exv10w1



 





Exhibit 10.1







December 8, 2004



Mr. Orin C. Smith

Starbucks Corporation

2401 Utah Avenue South

Seattle, WA 98134



Dear Orin:


This letter confirms the terms and conditions of your employment agreement (“Agreement”) from
November 29, 2004 through June 30, 2007.




Employment Term


From November 29, 2004 through March 31, 2005 you will serve as Starbucks president and chief
executive officer. From April 1, 2005 through June 30, 2007 (the “Term”) you agree to provide
advisory services to Starbucks; provided, however, that if this Agreement is terminated earlier as
provided below, the Term shall end on the date of such earlier termination. From April 1, 2005 on,
your title will be former ceo.




Duties


From November 29, 2004 through March 31, 2005, you will continue to perform the duties of Starbucks
president and chief executive officer. From April 1, 2005 through June 30, 2007, you will be asked
to provide reasonable advisory services from time to time on an “as needed” basis through the
chairman and chief global strategist or through the president and chief executive officer of
Starbucks, or any of their respective designees. You will not be required to provide services for
which you are not qualified. You may perform services for others on a paid consulting basis and
you may serve on the boards of directors of other companies so long as such activities do not
conflict with Starbucks Standards of Business Conduct.




Base Salary


From November 29, 2004 through March 31, 2005, you will be paid bi-weekly your full base salary as
president and chief executive officer of Starbucks, which currently annualizes to One Million One
Hundred and Ninety Thousand Dollars ($1,190,000). From April 1, 2005 through June 30, 2007, you
will be paid bi-weekly at a base salary that annualizes to Twenty Five Thousand Dollars ($25,000)
per year for your role as an advisor to Starbucks during the employment Term.



In the event that you die before June 30, 2007, Starbucks will pay your estate a single sum equal
to the unpaid salary you would have received through June 30, 2007.




 









 





Bonus


As determined in accordance with the terms of the Executive Management Bonus Plan (the “EMB Plan”),
your FY04 bonus payout will be paid to you in December 2004.



Depending upon Starbucks performance and in accordance with the terms of the EMB Plan, you will be
paid a pro rated bonus for your six months performance in FY05 as Starbucks president and chief
executive officer. The FY05 bonus will be paid to you in December 2005.



Both your FY04 and FY05 bonuses are subject to the approval of Starbucks Compensation and
Management Development Committee (the “Compensation Committee”) and of the independent members of
the Starbucks Board of Directors.




Stock Options


Subject to the approval of the Compensation Committee and of the independent members of the
Starbucks Board of Directors, you will receive in November 2004 your full stock option grant as
Starbucks president and chief executive officer of 500,000 shares. The options will be granted
pursuant to the terms of the Starbucks Corporation Amended and Restated Key Employee Stock Option
Plan – 1994, as amended (the “Key Employee Plan”). Your options will continue vesting during the
Term in accordance with the schedules set forth in your various option agreements. Any options
that are not exercisable on June 30, 2007 will automatically vest on that date. For your
convenience, Schedule 1 is attached hereto showing when your options will vest.




Benefits


From November 29, 2004 through March 31, 2005, you will enjoy all of your current benefits as
Starbucks president and chief executive officer. From April 1, 2005 through June 30, 2007, you
will opt out of all Starbucks benefit programs (including, but not limited to, medical, life
insurance, 401(k), etc.) and have no access to the Company airplane unless you are traveling with
the president and chief executive officer or the chairman and chief global strategist or if you are
invited to travel with a group of Starbucks partners on a specific business trip.




Termination


Starbucks may terminate this Agreement if you are unable to perform your duties because of physical
or mental disability. This Agreement may also be terminated “for cause” to include, but not be
limited to, your unreasonable refusal to perform your duties or any material violation of Starbucks
Standards of Business Conduct. You may also terminate this Agreement before June 30, 2007 by
providing Starbucks with written notice of your resignation. In the event you resign, then
Starbucks will pay you through the end of the workweek in which Starbucks receives notice of your
resignation.




Expenses and Administrative Support


Starbucks shall reimburse you for all reasonable and customary expenses incurred by you in
performing your duties, including, but not limited to, reasonable travel expenses. To assist you
in your advisory role, Starbucks will continue to provide an office, computer, cell phone and
administrative and secretarial assistance as you reasonably require in performance of your


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Starbucks duties. In addition, you will continue to have access to the building and parking
garage. The monthly parking garage fee will be deducted from your paychecks.




Assignment


Your rights and duties under this Agreement are personal to you and are not assignable to others.
Starbucks may assign its rights under this Agreement in connection with any merger or consolidation
of Starbucks or any sale of all or any portion of Starbucks assets, provided that any such
successor or assignee expressly assumes in writing Starbucks obligations under this Agreement.




Governing Law


This Agreement will be governed by the laws of the State of Washington.




Entire Agreement


This Agreement contains the sole employment agreement between you and Starbucks and supersedes any
prior arrangements or understandings regarding your Starbucks employment.



To confirm your agreement to the terms and conditions of your employment, please countersign both
copies of this letter below and return one copy to each of us. Thank you for your continued
contributions to the Company’s success.




Warm regards,



	 	 	 
	/s/ Howard Schultz

	 	/s/ Barbara Bass
	
 

	 	
 
	Howard Schultz

	 	Barbara Bass
	chairman & chief global strategist

	 	Chair, Compensation & Management 

Development Committee







     I agree to the terms and conditions of my employment agreement as set forth in the
foregoing letter.



	 	 	 
	/s/ Orin C. Smith

	 	 
	


	 	 
	Orin C. Smith

	 	 
	 
	 	 
	December 8,
2004

	 	 
	


	 	 
	Dated

	 	 







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Schedule 1

To Orin C. Smith

Employment Agreement



ORIN C. SMITH

STOCK OPTION VESTING




Options Granted Prior to November 20, 2003 





	•	 	No retirement provision applies
	 
	•	 	Your options continue to vest according to the terms of your
agreements (i.e., over 3 years), and will all be vested by October
2005 according to the terms of those agreements
	 
	•	 	You will have 3 months from your separation/retirement date (i.e.,
September 30, 2007) to exercise your vested options — - this also
applies to all of the options that you have previously gifted
	 
	•	 	Nothing in this Employment Agreement extends your right to exercise
your options beyond the 10-year term limitation set forth in your
option agreements





Options Granted on or after November 20, 2003





	•	 	Until June 30, 2007, your stock options continue to vest according to the terms of your various option agreements
	 
	•	 	The retirement provision applies when your employment ends on June 30, 2007 (i.e., any options that are not exercisable
on that date will automatically vest)
	 
	•	 	You have 36 months from June 30, 2007 (i.e., June 30, 2010) to exercise these options






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