PepsiCo CEO picks a president, but no 'heir apparent'

By Jennifer Maloney Business Leaders Dow Jones Newswires

Pepsi products are displayed in a supermarket in New York City, U.S. February 15, 2017. REUTERS/Brendan McDermid - RTSYUYP

PepsiCo Inc.'s longtime leader Indra Nooyi is promoting one of her lieutenants to serve as the company's president, filling a No. 2 role that has been vacant for nearly three years and shuffling around her potential successors.

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Ramon Laguarta, currently head of the company's Europe and sub-Saharan Africa business, will become PepsiCo's president, a headquarters role covering global operations, corporate strategy, public policy and government affairs.

His current duties will be given to Laxman Narasimhan, who runs the snack-and-beverage giant's Latin America division. Both appointments will take effect Sept. 1.

In an interview, Ms. Nooyi, 61 years old, said she intends to keep running the Purchase, N.Y.-based company "for the foreseeable future." The two promotions are the latest in a series of moves over the past few years to "stretch" executives and prepare them to be contenders for the top job, she said. The company's division heads will continue to report to her.

PepsiCo, which has a market value of about $165 billion, has been using higher prices, smaller packaging and a broader portfolio to help boost results amid shifting consumer tastes that are pressuring the packaged food and beverage industries. Despite falling soda demand and other industry challenges, the company's profit margins are rising and shares are trading near all-time highs.

During Ms. Nooyi's 11-year tenure, two potential successors have been promoted to the No. 2 role of president and subsequently left the company. The job has been vacant since the 2014 departure of Zein Abdalla.

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Ms. Nooyi, who was CFO and president before she was named chief executive in 2006, said Mr. Laguarta shouldn't be presumed her successor. She took over as chairman in 2007 and led the spinoff of Yum Brands Inc. as well as acquisitions of Tropicana and Quaker Oats. She has fended off calls to break up the company and pushed into healthier snacks and beverages.

"There is no heir apparent," she said. "When the time comes for succession, whenever it is, I think the wonderful thing is our board is going to have so many people to choose from."

The leading internal candidates to succeed Ms. Nooyi now include Mr. Laguarta, Mr. Narasimhan and Hugh Johnston, PepsiCo's chief financial officer, who in 2015 was named vice chairman and put in charge of e-commerce and information technology.

Mr. Laguarta, 53, a native of Barcelona, joined the company in 1996 and has spent most of his career rising through the ranks of the European operations. He has an MBA from Spain's ESADE business school. He speaks English, Spanish, French, German, Greek and Catalan and will relocate to the U.S. from Geneva in his new role.

Mr. Narasimhan, 50, was a senior partner at McKinsey & Co. where he spent 19 years before joining PepsiCo in 2012. He was senior vice president and CFO of PepsiCo Americas Foods before rising to Latin America chief in 2014.

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Ms. Nooyi said she wanted Mr. Laguarta, whom she called "a great operating executive," to gain experience at the corporate headquarters, where his mandate will be to grow sales and productivity to fund investments, she said.

For Mr. Narasimhan, she said she wanted to push him to "lift and shift ideas" across his two geographic divisions to accelerate their growth. She said he has "evolved from brilliant strategist to a very good operating executive."

As Mr. Laguarta takes on some of Ms. Nooyi's responsibilities, she said she would shift her focus to PepsiCo's future. Letting other executives "come into their own, but being there as a helping hand, is my job at this point," she said.

Write to Jennifer Maloney at jennifer.maloney@wsj.com

(END) Dow Jones Newswires

July 20, 2017 08:14 ET (12:14 GMT)

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