Blog: Dean BestWhy Abdalla's exit does not change much at PepsiCo

Dean Best | 7 November 2014

The departure of PepsiCo president Zein Abdalla from the US food and drinks giant was a surprise announcement - but investors are unlikely to be too concerned.

Abdalla, who joined PepsiCo in 1995, is to leave the Lay's and Quaker manufacturer at the end of the year. He has held the role of president since 2012 and had been tipped as a possible successor to chairman and CEO Indra Nooyi.

His exit from the company was announced yesterday (6 November) in a brief SEC filing. In the filing, PepsiCo said Abdalla had told the company he plans to "retire from the group" on 31 December. No reason was given for Abdalla's decision and PepsiCo made no indication of whether they were looking to replace him.

The announcement was something of a surprise and some newswires made mention of the fact Abdalla would be the second senior executive to leave PepsiCo this year, following Brian Cornell's move to US retailer Target Corp.

However, though investors liked and respected Abdalla, his departure is unlikely to have long-term ramifications at the company.

At face value, his departure could mean Nooyi is unlikely to be going anywhere in the short term - though she was not expected to be ready to leave the business.

It leaves CFO Hugh Johnston as the most likely internal successor to Nooyi, a change from the "deep bench" of potential new chief executives touted by some analysts a couple of years ago.

That said, investors are unlikely to be too concerned and, should PepsiCo not fill the role of president, it streamlines the company's executive roster. Few US-based companies have a president, a chairman and CEO, as well as a CFO. Some investors believed PepsiCo was a bit top-heavy.

Above all, given Abdalla's experience, one should not be surprised to see him resurface elsewhere. But PepsiCo shareholders will be more concerned with seeing if the strategy in which Nooyi and Gilbert so firmly believe - keeping the snacks and drinks giant together, instead of splitting in two - does pay dividends.

Sectors: Cereal, Snacks

Companies: PepsiCo

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