Summary
Starbucks Corporation (SBUX) filed an 8-K on December 9, 2019, reporting on long-term cash performance-based awards granted to its CEO, Kevin R. Johnson, and COO, Rosalind G. Brewer. These awards are designed to incentivize leadership retention and align executive compensation with exceptional shareholder returns over a three-year performance period, specifically tied to relative Total Shareholder Return (TSR) against the S&P 500 index. The board highlighted Johnson's transformative leadership and the "Growth at Scale" agenda as key drivers for these grants.
Key Highlights
- 1CEO Kevin R. Johnson and COO Rosalind G. Brewer received one-time, long-term cash performance-based awards.
- 2Awards are tied to relative Total Shareholder Return (TSR) against the S&P 500 index over a three-year performance period (October 1, 2019 - September 30, 2022).
- 3The CEO's award has a target value of $25 million, and the COO's award has a target value of $5 million.
- 4Payment amounts can range from zero to 200% of the target value, based on achieving specific TSR percentiles relative to the S&P 500.
- 5Awards are intended to retain key leadership and support the company's "Growth at Scale" agenda.
- 6Specific payout thresholds are set: 100% of target at the 65th percentile, zero at the 40th percentile, and 200% at the 80th percentile, with linear interpolation in between.
Frequently Asked Questions
The primary purpose is to retain key leadership, specifically CEO Kevin R. Johnson and COO Rosalind G. Brewer, for at least the next three years by offering significant performance-based incentives tied to shareholder returns, thereby supporting long-term leadership continuity and the company's strategic agenda.
The payout is determined by Starbucks' Total Shareholder Return (TSR) performance relative to the companies in the S&P 500 index over a three-year period. Specific performance levels trigger payouts: 100% of target at the 65th percentile, zero payout at the 40th percentile, and 200% of target at the 80th percentile, with payouts interpolated between these points.
The CEO's award has a target value of $25 million, with the potential to receive between $0 and $50 million. The COO's award has a target value of $5 million, with the potential to receive between $0 and $10 million, depending on the company's relative TSR performance.
Yes, the awards include provisions for pro rata payments at target in case of death or disability. In the event of involuntary termination or voluntary termination for good reason, payments will be accelerated and based on actual performance through the termination date. If this occurs in connection with a change of control, payments will also be accelerated and based on actual performance.