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 Color 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 center 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.
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.”
Still, Johnson will be taking over a company whose sales in the U.S. 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 U.S. 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.
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 Center 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.”
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 rumors. Over the years, Schultz has by turns batted down that idea in op-eds and fueled 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.”