SBUX » Topics » Internal Pay Equity

This excerpt taken from the SBUX DEF 14A filed Jan 22, 2009.
Internal Pay Equity
 
Compensation of Other Named Executive Officers in Relation to One Another and to the Chairman, President and Chief Executive Officer
 
As noted above, the Compensation Committee considers internal pay equity, among other factors, when making compensation decisions. However, the Compensation Committee does not use a fixed ratio or formula when comparing compensation among executive officers. In addition, the Compensation Committee reviews executive compensation on the same basis for each of the named executive officers, including our chairman, president and chief executive officer.
 
Our chairman, president and chief executive officer is compensated at a higher level than other executive officers due to his significantly greater level of experience, accountability and responsibility. However, Mr. Schultz’s base salary has not increased since fiscal 2004. Mr. Schultz receives more of his pay in the form of long-term incentive compensation, rather than annual cash compensation, as compared to the compensation of the other named executive officers. Given Mr. Schultz’s responsibility for overall Company performance, the Compensation Committee believes greater compensation in the form of long-term incentive compensation will align his compensation with the long-term performance of the Company. The Compensation Committee believes this is consistent with market practices whereby companies compensate chief executive officers at a higher level than the other executive officers and weight the chief executive officer’s total compensation more heavily toward long-term incentive compensation.
 
We believe the fiscal 2008 target total direct compensation we paid to Messrs. Bocian, Burrows, Coles, Lopez and Donald in relation to the compensation targeted for Mr. Schultz and to one another is reasonable and appropriate given each executive’s responsibilities and fiscal 2007 performance.
 
  •  Mr. Bocian.  Mr. Bocian’s fiscal 2008 target total direct compensation was lower than that of Messrs. Donald and Coles. Mr. Bocian’s compensation was below Mr. Donald’s compensation as Mr. Bocian did not have the same level of responsibility and accountability for overall Company performance. Mr. Bocian’s compensation was below Mr. Coles’ compensation as Mr. Bocian was compensated at the executive vice president level while Mr. Coles was compensated at the chief operating officer level. Mr. Bocian’s compensation was higher than Messrs. Burrows and Lopez since Mr. Burrows was not promoted until February 2008 to his new role as president, Starbucks Coffee U.S. and as such was not compensated as an executive officer until his promotion, and Mr. Lopez was compensated at the senior vice president level.
 
  •  Mr. Burrows.  Mr. Burrows’ fiscal 2008 target total direct compensation was lower than that of our other named executive officers (other than Mr. Lopez), because he was compensated as a senior vice president until he was promoted to president, Starbucks Coffee U.S.
 
  •  Mr. Coles.  Mr. Coles’ fiscal 2008 target total direct compensation was higher than that of the other named executive officers (other than Messrs. Schultz and Donald) because his compensation was targeted as chief


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  operating officer. As such, he received higher targeted compensation due to his broad responsibilities relative to our other named executive officers.
 
  •  Mr. Lopez.  Mr. Lopez’s fiscal 2008 target total direct compensation was lower than the other named executive officers because he was compensated as a senior vice president.
 
  •  Mr. Donald.  Mr. Donald’s fiscal 2008 target total direct compensation was higher than that of the other named executive officers (other than Mr. Schultz) due to his greater responsibility for overall Company performance as the Company’s then president and chief executive officer.
 
This excerpt taken from the SBUX DEF 14A filed Jan 23, 2008.
Internal Pay Equity
 
Compensation of the Chairman in Relation to the President and Chief Executive Officer for fiscal 2007
 
As noted above, on January 7, 2008 Mr. Schultz took on the additional role of president and chief executive officer, in addition to his role as chairman, replacing James Donald. Mr. Schultz will not receive any additional compensation in connection with his new position.
 
When Mr. Schultz relinquished the chief executive officer title in 2000, the Compensation Committee decided that his total direct compensation would continue to be at least as much as the chief executive officer’s. Mr. Schultz’s total direct compensation mirrored the chief executive officer’s for several years, until the former chief executive officer retired after a long tenure and Mr. Donald was promoted to chief executive officer at a lower compensation level than his predecessor. Mr. Schultz’s base salary has remained the same since Mr. Donald was promoted to chief executive officer, while Mr. Donald’s increased over time. The difference in their respective incentive bonus plan payouts, which are a function of base salary, has similarly decreased. Their annual stock option awards have been the same since Mr. Donald became chief executive officer.


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For fiscal 2007, we believe it was appropriate for Mr. Schultz’s total direct compensation to be at least as much as the chief executive officer’s because in addition to Mr. Schultz’s responsibilities as chairman of the board, he also had a significant role in:
 
  •  global strategy and development;
 
  •  new business development and innovation;
 
  •  global brand development;
 
  •  category management; and
 
  •  preservation of the values and culture of Starbucks.
 
Compensation of Other Named Executive Officers in Relation to Each Other and to the Chief Executive Officer
 
We believe the total fiscal 2007 compensation we paid to each of Messrs. Coles, Casey and Alling, respectively, was appropriate in relation to the others. Mr. Casey’s fiscal 2007 compensation was significantly higher than our other executive vice presidents, and slightly higher than compensation for Messrs. Coles and Alling, due to Mr. Casey’s broad responsibilities as chief financial officer relative to our other executive vice presidents. During almost all of fiscal 2007, Mr. Coles led our international business and Mr. Alling led our United States business. Mr. Coles’s higher compensation reflects the stronger performance of the international business during fiscal 2007 and his promotion to chief operating officer late in the year. We believe the fiscal 2007 total compensation we paid to Messrs. Coles, Casey and Alling in relation to the compensation we paid Mr. Schultz and Mr. Donald, respectively, is reasonable and appropriate given each executive’s responsibilities and fiscal 2007 performance.
 
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