OPEN THREAD conversation-starter: Howard Schultz's options package is worth over $42 million. How are you doing?

Deep in this recent New York Times story, it says:

On Nov. 17, 2008, as Starbucks shares neared lows not seen since the beginning of the decade, Howard Schultz received options to buy 2.7 million shares at $8.64 as part of his 2009 compensation ...Thanks to more traffic in the stores and renewed earnings growth, shares of Starbucks have risen above $24 a share, making his options package worth $42.3 million.

Discuss the Starbucks CEO's windfall -- or anything else Starbucks-related in the weekend OPEN THREAD. || Jump to the second page of comments.

Comments

[@usorthem3]

“The sector is going through hard times,” Ms. Anderson said. “For workers, it’s demoralizing to see that kind of money going into executives’ pockets when jobs are being cut.”

[adoubleshotofclarity]

The options don't take money out of workers' pockets. It doesn't even take it from Starbucks. Back when the stock was at 8 and change, Starbucks purchased the right for employees who are option-eligible to buy stock at that price, regardless of what the market does. If the company doesn't do well and the stock drops or stays flat, you get nothing. If it improves, as ours has, you have the opportunity to buy company stock at discounted prices.

Before everyone gets up in arms thinking that someone cut Howard a $42 million check, do a little research. This isn't money that came out of anyone's budget.

[me myself and I]

I guess someone somewhere down the road has to pay for it. Otherwise it would be money created from nothing. I agree it is not money taken directly out of baristas pockets, but it money taken from someone somewhere.

[Fred]

It may not be money that came out of anyones budget, but we sure did have to shove VIA down peoples throats under threat of being fired and... Oh yeah! Howard closed down hundreds of stores and fired people. If that wouldn't make Howie a cool 40 mil I don't know what will!! Ok... On to clean the drains!! Have fun on your vacations, guys!!

[whatever]

Frappacino Coffee Base Blended Beverage:
Really, do I have to wear a wrist band that is going to get all nasty!?! How is that going to sell anything? The customer at the drive thru speaker isn't going to see it! Will I get fired if I wrap it around my ponytail?

I don't miss the tshirts/gimics. Seriously lets save the money, I would rather have an extra 2 hours labor a week!

[javagirl666]

I think the wrist bands are fabulous! There are tons of partners who wear them everyday anyway to cover up tattoos..this way, at tleast they will look more uniform. Sell it on e-bay..

[me myself and I]

What wristbands are you talking about???

[SBUX Alum Bill]

@ adoubleshotofclarity:

Let me connect the dots for you:

1) Howie gets a big stock option package at a depressed stock price - depressed in part because of his earlier over-expansion of the company.

2) Howie lays off thousands of his loyal "Partners" to correct his previous mistake.

3) The stock price soars, as the investment community applauds Starbucks' sudden embrace of fiscal austerity.

4) Howie makes the second largest windfall of all CEO's in the U.S.

Summary: Howie reaps big rewards by throwing many of his loyal "Parners" under the bus! Howie wins, and the loyal "Partners" that he threw under the bus lose.

[Lisa V]

It's true that Howie is reaping an unjust reward, however any remaining baristas who were granted stock in that year will also get a small windfall. (Which does not make me feel good about exercising my stock!) We will be reaping a reward as well from that whole debacle, even though it does not make up for the layoffs, taking away personal days, and slower vacation accrual.

[Crema_the_crop]

Wrtistbands are for partners to wear during the promo.

There are also blue aprons to wear behind the line to advertise the new frappuccinos.

No black aprons are allowed during the Summer 1 promo phase to "ensure consistent brand imaging"

Also, who's excited for Frappuccino Happy (crappy) Hour????? 1/2 price fraps 3-5pm. Great. Lowest coverage period of my day.

[Barista Ben]

indeeed. My stock options at $8 a share are worth about $4k now. Thats a lot considering I have a crappy job. Oh. wait.

[SBUX Alum Bill]

@ Lisa V:

Don't feel guily when you cash in your options. You earned it by sacrificing during the tough times (lost benefits, low raises, low morale), and you didn't make any of the decisions that harmed your fellow "Partners."

[BOSTON STARBUCKS REBEL]

If Howard gave his money to the partners of Starbucks, we could all get at least $200.

[Coffee Soldier]

This is the situation....Starbucks is a business...we may be partners but we are just cogs in the giant wheel of business anyone can do our jobs with as little or as much heart as some of us have....it is very unfortunate what happened to the layed off partners BUT this is a business not a charity....the stock market was falling for Starbucks and nearly every other company operating during the reccession. What did you expect our senior leadership to do? Sit back and watch us all stand around doing coffee tastings with 6 partners on the floor at a time? The leadership team made hard decisions at critical times to bring Starbucks back from the brink of being completely flushed down the toilet! If stores hadn't been closed which sadly resulted in some partners losing jobs we would all be unemployed now. Now is the time to buck up and decide whether you want to be bitter and complain over and over on a website (which on another point used to be great fun and infomative to visit and is now so negative that I have cut my visits in half and skip negative posts) or suck it up embrace what the company has done and do your job. if not then get out! There is the door and if you're such a great employee then some other place should snap you up in a heart beat. Many of us own a little piece of this company and I don't know about most of you, but even if I make 5k off stock options that this company granted me if was 5k I didn't have before and the SIP that I invest...well it goes up and down because it's the stock market...I could easily invest anywhere else and have the same luck. Starbucks is not the same as it was 10 years, 5 years, or even 10 months ago so the complaining over and over by the same partners on here is getting very old! Let's talk about coffee, drinks, customers, anything but how horrendous it is that months ago partners were layed off and it's Howard's fault and we are all mad!!!!

Sorry for the rant everyone but I really enjoy some coffee talk or something stimulating rather then bashing the company day after day!

[erstwhile]

Barista Ben: ~$2400 after taxes and withholdings! :(

Although to be fair, I guess you could say Howie only has ~$25.2 million in options after taxes and withholdings. Bummer for him.

[Melody]

@CoffeeSoldier - Closing underperforming stores was probably needed when Howard came back. I think it's possible to take a middle road though: I'm not happy with every single tranformation decision that occurred from 2008 to present but obviously I'm glad about what Howard has done to restore great profitibility. It's okay to BE a cheerleader for Starbucks, but from a business standpoint, they've got to listen to more than just their cheerleaders.

On the plus side, it looks like Via really was a pretty brilliant business idea. It's launching all over the place, and in Japan, with the Via launch, they got all kinds of very cool merchandise! I wish we got all that stuff here. Via tumblers, Via Bearista Bears, Via everything under the sun!

Also, if you want to talk coffee, I'm looking forward to some seasonal offerings coming soon starting summer phase 1. The Peru in the stores now was good, but didn't make my heart skip a beat. Ahh ... I still miss Casi Cielo at times. New Clover coffees come next month. I'm sad that Yirgacheffe goes off the menu. I love that coffee.

[longo]

Has anybody come up with a way to make the new Frappucino taste more like the old one (additional coffee pumps, etc?). We haven't launched them yet but the store where my friend works had to because they ran out of the old product. So far, she is very frustrated about the number of remakes, dissatisfied customers, etc.

We'd appreciate any suggestions from those of you who have been making these for a while. It would save her store some time and money.

[drank all the kool-aid]

I applaud Mr Schultz for making the company what it is today. This time last year our stock was at $8. Look at it now. Im a 15 yr partner and I've made many sacrifices,had many positions within the company,lost many friends to the layoffs. Still, I love this company. I helped build it. I've grown with it and Im lucky to be a part of it.

[Mrs. Tillinghamshackles]

The official literature from Starbucks told us to either do a pump of extra coffee, or a pump less of flavor, or both to make it taste similar to the originals.

[me, myself and I]

Ha ha, I've seen the wristbands now. They look so 80s tennis star like. I'm sure Bjorn Borg wore them. But I have to admit, they are a great conversation starter. Everyone has to say something about them and this breaks the ice to talk about the new frappuccinos. Actually, the customer starts that conversation. Pretty smart move if you ask me. This way we don't feel like pressing it onto people. They are literally asking for it.

[@usorthem3]

@me, myself, and I ~~Bjorn Borg, LOL that was good, maybe some Olivia Newton John Physical to go along. :^]

[....]

i will REFUSE to wear a green or blue apron - i worked my ASS off to earn my BLACK COFFEE MASTER APRON and i wear it every day with pride.

[Cafe Nervosa]

@ "....": This is the one and only time I'll be grateful dress code has never been strictly enforced in my store... I can be gung ho about a promo without wearing a red or orange apron that lives in the BoH and gets disgusting, thank you very much. I'll active sample my heart out and help our store to meet every goal we have... but my black aprons belong to ME and they come to work with me every day, immaculate and oh so slimming.

[(former) FLA SM]

"Let's talk about coffee, drinks, customers, anything but how horrendous it is that months ago partners were layed off and it's Howard's fault and we are all mad!!!!"

Yeah, God forbid the truth should be heard and spoil our good time. By the way, the layoffs pretty much proved that Starbucks employees are not "partners."

[me myself and I]

Really? You worked your ass off to get that coffee master black apron? It was a training, yes, but working my ass off as in very stressfull and time consuming? No! You've even been paid to do the training. So please get a little piece of reality. I'm proud to have mine, too. But I don't see myself above anyone else. I just look at it as a guidance for customers who to look out if they have coffee related questions. Since Starbucks doesn't focus on coffee anymore (and they haven't for a while) the black aprons are actually obsolete.
So if dresscode demands a green or red or purple or whatever apron (and there is a clean one available!!!) that's what we were. At least we don't have to provide them ourselves.

[sydney alexander]

I cant wait to see what to see what your earnings are gonna be now that youve PISSED off about 50% of your LOYAL customers, I spent about $200 a month for five years, and now that youve RUINED my drink, I'll be at McDonalds, and as I see it on the different websites, I wont be alone, its funny that this is the 25th anniversary of the NEW COKE fiasco, dont any of you ceo's remember that? You wanna offer options, fine, but to take away my 'happiness in a cup', thats unforgivable, and I hope it blows up in ur face, and youll be forced to go back, tail between ur legs and BEG for your old customers back, cuz its obvious that u couldnt give a SHIT about us!

[gc]

@sydney alexander:

Hold up... You're coming off like you're kind of angry.

For real, though, it's a blended ice beverage that's coffee flavored. It's not medicine that you'll die if you go without. Frankly, you're probably better off without it.

On another aside, for it to be your 'happiness' is sort of... sad. Not to judge (too harshly), but why not get out, get a true passion and actually experience happiness that you've created and not rely on one that was generated by a retail foodservice business?

Geeze. There are far more pressing things to be angry about -- for instance, how those crazy tea party folks are trying to ruin the country with "their" extreme views. We all know they mindlessly got their convictions from O'Reilly & Co and can't think for themselves. Be angry about that.

[javagirl666]

Really, Sydney?? I have to agree with the above post..get over yourself! I will say this AGAIN..there really isn't that big of a difference..the drink actually tastes fresher now..not so synthetic. Go to McDonald's where they can make you "happe'"..the partners who used to wait on you at Starbucks are probably cheering due to the fact that you won't be in again.

[NaterTots]

I mean, the thing no one mentioned (maybe we're all too optomistic) is that Howie's shares still have to vest like the rest of ours... who knows what the total value of those options will be in 2013 when they're 100% vested?

Maybe he'll be left holding his beans too...

[quityourbitchin]

yea, 50% of customers do not drink frapps and many like them. Pull your head out of your ass

[Melody]

@quityourbitchin - Play nice! You may know it all *cough cough* but it wouldn't hurt to at least think about what the other person is saying.

Not to confuse you with _numbers_ but if the typical Starbucks sells 3% whole bean, 3% merchandise, 18% food, and 76% percent beverages ... Well, if Starbucks is right about the 40 million customers per week in their stores they boast ... that's A LOT of Frappuccinos. Yes, I know there are other beverages, but the Frappuccino IS iconic. Let's wait and see how this plays out before deciding to rough-handle those that don't like the new Frappuccino.

http://bit.ly/98RTNJ
^ Link goes to Coffee City blog poll on whether people like the new Frappuccino. (Link in my name goes to same Coffee City blog post).

[lol]

Sydney,

You sound uneducated. Typical Frappuccino drinker. Let me guess. Extra, extra caramel?

[looong time shift]

@longo
An easy way to make the old coffee frap version: for a grande, add 2 extra FR pumps ( i guess in general, double the pumps -1) its pretty darn close... It should work for all the other flavors as well. Only tried the coffee frap so far to get a (unsweetened) clear point of reference for the taste.

[Cafe Nervosa]

I'm more than a little done with people threatening to go elsewhere. By all means, if I put five and three quarters of a Splenda in your half caff tall half breve half soy semidry cappuccino drink instead of five and a half Splenda, you're free to try Dunkin. Try ordering that there without getting laughed out of the store.

How is something that is dispensed, premixed, out of a tank, better than something made upon request? Good luck getting light ice or double blended. The new drinks are customizable and fresh- When discussing the pros and cons of iced lattes versus the Frappuccino, I would point out that the Frappuccino coffee base comes out of a carton and gets premixed, while iced lattes are made fresh to order. Now things have changed, and a "skinny" Frappuccino has become an idea less worthy of ridicule.

[Darth Sidamo]

@Melody. Isnt it sad that our "Iconic" symbol for an Italian coffee store is infact the furthest thing from that same thing?

As for the frappuccino debate I understand what it is like to have your favorite drink taken away. I really do. I loved Valencia. However in retrospect I would probably be ten pounds heavier if it were still around and maybe you can find someplace else to get your minimal caffeine and 130g of sugar. You might feel like they alienated you, but for every one person they could gain two customers by making it customizable.

This is all about business. This should be evidenced by abandoning being the "Premium Purveyor of Coffee" in exchange for a calorie laden "coffee" smoothie. I mean you don't see Ruth's Chris getting a drive-thru anytime soon? They are after all, the Premium Purveyor of Steak.

[Melody]

@DarthSidamo - One of the ironies of StarbucksGossip is that if you don't take the position "Starbucks knows best, so just go elsewhere or get with the new program" you will be jumped on at this site. That is a horrible attitude. Every single time I see a million posts just saying "go elsewhere" I think that partners must not think about lost customers in the aggregate and what that means for the business. (???)

As for the new Frappuccino - yep it is definitely true that the iconic Starbucks COFFEE house drink is essentially a sugary milkshake-like concoction. Some irony there too.

But if you think about the numbers, Starbucks is serving millions of Frappuccino every week. I'm not even going to do the math, but so 40 million customers a week, with 76% of store sales being beverages, and probably most stores don't do over 10% to 15% top brewed coffee ... All I know is that is a really HUGE number of Frappuccinos every single week.

Here, on this site, if you suggest that it is *possible* that Starbucks made a mistake in changing their most popular and iconic drink, you'll just be told "go elsewhere". But it IS possible that Starbucks has made mistake. I mean the flood of complaints is unbelievable.

Do I personally think they made mistake? I don't know and I am going to reserve making an opinion about that until we have more evidence. We're not even at the full nation-wide launch and the flood of complaints is significant.

I assume that Starbucks thought the number of new Frappuccino drinkers they would bring in ...soy, non-fat, etc... would outnumber the people they lose.

At some level, it doesn't really matter if the drink is "fresher". For many people if tastes great, that's the important thing. The fact that the old Frappuccino came out of a carton isn't really alarming for many people... it's merely evidence of typical American consumption habits not evidence of a failed beverage.

And my personal opinion? Well, I love the new Frappuccino because it is so versatile. But I still won't end up ordering all that many because it's not really my drink. A tall breve dark cherry vanilla bean Frappuccino is delicious. But if my opinion about beverages was ever half-way right on the money and influential, we'd get rid of Pike Place Roast (about 15% of customers pick this as their fave coffee), we would still have Sorbetto in select stores (so delicious and remember the hype on that one?), the honey-vanilla Vivanno would have launched (another amazing beverage that never got out of test phase), and we never would have changed the recipe to the Vanilla cupcake this year.

(Link in name is still to the Coffee City poll on the new Frappuccino)

[javagirl666]

My store sells..at max..200 frappuccino/week. If I lose 50% of those..good riddance. I actually bought a McHappe Frappe today..it really didn't taste like anything. Fresh is always better and yeah, when you're asking for an extra 10p of caramel syrup..whatever.

[Christinschu]

From the test markets frappuccino sales actually increase with the new recipes, i can dig up the actually #'s later, but it's significant. It seems that the people who prefer the new way actually outnumber those who hate it. So even though some may never come back, we are gaining enough new customers to more than make up for it.

[Melody (Reply to Christinschu)]

@Christinschu - Testing never tells the whole story, despite what the numbers are. (And remember the issue with Via numbers? Pike Place Roast numbers are far less accurate because baristas often don't use the 'morning pick' button). I'm sort of stunned that Starbucks Gossip has become the place where "everything that Starbucks does is right, and don't question anything the corporation tells us."

There will always be a significant rise in purchasing a test product because of the effect of 'oh look, something new, let's try it out'. That effect can last a long while because of all the people who are only treat-seekers and come in just once or twice a month.

It is true that over years and years, this will normalize. It will just be what it is. Five years from now, lots of people won't remember that there ever was a different Frappuccino. Over time, you simply stop hearing from customers who didn't like the product because they leave. Under this theory of 'time normalizes everything' you can launch ANY product and it will work, because over time new customers will never know that there was a difference. But just because you can sell anything, doesn't mean you should and it's right for the business.

I'm trying not to vote on the million and one threads at MSI about the Frappuccino because I want to see more how this all plays out. But if we can't question the corporation, we're in a world of hurt.

And I'm sure everyone can think of a million examples where really scientific polls, surveys, and testing have turned up the wrong results due to spurious data confusion.

[Christinschu]

Melody, that's an overstatement. You cannot "launch ANY product and it will work". We have had SEVERAL failed products, despite pressure to make the successful.

As you stated yoruself, starbucks Tests lots of products, and actually the majority of them DONOT make it to the final nation wide roll out. And these were not small test markets for frappuccino, and it lasted for years. It has been very extensive.

Yes there are people that don't like them, however, the good outweighs the bad, as determined by testing and sales.

[Christinschu]

Blurg I wish I could articulate my thoughts better, but my dog spilled a soda on my macbook keyboard and it's very hard to type on!

[socal barista]

I do think this is one of those cases where people are complaining just to complain. And I'm not sure if it's been like this everywhere, but in my district the training was rushed and many people have differing opinions on how exactly to make them. No one read the provided materials fully, not even my manager. It's been incredibly frustrating having to hold up a line of customers trying to explain to my bar person that the number of pumps of mocha differs depending on which pump you use. One girl actually told a customer that we're not putting espresso shots in the frappuccinos anymore!!!! *bangs head on table*

I just transferred to a new district, and I am AMAZED at the lack of knowledge the baristas here have about our drinks. My manager didn't even know the cup marking for breve. He put a 1/2 in the milk box (He also asked me if Frapp. syrup came in the daily or RP order). They don't even have SHOT GLASSES at my new store. I think my old manager would faint if she saw the condition this store is in. As a lowly barista, I really have no power here but my god. I can't even order a drink from my own store now because of the lack of knowledge and skill required to make our beverages.

Sorry for the rant. I just take my job very seriously and get annoyed when others don't.

[BAYAREABUX]

Said it before and I'll say it again, "My Starbucks Idea" is dead.

It's just an echo chamber for Frappuccino and rewards gripes.

It's high time to fold up tent Chantico-style and pretend it never happened. We're really good at doing that!

[Melody]

@Bayareabux - You've got a valid point there. But part of the problem was the format of MSI from the beginning. Giving millions of customers an online blank piece of paper and saying 'write anything' is impossible to control. Starbucks needed to create real and vibrant blogs with themed discussion to keep people on one topic, and prevent the million duplicate threads.

@Christinschu - I'm just very irritated at the all pervasive attitude of "if they're complainers, we don't need them as customers. Starbucks is always right, and the customer is always wrong." And that it is totally inconsistent with the stated Starbucks leadership message of "We put the customer in every room and every meeting with us."

Will the new Frappuccino work? Who knows. Maybe so. But just because folks in Dallas and Tampa seemed to like it, doesn't give us a definite answer. People in Chicago liked Chantico.

The only way we know if the new Frappuccino is a success is to look at the data about one year from now: We have to get passed the "happy hour" Frappuccino which will inflate sales, and we have to get passed a few seasons of weather, and we have to see how the whole nation likes it. And we have to get beyond the point of it being a novelty so all the people who try it because it is new. Then, one year from now you *might* have some real data. Even then, data would have to be normalized for the heavy promotional sales offerings (coupons for rewards members, ads, and happy hour). Then compare the year's worth of data from about 2007-2008 (before the test) to 2010-2011.

And 5 years from now, it won't *really* matter. But I still can't jump on the bandwagon of tell the customer, "We don't care if you don't like it. You're a complainer so go elsewhere." Horrible business attitude.

[javagirl666]

Don't take me wrong..I think Starbucks has been wrong about ALOT of things. Can I control them..nope. When you are on the front lines day in and day out, you hear people complaining just to make themselves seem important. This gets old real quick. But, if you are so ignorant as to not let the barista work with you to find a flavor that suits your taste..then no, I don't care if you come back. The customer is not always right and I will support my partners to the end..this "horrible business attitude", my dear, has created a very successful career for myself as well as all of my direct promotes, very happy partners and even happier customers.

[@usorthem3]

@javagirl666 Your store does 200/wk.? Tx Cafe store=100+/day. It's the measure cup thing that is killing my timing. Sigh.
And I know breve would make them good to drink, but what is good is not always good for you, I wouldn't do it daily.

[yeano]

one of the obvious facts about the internet is that it is anymous-yes, anyone can make a bazillion screen names and complain ...and it looks like 1 person is 25...funny how that works

[nematode]

well we launched the new frapps we ran out of product. we were told not to mention it to anyone of the change until the roll out. so far no complaints. i bet the same people who have been served the new frapps for 2 weeks will start complaining that it tasts different... lol

[BLACK BALL's]

I just got with McD's in Kanas City, and told them if they start blending their ICED COFFEE's, they would sell a lot more.
They told me they would start trying something new in the stores this summer.

So what ever happened to the RD that QUIT, sold out to McD's in Kansa City, and took the Starbucks Coffee Manual on his way out the DOOR....
So way did McD's start in the Kansas City Market, does anyone know??

[Stock Sucks]

So Stock has been raising, but the fasted way to get a companys stock to raise, is to have the Board of Dir. to do a large buy back, that pushes the stock up and makes the market look good, so when you are making a few Mil. a year and buy some 8.00 stock, and watch it climb to 27.00 as of Friday.
So now you know how way Starbucks stock shot up.

By the way the reason for Stock, is to help a company grow, not to pay off the CEO. Stock $$ was to go back into the company to increase the company and it's sales.... That's way it is called an investment...

The people that got Laid-Off got screwed out of most of their Stock...
because it dropped below market value, and the purchase price, so they didn't get vested, I lost over 800 shares.
I had to sell back all my stock so I could pay my bill's, I lost over $60,000 and could not claim any lost on Tax's this year. I did get laid-off...