PepsiCo joins giants hiring female CEOs

NEW YORK — The exclusive club of women running the nation's largest public companies grew by one Monday.

PepsiCo, maker of Pepsi, Gatorade and Frito-Lay snacks, named Indra K. Nooyi as chief executive, making her No. 2 among female CEOs at firms in the Fortune 500, which are ranked in size by revenue. She takes over Oct. 1.

Nooyi, who was born in India and earned an undergraduate and master's degree there, has been called "a true internationalist."

She started her career in India, including a post at Johnson & Johnson, and later moved on to jobs at the Boston Consulting Group and Motorola. She has a master's degree in public and private management from Yale University.

Nooyi, 50, replaces Steven Reinemund and boosts the ranks of women at the top of large companies to 11.

Patricia Woertz at agricultural processor Archer Daniels Midland ranks first among female CEOs of Fortune 500 companies, where ADM is 56th.

PepsiCo, the world's second-largest soft-drink company after Coca-Cola, is 61st.

Seattle-based Safeco's CEO, Paula Rosput Reynolds, is No. 10 on the list of women Fortune 500 chief executives.

"I'm very excited and at the same time very humbled," Nooyi told analysts during a conference call Monday.

Nooyi said she was fortunate to be taking over when PepsiCo has solid growth across all its business units.

The news of Nooyi's promotion comes while PepsiCo faces allegations that beverages sold in her home country have high levels of pesticides.

Within the past week, at least five Indian states have banned the sale of Pepsi and Coca-Cola products at schools, colleges and government offices. The bans followed the release of a report by a research group, The Center for Science and Environment in New Delhi, that claimed the drinks contained high levels of pesticide residue.

PepsiCo and Coke have maintained their drinks are safe. Between them, the two companies account for nearly 80 percent of India's $2 billion-plus soft-drinks market.

Catalyst Vice President Debbie Soon, in charge of executive leadership initiatives, said she cheered Nooyi's promotion but saw it as part of a trend that needs more momentum.

"We are certainly happy," said Soon, whose organization works to expand job opportunities for women. "Given that Indra is 11th, it's not really a great victory, but it's directionally correct. Hopefully it will become a part of the corporate DNA such that this will no longer be news."

Citigroup analyst Bonnie Herzog called Nooyi a star who has been working side by side with Reinemund over the past several years. "She has been very involved with every major decision PepsiCo has made over the past five-plus years and therefore we expect this transition to be very smooth," Herzog wrote in a research note.

Reinemund said in a statement he is retiring to spend more time with his family.

"I can't tell you how excited I am to pass the baton to Indra," Reinemund said Monday.

Wall Street analysts said they were surprised at the timing of the move, which came earlier than they expected. Reinemund is only 58.

"However, we verified with the company that he is healthy, he is not going to another company, and that he just simply wants to spend time with his family," Herzog said in her research note.

Reinemund was a driving force in diversifying PepsiCo's product portfolio into more healthful foods, Bank of America analyst Bryan Spillane said in a note to investors.

The company's growth has been buoyed by strength in noncarbonated drinks and in international markets, moving its focus from the flagship cola products.

Sales of noncarbonated drinks, such as Aquafina water and Gatorade, surged 23 percent in North America in the most recent quarter.

Reinemund will continue as chairman until his retirement in May. He has worked for PepsiCo for 22 years, serving as chairman and CEO for five.

Nooyi has been with the company for 12 years and has been chief financial officer since 2001. She will be the fifth CEO in PepsiCo's 41-year history.

The announcement settles the question of whether PepsiCo could keep Nooyi at the company, Spillane said.

"One question investors have consistently had the last few years was whether there would be enough to keep Ms. Nooyi interested at Pepsi," he wrote. "This promotion would seem to suggest that there is."

Nooyi's responsibilities will be divided between PepsiCo International CFO Richard Goodman and Senior Vice President Hugh Johnston.

PepsiCo stock rose 62 cents, to close at $63.95.