Starbucks has announced a substantial compensation package for its incoming CEO, Brian Niccol. The coffee giant is set to provide Niccol with an estimated total compensation of $113 million, signalling the high cost of attracting top-tier talent for corporate turnarounds, as per a Fortune report.
The 50-year-old executive's package includes a $10 million sign-on bonus and a $75 million equity grant. Starting in fiscal 2025, Niccol could receive an additional annual grant worth up to $23 million. These incentives are on top of his $1.6 million annual salary and a performance-based cash bonus ranging from $3.6 million to $7.2 million, the report added.
Notably, Niccol's offer letter includes unique accommodations. He won't be required to relocate to Starbucks' Seattle headquarters, though he has agreed to commute when required. The company will cover temporary housing costs in Seattle and provide a personal chauffeur. Additionally, Starbucks will establish a small remote office in Newport Beach, California, where Chipotle Mexican Grill, Niccol's previous employer, is based, as per the report.
A Starbucks spokesperson defended the compensation package, stating: “Brian Niccol has proven himself to be one of the most effective leaders in our industry, generating significant financial returns over many years. His compensation at Starbucks is tied directly to the company's performance and the shared success of all our stakeholders. We're confident in his ability to deliver long-term, enduring value for our partners, customers and shareholders,” as quoted by Fortune.
Niccol replaces Laxman Narasimhan, who led Starbucks for 17 months during which the company's share price declined by 23.9%, resulting in a $32 billion market cap loss, as per Fortune.
The new CEO's impressive track record at Chipotle, where he oversaw an 800% stock price growth and a nearly seven-fold increase in profits over six years, appears to be the driving force behind Starbucks' generous offer, as per Fortune.
This leadership change comes as Starbucks grapples with post-pandemic work culture shifts. While the company had embraced remote work during the pandemic, founder Howard Schultz recently called for office employees within commuting distance to return to the workplace at least three days a week, citing concerns about maintaining collaboration and connection to the company's mission, as per the Fortune report.
