Starbucks (Nasdaq: SBUX ) is reining in compensation for founder and CEO Howard Schultz and several top managers. That's a step in the right direction given the company's lagging performance lately, but is it really enough? It's been an awful year, folks.
The executives, including Schultz, aren't receiving raises for 2009. Also, Schultz won't participate in the company's executive bonus program this year.
There's no reason to shed bitter tears for Schultz, though. According to the company's proxy filing, his total compensation was $9.7 million in 2008 (an 8.5% decrease compared to 2007). The sum includes customary extras like stock options and life and disability insurance benefits. (Schultz's base salary remains at around $1.2 million, as it has been for years.)
On a public relations level, this looks much better than the recent news about Starbucks' new corporate jet. Then again, it's interesting when you consider the fact that there are high-profile corporate leaders who voluntarily reject base salary. These include Apple's (Nasdaq: AAPL ) CEO Steve Jobs and Google's (Nasdaq: GOOG ) founders Larry Page and Sergey Brin and CEO Eric Schmidt.
Granted, all of the above gentlemen had stock or options over the years that have been extremely lucrative. However, most CEOs do take every kind of compensation they can get, so it's also noteworthy that those CEOs decided not to take customary levels of base salary in good times.
Starbucks does many good deeds with its business; I nominated it as one of the contenders for Most Socially Responsible Company for our recent Fool Awards.
That's why I find it a bit odd that for a company that's so touchy-feely, there isn't a more dramatic gesture when it comes to executive pay. After all, Starbucks' profit fell 50% in the last year. Meanwhile, Starbucks is closing stores and laying off workers. I'm not sure this is a good example of Starbucks' management team pouring its heart into it.
I still believe in Starbucks' business for the long term (I nominated it as the Best Stock for 2009, in fact), and I'm a shareholder. However, just because I'm optimistic about the company's long-term prognosis doesn't mean that I'm a built-in fan of anything management does. In this case, I'm a bit surprised that this progressive company isn't a little bit more progressive regarding executive compensation. No raises and no bonus for Schultz is a start, but it seems like much more could have been done.
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