Elliott Management has proposed board expansion and governance improvement at coffee chain Starbucks (SBUX.O) as part of a settlement that would allow CEO Laxman Narasimhan to keep his position, CNBC reported on Thursday.
The offer was made weeks ago and Starbucks has not yet responded, the report said, adding that the move came before reports that the activist investor had a significant stake in the company.
Starbucks and Elliott declined to comment.
The coffee chain had on Tuesday confirmed that Elliott was a shareholder during its third-quarter earnings call and that talks with the investor had been "constructive".
The hedge fund has not disclosed its stake, but CNBC had earlier reported it would be worth as much as $2 billion.
The offer of settlement is also complicated by opposition from former CEO Howard Schultz, according to a report by the Financial Times last week.
Schultz is the sixth-largest shareholder in Starbucks — a company he propelled to global fame in his 41 years with the coffee chain, during which he was CEO thrice.
In May, days after Starbucks cut its annual sales forecast, Schultz wrote on his LinkedIn account that its U.S. operations were the "primary reason for its fall from grace", and that senior leaders need to spend more time with its workers.
Schultz stepped down as CEO in 2023 and was succeeded by former Reckitt and PepsiCo executive Narasimhan.
The company's shares were down about 3% in early trade on Thursday. They have risen about 5% this week after the coffee chain met profit expectations for its third quarter, helped by in-store efficiencies, despite a drop in global sales.
Starbucks has faced a slowdown in China — its second biggest market after the U.S., as it tackles competition from local chains, as well as weak consumer spending.
CEO Narasimhan had said on Tuesday that the company was exploring strategic options for its China business, which could include joint ventures and partnerships.
