A Starbucks in downtown Beijing on January 16, 2021. CEO Kevin Johnson will step down next month and be replaced by former CEO Howard Shultz in the interim, the company announced on Wednesday. Photo by Stephen Shaver/UPI | License Photo
March 16 (UPI) -- Starbucks CEO Kevin Johnson is retiring and will temporarily be replaced by former CEO Howard Shultz, the company announced Wednesday.
Johnson will leave his role on April 4 after 13 years with Starbucks and five years as CEO. Shultz will step in while the company searches for a permanent replacement.
"As I make this transition, we are very fortunate to have a founder who is able to step in on an interim basis, giving the board time to further explore potential candidates and make the right long-term succession decision for the company," Johnson said in a company news release. "I have enjoyed every minute of the job and am proud of what we have achieved together."
The abrupt move comes as Starbucks grapples with accusations of union-busting tactics. More than 120 stores across the country out of roughly 9,000 locations have filed for union elections this year, with workers at its stores complaining of poor conditions.
A day before Johnson's announcement, the National Labor Relations Board issued a formal complaint against the coffee giant over accusations that management retaliated against two Phoenix workers seeking to unionize their location, The New York Times reported. The complaint states that Starbucks disciplined and suspended one employee and rejected the scheduling preferences of the other in response to the workers' union support.
Later that day, a group of several dozen major investors sent Johnson a joint letter expressing their concern over Starbucks' response to organizing efforts, citing "reputational risk."
"Starbucks has worked hard to create a positive brand reputation rooted in pro-partner sentiment," the investors wrote. "Starbucks describes how its response to organizing efforts could negatively impact how the brand is perceived. With rapidly growing public support for unions, which currently stands at a high of 68% approval, we believe that Starbucks' reputation may be jeopardized due to reporting of aggressive union-busting tactics."
In its news release, the company didn't mention its labor woes. It points instead to Johnson's stewardship during the COVID-19 pandemic over the past two years, when Starbucks emerged with strong profits and revenue growth. Shares of Starbucks rose more than 50% during Johnson's tenure.
"Kevin and the entire executive team stepped up to the challenge of the pandemic and navigated one of the most difficult periods in modern history" Mellody Hobson, Starbucks board of directors chairwoman, said in the release.
In an appearance on CNBC Wednesday morning, however, Hobson acknowledged that the company "made some mistakes" handling the ongoing union push.
"When you think about, again, why we're leaning on Howard in this moment, it's that connection with our people where we think he's singularly capable of engaging with our people in a way that will make a difference," she added.
Shultz became the CEO of Starbucks in 1987, building the Seattle-based company into a global brand over the course of his first 13-year tenure. He temporarily retired in 2000, but took the helm again from 2008 to 2017.
It's unclear whether Shultz plans to ease the company's anti-union stance or double down. Six months ago, he told a group of managers in Buffalo, N.Y., that he was "saddened and concerned" that employees felt they needed to organize, The Buffalo News reported at the time. Johnson did not attend the meeting.
Upon his reinstatement as CEO, Shultz will earn a symbolic salary of $1.
"When you love something, you have a deep sense of responsibility to help when called," he said in the company news release. "Although I did not plan to return to Starbucks, I know the company must transform once again to meet a new and exciting future where all of our stakeholders mutually flourish."