Starbucks Corp.’s SBUX new CEO, Brian Niccol, will receive over a $113 million compensation package. This is in addition to the privilege of working remotely.
What Happened: Niccol’s total compensation package includes a $10 million sign-on bonus, a $75 million equity grant, and a potential $23 million annual grant beginning in fiscal 2025. He will receive a $1.6 million annual salary and a performance-based cash bonus ranging from $3.6 million to $7.2 million, as detailed in the company’s U.S. Securities and Exchange Commission filing and Niccol’s offer letter.
“You will be eligible for an annual cash bonus opportunity, with a target of 225% of your base salary (the "Target Incentive") and a maximum of 450% of your base salary, the amount of your annual cash bonus based on performance as determined in accordance with the Company's Executive Management Bonus Plan (or any successor arrangements) and payment thereof subject to your continued service through the last day of the applicable performance period,” the offer letter stated.
Niccol’s offer letter states that he is not required to relocate to Starbucks’ Seattle headquarters, but he has agreed to commute as necessary.
Until he secures permanent secondary housing in Seattle, Starbucks will cover the cost of any temporary housing arrangements and provide a personal chauffeur. The company has also promised to set up a small remote office in Newport Beach, California, where Niccol resides.
Starbucks stated that under Niccol’s leadership at Chipotle, the stock price surged by 800%, and profits increased nearly sevenfold.
Niccol, who previously served as the CEO of Chipotle Mexican Grill CMG, is replacing the departing CEO, Laxman Narasimhan, who oversaw a 23.9% share price decline during his 17-month tenure.
Why It Matters: The appointment of Niccol as CEO has significant implications for both Starbucks and Chipotle. Niccol’s departure from Chipotle sent shockwaves through the restaurant industry. Analysts overwhelmingly view this as a win for Starbucks, given Niccol’s track record of tripling Chipotle’s shares over the past five years.
CNBC’s “Mad Money” host Jim Cramer highlighted Niccol’s potential to revive Starbucks, which has faced challenges in key markets like the U.S. and China. Cramer believes Niccol is the “key to a new Starbucks” but cautioned that the turnaround won’t be immediate.
The market reacted strongly to the leadership change. Chipotle’s stock dropped by nearly 10%, on Tuesday, wiping out $7 billion in market value, while Starbucks’ shares surged over 20%, adding more than $15 billion to its valuation.
Price Action: Starbucks Corp’s stock closed at $93.90 on Wednesday, down 2.09%. Year to date, the stock has gained 0.25%, according to data from Benzinga Pro.
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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