Starbucks Unions Face Setback

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A union that represents Starbucks Corp. (NASDAQ: SBUX) workers may have gotten a major win in its battle against the coffee chain. However, it lost another challenge to the company as it attempted to get seats on the Starbucks board of directors.

Institutional Shareholder Services is a proxy advisory firm that advises investors on how to vote on major issues before annual meetings. It said that the Strategic Organizing Center, a group of labor unions, should not get the three seats on the Starbucks board it has vied for. The ISS evaluation read, “The dissident has failed to establish a material link between these matters and underperformance, undermining its request for over a quarter.” Starbucks has 11 people on its board.

The Strategic Organizing Center includes Workers United, the union that has sought better pay and benefits for Starbucks workers. Its case may have been very hard to prove. Despite the low pay, whether worker treatment affects profits and losses is an open and perhaps unanswerable question. (Five reasons to avoid Starbucks today.)

The decision may not end up mattering in terms of the efforts that labor leaders wanted. After years of resistance, Starbucks management has agreed to sit down with Workers United to discuss improved conditions. The New York Times reported three days ago:

Starbucks and the union that represents employees in roughly 400 of its U.S. stores announced Tuesday that they were beginning discussions on a “foundational framework” that would help the company reach labor agreements with unionized workers and resolve litigation between the two sides.

As an aside, Starbucks shares have been falling, although there is no single reason for the underperformance. In the past year, the stock is down 7% while the S&P 500 is up by 28%. Ultimately, the unions got much of what they wanted despite the share price drop.

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