25% of PepsiCo Shareholders Vote to Enact an Independent Board Chair SumOfUs is encouraged that 1 out of 4 shareholders voted for greater human rights protections

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May 01, 2019

SumOfUs, an international consumer advocacy group, expresses its praise that 1 out of 4 shareholders voted for PepsiCo CEO Ramon Laguarta to step down as Board Chair. The proposal gathered over 25% of the votes despite the company advising against it, signaling that some PepsiCo shareholders have a strong commitment to upholding human and environmental rights.

PepsiCo continues to do business with Indonesian food giant Indofood despite its recent expulsion from the Roundtable on Sustainable Palm Oil (RSPO) for its abuse of workers on palm oil plantations. SumOfUs’ shareholder proposal called for greater oversight in light of these abuses believing the CEO should not be his own boss. Under Laguarta’s leadership, PepsiCo operates as if the gross negligence of its suppliers to uphold human and environmental rights is “business as usual.”

In academic studies, an independent Board Chair has been found to improve the performance of public companies. Separating the roles of Chair and CEO is the norm in Europe with 51% of S&P 500 Boards having split the Chair and CEO roles. In a Washington Post article about Facebook’s corporate governance structure in 2017, SumOfUs argued that an independent Chair of the Board would be better able to oversee the executives of the company, improve corporate governance and set a more accountable, pro-shareholder agenda. For these reasons, SumOfUs argues PepsiCo should also adopt a similar set of changes.

In response, Rebecca Falcon, Campaign Manager at SumOfUs,  an international consumer group, released the following statement:

“It is egregious that investors still followed the Board’s advice and chose to put short-term profits over protecting workers rights despite 1 in 4 shareholders voting to uphold human rights. Today is International Worker’s Day and presented the perfect opportunity for PepsiCo to end ties with Indofood’s plantations on which child labour and exploitation is rampant. There are nearly a million signatures on SumOfUs’ petitions telling PepsiCo to cut ties with conflict palm-oil company Indofood. As long as PepsiCo holds its Joint Venture Partnership with Indofood, it’s complicit in the abuse of these workers”