By MATT OTT and DEE-ANN DURBIN AP Business Writers April 4, 2022, 6:45 p.m. • 3 minutes reading Share to Facebook Share to Twitter Email this article SILVER SPRING, Md. – Starbucks long-time leader Howard Schultz – who returned to the company as interim CEO on Monday – said his first major step would be to suspend Starbucks’s share repurchase program and raise those billions of dollars in the company. “This decision will allow us to invest more profit in our people and our stores – the only way to create long-term value for all concerned,” Schultz said in an open letter to employees posted on the Starbucks website. The axis of strategy comes just three weeks after Starbucks announced that Schultz, who bought the company in 1987 and led it for more than three decades, would take over the company’s top role until he finds a permanent CEO. Former CEO Kevin Johnson announced his departure on March 16. the company said it expects to appoint a permanent CEO by this fall. Starbucks announced late last year that it was committing to a three-year $ 20 billion stock and dividend repurchase program to return profits to investors. This was in addition to a $ 25 billion stock and dividend plan announced by the company in 2018. Acquisitions often increase a company’s share price, rewarding its shareholders. However, some critics, including Democratic Sen. Elizabeth Warren of Massachusetts, say the acquisitions are also boosting executive compensation and doing little to improve a company’s assets and services. Investors were not happy with the news. Shares of Starbucks fell 4% in Monday afternoon trading. It is unclear how the end of the repurchase program will affect Schultz himself, as Starbucks has not revealed how many shares it currently holds. By the time he left the company in 2018, he and his family owned 34 million shares. which would be worth almost $ 3 billion today. Schultz volunteered his time as interim CEO, receiving $ 1 in compensation. Monday’s announcement shows Schultz is feeling some warmth from employees, many of whom have publicly complained about understaffed stores and pay delays. Last fall, Starbucks pledged to spend $ 1 billion over two years to raise U.S. workers’ wages, which will average $ 17 an hour by this summer. But many workers questioned whether that was enough, given that Johnson’s 2021 compensation package would total more than $ 20 million. As a result, Starbucks are facing increasing trade union efforts that Schultz may seek to stifle. Ten of the company’s 9,000 corporate-owned stores in the United States have voted in favor of the union since December, and at least 181 more in 28 states have applied for union elections. Workers United, a subsidiary of the International Union Employees Service, is leading the effort. Last Friday, workers at the flagship Starbucks Reserve Roastery in New York voted 46-36 in favor of forming a union. It was the largest store that voted unionized to date. In his previous collaboration with the company, the 68-year-old Schultz successfully fought the efforts to unify the Starbucks stores in the USA and the baking factories. Starbucks had to reinstate laid-off workers or pay to settle labor law violations several times under Schultz in the early 2000s. Schultz did not mention the trade union effort in a letter to workers Monday. He said he plans to travel to stores and factories around the world to get information on how to rebuild the company after several turbulent years. “Supply chains, COVID-induced decimation, rising tensions and political unrest, a racial record and a rising generation seeking a new responsibility for business,” Schultz wrote. “As Starbucks, we can either choose to go right now – or stay inactive.
