SEATTLE – Starbucks Corp. has given the chief executive officer it fired earlier this month a severance package that includes $1.25 million the coffee retailer will pay out over the next year.
The agreement, disclosed in a filing with the Securities and Exchange Commission on Monday, also allows Jim Donald to exercise options for 1.45 million shares of stock at prices of either $10.86 or $15.23.
Those options are worth $9.52 million, based on Monday’s closing stock price of $19.66. The deal, reached about two weeks after Donald was fired, gives him three months past his Jan. 7 firing date to exercise those options.
Donald, 53, has options to buy nearly 855,500 additional Starbucks shares, but those are essentially worthless because the strike prices are greater than the current stock price.
The world’s largest chain of coffee houses announced Jan. 7 that Chairman Howard Schultz was returning as CEO as part of a series of moves aimed at revitalizing the company.
Rising dairy, energy and other costs, declining traffic in U.S. stores, and growing competition from cheaper rivals has sent Starbucks’ stock plummeting 50 percent since late 2006.
Donald had been CEO since March 2005, when he was promoted from president of the company’s North American division to replace Orin Smith, who retired.
Donald received compensation Starbucks valued at $7.4 million last year.
He earned a $1 million salary, but his package was boosted by stock options worth $6.3 million when they were granted and perquisites worth about $37,000.