AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 6/6 · 19/10/2026
Moat56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 3/4 · Owned trademarks, exclusive territorial bottler contracts and charging rights establish a functioning brand monetization structure. International beverage growth and the reported decade of retailer recognition support its commercial relevance. Relative cost superiority and market-share leadership are not established.
durability · 2/4 · The bottler structure persists across annual disclosures and demand remains demonstrable, but individual brand impairments and North American beverage volume declines limit confidence in durable economic protection. Contract lengths are missing.
customer dependency · 2/4 · Bottlers depend on contractual trademark rights, and retailer recognition suggests useful commercial relationships. Consumer dependency is weaker: beverage volume declines show demand can fall, and a customer accounting for approximately 14% of revenue creates countervailing bargaining exposure.
erosion resilience · 2/4 · International beverage volume growth and a 2026 annual assessment without impairment offset some concerns. Prior brand impairments, food-segment pricing and profit weakness, and realized reductions in willingness to purchase demonstrate meaningful erosion rather than merely hypothetical risk.
Pricing power50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 2/4 · The second-quarter table reports positive consolidated effective net pricing, including positive beverage pricing, alongside negative pricing in PFNA and Asia Pacific Foods. Latest PBNA and international beverage discussions also report favorable pricing. Outcomes are mixed, and the measure incorporates mix and incentives.
retention · 2/4 · Indirect repeat-demand evidence is mixed: international beverage unit volume grew 5% in the latest quarter and food unit volume grew 1%, while PBNA unit volume fell 3% over 36 weeks. These outcomes support continuing demand but do not establish customer-level retention or isolate the effect of pricing.
margin resilience · 2/4 · Consolidated profit resilience and productivity savings coexist with food-segment profit declines caused partly by unfavorable pricing and operating costs. The reconciliation shows substantially smaller core profit growth than reported growth, limiting evidence for strong pricing-led protection.
contractual freedom · 2/4 · Bottler arrangements expressly permit charges for concentrate, finished goods and royalties, demonstrating monetization rights. Customer incentive arrangements and competitive limits on cost recovery constrain effective discretion. The passages do not establish unrestricted unilateral repricing.
Predictability100
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 100.00
- Revenue growth volatility (pp)
- 3.21
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 0.83
Financial strength36
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 22.71
- netDebtEbitGrade
- 30.38
- interestCoverageGrade
- 84.15
- currentRatioGrade
- 8.24
- Debt / FCF (x)
- 6.41
- Net debt / operating income (x)
- 3.48
- Interest coverage (x)
- 10.26
- Current ratio (x)
- 0.85
Capital allocation94
Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 22.37
- 3-year average dilution (%)
- -0.27
- 3-year average SBC / revenue (%)
- 0.37
- cashConversionGrade
- 84.73
Management63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Operating cash flow improved to approximately $8.0 billion against $2.1 billion of net capital spending. However, $6.7 billion of distributions exceeded cash remaining after that spending, alongside debt issuance and short-term borrowing. Prior brand impairments and the sharp decline in poppi contingent consideration value temper evidence of acquisition discipline; neither proves every investment failed.
incentive alignment · 3/4 · Actual 2026 grants place 60% in PSUs and 40% in RSUs for the disclosed senior executive group. PSUs use three-year financial performance and a relative shareholder return multiplier; hedging, pledging and target resets are prohibited. These are implemented arrangements, not proposed awards, but subsequent vesting, realized alignment and ownership quantities are unestablished.
execution · 2/4 · Reported retailer recognition, international beverage growth, productivity savings and improved cash generation support execution. North American beverage volume declines and food profit weakness offset those achievements. This assessment uses indirect operating outcomes; management's transformation ambitions are not treated as completed results.
governance · 3/4 · Disclosed independent committees, an independent presiding director, regular executive sessions and compensation safeguards support strong formal oversight. The combined chairman and CEO role limits separation of authority. Nominee independence is not treated as proof of election, and these processes do not establish exceptional governance outcomes.
Evidence
We own numerous valuable trademarks which are essential to our worldwide businesses, including Adrenaline Rush, Agusha, Amp Energy, Aquafina, Aquafina Flavorsplash, Aqua Minerale, Arto Lifewtr, Baja Blast, BaiCaoWei, Bare, Bokomo, Bubly, Cap’n Crunch, Ceres, Cheetos, Chester’s, Chipsy, Chokis, Chudo, Cracker Jack, Crunchy, Diet Mountain Dew, Diet Mug, Diet Pepsi, Diet 7UP (outside the United States), Domik v Derevne, Doritos, Duyvis, Elma Chips, Emperador, Evolve, Fast Twitch, Frito-Lay, Fritos, Fruktovy Sad, Futurelife, G2, Gamesa, Gatorade, Gatorade Fit, Gatorade Zero, Gatorlyte, Grandma’s, H2oh!, Hard MTN Dew, Health Warrior, Imunele, J7, Kas, Kurkure, Lay’s, Life, Lifewtr, Liquifruit, Lubimy, Manzanita Sol, Marias Gamesa, Matutano, Mirinda, Miss Vickie’s, Moirs, Mother’s, Mountain Dew, Mountain Dew Code Red, Mountain Dew Game Fuel, Mountain Dew Kickstart, Mountain Dew Zero Sugar, Mug, Munchies, Muscle Milk, Near East, Obela, Off the Eaten Path, Paso de los Toros, Pasta Roni, Pearl Milling Company, Pepsi, Pepsi Black, Pepsi Max, Pepsi Wild Cherry, Pepsi Zero Sugar, PopCorners, Poppi, Pronutro, Propel, Quaker, Quaker Chewy, Quaker Simply Granola, Rice-A-Roni, Rockstar (outside the United States and Canada), Rold Gold, Ruffles, Sabra, Sabritas, Safari, Sakata, Saladitas Gamesa, San Carlos, Sandora, Santitas, Sasko, 7UP (outside the United States), 7UP Free (outside the United States), Siete, Simba, Smartfood, Smith’s, Snack a Jacks, SoBe, SodaStream, Sonric’s, Spekko, Stacy’s, Starry, Starry Zero Sugar, Sting Energy, Stubborn Soda, SunChips, Toddy, Toddynho, Tostitos, Vesely Molochnik, Walkers, Weetbix, White Star, Ya and Yachak.
Our Brands and Intellectual Property Rights · Filed 03/02/2026
We normally grant our independent bottlers exclusive contracts to sell and manufacture certain beverage products bearing our trademarks within a specific geographic area.
Our Customers — exclusive territorial bottler contracts · Filed 03/02/2026
These arrangements provide us with the right to charge our independent bottlers for concentrate, finished goods and Aquafina royalties and specify the manufacturing process required for product quality.
Our Customers — concentrate, finished goods and royalty charging rights · Filed 03/02/2026
We normally grant our independent bottlers exclusive contracts to sell and manufacture certain beverage products bearing our trademarks within a specific geographic area.
Our Customers — exclusive territorial bottler contracts · Filed 09/02/2024
IB Franchise
12 Weeks
Net revenue increased 8%, primarily reflecting organic volume growth and effective net pricing.
IB Franchise — 12-week revenue, organic volume and effective net pricing · Filed 08/10/2026
Unit volume grew 5%, primarily reflecting broad-based increases, led by India, partially offset by declines in China and Mexico.
IB Franchise — 12-week unit volume growth and geographic variation · Filed 08/10/2026
FASTER
STRONGER
BETTER
Execution: Named number one supplier by our retail partners in Kantar’s 2025 PoweRanking for the 10th consecutive year, recognizing PepsiCo’s ability to anticipate retailer needs and deliver creative solutions
Product Innovation: Accelerated our innovation pipeline and launched new offerings in emerging and functional spaces
Digital Transformation: Collaborated with Salesforce and Amazon Web Services (“AWS”) to advance our digital transformation and enhance customer and consumer experience
One PepsiCo: Drove incremental savings to reinvest in growth and identified additional opportunities to expand Global Capability Centers (“GCC”) penetration across regions and functions
pep+: Leveraged achievements made since the implementation of pep+ in 2021 and refined sustainability goals to position business for the long-term
Branding: Launched our new corporate identity, focusing on who we are today and uniting our people, brands, and purpose under a refreshed identity
The Principles of Our Executive Compensation Program
Our executive compensation program is designed to drive performance
Proxy Statement Summary — reported retailer ranking and operating initiatives · Filed 27/03/2026
41
Table of Contents
36 Weeks
Net revenue increased 7%, primarily driven by a favorable net impact of acquisitions and divestitures and effective net pricing, partially offset by an organic volume decline.
PBNA — 36-week revenue drivers and organic volume decline · Filed 08/10/2026
Unit volume declined 3%, primarily driven by a 3% decline in NCB volume and a 2.5% decline in CSD volume.
PBNA — 36-week unit volume declines · Filed 08/10/2026
Reported, GAAP measure
$
4,104
$
2,845
$
1,520
$
1,926
$
1,668
$
518
$
(1,085)
$
11,496
Items Affecting Comparability (a)
Mark-to-market net impact
—
—
—
—
—
—
(221)
(221)
Restructuring and impairment charges
149
55
10
82
9
13
55
373
Acquisition and divestiture-related charges/credits
3
(257)
—
—
—
—
—
(254)
Core, non-GAAP measure
4,256
2,643
1,530
2,008
1,677
531
(1,251)
11,394
Impact of foreign exchange translation
(3)
—
(30)
(29)
(175)
(16)
—
(253)
Core Constant Currency, non-GAAP measure
$
4,253
$
2,643
$
1,500
$
1,979
$
1,502
$
515
$
(1,251)
$
11,141
Reported Operating Profit % Change, GAAP measure
(8)
%
416
%
22
%
47
%
28
%
62
%
(13)
%
45
%
Core Operating Profit % Change, non-GAAP measure
(8)
%
3
%
15
%
18
%
18
%
29
%
3
%
5
%
Core Constant Currency Operating Profit % Change, non-GAAP measure
(8)
%
3
%
13
%
17
%
6
%
25
%
3
%
3
%
40
Table of Contents
36 Weeks Ended 9/6/2025
PFNA
PBNA
IB Franchise
EMEA
LatAm Foods
Asia Pacific Foods
Corporate unallocated expenses
Total
Reported, GAAP measure
$
4,463
$
550
$
1,248
$
1,310
$
1,301
$
321
$
(1,252)
$
7,941
Items Affecting Comparability (a)
Mark-to-market net impact
—
—
—
—
—
—
(8)
(8)
Restructuring and impairment charges
147
192
7
118
36
9
45
554
Acquisition and divestiture-related charges/credits
23
285
—
—
—
—
—
308
Impairment and other charges
—
1,537
73
270
—
80
—
1,960
Indirect and income tax impact
Net revenue decreased slightly, primarily driven by unfavorable net pricing, partially offset by an increase in organic volume.
Operating profit reconciliation and subsequent food-segment revenue discussion · Filed 08/10/2026
Operating profit decreased 8%, primarily reflecting certain operating cost increases, the unfavorable net pricing and a 4-percentage-point impact of gains associated with sales of certain assets in the prior year.
Food-segment operating discussion — 8% operating profit decline · Filed 08/10/2026
For information on additional impairment charges, see Notes 1 and 4 for impairment and other charges taken primarily related to the impairments of the Rockstar and Be & Cheery brands.
Intangible assets — reference to Rockstar and Be & Cheery impairments · Filed 08/10/2026
In 2025, sales to Walmart Inc. (Walmart) and its affiliates, including Sam’s Club (Sam’s), represented approximately 14% of our consolidated net revenue, with sales reported across all of our segments, including concentrate sales to our independent bottlers, which were used in finished goods sold by them to Walmart.
Our Customers — Walmart revenue concentration · Filed 03/02/2026
Our Competition
Our beverage and convenient food products are in highly competitive categories and markets and compete against products of international beverage and convenient food companies that, like us, operate in multiple geographies, as well as regional, local and private label manufacturers and economy brands and other competitors, including smaller companies developing and selling micro brands directly to consumers
Our Competition — international, regional, local and private-label competition · Filed 03/02/2026
12 Weeks Ended 6/13/2026
Impact of
Impact of
Reported
% Change, GAAP measure
Foreign exchange translation
Acquisitions and divestitures
Organic
% Change, non-GAAP measure(a)
Organic volume change(b)
Effective net pricing
PFNA
(2)
%
—
—
(2)
%
—
(2)
PBNA
7
%
—
(6)
1
%
(2)
3
IB Franchise
11
%
(2)
—
9
%
6
3
EMEA
10
%
(3)
—
6
%
3
3
LatAm Foods
15
%
(11)
—
4
%
—
4
Asia Pacific Foods
12
%
(3)
—
9
%
10
(1)
Total
6
%
(2)
(2)
2
%
1
2
24 Weeks Ended 6/13/2026
Impact of
Impact of
Reported
% Change, GAAP measure
Foreign exchange translation
Operating profit decreased 3.5%, primarily reflecting certain operating cost increases and the unfavorable net pricing.
Net Revenue and Organic Revenue Performance — 12 weeks ended June 13, 2026 · Filed 09/07/2026
Effective net pricing: reflects the year-over-year impact of discrete pricing actions, sales incentive activities and mix resulting from selling varying products in different package sizes and in different countries.
Glossary — definition of effective net pricing · Filed 03/02/2026
and Subsidiaries
(in millions, except per share amounts, unaudited)
12 Weeks Ended
36 Weeks Ended
9/5/2026
9/6/2025
9/5/2026
9/6/2025
Net Revenue
$
25,274
$
23,937
$
68,898
$
64,582
Cost of sales
11,520
11,113
31,302
29,343
Gross profit
13,754
12,824
37,596
35,239
Selling, general and administrative expenses
9,494
9,122
26,100
25,305
Impairment of intangible assets (see Notes 1 and 4)
—
133
—
1,993
Operating Profit
4,260
3,569
11,496
7,941
Other pension and retiree medical benefits (expense)/income
(114)
26
3
91
Net interest expense and other
(242)
(264)
(773)
(788)
Income before income taxes
3,904
3,331
10,726
7,244
Provision for income taxes
834
(in millions, unaudited)
36 Weeks Ended
9/5/2026
9/6/2025
Operating Activities
Net income
$
8,412
$
5,740
Depreciation and amortization
2,531
2,315
Impairment and other charges
—
1,960
Operating lease right-of-use asset amortization
531
489
Share-based compensation expense
240
207
Restructuring and impairment charges
367
567
Cash payments for restructuring charges
(373)
(554)
Acquisition and divestiture-related charges/credits
(254)
308
Cash payments for acquisition and divestiture-related charges
(24)
(80)
Pension and retiree medical plan expenses
227
164
Pension and retiree medical plan contributions
(355)
(400)
Deferred income taxes and other tax charges/credits
663
30
Tax payments related to the Tax Cuts and Jobs Act (TCJ Act)
(965)
(772)
Change in assets and liabilities:
Accounts and notes receivable
(2,124)
(1,747)
Inventories
(588)
(449)
Prepaid expenses and other current assets
27
(223)
Accounts payable and other current liabilities
(358)
(1,647)
Income taxes payable
415
6
Other, net
(422)
(446)
Net Cash Provided by Operating Activities
7,950
5,468
Investing Activities
Capital spending
(2,182)
(2,499)
Sales of property, plant and equipment
89
272
Acquisitions, net of cash acquired, investments in noncontrolled affiliates and purchases of intangible and other assets
(148)
(3,176)
Short-term investments, by original maturity:
More than three months - purchases
(105)
(190)
More than three months - maturities
Condensed consolidated income and cash flow statements — 36-week comparative results · Filed 08/10/2026
36 Weeks
Operating profit increased 45%, primarily driven by productivity savings, prior-year impairment charges related to the Rockstar and Be & Cheery brands, effective net pricing and a favorable net impact of acquisition and divestiture-related charges/credits, partially offset by certain operating cost increases.
Consolidated Results — 36-week operating profit drivers · Filed 08/10/2026
Unit volume grew 1%, driven primarily by a 1% increase in savory snacks volume.
Food-segment operating discussion — unit volume growth · Filed 08/10/2026
We continuously monitor the performance of all our indefinite-lived intangible assets and performed our annual impairment assessment during our third quarter, which resulted in no impairment.
Intangible assets — 2026 annual impairment assessment · Filed 08/10/2026
Commodity Prices
We are subject to commodity price risk because our ability to recover increased costs through higher pricing may be limited in the competitive environment in which we operate.
Note 9 — competitive limits on recovering commodity costs through pricing · Filed 03/02/2026
During the 36 weeks ended September 5, 2026, net cash provided by operating activities was $8.0 billion, compared to net cash provided by operating activities of $5.5 billion in the prior-year period.
Liquidity and Capital Resources — operating cash flow · Filed 08/10/2026
The increase in operating cash flow primarily reflects favorable operating profit performance and favorable working capital comparisons.
Liquidity and Capital Resources — operating cash flow improvement drivers · Filed 08/10/2026
Investing Activities
During the 36 weeks ended September 5, 2026, net cash used for investing activities was $2.3 billion, primarily reflecting net capital spending of $2.1 billion.
Investing Activities — net capital spending · Filed 08/10/2026
48
Table of Contents
Financing Activities
During the 36 weeks ended September 5, 2026, net cash used for financing activities was $3.9 billion, primarily reflecting the return of operating cash flow to our shareholders through dividend payments and share repurchases of $6.7 billion and payments of long-term debt borrowings of $2.3 billion, offset by proceeds from the issuances of long-term debt of $3.0 billion and net proceeds of short-term borrowings of $2.1 billion.
Financing Activities — shareholder distributions and debt financing · Filed 08/10/2026
Additionally, certain executive officers and other senior executives who were previously granted 66% PSUs and 34% long-term cash were granted 60% PSUs and 40% RSUs in 2026.
Note 5 — actual 2026 executive PSU and RSU grants · Filed 08/10/2026
For PSUs granted in 2026, the final payout will be determined over a three-year period based on achievement of specified pre-established financial performance metrics, with PepsiCo’s total shareholder return relative to a specific set of peer companies acting as a multiplier.
Note 5 — three-year financial metrics and relative shareholder return multiplier · Filed 08/10/2026
No hedging and pledging: Under our Insider Trading Policy, executive officers are prohibited from hedging and pledging Company stock
Executive Compensation — prohibition on executive hedging and pledging · Filed 27/03/2026
No resetting of financial targets: We do not reset internal incentive goals used to determine performance-based award payouts for executive officers once established at the beginning of the performance period
Executive Compensation — prohibition on resetting established incentive goals · Filed 27/03/2026
Independent Oversight
■
12 of 13 director nominees are independent (all except for the CEO)
■
Independent Presiding Director with clearly defined and robust responsibilities
■
Regular executive sessions of independent directors at Board meetings (chaired by independent Presiding Director) and Committee meetings (chaired by independent Committee Chairs)
■
100% independent Board Committees
■
Active Board oversight of the Company’s strategy and risk management, including food safety, cybersecurity, sustainability and human capital management
Board Refreshment
■
Comprehensive, ongoing Board succession planning process, including election of a new Presiding Director effective May 2026
■
Regular Board refreshment and mix of tenure of directors (1 director nominee is a new candidate for election to the Board and 3 nominees joined since the beginning of 2021)
■
Annual Board and Committee assessments, including periodic individual director assessments facilitated by a third party
■
Mandatory retirement age of 75
■
Comprehensive director orientation and ongoing director education
Corporate governance summary — independent oversight and director nominees · Filed 27/03/2026
90 | PEPSICO 2026 Proxy Statement
Back to Contents
Shareholder Proposals
■
Executive Sessions of the Independent Directors: The Board and its Committees each meets in executive sessions on a regular basis without the presence of the CEO or other members of management.
Corporate governance — independent director executive sessions · Filed 27/03/2026
Laguarta
Chairman of the Board of Directors and Chief Executive Officer
126
Table of Contents
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of PepsiCo and in the capacities and on the date indicated.
Signatures — combined Chairman and Chief Executive Officer role · Filed 03/02/2026
As of September 5, 2026, the fair value of the contingent consideration was $12 million, reflecting a fair value decrease of $105 million and $266 million in the 12 and 36 weeks ended September 5, 2026, respectively, recorded in selling, general and administrative expenses.
Financial instruments — decline in poppi contingent consideration fair value · Filed 08/10/2026
We, our independent bottlers and our distributors operate DSD systems that deliver beverages and convenient foods directly to retail stores where the products are merchandised by our employees or our independent bottlers.
Our Distribution Network — direct store delivery and merchandising · Filed 03/02/2026
Customer Warehouse
Some of our products are delivered from our manufacturing plants and distribution centers, both company and third-party operated, to customer warehouses, which is a less costly method of distribution than DSD.
Our Distribution Network — warehouse delivery costs compared with DSD · Filed 03/02/2026
These and other factors have reduced and could continue to reduce consumers’ willingness to purchase certain of our products, including as a result of public boycotts.
Business risks — realized reductions in willingness to purchase · Filed 03/02/2026
A number of our sales incentives, such as bottler funding to independent bottlers and customer volume rebates, are based on annual targets, and accruals are established during the year, as products are delivered, for the expected payout, which may occur after year end once reconciled and settled.
Total Marketplace Spending — bottler funding and customer volume rebates · Filed 08/10/2026
