New Starbucks CEO Brian Niccol’s pay package sends a signal
SEATTLE — Starbucks offered an eight-figure cash signing bonus and personal use of its corporate aircraft to its new CEO as part of its sizable compensation package to lure him away from Chipotle.
He also won’t be forced to leave California.
The Seattle-based coffee giant announced Tuesday that CEO Laxman Narasimhan was stepping down, effective immediately. The company also named his replacement: Chipotle CEO Brian Niccol, who will start on Sept. 9.
Niccol’s compensation package includes a $10 million signing bonus in cash that will be fully paid six months from his start, a $75 million stock award and a $1.6 million annual salary, according to a financial filing Wednesday.
The cash bonus and the stock award are meant to replace the compensation he’s forfeiting by leaving Chipotle.
In the offer letter, Starbucks told Niccol he won’t be required to uproot his life to Seattle. Instead, he’ll commute as needed from his home in Newport Beach, California, to the company’s Sodo headquarters.
The offer is a big jump from what the company gave to Narasimhan in 2022. Financial filings show Starbucks offered Narasimhan a $1.3 million annual base salary, a $9.25 million stock award and a $1.6 million cash signing bonus.
Niccol will also be eligible to receive annual stock awards valued at $23 million in October, when Starbucks’ fiscal year starts. The stock awards are worth almost $10 million more than what Narasimhan was offered.
Any future bonuses or stock awards for Niccol will be based on performance.
Starbucks shelling out for its new CEO signals the company’s faith in him to turn things around after a rocky year, the last two quarters of which delivered declining revenue. The company had been facing mounting pressure from investors, including activist fund Elliott Investment Management which acquired a sizable stake in Starbucks recently.
Elliott managing partner Jesse Cohn and partner Marc Steinberg said in a statement Tuesday that they viewed Niccol’s hiring as a “a transformational step forward for the Company.”
Niccol’s compensation package for his first year will blow past the pay for another recently hired Seattle CEO. Newly appointed Boeing CEO Kelly Ortberg stands to make $22 million next year if all performance targets are met. While Niccol is receiving a $75 million stock award, Ortberg will receive a $17.5 million stock award.
The compensation package is sure to drive up Starbucks’ CEO-to-worker pay ratio. Because Starbucks’ median employee is a part-time barista in the U.S. who makes $14,209, the ratio under Narasimhan last year was 1,028-to-one.