The trendsetter CEO’s
Sonali Ray, writer
Brief news
- Brian Niccol, the new CEO of Starbucks, will not be required to relocate to the company’s headquarters in Seattle and will be allowed to reside in his residence in Newport Beach, California.
- Niccol will receive a base compensation of $1.6 million annually, with the potential to earn additional cash incentives and equity awards based on his performance.
- This arrangement highlights the disparity in flexibility between high-ranking executives and average employees, but it is becoming more prevalent as companies compete for top talent.
Detailed news
Brian Niccol, the newly appointed CEO of Starbucks, will not be required to relocate to the company’s headquarters in Seattle upon his arrival at the coffee behemoth next month.
According to the offer letter of the new CEO, which was disclosed in an SEC filing last week, Niccol is permitted to reside in his residence in Newport Beach, California, and travel to Starbucks’ headquarters via a corporate aircraft, which is located 1,000 miles away.
Niccol, who is 50 years old, will receive a base compensation of $1.6 million annually in his new position. Additionally, he has the potential to earn an annual cash incentive that could range from $3.6 million to $7.2 million, contingent upon his performance. In addition, he will be eligible for annual equity awards of up to $23 million.
Niccol effectively negotiated a comparable agreement upon his appointment as CEO of Chipotle in 2018.
Niccol, who resided in Newport Beach, a 15-minute commute from Taco Bell’s primary office in Irvine, California, was the CEO of Taco Bell prior to his tenure at Chipotle. The fast-casual chain was headquartered in Denver, Colorado, at the time. Three months following Niccol’s appointment, Chipotle relocated its headquarters from Denver to Newport Beach.
Starbucks also specifies in the offer letter that it will establish a remote office in Newport Beach for Niccol, along with an associate of his choosing.
Niccol will be required to work from the Seattle office at least three days per week when he is not traveling for business, as per Starbucks’ hybrid work policies, according to a spokesperson for the company, as reported by CNBC Make It.
“Brian’s primary office and the majority of his time will be spent at our Seattle Support Center or visiting partners and customers in our stores, roasteries, roasting facilities, and offices worldwide,” the spokesperson further stated. “His schedule will surpass the hybrid work guidelines and workplace expectations that we have established for all partners.”
Since early 2023, Starbucks employees have been obligated to work from the office on a minimum of three days per week.
Niccol’s arrangement emphasizes the disparity in bargaining power between high-ranking executives and the average employee in terms of flexibility.
The supercommuting CEO is becoming “more prevalent.”
Although rank-and-file employees may not be able to request the flexibility to work remotely from a different state, companies make exceptions for senior-level employees in order to attract and retain top talent, according to Raj Choudhury, a professor at Harvard Business School who specializes in remote work.
Choudhury asserts that there is an increasing number of CEOs who are “working from anywhere,” despite the absence of comprehensive research on the subject.
“It is becoming more prevalent due to the fact that we are still in a competitive labor market,” he explains. “Executives are declining job offers in the absence of flexibility.”
Hillary Super, the former CEO of Fenty x Savage, Rihanna’s lingerie brand, was recruited as Victoria’s Secret’s new CEO last week. This was a comparable concession.
According to her employee agreement, she will be required to travel to Columbus as needed to work from the retailer’s New York City offices when Super commences operations in September, as opposed to its headquarters in the vicinity of Columbus, Ohio.
It is still difficult to draw any definitive conclusions about CEOs’ preferences for remote work, despite these recent instances.
Despite the fact that certain CEOs, such as Andy Jassy of Amazon and Jamie Dimon of JPMorgan Chase, are adopting strict return-to-office policies, other research has suggested that managers are not particularly enthusiastic about the decline in remote work.
Niccol’s arrangement at Starbucks is viewed by Choudhury as an illustration of a company that has taken a “smart risk” in order to secure a prominent executive.
CNBC reports that the coffee giant’s performance has been hindered this year by sluggish sales in the United States and China, its two largest markets. Starbucks shares have declined by 21% during the tenure of its current CEO, Laxman Narasimhan.
Niccol has a proven history of successfully reviving troubled organizations. In his capacity as CEO of Chipotle, he oversaw the chain’s recovery from the foodborne illness scandal and guided its restaurants through the pandemic. According to CNBC, the restaurant chain’s stock experienced a 773% increase during his tenure.
Choudhury asserts that Starbucks’ selection process was predicated on the individual’s prior success in fostering restaurant-based businesses, rather than their geographic location. “I anticipate that additional organizations will recognize this and adopt similar policies: In order to recruit and retain the most talented employees, it is imperative to be amenable to accommodating work arrangements.”
In addition, Choudhury suggests that this emerging trend may be advantageous for desk workers who desire flexibility.
“He posits that the more C-suite leaders who begin working remotely, the more likely it is that middle managers will be motivated to begin experimenting with it, as culture changes begin at the top.” “This presents an excellent opportunity for Starbucks to experiment with providing employees with the same level of flexibility as it provides to its executives, whenever feasible.”
Source : CNBC News
