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REGULATORY ACTIVITY

PROXIES-Starbucks Allowed to Exclude Majority Voting Proposal from Proxy Materials

By John Filar Atwood, J.D.

Starbucks Corp. will exclude from its proxy materials a shareholder proposal regarding majority voting based on advice from the SEC Division of Corporation Finance staff that the company substantially implemented the proposal. The staff found that the company's policies, practices and procedures compare favorably with the proposal's guidelines.

The proposal was submitted by James McRitchie who named John Chevedden as his designated representative. McRitchie asked the Starbucks board to change each voting requirement in the company's charter and by-laws that calls for greater than a simple majority vote to, instead, require a majority of the votes cast for and against a matter. This would be the closest standard to a majority vote consistent with applicable law.

In support of the proposal, McRitchie argued that shareholders are willing to pay a premium for companies with excellent corporate governance. In addition, he noted that the majority vote proposal had already won significant support from shareholders of Weyehauser, Alcoa, Goldman Sachs and other companies.

Gibson, Dunn & Crutcher, counsel for Starbucks, pointed out that the only provision in the company's by-laws that calls for greater than a simple majority vote is in Article X, which requires a two-thirds vote of the board to amend the by-laws. Counsel noted that Starbucks is already in the process of removing that supermajority voting standard from its by-laws. Specifically, the company recommended at the November board meeting that the board approve a recommendation to eliminate the two-thirds vote requirement for by-law amendments. The SEC staff concurred that in light of this information, Starbucks had already implemented the proposal. [Starbucks Corp., SEC No-Action Letters Ind. & Summaries (WSB) #1126201202 (November 27, 2012)]

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