Starbucks Corp. (NYSE: SBUX) Chief Executive Howard Schultz took plenty of grief earlier this year after his company awarded him a $1 million bonus at a time when the coffee retailer was struggling. Now, the 25 percent salary increase looks like money well spent.
It sounds callous to reward a CEO at a time when he dismissed 19 percent of the workforce and closed hundreds of stores, but corporate chiefs are supposed to be paid for performance. Schultz’s $12 million pay package seems high but it was deserved. For the fiscal year ended Sept, 27, 2009, profit rose 24 percent and sales fell 6 percent, not a bad performance for a company struggling in the midst of the Great Recession. Wall Street sure thought so, bidding the shares up 40 percent during that same time.
The coffee retailer continues to do well. GAAP EPS rose 35% while revenue rose 9% in the most recent quarter. Comparable same store sales — a key metric for retail companies — gained 9%. Operating margins rose by 400 basis points. Its VIA instant coffee, which many thought would dilute the brand, has enhanced it. Sales have topped $100 million.
Shares of the Seattle-based company are up 38 percent this year. Most Wall Street analysts rate the shares as a buy, underscoring the opinion that Schultz has delivered for shareholders. He deserves another raise. It’s only fair.
Jonathan Berr
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