P&G's CEO Gets Boost in Bonus -- WSJ
August 29 2016 - 3:03AM
Dow Jones News
By Sharon Terlep
A Procter & Gamble Co. incentive program with some
unconventional measures meant extra cash for top executives after a
year in which the company missed sales and profit growth
targets.
David Taylor, chief executive since November, was awarded a $2.5
million bonus for the fiscal year ended June 30, according to a
proxy statement filed Friday. He received total compensation of
$14.4 million for the year.
The maker of Tide and Pampers has long awarded executives based
on typical corporate metrics such as sales growth, market share and
per-share earnings. Last year, P&G added a "transformation
factor" that rewards executives for initiatives that drive the
Cincinnati company's restructuring, such as overhauling the supply
chain, improving cybersecurity and streamlining the product
portfolio.
Mr. Taylor and his team received the highest possible marks in
the transformation category, with weaker scores on measures of the
company's success in meeting sales and earnings targets.
"We didn't meet all of the goals everywhere we wanted to,"
P&G spokesman Damon Jones said. He said the new category, which
will remain in place for another year, is intended to encourage
executives to push forward on initiatives that fuel the company's
long-term turnaround even if they don't have an immediate impact on
earnings and sales.
The company's Gillette brand used a similar metric for several
years after being acquired by P&G in 2005 and found that it
improved performance, Mr. Jones said. "We view it as a way to send
a clear message that our transformation is a critical must-do
priority," he said.
The executives also benefited from more conservative goals
compared with the previous year.
At the start of last fiscal year, the compensation committee of
P&G's board set a 1.5% target for both organic sales growth and
gains in so-called core earnings per share, which excludes certain
items like restructuring costs. The company missed both goals. The
previous year's targets were 3% organic sales growth and 5%
earnings-per-share growth.
Mr. Taylor received 89% of his target bonus. His predecessor
A.G. Lafley, who stayed on as executive chairman until July 1,
received 66% of his potential award. Mr. Lafley's total
compensation was $10 million, compared with $18.3 million the year
before.
P&G reported net income of $10.5 billion for the year
through June 30, an increase of 50%. Sales fell 8% to $65.3
billion, hurt in part by the weakening of foreign currencies
against the U.S. dollar. The company's organic sales, a measure
that excludes currency swings and the effect of acquisitions and
divestments, rose 1% amid struggles in China, its second-largest
market, and intense competition in the U.S.
Before taking over as CEO, Mr. Taylor, a 35-year P&G veteran
was running the company's beauty, grooming and health-care
divisions, which combined make up around 40% of P&G's sales. He
received $6 million in annual compensation for the 2014-15 fiscal
year.
--Theo Francis contributed to this article.
Write to Sharon Terlep at sharon.terlep@wsj.com
(END) Dow Jones Newswires
August 29, 2016 02:48 ET (06:48 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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