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Indra "Middle Finger" Nooyi promoted to CEO at Pepsico
The Pepsico CFO who likened the US to a middle finger has now been pushed upstairs. PepsiCo Inc. (NYSE:PEP - news) on Monday promoted its president and chief financial officer, Indra Nooyi, to chief executive, succeeding Steve Reinemund, whose decision to retire after a successful five-year run caught some on Wall Street by surprise. Nooyi, who has been involved in much of the major strategic planning for the company for several years, was expected to lead a smooth transition, and the stock rose slightly. "I don't think it's a surprise to anyone that the choice was Indra. The surprise was Steve stepping aside," said David Kolpak, an analyst at Victory Capital Management, which owns 1.5 million PepsiCo shares. Reinemund, 58, said he will leave next May to spend more time with his family. He will serve as executive chairman and as a director of PepsiCo, which makes Pepsi soda and Frito-Lay snacks, until his retirement. The 50-year-old Nooyi, who takes over effective October 1, has been president and chief financial officer of PepsiCo since 2001, and was favored to take over the helm. "Given Indra's involvement in the company's strategy, vision and her current role as president and chief financial officer, we would expect a seamless transition," William Pecoriello, an analyst at Morgan Stanley, said in a research note. Pecoriello called Reinemund's retirement a surprise, adding he had the "highest confidence" in Nooyi's ability to "lead the organization going forward into many years of solid performance." The stock rose 25 cents to $63.58 on the New York Stock Exchange on Monday. The shares are up about 44 percent since April, 2001, compared with a 5 percent decline in Coca-Cola Co. (NYSE:KO - news) shares over the same period. PepsiCo stock is also up nearly 80 percent from a low under Reinemund of $35.60 in September 2002. The largest U.S. company in terms of revenue run by a woman is grain processor Archer Daniels Midland Co. (NYSE:ADM - news), which named Patricia Woertz as CEO in April. With Nooyi's appointment, PepsiCo would become the second-largest company headed by a woman. Reinemund had moved back to Dallas about three years ago to be closer to his family, so the decision to retire was not a surprise, said Ken Harris, a partner in consulting firm Cannondale Associates. Harris, who used to work with Nooyi, said that she brings several important qualities to the chief executive's job. "No. 1, she's smart, smart, smart," Harris said. "The next thing is that she is a very good people manager." Richard Goodman, 57, currently CFO of PepsiCo International, will become CFO of the corporation, and Hugh Johnston, 44, was promoted to the newly created position of executive vice president, operations. He had been PepsiCo's senior vice president, transformation. Since Reinemund became chairman and CEO in May, 2001, PepsiCo has expanded its business. Most notably, it acquired Quaker Oats Co. for $13 billion three months after he took over, adding Gatorade sports drink and a host of food brands to the company's portfolio. During his tenure, PepsiCo evolved from a company known mostly for selling soda pop and salty snacks into a $33 billion food company that has embraced the push into healthier options like Tropicana juices, Aquafina water and whole grain Quaker Oats Cereals, while seeing earnings soar. "He's an ex-Marine. He prides himself on staying in shape, and health and wellness has been a real mantra for him at the company," said analyst Kolpak. Kolpak noted that PepsiCo was ahead of most, if not all, of the food industry, in removing artery-clogging trans fats from its products. From 2001 to 2005, the company's earnings per share jumped 80 percent, its dividend doubled, and its market capitalization increased to more than $100 billion. Posted by: Zhang Fei 2006-08-14 |
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