Starbucks’ decision to change CEOs last year is costing the company a lot of money.
The Seattle-based coffee shop giant awarded more than $117.3 million in various compensation to the two chief executives it employed last year, Laxman Narasimhan and Brian Niccol, according to a federal securities filing on Friday.
Niccol, the former Chipotle CEO lured to take over for the ousted Narasimhan, received a pay package worth $95.8 million, almost all of which was in the form of sign-on bonuses and stock awards the company gave him to take the job.
But Starbucks also gave Narasimhan $21.5 million, including $14.4 million in stock awards and $5.9 million in other compensation, most of which is in the form of a $4.2 million severance payment. He also received a portion of the bonus he would have received had he remained chief executive the full year.
Narasimhan is due another $4.2 million in cash severance 18 months following his termination date, according to the filing.
The filing puts a huge price tag on the cost Starbucks paid to make the CEO change last year, less than 18 months after Narasimhan was elevated to the top job following a six-month introductory period. Niccol was handed the chairman title, in addition to CEO—something Narasimhan did not get—and was largely handed the keys to the company to change as he saw fit.
Niccol in the five months since then has unleashed a flurry of changes, from eliminating menu items like Oleato to instituting a new code of conduct to announcing an oncoming set of layoffs as part of a reorganization of the company’s global support functions.
(Read about how much Starbucks has done since Niccol took over.)
The compensation committee of the board, along with its independent members, “strongly believe that Mr. Niccol’s leadership is necessary to drive sustainable, long-term growth at Starbucks,” the filing said, noting the 20% increase in Starbucks stock following the announcement of the leadership change.
Much of Niccol’s compensation last year was in the form of replacement grants of stock, given to the new CEO to replace the value of shares he forfeited when he opted to leave Chipotle. He is also getting temporary housing in Seattle, use of corporate aircraft to take him to and from Seattle from his California home.
He received $5 million of what will be a $10 million signing bonus, the rest of which is due next month.
Narasimhan’s compensation, meanwhile, included nearly $700,000 in security modifications to his home, “due to the occurrence of increased security risk incidents” there, according to the filing.
UPDATE: This story has been updated to clarify that the CEOs received pay packages.
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