This excerpt taken from the PBG DEF 14A filed Mar 31, 2006.
Long-Term Incentives. The Company provides long-term incentives through its Long-Term Incentive Plans (collectively, the LTIP). In 2005, shareholders approved the amended and restated PBG 2004 Long-Term Incentive Plan which provides the Committee with the flexibility to award non-qualified stock options, performance units, incentive stock options, stock appreciation rights, and/or restricted share grants. The objective of the LTIP is to provide a long-term focus that links executive compensation to shareholder interests and to provide an appropriate balance to the short-term focus of the base salary and annual incentive aspects of the compensation programs. In 2005, individual grants to all executives were targeted within the third quartile of the peer group and determined based on an executives salary band and current base salary. In 2005, non-qualified stock options continued to be the primary long-term incentive vehicle of the Company.
In March 2005, the Committee granted an award of stock options to each Covered Executive, other than Mr. Rebolledo (who is not eligible for such awards as discussed below). Consistent with the terms of the LTIP, these options were granted with an exercise price equal to the fair market value of PBG Common Stock on the grant date. The options will vest 25%, 25% and 50% on March 30th of 2006, 2007 and 2008, respectively, subject to the Covered Executives continued employment through the vesting date. This vesting schedule is identical to the schedule applicable to executives generally. The stock option awards to the Covered Executives are reflected in the Option Grants in Last Fiscal Year table on page 14.
In addition, in October 2005, the Committee granted a special award of performance-based restricted stock units (RSUs) to each Covered Executive, other than Mr. Rebolledo, in connection with the Companys executive retention and succession planning objectives. The RSUs will vest only if a pre-established 2006 EPS target, approved by the Committee, is met. In addition, provided
the performance target is met, the RSUs will vest only if the Covered Executives remain continuously employed for a specified period of time. Messrs. Foss, Petrides and Wandschneider must remain continuously employed through the fifth anniversary of the grant date in order to vest in their RSUs. Mr. Cahills award is discussed below. The RSU awards to the Covered Executives are reflected in the Restricted Stock/ Units Awards column of the Summary Compensation Table on page 11.
Following an extensive review in 2005 of the Companys executive compensation program, the Committee approved a new long-term incentive program beginning in 2006. The Committees review was conducted with the assistance of its independent compensation consultant. For 2006, all long-term awards will be in the form of 50% stock options and 50% RSUs and, in all cases, vesting will be conditioned on continuous employment through the applicable vesting date. Stock options will vest over three years with generally one-third of the award vesting on each of the first three anniversaries of the grant date. The RSUs will vest 100% on the third anniversary of the grant date. Furthermore, RSUs granted to certain senior executives, including the Covered Executives, will vest only if a pre-established 2006 earnings per share target, approved by the Committee, is met.