P&G Cuts CEO Lafley's Bonus After Earnings Shortfall
August 28 2015 - 7:09PM
Dow Jones News
By Serena Ng
Procter & Gamble Co. cut Chief Executive A.G. Lafley's bonus
by $1.1 million in the company's recently ended financial year,
after the consumer-goods company's sales and profit growth came up
short of its targets.
Mr. Lafley, who came out of retirement in May 2013 to run
P&G a second time, received total compensation of $18.3 million
in the year ended in June, a 6.2% decrease from his $19.5 million
compensation package the previous year, according to a proxy
statement the company filed on Friday.
The decline was mainly due to a smaller bonus of $3.29 million,
which was down from $4.4 million a year earlier. P&G said it
paid Mr. Lafley 66% of his target bonus because the company didn't
reach its profit and sales goals.
P&G reported net income of $7 billion for the year through
June 30, down 40% from a year ago. Sales fell 5% to $76.3 billion,
weighed down by the weakening of many foreign currencies against
the U.S. dollar. The company's organic sales growth, a measure that
excludes currency swings and the effect of acquisitions and
divestments, grew 1%, as a result of weakness in P&G's beauty
division and challenges the company faced in China and other
markets.
At the start of P&G's last fiscal year, the compensation
committee of P&G's board had set a 3% organic sales growth
target and a 5% target for growth in so-called core earnings per
share, which excludes certain items like restructuring costs. The
company ended up not meeting the earnings target, reporting a 2%
decline in core earnings per share growth mainly because of
currency swings.
Mr. Lafley's salary remained at $2 million and he received stock
awards valued at $12.4 million. P&G paid $512,040 to cover the
cost of Mr. Lafley's use of the company's aircraft when he commuted
to its offices in Cincinnati from his home in Florida and when he
traveled to attend board meetings at other companies.
On Nov. 1, Mr. Lafley will become P&G's executive chairman
and hand over the CEO reins to David Taylor, a 35-year company
veteran. The two will work together to pull P&G out of a
yearslong performance slump.
Mr. Taylor, 57 years old, currently oversees P&G's divisions
that make up around 40% of its sales. He received a $6.1 million
compensation package in the year to June, including $945,000 in
salary and a $790,272 bonus.
P&G earlier said that after Mr. Taylor becomes CEO, he will
receive a base salary of $1.6 million, with a target bonus of 200%
of his base salary, as well as equity grants under the company's
long-term incentive program. Mr. Lafley will receive a base salary
of $1.25 million in his executive chairman role, with an annual
bonus target of 150% of that amount.
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(END) Dow Jones Newswires
August 28, 2015 18:54 ET (22:54 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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