Starbucks’ new CEO, Brian Niccol, is expected to earn more than $100 million in his first year at the company, one of the largest hires ever in the U.S.
As an added bonus, Niccol doesn’t have to move from his home in Newport Beach, California, to Seattle, the headquarters of the global café chain.
Starbucks announced Tuesday that Niccol would take over from Laxman Narasimhan, who abruptly stepped down after more than a year in the top job following public criticism from the company’s founder.
Niccol, who was praised for his successful turnaround at burrito chain Chipotle, will take over as chairman and CEO of the coffee giant on September 9.
‘Right now he’s almost seen as the LeBron James or the Tom Brady or the [Lionel] “The Messi of the restaurant industry,” said Bernstein analyst Danilo Gargiulo when news of his appointment broke.
Brian Niccol will take over as chairman and CEO of the coffee giant on September 9
Niccol became one of the world’s most sought-after business leaders after building a track record of successfully turning around struggling companies, including Taco Bell and, most recently, Chipotle.
He took the top job at the California-based chain in 2018, when Chipotle was hit by a series of foodborne illness outbreaks that sickened more than 1,000 customers over several years.
Chipotle’s revenue has nearly doubled since his arrival, after he boosted product innovation while instituting employee benefits, such as a program that pays employees’ tuition at certain schools.
Starbucks is counting on Niccol to turn around its flagging sales and put the company back on the map as a destination where customers are willing to pay a premium for its products.
Starbucks said in a filing with the Securities and Exchange Commission on Wednesday evening that Niccol, 50, will receive a $10 million cash bonus plus $75 million in equity to make up for what he loses in his sudden departure from Chipotle.
The portion of his salary paid in shares is paid out over time and is dependent on the achievement of performance targets.
If Starbucks achieves these and other goals, its salary could easily exceed $100 million in its first year.
Laxman Narasimhan – former boss of British consumer goods giant Reckitt Benckiser – joined Starbucks in March 2023
Niccol’s annual base salary will be $1.6 million. He will also have an annual cash incentive opportunity with a target of 225 percent of his base salary and a maximum of 450 percent of his base salary. If he achieves the maximum incentive, it would be approximately $8.8 million.
Beginning in fiscal 2025, Niccol will be eligible for annual stock awards worth up to $23 million.
Perhaps just as notable, Starbucks is not requiring Niccol to move to its Seattle headquarters. He is allowed to remain in Newport Beach, California, where he currently lives and where Chipotle is located.
According to a regulatory filing, Starbucks, with Niccol’s help, will set up a small remote office in Newport Beach and will hire an assistant for Niccol at that location.
Niccol travels to Seattle on the company plane when necessary and also makes other business trips as deemed necessary.
Niccol will travel to Seattle on the company plane as needed and will also make other business trips as deemed necessary
Starbucks CFO Rachel Ruggeri will serve as interim CEO until Niccol arrives in early September.
Niccol becomes the fourth boss in less than three years after Narasimhan – former boss of British consumer goods giant Reckitt Benckiser who took over in March 2023 – left with immediate effect.
During his tenure, Narasimhan faced criticism for his lack of experience in the restaurant industry, as well as criticism from his predecessor Howard Schultz, the pioneer who built Starbucks into the world’s largest coffee chain.
Schultz, who cut ties with Starbucks last September but remains one of its largest shareholders, published an open letter on LinkedIn in May criticizing the company’s disappointing earnings and what he called its “fall from grace.”
He said the company needed to shift its focus and start repairs in the US, but also face the problems.
“For any company that is seriously failing, there needs to be remorse and a renewed focus and discipline on the core,” he said. “Acknowledge the failure without any excuse.”
Starbucks’ decline has been attributed to lower demand due to price increases and boycotts related to the war in Gaza and perceived ties to Israel.
Narasimhan, who was recruited by Schultz, said at the time: “We had a tough quarter. We have to do better, and we will. As I look ahead, I’m confident we have the right strategy.”
Starbucks’ decline has been blamed on declining demand due to price increases and boycotts over the war in Gaza and perceived ties to Israel.
Mellody Hobson, who led the leadership change, said the board had started pushing for Narasimhan’s replacement “a few months ago”.
“I reached out to Brian through someone and he picked up the phone,” Hobson told CNBC.
“We thought we had an opportunity to connect with one of the biggest names in the industry, someone whose track record is just clearly proven,” she said. “He knows this industry and we thought he would be the right leader for this moment.”
Starbucks shares rose 20 percent after Niccol’s appointment was announced earlier this week. It was little changed Thursday.