Starbucks new CEO urges care for employees amid labor strife

© Reuters. FILE PHOTO: Starbucks workers attend a rally as they go on a one-day strike outside a store in Buffalo, New York, U.S., November 17, 2022. REUTERS/Lindsay DeDario/File Photo

By Hilary Russ

NEW YORK (Reuters) -Starbucks, which has faced criticism over its opposition to union organizing, wants to be "a different kind of company" that cares for its frontline workers, new CEO Laxman Narasimhan told employees on Thursday before the coffee chain's annual meeting.

In a letter to workers, Narasimhan said Starbucks (NASDAQ:SBUX)' performance was strong but the company needs to strengthen its health. "We must care for" customer-facing staff, he wrote.

"We strive to be a different kind of company operating in a different kind of world," he said, adding Starbucks plans to "reinvigorate" its employee culture.

His comments came the day after Starbucks workers walked off the job at 100 stores around the United States, and a video posted by the union on social media showed hundreds of activists marching in protest outside company headquarters.

The former PepsiCo (NASDAQ:PEP) and Reckitt Benckiser executive, who joined the company in October, took over on Monday as Howard Schultz stepped down from his third stint as CEO of the chain he helped turn into a global coffee behemoth.

Narasimhan must contend with the company's divisive record on labor unions, an issue of increasing concern to politicians and shareholders.

The company has said it complies with U.S. labor law. It has accused the union of failing to bargain in good faith and the National Labor Relations Board of running unfair elections that favored the union.

Schultz is scheduled to testify next week before a U.S. Senate committee on the topic.

Investors voted Thursday on a shareholder proposal for an independent review of Starbucks' practices on union organizing and collective bargaining.

The company did not disclose results of the voting.

During the meeting, acting executive vice president and general counsel Zabrina Jenkins addressed the proposal, saying the company is conducting an independent assessment "that will include a deeper level review of the principles of freedom of association and the right to collective bargaining. This represents a much broader commitment than the shareholder proposal requests."

Jonas Kron, chief advocacy officer at shareholder Trillium Asset Management, one of the investors that made the proposal, said this was the first time he had heard that argument.

Jenkins' comments "didn't provide clarity" and were "very vague," Kron said.

But Narasimhan taking over "is a real opportunity for a pivot" on unions, he said.

Much of the meeting consisted of a video showing Narsimhan's last six months with the company, visiting coffee farmers, suppliers and cafes around the world, donning a green apron and giving fist bumps and high fives to baristas.

LABOR STRIFE

Since late 2021, workers at more than 290 U.S. corporate-owned locations have voted to unionize. Unionized employees say the company illegally retaliated against union organizers with firings and store closures.

Hundreds of pro-union baristas and supporters protested outside Starbucks' Seattle headquarters on Wednesday, according to Starbucks Workers United and video on social media.

Chanting and carrying signs reading "seize the beans of production" and "be kind to your workers," baristas urged the company to increase staffing and schedule the workers for more hours so they could qualify for health insurance benefits.

"Stop union busting and show up to the bargaining table," barista Hailey Cribbs from Bellingham, Washington, told the rally.