This excerpt taken from the PBG DEF 14A filed Mar 31, 2006.
Impact of Internal Revenue Code Section 162(m). Section 162(m) of the Code limits the tax deduction for compensation in excess of one million dollars paid to the Covered Executives. However, performance-based compensation can be excluded from the limit so long as it meets certain requirements. The Committee believes the EICP and LTIP satisfy the requirements for exemption under Section 162(m). Payments made under these plans are generally expected to qualify as performance-based compensation and to constitute the majority of aggregate incentive payments for the Covered Executives. For 2005, the annual salary paid to Mr. Cahill and the other Covered Executives was in each case less than one million dollars. The 2005 annual incentives were all paid pursuant to the EICP and will, therefore, be deductible when paid, to the extent permitted by Section 162(m). The 2005 awards of restricted stock units and stock options made to the Covered Executives under the terms of the LTIP are exempt as performance-based compensation for purposes of calculating the one million-dollar limit. Due to the Companys focus on performance-based compensation plans and continued deferral of compensation by certain executive officers, the Committee expects to continue to qualify most compensation paid to the group as tax deductible. In the case of annual salary paid to a Covered Executive in excess of one million dollars, the Committee may mandate the deferral of payment of such excess amount to the extent that such amount would not be deductible under Section 162(m) but for the deferral.