DealLawyers.com Blog

In early December, I blogged about the Starbucks proxy contest led by the Strategic Organizing Center. Michael Levin at The Activist Investor called this “the first ESG proxy contest under UPC” and this Paul Hastings alert noted that this contest might be early evidence that some of the corporate world’s concerns about UPC are coming to fruition. That alert highlighted the importance of proactive engagement in advance, including on issues that were the topic of a shareholder proposal that garnered significant support.

In another development highlighting the importance of engagement and responsiveness, the SOC announced yesterday that it is withdrawing its director nominations, citing the announcement by Starbucks and Workers United last week “to work together on a path forward to reach collective bargaining agreements for represented stores and partners, the resolution of litigation, and a fair process for workers to organize.” On the governance side, Starbucks also established an Environmental, Partner and Community Impact Board Committee, which the SOC hopes “will increase board oversight and performance on Starbucks’ partner-related issues.” The SOC’s announcement also notes that it met with a number of other shareholders after these developments were made public and those shareholders seem optimistic that the company is on a path “to repair its relationship with its workers.” Starbucks shared this short response.

This outcome continues the post-UPC trend of negotiating settlements and, notably, the contest ended with no activist nominees joining the board, but with significant developments in the social issues raised by the activist and governance improvements with the creation of a new board-level committee.

– Meredith Ervine