SBUX » Topics » Compensation of Directors

This excerpt taken from the SBUX DEF 14A filed Jan 22, 2010.
Compensation of Directors
 
Compensation Program for Non-Employee Directors
 
For fiscal 2009, the annual compensation program for non-employee directors provided for a total of $240,000 per year in compensation, composed of (i) a retainer of $120,000, which may be in the form of cash, stock options or a combination of both at the director’s election, and (ii) $120,000 in equity compensation in the form of stock options. The compensation program was approved by our board of directors in May 2007, on the recommendation of the Nominating Committee following its biennial non-employee director compensation review required by its charter and our Corporate Governance Principles and Practices. We pay at least 50% of non-employee director compensation in the form of stock options in order to align the interests of non-employee directors with shareholders. We do not pay chair or meeting fees as part of our non-employee director compensation program.
 
New non-employee directors first become eligible to receive the regular annual compensation in the first full fiscal year after they join the board of directors. In addition to the annual compensation program, upon first joining the board, non-employee directors are granted an initial stock option to acquire 30,000 shares of our common stock under the 2005 Non-Employee Director Sub-Plan to our 2005 Long-Term Equity Incentive Plan. The initial stock option grant vests in equal annual installments over a three-year period. Mr. Johnson and Ms. Sandberg were granted initial stock options in fiscal 2009. They are first eligible for the annual compensation in fiscal 2010.
 
Stock options have an exercise price equal to the closing market price of our common stock on the grant date. Pursuant to the 2005 Non-Employee Director Sub-Plan to our 2005 Long-Term Equity Incentive Plan, the number of options covered by each annual grant is determined by dividing the equity compensation amount for each director by the closing market price of our common stock on the grant date, multiplied by three. For example, for $120,000 of equity compensation and a closing market price of $15 per share on the grant date, the director would receive 24,000 stock options, which is the result of $120,000 divided by $15, or 8,000, multiplied by 3. Annual stock option grants vest one year after the date of grant. Stock options granted to non-employee directors generally cease vesting as of the date he or she no longer serves on the board of directors. However, unvested stock options will vest in full upon a non-employee director’s death or “retirement” (generally defined as leaving the board after attaining age 55 and at least six years of board service) or upon a change in control of Starbucks (described beginning on page 49). Five of the board’s nine current independent directors meet the retirement criteria.
 
In June 2009, the non-employee director compensation program was amended by our board of directors, on the recommendation of the Nominating Committee following its biennial non-employee director compensation review required by its charter and our Corporate Governance Principles and Practices. At the time the non-employee director compensation program was reviewed, the board believed that, in light of the economic decline, the


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downturn in the Company’s performance and the related impact on partner compensation, the non-employee director compensation program should be adjusted downward accordingly. As such, for fiscal 2010, the annual compensation program for non-employee directors was decreased to provide for a total of $220,000 per year in compensation, composed of (i) a retainer of $110,000, which may be in the form of cash, stock options or a combination of both at the director’s election, and (ii) $110,000 in equity compensation in the form of stock options. When the Nominating Committee considered and ultimately recommended the fiscal 2010 non-employee director compensation, the committee reviewed competitive market data prepared by Towers Perrin for the same comparator group used to benchmark executive compensation for fiscal 2009. The level of non-employee director total compensation approved by the Nominating Committee was between the 65th and 70th percentile among comparator group companies and the board believed that the level was appropriate to attract and retain top board candidates. The board also agreed to review non-employee director compensation again in fiscal 2010.
 
Mr. Schultz does not participate in the compensation program for non-employee directors, but rather is compensated as an executive officer, as described in the section “Executive Compensation” beginning on page 20.
 
On April 6, 2009, Mr. Lee was named as interim executive vice president, Partner Resources. For his services as interim executive vice president, Mr. Lee was compensated pursuant to a consulting agreement that provided for a consulting fee of $25,000 per month plus reimbursement of ordinary business expenses. Mr. Lee remained on our board of directors during this period and was thus also compensated pursuant to the non-employee director compensation program. Effective October 1, 2009, the consulting agreement was amended by the Compensation Committee to increase the monthly consulting fee from $25,000 to $50,000 and to provide a one-time lump sum payment of $150,000. In November 2009, Kalen Holmes joined Starbucks as executive vice president, Partner Resources. Mr. Lee will continue with the Company on an interim basis to assist Ms. Holmes and ensure a smooth transition.
 
Fiscal 2009 Compensation of Non-Employee Directors
 
The following table shows fiscal 2009 compensation for non-employee directors. The amounts shown under the “Options Awards” column below represent compensation recognized for financial statement reporting purposes for fiscal 2009 for all outstanding option awards (as described further in footnote 1 below). Because the amounts reflected in the Option Awards column also include amounts from awards granted in prior years, the amounts in the “Total” column below may exceed $240,000 annually.
 
This excerpt taken from the SBUX DEF 14A filed Jan 22, 2009.
Compensation of Directors
 
Compensation Program for Non-Employee Directors
 
For fiscal 2008, the annual compensation program for non-employee directors provided for a total of $240,000 per year in compensation, comprised of (i) a retainer of $120,000, which may be in the form of cash, stock options or a combination of both at the director’s election, and (ii) $120,000 in equity compensation in the form of stock options. The compensation program was approved by our board of directors in May 2007, on the recommendation of the Nominating Committee following its biennial non-employee director compensation review required by its charter and our Corporate Governance Principles and Practices. We pay at least 50% of non-employee director compensation in the form of stock options in order to align the interests of non-employee directors with shareholders. We do not pay chair or meeting fees as part of our non-employee director compensation program.
 
When it considered and ultimately recommended an increase in non-employee director compensation effective for fiscal 2008, the Nominating Committee reviewed competitive market data prepared by Towers Perrin for the same comparator group used to benchmark executive compensation for fiscal 2008. At the time the compensation was approved, the level of non-employee director total compensation fell between the 75th and 90th percentile among comparator group companies. The board believes this level is appropriate to attract and retain top board candidates. Based on the biennial review cycle noted above, we do not expect the board to review non-employee director compensation again prior to May 2009.
 
New non-employee directors first become eligible to receive the regular annual compensation in the first full fiscal year after they join the board. In addition to the annual compensation program, upon first joining the board non-employee directors are granted an initial stock option to acquire 30,000 shares of our common stock under the 2005 Non-Employee Director Sub-Plan to our 2005 Long-Term Equity Incentive Plan. The initial stock option grant vests in equal annual installments over a three-year period. None of the directors in the table below were granted initial stock options in fiscal 2008.
 
Stock options have an exercise price equal to the closing market price of our common stock on the grant date. Pursuant to the 2005 Non-Employee Director Sub-Plan to our 2005 Long-Term Equity Incentive Plan, the number of options covered by each annual grant is determined by dividing the equity compensation amount for each director by the closing market price of our common stock on the grant date, multiplied by three. For example, for $120,000 of equity compensation and a closing market price of $15 per share on the grant date, the director would receive 24,000 stock options, which is the result of $120,000 divided by $15, or 8,000, multiplied by 3. Annual stock option grants vest one year after the date of grant. Stock options granted to non-employee directors generally cease vesting as of the date he or she no longer serves on the board. However, unvested stock options will vest in full upon a non-employee director’s death or “retirement” (generally defined as leaving the board after attaining age 55 and at least six years of board service) or upon a change in control of Starbucks (described beginning on page 49). Four of the board’s eight current independent directors meet the retirement criteria.


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Mr. Schultz does not participate in the compensation program for non-employee directors, but rather is compensated as an executive officer, as described in the section “Executive Compensation” beginning on page 20. Mr. Behar, during the time he was a director and also a Starbucks partner, was compensated pursuant to the employment arrangement described in the section “Certain Relationships and Related Transactions” beginning on page 51.
 
Fiscal 2008 Compensation of Non-Employee Directors
 
The following table shows fiscal 2008 compensation recognized for financial statement reporting purposes of our non-employee directors (as described further in footnote 1 below). Consequently, the amounts reflected in the “Option Awards” column below also include amounts from awards granted in prior years — this is why the amounts in the “Total” column below exceed $240,000 annually.
 
This excerpt taken from the SBUX DEF 14A filed Jan 23, 2008.
Compensation of Directors
 
Compensation Program for Non-Employee Directors
 
From 2003 through fiscal 2007, the annual compensation program for non-employee directors provided that for each fiscal year of service each non-employee director received a total of $200,000, comprised of (i) a retainer of $100,000, which may be in the form of cash, stock options or a combination of both at the director’s election, and (ii) $100,000 in equity compensation in the form of stock options. Effective for fiscal 2008, the annual compensation program for non-employee directors provides for a total of $240,000 per year in compensation, also split evenly as $120,000 in annual retainer and $120,000 in equity compensation. This new compensation program was approved by our board of directors in May 2007, on the recommendation of the Nominating Committee following its biennial non-employee director compensation review required by its charter and our Corporate Governance Principles and Practices. We pay at least 50% of non-employee director compensation in the form of stock options in order to align the interests of non-employee directors with shareholders. We do not pay chair or meeting fees as part of our non-employee director compensation program.
 
When it considered and ultimately recommended an increase in non-employee director compensation effective for fiscal 2008, the Nominating Committee reviewed competitive market data prepared by Towers Perrin for the same comparator group used to benchmark executive compensation. Information about this comparator group is provided on page 21. The newly increased level of non-employee director compensation falls between the 75th and 90th percentile among comparator group companies. The board believes this level is appropriate to attract and retain top board candidates. Based on the biennial review cycle noted above, we do not expect the board to review non-employee director compensation again prior to May 2009.
 
New non-employee directors first become eligible to receive the regular annual compensation in the first full fiscal year after they join the board. In addition to the annual compensation program, upon first joining the board non-employee directors are granted an initial stock option to acquire 30,000 shares of our common stock under the 2005 Non-Employee Director Sub-Plan to our 2005 Long-Term Equity Incentive Plan. The initial stock option grant vests in equal annual installments over a three-year period. None of the directors in the table below was granted an initial stock option in fiscal 2007.
 
Stock options have an exercise price equal to the closing market price of our common stock on the grant date. The number of options covered by each annual grant is determined by dividing the equity compensation amount for


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each director by the closing market price of our common stock on the grant date, multiplied by three. For example, for $100,000 of equity compensation and a closing market price of $25 per share on the grant date, the director would receive 12,000 stock options, which is the result of $100,000 divided by $25, or 4,000, multiplied by 3. Annual stock options vest one year after the date of grant. Stock options granted to non-employee directors generally cease vesting as of the date he or she no longer serves on the board. However, unvested stock options will vest in full upon a non-employee director’s death or “retirement” (generally defined as leaving the board after attaining age 55 and at least six years of board service) or upon a change in control of Starbucks (described beginning on page 39).
 
Directors who are also Starbucks partners (Messrs. Schultz and Behar), do not participate in the compensation program for non-employee directors. For fiscal 2007, Messrs. Schultz and Donald (who was our president and chief executive officer through January 7, 2008) were compensated as executive officers, as described in the section “Executive Compensation” beginning on page 18. Mr. Behar is compensated pursuant to the employment arrangement described in the section “Certain Relationships and Related Transactions” beginning on page 41.
 
Fiscal 2007 Compensation of Non-Employee Directors
 
The following table shows fiscal 2007 compensation recognized for financial statement reporting purposes of our non-employee directors (as described further in footnote 1 below). Consequently, the amounts reflected in the “Options Awards” column below also include amounts from awards granted in prior years.
 
This excerpt taken from the SBUX DEF 14A filed Jan 17, 2007.
Compensation of Directors
 
Annual Compensation of Non-Employee Directors
 
Only non-employee directors are compensated for serving as directors of the Company. Pursuant to guidelines approved by the Board of Directors on recommendation from the Nominating Committee, for each fiscal year of service non-employee directors receive a retainer of $100,000, which may be in the form of cash or stock options, and $100,000 in equity compensation in the form of stock options. New non-employee directors first become eligible to receive the regular annual non-employee director compensation in the first full fiscal year after they join the Board of Directors. Stock options are granted under the 2005 Non-Employee Director Sub-Plan to the Starbucks Corporation 2005 Long-Term Equity Incentive Plan (the “Non-Employee Director Stock Plan”). The number of stock options granted is determined by dividing the dollar amount of compensation to be received in the form of stock options by the closing market price of the Common Stock on the grant date, multiplied by three. These stock options vest one year after the date of grant and have an exercise price equal to the closing market price of the Common Stock on the grant date. Stock options granted to non-employee directors generally cease vesting as of the date a non-employee director no longer serves on the Board. However, unvested stock options held by non-employee directors will vest in full upon a non-employee director’s death or “retirement” (generally defined as leaving the Board after attaining age 55 and at least six years of Board service).
 
Fiscal 2006 Compensation of Non-Employee Directors
 
The table below sets forth, for each non-employee director, the amount of cash compensation paid and the number of stock options received for his or her service during fiscal 2006.
 
                 
Non-Employee Director
  Cash($)     Stock Options (#)(1)  
 
Barbara Bass
    0       19,724  
William W. Bradley
    100,000       9,862  
Mellody Hobson
    0       19,724  
Olden Lee
    0       19,724  
James G. Shennan, Jr. 
    100,000       9,862  
Javier G. Teruel
    0       19,724  
Myron E. Ullman, III
    0       19,724  
Craig E. Weatherup
    0       19,724  
Gregory B. Maffei(2)
    0       19,724  
 
 
(1) All stock options included in the table were granted on November 16, 2005, with an exercise price of $30.42 per share, and vested in full on November 16, 2006 other than with respect to Mr. Maffei, as explained below.
 
(2) Mr. Maffei resigned from the Board of Directors in March 2006. Under the terms of the Non-Employee Director Stock Plan, the options listed in the table and granted to Mr. Maffei did not vest and were cancelled upon his resignation.


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Initial Stock Option Grant for New Non-Employee Directors
 
Upon first joining the Board of Directors, non-employee directors are granted an initial stock option to acquire 30,000 shares of Common Stock under the Non-Employee Director Stock Plan. These options vest in equal annual installments over a three-year period and have an exercise price equal to the fair market value of the Common Stock on the date of grant. None of the directors in the table above was granted an initial stock option in fiscal 2006.
 
Former Deferred Compensation Plan
 
Non-employee directors formerly could choose to defer all or a portion of their compensation in the form of unfunded deferred stock units under the Starbucks Corporation Directors Deferred Compensation Plan, as amended and restated effective September 29, 2003 (the “Non-Employee Director Deferral Plan”). The Board of Directors terminated future deferrals under the Non-Employee Director Deferral Plan during fiscal 2005, so no further compensation may be deferred under the plan. Amounts previously deferred under the Non-Employee Director Deferral Plan are unaffected and deferred stock units credited to non-employee directors who had previously deferred compensation under the Non-Employee Director Deferral Plan remain outstanding. Deferred stock units are settled in an equal number of shares of Common Stock when plan participants leave the Board. Deferred stock units cannot be voted or transferred.
 
Director Stock Ownership Guidelines
 
Under stock ownership guidelines approved by the Board and included in the Corporate Governance Principles and Practices for the Board, each non-employee director is required to have invested at least $200,000 to purchase shares of Common Stock within four years of May 7, 2003 (the date of adoption of the guidelines) for non-employee directors serving on the Board at that time, or within four years of being elected to the Board, for non-employee directors elected after May 7, 2003. Vested stock options do not count toward meeting the requirement. Each non-employee director must continue to hold the shares purchased as a result of this investment for so long as such director serves on the Board.
 
Compensation of Employee Directors
 
Messrs. Schultz and Donald are executive officers of the Company and are compensated as such, as described in the section “Executive Compensation” on pages 14 through 28 of this proxy statement. As more fully discussed on page 28 of this proxy statement, Mr. Behar is an employee of the Company and is compensated as an advisor.
 
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