P&G begins search for new chief executive
Procter & Gamble is considering current and former executives of the world's largest household products maker as it begins the search for candidates to succeed chairman and chief executive Alan Lafley, sources said.
The P&G veterans include Fabrizio Freda, who spent two decades at the company before becoming chief executive of Estee Lauder, and Susan Arnold, former president of global business units who is now an operating partner at private equity firm Carlyle.
Lafley was also closely watching the performance of some of his subordinates to see if they had the potential to succeed him, the sources said. They include: Melanie Healey, group president of North America; David Taylor, group president of global home care; Deborah Henretta, group president of global beauty care; Martin Riant, group president of global baby care; and Giovanni Ciserani, group president of global fabric care.
Lafley, 66, was previously P&G's chief executive from 2000 to 2009, but came out of retirement after his successor, Bob McDonald, was abruptly replaced last year amid pressure from investors worried about the company's growth prospects and lagging share price.
Since taking over, Lafley has conducted a "deep dive" to figure out what needs fixing. He re-organised P&G into four businesses to boost efficiency. Last year, he said the 2014 fiscal year would be a transition year, with fiscal 2013 a "stepping stone".
The new details about P&G's succession planning process suggest that the company, whose products including Tide detergent, Gillette razors and Pampers diapers are household names, is leaning toward choosing one of its own to be the next chief executive.
The sources said the appeal of hiring a former or current executive is their understanding of the complexities of a large multinational company with dozens of products and its culture.
Gary Stibel, founder and chief executive of New England Consulting and a former P&G executive, said the company was unlikely to select a candidate with no ties to it.
"It is totally unnecessary, because they have so much internal talent competing for that job that it will be a challenge to select one," Stibel said.
P&G has traditionally chosen chief executives and other top executives from within its management ranks. In 2009, Lafley picked McDonald, who was the then chief operating officer, to take over the company.
McDonald struggled with a pullback in consumer spending in the aftermath of the financial crisis and the recession. In early 2012, he unveiled a US$10 billion restructuring programme, cutting thousands of jobs and taking other steps to improve operations, launch new products and expand into fast-growing emerging markets.
Investors wanted faster improvements. Activist investor William Ackman's Pershing Square Capital Management took a US$2 billion stake in P&G and began pushing for changes, saying shares were undervalued.
P&G shares underperformed those of rivals between the time McDonald was appointed in June 2009 and the announcement of his departure. During that time, P&G rose about 50 per cent, while Colgate-Palmolive, for example, was up 74 per cent and the Standard & Poor's 500 index advanced 75 per cent.
Lafley is expected to remain in the top seat at P&G for at least another 12 to 18 months.