“Starbucks CEO Laxman Narasimhan’s abrupt departure adds to a record number of CEO ousters in 2024. Explore the reasons behind the change, its impact on Starbucks shares, and broader trends in CEO turnover.”

Starbucks’ abrupt leadership change has intensified the already high number of CEO ousters in U.S. companies this year. The sudden departure of Laxman Narasimhan from Starbucks is a significant event in a record-setting period for CEO exits. As of this year, 74 out of 191 CEOs in the Russell 3000 Index have been fired or forced out, according to data from exechange.com, marking the highest rate of ousters since the firm began tracking in 2017.

Laxman Narasimhan’s Departure:

Laxman Narasimhan’s exit as Starbucks CEO comes amid turbulent times for the Starbucks coffee company. Despite not providing specific reasons for Narasimhan’s departure, the circumstances suggest a high-pressure environment. Starbucks shares have faced a 20% decline this year, and the company has reported two consecutive quarters of comparable sales declines. This performance has drawn scrutiny from activist investors like Elliott Investment Management and Starboard Value.

Former CEO Howard Schultz, who founded Starbucks, has also been vocal about his concerns regarding the company’s performance. Although Board Chair Mellody Hobson stated in a CNBC interview that Narasimhan’s departure wasn’t necessarily influenced by external pressures, the situation reflects broader trends in CEO turnover.

Record CEO Turnover Trends:

Exechange.com’s data indicates that CEO departures are being scored with increasing severity, with an average departure score of 6.2 in 2024, the highest since tracking began. Narasimhan’s exit was notably rated a 9 on the scale, indicating a strongly non-voluntary departure.

Impact on Starbucks:

Starbucks’ board faces the challenge of stabilizing the company and reversing the declining trend in its share performance. The search for a new leader to steer Starbucks through these challenging times will be closely watched, especially as the company grapples with market pressures and internal expectations.

The ouster of Laxman Narasimhan at Starbucks highlights a broader trend of increased CEO turnover, driven by performance pressures and market dynamics. As Starbucks navigates through this leadership transition, the focus will remain on how the company addresses its challenges and the impact of its new leadership on future performance.