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Starbucks gets a key endorsement in its board fight with unions

Two key proxy advisory firms have endorsed the coffee chain giant's board nominees over those nominated by a union-backed group.
Starbucks HQ
Starbucks received a key endorsement from a proxy advisory firm. | Photo by Jonathan Maze.

A pair of proxy advisory firms recommended that shareholders back Starbucks candidates for the company’s board, handing the coffee shop chain an important victory in its battle against a union-backed group pushing its own slate of directors.

Institutional Shareholder Services (ISS) recommended that shareholders vote for all 11 director candidates Starbucks recommended for the board. The recommendation is considered important because many large, institutional shareholders rely on the firm’s recommendation for their proxy votes.

Glass Lewis, another such firm, also recommended shareholders vote in favor of Starbucks' nominees for director.

Starbucks “has a history of demonstrating responsiveness to shareholders, and has continued to do so despite recent headwinds,” ISS said in its recommendation, according to Starbucks. “All-in, there is no reason to believe that the board is unwilling or unable to approach matters, including unionization, so as to support the best interests of shareholders.”

The Strategic Organizing Center (SOC), backed by major union organizations including the Service Employees International Union, said it disagreed with ISS’s view that board change is not needed.

“As ISS points out, Starbucks ‘mishandled’ its response to its employees’ campaign for unionization and, as a result, materially damaged the reputation the company previously enjoyed as a progressive employer,” SOC said in a statement.

SOC has nominated three for seats on the Starbucks board: Former senior White House official Maria Echaveste; corporate governance and policy expert Joshua Gotbaum and former National Labor Relations Board Chair Wilma Liebman.

The proxy vote is largely over Starbucks’ response to its unionization campaign. SOC argues that the company’s response to unionization has damaged the brand, particularly with younger consumers, and that this requires better oversight at the board level.

But the company has argued that it has made numerous investments in employee pay and benefits over the past two years and has a strategy in place to improve operations inside stores.

And Starbucks and the group unionizing many of its U.S. stores, Starbucks Workers United, have agreed to develop a framework for collective bargaining.

The company has made numerous changes over the past year under new CEO Laxman Narasimhan. Five of the company’s 10 independent board members were seated since then.

UPDATE: This story has been updated to add the Glass Lewis recommendation.

 

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