The annual proxy for this coffee company and coffeehouse chain had the following proposals:
- Proforma votes on directors, appointment of auditors, and “say-on-pay” advisory vote
- Shareholder proposals on “True Diversity” and on sustainable packaging
Magni voted as follows:
- Magni voted for all proforma proposals.
-Directors – The board has a majority of independent directors and some have CEO/CFO experience with other companies. The compensation of directors is disclosed with a meaningful portion in equity where the equity has restrictions to align director incentives with long-term value creation. The compensation levels are set using a benchmarking process.
-Auditors – There appear to be no controversies with the financial statements of the company.
-“Say-on-pay” – The shareholder engagement and peer group disclosures indicate good governance practices in executive compensation.
- Magni voted against both shareholder proposals.
-“True Diversity” – The proposal seeks to force political diversity as a criterion for board membership. However, the role of a board is to oversee the company for the benefit of shareholders. The board can make the decision as to whether the company is apolitical or political, and if political, what (if any) leaning it may have. Starbucks has been very successful, so whatever political approach Starbucks has used, the approach does not appear to have hurt the company, hence Magni defers to the board.
-Report on Sustainable Packaging – Sustainable packaging is an important issue. The proposal is not to vote on whether the issue is important; it is whether Starbucks is deficient in its sustainable programs. In recommending rejection of the proposal, Starbucks listed its many programs and innovations. It is readily apparent that the company considers sustainability important, makes significant investments in the area, and continually seeks to improve its sustainability. As such, Magni defers to the board.