By Sharon Terlep 

A Procter & Gamble Co. incentive program with some unconventional measures meant extra cash for top executives after 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 26, 2016 16:21 ET (20:21 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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