Retail coffee giant Starbucks (NASDAQ:SBUX) shares dived early Tuesday, as a group of labor unions is reportedly ending its proxy fight, after the two sides agreed last week to work toward a “foundational framework” on collective bargaining.
The labor group, the Strategic Organizing Center, argued that Starbucks had responded to a yearslong union push with a “flawed” strategy that diminished shareholder returns and presented reputational risk. The SOC said in its proxy filings that the company’s response to widespread unionization efforts had cost the company nearly $250 million.
It had put forth three nominees to Starbucks’ board of directors, which the SOC is now withdrawing, according to the person familiar.
The cessation comes after two influential proxy advisors, Institutional Shareholder Services and Glass Lewis, both recommended that shareholders vote for management board nominees.
The fight would have been unusual given the small size of the SOC’s economic interest and the composition of the group. It was the first time that a labor union — typically opposed to activist campaigns — had drawn on the activist toolkit.
The SOC hired well-respected communications, legal and proxy advisors who have worked on behalf of major activists and hedge funds. Together, they built a thesis that drew a line from slipshod bargaining tactics to weakened shareholder returns.
SBUX began Tuesday down $1.04, or 1.1%, to $91.42.
