PepsiCo (PEP) CEO Indra Nooyi announced her retirement from her job today and it's truly a tectonic shift for PepsiCo and, in many ways, the way we do business itself. Nooyi's a pioneer in so many ways, not the least of which is her candor with which she approached being a CEO and a mom and how hard it is to juggle both. We just don't get a lot of CEOs who own up to how difficult the job is, let alone the travails that a woman CEO has versus a man. Her honesty is part of her incredible strength as a leader of the consumer packaged goods giant.
First some facts: under her tutelage from the time she became CFO in 2000 to her retirement this week, PepsiCo had given shareholders a total return of 411% topping the consumer staples group with a return of 333% and trouncing the S&P 500 which gave you a 176% return.
She added a billion dollar brand every other year since she became CEO, bringing the number from 17 to 22, including Pepsi Max and Diet Mountain Dew. And dividends tripled from $1.16 in 2006 to $3.17 this year, a compound annual growth rate of almost 10%.
But these don't tell the full story of PepsiCo's transformation under Nooyi. Let me give you my story with Nooyi because it is indicative of the true powerhouse that she created while others in her group dropped by the wayside.
A little more than 10 years ago in a segment of Stop Trading with Erin Burnett I said that I had thrown a sleepover party for the swim team that my daughter swam for. I had stocked baskets all over the house with Frito Lays and the kids studiously avoided them. I was shocked. If we had teams of my generation the issue would be if I have enough of Frito Lays' products.
I said that these kids represented the future and the future looked dim for these kinds of snacks.
I didn't know Indra but she called me right after the segment and told me that I hadn't done my homework. I hate when that happens but not that long after I visited their Aberdeen proving grounds, coincidentally where our military has its proving grounds, and I saw the future: sustainable snacks with very little sodium and very little fat made in a factory that had no water footprint because it used the excess water from the potatoes it cut.
In other words, she saw the future coming when few did. "I don't know if the anticipation of trends has anything to do with gender, ethnicity or nationality," she told me later on Mad Money. "I think it's just that PepsiCo as a company has had a history of strategic acuity. As a company we have always anticipated megatrends and skated toward those trends and then tried to proactively shape the portfolio."
I think she was and has been way too effacing. Her "Performance with a Purpose" program, and her notion of "doing well by doing good," are her real hallmarks as she has pioneered the notion of healthier options while reducing greenhouse gas emissions and being at the forefront of diversity. These moves do not pay off immediately. "We can't just focus on every quarter, " she told me. "That's not the way you build sustainable companies. That's not the way you build iconic American companies. And God knows as a country we need big companies that are performing well to make sure our country remains strong."
There's been a terrific run of late in the consumer package goods companies, a run that started with a definitive earning surprise delivered by Nooyi's PepsiCo. Now it will be led by Ramon Laguarta, an insider with tremendous international experience. I think the rally in the stock has to do with a belief that he will do something radical to bring out value. My charitable trust has a position in the stock so we are grateful for any gain. But let's not get ahead of the story. Nooyi's been bringing out value the whole way. If Laguarta can follow in Nooyi's giant footsteps then we would be thrilled for the trajectory. However, we aren't interested in short term pops. We want long-term stability and sustainability. We want what Nooyi's given us, so we offer congratulations and best wishes as her tenure closes, and we wish her all of the luck in the world as she carries on her championing of larger causes than just the earnings per share she faithfully delivered.