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A Sign of the Times: Starbucks Drops ‘DEI,’ Favors ‘Talent’
March 26, 2024
Shareholders overwhelmingly approved Starbucks’ fiscal year 2024 compensation plan in a say-on-pay vote that received 90% yes votes. The 2024 pay program removes explicit diversity and sustainability goals from bonus considerations for top leaders and modifies the equity incentive plan around issues of talent and sustainability.
Last year, 7.5% of Starbucks executive bonus consideration was tied to diversity, while 7.5% was based on sustainability goals. In the proposed outline for 2024, 75% of executive bonus consideration would be tied to overall financial performance and 25% would be based on individual performance. The company’s Compensation Committee will assess individual performance using a scorecard of various goals, including a new “belonging” goal to align with their stated belief that “creating a culture of belonging is critical to drive collaboration.”
Starbucks also replaced the word “representation” with “talent” in its performance-related restricted stock unit (PRSU) grant program “to include a broader spectrum of the workforce [measures] and provide for different representation improvement targets,” according to company filings. Additionally, Starbucks moved sustainability goals to its PRSU plan to reflect its commitment to these multi-year objectives.
Farient ESG analyst Brian Bueno, a co-author of the just-released 2024 Global Trends in Stakeholder Incentives: What’s Next? notes that while Starbucks is giving less prominence to DEI in its short-term incentive plan, the company is elevating “talent” and “sustainability” measures in its long-term incentives (LTIs), a trend recognized in the report.
“We’re seeing more cases of all the trends we reported,” Bueno says. “Terminology changes are a possible reaction to anti-ESG backlash and possible legal challenges to DEI measures in the aftermath of the Supreme Court decision, and the growing using of ESG/sustainability measures in the LTI. It’s surely a sign of what’s to come this proxy season.”
Starbucks STIP 2023
Starbucks STIP 2024
Starbucks LTIP 2024-2026
Source: Starbucks 2024 Proxy Statement
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