Pepsi's New CEO Doesn't Keep Her Opinions Bottled Up By CHAD TERHUNE and JOANN S. LUBLIN August 15, 2006; Page B1 At a corporate diversity event last year for PepsiCo Inc. employees, Indra K. Nooyi stood up to introduce guest speaker Harry Belafonte. Wearing a traditional Indian sari, a style she wears on special occasions, Pepsi's then-chief financial officer praised the company's strides in creating a more diverse workplace but challenged it not to rest on its laurels. Then she broke from the script and led more than a hundred employees on an impromptu sing-along of the entertainer's famous song "Day-O." It was nothing out of the ordinary for the 50-year-old Indian-born executive, who fronted an all-female rock band in college and has remained close to her roots on the subcontinent. Now Ms. Nooyi will take center stage as chief executive of the food-and-beverage giant effective Oct. 1, culminating a 12-year climb up the company ladder. While the timing of yesterday's announcement came earlier than expected, Ms. Nooyi had been one of the leading internal candidates to succeed Chairman and CEO Steve Reinemund since she became Pepsi's president and finance chief in 2001. Under Mr. Reinemund's leadership, Pepsi became consistent at churning out strong sales and profits. Late last year, it achieved what was once unthinkable: surpassing rival Coca-Cola Co. in market capitalization. Mr. Reinemund said the board will determine his successor as chairman in the coming months. Ms. Nooyi beat out Michael White, 54, Pepsi's vice chairman and head of the company's fast-growing international business, for the corner office. One of her early goals will be to prevent the departure of Mr. White and other key executives. Mr. White aspires to run a public company, several recruiters say. Ms. Nooyi already has reached out to him, reassuring him that he can be an integral part of her leadership team, one person familiar with the situation says. <REPRINTSDISCLAIMER>The Purchase, N.Y., company will become the largest in terms of market capitalization to be led by a woman. Two other female CEOs, Patricia A. Woertz at Archer-Daniels-Midland Co. and Irene B. Rosenfeld at Kraft Foods Inc., lead companies with slightly higher annual revenue than Pepsi. Last year, Pepsi reported net income of $4.08 billion on revenue of $32.56 billion. AT THE TOP Women at the top of major U.S. companies <TABLE cellSpacing=1 cellPadding=3 width=275 border=1><TD class=p11 vAlign=center>Name <TD class=p11 vAlign=center align=left>Company <TD class=p11 vAlign=top align=left>Market Capitalization <TD class=p11 vAlign=top>Indra Nooyi <TD class=p11 vAlign=top align=left>PepsiCo <TD class=p11 vAlign=top align=left>$104.41 billion <TD class=p11 vAlign=top>Irene B. Rosenfeld <TD class=p11 vAlign=top align=left>Kraft Foods <TD class=p11 vAlign=top align=left>$55.73 billion <TD class=p11 vAlign=top>Meg Whitman <TD class=p11 vAlign=top align=left>eBay <TD class=p11 vAlign=top align=left>$34.25 billion <TD class=p11 vAlign=top>Patricia Woertz <TD class=p11 vAlign=top align=left>Archer Daniels Midland <TD class=p11 vAlign=top align=left>$26.72 billion <TD class=p11 vAlign=top>Anne Mulcahy <TD class=p11 vAlign=top align=left>Xerox <TD class=p11 vAlign=top align=left>$13.03 billion <TD class=p11 vAlign=top>Brenda Barnes <TD class=p11 vAlign=top align=left>Sara Lee <TD class=p11 vAlign=top align=left>$12.76 billion <TD class=p11 vAlign=top>Andrea Jung <TD class=p11 vAlign=top align=left>Avon Products <TD class=p11 vAlign=top align=left>$12.38 billion MORE WOMEN TO WATCH Read more about top women in business<SUP>1</SUP> in the Wall Street Journal's latest annual report on the subject, published in October. Ms. Nooyi will join 10 other women in the top job at the nation's 500 largest corporations, according to Catalyst Inc., a nonprofit New York group that researches women's issues. (That excludes Ms. Rosenfeld at Kraft, which is part of Altria Group Inc.) Other leading female CEOs include Meg Whitman at eBay Inc. and Anne Mulcahy at Xerox Corp. In 1994, none of the top 500 companies had a woman at the helm. In a conference call with analysts and investors yesterday, Ms. Nooyi said she was "very excited and very humbled by the new appointment" and she lauded both Messrs. Reinemund and White for being "mentors." Mr. White responded by saying that the board had made an "absolutely outstanding choice" in promoting his longtime colleague. (See a transcript of the conference call.<SUP>2</SUP>) Mr. Reinemund, a marathon runner who is in excellent health, said he is stepping down as CEO this fall and retiring as chairman next May in order to spend more time with his wife and four children. His two youngest children, who are twins, will enter high school next year. Pepsi said Ms. Nooyi's current duties will be split between two company veterans. Richard Goodman, 57, will take over as finance chief, and Hugh Johnston, 44, will be promoted to executive vice president of operations. Currently, Mr. Goodman is chief financial officer for Pepsi's international unit and Mr. Johnston is senior vice president for transformation. Mr. Reinemund quipped on the conference call: "It has taken two great men to replace one great woman." Roger Enrico, Pepsi's former chairman and CEO who worked closely with both Mr. Reinemund and Ms. Nooyi, said Mr. Reinemund had been considering retirement for at least a year for family reasons and that drove the timing of succession. This "is something he's been struggling with for a while," Mr. Enrico said. He described Ms. Nooyi as an "extremely visionary" executive who "challenges the status quo intellectually....She's ready to run this company." Ramesh Vangal, a former Pepsi executive in India and close friend to Ms. Nooyi, says her patience as No. 2 paid off, and she was a logical choice for CEO as the company tries to expand its international footprint. Pepsi wants to become less reliant on the U.S. market, where sales growth has slowed for some of its flagship sodas and snacks. "She has a good grasp of all the international opportunities, and that is where the future of Pepsi lies," said Mr. Vangal, now an entrepreneur in India. Corporate recruiters have tried numerous times to pry Ms. Nooyi away from Pepsi. But the Pepsi board, which includes former AT&T Corp. Chairman Robert E. Allen and retired International Business Machines Corp. Chairman John F. Akers, had made it clear over the years they didn't want to lose Ms. Nooyi. In 2004, she and Mr. White were granted multimillion-dollar restricted stock awards that require them to stay until 2009 to cash in. Tod MacKenzie, a Pepsi spokesman, said no external forces, such as a competing job offer for Ms. Nooyi, forced the management moves now. Ms. Nooyi joined Pepsi in 1994 after working as a corporate strategist at Motorola Inc. and Asea Brown Boveri Inc. She remains a director at Motorola. At Pepsi, her strategy and deal-making skills have been instrumental in remaking the company over the past decade. Ms. Nooyi helped spin off Pepsi's restaurant and bottling businesses and worked on the 1998 acquisition of juice maker Tropicana. Later, she was lead negotiator on the $13.8 billion acquisition of Quaker Oats Co. in 2001. One thing lacking on Ms. Nooyi's Pepsi résumé has been direct experience running one of the company's snack or beverage units. Some analysts had thought Pepsi would give Ms. Nooyi an operations role at some point to give her more seasoning for the top job. Ms. Nooyi is known for singing pop songs at work and for her razor-sharp wit. (During an employee talent show, she once teased Mr. Reinemund for being unfamiliar with American Idol's Paula Abdul.) But she's also a tough, plain-spoken boss who drives her employees hard and has sometimes alienated colleagues. She is fiercely competitive, from racing fellow executives home after a business trip, to playing hard to win a treasure hunt at a managers' retreat. Her brash style has sometimes backfired publicly. Last year in a commencement address at Columbia University's business school, Ms. Nooyi compared five major continents to her hand with the U.S. representing the middle finger. In that talk, she said: "Each of us...must be careful that when we extend our arm in a business or political sense, we take pains to assure we are giving a hand...not the finger....Unfortunately, I think this is how the rest of the world looks at the U.S."