Sends letter to Starbucks shareholders and
mails definitive proxy materials
SOC’s nominees can bring fresh perspectives and
the right expertise to help improve oversight and safeguard the
best interests of Starbucks shareholders, customers and
employees
Visit www.BrewABetterStarbucks.com for more
information
The Strategic Organizing Center (the “SOC,” “we” or “us”), a
shareholder of Starbucks Corporation (Nasdaq: SBUX) (“Starbucks” or
the “Company”), today sent a letter to its fellow shareholders
outlining why enhanced oversight and proven human capital
management expertise is needed on Starbucks’ Board of Directors
(the “Board”). The SOC also filed definitive proxy materials in
connection with Starbucks’ Annual Meeting of Shareholders (the
“Annual Meeting”), which is currently scheduled for March 13,
2024.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20240125418766/en/
For more information, shareholders can visit:
www.BrewABetterStarbucks.com.
The full text of the letter is included below:
Dear Fellow Starbucks Shareholders,
Starbucks is an iconic company. For years, it was known not only
for great coffee and service, but also for bringing an enlightened
approach to how it treated its workers. Sadly, Starbucks has lost
its way.
As a shareholder of Starbucks and as an ally to Starbucks
employees – many of whom are also shareholders through the
Company’s share ownership program – the Strategic Organizing Center
(the “SOC”) is seeking to bring urgently needed change to
Starbucks’ boardroom. We believe the current Board has tolerated an
unacceptable level of reputational risk, a counterproductive
approach to labor issues and a flawed allocation of resources. For
these reasons – and to protect shareholder value – we have
nominated three director candidates (the “SOC Nominees”), who are
ideally suited to help repair the relationship with the Company’s
workers and regulators while safeguarding the best interests of all
Starbucks’ stakeholders.
You can support this change and be part of ensuring Starbucks
returns to the right path for the future. We urge you to use the
enclosed BLUE proxy card to
vote “FOR” each of the SOC Nominees today. You can also vote
for the SOC Nominees on the Company’s White proxy card. We strongly
believe that voting for the SOC Nominees will help ensure the
status quo does not continue, and that shareholder value does not
suffer in the same way the Company’s reputation has.
Starbucks is a company in crisis
For more than two years, Starbucks has gone to historic lengths
to counter its employees’ attempts to have their voices heard by
unionizing. These actions have not only cost untold millions in
legal fees and other expenditures, but the constant media,
policymaker and regulatory scrutiny in response to the Company’s
actions has also caused significant damage to the value of
Starbucks’ previously enviable brand. Consider the facts:
- Since November 2021, the National Labor Relations Board
(“NLRB”) has issued over 130
complaints against Starbucks, including approximately
420 charges of violating federal labor
law – all under the watch of the incumbent Board.
- During this period there have been 1,100
allegations of violating federal labor laws, including
terminating workers for union activity, refusing to bargain in good
faith and retaliatory store closures.1
- A report recently commissioned by Starbucks in response to a
shareholder proposal that won majority
support at last year’s annual meeting found that the Company
addressed initial employee organizing campaigns “without clear governance,” and that those leading
the response to unionization efforts may have prioritized
operational change over respecting the “compliance framework created by the presence of” a
union.2
- The Company recently experienced significant stock price declines following
weakening sales, with the ongoing labor
issues, related litigation and staff walkouts also cited by
outside observers as negative factors for the share price.3
- Starbucks currently has 370+ unionized
stores with more than 9,000 union
partners and counting. This is not an
issue that is going away.
Starbucks has claimed that it recognizes its employees as its
“most important asset.”4 Unfortunately, its recent actions do not
back this up.
We believe that if the Company does not take meaningful steps to
address the shortcomings of its human capital management strategy,
shareholder value could suffer as a result. For instance, under the
Company’s “Triple Shot Reinvention Strategy,” it aims to open more
than 17,000 new stores by 2030. If the Company continues to try to
silence its workforce, we believe this will only continue to divert
resources away from Starbucks’ ability to realize its growth
objectives.
The bottom line is this: until Starbucks’ Board deals with the
crisis that has formed under the current directors’ watch, the
Company will not be able to fulfill its vast potential.
The current Board’s efforts are too little, too late
Since the SOC signaled to Starbucks our intention to nominate
director candidates, the Company has issued numerous announcements
related to its purported commitment to improving relations with its
employees.5 These reactive steps have included the formation of a
new Board committee, a public letter to Workers United seeking to
reengage in negotiations and multiple letters to shareholders.
While the optimistic view would be to see some of these steps as
encouraging, the reality is that we are only able to truly judge
their significance based on what the
incumbent Board does, not what it says.
Case in point: Starbucks recently announced its decision to
unilaterally appoint three new directors and expand the size of the
Board. While the Board could have taken this opportunity to
demonstrate its stated “unwavering commitment to elevate the
partner (employee) experience and offer partners a bridge to a
better future,” none of the new Board members
appear to have any notable labor law or labor management relations
expertise. These appointments reflect, in our view, a
failure by the Board to place due importance on this key aspect of
Starbucks’ business and, moreover, a troubling lack of
follow-through with respect to the Company’s commitments to its
employees.
Further, the NLRB’s “largest and most focused” action against
the Company yet was just brought on January 9, encompassing nearly
400 stores and alleging that Starbucks is “failing and refusing to
bargain collectively with the union.”6 While the Board may want
stakeholders to believe it has seen the light, what we see is an
ongoing pattern of disenfranchising employees.
We believe the Company’s level of response following the launch
of our campaign represents a clear acknowledgment that the Board’s
oversight of the Company’s human capital strategy has been severely
misguided and that even Starbucks recognizes that change is needed.
However, Starbucks seems to believe it can drive this change purely
on its own. The Board’s track record when it
comes to these issues fails to make that case.
The SOC Nominees have the unique expertise and independent
perspectives Starbucks needs
Our nominees bring significant leadership experience from large,
national organizations from within the business, government and
non-profit sectors; service on various public and private boards of
directors; and expertise in key areas of labor law, policy and
regulation. If elected, we expect the SOC Nominees to work
constructively and effectively to recalibrate the Company’s
approach to its labor issues, rehabilitate its reputation and
maximize shareholder value.
The SOC Nominees are:
- Maria Echaveste, a former senior White House official,
senior Department of Labor appointee and corporate attorney with
significant international relations and public company board
experience.
- Hon. Joshua Gotbaum, who has been a director of both
public and private companies with decades of experience in
corporate governance and change, as well as significant public
policy and government experience.
- Wilma Liebman, who possesses over 40 years of experience
in labor management, employee relations, wage negotiations, public
policy and law – including having served as the Chair of the NLRB
under President Barack Obama.
For their full biographies, see here.
We recognize that the incumbent directors on Starbucks’ Board
are highly accomplished in their own areas of the business world.
It would have been our preference that following the interview
process for our nominees, the Company would have looked to add at
least some of the SOC Nominees to the Board – rather than
unilaterally adding three new directors, given that the SOC
Nominees possess demonstrated
labor law and labor relations
management expertise, which is sorely needed on the
Board.
As a result of the Board’s responses to the ongoing labor
crisis, we are recommending shareholders “WITHHOLD” on the
following directors: Ritch Allison (Compensation Committee chair),
Andy Campion (Audit Committee chair) and Jørgen Vig Knudstorp
(Nominating/Governance Committee chair).
We have chosen to oppose these individuals because each of them
holds a position of leadership on the Board, as defined by chairing
at least one of the Board’s committees. As a result, we believe
they bear primary responsibility for the complacency and lack of
oversight that has led Starbucks to the current crisis it finds
itself in.
*****
The SOC believes that our nominees are the right choice to help
address the pressing issues Starbucks is facing as a result of the
current Board’s failure to oversee and instill an effective human
capital management strategy. We look forward to communicating more
with our fellow shareholders in the near future.
Sincerely, The Strategic Organizing Center
*****
DISCLAIMER
This material does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities described
herein in any state to any person. In addition, the discussions and
opinions in this press release and the material contained herein
are for general information only, and are not intended to provide
investment advice. All statements contained in this press release
that are not clearly historical in nature or that necessarily
depend on future events are “forward-looking statements,” which are
not guarantees of future performance or results, and the words
“will,” “anticipate,” “believe,” “expect,” “potential,” “could,”
“opportunity,” “estimate,” and similar expressions are generally
intended to identify forward-looking statements. Any projected
results and/or statements contained in this press release that are
not historical facts are based on current expectations, speak only
as of the date of this press release and involve risks that may
cause the actual results to be materially different. Certain
information included in this press release is based on data
obtained from sources considered to be reliable. No representation
is made with respect to the accuracy or completeness of such data,
and any analyses provided to assist the recipient of this press
release in evaluating the matters described herein may be based on
subjective assessments and assumptions and may use one among
alternative methodologies that produce different results.
Accordingly, any analyses should also not be viewed as factual and
also should not be relied upon as an accurate prediction of future
results. Any figures are unaudited estimates and subject to
revision without notice. The SOC disclaims any obligation to update
the information herein and reserve the right to change any of their
opinions expressed herein at any time as they deem appropriate.
Past performance is not indicative of future results.
1 Students Leverage Their University Affiliation to Gain Ground
in the Fight Against Starbucks’s Union-Busting Efforts, American
Bar Association (Oct. 31, 2023)
https://www.americanbar.org/groups/crsj/publications/human_rights_magazine_home/labor-and-employment-rights/students-fight-starbucks-union-busting/.
2 The Company’s “Abridged Report to Starbucks Board of Directors
Concerning Starbucks’ adherence to freedom of association and
collective bargaining commitments in its Global Human Rights
Statement” (see full report here). 3 Why Is Starbucks on the
Decline, and Can the Situation Be Turned Around?, RetailWire (Dec.
6, 2023)
https://retailwire.com/discussion/why-is-starbucks-on-the-decline-and-can-the-situation-be-turned-around/.
4 A People Company Serving Coffee, Starbucks,
https://archive.starbucks.com/collection/a-people-company-serving-coffee.
5 Relevant Company announcements and statements include: (i) press
release, dated November 20, 2023, “Starbucks Announces Intention to
Establish New Environmental, Partner and Community Impact Board
Committee Focused on Oversight of Stakeholder Promises”; (ii)
letter, dated December 8, 2023, “Message from Sara: Our Outreach to
Resume Contract Bargaining with Workers United”; (iii) letter,
dated December 11, 2023,“Letter from Starbucks ceo: Affirming what
we stand for”; and (iv) statement, dated December 13, 2023,
“Starbucks Reaffirms Its Commitment to the Principles of Freedom of
Association and the Right to Collective Bargaining.” 6 Starbucks
Hit With Sweeping Complaint for Refusal to Bargain, Bloomberg Law
(Jan. 9, 2024),
https://news.bloomberglaw.com/daily-labor-report/starbucks-hit-with-nationwide-complaint-for-refusal-to-bargain.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240125418766/en/
Investor Contact Okapi Partners Bruce Goldfarb / Pat
McHugh, (212) 297-0720 info@okapipartners.com Media Contacts
Longacre Square Partners soc-sbux@longacresquare.com
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