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P&G’s A.G. Lafley Talks Growth, Improvement at Annual Meeting

Since his return to the company in May, the executive has been racing against the clock in a bid to fix P&G's most glaring issues.

During his opening remarks at Procter & Gamble Co.’s annual meeting with shareholders on Tuesday, reinstalled chairman, president and chief executive officer A.G. Lafley pointed to a digital clock and told those who were waiting to ask questions that they would be timed.

Since his return to P&G in May, Lafley has been racing against the clock in his own right in a bid to fix the company’s most glaring issues, including its stalled beauty business. His role at P&G is seen by Wall Street as pivotal, but also temporary and he is expected to play a central role in selecting his successor.

“It’s energizing, an honor and a privilege to be back with you today,” Lafley told shareholders. “I am convinced P&G has what it takes to grow, to deliver value and to win. We are committed to making the changes we know we need to make to improve our performance,” he added, referring to P&G’s latest earnings results as a “step in the  right direction.”

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For the full year, net earnings from continuing operations rose 4.6 percent to $11.3 billion, or $3.86 a diluted share, compared with $10.8 million, or $3.66 a share, a year ago. Net sales gained 1 percent to $84.2 billion, up from $83.7 billion.

The company said it expects full-year 2014 organic sales growth in the range of 3 to 4 percent.

During the meeting Lafley outlined four key areas to improve the company’s performance, namely value creation for consumers and shareholders, productivity and innovation, operating discipline and execution and improved go-to-market capabilities. Lafley emphasized his aim is to make productivity “systemic not episodic,” and said that in the past P&G has relied on restructurings every three to five years, which can be “disruptive.”

Lafley said P&G will focus on its core businesses, which include the leading, most profitable brands, categories and countries. He noted the company’s portfolio includes 25 brands each with annual sales of more than $1 billion, and 15 brands with sales within the $500 million to $1 billion range.

“We have a brand and product-innovation portfolio and pipeline that will only get stronger,” said Lafley.

He also reintroduced a focus on winning at “moments of truth” — a phrase familiar from his first tour as ceo — which he said occur when consumers research a product, again at the shelf when they select a product and later when they try it at home.

During the question-and-answer session, a number of shareholders greeted Lafley with “welcome back.” Several attendees’ questions zeroed in on P&G’s executive compensation plan, with one shareholder declaring, “We the shareholders need new methods of securing results” from executive officers. Lafley responded, “If it’s any consolation and just as a matter of interest when the board asked me to come back, I did not even ask about compensation. I’m here for duty and it’s an honor.” He added, “We try to be very clear as a company that we pay for performance and results. We try to pay fairly, and that means competitively in the marketplace.…We’re paid for supporting our business strategies. We’re paid for delivering over the mid- to long term. We’re paid not to take excess risks.”