London Daily

Focus on the big picture.
Saturday, Jul 26, 2025

Starbucks shareholders reject CEO pay proposal in rare move

Starbucks shareholders reject CEO pay proposal in rare move

Starbucks shareholders voted against the company's CEO pay proposal in a rare move that may indicate some shareholders think the chief executive is overpaid.
The news was first reported by the Wall Street Journal following Starbucks' annual shareholder meeting. Starbucks confirmed the results of the vote to CNN Business.

Starbucks CEO Kevin Johnson earned a $1.86 million bonus in fiscal year 2020 in addition to a larger retention award, designed to keep Johnson in the position through fiscal year 2022, according to Starbucks' proxy statement.

"The board unanimously supported the performance-based retention rewards granted to our executives in late 2019," said Starbucks board member and Ulta Beauty CEO Mary Dillon in a statement responding to the vote.

Companies seek non-binding approval on executive compensation from shareholders through so-called "say-on-pay" proposals outlined in proxy statements each year. Because the proposal is not binding, companies don't need to make any changes based on the outcome of the vote. But companies are legally required to allow investors to vote on compensation.

Generally, "it is pretty rare for the 'say-on-pay' proposals not to be approved," said Kai Liekefett, a partner at Sidley Austin law firm who specializes in executive pay and corporate governance.

When investors signify they think executives are overpaid, it may signal underlying shareholder unrest, he said. Shareholders typically "don't mind executives making a lot of money, as long as the performance is outstanding," Liekefett said.

This time, shareholders were likely swayed by the guidance of Institutional Shareholder Services and Glass Lewis, two influential proxy advisory firms that provide guidance on how investors should vote on proposals to ensure the best possible returns, and often effectively dictate how investors vote.

ISS recommended that shareholders vote against the proposal, arguing that the rationale justifying the value of Johnson's compensation package is "insufficient considering the exceedingly large target and maximum opportunities under the award," and given that Johnson earned a special performance award the previous year. Glass Lewis, also recommended shareholders vote against the proposal, saying that Starbucks "paid [its CEO] moderately more than its peers, but performed worse."

ISS has recommended shareholders vote against compensation packages for approximately 12% of companies each year for the past decade, according to an analysis published in March by Compensation Advisory Partners, a consulting firm specializing in executive and director compensation. The report found that in about 96% of cases when most shareholders voted against an executive pay proposal, the ISS had advised to vote in that manner.

Starbucks said in response to the guidance that "we respectfully disagree," with the recommendations, saying that the award reflects the value Johnson has brought to the company and is designed to keep him in the role through at least fiscal year 2022, while the company executes its rapid growth agenda. The company has recently lost two high-ranking officials: former COO Rosalind Brewer, who just took the helm at Walgreens, and Patrick Grismer who recently stepped down as chief financial officer.

Shareholders ultimately decided to go with the recommendation issued by the advisories and voted down Johnson's proposed compensation package.

Though Starbucks is not required to make any changes, it should take shareholder sentiment into account as it considers how to structure executive pay moving forward, said Liekefett. Investors may feel "alienated if a board does not appear to be responsive ... to the criticism," he said. That could ultimately lead to advisories voting against director nominations, or invite an activist shareholder to take a stake in the company.

Starbucks intends to better understand what happened, Dillon noted.

"Our board and management team will continue to engage with investors in the months ahead to understand their perspectives as part of our ongoing evaluation of our executive compensation programs," she said.
Newsletter

Related Articles

0:00
0:00
Close
Deputy attorney general's second day of meeting with Ghislaine Maxwell has concluded
Controversial March in Switzerland Features Men Dressed in Nazi Uniforms
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
Thai Civilian Death Toll Rises to 12 in Cambodian Cross-Border Attacks
TSUNAMI: Trump Just Crossed the Rubicon—And There’s No Turning Back
Over 120 Criminal Cases Dismissed in Boston Amid Public Defender Shortage
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
Trump Announces $550 Billion Japanese Investment and New Trade Agreements with Indonesia and the Philippines
US Treasury Secretary Calls for Institutional Review of Federal Reserve Amid AI‑Driven Growth Expectations
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Severe Flooding in South Korea Claims Lives Amid Ongoing Rescue Operations
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
CEO Resigns Amid Controversy Over Relationship with HR Executive
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
US Revokes Visas of Brazilian Corrupted Judges Amid Fake Bolsonaro Investigation
U.S. Congress Approves Rescissions Act Cutting Federal Funding for NPR and PBS
North Korea Restricts Foreign Tourist Access to New Seaside Resort
Brazil's Supreme Court Imposes Radical Restrictions on Former President Bolsonaro
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Judge Criticizes DOJ Over Secrecy in Dropping Charges Against Gang Leader
Apple Closes $16.5 Billion Tax Dispute With Ireland
Von der Leyen Faces Setback Over €2 Trillion EU Budget Proposal
UK and Germany Collaborate on Global Military Equipment Sales
Trump Plans Over 10% Tariffs on African and Caribbean Nations
Flying Taxi CEO Reclaims Billionaire Status After Stock Surge
Epstein Files Deepen Republican Party Divide
Zuckerberg Faces $8 Billion Privacy Lawsuit From Meta Shareholders
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
SpaceX Nears $400 Billion Valuation With New Share Sale
Microsoft, US Lab to Use AI for Faster Nuclear Plant Licensing
Trump Walks Back Talk of Firing Fed Chair Jerome Powell
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Irish Tech Worker Detained 100 days by US Authorities for Overstaying Visa
Dimon Warns on Fed Independence as Trump Administration Eyes Powell’s Succession
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Jeff Bezos Considers Purchasing Condé Nast as a Wedding Gift
Ghislaine Maxwell Says She’s Ready to Testify Before Congress on Epstein’s Criminal Empire
Bal des Pompiers: A Celebration of Community and Firefighter Culture in France
FBI Chief Kash Patel Denies Resignation Speculations Amid Epstein List Controversy
Air India Pilot’s Mental Health Records Under Scrutiny
×