(Reuters) -Starbucks named Chipotle Mexican Grill head Brian Niccol as its new CEO on Tuesday in a management shakeup as it tries to fend off pressures from activist investor Elliott Investment Management. #StarbucksCEOBrianNiccol
Brian Niccol replaces Laxman Narasimhan, who officially became CEO in April last year. Narasimhan was recruited from Reckitt to reinvent Starbucks.
Starbucks stock has declined by about 20% over the past five years, while the S&P 500 has risen more than 80%. In July, Starbucks missed sales expectations. This shortfall was attributed to weakening demand in both the United States and China.
Starbucks stock surged 21% in early trading on Tuesday, marking its best day ever and reversing all yearly losses. Meanwhile, Chipotle’s shares fell 9%.
Elliott, a major shareholder, has urged Starbucks to enhance performance and stock price by expanding its board and improving governance. Their proposal aimed to help Narasimhan retain his CEO position. Elliott’s offer was reportedly part of this strategy to stabilize leadership.
When asked on CNBC if activist Elliott was consulted about the shakeup, Starbucks Board Chair Mellody Hobson said it had not been.
“We look forward to engaging with all of our shareholders about this new development,” she said.
It is unclear what will happen with negotiations with Elliott. #StarbucksCEOBrianNiccol
In addition, Niccol’s track record at Chipotle sets high expectations for his tenure at Starbucks. His innovative approach may bring fresh perspectives to the role. Therefore, as Starbucks CEO Brian Niccol steps into his new role, all eyes will be on how he transforms the company.
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