Talent Sustainability

Increasing the skills of our employees is crucial for business success in a competitive global economy.

Outside of the leadership area, PepsiCo has traditionally approached the functional organizational learning and knowledge management aspects of development from a primarily decentralized perspective. Each division handles its functional organizational learning and knowledge management locally. As a result, each division has developed its own set of functional competency models. To foster consistency where appropriate, we have developed cross-divisional functional competency models for Sales, Marketing, Finance and Human Resources. These models are used as the basis for building career frameworks that described certain job roles and responsibilities. These tools are available on our internal learning management and career development websites.

PepsiCo also offers associates specific job training as required, including attending professional conferences to enhance their skills, and we have a 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 yearlong 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. All employees are included in some form of performance management process across PepsiCo.

As a guide for associates in all functions and at all levels of our organization, we have the PepsiCo Leadership and Individual Effectiveness Model. The model details the key competencies and associated behaviors that are required-individually and collectively-to assure that 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.

360 Degree Feedback at PepsiCo is an annual process for executives and people managers across all divisions of PepsiCo. While we have always had a robust 360 program, in 2008 the process was enhanced to be even more focused on building self-awareness of the participants by linking results to a best-in-class personality assessment inventory (the Hogan Assessment Suite). The process now requires mandatory follow-up feedback meetings with certified professionals (based on a custom-designed three-day certification program) in the 360 program and personality tools to ensure a high-quality and rigorous feedback and development planning discussion. Evaluation results from the program in 2008 were extremely positive, with 86% of respondents indicating that the integration of the 360 feedback with the Hogan Assessment Suite helped them gain valuable leadership insights into ways they can maximize their effectiveness.

Beginning in 2008, we aligned our 360 degree feedback process with the PepsiCo Leadership and Individual Effectiveness Model to make it more robust and to ensure that leaders know and understand what's 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.

For our entire executive and professional population (all salaried employees at all levels), we have a formal performance evaluation system with separate Business and People objectives that our employees are evaluated on each year. As part of the performance appraisal process, our entire executive and professional population is required to have a mid-year review with their manager, and employees provide input on their results against their objectives. All individuals receive a formal written feedback form that follows a standard process, including summary highlights and developmental opportunities. Formal written feedback is signed by the employee, the employee's manager, the next level manager, and Human Resources leadership. Individual performance objectives include measures relating to the company's Performance with Purpose agenda in each of our three sustainability planks (Environmental, Human and Talent) as well as improved operating efficiencies, customer and employee satisfaction, and for all people managers, their performance as it relates to the management and development of people.

Front-line employees in certain operating divisions and in certain functions (primarily sales and manufacturing operations) receive feedback directly from their managers/supervisors on an ongoing basis in real time and do not require the same type of objectives-based process.

We also ask associates to respond to an Organizational Health survey biannually. The Organizational Health survey provides developmental feedback to people managers throughout the organization. The survey is a global process with a consistent set of core items. All employees are surveyed in every country in the world for their feedback, resulting in survey translations into over 35 languages. 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 used at multiple levels (e.g., front-line supervisors, middle managers, functional VPs, division and business unit CEOs, the PepsiCo CEO, External Advisory Boards, etc.) to drive action plans and improvements throughout the corporation. Results are also leveraged for summaries and action planning of employee issues across various populations, including African-Americans, women of color, Latinos, Asians, white males, women, and GLBT employees.

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 that recognizes outstanding accomplishments above and beyond an individual's basic job accountabilities and that delivers 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 its 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.

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 U.S., 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 U.S. 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.

Outside the U.S., benefits are provided through a combination of company-sponsored programs and state programs funded by payroll or other taxes. PepsiCo has adopted global standards designed to ensure that all employees receive at least basic medical, disability, life insurance and retirement benefits, regardless of location. The company has an ongoing process in place to review and, if necessary, adjust practices in mature markets, and shape practices in emerging markets against these standards.

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 our associates are recognized for their contributions and valued for the unique differences they bring to the workplace.

We are committed to hiring and retaining the best talent to fill each and every job in the corporation. And we are equally committed to fostering an atmosphere of caring, open communication and candor among our employees, where we treat each other with respect. These fundamental policies are reflected in our PepsiCo Values Statement.

That commitment to diversity continues today. We place a great deal of emphasis on personal integrity and believe long-term results, from real accomplishments, are the only fair way to judge performance. We respect individual differences in culture, ethnicity and gender. PepsiCo is committed to equal opportunity for all employees and applicants. We are committed to providing a workplace free from all forms of discrimination. We respect the right of individuals to achieve professional and personal balance in their lives.

Although PepsiCo is a global corporation, the way it operates is more local in character. In markets outside the United States, PepsiCo businesses rely primarily on hiring local managers and employees.

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 Advisory 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. PepsiCo's External Diversity Advisory Boards consist of educators, politicians, practitioners, and customers to advise PepsiCo senior management on a variety of issues relating to diversity and inclusion.

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 U.S., we have African-American and Latino/Hispanic Ethnic Advisory Boards. In Canada, we have an Asian Advisory Council.

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 is 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 environmental, health and safety risks (the PepsiCo Environmental Health and Safety Management System (EHSMS) framework). The PepsiCo EHSMS framework combines our environmental, 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 ISO 14001:2007.

PepsiCo's commitment to occupational health and safety is described in the PepsiCo Occupational Health and Safety Policy. The policy is posted on the PepsiCo website and intranet, and is referenced in the PepsiCo Code of Conduct training. The PepsiCo Occupational Health and Safety Policy was developed in consultation with more than 500 PepsiCo employees and was approved by the PepsiCo Public Policy Coordinating Group. The policy has been translated into 20 languages.

 Download our Occupational Health and Safety Policy

Health and safety performance is governed by the PepsiCo Health and Safety Leadership Council (HSLC). The council comprises members from across PepsiCo, including representation from Frito-Lay North America, PepsiCo Canada, SACC Sabritas in Mexico, PepsiCo International, PepsiCo Americas Beverage, Quaker Food & Snacks, Global Research & Development, Risk Management and Legal. The HSLC is sponsored by PepsiCo's CEO, SVP of Human Resources and SVP of Operations.

The HSLC operates under three platforms: governance, leverage and connectivity. The HSLC reports on health and safety performance using globally-agreed-upon metrics and implementation of the PepsiCo EHSMS framework. The HSLC meets every two months and is responsible for:

• Defining the PepsiCo Occupational Health and Safety policy and strategic framework and monitoring its compliance across all divisions.
• Assessing performance, systemic strengths, and gaps relative to our own aspirations and external benchmarks.
• Developing goals and timelines for PepsiCo health and safety performance.
• Prioritizing and directing activities to continually improve performance.
• Partnering with efforts in Human and Environmental Sustainability to assure comprehensive and complementary strategies for PepsiCo's Performance with Purpose.
• Advising and informing PepsiCo senior management on matters of worker health and safety.

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.

PepsiCo International also published more than 20 environment, health and safety (EHS) standards that describe minimum requirements for EHS management systems and risks, including EHS risk management, permit-to-work, EHS Competence and training.

PepsiCo Chicago has a dedicated professional staff comprised of approximately 13 EHS professionals who are responsible for both occupational safety and health programs and environmental programs. PepsiCo Chicago's manufacturing sites have one or more dedicated EHS professionals who assist their sites in meeting PepsiCo Chicago's standards and risk management expectations. All site EHS leaders are members of their site leadership teams, and report to both their plant managers and division EHS staff. PepsiCo Chicago's EHS efforts are delivered through management systems called Organizational Practices that apply to both employee safety and health and environmental considerations. These Organizational Practices include Leadership and Commitment, Employee Ownership, Risk Management, Training and Learning, Information Management, and Continuous Improvement. EHS risk prevention and regulatory compliance is achieved through the Risk Management Organizational Practice. Risk Management includes identification of EHS risks, evaluation and prioritization, and execution of feasible and effective controls (both interim and long-term).

In 2008, PepsiCo Chicago received several internal and external awards, including OSHA VPP Star certification at Columbia, Mo., Quaker and OSHA VPP Star recertification at Ft. Pierce, Fla., Tropicana.

Frito-Lay continued its involvement in OSHA VPP. During 2008, the manufacturing sites in Kirkwood, N.Y., and Modesto, Calif., were approved at the Star level, the highest honor bestowed under the program. Frito-Lay now has 30 VPP Star sites--the most in the food industry.

Frito-Lay continues to build on its strong safety culture in both the Operations and Sales functions. Frito-Lay continues to provide ongoing injury and vehicle collision prevention training for all associates and is leveraging the power of employee engagement to create the positive safety culture needed for long-term success. The organization embraces the safety vision--"Zero Injuries and Zero Collisions"--and believes that all injuries can be prevented.

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 annual Code of Conduct Training, a leading-edge process that ensures that our businesses are operating in the most ethical way possible.

Human rights policy violations can be reported to HR, the PepsiCo Law Department, or through the Speak Up hotline. We encourage employees to report issues such as discrimination, harassment and mistreatment of employees when they occur. 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 that 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.

As a signatory to the United Nations Global Compact, PepsiCo is visibly committed to all of its 10 principles, including those for Human Rights and Labor Standards. We collaborate with our contractors, licensed bottlers, suppliers, customers and local communities to reduce the health and safety impacts of our daily operations and technology as it applies to them.

 Download our Human Rights 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.

PepsiCo expects and encourages all of its employees, as well as its contractors, subcontractors, agents and their employees, to promptly report on a confidential and/or anonymous basis any conduct or situation that he/she believes could conflict with PepsiCo's Code of Conduct, Values, and policies or violates state local or federal law. Speak Up is a 24-hour, toll-free, anonymous hotline available to report any suspected misconduct or business abuse. Speak Up calls are received by a third-party vendor--not a PepsiCo employee--to ensure anonymity. The Speak Up hotline is available in 48 countries and 33 languages through dedicated country-specific toll free phone lines, and available elsewhere via collect call. Any Speak Up calls received from suppliers, vendors and customers are handled in the same manner as calls received from employees.

Explanations of Speak Up are provided on this website, on posters and in PepsiCo's Worldwide Code of Conduct, which is available on PepsiCo's website in 33 languages.

The availability of the Speak Up hotline is communicated across PepsiCo. Types of incidents that may be reported through the Speak Up hotline 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 continues to add additional lines and languages as the company acquires new businesses and expands into new countries. In the past year, three new country-specific lines were installed in Pakistan, New Zealand and Croatia, and an additional five lines went live in June 2009. In addition, PepsiCo continually improves the service offered by the hotline. In the fall of 2008, a new enhanced web-based reporting tool was launched, enabling complaints to be made over the Internet to a secure website maintained by a third-party vendor. As a result of the new web-based reporting tool, the number of complaints received over the web has increased three-fold over the first six months since the tool went live.

Across PepsiCo we recognize HIV/AIDS as a uniquely challenging global health issue that 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 South Africa, we are continuing the direct AIDS intervention program, which includes full treatment coverage for all employees and spouses. The program provides community outreach through peer education and providing assistance to affected families. PepsiCo's South Africa business has also implemented quarterly Health and Wellness weeks that provide employees with free testing for conditions such as HIV, diabetes and high blood pressure, and free counseling on matters such as nutrition and cancer. South Africa ICAS E-Care Employee Wellness Programme helps employees take ownership of total well-being (physical, psychological and social).

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 the HealthRoads website, a 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.

More information about our HIV/AIDS policy

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 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 the 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 this and other 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.

Johns Hopkins University was awarded a $5 million grant in support of the Diplomas Now program, a collaborative initiative between Johns Hopkins, City Year, and Communities in Schools. The goal is to transform the high-poverty secondary schools in the 10 U.S. cities that produce most of the nation's dropouts. The program seeks to substantially increase the graduation rate among these schools by helping students stay on track, graduate from high school and prepare for adult success.

The PepsiCo Foundation continued to support National Council of LaRaza and the Escalera project in 2008. Together with National Council of LaRaza in 2001, PepsiCo Foundation created the NCLR Escalera Project: Taking Steps to Success to stem the tide and close the gap of Latino high school dropouts, encouraging them to graduate from high school, prepare for college and explore career opportunities through internships.

The Diamond Scholars program was supported by the PepsiCo Foundation again in 2008 and has been implemented in Dallas, Detroit, Miami, San Jose, and Los Angeles. Annually, it offers renewable scholarship aid to urban youth who have demonstrated an ability to overcome adversity and plan to pursue post-secondary education.

The Foundation's commitment extends beyond grants by encouraging employees to engage in their communities through volunteer activities and by offering a Matching Gifts program, United Way Campaigns, and Community Service Day. In 2008, more than $6 million in matching funds was distributed globally in support of employees' financial contributions.

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 and served 9,273 volunteer hours.