Our share-based compensation program is designed to attract and retain employees while also aligning employees’ interests with the interests of our shareholders. PepsiCo has granted stock options, RSUs, PSUs, PEPunits and long-term cash awards to employees under the shareholder-approved PepsiCo, Inc. Long-Term Incentive Plan (LTIP). Executives who are awarded long-term incentives based on their performance may generally elect to receive their grant in the form of stock options or RSUs, or a combination thereof. Executives who elect stock options receive four stock options for every one RSU that would have otherwise been granted. Certain executive officers and other senior executives do not have a choice and are granted 66% PSUs and 34% long-term cash, each of which are subject to pre-established performance targets.

The Company may use authorized and unissued shares to meet share requirements resulting from the exercise of stock options and the vesting of RSUs, PSUs and PEPunits.

The following table summarizes our total share-based compensation expense, which is primarily recorded in selling, general and administrative expenses, and excess tax benefits recognized:


	2020		2019		2018
Share-based compensation expense - equity awards	$	264	$	237	$	256
Share-based compensation expense - liability awards	11		8		20
Restructuring charges	(1)		(2)		(6)
Total	$	274	$	243	$	270
Income tax benefits recognized in earnings related to share-based compensation	$	48	$	39	$	45
Excess tax benefits related to share-based compensation	$	35	$	50	$	48

As of December 26, 2020, there was $300 million of total unrecognized compensation cost related to nonvested share-based compensation grants. This unrecognized compensation cost is expected to be recognized over a weighted-average period of two years.

The fair value of share-based award grants is amortized to expense over the vesting period, primarily three years. Awards to employees eligible for retirement prior to the award becoming fully vested are amortized to expense over the period through the date that the employee first becomes eligible to retire and is no longer required to provide service to earn the award. In addition, we use historical data to estimate forfeiture rates and record share-based compensation expense only for those awards that are expected to vest.

A stock option permits the holder to purchase shares of PepsiCo common stock at a specified price. We account for our employee stock options under the fair value method of accounting using a Black-Scholes valuation model to measure stock option expense at the date of grant. All stock option grants have an exercise price equal to the fair market value of our common stock on the date of grant and generally have a 10-year term.


	2020		2019		2018
Expected life	6 years		5 years		5 years
Risk-free interest rate	0.9	%	2.4	%	2.6	%
Expected volatility	14	%	14	%	12	%
Expected dividend yield	3.4	%	3.1	%	2.7	%

The expected life is the period over which our employee groups are expected to hold their options. It is based on our historical experience with similar grants. The risk-free interest rate is based on the expected U.S. Treasury rate over the expected life. Volatility reflects movements in our stock price over the most recent historical period equivalent to the expected life. Dividend yield is estimated over the expected life based on our stated dividend policy and forecasts of net income, share repurchases and stock price.


	Options(a)	Weighted-Average Exercise Price		Weighted-Average Contractual Life Remaining (years)	Aggregate Intrinsic Value(a)
Outstanding at December 28, 2019	11,625	$	89.03
Granted	1,847	$	131.79
Exercised	(2,440)	$	73.37
Forfeited/expired	(392)	$	102.69
Outstanding at December 26, 2020	10,640	$	99.54	5.26	$	484,362
Exercisable at December 26, 2020	6,545	$	85.84	3.31	$	387,625
Expected to vest as of December 26, 2020	3,719	$	120.67	8.31	$	90,725

Each RSU represents our obligation to deliver to the holder one share of PepsiCo common stock when the award vests at the end of the service period. PSUs are awards pursuant to which a number of shares are delivered to the holder upon vesting at the end of the service period based on PepsiCo’s performance against specified financial performance metrics. The number of shares may be increased to the maximum or reduced to the minimum threshold based on the results of these performance metrics in accordance with the terms established at the time of the award. During the vesting period, RSUs and PSUs accrue dividend equivalents that pay out in cash (without interest) if and when the applicable RSU or PSU vests and becomes payable.


	RSUs/PSUs(a)	Weighted-Average Grant-Date Fair Value		Weighted-Average Contractual Life Remaining (years)	Aggregate Intrinsic Value(a)
Outstanding at December 28, 2019	6,380	$	111.53
Granted (b)	2,496	$	131.21
Converted (c)	(2,315)	$	109.61
Forfeited	(434)	$	117.51
Outstanding at December 26, 2020 (d)	6,127	$	119.92	1.27	$	888,832
Expected to vest as of December 26, 2020	5,447	$	119.72	1.26	$	790,179

(d)The outstanding PSUs for which the vesting period has not ended as of December 26, 2020, at the threshold, target and maximum award levels were zero, 1 million and 2 million, respectively.

PEPunits provide an opportunity to earn shares of PepsiCo common stock with a value that adjusts based upon changes in PepsiCo’s absolute stock price as well as PepsiCo’s Total Shareholder Return relative to the S&P 500 over a three-year performance period. The fair value of PEPunits is measured using the Monte-Carlo simulation model, which incorporates into the fair-value determination the possibility that the market condition may not be satisfied until actual performance is determined.

Certain executive officers and other senior executives were granted long-term cash awards for which final payout is based on PepsiCo’s Total Shareholder Return relative to a specific set of peer companies and achievement of a specified performance target over a three-year performance period.

Long-term cash awards that qualify as liability awards under share-based compensation guidance are valued through the end of the performance period on a mark-to-market basis using the Monte Carlo simulation model.


	Long-Term Cash Award(a)		Balance Sheet Date Fair Value(a)		Contractual Life Remaining (years)
Outstanding at December 28, 2019	$	44,224
Granted (b)	18,975
Vested (c)	(15,686)
Forfeited	—
Outstanding at December 26, 2020 (d)	$	47,513	$	45,669	1.23
Expected to vest as of December 26, 2020	$	42,658	$	41,318	1.14

(c)Represents the amount of long-term cash awards that vested during the year, net of awards above and below target levels based on the achievement of its market conditions.

(d)The outstanding long-term cash awards for which the vesting period has not ended as of December 26, 2020, at the threshold, target and maximum award levels were zero, 48 million and 95 million, respectively.


	2020		2019		2018
Stock Options
Total number of options granted (a)	1,847		1,286		1,429
Weighted-average grant-date fair value of options granted	$	8.31	$	10.89	$	9.80
Total intrinsic value of options exercised (a)	$	155,096	$	275,745	$	224,663
Total grant-date fair value of options vested (a)	$	8,652	$	9,838	$	15,506
RSUs/PSUs
Total number of RSUs/PSUs granted (a)	2,496		2,754		2,634
Weighted-average grant-date fair value of RSUs/PSUs granted	$	131.21	$	116.87	$	108.75
Total intrinsic value of RSUs/PSUs converted (a)	$	303,165	$	333,951	$	260,287
Total grant-date fair value of RSUs/PSUs vested (a)	$	235,523	$	275,234	$	232,141
PEPunits
Total intrinsic value of PEPunits converted (a)	$	—	$	—	$	30,147
Total grant-date fair value of PEPunits vested (a)	$	—	$	—	$	9,430

As of December 26, 2020 and December 28, 2019, there were approximately 287,000 and 269,000 outstanding awards, respectively, consisting primarily of phantom stock units that were granted under the PepsiCo Director Deferral Program and will be settled in shares of PepsiCo common stock pursuant to the LTIP at the end of the applicable deferral period, not included in the tables above.