Starbucks cracked open its piggy bank to lure Chipotle CEO Brian Niccol as its next leader.
Niccol will receive a compensation package in his first year worth up to nearly $117 million. That includes a $1.6 million base salary, a $10 million signing bonus, up to $7.2 million in annual cash incentives, a targeted $23 million in annual stock awards, and a one-time targeted $75 million replacement equity grant (this compensates the employee for the equity they are forfeiting by leaving their current job).
He won’t be required to relocate to Starbucks’ headquarters in Seattle, Washington, according to the offer letter. Instead, the company will set up and pay for a small remote office in Newport Beach, California.
Niccol’s tenure as CEO and chairman will begin September 9. This leadership change comes as Starbucks faces declining sales and heat from an activist investor. The unexpected move caused Starbucks’ stock to surge more than 20 percent.
READ MORE: Starbucks’ Hire of Brian Niccol Will Send ‘Ripples’ Through Industry
Niccol, known for transforming Chipotle, is expected to bring similar success to the coffee giant. He succeeds Laxman Narasimhan, who was let go after stepping into the role in March 2023. Until Niccol’s start date, CFO Rachel Ruggeri will serve as interim CEO, and board chair Mellody Hobson will become lead independent director.
Starbucks has been struggling with sliding U.S. same-store sales, with a 7 percent drop in Q2 and continued decline in Q3. The brand has faced challenges from macroeconomic pressures, which have led to a decrease in customer traffic despite a slight increase in average ticket size.
Also, in July, activist hedge fund Elliott Investment Management reportedly acquired a significant stake in Starbucks, pressuring the company to boost its stock price through potential changes like slowing down unit growth and reallocating capital, particularly in China. Elliott managing partner Jesse Cohn and partner Marc Steinberg released a joint statement Tuesday calling the hiring of Niccol “a transformational step forward for the company.”
William Blair analyst Sharon Zackfia said Niccol’s hire will “send ripples throughout the industry.”
“Still, we expect Niccol to stick to what worked at Chipotle—honoring the brand, focusing on operations/speed, amplifying marketing messaging, and implementing a strict stage-gate process for new product innovation,” she said. “Notably, if Chipotle is any guide, Niccol will likely enter Starbucks in a listen-and-learn mode and is unlikely to make seismic changes in the early innings of his leadership.”
Niccol’s time at Chipotle was marked by substantial growth, nearly doubling revenue and increasing profits sevenfold. His digital strategies and focus on employee benefits played a key role in revitalizing the brand. Before Chipotle, Niccol held leadership roles at Taco Bell and Pizza Hut, where he also drove significant growth and innovation.
As he transitions to Starbucks, Chipotle COO Scott Boatwright will serve as interim CEO. Additionally, Chipotle’s CFO Jack Hartung, who recently announced his retirement plans, will remain indefinitely to support the transition as president of strategy, finance, and supply chain.
