Every public company has to disclose it, and it is easy to find in the Starbucks Corp. (NASDAQ: SBUX) proxy: “The ratio of our ceo’s annual total compensation to our median employee’s annual total compensation for fiscal year 2024 is 6,666 to 1.” That is the highest number among S&P 500 companies that have released proxies.
The median pay of a Starbucks worker was “$14,674, including salary and Bean Stock awards.” This is for a part-time barista in the United States. CEO Brian Niccol made $97,813,843. Part of that was to offset compensation he would have received at his previous job at Chipotle Mexican Grill.
The figure shows what a struggling company may pay for a CEO who the board feels can turn the company around. Starbucks had suffered from falling same-store sales, unhappy customers, and falling stock.
Niccol has already begun implementing a plan to improve Starbucks results. He eliminated some items from the coffee store’s menu and committed to customer wait times of no longer than four minutes. He fired 1,100 corporate workers and said some open jobs would not be filled.
Earlier in his tenure, Niccol set out broader plans. He said the company would return to its roots as a “community coffee house” and “empower” baristas to handle customer orders better. Some evidence indicated that customers have waited longer than 20 minutes to get their orders.
Niccol has a tall hill to climb. Starbucks competes with McDonald’s, Dunkin Donuts, and local coffee houses in the United States. In China, Starbucks’s second-largest market, it competes with much larger Luckin Coffee.
The compensation ratio also shows how low Starbucks pays in-store workers. Baristas can make as little as $15 per hour.
Niccol will have to work miracles to justify such a huge pay package.
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