Starbucks CEO Kevin Johnson speaks at the company’s annual shareholders’ meeting at the WAMU Theater on March 20, 2019, in Seattle, Washington.
Stephen Brashear | Getty Images
Starbucks shareholders rejected the proposal for executive compensation of the coffee chain, in a rare reprimand of an S&P 500 company.
The resolution is not binding and is unlikely to have an impact on the council’s decision. However, the Wall Street Journal, which first reported the news, said only 10 S&P 500 companies had had their shareholders reject their annual payment resolutions in the past year, based on data from ISS Corporate Solutions.
The proposal included a $ 1.86 million payout for CEO Kevin Johnson for performance in fiscal year 2020, while the company endured the coronavirus pandemic and $ 50 million in pay, if maintained until 2022. .
“The Board unanimously upheld the performance-based retention awards given to our directors at the end of 2019,” said Mary Dillon, a board member and CEO of Ulta, in a statement to CNBC. “This award – which is achieved through the company’s outstanding performance over a period of time – is in line with our commitment to creating shareholder value and the ‘pay for performance’ philosophy.”
In 2020, 84% of Starbucks shareholders voted in favor of the payment resolution.
Prior to the shareholders ‘meeting, Institutional Shareholder Services, which runs ISS Corporate Solutions, and Glass Lewis advised shareholders to reject the performance incentive scheme from October 2019 to September 2022. Both companies disagreed with Starbucks’ reason for single cash bonuses. awarded to CEO Kevin Johnson and former COO Roz Brewer. Brewer lost his cash prize when he left the company in February to serve as CEO of the Walgreens Boots Alliance.
The ISS wrote that it was concerned about the frequency of single awards and that Starbucks did not provide an adequate explanation for why the long-term award was distributed in cash.
Starbucks said in a filing that it asked shareholders to approve the resolution that the final payment for the cash grant will not be known until fiscal year 2022. The company also noted that Starbucks’ market value has increased by $ 39 billion. when Johnson became CEO in 2017.
Starbucks shares fell about 1.5% in morning trading on Thursday. The stock has grown 92% in the last year, giving it a market value of $ 128 billion.