Starbucks' Confusing Memo

28 Aug 10:01am
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So, Howard Schultz the billionaire will not get a salary raise at Starbucks (SBUX) this year. This is news why? The memo gets leaked and then there is a section in it that catches my eye.

From the memo:

All U.S. vice presidents and above, including Howard Schultz and the senior leadership team, will receive no salary increases this year.

Based on Starbucks year-to-date performance, we are not currently on track to reach the requisite financial targets for the General Management Incentive Plan (GMIP). When we announce FY08 results in November, GMIP participants will learn more about the status of bonus payouts.


What status? If you are not on track to meet the targets, there ought to be nothing, correct? Or, are we going to play the Circuit City (CC) game of lowering the target and give them a bonus in lieu or a "raise next year"? Or, are we going to lower targets and increase incentives for next year so it all comes out in the wash? That statement was just way too ambiguous for me.

I am going to watch this. Think about it. How far has the brand fallen when corporate actions can be looked at in the same vein as those at Circuit City?

View full memo



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ToddSullivan

A Massachusetts based value investor, I look for companies whose current valuation is at a discount to their true value. When I purchase a stock, my typical holding period is several years. I consider buying a stock purchasing a piece of a business. I am confident once I make a decision to buy that eventually the market as a whole will recognize the true value of the business and value it accordingly. It may take 1 month, 6 months or a year, but if I buy it at enough of a discount to its true value my results will be (and have been) superior to the market as a whole. Of all the disparate investing disciplines, value investing has stood the test of time. The great investors of have all been value investors. Warren Buffett, Ben Graham, Bill Ruane (Sequoia Fund), Bill Miller and Wally Weitz, all have consistently outperformed the market for decades by using various forms of value investing. Currently I am a contributing writer to Seeking Alpha, Vinvesting.com, The Stock Masters and Value Investing News. Posts have been reprinted in The Wall St. Journal, Yahoo Finance, Google Alerts, Google Finance, TheStreet.com. 24/7 Wall St. and Topix.net.