P&G's Chief Resigns, Warns of Flat 4Q
By Matt Paolucci
After 30 years with the company, Durk I. Jager, Proctor and
Gamble's chairman, president and chief executive, announced he
would retire at the beginning of next month.
Jager stepped down for personal reasons, saying, "It's
unfortunate our progress in stepping up top line sales growth
resulted in earnings disappointments. I'm confident that with
the leadership of A.G. Lafley and John Pepper and the strength
of P&G people, the company will achieve its full potential."
Jager assumed the positions of chief executive in January 1999
and chairman in September.
The company named Alan G. Lafley to the posts of president and
CEO, effective immediately. Lafley's previous post had been
president of P&G's global beauty care for North America.
"I have great confidence in P&G and our prospects for
delivering top- and bottom-line growth," said Mr. Lafley. "I'm
going to focus on making the clear, hard choices we must make
to achieve that goal."
Proctor and Gamble also warned that fourth-quarter earnings
would be flat from a year ago, excluding one-time items. On
March 7, the company said that earnings would increase 15-17
percent over last year. Law firm Pomerantz Haudek Block
Grossman & Gross LLP subsequently sued P&G on March 10,
alleging Proctor and Gamble issued a series of false and
misleading statements during the period between January 25,
2000 and March 6, 2000 regarding the success of its
restructuring plan, and its bullish outlook for the future.
P&G cited competitive pressures and reduced marketing support
on several key businesses for the weaker earnings outlook. The
Company said sales growth would probably be in the range of 2-
3 percent for the year.
"We've had too much change, too fast," Lafley said. He said
P&G has ignored its core businesses, such as fabrics and home
care, while trying to expand into new areas. At the same time,
it adopted more ambitious forecasting models, Lafley added.
As far as fiscal 2000 earnings are concerned, expectations are
for growth of around 4 percent, excluding one-time items,
while fiscal 2001 earnings are expected to be up 11-13 percent
above this year's revised numbers.
First Call/Thomson Financial had been looking for fourth-
Quarter earnings, after charges, of 64 cents per share versus 55
cents per share in the prior year period.
Additionally, the board elected John E. Pepper, currently
retired from P&G and chairman of the executive committee of
the board, to be chairman of the board. Pepper retired from
P&G in early 1999 after Jager replaced him as CEO.
One of the 30 stocks in the Dow Jones Industrial Average,
Proctor and Gamble shares traded down $3.75, or 6 percent, at
$58.13 in afternoon trading.
