Starbucks has recently announced the appointment of Brian Niccol as its new CEO, who is set to take the reins on September 9th. Niccol, who was previously with Chipotle Mexican Grill, will be offered a salary four times larger than his predecessor’s and the option to work remotely from California, 1000 miles away from the company’s headquarters.
This major leadership transition is expected to help Starbucks reverse its declining sales performance. The coffee giant is offering generous compensation packages, including substantial one-time bonuses, to entice Niccol to join their team. According to documents filed with the U.S. Securities and Exchange Commission (SEC), a significant portion of Niccol’s compensation will be in the form of stock options tied to company performance metrics.
Niccol, a 49-year-old executive, stands to earn up to $116.8 million in total compensation in his first year, contingent upon the company meeting operational targets and fulfilling stock option commitments. His base salary is $1.6 million annually, with the potential to earn an additional $7.2 million in cash incentives and up to $23 million in annual stock awards.
Starbucks has also granted Niccol a signing bonus of $10 million in cash and $75 million in stock awards as a one-time compensation package for his departure from Chipotle. The cash portion will be paid upfront while the stock awards will be distributed over a three-year period.
Interestingly, under the terms of his contract, Niccol has the option to work remotely from Newport Beach, California, a scenic coastal city about 1000 miles away from Starbucks’ Seattle headquarters. Should Niccol decide to relocate to Seattle, Starbucks will cover his moving expenses and provide temporary housing for up to three months.
A Starbucks spokesperson indicated that Niccol is expected to spend a significant amount of time at the company’s Seattle headquarters, despite the remote work option in California. During Niccol’s tenure at Chipotle, the company’s stock price soared by 773%.
In a statement, Starbucks praised Niccol as one of the most effective leaders in the industry, emphasizing his track record of delivering significant financial returns over the years. The company also highlighted that Niccol’s compensation is directly tied to Starbucks’ performance and the collective success of all stakeholders involved.
Following the announcement of Niccol’s appointment, Starbucks’ stock price surged by nearly 25%, leading to a $20 billion increase in the company’s market valuation. Comparatively, this compensation agreement puts Laxman Narasimhan, Starbucks’ former CEO who departed on Tuesday, at a notable contrast. Narasimhan received a $28 million compensation package upon joining in April 2023 and was paid a total of $14.6 million in compensation last year, primarily from stock awards, with a base salary of $1.3 million.