Starbucks’ new CEO, Brian Niccol, will join the coffee giant next month but will not be required to relocate to the company’s Seattle headquarters.
In the new CEO offer letter, made public in an SEC filing last week, Starbucks said Nicol would live at home in Newport Beach, California, and commute 1,000 miles to Starbucks’ headquarters on a corporate jet.
Nicol, 50, will be paid an annual base salary of $1.6 million in his new role and will have the opportunity to receive annual cash bonuses of between $3.6 million and $7.2 million based on performance. Nicol will also be eligible to receive up to $23 million in stock-based awards annually.
Nicol successfully negotiated a similar deal when he became CEO of Chipotle in 2018.
At the time, the fast-casual chain was headquartered in Denver, Colorado, and Niccol, who was CEO of Taco Bell before joining Chipotle, lived in Newport Beach, a 15-minute drive from Taco Bell’s headquarters in Irvine, California. Three months after announcing Niccol’s appointment, Chipotle moved its headquarters from Denver to Newport Beach.
In his offer letter, Starbucks also said it would set up a remote office for Nicol in Newport Beach and staff it with an assistant of his choosing.
However, when Nicol is not traveling, she will be expected to work from Starbucks’ Seattle office at least three days a week, in line with Starbucks’ hybrid work policy, a company spokesperson told CNBC Make It.
“Brian’s primary office and the majority of his time will be spent visiting our partners and customers in our support center in Seattle or in our stores, roasteries, roasting facilities and offices around the world,” the spokesperson added. “His schedule will exceed the hybrid work guidelines and workplace expectations we require of all our partners.”
Starbucks employees will be required to work in the office at least three days a week starting in 2023.
Nicol’s arrangement highlights the bargaining power gulf between senior managers and average workers when it comes to flexibility.
Supercommuting CEOs are ‘becoming more and more common’
Raj Choudhury, a professor at Harvard Business School who studies remote work, said that while rank-and-file employees may not be able to request the flexibility to work remotely from another state, companies are making exceptions for senior executives to attract and retain top talent.
Choudhury said while there isn’t any comprehensive research on the subject, the number of CEOs “working from anywhere” is on the rise.
“This is becoming more and more common as the labor market remains competitive,” he explains, “and executives are not accepting job offers if flexibility isn’t taken into account.”
Victoria’s Secret made a similar concession last week, hiring Hilary Super of Rihanna’s lingerie brand, Fenty x Savage, as its new CEO.
When Super starts in September, he will work out of the company’s New York City office rather than the company’s headquarters near Columbus, Ohio, and will travel to Columbus as needed, according to his employment agreement.
Despite these recent examples, it remains difficult to draw definitive conclusions about CEOs’ remote work preferences.
While some CEOs, including Amazon’s Andy Jassy and JPMorgan Chase’s Jamie Dimon, have taken hard-line stances on returning to the office, other surveys suggest that bosses are not happy about ending remote work.
Choudhury sees Nicol’s deal at Starbucks as an example of a company taking a “smart risk” to acquire a star executive.
The coffee giant has been struggling this year with weak sales in its two biggest markets, the United States and China, CNBC reported. Starbucks shares have fallen 21% during the tenure of current CEO Lakshman Narasimhan.
Niccol has a track record of turning around struggling companies: As CEO of Chipotle, he helped the chain recover from a food-poisoning scandal and led restaurants through the pandemic, with the chain’s stock price up 773% during his tenure, CNBC reported.
“Starbucks based this selection criteria on their past record of supporting restaurant businesses, not on location,” Choudhury said. “I think more companies will take notice and follow suit. If they want to attract and retain the best talent, they need to embrace flexible work.”
These emerging trends could benefit desk workers who crave flexibility, Choudhury added.
“If more executives start working remotely, it may encourage middle managers to try it, because cultural change starts at the top,” he said. “This is a great opportunity for Starbucks to experiment with giving employees the same degree of flexibility they give their executives, wherever possible.”
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