Feb 18 - A coalition of investors that includes public-sector pension funds has called on Starbucks shareholders to vote against the reelection of two board members, citing ongoing lapses in managing the company's labor relations amid protracted union negotiations.
The investors asked shareholders to withhold support for lead independent director Jorgen Vig Knudstorp and Beth Ford, who chairs the board's Nominating and Corporate Governance Committee. Their appeal comes as Starbucks continues efforts to reach a collective bargaining agreement with its unionized baristas.
More than 3,800 baristas joined a nationwide strike late last year, marking the longest work stoppage in Starbucks' history, the investors noted. The union, Starbucks Workers United, has been pressing for improvements including better staffing, more predictable schedules and higher pay following extended contract talks.
In a letter sent ahead of Starbucks' March 25 annual meeting, the investor group warned that the company may struggle to sustain a turnaround without a constructive relationship with its unionized workforce. "We are concerned that, without a constructive relationship between Starbucks and its unionized workforce, sustaining the turnaround may prove difficult," the investors wrote in the letter.
Signatories to the letter include New York State Comptroller Thomas DiNapoli, New York City Comptroller Mark Levine, Trillium ESG Global Equity Mutual Fund, SOC Investment Group, Merseyside Pension Fund and the Shareholder Association for Research and Education.
Starbucks responded with a statement highlighting its compensation and benefits, saying: "We offer the best job in retail with hourly partners earning an average of $30 an hour and world-class benefits... all for those who only work 20 hours a week on average."
The investor group had previously written in January to the two directors, expressing concern about the board's decision to eliminate its Environmental, Partner, and Community Impact Committee without providing an explanation. Starbucks told Reuters on Wednesday that the committee's responsibilities were redistributed among existing committees and that the full board reclaimed primary responsibility for labor oversight.
The request to vote against the directors adds pressure on Starbucks' board at a moment when its management is working to revive sales while navigating a high-profile labor dispute that has drawn sustained attention from investors and the public.
Context and next steps
The investor letter and the call to oppose the two directors set the issue to be considered by shareholders at the company's March 25 annual meeting. The outcome will hinge on how widely the investors' concerns resonate with the shareholder base ahead of that vote.
What remains unclear
The information provided by the investors and Starbucks details the dispute and governance changes, but does not indicate how individual shareholders will vote or how management plans to resolve the outstanding core issues in negotiations with the union.