A “venti-sized turnaround challenge” is how The Seattle Times described the commercial task ahead for Starbucks’ new CEO Brian Niccol. Others focused on a different issue: rebuilding trust with staff and shareholders after his terms of his employment were revealed in an SEC filing.

The coffee company agreed to an unusual set of riders in when they hired Niccol: instead of moving to its famous Seattle HQ, he will work from a remote office in Newport Beach, a particularly nice part of coastal California’s Orange County, where he happens to live. What’s more, he will commute the 1000 miles to Seattle, as and when required, by corporate jet paid for by the company.

Niccol’s base salary is US$1.6m per annum with a performance-related bonus potential of $3.6m -$7.2m; annual equity awards worth up to $23m; and an equity replacement grant estimated at $75m to $80m paid over a three-year period to cover the value of stock he gave up to join Starbucks. He also receives a $10m sign-on bonus.

His compensation is around 75% higher than his predecessor and makes Niccol one of the highest-paid CEOs in the US. It also skews the company’s already unhealthy CEO-to-worker pay ratio.

Leaving aside the money, eye-watering even by US standards, and the carbon footprint implied in this arrangement, Starbucks desk-based employees have been required to show up in the office for a minimum of three days a week since early 2023.

Unsurprisingly, many of them took to X and other platforms to call out this apparent hypocricy; cue eye rolls and outrage emojis.

“Just a terrible decision by the Starbucks Board (and this new CEO)”, said one. “If everyone has to be in office, that should mean everyone”, said another. The Financial Times quoted Samuel Johar, chair of the Board advisory firm Buchanan Harvey: “It is not wise and sets a terrible example. It smacks of one rule for CEOs and another for everyone else.”

Peter Cappelli, professor of management at The Wharton School, had a stark warning: “Good luck trying to get anyone else to come into the office if your CEO doesn’t have to do it.”

Critics questioned how Niccol could ever build trust with the workforce in the face of this arrangement, and his ability to positively impact and improve the organisational culture of the company while working remotely.

Niccol has form: he moved the HQ of his previous company, Chipotle, from Denver to Newport Beach just three months after taking over there as CEO.

Given the obvious PR problems embedded in the deal, who in the world thought this was a good idea for Starbucks?

For one, it is a sign of just how desperate the coffee chain was to sign Niccol up.

Starbucks’ performance has struggled this year in the face of weakening sales both in its home market and in China. He will be the company’s third CEO in less than three years. Its previous CEO, Laxman Narasimhan, lasted only 17 months, during which its shares fell by 21%.

Niccol, by contrast, is an industry rock star in the retail and restaurant sector with an undisputed track record of turnaround.

At Chipotle, which he took over in March 2018, he engineered the chain’s recovery from its multiple contaminated food scandals, and successfully led the restaurants through the covid pandemic. Chipotle’s stock rose by a whopping 770% during his tenure – the key factor that inflated his  Starbucks deal. Prior to Chipotle he was a successful senior exec and CEO of Taco Bell.

It seems that Starbucks was prepared to throw almost anything at Niccol to get him across the line, with the difficult optics of the deal just inevitable collateral damage for which he, and the company, are unapologetic.

According to The Wall Street Journal, negotiations were led personally by the Chair of the Board, Mellody Hobson, and the decision-making circle was kept tight even within the Board. Activist investor groups and major shareholders were not consulted in advance. Reportedly Howard Schultz, three-time former CEO of the company and still a major shareholder, was not initially brought into the discussion.

So - is it worth letting your new CEO dictate his or her terms, no matter how eyecatching, expensive, counter-cultural or outrageous they might seem to ordinary workers? The answer is … probably.  

Niccol was able to name his price as a rising star because he has an extraordinary track record of success as an experienced CEO that is relatively rare and therefore highly prized. As Hobson said when interviewed by CNBC: “Brian has been there and done it.”

With great reward comes greater scrutiny and expectation. The Starbucks Board and investors will be watching closely and Niccol won’t have much time to start demonstrating his famed turnaround skills.  

But if he can sprinkle even some of the commercial stardust he brought to Chipotle over the tired, declining coffee chain which has badly lost its way then - yes, he will be worth it. Niccol will of course need to deliver the results that Starbucks is seeking. Even while WFB.