Howard Schultz is back as Starbucks CEO, and he is back with a ban.
Taking over from former CEO Kevin Johnson for an interim period, Schultz’s first step was to “immediately” suspend the company’s ‘share repurchasing program’. The controversial move has left shareholders unhappy as the Starbucks shares plummeted 4% on Monday.
Addressing the company partners—including employees, shareholders, and customers—in a letter yesterday, Schultz stated that the move to suspend share repurchasing is “to invest more profit into our people and our stores—the only way to create long-term value for all stakeholders.”
The move is considered controversial as the company cancels its plans to buy back $20 billion worth of shares over the next few years.
Stock buyback over the years had increased Starbucks ' share value up to 79% under former CEO Kevin Johnson.
Tech experts allege that this move by Howard Schultz is due to employees stepping up “efforts to unionize as they criticize the way they are treated by the company, especially during the pandemic.”
Schultz has been an opponent of unionization and had spent much of his earlier time as CEO pushing back against employee/workers unions.
Experts further question whether suspending share buybacks would redirect that funding to workers and prevent union formation.
