Starbucks CEO Kevin Johnson will step down on April 4 after five years at the helm of the company, Starbucks said in a statement Wednesday. Howard Schultz, who spent decades leading the company before Johnson, will take over as interim CEO and rejoin its board as the company searches for a new chief executive.
“A year ago, I signaled to the board that as the global pandemic neared an end, I would be considering retirement from Starbucks,” Johnson said in a statement. “I feel this is a natural bookend to my 13 years with the company.”
Johnson joined the Starbucks (SBUX) board in 2009, and became president and chief operating officer in 2015. He took over as CEO in 2017, replacing Schultz.
Johnson will stay on as a special consultant to the company and its board through September.
“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 added.
In a video message, Johnson said that “Starbucks has been a gift in my life,” adding that he is “filled with gratitude and optimism for the future.”
Johnson had led the company through difficult times, even before the pandemic. For example, in 2018, two Black men were arrested in a Philadelphia Starbucks while waiting for a friend, prompting widespread criticism of the company. Johnson apologized for the way they were treated and set up a training course for staff.
Starbucks’ stock hit an all-time high in July 2021, along with other restaurant stocks that soared that summer. Johnson executed several strategies that proved successful, including expansion in China, improving the company’s rewards program and improving its technology.
But last year, shareholders voted against the company’s CEO pay proposal — a rare move that indicates some of them thought Johnson was overpaid. He received $20.4 million in total compensation in the company’s fiscal year 2021.
In a 2019 agreement the company said Johnson could also earn up to $50 million if he stayed in the position through fiscal year 2022 and hit performance targets. The Wall Street Journal said the company will decide about the performance bonus in September, but doesn’t currently expect to make that payment. A Starbucks spokesperson confirmed to CNN Business that the report is “accurate.”
Meanwhile, Starbucks shares are down about 26% over the past year, though the stock popped about 4% on Wednesday on the news.
The Starbucks board engaged executive search firm Russell Reynolds Associates to help look for a replacement for Johnson last year, the company said. Schultz will also help look for a new, permanent CEO, as well as help manage the day-to-day business, Starbucks said. For his services, he’s earning $1.
“When you love something, you have a deep sense of responsibility to help when called,” Schultz said in a statement. “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.”
During the company’s annual shareholder meeting on Wednesday, Mellody Hobson, independent chair of the board of directors, said that “Howard’s return at this inflection point in the world and our own company’s history is not back to to the past, but back to the future.”
Schultz first served as Starbucks’ chief executive from 1987 to 2000. He returned as CEO in 2008, and remained in the post until he handed the reins over to Johnson in 2017. He stepped down as executive chairman and member of the board in 2018.
“No partner has ever needed to have a representative seek to obtain things we all have as partners at Starbucks,” he wrote. “And I am saddened and concerned to hear anyone thinks that is needed now.”
“Howard has a tremendous track record of success running the company,” Edward Jones analyst Brian Yarbrough told CNN Business, adding that he “did a great job when he stepped back in the CEO prior.”
Cowen analyst Andrew Charles wrote in a note Wednesday that “we are a bit surprised the company is exploring external candidates, as there are several top executives who come to mind that have worked under Howard Schultz,” he wrote. “However, unionization publicity could be a factor pushing the company to look externally.”
Already, half a dozen stores have voted to unionize with several others preparing for their own votes.
“The union conversation is one that is front and center,” Hobson said on CNBC on Wednesday. “We made some mistakes here. We didn’t listen, and we need to do that.”
She reiterated the point during the annual meeting. “We hear the feedback and we are committed to finding new ways to enhance and elevate what we call the ‘partner experience,’” she said. Starbucks refers to its employees as partners.