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PepsiCo will take the first step toward finding an eventual successor to Chief Executive Indra Nooyi next month when it plans to ask several top executives to step up their duties.
The beverage and snack giant, which is set to release the results of a months-long review on Feb. 9, will give at least two executives additional responsibilities, anointing them as possible replacements, a source close to the company said.
Among those who could get the nod: John Compton, the global head of the snacks business and Saad Abdul-Latif, the chief of Pepsi’s Asia, Middle East and Africa division, are considered the favorites, sources said. Pepsi’s Europe chief, Zein Abdalla, is also seen as a possibility.
PepsiCo, which is under pressure to split up its beverages and snacks businesses, is also facing criticism of its leadership. The company’s flagship soda has been losing ground to archrival Coca-Cola, while the stock has been flat during Nooyi’s five-year tenure.
“The priority for the board is not breaking up the brands, but how quickly do they replace Indra [Nooyi],” a source close to the board said.
The Post has reported that some members of PepsiCo’s board were frustrated with Nooyi for not readying an heir apparent and for failing to retain a key executive.
In an interview with the Wall Street Journal last month, Pepsi director James Schiro, speaking on behalf of the board, said Nooyi still had the board’s backing.
PepsiCo declined to comment beyond Schiro’s comments.
The last two PepsiCo CEOs — Roger Enrico, who ran the company from 1996 to 2001, and Steven Reinemund, from 2001 to 2006 — each stayed at the helm for five years. Nooyi is in her sixth year.
Since October 2006, when Nooyi became CEO, PepsiCo’s stock has barely budged from $65.20 to a closing price yesterday of $66.52.
PepsiCo will not fill its vacant COO position next month, which would have instead meant it was choosing an heir apparent.
In setting up a succession contest, the company is following the same model it used to arrive at Nooyi.
PepsiCo in the mid-1990s elevated Nooyi and Michael White, making it clear one would take the top job. After choosing Nooyi, White resigned and went on to became CEO of satellite-TV provider DirecTV.
Nooyi’s predecessor, Steven Reinemund, took a different path, first becoming COO and two years later CEO.
Of the candidates who could take on new duties, Compton is recognized as perhaps the strongest operator, running a lean snacks operation with fat profit margins.
However, a former top PepsiCo executive said Nooyi is not very close to the Frito-Lay snack business, and therefore might not favor Compton, though would clearly fear losing him by making another executive the heir apparent.
“It’s clear she likes [Europe CEO] Zein,” the former executive said.
The need to have a succession plan became more pressing in December when former Pepsi Bottling Group CEO Eric Foss resigned. He was the only senior executive with experience running a public company.