Summary
PepsiCo, Inc. (PEP) announced two significant capital allocation decisions by its Board of Directors on March 12, 2010, as disclosed in their Form 8-K filing on March 15, 2010. The company approved a 7% increase in its annual common stock dividend, raising it from $1.80 to $1.92 per share. This increase is set to take effect with the dividend expected to be paid on June 30, 2010. Additionally, PepsiCo authorized a substantial new share repurchase program, allowing for the buyback of up to $15 billion of its common stock through June 2013, supplementing an existing $8.0 billion program set to expire in June 2010.
Key Highlights
- 1PepsiCo's Board of Directors approved a 7% increase in the annual common stock dividend, from $1.80 to $1.92 per share.
- 2The dividend increase is expected to be effective with the quarterly dividend payable on June 30, 2010.
- 3A new share repurchase program of up to $15 billion was authorized by the Board.
- 4The new repurchase program is authorized through June 2013.
- 5This new repurchase authorization is in addition to an existing $8.0 billion program expiring on June 30, 2010.
Frequently Asked Questions
This Form 8-K filing serves as a Regulation FD disclosure and an "Other Events" announcement to inform investors about two key decisions made by PepsiCo's Board of Directors: a significant increase in the annual dividend and the authorization of a substantial new share repurchase program.
The 7% dividend increase, bringing the annual rate to $1.92 per share, will take effect with the next quarterly common stock dividend, which is expected to be paid on June 30, 2010, to shareholders of record on June 4, 2010.
PepsiCo authorized a new repurchase program of up to $15 billion through June 2013. This is in addition to their existing $8.0 billion repurchase program, which was authorized in May 2007 and is set to expire on June 30, 2010. The total potential repurchase amount is therefore substantial, but the $15 billion is a new authorization.
PepsiCo has outlined various forward-looking risks inherent in its business, including changes in consumer demand, brand reputation, trade dynamics, customer relationships, political instability, regulatory environments, IT infrastructure challenges, economic conditions, foreign exchange volatility, competitive pressures, raw material costs, supply chain disruptions, climate change impacts, integration of recent mergers (PBG and PAS), labor relations, and credit rating downgrades. Investors are cautioned to consider these risks when evaluating the company's future performance.