PepsiCo CEO Indra Nooyi will step down after 12 years at the helm of the food and beverage giant, steering the company through consumers’ changing tastes and adapting to the demands of the environment, while also fending off pressure from activist investors.
Indra Nooyi (left) and successor Ramon Laguarta
PepsiCo Inc today announced that its board of directors has unanimously elected Ramon Laguarta, 54, to succeed the 62-year-old Nooyi effective 3 October. He will be Pepsi's sixth CEO. Nooyi will remain as chairman until early 2019.
Since Nooyi took over as CEO, PepsiCo has delivered total shareholder return of 162 per cent between 31 December 2006 and 31 December 2017. Total cash returned to shareholders through dividends and share repurchases since the beginning of 2006 till the end of 2017 stood at $79.4 billion/
Dividends per share nearly tripled from $1.16 in 2006 to $3.17 in 2017, a compound annual growth rate of nearly 10 per cent.
Net revenue increased from $35 billion in 2006 to $63.5 billion in 2017, a compound annual growth rate of 5.5 per cent.
"Leading PepsiCo has truly been the honour of my lifetime, and I'm incredibly proud of all we have done over the past 12 years to advance the interests not only of shareholders, but all our stakeholders in the communities we serve," said Nooyi.
"Growing up in India, I never imagined I'd have the opportunity to lead such an extraordinary company. Guided by our philosophy of Performance with Purpose — delivering sustained performance while making more nutritious products, limiting our environmental footprint and lifting up all the communities we serve — we've made a more meaningful impact in people's lives than I ever dreamed possible. PepsiCo today is in a strong position for continued growth with its brightest days still ahead."
On his successor, Nooyi said, "Ramon Laguarta is exactly the right person to build on our success. He is a terrific executive with a long and proven track record of growing businesses. He has a deep understanding of the changing preferences of consumers and other critical trends unfolding around the world, and he has demonstrated that he knows how to navigate them successfully. Ramon has been a critical partner in running the company, and I'm confident he will take PepsiCo to new and greater heights in the years to come."
PepsiCo has faced challenges from upstart brands that continue to threaten its market share, including once-dominant drinks like Gatorade, more so in the North American market.
PepsoCo’s beverage business has been more challenged than its snacking business, raising the prospects of a splitting of the two businesses.
In fact, activist investor Nelson Peltz who had taken a stake in the company, had pushed for a split of the two businesses before backing off and exiting the company in 2016.
Nooyi is the latest in a growing list of departures of chief executives across the food and beverage industry, as it faces the unprecedented challenge of remaking decades-old companies under the glare of the public eye.
Laguarta will become the sixth CEO in PepsiCo's 53-year history. All have been appointed from within the organization, a testament to PepsiCo's strong bench of talent and succession planning.
Laguarta, a 22-year veteran of the company, has been president since September, overseeing global operations, corporate strategy, public policy and government affairs. Prior to that, Laguarta served in leadership positions in the European and sub-Saharan Africa divisions.
Laguarta has held a number of executive and general management roles in his 22 years at PepsiCo. Since September 2017, Laguarta has served as president of PepsiCo, overseeing global operations, corporate strategy, public policy and government affairs. Previously, Laguarta served as chief executive officer, Europe Sub-Saharan Africa, one of PepsiCo's most complex businesses with operations spanning three continents and comprised of developed, developing and emerging markets. Prior to that, he served as President, PepsiCo Eastern Europe region and served in a variety of sales, marketing and other commercial roles across Europe.
Prior to PepsiCo, Laguarta worked for Chupa Chups, S.A, a leading confectionery company based in Spain, where he held a number of international roles in Europe and the US Laguarta holds an MBA from ESADE Business School in Spain and a Master's in International Management (M&M) from Thunderbird School of Global Management in the U.S. A Barcelona native, he speaks multiple languages, including English, Spanish, French, German and Greek.
With Nooyi's departure, the rest of PepsiCo's senior leadership team will remain unchanged. Laguarta's direct reports will be: Hugh F Johnston, vice chairman and chief financial officer; Mehmood Khan, vice chairman and chief scientific officer, Global Research and Development; Albert P Carey, chief executive officer, PepsiCo North America; Vivek Sankaran, president and chief operating officer, Frito-Lay North America; Kirk Tanner, president and chief operating officer, North America Beverages; Laxman Narasimhan, chief executive officer, Latin America and Europe Sub-Saharan Africa; Silviu Popovici, president, Europe Sub-Saharan Africa; Mike Spanos, chief executive officer, Asia, Middle East and North Africa; Dave Yawman, executive vice president of government affairs, general counsel and corporate secretary; Jon Banner, executive vice president, global communications and president, PepsiCo Foundation; and Ruth Fattori, executive vice president and chief human resources officer.