Returning Starbucks CEO, Howard Schultz, has ordered the immediate pause of the coffee chain's planned buyback program. The order was Schultz's first act after returning as the head of the coffee chain giant.
In a letter to employees and stakeholders after his return, Schultz announced that the company would be suspending its share repurchasing program to allow it to make more investments in its stores and staff. He added that the decision was the best way for the company to create "long-term value" for investors.
Schultz returned as the CEO of Starbucks for the third time on Monday. He will be acting as the interim chief executive until the company can find a permanent replacement. Apart from halting the buyback program, Schultz also addressed growing concerns over U.S. employees unionizing.
Even before his return as CEO, Schultz has been working to dissuade employees from unionizing. In November, Schultz had met with some employees to discuss their demands and issues with the company's recent decisions.
Last month, Starbucks announced that its stock repurchase program had been restarted. The company said at the time that it planned to return $20 billion to shareholders over the next three fiscal years.
Investors like buyback schemes because they reduce the total number of outstanding shares, improving earnings per share. However, not everyone had agreed with the decision. Following the news, Vermont Senator Bernie Sanders chastised Starbucks, calling on the company to instead use the funds to unionize its workforce.
Schultz said that he plans to hold further meetings with employees to hear their thoughts and concerns. He added that he will be traveling to the company's different stores and manufacturing plants around the world to better understand workers and how to build better outlets. A source within the company said Schultz would be holding an open forum for interested employees this week to address macroeconomic issues currently affecting the business.
On Monday, a group of stockholders with a combined $1.2 billion in Starbucks stock encouraged Schultz to think about the implications of "antagonizing" employees who wanted to form a union. They contended that bringing workers to the table would result in decreased staff turnover and long-term success.
Apart from the possible unionization of its workforce, Schultz will also be tackling other challenges. In his letter, Schultz acknowledged that the continued supply chain issues, the aftermath of the pandemic, and the growing tensions and political unrest will be significant challenges for the company in the short and near term.
