PepsiCo has handed a board seat to former Heinz CEO Bill Johnson, who is also an advisor to Nelson Peltz, the activist shareholder that has been pushing for change at the US food and drinks giant.
The move appears to have brought an end to two years of tension between PepsiCo and Peltz, during which time the company’s management resisted Peltz’s calls to split the Lay’s and Quaker owner in two.
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Announcing the appointment of Johnson on Friday (16 January), PepsiCo chairman and CEO Indra Nooyi insisted the company had had “constructive discussions” with Peltz’s investment fund Trian Fund Management for nearly two years. She added: “They have provided valuable input to many aspects of our business, and the recommendation of Bill as an independent director to the board. We respect Bill’s strong track record of shareholder value creation at Heinz. Bill’s extensive consumer packaged goods experience will be an important addition to our board.”
Peltz first called for a split at PepsiCo in 2013. He suggested the company should look to merge its snacks business with Cadbury and Oreo owner Mondelez International and then spin off its drinks arm. A so-called “Plan B” from Peltz was for PepsiCo to simply spin off the beverage business. Last January, Peltz gave up on his bid for a merger with Mondelez but still publicly called on PepsiCo to split.
Peltz still wanted PepsiCo to divide in two at least as recently as July. The billionaire told a conference in New York PepsiCo was “not being managed well” and warned there could be a proxy battle at the business.
A proxy battle did occur at Heinz in 2006 after Peltz accused the ketchup maker – then run by Johnson – of failing to drive shareholder value. Peltz and an associate subsequently won seats on the Heinz board.
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By GlobalData“Trian has always believed that PepsiCo is a world-class company with a portfolio of iconic brands, and enormous potential,” Peltz said on Friday. “We support Indra’s commitment to operational excellence, which has resulted in improved performance of the company. We are confident that Bill will be a strong and complementary addition to the PepsiCo board.”
Johnson, who left Heinz in 2013 after the company’s US$28bn sale to Brazil-based 3G Capital and Warren Buffett’s Berkshire Hathaway investment fund, is, among other corporate positions, an advisory partner at Trian.
He said: “I am excited to join PepsiCo’s board of directors and look forward to working closely with Indra and the other directors to continue driving value for all PepsiCo shareholders.”
