Starbucks Corp. shareholders rejected the coffee company’s executive compensation proposal, a rare rebuke to a major U.S. company.
The plan voted down by Starbucks shareholders Wednesday includes millions of dollars in bonus and retention pay for Starbucks’ chief executive, though the resolution was nonbinding and may not affect executives’ compensation. Only 10 S&P 500 companies have had shareholders reject annual say-on-pay resolutions in the last year, according to ISS Corp orate Solutions, an executive compensation consulting firm run by investment adviser Institutional Shareholder Services.
The compensation proposal for the company’s executives included a one-time bonus award to CEO Kevin Johnson of $1.86 million for its 2020 fiscal year. Starbucks’s board also agreed in late 2019 to provide Mr. Johnson with a three-year retention bonus of up to $50 million if he helped to boost the company’s stock to established targets and remained at Starbucks through the end of its 2022 fiscal year.
The company said in a filing to shareholders that Mr. Johnson had helped Starbucks’s market value grow by more than $39 billion since becoming CEO in 2017 and had helped deliver stronger results compared with most peers.
ISS and fellow proxy-advisory firm Glass Lewis had advised shareholders to vote against the pay resolutions. ISS wrote that Starbucks hadn’t adequately explained why the long-term award was made in cash and said that the frequency of the one-time awards was concerning. Starbucks’s rationale for the performance-cash pay wasn’t adequate given the size of the potential $50 million bonus, ISS said.
