Based on the SOC’s analysis, Starbucks’ aggressive opposition to employee organizing efforts has cost shareholders at least $240 million in undisclosed costs and liabilities

Believes Starbucks needs to immediately provide full disclosure of the total costs and liabilities of its misguided human capital management strategy in order for shareholders to make fully informed voting decisions before the 2024 Annual Meeting

Encourages shareholders to support the SOC’s three independent candidates for the Starbucks Board in order to help improve oversight and safeguard the best interests of Starbucks shareholders, customers and employees

The Strategic Organizing Center (the “SOC”), a shareholder of Starbucks Corporation (Nasdaq: SBUX) (“Starbucks” or the “Company”), today submitted a letter to the United States Securities and Exchange Commission (the “SEC”), detailing what it believes are failures by Starbucks to properly disclose material information – including the full cost to date of the Company’s aggressive and illegal anti-unionization efforts – that shareholders have a right to know in advance of making voting decisions prior to the contested Annual Meeting of Shareholders (the “Annual Meeting”). The Annual Meeting is currently scheduled for March 13, 2024.

As the letter states:

Since before the Proxy Contest began, Starbucks has attempted to create a smokescreen of positivity around its conduct concerning its aggressive opposition to Starbucks workers’ efforts to unionize, in many cases by violating federal labor laws. These efforts are well documented. Moreover, the Company’s forceful tactics have led not only to increasingly problematic human capital management issues, but also substantial costs and liabilities that the Company has never acknowledged or disclosed, but that the SOC estimates to be at least $240 million to date.

The SOC’s analysis includes the estimated total of litigation costs and expenses, other categories of expenditures (including employee lost time, communications and internal Starbucks staffing) as well as liabilities associated with labor law violations sustained by National Labor Relations Board (the “NLRB”) complaints and/or labor judge determinations.

Based on the SOC’s analysis, Starbucks’ anti-union campaign includes the following estimated costs and liabilities through February 2024:

 

Estimated Costs Based on Company Anti-Union Activity through February 2024:

 

Legal Fees: Litigation (State and Federal Court, NLRB),1 Campaign Advice, Expenses

$100 million

 

 

 

 

Consultants and Internal Support: Communications, Research, Training

$40 million

 

 

 

 

Store Employee Productivity Lost Time: Captive Audience Store and Individual Meetings, Trainings

$13 million

 

 

 

Estimated Liabilities Based on NLRB General Counsel Complaints and Administrative Law Judge Decisions through February 2024:2

 

Illegally Denied Wages and Tips (Note: This grows at a rate of $815,000 per week)

$61 million

 

 

 

 

Illegal Firings and Store Closings

$26 million

 

 

 

 

Total Estimated Expenditures and Liabilities

$240 million

The letter also describes why the SOC believes that Starbucks’ proxy materials and other filings fail to provide an accurate portrayal to shareholders:

Indeed, the Company spills a fair amount of ink (in its proxy statement) on its “Reinvention Plan” and business strategy to paint a rosy—yet misleading—picture of its purported attention to its partners that acknowledges their importance while obfuscating Starbucks’ true approach to human capital management that informs the Proxy Contest.3 In doing so, the Company tactically and conveniently cherry picks what it thinks the broader investing public should know about its business and about the Proxy Contest.

In the letter, the SOC requests that the SEC require Starbucks to fully disclose to shareholders the costs and liabilities associated with its anti-union efforts.

The SOC believes Starbucks’ lack of disclosure and the exorbitant cost to shareholders represent just the latest examples of the current Board’s lack of oversight, counterproductive approach to labor issues and flawed allocation of resources. For these reasons – and to protect shareholder value – the SOC has nominated three director candidates (the “SOC Nominees”), who are ideally suited to help repair the relationship with the Company’s workers and regulators while safeguarding the best interests of all Starbucks’ stakeholders.

The SOC Nominees are:

  • Maria Echaveste, a former senior White House official, senior Department of Labor appointee and corporate attorney with significant international relations and public company board experience.
  • Hon. Joshua Gotbaum, who has been a director of both public and private companies with decades of experience in corporate governance and change, as well as significant public policy and government experience.
  • Hon. Wilma Liebman, who possesses over 40 years of experience in labor management, employee relations, wage negotiations, public policy and law – including having served as the Chair of the NLRB under President Barack Obama.

For the nominees’ full biographies, see here.

Shareholders can be part of ensuring Starbucks returns to the right path for the future by using the BLUE proxy card to vote “FOR” each of the SOC Nominees today. Shareholders can also vote for the SOC Nominees on the Company’s White proxy card.

For more information, shareholders can visit: www.BrewABetterStarbucks.com.

***

DISCLAIMER

This material does not constitute an offer to sell or a solicitation of an offer to buy any of the securities described herein in any state to any person. In addition, the discussions and opinions in this press release and the material contained herein are for general information only, and are not intended to provide investment advice. All statements contained in this press release that are not clearly historical in nature or that necessarily depend on future events are “forward-looking statements,” which are not guarantees of future performance or results, and the words “will,” “anticipate,” “believe,” “expect,” “potential,” “could,” “opportunity,” “estimate,” and similar expressions are generally intended to identify forward-looking statements. Any projected results and/or statements contained in this press release that are not historical facts are based on current expectations, speak only as of the date of this press release and involve risks that may cause the actual results to be materially different. Certain information included in this press release is based on data obtained from sources considered to be reliable. No representation is made with respect to the accuracy or completeness of such data, and any analyses provided to assist the recipient of this press release in evaluating the matters described herein may be based on subjective assessments and assumptions and may use one among alternative methodologies that produce different results. Accordingly, any analyses should also not be viewed as factual and also should not be relied upon as an accurate prediction of future results. Any figures are unaudited estimates and subject to revision without notice. The SOC disclaims any obligation to update the information herein and reserve the right to change any of their opinions expressed herein at any time as they deem appropriate. Past performance is not indicative of future results.

IMPORTANT INFORMATION

The SOC, the SEIU, Mary Kay Henry, Ahmer Qadeer, Michael Zucker, Maria Echaveste, Joshua Gotbaum, and Wilma B. Liebman (collectively, the “Participants”) filed a definitive proxy statement and accompanying proxy card (the “Proxy Statement”) with the SEC on January 25, 2024 to be used to solicit proxies in connection with the 2024 annual meeting of shareholders (the “Annual Meeting”) of Starbucks Corporation (the “Company”). All shareholders of the Company are advised to read the Proxy Statement and other documents related to the solicitation of proxies, each in connection with the Annual Meeting, by the Participants, as they l contain important information, including additional information related to the Participants, including a description of their direct or indirect interests by security holdings or otherwise. The Proxy Statement and an accompanying BLUE proxy card will be furnished to some or all of the Company’s stockholders and is, along with other relevant documents, available at no charge on the SEC website at http://www.sec.gov.

_____________________________________ 1 Litigation costs were estimated based on the different types and number of NLRB charges and proceedings litigated to date in the Company’s anti-union campaign, including unfair labor practice charges, election petitions, bargaining and settlements. These cases are published on the NLRB’s website at: https://www.nlrb.gov/search/case/starbucks. 2 Liabilities were calculated for cases in which the NLRB General Counsel has issued complaints or an ALJ has issued a decision finding labor law violations regarding (1) illegally denied wages and tips, (2) illegal firings and (3) illegal store closings. Wage liability calculations include hourly pay, tips, accrued interest and FICA payments. Wage liabilities were calculated through February 17, 2024 for all workers who (1) were illegally denied wage increases or certain benefits – like credit card tipping, (2) were illegally fired or (3) who previously worked at an illegally closed store. Wages were calculated based on the Company’s published average wage of $17.50 per hour. See 2024 Proxy Statement, at pg. 10. Estimated liabilities for store closings includes: (1) estimated wage liabilities, (2) estimated shutdown costs, (3) estimated net lost revenue and (4) estimated reopening costs. 3 The Proxy Statement explains, at page 11, that one key aspect of the Company’s latest reinvention plan is to “reinvigorate partner culture,” and at page 1, that “various initiatives to improve the partner experience” are “core” to the reinvention plan. See also 2024 Proxy Statement at page 10 (“Our partners are—and always have been—core to Starbucks overall business strategy, which is why our company, under the direction of the board, has made, and continues to make, significant investments in our partners.”).

Investor Contact Okapi Partners Bruce Goldfarb / Pat McHugh, (877) 285-5990 info@okapipartners.com Media Contacts Longacre Square Partners soc-sbux@longacresquare.com

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