Starbucks CEO Howard Schultz Deserves His $68.8 Million Paycheck

Numbers prove exec has done right by SBUX shareholders

   
Starbucks CEO Howard Schultz Deserves His $68.8 Million Paycheck

dowleadersig 247x300 Starbucks CEO Howard Schultz Deserves His $68.8 Million PaycheckCoffee giant Starbucks (NASDAQ:SBUX) has made quite a comeback since CEO Howard Schultz returned to the corner office in 2008. SBUX stock is up 140% since January 2008, while the Dow Jones industrial average is actually in the red!

Of course, while Howard Schultz certainly has a soft spot for the company he led to international prominence, this wasn’t a charity project. The Starbucks CEO raked in a cool $68.8 million last year thanks to the company’s resurgence. That makes him among the highest-paid CEOs on Wall Street.

Schultz received base compensation valued at $16 million, plus a special retention award valued at $12 million for sticking around at Starbucks. He did, after all, take eight years off from the corner office, so the company wanted to ensure he stuck around. On top of that, Starbucks CEO Schultz got paid from stock options worth $40.8 million, according to the Starbucks annual statement filed Thursday.

Oh yeah, and in case you’re wondering — in 2010, the SBUX CEO pulled in about $46 million, including $24.7 million from stock options.

That might sound like an exorbitant amount of cash for most folks. but it’s worth noting that Starbucks has indeed benefited from Schultz’s return, and SBUX shareholders have been richly compensated — not just in share appreciation, but via the initiation of a Starbucks dividend in 2010.

Starbucks continues to expand and find growth, whether it be through expansion in India or through testing beer and wine sales or through its new, milder Starbucks Blonde Roast coffee. This growth has led to huge revenue and profit gains that more than offset the CEO’s compensation. For instance, fiscal 2011 earnings noted revenue of $11.7 billion and operating income of of $1.7 billion. That’s over revenue of $10.7 billion and income of $1.4 billion in fiscal 2010.

In short, the company delivered an extra $1 billion in sales and $300 million in profits. Seems like Schultz’s admittedly pricey leadership paid for itself at Starbucks last year.

The growth continues, too. SBUX posted fiscal first-quarter profit that was up 10%, setting a new record. U.S. store traffic was up 8%. Those are impressive numbers for a mature business like Starbucks that faces competition from all corners via McDonald’s (NYSE:MCD), Dunkin Brands (NASDAQ:DNKN) and others.

What’s more, the recent Starbucks proxy says a $12 million stock grant in 2011 will not vest until 2014 — meaning he has to stick around to get paid, and focus on long-term growth. So keep in mind that if you read about tens of millions in compensation three years from now, it’s on shares Schultz has been working a very long time to protect.

Starbucks CEO Howard Schultz joins a growing list of $50 million CEOs on Wall Street that include:

  • Disney (NYSE:DIS) CEO Robert Iger, who made $31.4 million in compensation and $21.4 million from stock in 2011.
  • Apple (NASDAQ:AAPL) CEO Tim Cook, who raked in $378 million across 2011, though admittedly $376 million came from AAPL stock soaring in recent years.
  • Qualcomm (NASDAQ:QCOM) CEO Paul Jacobs, who enjoyed $50.6 million in 2011 compensation, with $28.9 million from stock options.
  • Tyco International (NYSE:TYC) CEO Ed Breen, who earned $68.9 million in 2011, including $52.4 million from stock.
  • J.C. Penney (NYSE:JCP) CEO Ron Johnson, who enjoyed $51.5 million in what amounts to a signing bonus for joining in November. His experience with Apple retail operations were so desired that Penney paid a pretty penny to get him on staff.

Jeff Reeves is the editor of InvestorPlace.com. Write him at editor@investorplace??.com, follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook. Jeff Reeves holds a position in Alcoa, but no other publicly traded stocks.


Article printed from InvestorPlace Media, http://investorplace.com/2012/01/starbucks-ceo-howard-schultz-compensation/.

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