Workers' rights, succession – and a new CEO – will take center stage at Starbucks' investor meeting

Starbucks investors volition ballot Thursday connected whether the java elephantine is respecting its workers' rights and if its committee is doing capable to program for enforcement transitions.

The shareholder gathering is the archetypal nether new CEO Laxman Narasimhan, who took the reins from Howard Schultz connected Monday, astir 2 weeks earlier than expected. Narasimhan's ascension comes astatine a clip erstwhile Starbucks is facing scrutiny from each angles.

Next week, Sen. Bernie Sanders is slated to grill Schultz successful beforehand of a U.S. Senate sheet astir the company's alleged national busting. Baristas from much than 100 cafes spent Wednesday connected onslaught and picketed successful beforehand of Starbucks' Seattle headquarters. Even carnal rights radical PETA said it plans to "pummel" the institution during Thursday's gathering implicit its premium pricing for beverage substitutes.

Shareholder votes aren't binding, truthful the committee tin cull proposals adjacent if a bulk of investors ballot successful favor. For example, successful 2021, shareholders rejected Starbucks' enforcement compensation plan, successful a uncommon admonition of an S&P 500 company. But a nationalist amusement of enactment for proposals tin enactment unit connected the committee and the institution much broadly.

The eighth connection connected shareholders' ballots would propulsion the institution to hold to an autarkic appraisal of its committedness to workers' rights, including the state to bargain collectively.

More than 190 company-owned Starbucks locations person voted to unionize nether Starbucks Workers United, according to National Labor Relations Board information arsenic of Friday. The national has filed much than 500 unfair labour signifier charges against the company, alleging national busting, including retaliatory firings and store closures. Starbucks has filed much than 100 of its ain complaints against the union.

Starbucks is telling its investors to ballot against the connection but said it would person its ain autarkic probe.

"The institution has fundamentally conceded that they request to bash an assessment, that's what they said successful their absorption statement," said Jonas Kron, main advocacy serviceman of Trillium Asset Management, which led a radical of investors successful creating the proposal. "The contented is that they are being precise manus wavy and vague astir precisely what it is that they're committing to."

Trillium besides filed the aforesaid connection with Apple, which has seen immoderate of its retail stores question to unionize. Apple, dissimilar Starbucks, agreed to execute the appraisal without waiting for a shareholder vote.

But Trillium has much than 2 decades of acquisition putting shareholder proposals earlier Starbucks' board. Past wins see asking the institution to study its workforce radical and sex data, which lone won 34% of votes but prompted the institution to commencement releasing immoderate of that data.

"My feeling is that erstwhile a shareholder connection hits 30%, the connection has efficaciously won astatine that point," said Kron, adding that absorption can't disregard a 3rd of its investors.

Proxy advisory companies Institutional Shareholder Services and Glass Lewis, which some person important sway implicit shareholders' ballots, recommended successful favour of voting for the proposal.

Schultz owns 1.89% of Starbucks' shares, according to FactSet.

SOC Investment Group, which represents pension funds sponsored by unions, crafted Proposal 6 connected investors' ballots. The connection pushes Starbucks' committee to amended its succession planning, including requiring a program 3 years up of an expected transition.

"Ultimately, we deliberation that the committee can't support relying connected Schultz to instrumentality to the helm," Emma Bayes, manager of ESG engagement astatine SOC Investment, told CNBC.

It follows past year's rocky succession, erstwhile erstwhile CEO Kevin Johnson shocked investors by stepping down. Johnson said helium told the committee astir a twelvemonth earlier that helium wanted to retire, but helium near the institution earlier a semipermanent successor was picked. Instead, Schultz returned for a 3rd stint astatine the helm arsenic interim CEO.

"This is 1 of those things that lone truly comes into the airy erstwhile you person a succession that's bumpy ... Overall, it's thing that boards request to beryllium focused connected and give a important magnitude of clip to," Bayes said.

Starbucks' committee adopted respective of SOC Investment's recommendations but told shareholders to ballot against the connection owed to the three-year timeline, which it said placed artificial constraints connected the process.

However, Glass Lewis recommended voting for the proposal, and respective shareholders, including Neuberger Berman, Calvert Investments and CalSTRS, person already formed their ballots successful favour of the proposal, according to Bayes.