UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. ___)

Filed by the Registrant þ

Filed by a Party other than the Registrant o

Check the appropriate box:

o				Preliminary proxy statement.
o				Confidential, for use of the Commission only (as permitted by Rule 14a-6(e)(2)).
þ				Definitive proxy statement.
o				Definitive additional materials.
o				Soliciting material under Rule 14a-12.

PEPSIAMERICAS, INC.

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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PepsiAmericas, Inc.

4000 Dain Rauscher Plaza

60 South Sixth Street

Minneapolis, Minnesota 55402

 

Robert C. Pohlad

Chairman and Chief Executive Officer

 

March 16, 2007

 

Dear Shareholder:

 

We are pleased to invite you to attend the 2007 Annual Meeting of Shareholders of PepsiAmericas, Inc., to be held on April 26, 2007, at 10:30 a.m., local time, at the Four Seasons Hotel, 120 East Delaware Place, Chicago, Illinois.

 

The formal notice of the meeting follows on the next page. Enclosed with this proxy statement are your proxy card, a postage-paid return envelope and a copy of our 2006 Annual Report.

 

In order to complete arrangements for the meeting, we would like to know in advance how many shareholders expect to attend. If you plan to attend, please check the box provided on the proxy card or advise us when voting by telephone or Internet.

 

We look forward to seeing you at the meeting.

 

 

Robert C. Pohlad

Chairman and Chief Executive Officer

PEPSIAMERICAS, INC.
4000 Dain Rauscher Plaza
60 South Sixth Street
Minneapolis, Minnesota 55402

 

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

 

Date:    April 26, 2007

 

Time:  10:30 a.m., local time

 

120 East Delaware Place

Chicago, Illinois

 

Purposes:

 

 

The close of business on February 27, 2007, has been fixed as the record date for determination of shareholders entitled to notice of and to vote at the meeting. A complete list of the shareholders entitled to vote at the meeting will be open to the examination of any shareholder, for any purpose germane to the meeting, during ordinary business hours, during the ten days prior to the meeting at our offices at 4000 Dain Rauscher Plaza, 60 South Sixth Street, Minneapolis, Minnesota 55402.

 

Please vote your shares as promptly as possible. Even if you plan to attend the meeting, please execute the proxy promptly by signing, dating and returning the enclosed proxy card by mail or by following the telephone or Internet voting instructions that appear on the enclosed proxy card. If you attend the meeting, you may vote your shares in person if you wish.

 

By Order of the Board of Directors

 

 

Brian D. Wenger

Corporate Secretary

 

Minneapolis, Minnesota

March 16, 2007

 

TABLE OF CONTENTS

 

PEPSIAMERICAS, INC.
4000 Dain Rauscher Plaza
60 South Sixth Street
Minneapolis, Minnesota 55402

 

PROXY STATEMENT

 

ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD APRIL 26, 2007

 

We manufacture, distribute and market a broad portfolio of PepsiCo and other national and regional beverage brands. We are the second largest bottler in the Pepsi system, with operations in the United States, Central Europe and the Caribbean. Our principal executive offices are located at 4000 Dain Rauscher Plaza, 60 South Sixth Street, Minneapolis, Minnesota 55402, and our telephone number is (612) 661-3883.

 

If you received your annual meeting materials by mail, we encourage you to conserve natural resources and help reduce our company’s printing and mailing costs by signing up to receive future shareholder communications via e-mail. With electronic delivery, we will notify you via e-mail as soon as the annual report and the proxy statement are available on the Internet, and you can easily submit your vote online. Electronic delivery can also help reduce the number of bulky documents in your personal files and eliminate duplicate mailings. To sign up for electronic delivery, visit our website at www.pepsiamericas.com in the Investors’ section under “electronic delivery enrollment.”

 

Your electronic delivery enrollment will be effective until you cancel it. If you have questions about electronic delivery, please call our Investor Relations department at (612) 661-3883.

 

Our meeting will be held on April 26, 2007, at 10:30 a.m., local time, at the Four Seasons Hotel, 120 East Delaware Place, Chicago, Illinois. No cameras or recording equipment will be permitted at the meeting. However, our meeting will be webcast. If you are unable to attend the meeting in person, you are invited to visit www.pepsiamericas.com at 10:30 a.m., Central Daylight Saving Time, on April 26, 2007, to view the webcast of the meeting. An archived copy of the webcast also will be available on our website.

 

We sent you these proxy materials because our Board of Directors is soliciting your proxy to vote your shares at the meeting. On approximately March 16, 2007, we will begin mailing these proxy materials to all shareholders of record at the close of business on February 27, 2007 (the “record date”). On the record date there were 128,714,017 shares outstanding and approximately 8,872 holders of record.

 

A quorum is necessary to hold a valid meeting. The attendance by proxy or in person of holders of 51% of the shares entitled to vote at the meeting will constitute a quorum to hold the meeting. Abstentions and broker non-votes are counted as present for establishing a quorum. A broker non-vote occurs when a broker votes on some matter on the proxy card but not on others because the broker does not have the authority to do so.

 

If a properly executed proxy is returned and the shareholder has abstained from voting on the election of a director, the shares represented by such proxy will be considered present at the meeting for purposes of determining a quorum, but will not be considered to be represented at the meeting for purposes of calculating

the vote with respect to such matter. If a properly executed proxy is returned and the shareholder has abstained from voting on any other matter, the shares represented by such proxy will be considered present at the meeting for purposes of determining a quorum and for purposes of calculating the vote, but will not be considered to have been voted in favor of such matter.

 

If a properly executed proxy is returned by a broker holding shares in street name which indicates that the broker does not have discretionary authority as to certain shares to vote on one or more matters, such shares will be considered present at the meeting for purposes of determining a quorum, but will not be considered to be represented at the meeting for purposes of calculating the vote with respect to such matter.

 

You are entitled to one vote for each share of common stock that you own as of the close of business on the record date. Please carefully read the instructions below on how to vote your shares. Because the instructions vary depending on how you hold your shares, it is important that you follow the instructions that apply to your particular situation.

 

Voting by proxy.  Even if you plan to attend the meeting, please execute the proxy promptly by signing, dating and returning the enclosed proxy card by mail, or by following the telephone or Internet voting instructions that appear on the enclosed proxy card.

 

Voting in person at the meeting.  If you plan to attend the meeting, you can vote in person. In order to vote at the meeting, you will need to bring your share certificates or other evidence of your share ownership with you to the meeting.

 

Revoking your proxy.  As long as your shares are registered in your name, you may revoke your proxy at any time before it is exercised. There are several ways you can do this:

 

 

Voting by proxy.  If your shares are registered in the name of your broker or nominee, you will receive instructions from the holder of record that you must follow in order for your shares to be voted.

 

Voting in person at the meeting.  If you plan to attend the meeting and vote in person, you should contact your broker or nominee to obtain a broker’s proxy card and bring it and your account statement or other evidence of your share ownership with you to the meeting.

 

Revoking your proxy.  If your shares are held in street name, you must contact your broker to revoke your proxy.

 

By giving us your proxy, you authorize the individuals named on the proxy card to vote your shares in the manner you indicate at the meeting or any adjournments thereof.

 

Election of Directors

 

With respect to the election of individual nominees for director, you may:

 

 

Because the number of nominees properly nominated for the 2007 Annual Meeting of Shareholders is the same as the number of directors to be elected at the 2007 Annual Meeting of Shareholders, the 2007 election of directors is a non-contested election. Therefore, if a quorum is present at the meeting, the nominees receiving a majority of votes cast will be elected to serve as directors. For additional information, please review “Majority Voting Standard and Director Resignation Policy” below.

 

Ratification of Appointment of Independent Registered Public Accountants

 

With respect to the other proposal presented in this proxy statement, you may:

 

 

Submitting a Proxy without Voting Instructions

 

If you give us your proxy but do not specify how you want us to vote your shares, your shares will be voted as follows:

 

 

Costs and Manner of Proxy Solicitation

 

We will bear the cost of soliciting proxies. In addition to this notice by mail, we request brokers, custodians, nominees and others to supply proxy materials to shareholders, and we will reimburse them for their expenses. Our officers and employees may, by letter, telephone, facsimile, electronic mail, or in person, make additional requests for the return of proxies, although we do not reimburse our own employees for soliciting proxies.

 

 

In December 2006, our Board of Directors approved amendments to Article II, Section 2 of our company’s By-Laws to change the vote standard for the election of directors from plurality to a majority of votes cast in uncontested elections.

 

Under the new majority vote standard, a majority of the votes cast means that the number of shares voted “for” a director must exceed the number of votes cast “against” that director. Abstentions and broker non-votes will have no effect on the election of a director since only votes “for” and “against” a nominee will be counted. In contested elections, the vote standard will continue to be a plurality of the votes cast. An election will be considered “contested” if the number of properly and timely nominated nominees, in accordance with our By-Laws, exceeds the number of directors to be elected.

 

PepsiAmericas is a Delaware corporation, and, under Delaware law, if an incumbent director is not elected, that director continues to serve as a “holdover director” until the director’s successor is duly elected and qualified. To address this potential outcome, in December 2006 our Board adopted a director resignation policy, described below. Under our By-Laws and this policy, if the votes cast “for” an incumbent director

nominee do not exceed the votes cast “against” that director, such incumbent director will offer to tender his or her resignation to the Board.

 

The Governance, Finance and Nominating Committee will then make a recommendation to the Board on whether to accept or reject the resignation, or whether other action should be taken. Subject to the policy, the Board will act on the Committee’s recommendation within 90 days from the date of the certification of the election results. Following the determination by the Board, our company will promptly disclose publicly the Board’s decision, including an explanation of the process for reaching its decision and, if applicable, the reasons for rejecting the resignation offer.

 

Representatives of Wells Fargo, our stock transfer agent, will tabulate votes and act as inspectors of election at the meeting. All votes will be tabulated by the inspectors of election, who will separately tabulate affirmative and negative votes, abstentions and broker non-votes.

 

Our directors are elected each year at the annual meeting by our shareholders. We do not have a classified Board of Directors. Ten directors will be elected at this year’s meeting. Each director’s term lasts until the 2008 Annual Meeting of Shareholders and until he or she is succeeded by another qualified director who has been elected. All the nominees are currently directors of our company. There are no familial relationships between any director and executive officer.

 

If a nominee is unavailable for election, the proxy holders may vote for another nominee proposed by the Board or the Board may reduce the number of directors to be elected at the meeting. Set forth below is information furnished with respect to each nominee for election as a director.

 

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU
VOTE FOR EACH OF THE NOMINEES.

 

Our Board of Directors represents the interests of our shareholders as a whole and is responsible for directing the management of the business and affairs of PepsiAmericas, as provided by Delaware law. The Board held six meetings in 2006. In addition to meetings of the full Board, directors also attended committee meetings. Each incumbent director attended at least 75% of all of the meetings of the Board and of those committees on which he or she served.

 

The Board is comprised of a majority of “independent” directors as defined in Section 303A.02 of the New York Stock Exchange listing standards. In this regard, the Board has affirmatively determined that a majority of its members has no material relationship with our company either directly or as a partner, shareholder or officer of an organization that has a relationship with our company. In making this determination, the Board has considered all relevant facts and circumstances, including material relationships such as commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships. The independent directors are identified by name in the chart that appears under the caption “Committees.”

 

The non-management members of the Board meet in executive session at each regular meeting of the Board, with no members of management present. In addition, the independent directors meet separately in executive session at least once a year. The non-management members of the Board have designated a non-management director, Archie R. Dykes, as Lead Director to preside at each executive session. Shareholders and interested parties may contact Dr. Dykes in the manner described below under the caption “Communications with Board Members.”

 

The Board has adopted Corporate Governance Guidelines that establish a common set of expectations to assist the Board and its committees in performing their duties in compliance with legal and regulatory requirements. The Board has also adopted a Code of Conduct and a Code of Ethics. The Corporate Governance Guidelines, the Code of Conduct and the Code of Ethics are available on our website at www.pepsiamericas.com or in print upon written request to PepsiAmericas, Inc., 4000 Dain Rauscher Plaza, 60 South Sixth Street, Minneapolis, Minnesota 55402, Attention: Investor Relations.

 

Our Board has designated an Audit Committee, a Management Resources and Compensation Committee, and a Governance, Finance and Nominating Committee. Each committee consists solely of directors who are independent under Section 303A.02 of the New York Stock Exchange listing standards. In addition, each member of the Audit Committee is independent under Section 303A.06 of the New York Stock Exchange listing standards and Exchange Act Rule 10A-3, and each member of the Management Resources and Compensation Committee is a non-employee director and is an outside director under the rules of the Securities and Exchange Commission and the Internal Revenue Service, respectively. Each of these committees has a charter, which is available on our website at www.pepsiamericas.com or in print upon written request to PepsiAmericas, Inc., 4000 Dain Rauscher Plaza, 60 South Sixth Street, Minneapolis, Minnesota 55402, Attention: Investor Relations.

 

Our Board also has designated an Affiliated Transaction Committee, as required by our By-Laws. The Affiliated Transaction Committee consists of at least three “independent directors,” defined by our By-Laws as persons who are not, and for the last two years have not been, (1) an officer or director of PepsiCo or an affiliate of PepsiCo, (2) an owner of more than 1% of the shares of PepsiCo, or (3) an owner of any ownership interest in a party to an “affiliated transaction.”

 

The following table shows the current membership of the committees and identifies our independent directors:

 

 

 

 

The Audit Committee, Management Resources and Compensation Committee, and Governance, Finance and Nominating Committee meet throughout the year, with regularly scheduled meetings held the day before the Board’s regularly scheduled meetings. Additional meetings, either by phone or in person, are called when deemed necessary or desirable. The Affiliated Transaction Committee meets as necessary. The chairperson of each committee, with the advice and consultation of management and the committee’s outside advisors, if any, sets the committee’s annual calendar and the agenda for each meeting. The committee receives detailed materials related to the topics on the agenda prior to each meeting.

 

The Audit Committee, which held eleven meetings during 2006, assists the Board by assuming certain oversight responsibilities with respect to (1) the integrity of our financial statements, (2) the independent registered public accountants’ qualifications and independence, (3) the performance of our internal audit function and independent registered public accountants, and (4) our compliance with legal and regulatory requirements that may have a material impact on our financial statements.

 

The Management Resources and Compensation Committee, which held five meetings during 2006, discharges the Board’s responsibilities relating to executive compensation and reviews and makes recommendations to the Board regarding employee benefit policies and programs, incentive compensation plans and equity-based plans, director compensation and succession planning for our executive team. A narrative description of this Committee’s processes and procedures for the consideration and determination of executive and director compensation appears below under the caption “Management Resources and Compensation Committee Procedures.”

 

The Governance, Finance and Nominating Committee, which held five meetings during 2006, develops and recommends to the Board corporate governance principles applicable to our company, recommends individuals qualified to serve as members of the Board, reviews and recommends appointments for all committees of the Board, serves as our company’s Qualified Legal Compliance Committee, and oversees the evaluation of the Board and its committees. In addition, this Committee assists the Board in reviewing and discussing with management our financing needs, including corporate borrowing, sales of our securities and other matters of a financial nature.

 

The Affiliated Transaction Committee, which did not meet during 2006, reviews, considers and passes upon any “affiliated transaction,” as defined in our By-Laws. An “affiliated transaction” includes certain transactions with a value of more than $10 million with affiliates, including PepsiCo and certain entities in which PepsiCo has an ownership interest. Effective February 2007, the Affiliated Transaction Committee also

has responsibility for reviewing and approving related party transactions requiring disclosure under Rule 404(a) of Regulation S-K.

 

Our Audit Committee was established in accordance with Section 3(a)(58)(A) of the Exchange Act. Each member of the Audit Committee is independent as defined in Section 303A.02 and Section 303A.06 of the New York Stock Exchange listing standards and Exchange Act Rule 10A-3. The Audit Committee operates under a charter, which is available on our website at www.pepsiamericas.com. The Board originally approved the charter in June 2000. The Committee reviews the charter and recommends any changes to it as part of its annual performance evaluation. The Committee last reviewed the charter in February 2007, at which time it was revised to provide that either the Committee or the chairperson of the Committee shall meet at least quarterly with certain members of management and the independent auditors to address any matters that should be discussed privately.

 

Pursuant to our listing agreement with the New York Stock Exchange, each member of the Audit Committee is financially literate and one member of the Committee, James R. Kackley, has accounting or related financial management expertise. Mr. Kackley serves as the “audit committee financial expert” as defined by Item 407(d)(5) of Regulation S-K. As noted above, our audit committee financial expert and the other members of our Audit Committee are independent, as independence for Audit Committee members is defined in the New York Stock Exchange listing standards. Further, no member of the Committee concurrently serves on more than two other public company audit committees.

 

Our Audit Committee met eleven times during 2006, and reviewed a wide range of issues, including the objectivity of the financial reporting process and the adequacy of internal controls. The Committee selected KPMG LLP (“KPMG”) as our independent registered public accountants, and considered factors relating to their independence. In addition, the Committee received reports and reviewed matters regarding ethical considerations and business conduct, and monitored compliance with laws and regulations. The Committee also met with our management and internal auditors and reviewed the current audit activities, plans and results of selected internal audits. The Committee also met privately with members of our internal audit team and with representatives of KPMG to encourage confidential discussions as to any accounting or auditing matters.

 

The Committee has reviewed and discussed with management and representatives of KPMG the audited financial statements contained in our Annual Report on Form 10-K for the year ended December 30, 2006. The Committee has also discussed with KPMG the matters required to be discussed by the statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1. AU §380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T, and has received the written disclosure and letter from KPMG required by applicable professional standards delineating all relationships they have with us, and has discussed with them their independence. Based on the review and discussions referred to above, the Committee recommended to the Board that the audited financial statements be included in our Annual Report on Form 10-K for the year ended December 30, 2006, for filing with the Securities and Exchange Commission. The Committee also determined that KPMG’s fees and services are consistent with the maintenance of their independence as our independent registered public accountants.

 

The name of each person who serves as a member of the Committee is set forth below.

 

Jarobin Gilbert, Jr., Chairman

Herbert M. Baum

Michael J. Corliss

Pierre S. du Pont

James R. Kackley

 

Our Management Resources and Compensation Committee is comprised of six directors: Mr. Cline (Chairman), Mr. Baum, Mr. Corliss (as of December 2006), Dr. Dykes, Mr. Kackley and Dr. Powell (as of December 2006). The Board, after review by and on the recommendation of the Governance, Finance and Nominating Committee, has determined that each of the directors on the Committee is “independent,” is a “non-employee,” and is an “outside” director under the rules of the New York Stock Exchange, the Securities and Exchange Commission and the Internal Revenue Service, respectively.

 

The Committee operates under a charter, which is available on our website at www.pepsiamericas.com. The Board originally approved the charter in February 2003. The Committee reviews the charter and recommends any changes to it as part of its annual performance evaluation. The Committee last reviewed the charter in February 2007, at which time it was revised to include the duty to review and discuss with management the Compensation Discussion and Analysis, and to recommend to the Board whether the Compensation Discussion and Analysis be included in the proxy statement.

 

The Committee’s primary purpose is to discharge the Board’s responsibilities related to executive compensation. In addition, the Committee reviews and makes recommendations to the Board regarding employee benefit policies and programs, incentive compensation and equity-based plans, director compensation, and succession planning for our executive team. The Committee has not delegated its duties, responsibilities or authority to any other person.

 

The Committee’s specific duties and responsibilities are to:

 

 

In addition, the Committee is responsible for reviewing the establishment, amendment and termination of employee benefit plans, and for overseeing the operation and administration of such plans. Our employee benefit plans provide our Senior Vice President, Human Resources with limited authority to amend the employee benefit plans and responsibility for the day-to-day operation and administration of such plans.

 

The Committee has the sole authority to retain and terminate compensation consultants used in the evaluation of director or executive officer compensation or employee benefit plans. The Committee also has the authority to obtain advice and assistance from internal or external legal, accounting or other experts and advisors to assist in carrying out its responsibilities.

 

The Committee has engaged Watson Wyatt Worldwide as its outside compensation consultant. The Committee selected Watson Wyatt after reviewing proposals submitted by multiple compensation consultants, based on its ability to meet the Committee’s needs at the most effective cost. The Committee regularly meets with Watson Wyatt. Watson Wyatt reports on our compensation strategy, compensation levels and general market practices. Specific assignments are determined by the Committee, with the advice of management. Watson Wyatt has advised the Committee on: the development and use of a competitive peer group; market assessment and review of our Long-Term Incentive Plan, including plan design, top five executive analysis,

equity plan analysis and executive ownership analysis; regulatory compliance matters; director compensation; and the development of executive compensation tally sheets.

 

Management has also engaged Watson Wyatt from time-to-time to advise on a variety of employee benefit matters. The Committee has reviewed the type and amount of work performed by Watson Wyatt on behalf of management, and has determined that the relationship between management and Watson Wyatt has not influenced the advice offered by Watson Wyatt to the Committee.

 

The Committee met five times during 2006. Each member of the Committee attended each meeting. In addition, our Senior Vice President, Human Resources and our Corporate Secretary attended each meeting. The Committee meets regularly in executive session throughout the year.

 

Directors who are not members of the Committee typically attend Committee meetings. The Committee specifically consults with the other directors in the annual evaluation of the Chief Executive Officer and in the approval of the annual compensation plans for the executive officers, including the Chief Executive Officer.

 

During fiscal year 2006, the Committee took various actions, including approval of the following:

 

 

The Committee also considered a competitive market review of the compensation paid to our non-employee directors. After its review, the Committee decided not to implement any changes to the compensation paid to our non-employee directors.

 

The members of our Management Resources and Compensation Committee are identified below under “Management Resources and Compensation Committee Report.” None of the members was an officer or employee of PepsiAmericas during fiscal year 2006 or in any prior year and none of the members had any relationship requiring disclosure under Item 404(a) of Regulation S-K. There were no compensation committee interlocks as described in Item 407(e)(4) of Regulation S-K.

 

The Management Resources and Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis that appears herein with management. Based on such review and discussion, the Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and in our 2006 Annual Report on Form 10-K.

 

The name of each person who serves as a member of the Committee is set forth below.

 

Richard G. Cline, Chairman

Herbert M. Baum

Michael J. Corliss

Archie R. Dykes

James R. Kackley

Deborah E. Powell

 

Our Governance, Finance and Nominating Committee operates under a charter, which is available on our website at www.pepsiamericas.com. The Board originally approved the charter in February 2003. The Committee reviews the charter and recommends any changes to it as part of its annual performance evaluation. The Committee last reviewed the charter in February 2007, at which time no revisions were made.

 

The Committee generally identifies individual nominees for director based upon suggestions by outside directors, management and/or shareholders. Our Board member selection criteria include: integrity; high level of education and/or business experience; broad-based business acumen; understanding of our business and industry; strategic thinking and willingness to share ideas; and diversity of experiences, expertise and backgrounds among Board members. The Committee has used these criteria to evaluate potential nominees. The Committee does not evaluate proposed nominees differently depending upon who has made the recommendation.

 

Upon recommendation of the Committee, the Board most recently appointed Mr. Corliss and Dr. Powell as directors in November 2006 and December 2006, respectively. Mr. Corliss and Dr. Powell were brought to the attention of the Committee by our Chairman and Chief Executive Officer. The Committee has not to date paid any third party fee to identify, evaluate or assist in the identification or evaluation of potential nominees.

 

It is the Committee’s policy to consider director candidates recommended by shareholders who appear to be qualified to serve on the Board of Directors. The Committee may choose not to consider an unsolicited recommendation if no vacancy exists on the Board and the Committee does not perceive a need to increase the size of the Board. The Committee will consider only those director candidates recommended in accordance with the procedures set forth below.

 

Nomination Procedures

 

To submit a recommendation of a director candidate to the Governance, Finance and Nominating Committee, a shareholder must submit the following information in writing, addressed to the chairperson of the Committee, in the care of the Corporate Secretary, at the main office of PepsiAmericas:

 

(1)   The name of the person recommended as a director candidate;

 

 

In order for a director candidate to be considered for nomination at the next annual meeting of shareholders, the recommendation must be received by the Committee as provided under “Shareholder Proposals for 2008 Annual Meeting.”

 

Minimum Qualifications

 

In carrying out its responsibility to find the best-qualified persons to serve as directors, the Governance, Finance and Nominating Committee will consider appropriate data with respect to each suggested candidate, consisting of age, business experience, educational background, current directorships, involvement in legal proceedings during the last five years which are material to evaluation of the integrity of the candidate, and an indication of the willingness of the candidate to serve as a director.

 

In addition, prior to nominating an existing director for re-election to the Board, the Committee will consider and review an existing director’s attendance and performance; length of service; experience, skills and contributions; and independence.

 

Interested parties may contact the Board, its committees, individual directors, the Lead Director, or non-management directors as a group, at the following address: PepsiAmericas, Inc., 4000 Dain Rauscher Plaza, 60 South Sixth Street, Minneapolis, Minnesota 55402, Attention: Corporate Secretary. All communications sent to the Chair of the Audit Committee or to any individual director will be received directly by such individuals and will not be screened or reviewed by any company personnel. All other communications are distributed to the Board, or to any individual directors as appropriate, depending on the facts and circumstances outlined in the communication. Certain items which are unrelated to the duties and responsibilities of the Board will be excluded, such as product complaints, product inquiries, new product suggestions, resumes and other forms of job inquiries, surveys, and business solicitations or advertisements. In addition, material that is unduly hostile, threatening, illegal or similarly unsuitable will be excluded, with the provision that any communication that is filtered out must be made available to any non-management director upon request.

 

PepsiAmericas encourages all of its directors to attend the annual meeting of shareholders. We generally hold a Board meeting coincident with the shareholders’ meeting to minimize director travel obligations and facilitate their attendance at the shareholders’ meeting. All directors attended the 2006 Annual Meeting of Shareholders.

 

 

Directors who are employees of our company receive no fees for their services as director. Our non-employee directors each receive annual compensation comprised of the following: (1) $30,000 annual retainer, paid in equal quarterly installments of $7,500; (2) a restricted stock award under our 2000 Stock Incentive Plan for a number of shares equal to approximately $60,000 divided by the fair market value of our common stock on the date of grant; (3) a meeting fee of $2,000 per Board meeting; and (4) a meeting fee of $1,000 per committee meeting. In addition, the Lead Director receives an additional $20,000 retainer per year; directors who serve on the Board’s committees receive an additional $5,000 retainer per year per committee; and the chairperson of each of the Board’s committees receives an additional $10,000 retainer per year (with the exception of the chairperson of the Affiliated Transaction Committee who receives an additional $5,000 retainer per year). Directors also are reimbursed for reasonable expenses incurred in attending meetings. The above-referenced director restricted stock awards are granted in February of every year. Pursuant to the terms of such awards, directors may not sell such stock while they serve on the Board.

 

This fee structure is based on the middle of the market compensation levels for companies in similar industries and of similar size (in terms of revenue). Use of this fee structure is consistent with our overall compensation philosophy.

 

The following table sets forth the compensation of our non-employee directors for fiscal year 2006:

 

 

 

 

Our non-employee directors held the following unexercised options at fiscal year end 2006:

 

Each of the options set forth above has a seven-year term and became exercisable in full at the date of grant, except for the option for 100,000 shares issued to Dr. Dykes. Such option, which was awarded in November 2000 and has a ten-year term, became exercisable for half of the shares purchasable thereunder on the first anniversary of the date of grant and in full on the second anniversary of the date of grant.

 

 

Directors also may, by written election, defer payments of the above-referenced restricted stock awards to a date specified by the director. We maintain an account for each director who has elected to defer stock compensation to which we credit the amount of shares deferred plus dividends accrued thereon. Upon a change in control, the director would be entitled to a lump sum distribution of all such deferred stock and dividends.

 

Director Option Exercises

 

On October 30, 2006, Jarobin Gilbert, Jr. exercised a stock option for the purchase of 7,570 shares of common stock at an aggregate exercise price of $90,916. On the same date, Mr. Gilbert sold the 7,570 shares he purchased upon exercise of such option for aggregate gross proceeds of $154,326. Mr. Gilbert realized $63,410 upon the exercise of such option.

 

The following table sets forth information, as of February 27, 2007, with respect to the beneficial ownership of shares of our common stock by each person who, to our knowledge, beneficially owned more than five percent of our common stock. Percentage of beneficial ownership is based on 128,714,017 shares outstanding as of February 27, 2007.

 

 

 

 

The table below lists the beneficial ownership of shares of our common stock, as of February 27, 2007, by each director and nominee for director, by each executive officer named in the summary compensation table below, and by all directors and executive officers as a group. Given that our directors are required to hold the shares of restricted stock they receive as compensation while they continue to serve on the Board, the following table includes such directors’ qualifying shares. Percentage of beneficial ownership is based on 128,714,017 shares outstanding as of February 27, 2007. Except as identified below, the named individual has sole voting and investment power with respect to the listed shares and none of the stated shares has been pledged as security.

 

 

 

 

 

Section 16(a) of the Exchange Act requires our directors and executive officers, as well as persons who own more than ten percent of our common stock, to file reports of ownership and changes in ownership of our common stock with the Securities and Exchange Commission. We have procedures in place to assist our directors and executive officers in preparing and filing these reports on a timely basis. Based solely on our review of the forms furnished to us, upon our records and other information, we believe that all required reports were timely filed during the past year.

 

Compensation Philosophy and Objectives

 

The Management Resources and Compensation Committee is committed to an executive compensation philosophy that attracts, motivates and retains high performing employees while maintaining fiscal responsibility. This philosophy supports our business objectives and aligns the interests of our executives with the long-term interests of our shareholders. The Committee regularly reviews this compensation philosophy and evaluates whether our company’s compensation programs are fulfilling the objectives of such philosophy.

 

Our compensation programs are designed to implement this philosophy by:

 

 

The Committee believes there should be a strong correlation between pay and performance. Specifically, this means that:

 

 

Compensation Decisions

 

In making compensation decisions, the Committee benchmarks the compensation paid to executives. The Committee uses two sources of compensation data to evaluate the market competitiveness of executive compensation: public filings from a select group of food and beverage companies of comparable size and complexity and compensation surveys for a broad group of industrial companies published by major consulting firms. The Committee believes that each data source has advantages, and that multiple data sources provide different reference points and a broad context for interpreting and assessing executive compensation.

 

Peer group comparisons in particular provide an objective basis for comparison for our compensation programs, pay levels and financial performance. The peer group we use is intended to characterize companies that operate on a similar business model or which provide competition for our executive talent and financial capital. The individual companies that the Committee has selected for benchmarking compensation are: Coca-Cola Bottling Co. Consolidated; Coca-Cola Enterprises; Constellation Brands, Inc.; Dean Foods Company; Del Monte Foods Company; The Hershey Company; Hormel Foods Corporation; McCormick and Company, Inc.; Molson Coors Brewing Company; The Pepsi Bottling Group; Performance Food Group; Ralcorp Holdings, Inc.; The J.M. Smucker Company; and United Natural Foods, Inc. These companies were selected on the following criteria: industry, company type, company size, performance (financial and operational), and geographic span of operations.

 

Certain executive officers assist the Committee with the design and assessment of executive compensation. These officers include Robert C. Pohlad, Chairman of the Board and Chief Executive Officer, Kenneth E. Keiser, President and Chief Operating Officer, Alexander H. Ware, Executive Vice President and Chief Financial Officer, and Anne D. Sample, Senior Vice President, Human Resources. These executives assist the Committee by providing insight on our business goals and results, defining the objectives for individual executives, and assessing the effect of suggested changes to compensation programs on our culture and personnel. No executive officer who assists the Committee is involved in setting his or her own compensation.

 

At the Committee’s last meeting of each year, comparative market data for executive officers is presented, reviewed and analyzed. The Committee reviews each component of total compensation, both individually and in the aggregate. This allows the Committee time to ask for additional information and to raise and discuss further questions before the first meeting of the next year, when merit increases to base pay, payouts under the Annual Incentive Plan, and awards of restricted shares under the Long-Term Incentive Plan are finalized.

 

Compensation Agreements and Policies

 

Employment Agreements:  We do not enter into employment agreements with our employees. All of our employees, including our named executive officers, are employed at will.

 

Change-in-Control Agreements:  We do not enter into change-in-control agreements with our employees, including the named executive officers. If there were a change in control of our company, the 2000 Stock Incentive Plan would cause any unvested restricted stock awards or unvested stock options to vest in their entirety. In addition, if an executive had elected to receive installment payments under the Executive Deferred Compensation Plan, and that executive were to terminate employment for any reason within three years of a change in control of our company, the payments to the executive would be accelerated and paid in a lump sum. The 2000 Stock Incentive Plan and the Executive Deferred Compensation Plan define “change in control.” We utilize a single trigger in the 2000 Stock Incentive Plan because we believe that accelerated vesting of these awards is the only protection we offer our employees in the face of a change in control of the company.

 

Severance Policy:  Our severance policy applies to all regular, full-time salaried exempt employees, including the named executive officers. Under our severance policy, employees whose positions have been eliminated due to a restructuring, a facility closure or other job elimination receive salary continuation payments, healthcare benefits and outplacement services, plus an incremental lump sum tenure payment. The duration of salary continuation payments, healthcare benefits and outplacement services is determined by salary band and age. We provide these severance benefits to assist during the time period typically required to find a comparable position with another company. The amount of an incremental lump sum tenure payment is equal to one week per year of service, up to a maximum of 26 weeks. We provide this incremental tenure

payment to recognize an employee’s years of service to our company. Employees who are terminated for performance issues or other special circumstances qualify for limited severance benefits. Severance benefits are available only to employees who sign a separation agreement and release.

 

Internal Pay Equity:  We review pay equity among salary bands and salaries within each salary band to ensure that pay, when compared internally and against the market, continues to meet our stated compensation philosophy and objectives.

 

Accumulated Wealth:  The Committee uses tally sheets to understand the compensation each named executive officer has earned over the last five years. The tally sheets assist the Committee in analyzing whether current compensation levels are fair and equitable, and meet our compensation objectives of retaining key executive talent.

 

Impact of Accounting and Tax Treatment on Compensation Decisions:  The Committee regularly reviews the impact of the accounting and tax treatment of each component of compensation.

 

The Committee is generally mindful of the limits of Section 162(m) of the Internal Revenue Code, which limits the deductibility of compensation in excess of $1 million for the five most highly compensated employees unless certain forms of compensation meet performance or other criteria mandated by law. While our compensation programs are generally structured with a view to satisfying these rules, there might be circumstances when our corporate interests are better served by programs or plans that do not satisfy this criteria. The Long-Term Incentive Plan is intended to comply with Section 162(m) beginning with awards received in 2006.

 

Our qualified and nonqualified retirement plans satisfy ERISA and applicable Internal Revenue Code provisions.

 

Stock Ownership Guidelines:  Coincident with the Long-Term Incentive Plan, we established in 2004 stock ownership guidelines for our key executives. We believe that promoting share ownership aligns the interests of key executives with those of shareholders and provides strong motivation to build shareholder value. We plan to periodically review the stock ownership guidelines.

 

Under the stock ownership guidelines, key executives are expected to own shares equal to a multiple of their base salary as follows: Chief Executive Officer, 6 times base salary; Chief Operating Officer and Chief Financial Officer, 3 times base salary; Executive Vice President, 2.5 times base salary; and Senior Vice President, 2 times base salary. Each executive has five years to attain the stock ownership requirement. The number of shares of company stock that must be held is determined by multiplying the executive’s annual base salary rate at the end of each calendar year by the applicable multiple shown above, and dividing the result by the 200-day average closing stock price at the end of each year. The executive may count shares held in trust and retirement accounts, and restricted shares that have not yet vested, but may not include stock options toward the attainment of the stock ownership guidelines. Shares counted toward these amounts may not be pledged as collateral. Under the net share retention policy, the executive is required to retain 50% of the shares received from equity grants after paying taxes and exercise costs until the ownership guideline is met.

 

Required and actual stock ownership multiples (as of the record date for our annual meeting) of our named executive officers are shown below:

 

Components of Executive Officer Compensation

 

The principal components of executive officer compensation are:

 

 

We allocate these components of compensation to reflect our belief that there should be a strong correlation between pay and performance. Therefore, compensation is substantially weighted toward performance-based compensation. For the named executive officers, we seek to provide currently paid out compensation, comprised of base salary and an annual incentive award under the Annual Incentive Plan, of approximately 42% of total compensation (defined to mean base salary, annual incentive award and restricted stock award). We seek to provide long-term compensation to our named executive officers, comprised of a restricted stock award under the Long-Term Incentive Plan, of approximately 58% of total compensation (defined in the same way). Annual incentive awards are determined according to company performance, while restricted stock awards are determined according to company as well as individual performance. Each of the individual components of executive officer compensation is discussed in detail below.

 

Base Salary.  Executive officers receive a base salary to compensate them for services rendered during the fiscal year. We intend for base salary to:

 

 

The Committee determines base salaries and salary bands for all of our salaried employees, including the named executive officers, based on the results of periodic market surveys. The Committee does not base actual salary bands exclusively on a formula and companies are not grouped to assess comparability according to narrowly defined criteria. The Committee derives salary bands from the skills and responsibilities required by a position, the averages of salary levels of hundreds of comparable positions and comparable companies and from information in numerous databases generated by outside independent consultants. We target our base salaries to the 50^th percentile.

 

At the first meeting of each year, the Committee evaluates the annual performance of each executive officer and bases salary adjustments on various factors according to established annual merit guidelines, which include personal performance, current position in the relevant salary band and comparable company data. Accordingly, the Committee does not have a general policy to set salaries of executive officers at any specific level within the salary band for their particular position. However, all salaried employees, including our named executive officers, are eligible for an annual merit increase in base salary, based primarily on performance of job responsibilities and accomplishment of predetermined performance objectives. The Committee approves salary actions for approximately ten key corporate and operating company officers, including the Chief Executive Officer, after considering such individuals’ responsibilities, past and current performance and compensation for similar positions at peer group companies.

 

Annual Incentives.  Executive officers participate in the Annual Incentive Plan (the “AIP”), which provides an annual opportunity to earn a cash incentive award. The annual incentives provided under the AIP are performance-based in order to drive and reward business results. We make such awards every February for prior year performance.

 

Payments under the AIP are based on a formula and are representative of our company’s results. Target payment opportunities are proportionally based on market data and the employee’s accountability for our business plan. These target payment opportunities range from 35-100% of annual base salary. Actual awards vary from 0-200% of target based on performance. If the applicable performance goals are met, the awards would equal at least 25% of target (we use this percentage as our threshold). The Committee maintains the discretion to vary from the formula, either to increase or decrease a payout. The Committee believes that the performance measures used and the resulting payouts are consistent with the stated compensation philosophy and objectives and the creation of shareholder value.

 

In order to ensure consistency and alignment of executive objectives and business priorities, performance measures for the AIP are determined annually. The Committee sets AIP targets at the 75^th percentile, compiled using our periodic market surveys. However, the performance measures have consistently proven to be difficult to achieve, as illustrated by the resulting payout ranges over the last several years. For example, the payout range for 2005 performance was 119% of target, while the payout range for 2006 performance was 49% of target.

 

The 2006 performance measures for the named executive officers were as follows: for the Chief Executive Officer, the Chief Financial Officer and the Chief Operating Officer, the applicable worldwide measures were adjusted net income (40%), net revenue (20%), volume (20%) and adjusted operating cash flow (20%). For the Executive Vice President, U.S. Operations, the applicable measures were adjusted domestic operating income (40%), domestic net revenue (20%), domestic non-carbonated volume (20%) and worldwide adjusted operating cash flow (20%). For the Executive Vice President, International, the applicable measures were adjusted international operating income (40%), international net revenue (20%), international volume (20%), and worldwide adjusted operating cash flow (20%).

 

The Committee has set the 2007 performance measures for the named executive officers as follows: for the Chief Executive Officer, Chief Operating Officer and Chief Financial Officer, the applicable worldwide measures will be adjusted net income (40%), net revenue (20%), adjusted operating cash flow (20%), and successful execution of key strategic priorities (20%). For the Executive Vice President, U.S. Operations, the applicable measures will be adjusted domestic operating income (40%), domestic net revenue (20%), domestic single serve volume (20%) and worldwide adjusted operating cash flow (20%). For the Executive Vice President, International, the applicable measures will be adjusted international operating income (40%), international net revenue (20%), international volume (20%), and worldwide adjusted operating cash flow (20%).

 

Long-Term Incentives.  Executive officers participate in the Long-Term Incentive Plan (the “LTIP”), which provides executives with the opportunity to earn awards of restricted stock under the 2000 Stock Incentive Plan. We consider and make such awards every February when the performance results from the prior year are available. Awards made under this plan vest in their entirety on the third anniversary of the award.

 

The Committee believes that the LTIP strategy achieves several key compensation objectives, including reinforcing the pay-for-performance philosophy of the overall executive compensation program, as well as providing competitive incentives and total compensation opportunities that allow us to attract and retain key executive talent. We intend for long-term incentives to:

 

 

The pool of restricted stock available for awards each year is based on our performance against a predetermined target for adjusted return on invested capital. The total annual pool can adjust from 90% of target to 110% of target. Once the overall LTIP pool is defined, individual awards are determined according to salary band, time in position, prior year’s performance and future leadership potential. LTIP ranges for each

salary band are based on the established target, with the range threshold equal to 50% of target and the range maximum equal to 120% of target. The Committee and management retain the discretion to award restricted shares within such range or to award a lower number of restricted shares, if the circumstances warrant it. An individual’s performance in the prior year and his or her future leadership potential determine the actual LTIP award received. An award may also be prorated based on the amount of time in a certain position. The Committee targets above-median award opportunities with differentiation in actual award sizes based on individual performance and contribution.

 

The performance measures have consistently proven to be difficult to achieve, as illustrated by the change in payout ranges between the two most recently completed fiscal years. We utilized 102% of the target for the awards granted in February 2006, which is reflective of the actual adjusted return on invested capital performance in 2005. We utilized 94% of the target for the awards granted in February 2007, which is reflective of the actual adjusted return on invested capital performance in 2006.

 

Our LTIP permits us to accelerate the vesting of options and the lapsing of restrictions on restricted stock awards upon an executive’s retiring after age 55. Our President and Chief Operating Officer, Kenneth E. Keiser, has attained age 55 as of fiscal year end 2006 and therefore may, at our discretion and upon Board approval, be eligible for acceleration of the vesting of his options and restricted stock awards, if he were to retire.

 

Outside of the LTIP and the annual restricted stock awards described above, in February 2007 the Committee granted a performance-based restricted stock award of 113,000 shares to Mr. Keiser under the 2000 Stock Incentive Plan. The Committee made such special award in connection with our company’s executive retention and succession planning objectives. This award will vest in January 2010, in whole or in part, if applicable company performance criteria are met and if Mr. Keiser remains employed by the company through such date.

 

Perquisites and Other Benefits

 

Executive officers receive certain perquisites and other benefits. The Committee believes that these components of executive compensation are reasonable and consistent with our philosophy to attract, motivate and retain high-performing employees while maintaining fiscal responsibility. The Committee periodically reviews the type and amount of perquisites and other benefits. These benefits are positioned competitively with the external market. The specific perquisites and other benefits provided executive officers are described below.

 

Standard Company Benefits:  Executive officers may participate in standard benefit plans we offer. These benefit plans include medical, dental, short-term disability, long-term disability, and group life insurance, and a company contribution of 2% and a company match of up to 6% into the participant’s 401(k) plan account. All employees are eligible to participate in post-retirement medical benefits, provided they are 55 or older and have 10 years of service. These retirees pay the full cost for such benefits. By offering these standard benefits to the executive officers, our objective is to treat executive officers consistent with the broader employee population, to recognize defined benefit market trends, and to reflect national and local labor market conditions to provide adequate coverage.

 

Executive Deferred Compensation Plan:  Executive officers may participate in our Executive Deferred Compensation Plan. For a detailed description of this plan, please review the narrative following the Summary Compensation Table below.

 

Executive Long-Term Disability:  Executive officers may participate in our executive long-term disability program. For a detailed description of this program, please review the narrative following the Summary Compensation Table below.

 

Car Allowance:  Executive officers are offered a market-based car allowance to cover the cost of owning and operating an automobile.

 

Executive Physicals:  Starting in 2007, executive officers will be eligible for bi-annual, company-paid physical examinations to ensure the physical health of our senior leadership team.

 

Personal Use of Company Airplane:  The Chief Executive Officer and the Chief Operating Officer are offered the use of our airplane and a second airplane in which we own a one-eighth interest in order to travel most expeditiously. This benefit allows our top two officers to maximize time at work, to facilitate scheduling, and to coordinate personal and professional travel. From time to time, our Chief Executive Officer and Chief Operating Officer have authorized personal use of an airplane by our Executive Vice President, U.S. Operations for the same reasons.

 

Financial and Tax Planning Services:  Executive officers are offered financial and tax planning services in order to ensure that they fully understand and leverage our executive compensation programs. These services also reduce the time, attention and effort required for financial planning and tax preparation. Executive officers utilizing these services pay taxes on the benefit received.

 

Perquisites Recently Terminated:  Through 2006 executive officers were reimbursed for country club and health club memberships. Effective January 2007 the Committee terminated these reimbursements. The Committee’s decision to terminate these perquisites was based on a competitive market review of perquisites offered by our peer group and a review of emerging practices and trends related to perquisites.

 

The following table sets forth information concerning the compensation of our named executive officers for fiscal year 2006:

 

 

 

 

The assumptions made in the valuation are those set forth in the “Significant Accounting Policies — Stock-Based Compensation” note to our consolidated financial statements. There were no forfeitures of stock options by our named executive officers during fiscal year 2006.

 

 

We calculate earnings on nonqualified deferred compensation in the same manner and at the same rate as earnings on externally managed investments to employees participating in a tax-qualified plan providing for broad-based employee participation. As a result, such earnings are not deemed to be above-market or preferential.

 

 

 

Details regarding Perquisites and Other Personal Benefits

 

Details regarding the perquisites and other personal benefits enumerated above appear in the following table.

 

 

Personal Use of Company Airplane.  The dollar amounts listed represent the aggregate incremental cost for personal use of our airplane and the invoiced amount for personal use of a second airplane in which we own a one-eighth interest. In calculating the aggregate incremental cost for personal use of our airplane, we determined the total hours flown for other than business purposes during fiscal year 2006 as

well as the total variable cost associated with the use of this airplane. We measured total variable cost by adding the costs of the following items: fuel, repair and maintenance, aircraft use and flight fees, travel and entertainment expenses, various other services (cleaning, uniforms, etc.), and supplies, less purchase rebates. Dividing the total variable cost by the number of hours flown for other than business purposes, we established a variable cost per hour flown. The entries set forth above represent (1) the product of the sum of hours of personal use by the named executive officers of our airplane and the variable cost per hour flown, and (2) $23,457 invoiced to our company for personal use by our executives of the other airplane.

 

We reimbursed Mr. Durkin for $7,634 in taxes associated with his personal use of an airplane and we reimbursed Mr. Ware for $990 in taxes associated with a flight that did not result in incremental cost. Such amounts are components of the entries set forth in the first chart of this footnote under the caption “Amounts Reimbursed for the Payment of Taxes.”

 

Car Allowance.  These entries represent amounts paid directly to our named executive officers to facilitate their purchases or leases of vehicles.

 

Financial Planning Fees.  These entries represent half of the annual participant dues paid to a financial planning firm on behalf of our named executive officers. We estimate that these amounts represent the amounts attributable to personal financial planning services. Such amounts do not include travel and entertainment expenses associated with participant meetings with the financial planning firm nor do they reflect the corporate retainer we paid such firm.

 

Club Dues.  Through fiscal year 2006, our named executive officers were reimbursed for country club and health club memberships. Effective January 2007 we decided to eliminate reimbursements for club dues.

 

We reimbursed the following amounts for the payment of taxes associated with club dues during fiscal year 2006: Mr. Ware ($2,286), Mr. Keiser ($39,496), Mr. Durkin ($6,030) and Mr. Rogers ($3,304). Such amounts are components of the entries set forth in the first chart of this footnote under the caption “Amounts Reimbursed for the Payment of Taxes.”

 

Amounts Reimbursed for the Payment of Taxes

 

Tax Equalization Program for Expatriates.  Mr. Rogers formerly worked for our company in Hungary. As such, he qualified for an expatriate assignment package which includes participation in our tax equalization program. Under this program, Mr. Rogers pays the company a hypothetical tax liability equal to the tax liability he would have incurred had he remained working in his home country. We pay Mr. Rogers’ actual tax liabilities. Due to timing differences, in 2006, we collected more hypothetical tax from Mr. Rogers than we paid in actual taxes on Mr. Rogers’ behalf. This results in a $92,757 negative adjustment to Mr. Rogers’ compensation. Such amount is a component of the entry in the first chart of this footnote under the caption “Amounts Reimbursed for the Payment of Taxes.”

 

Other Amounts.  The nature and dollar amounts of other reimbursements for the payment of taxes are specified above under the caption “Details regarding Perquisites and Other Personal Benefits.”

 

Executive Long-Term Disability

 

The amounts set forth in this column of the first chart of this footnote reflect amounts paid on behalf of our named executive officers under our executive long-term disability program. We offer this program in addition to, and in coordination with, the long-term disability benefits available through our group plan. In order to participate in the executive long-term disability program, the executive must be at a certain executive band level or above, must be enrolled in the voluntary long-term disability program through our group plan and must have purchased an increased benefit under such program providing for a total benefit of 60% of salary with a maximum of $10,000 per month. Given the base salaries of our named executive officers, the company’s basic and voluntary long-term disability program benefits are effectively capped at $10,000 per month for executive participants. The executive long-term disability program provides additional benefits such that executives are eligible to receive 60% of salary. That is, subject to medical

underwriting, the benefits provided under the executive long-term disability program provide benefits equal to 60% of the executive’s base salary when combined with the benefits provided under the basic and voluntary group plan. The executive long-term disability program also provides an additional catastrophic disability benefit equal to 40% of salary with a maximum of $8,000 per month that would be paid in the event of certain serious disabilities. Participants in the executive long-term disability program may also purchase coverage for up to 70% of base salary and two-year average non-equity incentive plan compensation at their own expense.

 

Company Contributions to Executive Deferred Compensation and 401(k) Plans

 

The amounts set forth in this column of the first chart of this footnote reflect matching contributions and basic contributions we made under such plans for fiscal year 2006. In particular, we sponsor a non-qualified Executive Deferred Compensation Plan (the “EDCP”). The EDCP is a supplemental, deferred compensation plan that provides eligible U.S. executives with the opportunity for contributions that could not be credited to their individual accounts under the qualified 401(k) plan because of Internal Revenue Code limitations. The EDCP is a defined contribution plan designed to accumulate retirement funds for executives, and includes a company matching contribution (up to 6%) and a basic 2% contribution similar to that of the qualified 401(k) plan. Generally, executives may elect the form and timing of their distributions from the EDCP. Employees hired before January 1, 2004, are immediately vested in the company contributions. Employees hired after January 1, 2004, are vested in the company contributions made under the plan in 20% annual increments until the employee is 100% vested after five years. Annual contributions made after the five-year period are immediately vested. The executive’s and the company’s contributions are credited with the investment gain or loss that is intended to mirror those under the qualified 401(k) plan. The Internal Revenue Code limits contributions to an individual’s account for the qualified 401(k) plan. Where the Internal Revenue Code limits employee and company contributions, the excess is applied to the EDCP. The overall maximum company contribution to the qualified 401(k) plan and the EDCP is 8% of eligible pay.

 

Severance Payments/Accruals

 

We made no severance payments to, or severance accruals for, our named executive officers in fiscal year 2006.

 

The following table sets forth information concerning non-equity incentive plan awards made in February 2007 for 2006 performance and equity incentive plan awards granted in February 2006 to our named executive officers:

 

 

 

 

 

For details on the criteria utilized to determine the specific amounts payable under these plans, including the relationship to target levels with respect to specific quantitative or qualitative performance-related factors, please review the “Compensation Discussion and Analysis” above.

 

For details on the proportion of salary and incentive compensation to total compensation, please review the “Compensation Discussion and Analysis” above.

 

The following table sets forth information concerning outstanding equity awards held by our named executive officers at fiscal year end 2006:

 

 

 

 

The following table sets forth information concerning each exercise of stock options and each vesting of restricted stock for our named executive officers at fiscal year end 2006:

 

 

For option awards, the value realized on exercise is calculated using the market price of our common stock at the time the option exercise is executed. For stock awards, the value realized on vesting is calculated using the average of the high and low sale prices of our common stock on the date of vesting.

 

Prior to the formation of PepsiAmericas in November 2000, Pepsi-Cola General Bottlers, then a bottling subsidiary of Whitman Corporation, maintained a qualified, defined benefit pension plan and a non-qualified supplemental pension plan. We generally froze benefit accruals under these plans as of December 31, 2001, and no new participants were enrolled after April 1, 2001. The plans pay benefits in optional forms elected by the employees. The benefit formula under the pension plans provides a normal retirement benefit equal to 1% of final average earnings multiplied by the participant’s credited service, up to a maximum of 20 years. The qualified pension plan provides a benefit on earnings up to the qualified plan limit ($170,000 for 2001), and the non-qualified plan provides a benefit on earnings over this limit.

 

The following table describes pension benefits of our named executive officers at fiscal year end 2006:

 

 

Final average earnings is the average of the participant’s highest earnings during 60 consecutive months out of the last 120 months worked, but not counting earnings after December 31, 2001. Earnings recognized under each plan include salaries, commissions, wages, cash bonuses, and overtime pay. All other compensation is excludable. Participants in each plan become fully vested after completion of five years of service.

 

Under the qualified pension plan, the benefit is payable as a life annuity commencing at the plan’s normal retirement date, which is the first of the month coincident with or next following the attainment of age 65 and completion of five years of vesting service. Participants under such plan are eligible for early retirement upon attaining age 55 and completing five years of vesting service. Participants eligible for early retirement are entitled to immediate commencement of their benefit, reduced actuarially for commencement prior to age 65. Participants eligible for early retirement with 20 or more years of vesting service receive a benefit reduced four percent for each year that benefit payments start prior to age 65.

 

Under the supplemental pension plan, the benefit is payable in a lump sum or installment payments pursuant to a participant’s election.

 

The figures shown in the table above represent the present value as of September 30, 2006, of the benefit earned under each plan as of that date. We determined present values based on the following assumptions: an interest rate of 6.16%, an assumed retirement age of 65, the RP-2000 Combined Healthy Mortality Table and no pre-retirement decrements.

 

The following table sets forth nonqualified deferred compensation of our named executive officers at fiscal year end 2006: