UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed | by the Registrant ☒ |
Filed | by a Party other than the Registrant ☐ |
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☐ | Preliminary Proxy Statement |
☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
☒ | Definitive Proxy Statement |
☐ | Definitive Additional Materials |
☐ | Soliciting Material Pursuant to §240.14a-12 |
STARBUCKS CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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☐ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | |||
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Letter to Our
Shareholders
Dear Shareholders:
You are cordially invited to attend the Starbucks Corporation 2018 Annual Meeting of Shareholders on March 21, 2018 at 10:00 a.m. (Pacific Time) (the Annual Meeting or the Annual Meeting of Shareholders). The meeting will be held at Marion Oliver McCaw Hall at the Seattle Center, located at 321 Mercer Street, in Seattle, Washington. More information appears on the back cover of this proxy statement.
As in prior years, we have elected to deliver our proxy materials to the majority of our shareholders over the Internet. This delivery process allows us to provide shareholders with the information they need, while at the same time conserving natural resources and lowering the cost of delivery. On January 26, 2018, we mailed to our shareholders a Notice of Internet Availability of Proxy Materials (the Notice) containing instructions on how to: |
| Access our proxy statement for our Annual Meeting and our fiscal 2017 Annual Report on Form 10-K for the fiscal year ended October 1, 2017, as filed with the Securities and Exchange Commission (the Annual Report); |
| Vote by Internet, by telephone or by mail; and |
| Receive a paper copy of the proxy materials by mail. |
On January 26, 2018, we also first mailed this proxy statement and the enclosed proxy card to certain shareholders.
The matters to be acted upon are described in the notice of Annual Meeting of Shareholders and proxy statement. At the Annual Meeting of Shareholders, we will also report on our operations and respond to questions from shareholders.
Proof of share ownership will be required to enter the Starbucks Annual Meeting. In addition, each attendee must present a government-issued photo identification (such as a drivers license or passport). See the back cover of this proxy statementADMISSION REQUIREMENTS AND TRANSPORTATION INFORMATION FOR THE STARBUCKS CORPORATION 2018 ANNUAL MEETING OF SHAREHOLDERS for details.
This year we are implementing a new seating process on the day of the event. Upon verification of proof of share ownership and identification, admitted attendees will be provided with a seat assignment. One seat will be given per name on the proof of share ownership. Attendees that wish to be seated together must be admitted at the same time. (Note: assigned seats may not be obtained before the day of the event.) As always, we anticipate a large number of attendees at the Annual Meeting of Shareholders. Seating will be on a first-come, first-served basis until venue capacity has been reached. We cannot guarantee seating for all shareholders.
As we have done before, we will also provide a live webcast of the meeting from the Investor Relations website at http://investor.starbucks.com. Presentations and a replay of the webcast will be available on the Investor Relations site on the Current and Past Events page under Events & Presentations. We hope this provides those unable to attend the meeting the opportunity to hear Starbucks leaders discuss our operating results and plans for the future. Our Investor Relations site is frequently updated, and includes additional information we believe our investors find useful.
Please also note that Starbucks is committed to providing an accessible experience. The event will be interpreted in American Sign Language and real-time captioning will be provided in the auditorium. Complimentary assistive listening devices and wheelchairs will be available. McCaw Hall is an accessible building with wheelchair seating, disability parking and accessible restrooms. If you have a disability accommodation request, please email us at investorrelations@starbucks.com or call us at (206) 318-7118 by March 2, 2018. Alternate formats of this proxy statement, the Annual Report and Letter to Shareholders are available at http://investor.starbucks.com or upon request by contacting investorrelations@starbucks.com.
YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the Annual Meeting, we urge you to please cast your vote as soon as possible by Internet, telephone or mail. We look forward to seeing you at the meeting.
Warm Regards,
Howard Schultz
executive chairman
Starbucks Corporation
2401 Utah Avenue South
Seattle, Washington 98134
Notice of Annual Meeting
of Shareholders
The Annual Meeting of Shareholders of Starbucks Corporation will be held at Marion Oliver McCaw Hall at the Seattle Center, located at 321 Mercer Street, in Seattle, Washington, on March 21, 2018 at 10:00 a.m. (Pacific Time) for the following purposes:
1. | To elect twelve directors nominated by the board of directors to serve until the 2019 Annual Meeting of Shareholders; |
2. | To approve an advisory resolution on our executive compensation; |
3. | To ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending September 30, 2018; |
4. | To consider shareholder proposals described in the accompanying proxy statement, if properly presented at the Annual Meeting of Shareholders; and |
5. | To transact such other business as may properly come before the Annual Meeting of Shareholders. |
Only shareholders of record at the close of business on January 11, 2018 will be entitled to notice of, and to vote at, the Annual Meeting of Shareholders and any adjournments or postponements thereof.
YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the Annual Meeting, we urge you to cast your vote and submit your proxy in advance of the meeting by one of the methods below. Make sure to have your proxy card or voting instruction form (VIF) in hand.
Submitting your proxy now will not prevent you from voting your shares at the meeting, as your proxy is revocable at your option. Shareholders may also vote in person at the Annual Meeting. If you are a registered shareholder (that is, you hold your shares in your name), you must present valid identification and proof of share ownership to vote at the meeting. If you are a beneficial shareholder (that is, your shares are held in the name of a broker, bank or other holder of record), you will also need to obtain a legal proxy from the registered shareholder to vote at the meeting.
As always, we anticipate a large number of attendees at the Annual Meeting of Shareholders. To provide shareholders with a better experience, we are implementing a ticketed seating process this year. When you present your proof of share ownership, you will receive a ticket with your designated seat. One ticket per name on the proof of share ownership. Seats will be given on a first-come, first-served basis until capacity has been reached.
By order of the board of directors,
Sophie Hager Hume
interim corporate secretary
Seattle, Washington
January 26, 2018
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be held on March 21, 2018. Our proxy statement follows. Financial and other information concerning Starbucks is contained in our Annual Report. The proxy statement and Annual Report are available on our Investor Relations website at http://investor.starbucks.com. Additionally, you may access our proxy materials at www.proxyvote.com, a site that does not have cookies that identify visitors to the site. |
By Internet: go to www.proxyvote.com; By toll-free telephone from the United States, U.S. territories and Canada: call 1-800-690-6903; By mail (if you received a paper copy of the proxy materials by mail): mark, sign, date and promptly mail the enclosed proxy card in the postage-paid envelope; or Scan this QR code to vote with your mobile device.
This summary highlights information contained elsewhere in this proxy statement. It does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting.
Wednesday, March 21, 2018 at 10:00 a.m. (Pacific Time) Doors open at 8:00 a.m. (Pacific Time) |
Marion Oliver McCaw Hall at the Seattle Center 321 Mercer Street Seattle, WA 98109 |
Voting: |
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Shareholders as of the record date, January 11, 2018, are entitled to vote. | ||
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Your broker will not be able to vote your shares with respect to any of the matters presented at the meeting, other than the ratification of the selection of our independent registered public accounting firm, unless you give your broker specific voting instructions.
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Attending the Annual Meeting: |
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In Person. To be admitted, you will be required to present a government-issued photo identification (such as a drivers license or passport) and proof of share ownership. More information can be found on the back cover of this proxy statement.
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| Via Webcast. Shareholders may view and listen to a live webcast of the meeting. The webcast will start at 10:00 a.m. (Pacific Time). See our Investor Relations website at http://investor.starbucks.com for details.
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| You do not need to attend the Annual Meeting of Shareholders to vote if you submitted your proxy in advance of the meeting.
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Even if you plan to attend our Annual Meeting in person, please cast your vote as soon as possible. Make sure to have your proxy card or voting instruction form (VIF) in hand:
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Annual Meeting Agenda and Voting Recommendations
Proposal |
Board Voting Recommendation |
Page Reference (for more detail) |
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Management proposals
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Election of 12 directors
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FOR EACH
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7
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Advisory resolution to approve our executive compensation
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FOR
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23
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Ratification of selection of Deloitte & Touche LLP as our independent registered public accounting firm for fiscal 2018
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FOR
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47
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Shareholder proposals
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Proxy Access Bylaw Amendments
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AGAINST
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49
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Report on Sustainable Packaging
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AGAINST
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51
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Report on Paid Family Leave
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AGAINST
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53
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Diversity Report
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AGAINST
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55
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By Internet: go to www.proxyvote.com; By toll-free telephone from the United States, U.S. territories and Canada: call 1-800-690-6903; By mail (if you received a paper copy of the proxy materials by mail): mark, sign, date and promptly mail the enclosed proxy card in the postage-paid envelope; or Scan this QR code to vote with your mobile device.
STARBUCKS CORPORATION | 2018 PROXY STATEMENT / 1 |
PROXY STATEMENT SUMMARY
The following table provides summary information about each director nominee. Each director nominee is elected annually by a majority of votes cast.
Director Tenure | Age Distribution | Gender | ||
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Committee Memberships
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Name
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Age
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Director Since
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Principal Occupation
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Independent
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ACC
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CMDC
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NCGC
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Howard Schultz
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64
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1985
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executive chairman of Starbucks Corporation
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Rosalind G. Brewer*
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55
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2017
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group president, Americas and chief operating officer of Starbucks Corporation
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Mary N. Dillon
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56
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2016
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chief executive officer and director of Ulta Beauty, Inc.
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Mellody Hobson
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48
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2005
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president and director of Ariel Investments
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C
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Kevin R. Johnson
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57
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2009
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president and chief executive officer of Starbucks Corporation
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Jørgen Vig Knudstorp
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49
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2017
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executive chairman of LEGO Brand Group
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Satya Nadella
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50
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2017
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chief executive officer and director of Microsoft Corporation
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Joshua Cooper Ramo
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49
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2011
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co-chief executive officer and vice chairman of Kissinger Associates, Inc.
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Clara Shih
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36
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2011
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chief executive officer and director of Hearsay Systems, Inc.
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Javier G. Teruel
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67
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2005
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retired vice chairman of Colgate-Palmolive Company
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Myron E. Ullman, III
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71
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2003
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retired executive chairman and ceo of J.C. Penney Company, Inc.
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, L
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C
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Craig E. Weatherup
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72
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1999
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retired chief executive officer of Pepsi-Cola
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C
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2 / 2018 PROXY STATEMENT |
PROXY STATEMENT SUMMARY
Corporate Governance Highlights
2017 Independent Director Nominees 9 of 12 Full Board Meetings 8 Frequency of Board Elections Annual Mandatory Retirement Age 75 Board Evaluations Annually Director Equity Grants Yes Board Independence Independent Director Nominees 9 of 12 Independent Lead Director Myron E. Ullman, III Independent Board Committees All Mandatory retirement age 75 Director Elections Frequency of board elections Annual Voting standard for uncontested elections Majority of votes cast Proxy Access for Director Nominations Ownership Threshold: 3%; Holding period: 3 years; Nominees: Group formation: Greater of 2 or 20% of board; Up to 20 shareholders Board Meetings in Fiscal 2017 Full board meetings 8 Independent director-only sessions 8 Board Committee Meetings in Fiscal 2017 Audit and Compliance 9 Compensation and Management Development 8 Nominating and Corporate Governance 6 Evaluating and Improving Board Performance Board evaluations Annually Committee evaluations Annually Board orientation Yes Aligning Director and Shareholder Interests Director stock ownership guidelines Yes Director equity grants Yes
STARBUCKS CORPORATION | 2018 PROXY STATEMENT / 3 |
PROXY STATEMENT SUMMARY
The Company delivered strong results in its 52-week fiscal year 2017, increasing global comparable store sales by 3% driven by a 3% increase in ticket. Consolidated net revenue grew 7% when excluding $412.4 million for the extra week in fiscal 2016; consolidated Non-GAAP* operating income grew by 7.8% to $4.4 billion year over year; and Non-GAAP* earnings per share (EPS) grew 11.4% to $2.06 per share. Starbucks 3-year cumulative total shareholder return (TSR) was 49%. During the year, Starbucks also made significant investments to support the growth of our business and added 2,200 net new stores, to end the 2017 fiscal year with more than 27,000 stores globally.
Starbucks reported another year of strong performance, with each of our business units
around the world contributing to record results. Starbucks delivered solid top and
bottom line growth, despite a difficult operating environment during the year.
+7%** | +7.8%* | 49% | ||
Revenues | Non-GAAP Operating Income |
3-Yr Cumulative TSR |
* | Annex A includes a reconciliation of Non-GAAP operating income and Non-GAAP EPS to operating income and diluted net earnings per share, respectively, the most directly comparable measures reported under accounting principles generally accepted in the United States. |
** | Excluding the extra week in fiscal 2016. |
Executive Compensation Highlights
Our executive compensation program is designed to achieve the following key objectives:
| Enable the attraction and retention of top talent by competing effectively for the highest quality people who will shape our long-term success; |
| Pay for performance through aligning compensation with the achievement of both short-term and long-term financial objectives that build shareholder value; and |
| Be true to our values by supporting our mission statement and guiding principles. |
Some of the compensation best practices we employ to achieve these objectives include:
What We Do
| Deliver a majority of executives target total direct compensation in the form of variable, at-risk, performance-based compensation |
| Utilize performance-based restricted stock units (PRSUs) with vesting requirements |
| Require our executives and directors to satisfy rigorous stock ownership guidelines |
| Maintain a clawback policy |
| Prohibit Starbucks partners (employees) from engaging in hedging transactions in Starbucks stock or pledging Starbucks stock |
| Conduct annual say-on-pay advisory votes |
What We Dont Do
| Have single-trigger change-in-control equity acceleration provisions |
| Provide cash-based change-in-control benefits |
| Provide excise tax gross-ups of perquisites |
| Provide significant perquisites |
| Maintain a supplemental executive retirement plan (SERP) |
As a matter of good corporate governance, the Audit and Compliance Committee is asking our shareholders to ratify the selection of Deloitte & Touche LLP to serve as our independent registered public accounting firm for fiscal 2018. The following table sets forth the aggregate fees billed by Deloitte for fiscal 2017 and fiscal 2016.
Type of Fees |
Fiscal 2017 |
Fiscal 2016 |
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Audit Fees
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$
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6,374,000
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$
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6,020,000
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Audit-Related Fees
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$
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402,000
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$
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266,000
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Tax Fees
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$
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467,000
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$
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332,000
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All Other Fees
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$
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16,000
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$
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0
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Total
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$
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7,259,000
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$
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6,618,000
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4 / 2018 PROXY STATEMENT |
VOTING INFORMATION
Even if you plan to attend our Annual Meeting in person, please cast your vote as soon as possible. Make sure to have your proxy card or voting instruction form (VIF) in hand:
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using the Internet at www.proxyvote.com calling toll-free from the United States, U.S. territories and Canada - 1-800-690-6903 mailing your signed proxy or voting scanning this QR code to vote
6 / 2018 PROXY STATEMENT |
Proposal 1 Election of Directors
Experience / Qualification / Skill
Food and beverage industry experience
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As the premier roaster, marketer and retailer of specialty coffee in the world, we seek directors who have knowledge of and experience in the food and beverage industry, which is useful in understanding our product development and retail and licensing operations.
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Consumer products and foodservice experience
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We seek directors with expertise in consumer products and foodservice as we continue to increase our focus on expanding our Channel Development business on a global scale.
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Brand marketing experience
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Brand marketing experience is important for our directors to have because of the importance of image and reputation in the specialty coffee business and our objective to maintain Starbucks standing as one of the most recognized and respected brands in the world.
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International operations and distribution experience
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Starbucks has a strong global presence. As of the end of fiscal 2017, the Company had operations in 75 countries around the world and had approximately 92,000 partners (employees) employed outside the United States. Accordingly, international operations and distribution experience is important for our directors to have, especially as we continue to expand globally and develop new channels of distribution.
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Domestic and international public policy experience
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We believe that it is important for our directors to have domestic and international public policy experience in order to help us address significant public policy issues, adapt to different business and regulatory environments and facilitate our work with governments all over the world.
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Digital and social
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As a consumer retail company, it is important for our directors to have digital and social media experience which can provide insight and perspective with respect to our marketing, sales and customer service functions.
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Public company board experience
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Directors who have served on other public company boards can offer advice and perspective with respect to board dynamics and operations, relations between the board and Starbucks management and other matters, including corporate governance, executive compensation and oversight of strategic, operational compliance-related matters and relations with shareholders.
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Senior leadership experience
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We believe that it is important for our directors to have served in senior leadership roles at other organizations, which demonstrates strong abilities to motivate and manage others, to identify and develop leadership qualities in others and to manage organizations.
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The Board of Directors Recommends that Shareholders vote FOR the election of each of the Nominees to the Board of Directors.
STARBUCKS CORPORATION | 2018 PROXY STATEMENT / 7 |
PROPOSAL 1 ELECTION OF DIRECTORS
STARBUCKS CORPORATION | 2018 PROXY STATEMENT / 9 |
PROPOSAL 1 ELECTION OF DIRECTORS
10 / 2018 PROXY STATEMENT |
PROPOSAL 1 ELECTION OF DIRECTORS
STARBUCKS CORPORATION | 2018 PROXY STATEMENT / 11 |
We have a long-standing history of actively engaging with our shareholders.
We believe that strong corporate governance should include year-round engagement with our shareholders. We have a long-standing, robust shareholder outreach program led by a cross-functional team including partners from our Investor Relations, Total Rewards, Law & Corporate Affairs and Global Social Impact departments. Through this outreach, we solicit feedback on our executive compensation program, corporate governance and disclosure practices and respond to questions regarding our Global Social Impact programs and goals. We share feedback we receive with our board of directors and Compensation and Management Development Committee (the Compensation Committee) as demonstrated below.
Corporate Governance Cycle
Publish Annual Report and proxy statement Active outreach with top investors to discuss important items to be considered at Annual Meeting of Shareholders Annual Meeting of Shareholders |
Review results from our most recent Annual Meeting Share investor feedback with board of directors and Compensation Committee Evaluate proxy season trends, corporate governance best practices, regulatory developments and our current practices |
Active outreach with top investors to understand their priorities for corporate governance, executive compensation and environmental and social matters Share investor feedback with board of directors and Compensation Committee Board of directors considers investor feedback received throughout the year |
As part of our normal outreach, during 2017 we reached out to our top shareholders and had conversations with corporate governance contacts representing approximately 30% of our shares outstanding. Additionally, our senior management team, including our president and ceo, and our cfo, regularly engage in meaningful dialogue with our shareholders through our quarterly earnings calls and other channels for communication.
In recent years, shareholder feedback has influenced our implementation of Proxy Access and the specific terms adopted as well as certain of our compensation design and philosophy changes, including most recently minimizing the use of special equity grants. In prior years shareholder feedback has influenced replacing EPS as a performance measure under our Executive Management Bonus Plan (EMBP) with adjusted net revenue (recognizing that EPS remains a performance measure under our PRSUs) and lengthening the performance period under our PRSU design from one year to two years.
12 / 2018 PROXY STATEMENT |
CORPORATE GOVERNANCE
STARBUCKS CORPORATION | 2018 PROXY STATEMENT / 13 |
CORPORATE GOVERNANCE
The current composition of each board committee is set forth below. As stated above, Messrs. Bradley and Gates will not stand for re-election at the 2018 Annual Meeting.
Director |
Audit and Compliance Committee (ACC) |
Compensation and Management Development Committee (CMDC) |
Nominating and Corporate Governance Committee (NCGC) |
Board of Directors | ||||||||||||||||
Howard Schultz
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C
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William W. Bradley
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Rosalind G. Brewer*
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Mary N. Dillon
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Robert M. Gates
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Mellody Hobson
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C
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Kevin R. Johnson
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Jørgen Vig Knudstorp
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Satya Nadella
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Joshua Cooper Ramo
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James G. Shennan, Jr.**
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Clara Shih
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Javier G. Teruel
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Myron E. Ullman, III
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C
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Craig E. Weatherup
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C
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Fiscal 2017 Meetings
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9
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8
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6
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8
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C Chair Member |
* | Ms. Brewer was an independent member of the board of directors and a member of the Compensation Committee and the Nominating/Governance Committee prior to her appointment as group president, Americas and chief operating officer, after which time she continued to serve as a non-independent member of the board of directors. |
** | Mr. Shennan retired from the board on March 22, 2017. |
14 / 2018 PROXY STATEMENT |
CORPORATE GOVERNANCE
Audit and Compliance Committee
Committee Members Mellody Hobson ◆ (Chair) Robert M. Gates Jørgen Vig Knudstorp Joshua Cooper Ramo Javier G. Teruel ◆ Craig E. Weatherup◆
Number of meetings in fiscal 2017: 9 |
The Audit Committee annually reviews and reassesses the adequacy of its charter. As more fully described in its charter, the primary responsibilities of the Audit Committee are to:
overseeour accounting and financial reporting processes, including the review of the Companys quarterly and annual financial results; appointthe Companys independent registered public accounting firm and oversee the relationship, including monitoring the auditors independence and reviewing the scope of the auditors work, including pre-approval of audit and non-audit services; reviewthe annual audit and quarterly review processes with management and the independent registered public accounting firm; reviewmanagements assessment of the effectiveness of the Companys internal controls over financial reporting and the independent registered public accounting firms related attestation; overseethe Companys internal audit function, including review of internal audit staffing and review of the internal audit plan; reviewand approve or ratify all transactions with related persons and potential conflicts of interests that are required to be disclosed in the proxy statement; and reviewperiodically and discuss with management the Companys major and emerging risk exposures, including financial, operational, privacy, security, disaster recovery and business continuity, ethics and compliance, food safety and legal and regulatory risks, the steps the Company has taken to monitor and control such exposures, and the Companys risk assessment and risk management policies; and regularly report to the board the substance of such reviews and discussions.
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◆ Audit Committee Financial Expert |
Each of Ms. Hobson and Messrs. Gates, Knudstorp, Ramo, Teruel and Weatherup currently: (i) meets the independence criteria prescribed by applicable law and the rules of the SEC for audit committee membership and is an independent director as defined by NASDAQ rules; and (ii) meets NASDAQs financial knowledge and sophistication requirements. Each of Ms. Hobson and Messrs. Teruel and Weatherup have been determined by the board of directors to be an audit committee financial expert under SEC rules. The Audit and Compliance Committee Report describes in more detail the Audit Committees responsibilities with regard to our financial statements and its interactions with our independent auditor, Deloitte & Touche LLP. |
STARBUCKS CORPORATION | 2018 PROXY STATEMENT / 15 |
CORPORATE GOVERNANCE
Compensation and Management Development Committee
Committee Members Myron E. Ullman, III (Chair) Rosalind G. Brewer* Mary N. Dillon Satya Nadella James G. Shennan, Jr.** Clara Shih Javier G. Teruel
Number of meetings in fiscal 2017: 8 |
The Compensation Committee annually reviews and reassesses the adequacy of its charter. As more fully described in its charter, the primary responsibilities of the Compensation Committee are to:
conductan annual review of and recommend to the independent directors of the board for their review and approval the compensation package for both the executive chairman and the president and chief executive officer; conductan annual review and approve the compensation package for the Companys executive officers and senior officers (as defined in its charter); annuallyreview and approve objective performance measures and performance targets for all executive officers and senior officers participating in the annual incentive bonus plan and long-term incentive plans, and certify achievement of performance measures after the measurement period; approve,modify and administer partner-based equity plans, the Executive Management Bonus Plan and deferred compensation plans; afterconsulting with the independent directors, together with the chair of the Nominating/Governance Committee, the chair of the Compensation Committee annually reviews the performance of our executive chairman and president and chief executive officer and meets with them to share the findings of the review; annuallyreview and approve our management development and succession planning practices and strategies; annuallyreview and approve the Companys peer group companies and review market data; providerecommendations to the board of directors on compensation-related proposals to be considered at the Companys annual meeting, including Say-on-Pay and any related shareholder feedback; determinemanagement stock ownership guidelines and periodically review ownership levels for compliance; and annuallyreview a report from management regarding potential material risks, if any, created by the Companys compensation policies and practices and inform the board of any necessary actions.
The charter allows the Compensation Committee to form and delegate any or all of its responsibilities to a subcommittee or subcommittees of the Compensation Committee, as may be necessary or appropriate, and within certain limits.
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* Ms. Brewer ceased membership on the Committee prior to her appointment as an executive officer of the Company ** Mr. Shennan retired from the board on March 22, 2017 |
Messrs. Nadella, Shennan, Teruel, Ullman and Ms. Brewer, Ms. Dillon and Ms. Shih served on the Compensation Committee during fiscal 2017. Mr. Shennan ceased membership on the Compensation Committee upon his retirement from the board in March 2017. Ms. Brewer ceased membership on the Committee prior to her appointment as group president, Americas and chief operating officer of the Company. At least annually, the Compensation Committee reviews and approves our executive compensation strategy and principles to confirm that they are aligned with our business strategy and objectives, shareholder interests, desired behaviors and corporate culture. |
16 / 2018 PROXY STATEMENT |
CORPORATE GOVERNANCE
STARBUCKS CORPORATION | 2018 PROXY STATEMENT / 17 |
CORPORATE GOVERNANCE
Nominating and Corporate Governance Committee
Committee Members Craig E. Weatherup (Chair) William W. Bradley Rosalind G. Brewer* Mary N. Dillon Robert M. Gates Jørgen Vig Knudstorp Joshua Cooper Ramo James G. Shennan, Jr.** Clara Shih
Number of meetings in fiscal 2017: 6 |
The Nominating/Governance Committee annually reviews and reassesses the adequacy of its charter. As described more fully in its charter, the Nominating/Governance Committee is responsible for providing leadership with respect to the corporate governance of Starbucks and advising and making recommendations to the board of directors regarding candidates for election as directors of the Company. Among its specific duties, the Nominating/Governance Committee:
makes recommendations to the board about our corporate governance processes; assists in identifying and screening board candidates; administers the Director Nominations Policy; considers shareholder nominations to the board; makes recommendations to the board regarding membership and chairs of the boards committees; oversees the annual evaluation of the effectiveness of the board and each of its committees; biennially recommends the boards lead independent director; biennially reviews the type and amount of board compensation for independent directors; annually reviews the Companys corporate political contributions and expenditures to confirm alignment with Company policies and values; and annually reviews and assesses the effectiveness of the Companys environmental and social responsibility policies, goals and programs through the annual Global Responsibility Report, and makes recommendations as deemed appropriate based on such review and assessment.
| |
* Ms. Brewer ceased membership on the Committee prior to her appointment as an executive officer of the Company ** Mr. Shennan retired from the board on March 22, 2017 |
The Nominating/Governance Committee also annually assists the board of directors with its affirmative independence and expertise determinations. After consulting with the independent directors of the board, the chair of the Nominating/Governance Committee and the chair of the Compensation Committee annually review the performance of the executive chairman and the president and chief executive officer and meet with them to share the findings of the review.
Messrs. Bradley, Gates, Knudstorp, Ramo, Shennan and Weatherup and Ms. Brewer, Ms. Dillon and Ms. Shih served on the Nominating/Governance Committee during fiscal 2017. Mr. Shennan ceased membership on the Nominating/Governance Committee upon his retirement from the board in March 2017. Ms. Brewer ceased membership on the Committee prior to her appointment as group president, Americas and chief operating officer of the Company. |
18 / 2018 PROXY STATEMENT |
CORPORATE GOVERNANCE
STARBUCKS CORPORATION | 2018 PROXY STATEMENT / 19 |
CORPORATE GOVERNANCE
20 / 2018 PROXY STATEMENT |
Fiscal 2017 Non-Employee Director Compensation
The following table shows fiscal 2017 compensation for non-employee directors.
Name |
Fees ($) |
Stock Awards ($)(1)(2) |
Option Awards ($)(3)(4) |
Total ($) |
||||||||||||
William W. Bradley
|
|
|
|
|
259,967
|
|
|
|
|
|
259,967
|
| ||||
Rosalind G. Brewer(5)
|
|
|
|
|
137,383
|
|
|
|
|
|
137,383
|
| ||||
Mary N. Dillon
|
|
|
|
|
255,356
|
|
|
|
|
|
255,356
|
| ||||
Robert M. Gates
|
|
|
|
|
255,356
|
|
|
|
|
|
255,356
|
| ||||
Mellody Hobson
|
|
|
|
|
255,356
|
|
|
|
|
|
255,356
|
| ||||
Jørgen Vig Knudstorp
|
|
|
|
|
|
|
|
87,692
|
|
|
87,692
|
| ||||
Satya Nadella
|
|
|
|
|
137,383
|
|
|
|
|
|
137,383
|
| ||||
Joshua Cooper Ramo
|
|
130,000
|
|
|
127,678
|
|
|
|
|
|
257,678
|
| ||||
James G. Shennan, Jr.(6)
|
|
|
|
|
259,967
|
|
|
|
|
|
259,967
|
| ||||
Clara Shih
|
|
130,000
|
|
|
127,678
|
|
|
|
|
|
257,678
|
| ||||
Javier G. Teruel
|
|
|
|
|
|
|
|
167,883
|
|
|
167,883
|
| ||||
Myron E. Ullman, III
|
|
|
|
|
|
|
|
167,883
|
|
|
167,883
|
| ||||
Craig E. Weatherup
|
|
|
|
|
|
|
|
167,883
|
|
|
167,883
|
|
(1) | The amounts shown in this column represent the grant date fair values of the RSU awards granted to each of the non-employee directors on November 21, 2016 (and in the case of Ms. Brewer and Mr. Nadella, who each received a prorated award on May 1, 2017). The grant date fair values have been determined based on the assumptions and methodologies set forth in the Companys 2017 Form 10-K (Note 12: Employee Stock and Benefit Plans). |
STARBUCKS CORPORATION | 2018 PROXY STATEMENT / 21 |
COMPENSATION OF DIRECTORS
(2) | As of October 1, 2017, the aggregate number of shares of Starbucks common stock underlying outstanding unvested RSU awards for each non-employee director were: Sen. Bradley 4,634; Ms. Brewer 2,302; Ms. Dillon 4,634; Sec. Gates 4,634; Ms. Hobson 4,634; Mr. Knudstorp 0; Mr. Nadella 2,302; Mr. Ramo 2,317; Mr. Shennan 0; Ms. Shih 2,317; Mr. Teruel 0; Mr. Ullman 0; and Mr. Weatherup 0. |
(3) | The amounts shown in this column represent the grant date fair values of the stock option awards granted to each of the non-employee directors on November 21, 2016 (and in the case of Mr. Knudstorp, who received a prorated award on May 1, 2017). The grant date fair values have been determined based on the assumptions and methodologies set forth in the Companys 2017 Form 10-K (Note 12: Employee Stock and Benefit Plans). |
(4) | As of October 1, 2017, the aggregate number of shares of Starbucks common stock underlying outstanding option awards for each non-employee director were: Sen. Bradley 6,426; Ms. Brewer 0; Ms. Dillon 3,480; Sec. Gates 0; Ms. Hobson 179,548; Mr. Knudstorp 6,906; Mr. Nadella 0; Mr. Ramo 60,000; Mr. Shennan 0; Ms. Shih 13,122; Mr. Teruel 381,500; Mr. Ullman 398,256; and Mr. Weatherup 288,256. |
(5) | Ms. Brewer was an independent member of the board of directors and a member of the Compensation Committee and the Nominating/Governance Committee prior to her appointment as group president, Americas and chief operating officer, after which time she continued to serve as a non-independent member of the board of directors. |
(6) | Mr. Shennan retired from the board effective March 22, 2017, due to having attained the board mandatory retirement age. |
22 / 2018 PROXY STATEMENT |
Compensation Discussion and Analysis
This Compensation Discussion and Analysis provides information on our executive compensation program and the amounts shown in the executive compensation tables that follow. In this proxy statement, the term NEOs means Named Executive Officers. These seven executive officers are named in the compensation tables of this proxy statement.
Compensation Committee or Committee refers to the Compensation and Management Development Committee of the board of directors.
We refer to all of our employees as partners, due to the significant role that they all play in the success of the Company and because all employees are eligible for equity based awards.
The Company delivered strong results in its 52-week fiscal year 2017, increasing global comparable store sales by 3% driven by a 3% increase in ticket. Consolidated net revenue grew 7% when excluding $412.4 million for the extra week in fiscal 2016; consolidated Non-GAAP* operating income grew by 7.8% to $4.4 billion year over year; and Non-GAAP* earnings per share (EPS) grew 11.4% to $2.06 per share. Starbucks 3-year cumulative total shareholder return (TSR) was 49%. During the year, Starbucks also made significant investments to support the growth of our business and added 2,200 net new stores, to end the 2017 fiscal year with more than 27,000 stores globally.
Starbucks reported another year of strong performance, with each of our business units
around the world contributing to record results. Starbucks delivered solid top and
bottom line growth, despite a difficult operating environment during the year.
+7%** | +7.8%* | 49% | ||
Revenues | Non-GAAP Operating Income |
3-Yr Cumulative TSR |
* | Annex A includes a reconciliation of Non-GAAP operating income and Non-GAAP EPS to operating income and diluted net earnings per share, respectively, the most directly comparable measures reported under accounting principles generally accepted in the United States. |
** | Excluding the extra week in fiscal 2016. |
Financial Results Under Incentive Plans
The charts below compare fiscal 2017, 2016 and 2015 results (1) under financial performance metrics that are used in determining (i) payouts under our EMBP, and (ii) the number of PRSUs earned. Note that these financial measures may differ from the comparable GAAP and Non-GAAP measures reported above and in our financial statements, as the measures below are adjusted to exclude the impact of certain non-routine and other items, as described in the footnotes to the charts below in accordance with the terms of our EMBP and our 2005 Long-Term Equity Incentive Plan.
Dollar amounts below, except per share data, are in millions.
using the Internet at www.proxyvote.com calling toll-free from the United States, U.S. territories and Canada - 1-800-690-6903 mailing your signed proxy or voting scanning this QR code to vote
24 / 2018 PROXY STATEMENT |
EXECUTIVE COMPENSATION
(1) | Our fiscal year ends on the Sunday closest to September 30. Fiscal years 2017 and 2015 each included 52 weeks. Fiscal year 2016 included 53 weeks with the additional week falling in our fourth fiscal quarter. The objective performance goals under our EMBP for fiscal 2016 were set on a comparable 52-week fiscal year. The impact of the 53rd week was excluded from our fiscal 2016 EPS results for purposes of our PRSUs. |
(2) | The fiscal 2017 consolidated adjusted net revenue result excludes the impact of foreign currency fluctuations and ownership changes in Singapore. The fiscal 2016 consolidated adjusted net revenue result excludes the impact of foreign currency fluctuations and the sale of our German market retail operations. The fiscal 2015 consolidated adjusted net revenue result excludes the impact of the acquisition of Starbucks Japan and foreign currency fluctuations. |
(3) | The fiscal 2017 consolidated operating income result excludes the impact of foreign currency fluctuations, ownership changes in Japan and Singapore, Greater China transaction costs, restructuring and impairment charges associated with our restructuring efforts, a donation to The Starbucks Foundation, and other items. The fiscal 2016 consolidated operating income result excludes the impact of foreign currency fluctuations, mark to market adjustments of our Management Deferred Compensation Plan (MDCP) liability, an accrual for a multi-year tax audit, the sale of our German market retail operations, the sale of our ownership interest in our Spanish joint venture and an accounting change and costs associated with the Starbucks Japan transaction and integration. The fiscal 2015 consolidated adjusted operating income result excludes the impact of the acquisition of Starbucks Japan, mark to market adjustments of our MDCP liability and foreign currency fluctuations. |
(4) | Return on Invested Capital (ROIC) is calculated as adjusted net operating profit after taxes (adjusted for implied interest expense on operating leases), divided by average invested capital. Invested capital is calculated on a five-point average and includes shareholders equity, short- and long-term debt, all other long-term liabilities, and capitalized operating leases, less cash, cash equivalents and short- and long-term investments. The fiscal 2017 ROIC result excludes the impact of certain impairment charges associated with our restructuring efforts. The fiscal 2016 ROIC result excludes the impact of the sale of our German market retail operations and the reclassification of deferred income taxes on our balance sheet associated with the adoption of new accounting guidance. The fiscal 2015 ROIC result excludes the impact of the acquisition of Starbucks Japan. |
(5) | On April 9, 2015, the Company effected a 2-for-1 stock split. The amounts shown above are adjusted to reflect the stock split. The fiscal 2017 adjusted earnings per share result excludes the impact of foreign currency fluctuations, ownership changes in Japan, Germany and Singapore, Greater China transaction costs, restructuring and impairment charges associated with our restructuring efforts, a donation to The Starbucks Foundation, and unbudgeted share repurchases. The fiscal 2016 adjusted earnings per share result excludes the impact of foreign currency fluctuations, incremental benefits from additional manufacturing deductions, the Starbucks Japan transaction and integration, the sale of our German market retail operations, the 53rd week of fiscal 2016 and unbudgeted share repurchases. The fiscal 2015 adjusted earnings per share result excludes the impact of foreign currency fluctuations, unbudgeted share repurchases, certain Starbucks Japan acquisition-related items and certain other items. |
Return on Invested Capital (ROIC) 4 26.9% 25.7% 25.2% 2015 2016 2017 Adjusted Earnings Per Share (EPS) 5 $1,584 $1,855 $2,066 2015 2016 2017
STARBUCKS CORPORATION | 2018 PROXY STATEMENT / 25 |
EXECUTIVE COMPENSATION
Elements of Our Executive Compensation Program
The following table provides information regarding the elements of our fiscal 2017 executive compensation program.
Element |
Form | Objectives and Basis | ||
Base Salary
|
Cash
|
Attract and retain highly qualified executives to drive our success
| ||
Annual Incentive Bonus (EMBP) |
Cash |
Drive Company and business unit results
Target bonus amount set as a percentage of base salary
Actual payout based on Total Company and business unit financial performance against pre-established net revenue and operating income targets
| ||
Long-Term Incentive |
PRSUs, stock options |
Drive Company performance; align interests of executives with those of shareholders; retain executives through long-term vesting; and provide potential wealth accumulation
Delivered 60% in PRSUs and 40% in stock options
PRSUs vest based on two-year EPS performance against pre-established targets, subject to downward adjustment based on ROIC
| ||
Perquisites and Other Executive Benefits
|
Limited (See Other CompensationPerquisites and Other Executive Benefits)
|
Provide for the safety and wellness of our executives, and other purposes as discussed below
| ||
Deferred Compensation |
401(k) plan, non-qualified Management Deferred Compensation Plan
|
Provide tax-deferred methods for general savings including for retirement
| ||
General Benefits |
Health and welfare plans, stock purchase plan and other broad-based partner benefits
|
Offer competitive benefits package that generally includes benefits offered to all partners
|
26 / 2018 PROXY STATEMENT |
EXECUTIVE COMPENSATION
2017 Pay Mix Fiscal Year 2017 Total Compensation mix President & CEO 86% LTI 10% Base 4% Bonus All Other NEOs 79% LTI 17% Base 4% Bonus Variable compensation as a percentage of total compensation equals 90% for our president and ceo, Kevin Johnson, and 83% for all other NEOs as a group (excluding our executive chairman, Howard Schultz, whose compensation is 100% variable).
STARBUCKS CORPORATION | 2018 PROXY STATEMENT / 27 |
EXECUTIVE COMPENSATION
Base Salary
The Compensation Committee generally reviews and adjusts base salaries annually at its November meeting with new salaries effective in late November or early December and also makes periodic adjustments in connection with promotion or changes in position. For fiscal 2017, the Committee reviewed and increased base salaries at its November 2016 meeting (and with respect to Messers. Schultz and Johnson, the Committee recommended and the independent directors approved), the base salaries shown below. The annual increases were made in recognition of personal performance. In addition, in March 2017, the independent directors approved a salary increase for Mr. Johnson upon his promotion to chief executive officer and the annual salary for Mr. Schultz was reduced to $1, effective April 3, 2017.
Base Salary (Annualized Rate) |
||||||||||
Named Executive Officer |
Fiscal 2017
|
Fiscal 2016
|
% Change
| |||||||
| ||||||||||
Howard Schultz
|
$
|
1
|
(1)
|
$
|
1,500,000
|
|
(99.9)%
| |||
Kevin Johnson
|
$
|
1,300,000
|
(2)
|
$
|
1,000,000
|
|
30.0%
| |||
Scott Maw
|
$
|
800,000
|
|
$
|
750,000
|
|
6.7%
| |||
Clifford Burrows
|
$
|
825,000
|
|
$
|
815,000
|
|
1.2%
| |||
John Culver
|
$
|
825,000
|
|
$
|
750,000
|
|
10.0%
| |||
Paul Mutty (3)
|
$
|
389,781
|
|
$
|
348,274
|
|
11.9%
| |||
Lucy Lee Helm (3)
|
$
|
600,000
|
|
$
|
515,000
|
|
16.5%
|
(1) | Mr. Schultz was named executive chairman and ceased serving as chief executive officer effective April 3, 2017. In connection with this change in role, Mr. Schultzs annualized salary was reduced to $1 from $1,500,000. |
(2) | Mr. Johnson was named president and chief executive officer effective April 3, 2017. In connection with this change in role, Mr. Johnsons annualized salary was increased to $1,300,000 from $1,000,000. |
(3) | On August 1, 2017, Ms. Helm assumed the role of chief partner officer, a non-executive officer role, at which time Mr. Mutty assumed the general counsel role on an interim basis. |
Annual Incentive Bonus
The target annual incentive bonus opportunity for our NEOs is shown below. The target annual incentive bonus for Mr. Johnson as a percentage of base salary was 150% during the portion of fiscal 2017 he served as president and chief operating officer. Upon assuming the role of president and chief executive officer on April 3, 2017, Mr. Johnsons target annual incentive bonus opportunity increased to 200%. Effective for fiscal 2017, target annual incentive opportunities for Messrs. Burrows and Culver increased to 120% from their previous fiscal 2016 targets of 100% and Mr. Muttys target annual incentive opportunity increased to 45% from 40%. Target annual incentive opportunities did not change in fiscal 2017 for the remaining NEOs, including Mr. Schultzs target of $3,750,000, which is now stated as a dollar amount due to his reduction in base salary to $1 in fiscal 2017.
Bonus Targets Percentage of Base Salary |
||||||||
Named Executive Officer |
Fiscal 2017
|
Fiscal 2016
|
% Change
| |||||
| ||||||||
Howard Schultz
|
$
|
3,750,000
|
|
250%
|
| |||
Kevin Johnson
|
|
200
|
%
|
120%
|
66.7%
| |||
Scott Maw
|
|
100
|
%
|
100%
|
| |||
Clifford Burrows
|
|
120
|
%
|
100%
|
20.0%
| |||
John Culver
|
|
120
|
%
|
100%
|
20.0%
| |||
Paul Mutty
|
|
45
|
%
|
40%
|
12.5%
| |||
Lucy Helm
|
|
75
|
%
|
75%
|
|
28 / 2018 PROXY STATEMENT |
EXECUTIVE COMPENSATION
Adjusted Net Revenue (1) |
Threshold (Millions US $) |
Target (Millions US $) |
Maximum (Millions (US $) |
Adjusted Actual US $) |
Payout | |||||||||||||
Consolidated (Schultz, Johnson, Maw, Burrows, Mutty, Helm)
|
|
22,364.6
|
|
|
23,056.3
|
|
|
23,748.0
|
|
|
22,611.4
|
|
45%
| |||||
Global Retail (Culver)
|
|
19,819.6
|
|
|
20,432.6
|
|
|
21,045.6
|
|
|
20,127.3
|
|
60%
|
(1) | The performance plan measures under the EMBP that were approved at the beginning of the performance period provided for certain non-GAAP adjustments so that the performance measures would more consistently reflect underlying business operations than the comparable GAAP measures. The fiscal 2017 consolidated adjusted net revenue result excludes the impact of foreign currency fluctuations and ownership changes in Singapore. |
Base Salary ($) Target Annual Incentive Opportunity (% of Salary) Adjusted NET REVENUE performance (weighted 50%) Adjusted OPERATING INCOME performance (weighted 50%) Annual Incentive Award $
STARBUCKS CORPORATION | 2018 PROXY STATEMENT / 29 |
EXECUTIVE COMPENSATION
Adjusted Operating Income(1) |
Threshold (Millions |
Target (Millions |
Maximum (Millions |
Adjusted Performance (Millions |
Payout | |||||||||||||||
Consolidated (All NEOs)
|
|
4,400.5
|
|
|
4,633.1
|
|
|
5,057.0
|
|
|
4,394.1
|
|
|
0
|
| |||||
Global Retail (Culver)
|
|
4,697.9
|
|
|
4,946.3
|
|
|
5,398.8
|
|
|
4,621.4
|
|
|
0
|
|
(1) | The performance plan measures under the EMBP that were approved at the beginning of the performance period provided for certain non-GAAP adjustments so that the performance measures would more consistently reflect underlying business operations than the comparable GAAP measures. The fiscal 2017 consolidated operating income result excludes the impact of foreign currency fluctuations, ownership changes in Japan and Singapore, Greater China transaction costs, restructuring and impairment charges associated with our restructuring efforts, a donation to The Starbucks Foundation, and other items. |
Fiscal 2017 Executive Management Bonus Plan Payout
|
||||||||||||
Named Executive Officer |
Payout on Consolidated Adjusted Operating (50% or 30% |
Payout on Business Operating (30% |
Payout on Business Unit/ Consolidated Adjusted Net Revenue (50% or 40% Weighting) |
EMBP Bonus Payout |
||||||||
(%) of Target |
($) | |||||||||||
Howard Schultz
|
0
|
NA
|
45%
|
22.5%
|
$
|
843,750
|
| |||||
Kevin Johnson
|
0
|
NA
|
45%
|
22.5%
|
$
|
469,688
|
| |||||
Scott Maw
|
0
|
NA
|
45%
|
22.5%
|
$
|
180,000
|
| |||||
Clifford Burrows
|
0
|
NA
|
45%
|
22.5%
|
$
|
222,750
|
| |||||
John Culver
|
0
|
0
|
60%
|
24.0%
|
$
|
237,600
|
| |||||
Paul Mutty
|
0
|
NA
|
45%
|
22.5%
|
$
|
39,465
|
| |||||
Lucy Helm
|
0
|
NA
|
45%
|
22.5%
|
$
|
101,250
|
|
30 / 2018 PROXY STATEMENT |
EXECUTIVE COMPENSATION
Value of Annual Long-Term Incentive Compensation Awards
|
Named Executive Officer |
Granted in Fiscal 2017 |
Granted in Fiscal 2016 |
% Change |
|||||||||
Howard Schultz
|
$
|
13,750,000
|
|
$
|
13,000,000
|
|
|
5.8%
|
| |||
Kevin Johnson
|
$
|
10,300,000
|
|
$
|
8,500,000
|
|
|
21.2%
|
| |||
Scott Maw
|
$
|
5,000,000
|
|
$
|
3,000,000
|
|
|
66.7%
|
| |||
Clifford Burrows
|
$
|
4,500,000
|
|
$
|
3,500,000
|
|
|
28.6%
|
| |||
John Culver
|
$
|
4,500,000
|
|
$
|
3,500,000
|
|
|
28.6%
|
| |||
Paul Mutty
|
$
|
200,000
|
|
$
|
250,000
|
|
|
(20.0)%
|
| |||
Lucy Helm
|
$
|
2,000,000
|
|
$
|
1,500,000
|
|
|
33.3%
|
|
Realized Value of Long-Term Incentive Awards Granted in November 2015 (Based on Fiscal 2017 Performance)
|
Options
|
PRSUs
|
|||||||||||||||||||
Named Executive Officer |
Total Value Granted in Fiscal 2016 |
Total Number Granted |
Total Number Granted at Target |
Total Number Earned |
Total Value Realized As of Fiscal 2017 Year-End |
|||||||||||||||
Howard Schultz
|
$
|
13,000,000
|
|
|
549,330
|
|
|
128,543
|
|
|
83,553
|
|
$
|
4,487,632
|
| |||||
Kevin Johnson
|
$
|
8,500,000
|
|
|
359,177
|
|
|
84,047
|
|
|
54,631
|
|
$
|
2,934,231
|
| |||||
Scott Maw
|
$
|
3,000,000
|
|
|
126,768
|
|
|
29,664
|
|
|
19,282
|
|
$
|
1,035,636
|
| |||||
Clifford Burrows
|
$
|
3,500,000
|
|
|
147,896
|
|
|
34,608
|
|
|
22,495
|
|
$
|
1,208,206
|
| |||||
John Culver
|
$
|
3,500,000
|
|
|
147,896
|
|
|
34,608
|
|
|
22,495
|
|
$
|
1,208,206
|
| |||||
Paul Mutty
|
$
|
250,000
|
|
|
10,564
|
|
|
2,472
|
|
|
1,607
|
|
$
|
86,312
|
| |||||
Lucy Helm
|
$
|
1,500,000
|
|
|
63,384
|
|
|
14,832
|
|
|
9,641
|
|
$
|
517,818
|
|
STARBUCKS CORPORATION | 2018 PROXY STATEMENT / 31 |
EXECUTIVE COMPENSATION
32 / 2018 PROXY STATEMENT |
EXECUTIVE COMPENSATION
STARBUCKS CORPORATION | 2018 PROXY STATEMENT / 33 |
EXECUTIVE COMPENSATION
Starbucks Fiscal 2017 Executive Compensation Peer Group Companies
Consumer Staples |
Consumer Discretionary | IT-Software and Services | ||
Coca-Cola Company
|
Estee Lauder Companies
|
Visa Inc.
| ||
Colgate-Palmolive Co.
|
Home Depot
|
PayPal Holdings, Inc.
| ||
General Mills, Inc.
|
L Brands, Inc.
|
|||
Kellogg Company
|
McDonalds Corp.
|
|||
Kraft Heinz Company
|
Marriott International
|
|||
PepsiCo. Inc.
|
NIKE, Inc.
|
|||
Procter & Gamble Co.
|
Target Corp.
|
|||
V.F. Corporation
|
||||
Yum! Brands, Inc.
|
Other Policies and Considerations
What We Do | What We Do Not Do | |
Pay for Performance Philosophy: A majority of Named Executive Officer compensation is variable and is tied to our financial performance or the performance of our stock price, or both.
|
No Excise Tax Gross-Ups Upon a Change-in-Control: Appointment letters and employment agreements do not include IRC Section 280G tax gross-up benefits.
| |
Stock Ownership Policy: Senior Officers are expected to acquire and hold Starbucks stock worth two to six times their base salary (depending on position) within five years of appointment. Executives who are not on track by the end of the third year after becoming subject to the guidelines are subject to a holding requirement.
|
No Excessive Executive Perquisites: We provide limited perquisites (e.g. annual executive physical exams, certain security services). | |
Double Trigger Equity Acceleration Upon a Change-in-Control: Long-term incentive award grants provide for accelerated vesting upon a change-in-control only if the executive is involuntarily terminated (without Cause) or equity awards are not substituted or assumed by the surviving company in conjunction with that change-in-control.
|
No Tax Gross-Ups on Perquisites or Benefits: We do not provide tax gross-ups on perquisites or benefits except in the case of standard relocation benefits and expatriate income tax equalization benefits available to all similarly situated employees. | |
Independent Executive Compensation Consultant: The Compensation Committee consults with an independent executive compensation consultant on matters surrounding executive pay and governance. This consultant provides no other services to Starbucks.
|
No Repricing Underwater Stock Options Without Shareholder Approval; No Grants Below 100% of Fair Market Value. | |
Mitigate Risk: Our compensation plans have provisions to mitigate undue risk, including caps on the maximum level of payouts, clawback provisions, multiple performance metrics and board and management processes to identify risk. The Compensation Committee does not believe any of our compensation programs create risks that are reasonably likely to have a material adverse impact on the Company.
|
No Fixed Term or Evergreen Employment Agreements; No Severance Agreements: All NEO employment letters are open ended with no specific end dates and our NEOs have no severance agreements. | |
Regularly Review Share Utilization: Management and the board regularly evaluate share utilization levels by reviewing the dilutive impact of stock compensation.
|
No Permitted Hedging, Short Sales or Derivative Transactions in Company Stock. | |
Clawback Policy: Named Executive Officers are subject to a clawback policy that applies where there has been payment of a bonus or equity award predicated upon the achievement of financial results that were the product of fraudulent activity or that were subsequently the subject of a material negative restatement.
|
34 / 2018 PROXY STATEMENT |
EXECUTIVE COMPENSATION
STARBUCKS CORPORATION | 2018 PROXY STATEMENT / 35 |
EXECUTIVE COMPENSATION
36 / 2018 PROXY STATEMENT |
EXECUTIVE COMPENSATION
STARBUCKS CORPORATION | 2018 PROXY STATEMENT / 37 |
The following table sets forth information regarding the fiscal 2017, 2016 and 2015 compensation for our NEOs, except fiscal 2015 and 2016 information for Mr. Mutty and Ms. Helm is not provided because they were not NEOs in either of those years.
Name and Principal Position |
Year | Salary ($) |
Bonus ($) |
Stock Awards ($)(1) |
Option Awards(1) |
Non-Equity Incentive Plan Compensation ($)(2) |
All Other Compensation ($)(3) |
Total ($) |
||||||||||||||||||||||||
Howard Schultz
|
|
2017
|
|
|
807,693
|
(4)
|
|
|
|
|
7,893,379
|
|
|
8,096,499
|
|
|
843,750
|
|
|
339,569
|
|
|
17,980,890
|
| ||||||||
executive chairman |
|
2016
|
|
|
1,500,000
|
|
|
|
|
|
7,546,811
|
|
|
9,362,066
|
|
|
3,187,500
|
|
|
219,121
|
|
|
21,815,498
|
| ||||||||
|
2015
|
|
|
1,500,000
|
|
|
|
|
|
7,482,977
|
|
|
6,886,300
|
|
|
4,005,000
|
|
|
217,076
|
|
|
20,091,353
|
| |||||||||
Kevin Johnson
|
|
2017
|
|
|
1,154,808
|
|
|
|
|
|
5,914,248
|
|
|
3,919,630
|
|
|
469,688
|
|
|
21,990
|
|
|
11,480,364
|
| ||||||||
president and ceo |
|
2016
|
|
|
1,000,000
|
|
|
500,000
|
|
|
4,934,433
|
|
|
3,579,055
|
|
|
1,020,000
|
|
|
24,424
|
|
|
11,057,912
|
| ||||||||
|
2015
|
|
|
576,923
|
|
|
500,000
|
|
|
4,263,892
|
|
|
2,140,180
|
|
|
924,231
|
|
|
68,947
|
|
|
8,474,173
|
| |||||||||
Scott Maw
|
|
2017
|
|
|
789,423
|
|
|
|
|
|
2,868,709
|
|
|
1,907,030
|
|
|
180,000
|
|
|
16,440
|
|
|
5,761,602
|
| ||||||||
executive vice president
and cfo |
|
2016
|
|
|
727,404
|
|
|
|
|
|
1,741,585
|
|
|
1,263,192
|
|
|
637,500
|
|
|
15,750
|
|
|
4,385,431
|
| ||||||||
|
2015
|
|
|
632,500
|
|
|
|
|
|
1,424,049
|
|
|
740,127
|
|
|
844,388
|
|
|
13,308
|
|
|
3,654,372
|
| |||||||||
Clifford Burrows
|
|
2017
|
|
|
822,885
|
|
|
|
|
|
2,581,817
|
|
|
1,716,322
|
|
|
222,750
|
|
|
21,990
|
|
|
5,365,764
|
| ||||||||
group president Siren Retail |
|
2016
|
|
|
811,404
|
|
|
|
|
|
2,031,850
|
|
|
1,473,724
|
|
|
619,400
|
|
|
30,216
|
|
|
4,966,594
|
| ||||||||
|
2015
|
|
|
796,300
|
|
|
|
|
|
2,014,665
|
|
|
1,047,072
|
|
|
960,338
|
|
|
38,709
|
|
|
4,857,084
|
| |||||||||
John Culver
|
|
2017
|
|
|
809,135
|
|
|
|
|
|
2,581,817
|
|
|
1,716,322
|
|
|
237,600
|
|
|
21,990
|
|
|
5,366,864
|
| ||||||||
group president International
and Channels(5) |
|
2016
|
|
|
727,558
|
|
|
|
|
|
2,031,850
|
|
|
1,473,724
|
|
|
990,000
|
|
|
20,992
|
|
|
5,244,124
|
| ||||||||
|
2015
|
|
|
633,300
|
|
|
|
|
|
1,533,436
|
|
|
796,967
|
|
|
855,588
|
|
|
17,697
|
|
|
3,836,988
|
| |||||||||
Paul Mutty
senior vice president,
interim general counsel(6) |
2017 | 387,770 | | 114,747 | 76,280 | 39,465 | 21,238 | 639,500 | ||||||||||||||||||||||||
Lucy Helm
executive vice president,
chief partner officer(7) |
2017 | 582,019 | | 1,147,462 | 762,807 | 101,250 | 21,652 | 2,615,190 |
(1) | Represents the aggregate grant date fair value, as computed in accordance with FASB ASC Topic 718. These amounts do not reflect whether the recipient has actually realized or will realize a financial benefit from the awards (such as by exercising stock options). The grant date fair values have been determined based on the assumptions and methodologies set forth in the Companys Form 10-K (Note 12: Employee Stock and Benefit Plans) for that year. The grant date fair value for PRSUs is reported based upon the probable outcome of the performance conditions (target) on the grant date in accordance with SEC rules. The value of the annual PRSU awards granted in fiscal year 2017 assuming achievement of the maximum performance level of 200% would have been: Mr. Schultz$15,786,758; Mr. Johnson$11,828,496; Mr. Maw$5,737,418; Mr. Burrows$5,163,634; Mr. Culver$5,163,634; Mr. Mutty$229,494 and Ms. Helm $2,294,924. The assumed expected term of stock options shown in the Companys Form 10-K (Note 12: Employee Stock and Benefit Plans) is a weighted average expected term covering all optionees. However, Mr. Schultzs historical practice of not exercising stock options until very late in their term requires us to apply a unique expected term assumption that exceeds eight years when valuing options granted to him for purposes of GAAP. In addition, in accordance with GAAP, the fair value of a stock option granted to a retirement-eligible partner will be expensed earlier than an identical stock option granted to a partner who is not retirement eligible. Mr. Schultz waived the accelerated vesting feature for options granted subsequent to fiscal year 2006. During fiscal 2017, Messrs. Burrows, Culver, Mutty and Ms. Helm were retirement eligible. |
(2) | These amounts represent annual bonus awards under the EMBP. |
(3) | The table below shows the components of All Other Compensation for the named executive officers. |
(4) | Effective April 3, 2017, Mr. Schultz stepped down as chief executive officer and assumed the role of executive chairman. At that time his annualized salary was reduced from $1,500,000 to $1. |
(5) | Effective October 2, 2017, Mr. Culvers title changed from group president, Global Retail to group president, International and Channels. |
(6) | Effective August 1, 2017, Mr. Mutty was named interim general counsel. |
(7) | Effective August 1, 2017, Ms. Helm assumed the role of chief partner officer at which time she ceased being an executive officer of the Company. Immediately prior to that change in role, Ms. Helm served as executive vice president, general counsel and secretary. |
38 / 2018 PROXY STATEMENT |
EXECUTIVE COMPENSATION TABLES
Fiscal 2017 all Other Compensation Table
Name |
Insurance Premiums ($)(1) |
Retirement Contributions ($)(2) |
Security ($)(3) |
Other ($)(4) |
Total ($) |
|||||||||||||||
Howard Schultz
|
|
6,492
|
|
|
8,077
|
|
|
325,000
|
|
|
|
|
|
339,569
|
| |||||
Kevin Johnson
|
|
5,490
|
|
|
13,500
|
|
|
|
|
|
3,000
|
|
|
21,990
|
| |||||
Scott Maw
|
|
2,940
|
|
|
13,500
|
|
|
|
|
|
|
|
|
16,440
|
| |||||
Clifford Burrows
|
|
5,490
|
|
|
13,500
|
|
|
|
|
|
3,000
|
|
|
21,990
|
| |||||
John Culver
|
|
5,490
|
|
|
13,500
|
|
|
|
|
|
3,000
|
|
|
21,990
|
| |||||
Paul Mutty
|
|
4,738
|
|
|
13,500
|
|
|
|
|
|
3,000
|
|
|
21,238
|
| |||||
Lucy Helm
|
|
5,152
|
|
|
13,500
|
|
|
|
|
|
3,000
|
|
|
21,652
|
|
(1) | These amounts represent the premiums paid on behalf of our NEOs under our executive life and disability insurance plans. |
(2) | These amounts represent Company matching contributions to the accounts of our NEOs in the Companys 401(k) plan. |
(3) | This amount represents the aggregate incremental costs to the Company of providing home security services and equipment to the executive chairman. We determine the incremental cost to us for this benefit based on the actual costs or charges incurred. |
(4) | These amounts represent the cost of providing an annual physical examination. |
STARBUCKS CORPORATION | 2018 PROXY STATEMENT / 39 |
EXECUTIVE COMPENSATION TABLES
Fiscal 2017 Grants of Plan-Based Awards Table
The following table sets forth information regarding fiscal 2017 annual incentive bonus awards and equity awards granted to our named executive officers in fiscal 2017.
All Other |
All Other Option Awards: Number of Securities Underlying Options |
Exercise or Base Price of Option Awards ($/SH) |
Grant of Stock |
|||||||||||||||||||||||||||||||||||||||||||||||
Potential Future Payouts Under Non-Equity Incentive Plan Awards |
Potential Future Payouts Under Equity Incentive Plan Awards |
|||||||||||||||||||||||||||||||||||||||||||||||||
Name |
Award | Approval Date |
Grant Date(1) | Threshold ($) |
Target ($) |
Maximum ($) |
Threshold (#) |
Target (#) |
Maximum (#) |
|||||||||||||||||||||||||||||||||||||||||
Howard Schultz |
Annual Incentive(3) Stock Options(4) Stock Options(6) PRSUs(5) PRSUs(7)
|
|
11/16/16 3/23/17 11/16/16 3/23/17
|
|
|
11/21/16 4/17/17 11/21/16 4/17/17
|
|
375,000 | 3,750,000 | 7,500,000 |
|
34,759 1,937
|
|
|
139,037 7,748
|
|
|
278,074 15,496
|
|
|
609,813 |
|
|
56.10 |
|
|
7,673,338 423,161 7,458,612 434,767
|
| ||||||||||||||||||||||
Kevin Johnson |
Annual Incentive(3) Stock Options(4) Stock Options(6) PRSUs(5) PRSUs(7)
|
|
11/16/16 3/23/17 11/16/16 3/23/17
|
|
|
11/21/16 4/17/17 11/21/16 4/17/17
|
|
208,750 | 2,087,500 | 4,175,000 |
|
25,401 2,066
|
|
|
101,604 8,264
|
|
|
203,208 16,528
|
|
|
445,633 |
|
|
56.10 |
|
|
3,623,353 296,277 5,450,526 463,722
|
| ||||||||||||||||||||||
Scott Maw |
Annual Incentive(3) Stock Options(4) PRSUs(5)
|
|
11/16/16 11/16/16
|
|
|
11/21/16 11/21/16
|
|
80,000 | 800,000 | 1,600,000 |
|
13,369
|
|
|
53,476
|
|
|
106,952
|
|
|
234,544 |
|
|
56.10 |
|
|
1,907,030 2,868,709
|
| ||||||||||||||||||||||
Clifford Burrows |
Annual Incentive(3) Stock Options(4) PRSUs(5)
|
|
11/16/16 11/16/16
|
|
|
11/21/16 11/21/16
|
|
99,000 | 990,000 | 1,980,000 |
|
12,032
|
|
|
48,128
|
|
|
96,256
|
|
|
211,089 |
|
|
56.10 |
|
|
1,716,322 2,581,817
|
| ||||||||||||||||||||||
John Culver |
Annual Incentive(3) Stock Options(4) PRSUs(5)
|
|
11/16/16 11/16/16
|
|
|
11/21/16 11/21/16
|
|
59,400 | 990,000 | 1,980,000 |
|
12,032
|
|
|
48,128
|
|
|
96,256
|
|
|
211,089 |
|
|
56.10 |
|
|
1,716,322 2,581,817
|
| ||||||||||||||||||||||
Paul Mutty |
Annual Incentive(3) Stock Options(4) PRSUs(5)
|
|
11/16/16 11/16/16
|
|
|
11/21/16 11/21/16
|
|
17,540 | 175,401 | 350,802 |
|
535
|
|
|
2,139
|
|
|
4,278
|
|
|
9,382 |
|
|
56.10 |
|
|
76,280 114,747
|
| ||||||||||||||||||||||
Lucy Helm |
Annual Incentive(3) Stock Options(4) PRSUs(5)
|
|
11/16/16 11/16/16
|
|
|
11/21/16 11/21/16
|
|
45,000 | 450,000 | 900,000 |
|
5,348
|
|
|
21,390
|
|
|
42,780
|
|
|
93,817 |
|
|
56.10 |
|
|
762,807 1,147,462
|
|
(1) | Annual option awards granted in fiscal 2017 were approved by the independent directors on the recommendation of the Compensation Committee except for grants to Mr. Schultz and Mr. Johnson, which were approved by the independent members of the board. In accordance with our equity grant timing policy in place at the time of the November 2016 grant, the grant date for the regular annual equity grant was the second business day after our fiscal 2016 earnings release; however, since the earnings release was before the November Compensation Committee and board meetings (November 15-16, 2016), the grant date, according to the policy, was the Monday following such meetings (Monday, November 21, 2016). |
(2) | The grant date fair value for PRSUs is reported based upon the probable outcome of the performance conditions (target) at the grant date in accordance with SEC rules. |
(3) | Reflects information regarding awards under the EMBP. |
(4) | Reflects stock options that vest in four equal annual installments (subject to rounding of partial shares) beginning on the first anniversary of the grant date. |
(5) | Reflects PRSUs that, if earned, vest 50% on the second anniversary of the grant date and 50% on the third anniversary of the grant date. |
(6) | Reflects stock options that vest in four equal installments (subject to rounding of partial shares) on each of November 21, 2017, November 21, 2018, November 21, 2019 and November 21, 2020. |
(7) | Reflects RSUs that, if earned, vest 50% on November 21, 2018 and 50% on November 21, 2019, subject to continued employment. |
The following narrative provides further detail with respect to the information in the table above.
40 / 2018 PROXY STATEMENT |
EXECUTIVE COMPENSATION TABLES
STARBUCKS CORPORATION | 2018 PROXY STATEMENT / 41 |
EXECUTIVE COMPENSATION TABLES
Outstanding Equity Awards at Fiscal 2017 Year-End Table
The following table provides information regarding stock options, RSUs and PRSUs held by our named executive officers as of October 1, 2017. No named executive officer has any other form of equity award outstanding.
Option Awards
|
Stock Awards
|
|||||||||||||||||||||||||||||||||||||||
Name |
Grant Date | Number
of (#) Total Grant |
Number of Securities Underlying Unexercised Options (#) Exercisable |
Number of Securities Underlying Unexercised Options (#) Un Exercisable |
Number of Securities Underlying Options (#) Previously Exercised |
Option ($) |
Option Expiration Date |
Number of Shares (#) |
Market Value of Shares or Units of Stock That Have Not ($)(1) |
Equity (#) |
Equity Incentive Plan Awards: of Unearned or Other Rights That ($)(2) |
|||||||||||||||||||||||||||||
Howard |
|
11/19/07(3) |
|
|
1,374,226 |
|
|
1,074,226 |
|
|
300,000 |
|
11.44 |
11/19/17 | ||||||||||||||||||||||||||
Schultz |
|
11/16/09(3) |
|
|
1,220,448 |
|
|
820,448 |
|
|
400,000 |
|
11.03 |
11/16/19 |
||||||||||||||||||||||||||
|
11/15/10(3) |
|
1,050,932 | 1,050,932 | 15.39 | 11/15/20 | ||||||||||||||||||||||||||||||||||
|
11/14/11(3) |
|
859,304 | 859,304 | 21.82 | 11/14/21 | ||||||||||||||||||||||||||||||||||
|
11/19/12(3) |
|
861,624 | 861,624 | 24.87 | 11/19/22 | ||||||||||||||||||||||||||||||||||
|
11/11/13(3) |
|
687,424 | 515,568 | 171,856 | 40.50 | 11/11/23 | |||||||||||||||||||||||||||||||||
|
11/17/14(4) |
|
135,294 | 7,266,641 | ||||||||||||||||||||||||||||||||||||
|
11/17/14(3) |
|
667,122 | 333,562 | 333,560 | 38.92 | 11/17/24 | |||||||||||||||||||||||||||||||||
|
11/16/15(4) |
|
83,553 | 4,487,632 | ||||||||||||||||||||||||||||||||||||
|
11/16/15(3) |
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