AP News

P&G's former CEO's pay slid 6 percent in 2012


NEW YORK (AP) — Procter & Gamble Co.'s former CEO Bob McDonald's compensation package declined 6 percent to $15.2 million his final year in the top spot, according to documents filed Friday with the Securities and Exchange Commission.

The world's largest consumer product company has been seeking to improve results globally in the face of stiff competition. As part of that effort, former CEO A.G. Lafley, 66, returned as head of the company on June 30, the end of P&G's fiscal year.

McDonald, 60, retired after a 4-year run as CEO. Lafley had been head of the company from 2000 to 2009.

McDonald's base salary was unchanged at $1.6 million. His cash bonus fell 8 percent, to $2.4 million from $2.6 million.

The bulk of his compensation came from stock and option awards totaling $10.9 million. He did not receive a performance-based bonus for the third year in a row. He also received other compensation totaling $312,559, which covers retirement and insurance contributions, personal use of company aircraft, and other items.

Nearly 90 percent of McDonald's pay is tied to performance. P&G looks at measures such as organic sales growth, which excludes the impact of acquisitions, and earnings-per-share growth.

The 175-year-old company's Tide detergent, Crest toothpaste and other products can be found in 98 percent of American households. But it has been struggling to hold or grow market share in some areas. P&G last year acknowledged that it had made missteps in some emerging markets — which make up nearly 40 percent of its sales — when it expanded in some product areas too quickly. It introduced a plan to focus on its 20 biggest new products and its 10 most-profitable emerging markets, which has led to improving market share.

It is also in the middle of a belt-tightening plan aimed at saving $10 billion by 2016.

The changes have been paying off somewhat. In P&G's most recent quarter, net income rose 6 percent to $2.57 billion, as revenue inched up 2 percent to $20.6 billion. But the company's guidance for its June quarter was below analyst expectations as the company spent more to market new products.

The Associated Press formula calculates an executive's total compensation during the last fiscal year by adding salary, bonuses, perks, above-market interest that the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year. The AP formula does not count changes in the present value of pension benefits. That makes the AP total slightly different in most cases from the total reported by companies to the Securities and Exchange Commission.

The value that a company assigned to an executive's stock and option awards for 2012 was the present value of what the company expected the awards to be worth to the executive over time. Companies use one of several formulas to calculate that value. However, the number is just an estimate, and what an executive ultimately receives will depend on the performance of the company's stock in the years after the awards are granted. Most stock compensation programs require an executive to wait a specified amount of time to receive shares or exercise options.


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