PepsiCo & Stakeholder Engagement Enhancing Enterprise Value November 2012 Presenters: Bob Knott,...

PepsiCo & Stakeholder Engagement Enhancing Enterprise Value November 2012 Presenters: Bob Knott, Senior Managing Director Mitzi Emrich, Managing Director

2 We are 3,800 trusted advisors with diverse expertise and exceptional credentials serving clients globally We combine unparalleled expertise and industry knowledge to address challenges to enterprise value Our breadth and depth extends across every social, political, and economic hub across the globe Critical Thinking At The Critical Time 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 20 40 60 80 100 120 140 160 180 FTI Consulting is a global business advisory firm that provides multidisciplinary solutions that help clients address complex business opportunities and challenges.

Our Global Network 3 Broad global reach encompassing approximately 700 strategic communications experts and a total of 3,800 business consultants in 23 countries around the world Proven ability to manage global issues with local expertise

4 The PepsiCo Team The FTI PepsiCo team will be staffed with an integrated team of experienced professionals who focus on the food and beverage industry. Bob Knott Program Director Beth Saunders Strategic Counsel Jeannine Dowling Mgr., Stakeholder Engagement John Watts Mgr., Stakeholder Identification & Mapping Mitzi Emrich Online Engagement Linda Mayer Jocelyn Landau Sacha Mohabeer Anshula Ahluwalia Jeremy Ruch Adam Sopko

Helping Brand And Market Leaders Advance Their Businesses 5 Created an engagement strategy to help deepen stakeholders commitment and belief to its new CEOs Vision 2020. Communicated transformation and long-term strategy to position the company as a leader in science and innovation. Created a grassroots strategy that engaged consumers to combat pending state and federal legislation that would adversely affect the companys corporate strategy. Reinforced the companys market leadership and reputation, despite the commoditization sweeping the insurance industry, while raising its profile as a leading advocate for the economic wellbeing of Americas middle class. Managed the communications surrounding the explosion of its Deepwater Horizon rig, widely characterized as the BP Oil Spill, including the engagement of various internal and external stakeholders regarding the companys ongoing operations. Worked with executive management to raise visibility in the US and create a new positioning theme. Facilitated introductions between Tata executives to develop US- based relationships.

Our Unique Approach: Enhancing Enterprise Value 6 FTI is uniquely capable of developing and implementing communication campaigns that enhance and protect a companys enterprise value. Our approach emphasizes the effective engagement of employees, customers, governmental publics and third parties, in addition to investors, analysts and other members of the financial community a diversity of essential stakeholders we are uniformly adept at reaching and influencing. Through the use of unified messages that resonate with each of these stakeholders, as well as a coordinated approach to communications, FTI not only enables companies to achieve committed workforces, reputational leadership and an increased license to operate, but also an optimal valuation of their stock.

Behaviors Constructively engage with PepsiCo in public forums Cite or refer to PepsiCo and PepsiCo experts views positively Understand and internalize all of PepsiCos strategic directions Behaviors Commitment to company Productivity Company ambassadorship / active articulation of PepsiCos perspective Articulate the economic importance of PepsiCo and the industry Acknowledge PepsiCos contributions / leadership Listen to and incorporate PepsiCo views Refrain from or amend restrictive laws / regulations Behaviors Thoughtfully consider and internalize managements plans Analysts echo PepsiCo views Attract / retain desired investor base Provide time when needed, based on belief in management Behaviors Our Approach: How It Works 7

8 Develop a comprehensive influencer engagement strategy and program that will: This program will operationalize PepsiCos strategic goals: Understanding PepsiCos Objectives Increase the credibility and resonance of PepsiCos near and long-term business strategy Brand Building Innovation Execution Productivity Return to Shareholders Educate and increase understanding of PepsiCos position around key issues Ensure the perception of PepsiCos past and present trajectory is validated and amplified

ATTITUDES AND OPINIONS IN THE U.S. OF THE FOOD AND BEVERAGE INDUSTRY

Packaged food used to be a convenience that was simply enjoyed. Now its a loaded gun. Questions and concerns have created a series of global trends that impact the reputations and bottom lines of food companies operating in an increasingly complex environment. Questions Consumers Are Asking 10

11 11 Understanding The Industry and External Pressures

Title Needed 12 Regulators, health professionals and industry leaders have become more focused on calories from beverages and processed foods. Obesity Influences the Dialogue Conversations and content about nutrition, health and food products are amplified through the food community, creating an echo chamber. Consumers are passionate about their food choices and about the companies they buy from The Rise of the Corp-sumer Social Media is Mainstream Media

Title Needed 13 Old paradigm of food issues being limited to developed markets and by geographic boundaries has changed. From obesity to food ingredients, sustainability to food safety, food security to commodities pricing, food issues dominate our global and local food dialogues, and shape the way companies and industries enter new markets and do business in those markets. Creating a unique presence on the niche social networks that are important to key audiences helps build credibility and trust. Global Thinking and Doing is a MustA New Issue Import/Export Dynamic User Networks to Create Social Currency

How Others In the Industry Are Reacting to the Landscape 14 From Candy to Innovation: With the worlds cocoa supply at risk, concentrated primarily in West Africa and susceptible to disease, and stakeholders calling for support of impoverished cocoa farmers, Mars decided to take action. In mapping the cocoa genome, Mars was seen as a leader, bringing solutions to a delicate agricultural and economic problem. Thinking Local: In the wake of a series of crises over the sourcing and ingredients of products sold in its restaurants, Yum! launched a global program that tracked and anticipated food and nutrition-related issues and influencers, leading to many of its brands announcing reformulated products based on unique market demands around the world. More than Just Coffee: While suffering declining financial returns and an increasingly competitive market, Starbucks heralded the return of CEO Howard Schultz and highlighted its deep bench of talented executives by partnering its thought leaders with select stakeholders in a series of global conversations, securing the companys corporate reputation as a leader in not just coffee, but in responsible capitalism, corporate citizenship and sustainability. Healthy Food Initiative: After successfully demonstrating that sustainable products should not and do not need to cost more for its customers, Walmart brought those same principles to healthy foods. Declaring that no family should ever have to make a choice between foods they can afford and foods that are good for them, Walmart announced a program with Michelle Obamas Lets Move! that includes working with manufacturers to reformulate packaged goods, creating its own healthy foods seal, and lowering prices on fruits and vegetables..

STAKEHOLDER IDENTIFICATION & MAPPING

PepsiCos Essential Stakeholders Health Professionals Financial Community Governmental Publics Key Opinion Makers Bloggers, Citizen Journalists News Media Online Influencers

Stakeholder Mapping on Parallel Paths Immediately Phase 1Phase 2 ONLINE MAPPING. RESEARCH-LEAD MAPPING Parallel paths address near-term opportunity and long- term, documentable results. Identify Hot Spots Manage brush fires Identify the most vocal, credible and trusted sources Manage and drive the conversation Map stakeholders by current vs. desired attitudes and behaviors, influence, and impact on achievement of our business objectives Reach out and engage the most vocal, credible and trusted sources Develop plans for most vocal, influenceable, influential and valuable Track success via measures of opinion, engagement and behavior

The Research-led Mapping Process To facilitate effective engagement over the long-term, we take a structured approach to mapping stakeholders and design communications that drive engagement and behavior.

The Research-led Mapping Process While PepsiCo has clear strategic vision and initially- identified stakeholders, a research-driven approach will ensure we know precisely who needs to hear what and how. The objectives developed in this stage will operationalize PepsiCos strategic goals: Brand Building Innovation Productivity Execution Return to Shareholders PLAN OBJECTIVES IDENTIFYMEASUREMAPANALYZE STRATEGY CREATION

The Research-led Mapping Process Ability to Influence Level of Engagement The resulting stakeholder map provides a holistic view of your messaging landscape, along with strategic and tactical insights. Certain loud voices may be unmovable, and require development of credible surrogates more likely to support PepsiCo while we identify the key advocates we need to continue to engage. PLAN OBJECTIVES IDENTIFYMEASUREMAPANALYZE STRATEGY CREATION

The Research-led Mapping Process At the top of the pyramid, special strategies are often required. Focusing on the issue of most interest to the individual is both possible and critical. Whether due to beliefs, position or role, some can be intractable and immovable, requiring development of other equally credible individuals to articulate your view. Engagement & Influence PLAN OBJECTIVES IDENTIFYMEASUREMAPANALYZE STRATEGY CREATION

The Research-led Mapping Process 0 20 40 60 80 10 0 Key Opinion Leaders frame and lead the debate. They are informed, vocal and have an impact beyond their own group. 0 20 40 60 80 10 0 Broader Opinion Elites have an interest in the issue and a degree of influence in its outcome. They can play a more active role if engaged. 0 20 40 60 80 10 0 Informed Influencers are able to influence groups above but have no decision making capacity in official debates 100%100%100%

Digital Stakeholder Identification and Mapping By mapping digital stakeholders, PepsiCo can identify online personalities who have the potential to become vocal online ambassadors for the companys initiatives and designate an approach for activating them. Measure Online Authority Ensure Participation in Relevant Conversation Uncover Shared Interests Develop Opportunities for Partnership FTIs Process for Digital Stakeholder Mapping Engagement Influence Popularity Trust TreeHugger Fooducate Mom RN SuperHealthyKids Jolly Tomato

Amplifying Messages Throughout the Food Community Online conversation shapes media coverage, government action and consumer opinion ultimately impacting a companys bottom line. Conversations about the business and social impacts of food are shared and reverberate amongst a tight-knit group of stakeholders who are deeply connected to PepsiCo and its competitors, providing the opportunity to reach broad audiences by targeting a few key digital influencers. Food Advocates & Enthusiasts Food & Nutrition Experts Consumers

Identifying Short-term Hotspots A multi-stakeholder world means opinions are formed across diverse channels, a debate can start anywhere and new influencers can rise to prominence each day. Navigating the complexity and engaging stakeholders in meaningful ways is critical to success, but PepsiCo must first start with the potential allies and influencers who are the most vocal, credible and trusted sources of information. FTI will immediately leverage its global heat-mapping tool to identify and chart a course for engaging prime stakeholders early, securing initial wins that will help PepsiCo establish broader relationships in key communities.

STAKEHOLDER ENGAGEMENT

Our Principles to Advance Engagement 27 Guided by Goals 1 Relation ship Based 2 Connect ed to Strategy Outcom es 3 Authentic engagement underlies all strategic alliance development efforts

9.5 9.9 9.5 0246810 0246810 0246810 Connected to Strategy Outcomes Relationship Based Guided by Goals 9.7 1 0 2 3 4 5 6 7 8 9 10 Authentic engagement underlies all strategic alliance development efforts Our Principles to Advance Engagement 28

Steps to Cultivating Stakeholders 29 Frame messages for individual Engage stakeholders Measure results in real time Respond accordingly Identify individuals attributes and commitment

Build Relationships with Potential Advocates 30 Incentivize with insights and unique experiences Build proactive and offline relationships by giving stakeholders exclusive and advanced access to products, internal experts, tools and programs before they are launched. Leverage partnerships with reputable offline groups to promote the progress of PepsiCos initiatives and help stakeholders understand the companys relationships with credible groups. Provide regular comments on news and issues core to PepsiCos business, offering a unique and reliable perspective on prominent issues. Take the lead in making the issues accessible Educate diverse audiences with engaging information in the form of videos, interactive infographics and other multimedia to share perspectives and messages unique to PepsiCo. Have a presence where your advocates spend their time

Using Mapping to Guide Strategy and Tactics 31 Once the identification process is complete, stakeholders will be mapped against influence and level of engagement to guide decisions on strategic communications tactics.

Contact Management 32 Contact detail: store typical contact information (address, phone, email, etc.). Custom fields: create limitless data points to categorize contacts; store additional relevant info; page view can be collapsed for accessibility. Tracking & ownership: assign contact owner, monitor when record created or last updated.

PERFORMANCE METRICS

Our programs center around measurement. We will work in partnership with your team to create a shared vision of success at the outset of the program based on: 34 OUTPUTSIMPACTSOUTCOMES FocusFTI work productsChanged opinions, attitudes, beliefs / knowledge, leading indicators Changed behavior ToolsProject management / tracking tools, including contact tracking (e.g. via Salesforce or similar) Periodic pulse checks via in-depth interviews among KOLs and other specialist groups, Delphi panel responses, Survey larger groups (public influentials, investors), Media audits Communications / contact tracking tools (e.g. Salesforce or similar) Media audits / tracking including traditional and social channels, by influence Regulatory filings / state and local codes Examples Activity tracking, by period and by key stakeholder group. Examples: # briefings / meetings # contacts made # site visits driven in # articles placed citing key messages # blog mentions citing key messages 1200 Examples: Volume and % favorable media coverage Volume and % favorable social media discussion % of message penetration, with or without PepsiCo attribution % who know PepsiCos position % hearing/believing messages % with aligned views Examples: # requests for information # attending conferences / events Volume and % actively articulating preferred views Volume and % favorable media coverage Volume and % favorable social media discussion # 3 rd party endorsements # (foreseen) unfavorable laws / regulations avoided or modified

Institutionalizing Relationships 35 Institutionalizing relationships between PepsiCo and its key influencers through a contact management system will help knowledge-sharing across the FTI and PepsiCo team as well as create a database of information to be used long- term, ultimately driving these relationships across the PepsiCo enterprise.

Biographies

37 Beth Saunders, Senior Managing Director Elizabeth Saunders is a Senior Managing Director and Americas chairman of the FTI Strategic Communications practice and is based in Chicago. Ms. Saunders specializes in building best practices investor relations programs across a wide spectrum of clients. She also serves as senior counsel for business transformation assignments and has actively worked on post merger communications, CEO transitions, and restructurings for Fortune 500 Companies including The Coca-Cola Company and Dow Chemical. She has also worked extensively in the technology space with companies including Dell, Symantec and Juniper. Prior to her role at FTI Consulting, Ms. Saunders co-founded Ashton Partners in 1997, a strategic advisory firm focused on financial communications. Ashton Partners was one of the country's top 15 independent investor relations firms. Prior to founding Ashton Partners, Ms. Saunders was the President and Chief Operating Officer of the investor relations consulting arm of Thomson Financial Services. Before this, she created and managed the Shareholder Services division of the Financial Relations Board. Earlier in her career, Ms. Saunders served as an analyst for Inland Steels Pension Fund and a senior analyst for Monticello Investments, a Chicago area merchant banking firm.

38 Bob Knott, Senior Managing Director Bob Knott is a Senior Managing Director, FTI Consulting Strategic Communications practice, and leads the firms corporate communications practice throughout the Americas. An expert in organizational positioning, reputation and issues management, thought leadership and stakeholder identification, mapping and engagement, Mr. Knott has developed and executed integrated communications campaigns on behalf of Fortune 500 companies and trade associations in a diversity of sectors. Prior to joining FTI Consulting, Mr. Knott was a global practice chairman and global client relationship manager at Edelman, where he managed many of the firms largest and most high profile client engagements. Mr. Knott managed the global launch of GEs ecomagination, while overseeing Edelmans worldwide work for the conglomerate. At Edelman, Bob established the Field to Fork Survey Seriesthe firms annual study comparing and contrasting the attitudes of adult primary grocery shoppers nationwide and Washington DC-based opinion elites about the food they eat, its impact on society and the extent to which government should regulate it.

39 Jeannine Dowling, Managing Director Jeannine Dowling is a senior member of FTI's Corporate Communications Practice and is based in New York. Jeannine has spent the last twenty years working with high profile global consumer products companies operating in highly regulated industries or highly publicized environments. She is a communications executive with tested experience in all communications environments from business to lifestyle. She specializes in reputation management, corporate positioning and stakeholder engagement. She effectively leverages multiple communications channels on a global platform to enhance corporate reputation and brand heritage and promote both top and bottom line growth. Prior to joining FTI, Jeannine was Senior Vice President of Corporate Affairs for Diageo NA., the largest beer, wine and spirits company in the world. At Diageo Jeannine led a multidisciplinary team responsible for the organization's brand and corporate communications. Jeannine has a wealth of front-line experience in managing the daunting regulatory, legislative and social policy challenges inherent in the beverage alcohol industry in the US. Before joining Diageo, Jeannine was a Vice President in Government Affairs for New York Life Insurance Company, and served as Director of Public Affairs at Philip Morris (now Altria).

40 Mitzi Emrich, Managing Director With more than 12 years in strategic communications and an expertise in social media, Mitzi Emrich has helped Fortune 100 clients from the health and retail sectors develop and integrate social media strategies into corporate communications and marketing initiatives aimed at consumers, influencers, and decision-makers. At FTI Consulting, Mitzi leads a team of digital strategists dedicated to helping clients protect and bolster their reputations in the digital space and build online experiences for social communities. During her career, Mitzi has focused on several food and nutrition clients. Having led the digital communications effort for Walmart and Sams Club, she helped the companies connect with stakeholders online through multi-channel tactics including social business strategy, blogger relations, social network engagement, website development and conversation analysis; as part of her work for Walmart, Mitzi supported the company during the development and launch of its groundbreaking Healthy Food Initiative with First Lady Michelle Obama. Prior to joining FTI Consulting, Mitzi served as a Senior Vice PresidentGroup Head at Edelman Public Relations and she previously worked as a lobbyist and grassroots organizer for the Sierra Club in Washington, DC.

41 John Watts, Managing Director John Stuart Watts is a Managing Director in FTIs Strategic Communications Practice, where he leads Research and Strategy work focused on Corporate Communications. The group offers full-service research services, including the design, management and analysis of research using a full suite of data gathering and advanced analytical and modeling tools. Johns personal focus is on the application of these tools to business strategy, corporate communications, reputation and brand, and customer experience. John joined FTI with 20+ years experience in market research, strategic consulting and teaching/research in the worlds top business schools. His previous experience includes serving as a Managing Director at Vivaldi Partners. Earlier, he was a Senior Vice President and Global Managing Director at the Opinion Research Corporation, a leading primary research house, reporting to the CEO and overseeing the firms Value Based Marketing and Decision Science practices. As ORCs Global Managing Director for Decision Sciences, John oversaw the design, analysis, supervision and delivery of numerous studies including brand, customer experience and decision processes, market segmentation, market size, product features and pricing. John has also served as a Senior Manager in the Strategy, Telecommunications and High Technology practices at Ernst & Young Consulting, Accenture and PRTM, and as an independent consultant.

42 Jocelyn Landau, Senior Director Jocelyn Landau is a Senior Director in the Strategic Communications Practice of FTI Consulting, based in New York City. Jocelyn has over nine years of experience in communications and research, specializing in public affairs, healthcare/life sciences and energy. Jocelyn has extensive experience in survey research, message testing, marketing, communications strategy and campaigns, as well as rigorous training in quantitative and qualitative research methods. She has conducted numerous telephone and online polls covering a range of issues in politics, policy and healthcare. Jocelyn is currently engaged in a variety of strategic consulting projects, including reputation management, market segmentation, industry thought leadership, stakeholder perception audits, brand and customer experience improvement, coalition building and growth strategy.

43 Linda Mayer, Senior Director Linda Mayer is a Senior Director in the FTI Consulting Corporate Communications practice and is based in New York. She leverages her expertise in communications, public affairs and reputation management on behalf of Health Care & Life Sciences clients. For more than two decades, Linda has provided counsel and successfully executed internal and external communications on behalf of Fortune 500 companies with brands that are household names. Linda has held senior communications positions at some of the worlds leading global health care and consumer packaged goods companies such as Merck, Pfizer/Wyeth, Cadbury and Johnson & Johnson. Her experience includes corporate branding, employee engagement, media relations, product communications, reputation management, crisis/issues management, executive positioning, corporate social responsibility and advocacy. Linda joined from Merck, where she was a senior consultant to the Global Human Health team supporting corporate, executive, employee and product communications.

44 Anshula Ahluwalia, Director Anshula Ahluwalia is a Director in the Chicago office of FTI Consulting. She is responsible for strategic planning and timely execution of communications programs, including corporate reputation management, thought leadership, media relations and training, executive visibility and crisis communications for clients such as American Society of Anesthesiologists, OfficeMax, Career Education Corporation and Insurance Auto Auctions, and serves as a point of contact for client communications. Prior to this, she has held several positions with Ogilvy Public Relations in Chicago where she managed corporate reputation (internal and external) and thought leadership campaigns for CDW Corporation, a leading provider of technology products and services, COUNTRY Financial, a provider of insurance and financial services, McDonalds Corporation, Grant Thornton and Hudson Highland Group. Anshula supported McDonalds in a change management and employee communications campaign for a cost management initiative, designed to help the company save $20 million over a period of three years. She developed strategic positioning communications, including business case and messaging, that helped sell-in the value and benefits of the program to executive leadership, as well as supported development and execution of franchisee and employee communications strategy to inform and align the groups in support of the initiative

45 Sacha Mohabeer, Senior Consultant Sacha joined FTI Consulting Strategic Communications in 2008 and has had roles in Social Media engagement and implementation, as well as Online Engagement and Planning, and Client Services, working with clients such as Forex.com, Wyndham Worldwide, and Duane Reade. She was a part of a team that managed Diageo's successful public affairs campaign, AxeTaxesNotJobs.com, a campaign to stop tax hikes on alcohol. Sacha has also worked with The Coca Cola Company in developing their internal social media guidelines and certification program for employees. Her expertise is in developing, managing and implementing online creative strategy and social media initiatives across each of the sectors. Sacha is also well-versed in social media strategy and platforms in regions across the world, having spent time working with clients and also providing Social Media training for consultants in our FTI SC Brussels, London and Bogot offices.

PepsiCo & Stakeholder Engagement Enhancing Enterprise Value November 2012 Presenters: Bob Knott,...

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