16 Former PepsiCo Executives are Now Fortune 500 CEOs. Here’s How the Food and Beverage Giant Became an Incubator for Leaders

This article appears in the December 2022/January 2023 issue of Fortune with the headline, “What’s in the water at PepsiCo?”

The maker of fizzy drinks and chips is a CEO factory.

When Laxman Narasimhan was hired to be the next Starbucks CEO in September, he joined a club that includes the chief executives of some of America’s biggest and best-known companies—Brian Cornell of Target, Chris Kempczinski of McDonald’s, Ed Bastian of Delta Air Lines, Al Kelly Jr. of Visa, Ron Coughlin of Petco, Lauren Hobart of Dick’s Sporting Goods, Vivek Sankaran of Albertsons, Dave Kimbell of Ulta Beauty, Mary Dillon of Foot Locker, and Ann Mukherjee of Pernod Ricard North America.

What do these leaders have in common? They all spent significant time rising through the ranks of the same company. But they aren’t alums of the expected “academy companies” known for turning out leadership talent, such as Procter & Gamble, nor a buzzy tech pioneer famous for its management culture.

No, these chief executives earned their chops selling fizzy drinks, hummus, and chips at PepsiCo.

Formed back in 1965 when the Pepsi-Cola company and Frito-Lay merged, PepsiCo has produced 16 current Fortune 500 CEOs, an analysis by Fortune found. We looked at companies whose alumni now lead at least five Fortune 500 companies, and found that PepsiCo is one of the most proficient corporations when it comes to leadership development, trailing only the management consulting firm McKinsey and General Electric.

And there are hundreds more C-suite executives with PepsiCo pedigrees in the Fortune 500, as well as CEOs outside the Fortune 500, like those of Petco or Boston Beer Co.

In other words, PepsiCo, which brings in $80 billion a year in revenue, is a veritable CEO factory.

What’s PepsiCo’s secret ingredient when it comes to creating so many leaders? It’s all about a highly developed, well-oiled system that identifies and intensively develops “high-performers” within the company, PepsiCo’s chief human resources officer, Ronald Schellekens, says. Those “hi-pos,” as they’re known internally at PepsiCo, are lavished with training programs, stretch assignments around the world, mentorship, and opportunities to try—and even to fail at—new things. Many companies invest in management and leadership training, but few do it as systematically as PepsiCo. That system is key to a culture that has kept PepsiCo’s revenue growing at a healthy clip for decades, and is expected to grow 12% this year.

But PepsiCo, whose portfolio includes Gatorade, Mountain Dew, and Quaker Oats, has an infrastructure for training and leadership development that goes back decades. Indeed, every PepsiCo CEO in its 57-year history rose within the company—including current CEO Ramon Laguarta and his predecessor, Indra Nooyi.

This leadership development apparatus was refined by the prominent industrial organizational psychologist Bob Eichinger, who worked at PepsiCo between 1978 and 1986. He made his mark by adapting psychometric tests to evaluate how executives behave, how they affect others, and how they can be more effective as leaders. This helped make PepsiCo a top “academy company,” a term coined in the 1980s by Yale School of Management professor Jeffrey Sonnenfeld.

PepsiCo’s hi-pos may dominate the Fortune 500 now, but it’s far from the first company to be well-regarded as a talent mill. Macy’s, Walmart, Target, Novartis, Lockheed Martin, Microsoft, and JPMorgan Chase have been considered top academy companies too.

At PepsiCo, “we take care of everybody,” Schellekens says in an interview at the company’s sculpture-filled campus in Purchase, N.Y. “But we take extra care of the top 20% performers, and they get extra love and extra attention from the company.”

It’s unusual for budding executives at any company to be shown such a clear path to advancement, says Jane Stevenson, global leader of the CEO succession practice at the organizational consultancy Korn Ferry. “At most companies, it’s a black box,” she says. “How do you become CEO? How do you get to the C-suite? You’re on your own to figure that out.”


No bragging rights

While the path may be clear, one of the striking aspects of the program at PepsiCo is that hi-pos have to guess whether they’ve been chosen for a faster track. Sure, a hi-po may have an inkling—otherwise, why would they be at a weeklong Wharton School business seminar?—but they are not formally told of that status. “In truth, if you were given certain jobs or were prioritized for various training programs, you knew you were well thought of within the business,” says Petco’s Coughlin.

The reasons for this secrecy have to do with morale and keeping strivers on their toes, Schellekens explains: No one wants to create resentments between employees, or a two-class system, or have a rising star become a showboat. Better to have bosses simply observe the person in action.

Besides, the composition of that 20% fluctuates all the time, with people regularly dropping out of the status if they’re falling short or have simply plateaued, and achievers who impress the top brass being added to the pool. (What’s more, that 20% isn’t limited to aspiring senior managers: A truck driver can also be a hi-po.)

“At most companies, it’s a black box … How do you get to the C-suite? You’re on your own to figure that out.”
JANE STEVENSON, KORN FERRY

Once they’re identified, hi-pos don’t get to sail easily to their next gig, especially if it’s a stop en route to the C-suite. Instead, those people deemed upper-management material are put through a rigorous, yearslong training program in many aspects of PepsiCo operations, from in-depth market data to two- to three-year stints in areas such as supply-chain management and international markets.

Hi-pos are also expected to develop fast decision-making skills. “Our model is first and foremost based on risk-taking and putting people into big jobs, uncomfortable jobs, and trusting they will flourish if you take a chance on them,” says Schellekens. “Sink or swim.” No one is ever fully ready for a big role anyway, he points out—so why not toss them in at the deep end?

Infographic shows the connections between Fortune 500 CEOs and companies

Hi-pos come from all over the company’s sprawling, complex business, which includes a wide array of food and beverage brands in dozens of countries, and they can be plucked from any job function or level of seniority. Whether a hi-po is a bottling plant manager, an analyst, or a data scientist, they’re usually first identified via their manager’s performance review. And they’re not necessarily just newbies fresh out of college or hungry mid-career strivers. An employee longer in the tooth who finds a second wind in a new role can also become a hi-po.

A spokeswoman for PepsiCo says that the company doesn’t track the demographics of who is a hi-po, given that it fluctuates constantly, but she estimates that the cohort at any given time reflects the company’s overall diversity. Some 43% of people in managerial roles across the company in 2021 were women. In the U.S., where PepsiCo tracks the workforce by ethnicity, some 18% of managers are Black or Hispanic. Diversity is an increasingly important piece of PepsiCo’s hi-po infrastructure, she added. There is a program called Breakthrough Organizational Leadership Development specifically for Hispanic and Black managers—hi-pos and others—looking to acquire new skills.


“Extra love” for the chosen few

The human resources department wields great power at PepsiCo and is key to this whole training system working properly. To determine who is a “hi-po” or a “very hi-po,” the HR department uses manager evaluations and performance metrics; 360-degree-review processes that include feedback from peers and reports; and personality assessments such as the Myers-Briggs Type Indicator. HR regularly checks in with managers to see who is standing out, and it’s not unusual for hi-pos to be plucked from the roles they’re excelling in to take on new challenges—sometimes to the chagrin of their current bosses.

PepsiCo offers training opportunities to all of its 300,000 employees, but the “extra love” Schellekens speaks of comes in the form of academic opportunities such as online classes from Pep university (PepsiCo’s center for learning) or a business school. They might be offered a chance to prove their mettle with a tough assignment, such as taking on a brand’s marketing in Latin America, or leading a profit and loss reporting unit.

Hi-pos are also offered mentoring and access to top leaders at the company.

Coughlin spent 13 years at PepsiCo, ending in 2007, including a stint heading marketing for Pepsi and other drinks outside the U.S. His standout achievement: helping diversify the company’s overseas markets to be less reliant on soda and offer more items such as tea, juices, and Gatorade. Those PepsiCo lessons helped prepare him to make big moves at Petco, such as no longer selling pet food with artificial ingredients, he says.

As he rose up in the ranks, Coughlin got to spend a lot of time with two PepsiCo icons, then CEOs Roger Enrico and Steve Reinemund, as part of its vice president training program. Coughlin has replicated that program at Petco, giving up-and-comers a week of up-close time with him, the board, and other C-suite executives.

Ann Mukherjee took on a chief marketing role at PepsiCo in 2009, in the wake of the 2008 financial crisis—a climate in which business success was elusive, she recalls. COURTESY OF PERNOD-RICARD

Another former hi-po, Ann Mukherjee, now CEO of Absolut maker Pernod Ricard’s North America unit, says she was given the space to fail and learn from the experience. Mukherjee took on a chief marketing role at PepsiCo in 2009, in the wake of the 2008 financial crisis—a climate in which business success was elusive, she recalls.

“But honestly, failure is the secret to my success,” she says. “I came out stronger than ever before. PepsiCo gave me the space to fail and gave me the resources and support to dust myself off and find solutions to these challenges.” And that, she says, “ultimately unleashed me.”

“PepsiCo gave me the space to fail and gave me the resources and support to dust myself off and find solutions to these challenges.”

– ANN MUKHERJEE, PERNOD RICARD NORTH AMERICA

That culture of letting a budding executive fail at something early is essential to avoid disaster later, says Korn Ferry’s Stevenson. “There has to be room for failure,” she says. “Because odds are they will eventually, and the CEO role is not the place for that to happen.”

Successes matter too, of course, and Mukherjee recalls a formative one for herself when she was chief marketing officer at Frito-Lay at PepsiCo: the decade-long “Doritos Crash the Super Bowl” campaign, which aired fan-made ads and is seen as a milestone in millennial-focused marketing. (Mukherjee was later known as the “Queen of Corn” at PepsiCo since she was in charge of its corn chip brands.)

Schellekens, a Dutchman four years into his second stint at PepsiCo, says no one should expect the company to manage their careers for them. Ambitious hi-pos must prove their mettle by hitting a few career markers.

PepsiCo wants prospective executives to understand the conglomerate as a whole and not just spend time in their business unit or silo. Hi-pos are expected to make at least one cross-functional move, and generally to have moved outside of their home countries for a stint, says Schellekens, who has worked in London, Barcelona, Geneva, and Johannesburg for PepsiCo. Laguarta, PepsiCo’s current CEO, is a 26-year company veteran and has worked in the U.S., Europe, and sub-Saharan Africa.

Brian Cornell is one of PepsiCo’s most successful alumni as the steward of Target’s stunning turnaround. He joined Target in 2014, leaving his role as CEO of PepsiCo Americas Foods—where he was seen as a possible candidate to succeed Nooyi in the top job. At PepsiCo, he says, “I learned so much about running complex, global organizations and being a student both of the consumer and the competition.”

PepsiCo is still popping

An effective leadership development program has helped keep the company on a fast growth trajectory for decades. Chart shows PepsiCo revenues since 2002


A culture of learning

It sounds simple enough to build an infrastructure for career development and training. But humans are humans, and singling out high performers for extra attention can cause some internal drama. It is drilled into people up and down the hierarchy that the overall company is what reigns supreme.

That sometimes means going against the adage “Don’t mess with success,” Schellekens explains, because successful players need new challenges. “When you’re a manager, and your team is performing, the last thing you want is people pulling people out of your team,” he says. “So it’s the job of HR to pull people out of comfortable positions.” Besides, he explains, managers should be developing a bench on their team so they are not too reliant on one successful team member.

Petco’s Coughlin says that has been key to the success of PepsiCo’s academy system. “Taking inventory of rising stars and stretching them is fundamental to the PepsiCo talent machine,” he says. “At PepsiCo, HR was very powerful, and they were on top of people’s career planning. You couldn’t hold on to people they were plotting across the company.”

Petco CEO Ron Coughlin spent 13 years at PepsiCo, ending in 2007, including a stint heading marketing for Pepsi and other drinks outside the U.S.
COURTESY OF PETCO

“Taking inventory of rising stars and stretching them is fundamental to the PepsiCo talent machine.”
– RON COUGHLIN, PETCO

That focus on cultivating the next generation of talent ultimately yields results, but it can be a slog, and sometimes another company ends up reaping the rewards by hiring away top executive talent.

Rather than bemoan the number of superstars who have left PepsiCo, Schellekens says PepsiCo’s leadership sees the Cornells, Coughlins, and Narasimhans as a vindication of the company’s investment in its talent development program. Besides, only so many people can become CEO of PepsiCo.

Turnover at the management echelon is “super low,” Schellekens says. And the focus on skills has helped the company remain on a fast growth trajectory for decades. As its hi-pos go on to lead other companies, PepsiCo’s reputation for minting corporate leaders has made the company a talent magnet.

“That’s what turns people on,” says Norm Smallwood of the RBL Group, a consulting firm specializing in leadership development. “They come to these feeder companies like PepsiCo to get opportunities they can’t get elsewhere.”


The Soda-rati

These 16 Fortune 500 CEOs came up in a rigorous executive leadership program at PepsiCo.
Chris Kempczinski, McDonald’s
Vivek Sankaran, Albertsons
Michele Buck, Hershey
Brian Cornell, Target
David Kimbell, Ulta Beauty
Tom Greco, Advance Auto Parts
Al Kelly Jr., Visa
Lauren Hobart, Dick’s Sporting Goods
Laxman Narasimhan, Starbucks
Darren Rebelez, Casey’s General Stores
Ed Bastian, Delta Air Lines
Mary Dillon, Foot Locker
Tony Sarsam, SpartanNash
Hock Tan, Broadcom
Beth Ford, Land O’Lakes
David Gibbs, Yum Brands

This article appears in the December 2022/January 2023 issue of Fortune with the headline, “What’s in the water at PepsiCo?”

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