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 Com-
mission 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 / No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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 (set forth the amount on which the filing fee is
calculated and state how it was determined):
- --------------------------------------------------------------------------------
(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
PepsiCo will hold its Annual Shareholders' Meeting at the headquarters
of Frito-Lay, Inc., 7701 Legacy Drive, Plano, Texas, on Wednesday, May 6, 1998,
at 1:00 P.M. Local Time, to:
0 Elect directors.
0 Approve the appointment of independent auditors.
0 Act upon three shareholder proposals described in the attached Proxy
Statement.
0 Transact any other business that may properly come before the
Meeting.
If you own shares of PepsiCo stock as of the close of business on March
13, 1998 (the Record Date), you can vote those shares by proxy or at the
Meeting.
If you plan to attend the Meeting, please check the box on your proxy
card, so that we may 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 IN THE ENCLOSED
POSTAGE-PAID ENVELOPE SO THAT YOUR SHARES WILL BE REPRESENTED. 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. ANY
SHAREHOLDER RETURNING A PROXY MAY REVOKE IT BY VOTING AT THE MEETING.
March 27, 1998 ROBERT F. SHARPE, JR.
Secretary
<PAGE>
PepsiCo, Inc.
Purchase, New York 10577-1444
March 27, 1998
PROXY STATEMENT
The Board of Directors of PepsiCo, Inc. ("PepsiCo") is soliciting
proxies to be voted at the Annual Meeting of Shareholders to be held on
Wednesday, May 6, 1998, and at any adjournment of the Meeting. We are sending
this Proxy Statement in connection with the proxy solicitation.
At March 13, 1998, the record date, there were 1,488,427,405 shares of
PepsiCo Capital Stock outstanding and entitled to one vote each at the Annual
Meeting. These shares were registered in the names of 228,686 shareholders and,
as far as we know, no person owns beneficially more than 5% of the outstanding
Capital Stock.
PepsiCo is making its first mailing of this Proxy Statement on or about
March 27, 1998.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
PROXY ITEM NO. 1 - ELECTION OF DIRECTORS............................................... 2
Ownership of Capital Stock by Directors and Executive Officers......................... 5
Board Meetings and Committees of the Board............................................. 5
Directors Compensation................................................................. 6
Executive Compensation
Compensation Committee Report................................................. 6
Summary Compensation Table.................................................... 9
Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values......10
Option Grants in Last Fiscal Year.............................................11
Performance Graph.............................................................12
Pension Plan Table............................................................12
Compliance with Exchange Act Reporting Requirements....................................13
PROXY ITEM NO. 2 - APPROVAL OF AUDITORS................................................13
PROXY ITEMS NOS. 3, 4 AND 5 - SHAREHOLDER PROPOSALS
Location of Annual Meeting....................................................13
Cumulative Voting.............................................................14
Cap Non-Performance-Based Executive Compensation..............................15
Other Matters..........................................................................16
Quorum and Voting......................................................................17
1999 Shareholders' Proposals...........................................................17
General................................................................................17
</TABLE>
<PAGE> 2
ELECTION OF DIRECTORS (PROXY ITEM NO. 1)
The Board of Directors proposes the following fourteen nominees for
election as directors at the Annual Meeting. The directors will hold office from
election until the next Annual Meeting of Shareholders, or until their
successors are elected and qualified.
- --------------------------------------------------------------------------------
[PHOTO]
JOHN F. AKERS, 63, former Chairman of the Board and Chief Executive Officer of
International Business Machines Corporation, has been a member of PepsiCo's
Board since 1991. Mr. Akers joined IBM in 1960 and was Chairman and Chief
Executive Officer from 1986 until 1993. He is also a director of Hallmark Cards,
Inc., Lehman Brothers Holdings, Inc., The New York Times Company, Springs
Industries, Inc., W.R. Grace & Co. and Zurich Insurance Company--U.S.
- --------------------------------------------------------------------------------
[PHOTO]
ROBERT E. ALLEN, 63, former Chairman of the Board and Chief Executive Officer of
AT&T Corp., has been a member of PepsiCo's Board since 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 was Chairman and Chief Executive Officer
from 1988 until 1997. He is also a director of Bristol-Myers Squibb Company and
Chrysler Corp.
- --------------------------------------------------------------------------------
[PHOTO]
WAYNE CALLOWAY, 62, Chairman of the Board of PepsiCo from 1986 to November 1996,
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, President and Chief Operating Officer in 1985, and Chief
Executive Officer in 1986, a position he held until April 1996. Mr. Calloway is
a director of Citicorp, General Electric Company and Exxon Corporation.
- --------------------------------------------------------------------------------
[PHOTO]
ROGER A. ENRICO, 53, was elected as PepsiCo's Chief Executive Officer in April,
and Chairman of the Board in November, 1996. Mr. Enrico has been a member of
PepsiCo's Board since 1987, and was elected Vice Chairman in 1993. He joined
PepsiCo in 1971, and became President and Chief Executive Officer of Pepsi-Cola
USA in 1983, 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. In addition, he was Chairman and Chief Executive Officer, PepsiCo
Worldwide Restaurants, from 1994 until the spin-off of PepsiCo's restaurant
businesses in 1997. Mr. Enrico is a member of the Board of Directors of Dayton
Hudson Corporation, the A. H. Belo Corporation and The Prudential Insurance
Company of America.
<PAGE> 3
- --------------------------------------------------------------------------------
[PHOTO]
PETER FOY, 57, Chairman of Baring Brothers International Ltd., the corporate
finance section of ING Group's investment bank, was elected to PepsiCo's Board
in July 1997. He joined McKinsey & Co., Inc. in 1968, became a director and head
of its U.K. Consumer Goods Practice in 1980, a managing director of McKinsey
U.K. in 1983, and Senior Partner from 1990 until 1996, when he assumed his
current position with Baring Brothers. Mr. Foy is also a director of ING Barings
Holdings Ltd., The Peninsular and Oriental Steam Navigation Company and Dawson
International plc.
- --------------------------------------------------------------------------------
[PHOTO]
RAY L. HUNT, 54, Chairman and Chief Executive Officer of Hunt Oil Company and
Chairman, Chief Executive Officer and President, Hunt Consolidated, Inc., was
elected to PepsiCo's Board in 1996. Mr. Hunt began his association with Hunt Oil
Company in 1958 and has held his current position since 1976. He is also a
director of Dresser Industries, Inc., Security Capital Group, Ergo Science, Inc.
and Electronic Data Systems Corporation, and a Class C Director for the Federal
Reserve Bank of Dallas.
- --------------------------------------------------------------------------------
[PHOTO]
JOHN J. MURPHY, 66, former Chairman of the Board and Chief Executive Officer of
Dresser Industries, Inc., was elected a director of PepsiCo in 1984, and is
Chairman of the Compensation Committee. Mr. Murphy joined Dresser in 1952 and
was elected its Chairman and Chief Executive Officer in 1983. Mr. Murphy served
as Chief Executive Officer until November 1995, and as Chairman until December
1996. He is also a director of Kerr-McGee Corporation, CARBO Ceramics Inc., and
W. R. Grace & Co.
- --------------------------------------------------------------------------------
[PHOTO]
STEVEN S REINEMUND, 49, is Chairman and Chief Executive Officer of the Frito-Lay
Company. He was elected a director of PepsiCo in 1996. Mr. Reinemund began his
career with PepsiCo as a senior operating officer of Pizza Hut, Inc. in 1984. He
became President and Chief Executive Officer of Pizza Hut in 1986, and President
and Chief Executive Officer of Pizza Hut Worldwide in 1991. In 1992, Mr.
Reinemund became President and Chief Executive Officer of Frito-Lay, Inc., and
assumed his current position in April 1996. He is also a director of Provident
Life & Accident Insurance Co. and Service Master Management Corporation.
- --------------------------------------------------------------------------------
[PHOTO]
SHARON PERCY ROCKEFELLER, 53, 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.
<PAGE> 4
- --------------------------------------------------------------------------------
[PHOTO]
FRANKLIN A. THOMAS, 63, was elected to PepsiCo's Board in 1994. 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. Mr. Thomas was President of the Ford Foundation from 1979 to
April 1996 and is currently a consultant to the TFF Study Group, a non-profit
organization assisting development in southern Africa. He is also a director of
ALCOA, Citicorp, Cummins Engine Company, Inc. and Lucent Technologies.
- --------------------------------------------------------------------------------
[PHOTO]
P. ROY VAGELOS, 68, retired Chairman of the Board and Chief Executive Officer of
Merck & Co., Inc., has been a member of PepsiCo's Board since 1992, and is
Chairman of the Nominating Committee. 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 1994. Dr. Vagelos is
also a director of The Estee Lauder Companies Inc., The Prudential Insurance
Company of America and Chairman of the Board of Regeneron Pharmaceuticals Inc.
- --------------------------------------------------------------------------------
[PHOTO]
KARL M. VON DER HEYDEN, 61, was elected as PepsiCo's Chief Financial Officer and
Vice Chairman of the Board in September 1996. Mr. von der Heyden was Co-Chairman
and Chief Executive Officer of RJR Nabisco from March through May 1993 and Chief
Financial Officer from 1989 to 1993. He served as President and Chief Executive
Officer of Metallgesellschaft Corp. from 1993 to 1994. Mr. von der Heyden is
also a director of Federated Department Stores, Inc.
- --------------------------------------------------------------------------------
[PHOTO]
CRAIG E. WEATHERUP, 52, was elected a director in 1996. Mr. Weatherup is
currently Chairman and Chief Executive Officer of the Pepsi-Cola Company, a
position he has held since July 1996. He joined Pepsi-Cola in 1974, and became
President of the Pepsi-Cola Bottling Group in 1986. He was appointed President
of the Pepsi-Cola Company in 1988, President and Chief Executive Officer of
Pepsi-Cola North America in 1991, and served as PepsiCo's President in 1996. Mr.
Weatherup is also a director of Federated Department Stores, Inc.
- --------------------------------------------------------------------------------
[PHOTO]
ARNOLD R. WEBER, 68, was elected to PepsiCo's Board in 1978, and is Chairman of
the Audit Committee. Dr. Weber is Chancellor of Northwestern University and was
the University's President from 1985 to 1995. He is also President of the Civic
Committee of the Commercial Club of Chicago. Dr. Weber 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 also a
director of Aon Corp., Burlington Northern, Inc., Inland Steel Company, The
Tribune Co. and Deere & Co.
- --------------------------------------------------------------------------------
<PAGE> 5
If any of these nominees for director becomes unavailable, the persons
named in the enclosed proxy intend to vote for any alternate designated by the
present Board.
OWNERSHIP OF CAPITAL STOCK BY DIRECTORS AND EXECUTIVE OFFICERS. The
following table shows, as of March 13, 1998, the shares of PepsiCo Capital Stock
beneficially owned by each director (including nominees), 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................................................. 35,150
Robert E. Allen............................................... 41,964
Wayne Calloway................................................ 5,502,732
Roger A. Enrico............................................... 1,713,933
Peter Foy..................................................... 6,142
Ray L. Hunt................................................... 10,224
John J. Murphy................................................ 36,116
Steven S Reinemund............................................ 651,251
Sharon Percy Rockefeller...................................... 69,152
Franklin A. Thomas............................................ 15,314
P. Roy Vagelos................................................ 46,860
Karl M. von der Heyden........................................ 245,260
Craig E. Weatherup............................................ 1,824,430
Arnold R. Weber............................................... 51,948
Edward V. Lahey, Jr........................................... 670,741
All directors and executive officers as a group (19 persons).. 11,445,572
- ---------------------
(1) Certain directors or executive officers share voting and
investment power over 651,251 shares of PepsiCo Capital Stock with their spouses
or children. The shares shown include 9,897,735 shares of PepsiCo Capital Stock
which certain directors and executive officers have a right to acquire within 60
days.
(2) The shares shown do not include 127,010 shares held by children or
spouses of directors or executive officers, or by trusts for the benefit of
directors or executive officers, as to which beneficial ownership is disclaimed.
The shares shown also include the following number of PepsiCo Capital Stock
equivalents, which are held in PepsiCo's deferred income program: John F. Akers,
3,188 shares; Robert E. Allen, 28,788 shares; Roger A. Enrico, 17,136 shares;
Ray L. Hunt, 3,188 shares; John J. Murphy, 8,062 shares; Franklin A. Thomas,
7,278 shares; P. Roy Vagelos, 3,188 shares; Craig E. Weatherup, 13,860 shares;
Arnold R. Weber, 4,896 shares; and all directors and executive officers as a
group, 92,109 shares.
Directors and executive officers as a group own less than 1% of
outstanding Capital Stock.
BOARD MEETINGS AND COMMITTEES OF THE BOARD. PepsiCo's Board held six
regular meetings and one telephonic meeting during the year. All outside
directors serve on the three Board Committees.
The Audit Committee, which was established in 1967, held two regular
meetings and one telephonic meeting in 1997. The Audit Committee reviews
external and internal audit plans and
<PAGE> 6
activities, the Corporation's annual financial statements, and its system of
internal financial controls. The Audit Committee 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 since 1955, held six
meetings during 1997. The Compensation Committee administers PepsiCo's incentive
plans, sets policies that govern executives' annual compensation and long-term
incentives, and reviews management performance, compensation, development and
succession.
The Nominating Committee, which was established in 1997, held one
meeting during the year. The Nominating Committee identifies candidates for
future Board membership and proposes criteria for Board candidates and
candidates to fill Board vacancies, as well as a slate of directors for election
by the shareholders at each annual meeting. The Committee annually assesses and
reports to the Board on Board and Board Committee performance and effectiveness;
reviews and makes recommendations to the Board concerning the composition, size
and structure of the Board and its Committees; and annually reviews and reports
to the Board on Directors' compensation and benefits.
Average attendance by incumbent directors at Board and Committee
meetings was approximately 98%. No incumbent director attended fewer than 75% of
the total number of Board and Committee meetings.
DIRECTORS' COMPENSATION. Directors who are employees receive no
additional pay for serving as directors. All other directors receive annual
retainers of $70,000 and an annual grant of options to buy $120,000 worth of
PepsiCo Capital Stock. Directors may convert up to $90,000 of their option grant
into PepsiCo Capital Stock at a ratio of three options for one share. Directors
may also 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 in cash. Deferrals may not be made for less than one year.
PepsiCo paid Wayne Calloway a salary of $500,000 during 1997 for
consulting and other nonexecutive services and he was awarded a bonus of
$1,500,000. Mr. Calloway also received a one-time payment of $2,000,000,
recognizing his outstanding contributions to PepsiCo over a 30-year career. Mr.
Calloway is a Director, and was PepsiCo's Chief Executive Officer until April
1996, and its Chairman until November 1996.
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
<PAGE> 7
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 12.
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 with a long-term history of strong
sales growth and 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 earnings and cash flow 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 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 earnings and cash 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 companies included in the survey
companies.
Long-term awards, made under the shareholder approved 1994 Long-Term
Incentive Plan (the "LTIP"), have generally been granted every other year in the
form of performance units and stock options. Pro rata and special awards have
been made off-cycle to participants who are promoted or newly hired. 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, in
general, 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.
PepsiCo's executives may also participate in the Company's benefit
programs, including the Company's retirement plans, its medical, savings and
other benefit plans and its SharePower Stock Option Plan, under which all
full-time employees receive grants of options to purchase shares of PepsiCo
stock equal in amount to 10% of that individual's previous year's salary and
bonus. Executive
<PAGE> 8
officers receive their annual SharePower awards under the LTIP. In addition,
executives are eligible to participate in the Company's income deferral
programs.
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 1997
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 during 1997 and in January 1998.
In November 1997, at Mr. Enrico's request, the Committee approved a
reduction in Mr. Enrico's annual salary from $900,000 to $1, and recommended to
the Board of Directors that it consider using the savings to support front line
employees. In January 1998, the Board approved annual charitable contributions
of approximately $1,000,000 to fund additional scholarships for children of
PepsiCo's front line employees.
Decisions on 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 earnings and cash flow results and on individual performance.
The primary performance measures used to determine the CEO's 1997 bonus
award were earnings and cash flow results, the strength of PepsiCo's strategic
position, spin-off of PepsiCo's restaurant businesses, and its five-year
earnings per share growth and total return to shareholders as compared to 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 1997 earnings per share (before one
time charges) increased 20%.
Long-term incentive awards were not granted in 1997 to the executive
officers except Mr. von der Heyden, who received an option grant in connection
with the extension of his employment period with PepsiCo.
The Performance Graph on page 12 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. The comparisons
reflect PepsiCo's spin-off of its restaurant businesses effective October 6,
1997. PepsiCo's compounded annual total shareholder return for the five years
ended December 27, 1997 was 14.5%.
COMPENSATION COMMITTEE:
JOHN F. AKERS SHARON PERCY ROCKEFELLER
ROBERT E. ALLEN FRANKLIN A. THOMAS
PETER FOY P. ROY VAGELOS
RAY L. HUNT ARNOLD R. WEBER
JOHN J. MURPHY
<PAGE> 9
<TABLE>
Summary Compensation Table
--------------------------
<CAPTION>
Long-Term
Annual Compensation Compensation
---------------------------------------------------------------------------
Awards Payouts
--------------------------
Securities
Under-
lying Long-Term All Other
Name and Principal Salary Other Annual Options Incentive Plan Compensation
Position Year ($) Bonus ($) Compensation($) (#)(1) Payouts ($) ($)(2)
- -------------------------- ----- -------- --------- --------------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Roger A. Enrico 1997 900,000 1,800,000 106,559(3) 0 0 2,051
Director; Chairman of the 1996 880,500 1,300,000 910,408(3) 1,864,303 1,745,029(4) 2,281
Board and Chief 1995 771,539 784,690 113,885(3) 5,985 0 2,638
Executive Officer
Steven S Reinemund (5) 1997 750,000 1,044,300 8,860 0 0 0
Director; Chairman and 1996 715,769 1,053,005 7,263 1,231,116 120,940(4) 0
Chief Executive Officer, 1995 - - - - - -
Frito-Lay Company
Craig E. Weatherup (5) 1997 750,000 1,134,150 133,822(3) 0 0 15,402(6)
Director; Chairman and 1996 723,346 925,025 59,553(3) 1,169,441 0 5,789(6)
Chief Executive Officer, 1995 - - - - - -
Pepsi-Cola Company
Karl M. von der Heyden (7) 1997 550,000 855,530 0 107,630 0 0
Director; Vice Chairman and 1996 158,654 200,000 0 215,260 - 0
Chief Financial Officer 1995 - - - - - -
Edward V. Lahey, Jr. 1997 433,615 550,000 11,013 0 0 946
Senior Vice President, 1996 411,636 233,435 21,523 177,192 0 1,211
General Counsel and 1995 388,269 315,900 10,816 2,723 0 1,643
Secretary (Retired)
- ---------------
</TABLE>
(1) Options have been adjusted to reflect the spin-off of certain of
PepsiCo's restaurant businesses in October 1997.
(2) PepsiCo pays a portion of the annual cost of life insurance
policies on the lives of its key employees. These amounts are included here. If
a covered employee dies while employed by PepsiCo, PepsiCo is reimbursed for its
payments from the proceeds of the policy.
(3) This amount includes benefits from the use of corporate
transportation ($68,552 in 1997; $92,929 in 1996; and $65,612 in 1995 for Mr.
Enrico; $106,310 in 1997; and $35,435 in 1996 for Mr. Weatherup. It also
includes reimbursement of $777,311 relocation and tax related expenses incurred
by Mr. Enrico in connection with his new responsibilities as Chairman and Chief
Executive Officer in 1996).
(4) This amount vested as a result of PepsiCo's achievement of a
predetermined cumulative earnings per share growth target over a four-year
period. Mr. Enrico deferred payment of this amount.
(5) Mr. Reinemund and Mr. Weatherup were not executive officers of
PepsiCo in 1995.
<PAGE> 10
(6) Of this amount, $1,248 is for life insurance (see (2))and $14,154
is preferential earnings on income deferred by Mr. Weatherup since 1986. In
1996, these amounts were $1,471 and $4,318 respectively. In order to earn a
preferential return, Mr. Weatherup elected a risk feature under which, if he
terminated his employment, he would forfeit all his deferred income. Earnings
for 1997 on Mr. Weatherup's deferred income were for four quarters.
(7) Mr. von der Heyden began his employment with PepsiCo as Vice
Chairman and Chief Financial Officer in September 1996.
<TABLE>
Aggregated Option Exercises in Last Fiscal Year
and FY-End Option Values(1)
-----------------------------------------------
<CAPTION>
Shares Ac- Number of Securities Under-
quired on Value lying Unexercised Options at Value of Unexercised In-the-
Name Exercise(#) Realized FY-End Money Options at FY-End(2)
- --------------------- ----------- -------- ---------------------------- ----------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Roger A. Enrico 0 0 1,783,581 1,975,382 51,741,782 14,759,434
Steven S Reinemund 0 0 620,067 1,964,494 13,635,634 20,666,594
Craig E. Weatherup 293,177 8,196,329 1,381,690 2,176,067 34,577,371 30,924,693
Karl von der Heyden 0 0 215,260 107,630 1,680,272 0
Edward V. Lahey, Jr. 0 0 704,507 363,553 17,679,327 4,316,912
- ----------
(1) Options have been adjusted to reflect the spin-off of certain of
PepsiCo's restaurant businesses in October 1997.
(2) The closing price of PepsiCo Capital Stock on December 26, 1997,
the last trading day prior to PepsiCo's fiscal year end, was $34.75.
</TABLE>
<PAGE> 11
<TABLE>
Option Grants in Last Fiscal Year
---------------------------------
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation for
Individual Grants Option Term
- ------------------------------------------------------------------------------ -------------------------------------
Number of
Securities % of Total
Under- Options Exercise
lying Granted to or Base
Options Employees in Price Expiration
Name Granted (#) Fiscal Year ($/Sh) Date 5% ($)(1) 10% ($)(1)
- ----------------------- ---------- ----------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Roger A. Enrico 0 - - - - -
Steven S Reinemund 0 - - - - -
Craig E. Weatherup 0 - - - - -
Karl M. von der Heyden 107,630(2) 3.984 36.7580 9/25/07 2,488,073 6,305,265
Edward V. Lahey, Jr. 0 - - - - -
- ----------
</TABLE>
(1) 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.
(2) These options become exercisable on December 31, 1998.
<PAGE> 12
PERFORMANCE GRAPH. The graph below shows 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 peer group composite index weighting is based
on 1997 sales. For the fourth quarter of 1997, it excludes the Restaurant Index,
due to PepsiCo's spin-off of certain of its restaurant businesses effective
October 6, 1997.
CUMULATIVE TOTAL RETURN,
using quarterly revenue weightings
Dec-92 Dec-93 Dec-94 Dec-95 Dec-96 Dec-97
------ ------ ------ ------ ------ ------
PepsiCo, Inc. $100 $100 $90 $142 $151 $196
S&P 500 $100 $110 $112 $153 $189 $252
S&P Avg. of Ind. Grps. $100 $106 $113 $163 $188 $244
<TABLE>
Pension Plan Table
------------------
When an executive retires at the normal retirement age (65), the
approximate annual benefits payable after January 1, 1998 for the following pay
classifications and years of service are:
<CAPTION>
Remuneration Years of Service
------------------ -------------- --------------- -------------- --------------
25 30 35 40
-------------- --------------- -------------- --------------
<S> <C> <C> <C> <C>
$500,000 221,780 246,130 270,490 295,490
$750,000 334,280 371,130 407,990 445,490
$1,000,000 446,780 496,130 545,490 595,490
$1,250,000 559,280 621,130 682,990 745,490
$1,500,000 671,780 746,130 820,490 895,490
$1,750,000 784,280 871,130 957,990 1,045,490
$2,000,000 896,780 996,130 1,095,490 1,195,490
$2,250,000 1,009,280 1,121,130 1,232,990 1,345,490
$2,500,000 1,121,780 1,246,130 1,370,490 1,495,490
</TABLE>
<PAGE> 13
The pay covered by the Pension Plans noted below is based on the
salary and bonus shown in the Summary Compensation Table on page 9 for each of
the named executive officers. The years of credited service as of January 1,
1998 for the executive officers named on the Summary Compensation Table who are
eligible for retirement benefits are as follows: Roger A. Enrico -- 26 years;
Steven S Reinemund -- 13 years; Craig E. Weatherup -- 23 years; and Edward V.
Lahey, Jr. -- 32 years.
Computation of Benefits. PepsiCo's executive officers generally
participate in PepsiCo's Retirement Plan and PepsiCo's Pension Equalization Plan
(which was adopted in 1975 to provide benefits that would have been payable
under the Retirement Plan except for ERISA limitations). The annual benefits
payable under these two 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).
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE. Section 16 of
the Securities Exchange Act of 1934 requires PepsiCo's directors and executive
officers to file reports of ownership and changes in ownership of PepsiCo
Capital Stock. To the best of PepsiCo's knowledge, all required forms were filed
on time, except that Securities and Exchange Commission Form 3 was not filed
within the 10-day period following Sean F. Orr's appointment as PepsiCo's Senior
Vice President and Controller, and one transaction by Mr. Orr in PepsiCo Capital
Stock was not timely reported on Form 4. The omission was subsequently
discovered and reported on Form 5. Also, one transaction by a corporation, the
stock of which is held, indirectly through a series of corporations, by trusts
for the benefit of Ray L. Hunt and his family, was not timely reported on Form
4. Once discovered, the omission was reported on Form 5.
APPROVAL OF AUDITORS (PROXY ITEM NO. 2)
The Audit Committee recommends that KPMG Peat Marwick LLP continue as
PepsiCo's independent auditors for 1998. They have been PepsiCo's independent
auditors since 1990. They were paid approximately $6.7 million for audit and
audit-related services rendered for 1997. Representatives of KPMG Peat Marwick
LLP will be available to answer questions at the Annual Meeting and are free to
make statements during the meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THIS
RESOLUTION.
SHAREHOLDERS' PROPOSALS
If proposals are submitted by more than one shareholder, PepsiCo will
only list the primary filer's name, address and number of shares held. We will
provide oral or written information about co-filers promptly if we receive an
oral or written request for the information.
Annual Meeting Location (Proxy Item No. 1)
------------------------------------------
Mrs. Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Avenue,
N.W., Washington, D.C. 20037, who owns 900 shares of PepsiCo Capital Stock, has
advised PepsiCo that she intends to introduce the following resolution for the
reasons stated:
<PAGE> 14
"RESOLVED: That the stockholders of PepsiCo recommend that the Board
take the necessary steps to rotate PepsiCo's annual meeting each year
between cities where PepsiCo, Frito-Lay and/or Pepsi-Cola have a
significant presence and/or a large concentration of shareowners.
REASONS: Many major corporations such as Westinghouse, IBM, GE, A.T.T.,
Xerox, Bell Atlantic and many others rotate on a regular basis. Chrysler,
Ford and GM ALL have adopted OUR resolution to rotate their annual
meetings.
Owners in other parts of the country also should have the opportunity
to meet officers and directors of the Company.
If you AGREE, please mark your proxy FOR this resolution."
BOARD OF DIRECTORS' RESPONSE: At the time of the 1998 meeting,
PepsiCo's World Headquarters in Purchase will be undergoing construction so that
it can accommodate more employees. This makes a shareholders' meeting in
Purchase much less cost efficient, and, as a result, the Board has determined
that this would be a good opportunity to hold the meeting at Frito-Lay's
headquarters and make it accessible to Dallas-area shareholders and employees.
However, holding annual meetings in different locations every year is neither
cost effective nor the best use of management resources.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE AGAINST THIS
RESOLUTION.
Cumulative Voting (Proxy Item No. 4)
------------------------------------
John J. Gilbert, who owns 1,536 shares of PepsiCo Capital Stock, and
Margaret R. and/or John J. Gilbert, trustees U/W of Caston J. Gilbert, which
trust holds 3,800 shares of PepsiCo Capital Stock, 29 East 64th Street, New
York, New York 10021-7043, 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 26.24%, 15,593 owners of 271,506,848
shares, were cast in favor of this proposal. The vote against included
12,292 unmarked proxies.
California law still requires that unless stockholders have voted not
to have cumulative voting they will have it. Ohio also has the same
provision.
The National Bank Act provides for cumulative voting. Companies get
around it by forming holding companies without cumulative voting. We were
delighted to see the SEC has finally taken action to prevent bad directors
from being on boards of public companies. The SEC should have hearings to
prevent such persons becoming directors before they harm investors.
<PAGE> 15
Many successful corporations have cumulative voting. Example, Pennzoil
defeated Texaco in that famous case. Texaco's recent problems might have
also been prevented with cumulative voting, getting directors on the board
to prevent such things. Ingersoll-Rand, also having cumulative voting, won
two awards. Further, Union Pacific is a good example having troubles with
their freight shipments, which are backed up for a month. The merger with
Southern Pacific is part of the excuse. Just last year, Union Pacific took
away cumulative voting.
Lockheed-Martin, as well as VWR Corporation, now have a provision that
if anyone has 40% or more of the shares cumulative voting applies: it does
apply at the latter company.
In 1995 American Premier adopted cumulative voting. Allegheny Power
System tried to take away cumulative voting and put in a stagger system of
electing directors, and stockholders defeated it, showing stockholders are
interested in their rights. Hewlett Packard, a very successful company,
also has cumulative voting.
Another reason to have cumulative voting is to get directors on the
board who will see that the stockholders have the right to even up
fractions, as so desired (like Culbro did), instead of simply getting cash
and having to figure the cost, which avoids accounting problems.
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 about cumulative voting
submitted by this shareholder at previous annual meetings have been defeated by
a wide margin. 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.
Cap Non-Performance-Based Executive Compensation at $1 Million (Proxy Item No.5)
- --------------------------------------------------------------------------------
The International Brotherhood of Teamsters General Fund, 25 Louisiana
Avenue, N.W., Washington, D.C. 20001, which owns 100 shares of PepsiCo Capital
Stock, has submitted the following resolution for the reasons stated:
"Resolved: That the shareholders of PepsiCo, Inc. request that the
Board of Directors establish a policy that no executive will be compensated
more than $1 million per year, regardless of when such compensation is
paid, unless the compensation is paid in accordance with a
performance-based plan disclosed to shareholders and approved by a majority
of the vote in a separate shareholder vote before the payment of the
compensation.
Supporting Statement:
Recently the New York Times ran an investigative series which focused
on deferred compensation which can be a detriment to shareholders in a
number of ways.
Deferred compensation can obscure the exact extent of compensation. For
example, the company may choose to pay above market interest rate on such
compensation.
<PAGE> 16
Deferred compensation can also prevent shareholders from exercising
their right to vote on certain compensation plans. Internal Revenue Code
Section 162(m) which eliminated the business expense deduction for annual
compensation of over $1 million, with some exceptions, was designed to give
shareholders the ability to rein in excessive executive compensation. In
approving this law, Congress did not declare that executives be paid less
than $1 million. Rather, Congress said that shareholders must approve
performance-based compensation package of more than $1 million to preserve
tax advantages.
One loophole corporate lawyers have exploited to avoid paying taxes and
at the same time to avoid seeking shareholder approval has been to put
ever-increasing amounts in deferred compensation. This seems to circumvent
part of the intent of the IRS Code by depriving shareholders of their
prerogative to vote.
Board members are closest to executive performance, yet Pepsi's unusual
board and committee structure may serve to create a board that is
disinclined to challenge such packages. The fact that there is no
independent nominating committee, for example, allows executives a great
deal of power in selecting who will make compensation decisions. The
current compensation committee is made up of a number of executives and
former executives, who themselves have faced criticism for their pay
packages. Deferred compensation should not be used as a way to obscure
compensation figures or to deprive shareholders of their right to make such
decisions.
Last year this proposal drew 75,000,000 votes at Pepsi.
For the above reasons we urge you to vote FOR the proposal."
BOARD OF DIRECTORS' RESPONSE: As shown on page 9, all of PepsiCo's
senior executives are paid non-performance based compensation--a salary--of less
than $1 million. All bonus and long-term incentives paid to executive officers
are tied to performance-based compensation plans approved by shareholders in
1987 and 1994.
All compensation deferred by PepsiCo's executive officers is fully
deductible and deferral of performance-based awards is consistent with the
deferral feature of shareholder approved compensation plans.
PepsiCo's Board of Directors believes it has an effective, independent
Board and Committee structure. The Board Committees, which are each comprised of
all outside directors, include a recently formed Nominating Committee.
Last year this same proposal was overwhelmingly defeated.
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 ones listed in this Proxy Statement arise
at the Meeting, the persons named in the proxy will vote the shares represented
by the proxy according to their judgment.
<PAGE> 17
QUORUM AND VOTING
QUORUM. Under North Carolina law, abstentions and broker nonvotes are
counted to determine whether a quorum is present at the Meeting. (Under New York
Stock Exchange rules, a broker may, if the broker does not have instruction from
a beneficial owner, vote shares on routine proposals. A broker does not have
discretionary voting power with respect to nonroutine proposals, such as a
merger. If the broker has not received voting instructions regarding nonroutine
proposals from the beneficial owner, the broker cannot vote on those proposals.
This is referred to as a broker nonvote.)
VOTING. 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.
Under PepsiCo's By-Laws, at all shareholder meetings, with a quorum
present, matters shall be decided by the vote of the holders of a majority of
the shares of Capital Stock present in person or by proxy and entitled to vote
(except that Directors shall be elected by a majority of votes cast).
Abstentions are not counted as "for" or "against" votes, but are counted in the
total number of votes present and entitled to vote for passage of a proposal.
This has the effect of requiring a higher vote for passage. Broker nonvotes are
not shares entitled to vote, are not counted in the total number of votes, and
have no effect on the outcome of voting.
Shares held in PepsiCo's Employee Stock Ownership Plan (the "ESOP")
cannot be voted unless a proxy card is signed and returned. If cards
representing shares held in the ESOP are not returned, the trustees will vote
those shares in the same proportion as the shares for which signed cards are
returned by other participants.
CONFIDENTIALITY. 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.
1999 SHAREHOLDERS' PROPOSALS
PepsiCo welcomes comments or suggestions from its shareholders. If a
shareholder wants to have a proposal formally considered at the 1999 Annual
Shareholders' Meeting, and included in the Proxy Statement for that Meeting, we
must receive the proposal in writing on or before November 27, 1998.
GENERAL
PepsiCo will pay the costs relating to this Proxy Statement, the proxy
and the Annual Meeting.
In addition to the solicitation of proxies by mail, PepsiCo intends to
ask brokers and bank nominees to solicit proxies from their principals and will
pay the brokers and bank nominees their expenses for the solicitation.
<PAGE> 18
To be sure that we have the necessary quorum to hold the Annual
Meeting, PepsiCo has hired the firm of Georgeson & Company, Inc. to help in
soliciting proxies by mail, telephone and personal interview for fees estimated
at approximately $21,000.
Employees of PepsiCo may also solicit proxies. They will not receive
any additional pay for the solicitation.
The Annual Report to Shareholders for 1997 and financial statements
were mailed with this Proxy Statement or were previously delivered to
shareholders and are not part of the material for the solicitation of proxies.
To reduce postage costs, we sent materials at bulk mail rates. If you have not
received the Annual Report by the time you receive your Proxy Statement, 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 can be
revoked by voting at the meeting, and mail it promptly in the enclosed
postage-paid envelope.
By order of the Board of Directors,
ROBERT F. SHARPE, JR.
Secretary
<PAGE>
APPENDIX -- PROXY CARD 1
PEPSICO, INC.
March 27, 1998
YOUR PROXY CARD IS ATTACHED BELOW.
PLEASE READ THE ENCLOSED PROXY STATEMENT, THEN VOTE AND RETURN THE
CARD AT YOUR EARLIEST CONVENIENCE.
NOTE: PEPSICO, INC.'S ANNUAL MEETING WILL BE HELD IN PLANO, TEXAS
<TABLE>
<CAPTION>
V FOLD AND DETACH HERE V (See reverse side for directions)
- -----------------------------------------------------------------------------------------------------------------------------------
/ X / PLEASE MARK
VOTES AS IN
THIS EXAMPLE
- -----------------------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEMS 3, 4 and 5.
VOTE FOR ITEMS 1 AND 2.
- -------------------------------------- -----------------------------------------------------------------------------------------
<S> <C> <C>
1.Election of Directors Nominees:
J.F. Akers, R.E. Allen
W. Calloway, R.A. Enrico, P. Foy,
R.L. Hunt,
J.J. Murphy,
S.S Reinemund, FOR WITHHELD FOR AGAINST ABSTAIN
S.P. Rockefeller, / / / / 3. Shareholder Proposal / / / / / /
F.A. Thomas, (Proxy Statement p. 13)
P.R. Vagelos,
K.M. von der Heyden,
C.E. Weatherup,
A.R. Weber.
4. Shareholder Proposal / / / / / /
(Proxy Statement p. 14)
------------------------------------
WITHHELD FOR: (Write that nominee's
name above.) 5. Shareholder Proposal / / / / / /
Proxy Statement p. 15)
2. Approval of / / / / / /
Auditors FOR AGAINST ABSTAIN
WHERE NO VOTING INSTRUCTIONS ARE GIVEN, THE I PLAN TO ATTEND MEETING
SHARES REPRESENTED BY THIS PROXY WILL BE If you check this box to the / /
VOTED FOR ITEMS 1 AND 2 AND VOTED right an admission card will
AGAINST ITEMS 3, 4 AND 5. 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 -----------
</TABLE>
<PAGE>
DIRECTIONS TO FRITO-LAY HEADQUARTERS
7701 LEGACY DRIVE, PLANO, TEXAS
[LOCAL AREA MAP, SHOWING RECOMMENDED ROUTES TO
FRITO-LAY HEADQUARTERS, APPEARS HERE.]
FROM DFW AIRPORT:
Approximately 15 miles
Exit Airport to the north following directions to S.H. 121
Curve to right onto S.H. 121
Follow S.H. 121 beyond Lewisville and The Colony to Legacy Drive
Turn right at signal onto Legacy Drive
Take second turn to the right into Frito-Lay near flags
FROM NORTH DALLAS AREA:
Approximately 13 miles
Off 635 (LBJ Freeway), exit Dallas North Tollway going north
Follow Tollway approximately 13 miles
Turn left at signal onto Legacy Drive
Go approximately 1/2 mile and turn left into Frito-Lay near flags
FROM DOWNTOWN:
Approximately 30 miles
Follow Dallas North Tollway to Legacy Drive
Turn left and follow Legacy Drive approximately 1 mile
Turn left into Frito-Lay near flags
PEPSICO, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
May 6, 1998
THIS PROXY IS SOLICITED ON BEHALF OF PEPSICO'S BOARD OF DIRECTORS
The undersigned hereby appoints Roger A. Enrico and Robert F. Sharpe,
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
PepsiCo, Inc., in Plano, Texas, on Wednesday, May 6, 1998 at 1:00 P.M., or at
any adjournment thereof, upon the matters set forth on the reverse side and
described in the accompanying Proxy Statement and upon such other business 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)
<PAGE>
PROXY CARD 2
PEPSICO, INC.
March 27, 1998
YOUR PROXY CARD IS ATTACHED BELOW.
PLEASE READ THE ENCLOSED PROXY STATEMENT, THEN VOTE AND RETURN THE
CARD AT YOUR EARLIEST CONVENIENCE.
NOTE: PEPSICO, INC.'S ANNUAL MEETING WILL BE HELD IN PLANO, TEXAS
<TABLE>
<CAPTION>
V FOLD AND DETACH HERE V (See reverse side for directions)
- -----------------------------------------------------------------------------------------------------------------------------------
/ X / PLEASE MARK
VOTES AS IN
THIS EXAMPLE
- -----------------------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEMS 3, 4 and 5.
VOTE FOR ITEMS 1 AND 2.
- -------------------------------------- -----------------------------------------------------------------------------------------
<S> <C> <C>
1.Election of Directors Nominees:
J.F. Akers, R.E. Allen
W. Calloway, R.A. Enrico, P. Foy,
R.L. Hunt,
J.J. Murphy,
S.S Reinemund, FOR WITHHELD FOR AGAINST ABSTAIN
S.P. Rockefeller, / / / / 3. Shareholder Proposal / / / / / /
F.A. Thomas, (Proxy Statement p. 13)
P.R. Vagelos,
K.M. von der Heyden,
C.E. Weatherup,
A.R. Weber.
4. Shareholder Proposal / / / / / /
(Proxy Statement p. 14)
------------------------------------
WITHHELD FOR: (Write that nominee's
name above.) 5. Shareholder Proposal / / / / / /
Proxy Statement p. 15)
2. Approval of / / / / / /
Auditors FOR AGAINST ABSTAIN
WHERE NO VOTING INSTRUCTIONS ARE GIVEN, THE
SHARES REPRESENTED BY THIS PROXY WILL BE
VOTED FOR ITEMS 1 AND 2 AND VOTED
AGAINST ITEMS 3, 4 AND 5.
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 -----------
</TABLE>
<PAGE>
PEPSICO, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
May 6, 1998
THIS PROXY IS SOLICITED ON BEHALF OF PEPSICO'S BOARD OF DIRECTORS
The undersigned hereby appoints Roger A. Enrico and Robert F. Sharpe,
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
PepsiCo, Inc., in Plano, Texas, on Wednesday, May 6, 1998 at 1:00 P.M., or at
any adjournment thereof, upon the matters set forth on the reverse side and
described in the accompanying Proxy Statement and upon such other business 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)
