Aristotle was the Elon Musk philosopher king of his day but unlike Musk, Aristotle appreciated the dangers of widening wealth disparity between the ruling class and their subjects. Aristotle was the first to state that inequality triggers a revolution, and his warning played out over the centuries. The French Revolution was triggered by onerous taxes on the lower and middle classes and the American Revolution was triggered with the rallying cry, “no taxation without representation.”

I’ve repeatedly argued the growing wealth disparity in America was reaching dangerous levels, and I’m not a choir of one on this issue.

As of three years ago, the top 1% of Americans held 15 times more wealth than the bottom 50% combined, according to Robert Reich, who served in the Carter administration and was Obama’s labor secretary. The wealthiest one percent owned about 35 percent of the nation’s total household wealth, compared with about 20 percent in the 1970s.

“Wealth inequality is eating this country alive,” Reich warned.

Indications are the disparity widened since Reich’s pronouncement. The FT reported that CEO pay in 2023 increased at the fastest rate for at least 14 years, compared with a 4.1 per cent year-on-year increase in U.S. wage growth.

Wealth inequality in America took a perilous turn with the disclosure Friday that Starbucks CEO Brian Niccol received $96 million in compensation last year, one of the biggest compensation packages in corporate America. A $96 million pay package for one year’s work would be obscene, but Niccol didn’t work for Starbucks for the entire year.

Niccol toiled at Starbucks for all of four months, making his $96 million pay package XXX pornographic. Seems likely Niccol is a shoo-in for the 2024 CEO Piggy of the Year, although no doubt some formidable competitors will emerge.

It’s somewhat of an exaggeration to say that Niccol toiled at Starbucks for four months, given that his commitment to the company is so tenuous he refused to relocate to Seattle where its headquarters is located. Instead, Niccol works out of an office in Southern California’s tony Newport Beach, which Starbucks pays for along with an assistant to keep him company and perform some administrative chores.

In his four months on the job, Niccol racked up $72 million in company costs flying between his Newport Beach home and Seattle. He also received $19,000 related to personal joy rides on Starbucks’ corporate aircraft.

Niccol also got a $5 million sign-on bonus after his one-month anniversary with the company.

Doug McMillon

Let me provide some context for Niccol’s pay package. Doug McMillon, president and CEO of Walmart and arguably the most impressive CEO in the Fortune 500 where Walmart ranks No. 1, was paid $27 million in 2023 for firing on all leadership cylinders. McMillon’s 2024 pay package hasn’t yet been disclosed, but it’s a safe bet it won’t be even half of the $96 million Niccol received, despite Yahoo Finance naming Walmart “Company of the Year” because of McMillon’s stellar leadership, which I profiled last June.

The corporate media’s CEO sycophants are quick to tell you that most chief executive compensations are comprised of stock grants and options, which supposedly aligns their interests with those of their shareholders, to whom CEOs are beholden. But CEOs increasingly have gamed the system to serve their personal financial interests, with a previously illegal hocus pocus gimmick called stock buybacks.

Companies buy back shares of their stock to increase the value of the remaining shares by reducing the supply of them. GM CEO Mary Barra, easily among the most overpaid CEOs in America, earmarked $16.5 billion to buy back the automaker’s underperforming stock during her 10-year tenure and goosed its value. Barra quickly unloaded a big chunk of her GM shares, allowing her to pocket more than $80 million in cold hard cash.  

Compared to GM, Starbucks is a piker when it comes to stock buybacks, having spent just under $2 billion on its own stock last year. Notably, even with all its problems, investors value Starbucks at $112 billion, while deeming GM’s worth under Barra at $59 billion.

Niccol’s pornographic payout no doubt has caught the attention of Starbucks’ headquarters and café employees. In a textbook example of CEO cluelessness, Niccol in recent days sent a notice to the company’s corporate staff advising them to be on standby for a ream of pink slips. The message was posted on Starbucks’ website, no doubt for the benefit of Wall Street, which loves to read about companies planning to fire employees en masse.

Comically, Niccol said, “we have some opportunities to operate more efficiently.” (Emphasis his.)

A CEO who runs a publicly traded corporation more than a thousand miles away from his company’s headquarters talking about operating more efficiently. Now that’s rich!

Brian Niccol/Starbucks

Niccol’s payout likely will anger Starbucks’ unionized café workers, who struck some 300 stores during the recent holiday seasons because of failed union contract negotiations.  Workers United told ABC News in a statement that Starbucks had proposed no immediate wage increases for most baristas and a guarantee of only 1.5% wage increases in future years.

I can only imagine how Arloa Fluhr, a bargaining delegate from Illinois, reacted to Niccol’s payday.  I will let Fluhr share her economic circumstances in her own words.

“The holiday season should be magical at Starbucks, but for too many of us, there’s a darker side to the peppermint mochas and gingerbread lattes,” Fluhr wrote in a statement last December. “I’m a mom of three, including my daughter who is diabetic. I know what it’s like to panic because my hours were slashed, and I won’t be able to pay my bills and could lose access to healthcare, including my daughter’s insulin. That’s why we’re steadfast in our demands for Starbucks to invest in baristas like me.”

Niccol was lured to Starbucks and his contract was negotiated by former board chair and lead independent director Mellody Hobson, who served on the company’s board for two decades, so she bears some responsibility for the decline of the once highly regarded coffee retailer. Here’s a link featuring the other cast of sorry characters on Starbucks’ board.

Those who might be incensed by Niccol’s pay package can take comfort knowing that Hobson just over a week ago announced that she won’t be seeking reelection.

Melody Hobson/Starbucks

“With Brian Niccol firmly at the helm (after a dogged pursuit!), I am confident Starbucks is in excellent hands,” Hobson said. “For this reason, I now feel comfortable stepping away from the board and do not plan to stand for re-election. I believe it is important for Brian to have a lead director who can sit alongside him for years to come—my twenty years is already a long time.”

Not surprisingly, Niccol had nothing but gushing praise for Hobson, whose day job is president and co-CEO of Ariel Investments, a Chicago-based money management firm.

“In everything we do, and in every decision we make, Mellody reminds us of our responsibility and our commitment to create opportunity and bridge to a better future for every partner,” Niccol gushed in a message to Starbucks’ “partners”. “She knows that when we take care of our partners, they take care of our customers — and, in-turn, our business.”

I’m skeptical that Niccol, or anyone else, can restore Starbucks to its former glory. When longtime CEO Howard Schultz ran the place, he had a vision for making Starbucks a coffeehouse experience that combined high-quality coffee with a welcoming atmosphere, inspired by Italy’s espresso bars. For a time, Schultz achieved his vision.

Starbucks today, at least at its dwindling stores in the Los Angeles area, is a miserable experience where customers are frequently greeted by surly baristas serving awful coffee that pales against Keurig and Nespresso home machines. My local Peet’s Coffee, under the leadership of manager Brian and his predecessor Rob, put the Starbucks on their block out of business and their store does a brisker business than the Starbucks down the street.

I’m certain the growing wealth disparity in America can’t continue indefinitely, particularly given that Generation Z is bearing the brunt of imbalance. Gen Z has been disproportionately pummeled by rising prices, higher housing costs, larger student loan balances and more overall debt than the millennials before them, a Washington Post analysis revealed.

“Gen Z consumers have seen their finances significantly impacted by the pandemic and its aftermath, even more so than the challenges faced by millennials as a result of the global financial crisis,” Michele Raneri, head of U.S. research at TransUnion, told the Post. “Both of these cohorts have emerged from a difficult financial situation, but Gen Z is having a harder time affording this new cost of living.”

If the Gen Z baristas at Starbucks must settle for at best 1.5% wage increases in future years, while their CEO makes $96 million for four months work, the consequences won’t be pretty if similar situations continue to unfold across America.

Subscribe to Blog via Email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.