Shares of Starbucks Corporation (NASDAQ: SBUX) are up 8.0% on Wednesday after CEO Kevin Johnson announced retirement; to start on April 4th.
Howard Schultz to serve as the interim CEO
Starbucks expects to name a permanent, long-term successor by fall of 2022. Meanwhile, Howard Schultz will serve as the interim CEO. He has over two decades of experience as the chief executive of Starbucks Corporation; from 1986 to 2000 and then again from 2008 to 2017.
Under Johnson’s leadership, Starbucks shares recorded a more than 50% gain. Praising his performance on CNBC’s “Squawk on the Street”, Jim Cramer said:
The stock’s up because Howard is great. But Kevin was also doing a terrific job. Obviously, there have been headwinds, like China and unionization. I welcome Howard back, but to call this expected is insane. I find it extraordinarily quizzical.
So far, about 140 Starbucks locations across 26 states have petitioned to unionize.
Why didn’t Starbucks already have a succession plan?
According to Johnson, he signalled the board about a year ago that he was considering retiring.
It, therefore, came as a surprise for many that Starbucks didn’t already have a laid-out succession plan. Explaining why, Mellody Hobson – Starbucks’ independent board of directors’ chair said on CNBC’s “Squawk Box”:
We had no date certain for Kevin’s retirement. And remember, we’re looking for a CEO during a pandemic. We’re not going to hire a CEO over Zoom. But we’ve been on a path and have a great slate of candidates.
Schultz has agreed to act as the CEO of Starbucks for a salary of $1.0; basically free. The stock that trades at a PE multiple of 23.51 is still down 25% for the year.
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