Skip to Content

Pepsi and Peltz call a truce—and here’s who wins

Davos World Economic Forum (WEF) 2011Davos World Economic Forum (WEF) 2011
Indra Nooyi, chairman and chief executive officer of PepsiCo Inc.Photograph by Andrew Harrer — Bloomberg/Getty Images

Score one point for activist investor Nelson Peltz in his crusade against women-led corporate giants. PepsiCo CEO Indra Nooyi has added Bill Johnson, a former Heinz CEO and now an advisory partner with Peltz’s hedge fund, to join Pepsi’s board.

The move marks a truce between Peltz and Nooyi, who, as I reported Monday in a story about Peltz’s seeming fetish for Fortune 500 companies run by women, has vigorously rebuffed a long-running Peltz campaign to split PepsiCo (PEP) into separate snack and beverage companies. One of his ideas is to combine Frito-Lay, Pepsi’s snack unit, with food conglomerate Mondelez (MDLZ), which is headed by Irene Rosenfeld.

By adding a Peltz adviser to her board, Nooyi wards off the danger of the billionaire corporate raider staging a noisy proxy fight for director seats this spring—as Peltz is now doing at DuPont (DD). DuPont also has a female CEO, Ellen Kullman.

“Bill will bring deep expertise and insight to the PepsiCo board as we continue to innovate and drive profitable long-term growth,” Nooyi said in a statement.

Indeed, Johnson figures to be a good addition to the Pepsi board. A food-industry veteran born and bred to win (his father was Bill “Tiger” Johnson, who played center for the San Francisco 49ers and later coached the Cincinnati Bengals) spent 31 years at Heinz and became CEO in 1998. He also fought his own proxy battle with Peltz before selling Heinz to Warren Buffett and 3G Capital for $23 billion in 2013. Once Peltz’s foe, Johnson has now befriended him, and he joined Peltz’s firm as an advisory partner last summer.

While Peltz scored by getting one of his guys a seat as an independent Pepsi director, Nooyi, under pressure, may end up scoring even better for herself and her shareholders. John Faucher, an analyst who covers PepsiCo for J.P. Morgan, notes that while “a breakup of PepsiCo is highly unlikely, Johnson’s presence on the board will keep it in discussion,” and the former Heinz chief will press for cost savings. With Johnson at her director’s table and with her stock outperforming the S&P this year, Nooyi prevents a disruptive proxy war—in the short-term, at least—and adds an industry pro who could help her sustain PepsiCo’s turnaround.