(Reuters) - PepsiCo Inc PEP.N President John Compton is leaving the company to head truck-stop operator Pilot Flying J Oil Corp, narrowing the pool of likely candidates to become the soft drink and snack giant’s next CEO.
Zein Abdalla, president of PepsiCo Europe, will succeed Compton as president of PepsiCo, effective immediately. Enderson Guimaraes will take over from Abdalla in Europe, the company said late on Tuesday.
The news was a surprise, as Compton was just named president in March. Some on Wall Street saw him as the most likely successor to CEO Indra Nooyi, who has been at the helm for five years and came under fire late last year for a stagnant stock price and a North American drink business that lagged Coca-Cola’s (KO.N).
Even though Compton cited personal reasons for his departure, one could view it as a sign that he saw a rise to CEO as unlikely, said Bernstein Research analyst Steve Powers.
The promotion of Abdalla, who has extensive international experience, now “clearly positions” him as a leading CEO candidate, said Wells Fargo analyst Bonnie Herzog.
“Furthermore, it seems to suggest a further shift away from a U.S./beverage centric leadership,” Herzog said.
Another, possibly less likely, successor is Brian Cornell, head of the Americas Foods business, Powers said. He added that any immediate departure by Nooyi seems less likely now, since Abdalla and Cornell lack the experience of Compton.
“PepsiCo could have transitioned to John (Compton) relatively seamlessly, whereas transitioning to Zein (Abdalla) or Brian (Cornell) at this point would be a tougher sell,” Powers said.
Compton joined PepsiCo as a 21-year-old at the Pulaski, Tennessee, Frito-Lay facility. Taking the CEO job at privately held Pilot Flying J gives him the chance to return to Tennessee.
“I have deep and personal ties to Tennessee, and my family’s plan all along has been to return to Tennessee at some point,” Compton said in a statement. He had been based in Purchase, New York.
In running Pilot Flying J, the nation’s largest truck stop operator, Compton will succeed James Haslam, who last month bought the Cleveland Browns American football team.
Despite what Edward Jones analyst Jack Russo called “a deep bench,” of capable managers, he said it was not good for PepsiCo to see such an experienced and well-liked executive depart, especially since the company is going through a transition.
CEO Nooyi is in the process of turning around the North American soft drink business. Her plan includes ramping up advertising, cutting thousands of jobs and warning Wall Street to expect a bigger-than-expected decline in near-term earnings.
During Abdalla’s tenure, the Europe division’s revenue grew to $14 billion from $7 billion. He joined the company in 1995.
Guimaraes joined PepsiCo in 2011 and had been president of the global nutrition group. His successor in that role will be named shortly, PepsiCo said.
Abdalla and Guimaraes will report to Nooyi.
PepsiCo shares were unchanged in after-hours trade from their close on the New York Stock Exchange at $71.58.
Reporting by Martinne Geller and Jessica Wohl in New York; Editing by Gary Hill, Andre Grenon, Phil Berlowitz and Bob Burgdorfer