No News Is (Apparently) Good News at P&G's Annual Meeting

Traffic and security were both heavier than usual around the Aronoff Center in downtown Cincinnati ahead of the Annual Meeting of Procter & Gamble (NYSE: PG  ) . In an earlier article, I predicted a boring meeting, and I wasn't disappointed, but there were a few noteworthy moments: 

Being a winner
This was P&G CEO A.G. Lafley's first annual meeting since returning to the company earlier this year. He had successfully helmed the company for almost a decade until 2009. His successor, Bob McDonald, was less successful, and he retired in June 2013. So it's hardly surprising that Lafley chose to focus his prepared remarks on winning.

Winning, said Lafley, "means winning with those who matter most: consumers, customers, and shareowners." He also talked about "winning the value equation." According to Lafley, there are two "moments of truth" for a consumer: the first when the consumer buys the product, and the second when the consumer uses the product and decides whether or not to buy it again. "We need to win more of these moments of truth more often," concluded Lafley.

Focusing on the core
As the largest non-food/beverage consumer products company in the U.S., P&G dominates the U.S. market in several important categories, including liquid laundry detergent (57% of total market share) and paper towels (44% of total market share). Lafley indicated he would be trying to maximize those advantages. "We're focusing first on our core businesses, which include the leading and most profitable brands, categories, and countries," he declared.

Lafley has already begun to put his product lines where his mouth is: Last month he announced several new Tide-branded products, including a lower-priced detergent called Tide Simply Fresh & Clean. Look for more attempts to leverage P&G's most powerful brand names in the coming months. 

Embracing innovation
Of course, no annual meeting would be complete without a Greatest Hits reel. Lafley threw one in as he talked about the importance of continuing innovation, highlighting recent successes including Crest 3D White toothpaste, the market share of which has grown for 40 consecutive months, and Tide Pods, which have already captured more than 6% of overall U.S. market share for laundry detergent, and more than 70% of the "unit dose segment." "Our choice is to be the innovation leader in every product category in which our brands compete," said Lafley. 

Business as usual
The rest of the meeting was pretty routine. A quarterly dividend of $0.6015 per share was announced, but since P&G has been paying a dividend for 123 consecutive years and increasing it for 57 consecutive years, no surprises there. All the Board members standing for reelection were approved.

There were no shareholder issues, and all the Board issues were passed without comment except for a couple of shareholders offering obligatory questions about the proposed executive compensation package. "If it's any consolation and just as a matter of interest," Lafley remarked, "When the Board asked me to come back, I did not even ask about compensation. I'm here for duty; it's an honor and a privilege."

Most of the questions asked during the subsequent 30-minute Q&A session were softballs, and (not to mix metaphors), Lafley punted almost all of them, usually saying he wasn't familiar with the particular situation or circumstances being discussed. He did assure one shareholder that his $200,000 travel budget (he commutes back and forth from Florida) had nothing to do with the fact that there were no "treats" in the lobby prior to the meeting.

And then it was over
Probably the most telling comment of the entire meeting came from shareholder Jim Baker. "Welcome back, A.G.," he said as he stepped up to the microphone, "Good to see you again." And that pretty much sums it up. The market, too, seemed glad to see Mr. Lafley again, as P&G's stock was up by more than 1%, even as the S&P 500 and rival consumer goods stocks Kimberly-Clark, Henkel AG, and Church & Dwight all declined. As a P&G shareholder, I hope it lasts.

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  • Report this Comment On October 11, 2013, at 2:59 PM, deckdawg wrote:

    Hey, you didn't plug P&G's new washing machine cleaner tablets! $9/5 tablets (1 tablet / month). The vast majority of new washing machines are front loaders, and the idea that these need to be kept clean to prevent mildew and odors is almost an obsession with owners. We've got a Whirlpool, and according to some literature that came with it, a bad odor is the #1 reason for service calls. These washers even have a separate "Clean" cycle.

  • Report this Comment On October 11, 2013, at 5:30 PM, whyaduck1128 wrote:

    "I'm here for duty; it's an honor and a privilege."

    Please. As a Cincinnati resident, I'm tired of Proctoids who equate working for the corporation with military or religious service. It's a corporation, not a country or a deity.

    It's your JOB, Lafley. Just do it as well as you did before.

    whyaduck

    Long PG (it's my #1 holding)

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