PBG
2004 Long-Term Incentive Plan
As Amended and Restated
Effective January 1, 2009
The
purposes of the PBG 2004 Long Term Incentive Plan (the
“Plan”) are: (a) to provide long-term incentives
to those persons with significant responsibility for the success
and growth of The Pepsi Bottling Group, Inc. (“PBG”)
and its subsidiaries, divisions and affiliated businesses
(collectively, the “Company”); (b) to assist the
Company in attracting, retaining and motivating a diverse group of
employees on a competitive basis; (c) to ensure a pay for
performance linkage for such employees; and (d) to associate
the interests of such employees with those of PBG
shareholders.
2.
Administration of the Plan.
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(a)
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The Plan shall be administered by the Compensation and Management
Development Committee of the Board of Directors of PBG (the
“Committee”). The Committee shall be appointed by the
Board of Directors of PBG (the “Board”) and shall
consist entirely of members of the Board who qualify as
“outside directors” for purposes of Section 162(m) of
the Internal Revenue Code of 1986, as amended (the
“Code”), as “Non-Employee Directors” within
the meaning of Rule 16b-3 of the Securities Exchange Act of
1934 as amended (the “Act”) and as
“independent” for purposes of any rules and regulations
of a stock exchange on which PBG’s Common Stock is traded.
The foregoing notwithstanding, no act of the Committee shall be
void or deemed to be without authority because a member fails to
meet the qualification requirements of this Section.
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(b)
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The Committee shall have all powers vested in it by the terms of
the Plan, such powers to include the authority (within the
limitations described herein):
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to select the individuals to be granted awards under the
Plan;
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to determine the type, size and terms of awards to be granted to
each individual selected;
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to determine the guidelines and procedures for the payment or
exercise of awards;
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to determine the time when awards will be granted and any
conditions which must be satisfied by employees before an award is
granted;
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to establish objectives and conditions for earning awards that are
otherwise applicable to awards;
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to determine whether such objectives and conditions have been met
and whether awards will be paid at the end of the award period or
at the time the award is exercised (whichever applies);
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to determine whether payment of an award will be deferred (subject
to Section 6 below);
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to determine whether payment of an award should be reduced or
eliminated; and
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to determine whether any such award should qualify, regardless of
its amount, as deductible in its entirety for federal income tax
purposes, including whether any award is intended to comply with
the performance-based exception under Section 162(m) of the Code in
the case of an award to a “Covered Executive,”
i.e. , an employee who is a “named executive
officer” (within the meaning of Item 402(a)(3) of
Regulation S-K) or an individual who is expected to be a named
executive officer and an employee at the time the Company is
entitled to a tax deduction related to such award (but excluding
any such named executive officer who is not considered a Covered
Executive under guidance published by the Internal Revenue
Service).
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(c)
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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 business as 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 the
Company, PBG shareholders and any person receiving an award under
the Plan.
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(d)
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To the extent not prohibited by law and not inconsistent with the
requirements of Section 162(m) of the Code, Rule 16b-3 of the
Act or applicable stock exchange rules, the Committee may delegate
its authority hereunder (including to a member of the Committee or
an officer of PBG) and may designate employees of the Company to
execute documents on behalf of the Committee or to otherwise assist
the Committee in the administration and operation of the Plan.
Specifically, and not by way of limitation, the Committee hereby
delegates to the Senior Vice President of Human Resources of the
Company the authority to adopt all appropriate provisions relating
to compliance with Section 409A of the Code, which provisions
shall be set out in one or more separate documents (collectively,
the “Rules”).
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Subject
to the provisions of the Plan, the Committee may, from time to
time, designate any of the following individuals as eligible to
receive an award available under the Plan: (i) officer,
(ii) employee, or (iii) key consultant or advisor of the
Company, other than a non-employee director, who provides bona fide
services to the Company not in connection with the offer or sale of
securities in a capital-raising transaction, in each case subject
to limitations provided by the Code or the Act as determined by the
Committee; and the Committee shall determine the nature and amount
of each award.
In
addition, in order to foster and promote achievement of the
purposes of the Plan or to comply with provisions of laws in other
countries in which the Company operates or has employees, the
Committee, in its sole discretion, shall have the power and
authority to: (i) determine which eligible individuals (if
any) performing services for the Company outside the United States
are eligible to participate in the Plan, (ii) modify the
terms, conditions and types of any awards made to such eligible
individuals, and (iii) establish subplans, modified stock
option exercise procedures and other award terms and procedures to
the extent such actions may be necessary or advisable. The
preceding sentence shall apply notwithstanding any provision of the
Plan to the contrary, except that in the case of a Post-409A Award
(as defined in Section 11(a) below) for a United States taxpayer,
it shall not override a provision of the Plan to the extent
necessary to comply with Section 409A of the Code.
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(a)
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Types.
Awards under the Plan include stock options (incentive stock
options and non-qualified stock options), stock appreciation
rights, restricted shares, restricted share units, performance
shares, performance units and share awards.
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(i)
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Stock Options.
Stock options are rights to purchase shares of PBG Common Stock
(“Common Stock”) at a fixed price for a specified
period of time. Stock options may consist of incentive stock
options satisfying the requirements of Section 422 of the Code
(“ISOs”) and designated by the Committee as ISOs and
non-qualified stock options that do not satisfy the aforementioned
requirements. The purchase price per share of Common Stock covered
by a stock option awarded pursuant to this Plan (the
“Exercise Price” as defined for stock options),
including any ISOs, shall be equal to or greater than the
“Fair Market Value” of a share of Common Stock on the
date the stock option is awarded unless the stock option was
granted through the assumption of, or in substitution for,
outstanding awards previously granted to individuals who became
employees of the Company as a result of merger, consolidation,
acquisition or other corporate transaction involving the Company,
in which case, provided it does not cause the stock option to be
subject to Section 409A of the Code, an Exercise Price may be
used that reasonably preserves the value of the previously granted
award. “Fair Market Value” means an amount equal to the
average of the high and low sales prices for Common Stock as
reported on the composite tape for securities listed on the New
York Stock Exchange, Inc. (the “Exchange”) on the date
in question (or, if no sales of Common Stock were made on such
Exchange on such date, on the immediately preceding day on which
sales were made on such Exchange), except that such average price
shall be rounded up to the nearest one cent solely for purposes of
determining the Exercise Price of stock options and stock
appreciation rights (“SARs” which are more fully
described below in paragraph (ii) hereof). The Exercise Price
per share may be payable, in whole or in part, in cash or in shares
of Common Stock held by the option holder, including previously
acquired shares and shares issuable or deliverable in connection
with an award (with any such Common Stock valued at its Fair
Market
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Value on the date of exercise), provided that no Common Stock may
be used to pay the Exercise Price if and to the extent that
additional accounting expense would result to the Company under
then applicable accounting rules.
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Stock options that are Post-409A Awards may be granted only to
individuals who provide direct services on the date of grant of the
stock option to PBG or another entity in a chain of entities in
which PBG or another such entity has a controlling interest within
the meaning of Treasury Regulation §1.409A-1(b)(5)(iii)(E) in
each entity in the chain.
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Stock options may be granted alone or in tandem with other awards,
including SARs. With respect to stock options granted in tandem
with SARs, the exercise of either such stock options or SARs will
result in the simultaneous cancellation of the same number of stock
options or tandem SARs, as the case may be.
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Except for adjustments made pursuant to Section 7, the
Exercise Price for any outstanding stock option granted under the
Plan may not be decreased after the date of grant nor may any
outstanding stock option granted under the Plan be surrendered to
the Company as consideration for the grant of a new stock option
with a lower Exercise Price without the approval of PBG’s
shareholders.
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Except in the case of grants in connection with: (1) the
recruitment of new employees, including employees transferring from
an allied organization (within the meaning of Section 4(c)(i)
or (ii) below), (2) special recognition awards
(3) awards granted in connection with business turnaround
plans, and (4) the assumption of, or substitution for,
outstanding awards previously granted to individuals who become
employees of the Company as a result of merger, consolidation,
acquisition or other corporate transaction, stock options shall
vest over a period of three years from the grant date and no
options shall have a vesting period of less than one year. However,
without regard to the vesting period assigned, the vesting of stock
options may be accelerated in connection with a change in control
and certain transfers, or in connection with a participant’s
death, disability, retirement or involuntary termination of
employment, in each case as determined by the Committee. The term
of options shall be determined by the Committee in its sole
discretion at the time of grant, but in no event shall the term
exceed ten years from the date of grant.
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ISOs may only be granted to employees of PBG, its subsidiaries and
divisions and may only be granted to an employee who, at the time
the option is granted, does not own stock possessing more than 10%
of the total combined voting power of all classes of stock of PBG.
The aggregate Fair Market Value (determined at the time of grant)
of all shares with respect to which ISOs are exercisable by a
participant for the first time during any year shall not exceed
$100,000. Any option that is intended to be an ISO but which does
not qualify as such shall remain outstanding and constitute a
non-qualified stock option. In determining the shares available for
issuance as ISOs under Section 5, adjustment under Section
5(a) shall not apply to the extent not permitted under
Section 422 of the Code and regulations promulgated
thereunder.
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(ii)
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Stock Appreciation Rights.
SARs are rights to receive the amount by which the Fair Market
Value of a share of Common Stock on the date the SAR is exercised
exceeds the purchase price of the SAR (the “Exercise
Price” as defined for SARs), which shall be equal to or
greater than the Fair Market Value of a share of Common Stock on
the grant date, unless the SAR was granted through the assumption
of, or in substitution for, outstanding awards previously granted
to individuals who became employees of the Company as a result of
merger, consolidation, acquisition or other corporate transaction
involving the Company, in which case, provided it does not cause
the SAR to be subject to Section 409A of the Code, an Exercise
Price may be used that reasonably preserves the value of the
previously granted award. Such difference may be paid in cash,
shares of Common Stock or both, or by any other method as
determined by the Committee in its sole discretion.
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Except in the case of grants in connection with: (1) the
recruitment of new employees, including employees transferring from
an allied organization (within the meaning of Section 4(c)(i)
or (ii) below), (2) special recognition awards, (3)
awards granted in connection with business turnaround plans, and
(4) the assumption of, or substitution for, outstanding awards
previously granted to individuals who become employees of the
Company as a result of merger, consolidation, acquisition or other
corporate transaction, SARs shall vest over a period of three years
from the grant date and no SARs shall have a vesting period of less
than one year from the grant date. However, without regard to the
vesting period assigned, the vesting of SARs may be accelerated in
connection with a change in control and certain transfers, or in
connection with a participant’s death, disability, retirement
or involuntary termination of employment, in each case as
determined by the Committee. The term of an SAR shall be determined
by the Committee in its sole discretion at the time of grant, but
in no event shall the term exceed ten years from the date of
grant.
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SARs that are Post-409A Awards may be granted only to individuals
who provide direct services on the date of grant of the SAR to PBG
or another entity in a chain of entities in which PBG or another
such entity has a controlling interest within the meaning of
Treasury Regulation §1.409A-1(b)(5)(iii)(E) in each entity in
the chain. SARs may be granted alone or in tandem with stock
options. The grant of SARs related to ISOs must be concurrent with
the grant of the ISOs. The grant of SARs related to non-qualified
stock options may be concurrent with the grant of the non-qualified
stock options or in connection with such non-qualified stock
options, previously granted under Section 4(a)(i), that are
unexercised and have not terminated or lapsed. With respect to SARs
granted in tandem with stock options, the exercise of either such
stock options or such SARs will result in the simultaneous
cancellation of the same number of tandem stock options or SARs, as
the case may be.
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(iii)
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Restricted Shares/Restricted Share Units.
Restricted shares are shares of Common Stock that may not be traded
or sold until the date that the restrictions on transferability
imposed by the Committee with respect to such shares have lapsed
(the “Restriction Period”). Restricted share units are
the right to receive an amount equal to the value of a specified
number of shares of Common Stock. Awards of restricted shares or
restricted share units may be made either alone or in addition to
or in tandem with other awards granted under the Plan, and they may
be awarded as additional compensation for services rendered by the
eligible individual or in lieu of cash or other compensation to
which the eligible individual is entitled from the
Company.
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The Committee shall impose such terms, conditions and/or
restrictions on any restricted share awards or restricted share
units granted pursuant to the Plan as it may deem advisable
including, without limitation: (1) a requirement that
participants pay a stipulated price for each restricted share or
each restricted share unit, (2) restrictions based upon the
achievement of specific performance goals (Company-wide,
divisional, related to other business units, and/or individual),
(3) time-based restrictions on vesting, including the time
during which the award is subject to a risk of forfeiture, and
(4) restrictions under applicable Federal or state securities
laws.
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Except in the case of performance-based awards and awards made in
connection with: (1) the recruitment of new employees,
including employees transferring from an allied organization
(within the meaning of Section 4(c)(i) or (ii) below),
(2) special recognition awards, (3) awards granted in
connection with business turnaround plans, and (4) the
assumption of, or substitution for, outstanding awards previously
granted to individuals who become employees of the Company as a
result of merger, consolidation, acquisition or other corporate
transaction, all restricted share and restricted share unit awards
shall be subject to a time-based vesting restriction of at least
three years from the date of grant. However, without regard to the
time-based vesting restriction assigned, the vesting of restricted
share and restricted share unit awards may be accelerated in
connection with a change in control and certain transfers (to the
extent permitted in Section 4(c) below) or in connection with a
participant’s death, disability, retirement, retirement
eligibility or involuntary termination of employment, in each case
as determined by the Committee. To the extent the restricted shares
or restricted share units granted to a Covered Executive are
intended to
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be deductible under Section 162(m) of the Code, the applicable
restrictions shall be based on the achievement of performance goals
over a performance period, as described in
Section 4(a)(iv).
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Restricted share units that become payable in accordance with their
terms and conditions shall be settled in cash, shares of Common
Stock, or a combination of cash and shares of Common Stock, as
determined by the Committee. To the extent that the vesting of a
restricted share unit is tied to (1) the completion of a
specified period of service, (2) death, (3) disability,
or (4) retirement, the payment date for the restricted share
unit shall be the day when vesting occurs, except to the extent the
agreement specifies a different payment date for such vesting event
or as otherwise provided below. Accordingly, if more than one such
vesting event applies with respect to the restricted share unit,
the earliest occurring vesting event shall govern (but if two or
more vesting dates occur on the same date, the vesting event
enumerated first in the prior sentence shall govern).
Notwithstanding any contrary terms in an agreement evidencing a
restricted shares unit, if the specified period of service that is
required to vest is changed after it is initially established, the
change shall not be taken into account for purposes of determining
the payment date for the restricted share unit, unless the change
extends the vesting period and such extension is eligible for the
special rule for certain transaction-based compensation in Treasury
Regulation 1.409A-3(i)(5)(iv) or unless the restricted share
unit is exempt from Section 409A of the Code and the change
accelerates the vesting period.
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Notwithstanding any contrary terms in this Plan or in an agreement
evidencing a restricted share unit, if a restricted share unit is a
Post-409A Award and is part of an award of restricted share units
that includes one or more restricted share units that is required
to comply with Section 409A of the Code, then all restricted
share units in such award shall be subject to the provisions of the
Rules.
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During any Restriction Period, restricted shares may not be sold,
assigned, transferred or otherwise disposed of, or mortgaged,
pledged or otherwise encumbered. In order to enforce the
limitations imposed upon the restricted shares, the Committee may
(1) cause a legend or legends to be placed on any certificates
relating to such restricted shares, and/or (2) issue
“stop transfer” instructions, as it deems necessary or
appropriate.
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Unless otherwise determined by the Committee, during any
Restriction Period, participants who hold restricted shares shall
have the right to receive dividends, in cash or property, as well
as other distributions or rights in respect of such shares, shall
have the right to vote such shares as the record owner thereof, and
participants who hold restricted share units shall have the right
to receive dividend equivalents. Unless otherwise determined by the
Committee, any dividends, distributions or rights, or dividend
equivalents payable to a participant during the Restriction Period
shall be distributed to the participant only if and when the
restrictions imposed on the applicable restricted shares or
restricted share units lapse (and in the case of dividend
equivalents on restricted share units, in accordance with the time
of payment rules that are applicable to the related restricted
share units).
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Each certificate issued for restricted shares shall be registered
in the name of the participant and deposited with the Company or
its designee. At the end of the Restriction Period, a certificate
representing the number of shares to which the participant is then
entitled shall be delivered to the participant free and clear of
the restrictions (or the participant’s unrestricted ownership
shall be otherwise reflected). No certificate shall be issued with
respect to a restricted share unit unless and until such unit is
paid in shares of Common Stock.
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(iv)
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Performance Awards.
Performance awards are performance shares or performance units.
Each performance share shall have an initial value equal to the
Fair Market Value of a share of Common Stock on the date of grant.
Each performance unit shall have an initial value that is
established by the Committee at the time of grant. Performance
awards may be granted either alone or in addition to other awards
made under the Plan.
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Unless otherwise determined by the Committee, performance awards
shall be conditioned on the achievement of performance goals (which
shall be based on one or more performance measures, as determined
by the Committee) over a performance period established by the
Committee, provided that no performance period shall be less than
one year.
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The performance measure(s) to be used for purposes of performance
awards (and for restricted shares and restricted share units, as
provided in Section 4(a)(iii)) may be described in terms of
objectives that are related to the individual participant or
objectives that are Company-wide or related to one or more
subsidiaries, divisions, departments, regions, functions or
business units of the Company to which the contributions of the
participant are relevant, and may consist of one or more or any
combination of the following criteria: stock price, market share,
sales revenue, sales volume, cash flow, earnings per share, return
on equity, return on assets, return on sales, return on invested
capital, economic value added, net earnings, total shareholder
return, gross margin, profit (before or after-taxes), net income,
operating income, EBITDA (earnings before interest, taxes,
depreciation and amortization) and/or costs. The performance goals
based on these performance measures may be made relative to the
performance of other corporations or a published index. The
Committee can establish other performance measures for performance
awards granted to participants who are not Covered
Executive
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