When times were tough, Apple’s (AAPL) Steve Jobs and Chrysler’s Lee Iaccoca took salaries of $1. Starbucks (SBUX) has just announced that its management will forgo taking raises next year.
Since Starbucks shares have dropped from almost $40 to $16 in less than two years, the gesture seems like a fair one. It may not be of any comfort to the 12,000 people the coffee company fired earlier this summer, but they were sacrificed for better profit margins. It would be hard to find a better reason.
The trouble at Starbucks sits on the shoulders of Howard Schults, the founder of the company and current CEO. He left the top job several years ago and installed himself as chairman, but he knew what went on at the company every step of the way. He ever sent a memorable memo to his top management two years ago predicting that there was trouble ahead. Aside from committing his thoughts to paper, he did nothing.
When things got much worse at the company, he returned as CEO. Aside from letting people go, his primary accomplishments are setting aside a day to "re-educate" store workers and adding a new line of cheap and watery coffee called Pike Peak Roast.
Schultz made a base salary of almost $1.2 million last year. His total compensation was over $10 million, and he owns over 32 million shares in Starbucks.
Given the damage done on his watch and the fact that his net worth is in the hundreds of millions of dollars he could at least hand investors a bone and cut his salary to $1.
Douglas A. McIntyre
Top Gaining Stocks
Top Losing Stocks