P&G's CEO pay slips 6 pct to $15.2 million

[August 25, 2012]  NEW YORK (AP) -- Procter & Gamble Co.'s CEO Bob McDonald's compensation declined 6 percent to $15.2 million during his third year at the helm of the world's largest consumer products maker, whose performance has been tripped up with missteps in pricing and balancing growth in key markets

McDonald, 59, who became CEO and president in June 2009 and added the title of chairman in January 2010, received a base salary of $1.6 million for the year ended June 30, according to documents filed Friday with the Securities and Exchange Commission. That was unchanged from the prior year.

But his cash-based bonus of $2.4 million was down 8 percent, and he received stock options that were valued at $4.4 million, down 29 percent from $6.17 million in the prior year.

McDonald's stock awards rose 15 percent to $6.45 million.

McDonald didn't receive a performance-based cash bonus for the second year in a row.

Other compensation rose 69 percent to $312.4 million, primarily because of increased air travel.

Nearly 90 percent of McDonald's pay is tied to performance. P&G looks at such measures as organic sales growth, which excludes acquisitions, and earnings-per-share growth.

The Procter & Gamble board Compensation & Leadership Development Committee's report said it uses CEO pay at 25 other big companies, including Wal-Mart Stores Inc., Colgate-Palmolive, Johnson & Johnson and General Electric, as a guide in setting McDonald's compensation.

The maker of Tide detergent, Crest toothpaste and other consumer goods has been criticized for not pushing out new products and not cutting costs fast enough. The pressure is on since activist investor William Ackman disclosed in July he has a 1 percent stake in the company.

When it released its fiscal fourth-quarter financial results earlier this month, P&G admitted to missteps in pricing and in balancing growth in emerging markets, which account for about 30 percent of sales, with the realities of an uncertain global economy and lackluster market share growth.

P&G reassured investors that its $10 billion cost-cutting plan and its strategy to prioritize investments in bringing new products to market and growing in its biggest and most profitable markets and its biggest emerging countries, are all on track.

For the year ended June 30, P&G reported a 9 percent net income decline to $10.90 billion, or $3.66 per share. That compares with the previous year period of $11.93 billion, or $3.93 per share.

Revenue was up 3 percent to $83.68 billion..

For the current fiscal year, the Cincinnati-based company expects core earnings per share excluding restructuring charges of $3.80 to $4 on revenue that's flat to down 2 percent. That implies revenue of $82 billion to $83.68 billion. Analysts had expected at the time $3.92 per share, on revenue of $84.7 billion.

The Associated Press formula calculates an executive's total compensation during the last fiscal year by adding salary, bonuses, perks, above-market interest the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year. The AP formula does not count changes in the present value of pension benefits. That makes the AP total slightly different in most cases from the total reported by companies to the Securities and Exchange Commission.

The value that a company assigned to an executive's stock and option awards for 2011 was the present value of what the company expected the awards to be worth to the executive over time. Companies use one of several formulas to calculate that value. However, the number is just an estimate, and what an executive ultimately receives will depend on the performance of the company's stock in the years after the awards are granted. Most stock compensation programs require an executive to wait a specified amount of time to receive shares or exercise options

[Associated Press; By ANNE D'INNOCENZIO]

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