Two prominent proxy advisor firms have sided with
Starbucks
’ board nominees, scoring a win for the company ahead of its union-led proxy vote later this month.
Glass Lewis and Institutional Shareholder Services recently released reports urging shareholders to vote for Starbucks’ 11 director nominees at the cafe chain’s March 13 meeting, rebuffing the three candidates nominated by the Strategic Organizing Center, or the SOC, last November.
The SOC is a coalition of unions representing over two million members, including members of Starbucks Workers United, a budding union. In a Securities and Exchange Commission filing last year, the SOC argued Starbucks needed to refresh its board to better manage the relationship with the union, adding that the current approach was weighing on the company’s financials and share price.
Starbucks stock is down 1.8% to $93.17 Friday, while the
S&P 500 index
is up 0.7%. Shares may be feeling some heat that the entire restaurant sector is feeling from inflation, and the
AdvisorShares Restaurant
exchange-traded fund is 0.3% lower Friday.
Starbucks shares have shed 2.5% year to date.
In reports issued Thursday and Friday, ISS and Glass Lewis respectively note that while the company mishandled its initial response to unionization efforts in 2021, it has since taken steps to mend the relationship, and to implement “proper controls” to respond to union demands.
Earlier this week the company and the union announced they had agreed to start discussions on a foundational framework to move close toward a collective contract. Starbucks also agreed to give workers at unionized cafes pay raises awarded to nonunionized cafes in May 2022—a move the union referred to as “huge” in a statement released on X this week.
“Overall, we believe Starbucks has approached the issues raised by the SOC, along with the broader employee satisfaction issue, with a reasonable degree of humility and responsiveness, along with a clear determination to improve,” the Glass Lewis report says.
ISS also highlights that Starbucks has navigated a series of macroeconomic challenges that may have weighed on performance more than the labor disputes.
ISS and Glass Lewis hold significant sway over how institutional shareholders vote. Last year, both firms recommended shareholders vote in favor of a proposal requesting an independent worker rights assessment in response to union pressure. The vote passed, and by December, the board had released the report, which found that while the company didn’t have an “antiunion playbook,” it was unprepared for the unionization push, resulting in negative consequences for the company.
On Thursday, after ISS issued the statement, the SOC said it recognized last week’s move as a meaningful step in breaking the yearslong stalemate between the union and the company, but noted that the board should be “held accountable for endorsing a response to unionization that destroyed shareholder value.”
“The fact remains that the actions the Company has taken are reactive,” the SOC said Thursday evening. “For this reason, we feel it is still important to add independent oversight to the Starbucks Board in order to ensure the Company follows through on its commitments.”
The SOC didn’t immediately respond to Barron’s request for comment on the Glass Lewis report, released Friday. In a statement, Starbucks said it was pleased that ISS and Glass Lewis recognized the strength of its board and supported the election of all its directors.
“Starbucks partners (employees) have always been the heart of its business and core to its success,” the company said. “The company is committed to building a bridge to a better future for all partners.”
Write to Sabrina Escobar at [email protected]
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