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New Starbucks CEO Laxman Narasimhan takes reins two weeks early

Yahoo Finance’s Brooke DiPalma joins the Live show to discuss Laxman Narasimhan replacing Howard Schultz as the CEO of Starbucks.

Video transcript

- We got to talk about Starbucks.

- Yeah, we do, because there's also a management change there, a personnel change, if you will.

- [LAUGHS]

- Starbucks officially naming Laxman Narasimhan the CEO this morning, taking the reins from three time executive Howard Schultz two weeks earlier than expected. Brooke DiPalma has been covering this for us. And she's here with us now. So it's only a two-week difference.

BROOKE DIPALMA: Right.

- But still, Starbucks is not a haphazard kind of company, right?

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BROOKE DIPALMA: Right, right. Certainly, this is something that we've been expecting, we've been planning for. And they've been planning for it for nearly five months. But Howard Schulz in a letter to leaders this morning calling this a new era for Starbucks. Of course, Laxman will take the role of CEO effective Monday today. He will also join the Starbucks board of directors, and interim Howard Schultz, interim CEO that is, will step down.

But he'll continue to remain on the board of directors. Now, as I noted before, this has been planned ahead. He joined the company October 1st. He's been transitioning into this role for the past five months. He spent that time meeting employees, going to manufacturing plans, and also support centers around the world that he's even earned his barista certificate. And Mellody Hobson, she is the chair of the board of directors.

She said that this intensive immersion allowed him to be uniquely prepared for this next phase of growth at Starbucks. But we know Laxman as the CEO of Lysol maker, Reckitt Benckiser. He led that company during the pandemic. He was also former global chief commercial officer of PepsiCo. And in the release, he did say that he was excited to unlock the limitless future of Starbucks. But of course, there's a lot going on at the company at the same time.

- Hmm.

- Absolutely. So what do the next few weeks look like for Starbucks? I mean, they've got some big events that are going to be taking place in this near term.

BROOKE DIPALMA: Right, big events internally and also externally facing, of course. This Thursday, we have the annual meetings of shareholders. Laxman will now lead that annual meeting of shareholders on Thursday as well. Shareholders are also expected to vote on a proposal from SOC Investment Group. Now, that proposal will require the Starbucks board to start succession planning at least three years in advance.

Of course, we know here that Howard Schultz has said publicly that he does not plan to step back into that role as CEO. But he is expected to testify before the Senate Health Committee in response to accusations that Starbucks has not come to the table in terms of collective bargaining when it comes to employees looking to unionize and that also they have been outspoken about not allowing employees to unionize.

But under Howard Schultz as interim CEO, the company has seen returns at Wall Street. Certainly excited about that. We saw stock price go up 47% from his first call as interim CEO until his latest call. Stock price from April 4, 2022 up 8%. We've also, as you noted here, see that the company market cap grows approximately $40 billion.

But there's lots going on at the company. And certainly, shareholders expecting, I feel like, a bit more from Laxman as he takes the helm.

- All right, a lot to continue to track with the ticker symbol SBUX and the green siren. Thanks so much, Yahoo Finance's own Brooke DiPalma.