“I made it clear to the board a year ago that as the global pandemic draws to a close, I would consider leaving Starbucks,” Johnson said in a statement. “I feel like this is a natural ending to my 13 years with the company.”
Johnson joined the board of directors of Starbucks (SBUX) in 2009 and became president and chief operating officer in 2015. He took over as CEO in 2017, replacing Schultz.
Johnson will remain special advisor to the company and its board until September.
“As I am making this transition, we are very fortunate to have a founder who can intervene on a temporary basis, giving the board time to further examine potential candidates and make the right long-term succession decision for the company,” Johnson. added.
In a video message, Johnson said “Starbucks has been the gift of my life,” adding that he is “overwhelmed with gratitude and optimism about the future.” He, along with Mellody Hobson, independent chairman of the board, will speak more at the company’s annual shareholder meeting later on Wednesday.
Johnson led the company through difficult times even before the pandemic. For example, in 2018, two black men were arrested at a Philadelphia Starbucks while waiting for a friend, prompting widespread criticism of the company. Johnson apologized for the way they were treated and organized a training course for the staff.
Starbucks shares hit an all-time high in July 2021, as did other restaurant stocks that soared that summer. Johnson implemented several strategies that proved successful, including expanding in China, improving the company’s rewards program, and improving its technology.
But last year, shareholders voted against the company’s CEO’s pay proposal, a rare move indicating that some of them thought Johnson had been overpaid. He received $20.4 million in total compensation in the company’s fiscal 2021. In the 2019 agreement, the company said that Johnson could also earn up to $50 million if he remains in the position through fiscal year 2022 and meets performance targets. The Wall Street Journal reported that the company will decide on a performance bonus in September, but has no plans to pay it at this time. A Starbucks spokesperson confirmed to CNN Business that the report is “accurate.”
Meanwhile, Starbucks shares are down about 24% over the past year, although they were up 7% on Wednesday on the news.
return of schultz
Last year, the Starbucks board hired executive search firm Russell Reynolds Associates to help find a replacement for Johnson, the company said in a statement. Schultz will also help find a new permanent CEO as well as help manage day-to-day business, Starbucks said. He receives $1 for his services.
“When you love something, you have a deep sense of responsibility to help when called,” Schultz said in a statement. “While I didn’t plan to return to Starbucks, I know the company must transform again to meet a new and exciting future where all of our stakeholders will thrive.”
Schultz first served as CEO of Starbucks from 1987 to 2000. He returned as CEO in 2008 and remained in that position until handing over the reins to Johnson in 2017. He stepped down as executive chairman and board member in 2018.
But since then, Schultz has continued to participate. In November, he wrote an open letter posted on the Starbucks website ahead of a successful union vote at a Starbucks store in Buffalo, New York.
“No partner has ever required a rep to strive for what we all have as partners at Starbucks,” he wrote. “And I’m saddened and concerned to hear that someone thinks it’s necessary now.”
Schultz mulled over the idea of running for president in 2019 before deciding not to run, prompting Starbucks to give employees guidance on how to handle political issues about his in-store plans.
“Howard has a huge track record of successfully running the company,” Edward Jones analyst Brian Yarbrough told CNN Business, adding that he “did a great job when he stepped down as CEO prior to this.”
Cowen analyst Andrew Charles wrote in a note on Wednesday that “we’re a bit surprised that the company is looking at external candidates, as several senior executives who worked under Howard Schultz come to mind,” he wrote. “However, union publicity can be a factor pushing a company to look outside.”
Already half a dozen stores have voted to unionize, and several others are preparing to vote of their own.
“Union talk is the one that is in the spotlight”, Hobson said on CNBC on Wednesday. “We made a few mistakes here. We didn’t listen and we need to do it.” This is not the first high-profile departure of Starbucks in recent years. In 2021, Rosalind Brewer stepped down from her position as chief operating officer to become the CEO of Walgreens (WBA).