In 2024, Starbucks appointed Brian Niccol combined CEO/Chair after six years with an independent Chair. We believe this concentrates too much oversight in one person and hinders the Board’s independent oversight on behalf of shareholders.

By having an independent Chair, Starbucks would rejoin a majority of its peers that have definitively split the two roles of CEO and Chair. According to SpencerStuart reporting, combined CEO/Chair roles have fallen sharply among S&P 500, from 52% in 2015 to 41% 2023, and independent Chairs have risen, from 29% to 39%.

Shareholders also have serious concerns regarding the Board’s oversight of governance issues, including Niccol’s pay package and perks. According to Reuters: “Starbucks’ incoming CEO could make well in excess of $100 million in his first year” and “will not be required to relocate from his home in California.” He’ll also be permitted to use Starbucks aircraft, at Starbucks’ expense, to commute to Seattle.

As background, in 2014 and 2015, shareholder proposals at Starbucks requesting an independent Chair policy each received approximately a third of the vote.

Much of Starbucks’ statements opposing them, however, centered on the contributions of then- CEO/Chair Howard Schultz. But with Mr. Schultz not serving in that capacity anymore, that’s no longer a factor.

Those opposition statements also centered on Starbucks having a Lead Independent Director (as it still does). But some serious concerns arise about that role.

First, unlike at major companies that select their lead directors annually, Starbucks selects theirs for extended two-year periods.

Second, the responsibilities seem to lack a key duty, as neither the Governance Guidelines nor proxy statements designate the role as the contact for shareholders wishing to engage the Board.

In fact, Institutional Shareholder Services (ISS) supported the 2014 and 2015 proposals on this topic, stating this in 2014: “One of the board’s primary responsibilities is to represent the interests of shareholders,” and yet, Starbucks “fails to disclose whether one of the [Lead Independent Director’s] duties includes that he will be available for consultation and direct communication with major shareholders.” (Glass Lewis also supported both proposals.)

The 2014 and 2015 proposals on this topic received a significant amount of support—especially considering they came while a long-serving CEO/Chair was leading the company and when most S&P 500 companies still combined the CEO and Chair roles. For the foregoing reasons, we believe majority support for Chair independence is now warranted.