def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY
STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
|
|
|
Filed by the Registrant
þ |
|
Filed by a Party other than the Registrant o |
|
|
Check the appropriate box: |
|
|
|
o Preliminary Proxy Statement |
|
o
Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)) |
|
þ Definitive Proxy Statement |
|
o Definitive Additional Materials |
|
o
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)
Payment of Filing Fee (Check the appropriate box):
|
|
|
þ No fee required. |
|
o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11. |
|
|
|
1) Title of each class of securities to which transaction applies: |
|
|
|
2) Aggregate number of securities to which transaction applies: |
|
|
|
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): |
|
|
|
4) Proposed maximum aggregate value of transaction: |
|
|
|
o
Fee paid previously with preliminary materials. |
|
|
|
o Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing. |
|
|
|
1) Amount Previously Paid: |
|
|
|
2) Form, Schedule or Registration Statement No.: |
Seattle,
Washington
January 22, 2010
Dear Shareholders:
You are cordially invited to attend the Starbucks Corporation
2010 Annual Meeting of Shareholders on March 24, 2010 at
10 a.m. (Pacific Time). The meeting will be held at Marion
Oliver McCaw Hall at the Seattle Center, located on Mercer
Street, between Third and Fourth Avenues, in Seattle,
Washington. Directions to McCaw Hall and transportation
information appear on the back cover of the notice of annual
meeting and proxy statement.
Under the Securities and Exchange Commission rules that allow
companies to furnish proxy materials to shareholders over the
Internet, Starbucks has 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,
2010, we mailed to our shareholders a Notice of Internet
Availability of Proxy Materials (the Notice)
containing instructions on how to access our fiscal 2009 proxy
statement and 2009 annual report to shareholders. The Notice
also provides instructions on how to vote online or by telephone
and includes instructions on how to receive a paper copy of the
proxy materials by mail. The Notice will serve as an admission
ticket for one shareholder to attend the 2010 Annual Meeting of
Shareholders. On January 26, 2010, we also first mailed
this proxy statement and the enclosed proxy card to certain
shareholders. If you received a paper copy of the proxy
materials in the mail, the proxy statement includes an admission
ticket for one shareholder to attend the Annual Meeting of
Shareholders. Each attendee must present the Notice, an
admission ticket or other proper form of documentation (as
described in the section Annual Meeting Information
in the proxy statement) to be admitted.
The matters to be acted upon are described in the notice of
annual meeting and proxy statement. At the Annual Meeting of
Shareholders, we will also report on our operations and respond
to questions from shareholders.
As always, we anticipate a large number of attendees at the
Annual Meeting of Shareholders. Again this year, seating will be
limited to McCaw Hall only, and we cannot
guarantee seating for all shareholders. Shareholders may also
log onto a live webcast of the meeting; please see details on
our Investor Relations website at
http://investor.starbucks.com.
Doors will open at 8 a.m. (Pacific Time) the day of the
event.
YOUR VOTE IS VERY IMPORTANT. Whether or not you
plan to attend the Annual Meeting of Shareholders, we urge you
to vote and submit your proxy by the Internet, telephone or mail
in order to ensure the presence of a quorum. If you attend the
meeting you will, of course, have the right to revoke the proxy
and vote your shares in person. If you hold your shares through
an account with a brokerage firm, bank or other nominee, please
follow the instructions you receive from them to vote your
shares.
Very truly yours,
Howard Schultz
chairman, president and chief executive officer
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 on Mercer Street, between Third and Fourth Avenues, in
Seattle, Washington, on March 24, 2010 at 10 a.m.
(Pacific Time) for the following purposes:
|
|
|
|
1.
|
To elect eleven directors nominated by the board of directors to
serve until the 2011 Annual Meeting of Shareholders;
|
|
|
2.
|
To ratify the selection of Deloitte & Touche LLP as
our independent registered public accounting firm for the fiscal
year ending October 3, 2010;
|
|
|
3.
|
To consider one shareholder proposal described in the
accompanying proxy statement, if properly presented at the
Annual Meeting of Shareholders; and
|
|
|
4.
|
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 14, 2010 will be entitled to notice of and to vote
at the Annual Meeting of Shareholders and any adjournments
thereof.
Important Notice Regarding the Availability of Proxy
Materials for the Annual Meeting of Shareholders to be Held on
March 24, 2010. Our proxy statement is attached. Financial
and other information concerning Starbucks is contained in our
annual report to shareholders for the fiscal year ended
September 27, 2009. The proxy statement and our fiscal 2009
annual report to shareholders are available on our website at
http://investor.starbucks.com.
Additionally, and in accordance with Securities and Exchange
Commission rules, you may access our proxy materials at
www.proxyvote.com, which does not have cookies that
identify visitors to the site.
YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to
attend the Annual Meeting of Shareholders, we urge you to vote
and submit your proxy in order to ensure the presence of a
quorum.
Registered holders may vote:
1. By Internet: go to www.proxyvote.com;
2. By toll-free telephone: call
1-800-690-6903; or
|
|
|
|
3.
|
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.
|
Any proxy may be revoked at any time prior to its exercise at
the Annual Meeting of Shareholders.
Beneficial Shareholders. If your shares are
held in the name of a broker, bank or other holder of record,
follow the voting instructions you receive from the holder of
record to vote your shares.
By order of the board of directors,
Paula E. Boggs
secretary
Seattle, Washington
January 22, 2010
TABLE OF
CONTENTS
|
|
|
|
|
Page
|
|
|
|
1
|
|
|
2
|
|
|
3
|
|
|
5
|
|
|
5
|
|
|
5
|
|
|
6
|
|
|
7
|
|
|
7
|
|
|
9
|
|
|
10
|
|
|
10
|
|
|
10
|
|
|
11
|
|
|
13
|
|
|
14
|
|
|
14
|
|
|
17
|
|
|
20
|
|
|
20
|
|
|
39
|
|
|
40
|
|
|
42
|
|
|
44
|
|
|
46
|
|
|
46
|
|
|
46
|
|
|
48
|
|
|
48
|
|
|
51
|
|
|
51
|
|
|
52
|
|
|
52
|
|
|
52
|
|
|
53
|
|
|
53
|
|
|
56
|
|
|
56
|
|
|
56
|
|
|
56
|
|
|
57
|
|
|
See outside
back cover
|
STARBUCKS
CORPORATION
2401 Utah Avenue South
Seattle, Washington 98134
PROXY
STATEMENT
for the
ANNUAL MEETING OF SHAREHOLDERS
We are making this proxy statement available to you on or about
January 22, 2010 in connection with the solicitation of
proxies by our board of directors for the Starbucks Corporation
2010 Annual Meeting of Shareholders. At Starbucks and in this
proxy statement, we refer to our employees as partners. Also in
this proxy statement we sometimes refer to Starbucks as the
Company, we or us, and to
the 2010 Annual Meeting of Shareholders as the annual
meeting. When we refer to the Companys fiscal year,
we mean the annual period ending on the Sunday closest to
September 30 of the stated year. This proxy statement is for
fiscal 2009, which was from September 29, 2008 through
September 27, 2009 (fiscal 2009).
Internet
Availability of Annual Meeting Materials
Under Securities and Exchange Commission (SEC)
rules, Starbucks has elected to make our proxy materials
available to the majority of our shareholders over the Internet
rather than mailing paper copies of those materials to each
shareholder. On January 26, 2010, we mailed to the majority
of our shareholders a Notice of Internet Availability of Proxy
Materials (the Notice) directing shareholders to a
website where they can access our fiscal 2009 proxy statement
and fiscal 2009 annual report to shareholders and view
instructions on how to vote via the Internet or by phone. If you
received the Notice only and would like to receive a paper copy
of the proxy materials, please follow the instructions printed
on the Notice to request that a paper copy be mailed to you.
Annual
Meeting Information
The annual meeting will be held at 10 a.m. (Pacific Time)
on March 24, 2010, at Marion Oliver McCaw Hall at the
Seattle Center, located on Mercer Street, between Third and
Fourth Avenues, in Seattle, Washington. Directions to McCaw Hall
and a map are provided on the back cover of this proxy
statement. For those shareholders receiving a Notice, the Notice
will serve as an admission ticket for one shareholder to attend
the annual meeting. For those shareholders receiving a paper
copy of proxy materials in the mail, an admission ticket for one
shareholder to attend the annual meeting is enclosed in the
proxy materials.
Majority
Vote Standard in Uncontested Director Elections
We have adopted majority voting procedures for the election of
directors in uncontested elections. In an uncontested election,
nominees must receive more for than
against votes to be elected. The term of any
director who does not receive a majority of votes cast in an
election held under the majority voting standard terminates on
the earliest to occur of (i) 90 days after the date
election results are certified; (ii) the date the director
resigns; or (iii) the date the board of directors fills the
position. As provided in our bylaws, a contested
election is one in which:
|
|
|
|
|
as of the last day for giving notice of a shareholder nominee, a
shareholder has nominated a candidate for director according to
the requirements of our bylaws; and
|
|
|
|
the board of directors considers that a shareholder candidacy
has created a bona fide election contest.
|
Voting
Information
Record Date. The record date for the annual
meeting is January 14, 2010. On the record date, there were
743,179,676 shares of our common stock outstanding and
there were no outstanding shares of any other class of stock.
Voting Your Proxy. Holders of shares of common
stock are entitled to cast one vote per share on all matters.
Proxies will be voted as instructed by the shareholder or
shareholders granting the proxy. Unless contrary
instructions are specified, if the proxy is completed and
submitted (and not revoked) prior to the annual meeting, the
shares of Starbucks common stock represented by the proxy will
be voted: (i) FOR the election of each of the eleven
director candidates nominated by the board of directors;
(ii) FOR the ratification of the selection of
Deloitte & Touche LLP as our independent registered
public accounting firm for the fiscal year ending
October 3, 2010 (fiscal 2010);
(iii) AGAINST the shareholder proposal regarding
recycling strategy for beverage containers; and (iv) in
accordance with the best judgment of the named proxies on any
other matters properly brought before the annual meeting.
Revoking Your Proxy. A shareholder who
delivers an executed proxy pursuant to this solicitation may
revoke it at any time before it is exercised by
(i) executing and delivering a later-dated proxy card to
our corporate secretary prior to the annual meeting;
(ii) delivering written notice of revocation of the proxy
to our corporate secretary prior to the annual meeting; or
(iii) attending and voting in person at the annual meeting.
Attendance at the annual meeting, in and of itself, will not
constitute a revocation of a proxy. If you voted by telephone or
the Internet and wish to change your vote, you may call the
toll-free number or go to the Internet site, as may be
applicable in the case of your earlier vote, and follow the
directions for changing your vote.
Vote Required. The presence, in person or by
proxy, of holders of a majority of the outstanding shares of
Starbucks common stock is required to constitute a quorum for
the transaction of business at the annual meeting. Abstentions
and broker non-votes (shares held by a broker or
nominee that does not have discretionary authority to vote on a
particular matter and has not received voting instructions from
its client) are counted for purposes of determining the presence
or absence of a quorum for the transaction of business at the
annual meeting. If a quorum is present, a nominee for election
to a position on the board of directors will be elected as a
director if the votes cast for the nominee exceed the votes cast
against the nominee. If a quorum is present, ratification of our
independent registered public accounting firm and approval of
the shareholder proposal, and all other matters that properly
come before the meeting, require that the votes cast in favor of
such actions exceed the votes cast against such actions. The
following will not be votes cast and will have no effect on the
election of any director nominee or the other proposals:
(i) broker non-votes; (ii) a share whose ballot is
marked as abstain; (iii) a share otherwise present at the
annual meeting but for which there is an abstention; and
(iv) a share otherwise present at the annual meeting as to
which a shareholder gives no authority or direction.
Please note that this year the rules that govern how brokers
vote your shares have changed. Brokers may no longer use
discretionary authority to vote shares on the election of
directors if they have not received instructions from their
clients. Please vote your proxy so your vote can be counted.
Proxies and ballots will be received and tabulated by Broadridge
Financial Services, our inspector of elections for the annual
meeting.
Expenses of Solicitation. We will bear the
expense of preparing, printing and mailing this proxy statement
and the proxies we solicit. Proxies will be solicited by mail,
telephone, personal contact and electronic means and may also be
solicited by directors, officers and Starbucks partners in
person, by the Internet, by telephone or by facsimile
transmission, without additional remuneration.
We will also request brokerage firms, banks, nominees,
custodians and fiduciaries to forward proxy materials to the
beneficial owners of shares of our stock as of the record date
and will reimburse them for the cost of forwarding the proxy
materials in accordance with customary practice. Your
cooperation in promptly voting your shares and submitting your
proxy by the Internet or telephone, or by completing and
returning the enclosed proxy card (if you received your proxy
materials in the mail), will help to avoid additional expense.
PROPOSAL 1
ELECTION OF DIRECTORS
In accordance with our bylaws, our board of directors has set
its size at eleven members; there are currently eleven members.
Under our bylaws, the number of directors may be changed at any
time by a resolution of the board of directors. The terms of
each of the eleven current directors expire upon the election
and qualification of the directors to be elected at the 2010
annual meeting. The board of directors has nominated each of the
eleven current directors for re-election at the annual meeting,
to serve until the 2011 Annual Meeting of Shareholders and until
their respective successors have been elected and qualified.
2
Unless otherwise directed, the persons named in the proxy intend
to vote all proxies FOR the election of the nominees, as
listed below, each of whom has consented to serve as a director
if elected. If, at the time of the annual meeting, any nominee
is unable or declines to serve as a director, the discretionary
authority provided in the enclosed proxy will be exercised to
vote for a substitute candidate designated by the board of
directors, unless the board chooses to reduce its own size. The
board of directors has no reason to believe any of the nominees
will be unable or will decline to serve if elected. Proxies
cannot be voted for more than eleven persons since that is the
total number of nominees.
Set forth below is certain information furnished to us by the
director nominees. There are no family relationships among any
of our directors or executive officers. None of the corporations
or other organizations referenced in the biographical
information below is a parent, subsidiary or other affiliate of
Starbucks.
Nominees
HOWARD SCHULTZ, 56, is the founder of Starbucks Corporation and
serves as our chairman, president and chief executive officer.
Mr. Schultz has served as chairman of the board of
directors since our inception in 1985, and in January 2008, he
reassumed the role of president and chief executive officer.
From June 2000 to February 2005, Mr. Schultz also held the
title of chief global strategist. From November 1985 to June
2000, he served as chairman of the board and chief executive
officer. From November 1985 to June 1994, Mr. Schultz also
served as president. From January 1986 to July 1987,
Mr. Schultz was the chairman of the board, chief executive
officer and president of Il Giornale Coffee Company, a
predecessor to the Company. From September 1982 to December
1985, Mr. Schultz was the director of retail operations and
marketing for Starbucks Coffee Company, a predecessor to the
Company.
BARBARA BASS, 58, has been a Starbucks director since January
1996. Since 1993, Ms. Bass has been the president of the
Gerson Bakar Foundation, a charitable organization. From 1989 to
1992, Ms. Bass was president and chief executive officer of
the Emporium Weinstock Division of Carter Hawley Hale Stores,
Inc. She also serves on the board of directors of DFS Group
Limited and bebe stores, inc.
WILLIAM W. BRADLEY, 66, has been a Starbucks director since June
2003. Mr. Bradley is a managing director of
Allen & Company LLC, an investment banking firm. From
2001 until 2004, he acted as chief outside advisor to
McKinsey & Companys non-profit practice. In
2000, Mr. Bradley was a candidate for the Democratic
nomination for President of the United States. He served as a
senior advisor and vice chairman of the International Council of
JP Morgan & Co., Inc. from 1997 through 1999. During
that time, Mr. Bradley also worked as an essayist for
CBS Evening News, and as a visiting professor at Stanford
University, Notre Dame University and the University of
Maryland. Mr. Bradley served in the U.S. Senate from
1979 until 1997, representing the State of New Jersey. Prior to
serving in the U.S. Senate, he was an Olympic gold medalist
in 1964, and from 1967 through 1977 he played professional
basketball for the New York Knicks, during which time they won
two world championships. Mr. Bradley also serves on the
boards of directors of Willis Group Holdings Limited and Seagate
Technology.
MELLODY HOBSON, 40, has been a Starbucks director since February
2005. Ms. Hobson has served as the president and a director
of Ariel Investments, LLC, a Chicago-based investment management
firm, and as the chairman (since 2006) and a trustee (since
2000) of the mutual funds it manages. She previously served
as senior vice president and director of marketing at Ariel
Capital Management, Inc. from 1994 to 2000, and as vice
president of marketing at Ariel Capital Management, Inc. from
1991 to 1994. Ms. Hobson works with a variety of civic and
professional institutions, including serving as a director of
the Chicago Public Library as well as its foundation and as a
board member of the Field Museum and the Chicago Public
Education Fund. In 2004, The Wall Street Journal named
her as one of its 50 Women to Watch. Ms. Hobson
also serves on the boards of directors of DreamWorks Animation
SKG, Inc. and The Estee Lauder Companies, Inc. Additionally, she
is on the board of governors of the Investment Company Institute
and is a member of the SEC Investment Advisory Committee.
KEVIN R. JOHNSON, 49, has been a Starbucks director since March
2009. Mr. Johnson has served as the Chief Executive Officer
of Juniper Networks, Inc., a leading provider of
high-performance networking products and services, since
September 2008. Mr. Johnson also serves on the board of
directors of Juniper Networks. Prior to joining Juniper
Networks, Mr. Johnson served as President, Platforms and
Services Division for Microsoft Corporation, a worldwide
provider of software, services and solutions. Mr. Johnson
was a member of Microsofts Senior Leadership Team and held
a number of senior executive positions over the course of his
3
16 years at Microsoft. Prior to joining Microsoft in 1992,
Mr. Johnson worked in IBMs systems integration and
consulting business.
OLDEN LEE, 68, has been a Starbucks director since June 2003.
Mr. Lee has also served as our interim executive vice
president, Partner Resources since April 2009. Mr. Lee
undertook the role of interim head of Partner Resources while
the Company searched for an executive vice president, Partner
Resources. Mr. Lee will continue with the Company on an
interim basis to assist the new head of Partner Resources and
ensure a smooth transition. Prior to serving in his current
role, Mr. Lee worked with PepsiCo, Inc. for 28 years
in a variety of positions, including serving as senior vice
president of human resources of its Taco Bell division and
senior vice president and chief personnel officer of its KFC
division. Mr. Lee currently serves as principal of Lee
Management Consulting, a management consulting firm he founded.
Mr. Lee also serves on the board of directors of TLC Vision
Corporation.
SHERYL SANDBERG, 40, has been a Starbucks director since March
2009. Ms. Sandberg has served as the Chief Operating
Officer of Facebook, Inc., an online social utility company,
since March 2008. From 2001 to March 2008, Ms. Sandberg was
the Vice President of Global Online Sales and Operations for
Google Inc., an Internet search engine company.
Ms. Sandberg also is a former Chief of Staff of the
U.S. Treasury Department and previously served as a
management consultant with McKinsey & Company and as
an economist with The World Bank. Ms. Sandberg serves on a
number of nonprofit boards including The Brookings Institution,
The AdCouncil, Women for Women International, and
V-Day. In
2008, Ms. Sandberg was named as one of the 50 Most
Powerful Women in Business by Fortune and one of
the 50 Women to Watch by The Wall Street
Journal.
JAMES G. SHENNAN, JR., 68, has been a Starbucks director since
March 1990. Mr. Shennan served as a general partner of
Trinity Ventures, a venture capital organization, from September
1989 to July 2005, when he became general partner emeritus.
Prior to joining Trinity Ventures, he served as the chief
executive of Addison Consultants, Inc., an international
marketing services firm, and two of its predecessor companies.
Mr. Shennan also serves on the board of directors of P.F.
Changs China Bistro, Inc.
JAVIER G. TERUEL, 59, has been a Starbucks director since
September 2005. Mr. Teruel served as vice chairman of
Colgate-Palmolive Company, a consumer products company, from
July 2004 to April 2007, when he retired. Prior to being
appointed vice chairman, Mr. Teruel served as
Colgate-Palmolives executive vice president responsible
for Asia, Central Europe, Africa and Hills Pet Nutrition.
After joining Colgate in Mexico in 1971, Mr. Teruel served
as vice president of Body Care in Global Business Development in
New York, and president and general manager of Colgate-Mexico.
He also served as president of Colgate-Europe, and as chief
growth officer responsible for the companys growth
functions. Mr. Teruel currently serves as a partner of
Spectron Desarrollo, SC, an investment management and consulting
firm. He also serves on the boards of directors of The Pepsi
Bottling Group, Inc. and J.C. Penney Company, Inc.
MYRON E. ULLMAN, III, 63, has been a Starbucks director
since January 2003. Mr. Ullman has served as the chairman
of the board of directors and chief executive officer of J.C.
Penney Company, Inc., a chain of retail department stores, since
December 2004. Mr. Ullman served as directeur general,
group managing director of LVMH Möet Hennessy Louis
Vuitton, a luxury goods manufacturer and retailer, from July
1999 to January 2002. From January 1995 to June 1999, he served
as chairman and chief executive officer of DFS Group Limited, a
retailer of luxury branded merchandise. From 1992 to 1995,
Mr. Ullman served as chairman and chief executive officer
of R.H. Macy & Co., Inc. He also serves on the board
of directors of the Federal Reserve Bank of Dallas.
CRAIG E. WEATHERUP, 64, has been a Starbucks director since
February 1999. Mr. Weatherup worked with PepsiCo, Inc. for
24 years and served as chief executive officer of its
worldwide Pepsi-Cola business and President of PepsiCo, Inc. He
also led the initial public offering of The Pepsi Bottling
Group, Inc., where he served as chairman and chief executive
officer from March 1999 to January 2003. Mr. Weatherup also
serves on the board of directors of Macys, Inc.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE
FOR THE ELECTION OF EACH OF THE NOMINEES TO THE BOARD OF
DIRECTORS.
4
CORPORATE
GOVERNANCE
Board
Committees and Related Matters
During fiscal 2009, our board of directors had three standing
committees: the Audit and Compliance Committee (the Audit
Committee), the Compensation and Management Development
Committee (the Compensation Committee) and the
Nominating and Corporate Governance Committee (the
Nominating Committee). The board of directors makes
committee and committee chair assignments annually at its
meeting immediately following the annual meeting of
shareholders, although further changes to committee assignments
are made from time to time as deemed appropriate by the board.
Reports from the Audit Committee and Compensation Committee
appear below. The committees operate pursuant to written
charters, which are available on our website at
www.starbucks.com/aboutus/corporate_governance.asp.
The current composition of each board committee is:
|
|
|
|
|
|
|
Compensation and
|
|
Nominating and Corporate
|
Audit and Compliance
|
|
Management Development
|
|
Governance
|
|
Javier G. Teruel (Chair)
|
|
Barbara Bass (Chair)
|
|
Craig E. Weatherup (Chair)
|
Mellody Hobson
|
|
Mellody Hobson
|
|
Barbara Bass
|
Kevin R. Johnson
|
|
Kevin R. Johnson
|
|
William W. Bradley
|
Craig E. Weatherup
|
|
James G. Shennan, Jr.
|
|
Sheryl Sandberg
|
|
|
Javier G. Teruel
|
|
James G. Shennan, Jr.
|
|
|
Myron E. Ullman, III
|
|
|
Affirmative
Determinations Regarding Director Independence and Other
Matters
Our board of directors has determined that each of the following
director nominees is an independent director as such
term is defined under NASDAQ rules:
|
|
|
Barbara Bass
|
|
James G. Shennan, Jr.
|
William W. Bradley
|
|
Javier G. Teruel
|
Mellody Hobson
|
|
Myron E. Ullman, III
|
Kevin R. Johnson
|
|
Craig E. Weatherup
|
Sheryl Sandberg
|
|
|
In determining that Ms. Sandberg is independent, the board
of directors considered her position as an officer of a private
company from which Starbucks purchased certain advertising and
marketing services in fiscal 2009. In determining that
Mr. Teruel is independent, the board of directors
considered his position on the board of directors of a large
public company that has a business relationship with Starbucks.
None of these relationships constitutes a related-person
transaction under applicable SEC rules. Mr. Lee is
currently serving as Starbucks interim executive vice president,
Partner Resources. During his service as an interim executive
officer, he is not considered independent under NASDAQ standards.
The board of directors also has determined that each member of
its three committees meets applicable independence requirements
as prescribed by NASDAQ, the SEC and the Internal Revenue
Service (IRS).
With the assistance of Starbucks legal counsel, the Nominating
Committee reviewed the applicable legal standards for board
member and board committee independence and the criteria applied
to determine audit committee financial expert
status, as well as the answers to annual questionnaires
completed by the independent directors. On the basis of this
review, the Nominating Committee delivered its independence
recommendations to the full board of directors. The board of
directors made its independence and audit committee
financial expert determinations based on the Nominating
Committees recommendation and each members review of
the information made available to the Nominating Committee.
5
Audit
Committee
As more fully described in its charter, the Audit Committee is
responsible for overseeing our accounting and financial
reporting processes, including the quarterly review and the
annual audit of our consolidated financial statements by
Deloitte & Touche LLP (Deloitte), our
independent registered public accounting firm. Each of
Ms. Hobson and Messrs. Johnson, Teruel and Weatherup
(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; (ii) meets NASDAQs financial
knowledge and sophistication requirements; and (iii) has
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
Deloitte.
Review
and Approval of Related-Person Transactions
Under the Audit Committees charter, and consistent with
NASDAQ rules, any material potential or actual conflict of
interest or transaction between Starbucks and any related
person of Starbucks must be reviewed and approved or
ratified by the Audit Committee. SEC rules define a
related person of Starbucks as any Starbucks
director (or nominee), executive officer, 5%-or-greater
shareholder or immediate family member of any of these persons.
Our board of directors has adopted a Policy for the Review and
Approval of Related-Person Transactions Required to Be Disclosed
in Proxy Statements, which states that it is the policy of
Starbucks not to participate in related person
transactions. In select circumstances, if the transaction
provides Starbucks with a demonstrable and significant strategic
benefit that is in the best interests of Starbucks and its
shareholders and has terms that are competitive with terms
available from unaffiliated third parties, then the Audit
Committee may approve the transaction. The policy also provides
that any related person as defined above must notify
the chair of the Audit Committee before becoming a party to, or
engaging in, a potential related-person transaction that may
require disclosure in our proxy statement under SEC rules, or if
prior approval is not practicable, as soon as possible after
engaging in the transaction. Based on current SEC rules,
transactions covered by the policy include:
|
|
|
|
|
any individual or series of related transactions, arrangements
or relationships (including, but not limited to, indebtedness or
guarantees of indebtedness), whether actual or proposed;
|
|
|
|
in which Starbucks was or is to be a participant;
|
|
|
|
the amount of which exceeds $120,000; and
|
|
|
|
in which the related person has or will have a direct or
indirect material interest. Whether the related person has a
direct or indirect material interest depends on the significance
to investors of knowing the information in light of all the
circumstances of a particular case. The importance to the person
having the interest, the relationship of the parties to the
transaction with each other and the amount involved in the
transaction are among the factors to be considered in
determining the significance of the information to investors.
|
The Audit Committee chair has the discretion to determine
whether a transaction is or may be covered by the policy. If the
chair determines that the transaction is covered by the policy,
then the full Audit Committee must review and approve it. The
Audit Committees decision is final and binding.
Additionally, the Audit Committee chair has discretion to
approve, disapprove or seek full Audit Committee review of any
immaterial transaction involving a related person (i.e.,
a transaction not otherwise required to be disclosed in the
proxy statement).
In considering potential related-person transactions, the Audit
Committee looks to SEC and NASDAQ rules, including the impact of
a transaction on the independence of any director. Once the
Audit Committee has determined that (i) the potential
related-person transaction will provide Starbucks with a
demonstrable and significant strategic benefit that is in the
best interests of Starbucks and its shareholders and
(ii) that the terms of the potential related-person
transaction are competitive with terms available from
unaffiliated third parties, the Audit Committee may consider
other factors such as:
|
|
|
|
|
whether the transaction is likely to have any significant
negative effect on Starbucks, the related person or any
Starbucks partner;
|
6
|
|
|
|
|
whether the transaction can be effectively managed by Starbucks
despite the related persons interest in it;
|
|
|
|
whether the transaction would be in the ordinary course of our
business; and
|
|
|
|
the availability of alternative products or services at
comparable prices.
|
Audit
and Compliance Committee Report
As part of fulfilling its responsibilities, the Audit Committee
reviewed and discussed the audited consolidated financial
statements for fiscal 2009 with management and Deloitte and
discussed those matters required by Statement on Auditing
Standards No. 61, Communication with Audit
Committees, as amended, and SEC
Regulation S-X,
Rule 2-07,
with Deloitte. The Audit Committee received the written
disclosures and the letter from Deloitte required by applicable
requirements of the Public Company Accounting Oversight Board
regarding Deloittes communications with the Audit
Committee concerning independence, and has discussed with
Deloitte its independence.
Based on the Audit Committees review of the audited
consolidated financial statements and its discussions with
management, the internal audit function and Deloitte, the Audit
Committee recommended to the board of directors that the audited
consolidated financial statements for fiscal 2009 be included in
the Starbucks Annual Report on
Form 10-K
filed with the SEC (2009
10-K).
Respectfully submitted,
Javier G. Teruel (Chair)
Mellody Hobson
Kevin R. Johnson
Craig E. Weatherup
Compensation
Committee
As more fully described in its charter, the primary
responsibilities of the Compensation Committee are to:
|
|
|
|
|
Conduct an annual review of all compensation elements for our
executive officers, including any special compensation and
benefits, and submit recommendations for review and approval by
the independent directors.
|
|
|
|
Annually review, approve and submit to the independent directors
for their review and approval performance measures and targets
for all executive officers participating in the annual incentive
bonus plan; certify and recommend to the independent directors
that they certify achievement of performance goals after the
annual measurement period to permit bonus payouts under the plan.
|
|
|
|
Review and approve the compensation structure for our senior
officers below the executive officer level, oversee the
compensation practices applicable to our partners generally, and
approve, change when necessary and administer partner-based
equity plans.
|
|
|
|
After consulting with the panel of independent directors,
together with the chair of the Nominating Committee, the chair
of the Compensation Committee annually reviews the performance
of our chairman, president and chief executive officer and meets
with him to share the findings of the review.
|
|
|
|
Annually review and approve our management development and
succession planning practices and strategies.
|
In addition, the Compensation Committees charter allows it
to delegate its authority to subcommittees of the committee, as
may be necessary or appropriate. At least annually, the
Compensation Committee reviews and approves our executive
compensation strategy and principles to ensure that they are
aligned with our business strategy and objectives, shareholder
interests, desired behaviors and corporate culture.
7
Summary
of the Role of Management and Consultants in the Executive
Compensation Process
In fiscal 2009, several members of senior management
participated in the Compensation Committees executive
compensation process. To assist in carrying out its
responsibilities, the Compensation Committee also regularly
received reports and recommendations from an outside independent
compensation consultant, Frederic W. Cook & Co., Inc.
(Cook & Co.). The Compensation Committee
did not request, and management did not provide, specific
compensation recommendations for fiscal 2009 compensation for
Mr. Schultz. Towers Perrin, managements consultant,
provided market data and historical compensation information to
the Compensation Committee and its consultant. Cook &
Co. provided advice regarding best practices in executive
compensation and compensation trends for chief executive
officers to Barbara Bass, the committees chair.
Ms. Bass, with input and review by Cook & Co.,
then developed specific compensation recommendations for
Mr. Schultz for fiscal 2009. The Compensation Committee
discussed those recommendations and reached consensus during an
executive session of the independent directors without
management present. All references to Towers Perrin and
Cook & Co. in this proxy statement refer,
respectively, to managements compensation consultant and
the Compensation Committees consultant.
Managements
Role in the Executive Compensation Process
Mr. Schultz, our chairman, president and chief executive
officer, our executive vice president, Partner Resources (for a
portion of fiscal 2009 our interim executive vice president,
Partner Resources), and other key members of Partner Resources
each played an important role in the Compensation
Committees executive compensation process for fiscal 2009
and regularly attended committee meetings. Partner
Resources refers to our human resources function. For
fiscal 2009, Mr. Schultz provided his perspective to the
Compensation Committee regarding executive compensation matters
generally and the performance of the executives reporting to
him. Members of the Partner Resources team presented
recommendations to the Compensation Committee on the full range
of annual executive compensation decisions, including
(i) annual incentive bonus plan structure and participants;
(ii) long-term incentive compensation strategy;
(iii) target competitive positioning of executive
compensation based on Company and individual performance; and
(iv) target total direct compensation for each executive
officer, including base salary adjustments, target incentive
bonus and equity grants. At the Compensation Committees
November 2008 meeting, the first meeting after the end of the
fiscal year 2008, members of the Partner Resources team
presented the committee with specific compensation
recommendations for all executives other than Mr. Schultz
for fiscal year 2009. These recommendations were developed in
consultation with Mr. Schultz and were accompanied by
market data provided by Towers Perrin, which was also reviewed
by Cook & Co. During the November 2008 meeting, the
Compensation Committee exercised its independent discretion
whether to accept managements recommendations and made
final approvals about each executive officers compensation
in an executive session of the independent directors without
management present. Barbara Bass, the Compensation
Committees chair, also met periodically with members of
the Partner Resources team to confer on current and upcoming
topics likely to be brought before the committee.
In accordance with NASDAQ rules, Mr. Schultz did not vote
on executive compensation matters or attend executive sessions
of the Compensation Committee nor was he present when his
compensation was being discussed or approved. Mr. Lee
resigned from the Compensation Committee effective April 2009 in
order to serve as our interim executive vice president, Partner
Resources. While a member of the Compensation Committee,
Mr. Lee was not present when his consulting agreement was
being discussed or approved. After his resignation from the
Compensation Committee, he did not vote on executive
compensation matters.
The Role
of Consultants in the Executive Compensation Process
For fiscal 2009, the Compensation Committee had an outside
independent compensation consultant. The Compensation
Committees consultant regularly attends committee meetings
and attends executive sessions as requested by Ms. Bass.
Cook & Co. has served as the Compensation
Committees consultant since June 2007 and reported
directly to the committee in fiscal 2009 to assist it, as
requested, in fulfilling various aspects of the committees
charter. Without the Compensation Committees prior
approval, Cook & Co. will not perform any services for
Starbucks
8
management, although it does work in cooperation with management
as required to gather information necessary to carry out its
obligations to the committee. While the Compensation Committee
does not ask Cook & Co. for its own market data, the
firm does validate the market data received from Towers Perrin,
managements consultant, supporting managements
recommendations.
During fiscal 2009, the Compensation Committee asked
Cook & Co. to review, validate and provide input on
the following tasks that Towers Perrin completed at
managements request:
|
|
|
|
|
Conduct an analysis of total direct compensation for executive
positions and assess how target and actual compensation
positioning to the market aligned with Starbucks compensation
philosophy and objectives;
|
|
|
|
Prepare analysis and recommend the peer group of companies used
for benchmarking executive compensation, using the criteria
established by the committee, and provide input on changes to
the peer group as requested;
|
|
|
|
Review management proposals for fiscal 2009 annual bonus targets;
|
|
|
|
Provide market data, historical compensation information and
internal equity comparisons to the committee for its
compensation decisions for Mr. Schultz;
|
|
|
|
Review and provide input on managements compensation
proposals for new hires, promotions and other executive position
moves within Starbucks; and
|
|
|
|
Review and provide input on managements compensation
proposals for executive separation agreements.
|
For more information about the Compensation Committees
activities, see Compensation Discussion and Analysis
and Compensation and Management Development Committee
Report.
Compensation
Committee Interlocks and Insider Participation
No current member of the Compensation Committee, each of whom is
listed under the Compensation Committee Report on
page 39, nor Mr. Bradley, who served on the committee
during a portion of fiscal 2009, was at any time during fiscal
2009 or at any other time an officer or employee of Starbucks,
and no member had any relationship with Starbucks requiring
disclosure as a related-person transaction in the section
Certain Relationships and Related Transactions on
page 51. Mr. Lee, our interim executive vice
president, Partner Resources resigned from the Compensation
Committee upon assuming the interim executive role. During
fiscal 2009, none of our executive officers served on the
compensation committee (or its equivalent) or board of directors
of another entity whose executive officer served on our
Compensation Committee.
Nominating
Committee
As described more fully in its charter, the Nominating Committee
is responsible for developing and implementing policies and
procedures that are intended to constitute the board of
directors and organize it appropriately to meet its fiduciary
obligations to Starbucks and our shareholders on an ongoing
basis. Among its specific duties, the Nominating Committee:
|
|
|
|
|
Makes recommendations to the board about our corporate
governance processes;
|
|
|
|
Assists in identifying and recruiting 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 presiding independent
director;
|
|
|
|
Biennially reviews the type and amount of board compensation for
independent directors;
|
9
|
|
|
|
|
Makes recommendations to the full board regarding such
compensation; and
|
|
|
|
Reviews its charter at least annually for appropriate revisions.
|
The Nominating Committee also annually assists the board of
directors with its affirmative independence and expertise
determinations. After consulting with the panel of independent
directors, together with the chair of the Compensation
Committee, the chair of the Nominating Committee annually
reviews the performance of our chairman, president and chief
executive officer and meets with him to share the findings of
the review.
Presiding
Independent Director; Executive Sessions of Independent
Directors
Biennially, at the first board of directors meeting following
the annual meeting of shareholders, the independent directors
select an independent director to preside at all of their
executive sessions and act as a liaison between management and
the independent directors. The independent directors meet in an
executive session at each board meeting. Our presiding
independent director also plays an active role in shaping
agendas for board meetings and makes recommendations to the
board regarding the structure of board and committee meetings.
Mr. Ullman was selected after the 2008 Annual Meeting of
Shareholders as the presiding independent director under the
current guidelines and his current term expires at the board
meeting immediately following the 2010 Annual Meeting of
Shareholders in March 2010. The presiding independent director
is limited to two consecutive two-year terms, so Mr. Ullman
is eligible to be selected again in March 2010 to serve a second
two-year term as presiding independent director.
Succession
Planning
Senior
Management Succession Planning
In light of the critical importance of executive leadership to
Starbucks success, we have an annual succession planning process
that we refer to as Organization & Partner Planning
(OPP). The OPP process is enterprise wide for
managers up to and including our president and chief executive
officer. Reflecting the significance the board attaches to
succession planning, our Compensation Committee is named the
Compensation and Management Development Committee.
Our board of directors involvement in the annual OPP
process is outlined in our Corporate Governance Principles and
Practices. The Principles provide that each year, the chair of
the Compensation Committee, together with the chairman,
president and chief executive officer, will review succession
planning practices and procedures with the board, and provide
the board with a recommendation as to succession in the event of
each senior officers termination of employment with
Starbucks for any reason (including death or disability).
Our Compensation Committee, pursuant to its charter, annually
reviews the performance of the executive officers and the
succession plans for each such officers position. As noted
above, this information is then presented to the board of
directors. The Compensation Committee also conducts an annual
review of, and provides approval for, our management development
and succession planning practices and strategies.
ceo
Succession Planning
The chairman, president and chief executive officer provides an
annual report to the board of directors assessing senior
managers and their potential to succeed him or her. This report
is developed in consultation with our executive vice president,
Partner Resources and the chair of our Compensation Committee
and includes contingency plans in the event of our chief
executive officers termination of employment with
Starbucks for any reason (including death or disability). The
report to the board also contains the chief executive
officers recommendation as to his or her successor. The
full board has the primary responsibility to develop succession
plans for the ceo position.
Attendance
at Board and Committee Meetings, Annual Meeting
During fiscal 2009, the board of directors held ten meetings,
the Audit Committee held eleven meetings, the Compensation
Committee held eleven meetings and the Nominating Committee held
four meetings. The board and
10
each committee hold an executive session without management
present at each of their respective meetings. During fiscal
2009, each director, other than Messrs. Bradley and Teruel,
attended at least 75% of all meetings of the board and board
committees on which he or she served. For fiscal 2009,
Mr. Bradley attended 60% (three out of five) of the
Compensation Committee meetings held prior to his rotation off
the Compensation Committee. Since his rotation off the
Compensation Committee was mid-year, he did not attend 75% of
the committee meetings at the time of his rotation.
Mr. Bradley attended at least 75% of the aggregate number
of board and committee meetings. For fiscal 2009,
Mr. Teruel attended 70% (seven out of ten) of the board
meetings as two of the meetings were called with relatively
short advance notice after Mr. Teruels time had been
committed elsewhere and Mr. Teruel was unable to attend one
of the meetings for personal reasons. Mr. Teruel attended
at least 75% of the aggregate number of board and committee
meetings.
Our Corporate Governance Principles and Practices require each
board member to attend our annual meeting of shareholders except
for absences due to causes beyond the reasonable control of the
director. All directors attended the 2009 Annual Meeting of
Shareholders except Ms. Bass, who had a prior commitment
out of the country.
Our
Director Nominations Process
Our Policy on Director Nominations is available at
www.starbucks.com/aboutus/corporate_governance.asp. The purpose
of the nominations policy is to describe the process by which
candidates for possible inclusion in our recommended slate of
director nominees (the candidates) are selected. The
nominations policy was approved by the full board of directors
and is administered by the Nominating Committee.
Minimum
Criteria for Board Members
Each candidate must possess at least the following specific
minimum qualifications:
|
|
|
|
|
Each candidate shall be prepared to represent the best interests
of all shareholders and not just one particular constituency;
|
|
|
|
Each candidate shall be an individual who has demonstrated
integrity and ethics in his or her personal and professional
life and has established a record of professional accomplishment
in his or her chosen field;
|
|
|
|
No candidate, or family member (as defined in NASDAQ rules) or
affiliate or associate (as defined in federal securities laws)
of a candidate, shall have any material personal, financial or
professional interest in any present or potential competitor of
Starbucks;
|
|
|
|
Each candidate shall be prepared to participate fully in board
activities, including active membership on at least one board
committee and attendance at, and active participation in,
meetings of the board and the committee(s) of which he or she is
a member, and not have other personal or professional
commitments that would, in the Nominating Committees sole
judgment, interfere with or limit his or her ability to do
so; and
|
|
|
|
Each candidate shall be willing to make, and financially capable
of making, the required investment in our stock in the amount
and within the time frame specified in the director stock
ownership guidelines described on page 16 of this proxy
statement.
|
Desirable
Qualities and Skills
In addition, the Nominating Committee also considers it
desirable that candidates possess the following qualities or
skills:
|
|
|
|
|
Each candidate should contribute to the board of directors
overall diversity diversity being broadly construed
to mean a variety of opinions, perspectives, personal and
professional experiences and backgrounds, such as gender, race
and ethnicity differences, as well as other differentiating
characteristics;
|
|
|
|
Each candidate should contribute positively to the existing
chemistry and collaborative culture among board members; and
|
11
|
|
|
|
|
Each candidate should possess professional and personal
experiences and expertise relevant to our goal of being one of
the worlds leading consumer brands. At this stage of our
development, relevant experiences might include, among other
things, large-company CEO experience, senior-level international
experience, senior-level
multi-unit
small box retail or restaurant experience and relevant
senior-level expertise in one or more of the following areas:
finance, accounting, sales and marketing, organizational
development, information technology and public relations.
|
Internal
Process for Identifying Candidates
The Nominating Committee has two primary methods for identifying
candidates (other than those proposed by shareholders, as
discussed below). First, on a periodic basis, the Nominating
Committee solicits ideas for possible candidates from a number
of sources: members of the board; senior-level Starbucks
executives; individuals personally known to the members of the
board; and research, including database and Internet searches.
Second, the Nominating Committee may from time to time use its
authority under its charter to retain at our expense one or more
search firms to identify candidates (and to approve such
firms fees and other retention terms). If the Nominating
Committee retains one or more search firms, they may be asked to
identify possible candidates who meet the minimum and desired
qualifications expressed in the nominations policy, to interview
and screen such candidates (including conducting appropriate
background and reference checks), to act as a liaison among the
board of directors, the Nominating Committee and each candidate
during the screening and evaluation process, and thereafter to
be available for consultation as needed by the Nominating
Committee.
The nominations policy divides the process for candidates
proposed by shareholders into the general nomination right of
all shareholders and proposals by qualified
shareholders (as described below).
General
Nomination Right of All Shareholders
Any Starbucks shareholder may nominate one or more persons for
election as a director at an annual meeting of shareholders if
the shareholder complies with the notice, information and
consent provisions contained in our bylaws. We have an advance
notice bylaw provision. For the fiscal 2011 Annual Meeting of
Shareholders, in order for the director nomination to be timely,
a shareholders notice to our executive vice president,
general counsel and secretary must be delivered to our principal
executive offices not less than 120 days nor more than
150 days before the anniversary of the date of the 2010
Annual Meeting of Shareholders.
The procedures described in the next paragraph are meant to
establish an additional means by which certain shareholders can
have access to our process for identifying and evaluating
candidates and is not meant to replace or limit
shareholders general nomination rights in any way.
Proposals
by Qualified Shareholders
In addition to those candidates identified through its own
internal processes, in accordance with the nominations policy,
the Nominating Committee will evaluate a candidate proposed by
any single shareholder or group of shareholders that has
beneficially owned more than 5% of our common stock for at least
one year (and will hold the required number of shares through
the annual meeting of shareholders) and that satisfies the
notice, information and consent provisions in the nominations
policy (a qualified shareholder). All candidates
(whether identified internally or by a qualified shareholder)
who, after evaluation, are then recommended by the Nominating
Committee and approved by the board of directors, will be
included in our recommended slate of director nominees in our
proxy statement.
In order to be considered by the Nominating Committee for an
upcoming annual meeting of shareholders, notice from a qualified
shareholder regarding a potential candidate must be received by
the Nominating Committee not less than 120 calendar days before
the anniversary of the date of our proxy statement released to
shareholders in connection with the previous years annual
meeting.
Any candidate proposed by a qualified shareholder must be
independent of the qualified shareholder in all respects as
determined by the Nominating Committee or by applicable law. Any
candidate submitted by a qualified shareholder must also meet
the definition of an independent director under
NASDAQ rules.
12
Evaluation
of Candidates
The Nominating Committee will consider all candidates identified
through the processes described above, and will evaluate each of
them, including incumbents, based on the same criteria.
If, based on the Nominating Committees initial evaluation,
a candidate continues to be of interest to the Nominating
Committee, the chair of the Nominating Committee will interview
the candidate and communicate the chairs evaluation to the
other Nominating Committee members and the chairman, president
and chief executive officer. Later reviews will be conducted by
other members of the Nominating Committee and senior management.
Ultimately, background and reference checks will be conducted
and the Nominating Committee will meet to finalize its list of
recommended candidates for the board of directors
consideration.
Timing of
the Identification and Evaluation Process
Our fiscal year ends each year on the Sunday closest to
September 30. The Nominating Committee usually meets in
September and November to consider, among other things,
candidates to be recommended to the board of directors for
inclusion in our recommended slate of director nominees for the
next annual meeting of shareholders and our proxy statement. The
board usually meets each November to vote on, among other
things, the slate of director nominees to be submitted to and
recommended for election by shareholders at the annual meeting,
which is typically held in March of the following calendar year.
Future
Revisions to the Nominations Policy
The nominations policy is intended to provide a flexible set of
guidelines for the effective functioning of our director
nominations process. The Nominating Committee intends to review
the nominations policy at least annually and anticipates that
modifications will be necessary from time to time as our needs
and circumstances evolve, and as applicable legal or listing
standards change. The Nominating Committee may amend the
nominations policy at any time, in which case the most current
version will be available on our website.
Corporate
Governance Materials Available on the Starbucks
Website
Our Corporate Governance Principles and Practices are intended
to provide a set of flexible guidelines for the effective
functioning of the board of directors and are reviewed regularly
and revised as necessary or appropriate in response to changing
regulatory requirements and evolving best practices. They are
posted on the Corporate Governance section of our website at
www.starbucks.com/aboutus/corporate_governance.asp.
In addition to our Corporate Governance Principles and
Practices, other information relating to corporate governance at
Starbucks is available on the Corporate Governance section of
our website, including:
|
|
|
|
|
Restated Articles of Incorporation
|
|
|
|
Amended and Restated Bylaws
|
|
|
|
Audit and Compliance Committee Charter
|
|
|
|
Compensation and Management Development Committee Charter
|
|
|
|
Nominating and Corporate Governance Committee Charter
|
|
|
|
Policy on Director Nominations
|
|
|
|
Standards of Business Conduct (applicable to directors, officers
and partners)
|
|
|
|
Code of Ethics for CEO and Finance Leaders
|
|
|
|
Procedure for Communicating Complaints and Concerns
|
|
|
|
Audit and Compliance Committee Policy for Pre-Approval of
Independent Auditor Services
|
You may obtain copies of these materials, free of charge, by
sending a written request to: executive vice president, general
counsel and secretary, Starbucks Corporation, 2401 Utah Avenue
South, Mail Stop S-LA1, Seattle, Washington 98134. Please
specify which documents you would like to receive.
13
Contacting
the Board of Directors
The Procedure for Communicating Complaints and Concerns
describes the manner in which interested persons can send
communications to our board of directors, the committees of the
board and to individual directors and describes our process for
determining which communications will be relayed to board
members. This complaints and concerns procedure provides that
interested persons may telephone their complaints and concerns
by calling the Starbucks Auditline at
1-800-300-3205
or sending written communications to the board, committees of
the board and individual directors by mailing those
communications to our third-party service provider for receiving
these communications at:
Starbucks
Corporation
[Addressee*]
P.O. Box 34507
Seattle, Washington 98124
|
|
* |
Audit and Compliance Committee of the Board of Directors
Compensation and Management Development Committee of the Board
of Directors
Nominating and Corporate Governance Committee of the Board of
Directors
Name of individual director
|
Compensation
of Directors
Compensation
Program for Non-Employee Directors
For fiscal 2009, the annual compensation program for
non-employee directors provided for a total of $240,000 per year
in compensation, composed of (i) a retainer of $120,000,
which may be in the form of cash, stock options or a combination
of both at the directors election, and (ii) $120,000
in equity compensation in the form of stock options. The
compensation program was approved by our board of directors in
May 2007, on the recommendation of the Nominating Committee
following its biennial non-employee director compensation review
required by its charter and our Corporate Governance Principles
and Practices. We pay at least 50% of non-employee director
compensation in the form of stock options in order to align the
interests of non-employee directors with shareholders. We do not
pay chair or meeting fees as part of our non-employee director
compensation program.
New non-employee directors first become eligible to receive the
regular annual compensation in the first full fiscal year after
they join the board of directors. In addition to the annual
compensation program, upon first joining the board, non-employee
directors are granted an initial stock option to acquire
30,000 shares of our common stock under the 2005
Non-Employee Director
Sub-Plan to
our 2005 Long-Term Equity Incentive Plan. The initial stock
option grant vests in equal annual installments over a
three-year period. Mr. Johnson and Ms. Sandberg were
granted initial stock options in fiscal 2009. They are first
eligible for the annual compensation in fiscal 2010.
Stock options have an exercise price equal to the closing market
price of our common stock on the grant date. Pursuant to the
2005 Non-Employee Director
Sub-Plan to
our 2005 Long-Term Equity Incentive Plan, the number of options
covered by each annual grant is determined by dividing the
equity compensation amount for each director by the closing
market price of our common stock on the grant date, multiplied
by three. For example, for $120,000 of equity compensation and a
closing market price of $15 per share on the grant date, the
director would receive 24,000 stock options, which is the result
of $120,000 divided by $15, or 8,000, multiplied by 3. Annual
stock option grants vest one year after the date of grant. Stock
options granted to non-employee directors generally cease
vesting as of the date he or she no longer serves on the board
of directors. However, unvested stock options will vest in full
upon a non-employee directors death or
retirement (generally defined as leaving the board
after attaining age 55 and at least six years of board
service) or upon a change in control of Starbucks (described
beginning on page 49). Five of the boards nine
current independent directors meet the retirement criteria.
In June 2009, the non-employee director compensation program was
amended by our board of directors, on the recommendation of the
Nominating Committee following its biennial non-employee
director compensation review required by its charter and our
Corporate Governance Principles and Practices. At the time the
non-employee director compensation program was reviewed, the
board believed that, in light of the economic decline, the
14
downturn in the Companys performance and the related
impact on partner compensation, the non-employee director
compensation program should be adjusted downward accordingly. As
such, for fiscal 2010, the annual compensation program for
non-employee directors was decreased to provide for a total of
$220,000 per year in compensation, composed of (i) a
retainer of $110,000, which may be in the form of cash, stock
options or a combination of both at the directors
election, and (ii) $110,000 in equity compensation in the
form of stock options. When the Nominating Committee considered
and ultimately recommended the fiscal 2010 non-employee director
compensation, the committee reviewed competitive market data
prepared by Towers Perrin for the same comparator group used to
benchmark executive compensation for fiscal 2009. The level of
non-employee director total compensation approved by the
Nominating Committee was between the 65th and
70th percentile among comparator group companies and the
board believed that the level was appropriate to attract and
retain top board candidates. The board also agreed to review
non-employee director compensation again in fiscal 2010.
Mr. Schultz does not participate in the compensation
program for non-employee directors, but rather is compensated as
an executive officer, as described in the section
Executive Compensation beginning on page 20.
On April 6, 2009, Mr. Lee was named as interim
executive vice president, Partner Resources. For his services as
interim executive vice president, Mr. Lee was compensated
pursuant to a consulting agreement that provided for a
consulting fee of $25,000 per month plus reimbursement of
ordinary business expenses. Mr. Lee remained on our board
of directors during this period and was thus also compensated
pursuant to the non-employee director compensation program.
Effective October 1, 2009, the consulting agreement was
amended by the Compensation Committee to increase the monthly
consulting fee from $25,000 to $50,000 and to provide a one-time
lump sum payment of $150,000. In November 2009, Kalen Holmes
joined Starbucks as executive vice president, Partner Resources.
Mr. Lee will continue with the Company on an interim basis
to assist Ms. Holmes and ensure a smooth transition.
Fiscal
2009 Compensation of Non-Employee Directors
The following table shows fiscal 2009 compensation for
non-employee directors. The amounts shown under the
Options Awards column below represent compensation
recognized for financial statement reporting purposes for fiscal
2009 for all outstanding option awards (as described further in
footnote 1 below). Because the amounts reflected in the Option
Awards column also include amounts from awards granted in prior
years, the amounts in the Total column below may
exceed $240,000 annually.
Fiscal
2009 Director Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
|
|
|
|
|
|
or Paid in
|
|
Option
|
|
All Other
|
|
|
|
|
Cash
|
|
Awards
|
|
Compensation
|
|
Total
|
Name
|
|
($)
|
|
($)(1)
|
|
($)
|
|
($)
|
|
Barbara Bass
|
|
|
|
|
|
|
258,682
|
|
|
|
|
|
|
|
258,682
|
|
William W. Bradley
|
|
|
60,000
|
|
|
|
207,481
|
|
|
|
|
|
|
|
267,481
|
|
Mellody Hobson
|
|
|
|
|
|
|
263,115
|
|
|
|
|
|
|
|
263,115
|
|
Kevin R. Johnson
|
|
|
N/A
|
(2)
|
|
|
38,182
|
|
|
|
|
|
|
|
38,182
|
|
Olden Lee
|
|
|
|
|
|
|
263,115
|
|
|
|
205,114
|
(3)
|
|
|
468,229
|
|
Sheryl Sandberg
|
|
|
N/A
|
(2)
|
|
|
38,182
|
|
|
|
|
|
|
|
38,182
|
|
James G. Shennan, Jr.
|
|
|
120,000
|
|
|
|
111,271
|
|
|
|
|
|
|
|
231,271
|
|
Javier G. Teruel
|
|
|
|
|
|
|
263,115
|
|
|
|
|
|
|
|
263,115
|
|
Myron E. Ullman, III
|
|
|
|
|
|
|
263,115
|
|
|
|
|
|
|
|
263,115
|
|
Craig E. Weatherup
|
|
|
|
|
|
|
258,682
|
|
|
|
|
|
|
|
258,682
|
|
|
|
|
(1) |
|
These amounts reflect the aggregate compensation costs for
financial statement reporting purposes in conformity with
accounting principles generally accepted in the United States of
America (GAAP) for fiscal 2009, for annual stock
options granted in fiscal 2009 and fiscal 2008. These amounts do
not reflect amounts paid to or realized by the director for
fiscal 2009. For information on the method and assumptions used |
15
|
|
|
|
|
to calculate the compensation costs, see Note 14 to our
audited consolidated financial statements in our 2009
10-K. In
calculating expense for non-employee director stock options for
financial statement reporting purposes, we do not assume any
service-based forfeitures. |
|
(2) |
|
Mr. Johnson and Ms. Sandberg joined the board in March
2009. As such, they received only their initial stock option
grant of 30,000 shares of our common stock in fiscal 2009.
They are first eligible for the annual compensation in fiscal
2010. |
|
(3) |
|
Amounts paid pursuant to Mr. Lees consulting
agreement described above, consisted of a $25,000 per month
consulting fee as well as the reimbursement of ordinary
expenses, including $24,566 for airfare, $24,938 for lodging and
$9,778 for car rental and taxi service. |
The full grant date fair value of the stock option awards
granted in fiscal 2009 to each director other than
Messrs. Bradley, Johnson and Shennan and Ms. Sandberg,
computed in accordance with GAAP, was $258,682.
Messrs. Bradley and Shennan elected to receive a portion of
their retainer in cash. As such, the GAAP full grant date fair
value of the stock option award granted in fiscal 2009 to
Mr. Bradley was $194,013 and Mr. Shennan was $129,343.
As Mr. Johnson and Ms. Sandberg were new to the board
of directors, they each received only their new director grant.
As such, the GAAP full grant date fair value of the stock option
award granted in fiscal 2009 to each of Mr. Johnson and
Ms. Sandberg was $156,237.
As of September 27, 2009, the aggregate number of shares
underlying outstanding option awards for each non-employee
director were: Ms. Bass 599,371 shares;
Mr. Bradley 191,154 shares;
Ms. Hobson 210,867 shares;
Mr. Johnson 30,000 shares;
Mr. Lee 272,225 shares;
Ms. Sandberg 30,000 shares;
Mr. Shennan 424,491 shares;
Mr. Teruel 210,867 shares;
Mr. Ullman 272,225 shares; and
Mr. Weatherup 580,601 shares.
Former
Deferred Compensation Plan
Non-employee directors formerly could defer all or a portion of
their compensation in the form of unfunded deferred stock units
under a directors deferred compensation plan. The board of
directors terminated future deferrals under the plan during
fiscal 2005, so no further compensation may be deferred. Amounts
previously deferred are unaffected and deferred stock units
credited to non-employee directors who had previously deferred
compensation under the plan remain outstanding. We do not
provide above-market or preferential earnings on these amounts.
Deferred stock units are settled in an equal number of shares of
Starbucks common stock when plan participants leave the board.
Deferred stock units cannot be voted or transferred. The number
of deferred stock units held by each director is shown in the
footnotes to the beneficial ownership table on page 17.
Director
Stock Ownership Guidelines
The board of directors adopted stock ownership guidelines for
non-employee directors in fiscal 2003. The original guidelines
required a $200,000 investment within four years. In May 2007,
the board revised the guidelines to increase the required
investment to $240,000 in tandem with the increase to
non-employee director compensation. In June 2009, when
non-employee director compensation was amended to $220,000 per
year, the board agreed to maintain the stock ownership
guidelines at $240,000. All non-employee directors will have
four years from their election to the board to achieve the
$240,000 investment. Directors at the time of the May 2007
amendment have two years from their original deadline to achieve
the additional $40,000 investment. Stock options do not count
toward meeting the requirement. Each director must continue to
hold the shares purchased as a result of the directors
investment for as long as he or she serves on our board. All
non-employee directors are in compliance with the guidelines.
Mr. Johnson and Ms. Sandberg have not yet served on
the board for four years and are working toward making the
required investment.
16
BENEFICIAL
OWNERSHIP OF COMMON STOCK
The following table sets forth information concerning the
beneficial ownership of our common stock by
(i) those persons who we know to beneficially own more than
5% of our outstanding common stock; (ii) our current
directors and nominees; (iii) the named executive
officers listed in the Summary Compensation Table on
page 40; and (iv) all of our current directors and
executive officers as a group. Beneficial ownership
is a concept which takes into account shares that may be
acquired within 60 days (such as by exercising vested stock
options) and shares as to which the named person has or shares
voting
and/or
investment power. Information provided for Morgan Stanley and
FMR LLC is based on the latest Schedule 13G reports that
each such investor had filed with the SEC as of the date of this
proxy statement. Information for all other persons is provided
as of December 1, 2009. Except as otherwise noted, the
beneficial owners listed have sole voting and investment power
with respect to shares beneficially owned. An asterisk in the
percent of class column indicates beneficial ownership of less
than 1%.
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature of
|
|
|
Name of Beneficial Owner
|
|
Beneficial Ownership
|
|
Percent of
Class(1)
|
|
Directors and Officers
|
|
|
|
|
|
|
|
|
Howard Schultz
|
|
|
31,349,258
|
(2)
|
|
|
4.2
|
%
|
Barbara Bass
|
|
|
633,937
|
(3)
|
|
|
*
|
|
William W. Bradley
|
|
|
205,965
|
(4)
|
|
|
*
|
|
Mellody Hobson
|
|
|
225,712
|
(5)
|
|
|
*
|
|
Kevin R. Johnson
|
|
|
14,000
|
|
|
|
*
|
|
Olden Lee
|
|
|
291,147
|
(6)
|
|
|
*
|
|
Sheryl Sandberg
|
|
|
855
|
|
|
|
*
|
|
James G. Shennan, Jr.
|
|
|
692,975
|
(7)
|
|
|
*
|
|
Javier G. Teruel
|
|
|
223,467
|
(8)
|
|
|
*
|
|
Myron E. Ullman, III
|
|
|
312,225
|
(9)
|
|
|
*
|
|
Craig E. Weatherup
|
|
|
570,601
|
(10)
|
|
|
*
|
|
Troy Alstead
|
|
|
550,695
|
(11)
|
|
|
*
|
|
Clifford Burrows
|
|
|
332,695
|
(12)
|
|
|
*
|
|
Martin Coles
|
|
|
842,529
|
(13)
|
|
|
*
|
|
Arthur Rubinfeld
|
|
|
165,221
|
(14)
|
|
|
*
|
|
Peter J. Bocian
|
|
|
6,390
|
(15)
|
|
|
*
|
|
All current directors and executive officers as a group
(22 persons)
|
|
|
37,390,568
|
|
|
|
4.9
|
%
|
5% Shareholders
|
|
|
|
|
|
|
|
|
FMR LLC
|
|
|
77,835,082
|
(16)
|
|
|
10.5
|
%
|
|
|
|
(1) |
|
Based on 741,565,775 shares of Starbucks common stock
outstanding on December 1, 2009. In accordance with SEC
rules, percent of class as of December 1, 2009 is
calculated for each person and group by dividing the number of
shares beneficially owned by the sum of the total shares
outstanding plus the number of shares subject to securities
exercisable by that person or group within 60 days. |
|
(2) |
|
Includes 8,530,927 shares subject to options exercisable
within 60 days of December 1, 2009 and
7,500,000 shares pledged to secure a line of credit. Also
includes 124,144 shares of common stock held by the Schultz
Family Foundation as to which Mr. Schultz disclaims
beneficial ownership. Also included are 3,394,184 deferred stock
units representing stock option gains that were deferred in 1997
into an equivalent number of deferred stock units under our 1997
Deferred Stock Plan. In November 2006, Mr. Schultz elected
to re-defer the distribution of these stock units into an equal
number of shares of common stock from December 21, 2007
until the earliest to occur of either (i) his termination
of employment with Starbucks |
17
|
|
|
|
|
or (ii) December 21, 2012, subject to any additional
deferral elections made in accordance with the terms and
conditions of the 1997 Deferred Stock Plan and approved by the
Compensation Committee. |
|
(3) |
|
Includes 599,371 shares subject to options exercisable
within 60 days of December 1, 2009. Also includes
28,000 shares held indirectly by a trust and 6,566 deferred
stock units under our Non-Employee Director Deferral Plan. |
|
(4) |
|
Includes 191,154 shares subject to options exercisable
within 60 days of December 1, 2009 and 6,566 deferred
stock units under our Non-Employee Director Deferral Plan. |
|
(5) |
|
Includes 210,867 shares subject to options exercisable
within 60 days of December 1, 2009. |
|
(6) |
|
Includes 272,225 shares subject to options exercisable
within 60 days of December 1, 2009. |
|
(7) |
|
Includes 424,491 shares subject to options exercisable
within 60 days of December 1, 2009. Also includes
62,440 shares held by the Shennan Family Investments LLC, a
limited liability company in which Mr. Shennan is a
manager, 156,044 shares held by the Shennan LLC, a limited
liability company in which Mr. Shennan is a manager, and
50,000 shares held in a trust in which Mr. Shennan or
his spouse is a trustee for the benefit of members of the
Shennan family. |
|
(8) |
|
Includes 210,867 shares subject to options exercisable
within 60 days of December 1, 2009. |
|
(9) |
|
Includes 272,225 shares subject to options exercisable
within 60 days of December 1, 2009. |
|
(10) |
|
Includes 530,601 shares subject to options exercisable
within 60 days of December 1, 2009, and
40,000 shares held in a trust of which Mr. Weatherup
and his wife are trustees for the benefit of members of the
Weatherup family. |
|
(11) |
|
Includes 482,466 shares subject to options exercisable
within 60 days of December 1, 2009. |
|
(12) |
|
Includes 316,664 shares subject to options exercisable
within 60 days of December 1, 2009. |
|
(13) |
|
Includes 831,228 shares subject to options exercisable
within 60 days of December 1, 2009. |
|
(14) |
|
Includes 69,319 shares subject to options exercisable
within 60 days of December 1, 2009. |
|
(15) |
|
Mr. Bocian, our former executive vice president, chief
financial officer and chief administrative officer separated
from the Company effective November 25, 2008. |
|
(16) |
|
FMR LLC stated in its Schedule 13G filing with the SEC on
July 9, 2009 that, of the 77,835,082 shares
beneficially owned, it (a) has sole voting power with
respect to 2,439,854 shares, (b) has shared voting
power with respect to no shares, and (c) sole dispositive
power with respect to all 77,835,082 shares. According to
the 13G filing, the address of FMR LLC is 82 Devonshire Street,
Boston, MA 02109. Fidelity Management & Research
Company (Fidelity), a wholly-owned subsidiary of FMR
LLC and an investment adviser registered under the Investment
Advisers Act of 1940 (Investment Advisers Act), is
the beneficial owner of 75,295,838 shares as a result of
acting as investment adviser to various investment companies
registered under the Investment Company Act of 1940
(Investment Company Act). Edward C. Johnson 3d
(Chairman of FMR LLC) and FMR LLC, through its control of
Fidelity, and the funds each has sole power to dispose of the
75,295,838 shares owned by the funds. Neither FMR LLC nor
Edward C. Johnson 3d has the sole power to vote or direct the
voting of the shares owned directly by the Fidelity funds, which
power resides with the funds Boards of Trustees. Fidelity
carries out the voting of the shares under written guidelines
established by the funds Boards of Trustees. Strategic
Advisers, Inc., a wholly-owned subsidiary of FMR LLC and an
investment adviser registered under the Investment Advisers Act,
provides investment advisory services to individuals. As such,
FMR LLCs beneficial ownership includes 13,877 shares
beneficially owned through Strategic Advisers, Inc. Pyramis
Global Advisors Trust Company (PGATC), an
indirect wholly-owned subsidiary of FMR LLC and a bank as
defined in the Securities Exchange Act of 1934, is the
beneficial owner of 1,147,877 shares as a result of its
serving as investment manager of institutional accounts owning
such shares. Edward C. Johnson 3d and FMR LLC, through its
control of PGATC, each has sole dispositive power over
1,147,877 shares and sole power to vote or to direct the
voting of 1,070,487 shares owned by the institutional
accounts managed by PGATC as reported above. Pyramis Global
Advisors LLC (PGALLC), an indirect wholly-owned
subsidiary of FMR LLC and an investment adviser registered under
the Investment Advisers Act, is the beneficial owner |
18
|
|
|
|
|
of 794,890 shares as a result of its serving as investment
adviser of institutional accounts owning such shares. Edward C.
Johnson 3d and FMR LLC, through its control of PGALLC, each has
sole dispositive power over 794,890 shares and sole power
to vote or to direct the voting of 794,890 shares owned by
the institutional accounts managed by PGALLC as reported above.
Fidelity International Limited (FIL) and various
foreign-based subsidiaries provide investment advisory and
management services to a number of
non-U.S.
investment companies and certain institutional investors. FIL is
the beneficial owner of 582,600 shares. Partnerships
controlled predominantly by members of the family of Edward C.
Johnson 3d and FIL, or trusts for their benefit, own shares of
FIL voting stock with the right to cast approximately 47% of the
total votes which may be cast by all holders of FIL voting
stock. FMR LLC and FIL are separate and independent corporate
entities, and their Boards of Directors are generally composed
of different individuals. |
19
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
The Compensation Committee determines our compensation
objectives, philosophy and forms of compensation and benefits
for all partners, including executives. The Compensation
Committee submits several key compensation elements for our
executive officers to the independent members of the full board
of directors for their review and approval. Additionally,
several members of senior management participate in the
Compensation Committees executive compensation process (as
noted in the Compensation Committee section
beginning on page 7) and the Committee regularly receives
reports and recommendations from Cook & Co., its
outside independent compensation consultant. This Compensation
Discussion and Analysis discusses and analyzes our executive
compensation program and the amounts shown in the executive
compensation tables that follow.
Fiscal
2009 The Year In Review
When determining fiscal 2009 target compensation, the Company
expected to continue to face a very challenging economic
environment. As a result, the Compensation Committee did not
approve base salary increases for the named executive officers
(other than Mr. Alstead in connection with his promotion to
chief financial officer) because it believed fiscal 2008 levels
remained competitive and Company performance for the prior
fiscal year did not warrant an increase. In addition, the
Compensation Committee revised our long-term incentive program
to include performance-based restricted stock units
(performance RSUs) as well as stock options to help
drive Company performance. The Compensation Committee determined
that Mr. Schultzs target fiscal 2009 compensation
should be primarily tied to increasing our share price. Thus,
his compensation package consisted of base salary and a
long-term incentive award consisting only of stock options. In
January 2009, the Compensation Committee, upon
Mr. Schultzs request, reduced his base salary for
fiscal 2009 to $6,900 effective March 30, 2009.
Fiscal 2009 was a challenging year for Starbucks. We were
confronted with extraordinary economic and operating challenges,
in addition to facing an increasingly competitive landscape.
Despite this difficult environment, Starbucks delivered strong
financial results by applying a more disciplined focus on
operations and introducing numerous initiatives to permanently
improve the Companys cost structure. For fiscal 2009,
these measures resulted in a full-year cost savings of
approximately $580 million (exceeding the most recent
target by $30 million), an earnings per share increase of
21% from the prior year and an operating margin improvement of
80 basis points from the prior year. Because our executive
compensation program emphasizes pay for performance,
compensation awarded for fiscal 2009 reflected the positive
results achieved in a particularly difficult environment.
As a result of the Companys strong fiscal 2009
performance, our executive officers, including the named
executive officers other than Mr. Schultz, received bonus
payouts under our annual incentive bonus plan. In addition to
these bonuses, we paid discretionary bonuses to reward the
contributions of our executive officers in meeting our
operational goals despite the challenging economic environment.
Additional information regarding discretionary bonuses is
provided on page 31.
Fiscal
2010 The Year Ahead
Although the global economy has shown some signs of improvement,
management recognizes the difficult economic situation that many
consumers are still facing and does not expect a significant
change in the global economic environment over the course of
fiscal 2010. The Compensation Committee evaluated compensation
for fiscal 2010 with an eye toward balancing retention of key
executive officers with our pay for performance principles and
anticipated costs to the Company. With this in mind, the
Compensation Committee kept the same elements of compensation
for fiscal 2010 as the elements in place for fiscal 2009. As
such, fiscal 2010 target total direct compensation consists of
base salary, annual incentive bonus and long-term incentive
compensation in the form of stock options and performance RSUs.
The Compensation Committee believes this combination of elements
of compensation is the appropriate mix to motivate future
performance, to drive Company results and retain executive
officers. For fiscal 2010, Mr. Schultz will participate in
the same elements of compensation as the other executive
officers. In November 2009, the Compensation Committee approved
a base salary increase for Mr. Schultz to $1.3 million
effective December 1, 2009.
20
Executive
Compensation Program Objectives and Design
Our executive compensation program is designed to achieve four
key objectives:
|
|
|
|
|
Attract and Retain Top Talent. Attract
and retain executives critical to our long-term success.
|
|
|
|
Pay for Performance. Align executive
compensation with Company, business unit and individual
performance on both a short-term and long-term basis.
|
|
|
|
Place Majority of Pay in the Form of Variable
Compensation. Align executive compensation
with shareholder interests by tying a significant majority of
total direct compensation to the achievement of performance
goals or stock price appreciation, which we refer to as variable
compensation, and increasing the amount of pay that is variable
compensation as we give executives greater levels of
responsibility. Variable compensation means the executive will
not realize value unless performance goals, the majority of
which are directly tied to Company performance, are achieved
(for annual incentive bonuses and performance RSUs) or our stock
price appreciates (for stock options).
|
|
|
|
Be True to Our Values. Support our
mission statement and guiding principles.
|
To achieve these objectives, we structured our executive
compensation program to:
|
|
|
|
|
Be competitive with compensation paid by companies in the same
market for executive talent.
|
|
|
|
Reward performance by linking compensation to (i) Company
and, for some executives as appropriate, business unit
performance and (ii) achievement of individual performance
bonus goals.
|
|
|
|
Drive long-term shareholder returns by delivering a majority of
executive compensation in the form of equity compensation, the
value of which is directly linked to our stock price.
|
|
|
|
Align executive and shareholder interests by requiring
executives to own our stock.
|
|
|
|
Provide limited executive perquisites.
|
In this proxy statement, the term executive officers
means our most senior executives, who are all listed under the
heading Executive Officers in our 2009
10-K
(available on our website at
http://investor.starbucks.com).
The term named executive officers means the four
current executive officers named in the compensation tables that
follow plus Martin Coles, our former president, Starbucks Coffee
International, who left the Company effective December 1,
2009 and Peter J. Bocian, our former executive vice president,
chief financial officer and chief administrative officer, who
left the Company effective November 25, 2008.
Compensation Committee or Committee
means the Compensation and Management Development Committee of
the board of directors.
Starbucks
Total Pay Philosophy
Our Total Pay compensation philosophy is designed to
recognize and reward the contributions of all partners,
including executives, in achieving our strategic goals and
business objectives, while aligning our compensation program
with shareholder interests and our mission statement and guiding
principles. You can find a copy of our mission statement and
guiding principles on our website in the About Us
section. We regularly assess our total pay package, and we
adjust it as appropriate to remain competitive and to enable us
to attract and retain our partners. We also offer a
comprehensive benefits package, including comprehensive health
care to all eligible full-and part-time partners in the United
States and internationally (except in countries where the
government provides health care), and provide a broad-based
equity program to all eligible global partners, and partner
stock purchase programs in the United States and Canada. We
believe our Total Pay practices motivate our executives to build
long-term shareholder value and take care of the partners who
take care of our customers.
21
Elements
of Executive Compensation Program
The following table lists the elements of our fiscal 2009
executive compensation program and the primary purpose of each.
|
|
|
|
|
Element
|
|
Objectives and Basis
|
|
Form
|
|
Base Salary
|
|
Provide base compensation that is competitive for each role
|
|
Cash
|
Annual Incentive Bonus
|
|
Annual incentive to drive Company, business unit, where
appropriate, and individual performance
|
|
Cash
|
Long-Term Incentive
|
|
Long-term incentive to drive Company performance and align
executives interests with shareholders interests;
retain executives through long-term vesting and potential wealth
accumulation
|
|
Performance RSUs, stock options
|
Perquisites and Other Executive Benefits
|
|
Provide for the safety and wellness of our executives, and other
purposes as discussed below
|
|
Various (see discussion below)
|
Discretionary Bonuses and Equity Awards
|
|
Reward extraordinary performance, attract top executive talent
from other companies; retain executives through long-term
vesting and potential wealth accumulation
|
|
Cash, stock options, time-based restricted stock units
(time-based RSUs)
|
Deferred Compensation
|
|
Provide tax-deferred means to save for retirement
|
|
Eligibility to participate in 401(k) plan and non-qualified
management deferred compensation plan
|
General Partner Benefits
|
|
Offer competitive benefits package that includes all benefits
offered to partners generally
|
|
Eligibility to participate in partner health and welfare plans,
stock purchase plan and other broad-based partner benefits
|
Determining
Executive Compensation at Starbucks
Timing of
Executive Compensation Decisions for Fiscal 2009
Compensation
Annual executive compensation decisions are made at the November
Compensation Committee meeting, which is the Committees
first regular meeting after fiscal year-end. During this
meeting, the Compensation Committee approves target total direct
compensation, which is comprised of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term
|
|
|
|
|
Short-Term Compensation
|
|
|
|
|
|
|
|
Incentive Compensation
|
|
|
|
|
|
Base
Salary
|
|
+
|
|
Target Annual
Incentive Bonus
|
|
=
|
|
Target Total Cash
Compensation
|
|
+
|
|
Target Equity Awards
|
|
=
|
|
Target Total Direct
Compensation
|
For example, in its first meeting for fiscal 2009, which
occurred in November 2008, the Compensation Committee approved
base salaries and target annual incentive bonus amounts for
fiscal 2009. At the same meeting, the Compensation Committee
reviewed fiscal 2008 performance and determined a fiscal 2009
target total direct compensation level.
Tally
Sheets
When making executive compensation decisions, the Compensation
Committee reviews tally sheets showing, for each executive
officer: (i) targeted value of base pay, annual incentive
bonus and equity award grants for the current year and each of
the past several years; (ii) actual realized value for each
of the past several years (the sum of
22
cash received, gains realized from equity awards, and the value
of perquisites and other benefits); (iii) the amount of
unrealized value from prior equity award grants and accumulated
deferred compensation; and (iv) the amount the executive
could realize upon a change in control or any severance
arrangement, which for Starbucks includes only amounts from the
acceleration of equity award vesting. Although tally sheets do
not drive individual executive compensation decisions, the
Compensation Committee uses tally sheets for several purposes.
First, it uses tally sheets as a reference to ensure Committee
members understand the total compensation being delivered to
executives each year and over a multi-year period. Tally sheets
also enable the Compensation Committee to validate its strategy
of paying a substantial majority of executive compensation in
the form of equity, by showing amounts realized and unrealized
by executives from prior equity grants. In some cases, the
Compensation Committees review of tally sheets may lead to
changes in the Companys compensation benefits and
perquisites. For fiscal 2009, there were no changes to the
Companys benefits and perquisites based on the
Compensation Committees review of tally sheets.
Compensation
Decision Process
The timing of executive compensation decisions at Starbucks is
discussed above. When making compensation decisions, the
Compensation Committee begins by reviewing competitive market
data to see how our executive pay levels compare to other
companies. However, the Compensation Committee does not use
formulas or rigidly set the compensation of our executives based
on this data, as the Compensation Committee also looks at other
factors (as described below) when setting compensation. The
Compensation Committee then considers recommendations and input
from management, and input from Cook & Co. as
described on page 8. As noted above, management did not
provide specific compensation recommendations for
Mr. Schultz. Recommendations and input are influenced by
factors that may vary from year to year, but typically include
prior-year Company and business unit financial performance and
shareholder return, retention, internal pay equity (i.e.,
considering pay for similar jobs and jobs at different levels
within Starbucks), compensation history, and whether individual
performance was particularly strong or weak in the prior year.
The Compensation Committee also considers how it can optimize
our tax deductibility of executive compensation under
Section 162(m) of the Internal Revenue Code by delivering
compensation that is performance-based to the greatest extent
possible while also delivering non-performance-based elements at
competitive levels. The Compensation Committee applies the
factors it deems most relevant for the particular fiscal year to
the most recent market data available to set compensation at the
desired competitive positioning.
When deciding fiscal 2009 target compensation, the
primary considerations that drove the Compensation
Committees decisions were:
|
|
|
|
|
Fiscal 2008 Company performance against targets;
|
|
|
|
Fiscal 2008 individual performance;
|
|
|
|
Incentives for fiscal 2009 Company and business unit performance;
|
|
|
|
Building shareholder value; and
|
|
|
|
Retention concerns.
|
23
Setting
the Pay Mix
The Compensation Committee and the independent directors
determine what portion of each executives compensation
will be in the form of variable compensation, with the variable
portion generally increasing as we give executives greater
levels of responsibility. The percentage of each named executive
officers fiscal 2009 target total direct compensation that
was variable compensation as of the time it was initially
approved (at the beginning of the fiscal year) is shown in the
table below. Target total direct compensation is composed of
base salary, target annual incentive bonus and target long-term
incentive compensation. We define fiscal 2009 variable
compensation to include target annual incentive bonuses under
our annual incentive bonus plan, the Executive Management Bonus
Plan, and economic value of stock options and performance RSUs
(at target) awarded in fiscal 2009. We designed our total direct
compensation mix to encourage our executives to take appropriate
risks aimed at improving Company performance and building
long-term shareholder value. As such, our pay for performance
compensation is based on Company, business unit and individual
performance on a short-term basis and Company performance on a
long-term basis. In addition, to mitigate any incentive to take
inappropriate risks, each of our executive officers is subject
to stock ownership requirements as noted on page 37 as well
as our Recovery of Incentive Compensation Policy as described on
page 37.
The table below shows the percentage of variable compensation
for each of the named executive officers. The percentage below
is calculated by dividing (i) the variable compensation
amount by (ii) the target total direct compensation, which
includes the variable compensation plus fiscal 2009 base salary.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable Compensation
|
|
|
|
|
|
|
|
|
Long-Term
|
|
Variable Compensation
|
|
|
|
|
Target Annual
|
|
Incentive at
|
|
(as a % of Target Total
|
Named Executive Officer
|
|
Base Salary ($)
|
|
Incentive Bonus ($)
|
|
Target ($)
|
|
Direct Compensation)
|
|
Howard
Schultz(1)
chairman, president and chief executive officer
|
|
|
1,190,000
|
|
|
|
0
|
|
|
|
8,210,000
|
|
|
|
87
|
%
|
Troy
Alstead(2)
executive vice president, chief financial officer and
chief administrative officer
|
|
|
450,000
|
|
|
|
225,000
|
|
|
|
610,000
|
|
|
|
65
|
%
|
Clifford Burrows
president, Starbucks Coffee U.S.
|
|
|
595,000
|
|
|
|
386,750
|
|
|
|
800,000
|
|
|
|
67
|
%
|
Martin Coles
former president, Starbucks Coffee International
|
|
|
725,000
|
|
|
|
471,250
|
|
|
|
700,000
|
|
|
|
62
|
%
|
Arthur Rubinfeld
president, Global Development
|
|
|
450,000
|
|
|
|
292,500
|
|
|
|
800,000
|
|
|
|
71
|
%
|
Peter J.
Bocian(3)
former executive vice president, chief financial officer
and chief administrative officer
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
(1) |
|
Based on target compensation set for Mr. Schultz at the
time of the annual compensation decisions in November 2008. In
January 2009, the Compensation Committee, on
Mr. Schultzs request, reduced his base salary for
fiscal 2009 to $6,900 effective March 30, 2009. |
|
(2) |
|
Based on the target compensation set for Mr. Alstead at the
time of his promotion in November 2008. |
|
(3) |
|
At the time of annual compensation decisions in November 2008,
Mr. Bocian had already provided the Company notice of his
intention to leave the Company effective November 25, 2008.
Accordingly, the Compensation Committee did not review his
fiscal 2009 compensation and it is not analyzed in this
Compensation Discussion and Analysis. |
24
Comparator
Group Companies and Benchmarking
The Compensation Committee refers to executive compensation
surveys prepared by Towers Perrin when it reviews and approves
executive compensation. The surveys reflect compensation levels
and practices for executives holding comparable positions at
targeted comparator group companies, which help the Compensation
Committee set compensation at competitive levels. The
Compensation Committee, with assistance from Cook &
Co., annually reviews specific criteria and recommendations
regarding companies to add or remove from the comparator group.
The Compensation Committees primary selection criteria are
revenue, market capitalization, industry and international
operations; secondary selection criteria are growth in revenue,
earnings per share, total shareholder return and brand
recognition.
Based on the above criteria, the Compensation Committee selected
a fiscal 2009 comparator group of 17 companies, as shown in
the table below. Although changes to the comparator group are
made when appropriate, the Compensation Committee prefers to
keep the group substantially consistent from year to year to
produce more consistent and useful compensation benchmarking. In
May 2008, when the Compensation Committee conducted its annual
review of the comparator group for fiscal 2009, it removed
Wendys International from the comparator group because
Wendys was acquired in 2008. Otherwise, the comparator
group did not change from fiscal 2008 to fiscal 2009.
|
|
|
|
|
|
|
Starbucks Fiscal 2009 Executive Compensation Comparator Group
Companies
|
Specialty Retail
|
|
Consumer Products
|
|
Restaurants
|
|
Supply Chain/Logistics
|
|
Bed Bath & Beyond
|
|
Avon Products
|
|
Brinker International
|
|
FedEx
|
Best Buy
|
|
Clorox
|
|
McDonalds
|
|
|
Gap
|
|
Colgate-Palmolive
|
|
YUM! Brands
|
|
|
Limited Brands
|
|
General Mills
|
|
|
|
|
Polo Ralph Lauren
|
|
Hershey Foods
|
|
|
|
|
Staples
|
|
NIKE
|
|
|
|
|
Whole Foods Market
|
|
|
|
|
|
|
In June 2009, when the Compensation Committee conducted its
annual review of the comparator group for the next fiscal year,
it removed Brinker International from the group as Brinker
International no longer met a majority of the primary criteria
for a period longer than one year. The Compensation Committee
added Darden Restaurants to the comparator group list for fiscal
2010 to replace both Wendys International and Brinker
International in the restaurant industry. Coach was added to the
comparator group for fiscal 2010 as it represents an additional
specialty retail company with a well-recognized brand. The
changes to the comparator group made in fiscal 2009 did not
affect fiscal 2009 compensation decisions.
The Compensation Committee compares each executive
officers base salary, target annual incentive bonus and
long-term incentive compensation value, both separately and in
the aggregate, to amounts paid for similar positions at
comparator group companies. The Compensation Committees
philosophy is to target total direct compensation to executives
at approximately the median (or
50th percentile)
among comparator group companies (based on the Companys
performance at plan). The Compensation Committee considers the
median range to generally be plus or minus 10% of our comparator
groups median. The Compensation Committee believes that
setting target total direct compensation at the median range
helps achieve the executive compensation program objectives and
design (as described above). However, target total direct
compensation may vary from the 50th percentile of
comparator group companies depending on the factors the
Compensation Committee considers most relevant each year, as
discussed above under Compensation Decision Process.
Target total direct compensation is set around the beginning of
each fiscal year. See Timing of Executive Compensation
Decisions for Fiscal 2009 Compensation on page 22.
When determining each element of target total direct
compensation, the Compensation Committee reviewed comparator
group data on a one-year and three-year basis. Generally, for
the annual compensation review, greater weight is given to the
three-year-average
data due to potential variability in data
year-over-year,
while one-year data is considered primarily for new hire or
promotional compensation decisions, as was the case for
Mr. Alstead.
25
As noted above, in specific cases, target total direct
compensation may be higher or lower than median where
appropriate. Fiscal 2009 target total direct compensation for
Mr. Burrows was positioned near the median. For all other
named executive officers, the target total direct compensation
was above or below the median, as follows. Since
Mr. Schultzs variable compensation consisted entirely
of a long-term incentive award in the form of stock options, his
long-term equity award was above median. As a result of the
above-median long-term incentive compensation award,
Mr. Schultzs target total direct compensation was
also above median. Mr. Alsteads target total direct
compensation was below median because he was new in his role as
executive vice president, chief financial officer and chief
administrative officer. Mr. Coles target total direct
compensation was slightly above median because his base salary
was not adjusted from the chief operating officer level when
Mr. Coles reassumed the role of president, Starbucks Coffee
International in late fiscal 2008. Since Mr. Coles
base salary was above median, his target bonus of 65% of his
higher base salary resulted in an annual incentive compensation
target above median. As a result, his target total direct
compensation was above median. Mr. Rubinfelds target
total direct compensation was above median as the most closely
comparable position that Mr. Rubinfeld was benchmarked
against does not encompass all of the job responsibilities of
Mr. Rubinfelds position, which includes real estate
development, store design and store initiatives. In addition,
for fiscal 2009, the Compensation Committee wanted to provide
additional incentive to Mr. Rubinfeld as there were several
major store initiatives underway in fiscal 2009 that were key to
meeting the Companys targeted operating performance.
The table below compares fiscal 2009 target compensation
versus fiscal 2009 actual compensation for each of the named
executive officers. Each element of fiscal 2009 compensation is
further analyzed below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target
|
|
Actual
|
|
|
|
|
|
|
|
|
Base
|
|
|
|
|
|
|
|
|
|
Target
|
|
Actual
|
|
|
|
Total
|
|
Total
|
|
|
|
|
|
|
Base
|
|
Salary
|
|
+/− to
|
|
Target
|
|
Actual
|
|
+/− to
|
|
Long-Term
|
|
Long-Term
|
|
+/− to
|
|
Direct
|
|
Direct
|
|
+/− to
|
|
|
Named Executive Officer
|
|
Salary
|
|
Paid
|
|
Target
|
|
Bonus
|
|
Bonus(1)
|
|
Target(2)
|
|
Incentive(3)
|
|
Incentive(3)
|
|
Target(4)
|
|
Comp.
|
|
Comp.(5)
|
|
Target(6)
|
|
|
|
Howard Schultz
|
|
|
1,190,000
|
|
|
|
643,954
|
|
|
|
(46)%(7)
|
|
|
|
0
|
|
|
|
1,000,000
|
|
|
|
N/A
|
|
|
|
8,210,000
|
|
|
|
8,210,000
|
|
|
|
0%
|
|
|
|
9,400,000
|
|
|
|
9,853,954
|
|
|
|
5%
|
|
|
|
|
|
Troy
Alstead(8)
|
|
|
450,000
|
|
|
|
430,385
|
|
|
|
(4)%(9)
|
|
|
|
225,000
|
|
|
|
302,252
|
|
|
|
34%
|
|
|
|
610,000
|
|
|
|
668,000
|
|
|
|
10%
|
|
|
|
1,285,000
|
|
|
|
1,400,637
|
|
|
|
9%
|
|
|
|
|
|
Clifford Burrows
|
|
|
595,000
|
|
|
|
595,000
|
|
|
|
0%
|
|
|
|
386,750
|
|
|
|
576,435
|
|
|
|
49%
|
|
|
|
800,000
|
|
|
|
916,000
|
|
|
|
15%
|
|
|
|
1,781,750
|
|
|
|
2,087,435
|
|
|
|
17%
|
|
|
|
|
|
Martin Coles
|
|
|
725,000
|
|
|
|
725,000
|
|
|
|
0%
|
|
|
|
471,250
|
|
|
|
493,211
|
|
|
|
5%
|
|
|
|
700,000
|
|
|
|
801,500
|
|
|
|
15%
|
|
|
|
1,896,250
|
|
|
|
2,019,711
|
|
|
|
7%
|
|
|
|
|
|
Arthur Rubinfeld
|
|
|
450,000
|
|
|
|
450,000
|
|
|
|
0%
|
|
|
|
292,500
|
|
|
|
394,138
|
|
|
|
35%
|
|
|
|
800,000
|
|
|
|
916,000
|
|
|
|
15%
|
|
|
|
1,542,500
|
|
|
|
1,760,138
|
|
|
|
14%
|
|
|
|
|
|
Peter J. Bocian
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
(1) |
|
Actual bonus includes bonus payouts under the Executive
Management Bonus Plan and discretionary bonus payouts as
described on page 31. The bonus payouts under the Executive
Management Bonus Plan are disclosed in the Non-Equity Incentive
Plan Compensation column of the Summary Compensation Table. The
discretionary bonus amounts are disclosed in the Bonus column of
the Summary Compensation Table. |
|
(2) |
|
The named executive officers received above target actual bonus
payouts as a result of achieving above target performance under
the Executive Management Bonus Plan, other than Mr. Coles,
and receiving discretionary bonuses. Mr. Coles bonus
payout under the Executive Management Bonus Plan was below
target; however, for the reasons described below Mr. Coles
was granted a discretionary bonus, resulting in an actual bonus
payout above target. |
|
(3) |
|
The amounts in the Target Long-Term Incentive column
include the target and actual economic value of equity awards
according to a methodology used by the Compensation Committee
that is consistent with its methodology for valuing comparator
group grants. They do not represent the full grant date fair
value of equity awards as disclosed in the Fiscal 2009 Grants of
Plan-Based Awards table. Actual Long-Term Incentive Compensation
includes the adjusted number of performance RSUs earned based on
fiscal 2009 performance. |
|
(4) |
|
The named executive officers, other than Mr. Schultz,
received above-target long-term incentive compensation as they
earned 129% of the target performance RSU award based on fiscal
2009 adjusted earnings per share. |
|
(5) |
|
Actual total direct compensation includes fiscal 2009
discretionary bonuses and the adjusted number of performance
RSUs earned based on fiscal 2009 performance. |
|
(6) |
|
The named executive officers received above-target total direct
compensation as a result of receiving a discretionary bonus and,
other than Mr. Coles, achieving above-target performance
under the Executive Management Bonus Plan and, other than
Mr. Schultz, earning 129% of the target performance RSU
award. |
26
|
|
|
(7) |
|
Mr. Schultz received below-target base salary because the
Compensation Committee, upon Mr. Schultzs request,
reduced his base salary to $6,900 for fiscal 2009 effective
March 30, 2009. |
|
(8) |
|
Mr. Alsteads target compensation is based on the
benchmarking data reviewed by the Compensation Committee at the
time of Mr. Alsteads promotion in November 2008. |
|
(9) |
|
Mr. Alsteads actual base salary is below target as
his salary increase did not begin until his promotion in
November 2008. As a result, he received a lower base salary for
a portion of fiscal 2009. |
Analysis
of Executive Compensation Elements
Base Salary. We set executive base salaries at
levels we believe are competitive based on each individual
executives role and responsibilities. We review base
salaries for executive officers on an annual basis, and at the
time of hire, promotion or other change in responsibilities.
Base salary changes also impact target annual incentive bonus
amounts, and actual annual incentive bonus payouts, because they
are based on a percentage of base salary. Consistent with the
philosophy discussed above, our executive base salaries are
generally set at approximately the median or
50th percentile of salaries paid by comparator group
companies for comparable positions. However, when setting each
executives base salary, we consider a number of factors
along with input from our chairman, president and chief
executive officer to determine whether base salaries should be
higher or lower than median. These factors include the level of
responsibility and complexity of the executives job,
whether individual performance in the prior year was
particularly strong or weak, how the executives salary
compares to the salaries of other Starbucks executives, and the
salaries paid by comparator group companies for the same or
similar positions. Fiscal 2009 executive base salaries remained
unchanged from fiscal 2008 levels, other than for
Mr. Alstead, because we believed fiscal 2008 levels
remained competitive and Company performance did not warrant an
increase. Mr. Alstead received a base salary increase to
recognize his promotion to executive vice president, chief
financial officer and chief administrative officer. In January
2009, the Compensation Committee, upon Mr. Schultzs
request, reduced his base salary for fiscal 2009 from
$1.19 million to $6,900 effective March 30, 2009. In
November 2009, the Compensation Committee approved a base salary
increase for Mr. Schultz to $1.3 million effective
December 1, 2009.
As discussed above, in specific cases we set base salaries
higher or lower than the median where appropriate.
Mr. Alsteads base salary was below median because he
was new in his role as executive vice president, chief financial
officer and chief administrative officer.
Messrs. Coles and Rubinfelds base salaries were
above median. Mr. Coles base salary was above median
because his base salary was not adjusted from the chief
operating officer level when Mr. Coles reassumed the role
of president, Starbucks Coffee International in late fiscal
2008. Mr. Rubinfelds base salary was above median
because the most closely comparable position that
Mr. Rubinfeld was benchmarked against does not encompass
all of the job responsibilities of Mr. Rubinfelds
position.
Annual Incentive Bonus. We provide an annual
incentive bonus opportunity for executive officers to drive
Company, business unit where appropriate, and individual
performance on a
year-over-year
basis. For fiscal 2009, all the executive officers with a title
of executive vice president or above (other than
Mr. Schultz) participated in the Executive Management Bonus
Plan at target annual incentive bonus amounts expressed as a
percentage of base salary. The target annual incentive bonus
amounts were generally set at the median of comparator group
companies.
However, as discussed above, in specific cases, we set target
bonuses higher or lower than the median where appropriate based
on factors such as the Companys prior-year performance,
individual performance and retention concerns. Since
Mr. Alsteads base salary was below median, his
resulting target bonus, set as a percentage of his base salary
(50%), was below median. For fiscal 2009,
Messrs. Coles and Rubinfelds target bonuses
were above median because each executives base salary was
above median. Since target bonuses are set as a percentage of
base salary, a base salary above median resulted in a target
incentive bonus above median.
The total annual incentive bonus award actually delivered
to an executive was determined based on the extent to which
the objective performance goal and individual performance goals
were achieved. Under the Executive Management Bonus Plan,
Company or business unit performance above or below the primary
objective target raises or reduces, respectively, the payouts
related to both the primary objective performance goal and the
individual performance goals. However, Company or business unit
performance above or below the primary objective
27
performance goal does not affect the payouts related to the
secondary objective performance goal. The Executive Management
Bonus Plan does not permit a payout of more than
$3.5 million to any executive officer for any single fiscal
year based on achievement of objective performance goals. In
addition, if participating executive officers achieve below 80%
of their individual performance goals, then they do not receive
any portion of the annual incentive bonus award under the
Executive Management Bonus Plan.
For the named executive officers (other than Mr. Schultz),
the annual incentive bonus opportunity was composed of objective
performance goals (both primary and secondary) and individual
performance goals. The primary objective performance goal for
the named executive officers with responsibilities that cross
business units (Messrs. Alstead and Rubinfeld) was
adjusted operating income; for Mr. Burrows it
was adjusted U.S. business unit profit
contribution and for Mr. Coles it was adjusted
International business unit profit contribution (each term
as defined below). The secondary objective performance goal was
adjusted earnings per share (as defined below). The weighting
(as a percentage of each executives target annual
incentive bonus amount) among the goals for each of the named
executive officers for fiscal 2009 was as follows.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighting
|
|
|
Target Bonus (as a
|
|
Primary Objective
|
|
Secondary Objective
|
|
Individual
|
Named Executive Officer
|
|
% of Base Salary)
|
|
Goal (%)
|
|
Goal (%)
|
|
Goal (%)
|
|
Howard Schultz
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Troy Alstead
|
|
|
50
|
|
|
|
50
|
|
|
|
30
|
|
|
|
20
|
|
Clifford Burrows
|
|
|
65
|
|
|
|
50
|
|
|
|
30
|
|
|
|
20
|
|
Martin Coles
|
|
|
65
|
|
|
|
50
|
|
|
|
30
|
|
|
|
20
|
|
Arthur Rubinfeld
|
|
|
65
|
|
|
|
50
|
|
|
|
30
|
|
|
|
20
|
|
Peter J. Bocian
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Objective
Performance Goals
For fiscal 2009, the primary objective performance goal for the
executive officers was either adjusted business unit profit
contribution (for executives responsible for a single business
unit) or adjusted operating income (for executives with
responsibilities that cross business units). For compensation
purposes, we define operating income as consolidated business
unit profit contribution less total unallocated corporate
general and administrative expense. The primary objective
measures are adjusted to exclude the impact of any
(i) significant acquisitions or dispositions of businesses;
(ii) one-time, non-operating charges; and
(iii) accounting changes (including early adoption of any
accounting change mandated by any governing body, organization
or authority). The secondary objective performance goal was
adjusted earnings per share. Earnings per share is adjusted to
exclude the impact of any (i) significant acquisitions or
dispositions of businesses; (ii) one-time, non-operating
charges; and (iii) accounting changes (including early
adoption of any accounting change mandated by any governing
body, organization or authority). Adjusted earnings per share is
also adjusted for any stock split, stock dividend or other
recapitalization.
28
We chose these measures because they directly link to Company
performance and they are easy to track and communicate. Since
business unit profit contribution performance and operating
income (primary objective measure) track core operating
performance more closely than earnings per share, we based 50%
of the total annual incentive bonus on the primary objective
performance measure and 30% of the total annual incentive bonus
on the secondary objective performance measure. Individual goals
were set at 20% of total incentive bonus goal weighting in
fiscal 2009 for participating executives.
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2009 Executive Management Bonus Plan Permitted
Payout
|
for Achievement of Primary Objective Performance Goal
|
Business Unit Profit Contribution
|
|
Consolidated
|
|
|
|
|
|
|
(in Millions US$)
|
|
Operating Income
|
|
|
|
|
|
|
U.S.
|
|
International
|
|
(in Millions US$)
|
|
% of Payout
|
|
|
|
Impact
|
814.0
|
|
219.2
|
|
983.3
|
|
200
|
|
ý
|
|
Positively
impacts primary
measure and
individual target
percentages
|
807.8
|
|
213.3
|
|
971.9
|
|
186
|
801.6
|
|
207.5
|
|
960.5
|
|
171
|
795.5
|
|
201.6
|
|
949.1
|
|
157
|
789.3
|
|
195.7
|
|
937.7
|
|
143
|
|
|
|
|
783.1
|
|
189.9
|
|
926.3
|
|
129
|
|
|
|
|
776.9
|
|
184.0
|
|
914.9
|
|
114
|
|
|
|
|
752.2-770.7
|
|
160.5-178.1
|
|
869.4-903.5
|
|
100
|
|
|
|
Target
|
746.0
|
|
154.6
|
|
858.0
|
|
75
|
|
ý
|
|
Negatively
impacts primary
measure and
individual target
percentages
|
739.8
|
|
148.8
|
|
846.6
|
|
50
|
733.6
|
|
142.9
|
|
835.2
|
|
25
|
727.5 or less
|
|
137.0 or less
|
|
823.8 or less
|
|
0
|
As noted above, the fiscal 2009 primary objective performance
measure was either adjusted business unit profit contribution or
adjusted Company operating income. To provide increased
incentives for better performance, the fiscal 2009 Executive
Management Bonus Plan primary objective measure had a sliding
scale that provided for annual incentive bonus payouts greater
than the target bonus if adjusted operating income or the
business unit profit contribution was greater than the target
(up to a 200% payout) or less than the target bonus if adjusted
operating income or the business unit profit contribution was
lower than the target (subject to a threshold amount). Final
calculations for primary objective measures were based on a
scale with levels of primary objective measure performance that
correspond to 1% increments. For fiscal 2009, the Company
performance of the primary objective measure was:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target
|
|
Actual Performance
|
|
|
Primary Objective Measure
|
|
(in Millions US$)
|
|
(in Millions US$)
|
|
% of Target
|
|
Adjusted U.S. Business Unit Profit Contribution
|
|
|
752.2-770.7
|
|
|
|
774.2
|
|
|
|
107
|
|
Adjusted International Business Unit Profit Contribution
|
|
|
160.5-178.1
|
|
|
|
119.9
|
|
|
|
0
|
|
Adjusted Consolidated Operating Income
|
|
|
869.4-903.5
|
|
|
|
894.4
|
|
|
|
100
|
|
The fiscal 2009 secondary objective performance measure was
adjusted earnings per share. As shown in the table below, target
adjusted earnings per share for fiscal 2009 was $0.75-0.78. To
provide increased incentive for better performance, the fiscal
2009 Executive Management Bonus Plan secondary objective
performance measure had a sliding scale that provided for bonus
payouts greater than the target bonus if adjusted earnings per
share was $0.79 or more (up to a 200% payout for $0.85 or
greater) or less than the target bonus if adjusted earnings per
share was $0.74 or lower (subject to a threshold adjusted
earnings per share of $0.72).
29
|
|
|
Fiscal 2009 Permitted Payout
|
for Achievement of Secondary Objective Performance Goal
|
|
|
Executive Management Bonus Plan
|
Adjusted EPS
|
|
%
of
Payout
|
$0.85 or greater
|
|
200%
|
$0.84
|
|
186%
|
$0.83
|
|
171%
|
$0.82
|
|
157%
|
$0.81
|
|
143%
|
$0.80
|
|
129%
|
$0.79
|
|
114%
|
$0.75-$0.78
|
|
100%
|
$0.74
|
|
75%
|
$0.73
|
|
50%
|
$0.72
|
|
25%
|
$0.71 or less
|
|
0%
|
Fiscal 2009 adjusted earnings per share was $0.80, providing for
a 129% payout on the secondary objective performance measure.
For fiscal 2009, GAAP earnings per share of $0.52 was adjusted
to $0.80 as a result of $0.28 in charges related to
restructuring costs.
We used adjusted operating income, adjusted business unit profit
contribution and adjusted earnings per share rather than
operating income, business unit profit contribution and earnings
per share calculated in accordance with GAAP because we believe
adjusted measures give executives a more certain target that is
within their sphere of control and accountability. The same
adjusted measures were used for the broader Company management
incentive plan. This avoids potentially interfering with the
incentive purpose of the awards by increasing or reducing actual
bonus payouts based on accounting impacts of unusual events and
changes in accounting rules. In setting the objective
performance target, we consider target Company performance under
the board-approved annual operating and long-term strategic
plans, the potential payouts based on achievement at different
levels on the sliding scale and whether the portion of
incremental earnings paid as bonuses rather than returned to
shareholders is appropriate. Objective performance goals are
generally targeted where they (i) require
year-over-year
growth in our business and (ii) are not easily achieved.
For example, in a challenging economic environment, 5.6%-9.9%
growth in adjusted earnings per share from $0.71 in fiscal 2008
was required in order to achieve the target fiscal 2009 adjusted
earnings per share of $0.75-$0.78. For every cent of adjusted
earnings per share over the target, we believe it is appropriate
to provide for increased bonus payouts due to the significant
shareholder returns commonly generated by above-target earnings
per share performance. The Compensation Committee and the
independent directors have the discretion under the plan to
reduce the awards paid under the Executive Management Bonus
Plan, but do not have discretion to increase payouts that are
based on achievement of the objective performance goals or make
a payout based on the objective performance goals if the
threshold targets are not achieved.
Individual
Performance Goals
For fiscal 2009, all named executive officers participating in
the annual incentive bonus plan had individual performance goals
under the plan. We believe individual bonus goals are
appropriate primarily to drive individual performance against
strategic corporate initiatives. Individual annual incentive
bonus goals vary depending on our strategic plan initiatives and
each executives responsibilities. Individual goals were
set at 20% of total incentive bonus goal weighting in fiscal
2009 for participating executives. We chose 20% because we
wanted to drive individual development of executives while at
the same time maximizing tax deductible performance-based
compensation. Individual annual incentive bonus goals are set
prior to the start of each fiscal year. Individual goals for
fiscal 2009 under the Executive Management Bonus Plan for the
participating named executive officers were based on the
following categories:
|
|
|
|
|
Troy Alstead: Company financial performance,
partner development, key stakeholder communication and diversity.
|
30
|
|
|
|
|
Clifford Burrows: business unit financial
performance, partner development, organizational effectiveness,
operational excellence and diversity.
|
|
|
|
Martin Coles: business unit financial
performance, partner development, organizational effectiveness
and diversity.
|
|
|
|
Arthur Rubinfeld: functional financial
performance/budget, partner development and diversity.
|
|
|
|
Peter J. Bocian: N/A.
|
Performance
Under the Annual Incentive Bonus Plan
After the end of fiscal 2009, the Compensation Committee
determined the extent to which the performance goals were
achieved, and subsequently approved, certified and recommended
to the independent directors (who also approved and certified)
the amount of the award to be paid to each participant in the
annual incentive bonus plan, the Executive Management Bonus
Plan. Based on fiscal 2009 financial performance, for some of
the named executive officers, the target primary and secondary
objective performance goals were met. As a result, there were
annual incentive bonus payouts under the Executive Management
Bonus Plan for fiscal 2009. The table below shows the fiscal
2009 levels of achievement of the performance metrics and the
fiscal 2009 annual incentive payouts, which are also disclosed
in the Non-Equity Incentive Compensation Plan column
of the Summary Compensation Table on page 40.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2009 Executive Management Bonus Plan Payout
|
|
|
Achievement of
|
|
Achievement of
|
|
Achievement of
|
|
|
|
Target
|
|
|
|
|
Primary Objective
|
|
Secondary Objective
|
|
Individual
|
|
Total
|
|
Bonus (as a
|
|
Total Payout
|
|
|
Performance Goal
|
|
Performance Goal
|
|
Performance Goals
|
|
Payout
|
|
% of Base
|
|
(as a % of
|
Named Executive Officer
|
|
(%)
|
|
(%)
|
|
(%)
|
|
($)(1)
|
|
Salary)
|
|
Base Salary)
|
|
Howard Schultz
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Troy Alstead
|
|
|
100
|
|
|
|
129
|
|
|
|
97
|
|
|
|
243,000
|
|
|
|
50
|
|
|
|
54
|
|
Clifford Burrows
|
|
|
107
|
|
|
|
129
|
|
|
|
97
|
|
|
|
436,865
|
|
|
|
65
|
|
|
|
73
|
|
Martin Coles
|
|
|
0
|
|
|
|
129
|
|
|
|
80
|
|
|
|
182,374
|
|
|
|
65
|
|
|
|
25
|
|
Arthur Rubinfeld
|
|
|
100
|
|
|
|
129
|
|
|
|
98
|
|
|
|
316,778
|
|
|
|
65
|
|
|
|
70
|
|
Peter J. Bocian
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
(1) |
|
Bonus payout under the Executive Management Bonus Plan. This
amount does not include discretionary bonuses as described below. |
Discretionary Bonuses. We paid discretionary
bonuses to reward our executive officers for their contributions
to the Companys strong fiscal 2009 performance during
extraordinarily challenging times that were not adequately
reflected in the payout calculations under the Executive
Management Bonus Plan. The Compensation Committee determined
that certain items, in addition to the adjustments described
above, impacted the calculations of the final primary objective
performance results under the Executive Management Bonus Plan in
a manner that would not yield bonus payout amounts that
appropriately rewarded the achievement of the Companys
targeted operating performance. These items included adjustments
related to (i) the effect of internal reorganizations
during the period that changed the scope of responsibility of
the business unit leader; (ii) the variance from annual
operating assumptions for (a) foreign exchange and
(b) mark-to-market
adjustment of the non-qualified deferred compensation plan
liability; and (iii) the effect of other significant,
unusual
and/or
non-recurring events. These same adjustments were applied to the
General Management Incentive Plan, the incentive plan that
applies to eligible partners below the executive officer level.
The Compensation Committee approved payment of a discretionary
bonus to each named executive officer, other than
Mr. Schultz, in the amount of the difference between the
actual bonus payouts under the Executive Management Bonus Plan
and the bonus payouts that would have been achieved had the
adjustments to the primary objective performance measures been
made to exclude the impact of the items described above. In
addition, the Compensation Committee approved a discretionary
bonus for Mr. Schultz as a result of the strong financial
results for fiscal 2009 as well as Mr. Schultzs
leadership during a transformational year for the business, even
though he did not participate in the Executive Management Bonus
Plan for fiscal 2009. The discretionary bonus amounts were:
Mr. Schultz
31
$1 million; Mr. Alstead $59,252;
Mr. Burrows $139,570;
Mr. Coles $310,837 and
Mr. Rubinfeld $77,360. These amounts are also
disclosed in the Bonus column of Summary
Compensation Table on page 40.
Long-Term Incentive Compensation. We design
our long-term incentive compensation program to drive long-term
Company performance, align the interests of executives with
those of our shareholders and retain executives through
long-term vesting and potential wealth accumulation. The
Compensation Committee reviews long-term incentive compensation
strategy and vehicles at least annually. Our long-term incentive
compensation program is broad-based, with over 90,000 partners
in 16 countries at all levels, including qualified part-time
partners, receiving equity awards in the most recent annual
grant in November 2009. The Compensation Committee continues to
believe in the importance of equity compensation for all
executive officers and the broad-based partner population, for
purposes of partner incentive and retention, and alignment of
interests with shareholders. Additionally, because we do not
have a pension or a supplemental executive retirement plan, we
believe our executives plan for their retirement substantially
through potential wealth accumulation from equity gains.
In fiscal 2009, as in prior years, long-term performance-based
compensation of executive officers included stock option awards
as disclosed in the Fiscal 2009 Grants of Plan-Based Awards
table on page 42. For fiscal 2009, the Compensation
Committee introduced performance RSUs as part of the total
target long-term incentive compensation award for executive
officers, with 50% of the award granted to executive officers in
the form of stock options and 50% in the form of performance
RSUs. The Compensation Committee continues to believe that stock
options are an appropriate equity vehicle for a portion of
long-term incentive compensation for our executives because
stock options align their interests with the interests of
shareholders by having value only if our stock price increases
over time. The Compensation Committee believes that performance
RSUs are an appropriate equity vehicle for a portion of
long-term incentive compensation for our executives because
performance RSUs align executives interests with the
interests of shareholders by having value only if performance
goals are met. Additionally, once the performance RSUs are
earned, they are subject to time-based vesting. Thus, the value
of performance RSUs increases if our stock price increases.
Performance RSUs also may serve in retaining executives as they
have a more stable value as the executive will receive economic
value (if performance goals are met) even if the stock price
declines or stays flat (as value is realized upon vesting).
The amount of equity granted to executive officers is based on a
target economic value, which was set at approximately the
50th percentile of comparator group companies for
comparable positions. We also take into consideration share
usage, dilution and shares available under the equity plan. We
do not consider the realized or unrealized value of prior equity
awards when determining the target economic value of new awards
because each equity award is awarded as an incentive to drive
future shareholder return.
As discussed above, in specific cases we may use discretion to
set the target economic value of the equity award higher or
lower than the median where appropriate, based on factors such
as the Companys prior-year performance, individual
executive performance and retention concerns. Since
Mr. Schultzs variable compensation consisted entirely
of a long-term incentive award in the form of stock options, his
long-term equity award was above median. Mr. Alsteads
target economic value for his long-term incentive compensation
award was below median as it was his first year as executive
vice president, chief financial officer and chief administrative
officer. Mr. Burrows target economic value for his
equity award was above median because the Compensation Committee
wanted to tie his compensation to driving Company performance as
the U.S. business, which constitutes a significant majority
of the Companys total net revenues, was facing significant
challenges at the time of fiscal 2009 compensation decisions.
Mr. Rubinfelds target economic value for his equity
award was also above median because the most closely comparable
position that Mr. Rubinfeld was benchmarked against does
not encompass all the job responsibilities of
Mr. Rubinfelds position; plus the Compensation
Committee wanted to provide additional incentive to
Mr. Rubinfeld as there were several major store initiatives
underway in fiscal 2009 that were key to meeting the
Companys targeted operating performance.
|
|
|
|
|
Stock Options. The amount of stock options
granted to executive officers for fiscal 2009 was based on a
target economic value for the total equity award value. The
number of stock options granted was calculated by dividing 50%
of the total equity award value by a closing price multiplier.
The closing price multiplier was equal to the closing market
price of Starbucks stock on the date of grant multiplied by a
Black-Scholes factor. The Black-Scholes factor is an option
value ratio based on maintaining comparable assumptions to
|
32
|
|
|
|
|
those used to develop competitive market levels and maintaining
year-over-year
consistency so that the amount of stock options granted is
primarily determined by Company financial performance and less
influenced by changes in the estimated option value. Starbucks
has applied the same Black-Scholes factor for the last five
years.
|
|
|
|
|
|
Performance-Based Restricted Stock Units. The
target amount of performance RSUs for executive officers for
fiscal 2009 was based on a target economic value for the total
equity award value. The number of performance RSUs was
calculated by dividing 50% of the total equity award value by
the closing price of Starbucks stock on the date of grant. The
actual number of performance RSUs earned was based on
achievement of adjusted earnings per share for fiscal 2009. As
shown in the table below, target adjusted earnings per share for
fiscal 2009 was $0.75-$0.78. To provide increased incentive for
better performance, the fiscal 2009 performance measure for the
performance RSUs had a sliding scale so that each named
executive officer could achieve between 0% to 200% of the target
award amount.
|
|
|
|
Fiscal 2009 Permitted Payout
|
for Performance-Based Restricted Stock Units
|
|
|
Earned as a
|
Adjusted EPS
|
|
% of Target Award
|
$0.85 or greater
|
|
200%
|
$0.84
|
|
186%
|
$0.83
|
|
171%
|
$0.82
|
|
157%
|
$0.81
|
|
143%
|
$0.80
|
|
129%
|
$0.79
|
|
114%
|
$0.75-$0.78
|
|
100%
|
$0.74
|
|
75%
|
$0.73
|
|
50%
|
$0.72
|
|
25%
|
$0.71 or less
|
|
0%
|
Based on the level of attainment, the target number of
performance RSUs was multiplied by the applicable percentage of
achievement. The number of performance RSUs resulting from the
calculation constituted the maximum number of restricted stock
units that may vest under the award. The earned performance RSUs
will vest 50% on the second anniversary of the date of grant and
50% on the third anniversary of the date of grant. The
Compensation Committee and the independent directors do not have
discretion to increase or decrease the RSUs that are earned
based on achievement of the performance goal. Fiscal 2009
adjusted earnings per share was $0.80, resulting in executive
officers earning 129% of the target performance RSU award. For
fiscal 2009, GAAP earnings per share of $0.52 was adjusted to
$0.80 as a result of $0.28 in charges related to restructuring
costs. The amounts shown in the table below represent the actual
number of performance RSUs earned by each participating named
executive officer for fiscal 2009.
|
|
|
|
|
Named Executive Officer
|
|
Fiscal 2009 Earned Performance RSUs
|
|
Howard Schultz
|
|
|
N/A
|
|
Troy Alstead
|
|
|
29,861
|
|
Clifford Burrows
|
|
|
59,722
|
|
Martin Coles
|
|
|
52,257
|
|
Arthur Rubinfeld
|
|
|
59,722
|
|
Peter J. Bocian
|
|
|
N/A
|
|
Perquisites and Other Executive Benefits. Our
executive compensation program includes limited executive
perquisites and other benefits. The aggregate incremental cost
of providing perquisites and other benefits to the named
executive officers is included in the amount shown in the
All Other Compensation column of the Summary
Compensation Table on page 40 and detailed in the Fiscal
2009 All Other Compensation Table on page 41. We
33
believe the perquisites and other executive benefits we provide
are representative of benefits offered by the companies with
whom we compete for executive talent, and therefore offering
these benefits serves the objective of attracting and retaining
top executive talent. In the Compensation Committees view,
some of the perquisites and other benefits, particularly home
and personal security services, are provided for the
Companys benefit notwithstanding the incidental personal
benefit to the executive. A discussion and analysis of
perquisites follows.
|
|
|
|
|
Security. Under our executive security
program, we provide security services to the chairman, president
and chief executive officer and certain other executives.
Security services include home security systems and monitoring
and, in the case of the chairman, president and chief executive
officer, personal security services. These protections are
provided due to the range of security issues encountered by
senior executives of large, multinational corporations, and
particularly with respect to high-profile founders such as our
chairman, president and chief executive officer. We believe that
the personal safety and security of our senior executives,
particularly Mr. Schultz, is of the utmost importance to
the Company and its shareholders. Therefore, we consider the
costs associated with such security to be appropriate and
necessary business expenses notwithstanding the incidental
personal benefit to executives. Aggregate security costs in
fiscal 2009 were higher than fiscal 2008 due primarily to
increased personal security details for Mr. Schultz as well
as upgrades to residential security systems.
|
|
|
|
Personal Use of Corporate Aircraft. Under our
corporate aircraft use policy, the chairman, president and chief
executive officer, the chief financial officer and other members
of management with the approval of the chairman, president and
chief executive officer are permitted limited personal use of
the corporate-owned aircraft, but are required to reimburse
Starbucks for those costs. Those reimbursements are discussed in
the section Certain Relationships and Related
Transactions on page 51. In addition, family members
or other guests occasionally accompany Mr. Schultz on
business trips when space is available. This use does not result
in aggregate incremental costs to the Company, but is treated as
imputed income to Mr. Schultz under IRS rules.
|
|
|
|
Replacement of Split-Dollar Life Insurance
Benefit. In fiscal 2005, we terminated our
obligations to pay premiums with respect to split-dollar life
insurance arrangements with Mr. Schultz in exchange for an
annual cash payment in an amount sufficient for him to acquire a
like benefit. The original split-dollar agreements and policies
were put in place over 10 years ago as a benefit to
Mr. Schultz. We terminated the agreements due to a change
in law, not because we wanted to affect the scope of benefits
provided to Mr. Schultz.
|
|
|
|
Executive Physicals. We offer to pay for an
annual physical examination for all senior vice presidents and
above, which includes all executive officers. We provide the
physicals at minimal cost for the Companys benefit, in an
effort to minimize the risk of losing the services of senior
management due to unforeseen significant health issues.
|
|
|
|
Executive Life and Disability Insurance. We
provide life and disability insurance to our vice presidents and
above, including all executive officers, at a higher level than
is provided to partners generally. We believe this is a standard
benefit offered to management employees by comparator group
companies.
|
|
|
|
Expatriate Package. Under limited
circumstances, we provide certain perquisites to officers that
expatriate to another country for work on the Companys
behalf. Mr. Burrows, prior to assuming his new role as
president, Starbucks Coffee U.S. in March 2008, was located
in the Netherlands as an expatriate from the United Kingdom. For
his transition to the United States from the United Kingdom and
the Netherlands, Mr. Burrows received tax preparation
assistance, tax equalization and household goods storage. The
amount recognized in fiscal 2009 for each of these perquisites
is detailed in the Fiscal 2009 All Other Compensation Table on
page 41. Upon assuming his new role, Mr. Burrows no
longer receives the expatriate perquisites except with respect
to certain tax preparation assistance as it related to his time
in the United Kingdom and the Netherlands. We believe this is a
standard package offered to expatriated employees at global
companies.
|
|
|
|
Relocation Expenses. The Company agreed to pay
the relocation expenses in connection with
Mr. Burrows move to the United States at the time of
his promotion to president, Starbucks Coffee U.S. The
majority of these expenses were incurred in fiscal 2008, but a
small amount was recognized in fiscal 2009. The amount
recognized in fiscal 2009 for each of these perquisites is
detailed in the Fiscal 2009
|
34
|
|
|
|
|
All Other Compensation Table on page 41. We believe this is
a standard package offered by global companies to executive
employees that are asked to relocate.
|
Discretionary Bonuses and Equity Awards. We
pay sign-on, first-year guaranteed and other discretionary
bonuses and grant new-hire equity awards where necessary or
appropriate, including to attract top executive talent from
other companies. Executives we recruit often have a significant
amount of unrealized value in the form of unvested equity and
other forgone compensation opportunities. Sign-on and first-year
guaranteed bonuses and special equity awards are an effective
means of offsetting the compensation opportunities executives
lose when they leave a former employer to join Starbucks. We
typically require newly recruited executives to return a pro
rata portion of their sign-on bonus if they voluntarily leave
Starbucks within a certain period of time (usually one year)
after joining us. Other than the discretionary bonuses discussed
on page 31, we did not award a discretionary cash bonus to
any named executive officer in fiscal 2009.
We grant discretionary equity awards from time to time where
appropriate to retain key executives or recognize expanded roles
and responsibilities. Discretionary equity awards take the form
of stock options or time-based RSUs. We grant time-based RSUs to
better serve retention purposes by ensuring that the awards will
have value upon vesting since the ultimate value of time-based
RSUs, unlike stock options, does not depend solely on our stock
price increasing over time. In fiscal 2009, we did not award
discretionary equity awards to any of the named executive
officers.
Deferred Compensation. Some executive officers
participate in the Management Deferred Compensation Plan, which
defers cash compensation. Mr. Schultz also participates in
a deferred stock plan.
|
|
|
|
|
Management Deferred Compensation Plan. We
offer participation in the plan to a group of management and
highly compensated partners, including, but not limited to,
executive officers, because their participation in our 401(k)
plan is limited under federal income tax rules and we believe
they should have other similar tax-efficient means of saving for
retirement. We do not pay or guarantee above-market returns. The
appreciation, if any, in the account balances of plan
participants is due solely to contributions by participants, any
Company matching contributions and the underlying performance of
the investment funds selected by the participants. The
investment alternatives available to Management Deferred
Compensation Plan participants are identical to those available
to 401(k) plan participants.
|
|
|
|
1997 Deferred Stock Plan. Under the 1997
Deferred Stock Plan, key partners designated by the Compensation
Committee could elect to defer gains from stock option exercises
by being credited with deferred stock units payable in shares of
common stock upon the expiration of the deferral period
specified by the executive. In September 1997, Mr. Schultz
elected to defer receipt of 3,394,184 shares of common
stock (as adjusted for stock splits since 1997). In November
2006, with the consent of the Compensation Committee,
Mr. Schultz elected to re-defer receipt of the shares until
December 2012 (or earlier if his employment with Starbucks
terminates). Although the Compensation Committee may consider
another re-deferral by Mr. Schultz, we no longer permit new
deferrals.
|
General Partner Benefits. Executives are
eligible to participate in all benefit plans we offer to
partners generally. This helps us attract and retain top
executive talent.
|
|
|
|
|
Employee Stock Purchase Plan. Among the plans
we offer to U.S. and Canadian partners generally, including
executive officers, is our U.S. tax-qualified employee
stock purchase plan. Under the plan, eligible partners may
acquire our stock at a discount price through payroll
deductions. For a portion of fiscal 2009, the plan had a
three-month look-back and allowed participants to buy stock at a
15% discount to the lower of the market price on the first or
last trading day of the period. Effective April 1, 2009,
the plan was amended to allow participants to buy stock at a 5%
discount to the market price on the last trading day of the
period. No plan participant could purchase more than $25,000 in
market value of our stock under the plan in any calendar year.
|
35
Other
Policies and Considerations
Internal Pay Equity
Compensation of Other Named Executive Officers in Relation to
One Another and to the Chairman, President and Chief Executive
Officer
As noted above, the Compensation Committee considers internal
pay equity, among other factors, when making compensation
decisions. However, the Compensation Committee does not use a
fixed ratio or formula when comparing compensation among
executive officers. In addition, the Compensation Committee
reviews executive compensation on the same basis for each of the
named executive officers, including our chairman, president and
chief executive officer.
Our chairman, president and chief executive officer is
compensated at a higher level than other executive officers due
to his significantly greater level of experience, accountability
and responsibility. For fiscal 2009, Mr. Schultzs
base salary was set at $1.19 million, the same amount he
had been paid since fiscal 2004. As noted above, in January
2009, the Compensation Committee, upon Mr. Schultzs
request, reduced his base salary to $6,900 for fiscal 2009
effective March 30, 2009. Mr. Schultz did not
participate in the Executive Management Bonus Plan for fiscal
2009 and his entire fiscal 2009 long-term incentive grant was in
the form of stock options. Mr. Schultz receives more of his
pay in the form of long-term incentive compensation, rather than
annual cash compensation, as compared to the compensation of the
other named executive officers. Given Mr. Schultzs
responsibility for overall Company performance, the Compensation
Committee believes greater compensation in the form of long-term
incentive compensation will align his compensation with the
long-term performance of the Company. The Compensation Committee
believes this is consistent with market practices whereby
companies compensate chief executive officers at a higher level
than the other executive officers and weight the chief executive
officers total compensation more heavily toward long-term
incentive compensation.
We believe the fiscal 2009 target total direct compensation we
paid to Messrs. Alstead, Burrows, Coles and Rubinfeld in
relation to the compensation targeted for Mr. Schultz and
to one another is reasonable and appropriate given each
executives responsibilities and fiscal 2008 performance.
|
|
|
|
|
Troy Alstead. For fiscal 2009,
Mr. Alsteads target total direct compensation was
below the other named executive officers as it was his first
year as executive vice president, chief financial officer and
chief administrative officer.
|
|
|
|
Clifford Burrows. For fiscal 2009,
Mr. Burrows target total direct compensation was
higher than that of our other named executive officers (other
than Messrs. Schultz and Coles) due to his greater
responsibility for the U.S. business which constitutes a
significant majority of the Companys total net revenues.
Mr. Burrows target total direct compensation was
below Mr. Coles compensation as Mr. Coles
base salary was not adjusted from the chief operating officer
level when he reassumed the role of president, Starbucks Coffee
International in late fiscal 2008.
|
|
|
|
Martin Coles. For fiscal 2009,
Mr. Coles target total direct compensation was higher
than that of our other named executive officers (other than
Mr. Schultz) as his target total cash was above median
because his base salary was not adjusted from the chief
operating officer level when Mr. Coles reassumed the role
of president, Starbucks Coffee International in late fiscal 2008.
|
|
|
|
Arthur Rubinfeld. For fiscal 2009,
Mr. Rubinfelds target total direct compensation was
lower than that of our other named executive officers (other
than Mr. Alstead) as the other named executive officers are
compensated at a higher level as they have a greater level of
responsibility for principal business units of the Company.
|
Change-in-Control
and Termination Arrangements
We do not provide special
change-in-control
benefits to executives. Our only
change-in-control
arrangement, which applies to all partners with equity
compensation awards, is accelerated vesting of equity. Such
vesting is double trigger, meaning that unvested
stock options and unvested restricted stock units vest
immediately only if (i) there is a change in control and
(ii) if stock options and restricted stock units are
assumed or substituted with
36
stock options or restricted stock units of the surviving
company, the partner is terminated or resigns for good reason
within one year after the change in control. If stock options or
restricted stock units are not assumed or substituted with stock
options or restricted stock units of the surviving company, they
vest immediately upon a change in control.
We occasionally offer a severance benefit arrangement for new
executive officers to provide for one years base salary if
we terminate his or her employment for any reason other than
cause (which generally requires misconduct) within
one year of the executives hire date. We may also offer a
severance benefit arrangement for terminated or separated
executives as part of a negotiated termination of employment in
exchange for a release of claims against the Company and other
covenants in the best interests of the Company. Other than as
described below, none of our named executive officers for fiscal
2009 has any such severance benefit arrangement.
On November 30, 2009, in connection with
Mr. Coles separation, the Company entered into a
Separation Agreement and Release with Mr. Coles. Pursuant
to the agreement, we agreed to pay Mr. Coles a lump sum
payment equal to 12 months of his base salary. The
Compensation Committee believes that the separation amount was
appropriate and in the best interests of the Company in exchange
for certain covenants and the release provided by
Mr. Coles. A detailed description of the agreement can be
found on page 49.
Executive Stock Ownership Guidelines
We have adopted stock ownership guidelines for senior executives
in September 2007 to ensure that our executives have a long-term
equity stake in Starbucks. The guidelines apply to all executive
vice presidents and above. The guidelines require covered
executives to have achieved a minimum investment in Starbucks
stock within five years. Minimum investment levels for each job
title are:
|
|
|
|
|
Job Title
|
|
Minimum Investment
|
|
chairman, president and chief executive officer
|
|
$
|
5,000,000
|
|
president(1)
|
|
$
|
2,000,000
|
|
executive vice
president(2)
|
|
$
|
750,000
|
|
|
|
|
(1) |
|
For fiscal 2009, applied to Messrs. Burrows, Coles and
Rubinfeld. Effective November 2009, Mr. Alstead is subject
to the $2,000,000 investment level. |
|
(2) |
|
For fiscal 2009, applied to Messrs. Alstead and Bocian. |
The unrealized value of vested,
in-the-money
stock options counts for up to 25% of the required minimum
investment. Unrealized value is measured as the difference
between aggregate exercise price and aggregate market value of
underlying shares. Shares held prior to the effective date of
the guidelines and shares purchased and held under our employee
stock purchase plan also count toward satisfying the investment
requirement. The Compensation Committee monitors each
executives progress toward the minimum investment on an
annual basis. We disfavor hedging transactions that limit or
eliminate the economic risk to our executives and partners of
owning our stock and, to our knowledge, no such arrangements are
currently outstanding. Our insider trading policy requires
general counsel pre-approval of any such hedging transactions.
Recovery of Incentive Compensation Policy
During its November 2009 meeting, the board of directors, upon
the recommendation of the Compensation Committee, approved a
Recovery of Incentive Compensation Policy. The policy allows the
Company to seek reimbursement with respect to incentive
compensation paid or awarded to executive officers (as
designated by the board) where (i) the payment of a bonus
or equity award (or the vesting of such award) was predicated
upon the achievement of financial results, which financial
results were the product of fraudulent activity or that were
subsequently the subject of a material negative restatement, and
(ii) a lower bonus payment or equity award would have been
made to executive officers (or lesser or no vesting would have
occurred with respect to such award) based on the restated
financial results or the financial results that would have
pertained absent such fraudulent activity. The Compensation
Committee believes that a Recovery of Incentive Compensation
Policy is in the best interests of the Company. The policy is
effective with respect to equity awards made beginning fiscal
2010 and bonus incentive payments earned for fiscal 2010.
37
Equity Grant Timing Practices
In September 2008, our board of directors approved the following
revised equity compensation grant timing guidelines:
Regular Annual Grant Dates. Regular annual
grants for partners and non-employee members of the board are
approved at the November Compensation Committee and board
meetings, and the grant date for such annual grants is the
second business day after the public release of fiscal
year-end earnings. However, if fiscal year-end earnings are
released before the November Compensation Committee and board
meetings, then the grant date will be the Monday following such
meetings. The grants are approved as formulas based on a
specified dollar amount; the number of shares and exercise price
for each option grant are determined based on the closing market
price of our stock on the grant date, and the number of shares
for each restricted stock unit is determined by dividing the
dollar amount by the closing market price of our stock on the
grant date.
Grant Dates for New Hires and
Promotions. Grant dates for new hire and
promotion grants are determined as follows:
|
|
|
|
|
Standard New Hire/Promotion Grants to Vice Presidents and
Below. Grants to newly hired or newly promoted
partners with titles of vice president or below that fall within
parameters previously approved by the Compensation Committee are
approved by written action of the chief executive officer acting
under a delegation from the Committee. These grants generally
occur on the same date each month and cover partners whose offer
letters are signed and who are working in their new positions as
of an earlier date in that month.
|
|
|
|
All Other New Hire/Promotion Grants. All other
new hire/promotion grants are approved by resolution of the
Compensation Committee and, unless a future effective date is
specified, are effective as of the date of the meeting at which
they are approved or, in the case of written consents, as of the
date the last Committee member signs the consent (in the event
the date the last Committee member signs the consent falls on a
weekend or holiday, the grant will occur on the next trading
day). Other new hire/promotion grants include grants
(i) to senior vice presidents or above under all
circumstances and (ii) to vice presidents or below for new
hire or promotion grants outside the parameters the Compensation
Committee has delegated the chief executive officer authority to
approve.
|
Grant Dates for Other Equity Awards. Grant
dates for equity awards other than annual equity award grants
and new hire/promotion grants are determined as follows:
|
|
|
|
|
Grants to Vice Presidents and Below by the Chief Executive
Officer with Delegated Authority. Grants to
partners with titles of vice president or below that fall within
the parameters previously approved by the Compensation Committee
are approved by written consent of the chief executive officer
acting under delegation from the Committee. These grants
generally occur on the same date each month.
|
|
|
|
All Other Equity Award Grants. All other
equity award grants are approved by resolution of the
Compensation Committee and, unless a future effective date is
specified, are effective as of the date of the meeting at which
they are approved or, in the case of written consents, as of the
date the last Committee member signs the consent (in the event
the date the last Committee member signs the consent falls on a
weekend or holiday, the grant will occur on the next trading
day).
|
Initial Grant Dates for Newly Elected Non-Employee
Directors. The grant date for initial grants to
newly elected non-employee members of the board of directors is
the date of election to the board, if the election date is open
for trading under our blackout policy for stock trading, or as
of the first open trading day after the election date, if the
election date is not open for trading under our blackout policy.
Tax Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code prevents us
from taking a tax deduction for non-performance-based
compensation in excess of $1 million in any fiscal year
paid to the chief executive officer and the three other most
highly compensated named executive officers (excluding the chief
financial officer). We refer to these executives as the
Section 162(m) covered executives. In designing
our executive compensation program, we
38
carefully consider the effect of Section 162(m) together
with other factors relevant to our business needs. We design
annual incentive and long-term performance awards to be
tax-deductible to Starbucks, so long as preserving the tax
deduction does not inhibit our ability to achieve our executive
compensation objectives. We will pay non-deductible compensation
when necessary to achieve our executive compensation objectives.
For fiscal 2009, the following elements of compensation were
designed to qualify as tax-deductible under Section 162(m):
Annual Incentive Bonus. The Executive
Management Bonus Plan, as in effect during fiscal 2009, was
designed to enable at least 80% of the annual incentive bonuses
paid to the named executive officers (other than
Mr. Schultz, who did not participate in the plan) to
qualify as performance-based and therefore be deductible under
Section 162(m). We believe it is important for the
executive team to have individual performance bonus goals in
order to drive specific behaviors and business initiatives, even
if it means a portion of their bonuses will not be
tax-deductible.
Stock Options. Stock options granted to the
covered executive officers are designed to qualify as
Section 162(m) performance-based compensation, and any gain
upon exercise of the options should be fully deductible under
Section 162(m).
Performance-Based Restricted Stock
Units. Performance RSUs granted to the covered
executive officers are designed to qualify as
Section 162(m) performance-based compensation, and any gain
upon vesting of the performance RSUs should be fully deductible
under Section 162(m).
Compensation paid to the Section 162(m) covered executives
that is not considered performance-based under
Section 162(m) is not deductible to the extent that it,
together with other non-performance-based compensation, exceeds
$1 million in any fiscal year. For fiscal 2009, the
following elements of compensation were not designed to qualify
as tax-deductible under Section 162(m): base salary, the
discretionary bonuses, the portion under the Executive
Management Bonus Plan based on individual performance goals and
certain other compensation. For fiscal 2009, other compensation
paid to Mr. Schultz included: (i) imputed income
related to travel by Mr. Schultzs family members on
certain flights using corporate aircraft; (ii) imputed
income for life and long-term disability insurance premiums paid
by Starbucks; and (iii) a payment to replace a split-dollar
life insurance benefit formerly provided to him, as more fully
explained on page 34.
Compensation
Committee Report
The Compensation Committee has reviewed and discussed the
foregoing Compensation Discussion and Analysis with management.
Based on this review and discussion, the Compensation Committee
recommended to the board of directors that the Compensation
Discussion and Analysis be included in the Starbucks 2009
10-K and
this proxy statement.
Respectfully submitted,
Barbara Bass (Chair)
Mellody Hobson*
Kevin R. Johnson*
James G. Shennan, Jr.**
Javier G. Teruel*
Myron E. Ullman, III
*Joined the Compensation Committee in September 2009.
**Joined the Compensation Committee in March 2009.
39
Summary
Compensation Table
The following table sets forth information regarding the fiscal
2009 compensation for our chief executive officer, chief
financial officer (at year-end), our two other most highly
compensated executive officers in fiscal 2009, plus Martin
Coles, our former president, Starbucks Coffee International and
Peter J. Bocian, our former executive vice president, chief
financial officer and chief administrative officer
(collectively, our named executive officers).
Columns required by SEC rules are omitted where there is no
amount to report. The table also sets forth information
regarding the fiscal 2007
and/or
fiscal 2008 compensation for Messrs. Schultz, Burrows,
Coles and Bocian because they were also named executive officers
in fiscal 2007
and/or
fiscal 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Incentive Plan
|
|
All Other
|
|
|
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Compensation
|
|
Total
|
Name and Principal Position
|
|
Year
|
|
($)(1)
|
|
($)(2)
|
|
($)(3)
|
|
($)(4)
|
|
($)(5)
|
|
($)(6)
|
|
($)
|
|
Howard Schultz
|
|
|
2009
|
|
|
|
643,954
|
|
|
|
1,000,000
|
|
|
|
|
|
|
|
9,530,162
|
|
|
|
|
|
|
|
935,676
|
|
|
|
12,109,792
|
|
chairman, president and chief
|
|
|
2008
|
|
|
|
1,190,000
|
|
|
|
|
|
|
|
|
|
|
|
7,730,540
|
|
|
|
|
|
|
|
764,366
|
|
|
|
9,684,906
|
|
executive officer
|
|
|
2007
|
|
|
|
1,190,000
|
|
|
|
|
|
|
|
|
|
|
|
8,576,816
|
|
|
|
|
|
|
|
861,398
|
|
|
|
10,628,214
|
|
Troy Alstead
|
|
|
2009
|
|
|
|
430,385
|
|
|
|
59,252
|
|
|
|
224,086
|
|
|
|
341,919
|
|
|
|
243,000
|
|
|
|
1,119
|
|
|
|
1,299,761
|
|
executive vice president, chief financial officer and chief
administrative officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clifford Burrows
|
|
|
2009
|
|
|
|
595,000
|
|
|
|
139,570
|
|
|
|
552,344
|
|
|
|
474,661
|
|
|
|
436,865
|
|
|
|
88,415
|
|
|
|
2,286,855
|
|
president, Starbucks Coffee U.S.
|
|
|
2008
|
|
|
|
565,990
|
|
|
|
|
|
|
|
373,542
|
|
|
|
434,902
|
|
|
|
|
|
|
|
610,151
|
|
|
|
1,984,585
|
|
Martin
Coles(7)
|
|
|
2009
|
|
|
|
725,000
|
|
|
|
310,837
|
|
|
|
161,838
|
|
|
|
1,252,830
|
|
|
|
182,374
|
|
|
|
25,249
|
|
|
|
2,658,128
|
|
former president, Starbucks
|
|
|
2008
|
|
|
|
725,000
|
|
|
|
|
|
|
|
|
|
|
|
1,914,850
|
|
|
|
|
|
|
|
46,184
|
|
|
|
2,686,034
|
|
Coffee International
|
|
|
2007
|
|
|
|
638,462
|
|
|
|
|
|
|
|
|
|
|
|
1,473,570
|
|
|
|
233,552
|
|
|
|
10,593
|
|
|
|
2,356,177
|
|
Arthur Rubinfeld
|
|
|
2009
|
|
|
|
450,000
|
|
|
|
77,360
|
|
|
|
184,958
|
|
|
|
735,427
|
|
|
|
316,778
|
|
|
|
4,082
|
|
|
|
1,768,605
|
|
president, Global Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter J.
Bocian(8)
|
|
|
2009
|
|
|
|
120,000
|
|
|
|
|
|
|
|
(89,307
|
)(9)
|
|
|
(836,388
|
)(9)
|
|
|
|
|
|
|
396
|
|
|
|
(805,299
|
)
|
former executive vice president, chief financial officer and
chief administrative officer
|
|
|
2008
|
|
|
|
594,711
|
|
|
|
|
|
|
|
89,307
|
|
|
|
1,041,683
|
|
|
|
|
|
|
|
3,543
|
|
|
|
1,729,244
|
|
|
|
|
(1) |
|
See page 27 for discussion and analysis of base salary
levels. |
|
(2) |
|
These amounts represent the discretionary bonus amounts paid for
fiscal 2009. |
|
(3) |
|
These amounts reflect the aggregate compensation costs for
financial statement reporting purposes for each fiscal year in
the table in accordance with GAAP for restricted stock units
granted in fiscal 2009 and prior years. These amounts do not
reflect amounts paid to or realized by the executive for fiscal
2009. For information on the assumptions used to calculate the
compensation costs, see Note 14 to the audited consolidated
financial statements in our 2009
10-K. As
required by SEC rules, the amounts reported have been adjusted
to exclude the estimated effect of service-based forfeiture
assumptions used for financial reporting purposes. See the
Fiscal 2009 Grants of Plan-Based Awards table on page 42
for the grant date fair value of each restricted stock unit
granted in fiscal 2009. Vesting of restricted stock units does
not accelerate upon retirement. |
|
(4) |
|
These amounts reflect the aggregate compensation costs for
financial statement reporting purposes for each fiscal year in
the table in accordance with GAAP for stock options granted in
such fiscal year and prior years. These amounts do not reflect
amounts paid to or realized by the executive for fiscal 2009.
For information on the method and assumptions used to calculate
the compensation costs, see Note 14 to the audited
consolidated financial statements in our 2009
10-K and
Note 14 to the audited consolidated financial statements in
our
Form 10-K
for the fiscal year ended 2008. The assumed expected term of
stock options shown in Note 14 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. As required
by SEC rules, the |
40
|
|
|
|
|
amounts reported have been adjusted to exclude the estimated
effect of service-based forfeiture assumptions used for
financial reporting purposes. See the Fiscal 2009 Grants of
Plan-Based Awards table on page 42 for the grant date fair
value of each stock option award granted in fiscal 2009. 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. The options granted to
Mr. Schultz on November 16, 2005 were amortized to his
retirement-eligible date of July 19, 2008; however,
Mr. Schultz waived the accelerated vesting feature for
options granted subsequent to fiscal year 2006. |
|
(5) |
|
These amounts represent annual incentive bonus awards paid for
fiscal 2009. |
|
(6) |
|
The table below shows the components of All Other
Compensation for the named executive officers, calculated
at the aggregate incremental cost to Starbucks. |
Fiscal
2009 All Other Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance
|
|
|
|
|
|
|
|
|
|
|
Premiums
|
|
|
|
|
|
|
|
|
|
|
& Annual
|
|
Retirement Plan
|
|
|
|
|
|
|
Security
|
|
Physical
|
|
Contributions
|
|
Other
|
|
Total
|
Name
|
|
($)(A)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
Howard Schultz
|
|
|
680,961
|
|
|
|
4,365
|
|
|
|
14,100
|
|
|
|
236,250
|
(B)
|
|
|
935,676
|
|
Troy Alstead
|
|
|
|
|
|
|
819
|
|
|
|
300
|
|
|
|
|
|
|
|
1,119
|
|
Clifford Burrows
|
|
|
30,798
|
|
|
|
2,575
|
|
|
|
6,900
|
|
|
|
48,142
|
(C)
|
|
|
88,415
|
|
Martin Coles
|
|
|
17,709
|
|
|
|
2,640
|
|
|
|
4,900
|
|
|
|
|
|
|
|
25,249
|
|
Arthur Rubinfeld
|
|
|
|
|
|
|
1,782
|
|
|
|
2,300
|
|
|
|
|
|
|
|
4,082
|
|
Peter J. Bocian
|
|
|
|
|
|
|
396
|
|
|
|
|
|
|
|
|
|
|
|
396
|
|
|
|
|
(A) |
|
As more fully explained on page 34, these amounts include
the costs of providing security services and equipment to the
chairman, president and chief executive officer and certain
other executives. |
|
(B) |
|
As more fully explained on page 34, $236,250 was paid to
Mr. Schultz in consideration of the replacement of a
split-dollar life insurance benefit we formerly provided him. As
discussed on page 51, Mr. Schultz reimbursed us for
the aggregate incremental cost of his personal use of corporate
aircraft during fiscal 2009. Occasionally,
Mr. Schultzs family members and other guests
accompany him on the corporate aircraft when he is traveling on
Company business. This use does not result in aggregate
incremental costs to the Company, but is treated as imputed
income to Mr. Schultz under IRS rules. |
|
(C) |
|
As more fully explained on page 34, this amount includes
expenses related to Mr. Burrows relocation to the
United States in connection with his promotion to president,
Starbucks Coffee U.S. |
|
|
|
(7) |
|
Mr. Coles separated from the Company effective
December 1, 2009. |
|
(8) |
|
Mr. Bocian separated from the Company effective
November 25, 2008. |
|
(9) |
|
Pursuant to SEC rules, this amount reflects the reversal of only
the previously expensed portions of the awards that were
reported in the fiscal 2008 proxy statement
(Mr. Bocians first year in the Starbucks proxy
statement). |
41
Fiscal
2009 Grants of Plan-Based Awards
The following table sets forth information regarding fiscal 2009
annual incentive bonus awards and equity awards granted to our
named executive officers in fiscal 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Awards:
|
|
Exercise
|
|
Date Fair
|
|
|
|
|
|
|
|
|
Potential Future Payouts
|
|
Potential Future Payouts
|
|
Number of
|
|
Number of
|
|
or Base
|
|
Value of
|
|
|
|
|
|
|
|
|
Under Non-Equity Incentive
|
|
Under Equity Incentive
|
|
Shares of
|
|
Securities
|
|
Price of
|
|
Stock and
|
|
|
|
|
|
|
|
|
Plan
Awards(2)
|
|
Plan Awards
|
|
Stock or
|
|
Underlying
|
|
Option
|
|
Option
|
|
|
|
|
Approval
|
|
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Units
|
|
Options
|
|
Award
|
|
Awards
|
Name
|
|
Award
|
|
Date
|
|
Grant
Date(1)
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
($/Sh)
|
|
($)(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Howard Schultz
|
|
Stock
Options(4)
|
|
|
11/12/08
|
|
|
|
11/17/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,714,947
|
|
|
|
8.64
|
|
|
|
12,391,522
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Troy Alstead
|
|
Annual Incentive
|
|
|
|
|
|
|
|
|
|
|
16,875
|
|
|
|
225,000
|
|
|
|
450,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
11/12/08
|
|
|
|
11/17/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66,138
|
|
|
|
8.64
|
|
|
|
223,441
|
|
|
|
Stock Options
|
|
|
12/18/08
|
|
|
|
12/18/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52,910
|
|
|
|
9.59
|
|
|
|
199,963
|
|
|
|
Performance RSUs
|
|
|
11/12/08
|
|
|
|
11/17/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,787
|
|
|
|
23,148
|
|
|
|
46,296
|
|
|
|
29,861
|
|
|
|
|
|
|
|
|
|
|
|
399,997
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clifford Burrows
|
|
Annual Incentive
|
|
|
|
|
|
|
|
|
|
|
29,006
|
|
|
|
386,750
|
|
|
|
773,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
11/12/08
|
|
|
|
11/17/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
132,275
|
|
|
|
8.64
|
|
|
|
448,373
|
|
|
|
Performance RSUs
|
|
|
11/12/08
|
|
|
|
11/17/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,574
|
|
|
|
46,296
|
|
|
|
92,592
|
|
|
|
59,722
|
|
|
|
|
|
|
|
|
|
|
|
799,995
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martin Coles
|
|
Annual Incentive
|
|
|
|
|
|
|
|
|
|
|
35,344
|
|
|
|
471,250
|
|
|
|
942,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
11/12/08
|
|
|
|
11/17/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
115,741
|
|
|
|
8.64
|
|
|
|
392,332
|
|
|
|
Performance RSUs
|
|
|
11/12/08
|
|
|
|
11/17/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,127
|
|
|
|
40,509
|
|
|
|
81,018
|
|
|
|
52,257
|
|
|
|
|
|
|
|
|
|
|
|
699,996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arthur Rubinfeld
|
|
Annual Incentive
|
|
|
|
|
|
|
|
|
|
|
21,938
|
|
|
|
292,500
|
|
|
|
585,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
11/12/08
|
|
|
|
11/17/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
132,275
|
|
|
|
8.64
|
|
|
|
448,378
|
|
|
|
Performance RSUs
|
|
|
11/12/08
|
|
|
|
11/17/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,574
|
|
|
|
46,296
|
|
|
|
92,592
|
|
|
|
59,722
|
|
|
|
|
|
|
|
|
|
|
|
799,995
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter J.
Bocian(5)
|
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
(1) |
|
Annual option awards granted in November 2008 were approved by
the independent directors on the recommendation of the
Compensation Committee. The December 2008 grant of options to
Mr. Alstead was approved by the Compensation Committee. In
accordance with our equity grant timing policy in place at the
time of the November 2008 grant, the grant date for the regular
annual equity grant (which was approved on November 12,
2008 for the fiscal 2009 grants) was the second business day
after our fiscal 2008 earnings release; however, since the
earnings release was before the November Compensation Committee
and board meetings, the grant date, according to the policy, was
the Monday following such meetings (Monday, November 17,
2008). The equity grant timing policy is described beginning on
page 38. |
|
(2) |
|
Reflects information regarding awards under the Executive
Management Bonus Plan. |
|
(3) |
|
The grant date fair value for performance RSUs is calculated
assuming the maximum performance (200%). For fiscal 2009, the
named executive officers achieved 129% of the target performance
RSU award resulting in the following grant date fair value:
Mr. Alstead $257,999;
Mr. Burrows $515,996;
Mr. Coles $451,497; and
Mr. Rubinfeld $515,997. |
|
(4) |
|
As noted above, Mr. Schultz did not participate in the
Executive Management Bonus Plan for fiscal 2009 and his entire
fiscal 2009 long-term incentive grant was in the form of stock
options. |
|
(5) |
|
At the time of annual compensation decisions in November 2008,
Mr. Bocian had already provided notice of his intention to
leave the Company effective November 25, 2008. As such,
Mr. Bocian did not receive an annual equity grant nor did
he participate in the Executive Management Bonus Plan for fiscal
2009. |
The following narrative discusses the material information
necessary to understand the information in the tables above.
Equity Awards. The amount of stock options
granted to executive officers for fiscal 2009 was based on a
target economic value for the total equity award value. The
number of stock options granted was calculated by dividing 50%
of the total equity award value by a closing price multiplier.
The closing price multiplier was equal to the closing market
price of Starbucks stock on the date of grant multiplied by a
Black-Scholes factor. The stock options shown in the table were
awarded in early fiscal 2009. The target amount of performance
RSUs for executive officers for fiscal 2009 was based on a
target economic value for the total equity award value. The
number of performance RSUs was calculated by dividing 50% of the
total equity award value by the closing price of Starbucks stock
on the date of grant. The actual amount of performance RSUs that
were earned in fiscal 2009 are shown in the table above.
42
A discussion and analysis of how award levels were determined
begins in the Long-Term Incentive Compensation
section on page 32. All equity awards shown in this table
were granted under the 2005 Key Employee Plan
Sub-Plan
(2005 Key Employee Plan) to our 2005 Long-Term
Equity Incentive Plan. The stock options have an exercise price
equal to the closing market price of our common stock on the
date of grant. The options vest in four equal annual
installments beginning on the first anniversary of the grant
date, subject to continued employment with us, and expire
10 years after the date of grant. The earned performance
RSUs will vest 50% on the second anniversary of the date of
grant and 50% on the third anniversary of the date of grant.
Threshold amounts for the performance RSUs are based on the
achievement of adjusted earnings per share at the threshold of
$0.72, permitting 25% of the portion of the target performance
RSU grant to be earned. Target amounts for the performance RSUs
assume 100% achievement of adjusted earnings per share of
$0.75-$0.78. Maximum amounts for the performance RSUs assume
200% achievement of adjusted earnings per share of $0.85. The
named executive officers earned 129% of the target amount of the
performance RSUs as discussed on page 33.
All stock options will become fully vested and exercisable
(i) if the recipient terminates his employment at or after
the age of 55 and with at least 10 years of credited
service with Starbucks (other than with respect to
Mr. Schultz, as explained below) and (ii) under the
circumstances described beginning on page 49 under
Equity Acceleration. Restricted stock units do not
accelerate upon retirement or death. Mr. Schultz
voluntarily waived accelerated vesting of the options upon
termination of employment at or after the age 55 and with
at least 10 years of service, which he attained during the
vesting period of this grant. Mr. Schultz agreed to forgo
this accelerated retirement vesting so we would not be required
to similarly accelerate the recognition of expense for the award
in our financial statements. The grant date fair value of each
stock option awarded to Mr. Schultz is significantly
greater than the fair value of stock options granted to the
other named executive officers because Mr. Schultzs
historical practice of not exercising stock options until very
late in their term has resulted in a longer expected term for
his options than the other executives. The longer expected life
leads to a significantly higher fair value in accordance with
GAAP.
Non-Equity Incentive Plan Awards. These
amounts reflect the potential threshold, target and maximum
annual incentive bonus awards payable to our named executive
officers under the Executive Management Bonus Plan for fiscal
2009. Amounts shown are calculated as a percentage of year-end
base salary ($450,000 for Mr. Alstead; $595,000 for
Mr. Burrows; $725,000 for Mr. Coles and $450,000 for
Mr. Rubinfeld). Threshold amounts for the primary objective
goal are based on the achievement of the fiscal 2009 adjusted
business unit profit contribution (for executives responsible
for a single business unit) or adjusted operating income (for
executives with responsibilities that cross business units). The
threshold amount for the secondary objective goal is based on
the achievement of the fiscal 2009 adjusted earnings per share
at the threshold of $0.72, permitting a payout of 25% of the
portion of the total bonus attributable to achievement of the
secondary objective goal under the Executive Management Bonus
Plan. See discussion and analysis beginning on page 28. The
threshold amounts are also based on achievement of their
individual bonus goals at the minimum 80% level required for any
payout under the Executive Management Bonus Plan. Target bonus
amounts assume achievement of the objective goals at the target
amounts (as described beginning on page 28) and achievement
of 100% of individual bonus goals. Maximum bonus amounts assume
achievement of the objective goals at the maximum amounts or
more (as described beginning on page 28) and achievement of
100% of individual bonus goals. The named executive officers
received a bonus payout under the Executive Management Bonus
Plan for fiscal 2009 as shown in the Non-Equity Incentive
Plan Compensation column of the Summary Compensation Table
on page 40.
Discretionary Bonuses. We paid discretionary
bonuses to reward our executive officers for their contributions
to the Companys strong fiscal 2009 performance during
extraordinarily challenging times that were not adequately
reflected in the payout calculations under the Executive
Management Bonus Plan. The Compensation Committee determined
that certain items, in addition to the adjustments described on
page 28, impacted the calculations of the final primary
objective performance results under the Executive Management
Bonus Plan in a manner that would not yield bonus payout amounts
to appropriately reward the achievement of the Companys
targeted operating performance. These items included adjustments
described on page 31. The Compensation Committee approved
payment of a discretionary bonus to each named executive
officer, other than Mr. Schultz, in the amount of the
difference between the actual bonus payouts under the Executive
Management Bonus Plan and the bonus payouts had adjustments to
the primary objective performance
43
measures been made to exclude the impact of the items described
above. In addition, the Compensation Committee approved a
discretionary bonus for Mr. Schultz, even though he did not
participate in the Executive Management Bonus Plan for fiscal
2009.
Outstanding
Equity Awards at Fiscal 2009 Year-End
The following table provides information regarding stock options
and restricted stock units held by our named executive officers
as of September 27, 2009. No named executive officer has
any other outstanding form of equity award.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
|
|
|
Number of
|
|
Number of
|
|
Number of
|
|
|
|
|
|
Number of
|
|
Value of
|
|
|
|
|
Number of
|
|
Securities
|
|
Securities
|
|
Securities
|
|
|
|
|
|
Shares or
|
|
Shares or
|
|
|
|
|
Securities
|
|
Underlying
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
Units of
|
|
Units of
|
|
|
|
|
Underlying
|
|
Unexercised
|
|
Unexercised
|
|
Options
|
|
Option
|
|
|
|
Stock that
|
|
Stock that
|
|
|
|
|
Options
|
|
Options
|
|
Options
|
|
(#)
|
|
Exercise
|
|
Option
|
|
Have Not
|
|
Have Not
|
|
|
|
|
(#)
|
|
(#)
|
|
(#)
|
|
Previously
|
|
Price
|
|
Expiration
|
|
Vested
|
|
Vested
|
Name
|
|
Grant Date
|
|
Total Grant
|
|
Exercisable
|
|
Unexercisable
|
|
Exercised
|
|
($)
|
|
Date
|
|
(#)
|
|
($)(1)
|
|
Howard Schultz
|
|
|
11/17/08
|
(2)
|
|
|
2,714,947
|
|
|
|
|
|
|
|
2,714,947
|
|
|
|
|
|
|
|
8.64
|
|
|
|
11/17/18
|
|
|
|
|
|
|
|
|
|
|
|
|
11/19/07
|
(2)
|
|
|
687,113
|
|
|
|
171,779
|
|
|
|
515,334
|
|
|
|
|
|
|
|
22.87
|
|
|
|
11/19/17
|
|
|
|
|
|
|
|
|
|
|
|
|
11/20/06
|
(2)
|
|
|
544,218
|
|
|
|
272,110
|
|
|
|
272,108
|
|
|
|
|
|
|
|
36.75
|
|
|
|
11/20/16
|
|
|
|
|
|
|
|
|
|
|
|
|
11/16/05
|
(3)
|
|
|
966,469
|
|
|
|
966,469
|
|
|
|
|
|
|
|
|
|
|
|
30.42
|
|
|
|
11/16/15
|
|
|
|
|
|
|
|
|
|
|
|
|
11/16/04
|
(4)
|
|
|
1,000,000
|
|
|
|
1,000,000
|
|
|
|
|
|
|
|
|
|
|
|
27.32
|
|
|
|
11/16/14
|
|
|
|
|
|
|
|
|
|
|
|
|
11/20/03
|
(5)
|
|
|
1,100,000
|
|
|
|
1,100,000
|
|
|
|
|
|
|
|
|
|
|
|
15.23
|
|
|
|
11/20/13
|
|
|
|
|
|
|
|
|
|
|
|
|
9/30/02
|
(6)
|
|
|
1,024,000
|
|
|
|
1,024,000
|
|
|
|
|
|
|
|
|
|
|
|
10.32
|
|
|
|
9/30/12
|
|
|
|
|
|
|
|
|
|
|
|
|
10/1/01
|
(6)
|
|
|
1,430,000
|
|
|
|
1,430,000
|
|
|
|
|
|
|
|
|
|
|
|
7.40
|
|
|
|
10/1/11
|
|
|
|
|
|
|
|
|
|
|
|
|
10/2/00
|
(6)
|
|
|
1,580,000
|
|
|
|
1,580,000
|
|
|
|
|
|
|
|
|
|
|
|
10.09
|
|
|
|
10/2/10
|
|
|
|
|
|
|
|
|
|
Troy Alstead
|
|
|
12/18/08
|
(2)
|
|
|
52,910
|
|
|
|
|
|
|
|
52,910
|
|
|
|
|
|
|
|
9.59
|
|
|
|
12/18/18
|
|
|
|
|
|
|
|
|
|
|
|
|
11/17/08
|
(2)
|
|
|
66,138
|
|
|
|
|
|
|
|
66,138
|
|
|
|
|
|
|
|
8.64
|
|
|
|
11/17/18
|
|
|
|
|
|
|
|
|
|
|
|
|
11/17/08
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,861
|
|
|
|
592,144
|
|
|
|
|
5/8/08
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,208
|
|
|
|
440,385
|
|
|
|
|
11/19/07
|
(2)
|
|
|
43,725
|
|
|
|
10,932
|
|
|
|
32,793
|
|
|
|
|
|
|
|
22.87
|
|
|
|
11/19/17
|
|
|
|
|
|
|
|
|
|
|
|
|
11/20/06
|
(2)
|
|
|
33,120
|
|
|
|
16,560
|
|
|
|
16,560
|
|
|
|
|
|
|
|
36.75
|
|
|
|
11/20/16
|
|
|
|
|
|
|
|
|
|
|
|
|
11/16/05
|
(3)
|
|
|
26,000
|
|
|
|
26,000
|
|
|
|
|
|
|
|
|
|
|
|
30.42
|
|
|
|
11/16/15
|
|
|
|
|
|
|
|
|
|
|
|
|
11/16/04
|
(4)
|
|
|
72,000
|
|
|
|
72,000
|
|
|
|
|
|
|
|
|
|
|
|
27.32
|
|
|
|
11/16/14
|
|
|
|
|
|
|
|
|
|
|
|
|
11/20/03
|
(5)
|
|
|
70,000
|
|
|
|
70,000
|
|
|
|
|
|
|
|
|
|
|
|
15.23
|
|
|
|
11/20/13
|
|
|
|
|
|
|
|
|
|
|
|
|
9/30/02
|
(6)
|
|
|
45,000
|
|
|
|
45,000
|
|
|
|
|
|
|
|
|
|
|
|
10.32
|
|
|
|
9/30/12
|
|
|
|
|
|
|
|
|
|
|
|
|
10/1/01
|
(6)
|
|
|
71,000
|
|
|
|
71,000
|
|
|
|
|
|
|
|
|
|
|
|
7.40
|
|
|
|
10/1/11
|
|
|
|
|
|
|
|
|
|
|
|
|
1/16/01
|
(6)
|
|
|
70,000
|
|
|
|
70,000
|
|
|
|
|
|
|
|
|
|
|
|
11.20
|
|
|
|
1/16/11
|
|
|
|
|
|
|
|
|
|
|
|
|
10/2/00
|
(6)
|
|
|
52,000
|
|
|
|
52,000
|
|
|
|
|
|
|
|
|
|
|
|
10.09
|
|
|
|
10/2/10
|
|
|
|
|
|
|
|
|
|
Clifford Burrows
|
|
|
11/17/08
|
(2)
|
|
|
132,275
|
|
|
|
|
|
|
|
132,275
|
|
|
|
|
|
|
|
8.64
|
|
|
|
11/17/18
|
|
|
|
|
|
|
|
|
|
|
|
|
11/17/08
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59,722
|
|
|
|
1,184,287
|
|
|
|
|
3/18/08
|
(2)
|
|
|
37,222
|
|
|
|
9,306
|
|
|
|
27,916
|
|
|
|
|
|
|
|
18.24
|
|
|
|
3/18/18
|
|
|
|
|
|
|
|
|
|
|
|
|
11/19/07
|
(2)
|
|
|
43,725
|
|
|
|
10,932
|
|
|
|
32,793
|
|
|
|
|
|
|
|
22.87
|
|
|
|
11/19/17
|
|
|
|
|
|
|
|
|
|
|
|
|
9/18/07
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,966
|
|
|
|
356,266
|
|
|
|
|
11/20/06
|
(2)
|
|
|
49,679
|
|
|
|
24,840
|
|
|
|
24,839
|
|
|
|
|
|
|
|
36.75
|
|
|
|
11/20/16
|
|
|
|
|
|
|
|
|
|
|
|
|
11/16/05
|
(3)
|
|
|
60,000
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
|
|
30.42
|
|
|
|
11/16/15
|
|
|
|
|
|
|
|
|
|
|
|
|
11/16/04
|
(4)
|
|
|
68,500
|
|
|
|
68,500
|
|
|
|
|
|
|
|
|
|
|
|
27.32
|
|
|
|
11/16/14
|
|
|
|
|
|
|
|
|
|
|
|
|
12/12/03
|
(3)
|
|
|
35,000
|
|
|
|
35,000
|
|
|
|
|
|
|
|
|
|
|
|
15.87
|
|
|
|
12/12/13
|
|
|
|
|
|
|
|
|
|
|
|
|
11/20/03
|
(5)
|
|
|
30,000
|
|
|
|
30,000
|
|
|
|
|
|
|
|
|
|
|
|
15.23
|
|
|
|
11/20/13
|
|
|
|
|
|
|
|
|
|
|
|
|
9/30/02
|
(9)
|
|
|
15,000
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
10.32
|
|
|
|
9/30/12
|
|
|
|
|
|
|
|
|
|
|
|
|
10/1/01
|
(9)
|
|
|
6,666
|
|
|
|
6,666
|
|
|
|
|
|
|
|
|
|
|
|
7.40
|
|
|
|
10/1/11
|
|
|
|
|
|
|
|
|
|
44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
|
|
|
Number of
|
|
Number of
|
|
Number of
|
|
|
|
|
|
Number of
|
|
Value of
|
|
|
|
|
Number of
|
|
Securities
|
|
Securities
|
|
Securities
|
|
|
|
|
|
Shares or
|
|
Shares or
|
|
|
|
|
Securities
|
|
Underlying
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
Units of
|
|
Units of
|
|
|
|
|
Underlying
|
|
Unexercised
|
|
Unexercised
|
|
Options
|
|
Option
|
|
|
|
Stock that
|
|
Stock that
|
|
|
|
|
Options
|
|
Options
|
|
Options
|
|
(#)
|
|
Exercise
|
|
Option
|
|
Have Not
|
|
Have Not
|
|
|
|
|
(#)
|
|
(#)
|
|
(#)
|
|
Previously
|
|
Price
|
|
Expiration
|
|
Vested
|
|
Vested
|
Name
|
|
Grant Date
|
|
Total Grant
|
|
Exercisable
|
|
Unexercisable
|
|
Exercised
|
|
($)
|
|
Date
|
|
(#)
|
|
($)(1)
|
|
Martin Coles
|
|
|
11/17/08
|
(2)
|
|
|
115,741
|
|
|
|
|
|
|
|
115,741
|
|
|
|
|
|
|
|
8.64
|
|
|
|
3/1/10
|
(9)
|
|
|
|
|
|
|
|
|
|
|
|
11/17/08
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52,257
|
(10)
|
|
|
1,036,256
|
|
|
|
|
11/19/07
|
(2)
|
|
|
249,859
|
|
|
|
62,465
|
|
|
|
187,394
|
|
|
|
|
|
|
|
22.87
|
|
|
|
3/1/10(10
|
)
|
|
|
|
|
|
|
|
|
|
|
|
9/18/07
|
(2)
|
|
|
114,856
|
|
|
|
57,428
|
|
|
|
57,428
|
|
|
|
|
|
|
|
27.83
|
|
|
|
3/1/10(10
|
)
|
|
|
|
|
|
|
|
|
|
|
|
11/20/06
|
(2)
|
|
|
132,167
|
|
|
|
66,084
|
|
|
|
66,083
|
|
|
|
|
|
|
|
36.75
|
|
|
|
3/1/10(10
|
)
|
|
|
|
|
|
|
|
|
|
|
|
11/16/05
|
(3)
|
|
|
120,808
|
|
|
|
120,808
|
|
|
|
|
|
|
|
|
|
|
|
30.42
|
|
|
|
3/1/10(10
|
)
|
|
|
|
|
|
|
|
|
|
|
|
11/16/04
|
(4)
|
|
|
100,000
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
27.32
|
|
|
|
3/1/10(10
|
)
|
|
|
|
|
|
|
|
|
|
|
|
4/12/04
|
(9)
|
|
|
400,000
|
|
|
|
300,000
|
|
|
|
|
|
|
|
100,000
|
|
|
|
19.60
|
|
|
|
3/1/10(10
|
)
|
|
|
|
|
|
|
|
|
Arthur Rubinfeld
|
|
|
11/17/08
|
(2)
|
|
|
132,275
|
|
|
|
|
|
|
|
132,275
|
|
|
|
|
|
|
|
8.64
|
|
|
|
11/17/18
|
|
|
|
|
|
|
|
|
|
|
|
|
11/17/08
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59,722
|
|
|
|
1,184,287
|
|
|
|
|
3/18/08
|
(2)
|
|
|
145,000
|
|
|
|
36,250
|
|
|
|
108,750
|
|
|
|
|
|
|
|
18.24
|
|
|
|
3/18/18
|
|
|
|
|
|
|
|
|
|
Peter J.
Bocian(11)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
(1) |
|
Value is calculated by multiplying the number of restricted
stock units that have not vested by the closing market price of
our stock ($19.83) as of the close of trading on
September 25, 2009 (the last trading day prior to our
September 27, 2009 fiscal year-end). |
|
(2) |
|
Options vest in four equal annual installments (subject to
rounding of partial shares), beginning on the first anniversary
of the grant date. |
|
(3) |
|
Options vested in three equal annual installments (subject to
rounding of partial shares), beginning on the first anniversary
of the grant date. |
|
(4) |
|
Options vested in three equal annual installments (subject to
rounding of partial shares) on October 1, 2005, 2006 and
2007. |
|
(5) |
|
Options vested in full on October 1, 2006. |
|
(6) |
|
Options vested in full on the third anniversary of the grant
date. |
|
(7) |
|
Earned Performance RSUs vest 50% on the second anniversary of
the grant date and 50% on the third anniversary of the grant
date. |
|
(8) |
|
Time-based RSUs vest 50% on the second anniversary of the grant
date and 50% on the fourth anniversary of the grant date. |
|
(9) |
|
Options vested in full on the fourth anniversary of the grant
date. |
|
(10) |
|
Pursuant to the terms of the applicable equity plans, these
options will expire three months after Mr. Coles
separation date of December 1, 2009. Additionally, any
restricted stock units not vested at the time of separation were
forfeited upon the separation date. |
|
(11) |
|
Pursuant to the terms of the applicable equity plans, all of
Mr. Bocians options expired on February 25,
2009, three months after the date of his separation. |
45
2009
Fiscal Year-End Option Values
The table below shows the total value of both vested and
unvested
in-the-money
stock options for each named executive officer as of the end of
fiscal 2009. Value is calculated as the difference between the
aggregate exercise price of the options and the aggregate market
value of the shares of underlying common stock as of the close
of trading on September 25, 2009 (the last trading day
prior to our September 27, 2009 fiscal year-end) calculated
based on the closing market price of our stock on that day
($19.83). There is no guarantee that, if and when these options
are exercised, they will have this value.
|
|
|
|
|
|
|
|
|
Name
|
|
Vested ($)
|
|
Unvested ($)
|
|
Howard Schultz
|
|
|
47,956,336
|
|
|
|
30,380,257
|
|
Troy Alstead
|
|
|
2,742,645
|
|
|
|
1,281,882
|
|
Clifford Burrows
|
|
|
517,080
|
|
|
|
1,524,543
|
|
Martin Coles
|
|
|
69,000
|
|
|
|
1,295,142
|
|
Arthur Rubinfeld
|
|
|
57,638
|
|
|
|
1,653,070
|
|
Peter J.
Bocian(1)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
(1) |
|
Mr. Bocian separated from the Company effective
November 25, 2008. As such, he did not have any vested and
unvested options as of September 25, 2009. |
Fiscal
2009 Option Exercises and Stock Vested
The following table provides information regarding stock options
that were exercised by our named executive officers and stock
awards (restricted stock units) that vested during fiscal 2009.
Option award value realized is calculated by subtracting the
aggregate exercise price of the options exercised from the
aggregate market value of the shares of common stock acquired on
the date of exercise. Stock award value realized is calculated
by multiplying the number of shares shown in the table by
$20.76, which was the closing price of our stock on
September 18, 2009, the date the stock awards vested. Value
realized represents long-term gain over many years; we do not
consider it part of fiscal 2009 compensation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
|
|
|
|
Acquired on
|
|
|
|
|
|
|
Number of Shares
|
|
Value Realized on
|
|
Vesting
|
|
Value Realized
|
Name
|
|
Grant Date
|
|
Acquired on Exercise (#)
|
|
Exercise ($)
|
|
(#)
|
|
on Vesting ($)
|
|
Howard Schultz
|
|
|
11/13/98
|
|
|
|
3,181,376
|
|
|
|
12,607,157
|
|
|
|
|
|
|
|
|
|
|
|
|
10/4/99
|
|
|
|
982,792
|
|
|
|
14,021,985
|
|
|
|
|
|
|
|
|
|
Troy Alstead
|
|
|
10/4/99
|
|
|
|
40,000
|
|
|
|
449,124
|
|
|
|
|
|
|
|
|
|
Clifford Burrows
|
|
|
9/18/07
|
|
|
|
|
|
|
|
|
|
|
|
17,966
|
|
|
|
372,974
|
|
Martin Coles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arthur Rubinfeld
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter J. Bocian
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management
Deferred Compensation Plan
The named executive officers are eligible to participate in the
Management Deferred Compensation Plan, an unfunded,
non-qualified plan, the benefits of which are paid by Starbucks
out of our general assets. The plan is subject to the
requirements of Section 409A of the Internal Revenue Code.
In September 2008, the board of directors approved an amended
and restated plan document to conform it to Section 409A
requirements effective January 1, 2009. Deferred
compensation earned prior to 2005 is not subject to
Section 409A requirements and continues to be governed
under the terms of the plan and the tax laws in effect on or
before December 31, 2004, as applicable.
46
Deferrals
Participants may defer up to 70% of base salary and 95% of
annual incentive bonus. In addition, participants may receive
matching contributions from Starbucks to replace the similar
benefits not available to them under our 401(k) plan due to
limitations imposed by the Internal Revenue Code. For the match
made in December 2008, the matching contributions equaled from
25% to 150% of the first 4% of eligible pay deferred into the
Management Deferred Compensation Plan. The actual amount of
matching contributions was based on the participants
credited months of service with Starbucks under the same formula
under our 401(k) plan. The participant generally must be
employed on the last day of the calendar year to receive
matching contributions, unless he or she retires at or after
age 65, becomes disabled or dies during the year, in which
case we will contribute a prorated amount. No named executive
officer was retirement-eligible. In December 2008, the board of
directors approved changing the matching contributions under the
Management Deferred Compensation Plan (and our 401(k) plan) from
the fixed formula described above to a discretionary arrangement
effective January 1, 2009. Accordingly, any future matching
contributions to either plan will be made at the discretion of
the board of directors.
Earnings
As an unfunded, non-qualified plan, the Management Deferred
Compensation Plan uses measurement benchmarks to credit earnings
on compensation deferred under the plan. Those measurement
benchmarks are based on the investment funds listed below and
are the same ones available under our 401(k) plan. Participants
select which measurement funds they wish to have their account
allocated to and may change how deferred compensation is
allocated to the measurement funds at any time, subject to
certain redemption fees and other limitations imposed by plan
rules. Changes generally become effective as of the first
trading day following the change.
|
|
|
Management Deferred
Compensation Plan Measurement Funds
|
|
SEI Stable Asset Fund
|
|
Morgan Stanley Institutional Fund, Inc.
|
Dodge & Cox Income Fund
|
|
Small Company Growth
Portfolio Class P**
|
American
Funds®
Fundamental Investor Fund Class R4*
|
|
Fidelity Diversified International Fund
|
Vanguard Institutional Index Fund Institutional Class
|
|
Conservative Blend***
|
American
Funds®
Growth Funds of
America®
Class R4
|
|
Moderate Blend***
|
Vanguard FTSE Social Index Fund Investor Class
|
|
Growth Blend***
|
Harbor Small Cap Value Fund Institutional Class
|
|
Aggressive Blend***
|
|
|
|
* |
|
Replaced the American Century Value Fund Investor
Class effective as of August 2008. |
|
** |
|
Class B shares were renamed to Class P shares
effective January 2008. |
|
*** |
|
Each blend investment option contains a diversified mix of the
other individual investment options. |
In-Service
Withdrawals and Distributions
At the time of making the deferral election for a year, a
participant elects when the resulting deferred compensation
account will be distributed to himself or herself. In general,
the participant can receive scheduled in-service or
hardship withdrawals while still employed or have distributions
paid on separation from service. The specific distribution
options depend on whether the deferred compensation was earned
on or after 2005 and is subject to other plan rules, including
those discussed below. A participant may receive potentially
three types of in-service withdrawals:
|
|
|
|
1.
|
A participant may designate a scheduled payment date at the time
of his or her deferral election. The scheduled payment date
cannot occur until after the deferred compensation has been in
the plan for three years (if deferred compensation earned on and
after January 1, 2005) or five years (if pre-2005
deferred compensation).
|
|
|
2.
|
A participant may request an in-service withdrawal if he or she
experiences a qualifying hardship.
|
|
|
3.
|
Only with respect to pre-2005 deferred compensation, a
participant may request an in-service withdrawal for any reason
by paying a 10% penalty.
|
47
For separation from service distributions, account balances
resulting from the Company match and deferred compensation
earned on and after January 1, 2005 can be paid either in a
lump sum or in up to 10 annual installments, in each case
beginning within 60 days of separation or one year after
separation. If a participant is considered a specified
employee on his or her separation date, Section 409A
requires the suspension of payments for six months after such
separation date. Account balances resulting from pre-2005
deferred compensation can be distributed either in a lump sum
within 60 days of separation or, if the participant is at
least age 65 on his or her separation date, in up to 10
annual installments.
Distribution elections with respect to account balances from
deferred compensation earned on and after January 1, 2005
can be changed up to two times, provided the new election occurs
at least one year prior to the original payment date and results
in an additional payment delay of five years. The participant
also must make a one-year advance election to change
distribution elections for pre-2005 deferred compensation.
Fiscal
2009 Nonqualified Deferred Compensation
The following table shows contributions and earnings during
fiscal 2009 and the account balances as of September 27,
2009 for our named executive officers under the Management
Deferred Compensation Plan. In addition, the table shows the
aggregate balance at fiscal year-end of Mr. Schultzs
deferred stock units under the 1997 Deferred Stock Plan as
described on page 35. None of the other named executive
officers have deferred stock units.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate
|
|
|
|
|
Executive
|
|
Starbucks
|
|
Aggregate
|
|
Withdrawals/
|
|
Aggregate
|
|
|
Contributions in
|
|
Contributions
|
|
Earnings (Loss)
|
|
Distributions in
|
|
Balance at
|
|
|
Fiscal 2009
|
|
in Fiscal 2009
|
|
in Fiscal 2009
|
|
Fiscal 2009
|
|
Fiscal Year-End
|
Name
|
|
($)(1)
|
|
($)(2)
|
|
($)(3)
|
|
($)
|
|
($)(4)
|
|
Howard Schultz
|
|
|
25,758
|
|
|
|
13,800
|
|
|
|
9,440
|
|
|
|
|
|
|
|
202,397
|
|
deferred stock units
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
67,306,669
|
(5)
|
Troy Alstead
|
|
|
|
|
|
|
|
|
|
|
(50,173
|
)
|
|
|
|
|
|
|
770,571
|
|
Clifford Burrows
|
|
|
17,392
|
|
|
|
|
|
|
|
3,447
|
|
|
|
|
|
|
|
20,840
|
|
Martin Coles
|
|
|
29,000
|
|
|
|
4,600
|
|
|
|
(6,375
|
)
|
|
|
|
|
|
|
106,839
|
|
Arthur Rubinfeld
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter J. Bocian
|
|
|
3,692
|
|
|
|
|
|
|
|
(2,990
|
)
|
|
|
(16,204
|
)
|
|
|
|
|
|
|
|
(1) |
|
These amounts were also included in Salary and/or
Non-Equity Incentive Plan Compensation in the
Summary Compensation Table on page 40. |
|
(2) |
|
These amounts were reported as All Other
Compensation in the Summary Compensation Table on
page 40 and as Retirement Plan Contributions in
the Fiscal 2009 All Other Compensation Table on page 41. |
|
(3) |
|
We do not provide above-market or preferential earnings on
Management Deferred Compensation Plan contributions, so these
amounts were not reported in the Summary Compensation Table.
Management Deferred Compensation Plan participants can select
only from among the same investment funds as are available under
our 401(k) plan. |
|
(4) |
|
Of these balances, the following amounts were reported in
Summary Compensation Tables in prior-year proxy statements:
Mr. Schultz $165,210;
Mr. Alstead N/A; Mr. Burrows
$31,357; Mr. Coles $89,678;
Mr. Rubinfeld N/A; and
Mr. Bocian $17,539. The information in this
footnote is provided to clarify the extent to which amounts
payable as deferred compensation represent compensation reported
in our prior proxy statements, rather than additional currently
earned compensation. |
|
(5) |
|
The aggregate balance at fiscal year-end for deferred stock
units is calculated by multiplying deferred stock units of
3,394,184 by the closing market price of our stock on
September 25, 2009 ($19.83). |
Potential
Payments Upon Termination or Change in Control
We do not provide special
change-in-control
benefits to executives. Our only
change-in-control
arrangement, which applies to all partners, is accelerated
vesting of certain equity awards. We do, however, occasionally
offer a
48
severance benefit arrangement for new senior executives to
provide for one years base salary if we terminate his or
her employment for any reason other than cause
(which generally requires misconduct) within one year of the
executives hire date. We may also offer a severance
benefit arrangement for terminated or separated executives as
part of a negotiated termination of employment in exchange for
release of claims against the Company and other covenants in the
best interests of the Company. Other than as described below,
none of our named executive officers for fiscal 2009 had any
such severance benefit arrangement.
On November 30, 2009, in connection with
Mr. Coles separation, the Company entered into a
Separation Agreement and Release with Mr. Coles. Pursuant
to the agreement, we agreed to pay Mr. Coles a lump sum
payment equal to 12 months of his base salary, subject to
customary tax and other withholdings. The agreement also
provides that (i) the Company will provide Mr. Coles
with a lump sum payment equal to the cost of COBRA continuation
coverage under the applicable Starbucks medical, dental and
vision programs for a period of 12 months, less applicable
withholding taxes; (ii) Mr. Coles vested stock
options will expire or be exercisable pursuant to the terms and
conditions of the applicable plan documents;
(iii) Mr. Coles participation in all equity
compensation, incentive compensation and all other compensation
and benefits plans, programs and agreements will terminate
effective as of his separation from the Company; (iv) the
Company will provide Mr. Coles with 12 months of
outplacement services up to a maximum of $14,000; and
(v) Mr. Coles is not entitled to any compensation or
benefits from and after his separation from the Company, except
as provided in the agreement, the terms of the our 401(k) plan
or the Management Deferred Compensation Plan. In the agreement,
Mr. Coles also provided a general release of claims against
the Company, agreed to certain confidentiality obligations and
reaffirmed his obligations under a non-competition agreement
with the Company. The Compensation Committee believes that the
separation amount was appropriate and in the best interests of
the Company in exchange for certain covenants and the release
provided by Mr. Coles.
As noted above, Mr. Bocian separated from the Company
effective November 25, 2008. He did not receive any
separation compensation in connection with his resignation.
Equity
Acceleration
Acceleration Upon Change in Control. No named
executive officer is entitled to any payment or accelerated
benefit in connection with a change in control of Starbucks, or
a change in his responsibilities following a change in control,
except for accelerated vesting of stock options and restricted
stock units granted under our 2005 Key Employee Plan. The 2005
Key Employee Plan has a complex definition of change in
control and resigning for good reason.
Generally speaking, a change in control occurs if (i) we
sell or liquidate all our assets; (ii) someone acquires 25%
or more of our stock without prior approval of our board of
directors; (iii) a majority of our directors is replaced in
any 36-month
period other than by new directors approved by existing
directors; or (iv) Starbucks is not the surviving company
after any merger.
The 2005 Key Employee Plan is a double trigger plan,
meaning that unvested stock options and unvested restricted
stock units vest immediately only if (i) there is a change
in control and (ii) if stock options and restricted stock
units are assumed or substituted with stock options or
restricted stock units of the surviving company, the partner is
terminated or resign for good reason within one year after the
change in control. Generally speaking, a resignation is
for good reason if it results from the resigning
partner: (i) having materially reduced responsibilities;
(ii) being placed in a new role that is inconsistent with
the pre-change-in-control role; (iii) having his or her
base salary or target incentive compensation reduced; or
(iv) having his or her primary work location moved by more
than 50 miles. If stock options or restricted stock units
are not assumed or substituted with stock options or restricted
stock units of the surviving company, they vest immediately upon
a change in control. We believe double-trigger
acceleration is appropriate because vesting is accelerated only
if the retention purpose of time-vested equity compensation is
defeated. This occurs upon a change in control only for partners
who lose their long-term incentive compensation opportunity,
which results if the acquiring company does not assume or
substitute awards, or if the partners lose their jobs or resign
for good reason. Performance RSUs, which were awarded in fiscal
2009, are treated in the same manner as restricted stock units
noted above once the performance period is complete and the
amount of award is determined. Prior to completion of the
performance period, performance RSUs do not accelerate upon a
change in control and are forfeited if not assumed or
substituted with awards of the surviving company.
49
Acceleration Upon Retirement or Death. The
vesting of all options accelerates in full upon the voluntary
termination of employment of any partner who is at least
55 years old and has a minimum of 10 years of credited
service with Starbucks, unless otherwise provided in the grant
agreement. Vesting also accelerates upon the partners
death. Restricted stock units do not accelerate upon retirement
or death.
The following table shows the estimated potential incremental
value of additional stock options and restricted stock units
that would have vested for our named executive officers as of
September 25, 2009 (the last business day of fiscal
2009) under the acceleration scenarios described above. For
stock options, the value is based on the difference between the
aggregate exercise price of all accelerated options and the
aggregate market value of the underlying shares as of
September 25, 2009 calculated based on the closing market
price of our stock on that day ($19.83). Accelerated restricted
stock unit award value is calculated by multiplying the number
of accelerated shares by the closing market price of our stock
on September 25, 2009 ($19.83). Of the named executive
officers, only Mr. Schultz satisfied the criteria for
retirement as of September 25, 2009.
Mr. Schultz has voluntarily waived accelerated vesting of
options upon termination of employment at or after the
age 55 and with at least 10 years of service for each
stock option grant he has received since he has been retirement
eligible. Mr. Schultz agreed to forgo this accelerated
retirement vesting so we would not be required to similarly
accelerate the recognition of expense for the award in our
financial statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of Accelerated Equity Awards ($)
|
|
|
|
|
Change in Control
|
|
Change in Control
|
|
|
|
|
|
|
Change in Control
|
|
with No Replacement
|
|
plus Qualifying
|
|
|
|
|
Name
|
|
Only
|
|
Equity
|
|
Termination
|
|
Death
|
|
Retirement
|
|
Howard Schultz
|
|
|
|
|
|
|
30,380,257
|
|
|
|
30,380,257
|
|
|
|
30,380,257
|
|
|
|
N/A
|
|
Troy Alstead
|
|
|
|
|
|
|
2,314,411
|
|
|
|
2,314,411
|
|
|
|
1,281,882
|
|
|
|
N/A
|
|
Clifford Burrows
|
|
|
|
|
|
|
3,065,096
|
|
|
|
3,065,096
|
|
|
|
1,524,543
|
|
|
|
N/A
|
|
Martin
Coles(1)
|
|
|
|
|
|
|
2,331,398
|
|
|
|
2,331,398
|
|
|
|
1,295,142
|
|
|
|
N/A
|
|
Arthur Rubinfeld
|
|
|
|
|
|
|
2,837,357
|
|
|
|
2,837,357
|
|
|
|
1,653,070
|
|
|
|
N/A
|
|
Peter J.
Bocian(2)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
(1) |
|
Mr. Coles separated from the Company effective
December 1, 2009. |
|
(2) |
|
Mr. Bocian was not employed as of fiscal 2009 year-end. |
The following table shows the estimated potential aggregate
amounts our named executive officers could have realized from
stock options, restricted stock units and Management Deferred
Compensation Plan account distributions if their employment
terminated as of the last business day of fiscal 2009, other
than for misconduct (which could cause forfeiture of all vested
stock options and Company match contributions under the
Management Deferred Compensation Plan), both including and
excluding amounts from accelerated vesting of stock options and
restricted stock units as detailed in the table above. The
Total No Acceleration column assumes
none of the acceleration scenarios covered above has occurred.
The Total With Acceleration column
assumes acceleration of all unvested stock options and
restricted stock units under one or more of the scenarios
covered above.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate Value of
|
|
|
Compensation Plan
|
|
|
|
|
|
Aggregate Value of
|
|
|
|
|
|
|
Vested Equity
|
|
|
Account Balances
|
|
|
Total No
|
|
|
Unvested Equity
|
|
|
Total With
|
|
Name
|
|
Awards ($)
|
|
|
($)(1)
|
|
|
Acceleration ($)
|
|
|
Awards ($)
|
|
|
Acceleration ($)
|
|
|
Howard Schultz
|
|
|
47,956,336
|
|
|
|
202,397
|
|
|
|
48,158,733
|
|
|
|
30,380,257
|
|
|
|
78,538,990
|
|
Troy Alstead
|
|
|
2,742,645
|
|
|
|
770,571
|
|
|
|
3,513,216
|
|
|
|
2,314,411
|
|
|
|
5,827,627
|
|
Clifford Burrows
|
|
|
517,080
|
|
|
|
20,840
|
|
|
|
537,920
|
|
|
|
3,065,096
|
|
|
|
3,603,016
|
|
Martin
Coles(2)
|
|
|
69,000
|
|
|
|
106,839
|
|
|
|
175,839
|
|
|
|
2,331,398
|
|
|
|
2,507,237
|
|
Arthur Rubinfeld
|
|
|
57,638
|
|
|
|
|
|
|
|
57,638
|
|
|
|
2,837,357
|
|
|
|
2,894,995
|
|
Peter J.
Bocian(3)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
50
|
|
|
(1) |
|
These amounts are also shown in the Aggregate Balance at
Fiscal Year-End column of the Fiscal 2009 Nonqualified
Deferred Compensation table on page 48 and are shown in a
single lump sum regardless of individual elections to receive
payment over time. |
|
(2) |
|
Mr. Coles separated from the Company effective
December 1, 2009. |
|
(3) |
|
Mr. Bocian was not employed as of fiscal 2009 year-end. |
Certain
Relationships and Related Transactions
During fiscal 2009, Mr. Schultz made personal use of
corporate aircraft, for which he reimbursed us at our aggregate
incremental cost. Mr. Schultzs reimbursements for
flights taken during fiscal 2009 totaled $65,148. The Audit
Committee approved aircraft reimbursements in accordance with
its charter, before the board of directors adopted the Policy
for the Review and Approval of Related-Person Transactions
Required to Be Disclosed in Proxy Statements, described in more
detail beginning on page 6.
On August 20, 2009, we entered into a
sub-lease
agreement with The Essential Baking Company, Inc., a Washington
corporation (Essential Baking Co.), pursuant to
which we will pay Essential Baking Co. approximately $422,000 in
base rent over the term of the
sub-lease.
The
sub-lease
will run through May 2014 and includes provisions for additional
payments above base rent if gross sales exceed certain
thresholds. In connection with the
sub-lease
agreement, we also entered into a vendor agreement on
July 17, 2009, pursuant to which Essential Baking Co. will
be the exclusive provider of baked goods, desserts, sandwiches
and salads for the retail store operating within the
sub-leased
property and also provide similar food items for certain other
retail stores on a non-exclusive basis. Through
December 31, 2009, we have paid Essential Baking Co.
approximately $47,896 under the vendor agreement. Arthur
Rubinfeld, our president, Global Development, serves on the
board of Essential Baking Co. and also owns approximately 26% of
Essential Baking Co.s outstanding common stock.
Mr. Rubinfeld also holds a promissory note from Essential
Baking Co. for $60,992 and has options to acquire additional
shares of common stock of Essential Baking Co. The Audit
Committee has reviewed these transactions pursuant to our Policy
for the Review and Approval of Related-Person Transactions
Required to Be Disclosed in Proxy Statements and has determined
that such transactions were in the Companys best interests
and that the terms are competitive with terms available from
unaffiliated third parties.
Equity
Compensation Plan Information
The following table provides information as of
September 27, 2009 regarding total shares subject to
outstanding stock options and rights and total additional shares
available for issuance under our existing equity incentive and
employee stock purchase plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
Remaining Available for
|
|
|
Number of Securities to
|
|
Weighted-Average
|
|
Future Issuance Under Equity
|
|
|
be Issued Upon Exercise
|
|
Exercise Price of
|
|
Compensation Plans
|
|
|
of Outstanding Options,
|
|
Outstanding Options,
|
|
(Excluding Securities
|
Plan Category
|
|
Warrants and Rights
|
|
Warrants and Rights
|
|
Reflected in Column (a))
|
|
Equity compensation plans approved by security holders
|
|
|
63,638,639
|
|
|
|
$13.73
|
(1)
|
|
|
46,663,138
|
(2)
|
Equity compensation plans not approved by security holders
|
|
|
4,368,623
|
|
|
|
$14.53
|
|
|
|
1,310,781
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
68,007,262
|
|
|
|
$13.78
|
(1)
|
|
|
47,973,919
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The weighted-average exercise price takes into account
4,445,821 shares under approved plans issuable upon vesting
of outstanding restricted stock units, which have no exercise
price. The weighted average exercise price for options only with
respect to the approved plans is $14.76. |
|
(2) |
|
Shares available for issuance under the 2005 Long-Term Equity
Incentive Plan may be issued pursuant to stock options,
restricted stock, restricted stock units and stock appreciation
rights. |
51
|
|
|
(3) |
|
Includes 38,163,649 shares under equity incentive plans and
9,810,270 shares remaining available for issuance under
employee stock purchase plans. |
The shares to be issued under plans not approved by shareholders
relate to our 1991 Company-Wide Bean Stock Option
Plan (the 1991 Bean Stock Plan) and our UK Share
Incentive Plan.
The 1991 Bean Stock Plan is our former broad-based stock option
plan and provided for the annual issuance of stock options to
eligible partners. The 1991 Bean Stock Plan was approved and
adopted by our board of directors in 1991 and did not require
shareholder approval. Generally, options were granted annually
under the 1991 Bean Stock Plan. These grants required board
approval, were linked to overall Company performance in the
prior year and were granted to partners as a percentage of base
salary. The 1991 Bean Stock Plan was effectively replaced by the
2005 Company-Wide
Sub-Plan to
the Starbucks Corporation 2005 Long-Term Equity Incentive Plan.
The Starbucks Corporation 2005 Long-Term Equity Incentive Plan
was approved by our shareholders on February 9, 2005.
Our UK Share Incentive Plan, which is a plan approved by Her
Majestys Revenue & Customs of the United
Kingdom, allows eligible partners in the United Kingdom to
purchase shares of our common stock through payroll deductions
during six-month offering periods at the lower of the market
price at the beginning and the market price at the end of the
offering period. We award one matching share for each six shares
purchased under the UK Share Incentive Plan. The total number of
shares issuable under the UK Share Incentive Plan is 1,400,000,
of which 89,219 were issued as of September 27, 2009. The
UK Share Incentive Plan was suspended in May 2009.
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires our directors and executive officers, and
persons who beneficially own more than 10% of our common stock,
to file reports of beneficial ownership and changes in
beneficial ownership with the SEC. Our directors, executive
officers and greater-than-10% shareholders are required by SEC
rules to furnish us with copies of all Section 16(a)
reports that they file. We file Section 16(a) reports on
behalf of our directors and executive officers to report their
initial and subsequent changes in beneficial ownership of our
common stock. To our knowledge, based solely on a review of the
reports we filed on behalf of our directors and executive
officers, written representations from these persons that no
other reports were required and all Section 16(a) reports
provided to us, all Section 16(a) filing requirements
applicable to our directors and executive officers were complied
with for fiscal 2009.
PROPOSAL 2
RATIFICATION OF SELECTION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Independent
Registered Public Accounting Firm Fees
The following table sets forth the aggregate fees billed to us
by Deloitte for fiscal 2009 and fiscal 2008:
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2009
|
|
|
Fiscal 2008
|
|
|
Audit Fees
|
|
$
|
4,736,000
|
|
|
$
|
4,927,000
|
|
Audit-Related Fees
|
|
|
82,000
|
|
|
|
112,000
|
|
Tax Fees
|
|
|
96,000
|
|
|
|
156,000
|
|
All Other Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
4,914,000
|
|
|
$
|
5,195,000
|
|
|
|
|
|
|
|
|
|
|
Audit Fees consist of fees paid to Deloitte for:
|
|
|
|
|
the audit of the Companys annual financial statements
included in the Annual Report on
Form 10-K
and review of financial statements included in the Quarterly
Reports on
Form 10-Q;
|
|
|
|
the audit of the Companys internal control over financial
reporting with the objective of obtaining reasonable assurance
about whether effective internal control over financial
reporting was maintained in all material respects; and
|
52
|
|
|
|
|
services that are normally provided by the independent
registered public accounting firm in connection with statutory
and regulatory filings or engagements.
|
Audit-Related Fees consist of fees for assurance and
related services that are reasonably related to the performance
of the audit or review of the Companys financial
statements and are not reported under Audit Fees. This
category includes fees related to audit and attest services not
required by statute or regulations, due diligence related to
mergers, acquisitions and investments and consultations
concerning financial accounting and reporting standards.
Tax Fees consist of fees for professional services for
tax compliance, tax advice and tax planning. These services
include assistance regarding federal, state and international
tax compliance, return preparation, tax audits and customs and
duties.
The Audit Committee has considered whether the provision of
non-audit services is compatible with maintaining the
independence of Deloitte and has concluded that it is.
Policy on
Audit Committee Pre-Approval of Audit and Permissible Non-Audit
Services of the Independent Registered Public Accounting
Firm
The Audit Committee is responsible for appointing, setting
compensation for and overseeing Deloittes work. The Audit
Committee has established a policy requiring its pre-approval of
all audit and permissible non-audit services provided by
Deloitte. The policy is available at
www.starbucks.com/aboutus/corporate_governance.asp. The policy
provides for the general pre-approval of specific types of
services and gives detailed guidance to management as to the
specific services that are eligible for general pre-approval,
and provides specific cost limits for each such service on an
annual basis. The policy requires specific pre-approval of all
other permitted services. For both types of pre-approval, the
Audit Committee considers whether such services are consistent
with the rules of the SEC on auditor independence. The Audit
Committees charter delegates to its chair the authority to
address any requests for pre-approval of services between Audit
Committee meetings, and the chair must report any pre-approval
decisions to the Audit Committee at its next scheduled meeting.
The policy prohibits the Audit Committee from delegating to
management the Audit Committees responsibility to
pre-approve any permitted services.
Requests for pre-approval for services that are eligible for
general pre-approval must be submitted to our controller and be
detailed as to the services to be provided and the estimated
total cost. The controller then determines whether the services
requested fall within the detailed guidance of the Audit
Committee in the policy as to the services eligible for general
pre-approval. Deloitte and management must report to the Audit
Committee on a timely basis regarding the services provided by
Deloitte in accordance with general pre-approval.
None of the services related to the Audit-Related Fees or
Tax Fees described above was approved by the Audit
Committee pursuant to the waiver of pre-approval provisions set
forth in applicable rules of the SEC.
The Audit Committee requests that shareholders ratify its
selection of Deloitte to serve as our independent registered
public accounting firm for fiscal 2010. Deloitte audited our
consolidated financial statements for fiscal 2009 and audited
our internal control over financial reporting with the objective
of obtaining reasonable assurance about whether effective
internal control over financial reporting was maintained in all
material respects for fiscal 2009. Representatives of Deloitte
will be present at the annual meeting and will have an
opportunity to make a statement if they so desire and to respond
to questions by shareholders.
PROPOSAL 3
SHAREHOLDER PROPOSAL NO. 3
Mr. John C. Harrington has notified the Company that he
intends to submit the following proposal at this years
annual meeting. Mr. Harrington beneficially owns
1,000 shares of Starbucks common stock. We will provide the
address of the individual submitting this proposal promptly upon
a shareholders oral or written request.
53
Recycled
Container Content and Container Recovery Goals
WHEREAS Starbucks Corp. has repeatedly emphasized its commitment
to environmental leadership, yet has no comprehensive recycled
content or container recovery strategy for the plastic, glass,
paper and metal containers its beverages are sold in.
Society has been inundated with recyclable materials that are
not being recycled. Two-thirds of beverage containers in the
U.S. are not recycled but discarded in landfills,
incinerated or littered, and thereby diverted from recycling
streams. The U.S. recycling rate for beverage containers
declined from 53 percent in 1992 to 34 percent in
2006, while sales continued to grow.
We congratulate the company for using 10% recycled paper fiber
in its hot coffee cups. But 3 billion Starbucks coffee cups
end up in landfills annually because they cant be
composted or recycled due to their plastic coating.
(Greenbiz.com, Sept. 15, 2009)
Starbuck[s] received failing grades for its performance on
beverage container recycled content and recycling policies in a
2008 scorecard and report published by As You Sow Foundation.
The company has made no commitment to use recycled content in
its Ethos brand water bottles or to specific measures designed
to increase rates of bottle recovery. Starbucks lags behind
competitors who sell bottled beverages, including
Coca-Cola
Co. and PepsiCo which both use a significant percentage of
recycled polyethylene terephthalate (PET) resin in plastic
bottles sold in the U.S. Nestle Waters North America has
introduced re-source, a brand of bottled water with 25%
recycled PET content. Pepsis Naked Juice brand will use
100% recycled PET plastic in its bottles in 2010.
Significant container recovery rates are possible. In
U.S. states with container deposit laws, and countries like
Germany and Sweden, beverage container recovery rates of 70 to
80 percent have been achieved.
Coca-Cola
has set a goal to recover 50% of all plastic and aluminum
containers it sells annually by 2015. Nestle Waters has pledged
to recover 60% of the plastic bottles it sells by 2018.
Starbucks has made no such commitment. Increased recovery can
reduce reliance on virgin resins and metals and make more
materials available to provide recycled content in new
containers.
Increased recycling of containers can also reduce carbon
footprint. If all U.S. beverage containers sold in 2005 had
been recovered, an estimated 15.6 million metric tons of
greenhouse gases could have been avoided. (Waste &
Opportunity, As You Sow, 2008)
BE IT RESOLVED THAT Shareowners of Starbucks request that the
board of directors adopt a comprehensive recycling strategy for
beverage containers sold by the company. The strategy should
include consideration of aggressive recycled content goals, and
container recovery goals for plastic, glass, paper and metal
containers. The board shall prepare a report by October 1, 2010
on the companys efforts to achieve this strategy. The
report to be prepared at reasonable cost, may omit confidential
information.
SUPPORTING STATEMENT
We believe the requested report is in the best interest of
Starbucks and its shareholders. Leadership in this area will
protect our brands and enhance the companys reputation.
BOARD
RECOMMENDATION
The Starbucks Board of Directors recommends that shareholders
vote AGAINST this proposal for the following reasons:
Starbucks believes in the importance of caring for our planet
and has a longstanding commitment to environmental stewardship.
Our focus on recycling is an essential part of this commitment.
To that end, Starbucks has developed a comprehensive recycling
strategy to minimize the environmental impacts of the
Companys products. Information on our recycling strategy,
as well as other aspects of the
Starbuckstm
Shared
Planettm
initiative, is publicly available at
www.starbucks.com/sharedplanet.
54
Starbucks continuously evaluates the environmental footprint of
our beverage containers and has taken definitive actions to
mitigate the environmental impacts of the Companys
single-use packaging. For example, Starbucks has worked with
supply chain partners who manufacture our packaging and
disposable products to maximize post consumer recycled content
in our paper goods, minimized the number of different resins in
our plastic products to enhance recycling and even reduced the
carbon footprint of our cold cups by 45% through materials
changes and cup weight reduction. Starbucks has also established
significant, relevant, quantitative forward looking goals to
further mitigate the impact of the Companys packaging
through increased recycling and a reduction in the overall
quantity of packaging by increasing the number of beverages
served in reusable cups and mugs.
A sampling of Starbucks current initiatives includes:
|
|
|
|
|
Packaging innovation: Introduction of the
recycled-content cup sleeve as a way to reduce double
cupping; launch of the industrys first paper
beverage cup containing post-consumer recycled fiber (PCF);
maximizing post-consumer recycled content in the Companys
non-cup paper goods, with an average of 65% recycled fibers in
2008; and encouraging customers to choose reusable cup options
by rewarding those who bring in their own travel tumblers with a
$0.10 discount off the price of their beverages.
|
|
|
|
Industry Leadership: Starbucks is active in
the Sustainable Packaging Coalition, an industry collaborative
effort to drive innovation in packaging design across all
materials; Starbucks is also a founding member of the Paper
Working Group, contributing to the development of the
Environmental Paper Assessment Tool. We hosted a cup summit in
May 2009, bringing stakeholders from the entire value chain
together for the first time to develop systems-based solutions
to increase cup recycling globally.
|
|
|
|
Quantitative Targets Moving Forward: Starbucks
has implemented specific goals to reduce the environmental
impact of serving our beverages, including 100% recyclable or
compostable cups by 2012, in-store recycling for customers in
100% of the stores where Starbucks controls waste management by
2015, and 25% of the Companys beverages served in reusable
containers by 2015, which would decrease Starbucks paper cup
usage by approximately one billion cups annually using current
sales data.
|
This resolution asks Starbucks to develop comprehensive plans
for recycling and the use of recycled content materials in our
packaging. We have already done this and have publicly stated
aggressive targets to demonstrate a commitment to lead the
specialty coffee and retail industry in ensuring that
comprehensive recycling opportunities for single use paper and
plastic cups come about over the next three years.
Although Starbucks also sells a number of ready to drink
(RTD) beverages in glass, aluminum and plastic
containers, and is consistently working with our suppliers to
mitigate the environmental impact of those bottles and cans,
these RTDs represent less than 4% of Starbucks total retail
beverage sales. Consequently, Starbucks believes it is most
appropriate to focus primarily on sustainable packaging for
paper and plastic cups, where we have the largest market share
in the specialty coffee industry and the greatest potential to
achieve success in changing the entire business sector for the
better.
This resolution also asks Starbucks to set quantitative goals
for the diversion of single use packaging from landfill disposal
to recycling. Starbucks believes it is appropriate for the
Company to set targets for customer access to recycling in
Starbucks stores. We have also committed to work with local
regulators and recycling companies to increase access in homes,
offices and public spaces. However, actual rates at which
Starbucks customers choose to recycle their products are highly
dependent upon the shared actions of other stakeholders outside
Starbucks influence. We therefore believe that measuring against
these rates, as the proposal requests, would provide a poor
indicator of our performance.
Sustainable packaging is an explicit priority for Starbucks and
is incorporated into the everyday packaging design and
purchasing decisions of the Company. We have set specific
targets that maintain Starbucks leadership role as an industry
innovator in minimizing the environmental footprint of our most
important and greatest volume packaging our paper
hot cups and plastic cold cups.
55
We remain committed to being an environmentally responsible
business. Starbucks will continue striving to find innovative
ways to minimize the environmental impacts of our products.
Implementation of this proposal will not further the
Companys environmental or recycling goals in any
meaningful respect. On the contrary, this proposal would result
in the Company incurring unnecessary costs and expenses by
duplicating efforts that are already underway and providing
additional reports with information that is already available to
shareholders.
FOR THESE REASONS, THE BOARD OF DIRECTORS RECOMMENDS THAT
SHAREHOLDERS VOTE AGAINST PROPOSAL NUMBER 3.
OTHER
BUSINESS
The board of directors knows of no other matters to be brought
before the annual meeting. If any other matters are properly
brought before the annual meeting, however, the persons
appointed in the accompanying proxy intend to vote the shares
represented thereby in accordance with their best judgment.
PROPOSALS OF
SHAREHOLDERS
Pursuant to SEC
Rule 14a-8,
shareholder proposals intended for inclusion in our fiscal 2010
proxy statement and acted upon at our 2011 Annual Meeting of
Shareholders (the 2011 Annual Meeting) must be
received by us at our executive offices at 2401 Utah Avenue
South, Mail Stop S-LA1, Seattle, Washington 98134, Attention:
Corporate Secretary, on or prior to September 24, 2010.
Shareholder proposals submitted for consideration at the 2011
Annual Meeting of Shareholders but not submitted for inclusion
in our fiscal 2010 proxy statement pursuant to SEC
Rule 14a-8,
including shareholder nominations for candidates for election as
directors, generally must be delivered to the Corporate
Secretary at our executive offices not less than 120 days
nor more than 150 days before the first anniversary of the
date of the 2010 Annual Meeting of Shareholders. As a result,
any notice given by a shareholder pursuant to the provisions of
our bylaws (other than notice pursuant to SEC
Rule 14a-8)
must be received no earlier than October 25, 2010, and no
later than November 24, 2010. However, if the date of the
2011 Annual Meeting occurs more than 30 days before or more
than 60 days after March 24, 2011, notice by the
shareholder of a proposal must be delivered no earlier than the
close of business on the 150th day prior to the date of
such annual meeting and no later than the close of business on
the later of the 120th day prior to the date of such annual
meeting or, if the first public announcement of the date of the
annual meeting is less than 100 days prior to the date of
such annual meeting, the 10th day following the day on
which we first make a public announcement of the date of the
annual meeting. Shareholder proposals must include the specified
information concerning the proposal or nominee as described in
our bylaws.
INTERNET
VOTING
The Company is incorporated under Washington law, which
specifically permits electronically transmitted proxies,
provided that the transmission set forth or be submitted with
information from which it can reasonably be determined that the
transmission was authorized by the shareholder. The electronic
voting procedures provided for the Annual Meeting are designed
to authenticate each shareholder by use of a control number to
allow shareholder to vote their shares and to confirm that their
instructions have been properly recorded.
SHAREHOLDERS
SHARING THE SAME ADDRESS
We have adopted a procedure called householding,
which has been approved by the SEC. Under this procedure, we
will deliver only one copy of our Notice of Internet
Availability of Proxy Materials, and for those shareholders that
received a paper copy of proxy materials in the mail, one copy
of our fiscal 2009 annual report to shareholders and this proxy
statement, to multiple shareholders who share the same address
(if they appear to be members of the same family) unless we have
received contrary instructions from an affected shareholder.
Shareholders who participate in householding will continue to
receive separate proxy cards if they received a paper copy of
proxy materials in the mail. This procedure reduces our printing
costs, mailing costs and fees, and also supports our
environmental goals set forth in our annual report on Global
Responsibility.
56
The fiscal 2009 annual report to shareholders and this proxy
statement are available at our website at
http://investor.starbucks.com.
Additionally, and in accordance with SEC rules, shareholders as
of the record date may access our proxy statement at
www.proxyvote.com, which does not have cookies that
identify visitors to the site. We will deliver promptly upon
written or oral request a separate copy of the annual report and
this proxy statement to any shareholder at a shared address to
which a single copy of either of those documents was delivered.
To receive a separate copy of the annual report or this proxy
statement, contact us at:
Investor Relations
Starbucks Corporation
2401 Utah Avenue South, Mail Stop: SR1
Seattle, Washington
98134-1435
(206) 318-7118
investorrelations@starbucks.com
http://investor.starbucks.com
If you are a shareholder, share an address and last name with
one or more other shareholders and would like to revoke your
householding consent or you are a shareholder eligible for
householding and would like to participate in householding,
please contact Broadridge, either by calling toll free at
(800) 542-1061
or by writing to Broadridge, Householding Department, 51
Mercedes Way, Edgewood, New York 11717. You will be removed from
the householding program within 30 days of receipt of the
revocation of your consent.
A number of brokerage firms have instituted householding. If you
hold your shares in street name, please contact your
bank, broker or other holder of record to request information
about householding.
ANNUAL
REPORT TO SHAREHOLDERS AND
FORM 10-K
The fiscal 2009 annual report to shareholders, including our
2009 10-K
(which is not a part of our proxy soliciting materials), is
being mailed with this proxy statement to those shareholders
that received a copy of the proxy materials in the mail. For
those shareholders that received the Notice of Internet
Availability of Proxy Materials, this proxy statement and our
fiscal 2009 annual report to shareholders are available at our
website at
http://investor.starbucks.com.
Additionally, and in accordance with SEC rules, you may access
our proxy statement at www.proxyvote.com, which does not have
cookies that identify visitors to the site. The 2009
10-K and the
exhibits filed with it are available at our website at
http://investor.starbucks.com.
Upon request by any shareholder to Investor Relations at the
address listed above, we will furnish a copy of any or all
exhibits to the 2009
10-K.
By order of the board of directors,
Paula E. Boggs
secretary
Seattle, Washington
January 22, 2010
57
Ticketing
and Transportation Information for the Starbucks
Corporation
2010 Annual Meeting of Shareholders
on
Wednesday, March 24, 2010
at
10 a.m. (Pacific Time)
Marion Oliver McCaw Hall at Seattle Center
321 Mercer Street, Seattle, Washington 98109
As noted in this document, if you received the Notice of
Internet Availability of Proxy Materials, the Notice will serve
as an admission ticket for one shareholder to attend the Annual
Meeting of Shareholders. If you received a paper copy of the
proxy materials by mail, the proxy statement includes an
admission ticket for one shareholder to attend the Annual
Meeting of Shareholders. Each shareholder must present the
Notice, an admission ticket or other proper form of
documentation (as noted in the section Annual Meeting
Information) to be admitted. Doors open at 8 a.m.
(Pacific Time).
Please note: As always, we anticipate a large number of
attendees at the Annual Meeting of Shareholders. Again this
year, seating will be limited to McCaw Hall only,
and we cannot guarantee seating for all shareholders.
Shareholders may also log onto a live webcast of the meeting;
please see details on our Investor Relations website at
http://investor.starbucks.com.
Directions from Interstate 5 (I-5) to the Mercer Street
Garage: Take Exit 167, the Mercer Street/Seattle
Center exit. Following the signs to Seattle Center, turn right
onto Fairview Avenue; turn left onto Valley Street, stay in the
center or left lanes; Valley Street becomes Broad Street; turn
right on Fifth Avenue North; turn left on Roy Street; turn left
on Third Avenue North and left into the parking garage.
Parking: Parking is available in the Mercer
Street Garage, which is located directly across from McCaw Hall.
Please refer to the map below for additional parking locations
at Seattle Center.
For more information on local transportation to the Annual
Meeting of Shareholders, please visit
www.seattlecenter.com/transportation.
STARBUCKS CORP.
2401 UTAH AVE. SOUTH
SEATTLE, WA 98134
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 PM Eastern Time the day before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 PM Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope provided, or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
|
|
|
|
|
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
|
|
|
|
|
|
|
M18795-P86444
|
|
KEEP THIS PORTION FOR YOUR RECORDS |
|
|
|
|
|
DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STARBUCKS CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Board of Directors recommends you vote |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR the following proposals:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. |
|
Election of Directors: |
|
For |
|
Against |
|
Abstain |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Nominees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1a. |
|
Howard Schultz
|
|
|
o |
|
|
|
o |
|
|
|
o |
|
|
|
|
|
For
|
|
|
Against
|
|
Abstain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1b. |
|
Barbara Bass
|
|
|
o |
|
|
|
o |
|
|
|
o |
|
|
1i. Javier G. Teruel
|
|
|
o |
|
|
|
o |
|
|
|
o |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1c. |
|
William W. Bradley
|
|
|
o |
|
|
|
o |
|
|
|
o |
|
|
1j. Myron E. Ullman, III
|
|
|
o |
|
|
|
o |
|
|
|
o |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1d. |
|
Mellody Hobson
|
|
|
o |
|
|
|
o |
|
|
|
o |
|
|
1k. Craig E. Weatherup
|
|
|
o |
|
|
|
o |
|
|
|
o |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1e.
1f. |
|
Kevin R. Johnson
Olden Lee
|
|
|
o
o |
|
|
|
o
o |
|
|
|
o
o |
|
2. |
Ratification of Deloitte & Touche LLP as the independent registered public accounting firm for the fiscal year ending October 3, 2010
|
|
|
o |
|
|
|
o |
|
|
|
o |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1g. |
|
Sheryl Sandberg
|
|
|
o |
|
|
|
o |
|
|
|
o |
|
The Board of Directors recommends
you
vote AGAINST the following proposal: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1h. |
|
James G. Shennan, Jr.
|
|
|
o |
|
|
|
o |
|
|
|
o |
|
3. |
Shareholder proposal regarding recycling strategy for beverage containers
|
|
|
o |
|
|
|
o |
|
|
|
o |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For address changes and/or comments, please check this box and write them on the back where indicated.
|
|
|
|
o |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each personally sign. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Signature [PLEASE SIGN WITHIN BOX] |
|
|
Date |
|
|
|
|
|
|
|
|
|
|
Signature (Joint Owners) |
|
Date
|
|
|
|
|
|
|
|
|
|
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders:
The Notice and Proxy Statement and Fiscal 2009 Annual Report are available at www.proxyvote.com.
M18796-P86444
Proxy
STARBUCKS CORPORATION
Annual Meeting of Shareholders
March 24, 2010 10:00 AM
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoint(s) Howard Schultz and Paula E. Boggs,
or either of them, as proxies, each with the power to appoint (his/her) substitute, and hereby authorizes them to represent and to vote, as designated on the
reverse side of this proxy, all of the shares of stock of STARBUCKS CORPORATION that the shareholder(s) is/are entitled to vote at the Annual Meeting of
Shareholder(s) to be held at 10:00 AM, (Pacific Time) on Wednesday, March 24, 2010 at the Marion Oliver McCaw Hall, Seattle, Center 321 Mercer Street Seattle,
WA 98109, and any adjournment or postponement thereof.This proxy, when properly executed, will be voted in the manner directed herein.
If no such direction is made, this proxy will be voted in accordance with the Board of Directors recommendations.
|
|
|
|
|
|
|
|
|
Address Changes/Comments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
Continued and to be signed on reverse side
At their discretion, the proxies are authorized to vote on such other matters as may properly come before the meeting or any postponements(s) or adjournment(s) thereof.