Feb 29, 2024 - Business

Proxy advisor ISS supports Starbucks board nominees in blow to union group

Illustration of the Starbucks siren holding up a fist.

Illustration: Aïda Amer/Axios

Institutional Shareholder Services voted in favor of all of Starbucks' board nominees, dealing a blow to the union group waging a proxy fight against the coffee chain.

Why it matters: ISS holds heavy sway over institutional shareholders and the proxy advisory firm's decision puts Starbucks in a major advantage of winning all three seats.

Catch up quick: The Strategic Organizing Center (SOC), a coalition of labor unions that owns owns 162 Starbucks shares, nominated three candidates to the company's board.

What they're saying: "Historical [total shareholder return] tells the story of a company that is accustomed to successfully navigating challenges, but is now contending with formidable headwinds that have created a divergence between long- and short-term performance," ISS says in its report, claiming the union group's argument relies on correlation.

  • "By contrast, the board has provided shareholders with a more thorough and concrete assessment of the factors that have led to underperformance, which do not include unionization matters."
  • "Starbucks is pleased that ISS recognizes the strength of the Starbucks Board and supports the election of all its directors," the company said in a statement.

The other side: The union group claims Starbucks' missteps with labor efforts and other issues led to underperformance.

  • The SOC didn't agree with ISS' analysis, maintaining Starbucks should be "held accountable for endorsing a response to unionization that destroyed shareholder value."
  • The SOC also said it believed that Starbucks' agreement to meet with Workers United at the bargaining table represented "meaningful progress," but it was reactive.
  • "For this reason, we feel it is still important to add independent oversight to the Starbucks Board in order to ensure the Company follows through on its commitments."

The latest: Starbucks and Workers United agreed to begin discussions in hopes of reaching collective bargaining agreements, the coffee giant and union said Tuesday.

What's next: ISS' backing means a settlement before Starbucks' annual general meeting on March 13 is unlikely.

  • The March 13 vote will reveal just how much support each side garnered during the campaign and will set a tone for future union-led proxy fights

Editor's note: This story has been corrected to note Starbucks' annual general meeting is on March 13, not March 7, and to add a statement from Starbucks and SOC.

Go deeper