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PepsiCo revamps management team

Published:Tuesday | March 13, 2012 | 12:00 AM

PepsiCo Inc. revamped its management structure Monday in a move intended to strengthen its lineup of potential successors to CEO Indra Nooyi and leverage its scale as a global company.

The management restructuring puts John Compton, who heads the company's Americas foods division, in charge of all the company's global groups in the newly-created role of president.

PepsiCo said Compton will also work with its regional groups for Europe, Asia, the Middle East and Africa to build brands, develop new products and cut costs. Compton, who is 50, started his career with PepsiCo when he was 22 and has been there ever since.

Brian Cornell, who was president and CEO of Wal-Mart Stores Inc.'s Sam's Club division, will take over for Compton as CEO of PepsiCo Americas Foods. The unit includes the Purchase, New York-based company's Frito-Lay and Quaker foods and snacks businesses.

Cornell, who is 52, previously held management positions at Pepsi, including president of its Tropicana brand and its Europe and Africa beverage businesses, before leaving the company in 2004.

PepsiCo said the appointments are effective immediately.

John Sicher, editor of Beverage Digest, said the appointments were in line with PepsiCo's recent focus on becoming known more as an international company like its rival The Coca-Cola Co.

"They want to extract all the benefits they can from being as big and global a company as they are," Sicher said, citing the company's plan to launch its first global ad campaign this summer.

The focus on international markets has become increasingly critical for beverage and snack food companies, given the flat growth at home in recent years.

PepsiCo in the past two years even created three new groups global beverages, global snacks and global nutrition. The company said Compton will assume responsibility for those groups, as well its global operations, marketing and strategy.

The new management structure comes as PepsiCo, the No. 2 U.S. cola company, has lost ground in recent years to Coca-Cola and faced speculation that Nooyi would step down amid investor dissatisfaction.

In a note to investors, Stifel, Nicolaus & Co. analyst Mark Swartzberg said he considered the appointments positive for the company's long-term fundamentals. Although he said he had no inside knowledge of the situation, he said it was a "reasonable outcome" that Nooyi would soon leave the CEO position she has held since 2006, paving the way for Compton or another senior PepsiCo executive.

At its annual investor meeting last month, PepsiCo said it plans to focus on regaining market share in North America by rolling out new products and significantly boosting its ad spending. The company also said it would cut 8,700 jobs, or about 3 per cent of its work force.

While PepsiCo is clearly focused on identifying its business fundamentals and ways to strengthen its advantages, Citi analyst Wendy Nicholson also noted last month that it would be "a mistake to underestimate the chaos factor" at PepsiCo.

She cited the high level of turnover during the past year, including the company's announcement that Massimo d'Amore, the president of its global beverages group, would retire early next year.

"While we believe change is good, especially for an organization that has underperformed, we also wonder how much more shifting of responsibilities is yet to come," she wrote.

Shares of PepsiCo gained 85 cents to $64 in afternoon trading.