EX-10.31



 




Exhibit 10.31



THE PBG DIRECTORS’ STOCK PLAN

As Amended and Restated as of February 2, 2006)




1. Purposes




     The principal purposes of The PBG Directors’ Stock Plan (the “Plan”) are to provide
compensation to those members of the Board of Directors of The Pepsi Bottling Group, Inc. (“PBG”)
who are not also employees of PBG, to assist PBG in attracting and retaining outside directors with
experience and ability on a basis competitive with industry practices, and to associate more fully
the interests of such directors with those of PBG’s shareholders.



2. Effective Date



     The Plan was unanimously approved by the Board of Directors of PBG, conditional on shareholder
approval, and became effective on May 23, 2001, superseding The PBG Directors’ Stock Plan of 1999.
The Plan was amended on January 23, 2003. This amendment and restatement of the Plan is effective
as of February 2, 2006, and it shall apply to awards made on and after that date.



3. Administration




     The Plan shall be administered and interpreted by the Board of Directors of PBG (the “Board”).
The Board shall have full power and authority to administer and interpret the Plan and to adopt
such rules, regulations, guidelines and instruments for the administration of the Plan and for the
conduct of its business as the Board deems necessary or advisable. The Board’s interpretations of
the Plan, and all actions taken and determinations made by the Board pursuant to the powers vested
in them hereunder, shall be conclusive and binding on all parties concerned, including PBG, its
directors and shareholders and any employee of PBG. The costs and expenses of administering the
Plan shall be borne by PBG and not charged against any award or to any award recipient.



4. Eligibility




     Directors of PBG who are not employees of PBG (“Non-Employee Directors”) are eligible to
receive awards under the Plan. Directors of PBG who are employees of PBG are not eligible to
participate in the Plan, but shall be eligible to participate in other PBG benefit and compensation
plans.



5. Initial Award




     Under the Plan, each Non-Employee Director shall, on the first day of the month after
commencing service as a Non-Employee Director of PBG, receive a formula grant of restricted stock
(“Restricted Stock”). The number of shares of Restricted Stock to be included in each such award
shall be determined by dividing $25,000 by the Fair Market Value (as defined below) of a share of
PBG Common Stock on the date of grant (the “Stock Grant Date”), or if such day is not a trading day
on the New York Stock Exchange (“NYSE”), on the immediately preceding trading day. The number of
shares so determined shall be rounded to the nearest number of whole shares. If the recipient of
the Restricted Stock continuously remains a director of PBG, the Restricted Stock granted hereunder
shall



 








 





vest and any restrictions thereon shall lapse on the first anniversary of the Stock Grant
Date; provided, however, that, in the event of a Non-Employee Director’s death or
Disability (as defined in Section 6(c)), the Restricted Stock granted to such Non-Employee Director
shall vest and any restrictions thereon shall lapse immediately. Notwithstanding the foregoing, a
Non-Employee Director may not sell or otherwise transfer any Restricted Stock granted to him or her
prior to the date such Non-Employee Director ceases to serve as a director for any reason. The
Non-Employee Director shall have all of the rights of a stockholder with respect to such Restricted
Stock, including the right to receive all dividends or other distributions paid or made with
respect to the stock. Any dividends or distributions that are paid or made in PBG Common Stock
shall be subject to the same restrictions as the Restricted Stock in respect of which such
dividends or distributions were paid or made. However, any dividends or distributions paid or made
in cash shall not be subject to the restrictions. Each Restricted Stock award shall be evidenced by
an agreement setting forth the terms and conditions thereof, which terms and conditions shall not
be inconsistent with those set forth in this Plan.




6. Annual Stock Option Award




     (a) Under the Plan, each Non-Employee Director shall receive an annual formula grant of
options to purchase shares of PBG Common Stock (“Options”) at a fixed price (the “Exercise Price”).
Such grant shall be made annually on April 1 (the “Option Grant Date”); provided,
however, that each individual who commences services as a Non-Employee Director after April
1 of a year shall receive a pro-rated annual formula grant of options (a “Pro-Rated Grant”) with
respect to his or her first year of service, on the first day of the month following the date he or
she commences service (the “Pro-Rated Option Grant Date”). To receive a grant of Options, a
Non-Employee Director must be actively serving as a director of PBG on the Option Grant Date or the
Pro-Rated Option Grant Date, as applicable.



     (b) The number of Options to be included in each annual option award shall be determined by
dividing the Grant Amount (as defined below) by the Fair Market Value (as defined below) of a share
of PBG Common Stock on the Option Grant Date or Pro-Rated Option Grant Date, as applicable, or if
such day is not a trading day on the NYSE, on the immediately preceding trading day. Grant Amount
shall mean $180,000, except that, in the case of a Pro-Rated Grant, Grant Amount shall mean the
following: (i) $135,000 in the case of an individual who commences service as a Non-Employee
Director of PBG on or after April 2 and on or before June 30; (ii) $90,000 in the case of an
individual who commences service as a Non-Employee Director of PBG on or after July 1 and on or
before September 30; (iii) $45,000 in the case of an individual who commences service as a
Non-Employee Director of PBG on or after October 1 and on or before December 31. No Pro-Rated
Grant shall be made in the case of an individual who commences service as a Non-Employee Director
of PBG on or after January 1 and on or before April 1. The number of Options so determined shall
be rounded up (if necessary) to the nearest number of whole Options. “Fair Market Value” shall
mean the average of the high and low per share sale prices for PBG Common Stock on the composite
tape for securities listed on the NYSE for the day in question, except that such average price
shall be rounded up (if necessary) to the nearest cent.


     (c) Options shall vest and become immediately exercisable on the Option Grant Date or
Pro-Rated Option Grant Date, as applicable. Each Option shall have an Exercise Price equal to the
Fair Market Value of PBG Common Stock on the Option Grant Date or Pro-Rated Option Grant Date, as
applicable, or if such day is not a trading day on the NYSE, on the immediately preceding trading
day. Each Option shall have a term of ten years; provided, however, in the event
the holder thereof shall cease to be a director of PBG, or its successor, for a reason other than
death or Disability (as defined below), such Options shall terminate and expire upon the earlier of
(i) the expiration of the




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original term, or (ii) five years from the date the holder ceased to be a
director. A Non-Employee Director has a “Disability” if he or she is totally disabled as
determined using the standards PBG applies under its long term disability program.




     (d) Non-Employee Directors may exercise their Options by giving an exercise notice to PBG in
the manner specified from time to time by the Board. Options may be exercised by using either a
standard cash exercise procedure or a cashless exercise procedure. From time to time, the Board
may change or adopt procedures relating to Option exercises. If, at any time, a Non-Employee
Director suffers a Disability or is otherwise incapable of exercising his or her Options before the
expiration thereof, the Board may take any steps it deems appropriate to prevent such Options from
lapsing prior to being exercised.



     (e) Each Option award shall be evidenced by a written agreement setting forth the terms and
conditions thereof, which terms and conditions shall not be inconsistent with those set forth in
this Plan.





7. Annual Restricted Stock Unit Award




     (a) Under the Plan, each Non-Employee Director shall receive an annual formula grant of
restricted stock units (“RSUs”). When a Non-Employee Director’s RSUs become payable, they shall be
settled in shares of PBG Common Stock with the Non-Employee Director receiving one share of PBG
Common Stock for each RSU. The grant of RSUs shall be made annually on April 1 (the “RSU Grant
Date”); provided, however, that each individual who commences service as a
Non-Employee Director after April 1 of a year shall receive a pro-rated annual formula grant of
RSUs (a “Pro-Rated RSU Grant”) with respect to his or her first year of service on the first day of
the month following the date he or she commences service (the “Pro-Rated RSU Grant Date”). To
receive a grant of RSUs, a Non-Employee Director must be actively serving as a director of PBG on
the RSU Grant Date or the Pro-Rated RSU Grant Date, as applicable.



     (b) The number of RSUs to be included in each annual RSU award shall be determined by dividing
the RSU Grant Amount (as defined below) by the Fair Market Value of a share of PBG Common Stock on
the RSU Grant Date or Pro-Rated RSU Grant Date, as applicable, or if such day is not a trading day
on the NYSE, on the immediately preceding trading day. RSU Grant Amount shall mean $60,000, except
that, in the case of a Pro-Rated RSU Grant, RSU Grant Amount shall mean the following: (i) $45,000
in the case of an individual who commences service as a Non-Employee Director on or after April 2
and on or before June 30; (ii) $30,000 in the case of an individual who commences service as a
Non-Employee Director on or after July 1 and on or before September 30; (iii) $15,000 in the case
of an individual who commences service as a Non-Employee Director on or after October 1 and on or
before December 31. No Pro-Rated RSU Grant shall be made in the case of an individual who
commences service as a Non-Employee Director on or after January 1 and on or before April 1. The
number of RSUs so determined shall be rounded up (if necessary) to the nearest number of whole
RSUs.



     (c) RSUs shall vest on the RSU Grant Date or Pro-Rated RSU Grant Date, as applicable. RSUs
granted in 2006 become payable on the first anniversary of the RSU Grant Date or Pro-Rated RSU
Grant Date, as applicable. A Non-Employee Director who receives a 2006 RSU grant on April 1, 2006
may make a one-time election to defer the payment date of his or her 2006 RSUs no later than
September 30, 2006, and such election to defer the payment date of his or her 2006 RSU grant must
specify a future payment date (the beginning of any calendar quarter) that will result in a minimum
deferral period of at least one year. A Non-Employee Director who receives a 2006 Pro-Rated RSU




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Grant may make a one-time election to defer the payment date of his or her 2006 Pro-Rated RSU Grant
at least one day prior to the Pro-Rated Grant Date of the award
and such election must specify a future payment date (the beginning of any calendar quarter) that
will result in a minimum deferral period of at least two years.




     (d) RSUs granted in 2007 and later years shall be payable on the RSU Grant Date or Pro-Rated
RSU Grant Date, as applicable, unless the Non-Employee Director timely elects to defer the payment
of such RSUs. In general, any such deferral election with respect to RSUs must be made in the
calendar year preceding the year of the grant; provided, however, that any such
deferral election with respect to Pro-Rated RSU Grants must be made at least one day
prior to the Pro-Rata RSU Grant. Any such election to defer the payment date of an RSU Grant or a
Pro-Rata RSU Grant must specify a future payment date (the beginning of any calendar quarter) that
will result in a minimum deferral period of at least two years.




     (e) Rather than deferring to a specified future payment date, a Non-Employee Director may
instead defer payment until his or her separation from service as a director of PBG, and any such
deferral shall be paid as of the beginning of the calendar quarter following such separation from
service. Alternatively, a Non-Employee Director may elect to defer until the earlier of (i)
separation from service as a director of PBG, or (ii) a specified future payment date determined in
accordance with Section 7(c) or (d) above, whichever applies. The determination of when a
Non-Employee Director separates from service as a director of PBG shall be made in accordance with
Section 409A(a)(2)(A)(i) of the Internal Revenue Code of 1986, as amended (“Code”), and no minimum
deferral period shall apply to the extent the deferral is until separation from service as a
director of PBG.



     (f) Notwithstanding the preceding provisions of this Section 7, a Non-Employee Director’s RSUs
shall be immediately paid out in the event of the Non-Employee Director’s Permanent Disability (as
defined below), Separation from Service as a director of PBG or death. For this purpose, a Non-Employee Director is considered to have a
Permanent Disability as of the date the Non-Employee Director would be considered disabled within
the meaning of Section 409A(a)(2)(C) of the Code.



     (g) During any period that the payment of RSUs is deferred (either by election or
automatically), the Non-Employee Director whose RSUs are deferred shall be entitled to be credited
with dividend equivalents. Dividend equivalents shall equal the dividends actually paid with
respect to a corresponding amount of PBG Common Stock during the deferral period, while the RSUs
remain unpaid, and shall be credited on the date such dividends are actually paid. Upon crediting,
a Non-Employee Director’s dividend equivalents shall be immediately converted to additional RSUs
(whole and/or fractional, as appropriate) by dividing the aggregate amount of dividend equivalents
credited to the Non-Employee Director on a day by the Fair Market Value of a share of PBG Common
Stock on such day, or if such day is not a trading day on the NYSE, on the immediately preceding
trading day. Additional RSUs credited under this Section 7(g) are in turn entitled to be credited
with dividend equivalents, and a Non-Employee Director’s aggregate additional RSUs shall be paid
out at the same time as the underlying RSUs to which they relate. Any cumulative fractional RSU
remaining at such time shall be rounded up to a whole RSU prior to its settlement in PBG Common
Stock.



     (h) Each RSU award shall be evidenced by a written agreement setting forth the terms and
conditions thereof, which terms and conditions shall not be inconsistent with those set forth in
this Plan.



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8. Shares of Stock Subject to the Plan




     The shares that may be delivered under this Plan shall not exceed an aggregate of 300,000
shares of PBG Common Stock, adjusted, if appropriate, in accordance with Section 10 below; provided
that any shares authorized but not delivered under the Prior Plan (as hereinafter defined) shall be
available for delivery under this Plan in addition to the above mentioned 300,000 shares. The
shares granted or delivered under the Plan may be newly issued shares of Common Stock or treasury
shares.



9. Deferral of Initial Awards




     (a) Non-Employee Directors may make an advance, one-time election to defer into PBG phantom
stock units all of the shares of Restricted Stock otherwise granted under Section 5. Any such
election shall be made at least one day prior to the grant date of such Restricted Stock. The
deferral period shall equal the Non-Employee Director’s period of
service as a director of PBG (i.e., such deferral period shall end on the date the Non-Employee
Director has a separation from service as a director of PBG for purposes of Code section
409A(a)(2)(A)(i)). Non-Employee Directors who elect to defer receipt of such shares shall be
credited on the grant date with a number of phantom stock units equal to that number of shares of
Restricted Stock which they would have received had they not elected to defer. During the deferral
period, the value of the phantom stock units will fluctuate based on the market value of PBG Common
Stock. At the end of the deferral period, all payments of deferred awards shall be made in shares
of PBG Common Stock (one share of PBG Common Stock for each PBG phantom stock unit), unless the
Board in its discretion decides to make the distribution in cash or in a combination of cash and
shares of PBG Common Stock. To the extent that a distribution is made in cash, in whole or in
part, the Non-Employee Directors will receive the aggregate value of the PBG phantom stock units
credited to them which are to be paid in cash. The value of PBG phantom stock units will be
determined by multiplying the number of PBG phantom stock units which are to be paid in cash by the
Fair Market Value of PBG Common Stock on the last NYSE trading day of the deferral period.



     (b) During the deferral period, the Non-Employee Director whose Restricted Stock is deferred
as phantom stock units shall be entitled to be credited with dividend equivalents. Dividend
equivalents shall equal the dividends actually paid with respect to a corresponding amount of PBG
Common Stock during the deferral period and shall be credited on the date such dividends are
actually paid. Upon crediting, a Non-Employee Director’s dividend equivalents shall be immediately
converted to additional phantom stock units (whole and/or fractional, as appropriate) by dividing
the aggregate amount of dividend equivalents credited to the Non-Employee Director on a day by the
Fair Market Value of a share of PBG Common Stock on such day, or if such day is not a trading day
on the NYSE, on the immediately preceding trading day. Additional phantom stock units credited
under this Section 9(b) are in turn entitled to be credited with dividend equivalents, and a
Non-Employee Director’s aggregate additional phantom stock units shall be paid out at the same time
as the underlying phantom stock units to which they relate. Any fractional phantom stock unit
remaining at such time shall be rounded up to a whole phantom stock unit prior to its settlement in
PBG Common Stock.



10. Dilution and Other Adjustments




     The number and kind of shares of PBG Common Stock issuable under the Plan, or which may or
have been awarded to any Non-Employee Director, may be adjusted proportionately by the Board to
reflect stock dividends, stock splits, recapitalizations, mergers, consolidations, combinations or
exchanges of shares, any spin off or other distribution of assets of the Company to its
shareholders,



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any partial or complete liquidation, or other similar corporate changes. Such
adjustment shall be conclusive and binding for all purposes of the Plan.




11. Effect of Misconduct




     Notwithstanding anything to the contrary herein, if a Non-Employee Director commits
“Misconduct,” he or she shall forfeit all rights to any unexercised Options, any RSUs and
Restricted Stock, as well as any phantom stock units credited to him or her under Section 9. For
purposes of this Plan, Misconduct occurs if a majority of the Board determines that a Non-Employee
Director has: (a) engaged in any act which is considered to be contrary to the Company’s best
interests; (b) violated the Company’s Code of Conduct or engaged in any other activity which
constitutes gross misconduct; (c) engaged in unlawful trading in the securities of PBG or of any
other company based on information gained as a result of his or her
service as a director of PBG; or (d) disclosed to an unauthorized person or misused confidential
information or trade secrets of the Company.



12. Withholding Taxes and Section 409A




     (a) Except
to the extent other arrangements are made by a Non-Employee Director
that are satisfactory to the Company, the Company shall withhold a
number of shares of PBG Common Stock otherwise deliverable having a
Fair Market Value sufficient to satisfy the minimum withholding taxes required by
federal, state, local or foreign law in respect of any award.



     (b) At all times, this Plan shall be interpreted and operated (i) in accordance with the
requirements of Section 409A with respect to Plan deferred compensation that is subject to Code
Section 409A, (ii) to maintain the exemption from Code Section 409A of stock option awards and
undeferred Restricted Stock (collectively, “Excepted Awards”), and (iii) to preserve the status of
deferrals made prior to the effective date of Code Section 409A (“Prior Deferrals”) as exempt from
Section 409A, i.e., to preserve the grandfathered status of Prior Deferrals. Thus, for example, a
Non-Employee Director’s ability to defer a Pro-Rated RSU Grant is conditioned on the Non-Employee
Director not having been previously eligible for a PBG deferral plan of the same type. In
addition, if a Non-Employee Director is determined to be a specified employee (within the meaning
of Code Section 409A(a)(2)(B)(i)), any payment made based on separation from service as a director
of PBG shall not be made until the beginning of the calendar quarter that occurs at least six
months after the separation from service. Similarly, any election that must be made at least one
day prior to a specified date must be considered effectively made and irrevocable, under the
applicable requirements of Code Section 409A, by the day preceding such specified date.



     (c) Any action that may be taken (and, to the extent possible, any action actually taken)
under the Plan shall not be taken (or shall be void and without effect), if such action violates
the requirements of Code Section 409A or if such action would adversely affect the exemption of
Excepted Awards or the grandfather of Prior Deferrals. If the failure to take an action under the
Plan would violate Code Section 409A, then to the extent it is possible thereby to avoid a
violation of Code Section 409A, the rights and effects under the Plan shall be altered to avoid
such violation. A corresponding rule shall apply with respect to a failure to take an action that
would adversely affect the exemption of Excepted Awards or the grandfather of Prior Deferrals. Any
provision in this Plan document that is determined to violate the requirements of Code Section 409A
or to adversely affect the exemption of Excepted Awards or the grandfather of the Prior Deferrals
shall be void and without effect. In addition, any provision that is required to appear in this
Plan document to satisfy the requirements of Code Section 409A, but that is not expressly set
forth, shall be deemed to be set forth herein, and the Plan shall be administered in all respects
as if such provision were expressly set forth. A corresponding rule shall apply with respect to a
provision that is required to preserve the exemption



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of Excepted Awards or the grandfather of the
Prior Deferrals. In all cases, the provisions of this Section shall apply notwithstanding any
contrary provision of the Plan that is not contained in this Section.



13. Resale Restrictions, Assignment and Transfer




     Options (unless the Board of Directors specifically determines otherwise), RSUs, Restricted
Stock and PBG phantom stock units may not be sold, transferred or assigned, except in the event of
the Non-Employee Director’s death, in which case his or her Options, Restricted Stock or PBG
phantom stock units may be transferred by will or by the laws of descent and distribution. All
restrictions on Restricted Stock granted to a Non-Employee Director shall lapse upon his or her
death. Options may be exercised by the decedent’s personal
representative, or by whomever inherits the Options, at any time, through and including their
original expiration date.



     Once awarded, the shares of PBG Common Stock received by Non-Employee Directors may be freely
transferred, assigned, pledged or otherwise subjected to lien, subject to restrictions imposed by
the Securities Act of 1933, as amended, and subject to the trading restrictions imposed by Section
16 of the Securities Exchange Act of 1934, as amended. PBG phantom stock units may not be
transferred or assigned except by will or the laws of descent and distribution.



14. Funding




     The Plan shall be unfunded. PBG shall not be required to establish any special or separate
fund or to make any other segregation of assets to assure the payment of any award under the Plan.



15. Supersession of Prior Plan




     This Plan superseded The PBG Directors’ Stock Plan of 1999 (the “Prior Plan”) when
shareholders approved this Plan on May 23, 2001. As of that date, all awards granted under the
Prior Plan became subject to the terms of this Plan and all shares that were authorized but not
delivered under the Prior Plan became available for delivery under this Plan, in addition to those
shares authorized for issuance pursuant to Section 8 of this Plan. No awards were made under the
Prior Plan after May 23, 2001.



16. Duration, Amendments and Terminations




     The Board of Directors may terminate or amend the Plan in whole or in part; provided,
however, that the Plan may not be amended more than once every six (6) months, other than
to comport with changes in the Internal Revenue Code or the rules and regulations thereunder;
provided further, however, that no such action shall have a material adverse effect
on any rights or obligations with respect to any awards theretofore granted under the Plan, unless
consented to by the recipients of such awards (unless the amendment is required to comply with Code
Section 409A in which case, the amendment shall be effective without consent of the recipient
unless the recipient expressly denies consent to such amendment in writing); and provided
further, however, that any amendment and the termination of the Plan shall neither
violate Code Section 409A nor adversely affect the exemption of Excepted Awards or the grandfather
of the Prior Deferrals. The Plan shall continue until terminated.



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