According to a recent company filing, Starbucks CEO Laxman Narasimhan received a staggering $96 million in compensation during his first few months on the job. The huge payout, most of which is stock awards accounting for 94%, is among the most generous pay packages in the corporate world. It has both elicited admiration and controversy.
Although the stock-based compensation ensures that the CEO’s interests are aligned with long-term performance, the critics of the company point out that the enormous amount paid out to him after only a few months in the company may appear exorbitant when viewed against the rising tide of public discourse about income inequality and wages. According to analysts, although the pay structure is aimed at pushing Narasimhan to propel Starbucks’ future success, it does not appeal to the public.
Narasimhan, who officially became CEO in April 2023, is on record as a leader at PepsiCo and Reckitt Benckiser. His stock compensation was intended to spur Starbucks to further heights. This is also part of a bigger trend where many CEOs receive most of their pay in the form of performance-based stock options, rather than cash salaries.
The move has attracted much criticism, but Starbucks has justified the pay package as a strategic move to ensure strong leadership and drive the company’s growth in a competitive marketplace. With Starbucks continuing to recover and expand globally, only time will tell how this move will pan out in the long run.
