The incoming CEO of Starbucks might earn well over $100 million in his first year of employment thanks to an incentive-rich contract, yet he won’t have to move from his California home to Seattle, the headquarters of the world’s largest coffee company.
After just over a year as the company’s top executive, Laxman Narasimhan abruptly stepped down, and Starbucks announced on Tuesday that Brian Niccol will take over as chairman and CEO. On September 9, Niccol will take over as chairman and CEO of Starbucks.
Niccol’s expertise in turning around firms that have faced difficulties, such as Taco Bell and most recently Chipotle, has made him one of the most sought-after corporate CEOs.
In 2018, while Chipotle was being rocked by a string of foodborne illness outbreaks that had sickened over a thousand of its patrons over several years, Niccol assumed the top position at the California-based restaurant.
Since his arrival, Chipotle’s revenue has almost doubled as a result of his energising product innovation and implementing staff benefits including a program that pays for employees’ college tuition at specific institutions.
Starbucks is depending on Niccol to turn around flagging sales and restore the brand’s reputation as a place where people are prepared to spend top dollar for its goods.
The 50-year-old Niccol will receive a cash bonus of $10 million as well as $75 million in equity from Starbucks, the company said in a filing with the Securities and Exchange Commission late on Wednesday, to make up for what is being forfeited by his sudden departure from Chipotle. His compensation package includes an equity component that vests over time and is subject to performance criteria being met.
His salary may likely top $100 million in his first year if Starbucks fulfils those ambitions in addition to other objectives.
Niccol will receive a base salary of $1.6 million each year. Additionally, he will be eligible for an annual financial incentive program with a maximum payout of 450% of base pay and a target of 225% of base pay. The maximum incentive, if he receives it, is approximately $8.8 million.
Niccol will be qualified to receive yearly equity awards of up to $23 million beginning in the fiscal year 2025.
Interestingly enough, Starbucks has stated that Niccol can stay in Newport Beach, California, where he presently resides and where Chipotle is headquartered, and is not forcing him to move to the Starbucks headquarters in Seattle.
In accordance with a regulatory filing, Starbucks and Niccol will work together to establish a small remote office in Newport Beach, where the business will also recruit an assistant to support Niccol.
Niccol will travel for business whenever it is considered essential, including making his commute to Seattle.
Until Niccol arrives in early September, Rachel Ruggeri, the chief financial officer of Starbucks, is acting in the capacity of temporary CEO.
Starbucks’ stock fell marginally on Thursday afternoon following a 20% increase in value upon the announcement of Niccol’s hiring earlier in the week.