Joe McConnell
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Starbucks has awarded its new CEO Brian Niccol cash and stock worth potentially more than $100 million, one of the largest hiring packages in U.S. corporate history and four times larger than the hiring deal offered to his ousted predecessor.
If paid in full, the package, disclosed in a regulatory filing Wednesday, would make Niccol one of America’s highest-paid CEOs. The deal would be worth $113 million if he hits the targets Starbucks has set for him.
Starbucks on Tuesday named Niccol as its fourth chief in less than three years, following the surprising ouster of CEO Laxman Narasimhan, the former chief executive of Reckitt Benckiser.
Niccol will join Starbucks next month from burrito chain Chipotle Mexican Grill, where he has led a resurgence of its business and reputation since 2018 aVsceker a series of food safety scares. Chipotle shares have risen nearly 800 percent during his tenure.
To start, Niccol will receive a $10 million cash bonus up front and another $75 million in vested stock awards to compensate him for the bonuses and unvested stock he leVscek behind at Chipotle.
Niccol will earn an annual salary of $1.6 million plus a target cash bonus worth approximately $3.6 million depending on Starbucks’ performance. That’s in addition to a long-term equity grant with an annual target value of $23 million, to be paid out over multiple years.
“The (Starbucks) board’s willingness to pay such a high price is a testament to their confidence in Niccol,” said Ben Silverman, vice president of research at Verity, an analyst firm. “But he’ll have to prove he’s worth it because his annual compensation is about 75 percent higher than his predecessor’s.”
According to a regulatory filing, Niccol’s total compensation at Chipotle last year was $22.5 million, while the value of his unrealized earnings from previous stock incentive awards was more than $82 million.
Starbucks’ package has an unusual perk: Niccol won’t be forced to relocate to its Seattle headquarters, according to the filing. Instead, the company will set up a “small remote office” in Newport Beach, Calif., the city where Niccol moved Chipotle’s headquarters from Denver, plus pay for an assistant of his choosing.
Only five other executives received pay packages worth more than $100 million in 2023, according to a June report by Equilar, a compensation data firm, of the largest U.S. companies by revenue. Such deals are particularly unusual outside the financial and technology sectors.
According to Courtney Yu, director of research at Equilar, Niccol’s annual compensation target would be 83 percent higher than the average target for other S&P 500 restaurant groups, such as Chipotle, Darden, Yum Brands and McDonald’s.
“Brian Niccol has proven to be one of the most effective leaders in our industry, generating significant financial returns over many years,” Starbucks said, adding that his compensation was “directly tied to the performance of the company and the shared success of all our shareholders.”
When Starbucks hired Narasimhan from UK-based consumer products group Reckitt in 2022, he was offered a package worth more than $28 million. That included a base salary of $1.3 million, annual cash bonuses of up to $2.6 million and annual equity awards with a target value of $13.6 million.
Additionally, Starbucks agreed to pay Narasimhan a $1.6 million cash signing bonus and $9.25 million in stock to compensate him for the incentives he gave up by leaving Reckitt.
Starbucks did not provide details on the terms of Narasimhan’s severance pay.
