A pay freeze has been announced for Starbucks' CEO and other top executives. Store managers and roasters are still eligible for raises.
Howard Schultz and about 130 other Starbucks executives will receive no salary increases next year, according to a memo sent to employees on Monday. Schultz’s salary has been $1.2 million since 2004, although other compensation has varied. Last year, his total compensation was $10.6 million.
The pay freeze includes everyone at the U.S. vice-president level and above and applies to fiscal 2009, which begins Sept. 29. In the memo, head of human resources Chet Kuchinad said a 3.5 percent salary increase will be available for eligible U.S. store managers, assistant store managers, retail-management trainees, district managers and most hourly roasting-plant employees.
Hourly employees in U.S. stores will continue to follow current guidelines for merit increases, he wrote. Other eligible U.S. employees below the vice-president level who have a certain performance rating will receive 2 percent flat salary increases.
Starbucks’ last publicized wage increase came two years ago, although pay scales and typical raises are not made public.
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At StarbucksGossip.com, some employees complained that the raises do not keep pace with inflation, which reached above 5 percent this summer. They also don’t like that in some categories, workers will receive the same raise even if they performed better than their colleagues.
“It will be a very easy decision for talented partners to continue to leave the company,” one post said. “This is like playing [the computer game] Oregon Trail without feeding the family and they slowly die of cholera and dysentery. It’s not a strategy that works.”
It is not clear whether executives will receive bonuses for fiscal 2008, although Kuchinad’s memo said, “We are not currently on track to reach the requisite financial targets” for the incentive plan. More information about bonuses will be available when Starbucks releases fiscal-year earnings in November, he said.
“While faced with a tough environment,” he wrote, “we are energized and remain focused on our efforts to strengthen the business and build long-term value.”
Starbucks stock rose 8 cents at $15.59 on Wednesday.
Melissa Allison: 206-464-3312 or email@example.com