Starbucks CEO’s $50m pay bump publicly rejected by shareholders

In a rare move, Starbucks CEO Kevin Johnson’s $50m pay raise just got vetoed by its shareholders.


March 23, 2021

Since Kevin Johnson joined Starbucks as president and CEO in 2017, the company’s valuation has grown by $39B (~45%).

That’s a latte growth — and Johnson has been handsomely rewarded for it: Between 2017 and 2019, he raked in $44.1m in total compensation.

But now, the CEO has run into a bit of a snag: His latest pay package, which includes a $50m retention award and a $1.86m bonus, has been rejected by Starbucks shareholders.

Stock-blocked

Public companies report planned changes to executives’ compensation via proxy statements. Shareholders then get to vote on these “say on pay” proposals.

So, what are the implications of a “no” vote?

  • The vote is technically nonbinding: The company still gets to make the final comp decision…
  • But a ‘no’ isn’t a good sign: It signals that shareholders think executives are overcompensated — or that they’re unhappy with the company’s direction.

How often does this happen?

Rarely. In fact, only 10 S&P 500 companies have had shareholders reject pay raises in the last year.

So how do shareholders decide if a pay raise is justified? Starbucks investors turned to 2 influential proxy advisory firms for insight:

  • Institutional Shareholder Services (“ISS”) argued that there was insufficient rationale behind Starbucks’ proposal.
  • Glass Lewis noted that Johnson is compensated disproportionately more than CEOs at other companies that have outperformed Starbucks.

The veto likely won’t change Starbucks’ decision. Still, it seems like drama is a-brewing.

Join 1.5m+ professionals getting The Hustle daily news brief

Business and tech news in 5 minutes or less

100% free, no ads or spam, unsubscribe anytime

Psst

How'd Bezos build a billion dollar empire?

In 1994, Jeff Bezos discovered a shocking stat: Internet usage grew 2,300% per year.

Data shows where markets are headed.

And that’s why we built Trends — to show you up-and-coming market opportunities about to explode. Interested?

Join us, it's free.

Look, you came to this site because you saw something cool. But here’s the deal. This site is actually a daily email that covers the important news in business, tech, and culture.

So, if you like what you’re reading, give the email a try.

If you don’t like it, unsubscribe any time. Privacy policy.