PepsiCo Inc. PEP -0.14% Chairman and Chief Executive Indra Nooyi received 2011 compensation valued at $17.1 million, according to a Securities and Exchange Commission filing released Friday, a 5.8% increase from the prior year driven primarily by an increase in the value of pension benefits.
Nooyi’s 2011 compensation included $1.6 million in base salary, up from $1.3 million, her first increase in base pay since becoming CEO in 2006. Stock and option awards totaled $9.5 million, roughly equal to year-ago levels, while her incentive plan compensation fell to $2.5 million from $3 million last year.
Nooyi’s pension value and non-qualified deferred compensation earnings was about $3 million, up from $2.1 million in 2010.
PepsiCo is undertaking a turnaround this year that will try to boost the company’s performance, especially in its Americas beverage division where sales have been lackluster. PepsiCo is slashing 8,700 jobs and boosting its marketing budget this year by up to $600 million that it will invest mostly behind a dozen global brands.
PepsiCo Inc. plans to spend up to $600 million more on marketing this year to try improve sales in North America and will lay off about 3% of its global work force to pay for it as part of a much-anticipated strategic overhaul to try to catch up to global rivalCoca-Cola Co.
PepsiCo’s job cuts will affect some 8,700 employees in 30 countries, and are part of a broader productivity program to slice $1.5 billion in annual costs from the global drinks-and-snacks giant by 2014.
Despite Pepsi’s move to cut costs and resurrect the Pepsi Cola brand, the board says it will stand by it’s CEO, Indra Nooyi. It sounds as if everyone agrees that Pepsi needs to be more aggressive in advertising its flagship brand, to compete with Coke. Once again, I don’t see a reason to layoff people to achieve that goal. Why not enlist those employees in helping transform the company, to once again improve the profitability and market share of the Pepsi brand?
Due to a stagnant stock price over the past three years, Pepsi feels it needs to do something to demonstrate its commitment to earnings growth and to move in a positive direction by laying of 1% of its workforce, or 4,000 people.
Why are layoffs always the first response to distress? Pepsi has an abundance of products; maybe they have just spread themselves out to thin with their acquisitions and focus on the Frito-Lay snack division. Plus, this focus on “better-for-you” products at the expense of good ole’ Pepsi advertising and head-to-head competition with Coke will not keep Pepsi in the top of mind with consumers.
Consumers don’t eat soda and snack food because they are good for them–they eat them because they taste good and want a snack (and not always a healthy one!). In addition, consumers like the head-to-head competition between Coke and Pepsi; it forces them each to bring their best advertising, packaging, and new products to the table for consumers; it brings out the best in both of them.
Because of our research on downsizing, which you can download for free here, and my former work as Account Executive for the Pepsi Cola account, I don’t think downsizing is the answer. I think that getting back to basics and remembering what makes Pepsi exciting for its consumers is what will bring that stock price back up. When I would call on Coke, they would never utter the “P” word. Maybe it was arrogance, or maybe it was a total devotion to dominating the market. Maybe Pepsi needs to take on that same mind-set.
Just my two cents.