By Lisa Baertlein
(Reuters) - Starbucks Corp investors on Wednesday rejected a shareholder proposal to prohibit the world's biggest coffee chain from making political contributions or forming a political action committee.
The Starbucks board had recommended rejection of the proposal, sponsored by shareholder John Harrington, chief executive of Harrington Investments. It was introduced at the annual meeting by a representative of Corporate Accountability International, where Harrington is a board member.
Two years ago, Starbucks Chief Executive Howard Schultz organized scores of fellow CEOs to boycott campaign contributions until lawmakers came up with a plan to fix the nation's financial woes.
Even though Starbucks has not contributed to political campaigns in recent years, directors said a policy forbidding contributions would hobble the company's ability to promote policies needed to deliver strong results and could put it at a "marked disadvantage" with competitors.
The breakdown of votes was not immediately available.
The Seattle-based company's corporate policy allows contributions to candidates, political action committees or state ballot measures. But over the last three years, Starbucks made no direct political contributions and did not operate a political action committee, according to the annual report to shareholders.
The company did pay dues to trade organizations that lobbied lawmakers.
During the shareholder meeting, Starbucks reiterated its 2013 revenue and earnings growth targets.
It also announced a $1 million seed grant to support a new job training program called LeadersUP and said it would expand sales of U.S.-made coffee mugs through a new relationship with Ohio-based American Pioneer Manufacturing, which later this year will begin supplying 100,000 mugs annually.
Over the last two years, Starbucks is one of 125 companies to face shareholder proposals related to political spending, according to a March 7 report by the Sustainable Investments Institute, which tracks political spending and corporate governance issues.
In votes held this year, 37 percent of Visa Inc's voting shareholders and 31 percent of those of Accenture Plc supported proposals to disclose contributions for lobbying, according to filings from both companies.
Shares of Starbucks, which hit an all-time high of nearly $62 in April 2012, were up 1.3 percent at $57.58 on Wednesday afternoon.
(Reporting by Lisa Baertlein in Los Angeles; editing by Matthew Lewis and David Gregorio)