Did Howard Schultz make a wise course correction on his first day back at Starbucks?
He’s back. Howard Schultz has started his third turn at leading Starbucks and it didn’t take him long to get the attention of the coffee giant’s stakeholders.
Mr. Schultz, writing a letter to associates that the company shared publicly, said Starbucks was immediately suspending a share buyback program announced just three weeks earlier. Doing so, he wrote, “will allow us to invest more profit into our people and our stores — the only way to create long-term value for all stakeholders.”
Starbucks’ decision to suspend buybacks follows the Biden administration’s budget proposal for fiscal 2023 that seeks to limit corporate executives from personally benefiting financially from the sale of shares in such instances. The proposal, should Congress include it in the budget it passes, would prohibit executives from selling shares in any year that a company announces a buyback.
Investors were not ecstatic about Mr. Schultz’s decision. The company’s stock was down 3.72 percent in premarket trading this morning.
Mr. Schultz’s audience, however, is not comprised solely of those interested in reaping greater shareholder value. He begins his new term as interim CEO knowing that he may not have much time to set the company back on the right track, as he sees it.
That road begins with reconnecting with Starbucks baristas. The chain faces a small but growing push for unionization at its stores. Ten locations to this point have voted in favor of joining Starbucks Workers United, the latest being the chain’s flagship Reserve Roastery in Manhattan. More than 180 of the 9,000-plus Starbucks in the U.S. have filed petitions for union votes.
Mr. Schultz wrote that he will be traveling along with other company leaders in the coming weeks to meet with employees in stores and at manufacturing plants. The purpose, he expressed to them, is “to understand your thinking and ideas about how to build this next Starbucks.”
He also said the company would “engage in design sessions with partners of all levels across the organization to co-create a future of mutual thriving in a multi-stakeholder era. We see these sessions as the deepest form of inventing together we’ve ever attempted as a community.”
- Starbucks founder Howard Schultz takes the helm as Starbucks chief executive officer – Starbucks
- Message from Howard Schultz: On the Future of Starbucks – Starbucks
- Budget of the U.S. Government Fiscal Year 2023 – WhiteHouse.gov
DISCUSSION QUESTIONS: Do you agree with Howard Schultz that investing more of Starbucks’ profits into people and stores is “the only way to create long-term value” for the chain? How likely is it that Starbucks will be able to convince most of the stores petitioning union votes to reject Starbucks Workers United?