Top management change at P&G

Bob McDonald, the CEO of Procter & Gamble and a 33-year veteran of the company, stepped down suddenly after the market closed on Thursday (May 23).

He will be replaced immediately by A.G. Lafley, presumably on a temporary basis as he is 65 and turning 66 in June. He was McDonald’s predecessor in the top management role. McDonald, who will retire June 30 after a transition period, has served as CEO since 2009.

Lafley, who led P&G from 2000 to 2009,  also will be assuming the roles of president and chairman in an effort to spur global growth for the consumer products company.              

Media outlets report McDonald was under fire from vocal investor Bill Ackman, who had advocated for a management change since last summer.

“This has been a very difficult decision for me, but I’m convinced it is what is in the best interests of the company and you. … During the past year, much attention has been focused on me from several angles, which has been a distraction that is not in our best interests.  I’ve always believed that we are a company — one company — comprised of great individuals. When we get to a point where too much attention becomes a distraction, it’s time to change that dynamic,” McDonald wrote in his letter to employees.

McDonald never got to the company to fire on all cylinders according to a Wall Street Journal report.

Investors lost patience with lackluster returns last year but a revamp in the company’s global strategy has been seen as a positive step in the right direction.

“During the last four years together, we’ve expanded our business into many new categories and geographies. By the end of this year, developing markets will account for 40% of our sales and 45% of volume. We’ve launched exciting innovations with many more to come. And, we’ve made significant progress on our productivity program. There are many more accomplishments, and I cannot thank you enough for all your hard work and dedication,” McDonald noted.

In the company’s most recent quarter, net profits rose 6% to $2.57 billion, on slightly higher revenue of $20.6 billion. Revenue fell short of Wall Street expectations.

Insiders are likely looking for Lafley’s insight and another blockbuster move like the $57 million acquisition of Gillette Co in 2005.

“I will be getting up to speed on the business in the next several weeks. In the meantime, here are a few of my core beliefs”, Lafely noted in his memo to employees.,

“The consumer is boss — at the heart of everything we do. 
We create and build brands that improve consumers’ lives.
Innovation is our lifeblood.
Every P&Ger is an owner and a leader — we are one team, with one dream, collaborating internally and competing externally. I look forward to working with you in the days and weeks ahead.”