This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The Best Companies Can Tell Shareholders to Go to Hell

NEW YORK ( TheStreet) -- Chest bump to Fred Allen at Forbes for relaying the news Friday evening: Howard Schultz to Anti-Gay Marriage Starbucks Shareholder: 'You Can Sell Your Shares.'

Or, translated into language the Starbucks (SBUX - Get Report) CEO might use over a beer, Go to hell!. Howard Schultz can put a shareholder in his place without fear of negative repercussions. It's at this point, CEOs such as Schultz must realize that, while they can't claim victory, at some level, their company has "made it."

In fact, Schultz displayed the swagger Apple (AAPL) lost when Steve Jobs died.

Via Forbes, here's the context and what went down Wednesday at Starbuck's annual meeting:

Last year Starbucks announced its support for Washington's state's sic referendum backing gay marriage, and in response the National Organization for Marriage launched a boycott of the coffee chain.
"In the first full quarter after this boycott was announced, our sales and our earnings, shall we say politely, were a bit disappointing," said the shareholder, Tom Strobhar . . . the founder of the anti-gay marriage Corporate Morality Action Center.
. . . Schultz . . . responded, "Not every decision is an economic decision. Despite the fact that you recite statistics that are narrow in time, we did provide a 38% shareholder return over the last year . . . Having said that, it is not an economic decision to me. The lens in which we are making that decision is through the lens of our people. We employ over 200,000 people in this company, and we want to embrace diversity. Of all kinds."
At that point the audience interrupted in cheers and applause. Then Schultz concluded, "If you feel, respectfully, that you can get a higher return than the 38% you got last year, it's a free country. You can sell your shares in Starbucks and buy shares in another company. Thank you very much."

Smash. Bang. Boom. Howard Schultz is not only a genius, he's a standup guy running one of the best companies in the world on his terms. CEOs like Schultz win. It's not wise to bet against them.

You can say the same for Jeff Bezos at Amazon.com (AMZN), who, coincidentally, donated $2.5 million to Washington's campaign to legalize same-sex marriage.

These guys do not have to tread lightly. There's little, if any, concern that taking the righteous sociopolitical stance will impact sales. Starbucks and Amazon run sticky businesses driven by the daily habits of millions of loyal customers. The anti-gay marriage guy must be delusional if he thinks there's any correlation between Starbucks support for gay rights and the numbers.

I would much rather invest in a company led by a CEO and infused with a corporate culture sans fear. There's something to be said for telling one shareholder to go fly a kite and not capitulating to the reactionary whims of larger groups.

Listening to shareholders sounds great if you're into populist lip service, however, in practice it makes as much sense as a professional sports franchise doing what a drunk guy commands from the bleachers. If you're an investor or a fan, you don't want the CEO, GM or skipper doing what every "expert" thinks is right. You want Schultz and Bezos making the call, no matter your stance on something like gay marriage.

As we attempt to figure out why investors refuse to give Apple the benefit of the doubt like they once did, stories such as this inform the conversation. Jobs kept shareholders in check, at a distance longer than arm's reach and farther than you can spit. He had the type of swagger we assign to Elon Musk by default, can't (in our right minds) assign to Tim Cook and probably should have been assigning, all along, to Howard Schultz and Jeff Bezos.

Chest bumps and fist pumps to Schultz -- and Bezos -- not only for being great leaders, but for doing the right thing . . . without fear.

-- Written by Rocco Pendola in Santa Monica, Calif.

Rocco Pendola is TheStreet's Director of Social Media. Pendola's daily contributions to TheStreet frequently appear on CNBC and at various top online properties, such as Forbes.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
SBUX $47.62 0.00%
AAPL $124.75 0.00%
FB $80.78 0.00%
GOOG $524.05 0.00%
TSLA $206.79 0.00%

Markets

DOW 17,826.30 -279.47 -1.54%
S&P 500 2,081.18 -23.81 -1.13%
NASDAQ 4,931.8150 -75.9760 -1.52%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs