The new chief executive of Starbucks will receive a compensation package potentially worth more than $100 million, with permission to work remotely from California.
The Seattle-based company disclosed the pay deal for Brian Niccol, its incoming chief executive who turns 50 on Friday, after removing Laxman Narasimhan, 57, from the role on Tuesday in a reaction to declining sales and pressure from Elliott Investment Management, the activist investor.
Starbucks has agreed to pay for a remote office with an assistant for Niccol in Newport Beach, California, it disclosed in regulatory filings.
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The offer letter for the chief executive position states that he is not required to relocate almost 1,200 miles to Seattle, Washington. However, Niccol has agreed to commute from his home to the company’s headquarters “as is required” to perform his duties and responsibilities. Starbucks will pay for a driver and for any temporary housing required while he is working in Seattle.
Niccol, who was poached from Chipotle Mexican Grill, the restaurant chain, will receive a $10 million starting bonus and an additional $75 million in equity grants designed to pay out over time, to compensate him for awards that he would have received if he had remained at Chipotle.
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He is due to start the job at Starbucks on September 9 on a base salary of $1.6 million a year and an annual cash incentive opportunity at a target of 225 per cent of his base salary and a maximum 450 per cent of base pay. Niccol will be eligible to receive annual stock awards with a target value of $23 million. The contract will be worth about $113 million if he meets the targets set for him by Starbucks.
Niccol’s flexible working arrangements come after Starbucks’ corporate employees living within commuting distance were told last year that they must work from the office for at least three days a week.
Howard Schultz, who was interim chief executive at the time, told staff that the policy was “critical to our business success”. He said that the company’s culture depended on “rituals”, including “coffee tastings to storytelling to seeing how our design experiences look end-to-end by putting the work up on a wall”.
A Starbucks spokeswoman said that Niccol’s primary office will be in Seattle, where he will spend the majority of his time.
Under Niccol’s leadership since 2018, Chipotle’s revenue has nearly doubled and its share price had risen by almost 800 per cent before the announcement of his departure.
Starbucks’ shares climbed by 24.5 per cent, or $18.87, to close at $95.90 in New York after Niccol’s appointment was unveiled on Tuesday. On Thursday afternoon they stood at $94.19.