SEATTLE — Starbucks will pay out millions of dollars to former CEO Laxman Narasimhan, who was replaced earlier this week.
Under the coffee giant’s severance plan outlined in the 2024 shareholders statement, CEOs are paid twice their base salary and target annual cash bonus, in addition to a pro-rata portion of their bonus for the year based on actual performance, COBRA insurance coverage and outplacement services.
Narasimhan’s base salary was $1.3 million with an annual cash incentive opportunity of between 200% and 400% of his base salary, according to the offer letter on Narasimhan’s employment.
In Starbucks’ annual shareholders meeting documents, COBRA coverage was listed at up to $37,620, and outplacement services were valued at $25,000.
Calculated together, Narasimhan could net between $7.8 million and $13 million for his base salary and annual cash incentive, plus the additional compensation.
Half of the cash severance is paid out within 10 business days of termination, and the rest is paid 18 months after, according to the severance plan.
Narasimhan was not in the role long. He spent a little over a year leading Starbucks before the company announced Aug. 13 that he would step down. Starbucks named Brian Niccol, the chairman and CEO of Chipotle as Narasimhan’s replacement.
Starbucks’ revenue dropped 2% in the first three months of 2024, which was the first quarterly sales decline for the company since the end of 2020.
Niccol could earn more than $100 million in his first year, taking incentives into account. Niccol’s base salary will be $1.6 million with the opportunity for cash incentives. He also received a $10 million signing bonus and equity awards totaling $75 million.
