PepsiCo Names New CEO: Should Investors Be Worried?

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The PepsiCo Inc. (NYSE: PEP) board of directors has announced the election of Ramon Laguarta as the company’s next chief executive officer. Laguarta has been PepsiCo’s president since September 2017 but has been with the company for 22 years.

He replaces Indra K. Nooyi, who will step down on October 3 after 12 years in the CEO role. She is expected to remain board chair until early 2019 to ensure a smooth transition.

Nooyi said:

Ramon Laguarta is exactly the right person to build on our success. He is a terrific executive with a long and proven track record of growing businesses. He has a deep understanding of the changing preferences of consumers and other critical trends unfolding around the world, and he has demonstrated that he knows how to navigate them successfully. Ramon has been a critical partner in running the company, and I’m confident he will take PepsiCo to new and greater heights in the years to come.

Laguarta, who joins the board of directors on October 3, will become the sixth CEO in PepsiCo’s 53-year history. The rest of PepsiCo’s senior leadership team will remain unchanged.

PepsiCo is top consumer staples stock and considered a defensive portfolio pick that could survive a market crash. It is also a dividend aristocrat, having paid dividends for 45 straight years. In July, the company posted second-quarter results that pleased investors, with positive surprises on the top and bottom lines. Nooyi commented at the time:

We are pleased with our results for the second quarter and we remain on track to achieve the financial targets we set out at the beginning of the year. The majority of our businesses performed very well, particularly our international divisions propelled by continued growth in developing and emerging markets, and our North America Beverages sector posted sequential net revenue and operating profit performance improvement.

Laguarta may have some big shoes to fill, but it doesn’t appear that investors have much reason to worry about a big course change for this global snack and beverage giant. Presiding director, Ian Cook, said:

PepsiCo is well positioned for ongoing success as Ramon assumes this new role. He is a seasoned leader with deep experience in international markets, and the board is confident that he is the right person to usher in this next chapter of growth for PepsiCo.

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