By Joyce Yu
Philadelphia, PA–PepsiCo CEO Indra Nooyi will step down after helming the food and beverage giant for 12 years, and will be succeeded by Ramon Laguarta, currently the President overseeing global operations, corporate strategy, public policy and government affairs. Nooyi will remain as chairman until early 2019.
Born and raised up in India, Nooyi have had a successful tenure with PepsiCo marked by efforts to adapt to changing consumer tastes and fending off pressure from activist investors. Since she assumed CEO in October 2006, PepsiCo’s net revenue grew from $35 billion to $63.5 billion in 2017. Having grew 79%, PepsiCo’s stock price, however, lagged slightly behind the market during this period when S&P 500 gained 112% and Coca-Cola soared 108%.
Nooyi is the latest in a growing list of departures of chief executives this year, and is the second female CEO of a food and beverage company to leave the post since May, following Campbell Soup’s Denise Morrison. From Intel, to JC Penny and to Starbucks, several well-known companies announced their CEOs leaving, not mentioning smaller companies which also experienced leadership changes.
A report by an outplacement and career transitioning firm Challenger, Gray & Christmas showed a total of 450 CEOs left their posts at U.S.-based companies during the first four months of 2018, higher than 460 CEO departures in the same period a year ago. The number of CEO departures in May further increased 14% year on year to more than 90. Excluding Intel’s Brian Krzanich and Papa John’s John Schnatter who stepped down due to scandals, corporate underperformance is often times the most common reason that leads to change at top leadership.
JCPenney CEO Marvin Ellison left the department store chain June 1 to move to Lowe’s after JCPenney’s stock price fell from more than $10 per share in late 2016 to less than $3 in May 2018. Same thing happens to Margo Georgiadis, former CEO of Mattel who left the company after nearly a year and half of declining stock prices. Some analysts also suggested company mergers and acquisitions have played a role in the rise in departing CEOs.
Age is another reason that we are witnessing a high number of CEO departures this year. Economic growth after the 2008 recession “appears to have stretched leadership tenure at U.S. public companies, with effects on CEO age,” Matteo Tonello, managing director and corporate leader for the Conference Board, told Bloomberg Law. The average age of a chief executive officer with an S&P 500 company has increased since the recession, hitting 58.3 years in 2017, more than two years older than the average CEO in 2009, he said.