Procter & Gamble recalls former chief executive A.G. Lafley back to his post
Consumer group's board recalls old hands as current CEO set to retire
Reuters in Chicago
Consumer goods group Procter & Gamble has brought back A.G. Lafley to run the world's largest household products maker, replacing Bob McDonald immediately in the midst of a major restructuring.
Lafley took on the roles of chairman, president and chief executive, on Thursday, while McDonald is set to retire on June 30 after 33 years at P&G.
The move comes as some investors have pushed for faster improvements from the maker of Tide detergent and Gillette razors. P&G unveiled a US$10 billion restructuring programme in February 2012. Since then, it has cut thousands of jobs and taken other steps to speed up its operations, improve its success with new products and do a better job in both fast-growing emerging markets and in larger, developed markets such as the United States.
"Bob retired, the board called me and I felt like duty called. I'm back to help maintain the business momentum and keep this productivity programme going," Lafley said. There was no single reason for McDonald's retirement, Lafley said. "I think it's a number of personal reasons."
McDonald, who had been Lafley's hand-picked successor, was not made available for an interview.
While the suddenness of the change was a shock, the move to bring back Lafley was not, said Matt McCormick, a portfolio manager at Bahl & Gaynor Investment Counsel in Cincinnati.
"The board has a known quantity in Lafley. He knows everyone, he knows the systems, and now that Procter is on firmer footing, it expects Lafley to be able to push the company and its stock price higher," said McCormick, whose firm invests more than US$9.1 billion, with P&G as one of its biggest holdings.
Lafley, who will celebrate his 66th birthday next month, said P&G's board asked him days, not weeks, ago to come back, but he did not say exactly when he got the call. He said he was "fully engaged" and wanted to finish the work that has been started on the productivity programme.
"Sixty-five is the new 45," he said, adding that he aims to build momentum at P&G by focusing on growth in emerging markets and innovation in brands and products.
Last summer, hedge fund Pershing Square Capital Management said it had a stake in P&G worth roughly US$2 billion, or 1 per cent of the company.
Lafley first joined Cincinnati-based P&G in 1977 and served as president and chief executive from 2000 to 2009, when he handed the position over to McDonald.
"[P&G] wanted to bring someone back who knows the company well and can handle running it, both in the interim and to provide strategic guidance," said David Larcker, director of Stanford University's Rock Centre for Corporate Governance.