8-KLeadership ChangesExhibits & Filings

STARBUCKS CORP 8-K Report, Executive Changes (Sep 2, 2022)

Filed September 2, 2022For Securities:SBUX

Summary

Starbucks Corporation (SBUX) filed an 8-K on September 1, 2022, to announce the adoption of the Starbucks Executive Severance and Change in Control Plan (Severance and CIC Plan). This new plan, effective August 31, 2022, aims to align the company's executive compensation with market practices. It applies to U.S.-based executives at the executive vice president level and above and outlines specific benefits in cases of termination without cause or resignation for good reason, particularly around a change in control. The plan details severance packages that include cash payments based on a multiple of salary and target bonus, pro-rata annual bonuses, COBRA coverage continuation, and outplacement services. Equity awards also have provisions for accelerated vesting or extended exercisability depending on the termination circumstances. These benefits are contingent upon the executive signing a release of claims and adhering to restrictive covenants.

Key Highlights

  • 1Starbucks adopted a new Executive Severance and Change in Control Plan (Severance and CIC Plan) effective August 31, 2022.
  • 2The plan applies to U.S.-based executives at the Executive Vice President level and above.
  • 3In case of termination without cause, executives receive 1.5 times their base salary plus target bonus, pro-rata bonus, 18 months of COBRA, and outplacement services.
  • 4Equity awards will be pro-rated for vesting/performance and vested options remain exercisable for 36 months upon termination without cause.
  • 5Under a change in control scenario (termination without cause or resignation for good reason within 24 months of or 89 days prior to a change in control), executives receive 2 times their base salary plus target bonus.
  • 6In a change in control, unvested equity awards vest immediately (at target for performance-based awards), and vested options remain exercisable for 36 months.
  • 7All benefits are subject to the executive executing a release of claims and complying with restrictive covenants (non-solicitation, non-competition, non-disparagement).

Frequently Asked Questions

The primary purpose of the new plan is to align Starbucks' executive compensation programs more closely with current market practices, providing defined benefits to senior executives under specific termination scenarios, including a change in control.

Eligibility is limited to U.S.-based executives at the Executive Vice President level and above who have been designated by the Compensation Committee and have signed a participation agreement.

In a termination without cause, executives receive 1.5 times their salary and bonus. In contrast, during a change in control event (or within a period around it), if employment is terminated without cause or the executive resigns for good reason, they receive 2 times their salary and bonus. Equity awards also have more favorable accelerated vesting terms under a change in control scenario.

Yes, executives must execute and not revoke a release of claims in favor of Starbucks and must comply with specific restrictive covenants, including non-solicitation, non-competition, and non-disparagement clauses.