PepsiCo announced August 14 that Steve Reinemund, 58, chairman and chief executive officer, will retire next May.
"After 22 years with PepsiCo, more than five of them as chairman and CEO, I have decided that my family is entitled to more time from me than the responsibilities and obligations of continuing as PepsiCo's CEO requires and deserves," said Reinemund. "It was, in many respects, the toughest and easiest decision of my life."
The board of directors has elected Indra K. Nooyi, 50, as CEO effective October 1, 2006. Reinemund will serve as executive chairman of PepsiCo and will continue to serve as a member of the board of directors until his retirement in May 2007.
In addition, PepsiCo also announced that Ms. Nooyi's current responsibilities will be divided between two PepsiCo veterans. Richard Goodman, 57, who has 12 years of service with the company and is currently chief financial officer of PepsiCo International, will assume the position of CFO for the corporation with responsibility for Tax, Treasury, Control, Risk Management and Audit and Investor Relations. Hugh F. Johnston, 44, currently senior vice president, Transformation, has been promoted to the newly created position of executive vice president, Operations and will add Global Procurement and Information Technology to his responsibilities. Johnston has worked at PepsiCo for 17 years. Both executives will report to Nooyi.
Nooyi joined the $33 billion global convenient foods and beverages company in 1994 and has served as president and CFO since 2001, when she was also named to PepsiCo's board of directors. As the fifth CEO in PepsiCo's 41-year history, she brings vast and unique skills to the job. She has directed the company's global strategy for over a decade and was the primary architect of PepsiCo's restructuring, including the divestiture of its restaurants into the successful YUM! Brands, Inc., the spin-off and public offering of company-owned bottling operations into anchor bottler Pepsi Bottling Group (PBG), acquiring Tropicana, and the merger with Quaker Oats that brought the vital Quaker and Gatorade businesses to PepsiCo. Recently, she has been driving critical cross-business initiatives to enhance operations and enable PepsiCo to meet the changing needs of consumers and retailers.
"Indra's record of transforming PepsiCo speaks for itself, and she has been an invaluable partner and ally throughout my time as CEO," said Reinemund. "She not only co-authored our vision and drafted our strategic blueprint, she has a sharp talent for turning insightful ideas and plans into realities and for developing and replenishing our talent base. Having worked side-by-side with Indra for many years, I am convinced she is more than qualified and clearly ready for her new role leading PepsiCo."
Reinemund, a 22-year PepsiCo veteran, has led the corporation since 2001. From 2001 to 2005, PepsiCo's revenues increased by more than $9 billion, net income increased by 70 percent, earnings per share increased by 80 percent, its annual dividend doubled and the company's market capitalization surpassed $100 billion. During 2006, PepsiCo has continued to build on that growth record. Last month, PepsiCo announced strong second-quarter earnings across all businesses, with a 12 percent increase in net revenue and 15 percent EPS growth. In conjunction with today's announcement, PepsiCo reiterated its confidence for the year and reconfirmed its forecast for 2006 full-year earnings of at least $2.95 per share.
Commenting on the transition, Reinemund said, "It has been a privilege to lead PepsiCo and I have wonderful memories of my 22 years here. I have a deep passion for the company and enormous respect for the people. However, I also have a deep love for my family and I believe the time is right to devote more attention at home, which I look forward to doing after completing a smooth business transition over the next nine months."
Speaking on behalf of PepsiCo's board of directors, presiding director Robert E. Allen said: "Steve's contributions as chairman and CEO and throughout his service to PepsiCo have been exemplary. In addition to the growth of the company during his tenure, there are three big areas that will mark his legacy to this company - his passionate commitment to health & wellness, diversity & inclusion and values-based leadership.
"At the very start of his tenure as CEO, he orchestrated the merger with Quaker, which gave PepsiCo substantial momentum and enabled it to become an industry leader in offering a pragmatic and balanced approach to delivering health and wellness solutions for consumers. It is evident in his move to quickly and voluntarily eliminate trans fats from Frito-Lay snacks, years ahead of when companies were required to start reporting trans fat content in their products.
"Steve has had a strong commitment to diversity and inclusion. From the outset, he has been relentless about attracting diverse talent and driving innovation by embracing different viewpoints with an eye towards growing the business by reaching out to the expanding population of diverse consumers.
"Finally, he has been the model of values-based leadership. His entire tenure has been marked by a singular focus on always doing what is best for PepsiCo and all its stakeholders, reinforced by the utmost integrity and total transparency. That legacy extends to the thoughtful and orderly succession he initiated many months ago with the board, which he has worked diligently to carefully organize until the plans were recently completed. We are deeply indebted to Steve and greatly appreciate his leadership, particularly in leading the company over the last five years, and wish him and his family all the best."
Speaking for the board, Allen continued, "We are exceedingly fortunate to have a leader of Indra's caliber, vision and experience take the helm. She has been instrumental to PepsiCo's solid direction and ongoing success and has the complete endorsement and support of the board. We have seen firsthand the difference that Indra has made on the business and the people, and we look forward to working even more closely with her to usher in the next generation of dramatic growth and advancement that has been a hallmark of PepsiCo since its founding."
Commenting on her appointment, Nooyi said, "I am humbled by the opportunity to lead PepsiCo, and profoundly grateful to follow in the footsteps of Steve Reinemund, Roger Enrico, Wayne Calloway and Don Kendall. Steve has steered the company to a strong and enviable position, and he will be a continuing source of wisdom and perspective. I am equally fortunate to have amazing partners, not only on the board and executive team, but in the 157,000 bright, talented colleagues around the world who deliver the results every day and are as committed as I am to continue capturing every growth opportunity."
As CEO, Nooyi's leadership team of direct reports will include the company's division chiefs - Michael D. White, PepsiCo vice chairman and chairman & CEO of PepsiCo International, who is also a member of the board of directors; Albert P. Carey, president & CEO of Frito-Lay North America; John C. Compton, president & CEO of Quaker-Tropicana-Gatorade; Thomas Greco, president of PepsiCo Sales; and Dawn Hudson, president & CEO of Pepsi-Cola
Corporate staff officers reporting to Ms. Nooyi will include Richard Goodman as CFO and Hugh Johnston as EVP, Operations, along with Larry D. Thompson, senior vice president, Government Affairs, general counsel and secretary; Margaret D. Moore, senior vice president, Human Resources; Ron Parker, senior vice president, Diversity and Inclusion; Antonio Lucio, senior vice president, Chief Innovation and Health & Wellness Officer; and Tod J. MacKenzie, senior vice president, Communications.
In closing, Reinemund said: "It gives me great pride that this organization continues to develop the kind of talent that enables the board to continue the unbroken tradition of selecting a strong CEO successor from within the ranks of our leadership, and provides qualified leaders to seamlessly backfill Indra's roles as well. I am absolutely confident that PepsiCo's future is in very capable hands, starting with Indra and deep into the organization. I truly believe she and her team will not only sustain the achievements we have made, but will take PepsiCo to an even higher level of success. I look forward to cheering their continued accomplishments."
