8-K/ALeadership Changes

STARBUCKS CORP 8-K/A Report, Executive Changes (Mar 23, 2017)

Filed March 23, 2017For Securities:SBUX

Summary

This 8-K/A filing from Starbucks Corporation (SBUX) amends a prior report to provide details on the compensation packages for Kevin R. Johnson and Howard Schultz in their upcoming leadership roles, effective April 3, 2017. Mr. Johnson, transitioning to President and CEO, will see an increased base salary and bonus target, along with a promotional equity award. Mr. Schultz, moving to Executive Chairman, will have his base salary significantly reduced to $1 but will retain his prior bonus target and receive an equity award. These compensation adjustments are important for investors to understand as they reflect the company's strategy and incentives for its top leadership during this key leadership transition. The equity awards, structured with stock options and performance-based restricted stock units (PRSUs), are designed to align executive interests with long-term company performance, with vesting contingent on continued employment and achievement of specific fiscal 2018 financial goals.

Key Highlights

  • 1Amendment to a previous 8-K filing providing updated compensation details for leadership transition.
  • 2Kevin R. Johnson's base salary increases to $1,300,000 as he becomes President and CEO.
  • 3Howard Schultz's base salary is reduced to $1 as he moves to Executive Chairman.
  • 4Mr. Johnson's Executive Management Bonus Plan target increases to 200% of base salary.
  • 5Mr. Schultz retains his previous bonus target of $3,750,000.
  • 6Both executives will receive equity awards (stock options and PRSUs) granted on April 17, 2017.
  • 7Performance-based restricted stock units for both executives are tied to fiscal 2018 EPS and ROIC goals.

Frequently Asked Questions

This filing amends a prior 8-K to disclose the specific compensation arrangements for Kevin R. Johnson and Howard Schultz in their new roles as President & CEO and Executive Chairman, respectively, effective April 3, 2017.

As President & CEO, Mr. Johnson's annualized base salary will increase to $1,300,000. His target bonus under the Executive Management Bonus Plan will be 200% of his base salary, and he will receive a promotional equity award of $800,000.

As Executive Chairman, Mr. Schultz's annualized base salary will be reduced to $1. However, his bonus target under the Executive Management Bonus Plan remains $3,750,000, and he will receive an equity award of $750,000.

The equity awards, granted on April 17, 2017, will consist of approximately 40% stock options and 60% performance-based restricted stock units (PRSUs). Stock options vest over four years, while PRSU vesting is contingent on achieving fiscal 2018 earnings per share and return on invested capital targets.