NLPC is circulating to PepsiCo investors an exempt solicitation report (PDF) urging shareholders to vote FOR Proxy Item No. 4 — the independent board chair proposal — at PepsiCo’s Annual Meeting on May 6, 2026. An executive summary of the report lays out the core case for investors who want the highlights before reviewing the full document.
The case against the status quo at PepsiCo is not complicated. Chairman and CEO Ramon Laguarta has held both titles simultaneously since February 2019. Under his watch, the company’s flagship Pepsi cola brand fell out of America’s top three sodas for the first time in industry tracker Beverage Digest‘s history — long behind Coca-Cola, Pepsi was then overtaken first by Dr Pepper, and then shoved to fourth place by Sprite. A board chaired by the very executive responsible for that decline was never going to demand answers about it. That’s the structural problem an independent chair would fix.
The Numbers Don’t Lie
PepsiCo’s full-year 2025 results are, to put it plainly, a mess. GAAP earnings per share dropped 14% year-over-year to $6.00. Operating profit fell from $12.9 billion to $11.5 billion — a decline of more than 10%. Organic revenue crept forward just 1.7%. Total shareholder return for 2025 was negative 1.9%, and the stock’s three-year annualized return is a negligible 1.6% — meaning shareholders who bought in three years ago have essentially gotten nothing for their patience.
The dividend payout ratio has ballooned to approximately 95% of net income. PepsiCo is now paying out almost every dollar it earns to sustain a dividend streak — its 54th consecutive annual dividend increase was announced in this year’s proxy, prominently, as if that is the achievement investors should be celebrating rather than the underlying earnings collapse that makes sustaining it increasingly precarious.
It Took a $4 Billion Activist to Do What the Board Should Have Done
Here is perhaps the most damning fact in this entire story: none of the strategic changes now underway at PepsiCo originated from its own board. It took Elliott Investment Management disclosing a roughly $4 billion stake in September 2025 — and a pointed public critique of the company’s strategic drift — to force action. The resulting December 2025 agreement committed PepsiCo to cutting its U.S. product lineup by nearly 20%, closing plants, reducing its workforce, and targeting margin improvement over three years. PepsiCo’s new CFO, Steve Schmitt, told analysts the message was clear: “it’s not business as usual here.”
An independent, structurally empowered board chair would have been asking these questions years ago. Instead, PepsiCo’s shareholders had to wait for a $4 billion outside intervention to get results that basic governance accountability should have produced on its own.
Where Is Laguarta’s Attention?
The combined Chair/CEO structure is bad enough in ordinary times. It is worse when the incumbent is spreading his attention across a growing portfolio of external commitments. In addition to running PepsiCo and chairing its board, Laguarta serves as a director of Visa Inc., was elected to the IBM board effective March 1, 2026, and serves as Co-Chair of the World Economic Forum’s Food Systems Initiative — an organization whose sustainability-first agenda has clearly influenced corporate decision-making at PepsiCo, to shareholders’ detriment. No independent Chair exists to ask whether this is an appropriate bandwidth commitment for the CEO of a company in active restructuring.
The Board Has Earned No Benefit of the Doubt
PepsiCo’s Board argues, as it has at every prior annual meeting at which this proposal has come to a vote — in 2019, 2022, and 2023 — that it needs “flexibility” to determine its own leadership structure.
What seven years of that flexibility have produced is a Pepsi brand in fourth place, a stock going nowhere, a 95% payout ratio, and an activist-forced restructuring. Laguarta received $23.9 million in total compensation for fiscal year 2025 — down from $28.8 million the year before, a drop driven by the company’s own weak performance metrics — while shareholders absorbed negative returns.
NLPC urges all PepsiCo shareholders to read our full report and vote FOR Proxy Item No. 4 at the May 6 annual meeting.
(Post references PX14A6G Notice of exempt solicitation)
