Wednesday 28 February 2024

Howard Schultz returns to the helm of Starbucks as Kevin Johnson steps down

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MILAN – Starbucks’ former leader Howard Schultz is returning to the helm of the company as an interim CEO after the coffee giant’s current chief executive announced his retirement. Kevin Johnson said he would retire next month after five years as president and CEO and 13 years at Starbucks. Johnson, 61, a former executive at Microsoft and Juniper Networks, succeeded Schultz as CEO in 2017.

He will leave his post on 4 April and serve on the company’s board and in an advisory role through September.

Starbucks made the announcement Wednesday ahead of its annual meeting.

The shakeup in leadership comes as Starbucks has not been able to slow a grassroots unionization drive that took off in Buffalo, New York, last year. In December, two out of three stores voted to join Workers United, affiliated with the Service Employees International Union, becoming the first Starbucks stores in the U.S. to form unions.

Since then, four more stores – one in Mesa, Arizona, and three others in the Buffalo area – have joined them, and more than 130 other locations have petitioned for union votes.

On Tuesday, the National Labor Relations Board issued a formal complaint against Starbucks, alleging the company took retaliatory actions against two Arizona employees who were part of the union campaign.

On Tuesday, a group of investors that hold a combined $1.2bn in Starbucks stock sent a letter to the company, urging it to adopt “a global policy of neutrality for all future attempts of workers to organize” and reach a “fair and timely” bargain with those who have voted to unionize. The investors also criticized Starbucks’ previous response to unionization efforts.

“Starbucks has responded to union organizing activities suggests a departure from international norms and standards as well as from its commitments to them,” the investors said.

In an open letter to Starbucks’ employees, Johnson said he told the company’s board last year that he was considering retirement. His most obvious successor had been Roz Brewer, the company’s chief operating officer, but Brewer left the company in February 2021 to become the top executive at Walgreens.

“On behalf of the entire Board, I want to express our sincerest thanks to Kevin for his leadership of Starbucks. Kevin and the entire executive team stepped up to the challenge of the pandemic and navigated one of the most difficult periods in modern history. The economic certainty provided to partners during the early months of the COVID shut down, as well as during mandatory quarantines, underscores our core values and will be an enduring legacy for the company. During Kevin’s tenure, Starbucks scaled an industry leading digital offering spanning nearly 45 million Starbucks Rewards members in the U.S. and China,” said Mellody Hobson, Independent Starbucks Board of Directors chair.

Some observers expressed surprise that the board would name Schultz instead of a new permanent CEO.

“It’s curious that they were not able to find a successor within a year,” said Timothy Hubbard, assistant professor of management at the University of Notre Dame’s Mendoza College of Business in an interview with AP. “For a company the size and stature of Starbucks not to have a solid succession plan is surprising.”

Starbucks expects to name a permanent CEO by the last quarter of this year. While Schultz leads the company, he will get $1 in compensation. Schultz, 68, is also rejoining Starbucks ‘ board.

Schultz bought Starbucks – then 11 stores and 100 employees – in 1987. Four years later, when Starbucks went public, the chain had grown to more than 100 stores. Starbucks now has more than 34,000 stores worldwide.

Schultz, who served as chief executive of the company from 1987 to 2000, and then a second time from 2008 to 2017, has been running his family foundation and working on various philanthropic efforts since he last stepped down.

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