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Founder Howard Schultz returns to lead Starbucks on interim basis

Starbucks Worker Pay
Posted at 1:54 PM, Mar 17, 2022
and last updated 2022-03-17 16:54:41-04

Longtime Starbucks CEO Howard Schultz is returning to lead the company on an interim basis after the coffee giant's current chief executive announced his retirement.

Kevin Johnson said he will retire next month after five years as president and CEO and 13 years at Starbucks. Johnson, a former executive at Microsoft and Juniper Networks, succeeded Schultz as CEO in 2017.

In an open letter to Starbucks employees, Johnson, 61, 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.

Starbucks said its board has been engaged in "continuous CEO succession planning" since last year and expects to name a permanent CEO by this fall. While Schultz leads the company, he will get $1 in compensation. Schultz, 68, is also rejoining Starbucks' board.

At the company's annual meeting Wednesday, board chairwoman Mellody Hobson said Schultz is "singularly qualified" to be the company's interim CEO.

"Who better to reinforce our culture than its creator?" Hobson said in a video message.

But 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. "For a company the size and stature of Starbucks not to have a solid succession plan is surprising."

Andrew Charles, an analyst with Cowen, said Schultz's return to the board signals he wants a greater say in Starbucks' future strategy, especially as a unionization effort gains steam at the company.

Workers at Starbucks stores — including five in Buffalo, New York, and one in Mesa, Arizona — have voted to unionize since late last year.

As of Wednesday, 140 stores in 27 states have petitioned the National Labor Relations Board to hold union elections, according to Workers United, the union organizing the Starbucks campaign.

When Schultz bought Starbucks in 1987, it had unionized workers at six stores and a roasting plant.

One of his first acts as CEO was to lead an effort to decertify the union.

"I was convinced that under my leadership, employees would come to realize that I would listen to their concerns. If they had faith in me and my motives, they wouldn't need a union," Schultz wrote in his 1997 memoir "Pour Your Heart Into It."

Starbucks has fought multiple unionization efforts since then.

Schultz traveled to Buffalo late last year to try to convince workers to vote against the union.

Jaz Brisack, a Starbucks employee and union organizer in Buffalo, New York, said Schultz's impact on the company used to be so great that new baristas were taught to make his favorite drink.

But his influence has waned, she said, and he offended some workers during his visit to Buffalo.

"A lot of people felt like they were being lectured to by a disappointed father because they weren't grateful," she said.

Schultz is credited with growing Starbucks into the global behemoth it has become.

When he bought the chain in 1987, it had 11 stores and 100 employees.

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 stepped down as CEO in 2000 and became the company's chairman. But he returned as CEO in 2008, when the company was struggling in the recession. He stepped down again in 2017 and became the company's chairman emeritus in 2018.

He remains a shareholder, but Starbucks wouldn't say Wednesday how many shares he owns. At the time he left the company, he and his family held 34 million shares; that would be worth nearly $3 billion today.

Schultz spent 2019 testing the waters for a possible run for president as an independent. But he announced in the fall of that year that he had decided against it.

In a statement issued by Starbucks, Schultz said he had not planned to return to the company but wanted to help it transform again as the pandemic recedes.

"When you love something, you have a deep sense of responsibility to help when called," Schultz said. "It's critical we set the table for a courageous reimagining and reinvention of the future Starbucks experience for our partners and customers." 

Additional reporting by The Associated Press. 

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