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PepsiCo CEO Indra Nooyi is no longer all that and a bag of chips.
After five years at the helm of the drinks-and-snack giant, Nooyi is testing the patience of company directors who are fretting over the lack of an heir apparent amid a series of marketing missteps and a stock that is flat as day-old soda.
Sources close to the board said some members have expressed frustration that there is no succession plan and that the only potential CEO replacement, Eric Foss, who headed up the bottling operations, is leaving next month.
“The board is running out of patience,” said a source close to the company, adding that he did not see an immediate change at the top, in part because there is no clear successor.
The 53-year-old Foss is the only PepsiCo executive who has been in charge of a publicly listed company, having run Pepsi Bottling Group until its sale last year to PepsiCo.
The PepsiCo board persuaded Foss to stay on after the takeover, and he signed a two-year contract that was expected to keep him around until at least 2012. Instead, Foss announced in September that he would step down Dec. 9.
While there had been rumblings that Foss would not renew his contract, the board was disappointed just the same, sources said.
“Eric [Foss] was a really, really good operator,” said one source.
The lack of a CEO successor coincides with investor discontent over PepsiCo, whose shares have fizzled as it loses ground to arch-rival Coca-Cola.
Hailed as a visionary when she rose to the rank of CEO, Nooyi is facing criticism that her focus on healthier foods is distracting her from high-margin snacks and sugary drinks.
A string of marketing stumbles — including a re-branding of Tropicana that caused mass confusion in the juice aisle, along with an overly noisy Sun Chip bag that turned off customers — is also causing investors to lose faith.
One source close to the company believes that the board is feeling the pressure and might address the succession issue within the next six months.
“I think there is a point in time where if the stock doesn’t improve, the pressure to force her out will be hard to ignore,” said the source.
One possible scenario is having Nooyi announce her intention to step down at the end of another year, giving the board time to conduct a search for a replacement.
Ironically, sources said Foss’s departure may have actually bought Nooyi, 56, more time at the helm.
“But people are starting to see that there needs to be a new way forward,” one source said.
PepsiCo’s stock has fallen 4 percent since Nooyi took charge of the company five years ago. Shares of the company, whose brands also include Quaker Oats and Frito-Lay, rose 51 cents yesterday to close at $62.50.
In 2006, PepsiCo’s board selected Nooyi over fellow executive Michael White largely because they believed she could better transform PepsiCo into a healthier drinks and snacks business.
Her major initiatives so far, including her 2010 global nutrition initiative to emphasize healthier options, have not yielded major results, sources said.
Analysts have called for PepsiCo to split its food and beverage divisions, saying that would boost the stock from its $62.50 close yesterday to $80 a share — a move neither Nooyi nor the board supports, sources said.
A PepsiCo spokesman declined comment.