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


	2022		2021		2020
Share-based compensation expense - equity awards	$	343	$	301	$	264
Share-based compensation expense - liability awards	30		20		11
Acquisition and divestiture-related charges	3		—		—
Restructuring charges	—		1		(1)
Total	$	376	$	322	$	274
Income tax benefits recognized in earnings related to share-based compensation	$	62	$	57	$	48
Excess tax benefits related to share-based compensation	$	44	$	38	$	35

As of December 31, 2022, there was $396 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

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.


	2022		2021		2020
Expected life	7 years		7 years		6 years
Risk-free interest rate	1.9	%	1.1	%	0.9	%
Expected volatility	16	%	14	%	14	%
Expected dividend yield	2.5	%	3.1	%	3.4	%

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 25, 2021	10,142	$	110.54
Granted	2,422	$	163.54
Exercised	(1,578)	$	87.33
Forfeited/expired	(482)	$	146.13
Outstanding at December 31, 2022	10,504	$	124.63	6.08	$	588,549
Exercisable at December 31, 2022	4,892	$	101.02	3.50	$	389,547
Expected to vest as of December 31, 2022	5,267	$	144.58	8.29	$	190,040

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 25, 2021	5,977	$	127.45
Granted	2,263	$	163.02
Converted	(2,051)	$	120.03
Forfeited	(475)	$	141.64
Outstanding at December 31, 2022 (b)	5,714	$	143.02	1.24	$	1,032,222
Expected to vest as of December 31, 2022 (c)	5,979	$	141.94	1.17	$	1,080,138

(b)The outstanding PSUs for which the vesting period has not ended as of December 31, 2022, at the threshold, target and maximum award levels were zero, 1 million and 2 million, respectively.

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(b)		Contractual Life Remaining (years)
Outstanding at December 25, 2021	$	45,792
Granted	18,182
Vested	(11,364)
Forfeited	(2,356)
Outstanding at December 31, 2022 (c)	$	50,254	$	68,167	1.17
Expected to vest as of December 31, 2022	$	46,841	$	65,835	1.15

(c)The outstanding awards for which the vesting period has not ended as of December 31, 2022, at the threshold, target and maximum award levels based on the achievement of its market conditions were zero, $50 million and $101 million, respectively.


	2022		2021		2020
Stock Options
Total number of options granted (a)	2,422		2,157		1,847
Weighted-average grant-date fair value of options granted	$	19.72	$	9.88	$	8.31
Total intrinsic value of options exercised (a)	$	134,580	$	153,306	$	155,096
Total grant-date fair value of options vested (a)	$	9,661	$	10,605	$	8,652
RSUs/PSUs
Total number of RSUs/PSUs granted (a)	2,263		2,636		2,496
Weighted-average grant-date fair value of RSUs/PSUs granted	$	163.02	$	131.81	$	131.21
Total intrinsic value of RSUs/PSUs converted (a)	$	329,705	$	273,878	$	303,165
Total grant-date fair value of RSUs/PSUs vested (a)	$	196,649	$	198,469	$	235,523

As of December 31, 2022 and December 25, 2021, there were approximately 307,000 and 299,000 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.