Paying it Forward


Howard Schultz
Chairman, president and CEO
Starbucks Corporation
2401 Utah Avenue South
Seattle, Washington 98134

Dear Mr. Schultz:

It takes a special breed to be CEO of a big company. CEOs create jobs. They stimulate the economy. They generate new wealth among the working class.

Oh, wait. That was last century. The textbook is still being written on what CEOs in this century are supposed to do. No doubt it will include a good explanation for why CEOs at America’s largest companies make about 300 to 500 times more than the rest of us. I’m sure there’ll also be something in there about how today’s CEOs are fearless, dynamic and born to lead. Let me congratulate you, then, on fearlessly and dynamically leading Starbucks to record profits and thus receiving nearly $22 million in total executive compensation last year. With $5 million in cash and $17 million in stock options burning a crater in your pocket, you could do amazing things. Like pay for the Starbucks siren to restore her nipples and navel. Maybe buy art lessons for whoever did the new Seattle’s Best Coffee logo.

Or you could do something that would get you kicked out of the “no paycheck is big enough unless it’s bigger than the next guy’s” club but possibly make everyone here forget that whole Sonics debacle. I’m talking about a public gesture that might persuade other capitalists to do the same, lest they be remembered as the generation so afraid to invest in the future that they chose to sit on $2 trillion in cash while jettisoning workers and moving production overseas.

What kind of gesture? No doubt your baristas could come up with some grande ideas. Maybe even a few venti ones. However, I’m suggesting that you publicly say the gap between your compensation and that of your Starbucks colleagues is as out of fashion as, say, nonrecyclable coffee cups. A century ago, J.P. Morgan suggested that a 20-to-1 ratio of CEO pay to average worker pay was eminently fair. As recently as a generation ago in this country, it was about 30 to 1. That’s roughly what it is in Europe today. So where do we get off allowing it to be 300 to 1? Or more?

I know, and I get it. CEOs believe that not everyone can do what they do, that they deserve to be richly compensated for steering their ships around rocky shoals. And it’s silly for someone like me to decry the eye-popping stock options and inflated bonuses because if a board of directors that I had a hand in picking offered me $22 million in compensation, I wouldn’t exactly say, “Uh, no, thanks.”

But this is a time when we need to admire our CEOs for their commitment to finding their better selves, and not for how many Frappuccinos they can buy. Nationally, CEO compensation is up almost 20 percent. Apparently, the recession is over. Someone simply has to start the ball rolling for the people who kept the lights on in the darkest hours and who make CEOs look good in the brightest. And it ought not to be the kind of ball that crushes people because they’re paying attention to something else, like, say, keeping their jobs.

Starbucks is annually rated one of the best companies to work for. Imagine its CEO telling his staff that the gap between his compensation and theirs is absurd and that he’s reinvesting some of it in making the company stronger and fairer. Seems implausible, I know. But some things in corporate life simply defy logic.

Yours sincerely,
John Levesque

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