PEPSICO INC, DEF 14A, 1995-03-28

PEPSICO INC
DEF 14A, 1995-03-28
BEVERAGES

Previous: PENN VIRGINIA CORP, DEF 14A, 1995-03-28

Next: PEPSICO INC, 10-K, 1995-03-28

<PAGE>
SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934

Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement / / Confidential, for use of the
Commission only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12.

PEPSICO, INC.
__________________________________________________________________________
(Name of Registrant as Specified in Its Charter)

Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-
6(i)(2) or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-
11.
(1) Title of each class of securities to which transaction applies:
__________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
__________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
__________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
__________________________________________________________________________
(5) Total fee paid:
__________________________________________________________________________
/ / Fee paid previously with preliminary materials.

/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.

(1) Amount Previously Paid:
__________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
__________________________________________________________________________
(3) Filing Party:
__________________________________________________________________________
(4) Date Filed:
__________________________________________________________________________

<PAGE>

PEPSICO, INC.

Purchase, New York 10577-1444

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To our Shareholders:

The Annual Shareholders' Meeting will be held at PepsiCo's World
Headquarters at 700 Anderson Hill Road, Purchase, New York, on Wednesday,
May 3, 1995, from 9:00 A.M. to 11:00 A.M., Eastern Daylight Saving Time,
to:

1. Elect directors.
2. Approve the appointment of independent auditors.
3. Act upon five shareholder proposals set forth in the attached
Proxy Statement.
4. Transact such other business as may properly come before the
Meeting.

The Board of Directors has fixed the close of business on March 10,
1995 as the record date for determining shareholders entitled to notice of
and to vote at the Meeting. Only shareholders of record at the close of
business on that date are entitled to vote at the Meeting.

PepsiCo hopes that as many shareholders as possible will personally
attend the Meeting. IF YOU PLAN TO ATTEND, PLEASE CHECK THE BOX PROVIDED
ON YOUR PROXY CARD. UPON RECEIPT OF YOUR PROXY WITH THE BOX CHECKED, WE
WILL SEND YOU AN ADMISSION CARD.

Whether or not you plan to attend the Meeting, please complete the
enclosed proxy card, and sign, date and return it promptly so that your
shares will be represented. Sending in your proxy will not prevent you
from voting in person at the Meeting.

By order of the Board of Directors,

March 28, 1995 EDWARD V. LAHEY, JR.
Secretary

<PAGE> 1

PEPSICO, INC.

Purchase, New York 10577-1444

March 28, 1995

PROXY STATEMENT

This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of PepsiCo, Inc. ("PepsiCo") of proxies to be
voted at the Annual Meeting of Shareholders to be held on Wednesday, May 3,
1995, and at any adjournment thereof.

The Board requests that all shareholders complete the enclosed proxy
card, and sign, date and return it as promptly as possible. Since many
shareholders cannot personally attend, it is necessary that a large number
be represented by proxy. The holders of record of a majority of the
outstanding shares must be present in person or represented by proxy at the
Annual Meeting in order to hold the Meeting. Under North Carolina law,
abstentions and broker non-votes are counted for purposes of determining
whether a quorum is present at the Meeting.

Any shareholder returning a proxy may revoke it by casting a ballot at
the Meeting. Any proxy not revoked will be voted as specified by the
shareholder. If no choice is indicated, a proxy will be voted in
accordance with the Board of Directors' recommendations.

PepsiCo's By-Laws require an affirmative vote of the holders of a
majority of the shares of Capital Stock present in person or by proxy and
entitled to vote for approval of each of the items listed on the proxy card
and described herein, with the exception of election of directors, which
requires a majority of the votes cast to elect; therefore, abstentions are
counted in the total number of votes cast on all proposals except the
election of directors. This has the effect of requiring a higher vote for
passage of a proposal. Broker non-votes are not shares entitled to vote,
are not counted in the total number of votes cast, and thus have no effect
on the outcome of voting.

At March 10, 1995, the record date, there were 787,801,790 shares of
PepsiCo Capital Stock outstanding and entitled to one vote each at the
Annual Meeting. These shares were registered in the names of 168,808
shareholders and, as far as is known to PepsiCo, no person owns
beneficially more than 5% of the outstanding Capital Stock.

This Proxy Statement is first being mailed on or about March 28, 1995.

<PAGE> 2

ELECTION OF DIRECTORS (PROXY ITEM NO. 1)

Twelve directors are to be elected at the Annual Meeting, to hold
office from election until the next Annual Meeting of Shareholders, or
until their successors are duly elected and qualified. The following
nominees have been proposed by the Board of Directors and are currently
serving as directors:

JOHN F. AKERS, former Chairman of the Board and Chief Executive Officer of
International Business Machines Corporation, has been a member of PepsiCo's
Board since May 1991. Mr. Akers joined IBM in 1960 and was Chairman and
Chief Executive Officer from 1986 until 1993. He is also a director of The
New York Times Company, Springs Industries, Inc. and Zurich Insurance
Company--U.S. Mr. Akers is 60 years old.

ROBERT E. ALLEN, Chairman of the Board and Chief Executive Officer of AT&T
Corp., has been a member of PepsiCo's Board since February 1990. He began
his career at AT&T in 1957 when he joined Indiana Bell. He was elected
President and Chief Operating Officer of AT&T in 1986, and assumed his
present responsibilities in 1988. He is also a director of Bristol-Myers
Squibb Company and Chrysler Corp. Mr. Allen is 60 years old.

D. WAYNE CALLOWAY, Chairman of the Board and Chief Executive Officer of
PepsiCo, was elected to PepsiCo's Board in 1983. Mr. Calloway joined
PepsiCo in 1967, became President and Chief Operating Officer of Frito-Lay,
Inc. in 1976, and became Chairman of the Board and Chief Executive Officer
of Frito-Lay in 1978. Mr. Calloway became Executive Vice President and
Chief Financial Officer of PepsiCo in 1983 and President and Chief
Operating Officer in 1985. He assumed his current position in 1986. Mr.
Calloway is a director of Citicorp, General Electric Company and Exxon
Corporation. Mr. Calloway is 59 years old.

ROGER A. ENRICO, Vice Chairman of the Board of PepsiCo and Chairman,
PepsiCo Worldwide Restaurants, was elected to PepsiCo's Board in 1987. He
joined PepsiCo in 1971. In 1983 Mr. Enrico became President and Chief
Executive Officer of Pepsi-Cola USA. He became President and Chief
Executive Officer of PepsiCo Worldwide Beverages in 1986, Chairman and
Chief Executive Officer of Frito-Lay, Inc. in 1991 and Chairman and Chief
Executive Officer of PepsiCo Worldwide Foods in 1992, assuming his present
positions as Vice Chairman of PepsiCo in 1993, and Chairman, PepsiCo
Worldwide Restaurants, at the end of 1994. He is also a member of the
Board of Directors of Dayton Hudson Corporation and The Prudential
Insurance Company of America. Mr. Enrico is 50 years old.

JOHN J. MURPHY, Chairman and Chief Executive Officer of Dresser Industries,
was elected a director of PepsiCo in 1984. Mr. Murphy joined Dresser in
1952 and was elected its Chairman and Chief Executive Officer in 1983. He
is also a director of NationsBank Corporation and Kerr-McGee Corporation.
Mr. Murphy is 63 years old.

<PAGE> 3

ANDRALL E. PEARSON was elected a director of PepsiCo in 1970. Mr. Pearson
was PepsiCo's President and Chief Operating Officer from 1971 through 1984.
He was a Professor at the Harvard Business School from 1985 until 1993, and
is a director of The May Department Stores Company and The Travelers Group.
He is also a general partner of Clayton, Dubilier & Rice, Inc., a director
of Lexmark International, Inc. and Chairman of the Board of Kraft
Foodservice Company. Mr. Pearson is 69 years old.

SHARON PERCY ROCKEFELLER was elected a director in 1986. She is President
and Chief Executive Officer of WETA public stations in Washington, D.C., a
position she has held since 1989, and was a member of the Board of
Directors of WETA from 1985 to 1989. She is a member of the Board of
Directors of Public Broadcasting Service, Washington, D.C. and was a member
of the Board of Directors of the Corporation for Public Broadcasting until
1992. Mrs. Rockefeller has also been a Member of the Democratic National
Committee. Mrs. Rockefeller is 50 years old.

ROGER B. SMITH, former Chairman and Chief Executive Officer of General
Motors Corp., was elected to PepsiCo's Board in 1989. Mr. Smith joined
General Motors Corp. in 1949 and became its Chairman and Chief Executive
Officer in 1981. He serves on the Board of Directors of Citicorp,
International Paper Co. and Johnson & Johnson. Mr. Smith is 69 years old.

ROBERT H. STEWART, III, a director since 1965 and Chairman of the Board's
Compensation Committee, is Vice Chairman of Bank One, Texas, N.A. In 1987,
Mr. Stewart became Chairman of the Board of First RepublicBank Corporation,
a position he held until joining LaSalle Energy Corp. where he was Vice
Chairman of the Board from August 1987 until its sale in November 1989.
Mr. Stewart then became Vice Chairman of Team Bank, assuming his present
position in November 1992 upon the acquisition of Team Bancshares Inc. by
BANC ONE CORPORATION. He is also a director of ARCO Chemical Co. Mr.
Stewart is 69 years old.

FRANKLIN A. THOMAS was elected to PepsiCo's Board in November 1994. Mr.
Thomas has been President of the Ford Foundation since 1979. From 1967 to
1977, he was President and Chief Executive Officer of the Bedford-
Stuyvesant Restoration Corporation. From 1977 to 1979 Mr. Thomas had a
private law practice in New York City. He is also a director of ALCOA,
AT&T, CBS Inc., Citicorp and Cummins Engine Company, Inc. Mr. Thomas is 60
years old.

P. ROY VAGELOS, former Chairman of the Board and Chief Executive Officer of
Merck & Co., Inc., has been a member of PepsiCo's Board since 1992. Dr.
Vagelos joined Merck in 1975 and became President and Chief Executive
Officer in 1985. He became a director in 1984, and Chairman in 1986,
retiring from that position in November 1994. Dr. Vagelos is also a
director of The Prudential Insurance Company of America, McDonnell Douglas
Corporation and Chairman of the Board of Regeneron Pharmaceuticals Inc.
Dr. Vagelos is 65 years old.

<PAGE> 4

ARNOLD R. WEBER was elected to PepsiCo's Board in 1978, and is Chairman of
the Audit Committee. Dr. Weber is Chancellor of Northwestern University
and has held various government positions including Executive Director of
the Cost of Living Council and Associate Director of the Office of
Management and Budget. He is a director of Aon Corp., Burlington Northern,
Inc., Inland Steel Company, The Tribune Co. and Deere Co. Dr. Weber is 65
years old.

Should any of the foregoing nominees for director become unavailable
for any reason, the persons named in the enclosed proxy intend to vote for
such other persons as the present Board may designate.

OWNERSHIP OF CAPITAL STOCK BY DIRECTORS AND EXECUTIVE OFFICERS. The
following table sets forth, as of March 10, 1995, the shares of PepsiCo
Capital Stock beneficially owned by each director and nominee, by each
named executive officer individually, and by all directors and executive
officers as a group:

Name of Individual or Number of Shares
Number of Persons in Group Beneficially Owned(1)(2)
-------------------------- ------------------------
John F. Akers 11,800
Robert E. Allen 3,070
D. Wayne Calloway 1,992,158
Roger A. Enrico 519,624
John J. Murphy 10,509
Andrall E. Pearson 154,577
Sharon Percy Rockefeller 30,245
Roger B. Smith 6,022
Robert H. Stewart, III 68,200
Franklin A. Thomas 500
P. Roy Vagelos 2,655
Arnold R. Weber 19,345
Robert G. Dettmer 405,110
Robert L. Carleton 37,886
Edward V. Lahey, Jr. 280,556
All directors and executive officers
as a group (17 persons) 3,729,429
____________________________

(1) Each director and executive officer has sole voting and
investment power with respect to the shares listed above, except that
voting and investment power over a total of 34,645 shares is shared with
their spouses or children. The shares shown include 3,140,948 shares of
PepsiCo Capital Stock with respect to which certain directors and executive
officers have a right to acquire beneficial ownership within 60 days.

(2) Such shares do not include 714,500 shares or options in the
aggregate, held by children or spouses of directors or executive officers,
or by foundations or estates of which directors and executive officers
serve as trustees or directors, as to which beneficial ownership is

<PAGE> 5

disclaimed. The shares shown also do not include the following number of
PepsiCo Capital Stock equivalents, which are held in PepsiCo's deferred
income program: Robert E. Allen 9,364 shares; Robert G. Dettmer 138,168
shares; Roger A. Enrico 8,568 shares; John J. Murphy 1,540 shares; Andrall
E. Pearson 6,179 shares; Roger B. Smith 15,302 shares; Arnold R. Weber
2,343 shares; and all directors and executive officers as a group 181,464
shares.

Directors and executive officers as a group own less than 1% of
outstanding Capital Stock. No director or executive officer owns more than
3/10 of 1% of outstanding Capital Stock.

BOARD MEETINGS AND COMMITTEES OF THE BOARD. PepsiCo's Board, which
held six meetings during the year, consists of ten independent outside
directors, and D. Wayne Calloway and Roger A. Enrico. Because of its
compact, independent structure, the Board does not operate through a
variety of Committees and all outside directors serve on the two existing
committees. Matters such as nominations for Board membership or issues
raised by shareholders are dealt with by the full Board.

The Audit Committee, which was established in 1967, held two meetings
in 1994. The Committee reviews external and internal audit plans and
activities, reviews PepsiCo's annual financial statements, reviews
PepsiCo's system of internal financial controls, approves the fees for
audit, audit-related and nonaudit services provided by the independent
auditors, and recommends to the Board the annual selection of independent
auditors.

The Compensation Committee, which has been active under various names
since 1955, also held two meetings during 1994. The Compensation Committee
has responsibility for administering PepsiCo's incentive plans, setting
policies that govern executives' annual compensation and long-term
incentives, and reviews management performance, development and succession.

Due to surgery, Robert E. Allen was unable to attend a total of four
meetings which were held on two days; consequently, he attended fewer than
75% of the total number of Board and Committee meetings. Excluding Mr.
Allen, average attendance by directors at Board and Committee meetings was
approximately 91%.

REMUNERATION OF DIRECTORS. Directors who are employees receive no
additional remuneration for serving as directors. All other directors
receive annual retainers of $70,000 and an annual grant of PepsiCo Capital
Stock with a value of approximately $30,000 on the date of the grant.
Directors may elect to defer payment of their retainers and stock grants.
If the stock grant is deferred, the only investment option available is
PepsiCo Capital Stock equivalents, payable only in cash. Deferrals may not
be made for less than one year.

<PAGE> 6

EXECUTIVE COMPENSATION

Compensation Committee Report on Executive Compensation

Executive Pay Policy

PepsiCo's executive compensation programs are designed to enable it to
recruit, retain and motivate a large group of talented and diverse domestic
and international executives. This is essential for PepsiCo to achieve its
challenging worldwide performance objectives and to continue to achieve
outstanding shareholder returns. As a result, the Committee has determined
that executive compensation opportunities, including those for PepsiCo's
Chief Executive Officer ("CEO"), should create incentives for superior
performance and consequences for below target performance.

The Compensation Committee annually examines short-term and long-term
compensation levels for the CEO and other senior executives against a
survey of the compensation practices of a group of leading consumer product
companies. This review is validated against surveys of the compensation
practices of a broader range of major companies, including the Fortune 50.
Together these companies are referred to as the "survey companies." These
reviews also compare PepsiCo's short and long-term results with the
performance of the survey companies, to ensure a pay for performance
linkage. The survey companies include some, but not all, of the companies
covered in the Standard & Poor's 500 Beverage, Food and Restaurant Indices
included on the Performance Graph on page 8.

The Committee believes that our executive compensation programs have
met their objectives. PepsiCo has been able to attract and retain the
executive talent necessary to support a corporation which has nearly
tripled its sales over the last seven years, while providing superior
shareholder returns.

Specific Compensation Programs

PepsiCo's executive compensation mix includes a base salary, annual
cash bonus awards, and long-term incentive compensation in the form of
performance units and stock options. Overall, these programs are intended
to be performance-oriented, with the principal portion of executive
compensation opportunities tied to achievement of annual objectives and
long-term shareholder returns. It is the Committee's intention that
substantially all executive compensation be deductible for federal income
tax purposes.

Salary ranges for the CEO and the other executive officers are based
on the underlying accountabilities of each executive's position, which are
reviewed on a regular basis and benchmarked against similar positions among
the survey companies. These salary ranges are targeted at the upper end of
salaries for similar positions at the survey companies, however, individual
salaries are capped at $1 million.

Bonus awards for PepsiCo's CEO and executive officers are paid based
on PepsiCo's overall performance against specified earnings targets set in
advance in accordance with the shareholder approved 1994 Executive
Incentive Compensation Plan. The amount of the award an executive is
eligible to receive will increase if higher earnings per share targets are
achieved. No payment will be made if the minimum earnings target is not
met. Once those earnings targets are

<PAGE> 7

achieved, the Committee exercises its discretion to determine the exact
amount of the bonus to be paid to each executive officer. In determining
the bonus of executive officers other than the CEO, the Committee considers
PepsiCo's performance as well as subjective personal factors such as quality
of strategic plans, organizational and management development and special
project or idea leadership. The CEO's bonus is based on the Committee's
subjective assessment of a broad range of performance measures, including
PepsiCo's financial results, strategic position, market share and performance
compared to the broad range of major companies included in the survey
companies.

Long-term awards, made under the shareholder approved 1994 Long-Term
Incentive Plan, have generally been granted every other year in the form of
performance units and stock options. Performance units are paid after four
years based on achieving earnings per share growth targets set in advance
by the Committee. Stock options are granted at market value on the date of
grant and increase in value only to the extent of appreciation in PepsiCo's
Capital Stock. Most become exercisable at the end of four years, and are
exercisable thereafter for six years. PepsiCo's CEO and other executive
officers are given the opportunity to choose the mix of performance units
and stock options in their long-term awards. The CEO and most executives
have elected 100% stock options.

Performance Evaluation

The Committee meets without the CEO to evaluate his performance, and
with the CEO to evaluate the performance of other executive officers. The
1994 salaries, bonuses and long-term incentive awards for the corporation's
CEO and executive officers set forth on page 9 were reviewed and approved
at meetings of the Compensation Committee held in January 1994 and January
1995.

Decisions on senior executive officers' salaries and salary increases
were based on individual performance evaluations. As described above,
decisions on senior executive officers' bonus awards were based on
PepsiCo's performance against established earnings targets and on
individual performance. Last year PepsiCo exceeded the minimum earnings
targets.

The CEO's 1994 salary was capped at $1 million. The primary
performance measures used to determine the CEO's 1994 bonus award were
earnings results, the strength of PepsiCo's strategic position and its five-
year earnings per share growth and total return to shareholders as compared
to the survey companies. With respect to earnings per share growth and
total shareholder return, PepsiCo ranked in the top one-third of the survey
companies. The overall performance measures were not assigned specific
weights, but rather were weighted subjectively by each member of the
Compensation Committee. PepsiCo's fiscal 1994 earnings per share growth
(adjusted for unusual items) was 10%.

Long-term incentive awards were made to the executive officers last
year. Long-term incentive levels for PepsiCo's CEO and other executive
officers are based on comparisons of award levels at the survey companies.
These long-term awards, which are intended as incentives for future
performance and are not based on past corporate performance, are targeted
at the upper end of awards for similar positions at the survey companies.

The Performance Graph on page 8 compares PepsiCo's five year
cumulative total return to the Standard & Poor's 500 Stock Index and the
Standard & Poor's 500 Beverage, Food and

Restaurant Indices. PepsiCo's compounded annual total shareholder return
for the five years ended December 31, 1994 was 13%.

COMPENSATION COMMITTEE:

JOHN F. AKERS ROGER B. SMITH
ROBERT E. ALLEN ROBERT H. STEWART, III
JOHN J. MURPHY FRANKLIN A. THOMAS
ANDRALL E. PEARSON P. ROY VAGELOS
SHARON PERCY ROCKEFELLER ARNOLD R. WEBER

Compensation Committee Interlocks and Insider Participation. Andrall
E. Pearson, who serves as a member of the Compensation Committee, was
PepsiCo's President and Chief Operating Officer until 1984.

Performance Graph

Set forth below is a graph showing the five-year cumulative total
return of PepsiCo Capital Stock as compared with Standard & Poor's 500
Stock Index and the weighted average of Standard & Poor's 500 Beverage
(Soft Drink), Food and Restaurant Indices. The information presented is
based on a calendar year, and the composite index is weighted based on 1994
sales.
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
PEPSICO $100 $124 $164 $204 $204 $184
S&P AVG. OF 3 IND. GRPS. $100 $105 $155 $175 $185 $195
S&P 500 $100 $ 97 $126 $136 $150 $152
</TABLE>

<PAGE> 9
<TABLE>
Summary Compensation Table
<CAPTION>
Long-Term
Annual Compensation Compensation
----------------------------------------- -------------------------
Awards Payouts
-------------------------

Other Securities Long-Term
Annual Underlying Incentive All Other
Name and Principal Compensa- Options Plan Compensa-
Position Year Salary ($) Bonus ($) tion ($) (#) Payouts($) tion ($)(1)
- ----------------------- ----- ---------- --------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
D. Wayne Calloway
Chairman of the 1994 968,269 1,975,000 120,786(2) 359,276 0 3,416
Board and Chief 1993 1,191,154 1,700,000 91,340(2) 5,423 0 3,830
Executive Officer 1992 1,093,077 1,200,000 75,584(2) 393,050 0 4,224

Robert G. Dettmer
Executive Vice 1994 482,808 347,355 19,373 120,532 0 225,797(3)
President and Chief 1993 445,769 302,200 13,210 1,861 0 121,193(3)
Financial Officer 1992 420,769 332,800 6,971 131,900 0 90,969(3)

Roger A. Enrico
Vice Chairman of the 1994 735,404 611,730 79,754(2) 52,273 1,340,036(4) 2,823
Board; Chairman, 1993 678,077 543,200 10,817 2,692 0 2,986
PepsiCo Worldwide 1992 621,538 595,200 3,828 55,791 0 3,131
Restaurants

Robert L. Carleton
Senior Vice 1994 297,050 188,410 10,761 66,705 0 0
President and 1993 270,977 163,740 9,732 1,003 0 0
Controller 1992 250,769 160,990 5,537 55,694 0 0

Edward V. Lahey, Jr.
Senior Vice 1994 370,692 229,950 10,362 86,819 0 1,827
President, General 1993 335,769 210,800 10,142 1,304 0 1,994
Counsel and 1992 310,769 223,500 5,329 94,793 0 2,155
Secretary

</TABLE>
_____________

(1) The amounts indicated for each named executive officer include a
portion of the annual cost of life insurance policies on the lives of its
key employees paid by PepsiCo. PepsiCo is reimbursed for its payments from
the proceeds of the policy in the event a covered employee dies while
employed by PepsiCo.
(2) Included in this amount are benefits from the use of corporate
transportation ($79,257 in 1994, $51,557 in 1993 and $42,888 in 1992 for
Mr. Calloway; $42,757 in 1994 for Mr. Enrico).
(3) Of the $225,797 in 1994, $3,823 is for life insurance (see (1))
and $221,974 is preferential earnings on income deferred by Mr. Dettmer
since 1978. In order to earn a preferential return, Mr. Dettmer elected a
risk feature under which, if he terminated his employment, he would forfeit
all his deferred income. In 1993, $121,193 represents $4,495 for life
insurance and $116,698 for preferential earnings on income and in 1992,
$90,969 represents $5,098 for life insurance and $85,871 for preferential
earnings. Earnings for 1994 on Mr. Dettmer's deferred income were for five
quarters.
(4) Payment of this amount has been deferred by Mr. Enrico. The
amount vested as a result of PepsiCo's achievement of a 10% cumulative
earnings per share growth target over a four-year period.

<PAGE> 10
<TABLE>
Option Grants in Last Fiscal Year
<CAPTION>

Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation for
Individual Grants Ten-Year Option Term
---------------------------------------------- -------------------------------

Number of
Securities % of Total
Under- Options
lying Granted to Exercise
Options Employees or Base
Granted in Fiscal Price Expiration
Name (#) Year (1) ($/Sh) Date 5% ($)(2) 10% ($)(2)
- -------------------- ------------ ----------- -------- ---------- -------------- -------------

<S> <C> <C> <C> <C> <C> <C>
D. Wayne Calloway 7,776(3) .056 30.75 6/30/04 150,376 381,083
351,500(4) 2.547 40.00 1/27/04 8,842,258 22,408,019

Robert G. Dettmer 2,532(3) .018 30.75 6/30/04 48,965 124,087
118,000(4) .855 40.00 1/27/04 2,968,383 7,522,464

Roger A. Enrico 4,148(3) .030 30.75 6/30/04 80,216 203,283
48,125(4) .349 40.00 1/27/04 1,210,622 3,067,954

Robert L. Carleton 1,405(3) .010 30.75 6/30/04 27,171 68,856
60,500(4) .438 40.00 1/27/04 1,521,925 3,856,857
4,800(5) .035 41.6875 1/23/02 125,842 318,908

Edward V. Lahey, Jr. 1,819(3) .013 30.75 6/30/04 35,177 89,145
85,000(4) .616 40.00 1/27/04 2,138,242 5,418,724

All PepsiCo 30.75 15.28 billion (6) 38.71 billion(6)
Shareholders - - 40.00 - 19.87 billion (6) 50.36 billion(6)

</TABLE>

_______________

(1) Does not include approximately 11,633,000 options granted to
approximately 128,000 employees under PepsiCo's SharePower Stock Option
Plan.

(2) The 5% and 10% rates of appreciation were set by the SEC and are
not intended to forecast future appreciation, if any, of PepsiCo's stock.
If PepsiCo's stock does not increase in value, then the option grants
described in the table will be valueless.

(3) Twenty percent of these options becomes exercisable one year
after the grant date, July 1, 1994, and an additional twenty percent
becomes exercisable each year thereafter.

(4) These options become exercisable on February 1, 1998.

(5) These options become exercisable on February 1, 1996.

(6) These amounts do not include dividends and are based on the
number of shares of PepsiCo Capital Stock outstanding on December 31, 1994.

<PAGE> 11
<TABLE>
Aggregated Option Exercises in Last Fiscal Year
and FY-End Option Values

<CAPTION>
Shares Ac-
quired on- Number of Securities Under-
Exercise Value lying Unexercised Options at Value of Unexercised In-the-
Name (#) Realized FY-End Money Options at FY-End (1)
- ------------------ ---------- -------- ---------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
Exercisable Unexercisable Exercisable Unexercisable
------------ ------------- ------------ -------------

D. Wayne Calloway 0 0 1,822,222 1,507,603 $42,940,918 $21,677,868

Robert G. Dettmer 0 0 390,626 254,381 8,506,468 455,661

Roger A. Enrico 0 0 491,524 635,865 11,911,840 14,440,142

Robert L. Carleton 168,576 $4,202,799 3,857 123,467 45,269 194,928

Edward V. Lahey, 0 0 265,985 182,997 5,788,980 327,487
Jr.
</TABLE>
__________

(1) The closing price of PepsiCo Capital Stock on December 30, 1994,
the last trading day prior to PepsiCo's fiscal year end, was $36.25.

<TABLE>

Long-Term Incentive Plans -- Awards in Last Fiscal Year
<CAPTION>
Estimated Future Payouts under
Non-Stock Price-Based Plans
---------------------------------------

Number of Period Until
Performance Maturation or Maximum
Name Units Payout Threshold (1) Target (1) (1)
- -------------- ----------- ------------ ------------- ----------- ---------

<S> <C> <C> <C> <C> <C>
Roger A. Enrico 48,125 4 years $481,250 $1,925,000 $1,925,000

</TABLE>
__________

(1) The target payout is based on 10% Cumulative Earnings per Share
Growth ("CE/SG") for the years ended 1994 through 1997. In the event that
the Corporation achieves 9% CE/SG, the participant receives 75% of the
target, 8% CE/SG results in a 50% payment, 7% CE/SG results in a 25%
payment and below 7% CE/SG would result in $0 payout.

<PAGE> 12
<TABLE>
Pension Plan Table

The following table sets forth the approximate annual benefits payable
upon normal retirement at age 65 after January 1, 1995 for the following
remuneration classifications and years of service:

<CAPTION>
Remuneration Years of Service
-------------------------------------------------------------------
20 25 30 35 40
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
$250,000 105,310 109,600 121,520 133,440 145,940
$500,000 217,810 222,100 246,520 270,940 295,940
$750,000 330,310 334,600 371,520 408,440 445,940
$1,000,000 442,810 447,100 496,520 545,940 595,940
$1,250,000 555,310 559,600 621,520 683,440 745,940
$1,500,000 667,810 672,100 746,520 820,940 895,940
$1,750,000 780,310 784,600 871,520 958,440 1,045,940
$2,000,000 892,810 897,100 996,520 1,095,940 1,195,940
$2,250,000 1,005,310 1,009,600 1,121,520 1,233,440 1,345,940
$2,500,000 1,117,810 1,122,100 1,246,520 1,370,940 1,495,940
$2,750,000 1,230,310 1,234,600 1,371,520 1,508,440 1,645,940
$3,000,000 1,342,810 1,347,100 1,496,520 1,645,940 1,795,940
$3,250,000 1,455,310 1,459,600 1,621,520 1,783,440 1,945,940
$3,500,000 1,567,810 1,572,100 1,746,520 1,920,940 2,095,940

</TABLE>

The compensation covered by the Pension Plans (as defined below) is
based on the combined amounts set forth under the headings "Salary" and
"Bonus" of the Summary Compensation Table for each of the above-named
executive officers. The years of credited service as of January 1, 1995
for the executive officers named on the Summary Compensation Table are as
follows: D. Wayne Calloway -- 28 years; Robert G. Dettmer -- 22 years;
Roger A. Enrico -- 23 years; Robert L. Carleton -- 20 years and Edward V.
Lahey, Jr. -- 29 years.

Computation of Benefits. PepsiCo's executive officers are
participants in PepsiCo's Retirement Plan and PepsiCo's Pension
Equalization Plan (which was adopted in 1975 to provide those benefits
otherwise payable under the Retirement Plan but for ERISA limitations).
Such Plans are hereinafter referred to as the "Pension Plans." Annual
benefits payable under the Pension Plans to employees with 5 or more years
of service at age 65 are, for the first 10 years of credited service, 30%
of the employee's highest consecutive five-year average annual earnings
plus an additional 1% of the employee's highest consecutive five-year
average annual earnings for each additional year of credited service over
10 years, less .43% of final average earnings not to exceed Social Security
covered compensation multiplied by years of service (not to exceed 35
years).

<PAGE> 13

APPROVAL OF AUDITORS (PROXY ITEM NO. 2)

The Audit Committee has recommended that KPMG Peat Marwick continue as
PepsiCo's independent auditors for 1995. They have served as PepsiCo's
independent auditors since 1990. They have been paid approximately $8.8
million for audit and audit-related services rendered for 1994.
Representatives of KPMG Peat Marwick will be available to answer questions
at the Annual Meeting and are free to make statements during the course of
the meeting.

The Board of Directors recommends that shareholders vote FOR this
resolution.

SHAREHOLDERS' PROPOSALS

Where proposals were submitted by more than one shareholder, PepsiCo
will only list the primary filer's name, address and number of shares held.
Information regarding co-filers will be furnished to any person, orally or
in writing as requested, promptly upon the receipt of any oral or written
request therefor.

Political Non-Partisanship (Proxy Item No. 3)

Mrs. Evelyn Y. Davis, of the Watergate Office Building, 2600 Virginia
Avenue, N.W., Washington, D.C. 20037, who owns 450 shares of PepsiCo
Capital Stock, has advised PepsiCo that she intends to introduce from the
floor the following resolution for the reasons stated:

"RESOLVED: That the stockholders of PepsiCo assembled in Annual
Meeting in person and by proxy, hereby recommend that the Corporation
affirm its political non-partisanship. To this end the following practices
are to be avoided:

(a) The handing of contribution cards of a single political party to
an employee by a supervisor.

(b) Requesting an employee to send a political contribution to an
individual in the Corporation for a subsequent delivery as part of a group
of contributions to a political party or fund raising committee.

(c) Requesting an employee to issue personal checks blank as to payee
for subsequent forwarding to a political party, committee or candidate.

(d) Using supervisory meetings to announce that contribution cards of
one party are available and that anyone desiring cards of a different party
will be supplied on request to his supervisor.

(e) Placing a preponderance of contribution cards of one party at
mail station locations.

Reasons: The Corporation must deal with a great number of
governmental units, commissions and agencies. It should maintain
scrupulous political neutrality to avoid embarrassing entanglements
detrimental to its business. Above all, it must avoid the appearance of
coercion in encouraging its employees to make political contributions
against

<PAGE> 14

their personal inclinations. The Troy (Ohio) News has condemned
partisan solicitation for political purposes by managers in a local company
(not PepsiCo).

If you AGREE, please mark your proxy FOR this proposal."

BOARD OF DIRECTORS' RESPONSE: PepsiCo, like all corporations, is
subject to many federal and state laws and regulations that govern
corporate involvement in partisan political activity, and we fully comply
with these laws and regulations. Some of the enumerated practices in the
shareholder proposal are, in fact, already prohibited by either federal or
state regulations.

PepsiCo encourages its employees to participate voluntarily in civic
and community affairs. We also respect the right of each employee to
exercise lawfully his or her constitutional right to participate
independently in the political process.

PepsiCo's policies, together with federal and state laws and
regulations, are more than sufficient to meet the concern raised by this
proposal.

The Board of Directors recommends that shareholders vote AGAINST this
resolution.

Cumulative Voting (Proxy Item No. 4)

John J. Gilbert, who owns 768 shares of PepsiCo Capital Stock, and
John J. Gilbert and/or Margaret R. Gilbert, 29 East 64th Street, New York,
New York 10021-7943, co-trustees of 3,800 shares of PepsiCo Capital Stock
under the will of Caston J. Gilbert, have advised PepsiCo of their
intention to introduce from the floor the following resolution for the
reasons stated:

"RESOLVED: That the stockholders of PepsiCo, Inc., assembled in
annual meeting in person and by proxy, hereby request the Board of
Directors to take the steps necessary to provide for cumulative voting in
the election of directors, which means each stockholder shall be entitled
to as many votes as shall equal the number of shares he or she owns
multiplied by the number of directors to be elected, and he or she may cast
all of such votes for a single candidate, or any two or more of them as he
or she may see fit.

Reasons: Continued strong support along the lines we suggest were
shown at the last annual meeting when 22%, 10,276 owners of 116,524,000
shares, were cast in favor of this proposal. The vote against included
14,331 unmarked proxies.

A law enacted in California provides that all state pension holdings
and state college funds invested in shares must be voted in favor of
cumulative voting proposals, showing increasing recognition of the
importance of this democratic means of electing directors.

The National Bank Act provides for cumulative voting. Unfortunately,
in many cases companies get around it by forming holding companies without
cumulative voting. Banking authorities have the right to question the
capability of directors to be on banking boards. Unfortunately, in many
cases authorities come in after and say the director or directors were not
qualified. We were delighted to see that the SEC has finally taken action
to prevent bad directors from being on the boards of public companies.

<PAGE> 15

We think cumulative voting is the answer to find new directors for
various committees. Additionally, some recommendations have been made to
carry out the Valdez 10 points. The 11th should be having cumulative
voting and ending stagger systems of electing directors, in our opinion.

When Alaska became a state it took away cumulative voting over our
objections. The Valdez oil spill might have been prevented if
environmental directors were elected through cumulative voting. Also, the
huge derivative losses might have been prevented with cumulative voting.

Many successful corporations have cumulative voting. For example,
Pennzoil having cumulative voting defeated Texaco in that famous case.
Another example is Ingersoll-Rand, which has cumulative voting and won two
awards. In FORTUNE magazine it was ranked second as 'America's Most
Admired Corporations' and the WALL STREET TRANSCRIPT noted 'on almost any
criteria used to evaluate management, Ingersoll-Rand excels.' In 1994 they
raised their dividend. We believe PepsiCo should follow their example.

If you agree, please mark your proxy for this resolution; otherwise it
is automatically cast against it, unless you have marked to abstain."

BOARD OF DIRECTORS' RESPONSE: Resolutions with regard to cumulative
voting submitted by these shareholders at previous annual meetings have
been soundly defeated. The present system of voting for the election of
directors, under which the holders of a majority of the shares elect a
Board representing all shareholders, has served well and avoids the
conflict created where a director is elected by a narrow constituency.

The Board of Directors recommends that shareholders vote AGAINST this
resolution.

Smokefree Restaurants (Proxy Item No. 5)

The Dominican Sisters of Caldwell, Mount Saint Dominic, Caldwell, New
Jersey 07006, who own 3,500 shares of PepsiCo Capital Stock, have, along
with other religious institutions, submitted the following resolution for
the reasons stated:

"WHEREAS--the EPA says exposure to environmental tobacco smoke
(ETS) causes cancer in exposed healthy nonsmokers. The U.S. Public Health
Service, National Academy of Sciences, National Cancer Institute, National
Institute for Occupational Safety and Health, World Health Organization,
American Medical Association and American Cancer Society agree.

-- The effect of ETS on children annually causes 150,000 - 300,000
lower respiratory infections (LRI), 7,500 - 15,000 hospitalizations for
LRI, 400,000 - 1,000,000 attacks of asthma, 8,000 - 26,000 new cases of
asthma, respiratory symptoms of irritation, middle ear effusion, and
significant reduction in lung functions.

-- Millions of children visit our facilities. In doing so they are
often involuntarily exposed to ETS. The Texas Attorney General has sued
five fast-food restaurant chains, charging them with jeopardizing
customers' and employees' health.

<PAGE> 16

-- For restaurant workers like waiters and bartenders, the risk of
getting lung cancer is 50% higher than the risk for others (The Journal of
the American Medical Association). 'Restaurant waiters had about 1.5 times
as great a likelihood of developing lung cancer as the general public' (The
New York Times 7/28/93).

-- Research also shows that employee and patron smoking costs money
in the form of higher health insurance premiums, cleaning costs, fire, and
fire insurance.

-- Failure to provide a safe eating environment may put our Company
at risk of being sued by nonsmoking employees, patrons, and/or the parents
of children who develop health problems from ETS exposure.

-- In 1994 McDonalds became smokefree in all its company-owned
facilities, joining other large chains such as Arbys and Taco Bell.

It has been noted that smokefree restaurants have not suffered
adverse financial affects from their decision.

RESOLVED that shareholders request the Board of Directors to
adopt a policy making all our restaurants smokefree by 1996. We request
the policy include stipulations that, beginning in 1996, all new
franchisees' facilities be smokefree and all renewals of franchise
agreements include smokefree facilities in the agreements.

Supporting Statement. To the knowledge of this resolution's
proponents, our Company has no smokefree policy covering all its facilities
and franchisees. Yet data shows children and workers are liable to be
victims of ETS inhaled in those restaurants. As for children's risk, John
Banshaf, Executive Director of Action on Smoking and Health, says this
'demands immediate action to protect the most vulnerable and helpless
nonsmokers: millions of infants, toddlers, and other young children.' As
for workers, The Milwaukee Journal editorialized (7/1/93) regarding smoking
bans in restaurants: 'Some courageous establishments have already done
that, while others, fearing the loss of patrons, have hesitated. . . .It's
true that many smokers find it hard to break the link between food, drink
and smoke. Yet the study provides all the more reason for proprietors of
such places to insist on the break. It's hardly fair for smokers to
endanger the health of workers for the sake of a few puffs.'

If you agree, please vote 'yes.'"

BOARD OF DIRECTORS' RESPONSE: Several thousand of our restaurants are
completely smoke-free and many others provide nonsmoking areas for patrons.
All of our restaurants prohibit smoking in the kitchens and smoking by
employees while on duty and all of our restaurants follow local, state and
federal non-smoking regulations. In addition, PepsiCo's corporate
headquarters is smoke-free and all of PepsiCo's divisions ban smoking in
their headquarters.

PepsiCo's restaurants have taken a very responsive approach on this
public policy issue. After it determined a large majority of its customers
preferred a smoke-free environment, Taco Bell not only made all of its
company-owned restaurants smoke-free, but has urged its franchisees to do
the same.

In today's competitive quick service environment, where consumers have
many restaurant choices, a flat ban on smoking that targets only our
restaurants puts us at a competitive

<PAGE> 17

disadvantage. That is why Taco Bell, KFC and Pizza Hut joined with other
members of The National Council of Chain Restaurants in publicly endorsing
federal legislation that would prohibit or restrict smoking in all public
facilities. This would put all restaurants, ours and everyone else's, on an
equal footing where we can compete on the basis of our value, quality and
service.

The Board of Directors recommends that shareholders vote AGAINST this
resolution.

Code of Conduct (Proxy Item No. 6)

The Maryknoll Fathers and Brothers, P.O. Box 306, Maryknoll, New York
10545-0306, who own 300 shares of PepsiCo Capital Stock, have, along with
one other shareholder, submitted the following resolution for the reasons
stated:

"WHEREAS PepsiCo's Code of Conduct functions as the company's
statement of policy for worldwide business conduct. In it, PepsiCo
promotes:

-- adherence to the highest standards of personal and
professional integrity and to avoid any situation that might reflect
unfavorably on us . . . as a Company;

-- precedence of ethical standards;

-- achievement of equality of opportunity for all employees;

-- 'fostering economic growth [which] strengthens both
understanding and peace;'

-- protecting the environment and 'maintaining open and
constructive communication with local community and business leaders in
order to bring to fruition mutually acceptable objectives;'

-- stating 'its position on issues of national and international
importance which may have an impact upon it or its operations throughout
the world.'

We commend PepsiCo for creating such forward looking guidelines.
However, we believe these guidelines fall short in vitally important areas
and that, in fact, PepsiCo's international conduct, at times, is in direct
conflict with the company's own guidelines.

For example, take the case of PepsiCo's expanding involvement in
the police state of Burma, one of the world's most repressive countries, as
confirmed by Amnesty International and the U.S. State Department. Many
human rights groups believe PepsiCo's controversial business operations
under the illegitimate military junta in fact hurts our reputation more
than it builds respect in the world community. Furthermore, a clear case
can be made that PepsiCo's Burma involvement strengthens the repressive
military government through the payment of tax dollars, providing
legitimacy to an ostracized government by investing there and portraying
the country in a positive light which helps counter international
criticism. We believe, this conflicts with our company's pledge to
strengthen understanding and peace. In fact, Pepsi has done a special
report on its Burma operations which, we believe, acts as an apology for
Pepsi's involvement.

<PAGE> 18

But Burma is only one example. PepsiCo also does business in
other countries with controversial human rights records: Indonesia, China,
Guatemala, Saudi Arabia, Turkey and Thailand.

Thus, we believe the PepsiCo Code needs significant expansion.
Entirely absent from the present Code is clear human rights criteria. For
example, Levi Strauss, in its Guidelines for Country Selection, states:
'We should not initiate or renew contractual relationships in countries
where there are pervasive violations of human rights.' Other companies,
such as Reebok and Phillips-Van Heusen, make commitments in their codes to
honor human rights.

RESOLVED the shareholders request the Board of Directors to
review and update the PepsiCo Code of Conduct and report their revisions to
shareholders and employees by September 1995. In its review, the Board
shall include a section advising PepsiCo on making decisions on investing
in or withdrawing from countries where there is a pattern of on-going and
systematic violation of human rights, where a government is illegitimate or
where there is a call by human rights advocates, pro-democracy
organizations or legitimately elected representatives for economic
sanctions against their country.

Supporting Statement. We believe our company policy has a major
loophole that needs to be addressed as it does business internationally.
This resolution urges our Directors to take leadership and add to our
Code."

BOARD OF DIRECTORS' RESPONSE: In 1994, PepsiCo revised its Worldwide
Code of Conduct. The Code, which promotes the highest standards of ethics
and integrity as it relates to our international business practices,
states: "Our objective is to be nonpolitical and to continue to be a good
corporate citizen wherever we operate." We believe this is the best way to
operate a worldwide business and firmly believe international commerce
strengthens both understanding and peace.

We do not agree with the actions of governments of every place we
operate. However, due to the long-term nature of PepsiCo's businesses and
the inevitability of political and social change, we long ago concluded
that it is neither prudent nor appropriate for us to establish our own
country-by-country foreign policy. Instead, we rely on the laws and
foreign policy created by the U.S. government. The filers' proposal would
put PepsiCo in the untenable position of having to assess and respond to
any number of political and ideological disagreements which may arise
wherever we do business.

The Board of Directors recommends that shareholders vote AGAINST this
resolution.

Position on Health Care Reform (Proxy Item No. 7)

The National Electrical Benefit Fund, 1125 15th Street, N.W.,
Washington, D.C. 20005, which holds 97,600 shares of PepsiCo Capital Stock,
submitted the following resolution for the reasons stated:

"RESOLVED: That the shareholders of PepsiCo, Inc. ("Company")
urge our board of directors to examine the Company's position on the
important public policy issue of national health care reform. From this
examination, the board of directors will produce a written report that
describes how the public policy positions our Company is advocating on
national health

<PAGE> 19

care reform will effect the economic, social and personal welfare of our
Company's shareholders, workers, customers, suppliers, the communities in
which we do business, and the nation as a whole. The report shall also
disclose the scope and the cost of the Company's national health care
reform advocacy activities since 1991.

The report shall exclude any proprietary information, be prepared
at reasonable cost, not impose an undue burden on company employees, and be
available to shareholders within six months after the 1995 annual meeting
of shareholders.

Supporting Statement. National health care reform has been the
pre-eminent public policy issue over the past four years. Today's health
care system has produced 50 million Americans with inadequate insurance and
37 million Americans with no insurance at all. The inability of the
current health care system to provide universal coverage has produced great
personal hardships, billions of dollars per year in uncompensated care, and
an upward cost spiral that threatens the competitiveness and profitability
of our Company and many other American businesses.

PepsiCo's management has decided to publicly participate in the
national health care debate. PepsiCo is a member of the steering committee
of HEAL -- the Health Care Equity Action League. HEAL's public policy
positions include:

- the creation of a standard benefits package by the Federal
government, 'in consultation with states, localities, businesses, labor,
insurers and providers.'

- the taxation of employee health care benefits that exceed
'the cost of a standard health care benefit package when it is established'
as a way to control health care costs.

- opposition to employer mandates, payroll taxes to finance
health care premiums, and government price controls.

PepsiCo's health care reform proposal is highly controversial.
Particularly, attempting to control costs through the taxation of employee
health benefits. Such a policy could create a large tax burden for our
Company's employees, customers, and working families in America.

We strongly believe that prior to getting our Company involved in
a politically contentious, ideologically charged national public policy
debate, such as health care reform, our Company's board of directors has a
responsibility to examine the impact of the various national health care
reform proposals on our Company's shareholders, workers, and other
corporate constituencies and disclose those findings to shareholders. We
believe thorough analysis and timely disclosure prior to entering into
public policy debates helps insure that our Company acts responsibly."

BOARD OF DIRECTORS' RESPONSE: The Company's health care reform
position was determined after careful examination of the issues and review
with our Board of Directors. The Company's position was summarized for
shareholders in PepsiCo's 1993 Annual Report as follows:

"PepsiCo supports specific reforms that expand access to healthcare,
reform the insurance market for small employers and individuals, and
promote consumer education. PepsiCo is

<PAGE> 20

opposed to proposals that replace the competitive marketplace with a
government-run healthcare system and employer mandates."

Like most large companies, PepsiCo belongs to a number of trade
associations, many of which took positions on the health debate. Because
no single association completely represented PepsiCo's point of view, the
Company elaborated on its position in public testimony before Congress,
which included a discussion of the economic impact of national healthcare
reform proposals on the Company, its shareholders, employees, and customers
and the communities in which it does business. All of this is available to
the public and in fact was covered by the media. In addition, the Company
has reported its lobbying expenses, in accordance with the law, and these
reports are also publicly available.

Because our position has been carefully considered and has been made
available to the public, the Company does not see any reason to endorse the
proponent's resolution. The Company's position is quite mainstream and we
are pleased to note that the key elements of our basic position enjoy
bipartisan support.

The Board of Directors recommends that shareholders vote AGAINST this
resolution.

OTHER MATTERS

The Board of Directors knows of no other matters to be brought before
the Meeting. If matters other than the foregoing should arise at the
Meeting, it is intended that the shares represented by proxies will be
voted in accordance with the judgment of the persons named in the proxy.

CONFIDENTIAL VOTING

PepsiCo's policy is that proxies identifying individual shareholders
are private except as necessary to determine compliance with law or assert
or defend legal claims, or in a contested proxy solicitation, or in the
event that a shareholder makes a written comment on a proxy card or an
attachment to it. PepsiCo retains an independent organization to tabulate
shareholder votes and certify voting results.

1996 SHAREHOLDERS' PROPOSALS

PepsiCo welcomes comments or suggestions from its shareholders,
including any recommendations shareholders may have as to future directors
of the Company. In the event that a shareholder desires to have a proposal
formally considered at the 1996 Annual Shareholders' Meeting, and included
in the Proxy Statement for that Meeting, the proposal must be received in
writing by PepsiCo on or before November 25, 1995.

GENERAL

The costs relating to this Proxy Statement, the proxy and the Annual
Meeting are being borne by PepsiCo.

<PAGE> 21

In addition to the solicitation of proxies by mail, PepsiCo intends to
request brokers and bank nominees to solicit proxies from their principals
and will pay such brokers and bank nominees their expenses in that
connection.

To assure the presence in person or by proxy of the necessary quorum
for holding the meeting, PepsiCo has employed the firm of Georgeson &
Company, Inc. to assist in soliciting proxies by mail, telephone, telegraph
and personal interview for fees estimated at approximately $21,000.

In addition, employees of PepsiCo (none of whom will receive any
additional compensation therefor) may solicit proxies.

The Annual Report to Shareholders for 1994, which includes financial
statements, has been mailed with this Proxy Statement or previously
delivered to shareholders and does not form a part of the material for the
solicitation of proxies. In an effort to reduce postage costs, we have
sent materials at bulk mail rates. If, upon receipt of your proxy
material, you have not received the Annual Report, please write or call
PepsiCo's Manager of Shareholder Relations, at PepsiCo, Inc., Purchase, NY
10577 or (914) 253-3055.

Please complete, sign, and date the enclosed proxy card, which is
revocable as described herein, and mail it promptly in the enclosed postage-
paid envelope.

By order of the Board of Directors,

EDWARD V. LAHEY, JR.
Secretary

<PAGE>
APPENDIX

PEPSICO, INC.

March 28, 1995

Dear Shareholder:

Overall 1994 was a good year for PepsiCo. Sales were up 14 percent, and
earnings per share grew 10 percent, excluding unusual items.

Over the last five years, PepsiCo's earnings per share have grown at a
compounded annual rate of over 14 percent, before accounting changes.
During that time -- even with our stock performance of 1994 -- our total
return to shareholders grew at a compounded annual rate of 13 percent.
This means if all dividends were reinvested, an investment in PepsiCo at
the beginning of 1990 has nearly doubled.

As proud as we are of this record, our eye is on the future, and 1994
suggests we are well positioned to continue our tradition of strong growth.

Your proxy card is attached below. Please read the enclosed proxy
statement, then vote and return the card at your earliest convenience.

Sincerely,

WAYNE CALLOWAY

Wayne Calloway
Chairman and
Chief Executive Officer

<PAGE>

DIRECTIONS TO PEPSICO, INC. WORLD HEADQUARTERS
PURCHASE, NEW YORK

BY CAR FROM NEW YORK
WEST SIDE - MANHATTAN - BRONX
West Side Highway/Henry Hudson Parkway
to Cross County Parkway East. Take
Hutchinson River Parkway Northbound to
Exit 28 (Lincoln Avenue, Port Chester).
Left on Lincoln Avenue and proceed one
(1) mile to PepsiCo on right.
EAST SIDE - MANHATTAN
East Side Drive to Bronx via Triboro
Bridge. Take the Bruckner Expressway
(278) North to the Hutchinson River
Parkway Exit 28 (Lincoln Avenue, Port
Chester), and follow directions above.
EAST SIDE - BRONX
Hutchinson River Parkway North to Exit
28 (Lincoln Avenue, Port Chester), and
follow directions above.
[LOCAL AREA MAP IS PROVIDED BROOKLYN, QUEENS & J.F. KENNEDY AIRPORT
IN PRINTED PROXY STATEMENT Van Wyck Expressway (678) to the Bronx
SHOWING MAIN ROADS Whitestone Bridge to Hutchinson River
SURROUNDING PEPSICO WORLD Parkway North. Take Exit 28 (Lincoln
HEADQUARTERS IN PURCHASE, Avenue, Port Chester), and follow
NEW YORK] directions above.
LA GUARDIA AIRPORT
Grand Central Parkway East to Whitestone
Expressway Exit. Cross the Whitestone
Bridge North to Hutchinson River Parkway
North. Take Exit 28 (Lincoln Avenue,
Port Chester), and follow directions
above.
FROM LONG ISLAND
Long Island Expressway or the Grand
Central Parkway to the Cross Island
Parkway. Cross Island Parkway West to
the Throgs Neck Bridge. Cross Throgs
Neck Bridge North and travel North on
New England Thruway (Route 95) to
Hutchinson River Parkway North to Exit
28 (Lincoln Avenue, Port Chester), and
follow directions above.
FROM WEST OF HUDSON RIVER - TAPPAN ZEE
BRIDGE
Cross Tappan Zee Bridge South. Follow
Cross Westchester (Interstate 287) to
Exit 8E. (Route 127 Harrison,
Westchester Avenue). Stay on
Westchester Avenue and turn left onto
Anderson Hill Road. Proceed about four
(4) miles to PepsiCo on right.
FROM CONNECTICUT - MERRITT PARKWAY
Take the Merrit Parkway South, which
becomes the Hutchinson River Parkway, to
Exit 28 (Lincoln Avenue, Port Chester).
Turn right and proceed one (1) mile to
PepsiCo on right.
NEW ENGLAND THRUWAY
Follow the New England Thruway to Exit
for Cross Westchester Expressway,
Westbound. Take Exit 9 North,
Hutchinson River Parkway, to Exit 28
(Lincoln Avenue, Port Chester). Turn
left onto Lincoln Avenue and proceed one
(1) mile to PepsiCo on right.
FROM NORTHERN WESTCHESTER
Take 684 South to Westchester Airport
Exit, Route 120 South. Left on Purchase
Street to Anderson Hill Road, left on
Anderson Hill Road to PepsiCo on right.

<PAGE>
<TABLE>
<CAPTION>
V FOLD AND DETACH HERE V (See reverse side for directions)
- ------------------------------------------------------------------------------------------------------------------------------------
Please mark
/ X / votes as in
this example.

THE BOARD OF DIRECTORS RECOMMENDS A THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEMS 3, 4, 5, 6 AND 7.
VOTE FOR ITEMS 1 AND 2.
<S> <C> <C> <C> <C> <C> <C>
1. Election of Directors Nominees: FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
J.F. Akers, R.E. Allen, 3. Shareholder Proposal / / / / / / 6. Shareholder Proposal / / / / / /
D.W. Calloway, R.A. Enrico, (Proxy Statement p. 13) (Proxy Statement p. 17)
J.J. Murphy, WITHHELD
A.E. Pearson, FOR FOR ALL
S.P. Rockefeller, / / / / 4. Shareholder Proposal / / / / / / 7. Shareholder Proposal / / / / / /
R.B. Smith, (Proxy Statement p. 14) (Proxy Statement p. 18)
R.H. Stewart, III
F.A. Thomas
P.R. Vagelos, 5. Shareholder Proposal / / / / / /
A.R. Weber (Proxy Statement p. 15)

_____________________________________

WITHHELD FOR: (Write that nominee's
name above).

2. Approval of / / / / / /
Auditors FOR AGAINST ABSTAIN

WHERE NO VOTING INSTRUCTIONS ARE GIVEN, I PLAN TO ATTEND
THE SHARES REPRESENTED BY THIS PROXY MEETING \ \
WILL BE VOTED FOR ITEMS NO. 1 AND 2 If you check this
AND VOTED AGAINST ITEMS NO. 3, 4, 5, 6 box to the right an
AND 7. admission card will
be sent to you.

Receipt is hereby acknowledged of the PepsiCo Notice of Meeting and
Proxy Statement. IMPORTANT: Please sign exactly as your name or
names appear on this Proxy. Where shares are held jointly, both
holders should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give your full title as
such, if the holder is a corporation, execute in full corporate
name by authorized officer.

Signature:_____________________________ Date______________

Signature:_____________________________ Date______________
(See other side)
</TABLE>

<PAGE>

PEPSICO, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
May 3, 1995
THIS PROXY IS SOLICITED ON BEHALF OF PEPSICO'S BOARD OF DIRECTORS

The undersigned hereby appoints D. Wayne Calloway and
Edward V. Lahey, Jr., and each of them, proxies for the
undersigned, with full power of substitution, to vote all
shares of PepsiCo, Inc. Capital Stock which the undersigned may
be entitled to vote at the Annual Meeting of Shareholders of
P PepsiCo, Inc., in Purchase, New York, on Wednesday, May 3, 1995
R from 9:00 A.M. to 11:00 A.M., or at any adjournment thereof,
O upon the matters set forth on the reverse side and described in
X the accompanying Proxy Statement and upon such other business
Y as may properly come before the meeting or any adjournment
thereof.

PLEASE MARK THIS PROXY AS INDICATED ON THE REVERSE SIDE TO
VOTE ON ANY ITEM. IF YOU WISH TO VOTE IN ACCORDANCE WITH THE
BOARD OF DIRECTORS' RECOMMENDATIONS, PLEASE SIGN THE REVERSE
SIDE; NO BOXES NEED TO BE CHECKED.

(Continued and to be signed on other side)

Please mark
/ X / votes as in
this example.

_____________________________________

WITHHELD FOR: (Write that nominee's
name above).

2. Approval of / / / / / /
Auditors FOR AGAINST ABSTAIN

WHERE NO VOTING INSTRUCTIONS ARE GIVEN,
THE SHARES REPRESENTED BY THIS PROXY
WILL BE VOTED FOR ITEMS NO. 1 AND 2
AND VOTED AGAINST ITEMS NO. 3, 4, 5, 6
AND 7.

Signature:_____________________________ Date______________

Signature:_____________________________ Date______________
(See other side)
</TABLE>

<PAGE>

PEPSICO, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
May 3, 1995
THIS PROXY IS SOLICITED ON BEHALF OF PEPSICO'S BOARD OF DIRECTORS

(Continued and to be signed on other side)