Stock. Bean Stock. Sharing in Our Success. United States

Transcription

1 Stock Bean Stock Sharing in Our Success United States

2 Bean Stock Rewards Partners We are proud to be able to offer Bean Stock to partners around the world. Created in 1991, Bean Stock is an opportunity for partners to share in the financial success of the company through shares of Starbucks stock it s why we are called partners. We continue that long history of investing in you, our partners with this year s Bean Stock grant. Bean Stock is one of the many ways for partners to know their contributions are valued and rewarded. As partners and shareholders, we fully recognize that Starbucks current successes are due to your ongoing commitment to deliver extraordinary moments of connection with customers and each other. So, this reward is our thank you for all that you do to create an exceptional Starbucks Experience in our stores and in the communities we serve. Congratulations!

3 Look Inside 2 What You Need to Know 3 Actions to Get You Started 4 Bean Stock Restricted Stock Units (RSUs) Questions and Answers 4 Who Is Eligible? 4 What Is a Bean Stock Restricted Stock Unit (RSU)? 4 How Many Bean Stock RSUs Will You Receive? 5 How Does Vesting Work? 6 How Are Taxes Determined? 7 What Happens After the Shares Are Deposited into My Fidelity Account? 8 How Do I Sell My Shares? 8 What Services Does Fidelity Provide? 9 Currency Conversion 9 How Do I Set Up My Fidelity Account? 10 How do I accept my grant online at Fidelity? 11 What Happens If I Leave Starbucks? 12 Where Can I Get More Information? 13 Glossary

4 What You Need to Know It s important that you understand how your Bean Stock reward works, how you ll receive value from your reward, and what to expect. Read through this brochure for details and watch the Bean Stock videos on starbucksbeanstock.com to learn more. Remember, Bean Stock is a reward that is granted to you; there is no need to enroll. Here are a few quick facts: Your Bean Stock reward will be in the form of Restricted Stock Units (RSUs). RSUs give you the right to receive shares of Starbucks stock after a specified period of time, known as vesting. RSUs vest 50 percent the first anniversary and 50 percent the second anniversary. This means on the first anniversary date of your grant when it vests you become a Starbucks shareholder. 2

5 Actions to Get You Started There is no need to enroll in Bean Stock, but you need to activate your account at Fidelity to view and manage your Bean Stock reward: If you have not activated your Fidelity Account yet, go to netbenefits.fidelity.com. Select Register Now. Click the Activate link next to your Starbucks stock plan and follow the step-by-step process to fully complete your activation. If you don t activate your account and complete your tax certification form (which is part of the activation process) by the first anniversary of the grant, this may impact the release of your shares and could result in additional tax withholding. You will need to accept your grant online as soon as possible. If you do not accept your grant, this may impact the distribution of net shares on the vest date. Always keep your home address current with Starbucks. This ensures the timely delivery of important information such as: Monthly, quarterly and annual account statements Confirmation statements for sale transactions Important year-end tax information 3

6 Bean Stock Restricted Stock Units (RSUs) Questions and Answers Who Is Eligible? You are eligible for Bean Stock Restricted Stock Units (RSUs) if you: Are employed by Starbucks as of May 1 of the fiscal year preceding the grant date Are paid at least 360 hours during the fiscal year, and Are in a position up to, but not including, the director level. What Is a Bean Stock Restricted Stock Unit (RSU)? A Restricted Stock Unit, or RSU, is the right to receive a specified number of shares of Starbucks common stock upon satisfaction of the vesting period. You receive shares of Starbucks stock (less taxes) when your RSUs vest. In addition RSUs are never underwater there is always some inherent value, and upon vesting you own the shares outright. There is no need to exercise RSUs. How Many Bean Stock RSUs Will You Receive? The number of Bean Stock RSUs you may receive vary year-to-year based on your job (retail) or annualized salary (nonretail) and the fair market value of Starbucks stock on the grant date. The number of RSUs granted is calculated by taking the economic value and dividing it by the closing price of Starbucks stock on the grant date. 4 For retail partners (barista through district manager), Starbucks determines your economic value based on the job you hold on the last day of the fiscal year. Each retail job will have a fixed economic value that will be awarded to each partner who holds that position.

7 For nonretail partners, Starbucks determines your economic value based on your annualized salary as of the last day of the fiscal year. Retail Reward Calculation Example Based on Job Job: Barista Economic Value (USD): $375 Fair Market Value: $50 (closing stock price on grant date) RSUs Granted: = 8* Nonretail Reward Calculation Example Based on Annualized Salary Annualized Salary (USD): $10,000 Economic Value (USD): $375 Fair Market Value: $50 (closing stock price on grant date) RSUs Granted: = 8* *All Bean Stock RSUs granted will be rounded up to the nearest whole share. How Does Vesting Work? Vesting is basically a waiting period during which you must remain employed by Starbucks without any breaks in service. As your Bean Stock RSU grant vests, the units become shares of Starbucks stock that you can then sell or continue to hold in your Fidelity Account. Bean Stock RSUs vest over a two-year period. On the first anniversary of the grant date, 50% of the grant vests. The next 50% of the grant vests on the second anniversary of the grant date. 5

8 Vesting Example Let s say you received 8 RSUs on the grant date. As long as you remain a partner, 50% or 4 RSUs will vest on the first anniversary of the grant date. And on the second anniversary of the grant date, the remaining 4 RSUs vest for a combined total of 8 RSUs. % VESTED 100% 50% 4 +4 ANNIVERSARY RSUs = Important Information About Taxes With RSUs, the taxable event is the vest date. How Are Taxes Determined? When RSUs vest, depending on where you work and/or live, you may be required to pay income tax on the market value of the vested shares. Starbucks will satisfy any tax-withholding obligations, if applicable, by reducing the number of vested shares equal to the amount of income tax you owe. This is referred to as Netting of Shares. The remaining shares will be deposited in your Fidelity Account shortly after the vest date. At vesting, Starbucks is responsible for reporting the taxable income to the tax authorities. The taxable income will also be reported through payroll, and the amount of tax withheld in shares will be detailed on your pay statement. Partners who have been granted RSUs while employed by Starbucks in other countries may have additional taxes that need to be withheld through local payroll at the time of vesting. 6

9 Tax-Withholding Example Let s say you received 8 RSUs on the grant date, and one year later when the first 50% (4 units) vest, the closing price of Starbucks stock is $55. This example is for illustration purposes only: Vesting Date: First Anniversary Closing Stock Price (per share) on Date of Vest: $55 Taxable Income: 4 x $55 = $220 Tax Withholding: $220 x 32.65%* = $71.83 Shares to Cover Taxes: Netting of Shares: Number of Shares Deposited in Fidelity Account : $71.83 $55 = 2** shares 4 2 = 2 shares 2 shares Value of Net Shares: 2 x $55 = $110 * The example shows tax withholding at the U.S. supplemental income rate at the time of grant, which includes 25% Federal, 6.2% FICA and 1.45% Medicare. The example in this situation does not reflect state, provincial and or/local taxes. For your own personal situation, we encourage all partners to consult with their own tax adviser with respect to the federal, state and local tax consequences in regards to taxation of RSUs at the time of vest. ** Shares will be rounded up to the nearest whole share, and any residual from the netting of shares will be refunded to you through payroll. What Happens After the Shares Are Deposited into My Fidelity Account? You can easily determine the value of the net shares deposited into your Fidelity Account (value = shares x price). Once deposited you have two options: Option 1 Keep the shares in your Fidelity Account. You can keep the shares in your Fidelity Account and become a Starbucks shareholder. As a shareholder, you have the right to vote on important Starbucks issues, such as who serves on the Board of Directors. You will also be entitled to receive any quarterly announced dividends as long as you remain a shareholder through the dividend record date. You also take on the benefits and risks of changes in the stock price. 7

10 Option 2 Sell the shares through Fidelity. You may sell the net shares that you own at any time once they are deposited into your Fidelity Account. Please note that when selling any Starbucks stock, all partners must follow the Starbucks Insider Trading Policy, which prohibits trading in Starbucks stock while aware of material, nonpublic information. If you have questions regarding this, please contact Starbucks Securities and Corporate Law at (206) or (206) to discuss these restrictions before you first engage in any transaction in Starbucks stock. How Do I Sell My Shares? Contact Fidelity to sell* some or all of your vested shares online through netbenefits.fidelity.com, or by phone with a Fidelity Representative. Fidelity will sell the shares immediately on the open market. Fidelity will deposit the cash proceeds less fees into your account upon settlement. You can instruct Fidelity to send the proceeds to you by mailing a check or making a wire transfer directly to your bank account. As each partner s personal tax situation is unique, consulting a tax adviser is recommended before you sell any of your Bean Stock. Please refer to the Partner Information Supplement posted on the Fidelity website section under Plan Documents. * Be aware that if the stock price increases after the vest date, your value increases and you may be subject to either a long-term or short-term capital gains tax. If you sell the shares and the stock price has gone down, you would then experience a capital loss. What Services Does Fidelity Provide? Fidelity Stock Plan Services (Fidelity) is Starbucks dedicated provider of recordkeeping and administrative services for stock plans. Fidelity and Starbucks have teamed up to provide you a host of benefits and services that will give you easy access to your stock plan information. 8

11 One of the advantages of Bean Stock is that you are provided with a Fidelity Account. This lets you conveniently manage your Bean Stock and access your proceeds to help fund your overall financial goals. At Fidelity you can: Access your account information online View account balances Conduct transactions Use investment tools Transfer proceeds directly into your bank account upon settlement Access stock plan documents Access transaction confirmation and account statements Currency Conversion If you wish to withdraw cash proceeds from your Fidelity Account, currency conversion is an optional service offered to stock plan participants. If you choose not to use Fidelity Stock Plan Services for your currency conversion, you can wire proceeds out in U.S. dollars and convert them at another institution (if allowed by your country / bank). Please note, exchange rates and transaction times may vary over time. You are encouraged to review and compare rates to ensure you receive the best rate possible. If you have questions regarding currency conversion, please contact Fidelity Stock Plan Services. You may also incur fees from your financial institution. How Do I Set Up My Fidelity Account? You will automatically be set up with a Fidelity Account. Before you can take advantage of your Fidelity Account, you need to activate it on netbenefits.fidelity.com. To ensure you are making the most of this benefit, be sure to activate your account as soon as possible. If you prefer, you may also call a Fidelity Representative at (866) to request a paper application to activate your account. As part as the account activation process, you will also need to check your W-9 Tax Certification status online and complete the appropriate form at Fidelity. This form is part of the account activation process. If you do not complete this Tax Certification form, you may have an additional tax withholding from the Internal Revenue Service (IRS) at the time you sell your shares. 9

12 How do I accept my grant online at Fidelity? 1 2 LOG IN to netbenefits.fidelity.com If this is your first Bean Stock grant, ACTIVATE your Fidelity Account Follow the steps to enter/verify your personal information. You will be asked to read and agree to the terms of the agreement. 3 VIEW and ACCEPT your grant Your unaccepted and accepted grants will appear on the Summary page. Click Accept Grant. Before accepting your grant, you must read your Plan Document by clicking on the Plan Document link. Indicate that you have read and agree to the plan documents by checking the box and click Next. You must also read and agree to the terms of your Grant Agreement by clicking on the Grant Agreement link. Indicate that you have read your Grant Agreement by checking the box and click Accept. You will receive a Confirmation Number showing that you have completed the acceptance process for your grant. 10

13 What Happens If I Leave Starbucks? Depending on your situation, the chart below explains what happens to your vested and unvested Bean Stock RSUs when you leave Starbucks. Your Situation What Happens to Your Vested Bean Stock RSUs What Happens to Your Unvested Bean Stock RSUs You voluntarily leave Starbucks or are separated for reasons other than misconduct or retirement. You involuntarily leave Starbucks for misconduct. You retire at age 55 or greater and have 10 years or more of credited service. You are no longer an active Starbucks partner due to a permanent and total disability. All vested RSUs that were converted to actual shares are yours. You determine when to sell these shares. There is no time limit. All unvested RSUs are forfeited. Your death. All vested RSUs converted to actual shares and in your account will go to your estate. Your estate will determine when to sell these shares. There is no time limit. All unvested RSUs are forfeited. 11

14 Where Can I Get More Information? For general stock plan questions, please talk to your manager or Partner Resources generalist. For additional questions, call Starbucks Partner Contact Center at (866) weekdays from 5 a.m. to 5 p.m., Pacific. To inquire about your stock, activate your account or sell shares, contact Fidelity Stock Plan Services. You have two ways to contact Fidelity: Go to netbenefits.fidelity.com Call Fidelity at (866) , where you can speak to a Fidelity Representative from 2 p.m. Sunday through 9 p.m. Friday, Pacific For information regarding Bean Stock grants made prior to November, please reference the Starbucks 2005 Company-Wide Sub-Plan to the 2005 Long-Term Equity Incentive Plan, commonly referred to as the Plan Document, and the Bean Stock brochure posted on the Fidelity website netbenefits.fidelity.com. 12

15 Glossary Annualized Salary In general, for hourly nonretail partners, your annualized salary is determined by taking your hourly rate equivalent and converting it to an annual salary as of the last day of the fiscal year. For salaried nonretail partners, your Bean Stock reward is based on your annual salary as of the last day of the fiscal year. Dividend A distribution of a portion of a company s earnings, decided by the board of directors, to a class of its shareholders. The dividend is most often quoted in terms of the dollar amount each share receives (dividends per share). It can also be quoted in terms of a percent of the current market price, referred to as dividend yield. Dividends may be in the form of cash, stock or property. Economic Value The economic value is derived using a common financial reporting methodology to estimate the current value of Restricted Stock Units (RSUs) based on several assumptions, including the closing price of Starbucks stock on the grant date, the anticipated value at future vest dates, and the changes in Starbucks stock price. Essentially, it is the present value of potential future gains over the vesting period of the RSU. Each year we use economic value to establish a set of guidelines by which we determine the number of shares rewarded (in the form of an RSU). Equity Reward An issuance of stock-based rewards pursuant to an employee (partner) stock plan, such as stock options or RSUs. Exercise Exercising stock options is the process of purchasing the underlying shares of Starbucks stock at a set price (also known as exercise price) regardless of current market price. Fair Market Value The closing price of Starbucks common stock on the grant date, as reported by The NASDAQ Stock Market. Fiscal Year A fiscal year is the 12-month period used for accounting purposes. Starbucks fiscal year starts on the Monday following the Sunday closest to September 30, and ends on the Sunday closest to September 30 the following year. 13

16 Grant Date The date on which Starbucks grants equity rewards like RSUs and stock options. This date marks the start of your vesting schedule. Netting of Shares The tax withholding process where the total number of shares deposited into your Fidelity Account is reduced by the number of shares equal to the amount of income tax you owe. Restricted Stock Unit (RSU) A Restricted Stock Unit, or RSU, is the right to receive a specified number of shares of Starbucks stock upon satisfaction of the vesting criteria. Shares of Stock The terms share and stock are often used interchangeably. A share of stock is an individual share of ownership in a company. When you purchase shares of Starbucks stock, you become a shareholder or part owner in the company. As a shareholder, you have the right to vote on important company issues, such as who serves on the Board of Directors. Stock Options The right to buy shares of Starbucks stock at a set price (also known as exercise price ) for a specified period of time. Underwater A stock option is considered underwater if the exercise price of the stock option is higher than the current market price. RSUs are never underwater. Vesting The time period that gives you the right to receive a specified number of shares of Starbucks stock. When a portion of your RSU has vested, you own the shares outright. Vesting will generally occur on the anniversary date of the RSU grant. This brochure highlights the terms of Starbucks 2005 Company-Wide Sub-Plan to the 2005 Long-Term Equity Incentive Plan. If a discrepancy should arise between this information and the official plan documents including your award agreement, the official plan documents govern in all cases. The Company reserves the right at its discretion with or without notice to review, change, amend or cancel the plan at any time. The language in this brochure does not constitute a guarantee of employment. Nor does any of the material in this brochure itself in any way constitute a contract of employment or a contract to continue to offer the plan described herein Starbucks Coffee Company. All rights reserved. This brochure is made with 100% post-consumer material. BRO_25110