Company Name: PepsiCo, Inc.
Public Availability Date: January 31, 2008Document Sections:
INQUIRY LETTER
INQUIRY LETTER
APPENDIX 1
STAFF REPLY LETTER
[INQUIRY LETTER]
December 21, 2007
Re: PepsiCo, Inc. - Shareholder Proposal Submitted by National Legal and Policy
Center
Office of the Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington D.C. 20549
Ladies and Gentlemen:
On behalf of PepsiCo, Inc., a North Carolina corporation ("PepsiCo"), and in
accordance with rule 14a-8(j) under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), we are filing this letter with respect to the
shareholder proposal and supporting statement (the "Proposal") submitted to
PepsiCo on November 20, 2007 by Peter Flaherty, President of National Legal and
Policy Center (the "Proponent"), for inclusion in the proxy materials PepsiCo
intends to distribute in connection with its 2008 Annual Meeting of
Shareholders.
We respectfully request confirmation that the staff of the Office of Chief
Counsel of the Division of Corporation Finance (the "Staff") will not recommend
enforcement action to the Securities and Exchange Commission (the "Commission")
if, in reliance on rule 14a-8, PepsiCo omits the Proposal from its 2008 proxy
materials. PepsiCo expects to file its definitive proxy materials with the
Commission on or about March 21, 2008. Accordingly, pursuant to rule 14a-8(j),
this letter is being filed with the Commission no later than 80 days before
PepsiCo files its definitive 2008 proxy materials.
Pursuant to rule 14a-8(j), we have enclosed six copies of each of this letter
and the Proposal, and a copy of this submission is being sent simultaneously to
the Proponent as notification of PepsiCo's intention to omit the Proposal from
its 2008 proxy materials. PepsiCo has not received any other correspondence from
the Proponent to be included with this letter. This letter constitutes PepsiCo's
statement of the reasons it deems the omission of the Proposal to be proper. We
have been advised by PepsiCo as to the factual matters set forth herein.
I. Introduction
The Proposal (including the supporting statement) is attached hereto as Exhibit
A. The Proposal requests that PepsiCo's board of directors adopt a policy that
allows shareholders to vote on an advisory management resolution at each annual
meeting to approve or disapprove the Compensation Discussion and Analysis report
("CD&A") in the proxy statement.
PepsiCo intends to omit the Proposal from its 2008 proxy materials because it
substantially duplicates another proposal previously submitted to PepsiCo by
another proponent that will be included in the company's 2008 proxy materials
for the same Annual Meeting of Shareholders.
II. Discussion
Rule 14a-8(i)(11) permits a company to omit a proposal if it substantially
duplicates another proposal previously submitted to the company by another
proponent that will be included in the company's proxy materials for the same
meeting. The Proposal was submitted to PepsiCo on November 20, 2007. Prior to
November 20, 2007, PepsiCo received the following shareholder proposal (the
"Earlier Proposal"), dated November 15, 2007, from the Boards of Trustees of
TIAA-CREF:
RESOLVED, that the shareholders of PepsiCo (the "Company") recommend that the
board of directors adopt a policy requiring that the proxy statement for each
annual meeting contain a proposal, submitted by and supported by Company
management, seeking an advisory vote of shareholders to ratify and approve the
board Compensation Committee Report and the executive compensation policies and
practices set forth in the Company's Compensation Discussion and Analysis.
Supporting Statement
The recent amendments to the Securities and Exchange Commission's rules
governing the disclosure of executive compensation are intended to provide
shareholders with clearer and more complete information about the Company's
compensation policies, goals, metrics, rationale and cost. The new rules should
enable shareholders to make an informed judgment about the appropriateness of
the company's compensation program. We believe that a non-binding, advisory vote
is an effective way for shareholders to advise the company's board and
management whether the company's policies and decisions on compensation have
been aaequately explained and whether they are in the best interest of
shareholders.
An advisory vote would inform management and the board of shareholder views
without involving shareholders in compensation decisions. We believe that the
results of an advisory vote would encourage independent thinking by the board,
stimulate healthy debate within the Company and promote substantive dialogue
about compensation practices between the Company and its investors.
We urge you to vote "FOR" this proposal.
* * *
The Commission has stated that the grounds for exclusion of a shareholder
proposal under rule 14a-8(i)(11) are intended to "eliminate the possibility of
shareholders having to consider two or more substantially identical proposals
submitted to an issuer by proponents acting independently of each other."
Exchange Act Release No. 34-12598 (July 7, 1976). Two proposals need not be
exactly identical in order to provide a basis for exclusion under rule
14a-8(i)(11). In granting requests for no-action relief under rule 14a-8(i)(11),
the Staff has consistently taken the position that proposals that have the same
"principal thrust" or "principal focus" may be considered substantially
duplicative, even where such proposals differ in terms and scope. General Motors
Corporation (April 5, 2007); JPMorgan Chase & Co. (March 5, 2007); Gannett Co.,
Inc. (December 21, 2005); Sun Microsystems, Inc. (July 29, 2005); Paychex, Inc.
(July 18, 2005); Comcast Corporation (March 22, 2005); The Home Depot, Inc.
(February 28, 2005); Constellation Energy Group, Inc. (February 19, 2004); Time
Warner Inc. (February 11, 2004); Siebel Systems, Inc. (April 15, 2003).
The terms of the Earlier Proposal and the Proposal are nominally different, but
the principal thrust and focus of each of the proposals calls for a shareholder
advisory vote on PepsiCo's CD&A For example, while the Proposal includes the
statement that "the policy should provide that appropriate disclosures will be
made to ensure that shareholders fully understand that the vote is advisory,
will not affect any person's pay, and will not affect the approval of any
compensation-related proposal submitted for a vote of stockholders at the same
or any other meeting of stockholders," this additional detail only repeats the
advisory character of the shareholder vote contemplated by the Proposal and does
not alter its substance. In addition, while the Earlier Proposal specifies that
PepsiCo's compensation committee report also be subject to the advisory vote,
under item 407(e)(5) of Regulation S-K the compensation committee report now
consists only of a statement as to whether the compensation committee has
reviewed and discussed the CD&A and whether, based on such review and
discussion, the compensation committee recommended to the board of directors
that the CD&A be included in the proxy statement. Finally, while the Earlier
Proposal specifically states that the advisory vote should address the
"executive compensation policies and practices" set forth in the CD&A, this
additional language merely summarizes the subject matter of the CD&A required by
item 402(b) of Regulation S-K. Accordingly, the advisory vote called for by the
Earlier Proposal will present the same issues for consideration by PepsiCo's
shareholders as would the advisory vote called for by the Proposal. Because the
principal thrust and focus of the Proposal and the Earlier Proposal are the
same, and the Earlier Proposal was submitted to PepsiCo before the Proposal,
PepsiCo intends to omit the Proposal from its 2008 proxy materials in accordance
with rule 14a-8(i)(11).
III. Conclusion
For the foregoing reasons, we believe that the Proposal may be excluded from
PepsiCo's 2008 proxy materials, and respectfully request your confirmation that
the Staff will not recommend enforcement action to the Commission if PepsiCo
proceeds on this basis.
If you have any questions or require further information, please call me at
212-450-4565 or contact me by email at joseph.hall@dpw.com. Thank you for your
attention to this matter.
Very truly yours,
/s/
Joseph A. Hall
Enclosures
cc: Thomas H. Tamoney, Jr., Esq.
Cynthia A. Nastanski, Esq.
Christopher Bellanca, Esq.
PepsiCo, Inc.
Mr. Peter Flaherty
President
National Legal and Policy Center
107 Park Washington Court
Falls Church, VA 22046
Fax: 703-237-2090
(via fax and courier)
[INQUIRY LETTER]
November 20, 2007
Mr. Larry D. Thompson
Secretary
PepsiCo
700 Anderson Hill Road
Purchase, NY 10577-1444
VIA FAX 914-253-3051
Dear Mr. Thompson:
I hereby submit the enclosed shareholder proposal ("Proposal") for inclusion in
the PepsiCo ("Company") proxy statement to be circulated to Company shareholders
in conjunction with the next annual meeting of shareholders. The Proposal is
submitted under Rule 14(a)-8 (Proposals of Security Holders) of the U.S.
Securities and Exchange Commission's proxy regulations.
National Legal and Policy Center (NLPC) is the beneficial owner of 54 shares of
the Company's common stock, which shares have been held continuously for more
than a year prior to this date of submission. NLPC intends to hold the shares
through the date of the Company's next annual meeting of shareholders. The
attached letter contains the record holder's appropriate verification of NLPC's
beneficial ownership of the aforementioned Company stock.
The Proposal is submitted in order to promote shareholder value by requesting a
Shareholder Vote on Executive Pay.
I will present the Proposal for consideration at the annual meeting of
shareholders.
If you have any questions or wish to discuss the Proposal, please contact me at
the number below. Copies of correspondence or a request for a "no-action" letter
should be forwarded to me at the address below.
Sincerely,
/s/
Peter Flaherty
President
Enclosures: Shareholder Resolution: Shareholder Vote on Executive Pay Letter
from SmithBarney
[APPENDIX 1]
Shareholder Vote on Executive Pay
RESOLVED, shareholders request that our board of directors adopt a policy that
allows shareholders to vote on an advisory management resolution at each annual
meeting to approve or disapprove the Compensation Discussion and Analysis report
in the proxy statement.
The policy should provide that appropriate disclosures will be made to ensure
that shareholders fully understand that the vote is advisory, will not affect
any person's pay, and will not affect the approval of any compensation-related
proposal submitted for a vote of stockholders at the same or any other meeting
of stockholders.
Supporting Statement:
The Corporate Library gives PepsiCo a "C" in its governance rating "due to
continued concerns over CEO compensation levels which are relative to other
large cap firms misaligned with shareholder interests and not tied to company
performance."
The Corporate Library expresses a "high concern for shareholder interests
because of the compensation paid to former Chief Executive Officer Steven S.
Reinemund in 2006." Regarding current CEO Indra Nooyi, the Corporate Library
states, "Our view is that shareholder interests will benefit from a CEO
shareholder compensation package for Ms. Nooy that is more in line with
compensation at other large cap firms."
Current rules governing senior executive compensation do not give shareholders
enough influence over pay practices. In the United Kingdom, public companies
allow stockholders to cast an advisory vote on the "directors remuneration
report." Although the vote isn't binding, it allows shareholders a voice.
Unless PepsiCo voluntarily gives shareholders such a voice, Congress may well
pass legislation forcing the Company to do so, such as the "Shareholder Vote on
Executive Compensation Act" (H. R. 1257).
[STAFF REPLY LETTER]
January 31, 2008
Response of the Office of Chief Counsel Division of Corporation Finance
Re: PepsiCo, Inc. Incoming letter dated December 21, 2007
The proposal requests that the board adopt a policy that allows shareholders to
vote on an advisory management resolution at each annual meeting to approve or
disapprove the Compensation Discussion and Analysis report in the proxy
statement.
There appears to be some basis for your view that
PepsiCo may exclude the proposal under rule 14a-8(i)(11) as substantially
duplicative of a previously submitted proposal that will be included in
PepsiCo's proxy materials. In this regard, we note your representation that
another proposal was previously submitted to PepsiCo by another proponent.
Accordingly, we will not recommend enforcement action to the Commission if
PepsiCo omits the proposal from its proxy materials in reliance on rule
14a-8(i)(11).
Sincerely,
/s/
Craig Slivka
Attorney-Adviser
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