Raphael Stevens

Starbucks plans to pay incoming CEO Brian Niccol $10 million in cash and $75 million in equity awards when he joins the company from Chipotle.
Niccol will be paid a base salary of $1.6 million annually, with the opportunity to earn up to $7.2 million more in cash.
As CEO, Niccol will have to turn around the coffee chain’s slumping business.

Brian Niccol, CEO of Chipotle
Anjali Sundaram | CNBC

Starbucks offered incoming CEO and Chair Brian Niccol a pay bump and hefty one-time awards to lure him from his prior role as chief executive at Chipotle Mexican Grill.
Niccol officially takes the reins at the embattled coffee chain on Sept. 9. As CEO, he’ll be tasked with turning around the company’s slumping sales, improving customers’ experience inside stores and figuring out what to do with its struggling China business. It’s a big undertaking — for which he will be well compensated.

Starbucks disclosed Niccol’s incoming pay plan in a filing on Wednesday. The majority of his compensation package is made up of equity that vests over time, and is based on company performance targets and other metrics. In his first year, his pay package could be worth as much as $116.8 million if the company hits its targets and it fully vests.
Niccol will be paid a base salary of $1.6 million annually, with the opportunity to earn up to $7.2 million more in cash. He’ll also be eligible for annual equity awards worth up to $23 million.
And for leaving Chipotle, Niccol will receive a $10 million cash bonus and $75 million in equity to make up for what he’s forfeiting with his departure from the burrito chain. The equity will vest over a three-to-four-year period, based on company performance and Niccol’s tenure.
“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 in a statement. “His compensation at Starbucks is tied directly to the company’s performance and the shared success of all our stakeholders. We’re confident in his ability to deliver long-term, enduring value for our partners, customers and shareholders.”
At Chipotle, Niccol collected a $1.3 million base salary last year, with a total compensation of $22.5 million. Stock awards and options accounted for the bulk of his earnings, but he also took home a cash bonus of $5.2 million.

During his tenure at Chipotle, the stock climbed 773%, fattening the value of his overall compensation.
Niccol’s pay package is also more generous than that of his ousted predecessor, Laxman Narasimhan. His base salary was $1.3 million, with possible cash bonuses of up to $5.85 million and equity awards of $13.6 million, according to filings. In fiscal 2023, Narasimhan’s compensation was valued at $14.6 million, largely from stock awards.
Unlike Narasimhan, who was previously based in the U.K., Niccol won’t be required to relocate to Starbucks’ headquarters in Seattle.
— CNBC’s Kate Rogers contributed to this report More

Boeing’s Starliner capsule “Calypso” has been in space for 71 days and counting as the company and NASA try to identify why multiple thrusters failed during docking.
NASA astronauts Butch Wilmore and Suni Williams are in limbo on the International Space Station as they wait for the agency’s decision, which is expected to come the last week of August.
Ken Bowersox, NASA associate administrator, said a final round of data analysis is expected to be complete by Aug. 23.

NASA astronauts Butch Wilmore, left, and Suni Williams pose inside the hatch connecting Boeing’s Starliner to the International Space Station on

Log entry: Day 71.
Butch Wilmore and Suni Williams are waiting. Boeing is waiting. And throughout the halls of NASA, leaders and engineers are gathering, analyzing and deliberating.

Boeing’s Starliner capsule “Calypso” has been at the International Space Station since early June, on a mission that’s been extended indefinitely as the company and NASA try to identify why multiple of the spacecraft’s thrusters failed during docking.
Those thrusters, part of the spacecraft’s propulsion system, are key to Starliner’s return from the ISS. But NASA remains uncertain of whether the capsule is safe to return with the two astronauts on board.
“Our big concern is having a successful deorbit burn — making sure that the [propulsion] system works just the way it needs to all the way through the deorbit burn. That’s why we’re looking so closely at the thruster jets and even thinking about how the larger thrusters work,” NASA Associate Administrator Ken Bowersox told reporters during a press conference on Wednesday.

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NASA has already adjusted the schedule for the next SpaceX launch of astronauts headed for the ISS, but it needs to make a decision soon on returning Starliner crewed or empty — or otherwise further delay its current plans. If Starliner comes back empty, SpaceX would serve as the rescue option for returning Wilmore and Williams.
Bowersox said a final round of data analysis is expected to be complete by Aug. 23, which would lead to NASA conducting a Flight Readiness Review, the deciding moment for how Starliner returns.

Boeing has made its case to NASA for why the company is confident that Starliner is safe, going so far as to make public appeals about the amount of thruster testing that’s been done. But the final decision that’s expected before the end of August will be NASA’s call and may go as high as its chief, Administrator Bill Nelson.
Originally intended to last about nine days, the Starliner crew flight test was supposed to be a final box checked for Boeing and a key asset gained for NASA. The agency was hoping to fulfill its dream of two competing companies — Boeing and SpaceX — flying alternating missions to the ISS.
Instead, the flight test is further setting back Boeing’s progress in NASA’s Commercial Crew program and, with over $1.5 billion in losses absorbed already, threatens the company’s future involvement with it.

Boeing spacecraft Starliner is seen from the window of SpaceX’s Dragon capsule “Endeavour” on July 3, 2024 while docked with the International Space Station during the crew flight test.

As for the astronauts themselves, the head of NASA’s spaceflight safety office, Russ DeLoach, stressed that Wilmore and Williams will do “their job as astronauts,” trusting in the agency’s decision-making process.
Joe Acaba, leader of NASA’s astronaut office, further emphasized that the pair are test pilots who willingly and intentionally take on risk.
“This mission is a test flight and, as Butch and Suni expressed ahead of their launch, they knew this mission might not be perfect. Human spaceflight is inherently risky and as astronauts we accept that as part of the job,” Acaba said.
Spacecraft are often named after iconic maritime vessels: Williams dubbed Starliner as “Calypso” in honor of Jacques Cousteau’s research ship, which in turn was named for the mythological Greek nymph.
For now, Boeing’s spacecraft shares an unfortunate similarity to its namesake — a critically damaged vessel with an indefinite timeline for repairs — as well as an eerie likeness to its namesake’s namesake — who trapped the hero Odysseus for seven years against his will. More

Alaska Airlines and its flight attendants union had reached a tentative agreement in June.
The flight attendants union and the company will have to resume negotiations.
The rejection comes as the company’s merger with Hawaiian Airlines looms.

An Alaska Airlines Boeing 737-900ER aircraft on the tarmac at Seattle-Tacoma International Airport (SEA) in Seattle, Washington, US, on Monday, Jan. 22, 2024. 
David Ryder | Bloomberg | Getty Images

Alaska Airlines flight attendants rejected a new labor deal that would have come with immediate raises averaging more than 24%, their union said Wednesday, setting both sides up for more talks as a merger with Hawaiian Airlines looms.
The union and the company had reached a tentative “record” agreement in June, which included boarding pay, as well as back pay, on top of average pay increases of about 32% over the three-year deal, according to the Association of Flight Attendants-CWA.

“There is more work to do,” the union said, adding that it will survey members to “determine key issues and return to the table to address them.”
The airline said in a statement: “We remain committed to reaching an agreement that reflects the critical role of our flight attendants and is good for Alaska’s long-term success.”
Airline workers across the industry have pushed their employers for pay increases and better working conditions after Covid-19 put a pause on most labor negotiations. Salaries and fuel are airlines’ biggest costs and talks at some carriers had turned contentious before new contracts were approved.
Pilots at the major carriers have sealed deals over the past two years, while other airline workers have continued to seek better pay.
American Airlines reached a deal with its flight attendants union last month, and members are voting on whether to ratify it. United Airlines is still negotiating a new contract with its flight attendants’ union.

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The M&M owner Mars is acquiring Kellogg spin-off company Kellanova in a deal valued at roughly $36 billion, or $83.50 per share.
The move comes after Kellogg separated its business last year, with its cereal segment trading under WK Kellogg Co, and the remaining snacking and plant-based brands under Kellanova.
Kellanova’s 2023 net sales topped $13 billion.

A box of Kellogg Co. Eggo brand frozen waffles is arranged for a photograph in New York.
Tiffany Hagler | Bloomberg | Getty Images

Mars will acquire Kellanova for $35.9 billion in cash, tying together some of the largest U.S. candy and snack brands, the companies announced Wednesday.
The M&M owner Mars is acquiring the Kellogg spinoff company for $83.50 per share, according to the press release. The addition of Kellanova, which separated from its parent company in 2023, will bring massive brands like Pringles and Cheez-Its to Mars’ snacking unit.

“We buy businesses to grow businesses, and we look to grow for generations,” Mars CEO Poul Weihrauch said on CNBC’s “Money Movers.”
The move comes after Kellogg separated its business last year, with its cereal segment trading under WK Kellogg Co, and the remaining snacking and plant-based brands under Kellanova. Net sales in 2023 for Kellanova topped $13 billion.
After years of high inflation, some consumers are pulling back on spending and struggling to afford brand-name snacks, making acquisitions more attractive. Many grocers have leaned into private-label options to entice consumers who are looking for value.
“It’s our job as a business to try and absolve as much of these input costs as possible and put on as little as required to the consumers,” Weihrauch told CNBC. “We believe that coming together will make us stronger in absolving these shocks.”

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Mars’ buyout aims to create a “broader, global snacking business” through recognized and popular brands, Andrew Clarke, global president of Mars Snacking, said in a statement.

Weihrauch said there is opportunity in places like China and Africa for the two companies to grow together. Mars has a larger business in China and Kellanova is stronger in Africa.
The acquisition could spark antitrust questions, particularly due to overlap in the candy bars category. Consumer advocacy group Food & Water Watch said in a statement that the deal would harm consumers, as Mars could take in nearly half of all snack and cereal bar sales after it closes. American grocery shoppers would face higher costs and fewer healthy options, the group’s research director Amanda Starbuck said.
Kellanova CEO Steve Cahillane said he doesn’t foresee any antitrust issues. Similarly, Weihrauch said the brands are complementary, and the company will collaborate with regulators.
“If you just take a stroll down the aisle in a supermarket of the bars, it is an incredibly fragmented space with lots of choice for consumers,” Cahillane said on “Money Movers.”
The growing snacking category includes brands marketed as healthier. Kellanova will bring products like RXBar and Nutri-Grain to the Mars business, complementing Kind and other Mars snacks, according to the release.
The transaction is expected to close in the first half of 2025, according to the release.
The acquisition comes after months of engagement with Toms Capital Investment Management, an activist fund run by Benjamin Pass which had amassed a sizeable stake in Kellanova, according to a person familiar with the matter. Toms Capital had been privately pushing Cahillane and Kellanova management to pursue strategic and organizational changes, the person said.
Toms previously mounted a campaign at Colgate in 2022, in collaboration with Dan Loeb’s Third Point.
— CNBC’s Rohan Goswami contributed to this report
Correction: Mars will acquire Kellanova for $35.9 billion in cash, the companies announced Wednesday. An earlier version misstated the day.

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Flutter reported phenomenal second-quarter earnings this week, wowing investors and sending shares up.
But it was the declaration that FanDuel will not add a surcharge to offset an Illinois tax hike that grabbed attention.
Rival DraftKings reversed course on introducing a surcharge on consumers in states where taxes on sports betting are highest.

Flutter reported phenomenal second-quarter earnings this week, wowing investors and sending shares up about 8% Wednesday as the company’s FanDuel betting platform captures market share and grows revenue dramatically, even in well established states with sports betting and online gaming.
But it was the declaration that FanDuel will not add a surcharge to offset an Illinois tax hike that grabbed attention. Earlier this month, rival DraftKings said it would introduce a surcharge on consumers in states where taxes on sports betting are highest.

Shares of DraftKings initially fell 5% in extended trading after FanDuel’s release, and the company soon after reversed course on taxing customers. DraftKings stock was last up more than 2%.
“We always listen to our customers and after hearing their feedback we have decided not to move forward with the gaming tax surcharge. We are always committed to delivering the best value in the industry to our loyal customers,” DraftKings said in a statement.
The nominal tax would have applied to customer winnings in states with multiple operators that have a tax rate over 20%, including Illinois, New York, Pennsylvania and Vermont. Illinois approved a 40% tax rate on gambling companies with the largest adjusted gross revenue. New York and New Hampshire each maintain 51% tax rates on sports betting companies.
DraftKings was the first operator to announce such a fee on users, but CEO Jason Robins predicted that other sportsbooks would follow.
Neither Penn Entertainment nor Rush Street Interactive, both of which operate sportsbooks in Illinois, followed suit on the surcharge.

FanDuel said Tuesday it would likewise skip the surcharge, instead offsetting the impact of high state taxes with more locally tailored marketing and promotions. The company anticipates a $40 million net impact in the second half of 2024.

A sign hangs on the wall in the reception area at Fanduel Inc.’s offices in Edinburgh, U.K., on Tuesday, Feb. 7, 2017. 
Chris Ratcliffe | Bloomberg | Getty Images

Peter Jackson, CEO of FanDuel parent Flutter, said the Illinois tax hike could actually prove a competitive advantage.
“Smaller players may also have to increase their prices, which leads to us capturing more share, which provides an offset for us,” he said on the company’s earnings call.
Gaming analysts praised DraftKings’ decision to yank its plans for a surcharge.
“We view the decision to remove the surcharge as a positive for the story, as users were disappointed with the company’s initial decision,” wrote Piper Sandler analyst Matt Farrell in a note.
Truist analyst Barry Jonas said, “The reversal should remove some uncertainty around execution risks (including market share and/or reputational impact), but also raises the question of how DKNG can offset the impact and/or if guidance needs to be tweaked.”
FanDuel maintains a 47% U.S. market share of sports betting based on gross gaming revenue. It’s also captured and is defending a lead in iGaming, or online casino games, with 25% share based on gross gaming revenue.
The competition is tighter and fiercer in iGaming because the profits and future growth far overshadow sports betting.
For the first five months of 2024, operators reported $677 million in iGaming revenue from only seven states where it’s legal, according to the American Gaming Association. For comparison, sports betting revenue totaled $1 billion in the same period across 38 states and Washington, D.C.
And a new report from games maker Light & Wonder and Vixio estimates annual gross gaming revenue of $48 billion if every state that currently allows land-based casinos or sports betting permitted iGaming.
The gambling industry seems to be shrugging off recession concerns, even as many other consumer-reliant companies report a pullback in spending.
According to a CNBC/Generation Lab poll, 9% of people aged 18 to 34 say they are spending at least $100 a month on online gambling. Three percent of people are spending more than $300 a month on online gaming.
The sports betting exchange-traded fund, BETZ, was up 2% Wednesday for its third straight daily gain and best day since January.
DraftKings stock is down about 9% year to date, while Flutter shares are up nearly 15%. More

Starbucks tapped Chipotle CEO Brian Niccol as its latest chief executive after ousting Laxman Narasimhan.
Piper Sandler, TD Cowen and Baird all upgraded Starbucks’ stock in the wake of the leadership changes.
Wall Street thinks that Niccol’s appointment might spell an end to Howard Schultz’s influence over the coffee chain, which he turned into a global behemoth.

Brian Niccol, CEO of Chipotle
Anjali Sundaram | CNBC

Wall Street believes Brian Niccol is the right choice to turn around Starbucks — and move the chain past the decadeslong Howard Schultz era.
Starbucks tapped Niccol as its latest chief executive and chair on Tuesday. Niccol replaces Laxman Narasimhan, who took over the top job in March 2023 after being handpicked by former CEO Schultz. In its last two quarters, Starbucks reported same-store sales declines as its U.S. business floundered. Once he takes over, Niccol will be charged with rejuvenating demand for the company’s coffee.

“In our view, Starbucks picks up a hall of fame restaurant CEO, and his appointment as Starbucks CEO and Chairman suggests a new era is underway,” TD Cowen analyst Andrew Charles wrote in a note to clients, emphasizing the importance of the combined role.
Investors are confident that he can revive the company. Shares of Starbucks climbed 20% in afternoon trading on the news, putting them on pace for their best day since the company’s IPO in 1992. Meanwhile, Chipotle’s stock fell 9% as shareholders bemoaned the loss of the longtime chief executive.
Piper Sandler, TD Cowen and Baird all upgraded Starbucks stock in the wake of the leadership changes.
Other analysts wrote glowingly of Niccol, seeing him as the right person to tackle Starbucks’ sluggish sales. A challenging consumer environment, worsening customer experience and rising competition from smaller coffee shops have hurt the chain’s performance recently.
“We view this as a dream hire for SBUX, and could not think of a more equipped leader to take a fresh look at SBUX’s operations, competitive positioning and overall strategy,” Oppenheimer analyst Brian Bittner said.

End of an era?

Niccol’s hiring could also spell the end of Schultz’s huge influence over the company he turned into a global coffee giant.
“Importantly, Brian is likely the one restaurant executive that has the gravitas to address the Howard Schultz Founder ‘overhang,'” Evercore ISI analyst David Palmer wrote.
Schultz served as CEO from 1986 to 2000, from 2008 to 2017 and then from 2022 to 2023, stepping in twice to save the company when sales turned sluggish. His last return sparked concerns about the company’s succession.
At the end of his last stint, he swore that he wouldn’t return as chief executive again, although his presence still looms large over the company. In May, after a brutal quarter for Starbucks, he wrote an open letter on LinkedIn about the company’s challenges and offered advice to its leaders — without naming Narasimhan.
Even after his retirement, Schultz’s involvement in the company has remained “a question hanging over the stock,” Morgan Stanley analyst Brian Harbour wrote in a note Tuesday. Mellody Hobson, who stepped down as Starbucks chair to become lead independent director as part of Tuesday’s leadership shake-up, said on CNBC’s “Squawk Box” that she told Schultz about the discussions with Niccol, keeping him in the loop despite him having no formal role within the company anymore.
Schultz also remains a major Starbucks shareholder, with a roughly 2% stake.
Schultz endorsed Niccol’s hiring in the press release announcing the shakeup. In a statement, the chairman emeritus said he believes that Niccol is the leader the company needs at a “pivotal moment in its history.”
Some analysts believe that having Niccol, an experienced restaurant CEO, in the driver’s seat could mean that Schultz finally moves on. Niccol will also succeed Hobson as chair of the board, giving him more latitude to make changes.
“This will be the last time investors care what he has to say because Niccol now has the wheel and there is no longer ANY room for a backseat driver,” Gordon Haskett analyst Don Bilson wrote.
Niccol also has previous experience taking over a founder-led brand and making it his own. When he joined Chipotle in 2018, he took the reins from founder Steve Ells, who had led the chain since 1993. Niccol moved the burrito chain’s headquarters from Denver to Newport Beach to attract different talent — and maybe evolve the brand from being founder-led, as Bernstein analyst Danilo Gargiulo wrote in a note.

Challenges ahead

While analysts largely cheered Niccol’s appointment, some were more cautious, noting that Starbucks is a larger and more complex business than Chipotle.
“Starbucks is a much more complicated model than Chipotle, with company and licensed stores, domestic and international locations, and a significant presence in struggling China,” BTIG analyst Peter Saleh wrote.
Chipotle has few licensed locations, except for some airport restaurants, and a relatively small international footprint, although Niccol has been pushing to grow its presence outside the U.S. in recent years.
Starbucks, on the other hand, has more international locations than U.S. cafes. And while investors have recently focused on the chain’s domestic performance, China, its second-largest market, has continued to struggle as competition there ramps up and the country’s economy lags.
Narasimhan said on the company’s latest conference call that he was exploring “strategic partnerships” for its China business, which could include a joint venture, tech partnership or other options. Niccol’s appointment could mean that Starbucks abandons that exploration, although he does have some experience with spinoffs from his time as head of Yum Brands’ Taco Bell. While he was there, the conglomerate spun off its China business into Yum China.
And while Chipotle’s burritos are still in high demand, consumers’ economic concerns have dampened their desire for coffee. That may prove to be a tougher hurdle for Niccol than investors anticipate.
“His challenge is to connect with a new customer,” Wedbush analyst Nick Setyan said. “Aside from the power to change the direction of macro headwinds, we view the shareholder euphoria (as expressed in the share price this morning) as premature.” More