Starbucks new CEO gets historic pay package and remote-work option

Global coffee major Starbucks saw a major leadership shake-up which resulted in the ouster of Indian-origin CEO Laxman Narasimhan. The former Reckitt chief Narasimhan's appointment as Starbucks CEO was celebrated and covered widely across the world, when he was announced as the next CEO in September 2022, succeeding Howard Schultz.

The coffee chain has been struggling with financial challenges that have culminated in the abrupt exit of Narasimhan. It has seen a notable decline, prompting the company’s leadership change.

During Narasimhan's 17 months as CEO, Starbucks share price saw a decline of 23.9%, which led to a $32 billion drop in market cap.

On August 13 Starbucks announced that Chipotle chief executive Brian Niccol has been appointed chairman and chief executive officer of the global coffee company. Niccol replaces Narasimhan who is stepping down as CEO and as a director effective immediately.

Brian Niccol, 50, will start in his new role on September 9, 2024. Starbucks chief financial officer, Rachel Ruggeri, will serve as interim CEO until that time. Narasimhan’s efforts to turnaround the decline in the same-store sales didn’t reap results, worsening the situation as the company cut guidance in April as US sales declined and China business’ growth decelerated. Some of the reasons include, falling sales numbers, in April. Starbucks reported a decrease in same-store sales for the first time in nearly three years. This decline affected both U.S. and international markets leading the company to lower its annual sales forecast.

Niccol will have his work cut out for him.

As per reports, Starbucks has offered Niccol, 50, a historic pay package: Roughly $113 million in total compensation including a $10 million sign-on bonus, a $75 million equity grant and, starting in fiscal 2025, a grant that could be worth $23 million per year. On top of that Niccol’s annual salary is $1.6 million and he also gets an annual cash bonus that could range from $3.6 million to $7.2 million, depending on performance.

Furthermore, Niccol won’t be required to relocate to the company’s HQ in Seattle. The offer letter states, "During your employment with the Company, you will not be required to relocate to the Company’s headquarters (currently in Seattle, Washington). You agree to commute from your residence to the Company’s headquarters (and engage in other business travel) as is required to perform your duties and responsibilities."

“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 in a statement. “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.”

Niccol also gets a perk of up to $250,000 in personal travel on the corporate jet and access to Starbucks’ executive physical program.