Measuring median wage of Starbucks employees against the one time multi-year strictly performance based stock-option plan given to the new CEO is so blatantly dishonest I can barely read the rest of the article.
Especially when Starbucks awards stock and healthcare plans to even part time baristas. Probably one of the better major employers of low skill labor in the world.
No. If keeping worker wages as low as possible was the goal, they wouldn't award stock or healthcare benefits to part time workers in their kitchens.
The point is that poaching a new CEO from another company (in this case, Chipotle), and awarding him a pile of stock options if he hits certain metrics is not pay, is not comparable to W2 income, does not hit his bank account, and does not make anyone else poorer, except theoretically the shareholders, who were so excited to hire this new guy that the stock literally popped 20% when the news broke.
> ...awarding him a pile of stock options if he hits certain metrics is not pay, is not comparable to W2 income, does not hit his bank account...
Are you certain that they are options, and not RSUs? The bonus plan described in the SEC filing [0] seems to indicate that the stock offered is not options.
My RSUs absolutely counted as wages once they vested, and I was absolutely able to turn them into cash in my bank account (as would have been the case with stock options that were worth something).
Good question. Options was casual nomenclature. He received PSRUs, which are Performance-based Restricted Stock Units. For him they vest through 2027 depending on if his hits the metrics or not. Failure to hit means no vesting at all.
Some of his metrics are about store renovations, revamping the rewards program, and hitting some internal financial operating ratios, and a couple other things.
So, I'm not sure what your claim is. Is it something like "bonus pay is totally incomparable to regular wage pay and does not enter your bank account"? That's the most charitable interpretation I can make out of
> ...awarding him a pile of [RSUs] if he hits certain metrics is not pay, is not comparable to W2 income, does not hit his bank account...
Performance pay that requires you to hit multiple metrics over a number of years, metrics you may or may not hit, due to unpredictable factors within and outside of your control, is not comparable to guaranteed wage income in a single year.
That's my point. Their CEO has a W-2 salary and cash bonus. It is about $5m a year. They should use that. We all know the reason they pull forward the next 3 years of maybe money and compare it against a part-time barista's single year pay. Because it juices the ratio and makes for a more outrageous headline. But it's dishonest. Starbucks CEO is not paid $98m per annum.
Funnily enough, wage income for nearly all USians is not guaranteed. For most of us, you have to keep hitting performance targets to earn subsequent paychecks. Sometimes (as many of us in the tech sector, and so, so many in the movie and video games sector know) you get that income taken away from you for no real reason at all.
> ...in a single year.
(To keep things simple in the following, I'm going to assume that Starbucks' fiscal years line up with calendar years, even though I'm certain that they do not.)
Sure, that objection of yours I sort of agree with. He gets a ten million signing bonus [0] and ~30 million in stock just for signing up, with ~45 million in additional stock gated behind continued job performance. The guy only starts getting 10.8 million per year (through the LTIP) in FY2025, with an equity bonus of 13.8 million and a cash bonus with target value of 3.6 million and maximum-planned value of 7.2 million.
Having said that, it does look like the annual cash bonus starts immediately:
> Your annual cash bonus for FY2024 will be pro-rated based on your Start Date and, notwithstanding anything to the contrary in the foregoing, will be calculated by multiplying (i) the annual cash bonus due based on actual performance for FY2024 by (ii) a fraction, (A) the numerator of which is the number of calendar days from the Start Date through September 30, 2024, and (B) the denominator of which is 366.
Another thing that's very important to look into: How often do these CEOs fail to meet their cash bonus targets? Their stock bonus targets? When I was working a bonus-eligible job, the only people who didn't meet their cash bonus target were folks who were going to be fired soon. (Noone I knew was eligible for bonuses delivered via RSUs.)
If we assume that he's not eligible for stock bonus in 2024, and we assume that his late start only divides his 2024 earnings by four, then (if I haven't fucked up my math) it looks like his Q4 2024 earnings were 41.3 million dollars. That's a little less than half what that article reported, but
a) That's still a lot of money... much, much, much more than most USians will ever make in their life, for four months work.
b) Because of my fiscal year manipulation, It's entirely possible that I'm not counting some money that was actually paid out in calendar year 2024, that would bring the actual payout much closer to the value stated in the article.
[0] I'm counting 100% of that signing bonus as paid up front because the only way he loses any of it is if he gets fired With Cause before he hits the six-month mark. If he got disabled on day #2 of his job and had to quit, he'd get 100% of the signing bonus.
This is a point always missed in debates about CEO pay. The money doesn't rain from the sky onto his yacht. Shareholders have to shell it out, and they'd prefer the CEO works for free. That CEO has to add billions to their bottom line in order to get paid millions.
Nice if CEO was something like an election — with competing CEO's listing their qualifications, how much they expect in compensation. Shareholders could vote for the CEO + pay package they prefer.
yes I realize that, I worked a minimum wage job for a long time. The CEO has daily job requirements to meet too, and for that the Starbucks CEO receives a cash salary of about $5m a year. This publication should use that for the ratio, rather than pulling forward the next three years of RSUs that only vest if he hits extremely broad strategy dependent goals that can easily be sunk because of a pandemic or general economic recession.
You're not asking this in good faith, but I'll give my answer anyway: companies have an interest in paying workers market wages, not more, and not much less.
Too much over the market rate, and you're not maximally efficient at converting economic inputs into larger economic outputs.
Too much under the market rate, and you'll see increased employee churn, leading to all sorts of other problems.
If you want workers to be paid more, as we all do, even us greedy capitalists, their economic productivity has to go up (not the same as working harder).
The best way to do that - as far as I know - is improving technology and education.
If you had a $100B asset, like Starbucks Inc, how much would you pay to search for and keep the right guy to run it?
The Venn diagram of people who have the diversity and depth of skills to pull off a major CEO role has a very small overlapped area.
If you choose your CEO well, you turn Apple in 1997 into Apple in 2010. If you choose poorly, your investment stagnates or evaporates.
So a couple of tens of millions in stock options are a bargain for investors. The value-add of any particular minimum wage employee, despite their equal human dignity and worth, is never going to even be in the same league.
Especially when Starbucks awards stock and healthcare plans to even part time baristas. Probably one of the better major employers of low skill labor in the world.