Starbucks (Nasdaq: SBUX) announced the retirement of its CEO Kevin Johnson, to be replaced by former chief executive Howard Schultz as the company begins its process of finding a permanent replacement.
Following the announcement, the coffee chain’s shares rose by 5% pre-market.
“A year ago, I signaled to the Board that as the global pandemic neared an end, I would be considering retirement from Starbucks. I feel this is a natural bookend to my 13 years with the company,” said Johnson in a statement.
Johnson replaced Schultz in 2017 as the company’s chief executive, with the latter half of his tenure dominated by the effects of the COVID-19 pandemic.
Although just for the interim, this will be Schultz’s third time sitting as the firm’s CEO–the first one lasting from 1986 to 2000, then again from 2008 to 2017.
“Although I did not plan to return to Starbucks, I know the company must transform once again to meet a new and exciting future where all of our stakeholders mutually flourish,” Schultz also said in a statement.
The company said Schultz will have a salary of US$1.00 and Starbucks Chair Mellody Hobson said the firm intends to have a new leader by fall.
“He’s (Schultz) not going to stay for three years… We get him until the fall, full stop. Trust me,” Hobson said in a CNBC interview.
The changing of the guards transpires amidst a background of employee unionization issues. Around 140 Starbucks stores in 26 states have petitioned the National Labor Relations Board to unionize, with six locations voting in favor of a union so far.
The NLRB also recently filed a formal complaint against the firm for “alleged retaliation and discrimination” related to employee union leaders.
Johnson has reportedly said that spending more on employees’ wages and benefits will lead to an improvement in long-term performance. He was seen recently circulating stores in New York ahead of the union elections to dissuade employees to vote in favor of unionizing.
A planned wage increase is in the works and, along with the two previous hikes, is expected to push an additional US$1 billion in salaries expense.
Starbucks last traded at US$83.12 on the Nasdaq.
Information for this briefing was found via CNBC, Wall Street Journal. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.