Howard Schultz

Howard Schultz
Schultz in 2011
Born (1953-07-19) July 19, 1953
New York City, United States
Education Northern Michigan University
(BA)
Occupation Chairman Emeritus, Starbucks
Salary One-dollar salary[1]
Net worth US$ 3.1 billion (April 2017)
Political party Democratic[2]
Spouse(s)
Sheri Kersch (m. 1982)
Children 3
Website Official website

Howard Schultz (born July 19, 1953) is an American businessman. He was the CEO of Starbucks in 1986-2000 and again in 2008-2017, as well as its executive chairman from 2017 to 2018. He is a former owner of the Seattle SuperSonics. He was a member of the Board of Directors at Square, Inc.[3] In 1998, Schultz co-founded Maveron, an investment group, with Dan Levitan.[4] In 2016, Forbes magazine ranked Schultz as the 232nd richest person in the United States, with a net worth of $3.1 billion as of April 2017.[5]

On December 1, 2016, Schultz announced his resignation as CEO of Starbucks, taking an executive chairman position, effective April 2017.[6] He was succeeded as CEO by Kevin Johnson.[7] On June 4, 2018, Schultz announced his retirement as executive chairman, effective June 26, 2018, becoming chairman emeritus, amid speculation he has U.S. presidential ambitions.[8]

Early life and education

Schultz was born to a Jewish family[9] on July 19, 1953 in Brooklyn, New York, the son of Elaine (Lederman) and her husband, ex-United States Army trooper and then truck driver Fred Schultz.[10][11][12] With his younger sister, Ronnie, and brother, Michael, he grew up in the Canarsie Bayview Houses of the New York City Housing Authority. As Schultz's family was poor, he saw an escape in sports such as baseball, football, and basketball, as well as the Boys Club. He went to Canarsie High School, from which he graduated in 1971.[13] Schultz was awarded an athletic scholarship to Northern Michigan University[10] – the first person in his family to go to college. A member of the Theta-Iota chapter of Tau Kappa Epsilon, Schultz received his bachelor's degree in speech communication in 1975.[11]

Career

After graduating, Schultz worked as a salesman for Xerox Corporation and was quickly promoted to a full sales representative.[11] In 1979 he became a general manager for Swedish drip coffee maker manufacturer, Hammarplast,[10] where he became responsible for their U.S. operations with a staff of twenty.[11] In 1981, Schultz visited a client of Hammarplast, a fledgling coffee-bean shop called Starbucks Coffee Company in Seattle, curious as to why it ordered so many plastic cone filters.[11] He was impressed with the company's knowledge of coffee and kept in contact over the next year, expressing interest in working with them. A year later, he joined Starbucks as the Director of Marketing.[14] On a buying trip to Milan, Italy, for Starbucks, Schultz noted that coffee bars existed on practically every street. He learned that they not only served excellent espresso, they also served as meeting places or public squares; the 200,000 cafés in the country were an important element of Italian culture and society.

On his return, he tried to persuade the owners (including cofounder Jerry Baldwin) to offer traditional espresso beverages in addition to the whole bean coffee, leaf teas and spices they had long offered. After a successful pilot of the cafe concept, the owners refused to roll it out company-wide, saying they did not want to get into the restaurant business. Frustrated, Schultz decided to leave Starbucks in 1985. He needed $400,000 to open the first store and start the business. He simply did not have the money and his wife was pregnant with their first baby. Jerry Baldwin and Starbucks cofounder Gordon Bowker offered to help. Schultz also received $100,000 from a doctor who was impressed by Schultz's energy to "take a gamble".[15] By 1986, he had raised all the money he needed to open the first store, "Il Giornale", named after the Milanese newspaper of the same name. The store offered ice cream in addition to coffee, had little seating, and played opera music in the background to portray an Italian experience. Two years later, the original Starbucks management decided to focus on Peet's Coffee & Tea and sold its Starbucks retail unit to Schultz and Il Giornale for US$3.8 million.

Schultz renamed Il Giornale with the Starbucks name, and aggressively expanded its reach across the United States. Schultz's keen insight in real estate and his hard-line focus on growth drove him to expand the company rapidly. Schultz did not believe in franchising, and made a point of having Starbucks retain ownership of every domestic outlet. On 26 June 1992, Starbucks had its initial public offering and trading of its common stock under the stock ticker NASDAQ-NMS: SBUX. The offering was done by Alex, Brown & Sons Inc. and Wertheim Schroder & Co. Inc.[16]

On June 1, 2000, Schultz stepped down as CEO of Starbucks, moving to the new position of chief global strategist to help the company expand internationally.[17] Privately, the previous 18 years of intensive work to grow the company had exhausted him.[18]

On January 8, 2008 Schultz returned as CEO of Starbucks after an eight-year hiatus.[19] Although the company was growing, that growth was largely dependent on opening new stores, while same-store sales were declining.[18] He fired many executives,[18][20] closed down hundreds of weak stores,[18][20] hired the company's first Chief Technology Officer,[20] introduced the Starbucks Reward Card,[20] and temporarily closed all US locations to retrain employees in making espresso.[20] The company soon returned to organic growth and investor favor.[20] At this time, Schultz was earning a total compensation of $9,740,471, which included a base salary of $1,190,000, and options granted of $7,786,105.[21]

Schultz again stepped down as CEO in December of 2016, assuming the position of executive chairman.[20] On June 4, 2018, Schultz announced that he would leave all positions at Starbucks, considering amongst other options a campaign for President amid concerns about income inequality.[22]

Schultz is known for pioneering Starbucks' partnership with Arizona State University, which allows all employees at Starbucks working 20 or more hours a week to qualify for free tuition through ASU's online courses.[23]

On the first of November 2013, it was announced that Schultz had stepped down from the board of Square, to be replaced by former Goldman Sachs executive David Viniar.[24]

Schultz is a significant stakeholder in Jamba Juice.[25]

Ownership of the Seattle SuperSonics and the Seattle Storm

Schultz is the former owner of both the NBA's Seattle SuperSonics and the WNBA's Seattle Storm. During his tenure as the SuperSonics team owner, he was criticized for his naïveté and propensity to run the franchise as a business rather than a sports team.[26] Schultz feuded with player Gary Payton, feeling that Payton disrespected him and the team by not showing up to the first day of training camp in 2002.[27] On July 18, 2006, Schultz sold the team to Clay Bennett, chairman of the Professional Basketball Club LLC, an Oklahoma City ownership group, for $350 million, after having failed to convince the city of Seattle to provide public funding to build a new arena in the Greater Seattle area to replace KeyArena. At the time of the team's sale, it was speculated that the new owners would move the team to their city some time after the 2006–2007 NBA season.[28] On July 2, 2008, the city of Seattle reached a settlement with the new ownership group and the SuperSonics moved to Oklahoma City and became the Thunder for the 2008–09 NBA season.[29] The sale to the out-of-state owners considerably damaged Schultz's popularity in Seattle.[30] In a local newspaper poll, Schultz was judged "most responsible" for the team leaving the city.[31] Before the city of Seattle settled with the Oklahoma City ownership group, Schultz filed a lawsuit against Bennett – in April 2008 – to rescind the July 2006 sale based on what Schultz claimed was fraud and intentional misrepresentation. However, Schultz dropped the lawsuit in August 2008. When Bennett purchased the SuperSonics and its sister franchise in the WNBA, the Seattle Storm, for $350 million, he agreed to a stipulation that he would make a "good-faith best effort" for one year to keep both teams in Seattle. The sincerity of the good-faith effort was widely disputed by the way Bennett acted and by direct quotes from his partner Aubrey McClendon. On January 8, 2008, Bennett sold the Storm to Force 10 Hoops, LLC, an ownership group of four Seattle women, which kept the team in Seattle.[32]

Author

Schultz wrote the book Pour Your Heart Into It: How Starbucks Built a Company One Cup at a Time with Dori Jones Yang in 1997. His second book Onward: How Starbucks Fought for Its Life Without Losing Its Soul, co-written with Joanne Gordon, was published in 2011. His third book For Love of Country, co-written with Rajiv Chandrasekaran, was published in 2014.

Comments about the UK economy

Speaking to CNBC in February 2009 about his concerns over the global economic crisis, Schultz said that "the place that concerns us the most is western Europe, and specifically the UK. The UK is in a spiral", expressing concern with the levels of unemployment and consumer confidence in the United Kingdom.[33]

Lord Mandelson, then-British Business Secretary, responded saying that the United Kingdom was "not spiralling, although I've noticed Starbucks is in a great deal of trouble", and suggesting that Schultz was projecting his own company's trouble in the United Kingdom onto the wider national economy.[33]

An official comment from Starbucks read that "It is a difficult economic situation in the US and around the world. Please be assured that Starbucks has no intention of criticising the economic situation in the UK. We are all in this together and as a global business we are committed to each and every market we serve."[33]

Awards and honors

Schultz was awarded the 1999 National Leadership Award for philanthropic and educational efforts to battle AIDS,[34] and the 2004 International Distinguished Entrepreneur Award from the University of Manitoba.[35]

In 2007, he received the FIRST Responsible Capitalism Award.[36]

On March 29, 2007, Schultz accepted the Rev. Theodore M. Hesburgh, C.S.C., Award for Ethics in Business at the Mendoza College of Business at the University of Notre Dame, delivered the Frank Cahill Lecture in Business Ethics.[37]

Schultz was named Fortune magazine's 2011 Businessperson of the Year for his initiatives in the economy and job market.[38]

Schultz spoke at the 2017 Arizona State University commencement ceremony was presented with an honorary Doctor of Humane Letters degree.[39]

In November 2017, the NAACP Legal Defense and Educational Fund presented Schultz with the National Equal Justice Award.[40]

Personal life

In 1982, Schultz married Sheri Kersch;[11] they have two children:[41] Jordan (born 1986),[42] and daughter Addison Schultz (born 1989). Their son Jordan Schultz is a sportswriter for The Huffington Post. Jordan married Breanna Hawes in September 2011; their civil ceremony was followed the same day by a Jewish religious ceremony.[42][43] Schultz endorses same-sex marriage.[44]

In 1996, Howard and Sheri Schultz co-founded the Schultz Family Foundation, which currently supports two national initiatives.[45] Onward Youth is aimed at promoting employment for young people between the ages of 16 and 24 who are not in school and not working.[46][47] Onward Veterans aims to support post-9/11 military to successfully transition to civilian life.[48]

References

  1. ↑ "Starbucks CEO will see base pay drop to $1 in April". The Oregonian.
  2. ↑ Long, Heather (September 7, 2016). "Starbucks CEO Howard Schultz endorses Hillary Clinton". CNNMoney. Retrieved August 5, 2017.
  3. ↑ Efrati, Amir (August 8, 2012). "Starbucks Invests in Square". The Wall Street Journal.
  4. ↑ Arnold, Glen (2008). Corporate financial management. Pearson Education. p. 496. ISBN 978-0-273-71041-7.
  5. ↑ "The Richest People in America List - Forbes 400". Forbes. Retrieved 2017-09-29.
  6. ↑ Egan, Matt. "Starbucks CEO Howard Schultz to step down". Retrieved 4 June 2018.
  7. ↑ Whitten, Everett Rosenfeld, Sarah (2016-12-01). "Howard Schultz stepping down as Starbucks CEO; current COO to replace him". CNBC. Retrieved 2016-12-02.
  8. ↑ "Howard Schultz to Step Down as Starbucks Executive Chairman". 4 June 2018. Retrieved 4 June 2018 – via NYTimes.com.
  9. ↑ New York Times: "New Economy; How Starbucks was put on the defensive by an attack on the Internet rumor mill that would not go away" By Sherri Day June 02, 2003
  10. 1 2 3 Melissa Thompson (August 5, 2010). "Starbucks' Howard Schultz on how he became coffee king". Sunday Mirror.
  11. 1 2 3 4 5 6 Howard is constantly reminding his team, "We are not in the coffee business serving people; we are in the people business serving coffee."Kellogg School of Management: "Howard Schultz and Starbucks Coffee Company" by Nancy F. Koehn November 28, 2011. Archived January 4, 2014.
  12. ↑ "Howard Schultz: I raise my frappuccino to the Brits". Retrieved 4 June 2018.
  13. ↑ "Howard Schultz". jewishvirtuallibrary.org. Retrieved 2012-03-20.
  14. ↑ "Howard Schultz Secrets for Success. Dan Skeen. Success Television". Archived from the original on 2011-07-16. Retrieved 2011-08-22.
  15. ↑ Mullins, John (2007). The New Business Road Test.
  16. ↑ "STARBUCKS COFFEE ANNOUNCES INITIAL PUBLIC OFFERING - Free Online Library". thefreelibrary.com.
  17. ↑ "Starbucks CEO steps down". [CNN Money]]. CNNfn. 6 April 2000. Retrieved 5 June 2018.
  18. 1 2 3 4 "Why did Howard Schultz leave Starbucks, only to return eight years later? (SBUX)". Investopedia. Retrieved 5 June 2018.
  19. ↑ Archived January 17, 2008, at the Wayback Machine.
  20. 1 2 3 4 5 6 7 Taylor, Kate (4 December 2016). "Here's what happened the last time Howard Schultz stepped down as Starbucks CEO". Business Insider. Retrieved 5 June 2018.
  21. ↑ 2008 CEO Compensation for Howard Schultz Archived 2009-08-14 at the Wayback Machine., Equilar.com
  22. ↑ Meyersohn, Nathaniel (4 June 2018). "Howard Schultz steps down at Starbucks, may consider run for president". CNN Money. Retrieved 5 June 2018.
  23. ↑ "Howard Schultz: How to do good and do good business | Masters of Scale podcast". WaitWhat. Retrieved 2018-03-20.
  24. ↑ Kate Taylor (November 1, 2013). "Starbucks CEO Howard Schultz Steps Down From Square's Board of Directors". Entrepreneur.
  25. ↑ "Research Information on Jamba Juice" (PDF). Retrieved 2011-08-22.
  26. ↑ "Why Schultz tuned out and sold out the Sonics". Sports.espn.go.com. 2006-07-21. Retrieved 2011-08-22.
  27. ↑ Jason Notte (February 1, 2014). "Seattle Super Bowl Scores Points for Paul Allen, Sacks Howard Schultz". TheStreet.com.
  28. ↑ seattletimes.nwsource.com. URL last accessed July 18, 2006.
  29. ↑ "Sonics are Oklahoma City-bound". seattlepi.com. 2008-07-02. Retrieved 2011-08-22.
  30. ↑ "Sonics Settlement". Mynorthwest.com. 2011-04-06. Retrieved 2011-11-24.
  31. ↑ http://www.seattlepi.com/polls/popup.asp?pollID=2983. Retrieved February 13, 2011. Missing or empty |title= (help)
  32. ↑ Allen, Percy (April 15, 2008). "Howard Schultz plans to sue Clay Bennett to get Sonics back". The Seattle Times. Archived from the original on April 19, 2008.
  33. 1 2 3 Wintour, Patrick (February 19, 2009). "Mandelson and Starbucks clash on UK economy". The Guardian. London. Retrieved March 18, 2009.
  34. ↑ Howard M. Schultz Biography Businessweek Data is as current as the most recent Definitive Proxy
  35. ↑ "IDEA Recipients". Google.com. Retrieved 2011-08-22.
  36. ↑ "The FIRST International Award for Responsible Capitalism".
  37. ↑ Frank Cahill Lecture, March 29, 2007
  38. ↑ "2011 Businessperson of the Year - 1. Howard M. Schultz (2) - FORTUNE". Money.cnn.com. 2011-11-17. Retrieved 2011-11-24.
  39. ↑ "Starbucks Chairman and CEO Howard Schultz to speak at ASU commencement". ASU Now: Access, Excellence, Impact. 2017-03-13. Retrieved 2017-03-23.
  40. ↑ "The Moment is Now: NAACP legal 31st Annual National Equal Justice Awards | NAACP LDF". www.naacpldf.org. Retrieved 2017-12-20.
  41. ↑ Forbes: The World's Billionaires - Howard Schultz September 2016
  42. 1 2 New York Times: "Breanna Hawes, Jordan Schultz" September 9, 2011
  43. ↑ London Daily Mail: "Nice wedding present for the 1%: Starbucks CEO buys son and his new bride $4.6m New York condo" by Daniel Bates November 10, 2011
  44. ↑ Allen, Frederick E. "Howard Schultz to Anti-Gay-Marriage Starbucks Shareholder: 'You Can Sell Your Shares'". Forbes. Retrieved 2016-04-24.
  45. ↑ Anders, George. "Howard Schultz's Stormy Crusades: The Starbucks Boss Opens Up". forbes.com.
  46. ↑ "Starbucks and Other Corporations to Announce Plan to Curb Unemployment of Young People". The New York Times. 13 July 2015.
  47. ↑ "Connecting Young People With Jobs". The New York Times. 13 July 2015.
  48. ↑ "Starbucks's Schultz Opens New Front in Helping Veterans Enter Work Force". philanthropy.com. 23 March 2015.

Further reading

  • Schultz, Howard; Yang, Dori Jones (1997). Pour Your Heart Into It: How Starbucks Built a Company One Cup at a Time. Hyperion.
  • Schultz, Howard; Gordon, Joanne (2011). Onward: How Starbucks Fought for Its Life without Losing Its Soul. Rodale.
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