PEP – That this executive departure is getting so much press shows the extent to which PEP’s international operations are the driver of future growth—and the degree to which PEP is a beneficiary of The Global Demographic Tailwind. It also shows the degree to which executive pay is out of control.
By VALERIE BAUERLEIN and JOANN S. LUBLIN SEPTEMBER 19, 2009, 4:42 P.M. ET
Michael D. White, a veteran PepsiCo Inc. executive who Chairman and Chief Executive Indra Nooyi once called her "closest partner" in running the snack and beverage giant, is retiring from the company by the end of this year.
Mr. White, the 57 year-old chief of PepsiCo's international businesses, as well as a vice chairman and board director, has played a major role alongside Ms. Nooyi in key developments in recent years, most recently negotiating the company's $7.8 billion deal in August to buy its two biggest independent bottlers. PepsiCo confirmed Mr. White's departure, first reported by The Wall Street Journal, in a statement Saturday afternoon.
In an interview, Mr. White said he first talked with Ms. Nooyi in the summer of 2008 about wanting to move on to "another chapter in my life" after nearly 20 years with the company. The veteran was passed over for the top job when Ms. Nooyi became chief executive three years ago, but Ms. Nooyi persuaded him to stay on.
Ms. Nooyi and Mr. White took the first step toward making his retirement possible with a restructuring of the international business last fall under two executives who will now take it over from Mr. White.
But Ms. Nooyi also tried to talk Mr. White out of leaving, he said, and gave him a big role starting last December in planning for the acquisition of the bottlers.
Mr. White said he plans to remain at PepsiCo until the end of November or December, when planning for the integration of the newly-acquired bottlers will be beyond "design and architecture" and "more about execution."
"I'm still going to be focused to make sure this is a seamless and well planned transition," he said. He will also remain on the company's board until he retires, and will continue to oversee corporate functions such as procurement and information technology and global concentrate operations.
But oversight of international operations will be handed over to the two executives elevated last fall. Zein Abdalla will become chief executive officer of PepsiCo Europe and Saad Abdul-Latif will become chief executive officer of PepsiCo Asia, Middle East, and Africa, the company said. Both will report to Ms. Nooyi.
Mr. White said he has been so busy with his duties at PepsiCo that he hasn't planned his next chapter. "I don't have a plan other than that I'm not looking to go play golf," he said.
But he said, "I'm ready to do something very different." He said he hopes to look at "some intriguing opportunities" in private equity or a leadership role at another company.
When she became chief executive officer, Ms. Nooyi, 53, said her first priority was keeping Mr. White as a deputy. He was granted a lucrative compensation package as part of his three roles. He had roughly 1 million exercisable options of PepsiCo shares, valued at about $59.9 million, according to the company's most recent proxy statement. Under SEC pay-disclosure rules, PepsiCo reported for Mr. White a 2008 total-pay figure of $10.1 million, far more than any other company executive except for Ms. Nooyi, whose total pay was $13.4 million.
In November 2007, Ms. Nooyi narrowed Mr. White's operational duties as part of a broader management reshuffling, but called him her "closest partner" in running PepsiCo. She gave him oversight of global purchasing and other strategic functions in addition to his operations role, and he worked with Ms. Nooyi to further develop the next generation of leaders.
Mr. White's exit follows other high-level departures at the company. Last month Dave Burwick, a 22-year veteran who oversaw marketing of Pepsi-Cola, Gatorade and other beverages, stepped down. Other departures include Rick Gomez, a vice president in the North American beverage unit, who is now at brewer MillerCoors LLC; Jeff Urban, senior vice president of sports marketing for Gatorade; Cie Nicholson, Mr. Burwick's predecessor; and Russell Weiner, former vice president of marketing of colas for North America, who left for Domino's Pizza Inc.
Some colleagues and industry experts said it reflected well on PepsiCo that Mr. White had stayed at the company as long as he did after not getting the nod for the top job in 2006.
Mr. White joined PepsiCo's Frito-Lay unit in 1990 in planning and has since served in leadership roles across the company, including a stint as chief financial officer.
In a statement, Ms. Nooyi credited Mr. White with leading a "dramatic transformation" of the company's international business. Sales outside North American have risen to close to $20 billion, from less than $8 billion in 2003, she said. "Mike's PepsiCo career has been nothing short of remarkable."
Among his achievements, Mr. White drove the company's expansion in recent years in fast-growing emerging markets such as China and Russia. A fan of Russian language and culture who spent time as a student at Leningrad State University, he helped drive a $2 billion acquisition together with Pepsi Bottling Group Inc. of Russia's largest juice maker, OAO Lebedyansky. He has also overseen rapid growth of the company's snack businesses in international markets, partly by tailoring flavors to local tastes – such as mango-flavored potato chips in China. Over the past year, PepsiCo has pledged multi-year investments of $1 billion in Russia, $1 billion in China and $500 million in India.‹
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