CNBC Exclusive: CNBC Transcript: Former Starbucks CEO Howard Schultz Sits Down with CNBC’s Andrew Ross Sorkin on CNBC’s “Squawk Box” Today

WHEN: Today, Tuesday, June 5, 2018

WHERE: CNBC's "Squawk Box" – Live from Starbucks' Seattle, WA HQ

The following is the unofficial transcript of an EXCLUSIVE CNBC interview with Former Starbucks CEO Howard Schultz and CNBC's Andrew Sorkin on CNBC's "Squawk Box" (M-F 6AM – 9AM) today, Tuesday, June 5. The interview follows Sorkin's scoop yesterday that Mr. Schultz will be stepping down from his current role as Executive Chairman of Starbucks effective June 26th. Following is a link to video of the interview on CNBC.com: https://www.cnbc.com/video/2018/06/05/starbucks-howard-schultz-steps-down.html?play=1.

All references must be sourced to CNBC.

ANDREW ROSS SORKIN: HEY. GOOD MORNING, JOE. WE ARE LIVE IN SEATTLE WITH THE INTERVIEW OF THE DAY, OF THE MORNING. HOWARD SCHULTZ IS HERE ANNOUNCING YESTERDAY HE'S GOING TO STEP DOWN FROM THE COMPANY AS EXECUTIVE CHAIR OF THE COMPANY AFTER NEAR 40 YEARS, GROWING THIS COMPANY FROM JUST 11 STORES HERE IN SEATTLE TO NOW OVER 28,000 IN OVER 77 DIFFERENT COUNTRIES. TALKED ABOUT THE FUTURE, POTENTIALLY SOME PHILANTHROPY AND OF COURSE A LOT OF SPECULATION ABOUT A COMMENT YOU MADE ABOUT PUBLIC SERVICE WE'RE GONNA TALK ABOUT AS WELL. THANK YOU FOR BEING HERE. THANK YOU FIRST OF ALL.

SCHULTZ: THANK YOU, ANDREW.

SORKIN: THE LAST TIME WE WERE TOGETHER HERE, KEVIN JOHNSON WAS SITTING NEXT TO YOU.

SCHULTZ: YES.

SORKIN: YOU WERE HANDING OVER THE REINS OF THE COMPANY AS THE CEO, BUT YOU SAID, "I'M ALL IN. I'M ALL IN FOR STARBUCKS." SO HERE WE ARE A YEAR LATER. WHY NOW?

SCHULTZ: WELL, WHETHER I LEAVE STARBUCKS OR NOT, I WILL ALWAYS BE ALL IN IN ON STARBUCKS. BUT THIS HAS BEEN PLANNED FOR OVER A YEAR. AND MY CONFIDENCE AND FAITH IN KEVIN AND THE LEADERSHIP TEAM, THE LONG-TERM OPPORTUNITY FOR STARBUCKS, THE COMPANY'S IN A GREAT POSITION. AND IT'S ALWAYS BEEN A TEAM SPORT. IT'S RIGHT TIME FOR ME TO LEAVE AND I HAVE OTHER OPPORTUNITIES AND OTHER THINGS I WANT TO DO.

SORKIN: I WANT TO TALK ABOUT THOSE OTHER OPPORTUNITIES IN A SECOND. BUT JUST IN TERMS OF THE TIMELINE, YOU TALKED TO THE BOARD ABOUT A YEAR AGO BUT HAD PLANNED FROM WHAT I UNDERSTAND, TO STEP DOWN IN MAY.

SCHULTZ: THE TRUTH OF THE MATTER IS I THOUGHT THIS WAS GOING TO HAPPEN IN MAY, AND THEN WE HAD THE UNFORTUNATE REPREHENSIBLE INCIDENT IN PHILADELPHIA AND WE THOUGHT GIVEN WHAT WE WANTED TO DO IN PHILADELPHIA AND THE OBLIGATION WE HAD, WE WERE GONNA PUSH IT BACK A MONTH OR TWO. SO HERE WE ARE.

SORKIN: SO YOU TALKED ABOUT THE OPPORTUNITY AHEAD.

SCHULTZ: YES.

SORKIN: SO WHY ARE YOU STEPPING DOWN FROM STARBUCKS RIGHT NOW?

SCHULTZ: WELL I THINK IT'S THE RIGHT TIME FOR ME TO STEP DOWN. IT'S BEEN PLANNED, AS I SAID. I KNOW THERE'S BEEN SPECULATION, SO LET'S JUST DEAL WITH THAT RIGHT AWAY, ABOUT WHETHER OR NOT I WOULD RUN FOR PUBLIC OFFICE. AND WHAT I REALLY BELIEVE IS THERE'S A LOT OF THINGS I CAN DO AS A PRIVATE CITIZEN OTHER THAN RUN FOR THE PRESIDENCY OF THE UNITED STATES. AND LET'S JUST SEE WHAT HAPPENS. I'VE GOT LOTS OF THINGS THAT I'M THINKING ABOUT. I'M WRITING A BOOK. IT'S ONLY BEEN 24 HOURS. BUT WE'VE TALKED MANY TIMES ABOUT HOW CONCERNED I AM ABOUT THE COUNTRY, OUR STANDING IN THE WORLD. AND I THINK THERE'S MANY THINGS I CAN DO AS A PRIVATE CITIZEN TO ADVANCE THE CAUSE OF THE PROMISE OF THE COUNTRY.

SORKIN: BUT A LOT OF PEOPLE LOOK AT THE TIMING. THEY SAY 2020, TWO YEARS AWAY. IF YOU'RE GOING TO DO IT, YOU'VE GOT TO -- ESPECIALLY RUNNING A PUBLICLY TRADED COMPANY, YOU'VE GOT TO GET AWAY FROM THE COMPANY. WHAT DO PLAN TO DO IN TERMS OF THINKING ABOUT RUNNING OR PUBLIC SERVICE OVER THE NEXT 12 MONTHS?

SCHULTZ: WELL, I'VE BEEN ENGAGED IN A NUMBER OF, I THINK, VERY IMPORTANT ISSUES FACING THE COUNTRY IN TRYING TO ADVANCE THE CAUSE OF THE NATIONAL CONVERSATION ABOUT SUCH THINGS AS IMMIGRATION, AS AN EXAMPLE. LET'S JUST TAKE THAT. I DON'T THINK WE'VE GOT A VERY HUMANE POLICY. I THINK WE NEED BORDER SECURITY, BUT THERE'S A LOT OF NON-TRUTHS. AS AN EXAMPLE, TWO-THIRDS OF THE UNDOCUMENTED PEOPLE WERE TALKING ABOUT ARE NOT PEOPLE THAT HAVE CROSSED A BORDER. THEY'RE PEOPLE THAT ARE HERE BECAUSE THEIR VISA HAS EXPIRED. THAT'S ONE THING. WE TALK ABOUT TRADE. WE'RE IN A TRADE BATTLE HERE THAT I DO NOT UNDERSTAND. OUR PROBLEM IS NOT CHINA OUR PROBLEM IS HERE IN THE U.S. WE HAVE A $21 TRILLION DEBT. WE'RE PAYING $400 BILLION OF INTEREST. THESE ARE THINGS THAT ARE UNSUSTAINABLE. WE HAVE A BUDGET PROCESS THAT IS BROKEN. WE'VE GOT A SITUATION WITH VETERANS IN WHICH WE TALK ABOUT TAKING CARE OF VETERANS, BUT THEN THE VA DOESN'T WORK. AND WE HAVE A TAX POLICY AS YOU KNOW THAT WE TALKED ABOUT A YEAR AGO AND I WAS WITH YOU, WHICH I WAS VERY DISAPPOINTED. CORPORATE AMERICA DID NOT NEED A TAX CUT TO 21% WHEN WE COULD HAVE DONE SO MUCH MORE FOR THE PEOPLE OF THE COUNTRY. 45% OF THE PEOPLE IN AMERICA DON'T HAVE $300 IN THE BANK FOR A CRISIS. SO ALL OF THESE THINGS, I THINK, ARE CONCERNS OF MINE. AS YOU KNOW, I AM LIVING PROOF IN MANY WAYS, NOT UNLIKE YOUR GUEST HOST OF THE AMERICAN DREAM. SO I'M VERY SENSITIVE TO THESE ISSUES OF ENSURING THE FACT THAT WE DO THE KIND OF THINGS THAT RESTORE THE PROMISE OF THE COUNTRY AND OUR THE STANDING AROUND THE WORLD.

SORKIN: OKAY. SO THAT LANGUAGE, BY THE WAY, IS OF SOMEBODY WHO COULD BE RUNNING.

SCHULTZ: NO, NO.

SORKIN: LET ME ASK YOU THIS. WHAT WOULD BE THE TIPPING POINT FOR YOU? WHAT DO YOU HAVE TO FIGURE OUT ABOUT WHETHER YOU WANT TO PURSUE WHAT YOU CALL PUBLIC SERVICE?

SCHULTZ: THAT'S A LEADING QUESTION. THAT ASSUMES – I'M NOT THINKING SPECIFICALLY RIGHT NOW. WHAT I'M THINKING ABOUT IS WHAT I CAN DO TO ADVANCE THE CAUSE OF THE COUNTRY AS A PRIVATE CITIZEN. I DON'T KNOW WHAT THAT'S GOING TO MEAN. AND THERE'S LOTS OF TIMES, LOTS OF SPECULATION. I REALLY HONESTLY DON'T KNOW. WE TALKED ABOUT THIS YESTERDAY.

SORKIN: AND LET ME ASK YOU A DIFFERENT QUESTION THAT RELATES TO THAT, THOUGH. PEOPLE TALK ABOUT THE PRESIDENCY, 2020. YOU USE THE PHRASE PUBLIC SERVICE. AND I WANT TO SEE IF THERE'S A DISTINCTION HERE. WOULD YOU EVER RUN FOR GOVERNOR OR SENATOR?

SCHULTZ: I CAN'T BE NAILED DOWN TODAY ON THE SPECIFICS OF WHAT I MIGHT OR MIGHT NOT RUN FOR. I WANT TO THINK ABOUT THIS IN TERMS OF THE LENS OF WHAT IT MEANS TO BE A GREAT AMERICAN CITIZEN. I DON'T KNOW WHAT THAT MEANS AT THIS POINT. BUT MY CONCERN FOR THE COUNTRY AND MY CONCERN FOR OUR STANDING IN THE WORLD, THE LACK OF DIGNITY, THE LACK OF RESPECT, THE VITRIOLIC BEHAVIOR COMING FROM THIS ADMINISTRATION. I THINK WE CAN DO MUCH BETTER. AND I THINK THE POLITICAL CLASS AS A WHOLE, NOT ONLY THIS ADMINISTRATION, HAS BEEN RECKLESS. SPECIFICALLY WITH REGARD TO $21 TRILLION IN DEBT AND NOT BEING AS FISCALLY CONSERVATIVE AS WE NEED TO BE. AND WE ARE GOING TO PAY FOR THIS IN TERMS OF THE NEXT GENERATION. AND IT'S UNFAIR.

SORKIN: I WANT TO GET INTO THE POLICY ISSUES, BUT I WANT TO ASK YOU ABOUT THIS IDEA OF A CEO AS PRESIDENT. THIS WAS SORT OF AN UNTHINKABLE ISSUE OR IDEA JUST A COUPLE YEARS AGO. HOW MUCH – I MEAN AND NOW YOU SEE THE STORIES WHETHER IT BE BOB IGER WHO SAID HE WANTED TO CONTINUE DOING THIS, OPRAH'S NAME GETS BANDIED ABOUT, JAMIE DIMON'S NAME GETS BANDIED ABOUT, MARK CUBAN'S NAME GETS BANDIED ABOUT. DO YOU THINK THAT PRESIDENT TRUMP'S PRESIDENCY, YOU KNOW -- HIS ELECTION, HAS CHANGED THE DYNAMIC WITH WHICH SOMEBODY LIKE YOU COULD THINK ABOUT PUBLIC SERVICE IN A WAY THAT YOU COULDN'T BEFORE?

SCHULTZ: WELL I THINK -- IT'S AN INTERESTING QUESTION, BECAUSE THERE IS A BIFURCATION. AND I WANT TO SAY THIS RESPECTFULLY AND SO NO ONE MISUNDERSTANDS WHAT I'M ABOUT TO SAY. BUT THERE IS A BIFURCATION BETWEEN WHEN YOU SAY "A CEO." I HAVE RUN A PUBLIC COMPANY FOR 26 YEARS AS A FIDUCIARY. THE CURRENT PRESIDENT RAN A PRIVATE COMPANY WHERE FROM WHAT I UNDERSTAND THERE IS -- RUNNING A PRIVATE COMPANY WITH -- I DON'T KNOW IF THERE WAS A BOARD, I DON'T KNOW WHAT RESPONSIBILITIES HE HAD TO OTHER SHAREHOLDERS. BOB IGER HAS RUN A PUBLIC COMPANY. SO WHEN YOU'RE TALKING ABOUT A CEO IN TERMS OF PUBLIC OFFICE, THERE IS A VERY BIG DIFFERENCE BETWEEN SOMEONE WHO HAS RUN A GLOBAL ENTERPRISE LIKE MYSELF WHO HAS TRAVELED TO CHINA, PROBABLY MORE THAN ANY OTHER CEO IN THE LAST TEN YEARS WHO UNDERSTANDS THOSE ISSUES, VERSUS SOMEONE WHO'S RUNNING A PRIVATE COMPANY WITH VERY LITTLE FIDUCIARY RESPONSIBILITY TO OTHER SHAREHOLDERS. AND I'M NOT SAYING THAT AS GOOD OR BAD, BUT IT'S A BIG DIFFERENCE. SO I THINK, YES, PRESIDENT TRUMP HAS GIVEN LICENSE TO THE FACT THAT SOMEONE WHO IS NOT A POLITICIAN COULD POTENTIALLY RUN FOR THE PRESIDENCY. WHETHER OR NOT THAT HAS ANYTHING TO DO WITH ME WILL -- REMAINS TO BE SEEN.

SORKIN: I WANT TO READ YOU, THIS IS PROFESSOR DOUGLAS BRINKLEY – HE'S A PRESIDENTIAL HISTORIAN AT RICE UNIVERSITY SAYS "THE HISTORY OF BUSINESS LEADERS IN THE WHITE HOUSE HAS NOT BEEN GOOD. YOU BASICALLY HAVE HERBERT HOOVER AND DONALD TRUMP." WHAT DO YOU MAKE OF THAT? -- JUST THE IDEA ALSO OF HAVING LITTLE POLITICAL EXPERIENCE.

SCHULTZ: WELL, I THINK THE RULES OF ENGAGEMENT FOR RUNNING THE UNITED STATES OF AMERICA IN A GLOBAL SOCIETY IS VERY DIFFERENT, AND COMPARING IT TO HOOVER OR THE CURRENT PRESIDENT. AND WHAT I SPECIFICALLY MEAN BY THAT IS WE HAVE SERIOUS PROBLEMS THAT WE HAVE TO ADDRESS. AND I THINK THE ISSUES THAT WE ARE FACING IN TERMS OF THE DYSFUNCTION AND POLARIZATION THAT EXISTS WITHIN THE GOVERNMENT IS REALLY BASED ON A SYSTEMIC PROBLEM OF IDEOLOGY. AND I THINK WE NEED A VERY DIFFERENT VIEW OF HOW THE GOVERNMENT AND HOW THE COUNTRY SHOULD BE RUN. AND IT'S BEEN A LONG TIME, I THINK, A LONG TIME SINCE ANYONE WITHIN GOVERNMENT HAS REALLY WALKED IN THE SHOES OF THE AMERICAN PEOPLE, AND DONE THE THINGS THAT WOULD DEMONSTRATE THE HUMANITY OF WHAT IS THE VALUES OF THE COUNTRY AND THE GUIDING PRINCIPLES OF THE PROMISE OF AMERICA.

SORKIN: LET ME ASK YOU A DIFFERENT QUESTION. ONE OF THE THINGS YOU SAID IS YOU'RE GOING TO BE WRITING A BOOK ABOUT SOCIAL RESPONSIBILITY. THE NEW ROLE OF CEO LEADERSHIP.

SCHULTZ: YEAH, THE ROLE AND RESPONSIBILITY OF A PUBLIC COMPANY IN AN EVER CHANGING SOCIETY.

SORKIN: LET ME -- SPECIFICALLY ABOUT THAT, YOU REALLY WERE THE EARLY CHAMPION OF THIS IDEA OF A MORAL LEADER AND STEPPING OUT ON PUBLIC AND SOCIAL ISSUES – SOMETHING THAT'S BECOME A LITTLE BIT MORE FASHIONABLE IN THE LAST YEAR AND A HALF FOR SOME CEOs BUT BY THE WAY, NOT WITHOUT CRITICISM AND NOT WITHOUT CONTROVERSY IN THAT IT CAN PUT COMPANIES IN A VERY DIFFICULT SITUATION GIVEN THE POLITICS AND DIVISION IN THIS COUNTRY. AND I JUST WANT TO COMMENT TO YOU, AND BECKY AND I GOT TO SPEND TIME WITH WARREN BUFFETT OVER THE WEEKEND ABOUT A MONTH AGO WHEN HE DID HIS ANNUAL MEETING AND HE'S MADE THE COMMENT MULTIPLE TIMES THAT BUSINESS SHOULDN'T BE IN THE BUSINESS OF POLITICS.

SCHULTZ: WELL, I AGREE WITH WARREN AND I DON'T THINK STARBUCKS HAS BEEN IN THE BUSINESS OF POLITICS. I THINK THAT'S BEEN MISCONSTRUED. WE HAVE BEEN IN THE BUSINESS OF CREATING A DIFFERENT TYPE OF BUSINESS MODEL THAT BALANCES OUR FIDUCIARY RESPONSIBILITY TO BUILD SHAREHOLDER VALUE, WHICH IS UP 21,000% SINCE WE WENT PUBLIC IN '92. SO THE PRICE OF ADMISSION HAS BEEN MET COUPLED WITH A SOCIAL IMPACT AGENDA THAT SPEAKS TO EQUITY IN THE FORM OF STOCK OPTIONS FOR OUR PEOPLE, HEALTH INSURANCE 20 YEARS BEFORE THE AFFORDABLE CARE ACT, FREE COLLEGE TUITION, AND AN ENGAGEMENT WITH 100 MILLION CUSTOMERS A WEEK ABOUT WHAT WE FEEL IS OUR RESPONSIBILITY TO RAISE THE NATIONAL CONVERSATION ABOUT THINGS THAT WE THINK ARE IMPORTANT. WE THINK THAT IS ACRETIVE TO THE EQUITY OF THE BRAND AND SHAREHOLDER VALUE. OTHERS HAVE CRITICIZED US FOR THAT BUT I THINK IT SPEAKS TO THE FACT RULES OF ENGAGEMENT FOR A PUBLIC COMPANY AND CEO ARE DIFFERENT TODAY. IN LARGE PART BECAUSE THE GOVERNMENT HAS BEEN SO DYSFUNCTIONAL AND SO POLARIZED. I MEAN, WE HAVEN'T HAD A BALANCED BUDGET SINCE PRESIDENT CLINTON. I MEAN THINK ABOUT THAT. AND WE TALK ABOUT IMMIGRATION. JUST FOR A MOMENT. RONALD REAGAN IN 1986 PASSED AN IMMIGRATION BILL AS A REPUBLICAN PRESIDENT. SO WHY CAN'T WE COME TOGETHER, MOVE THE IDEOLOGY OUT, AND DO WHAT'S IN THE INTEREST OF AMERICAN PEOPLE? 70% OF THE AMERICAN PEOPLE WANT A GOOD IMMIGRATION POLICY. 70% OF THE AMERICAN PEOPLE WANT THE KIND OF POLICY LEGISLATION THAT TAKES THE GUNS OF WAR OUT OF THE AMERICAN PEOPLE'S NEIGHBORHOODS. I MEAN, IT DOESN'T MAKE SENSE TO ME.

SORKIN: BUT THE REASON I'M PRESSING ON THIS IS WHEN YOU THINK ABOUT THE LEADER OF A COMPANY, AND WE HAVE SO MANY CEOs WHO ARE WATCHING RIGHT NOW ABOUT CAN THEY STEP OUT -- SHOULD THEY STEP OUT ON A PARTICULAR ISSUE, WHAT IT DOES AND THE JEOPARDY IN CERTAIN INSTANCES, IT CAN PUT A COMPANY IN.

SCHULTZ: WELL, BUT I THINK YOU JUST CAN'T JUMP INTO THE DEEP END OF THE POOL OVERNIGHT. THE CULTURE AND VALUES OF THE COMPANY HAVE TO BE SKEWED TOWARDS THE FACT THAT YOU HAVE A LICENSE TO TALK ABOUT THESE THINGS BECAUSE THEY ARE EMBEDDED IN YOUR COMPANY. AND AS WE TALKED YESTERDAY, THE LITMUS TEST FOR ME HAS BEEN ONE THING: DOES THIS DECISION, THIS POLICY GONNA MAKE OUR CUSTOMERS AND OUR PEOPLE PROUD? AND IF THE ANSWER IS YES, THEN WE'RE ON THE RIGHT SIDE OF THE DEBATE. IF IT'S NOT, WE SHOULDN'T DO IT. BUT MAKE NO MISTAKE. WE'RE NOT IN THIS TO BE POLITICAL. WE'RE IN THIS TO ADVANCE TO CAUSE TO STARBUCKS.

SORKIN: LET ME ASK YOU ONE OTHER QUESTION. IT RELATES TO POLICY, IT RELATES TO TAX POLICY. WE TALKED ABOUT IT HERE YOU'VE BEEN CRITICAL OF PRESIDENT TRUMP'S APPROACH – THE TRUMP ADMINISTRATION'S APPROACH TO TAX POLICY AND THE CORPORATE TAX RATE GOING DOWN.

SCHULTZ: YES.

SORKIN: AND YET EARLIER THIS YEAR YOU GAVE THE ADMINISTRATION CREDIT FOR THE FACT THAT YOU WERE RAISING WAGES OF EMPLOYEES AT STARBUCKS.

SCHULTZ: I'M NOT SURE I GAVE THE ADMINISTRATION CREDIT FOR THAT. WHAT I SAID WAS -- AND WE WERE TOGETHER IN YOUR CONFERENCE EARLY ON ABOUT THIS. WHAT I SAID VERY SPECIFICALLY IS THAT I REALLY DID NOT BELIEVE THE MAJORITY OF COMPANIES IN AMERICA WERE GOING TO TAKE A CORPORATE TAX CUT FROM 35% TO 21% AND DO ALL THE THINGS THE ADMINISTRATION WAS SPEWING ABOUT IN TERMS OF ADVANCING THE ECONOMY AND CREATING JOBS AND DOING ALL THESE GREAT THINGS. AND I SAID MOST COMPANIES WERE GOING TO GIVE IT BACK TO THE SHAREHOLDERS. AND WHAT WE DECIDED TO DO WAS THAT ALMOST 50% OF THE BENEFIT WE HAD, WE GAVE TO OUR PEOPLE. I DIDN'T GIVE CREDIT TO THE ADMINISTRATION FOR THAT. I GAVE CREDIT TO THE FACT THE LEADERSHIP OF STARBUCKS DID THE RIGHT THING. AND THAT IS SUCCESS IS BEST WHEN IT'S SHARED. AND ALSO, THIS IS VERY IMPORTANT, WHEN YOU'RE BUILDING A GREAT ENDURING COMPANY, NOT EVERY BUSINESS DECISION SHOULD BE AND IS AN ECONOMIC ONE. AND THIS IS VERY IMPORTANT WITH REGARD TO THE STREET WHO HAS A VERY SHORT-TERM MENTALITY. AND AS A CEO WHO HAS RUN A PUBLIC COMPANY FOR 26 YEARS, TRYING TO COMMUNICATE TO THE STREET, WE'RE BUILDING A GREAT ENDURING COMPANY. AND THERE WILL TIMES WHERE THERE WILL BE CYLICAL CHANGES, THERE WILL BE A DOWNTURN IN COMPS, WHICH WE'VE HAD RECENTLY BUT OVER THE LONG-TERM, WE'RE GOING TO BE FINE.

SORKIN: HOW MUCH CREDIT, THOUGH, DO YOU GIVE TO THE TRUMP ADMINISTRATION FOR THE ECONOMY TODAY? YOU LOOK AT THE UNEMPLOYMENT RATE, YOU LOOK AT WHERE THE MARKET IS.

SCHULTZ: WELL, FIRST OFF, I THINK IT'S VERY WRONG TO USE THE STOCK MARKET AS A PROXY FOR THE U.S. ECONOMY. INTEREST RATES ARE GOING UP AND IF I HAD TO MAKE A BET, AND I'M NOT AN ECONOMIST, I DON'T BELIEVE THAT THE STOCK MARKET IS GOING TO CONTINUE TO GROW AT THE LEVEL, IT HAS BETWEEN NOW AND 2020. YOU'RE GOING TO SEE A SEA CHANGE. SO LISTEN, THE ECONOMY IS STRONG. I GIVE PRESIDENT OBAMA CREDIT FOR THAT. I GIVE PRESIDENT TRUMP SOME CREDIT FOR THAT. BUT YOU ALSO HAVE SYSTEMIC PROBLEMS IN THE COUNTRY. THE LIKES OF WHICH WE HAVE NOT HAD IN A LONG TIME. YO'VE GOT A MAJOR MENTAL HEALTH CRISIS. YOU'VE GOT A MAJOR HOMELESS CRISIS. YOU'VE GOT A MAJOR OPIATE CRISIS. YOU'VE GOT A RACIAL DIVIDE IN THE COUNTRY. SO -- AND YOU ALSO HAVE 45% OF AMERICAN HOUSEHOLDS THAT DON'T HAVE $400. AND YOU HAVE 67% OF THE WORKFORCE IN AMERICA AMONG MEN THAT ARE NOT IN IT. SO THERE'S LOTS OF THINGS THAT WE HAVE TO DO AS A COUNTRY TO ADDRESS THE SOCIAL ISSUES. AND OUR GOING BACK TO CHINA IN TRADE. JUST ONE MORE THING. THIS RHETORIC ABOUT ALL THESE TRADE WARS THAT ARE NOW BEING ENGAGED WITH CHINA, WITH MEXICO, WITH CANADA. AND THIS MIGHT SOUND LIKE A TRITE LINE, BUT IT'S IMPORTANT: WE SHOULD NOT BE IN THE BUSINESS OF BUILDING WALLS. WE SHOULD BE IN THE BUSINESS OF BUILDING BRIDGES, WITH OUR NEIGHBORS, WITH OUR ALLIES. AND OUR STANDING IN THE WORLD ODAY IS NOT WHAT IT SHOULD BE. AND WE HAVE TO ADVANCE AMERICA'S VALUES AROUND THE WORLD AND WE HAVE TO DEAL WITH THE SYSTEMIC DOMESTIC ISSUES IN THE COUNTRY. AND THAT IS ABOUT SERVANT LEADERSHIP. WE HAVE NOT HAD SERVANT LEADERSHIP IN GOVERNMENT IN ALONG TIME WHERE WE ARE WORKING IN SERVICE OF THE AMERICAN PEOPLE.

SORKIN: I HAVE A HANDFUL OF QUESTIONS ABOUT STARBUCKS. BUT HANG ON BECAUSE I KNOW WE HAVE QUESTIONS BACK IN NEW YORK. GUYS.

JOE KERNEN: ALL RIGHT, GREAT. THANKS, ANDREW. AND HOWARD, I -- ONE OF THE HIGHLIGHTS OF YOUR CAREER, I DON'T KNOW IF YOU REMEMBER THAT AWARD I GAVE YOU AT CNBC. DO YOU REMEMBER? YOU SOMEHOW -- I ENDED UP LEARNING WHAT A 2% VENTI NO FOAM ICED LATTE WITH CINNAMON -- INSTEAD OF JUST ORDERING A CUP OF COFFEE, I FOUND MYSELF SAYING THAT AND ORDERING A MILES DAVIS CD AND BUYING A SCONE AND MY BILL WOULD COME TO $22. AND I WAS LIKE -- I GAVE YOU KUDOS FOR THAT BECAUSE YOU CHANGED THE WORLD, BASICALLY. I DON'T KNOW HOW YOU DID IT. AND I STILL ORDER 2% VENTI NO FOAM LATTES WITH CINNAMON, WHICH IS AMAZING. BUT MY QUESTION IS WHEN YOU LEFT LAST TIME, SOMETHING HAPPENED WITH THE CULTURE OF STARBUCKS. I DON'T REMEMBER EXACTLY WHAT IT WAS. THE BARISTAS CHANGED, SOMETHING CHANGED, AND THE STOCK SUFFERED. AND THEN WHEN YOU CAME BACK, IT WAS -- IT'S HARD TO BELIEVE THAT THE PERSON AT THE TOP CAN REALLY CHANGE AN ENTIRE COMPANY, BUT I THINK IT HAPPENED. I'M JUST WONDERING ARE YOU SURE THAT'S NOT GOING TO HAPPEN AGAIN? ESPECIALLY WHEN YOU'RE TRYING TO NAVIGATE WITH THIS OPEN POLICY OF NOT HAVING TO BUY ANYTHING. THAT SEEMS LIKE A TOUGH THING TO LEAVE ON YOUR PREDECESSORS OR, I'M SORRY, ON YOUR SUCCESSORS' PLATE AT A TIME WHEN I THINK THAT'S GOING TO HAVE TO BE MANAGED. BECAUSE IT'S GOING TO BE – EACH STORE'S GOING TO HAVE TO FIGURE OUT A WAY TO MANAGE THROUGH THAT. THAT'S A TOUGH TIME TO LEAVE.

SCHULTZ: WELL, I THINK KEVIN JOHNSON AND THE TEAM HAVE BEEN AT MY SIDE NOW FOR A NUMBER OF YEARS. I FEEL VERY CONFIDENT IN THE FUTURE LEADERSHIP OF THE COMPANY. AS I SAID TO ANDREW, THERE WILL ALWAYS BE SOME CYCLICAL ISSUES. BUT 2018 IS NOT 2008 FOR STARBUCKS. WE'RE BUILDING A GREAT ENDURING COMPANY. WE'RE OPENING A STORE EVERY 15 HOURS IN CHINA. WE'RE UP TO 3500 STORES. WE HAVE OUR NEW ROASTERY OPENING IN ITALY AND NEW YORK IN SEPTEMBER AND OCTOBER. THE FUTURE OF THE COMPANY IS VERY BRIGHT. WILL THERE BE CYCLICAL CHANGES? THERE WILL BE AT TIMES. BUT I'M VERY CONFIDENT IN THE LONG-TERM PROGRESS AND VALUE CREATION FOR STARBUCKS.

SORKIN: HOW, BY THE WAY, DO YOU THINK INVESTORS SHOULD THINK ABOUT THE COMPANY? BY THE WAY, ON THE ANNOUNCEMENT OF YOUR NEWS, STOCK WENT DOWN ABOUT 1%. BUT THERE'S BEEN QUESTIONS ABOUT ALMOST A HYBRID NATURE OF THIS COMPANY NOW. THERE'S THE U.S. PIECE WHERE SAME STORE SALES ARE BASICALLY GROWING AT 2% AT THE MOMENT.

SCHULTZ: SURE.

SORKIN: AND THEN THERE'S CHINA WHICH IS CONTINUING TO GROW WILDLY. IS THIS A VALUE PLAY? IS THIS A GROWTH PLAY? I MEAN, FOR SO MANY YEARS THIS WAS A GROWTH STORY. WHAT IS IT NOW?

SCHULTZ: I WOULD BANG THE TABLE AND SAY WE ARE A GROWTH COMPANY THAT IS EXPERIENCING A MOMENT IN TIME WHERE U.S. COMPS HAVE SLOWED. BUT U.S. COMPS HAVE SLOWED IN THE U.S. BEFORE. AND WE WILL, WITHOUT QUESTION, THROUGH INNOVATION AND DISRUPTION REALLY I THINK DO A NUMBER OF THINGS THAT WILL BE CATALYTIC OVER TIME TO ADDRESS THE COMP ISSUE. BUT IF YOU JUST ISOLATE CHINA, AND THE GROWTH OF OUR INTERNATIONAL BUSINESS, THEN MANY WAYS THE VALUE OF STARBUCKS IS UNDERVALUED. SO I'M VERY BULLISH LONG-TERM ON THE COMPANY. AND OUR U.S. COMPS OVER TIME WILL IMPROVE. I'M QUITE CONFIDENT ABOUT THAT.

SORKIN: KEN BACK IN NEW YORK, HE'S GOT A QUESTION.

KEN LANGONE: HOWARD. HOW ARE YOU? CONGRATULATIONS. WE'VE BEEN TRYING TO GET TOGETHER FOR SOME TIME.

SCHULTZ: HEY KEN.

KEN LANGONE: LET'S MAKE SURE WE DO IT. NOW, HOWARD –

SCHULTZ: WELL, LET ME TELL YOU. YOU HAVE BUILT A GREAT COMPANY AND YOU ARE A GREAT AMERICAN STORY. SO IT'S AN HONOR TO BE WITH YOU.

LANGONE: WELL, MY HONOR IS TO BE WITH YOU. AND I'M THRILLED YOU'RE LOOKING BEYOND YOUR CURRENT WORK. THERE'S A LOT OF WORK TO BE DONE. THERE'S TWO THINGS THAT STRIKE ME. ONE, YOU HAVEN'T MENTIONED IN ALL THE THINGS THAT NEED TO BE WORKED ON IN AMERICA, PUBLIC EDUCATION. THAT'S A NATIONAL DISGRACE.

SCHULTZ: YES.

LANGONE: AND IT'S GOT THORNY POLITICAL CONSEQUENCES TO IT THAT WE HAVE TO PUSH ASIDE IF WE'RE GOING TO FIX THE PROBLEM, WITHOUT REGARD TO WHAT THOSE PROBLEMS ARE. THE SECOND THING IS, GOVERNMENT CAN'T DO EVERYTHING FOR US. A GOOD EXAMPLE, YOU MENTIONED THE VETERAN'S ADMINISTRATION. IF I TOOK HOWARD SCHULTZ, BERNIE MARCUS, JAMIE DIMON, AND JIM SINEGAL AND SAID, "GUYS. HERE'S THE VA. FIX IT," I WILL BET YOU IN 18 MONTHS, YOU'LL HAVE US WELL ON THE WAY TO DOING AS A NATION WHAT WE SHOULD BE DOING FOR THESE PEOPLE THAT SERVED US SO WELL AND SO BRAVELY. SO I'M EXCITED ABOUT SOMEBODY LIKE YOU GIVING THE THOUGHT OF COMING INTO PUBLIC SERVICE. I THINK IT'S GOING TO BE GOOD FOR THE COUNTRY, HOWARD, AND YOU'LL BE GREAT AT IT. I URGE YOU TO DO IT.

SCHULTZ: WELL KEN, THANK YOU.

LANGONE: WE HAVE TO UNDERSTAND: GOVERNMENT CAN'T DO EVERYTHING. I'M SORRY.

SCHULTZ: I COMPLETELY AGREE WITH YOU. AND I THINK WHAT WE'RE REALLY TALKING ABOUT IS LEADERSHIP.

LANGONE: YES.

SCHULTZ: AUTHENTIC LEADERSHIP. I THINK THE COUNTRY IS LONGING FOR TRUTH, LONGING FOR AN OPPORTUNITY IN WHICH RESPECT AND DIGNITY WITH HOW WE ARE TALKING TO ONE ANOTHER. WE ARE ALL IN THIS TOGETHER. AND WE'VE GOT TO ASK OURSELVES A VERY IMPORTANT QUESTION TODAY AND IT IS WHAT KIND OF COUNTRY DO WE WANT TO LIVE IN? AND WE CAN'T LIVE IN A COUNTRY IN WHICH WE'RE DIVIDED. WE HAVE TO LOVE OUR FELLOW COUNTRY MEN AND WE HAVE TO CREATE THE KIND OF LEADERSHIP IN WHICH WE ARE CREATING VALUE AND OPPORTUNITY FOR EVERYONE, AMD WE CAN'T DO THAT WITHOUT REFORMING AND TRANSFORMING THE EDUCATION SYSTEM IN AMERICA. COULD NOT AGREE WITH YOU MORE.

LAGONE: HOWARD, MAYBE -

SORKIN: TWO FINAL QUESTIONS – OH, GO AHEAD, KEN.

LANGONE: ONE LAST THING. I BELIEVE THE GLASS IS HALF FULL. I THINK WE ARE IN THE GREATEST NATION ON EARTH. WE HAVE SO MUCH TO BUILD ON. WE HAVE ISSUES. WE HAVE PROBLEMS. BUT THE SOONER WE ADDRESS THEM IN A POSITIVE WAY AND STOP KNOCKING EACH OTHER AND STOP DEMEANING EACH OTHER, THE BETTER WE'RE GOING TO BE TO GET THOSE PROBLEMS SOLVED. THAT'S A TALL ORDER. I DON'T KNOW HOW YOU GET THERE BUT THAT'S WHAT NEEDS TO BE DONE, IN MY OPINION.

SCHULTZ: YEAH I AGREE WITH YOU. CAN I JUST –

SORKIN: YEAH, SURE.

SCHULTZ: I SAID SOMETHING IN OUR – WE HAD A COMPANY WIDE MEETING YESTERDAY AND AT THE END I SAID, "I HAD THE PRIVILEGE AND THE HONOR TRAVELING AROUND THE WORLD CARRYING THE STARBUCKS FLAG." BUT I CARRY THE AMERICAN FLAG EVERYWHERE I GO. AND THERE'S NO OTHER COUNTRY I'D RATHER COME HOME TO WHEN I'M ON ALL OF THESE TRIPS THAN COME HOME TO THE UNITED STATES OF AMERICA WHERE A KID FROM BROOKLYN IN THE PROJECTS HAS BUILT AND BEEN PART OF SOMETHING THAT CAN ONLY HAPPEN IN THIS COUNTRY.

LANGONE: YOU'RE RIGHT.

SCHULTZ: YES.

SORKIN: COUPLE OF JUST POLITICAL QUESTIONS OUTSIDE OF YOUR OWN POTENTIAL FUTURE. WHEN YOU LOOK AT THE FIELD, IF YOU WILL, PEOPLE SAY, YOU KNOW, WILL JOE BIDEN RUN, WILL OTHERS RUN? IS THERE ANYBODY THAT YOU GET EXCITED ABOUT?

SCHULTZ: I THINK THERE'S A LOT OF PEOPLE WHO MIGHT RUN FOR PRESIDENT. AND I HAVE NOT FOCUSED ON THAT. I WILL SAY THAT IT CONCERNS ME THAT SO MANY VOICES WITHIN THE DEMOCRATIC PARTY ARE GOING SO FAR TO THE LEFT. AND I ASK MYSELF HOW ARE WE GOING TO PAY FOR ALL THESE THINGS IN TERMS OF THINGS LIKE SINGLE PAYER OR PEOPLE ESPOUSING THE FACT THAT THE GOVERNMENT GOING TO GIVE EVERYONE A JOB. I DON'T THINK THAT'S REALISTIC. AND I THINK WE'VE GOT A GET AWAY FROM ALL OF THESE FALSEHOODS AND START TALKING ABOUT THE TRUTH AND NOT FALSE PROMISES.

SORKIN: RIGHT. QUESTION. AND IT REALLY COMES FROM STARBUCKS INVESTORS – I SAW THIS ON TWITTER YESTERDAY, IF YOU WERE TO PURSUE PUBLIC SERVICE, DO YOU WORRY AT ALL THAT STARBUCKS WOULD GET WRAPPED UP INTO IT? DO YOU REMEMBER WHEN ROMNEY RAN, BAIN GOT WRAPPED UP IN IT QUICK.

SCHULTZ: SURE. YEAH, WELL I THINK THERE IS AN ANOMALY HERE. THIS HASN'T HAPPENED VERY OFTEN. WHERE IF SOMEONE LIKE ME DID DO THIS, THE -- MY CONNECTION AND ASSOCIATION WE THE COMPANY, WE'D HAVE TO DEAL WITH THAT. BUT WE'RE A LONG WAY FROM THAT.

SORKIN: JOE'S GOT ANOTHER QUESTION. JOE?

JOE KERNEN: JUST TO TRY TO FOCUS BACK ON JUST THE WHOLE PHILOSOPHY, HOWARD, OF MAYBE REDISTRIBUTION VERSUS GROWTH. AND I'M NOT SURE THE STOCK MARKET IS NECESSARILY THE BE BAROMETER YOU WANT TO LOOK AT EITHER, BUT IT'S POSSIBLE THIS YEAR WE GROW ABOVE 3%. AND THERE'S MAYBE A LOT OF REASONS WHY THAT'S GOING TO HAPPEN. MAYBE IT WAS SET UP BY THE OBAMA ADMINISTRATION. BUT FOR EIGHT YEARS WE DIDN'T, NEVER HAD A YEAR, WE BARELY GOT TO 2%. SO THERE'S THIS NEVER ENDING ARGUMENT ABOUT WHETHER GROWTH AND LETTING THE PRIVATE SECTOR HAVE MORE CAPITAL, KEEPING IT IN THE PRIVATE SECTOR AND LETTING THAT GROW THE PIE OR WHETHER REDISTRIBUTION IS THE WAY TO GO. I MEAN, IF WE END UP GROWING AT GREATER THAN 3% THIS YEAR, WOULD YOU REPEAL THE TAX REFORM ACT? WOULD YOU RAISE TAXES ON CORPORATIONS BACK TO WHERE THEY WERE IF YOU WERE PRESIDENT?

SCHULTZ: WELL, I DON'T WANT TO TALK IN THE HYPOTHETICAL ABOUT WHETHER -- WHAT I WOULD DO IF I WAS PRESIDENT. BUT LET ME TRY TO SAY THIS IN MY OWN WAY. I THINK THE GREATEST THREAT DOMESTICALLY TO THE COUNTRY IS THIS $21 TRILLION DEBT HANGING OVER THE CLOUD OF AMERICA AND FUTURE GENERATIONS. AND THE FACT INTEREST RATES ARE GOING UP, WE'RE GOING TO BE PAYING CLOSE TO OVER $400 BILLION IN INTEREST EXPENSE, WHICH I THINK IS THE NUMBER ONE OR NUMBER TWO ISSUE IN TERMS OF FEDERAL EXPENSE TO THE COUNTRY. THE ONLY WAY WE'RE GOING TO GET OUT OF THAT IS WE'VE GOT TO GROW THE ECONOMY IN MY VIEW, 4% OR GREATER AND THEN WE HAVE TO GO AFTER ENTITLEMENTS. AND AGAIN, THIS IS WHERE POLITICAL IDEOLOGY AND THE POLITICAL CLASS IS NOT FACING THE TRUTH AND NOT FACING REALITY. AND THIS IS ABOUT LEADERSHIP. THIS IS ABOUT GETTING PEOPLE TOGETHER IN A ROOM AND TALKING ABOUT THE FACT THAT THE FUTURE OF THE COUNTRY IS ON A COLLISON COURSE WITH TIME BECAUSE WE MUST ADDRESS THIS. IT'S NOT ABOUT REDISTRIBUTION, IT'S ABOUT FACING THESE HARD TRUTHS AND DEALING WITH SIGNIFICANT PROBLEMS SO THAT WE CAN PUT THE COUNTRY IN A POSITION WHERE IT'S NOT ABOUT TRADE WARS AND IT'S NOT ABOUT CHINA, IT'S NOT ABOUT BUILDING A WALL, IT IS ABOUT GETTING OUR HOUSE IN ORDER AND DOING EVERYTHING WE CAN. AND I'VE SAID THIS BEFORE, ABOUT WALKING IN THE SHOES OF THE AMERICAN PEOPLE AND DOING WHAT'S RIGHT FOR THEM, RIGHT.

KERNEN: BUT HOW DO YOU GET TO 4% GROWTH? THAT'S WHERE – THAT'S WHERE THE RUB IS -- IS HOW YOU GET AN ECONOMY TO 4% GROWTH. AND THE BEST INTENTIONS OF A COMPASSIONATE -- A LIBERAL SORT OF PHILOSOPHY, THE BEST INTENTIONS SOMETIMES END UP WITH INCOME INEQUALITY GETTING WORSE FOR EIGHT YEARS BECAUSE THE FED STAYED AT 0%. AND HERE WE ARE – WE MAY GET TO 4%.

SCHULTZ: WELL, TAKE THE LIBERAL PIECE OUT OF IT. LET'S TAKE A CENTRIST APPROACH ABOUT GETTING IDEOLOGY OUT. WE CAN GET THE 4% GROWTH, WE CAN GET LOW AFTER ENTITLEMENTS AND WE CAN DO THE RIGHT THING -- IF WE HAVE THE RIGHT PEOPLE IN PLACE WHO ARE TALKING ABOUT WHAT IT IS TO BE AN AMERICAN AS OPPOSED TO BEING A REPUBLICAN OR A DEMOCRAT AND GETTING ALL OF THESE ISSUES OUT OF THE WAY SO WE CAN FIX THE PROBLEMS IN THE COUNTRY.

SORKIN: FINAL QUESTION. YOU SPENT NEARLY 40 YEARS AS -- RUNNING STARBUCKS. WHAT I SAW YESTERDAY, IT WAS AN EMOTIONAL DAY FOR YOU. WE'RE NOW A DAY AFTER. SO HOW ARE YOU FEELING? SOME PEOPLE GO TO DISNEY WORLD AFTER THE SUPER BOWL AND THEY WIN. WHAT ARE YOU DOING?

SCHULTZ: THE TRUTH IS I'M GOING BACK TO WORK TODAY. YOU KNOW, I STILL HAVE A NUMBER OF THINGS TO DO AT STARBUCKS. THERE'S A NUMBER OF PEOPLE I WANT TO SEE AND TALK TO. IT WAS EMOTIONAL YESTERDAY. YOU KNOW, THERE WAS A MOMENT WHERE I STARTED TO TEAR UP AS I WAS THINKING IF ONLY MY PARENTS COULD SEE THIS. IT WOULD HAVE BEEN A WONDERFUL MOMENT FOR ME AND MY FAMILY. AND I HOPE THEY CAN SEE IT.

SORKIN: OKAY. HOWARD SHULTZ, THANK YOU. THANK YOU FOR SPENDING TIME WITH US.

SCHULTZ: ANDREW, THANK YOU VERY MUCH.

SORKIN: THANK YOU FOR ANSWERING OUR QUESTIONS AND CONGRATULATIONS ON A REMARKABLE CAREER AT STARBUCKS. AND WE WISH YOU THE BEST IN THE FUTURE.

SCHULTZ: THANK YOU.

SORKIN: THANK YOU. APPRECIATE IT. GUYS, I'M GONNA SEND IT BACK TO YOU.

For more information contact:

Jennifer Dauble
CNBC
t: 201.735.4721
m: 201.615.2787
e: jennifer.dauble@nbcuni.com

Emma Martin
CNBC
t: 201.735.4713
m: 551.275.6221
e: emma.martin@nbcuni.com

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