Talent Sustainability

Our people are our greatest strength. Without a broad base of talented people, we can't continue to deliver exceptional results. Our goals are to attract, hire, develop and retain the most talented people. By valuing our employees, supporting their ability to work effectively together and providing them with the tools they need to succeed, we are ensuring that PepsiCo is the kind of company where talented people of all backgrounds want to work.

We will continue to foster an inclusive environment, by increasing female and minority representation in management ranks, engaging employees in health and wellness programs and creating rewarding job opportunities for people with disabilities.

We will leverage the reach of our employee base and continue to encourage our employees around the world to participate in community service and inclusion activities, which are designed not only to positively impact the communities we serve, but to drive our employees to be leaders in social responsibility.

PepsiCo's Talent Sustainability strategy is overseen by the Senior Vice President of Human Resources, who is a member of the PepsiCo Executive Committee. An extensive bi-annual survey process, supplemented by shorter and targeted surveys, provides feedback and input on how associates view the business and drives action plans and improvements throughout the corporation.

Expanding Opportunities Through Diversity and Inclusion
PepsiCo approaches diversity and inclusion as a fundamental business priority. Our continued innovation and growth requires employees who can understand the needs of international and diverse markets. We intend to continually evolve our culture so that our associates are recognized for their contributions and valued for the unique differences they bring to the workplace.

U.S. Diversity Inclusion Statistics Year-End 2007

	Total	Women	%	Minority	%
Board of Directors*	10	3	30	3	30
Senior Executives**	28	3	11	12	43
Executives (U.S.A.)	2,326	763	33	470	20
All Managers (U.S.)	10,862	4,037	37	3,003	28
All Employees (U.S.)***	58,532	15,125	26	17,936	31
At year-end 2007 we had approximately 185,000 associates worldwide.
*Our Board of Directors. **Includes PepsiCo Executive Committee members listed here. ***Includes full-time employees only.

In the United States, our Diversity and Inclusion Networks promote a culture where everyone feels they have an equal opportunity to contribute and succeed. The groups include African Americans, Latinos/Hispanics, Asians, Native Americans, Women, Gay/Lesbian/Bisexual/Transgender and EnAble, for individuals with disabilities. In addition to our core employee resource groups, we have the Women of Color Multicultural Alliance and the White Male Inclusion Group.

PepsiCo has a Global Diversity and Inclusion Governance Council that is composed of internal and external thought leaders and is co-chaired by our Chairman and Chief Diversity Officer. The Council is focused on raising the bar on diversity and inclusion capabilities and creating a sustainable and differentiated competitive advantage for PepsiCo. Diversity and Inclusion Councils have been successfully established in all four continents of our PepsiCo International business -- focusing on locally relevant diversity and inclusion strategies and plans, with a particular focus on women.

Increasing support oufor women in the workforce is crucial, especially in developing countries. Our long-term progress depends on recruiting and retaining women in these geographies. PepsiCo International increased the percentage of female executives from 13 in 2003 to 21 in 2007. Representation of women in many Muslim countries in PepsiCo's Middle East/Africa region improved from 5 percent in 2004 to 18 percent in 2007. The Female Talent Development program was launched to focus on work environment changes and recruitment of women in 2008. PepsiCo International increased the percentage of female executives from 13 in 2003 to 21.9 in 2007.

All employees participate in inclusion training sessions. Our Diversity and Inclusion Governance Council, formed in 2005, is a cross-divisional, cross-functional group composed of internal and external thought leaders. Our Ethnic Advisory Boards provide counsel and advice on a broad range of social, cultural and business needs, including marketing, hiring, supplier development and diversity. In the United States we have African-American and Latino/Hispanic Ethnic Advisory Boards. In Canada, we have an Asian Advisory Council. Read more about our Ethnic Advisory Boards

The safety, health and well-being of our employees around the world are of utmost importance. PepsiCo is proud to live by our Sustainability Vision and we believe that protecting the health and safety of our people is a core value.

Occupational Health and Safety
PepsiCo believes that a safe and healthy workplace is a basic human right, and protecting the health and safety of our people are among our core values. We have communicated our beliefs and commitment to them in our company's Occupational Health and Safety policy, and have adopted an integrated framework for managing environment, health and safety risks (the PepsiCo EHSMS framework). The PepsiCo EHSMS framework combines our environment, health and safety expectations for all of our business units and aligns with the international Occupational Health and Safety Assessment Series management standard OHSAS 18001:2007 and international specification for Environmental Management Systems ISO14001:2007.

Many of our facilities have been externally accredited for their health and safety management systems and performance. In the United States, 28 Frito-Lay North America plants, one Quaker Foods North America and four North American Beverage plants have been recognized under the Occupational Safety and Health Administration (OSHA) Voluntary Protection Programs (VPP) Star program. Additionally, our Quaker, Tropicana and Gatorade plants in North America have been invited by OSHA to participate in Phase 2 of the VPP Corporate Pilot. Globally, five of our international plants have achieved OHSAS 18001 certification. Our remaining plants continue to implement the PepsiCo EHSMS framework.

Our OHS policy, which was released in 2008, describes our obligations under eight areas:

1. Regulatory Compliance
We track our OHS legal and regulatory requirements in each business unit and country where we operate. Some countries where we operate have minimal health and safety legislation, which is why we manage risks by setting minimum requirements across our divisions. This includes standards for our high risk areas such as fleet safety and ergonomics. Each PepsiCo business unit has developed an internal audit tool to verify conformance with our internal standards.

PepsiCo Values include a commitment to respect others, inside and outside the Company, which is consistent with our value of treating people with dignity. PepsiCo's Human Rights Workplace Policy ensures a work environment that is free from all forms of discrimination where people feel comfortable and respected. In 2008, we translated this policy into 30 languages and broadly communicated it as part of our Code of Conduct Training, a leading edge process that ensures our businesses are operating in the most ethical way possible.

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 the training, we explore the human rights intrinsic to all and the importance of sustaining an inclusive culture.

PepsiCo's Code of Conduct requires all employees to follow local employment laws and regulations, including child labor laws and treatment of employees. We have set 15 as the minimum age anyone can work for PepsiCo.

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.

Human Rights Workplace Policy

To promote high ethical standards and open communication across a global organization, we ensure that employees have clear lines of communication to report potential issues.  We have a telephone hotline called "Speak Up" for this purpose. It is accessible from around the world at no charge to employees. To further ensure an environment that fosters open communications, employees may remain anonymous.
All associates can use Speak Up as a method to raise any issue. 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. Speak Up calls are received by a third-party vendor -- not a PepsiCo employee -- to ensure anonymity. Explanations of Speak Up are provided on the PepsiCo intranet, on posters and in PepsiCo's Worldwide Code of Conduct.

The availability of the Speak Up line is communicated across PepsiCo. Types of incidents that may be reported through the Speak Up line include, but are not limited to:

• Employee mistreatment
• Discrimination, including sexual harassment
• Product tampering
• Substance abuse
• Falsifying Company records
• Accounting irregularities
• Questionable business practices
• Fraud or theft
• Criminal conduct
• Impermissible gifts
• Safety hazards

PepsiCo serves as chief partner in the global program of the World Health Organization/World Economic Forum "Workplace Wellness Unit" and is working with both organizations to develop better workplace wellness solutions.

PepsiCo extends its commitment to health and wellness internally through employee programs such as HealthRoads, PepsiCo's employee wellness benefit. HealthRoads promotes healthier lifestyles through a combination of health assessments, personalized coaching, fitness and nutrition programs, online tools and worksite wellness initiatives. HealthRoads assists employees in navigating through the health care system and addresses increasing health care costs for both employees and the company, by helping employees maintain good health or improve their health status. In the United States, more than 82,000 employees and spouses are eligible for the program. Last year in the United States, 68 percent of all members registered in the program, 61 percent took a Personal Health Assessment (PHA) and 60 percent of those who took a PHA are participating in wellness coaching programs.

In 2007, HealthRoads was launched in Asia and PepsiCo UK initiated "Fit for Life," a program designed to encourage healthier lifestyles as well as better work/life balance for all employees. Vive Saludable (Live Healthy) is a similar program in Mexico that promotes healthy lifestyles among employees and consumers.

Across PepsiCo we recognize HIV/AIDS as a uniquely challenging global health issue which poses a significant threat to the sustainability of our business operations worldwide. We are committed to making a significant contribution to the fight against this devastating pandemic and to assisting employees and family members affected by it. PepsiCo has established an internal task force on HIV/AIDS to address the issue in our businesses. In addition to the United States and South Africa, the task force identified priority countries where there is a high or rising prevalence and we have major businesses: India, China and Russia.

We made have made great progress in developing and implementing workplace programs in South Africa, India, Russia and China. Thailand and Mexico have recently joined in the effort.

In 2005, we announced our global HIV/AIDS policy and communicated it across all PepsiCo. In South Africa, we launched a direct AIDS intervention program which included full treatment coverage for all employees and spouses. We are continuing the program, providing community outreach through peer education and providing assistance to affected families.

In India, we have provided education, treatment and community outreach programs, including peer education. In China, we have provided education, engaged in programs with outside groups and have a dedicated wellness doctor who visits our business unit facilities to provide information on health and wellness issues, with an emphasis on HIV/AIDS. An information hotline was established to answer questions about HIV/AIDS and other health issues, as well as to provide referrals to treatment facilities and case management where appropriate. In Russia, in addition to employee education and awareness, PepsiCo is participating in community educational programs.

The Thailand business has been a part of a number of activities, including a National Children's Day's activity book on AIDS prevention for children and how to live with AIDS-infected children. The business has a certificate of gold level from the AIDS Response Standard Organization (ASO Thailand) for outstanding HIV/AIDS work. In the United States, PepsiCo has an active program that includes information on our HealthRoads website and review of benefit plans to ensure coverage of HIV/AIDS. In addition, associates participated in HIV/AIDS awareness marches across the United States, raising funds to fight this disease.

Fighting HIV/AIDS
Since 2002 PepsiCo has been a member of the Global Business Coalition on HIV/AIDS, Tuberculosis and Malaria (GBC), a not-for-profit group dedicated to fighting HIV/AIDS and related diseases.

Developing Future Leaders
PepsiCo provides support to programs that offer opportunities for individuals to gain thought leadership skills and experience. In 2007, PepsiCo made a one million dollar commitment to help United Negro College Fund (UNCF) advance its mission and its work with historically black colleges and universities. This gift symbolized PepsiCo's continued commitment to UNCF, to close the gap in providing equal education and in promoting diversity and inclusion in the workplace.

PepsiCo also participated in Fair and Independent Courts: A conference on the State of the Judiciary, at the request of Supreme Court Justice Sandra Day O'Connor. The conference goal was to advance the independence and fairness of the judiciary, which is important to the business environment. Separately, the PepsiCo Foundation made a $100,000 grant to the Georgetown University Law Center. Our contribution will help to implement projects like the production of an online tool for high school students to learn about the independent courts.

Pandemic Preparation
PepsiCo recognizes the dangers pandemics could pose to our employees and business and has established a task force that is addressing potential pandemics. In the United States, this includes education, awareness and steps to take regarding work related issues.

The PepsiCo Foundation has a long history of funding diversity programs in education and workforce development with community-based organizations in the United States. The Foundation's objective is to foster economic achievement and mobility for the underserved and minority populations. Currently, the strategic areas of focus include access to education and training and, women's empowerment programs.

National Council of La Raza:  Together with the National Council of La Raza (NCLR) in 2001, the PepsiCo Foundation created the NCLR Escalera project "Taking Steps to Success" to close the gap of Latino high school drop outs. The program encourages at-risk Latino high school students to graduate from high school, prepare for college, and explore career opportunities through internships. The Foundation's intent is to co-develop a best practice education program model that can be expanded to include all of the organization's 300 affiliates. This program continues to be expanded and replicated across the nation.

Ascent: Since 2006, The PepsiCo Foundation has been working in partnership with Ascent to prepare and train multicultural women to build careers in corporate America. Ascent collaborates with corporate partners to identify, attract, and advance women of color. The partnership is designed to assist Ascent in firming its business strategy, training, portfolio and governance structure, and
to enable Ascent to launch and develop program curricula.

Community Engagement
PepsiCo encourages and supports its employees in their efforts to volunteer with community organizations and projects. We sponsor and participate in a wide variety of local and national activities through employee involvement. During PepsiCo's 2008 Global Week of Community Service, more than 1,800 employees around the world spent time serving their local communities and service organizations.

We are continually looking for ways to make PepsiCo a great place to work. One way we do this is by offering comprehensive benefits packages designed to address the health care and financial needs of our employees, both now and into retirement.

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 drugs, mental health, life and accident insurance, disability and flexible spending accounts. We also offer commuter reimbursements, adoption assistance, Employee Assistance Program, child and elder care referral and resources, smoking cessation programs, care and lifestyle management programs and family and medical leaves. Domestic partners who meet certain eligibility requirements may be covered under PepsiCo benefits. Eligible part time employees receive medical, dental, vision, life insurance and disability benefits.

Financial benefits in the United States 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. Currently, over 90,000 PepsiCo employees receive the grant annually.

PepsiCo University is a worldwide system of continuous education that supports our learning culture. PepsiCo University has launched a new online portal for employees worldwide that offers blended learning solutions, combining classroom style learning with electronic tools, focused on building people skills, managerial skills and cultural awareness.

PepsiCo also 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 career 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 to gain a broader perspective of our business.

As a guide for associates in all functions and at all levels of our organization, we introduced the PepsiCo Leadership and Individual Effectiveness Model in 2007. The model details the key competencies and associated behaviors that are required -- individually and collectively -- to assure we reach our performance goals. Regardless of current role, level or career aspiration, every associate can use the model to understand which behaviors they should strive for today and what will contribute to their own personal success, as well as success for PepsiCo.

Beginning in 2008, we aligned our 360-degree feedback process with the PepsiCo Leadership and Individual Effectiveness Model to make it more robust and ensure that leaders know and understand what is expected of them. As a new and significantly valuable addition, we will combine the 360-degree process with other feedback tools to further build self-awareness and provide participants with rich, one-on-one developmental feedback from trained and certified facilitators.

In 2007, we introduced a concept called "One Simple Thing," which strives to help associates better bilance work and home by agreeing with their manager to make one change. All employees receive regular performance and career development reviews annually.

We also ask associates to respond to an "Organizational Health" survey, generally every other year. Topics include benefits, working conditions, compensation, career development, diversity and inclusion initiatives, community activities and many others. The results of the survey are shared with associates and action plans to address issues are developed and made a part of performance goals.

PepsiCo offers a variety of Award Programs to recognize associates. Common to all businesses are gift awards for length of service. All associates are also eligible to receive stock option grants as recipients of The Chairman's Award, a program which recognizes outstanding accomplishments above and beyond an individual's basic job accountabilities and which deliver a sustainable business impact in support of the company's Performance with Purpose vision. The Chairman's Award is the highest honor at PepsiCo.

To honor those who have helped PepsiCo advance our commitment to world-class performance in diversity and inclusion, we have created a unique Chairman's Award called the Harvey C. Russell Inclusion Award. Harvey C. Russell was chosen as the namesake for this prestigious award, because his leadership, perseverance, and commitment to "raising the bar" are the foundation upon which PepsiCo's diversity initiative is built.

The Steve Reinemund Diversity & Inclusion Leadership Legacy Award is a PepsiCo leadership award given to senior leaders who champion diversity and inclusion over time and move PepsiCo to new levels of diversity and inclusion accomplishments and behaviors through their words and actions.

Front line associates are those who make, sell and distribute our brands. These associates, as well as the front line employees of our bottlers, are eligible for the President's Ring of Honor. This annual award inducts high achievers into a permanent role of honor. We have a variety of other award programs within our divisions.

Supplier CSR Assurance Program
We communicate, educate and work with our suppliers to improve corporate social responsibility performance across the Supply Chain.

In 2007, PepsiCo developed a Supplier Code of Conduct to clarify our global expectations in the areas of labor practices, employee health and safety, environmental management and business integrity. It has been translated into 18 additional languages, has been proactively communicated and is mandatory in all procurement contracts. Our Supplier Code is based on the ILO, UNGC and other benchmark standards.

Supplier Code of Conduct

To further demonstrate our commitment to sustainability within our supply chain, PepsiCo joined the Supplier Ethical Data Exchange (Sedex). Sedex is a web-based system that allows companies to maintain and share data on labor and environmental standards at their production sites. Sedex members are committed to continuous improvement of the ethical performance of their supply chains.

We have also joined in an industry-wide initiative called AIM-PROGRESS along with other manufacturers to work towards improving working conditions within our supply chain communities. PepsiCo is the Vice-Chair of this initiative and continues to lead expansion of AIM-PROGRESS across the CPG industry.

Engaging Suppliers: Supplier Diversity
PepsiCo extends its commitment to diversity and inclusion by providing opportunities for our business partners and the communities in which we operate. PepsiCo and its bottler community achieved 2007 spending of approximately $1.13 billion with U.S. minority-owned and women-owned suppliers, marking the fifth consecutive year of double-digit growth in supplier diversity spending. In the United Kingdom, PepsiCo is a founding member of the National Minority Supplier Development Council (NMSDC) international pilot program to inspire supplier diversity. PepsiCo has taken a leadership position in the group, which is called Minority Supplier Development United Kingdom (MSDUK).