Following Schultz’s departure as CEO of Starbucks in 2023, Narasimhan, a former executive at PepsiCo and Reckitt, took over as CEO.
In exchange for CEO Laxman Narasimhan’s retention, Elliott Management has suggested that Starbucks’ board be expanded and that its governance be strengthened.
The report stated that Starbucks has not reacted to the offer, which was made weeks ago. It further stated that the action was taken prior to rumors that the activist investor held a sizeable position in the business.
Elliott and Starbucks declined to comment.
During its third-quarter earnings call on Tuesday, the coffee giant revealed that Elliott was a stakeholder and that their discussions had been “constructive.”
The investment held by the hedge fund is estimated to be worth $2 billion, although it has not been revealed.
The resistance of former CEO Howard Schultz to the settlement offer further complicates matters.
After 41 years of employment, including three stints as CEO, Schultz is now the sixth-largest shareholder in Starbucks, the coffee brand he helped to drive to global prominence.
Days after Starbucks lowered its yearly sales projection in May, Schultz claimed on his LinkedIn profile that the company’s U.S. operations were the “primary reason for its fall from grace” and that senior executives should spend more time interacting with their employees.
Following Schultz’s departure as CEO in 2023, Narasimhan, a former executive at PepsiCo and Reckitt, took over as CEO.
Early on Thursday, the company’s shares were down roughly 3%. They have increased by almost 5% this week after the coffee chain, which saw a decline in worldwide sales, nevertheless beat earnings estimates for its third quarter, aided by in-store savings.
Starbucks has experienced a downturn in China, which is its second-biggest market after the United States, as it deals with local chain competition and poor consumer spending.
The company is looking into strategic options for its China business, including partnerships and joint ventures, according to CEO Narasimhan’s statement on Tuesday.
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