Starbucks: Proxy Contest 2023

November 30th, 2023

Starbucks Corporation is set to become the latest company to face a proxy contest after a coalition of labour unions nominated directors for election to its board due to concerns over the firm’s approach to labour rights. 

The Strategic Organizing Center (SOC), a shareholder of Starbucks, has announced three directors for nomination to the coffee chain’s board at its upcoming Annual General Meeting (AGM): Maria Echaveste, Hon. Joshua Gotbaum and Wilma Liebman.  

SOC is a democratic coalition comprising three labour unions: the Service Employees International Union (SEIU), the Communications Workers of America (CWA), and the United Farm Workers of America (UFW), collectively representing 2.3 million workers. The nominations are being used as a method of ratcheting up its efforts to unionise Starbucks’ workers. 

The SOC stated: “For more than two years, Starbucks has gone to historic lengths to counter its employees’ campaign to have their voices heard. 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.” 

This is the first case of a proxy contest due to labour rights and one of the few proxy contests initiated since the Universal Proxy Card (UPC) was introduced in September 2022. The use of a proxy contest by SOC could suggest ESG or single-issue activists may use UPC as a means to further their campaigns and seek concessions. 

The UPC appears to have increased the influence shareholders have gained in shaping boards. Since UPC was adopted, proxy contests at Apartment Investment & Management Co, Pitney Bowes Inc, and Illumina Inc have all received an element of success through the election of at least one of their proposed directors, while proxy contests at Masimo Corp and Necessity Retail REIT Inc were successful with all dissident directors elected. 

As shown in the bar chart below, according to Minerva’s data the number of proxy contests has remained relatively stable over the last six years and the anticipated increase in proxy contests following the mandating of UPC has not materialised. However, there does appear to be an increase in the level success since the adoption of UPC. In 2023 four companies faced dissent director candidates and, in each case, at least one of the dissident candidates was elected to their respective boards - the highest rate of success since 2020.  

Number of Companies with a voted-on proxy contest and Number of companies with at least one successful candidate

Author: Daniel Kehoe