Take a closer look at Starbucks CEO's contract, which covers his commute by jet
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Imagine that is is getting 10 millions as sign-in bonus, just because he joins. When it easily represent a thousand years of work of a Barista that is the one really working hard every day to bring the cash in.
Sure, the CEO work value is important, but not that multiple thousand years of employees.
I like to translate such a CEO compensation into the number of products that you have to sell every year just to cover for the pay of this single person.
Here if we think something like 5 to 15 millions of dollars per year, and a Starbucks drink is probably sold around 7 dollars:
With that, employees have to sell around 710 000 to 2 142 000 drinks per year just to pay a standard year of this guy. My brain has hard time comprehending such a number.
Why not? Because you find it personally distasteful?
What multiple is OK? If it’s not 1000 is it 999? If not 500 then 400? If not 100 then 25?
Instead of downvoting, try answering…
Beside that, why travel to be in an office, so doing the same thing he do at home? It's not efficient, it's stupid and stupid thing done for political reasons, like justify RTO because big corps need cities while humanity today need the opposite, could not led to anything than bad lands and dire scenarios.
I take that as a proof we are essentially in a falling, failed society, where we lost the substantial propulsion force, industry and open research. Or this change quickly AND SUBSTANTIALLY or we will end up like any other failed empire before, in dire conditions.
Indeed what do you think reading about someone who works from home most of the time, but took a jet to be a 1000km from home some day per week to show up in the office, something clearly not technically needed since office works is still at a desktop, not physical conference, not factory inspections or something like that. Hard to talk about something else.
Not based on their performance or the value they can be measured to add, nor comparing against any sort of alternative structure that might be more efficient, but simply because they deserve it for their hard work ensuring the company is operational and ever-growing.
Indeed, really it should be the case among all companies. And if employees dislike it, they should simply try to employ themselves and join in on the action; so often are people simply lazy whiners who should go make their own profitable business before rent's due.
Actually, in retrospect, the CEOs should probably leave some surplus for the landlords to share -- without their herculean work, how would so many have a home to live in?
Apparently the average store sells around 500 drinks a day.
That’s 9 million drinks per day just in the USA. 19 million globally. So it’s the first couple of hours, on one single day, of the combined US stores.
Not arguing either way about the comp this guy is getting - but like you say, the numbers are mind boggling when you begin to look at them!
I have worked for regional orgs making a fraction of that revenue where the CEO had a corporate jet.
Not only does the CEO get the privilege of choosing whether he wants to relo to Seattle (with a chartered jet for transportation, no less), but Starbucks is also willing to expense up to three months of temporary residence while he's in Seattle until he finds "permanent secondary housing", at which point Starbucks will expense relocation costs.
The average worker that moved to Boise during COVID? RTO, on your dime.
The offer letter also allows the CEO to use the jet for personal travel, up to $250k/year (which is negotiable). Keep in mind that any travel he does while he's with vendors, suppliers, corp customers, etc counts as business travel that hits various corporate budgets and DOES NOT count towards this limit. So if he's into golf and wants to fly himself and his friends to Augusta or something, that's covered by Starbucks (and can also be considered a business expense depending on who's with him; see the previous sentence).
Meanwhile, an employee (that isn't in Sales) who wants to fly Economy to a conference FOR WORK within the continental US has to charge the entire thing against their training budget (usually less than $3000) and, in some cases, provide evidence that they were there.
And people on here wonder why founders, by and large, don't make startups for the love of it anymore.
I agree with the internet here; this is bullshit.
So some PMs, SWEs, HR workers, and accounting folks are butt hurt? They can quit and find remote work for another company.
It is mostly about maintaining a specific kind of CEO that makes investors and boards comfortable.
So perpetuating bias and uniformity more than performance.
It is my understanding that this is the guy who Introduced Taco Bell tacos with a Doritos shell…
… which is pure, unalloyed genius.
My god I want to kiss their marketing team.
With that kind of a CEO you have to bend over backwards to poach them (eg. Making them Chair and CEO - very rare for non-founder CEOs to be granted this role)
Starbucks is simply extremely desperate to have good leadership after Laks didn't fit in well.
Food Safety wise absolutely.
Menu Diversity wise absolutely not.
Pre-Niccols, Chipotle gave more leeway to restaurants to modify the menu in non-standard manners as well as play around with sizing and with limited corporate oversight.
This was great for customers, but the limited oversight and lack of standardization lead to an E Coli and Salmonella breakout at a handful of Chipotle branches, which collapsed customer confidence, the Chipotle stock, and became a massive PR nightmare.
When Niccols was brought in, corporate cracked down on customer option and diversity in order to better manage the risk profile.
Standardization is great for margins by minimizing risk and overhead, but this comes at the expensive of diversity (every consumer likes a high touch sales cycle).
Great observation!
Different industries have different margins. High margin industries give breathing room for stronger Product-Market Fit to emerge. PMF forces companies to try and optimize for customer satisfaction, and protects against commodification by keeping customers happy.
On the other hand, in industries with low margins (eg. Restaurants), commodification is extremely high so penny pinching is critical in order to manage your operating costs. Furthermore, you will be dependent on outside investors to raise capital, so Investor Relations becomes critical.
According to the article roughly half of public companies have the same person as Chair and CEO. They cite this [1] to support that. I don't think there are enough CEO founders to account for a majority of those.
[1] https://corpgov.law.harvard.edu/2024/01/18/2023-disclosure-p...
Also, the CorpGov blog (love it btw - highly recommend RSSing it) also shows the same trend over the past several years - that companies increasingly split the CEO position and Chair position.
And as an investor, I tend to demand that unless the CEO is an absolute rainmaker due to conflict of interest, and Sbux's closest competitors (Dunkin's and RBI) do the same split.
Reportedly 28 flights for about 80 k€ total.
"Peanuts" as they say here in Germany but it became a big deal after Arcandor went bancrupt. Thomas Middelhoff was in the end convicted of embezzlement and tax evasion (the flights were part of the trials but not the main one).
Having read the article, what’s your best guess?
Companies (F500s and below) are increasingly moving away from this for efficiency and cost reasons, but I agree with you that it's a bit of a nothingburger.
Meanwhile the same HNers complaining about Niccols contract are the same ones who oppose the unrealized capital gains tax proposal that literally only affects people with $100M and above in undeployed capital
And for what? So politicians can spend it on some photo-op project for themselves? Maybe sending "aid" to other countries (bullets and bombs)? Using it to spy on it's own citizens and quell dissidents? Surely individuals can on average invest the money more productively.
You don't even have a moral argument for that stupid idea. Just a political belief.
Starbucks pretends to care about the environment and sustainability much more than most. Or at least they used to, he may dial that back since his commute will be mentioned in news articles for at least the next few years.
You might start with 5 or so candidates and then whittle it down to 1 or 2 that are the right person for a job. These people are already wealthy with all that goes along with it and the idea of relocating could be a hard ask. From a successful CEO's perspective, it's probably much easier for them to land another gig that caves to their demands than the other way around.
At this comp level you could say it's similar to a sports star that gets traded to another team, and it is in a way, but that's part of what comes along with being someone like that... in the span of 20 years they may have to uproot their life 3-4x. Their career even starts off like that, where they get selected to a team and boom, they have to move to somewhere they may have never even visited before their life even gets somewhat calcified by having generational wealth.
It’s pretty clear (by looking at actions, not words) that nobody cares about being insanely wasteful and polluting.
Everybody believes some other person is being insanely wasteful and polluting but their lifestyle isn’t as bad so they don’t have to change.
If you need to travel, for instance to expect a new remote production site, a potential acquisition, getting to know well something up somewhere where you have interests, it's not wrong at all. Travel just to show up in the office, like a religious act, a ritual probably to justify RTO policies needed by the company to stay alive not because they need people in the office but because they live on cities and with WFH as the default, having already lost industries with '80s globalization, cities are simply dead with their Barnum circus including therein Starbucks that have no substantial reason to exist in business without the "ritual, polite, city-stile suit and tie/tailleur" way of living.
This act means a thing: Starbucks is a no future company, desperately attached to a past model that can't exists anymore, so having no substantial reason they switch to rituals, imposing them on their own, chiefs included, to trying keeping up.
My unproven response is that's simply a ritual because Starbucks will die without modern cities, or will die without mid/high income office workers with a certain mindset who like being in places like Starbuks. A cohort of people who will change mindset if WFH.
Did you see the impact of the "covid" switch on airlines, hotels NOT due to the lack of tourist but due to the change in working travelers, with conferences moved to remote meeting, business trips much reduced due to remote meetings and so on? That's the point: could Starbucks live without the office, not it's own office, but the office model, or the modern city model, since most factories are not in cities anymore and in modern city the economy, at least in the west is essentially driven by the tertiary sector and could such modern city model live?
My personal take it's a double no. I expect cities slowly evolve in ghetto's for poor and desperate people, a cohort not likely to buy Starbucks, and so despite the substantial ritual of "being in an office at least some days per week", their business model is doomed IMVHO, not tomorrow morning, things do change slowly, but in not much years in the future anyways, rituals do work only a bit, if the economy underneath is flawed they can keep things up for a bit more, but not save the game.
Plenty of people go to Starbucks that don’t live in big cities. Lots of rural people love SB and those who live in towns of 20-30k or less even.
“ Did you see the impact of the "covid" switch on airlines, hotels NOT due to the lack of tourist but due to the change in working travelers, with conferences moved to remote meeting, business trips much reduced due to remote meetings and so on?”
Yes and it was a shame because we never should have shutdown.
“ A cohort of people who will change mindset if WFH.”
People still went to Starbucks during the shutdown.
People in small or medium cities I do not know, but rural people I doubt for a simple reason: where is SB outside cities? To sustain their costs they need a certain size, not available in spread area, while the small Old Joe pub perfectly can.
> Yes and it was a shame because we never should have shutdown.
I agree about the shutdown, but I'm not talking about it but SINCE it or the fact many realize that there is no damn need to meet in person for countless of activities from the till today simply decide there is no sense doing in-person conferences and so on. That's the impact I'm talking about, of course airlines for cargoes have compensate much of the loss because we still need to move goods for a distance that a cargo is the cheapest not only the fastest option, tourism still exists (and that's perfectly fine) but no need to move for many business activities.
> People still went to Starbucks during the shutdown.
No doubt, but when you decide to leave the city, perhaps a very expensive and even very small apartment for a home in a nice place with plenty of nature, a nice garden, a nice veranda depending on the climate, why going to a luxury bar when you can have it at home, without the need to dress and with anything you like done as you like? Restaurants it's another thing, you go to eat something you do not typically cook at home, but a bar? I'm Italian, living in France, my cappuccino is definitively better than a SB one, I do not need to register myself, I only need the good roasted coffee and some sufficiently fat milk. Why bother to get dressed and go somewhere if I can just open a door and have a better alternative? In a dense city, full of noise, things are different but in nature with plenty of space I can have friends at home, outside, inside, in both in total comfort.
Who cares if you're eating at Per Se when you're stuck with other people vying for your job or trying to push their agenda.
You have almost no time for personal enjoyment, and you're almost entirely stuck with coworkers so you can't let loose.
C-Suite and C-Suite adjacent end up working 60-80 hour weeks, and you have to be always on because that is what the role entails
> I'm sure can arrange to go to Europe "for work"
CEOs report to boards, and we ask their C-Suite peers about each other and any issues.
And even before it could reach that level, the CFO would absolutely push back on a frivolous expense like that.
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Best bang for your buck between luxury and free time is Staff/Principal Engineer - you earn enough that you can afford to take fancy vacations, but you are still an experienced IC so you can shop around for jobs if god forbid you lose yours, and you aren't expected to work most weekends
When they lump in travel, personal appointments/meals, and exercise as "work". I work that much when you add those in too
"You will be eligible to use the Company aircraft for (i) business-related travel in accordance with the Company’s travel policy, (ii) travel between your city of residence and the Company’s headquarters in Seattle, Washington and (iii) your personal travel in accordance with the Company’s policies, up to a maximum amount of $250,000 per year, which amount will be based on the aggregate incremental cost to the Company."
> For his commute, he'll be covering the 1,600km each way via corporate jet.
No mention of how often he'll make that trip. One might read the requirement of "in the office three days each week" and infer these would be weekly trips, but there's no support given for this inference in TFA.
...which gives the article a distinct air of outrage chum. Instead of reporting on what someone is doing, it is trying to stir up resentment about what someone might do, based on their employment contract?
I haven't eaten there in...Six years now? Maybe once and I used to be multiple times per week.
Get ready for enshittification, Starbucks customers
Good for hitting your CEO stock options and leaving a smoking carcass of company afterward.
Personally, I’d rather not spend almost all my waking hours at work, most of my life.
Eight hours of sleep is generally sufficient for most people. Personally, I consider physical activity at the CEO level to be part of their work time.
It’s important to note that, motivation-wise, running a company is very different from being a worker at a company under a manager. From experience running my own (very small) company, its very easy to put in long hours for something that’s your own, something where anything that goes wrong is your responsibility, something where success is defined by and depends on you. It’s much harder to motivate long hours as a regular employee, especially if the extra hours aren’t your choice and/or are the result of problems other people created. Being in charge is not for everyone, but for some, sixty hours a week is relatively light.
I’ve been in a hotel/resort for the past week. I didn’t take time off or notify my employer, though my direct manager is aware. No one cares, because my work still gets done.
For example, the wall street journal had this infamous infographic a while ago where 20 hours of CEOs' supposed working hours go to a "miscellaneous" category which includes "exercise" and "personal appointments": https://imgur.com/jkQZ0YX
The reason is because he wants to live in his home in Newport Beach, California vs moving to Seattle.
Quoted text from SEC notification:
“ During your employment with the Company, you will not be required to relocate to the Company’s headquarters (currently in Seattle, Washington). You agree to commute from your residence to the Company’s headquarters (and engage in other business travel) as is required to perform your duties and responsibilities.
From the Start Date until such time as you secure permanent secondary housing arrangements in Seattle, Washington (up to three months following the Start Date), the Company will pay directly, or reimburse you for, the costs of your reasonable temporary housing arrangements in Seattle, Washington and a driver to transport you as necessary while you are in Seattle, Washington.
If you decide to relocate to the Seattle, Washington area, you will be eligible for reimbursement for qualified relocation expenses to Seattle, Washington, pursuant to the Company’s relocation policy. Remote Office: Promptly following the Start Date, the Company will establish, with your assistance, a small remote office in Newport Beach, California. The Company will employ an assistant of your choosing for such office, subject to the reasonable consent of the Company. This office location will be maintained at the expense of the Company.”
CTRL+F for jet comes up empty. It does say they will provide a driver. So maybe it’s implied he will use the jet.
The relevant word in the text is "aircraft":
"You will be eligible to use the Company aircraft for (i) business-related travel in accordance with the Company’s travel policy, (ii) travel between your city of residence and the Company’s headquarters in Seattle, Washington and (iii) your personal travel in accordance with the Company’s policies, up to a maximum amount of $250,000 per year, which amount will be based on the aggregate incremental cost to the Company."
A commuter jet and a quarter of a million dollars of personal travel!
> You will be eligible to use the Company aircraft for (i) business-related travel in accordance with the Company’s travel policy, (ii) travel between your city of residence and the Company’s headquarters in Seattle, Washington and (iii) your personal travel in accordance with the Company’s policies, up to a maximum amount of $250,000 per year, which amount will be based on the aggregate incremental cost to the Company.
I wonder if thats even possible given how much dairy they use. While I cant find any official numbers on their dairy use, one site estimated it at 750 million liters a year. Another site suggests Starbucks actually sells more dairy than coffee (a drink like a latte or mocha is 90% milk).
Of course they are related. How can a company say with a straight face on the one hand that they are committed to environmental initiatives while on the other hand their CEO uses one of the most environmentally harmful forms of travel for a regular commute?