Starbucks Shareholder Seeks Removal of Howard Schultz as Director; Urges Company to Be Transparent About China Risks

Long-time leader has politicized the company and should not continue as a ‘shadow' CEO

Falls Church, VA

--News Direct--

Ahead of Starbucks Corporation's annual meeting on March 23, National Legal and Policy Center is calling upon its fellow shareholders to support its proposal to provide greater transparency about the company's risks of doing business in China, and to join NLPC in opposition to the reelection of outgoing CEO Howard Schultz to the board of directors.

NLPC is sponsoring an "Annual Report on Company Operations in China" resolution at the meeting, which seeks transparency for shareholders that addresses "the nature and extent to which corporate operations depend on, and are vulnerable to, communist China…." The item is Proposal No. 7, found on page 79 of Starbucks's proxy statement. NLPC's response to the Starbucks board's opposition to its proposal was filed with the Securities and Exchange Commission last week.

NLPC also is asking shareholders, in a memo filed with the SEC, to oppose the reelection of longtime (and soon former) CEO Howard Schultz to the company's board of directors. An excerpt from NLPC's filing on Schultz says:

We believe that Mr. Schultz being removed from all leadership and advisory roles within the company would be the most effective transition. Additionally, given Mr. Schultz's insistence on exponential growth in risk-laden communist China; his dubious and likely illegal anti-union tactics; and his harmful politicization of the Company, we believe that his complete removal would be beneficial for the development of Mr. Narasimhan and growth of Starbucks.

"In the past – even when Howard Schultz had no formal title with Starbucks – he always lurked in the shadows, and seemed to intervene when he saw problems that he arrogantly believed only he could solve," said Paul Chesser, director of NLPC's Corporate Integrity Project. "Disney had a similar situation last year with Bob Iger, who just couldn't let the company go and undermined his successor before he returned, which led to the company's worst year financially and image-wise in decades. Now Schultz may be doing the same with his aggressive union-busting efforts, which a federal judge has ruled are illegal."

On NLPC's China proposal, Chesser said, "Mr. Schultz has built Starbucks's presence in the communist nation beyond 6,000 stores, and has plans for thousands more, at a time of increasing geopolitical risk with U.S.-China relations approaching a critical point in hostilities. Shareholders must be thoroughly informed about the unique risks to the company that China's aggression presents."

Finally, NLPC has also asked, in a memo filed with the SEC, for fellow Starbucks shareholders to support Proposal No. 9 on the proxy statement, which is sponsored by the Free Enterprise Project. The proposal asks the Company to create a special board committee to review the impacts of policies like its "Third Place Policy," which opened its stores to anyone for the use of its restrooms and seating areas, regardless of whether they purchased anything. The practice has led to increased crime and unsafe environments around some stores, causing the closure of many of them.

Founded in 1991, NLPC promotes ethics in public life and government accountability through research, investigation, education, and legal action.

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For more information or to schedule an interview with Paul Chesser, contact Dan Rene at 202-329-8357 or drene@nlpc.org.

Please visit http://www.nlpc.org.