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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
| ☑ | Filed by the Registrant | ☐ | Filed by a Partyparty other than the Registrant | |
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| ☐ | | Preliminary Proxy Statement |
| ☐ | | Confidential, Forfor Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ☑ | | Definitive Proxy Statement |
| ☐ | | Definitive Additional Materials |
| ☐ | | Soliciting Material Under Rule 14a-12under §240.14a-12 |
PepsiCo, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Thanother than the Registrant)
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Announced our
50th consecutive annualized
dividend per share increase,
effective with the expected
June 2022 dividend payment |  |
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Dear Fellow PepsiCo Shareholders:
DEAR FELLOW PEPSICO SHAREHOLDERS:
|
Ramon L. Laguarta
Chairman of the Board of Directors and
Chief Executive Officer
I am pleased to invite you to attend our 20202022 Annual Meeting of Shareholders on Wednesday, May 6, 20204, 2022 at 9:00 a.m. Eastern Daylight Time. The Meeting willUpon consideration of various factors, including the continued uncertainty regarding the potential impact of COVID-19 on health and safety, we have planned for this year’s event to be heldvirtual-only. You can access the meeting at the North Carolina History Center at Tryon Palace in New Bern, North Carolina, the “birthplace” of Pepsi. We hope you will attend, but for those who cannot, we will offer a live webcast of our Annual Meeting on our website atwww.virtualshareholdermeeting.com/PEP2022.www.pepsico.com/investors/events.
We believe our strategy will position our Company for long-term sustainable growth
Last year as I started my first full year as Chairman and CEO, we embarked on an approach we callWinning with Purposethat was intended to build on our already strong foundation to achieve accelerated, sustainable growth.
We articulatedcontinued to stay resilient and delivered outstanding results during another challenging year
As I write to you in March, war has taken a missiontragic toll in Ukraine. We have worked to support our associates and with various charitable organizations to provide humanitarian support to the people of Ukraine and to support refugees in neighboring countries. We have joined with many across the globe in calling for a speedy, peaceful resolution.
Such an abrupt turn toward conflict has underscored one timeless principle: change is the only constant. We’re seeing this play out in different contexts all over the world, with various implications for our business.
This past year was another very challenging period for our Company. COVID-19 has significantly shifted consumer purchasing behavior and accelerated supply chain and inflationary pressures, and we continued to face the impacts of climate change. But despite these challenges, PepsiCo never stopped transforming and building, thanks to our incredible team of associates.
Our efforts to become a Faster, Stronger and Better Company laid a solid foundation that enabled us to continue to perform through the ongoing significant challenges and wide-scale disruptions brought by 2021. Last year, we delivered strong operational performance despite economic uncertainties, yielding 12.9% and 9.5% reported and organic revenue growth and 7% and 12% reported and core constant currency earnings per share growth – toCreate More Smiles with Every Sip and Every Bite;a vision– To Be the Global Leaderfastest pace of revenue growth we have delivered in Convenient Foods and Beverages by Winning with Purpose; and seven leadership behaviors that define our shared culture that we callThe PepsiCo Way. This approach was designed to help make our Company faster, stronger and better at meeting the needsover five years. We have also held or gained share across many of our shareholders, customers, consumers, partners and communities, while caring for our planet and inspiring our associates.
Askey markets. In addition, we head into the second year of this journey, we have made great progress and we believe this approach will position PepsiCo well for the future as evidenced by the results we delivered in 2019.
Looking back at our progress in 2019, we met or exceeded each of the financial goals we announced at the beginning of the year, returned a total of $8.3roughly $5.9 billion in cash to shareholders through dividends and share repurchases in 2021 and, earlier this year, announced share repurchases of $1.5 billion in 2022 and a 7% increase in our annualized dividend, per share effective with the expected June 20202022 dividend payment the 48th– our 50th consecutive annualannualized dividend per share increase.
Our strategy is designed to address key challenges facing our Company, including: shifting consumer preferences and behaviors; a highly competitive operating environment; a rapidly changing retail landscape, including the growth in e-commerce; continued macroeconomic and political volatility; and an evolving regulatory landscape.
To adaptThis was all possible because striving to thesebecome even Faster, even Stronger and even Better means rethinking every aspect of our business so that we are ready for what the future may hold. In an environment where consumer behaviors and customer demand rapidly evolve, we are continuing to transform ourselves and build new capabilities, including by: driving efficiency and growth through our Global Business Services; developing and scaling core capabilities through investment in technology and digitalization; and entering into new business ventures to offer an even more diversified product portfolio to our consumers.
After such a strong year, from the outside, it might seem like our success was inevitable. However, we faced the same supply chain and inflationary pressures, the same shifts in consumer behavior, the same climate challenges whilst becomingas everyone else. But we have one thing that no one else does – our associates. Over the past year, our global and local teams came together as one PepsiCo and I am very proud of what we have been able to achieve, while staying focused on the issues that matter to our society and planet.
We are charting a new course to drive positive action for the planet and people
In September 2021, we announced PepsiCo Positive (pep+), a strategic, end-to-end transformation that places sustainability and human capital at the center of how we create growth and value. Embedding pep+ across our strategy and organization will allow our business to become more competitive in the marketplace, building differentiated capabilities,resilient and creating very efficient businesses, we intendcontribute positively to continue to focus on becomingFaster, Strongerour planet and Better:our communities, positioning PepsiCo for long-term success.
PepsiCo Positive drives action and progress across three key pillars, bringing together a number of industry-leading goals under a comprehensive framework:
| ■ | FasterPositive Agriculture– PepsiCo is working to spread regenerative practices to: |
| – | Restore the Earth across 7 million acres by winning in2030, approximately equal to the marketplace, being more consumer-centricCompany’s entire agricultural footprint; |
| – | Sustainably source(1) 100% of its key ingredients by 2030; and accelerating investment for topline growth. This includes broadening our portfolios to win locally in convenient foods and beverages, fortifying our North America businesses, and accelerating our international expansion, with disciplined focus on markets where we see a strong likelihood of prevailing over our competition. In 2019, we increased our global advertising and marketing spending, expanded our market presence, invested in additional manufacturing capacity and accelerated our innovations. |
■ | Stronger– | Improve the livelihoods of more than 250,000 people in its agricultural supply chain and communities by continuing to transform our capabilities, cost and culture by leveraging scale and technology in global markets across our operations and winning locally. This includes continuing to focus on driving savings through holistic cost management to reinvest to succeed in the marketplace, developing and scaling core capabilities through technology, and building differentiated talent and culture. In 2019, we invested in data analytics and other information technology, strengthened our omnichannel capabilities, migrated our organizational structure closer to the market, evolved our values and ways of working and delivered in excess of $1 billion in productivity savings.2030. |
| ■ | BetterPositive Value Chainby continuing to integrate purpose into our business strategy and brands, whilst doing even more for our planet and people. This includes our efforts to– PepsiCo will help build a more sustainable food system, with a focus on advancing next generation agriculture, driving positive water impact, building a circular future for packaging, improving choices across our portfolio, mitigating the impact of climate change and promoting people and prosperity. To advance this agenda, we also appointed our first ever Chief Sustainability Officer and issued our first Green Bond that generated almost $1 billion in net proceeds to fund key sustainability initiatives.inclusive value chain through taking actions to: |
| – | Achieve net-zero emissions by 2040; |
| – | Become net water positive by 2030; |
| (1) | “Sustainably source” refers to meeting the independently verified environmental, social and economic principles of PepsiCo’s Sustainable Farming Program, enabling continuous improvement for farmers, communities and the planet. |
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| – | Cut virgin plastic per serving by 50% across its global beverages and convenient foods portfolio by 2030 (against a 2020 baseline), using 50% recycled content in its plastic packaging and scaling the SodaStream business globally; and |
| – | Advance its more than $570 million Racial Equality Journey. |
| ■ | Positive Choices – PepsiCo continues to evolve its portfolio of beverages and convenient food products so that they are better for the planet and people, including by: |
| – | Accelerating its reduction of added sugars and sodium through the use of science-based targets across its portfolio and cooking its convenient food offerings with healthier oils; |
| – | Incorporating more diverse ingredients in both new and existing convenient food products that are better for the planet and/or deliver nutritional benefits, prioritizing chickpeas, plant-based proteins and whole grains; |
| – | Expanding its position in the nuts and seeds category, where PepsiCo is already the global branded leader; and |
| – | Continuing to scale new business models that require little or no single-use packaging, including its global SodaStream business. |
Achieving our pep+ goals will require new skills, new processes, new partnerships, and continually re-evaluating business as usual, but I am confident that pep+ is a key part of the future of our Company – our roadmap to building a system that helps preserve the planet and positively impacts the people and communities we work with and serve, while enabling us to be a Faster, Stronger, Better Company. We recognize that by becoming better ourselves, we can not only meet the consumer and stakeholder needs and position ourselves for long-term growth, but we can also help build a stronger, more sustainable future for us all.
Our Board of Directors is actively engaged in the Company’sour strategy
As stewards of our Company, our Board plays an essential role in determining PepsiCo’sguiding our overall long-term strategy. Our Board has deep experience and expertise in the area of strategy development and offers insights into the most important issues facing the Company. Our entireIn particular, a number of our Board actsmembers have science and public policy expertise that has informed PepsiCo’s response to COVID-19 and racial equality issues, as a strategy committeewell as PepsiCo’s sustainability initiatives. Throughout the pandemic and discusses the Company’s key
 | PEPSICO 2020 PROXY STATEMENT 1 |
Tableyet another year of Contentsuncertainty and challenges, our Board has continued to be an invaluable resource, offering their expertise and providing tireless support. I am grateful to each member for their availability and their counsel throughout this extraordinary time.
priorities annually in an extensive reviewThe core of the Company’s plans and throughout the year at almost every Board meeting, including during executive sessions without Company management present.
Givenresilience is good governance. We believe that we believe our performance is inextricably linked to thedeliver long-term value, sustainability must be woven into all aspects of the world in which we operate, sustainability topics are integral to our business strategy. As a result,strategy and brands and overseen at the full Board considers sustainability issues a vital element of its business oversight. In addition, ourlevel. That is why the Board’s Sustainability, Diversity and Public Policy and Sustainability Committee, which was established in 2017 and is comprised entirely of independent directors,renamed in 2020, assists the Board in providing more focused oversight of the Company’sover PepsiCo’s policies and programs and related risks that concern key sustainability, diversity, equity and inclusion and public policy matters.matters and helps ensure that such topics remain central to the success of our business strategy.
We value the diversity of thought, experience and background in our Boardroom
As our Company’s long-term strategy evolves, so do the skills, qualifications, attributes and experiences that the Board seeks in its director nominees. The Board has a robust succession planning process designed to regularly review the mix of skills, qualifications, attributes and experiences of the directors currently on the Board and needed in the future, as well as to identify individuals whose skills, qualifications, attributes and experiences will enable them to meaningfully contribute to shaping our long-term business strategy.
We are extremely proud of the ongoing evolution of our Board and its track record on refreshment. We strive to maintain an appropriate balance of tenure, diversity, skills, viewpoints and experiences on the Board. Of the 12believe our director nominees 7 have joined in the last six years. Refreshing our Board with new perspectives and ideas is key to representing the interests of our shareholders effectively as the Company’s strategy and needs evolve. At the same time, the Board believes it is equally important to benefit from the valuable experience and continuity that longer-serving directors bring to the Board. The director nominees reflect a range of tenures, averaging approximately seven years, and a balanced mix of ages. Our director nominees also bring diverse opinions and perspectives and a well-rounded range of attributes, viewpoints and experiences that are reflective of our global businesses. 50% of our director nominees are women and/or ethnically diverse individuals. Three women serve on
Edith W. Cooper joined our Board of which two holdas an independent director in 2021, further strengthening our Board leadership roles as Committee Chairs. Six director nominees are citizens of countries other than the United Stateswith diverse perspectives and 11providing extensive knowledge of the 12 director nomineeshuman resources field, including recruiting and talent development. Ms. Cooper’s additional perspectives and experiences have significant international experience.
One of our directors, William R. Johnson, is not standing for re-electionalready been valuable additions to the BoardBoard.
Looking ahead
We have a lot of work ahead of us, but we will continue to concentrate on the values and will retire effective as ofbehaviors that served us so well during the 2020 Annual Meeting. We thank Bill for his manypast few years of service and are grateful for his valuable contributions tofocus our Company.
Underpinning our performance is our enduring commitment to ethical business practices and strong corporate governance and toneefforts in the right places, while embedding pep+ at the topcenter of everything we do.
At PepsiCo, we believe acting ethically and responsibly is not only the right thing to do, but also the right thing for our business. The Board has consistently demonstrated an enduring commitment to strong corporate governance practices and setting a strong tone at the top of the Company. We have adopted comprehensive corporate standards and policies to govern our operations and facilitate accountability for our actions.
We believe strong corporate governance and an ethical culture are the foundation for financial integrity, investor confidence and sustainable performance. We are focused on advancing our vision with honesty, fairness and integrity. PepsiCo is honored to have been named among Ethisphere’s World’s Most Ethical Companies for the fourteenth consecutive year in 2020.
We value your views
The feedback we receive from our shareholders and other stakeholders is a cornerstone of our corporate governance practices. We believe that regular, transparent communication is essentialcritical to PepsiCo’s long-term success, and wesuccess. We have a longstanding practice of engaging regularly engaging with our shareholders and other stakeholders – such as customers, consumers, suppliers, associates, advocacy groups, governments and communities – on all aspects of our business. These important external viewpoints help inform our decisions and our strategy. Through our ongoing dialogue, with you, we seekhope to ensure thatcontinue broadening our perspective and strengthening our corporate governance at PepsiCo is a dynamic framework that can both accommodate the demands of a rapidly changing business environment and remain responsive to the priorities of our shareholders and other stakeholders.framework.
Your vote is important
Whether or not you plan to attend the Annual Meeting in person,virtually, we encourage you to vote promptly. You may vote by telephone or over the Internet,online, or, if you requested to receive printed proxy materials, by completing, signing, dating and returning the enclosed proxy card or voting instruction form if you requested to receive printed proxy materials.form.
On behalf of our Board of Directors and all of our PepsiCo associates, thank you for being a PepsiCo shareholderyour support and forthe faith you place in us with your continued support of PepsiCo.investment. Please continue to stay healthy and safe.
Sincerely,
Ramon L. Laguarta
Chairman of the Board of Directors and
Chief Executive Officer
March 20, 202024, 2022
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700 Anderson Hill Road
Purchase, New York 10577
Notice of 2022 Annual Meeting of Shareholders
700 Anderson Hill Road
Purchase, New York 10577 |
NOTICE OF 2020 ANNUAL MEETING OF SHAREHOLDERS
|
Date and Time
Wednesday, May 6, 20204, 2022
9:00 a.m. Eastern Daylight Time
Place*
North Carolina History CenterThis year’s meeting will be a virtual shareholder meeting at Tryon Palace
529 South Front Street
New Bern, North Carolina 28562www.virtualshareholdermeeting.com/PEP2022.
Items to be Voted On
| 1 | Elect as directors the 1214 nominees named in the attached Proxy Statement. |
| | |
| 2 | Ratify the appointment of KPMG LLP as our independent registered public accounting firm for fiscal year 2020.2022. |
| |
| 3 | Provide advisory approval of executive compensation. |
| | |
4-54-6 | Act upon twofour shareholder proposals described in the attached Proxy Statement, if properly presented. |
Record Date
Holders of record of our Common Stock as of the close of business on March 2, 20201, 2022 will be entitled to notice of, and to vote at, the Annual Meeting.
By Order of the Board of Directors,
David YawmanFlavell
Corporate Secretary
March 20, 202024, 2022
Live WebcastProxy Voting*
TheYour vote is very important. Whether or not you plan to attend the Annual Meeting, please promptly vote by telephone or over the Internet, or by completing, signing, dating and returning your proxy card or voting instruction form so that your shares will be webcast live on our websiterepresented at the Annual Meeting.
www.pepsico.com/investors/events beginningat 9:00 a.m. Eastern Daylight Time on May 6, 2020.Voting Methods
Proxy Voting
Your vote is very important. Whether or not you plan to attend the Annual Meeting in person, please promptly vote by telephone or over
| Via the Internet or by completing, signing, dating and returning your proxy card or voting instruction form so that your shares will be represented at the Annual Meeting.in Advance
Advanced Voting MethodsVisit www.proxyvote.com. | |
| | | | |
  | InternetBy Telephone
www.proxyvote.com
| You will need
the 16-digit
number
included in
your proxy
card, voting
instruction
form or notice
| |
| |
 | Telephone
Call the phone number located on your proxy card or voting instruction formform.
|
| | | You will need the 16-digit number included in your proxy card, voting instruction form or notice |
| | | |
  | By Mail
Complete, sign, date and return your proxy card or voting instruction form in the envelope providedprovided. |
| | |
 | At the Meeting
Attend the Annual Meeting virtually. See page 95 for additional details on how to vote during the meeting. | |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be Held on May 6, 2020.4, 2022.
Our Notice of Annual Meeting, Proxy Statement and Annual Report for the fiscal year ended December 28, 201925, 2021 (“2021 Annual Report”) are available atwww.pepsico.com/proxy22.www.pepsico.com/proxy20.
We are making the Proxy Statement and the form of proxy first available on or about March 20, 2020. 24, 2022.
*We are monitoring | Upon consideration of various factors, including the emerging public healthcontinued uncertainty regarding the potential impact of the coronavirus (COVID-19). TheCOVID-19 on health and well-being of our employees, shareholders, directors, officers and other stakeholders are paramount. Althoughsafety, we are sensitivehave planned for this year’s annual meeting to the public health and travel concerns our stakeholders may have and the protocols that federal, state and local governments may impose, we are not permitted to holdbe a virtual-only annual meeting of shareholders under current North Carolina law. If public health developments warrant, we may need to change the location of the Annual Meeting. Any such change will be announced as promptly as practicable. We encourage you to visitwww.pepsico.com/investors/eventsto listen to the live webcast of the Annual Meeting.meeting. Whether or not you plan to attend the Annual Meeting, we encourage you to vote promptly. |
| |
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This Proxy Statement of PepsiCo, Inc. (“PepsiCo,” the “Company,” “we,” “us” or “our”) contains statements reflecting our views about our future performance that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (“Reform Act”). Statements that constitute forward-looking statements within the meaning of the Reform Act are generally identified through the inclusion of words such as “aim,” “anticipate,” “believe,” “drive,” “estimate,” “expect,” “expressed confidence,” “forecast,” “future,” “goal,” “guidance,” “intend,” “may,” “objective,” “outlook,” “plan,” “position,” “potential,” “project,” “seek,” “should,” “strategy,” “target,” “will” or similar statements or variations of such words and other similar expressions. Forward-looking statements are based on currently available information, operating plans and projections about future events and trends. They inherently involve risks and uncertainties that could cause actual results to differ materially from those predicted in any such forward-looking statement. Such risks and uncertainties include, but are not limited to: the impact of COVID-19; future demand for PepsiCo’s products, as a result of changes in consumer preferencesproducts; damage to PepsiCo’s reputation or otherwise; changes in laws related to the use or disposal of plasticsbrand image; product recalls or other packaging of PepsiCo’s products; changes inissues or failureconcerns with respect to comply with, applicable lawsproduct quality and regulations; imposition or proposed imposition of new or increased taxes aimed at PepsiCo’s products; imposition of labeling or warning requirements on PepsiCo’s products;safety; PepsiCo’s ability to compete effectively; failurePepsiCo’s ability to realize anticipated benefits fromattract, develop and maintain a highly skilled and diverse workforce; water scarcity; changes in the retail landscape or in sales to any key customer; disruption of PepsiCo’s productivitymanufacturing operations or reinvestment initiativessupply chain, including increased commodity, packaging, transportation, labor and other input costs; political or operating model; politicalsocial conditions civil unrest or other developments and risks in the markets where PepsiCo’s products are made, manufactured, distributed or sold; PepsiCo’s ability to grow its business in developing and emerging markets; uncertain or unfavorablechanges in economic conditions in the countries in which PepsiCo operates; the ability to protect information systems against, or effectively respond to, a cybersecurity incident orfuture cyber incidents and other disruption; water scarcity; business disruptions, including health epidemics or pandemics, such as the novel coronavirus (COVID-19), or other contagious outbreaks; product contamination or tampering or issues or concerns with respect to product quality, safety and integrity; damage to PepsiCo’s reputation or brand image;disruptions; failure to successfully complete integrate or manage acquisitionsstrategic transactions; PepsiCo’s reliance on third-party service providers and joint ventures intoenterprise-wide systems; climate change or measures to address climate change; strikes or work stoppages; failure to realize benefits from PepsiCo’s existing operationsproductivity initiatives; deterioration in estimates and underlying assumptions regarding future performance that can result in an impairment charge; fluctuations or to complete or manage divestitures or refranchisings; PepsiCo’s ability to recruit, hire or retain key employees or a highly skilled and diverse workforce; the loss of, or a significant reductionother changes in sales to, any key customer; disruption to the retail landscape, including rapid growth in the e-commerce channel and hard discounters;exchange rates; any downgrade or potential downgrade of PepsiCo’s credit ratings; climate changeimposition or proposed imposition of new or increased taxes aimed at PepsiCo’s products; imposition of limitations on the marketing or sale of PepsiCo’s products; changes in laws and regulations related to the use or disposal of plastics or other packaging materials; failure to comply with personal data protection and privacy laws; increase in income tax rates, changes in income tax laws or disagreements with tax authorities; failure to adequately protect PepsiCo’s intellectual property rights or infringement on intellectual property rights of others; failure to comply with applicable laws and regulations; and potential liabilities and costs from litigation, claims, legal or regulatory proceedings, inquiries or market measures to address climate change;investigations. For additional information on these and the other factors discussed inthat could cause PepsiCo’s actual results to materially differ from those set forth herein, please see PepsiCo’s filings with the risk factors section of PepsiCo’sSecurities and Exchange Commission, including its most recent annual report on Form 10-K and subsequent reports on Forms 10-Q and 8-K. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. PepsiCo undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
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PROXY STATEMENTProxy Statement
SUMMARYSummary
| This summary highlights certain information contained in thisProxy Statement. You should read the entire Proxy Statement and 20192021 Annual Report carefully before you vote. |
PepsiCo StrategyPositive (pep+)
In September 2021, PepsiCo introduced PepsiCo Positive (pep+), a strategic end-to-end transformation, with sustainability and Vision
Our leadership team articulated an approach in 2019 designed to help us meethuman capital at the needscenter of our shareholders, customers, consumers, partnershow PepsiCo will create growth and communities, while caringvalue by operating within planetary boundaries and inspiring positive change for ourthe planet and inspiring our associates.people.
 | | CreatePositive Agriculture
Work to source our
crops and ingredients
in ways that restore the
earth and strengthen
farming communities | | Positive Value Chain Make products in a way
that helps build a circular
and inclusive value chain | | Positive Choices Inspire people through our
brands to make choices
that create more smiles with every sipfor
them and every bite |
| | |
VISION | | Be the global leader in convenient foods and beverages by winning with purposeplanet |
| | | | | | |
The
PEPSICO
WAY
| | FASTERSustainable Sourcing;
Winning in the marketplace being more consumer-centric and accelerating investment for topline growth
Regenerative Practices;
Improved Livelihoods | | STRONGERNet Zero Emissions;
Transforming our capabilities, cost
Net Water Positive;
Sustainable Packaging;
Meaningful Growth
Opportunities; Diversity,
Equity and culture by operating as one PepsiCo, leveraging technology, winning locally and globally enabled
Inclusion | | Expanded Offerings;
Innovative Packaging
Solutions;
Planet + People BrandsBETTER
Integrating purpose into our business strategy and doing even more for the planet and our people
|
| |
|  |
For more information, please visit www.pepsico.com/PepsiCoPositive.[1]
Matters to beBe Voted on at our 2020Our 2022 Annual Meeting of Shareholders
Shareholders will be asked to vote on the following matters at the Annual Meeting of Shareholders:
| [1] | The information on any website mentioned in this proxy statement is not, and shall not be deemed to be, a part of this Proxy Statement or incorporated herein or into any of our other filings with the Securities and Exchange Commission (the “SEC”). |
| |
 PEPSICO 20202022 PROXY STATEMENT | 5 |
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Proxy Statement Summary
Director Nominees
Our Nominating and Corporate Governance Committee and our Board have determined that the director nominees possess a broad range of attributes, viewpoints and experiences to effectively oversee PepsiCo’s long-term business strategy. The following table provides summary information about each director nominee. For more detailed information about our directors, please see “Election of Directors (Proxy Item No. 1)” beginning on page 11 of this Proxy Statement.
| | | | Director
Since | | | | | | Committee Membership | | | | Director | | Committee Membership |
| Name | | Primary Occupation | | | Age* | | Independent | | AC | | CC | | NCG | | PPS | | Primary Occupation | | Since | Age* | Independent | AC | CC | NCG | SDPP |
| Segun Agbaje | | | Group Chief Executive Officer, Guaranty Trust Holding Company Plc | | 2020 | 57 |  | E | | |
| Shona L. Brown | | Independent Advisor; Former Senior Advisor, Google Inc. | | 2009 | | 54 | | ✓ | | | |  | | | | ● | | Independent Advisor; Former Senior Advisor, Google Inc. | | 2009 | 56 | | |  | |  |
| Cesar Conde | | Chairman, NBCUniversal International Group and NBCUniversal Telemundo Enterprises | | 2016 | | 46 | | ✓ | | ● | | | | | | | | Chairman, NBCUniversal News Group | | 2016 | 48 | | | | |
Ian Cook
(Presiding Director) | | Executive Chairman, Colgate-Palmolive Company | | 2008 | | 67 | | ✓ | | | | | | ● | | | | Former Chairman, President and Chief Executive Officer, Colgate-Palmolive Company | | 2008 | 69 | | | | | |
| Edith W. Cooper | | | Former Executive Vice President and Global Head, Human Capital Management, The Goldman Sachs Group, Inc. | | 2021 | 60 | | | | |
| Dina Dublon | | Former Executive Vice President and Chief Financial Officer, JPMorgan Chase & Co. | | 2005 | | 66 | | ✓ | | | | ● | | | | | | Former Executive Vice President and Chief Financial Officer, JPMorgan Chase & Co. | | 2005 | 68 | | | | | |
| Richard W. Fisher | | Former President and Chief Executive Officer, Federal Reserve Bank of Dallas | | 2015 | | 71 | | ✓ | | E | | | | | | | |
| Michelle Gass | | Chief Executive Officer, Kohl’s Corporation | | 2019 | | 52 | | ✓ | | | | | | | | | | Chief Executive Officer, Kohl’s Corporation | | 2019 | 54 | | E | | |
| Ramon L. Laguarta | | Chairman of the Board and Chief Executive Officer, PepsiCo | | 2018 | | 56 | | | | | | | | | | | | Chairman of the Board and Chief Executive Officer, PepsiCo | | 2018 | 58 | | | | |
| Sir Dave Lewis | | | Former Group Chief Executive Officer, Tesco PLC; Chairman of Xlinks | | 2020 | 57 | | E | | |
| David C. Page, MD | | Director and President, Whitehead Institute for Biomedical Research; Professor, Massachusetts Institute of Technology | | 2014 | | 63 | | ✓ | | | | ● | | | | ● | | Professor, Massachusetts Institute of Technology; Former Director and President, Whitehead Institute for Biomedical Research | | 2014 | 65 | | | | | |
| Robert C. Pohlad | | President of various family-owned entities; Former Chairman and Chief Executive Officer, PepsiAmericas, Inc. | | 2015 | | 65 | | ✓ | | | | | | ● | | | | President of various family-owned entities; Former Chairman and Chief Executive Officer, PepsiAmericas, Inc. | | 2015 | 67 | | | | | |
| Daniel Vasella, MD | | Former Chairman and Chief Executive Officer, Novartis AG | | 2002 | | 66 | | ✓ | | | | ● | | | | | | Former Chairman and Chief Executive Officer, Novartis AG | | 2002 | 68 | | | | |
| Darren Walker | | President, Ford Foundation | | 2016 | | 60 | | ✓ | | | | | | ● | | ● | | President, Ford Foundation | | 2016 | 62 | | | | | |
| Alberto Weisser | | Former Chairman and Chief Executive Officer, Bunge Limited | | 2011 | | 64 | | ✓ | | E | | | | | | | | Former Chairman and Chief Executive Officer, Bunge Limited | | 2011 | 66 | | E | | |
| * | Ages are as of March 20, 2020.24, 2022. |   | = | Committee Chair | | AC | =Audit Committee |
| | E | = | Audit Committee Financial Expert | | CC | =Compensation Committee |
| | | Financial Expert | | NCG | =Nominating and Corporate Governance Committee |
| | | | | PPSSDPP | = Sustainability, Diversity and Public Policy and Sustainability Committee |
| | | | | |
| 6 | PEPSICO 20202022 PROXY STATEMENT | |
Table of Contents
Proxy Statement Summary
Director Nominee Highlights
Director succession planning is a robust, ongoing process at PepsiCo. Our Board regularly evaluates desired attributes in light of the Company’s strategy and evolving needs. We believe our 1214 director nominees bring a diverse and well-rounded range of attributes, viewpoints and experiences, and represent an effective mix of deep company knowledge and fresh perspectives.
| Strong Board Diversity
| | | | |
| | | | | |
| Diverse Representation | Global PerspectiveDiversity Highlights | |
| female and/or
racially/ethnically diverse |  4female director nominees
3Hispanic/ Latinx director
nominees
3African American/Black
director nominees
| 2 of 4 Standing Board Committees
chaired by diverse directors: Shona L. Brown (Compensation Committee)
and Darren Walker (Sustainability, Diversity
and Public Policy Committee) Added 2 new diverse directors in past 2 years: Edith W. Cooper (2021) and
Segun Agbaje (2020) | |
| | | |
| | Range of Tenures* | | | | | Balanced Mix of Ages*
| | | | | Independent Oversight | | |
| | | | | | | | | | |
| | Average Tenure:
7.37.6 Years
7 joined in the last 6 years | | | | Average Age:60.861.1
67%64.3% are 65 or younger | | | |  
13 of 14 independent director nominees All 4 Board Committees
are independent | |
| |
| |
| | | | | | | | | | | | | |
| * | Tenure and age are as of March 20, 2020. 24, 2022. |
| | Diverse and Balanced Mix of Attributes and Experiences | | | | | Global Perspective | | |
| | | | | | | |
| |   | | | |
12 of 14
director nominees with
significant global experience | |
| | | | | | | |
For further information on these attributes and experiences, see page 20.21.
| PEPSICO 20202022 PROXY STATEMENT | 7 |
Table of Contents
Proxy Statement Summary
Executive Compensation At-a-Glance
20192021 PepsiCo Performance Highlights
PepsiCo delivered solidexceeded its operating performance goals in 2019. To incentivize executive officers to deliver sustainable long-term value to shareholders, compensation is heavily weighted towards the achievement of performance goals that are aligned2021 despite continued challenges associated with the following externally reported non-GAAP measures.[1]
| Organic Revenue Growth[1] | | | | | Core Constant Currency Earnings
Per Share (”EPS”) Performance[1] | | | | | Free Cash Flow[1] | | |
| | | | | | | | | | |
| 4.5%
Goal: 4.0%[2] |  | | | | -1%
Goal: Approximately -1% |  | | | | $5.6B
Goal: Approximately $5.0B | | |
| | | | | | | | | | | | | |
Our Total Shareholder Return (“TSR”) reflectsCOVID-19 pandemic, including ongoing supply chain disruptions and inflationary pressures. We advanced our strong 2019 results, delivering 27.4% return to shareholders, aligned with the medianprogress on accelerating growth and expanding margins. Highlights of our proxy peer group.2021 performance include:
| | Organic Revenue Growth[2] | | | | Core Constant
Currency Earnings
Per Share (“EPS”)
Growth[2] | | | | Free Cash Flow
Excluding Certain
Items[2] | | | | Total Shareholder
Return (“TSR“) | | | | Cash Returned to Shareholders | |
| | | | | | | | | | | | | | |
| | 9.5% | | | | 12% | | | | $8.1 Billion | | | | 20.5% | | | | $5.9 Billion | |
| | | | | | | | | | | | | | | | | | | |
Noteworthy accomplishments in 2019 which2021 that continue to create shareholder value over the long-term include the following:include:
| ■ | IncreasedAccelerated Net Revenue growth across our annualized dividend, returning a total of $8.3 billion in cash to shareholders through dividendskey categories and share repurchasesgeographies |
| ■ | AchievedImproved market share in categories such as salty snacks and savory snacks in the highest rate of Organic Revenue Growth[1] since 2015, with Frito-Lay North America delivering its fastest rate of growth since 2013United States, and PepsiCo Beverages North America (“PBNA”) delivering its fastest rate of growth since 2015sustained strong business momentum in key international markets |
| ■ | DeliveredImplemented PepsiCo Positive (pep+), a strategic end-to-end transformation agenda with sustainability and human capital at the center of how we will create growth and shared value over $1 billion of productivity savings in 2019 to strengthen our beverage, food and snack businessesthe long-term |
| ■ | Advanced sustainable farming program, achieving nearly 80% sustainably-sourced direct agricultural raw materials by farmers |
■ | EstablishedTSR of 20.5% at the 74th percentile of our proxy peer group and activatedThe PepsiCo Wayto evolve our culture, values and waysthe 65th percentile of working in order to becomeFaster, Stronger and Betterthe S&P Consumer Staples Index |
2019 Target Pay Mix for Named Executive Officers
To align pay levels for Named Executive Officers (“NEOs”)We continued to deliver on our Faster, Stronger and Better aspirations to Be the Global Leader in Beverages and Convenient Foods by Winning with pep+, as well as continued to take actions to keep our associates safe, support our communities and meet our consumers’ and customers’ needs during the Company’s performance, our pay mix places the greatest emphasis on performance-based incentives.COVID-19 pandemic.
CHAIRMAN AND CEO TARGET PAY MIXFASTER | | NEO AVERAGE TARGET PAY MIX
(EXCLUDING CHAIRMAN AND CEO)STRONGER | | BETTER |
Execution: Named number one supplier by our retail partners in the 2021 Kantar PoweRanking Report for the sixth consecutive year Brand Building:Performance-BasedStepped up our level of advertising and marketing support for our brands to approximately 6% of Net Revenue in 2021 and delivered innovative products representing approximately 8% of Net Revenue in 2021 | | Productivity: Continued the expansion of our Global Business Services (“GBS”) platform to leverage our global scale and fuel our growth by building capability, driving agility and delivering productivity Digitalization: Established two digital hubs, in Dallas and Barcelona, which will accelerate the way we develop, centralize and deploy critical digital capabilities | | Sustainability: Awarded the Terra Carta Seal from His Royal Highness The Prince of Wales in recognition of PepsiCo’s commitment to build a more sustainable food system for both people and the planet People: Announced a new goal to make nutritious food accessible to 50 million people around the world by 2030 through the PepsiCo Foundation’s Food for Good program |
The Principles of Our Executive Compensation Program
Our executive compensation program is designed to align the interests of PepsiCo’s executive officers with those of our shareholders. The Compensation Committee oversees and evaluates the program against competitive practices, regulatory developments and corporate governance trends.
 | The Compensation 91% | Performance-Based Compensation 84%Committee has incorporated market-leading governance features into our programs that include a stringent clawback policy, rigorous stock ownership requirements and challenging targets for incentive awards set at the beginning of the performance period taking into consideration our business strategy, operating goals and external guidance. |
 |  |
 | Our executive compensation program avoids shareholder-unfriendly features. For our executive officers, we do not have employment agreements or supplemental retirement plans and we prohibit hedging or pledging of Company stock. |
[1]2] | To evaluate performance in a manner consistent with how management evaluates our operating results and trends, the Compensation Committee applies certain business performanceBusiness Performance metrics that are not in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) as compensation performance measures to both long-term and annual incentive awards. Please refer to Appendix A to this Proxy Statement for a description and reconciliation of these non-GAAP financial measures relative to reported GAAP financial measures, and to pages 57-6243-48 and 64-6651 of PepsiCo’s 20192021 Annual Report on Form 10-K for the fiscal year ended December 28, 201925, 2021 for a more detailed description of the items excluded from these measures. |
[2] | PepsiCo updated its initial Organic Revenue Growth guidance in the third-quarter 2019 earnings release from a target growth rate in Organic Revenue of 4.0% to meeting or exceeding 4.0% growth over prior year. |
| 8 | PEPSICO 20202022 PROXY STATEMENT | |
Table of Contents
Proxy Statement Summary
2021 Target Pay Mix for Named Executive Officers
The Principles of OurTo align pay levels for Named Executive Compensation ProgramOfficers (“NEOs
Our executive compensation program is designed to align”) with the interests of PepsiCo’s executive officers with those ofCompany’s performance, our shareholders. The Compensation Committee oversees and evaluatespay mix places the program against competitive practices, regulatory developments and corporate governance trends.greatest emphasis on performance-based incentives.
Compensation Highlights
Reflecting our pay-for-performance compensation philosophy theand based on performance summarized above and presented in detail below, our strong results delivered to shareholders translated into above-target payouts of annual incentive awards and Long-Term Cash awards. Due to increased long-term investments in our businesses, long-term incentive award paymentsPerformance Stock Unit payouts were at or below target.
Annual
Incentive |  
| 1-year
performance period | | 20192021 Annual Incentive
Overall, PepsiCo achieved
strong operating performance for the year. | | Payout (% of target) |
| | 113%167% | Average
for all NEOs |
| | | |
Long-Term
Incentives |   | 3-year performance period |
| | |
| [3] | For further information on PepsiCo’s three-year average Core Constant Currency EPS PerformanceGrowth compensation performance measure, which is a non-GAAP financial measure, please refer to Appendix A to this Proxy Statement. In calculating this compensation performance measure, PepsiCo’s 20182020 Core Constant Currency EPS PerformanceGrowth was adjusted to exclude certain gains associated with the salecharges taken as a result of assets and insurance claims and settlement recoveries.COVID-19 in 2020. |
| [4] | For further information on PepsiCo’s three-year Core Net ROIC Improvement compensation performance measure, which is a non-GAAP financial measure, please refer to Appendix A to this Proxy Statement. In calculating this compensation performance measure, PepsiCo’s Core Net ROIC Improvement was adjusted for the following: (i) to exclude the impact of the SodaStream Internationalacquisitions in 2020, including Rockstar Energy Beverages (“Rockstar”), Pioneer Food Group Ltd. (“SodaStreamPioneer Foods”) acquisition in 2018 and 2019, as well asHangzhou Haomusi Food Co., Ltd. (“Be & Cheery”) and (ii) to mitigate the impact of changes in foreign exchange rates from 20172019 to 2019.2021. |
| |
| PEPSICO 20202022 PROXY STATEMENT | 9 |
Table of Contents
Proxy Statement Summary
Corporate Governance Highlights
Our Corporate Governance Policies Reflect Best Practices
Many of our corporate governance practices are a result of valuable feedback and collaboration with our shareholders and other stakeholders who have provided important external viewpoints that inform our decisions and our strategy.
| ■ | The Board established a Public Policy and Sustainability Committee in 2017. In 2020, the Board amended the Committee’s charter and changed its name to Sustainability, Diversity and Public Policy Committee to reflect the Committee’s ongoing oversight over diversity, equity and inclusion matters. The Committee assists the Board in providing more focused oversight over PepsiCo’s policies and programs and related risks that concern key sustainability, diversity, equity and inclusion and public policy matters. |
| ■ | We amendedpublished a global workforce demographics data report and our Articles of Incorporation in 20192020 U.S. Consolidated EEO-1 Report as submitted to eliminate supermajority voting standards, as approved by our shareholders.the U.S. Equal Employment Opportunity Commission, available at www.pepsico.com/about/diversity-equity-and-inclusion/progress-at-pepsico. |
| ■ | The Board amended our Corporate Governance Guidelines: |
| – | in 2021 to specifically mention food safety and cybersecurity as areas of Board oversight to reflect existing practices; |
| – | in 2019 to decrease the total number of public company boards that a non-executive director can serve on from 5 to 4 and establish a limit of 2 total public company boards for directors who are public company executive officers; and |
| – | in 2018 to underscore the Board’s focus on diversity, by explicitly stating its commitment to actively seeking out highly qualified women and minority candidates, as well as candidates with diverse backgrounds, skills and experiences, to include in the pool from which Board nominees are chosen. |
| | |
■Independent
Oversight | The Board established a Public Policy and Sustainability Committee in 2017 to assist the Board in providing more focused oversight over PepsiCo’s policies, programs and related risks that concern key sustainability and public policy matters. |
Independent
Oversight | ■1113 of 1214 director nominees are independent (all except for the CEO) ■Independent Presiding Director with clearly defined and robust responsibilities ■Regular executive sessions of independent directors at Board meetings (chaired by independent Presiding Director) and Committee meetings (chaired by independent Committee Chairs) ■100% independent Board Committees ■Active Board oversight of the Company’s strategy and risk management, including ongoing COVID-19 impact and related risks, sustainability, andcybersecurity, food safety, human capital management, including diversity, equity and inclusion, and talent development |
Board
Refreshment | | ■Comprehensive, ongoing Board succession planning process ■Focus on diversity (1 new female director(2 diverse directors elected in 2019; 2 female directors hold Board leadership roles as Committee Chairs; 50%the last two years; 57% of director nominees are female/female and/or racially/ethnically diverse) ■Regular Board refreshment and mix of tenure of directors (7 director nominees joined in the last 6six years) ■Annual Board and Committee assessments, including periodic individual director assessments facilitated by a third party ■Mandatory retirement age of 72 ■Comprehensive director orientation and ongoing director education |
Shareholder
Rights | | ■Annual election of all directors ■Proxy access right for shareholders (3% ownership threshold continuously for 3 years / 2 director nominees or 20% of the Board / 20 shareholder aggregation limit) ■Majority-vote and director resignation policy for directors in uncontested elections ■20% of shareholders are able to call special meeting ■One class of outstanding shares with each share entitled to one vote |
Good
Governance
Practices | | ■Prohibition on hedging or pledging Company stock ■Stringent clawback policy applicable to directors and executives ■Rigorous director and executive stock ownership requirements ■Active and ongoing shareholder engagement program ■Global Code of Conduct applicable to directors and all employees with annual compliance certification ■Extensive management of sustainability risks and opportunities throughout our value chain as part of PepsiCo’s ambition to help build a more sustainable food system ■Robust political activities disclosures on our website |
| 10 | PEPSICO 20202022 PROXY STATEMENT | |
Table of Contents
Election of Directors (Proxy Item No. 1)
ELECTION OF DIRECTORS (PROXY ITEM NO. 1)
|
Upon the recommendation of the Nominating and Corporate Governance Committee, our Board of Directors has nominated the 12 directors14 persons identified on the following pages for election at the 20202022 Annual Meeting. If elected, the directorsnominees will hold office as directors from election until the next Annual Meeting of Shareholders and until their successors are elected and qualified or until their death, resignation or removal. All of the nominees are currently PepsiCo directors who were elected by shareholders at the 20192021 Annual Meeting. William R. Johnson has announced that he is not standingMeeting, except for re-election at the 2020 Annual Meeting. As a result, Mr. Johnson will retire fromEdith W. Cooper, who was elected to the Board of Directorseffective September 1, 2021. Ms. Cooper was recommended for consideration by the Nominating and the size of the Board will be reduced to 12 directors effective as of the 2020 Annual Meeting. Our Board thanks Mr. Johnson for his many years of exemplary service.Corporate Governance Committee by an independent third-party consulting firm that helps identify, evaluate and conduct due diligence on potential director candidates.
Our Board has a comprehensive, ongoing director succession planning process designed to provide for a highly independent, well-qualified Board, with the diversity, experience and background to be effective and to provide strong oversight. Our Board regularly evaluates the needs of the Company and adds new attributes, viewpoints and experiences to the Board as necessary to best position the Company to navigate through a constantly changing global landscape.
Our Nominating and Corporate Governance Committee and our Board have determined that the director nominees possess a diverse and balanced mix of attributes, viewpoints and experiences to effectively oversee PepsiCo’s long-term business strategy. Biographical information about each nominee, as well as highlights of certain notable skills, qualifications, attributes and experiences that contributed to the nominee’s selection as a member of our Board of Directors and nomination for re-electionelection at our 20202022 Annual Meeting, are included on the following pages.
Our Nominating and Corporate Governance Committee and our Board are keenly focused on ensuring that a wide range of backgrounds, attributes, viewpoints and experiences are represented on our Board. The chart below summarizes certain notable attributes and experiences of each director nominee and highlights the diverse and balanced mix of attributes and experiences of the Board as a whole. These are the same attributes that the Board considers as part of its ongoing director succession planning process and align with the needs of PepsiCo’s long-term business strategy. This high-level summary is not intended to be an exhaustive list of each director nominee’s contributions to the Board.
Attributes/
Experiences | | Public
Company
CEOAgbaje | | Financial
Expertise/
Financial
CommunityBrown | | Consumer
ProductsConde | | Risk
ManagementCook | | Public
PolicyCooper | | Science/
Medical
Research/
InnovationDublon | | Technology/
Data
Analytics/
e-commerce/
Digital
Marketing/
CyberGass | | DiversityLaguarta | | Developing
& Emerging
Markets/
International
ResidenceLewis |
Shona Brown | | | | | | | | | | | | ✓Page | | ✓Pohlad | | ✓Vasella | | ✓Walker | | Weisser |
Cesar CondePublic Company CEO | | | | | | | | | | | | | | ✓ | | | | | | ✓ | | ✓ | | | | | | | | | | | | |
Ian CookFinancial Expertise/Financial Community | | ✓ | | | | | | ✓ | | ✓ | | | | | | | | | | | | ✓ | | | | | | | | | | | | | | | | |
Dina DublonConsumer Products | | | | | | | | ✓ | | | | | | ✓ | | | | | | | | ✓ | | ✓ | | | | | | | | | | |
| Risk Management | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Richard FisherPublic Policy | | | | | | | | | | | | | | | | | | | | ✓ | | | | | | ✓ | | |
| Science/Medical/Research/Innovation | | | | ✓ | | | | | | | | | | | | | | | | ✓ | | | | ✓ | | | | |
| Technology/Data Analytics/e-commerce/Digital Marketing/Cyber | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Diversity | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Developing and Emerging Markets/International Residence | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Michelle GassDemographic Background | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| African American or Black | | ✓ | | | | | | | | ✓ | | | | | | | | | | | | | | | | ✓ | | |
| Hispanic or Latinx | | | | | | ✓ | | | | | | | | | | | | | | | | | | | | | | |
| White | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ramon LaguartaTwo or More Races or Ethnicities | | | | | | | | | | | | ✓ | | | | ✓ | | | | | | | | | | ✓ | | ✓ |
David Page | | | | | | | | | | ✓Gender | | ✓ | | | | | | | | | | | | | | | | | | | | | | | | | | |
Robert PohladFemale | | | | ✓ | | | | | | ✓ | | ✓ | | | | | | | | | | | | ✓ | | | | | | | | | | | | | | |
Daniel VasellaMale | | ✓ | | | | ✓ | | | | | | ✓ | | | | | | | | ✓ |
Darren Walker | | | | ✓ | | | | | | ✓ | | | | | | ✓ | | ✓ |
Alberto Weisser | | ✓ | | ✓ | | | | ✓ | | | | | | | | | | ✓ |
Our Nasdaq Board Diversity Matrix is posted on our website at www.pepsico.com/about/diversity-equity-and-inclusion/progress-at-pepsico.
| Diverse Board Representation | | | | | Range of Tenures* | | | | | Balanced Mix of Ages*
| | |
| | | | | | | | | | | |
|   | | | |  
Average Tenure:
7.37.6 Years
7 joined in the last 6 years | | | |  
Average Age:60.861.1
67%64.3% are 65 or younger | |
| | | | | | | | | | |
| * | | | | * Tenure and age are as of March 20, 2020. | 24, 2022. |
| PEPSICO 20202022 PROXY STATEMENT | 11 |
Table of Contents
Election of Directors (Proxy Item No. 1)
Additionally, all directors are expected to possess personal traits such as candor, integrity and professionalism and must be able to commit significant time to the Company’s oversight. For additional information on the Board selection process, including the Board’s consideration of diversity, see “Board Composition and Refreshment” on pages 19-2220-23 of this Proxy Statement.
Although our Board does not anticipate that any of the nominees will be unable to stand for election as a director at our Annual Meeting, if this occurs, proxies will be voted in favor of such other person or persons as may be designated by our Nominating and Corporate Governance Committee and our Board.
Director Election Requirements and Majority-Vote Policy
All members of the Board are elected annually by our shareholders by a majority of the votes cast in an uncontested election (i.e., an election where the number of nominees is not greater than the number of directors to be elected), meaning that the number of votes cast “for” a director must exceed the number of votes cast “against” that director in order to elect the director to the Board. In a contested election, where the number of director nominees exceeds the number of directors to be elected, directors will be elected by a plurality vote. Under our Director Resignation Policy set forth in our Corporate Governance Guidelines, if a director nominee in an uncontested election who is an incumbent director receives more votes “against” than votes “for” his or her election, he or she must offer to resign from the Board. The Nominating and Corporate Governance Committee will make a recommendation to the Board on the resignation offer. Within 90 days following certification of the shareholder vote, the independent directors will determine, considering the best interests of the Company and its shareholders, whether to accept the director’s resignation, and the Company will promptly publicly disclose such determination. A director who offers to resign pursuant to this Policy may not be present during the deliberations or voting by the Nominating and Corporate Governance Committee or the Board as to whether to accept the resignation offer.
Director Nominees
| |  | |
|  | Our Board of Directors recommends that shareholders vote “FOR” the election of each of the following director nominees: | |
| Segun Agbaje | | |  |
| | |
| | |
Director Since: 2020
Age: 57 | | Independent Committee Memberships:
■ Audit |
Segun Agbaje has served since 2021 as Group Chief Executive Officer of Guaranty Trust Holding Company Plc, a Nigerian multinational financial institution. He previously served as Managing Director and Chief Executive Officer of Guaranty Trust Bank plc from 2011 to 2021. Mr. Agbaje joined Guaranty Trust Bank as a pioneer staff member in 1991 and held positions of increasing responsibility, including as Executive Director from 2000 to 2002, Deputy Managing Director from 2002 to 2011 and as Acting Managing Director in 2011. Prior to joining Guaranty Trust Bank, Mr. Agbaje served as an auditor at Ernst & Young LLP from 1988 to 1990. Other Public Company Directorships: ■ Current: Guaranty Trust Holding Company Plc ■ Previous (During Past 5 Years): Guaranty Trust Bank plc (until 2021) | | Skills and Qualifications Mr. Agbaje brings to our Board of Directors deep knowledge of financial and banking matters and financial expertise gained from his over 30 years of experience in the financial services industry. He also contributes a valuable understanding of complex businesses and fast-growing markets, particularly Sub-Saharan Africa where PepsiCo recently acquired Pioneer Foods as part of its strategy to expand in the region. His knowledge and experience of embracing and scaling new technologies and critical capabilities will be valuable as PepsiCo continues to invest in opportunities that create shareholder value. |
| 12 | PEPSICO 2022 PROXY STATEMENT |
Table of Contents
Election of Directors (Proxy Item No. 1)
Shona L. Brown Director Since:2009
Age:5654 | | Independent Committee
Memberships: ■ Sustainability, Diversity and Public Policy and Sustainability |   |
| | |
Shona L. Brown served as a Senior Advisor to Google Inc., an Internetinternet search and advertising technologies corporation, from 2013 to 2015. Dr. Brown served as Senior Vice President of Google.org, Google Inc.’s philanthropic arm, from 2011 to 2012. Dr. Brown served as Google Inc.’s Senior Vice President, Business Operations from 2006 to 2011 and Vice President, Business Operations from 2003 through 2006, leading internal business operations and people operations in both roles. Previously, Dr. Brown was a partner at McKinsey & Company, a management consulting firm. Dr. Brown also currently serves on the boards of DoorDash Inc., an on-demand prepared food delivery service, and several non-profit organizations (including The Nature Conservancy, Code for America, the Center for Advanced Study in the Behavioral Sciences at Stanford University and the John S. and James L. Knight Foundation). Other Public Company Directorships: ■Current:Atlassian Corporation plcplc; DoorDash Inc. ■Previous (During Past 5 Years):None | | Skills and Qualifications
Dr. Brown brings to our Board of Directors broad knowledge of information technology and social media and a critical perspective regarding the rapidly changing digital landscape gained from her extensive experience at a world-recognized global technology leader, Google. Dr. Brown also provides PepsiCo with the unique perspective of building innovation into business and people operations (including sustainability operations) at Google. In addition, through her business experience at Google and McKinsey & Company, she brings a deep expertise in building organizations optimized for adaptability, growth and innovation, which benefits PepsiCo as we address similar issues in an environment of evolving consumer preferences and regulatory initiatives. Her perspective on public policy and sustainability-related matters and the role of business in society gained from her experience working with non-profit organizations are valuable as PepsiCo continues to focus on its sustainability goals and pursue strategies to drive sustainable long-term growth. |
12 PEPSICO 2020 PROXY STATEMENT | | | |
Table of Contents
Election of Directors (Proxy Item No. 1)
Cesar Conde Director Since:2016
Age:4846 | | Independent Committee
Memberships: ■ Nominating and Corporate Governance |   |
| | |
Cesar Conde has served as Chairman of the NBCUniversal News Group, part of a global media and entertainment company, since 2020. In this role, Mr. Conde has oversight of NBC News, MSNBC and CNBC, including editorial and business operations for the television and digital properties. From 2015 to 2020, Mr. Conde served as Chairman of NBCUniversal International Group and NBCUniversal Telemundo Enterprises, part of a global media and entertainment company. He also serves on the Executive Committee of NBCUniversal.Enterprises. From 2013 to 2015, he served as Executive Vice President at NBCUniversal, where he oversaw NBCUniversal International and NBCUniversal Digital Enterprises. From 2009 to 2013, Mr. Conde served as President of Univision Networks, a leading American media company with a portfolio of Spanish language television networks, radio stations and digital platforms. From 2003 to 2009, Mr. Conde served in a variety of senior executive capacities at Univision Networks and is credited with transforming it into a leading global, multi-platform media brand. Prior to Univision, Mr. Conde served as the White House Fellow for Secretary of State Colin L. Powell from 2002 to 2003. Mr. Conde also currently serves on the boards of several non-profit organizations, including the Paley Center for Media and The Aspen Institute. Other Public Company Directorships: ■Previous (During Past 5 Years):Owens Corning (until 2019) | | Skills and Qualifications
Mr. Conde is an experienced global executive with a strong track record in business, finance and media. He provides our Board of Directors with diverse and actionable perspectives on today’s consumer and media landscapes, and his unique insights are particularly valuable as PepsiCo continues to build new omnichannel marketing capabilities and adapt to changing demographics around the world. Mr. Conde also brings his market and consumer insights developed through his experience at national and global media companies and his leadership of social and corporate responsibility initiatives worldwide. |
| PEPSICO 2022 PROXY STATEMENT | 13 |
Table of Contents
Election of Directors (Proxy Item No. 1)
Ian Cook
PRESIDING DIRECTOR Director Since:2008
Age:6967 | | Independent Committee
Memberships: ■Nominating and Corporate Governance |   |
| | |
Ian Cook has served as a director of Colgate-Palmolive Company, a multinational consumer products company, sincefrom 2007 to 2020, as its Chairman from 2009 to 2019 and as its Executive Chairman sincefrom 2019 from which he plans to retire effective April 1,until his retirement in 2020. Mr. Cook joined Colgate-Palmolive in the United Kingdom in 1976 and progressed through a series of senior management roles around the world. In 2002, he became Executive Vice President, North America and Europe. In 2004, he became Chief Operating Officer, with responsibility for operations in North America, Europe, Asia and Africa, and in 2005, he became responsible for all Colgate-Palmolive operations worldwide, serving as President and Chief Operating Officer from 2005 to 2007. He served most recently as Colgate-Palmolive’sColgate- Palmolive’s President and Chief Executive Officer from 2007 to 2018 and as Chief Executive Officer from 2018 to 2019. Mr. Cook also serves on the boards of several non-profit organizations, including Catalyst, Memorial Sloan Kettering Cancer Center, New Visions for Public Schools and Caramoor Center for Music and the Arts. Other Public Company Directorships: ■Current: Colgate-Palmolive CompanyNone ■Previous (During Past 5 Years): NoneColgate-Palmolive Company (until 2020) | | Skills and Qualifications
Mr. Cook brings to our Board of Directors deep knowledge of the consumer products industry and operational leadership experience gained through his 40-year40-plus year career at Colgate-Palmolive. His extensive understanding of our business and his experience leading a multinational consumer products company make him uniquely positioned as PepsiCo’s Presiding Director to work collaboratively with our Chairman and CEO. He also contributes a broad understanding of industry trends and his extensive global leadership experience gained from holding a variety of senior management roles at Colgate-Palmolive in numerous countries throughout the world. Mr. Cook’s qualifications also include expertise in finance, brand-building, corporate governance, human capital management and talent development and succession planning. |
| | | |
Edith W. Cooper Director Since: 2021 Age: 60 | | Independent Committee Memberships: ■ Audit |  |
| | |
Edith W. Cooper spent over two decades of her career with The Goldman Sachs Group, Inc., most recently serving as Executive Vice President and Global Head, Human Capital Management from 2011 to 2017 and Managing Director and Global Head, Human Capital Management from 2008 to 2011. Ms. Cooper began her career in derivative sales at Morgan Stanley from 1991 to 1996 and Bankers Trust Company from 1986 to 1991. Ms. Cooper co-founded Medley, a membership-based community for personal and professional growth, in 2020. Ms. Cooper also serves on the board of directors of several non-profit organizations, including the Museum of Modern Art, the Smithsonian National Museum of African American History and Culture and Mount Sinai Hospital. Other Public Company Directorships: ■ Current: Amazon.com, Inc.; EQT AB; MSD Acquisition Corp ■ Previous (During Past 5 Years): Slack Technologies, Inc. (until 2021); Etsy, Inc. (until 2021) | | Skills and Qualifications Ms. Cooper brings to our Board of Directors extensive knowledge of the human resources field, including recruiting and talent development, gained from almost a decade of experience leading the human capital management function at Goldman Sachs. PepsiCo will benefit from her significant talent management expertise in attracting and developing high-quality talent and advancing its commitment to diversity, equity and inclusion. In addition, she possesses a strong financial background through over 30 years of experience in management and sales leadership at leading organizations across the financial services industry. Ms. Cooper also has significant corporate governance and executive compensation experience across multiple industries as a result of her board service at other public companies. |
| PEPSICO 20202022 PROXY STATEMENT 13 |
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Election of Directors (Proxy Item No. 1)
Dina Dublon Director Since:2005
Age:6866 | | Independent Committee
Memberships: ■ Sustainability, Diversity and Public Policy and SustainabilityCHAIR |   |
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Dina Dublon served as Executive Vice President and Chief Financial Officer at JPMorgan Chase & Co., a leading global financial services company, from 1998 until her retirement in 2004. In this role, she was responsible for financial management, corporate treasury and investor relations. Ms. Dublon previously held numerous positions at JPMorgan Chase and its predecessor companies, including corporate treasurer, managing director of the financial institutions division and head of asset liability management. Ms. Dublon also previously served on the faculty of Harvard Business School and on the boards of several non-profit organizations, including the Women’s Refugee Commission and Global Fund for Women. She also currently serves on the independent audit quality committee of Ernst & Young LLP, the board of overseersadvisors of the Columbia University Mailman School of Public Health.Health and the board of directors of the Westchester Land Trust. Other Public Company Directorships: ■Current:Motive Capital Corp; Motive Capital Corp II; T. Rowe Price Group, Inc. ■Previous (During Past 5 Years):Deutsche Bank AG (supervisory board until 2018); Accenture plc (until 2017) | | Skills and Qualifications
Ms. Dublon brings to our Board of Directors deep expertise in financial, accounting, strategic and banking matters and capital markets operations gained from her distinguished career in the financial services industry, particularly through her role as Executive Vice President and Chief Financial Officer of JPMorgan Chase. She also contributes valuable risk management insights obtained through her experience at JPMorgan Chase, as well as from her service on the boards of several other public companies, including T. Rowe Price Group, Inc. In addition, Ms. Dublon offers unique perspectives on emerging markets, public policy and sustainability-related matters gained while working with global non-profit organizations focusing on public health and women’s issues and initiatives. |
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Richard W. FisherMichelle Gass
Director Since:20192015
Age:5471 | | Independent Committee
Memberships: |   |
Richard W. Fisher served as President and Chief Executive Officer of the Federal Reserve Bank of Dallas from 2005 to 2015. Previously, from 2001 to 2005, Mr. Fisher was Vice Chairman and Managing Partner of Kissinger McLarty Associates, a strategic advisory firm. From 1997 to 2001, Mr. Fisher served as Deputy U.S. Trade Representative with the rank of Ambassador, during which he oversaw the implementation of the North American Free Trade Agreement, the Bilateral Trade Agreement with Vietnam and other trade agreements. During his tenure, Mr. Fisher was also instrumental in negotiating the United States’ accord with China and Taiwan to enable them to join the World Trade Organization. Mr. Fisher’s experience also includes serving as Managing Partner of Fisher Capital Management, an SEC-registered investment advisory firm, and Senior Manager of Brown Brothers Harriman & Co., a private banking firm where he was a registered options principal. He has also served, since 2015, as a Senior Advisor for Barclays PLC, a financial services provider, and, since 2018, as a Senior Partner Director of Beneficient Company Group, L.P., an alternative asset service provider.
Other Public Company Directorships:
■Current: AT&T Inc.; Tenet Healthcare Corporation
■Previous (During Past 5 Years): GWG Holdings, Inc. (until 2019)
| Skills and Qualifications
Mr. Fisher brings to our Board of Directors deep knowledge of financial matters and financial expertise gained from extensive experience that includes serving as President and Chief Executive Officer of the Federal Reserve Bank of Dallas, Managing Partner of Fisher Capital Management and Senior Manager of Brown Brothers Harriman. Mr. Fisher also contributes his strategy, leadership and management skills, and experience gained from chairing for five years a Federal Reserve committee on information technology architecture and cybersecurity risks and from his public company director experience. In addition, his global experience and expertise in international trade and regulatory matters, including from his roles as Deputy U.S. Trade Representative and Vice Chairman and Managing Partner of Kissinger McLarty Associates, are particularly valuable to PepsiCo.
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Election of Directors (Proxy Item No. 1)
Michelle Gass
Director Since:2019
Age:52
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Michelle Gass has served as Chief Executive Officer and a director of Kohl’s Corporation, a leading omnichannel retailer, since 2018. She previously served as its Chief Executive Officer-elect and Chief Merchandising & Customer Officer from 2017 to 2018, Chief Merchandising & Customer Officer from 2015 to 2017, and Chief Customer Officer from 2013 to 2015. Prior to joining Kohl’s, Ms. Gass served in a variety of management positions with Starbucks Corporation from 1996 to 2013, including most recently as President, Starbucks Coffee EMEA (Europe, Middle East and Africa) from 2011 to 2013; President, Seattle’s Best Coffee; Executive Vice President, Global Marketing and Category; and various leadership roles in other brand, creative, marketing, product management and strategy functions. Prior to Starbucks, Ms. Gass was with The Procter & Gamble Company. Ms. Gass currently serves on the boards of the Retail Industry Leaders Association, the National Retail Federation, and Children’s Wisconsin. Other Public Company Directorships: ■Current:Kohl’s Corporation ■Previous (During Past 5 Years):Cigna Corporation (until 2017) | | Skills and Qualifications
Ms. Gass brings to our Board of Directors deep knowledge of the omnichannel retail and consumer products industryindustries gained from close toover 30 years of experience in retail and consumer goods industries, both domestically and internationally. PepsiCo benefits from her extensive understanding of marketing, product innovation and consumer branding from her various roles at Kohl’s, Starbucks and Procter & Gamble. Her insights in transforming the way Kohl’s is doing business to adapt and embrace technology and e-commerce opportunities are particularly valuable as we continue to strengthen our omnichannel capabilities to address similar issues in an environment of evolving consumer preferences. In addition, through her experiences leading a large retail public company, Kohl’s, and operating businesses at Starbucks, Ms. Gass also offers operational leadership experience, leading and developing strong management teams, as well as creating and implementing strategic plans. |
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Election of Directors (Proxy Item No. 1)
Ramon L. Laguarta Director Since:2018
Age:5856 | |  |  |
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Ramon L. Laguarta has served as PepsiCo’s Chief Executive Officer and a director on the Board since October 2018, and assumed the role of Chairman of the Board in February 2019. Mr. Laguarta previously served as President of PepsiCo from 2017 to 2018. Prior to serving as President, Mr. Laguarta held a variety of positions of increasing responsibility in Europe, including as Commercial Vice President of PepsiCo Europe from 2006 to 2008, PepsiCo Eastern Europe Region from 2008 to 2012, President, Developing & Emerging Markets, PepsiCo Europe from 2012 to 2015, Chief Executive Officer, PepsiCo Europe in 2015, and Chief Executive Officer, Europe Sub-Saharan Africa from 2015 until 2017. From 2002 to 2006, he was General Manager for Iberia Snacks and Juices, and from 1999 to 2001, a General Manager for Greece Snacks. Prior to joining PepsiCo in 1996 as a marketing vice president for Spain Snacks, Mr. Laguarta worked for Chupa Chups, S.A., where he worked in several international assignments in Asia, Europe, the Middle East and the United States. He also currently serves as the Co-Chair of the World Economic Forum’s Board of Stewards for the Food Systems Initiative. Other Public Company Directorships: ■Previous (During Past 5 Years):None | | Skills and Qualifications
Mr. Laguarta brings to our Board of Directors strong leadership skills and extensive consumer packaged goods experience gained from the 20-plus years he spent in a variety of senior operational and executive roles at PepsiCo. Mr. Laguarta also contributes invaluable perspectives on the global marketplace and sustainability gained from his numerous international senior management positions, including living in Europe and leading the Europe Sub-Saharan Africa division, which has operations that span three continents and is comprised of developed, developing and emerging markets. A native of Barcelona, he speaks multiple languages including English, Spanish, French, German and Greek. Through his leadership of the Europe Sub-Saharan Africa division and then as President of PepsiCo, he offers deep experience in strategic planning, operations, marketing, brand development and logistics. His role as Chairman and CEO of PepsiCo creates a critical link between management and the Board of Directors, enabling the Board to perform its oversight function with the benefit of management’s perspective on the business. |
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Sir Dave Lewis Director Since: 2020 Age: 57 | | Independent Committee Memberships: ■ Audit |  |
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Sir Dave Lewis served as Group Chief Executive Officer of Tesco PLC, a multinational grocery and general merchandise retailer, from 2014 until 2020. Prior to joining Tesco, he served in a variety of management positions with Unilever PLC, a global consumer products company, from 1987 to 2014, including a variety of leadership roles in Europe, Asia and the Americas, including as President, Personal Care from 2011 to 2014; President, Americas from 2010 to 2011; and Chairman, UK and Ireland from 2007 to 2010. Sir Dave currently serves as Chairman of Xlinks and Non-Executive Chair Designate for GlaxoSmithKline plc’s new consumer healthcare company. Sir Dave also serves on the boards of several non-profit and charitable organizations, including as Chair of World Wildlife Fund – UK and as a trustee of Leverhulme Trust, a UK charitable foundation. He was also chair of Champions 12.3, a UN program seeking to add momentum to the achievement of the UN Sustainable Development Target 12.3 by 2030, and co-chair of the Consumer, Retail and Life Sciences Business Council, which was established to advise the Prime Minister of the UK. In addition, he served as co-chair of the Supply Chain Advisory Group for the UK government during 2021. In recognition of his contribution to business and the food industry in the UK, Sir Dave was knighted by Her Majesty Queen Elizabeth II in the 2021 New Year’s Honours List. Other Public Company Directorships: ■ Current: None ■ Previous (During Past 5 Years): Tesco PLC (until 2020) | | Skills and Qualifications Sir Dave brings to our Board of Directors a wealth of international consumer experience and expertise in business strategy, brand management and customer development through his significant experience over three decades in both retail and consumer-packaged goods industries. He contributes a unique, global perspective on consumer centricity, retail strategy, operations, and supply chain management for consumer-facing brands. Through his experience leading Champions 12.3 and working with non-profit and charitable organizations, he also provides valuable knowledge of sustainability-related matters and the role of business in society as PepsiCo continues to focus on its sustainability goals and pursue strategies to drive sustainable long-term growth. |
| PEPSICO 20202022 PROXY STATEMENT 15 |
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Election of Directors (Proxy Item No. 1)
David C. Page, MD Director Since:2014
Age:6563 | | Independent Committee
Memberships: ■ Sustainability, Diversity andPublic Policy and Sustainability |   |
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David C. Page, MD, has served as Directoris a professor of biology at Massachusetts Institute of Technology (“MIT”) and President of the Whitehead Institute for Biomedical Research, an independent non-profit research and educational institute affiliated with MassachusettsMIT and an investigator at the Howard Hughes Medical Institute. His research focuses on the genetic and molecular differences between males and females, and the roles that these differences play in health and disease. He served as Director and President of the Whitehead Institute of Technology (“MIT”), since 2005.from 2005 to 2020. In this role, from which he plans to retire in July 2020, he leadsled a group of scientists focused on cancer research, genetics, genomics, developmental biology, stem cell research, regenerative medicine, parasitic disease and plant biology. This transition in July 2020 will allow Dr. Page to focus more intently on his own research, on the genetic and molecular differences between males and females, and the roles that these differences play in health and disease. He will continue as a professor of biology at MIT and the Whitehead Institute, and as an investigator at the Howard Hughes Medical Institute. His honors include a MacArthur Prize Fellowship, Science magazine’s Top Ten Scientific Advances of the Year (in 1992 and again in 2003) and the 2011 March of Dimes Prize in Developmental Biology. He is a member of the National Academy of Sciences, the National Academy of Medicine and the American Academy of Arts and Sciences. Dr. Page serves onas chair of the Visiting Committee for Harvard Medical School and Harvard School of Dental Medicine and will serve as Chair effective July 2020. He also serves on the board of the Society for Women’s Health Research.Medicine. Other Public Company Directorships: ■Previous (During Past 5 Years):None | | Skills and Qualifications
Dr. Page brings to our Board of Directors his scientific and medical expertise, gained from over 30 years of experience in those fields, and unique perspective on the intersection of academic and commercial scientific research of interest to companies in the food and beverage industry. His perspectives are particularly valuable in light of PepsiCo’s strategic focus on the areas of nutrition as well asand health and wellness.Dr.wellness and in informing PepsiCo’s response to the COVID-19 pandemic. Dr. Page’s experience with producing significant scientific discoveries and innovative breakthroughs is highly relevant to PepsiCo’s research and development initiatives, innovation pipeline and sustainability goals in an environment of shifting consumer preferences and regulatory initiatives. |
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Robert C. Pohlad Director Since:2015
Age:6765 | | Independent Committee
Memberships: ■ Compensation ■Nominating and
Corporate Governance |   |
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Robert C. Pohlad has served since 1987 as President of Pohlad Holdings, a company of various family-owned entities which operate multiple businesses across a number of industries, including commercial real estate, automotive sales, automation and robotic engineering, and sports and entertainment. From 2002 until its acquisition by PepsiCo in 2010, Mr. Pohlad was Chairman and Chief Executive Officer of PepsiAmericas, Inc., an independent publicly traded company. PepsiAmericas, Inc. was formed from several independent bottlers in 1998, and, under Mr. Pohlad’s tenure, it grew to become the second-largest bottler of PepsiCo products at the time of its acquisition. Previously, Mr. Pohlad held several other executive positions at bottling companies. Mr. Pohlad is a member and chair of the Board of Trustees of the University of Puget Sound and a member and chair of the Board of Visitors of the University of Minnesota Medical School. Other Public Company Directorships: ■Previous (During Past 5 Years):None | | Skills and Qualifications
Mr. Pohlad brings to our Board of Directors extensive beverage and finance experience gained from the 20-plus years he spent in a variety of senior operational and executive roles at PepsiAmericas, Inc. and its predecessors. Mr. Pohlad has a deep understanding of leveraging large-scale distribution systems and global brands, specifically with respect to beverage and bottling operations, which is invaluable to PepsiCo. In addition, through his experience operating businesses and investments in myriad fields, Mr. Pohlad has gained expertise leading and developing strong management teams, creating and implementing effective strategic plans, addressing succession planning needs and brand-building. |
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Election of Directors (Proxy Item No. 1)
Daniel Vasella, MD Director Since:2002
Age:6866 | | Independent Committee
Memberships: ■Nominating and Corporate
GovernanceCHAIR |   |
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Daniel Vasella, MD, served as Chairman of Novartis AG, a global innovative healthcare solutions company, from 1999 to 2013 and as Chief Executive Officer of Novartis AG from 1996 to January 2010. From 1992 to 1996, Dr. Vasella held the positions of Chief Executive Officer, Chief Operating Officer, Senior Vice President and Head of Worldwide Development and Head of Corporate Marketing at Sandoz Pharma Ltd. He also served at Sandoz Pharmaceuticals Corporation from 1988 to 1992. Dr. Vasella is currently working as a coach to senior executives. He also serves onas chair of the board of Numab Therapeutics AG, an emerginga biotechnology company, and as a memberon the boards of several private companies and non-profit organizations. Other Public Company Directorships: ■Current:American Express CompanyCompany; SciClone Pharmaceuticals (Holdings) Limited ■Previous (During Past 5 Years):XBiotech Inc. (until 2018) | | Skills and Qualifications
Dr. Vasella brings to our Board of Directors his expertise in the areas of nutrition and health and wellness, topics of importance to PepsiCo especially in light of the COVID-19 pandemic, as well as his leadership experience and global perspectives, which he obtained through his former role as Chairman and Chief Executive Officer of Novartis. Through his leadership of Novartis and his public company director experience, he also offers to PepsiCo extensive business, corporate governance, operations, management and marketing skills, as well as human capital management and talent development, succession planning and experience developing corporate strategy. In addition, he contributes his knowledge of and experience with regulatory matters developed through his role leading a highly regulated, global business in rapidly changing markets. |
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Darren Walker Director Since:2016
Age:6260 | | Independent Committee
Memberships: ■Nominating and
Corporate Governance ■ Sustainability, Diversity and Public Policy and Sustainability |   |
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Darren Walker has served since 2013 as President of the Ford Foundation, a philanthropic organization, and as its Vice President for Education, Creativity and Free Expression from 2010 to 2013. Prior to the Ford Foundation, Mr. Walker joined the Rockefeller Foundation, a philanthropic organization, in 2002 and served as a Vice President responsible for foundation initiatives from 2005 to 2010. From 1995 to 2002, he was the Chief Operating Officer of Abyssinian Development Corporation, a community development organization in Harlem in New York City. Prior to that, Mr. Walker held various positions in finance and banking at UBS AG. Mr. Walker currently serves on the boards of several non-profit organizations, including the National Gallery of Art, Lincoln Center for the Performing Arts, Friends of the High Line and Carnegie Hall. Mr. Walker also currently chairs the U.S. Impact Investing Alliance Advisory Board and is a member of the Council on Foreign Relations and the American Academy of Arts and Sciences. Other Public Company Directorships: ■Current: NoneRalph Lauren Corporation; Block, Inc. (formerly Square, Inc.) ■Previous (During Past 5 Years):None | | Skills and Qualifications
Mr. Walker brings to our Board of Directors his insight into the role of business in society gained through his role as President of the Ford Foundation and his leadership at other non-profit and philanthropic organizations. Through his experience with various social and community initiatives, he provides the Board with unique perspectives on human capital management, and talent development and diversity and inclusion and insights on public policy and sustainability-related matters that are particularly valuable as PepsiCo continues to focus on its sustainability goals and pursue strategies to drive long-term growth. In addition, he offers a unique understanding of emerging markets and communities gained through his experience and oversight of the Ford Foundation’s operations. |
| PEPSICO 20202022 PROXY STATEMENT 17 |
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Election of Directors (Proxy Item No. 1)
Alberto Weisser Director Since:2011
Age:6664 | | Independent Committee
Memberships: |   |
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Alberto Weisser served as Chairman and Chief Executive Officer of Bunge Limited, a global food, commodity and agribusiness company, from 1999 until June 2013mid-2013 and as Executive Chairman until December 2013.late-2013. Mr. Weisser previously served as Bunge’s Chief Financial Officer from 1993 to 1999. Previously, Mr. Weisser worked at BASF Group, a chemical company, in various finance-related positions. He also served as a Senior Advisor at Lazard Ltd. from 2015 until August 2018. He currently serves on the Americas Advisory Panel of Temasek International Pte. Ltd., a Singapore-based investment company, and serves as a board member of the Americas Society.company. Other Public Company Directorships: ■Current:NoneBayer AG; Linde Plc ■Previous (During Past 5 Years):None | | Skills and Qualifications
Mr. Weisser brings to our Board of Directors his extensive experience with and keen understanding of commodities, gained from his role as Chairman and Chief Executive Officer of Bunge Limited. These skills are particularly valuable to PepsiCo in today’s volatile global economic environment. Mr. Weisser has deep knowledge of the strategic, financial, risk and compliance issues facing a large, diversified, publicly traded company, and significant international experience, particularly with respect to emerging markets. Mr. Weisser also contributes strong financial acumen and expertise resulting from his six years of experience serving as Bunge Limited’s Chief Financial Officer and other senior finance-related positions. |
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Board Composition and Refreshment
BOARD COMPOSITION AND REFRESHMENT
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We believe the Board benefits from a mix of new directors who bring fresh perspectives and longer-serving directors who bring valuable experience, continuity and a deep understanding of the Company. The Board strives to maintain an appropriate balance of tenure, turnover, diversity, skills,attributes, viewpoints and experiences. To promote thoughtful Board refreshment, we have:
| ■ | Developed a comprehensive, ongoing Board succession planning process; |
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| ■ | Implemented an annual Board and Committee assessment process; and |
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| ■ | Adopted a policy in which no director may stand for election to the Board after reaching the age of 72. |
7 of the 1214 director nominees have joined since the beginning of 2014.2016. The average age of our director nominees and our independent director nominees is 60.861.1 years and 61.3 years, respectively. The average tenure of all our director nominees and our independent director nominees is 7.37.6 years and 7.87.9 years, respectively.
Comprehensive, Ongoing Process for Board Succession Planning and Selection and Nomination of Directors
The Board regularly evaluates its composition, assessing individual director’s skills, qualifications, attributes and experiences to ensure the overall Board composition is aligned with the needs of PepsiCo’s long-term business strategy. Each year, the Board assesses the directors to be nominated at the annual meeting. The Board reviews potential director vacancies in light of its ongoing evaluation and maintains a compilation ofregularly reviews potential candidates that it regularly reviews at Board meetings. The Nominating and Corporate Governance Committee assists this process by considering prospective candidates and identifying appropriate individuals for the Board’s further consideration. From time to time, the Nominating and Corporate Governance Committee engages independent third-party consulting firms to help identify, evaluate and conduct due diligence on potential director candidates who meet the current needs of the Board.
The Nominating and Corporate Governance Committee also assists the Board in considering succession planning for Board positions such as the Presiding Director and Chairs of the Committees.
| ■ | Except as the independent directors may otherwise determine, theThe Presiding Director is appointed for a term of three years and no more than three consecutive three-year terms.years. The Board evaluates the Presiding Director’s performance annually under the guidance of the Nominating and Corporate Governance Committee. Based on the recommendation of the Nominating and Corporate Governance Committee, the independent members of the Board re-elected Ian Cook as the Presiding Director of the Board in 2021 for a thirdanother three-year term beginning in 2019.2022. For more information on the robust responsibilities of our independent Presiding Director, please see “Board Leadership Structure” beginning on page 25 of this Proxy Statement. |
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| ■ | Except as the Board may otherwise determine, the Chair of each Committee is appointed for a term of three years and no more than three consecutive three-year terms. The Board re-elected each Committee Chair for second terms beginning in 20182019 for the Audit Committee and 2020 for the Compensation Committee, and elected a new Committee Chair beginning in 2021 for each of the Nominating and Corporate Governance Committee Chair, 2019 forand the Audit Committee Chair and 2020 for each Chair of the Compensation CommitteeSustainability, Diversity and Public Policy and Sustainability Committee. |
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Board Composition and Refreshment
Directors’ Attributes and Experiences
The Board looks for its current and potential directors to have a broad range of skills, education, qualificationsattributes, viewpoints and experiences that can be leveraged in order to benefit PepsiCo and its shareholders and align with the evolving needs of PepsiCo’s long-term business strategy. Currently, the Board is particularly interested in maintaining a mix of attributes and experiences that include the following:
■ | Public Company CEOincluding deep operational, CEO experience at a large global public company |
■ | Financial Expertise / Financial Communityincluding senior financial leadership experience at a large global public company or senior leadership experience at a financial institution |
■ | Consumer Productsincluding senior leadership experience with respect to a large consumer products business |
■ | Risk Managementincluding experience handling major risk-related challenges |
■ | Public Policyincluding senior governmental, regulatory, philanthropic or public policy leadership experience, or policy-making role in areas relevant to our business |
■ | Science / Medical / Research / Innovationincluding senior leadership experience or scientific/research role driving technical, engineering, medical or other research innovation |
■ | | ■ Technology / Data Analytics / e-commerce /Digital Marketing / Cyberincluding senior leadership experience at a digital company or expertise in areas including e-commerce, data analytics, cloud engineered systems, digital marketing or cybersecurity |
■ | Diversity Diversityincluding understanding the importance of diversity to a global enterprise with a diverse consumer base, informed by experience of gender, race, ethnicity and/or nationality |
■ | Developing and Emerging Markets / InternationalResidenceincluding global business experience with a focus on developing and emerging markets, or residence or extensive time spent living outside of the United States |
Attributes of Individual Nominees
All directors are also expected to possess certain personal traits and, in fulfilling its responsibility to identify qualified candidates for membership on the Board, the Nominating and Corporate Governance Committee considers the following attributes of candidates:
| ■ | Relevant knowledge, diversity of background, perspectives and experience in areas including business, finance, accounting, technology and cybersecurity, marketing, international business, government, human capital management and talent development; |
| ■ | Personal qualities of leadership, character, judgment and whether the candidate possesses a reputation in the community at large of integrity, trust, respect, competence and adherence to the highest ethical standards; |
| ■ | Roles and contributions valuable to the business community; and |
| ■ | Whether the candidate is free of conflicts and has the time required for preparation, participation and attendance at meetings. |
Consideration of Board Diversity
  | | The Nominating and Corporate Governance Committee and the Board are keenly focused onensuring that a wide range of backgrounds and experience are represented on our Board. 50%57% ofour director nominees are women and/or racially/ethnically diverse individuals. |
Throughout the director selection and nomination process, the Nominating and Corporate Governance Committee and the Board seek to achieve diversity within the Board with a broad array of viewpoints and perspectives that are representative of our global business. The Nominating and Corporate Governance Committee adheres to the Company’s philosophy of maintaining an environment free from discrimination on the basis of race, color, religion, sex, sexual
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Board Composition and Refreshment
orientation, gender identity, age, national origin, disability, veteran status or any other protected category under applicable law. This process is designed to provide that the Board includes members with diverse backgrounds, perspectives and experience, including appropriate financial and other expertise relevant to the business of the Company.
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Board Composition and Refreshment
While not a formal policy, PepsiCo’s director nomination processes call for the consideration of a range of types of diversity, including race, gender, ethnicity, culture, nationality and geography. In fact, diversity is one of the enumerated criteria that the Board has identified as critical in maintaining among its current and potential directors. Accordingly, the Nominating and Corporate Governance Committee is committed to actively seeking out highly qualified women and minority candidates, as well as candidates with diverse backgrounds, skills and experience, to include in the pool from which Board nominees are chosen. The Board also annually assesses the diversity of its members as part of its assessment process.
Director Orientation and Continuing Education
We have a comprehensive orientation program for all new directors with respect to their role as directors and as members of the particular Board committees on which they will serve. This orientation program includes one-on-one meetings with senior management, visits to PepsiCo’s operations when possible and extensive written materials to familiarize new directors with PepsiCo’s business, financial performance, strategic plans, executive compensation program, and corporate governance policies and practices. Additional training is also provided when a director assumes a leadership role, such as becoming a Committee Chair.
We also haveoffer continuing education programs to assist directors in enhancing their skills and knowledge to better perform their duties and to recognize, and deal appropriately with, issues that may arise. These programs may be part of regular Board and Committee meetings or provided by qualified third-partiesthird parties on various topics. The directors also periodically visit PepsiCo’s operations, plants and markets, which provide the directors with an opportunity to see firsthand the execution and impact of the Company’s strategy and engage with senior leaders and associates in our divisions to deepen their understanding of PepsiCo’s business, competitive environment and corporate culture. In addition, the Company pays for all reasonable expenses for any director who wishes to attend an external director continuing education program.
Board and Committee Assessments
Our Board continually seeks to improve its performance. A formal evaluation is conducted on an annual basis, and directors share perspectives, feedback and suggestions year-round, both insideduring and outside of the Boardroom.
Board and Committee meetings. Pursuant to PepsiCo’s Corporate Governance Guidelines and the Charters of each of the Board’s Committees, the Board and each of its Committees conduct an evaluation at least annually.
Our processes enable directors to provide anonymous and confidential feedback on topics including:
| ■ | Board/Committee information and materials;materials, including updates provided during the ongoing COVID-19 pandemic; |
| ■ | Board/Committee meeting mechanics; |
| ■ | Board/Committee composition and structure (including diversethe mix of experience, skills, qualifications, viewpoints, backgrounds and demographic diversity); |
| ■ | Board/Committee responsibilities and accountability (including with respect to strategy, risk management, operating performance, CEO and management succession planning, senior management development, corporate governance, sustainability and corporate culture); |
| ■ | Board meeting conduct and culture; and |
| ■ | Overall performance of Board members. |
To promote effectiveness of the Board and each Committee, the results of the assessment are reviewed, and addressed by the Nominating and Corporate Governance Committee, the members of each Committee and the independent directors both alone in an executive session led by the independent Presiding Director and with members of management.
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Board Composition and Refreshment
This process of actively engaging in thoughtful discussions, including on topics ranging from Board and Committee composition to overall performance of Board members, has had a meaningful impact on Board refreshment and succession planning. As a testament to the effectiveness of this assessment process, in the last six years, the Board added seven of the twelvefourteen director nominees, in the last four years appointed three new Board Committee Chairs (two of whom are female), and in the last yeartwo years elected a new Chairman of the Board and atwo new female director.and/or racially diverse directors. This refreshment demonstrates the Board’s focus on ensuringmaintaining an appropriate balance of attributes, viewpoints and experiences that each memberalign with the evolving needs of the PepsiCo’s long-term business strategy.
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Board brings the necessary attributesComposition and areas of expertise to contribute to discussions around PepsiCo’s strategic initiatives and to oversee the risks that face our business and as they evolve.Refreshment
The Nominating and Corporate Governance Committee annually reviews the format of the evaluation process, andincluding periodically considers whetherconducting individual director interviews and/or third-party assessments should be conducted to supplement the Board and Committee assessment process.facilitated by a third party. As a result of the evaluation process, which helps identify opportunities to continue to improve the performance of the Board and the Committees, the Board and Committees continue to enhance practices and procedures as appropriate. The Board also reviews the Nominating and Corporate Governance Committee’s periodic recommendations concerning the performance of the Board, each of its Committees and the Presiding Director.
Shareholder Recommendations and Nominations of Director Candidates
The Nominating and Corporate Governance Committee will consider recommendations for director nominees made by shareholders and evaluate them using the same criteria as for other candidates. Recommendations received from shareholders are reviewed by the Chair of the Nominating and Corporate Governance Committee to determine whether each candidate meets the minimum criteria set forth in the Corporate Governance Guidelines, and if so, whether the candidate’s expertise and particular set of skills and background fit the current needs of the Board. Any shareholder recommendation must be sent to the Corporate Secretary of PepsiCo at 700 Anderson Hill Road, Purchase, New York 10577, and must include detailed background information regarding the suggested candidate that demonstrates how the individual meets the Board membership criteria.
Our By-Laws permit proxy access for shareholders. Shareholders who wish to nominate directors for inclusion in our Proxy Statement or directly at an Annual Meeting in accordance with the procedures in our By-Laws should see “2021“2023 Shareholder Proposals and Director Nominations” on page 8799 of this Proxy Statement for further information.
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Corporate Governance at PepsiCo
CORPORATE GOVERNANCE AT PEPSICO
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Our Governance Philosophy
| We believe strong corporate governance and an ethical culture are the foundation for financial integrity, investor confidence and sustainable performance. |
Strong corporate governance and a steadfast commitment to doing business the right way are and have been longstanding priorities at PepsiCo. Our strong tone at the top begins with our Board of Directors, which has demonstrated its focus on advancing openness, honesty, fairness and integrity in the Boardroom and across the Company through such actions as:
| ■ | Adopting Corporate Governance Guidelines for the Company that establish a common set of expectations to assist the Board and its Committees in performing their duties, reviewing these Guidelines at least annually, and updating the Guidelines as appropriate to reflect changing regulatory requirements, evolving best practices and input from our shareholders and other stakeholders; |
| ■ | Adopting the Company’s Global Code of Conduct and overseeing compliance, including ensuring corporate culture is on the Board agenda; |
| ■ | Holding regular executive sessions between the Audit Committee and our Global Chief Compliance & Ethics Officer at each regularly scheduled meeting;Officer; |
| ■ | Establishing a means for employees to raise issues to the Board and encouraging a culture of trust so that employees at every level feel comfortable speaking up about concerns; and |
| ■ | Fostering a corporate culture of integrity and risk awareness through the Board’s oversight over PepsiCo’s integrated risk management framework, which includes the Board’s review of specific high-priority risks on a regular basis throughout the year. |
Key Corporate Governance Documents.Documents. The following key corporate documents are available atwww.pepsico.com www.pepsico.com[5]under “About” and are also available in print upon written request to the Corporate Secretary of PepsiCo at 700 Anderson Hill Road, Purchase, New York 10577: Corporate Governance Guidelines; the Global Code of Conduct; and the Charters of our Audit, Compensation, Nominating and Corporate Governance, and Sustainability, Diversity and Public Policy and Sustainability Committees of the Board.
Our Global Code of Conduct
| PepsiCo is proud of its commitment to deliver sustained growth through empowered people acting with responsibility and building trust. |
This commitment is evidenced in part by our robust Global Code of Conduct, which is designed to provide our directors and employees with guidance on how to act legally and ethically while performing work for PepsiCo. PepsiCo works hard to communicate its values clearly and regularly throughout its operations, including by conducting an annual Global Code of Conduct training program for employees. Annually, all of PepsiCo’s directors and executives, including all of our executive officers, certify their compliance with our Global Code of Conduct. Through these efforts, we are focused on developing a culture of empowering people across the Company to act with responsibility and to build trust by embracing the principles of our Global Code of Conduct and our core values: showing respect in the workplace; acting with integritytrust in the marketplace; ensuring ethicsfairness in our business activities;relationships, honesty in business conduct; and performing work responsibly forpurpose in our shareholders.world.
Prohibition on Hedging and Pledging.Pledging. To further align the interests of PepsiCo’s directors, officers and employees with those of our shareholders, under PepsiCo’s Global Code of Conduct and insider trading policy,Insider Trading Policy, the Company prohibits all directors, officers and employees from engaging in activities that are designed to hedge or offset any decrease in the market value of PepsiCo stock (including purchasing financial instruments such as prepaid variable forward contracts, collars, exchange funds or equity swaps or engaging in short sales). In addition, directors, officers and employees may not hold PepsiCo securities in a margin account or pledge PepsiCo stock or PepsiCo stock options as collateral for a loan or otherwise.
____________________
[5]24 | The information on our website is not, and shall not be deemed to be, a part of this Proxy Statement or incorporated herein or into any of our other filings with the Securities and Exchange Commission (the “SEC”). |
| PEPSICO 20202022 PROXY STATEMENT 23 |
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Corporate Governance at PepsiCo
Our Board of Directors
Our Board of Directors represents the interests of our shareholders and oversees the Company’s business and affairs pursuant to the North Carolina Business Corporation Act and our governing documents. Members of the Board, all of whom are elected annually, oversee the Company’s business and affairs by, among other things, participating in Board and Committee meetings, reviewing materials provided to them, engaging with the Chairman and CEO and with key members of management and associates, visiting PepsiCo’s operations, bringing in outside experts, and discussing feedback from shareholders and other stakeholders.
Outstanding Board Member Attendance.Attendance. Regular attendance at Board meetings and the Annual Meeting of Shareholders is expected of each director. In fiscal year 2019,2021, our Board of Directors held fivesix meetings and our Committees held 2120 meetings in the aggregate. In addition, our Board held update calls regarding key developments relating to the ongoing COVID-19 pandemic and other strategy matters. In fiscal year 2019,2021, no incumbent director attended fewer than 75% of the total number of Board and applicable Committee meetings (held(in each case held during the period that such director served) and average attendance. Twelve of our incumbent directors at Board and applicable Committee meetings (held during the period that such director served) was 96%. All thirteenfourteen directors then serving attended the 20192021 Annual Meeting of Shareholders.
Board Leadership Structure
PepsiCo’s governing documents enable the Board to determine the appropriate Board leadership structure for the Company and allow the roles of Chairman of the Board and CEO to be filled by the same or different individuals. This approach allows the Board flexibilitythe opportunity to determine whether the two roles should be separate or combined based upon the Company’s needs in light of the dynamic environment in which we operate and the Board’s assessment of the Company’s leadership from time to time.
The Board regularly considers and is open to different structures as circumstances may warrant. The succession planning discussions regardingDuring its most recent evaluation of its leadership structure, the recent transitions inBoard determined that the current combined Chairman and CEO roles included extensive discussionsstructure, together with a strong independent Presiding Director with clearly defined and robust responsibilities as set forth on page 26, strikes the right balance between effective independent oversight of PepsiCo’s business and Board activities and strong and consistent corporate leadership, and provides the best leadership structure includingfor the merits of separating or combiningCompany at this time. This structure enables a clear and unified strategic vision and is beneficial at this time given the Chairmancomplex and CEO rolesdynamic consumer and whetherretail landscape.
In making the Chairman role should be held by an independent director followingleadership structure determination, the appointment of the new CEO. The Board gave thorough consideration to a number of factors, including: (i) the strategic goals of the Company, (ii) the unique opportunities and challenges PepsiCo is facing, (iii) the breadth and complexity of PepsiCo’s business and global footprint, (iv) the various capabilities of our directors, (v) the dynamics of our Board, (vi) best practices in the market, (vii) PepsiCo’s shareholder base and investor feedback, (viii) the current industry environment and (ix) the status of PepsiCo’s progress with respect to key strategic initiatives. The Board also reflected upon the Company’s strong, independent oversight function exercised by our actively engaged Board, which consists entirely of independent directors other than our Chairman and CEO, as well as the independent leadership provided by our independent Presiding Director and each of the four standing Board Committees, which consist solely of, and are chaired by, independent directors.
We regularly engage with our shareholders and contacted shareholders representing approximately 48% of our outstanding shares in connection with the 2019 Annual Meeting of Shareholders. We heard a range of views on Board leadership, with most shareholders indicating that an appropriate structure depends on a company’s overall governance and performance and many shareholders observing that PepsiCo’s overall governance and performance were strong.
Taking into consideration the factors described above, including feedback received from our shareholder engagement, the Board determined that a combined Chairman and CEO structure, together with a strong independent Presiding Director with clearly defined and robust responsibilities as set forth on page 25, strikes the right balance between effective independent oversight of PepsiCo’s business and Board activities and strong and consistent corporate leadership, and provides the best leadership structure for the Company at this time.
The Board recognizes the importance of the Company’s leadership structure to our shareholders and will continue to regularly assess the Board leadership structure with careful consideration of the input obtained through engagement with our shareholders.
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Corporate Governance at PepsiCo
Ramon L. Laguarta
CHAIRMAN AND CEO |   | | Ian Cook
PRESIDING DIRECTOR
Former Chairman, President and Chief Executive
Executive Chairman,Officer, Colgate-Palmolive Company |   |
The independent directors believe that our current Chairman of the Board and CEO, Ramon L. Laguarta, as an experienced leader with deep operational experience, particularly in international markets, and extensive knowledge of the Company, food and beverage industry and risk management practices that Mr. Laguarta gained from working over 20 years at PepsiCo in a variety of executive and general management roles, serves as a highly effective bridge between the Board and management. In his role as Chairman and CEO, Mr. Laguarta is in the best position to be aware of key issues facing the Company, and to effectively communicate with various internal and external constituencies about critical business matters. During this period of significant change for PepsiCo as we implement our productivity planskey strategic and other keyongoing transformation initiatives and navigate the rapidly evolving environment in light of the COVID-19 pandemic, the independent directors believe that the Company is best served by having one clear leader in both the Chairman and CEO roles who has the vision and leadership to execute on the Company’s strategy and create shareholder value. | | In recognition of his skills in overseeing the Company’s strong governance policies and practices and his overall leadership and communication abilities, the independent members of the Board of Directors re-elected Ian Cook as the Presiding Director of the Board for another three-year term beginning in 2019. As a result of his extensive experience leading a multinational consumer products company during his 40-year40-plus year career at Colgate-Palmolive and deep understanding of PepsiCo and its business acquired from his years of service on our Board, Mr. Cook is uniquely positioned to work collaboratively with our Chairman and CEO, while providing strong independent oversight of management.
In addition to his core responsibilities as Presiding Director as described further below, Mr. Cook is an actively engaged director and ledwho regularly communicates with the recent Chairman and CEO succession planning process together withand other members of the Nominatingsenior management on various topics of importance to the Company. In recognition of Mr. Cook’s strong leadership stemming from his industry-relevant knowledge, operational and Corporate Governance Committee Chair.governance experience and exceptional interpersonal and communication skills, the independent members of the Board of Directors re-elected Mr. Cook as the Presiding Director for another three-year term beginning in 2022. |
Role of Presiding Director.Director. Our Corporate Governance Guidelines provide that if the Chairman of the Board is not an independent director, an independent director shall be designated as the Presiding Director by the independent members of the Board based on the recommendation of the Nominating and Corporate Governance Committee. Except as the independent directors may otherwise determine, theThe Presiding Director is appointed for a term of three years and no more than three consecutive three-year terms.years.
The Board evaluates the Presiding Director’s performance annually under the guidance of the Nominating and Corporate Governance Committee. The duties of our independent Presiding Director are robust and consistent with the responsibilities generally held by independent “lead directors” at other public companies.
Presiding Director Duties:| Presiding Director Duties: |
| ■ | Presides at all meetings of the Board at which the Chairman of the Board is not present, including executive sessions of the independent directors |
| ■ | Serves as a liaison between the Chairman of the Board and the independent directors |
| ■ | Has authority to approve information sent to the Board |
| ■ | Approves meeting agendas for the Board |
| ■ | Approves meeting schedules to assure that there is sufficient time for discussion of all agenda items |
| ■ | Has the authority to call meetings of the independent directors |
| ■ | If requested by major shareholders, ensures that he or she is available for consultation and direct communication |
In addition to these responsibilities and assisting the Board in the fulfillment of its responsibilities in general, Mr. Cook, as the Presiding Director, has over the past few years performed additional duties including:
■ | leading the recent Chairman and CEO succession planning process; |
| ■ | meeting with the Chairman and CEO after the executive sessions of independent directors held at each regularly scheduled Board meeting to provide feedback on the independent directors’ deliberations; |
| ■ | regularly speaking with the Chairman and CEO between Board meetings to discuss any matters of concern, often following consultation with other independent directors; |
| ■ | working with the Nominating and Corporate Governance Committee to guide the Board’s governance processes, including developing recommendations for Board succession planning, committee structure and composition; |
| ■ | meeting regularly with members of senior management other than the Chairman and CEO; |
| ■ | leading our succession planning process; and |
| ■ | speaking with shareholders, including on sustainability matters. |
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Corporate Governance at PepsiCo
Director Independence
Independence Determination
The Company’s Corporate Governance Guidelines provide that an independent director is a director who meets the Nasdaq definition of independence, as determined by the Board. This definition is included in the Corporate Governance Guidelines, which are available atwww.pepsico.com under www.pepsico.comunder“About”—“Corporate “Corporate Governance.”In making a determination of whether a director has any relationship which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, the Board of Directors considers all relevant facts and circumstances, including but not limited to the director’s commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships.
Consistent with these considerations, the Board of Directors has affirmatively determined that all of our non-management director nominees, who are listed below, are independent within the meaning of the SEC and Nasdaq rules. The Board had also previously determined that GeorgeRichard W. Buckley,Fisher, who served on the Board during a portion of 2019,2021, was independent, and William R. Johnson, who is not standing for re-election to the Board and will retire effective as of the 2020 Annual Meeting, is independent.
| Independent Director Nominees | |
| Segun Agbaje | Dina Dublon | Daniel Vasella |
Shona L. Brown
| Michelle Gass | Darren Walker |
Cesar Conde
| Dave Lewis | Alberto Weisser |
Ian Cook
Dina Dublon | Richard W. Fisher
Michelle Gass
David C. Page
| |
| Edith W. Cooper | Robert C. Pohlad | Daniel Vasella
Darren Walker
Alberto Weisser |
In arriving at the foregoing independence determination, the Board of Directors thoroughly considered the relationships described under “Transactions with Related Persons” on page 2728 of this Proxy Statement and determined that they do not impair Mr. Pohlad’s independence or his ability to exercise independent judgment in carrying out the responsibilities of a director.
Executive Sessions of Independent Directors
The independent directors hold regularly scheduled executive sessions of the Board and its Committees without Company management present. These executive sessions are chaired by the independent Presiding Director (at Board meetings) or by the independent Committee Chairs (at Committee meetings). The independent directors met in executive session at all of the regularly scheduled Board and Committee meetings held in 2019.2021. Regular executive sessions are also held by each Committee.
Related Person Transactions
The Board of Directors has adopted written Related Person Transaction Policies and Procedures that generally apply to any transaction or series of transactions:
| ■ | in which the Company or a subsidiary was or is a participant; |
| ■ | where the amount involved exceeds or is expected to exceed $120,000 since the beginning of the Company’s last completed fiscal year; and |
| ■ | in which the related person (i.e., a director, director nominee, executive officer, greater than five percent beneficial owner of the Company’s Common Stock, or any immediate family member of any of the foregoing) has or will have a direct or indirect material interest. |
The transactions described above are submitted to the Audit Committee for review and approval or ratification.
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Corporate Governance at PepsiCo
Review and Approval of Transactions with Related Persons
In determining whether to approve, ratify or disapprove of the entry into a related person transaction, the Audit Committee considers all relevant facts and circumstances and takes into account, among other factors:
| ■ | whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances; |
| ■ | whether the transaction would impair the independence of an outside director; and |
| ■ | whether the transaction would present an improper conflict of interest for any director or executive officer of the Company. |
The Audit Committee has considered and adopted standing pre-approvals under the policy for limited transactions with related persons. The Company’s General Counsel maintains a list of transactions deemed pre-approved under the policy for review by any Board member.
Transactions with Related Persons
The Board thoroughly considered the following relationships involving Robert C. Pohlad and determined that they do not impair Mr. Pohlad’s independence or his ability to exercise independent judgment in carrying out the responsibilities of a director of the Company:
| ■ | Mr. Pohlad indirectly owns one-third of the voting interests in the Minnesota Twins, a Major League Baseball team, and the remaining voting interests are indirectly owned by his brothers, William Pohlad and James Pohlad. The majority of the non-voting interests in the Minnesota Twins are owned indirectly by Mr. Pohlad and members of his immediate family and through trusts for the benefit of Mr. Pohlad’s descendants and descendants of members of his immediate family. Members of Mr. Pohlad’s immediate family are employed by the Minnesota Twins, including James Pohlad, who serves as Executive Chair and Chairman of the Board. In fiscal year 2019,2021, PepsiCo made payments to the Minnesota Twins of approximately $714,000$744,000 in connection with a sponsorship agreement, and PepsiCo received payments of approximately $940,000$623,000 from the Minnesota Twins and an independent third party in connection with the sale of PepsiCo products at the Minnesota Twins’ stadium. Transactions between the Minnesota Twins and PepsiCo, individually and in the aggregate, represented less than 1% of the annual revenues of the Minnesota Twins and PepsiCo for each of fiscal years 2019, 20182021, 2020 and 2017.2019. |
| ■ | In December 2018, PepsiCo entered into a five-year sponsorship agreement with Minnesota United, a Major League Soccer team, in which Mr. Pohlad and his brothers indirectly own an equity interest of approximately 12%. in Minnesota United, a Major League Soccer Team. In fiscal year 2019,2021, PepsiCo made payments to Minnesota United of approximately $223,000$165,000 in connection with sucha sponsorship agreement. As a result of its rights under the sponsorship agreement, and PepsiCo received payments of approximately $208,000$117,000 from Minnesota United and an independent third party in connection with the sale of PepsiCo products at Minnesota United’s stadium. Transactions betweenThe payments made by PepsiCo to Minnesota United and PepsiCo, individually and inunder the aggregate,sponsorship agreement represented less than 1% of the annual revenues of Minnesota United and PepsiCo infor each of fiscal yearyears 2021, 2020 and 2019. |
The sponsorship agreements with Minnesota Twins and Minnesota United and sale of PepsiCo products at their stadiums are ongoing.ongoing, and Mr. Pohlad is not involved in negotiating these arm’s-length transactions.
In addition, Jennifer CareyMeaghan Spillane is a Sales DirectorKey Account Manager, PepsiCo Beverages North America at PepsiCo and daughter-in-lawdaughter of Albert P. Carey,Marie T. Gallagher, who servedserves as PepsiCo’s CEO, North America during a portionSenior Vice President and Controller of 2019.PepsiCo. Ms. CareySpillane received total compensation of approximately $183,000$142,000 in fiscal year 2019,2021, and participates in the general welfare and benefit plans of PepsiCo. Ms. Carey’sSpillane’s compensation was established in accordance with PepsiCo’s employment and compensation practices applicable to employees with equivalent qualifications and responsibilities and holding similar positions. Mr. CareyMs. Gallagher does not have a material interest in his daughter-in-law’sher daughter’s employment, nor does heshe share a household with her.
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Corporate Governance at PepsiCo
Committees of the Board of Directors
The Board of Directors has four standing Committees: Audit, Compensation, Nominating and Corporate Governance, and Sustainability, Diversity and Public Policy and Sustainability.Policy. Fifty percent of the Committees are chaired by diverse Directors. The table below indicates the current members of each Board Committee:
| | Audit | | Compensation | | Nominating and
Corporate
Governance | | Sustainability,
Diversity and
Public Policy
and Sustainability |
| Segun Agbaje | | E | | | | | | |
| Shona L. Brown | | | |   | | | | ● |
| Cesar Conde | | ●
| | ● | | ● | | |
| Ian Cook(Presiding Director) | | | | | | ● | | |
| Edith W. Cooper | | ● | | | | | | |
| Dina Dublon | | | | ● | | | | |
Richard W. Fisher | | E
| | | | | | |
| Michelle Gass | | E | | | | | | |
William R. Johnson*Dave Lewis | | E | | | | | | |
| Ramon L. Laguarta | | | | | | | | |
| David C. Page | | | | ● | | | | ● |
| Robert C. Pohlad | | | | ● | | ●
| | |
| Daniel Vasella | | | | ● | | | | |
| Darren Walker | | | | | | ● | | ●
|
| Alberto Weisser | | | | | | | | |
  | = | Committee Chair |
| E | = | Audit Committee Financial Expert |
* William R. Johnson is not standing for re-election to the Board of Directors and will retire effective as of the 2020 Annual Meeting. PEPSICO 2022 PROXY STATEMENT | 29 |
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| 2021 Current Committee Members
Members Alberto Weisser CHAIR CHAIR
Cesar CondeSegun Agbaje
RichardEdith W. FisherCooper
William R. JohnsonMichelle Gass
Dave Lewis | | Primary Responsibilities ■Engaging and overseeing the Company’s independent registered public accounting firm (taking into account the vote on shareholder ratification) and considering the independence, qualifications and performance of the independent registered public accounting firm ■Approving all audit and permissible non-audit services to be performed by the independent registered public accounting firm ■Reviewing and evaluating the performance of the lead audit partner of the independent registered public accounting firm and periodically considering whether there should be a rotation of the independent registered public accounting firm ■Overseeing the quality and integrity of PepsiCo’s financial statements and its related accounting and financial reporting processes and internal control over financial reporting, and the audits of PepsiCo’s financial statements, including reviewing with management and the independent registered public accounting firm PepsiCo’s annual audited and quarterly financial statements and other financial disclosures, including earnings releases ■Reviewing and approving the internal audit department’s audit plan, staffing, budget and responsibilities ■Reviewing PepsiCo’s compliance with legal and regulatory requirements, including by reviewing and discussing the implementation and effectiveness of PepsiCo’s compliance program ■Establishing procedures for the receipt, retention and treatment of complaints received by the Company regarding (a) accounting, internal accounting controls or auditing matters and other federal securities law matters and (b) confidential, anonymous submissions by employees of concerns regarding accounting or auditing matters or other federal securities law matters ■Reviewing and assessing the guidelines and policies governing PepsiCo’s risk management and oversight processes, and assisting the Board’s oversight of PepsiCo’s financial, compliance and employee safety risks ■Reviewing and providing oversight of all related person transactions ■ Financial Expertise and Independence The Board of Directors has determined that Richard W. Fisher, William R. JohnsonSegun Agbaje, Michelle Gass, Dave Lewis and Alberto Weisser satisfy the criteria adopted by the SEC to serve as “audit committee financial experts” and that all of the members of the Committee are independent directors pursuant to the applicable requirements under the SEC and Nasdaq rules. No Audit Committee member concurrently serves on the audit committee of more than two other public companies. Report The Audit Committee Report is set forth beginning on page 3944 of this Proxy Statement. |
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Met Metfour sixtimes in 2019 Current Committee Members
Members Shona L. Brown CHAIR CHAIR
Cesar Conde
Dina Dublon
David C. Page
Robert C. Pohlad
Daniel Vasella | | Primary Responsibilities ■Overseeing policies relating to compensation of the Company’s executives and making recommendations to the Board with respect to such policies ■Overseeing engagement with shareholders on executive compensation matters ■Overseeing the design of all material employee benefit plans and programs of the Company, its subsidiaries and divisions ■Meeting at least annually with the CEO to discuss the CEO’s self-assessment in achieving individual and corporate performance goals and objectives ■Evaluating and discussing with the independent directors the performance of the CEO and recommending the CEO’s compensation to the independent directors based on the CEO’s performance ■Overseeing the evaluation of the executive officers and other key executives deemed to be under the Compensation Committee’s purview, and evaluating and determining the individual elements of total compensation for such officers ■Evaluating its relationship with any compensation consultant for any conflicts of interest and assessing the independence of any compensation consultant, legal counsel or other advisors ■Reviewing and reporting to the Board with respect to director compensation and stock ownership guidelines Additional information on the roles and responsibilities of the Compensation Committee is provided in the Compensation Discussion and Analysis beginning on page 4348 of this Proxy Statement. Independence The Compensation Committee is comprised entirely of directors who are independent under the SEC and Nasdaq rules for directors and compensation committee members, and who are also “outside directors” for purposes of Section 162(m) of the Internal Revenue Code and “non-employee directors” for purposes of Section 16 of the Securities Exchange Act of 1934, as amended (“Exchange Act”).members. Report The Compensation Committee Report is set forth on page 7381 of this Proxy Statement. |
Compensation Advisor
The Compensation Committee has engaged FW Cook as its independent external advisor. The Compensation Committee reviewed its relationship with FW Cook, considered FW Cook’s independence and the existence of potential conflicts of interest, and determined that the engagement of FW Cook did not raise any conflict of interest or other issues that would adversely impact FW Cook’s independence. In reaching this conclusion, the Compensation Committee considered various factors, including the six factors set forth in the SEC and Nasdaq rules regarding compensation advisor conflicts of interest and independence.
Compensation Committee Interlocks and Insider Participation
Shona L. Brown, Cesar Conde, Dina Dublon, David C. Page, Robert C. Pohlad and Daniel Vasella served on the Company’s Compensation Committee during fiscal year 2019.2021. No member of the Compensation Committee is now, or has been, an officer or employee of the Company. No member of the Compensation Committee had any relationship with the Company or any of its subsidiaries during 20192021 pursuant to which disclosure would be required under applicable SEC rules pertaining to the disclosure of transactions with related persons.persons, other than Mr. Pohlad, as described on page 28 of this Proxy Statement. None of the executive officers of the Company currently serves or served during 20192021 on the board of directors or compensation committee of another company at any time during which an executive officer of such other company served on PepsiCo’s Board of Directors or Compensation Committee.
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Nominating
and Corporate
Governance
Committee Current Committee Members
Daniel VasellaCHAIR
Ian Cook
Members Robert C. Pohlad CHAIR
Cesar Conde
Ian Cook
Daniel Vasella
Darren Walker | | Primary Responsibilities ■Developing criteria and qualifications, including criteria to assess independence, for selecting director candidates and identifying qualified candidates for membership on the Board and its Committees ■Developing and recommending to the Board corporate governance guidelines and other corporate policies and otherwise performing a leadership role in shaping the Company’s corporate governance policies and practices ■Reviewing Board succession plans and overseeing the development of the process and protocols regarding succession plans for the Company’s CEO ■Making recommendations to the Board concerning the composition, size, structure and activities of the Board and its Committees ■Overseeing the process for evaluating the Board and its Committees, including assessing and reporting to the Board on the performance of the Board and its Committees Independence The Nominating and Corporate Governance Committee is comprised entirely of directors who meet the independence requirements under the Nasdaq rules. |
Sustainability,
Diversity and Public
Policy and Sustainability Committee Met Metfive four times in 2019 Current Committee Members
Dina DublonCHAIR
Members Darren Walker CHAIR
Shona L. Brown
Dina Dublon
David C. Page
Darren Walker | | Primary Responsibilities ■ Assisting in the Board’s oversight of risks related to matters overseen by the Committee ■Reviewing the Company’s sustainability initiatives and engagement ■ Review the Company’s key sustainability programs and related goals it may establish from time to time and monitor the Company’s progress toward achieving those goals ■ Reviewing the Company’s diversity, equity and inclusion policies, programs and initiatives ■Reviewing and monitoring key public policy trends, issues and regulatory matters and the Company’s engagement in the public policy process ■Overseeing the Company’s Political Contributions Policy and reviewing the Company’s political activities and expenditures ■Assisting in the Board’s oversight of risks related to matters overseen by the Committee
Independence The Sustainability, Diversity and Public Policy and Sustainability Committee is comprised entirely of directors who meet the independence requirements under the Nasdaq rules. |
The Board’s Role in Strategy Oversight
One of the Board’s key responsibilities is overseeing the Company’s strategy, and the Board has deep experience and expertise in the area of strategy development and insights into the most important issues facing the Company. Setting the strategic course of the Company involves a high level of constructive engagement between management and the Board. Our entire Board acts as a strategy committee and regularly discusses the key priorities of our Company, taking into consideration and adjusting the Company’s long-term strategy with global economic, consumer and other significant trends, as well as changes in the food and beverage industries and regulatory initiatives.
| ■ | Annually, the Board conducts an extensive review of the Company’s long-term strategic plans, its annual operating plan and capital structure. |
| |
| ■ | Throughout the year and at almost every Board meeting, the Board receives information and updates from management and actively engages with senior leaders with respect to the Company’s strategy, including the strategic plans for our divisions, and the competitive environment.environment, sustainability initiatives and human capital management strategies, including matters related to diversity, equity and inclusion. |
| |
| ■ | PepsiCo’s independent directors also hold regularly scheduled executive sessions without Company management present, at which strategy is discussed. |
| |
| ■ | The Board also regularly discusses and reviews feedback on strategy from our shareholders and stakeholders. |
■ | These discussions are also enhanced with experiences periodically held outside the Boardroom, such as visits to PepsiCo’s operations, plants and markets, which provide the directors with an opportunity to see firsthand the execution and impact of the Company’s strategy and to engage with senior leaders and associates in our divisions to deepen their understanding of PepsiCo’s business, competitive environment and corporate culture. |
During 2021, the Board continued to be actively engaged in monitoring the impact of COVID-19 on the Company’s strategy. The Board continues to receive regular updates, formally and informally, and participate in discussions with management about key developments relating to the pandemic.
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The Board’s Oversight of Risk Management
The Board recognizes that the achievement of our strategic and operating objectives involves taking risks and that those risks may evolve over time. The Board has oversight responsibility for PepsiCo’s integrated risk management framework, which is designed to identify, assess, prioritize, address, manage, monitor and communicate these risks across the Company’s operations, and foster a corporate culture of integrity and risk awareness. Consistent with this approach, one of the Board’s primary responsibilities is overseeing and interacting with senior management with respect to key aspects of the Company’s business, including risk assessment and risk mitigation of the Company’s top risks.
In addition, the Board has tasked designated Committees of the Board to assist with the oversight of certain categories of risk management, and the Committees report to the Board regularly on these matters.
■BOARD OVERSIGHT |
Board of Directors The Board has oversight responsibility for PepsiCo’s integrated risk management framework. Throughout the year, the Board and the relevant Committees receive updates from management with respect to various enterprise risk management issues and dedicate a portion of their meetings to reviewing and discussing specific risk topics in greater detail, including risks related to cybersecurity, food safety, sustainability, human capital management, including diversity, equity and inclusion, and COVID-19 |
|
| The Board has tasked designated Committees of the Board to assist with the oversight of certain categories of risk management, and the Committees report to the Board regularly on these matters |
Audit Committeereviews Reviews and assesses the guidelines and policies governing the Company’s risk management and oversight processes, and assists with the Board’s oversight of financial, compliance and employee safety risks facing the Company;Company | Nominating and Corporate Governance Committee Assists the Board in its oversight of the Company’s governance structure and other corporate governance matters, including succession planning |
■ |
TheCompensation Committee reviewsReviews the Company’s employee compensation policies and practices to assess whether such policies and practices could lead to unnecessary risk-taking behavior; |
■behavior | TheNominatingSustainability, Diversity and Corporate Governance Committee assists the Board in its oversight of the Company’s governance structure and other corporate governance matters, including succession planning; and |
■ | ThePublic Policy and Sustainability CommitteeassistsAssists the Board in its oversight of the Company’s policies, programs and related risks that concern key sustainability, diversity, equity and inclusion and public policy matters.matters, including climate change |
| Oversight of Certain Key Risks |
Oversight of
COVID-19-
Related Risks 
| | During 2021, in addition to COVID-19 discussions as part of risk updates to the Board and the relevant Committees, the Board continued to be provided with updates on COVID-19’s impact to our business, financial condition and operations through memos, teleconferences or other appropriate means of communication. PepsiCo has COVID-19 risk protocols and responses embedded across its risk areas and will continue to evaluate its approach in addressing COVID-19-related risks as circumstances evolve. |
Oversight of
Cybersecurity
Related Risks 
| | The Board also maintains direct oversight over cybersecurity risk. The Board receives and provides feedback on regular updates from management regarding cybersecurity governance processes, the status of projects to strengthen internal cybersecurity and also discusses any significant cyber incidents, including recent incidents throughout the industry and the emerging threat landscape. |
Oversight of
Climate Change
Related Risks 
| | The Sustainability, Diversity and Public Policy Committee assists the Board in overseeing the management of long-term risks posed by climate change, including specific actions performed in order to protect the Company from the negative effects of climate change. In addition, the Committee reviews PepsiCo’s sustainability programs and goals related to reducing our climate impact in our operations throughout our value chain and monitors our progress toward achieving such goals. |
Oversight of
Human Capital
Management
Related Risks 
| | The Board is actively engaged in overseeing senior management development and succession as well as PepsiCo’s key human capital management strategies. The Compensation Committee oversees the design of all material employee benefit plans and programs, the Nominating and Corporate Governance Committee oversees CEO and director succession plans, and the Sustainability, Diversity and Public Policy Committee oversees initiatives and progress related to diversity, equity and inclusion. Each of the Committees provide reports and feedback to the full Board for its collective review and discussion. For more information, please see “The Board’s Role in Human Capital Management and Talent Development” beginning on page 34 of this Proxy Statement. |
| PEPSICO 2022 PROXY STATEMENT | 33 |
Throughout the year, the Board and the relevant Committees also receive updates from management with respect to various enterprise risk management issues and dedicate a portionTable of their meetings to reviewing and discussing specific risk topics in greater detail, including risks related to cybersecurity.Contents
The Company’s integrated risk management framework also includes both division-level and key country risk committees that are comprised of cross-functional senior management teams and that work together to identify, assess, prioritize and address division- and country-specific business risks. The Company’s senior management engages with and reports to PepsiCo’s Board of Directors and the relevant Committees on a regular basis to address high-priority risks.Corporate Governance at PepsiCo
At its February 20202022 meeting, the Compensation Committee reviewed the results of the 20192021 annual compensation risk assessment and concluded that the risks arising from the Company’s overall compensation programs are not reasonably likely to have a material adverse effect on the Company.
The Company believes that the Board’s leadership structure, discussed in detail under “Board Leadership Structure” on pages 24-2525-26 of this Proxy Statement, supports the risk oversight function of the Board by providing for open communication between management and the Board and all directors are involved in the risk oversight. In addition, strong independent directors chair each of the Board’s four Committees, which provide in-depth focus on certain categories of risks.
The Board’s Role in Human Capital Management and Talent Development
The Board believes that human capital management and talent development are vital to PepsiCo’s continued success. They are integral elements of our strategic framework and we strive to create a diverse and inclusive workplace with meaningful opportunities that will attract and retain the best and brightest in a competitive talent landscape.
Our Board’s involvement in leadership development and succession planning is systematic and ongoing, and the Board provides input on important decisions in each of these areas. The Board has primary responsibility for succession planning for the CEO and oversight of other executive officer positions. The Nominating and Corporate Governance Committee oversees the development of the process and protocols regarding succession plans for the CEO, and annually reviews these protocols. To assist the Board, the CEO annually provides the Board with an assessment of senior managers and their potential to succeed to the position of CEO, developed in consultation with the Presiding Director and the Chair of the Nominating and Corporate Governance Committee. The Board meets regularly with high-potential executives, both in small group and one-on-one settings.
Following a comprehensive and robust succession planning process, led by our Presiding Director and the Chair of the Nominating and Corporate Governance Committee, in the fall of 2018, the Board appointed Ramon L. Laguarta from within the organization to be PepsiCo’s Chief Executive Officer. Since that time, the The Board has also overseen the appointments of severalcurrent direct reports of the CEO, who were elevated from other roles within PepsiCo, including most recently three include seven executives globally who are racially/ethnically diverse executives (one of whom is female). The promotion of these executives from within the organization is a testament to PepsiCo’s strong bench of talent, succession planning andand/or female, demonstrating our focus on developing and maintainingbuilding a highly skilled and diverse executive team that brings a broad array of opinions and perspectives that are reflective of our global businesses.
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TableWith respect to the broader organization, our Board is actively engaged in the oversight of Contents
Corporate Governance at PepsiCo
Beyond leadership development, our Boardcorporate culture and is continuously focused on developing an inclusivea culture that is aligned with our long-term strategy. This includes reinforcing a set of behaviors throughout the Company that we think are critical to empower performance, which we call The PepsiCo Way, including voicing opinions fearlessly, raising the bar on talent and respectful work environment where our employees acrossdiversity and acting with integrity.
PepsiCo is focused on developing a culture that is aligned with our long-term strategy,
including reinforcing a set of behaviors throughout the Company that we think are
critical to empower performance, which we call The PepsiCo Way: |
| | | |
| THE PEPSICO WAY | |  | BE
CONSUMER
CENTRIC |  | ACT AS
OWNERS |  | FOCUS & GET
THINGS DONE
FAST |  | VOICE
OPINIONS
FEARLESSLY |  | RAISE THE BAR
ON TALENT
& DIVERSITY |  | CELEBRATE
SUCCESS |  | ACT
WITH
INTEGRITY |
In addition, the entire workforce are empowered to speak with truth and candor, raise concerns and implement new ideas in the best interests of the business. The Board and its applicable Committees regularly engage with employees at all levels of the organization including through periodic visits to PepsiCo’s operations, to provide oversight on a broad range of other human capital management topics, including corporate culture,talent attraction and retention, diversity, equity and inclusion, pay equity, health and safety, training and development and compensation and benefits. Employee feedback is considered in designing and evaluating employee programs and benefits and in monitoring current practices for potential areas of improvement.
| The Board’s Sustainability, Diversity and Public Policy Committee, established in 2017 and renamed in 2020, assists the Board in providing more focused oversight over PepsiCo’s policies and programs and related risks that concern key sustainability, diversity, equity and inclusion and public policy matters and to ensure that such topics remain central to the success of our business strategy. |
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Human Capital Management Highlights
PepsiCo, under the Board’s oversight and guidance, has taken significant actions to enhance our diverse and inclusive culture, protect and train our associates and maintain our reputation as a great place to work.
| | APPROACH | | RECENT ACTIONS AND HIGHLIGHTS | | ADDITIONAL
INFORMATION |
| | | | | | |
 Diversity,
Equity and
Inclusion | | We believe that our culture of diversity, equity and inclusion is a competitive advantage that fuels innovation, enhances our ability to attract and retain talent and strengthens our reputation. We continually strive to improve the attraction, retention, and advancement of diverse associates to ensure we sustain a high-caliber pipeline of talent that also represents the communities we serve. | | In 2020, PepsiCo launched our more than $570 million Racial Equality Journey, an effort to break down systemic barriers to opportunity, starting with a set of initiatives in the United States focused on increasing Black and Hispanic representation at PepsiCo, supporting Black- and Hispanic-owned businesses and lifting up Black and Hispanic American communities over five years. This commitment includes specific goals to increase Black and Hispanic managerial representation at PepsiCo by 2025. We are also continuing our efforts to recruit, develop and retain women through targeted efforts like our Transformational Leadership Program, Million Women Mentors and our Women’s Inclusion Network and Women of Color Employee Resource Groups. We are committed to being transparent about our actions and provide a workforce demographics report on our website, which is updated every six months, to show how we are progressing against our goals. | | More information on our Racial Equality Journey and initiatives to advance diversity, as well as our U.S. 2020 Consolidated EEO-1 Report as submitted to the U.S. Equal Employment Opportunity Commission, can be found on our website at www.pepsico.com/about/diversity-equity-and-inclusion. |
| | | | | | |
Training and
Development | | PepsiCo supports and develops its associates through a variety of global training and development programs that build and strengthen employees’ leadership and professional skills, including career development plans, mentoring programs and in-house learning opportunities, such as PEP U Degreed, our internal global online learning resource | | Through PEP U Degreed, we offer learning solutions, such as industry magazines, TED talks and podcasts. PEP U Degreed also leverages artificial intelligence and machine learning to suggest personalized learning resources. In 2021, PepsiCo associates completed over one million hours of training, including on PEP U Degreed. In 2022, PepsiCo increased its investment in upskilling and reskilling by offering eligible U.S. associates access to more than 100 degrees, certificates and trades programs, all tuition-free. In addition, PepsiCo launched SMILES, a global employee recognition program, in 2020 to provide an opportunity for managers and peers to celebrate their team members for The PepsiCo Way behaviors or a milestone. Since launch, more than one million SMILES have been generated on the platform. | | More information on how we are supporting the growth and development of our associates can be found on our website at www.pepsico.com/esg-topics-a-z/employee-learning-and-development. |
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| | APPROACH | | RECENT ACTIONS AND HIGHLIGHTS | | ADDITIONAL
INFORMATION |
Health and
Safety | | Protecting the safety, health, and well-being of our associates around the world is PepsiCo’s top priority. We strive to achieve an injury-free work environment. In addition, throughout the COVID-19 pandemic, we have remained focused on the health and safety of our associates and implemented significant changes that we determined were in the best interest of our employees, their families, our customers and consumers and the communities in which we operate. | | We provide training on how to mitigate potential safety risks and continue to invest in emerging technologies to protect our employees from injuries, including leveraging fleet telematics and distracted driving technology, resulting in reductions in road traffic accidents, and deploying wearable ergonomic risk reduction devices. In response to the COVID-19 pandemic, we implemented notable changes, including a large portion of our workforce working remotely and the implementation of safety protocols and procedures for our frontline and other essential associates who continue to work on site. For example, we have deployed company-wide social distancing protocols, mandatory temperature checks and symptom screening while strengthening sanitation procedures and providing employees with personal protective equipment. In the U.S., our biggest market, we provided all of our associates with 100% of pay for eligible quarantines. During the height of the pandemic, we also provided paid leave for eligible individuals who were considered high-risk or who lived with a family member who was high-risk, and also previously provided reimbursement through our childcare benefit for eligible employees who needed to pay for caregivers for children in the wake of various PepsiCo facility closures caused by COVID-19. To acknowledge the significant efforts of our frontline who continue to make, move and sell our products during this critical time, we also enhanced pay, benefits and well-being programs for our frontline associates. We further continued to provide health and financial wellness programs to help manage a variety of new stressors for employees. | | More information on our commitment to the health and safety of our associates can be found on our website at www.pepsico.com/esg-topics-a-z/environment-health-and-safety. |
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Shareholder and Stakeholder Engagement
We believe that regular, transparent communication with our shareholders and other stakeholders is essential to PepsiCo’s long-term success.
| We believe that regular, transparent communication with our shareholders and other stakeholders is essential to PepsiCo’s long-term success. |
We value the views of our shareholders and other stakeholders, and the input that we receive from them is a cornerstone of our corporate governance practices. Through these engagements, we seek to ensure that corporate governance at PepsiCo is a dynamic framework that can both accommodate the demands of a rapidly changing business environment and remain responsive to the priorities of our shareholders and other stakeholders.
We engage with our shareholders and other stakeholders year-round in a variety of ways:
| ■ | Our investor relations team regularly meets with shareholders, prospective shareholders and investment analysts. OftenAs appropriate, these meetings include our Chairman of the Board and CEO and Vice Chairman and Chief Financial Officer or leaders of our divisions.Officer. These meetings are generally focused on our portfolio strategy, financial and operating performance, and capital allocation. |
| |
| ■ | Members of our management team also regularly engage with shareholders and other stakeholders to discuss our sustainability strategy and initiatives, human capital management, Company culture, diversity, equity and inclusion, corporate governance and executive compensation practices and to solicit feedback on these and a variety of other topics of interest. |
| |
| ■ | We frequently seek feedback from stakeholders in developing key sustainability programs and goals. For example, we engaged more than 50 stakeholders across several geographic areas during the development of the PepsiCo Positive (pep+) framework, including multilateral organizations, non-profit organizations and members of the academia. |
| |
| ■ | Every year, during the two-month period before the Annual Meeting of Shareholders, we generally contact our 75 largest shareholders, who in 2021 represented approximately 47% of our outstanding shares of Common Stock, offering to discuss a broad range of topics. |
| |
| ■ | Subsequent to the Annual Meeting of Shareholders, we continue our outreach efforts to develop a better understanding of the feedback received from shareholders and issues important to our shareholders. |
| 2019 Proxy Season | |
| |
| Contacted our 75 largest shareholders, representingapproximately 48%of our outstanding shares of Common Stock
| |
| | |
As reflected in our Corporate Governance Guidelines, our Presiding Director is available for consultation and direct communication, if requested by major shareholders. Our engagement program also involves directors, as well as senior executives and associates from many different parts of the Company, including from PepsiCo’s communications, investor relations, executive compensation, compliance and ethics, legal, public policy and government affairs, and sustainability teams.
Following the 2021 Annual Meeting, we considered the voting outcomes for management and shareholder proposals, including the advisory shareholder proposal to reduce the threshold to call a special shareholder meeting, which received the support of approximately 44% of the votes cast. In response, the Nominating and Corporate Governance Committee and the Board carefully considered the proposal and the mix of views that we received on this topic during engagement with shareholders, and continue to believe that it is neither necessary nor in the best interests of the Company or its shareholders to take steps to implement this proposal, in light of our longstanding practice of regularly engaging with our shareholders and the Company’s strong corporate governance policies and practices, including the availability of the Company’s shareholder right to call a special meeting by shareholders holding in the aggregate 20% or more of our outstanding shares.
In addition, we have had an ongoing dialogue with various other shareholders and stakeholders and regularly meet with diverse stakeholders often in collaboration with leading non-profit groups that bring together investors, non-governmental organizations and businesses in support of sustainability. During these meetings, our shareholders and other stakeholders engage with us on such topics as climate change, packaging, nutrition, water scarcity, packaging, nutrition, public health, human capital management, diversity, equity and inclusion, racial equality, gender pay parity, human rights and environmental matters related to PepsiCo’s supply chain, sustainable agriculture, sustainability reporting, and various other issues. We are also engaged with other key stakeholders through our active participation in prestigiousleading corporate governance organizations, such as the Harvard Law School Program on Corporate Governance, the Council of Institutional Investors, and the Society for Corporate Governance.Governance and the Stanford Institutional Investors’ Forum.
Feedback Informs Our Board’s Decisions.The Board receives a reportand its Committees regularly receive updates on our engagement at least quarterly and a summary of communications is sent to the Board with each regularly scheduled Board meeting to provide insights into feedback from shareholders and other stakeholders and the scope of topics important to them. During the Board meetings, the directors are also provided with the opportunity to discuss and ask questions on shareholder feedback. Our engagement activities have resulted in our receiving valuable feedback from our shareholders and other stakeholders who have provided important external viewpoints that inform our decisions and our strategy.
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For example, as a result of the dialogue and collaboration with our shareholders and other stakeholders in recent years:
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| Governance | | ■ The Board refined the roles of its Committees by establishing a Public Policy and Sustainability Committee in 2017. In 2020, the Board amended the Committee’s charter and changed its name to Sustainability, Diversity and Public Policy Committee to reflect the Committee’s ongoing oversight over diversity, equity and inclusion matters. The Committee assists the Board in providing more focused oversight over PepsiCo’s policies and programs and related risks that concern key sustainability, diversity, equity and inclusion and public policy matters. ■ We published a global workforce demographics data report and our U.S. 2020 Consolidated EEO-1 Report as submitted to the U.S. Equal Employment Opportunity Commission, available at www.pepsico.com/about/diversity-equity-and-inclusion/progress-at-pepsico. ■We amended our Articles of Incorporation in 2019 to eliminate supermajority voting standards, as approved by our shareholders. ■The Board amended our Corporate Governance Guidelines over the last several years to: – specifically mention food safety and cybersecurity as areas of Board oversight to reflect current practices; –decrease the total number of public company boards that a non-executive director can serve on from 5 to 4 and establish a limit of 2 total public company boards for directors who are public company executive officers; –highlight the Board’s focus on diversity, by explicitly stating its commitment to actively seeking out highly qualified women and minority candidates, as well as candidates with diverse backgrounds, skills and experiences, to include in the pool from which Board nominees are chosen; –underscore the Board’s involvement in human capital management and talent development, by adding those experiences to the list of attributes sought for individual directors; and –specify the Board’s oversight role with respect to sustainability, an integral part of the Company’s business strategy. ■The Board also refined the roles of its Committees by establishing a Public Policy and Sustainability Committee in 2017 to assist the Board in providing more focused oversight over PepsiCo’s policies, programs and related risks that concern key sustainability and public policy matters. ■The Board implemented a proxy access right for shareholders.
shareholders in 2016. |
| Sustainability | | ■We ensure that the regular engagement team includes a member with sustainability or public policy expertise, who is available for a dialogue with shareholders about sustainability matters. ■We continue to integrate purpose into our business strategy and brands with the launch of PepsiCo Positive (pep+), which drives action and progress across three key pillars — Positive Agriculture, Positive Value Chain and Positive Choices — bringing together a number of industry-leading goals under a comprehensive framework as we continue to implement a set of focused initiatives around next generation agriculture, water stewardship, sustainable packaging, products, climate change, and people, to help build a more sustainable food system. More information on pep+ can be accessed on www.pepsico.com/pepsicopositive. ■ We also enhanced the Company’s annual sustainability reporting suite by expanding our 2025 sustainability goals that are designed toESG Topics A-Z platform available at www.pepsico.com/esg-topics-a-z and, for the first time, publishing a Sustainability Accounting Standards Board (SASB) Index. These enhancements build on our progress and broaden our efforts in a way that respondsindustry leading work to changing consumer and societal needs. We also enhanced our disclosure of the Company’spublish annual sustainability progress by issuing our annual Sustainability Report and replacing a separate annualperformance metrics, Global Reporting Initiative Report with a web-based, interactive environmental, social(GRI) reporting, Task Force on Climate-Related Financial Disclosures (TCFD) reporting, and governance (“ESG”) reporting platform, which we are periodically updating with information about PepsiCo’s policies, programs, governance and performance against the 2025 goals. other measures.■We published a reportour first Human Rights Report in 2020, available at www.pepsico.com/esg-topics-a-z/human-rightswww.pepsico.com/sustainability/packagingthat describes the substantial steps PepsiCo has taken over more than a decade to improve recycling in the U.S. and, which provides comprehensive information on our efforts to advance human rights throughout our long-term approach to sustainable packaging for our food and beverage products. full value chain. |
| Compensation | | ■After a We perform comprehensive review and considerationreviews of feedback from shareholders, the Compensation Committee implementedand in 2020 several changes were made to the overall executive compensation program in 2020, while continuing toprogram. We will maintain the long-term incentiveprogram as 100% performance-based; these changes are described on pages 54-55 of this Proxy Statement. it aligns to our business strategy, as well as our core compensation principles, but will continue to take shareholder feedback into consideration. |
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Our Commitment to Sustainable Business Practices
We are focused on an approach called Winning with Purpose that will help make our Company faster, stronger and better at meeting the needs of our shareholders, customers, consumers, partners and communities, while caring for our planet and inspiring our associates around the world.
| We are focused on making our Company Faster, Stronger and Better at meeting the needs of our shareholders, customers, consumers, partners and communities, while caring for our planet and inspiring our associates around the world. |
Our long-term sustainability goals have been woven into all aspects of our business since we first articulated our purpose agenda over ten years ago, and we continue to believe our strong sustainability agenda will enable PepsiCo to run a successful global company that creates long-term value for society and our shareholders.
PepsiCo is pleased to shareThroughout the progress we are making in ouryear, the Board and the relevant Committees receive updates from and discuss with management sustainability, journey, as we continue to integrate purpose into our business strategyhuman capital management, including diversity, equity and brands while doing even more for our planetinclusion, and people. In 2019, we prioritized a set of focused initiatives around next generation agriculture, water stewardship, plastic packaging, products, climate change and people to help build a more sustainable food system. These goals broaden our efforts in a way that responds to changing
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Corporate Governance at PepsiCo
consumer and societal needs and focus on building a healthier future for all of our stakeholders. Our annual Sustainability Report and web-based interactive ESG reporting platform onpublic policy matters, including the Company’s website atwww.pepsico.comunder “Sustainability” presents our sustainabilitykey programs and related goals on these topics and provides data, as well as examples of our efforts to achieve theseprogress toward achieving those goals.
To assist our Board in its oversight and to align with our sustainability agenda, the Board also refined the roles of its Committees by establishing a Public Policy and Sustainability Committee in 2017. In 2020, the Board amended this Committee’s charter and changed its name to Sustainability, Diversity and Public Policy Committee to reflect the Committee’s ongoing oversight over diversity, equity and inclusion matters. This Committee, which is comprised entirely of independent directors, assists the Board in providing more focused oversight over the Company’s policies, programs and related risks that concern key sustainability, diversity, equity and inclusion and public policy matters.
Launch of pep+
PepsiCo is pleased to share the progress we are making in our sustainability journey. In 2021, we introduced PepsiCo Positive (pep+), a strategic end-to-end transformation with sustainability and human capital at the center of how the company will create growth and value by operating within planetary boundaries and inspiring positive change for the planet and people. pep+ will guide how PepsiCo will transform its business operations: from sourcing ingredients and making and selling its products in a more sustainable way, to leveraging its more than one billion connections with consumers each day to take sustainability mainstream and engage people to make choices that are better for themselves and the planet. pep+ drives action and progress across three key pillars — Positive Agriculture, Positive Value Chain and Positive Choices — bringing together our numerous industry-leading goals for 2030 and beyond under a comprehensive framework as we continue to implement a set of focused initiatives around next generation agriculture, water stewardship, sustainable packaging, products, climate change and people to help build a more sustainable food system. Our sustainability performance goals broaden our efforts in a way that responds to changing consumer and societal needs and focus on building a healthier future for all of our stakeholders.
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| | OUR PEP+ GOALS | | OUR PEP+ PROGRESS HIGHLIGHTS |
Positive Agriculture We’re working to source our crops & ingredients in ways that restore the earth and strengthen farming communities | | Spread regenerative agriculture across 7 MILLION ACRES by 2030 Improve the livelihoods of more than 250,000 PEOPLE in our agricultural supply chain and communities by 2030 Sustainably source(1) 100% of our key crops and ingredients by 2030 | 
| | Sustainably sourced(1) 100% of our grower-sourced crops (potatoes, whole corn, oats and oranges) in 31 countries, and more than 90% of our grower-sourced crops globally as of 2021 Achieved 100% Roundtable on Sustainable Palm Oil (RSPO) physically certified palm oil(2) Achieved 100% Bonsucro certified sustainable cane sugar globally(3)(4) |  |
| | | | | | |
Positive Value Chain We’re helping build a circular and inclusive value chain | | Achieve NET-ZERO EMISSIONS BY 2040 Cut virgin plastic per serving by 50% across our global beverages and convenient foods portfolio by 2030 against a 2020 baseline NET WATER POSITIVE Reduce use and replenish more water than we use by 2030 Execute our diversity, equity and inclusion agenda, invest more than $570 MILLION by 2025 |
| | In 2021, we continued to transition to 100% renewable electricity in our direct operations, and approximately 70%(5)(6) of our global electricity needs were met by renewable sources | 
|
| | As of 2021, we increased our Black andHispanic managerial populations in the U.S. to 8.3% and 9.5%, respectively, of our workforce Women hold 43% of our global manager positions and continue to be paid within 1% of men in 72 countries (representing 99% of our salaried employee population), after controlling for legitimate drivers of pay such as job level, geographic location and performance ratings(7) | 
|
| | | | | | |
 Positive Choices We’re inspiring people through our brands to make choices that create more smiles for them and the planet | | EVOLVE OUR PORTFOLIO OF PRODUCTS SO THEY ARE BETTER FOR THE PLANET AND PEOPLE
LEVERAGE OUR ICONIC BRANDS TO INSPIRE POSITIVE CHOICES |  | | We are over 70%(6) of the way toward our 2025 targets in reducing added sugars, sodium and saturated fat across our beverages and convenient foods portfolio(8) | |
For more information, please visit www.pepsico.com/PepsiCoPositive.
| (1) | “Sustainably source” refers to meeting the independently verified environmental, social and economic principles of PepsiCo’s Sustainable Farming Program, enabling continuous improvement for farmers, communities and the planet. |
| (2) | We increased our sourcing through the RSPO Mass Balance physically certified supply chain model and procured de minimis Independent Smallholder Credits to achieve 100% RSPO certification in 2021. |
| (3) | Results reflect exclusion of SodaStream International Ltd. (“SodaStream”) and Pioneer Foods portfolios. |
| (4) | Results include a combined approach of procuring Bonsucro credits and verifying our supply chain. |
| (5) | This target was met by a diversified portfolio of solutions. |
| (6) | Results reflect exclusion of Be & Cheery portfolio. |
| (7) | Based on base compensation. |
| (8) | Based on 2020 data in our Top 26 Beverage markets, which represent 80% of our global beverages volume, and our Top 23 Convenient Foods markets, which represent 88% of our global convenient foods volume. |
Unless otherwise noted, information with respect to our acquisitions of Be & Cheery, BFY Brands, Inc., Pioneer Foods, Rockstar and SodaStream is included herein. Organizational changes (e.g., acquisitions, mergers and divestitures) are evaluated to determine if they have a significant impact on our sustainability performance and, as data becomes available, all reported years for metrics impacted by an organizational change are recast to consistently reflect the impact of the organizational change.
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Our annual Sustainability Report and web-based interactive environmental, social and governance (“ESG”) reporting platform on the Company’s website at www.pepsico.com under “Sustainability” presents our sustainability goals and provides data, as well as examples of our efforts to achieve these goals.
Political Contributions Policy
In 2005, the Board of Directors adopted a Political Contributions Policy for the Company, which is amended from time to time. The Political Contributions Policy states, among other things, that details on PepsiCo’s political contributions are posted on our website on an annual basis, and that while the Company generally does not provide contributions from corporate funds to candidates outside the U.S., that it will appropriately post any such contribution along with other political contributions on our website.
The Political Contributions Policy, together with other policies and procedures of the Company, guide PepsiCo’s approach to political contributions. As specified in its Charter, the Sustainability, Diversity and Public Policy and Sustainability Committee oversees this policy and is responsible for reviewing the Company’s key public policy trends, issues and regulatory matters, its engagement in the public policy process and the Company’s political activities and expenditures. In addition, our Board receives information regarding the Company’s public policy initiatives and developments at every regularly scheduled Board meeting.as necessary.
In keeping with our goal of transparency, our Political Contributions Policy and our annual U.S. political contributions are posted atwww.pepsico.com www.pepsico.comunder “Sustainability”Sustainability”—“Environmental, Social & GovernanceESG Topics” A-Z”—“Public Policy Engagement, Political Activities Politicaland Contributions & Issue Advocacy.Guidelines.” Additionally, over the years, we have significantly enhanced our website disclosure of political spending and lobbying activities by including the following information: |
| ■ | a link to PepsiCo’s quarterly federal lobbying reports; |
| ■ | the total annual amount of PepsiCo’s federal lobbying-related expenditures in the United States; |
| ■ | information about our key lobbying priorities and our Board’s oversight of political spending and lobbying activities; |
| ■ | criteria to be used in connection with all contributions, including the candidate’s overall character, integrity, personal conduct, record of public service and commitment to supporting diversity, equity and inclusion; |
| ■ | a list of U.S. trade associations and policy groups that lobby on behalf of PepsiCo to which PepsiCo contributes over $25,000 annually; and |
| ■ | the names of the lobbyists with which we directly contract. |
Communications with the Board
The PepsiCo Corporate Law Department reviews all communications sent to the Board of Directors and regularly provides to the Board a summary of communications that relate to the functions of the Board or a Board Committee or that otherwise warrant Board attention. Copies of such communications are also made available to the Board. Directors may at any time discuss the Board communications received by the Company. In addition, the Corporate Law Department may forward certain communications only to the Presiding Director, the Chair of the relevant Committee or the individual Board member to whom a communication is directed. Concerns relating to PepsiCo’s accounting, internal accounting controls or auditing matters will be referred directly to members of the Audit Committee. Those items that are unrelated to the duties and responsibilities of the Board or its Committees may not be provided to the Board by the Corporate Law Department, including, without limitation, business solicitations, advertisements and surveys; requests for donations and sponsorships; job referral materials such as resumes; product-related communications; unsolicited ideas and business proposals; and material that is determined to be illegal or otherwise inappropriate.
Shareholders and other interested parties may send communications directed to the Board, a Committee of the Board, Presiding Director, independent directors as a group or an individual director by any of the following means:
By Phone |   | | By Mail |   | | Online |   |
1-866-626-0633 | | PepsiCo Board of Directors
ATTN: Corporate Secretary
PepsiCo, Inc.
700 Anderson Hill Road
Purchase, New York 10577 | | Submit a communication through our websitewww.pepsico.com www.pepsico.comunder “About”About” — “Corporate Governance”—“Corporate Governance”— “Contacting the Board of DirectorsDirectors”” |
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2021 Director Compensation
2019 DIRECTOR COMPENSATION
|
Non-employee directors are compensated for their service on the Board as described below. Directors who are employees of the Company receive no additional compensation for serving as directors.
Annual Compensation
Every year, our Board of Directors reviews the competitiveness of our compensation program for non-employee directors. Based on the results of a competitive analysis, supported by the Board’s independent compensation consultant, FW Cook, and upon the recommendation of the Compensation Committee, in 2021 the Board approved an increase in the cash retainer from $110,000 to $120,000 and an increase in the equity retainer from $180,000 to $190,000 effective October 1, 2019. This adjustment was madedecided to maintain the competitivenesscurrent annual cash retainer of our director compensation program relative to PepsiCo’s peer group$120,000 and to further align the directors’ interests with our shareholders.current annual equity retainer of $190,000.
ANNUAL DIRECTOR COMPENSATION |
| | ADDITIONAL COMPENSATION |
  | | | An additional $30,000 annual cash retainer ■Nominating and Corporate Governance Committee Chair ■ Sustainability, Diversity and Public Policy and Sustainability Committee Chair An additional $40,000 annual cash retainer ■Compensation Committee Chair An additional $50,000 annual cash retainer |
The $190,000 annual equity retainer is provided in phantom units of PepsiCo Common Stock that are immediately vested and are payable on the first day of the calendar quarter following the first anniversary of the director’s retirement or resignation from PepsiCo’s Board of Directors.Directors, or as of a later date selected by the director. The number of phantom units of PepsiCo Common Stock granted to each director on October 1, 20192021 was determined by dividing the $190,000 equity retainer value by the closing price of PepsiCo Common Stock on October 1, 2019,2021, which was $137.37.$150.95. As such, each director was granted 1,3831,259 phantom units, each representing the right to receive one share of PepsiCo Common Stock and dividend equivalents. Dividend equivalents are reinvested in additional phantom units. Directors may also elect to defer their cash compensation into phantom units payable at the end of the deferral period selected by the directors.
Directors are reimbursed for expenses incurred to attend Board and Committee meetings and receive business travel and accident insurance coverage. Directors do not receive any meeting fees and do not have a retirement plan or receive any benefits such as life or medical insurance. Directors are eligible for matching of charitable contributions through the PepsiCo Foundation, which is generally available to all PepsiCo employees.
Initial Share Grant
Each newly appointed non-employee director receives a one-time grant of 1,000 shares of PepsiCo Common Stock when he or she joins the Board. These shares are immediately vested, but must be held until the director leaves the Board.
Governance Features
Our compensation program for non-employee directors operates with the following market-leading governance features:
Shareholder-Approved Cap on Pay.Pay. In 2016, our shareholders approved a cap on non-employee director pay as part of the renewal of the PepsiCo, Inc. Long-Term Incentive (“LTI”) Plan. The cap imposes a limit on the awards that may be granted to any non-employee director in a single calendar year in the following amounts: $500,000 for annual equity awards, $500,000 for annual cash retainers, and $250,000 for one-time initial awards to any newly appointed or elected non-employee director. Our current compensation program for non-employee directors is well within these limits.
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2019 Director Compensation
Stock Ownership Requirements.Requirements. To reinforce our ownership philosophy, non-employee directors are required to own shares of PepsiCo Common Stock equal to at least $600,000 (five times the annual cash retainer). Shares or phantom units of PepsiCo Common Stock held either directly by the non-employee director (or immediate family members), in the director’s deferred compensation account, or in a trust for the benefit of immediate family members, count towards satisfying the requirement.
Non-employee directors have five years from their appointment to meet their stock ownership requirement. All of our non-employee directors have met or are on track to meet their objectives within the five-year period.period.
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2021 Director Compensation
Clawback Provision.Provision. Under the terms of our long-term incentive plans, non-employee directors who violate PepsiCo’s Global Code of Conduct, who violate applicable non-compete provisions, or who engage in gross misconduct may be subject to financial consequences. Our long-term incentive plans permit PepsiCo to cancel a non-employee director’s outstanding equity awards if PepsiCo determines that the non-employee director has committed any such violation. The long-term incentive plans also permit PepsiCo to claw back all gains from exercised stock options received within the 12 months preceding the violation.
Prohibition on Hedging and Pledging.Pledging. Our insider trading policyInsider Trading Policy prohibits all directors (including non-employee directors) from using any strategies or products (such as derivative securities or short-selling techniques) to hedge against the potential changes in the value of PepsiCo Common Stock. In addition, directors may not hold PepsiCo securities in a margin account or pledge PepsiCo stock or PepsiCo stock options as collateral for a loan.
Limited Trading Windows.Windows. Our directors (including non-employee directors) can only transact in PepsiCo securities during approved trading windows after satisfying mandatory clearance requirements.
20192021 Non-Employee Director Compensation
The following table summarizes the compensation of the non-employee directors for the fiscal year ended December 28, 2019. Employee directors, which in 2019 included our former Chairman of the Board, Indra K. Nooyi, and Mr. Laguarta, do not receive any compensation for their service as a director. Ms. Nooyi’s employee compensation for 2019 is included in the table below and Mr. Laguarta’s employee compensation for 2019 is shown in the Summary Compensation Table on page 61.25, 2021.
| Name | | Fees Earned or
Paid in Cash
($)(1) | | Stock
Awards
($)(2) | | All Other
Compensation
($)(3) | | Total
($) | | Fees Earned or
Paid in Cash
($)(1) | | Stock
Awards
($)(2) | | All Other
Compensation
($)(3) | | Total
($) |
| Segun Agbaje | | | 120,000 | | 190,000 | | — | | 310,000 |
| Shona L. Brown | | 151,667 | | 190,000 | | — | | 341,667 | | 160,000 | | 190,000 | | — | | 350,000 |
| George W. Buckley(4) | | 45,833 | | — | | — | | 45,833 | |
| Cesar Conde | | 111,667 | | 190,000 | | — | | 301,667 | | 120,000 | | 190,000 | | — | | 310,000 |
| Ian Cook | | 161,667 | | 190,000 | | — | | 351,667 | | 170,000 | | 190,000 | | — | | 360,000 |
| Edith W. Cooper(4) | | | 30,000 | | 363,183 | | — | | 393,183 |
| Dina Dublon | | 141,667 | | 190,000 | | 10,000 | | 341,667 | | 132,500 | | 190,000 | | 31,208 | | 353,708 |
| Richard W. Fisher | | 111,667 | | 190,000 | | 10,000 | | 311,667 | |
| Michelle Gass(5) | | 84,167 | | 411,205 | | — | | 495,372 | |
| William R. Johnson | | 111,667 | | 190,000 | | — | | 301,667 | |
| Indra K. Nooyi(6) | | — | | — | | 10,660,915 | | 10,660,915 | |
| Richard W. Fisher(5) | | | 50,000 | | — | | 15,207 | | 65,207 |
| Michelle Gass | | | 120,000 | | 190,000 | | — | | 310,000 |
| Dave Lewis | | | 120,000 | | 190,000 | | — | | 310,000 |
| David C. Page | | 111,667 | | 190,000 | | 10,000 | | 311,667 | | 120,000 | | 190,000 | | 11,208 | | 321,208 |
| Robert C. Pohlad | | 111,667 | | 190,000 | | — | | 301,667 | | 137,500 | | 190,000 | | — | | 327,500 |
| Daniel Vasella | | 141,667 | | 190,000 | | 27,990 | | 359,657 | | 132,500 | | 190,000 | | 11,208 | | 333,708 |
| Darren Walker | | 111,667 | | 190,000 | | — | | 301,667 | | 137,500 | | 190,000 | | — | | 327,500 |
| Alberto Weisser | | 151,667 | | 190,000 | | — | | 341,667 | | 160,000 | | 190,000 | | — | | 350,000 |
| (1) | The retainer fee reflects a payment of $55,000$60,000 made in arrears in June 20192021 for service during the period December 1, 20182020 through May 31, 20192021 and a payment of $56,667$60,000 made in arrears in December 20192021 for service during the period June 1, 20192021 through November 30, 2019. Dr. Vasella2021. The following directors elected to defer his 2018-2019all or part of their 2020-2021 cash compensation into PepsiCo’s director deferral program, deferringprogram: Mr. Agbaje deferred his $141,667$120,000 retainer fees into 1,070781 phantom stock units and Sir Dave deferred his $120,000 retainer fees into 781 phantom stock units. The number of phantom units of PepsiCo Common Stock Dr. VasellaMr. Agbaje and Sir Dave deferred on June 1, 20192021 and December 1, 20192021 was determined by dividing histhe deferred cash compensation by the closing price of PepsiCo Common Stock on the grant date (or the next trading day), which was $128.98$147.63 and $135.88,$160.16, respectively. |
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2019 Director Compensation
| (2) | The amounts reported for stock awards represent the full grant date fair value of the phantom stock units granted in 20192021 calculated in accordance with the accounting guidance on share-based payments. |
| (3) | With respect to Ms. Dublon, Mr. Fisher, Dr. Page and Dr. Vasella, theThe amounts reported in this column represent PepsiCo Foundation matching gifts, and other charitable contributions or commitments.commitments and the value of gifts. PepsiCo Foundation matching gift contributions are available to all PepsiCo employees and PepsiCo non-employee directors. Under the matching gift program, the PepsiCo Foundation matches cash or stock donations to recognized tax-exempt organizations and provides a double-match requested by an eligible individual who was a member of a qualified board of a tax-exempt organization and made a financial contribution to such organization during 2019,2021, with PepsiCo Foundation annual contributions generally capped at a total of $10,000. The other amounts reported$10,000 plus an additional $20,000 for charitable contributions made in this column representOctober 2021, during our annual corporate-wide giving campaign that encourages associates to give back. With respect to Ms. Dublon, Mr. Fisher and Drs. Page and Vasella, the valuePepsiCo Foundation made matching contributions of travel reimbursement for infrequent Board meetings or events that spouses of directors are invited to attend,$30,000, $10,000, $10,000 and the value of gifts. If spouse travel occurs on Company aircraft, income is imputed to the director for income tax purposes and the director is not provided a tax reimbursement.
$10,000, respectively. |
| (4) | Mr. Buckley retired from the Board effective May 1, 2019; therefore, his retainer fee includes a pro-rata amount of $45,833 for service from December 1, 2018 to May 1, 2019.
|
(5) | Upon joining the Board on March 6, 2019,September 1, 2021, Ms. GassCooper received the one-time grant of 1,000 shares of PepsiCo Common Stock granted to all new directors. She also received a pro-rated annual cash retainer of $27,500$30,000 for service from March 6, 2019 through May 31, 2019 and the $56,667 cash retainer for service from JuneSeptember 1, 20192021 through November 30, 2019,2021, a pro-rated equity retainer of $105,000$15,833 for service from March 6, 2019September 1, 2021 through September 30, 20192021 and the $190,000 annual equity retainer on October 1, 20192021 to compensate her for the period October 1, 20192021 through September 30, 2020. 2022. |
(6)(5) | Reflects employeeMr. Fisher retired from the Board effective May 5, 2021; therefore, his retainer fee includes a pro-rata amount of $50,000 for service from December 1, 2020 to May 5, 2021. Mr. Fisher elected to defer his $50,000 retainer fees into 339 phantom stock units. The number of phantom units of PepsiCo Common Stock Mr. Fisher deferred on June 1, 2021 was determined by dividing the deferred cash compensation paid to Ms. Nooyi in connection with her service in 2019 and prior years as detailed below.
by the closing price of PepsiCo Common Stock on the grant date (or the next trading day), which was $147.63. |
Former Chairman of the Board Compensation.Ms. Nooyi served as Chairman of the Board and remained employed by the Company through February 1, 2019. Since Ms. Nooyi was not an executive officer during 2019, her employee compensation for 2019 is disclosed in the table above. Her total 2019 annual compensation of $10,660,915 disclosed in the table above reflects compensation paid to Ms. Nooyi in connection with her service as an employee in 2019 and prior years, comprising her pro-rated base salary and bonus for her employment through February 1, 2019 ($536,223); the payout of her 2017 Long-Term Cash Award which was granted to her while in the capacity of Chairman of the Board and CEO in 2017, subject to underlying performance conditions ($4,855,200); the change in pension value up to her retirement date, impacted by changes in actuarial assumptions such as discount rates and lump sum conversion rates ($5,184,425); and other compensation from personal use of Company aircraft and ground transportation through February 1, 2019 ($35,067) and donations made to charities of Ms. Nooyi’s choosing in honor of her retirement and longstanding service ($50,000). Ms. Nooyi did not receive a 2019 LTI award.
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Ratification of Appointment of Independent Registered Public Accounting Firm (Proxy Item No. 2)
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PROXY ITEM NO. 2)
|
The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm (taking into account the vote on shareholder ratification). The Audit Committee has appointed KPMG LLP (“KPMG”) as PepsiCo’s independent registered public accounting firm for fiscal year 2020.2022. KPMG has served as PepsiCo’s independent registered public accounting firm since 1990. While we are not required by our By-Laws or otherwise to seek shareholder ratification of the appointment of KPMG as our independent registered public accounting firm, we are doing so as a matter of good corporate governance. If the shareholders do not ratify the appointment, the Audit Committee will take the vote into consideration when determining whether or not to retain KPMG. The Audit Committee believes that the continued retention of KPMG as our independent registered public accounting firm is in the best interests of our shareholders. Even if the selection of KPMG is ratified by shareholders, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its shareholders.
Representatives of KPMG are expected to be present and available to answer appropriate questions at the 20202022 Annual Meeting and will have an opportunity to make statements during the meeting if they desire to do so.
 | | | |
| | Our Board of Directors recommends that shareholders vote “FOR” the ratification of the appointment of KPMG as PepsiCo’s independent registered public accounting firm for fiscal year 2020.2022. | |
| | | |
Audit Committee Report
PepsiCo’s Audit Committee reports to, and acts on behalf of, the Board. The Audit Committee is comprised solely of directors who satisfy applicable independence and other requirements of Nasdaq and applicable securities laws. A majority of the members of the Audit Committee are “audit committee financial experts” as defined by SEC rules and regulations.
The Audit Committee’s purpose and responsibilities are set forth in its charter, which is approved and adopted by the Board and is available on PepsiCo’s website atwww.pepsico.com under www.pepsico.comunder“About”—“Corporate Governance.Governance.”The Audit Committee’s Charter is reviewed at least annually and updated, as appropriate, to address changes in regulatory requirements, authoritative guidance, evolving oversight practices and investor feedback.
During 2019,2021, the Audit Committee met seven times and fulfilled each of its duties and responsibilities as outlined in its charter, including reviewing and assessing the guidelines and policies governing PepsiCo’s risk management and oversight processes, overseeing PepsiCo’sPepsiCo���s compliance with legal and regulatory requirements (including meeting with the Global Chief Compliance & Ethics Officer to discuss PepsiCo’s compliance program), receiving an update on PepsiCo’s Law Department’s compliance with Part 205 of Section 307 of the Sarbanes-Oxley Act of 2002 regarding standards of professional conduct for attorneys and regularly meeting separately with PepsiCo’s General Counsel, Global Chief Compliance & Ethics Officer, General Auditor, and Chief Financial Officer and representatives of the independent registered public accounting firm (see page 2930 of this Proxy Statement for additional information regarding the Audit Committee’s responsibilities). During 2021, the Audit Committee also reviewed and considered how COVID-19 continued to impact each of its areas of responsibility, including its oversight of PepsiCo’s independent registered public accounting firm, the quality and integrity of PepsiCo’s financial statements and internal control over financial reporting, PepsiCo’s internal audit function, and enterprise risk management processes.
Selection and Oversight of the Independent Registered Public Accounting Firm.Firm. The Audit Committee assists the Board with its oversight of PepsiCo’s independent registered public accounting firm’s qualifications and independence. The Audit Committee is responsible for appointing, compensating, retaining and overseeing the work of PepsiCo’s independent registered public accounting firm, including approving any services provided by the firm, periodically reviewing and evaluating the performance of the lead audit partner, as well as overseeing the required rotation of KPMG’s lead audit partner and, through the Audit Committee Chair as its representative, reviewing and considering the selection of the lead audit partner. KPMG has served as PepsiCo’s independent registered public accounting firm since 1990. KPMG’s current lead audit partner is required to rotate after completion of the fiscal year 2022 audit.
| PEPSICO 20202022 PROXY STATEMENT 39 |
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Ratification of Appointment of Independent Registered Public Accounting Firm (Proxy Item No. 2)
The Audit Committee recognizes the importance of maintaining the independence of PepsiCo’s auditor, both in fact and in appearance. In 2019,2021, the Audit Committee received and reviewed the written disclosures and the letter from KPMG required by applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) regarding KPMG’s communications with the Audit Committee concerning independence, and discussed with KPMG the firm’s independence from PepsiCo and management. These discussions included, among other things, a review of the nature of, and fees paid to, KPMG for non-audit services and the compatibility of such services with maintaining KPMG’s independence (see page 4146 of this Proxy Statement for additional information). The Audit Committee concurred with KPMG’s conclusion that they are independent from PepsiCo and its management.
The Audit Committee also periodically considers whether there should be a rotation of PepsiCo’s independent registered public accounting firm. In addition to KPMG’s independence from PepsiCo and management, the Audit Committee also considers several other factors in deciding whether to re-engage KPMG, including: the quality of KPMG’s staff, work and quality control; KPMG’s policies related to independence; KPMG’s global reach; and KPMG’s capability and expertise to perform an audit of PepsiCo’s financial statements and internal control over financial reporting, given the breadth and complexity of PepsiCo’s business and global footprint. The Audit Committee also discussed with KPMG the status or results of the PCAOB’s reports on its inspections of KPMG and discussed with KPMG certain legal and regulatory proceedings, both pending and resolved, against KPMG.
Based on the foregoing, the Audit Committee has retained KPMG as PepsiCo’s independent registered public accounting firm for the fiscal year 20202022 and recommends that shareholders ratify this appointment (see page 3944 of this Proxy Statement for additional information regarding the shareholder vote).
Review and Recommendation Regarding Financial Statements.Statements. PepsiCo’s management is responsible for preparing PepsiCo’s financial statements, for maintaining effective internal control over financial reporting, and for assessing the effectiveness of internal control over financial reporting. KPMG is responsible for expressing an opinion on PepsiCo’s financial statements and an opinion on PepsiCo’s internal control over financial reporting based on its audits. The Audit Committee does not itself prepare financial statements or perform audits, and its members are not auditors or certifiers of PepsiCo’s financial statements.
In the performance of its oversight function, the Audit Committee met with management and KPMG to review and discuss PepsiCo’s audited financial statements and internal control over financial reporting, asked management and KPMG questions relating to such matters and discussed with KPMG the matters required to be discussed by applicable PCAOB auditing standards. These meetings and discussions included a review of the critical accounting policies applied by PepsiCo in the preparation of its financial statements and the quality (and not just the acceptability) of the accounting principles utilized, the reasonableness of significant accounting estimates and judgments, the critical audit matters identified by KPMG during the audit, and the disclosures in PepsiCo’s consolidated financial statements. Based on the reviews and discussions described in this report, the Audit Committee recommended to the Board that the audited financial statements be included in the Annual Report on Form 10-K for the fiscal year ended December 28, 2019,25, 2021, for filing with the SEC.
| The Audit Committee | |
| |
Alberto Weisser, Chair
Segun Agbaje
Edith W. Cooper | Richard W. Fisher |
Cesar Conde | William R. JohnsonMichelle Gass
Dave Lewis |
The information contained in the above report will not be deemed to be “soliciting material” or “filed” with the SEC, nor will this information be incorporated into any future filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Securities Exchange Act of 1934, as amended (“Exchange Act”), except to the extent the Company specifically incorporates such report by reference.reference.
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Ratification of Appointment of Independent Registered Public Accounting Firm (Proxy Item No. 2)
Audit and Other Fees
The following table presents fees incurred for professional audit services rendered by KPMG, the Company’s independent registered public accounting firm, for the audit of the Company’s annual consolidated financial statements for fiscal years 20192021 and 2018,2020, and fees billed for other services rendered by KPMG in fiscal years 20192021 and 2018. The Audit Committee has pre-approved all fees paid to KPMG in accordance with the Policy for Pre-Approval of Audit, Audit-Related and Non-Audit Services, as discussed below.2020.
| | 2019 | | 2018 | | | 2021 | | | 2020 |
| Audit fees(1) | | $ | 23,828,000 | | $ | 26,997,000 | | $ | 29,526,000 | | $ | 24,144,000 |
| Audit-related fees(2) | | $ | 1,456,000 | | $ | 1,169,000 | | $ | 1,476,000 | | $ | 1,480,000 |
| Tax fees(3) | | $ | 314,000 | | $ | 588,000 | | $ | 166,000 | | $ | 141,000 |
| All other fees(4) | | $ | — | | $ | — | | $ | — | | $ | — |
| (1) | Audit fees for fiscal years 20192021 and 20182020 consisted of fees for the audits of the Company’s annual consolidated financial statements, and the audit of the effectiveness of the Company’s internal control over financial reporting, the reviews of the financial statements included in the Company’s Quarterly Reports on Form 10-Q and services related to statutory filings or engagements. |
| (2) | Audit-related fees for fiscal years 20192021 and 20182020 consisted primarily of the audits of certain employee benefit plans, the issuance of comfort letters, agreed upon procedures and other attestation reports and the issuance of comfort letters.reports. |
| (3) | Tax fees for fiscal years 20192021 and 20182020 consisted primarily of international tax compliance services. |
| (4) | KPMG was not engaged in fiscal years 20192021 or 20182020 for any services other than those described above. |
Pre-Approval Policy and Procedures
We understand the need for the independent registered public accounting firm to maintain its objectivity and independence, both in appearance and in fact, in its audit of PepsiCo’s consolidated financial statements. Accordingly, the Audit Committee has adopted the PepsiCo Policy for Pre-Approval of Audit, Audit-Related and Non-Audit Services. The policy provides that the Audit Committee will engage the independent registered public accounting firm for the audit of PepsiCo’s consolidated financial statements and audit-related, tax and other non-audit services in accordance with the terms of the policy. The policy provides that on an annual basis the independent registered public accounting firm’s global lead audit partner will review with the Audit Committee the services the independent registered public accounting firm expects to provide in the coming year and the related fee estimates, and that the Audit Committee will consider for pre-approval a schedule of such services. The policy further provides that the Audit Committee will specifically pre-approve engagements of the independent registered public accounting firm for services that are not pre-approved through the annual process. The Audit Committee Chair is authorized under the policy to pre-approve any audit, audit-related, tax or other non-audit services between Audit Committee meetings, provided such interim pre-approvals are reviewed with the full Audit Committee at its next meeting. In addition, the Audit Committee receives a status report at each of its regularly scheduled meetings regarding audit, audit-related, tax and other non-audit services that the independent registered public accounting firm has been pre-approved to perform, has been asked to provide or may be expected to provide during the balance of the year. The Audit Committee pre-approved all services provided by KPMG during fiscal 2021 and 2020 in accordance with the Policy for Pre-Approval of Audit, Audit-Related and Non-Audit Services.
| PEPSICO 20202022 PROXY STATEMENT 41 |
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Advisory Approval of Executive Compensation
(Proxy Item No. 3)
ADVISORY APPROVAL OF EXECUTIVE COMPENSATION (PROXY ITEM NO. 3)
|
Pursuant to Section 14A of the Exchange Act, the Company asks shareholders to cast an advisory vote to approve the compensation of our Named Executive Officers disclosed in the “Executive Compensation” section beginning on page 4348 of this Proxy Statement. While this vote is non-binding, PepsiCo values the opinions of its shareholders and, consistent with our record of shareholder engagement, will consider the outcome of the vote when making future compensation decisions.
In considering your vote, we invite you to review the Compensation Discussion and Analysis beginning on page 4348 of this Proxy Statement. As described in the Compensation Discussion and Analysis, we believe that PepsiCo’s executive compensation programs effectively align the interests of our executive officers with those of our shareholders by linking a significant portion of their compensation to PepsiCo’s performance and by providing a competitive level of compensation designed to recruit, retain and motivate talented executives critical to PepsiCo’s long-term success.
We are asking our shareholders to vote FOR, in an advisory vote, the following resolution:
“Resolved, the shareholders of PepsiCo approve, on an advisory basis, the compensation of the Company’s Named Executive Officers as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, the 20192021 Summary Compensation Table, the other compensation tables and the related notes and narratives on pages 43-7548-83 of this Proxy Statement for the 20202022 Annual Meeting of Shareholders.”
The Board has adopted a policy of providing annual advisory approvals of the compensation of our NEOs. The next advisory approval of executive compensation will occur at the 20212023 Annual Meeting of Shareholders.
| | | |
| | Our Board of Directors recommends that shareholders vote “FOR” the compensation of our Named Executive Officers. | |
| | | |
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Executive Compensation
Compensation Discussion and Analysis
This Compensation Discussion and Analysis provides a description of PepsiCo’s executive compensation philosophy and programs and more specifically, discusses the process in determining the compensation of our NEOs.
| Name and Title | | |
| Ramon L. Laguarta | | Chairman of the Board and CEO, PepsiCo |
| Hugh F. Johnston | | Vice Chairman, Executive Vice President (“EVP”) and Chief Financial Officer (“CFO”), PepsiCo |
| Silviu Popovici | | CEO, Europe |
| Kirk Tanner | | CEO, PepsiCo Beverages North America (“PBNA”) |
| Steven Williams | | CEO, PepsiCo Foods North America (“PFNA”) |
PepsiCo Strategy and Vision
In 2019, our leadership team set out our visionOur unwavering commitment to becoming an even Faster, Stronger and Better organization and to Be the Global Leader in Beverages and Convenient Foods and Beverages by Winning with Purpose. To help us achieve thispep+ contributed to our achievement of strong performance and financial results in 2021 as we continued to invest in our people, brands, go-to-market systems, supply chain, manufacturing capacity and digital capabilities to build competitive advantages and win in the marketplace.
This vision we are committedwas introduced by our leadership team and led by the Chairman and CEO to becomingFaster, Strongersupport the start of our strategic transformation in 2019. Our business is benefiting from the substantial investments made and Better.strategic actions taken over the last three years to deliver on our aspirations, yielding positive returns for our shareholders.
| FASTER | | STRONGER | | BETTER |
Winning in the marketplace,
being more consumer-centric
and accelerating investment for topline
top-line growth | | Transforming our capabilities, cost
and culture by operating as one PepsiCo, leveraging technology,
winning locally and globally enabled | | Integrating purpose into our business strategyCreating growth and doing even morevalue by
operating within planetary
boundaries and inspiring positive
change for the planet and our people |
To further complement and enhance our strategic framework, we introduced pep+ in 2021, a fundamental end-to-end transformation of what we do and how we do it to create growth and shared value with sustainability and human capital at the center.
In orderaddition, our primary focus remained keeping our associates safe, supporting our communities and meeting our consumers’ and customers’ needs as the COVID-19 pandemic continued to effectively deliver onbe a major worldwide health concern.
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Executive Compensation
2021 PepsiCo Performance Highlights
PepsiCo exceeded its operating performance goals in 2021 despite continued macroeconomic challenges and economic uncertainty associated with the COVID-19 pandemic, including ongoing supply chain disruptions and inflationary pressures. Our strong results highlight the strength of our diversified portfolio and the growth momentum from our Faster, Stronger and Betterbusiness aspirations, substantial investments in innovation, marketing, manufacturing and go-to-market capacity were made in 2019, while maintaining disciplined capital allocation. To further strengthen compensation programs with our accelerated growth imperative, the Compensation Committee approved a series of changes effective for the 2020 performance yearas we continued to further strengthen the link between pay and performance as described later in this Proxy Statement.demonstrate resiliency.
2019 PepsiCo Performance Highlights
PepsiCo delivered solid operating performance in 2019. To incentivize executive officers to deliver sustainable long-term value to shareholders, compensation is heavily weighted towardsmeasured against key metrics which are critical for the achievementexecution of the Company’s strategy based on targets set at the beginning of the year. Highlights of our 2021 performance goals that are aligned with the following externally reported non-GAAP measures.[6]include:
| | Organic Revenue Growth[5] | | | | | Core Constant
Currency EPS Growth[5] | | | | | Free Cash Flow
Excluding Certain Items[5] | | |
| | | | | | | | | | | |
| | 9.5% | | | | 12% | | | | $8.1 Billion | |
| | | | | | | | | | | | | | |
| | | Organic Revenue Growth[6]TSR | | | | |
Core Constant Currency EPS
Performance[6]Cash Returned to Shareholders | | | |
| | | | | | | | |
| | 20.5% | | | | Free Cash Flow[6]$5.9 Billion | | |
| | | | | | | | | | | |
| 4.5%
Goal: 4.0%[7] | | | | | -1%
Goal: Approximately -1% | | | | | $5.6B
Goal: Approximately $5.0B | | |
| | | | | | | | | | | | | |
Our TSR reflects our strong 2019 results, delivering 27.4% return to shareholders, aligned with the median of our proxy peer group. |
Furthermore, we made significant progress in advancing key strategic priorities throughout 2019:
PepsiCo Compensation Principles
Our executive compensation programs are designed to align the interests of our executive officers with our shareholders, underpinned by the following core principles.
BETTERPay for Performance | |  | | ■ Put the majority of executive officer pay at-risk, where both short-term and long-term incentives are dependent on performance relative to predetermined goals ■ Awards granted to executive officers never vest exclusively on continued employment ■ Payout at target only when PepsiCo achieves its internal performance targets |
| Alignment withBusiness Strategy | |  | | Execution:■ Named number one ranked manufacturer by the Kantar PoweRanking® Survey for the fourth consecutive year.Tie performance objectives directly to each Faster, Stronger and Better aspiration to drive forward our vision
Brand Building:■ Stepped upTop-line and market share metrics reinforce our level of advertisingneed to be Faster, bottom-line and marketing support for our brandscapital management metrics provide a balance to 7.0% of net revenue in 2019.
| | Productivity:Delivered over $1 billion of savings in 2019, enablinghelp us be Stronger and integrating purpose into strategic business imperatives allows us to reinvestbe Better
|
| Shareholder ValueCreation | |  | | ■ Directly link pay to the achievement of performance goals designed to foster the creation of sustainable long-term shareholder value ■ Maintain stock ownership requirements for senior leadership which extend beyond employment |
| Market PayCompetitiveness | |  | | ■ Provide market-competitive programs that enable PepsiCo to attract and retain highly talented individuals ■ Reward overachievement allowing for differentiation in talent |
Delivering
Individual and
ESG Objectives | |  | | ■ Recognize the delivery of individual and strengthen our businesses.ESG goals that advance PepsiCo’s strategic business imperatives, tailored to each executive officer’s role and responsibilities Digitalization:■ Strengthened omnichannel capabilities within e-commerce,Embed goals into individual objectives which delivered nearly $2 billion in retail sales, building upon enhanced online capabilities and partnerships.
| | Sustainability:Advancedare tied to one or more of next generation agriculture, water stewardship, sustainable farming program, achieving nearly 80% sustainably-sourced direct agricultural raw materials by farmers, striving to meet 2020 objective of 100%.
People:Evolved our culture, values and ways of working with a new set of behaviors,The PepsiCo Way, to further strengthen our talent pool to achieve our mission and vision.packaging, products, climate change and/or people
|
[6]5] | To evaluate performance in a manner consistent with how management evaluates our operating results and trends, the Compensation Committee applies certain business performanceBusiness Performance metrics that are measured on a non-GAAP basis as compensation performance measures to both long-term and annual incentive awards. Please refer to Appendix A to this Proxy Statement for a description and reconciliation of these non-GAAP financial measures relative to reported GAAP financial measures, and to pages 57-6243-48 and 64-6651 of PepsiCo’s 20192021 Annual Report on Form 10-K for the fiscal year ended December 28, 201925, 2021 for a more detailed description of the items excluded from these measures. |
| PEPSICO 2022 PROXY STATEMENT | 49 |
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Executive Compensation
Impact of 2021 PepsiCo Performance on CEO Pay
Chairman and CEO Performance Summary
The Board of Directors evaluates the performance of Mr. Laguarta through a rigorous assessment of achievements relative to predetermined operational measures established by the Compensation Committee at the beginning of the year, with adjustments for individual performance. The annual incentive is fully at-risk based on performance and can range from 0% to 200% of target.
For 2021, Mr. Laguarta’s annual incentive was determined by reference to the Business Performance metrics and Business Results under the “2021 Annual Incentive Award” section beginning on page 55 of this Proxy Statement, with primary focus on achievement of predetermined goals established at the beginning of the year for each of the following measures:
| ■ | Organic Revenue Growth[6] |
| ■ | Free Cash Flow Excluding Certain Items[6] |
| ■ | Relative Competitive Performance |
| ■ | Core Constant Currency Net Income Growth[6] |
In addition to the Business Performance metrics, the Compensation Committee considered Mr. Laguarta’s individual performance by assessing his progress relative to PepsiCo’s short-term and long-term business strategy with an emphasis on the delivery of our aspirations to be Faster, Stronger and Better for our associates, communities, consumers, customers, planet and shareholders.
In 2021, Mr. Laguarta provided strong strategic leadership in an ongoing challenging environment to drive PepsiCo to exceed its financial goals, while remaining focused on long-term value creation for its shareholders and prioritizing the safety and well-being of associates. Under his direction, Organic Revenue Growth accelerated at its fastest pace since the implementation of the Faster, Stronger and Better strategic framework in 2019. Financial, operational and individual performance highlights under Mr. Laguarta’s leadership in 2021 include:
Faster 
| | ■ Delivered Organic Revenue Growth[7] of 11% in International divisions and 8% in North American divisions ■ Generated 11% Organic Revenue Growth[7] for Global Beverages, as well as 8% Organic Revenue Growth[7] for Global Convenient Foods ■ Continued expansion in both developed and developing and emerging markets, which delivered 8% and 15% Organic Revenue Growth[7], respectively ■ Drove strong marketplace performance with market share gains in key categories such as salty snacks and savory snacks in the United States ■ Led sustained business momentum in key international markets including continued gains in savory market share in Brazil, China, Turkey and Australia, as well as gains in beverages market share in China, Mexico, Poland and Thailand ■ Continued focus on innovation to strengthen our diverse portfolio, reinforced by the Frito-Lay North America business being ranked as the #1 innovation driver across salty and savory categories in 2021, as defined by IRI, and the expansion of our energy portfolio with Rockstar, Mtn Dew Energy and Starbucks TripleShot delivering more than $1 billion in estimated annual retail sales in aggregate in 2021 |
| [6] | To evaluate performance in a manner consistent with how management evaluates our operating results and trends, the Compensation Committee applies certain Business Performance metrics that are measured on a non-GAAP basis as compensation performance measures to both long-term and annual incentive awards. Please refer to Appendix A to this Proxy Statement for a description and reconciliation of these non-GAAP financial measures relative to reported GAAP financial measures, and to pages 43-48 and 51 of PepsiCo’s 2021 Annual Report on Form 10-K for the fiscal year ended December 25, 2021 for a more detailed description of the items excluded from these measures. |
| [7] | PepsiCo updated its initial Organic Revenue Growth guidance in the third-quarter 2019 earnings release from a target growth rate in Organic Revenue of 4.0% to meeting or exceeding 4.0% growth over prior year. |
| PEPSICO 2020 PROXY STATEMENT 43 |
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Executive Compensation
PepsiCo’s executive compensation programs are designed to align the interests of our executive officers with our shareholders:
■ | We provide market-competitive programs that enable PepsiCo to attract and retain highly talented individuals. |
■ | Pay is directly linked to the achievement of performance goals designed to foster the creation of sustainable long-term shareholder value. |
■ | Our pay-for-performance principles dictate that our executive officers should only receive target payouts when PepsiCo achieves its financial goals. For this reason, our Compensation Committee sets certain financial targets for incentive pay that are aligned with external guidance. |
Impact of 2019 PepsiCo Performance on CEO Pay
Chairman and CEO Performance Summary
The Board of Directors evaluates the performance of Mr. Laguarta through a holistic assessment of PepsiCo’s operating results and his progress against PepsiCo’s strategic priorities, with a heavy emphasis on performance versus the predetermined and objectively measured financial goals approved by the Compensation Committee at the beginning of the year. Upon Mr. Laguarta’s appointment to Chairman of the Board in February 2019, he received no salary adjustment or additional compensation.
In his first complete fiscal year as CEO, Mr. Laguarta provided strategic leadership in a highly competitive environment to drive PepsiCo to achieve strong performance that met or exceeded each of the full-year financial targets we communicated to shareholders at the beginning of the year. At the same time, Mr. Laguarta made significant progress towards PepsiCo’s goal of beingFaster, Stronger and Betterfor our shareholders, customers, consumers, partners and communities, while caring for our planet and inspiring our associates.
Performance highlights under Mr. Laguarta’s leadership in 2019 include:
Operational
| | ■Achieving the highest rate of Organic Revenue Growth[8]since 2015, driven by growth across North American and international businesses
■Rolling-out innovative products that contributed to top-line growth, such as Gatorade Zero, Mountain Dew AMP Game Fuel and Doritos Flamin’ Hot
■Executing four consecutive quarters of net revenue growth for trademark Pepsi, delivering our best share performance versus the competition in three years
■Accelerating portfolio expansion with double-digit net revenue growth for LIFEWTR and Propel, as well as high single-digit net revenue growth for Pure Leaf Tea and Starbucks Ready-to-Drink beverages
■Delivering over $1 billion of productivity savings in 2019, leveraging new technology and business models to further simplify, harmonize and automate processes
|
|
|
Leadership
| | ■Receiving the top 2 rankings disclosed in the 2019 U.S. Advantage Survey Core Food Multichannel Report reflecting outstanding product quality, supply chain operations and innovative growth strategies for both snack and beverage businesses
■Leading PepsiCo through the acquisition of CytoSport, the maker of Muscle Milk, to expand our presence in sports nutrition and broaden our portfolio
■Delayering of our organization with leaders of key businesses and geographies reporting directly into the CEO, resulting in improved line-of-sight and efficiency
■Completing refranchising of certain bottling operations in India with minimal disruption to the business
|
|
|
People and
Planet
| | ■Reinforcing the importance of cultural integrity, being recognized as one of the World’s Most Ethical Companies by the Ethisphere Institute, one of only three honorees in the food, beverage and agriculture industry for the 13th consecutive year in 2019
■Demonstrating our commitment to becomingBetterby appointing PepsiCo’s first ever Chief Sustainability Officer
■Facilitating PepsiCo’s first Green Bond offering, generating almost $1 billion in net proceeds, to help fund a series of key initiatives to advance PepsiCo’s sustainability agenda
■Improving operational water-use efficiency at plants in high water risk areas, representing 4% progress during 2019 toward our 2025 water-use efficiency goal
|
|
|
____________________
[8] | Please refer to Appendix A to this Proxy Statement for a description and reconciliation of these non-GAAP compensation performance measures relative to reported GAAP financial measures. |
44 50 | PEPSICO 20202022 PROXY STATEMENT | |
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Executive Compensation
Stronger 
| | ■ Positioned juice businesses for future success by entering into an agreement with PAI Partners to sell Tropicana, Naked and other select juice brands across North America and an irrevocable option to sell certain juice businesses in Europe, while retaining a 39 percent non-controlling interest in a newly formed joint venture. The divestiture was completed in 2022 ■ Expanded our GBS platform, delivering over $1 billion of productivity savings in 2021 and successfully executed against our major transformation initiatives, while continuing to build new automated capabilities to enable us to reinvest in our businesses ■ Took decisive actions and made numerous investments to advance our digitalization efforts to better leverage technology and data analytics to capture data at a more granular level, as well as achieved progress against our global next generation commercial capabilities in our e-Commerce, Net Revenue Management and Demand Accelerator functions ■ Provided leadership to deliver positive organizational health survey results with engagement scores holding steady or better than pre-pandemic periods ■ Advanced PepsiCo’s reputation as an employer of choice, proudly recognized by Forbes as one of America’s Best Large Employers in 2021, by Comparably as the recipient of the Best Global Culture in 2021 and by Ethisphere as one of the World’s Most Ethical Companies for a 15th consecutive year in 2021 |
Better 
| | ■ Launched pep+ which is a fundamental transformation of what we do and how we do it: from sourcing ingredients and making and selling our products in a more sustainable way, to leveraging our more than one billion connections with consumers each day to take sustainability mainstream and engage people to make choices that are better for themselves and the planet (with additional information on our pep+ achievements highlighted on pages 39-40 of this Proxy Statement) ■ Took action to continue building a circular and inclusive value chain with a goal to cut virgin plastic in our packaging by 50% by 2030 against a 2020 baseline, providing leadership to launch 100% recycled polyethylene terephthalate Pepsi bottles in Spain, and continuing to move our vision forward by making a $15 million investment in Closed Loop Partners’ Leadership Fund to strengthen recycling infrastructure and build circular supply chains that keep materials out of landfills ■ Increased women’s managerial representation globally through continued efforts to recruit, develop and retain women via targeted efforts like our Transformational Leadership Program and our Women’s Inclusion Network and Women of Color Employee Resource Groups, as well as our continued support of female-founded businesses with Stacy’s Rise Project ■ Continued to deliver on our more than $570 million Racial Equality Journey initiative, demonstrating meaningful progress toward our U.S. Black and Hispanic 2025 managerial representation ambition and launching the $50 million Juntos Crecemos platform aimed at strengthening Hispanic-owned businesses across the United States ■ Made progress with the PepsiCo Foundation Black Restaurant Accelerator Program designed to provide Black restaurant owners in the United States with capital, technical assistance and mentorship services ■ Supported additional underserved communities including #StrongerTogether efforts for the Asian-American Community, our You Belong Here campaign for individuals with disabilities and our Pride Month celebrations around the world such as our efforts in Mexico and Brazil with Doritos Rainbow ■ Partnered with the PepsiCo Foundation to roll out a $40 million scholarship and professional mentoring program to support Black and Hispanic aspiring and graduating community college students, initially launched in Dallas, Westchester, Houston and Chicago with plans to expand the program to sixteen additional cities ■ Awarded scholarships to the first 25 recipients through PepsiCo’s S.M.I.L.E. (Success Matters in Life & Education) initiative to help them transition from 2-year to 4-year colleges and universities, of whom more than 50% are Hispanic |
| PEPSICO 2022 PROXY STATEMENT | 51 |
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Executive Compensation
Chairman and CEO Pay Decisions
InWhen Mr. Laguarta was appointed CEO in 2018, the Board of Directors took numerous factors into consideration to determine his compensation, including compensation for newly-appointed CEOs and target pay of CEOs of our peer group. The Board recommended to place Mr. Laguarta’s total compensation below the median of peer group CEO compensation to provide room for future increases in target compensation assuming sustained performance and demonstrated leadership.
As disclosed in the 2021 Proxy Statement, in recognition of Mr. Laguarta’s 2020 achievements duringand to move his compensation closer to market, the 2019 fiscal year,Board of Directors approved a 3% increase to his base salary effective February 2021. To further recognize Mr. Laguarta’s sustained performance and leadership since becoming CEO and to ensure appropriate market pay competitiveness aligned with PepsiCo’s pay philosophy, the Board approved an annual salary of $1.5$1.625 million for 2020,2022, a 20194.8% increase over 2021, a 2021 annual cash incentive of $3.1$6.01 million and a 20202022 LTI award with a grant date value of $12.25$14.25 million. The actual payout Mr. Laguarta will realize on his 20202022 LTI award will depend upon achievement of Organic Revenue Growth, Core Constant Currency EPS PerformanceGrowth, Organic Revenue Growth and Relative TSR Performance targets established by the Compensation Committee for the 2020-20222022-2024 performance period.
Chairman and CEO Pay-for-Performance Alignment
The PepsiCo TSR shown in the table below illustrates the year-to-year return, including stock price appreciation and reinvested dividends, on PepsiCo’s Common Stock on a calendar year basis, indexed to a 20132017 base year. As a comparison, the median TSR generated by PepsiCo’s peer group is depicted below, indexed to a 20132017 base year. The table also illustrates PepsiCo’s year-to-year Core Constant Currency EPS PerformanceGrowth(2)on a fiscal year basis, adjusted for payout linked to our incentive plans and indexed to a 20132017 base year.
| (1) | The above chart is prepared on a different basis than the 20192021 Summary Compensation Table on page 6169 of this Proxy Statement. SEC rules require disclosure of stock-settled awards in the year granted and disclosure of cash-settled awards in the year in which the relevant performance criteria are satisfied, whether or not payment is actually made in that year. Consistent with these rules, Mr. Laguarta’s 20192021 compensation reflected in the 20192021 Summary Compensation Table includes the Performance Stock Units (“PSUs”) granted in 20192021 and Long-Term Cash (“LTC”) Awardsawards granted in 2017,2019, which is based on performance over the 2017-20192019-2021 performance period and paid out in March 2020.2022. |
| (2) | Please refer to Appendix A to this Proxy Statement for a description and reconciliation of this non-GAAP compensation performance measure relative to the reported GAAP financial measure. In calculating this compensation performance measure, PepsiCo’s 2020 Core Constant Currency EPS Growth was adjusted to exclude certain charges taken as a result of COVID-19 and PepsiCo’s 2018 Core Constant Currency EPS PerformanceGrowth was adjusted to exclude certain gains associated with the sale of assets and insurance claims and settlement recoveries and PepsiCo’s 2016 Core Constant Currency EPS Performance was adjusted to exclude the impact of the Venezuela deconsolidation that occurred in 2015. recoveries. |
| (3) | TSR is based on stock price appreciation and reinvested dividends of PepsiCo’s peer group in effect for each performancecalendar year. |
| (4) | LTI awards for the 20192021 performance year consist of PSUs (66%) and LTC Awardsawards (34%) at target under our current LTI program design (further described in the “2019“2021 Long-Term Incentive Awards” section beginning on page 5262 of this Proxy Statement) and differ from the value reported in the 20192021 Summary Compensation Table under the SEC rules. The tableabove chart excludes the special PSU award that was granted to Mr. Laguarta in 2018. |
| PEPSICO 20202022 PROXY STATEMENT 45 |
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Executive Compensation
Strong Compensation Governance
The Compensation Committee oversees the executive compensation programprograms and evaluates the programprograms against competitive practices, legal and regulatory developments and corporate governance trends. The Compensation Committee has incorporated the following market-leading governance features into our program.programs.
| | | | | | |
| What We Do | | | |  What We Don’t Do
| |
|  policy:provisions:PepsiCo has a robustclawback policy,robust clawback provisions, providing the right to cancel and recoup granted, earned and vested awards, wholly or partly, with a look-back period in the event of misconductDouble trigger vesting:LTI awards provide for accelerated vesting only if an executive is involuntarily terminated without cause or resigns for good reason within two years of a change-in-controlchange in control or if the awards are not assumed by the acquirer Responsible share usage:Share utilization is below our peer group median due to our responsible usage of shares under the LTI Plan Rigorous stock ownership requirements:Executive officers are required to own PepsiCo stock worth two to eight times their base salary (depending on position), with holding requirements extended for 12 months beyond employment Challenging incentive targets:Targets for performance metricsincentive awards are aligned with certain financial goals communicated to shareholdersset at the beginning of the yearperformance period taking into consideration our business strategy, operating goals and external guidance Risk mitigation:Our compensation programs include balanced performance metrics, clawback provisions and an oversight process to identify risk | | | |  What We Don’t Do  No employment agreements:None of our executive officers have an employment agreement, separation or change-in-controlchange in control agreement
No supplemental executive retirement plans:WedoWe do not have any supplemental executive retirement plans, as our NEOs participate in the same pension programs as other similarly situated employees No tax gross-ups:We do not provide tax gross-ups on perks or benefits except in the case of standard expatriate tax equalization benefits available to all similarly situated employees No hedging and pledging:Under our insider trading policy,Insider Trading Policy, executive officers are prohibited from hedging and pledging Company stock No resetting of financial targets:We do not reset internal incentive targetsgoals used to determine performance-based award payouts for executive officers once established at the beginning of the performance period No repricing:We do not reprice stock option awards and our plans expressly forbid exchanging underwater options for cash | |
| | | | | | |
Engagement with Our Shareholders
PepsiCo has a longstanding practice of regularly engaging with shareholders year-round. Every year, during the two-month period before the Annual Meeting of Shareholders, we generally contact our 75 largest shareholders who in 2021 represented approximately 47% of our outstanding shares of Common Stock, offering to discuss a broad range of topics, including executive compensation. In 2019, we contacted shareholders representing approximately 48% of our outstanding shares of Common Stock. Subsequent to the Annual Meeting of Shareholders, we continue our outreach efforts to develop a better understanding of the feedback received from shareholders and issues important to our shareholders.
Our Compensation Committee considered shareholder feedback in its annual review of program components, targets and payouts to maintain awareness of emerging executive compensation practices, ensure the continued strength of our pay-for-performance alignment and sustain strong shareholder support.
| | | | |
| |  
At our 20192021 Annual Meeting, shareholders again showed strong support for our executive compensation programs with 93%92% of the votes cast approving our advisory resolution. | | | To strengthen the link between PepsiCo’s new business strategy and incentives, the Compensation Committee implemented several changes to the overall executive compensation program in 2020.These changes are described on page 54effective with the 2020 performance year. The Compensation Committee determined to maintain the current construct of this Proxy Statement.
| the program for 2021. |
| | | | |
46 PEPSICO 2020 PROXY STATEMENT | |
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Executive Compensation
Our Named Executive Officers
This Compensation Discussion and Analysis describes the compensation of the following NEOs:
Name and Title | | |
Ramon L. Laguarta | | Chairman of the Board and CEO, PepsiCo(1) |
Hugh F. Johnston | | Vice Chairman, Executive Vice President (“EVP”) and Chief Financial Officer (“CFO”), PepsiCo |
Kirk Tanner | | CEO, PBNA(2) |
Silviu Popovici | | CEO, Europe(3) |
Ronald Schellekens | | EVP and Chief Human Resources Officer (“CHRO”), PepsiCo |
(1) | Mr. Laguarta assumed the role of Chairman of the Board in February 2019. |
(2) | Mr. Tanner was promoted to CEO, PBNA in January 2019. |
(3) PEPSICO 2022 PROXY STATEMENT | Mr. Popovici was promoted to CEO, Europe Sub-Saharan Africa (“ESSA”) in February 2019, and following a change in our management reporting structure during the fourth quarter of 2019, subsequently transitioned to the role of CEO, Europe.53 |
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Executive Compensation
Components of Our Executive Compensation Program
The primary components of our executive compensation programs, summarized in the following table, ensure that pay is directly linked to the creation of sustainable long-term shareholder value.
| Type | | Component | | | | Objective | | Performance Metrics | | Terms |
Fixed
Compensation | | Base
Salary | |  | | Base Salary
|  | | ■Provide market-competitivemarket- competitive fixed pay reflective of an executive officer’s role, responsibilities and individual performance in order to attract and retain top talent ■ Ensure appropriate balance between internal pay equity and external market practice for executives with a comparable scope of responsibilities | | ■Subject to annual adjustment based on market data, internal equity, job responsibilities and individual performance ■ Increases not automatic or guaranteed | | ■Paid per local practice |
Performance-Based Performance-
Based
Compensation
| | Annual
Incentive | |  | | Annual Incentive
|  | | ■Drive Company and business unit performance, including revenue growth, year- over-year market share change, profitability and free cash flow ■Deliver individual performance against specific business imperatives | | ■Performance measures linked to company-wideCompany-wide performance or business unit performance depending on the NEO’s position and scope of responsibilities ■Individual performance tied to PepsiCo’s strategic imperatives within the scope of the executive officer’s responsibilities | | ■Paid in cash in the 1st quarter of the year following the performance period ■Must be employed by the Company as of the end of the fiscal year to be eligible for a payout, unless retirement-eligibleretirement eligible, capped at 200% of target for the Chairman and CEO and 300% of target for all other NEOs |
| LTI | |  | | LTI
|  | | ■Align executive officers’ rewards with returns delivered to PepsiCo’s shareholders via sustained financial results and shareholder returns ■Incentivize achievement of long-term value creation through stock performance objectives and critical financial and operating performance objectives over a three-year period | | ■Performance measures linked to three-year goals (for 2019,2021-2023, measures were Core Constant Currency EPS Performance, Core Net ROIC ImprovementGrowth, Organic Revenue Growth and TSR relative to proxy peers) | | ■Annual awards are granted on or around March 1 ■Awards generally vest after three years if the executive is still employed by the Company, unless retirement-eligible,or upon retirement if retirement eligible, and subject to the achievement of performance criteria, capped at 200% of target |
| PEPSICO 20202022 PROXY STATEMENT 47 |
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Executive Compensation
20192021 Target Pay Mix for Named Executive Officers
To align pay levels for NEOs with the Company’s performance, our pay mix places the greatest emphasis on performance-based incentives.
| CHAIRMAN AND CEO TARGET PAY MIX | | NEO AVERAGE TARGET PAY MIX
(EXCLUDING CHAIRMAN AND CEO) |
| Performance-Based Compensation 91% | | Performance-Based Compensation 84%85% |
  | |   |
Base Salary
The Compensation Committee annually reviews the salaries of our NEOs, as annual salary increases are not automatic or guaranteed. In January 2019, Mr. Tanner’sWilliams’ base salary was increased by 7%14% in February 2021 to recognizeaddress external and internal pay competitiveness for his promotion to CEO, PBNA. Mr. Popovici’s base salary was increased by 7% effective February 2019 to recognize his appointment to CEO, ESSA.role and responsibilities.
The base salaries paid to our NEOs in fiscal year 20192021 are presented in the 20192021 Summary Compensation Table on page 6169 of this Proxy Statement.
| Name | | Base Salary as
of 2018 Fiscal
Year-End
($000) | | Base Salary as
of 2019 Fiscal
Year-End
($000) | | Percentage
Increase | | Base Salary as
of 2020 Fiscal
Year-End
($000) | | Base Salary as
of 2021 Fiscal
Year-End
($000) | | Percentage
Increase |
| Ramon L. Laguarta | | 1,300 | | 1,300 | | 0% | | 1,500 | | 1,550 | | 3% |
| Hugh F. Johnston | | 1,000 | | 1,000 | | 0% | | 1,000 | | 1,000 | | 0% |
| Silviu Popovici | | | 750 | | 750 | | 0% |
| Kirk Tanner | | 750 | | 800 | | 7% | | 800 | | 800 | | 0% |
| Silviu Popovici | | 700 | | 750 | | 7% | |
| Ronald Schellekens | | 675 | | 675 | | 0% | |
| Steven Williams | | | 700 | | 800 | | 14% |
Effective February 2020, Mr. Laguarta’s base salary increased to $1.5 million and Mr. Schellekens’ base salary increased to $700,000 as part of the Compensation Committee’s annual review of pay competitiveness.
20192021 Annual Incentive Award
We provide annual cash incentive opportunities to our NEOs under the PepsiCo, Inc. Executive Incentive Compensation Plan (“EICP”). Awards granted under the EICP are designed to drive Company, business unit and individual performance.
When determining the actual annual incentive award payable to each executive officer, the Compensation Committee considers both business and individual performance. The graphic below illustrates the weightingcalculation of performance metricsthe annual incentive award for each NEO, with the exception ofapart from the Chairman and CEO, whose annual cash awardcompensation is determined by the Compensation Committee and independent members of the Board based on a holistic assessment of the Company’s performance and his leadership.discussed earlier.
48 PEPSICO 20202022 PROXY STATEMENT | |
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Executive Compensation
Business Performance Metrics.Our annual incentive program applies metrics that executives directly influence to ensure a link between annual performance and actual incentive payments. Compensation performance measures are selected taking our business strategy into consideration to drive effective execution and delivery of our operating goals. The 2019Compensation Committee may make adjustments from time to time to facilitate year-over-year comparability of historical business performance and trends, which is consistent with how management evaluates operating results. The 2021 performance metrics which make up the Business Performance weightingcomponent of the annual incentive award are listed in the table below for each NEO:
| Name | | Ramon L. Laguarta
PepsiCo | | Hugh F. Johnston
PepsiCo | | Silviu PopoviciKirk Tanner
Europe
PBNA | | Kirk TannerSilviu Popovici
PBNA
Europe(1) | | Steven WilliamsRonald Schellekens
PFNA(1)
PepsiCo |
Organic Revenue Growth[9] | | ● | | ● | | ● | | ● | | ● |
Free Cash Flow Excluding Certain Items[9] | | ● | | ● | | ● | | ● | | ● |
Core Constant Currency EPS Performance[9]Growth | | ● | | | | | | | | |
Core Net ROIC Improvement[9]Relative Competitive Performance | | ● | | ● | | ● | | ● | | ● |
Core Constant Currency Net
Income Growth[9] | | | | ● | | | | | | ● | | | | | | |
Core Constant Currency Operating
Profit Growth[9] | | | | | | ● | | ● | | ● |
| (1) | Annual incentive award for Mr. Popovici’sWilliams is based on Frito-Lay North America (“FLNA”) and Quaker Foods North America (“QFNA”) compensation performance was measured relative to business performance of ESSA. From an external reporting perspective, ESSA was realigned as Europe during the fourth quarter of 2019 and no longer includes Sub-Saharan Africa.measures. |
Business Results.In determining annual incentive awards for 2019,2021, the Compensation Committee consideredassessed actual Company performance against the pre-established performance targets noted in the table below. Certain performancePerformance targets for our NEOs wereare set at levels aligned with external guidance communicated at the beginning of 2019.the year taking external guidance into consideration. This ensures that our NEOs are motivated to deliver on our financial goals communicated to shareholders. We planned a decline for certain
| Performance Metrics[8] | | Performance Targets | | Actual Results |
| Organic Revenue Growth | | 4.5% | | 9.5% |
| Free Cash Flow Excluding Certain Items | | $7.2 billion | | $8.1 billion |
| Core Constant Currency EPS Growth | | 8% | | 12% |
| Core Constant Currency Net Income Growth | | 7.7% | | 11% |
Business unit performance targets in 2019 due to anticipated investments in innovation, marketing, manufacturing and go-to-market capacity, as we believe that our significant increase in investments will position us to deliver sustainable long-term growth for our shareholders.
| Performance Metrics[10] | | Communicated Goals | | Performance Targets | | Actual Results |
| Organic Revenue Growth | | 4.0%(1) | | 4.6% | | 4.5% |
| Free Cash Flow Excluding Certain Items(2) | | Approximately $5.0B(2) | | $6.1B(2) | | $6.7B(2) |
| Core Constant Currency EPS Performance | | Approximately -1% | | -1% | | -1% |
| Core Net ROIC Improvement | | (3) | | -150bps | | -250bps(4) |
| Core Constant Currency Net Income Growth | | (5) | | -2.3% | | -2% |
(1) | PepsiCo updated its financial guidance during the third-quarter 2019 earnings release from a target growth rate in Organic Revenue of 4.0% to meeting or exceeding 4.0% over prior year. |
(2) | Communicated Goal is the financial objective externally communicated at the beginning of the year (Free Cash Flow). Performance Targets and Actual Results are the compensation performance measure (Free Cash Flow Excluding Certain Items). |
(3) | PepsiCo expects long-term financial performance of increasing core net returns on invested capital. |
(4) | Includes impact of SodaStream acquisition. |
(5) | PepsiCo does not publicly disclose net income goals because such disclosure would result in competitive harm to PepsiCo. |
In determining annual bonus payouts, the Compensation Committee considered actual business results relative to the performance targets outlined in the table above, in addition to other quantitative and qualitative factors including the impact of share repurchases on financial results.
PepsiCo’s business unit performance targets,Relative Competitive Performance expectations, which were intended to be challenging, are not disclosed because such disclosure would result in competitive harm to PepsiCo.the Company. These targets were set at levels necessary to deliver our consolidated financial goals communicatedand generate value for shareholders.
In determining final bonus payouts, the Compensation Committee considers actual business results relative to shareholders.the performance targets outlined in the previous table, in addition to other quantitative and qualitative factors. The Compensation Committee engages in a robust and rigorous review of any exclusions made from results of operations for compensation purposes. These adjustments may be positive or negative to ensure that executives are neither rewarded nor penalized for extraordinary factors outside of their control.
Relative Competitive Performance (“RCP”). In addition to the financial performance measures outlined above, RCP is a measure that assesses year-over-year market share change in applicable food and beverage categories such as savory, liquid refreshment beverages, cereals and/or modern dairy, based on market share data reported by independent market research leaders and our analysis of other relevant factors, including data availability, data quality, strategic importance to a category, consumer perception and brand equity.
| [8] | Please refer to Appendix A to this Proxy Statement for a description and reconciliation of these non-GAAP financial measures relative to reported GAAP financial measures, and to pages 43-48 and 51 of PepsiCo’s 2021 Annual Report on Form 10-K for the fiscal year ended December 25, 2021 for a more detailed description of the items excluded from these measures. |
| 56 | PEPSICO 2022 PROXY STATEMENT |
Table of Contents
Executive Compensation
Individual Performance Metrics.The Compensation Committee evaluates individual performance based on metricsobjectives related to an individual’s contribution to PepsiCo’s strategic business imperatives, such as improving operating efficiencies, driving innovation, increasing customer satisfaction, enhancing environmental sustainability and managing and developing a diverse and talented workforce. The strategic business imperatives are intended to be challenging. They can be both qualitativequantitative and quantitativequalitative and vary for each executive officer.
As we continue to integrate purpose into our business strategy and brands through pep+, executive officers are held accountable for strategic imperatives which drive action and progress towards our long-term sustainability goals. As such, executive officers have ESG goals incorporated into their individual performance objectives, generally tailored to the scope of their respective responsibilities.
The Compensation Committee thoroughly reviews all accomplishments for the performance year, evaluating each executive officer’s progress towards the achievement of our broader sustainability goals as described in PepsiCo’s annual Sustainability Report. Holistic accomplishments pertaining to each stage of our value chain are considered including, but not limited to, next generation agriculture, water stewardship, sustainable packaging, products, climate change and people.
These outcomes are taken into consideration by the Compensation Committee, in conjunction with the executive officer’s broader contributions to PepsiCo’s business imperatives, translating into his or her Individual Performance Multiplier, which ranges from 0% to 150% to allow for enhanced differentiation in payouts.
| PEPSICO 2022 PROXY STATEMENT | 57 |
Table of Contents
Executive Compensation
NEO Performance Summary. In determining annual incentive awards for 2021, the Compensation Committee considered the following accomplishments by NEOs, other than the Chairman and CEO, who is discussed earlier.
| | NEO Performance | | 2021 Compensation ($000) |
Hugh F. Johnston Vice Chairman, EVP
and CFO, PepsiCo | | FASTER: ■ Enabled PepsiCo to increase its dividend for the 49th consecutive year in 2021, returning $5.9 billion in cash to shareholders through $5.8 billion of dividends and $0.1 billion in share repurchases, prioritizing investor returns ■ Advanced journey to gradually upgrade and harmonize systems through the expansion of the duration and scope of PepsiCo’s 2019 productivity plan designed to deliver at least $1 billion in annual savings through 2026 STRONGER: ■ Drove process and information technology standardization across global key platforms with critical, large scale projects, including the implementation of tools tied to go-to-market modernization, our value chain and digital planning ■ Built the Finance function of the future globally by operationalizing new ways of working, in tandem with developing key capabilities BETTER: ■ Continued to effectively manage proceeds of PepsiCo’s first Green Bond to optimize the achievement of our long-term sustainability goals ■ Managed our capital allocation priorities and appropriated annual funding operating expenses associated with our sustainability initiatives | | 
Mr. Johnston’s 2021 Annual Incentive Award was determined in accordance with the performance measures previously disclosed and the accomplishments highlighted to the left. Mr. Johnston’s 2021 LTI Award was granted in March 2021 in the form of 66% PSUs and 34% LTC. |
| | | | |
| | NEO Performance | | 2021 Compensation ($000) |
Silviu Popovici
CEO, Europe | | FASTER: ■ Enabled Net Revenue growth in key geographies, such as Southwest Europe, Northwest Europe and the United Kingdom ■ Held or gained share in key markets, highlighted by savory share expansion in Turkey and Belgium, and beverages share expansion in Poland STRONGER: ■ Invested in our systems, data, digitalization and strategic capabilities to build commercial capabilities in Europe, leveraging our global toolkit to be best-in-class ■ Successfully expanded digital supply chain and smart factory pilots BETTER: ■ Invested in 100% renewable electricity in nine markets across Europe and scaled efforts to use agricultural waste to make fertilizer in Turkey and the United Kingdom with our circular potatoes program ■ Pledged in the European Union to reduce added sugars in our soft drinks by 50% by 2030 and grow our more nutritious snacking portfolio to a $1 billion business over the same period | | 
Mr. Popovici’s 2021 Annual Incentive Award was determined in accordance with the performance measures previously disclosed and the accomplishments highlighted to the left. Mr. Popovici’s 2021 LTI Award was granted in March 2021 in the form of 66% PSUs and 34% LTC. |
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Table of Contents
Executive Compensation
| | NEO Performance | | 2021 Compensation ($000) |
Kirk Tanner
CEO, PBNA | | FASTER: ■ Delivered Organic Revenue Growth[9] of 10% for PBNA, while expanding margins through disciplined capital management ■ Gained market share in the carbonated soft drink category with Mountain Dew and in the ready-to-drink tea, water and sparkling water categories ■ Posted solid growth across all channels, led by strong double-digit Net Revenue growth in foodservice, large format and convenience and gas channels STRONGER: ■ Invested in innovation, pricing and execution which resulted in many key brands performing exceptionally well, reinforced by double-digit Net Revenue growth in Pepsi, Mountain Dew, Gatorade, Starbucks, LIFEWTR, bubly and Aquafina ■ Provided critical opportunities and advanced succession planning to support the development of PBNA leadership BETTER: ■ Expanded offerings of Zero Sugar products in the carbonated and non-carbonated categories to offer more choices to our consumers ■ Made progress towards product sustainability goals, including the development of a holistic Gatorade sustainability product pipeline | | 
Mr. Tanner’s 2021 Annual Incentive Award was determined in accordance with the performance measures previously disclosed and the accomplishments highlighted to the left. Mr. Tanner’s 2021 LTI Award was granted in March 2021 in the form of 66% PSUs and 34% LTC. |
| | | | |
| | NEO Performance | | 2021 Compensation ($000) |
Steven Williams
CEO, PFNA | | FASTER: ■ Delivered Organic Revenue Growth[9] of 7% for FLNA, coupled with flat growth for QFNA, lapping significant surge in consumer demand from the prior year ■ Accelerated solid growth across many channels, including strong Net Revenue growth across the large format, convenience and gas, foodservice and e-commerce channels ■ Delivered double-digit Net Revenue growth for Ruffles and high-single-digit Net Revenue growth for Doritos STRONGER: ■ Continued focus on consumer-centric innovation such as Doritos 3D, Cheetos Crunch Pop Mix, Lay’s Kettle Cooked Extra and Ruffles Double Crunch ■ Implemented revenue management actions to mitigate the impact of higher commodity, transportation and other supply chain costs BETTER: ■ Promoted nutritious snacking alternatives such as Simply, Baked and lightly salted offerings ■ Invested in small Black and Hispanic businesses to continue supporting our Racial Equality Journey initiative ■ Enhanced organizational design and compensation mechanisms to support 2021 progress toward the achievement of pep+ sustainability objectives for FLNA and QFNA | | 
Mr. Williams received a 14% base salary increase in February 2021. Mr. Williams’ 2021 Annual Incentive Award was determined in accordance with the performance measures previously disclosed and the accomplishments highlighted to the left. Mr. Williams’ 2021 LTI Award was granted in March 2021 in the form of 66% PSUs and 34% LTC. |
| [9] | Please refer to Appendix A to this Proxy Statement for a description and reconciliation of these non-GAAP compensation performance measures relative to reported GAAP financial measures. |
[10] | Please refer to Appendix A to this Proxy Statement for a description and reconciliation of these non-GAAP financial measures relative to reported GAAP financial measures, and to pages 57-6243-48 and 64-6651 of PepsiCo’s 20192021 Annual Report on Form 10-K for the fiscal year ended December 28, 201925, 2021 for a more detailed description of the items excluded from these measures. |
| PEPSICO 20202022 PROXY STATEMENT | 4959 |
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Executive Compensation
NEO Performance Summary.In determining annual incentive awards for 2019, the Compensation Committee considered the following accomplishments by NEOs, other than the Chairman and CEO, who is discussed earlier. The 2019 LTI awards granted to NEOs in March 2019 took into account 2018 performance, and were also disclosed in the Compensation Discussion and Analysis of the 2019 Proxy Statement.
| | NEO Performance | 2019 Compensation ($000) |
Hugh F. Johnston
Vice Chairman,
EVP and CFO,
PepsiCo
| | ■Enabled PepsiCo to increase its dividend for the 47th consecutive year in 2019, returning $8.3 billion in cash to shareholders through $5.3 billion of dividends and $3 billion in gross share repurchases
■Oversaw the generation of over $1 billion in savings through productivity initiatives which are integral towards the improvement of go-to-market capabilities and execution efficiency
■Maintained PepsiCo’s strong capital market structure, successful debt offerings and continued effective controls over capital spending, delivering Free Cash Flow of $6.7 billion excluding certain items[11]
■Facilitated PepsiCo’s information technology support through the successful deployment of a global business shared services solution
■Led the transformation of PepsiCo’s digital and analytical capabilities with the appointment of a newly-created Chief Data Officer position
■Achieved progress in the simplification and standardization of information technology processes and systems
| Key Decisions:
No change was made to Mr. Johnston’s total annual compensation in 2019.
|
Kirk Tanner
CEO, PBNA
| | ■Delivered Organic Revenue Growth of 3%[11] in a rapidly evolving retail market, PBNA’s fastest rate of growth since 2015
■Improved growth for Gatorade, building upon successful launch of Gatorade Zero, which delivered more than $600 million in retail sales in 2019
■Delivered a record year of innovation with more than $1 billion of cumulative retail sales for Gatorade Zero, bubly, Mountain Dew AMP Game Fuel, Pure Leaf Herbals and Starbucks Triple Energy
■Led the transformation of PBNA’s operating structure into segmented market units, each providing greater focus on meeting consumer demands and executing with local relevance
■Enhanced presence in the away-from-home channel by becoming the preferred beverage partner for JetBlue Airways, Carnival Cruise Line and Regal Cinemas
■Partnered with The Coca-Cola Company and Keurig Dr Pepper to launch the “Every Bottle Back” initiative with the objective of reducing the usage of new plastic by making significant improvements in the way material is collected, sorted and recycled
| Key Decisions:
Mr. Tanner’s base salary increased to $800,000 in connection with his promotion to CEO, PBNA in January 2019.
|
____________________
[11] | Please refer to Appendix A to this Proxy Statement for a description and reconciliation of these non-GAAP financial measures relative to reported GAAP financial measures, and to pages 57-62 and 64-66 of PepsiCo’s 2019 Annual Report on Form 10-K for the fiscal year ended December 28, 2019 for a more detailed description of the items excluded from these measures. |
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Executive Compensation
| | NEO Performance | | 2019 Compensation ($000) |
Silviu Popovici
CEO, Europe
| | ■Made good progress on improving top-line performance in ESSA, despite ongoing macroeconomic volatility in a number of key markets
■Improved market share in the majority of European markets, particularly within the beverages category in Norway and Poland and the snacks category in Belgium, Russia and Ukraine
■Launched the “Perfect Store” retail execution program aimed at implementing the best levers in the areas of portfolio, merchandising, visibility, price and promotion to achieve accelerated growth
■Supported product innovation across ESSA’s portfolio to improve consumer choices by reducing sodium and saturated fats with the introduction of Walker’s Oven Baked with Veg in the U.K. and Lay’s Oven Baked in Eastern markets
■Provided leadership in the transition of the Sub-Saharan Africa business unit to the Africa, Middle East, South Asia division
■Enhanced the sustainability agenda through changes in plastic bottle production in Spain, Russia and Romania, and product labeling in Russia, Romania and Ukraine, working towards achieving PepsiCo’s goal of 50% recycled plastic usage in bottles by 2030 across the European Union
| |
Key Decisions:
Mr. Popovici’s base salary increased to $750,000 in connection with his promotion to CEO, ESSA in February 2019.
|
Ronald Schellekens
EVP and CHRO, PepsiCo
| | ■Led succession planning process resulting from organizational changes, focused on developing and maintaining a highly skilled and diverse leadership team
■Redesigned the executive compensation programs effective 2020 in order to further enhance the link of performance-based incentives with our aspirations to becomeFaster, Stronger and Better
■Prioritized gender parity by advancing female promotional opportunities and pay equity in 70 countries that collectively make up more than 99 percent of PepsiCo’s salaried population
■Improved organizational health across all geographies with engagement results reflecting the highest levels in the last ten years
■ActivatedThe PepsiCo Way, reinforcing the values and ways of working to foster a culture where employees act like owners, with a greater sense of empowerment and accountability
■Provided leadership in the operational and cultural integration of SodaStream
| |
Key Decisions:
No change was made to Mr. Schellekens’ total annual compensation in 2019.
|
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Executive Compensation
2019 Long-Term Incentive Awards
PepsiCo’s LTI program is 100% performance-based. The design helps ensure an appropriate level of focus on successfully attaining critical operating goals and sustained appreciation in shareholder value relative to our peers.
Awards granted includeincluded two distinct components: PSUs and LTC Awards.awards. Each executive’s target grant value iswas based on his or her role. Actual grant values can bewere between 0% and 125% of target based on long-term individual performance. | |   |
Performance Stock Units
The PSUs incentivized our executive officers to focus on critical operating performance objectives that we believed translated to sustainable shareholder returns over the long-term. The PSUs paid out in PepsiCo shares, plus dividends accrued over the vesting period on earned shares.
50%
weighting | | Earnings Per Share 3-year average of annual Core Constant Currency EPS Growth rates A metric followed by shareholders that incorporates key elements of financial success, including top-line growth in revenue, expense control, the effectiveness of investments made in the business over time and bottom-line profitability. |
| | |
50%
weighting | | Return on Invested Capital 3-year cumulative increase in Core Net ROIC A metric followed by shareholders that measures the improvement in both capital spending and working capital management, enabling us to continue to improve the efficiency of our asset base. |
| | |
| Payout | | 0 - 175% of Target |
Long-Term Cash Award
The LTC award focused on relative TSR performance, strengthening alignment with long-term shareholder value creation. The LTC award was denominated and paid out in cash, reflecting PepsiCo’s responsible use of shares under our LTI program.
100%
weighting | | Relative TSR Performance TSR performance relative to our proxy peer group over a 3-year performance period. |
| 
Target payout requires us to deliver positive 3-year TSR. Linear interpolation is used when ranking falls betweenpercentages shown. |
| Payout | | 0 - 200% of Target |
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Executive Compensation
Long-Term Incentive Award Payouts
2019 PSU Payout
As a result of investments made to accelerate growth initiatives, the 2019 PSUs paid out at 87.5% of target.
3-YEAR AVERAGE CORE CONSTANT CURRENCY
EPS GROWTH[10] | | 3-YEAR CORE NET ROIC IMPROVEMENT[10] |
|  | | |  |
| ■ | PepsiCo’s three-year (2019-2021) average Core Constant Currency EPS Growth[10] compensation performance measure of 7.0% was above the maximum of 6.8% set by the Compensation Committee in March 2019 | | ■ | PepsiCo’s actual three-year (2019-2021) Core Net ROIC[10] compensation performance measure of -428bps was below the threshold of -150bps set by the Compensation Committee in March 2019 |
| ■ | In calculating this compensation performance measure, PepsiCo’s 2020 Core Constant Currency EPS Growth was adjusted to exclude certain charges taken as a result of the COVID-19 pandemic in 2020, as described in PepsiCo’s 2020 Annual Report on Form 10-K for the fiscal year ended December 26, 2020 | | ■ | In calculating this compensation performance measure, PepsiCo’s Core Net ROIC Improvement was adjusted to exclude the impact of acquisitions in 2020, including Rockstar, Pioneer Foods and Be & Cheery and to mitigate the impact of changes in foreign exchange rates from 2019 to 2021 |
| | | | |
| Name | | PSUs
Granted | | PSUs
Earned | | Payout
of Target |
| Ramon L. Laguarta(1) | | 56,897 | | 49,785 | | 87.5% |
| Hugh F. Johnston | | 35,560 | | 31,115 | | 87.5% |
| Silviu Popovici | | 17,069 | | 14,935 | | 87.5% |
| Kirk Tanner | | 17,922 | | 15,682 | | 87.5% |
| Steven Williams | | 6,847 | | 5,991 | | 87.5% |
| (1) | The PSU grant shown above excludes Mr. Laguarta’s special award which was granted in 2018 and based on different performance metrics and targets over 2018-2020 and was paid out in March 2022, described on page 63 of this Proxy Statement. |
2019 Long-Term Cash Award Payout
The 2019 LTC award paid out at 124% of target in light of our total return to shareholders, including dividends, outperforming the median of our proxy peer group over the three-year performance period.
3-YEAR RELATIVE TSR PERCENTILE VS. PROXY PEER GROUP
 | | ■ | Based on PepsiCo’s TSR of 71.5% for the three-year performance period ended on December 31, 2021, PepsiCo ranked at the 62nd percentile relative to our proxy peer group |
| | | |
| Name | | LTC Granted
($000) | | LTC Earned
($000) | | Payout
of Target |
| Ramon L. Laguarta | | 3,400 | | 4,216 | | 124% |
| Hugh F. Johnston | | 2,125 | | 2,635 | | 124% |
| Silviu Popovici | | 1,020 | | 1,265 | | 124% |
| Kirk Tanner | | 1,071 | | 1,328 | | 124% |
| Steven Williams | | 332 | | 411 | | 124% |
| [10] | Please refer to Appendix A to this Proxy Statement for a description and reconciliation of these non-GAAP compensation performance measures relative to reported GAAP financial measures. |
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Executive Compensation
2021 Long-Term Incentive Awards
As disclosed in last year’s Proxy Statement, beginning with the 2020 LTI award, PSUs are earned using 3-year Organic Revenue Growth instead of 3-year Core Net ROIC Improvement, reinforcing PepsiCo’s vision to Be the Global Leader in Beverages and Convenient Foods by Winning with pep+. To recognize the stretch nature of performance goals and to align with peer practices, the maximum PSU payout was increased to 200% of target.
The vesting of LTI awards continues to be 100% performance-based, subject to the achievement of ambitious three-year financial targets aligned with the terms and conditions of PepsiCo’s LTI program. The three-year cliff vesting provision also serves as a critical retention tool in an environment of competition for key talent.
| Awards granted include two distinct components: PSUs and LTC awards. Each executive’s target grant value is based on his or her role. | |  |
Performance Stock Units
The PSUs incentivize our executive officers to focus on critical operating performance objectives that we believe will translate to sustainable shareholder returns over the long-term. The PSUs will pay out in PepsiCo shares, plus dividends accrued over the vesting period on earned shares.
50%
weighting | | Earnings Per Share
3-year average of annual Core Constant Currency EPS PerformanceGrowth rates
A metric followed by shareholders that incorporates key elements of financial success, including top-line growth in revenue, expense control, the effectiveness of investments made in the business over time and bottom-line profitability. |
| 
| | |
50%
weighting | | |
50%
weighting | Organic Revenue Growth Return on Invested Capital
3-year cumulative increase in Core Net ROIC
average of annual Organic Revenue Growth
A metric followed by shareholders that measures the improvement in both capital spendingfocuses on accelerated top-line growth and working capital management, enabling us to continue to improve the efficiency of our asset base.enhanced shareholder returns. |
| 
| | |
| Payout | | |
Payout
| 0 - 175%200% of Target |
| | | |
Long-Term Cash Award
The LTC Awardaward focuses on relative TSR performance, strengthening alignment with long-term shareholder value creation. The LTC Awardaward is denominated and will pay out in cash, reflecting PepsiCo’s responsible use of shares under our LTI program.
0 - 200%100%
weighting | Relative TSR Performance
TSR performance relative to our proxy peer group over a 3-year performance periodperiod. |
Target payout requires us to deliver positive 3-year TSR. Linear interpolation is used when ranking falls between percentages shown. |
| Payout | 0 - 200% of Target |
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Executive Compensation
Long-Term Incentive Award Payouts
2017 PSU Payout
As a result of investments made to accelerate growth initiatives, the 2017 PSUs paid out at 75.6% of target.
3-YEAR AVERAGE CORE CONSTANT CURRENCY
EPS PERFORMANCE[12] | | 3-YEAR CORE NET ROIC IMPROVEMENT[12] |
 | |  |
■PepsiCo’s three-year (2017-2019) average Core Constant Currency EPS Performance[12]compensation performance measure of 5.1% was below the threshold of 5.3% set by the Compensation Committee in March 2017
■In calculating this compensation performance measure, PepsiCo’s 2018 Core Constant Currency EPSPerformance was adjusted to exclude certain gains associated with the sale of assets and insurance claims and settlement recoveries
| | ■PepsiCo’s actual three-year (2017-2019) Core Net ROIC[12]compensation performance measure improved from 21.5% to 24.0% over the three-year performance period, a 252bps increase that exceeded the 150bps target set by the Compensation Committee in March 2017
■In calculating this compensation performance measure, PepsiCo’s Core Net ROIC Improvement was adjusted to exclude the impact of the SodaStream acquisition in 2018 and 2019, as well as the impact of changes in foreign exchange rates from 2017 to 2019
|
| Name | | PSUs Granted | | PSUs Earned | | Payout of Target |
| Ramon L. Laguarta | | 23,491 | | 17,759 | | 75.6% |
| Hugh F. Johnston | | 32,887 | | 24,863 | | 75.6% |
| Kirk Tanner | | 18,793 | | 14,208 | | 75.6% |
| Silviu Popovici(1) | | 7,389 | | 5,586 | | 75.6% |
| Ronald Schellekens(2) | | 0 | | 0 | | Not Applicable |
(1) | In conjunction with Mr. Popovici’s promotion to President, ESSA in 2017, he is entitled to two separate PSU grants included above, vesting at different times in 2020 based on identical performance targets. |
(2) | Mr. Schellekens is not eligible for PSUs granted in 2017 as he was not an executive officer in 2017. |
2017 Long-Term Cash Award Payout
The 2017 LTC Award paid out at 102% of target in light of our total return to shareholders, including dividends, outperforming the median of our proxy peer group over the three-year performance period.
3-YEAR RELATIVE TSR PERCENTILE VS. PROXY PEER GROUP |
 | | ■Based on PepsiCo’s TSR of 42.8% for the three-year performance period ended on December 31, 2019, PepsiCo ranked at the 51st percentile relative to our proxy peer group
|
| Name | | LTC Granted ($000) | | LTC Earned ($000) | | Payout of Target |
| Ramon L. Laguarta | | 1,328 | | 1,355 | | 102% |
| Hugh F. Johnston | | 1,859 | | 1,897 | | 102% |
| Kirk Tanner | | 1,063 | | 1,084 | | 102% |
| Silviu Popovici | | 289 | | 295 | | 102% |
| Ronald Schellekens(1) | | 0 | | 0 | | Not Applicable |
(1) | Mr. Schellekens is not eligible for a LTC Award granted in 2017 as he was not an executive officer in 2017. |
____________________
[12] | Please refer to Appendix A to this Proxy Statement for a description and reconciliation of these non-GAAP compensation performance measures relative to reported GAAP financial measures. |
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Executive Compensation
Change to Executive Compensation Design
PepsiCo’s executive compensation program evolves taking shareholder input and current best practices into account. As a result of a comprehensive review of our programs and in conjunction with our strategic transformation, the Compensation Committee approved several enhancements to PepsiCo’s executive compensation design to further align incentives with our accelerated growth imperative.
The below changes to the annual incentive design will not be applicable to the Chairman and CEO, whose performance will continue to be evaluated by the Board of Directors based on a holistic assessment of PepsiCo’s operating results and progress against PepsiCo’s strategic priorities.
2020 Changes to Annual Incentive Design
To support our vision to Be the Global Leader in Convenient Foods and Beverages by Winning with Purpose, we have made changes to our executive Annual Incentive Award program in 2020 to make usFaster, Stronger and Better.
2020 Annual Incentive Program - Key Changes
Business Performance
Metrics | | A Relative Competitive Performance metric is added to business performance to measure our market share improvement compared to our competitors in the market |
| | |
Individual Performance | | While individual performance currently accounts for 30% of the overall annual incentive target, the individual performance becomes a multiplier under the new design, with a possible score ranging from 0% to 150% to enhance differentiation in payouts among executives |
| | |
2020 Changes to Long-Term Incentive Design
2020 Long-Term Incentive Program - Key Changes
Business Performance
Metrics | | PSUs will be measured using 3-year Organic Revenue Growth instead of 3-year Core Net ROIC Improvement as the combination of Core Constant Currency EPS Performance and Organic Revenue Growth focuses on disciplined investment to fuel accelerated growth and enhanced shareholder returns |
| | |
Individual Performance | | Individual performance metrics will no longer be used to determine the LTI grant value |
| | |
| | |
Payout | | Payout range from 0% to 200% of target |
| | |
Our move to three-year Organic Revenue Growth as a critical performance measure in the new LTI design, along with the other long-term performance objectives, reinforces PepsiCo’s vision to Be the Global Leader in Convenient Foods and Beverages by Winning with Purpose.
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Executive Compensation
In setting the value of the LTI awards for the March 2020 grants under the new plan design, the Compensation Committee considered the prior year’s compensation targets and the importance of motivating the executive management team to focus on our strategic mission and vision, and particularly on achieving our long-term growth objectives during this period of change and transformation. The 2020 LTI awards were the first long-term equity awards granted to the executive management team following the articulation of our new strategy in 2019. The Compensation Committee structured the 2020 LTI awards to provide strong alignment between the executives’ incentives and the key drivers underlying our long-term growth strategy, including our three-year Organic Revenue Growth metric which was incorporated as a performance measure for PSU awards for the first time in 2020.
The vesting of LTI awards continues to be 100% performance-based, subject to the achievement of ambitious three-year financial targets aligned with the terms and conditions of PepsiCo’s LTI program. The three-year cliff vesting also serves as a critical retention tool in an environment of competition for key talent.
Special Long-Term Incentive Awards
Special PSU Award Grants
The Compensation Committee recognizes that retention of highly qualified leaders is critical to PepsiCo’s continued strong performance and successful succession planning. Due to the breadth and depth of expertise they have gained through their PepsiCo careers, PepsiCo’s senior leaders are often considered for senior roles outside of PepsiCo. Each year, the CEO presents an extensive analysis to the Compensation Committee that addresses talent retention considerations, taking into account the demonstrated performance and future potential of each senior officer, as well as the competitive landscape for executive talent and business disruption likely to be caused by unplanned departures.
As a result of this analysis, the Compensation Committee grants special performance-based awards to select talented leaders critical to our business continuity and growth.
As previously disclosed in prior years’the 2021 Proxy Statements,Statement, in February 2021, the BoardCompensation Committee certified the achievement of Directors took into account the leadership transitions that occurred towardsperformance goals applicable to the end of 2017 with Mr. Laguarta’s appointmentspecial award granted to President, PepsiCo, followed by Mr. Popovici’s appointment to President, ESSA, and granted Mr. Laguarta and Mr. Popovici each a special PSU award onin March 1, 2018. Mr. Laguarta received a special PSU award of 36,782 shares (at target) with a vesting date of March 1, 2022. Mr. Popovici received a special PSU award of 13,793 shares (at target) with a vesting date of March 1, 2021. Both awards will be earned over a three-year performance period (2018-2020) basedBased on the achievement of three separate annual performance targets determined by the Compensation Committee each year.
The ultimate payout for each of these awards will be calculated based on the average of the attainments for each of the three performance periods and can befrom 2018 through 2020, Mr. Laguarta’s PSUs were earned between 0% to 125% of target, having no value to the executive unless the executive remains employed with PepsiCo for the relevant vesting period and the specified performance criteria are met. The awards are forfeited if the executive retires or terminates employment prior to the end of the vesting period or if the underlying performance goals are not attained.
For 2019, the targets related to PepsiCo and ESSA Organic Revenue Growth for Mr. Laguarta and Mr. Popovici, respectively. The PepsiCo target was achieved at approximately 97%61% of target and the ESSA target was achieved at approximately 73% of target. For 2020, consistent with our articulated strategy, the Compensation Committee determined22,599 shares were delivered to continue to focus Messrs. Laguarta and Popovici on top-line growth goals for our entire portfolio.him in March 2022.
No new special PSU awards were approvedgranted to NEOs in 2019.2021.
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Executive Compensation
Retirement and Benefit Programs
| | | | | | | |
| | PensionRetirement and Post-Retiree Medical
| | | | Health and Mobility Benefits
| |
| ■Our NEOs participate in the same retirement programs as other similarly situated employees and receive no enhancements in determining their benefits versus other employees ■PepsiCo maintains defined benefit pension plans for the majority of U.S. salaried employees hired before January 1, 2011 and defined contribution plans for U.S. salaried employees hired in 2011 or later ■A separate retirement plan is also maintained for certain employees working outside the U.S. who are unable to participate in their home country plans ■DetailsEffective December 31, 2025, accruals for participating executive officers aresalaried employees under the defined benefit pension plans in which NEOs participate will be frozen and employees will participate in the defined contribution plans going forward with details described in the “2019 Pension“2021 Retirement Benefits” section beginning on page 6774 ■Our NEOs are also eligible for retiree medical coverage on the same terms as other similarly situated employees ■No NEOs were provided enhanced coverage, such as executive life insurance | | | | Health and Mobility Benefits ■Executive officers receive the same healthcare benefits as other similarly situated employees ■U.S.-based medical benefits are generally the same for all participants in the Company’s healthcare program; however, our executive officers are required to pay two to three times as much as non-executive employees for their coverage ■International medical benefit plans vary, but executives typically receive the benefits offered in the relevant broad-based program ■PepsiCo’s global mobility program facilitates the assignment of global talent to positions in other countries by minimizing any financial detriment or gain to the employee from an international assignment ■In 2019,2021, Mr. Popovici participated in the mobility program due to his assignment in Switzerland and Mr. Schellekens participated in the mobility program with his relocation to the U.S. ■Executive officers who relocate are supported under the mobility program available to all PepsiCo salaried employees, eligible for reimbursement forof relocation expenses, such as household goods shipment and applicable taxes associated with moving | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | Perquisites | | | | Executive Income Deferral | |
| ■Consistent with our pay-for-performance philosophy, we limit executive perquisites to a Company car allowance, an annual physical and limited personal use of Company aircraft ■Certain executive officers may also be required to use Company ground transportation ■ Based on an independent security study, the Compensation Committee generally requires the CEO to use Company aircraft to enhance personal safety and to increase time available for business purposes ■Certain executive officers may also be required to use Company ground transportation ■Certain exceptions allow the use of commercial aviation provided that the PepsiCo Global Security Team has assessed the risk and trip itinerary in advance, establishing a travel security protocol
■Executives are fully responsible for their personal income tax liability associated with personal use of Company aircraft ■A select few executive officers who are permitted to use Company aircraft, other than the CEO, must reimburse PepsiCo for the full variable operating cost of personal flights in excess of a limited number of hours per year as established by the Compensation Committee ■Personal use of Company ground transportation and Company aircraft above a predetermined hour threshold for executive officers other than the CEO must be approved by the CEO on a case-by-case basis | | | | Executive Income Deferral ■Under the PepsiCo Executive Income Deferral Program (the “EIDP���”), most U.S.-based executives can elect to defer up to 75% of their base salary and up to 100% of their annual cash incentive awards into phantom investment funds on a tax-deferred basis ■Executives may elect to have their deferral accounts notionally invested in market-based funds, including the PepsiCo Common Stock Fund ■The EIDP does not guarantee a rate of return, does not match deferrals and none of the funds provide “above market” earnings ■The EIDP is a non-qualified and unfunded program in which account balances are unsecured and at risk,at-risk, with its material features described in the “2019“2021 Non-Qualified Deferred Compensation” section beginning on page 7078 | |
| | | | | | | |
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Executive Compensation
Peer Group
The Compensation Committee utilizes a peer group to evaluate whether executive officer pay levels are aligned with Company performance on a relative basis.basis and assesses the composition of the peer group annually. The Compensation Committee primarily identifies companies that are of comparable size (based on revenue and market capitalization), maintain strong consumer brands, have an innovative culture, compete with PepsiCo for executive talent and/or possess significant international operations. There were no changes to our peer group during the 20192021 performance year.
PEPSICO 20192021 COMPENSATION PEER GROUP
The 3M Company | | International Business Machines Corp. | | Pfizer Inc. |
| Anheuser-Busch InBev SA/NV | | Johnson & Johnson | | The Procter & Gamble Company |
| Apple Inc. | | The Kraft Heinz Company | | Starbucks Corporation |
| The Coca-Cola Company | | McDonald’s Corporation | | Unilever PLC |
| Colgate-Palmolive Company | | Microsoft Corporation | | United Parcel Service, Inc. |
| Danone S.A. | | MondelezMondelēz International, Inc. | | Walmart Inc. |
| General Electric Company | | Nestlé S.A. | | The Walt Disney Company |
| General Mills, Inc. | | Nike,NIKE, Inc. | | |
PEPSICO VS. PEER GROUP
| * | Based on the four fiscal quarters ended prior to December 28, 201925, 2021 and publicly available as of March 1, 20202022 |
| ** | Based on 20192021 year-end |
Governance Features of Our Executive Compensation Programs
We believe that PepsiCo’s compensation programs should ensure that our executives remain accountable for business results and take responsibility for the assets of the business and its employees. Consistent with this objective, our Board has incorporated strong governance features into our executive compensation programs.
Risk Mitigation
PepsiCo’s executive compensation programs include features intended to discourage employees from taking unnecessary and excessive risks that could threaten the financial health and viability of the Company.
  | |   | |   | |   |
Balanced Performance
Performance Metrics | | Accountability for Prior
Business Unit Results
| | Emphasis on Long-Term
Shareholder Value Creation
| | Stringent
Clawback Provisions
|
The annual incentive program utilizes balanced financial metrics consisting of top-line metrics (such as organic revenue), bottom-line metrics (such as operating profit) and metrics designed to enhance capital management (such as cash flow). | | Accountability for Prior
Business Unit Results All or a portion of the annual incentive award for any executive officer who assumes a new leadership position in a different business unit is generally determined based on the prior business unit’s results to hold the executive officer accountable for sustained performance. | | Emphasis on Long-Term
Shareholder Value Creation LTI awards are the most significant element of executive officer pay and focus executives on creating long-term shareholder value, measured in terms of delivering exceptional long-term operating results and stock price changesperformance relative to a comparator group. | | Stringent Clawback
Provisions Under PepsiCo’s annual incentive, LTI and executive deferral programs, the Company has the right to cancel and recoup awards and gains from an executive in certain circumstances, such as if he or she engages in gross misconduct, violates applicable non-compete provisions, or causes or contributes to the need for an adjustment to the Company’s financial results through gross negligence or misconduct.circumstances. |
| PEPSICO 20202022 PROXY STATEMENT | 5765 |
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Stock Ownership Requirements
Under PepsiCo’s stock ownership guidelines, executive officers are required to own shares of PepsiCo Common Stock equal in value to a specified multiple of their annual base salary, as set forth below:
CEO
|  |
CFO and Business Unit CEOs
|  |
All Other Executive Officers
|  |
Shares of PepsiCo Common Stock or equivalents held by the executive officer (or immediate family members) in thea 401(k) plan, in a deferred compensation account, or in a trust for the benefit of immediate family members count towards satisfying the requirement. Unexercised stock options and unvested PSUs and Restricted Stock Units (“RSUs”) granted under the LTI Plan do not count towards satisfying the applicable stock ownership requirement.
Executive officers have five years from the date they first become subject to a particular level of stock ownership to meet the stock ownership requirement. With Mr. Laguarta’s promotion to CEO in October 2018, he is required to own PepsiCo Common Stock equal to 8 times his current annual base salary and continues to be well-positioned to meet this requirement by October 2023.
All of PepsiCo’s executive officers have met or are on track to meet their ownership requirements within the five-year period.
Executive officers who terminate or retire from PepsiCo are required to continue to hold 100% of the shares needed to meet the applicable level of stock ownership until at least six months after termination or retirement and to continue to hold at least 50% of the shares needed to meet the applicable level of stock ownership until at least twelve months after termination or retirement.
Share Retention Policy
To ensure that our executive officers exhibit a strong commitment to PepsiCo stock ownership, the Board adopted a Share Retention Policy in 2002. The policy limits the proceeds that an executive officer may receive in cash upon exercise of stock options during each calendar year to 20% of the aggregate value of all of the executive officer’s in-the-money vested stock options. Any proceeds in excess of this 20% limit must be held in shares of PepsiCo Common Stock for at least one year after the date of exercise. In addition, executive officers are required to hold at least 50% of the shares, net of applicable tax withholding, received upon the vesting and payout of PSUs in furtherance of PepsiCo’s stock ownership guidelines.
Executive officers who maintain the required level of stock ownership are exempt from the Share Retention Policy.
No Employment Contracts
None of our NEOs have an employment contract or separation agreement, and we do not maintain formal programs or policies that guarantee cash severance or continued access to health and welfare benefits in the event of an involuntary termination of employment. Consistent with our approach of rewarding performance, employment is not guaranteed, and either the Company or the NEO may terminate the employment relationship at any time. In some cases, the Compensation Committee or the Board may agree to provide separation payments and benefits to departing executives upon their termination. Such terminations are addressed on a case-by-case basis, taking into consideration the nature of the termination and a variety of other factors.
Clawback Provisions
Compliance with our Global Code of Conduct, as well as Acting with Integrity, one of the seven guiding behaviors of The PepsiCo Way, are fundamental to doing business the right way. To reinforce the importance of this, PepsiCo’s executive compensation programs have stringent clawback provisions which allow the Company to cancel outstanding awards from the EICP and LTI Plan, to enforce the repayment of gains from the exercise of any stock options granted under the terms of the LTI Plan and to recoup the value of awards that have vested and/or paid out from the EICP and LTI Plan.
Clawback provisions are triggered in the event an executive engages in behavior that may be detrimental to the Company, such as the breaching of non-competition, non-solicitation or non-disclosure clauses, or an act of gross misconduct which includes but is not limited to negligence that causes or contributes to the need for an accounting adjustment to the Company’s financial results.
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Change in Control Provisions
PepsiCo does not maintain formal policies for our NEOs that provide for predetermined cash severance, continued health and welfare benefits, pension service credit, tax gross-ups or any other change-in-controlchange in control benefits other than change-in-controlchange in control protections under the shareholder-approved LTI Plan.
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The LTI Plan provides non-employee directors and all employees, including executive officers, change-in-controlchange in control protection for their LTI awards. Outstanding unvested awards vest and performance-based awards are payable in accordance with their terms as if performance metrics have been achieved at the target performance level in the event that the participant is terminated without cause or resigns for good reason within two years following a change-in-controlchange in control of PepsiCo (i.e., “double trigger” vesting) or if the acquiring entity fails to assume or replace the awards. We utilize “double trigger” vesting to ensure management talent will be available to assist in the successful integration following a change-in-controlchange in control and to align with prevailing governance practices.
Prohibition on Hedging and Pledging
Our insider trading policyInsider Trading Policy prohibits employees, including executive officers, from engaging in activities that are designed to hedge or offset any decrease in the market value of PepsiCo stock (including purchasing financial instruments such as prepaid variable forward contracts, collars, exchange funds or equity swaps or engaging in short sales). In addition, employees, including executive officers, may not hold PepsiCo securities in a margin account or pledge PepsiCo stock or PepsiCo stock options as collateral for a loan or otherwise.
Limited Trading Windows
Executive officers can only transact in PepsiCo securities during approved trading windows after satisfying mandatory clearance requirements.
Responsible Equity Grant Practices
PepsiCo’s equity grant practices ensure all grants are made on fixed grant dates and at exercise prices or grant prices equal to the “fair market value” of PepsiCo Common Stock on such dates.
| ■ | Stock option, PSU and RSU grants are awarded under our shareholder-approved LTI Plan at “fair market value,” defined as the average of the high and low stock prices rounded up to the nearest quarter on the date of grant. These formulas mitigate the impact of our stock price’s intra-day volatility when setting the grant price of equity awards. |
| ■ | PepsiCo does not backdate, reprice or grant stock options retroactively. Our shareholder-approved LTI Plan prohibits repricing of awards or exchanges of underwater options for cash or other securities without shareholder approval. |
| ■ | Under our shareholder-approved LTI Plan, stock options, RSUs, PSUs and LTC Awardsawards generally require a three-year minimum vesting period. Aggregate awards covering up to 5% of the total shares available under the LTI Plan may be issued with a vesting period of less than three years, but never less than one year. |
| ■ | PepsiCo is responsible in the use of shares under our LTI program,Plan, with share utilization below our peer group median. |
| ■ | Equity award grants to executive officers are approved by a subcommittee of the Compensation Committee consisting entirely of non-employee directors, as that term is defined in Rule 16b-3 of the Exchange Act. |
Tax Considerations
Historically, the Compensation Committee has considered the impact of Section 162(m) of the Internal Revenue Code in establishing compensation for our executive officers, with a primary objective of supporting PepsiCo’s business needs and workforce strategy.
Prior to the 2018 taxation year, Section 162(m) generally disallowed a tax deduction for compensation over $1 million paid for any fiscal year to the CEO and the three other highest paid executive officers other than the CFO, unless the compensation qualified as “performance-based.” Effective with the January 1, 2018 taxation year, the Section 162(m) performance-based exception is no longer applicable and the $1 million deduction limit applies to the CEO, CFO and the top three other highest compensated executive officers in the year. The deduction limit also applies to all those who were subject to the limit in any prior year after 2016, and it continues to apply to compensation paid at any time, including after termination or retirement and after death.
The 2018 changes to Section 162(m) include a “grandfather” provision that continues to apply Section 162(m)’s pre-2018 terms to certain compensation payable under a written binding contract (such as an award agreement or plan) that is in effect on November 2, 2017 and not materially modified. The 2017 LTC Awards were granted under the shareholder-approved LTI Plan and set forth in award agreements that were binding on November 2, 2017. The Compensation Committee sets payouts for the 2017-2019 LTI Award cycle based on maximum achievement of a Core Constant Currency Net Income target of $10 billion. The 2017 LTC Awards are intended to qualify as performance-based compensation deductible under Section 162(m) as they were subject to binding agreements on November 2, 2017. However, there can be no guarantee that the awards will be treated as qualified performance-based compensation under Section 162(m).
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Executive Compensation
Our Decision MakingDecision-Making Process
COMPENSATION COMMITTEE
The Compensation Committee oversees and evaluates PepsiCo’s executive compensation programs against competitive practices, regulatory developments and corporate governance trends.
| The Compensation Committee oversees and evaluates PepsiCo’s executive compensation programs against competitive practices, regulatory developments and corporate governance trends. |
| JAN | | FEB | | MAR | | APR | | MAY | | JUN | | JUL | | AUG | | SEP | | OCT | | NOV | | DEC |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
February Meeting | | March Meeting | | September Meeting | | November Meeting |
■Certifies performance-based incentive payouts ■Recommends CEO compensation to independent members of the Board without management input ■Approves performance goals and other objectives of the Chairman and CEO ■Approves executive officer compensation based on Company performance, market data, responsibilities and other factors | | ■Sets specific performance targets for executive officer incentive awards ■Reviews compensation-related disclosures for Proxy Statement | | ■Reports to the Board regarding director compensation and stock ownership guidelines ■Establishes peer group companies used to benchmark Company performance and executive officer compensation ■Reviews trends and best practices in executive compensation | | ■Reviews Committee Charter, Committee’s assessment results and work plan for the following year ■Reviews and approves executive compensation policies, such as stock ownership and clawback provisions, as needed |
Compensation Committee meetings may occur on a more frequent basis in the event of ad hoc matters for discussion or approval.
| Independent Advisor | |
| | PepsiCo Management | |
| The Compensation Committee has engaged FW Cook as its independent external advisor, and considers analysis and advice from FW Cook when making compensation decisions | | | | PepsiCo’s Managementmanagement team is responsible for providing input to the Compensation Committee with respect to compensation decisions for PepsiCo’s executive officers (other than the Chairman and CEO) | |
| ■Provides recommendations on Chairman and CEO compensation directly to the Compensation Committee without consulting management ■PeriodicallyRegularly reviews the Company’s executive compensation programs, in cooperation with management, and advises the Committee of changes that may be made to better reflect evolving best practices and improve effectiveness ■PeriodicallyRegularly reviews the Company’s compensation philosophy, target peer group and target competitive positioning for reasonableness and appropriateness ■All services performed by FW Cook have been limited to executive and director compensation consulting ■FW Cook is prohibited from undertaking any other work with PepsiCo management or employees and has direct access to Compensation Committee members without management involvement ■The Compensation Committee assessed FW Cook’s independence under SEC regulations and Nasdaq listing standards, and concluded that there is no conflict of interest | | | | ■Provides input regarding PepsiCo’s business strategy and performance ■The Chairman and CEO provides the Compensation Committee with a self-assessment based on achievement of the agreed-upon objectives and other leadership accomplishments ■The Chairman and CEO provides the Compensation Committee with performance evaluations and pay recommendations for other executive officers ■ Regularly reviews shareholder feedback which is taken into consideration when reevaluating and/or designing the Company’s executive compensation programs | |
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Executive Compensation
20192021 Summary Compensation Table
The following table summarizes the compensation of the NEOs for the fiscal year ended December 28, 201925, 2021 in accordance with SEC rules. We encourage you to also review pages 44-45page 52 for a description of how Chairman and CEO compensation is viewed by PepsiCo’s Board.
Name and
Principal Position | | Year(1) | | Salary
($) | | Bonus
($)(2) | | Stock
Awards
($)(3) | | Non-Equity Incentive Plan
Compensation ($) | | Change in
Pension
Value and
Non-Qualified
Deferred
Compensation
Earnings
($)(7) | | All Other
Compensation
($)(8) | | Total
($) | |
| | | | | | | | | | Non-Equity Incentive Plan
Compensation ($) | | Change in
Pension | | | | |
Name and
Principal Position | | Year(1) | | Salary
($) | | Bonus
($)(2) | | Stock
Awards
($)(3) | | Subtotal for
Annual
Payouts
($)(4) | | Subtotal for
Long-Term
Payouts
($)(5) | | Total for
Annual and
Long-Term
Payouts
($)(6) | | Change in
Pension
Value and
Non-Qualified
Deferred
Compensation
Earnings
($)(7) | | All Other
Compensation
($)(8) | | Total
($) | | Year(1) | | Salary
($) | | Bonus
($) | | Stock
Awards
($)(2) | | Subtotal
for
Annual
Payouts
($)(3) | | Subtotal
for
Long-Term
Payouts
($)(4) | | Total for
Annual
and
Long-Term
Payouts
($)(5) | | Value and
Non-Qualified
Deferred
Compensation
Earnings
($)(6) | | All Other
Compensation
($)(7) | | Total
($) |
| 3,100,000 | | 1,354,688 | | 4,454,688 | | 2021 | | 1,542,308 | | — | | 8,745,056 | | 6,006,640 | | 4,216,000 | | 10,222,640 | | 4,415,239 | | 581,364 | | 25,506,607 |
Ramon L. Laguarta
Chairman of the
Board and Chief
Executive Officer
| | 2018 | | 996,923 | | — | | 4,427,104 | | 1,800,000 | | 1,238,875 | | 3,038,875 | | 1,132,418 | | 1,232,076 | | 10,827,396 | | 2020 | | 1,469,231 | | — | | 9,694,125 | | 3,550,000 | | 1,753,125 | | 5,303,125 | | 4,344,395 | | 676,106 | | 21,486,982 |
| 2017 | | 799,615 | | — | | 2,578,137 | | 1,551,800 | | 1,680,000 | | 3,231,800 | | 2,963,657 | | 584,036 | | 10,157,245 | | 2019 | | 1,300,000 | | — | | 8,022,328 | | 3,100,000 | | 1,354,688 | | 4,454,688 | | 2,654,833 | | 438,968 | | 16,870,817 |
| 2019 | | 1,000,000 | | — | | 4,124,960 | | 2,114,000 | | 1,896,563 | | 4,010,563 | | 2,101,080 | | 55,414 | | 11,292,017 | | 2021 | | 1,000,000 | | — | | 4,620,000 | | 2,958,380 | | 2,635,000 | | 5,593,380 | | 1,849,787 | | 141,198 | | 13,204,365 |
Hugh F. Johnston
Vice Chairman,
EVP and CFO | | 2018 | | 962,500 | | — | | 3,609,413 | | 1,647,800 | | 1,892,100 | | 3,539,900 | | 958,108 | | 72,145 | | 9,142,066 | | 2020 | | 1,000,000 | | — | | 4,620,000 | | 2,079,000 | | 2,045,313 | | 4,124,313 | | 2,533,163 | | 102,612 | | 12,380,088 |
| 2017 | | 950,000 | | — | | 3,609,348 | | 1,624,500 | | 3,360,000 | | 4,984,500 | | 2,107,738 | | 64,666 | | 11,716,252 | | 2019 | | 1,000,000 | | — | | 4,124,960 | | 2,114,000 | | 1,896,563 | | 4,010,563 | | 2,101,080 | | 55,414 | | 11,292,017 |
| 2019 | | 800,000 | | — | | 2,078,952 | | 1,219,200 | | 1,083,750 | | 2,302,950 | | 1,581,885 | | 72,950 | | 6,836,737 | |
Silviu Popovici
CEO, Europe | | 2019 | | 742,308 | | — | | 2,513,372 | | 1,185,900 | | 294,780 | | 1,480,680 | | 231,730 | | 1,163,924 | | 6,132,014 | | 2021 | | 750,000 | | — | | 1,980,038 | | 1,584,000 | | 1,264,800 | | 2,848,800 | | 264,701 | | 2,632,231 | | 8,475,770 |
| 2018 | | 700,000 | | — | | 2,397,503 | | 1,139,300 | | 74,420 | | 1,213,720 | | 140,209 | | 1,699,602 | | 6,151,034 | | 2020 | | 750,000 | | — | | 3,573,412 | | 1,381,100 | | 1,075,250 | | 2,456,350 | | 240,751 | | 1,029,101 | | 8,049,614 |
Ronald Schellekens
EVP and CHRO | | 2019 | | 675,000 | | 1,200,000 | | 1,055,948 | | 942,000 | | — | | 942,000 | | — | | 308,528 | | 4,181,476 | |
Silviu Popovici
CEO, Europe | | | 2019 | | 742,308 | | — | | 2,513,372 | | 1,185,900 | | 294,780 | | 1,480,680 | | 231,730 | | 1,163,924 | | 6,132,014 |
| | 2021 | | 800,000 | | — | | 1,980,038 | | 2,535,000 | | 1,328,040 | | 3,863,040 | | 1,589,710 | | 157,918 | | 8,390,706 |
| | 2020 | | 800,000 | | — | | 2,970,056 | | 1,386,000 | | 1,028,500 | | 2,414,500 | | 2,444,261 | | 64,061 | | 8,692,878 |
Kirk Tanner
CEO, PBNA | | | 2019 | | 800,000 | | — | | 2,078,952 | | 1,219,200 | | 1,083,750 | | 2,302,950 | | 1,581,885 | | 72,950 | | 6,836,737 |
| | 2021 | | 784,615 | | — | | 1,980,038 | | 1,406,240 | | 411,060 | | 1,817,300 | | 1,583,633 | | 149,035 | | 6,314,621 |
| (1) | Messrs. Tanner and Schellekens were not NEOs prior to 2019 and, as a result, only their 2019 compensation information is being disclosed in the Summary Compensation Table. Mr. PopoviciWilliams was not an NEO prior to 20182021 and, as a result, only his 2018 and 20192021 compensation information is being disclosed in the Summary Compensation Table. |
| (2) | The amount reported for Mr. Schellekens is a payment made to offset compensation that was forfeited due to his leaving his prior employer, which he received on the six-month anniversary of his start date. |
(3) | The amounts reported for stock awards represent the aggregate grant date fair value of stock awards calculated in accordance with the accounting guidance on share-based payments. For a discussion of the assumptions and methodologies used in calculating the grant date fair value of these awards, please see Note 6 to the Company’s consolidated financial statements in the Company’s Annual Report on Form 10-K for the applicable fiscal year. |
| For 2019,2021, the amounts reported in this column represent the grant date fair value of PSU awards and special PSU awards. If PepsiCo were to exceed its performance targets, grant recipients may earn up to 175%200% of the target number of PSUs granted and 125% of the target number of special PSUs granted. The following table reflects the grant date fair value of the PSU awards at below-threshold, target and maximum performance earn-out levels. |
| | | | Value of 2019 PSU Awards |
| | Name | | Below
Threshold | | At Target
Level
($) | | At Maximum
175% Level
($) |
| | Ramon L. Laguarta | | — | | 6,600,052 | | 11,550,091 |
| | Hugh F. Johnston | | — | | 4,124,960 | | 7,218,680 |
| | Kirk Tanner | | — | | 2,078,952 | | 3,638,166 |
| | Silviu Popovici | | — | | 1,980,004 | | 3,465,007 |
| | Ronald Schellekens | | — | | 1,055,948 | | 1,847,909 |
| | In 2018, Messrs. Laguarta and Popovici received special PSU awards of 36,782 and 13,793 shares, respectively, with a maximum payout level of 45,978 and 17,241 shares, respectively. Grant date fair value is calculated based on the number of shares issuable at target achievement level. Because the performance-related payout is based on separate measurements of our financial performance for each year over a three- year performance period (2018-2020), and those separate performance targets are established at the beginning of each performance year, the accounting guidance on share-based payments requires the grant date fair value to be calculated at the commencement of each separate year of the performance cycle when the respective performance targets are approved. The amounts for 2019 represent the grant date fair value for special PSU awards at target that may be earned based on performance against 2019 targets. It excludes shares that were earned based on performance against 2018 targets and shares that may be earned based on performance against 2020 targets. |
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| | | Value of 2021 PSU Awards |
| Name | | Below
Threshold | | At Target
Level
($) | | At Maximum
200% Level
($) |
| Ramon L. Laguarta | | — | | 8,745,056 | | 17,490,112 |
| Hugh F. Johnston | | — | | 4,620,000 | | 9,240,000 |
| Silviu Popovici | | — | | 1,980,038 | | 3,960,076 |
| Kirk Tanner | | — | | 1,980,038 | | 3,960,076 |
| Steven Williams | | — | | 1,980,038 | | 3,960,076 |
(4)(3) | As described in the “2019“2021 Annual Incentive Award” section of the Compensation Discussion and Analysis beginning on pages 48-51page 55 of this Proxy Statement, the amounts reported reflect compensation earned for performance under the annual incentive compensation program for that year, paid in March of the subsequent year. |
(5)(4) | As described in the “Long-Term Incentive Award Payouts” section of the Compensation Discussion and Analysis on page 5361 of this Proxy Statement, the Long-Term Payout amounts reported for 20192021 reflect compensation earned for performance over a three-year period (2017-2019)(2019-2021) under the LTC Awardaward granted in 20172019 and paid in March 2020. Mr. Schellekens was not eligible for a LTC Award granted in 2017 as he was not an executive officer in 2017.2022. |
| |
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(6)(5) | Represents the total of the Annual Payouts and Long-Term Payouts of Non-Equity Incentive Plan compensation.Compensation. |
(7)(6) | The amounts reported reflect the aggregate change in the actuarial present value of each NEO’s accumulated benefit under the defined benefit pension plans in which they participate. The change in pension value reflects changes in age, service and earnings during 2019. Mr. Schellekens was hired after December 31, 2010 and therefore he is not eligible to participate in any defined benefit pension plans sponsored by PepsiCo.2021. |
(8)(7) | The following table provides the details for the amounts reported for 20192021 for each NEO: |
| | Name | | Personal
Use of
Company
Aircraft(A)
($) | | Personal Use
of Ground
Transportation(A)
($) | | Car
Allowance
($) | | Company
Contributions
to Defined
Contribution
Plans(B)
($) | | Global
Mobility(C)
($) | | Tax
Reimbursement(D)
($) | | Total All Other
Compensation(E)
($) |
| | Ramon L. Laguarta | | 275,645 | | 18 | | 25,350 | | — | | 89,847 | | 48,108 | | 438,968 |
| | Hugh F. Johnston | | 19,398 | | 636 | | 25,350 | | — | | — | | — | | 55,414 |
| | Kirk Tanner | | 46,600 | | — | | 25,350 | | — | | — | | — | | 72,950 |
| | Silviu Popovici(F) | | — | | — | | 38,301 | | — | | 564,717 | | 560,906 | | 1,163,924 |
| | Ronald Schellekens | | — | | 496 | | 25,350 | | 51,817 | | 157,847 | | 73,018 | | 308,528 |
| Name | | Personal Use
of Company
Aircraft
($)(A) | | Car Allowance
and Personal
Use of Ground
Transportation
($)(B) | | Global
Mobility
($)(C) | | Tax
Reimbursement
($)(D) | | Charitable
Contributions
and Gifts
($)(E) | | Total All Other
Compensation
($) |
| Ramon L. Laguarta | | 463,014 | | 25,459 | | 86,491 | | — | | 6,400 | | 581,364 |
| Hugh F. Johnston | | 99,648 | | 25,350 | | — | | — | | 16,200 | | 141,198 |
| Silviu Popovici(F) | | — | | 40,766 | | 417,185 | | 2,173,080 | | 1,200 | | 2,632,231 |
| Kirk Tanner | | 111,345 | | 25,373 | | — | | — | | 21,200 | | 157,918 |
| Steven Williams | | 86,485 | | 25,350 | | — | | — | | 37,200 | | 149,035 |
| (A) | Personal use of Company aircraft and ground transportation is valued based on the aggregate incremental cost to the Company. The aggregate incremental costCompany, which is generally calculatedallocated based on the variable operating costs that were incurred as a result of personal use of the aircraft (such as fuel, maintenance, landing fees, crew expenses, catering and en-route charges) or the cost associated with the use of a charter aircraft. Infrequently, an executive’s spouse or other family member may fly on the Company aircraft. The NEOs are fully responsible for all personal income taxes associated with any personal use of Company aircraft. |
| (B) | Car allowance and personal use of ground transportation includes cash allowance for car usage, personal use of a Company-provided vehicle (taxable benefit value from personal usage) or the aggregate incremental cost to the Company for Company-provided ground transportation (such as fuel and the driver’s compensation). Infrequently, an executive’s spouse or other family member may fly on the Company aircraft or shareuse Company-provided ground transportation as an additional passenger. There is no incremental cost associated with such usage.transportation. The NEOs are fully responsible for all personal income taxes associated with any personal use of Company aircraft andCompany-provided ground transportation. The value shown for Mr. Popovici is the annual lease for his Company-provided vehicle as well as fuel used in 2021, converted into U.S. dollars based on an average monthly exchange rate of 1 CHF = 1.0952 USD for 2021. |
(B) | Mr. Schellekens participated in the ARC and ARC-E programs described under the “2019 Pension Benefits” section beginning on page 67 and the “2019 Non-Qualified Deferred Compensation” section beginning on page 70. |
| (C) | The amounts reported reflect the expense for benefits provided pursuant to PepsiCo’s standard global mobility program as a result of Mr. Laguarta’s relocation to the United States and Mr. Popovici’s international assignment in Switzerland and Mr. Schellekens relocation to the United States.Switzerland. These benefits include tax preparation assistance, housing, cost-of-living and home-leave allowances and household goods storage. The global mobility program facilitates the assignment of employees to positions outside their home country by minimizing any financial detriment or gain to the employee from the international assignment. |
| (D) | For Mr. Popovici, this reflects the estimated total net amount of tax equalization designed to cover taxes on his compensation in excess of the taxes he would have incurred in his home country, in accordance with our standard mobility program. For Messrs. Laguarta and Schellekens, it also reflects reimbursement of all tax obligations directly related to relocation assistance and taxes incurred in connection with such assistance, in accordance with standard policy that applies to all participating employees. |
| (E) | The total also includes the cost of an annual physical exam for Mr. Johnston and theamounts reported in this column represent PepsiCo Foundation matching gifts, and other charitable contributions or commitments and the value of gifts. Under the matching gift program, the PepsiCo Foundation matches cash or stock donations to recognized tax-exempt organizations. The PepsiCo Foundation annual contributions are generally capped at a total of $10,000 plus an additional $20,000 for Messrs. Johnston and Tanner.charitable contributions made in October 2021, during our annual corporate-wide giving campaign that encourages associates to give back. PepsiCo Foundation matching gift contributions are available to all PepsiCo employees and PepsiCo non-employee directors. In 2021, the PepsiCo Foundation made matching contributions of $4,000, $15,000, $20,000 and $36,000 for Messrs. Laguarta, Johnston, Tanner and Williams, respectively. |
| (F) | The car allowance andA portion of global mobility benefits provided to Mr. Popovici while in Switzerland werewas paid in Swiss Francs and converted into U.S. dollars based on an average monthly exchange rate of 1 CHF = 1.00791.0952 USD for 2019.2021. |
| | |
62 70 | PEPSICO 20202022 PROXY STATEMENT | |
Table of Contents
Executive Compensation
20192021 Grants of Plan-Based Awards
The following table summarizes grants of annual incentive awards, LTC Awardsawards and PSUs provided to NEOs in 2019. LTC Awards and PSUs granted in 2019 recognized 2018 performance, with the exception of the Special PSU Awards granted in connection with leadership transitions.2021. The material terms of PepsiCo’s annual and LTI programs are described in the Compensation Discussion and Analysis beginning on page 4348 of this Proxy Statement.
| | | | | | | | | Estimated Future
Payouts Under Non-Equity
Incentive Plan Awards | | Estimated Future Payouts
Under Equity Incentive
Plan Awards | | Grant Date
Fair Value
of Stock
and Option
Awards(2) |
| Name | | Grant
Date(1) | | Approval
Date(1) | | Grant Type | | | Threshold
($) | | Target
($) | | Maximum
($) | | Threshold
(#) | | Target
(#) | | Maximum
(#) | |
| Ramon L. Laguarta | | — | | 2/13/2019 | | Annual Incentive | (3) | | — | | 2,600,000 | | 5,200,000 | | | | | | | | |
| 3/1/2019 | | 2/13/2019 | | Long-Term Cash | (4) | | — | | 3,400,000 | | 6,800,000 | | | | | | | | |
| 3/1/2019 | | 2/13/2019 | | PSUs | (5) | | | | | | | | — | | 56,897 | | 99,570 | | 6,600,052 |
| 3/1/2019 | | — | | Special PSUs | (6) | | | | | | | | — | | 12,261 | | 15,326 | | 1,422,276 |
Hugh F. Johnston
| | — | | 2/13/2019 | | Annual Incentive | (3) | | — | | 1,750,000 | | 3,421,250 | | | | | | | | |
| 3/1/2019 | | 2/13/2019 | | Long-Term Cash | (4) | | — | | 2,125,000 | | 4,250,000 | | | | | | | | |
| 3/1/2019 | | 2/13/2019 | | PSUs | (5) | | | | | | | | — | | 35,560 | | 62,230 | | 4,124,960 |
| Kirk Tanner | | — | | 2/13/2019 | | Annual Incentive | (3) | | — | | 1,200,000 | | 2,346,000 | | | | | | | | |
| 3/1/2019 | | 2/13/2019 | | Long-Term Cash | (4) | | — | | 1,071,000 | | 2,142,000 | | | | | | | | |
| 3/1/2019 | | 2/13/2019 | | PSUs | (5) | | | | | | | | — | | 17,922 | | 31,364 | | 2,078,952 |
| Silviu Popovici | | — | | 2/13/2019 | | Annual Incentive | (3)(7) | | — | | 1,112,500 | | 2,174,938 | | | | | | | | |
| 3/1/2019 | | 2/13/2019 | | Long-Term Cash | (4) | | — | | 1,020,000 | | 2,040,000 | | | | | | | | |
| 3/1/2019 | | 2/13/2019 | | PSUs | (5) | | | | | | | | — | | 17,069 | | 29,871 | | 1,980,004 |
| 3/1/2019 | | — | | Special PSUs | (8) | | | | | | | | — | | 4,598 | | 5,748 | | 533,368 |
| Ronald Schellekens | | — | | 2/13/2019 | | Annual Incentive | (3) | | — | | 810,000 | | 1,583,550 | | | | | | | | |
| 3/1/2019 | | 2/13/2019 | | Long-Term Cash | (4) | | — | | 544,000 | | 1,088,000 | | | | | | | | |
| 3/1/2019 | | 2/13/2019 | | PSUs | (5) | | | | | | | | — | | 9,103 | | 15,930 | | 1,055,948 |
| | | | | | | | | Estimated Future
Payouts Under Non-Equity
Incentive Plan Awards | | Estimated Future Payouts
Under Equity Incentive
Plan Awards | | Grant Date
Fair Value |
| Name | | Grant
Date(1) | | Approval
Date(1) | | Grant Type | | Threshold
($) | | Target
($) | | Maximum
($) | | Threshold
(#) | | Target
(#) | | Maximum
(#) | | of Stock
and Option
Awards(2) |
Ramon L.
Laguarta | | — | | 2/4/2021 | | Annual Incentive(3)(4) | | — | | 3,083,333 | | 6,166,667 | | | | | | | | |
| | 3/1/2021 | | 2/4/2021 | | Long-Term Cash(5) | | — | | 4,505,000 | | 9,010,000 | | | | | | | | |
| | 3/1/2021 | | 2/4/2021 | | PSUs(6) | | | | | | | | — | | 66,629 | | 133,258 | | 8,745,056 |
Hugh F.
Johnston | | — | | 2/4/2021 | | Annual Incentive(3) | | — | | 1,750,000 | | 5,250,000 | | | | | | | | |
| | 3/1/2021 | | 2/4/2021 | | Long-Term Cash(5) | | — | | 2,380,000 | | 4,760,000 | | | | | | | | |
| | 3/1/2021 | | 2/4/2021 | | PSUs(6) | | | | | | | | — | | 35,200 | | 70,400 | | 4,620,000 |
Silviu
Popovici | | — | | 2/4/2021 | | Annual Incentive(3) | | — | | 1,125,000 | | 3,375,000 | | | | | | | | |
| | 3/1/2021 | | 2/4/2021 | | Long-Term Cash(5) | | — | | 1,020,000 | | 2,040,000 | | | | | | | | |
| | 3/1/2021 | | 2/4/2021 | | PSUs(6) | | | | | | | | — | | 15,086 | | 30,172 | | 1,980,038 |
Kirk
Tanner | | — | | 2/4/2021 | | Annual Incentive(3) | | — | | 1,200,000 | | 3,600,000 | | | | | | | | |
| | 3/1/2021 | | 2/4/2021 | | Long-Term Cash(5) | | — | | 1,020,000 | | 2,040,000 | | | | | | | | |
| | 3/1/2021 | | 2/4/2021 | | PSUs(6) | | | | | | | | — | | 15,086 | | 30,172 | | 1,980,038 |
Steven
Williams | | — | | 2/4/2021 | | Annual Incentive(3)(4) | | — | | 1,175,000 | | 3,525,000 | | | | | | | | |
| | 3/1/2021 | | 2/4/2021 | | Long-Term Cash(5) | | — | | 1,020,000 | | 2,040,000 | | | | | | | | |
| | 3/1/2021 | | 2/4/2021 | | PSUs(6) | | | | | | | | — | | 15,086 | | 30,172 | | 1,980,038 |
| (1) | Consistent with prior years, 20192021 PSUs and LTC Awardsawards were approved by the Compensation Committee at its regularly scheduled meeting in February. The approval date for the awards was February 13, 20194, 2021 and the grant date was March 1, 2019. The special awards discussed in footnotes 6 and 8 were first authorized by the Compensation Committee on February 5, 2018.2021. |
| (2) | The amounts reported represent the aggregate grant date fair value of all PSUs granted to NEOs in 20192021 calculated in accordance with the accounting guidance on share-based payments. For a discussion of the assumptions and methodologies used in calculating the grant date fair value of the PSUs reported, please see Note 6 to the Company’s consolidated financial statements in the Company’s 20192021 Annual Report on Form 10-K for the fiscal year ended December 28, 2019.25, 2021. |
| (3) | The amounts reported reflect the potential range of 20192021 annual cash incentive awards under the EICP, as described under the “2019“2021 Annual Incentive Award” section in the Compensation Discussion and Analysis beginning on pages 48-51page 55 of this Proxy Statement. |
| (4) | The target and maximum annual incentive for Messrs. Laguarta and Williams reflect pro-rated increases due to base salary adjustments received in February 2021. |
| (5) | The amounts reported reflect the potential range of 20192021 LTC Awardaward payouts under the shareholder-approved LTI Plan. The actual LTC Awardaward earned is determined based on the level of achievement attained with respect to the pre-established performance targets based on PepsiCo’s TSR relative to the proxy peer group over the three-year performance period and will be paid out on the third anniversary of the grant date. |
(5)(6) | The actual number of shares of PepsiCo Common Stock that are earned for the 20192021 PSUs will be determined based on the level of achievement attained with respect to Core Constant Currency EPS PerformanceGrowth and cumulative Core Net ROIC ImprovementOrganic Revenue Growth consistent with the pre-established payout scale determined for the three-year performance period. If PepsiCo performs below the pre-established performance targets, the number of PSUs earned will be reduced below the target number. The amounts reported in the “target” column reflect the number of PSUs that may be paid out if the performance targets are achieved at 100%, and the amounts reported in the “maximum” column reflect the maximum number of PSUs that will be paid out if the performance targets are exceeded. |
| The PSUs earned by NEOs will vest and be paid out in shares of PepsiCo Common Stock on the third anniversary of the grant date subject to pro-rata vesting upon retirement between ages 55 and 61, inclusive, with at least 10 years of service, and full vesting upon retirement at age 62 or older with at least 10 years of service, in each case subject to achievement of the applicable performance targets over the full three-year performance period. As of 20192021 fiscal year-end, Messrs. Laguarta, Johnston and JohnstonWilliams are eligible for pro-rata vesting. Notwithstanding the level of performance achieved, the Compensation Committee retains the discretion to reduce the number of shares issued in settlement of the 20192021 PSU awards. |
 | |
PEPSICO 20202022 PROXY STATEMENT | 6371 |
Table of Contents
Executive Compensation
(6) | The amount reported reflects a special PSU award which was awarded to Mr. Laguarta in 2018 as described in the Compensation Discussion and Analysis. The award is scheduled to vest on the fourth anniversary of the grant date, subject to the achievement of annual performance targets over a three-year performance period (2018-2020), and subject to continued employment through March 1, 2022. Grant date fair value is calculated based on the number of shares issuable at target achievement level. Because the performance-related payout is based on separate measurements of our financial performance for each year over a three-year performance period (2018-2020), and those separate performance targets are established at the beginning of each performance year, the accounting guidance on share-based payments requires the grant date fair value to be calculated at the commencement of each separate year of the performance cycle when the respective performance targets are approved. The amounts for 2019 represent the grant date fair value for special PSU awards at target that may be earned based on performance against 2019 targets. It excludes shares that were earned based on performance against 2018 targets and that may be earned based on performance against 2020 targets. |
(7) | Mr. Popovici’s target and maximum annual incentive reflect a pro-rated increase based on the base salary adjustment received in February 2019 in connection with his promotion to CEO, ESSA. |
(8) | The amount reported reflects a special PSU award which was awarded to Mr. Popovici in 2018 as described in the Compensation Discussion and Analysis. The award is scheduled to vest on the third anniversary of the grant date, subject to the achievement of annual performance targets over a three-year performance period (2018-2020), and subject to continued employment through March 1, 2021. Grant date fair value is calculated based on the number of shares issuable at target achievement level. Because the performance-related payout is based on separate measurements of our financial performance for each year over a three-year performance period (2018-2020), and those separate performance targets are established at the beginning of each performance year, the accounting guidance on share-based payments requires the grant date fair value to be calculated at the commencement of each separate year of the performance cycle when the respective performance targets are approved. The amounts for 2019 represent the grant date fair value for special PSU awards at target that may be earned based on performance against 2019 targets. It excludes shares that were earned based on performance against 2018 targets and that may be earned based on performance against 2020 targets. |
64 PEPSICO 2020 PROXY STATEMENT | |
Table of Contents
Executive Compensation
20192021 Outstanding Equity Awards at Fiscal Year-End
The following table lists all outstanding stock option, PSU and RSU awards as of December 28, 201925, 2021 for the NEOs. The material terms and conditions of the equity awards reported in this table are described in the “2019 Long-Term Incentive Awards” sectionAwards sections of the Compensation Discussion and Analysis beginning on page 5260 of this Proxy Statement. No LTI award granted to an NEO has been transferred to any other person, trust or entity.
| | Option Awards | | Stock Awards(1)(2) |
| Name | | Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable | | Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable | | Option
Exercise
Price
($) | | Option
Grant
Date | | Option
Vesting
Date | | Option
Expiration
Date | | Grant
Date | | Vesting
Date | | Number
of Shares
or Units
of Stock
That
Have Not
Vested | | | Market
Value of
Shares
or Units
of Stock
That
Have Not
Vested | | Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested(3)
(#) | | | Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
($) |
| Ramon L. Laguarta | | 16,941 | | — | | 63.75 | | 3/1/2011 | | 3/1/2014 | | 2/28/2021 | | 3/1/2019 | | 3/1/2022 | | — | | | — | | 56,897 | | | 7,825,613 |
| | | | | | | | | | | | | 3/1/2018 | | 3/1/2022 | | — | | | — | | 36,782 | (4) | | 5,058,996 |
| | | | | | | | | | | | | 3/1/2018 | | 3/1/2021 | | — | | | — | | 28,448 | | | 3,912,738 |
| | | | | | | | | | | | | 3/1/2017 | | 3/1/2020 | | — | | | — | | 23,491 | | | 3,230,952 |
| Hugh F. Johnston | | | | | | | | | | | | | | 3/1/2019 | | 3/1/2022 | | — | | | — | | 35,560 | | | 4,890,922 |
| | | | | | | | | | | | | 3/1/2018 | | 3/1/2021 | | — | | | — | | 33,190 | | | 4,564,953 |
| | | | | | | | | | | | | 3/1/2017 | | 3/1/2020 | | — | | | — | | 32,887 | | | 4,523,278 |
| Kirk Tanner | | | | | | | | | | | | | | 3/1/2019 | | 3/1/2022 | | — | | | — | | 17,922 | | | 2,464,992 |
| | | | | | | | | | | | | 3/1/2018 | | 3/1/2021 | | — | | | — | | 16,690 | | | 2,295,543 |
| | | | | | | | | | | | | 3/1/2017 | | 3/1/2020 | | — | | | — | | 18,793 | | | 2,584,789 |
| Silviu Popovici | | | | | | | | | | | | | | 3/1/2019 | | 3/1/2022 | | — | | | — | | 17,069 | | | 2,347,670 |
| | | | | | | | | | | | | 3/1/2018 | | 3/1/2021 | | — | | | — | | 17,448 | | | 2,399,798 |
| | | | | | | | | | | | | 3/1/2018 | | 3/1/2021 | | — | | | — | | 13,793 | (5) | | 1,897,089 |
| | | | | | | | | | | | | 10/1/2017 | | 10/1/2020 | | — | | | — | | 5,020 | | | 690,451 |
| | | | | | | | | | | | | 3/1/2017 | | 3/1/2020 | | 7,107 | | | 977,497 | | 2,369 | | | 325,832 |
| Ronald Schellekens | | | | | | | | | | | | | | 3/1/2019 | | 3/1/2022 | | — | | | — | | 9,103 | | | 1,252,027 |
| | | | | | | | | | | | | 12/24/2018 | | 7/1/2021 | | 29,425 | (6) | | 4,047,115 | | — | | | — |
| | | Option Awards | | Stock Awards(1)(2) |
| Name | | Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable | | Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable | | Option
Exercise
Price
($) | | Option
Grant
Date | | Option
Grant
Date | | Option
Vesting
Date | | Option
Expiration
Date | | Grant
Date | | Vesting
Date | | Number
of
Shares
or Units
of Stock
That
Have
Not
Vested
(#) | | Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested
($) | | Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested(3)
(#) | | Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That Have
Not Vested
($) |
Ramon L.
Laguarta | | | | | | | | | | | | | | | | 3/1/2021 | | 3/1/2024 | | — | | — | | 66,629 | | 11,312,272 |
| | | | | | | | | | | | | | | | 3/1/2020 | | 3/1/2023 | | — | | — | | 61,600 | | 10,458,448 |
| | | | | | | | | | | | | | | | 3/1/2019 | | 3/1/2022 | | — | | — | | 56,897 | | 9,659,973 |
| | | | | | | | | | | | | | | | 3/1/2018 | | 3/1/2022 | | 22,599(4) | | 3,836,858 | | — | | — |
Hugh F.
Johnston | | | | | | | | | | | | | | | | 3/1/2021 | | 3/1/2024 | | — | | — | | 35,200 | | 5,976,256 |
| | | | | | | | | | | | | | | | 3/1/2020 | | 3/1/2023 | | — | | — | | 35,200 | | 5,976,256 |
| | | | | | | | | | | | | | | | 3/1/2019 | | 3/1/2022 | | — | | — | | 35,560 | | 6,037,377 |
Silviu
Popovici | | | | | | | | | | | | | | | | 3/1/2021 | | 3/1/2024 | | — | | — | | 15,086 | | 2,561,301 |
| | | | | | | | | | | | | | | | 3/1/2020 | | 3/1/2023 | | — | | — | | 22,629 | | 3,841,952 |
| | | | | | | | | | | | | | | | 3/1/2019 | | 3/1/2022 | | — | | — | | 17,069 | | 2,897,975 |
Kirk
Tanner | | | | | | | | | | | | | | | | 3/1/2021 | | 3/1/2024 | | — | | — | | 15,086 | | 2,561,301 |
| | | | | | | | | | | | | | | | 3/1/2020 | | 3/1/2023 | | — | | — | | 22,629 | | 3,841,952 |
| | | | | | | | | | | | | | | | 3/1/2019 | | 3/1/2022 | | — | | — | | 17,922 | | 3,042,797 |
Steven
Williams | | | | | | | | | | | | | | | | 3/1/2021 | | 3/1/2024 | | — | | — | | 15,086 | | 2,561,301 |
| | | | | | | | | | | | | | | | 3/1/2020 | | 3/1/2023 | | — | | — | | 17,600 | | 2,988,128 |
| | | | | | | | | | | | | | | | 5/1/2019 | | 3/1/2022 | | — | | — | | 5,037 | | 855,182 |
| | | | | | | | | | | | | | | | 3/1/2019 | | 3/1/2022 | | 1,846 | | 313,414 | | 1,810 | | 307,302 |
| (1) | With the exceptionEach of the special awards discussed in footnotes 4, 5 and 6 below, each of the RSU and PSU awards listed in the table vests three years after the grant date, subject to continued service with PepsiCo through the vesting date and achievement of applicable performance targets during a three-year performance period. Each of the awards that are not special awards will vest on a pro-rata basis upon retirement between ages 55 and 61, inclusive, with at least 10 years of service, and will vest in full upon retirement at age 62 or older with at least 10 years of service, subject to achievement of applicable performance targets. As of 20192021 fiscal year-end, Messrs. Laguarta, Johnston and JohnstonWilliams are eligible for pro-rata vesting. |
| (2) | The market value of unvested RSUsPSUs and PSUsRSUs reflected in the table has been calculated by multiplying the number of unvested PSUs and RSUs and PSUs by $137.54,$169.78, PepsiCo’s closing stock price on December 27, 2019,23, 2021, the last trading day of the 20192021 fiscal year. |
| (3) | The numbers displayed in this column reflect the target number of PSUs awarded. Notwithstanding the level of performance achieved, the Compensation Committee retains the discretion to reduce the number of shares issued in settlement of these awards. |
| (4) | The amount reported award reflects athe special PSU award which was awardedgranted to Mr. Laguarta in 2018 as described inMarch 2018. In February 2021, the Compensation Discussion and Analysis on page 55Committee certified the level of this Proxy Statement. The award is scheduled to vest on the fourth anniversary of the grant date, subjectperformance achieved with respect to the achievement of annual performance targets over a three-year performance period (2018-2020), and, as a result, Mr. Laguarta may receive 61.4% of target for this award. The award remains subject to time-based vesting and is scheduled to vest on March 1, 2022 subject to continued employment through March 1, 2022.the vesting date. In addition, notwithstanding the level of performance achieved, the Compensation Committee retains the discretion to reduce the number of shares issued in settlement of this award. |
| |
(5)72 | The amount reported reflects a special PSU award which was awarded to Mr. Popovici in 2018 as described in the Compensation Discussion and Analysis on page 55 of this Proxy Statement. The award is scheduled to vest on the third anniversary of the grant date, subject to the achievement of annual performance targets over a three-year performance period (2018-2020), and subject to continued employment through March 1, 2021. |
(6) | The reported award reflects a RSU award granted to Mr. Schellekens to offset compensation that was forfeited due to his leaving his prior employer. 50% of this award is scheduled to vest on July 1, 2020 and the remaining 50% is scheduled to vest on July 1, 2021, subject to continued employment through each vesting date. |
| PEPSICO 20202022 PROXY STATEMENT 65 |
Table of Contents
Executive Compensation
20192021 Option Exercises and Stock Vested
| | Option Awards(1) | | Stock Awards(2) | | Option Awards(1) | | Stock Awards(2) |
| Name | | Number of Shares
Acquired on Exercise
(#) | | Value Realized
on Exercise
($)(3) | | Number of Shares
Acquired on Vesting
(#) | | Value Realized
on Vesting
($)(3) | | Number of
Shares
Acquired on
Exercise
(#) | | Value Realized
on Exercise
($)(3) | | Number of
Shares
Acquired on
Vesting
(#) | | Value Realized
on Vesting
($)(3) |
| Ramon L. Laguarta | | 19,066 | | 1,199,909 | | 38,483 | | 4,456,331 | | — | | — | | 14,964 | | 1,962,603 |
| Hugh F. Johnston | | — | | — | | 58,774 | | 6,806,029 | | — | | — | | 17,458 | | 2,289,704 |
| Silviu Popovici | | | — | | — | | 15,052 | | 1,974,145 |
| Kirk Tanner | | 3,158 | | 194,754 | | 43,426 | | 5,028,730 | | — | | — | | 8,779 | | 1,151,410 |
| Silviu Popovici | | — | | — | | 13,613 | | 1,654,244 | |
| Ronald Schellekens | | — | | — | | — | | — | |
| Steven Williams | | | — | | — | | 25,496 | | 3,494,239 |
| (1) | All stockStock option exercises during 2019 wereare executed in a manner consistent with PepsiCo’s Share Retention Policy, which is described in the “Governance Features of Our Executive Compensation Programs” section of the Compensation Discussion and Analysis beginning on page 5765 of this Proxy Statement. |
| (2) | The following table lists PSU and RSU awards that vested in 20192021 for the NEOs. |
| Name | | Type | | Grant Date | | Payout
Date | | Number of
Shares
Granted (#) | | Number
of Shares
Acquired on
Vesting (#) | | Value
Realized on
Vesting ($) | | Dividend
Equivalents
Paid ($) | | Type | | Grant
Date | | Payout
Date | | Number of
Shares
Granted (#) | | Number
of Shares
Acquired on
Vesting (#) | | Value
Realized
on
Vesting ($) | | Dividend
Equivalents
Paid ($) |
| Ramon L. Laguarta | | PSUs | | 3/1/2016 | | 3/1/2019 | | 22,975 | | 38,483 | | 4,456,331 | | 409,557 | | PSUs | | 3/1/2018 | | 3/1/2021 | | 28,448 | | 14,964 | | 1,962,603 | | 170,627 |
| Hugh F. Johnston | | PSUs | | 3/1/2016 | | 3/1/2019 | | 35,089 | | 58,774 | | 6,806,029 | | 625,503 | | PSUs | | 3/1/2018 | | 3/1/2021 | | 33,190 | | 17,458 | | 2,289,704 | | 199,065 |
| Kirk Tanner | | RSUs(A) | | 3/1/2016 | | 3/1/2019 | | 5,924 | | 5,924 | | 685,999 | | 63,046 | |
| Kirk Tanner | | RSUs(B) | | 3/1/2014 | | 3/1/2019 | | 18,809 | | 18,809 | | 2,178,082 | | 299,768 | |
| Kirk Tanner | | PSUs(A) | | 3/1/2016 | | 3/1/2019 | | 5,924 | | 9,923 | | 1,149,083 | | 105,603 | |
| Kirk Tanner | | PSUs | | 5/4/2016 | | 3/1/2019 | | 5,236 | | 8,770 | | 1,015,566 | | 87,177 | |
| Silviu Popovici | | RSUs(A) | | 3/1/2016 | | 3/1/2019 | | 6,380 | | 6,380 | | 738,804 | | 67,899 | | PSUs | | 3/1/2018 | | 3/1/2021 | | 17,448 | | 9,178 | | 1,203,741 | | 104,652 |
| Silviu Popovici | | RSUs(B) | | 10/1/2016 | | 10/1/2019 | | 3,670 | | 3,670 | | 502,845 | | 37,966 | | PSUs(A) | | 3/1/2018 | | 3/1/2021 | | 13,793 | | 5,874 | | 770,404 | | 66,978 |
| Silviu Popovici | | PSUs(A) | | 3/1/2016 | | 3/1/2019 | | 2,127 | | 3,563 | | 412,595 | | 37,917 | |
| Kirk Tanner | | | PSUs | | 3/1/2018 | | 3/1/2021 | | 16,690 | | 8,779 | | 1,151,410 | | 100,103 |
| Steven Williams | | | RSUs(B)(C) | | 3/1/2019 | | 3/1/2021 | | 5,431 | | 3,585 | | 470,191 | | 28,014 |
| Steven Williams | | | PSUs(C) | | 3/1/2018 | | 3/1/2021 | | 1,851 | | 974 | | 127,745 | | 11,106 |
| Steven Williams | | | RSUs(C) | | 3/1/2018 | | 3/1/2021 | | 5,552 | | 5,552 | | 728,172 | | 63,307 |
| Steven Williams | | | RSUs(C)(D) | | 2/5/2016 | | 2/5/2021 | | 15,385 | | 15,385 | | 2,168,131 | | 269,699 |
| (A) | The awardsaward granted to Mr. Popovici on March 1, 2018 was subject to the achievement of annual performance targets over a three-year performance period (2018-2020) and continued employment through the payout date. |
| (B) | The RSU award granted on March 1, 20162019 to Mr. Williams pro-rata vested as Mr. Williams became eligible for Messrs. Tanner and Popoviciearly retirement in 2021 having reached age 55 with at least 10 years of service. |
| (C) | The awards granted to Mr. Williams were awarded prior to their promotionshis promotion to theirhis senior executive officer rolesrole and associated pay structure. |
(B)(D) | The awardsaward granted to Messrs. Tanner and Popovici in 2014 andMr. Williams on February 5, 2016 respectively, werewas subject to continued employment through eachthe payout date. The award for Mr. Tanner vested on March 1, 2019 and the award for Mr. Popovici vested on October 1, 2019. |
| (3) | The value realized on exercise of stock options is equal to the amount per share at which the NEO sold shares acquired on exercise (all of which occurred on the date of exercise), minus the exercise price of the stock options, times the number of shares acquired on exercise of the options. The value realized on vesting of stock awards is equal to the average of the high and low market prices of PepsiCo Common Stock on the date of vesting, times the number of shares acquired upon vesting. The number of shares and value realized on vesting include shares that were withheld at the time of vesting to satisfy tax withholding requirements. |
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66 PEPSICO 20202022 PROXY STATEMENT | |
Table of Contents
Executive Compensation
2019 Pension2021 Retirement Benefits
A summary of the defined benefit and defined contribution plans sponsored by PepsiCo that our NEOs participated in during 20192021 are described in the tables below. Benefits for the NEOs who participate in these plans are generally determined using the same formula as for other eligible employees. NEOs receive no enhancements that are not available to other eligible employees in each plan.
As disclosed in the 2021 Proxy Statement, in December 2020, PepsiCo announced that future service accruals for salaried employees would cease under the defined benefit pension plans outlined below, effective December 31, 2025 and going forward, all salaried employees would participate in the defined contribution plans, which are also summarized below.
| | PepsiCo Employees
Retirement Plan AI (“PERP-A”PERP-I”) | | PepsiCo Pension Equalization Plan
(“PEP”(“PEP”) | | PepsiCo International Retirement Plan -
Defined Benefit Program (“PIRP-DB”)PIRP-DB”) |
| | | | | | | |
| Eligible NEOs | | ■Ramon L. Laguarta (early retirement eligible) ■Hugh F. Johnston (early retirement eligible) | | ■Ramon L. Laguarta (frozen) |
| | | | | | |
| | | | | | | |
| Type of Plan | | Qualified defined benefit pension plan | | Non-qualified defined benefit pension plan | | Non-qualified defined benefit pension plan |
| | | | | | | |
| | | | | | |
| Eligibility | | U.S. salaried employees hired prior to January 1, 2011 | | Employees eligible to participate in the PERP-APERP-I whose benefits under the PERP-APERP-I are affected by limitations imposed by the Internal Revenue Code on qualified plan compensation or benefits | | Generally covers non-U.S. citizens hired prior to January 1, 2011 who were active participants in a defined benefit retirement plan sponsored by their home country and were unable to remain in that plan during their assignment outside their home country, designated for participation by PepsiCo |
| | | | | | | |
| | | | | | |
Form of
Payment
Upon
Retirement | | Benefits generally payable as a single life annuity, a single lump sum distribution, a joint and survivor annuity, a 10-year certain annuity or a combination of a partial lump sum and an annuity | | ■Benefits accrued and vested by December 31, 2004 are generally paid in the same form and at the same time the PERP-APERP-I benefits are paid ■Benefits accrued or vested after December 31, 2004 are payable at termination (subject to a six-month delay under Section 409A of the Internal Revenue Code), in the form of a lump sum | | Benefits payable as a single life annuity, a single lump sum distribution, a joint and survivor annuity, a 10-year certain annuity or a combination of a partial lump sum and an annuity |
| | | | | | | |
| | | | | | |
Benefit
Timing | | ■Normal retirement benefits payable at age 65 with 5 years of service ■Unreduced early retirement benefits payable as early as age 62 with 10 years of service ■Reduced early retirement benefit payable at age 55 with 10 years of service, determined by reducing the normal retirement benefit by 4% for each year benefits begin prior to age 62 |
| | | | | | | |
| |
| 74 | PEPSICO 20202022 PROXY STATEMENT 67 |
Table of Contents
Executive Compensation
| | PepsiCo Employees
Retirement Plan AI (“PERP-A”PERP-I”) | | PepsiCo Pension Equalization Plan
(“PEP”(“PEP”) | | PepsiCo International Retirement Plan -
Defined Benefit Program (“PIRP-DB”)PIRP-DB”) |
| | | | | | | |
Retirement
Benefit
Formula | | A single life annuity beginning at normal retirement age generally determined as follows: ■3% for each year of service up to 10 years, plus 1% for each year of service in excess of 10, multiplied by the executive’s highest consecutive five-year average monthly earnings (base salary and annual incentivebonus compensation, limited by Internal Revenue Code regulations) , based on service and earnings up to December 31, 2025■Reduced by 0.43% of the executive’s highest consecutive five-year average monthly earnings up to his or herapplicable monthly Social Security covered compensation, multiplied by the executive’s years of service up to 35 | | ■Same terms and conditions as the PERP-APERP-I as determined without regard to the Internal Revenue Code limitations on compensation and benefits ■Offset by the actual benefit payable under the PERP-A | | ■Substantially the same as the formula under the PERP-APERP-I and the PEP, without the Social Security offset ■Offset by retirement benefits paid under any Company plan or government mandated retirement program |
| | | | | | |
| | | | | | | |
Disability/
Death
Benefits | | ■All participants who become disabled after 10 years of service and remain disabled until retirement generally receive continued service for the lengthduration of their disability, but not past December 31, 2025■If an employee dies, the spouse or domestic partner of an employee who is retirement eligible is entitled to a pension equal to the survivor benefit under the 50% joint and survivor option. The surviving spouse, domestic partner or estate of an active retirement-eligible participant is also entitled to a one-time payment equal to the lump sum benefit accrued at death, offset by the lump sum value of any surviving spouse’s or domestic partner’s benefit that might be payable. This special death benefit is paid by the Company and not from the plan | | If the participant dies, the spouse or domestic partner of an employee is entitled to a pension equal to the survivor benefit under the 50% joint and survivor option |
| | | | | |
| | | | | | |
Deferred
Vested
Benefits | | ■For a participant with five or more years of service who terminates employment prior to attaining either age 55 with 10 years of service or age 65 with 5 years of service ■Benefit is equal to the retirement benefit formula amount calculated using the potential years of credited service had the participant remained employed to age 65 pro-rated by a fraction, the numerator of which is the participant’s credited years of credited service at termination and the denominator of which is the participant’s potential years of credited service had the participant remained employed to age 65 ■Deferred vested benefits under the PERP-APERP-I and PIRP-DB are payable inas an annuity commencing at age 65,65; however, a participant may elect to commence benefits as early as age 55 on an actuarially reduced basis to reflect the longer payment period. A participant who terminates from the PERP-APERP-I is eligible for a one-time lump sum benefit within 365 days of termination, provided that the participant does not have a PEP benefit that vested prior to 2005. A participant who terminates from the PIRP-DB is also eligible for a one-time lump sum benefit within 365 days of termination. Deferred vested benefits under PEP are payable in an annuity at the later of age 55 or termination (subject to a six monthsix-month delay and form of payment restrictions under Section 409A of the Internal Revenue Code) |
| | | | | | | |
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68 PEPSICO 20202022 PROXY STATEMENT | |
Table of Contents
Executive Compensation
| | PepsiCo Savings Plan - Automatic Retirement
Contribution Program
(“ARC”) | | PepsiCo International Retirement Plan -
Defined Contribution Program(“PIRP-DC”) |
| | | | | |
| Eligible NEOs | | ■Ronald SchellekensNone of the NEOs participate in the ARC | | ■Silviu Popovici |
| | | | |
| | | | | |
| Type of Plan | | Qualified defined contribution plan | | Non-qualified defined contribution plan |
| | | | | |
| | | | |
| Eligibility | | U.S. salaried employees hired on or after January 1, 2011 | | Generally covers non-U.S. citizens hired on or after January 1, 2011 who are unable to remain in their home country retirement plan during their assignment outside their home country and are designated for participation by PepsiCo |
| | | | | |
| | | | |
Form of Payment
Upon Retirement | | Benefits are payable as a single lump sum distribution or in installments | | Benefits are payable as a single lump sum distribution |
| | |
| | |
| Benefit Timing | | Vested account balance payable following retirement/termination |
| | |
| | |
| | | | |
Retirement
Benefit Formula | | ■Contributions are determined by multiplying a percentage (range of 2% to 9% based on age and years of service) by eligible pay, subject to Internal Revenue Code limitations ■PepsiCo provides a matching contribution of 50% up to either 4% or 6% of eligible pay, based on years of service | | ■Pay Credits are determined each year by multiplying the eligible pay credit percentage (ranging from 5% to 18%12%) by the eligible annualized pay ■Interest Credits are allocated based on the 30-year Treasury rate ■Offset by retirement benefits paid under any Company plan or government mandated retirement program ■ |
| | | |
| | |
Disability/Death
Benefits | | If the participant dies, the spouse, domestic partner or beneficiary is entitled to receive the vested account balance |
| | |
| | |
Deferred Vested
Benefits | | Vested account balance payable following retirement/termination |
| | | | | |
| |
| 76 | PEPSICO 20202022 PROXY STATEMENT 69 |
Table of Contents
Executive Compensation
The Present Value of Accumulated Benefit reported in the 2019 Pension2021 Retirement Benefits Table below represents the accumulated benefit obligation for benefits earned to date, based on age, service and earnings through the measurement date of December 28, 2019.25, 2021.
| Name | | Plan Name | | Number of
Years
Credited
Service (#) | | Present
Value of
Accumulated
Benefit ($)(1) | | Payments
During Last
Fiscal Year
($) | | Plan Name | | Number of
Years
Credited
Service
(#) | | Present
Value of
Accumulated
Benefit
($)(1) | | Payments
During Last
Fiscal Year
($) |
| Ramon L. Laguarta(2) | | PepsiCo International Retirement Plan - DB | | 21.0 | | 3,789,319 | | — | | PepsiCo International Retirement Plan - DB | | 21.0 | | 4,374,288 | | — |
| | PepsiCo Employees Retirement Plan A | | 2.3 | | 56,956 | | — | | PepsiCo Employees Retirement Plan I | | 4.3 | | 122,931 | | — |
| | PepsiCo Pension Equalization Plan | | 5,406,628 | | — | | PepsiCo Pension Equalization Plan | | | | 13,515,318 | | — |
| Hugh F. Johnston | | PepsiCo Employees Retirement Plan A | | 29.8 | | 1,315,055 | | — | | PepsiCo Employees Retirement Plan I | | 31.8 | | 1,641,310 | | — |
| | PepsiCo Pension Equalization Plan | | 12,552,861 | | — | | PepsiCo Pension Equalization Plan | | | | 16,609,556 | | — |
| Silviu Popovici | | | PepsiCo International Retirement Plan - DC | | 4.3 | | 896,350 | | — |
| Kirk Tanner | | PepsiCo Employees Retirement Plan A | | 27.5 | | 931,516 | | — | | PepsiCo Employees Retirement Plan I | | 29.5 | | 1,253,499 | | — |
| | PepsiCo Pension Equalization Plan | | 4,006,165 | | — | | PepsiCo Pension Equalization Plan | | | | 7,718,153 | | — |
| Silviu Popovici | | PepsiCo International Retirement Plan - DC | | 2.3 | | 390,898 | | — | |
| Steven Williams | | | PepsiCo Employees Retirement Plan I | | 25.0 | | 1,237,523 | | — |
| | | | PepsiCo Pension Equalization Plan | | | | 4,200,574 | | — |
| (1) | These amounts have been calculated using actuarial methods and assumptions shown below in the fiscal year-end valuation under the guidance on employers’ accounting for pensions with the assumption, required by SEC disclosure rules, that each NEO remains in service until retirement at the earliest date when unreduced retirement benefits would be available (i.e., age 62 or older):; discount rate of 3.36%2.87% for the PepsiCo Employees Retirement Plan A, 3.21%I, 2.76% for the PepsiCo Pension Equalization Plan and 3.33%2.89% for the PepsiCo International Retirement Plan; and benefits were converted to lump sums based on a 5.50%5% lump sum conversion rate at retirement. |
| (2) | The amounts reported for Mr. Laguarta above reflect his transition to the U.S. on September 1, 2017. In 2017, Mr. Laguarta was credited service under the PepsiCo International Retirement Plan - DB commencing on his hire date in lieu of end-of-service benefits under his prior Spanish employment terms that he ceased to be eligible for upon his relocation to the U.S. |
2019 Non-Qualified Deferred Compensation
Executive Income Deferral Program
Eligible NEOs | ■Hugh F. Johnston
■Kirk Tanner
|
| | |
| PEPSICO 2022 PROXY STATEMENT | 77 |
Table of Contents
Executive Compensation
2021 Non-Qualified Deferred Compensation
Executive Income Deferral Program
| Eligible NEOs | | ■ Hugh F. Johnston ■ Kirk Tanner ■ Steven Williams |
| | |
| Description | | Non-qualified and unfunded program that allows certain U.S.-based eligible employees to defer a portion of their annual compensation to a later date. The participants’ balances are unsecured, subject to the claims of PepsiCo’s creditors and may be forfeited in the event of the Company’s bankruptcy |
| | | |
| Deferral Limits | | Eligible PepsiCo executives may defer up to 75% of base salary and 100% of annual cash incentive cash compensation. The Company does not provide a matching contribution on any deferrals |
| | | |
Return on Plan
Balance | | Executives earn a return on their notional accounts based on investments in the phantom funds selected by the executives (listed in footnote 2 of the table below) from a list of phantom funds made available by the Company. The EIDP does not guarantee a rate of return and none of the funds provide above market earnings |
| | | |
| Distributions | | ■At the time of election to defer, executives are required to choose to receive future payments on either a specific date or upon separation from service ■Notwithstanding a participant’s payment election, deferrals made after 2000 are paid in a lump sum at the time of separation from service in cases in which separation (other than retirement) occurs prior to the elected payment date ■Payments of deferrals made after 2004 to executives who are specified employees under Section 409A of the Internal Revenue Code that are triggered by a separation from service are delayed six months following separation |
| | | |
Form of
Payment | | Made in cash and received as a lump sum or in installments (quarterly, semi-annually or annually) over a period of up to 20 years and up to age 80 |
| | |
| |
For additional detail on PepsiCo’s EIDP, refer to the “Executive Income Deferral” section of the Compensation Discussion and Analysis on page 56 |
For additional detail on PepsiCo’s EIDP, refer to the “Executive Income Deferral” section of the Compensation Discussion and Analysis on page 64 of this Proxy Statement.
| 78 | PEPSICO 2022 PROXY STATEMENT |
70 PEPSICO 2020 PROXY STATEMENT | |
Table of Contents
Executive Compensation
Supplemental Savings Program
Eligible NEONEOs | ■Ronald Schellekens
|
| | |
Description■
| TheNone of the NEOs participate in the PepsiCo Automatic Retirement Contribution Equalization Plan (the “ARC-E”“ARC-E”) |
| | |
| Description | | The ARC-E is a non-qualified, non-elective defined contribution deferred compensation plan sponsored by PepsiCo to provide benefits to employees whose benefits under the Automatic Retirement Contribution (“ARC”)ARC portion of the PepsiCo Savings Plan are limited due to Internal Revenue Code limitations on qualified plan compensation and benefits |
| | | |
| Eligibility | | U.S. salaried employees hired on or after January 1, 2011 |
| | | |
Form of Payment
Upon Retirement | | Benefits are payable as a single lump sum distribution |
| | | |
| Benefits Timing | | ■Vested account balance payable following retirement/termination ■Payments made to executives who are specified employees under Section 409A of the Internal Revenue Code that are triggered by a separation from service are delayed six months following separation |
| | | |
Retirement
Benefits Formula | | Contributions have the same terms and conditions as ARC described in the “2019 Pension“2021 Retirement Benefits” section on page 6774 without regard to the Internal Revenue Code limitations on compensation and benefits. Total ARC and ARC-E contributions in any year cannot exceed an amount equal to the IRSInternal Revenue Code annual contributioncompensation limit in effect for that year |
| | | |
Disability/Death
Benefits | | If the participant dies, the spouse, domestic partner or beneficiary is entitled to receive the vested account balance |
| | |
Deferred Vested
Benefits | Vested account balance payable following retirement/termination |
| |
The following table provides information regarding participation by NEOs in our non-qualified deferred compensation programs during 20192021 and at fiscal year-end.
| Name | | Executive
Contributions
in Last
Fiscal Year
($) | | Registrant
Contributions
in Last
Fiscal Year
($) | |
Aggregate
Earnings in Last
Fiscal Year
($)(1) | | Aggregate
Withdrawals/
Distributions
($) | | Aggregate
Balance at
Last Fiscal
Year End
($)(2) | | Executive
Contributions
in Last
Fiscal Year
($) | | Registrant
Contributions
in Last
Fiscal Year
($) | | Aggregate
Earnings in Last
Fiscal Year
($)(1) | | Aggregate
Withdrawals/
Distributions
($) | | Aggregate
Balance at
Last Fiscal
Year-End
($)(2) |
| Hugh F. Johnston | | — | | — | | 705,309 | | — | | 3,204,835 | | — | | — | | 705,028 | | — | | 4,186,635 |
| Kirk Tanner | | — | | — | | 59,889 | | — | | 243,242 | | — | | — | | 78,380 | | — | | 365,967 |
| Ronald Schellekens | | — | | 25,888 | | 1,316 | | — | | 27,204 | |
| Steven Williams | | | — | | — | | 442,590 | | — | | 2,844,051 |
| (1) | PepsiCo does not provide above-marketabove market or preferential rates and, as a result, the notional earnings are not included in the 20192021 Summary Compensation Table. |
| (2) | None of the amounts reported in this column are reflected in the 20192021 Summary Compensation Table with respect to Messrs. Johnston, Tanner and Tanner.Williams. Deferral balances of NEOs under the EIDP were notionally invested in the following phantom funds and earned the following rates of return in 2019:2021: PepsiCo Common Stock: 27.95%Stock Fund: 20.24%, BlackRock LifePath Retirement Fund: 7.10%, BlackRock International Equity Index Fund: 12.06%, BlackRock Small Cap Equity Index Fund: 12.89%, BlackRock Mid-Cap Equity Index Fund: 22.18%, BlackRock Large Cap Equity Index Fund: 29.44%, BlackRock Total U.S. Equity Index Fund: 32.4%25.84%, BlackRock Large Cap Equity IndexSecurity Plus Fund: 33.0%1.74%, Dodge & Cox Bond Account: -0.40% and Defined Applicable Federal Rate (AFR) Fund: 2.98%2.17%. |
| |
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Table of Contents
Executive Compensation
Potential Payments on Termination or Change in Control
Termination of Employment/Retirement
None of our NEOs have any arrangement that provides for severance payments or severance benefits.
In the event an NEO retires, terminates or resigns from PepsiCo for any reason as of fiscal year-end, he or she would be entitled to a pensionretirement benefit and any outstanding balance calculated in accordance with the terms and conditions disclosed under the “2019 Pension“2021 Retirement Benefits” section beginning on page 6774 of this Proxy Statement and under the “2019“2021 Non-Qualified Deferred Compensation” section beginning on page 7078 of this Proxy Statement.
Our NEOs’ unvested annual LTI awards vest on a pro-rata basis upon retirement between ages 55 and 61, inclusive, and fully vest upon death, disability or retirement on or after age 62. In order to be retirement eligible, an executive must be at least age 55 with 10 or more years of service. For special awards, no accelerated vesting occurs upon retirement. In the event of death or long-term disability, special awards fully vest. Even after vesting, PSUs and LTC Awardsawards remain subject to the achievement of pre-established performance targets.
The following table sets forth, for each NEO, the value of the unvested Stock Options,stock options, PSUs, RSUs and LTC Awardsawards and accrued dividend equivalents on PSUs and RSUs that would vest or be forfeited if the NEO’s employment terminated on December 28, 2019,25, 2021, the last day of the 20192021 fiscal year, due to termination without cause, retirement, death or long-term disability:
| | Termination/Retirement
($ in millions)(1) | | Death/Long-Term Disability
($ in millions)(1) | | Termination/
Retirement
($ in millions)(1) | | Death/Long-Term
Disability
($ in millions)(1) |
| Name | | Vest | | Forfeit | | Vest | | Forfeit | | Vest | | Forfeit | | Vest | | Forfeit |
| Ramon L. Laguarta | | 11.2 | | 16.1 | | 16.1 | | — | | 26.5 | | 22.7 | | 22.7 | | — |
| Hugh F. Johnston | | 12.4 | | 8.2 | | 8.2 | | — | | 15.6 | | 10.1 | | 10.1 | | — |
| Silviu Popovici | | | — | | 13.3 | | 13.3 | | — |
| Kirk Tanner | | — | | 10.8 | | 10.8 | | — | | — | | 13.5 | | 13.5 | | — |
| Silviu Popovici | | — | | 11.4 | | 11.4 | | — | |
| Ronald Schellekens | | — | | 6.0 | | 6.0 | | — | |
| Steven Williams | | | 5.4 | | 4.5 | | 4.5 | | — |
| (1) | The PSUs and RSUs were valued at a price of $137.54,$169.78, PepsiCo’s closing stock price on December 27, 2019,23, 2021, the last trading day of the 20192021 fiscal year. Death and Long-Term Disability vesting amounts do not include the value of vested stock options that have already been earned or unvested PSUs, RSUs and LTC Awardsawards that an executive may have earned due to fulfilling the retirement eligibility criteria. As of 20192021 fiscal year-end, Messrs. Laguarta, Johnston and JohnstonWilliams are eligible for pro-rata vesting of annual LTI awards. |
Change in Control
PepsiCo has a long history of maintaining a “double trigger” vesting policy. This means that unvested stock options, PSUs, RSUs and LTC Awardsawards only vest if the participant is terminated without cause or resigns for good reason within two years following a change in control of PepsiCo or if the acquirer fails to assume or replace the outstanding awards.
For each NEO, the following table illustrates:
| ■ | the value of the Stock Options,stock options, PSUs, RSUs, LTC Awardsawards and accrued dividend equivalents on PSUs and RSUs that would vest upon a change in control of PepsiCo without termination of employment; and |
| |
| ■ | the value of the Stock Options,stock options, PSUs, RSUs, LTC Awardsawards and accrued dividend equivalents on PSUs and RSUs that would vest upon an NEO’s termination without cause or resignation for good reason or if the acquirer does not assume or replace the outstanding awards at the time of the change in control. |
| | Change in Control
($ ($ in millions) |
| Name | | Total Benefit:
Change in
Control Only | | Total Benefit: Qualifying
Termination upon
Change in Control(1) |
| Ramon L. Laguarta | | — | | 16.122.7 |
| Hugh F. Johnston | | — | | 8.210.1 |
| Silviu Popovici | | — | | 13.3 |
| Kirk Tanner | | — | | 10.813.5 |
Silviu PopoviciSteven Williams | | — | | 11.4 |
Ronald Schellekens | | — | | 6.04.5 |
| (1) | The amounts reported in this column assume that both the change in control and termination occurred on December 28, 2019,25, 2021, the last day of the 20192021 fiscal year. The Stock Options,stock options, PSUs and RSUs were valued based on PepsiCo’s $137.54$169.78 closing stock price on December 27, 2019,23, 2021, the last trading day of 2019.the 2021 fiscal year. Amounts do not include vested options that have already been earned due to continued service or unvested PSUs, RSUs and LTC Awardsawards that an executive may have earned due to fulfilling the retirement eligibility criteria. As of 20192021 fiscal year-end, Messrs. Laguarta, Johnston and JohnstonWilliams are eligible for pro-rata vesting of annual LTI awards. |
72 80 | PEPSICO 20202022 PROXY STATEMENT | |
Table of Contents
Executive Compensation
Compensation Committee Report
The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2019.25, 2021.
| The Compensation Committee | | |
| Shona L. Brown, Chair | Dina Dublon | Robert C. Pohlad |
| Cesar Conde | David C. Page |
Dina Dublon | Daniel Vasella |
The information contained in the above report will not be deemed to be “soliciting material” or “filed” with the SEC, nor will this information be incorporated into any future filing under the Securities Act or the Exchange Act except to the extent the Company specifically incorporates such report by reference.
| PEPSICO 20202022 PROXY STATEMENT 73 | 81 |
Table of Contents
Executive Compensation
CEO Pay Ratio
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are providing disclosure regarding the ratio of the annual total compensation of our CEO to that of our median employee. As a global organization, we have employees operating in 7779 countries serving customersconsumers and consumerscustomers in more than 200 countries and territories. Our objective is to provide competitive compensation commensurate with an employee’s position and geographic location, while also linking compensation to Company and individual performance.
To provide context for this disclosure, it is important to understand the scope of our operations.
| ■ | Globally diverse workforce.Diverse Workforce. More than half of our employees are located outside the United States in locations where the cost of living is significantly below the U.S., including developing and emerging markets such as Mexico, Russia, the Middle East, China, South Africa, Brazil China and India. The compensation elements and pay levels of our employees can vary dramatically from country to country based on market trends, cost of living and cost of labor. These factors, along with fluctuations in currency exchange rates, impact the median employee compensation and the resulting ratio. |
| |
| ■ | Frontline is a strategic advantage.Strategic Advantage. PepsiCo has a large global frontline employee population driven by our direct store delivery model and in-house manufacturing and supply chain in many markets. We believe our frontline employees who make, merchandise, move and sell our products represent a strategic advantage for PepsiCo. PepsiCo’s integrated approach enables us to bring innovative products and packages to market faster, allows us to react more quickly to changes in the marketplace and builds unmatched customer relationships at the store level. |
Calculating Methodology
In 2017,2021, to identify our median employee and calculate such employee’s annual total compensation, we used the followingconsistent methodologies, estimates and assumptions.assumptions that were used prior to 2021 to identify any previous median employees.
Gathering Data on our Worldwide Employee Population.Due to the complexity of collecting compensation information across all the countries in which we have employees and the limited employee headcount in some of those countries, we used the de minimis exemption allowed by applicable SEC rules to exclude approximately 4,6005,383 employees from 3841 countries as detailed below, bifurcated into our reportable segments in effect in 2017.2021.
| ■ | Asia,Africa, Middle East and North AfricaSouth Asia - 1,300: Bahrain,666: Bangladesh, Ethiopia, Lebanon, Nigeria |
| |
| ■ | Asia Pacific, Australia and New Zealand and China Region - 1,344: Hong Kong, Indonesia, Japan, Lebanon, Malaysia, New Zealand, Philippines, Singapore, South Korea, Taiwan, Vietnam |
| |
| ■ | ESSAEurope - 2,187:2,226: Austria, Azerbaijan, Belarus, Bosnia and Herzegovina, Cyprus, Czech Republic, Denmark, Estonia, Finland, Georgia, Hungary, Italy, Kazakhstan, Kyrgyzstan, Lithuania, Luxembourg, Nigeria, Norway, Slovakia,Sweden, Switzerland, Uzbekistan |
| |
| ■ | Latin America - 1,065:1,147: Bermuda, Bolivia, Costa Rica, El Salvador, Panama, Paraguay, Uruguay |
The excluded employees represented less than 5% of our total global population of 272,398309,076 as of October 1, 2017.2021. In certain countries, our employment levels are subject to seasonal variations. After our use of the de minimis exemption, our employee population from which we determined our median employee consisted of 267,846303,693 individuals from 3938 countries.
We collected full-year 20162020 compensation data for the October 1, 20172021 employee population, relying on our internal payroll and tax records, rather than using statistical sampling.
Consistently Applied Compensation Measure.Our employees are compensated through multiple compensation elements that are highly dependent on the role, market practices and statutory requirements within each country where our employees are located. Because of the differences in compensation elements globally, we identified all cash-based compensation plus equity-based compensation that was realized in the measurement period as an appropriate representation of the annual total compensation for our employees in accordance with SEC rules.
| ■ | Compensation was annualized on a straight-line basis for full-time and part-time new hire employees who did not work a full fiscal year. |
| |
| ■ | We used the 12-month average exchange rate to convert each non-U.S. employee’s total compensation to U.S. dollars, enabling the median to be identified. |
| |
| ■ | We calculated the total compensation for the median employee in the same manner in which we determine the compensation shown for our NEOs in the Summary Compensation Table, including the value of retirement benefits. |
74 82 | PEPSICO 20202022 PROXY STATEMENT | |
Table of Contents
Executive Compensation
The Ratio
The following ratio of Mr. Laguarta’s annual total compensation to the median employee’s for our last completed fiscal year is a reasonable estimate calculated in a manner consistent with applicable SEC rules.
| ■ | The median employee’s total compensation was $45,896.$52,297. |
| |
| ■ | The total compensation was calculated in the same manner in which we determine the compensation shown for our NEOs in the Summary Compensation Table, including the value of retirement benefits. |
■ | Although we concluded there were no changes to our employee population or employee compensation arrangements that would significantly impact our pay ratio disclosure, the median employee referenced above is different than the median employee identified in the 2019 Proxy Statement. The prior median employee’s compensation for the last completed fiscal year significantly changed during 2019, primarily because the employee moved into a new role and received a significant salary increase. As permitted by SEC rules, the median employee identified above is one whose compensation is substantially similar to the median employee referenced in the 2019 Proxy Statement based on the compensation measure used to first select a median employee. |
| ■ | As reported in the Summary Compensation Table on page 61,69, our CEO’s compensation was $16,870,817.$25,506,607. |
Based on this information, the ratio of Mr. Laguarta’s annual total compensation to the median employee compensation for 20192021 was estimated to be 368488 to 1.
Securities Authorized for Issuance under Equity Compensation Plans
The following table provides information as of December 28, 201925, 2021 with respect to the shares of PepsiCo Common Stock that may be issued under our equity compensation plans.
| Plan Category | | Number of securities
to be issued upon
exercise of
outstanding
options, warrants
and rights(a) | | Weighted-average
exercise price of
outstanding options,
warrants and
rights(b) | | Number of securities
remaining available
for future issuance under
equity compensation plans
(excluding securities
reflected in column(a))(c) |
| Equity compensation plans approved | | 18,273,515(2) | | $89.03(3) | | 59,338,738(4) |
| by security holders(1) | | | | | | |
| Equity compensation plans not approved | | — | | — | | — |
| by security holders(5) | | | | | | |
| Total | | 18,273,515 | | $89.03(3) | | 59,338,738 |
| Plan Category | | Number of securities
to be issued upon
exercise of
outstanding
options, warrants
and rights(a) | | Weighted-average
exercise price of
outstanding options,
warrants and
rights(b) | | Number of securities
remaining available
for future issuance under
equity compensation plans
(excluding securities
reflected in column(a))(c) |
| Equity compensation plans approved by security holders(1) | | 16,418,111(2) | | $110.54(3) | | 43,896,443(4) |
| Equity compensation plans not approved by security holders | | — | | — | | — |
| Total | | 16,418,111 | | $110.54(3) | | 43,896,443 |
| (1) | Includes the LTI Plan. |
| |
| (2) | This amount includes 6,379,8675,977,466 PSUs and RSUs that, if and when vested, will be settled in shares of PepsiCo Common Stock. This amount also includes 268,745298,842 phantom units under the PepsiCo Director Deferral Program that will be settled in shares of Common Stock pursuant to the LTI Plan at the end of the applicable deferral period. For PSUs for which the performance period has ended as of December 28, 2019,25, 2021, the amounts reported in the table reflect the actual number of PSUs earned above and below target levels based on actual performance measured at the end of the performance period. The amounts reported in the table assume target level performance for PSUs for which the performance period hashave not endedvested as of December 28, 2019.25, 2021. If maximum earn-out levels are assumed for such PSUs, the total number of shares of PepsiCo Common Stock to be issued upon exercise and/or settlement of outstanding awards as of December 28, 201925, 2021 is 18,797,534.17,239,186. |
| |
| (3) | Weighted-average exercise price of outstanding options only. |
| |
| (4) | The shareholder-approved LTI Plan is the only equity compensation plan under which PepsiCo currently issues equity awards. As of May 2, 2007, the LTI Plan superseded the Company’s prior plan, the shareholder-approved 2003 Long-Term Incentive Plan, and no further awards were made under the 2003 plan. The LTI Plan permits the award of stock options, stock appreciation rights, restricted and unrestricted shares, restricted stock units and performance shares and units. The LTI Plan authorizes a number of shares for issuance equal to 195,000,000 plus the number of shares underlying awards under the Company’s prior equity compensation plans that are canceled or expired after May 2, 2007 without delivery of shares. Under the LTI Plan, any stock option granted reduces the available number of shares on a one-to-one basis, any RSU or other full value award granted before May 5, 2010 reduces the available number of shares on a one-to-one basis and any RSU or other full value award granted on or after May 5, 2010 reduces the available number of shares on a one-to-three basis. |
(5) | The table does not include information for equity compensation plans assumed by PepsiCo in connection with PepsiCo’s acquisition of The Pepsi Bottling Group, Inc. (“PBG”) in 2010. As of December 28, 2019, there were no shares of PepsiCo Common Stock issuable upon the exercise of outstanding options granted under the PBG plans prior to the acquisition of PBG. No additional stock options or other awards may be granted under the PBG plans. |
| PEPSICO 20202022 PROXY STATEMENT 75 | 83 |
Table of Contents
Shareholder Proposals (Proxy Item Nos. 4-6)
SHAREHOLDER PROPOSALS (PROXY ITEM NOS. 4-5)
|
Shareholders have submitted the following proposals for the reasons stated. The shareholder proposals will be voted on at our 20202022 Annual Meeting if properly presented by the shareholder proponent or by a qualified representative on behalf of the shareholder proponent. In accordance with federal securities regulations, we have included the shareholder proposals, including any supporting statements and graphics, as submitted by the shareholder proponents. We do not believe that certain assertions in these shareholder proposals about PepsiCo are correct. We have not attempted to refute all of these inaccuracies. However, our Board of Directors has recommended a vote against each of these proposals for the reasons set forth following each proposal.
Shareholder Proposal – Reduce Ownership Threshold to Call Special Shareholder MeetingsIndependent Board Chairman (Proxy Item No. 4)
John Chevedden, on behalf of Kenneth Steiner, 14 Stoner Avenue, 2M, Great Neck, NY 11021, who owns at least 500 shares of PepsiCo Common Stock worth at least $2,000, has submitted the following proposal:
Proposal No. 4 – Make Shareholder RightIndependent Board Chairman
The shareholders request that the Board of Directors adopt an enduring policy, and amend the governing documents as necessary in order that 2 separate people hold the office of the Chairman and the office of the CEO as follows:
Selection of the Chairman of the Board The Board requires the separation of the offices of the Chairman of the Board and the Chief Executive Officer.
Whenever possible, the Chairman of the Board shall be an Independent Director.
The Board has the discretion to Call Special Meeting More Accessibleselect a Temporary Chairman of the Board who is not an Independent Director to serve while the Board is seeking an Independent Chairman of the Board.
Resolved, Shareowners askThe Chairman shall not be a former CEO of the company.
This policy could be phased in when there is a contract renewal for our board to takecurrent CEO or for the steps necessary (unilaterally if possible) to amend our bylaws and each appropriate governing document to give holders in the aggregate of 10% of our outstanding common stock the power to call a special shareowner meeting (or the closest percentage to 10% according to state law). Shareholders, in addition to our directors, will thus have a right to call a special meeting.next CEO transition.
This proposal topic won more than 70%-support52% support at Edwards LifesciencesBoeing and SunEdison. 54% support at Baxter International in 2020. Boeing then adopted this proposal topic in June 2020. The roles of Chairman and CEO are fundamentally different and should be held by 2 directors, a CEO and a Chairman who is completely independent of the CEO and our company.
This proposal topic sponsored by William Steiner, also won 78% support44%-support at our 2012 annual meeting. This 44%-support likely represented 51%-support from the shares that have access to independent proxy voting advice.
A CEO serving as Chair can result in excessive management influence on the Board and weaker oversight of management. The CEO gets comfortable with being his own boss. With the current CEO serving as Chair this means giving up a Sprint annual meetingsubstantial check and balance safeguard that can only occur with 1.7 Billion yes-votes. Nuance Communications (NUAN) shareholders gave 94%-support in 2018 to a rule 14a-8 proposal callingan independent Board Chairman.
A lead director is no substitute for 10% of shareholders toan independent board chairman. A lead director cannot call a special meeting.
The lax corporation laws of North Carolina do not allow shareholder action by written consentmeeting and PepsiCo shareholders do not have do not have [sic] the full right to call a special meeting that is available under state law. Hence the need to have the full shareholder right tocannot even call a special meeting of shareholders under North Carolina law. The 2018the board. A lead director responsecan delegate most of his lead director duties to this proposal topic was totally silent on the CEO office and then the lead director can simply rubber-stamp it.
The lack of shareholder abilityan independent Board Chairman is an unfortunate way to discourage new outside ideas and an unfortunate way to encourage the CEO to pursue pet projects that would not stand up to effective oversight. Plus PepsiCo shareholders are restricted in bringing new ideas to management in a manner that has traction because shareholders have no right to act by written consent.
Plus this proposal topic already wonIn an impressive 48%-vote atexample from a company whose share price went from $130 to $200 in 10 months, the 2018 PepsiCo2020 Lowe’s annual meeting. This 48%-vote would have been higher than 51% if more PepsiCo shareholders had access tomeeting proxy said Lowe’s independent proxy voting advice. It is vitally important to make the shareholder right to call special meeting more accessible to make up for our lack of ability to act by written consent.
This proposal improves shareholder engagement because productive shareholder engagement depends on shareholdersdirectors determined that having a Plan B if engagement fails. This proposal will give shareholders a greater Plan B. Shareholders must engage management from a position of strength.
If shareholders had a more complete rightseparate Chairman and Chief Executive Officer affords the CEO the opportunity to call a special meeting, as called for in this proposal, shareholders would have a greater abilityfocus his time and energy on managing the business and allows the Chairman to engage our Directorsdevote his time and managementattention to improve the qualifications of our directorsBoard oversight and make sure that the Board of Directors is continually refreshed with new diverse talent in order to maintain director independence -since a special meeting can be called in regard to the election of directors. Independence is a highly valuable attribute in a director.
This proposal would give shareholders greater standing to engage Directors and management to see if our company can benefit from an independent board chairman. Also shareholders would have a better standing to engage the Board concerning the directors who receive the most negative votes while running unopposed. Our COB/CEO received the second highest negative votes in 2019.governance.
Please vote to improve shareholder engagement:yes:
Make Shareholder Right to Call Special Meeting More Accessible –Independent Board Chairman - Proposal No. 4
 | | | |
|  | Our Board of Directors recommends that shareholders vote “AGAINST” this proposal. | |
| | | |
76 84 | PEPSICO 20202022 PROXY STATEMENT | |
Table of Contents
Shareholder Proposals (Proxy Item Nos. 4-5)4-6)
After careful consideration, the Board has determined that a fixed policy requiring an independent Chairman as requested by the shareholder proposal is neither necessary nor in the best interests of PepsiCo or its shareholders for the following reasons:
| ■ | Our Board should retain the flexibility to determine the most effective leadership structure for PepsiCo based on the Company’s needs and the Board’s regular assessment of the Company’s leadership. |
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| ■ | Our Board regularly reviews the Company’s leadership structure and continues to believe that the combined Chairman and CEO role, together with a strong independent Presiding Director with clearly defined and robust responsibilities, provides the best leadership structure for the Company at this time. |
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| ■ | Our Board believes that our leadership structure and strong corporate governance practices provide for effective, independent Board oversight that best serves the interests of our shareholders at this time. |
Our Board believes it is important to preserve flexibility in determining the most effective leadership structure for PepsiCo based on the Company’s specific circumstances and needs to best serve both the short-term and long-term interests of shareholders.
PepsiCo’s governing documents allow the roles of Chairman of the Board and CEO to be filled by the same or different individuals. Rather than taking a “one-size-fits-all” approach to Board leadership, our existing policies provide the Board flexibility to determine the most appropriate leadership structure to address the Company’s needs in light of the dynamic environment in which we operate as part of the Board’s regular assessment of the Company’s leadership. The Board has deep knowledge of the strategic goals of the Company, the unique opportunities and challenges it faces, and the various capabilities of our directors and the Company’s senior management and is therefore best positioned to determine the most effective leadership structure to protect and enhance long-term shareholder value. Furthermore, the 2021 Spencer Stuart Board Index notes that only 37% of S&P 500 companies have a truly independent chair, i.e., one that meets the NYSE or Nasdaq rules for independence.
Our Board currently believes that PepsiCo and its shareholders are best served by a combined Chairman and CEO role, together with a strong independent Presiding Director.
Ramon L. Laguarta, PepsiCo’s Chairman of the Board and CEO, has deep operational experience, particularly in international markets, and extensive knowledge of the Company, food and beverage industry and risk management practices that Mr. Laguarta gained from working over 20 years at PepsiCo in a variety of executive and leadership roles. Therefore, the Board believes that Mr. Laguarta is best positioned to be aware of key issues facing the Company and to serve as Chairman in guiding thoughtful Board discussions and effectively communicating with PepsiCo’s various internal and external constituencies. In order to ensure independent oversight of the Company’s management, strategy and business, our independent directors have elected Ian Cook as the Presiding Director of the Board. Mr. Cook has a deep understanding of PepsiCo and its business acquired from his years on our Board, as well as his extensive 40-plus year experience at a multinational consumer products company, including 12 years as chief executive officer, which makes him uniquely positioned to work collaboratively with our Chairman and CEO while ensuring strong independent oversight of management. The Presiding Director has clearly defined and robust responsibilities, which include: ■Presiding at all meetings of the Board at which the Chairman is not present, including executive sessions of the independent directors; ■Serving as a liaison between the Chairman and the independent directors; ■Having authority to approve information sent to the Board; ■Approving meeting agendas for the Board; ■Approving meeting schedules to assure that there is sufficient time for discussion of all agenda items; ■Having the authority to call meetings of the independent directors; and ■If requested by major shareholders, ensuring that he or she is available for consultation and direct communication. | | The Company has a track record of strong long-term performance under the leadership structure of a combined Chairman and CEO and independent Presiding Director. 
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| PEPSICO 2022 PROXY STATEMENT | 85 |
Table of Contents
Shareholder Proposals (Proxy Item Nos. 4-6)
In addition to the Presiding Director responsibilities outlined in the Corporate Governance Guidelines, Mr. Cook is also an actively engaged director who regularly communicates with our Chairman and CEO and other members of the Board and senior management on various topics of importance to the Company. For more information on additional duties that Mr. Cook has fulfilled over the past few years, see the “Board Leadership Structure” section beginning on page 25 of this Proxy Statement. He has also overseen further enhancements to the Company’s strong governance policies and practices, such as the Board’s decision to eliminate supermajority voting standards in our Articles of Incorporation as approved by shareholders, implementing a proxy access right for shareholders, and establishing the Sustainability, Diversity and Public Policy Committee. These actions are just a few examples of how the independent directors, led by our Presiding Director, have been responsive to shareholders. In recognition of Mr. Cook’s strong leadership stemming from his industry-relevant knowledge, operational and governance experience and exceptional interpersonal and communication skills, the independent members of the Board of Directors recently re-elected Mr. Cook as the Presiding Director for an additional three-year term beginning in 2022.
Under the leadership of a combined Chairman and CEO and overseen by our strong independent Board, PepsiCo has delivered strong performance, as illustrated by the five-year annualized total shareholder return chart on page 85, and has continued its efforts to progress and expand its ambitious sustainability goals, including announcing PepsiCo Positive, a strategic end-to-end transformation with sustainability and human capital at the center of how the Company intends to create growth and value.
Given these considerations, the Board does not currently believe that a change to PepsiCo’s leadership structure will improve corporate performance or otherwise benefit shareholders at this time.
PepsiCo’s strong corporate governance practices provide for effective independent leadership and independent oversight of PepsiCo.
| ■ | We believe that the strong overall corporate governance framework that we have in place supports the objective and independent Board leadership structure necessary to effectively challenge and oversee management and to effectively oversee key issues facing the Company: |
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| ■ | We have a diverse and experienced Board whose members are elected annually by shareholders and is comprised entirely of independent directors within the meaning of the applicable laws and Nasdaq rules, with the exception of the Chairman and CEO. |
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| ■ | Each of our four standing Board Committees - Audit; Compensation; Nominating and Corporate Governance; and Sustainability, Diversity and Public Policy - is comprised solely of, and chaired by, independent directors. This means that the independent directors oversee key matters of the Company as outlined in each of the Committee charters, such as the integrity of our financial statements, compensation of our executive officers including Mr. Laguarta, selection and evaluation of directors, development and implementation of corporate governance policies, and sustainability, diversity, equity and inclusion and public policy matters. |
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| ■ | The Nominating and Corporate Governance Committee monitors the Board’s leadership structure to determine whether it remains in the best interests of our shareholders and revisits the structure regularly as part of its ongoing Board assessment process. |
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| ■ | The Board and its Committees each meets in executive session on a regular basis without the presence of the CEO or other members of management. Independent directors use these executive sessions to discuss matters they deem appropriate, including evaluation of the Chairman and CEO, director and senior management succession, Company strategy and performance, Board priorities and Board effectiveness. |
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| ■ | All Board members have complete access to management, and the Board and its Committees have the authority to retain legal, accounting and other outside consultants to advise them as they deem appropriate. |
The Board believes it is best positioned to determine the most effective leadership structure for PepsiCo based on the best interests of the Company and our shareholders. Moreover, the Board believes the combined Chairman and CEO role, together with the leadership of our strong independent Presiding Director and bolstered by the other governance practices outlined above, strikes the right balance between consistent leadership and effective independent oversight of PepsiCo’s management, strategy and business. For all of the foregoing reasons, our Board continues to believe that our current leadership structure has served our shareholders well and remains in our shareholders’ best interest.
Our Board of Directors recommends that shareholders vote “AGAINST” this proposal.
| 86 | PEPSICO 2022 PROXY STATEMENT |
Table of Contents
Shareholder Proposals (Proxy Item Nos. 4-6)
Shareholder Proposal – Report on Global Public Policy and Political Influence Outside of the United States (Proxy Item No. 5)
John C. Harrington, Harrington Investments, Inc., 1001 2nd Street, Suite 325, Napa, California 94559, who owns shares of PepsiCo Common Stock worth at least $2,000, has submitted the following proposal:
RESOLVED: Shareholders request that the Company annually issue a transparency report on global public policy and political influence, disclosing company expenditures and activities outside of the United States. Such report should disclose company funding and in-kind support directed to candidates or electioneering, lobbying, scientific advocacy, and charitable donations for the preceding year including:
| ● | recipients and amounts; |
| |
| ● | date and timeframe of the activity taking place |
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| ● | the Company’s membership in or payments to nongovernmental organizations including trade and business associations, scientific or academic organizations and charities. |
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| ● | the rationale for these activities. |
The Board and management may, in its discretion, establish a de minimis threshold, such as contributions to an individual or organization totaling less than $250, below which itemized disclosures would not be required.
Supporting Statement
Food corporations rely heavily on consumer trust, brand affinity and public goodwill. In today’s world, public officials, journalists, NGOs, and even social media can quickly and publicly reveal corporate advocacy that seems remarkably at odds with a company’s image, brand or stated values.
In the food industry, a particular vulnerability involves company support for scientific advocacy intended to shape policymaker perceptions and stall policymaking, regulations and rule-setting.1 Other problematic company-sponsored advocacy efforts may undercut public health policies through national trade associations. For instance, a PepsiCo supported trade association, ConMexico, lobbied the Mexican government to postpone food labeling regulations generating widespread criticism due to negative impacts on public health.2
PepsiCo scores low with regards to international disclosures of corporate political activities, according to a recently published transparency index.3
In March 2021, Vanguard cautioned that “poor governance of corporate political activity, coupled with misalignment to a company’s stated strategy or a lack of transparency about the activity, can manifest into financial, legal, and reputational risks that can affect long-term value”.4
In January 2021, our company announced it was “suspending all political contributions while conducting a full review to ensure they align with our company’s values and our shared vision going forward”5. The announcement raised serious concerns for investors regarding our company’s corporate political activity both in the U.S. and internationally.
As a truly global corporation, PepsiCo operates in over 200 countries and territories6, with approximately 291,000 global employees.7 In 2020, 42 percent of market trendsPepsiCo operating profits came from outside the U.S.8 While our Company discloses fragmentary information relating to U.S. political activities, spending to influence and investor feedbackengage on public policy outside of the U.S. is even more poorly disclosed.
We urge you to vote in favor of this proposal, and to encourage our company to disclose detailed data on its non-domestic political contributions, lobbying, and support for trade associations, charitable and scientific organizations, thus all corporate political activities. Adopting this resolution would position the corporation globally to be a nearly identicalleader on political transparency.
| 1 | https://www.corporateaccountability.org/wp-content/uploads/2020/09/Partnership-for-an-unhealthy-planet.pdf |
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| {$NOTE_LABEL} https://ojo-publico.com/1702/mexico-empresas-ponen-de-pretexto-la-pandemia-para-aplazar-etiquetado |
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| 3 | https://feedthetruth.org/wp-content/uploads/2021/08/FeedtheTruth_FACT_Index_report_v3.pdf |
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| 4 | https://about.vanguard.com/investment-stewardship/perspectives-and-commentary/INVSPOLS_032021.pdf |
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| 5 | https://www.reuters.com/article/us-usa-trump-pepsico/pepsico-suspends-all-political-contributions-idUSKBN29K1NC |
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| 6 | https://www.pepsico.com/about/about-the-company |
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| 7 | https://www.statista.com/statistics/536974/pepsico-s-number-of-employees-worldwide/ |
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| 8 | https://www.pepsico.com/docs/album/annual-reports/pepsico-inc-2020-annual-report.pdf?sfvrsn=d25439e4_4 |
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| Our Board of Directors recommends that shareholders vote “AGAINST” this proposal. |
| PEPSICO 2022 PROXY STATEMENT | 87 |
Table of Contents
Shareholder Proposals (Proxy Item Nos. 4-6)
In recent years, public attention and unsuccessful proposalscrutiny have increased around the role corporations play in 2018influencing global public policy, including through the provision of political contributions. PepsiCo recognizes the need for corporations to reduce the stock ownership threshold neededensure strong governance over their corporate political activities and alignment between such activities and stated corporate strategies, as well as to call a special meeting,provide transparency with respect to their advocacy and related actions. As such, PepsiCo has worked to ensure active oversight and abundant corporate transparency around this topic.
After careful consideration, the Board has determined that the actionreport on PepsiCo’s non-U.S. political activities and related contributions requested by the shareholder proposal is neither necessary nor in the best interests of PepsiCo or our shareholders forgiven our existing policies and practices, including the following reasons:
■ | PepsiCo already provides a meaningfulfact that we do not make political contributions outside of the U.S. and balanced right to shareholders to call a special meeting. |
■ | The current ownership threshold provides shareholders owning a meaningful minority of shares (at least 20% of our outstanding shares) with the right to call a special meeting while maintaining a threshold that prevents the potential unnecessary waste of corporate resources and disruption associated with a much smaller minority of shares calling a special meeting on frivolous grounds or to advance their narrowly supported interests. Our current threshold can be met by as few as five of our shareholders acting together, whereas the proposed 10% threshold could be met with as few as two shareholders acting together. |
■ | Shareholders have significant opportunities to engage with management and the Board throughout the year, in ways that are more cost effective. |
■ | PepsiCo has strong corporate governance policies and practices in place that protect shareholder rights. |
PepsiCo shareholders already have a meaningful right to call a special meeting and other ways to engage with the Boardpublicly stated on important topics.our website that we would disclose any international political contributions.
PepsiCo has long supported and continues to support various means for our shareholders to effectively communicate with the Board and senior management beyond the limited forum of a special meeting. We provide significant opportunity for shareholders to raise matters through the shareholder proposal process, at our annual meeting and throughout the year as described further below and in the “Communications with the Board” section beginning on page 35 of this Proxy Statement.
Our Board recognizes the importance of giving shareholders a meaningful right to call special meetings in appropriate circumstances. Our shareholders have had this existing right since 2010 when the Board amended our By-Laws and reduced the ownership threshold for calling a special meeting from a majority to 20% of our outstanding Common Stock, in part informed by feedback at the time from our shareholders. We regularly engage with manyglobal stakeholders, including government officials, to raise our concerns around or support regulatory proposals designed to ensure an equal playing field for our global operations or facilitate our Company’s goals, such as in the area of environmental sustainability. Over the years, we have worked closely with external stakeholders to design a leading system of transparency on political engagement in the U.S., which also takes into account our international operations, as reflected through our comprehensive publicly available reporting and disclosures on our website. Our practices and policies, as detailed below, reflect our efforts to provide clear, consistent, transparent and meaningful safeguards around PepsiCo’s role in engaging in public policy dialogues:
We have not and do not plan to make political contributions to candidates outside of the U.S. Although no international political contributions are currently planned, we have publicly stated on our website that we would disclose any international contributions paid, along with all our U.S. contributions, to ensure transparency. Additionally, PepsiCo does not directly sponsor communications supporting or opposing candidates or political parties.
Our Board of Directors oversees the Company’s public policy processes and activities with the assistance of its Sustainability, Diversity and Public Policy Committee, which is comprised entirely of, and chaired by, independent directors. This includes the Committee’s periodic review of our shareholderspolicies and contacted shareholders representing over 46%practices regarding political contributions, as well as an annual review of our outstanding sharespolitical contributions and expenditures. We provide robust disclosures on our governance, public policy engagement, political activities and contributions guidelines on our website, including our Political Contributions Policy which specifically states that PepsiCo does not generally provide contributions to candidates outside of the U.S. and that we will appropriately disclose such contributions on our website. For additional information, see the dedicated page on our website at www.pepsico.com/esg-topics-a-z/public-policy-engagement-political-activities-and-contributions-guidelines.
We comply with all national transparency rules around reporting contributions to trade associations in connectionthe U.S. and internationally.
PepsiCo advocates on our own behalf and belongs to trade associations that advocate on our behalf. We follow all national transparency rules regarding the disclosure of our contributions to trade associations. As a general rule, the trade associations with which we engage internationally do not provide contributions to political candidates, and we expect our associations to inform the 2018 Annual MeetingCompany if they were to begin engaging in this way.
Our scientific engagement is focused on sharing our expertise on key issues. PepsiCo adheres to robust principles on transparency in sponsoring any scientific research, including making available links to PepsiCo-funded research on our website and disclosing any role of ShareholdersPepsiCo in research when promoting findings of sponsored research.
As companies continue to be called upon to develop creative, innovative solutions and products to better serve society’s needs, PepsiCo is committed to engaging with stakeholders on public health and sustainability topics. For example, PepsiCo is a nearly identical proposal was submitted bymember of organizations such as the Proponent. The BoardEuropean Food Information Council, a non-profit organization focused on making the science behind food and health more accessible and easier to understand among the public. Our scientific engagement is focused on sharing our expertise on key issues such as food safety, food allergies, health benefits assessment of food products, microplastics, packaging materials, sensory science and consumer behavior.
With respect to scientific research, PepsiCo believes that adherence to ethical principles is essential and has adopted the current thresholdPepsiCo Position on Conduct of Scientific Research (“Scientific Research Position”), which is the most appropriatedisclosed on a dedicated page on responsible research on our website, available at this time based on the feedback the Board received from engagement with various shareholders.www.pepsico.com/esg-topics-a-z/responsible-research. The Board also considered statistical research across the S&P 500 and determined that PepsiCo’s existing 20% ownership threshold continues to be consistent with, and in most cases lower than, the thresholds of other S&P 500 companies that offer shareholders the right to call a special meeting.In fact, only approximately 18% of S&P 500 companies provide shareholders the right to call a special meeting at a threshold lower than 20% as of March 9, 2020.
By reducing the ownership threshold to 10%, a small minority of shareholders (currently as few as two) could use the special meeting platform solely to advance their own agenda, without regard to the interests of PepsiCo and its broader shareholder base. Because special meetings require considerable time, effort and resources, including significant costs in preparing, printing and mailing materials and soliciting proxies particularly for a company with a large retail shareholder base such as ours, we believe that special meetings should only be held to cover extraordinary matters considered by a reasonable percentage of outstanding shares to be of sufficient import or urgency that it cannot wait until the next annual meeting. The Board continues to believe maintaining the 20% ownership threshold preserves a reasonable and appropriate balance between providing shareholders with the right to call a special meeting while protecting against unnecessary waste of corporate resources and disruption associated with convening a special meeting.
We value the views of our shareholders and strong corporate governance practices have been a long-standing priority at PepsiCo.
We value the views of our shareholders, and the input that we receive from our shareholders through regular engagement is a cornerstone of our corporate governance practices. Through shareholder engagement, we have received valuable feedback and important external viewpoints that inform our decisions and our strategy. As evidenceScientific
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Shareholder Proposals (Proxy Item Nos. 4-5)4-6)
Research Position outlines our guiding principles on transparency, conflicts of interest and minimizing bias and best practices with respect to PepsiCo-sponsored research and research conducted by PepsiCo associates with external research partners. Among other things, we require sponsored researchers to follow accepted principles of scientific rigor in order to adequately test the stated hypotheses and assure accuracy of data produced and requires that any role of PepsiCo at all times be made public through disclosure of source of funding.
In addition, the Scientific Research Position states that we will (1) make available on our website citations for, and hyperlinks to, PepsiCo-funded research at the time of publication in a peer-reviewed journal, and (2) be fully transparent about our role in the design, implementation and analysis of the research, as well as in research funding, when promoting the findings of sponsored research. Published content from PepsiCo-sponsored research from 2010 to present can be found on the PepsiCo Health & Nutrition Sciences website at www.pepsicohealthandnutritionsciences.com/publications.
We do not make charitable contributions for purposes of political influence and all charitable contributions made by the PepsiCo Foundation are publicly disclosed in its tax returns.
Most of our Board’s focusinternational cash charitable contributions in 2020 were made through the PepsiCo Foundation, the Company’s philanthropic arm. The PepsiCo Foundation primarily works with U.S. non-profit organizations such as Charities Aid Foundation America to contribute to various international partners for disaster relief and work in the areas of access to food security, safe water and economic opportunity. As a 501(c)(3) private foundation, the PepsiCo Foundation is prohibited from engaging in most lobbying and political activities, including directly or indirectly participating or intervening in political campaigns on strongbehalf of or in opposition to any political candidate, and effective corporate governance practicesdoes not make charitable contributions for purposes of political influence.
All of the PepsiCo Foundation’s contributions, including those made to foreign organizations, are publicly disclosed on its U.S. tax returns in compliance with federal disclosure requirements.
More information regarding the PepsiCo Foundation’s work and responsivenessdisbursements, including its extensive work to shareholder perspectives, we have taken a number of actions based in part on shareholder input, including amending our Articles of Incorporation to eliminate supermajority voting standards, implementing “proxy access,” reducing the ownership threshold on the right to call a special meetingbring food and other vital resources to the current 20% level and creating a new Public Policy and Sustainability Committee. The current special meeting right also augments other corporate governance best practices that we have in place that protect shareholder rights, such as the annual election of all directors and majority voting for the election of directors in uncontested elections.
For more informationcommunities most affected by COVID-19, can be found on our shareholder engagementwebsite at www.pepsico.com/sustainability/philanthropy.
We are committed to continued transparency and corporate governance practices, see the “Corporate Governance at PepsiCo” section beginningaddressing input from external stakeholders related to our advocacy on page 23 of this Proxy Statement.
When viewed together withglobal public policy and other related activities. Given our strong corporate governancerobust public reporting and our current policies and practices, our robust shareholder engagement programwhich both meet high standards and are reviewed on a regular basis, we believe the many shareholder-friendly provisions that we have adopted, the Board believes that our current 20% special meeting threshold is appropriate and enhances shareholder rights while still ensuring appropriate support among shareholders is required to call a special meeting. Lowering the threshold would increase the potential for the unnecessary waste of corporate resources and disruption to corporate operations. Therefore, the Board believes the adoption ofreport requested by this proposal is unnecessarywould be both duplicative and not in the best interests of PepsiCo or our shareholders.unnecessary.
Our Board of Directors recommends that shareholders vote “AGAINST” this proposal.
Shareholder Proposal – Report on Sugar and Public Health Costs (Proxy Item No. 5)6)
The Shareholder Commons, on behalf of the John Harrington, Harrington Investments, Inc., 1001 2ndBishop Montgomery Trust U/A DTD 4/4/2019, 65 3rd Street, Suite 325, Napa, California, 94559,25, P.O. Box 1270, Point Reyes Station, CA, who owns 50 shares of PepsiCo Common Stock worth at least $2,000, has submitted the following proposal:
Whereas, our Company has historically been involvedITEM 6: Report on public-health costs of food and beverages products
RESOLVED, shareholders ask that the board commission and publish a report on (1) the link between the public-health costs created by PepsiCo’s food and beverage business and PepsiCo’s prioritization of enterprise risk and (2) the manner in multiple controversies, including employee laborwhich such costs affect the market returns available to its diversified shareholders.
Supporting Statement:
PepsiCo says it is “making it easier for consumers to choose foods and discrimination issues, environmental violations, workplace safety, food safety related issues, as well as consumer issues;
More importantly,beverages that are good for themselves and good for the most serious issues continue to be related toplanet,”1 yet the public healthunhealthful foods and safety impactsbeverages that constitute 79 percent of our Company’s beverages, including syrups and sugary drinks, andPepsiCo’s product portfolio2 are among the top culprits in the growing national health epidemic relatingglobal obesity epidemic.
A recent report found that food and drink manufacturers, including PepsiCo, were capitalizing on the COVID-19 pandemic to increasesincrease consumption of sugar in our diet;
Our Company continues to be the target of multiple campaigns related to our Company’s products that contribute to the general level of decline in public health of consumers, including reports that 1 in 3 United States children born in the year two thousand will develop diabetes, resulting from poor diet,unhealthful products. For example, “An initiative depicted as increase in obesity in turn increases the risk of diabetes, hypertension, heart disease, cancers, asthma, arthritis, reproductive complications and premature death;
Our Company continues to market sugary drinks with advertising influencing children’s food preferences, diets and health; In two thousand eleven, the American Academy of Pediatrics released a policy statement calling for a ban on child targeted and interactive junk food advertising‘PepsiCo Gives Back’ … served as a response to concerns regarding childhood obesity;
Public pressure against junk foodmarketing opportunity linking a nutrition project and sugary drinks linked to obesitya leading antipoverty agency directly with the promotion of sugar-sweetened beverages and diabetes, has led to numerous community campaigns to impose local taxes on sugary beverages, which include our products, to which our Company has responded by lobbying efforts in numerous state legislatures to preempt local control or restrict local taxation on our Company’s products linked to obesity and diabetes;
In two thousand nineteen, the American Academy of Pediatrics and the American Heart Association released a joint statement in support of such taxes, potentially increasing our Company’s risk associated with its business of sugary drinks. A recent peer review study also documented how a sugary drink ban was tied to health improvement of employees at a higher education institution;unhealthy [sic] snack foods.”3
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Shareholder Proposals (Proxy Item Nos. 4-5)4-6)
Shareholders believe our Company should be partThe World Health Organization assesses the unpriced social burdens of obesity as equaling almost 3 percent of global GDP annually.4 This cost, year after year, is devastating to economic growth. Yet PepsiCo does not disclose any methodology to address the solutionpublic-health costs of its business.
It appears PepsiCo only addresses nutrition when that pursuit optimizes its internal financial return. In describing its approach to solving the problem of the obesity epidemic in working with healthcare professionals and experts in diet and nutrition, not promoting advertising campaigns and sponsoring nutrition organizations and their events like the Academy of Nutrition and Dietetics Food & Nutrition Conference & Expo, two thousand nineteen, and funding the International Life Sciences Institute to shift the blame away from poor diet causing obesity, to lack of exercise;
Resolved, that shareholders request the Board of Directors issue a report on Sugar and Public Health, with support from a group of independent and nationally recognized scientists and scholars, providing critical feedback on our Company’s sugar products marketed to consumers, especially those Pepsi products targeted to children and young consumers. Such report to shareholders should be produced at reasonable expense, exclude proprietary or legally privileged information and be published no later than November first, two thousand twenty, and includenutrition-related risk, PepsiCo says it “leverage[s] an assessmentintegrated enterprise risk management framework.”5 This prioritization of risks to the Company’s financesenterprise, rather than risks to public health, means that PepsiCo only addresses nutritional issues that threaten its ability to generate profits. The Company does not prioritize risks to the global community, so that PepsiCo can continue to profit from conduct that threatens public health so long as it does not create risk for the company itself.
But a gain in Company profit that comes at the expense of public health is a bad trade for most PepsiCo shareholders, who are diversified and reputation associated with changing scientific understandingrely on broad economic growth to achieve their financial objectives. A Company strategy that increases its own financial returns but threatens global GDP is counter to the interests of most PepsiCo shareholders: the rolepotential drag on GDP created by public-health costs will directly reduce diversified portfolio returns over the long term.6
This proposal asks the Board to commission a report that analyzes the trade-offs PepsiCo makes by prioritizing enterprise risk over risks to public health and the global economy from the perspective of sugar in disease causation.its largely diversified shareholders, whose investment portfolios may be at grave risk from public-health threats.
The requested report will help shareholders determine whether current Company policies serve shareholders’ best interests and whether PepsiCo should prioritize certain public-health issues over financial returns.
Please vote for: Report on public-health costs of food and beverage products – Proposal 6
| 1 | https://www.pepsico.com/esg-topics-a-z/nutrition |
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| 2 |  |
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| 3 | https://ncdalliance.org/sites/default/files/resource_files/Signalling%20Virtue%2C%20Promoting%20Harm_Sept2020_FINALv.pdf |
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| 4 | https://www.schroders.com/en/sysglobalassets/digital/insights/2019/pdfs/sustainability/sustainex/sustainex-short.pdf |
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| 5 | https://www.pepsico.com/docs/album/esg-topics-policies/nutrition-risk-management.pdf |
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| 6 | https://www.unepfi.org/fileadmin/documents/universal_ownership_full.pdf |
| Our Board of Directors recommends that shareholders vote “AGAINST” this proposal. | |
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As one of the world’s largest beverages and convenient foods companies, PepsiCo embraces the role it can play in promoting a balanced diet that supports health and wellness and we have long been committed to being a part of the solution to the complex issue of the role of diet in obesity and undernutrition. Reformulation to reduce added sugars, sodium and saturated fat in many of our products and portfolio expansion have been cornerstones of our sustainability agenda since its inception. PepsiCo monitors nutrition-related risks as a part of its enterprise risk management. PepsiCo also takes a much broader view in its sustainability agenda and is focused on continuing to evolve its portfolio of beverages and convenient food products so that they are better for the planet and people. The Board believes PepsiCo is already effectively addressing the issues raised in this proposal through our ongoing sustainability initiatives, including our recently announced PepsiCo Positive (pep+) framework, which include but are not limited to improving the nutritional profile of our products and overall product portfolio, working to provide simple, clear information on our packaging, rethinking packaging sizes and leveraging the scale of our brands to drive positive change. For further information on PepsiCo’s sustainability initiatives relating to our products, see our website at www.pepsico.com/sustainability/focus-areas/product.
It is not practicable to extrapolate PepsiCo’s impact from all other factors that contribute to public health, and therefore the reportreporting called for in this proposal is duplicativeneither practicable nor a good use of Company resources.
There are numerous factors that contribute to obesity, and unnecessary given robustwe believe it is not feasible to accurately quantify external public disclosureshealth costs for specific food and beverage products or categories in isolation. The World Health Organization (WHO) assessment referenced in this proposal is based on a 2014 McKinsey Global Institute report that states obesity is impacted by PepsiConumerous health, socio-economic and several third-party organizationslifestyle factors, of which diet is just one of many important factors. In fact, the report considers 74 interventions across 18 different areas that conduct independenthave the highest likelihood of impacting obesity rates.
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Shareholder Proposals (Proxy Item Nos. 4-6)
Furthermore, while the SustainEx report referenced in this proposal suggests that a methodology exists to assess public health costs of our products, we believe that there are a number of challenges with such methodology. Most significantly, this method references utilizing product reviews by GoodGuide (which has been offline since 2020) or the Environmental Working Group that were not developed to assess the impact of food and beverage products related to obesity. Such product reviews, for instance, penalize products that are reformulated to reduce added sugars through the use of low calorie sweeteners or use conventional processing methods and do not acknowledge the addition of fiber to products. In addition, they make assumptions related to additives and ingredients that are inconsistent with the evidence base.
It is our belief that existing research and analysis have effectively identified the multitude of factors that contribute to obesity and their collective public health costs, and that the time, money and people resources that would be required to produce the proposed report would be better spent on our significant existing efforts to mitigate those factors. In carefully considering this proposal, our Board also took into account the fact that a similar proposal presented at PepsiCo’s 2021 Annual Meeting of Shareholders received the support of only approximately 12% of the votes cast.
PepsiCo’s product-related goals and progress go beyond measures to manage enterprise risk, as highlighted by PepsiCo and the industry on the topic of sugar and public health. We recognize the role that PepsiCo must play,our recently announced pep+ framework, and we have taken meaningfulaggressive steps to reduce sugar, responsibly marketimplement many of the actions recommended by the World Health Organization, including reformulation, portfolio diversification and responsible labeling and marketing practices.
While PepsiCo closely monitors and actively manages sustainability risks as a part of our productsenterprise risk management program, our sustainability agenda reflects a much broader ambition to drive positive action for the planet and people. The proposal does not give effect to our current website page on nutrition that provides in-depth information on PepsiCo’s product-related sustainability goals and progress and work to meet societal nutritional needs, available at www.pepsico.com/esg-topics-a-z/nutrition.
In September 2021, we introduced pep+, a strategic end-to-end transformation with sustainability and human capital at the center of how the Company will create growth and value. We reinforced our commitment to evolve our portfolio and improve choicesits nutritional profile and help improve nutrition access through our pep+ framework, which includes:
| ■ | Incorporating more diverse ingredients in both new and existing food products to deliver nutritional benefits, such as chickpeas and whole grains; |
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| ■ | Expanding our position in the nuts and seeds category, where we are already the global branded leader, including leadership positions in Mexico, China and several Western European markets; |
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| ■ | Accelerating progress against our goals to reduce added sugars and sodium by 2025 through the use of science-based targets across our portfolio and cooking our convenient food offerings with healthier oils (with reduction goals informed by leading global and national health authorities, including the WHO); and |
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| ■ | Partnering with communities to advance food security and make nutritious food accessible to 50 million people by 2030. |
For further information on pep+, see our website at www.pepsico.com/pepsicopositive.
In addition, we continue to take aggressive steps to implement actions recommended by the WHO Global Strategy on Diet, Physical Activity and Health and the WHO Global Action Plan for the Prevention and Control on Non-Communicable Diseases. Our multi-faceted approach includes:
| ■ | Developing and publishing the PepsiCo Nutrition Criteria (based on guidance from leading global and national health authorities, including the WHO), which is described in detail on our website at www.pepsico.com/docs/album/esg-topics-policies/pepsico-nutrition-criteria.pdf; |
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| ■ | Providing clear labeling information about product ingredients; |
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| ■ | Adhering to responsible marketing policies, including specifically restating our commitment to responsible marketing throughout the COVID-19 pandemic; and |
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| ■ | Meeting the highest standards for food quality and safety. |
We are also increasing the number of more nutritious options in our beverage portfolio through innovation, acquisitions and strategic partnerships to help consumers reduce the amount of sugar in their dietsoffer more choices and make more informed choices.
PepsiCo has set a robust and meaningful goal to reduce sugar in our beverage portfolio by 2025 and is committed to responsibly marketing our foods and beverages, particularly to children.
PepsiCo offers a broad range of no sugar and low sugar beverages, and sugar reduction is a key part of PepsiCo’s long-term strategy to meet consumers’consumer needs and helping to build a more sustainable food system. Informed by the guidelines on sugar intake provided by leading global and national nutrition and health authorities, we set a goal that by 2025 at least two-thirds of our global beverage portfolio volume will have 100 calories or fewer from sugar per 12-ounce serving. We made progress towards this goal in 2018, reducing sugar by 4% across our portfolio in the top 26 beverage markets. These markets comprise 80% of our global beverage volume, and as of 2018, 44% of our beverage portfolio in such markets met our sugar reduction target. We are continuing to make progress towards this goal by reformulating our existing beverages to reduce sugar in our products so that consumers can continue to enjoy them as part of a balanced diet, offering a variety of no sugardiet. Recent acquisitions and low sugar products and smaller portion sizes, and working to introduce new products that have no sugar, low sugar and/or more of the nutritious ingredients our consumers desire. Through our sugar reduction efforts, we believe we are not only addressing the concerns raised in this proposal but creating new opportunities for competitive advantage and future market growth. For example, we leveraged opportunities like the 2020 Super Bowl to spotlight only zero sugar products in all of our beverage television advertisements. For further information on our strategy to helping to build a more sustainable food system, see our website atwww.pepsico.com/sustainability/sustainable-food-system.
We have also taken meaningful steps to responsibly market our products, particularly when communicating to children. In accordance with our policies and industry standards, including the International Council of Beverages Associations (ICBA) Guidelines on Marketing to Children, we do not advertise any soft drinks of any kind, whether full sugar or zero sugar products, to children under 12, and we restrict direct sales of certain beverages to schools. A dedicated section of our website atwww.pepsico.com/sustainability/marketingprovides further information to enable consumers, policymakers and other stakeholders to better understand our Company’s policies and practices that inform our advertising and marketing strategy.strategic investments include:
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Shareholder Proposals (Proxy Item Nos. 4-5)4-6)
The requested report is duplicative and unnecessary.
Given the publicly available reporting by PepsiCo and third-party organizations, we believe the main objective of this proposal has already been addressed. We describe PepsiCo’s approach and the substantial steps that we have taken to advance our sugar reduction goal in our Corporate Sustainability Report and elsewhere on our website athttps://www.pepsico.com/sustainability/esg-topics#sugar. Several third-party organizations already publish reports that address sugar and public health, as well as feedback on PepsiCo and the industry, including identifying strengths and opportunities for improvement. For example:
| ■ | Bare Foods Co. (a producer of baked fruit and vegetable convenient foods); |
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| ■ | Health Warrior, Inc. (a producer of snacks with ingredients like chia and pumpkin seeds); |
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| ■ | Cytosport, Inc. (makers of Muscle Milk and Evolve Protein - enhanced protein beverages); |
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| ■ | Pioneer Food Group Ltd (one of South Africa’s beverages and convenient foods companies with strong positions in cereals, juice, and other African nutritional food staples); |
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| ■ | BFY Brands, Inc. (makers of air popped convenient foods); |
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| ■ | Hangzhou Haomusi Food Co., Ltd. (Be & Cheery) (one of China’s largest online convenient foods companies with product offerings that include nuts, dried fruits and meat snacks); and |
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| ■ | The AccessPLANeT Partnership (a joint venture with Beyond Meat, Inc. to Nutrition Foundation (ATNF), a respected independent non-profit organization based in the Netherlandsproduce and funded by the Bill & Melinda Gates Foundation, the Dutch Ministry of Foreign Affairs, the Robert Wood Johnson Foundationmarket innovative beverages and the U.K.’s Department for International Development, publishes reports that not only provide a robust assessment of PepsiCo’s goals and performance, but a critical analysis and benchmarking on efforts of other leadingconvenient food and beverage manufacturers to improve consumers’ access to nutritious foods and beverages. These ATNF reports were designed through an extensive, multi-stakeholder consultative process to ensure that they would be a useful tool for a range of stakeholder groups, including investors, academia, policymakers, civil society organizations and industry members. |
■ | In addition, in order to continue to drive transparency around this important issue, we collaborate with Partnership for Healthier America (PHA), an organization that works with the private sector to help improve the health of youth in the United States by addressing childhood obesity, for PHA to conduct an independent review and externally validate PepsiCo’s data, methodology and progress against our sugar reduction goal. |
■ | We also collaborate with our peers on industry initiatives, such as the U.S. Balance Calories Initiative to establish a national calorie goal to help reduce beverage calories consumed per person per day. Progress on this industry initiative is audited by an independent third-party organization. We are part of similar industry initiatives in several countries.products made from plant-based protein). |
Engagement withIn general, alongside healthy lifestyle, education and feedback from these third-party organizationsmore physical activity, we believe offering consumers choices by reformulating some of our products, widening and others informimproving the nutritional composition of our sustainability reportingportfolio, providing clear nutritional information on labels to help consumers make informed purchase decisions and overarching sustainability strategy. We recognizefollowing self-imposed marketing and publicly disclose related risks, such as changes inadvertising restrictions to protect children are the understandingmost effective ways we can help consumers achieve their dietary goals.
Given our belief that it is not feasible to accurately provide the requested report due to the numerous factors that contribute to obesity and PepsiCo’s ongoing commitment beyond enterprise risk management to follow the recommendations of the role of sugar or other ingredients added in our products, including in our annual report, the latest of which is available atwww.pepsico.com/proxy20.Because sustainability topics are integrated into, and not separate from, our business, the full Board considers sustainability issues a vital element of its business oversight. In addition, our Public Policy and Sustainability Committee assists the Board in providing more focused oversight over the Company’s policies, programs and related risks that concern key sustainability matters, including sugar and public health.
Given the robust public disclosures by PepsiCo and several independent third partiesUnited Nations and the meaningful steps PepsiCo has taken,WHO in order to be a part of the solution through reformulation, portfolio diversification and plans to continue to take, to improve choices across our portfolioresponsible labeling and to responsibly market our products,marketing practices, we do not believe the additional report requested by this proposal would be duplicative and unnecessary.a worthwhile use of Company resources.
Our Board of Directors recommends that shareholders vote “AGAINST” this proposal.
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Ownership of PepsiCo Common Stock
OWNERSHIP OF PEPSICO COMMON STOCK
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Stock Ownership of Officers and Directors
The following table shows, as of March 2, 2020,1, 2022, the number of shares of our Common Stock beneficially owned and the number of phantom units of our Common Stock held in the Company’s income deferral programs by each director (including each nominee), by each of the NEOs identified in the 20192021 Summary Compensation Table on page 6169 of this Proxy Statement, and by all current directors and executive officers as a group. Each phantom unit represents the economic equivalent of one share of our Common Stock. Except as otherwise noted, the directors and executive officers exercise sole voting and investment power over their shares shown in the table. None of the shares are subject to pledge.
As of March 2, 2020,1, 2022, our current directors and executive officers as a group beneficially owned less than 1% of our outstanding Common Stock.
| Name of Individual or Group | | Number of Shares of
PepsiCo Common Stock
Beneficially Owned(1) | | Number of Phantom
Units of PepsiCo
Common Stock Held
in PepsiCo’s Deferral
Programs(2) | | Total | | Number of Shares of
PepsiCo Common Stock
Beneficially Owned(1) | | Number of Phantom
Units of PepsiCo
Common Stock Held
in PepsiCo’s Deferral
Programs(2) | | Total |
| Segun Agbaje | | | 700 | | 4,181 | | 4,881 |
| Shona L. Brown | | 1,000 | | 32,463 | | 33,463 | | 1,000 | | 37,060 | | 38,060 |
| Cesar Conde | | 1,000 | | 7,607 | | 8,607 | | 1,000 | | 10,724 | | 11,724 |
| Ian Cook | | 3,569 | | 30,251 | | 33,820 | | 3,569 | | 34,715 | | 38,284 |
| Edith W. Cooper | | | 1,075 | | 1,368 | | 2,443 |
| Dina Dublon | | 2,455 | | 31,498 | | 33,953 | | 2,455 | | 36,037 | | 38,492 |
| Richard W. Fisher | | 1,000 | | 9,505 | | 10,505 | |
| Michelle Gass | | 1,000 | | 2,312 | | 3,312 | | 1,000 | | 5,114 | | 6,114 |
| William R. Johnson(3) | | 3,765 | | 9,505 | | 13,270 | |
| Hugh F. Johnston | | 119,083 | | 23,468 | | 142,551 | | 57,992 | | 19,603 | | 77,596 |
| Ramon L. Laguarta | | 98,245 | | — | | 98,245 | | 130,729 | | — | | 130,729 |
| Dave Lewis | | | 700 | | 3,375 | | 4,075 |
| David C. Page | | 1,000 | | 10,150 | | 11,150 | | 1,000 | | 13,418 | | 14,418 |
| Robert C. Pohlad(4) | | 1,144,659 | | 9,505 | | 1,154,164 | |
| Robert C. Pohlad(3) | | | 1,144,659 | | 12,735 | | 1,157,394 |
| Silviu Popovici | | 29,230 | | — | | 29,230 | | 30,511 | | — | | 30,511 |
| Ronald Schellekens | | — | | — | | — | |
| Kirk Tanner | | 51,439 | | — | | 51,439 | | 52,648 | | — | | 52,648 |
| Daniel Vasella | | 14,011 | | 53,220 | | 67,231 | | 14,011 | | 60,177 | | 74,188 |
| Darren Walker | | 1,000 | | 6,525 | | 7,525 | | 1,000 | | 9,577 | | 10,577 |
| Alberto Weisser | | 1,000 | | 19,397 | | 20,397 | | 1,000 | | 23,216 | | 24,216 |
| All directors and executive officers as a group (22 persons) | | 1,606,461 | | 245,406 | | 1,851,867 | |
| Steven Williams | | | 26,167 | | — | | 26,167 |
| All directors and executive officers as a group (24 persons) | | | 1,626,489 | | 273,695 | | 1,900,185 |
| |
| (1) | The shares shown include the following shares that directors and executive officers have the right to acquire within 60 days after March 2, 2020:1, 2022: (1) through the exercise of vested stock options: Mr. Laguarta, 16,941 shares; and all directors and executive officers as a group, 33,79228,871 shares; and (2) pursuant to other equity awards: Mr. Johnston, 13,95815,304 shares; Mr. Laguarta, 9,95936,588 shares; Mr. Popovici, 5,9609,409 shares; Mr. Tanner, 8,5327,930 shares; Mr. Williams, 4,670 and all directors and executive officers as a group, 68,994106,051 shares. In addition, the amounts reported include Common Stock equivalent amounts attributed to the following executive officers based on their respective holdings in the PepsiCo Savings Plan: Mr. Johnston, 276291 shares; Mr. Tanner, 535565 shares; Mr. Williams, 380; and all executive officers as a group, 1,4831,567 shares. |
| (2) | Reflects phantom units of our Common Stock held in the PepsiCo Executive Income Deferral Program and the PepsiCo Director Deferral Program. |
| (3) | The shares shown for William R. Johnson include (i) 2,102 shares held jointly with his spouse over which Mr. Johnson has shared voting and investment power, (ii) 187 shares held in a trust with his spouse over which Mr. Johnson has shared voting and investment power, and (iii) 476 shares held in trusts over which Mr. Johnson has sole voting and investment power.
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(4) | The shares shown for Robert C. Pohlad include 900,000 shares held in a limited liability company over which Mr. Pohlad has shared voting and investment power and 27 shares held indirectly by his spouse. |
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PEPSICO 20202022 PROXY STATEMENT | 8193 |
Table of Contents
Ownership of PepsiCo Common Stock
Stock Ownership of Certain Beneficial Owners
The following table sets forth information regarding persons or groups known to the Company to be beneficial owners of more than 5% of our outstanding Common Stock.
| Name and Address of Beneficial Owner | | Number of Shares
of Common Stock
Beneficially Owned | | | Percent of Class
Outstanding(1) |
The Vanguard Group
100 Vanguard Blvd.
Malvern, PA 19355 | | 122,600,602 | (2) | | | 8.9 | % |
BlackRock, Inc.
55 East 52nd Street
New York, NY 10055 | | 105,501,759 | (3) | | | 7.6 | % |
Name and Address of Beneficial Owner | | Number of Shares
of Common Stock
Beneficially Owned | | Percent of Class
Outstanding(1) |
The Vanguard Group
100 Vanguard Blvd.
Malvern, PA 19355 | | 114,672,157(2) | | 8.3% |
BlackRock, Inc.
55 East 52nd Street
New York, NY 10055 | | 106,385,603(3) | | 7.7% |
| (1) | Based on the number of shares of our Common Stock outstanding and entitled to vote at the 20202022 Annual Meeting as of our record date, March 2, 2020. 1, 2022. |
| (2) | Based solely on the Schedule 13G/A filed by the Vanguard Group with the SEC on February 12, 20209, 2022 regarding its holdings as of December 31, 2019.2021. The Vanguard Group also reported that, as of December 31, 2019,2021, it had sole voting power for 2,146,9620 shares of our Common Stock, sole dispositive power for 112,225,075116,788,458 shares of our Common Stock, shared voting power for 425,9502,315,794 shares of our Common Stock and shared dispositive power for 2,447,0825,812,144 shares of our Common Stock. |
| (3) | Based solely on the Schedule 13G/A filed by BlackRock, Inc. with the SEC on February 5, 20201, 2022 regarding its holdings as of December 31, 2019.2021. BlackRock, Inc. also reported that, as of December 31, 2019,2021, it had sole voting power for 92,314,92887,624,690 shares of our Common Stock, sole dispositive power for 106,385,603105,501,759 shares of our Common Stock and shared voting power for and shared dispositive power for 0 shares of our Common Stock. |
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Table of Contents
Information About the Annual Meeting
INFORMATION ABOUT THE ANNUAL MEETING
|
Voting Procedures
Who may vote at the Annual Meeting?
Only shareholders of record of our Common Stock as of the close of business on our record date, March 2, 2020,1, 2022, are entitled to receive notice of and to vote at the Annual Meeting and at any postponement or adjournment of the meeting. As of the record date, there were 1,389,240,9931,383,248,600 shares of our Common Stock outstanding and entitled to vote at the Annual Meeting and each share of our Common Stock is entitled to one vote.
How do I vote?
Whether you are a shareholder of record (that is, if your shares are registered in your own name with our transfer agent) or a beneficial owner of shares held in street name (that is, if you hold your shares through a broker, bank or other holder of record), you can vote any one of four ways:
| ■ | Via the Internet Prior to the Annual Meeting. . You may vote by visiting the website www.proxyvote.com and entering the 16-digit control number found in the Notice of Internet Availability of Proxy Materials (the “Notice of Internet Availability”), proxy card or voting instruction form. |
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| ■ | By TelephoneTelephone. .YouYou may vote by calling the toll-free number found in the proxy card or voting instruction form or provided on the website listed on the Notice of Internet Availability. |
| |
| ■ | By MailMail. . If you received or requested printed copies of the proxy materials by mail, you may vote by proxy by filling out the proxy card (if you are a shareholder of record) or voting instruction form (if you are a beneficial owner) and sending it back in the envelope provided. |
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| ■ | In PersonVia the Internet During the Annual Meeting. . If you are a shareholder of record andEven if you plan to attend the Annual Meeting, you are encouraged to vote beforehand by Internet, telephone or mail. You may also may vote in person at the Annual Meeting. Bring your printed proxy card if you received one by mail. Otherwise, the Company will give shareholders of record a ballot at the Annual Meeting. If you are a beneficial owner, you must obtain a legal proxy from the organization that holds your shares if you wish to attendduring the Annual Meeting (up until the closing of the polls) by visiting www.virtualshareholdermeeting.com/PEP2022, entering the 16-digit control number found in the Notice of Internet Availability, proxy card or voting instruction form and vote in person.following the instructions available on the website. |
What happens if I do not give specific voting instructions when I deliver my proxy?
| ■ | Shareholder of RecordRecord. . The persons named as proxies will vote your shares in accordance with your instructions. Except as noted below with respect to shares held in the PepsiCo Savings Plan, if your properly executed proxy does not contain voting instructions, the persons named as proxies will vote your shares in accordance with the voting recommendations of the Board. |
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| ■ | Beneficial Owner of Shares Held in Street NameName.. If you are the beneficial owner of shares held in street name, you have the right to direct your bank or broker how to vote your shares, and it is required to vote your shares in accordance with your instructions. If you do not give instructions to your bank or brokerage firm, under stock exchange rules, it will nevertheless be entitled to vote your shares with respect to “routine” matters, but it will not be permitted to vote your shares with respect to “non-routine” matters. In the case of a non-routine matter, your shares will be considered “broker non-votes” on that proposal. |
Proxy Item No. 2 (ratification of the appointment of the independent registered public accounting firm) is a matter the Company believes will be considered “routine.”
Proxy Item No. 1 (election of directors), Proxy Item No. 3 (advisory approval of executive compensation), and Proxy Item Nos. 4-54-6 (shareholder proposals) are matters the Company believes will be considered “non-routine.”
If you are a beneficial owner and do not give voting instructions to your bank or brokerage firm on certain matters, the Company believes your bank or broker may vote your shares with respect to Proxy Item No. 2, but not Proxy Item Nos. 1 or 3-5.3-6.
| PEPSICO 20202022 PROXY STATEMENT | 8395 |
Table of Contents
Information About the Annual Meeting
Can employees who participate in PepsiCo’s Savings Plan vote?
Yes. If you are an employee who participates in the PepsiCo Savings Plan (a portion of which constitutes an Employee Stock Ownership Plan), you can vote the shares (if any) that are deemed to be in your account in the PepsiCo Savings Plan as of the close of business on March 2, 2020.1, 2022.
To do so, you must sign and return the proxy card or vote by the Internet or telephone, as instructed in the proxy materials you received in connection with these shares in the PepsiCo Savings Plan. Voting instructions must be received no later than 11:59 p.m. Eastern Daylight Time on May 3, 2020,1, 2022, so that the trustee (who votes the shares on behalf of the participants of the PepsiCo Savings Plan) has adequate time to tabulate the voting instructions. The trustee will vote those shares you instruct. If you do not provide voting instructions, the trustee will vote your PepsiCo Savings Plan shares in the same proportion as the PepsiCo Savings Plan shares of other participants for which the trustee has received proper voting instructions.
What constitutes a quorum in order to hold and transact business at the Annual Meeting?
The presence in person or by proxy of the holders of record of a majority of the votes entitled to be cast on a matter constitutes a quorum for action on that matter. Votes “for” and “against,” “abstentions” and “broker non-votes” will all be counted as present to determine whether a quorum has been established. Once a share of the Company’s Common Stock is represented for any purpose at a meeting, it is deemed present for quorum purposes for the remainder of the meeting and any adjournments of the meeting unless a new record date is or must be set for the adjourned meeting. If a quorum is not present at the opening of the meeting, the meeting may be adjourned from time to time by the vote of a majority of the votes cast on the motion to adjourn.
What is the voting requirement to approve each of the proposals?
Assuming the existence of a quorum at the Annual Meeting:
| ■ | Each director nominated pursuant to Proxy Item No. 1 must receive a vote “for” their election from a majority of the votes cast; |
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| ■ | For all other matters, the affirmative vote of a majority of the votes cast is required to approve each proposal. |
Abstentions and broker non-votes are not treated as cast either for or against a matter, and therefore will not affect the outcome of the vote.
Can I revoke my proxy or change my vote after I have voted?
You may revoke your proxy and change your vote at any time before the final vote at the Annual Meeting by voting again via the Internet prior to or during the Annual Meeting or by telephone, by completing, signing, dating and returning a new proxy card or voting instruction form with a later date, or by attending the Annual Meeting and voting in person.date. Only your latest dated proxy we receive at or prior to the Annual Meeting will be counted. However, your virtual attendance at the Annual Meeting will not automatically revoke your proxy unless you vote again.
Who will count the votes?
We have retained representatives of Broadridge Investor Communication Solutions, Inc. as the inspectors of election to tabulate the votes and certify the vote results.
Where can I find the voting results of the Annual Meeting?
We expect to announce preliminary voting results at the Annual Meeting. We will also disclose voting results on a Form 8-K filed with the SEC within the time period prescribed by SEC rules.
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Information About the Annual Meeting
How are proxies solicited and what is the cost?
We are providing these proxy materials in connection with the solicitation by our Board of Directors of proxies to be voted at our Annual Meeting. We bear all expenses incurred in connection with the solicitations of proxies. We have engaged Innisfree M&A Incorporated to solicit proxies for an estimated fee of $18,500, plus expenses.
In addition to the solicitation of proxies by mail and electronically, PepsiCo intends to ask brokers and bank nominees to solicit proxies from their principals and will pay the brokers and bank nominees their expenses for the solicitation. Our directors, officers and employees also may solicit proxies by mail, telephone, electronic or facsimile transmission or in person. They will not receive any additional compensation for these activities.
Attending the Annual Meeting
How can I attend the Annual Meeting in Person?Meeting?
Attendance atIn light of ongoing concern regarding COVID-19, and to promote the health and well-being of our employees, shareholders, directors, officers and other stakeholders, we have planned for this year’s Annual Meeting is limited to shareholders as of the close of business on the record date, March 2, 2020. Each shareholder may appoint only one representativebe a virtual-only meeting. Shareholders will not be able to physically attend the Annual Meeting on his, her or its behalf. Due to space constraints and other security measures, we are not able to admit the guests of either shareholders or their legal proxy holders. AdmissionMeeting. To be admitted to the virtual 2022 Annual Meeting, will be on a first-come, first-served basis and will require an admission ticket. Each shareholder will be asked to present valid government-issued picture identification such as a driver’s license or passport. Security measures may include bag, metal detector or hand-wand searches. Cell phones, PDAs, tablets, pagers, recording and photographic equipment and/or computers will not be permitted in the meeting rooms at the Annual Meeting. These security procedures may require additional time, so please plan accordingly. The North Carolina History Center at Tryon Palace is accessible to disabled persons. Upon advance request, we will provide wireless headsets for hearing amplification. See also page 3 of this Proxy Statement if public health developments regarding the coronavirus (COVID-19) warrant a change in location of the Annual Meeting.
How do I receive an admission ticket?
If you received your proxy materials by mail, your admission ticket will be your Notice of Internet Availability, proxy card (shareholders of record only) or voting instruction form (beneficial owners only). If you received your proxy materials by email, you will be given an opportunityneed to print an admission ticket after you vote online.
We encourage shareholderslog-in to pre-register in advance ofwww.virtualshareholdermeeting.com/PEP2022 using the Annual Meeting by visitingwww.proxyvote.com. You will need your 16-digit control number to accesswww.proxyvote.com, which you can findfound in the Notice of Internet Availability, proxy card or voting instruction form. You may also pre-register by contacting PepsiCo’s Manager of Shareholder Relations at (914) 253-3055 orinvestor@pepsico.com. If you are a beneficial owner of shares, you must show proof of ownership, such asmay contact the bank, broker or other institution where you hold your account if you have questions about obtaining your control number. Guests without a recent bankcontrol number may also attend the meeting, but will not have the option to vote shares or brokerage account statement reflecting your ownership of Common Stock as of March 2, 2020, in addition to valid government-issued picture identification. On May 6, 2020, registration will begin at 8:00 a.m. Eastern Daylight Time.ask questions.
Can I listen to the Annual Meeting on the Internet?
Yes, ourThe Annual Meeting will be webcast live on May 6, 2020begin promptly at 9:00 a.m. Eastern Daylight Time. You are invited to visitwww.pepsico.com/investors/eventsto listenTime on May 4, 2022. Online access to the live webcast will open at approximately 8:45 a.m. Eastern Daylight Time to allow time for you to log-in and test your device’s audio system. We encourage you to access the meeting in advance of the designated start time. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on www.virtualshareholdermeeting.com/PEP2022. A replay of the Annual Meeting.Meeting webcast will be available on our website at www.pepsico.com in the Investors section after the Annual Meeting for at least 30 days.
Will I be able to ask questions and participate in the virtual Annual Meeting?
Shareholders of record and beneficial owners of shares will be able to participate in the Annual Meeting by asking questions and voting their shares as outlined above. This year’s shareholders Q&A session will include questions submitted both during and in advance of the meeting. You may submit a question beginning approximately five days in advance of the meeting at www.proxyvote.com after logging in with the 16-digit control number found in the Notice of Internet Availability, proxy card or voting instruction form. Questions may be submitted online shortly prior to, and during, the Annual Meeting by logging in with the 16-digit control number at www.virtualshareholdermeeting.com/PEP2022. We will answer questions during the Annual Meeting that are pertinent to the Company as time permits. If we receive substantially similar written questions, we plan to group such questions together and provide a single response to avoid repetition and allow time for additional question topics. For appropriate questions that are not otherwise addressed during the 2022 Annual Meeting, we will publish our responses on our Investor Relations site after the meeting or communicate the relevant response directly to the submitting shareholder.
Additional information regarding the rules and procedures for participating in the virtual Annual Meeting will be provided in our rules of conduct for the Annual Meeting, which shareholders can view during the meeting at the meeting website.
20202022 Proxy Materials
Why am I receiving these proxy materials?
Our Board of Directors has made these materials available to you on the Internet or has delivered printed versions of these materials to you by mail in connection with the Board of Directors’ solicitation of proxies for use at our Annual Meeting of Shareholders. As a shareholder, you are invited to attend the Annual Meeting and are requested to vote on the items of business described in this Proxy Statement.
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Table of Contents
Information About the Annual Meeting
What is included in these materials?
These proxy materials include:
| ■ | this Proxy Statement for the Annual Meeting; and |
| |
| ■ | our 2021 Annual Report for the fiscal year ended December 28, 2019.Report. |
If you received printed versions of these materials by mail, these materials also include the proxy card or voting instruction form for the Annual Meeting.
Why did I receive a Notice of Internet Availability in the mail instead of printed proxy materials?
In accordance with SEC rules, instead of mailing a printed copy of our proxy materials to all of our shareholders, we have elected to furnish such materials to selected shareholders by providing access to these documents over the Internet. Accordingly, on or about March 20, 2020,24, 2022, we sent a Notice of Internet Availability to most of our shareholders.
These shareholders have the ability to access the proxy materials on a website referred to in the Notice of Internet Availability or request to receive a printed set of the proxy materials by calling the toll-free number or emailing the address found on the Notice of Internet Availability. We encourage you to take advantage of the availability of the proxy materials on the Internet in order to help save natural resources and reduce the cost to print and distribute the proxy materials.
How can I get electronic access to the proxy materials?
The Notice of Internet Availability provides you with instructions regarding how to:
| ■ | view our proxy materials for the Annual Meeting on the Internet; |
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| ■ | vote your shares after you have viewed our proxy materials; |
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| ■ | request a printed copy of the proxy materials; and |
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| ■ | instruct us to send our future proxy materials to you electronically by email. |
PepsiCo will plant a tree for every shareholder that signs up for electronic delivery. Choosing to receive your future proxy materials by email will lower our costs of delivery and will help reduce the environmental impact of our Annual Meeting. Since 2016, we have planted nearly 55,000 trees based on the number of shareholders who have signed up for electronic delivery.
| PepsiCo will plant a tree for every shareholder that signs up for electronic delivery. Choosing to receive your future proxy materials by email will lower our costs of delivery and will help reduce the environmental impact of our Annual Meeting. Since 2016, we have planted nearly 86,600 trees based on the number of shareholders who have signed up for electronic delivery. |
Copies of the proxy materials are available for viewing atwww.pepsico.com/proxy22www.pepsico.com/proxy20.
You may have received proxy materials by email. Even if you received a printed copy of our proxy materials, you may choose to receive future proxy materials by email. If you do so, you will receive an email next year with instructions containing a link to view those proxy materials and a link to the proxy voting site. Your election to receive proxy materials by email will remain in effect until you terminate it or for so long as the email address provided by you is valid.
What is “householding”?
If you are a beneficial owner, your bank or broker may deliver a single Proxy Statement and Annual Report, along with individual proxy cards, or individual Notices of Internet Availability to any household at which two or more shareholders reside unless contrary instructions have been received from you. This procedure, referred to as householding, reduces the volume of duplicate materials shareholders receive and reduces mailing expenses. Shareholders may revoke their consent to future householding mailings or enroll in householding by contacting Broadridge at 1-866-540-7095, or by writing to Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717. Alternatively, if you wish to receive a separate set of proxy materials for this year’s Annual Meeting, we will deliver them promptly upon request to PepsiCo’s Manager of Shareholder Relations at PepsiCo, Inc., 700 Anderson Hill Road, Purchase, New York 10577 or (914) 253-3055 orinvestor@pepsico.cominvestor@pepsico.com.
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Table of Contents
Information About the Annual Meeting
Where can I find the Annual Report?
The 20192021 Annual Report to Shareholders, including financial statements, was delivered or made available with this Proxy Statement.
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Table of Contents
Information About the Annual Meeting
A copy of PepsiCo’s Annual Report on Form 10-K for the fiscal year ended December 28, 201925, 2021 (including the financial statements, schedules and a list of exhibits) will be sent without charge upon the request of any shareholder to PepsiCo’s Manager of Shareholder Relations at PepsiCo, Inc., 700 Anderson Hill Road, Purchase, New York 10577 orinvestor@pepsico.cominvestor@pepsico.com. You also may obtain our Annual Report on Form 10-K over the Internet on the SEC’s website atwww.sec.govwww.sec.gov, or on our website atwww.pepsico.com under “www.pepsico.comInvestorsunder” — ““Investors”—“Financial Information”— ““SEC Filings.Filings.”
Other Matters
The Board of Directors knows of no other matters to be brought before the Annual Meeting. If any other business should properly come before the Annual Meeting or any postponement or adjournment thereof, the persons named in the proxy will vote on such matters according to their best judgment.
20212023 Shareholder Proposals and Director Nominations
Shareholder Proposals for Inclusion in the Proxy Statement for the 20212023 Annual Meeting
PepsiCo welcomes comments or suggestions from its shareholders. If a shareholder wishes to have a proposal formally considered at the 20212023 Annual Meeting of Shareholders and included in the Company’s Proxy Statement for that meeting, we must receive the proposal in writing on or before the close of business on November 20, 202024, 2022 and the proposal must otherwise comply with Rule 14a-8 under the Exchange Act.
Director Nominations for Inclusion in the Proxy Statement for the 20212023 Annual Meeting
The Board has implemented a proxy access provision in our By-Laws, which allows a shareholder or group of up to 20 shareholders owning in aggregate three percent or more of our outstanding Common Stock continuously for at least three years to nominate and include in our proxy materials director nominees constituting up to 20% of the number of directors in office or two nominees, whichever is greater, provided the shareholder(s) and nominee(s) satisfy the requirements in the By-Laws. If a shareholder or group of shareholders wishes to nominate one or more director candidates to be included in the Company’s Proxy Statement for the 20212023 Annual Meeting of Shareholders pursuant to these proxy access provisions in Section 2.9 of our By-Laws, we must receive proper written notice of any such nomination no earlier than the close of business on October 21, 202025, 2022 and no later than the close of business on November 20, 2020,24, 2022, and the nomination must otherwise comply with our By-Laws. If, however, the 20212023 Annual Meeting is not within 30 days before or 60 days after the anniversary of this year’s Annual Meeting, we must receive such notice no earlier than the close of business on the 150thday prior to such meeting and no later than the close of business on the later of the 120thday prior to such meeting or the 10thday following the public announcement of the meeting date.
Other Proposals or Director Nominations for Presentation at the 20212023 Annual Meeting
Under our By-Laws, if a shareholder wishes to present other business or nominate a director candidate at the 20212023 Annual Meeting of Shareholders, we must receive proper written notice of any such business or nomination no earlier than the close of business on January 6, 20214, 2023 and no later than the close of business on February 5, 2021.3, 2023. If, however, the 20202023 Annual Meeting is not within 30 days before or 60 days after the anniversary of this year’s Annual Meeting, we must receive such notice no earlier than the close of business on the 120thday prior to such meeting and not later than the close of business on the later of the 90thday prior to such meeting or the 10thday following the public announcement of the meeting date. Any such notice must include the information specified in the By-Laws. If a shareholder does not meet these deadlines, or does not satisfy the requirements of Rule 14a-4 of the Exchange Act, the persons named as proxies will be allowed to use their discretionary voting authority when and if the matter is raised at the Annual Meeting.
All notices of proposals or nominations, as applicable, must be addressed to the Corporate Secretary of PepsiCo at 700 Anderson Hill Road, Purchase, New York 10577.
| PEPSICO 20202022 PROXY STATEMENT | 8799 |
Table of Contents
Appendix A - Reconciliation of GAAP and
Non-GAAP Information
APPENDIX A—RECONCILIATION OF GAAP AND NON-GAAP INFORMATION
|
($ in millions, except per share amounts; unaudited)
Organic revenue growth, core constant currency EPS (with 2016 growth excluding the impact of the Venezuela deconsolidation and core constant currency EPS growth (with 2018 growth excluding the impact of certain gains and 2020 growth excluding the impact of COVID-19 charges for calculation of this compensation performance measure), free cash flow, and free cash flow excluding certain items, core net ROIC improvement (with 20192021 3-year growth excluding the impact of the SodaStream acquisitionPioneer Foods, Rockstar and Be & Cheery acquisitions and cumulative impact of foreign exchange translation for calculation of this compensation performance measure), and core constant currency net income growth (refers to core constant currency net income attributable to PepsiCo) are non-GAAP financial measures. In addition to using these measures as compensation performance measures, we use these non-GAAP financial measures internally to make operating and strategic decisions, including the preparation of our annual operating plan and evaluation of our overall business performance. We believe presenting non-GAAP financial measures provides additional information to facilitate comparison of our historical operating results and trends in our underlying operating results, and provides additional transparency on how we evaluate our business. We also believe presenting these measures allows investors to view our performance using the same measures that we use in evaluating our financial and business performance and trends.
We consider quantitative and qualitative factors in assessing whether to adjust for the impact of items that may be significant or that could affect an understanding of our ongoing financial and business performance or trends. The core non-GAAP financial measures contained in the Proxy Statement exclude the impact of the following items:
| ■ | Mark-to-Market Net Impact:Mark-to-market net gains and losses on commodity derivatives in corporate unallocated expenses. These gains and losses are subsequently reflected in division results when the divisions recognize the cost of the underlying commodity in operating profit. |
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| ■ | Restructuring and Impairment Charges:Expenses related to the multi-year productivity plans publicly announced in 2019 and 2014, as applicable. The 2019 plan was expanded and 2012 Multi-Year Productivity Plans.extended through the end of 2026 to take advantage of additional opportunities within the initiatives of the plan. |
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| ■ | Inventory Fair Value AdjustmentsAcquisition and MergerDivestiture-Related Charges: In 2021, acquisition and Integration Charges:divestiture-related benefits of $4 million primarily related to the acceleration payment made in 2021 under the contingent consideration arrangement associated with our acquisition of Rockstar, which is partially offset by other acquisition and divestiture-related charges, as well as a tax benefit related to contributions to socioeconomic programs in South Africa. In 2019, inventory2020, acquisition and divestiture-related charges of $255 million primarily related to our acquisitions of Pioneer Foods, Rockstar, Be & Cheery and BFY Brands. The charges are primarily related to fair value adjustments to the acquired inventory included in the acquisition-date balance sheets and closing costs, employee-related costs, contract termination costs, changes in the fair value of contingent consideration and other integration costs. These merger and integration charges also include liabilities to support socioeconomic programs in South Africa, which are irrevocable conditions of our acquisition of Pioneer Foods. In 2019, acquisition and divestiture-related charges of $55 million primarily related to our acquisition of SodaStream. The charges are primarily related to fair value adjustments to the acquired inventory included in SodaStream’s balance sheet at the acquisition date, as well as merger and integration charges, including employee-related costs. In 2018, mergeracquisition and integrationdivestiture-related charges of $75 million related to our acquisition of SodaStream. These charges include closing costs, advisory fees and employee-related costs. |
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| ■ | Pension and Retiree Medical-Related Impact: In 2013, merger and integration2021, pension settlement charges of $10$47 million related to our acquisitionlump sum distributions exceeding the total of Wimm-Bill-Dann Foods OJSC.annual service and interest costs, as well as curtailment gains of $35 million related to plan changes. In 2020, pension settlement charges of $205 million related to lump sum distributions exceeding the total of annual service and interest costs. In 2019, pension settlement charges of $220 million related to the purchase of a group annuity contract and settlement charges of $53 million related to one-time lump sum payments to certain former employees who had vested benefits. |
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| ■ | Charges Related to Cash Tender and Exchange Offers: In 2021, interest expense of $842 million in connection with our cash tender offers, primarily representing the tender price paid over the carrying value of the tendered notes and loss on treasury rate locks (T-locks) used to mitigate the interest rate risk on the cash tender offers. In 2018, interest expense of $253 million in connection with our cash tender and exchange offers, primarily representing the tender price paid over the carrying value of the tendered notes. |
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| A-1 | PEPSICO 2022 PROXY STATEMENT |
Table of Contents
Appendix A - Reconciliation of GAAP and Non-GAAP Information
| ■ | Net Tax Related to the Tax Cuts and Jobs (TCJ) Act:In 2021, net tax expense of $190 million related to the TCJ Act as a result of adjustments related to the final assessment of the 2014 through 2016 Internal Revenue Service (IRS) audit. In 2019 and 2018, net tax benefit of $8 million and $28 million, respectively, related to the TCJ Act. In 2018, net tax benefit of $28 million related to the TCJ Act. In 2017, provisional net tax expense of $2.5 billion associated with the enactment of the TCJ Act. Included in the net tax expense of $2.5 billion was a provisional mandatory one-time transition tax of approximately $4 billion on undistributed international earnings. This mandatory one-time transition tax was partially offset by a provisional $1.5 billion benefit resulting from the required remeasurement of our deferred tax assets and liabilities to the new, lower U.S. corporate income tax rate. While our accounting for the recorded impact of the TCJ Act is deemed to be complete, additional guidance issued by the IRS impacted, and may continue to impact, our recorded amounts after December 29, 2018. |
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| ■ | Other Net Tax Benefits:In 2018, other net tax benefits of $4.3 billion related to the reorganization of our international operations. Also, in 2018, non-cash tax benefits of $717 million associated with both the conclusion of certain international tax audits and our agreement with the IRS resolving all open matters related to the audits of taxable years 2012 and 2013. In 2015, non-cash tax benefit of $230 million associated with our agreement with the IRS resolving substantially all open matters related to the audits for taxable years 2010 through 2011, which reduced our reserve for uncertain tax positions for the tax years 2010 through 2011. In 2013, non-cash tax benefit of $209 million associated with our agreement with the IRS resolving all open matters related to the audits for taxable years 2003 through 2009, which reduced our reserve for uncertain tax positions for the tax years 2003 through 2012. |
■ | Charges Related to Cash Tender and Exchange Offers:In 2018, interest expense of $253 million in connection with our cash tender and exchange offers, primarily representing the tender price paid over the carrying value of the tendered notes. |
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Table of Contents
Appendix A—Reconciliation of GAAP and Non-GAAP Information
■ | Charges Related to the Transaction with Tingyi (Cayman Islands) Holding Corp. (Tingyi): In 2016, impairment charge of $373 million to reduce the value of our 5% indirect equity interest in KSF Beverage Holding Co., Ltd. (KSFB), formerly known as Tingyi-Asahi Beverages Holding Co. Ltd., to its estimated fair value. In 2015, charge of $73 million related to a write-off of the value of a call option to increase our holding in KSFB to 20%. |
■ | Charge Related to Debt Redemption: In 2016, interest expense primarily representing the premium paid in accordance with the “make-whole” redemption provisions to redeem all of our outstanding 7.900% senior notes due 2018 and 5.125% senior notes due 2019 for the principal amounts of $1.5 billion and $750 million, respectively. |
■ | Pension-Related Settlement Charges / (Benefits): In 2019, pension settlement charges of $220 million related to the purchase of a group annuity contract and settlement charges of $53 million related to one-time lump sum payments to certain former employees who had vested benefits. In 2016, pension settlement charge of $242 million related to the purchase of a group annuity contract. In 2015, benefits of $67 million associated with the settlement of pension-related liabilities from previous acquisitions. In 2014, lump sum settlement charges of $141 million related to payments for pension liabilities to certain former employees who had vested benefits. |
■ | Venezuela Impairment Charges: In 2015, charges of $1.4 billion related to the impairment of investments in our wholly-owned Venezuelan subsidiaries and beverage joint venture. |
■ | Venezuela Remeasurement Charges: In 2014, a $105 million net charge related to our remeasurement of the bolivar for certain net monetary assets of our Venezuelan businesses. In 2013, net charge of $111 million related to the devaluation of the bolivar for our Venezuelan businesses. |
Additionally, free cash flow excluding certain items is a measure management uses to monitor cash flow performance. Since net capital spending is essential to our product innovation initiatives and maintaining our operational capabilities, we believe that it is a recurring and necessary use of cash. As such, we believe investors should also consider net capital spending when evaluating our cash from operating activities. We also consider certain other items (included in the Net Cash Provided by Operating Activities Reconciliation table below) in evaluating free cash flow that we believe investors should consider in evaluating our free cash flow results.
ROIC is net income attributable to PepsiCo plus interest expense after-tax divided by the sum of quarterly average debt obligations and quarterly average common shareholders’ equity. This metric serves as a measure of how well we use our capital to generate returns. Core net ROIC is ROIC adjusted for quarterly average cash, cash equivalents and short-term investments, after-tax interest income, and items that are not indicative of our ongoing performance. We believe the calculation of ROIC and core net ROIC provides useful information to investors and is an additional relevant comparison of our performance to consider when evaluating our capital allocation efficiency.
As described above, some of these non-GAAP financial measures were further adjusted in 2020 for certain charges taken as a result of the COVID-19 pandemic in 2020, such as costs related to expanded benefits and frontline incentives, the provision of personal protective equipment and increased sanitation, allowances for expected credit losses, upfront payment reserves and inventory write-downs. For further information regarding these 2020 COVID-19 charges, refer to pages 31-33 and 68 of PepsiCo’s Annual Report on Form 10-K for the fiscal year ended December 25, 2021.
For more information regarding these non-GAAP financial measures, including further information on the excluded items for years 2019, 2018,2021 and 2017,2020, see pages 57-6243-48 and 64-6651 of PepsiCo’s Annual Report on Form 10-K for the fiscal year ended December 28, 2019.25, 2021.
Non-GAAP information should be considered as supplemental in nature and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with U.S. GAAP. In addition, our non-GAAP financial measures may not be the same as or comparable to similar non-GAAP measures presented by other companies.
Net Revenue Growth Reconciliation
| | Year Ended
12/28/201925/2021 |
| Reported Net Revenue Growth | | 4 | 13 | % |
| Impact of: | | | | |
| Foreign Exchange Translation | | 2 | (1) | |
| Acquisitions and Divestitures | | (1 | )(2) | |
| Organic Revenue Growth | | 4.5 | 10 | % |
| | | | |
Note - Certain amounts above may not sum due to rounding.
| PEPSICO 20202022 PROXY STATEMENT | A-2 |
Table of Contents
Appendix A—A - Reconciliation of GAAP and Non-GAAP Information
Diluted EPS Performance Reconciliation
| | Year Ended | | Year Ended |
| | 12/28/2019 | | 12/29/2018 | | 12/30/2017 | | 12/31/2016 | | 12/26/2015 | | 12/27/2014 | | 12/28/2013 | | 12/25/2021 | | | 12/26/2020 | | | 12/28/2019 | | | 12/29/2018 | | | 12/30/2017 | |
| Reported Diluted EPS | | $ | 5.20 | | $ | 8.78 | | $ | 3.38 | | $ | 4.36 | | $ | 3.67 | | $ | 4.27 | | | $ | 4.32 | | | $ | 5.49 | | | $ | 5.12 | | | $ | 5.20 | | | $ | 8.78 | | | $ | 3.38 | |
| Mark-to-Market Net Impact | | | (0.06 | ) | | | 0.09 | | | (0.01 | ) | | | (0.08 | ) | | | — | | | 0.03 | | | | 0.03 | | | | 0.01 | | | | (0.04 | ) | | | (0.06 | ) | | | 0.09 | | | | (0.01 | ) |
| Restructuring and Impairment Charges | | | 0.21 | | | 0.18 | | | 0.16 | | | 0.09 | | | 0.12 | | | 0.21 | | | | 0.08 | | | | 0.15 | | | | 0.17 | | | | 0.21 | | | | 0.18 | | | | 0.16 | |
| Inventory Fair Value Adjustments and Merger and Integration Charges | | | 0.03 | | | 0.05 | | | — | | | — | | | — | | | — | | | | 0.01 | | |
| Net Tax Related to the TCJ Act | | | (0.01 | ) | | | (0.02 | ) | | | 1.70 | | | — | | | — | | | — | | | | — | | |
| Acquisition and Divestiture-Related Charges(a) | | | | (0.02 | ) | | | 0.17 | | | | 0.03 | | | | 0.05 | | | | — | |
| Pension and Retiree Medical-Related Impact | | | | 0.01 | | | | 0.11 | | | | 0.15 | | | | — | | | | — | |
| Charges Related to Cash Tender and Exchange Offers | | | | 0.49 | | | | — | | | | — | | | | 0.13 | | | | — | |
| Net Tax Expense/(Benefit) Related to the TCJ Act | | | | 0.14 | | | | — | | | | (0.01 | ) | | | (0.02 | ) | | | 1.70 | |
| Other Net Tax Benefits | | | — | | | (3.55 | ) | | | — | | | — | | | (0.15 | ) | | | — | | | | (0.13 | ) | | | — | | | | — | | | | — | | | | (3.55 | ) | | | — | |
| Charges Related to Cash Tender and Exchange Offers | | | — | | | 0.13 | | | — | | | — | | | — | | | — | | | | — | | |
| Charges Related to the Transaction with Tingyi | | | — | | | — | | | — | | | 0.26 | | | 0.05 | | | — | | | | — | | |
| Charge Related to Debt Redemption | | | — | | | — | | | — | | | 0.11 | | | — | | | — | | | | — | | |
| Pension-Related Settlement Charges / (Benefits) | | | 0.15 | | | — | | | — | | | 0.11 | | | (0.03 | ) | | | 0.06 | | | | — | | |
| Venezuela Impairment Charges | | | — | | | — | | | — | | | — | | | 0.91 | | | — | | | | — | | |
| Venezuela Remeasurement Charges | | | — | | | — | | | — | | | — | | | — | | | 0.07 | | | | 0.07 | | |
| Core Diluted EPS | | $ | 5.53 | | $ | 5.66 | | $ | 5.23 | | $ | 4.85 | | $ | 4.57 | | $ | 4.63 | | | $ | 4.37 | | | $ | 6.26 | | | $ | 5.52 | | | $ | 5.53 | | | $ | 5.66 | | | $ | 5.23 | |
| | | | | | | | | | | | | | | | | |
| Reported Diluted EPS Performance | | | (41 | )% | | | 160 | % | | | (23 | )% | | | 19 | % | | | (14 | )% | | | (1 | )% | | | | | | 7 | % | | | (2 | )% | | | (41 | )% | | | 160 | % | | | |
| | | | | | | | | | | | | | | | | |
| Core Diluted EPS Performance | | | (2 | )% | | | 8 | % | | | 8 | % | | | 6 | % | | | (1 | )% | | | 6 | % | | | | | | 13 | % | | | — | % | | | (2 | )% | | | 8 | % | | | |
| Impact of Foreign Exchange Translation | | | 1 | | | 1 | | | 1 | | | 3 | | | 11 | | | 3 | | | | | | | 1.5 | | | | 2 | | | | 1 | | | | 1 | | | | |
| Core Constant Currency Diluted EPS Performance | | | (1 | ) | | | 9 | | | 9 | | | 9 | | | 10 | | | 9 | | | | | | | 12 | % | | | 2 | % | | | (1 | )% | | | 9 | % | | | |
| Impact of Excluding Certain Items(a) | | | n/a | | | (1 | ) | | | n/a | | | n/a | | | n/a | | | n/a | | | | | |
Impact of Excluding Venezuela from 2015 base(b) | | | n/a | | | n/a | | | n/a | | | 2.5 | | | n/a | | | n/a | | | | | |
| Impact of Excluding Certain Items(b) | | | | n/a | | | | n/a | | | | n/a | | | | (1 | ) | | | |
| Impact of Excluding COVID-19 Charges | | | | n/a | | | | 8 | | | | n/a | | | | n/a | | | | |
| Core Constant Currency Diluted EPS Performance, Excluding Above Items | | | (1 | )% | | | 7 | % | | | 9 | % | | | 12 | % | | | 10 | % | | | 9 | % | | | | | | 12 | % | | | 10 | % | | | (1 | )% | | | 7 | % | | | |
| 2017-2019 Three-Year Growth Average | | | 5.1 | %(c) | | | | | | | | | | | | | | | | |
| 2019-2021 Three-Year Growth Average | | | | 7 | %(c) | | | | | | | | | | | | |
| |
| n/a | - Adjustment was not applicable for purposes of calculating this performance measure. |
| |
| (a) | 2021 income primarily relates to the acceleration payment made in 2021 under the contingent consideration arrangement associated with our acquisition of Rockstar, which is partially offset by other acquisition and divestiture-related charges, as well as a tax benefit related to contributions to socioeconomic programs in South Africa. |
| |
| (b) | Represents the impact of excluding certain gains associated with the sale of assets and insurance claims and settlement recoveries. |
(b) | Represents the impact of the exclusion of the 2015 results of our Venezuelan businesses, which were deconsolidated effective as of the end of the third quarter of 2015. |
| (c) | Average percentage is based on unrounded amounts. |
Net Cash Provided by Operating Activities Reconciliation
| | | Year Ended
12/25/2021 | |
| Net Cash Provided by Operating Activities | | $ | 11,616 | |
| Capital Spending | | | (4,625 | ) |
| Sales of Property, Plant and Equipment | | | 166 | |
| Free Cash Flow | | | 7,157 | |
| Discretionary Pension and Retiree Medical Contributions | | | 525 | |
| Net Cash Tax Benefit Related to Discretionary Pension and Retiree Medical Contributions | | | (120 | ) |
| Payments Related to Restructuring Charges | | | 256 | |
| Net Cash Tax Benefit Related to Restructuring Charges | | | (51 | ) |
| Tax Payments Related to the TCJ Act | | | 309 | |
| Payments Related to Acquisition and Divestiture-Related Charges | | | 176 | |
| Net Cash Tax Benefit Related to Acquisition and Divestiture-Related Charges | | | (48 | ) |
| Futures Variation Margin Adjustment | | | 15 | |
| Hedge Loss on Reverse T-Locks in association with Cash Tender Offers | | | 56 | |
| Net Cash Tax Benefit Related to Charges in association with Cash Tender Offers | | | (162 | ) |
| Free Cash Flow Excluding Certain Items | | $ | 8,113 | |
Note - Certain amounts above may not sum due to rounding.
| A-3 | PEPSICO 20202022 PROXY STATEMENT | |
Table of Contents
Appendix A—A - Reconciliation of GAAP and Non-GAAP Information
Net Cash Provided by Operating Activities Reconciliation
| | Year Ended
12/28/2019 |
| Net Cash Provided by Operating Activities | | $ | 9,649 | |
| Capital Spending | | | (4,232 | ) |
| Sales of Property, Plant and Equipment | | | 170 | |
| Free Cash Flow | | | 5,587 | |
| Discretionary Pension Contributions | | | 417 | |
| Net Cash Tax Benefit Related to Discretionary Pension Contributions | | | (36 | ) |
| Payments Related to Restructuring Charges | | | 360 | |
| Net Cash Tax Benefit Related to Restructuring Charges | | | (64 | ) |
| Tax Payments Related to the TCJ Act | | | 423 | |
| Certain Other Items | | | 11 | |
| Free Cash Flow Excluding Certain Items | | $ | 6,698 | |
ROIC
| | Year Ended | | Year Ended |
| | 12/28/2019 | | 12/29/2018 | | 12/31/2016 | | 12/25/2021 | | | 12/29/2018 | |
| Net Income Attributable to PepsiCo | | $ | 7,314 | | | $ | 12,515 | | | $ | 6,329 | | | $ | 7,618 | | | $ | 12,515 | |
| Interest Expense | | | 1,135 | | | 1,525 | | | 1,342 | | | | 1,988 | | | | 1,525 | |
| Tax on Interest Expense | | | (252 | ) | | | (339 | ) | | | (483 | ) | | | (441 | ) | | | (339 | ) |
| | $ | 8,197 | | $ | 13,701 | | $ | 7,188 | | | $ | 9,165 | | | $ | 13,701 | |
| | |
| Average Debt Obligations | | $ | 31,975 | | $ | 38,169 | | $ | 35,308 | | | $ | 42,341 | | | $ | 38,169 | |
| Average Common Shareholders’ Equity | | | 14,317 | | | 11,368 | | | 11,943 | | | | 14,924 | | | | 11,368 | |
| Average Invested Capital | | $ | 46,292 | | $ | 49,537 | | $ | 47,251 | | | $ | 57,265 | | | $ | 49,537 | |
| ROIC | | | 17.7 | % | | | 27.7 | % | | | 15.2 | % | | | 16.0 | % | | | 27.7 | % |
ROIC GrowthPerformance Reconciliation
| | Year Ended | | 2019 Growth versus | | Year Ended | | 2021 Change
versus 2018 |
| | 12/28/2019 | | 12/29/2018 | | 12/31/2016 | | 2018 | | 2016 | | 12/25/2021 | | | 12/29/2018 | | |
| ROIC | | 17.7 | % | | 27.7 | % | | 15.2 | % | | (1,000) bps | | 250 bps | | 16.0 | % | | 27.7 | % | | (1,170 | ) bps |
| Impact of: | | | | | | | | | | | | | | | | | | | |
| Average Cash, Cash Equivalents and Short-Term Investments | | 3.0 | | 7.8 | | 6.0 | | | | 2.2 | | | 7.8 | | | | |
| Interest Income | | (0.5 | ) | | (0.6 | ) | | (0.2 | ) | | | | (0.2 | ) | | (0.6 | ) | | | |
| Tax on Interest Income | | 0.1 | | 0.1 | | 0.1 | | | | — | | | 0.1 | | | | |
| Mark-to-Market Net Impact | | (0.2 | ) | | 0.2 | | (0.2 | ) | | | | 0.1 | | | 0.2 | | | | |
| Restructuring and Impairment Charges | | 0.5 | | 0.4 | | 0.1 | | | | 0.2 | | | 0.4 | | | | |
| Inventory Fair Value Adjustments and Merger and Integration Charges | | 0.1 | | 0.1 | | — | | | |
| Pension-Related Settlement Charges | | 0.5 | | — | | 0.3 | | | |
| Net Tax Related to the TCJ Act | | (1.0 | ) | | (1.1 | ) | | — | | | |
| Acquisition and Divestiture-Related Charges(a) | | | (0.1 | ) | | 0.1 | | | | |
| Pension and Retiree Medical-Related Impact | | | (0.1 | ) | | — | | | | |
| Charges Related to Cash Tender and Exchange Offers | | | — | | | (0.1 | ) | | | |
| Net Tax Expense/(Benefit) Related to the TCJ Act | | | 0.3 | | | (1.1 | ) | | | |
| Other Net Tax Benefits | | 2.2 | | (9.7 | ) | | 0.1 | | | | — | | | (9.7 | ) | | | |
| Charges Related to Cash Tender and Exchange Offers | | (0.1 | ) | | (0.1 | ) | | — | | | |
| Charges Related to the Transaction with Tingyi | | — | | — | | 0.6 | | | |
| Venezuela Impairment Charges | | — | | — | | (0.5 | ) | | | |
| Core Net ROIC | | 22.3 | % | | 24.8 | % | | 21.5 | % | | (250) bps(a) | | 72 bps | | 18.4 | % | | 24.8 | % | | (632 | ) bps |
| 3-Yr Cumulative Impact of Foreign Exchange Translation | | 0.1 | | 12 bps | | (0.2 | ) | | n/a | | | (24 | ) |
| Impact of the SodaStream Acquisition | | 1.7 | | 0.4 | | — | | 168 bps | |
| Impact of Certain Acquisitions(b) | | | 2.3 | | | — | | | 228 | |
| Core Net ROIC, Excluding Above Items | | 24.0 | % | | 25.2 | % | | 21.5 | % | | | 252 bps(b) | | 20.5 | % | | 24.8 | % | | (428 | ) bps(c) |
| |
| (a) | 2021 income amount primarily relates to the acceleration payment made in 2021 under the contingent consideration arrangement associated with our acquisition of Rockstar, which is partially offset by other acquisition and divestiture-related charges, as well as a tax benefit related to contributions to socioeconomic programs in South Africa. |
| |
| (b) | Includes impacts of Pioneer Foods, Rockstar and Be & Cheery acquisitions in 2020. |
| |
| (c) | Represents one of the performance measures used to determine the payout of the NEOs’ 2019 annual incentive bonus. |
(b) | Represents one of the performance measures used to determine the payout of the NEOs’ 2017 PSU awards.
|
Note - Certain amounts above may not sum due to rounding.
|
| PEPSICO 2020 PROXY STATEMENT A-4 |
Table of Contents
Appendix A—Reconciliation of GAAP and Non-GAAP Information
Net Income Attributable to PepsiCo Reconciliation
| | 12/28/2019 | | 12/29/2018 | | Growth |
| Net Income Attributable to PepsiCo | | $ | 7,314 | | | $ | 12,515 | | | (42 | )% |
| Mark-to-Market Net Impact | | | (87 | ) | | | 125 | | | | |
| Restructuring and Impairment Charges | | | 298 | | | | 251 | | | | |
| Inventory Fair Value Adjustments and Merger and Integration Charges | | | 47 | | | | 75 | | | | |
| Net Tax Related to the TCJ Act | | | (8 | ) | | | (28 | ) | | | |
| Pension-Related Settlement Charges | | | 211 | | | | — | | | | |
| Other Net Tax Benefits | | | — | | | | (5,064 | ) | | | |
| Charges Related to Cash Tender and Exchange Offers | | | — | | | | 191 | | | | |
| Core Net Income Attributable to PepsiCo | | $ | 7,775 | | | $ | 8,065 | | | (4 | ) |
| Impact of Foreign Exchange Translation | | | | | | | | | | 1 | |
| Core Constant Currency Net Income Attributable to PepsiCo Growth | | | | | | | | | | (2 | )% |
PBNA Net Revenue Growth Reconciliation
| | Year Ended
12/28/19 |
| | PBNA |
Reported Net Revenue Growth | | 3 | % |
Impact of: | | | |
Foreign Exchange Translation | | — | |
Acquisitions and Divestitures | | (1 | ) |
Organic Revenue Growth | | 3 | % |
Note - Certain amounts above may not sum due to rounding.
A-5 PEPSICO 20202022 PROXY STATEMENT | |
Table of Contents
Appendix A - Reconciliation of GAAP and Non-GAAP Information
Net Income Attributable to PepsiCo Reconciliation
| | | Year Ended | | |
| | | 12/25/2021 | | | 12/26/2020 | | | Growth |
| Net Income Attributable to PepsiCo | | $ | 7,618 | | | $ | 7,120 | | | 7 | % |
| Mark-to-Market Net Impact | | | 14 | | | | (58 | ) | | | |
| Restructuring and Impairment Charges | | | 205 | | | | 231 | | | | |
| Acquisition and Divestiture-Related Charges(a) | | | (27 | ) | | | 237 | | | | |
| Pension and Retiree Medical-Related Impact | | | 11 | | | | 158 | | | | |
| Charges Related to Cash Tender Offers | | | 677 | | | | — | | | | |
| Net Tax Expense Related to the TCJ Act | | | 190 | | | | — | | | | |
| Core Net Income Attributable to PepsiCo | | $ | 8,688 | | | $ | 7,688 | | | 13 | |
| Impact of Foreign Exchange Translation | | | | | | | | | | 1.5 | |
| Core Constant Currency Net Income Attributable to PepsiCo Growth | | | | | | | | | | 11 | % |
| |
| (a) | 2021 income amount primarily relates to the acceleration payment made in 2021 under the contingent consideration arrangement associated with our acquisition of Rockstar, which is partially offset by other acquisition and divestiture-related charges, as well as a tax benefit related to contributions to socioeconomic programs in South Africa. |
PBNA, FLNA, QFNA, International, North America, Global Beverages, Global Convenient Foods, Developed Markets and Developing and Emerging Markets Net Revenue Growth Reconciliation
| | Year Ended
12/25/2021 |
| | | PBNA | | | FLNA | | | QFNA | | | International | | | North
America | | | Global
Beverages | | | Global
Convenient
Foods | | | Developed
Markets | | | Developing
and
Emerging
Markets | |
| Reported Net Revenue Growth | | | 12 | % | | | 8 | % | | | — | % | | | 18 | % | | | 10 | % | | | 13 | % | | | 13 | % | | | 9 | % | | | 23 | % |
| Impact of: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Foreign Exchange Translation | | | (0.5 | ) | | | (0.5 | ) | | | (1 | ) | | | (2 | ) | | | (1 | ) | | | (1 | ) | | | (2 | ) | | | (1 | ) | | | (1 | ) |
| Acquisitions and Divestitures | | | (1 | ) | | | — | | | | — | | | | (5 | ) | | | (1 | ) | | | (1 | ) | | | (3 | ) | | | (1 | ) | | | (7 | ) |
| Organic Revenue Growth | | | 10 | % | | | 7 | % | | | — | % | | | 11 | % | | | 8 | % | | | 11 | % | | | 8 | % | | | 8 | % | | | 15 | % |
Note - Certain amounts above may not sum due to rounding.
| A-5 | PEPSICO 2022 PROXY STATEMENT |
Table of Contents
TRANSFORM THE WAY WE CREATE VALUE BY OPERATING WITHIN
PLANETARY BOUNDARIES AND INSPIRING POSITIVE CHANGE
FOR PLANET AND PEOPLE IN THE GLOBAL FOOD SYSTEM
 | |  | |  |
| | | | |
POSITIVE
AGRICULTURE | | POSITIVE
VALUE CHAIN | | POSITIVE
CHOICES |
PepsiCo’s portfolio includes23brands that each generated
$1 billion or morein estimated annual retail sales in2019
 
700 ANDERSON HILL ROAD
PURCHASE, NY 10577-1444 | | 
SCAN TOYOUR VOTE IS IMPORTANT
VIEW MATERIALS & VOTE BY INTERNET/TELEPHONE 24 HOURS A DAY, 7 DAYS A WEEK
VOTE BY INTERNET - www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Daylight Time on May 3, 2022 (other than PepsiCo Savings Plan participants). Have your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form. During The Meeting - Go to www.virtualshareholdermeeting.com/PEP2022 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Daylight Time on May 3, 2022 (other than PepsiCo Savings Plan participants). Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to PepsiCo, Inc., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. PEPSICO SAVINGS PLAN All votes by participants in the PepsiCo Savings Plan submitted over the Internet, by phone or mail must be received by 11:59 p.m. Eastern Daylight Time on May 1, 2022. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
YOUR VOTE IS IMPORTANT
VOTE BY INTERNET/TELEPHONE 24 HOURS A DAY, 7 DAYS A WEEK
VOTE BY INTERNET -www.proxyvote.com or scan the QR Barcode above
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Daylight Time on May 5, 2020 (other than PepsiCo Savings Plan participants). Have your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Daylight Time on May 5, 2020 (other than PepsiCo Savings Plan participants). Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to PepsiCo, Inc., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
SHAREHOLDER MEETING REGISTRATION:
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Please bring the admission ticket to the meeting.
PEPSICO SAVINGS PLAN
All votes by participants in the PepsiCo Savings Plan submitted over the Internet, by phone or mail must be received by 11:59 p.m. Eastern Daylight Time on May 3, 2020.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: |
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| | DETACH AND RETURN THIS PORTION ONLY |
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PEPSICO, INC.
Company ProposalsPEPSICO, INC. | | | | |
| | | | |
| Company Proposals | | | | |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"“FOR” EACH OF THE NOMINEES LISTED IN ITEM NO. 1. | |
| |
Vote on Directors | |
| | |
1. | | Election ofVote on Directors | | For | | Against | | Abstain |
| | | | |
| | | | | | |
| 1. | Election of Directors | | For | Against | Abstain |
| Nominees: | | | | |
| | | | |
| 1a. | Segun Agbaje | | o | o | o |
| | | | | |
| 1b. | Shona L. Brown | | o | o | o |
| | | | | |
| 1c. | Cesar Conde | | o | o | o |
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| 1d. | Ian Cook | | o | o | o |
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| 1e. | Edith W. Cooper | | o | o | o |
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| 1f. | Dina Dublon | | o | o | o |
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| 1g. | Michelle Gass | | o | o | o |
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| 1h. | Ramon L. Laguarta | | o | o | o |
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| 1i. | Dave Lewis | | o | o | o |
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| 1j. | David C. Page | | o | o | o |
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| 1k. | Robert C. Pohlad | | o | o | o |
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| 1l. | Daniel Vasella | | o | o | o |
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Nominees:IF VOTING BY MAIL, YOU MUST SIGN, DATE AND RETURN THIS CARD IN ORDER FOR THE SHARES TO BE VOTED. |
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| Please sign exactly as your name(s) appear hereon. When signing as attorney, executor, administrator, corporate officer, trustee, guardian or custodian, please give full title. |
| Nominees (continued): | | For | Against | Abstain |
| | | | | | | |
| | 1m. | Darren Walker | | o | o | o |
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| | 1a. | | Shona L. Brown | | ☐ | | ☐ | | ☐ |
| | | | | | | | | | |
| | 1b. | | Cesar Conde | | ☐ | | ☐ | | ☐ |
| | | | | | | | | | |
| | 1c. | | Ian Cook | | ☐ | | ☐ | | ☐ |
| | | | | | | | | | |
| | 1d. | | Dina Dublon | | ☐ | | ☐ | | ☐ |
| | | | | | | | | | |
| | 1e. | | Richard W. Fisher | | ☐ | | ☐ | | ☐ |
| | | | | | | | | | |
| | 1f. | | Michelle Gass | | ☐ | | ☐ | | ☐ |
| | | | | | | | | | |
| | 1g. | | Ramon L. Laguarta | | ☐ | | ☐ | | ☐ |
| | | | | | | | | | |
| | 1h. | | David C. Page | | ☐ | | ☐ | | ☐ |
| | | | | | | | | | |
| | 1i. | | Robert C. Pohlad | | ☐ | | ☐ | | ☐ |
| | | | | | | | | | |
| | 1j. | | Daniel Vasella | | ☐ | | ☐ | | ☐ |
Nominees (continued): | | For | | Against | | Abstain |
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| | 1k. | Darren Walker | | ☐ | | ☐ | | ☐ |
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| | 1l.1n. | Alberto Weisser | | ☐o | o | ☐ | | ☐o |
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| THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"“FOR” ITEMS NO. 2 AND 3. | | For | Against | Against | | Abstain |
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| 2. | | Ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for fiscal year 2020.2022. | | ☐o | o | ☐ | | ☐o |
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| 3. | | Advisory approval of the Company’s executive compensation. | | ☐o | o | ☐ | | ☐o |
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Shareholder Proposals | | | | | | |
| | Shareholder Proposals | | | | |
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| THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST"“AGAINST” ITEMS NO. 4, 5 AND 5. | | For | | Against | | Abstain |
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4.6. | | For | Against | Abstain |
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| 4. | Shareholder Proposal - Reduce Ownership Threshold to Call Special Shareholder Meetings.Independent Board Chairman. | | ☐o | o | ☐ | | ☐o |
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5. | | | | | |
| 5. | Shareholder Proposal - Report on SugarGlobal Public Policy and Public Health.Political Influence Outside the U.S. | | ☐o | o | ☐o |
| | ☐ |
IF VOTING BY MAIL, YOUMUSTSIGN, DATE AND RETURN THIS CARD IN ORDER FOR THE SHARES TO BE VOTED.
Please sign exactly as your name(s) appear hereon. When signing as attorney, executor, administrator, corporate officer, trustee, guardian or custodian, please give full title.
| | | |
| 6. | Shareholder Proposal - Report on Public Health Costs. | | o | o | o |
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| Sign up for E-Delivery and we will plant a tree on your behalf. | |  |
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| Signature [PLEASE SIGN WITHIN BOX] | Date |
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| Signature (Joint Owners) | Date | |
Directions to the North Carolina History Center at Tryon PalaceTable of Contents
North Carolina History Center at Tryon Palace
529 South Front Street
New Bern, North Carolina 28562
FROM COASTAL CAROLINA REGIONAL AIRPORT (EWN):
Head east on Terminal Drive. Turn left on Airport Road. Take the second left onto US 70 West. Take exit #417A toward New Bern. Merge onto US 70 Bus. Turn left onto South Front Street. The North Carolina History Center will be immediately on your left.
FROM THE SOUTH (Wilmington, Jacksonville):
Take Highway 17 North into New Bern. Stay on same road (also called ML King Blvd.) and pass Twin Rivers Mall. Go under Route 70 overpass (Hwy 17 becomes Business 17) - stay in middle lane. Road will veer right at Palace Motel and name will change to Neuse Blvd. Shortly after fire station, name will change again to Broad Street. Continue on Broad Street to Hancock Street. Turn right on Hancock Street. Cross Pollock Street. Make a right onto South Front Street. The North Carolina History Center will be immediately on your left.
FROM THE SOUTHWEST (Fayetteville):
Take I-95 North to Highway 70 East to New Bern. Take the Trent Road/Pembroke exit and turn left at the light. Turn right at the third light (Broad Street), and then turn right on Hancock Street. Cross Pollock Street. Make a right onto South Front Street. The North Carolina History Center will be immediately on your left.
FROM THE NORTHWEST (Raleigh, Goldsboro):
Take Highway 70 East to New Bern. Take the Trent Road/Pembroke exit and turn left at the light. Turn right at the third light (Broad Street), and then turn right on Hancock Street. Cross Pollock Street. Make a right onto South Front Street. The North Carolina History Center will be immediately on your left.
FROM THE NORTH (Greenville):
Take Highway 17 South from Washington, NC. Cross the Neuse River Bridge, take the ramp straight to US 70 and cross the Freedom Memorial Bridge. Take the Trent Road/Pembroke exit and turn right at the light. Turn right at the third light (Broad Street) then turn right on Hancock Street. Cross Pollock Street. Make a right onto South Front Street. The North Carolina History Center will be immediately on your left.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be Held on May 6, 2020:4, 2022:The Notice and Proxy Statement and Annual Report are available at www.pepsico.com/proxy20.proxy22.
D68043-P66937-Z81866
PEPSICO, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF PEPSICO, INC.
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 6, 2020.4, 2022.
The undersigned hereby appointsappoint(s) Ramon L. Laguarta, David YawmanFlavell and Cynthia Nastanski, and each of them, proxies for the undersigned, with full power of substitution, to vote all shares of Common Stock of PepsiCo, Inc., which the undersigned may be entitled to vote at the Annual Meeting of Shareholders of PepsiCo, Inc. in New Bern, North Carolina,held virtually at www.virtualshareholdermeeting.com/PEP2022 on Wednesday, May 6, 20204, 2022 at 9:00 a.m., Eastern Daylight Time, or at any adjournment or postponement thereof, upon the matters set forth on the reverse side and described in the accompanying Proxy Statement and any other matter that may properly come before the meeting.
Please mark this proxy as indicated on the reverse side to vote on any item. Shares represented by this proxy will be voted in accordance with your specifications, and, in the discretion of the proxies, upon any other matter that may properly come before the meeting or any adjournment or postponement thereof.For holders of Common Stock of PepsiCo, if you do not provide specific instructions, shares represented by this proxy will be voted in accordance with the Board of Directors'Directors’ recommendations. For participants in the PepsiCo Savings Plan, if you do not provide voting instructions, the trustee will vote the shares that are deemed to be in the account in the PepsiCo Savings Plan in the same proportion as the PepsiCo Savings Plan shares of other participants for which the trustee has received proper voting instructions. The votes by PepsiCo Savings Plan participants must be received no later than 11:59 p.m. Eastern Daylight Time on May 3, 2020.1, 2022.
If you submit your proxy by telephone or the Internet, there is no need for you to mail back your proxy.
Continued and to be signed on reverse side
