PepsiCo Inc revamped its global structure today in a move that deepens its management bench and could pave the way for an eventual successor to Chief Executive Indra Nooyi.
The company named John Compton, currently CEO of its Americas Foods division, to the newly created position of president of PepsiCo.
It also named Brian Cornell, a PepsiCo alum who most recently ran the Sam’s Club unit of Walmart Stores Inc, to replace Compton. He will be responsible for Frito-Lay North America, Quaker oatmeal and other brands.
“The management moves are about Nooyi and PepsiCo doing some ‘bench strengthening’ and bringing back a talented executive,” said Beverage Digest Editor John Sicher, citing sources who also said Compton should not be viewed as Nooyi’s sole heir apparent.
Compton, Cornell and Zein Abdalla, who runs PepsiCo’s European operations, are the three most likely internal candidates, said a source familiar the situation. Hugh Johnston, PepsiCo’s chief financial officer, is also on the list, but a little further down, the source added.
Nooyi’s five-year tenure has been hurt by the global financial crisis, recession and unprecedented commodity inflation. Still, she has been criticised for taking her eye off the core business of sodas to expand into healthier products such as hummus and drinkable oatmeal.
She has come under pressure lately from Wall Street for a stagnant stock price and a lagging North American beverage business, though she has the support of PepsiCo’s board of directors. She recently announced a broad plan aimed at boosting performance.
“We consider today’s news positive to PepsiCo’s long-term fundamentals,” said Stifel Nicolaus analyst Mark Swartzberg. “We take it as more evidence that the company is stepping up focus on execution and returns on what it ‘already has.’”
“Will Ms Nooyi soon leave PepsiCo, paving the way for Mr Compton or another senior PepsiCo executive to become PepsiCo’s next CEO? We consider that a reasonable outcome but have no special knowledge of the situation,” Swartzberg added.
PepsiCo shares were up 61 cents, or 1 per cent, at $63.76 in morning trade on the New York Stock Exchange.
Cornell, who headed the Sam’s Club warehouse chain for nearly three years until he left last month, previously held senior roles at the Michaels arts and crafts specialty retailer, where he led a turnaround, and was chief marketing officer for supermarket chain Safeway.
Prior to that, Cornell worked at PepsiCo in a number of positions, including president of Tropicana and of PepsiCo North America Foodservice. He will report to Nooyi, who praised him for having “what it takes to be a senior executive of a large public company.”
Compton, who has worked at PepsiCo for 28 years, will oversee the company’s existing global category groups, which include beverages, snacks, nutrition, operations marketing and corporate strategy. He will continue to report to Nooyi.
