Starbucks' CEO steps down amid union battle, shares climb 5%

Starbucks' CEO steps down amid union battle, shares climb 5%
Published - Mar 17, 2022 @ 4:43 PM (EET)

On Wednesday, current Starbucks (NASDAQ:SBUX) Chief Executive Officer Kevin Johnson said that he would be retiring from his role of the past five years on the 4th of April. 


The move comes as a unionization push among the company's U.S. baristas heats up for better pay and working conditions. Mr. Johnson, who navigated the company through many controversies since 2018, has appealed to employees to let the company maintain its direct relationship with them in recent times.


Howard Schultz, who built Starbucks from a handful of Seattle-based coffee shops to the world's biggest coffee chain before retiring in 2018, will temporarily return as CEO as it plans to improve relations with its workers.


WHAT HAPPENED


During the COVID-pandemic, Starbucks steered its business to a to-go and drive-thru model by placing orders on Starbucks' mobile app. However, the app's success led to overworked employees and barista burnout which contributed to a rise of union organizing in U.S. locations.


Over 130 Starbucks cafes in the United Stated have petitioned to unionize, and since late 2021, six locations have voted for representation by the Starbucks Workers United union.


For a smooth transition, Johnson, the President and CEO of Starbucks since 2017, will serve as a special consultant to the firm and its board through September.  


In addition, investment analyst Ben Wong at Motley Fool Asset Management, a fund that owns about 146,660 Starbucks shares, said his firm is monitoring the unionization campaign for potential reputational damage to the chain.


NOW WHAT


According to the Starbucks filing Wednesday, Mr. Schultz will be paid a base salary of $1 and will be allowed to participate in the company's employee benefit plans.


Concluding its annual meeting Wednesday, the chain said Starbucks shareholders approved the company's 'say' on executive compensation and that the performance award would be determined in September.  Currently, it is expected that Starbucks won't pay it to Johnson.


Following the meeting, shares of the Starbucks chain climbed 5.16%, to close at $87.41.  


                                                        


Live News

Market Movers

By clicking “Accept All Cookies”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts. View our Privacy Policy for more information.