In a surprise move, the chief executive of The Coca-Cola Co. will step down after four years as head of the world’s largest beverage maker and be succeeded by his second-in-command, the company said Thursday.
Neville Isdell, 64, will step down as CEO on July 1, and will be succeeded by the company’s president and chief operating officer, Muhtar Kent, 55.
Isdell, who became CEO in June 2004, will remain chairman of the board until the company’s annual meeting in April 2009, the Atlanta-based company said in a statement. Company spokesman Dana Bolden said Isdell also will remain an executive of the company, though it was unclear what his duties would be aside from managing the board.
"We have accomplished a great deal in the last three and a half years, and I recognize my responsibilities to the company and to Muhtar remain unfinished until Muhtar is successfully launched as CEO," Isdell said in a statement. "Management succession is the key final measure of any CEO’s success, and I will do all I can to ensure our progress is secure for many years ahead."
The statement did not explain why the decision for Isdell to leave was being made now, but Isdell and Kent were expected to speak to reporters later Thursday.
Isdell did say in the statement that he has been speaking with the board about succession and planning since he became CEO.
John Sicher, an industry expert and editor and publisher of Beverage Digest, said naming Kent as Isdell’s successor is a positive move for Coca-Cola.
"He understands the company and the system literally as well as anybody in the world and better than most," Sicher said.
Sicher added, however, that business challenges lie ahead for Coca-Cola and Kent after Isdell steps down as CEO, particularly in the company’s key North American market.
"I think the big challenge for Muhtar is unlocking or trying to figure out how to get North America back into a stronger growth mode," Sicher said. "That hasn’t happened yet, and that needs to be the top of Muhtar’s priority list."
Kent first joined Coca-Cola in 1978 and served in a variety of positions until 1998, when he left to become president and CEO of Efes Beverage Group, one of Europe’s largest international beverage businesses. He returned to Coca-Cola in May 2005 as president of the North Asia, Eurasia and Middle East Group. He was named president of Coca-Cola International in January 2006 and appointed president and chief operating officer of the company in December 2006.
As COO, Kent has overseen a number of significant initiatives, including the acquisition of Glaceau, the maker of Vitaminwater and other brands, earlier this year. He will continue to hold the title of president.
During Isdell’s tenure as CEO, company profits steadily rose, particularly on the international side. Also during his tenure, a Justice Department investigation of business practices at the company concluded with a settlement, and the final chapter of a nearly $200 million discrimination settlement involving the company closed.
Before Isdell was hired as CEO, Coca-Cola conducted a national search for a replacement for his predecessor, Doug Daft. With the immediate naming of Kent as Isdell’s successor, it appears a national search will not be needed this time.
Sicher said he was not surprised by that.
"Muhtar has been the heir apparent for some time," Sicher said.