Starbucks’ newly appointed CEO, Brian Niccol, has been furnished with an extensive package comprising of cash and stocks valued at roughly €102 million. Additionally, his base of operations will be 1,100 miles from the Starbucks headquarters. The announcement on Wednesday divulged that if Niccol successfully reaches the company goals, his contract could be worth a colossal $113 million (€102 million), potentially placing him amongst the highest-earning CEOs in the US.
Niccol’s appointment as the fourth Starbucks chief in less than three years followed the unexpected termination of Laxman Narasimhan, the ex-CEO of Reckitt Benckiser. In the following month, Niccol will transition from his previous role at the fast-food chain, Chipotle Mexican Grill. He was instrumental in rejuvenating Chipotle’s business and reputation since 2018, after it experienced multiple food safety controversies. Chipotle’s stocks saw a staggering increment of nearly 800% during his term.
Upon commencement of his role at Starbucks, Niccol will be awarded a $10 million cash bonus and a further $75 million in equity increments. This is to reimburse him for the bonuses and stock he forwent at Chipotle. His annual compensation will include a $1.6 million salary, plus a performance dependent cash bonus of approximately $3.6 million. This will be topped up with a long-term equity grant valued at $23 million annually, to be paid over several years.
According to Ben Silverman, vice president of research at Verity, an analytics company, “The board at Starbucks’ willingness to outlay such a substantial sum indicates the confidence they have in Niccol. However, he will need to validate his value as his yearly compensation exceeds that of his predecessor by about 75%.”
Last year, Niccol grossed a total of $22.5 million at Chipotle. Additionally, the potential earnings from his outstanding equity incentive grants were pegged at over $82 million, as per a regulatory filing.
The parcel from Starbucks offers an extraordinary benefit: relocation to their Seattle headquarters is not mandatory for Niccol, as stated in the document. Instead, a “small virtual office” will be set up for him in Newport Beach, California – where Niccol previously relocated Chipotle’s main office from Denver – in addition to covering the expenses of an assistant of his choice. The distance from Starbucks’ main establishment to Newport Beach is just over 1,100 miles, as indicated by Google Maps.
In 2023, only five other top-level employees received compensation packages valued at over $100 million, as a June report from pay data firm, Equilar, of the largest US firms by revenue revealed. Such agreements are especially uncommon outside the finance and technology industries.
Niccol’s aimed yearly payment would be 83 per cent higher than the median target of other restaurant groups listed on the S&P 500, as companies like Chipotle, Darden, Yum Brands, and McDonald’s, remarked Courtney Yu, the head of research at Equilar.
In a statement, Starbucks mentioned, “Brian Niccol has consistently shown himself to be among the most proficient leaders in our sector, resulting significant monetary gains for many years”, affirming that his remuneration was “directly correlated to the company’s performance and the collective success of all stakeholders”. – Copyright The Financial Times Limited 2024.