Starbucks CEO Kevin Johnson speaks during 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 proposed compensation for executives of the coffee chain, in a rare warning from an S&P 500 company.
The resolution is not binding and is unlikely to affect the board’s decision. However, the Wall Street Journal, which released the news for the first time, said that only 10 S&P 500 companies had shareholders rejecting annual payment voting resolutions last year, based on data from ISS Corporate Solutions.
The proposal included a payment of $ 1.86 million to CEO Kevin Johnson for fiscal performance in 2020, while the company resisted the coronavirus pandemic and $ 50 million in withholding payment if it remained through fiscal year 2022.
“The board unanimously supported the performance-based retention rewards granted to our executives at the end of 2019,” said Ulta board member and CEO Mary Dillon in a statement to CNBC. “This award – which is obtained through the company’s exceptional performance over a period of time – is consistent with our commitment to creating shareholder value and the ‘pay for performance’ philosophy.”
In 2020, 84% of Starbucks shareholders voted in favor of wage resolution.
Prior to the shareholders ‘meeting, Institutional Shareholder Services, which manages ISS Corporate Solutions, and Glass Lewis recommended that shareholders reject the performance incentive scheme from October 2019 to September 2022. Both companies disagreed with Starbucks’ justification for unique cash bonuses given 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.
ISS wrote that it was concerned about the frequency of one-time awards and that Starbucks had not provided an adequate explanation as to why the long-term award was distributed in cash.
Starbucks said in a document asking shareholders to pass the resolution that the final payment for the cash premium will not be known until fiscal 2022. The company also noted that Starbucks’ market value has increased by $ 39 billion since Johnson became chief executive in 2017.
Starbucks shares fell about 1.5% in Thursday morning trading. The shares rose 92% in the last year, giving them a market value of $ 128 billion.