Starbucks faces internal conflict as Howard Schultz opposes Elliott settlement
Howard Schultz
Former Starbucks CEO Howard Schultz is lining up against a potential settlement between the coffee giant and activist investor Elliott Investment Management, the Financial Times reported. In a $2.03 billion stake at Starbucks, Schultz holds the company's sixth-largest shares. He expressed his misgivings to board members, the report said, citing sources familiar with the matter.
Elliott has built a sizable stake in Starbucks and, in recent days, has been discussing ways of improving the coffee chain's stock performance, sources familiar with the matter told Reuters last week. The coffee chain would not comment on the report, while Schultz and Elliott did not immediately respond to requests from Reuters for comment.
Schultz, who left the board of Starbucks last year, transformed what was essentially a small whole-bean business into an international coffee house chain operating more than 36,000 stores in 86 markets. He stepped down as CEO in 2023 after returning for a third term to steer the company.
Following a disappointing quarterly earnings report in April, Schultz took to LinkedIn to signal that Starbucks must overhaul its US operations. Elliott, which won board seats at Etsy, Phillips 66, and Match, in the first half of 2024, is also currently pressuring Southwest Airlines for changes. The hedge fund, managing $65.5 billion in assets as of December, also launched campaigns at Texas Instruments and Johnson Controls earlier this year.
Shares of Starbucks, down nearly 23 per cent this year, edged higher in extended trading on Friday.
This standoff between Schultz and Elliott epitomises the internal rifts underway inside Starbucks as it faces activist pressure. The resistance that Schultz offers to the settlement underlines his remaining influence and deep apprehension for the future course of the company, a resolution of this dispute being of prime importance from the future strategy and investor confidence point of view.
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