Starbucks CEO Brian Niccol did lots higher than the espresso chain’s typical barista final yr. A number of thousand instances higher, in reality.
Niccol’s $96 million pay bundle for 2024 was 6,666 instances bigger than that of Starbucks’ median worker ― probably the most lopsided CEO-to-worker pay ratio in a new evaluation of “low wage” employers by the Institute for Coverage Research, a progressive assume tank.
The Seattle-based firm simply topped the listing because of Niccol’s roughly $90 million in inventory awards. Many of the unusually excessive inventory grants had been meant to cowl cash Niccol was forfeiting to go away the fast-casual burrito chain Chipotle final yr. In a typical yr, his goal inventory award can be round $23 million.
By comparability, Starbucks’ median employee took residence $14,674 for the yr, a determine supplied to the Securities and Alternate Fee that features part-time workers and staff abroad. Boosting pay has been a central purpose of the Starbucks Staff United marketing campaign, which has unionized greater than 600 shops across the nation since 2021.
Niccol’s compensation is now “directly tied to Starbucks’ future performance,” Andrew Trull, a Starbucks spokesperson, instructed HuffPost.
“Starbucks believes Brian has established himself as one of the most effective leaders in our industry, with a proven track record of delivering long-term value to employees, customers and shareholders,” Trull stated.
“It’s the ‘great man’ theory of corporate value that says these guys are worth hundreds or thousands of times more than their typical worker.”
– Sarah Anderson, Institute for Coverage Research
Sarah Anderson, who authored the report, instructed HuffPost the Starbucks instance could also be excessive, however she views it as a part of a “broader trend” through which govt pay soars in comparison with that of the rank-and-file worker.
“It’s just an outrageous case,” Anderson stated. “It’s the ‘great man’ theory of corporate value that says these guys are worth hundreds or thousands of times more than their typical worker.”
The evaluation, titled “Executive Excess,” appears to be like on the 100 employers within the S&P 500 inventory market index with the bottom median employee pay. Public firms at the moment are required to report these pay figures in annual filings.
CEO pay amongst these 100 firms shot up 34.7% over a five-year stretch, to a mean of $17.2 million, in contrast with a 16.3% improve for the median employee over the identical interval, to a mean of $35,570.
The most important drop in median employee pay occurred at Ulta Magnificence, the cosmetics chain, falling 46% over 5 years, to $11,078. The report attributes that plunge to an growth within the firm’s part-time workforce, flattening the everyday employee’s annual pay.
Michael Reaves through Getty Pictures
The report notes that many firms have opted to plow cash into inventory buybacks versus growing wages. That’s when a agency purchases its personal shares on the open market to juice the worth of the remaining shares and reward buyers, together with the agency’s executives who maintain excessive quantities of inventory.
The businesses analyzed within the report collectively spent $644 billion on inventory buybacks over a five-year interval, “siphon[ing] resources out of worker wages and productive long-term investments.”
Anderson argues federal policymakers might do lots to discourage buybacks, together with by proscribing them as a situation of federal contracts, and by growing an present tax on them. Congress handed a 1% excise tax on inventory buybacks underneath President Joe Biden.
High among the many firms doing buybacks had been the home-improvement retailers Lowe’s and Dwelling Depot, in keeping with the evaluation. They spent $46.6 billion and $37.9 billion, respectively, over the five-year stretch.
Anderson stated such cash can be higher spent on workers, noting that it may be arduous to discover a employee that can assist you if you’re in search of one thing in a Lowe’s or Dwelling Depot. The report estimates that Lowe’s might have added 88 staff at every of its shops with the cash it dedicated to buybacks.
“The understaffing is a really big deal,” she stated. “It makes it hard for employees to provide good customer service when they’re run so ragged.”
