While it may be tempting to go
after companies for hypocrisy on corporate social responsibility, even deeper
criticism may be closer to the bottom line, financially. Even though social
media castigated Starbucks for its impact on carbon emissions in agreeing to
fly its Southern Californian CEO Brian Niccol to Seattle on a company plane each
week, I submit that the amount of spending entailed raises questions about
cost-containment and even cast some doubt on whether the company’s price
increases in 2024 were wholly justified, and thus even on whether the industry
was competitive or an oligarchy.
Before Niccol was to assume his
role as CEO on September 9, 2024, Starbucks announced that he would “not be
required to relocate to the company’s headquarters” during his employment with
the company.[1] Because
he would be expected to work at the Seattle office at least three days a week
to comply with the company’s policy on hybrid working, he would be flying a
distance greater than that which is between Berlin and Rome on a company plane weekly.
Why could he not fly commercial (business class) and thereby save the company a
lot of money? Is a CEO really above such flying?
I suspect that in the E.U. the answer
would be more down-to-earth, or realistic, than in the U.S., where CEO’s are
more likely to be reckon as akin to divine emperors. Whereas in Europe, an
aristocracy exists that can put the moneyed caste in its proper place, American
CEOs reside at the top of the societal pyramid. Being consumed with thoughts of
money is valued rather than presumed low. This is not to say that inherited
wealth is value-free and thus exempt from a different criticism. Rather, my
point is that CEO’s of American companies can get away with being treated like
royalty on account of the relatively pro-business (or business-leaning) societal
culture.
Rather than criticizing Starbucks
for spending too much money on its CEO’s transportation, users of social media
expressed anger over the company’s preachments on sustainability while the CEO
is to be flown on a private plane weekly, burning thousands of liters of fuel
in the atmosphere. On its website, the company claimed that it had “a bold
aspiration to be a resource positive company.”[2]
The CEO of Conservation International stated that the company was backing up its
“commitments with immediate actions to reduce [its] footprint and invest in
nature.”[3]
The hypocrisy could have been easily obviated by having the CEO fly business in
a commercial airline.
It is not as if Niccol would not
be able to afford the flights, as his annual salary was announced as $1.6 million,
not including a possible performance-related bonus of up to $7.2 million and up
to $23 million a year in company stock.[4]
Of course, the company would no doubt cover the cost of its CEO’s commute, whether
commercial or on a company plane, and such money, together with his
compensation-level, suggests that Starbucks had money to burn in 2024 even as
it was increasing the prices of its drink products.
In 2023, the CEO-to-worker pay
ratio in the United States had increased to 251:1, which was up 26% from 2022. Back
in 1965, CEOs were paid on average just 21 times more than the medium worker.
In 2021, Chipotle, where Niccol had worked prior to becoming CEO of Starbucks,
was at 2,998:1, which was the fifth highest in the United States. I suspect
that he had rather high expectations in negotiating with Starbucks. That the
company relented even as it felt the need to increase drink prices (presumably
to keep afloat financially) is a point that the carbon-emission critics missed.
Considering the rise in prices at restaurants and grocery stores since the pandemic of 2020, it is worthy of note societally that a company raising prices would have enough cash on hand to fly one person weekly on a company plane instead of having him fly commercial (and on his own dime!). That is to say, one might wonder how legitimate the rising prices of food (and drink) were even after the pandemic. In competitive markets, new entrants can offer more competitive prices and thus bring down prices generally in an industry, such that the companies cannot afford to be extravagant in spending. Starbucks may simply have been raising prices because it could get away with it, and could thus afford to fly its CEO on a company plane weekly not only to the company’s headquarters, but on visits to company stores and brewing facilities on a regular basis.
2. Ibid.
3. Ibid.
4. Ibid.
