By and  on June 9, 2009

Robert McDonald has reportedly been named chief executive officer of Procter & Gamble, replacing A.G. Lafley, who will remain as the company’s chairman. News of the succession is expected to be announced at a Deutsche Bank Global Consumer & Food Retail Conference in Paris this morning.

McDonald, 55, P&G’s chief operating officer, had long been thought of as the frontrunner for the position, a notion reinforced when his top competitor for the spot, Susan Arnold, president of global business units, abruptly retired from the company in early March.

Several P&G spokespersons would not comment on the report, citing “rumor and speculation.”

Late Monday, the development was first reported in an online dispatch from The Wall Street Journal.

Caris & Co. analyst Linda Bolton Weiser said McDonald was the obvious choice to succeed Lafley. In a March 9 research note, Weiser wrote, “Arnold’s departure does signal news could come soon.”

From the same report, she added, moving McDonald into the ceo post during a challenging economic time would allow Lafley to leave with his legacy intact.

“They can get him out of there before it hits the fan,” Weiser said, adding it is unlikely that Lafley would stay at the helm long enough to guide the company through another turnaround. “He will have his hands full,” she added, referring to the hurdles the recession has thrown P&G’s way.

Prior to being named chief operating officer in May 2007, McDonald served as vice chairman of operations.

Since Arnold’s departure in March, several key changes have taken place. Ed Shirley, vice chair, global Beauty & Grooming, who was a former Gillette executive, put in place two executives to oversee the division, with Gina Drosos running the women’s business and Chip Bergh guiding the men’s business. A week ago P&G bought the Art of Shaving, a premium men’s shave brand, and the next day it announced plans to discontinue Max Factor in the U.S.

While making a presentation at an institutional investor conference in New York City in late May, P&G outlined investment plans to accelerate innovation, reach more consumers in emerging markets and continue its simplification and productivity efforts to drive profitable long-term growth. Organic sales growth for 2010, the firm said, will be from 1 to 3 percent ahead, driven primarily by market share growth. It added that estimates for its global markets for its business and geographic portfolio will be flat to up only modestly on a value basis versus fiscal year 2009. The company expects net sales in the range of up 1 percent to down 2 percent versus fiscal 2009, which includes a negative foreign exchange impact of 2 to 3 percent.

During the meeting, Lafley was quoted as saying, “We made the right choices over the last year to deal with the global economic crisis, and I am confident we are making the right choices as we plan for next year.”



Meanwhile, for its most recent quarter ended Dec. 31, net income was $5 billion, or $1.58 a diluted share, up from $3.27 billion, or 98 cents a share, in the year-earlier period. Dragged down by lower shipments to retailers and unfavorable foreign exchange, net sales declined 3.2 percent to $20.37 billion from $21.04 billion in the year-earlier period. Organic sales gained 2 percent for the quarter, at the lower end of P&G’s revised guidance of 2 to 5 percent.

According to a biography of McDonald on P&G’s web site, he joined P&G in 1980 and has been an officer since 1999. From 2004-2007 he served as vice chairman of Global Operations, prior to which he was president of Global Fabric & Home Care from 2001 to 2004. He has extensive training in Asia with executive roles from 1991 through 1999 in the Philippines and Japan, ending in 1999 as president, Northeast Asia. He has been a director of Xerox Corp. since May 2005 and serves as a director of P&G. McDonald, who grew up in Chicago, holds a B.S. in engineering from the U.S. Military Academy at West Point. After graduation, he served as a captain in the U.S. Army for five years, and while still serving in the Army, he received an M.B.A. from the University of Utah.

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