* Shareholder proposal would ban contributions, company PAC
* Starbucks made no contributions, but reserves right to do
* Contributions can "look like bribery," says governance
By Lisa Baertlein and Ronald Grover
LOS ANGELES, March 14 Starbucks Chief
Executive Howard Schultz jumped into the political arena two
years ago, organizing a hundred of his fellow CEOs in a pledge
to forswear campaign contributions till Washington came up with
a plan to fix the nation's debt.
Now, a Starbucks investor wants Schultz to go one better by
prohibiting the world's biggest coffee chain from making any
political contributions, or forming a political action
Shareholders of the Seattle-based company will vote at its
March 20 annual meeting on a proposal by John Harrington, who
owns 800 shares, to "adopt a policy prohibiting the use of
corporate funds for any political election or campaign."
"It compromises your fiduciary responsibility because you
don't know how people are going to vote once they are elected,"
Harrington, chief executive of Napa, California-based Harrington
Investments, said in an interview with Reuters.
Starbucks is one of 125 companies that have faced
shareholder proposals over the last two years related to
political spending, according to a March 7 report by the
Sustainable Investments Institute, which tracks political
spending and corporate governance issues.
In votes held this year, 37 percent of VISA's voting
shareholders and 31 percent of those of Accenture
supported proposals to disclose contributions for lobbying,
according to filings from both companies.
"The problem is that the closer your contributions get to
someone who can help your company, the closer they look like
bribery," said University of Delaware professor Charles Elson,
director of its John L. Weinberg Center for Corporate
Governance. "It's probably best for companies to just get out of
Over the last three years, Starbucks made no direct
political contributions, or operated a political action
committee, according to the annual report to shareholders on its
activity, though it paid dues to trade organizations that
lobbied, it said.
Its corporate policy, however, allows contributions to state
or local candidates, political action committees or state ballot
"We rarely make contributions and when we do we're committed
to doing so transparently," said Starbucks spokesman Zack
Hutson. "We believe that we have a responsibility to advocate
for public policies that support our business, our partners and
the communities we serve."
Starbucks' board recommended its shareholders vote against
the ban, saying it would impact the company's ability to educate
elected officials about its business, promote public policies
"critical to delivering long-term value for our shareholders,"
and "potentially put us at a marked disadvantage relative to our
competitors who are able to participate in the political
The coffee chain made contributions in the past, the board
added, and "may consider doing so in the future if it is in the
best interests of the company, our shareholders, our partners
and the communities we serve."
Delaware professor Elson agrees with the Starbucks approach.
"Let's say someone decides to outlaw caffeine," he said.
"Starbucks' shareholders would expect the company to represent