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PepsiCo Promotes Internally Again in Legal Chief Shuffle (1)

Jan. 29, 2021, 4:50 PM; Updated: Jan. 29, 2021, 11:04 PM

For the second time in four years, PepsiCo Inc. will have a new top lawyer, David Flavell, who is now the company’s deputy general counsel and chief compliance and ethics officer.

Flavell will take over March 1 from David Yawman as PepsiCo’s general counsel and corporate secretary. Yawman became PepsiCo’s legal chief in 2017 following the departure of former Justice Department lawyer Tony West, who left to take the top legal job at Uber Technologies Inc.

PepsiCo said in a Jan. 28 statement that Yawman is leaving the company where he has spent more than 22 years to pursue other interests. In a Friday interview with Bloomberg Law, Yawman said he plans to rest for a few months before joining Cresco Partners Inc., a boutique executive leadership and development firm.

“I started in law 25 years ago and even from the start never envisioned myself spending my whole life in the legal world,” Yawman said. “I’ve had a phenomenally enjoyable ride at a company that I love. I’m three-and-a-half years into the role, the company’s in really strong shape, and David’s ready for the role.”

Yawman, 52, began his career as an associate at Fried, Frank, Harris, Shriver & Jacobson in 1997 before joining PepsiCo the following year. During the next two decades he held a variety of in-house positions at the snack food and beverage behemoth, including compliance chief and head of government affairs.

Flavell, his successor as general counsel, has spent the past decade at PepsiCo, working in the company’s headquarters in Purchase, N.Y., and in its offices in Dallas and Dubai. He also oversaw legal work for its food processing subsidiary, Frito-Lay.

“David is a highly respected leader with a decade of experience at PepsiCo, including as general counsel for different businesses and geographies,” company Chairman and CEO Ramon Laguarta said in a statement. “He has demonstrated a firm commitment to upholding and modeling the values we stand for as a company.”

Flavell, 49, was born and raised in Melbourne, Australia. He joined PepsiCo in 2011 after spending four years as general counsel for the Asia-Pacific and Middle East regions at French food company Danone SA. Prior to that, Flavell worked in-house at New Zealand dairy cooperative Fonterra Ltd. and spent a decade at Australian law firm Corrs Chambers Westgarth, where he was a corporate and antitrust partner.

Diversity Push

The Coca-Cola Co., a PepsiCo rival, announced over the summer its hire of a new general counsel in Bradley Gayton, who joined the company Sept. 1.

Gayton, who spent the previous three decades in-house at the Ford Motor Co., has recently called on Coca-Cola’s outside law firms to increase their diversity efforts or face a 30% holdback in legal fees.

PepsiCo and Coca-Cola are among a group of 34 companies that have agreed to share their private diversity data as part of an initiative by New York City’s comptroller and three city retirement funds.

Yawman described PepsiCo’s own outside counsel selection policy, one started by West, which cites cost, expertise, and inclusion as key metrics for selection.

“I applaud what Coke’s doing, but we’ve been out there for a number of years with a policy that we’ve been executing,” he said, adding that at PepsiCo he’s worked for three Black general counsel in West, Larry Thompson, and the late David Andrews, as well as a woman in Maura Smith. “Our record is pretty unassailable.”

Growing Business

Yawman said PepsiCo’s legal group has been busy in recent years helping the company expand its operations into more than 200 countries.

PepsiCo paid nearly $3.9 billion last year to buy energy drink maker Rockstar Inc., $1.8 billion in 2019 to purchase South Arica’s Pioneer Foods Group Ltd., and $3.2 billion in 2018 to acquire Israel’s SodaStream International Ltd.

PepsiCo announced this month a joint venture with Beyond Meat Inc., a plant-based food company that paid its top lawyer nearly $22 million in 2019, to develop plant-based snacks and beverages.

“The scope and the scale of the business is enough to keep you busy every single day,” Yawman said. “We’re a microcosm of society in general, because everyone in the world is a possible consumer.”

PepsiCo’s in-house lawyers often find themselves dealing with a range of legal matters, such as packaging, nutrition labeling, and climate issues, Yawman said.

Gibson, Dunn & Crutcher, Davis Polk & Waldwell, and London-based Freshfields Bruckhaus Deringer are some of the go-to firms for PepsiCo, said Flavell, noting the company also relies upon mid-market firms for local counsel.

Gibson Dunn has handled more than 14% of PepsiCo’s federal litigation work in the U.S. over the past five years, per Bloomberg Law data, followed by Dykema Gossett, Ford & Harrison, and Ogletree, Deakins, Nash, Smoak & Stewart.

Changing Roles

PepsiCo’s promotion of Flavell, its ethics and compliance chief, follows its decision to tap Yawman, who had previously held that role, to be general counsel in 2017.

PepsiCo’s top legal job has now changed hands five times within the past decade.

Thompson, who succeeded Andrews in 2004, retired in 2011 and was succeeded by Smith, a former general counsel for the International Paper Co. Smith, like many future law department leaders, began her in-house career at General Electric Co.

She lasted a year at PepsiCo before leaving in 2012, leading to Thompson’s return and West replacing him in 2014.

The Wall Street Journal reported in 2017 that Smith’s exit could be related to the handling of an internal probe—conducted by Gibson Dunn—into the business practices of Wimm-Bill-Dann Dairy & Juice Co. PepsiCo acquired a controlling stake in the Russian company as part of a $3.8 billion deal announced in December 2010.

The Journal, citing documents inadvertently sent to the newspaper by an unnamed lawyer at Wilmer Cutler Pickering Hale and Dorr, reported that the Securities and Exchange Commission investigated the company for potentially retaliating against Smith. WilmerHale was advising PepsiCo in the SEC inquiry.

Smith ultimately left PepsiCo with a $10.6 million severance package that involved a non-disparagement agreement, according to an Oct. 18, 2012 securities filing by the company. Smith, who in 2019 joined a small Connecticut law firm, left that shop last month and relocated to Knoxville, Tenn.

“They’re both great guys and quite capable of running a big legal department,” Smith said of Yawman and Flavell, the latter of whom she hired in her brief time at PepsiCo.

Smith said she brought back Kelly Mahon Tullier, now the top lawyer at Visa Inc. and then legal chief for PepsiCo’s Asia, Africa, and Middle East operations, to be a deputy general counsel in the company’s headquarters. Flavell filled her spot overseas.

“I interviewed him right before I joined,” Smith said. “It’s a small world.”

Smith declined to discuss the circumstances that led her to leave PepsiCo.

The company, in its most recent proxy statement for fiscal 2019, said it participates in “prestigious corporate governance organizations” like the Harvard Law School Program on Corporate Governance, the Council of Institutional Investors, and the Society for Corporate Governance.

Yawman was not among the five highest-paid executives at PepsiCo in 2019, according to the company’s proxy filing. Bloomberg data shows that he currently owns nearly $8.9 million in PepsiCo stock.

Bloomberg Law reported last year on the departure of PepsiCo’s former global ethics and compliance chief, Lynn Haaland, who joined Zoom Video Communications Inc. as deputy general counsel and chief compliance and ethics officer.

(Updates story throughout with comments from Yawman, Flavell, and Smith.)

To contact the reporter on this story: Brian Baxter in New York at bbaxter@bloomberglaw.com

To contact the editor responsible for this story: Chris Opfer at copfer@bloomberglaw.com
John Hughes at jhughes@bloombergindustry.com

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