Starbucks’ new CEO Brian Niccol is expected to receive more than $100 million in his first year at the company, in one of the largest hires on record in the United States.
As an added benefit, Niccol won’t have to move from his home in Newport Beach, California, to Seattle, the headquarters of the global coffee chain.
Starbucks announced Tuesday that Niccol would replace Laxman Narasimhan, who abruptly resigned after spending just over a year in the top role following public criticism from the company’s founder.
Niccol, who has been praised for his successful turnaround at burrito chain Chipotle, will take the reins as president and CEO of the coffee giant on Sept. 9.
“He’s almost considered the LeBron James or the Tom Brady or the (Lionel) Messi of the restaurant industry right now,” Bernstein analyst Danilo Gargiulo said when news of his hiring broke.
Brian Niccol will take over as president and CEO of the coffee giant on September 9.
Niccol became one of the most sought-after corporate executives in the world after establishing a track record of successfully turning around struggling companies, including Taco Bell and, more recently, Chipotle.
He took over the top job at the California chain in 2018 as Chipotle was plagued by a series of foodborne illness outbreaks that had sickened more than 1,000 of its customers over several years.
Chipotle’s revenue has nearly doubled since his arrival after he drove product innovation while instituting employee benefits such as a program that pays employees’ college tuition costs at certain schools.
Starbucks is counting on Niccol to revive its sales and reestablish the company as a destination where customers are willing to pay premium prices for its products.
In a filing with the Securities and Exchange Commission late Wednesday, Starbucks said Niccol, 50, will receive a $10 million cash bonus as well as $75 million in equity to offset what he is losing from his abrupt departure from Chipotle.
The equity component of your salary package will vest over time and is contingent upon meeting performance targets.
If Starbucks meets those goals and other targets, his salary could easily top $100 million in his first year.
Laxman Narasimhan, former head 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 the opportunity to receive an annual cash incentive that is targeted at 225 percent of his base salary and a maximum of 450 percent of base salary. If he achieves the maximum incentive, it would be about $8.8 million.
Beginning in fiscal year 2025, Niccol will be eligible to receive annual equity awards of up to $23 million.
Perhaps just as notable, Starbucks is not requiring Niccol to move to Starbucks headquarters in Seattle, saying he can remain in Newport Beach, California, where he currently lives and where Chipotle is headquartered.
According to a regulatory filing, Starbucks will help set up, with Niccol’s assistance, a small remote office in Newport Beach and the company will hire an assistant for Niccol at that location.
Niccol will travel to Seattle as needed on company aircraft, in addition to undertaking any other business travel deemed necessary.
Niccol will travel to Seattle as needed on company aircraft, as well as undertake any other business travel deemed necessary.
Starbucks CFO Rachel Ruggeri will serve as interim CEO until Niccol arrives in early September.
Niccol will be the fourth boss in less than three years after Narasimhan, former boss of British consumer goods giant Reckitt Benckiser who joined in March 2023, left with immediate effect.
Throughout his tenure, Narasimhan faced scrutiny 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 severed ties with Starbucks last September but remains one of its largest shareholders, published an open letter on LinkedIn in May criticizing disappointing earnings and what he called the company’s “fall from grace.”
He said the company needed to renew its focus and start fixing its home in the United States, in addition to addressing its problems.
“In any company that makes serious mistakes, there needs to be repentance and a renewed, disciplined focus on the essentials,” he said. “Mistakes need to be acknowledged without the slightest excuse.”
Starbucks’ decline has been attributed to weaker demand due to rising prices and boycotts related to the war in Gaza and alleged links to Israel.
Narasimhan, who was recruited by Schultz, said at the time: “We had a tough quarter. We need to do better and we will. Looking ahead, I’m confident we have the right strategy.”
Starbucks’ decline has been blamed on lower demand due to rising prices and boycotts linked to the war in Gaza and alleged links to Israel.
Mellody Hobson, who led the leadership shake-up, said the board had started pushing to replace Narasimhan “a couple of months ago”.
“I made a proposal to Brian through someone and he took the call,” Hobson told CNBC.
“We thought we had an opportunity to work with one of the biggest names in the industry, someone whose track record is clearly proven,” he said. “He knows this industry and we thought he would be the right leader for this moment.”
Starbucks shares rose 20 percent when Niccol’s appointment was announced earlier this week, and were little changed on Thursday.