Howard Schultz, Starbucks’ leader who returned to the company as interim CEO, said his first major action will be suspending Starbucks' share buyback programme and ploughing those billions of dollars into the company instead.
“This decision will allow us to invest more profit into our people and our stores – the only way to create long-term value for all stakeholders,” Schultz said in an open letter to employees posted on Starbucks' website.
The pivot in 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 be taking over the company’s top role until it finds a permanent CEO.
Previous CEO Kevin Johnson announced his retirement in mid-March and the company said it expects to name a permanent CEO later this year.
Starbucks announced late last year that it was committing to a three-year, US$20 billion (NZ$28.7 billion) share repurchase and dividend programme to return profits to investors. That was on top of a US$25b share buyback and dividend programme the company announced in 2018.
Buybacks often raise a company's stock price, rewarding its shareholders. But some critics, including US Democratic Senator Elizabeth Warren of Massachusetts, have noted buybacks also inflate executive compensation and do nothing to improve a company's goods and services.
Investors weren't pleased by the news. Starbucks' shares closed at the beginning of this week down 4 percent.
It's not clear how ending the buyback programme will impact Schultz himself, since Starbucks has not revealed how many shares he currently owns. At the time he left the company in 2018, he and his family held 34 million shares; that would be worth nearly US$3b today.
Starbucks is facing a growing unionisation effort that Schultz may be seeking to quell. Ten of the company's 9000 company-owned US stores have voted to unionise since December, and at least 181 more in 28 states have filed to hold union elections.
Workers United, a branch of the Service Employees International Union, is leading that effort. Last week, workers at Starbucks' flagship Reserve Roastery in New York voted 46-36 to form a union. It was the largest store to vote for unionisation to date.
