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No Bonuses for Starbucks Top Execs as Coffee Retailer Struggles


By ELIZABETH M. GILLESPIE
AP Business Writer
The Seattle Times

January 24, 2008

Neither Starbucks Corp. Chairman Howard Schultz nor the chief executive he recently replaced received bonuses last year, as the coffee retailer struggled with weak demand amid the U.S. economic downturn, high dairy and energy costs and growing competition from cheaper competitors.

Schultz, who reclaimed the CEO title when Starbucks fired Jim Donald earlier this month, received compensation the company valued at $12.6 million in fiscal 2007, according to a filing with the Security and Exchange Commission on Wednesday.

Schultz was paid a $1.19 million in salary, but his package for fiscal 2007, which ended Sept. 30, was boosted by stock options worth $10.6 million when they were granted and perquisites valued at $861,398.

The perks included nearly $497,000 for personal security, $3,237 for health insurance premiums and an annual physical, $13,500 for retirement plan contributions, $155,100 for a personal secretary, and nearly $193,000 for the replacement of a life insurance benefit the company used to give him.

Schultz reimbursed Starbucks about $401,000 for personal use of corporate aircraft.

The Associated Press calculations of total pay include executives' salary, bonus, incentives, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year.

Starbucks, the world's largest chain of coffee houses, earned $672.6 million, or 87 cents per share, in fiscal 2007, up from $564.3 million, or 71 cents per share, the year before. Revenue in fiscal 2007 totaled $9.41 billion, compared with $7.79 billion a year earlier.

Schultz and Donald failed to double their salaries under the company's fiscal 2007 bonus plan for executives because the company fell short of its internal operating profit targets.

Donald, who was promoted to CEO from president of Starbucks' North American division in March 2005, received compensation the company valued at $7.4 million.

He earned a $1 million salary, but his package was boosted by stock options worth $6.3 million when they were granted and perquisites worth about $37,000.

The perks included about $4,100 for personal security, $2,880 for health insurance premiums and an annual physical, $4,400 for retirement plan contributions and $25,549 for personal use of corporate aircraft.

The company has not indicated whether it has paid Donald severance.

In its proxy statement, Starbucks said it generally offers new senior executives severance pay amounting to one year's base salary if their employment ends for any reason other than cause, but that none of its 2007 executive officers currently has such an arrangement.

Copyright © 2008 The Seattle Times Company

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