Starbucks has awarded its new chief executive Brian Niccol cash and stock potentially worth more than €102 million, and an office 1,100 miles from the company’s HQ.
If paid out in full, the package – revealed in a regulatory filing on Wednesday – would make Niccol one of America’s highest-paid CEOs. The contract would be worth $113 million (€102 million) if he hits the targets Starbucks has set for him.
Starbucks named Niccol as its fourth boss in less than three years on Tuesday after the surprise ousting of CEO Laxman Narasimhan, the former Reckitt Benckiser chief executive.
Niccol will arrive at Starbucks next month from burrito chain Chipotle Mexican Grill, where since 2018 he led a revival in its business and reputation after a series of food safety scares. Shares of Chipotle gained almost 800 per cent during his tenure.
To start, Niccol will receive a $10 million cash bonus upfront and another $75 million in equity grants designed to pay out over time, to compensate him for bonuses and unvested stock he left behind at Chipotle.
Annually, Niccol will earn a $1.6 million salary plus a target cash bonus worth about $3.6 million depending on how Starbucks performs. That is in addition to a long-term equity grant with an annual target value of $23 million, to be paid out over multiple years.
“The (Starbucks) board’s willingness to pay such a high price is testament to the faith they have in Niccol,” said Ben Silverman, vice-president of research at Verity, an analytics firm. “But he’s going to have to prove that he’s worth it because his annual compensation is about 75 per cent higher than that of his predecessor.”
Last year Niccol’s total pay at Chipotle was $22.5 million, while the value of his unrealised gains from past equity incentive grants was more than $82 million, according to a regulatory filing.
The package from Starbucks comes with an unusual perk: Niccol would not be required to move to its Seattle headquarters, according to the filing. Instead, the company will establish a “small remote office” in Newport Beach, California – the city to which Niccol had moved Chipotle’s headquarters from Denver – plus pay for an assistant of his choosing. It’s just over 1,100 miles from Starbucks HQ to Newport Beach, according to Google Maps.
Only five other executives were awarded pay packages worth more than $100 million in 2023, according to a June report from Equilar, a pay data company, of the largest US companies by revenue. Such contracts are particularly unusual outside the financial and technology sectors.
Niccol’s target annual remuneration would be 83 per cent above the median target at other S&P 500 restaurant groups, such as Chipotle, Darden, Yum Brands and McDonald’s, said Courtney Yu, director of research at Equilar.
“Brian Niccol has proven himself to be one of the most effective leaders in our industry, generating significant financial returns over many years,” Starbucks said, adding that his pay was “tied directly to the company’s performance and the shared success of all of our stakeholders”. – Copyright The Financial Times Limited 2024
- Sign up for Business push alerts and have the best news, analysis and comment delivered directly to your phone
- Join The Irish Times on WhatsApp and stay up to date
- Our Inside Business podcast is published weekly – Find the latest episode here
