PEPSICO, INC.
1994 Long-Term Incentive Plan
(as amended and restated, effective, September 24, 1998)
1. Purpose.
The purposes of the 1994 Long-Term Incentive Plan (the "Plan") are to
provide long-term incentives to those persons with significant responsibility
for the success and growth of PepsiCo, Inc. and its subsidiaries, divisions and
affiliated businesses ("PepsiCo"), to assist PepsiCo in attracting and retaining
key employees on a competitive basis, and to associate the interests of such
employees with those of PepsiCo's shareholders.
2. Administration of the Plan.
The Plan shall be administered by the Compensation Committee of the Board
of Directors of PepsiCo (the "Committee"). The Committee shall be appointed by
the Board of Directors and shall consist of two or more outside, disinterested
members of the Board.
The Committee shall have all the powers vested in it by the terms of the
Plan, such powers to include authority (within the limitations described herein)
to select the persons to be granted awards under the Plan, to determine the
type, size and terms of awards to be made to each employee selected, to
determine the time when awards will be granted and any conditions which must be
satisfied by employees before an award is made, to establish objectives and
conditions for earning awards, to determine whether such conditions have been
met and whether awards will be paid at the end of the award period, or when the
award is exercised, or deferred, to determine whether payment of an award should
be reduced or eliminated, and to determine whether such awards should qualify,
regardless of their amount, as deductible in their entirety for federal income
tax purposes.
The Committee shall have full power and authority to administer and
interpret the Plan and to adopt such rules, regulations, agreements, guidelines
and instruments for the administration of the Plan and for the conduct of its
businesses the Committee deems necessary or advisable. The Committee's
interpretations of the Plan, and all actions taken and determinations made by
the Committee pursuant to the powers vested in it hereunder, shall be conclusive
and binding on all parties concerned, including PepsiCo, its shareholders and
any person receiving an award under the Plan.
3. Eligibility.
Key employees of PepsiCo and its divisions, subsidiaries and affiliates
are eligible to be granted awards under the Plan. Executives of PepsiCo and its
subsidiaries and divisions shall be granted awards of stock options and
performance units and may, in the Committee's discretion, be granted other
awards available under the Plan. The Committee, in its discretion, may also
grant awards under the Plan to other employees of PepsiCo, its divisions,
subsidiaries and affiliates who are in a position to contribute to the success
of PepsiCo. Notwithstanding the foregoing, incentive stock options may only be
granted to employees of PepsiCo or its divisions and subsidiaries.
4. Awards.
(a) Types. Awards under the Plan include stock options, performance units,
incentive stock options, stock appreciation rights and restricted stock.
(i) Stock Options. Stock options are rights to purchase shares of PepsiCo
Capital Stock ("Capital Stock") at a fixed price for a specified period of time.
The purchase price per share of Capital Stock covered by a stock option awarded
pursuant to this Plan, including any incentive stock options, shall be equal to
or greater than the fair market value of a share of PepsiCo Capital Stock on the
date the stock option is awarded.
(ii) Performance Units. Performance units are rights to receive up to 100%
of the value of shares of Capital Stock as of the date of grant, which value may
be paid in cash or Capital Stock, without payment of any amounts to PepsiCo. The
full and/or partial payment of performance unit awards granted under this Plan
will be made only upon certification by the Committee of the attainment by
PepsiCo, over a four year period, of earnings per share targets which have been
established by the Committee. No payment will be made if the minimum earnings
per share target is not met. The established earnings per share targets will not
be amended without shareholder approval.
(iii) Stock Appreciation Rights. Stock appreciation rights are rights to
receive the difference between the fair market value of a share of PepsiCo
Capital Stock on the grant date and the fair market value of a share of Capital
Stock on the date the stock appreciation right is granted.
(iv) Restricted Stock. The full and/or partial vesting of any restricted
stock award made under this Plan will occur only upon the attainment by PepsiCo
of primary and secondary targets established by the Committee at the time the
award is made. These targets may include one or more of the
following: corporate earnings, return on investment, total shareholder return,
division profits, market value added or economic value added.
(v) Variable Awards. Variable awards are rights to receive grants of either
cash payments or stock options based upon the performance of PepsiCo business
units during a three-year performance period. The election to receive cash or
stock options is made by the participant at the beginning of the three-year
performance period.
(b) Supplemental Awards. Participants who are newly hired or promoted
during the vesting period for stock options or during the first two years of the
award period for performance units will be granted supplemental pro rata grants
of stock options and performance units.
(c) Negative Discretion. Notwithstanding the attainment by PepsiCo of any
target specified under this Plan, the Committee has the discretion, by
participant, to reduce some or all of an award that would otherwise by paid.
(d) Guidelines. The Committee shall adopt from time to time written
policies for its implementation of the Plan. Such policies shall be consistent
with the Plan and may include, but need not be limited to, the type, size and
term of awards to be made, and the conditions for payment of such awards.
(e) Maximum Awards. An employee may be granted multiple awards under the
Plan but no one employee may be granted, in the aggregate, awards which would
result in his receiving, in the aggregate during the term of the Plan, more than
10% of the maximum number of shares available for award under the Plan. Solely
for the purposes of determining whether this maximum is met, a performance unit
shall be treated as entitling the holder thereof to one share of PepsiCo Capital
Stock.
5. Shares of Stock Subject to the Plan.
The shares that may be delivered or purchased under the Plan shall not
exceed an aggregate of 75,000,000 shares of Capital Stock, as adjusted, if
appropriate, pursuant to Section 7 hereof.
6. Deferred Payments.
The Committee may determine that all or a portion of a payment to a
participant under the Plan, whether it is to be made in cash, shares of Capital
Stock or a combination thereof, shall be deferred. Deferrals shall be for such
periods and upon such terms as the Committee may determine in its sole
discretion.
7. Dilution and Other Adjustments.
In the event of any change in the outstanding shares of Capital Stock by
reason of any split, stock dividend, recapitalization, merger, consolidation,
combination or exchange of shares or other similar corporate change, such
equitable adjustments shall be made in the Plan and the awards thereunder as the
Committee determines are necessary and appropriate, including, if necessary, an
adjustment in the maximum number or kind of shares subject to the Plan or which
may be or have been awarded to any participant. Such adjustment shall be
conclusive and binding for all purposes of the Plan.
8. Change in Control.
Upon a "Change in Control" (as defined below), the following shall occur:
(a) Options. At the date of such Change in Control, all outstanding and
unvested stock options granted under the Plan shall immediately vest and become
exercisable, and all stock options then outstanding under the Plan shall remain
outstanding in accordance with their terms. In the event that any stock option
granted under the Plan becomes unexercisable during its term on or after a
Change in Control because: (i) the individual who holds such option is
involuntarily terminated (other than for cause) within two (2) years after the
Change in Control; (ii) such option is terminated or adversely modified in
connection with or as a result of the Change in Control; or (iii) PepsiCo
Capital Stock is no longer issued and outstanding, or no longer traded on a
national securities exchange, then the holder of such option shall immediately
be entitled to receive a lump sum cash payment equal to the greater of (x) the
gain on such option or (y) the Black-Scholes value of such option (as determined
by a nationally recognized independent investment banker chosen by PepsiCo), in
either case calculated on the date such option becomes unexercisable. For
purposes of the preceding sentence, the gain on a stock option shall be
calculated as the difference between the closing price per share of PepsiCo
Capital Stock as of the date such option becomes unexercisable less the exercise
price per share of such option.
(b) Variable Awards. Each variable award granted under the Plan that is
outstanding on the date of the Change in Control shall immediately vest, and the
holder of such award shall be entitled to a lump sum cash payment equal to 100%
of the amount of such award payable at the end of the performance period as if
100% of the performance objectives have been achieved.
(c) Performance Shares. Each performance share granted under the Plan that
is outstanding on the date of the Change in Control shall immediately vest, and
the holder of such performance share shall be entitled to a
lump sum cash payment equal to the amount of such award payable at the end of
the performance period as if 100% of the performance objectives have been
achieved.
Any amount required to be paid pursuant to this Section 8 shall be paid
within twenty (20) days after the date such amount becomes payable.
"Change in Control" means the occurrence of any of the following events: (i)
acquisition of 20% or more of the outstanding voting securities of PepsiCo, Inc.
by another entity or group; excluding, however, the following (A) any
acquisition by PepsiCo, Inc., or (B) any acquisition by an employee benefit plan
or related trust sponsored or maintained by PepsiCo, Inc.; (ii) during any
consecutive two-year period, persons who constitute the Board of Directors of
PepsiCo, Inc. (the "Board") at the beginning of the period cease to constitute
at least 50% of the Board (unless the election of each new Board member was
approved by a majority of directors who began the two-year period); (iii)
PepsiCo, Inc. shareholders approve a merger or consolidation of PepsiCo, Inc.
with another company, and PepsiCo, Inc. is not the surviving company; or, if
after such transaction, the other entity owns, directly or indirectly, 50% or
more of the outstanding voting securities of PepsiCo, Inc.; (iv) PepsiCo, Inc.
shareholders approve a plan of complete liquidation of PepsiCo, Inc. or the sale
or dispositions of all or substantially all of PepsiCo, Inc.'s assets; or (v)
any other event, circumstance, offer or proposal occurs or is made, which is
intended to effect a change in the control of PepsiCo, Inc., and which results
in the occurrence of one or more of the events set forth in clauses (i) through
(iv) of this paragraph.
9. Miscellaneous Provisions.
(a) Misconduct. If the Committee determines that a present or former
employee has (i) used for profit or disclosed to unauthorized persons,
confidential information or trade secrets of PepsiCo, or (ii) breached any
contract with or violated any fiduciary obligation to PepsiCo, that employee
shall forfeit his or her awards under the Plan.
(b) Rights as Shareholder. A participant in the Plan shall have no rights
as a holder of Capital Stock with respect to awards hereunder, unless and until
certificates for shares of Capital Stock are issued to the participant.
(c) Assignment or Transfer. Unless the Committee shall specifically
determine otherwise, no award under the Plan or any rights or interests therein
shall be assignable or transferable by a participant except by will or the laws
of descent and distribution.
(d) Agreements. All awards granted under the Plan shall be evidenced by
agreements in such form and containing such terms and conditions (not
inconsistent with the Plan) as the Committee shall approve.
(e) Requirements for Transfer. No share of Capital Stock shall be issued
or transferred under the Plan until all legal requirements applicable to the
issuance or transfer of such shares have been complied with to the satisfaction
of the Committee. The Committee shall have the right to condition any issuance
of shares of Capital Stock made to any participant upon such participant's
written undertaking to comply with such restrictions on his subsequent
disposition of such shares as the Committee or PepsiCo shall deem necessary or
advisable as a result of any applicable law, regulation or official
interpretation thereof, and certificates representing such shares may be
legended to reflect any such restrictions.
(f) Withholding Taxes. PepsiCo shall have the right to deduct from all
awards hereunder paid in cash any federal, state, local or foreign taxes
required by law to be withheld with respect to such awards and, with respect to
awards paid in stock or upon exercise of stock options, to require the payment
(through withholding from the participant's salary or otherwise) of any such
taxes. The obligations of PepsiCo to make delivery of awards in cash or Capital
Stock shall be subject to currency or other restrictions imposed by any
government.
(g) No Rights to Awards. Except as set forth herein, no employee or other
person shall have any claim or right to be granted an award under the Plan.
Neither the Plan nor any action taken hereunder shall be construed as giving any
employee any right to be retained in the employ of PepsiCo or any of its
subsidiaries, divisions or affiliates.
(h) Costs and Expenses. The cost and expenses of administering the Plan
shall be borne by PepsiCo and not charged to any award nor to any employee
receiving an award.
(i) Funding of Plan. The Plan shall be unfunded. PepsiCo shall not be
required to establish any special or separate fund or to make any other
segregation of assets to assure the payment of any award under the Plan.
10. Effective Date, Amendments and Termination.
(a) Effective Date. The Plan shall become effective on the date it is
approved by PepsiCo's shareholders.
(b) Amendments. The Committee may at any time terminate or from time to
time amend the Plan in whole or in part, but no such action shall
adversely affect any rights or obligations with respect to any awards
theretofore made under the Plan.
Unless the shareholders of PepsiCo shall have first approved thereof, no
amendment of the Plan shall be effective which would increase the maximum number
of shares of PepsiCo Capital Stock which may be delivered under the Plan or to
any one individual, except to the extent such amendment is made pursuant to
Section 7 hereof, extend the maximum period during which awards may be granted
under the Plan, change the performance goal pursuant to which performance units
are earned, or modify the requirements as to eligibility for participation in
the Plan.
With the consent of the employee affected, the Committee may amend
outstanding agreements evidencing awards under the Plan in a manner not
inconsistent with the terms of the Plan.
(c) Termination. No awards of stock options, performance units, incentive
stock options or stock appreciation rights shall be made under the Plan after
December 31, 2004. No awards of restricted stock shall be made under the Plan
after May 1, 1999.