Social Investor Proposal on Paid Leave at Starbucks Illustrates Use of Governance Tactics to Push fo

Executive Pay Plan Design, Shareholder Viewpoints

Last week, when Bloomberg ran an article titled "Starbucks, Google Assailed by Investors Over Gender Policies," it became clear that the era of using governance tactics to push even more progressive human capital policies had dawned.  On October 1, Starbucks put into effect a new paid leave policy, which provides six weeks of paid leave for new mothers who work 20 hours a week in the retail stores, regardless of how long they have worked for the company.  However, Zevin Asset Management, which describes its team as "pioneers in social investing," submitted a "first-of-its-kind" shareholder proposal that asks Starbucks to prepare a report on the new policy, calling it "particularly unequal" because the company offers mothers at corporate headquarters 18 weeks paid leave.  According to the article, Zevin believes that the "divide between headquarters and the front-line workforce can erode morale" and that the situation "is an employment discrimination situation waiting to happen," according to Pat Tomaino, Zevin's Associate Director of Responsible Investing.  Starbucks pointed out that in addition to its paid leave policies, all part-time workers are eligible for 12 weeks unpaid leave.  The article notes that Zevin has approached over a dozen large companies, including Amazon and Google, about their paid family leave policies, generated in part by the lack of federal legislative action on the subject.  Zevin's strategy of targeting marquee brand names is clearly aimed at setting market trends at the nation's top employers—even those with especially progressive policies—which would subsequently pressure companies competing for talent with those organizations to adjust their own policies to remain competitive.