Starbucks passes savings to workers, not shareholders

SEATTLE — Starbucks will continue investing in its workers even if that means forgoing the short-term stock-price lift it might have seen by passing more of its tax-cut windfall on to shareholders, says the company’s executive chair.

Howard Schultz urged the coffee giant’s shareholders who are disappointed with the “fairly flat” performance of Starbucks stock over the last year — a period that has seen broader U.S. markets up 15 to 20 per cent — to take a longer view.

The reduction of the corporate-tax rate to 21 per cent yielded hundreds of millions of dollars in savings. “We could have taken that money and given it all away to our shareholders, and maybe the stock would have gone up a point or two,” Schultz said Wednesday at the company’s annual meeting of shareholders.

“We’re trying to make long-term decisions,” he continued. “We’re trying to value the dignity of work. We’re trying to do everything we possibly can to demonstrate to the world ... that there is a better way. And the better way is not a zero-sum game where you leave your people behind.”

Starbucks touted a host of benefits and accomplishments related to its workers — including in the strategically paramount China market — some of which were “accelerated due to changes in tax laws,” said the company’s top human-resources executive, Lucy Helm.

Helm said the company’s U.S. employees performing similar work are now paid equitably regardless of gender or race. That hasn’t always been the case. The gender pay gap in the U.S. economy is large. Women on average earn 80 cents for each dollar earned by men. In retail, the gap is even wider.

She said the pay-equity milestone was an “emotional moment” for her after 19 years at the company and as a woman in senior leadership.

Over the last 10 years, Starbucks has put in place systems and practices to root out pay inequity, including ensuring starting pay is equitable, openly discussing pay, and conducting audits “to address and close any unexplained pay gaps between men and women and between people of different races,” Helm said.

The company now turns its attention to striving for 100 per cent pay equity for employees in all company-owned stores around the world. Starbucks, which has more than 300,000 employees globally, would not disclose pay disparities in other markets, nor did it specify a timeline for reaching the goal, but said it would provide an update in a year.

Helm said Starbucks intends to “set a new bar for multinational companies who recognize the importance of equal pay for equal work.”

In China, too, the company is trying to set a standard with its benefits package. Last year, the company began offering critical illness insurance for the parents of employees.