US: PepsiCo chairman retires

PepsiCo's chairman Steve Reinemund retired today (2 May). The company's CEO Indra K. Nooyi assumes the title of chairman.

Nooyi assumed her role as CEO in October 2006, and today becomes the fifth chairman and chief executive officer in PepsiCo's 42-year history, following Reinemund (2001-2006), Roger A Enrico (1996-2001), Wayne D Calloway (1986-1996) and Donald M Kendall (1971-1986). Herman W Lay served as PepsiCo's first Chairman (1965-1971), while Kendall served as CEO.

PepsiCo also said that its board of directors had approved a plan to increase cash returns to shareholders by raising both the company's targeted dividend payout rate and its share repurchase authorisation amount.

Nooyi said: "The plans reflect our continued confidence in the growth of our business and our steadfast commitment to providing strong cash returns to our shareholders."

The company increased its dividend payout target to 50% of prior year's earnings, beginning with its May dividend declaration. As a result of today's action, the company announced a 25% increase in the annual dividend, raising it to US$1.50 per share from $1.20 per share. The dividend is payable on June 29, 2007 to shareholders of record on June 8, 2007.

The board of directors also approved a higher level of share repurchases. The board authorised repurchasing up to an additional $8 billion through mid- 2010, once the current share repurchase authorisation is complete. The current $8.5 billion authorisation began in 2006 and has approximately $6 billion remaining.

The company indicated it expects share repurchases of $4.3 billion in 2007, an upward revision from its previous guidance of $3.3 billion, and annual share repurchases of $4 billion to $5 billion over the next several years.