Cornell Returns To Pepsi; Succession Speculation Bubbles

The voice of a new generation of executive at PepsiCo turns out to be the return of an old hand. Under pressure from Wall Street to pay more attention to earnings than to transforming PepsiCo into a do-good evangelist for healthier nutrition and booster of developing economies, it announced the appointment of Brian Cornell as CEO, PepsiCo Americas Foods. 

Cornell, who left PepsiCo in 2004 for Wal-Mart Stores, had resigned as president and CEO of its Sam's Club division in January, reportedly to return to the Northeast to spend more time with his grown children. He will be responsible for Frito-Lay North America, Quaker Foods & Snacks North America, PepsiCo Mexico, South America Foods, PepsiCo customer teams and all Power of One activities within the Americas. 

The current Americas Foods CEO, John Compton, has been named to a new position as president of PepsiCo. He will continue to report to chairman and CEO Indra K. Nooyi while taking command of all of the company’s existing global category groups. Compton will be responsible for “driving breakthrough innovation, and brand building while looking for ways to significantly reduce the overall cost structure of the company,” according to a press release giving equal weight to both appointments.



Cornell also will report to Nooyi, who made the announcement in a video that leads with the statement: “Today marks an important and essential step in PepsiCo’s journey to continue to deliver sustainable growth.” Shareholders’ eyes are on that last phrase in particular. 

“The appointments position both men, along with European operations chief Zein Abdalla, as the top internal candidates to succeed Mrs. Nooyi, according to people familiar with the matter,” write Mike Esterl and Joann S. Lublin in the Wall Street Journal. “Mrs. Nooyi has faced investor dissatisfaction as beverage rival Coca-Cola Co. has swiped market share from PepsiCo and also has been unable to boost the company's stock since she became CEO in 2006.”

The UK’s Independent man in New York, Stephen Foley, observes the same scenario albeit with a bit more verve: “Bang,” is his lede. 

“What was that?

“The starting gun.

“Oh, I get it. On the race to be the next chief executive of PepsiCo, fizzy drinks maker and purveyor of crisps and snacks to an increasingly obese world.” 

Foley concludes that Cornell has “the corporate patter to a tee, with a mantra of focusing on ‘five Cs’ (consumers, customers, competitors, costs, colleagues),” but says that “results” will determine who eventually succeeds Nooyi.

Cornell previously had been CEO at arts and crafts retailer Michaels, and EVP and chief marketing officer for Safeway. His previous positions at PepsiCo included president of Tropicana, president of PepsiCo beverages for Europe and Africa, and president of PepsiCo North America Foodservice. 

"The passion PepsiCo's people have for the brands and the company is truly special” Cornell says. “I look forward to leveraging my retail operating experience to meet the future needs of PepsiCo's consumers, customers and shareholders.”

“Rumors were circulating at a snack foods conference last week that PepsiCo was trying to hire Mr. Cornell, who was also being wooed by Avon, writes Stephanie Strom in the New York Times. “The appointment of Mr. Compton, along with Mr. Cornell’s return to the company, made it clear that PepsiCo would be leaning more heavily on its past.”

Bloomberg Businessweek’s Diane Brady points out that Nooyi’s focus is more on retaining top executives than it is on her eventual successor. She has “carefully arranged its new structure so Cornell doesn’t upstage John Compton,” she writes. Managing a “diverse set of ambitious executives” has been a particular talent of Nooyi’s from the get-go, she feels, with her retention of Michael White for several years after she beat him out for the top spot a case in point.

But her appointment of Massimo F. D’Amore to lead the North American beverage business in 2008 “led to the exodus of more than a dozen senior PepsiCo marketing executives, according to advertising agency leaders in New York” points out Strom in the Times. D’Amore, however, recently retired.

Nooyi has not indicated what her retirement plans might be but “it makes some sense to bring in fresh blood,” Davenport analyst Ann Gurkin tellsForbes’ Abram Brown. “We had expected further management changes to come,” she says. “We think it signals a change at the top coming sooner rather than later.”

PepsiCo indicated last month that this would be a year of transition “as it adds hundreds of millions of dollars in advertising spend, trims its agency partners, lays off thousands of employees and positions itself for growth,” Ad Age’s Natalie Zmuda reported at the time.

With a sweet touch of timing, we learned from Age’s E.J. Schultz yesterday that an obscure band of instant oatmeal owned by MOM Brands had snatched its “iconic” slogan –- “Choice of a New Generation” -- after Pepsi let the trademark lapse. Then again, it’s a tagline that only means something to a generation that nowadays is the antithesis of “new” –- the direction Pepsi seems to be going even as it draws on its veteran marketers to get it there.

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