PepsiCo Inc. Wednesday raised its dividend and announced a stock split as shareholders met to consider whether the food and beverage giant should ban smoking at its Pizza Hut and KFC restaurants and shed interests in countries that violate human rights.
The 2-for-1 stock split will be distributed May 28 to shareholders on the company's books as of the close of business May 10. PepsiCo directors also voted to raise the dividend 15 percent, to 111/2 cents from 10 cents a share, on a post-split basis.PepsiCo stock rose following the announcement and was up 75 cents at $64.25 a share at midmorning on the New York Stock Exchange.
In advance of Wednesday's annual shareholder meeting, PepsiCo announced it would sell its 40 percent stake in a bottling franchise in Burma. The deal would mean Pepsi would supply local businesses with the cola syrup and allow them to use the Pepsi trademark, without having employees in the southeast Asian nation.
For those opposed to the Burmese military regime, the measure outlined last week doesn't go far enough. Organizers of student boycotts at college campuses nationwide say they will continue their protests.
"Pepsi is under siege by its own target market as a result of this student boycott campaign. Pepsi's whole image is built around the image of youth," said Simon Billenness, a senior analyst with the Franklin Research and Development Corp. in Boston and an outspoken opponent of Burma.
The resolution shareholders were to vote on Wednesday calls for PepsiCo to adopt a worldwide code of ethical conduct that would require it to stay out of countries with shaky human rights records or strong-arm governments. Levi Strauss, Reebok and Phillips-Van Heusen have such policies.
PepsiCo maintains that political and social change is inevitable, and "it is neither prudent nor appropriate for us to establish our own country-by-country foreign policy."
The other proxy calls on PepsiCo to ban smoking at all of its Pizza Hut and KFC restaurants. Smoking is already prohibited at all PepsiCo-owned Taco Bell outlets.
"In today's competitive quick service environment, where consumers have many restaurant choices, a flat ban on smoking that targets only our restaurants puts us at a competitive disadvantage," the company said, noting it has endorsed federal legislation that would restrict smoking in all public facilities.
The human-rights proxy condemns PepsiCo for doing business in Burma, Indonesia, China, Guatemala, Saudi Arabia, Turkey and Thailand.
Although similar resolutions failed at two previous shareholders' meetings, the pressure has been building. Harvard turned down Pepsi for a $1 million contract and Stanford decided not to allow a Taco Bell on campus after 2,000 students petitioned the university to sever ties with companies doing business in Burma.