Wall Street seems happy to have A.G. Lafley back at the helm at consumer stalwart Procter & Gamble Co., but analysts, while bullish, aren’t inclined to view his first tenure as chief executive officer through rose-colored glasses.

This story first appeared in the May 28, 2013 issue of WWD. Subscribe Today.

“Lafley was terrific….But let’s not be too romantic and rewrite history,” said Citi analyst Wendy Nicholson, who credited the ceo with simplifying the company’s focus on its top 10 brands in its top 10 countries.

“However, five years into his post as ceo, [P&G’s] momentum slowed, as it seemed that innovation hit a dry patch, the strategy of acquiring big businesses had run its course — post Clairol in 2001, Wella in 2003 and Gillette in 2005 — and [P&G’s] relative lack of emerging market exposure was beginning to catch up with the company,” Nicholson said.

Investors approved of the ceo switch and drove the stock up 4 percent to $81.88 Friday, although it’s not certain how long Lafley’s tenure will be, as part of his mandate is to “facilitate an ongoing succession process.” Lafley took back the role of chairman, president and ceo from his successor, Robert McDonald, who has been criticized by investors for the company’s relatively slow growth.

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Nicholson said she hopes the ceo “pulls out his Rolodex and perhaps brings back some other former [P&G] executives who have left the company in recent years.”

Deutsche Bank analyst Bill Schmitz Jr. called the ceo’s return “a bold move.

“Lafley is often credited with building out the now-struggling beauty business at P&G and is well respected internally, even as growth slowed in the last several quarters of his previous tenure,” Schmitz said. “If nothing more, his first task is to stem share losses and grow P&G at least in line with global peers, something that hasn’t happened in over five years.”

Jon Moeller, chief financial officer, told analysts on a call Friday that “this change, very simply, reflects Bob McDonald’s decision to retire and the board’s view that A.G. Lafley was currently the best person to replace Bob and build on the momentum that Bob has initiated and led.”

Moeller also said the move wouldn’t lead to “a dramatic change in our strategy or priorities.”

For his efforts, P&G said Lafley would receive a base salary of $2 million and beginning with the new fiscal year on July 1 would be eligible for an annual performance bonus of $5 million. He will also receive equity grants.

The executive has been consulting for the company in recent years and next month will get a cash payment of $1.6 million for his service in the current fiscal year.

In keeping with the company’s practice, McDonald will not receive any severance for retiring. Last fiscal year, McDonald logged total compensation of $15.2 million — although $10.9 million of that came in the form of stock and option awards, the value of which might never be realized. McDonald received a salary of $1.6 million and a bonus of $2.4 million.

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