Starbucks has announced that Brian Niccol, the current CEO of Chipotle Mexican Grill, will take over as the new CEO of Starbucks, effective September 9.
According to The Washington Post, Niccol will replace Laxman Narasimhan, who is stepping down after just 17 months. This leadership change has caused a sharp 20% increase in Starbucks' shares, while Chipotle's shares dropped by 10%.
Starbucks Appoints Chipotle's Brian Niccol as New CEO
Niccol's compensation package is significant, totaling around $113 million. It includes a $10 million sign-on bonus, a $75 million equity grant, and an annual grant of up to $23 million starting in fiscal 2025.
In addition to a base salary of $1.6 million, Niccol is also eligible for an annual cash bonus ranging between $3.6 million and $7.2 million, depending on his performance.
Niccol will not be required to relocate to Starbucks' headquarters in Seattle. Instead, he will commute as needed from his home in Newport Beach, California. Starbucks has agreed to cover his temporary housing and provide a chauffeur during his Seattle stay.
Starbucks will reportedly set up a remote office for Niccol in Newport Beach, fully covering the costs, and he will have access to the company's plane for commuting between his home and the headquarters.
The Starbucks board is confident in Niccol's leadership, highlighting his successful tenure at Chipotle, where he led the company through significant growth. Since becoming CEO of Chipotle in 2018, Niccol has overseen an 800% increase in the company's stock price and nearly a sevenfold rise in profits.
Starbucks' board is hopeful that Niccol can replicate this success at Starbucks, especially as the company faces challenges like declining market share and growing unionization efforts among its employees.
The company has struggled with a decline in market share and slow growth, particularly under Narasimhan's leadership. During his short tenure, Starbucks' stock price fell by nearly 24%, and the company's market capitalization dropped by $32 billion.
Starbucks' Competition Challenges
Analysts have pointed out that Starbucks has not kept pace with innovation, especially in its food offerings, and its in-store experience has declined. As smaller, independent coffee shops continue to gain popularity, Starbucks has faced increasing competition.
Starbucks and Chipotle have seen growing efforts to unionize their workforces in recent years. Over 450 Starbucks locations have chosen to organize since the first successful union election at a store in Buffalo.
Chipotle has also faced its share of labor disputes, including calls for an independent audit of worker safety conditions. Niccol's experience navigating these challenges at Chipotle could prove valuable as he takes the helm at Starbucks.
In addition to his compensation package, Niccol will enjoy other perks as Starbucks' new CEO. He will have access to up to $250,000 in personal travel on the corporate jet and participate in Starbucks' executive physical program, according to Fortune.
However, he will no longer be allowed to trade coffee and dairy futures, which aligns with Starbucks' policies. Starbucks has yet to provide further comments on the leadership change or the specifics of Niccol's compensation package.
