Our Business

Outside of the United States, our largest markets are Mexico, the United Kingdom and Canada.

In addition to our various headquarters, our major properties include:

Frito-Lay North America (FLNA)
FLNA's most significant properties include its headquarters building and a research facility in Plano, Tex., both of which are owned. FLNA also owns or leases approximately 40 food manufacturing and processing plants and approximately 1,750 warehouses, distribution centers and offices. In addition, FLNA also utilizes approximately 55 plants and production processing facilities that are owned or leased by our contract manufacturers or co-packers.

Quaker Foods North America (QFNA)
QFNA owns a plant in Cedar Rapids, Iowa, which is its most significant property. QFNA also owns or leases five plants and production processing facilities in North America. In addition, QFNA utilizes approximately 25 manufacturing plants, production processing facilities and distribution centers that are owned or leased by our contract manufacturers or co-packers.

Latin America Foods (LAF)
LAF's most significant properties include a food plant in Celaya, Mexico, and three snacks plants in the Mexican cities of Vallejo and Veracruz and the Brazilian city of Itu, all of which are owned. LAF also owns or leases approximately 50 food manufacturing and processing plants and approximately 660 warehouses, distribution centers and offices. LAF also utilizes one plant facility that is owned by a contract manufacturer.

PepsiCo Americas Beverages (PAB)
PAB's most significant properties include the headquarters building it shares with QFNA in downtown Chicago, Ill., which is leased, and its Tropicana facility in Bradenton, Fla., its concentrate plant in Ireland, and its research and development facility in Valhalla, N.Y., all of which are owned. PAB also owns or leases approximately 40 plants and production processing facilities and approximately 50 warehouses, distribution centers, and offices. In addition, authorized bottlers in which we have an ownership interest own or lease approximately 65 bottling plants. PAB also utilizes approximately 70 plants and production processing facilities and approximately 60 warehouses and distribution centers that are owned or leased by our contract manufacturers or co-packers.

Europe
Europe's most significant properties are its snack manufacturing and processing plants located in Leicester, U.K., and Coventry, U.K., each of which are owned. Europe also owns or leases approximately 35 plants and approximately 320 warehouses, distribution centers and offices. In addition, authorized bottlers in which we have an ownership interest own or lease seven plants and approximately 30 distribution centers. Europe also utilizes approximately one plant and production processing facility and approximately two distribution centers that are owned or leased by our contract manufacturers.

Asia, Middle East & Africa (AMEA)
AMEA's most significant properties are its beverage plant located in Shenzhen, China, and its snack manufacturing and processing plant located in Tingalpa, Australia, each of which are owned. AMEA also owns or leases approximately 100 plants and approximately 1,100 warehouses, distribution centers and offices. In addition, authorized bottlers in which we have an ownership interest own or lease approximately 25 plants and 120 distribution centers. AMEA also utilizes two plants and production processing facilities that are owned or leased by our contract manufacturers.

Shared Properties
QFNA shares five production facilities and five warehouses and distribution centers with FLNA, 10 warehouses and distribution centers with both FLNA and PAB, and 10 offices with PAB and FLNA, including a research and development laboratory in Barrington, Ill. PAB, Europe and AMEA share production facilities at two concentrate plants in Cork, Ireland. PAB and AMEA share a concentrate plant in Colonia, Uruguay.

Mission
We aspire to make PepsiCo the world's premier consumer products company, focused on convenient foods and beverages. We seek to produce healthy financial rewards for investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive to act with honesty, openness, fairness and integrity.

Values
Our commitment is to deliver sustained growth through empowered people acting with responsibility and building trust. We define these values as follows:

Sustained Growth is fundamental to motivating and measuring our success. Our quest for sustained growth stimulates innovation, places a value on results and helps us understand whether actions today will contribute to our future. This value is about the growth of our employees and the company's performance. It prioritizes making a difference and getting things done.

Empowered People means we have the freedom to act and think in ways that we feel will get the job done, while being consistent with the processes that ensure proper governance and being mindful of the rest of the company's needs.

Responsibility and Trust form the foundation for healthy growth. It's about earning the confidence that other people place in us as individuals and as a company. Our responsibility means we take personal and corporate ownership for all we do, to be good stewards of the resources entrusted to us. We build trust between ourselves and others by being committed to succeeding together.

Guiding Principles
We must always strive to:

• Care for customers, consumers, and the world we live in
• Sell only products we can be proud of
• Speak with truth and candor
• Balance short term and long term
• Win with diversity and inclusion
• Respect others and succeed together

Along with our Values, the PepsiCo Code of Conduct is at the center of everything we do. The Code applies to all employees, officers and directors, to all divisions and subsidiaries, and to every business transaction we make. It unites all PepsiCo employees through shared values and common goals, and is a declaration of our commitment to the highest standards of ethics and integrity.

Since 1976, PepsiCo has had a Code of Conduct that is regularly updated and communicated to all our employees annually. The Code includes provisions relating to ethical business dealings, bribery, business gifts and entertainment, discrimination, harassment, confidentiality of information, insider trading, accounting and record-keeping, health and safety, human rights, the environment, political activities, protection of company assets, and whistle-blowing.

Code of Conduct Awareness
The PepsiCo Compliance and Business Practices department works to educate employees on business ethics and Code of Conduct compliance to ensure that employees know the principles embodied in the Code as the first fundamental step towards operating ethically.

Each year, PepsiCo requires over 24,000 employees worldwide to train and certify compliance to the Code of Conduct. In May and June of 2008, over 24,000 managers and employees completed a 45 minute web-based Code of Conduct training course, which was available in 18 languages. The online training course provided a detailed overview of the Code of Conduct and featured key policies, such as the Human Rights Workplace Policy and the International Anti-Bribery Policy. Each year, a new customized Code of Conduct training course is developed by the Compliance department, and in 2009 up to 40,000 employees will train in 23 languages.

In addition to the annual online Code training, PepsiCo designates one month each year as Code of Conduct Month to increase awareness of the Code across the entire employee population. During Code of Conduct Month, copies of the Code are distributed to all PepsiCo employees, including those in plants, producing facilities and warehouses. The Code is also promoted through newsletter articles, e-mail messages from division presidents and senior managers, mentions at town hall meetings and work-site posters. During Code of Conduct Month, all employees are encouraged to review the Code and recommit to what we stand for: doing the right thing consistently and without compromise.

In an effort to expand the compliance training initiatives beyond the annual Code of Conduct Month activities, a year-round compliance training curriculum was developed in 2008. Online training on key risk areas, such as Antitrust, Trade Spend Compliance and Anti-Bribery, was commenced in 2009. New topics will be added every year to the compliance training portfolio. This supplemental training is designed to instill an effective values-based compliance and ethics culture throughout the company.

Code and Our Policies
At PepsiCo, operating ethically and with integrity means compliance with the laws and regulations that impact our business worldwide, our Values, our Code of Conduct, and the corporate and division policies that support the principles embodied in the Code. Such policies include but are not limited to the International Anti-Bribery Compliance Policy, Anti-Harassment/Discrimination Policy, Equal Employment Opportunity Policy, Human Rights Workplace Policy, Customer Trade Agreement Policy, Disclosure Policy, Environmental Policy, Food Safety Policy, Information Security Policy, Travel & Entertainment Policy, Workplace Violence Policy, Security Communications Protocol, and Occupational Health and Safety Policy. These policies apply to all of our employees worldwide and are posted on company intranets for downloading by employees.

Making the Code Count
PepsiCo's Chief Compliance Officer has overall responsibility for overseeing PepsiCo's implementation of its Code of Conduct, supported by other functional groups including Control, Corporate Communications, Human Resources and Corporate Audit. Within each operating division, the Law Department, Controller and Human Resources Department are primarily responsible for their business unit's implementation of the standards and procedures established by the Code. Division lawyers work closely with members of the Compliance function. In 2009, Compliance established a cross-functional network of division-based Control Environment Councils consisting of Controllers, Personnel Officers and Legal representatives to improve local control and maintain efficiencies in reporting, investigating and escalating significant matters.

All employees are required to comply with the Code of Conduct. Actions that uphold the Code of Conduct have been recognized with the Chairman's Award, which is given to employees who show outstanding commitment to PepsiCo's Values and the Code. The Award includes a special stock grant in recognition of the recipient's contributions.

Failure to comply with the Code may result in a variety of corrective actions, including counseling, written warnings, reduction in annual compensation or annual bonus, failure to receive long-term compensation, cancellation of stock options, and termination, depending on the type and seriousness of the matter.

Compliance Review and Reporting
PepsiCo's compliance programs are periodically independently reviewed by a third party to determine key compliance risks. PepsiCo has in effect a Code of Conduct Escalation Policy requiring management attorneys to report any violations of the securities laws, breach of fiduciary duty or similar violations.

PepsiCo's outside auditor receives reports regarding potentially significant violations that relate to fraud, accounting, auditing and internal control matters. The Audit Committee also receives regular reports regarding compliance with the Code of Conduct.

Information on violations of the Code of Conduct is reported internally on a need-to-know basis to monitor trends, foster consistency of discipline, and ensure that appropriate corrective action and in-person training is taken. Efforts are made to share learnings and increase awareness of the risks attendant to Code of Conduct violations internally within the organization without compromising confidentiality or anonymity of any specific violation(s). As an example, our customized Code of Conduct online training course includes interactive activities and work-related scenarios that are generally based on actual Code violations that have occurred within the company.

PepsiCo also maintains its Speak Up reporting hotline, which is a toll-free, anonymous hotline for any employee to report potential violations of the Code of Conduct. This hotline is operated by an independent vendor and is available to employees, vendors and customers worldwide and 24 hours a day. In addition to receiving reports of misconduct and Code violations, the Speak Up hotline also receives general inquiries and questions on the company's policies and on Code of Conduct compliance. Employees are also encouraged to raise questions on business ethics and Code compliance to the Chief Compliance Officer, the General Counsel or the General Auditor. In addition, the Compliance department maintains and monitors a special projects e-mail mailbox that accepts inquiries from employees on Code-related issues and training.

PepsiCo is subject to risks in the normal course of business with respect to several areas, including those relating to sustainability. These risks include: product demand; our reputation; information technology; supply chain; retail consolidation; the loss of major customers and failure to maintain good relationships with our bottling partners; global, economic, environmental, and political conditions; the legal and regulatory environment; workforce retention and outsourcing; raw materials and other supplies; and market risks.

In 2008, we continued to focus our risk mitigation efforts to further reduce PepsiCo's exposure to risks, and integrated those efforts in our businesses' operating plans and budgets where accountability is assigned and performance is measured.

Risk Management Process
PepsiCo's Chief Risk Officer is responsible for heading the company's risk management function, reporting directly to the CEO. Our risk management process is intended to ensure that risks are taken knowingly and purposefully. PepsiCo leverages an integrated risk management framework at the corporate level as well as across divisions to identify, assess, prioritize, manage, monitor and communicate risks across the company. The infrastructure underlying PepsiCo's risk management framework supports a top-down, bottom-up viewpoint of the financial, operational, strategic and compliance risks facing PepsiCo at various levels of the Company. This framework includes:

• The PepsiCo Risk Committee (PRC) is a cross-functional, senior leadership team which identifies, assesses, prioritizes and addresses strategic, reputational and emerging risks, and is chaired by PepsiCo's Chairman and CEO. The PRC is charged with owning the development of mitigation activities and communicating to PepsiCo's Board of Directors, Audit and/or Compensation Committee. Meetings are held quarterly, and from a communications standpoint each risk is owned by a PRC member, who is responsible for owning and reporting out one of PepsiCo's top risks.
• The PepsiCo Executive Committee (PEC), comprised of a cross-functional, geographically diverse, senior management group that meets regularly to identify, assess, prioritize and address strategic and reputational risks
• Division Risk Committees (DRCs), comprised of cross-functional senior management teams that meet regularly each year to identify, assess, prioritize and address division-specific operating risks
• PepsiCo's Risk Management Office (RMO), which manages the overall risk management process, provides ongoing guidance, tools, and analytical support to the PEC and the DRCs, identifies and assesses potential risks, and facilitates ongoing communication between the parties as well as to PepsiCo's Audit Committee and Board of Directors
• PepsiCo Corporate Audit, which evaluates the ongoing effectiveness of our key internal controls through periodic audit and review procedures
• PepsiCo's Compliance Office, which leads and coordinates our compliance policies and practices

As a subset of our many risk mitigation capabilities, PepsiCo has dedicated crisis management resources at corporate and division locations responsible for the crisis management capabilities of the company. Crises include disaster recovery, product recall, etc. The company has crisis management protocols and procedures for each division and at corporate headquarters that define when the protocols should be activated and that also identify key individuals. The crisis management program includes a risk assessment methodology by geographic location and business disruption tabletop testing exercises that ensure the readiness and effectiveness of the program.

Many work processes across PepsiCo incorporate risk management principles, including PepsiCo's compliance program; SOX 302, 307, and 404 compliance programs; internal audit protocols; financial policies; pre- and post-close reviews; operating policies and procedures; strategic planning; annual operating plans; business and joint venture reviews; advertising guidelines and reviews; product safety and security programs; crisis management; disaster recovery plans; and people planning and development processes; as well as Corporate, Divisional, Sector, and Business Operating committees.

Assessment and prioritization of risks are based on calculation of likelihood and impact, taking vulnerability into account. Velocity is also measured to assess strategic risks at a corporate level. Emerging risks, which are considered slow to materialize but high impact, are also addressed within the risk management process.

In addition to the embedded risk management activities that take place each and every day within our normal business processes, PepsiCo uses an integrated risk management framework to explicitly identify, assess, prioritize, manage, monitor and communicate risks across the company. Utilizing the enterprise risk management framework, the process is intended to deliver risk transparency, and to provide clear understanding of the level of resiliency of our most critical risks and alignment between management and our Board of Directors regarding the company's risk tolerance. These deliverables are achieved through the following efforts:

• Risk Identification--This takes place annually from a top-down and bottom-up viewpoint. Our risk identification efforts seek to evaluate both external sources of risks as well as risk associated with our internal capabilities in the context of achieving our long-term vision (e.g., being the premier consumer product goods company focused on the convenient food and beverage category). Risks are identified on an inherent basis.
• Risk Assessment --After identifying our most significant inherent risks, each assessing party (PRC, DRCs, RMO) assesses the most significant risks from a probability, impact and vulnerability perspective. This assessment requires that we fully understand the existing capabilities, controls, programs, insurance coverage and other mitigating factors that enable an accuracy assessment of the residual risk assessment.
• Risk Prioritization--After assessment, all risks that exceed a predetermined threshold are prioritized by both the assessment itself as well as the ability to influence/mitigate. In addition, the RMO aggregates the risk assessment information to look for risk interdependencies and common mitigation solutions.
• Risk Response--Following prioritization, the PRC and DRCs are required to explicitly determine the response to each significant risk. The responses include accepting, avoiding, mitigating and transferring (via third-party insurance). The DRCs also identify which risks need monitoring on an ongoing basis and what measurement index will be used. Having selected the risk response, management identifies control activities necessary to help ensure that the risk responses are carried out effectively.

Risk maps are submitted to the RMO by DRCs on a semiannual basis and are used to document specific information about identified risks, including the assessment of the likelihood and impact of the risk, as well as the risk response and urgency for action. Risk maps are also used to monitor and track the progress against the mitigation strategies.

In addition, PepsiCo's corporate risk owners are required to submit annual updates of our top strategic risks to RMO on a periodic basis. Similar to the DRC risk maps, these documents capture and prioritize each risk and list mitigation strategies and progress made throughout the year, as well as a targeted end state for PepsiCo's position with regard to each risk.

Communication
Each DRC is required to summarize its risk management efforts by providing semiannual DRC meeting minutes, as well as semiannual submission of the division risk map. For risks disclosed in our annual report, PepsiCo has assigned Executive Risk Owners responsible for understanding the risk across the company and providing annual updates to the PRC, as well as to the Audit Committee or full Board of Directors. Lastly, a semiannual risk management update is provided to the PepsiCo Audit Committee to discuss our risk profile, risk mitigation efforts and risk management process.

More information about our business risks

Our governance includes the following:

• Board of Directors and Standing Committees
• Disclosure Committee
• PepsiCo Executive Committee
• Public Policy Coordinating Group

Board of Directors and Standing Committees
PepsiCo's business strategy and affairs are overseen by our Board of Directors. Our Board of Directors has three Standing Committees:

1. Nominating and Corporate Governance
2. Audit
3. Compensation

As of March 2009, there are 13 board members, including 11 independent outside directors and 2 executive directors. Members of all Board Committees are independent outside directors.

PepsiCo's independent director standards are defined in the Corporate Governance Guidelines in the section entitled "Director Qualification Standards." These standards conform to the director independence rules of the New York Stock Exchange.

View our Corporate Governance Guidelines

The PepsiCo Board, in its strategic oversight capacity, reviews key social responsibility and sustainability issues on an as-needed basis. In addition, the Board Committees periodically review specific issues or initiatives consistent with the scope of each committee's charter.

See the Investors/Corporate Governance section of PepsiCo.com for Corporate Governance Guidelines, Audit Committee Charter, Compensation Committee Charter and Nominating Committee Charter.

More information about the election of directors

PepsiCo Executive Committee (PEC)
The PEC is comprised of a cross-functional, geographically diverse senior management group that identifies, assesses, prioritizes and addresses strategic and reputational risk and is chaired by Indra Nooyi, PepsiCo's Chairman and CEO. This committee meets regularly on all areas of the business.

Public Policy Coordinating Group
In July 2007, PepsiCo established the Public Policy Coordinating Group to address issues of public policy and sustainability. The group is under the direction of PepsiCo's General Counsel and includes senior functional heads as well as other company leaders who are focused on Human, Environmental and Talent Sustainability:

Human Sustainability is led by our Chief Scientific Officer (CSO), who is charged with driving our product portfolio transformation through our global R&D organization and businesses. Our CSO reports to our Chairman and CEO and serves on the PEC. In 2008, we expanded our global research and development capability to address public health concerns including obesity. Our network of leaders includes world-renowned clinical scientists and experts in science, nutrition, food safety, epidemiology and health policy.

Environmental Sustainability is led by the Environmental Sustainability Leadership Team (ESLT), which is charged with advising and informing the Chairman and CEO, the PEC and the Board of Directors on matters of environmental sustainability. The ESLT is comprised of the heads of the supply chain at each of our four businesses, as well as senior leaders from Sales, Human Resources, Communications, Government Affairs, Legal, R&D, Purchasing, Finance and Investor Relations. They are supported by the Environmental and Sustainable Packaging Councils, which are comprised of subject matter experts across all divisions and are responsible for recommending and implementing actions.

Talent Sustainability is led by our Chief Personnel Officer (CPO), who is supported by our staffing team, our compensation and benefits team, and our diversity and inclusion team. Our CPO reports to our Chairman and CEO and serves on the PEC. We're committed to developing our employees, enabling them to build careers and become ambassadors for our company and our brands.

Communications with the Board of Directors
To facilitate communications with our shareholders, we provide various methods to contact the Board of Directors. These may be found under "Contact the Board of Directors/Audit Committee" in the Corporate Governance section of our website. In addition, PepsiCo's Proxy Statement, which is distributed to all shareholders, details the process for contacting the Board, a committee of the Board or an individual member of the Board.

Shareholder Proposals
Shareholders wishing to submit shareholder proposals may do so in accordance with the instructions in our Proxy Statement.

View our proxy statement

Board and Executive Compensation

PepsiCo's Proxy Statement includes a detailed description of our Board of Directors' compensation program, which is the same for all nonmanagement Board members, with an additional retainer provided to the three Committee Chairs and to the Presiding Director, who does not serve as a Committee Chair.

Compensation for the CEO, CFO and next highest paid officers are disclosed in the annual Proxy Statement. Details include salary, bonus, stock option awards, performance-based restricted stock awards, performance-based long-term cash awards, perquisites, pension and executive income deferral earnings. Information on stock-based compensation values directly tied to shareholder value is also included.

PepsiCo's Proxy Statement also describes stock ownership guidelines applicable to Senior Officers and the Board of Directors, as well as our exercise and hold policy. Beginning in 2009, executive officers who meet their recently increased ownership level are exempt from this exercise and hold requirement as long as they continue to meet their ownership requirement.

View our Proxy Statement

Conflicts of Interest
Our Code of Conduct, which applies to all PepsiCo employees and directors, contains clear guidelines regarding conflicts of interest. PepsiCo's Corporate Governance Guidelines also include director independence standards to address potential director conflicts of interest.

Director Nomination Process
The Nominating and Corporate Governance Committee does not solicit director nominations but will consider recommendations for director nominees if the individuals recommended meet certain minimum Board membership criteria detailed in our Proxy Statement and, if so, if the candidate's expertise and particular set of skills and background fit the current needs of the Board. This process is designed to ensure that the Board includes members with diverse backgrounds, skills and experience, including appropriate financial and other expertise relevant to the business of the Company.

Annual Performance Evaluation of the Board
PepsiCo's Nominating and Corporate Governance Committee conducts an annual review and assessment of Board and Committee performance.

Several independent organizations rate companies on the quality of their corporate governance. PepsiCo received a perfect 10 out of 10 corporate governance rating from Governance Metrics International in 2008/2009.

More information about our Nominating and Corporate Governance Committee Charter

Capital Expenditure Filter
All requests for capital expenditures over $5 million must include a review of sustainability issues and performance against appropriate benchmarks. Additionally, opportunities for improving the sustainability of the project surrounding the capital request must be highlighted. The goal is to incorporate more sustainability opportunities in projects right from the start.

PepsiCo has always prided itself on being a good corporate citizen and taking action or aligning itself with leading experts and organizations focused on emerging social issues. Examples of this include addressing health and wellness initiatives including diet and nutrition concerns, climate change, water resources and HIV/AIDs.

Through our memberships and partnerships, PepsiCo endorses a number of initiatives related to our businesses. In addition to the initiatives noted below, on a global level, we have endorsed the United Nations Millennium Development Goals.

Professional Trade Groups
We are also members of many trade and professional groups and take an active role in these as suitable. These are sometimes local and specific to the business. Among these are:

• American Beverage Association (ABA)
• Snack Food Association
• International Life Science Institute
• International Society of Beverage Technologists
• National Safety Council
• American Industrial Hygiene Association
• American Society of Safety Engineers
• Con Mexico
• European Association of Industries of Juices & Nectars
• International Council of Beverage Associations
• CEEREAL European Breakfast Cereals Association
• European Food and Drink Federation (CIAA)

Memberships and Partnerships (Selected Listing)

General

Human Sustainability

Environmental Sustainability

Talent Sustainability

2008 Milestones

• PepsiCo named to the Dow Jones Sustainability World Index and the Dow Jones Sustainability North America Index, (DJSI World and DJSI North America) for the third time
• Forbes Names PepsiCo Among Its Best Big Companies
• CRO Names PepsiCo to Top 25 100 Best Corporate Citizens 2008
• PepsiCo Honored with 2008 Energy Star Partner of the Year Award
• PepsiCo International's China Foods Wins "China's Top Leaders 2008" Award
• Wall Street Journal Article Recognizes PepsiCo for Leadership in Employment of People with Different Abilities
• PepsiCo France Recognized as "Great Place To Work" by Institute Survey
• PepsiCo UK and Ireland Named Among "Where Women Want to Work"
• PepsiCo Wins 'New Freedom Initiative' Award
• PepsiCo Wins at Out & Equal Workplace National Summit
• PepsiCo, Goldman Sachs and William C. Thompson, Jr. Recognized for Leadership on LGBT Workplace Equality
• PepsiCo Earns Top Marks in 2009 Corporate Equality Index
• PepsiCo Named to DiversityInc Top 50