Who is Gary M. Rodkin and why is his departure significant?

Gary M. Rodkin was the Chairman and CEO of PepsiCo Beverages and Foods. His departure from this executive role, effective July 1, 2005, is significant as it involves a material definitive agreement, including a consultancy period and specific terms regarding compensation and equity awards.

What are the financial terms of Gary Rodkin's separation agreement?

Mr. Rodkin will receive $190,000 per month during his two-year consultancy period (through June 30, 2007). Additionally, his 2003, 2004, and 2005 option grants will vest immediately, as will his 2004 and 2005 restricted stock units, though the latter remain subject to original performance criteria. He is also eligible for a standard deferred vested pension.

Are there any restrictions on Gary Rodkin after his departure?

Yes, during his consultancy period, Mr. Rodkin is prohibited from disclosing confidential information, competing against PepsiCo, disparaging the company, or soliciting its employees. His stock options must also be exercised before his July 1, 2005 separation date.

What is the purpose of the two-year consultancy agreement?

The consultancy agreement allows PepsiCo to retain Mr. Rodkin's expertise for a specified period after his executive role concludes. This is a common practice to ensure a smooth transition and leverage the departing executive's knowledge, while also binding them with confidentiality and non-compete clauses.

PEP 8-K: Material Agreements

Summary

PepsiCo, Inc. (PEP) filed an 8-K report on April 21, 2005, detailing a material definitive agreement related to the departure of Gary M. Rodkin, Chairman and CEO of PepsiCo Beverages and Foods. This agreement outlines the terms of his separation, which is effective July 1, 2005, and includes a two-year consultancy period post-employment. Investors should note the financial implications of this separation agreement, including Mr. Rodkin's compensation during his consultancy ($190,000 per month) and the accelerated vesting of certain equity awards, specifically option grants and restricted stock units from 2003-2005. While options must be exercised by July 1, 2005, restricted stock units remain subject to original performance criteria. The report also confirms Mr. Rodkin's eligibility for a standard deferred vested pension benefit.

Key Highlights

1Gary M. Rodkin, Chairman and CEO of PepsiCo Beverages and Foods, will depart from his executive role on July 1, 2005.
2PepsiCo has entered into a separation agreement with Mr. Rodkin, effective April 18, 2005.
3Mr. Rodkin will serve as a consultant to PepsiCo for two years following his departure, through June 30, 2007.
4Consultancy compensation for Mr. Rodkin is set at $190,000 per month.
5The agreement includes standard non-compete, non-disclosure, and non-solicitation clauses.
6Certain equity awards, including 2003, 2004, and 2005 option grants, are entitled to immediate vesting, but must be exercised before July 1, 2005.
72004 and 2005 restricted stock units are also entitled to immediate vesting, subject to original performance criteria.

PEPSICO INC 8-K Report, Material Agreement (Apr 21, 2005)

Summary

Key Highlights

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