From Slough to Seattle: the challenges facing Starbucks’ new boss

Surprise move to Seattle comes as global coffee chain faces unionisation drive

When Reckitt Benckiser announced the surprise departure of its chief executive, Laxman Narasimhan, on Thursday, the Durex to Dettol maker cited “personal and family reasons”.

Those reasons became clear a few hours later: Narasimhan is swapping the Reckitt office in Slough for a perch in Seattle as he joins the Starbucks chain.

In a statement, Howard Schultz, the billionaire who built Starbucks into a global empire, praised Narasimhan’s “passion of investing in humanity”.

That passion is to be tested, as Starbucks faces a widespread unionisation drive at home even as it seeks reinvigorating growth abroad.

Starbucks Workers United says it has unionised 235 stores, with a further 90 having filed to hold elections. The group complains that workers’ interests are put behind shareholders’ and says they are “understaffed, overextended, exhausted and burnt-out”.

Michelle Eisen, a Starbucks Workers United leader, said she hoped Narasimhan would “end Starbucks’ scorched earth union-busting campaign”.

“This is the perfect opportunity for Starbucks to end the wrongful terminations, store closings, and war against workers, and instead embrace our union and sign the fair election principles,” she said.

The company denies using delaying tactics, despite the fact that only three stores have so far started negotiations with unions over new terms.

A US judge last month told Starbucks to reinstate seven staff in Memphis, Tennessee, who were allegedly fired for union activities – the company denied the allegations and said it would appeal. Starbucks has also accused US federal officials of interfering in workers’ favour.

It will be a fresh challenge for Narasimhan, who did not face significant labour relations problems during his three-year tenure at Reckitt. Starbucks said he would spend part of the first few months on the job meeting “partners” – Starbucks’ word for employees – from around the world.

Schultz, who grew the chain from 11 stores to more than 28,000, stepped in as interim chief executive in April after his hand-picked successor retired. He has already set a new strategy to push Starbucks back to growth after a year in which its market value has fallen by a third. He will be hovering over Narasimhan in a non-executive role.

Starbucks has been particularly badly affected in recent months by lockdowns in China, while it has also suspended share buybacks to spend more on wages and training in the US, the other market where it hopes to find more growth.

The importance to Starbucks of the UK and Europe has diminished, to the point that it was reportedly considering a sale of the British operation of about 1,000 stores.

The new job will represent a step up for Narasimhan, from a £45bn company to one worth nearly $100bn (£87bn). His personal rewards will rise in parallel: from £6m in 2021 to a possible $17.5m annual payout if he hits targets.

Added to that, Starbucks will pay a $1.6m cash signing bonus and $9.3m in shares to make up for lost Reckitt bonuses. He will also receive up to $50,000 to cover legal fees, and the Starbucks private jet will be at his disposal.

Narasimhan departed Reckitt afteran unusually short stint for a FTSE 100 chief executive. He grew up in India, before studying at the University of Pennsylvania’s prestigious Wharton School and joining McKinsey, a global management consultancy.

Before Reckitt, he worked at PepsiCo – a longstanding Starbucks partner on branded bottled coffee drinks – where he ran its operations in Latin America, Europe and sub-Saharan Africa.

Narasimhan, who has advised the UK prime minister, Boris Johnson, said he could not turn down the chance to return to the US, where he is a citizen.


Jasper Jolly

The GuardianTramp

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