensation
Committee after considering a number of factors, including the
executive’s role and responsibilities, whether the target annual
incentive is competitive with similarly situated executives in our
peer group, and our recent and projected financial
performance.
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|
Bonus Targets
Percentage of Base Salary
|
|
Named Executive Officer |
Fiscal 2022 |
Fiscal 2021 |
% Change |
|
Rachel Ruggeri |
125% |
120% |
5% |
|
Michael Conway |
150% |
150% |
0% |
|
Kevin R. Johnson* |
200% |
200% |
0% |
|
John Culver |
150% |
150% |
0% |
|
Rachel A. Gonzalez** |
100% |
100% |
0% |
* Mr. Johnson retired as president and chief
executive officer, effective April 4, 2022, and remained employed
with the Company in a senior advisor role through October 2, 2022.
During Mr. Johnson’s time in a senior advisor role, Mr. Johnson’s
annual bonus opportunity was reduced by 50%.
** Ms. Gonzalez received a prorated target
bonus payout for fiscal 2022 in connection with her departure from
the Company on May 20, 2022.
Financial, Planet Positive, and Profit Positive Performance
Measures
For fiscal 2022, the portion of the annual cash incentive award
derived from financial performance goals was based on the
achievement of adjusted net revenue and adjusted operating income
measures on a Company consolidated basis. We chose these measures
because we believed they would motivate our executives to drive
Company growth and profitability consistent with our board-approved
annual financial and long-term strategic plans.
To reflect performance above or below targets, adjusted net revenue
and adjusted operating income have sliding scales that would have
provided for annual cash incentive award payouts greater than the
target bonus if results were greater than target (up to a maximum
200% payout) or less than the target bonus if results were lower
than the target (down to a threshold of 25% of target payout, below
which the result would be 0% payout).
Financial Performance Goals
Adjusted Net Revenue
For the NEOs, 40% of the financial performance goals was based on
adjusted net revenue. The payout for each component ranges from 0%
to 200%. The threshold, target, and maximum criteria and actual
results for adjusted net revenue for fiscal 2022 were as
follows:
ADJUSTED NET REVENUE(1)
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Threshold
(Millions U.S.$)
25% Payout
|
Target
(Millions U.S.$)
100% Payout
|
Maximum
(Millions U.S.$)
200% Payout
|
Payout
Percentage
|
|
Consolidated |
|
|
(1)The
performance measures under the Annual Incentive Bonus Plan that
were approved at the beginning of the performance period provided
for certain non-GAAP adjustments so that the performance measures
would more consistently reflect underlying business operations than
the comparable GAAP measures. The fiscal 2022 consolidated net
revenue result excludes foreign currency fluctuations.
Adjusted Operating Income
For the NEOs, 60% of the financial performance goals, was based on
adjusted operating income goals. In fiscal 2022, consolidated
adjusted operating income equaled the total of all business units’
operating income less total unallocated corporate
expenses.
ADJUSTED OPERATING INCOME(1)
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Threshold
(Millions U.S.$)
25% Payout
|
Target
(Millions U.S.$)
100% Payout
|
Maximum
(Millions U.S.$)
200% Payout
|
Payout
Percentage
|
|
Consolidated |
|
|
(1)The
performance measures under the Annual Incentive Bonus Plan that
were approved at the beginning of the performance period provided
for certain non-GAAP adjustments so that the performance measures
would more consistently reflect underlying business operations than
the comparable GAAP measures. The fiscal 2022 consolidated
operating income result excludes foreign currency
fluctuations.
Planet Positive Performance Goals
We believe giving back more than we take from the planet
contributes to our primary objective of maintaining Starbucks
standing as one of the most recognized and respected brands in the
world. Further, we believe sustainability of our raw materials,
especially coffee, is paramount to our business operations. As a
result, our coffee, dairy, and waste goals for fiscal 2022 would
have accounted for 10% of the overall fiscal 2022 Annual Incentive
Bonus Plan payout, with equal weighting amongst such
goals.
The graphic below sets forth additional details regarding our
coffee, dairy, and waste goals, as well as the relative weighting
of each component.
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Planet Positive Sustainability |
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Coffee: Accelerate sustainable on-farm coffee solutions, complete
coffee technology and tool roadmap, launch Nestle
partnership |
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Dairy: Global sustainable dairy standard, verification program and
on-farm program; global standard aligned to by all
regions |
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Waste: All regions establish targets, plans, and capabilities to
enable activation towards global waste strategy in FY23 |
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|
Coffee (33% weighting) |
Dairy (33% weighting) |
Waste (33%) |
|
Payout |
On-Farm Coffee
Solutions |
Coffee Technology and
Tool Roadmap |
Nestle Partnership |
Global Standard |
Pilots Beyond
Baseline of 20 |
Target, plans and
capabilities established |
|
200% |
50% Implementation |
Yr 1 Completed |
Synergies realized |
|
40 farms and/or additional progress toward implementing on farm
changes beyond pilot assessments |
Yr 1 Completed |
|
150% |
35% Implementation |
50% of Yr 1 Completed |
|
|
30 farms and/or additional progress toward implementing on-farm
changes beyond pilot assessment |
50% of Yr 1 Completed |
|
100% |
25% Implementation |
Roadmap Completed |
Launched |
Aligned by all regions |
20 farm pilots globally |
Executed in all regions |
|
90% |
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90% of regions |
|
75% |
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75% of regions |
|
50% |
15% implementation |
|
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Piloted only |
|
50% of regions |
|
25% |
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25% of regions |
|
0% |
0% achievement for category if any area is not started |
Profit Positive Performance Goals
The profit-positive element of our annual cash incentive program
reflected purely quantitative measures. As a result, our total
Company comparable sales, total Company net new stores, and total
Company operating margin goals would have accounted for 10% of the
overall fiscal 2022 Annual Incentive Bonus Plan payout, with equal
weighting of such goals.
The graphic below sets forth additional details regarding our total
Company comparable sales, total Company net new stores, and total
Company operating margin goals, as well as the relative weight of
each component.
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Profit Positive: Targets for Earnings Growth Drivers |
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FY22 Total Company Comp |
10.7% |
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FY22 Total Company Net New Stores |
2.037 |
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FY22 Total Company Operating Margin |
17.0% |
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Payout |
Comp |
Net New Stores |
Op Margin |
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Profit Positive: Earnings Growth Drivers
|
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|
FY22 Total Company Comp (33% weighting)
•Scale
based on business performance revenue scales, adjusted for specific
retail market FY22 Financial Plan Comp Factor (Current year comp
sales adjusted by revenue range of 92% to 104%), allowing for twice
the downside protection.
FY22 Total Company Net New Stores (33% weighting)
•Proposed
range of +/- 20% net new stores
FY22 Total Company Operating Margin
(33% weighting)
•Scale
based on business performance operating income scale range (86% to
107.5%, with assumed 50% flow-through), allowing for twice the
downside protection.
|
|
200% |
> +4ppt |
> +400 stores |
> +80bps |
|
150% |
+2ppt to +4ppt |
+201 to +400 stores |
+40bps to +80bps |
|
110% |
+1ppt to +2ppt |
+101 to +200 stores |
+10bps to +40bps |
|
100% |
-2ppt to +1ppt |
+/-100 stores |
-40bps to +10bps |
|
90% |
-2ppt to -6ppt |
-101 to -200 stores |
-40bps to +120bps |
|
50% |
-6ppt to -8ppt |
-201 to -400 stores |
-120bps to +160bps |
|
0% |
< -8ppt |
< -400 stores |
< -160bps |
Financial, Planet Positive, and Profit Positive Performance
Measures - Results
The table below shows the fiscal 2022 actual achievement results
for each of the financial, planet-positive, and people-positive
components of the Annual Incentive Bonus Plan.
($ in millions)
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Performance Measure |
Weighting |
FY22 Target |
FY22 Result |
FY22 Achievement Factor(2)
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|
Business Performance(1)
|
|
Total Company Consolidated |
52.0% |
|
Corporate Revenue |
40% |
$33,435 |
$32,774 |
85.0% |
|
Corporate OI |
60% |
$5,681 |
$4,945 |
30.0% |
|
Planet Results |
95.8% |
|
Coffee |
33% |
Varies |
100.0% |
|
|
Dairy |
33% |
Varies |
87.5% |
|
|
Waste |
33% |
Varies |
100.0% |
|
|
Profit Results |
60.0% |
|
FY22 Total Company Comp |
33% |
10.7% |
7.6% |
|
|
FY22 Total Company Net New Stores |
33% |
2,037 |
1,878 |
|
|
FY22 Total Company Operating Margin |
33% |
17.0% |
15.1% |
|
(1)The
performance measures under the Annual Incentive Bonus Plan that
were approved at the beginning of the performance period provided
for certain non-GAAP adjustments so that the performance measures
would more consistently reflect underlying business operations than
the comparable GAAP measures. The fiscal 2022 consolidated net
revenue result and consolidated operating income result excludes
foreign currency fluctuations.
As noted in the table above, consolidated Company adjusted net
revenue and adjusted operating income goals were achieved at 95%
and 87% of target, respectively, resulting in weighted achievement
factors of 85% and 30%, respectively, and a weighted achievement
factor of 52% for all consolidated Company financial performance
goals.
Our planet-positive goals related to coffee, dairy, and waste were
achieved with a weighted achievement factor of 95.8% for all
planet-positive goals, and our profit-positive goals related to
total Company comparable sales, net new stores, and operating
margin were achieved at 71%, 92%, and 89% of target, respectively,
resulting in a weighted achievement factor of 60% for all
profit-positive goals.
Individual Performance Factor (“IPF”)
The IPF was weighted at 30% of the total payout under the fiscal
2022 Annual Incentive Bonus Plan and was composed of the elements
set forth in the table below, which vary by
individual.
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Element |
Weight |
Payout
Range |
Goals |
Rationale |
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People
(Common goals shared by all NEOs with performance results varying
by individual)
|
10% |
0-200% |
•BIPOC
Retention Rate*:
>90%
•Mentorship
Program: Serve as a mentor to BIPOC mentees with a meaningful time
commitment demonstrated through monthly group meetings with all
mentees and monthly individual meetings with
each mentee
•Inclusive
Leadership Survey linked to Mentorship Program: Average score
>4.5 on scale of 1-5
•Executive
Champion or Two Other Elective Activities: Serve as an executive
sponsor for a Starbucks Partner Network or demonstrate leadership
in at least two other elective activities that builds inclusive
leadership capability such as designing an experiential activity,
engaging with professional organizations related to an action plan,
or joining experiences that build inclusive leadership
capacity
|
Our people-positive vision is to cultivate an inclusive environment
where everyone belongs. We believe the strength, diversity, and
inclusiveness of our workforce are significant contributors to our
success as a global brand. |
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Living Our Mission and Values/Helping Others Succeed
(Goals vary by individual)
|
20%
|
0-200%
|
Varies by individual, but focused on:
•Creating
a culture of warmth and belonging, where everyone is
welcome.
•Delivering
our very best in all we do, holding ourselves accountable for
results.
•Acting
with courage, challenging the status quo, and finding new ways to
grow our company and each other.
•Being
present, connecting with transparency, dignity, and
respect.
|
Living our Mission and Values enables our partners to deliver an
elevated
Starbucks Experience
to our customers every day.
|
|
Strategic and Operational Goals
(Goals vary by individual)
|
|
|
Varies by individual, tied to the NEO’s primary areas of
responsibility
|
Individual strategic and operational goals directly tied to the
NEO’s primary areas of responsibility are important to driving
sustainable growth and value creation.
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|
* BIPOC refers to Black, Indigenous, and
People of Color. BIPOC retention is measured using a fiscal
year-to-date retention metric and monitors the retention of BIPOC
partners who were under an NEO’s functional hierarchy (reporting up
through an NEO’s organization) at the beginning of the fiscal year
and who remained employed with Starbucks throughout the fiscal
year. A partner does not need to report to an NEO’s organization at
the end of the fiscal year to be counted as retained, so long as
they are still an active Starbucks partner.
With respect to Mr. Johnson’s IPF, his individual strategic and
operational performance goals for fiscal 2022 were set in October
2021 in collaboration with the independent members of the
board.
Fiscal 2022 Individual Performance
While the Committee did not determine IPF payout factors or overall
payouts, at the Committee’s November 2022 meeting, Mr. Schultz
evaluated the performance of the other NEOs and presented the
results of those evaluations to the Committee for consideration as
the Committee believed that such individual performance results
would be useful in determining compensation targets and amounts for
continuing NEOs in fiscal 2023. Such individual performance results
are summarized below. Due to Mr. Johnson’s retirement and the
decision to eliminate Mr. Culver’s position and not pay awards
under the Annual Incentive Bonus Plan, the Compensation Committee
did not assess their individual performance for fiscal
2022.
Rachel Ruggeri
Ms. Ruggeri achieved her Mission and Values and strategic and
operational goals, as she helped to create increased spans for
partners to support development; drove continued leadership
development, with three bench directors promoted to vice president
and one vice president promotion to senior vice president; and
prioritized a team of dedicated resources to transform Financial
Planning, creating efficiency in the process. In addition, she
facilitated partners in all disciplines and across functions to
come together to design, develop, and provide leadership support
and input on one of our most anticipated Investor Days in our
history, which focused on our Reinvention Plan. While the BIPOC
retention rate of Ms. Ruggeri’s reporting hierarchy fell just short
of her ≥ 90% goal with an 89.5% retention rate, Ms. Ruggeri
achieved her other People goals as she served as the executive
sponsor of the Starbucks Partners for Sustainability Network,
received a 4.5 employee feedback score, and successfully mentored
BIPOC partners through monthly mentoring circles.
Michael Conway
Mr. Conway achieved his Mission and Values and strategic and
operational goals, as he executed our first-ever in person
International Forum, with 30+ licensee leaders in attendance;
aligned our International and Channel Development financial plan to
our new service standards, ensuring cross-channel coordination, and
gained increased visibility to Starbucks locations; and fostered
strong results across our digital and financial platforms. In
addition, he bridged our human capital strategies to international
markets and business partners through locally relevant programs,
aligning international regions to enterprise goals, implemented a
Store Experience Assessment across regions to ensure a consistent
Starbucks Experience, and developed funding and organizational
structures in support of Starbucks Digital Services. Mr. Conway’s
BIPOC retention rate of his reporting hierarchy also fell just
short of his ≥ 90% goal with an 89.7% retention rate, however he
achieved his other People goals having successfully mentored BIPOC
partners through monthly mentoring circles, served as executive
sponsor of the Starbucks Black Partner Network, and achieved a 4.67
employee feedback score.
Leadership Stock Plan
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Fiscal 2022
Design |
ANNUAL EPS PERFORMANCE
TARGETS AVERAGED OVER 3 YEARS |
|
3-YR RELATIVE TSR vs S&P 500
(upward or downward modifier of +/-25%) |
|
ACHIEVEMENT OF INCLUSION & DIVERSITY GOALS
(upward or downward modifier of +/-10%) |
|
TIME-BASED RSUs |
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60% PRSUs |
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40% TIME-BASED RSUs |
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Overview
In fiscal 2022, the Committee granted each of our NEOs who was
employed by the Company prior to the beginning of the year
long-term performance-based compensation in the form of PRSUs and
time-based RSUs. PRSUs are earned only to the extent
pre-established performance goals are met. Time-based RSUs vest
annually in equal installments of 25%, commencing on the first
anniversary of the grant date. Both PRSUs and time-based RSUs
include dividend equivalent rights payable at the same time as the
underlying shares are earned.
The values of the long-term incentive awards reflected in the table
below were designed to be competitive to market, recognize the
personal performance of each executive in the fiscal year prior to
the November grant date (as applicable), and to further increase
the percentage of total pay that is variable and at-risk based on
Starbucks financial, shareholder return, and inclusion and
diversity performance. The table below reflects the value of annual
long-term incentive awards approved by the Committee for our NEOs
in each of the last two fiscal years under the Leadership Stock
Plan, other than Mr. Schultz who did not receive any equity grants
in fiscal 2022 or Mr. Narasimhan who did not receive any annual
long-term incentive awards in fiscal 2022 but instead received the
replacement grants described above in “ceo-Elect New Hire Package.”
We determined the number of PRSUs to be delivered by dividing 60%
of the value approved by the Committee by the closing price of our
stock on the grant date. For time-based RSUs, we divided 40% of the
value by the closing price of our stock on the grant date. Because
the value approved by the Committee is approved 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 from the grant date fair
value of equity awards as disclosed in the Summary Compensation
Table.
Value of Annual Long-Term Incentive Compensation
Awards
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Named Executive Officer
|
Granted in
Fiscal 2022
|
Granted in
Fiscal 2021
|
% Change
|
|
Howard Schultz |
— |
|
N/A |
N/A |
|
Rachel Ruggeri |
$4,500,000 |
(1)
|
$875,000 |
414.3 |
% |
|
Michael Conway |
$4,500,000 |
(1)
|
$3,500,000 |
28.6 |
% |
|
Kevin R. Johnson |
$15,500,000 |
|
$14,500,000 |
6.9 |
% |
|
John Culver |
$6,000,000 |
|
$6,000,000 |
0 |
% |
|
Rachel A. Gonzalez |
$3,500,000 |
|
$3,500,000 |
0 |
% |
(1) In November 2021, the Compensation Committee
approved a $3,625,000 increase in the target value of Ms. Ruggeri’s
annual awards under the Leadership Stock Plan to reflect her
elevation to the role of executive vice president and chief
financial officer in January 2021. Mr. Conway also received an
increase of $1,000,000 in the target value of his annual awards
under the Leadership Stock Plan in consideration of his prior
performance, the significance of his role with the Company, and
market considerations.
Fiscal 2022 PRSUs
Consistent with the feedback that we have received from
shareholders and our focus on strategic performance that will drive
longer‑term shareholder returns, the EPS metric is measured over a
three-year period, and at the end of the three years, a relative
TSR modifier can impact payout of PRSUs upward or downward by 25%.
In addition, consistent with our practice beginning with the fiscal
2021 PRSUs, we are holding our senior leaders collectively
accountable for meeting a three-year inclusion and diversity goal
for the fiscal 2022 PRSUs, which focuses on improvement in Black,
Indigenous, and LatinX representation at the manager level and
above by 5% or more by 2024. The representation metric will operate
as a modifier to the payout of the fiscal 2022 PRSU
award.
Annual EPS performance targets are set each year and then averaged
at the conclusion of the three-year performance period to determine
baseline payouts from 0-200%, and three-year relative TSR
performance is measured against the S&P 500. The PRSUs granted
in fiscal 2022 reflect this structure and represent 60% of target
long-term award value for fiscal 2022.
The extent to which PRSUs are earned is based on our achievement of
annual adjusted EPS, relative TSR goals measured over a three-year
period following the grant date, and, with respect to fiscal 2022
PRSUs, achievement of inclusion and diversity goals. Annual EPS
targets are measured and certified by the Compensation Committee
each year. To reflect performance above or below target, adjusted
EPS has a sliding scale that provides for payouts greater than the
target number of PRSUs if performance results are greater than
target (up to a maximum 200% of payout) or less than the target
number if performance results are lower than target (down to a 25%
payout for threshold performance, below which
the payout would be 0%). If the threshold EPS goal under the PRSUs
is not met, then the awards will pay out at zero. Linear
interpolation will be applied to performance that falls between EPS
goals.
To the extent the performance targets are met, earned PRSUs
generally vest 100% on the third anniversary of the grant date,
with a possible adjustment upward or downward of 25% based on
achievement of predetermined relative TSR goals and, with respect
to fiscal 2022 PRSUs, a possible adjustment upward or downward of
up to 10% based on achievement of predetermined inclusion and
diversity goals.
The TSR metric will modify the fiscal 2022 PRSUs (as well our other
outstanding PRSU grants) as follows: (i) upwards to a maximum of
125% if Starbucks TSR ranking is equal to or exceeds the 75th
percentile, and (ii) downwards to a threshold of 75% if the
Starbucks TSR ranking is equal to or below the 25th percentile,
with linear interpolation to be applied if Starbucks TSR ranking is
between the 25th and 75th percentile and above and below the 50th
percentile.
RELATIVE TSR MODIFIER
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≤ 25th Percentile
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50th Percentile
|
≥ 75th Percentile
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75% |
100% |
125% |
The representation metric will modify the fiscal 2022 PRSUs as
follows: (i) upwards to a maximum of 110% if the inclusion and
diversity goal of 5% representation growth is met or exceeded; (ii)
reducing the number of PRSUs earned by 5% if the inclusion and
diversity goal is not achieved but growth is positive and
below 5%; and (iii) reducing the number of PRSUs earned by 10% if
representation falls over the three-year
performance period.
REPRESENTATION MODIFIER(1)
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<0%
|
≥0% and <5%
|
≥5%
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|
90% |
95% |
110% |
(1)For
improvement of representation of Black, Indigenous, and Latinx
partners at the manager level and above.
The threshold, target, and maximum number of PRSUs that could have
been earned by the NEOs are disclosed in the Fiscal 2022 Grants of
Plan-Based Awards Table on page
65.
PRSU EPS Targets and Performance Through the End of Fiscal Year
2022
As noted in the table below, the EPS goal for fiscal year 2022 and
actual EPS results apply to the third year of the three-year
performance period for the PRSUs awarded to our NEOs in November
2019, the second year of the three-year performance period for the
PRSUs awarded to our NEOs in November 2020, and the first year of
the three-year performance period for the PRSUs awarded to our NEOs
in November 2021.
The table below sets forth the EPS goals for each of the last three
fiscal years and the application of the TSR modifier to the payout
of PRSUs awarded to our NEOs in November 2019.
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FY20 |
FY21 |
FY22 |
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PRSU Granted 11/13/2019 |
|
Min |
Target |
Max |
Min |
Target |
Max |
Min |
Target |
Max |
|
November 2019 PRSU Payout |
|
EPS: Goals by Year |
|
$2.891 |
$3.043 |
$3.196 |
$2.205 |
$2.594 |
$2.801 |
$2.906 |
$3.419 |
$3.692 |
|
Avg EPS Payout Result |
81.67% |
|
EPS Result |
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|
$1.154(1)
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$3.002(1)
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$3.010(1)
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|
3-yr TSR Modifier |
75.00% |
|
Result as a % of Target |
|
|
38% |
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|
116% |
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|
88% |
|
|
Nov 2019 PRSU Payout |
61.25% |
|
Payout Result |
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0% |
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200% |
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45% |
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TSR Result
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FY21 |
FY22 |
FY23 |
|
PRSU Granted 11/11/2020 |
|
Min |
Target |
Max |
Min |
Target |
Max |
Min |
Target |
Max |
|
EPS: Goals by Year |
|
$2.205 |
$2.594 |
$2.801 |