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Starbucks’ Schultz faces poor track record for Boomerang CEOs

Schultz, 68, is part of a boomerang CEO fraternity that includes celebrity business leaders such as Steve Jobs, Michael Dell and AG Lafley. In general, stock performance under recurring CEOs is about 10% lower than those taking the reins for the first time, according to a study by the Kenan-Flagler Business School at the University of North Carolina.

“I see Schultz going back to basics, and it might not work now,” Professor Kenan-Flagler said. Christopher Bingham said in an interview. “Bringing someone back a second time is a rare occurrence, and that worries me in particular.”

Bingham and his colleagues analyzed the performance of 167 boomerang CEOs at companies listed on the S&P 1500 Index from 1992 to 2017 and compared their tenures with those of more than 6,000 other leaders during the same period. Founders, who made up nearly half of recurring CEOs, “often lack the administrative skills necessary to manage the challenges associated with a larger, more complex organization,” especially one that is in crisis or in need of turnaround, wrote the academics in a article in MIT Sloan Management Review in September 2020.

Although Schultz did not create Starbucks from scratch, he is credited with transforming a local java roaster into a global phenomenon. The company now faces rising costs, geopolitical uncertainty in China and a growing union organizing movement in the United States, not to mention declining foot traffic in urban areas due to the popularity of the job. from a distance.

Admittedly, Schultz’s first return to the reins was good for investors. The stock rose more than 500% during his tenure from 2008 to 2017, compared to a 67% gain in the S&P 500 Index.

Johnson first signaled to the Starbucks board about a year ago that he was considering retirement and hoped to do so after the pandemic, Starbucks board chair Mellody Hobson said. . Recount the Wall Street Journal. His decision to leave was his, not the result of any board or outside push, said Hobson, who is also co-CEO of Chicago-based Ariel Investments.

“It was deliberate,” Ms. Hobson told the Journal in an interview on Tuesday. “It’s by no means hasty.”