Starbucks Corp. named former Juniper Networks Inc. Chief Executive Officer Kevin R. Johnson as its next chief operating officer, underscoring the role technology now plays at the coffee chain and mobile-payment innovator.
Johnson, 54, will take over on March 1 for Troy Alstead, who is leaving the company for an unpaid sabbatical announced earlier this month. Johnson, who has been a Starbucks director since 2009, will remain on the board but cease membership on all committees, the Seattle-based company said Jan. 22.
The move brings Starbucks a seasoned technology executive at a time when reaching customers through their mobile phones is an integral part of its strategy. Chief Executive Officer Howard Schultz said that about 16% of Starbucks U.S. store transactions now come from mobile devices. The chains app, which lets customers pay and earn rewards points by scanning their phones, has more than 13 million active users.
The choice speaks to Schultzs conviction that mobile and digital platforms will drive the companys future growth, said Asit Sharma, an analyst at the Motley Fool in Raleigh, North Carolina. Johnson brings deep technology and supply-chain expertise to Starbucks C-level.
Johnson will be taking over for an executive who began managing day-to-day operations last year. Alstead, a 23-year veteran of the coffee chain, had been widely cited as a potential CEO successor.
Schultz said on a conference call Jan. 22 that he had been talking to Johnson for some time, independent of Alsteads decision to take a sabbatical. He also played down the idea that the move was part of a CEO succession plan.
My personal commitment to Starbucks has never been greater, and I also want to make it clear that Kevins addition is not part of some unannounced succession arrangement, said Schultz, 61.
The shares rose as much as 4.5% to $86.44 in late trading in New York, lifted by an 82% surge in profit in the first quarter. The stock increased 4.7% in 2014, the sixth straight year of gains.
Johnson will receive an annual base salary of $1 million, Starbucks said. Hes also been granted a new-hire equity award of $7 million, along with a $1 million cash award.
Johnson led Juniper, a Sunnyvale, California-based maker of networking gear, from 2008 through 2013. He previously worked at Microsoft Corp., which he joined in 1992. Johnson rose to become president of its flagship Windows business as well as its struggling Online Services division. He also championed Microsofts unsuccessful bid to buy Yahoo! Inc. in 2008, an attempt to create a strong No. 2 in the search business to Google Inc.
Johnson left Microsoft after the Yahoo deal collapsed to become CEO of Juniper, the second-largest maker of routers used by phone companies. Known as a strong sales and marketing executive, he improved the companys execution but failed to make it a top provider of networking gear to corporate buyers. Juniper shares fell almost 20% when he resigned in July 2013, five years after he took the job.
Starbucks, meanwhile, has become a leader in payment technology. The company introduced mobile ordering last month at cafes in Portland, Oregon, and plans to roll out the service nationwide this year. The company also expects to offer delivery in select markets in the second half of this year in a plan that Schultz has called e-commerce on steroids.
When Alstead announced he was taking a leave of absence to spend more time with his family, it raised questions over whether he was still the top candidate to replace Schultz. Some analysts speculated that he was still the leading successor, despite the sabbatical.
Its too soon to now call Johnson an heir apparent for the CEO job at Starbucks, but the announcement shows the company isnt waiting for Alsteads return, said Peter Saleh, an analyst at Telsey Advisory Group in New York.
Im reluctant to say Troys not going to come back, but it doesnt look like theyre leaving the seat open for him, he said.