It’s been a busy couple of days for Rachel Ruggeri: She’s been named the interim CEO of Starbucks and sold hundreds of thousands of dollars’ worth of stock in the coffee behemoth she now finds herself leading.
Ruggeri’s sale is not, however, a reflection of her self-confidence.
Instead, it was a preplanned trade scheduled in November of last year, carried out by a third-party broker to mitigate any concerns of insider trading.
Ruggeri sold the 3,750 shares yesterday for $341,850 under a Rule 10b5-1 trading agreement, which allows business insiders and executives to trade their shares in a publicly listed company without risk of breaking the law.
Strangely, while Ruggeri herself would have had no influence over the sale, her appointment may have led to the agreement being triggered.
Yesterday, the $108 billion Seattle giant announced that CEO Laxman Narasimhan would be stepping down from the top job—and the board—with immediate effect.
Incoming CEO Brian Niccol, who joins from Chipotle, will take over the corner office on Sept. 9.
In the meantime, Ruggeri, currently serving as Starbucks’ CFO, will lead the company.
The market is pleased by the decision, with the stock jumping from $77 a share to $91 a share—the point at which Ruggeri’s shares were off-loaded onto the market. At the time of 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 can be triggered either by a share price hitting a certain point, or by a certain date being reached.
The trading agreement is subject to a strict set of rules, which includes handing the shares to an independent party—in this case, Rhode Island–based Fidelity Brokerage—that has exclusive knowledge of when a sale or purchase will be made.
Furthermore, a formula must be employed to determine the amount, price, and date of the sale to remove any human bias.
The method is employed by a range of top executives, including Nvidia CEO Jensen Huang.
In Ruggeri’s situation, the stock sale was made up entirely of restricted stocks vesting, which had been awarded to her as part of her compensation packages over the past two years.
The CFO-turned-CEO’s recent selloff also represents a fraction of her assets still remaining vested in the company. The SEC filing seen by Fortune confirms that Ruggeri still owns more than 1.13 million shares or other units in Starbucks.
Starbucks did not respond to Fortune’s request for comment.
A bumpy time for Starbucks
While overall, Starbucks has enjoyed massive growth since its launch in the 1970s, the past couple of years have not been without hiccups.
Howard Schultz, who joined the business 10 years after its inception, has been a yo-yo CEO, repeatedly called back to the business in times of crisis in order to steer it back on track.
As a result, Schultz served in the top job three times: from 1987 to 2000; following the financial crisis from 2008 to 2018; and again during the COVID-19 pandemic from 2022 to 2023.
The most recent CEO to take over after Schultz’s tenure was Narasimhan, who was in the top job for only 17 months.
During that time, Starbucks struggled to navigate a complicated consumer environment, union negotiations with employees, and tensions in the Middle East.
In its latest earnings release, the business revealed that comparable global store sales were down 3%, while net revenues declined 1% to $9.1 billion.
Schultz said of Niccol’s appointment: “His retail excellence and track record in delivering extraordinary shareholder value recognizes the critical human element it takes to lead a culture- and values-driven enterprise.
“I believe he is the leader Starbucks needs at a pivotal moment in its history. He has my respect and full support.”