Starbucks CEO Pay and 2021 Proxy Highlights Ahead of Shareholder Meeting

This is an English adaptation of a FoodBud historical article originally published on February 3, 2022.

Starbucks said it would hold its shareholder meeting on March 10, with investors voting on nominated board members.

In a shareholder letter, CEO Kevin Johnson said Starbucks’ market capitalization had more than doubled over the prior four-plus years. He also said the global coffee market would exceed $400 billion within the next three years, implying an 8%-9% compound annual growth rate.

Fiscal 2021 Operating Highlights

Starbucks’ disclosure highlighted fiscal 2021 performance for the period from September 28, 2020 to October 3, 2021.

Store Investment and Technology

In North America, more than 500 stores were repositioned. Starbucks also invested in Mastrena II coffee machines and Deep Brew, its AI system developed with Microsoft Azure, to improve store operating efficiency.

Deep Brew was designed to create smarter customer experiences. Using reinforcement-learning models, it could recommend items based on customer taste, popular choices at the local Starbucks, and even current weather conditions.

Workforce Measures

In the U.S., Starbucks set store employee wages at a minimum of $15 per hour. In China, it provided employee and parent medical insurance, rental assistance, and more job opportunities for young people in remote areas.

Employees such as baristas hired before September 14, 2020 received at least a 10% raise. Employees with more than three years of tenure received at least an 11% increase, and all base pay rose by at least 5%, aimed at attracting and retaining staff.

Employees hired before July 4, 2021 received at least a 5% raise. Those with two or more years of service received a 5% increase, while employees with five or more years of service could receive a 10% increase. That policy took effect in late January 2022.

Starbucks also said that by summer 2022, average hourly wages for all U.S. store employees would approach $17, with a minimum of $15.

Sales Recovery

Global comparable same-store sales revenue grew 20%, while average ticket increased 10%.

In the U.S., store sales revenue grew 7% for the second consecutive year. In China, store sales revenue grew 17%.

Loyalty Scale

Starbucks had 25 million 90-day active members in the U.S. and nearly 18 million in China.

Beverage Mix

In the final quarter of fiscal 2021, cold beverages accounted for 75% of U.S. sales. For comparison, Dutch Bros, the North American coffee chain that listed in 2021, reported an 82% cold beverage mix.

Supplier and Sustainability Spending

Since 2000, Starbucks had directly invested more than $8 billion with Tier 1 suppliers. In fiscal 2021, it spent nearly $800 million with Tier 1 suppliers, representing 8.9% of total U.S. and Canada spending.

Globally, Starbucks purchased enough renewable energy to power all of its stores in the U.S., Canada, and Europe. By fiscal 2022, it expected renewable energy procurement to cover 72% of global stores. Restrictions in China and Japan meant Starbucks could not yet reach its goal of using renewable energy for 100% of stores.

In fiscal 2021, Starbucks expanded renewable-energy innovation into the communities around its operated stores. It committed to work with Generate Capital and invest nearly $97 million in solar projects in New York, providing solar power to more than 24,000 households, small businesses, nonprofits, churches, universities, and Starbucks stores.

Starbucks’ Carson Valley roasting plant and distribution center also completed installation of solar panels, expected to supply one-third of the facility’s annual electricity.

Greener Stores

In 2021, Starbucks opened its first Greener Store in China. It planned to build or convert 10,000 environmentally friendly “green stores” globally by 2025.

Board Nominees

Starbucks’ board nominees included executives from Domino’s, Nike, Apple, Ariel Investments, and Starbucks itself. The 11 nominees included Domino’s Pizza’s CEO, Nike’s COO, Apple’s managing director for Greater China, Ariel Investments’ CEO, and Starbucks’ current CEO.

Mellody Hobson had served as Starbucks board chair since March 17, 2021, after previously serving as vice chair from June 2018 to March 2021. Hobson is CEO of Ariel Investments. In fiscal 2021, she was the highest-paid non-employee board member, with compensation of $480,000.

Executive Compensation

Within Starbucks’ executive team, former CFO Grismer retired in February 2021, and former COO Brewer resigned in February 2021.

For fiscal 2021, Starbucks’ total revenue grew 21% year over year to $29.1 billion, and its share price rose 31%.

CEO Kevin Johnson received $20.425 million in fiscal 2021 compensation, about RMB 130 million. Newly appointed CFO Rachel Ruggeri received $3.329 million, about RMB 21.179 million. COO John Culver received $9.367 million, about RMB 59.586 million.

Note: forward targets, market-size estimates, renewable-energy plans, green-store targets, IPO references, share-price performance, and compensation figures are historical as of the 2022 article.