Two prominent shareholder advisory firms are urging investors to take a close look at how Starbucks is managing labor-related risks, arguing the company may lack sufficient board-level oversight of its workplace relations. The advisories come more than a year after bargaining between Starbucks and its U.S. union broke down.
ISS, the worlds largest proxy advisor, wrote earlier this month that "There are ongoing controversies related to labor disputes, and it is not clear there is sufficient board oversight of the companys management of labor relations." That caution was issued ahead of Starbucks' annual meeting scheduled for March 25.
ISS highlighted several factors as part of its concern, including strikes led by the companys U.S. union and a recent $38.9 million settlement Starbucks agreed to pay over claims it violated New York City requirements for predictable and stable scheduling of fast-food workers. The settlement followed allegations the company failed to meet local scheduling rules.
Both ISS and Glass Lewis also pointed to Starbucks' recent decision to disband a board committee created to focus on labor issues. The committee, formally named the Environmental, Partner, and Community Impact Committee, was established in 2023 under then-CEO Laxman Narasimhan after pressure from shareholder groups to address labor concerns. That pressure included a successful vote forcing the company to hire an outside auditor to review its approach to labor relations.
Some of the same shareholder groups that pressed for the committees creation - including the New York State Comptroller and the union-affiliated SOC Investment Group - have since intensified their scrutiny, in part because of the committees dissolution and ongoing labor conflict that, they say, threatens CEO Brian Niccols turnaround strategy.
Starbucks said the dissenting shareholders represent a minority of its investor base.
Glass Lewis recommended shareholders vote against re-electing board director Beth Ford, who chairs the nominating and corporate governance committee. In its recommendation, Glass Lewis said the governance committee "bears responsibility for failing to ensure" oversight of risks that could harm shareholder interests, citing the elimination of the labor-focused committee.
In Starbuckss proxy filing, the company said responsibility for labor oversight has been reassigned to the full board and that other duties of the Impact Committee were redistributed to different committees. The filing said the change was made to simplify the board structure and to allow board and committee members to "focus their attention on matters that drive long-term shareholder value."
Starbucks spokesperson Jaci Anderson said in a statement that the board has "the necessary skills and experience to effectively oversee our strategy, including human capital management." The company also emphasized the benefits it provides to employees who work more than 20 hours a week, including healthcare, parental leave, and tuition for online classes at Arizona State University, and described the role as "the best job in retail."
Starbucks' annual SEC filing for 2025 details potential shareholder risks stemming from labor issues. The filing lists possible disruptions from work stoppages, the prospect of an "unfavorable" future union contract, and reputational harm resulting from the company's public stances on unions.
Union representation has been secured at roughly 6% of Starbucks stores in the United States, according to the company. While the pace of union elections slowed from a peak in 2022, organizing activity has continued into 2026.
In December, unionized café workers across 40 U.S. cities launched an open-ended strike. That action has largely dissipated, though rotating work stoppages at individual stores have continued. Starbucks said the strikes affected less than 1% of its stores and that the employees involved have officially returned to work.
Both Starbucks and union representatives have blamed the other side for the collapse of talks in late 2024. Each has said it is prepared to resume negotiations.
The proxy advisers warnings underline a governance and labor-relations debate facing investors: whether the companys current board structure and oversight are adequate to manage ongoing labor disputes and associated financial and reputational risks. With shareholder votes coming at the March 25 meeting, the dialogue between investors, proxy advisors, and Starbucks leadership will determine how these concerns are addressed in the near term.