Procter & Gamble pg is reportedly ready to name 29-year company veteran Robert McDonald to succeed A.G. Lafley as CEO of the world's largest consumer products maker.
Media reports say people familiar with the matter revealed the plan for Lafley to step aside as chief executive officer in favor of McDonald while staying on as chairman.
"It is a very deliberate and well-planned process, years in the formation, and we're not expecting to be making any announcements," P&G spokesman Paul Fox told The Associated Press before a regularly scheduled board meeting at company headquarters in downtown Cincinnati.
P&G makes brands such as as Tide detergent, Gillette shavers and Pampers diapers.
McDonald, P&G's chief operating officer, has been considered heir apparent to Lafley, who became CEO nine years ago this month and turns 62 on June 13.
"It's not unexpected that Bob McDonald was going to be named CEO," said Ali Dibadj, a senior analyst for Sanford C. Bernstein. "I think he's an extraordinarily capable leader."
But Dibadj said the move will raise questions — if it happens — during a recession as P&G's growth and sales have slumped.
"If this is for real, investors will have questions about the timing of the departure and what is A.G. Lafley leaving behind for McDonald," he said.
P&G has seen nearly a decade of double-digit growth and the acquisition in 2005 of Gillette in a blockbuster $57 billion deal that added Gillette's shavers, Duracell batteries and Oral-B tooth care to P&G's household portfolio.
But the company's sales and profits have slowed the past year as households limit spending and trade down to less-expensive brands. P&G on May 28 forecast that earnings and sales growth will fall below the company's usual 4% to 6% targets for this year and next.
The 55-year-old McDonald is a veteran of the Asian businesses that P&G has increasingly targeted for growth. He has worked closely with Lafley on P&G strategy and analysts have said his leadership would be unlikely to mean significant shifts in direction for the company.
Lafley told analysts last month that the company will step up business-building efforts in developing markets such as China, India and Brazil, invest aggressively in marketing and developing new products for its major brands, and use "surgical" price-cutting while adding to its lower-priced product line.
McDonald is a West Point grad who served as a U.S. Army captain before joining P&G in 1980. Early in his career, the Gary, Ind., native worked with dishwashing and laundry products before heading to the Philippines in 1994 and rising to become president for Northeast Asia by 1999.
McDonald became vice president for global operations in 2004, and COO in 2007 during a reorganization in which Susan Arnold was named president for global business units. Analysts saw the reorganization as signaling they were the top two candidates to succeed Lafley, and McDonald became the clear front-runner after Arnold stepped down as president in March.
It is expected that Lafley will remain chairman for up to two years, continuing to guide the company and mentor McDonald.
Such a plan would follow a pattern set when Lafley was named chief executive in 2000. Then, former chairman and CEO John Pepper returned as chairman as Lafley was appointed to run day-to-day operations in the midst of a financial crisis.
Lafley added the chairman title in 2002.
McDonald's promotion from chief operating officer had been expected at least since early March. But whenever Lafley had been asked about CEO succession in public, he maintained he was focusing on running the company and planned to do so for some time.
The succession issue also has been on the minds of investors, employees and others because Lafley is considered one of P&G's most successful CEOs, having doubled sales in his nine years, refocused the company on its core strengths and integrated major acquisitions, including Gillette.
The expected transition comes as the company, with $83 billion in annual sales last year, has pulled back from its long-term sales goal of growing 4% to 6% a year. For its 2010 fiscal year, which begins July 1, P&G is forecasting weak sales growth of 1% to 3% and earnings per share that are also well below its long-term goals.
While its stock has been rising since mid-March, it is down 14% year to date, and fell 14.5% in 2008, even though the consumer staples company is often thought to be a recession-resistant stock.
P&G, the world's largest consumer products company, also has outlined plans to more than double its sales over the next 15 years, largely by expanding sales in developing nations such as Brazil, Russia, India and China.