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By Christopher Palmeri
PepsiCo Inc.’s Hugh Johnston will find a familiar face when he joins Walt Disney Co. next month as chief financial officer — activist investor Nelson Peltz.
Johnston, who has been Pepsi’s CFO since 2010, was a key player in fending off Trian Fund Management 10 years ago when its founder Peltz began pushing the soft drink and snack giant to either merge with a rival or split into two businesses. Johnston argued against the proposal. Pepsi added a Peltz adviser to its board in 2015, and Trian sold its shares the following year.
“With Hugh there, Pepsi did a nice job convincing the Street that it had a growth plan,” said Bloomberg Intelligence analyst Ken Shea.
Peltz is now seeking several board seats at Disney after amassing a $2.5 billion stake in the company. He dropped a similar push earlier this year after Disney Chief Executive Officer Bob Iger announced a cost-cutting plan. But Disney’s stock has continued to underperform the S&P 500, losing about 3 per cent of its value this year.
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Disney announced the appointment of Johnston, 62, as its new CFO early Monday. He succeeds longtime executive Christine McCarthy, who stepped down for family medical leave in June.
The new CFO is expected to bring a seasoned hand to other issues at Disney. The world’s largest entertainment company is struggling to navigate the shift by consumers from traditional TV channels to streaming services. Iger, who returned to run Disney a year ago, has said he may sell networks like ABC. He’s looking for a strategic partner for his ESPN sports business and intends to buy Comcast’s Corp.’s one-third of the Hulu streaming service.
Johnston, who first joined Pepsi in 1987, was considered the right hand to CEO Indra Nooyi before she retired in 2018. He’s continued to advise Pepsi’s current boss Ramon Laguarta in his efforts to grow the business, such as the $3.85 billion purchase of Rockstar energy drink in 2020.
Other strategic moves have included an attempt to address consumer concerns about healthy eating by making smaller containers of soda and snacks, such as the company’s Doritos and Cheetos.
Under Johnston, Pepsi has become known for making and beating conservative financial forecasts. The executive has often been the public face of the company on Wall Street, in investor presentations and TV appearances. That could potentially make him a candidate to succeed Iger, whose contract runs through 2026, according to Citigroup analyst Filippo Falorni.
“He’s been around the organization,” Falorni said in an interview. “He’s had a lot of operational experience.”
Disney declined to comment or make Johnston available.
Johnston, who serves on the board of Microsoft Corp. and HCA Healthcare Inc., doesn’t have any direct experience in movies, TV or theme parks, Disney’s core businesses.
When Johnston joined the board of Twitter Inc. in 2016, many observed that he didn’t have an account on the social media site beforehand.
“Twitter Inc. may have found an answer to its problem of user growth — add nonusers to the company’s board and get them to start tweeting,” MarketWatch wrote at the time.
In an address at his alma mater, Syracuse University, in 2012 Johnston said new challenges are the key to professional growth.
“If you constantly work on developing yourselves and the skills you possess, you will stay fresh and be able to transform in any environment or market that you are in,” he said.
Then he gave out cans of Pepsi.
