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Originally published March 21, 2012 at 7:37 PM | Page modified March 22, 2012 at 9:50 AM

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Starbucks' conscience is key to success, CEO tells shareholders

Companies need to give back to communities, said Howard Schultz, who believes that " the American Dream is on a very, very fragile foundation."

Seattle Times business reporter

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Starbucks CEO Howard Schultz launched the company's annual shareholders meeting at McCaw Hall on Wednesday with a political speech.

He mentioned Starbucks' record profits — above $1 billion last year — and record high stock price. But he tied those successes to the company's conscience and upbraided politicians for not resolving the debt crisis and banks for not lending to small businesses.

"We are going to see cuts in social services that we haven't seen since the Great Depression. The gap between the haves and the have-nots is going to get wider and wider," said Schultz, himself a "have" who was raised in Brooklyn public housing.

Partly because of his background, he said, "I'm ultrasensitive to the fact that I believe the American Dream is on a very, very fragile foundation."

Companies need to give back to communities, he said.

"We are heading into a crucible; we're in the midst of something that's really going to test the conscience of the country," he said. "It's a test we will not pass by being bystanders."

Starbucks has helped fund — and encouraged customers to contribute to — a jobs program that makes loans to small businesses, community centers and others.

Schultz also announced the chain will build a new factory in Augusta, Ga., that will make instant and other soluble coffee. It's investing $180 million to build that plant, which will have 150 to 200 employees, and to expand an existing facility in Sandy Run, S.C. Other plants are in Kent; Carson Valley, Nev.; York, Pa.; and Amsterdam, the Netherlands.

He and other Starbucks executives also highlighted parts of the company's annual "global responsibility report," which it released Wednesday.

Among the highlights: Last year, Starbucks employees volunteered for 442,353 hours; the company more than tripled the availability of in-store recycling; and, on the down side, it lowered its goal for serving drinks in customers' own tumblers from 25 percent to 5 percent of those made in stores by 2015. Few customers bring their own, although Starbucks has a 10-cent discount to those who do in U.S. stores.

The meeting also outlined how the global coffee-shop chain is faring, which is quite well, particularly compared with where it was — closing stores and slashing jobs — a few years ago.

Longtime Starbucks executive Michelle Gass described how she's turning around its underperforming operations in Europe, the Middle East and Africa. For starters, her division added a second, smoother espresso roast in France and a free extra shot of espresso to 12-ounce lattes in the United Kingdom.

Starbucks' consumer-products unit introduced a canned energy drink called "Refreshers" that's powered by an extract of green (meaning unroasted) coffee. It has a mild flavor that blends better with fruit than roasted coffee does.

The company also demonstrated its Verismo at-home espresso machine, which will be sold in Starbucks and specialty stores later this year. It's similar to Nestlé's popular Nespresso machine.

Breaking up the corporate messages were moments of inspiration and entertainment — a short sermon from the Rev. Calvin Butts, of Abyssinian Baptist Church in Harlem, and two songs by Grammy winner Esperanza Spalding.

Perhaps the liveliest part of the meeting came from Chief Financial Officer Troy Alstead, who beamed as he read part of a paper written by Juliette LaMontagne, a fifth-grader from Thomas Jefferson School in Morristown, N.J.

"What happens when the 50-, 100- and 200-day moving [stock price] averages are layered like soldiers in a battlefield with reinforcements waiting on the sidelines? It means that it is an excellent time to buy! Currently, Starbucks' 50-, 100-, and 200-day moving averages remind me of an invincible army with many layers of warriors. With the 50 on top, the 100 in the middle, and finally the 200 layered perfectly on the bottom, it screams 'charge' to the experienced investor," the fifth-grader — that's elementary school — wrote.

"My mom might say I am too young for coffee, but that is not going to stop me from buying Starbucks' amazing stock!"

The meeting was not a total love fest: An activist shareholder made a proposal to encourage Starbucks' board to add an environmental sustainability committee. Only 4.1 percent of shareholders who voted supported it.

And during a question-and-answer session, two speakers questioned Starbucks' support of same-sex marriage. Schultz said it was not a difficult decision, and business has not been hurt by it.

One of the last questions came from an attendee whose mother asked him to read a statement nominating Schultz for U.S. president.

The audience applauded, but Schultz — who has said he is not leaving Starbucks — just thanked him.

Melissa Allison: 206-464-3312 or mallison@seattletimes.com. On Twitter @AllisonSeattle.

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