Starbucks CEO hands keys to successor

In this image, Starbucks CEO Howard Schultz stands at the Princi bakery, in Milan, Italy. Longtime CEO Howard Schultz's vision for Starbucks was largely inspired by the Milan coffee bars he experienced on his first trip to the northern Italian city in 1983. Schultz will continue on with the company to open ''the quintessential Roastery'' in Milan by the end of 2018. AP Photo/Luca Bruno

In this image, Starbucks CEO Howard Schultz stands at the Princi bakery, in Milan, Italy. Longtime CEO Howard Schultz's vision for Starbucks was largely inspired by the Milan coffee bars he experienced on his first trip to the northern Italian city in 1983. Schultz will continue on with the company to open ''the quintessential Roastery'' in Milan by the end of 2018. AP Photo/Luca Bruno

Published Mar 23, 2017

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Washington - Starbucks CEO Howard Schultz quite literally

handed the keys to the company to his successor on Wednesday. Reaching into his

pocket during the company's meeting of annual shareholders, Schultz plucked the

door key to Seattle's Pike Place Market store, the company's original location,

and handed it to president and chief operating officer Kevin Johnson, who will

officially succeed Schultz in early April.

"That has been in my pocket for 35 years," he

said.

Schultz has never shied away from turning the usually

drab annual investor meeting into a show of its own - a choreographed event

that has long mixed emotional video, lofty commentary on the state of the

nation and even pop star surprises for its shareholders. Wednesday was no

different, with an appearance from Grammy nominee Leon Bridges, a flag

presentation by the Seattle Recruiting Battalion Colour Guard and the singing

of the national anthem by a chorus of green-aproned Starbucks employees. Even

the corporate secretary, announcing results of shareholder votes, made a joke

about the Oscars.

Yet it was the passing of the torch from Schultz to

Johnson that took centre stage, the most visible handoff yet of the succession

announced in December. The company unveiled a handful of initiatives, from the

expansion of veteran and minority youth hiring programs to new food items in

its stores. A question from a conservative shareholder think tank prompted

Schultz to respond that boycotts over his pledge to hire refugees had

"unequivocally" no impact on the company's business - producing some

of the loudest applause of the event.

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But in the meeting - and in an interview two days before

the shareholder event - Schultz sought to reflect on the culture he'd built at

the coffee giant and reassure investors about the person who would soon take

the reins. "I have so much faith in Kevin's ability and leadership skills

that he's the right person at the right time," Schultz said in an

interview Monday with The Washington Post, comments that he echoed in the

meeting Wednesday. "I think he's better prepared than me to lead the

company into the future."

Stock is down

Still, Johnson will be taking over a company whose sales

in the US have not been on a caffeinated high. This year marks the first time

since the financial crisis that the stock has been down in the year preceding

the annual meeting. As US sales failed to meet analyst expectations five

quarters in a row, investors have driven down shares in Starbucks 4 percent

over the past year, compared with a 15 percent rise in the S&P 500 stock

index. In January, it trimmed its full-year revenue forecast.

Both Johnson and Schultz said they are confident about

the company's growth in China, where it now operates more than 2 600 stores and

is opening more than one store a day, as well as new digital efforts to enhance

ordering and gift-card sharing and new food and coffee options. Schultz, who

will step down from the CEO role but continue on as executive chairman, plans

to lead the company's new high-end Roastery and Reserve brands, as well as

focus on the company's social impact efforts.

That focus was on display in Wednesday's meeting, as

Schultz, known for leading the company with heart-on-his-sleeve talk of

corporate "humanity" and a willingness to enter the public debate on

social issues, spoke about those efforts, from being one of the first companies

to support same-sex marriage to having the "courage, the conviction, to

address the issue of race," a reference to the company's ill-fated

"Race Together" campaign.

Travel ban

Most recently, he was one of the first non-tech CEOs to

speak out about Trump's first travel ban temporarily prohibiting immigrants

from seven majority-Muslim countries, promising to hire 10 000 refugees over

the next five years in 75 countries. The move was lauded by many customers but

also drew boycott threats on social media from the right.

At Wednesday's meeting, a representative from the

National Centre for Public Policy Research, a conservative think tank, asked

about what the hiring of refugees would cost Starbucks and whether it was

politically driven. After boos from the audience, Schultz replied that he could

"unequivocally" say "there is zero, absolutely no evidence

whatsoever, that there's any dilution in the integrity of the Starbucks brand,

our reputation or our core business as a result of being compassionate."

"If there's one message that I hope you came away

with today it's that none of the things that we have tried to do as a company,

which is based on humanity and compassion, is based on politics," he said.

"It's based on principles and our core beliefs."

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Schultz's comfort with wading into social issues from the

corner office has led to frequent speculation that he may have aims on

political office, and an annual meeting that begins with a national anthem

could prompt some to believe the rumours. Over the years, Schultz has by turns

batted down that idea in op-eds and fuelled it with statements in interviews

like "let's see what the future holds."

But as he moves into the chairman's seat, Schultz again

reiterated in an interview Monday that "I don't have any plans to run for

political office." (Is there any chance he would consider it?

"No," Schultz said.) He does, however, intend to take that "social

impact" part of his mandate seriously. "As I have more time on my

hands then I have had as CEO, I hope that I can work toward elevating the

national conversation on a more compassionate society, on a more compassionate

government, and work alongside like-minded CEOs and government officials,"

he said.

Schultz says such lofty remarks aren't made to draw more

attention to him. "I'm not looking to make news as it relates to Howard

Schultz," he said. "What I am looking to do is to continue to be a

respectful, positive voice for humanity and for civil discourse on the things

that I think are important."

WASHINGTON POST

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