Starbucks’ new chief executive is set to receive a pay package of up to $113m (£88m), in one of the biggest executive deals in the company’s history and four times that of his predecessor.
The American coffee chain has hired Chipotle Mexican Grill president Brian Niccol as its new CEO this week in a surprise management shakeup that ousted Lakshman Narasimhan after just 17 months.
Nicole has been offered a generous pay package for the switch, and will be allowed to work remotely from his home in Newport Beach, Calif. Starbucks has agreed to cover the costs of setting up a “remote mini-office” and a dedicated local assistant, and Nicole will be able to use the company’s jet to travel to its Seattle headquarters when needed.
Nicol, who will take the reins on Sept. 9 and become the company’s fourth chief executive in less than three years, is set to receive the huge salary largely due to a huge tranche of stock options.
His package includes a $10 million signing bonus and $75 million in additional stock options to compensate for the shares he will have to give up from Chipotle, the burrito chain he has run since 2018.
Nicole’s annual salary will be $1.6 million, and he will have the opportunity to earn up to $23 million in stock-based awards each year, in addition to a cash bonus of approximately $3.6 million based on the company’s performance.
If the contract is paid in full, Nicol’s salary will reach $113.2 million. He earned $22.5 million at Chipotle in 2023 and $17.2 million a year earlier.
The new pay deal dwarfs that of Narasimhan, who joined the company from British consumer goods group Reckitt in April 2023 and was offered a $28 million deal. Narasimhan earned $14.6 million from Starbucks last year.
Nicol’s pay deal has come to light amid renewed anger over the huge bonuses that top executives receive. It emerged this week that the pay of the bosses of the UK’s 100 largest listed companies has risen to its highest level ever, prompting calls for a “new approach” to wealth distribution.
Starbucks said Nicole “has proven to be one of the most effective leaders in our industry, delivering significant financial returns over many years.”
His appointment, announced Tuesday, is part of a broader reorganization at Starbucks, which has been trying to fend off pressure from activist investor Elliott Investment Management. Elliott wants the company to improve its performance and stock price, including by expanding its board and improving governance.
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The company’s stock price has fallen about 20% over the past five years, while the benchmark S&P 500 index has risen more than 80%. But Starbucks stock enjoyed its best trading day ever after Niccol’s appointment was announced, jumping 24%.
In July, the company failed to achieve sales that met its expectations due to weak demand in the United States and China.
Workers at Starbucks, the world’s largest coffee chain, are fighting to form a union. In February, the company agreed to a new “framework” of organization with the Starbucks Workers Union, and negotiations have continued since then. Workers have voted to unionize at more than 370 locations, but none have reached a labor agreement with the company.
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