Just a few weeks ago, I highlighted Starbucks’ commendably specific linking of executives’ incentive compensation to Diversity, Equity, and Inclusion (DE&I) Goals and its disclosure of the same. And now, last week a majority of Starbucks’ shareholders voted “Against” its shareholder say on pay resolution. As described in a Form 8-K filed two days after its 2021 annual shareholders meeting, more than 421 million shares were voted Against the resolution while only 381 million shares were voted in favor.
ISS and Glass Lewis each had recommended a vote “Against” because they did not believe there was adequate rationale for the one-time long-term performance-based cash award Starbucks made in December 2019 to each of its CEO and then-COO (who forfeited the cash award in connection with her departure from the company in February 2021). Starbucks had filed a Supplement to its Proxy Statement one week before the meeting, explaining that the award was for the CEO’s “exceptional” performance over his entire four-year tenure, and pointing out the award had been described in the preceding year’s proxy statement (when 84% of votes were cast in favor of the company’s say-on-pay resolution). Apparently, shareholders were unmoved.
I have no inside information on precisely why shareholders voted against the SSOP proposal in such large numbers and I was tempted to label this “no good deed goes unpunished.” However, my best guess is 2021 is not a good year to report large, unplanned payouts following a year in which so many people lost so much due to COVID.
-Mike Melbinger, CompensationStandards.com March 22, 2021
