Monday, May 14, 2007

Procter & Gamble Shuffles Top Executives (Wall Street Journal)

May 15, 2007; Page B5

Procter & Gamble Co. announced new positions for several top executives yesterday, renewing speculation over the likely successor to Chief Executive A.G. Lafley.

Vice Chairman Susan Arnold, 53 years old, will assume the role of president, overseeing all of P&G's global business units. Vice Chairman Robert McDonald, also 53, was named to the newly established role of chief operating officer, with responsibility for global operations.

Although Mr. Lafley, who turns 60 next month, is still five years from mandatory retirement, he has openly discussed the importance of an orderly succession plan. Last year, when R. Kerry Clark, another vice chairman, left to become CEO of Cardinal Health Inc., Ms. Arnold and Mr. McDonald emerged as Mr. Lafley's likely successors. Yesterday's announcement keeps Ms. Arnold and Mr. McDonald reporting directly to Mr. Lafley.

"We believe this news formalizes a potential near-term succession plan with [Ms.] Arnold and [Mr.] McDonald as the primary successors to [Mr.] Lafley," said Goldman Sachs analyst Amy Low Chasen in a research note. Some current and former P&G executives, as well as other industry executives, share that view. Ms. Chasen added that if Mr. Lafley stays until he is 65, the board could go with a younger CEO.

Regarding succession, P&G spokesman Terry Loftus said only: "Our board has a succession plan in place." Mr. Loftus said no company executives were available to comment.

The management shuffle was part of a broader decision by Cincinnati-based P&G to streamline its business into three divisions to better accommodate the company's rapid sales growth and major acquisitions, such as Clairol, Wella and Gillette, since 2000.

While many observers have focused attention on Ms. Arnold and Mr. McDonald, others believe Mr. Lafley's successor could come from the executive ranks a level or two below them.

P&G group presidents promoted to vice-chair posts as part of yesterday's announcement include Dimitri Panayotopoulos, 55, who will oversee global household care; Robert Steele, 51, who will oversee global health and well-being businesses; and Werner Geissler, 54, who will assume the post of vice chair, global operations, succeeding Mr. McDonald.

Chief Financial Officer Clayton Daley was also elected vice chairman and continues to report to Mr. Lafley. Bruce Byrnes, currently vice chairman of household care, will step down next year, advising on global brand-building training until then.

As part of the job shuffle, three former Gilette executives who were given some of the most senior positions in the combined company will retire later this year. They are Bruce Cleverly, 62, Mary Ann Pesce, 52, and Mark Leckie, 53. Their retirements are among a handful of departures of P&G executives.

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