2018 Guide to Effective Proxies

2.17.11 Shareholder engagement | 495 6 TH EDITION | GUIDE TO EFFECTIVE PROXIES CORPORATEGOVERNANCE UpontherecommendationofourNominatingandCorporate GovernanceCommittee(the“Nominating/GovernanceCommittee”) andmanagement’srecommendationsbasedonvariousfactors includingtheresultsoftheshareholderoutreachsummarizedabove, ourboardamendedourBylawsinSeptemberof2016toimplement proxyaccess.Asamended,ourBylawspermitashareholder,ora groupofupto20shareholders,owningthreepercentormoreofour outstandingcommonstockcontinuouslyforatleastthreeyearsto nominateandincludeinourproxymaterialsdirectornominees constitutinguptotwoindividualsor20%oftheboard,whicheveris greater,providedthattheshareholder(s)andthenominee(s)satisfy therequirementsspecifiedinourBylaws. BoardLeadership Theboardofdirectorsisresponsibleforoverseeingtheexerciseof corporatepowerandseeingthatStarbucksbusinessandaffairsare managedtomeettheCompany’sstatedgoalsandobjectivesandthat thelong-terminterestsoftheshareholdersareserved. HowardSchultz,executivechairmanofStarbucks,currentlyservesas thechairmanoftheboard.MyronE.Ullman,III,anon-employee independentdirector,waselectedtheleadindependentdirector pursuanttoourCorporateGovernancePrinciplesandPractices, effectiveMarch23,2016.Mr.Ullman’stermasleadindependent directorexpiresattheboardmeetingimmediatelyfollowingthe2018 AnnualMeetingofShareholders.Directorsarelimitedtoservingtwo consecutivetwo-yeartermsinthatrole. Ourboardleadershipstructuresupportstheindependenceofour non-managementdirectors.Theindependentdirectorsmeetinan executivesessionateachboardmeeting,andeachofthestanding boardcommittees(discussedbelow)iscomprisedsolelyofandledby independentdirectors.Theleadindependentdirectorpresidesatthe scheduledexecutivesessionsofindependentdirectorsaswellasall meetingsoftheboardatwhichthechairmanisnotpresent.Thelead independentdirectorandthechairmaneachhastheauthoritytocall meetingsoftheindependentdirectorsandoftheentireboard. PursuanttoourCorporateGovernancePrinciplesandPractices,the dutiesoftheleadindependentdirectoralsoinclude: • servingasaliaisonbetweentheindependentdirectorsandthe chairmanoftheboard; • approvingtheschedulingofboardmeetings,aswellastheagenda andmaterialsforeachboardmeetingandexecutivesessionofthe independentdirectors; • approvingandcoordinatingtheretentionofadvisorsandconsultants totheboard;and • suchotherresponsibilitiesastheindependentdirectorsmay designatefromtimetotime. Theboardofdirectorsbelievesthatitshouldmaintainflexibilityto selectStarbuckschairmanandboardleadershipstructuresfromtime totime,andourpoliciesdonotprecludethechiefexecutiveofficer fromalsoservingaschairmanoftheboard.Mr.Schultzservedinboth positionspriortoApril3,2017.Onthatdate,therolesofchairmanand ceowereseparatedasMr.Schultzbecameexecutivechairmanofthe CompanyandMr.Johnsonassumedtheroleofpresidentandceo. Mr.Schultzcontinuestoserveaschairmanoftheboard. TheboardofdirectorsbelievesthatMr.Schultzcontinuingtoserveas chairmanoftheboard,whileMr.Ullmanmaintainshisroleasthelead independentdirector,allowstheboardtocontinuetobenefitfrom Mr.Schultz’sin-depthknowledgeofStarbucksbusinessandindustry aswellashisleadershipinformulatingandimplementingstrategic initiativesthatwillfocusoninnovation,designanddevelopmentof StarbucksReserve ® Roasteriesaroundtheworld,expansionofthe StarbucksReserve ® retailstoreformatandtheCompany’ssocial impactinitiatives,whiletherolegiventoourleadindependentdirector willmaintainastrong,independentandactiveboard. RiskOversight Theboardofdirectorshasoverallresponsibilityforriskoversight, including,aspartofregularboardandcommitteemeetings,general oversightofexecutives’managementofrisksrelevanttotheCompany. Afundamentalpartofriskoversightisnotonlyunderstandingthe materialrisksacompanyfacesandthestepsmanagementistakingto managethoserisks,butalsounderstandingwhatlevelofriskis appropriateforthecompany.Theinvolvementoftheboardofdirectors inreviewingStarbucksbusinessstrategyisanintegralaspectofthe board’sassessmentofmanagement’stoleranceforriskandalsoits determinationofwhatconstitutesanappropriatelevelofriskforthe Company. Whilethefullboardhasoverallresponsibilityforriskoversight,the boardhasdelegatedoversightresponsibilityrelatedtocertainrisksto theAuditandComplianceCommittee(the“AuditCommittee”)andthe CompensationCommittee.TheAuditCommitteeisresponsiblefor reviewinganddiscussingwithmanagementtheCompany’smajorand emergingriskexposures,includingfinancial,operational,technology, privacy,dataandphysicalsecurity,disasterrecoveryandethicsand compliance,foodsafety,legalandregulatoryrisks;thestepsthe Companyhastakentomonitorandcontrolsuchexposures;andthe Company’sriskassessmentandriskmanagementpolicies.Thechair oftheAuditCommitteeregularlyreportstotheboardthesubstanceof suchreviewsanddiscussions.Further,in2016,theCompany establishedtheRiskManagementCommitteewhichisco-managedby Starbuckschieffinancialofficerandgeneralcounsel.TheRisk ManagementCommitteeisfocusedonrisksfacingtheCompany, includingstrategicrisks,marketrisks,internalcontrolrisksand operationalrisksandprovidesinformationtotheAuditCommitteeatits regularlyscheduledmeetings. TheAuditCommitteealsoreceivesregularreportsfrommanagement includingourchiefethicsandcomplianceofficer,vicepresidentand controllerandvicepresidentofInternalAuditonrisksfacingthe Companyatitsregularlyscheduledmeetingsandotherreportsas requestedbytheAuditCommitteefromtimetotime.The CompensationCommitteeisresponsibleforreviewingandoverseeing themanagementofanypotentialmaterialrisksrelatedtoStarbucks compensationpoliciesandpractices.TheCompensationCommittee reviewsasummaryandassessmentofsuchrisksannuallyandin connectionwithdiscussionsofvariouscompensationelementsand benefitsthroughouttheyear. Theboard’sroleinriskoversighthasnotresultedinanyadditional changestotheboard’sleadershipstructure. STARBUCKSCORPORATION 2018PROXYSTATEMENT / 13 Total of 02 pages in section PROLOGIS STARBUCKS CORPORATION ENVIRONMENTALSTEWARDSHIP,SOCIALRESPONSIBILITYANDGOVERNANCE Investoroutreach Ourpublicandprivateinvestorteamsarecommittedtoconsistent engagementwithourstockholdersandstrategiccapitalinvestorsthrough frequentcommunication,in-personandtelephonicmeetings,investorforums, annualmeetingsandoutreachroadshows. Throughsuchengagement,welearnedthatourpublicandprivateinvestors wanttoplacetheircapitalinorganizationsthathavestrongESGpractices embeddedintheirbusiness. In2017,weparticipatedinstockholderoutreachwithourleadindependent directorandthechairofourTalentandCompensationCommittee(the “CompensationCommittee”)tomeetwithover70%ofourstockholdersto discussourESGandcompensationprograms.Ourstockholdersappreciated theopportunitytospeakdirectlywithourdirectorsoutsideoftheannual meetingseasonunrelatedtoaspecificrequestorproposal.Manyofour stockholdershighlightedESGasacurrentpriorityforthemandtheir respectiveclients. Eachofourfundshasadedicatedteamthatmeetswiththeirrespective investorsatleastquarterlytoreviewperformanceanddiscussstrategic planning.OurESGteamconductssustainabilityoutreachwithourfund investorsregularlytoreviewGRESBandothersustainabilityindices.Ourteam alsoincludesanESGsectionineachquarterlyfundreport. 70% ofourstockholders metbyourlead directorand compensation committeechair in 2017 Communityinvolvement Ourworkinourcommunitieshasacriticalbusinesspurpose.Locationiskeyto ourbusiness.Strengtheningourpresenceincriticallocationsrequires deepeningrelationshipswiththecommunitiesinwhichwedobusiness. Developinginthesecriticallocationsrequiresagoodworkingrelationship withthecommunities.Investinginthecommunitiesthroughourvolunteerism andcharitableprogramsbuildstrust,whichleadstobettersolutionswhenwe needthem. ThePrologisFoundationsupportsmanycharitablecontributionprograms, suchasourDollarsforDoersprogram(matchingdollarsforvolunteerhours spent)andourMatchingGiftsprogram(matchingdollarsforemployee donationstocharities).Over$12millionhasbeendonatedthroughthe PrologisFoundationinthelastfiveyears. OurSpaceforGoodprogramdonatesavailablelogisticsspaceonashort-term basistocharitableorganizationsinneed.Wehavedonatedmorethan500 monthsofrent-freespaceto89non-profitsinthelastfiveyears. Furtherreflectingourcommitmenttoourcommunities,wesponsoremployee volunteersservicingtheneedsofourcommunities.Inthelastfiveyears,our employeesvolunteeredover50,000hoursofPrologis-sponsoredcommunity service.WesponsoranannualImpactDayofserviceforallPrologis employeesacrosstheglobe,resultinginover8,000volunteerhours benefitting38nonprofitorganizationsin2017. I 39 Corporate Governance ShareholderEngagement Wehavealong-standinghistoryofactivelyengagingwithourshareh lders. Webelievethatstrongcorporategovernanceshouldincludeyear-roundengagementwithourshareholders.Wehavealong-standing,robust shareholderoutreachprogramledbyacross-functionalteamincludingpartnersfromourInvestorRelations,TotalRewards,L w&Corporat Affais andGlobalSocialImpactdepartments.Throughthisoutreach,wesolicitfeedbackonourexecutivecompensationprogram,corporateg vernance anddisclosurepracticesandrespondtoquestionsregardingourGlobalSocialImpactprogramsandgoals.Wesharefeedbackwerec ivewi our boardofdirectorsandCompensationandManagementDevelopmentCommittee(the“CompensationCommittee”)asdemonstrat dbelow. CorporateGovernanceCycle Winter/Spring Summer Fall • PublishAnnualReportandproxy statement • Activeoutreachwithtopinvestorsto discussimportantitemstobe consideredatAnnualMeetingof Shareholders • AnnualMeetingofShareholders • Reviewresultsfromourmostrecent AnnualMeeting • Shareinvestorfeedbackwithboard ofdirectorsandCompensation Committee • Evaluateproxyseasontrends, corporategovernancebestpractices, regulatorydevelopmentsandour currentpractices • Activeoutreachwithtopinvestorsto understandtheirprioritiesfor corporategovernance,executive compensationandenvironmentaland socialmatters • Shareinvestorfeedbackwithboardof directorsandCompensation Committee • Boardofdirectorsconsidersinvestor feedbackreceivedthroughouttheyear Aspartofournormaloutreach,during2017wereachedouttoourtopshareholdersandhadconversationswithcorporategover ancecontacts representingapproximately30%ofoursharesoutstanding.Additionally,ourseniormanagementteam,includingourpresidentandc o,an our cfo,regularlyengageinmeaningfuldialoguewithourshareholdersthroughourquarterlyearningscallsandotherchannelsforcommunication. Inrecentyears,shareholderfeedbackhasinfluencedourimplementationofProxyAccessandthespecifictermsadoptedaswellascertainofour compensationdesignandphilosophychanges,includingmostrecentlyminimizingtheuseofspecialequitygrants.Inprioryearsshareholder feedbackhasinfluencedreplacingEPSasaperformancemeasureunderourExecutiveManagementBonusPlan(“EMBP”)withadjustednet revenue(recognizingthatEPSremainsaperformancemeasureunderourPRSUs)andlengtheningtheperformanceperiodunderourPRSU designfromoneyeartotwoyears. ShareholderFeedbackonProxyAccess Atour2016AnnualMeeting,ashareholderproposaltoadoptaproxy accessbylawwassupportedbyamajorityofthesharesthatvotedon theproposal.Inoursubsequentdiscussionswithshareholders,who collectivelyheldmorethan30%ofoursharesoutstanding,regarding theformofproxyaccesstobeadopted,wesoughtandreceivedthe followingfeedback: • Whileshareholderswerenotunanimousintheirview,theygenerally supportedtheconceptofproxyaccess; • Shareholderviewsonspecifictermsunderwhichproxyaccess shouldbeadoptedvaried,butmostshareholderswespokewith supportedthecoretermsthatweadopted(3%ownershipthreshold for3years,anominationrightofthegreaterof2or20%oftheboard andalimitof20shareholderswhomayaggregatetheirholdingsto meetthe3%ownershipthreshold);and • Mostshareholdersalsogenerallysupportedthe“secondary”proxy accessbylawtermsandlimitationsthatwerediscussedandthatour boardultimatelyadopted,includingcountingmultipleinvestment fundsundercommonmanagementasoneshareholder,counting sharesonloantowardsatisfyingtheownershipthresholdifthe shareholderhastherighttorecalltheshareswithinfivebusiness days’noticeandprohibitingthirdpartycompensationfordirector services. 12 / 2018PROXYSTATEMENT