Starbucks recently announced the appointment of Chipotle’s CEO, Brian Niccol, as its new chief executive officer, replacing Laxman Narasimhan. This news had a significant impact on the company’s stock price, leading to Starbucks’ interim CFO, Rachel Ruggeri, cashing in over $341,000 in company stock. Ruggeri sold 3,750 shares as part of a predetermined trading plan, avoiding any insider trading allegations.
The decision to hire Niccol, a respected turnaround expert known for his successful stints at Taco Bell and Pizza Hut, caused Starbucks’ shares to surge by 24.5% on Tuesday. The stock closed at $95.90, triggering a price threshold in Ruggeri’s trading plan. These plans, which many executives at Starbucks have, allow for predetermined trades overseen by brokers at regular intervals, with price benchmarks for when the stock is sold.
Ruggeri had also sold 3,750 shares in May, netting $300,000. Her financial planners strategically planned for contingencies, and it appears that their plans worked out favorably. Securities attorney Randy Katz of law firm Clark Hill LLP noted that Ruggeri’s trades were filed with the SEC even before the management shakeup news appeared on the SEC’s website. This suggests that other Starbucks executives did not benefit from the stock surge the way Ruggeri did.
Starbucks has been facing challenges such as slowing sales and an aggressive union movement within its stores. In April, the company reported its first drop in same-store sales in nearly three years, causing a decline in its stock price. Additionally, Narasimhan’s management style was criticized by Howard Schultz, the chain’s former CEO, on LinkedIn in May. Narasimhan had to lower Starbucks’ earnings estimates multiple times since taking over as CEO last April. Furthermore, Starbucks has been dealing with a widespread unionization effort since 2021.
Overall, Ruggeri’s timely stock sales and the appointment of Niccol as CEO have had a significant impact on Starbucks. The surge in stock price reflects investor confidence in the company’s future under new leadership. However, Starbucks still faces challenges, and it will be interesting to see how Niccol’s extensive experience in turning around struggling companies will translate into positive results for the coffee giant.
