PepsiCo deepens management bench

Mon Mar 12, 2012 11:09am EDT
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By Martinne Geller

(Reuters) - PepsiCo Inc (PEP.N: Quote) revamped its global structure on Monday 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 Wal-Mart Stores Inc (WMT.N: Quote), 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 criticized 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.'"   Continued...

Brian Cornell, President and CEO, Sam's Club, speaks to shareholders during Wal-Mart Stores Inc's annual general meeting in Fayetteville, Arkansas on June 3, 2011. REUTERS/Sarah Conard