It’s been a busy past few days for Rachel Ruggeri, who was named interim CEO of Starbucks and sold hundreds of thousands of dollars’ worth of stock in the coffee giant she now leads.
Ruggeri’s sales figures, however, are not a reflection of her confidence.
Rather, it was a pre-planned transaction scheduled for last November and executed by a third-party broker to mitigate insider trading concerns.
Mr. Ruggeri sold 3,750 shares yesterday for $341,850 under a Rule 10b5-1 trading agreement, which allows business associates and executives to trade stock in publicly-traded companies without risk of violating the law.
Curiously, Ruggeri herself had no influence over the sale, yet her appointment may have helped set the deal in motion.
Yesterday, the $108 billion Seattle-based giant announced that CEO Lakshman Narasimhan would be stepping down from his role as CEO and from his board of directors, effective immediately.
New CEO Brian Niccol, who comes from Chipotle, will take up the corner office on Sept. 9.
In the meantime, Ruggeri, who is currently Starbucks’ CFO, will lead the company.
The market cheered the decision, sending the stock soaring from $77 to $91 a share, at which point Ruggeri’s shares were dumped onto the market. As of this writing, Starbucks shares are up nearly 30% over the past five days.
What is a Rule 10b5-1 trading agreement?
A Rule 10b5-1 trading agreement is triggered when a stock’s price reaches a certain point or on a certain date.
The deal agreement is governed by a strict set of rules, including the requirement that the shares be delivered to an independent party — in this case Rhode Island-based Fidelity Brokers — which has exclusive knowledge of when the sale and purchase will occur.
Additionally, formulas should be used to determine sales amounts, prices, and dates to eliminate human bias.
This approach has been adopted by a variety of top executives, including Nvidia CEO Jensen Huang.
In Ruggeri’s situation, the stock sale was due entirely to vesting of restricted stock, which had been granted to her as part of her compensation package for the past two years.
of The CFO-turned-CEO’s recent sale indicates that some of her assets are still in the company. luck confirm Ruggeri still owns more than 1.13 million Starbucks shares and other units.
Starbucks did not respond. Fortune Request for Comments.
Hard times for Starbucks
Overall, Starbucks has experienced significant growth since its founding in the 1970s, but the past few years haven’t been without their problems.
Howard Schultz, who joined the company a decade after it was founded, was a troubled CEO who was repeatedly brought back during crises to get the company back on track.
As a result, Schultz will have served as chief executive three times: from 1987 to 2000, after the financial crisis in 2008 to 2018, and again from 2022 to 2023 during the COVID-19 pandemic.
The most recent CEO to succeed Schultz was Narasimhan, who served in the role for just 17 months.
During that time, Starbucks struggled to navigate a complicated consumer environment, labor union negotiations with employees, and tensions in the Middle East.
In its latest earnings release, the company revealed that global same-store sales fell 3% and net revenue fell 1% to $9.1 billion.
Commenting on Nicol’s appointment, Schultz said: “Nicol’s track record of retail excellence and delivering exceptional value to shareholders recognises the people element essential to leading a culture- and values-driven company.”
“I believe he is the leader Starbucks needs at this critical moment in its history. I respect him and have his full support.”
