Starbucks CEO Kevin Johnson speaks during the company’s annual shareholder meeting at the WAMU Theater on March 20, 2019 in Seattle, Washington.
Stephen Brashear | Getty Images
Starbucks shareholders rejected the coffee chain’s executive compensation proposal, with a rare reprimand from an S&P 500 company.
The resolution is not binding and will likely not affect the board’s decision. However, the Wall Street Journal, which first reported the news, said only 10 S&P 500 companies have had shareholders rejecting annual payment resolutions payable in the past year, based on data from ISS Corporate Solutions.
The proposal included a $ 1.86 million payment to CEO Kevin Johnson for performance in fiscal 2020, as the company overcame the coronavirus pandemic and $ 50 million in retention if held for the prosecutor 2022.
“The board unanimously supported the performance-based withholding rewards given to our executives in late 2019,” Mary Dillon, board member and CEO of Ulta, said in a statement to CNBC. “This award, which is obtained through exceptional company performance over a period of time, is consistent with our commitment to shareholder value creation and the‘ pay-for-performance ’philosophy.
In 2020, 84% of Starbucks shareholders voted in favor of the wage resolution.
Prior to the shareholders ’meeting, Institutional Shareholder Services, which manages ISS Corporate Solutions, and Glass Lewis, advised shareholders to reject the performance incentive plan from October 2019 to September 2022. Both companies they disagreed with Starbucks’ justification for the one-time bonuses being given CEO Kevin Johnson and former chief operating officer Roz Brewer. Brewer lost his cash prize when he left the company in February to serve as CEO of Walgreens Boots Alliance.
ISS wrote that it was concerned about the frequency of one-time awards and that Starbucks had not provided a proper explanation of why the long-term award was distributed in cash.
Starbucks said in a filing that it asked shareholders to pass the resolution that the final payment for the cash award will not be known until fiscal year 2022. The company also noted that Starbucks market value has increased by $ 39 billion since Johnson became chief executive in 2017.
Shares of Starbucks fell about 1.5% in Thursday morning trading. Shares have risen 92% over the past year, giving it a market value of $ 128 billion.