Starbucks spent nearly $113 million to steal its newest CEO from Chipotle. Critics have called out this compensation package, and the CEO’s added benefit of being able to work from home, as a demonstration of the company’s inequality problems.
Starbucks’ Newest Leadership Change
Starbucks recently announced a major change in its leadership team. Brian Niccol will be joining the company as its new CEO.
The New CEO
Starbucks had to work hard for Niccol; he was a successful CEO in his position as CEO of Chipotle Mexican Grill. He managed to revamp the brand – a feat Starbucks will likely also be looking for.
Experience with Struggling Brands
Niccol has an impressive track record of helping struggling brands to turn themselves around. This has made him an attractive option for Starbucks.
Out With the Old
The former CEO, Laxman Narasimhan, had only been with the company for less than a year. His removal was abrupt, but likely caused by issues with declining sales and pressure from investors wanting to see certain activism.
Leadership Change
The coffee market is also volatile and this, combined with many internal issues, pushed Starbucks to consider bringing on a new CEO with experience adjusting to situations and taking on challenges like this.
Fourth Boss in Three Years
This recent shift in leadership marks the company’s fourth boss in less than three years. Starbucks has been working to improve its business model and reputation, with Niccol coming in to hopefully make those changes.
Niccol’s Pay
Brian Niccol’s compensation package has caught public attention. With a total nearing $113 million, Starbucks has tied its hope for future performance with a high CEO compensation.
Stock Options
The majority of Niccol’s payout has been in the form of stock awards. This allows the CEO to benefit more depending on how financially well the company performs in the stock market.
Base Pay and Bonuses
Niccol’s base pay sits at $1.6 million, which is little compared to bonuses, grants, and stock options. He will continue to get cash bonuses depending on Starbucks’ performance in the upcoming years.
What does the Average Employee Make?
This compensation package stands in stark contrast with how much the average Stabucks employee makes. Baristas make around $30,000 per year, while higher level directors can make $190,000. Both salaries are much lower than Niccol’s entry salary.
Employee Policies
In the past, Starbucks has received praise for its employee benefits. Health insurance and education assistance are just two benefits that have been popular; however, many employees have complained about overall low wages.
Controversies Over Labor Practices
The company has also faced criticism because of its labor practices. Unions have spoken out against the company and compared its treatment of the CEO versus its seasoned workers.
The CEO Can Work Remotely
Another eyebrow-raising benefit is that Niccol will have a new remote office created in Newport Beach, California, with an assistant. This benefit is not extended among most Starbucks employees.
General Remote Work Policies
While some of the corporate employees have some remote work options, there has been a shift since the pandemic toward office work. Customer-facing roles have limited flexibility in where they can work.
Niccol’s Leadership Approach
Niccol’s past experiences show that he relies on data to fuel his plans and he focuses heavily on improving the customer experience. These will likely be the direction for Starbucks’ future as well.
His Vision for Starbucks
Starbucks is expected to focus its efforts on innovating and expanding its digital footprint. These methods could bring back some lost customers and sales.
Some of the Biggest Challenges
Competition, labor disputes, and shifting consumer preferences are just a few of the challenges that Niccol will need to address in the future.
Facing Boycotts
He will also need to grapple with the boycotts that have hit Starbucks in the past year, related to ongoing political events and support. Niccol’s approach may be crucial for the company’s future growth.
Executive Trends
Performance-based rewards are on the rise. Many companies have moved away from high base salaries and toward rewarding leadership for their successes.
Impact on Employee Morale
Large differences between CEO pay and average employee wages can affect company morale and create tensions within the company.
The Growing Pay Gap
Niccol’s compensation package has been met with mixed public reactions. Some have praised his success and track record, while others have criticized the amount of money given to someone in this position.
The Next Steps
Niccol is under pressure going forward, as he tries to direct Starbucks into its next phase. He will need to find balance between the growth of the company and the satisfaction of employees.
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