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Starbucks has awarded its new chief executive Brian Niccol cash and stock potentially worth more than $100mn, one of the largest hiring packages in US corporate history and four times larger than the sign-on deal offered to his ousted predecessor.

If paid out in full, the package — revealed in a regulatory filing on Wednesday — would make Niccol one of America’s highest paid CEOs. The contract would be worth $113mn if he hits the targets Starbucks has set for him.

Starbucks named Niccol as its fourth boss in less than three years on Tuesday after the surprise ousting of CEO Laxman Narasimhan, the former Reckitt Benckiser chief executive.

Niccol will arrive at Starbucks next month from burrito chain Chipotle Mexican Grill, where since 2018 he led a revival in its business and reputation after a series of food safety scares. Shares of Chipotle gained almost 800 per cent during his tenure.

To start, Niccol will receive a $10mn cash bonus upfront and another $75mn in equity grants designed to pay out over time, to compensate him for bonuses and unvested stock he left behind at Chipotle.

Annually, Niccol will earn a $1.6mn salary plus a target cash bonus worth about $3.6mn depending on how Starbucks performs. That is in addition to a long-term equity grant with an annual target value of $23mn, to be paid out over multiple years.

“The (Starbucks) board’s willingness to pay such a high price is testament to the faith they have in Niccol,” said Ben Silverman, vice-president of research at Verity, an analytics firm. “But he’s going to have to prove that he’s worth it because his annual compensation is about 75 per cent higher than that of his predecessor.”

Last year Niccol’s total pay at Chipotle was $22.5mn, while the value of his unrealised gains from past equity incentive grants was more than $82mn, according to a regulatory filing.

The package from Starbucks comes with an unusual perk: Niccol would not be required to move to its Seattle headquarters, according to the filing. Instead, the company will establish a “small remote office” in Newport Beach, California — the city to which Niccol had moved Chipotle’s headquarters from Denver — plus pay for an assistant of his choosing.

Only five other executives were awarded pay packages worth more than $100mn in 2023, according to a June report from Equilar, a pay data company, of the largest US companies by revenue. Such contracts are particularly unusual outside the financial and technology sectors.

Niccol’s target annual remuneration would be 83 per cent above the median target at other S&P 500 restaurant groups, such as Chipotle, Darden, Yum Brands and McDonald’s, said Courtney Yu, director of research at Equilar.

“Brian Niccol has proven himself to be one of the most effective leaders in our industry, generating significant financial returns over many years,” Starbucks said, adding that his pay was “tied directly to the company’s performance and the shared success of all of our stakeholders”.

When Starbucks hired Narasimhan from UK-based consumer products group Reckitt in 2022, he was offered a package valued at more than $28mn. This included a base salary of $1.3mn, annual cash bonuses worth up to $2.6mn and annual equity awards with a target value of $13.6mn.

In addition, Starbucks agreed to pay Narasimhan a $1.6mn signing on bonus in cash and $9.25mn in equity to compensate him for incentives he gave up by leaving Reckitt.

Starbucks did not detail the terms of Narasimhan’s severance payout.

Of course no intellectual presidential campaign speech on the economy is complete without an extended riff on immigrants and rape.

Former president and self-described stable genius Donald Trump let a small crowd in a small venue in North Carolina know what was in store for them Wednesday: “We’re talking about a thing called the economy.”

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

It is snack time in the packaged food industry. Confectionery giant Mars’ $36bn swoop on Pringles maker Kellanova could put dealmaking back on the table for other food and drink multinationals.

Privately held Mars, home of Snickers and Skittles, will pay $83.50 a share in cash for the maker of Cheez-it and Eggo waffles. The price represents a 42 per cent premium over Kellanova’s undisturbed three month average. 

With few big US snacks groups left, a deal was never going to come cheap. Including Kellanova, there are just seven companies in the US packaged food sector with market values of over $20bn. 

Mars is paying the equivalent of 16 times EV to forward ebitda for Kellanova. The median ratio for recent deals in the sector was around 15 times, according to JPMorgan. And the deal looks even pricier considering the difficult outlook for snacking — particularly the less healthy varieties that are in Kellanova’s portfolio. 

Salty snacks have been the fastest-growing category in the packaged food sector over the past 14 years, with a compound annual growth rate of around 5.8 per cent between 2010 and 2023, according to Citi. 

But that growth has slowed sharply this year. Inflation-wary consumers — particularly lower-income ones — are cutting back. At the same time, the rise of GLP-1 weight loss drugs like Ozempic, Wegovy and Zepbound is reshaping America’s waistlines. In a study by Morgan Stanley earlier this year, about two-thirds of GLP-1 drug users surveyed said they have cut back on snacking by over 50 per cent. Half of those surveyed also said they have cut back on sweets by more than 75 per cent or have stopped scoffing them altogether.

The strain is starting to show. Kellanova’s organic net sales were up 5 per cent in the first six months of the year. But that was largely driven by price increases. That strategy isn’t sustainable: consumers will buy less or choose private label brands.

Mars, as a private company with more than $50bn in sales, opted not to provide cost savings targets to justify its deal, but overlap between the two looks limited. Mars is clearly prepared to pay up to diversify away from its chocolate-heavy snack portfolio. Kellanova, which makes about half its $13bn annual sales from savoury chips and crackers, would do that. Still, $36bn is a big mouthful for what looks like a dubious defensive move.

pan.yuk@ft.com