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Howard Schultz, the former Starbucks chief executive, is opposing a potential settlement between the company and activist investor Elliott Investment Management, in the latest sign of tension at the world’s largest coffee chain.
The quasi-founder of Starbucks has made his opposition to an Elliott settlement known to some board members, said people familiar with the matter.
Schultz had criticised its leadership publicly in recent months despite no longer having a formal role at the company. He remains Starbucks’s sixth-largest shareholder, with a holding of about $1.6bn.
Elliott, known for being an aggressive investor, has built a sizeable minority stake in the $86bn company and has privately pushed for change in recent weeks, including board representation, in an attempt to revive Starbucks’ lacklustre performance. Schultz and Elliott have not been in contact over this matter, one person said.
Companies under pressure from activists such as Elliott often seek to negotiate agreements with them rather than face a public fight, but the status of any settlement discussions between Starbucks and Elliott remain unclear.
“Howard left the board a year ago and in his limited contact with the board since, his input has always focused on the values and culture of Starbucks as the primary driver of success and performance,” a person close to Schultz said.
The billionaire former coffee machine salesman led the company three separate times — for about 14 years starting in 1986, then again from 2008 to 2017, and most recently as interim CEO from 2022 to 2023.
He was succeeded as CEO last year by Laxman Narasimhan, who joined from UK-based consumer health and hygiene group Reckitt. Schultz remains chair emeritus but left the company’s board and has said he does not have access to financial information.
Schultz, who has said he has no interest in returning as CEO, has remained vocal on the sidelines. This spring he criticised the company’s performance on LinkedIn, penning an open letter that said senior leaders and board members needed “to spend more time with those who wear the green apron”.
He also made an appearance on business podcast Acquired in June, speaking about the history of Starbucks and his recommendations for management. “It hasn’t been a great year for Starbucks,” he said. “In fairness to Laxman, there’s a lot of external issues that have contributed to the pressure, like on every company. But the company has not executed the way that I think it should have.”
“If the company is doing a drift towards mediocrity, I hold leadership, and the board responsible for that,” he said later in the three-hour podcast.
Starbucks’s share price has fallen about 20 per cent since the start of 2024. The company cut its financial guidance in January and again in April, when it reported a 4 per cent decline in quarterly comparable store sales that was the first such drop since late 2020. It is due to announce results for its fiscal third quarter on Tuesday.
Starbucks has made changes to its board over the past year. Three new members, including the CEOs of YouTube and T-Mobile, Neal Mohan and Mike Sievert, joined earlier this year. This spring, Microsoft CEO Satya Nadella left the board.
Spokespeople for Schultz, Starbucks and Elliott declined to comment.