| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On August 31, 2022, the Board of Directors (the “Board”) of Starbucks Corporation (the “Company” or “Starbucks”) approved the appointment of Laxman Narasimhan as chief executive officer-elect of the Company, reporting to our interim chief executive officer. In connection with the appointment, Mr. Narasimhan received an offer letter, which includes a statement of employment terms that Mr. Narasimhan and the Company executed on September 1, 2022 (the “Offer Letter”).
Mr. Narasimhan will serve as an executive officer of the Company beginning on his start date, which is expected to be October 1, 2022. The Offer Letter provides that on or before April 1, 2023, Mr. Narasimhan will be appointed chief executive officer of the Company, reporting to the Board. Upon elevation to chief executive officer, Mr. Narasimhan will also be appointed to the Board and will be nominated for election to the Board at the following meetings of Company shareholders.
Mr. Narasimhan, age 55, currently serves as Chief Executive Officer of Reckitt Benckiser Group Plc (“Reckitt”), a FTSE 12 listed British multinational consumer health, hygiene and nutrition company. He has served in this role since September 2019. Prior to joining Reckitt, Mr. Narasimhan held various roles at PepsiCo from 2012 to 2019. He served as PepsiCo’s Group Chief Commercial Officer until July 2019, and prior to that beginning in 2012 served as Chief Executive Officer - Latin America, Europe and Sub-Saharan Africa, Chief Executive Officer - Latin America, and Chief Financial Officer of PepsiCo Americas Foods. Prior to joining PepsiCo, Mr. Narasimhan spent 19 years at McKinsey & Company, where he focused on its consumer, retail and technology practices in the U.S., Asia and India. Mr. Narasimhan is a trustee of the Brookings Institution and a member of the Council on Foreign Relations. Mr. Narasimhan holds a degree in Mechanical Engineering from the College of Engineering, University of Pune, India. He has an MA in German and International Studies from The Lauder Institute at The University of Pennsylvania and an MBA in Finance from The Wharton School of The University of Pennsylvania.
During Mr. Narasimhan’s employment with the Company, he will receive an initial base salary of $1,300,000 per year, and an annual cash incentive target opportunity equal to 200% of base salary. Commencing in the Company’s fiscal year 2023, Mr. Narasimhan will be eligible to receive annual equity awards with a target value of $13,600,000, pursuant to the terms of the Company’s shareholder approved equity plans.
In connection with his appointment as chief executive officer-elect, Mr. Narasimhan will receive a cash signing bonus of $1,600,000, in consideration for cash incentive opportunities that are being forfeited from his current employer. Mr. Narasimhan will also receive a replacement equity grant with a target value of $9,250,000 in respect of certain equity awards of his current employer that will be forfeited upon his joining the Company. The replacement grant will consist of 60% performance-based restricted stock units (“PRSUs”) and 40% time-based restricted stock units (“RSUs”).
Upon certain qualifying terminations, or if Mr. Narasimhan is not appointed chief executive officer of the Company by April 1, 2023 (or later mutually agreed upon date) and he resigns from employment with the Company in April 2023, then he will receive $7,800,000 and a pro-rata portion of his fiscal year 2023 annual incentive target opportunity, subject to execution of a release of claims against the Company. Following April 1, 2023, Mr. Narasimhan is expected to participate in any generally applicable severance plan.
If the Company determines that Mr. Narasimhan will not commence employment with the Company on the start date, other than due to his Misconduct, he will receive the severance payments described above and $9,250,000 in lieu of the replacement equity grant. On certain voluntary terminations occurring within twelve months of the start date, Mr. Narasimhan will be required to repay the Company the cash signing bonus on an after-tax basis and he will forfeit the replacement equity grant and any other equity-based grants.
Mr. Narasimhan will also be subject to the Company’s restrictive covenants agreement, which includes restrictions relating to noncompetition and non-solicitation for eighteen months after the termination date and protection of confidential information. Mr. Narasimhan will be eligible to participate in the employee benefit plans and programs provided by the Company to other senior executives, will be reimbursed up to fifty thousand dollars for legal fees incurred in relation to entry into the Offer Letter, and will be eligible to use Company aircraft for business-related travel in accordance with the Company’s travel policy. Mr. Narasimhan will be covered by any Company indemnification policy and D&O insurance policies.
