Shareholders chide P&G on results

Procter & Gamble shareholders asked tough questions Tuesday of outgoing CEO A.G. Lafley following a tough year for the company.

The grilling occurred during the company's annual meeting attended by about 400 people at the general offices of the Cincinnati-based consumer products giant.

Shareholder Karen Mayer bemoaned the company's swooning shares that nearly hit $94 late last year, but have since plunged more than 20 percent.

"Clearly, the people making decisions have driven the P&G bus into a ditch," Mayer said before asking Lafley what he'd do to his team if the company remained "in the ditch."

Lafley said there are signs of improvement, noting the company is in the midst of its turnaround plan.

"We are in the middle of a big transformation – we're not going to change in a week," Lafley said. "We're about halfway through this."

P&G is in the midst of a major turnaround: shedding 100 brands to simplify its business; slashing thousands of jobs; and overhauling the company's factory and warehousing footprint. Still, the company, which gets two-thirds of its sales from outside the U.S., is getting hammered by unfavorable foreign exchange rates as countries from Russia to Venezuela have devalued their currencies – wiping out the equivalent of $4.6 billion in sales.

The company is also going through a leadership transition: David Taylor, the global head of beauty, grooming and health, will become CEO on Nov. 1 and Lafley will become the executive chairman of the board. Taylor was introduced along with other board members at the start of the meeting, but did not participate in the presentations for shareholders.

P&G's profits dropped 40 percent to $7 billion during the fiscal year ended June 30, and sales slid 5 percent to $76.3 billion. Closely-watched organic sales, which exclude impacts from foreign exchange, acquisitions or divestitures, inched up a tepid 1 percent.

Another shareholder, Leland Wykoff, complained stock owners were paying for "non-performance."

"Good work if you can get it," Wykoff said to some applause. He questioned P&G's expanding sales of Pods under Tide and other brands amid concerns children have been ingesting them. He also dismissed the company's $4.6 billion worth of stock buybacks as a gimmick to "artificially increase" earnings per share.

Lafley said P&G's sales and market share were growing in the laundry business thanks to innovations, such as the Pods. He noted despite P&G's shrinking number of brands, it is increasing sales. He said P&G had 14 detergent brands with a combined 40 percent U.S. market share when he joined the company in the 1970s and now has only five brands with 60 percent of market share.

Lafley defended the company's stock repurchases as a use of capital after it has funded its operations and paid its dividends. He said the company has eschewed a major acquisition at this time, which would be the only other use of extra cash.

Outside, about a dozen protesters with Women's Voices for the Earth picketed on the sidewalk over health concerns about the company's feminine protection products.

At the end of the meeting, P&G officials announced shareholders had re-elected its board of directors to serve another year, approved its auditor of record and an advisory vote on executive pay.