Procter & Gamble Co., pushing ahead with a widely expected succession plan, will elevate David Taylor to the chief executive officer job on Nov. 1, with current CEO A.G. Lafley staying on as executive chairman.
Taylor, a 35-year veteran of P&G who currently serves as head of global beauty, grooming and health care, also will take the president role, the Cincinnati-based company said in a statement on Tuesday.
Lafley, who has served two terms as CEO, interrupted his retirement in 2013 to lead a turnaround at the consumer-products giant. The overhaul has included a plan to exit about 100 underperforming brands, an effort that is now largely completed. He telegraphed early on during his latest tenure that he didn’t plan to stay long, and Taylor emerged as the heir apparent.
“Job after job, increased responsibility after increased responsibility, he keeps contributing and keeps delivering outstanding results,” Lafley, who has known Taylor for two decades, said in an interview. “And he keeps growing as a manager and a leader.”
As part of Lafley’s plan to streamline the company, P&G agreed to sell 43 of its beauty brands to Coty Inc. earlier this month for about $12.5 billion. The transaction will be conducted as a tax-saving Reverse Morris Trust, meaning P&G will spin or split off the business, which will then merge with a Coty subsidiary. With the sale, P&G cedes its position as the largest beauty-product seller to L’Oreal SA, according to Euromonitor International.
Work in Progress
“Lafley started a process which the new CEO will have to follow,” said Peter Crist, founder and chairman of executive recruiter Crist Kolder Associates. “So it will be a while before the new CEO can be measured for his own strategy.”
Taylor, 57, was made president of the company’s global beauty group in January -- his 18th job at P&G -- putting him in position to take the helm from the 68-year-old Lafley. It was the latest stop in a career that has covered almost every part of P&G’s business -- from hair care and grooming to health and household products -- taking him to Europe, Asia and North America.
In winning the CEO job, Taylor beat out at least four other internal candidates -- including Melanie Healey, former head of P&G’s North American operations, who retired in June. Women account for the majority of P&G’s sales, which has many women in senior executive positions but has never had a female CEO.
As the new chief, Taylor inherits a slimmed-down company that has lost a clear pathway to growth. Sales are projected to decline 8 percent to $76.4 billion this year, according to analysts’ estimates compiled by Bloomberg, with an additional 1 percent drop next year.
P&G shares rose 0.2 percent to $80.42 as of 9:51 a.m. in New York. Through Tuesday, the stock had slid 12 percent this year, compared with a 1.7 percent increase for the Standard & Poor’s 500 Index.
The revamped P&G will have to compete against a host of upstarts, which are winning customers with natural and organic brands. It’s also fighting stiff competition on price, and the company has to convince a new generation that it’s worth paying up for P&G names like Tide, Crest and Pampers.
“They’ve still got challenges,” said Jack Russo, an analyst at Edward Jones.
Taylor has a long track record of making career leaps to broaden experience. Right after graduating from Duke University in 1980 with a degree in electrical engineering, he worked as a production manager at a P&G plant in North Carolina. He spent more than a decade in operations before deciding to start over, becoming an entry-level assistant brand manager in 1992.
“I knew that if I aspired to get into senior management at P&G, I needed to understand marketing and the concerns of customers,” Taylor told students during a talk at Duke’s Fuqua School of Business last year. “I knew I had to start over and learn from the ground up. It was a fabulous lesson in humility.”
Later he went to Hong Kong and mainland China for P&G, taking on several challenges at once: adapting to Asia, being a general manager and overseeing a portfolio of brands like Charmin. He also had to motivate both ex-pat and local Chinese managers in an unfamiliar region.
“If ever there was a chance to experience the power of diversity, it was there,” he said at the Duke talk. “I didn’t have the skills to do all that needed to get done,” so he learned from his staff, including local Chinese managers.
That helped give him the confidence to set a strategy and trust his staff make it happen.
“You need to be clear about the outcomes you want,” but not restrictive about how they’re achieved, Taylor said.