EXHIBIT
10.4
PepsiCo, Inc.
2003
Long-Term Incentive Plan
(as amended
and restated effective September 12, 2008)
1. Purposes.
The purposes of this Plan are to provide long-term incentives to
those persons with significant responsibility for the success and
growth of PepsiCo, Inc. (“PepsiCo”) and its
subsidiaries, divisions and affiliated businesses, to associate the
interests of such persons with those of PepsiCo’s
shareholders, to assist PepsiCo in recruiting, retaining and
motivating a diverse group of employees and outside directors on a
competitive basis, and to ensure a pay for performance linkage for
such employees and outside directors. If approved by
PepsiCo’s shareholders, this Plan would replace the PepsiCo,
Inc. 1994 Long-Term Incentive Plan, the PepsiCo, Inc. 1995 Stock
Option Incentive Plan, the PepsiCo SharePower Stock Option Plan,
the Director Stock Plan and the PepsiCo Share Award Plan, and no
further awards would be made under any of the foregoing plans.
2. Definitions.
For purposes of the Plan:
(a) “Award” means a grant of Options, Stock
Appreciation Rights, Restricted Shares, Restricted Share Units,
Performance Awards, vested shares of Common Stock, or any or all of
them (but vested shares of Common Stock may not be granted to
employees or officers).
(b) “Board” means the Board of Directors of
PepsiCo, Inc.
(c) “Change in Control” is defined in
Section 11(f).
(d) “Code” means the Internal Revenue Code of
1986, as amended. Any reference to a section of the Code shall also
be a reference to any successor section of the Code (or a successor
code).
(e) “Committee” means, with respect to any matter
relating to Section 8 of the Plan, the Board, and with respect
to all other matters under the Plan, the Compensation Committee of
the Board of Directors of PepsiCo, Inc. The Compensation Committee
shall be appointed by the Board and shall consist of two or more
outside, disinterested members of the Board. The Compensation
Committee, in the judgment of the Board, shall be qualified to
administer the Plan as contemplated by (a) Rule 16b-3 of the
Securities and Exchange Act of 1934 (or any successor rule),
(b) Section 162(m) of the Code, as amended, and the
regulations thereunder, and (c) any rules and regulations of a
stock exchange on which Common Stock is traded. Any member of the
Compensation Committee who does not satisfy the qualifications set
out in the preceding sentence may recuse himself or herself from
any vote or other action taken by the Committee. The Board may, at
any time and in its complete discretion, remove any member of the
Compensation Committee and may fill any vacancy in the Compensation
Committee.
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(f) “Common
Stock” means the common stock, par value 1 2/3 cents per
share, of PepsiCo, Inc.
(g) “Company” means PepsiCo, its subsidiaries,
divisions and affiliated businesses.
(h) “Eligible Participants” means any of the
following individuals who is designated by the Committee as
eligible to receive Awards, subject to the conditions set forth in
this Plan: any officer, employee, consultant or advisor of the
Company. The term employee does not include any individual who is
not, as of the grant date of an Award, classified by the Company as
an employee on its corporate books and records even if that
individual is later reclassified (by the Company, any court, any
governmental or regulatory agency or otherwise) as an employee as
of the grant date. Non-Employee Directors are not Eligible
Participants.
(i) “Employee Directors” means the members of the
Board who are also employees of the Company.
(j) “Fair Market Value” on any date means the
average of the high and low market prices at which a share of
Common Stock shall have been sold on such date, or the immediately
preceding trading day if such date was not a trading day, as
reported on the New York Stock Exchange Composite Transactions
Listing and, in the case of an ISO, means fair market value as
determined by the Committee in accordance with Section 422 of
the Code.
(k) “ISO” means an Option satisfying the
requirements of Section 422 of the Code and designated by the
Committee as an ISO.
(l) “Named Executive Officer” means
PepsiCo’s Chief Executive Officer and PepsiCo’s next
four highest paid executive officers, as reported in
PepsiCo’s proxy statement pursuant to Regulation S-K,
Item 402(a)(3) for a given year.
(m) “Non-Employee Director” means a member of the
Board who is not an employee of the Company.
(n) “NQSO” or “Non-Qualified Stock
Option” means an Option that does not satisfy the
requirements of Section 422 of the Code and that is not
designated as an ISO by the Committee.
(o) “Options” means the right to purchase shares
of Common Stock at a specified price for a specified period of
time.
(p) “Option Exercise Price” means the purchase
price per share of Common Stock covered by an Option granted
pursuant to this Plan.
(q) “Participant” means an individual who has
received an Award under this Plan.
(r) “PepsiCo” means PepsiCo, Inc., a North
Carolina corporation.
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(s) “Performance Awards” means an Award of
Performance Shares or Performance Units based on the achievement of
Performance Goals during a Performance Period.
(t) “Performance Based Exception” means the
performance-based exception set forth in Code
Section 162(m)(4)(C) from the deductibility limitations of
Code Section 162(m).
(u) “Performance Goals” means the goals
established by the Committee under Section 7(d).
(v) “Performance Measures” means the criteria set
out in Section 7(d) that may be used by the Committee as the
basis for a Performance Goal.
(w) “Performance Period” means the period
established by the Committee during which the achievement of
Performance Goals is assessed in order to determine whether and to
what extent a Performance Award has been earned.
(x) “Performance Shares” means shares of Common
Stock awarded to a Participant based on the achievement of
Performance Goals during a Performance Period.
(y) “Performance Units” means an Award denominated
in shares of Common Stock, cash or a combination thereof, as
determined by the Committee, awarded to a Participant based on the
achievement of Performance Goals during a Performance Period.
(z) “Plan” means the PepsiCo, Inc. 2003 Long-Term
Incentive Plan, as amended and restated from time to time.
(aa) “Prior Plans” means the PepsiCo, Inc. 1994
Long-Term Incentive Plan, the PepsiCo, Inc. 1995 Stock Option
Incentive Plan, the PepsiCo SharePower Stock Option Plan, the
Director Stock Plan, the PepsiCo Share Award Plan, the PepsiCo 1987
Incentive Plan, the Quaker Long Term Incentive Plan of 1990, the
Quaker Long Term Incentive Plan of 1999 and the Quaker Stock
Compensation Plan for Outside Directors.
(bb) “Restriction Period” means, with respect to
Restricted Shares or Restricted Share Units, the period during
which any restrictions set by the Committee remain in place.
Restrictions remain in place until such time as they have lapsed
under the terms and conditions of the Restricted Shares or as
otherwise determined by the Committee.
(cc) “Restricted Shares” means shares of Common
Stock, which 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.
(dd) “Restricted Share Units” means the right, as
described in Section 7(c), to receive an amount, payable in
either cash or shares of Common Stock, equal to the value of a
specified number of shares of Common Stock.
(ee) “Retirement” with respect to a Non-Employee
Director shall mean termination from the Board after such
Non-Employee Director shall have attained at least age 55 or after
such Non-Employee Director shall have satisfied the criteria for
Retirement established by the Employee Directors from time to
time.
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(ff) “Stock
Appreciation Rights” or “SAR” means the right to
receive the difference between the Fair Market Value of a share of
Common Stock on the grant date and the Fair Market Value of a share
of Common Stock on the date the Stock Appreciation Right is
exercised.
(gg) “Total Disability” shall have the meaning set
forth in the long-term disability program of PepsiCo.
3. Administration of the Plan.
(a) Authority of Committee . The Plan shall be
administered by the Committee, which shall have all the 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 persons to be granted Awards under the Plan,
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to determine the type, size and terms of Awards to be made to
each person selected,
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to determine the time when Awards are to be made and any
conditions which must be satisfied before an Award is made,
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to establish objectives and conditions for earning Awards,
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to determine whether an Award shall be evidenced by an agreement
and, if so, to determine the terms of such agreement (which shall
not be inconsistent with the Plan) and who must sign such
agreement,
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to determine whether the conditions for earning an Award have
been met and whether an Award will be paid at the end of the
Performance Period,
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to determine if and when an Award may be deferred,
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to determine whether the amount or payment of an Award should be
reduced or eliminated,
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to determine the guidelines and/or procedures for the payment or
exercise of Awards, and
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to determine whether an Award should qualify, regardless of its
amount, as deductible in its entirety for federal income tax
purposes, including whether any Awards granted to Named Executive
Officers comply with the Performance Based Exception under Code
Section 162(m).
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(b) Interpretation of Plan . The Committee shall
have full power and authority to administer and interpret the Plan
and to adopt or establish such rules, regulations, agreements,
guidelines, procedures and instruments, which are not contrary to
the terms of the Plan and which, in its opinion, may be necessary
or advisable for the administration and operation of the Plan. 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.
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(c) Delegation
of Authority . To the extent not prohibited by law, the
Committee may delegate its authority hereunder and may grant
authority to employees or 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.
4. Eligibility.
(a) General . Subject to the provisions of the
Plan, the Committee may, from time to time, select from all
Eligible Participants those to whom Awards shall be granted under
Section 7 and shall determine the nature and amount of each
Award. Only Non-Employee Directors shall be eligible to receive
Awards under Section 8.
(b) International Participants . Notwithstanding
any provision of the Plan to the contrary, 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
Participants (if any) employed by the Company outside the United
States are eligible to participate in the Plan, (ii) modify
the terms and conditions of any Awards made to such Eligible
Participants, and (iii) establish subplans and modified Option
exercise procedures and other Award terms and procedures to the
extent such actions may be necessary or advisable.
5. Shares of Common Stock Subject to the Plan.
(a) Authorized Number of Shares . Unless
otherwise authorized by PepsiCo’s shareholders and subject to
the provisions of this Section 5 and Section 10, the
maximum aggregate number of shares of Common Stock available for
issuance under the Plan shall be (i) 70 million, plus
(ii) the number of shares underlying awards under the Prior
Plans, which are cancelled or expire after the effective date of
this Plan. Any of the authorized shares may be used for any of the
types of Awards described in the Plan, except:
(i) at least 20 million of the authorized shares will be
available for issuance in connection with broad-based grants under
PepsiCo’s SharePower program,
(ii) no more than 30 million of the authorized shares may
be issued pursuant to Awards other than Options granted with an
Option Exercise Price equal to Fair Market Value on the date of
grant, and
(iii) no more than 50 million shares may be issued in the
form of ISOs.
(b) Share Counting . The following shall apply in
determining the number of shares remaining available for grant
under this Plan:
(i) In connection with the granting of an Option or other
Award (other than a Performance Unit denominated in dollars), the
number of shares of Common Stock available for issuance under this
Plan shall be reduced by the number of shares in respect of which
the Option or Award is granted or denominated; provided, however,
that where a SAR is settled in shares of Common Stock, the number
of shares of Common Stock available for issuance under this Plan
shall be reduced only by the number of shares issued in such
settlement.
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(ii) If any Option is exercised by tendering shares of Common
Stock to PepsiCo as full or partial payment of the exercise price,
the number of shares available for issuance under this Plan shall
be increased by the number of shares so tendered.
(iii) Whenever any outstanding Option or other Award (or
portion thereof) expires, is cancelled, is settled in cash or is
otherwise terminated for any reason without having been exercised
or payment having been made in respect of the entire Option or
Award, the shares allocable to the expired, cancelled, settled or
otherwise terminated portion of the Option or Award may again be
the subject of Options or Awards granted under this Plan.
(iv) Awards granted through the assumption of, or in
substitution for, outstanding awards previously granted to
individuals who become employees as a result of a merger,
consolidation, acquisition or other corporate transaction involving
the Company as a result of an acquisition will not count against
the reserve of available shares under this Plan.
(c) Shares to be Delivered . Shares of Common
Stock to be delivered by the Company under this Plan shall be
determined by the Committee and may consist in whole or in part of
authorized but unissued shares, treasury shares or shares acquired
on the open market.
6. Award Limitations.
The maximum number of Options or SARs that can be granted to any
Eligible Participant during a single calendar year cannot exceed
2,000,000. The maximum per Eligible Participant, per calendar year
amount of Awards other than Options and SARs shall not exceed
$15,000,000 or 500,000 shares of Common Stock. The maximum Award
that may be granted to any Eligible Participant for a Performance
Period greater than one year shall not exceed the foregoing annual
maximum multiplied by the number of full years in the Performance
Period.
7. Awards to Eligible Participants.
(a) Options .
(i) Grants . Subject to the terms and provisions
of this Plan, Options may be granted to Eligible Participants.
Options may consist of ISOs or NQSOs, as the Committee shall
determine. Options may be granted alone or in tandem with SARs.
With respect to Options granted in tandem with SARs, the exercise
of either such Options or such SARs will result in the simultaneous
cancellation of the same number of tandem SARs or Options, as the
case may be.
(ii) Option Exercise Price . The Option Exercise
Price shall be equal to or greater than the Fair Market Value on
the date the Option is granted, unless the 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 a merger, consolidation, acquisition or
other corporate transaction involving the Company.
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(iii) Term . The term of Options shall be
determined by the Committee in its sole discretion, but in no event
shall the term exceed ten (10) years from the date of grant;
provided, however, that Awards covering up to five (5) million
shares of Common Stock may be issued with a term of up to fifteen
(15) years.
(iv) ISO Limits . ISOs may only be granted to
employees of PepsiCo, its divisions and subsidiaries and may only
be granted to an employee who, at the time the Option is granted,
does not own stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of PepsiCo.
The aggregate Fair Market Value 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. The aggregate Fair Market Value of
such shares shall be determined at the time the Option is
granted.
(v) No Repricing . Except for adjustments made
pursuant to Section 10, the Option Exercise Price for any
outstanding Option granted under the Plan may not be decreased
after the date of grant nor may any outstanding Option granted
under the Plan be surrendered to the Company as consideration for
the grant of a new Option with a lower Option Exercise Price
without the approval of PepsiCo’s shareholders.
(vi) Buy Out of Option Gains. At any time after any Option
becomes exercisable, the Committee shall have the right to elect,
in its sole discretion and without the consent of the holder
thereof, to cancel such Option and to cause PepsiCo to pay to the
Participant the excess of the Fair Market Value of the shares of
Common Stock covered by such Option over the Option Exercise Price
of such Option at the date the Committee provides written notice
(the “Buy Out Notice”) of its intention to exercise
such right. Buy outs pursuant to this provision shall be effected
by PepsiCo as promptly as possible after the date of the Buy Out
Notice. Payments of buy out amounts shall be made in shares of
Common Stock. The number of shares shall be determined by dividing
the amount of the payment to be made by the Fair Market Value of a
share of Common Stock at the date of the Buy Out Notice, and by
rounding up any fractional share to a whole share. The rights
provided by this provision are the exclusive rights that are
available with respect to any Option in the event of a buy out,
notwithstanding the terms of any outstanding agreement.
(b) Stock Appreciation Rights .
(i) Grants . Subject to the terms and provisions
of this Plan, SARs may be granted to Eligible Participants. SARs
may be granted alone or in tandem with Options. With respect to
SARs granted in tandem with Options, the exercise of either such
Options or such SARs will result in the simultaneous cancellation
of the same number of tandem SARs or Options, as the case may
be.
(ii) Purchase Price . The purchase price per
share of Common Stock covered by a SAR granted pursuant to this
Plan shall be equal to or greater than Fair Market Value on the
date the SAR is granted, 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 a merger, consolidation, acquisition or
other corporate transaction involving the Company.
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(iii) Term . The term of a SAR shall be
determined by the Committee in its sole discretion, but in no event
shall the term exceed ten (10) years from the date of grant;
provided, however, that Awards covering up to five (5) million
shares of Common Stock may be issued with a term of up to fifteen
(15) years.
(iv) Form of Payment . The Committee may
authorize payment of a SAR in the form of cash, Common Stock valued
at its Fair Market Value on the date of the exercise, a combination
thereof, or by any other method as the Committee may determine.
(c) Restricted Shares / Restricted Share Units .
(i) Grants . Subject to the terms and provisions of
the Plan, Restricted Shares or Restricted Share Units may be
granted to Eligible Participants.
(ii) Restrictions . The Committee shall impose
such terms, conditions and/or restrictions on any Restricted Shares
or Restricted Share Units granted pursuant to the Plan as it may
deem advisable including, without limitation: a requirement that
Participants pay a stipulated purchase price for each Restricted
Share or each Restricted Share Unit; restrictions based upon the
achievement of specific performance goals (Company-wide,
divisional, and/or individual); time-based restrictions on vesting;
and/or restrictions under applicable Federal or state securities
laws. Unless otherwise determined by the Committee at the time of
grant, any time-based restriction period shall be for a minimum of
three years. To the extent the Restricted Shares or Restricted
Share Units are intended to be deductible under Code
Section 162(m), the applicable restrictions shall be based on
the achievement of Performance Goals over a Performance Period, as
described in Section 7(d) below.
(iii) Payment of Units . 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, as determined by the Committee. The payment
date shall be as soon as practicable after the earliest of
(A) any vesting date that can be pre-determined at grant under
the terms of an Award Agreement, and (B) the occurrence date
of an applicable vesting event (e.g., death, total disability,
approved transfer or retirement) specified in the applicable award
agreement.
(iv) No Disposition During Restriction Period
. During the 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
(a) cause a legend or legends to be placed on any certificates
relating to such Restricted Shares, and/or (b) issue
“stop transfer” instructions, as it deems necessary or
appropriate.
(v) Dividend and Voting Rights . Unless otherwise
determined by the Committee, during the
