Why does PepsiCo CEO Indra Nooyi still have a job?

Shares of the embattled beverage maker have barely budged since she took the helm, while rival Coca-Cola's have soared.

By Jonathan Berr Mar 12, 2012 11:42AM
When PepsiCo (PEP) announced a management overhaul Monday morning, the Associated Press argued that the struggling beverage and snacks company "may be lining up a potential successor to CEO Indra Nooyi."  

My question to Pepsi: Why wait?

Nooyi, 56, has done quite a bit since joining the firm in 1994, including overseeing the divestiture of its restaurant business [now called Yum! Brands (YUM)], the $3.3 acquisition of Tropicana in 1998 and the $13.4 billion purchase of Quaker Oats in 2001. 

What Nooyi hasn't been able to do is boost PepsiCo's share price since becoming CEO in 2006 and chairman in 2007. Over the past five years, shares of the Purchase, N.Y., company have barely budged, while rival Coca-Cola (KO) has soared more than 50%. How Nooyi has managed to keep her job is beyond me?

If the cola wars were a real fight, a referee would have declared Coke the winner long ago by a knockout. According to the latest data from Beverage Digest, Coca-Cola has 42% of the market to PepsiCo's 29%. Nooyi, who is often listed as one of the most powerful women in business and touted by some as the next World Bank head, has had plenty of time to address this problem -- and failed to do so. The board, however, has apparently not yet lost faith in her.

Earlier this month, she said that 2012 would be a "transitional year" and announced that Pepsi would lay off more than 8,000 workers. At the same time, the company pledged to boost marketing spending on its brands by as much as $600 million. Exactly how this will work is unclear.

The naming today of Wal-Mart executive Brian Cornell as CEO of PepsiCo Americas Food and John Compton as president is designed, in the words of Nooyi, "to ensure that we compete effectively and efficiently in the global marketplace." Huh? Why hasn't that been happening already?

PepsiCo's problems are not going to be solved by endless blathering about "transitions." Nooyi has to back up her words with deeds, including breaking up the company. There are no obvious synergies between the snack business and the beverage business, except in marketing to college students. Moreover, if it was such a great business model, why hasn't Coca-Cola and others replicated it?

Nooyi, whose 2010 compensation topped $14 million, has been given plenty of time to fix what ails PepsiCo. It's time for the company to give someone else a chance to do the job.

Jonathan Berr is a recovering soda addict. He is long Coca-Cola.

Mar 12, 2012 4:06PM
she makes 14 mil and 8000 poor people loose their job nice  where is justice?
Mar 12, 2012 4:36PM
Maybe the reason she hasn't lost her job is that she's a triple minority - over the age of 40, a female and someone of ethnic descent. 
Mar 12, 2012 4:15PM
This is the same O same O. The CEO makes big bucks, bonuses, cars, corporate jets everywhere at beck and call. The shareholders are the last people in line for anything. It's all about making as much as you can for as long as you can before you get the boot! Bonuses should be geared to the price of the stock.  If the stock action stinks you as CEO should not get a big bonus. When are the compensation people at Pepsi going to wake-up?
Mar 12, 2012 4:48PM
 Ms. Nooyi's 0% return over 4 years far outperforms Jeff Immelt's -60% return over 11 years as head of GE.  Mr. Immelt is our current president's choice to figure out how to create jobs. 
Mar 12, 2012 4:07PM

what can you possible buy if you make 14 mil a year


Mar 12, 2012 5:16PM

Forget, the socialist rant.

Pepsi needs fixing and any astute business person could do it quickly.

I have fixed compaines in worse trouble for a lot less then $14M.

Two years - $1M per year and bonus ($5M) if bench marks hit but I am an elderly, white male so I don't count. I am not politically correct.

Mar 12, 2012 7:13PM

So let's see if she works 40 hours a week for 52 weeks with no vacations or sick time off that only equals $6731.00 (rounded) per hour, or $53,846.00 per day. What self respecting oligarch can deliver for that?

Mar 12, 2012 7:52PM
Can't fire women or minorities without getting sued.
Mar 12, 2012 4:37PM
Make all their products wil real sugar and dispence with the High Fructose Corn Syrup, maybe the will gain more business.
Mar 12, 2012 4:27PM
Hi Camaro; What you have to remember is that $14 million isn't what it used to be ! Pity them.
Mar 12, 2012 4:23PM
Taste, taste, taste. Aside from tasting like a sugar bowl mixed with used coffee, it just does not have the right sound. When was the last time you entered a bar and ordered a Bourbon & Peepsi? It's Bourbon & Coke. Peepsi float? No, it's a Coke float. When we think truck, we think Ford, When we think motorcycle we think Harley and when we think cola, we think Coke. All are an American institution, no matter who runs the place, it will always be destined to fail as a product or remain weak. In my opinion, the glory days are gone, the testing is over and I want a Bourbon & Coke now!
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

125 rated 1
267 rated 2
455 rated 3
612 rated 4
682 rated 5
695 rated 6
632 rated 7
472 rated 8
279 rated 9
147 rated 10

Top Picks

TAT&T Inc9



Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.