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Starbucks made headlines with its appointment of Brian Niccol as the new CEO, and the package he is set to receive has caught the attention of many.
Niccol is replacing Laxman Narasimhan, who stepped down after leading the company for just 17 months.
Brian Niccol’s compensation package is substantial, with Starbucks offering him approximately $113 million in total compensation.
This includes a $10 million sign-on bonus, a $75 million equity grant, and a grant starting in fiscal 2025 that could be worth $23 million annually.
In addition to these figures, Niccol will receive an annual salary of $1.6 million, along with an annual cash bonus that could range between $3.6 million and $7.2 million, depending on his performance.
"He will receive an initial base salary of $1,600,000 per year, and an annual cash incentive opportunity at a target of 225% of base salary and a maximum of 450% of base salary, which will be prorated for fiscal year 2024. Commencing in the Company’s fiscal year 2025, Mr. Niccol will be eligible to receive annual equity awards with a target value of $23,000,000, pursuant to the terms of the Company’s shareholder approved equity plans," said Starbucks in a United States Securities and Exchange Commission filing.
In addition to his financial compensation, Niccol will not be required to relocate to Starbucks’ headquarters in Seattle.
Instead, he will commute as necessary from his current residence. Starbucks has agreed to cover the costs of any temporary housing arrangements he may need and will also provide him with a personal chauffeur while he is in Seattle.
Furthermore, Starbucks will establish a small remote office for Niccol in Newport Beach, allowing him to work from there when he is not at the Seattle headquarters. He will also have access to Starbucks’ executive physical programme and can use the company’s plane to travel between his home, his remote office, and the headquarters.
A spokesperson for Starbucks expressed confidence in Niccol's ability to lead the company.
"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," the spokesperson said.
The compensation package from Starbucks is not just about the new role but also about making up for the pay Niccol is leaving behind at Chipotle.
During his tenure at Chipotle, Niccol was instrumental in driving an 800% increase in the stock price and a nearly sevenfold rise in profits. Starbucks' board is hopeful that he can bring similar growth to their company, which has faced challenges in recent times.
Niccol steps into his new role at Starbucks following the departure of Laxman Narasimhan, whose 17-month tenure saw a huge decline in the company’s fortunes.
Under Narasimhan’s leadership, Starbucks experienced a 23.9% drop in share price, leading to a Rs 32 billion decrease in market capitalisation.
