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This will be one of the most hotly contested proxy battles in 2024.

Strategic Organizing Center labor group provokes proxy battle with Starbucks board

The group is a coalition of labor unions, one of which holds a small stake in the Seattle-based coffee chain, and aims to address Starbucks’ union clashes

Starbucks might be facing a major proxy battle in 2024, as the Strategic Organizing Center — a coalition of labor unions, including  the Service Employees International Union, which has a small stake in the Seattle-based coffee chain – seeks more representation on the Starbucks executive board, The Wall Street Journal has learned.

The Strategic Organizing Center wants to address the company’s treatment of its employees, including Starbucks’ clashes with its growing union, and has nominated three director candidates for the board. The SOC has previously submitted executive board challenges to other companies, including Uber and Apple.

The Strategic Organizing Center argues that Starbucks’ alleged union busting and clashes with Workers United have left it vulnerable to “legal, financial and regulatory risks” and has also damaged the good will (and potential shareholder value) of the brand.

“For more than two years, Starbucks has gone to historic lengths to counter its employees’ campaign to have their voices heard,” the SOC said in a statement. “This has not only cost untold millions in legal fees and other expenditures, but the constant media, policymaker and regulatory scrutiny have caused potentially irreversible damage to the value of the company’s previously enviable brand…. The board’s current approach likely jeopardizes its ability to fulfill its fiduciary duties to investors and has resulted in arguably one of the most glaring and destructive examples of human capital mismanagement corporate America has seen.”

Starbucks has confirmed that the company has received a notice of nomination for three director candidates by the Strategic Organizing Center. According to the Wall Street Journal, the candidates are Maria Echaveste, an attorney and former senior White House official in the Clinton administration; Joshua Gotbaum, an economic policy expert; and Wilma Liebman, the former chair of the National Labor Relations Board under President Obama.

“The Starbucks board and executive leadership team regularly engage with all stakeholders, and we are committed to constructive dialogue that furthers our collective goal of creating long-term value for all stakeholders,” Starbucks said in a statement. “Today, Starbucks has a diverse, engaged, and independent Board with a balanced mix of experience, skills, and perspectives. The Starbucks board is made up of eight highly qualified directors, four of whom are new in the past year and seven of whom are independent. These individuals bring extensive experience across areas critical to Starbucks business including human capital management, international operations and distribution, corporate social responsibility, and capital allocation.”

Earlier this week, Starbucks announced its intent to create a new environmental, partner and community impact board committee, which would assist the Starbucks board as it responds to shifting standards, and also hold the board accountable for adherence to these standards. It is unclear whether this committee was created in response to the proxy challenge.

This is not the first time in recent years that a shareholder has challenged Starbucks’ union response. In March 2022, an investor group led by Trillium Access Management and representing more than $3.4 trillion in assets wrote a letter to Starbucks urging the company to adopt a policy of neutrality instead of fighting against employees trying to gain representation.

Starbucks has been clashing with the Workers United union since the first store voted to unionize in Dec. 2021. Since then, around 360 of the company’s 9,380 U.S. cafes have joined the union – an affiliate of the Service Employees International Union.

Contact Joanna at [email protected]

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