Interim Starbucks CEO Announces Major Investment Reversal
The coffee chain is attempting to chart a new path forward.
Former Starbucks CEO Howard Schultz has resumed his leadership role at a tumultuous time, facing ongoing Covid challenges, supply-chain disruptions and increasing sociopolitical unrest, he wrote in an open letter to company employees, customers and others on Monday, his first day back on the job. But Schultz intends 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 programs benefit 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."
In his new position, Schultz will also have to contend with widespread unionization efforts. Starbucks workers in Buffalo, New York voted to create the first-ever union back in December, and since then, more than 100 locations have filed for union recognition in more than 20 states. But Schultz penned a letter opposing 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."
Following Starbucks' announcement of its share buyback program, Vermont senator Bernie Sanders voiced 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."
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.
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