Our Employee Policies and Programs

Diversity and Inclusion

African American Advisory Board
Seated, left to right: Ray M. Robinson, Benaree Pratt Wiley, Earl G. Graves, Sr., Dawn Hudson, Keith Clinkscales.
Standing, left to right: Kweisi Mfume, Amy Hilliard, Warren M. Thompson, Jerri DeVard, Glenda McNeal, John Compton, Johnny F. Johnson, Roderick D. Gillum, Darlene Williamson, Ph.D., Robert Holland, Reverend Dr. Franklyn Richardson, Darwin N. Davis, Sr.(deceased April 16, 2006), Clarence Avant, Reverend Al Sharpton.

PepsiCo approaches diversity and inclusion as a fundamental strategic priority. We believe our leadership in this area gives us an opportunity to drive our growth and gain a competitive advantage.

The business rationale is clear: Minority populations are growing faster than the population overall. Each year, racial and ethnic minorities constitute a greater share of our potential consumers, employees and retail customers.

To attract and retain the brightest, most capable people, we must create a diverse and inclusive culture where everyone feels they have equal opportunity to succeed and grow - regardless of gender, race, ethnicity, religion or sexual orientation. We set goals for improving the representation of women and people of color within our workforce and we link executive compensation to the achievement of these goals as part of their performance objectives.

We have active employee networks for our various groups. Starting in 2005, each of our employee groups is represented at the most senior levels by an executive reporting to our chief executive officer. Our U.S. groups include African-Americans, Latinos, Asian, Women, Women of Color, White Males, Gay/Lesbian/Bisexual/Transgender (GLBT) and our newest group, "Enable," for individuals with different abilities.

All employees participate in inclusion training sessions. Our Harvey C. Russell Inclusion Award was introduced in 2003 to recognize outstanding achievement in support of PepsiCo's diversity and inclusion efforts.

Latino/Hispanic Advisory Board
Seated, left to right, Gilbert Aranza, Irene Rosenfeld, (left June 2006) Raúl Yzaguirre, Maria Contreras-Sweet, Carlos H. Arce, Ph.D.
Standing, left to right; Victor Arias, Jr., Carlos A. Saladrigas, Deborah Rosado Shaw, Isabel Valdés, Ricardo R. Fernández, Ph.D., Douglas X. Patiño, Ph.D., Raquel Malo.

Our African-American and Latino/Hispanic Ethnic Advisory Boards have provided excellent counsel on a broad range of social, cultural and business issues, including marketing, hiring, benefits and diversity. Our Canada business recently convened an Asian Advisory Board.

For more information, visit our diversity site:
http://www.pepsico.com/PEP_Diversity/index.cfm

U.S. Diversity and Inclusion Statistics

In 2005, we increased the percentage of our women managers by one point and our minority managers by two points. Our international operations also made significant progress in achieving diversity goals with the number of women in executive positions increasing by nearly 3% in 2005.

Associate Numbers

(Appoximate at year-end 2005)

Differences in U.S. Equal Employment Opportunity employee numbers vs. U.S. Associate Numbers are due to timing of when the data was collected in 2005. Additionally, Associate Numbers include Puerto Rico employees.

Safety

Our Code of Conduct includes a commitment to provide safe and healthy workplaces. It is our goal to design, construct and maintain our operating facilities in a manner to protect our people and physical resources.

In the United States, our corporate commitment to providing safe and healthy workplaces is combined with training and monitoring. At FLNA, each manufacturing and distribution center has a safety manager who is responsible for safety. At Quaker, Tropicana and Gatorade, dedicated health and safety professional lead comprehensive risk management programs focused on preventing workplace illnesses and injuries.

Benefits

In the United States, we offer a full range of health care, savings and retirement benefits. Our health and welfare benefits include medical, dental, vision, prescription drug, mental health, life and accident insurance, disability and flexible spending accounts. We also offer commuter reimbursement, group legal benefits, tuition reimbursement, adoption assistance, Employee Assistance Program, child care referral and resources, smoking cessation programs and family and medical leaves. In 2004, we introduced HealthRoads, a wellness benefit for employees and their families. HealthRoads provides information, resources and tools, as well as financial incentives, to encourage employees and their families to live healthier lifestyles. Domestic partners who meet certain eligibility requirements may be covered under these benefits.

There is a formal procedure for appeals related to PepsiCo employee benefit claims. This information is provided along with benefit details.

Financial benefits include company-funded pension plans, a 401(k) Plan with a company match, the PepsiCo Stock Purchase Program and SharePower, a broad-based stock option program. SharePower was introduced in 1989 and is a global program that offers eligible employees stock options that may be exercised after a vesting period. We believe SharePower clearly reflects a culture that places a high priority on ownership.

Our various headquarters offer on-site fitness centers and wellness classes. We offer lifestyle benefits such as employee credit unions offering on-site banking and other amenities.

HIV/AIDS

HIV/AIDS poses an increasingly overwhelming health risk to human society. PepsiCo has recognized the importance of joining the fight against HIV/AIDS.

In 2002, PepsiCo's South Africa snack food operation, Simba, adopted a formal HIV/AIDS policy. That same year, PepsiCo joined the Global Business Coalition (GBC), a not-for-profit group dedicated to fighting HIV/AIDS and related diseases by providing information, counsel and sharing best practices. And also that same year, PepsiCo established an internal task force on HIV/AIDS to address the issue in our businesses. In addition to South Africa, the task force identified priority countries where there is a high or rising prevalence and where we have major businesses: India, China and Russia.

In 2004, in consultation with interested shareholders, PepsiCo prepared a report on the known impact of HIV/AIDS on our businesses in the identified countries. PepsiCo had also developed our PepsiCo Worldwide HIV/AIDS policy.

We made a great deal of progress in 2005 as we developed and implemented workplace programs in the four key countries: South Africa, India, Russia and India. Thailand volunteered to join the first tier efforts.

In 2005, we announced our global HIV/AIDS policy and communicated it across PepsiCo. In South Africa, we launched a direct AIDS intervention program which includes full treatment coverage for all employees and spouses. In India, we have begun awareness and prevention education. In Russia, we established a formal partnership with Transatlantic Partners Against AIDS, updated our medical programs and reached agreement with a new medical insurance provider to consult with employees on HIV/AIDS related issues. Thailand has programs for training employees and now has an on-site nurse to provide daily counseling on HIV/AIDS. Thailand also has an active community service program, including donating to Orphans of HIV/AIDS Parents Project. Our Thailand partners have been recognized for their work with a "Certificate of Gold Level" from the AIDS Response Standard Organization, sponsored by the Ministry of Labor. China was chosen as a pilot site for developing a replicable integrated health care program. We have developed a methodology that can be applied to other countries and regions when developing HIV programs.

For more information, visit our HIV/AIDS site at:
http://www.pepsico.com/PEP_Citizenship/HIVAIDSInitiatives/index.cfm

Training

Employee training is year round at PepsiCo. Training covers a large number of areas including: on-boarding for new employees, job-specific training, skill improvement training, career management, diversity and inclusion training, Values and Code of Conduct training, lifestyle and personal development courses and health and wellness information. Associates are regularly updated on the business through forums and town halls, increasingly available on the web.

On-Boarding - New associates are introduced to the company and receive information in a variety of areas, including an overview of the Company, history, career information and benefit information.

Job Training - Associates receive specific job training as required, including attending professional conferences to enhance their skills.

Skill Improvement Training - PepsiCo offers associates opportunities to improve their skills through a variety of training opportunities, including a week-long focus on training during which associates can select from courses in everything from learning to prepare a PowerPoint presentation to balancing home and work.

Career Management - PepsiCo has a very robust program for helping associates manage their careers. Elements include a guide for career growth tailored to PepsiCo, as well as guides focused on specific functions. Our year-long proprietary process includes objective setting, performance and development reviews, development action plans, mid-year reviews and 360 degree evaluations, all supported by training and materials. Executive leadership training focuses on helping high potential managers learn to be more effective leaders and gain a broader perspective of our business.

Diversity and Inclusion Training - PepsiCo supports its commitment to fostering a diverse and inclusive workplace with training. Associates move through Level 1, 2 and 3 training specifically developed for PepsiCo.

Values and Code of Conduct Training - PepsiCo is providing interactive training in its Values to associates worldwide. This training is mandatory and uses an interactive approach to share and discuss PepsiCo's overall mission and values. PepsiCo has also provided interactive training on its Code of Conduct. In 2006, approximately 25,000 associates around the world completed mandatory Code of Conduct training.

Lifestyle and Personal Development- PepsiCo offers associates the opportunity to hear speakers on a variety of topics and to participate in workshops of special interests. Examples include speakers on market trends and workshops on family issues.

Health and Wellness Information - PepsiCo sponsors employee wellness fairs which include the distribution of health information and speakers on topics relating to health and wellness.

Human Rights

PepsiCo Values include a commitment to respect others, inside and outside the Company, which is consistent with our value of treating people with dignity. Our commitment to employees includes a work environment that is free from all forms of discrimination, including sexual and other forms of harassment, and to fostering a work environment where people feel comfortable and respected. PepsiCo's Code of Conduct requires all employees to follow local employment laws and regulations, including child labor laws and treatment of employees.

In order to bolster this historic commitment, in 2006 PepsiCo adopted our Human Rights Policy which states:

PepsiCo Human Rights Workplace Policy
PepsiCo respects the dignity of our workers in the workplace and we work to ensure our associates' rights to personal security, a safe, clean and healthful workplace, and freedom from harassment or abuse of any kind.

We deal fairly and honestly with our associates regarding wages, benefits and other conditions of employment, and recognize our associates' right to freedom of association. We do not use compulsory or child labor.

We do not tolerate discrimination and work to ensure equal opportunity for all associates.

We comply with all applicable laws, regulations, and other employment standards, wherever we operate or work.

We encourage our partners, suppliers, contractors and vendors to support these policies and we place substantial value on working with others who share our commitment to human rights.
http://www.pepsico.com/PEP_Investors/CorporateGovernance/Policies/HumanRights/index.cfm

Human Rights Training
Training is provided throughout PepsiCo on our Code of Conduct and Speak Up hotline. We encourage employees to report issues such as discrimination, harassment and mistreatment of employees. In addition, in the United States, PepsiCo is providing inclusion training to associates, including all managers. During this training, we explore the human rights intrinsic to all and the importance of sustaining an inclusive culture.

Reporting Issues and Speak Up
The employee grievance system includes employee and manager communications, intervention by human resources generalists, and the Speak Up Line. All associates can use Speak Up as a method to raise any issue. We regularly report significant Code of Conduct and Speak Up issues to the Audit Committee of the Board of Directors.

Speak Up is a 24-hour, toll-free, hotline available to report any suspected violation of the Code of Conduct, PepsiCo's Values or the law. Callers can be anonymous. Speak Up calls are received by a third-party vendor - not a PepsiCo employee - to ensure anonymity. All calls are free to employees and contractors. The toll-free numbers and an explanation of Speak Up are provided on the PepsiCo intranet, on posters and in PepsiCo's Worldwide Code of Conduct. The Code of Conduct includes PepsiCo's policy prohibiting retaliation against employees and contractors who raise grievances.

PepsiCo has had a Speak Up program since 1999 when it was introduced at Frito-Lay North America. In 2001, the Speak Up program was introduced to other employees in the United States. The Speak Up program was extended to international employees in 2003. In 2005, we improved international telephone access to the program and established a secure, anonymous website for reporting issues via the internet. Information on Speak Up is included in training for the Code of Conduct.