Proxy Advisor Firms Side with Starbucks
Two prominent proxy advisor firms, Glass Lewis and Institutional Shareholder Services, have recently released reports urging shareholders to vote for Starbucks’ 11 director nominees at the upcoming cafe chain’s March 13 meeting. This decision came as a win for the company ahead of its union-led proxy vote later this month.
Background on Strategic Organizing Center’s Nominees
The Strategic Organizing Center (SOC), a coalition of unions representing over two million members, including Starbucks Workers United, nominated three candidates last November in an effort to refresh Starbucks’ board. The SOC argued that this refresh was necessary to better manage the relationship with the union, which was impacting the company’s financials and share price.
Analysis of Starbucks’ Stock
Despite Starbucks’ stock being down 1.8% to $93.17 on Friday, both ISS and Glass Lewis highlighted in their reports that the company has made efforts to mend its initial mishandling of unionization efforts in 2021. These efforts include implementing proper controls to respond to union demands and starting discussions on a collective contract with the union.
Positive Steps Forward
Starbucks’ agreement to provide pay raises to workers at unionized cafes starting in May 2022 was seen as a significant milestone by the union. Both proxy advisor firms commended Starbucks for its humility, responsiveness, and determination to improve in addressing the issues raised by the SOC and overall employee satisfaction.
Conclusion
In conclusion, the reports from ISS and Glass Lewis are in favor of Starbucks’ current board nominees in light of the company’s efforts to strengthen its relationship with the union and address employee concerns. The upcoming proxy vote on March 13 will be a key moment for shareholders to show their support for Starbucks’ direction moving forward.
ISS Review on Starbucks Performance
Upon examining Starbucks’ performance, ISS pointed out that the company has successfully navigated through various macroeconomic challenges, indicating that these challenges have potentially impacted its performance more significantly than the labor disputes.
Influence of ISS and Glass Lewis
ISS and Glass Lewis have considerable influence on how institutional shareholders cast their votes. Last year, both firms recommended shareholders to vote in favor of a proposal asking for an independent assessment of worker rights in response to union pressure. This proposal was approved, leading to the release of a report by the board in December. The report revealed that while Starbucks didn’t have an “antiunion playbook,” it was ill-prepared for the unionization movement, resulting in adverse effects on the company.
Stakeholder Perspective
Following ISS’s statement, the SOC acknowledged the recent progress as a significant step towards resolving the longstanding conflict between the union and Starbucks. However, the SOC emphasized that the board should bear responsibility for supporting a response to unionization that had a negative impact on shareholder value.
Continued Oversight
“The actions taken by the Company have been reactionary,” stated the SOC on Thursday evening. Therefore, the SOC believes that independent oversight should be added to Starbucks’ board to ensure that the company fulfills its commitments.
Response from Starbucks
Starbucks expressed satisfaction with the recognition of its board’s strength and the support for the re-election of all directors by ISS and Glass Lewis. The company reiterated its commitment to valuing its partners (employees) as essential contributors to its success and business operations.
