It's rare for a CEO to leave a company to spend more time with his family and have the reason come across as genuine. However, with Steven Reinemund set to step down as CEO of PepsiCo (NYSE:PEP) on Oct. 1 and give up his chairman duties in May of next year, there is little cause to doubt that his reasons aren't sincere.
Since 2001, when Reinemund officially took the reins as chairman and CEO, the company's returns have been simply fantastic. I could go on about the different metrics, but the company provided them in its press release announcing the CEO change. Perhaps more impressive is that Reinemund accomplished this growth during a tough market, and to a certain extent the stock price has lagged the performance of the business, though it has done a lot catching up in the last year. CEOs that put up that kind of performance are rarely asked to leave.
Reinemund's replacement will be current CFO and President Indra Nooyi. From an outsider's perspective, Nooyi has done a great job during her tenure at the company, and the reaction of the company's shares today (up 1%) confirms that Wall Street sees little reason to worry about the appointment. This is logical, because like General Electric (NYSE:GE), PepsiCo has been able to promote CEOs from within and maintain its results.
There is, however, an interesting comparison to Inside Value selection Coca-Cola (NYSE:KO) to be had. Neville Isdell certainly spent a great deal of time at Coca-Cola -- and, in my opinion, was an internal promotion -- but the transition to Isdell as CEO was not nearly as neat and orderly as what we are witnessing at PepsiCo.
The other interesting fact is that Nooyi will join Meg Whitman of eBay (NASDAQ:EBAY), Irene Rosenfeld of Kraft (NYSE:KFT), and a handful of other women who are CEOs of large U.S. companies. While the number of women leading corporations can be an interesting bit of trivia to toss around, it ultimately doesn't mean as much as Nooyi's track record as CFO and her previous work at the company to spin off Yum! Brands (NYSE:YUM) and the acquisition of Quaker Oats. All things considered, I don't think PepsiCo shareholders could ask for a better transition or a better management team to guide this company in the long term.
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At the time of publication, Nathan Parmelee had no interest in any of the companies mentioned. The Motley Fool has an ironclad disclosure policy.
