Elliott Proposes Starbucks Settlement to Allow CEO to Retain Position, Reports CNBC By Reuters

Elliott Management has suggested expanding the board and improving governance at Starbucks as part of a settlement that would allow CEO Laxman Narasimhan to retain his position, according to a report from CNBC.

The proposal was made several weeks ago, and Starbucks has yet to respond. This move follows reports that the activist investor holds a significant stake in the company. Both Starbucks and Elliott Management have declined to comment on the situation.

During its third-quarter earnings call, Starbucks confirmed Elliott’s status as a shareholder and characterized discussions with the investor as “constructive.” Although the hedge fund has not publicly disclosed its stake, previous reports suggest it could be valued at up to $2 billion.

The proposed settlement faces challenges due to opposition from former CEO Howard Schultz. Schultz is currently the sixth-largest shareholder and played a critical role in establishing Starbucks as a global brand during his 41 years with the company, during which he served as CEO three times.

In May, shortly after Starbucks revised its annual sales forecast downward, Schultz expressed on his LinkedIn account that the company’s U.S. operations were the main reason for its decline and urged senior leaders to engage more with employees.

Schultz stepped down from his role as CEO in 2023, passing the reins to Narasimhan, who previously worked at Reckitt and PepsiCo.

As of Thursday morning, shares of Starbucks were down approximately 3%. However, they have increased around 5% this week after the company met profit expectations for the third quarter, attributed to improved in-store efficiencies despite a decline in global sales.

Starbucks has been experiencing a slowdown in its second-largest market, China, where it faces stiff competition from local brands and challenges related to weak consumer spending. CEO Narasimhan stated that the company is exploring strategic options for its operations in China, potentially including joint ventures and partnerships.