Starbucks CEO Kevin Johnson will speak at the company’s annual shareholders meeting at WAMU Theater, on March 20, 2019 in Seattle, Washington.
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Starbucks shareholders rejected the coffee chain’s action compensation proposal, in a rare warning from the S&P 500 company.
The resolution is non-binding and may not influence the board’s decision. However, the Wall Street Journal, which first reported on the news, reported that only 10 S&P 500 shareholders have denied annual pay-as-you-go resolutions in the past year, based on data from ISS Corporate Solutions.
The proposal included a $ 1.86 million payment to CEO Kevin Johnson for 2020 fiscal performance while the company spent the coronavirus pandemic and $ 50 million in maintenance payments if it holds around through fiscal 2022.
“The board unanimously endorsed the performance-based retention awards presented to our executives at the end of 2019,” board member and CEO Ulta Mary Dillon said in a statement to CNBC. This award – earned through a company ‘s outstanding performance over time – is consistent with our commitment to shareholder value creation and a’ pay for performance ‘philosophy. “
In 2020, 84% of Starbucks shareholders voted for the payout resolution.
Ahead of the shareholder meeting, Institutional Shareholder Services, which runs ISS Corporate Solutions, and Glass Lewis recommended that shareholders reject the performance incentive scheme from October 2019 through September 2022 .The two companies did not agree with Starbucks’ philosophy for one-time cash bonuses awarded to CEO Kevin Johnson and former COO Roz Brewer. Brewer took away her cash prize when she left the company in February to become CEO of Walgreens Boots Alliance.
ISS wrote that they were concerned about the frequency of one-time prizes and that Starbucks had not provided an appropriate explanation as to why the long-term prize was distributed in cash.
Starbucks said in a filing urging shareholders to agree to the resolution that the final payment for the cash prize will not be known until fiscal 2022. The company also noted that the market value of Starbucks has gone up. up $ 39 billion since Johnson became chief executive in 2017.
Shares of Starbucks were down about 1.5% in trading on Thursday morning. The stock has grown 92% over the past year, giving it a market value of $ 128 billion.