Starbucks has offered a lucrative compensation package to Brian Niccol, the incoming CEO and Chair of the company, to entice him away from his previous position as chief executive at Chipotle Mexican Grill. Niccol, who officially takes charge of Starbucks on September 9th, will be tasked with revitalizing the struggling coffee chain’s sales, improving the in-store customer experience, and finding solutions for its struggling China business.
According to a filing by Starbucks, the majority of Niccol’s compensation will come in the form of equity that will vest over time, contingent on the company’s performance targets and other metrics. If Starbucks meets its targets in Niccol’s first year, his pay package could be worth as much as $116.8 million. This includes a base salary of $1.6 million per year, with the potential to earn up to an additional $7.2 million in cash. Niccol will also be eligible for annual equity awards valued at up to $23 million.
In addition to his salary and equity awards, Niccol will receive a $10 million cash bonus and $75 million in equity as compensation for leaving Chipotle. These amounts are intended to make up for what he is forfeiting by departing from the burrito chain. The equity portion will vest over a three-year period, based on the performance of the company and Niccol’s tenure.
Starbucks expressed confidence in Niccol’s leadership abilities, stating, “Brian Niccol has proven himself to be one of the most effective leaders in our industry, generating significant financial returns over many years.” The company also emphasized that his compensation is directly tied to the performance of Starbucks and the shared success of all stakeholders, including partners, customers, and shareholders.
Comparing Niccol’s pay package to that of his predecessor, Laxman Narasimhan, it is evident that Niccol’s compensation is more generous. Narasimhan had a base salary of $1.3 million, with potential cash bonuses of up to $5.85 million and equity awards of $13.6 million. In fiscal 2023, Narasimhan’s total compensation was valued at $14.6 million, primarily due to stock awards. Unlike Narasimhan, Niccol will not be required to relocate to Starbucks’ headquarters in Seattle.
Niccol’s successful tenure at Chipotle, during which the company’s stock value rose by an impressive 773%, highlights his ability to generate significant financial returns. This track record likely played a significant role in Starbucks’ decision to offer him such a lucrative compensation package.
Overall, Starbucks’ decision to provide Brian Niccol with a substantial pay bump and attractive one-time awards underscores the company’s determination to position itself for success under new leadership. By offering a compensation package that aligns with his proven leadership abilities, Starbucks is demonstrating its commitment to delivering long-term, enduring value for its partners, customers, and shareholders.
