Pepsi Turns To Former President For Food Business

PepsiCo Inc. Monday named its 72-year-old former president to the top management job of the $10 billion fast-food restaurant company it will spin off later this year.

Andrall Pearson, a partner at the New York leveraged buyout company Clayton, Dubilier & Rice and president of PepsiCo from 1971 through 1984, will be chairman and chief executive of the restaurant spinoff, Pepsi said.

He will be joined by 44-year-old David Novak, currently president and chief executive of Pizza Hut and Kentucky Fried Chicken, which, along with Taco Bell are being spun into the largest restaurant company in terms of stores in the world.

 

Pearsons appointment took Wall Street by surprise. Id never heard Pearsons name thrown around as a potential candidate, said Emanuel Goldman, an analyst at PaineWebber Inc.

But its very apropos to have him in that position, Goldman added, since he was instrumental in Pepsi getting into the restaurant business in the first place.

Pearson engineered Pepsis purchase of Pizza Hut in 1974 and then of Taco Bell nine months later. The deals were Pepsis first forays into the restaurant business.

Known as a tough-minded leader who set exacting standards for his managers, Pearson left Pepsi at the end of 1984 to become a professor at Harvards business school.

He left Harvard to join Clayton, Dubilier & Rice in 1994.

He ranks his new job at Pepsi among his biggest challenges. Pepsi announced earlier this year it would spin off the restaurant businesses to focus more closely on its international beverage operations.

This is a unique and very appealing opportunity, Pearson told Reuters.

I wanted the challenge of working with David (Novak) to help this company take its place as a great restaurant company.

One of the ways he will do that, he said, is by bringing people into Pepsis restaurants with new product ideas. That will produce profitable top-line growth, he added.

While analysts generally applauded Pepsis decision to hire the experienced Pearson, some said he will simply be a figurehead for Novak, who will oversee the restaurants day-to-day operations and basically run the company.

David Novak is going to run the show, in my opinion, said Michael Rietbrock, an analyst at Smith Barney.

Pearson disagreed, saying, I didnt become head of this thing to become a figurehead. Both David and I will take an active role in leading the company.

Pearson said he decided to take the top job at Pepsis restaurant spinoff last Tuesday, after the company first contacted him about six weeks ago.

Hell get paid quite a lot for his work, he added.

Although he declined to be specific, he said his compensation would be well into the seven figures.

Pepsis shares were up 12.5 cents at $37.25 on the New York Stock Exchange.