Updated Tue, March 5, 2024
By Svea Herbst-Bayliss
(Reuters) - A coalition of labor unions is ending its boardroom fight at Starbucks after the coffee chain last week agreed to work toward reaching labor agreements, two sources familiar with the matter told Reuters.
The Strategic Organizing Center (SOC), a coalition of North American labor unions, is withdrawing its three director candidates to the coffee chain's 11-member board one week before Starbucks investors were slated to elect directors to oversee corporate strategy at the company's March 13 annual meeting, the sources said, asking not to be named because the discussions are private.
Many large investors told the coalition, which includes the parent of Workers United which represents Starbucks workers, they are optimistic Starbucks is committed to changes and plans to repair its relationship with employees, the sources said.
"Investor concern with the board and management response to ongoing unionization efforts at Starbucks has been loud and clear, but last week's joint announcement from the company and Workers United of a settlement framework was welcome news that we hope means a fundamental change in direction," New York City Comptroller Brad Lander told Reuters.
The fight was closely watched on Wall Street because it marked the first time a labor union used tools traditionally employed by hedge funds to push for board seats at a corporation.
The union coalition argued Starbucks' resistance to unionizing that began in 2021 tarnished the brand and hurt shareholders by weighing on the share price.
This year's other big board room fight is between Disney and two activist investors, Trian Fund Management and Blackwells Capital.
A Starbucks logo on a store in Los Angeles
The coalition hired lawyers, a proxy solicitor and a communications firm who usually work with large activist hedge funds on big campaigns. It nominated three candidates with White House, National Labor Relations Board and economic policy expertise and was pushing ahead in trying to convince shareholders, including big index funds, that Starbucks needs better oversight as it works to repair labor relations.
"SOC Investment Group led an effective campaign with qualified candidates committed to preserving fundamental workers' rights and increasing long-term value, and the announced suspension of a contentious proxy fight is a win for workers and shareholders," Lander added.
He said Starbucks' investors now expect the company "to continue investing in their workforce, and we will continue to be engaged." The city owned $157 million worth, or 1.64 million shares, of Starbucks at the end of December.
While only about 370 U.S. Starbucks stores are unionized, the movement, as well as the proxy fight launched in November, tapped into growing support for organized labor after unions last year won concessions for Hollywood writers and auto workers.
Now the coalition, which did not reach any concessions with the company, is pinning its hopes on last week's news that Starbucks and the union that represents its workers will work to create a "foundational framework" that could lead to collective bargaining agreements and the resolution of lawsuits.
Its decision follows last week's recommendations by the two main proxy advisory firms Institutional Shareholder Services (ISS) and Glass Lewis that urged Starbucks shareholders to back all 11 company directors, arguing the coalition had not sufficiently made its case to win seats.
But ISS wrote that the coalition, "has achieved at least a portion of what it ostensibly set out to accomplish."
(Reporting by Svea Herbst-Bayliss; Editing by Chris Reese)
Starbucks Activists Withdraw Candidates for Board Seats
Crystal Tse
Tue, March 5, 2024
(Bloomberg) -- An activist group seeking changes at Starbucks Corp. has withdrawn a slate of candidates for the coffee giant’s board, citing progress in improving labor relations at the company.
The Strategic Organizing Center, which advises union pension funds, said Tuesday it withdrew the three candidates it had proposed in a high-profile campaign to add employee representation to the board.
The board challenge by SOC followed a two-year standoff between Starbucks and the union representing about 400 US stores. Tensions eased last week after the two parties agreed to start talks about how to achieve collective-bargaining agreements and provide a fair process for organizing.
SOC said Tuesday that after discussions with other Starbucks investors, “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.”
Starbucks said in an emailed statement that it appreciates SOC’s decision. “Our board’s focus remains on driving long-term value for all stakeholders, including partners, shareholders, customers and farmers,” the company said.
Advisory firms Institutional Shareholder Services and Glass Lewis & Co. last week both counseled Starbucks investors to support the company’s board slate, with Glass Lewis saying Starbucks had “made positive strides to improve its partner relations.”
ISS said that while the company’s initial response to unionization efforts “translated into reputational damage,” SOC hadn’t established a “material link” between that and company underperformance.
ISS added, “It also has to be recognized that the dissident, despite owning only 162 shares, had every right to run this proxy contest, and has achieved at least a portion of what it ostensibly set out to accomplish.”
SOC in November put forward three proposed members of the Starbucks board, saying the company had gone to “historic lengths” to counter employees’ organizing efforts.
--With assistance from Daniela Sirtori-Cortina.
Bloomberg Businessweek
Crystal Tse
Tue, March 5, 2024
(Bloomberg) -- An activist group seeking changes at Starbucks Corp. has withdrawn a slate of candidates for the coffee giant’s board, citing progress in improving labor relations at the company.
The Strategic Organizing Center, which advises union pension funds, said Tuesday it withdrew the three candidates it had proposed in a high-profile campaign to add employee representation to the board.
The board challenge by SOC followed a two-year standoff between Starbucks and the union representing about 400 US stores. Tensions eased last week after the two parties agreed to start talks about how to achieve collective-bargaining agreements and provide a fair process for organizing.
SOC said Tuesday that after discussions with other Starbucks investors, “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.”
Starbucks said in an emailed statement that it appreciates SOC’s decision. “Our board’s focus remains on driving long-term value for all stakeholders, including partners, shareholders, customers and farmers,” the company said.
Advisory firms Institutional Shareholder Services and Glass Lewis & Co. last week both counseled Starbucks investors to support the company’s board slate, with Glass Lewis saying Starbucks had “made positive strides to improve its partner relations.”
ISS said that while the company’s initial response to unionization efforts “translated into reputational damage,” SOC hadn’t established a “material link” between that and company underperformance.
ISS added, “It also has to be recognized that the dissident, despite owning only 162 shares, had every right to run this proxy contest, and has achieved at least a portion of what it ostensibly set out to accomplish.”
SOC in November put forward three proposed members of the Starbucks board, saying the company had gone to “historic lengths” to counter employees’ organizing efforts.
--With assistance from Daniela Sirtori-Cortina.
Bloomberg Businessweek
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