STARBUCKS CORP SBUX

Removed from 2025

• A portion of the amount shown for each of Ms. Ford, Mr. Mohan, Mr. Servitje, and Mr. Sievert represents the grant date fair value of RSU awards granted on January 16, 2024.
• The grant date fair values have been determined based on the assumptions and methodologies set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended September 29, 2024.
• As of September 29, 2024, the aggregate number of shares of Starbucks common stock underlying outstanding option awards for each non-employee director were: Mr. Allison, 0; Mr. Campion, 0; Ms. Ford, 0; Ms. Hobson, 0; Mr. Knudstorp, 49,289; Mr. Mohan, 0; Mr. Servitje, 0; Mr. Sievert, 0 and Ms. Zhang, 0.
• As of the date of his departure from the Board, Mr. Nadella held 6,876 shares of Starbucks common stock underlying outstanding option awards.
• Proposal 2 Advisory vote to approve named executive officer compensation
• The Compensation Committee and the board of directors believe that our executive compensation policies and procedures are effective in achieving our goals and that the compensation of our NEOs reported in this proxy statement has contributed to the Company’s long-term success.
• The board has adopted a policy providing for an annual say-on-pay advisory vote.
• In accordance with this policy and Section 14A of the Exchange Act, and as a matter of good corporate governance, we are asking shareholders to approve, on a nonbinding, advisory basis, the following resolution at the Annual Meeting:
• Following the expressed preference of our shareholders approving the advisory resolution for an annual frequency of advisory votes on executive compensation at our 2023 Annual Meeting and unless the board modifies its policy on the frequency of future say-on-pay advisory votes, the next say-on-pay advisory vote will be held at the 2026 Annual Meeting.
• This nonbinding, advisory vote on the compensation paid to our NEOs will be approved if the votes cast in favor of the proposal exceed the votes cast against it.
• Executive compensation Compensation discussion and analysis This Compensation Discussion and Analysis (“CD&A”) provides information about our executive compensation program and underlying compensation philosophy, which focuses on rewarding partners for their central role in our growth.
• While the principles underlying this philosophy extend throughout the organization, this CD&A primarily covers the compensation of our NEOs for fiscal year 2024—the current and former executive officers identified below.
• Brian Niccol(1) chairman and chief executive officer Rachel Ruggeri(2) executive vice president,chief financial officer and former interim chief executive officer Brady Brewer chief executive officer,Starbucks International Bradley E.
• Lerman executive vice president,chief legal officer Michael Conway(3) former chief executive officer, Starbucks North America Laxman Narasimhan(4) former chief executive officer
• (1) Mr. Niccol was appointed our chairman and chief executive officer effective September 9, 2024.
• (2) Ms. Ruggeri served as interim ceo from August 12, 2024, until September 9, 2024.
• (3) Mr. Conway retired effective November 30, 2024.
• (4) Mr. Narasimhan served as ceo until August 11, 2024.
• We faced a challenging operating environment in fiscal year 2024, notably driven by reduced customer traffic compared to fiscal year 2023.
• Our fiscal year 2024 performance was lower than expected, and our investments were not successful in improving customer behaviors, while macroeconomic and other external factors adversely impacted performance in our both U.S. and certain international markets.
• The board recognized that the fiscal year 2024 strategy was not materializing into the results expected.
• In August 2024, the board announced the appointment of Brian Niccol as ceo and chairman of the board of Starbucks, effective September 9, 2024, to replace Laxman Narasimhan as ceo and a member of the Starbucks board.
• Rachel Ruggeri served as interim ceo until Mr. Niccol joined the Company.
• The board believes that Mr. Niccol, a highly sought-after, effective leader with a proven track record, has the ideal industry experience and operational background to drive sustainable, long-term growth at Starbucks.
• Shortly after joining the Company, Mr. Niccol announced our “Back to Starbucks” strategy, which represents a strategic reset, refocusing on what has always set us apart—a welcoming coffeehouse where people gather and where we serve the finest coffee, handcrafted by our skilled baristas.
• This reset focuses on making the store experience better for our partners, and in turn, our customers.
• This focused strategy also complements our continued work to simplify our compensation design and reduce complexity.
• Additional executive team changes included Brady Brewer assuming the role of ceo, Starbucks International in April 2024.
• Mr. Brewer oversees the teams across Asia Pacific, Europe, Middle East, Africa (EMEA), and Latin American Caribbean (LAC), as well as Global Channel Development and the company’s international licensed business partners.
• At the same time, Michael Conway assumed the role of ceo, Starbucks North America, until he stepped down from his role at the end of September 2024 and then retired from the Company in November 2024.
• We believe our current NEOs showed strong leadership in managing the Company through this transition.
• Individually and collectively, Brian, the executive team, and the board are committed to the success of our “Back to Starbucks” strategy.
• Consolidated Net Revenues $36.2B +1% year-over-year ConsolidatedOperating Margin 15.0% GAAP: -130 bps year-over-year Non-GAAP*: -110 bps year-over-year EPS $3.31 GAAP: -8% year-over-year Non-GAAP*: -6% year-over-year Global Store Count 40,199 +6% year-over-year * Appendix A includes a reconciliation of non-GAAP operating margin and non-GAAP EPS to the most directly comparable measure reported under GAAP as well as information regarding how these measures are calculated.
• Year-over-year growth is based on a 52-week basis.
• During fiscal year 2024, we reached out to more than 35 shareholders representing over 50% of our total shares outstanding, and ultimately spoke with more than 30 shareholders representing nearly 45% of our total shares outstanding.
• The shareholders with whom we engaged with generally expressed support for our executive compensation program and were supportive of the enhancements that we made to our program in fiscal year 2024, which included simplifying the individual performance factor portion of our Annual Incentive Bonus Plan.
• We further refined our Annual Incentive Bonus Plan to, among other things, ensure that our leaders are aligned across shared performance metrics in connection with the Company’s “Back to Starbucks” strategy while providing deeper accountability, driving performance, and reinforcing our priorities of belonging, joy, and sustainability.
• * This chart does not include Ms. Ruggeri who served as interim ceo from August 12, 2024, until September 9, 2024, or Mr. Niccol who did not commence employment with the Company until September 9, 2024, in each case, shortly before the end of fiscal year 2024.
• Ms. Ruggeri is included in the Other NEO Compensation Mix chart.
• The Compensation Committee, together with the other independent members of our board, spent significant time reviewing Mr. Niccol’s compensation package with the Committee’s independent compensation consultant.
• In approving the final terms of Mr. Niccol’s compensation package, they considered, among other things:
• • Starbucks critical need for a transformative leader at a pivotal moment in its history;
• • Mr. Niccol’s leadership and transformation journey at Chipotle—which resulted in significant growth and value creation for Chipotle and set new standards in the industry;
• • the substantial value of the cash and equity compensation that Mr. Niccol would forfeit upon his departure from Chipotle in both the near- and long-term;
• • Mr. Niccol’s total target direct compensation as well as his aircraft benefits at Chipotle; and
• • Starbucks peer group, which had recently been updated in connection with fiscal year 2025 compensation decisions (see “Our Executive Compensation Process” on page 61 for more information regarding these peer group updates).
• Based on such considerations, the Compensation Committee and the other independent members of our board ultimately determined that such a compensation package was necessary to recruit a ceo of the caliber of Mr. Niccol, who could effectively execute on a strategic reset of the Company while maintaining the confidence of Starbucks partners, shareholders, and other stakeholders.
• In November 2024, Mr. Niccol’s offer letter was amended to (i) clarify that his equity awards should be determined based on target value rather than grant date fair value to correctly capture the intent of the parties to the offer letter with respect to his performance-based equity grants, and (ii) align with Starbucks grant practices with respect to annual equity grants, which are determined based on target value, rather than grant date fair value.
• The independent members of our board confirmed and ratified Mr. Niccol’s replacement equity grant (as detailed below) in accordance with the amendments to the offer letter.
• The Compensation Committee, as well as the other independent members of our board, strongly believe that Mr. Niccol’s leadership is necessary to drive sustainable, long-term growth at Starbucks, and that shareholders have been largely receptive of Mr. Niccol’s appointment as evidenced by Starbucks stock price, which as of January 10, 2025, has increased approximately 20% from the date just prior to the announcement of Mr. Niccol’s appointment as ceo.
• As discussed in greater detail below, Mr. Niccol’s signing bonus and replacement equity grants, which represent a substantial portion of his compensation in fiscal year 2024, are “make whole” awards, which are intended to replace the estimated value of the cash and equity compensation that Mr. Niccol would forfeit upon his departure from Chipotle in both the near- and long-term.
• Compensation Element Description Rationale Base Salary $1,600,000, prorated for fiscal year 2024 Provides a predictable level of income In determining the amount, Mr. Niccol’s skills and experience, his role and responsibilities, market data, his prior compensation, and the desire and need to attract Mr. Niccol to join Starbucks were considered Annual Incentive Bonus Target 225% of base salary (target); 450% of base salary (maximum), prorated for fiscal year 2024 Ties additional upside earning opportunity to Company and individual performance results In determining the amount, Mr. Niccol’s skills and experience, his role and responsibilities, market data, his prior compensation, and the desire and need to attract Mr. Niccol’s to join Starbucks were considered Annual Equity Incentives Annual equity awards with a target value of $23,000,000 for fiscal year 2025, calculated using the closing stock price on the date of grant; future equity award values will be determined on an annual basis In determining the amount, Mr. Niccol’s skills and experience, his role and responsibilities, market data, his prior compensation, and the desire and need to attract Mr. Niccol’s to join Starbucks were considered
• Compensation Element Description Rationale Replacement Equity Grants Replacement equity grants with a target value of no less than $75,000,000 but no more than $80,000,000 on the date of grant, calculated using the closing stock price on the date of grant • 60% in PRSUs, which vest based on performance, and • 40% in time-based RSUs, which vest annually over three years The PRSUs will be eligible to vest based on Starbucks relative total shareholder return (“TSR”) compared to the S&P 500 index over a three-year period beginning on his start date, in accordance with the following schedule: • 75th percentile: 200% of target • 65th percentile: 100% of target • 40th percentile: 50% of target The percentage of target number of PRSUs that vests will be determined using linear interpolation between the above points The replacement equity grants were made to replace the estimated value of outstanding equity awards that Mr. Niccol forfeited when he left his previous employer to join Starbucks that would have vested after the six months following his departure The $75,000,000 target value minimum was intended to ensure that the target value of Mr. Niccol’s replacement grants did not fall significantly below the estimated value of the outstanding equity awards that Mr. Niccol forfeited when he left his previous employer to join Starbucks that would have vested after six months; an $80,000,000 cap was implemented to both reflect and limit the number of stock units that Mr. Niccol could receive due to an increase in stock price between the date of his appointment and his start date This $80,000,000 maximum value cap was triggered due to the 24% increase in our stock price on the announcement of Mr. Niccol’s hiring.
• Please see “Target Values versus Accounting Values” on page 56 for a more detailed discussion of the accounting implications of Mr. Niccol’s replacement equity grants The replacement equity grants are intended to drive performance, support retention, and incentivize Mr. Niccol to lead our transformation through our "Back to Starbucks" strategy and beyond Relative TSR was chosen as a metric to emphasize pay for performance and drive sustained shareholder value creation by directly linking the payout to Starbucks long-term total shareholder return relative to the S&P 500 Index Target performance was set at the 65th percentile, with performance measured over a three-year performance period, to incentivize significant, sustained outperformance We believe that the S&P 500 Index, which is also used to assess relative TSR performance in our Leadership Stock Plan, is an appropriate benchmark because it represents a robust, broad representation of the potential opportunity cost of investing in Starbucks from an investor’s perspective Perquisites and Other Executive Benefits Temporary housing provided until permanent secondary housing established in Seattle Establishment of a remote office in city of primary residence Use of Starbucks aircraft for travel between city of primary residence and Starbucks headquarters and up to $250,000 in personal non-commuting travel per year; additional use of Starbucks aircraft for travel pursuant to Mr. Niccol’s time sharing agreement Up to $50,000 for legal fee reimbursements in connection with negotiating the terms of Mr. Niccol’s employment Personal security, driver when traveling in Seattle, executive life insurance, and physical exam We believe that providing such benefits was necessary to attract and retain a transformative leader like Mr. Niccol We provide security benefits, executive physicals, and a driver because we believe that the personal health and safety and security of our ceo is of the utmost importance to Starbucks and its shareholders The security, aircraft, and driver benefits were recommended under an independent, third-party security study Mr. Niccol was also entitled the use of his previous employer’s aircraft for personal travel up to a fixed value each year Please see "Perquisites and Other Executive Benefits" on page 66 for more information regarding certain of these benefits
• Compensation Element Description Rationale Signing Bonus $10,000,000, with 50% paid on the payroll date following the one-month anniversary of start date, and 50% paid on the payroll date following the six-month anniversary, subject to continued employment Mr. Niccol will be entitled to the unpaid portion if he is terminated without cause, or due to death or disability, or resigns for good reason (as defined in his offer letter) and executes a separation and release agreement The signing bonus was intended to replace the sum of (i) the estimated earned value of Mr. Niccol’s cash incentive opportunity, which he forfeited when he departed his previous employer and (ii) the estimated value of the equity awards granted by his previous employer that would have vested within the six months following his departure The vesting and payout schedule of the signing bonus takes into account the estimated payout dates of Mr. Niccol’s forfeited cash incentive opportunity and forfeited portion of his equity awards, which in both cases would have been earned and paid out within six months following his departure Severance Benefits Participation in the Starbucks Executive Severance and Change in Control Plan ("Severance and CIC Plan") A resignation for good reason will constitute a qualifying termination under the Severance and CIC Plan, whether prior to, in connection with, or following a change in control If Mr. Niccol is terminated without cause, or due to death or disability, or resigns for good reason, his replacement time-based RSUs will continue to vest as scheduled and his replacement PRSUs will be eligible to vest in full based on the original performance criteria and performance period Supports our objective of attracting and retaining a transformative leader Please see "Executive Compensation Agreements and Arrangements" on page 67 for more information regarding the material features and rationale for the design of the Starbucks Severance and CIC Plan
• Our fiscal year 2022 PRSUs (awarded in November 2021) paid out at 42.75% of target as a result of the 60% average achievement against our three-year adjusted EPS targets being reduced by our three-year relative total shareholder return and three-year representation modifier.
• ANNUAL INCENTIVE BONUS PLAN Financial Performance Individual Performance Factor Payout of 14% of target Payout ranged from 66.7% to 108.3% of target
• 44 STARBUCKS 2025 PROXY EXECUTIVE SUMMARY
• Rigorous goal setting
• Management and the Compensation Committee worked collaboratively to set targets that would reflect our ambitious performance goals and drive long-term value creation for our shareholders.
• FISCAL YEAR 2024 ANNUAL INCENTIVE BONUS PLAN
• * The three sections shown here are not meant to be representative of their categorical value.
• Annual incentive bonus plan
• The Compensation Committee shifted the sustainability goal into our PRSU program and incorporated a metric focused on creating a culture of belonging at Starbucks in the individual performance component.
• Reducing the number of metrics supports the Compensation Committee’s continued goal of focusing and simplifying the Annual Incentive Bonus Plan.
• Leadership stock plan
• For fiscal year 2024, the Compensation Committee incorporated a sustainability modifier into the PRSU program and updated the talent modifier to include a broader spectrum of the workforce.
• Long-term incentives were awarded in two forms: (1) 60% in the form of PRSUs, where the number of shares earned is based on three-year adjusted EPS performance against pre-established annual targets, subject to a downward or upward adjustment of up to 25% based on relative TSR performance, an additional downward or upward adjustment of up to 10% based on achievement of three-year talent goals, and an additional downward or upward adjustment of up to 10% based on achievement of three-year sustainability goals and (2) 40% in the form of time-based RSUs, which vest over four years.
• 45 STARBUCKS 2025 PROXY EXECUTIVE SUMMARY
• Fiscal Year 2024 Executive Compensation Overview
• Element Form Objectives and Basis Base Salary Cash • Attract and retain highly qualified executives to drive our success Annual Incentive Bonus Cash • Drive short-term Company performance and promote our financial goals • Actual payout based on financial performance against pre-established adjusted net revenue and adjusted operating income targets and individual performance Long-term Incentive PRSUs (60%) and time-based RSUs (40%) • Drive long-term Company performance, align interests of executives with those of shareholders, promote our talent and inclusion and sustainability initiatives, retain executives through long-term vesting, and support potential wealth accumulation • PRSUs are earned based on three-year adjusted EPS performance against pre-established annual targets, subject to downward or upward adjustment of up to 25% based on our relative TSR performance, downward or upward adjustment of up to 10% based on achievement of a three-year talent goal, and downward or upward adjustment of up to 10% based on achievement of a three-year sustainability goal • Time-based RSUs vest over a four-year period, subject to continued service with the Company, and become more valuable as our stock price increases, which aligns the recipients’ interests with the interests of our shareholders Perquisites and Other Executive Benefits See “Other Fiscal year 2024 Compensation Matters – Perquisites and Other Executive Benefits” on page 66 • Provide for the safety and wellness of our executives and support our objective of attracting and retaining top executive talent Deferred Compensation 401(k) plan and non-qualified Management Deferred Compensation Plan • Provide methods for general savings, including for retirement and benefits generally consistent with those offered by our peer group General Benefits Health and welfare plans, stock purchase plan, and other broad-based partner benefits • Offer competitive benefits package that generally includes benefits offered to all partners
• Financial Results Under Performance Goals
• In determining the design of our fiscal year 2024 Annual Incentive Bonus Plan and the PRSUs granted under the Leadership Stock Plan, we considered prior year incentive plan targets and results as well as our financial and operating performance in fiscal year 2023.
• Targets for fiscal year 2024 financial goals were set at a level significantly above the prior year’s results.
• (1) Adjusted net revenue is a non-GAAP measure.
• Appendix A includes a reconciliation of adjusted net revenue to the most directly comparable measure reported under GAAP as well as information regarding how these measures are calculated.
• (2) Adjusted operating income is a non-GAAP measure.
• Appendix A includes a reconciliation of adjusted operating income to the most directly comparable measure reported under GAAP as well as information regarding how these measures are calculated.
• In fiscal year 2024, each of our NEOs other than Mr. Niccol received a base salary increase, which became effective on November 27, 2023, based on their performance and market competitiveness and internal equity considerations.
• Base Salary (Annualized Rate) Named Executive Officer Fiscal Year 2023 Fiscal Year 2024 % Change Brian Niccol(1) N/A $1,600,000 N/A Rachel Ruggeri $891,000 $918,000 3.0% Brady Brewer $730,000 $775,000 6.2% Bradley E.