Interim Starbucks CEO Announces Major Investment ReversalThe coffee chain is attempting to chart a new path forward.
ByAmanda Breen•
FormerStarbucks CEO Howard Schultzhas resumed his leadership role at a tumultuous time, facing ongoing Covid challenges, supply-chain disruptions and increasing sociopolitical unrest,he wrote in an open letterto company employees, customers and others on Monday, his first day back on the job. ButSchultzintends to rise to the occasion — starting with the reversal of the company's share buyback program, which was reinstated just a few weeks ago on March 16.
Buyback programsbenefit investors; when companies buy back shares, they reduce the total number of outstanding shares, which means investors earn more for each share. But in his letter, Schultz highlights the drawbacks of the company's buyback program, saying that its cessation "will allow us to invest more profit into our people and our stores — the only way to create long-term value for all stakeholders."
Related:How Starbucks CEO Transformed a Small Coffee Bean Store Into a Massively Successful Worldwide Brand
In his new position, Schultz will also have to contend with widespread unionization efforts. Starbucks workers in Buffalo, New Yorkvoted to create the first-ever unionback in December, and since then, more than 100 locations have filed for union recognition in more than 20 states. But Schultzpenned a letteropposing the move last fall, arguing that "No partner has ever needed to have a representative seek to obtain things we all have as partners at Starbucks."
FollowingStarbucks' announcement of its share buyback program, Vermont senatorBernie Sandersvoiced his disapproval for the coffee giant's unionization stance, saying, "If Starbucks can afford to spend $20 billion on stock buybacks and dividends and provide a $20 million compensation package to its CEO, it can afford a unionized workforce that can collectively bargain for better wages, better benefits, safer working conditions and reliable schedules."
Related:Starbucks Is Getting Rid of Its Iconic Cups
In the coming weeks, Schultz will travel with other company leaders to speak with partners in the company's stores and plants across the globe as Starbucks attempts to chart a new path forward.
Starbucks Corporation was down 5.29% as of 10:38 a.m. EST.
