Starbucks Raises Lack Detail, Bolster CEO Image

The chairman, chief executive and founder of Starbucks Corp. (NASDAQ: SBUX), Howard Schultz, often makes public proclamations about issues, from gun lovers in his stores to race relations and the presidential elections. It’s unusual for public company CEOs to be so vocal. However, he is a billionaire and can do as he pleases, unlike many other public corporation leaders whose shareholders might be uncomfortable about chief executives taking open opinions.

Schultz’s most recent proclamation is about the wage increases he will give Starbucks employees. He could not just send a note to his workers. He has to make it a press release at the Starbucks company site. But the announcement was short on details.

Companies that give employees raises, even if they do not want to do so, release information about the size of the raises, and how many “partners” or “associates” will be affected by the program. In memo to his workers, and the world in general, Schultz wrote:

On Friday, I wrote you that I was at a loss for words in the aftermath of a tragic week of violence in our country. This past weekend, as I prepared to share important news with you, a word found me. That word is trust. For me, trust is a force that brings people together regardless of differences because they share common values. While trust in America may seem to be fraying, I do believe the majority of Americans recognize our shared humanity and strive to ensure that respect, civility and compassion rise above the alternatives. Trust, after all, must be earned one human connection at a time.

[nativounit]

He could not keep any distance between his personal view about violence and raises. He got to the point much further into the memo:

First, effective October 3, all partners and store managers in U.S. company-operated stores will receive an increase in base pay of 5% or greater. The range of increase will be determined by geographic and market factors and is intended to ensure Starbucks remains a retail employer of choice in all the markets where we operate.

“Geographic and market factors” dodges the issue of what the lower-paid Starbucks workers get. A raise from the minimum wage, the so-called working wage of $15 that has become law in several states, or some other number?

In fairness, Schultz said two other programs that include access to flexible benefits and “bean stock” awards for longer term workers presumably help some large number of people who work for the coffee store company.

Starbucks is one of the lowest paying companies in America, according to research by 24/7 Wall St. Schultz did not mention that, but he did get a get a great deal of press coverage about his generosity. He closed his statements as follows:

Again, the world around us is increasingly fragile. But our commitment to you is not. We are in this together, and honoring your needs is essential to Starbucks success.

A fragile world for low-paid people, which Schultz left out of his comments.

[wallst_email_signup]

Separately, Starbucks announced Tuesday morning a price increase of about 1% on select beverage sizes.