Strategic Organizing Center Issues Statement on Starbucks
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Insights
The recent developments between Starbucks and Workers United signify a strategic pivot in Starbucks' approach to labor relations. This shift is poised to impact the company's brand perception positively, particularly among socially conscious consumers and investors who prioritize corporate responsibility. By reaching an agreement that includes collective bargaining and the provision of previously withheld benefits, Starbucks is likely to experience enhanced employee morale and productivity which can translate into improved customer service—a critical factor in the highly competitive food and beverage industry.
Furthermore, the establishment of the Environmental, Partner and Community Impact Board Committee suggests a strengthening of corporate governance. This move not only aligns with broader market trends towards environmental and social governance (ESG) but also provides a framework for Starbucks to more effectively manage and report on issues that are increasingly important to investors. Enhanced ESG practices could lead to a more favorable risk profile and potentially lower cost of capital over time, benefiting long-term shareholder value.
From a financial perspective, the withdrawal of the SOC's director nominations indicates reduced activist shareholder pressure on Starbucks' board, which may result in a more stable governance environment. This stability is often viewed positively by the market, as it suggests a unified front in corporate strategy and decision-making. Additionally, the resolution of litigation and the establishment of a fair process for workers to organize may reduce legal and reputational risks, potentially averting costs associated with prolonged disputes.
The commitment to engage with employees and improve labor relations is expected to mitigate risks of operational disruptions due to strikes or high employee turnover. Over the long term, this can lead to cost savings and a more reliable operational performance. However, investors will be closely monitoring the implementation of these commitments to ensure that they translate into tangible benefits for the company's financial health and stock performance.
The agreement between Starbucks and Workers United marks a significant milestone in labor relations, particularly in the retail and service sectors where unionization efforts have historically faced resistance. By proactively engaging with union representatives and offering benefits such as credit card tipping, Starbucks is setting a precedent that may influence labor practices across the industry.
The potential long-term benefits of improved labor relations include a more motivated workforce and the attraction and retention of talent, which are essential components of a successful service-oriented business. However, there is also the potential for increased labor costs due to collective bargaining agreements, which could impact profit margins if not managed effectively. The challenge for Starbucks will be to balance the interests of employees and shareholders while maintaining competitive pricing and operational efficiency.
Believes agreement on path forward reached by Starbucks and Workers United represents meaningful progress that will benefit all stakeholders
Withdrawing director nominees to allow the Company to focus on upholding its new commitments to workers and enhancing value for shareholders
The SOC launched our campaign for change at Starbucks this past November because we believed the Company’s response to its employees’ attempts to unionize was misguided. In our view, Starbucks’ strategy – overseen by the Board of Directors (the “Board”) – had materially damaged the value of the Company’s brand and negatively impacted its shareholders, partners and customers.
Last Tuesday, Starbucks and Workers United announced that the two sides had agreed to work together on a path forward to reach collective bargaining agreements for represented stores and partners, the resolution of litigation, and a fair process for workers to organize. Starbucks also took the significant step of providing employees represented by Workers United with the May 2022 benefits, including credit card tipping. As was widely noted, this agreement represents a potentially ‘huge shift’ in Starbucks’ labor relations strategy and a ‘major step forward for all involved.1,2
Since the announcements, we have had meaningful dialogue with a number of other shareholders. Based on these discussions, we believe that by and large shareholders are optimistic the Company has committed to these changes in good faith and intends to begin to repair its relationship with its workers, which will ultimately enhance performance and shareholder value. We also believe Starbucks’ establishment of its Environmental, Partner and Community Impact Board Committee represents an important governance reform, one which we hope will increase board oversight and performance on Starbucks’ partner-related issues.
While we continue to believe that our three exceptionally qualified nominees – Maria Echaveste, Hon. Wilma Liebman, and Hon. Josh Gotbaum – would be additive to the Starbucks Board, we feel that now is the time to acknowledge the progress that has been made and to allow the Company and its workers to focus on moving forward. As such, we are withdrawing our director nominations.
We think it’s imperative that shareholders continue to monitor the Board’s performance and Starbucks’ approach to labor relations issues in the coming months – and we plan to continue to hold the Company accountable going forward.
We would like to thank our nominees, the shareholders we engaged with, and everyone involved with our campaign. We are truly hopeful that the commitments made and steps taken last week will result in Starbucks returning to the right path, and the Company being able to fulfill its vast potential for all its stakeholders.
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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 ABOUT THE BLUE PROXY CARD
Blue proxy cards that have been properly signed and returned to the SOC or its agents will be voted as directed, except that any votes for the SOC’s nominees on such cards will be disregarded and will not be voted at the Annual Meeting. Relatedly, any votes marked for the Company’s nominees on the blue proxy card will be voted as directed at the Annual Meeting.
1 The New York Times: Starbucks and Union Agree to Work Out Framework for Contract Talks, By Noam Scheiber (Feb. 27, 2024).
2 Institutional Shareholder Services Inc. report issued on Feb. 29, 2024.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240305747646/en/
Investor Contact
Okapi Partners
Bruce Goldfarb / Pat McHugh, (877) 285-5990
info@okapipartners.com
Media Contacts
Longacre Square Partners
soc-sbux@longacresquare.com
Source: The Strategic Organizing Center
FAQ
What agreement was reached between Starbucks and Workers United?
Why did the SOC launch a campaign for change at Starbucks?
What significant step did Starbucks take for employees represented by Workers United?
What governance reform did Starbucks establish?
Why did the SOC decide to withdraw its director nominations?
