Good Corporate Governance: Starbucks

I was perusing the 2008 Starbucks Proxy Statement in preparation for the upcoming shareholders meeting, and came upon this gem:

Executive Stock Ownership Guidelines
We adopted stock ownership guidelines for senior executives during fiscal 2007 to ensure that our executives have a long-term equity stake in Starbucks. The guidelines apply to all executive vice presidents and above. The guidelines require covered executives to have achieved a minimum investment in Starbucks stock within five years.

Minimum investment levels for each job title are:

President and CEO – 5,000,000
Chairman – 5,000,000
CEO – 2,000,000
President – 2,000,000
Executive V.P. – $750,000

The unrealized value of vested, in-the-money stock options counts for up to 25% of the required minimum investment.

This is a fantastic way to ensure that all of the executives have their interests aligned. I think all organizations – no matter the size – should adopt rules like this one.

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