The fixation on pantheon-style corporate leaders, particularly CEOs, is thriving in the United States. Starbucks’ stocks witnessed an unprecedented single-day boost of 25% following the statement that Brian Niccol was to step in as CEO, replacing Laxman Narasimhan, whose tenure was fraught with turmoil. This surge in stock price culminated in a $21 billion (or €19 billion) increase in market capitalisation.
Does Niccol’s entry validate this $21 billion leap? His reputation is nothing short of stellar, thanks to a successful six-year tenure at Chipotle, a burrito restaurant, where he steered the company shares towards an almost 800% rise. The Bank of America lauds Niccol as “potentially the best CEO in the restaurant sector” in the past six years. Bernstein analyst Danilo Gargiulo took the compliments to another level, drawing parallels between Niccol and Messi, with the former being perceived as the footballer equivalent in the restaurant business world.
Starbucks appears ready to foot a significant bill, reportedly offering Niccol a welcoming package which could potentially reach up to $113 million. The tendency to hold celebrity CEOs in high regard can point to cases like Microsoft which saw an 8% share rise in 2013 when the then-head Steve Ballmer declared his plans to resign. Under Ballmer, the stocks had plummeted by over a third; however, with his successor, Satya Nadella, they’ve risen tenfold.
Nonetheless, majority scholarly work highlights an inclination to overemphasise the CEO’s role, as succinctly described by Warren Buffett: “when a talented management team tries to enhance a business known for its poor economics, the business’s tarnished reputation stays unchanged”. Even though investors appear to disagree, it remains to be seen whether Niccol will ultimately prove to be the game-changer Starbucks needs.