Starbucks' CEO will commute 1,000 miles from California to Seattle office instead of relocating.

When Brian Niccol becomes the new CEO of Starbucks next month, he won't have to move to the company's headquarters in Seattle.

According to the new CEO's offer letter, which was made public in an SEC filing last week, Starbucks has offered Niccol the option to live in his home in Newport Beach, California and commute to Starbucks' head office 1,000 miles away on a corporate jet.

Niccol, 50, will receive a base salary of $1.6 million annually and has the potential to earn an annual cash bonus ranging from $3.6 million to $7.2 million based on his performance. Additionally, he will be eligible for annual equity awards worth up to $23 million in his new role.

In 2018, when Niccol became CEO of Chipotle, he successfully negotiated a similar deal.

Niccol, who was previously CEO of Taco Bell, resided in Newport Beach, a 15-minute drive from Taco Bell's main office in Irvine, California. Three months after announcing his appointment, Chipotle relocated its headquarters from Denver to Newport Beach.

In addition to the offer letter, Starbucks mentions that it will establish a remote office for Niccol in Newport Beach and allow him to choose an assistant to assist him.

Despite not traveling for work, Niccol will still need to work from the Seattle office at least three days a week in accordance with Starbucks' hybrid work policies, as stated by a company spokesperson to CNBC Make It.

"The spokesperson stated that Brian will spend most of his time in our Seattle Support Center and out visiting partners and customers in our locations worldwide, exceeding the hybrid work guidelines and expectations we have for all partners."

Since early 2023, Starbucks employees have been mandated to spend at least three days in the office each week.

The gulf in bargaining power between high-ranking executives and the average employee is emphasized by Niccol's arrangement.

The supercommuting CEO is becoming 'increasingly common'

Senior-level employees are often granted the flexibility to work remotely from a different state in order to attract and retain top talent, according to Raj Choudhury, a professor at Harvard Business School who specializes in remote work.

According to Choudhury, the trend of CEOs working remotely is on the rise, despite a lack of comprehensive research on the subject.

"Executives are increasingly demanding flexibility in job offers due to the competitive labor market, explains the source."

Last week, Victoria's Secret hired Hillary Super from Fenty x Savage, Rihanna's lingerie brand, as its new CEO.

In September, Super will work from the retailer's New York City offices instead of its headquarters near Columbus, Ohio, and travel to Columbus as needed, as per her employee agreement.

Although there have been some recent examples, it is still challenging to make a clear determination about CEOs' preferences for remote work.

While some CEOs, such as Amazon's Andy Jassy and JPMorgan Chase's Jamie Dimon, are firm on their return-to-office policies, other studies suggest that managers are not happy about the loss of remote work.

Niccol's arrangement at Starbucks is viewed by Choudhury as a "smart risk" taken by the company to attract a top executive.

During the tenure of CEO Laxman Narasimhan, Starbucks' shares have fallen 21%, with weak sales in the U.S. and China, its two largest markets, contributing to the company's struggling performance, according to CNBC reports.

As CEO of Chipotle, Niccol successfully steered the company through a foodborne illness scandal and navigated its restaurants through the pandemic. As a result, the chain's stock skyrocketed by 773%, according to CNBC.

"According to Choudhury, Starbucks chose this individual based on their past success in boosting restaurant-based companies, not their location. He predicts that more companies will adopt this approach: To attract and retain top talent, companies must be open to flexible work arrangements."

Choudhury notes that the trend of remote work could provide flexibility benefits for desk workers.

"If more executives work remotely, middle managers may be motivated to follow suit, as cultural shifts begin from the top. This presents an excellent opportunity for Starbucks to test offering its employees the same level of flexibility as its executives."

To become more successful and confident with your money, enroll in CNBC Make It's new online course. Our expert instructors will guide you in mastering your money and discovering practical strategies to increase your savings, decrease your debt, and grow your wealth. Start your journey to financial freedom today with a 30% discount using the coupon code EARLYBIRD until September 2, 2024.

Sign up for CNBC Make It's newsletter to receive tips and tricks for success at work, with money and in life.