8-KLeadership Changes

STARBUCKS CORP 8-K Report, Executive Changes (Jul 2, 2025)

Filed July 2, 2025For Securities:SBUX

Summary

Starbucks Corporation (SBUX) announced on July 1, 2025, through an 8-K filing, a new equity grant program for its named executive officers. This initiative, termed "Back to Starbucks" grants, involves performance-based restricted stock units (PRSUs) designed to incentivize senior leadership to execute the company's turnaround strategy. The PRSUs are entirely performance-based and directly linked to key objectives within the "Back to Starbucks" plan, aiming to align executive compensation with shareholder value creation and operational improvements. The grants have a target value of $6 million per executive and are contingent upon achieving specific performance milestones, including meaningful operating expense reductions. Payouts can range up to 200% of the target value, but are subject to a potential downward adjustment based on relative total shareholder return compared to the S&P 500. Vesting is tied to fiscal year 2027 and requires continued service through the settlement date, underscoring a commitment to long-term execution of the turnaround plan.

Key Highlights

  • 1Starbucks has approved "Back to Starbucks" performance-based restricted stock unit (PRSU) grants for its named executive officers.
  • 2The PRSU grants are 100% performance-based, with targets directly aligned with the "Back to Starbucks" strategic initiatives.
  • 3The primary objective is to motivate and retain senior leaders to drive the company's turnaround plan, including significant operating expense reductions.
  • 4Each grant has a target value of $6,000,000.
  • 5Vesting is set for after fiscal year 2027, contingent on achieving pre-determined goals, notably a threshold goal for operating expense reduction.
  • 6Payouts can reach up to 200% of the target value based on success in key areas like Green Apron Service, coffeehouse uplifts, new food/beverage platforms, and a reimagined Rewards program.
  • 7Payouts are subject to a downward adjustment if relative total shareholder return does not meet or exceed the 50th percentile of the S&P 500 over the performance period.

Frequently Asked Questions

The primary purpose is to incentivize and retain Starbucks' named executive officers by directly tying a significant portion of their compensation to the successful execution of the company's "Back to Starbucks" turnaround strategy, which includes achieving key operational and financial performance targets.

The PRSUs are eligible to vest following Starbucks' fiscal year 2027. Vesting is contingent on the achievement of specific performance goals, most importantly a threshold goal related to operating expense reduction. Executives must also remain in service through the settlement date of the PRSUs.

The PRSUs have a target value of $6,000,000 per executive. Depending on the achievement of specific performance goals related to operating expense reduction, the Green Apron Service program, coffeehouse improvements, new product platforms, and the Starbucks Rewards program, payouts can range up to 200% of the target value. However, this payout is subject to a potential downward adjustment if Starbucks' relative total shareholder return compared to the S&P 500 falls below the 50th percentile.

The grants are designed to align executive interests with shareholder value creation by making a substantial portion of compensation dependent on the successful execution of the "Back to Starbucks" plan. Key performance indicators include operating expense reduction and initiatives aimed at improving the in-store experience and customer loyalty, which are expected to drive future profitability and shareholder returns.