UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant ☒
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| ☐ | Preliminary Proxy Statement |
| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ☒ | Definitive Proxy Statement |
| ☐ | Definitive Additional Materials |
| ☐ | Soliciting Material Pursuant to §240.14a-12 |
The Procter & Gamble Company
(Name of Registrant as Specified In Its Charter)
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Letter from our Chairman, President, and CEO
August 27, 2021
Fellow Procter & Gamble Shareholders:
I hope this year’s Proxy Statement finds you safe and well. The year we just completed was marked by uncertainty, volatility, and challenge, both for our Company and for many of us personally. Nevertheless, P&G people continued to step up and step forward to keep each other safe, to serve consumers, and to support communities around the world. Importantly, these priorities are completely congruent with our long-term strategic choices.
Our integrated strategy was delivering strong results before the crisis, it is serving us well during the pandemic, and we believe it will continue to serve us well after the crisis through a portfolio of daily-use categories where performance drives brand choice; superiority across product, package, brand communication, retail execution and value; productivity in all areas of cost and cash; constructive disruption in all facets of our operations; and a more agile, accountable, and empowered organization.
Because of the hard work of P&G people and the underlying momentum generated by our integrated strategy, our overall business remained strong. I invite you to read more about our results, our immediate priorities, and our long-term growth strategy in our 2021 Annual Report.
This volatile year has served as a pointed reminder that Corporate Citizenship—our collective Environmental, Social, and Governance (ESG) practices and impacts, together with the related activities and commitments we have made—cannot be something done on the side. It must be built into how we do business throughout the organization every day. As we have sought to be a force for good and a force for growth, the Board of Directors and its Committees remain actively engaged in this work, providing oversight and strategic guidance on our efforts.
We have also continued to increase our transparency about our Citizenship work and our impact. If you have not already, I invite you to visit our ESG for Investors website (www.pginvestor.com/esg), where we publish a variety of information and data about our practices and policies, including our workforce and Board demographic data, TCFD and SASB disclosures, Forestry Practices Report, and more. This broad work continues to be a significant focus for us, and its integration into our business reflects the importance that serving a broad set of stakeholder interests has to our strategy for long-term value creation.
As I prepare to step into the role of Executive Chairman on November 1, I look forward to continuing to serve the Company and its shareholders in a new capacity. And I have every confidence that Jon Moeller, who will succeed me as President and Chief Executive Officer, will continue to bring to bear his tremendous foresight, focus, and commitment to P&G, its people, and its shareholders as he leads the Company forward.
Thank you for your continued investment in and engagement with our Company. I look forward to sharing more with you during our annual meeting in October.
David S. Taylor
Chairman of the Board, President, and Chief Executive Officer
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
August 24, 201827, 2021
Fellow Procter & Gamble Shareholders:
It is ourmy pleasure to invite you to this year’s annual meeting of shareholders. The meeting will take place on Tuesday, October 9, 201812, 2021, at 9:12:00 a.m.p.m. Eastern Daylight TimeTime. To support the health and well-being of our employees and our shareholders, particularly given the continuing uncertainty of the COVID-19 pandemic and significant variations in local transmission and vaccination rates, this year’s meeting will be held virtually via a live audio webcast at The Procter & Gamble Company General Offices, 1 Procter & Gamble Plaza, Cincinnati, Ohio 45202.www.virtualshareholdermeeting.com/PG2021. At the meeting, our shareholders will be asked to:
Elect the 13 Director nominees listed in the accompanying proxy statement;
Ratify the appointment of the independent registered public accounting firm;
Approve, on an advisory basis, the Company’s executive compensation (the “Say on Pay” vote); and
Transact such other business as may properly come before the meeting.
| ☑ | Elect the 12 Director nominees listed in the accompanying proxy statement; |
| ☑ | Ratify the appointment of the independent registered public accounting firm; |
| ☑ | Approve, on an advisory basis, the Company’s executive compensation (the “Say on Pay” vote); |
| ☑ | Vote on the shareholder proposal described in the accompanying proxy statement, if properly presented at the meeting; and |
| ☑ | Transact such other business as may properly come before the meeting. |
Shareholders of record as of the close of business on August 10, 201813, 2021 (the “record date”) are entitled to vote at the annual meeting and any postponement or adjournment thereof.Please see pages 2-52-6 for additional information regarding admission toaccessing the meeting and how to vote your shares. If you planYou do not need to attend the virtual meeting in person,we encourage youorder to register for admission by Monday, October 8. If you are not able to attend the meeting in person, you may join a live webcast of the meeting on the Internet by visitingwww.pginvestor.com at 9:00 a.m., Eastern Daylight Time, on October 9.vote your shares.
Your vote is important. Please vote your proxy promptly to ensure your shares are properly represented, even if you plan to attendjoin the annual meeting. You can vote by Internet, by telephone, or by requesting a printed copy of the proxy materials and using the enclosed proxy card.
We appreciate your continued confidence in our Company and look forward to seeing you at The Procter & Gamble Company General Officesyour joining us virtually on October 9, 2018.12, 2021.
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REVIEW THE PROXY STATEMENT AND VOTE IN ONE OF FOUR WAYS:
The Company’s principal executive offices are located at 1 Procter & Gamble Plaza, Cincinnati, Ohio 45202. These proxy materials are first being made available to our shareholders on August 27, 2021. Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be held on October
This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information you should consider. Please carefully read the entire Proxy Statement before voting. Voting Matters and Board Recommendations
P&G’s Integrated Growth Strategy Our integrated and mutually reinforcing strategies are the foundation for long-term, balanced growth and value creation.
Our Director Nominees’ Diversity The Board seeks to achieve a mix of
Our Director Nominees You are being asked to vote on the election of the
(I) Independent †The Board will determine Mr. Kempczinski’s Committee assignments upon his election. ‡Not on any Committees because the Committees are all comprised of independent Directors. §In addition to her current term of ten years, Ms. Whitman previously served as a Director from 2003 to 2008.
Our Director Nominees’ Skills and Experience
Corporate Governance Highlights BOARD STRUCTURE & COMPOSITION Director Independence 10 of 12 Director nominees are independent Four fully independent Board Committees Board Leadership Annual assessment and determination of Board leadership structure Annual election of independent Lead Director if Chairman/CEO roles are combined or the Chairman is not independent Lead Director has strong role and significant governance duties, including chairing regular executive sessions of independent Directors Board Refreshment & Diversity Balance of new and experienced Directors. More than half of incumbent Director nominees have tenures of 6 years or less, and average tenure is less than 6 years Retirement age and term limit for Directors 8 of 12 Director nominees are women and/or ethnically diverse Average age of Director nominees is 60 Evaluation & Effectiveness Annual Board and Committee self-assessments One-on-one reviews with individual Directors to ensure thoughtful, candid feedback Annual independent Director evaluation of Chairman and CEO and continuous Director feedback Director Engagement Incumbent Directors attended about 98% of Board and Committee meetings combined in FY 2020-21 Board policy limits Director membership on other public company boards Director Access Directors have significant interaction with senior business leaders and access to other employees Directors have ability to hire outside experts and consultants and to conduct independent investigations Directors participate in focused sessions on emerging topics and visits to strategic Company operations globally (when travel and safety protocols permit) GOVERNANCE BEST PRACTICES Clawback and Anti-Hedging and Pledging Policies
Share Ownership Requirements
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| • | Any executive who has not met the requirements of the Executive Share Ownership Program is subject to the Share Holding Requirement for any net shares resulting from stock option exercises or settlement of PSUs or RSUs | ||
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Corporate Governance Principles
• Policies consistent with the Investor Stewardship Group’s Corporate Governance Principles
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ESG Oversight and Reporting
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SHAREHOLDER RIGHTS & ENGAGEMENTMr. Taylor’s STAR target remained at 200% of salary. His STAR payout was $2,736,000, which is approximately 85% of target.
Proxy Access
Special Meetings
Board Accountability
Board Engagement
| iv The Procter & Gamble Company | ||
| PROXY SUMMARY | ||
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ESG: Board Oversight, Stakeholder Engagement, and Expanded Disclosures
P&G strives to be a force for good and a force for growth. We serve shareholders and investors and, in doing so, serve employees, business partners, suppliers, communities, governments, and the broader world around us. We have a responsibility to all our stakeholders, and we engage with them throughout the year on our efforts. Below are some highlights of our Board’s involvement in our ESG work, our conversations with stakeholders, and the ways we have expanded and enhanced our disclosures this year.
Board Oversight of ESG
The Board and its Committees are actively engaged in our environmental and social efforts, in addition to their critical governance oversight role. For example, this year:
Brand Officer on matters including talent development, recruiting, succession planning, workplace policies and employee engagement, and external efforts to promote equality and inclusion in society. |
In their oversight role, our Directors ask questions, probe our thinking, provide strategic input, and give guidance informed by their diverse skills and experiences. The Board’s engagement helps ensure that our efforts in these areas remain closely linked to our broader Company strategy in a way that serves our goal of balanced, long-term growth and value creation.
Stakeholder Engagement
In the summer and fall, we spoke with many of our shareholders, including most of our top 20, listening to their perspectives on our efforts, impact, and disclosures across several aspects of ESG. We also responded to inquiries received from other shareholders and stakeholders, sharing our work and approach and inviting further input.
In the winter and spring, we held follow up conversations with multiple stakeholders, including shareholders, sharing our planned actions and inviting additional feedback. We also continue to respond to inquiries and letters we receive from institutional shareholders, advocacy groups, and retail investors.
In our conversations and exchanges, we heard several themes, including:
| 2021 Proxy Statement v | ||||
| PROXY SUMMARY | ||
As described further below and elsewhere in this Proxy Statement, this feedback helps inform our policies, practices, and disclosures.
Expanded Disclosures
We recognize that actions and progress do not always fully speak for themselves. Meaningful transparency is an important aspect of serving our investors and stakeholders. In response to stakeholder feedback and to help strengthen our broader efforts, we enhanced and expanded our ESG-related disclosures in several ways this year:
| • | Launching an ESG for Investors site on our www.pginvestor.com/esg website, which gathers data and information across our various efforts into a single platform and allows for more frequent updates that complement our annual Citizenship Report, and proactively discussing feedback on the content with investors. |
We will continue to engage with our many stakeholders as we look for opportunities to serve consumers and our communities, in the interests of our long-term shareholders and our many other stakeholders.
| vi The Procter & Gamble Company | ||
| PROXY SUMMARY | ||
Key Elements of FY 2020-21 Executive Compensation Program |
We Received Strong Shareholder Support with 91.78% Say on Pay Support at the 2020 Annual Meeting. This vote is a positive endorsement of the Company’s executive compensation practices and decisions.
We Emphasize Pay for Performance. On average, 89% of the four main components of NEO compensation (Salary, Short-Term Achievement Reward (“STAR”), Long-Term Incentive Program (“LTIP”), and Performance Stock Program (“PSP”)) was performance-based. Of this, 67% was tied to long-term performance.
Consistent with our design principles, performance-based programs pay out at 100% when target goals are achieved. Payouts below 100% occur when target goals are not achieved, and payouts above 100% are possible when target goals are exceeded.
Payouts under these programs are based on the results achieved as compared to the pre-established
performance targets, highlighting the clear link between pay and performance that is the cornerstone of our compensation programs.
We Pay Competitively. The C&LD Committee structures executive compensation to be competitive with the targets for comparable positions at companies considered to be our peers, as described on pages 50-51.
We Focus on Long-Term Success. The majority of the NEOs’ compensation is delivered through two long-term incentive programs tied to Company performance: PSP and LTIP.
NEOs must meet significant share ownership and shareholding requirements. For FY 2020-21, the CEO must own shares of Company stock and/or RSUs (including granted Performance Stock Units) valued at a minimum of eight times salary. All other NEOs must own stock valued at a specific multiple of salary, depending on the NEO’s role.
CEO Compensation Highlights
Salary. Mr. Taylor’s annualized base salary increased to $1,800,000.
STAR Annual Bonus Program. Mr. Taylor’s STAR target remained at 200% of salary. His STAR payout was $6,570,000, which is approximately 183% of target.
Long-Term Incentive Programs. The C&LD Committee approved a long-term incentive award of $14,250,000 for Mr. Taylor. One half of the award value was delivered in the PSP. The remaining half is in the LTIP grant, which the C&LD Committee determined would be delivered as 65% stock options and 35% RSUs.
ESG and Incentive Compensation
To reinforce our key commitments to ESG initiatives, the C&LD Committee elected at its August 2021 meeting to add an ESG Factor that will be applied to the STAR award for senior executives beginning in FY2021-22. The ESG Factor will adjust the Company
Factor portion of the STAR award as a multiplier in the range of 80% to 120%, based on an assessment of the Company’s progress toward certain long-term Equality & Inclusion and Environmental Sustainability goals. For more information, see page 48.
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| GLOSSARY OF TERMS | ||
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Commonly Used Terms in This Proxy StatementDirector Independence
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Board Leadership
Board Refreshment & Diversity
Evaluation & Effectiveness
Director Engagement
Director Access
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In connection with the Company’s 2018 annual meeting of shareholders, which will take place on October 9, 2018, the Board of Directors has provided these materials to you, either over the Internet or via mail. The Notice was mailed to Company shareholders beginning August 24, 2018, and our proxy materials were posted on the website referenced in the Notice on that same date. The Company, on behalf of its Board, is soliciting your proxy to vote your shares at the 2018 annual meeting of shareholders. We solicit proxies to give shareholders of record an opportunity to vote on matters that will be presented at the annual meeting. In the proxy statement, you will find information on these matters, which is provided to assist you in voting your shares.
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You can vote if, as of the close of business on August 10, 2018, you were a shareholder of record of the Company’s:
Common Stock;
Series A ESOP Convertible Class A Preferred Stock; or
Series B ESOP Convertible Class A Preferred Stock.
Each share of Company stock gets one vote. On August 10, 2018, there were issuedClawback and outstanding:
2,489,159,247 shares of Common Stock;
38,103,661 shares of Series A ESOP Convertible Class A Preferred Stock;Anti-Hedging and
54,407,237 shares of Series B ESOP Convertible Class A Preferred Stock.
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Most shareholders can vote by proxy in three ways:
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| • | Insider Trading Policy prohibits Directors, senior executives, and other designated employees from engaging in any pledging, short sales, or |
By Telephone — In the United States and Canada, you can vote by telephone by following the instructions in the Notice or by calling (800)690-6903 (toll-free) and following the instructions; or
By Mail — You can vote by mail by requesting a full packet of proxy materials be sent to your home address. Upon receipt of the materials, you may fill out the enclosed proxy card and return it per the instructions on the card.
If you vote by proxy, your shares will be voted at the annual meeting as you direct. If you sign your proxy card but do not specify how you want your shares to be voted, they will be voted as the Board recommends.
If you are a participant in The Procter & Gamble Direct Stock Purchase Plan and/or The Procter & Gamble International StockShare Ownership Program, you can vote the shares of common stock held for your account through any of the proxy voting options set forth above.
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For participants in The Procter & Gamble Profit Sharing Trust and Employee Stock Ownership Plan, The Procter & Gamble Savings Plan, The Gillette Company Employee Stock Ownership Plan, The Procter & Gamble Commercial Company Employees’ Savings Plan and/or The Profit Sharing Retirement Plan of The Procter & Gamble Commercial Company (the “NA Plans”):Requirements
If you are a participant in the NA Plans, you have the right to instruct the respective plan fiduciaries how to vote the shares of stock that are allocated to your account. If your properly signed and executed voting instructions are timely received, the plan fiduciaries will vote the shares allocated to your account as you instructed. If your voting instructions are not properly signed and executed or if they are not timely received, the plan fiduciaries will vote the shares allocated to your account in direct proportion to the shares of the same class for which the respective plan fiduciaries timely received properly signed and executed voting instructions. The plan fiduciaries also will vote the shares held in trust that have not been allocated to any account in the same manner. The plan fiduciaries will vote shares of P&G stock as described above, unless otherwise required by the Employee Retirement Income Security Act of 1974, as amended, or other applicable law.
For participants in The Procter & Gamble U.K.1-4-1 Plan, The Procter & Gamble U.K. Share Investment Scheme and/or The Procter & Gamble Ireland Employee Stock Ownership Plan (the “UK and Ireland Plans”):
If you are a participant in the UK and Ireland Plans, you can instruct the respective plan fiduciaries how to vote the shares of stock that are allocated to your account. If you do not vote your shares, the plan fiduciaries will not submit a vote for your shares.
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Yes. You can change or revoke your proxy at any time before it is exercised at the annual meeting by Internet, telephone, or mail prior to 11:59 p.m. Eastern Daylight Time on Monday, October 8, 2018, or by attending the annual meeting and voting in person.
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Yes. However, we encourage you to vote your proxy by Internet, telephone, or mail prior to the meeting, even if you plan to attend in person.
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Election of Directors—As provided in the Company’s Amended Articles of Incorporation, each of the 13 nominees for Director who receives a majority of votes cast will be elected as a member of the Board. A “majority of votes cast” means that the number of shares cast “for” a nominee must exceed the number of votes cast “against” that nominee. Abstentions and brokernon-votes will have no effect. Pursuant to the By-Laws of the Board of Directors, if anon-incumbent nominee for Director receives a greater number of votes cast “against” than votes cast “for,” such nominee shall not be elected as a member of the Board. Any incumbent nominee for Director who receives a greater number of votes cast “against” than votes cast “for” shall continue to serve on the Board pursuant to Ohio law, but shall immediately tender his or her resignation as a Director to the Board. Within 90 days, the Board will decide after taking into account the recommendation of the Governance & Public Responsibility Committee (in each case excluding the nominee in question), whether to accept the resignation. Absent a compelling reason for the Director to remain on the Board, the Board shall accept the resignation. The Board’s explanation of its decision shall be promptly disclosed on a Form8-K submitted to the SEC.
All other proposals require the affirmative vote of a majority of shares participating in the voting on each proposal for approval. Abstentions and brokernon-votes will not be counted as participating in the voting and will therefore have no effect.
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The Company will bear the cost of the solicitation of proxies by the Company. We have hired D.F. King & Co., Inc., a proxy solicitation firm, to assist us in soliciting proxies for a fee of $17,500, plus reasonable expenses. In addition, D.F. King and the Company’s Directors, officers, and employees may also solicit proxies by mail, telephone, personal contact, email, or other online methods. We will reimburse their expenses for doing this.
We will also reimburse brokers, fiduciaries, and custodians for their costs in forwarding proxy materials to beneficial owners of Company stock. Other proxy solicitation expenses that we will pay include those for preparing, mailing returning, and tabulating the proxies.
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You are the “shareholder of record” for any P&G shares that you own directly in your name in an account with P&G’s stock transfer agent, EQ Shareowner Services.
You are a “beneficial shareholder” of shares held in street name if your P&G shares are held in an account with a broker, bank, or other nominee as custodian on your behalf. The broker, bank, or other nominee is considered the shareholder of record of these shares. As the beneficial owner, you have the right to instruct the broker, bank, or other nominee on how to vote your P&G shares.
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If your shares are held by a bank, broker, or other holder of record, you will receive voting instructions from the holder of record. Your broker is required to vote your shares in accordance with your instructions.
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If you plan to attend the meeting, you must be a shareholder of The Procter & Gamble Company as of August 10, 2018, the record date. In order to expedite your admission process, we encourage you to register for admission before 11:59 p.m. on Monday, October 8. You may register for admission for yourself and one guest by:
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At the entrance to the meeting, we will verify your registration and request to see a valid form of photo identification, such as a driver’s license or passport.
If you do not register for admission in advance of the meeting, we will request to see your photo identification at the entrance to the meeting. We will then determine if you owned common stock on the record date by:Corporate Governance Principles
Verifying your nameESG Oversight and stock ownership against our list of registered shareholders; or
Asking to review evidence of your stock ownership as of August 10, 2018, such as your brokerage statement. You must bring such evidence with you in order to be admitted to the meeting. If you are acting as a proxy, we will need to review a valid written legal proxy signed by the owner of the common stock granting you the required authority to vote the owner’s shares.
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If you are not able to attend the meeting in person, you may join a live webcast of the meeting on the Internet by visitingwww.pginvestor.com at 9:00 a.m. Eastern Daylight Time on October 9, 2018.
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August 10, 2018 is the record date for the meeting. This means that owners of Procter & Gamble stock at the close of business on that date are entitled to:
receive noticeBoard oversight and ongoing engagement with senior executives on key matters, including cybersecurity (Audit Committee), organizational diversity and gender pay equity (C&LD Committee), and community impact, sustainability, and governance practices (G&PR Committee)
vote at the meeting and any adjournments or postponements of the meeting.
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On or about August 24, 2018, we began mailing a Notice of Internet Availability of Proxy Materials (the “Notice”) to shareholders of record as of August 10, 2018, and we posted our proxy materials on the website referenced in the Notice (www.proxyvote.com). As more fully described in the Notice, shareholders may choose to access our proxy materials atwww.proxyvote.com or may request a printed set of our proxy materials. In addition, the Notice and website provide information regarding how you may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis. Those who previously requested printed proxy materials or electronic materials on an ongoing basis will receive those materials as requested.
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Shareholders of record who have the same address and last name and have not previously requested electronic delivery of proxy materials will receive a single envelope containing the Notices for all shareholders having that address. The Notice for each shareholder will include that shareholder’s unique control number needed to vote his or her shares. This procedure reduces our printing costs and postage fees. If you prefer to receive a separate copy of the proxy materials, please call us toll-free at (800)742-6253 in the U.S., or inform us in writing at: The Procter & Gamble Company Shareholder Services, c/o EQ Shareowner Services, P.O. Box 64874, St. Paul, MN 55164-0874, or by email atwww.pgshareholder.com; click Contact Us under the Email section. We will promptly deliver a separate copy of the proxy materials in response to any such request. If, in the future, you do not wish to participate in householding, you should contact us at the above phone number, address or email.
For those shareholders who have the same address and last name and who request to receive a printed copy of the proxy materials by mail, we will send only one copy of such materials to each address unless one or more of those shareholders notifies us, in the same manner described above, that they wish to receive a printed copy for each shareholder at that address.
Beneficial shareholders can request information about householding from their banks, brokers, or other holders of record.
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Our Board of Directors has general oversight responsibility forsenior executives, directs the Company’s affairs pursuant to Ohio’s General Corporation Law and the Company’s Amended Articles of Incorporation, Code of Regulations, andBy-Laws of the Board of Directors. In exercising its fiduciary duties, the Board represents and acts on behalf of the Company’s shareholders and is committed to strong corporate governance, as reflected through its policies and practices. The Board is deeply involved in the Company’s strategic planning process, leadership development, succession planning, and oversight of risk management.
Our Board of Directors nominated the 13 Directors listed on pages 8-14 for election at the 2018 annual meeting. Each of the Director nominees currently serves on the Board and was elected for aone-year term at the 2017 annual meeting, with the exception of Joseph Jimenez and Nelson Peltz, who were appointed to the Board effective March 1, 2018. The current terms of all nominees for Director will expire at the 2018 annual meeting when their successors are elected, and the Board has nominated each of these individuals for a newone-year term that will expire at the 2019 annual meeting when their successors are elected. In accordance with the term limits in the Corporate Governance Guidelines (“Governance Guidelines”), Ernesto Zedillo is expected to retire in February 2019 upon reaching 18 years of service on the Board.
Each of the Director nominees identified in this proxy statement has consented to being named as a nominee in our proxy materials and has accepted the nomination and agreed to serve as a Director if elected by the Company’s shareholders. If any nominee becomes unable or unwilling to serve between the date of the proxy statement and the annual meeting, the Board may designate a new nominee, and the persons named as proxies will vote on that substitute nominee.
Director Skills, Qualifications, and Diversity
Procter & Gamble is a global consumer products company, serving consumers around the world with sales in more than 180 countries and territories. A company of our size must have strong governance, as well as leaders who understand our diverse consumers and global needs. The current composition of the Board reflects an appropriate mix of skill sets, experience, and qualifications that are relevant to the businessenvironmental, social, and governance of the Company. Each Director epitomizes theprograms
Although the Board does not establish specific goals with respect to diversity, the Board’s overall diversity is a significant consideration in the Director nomination process. The Governance & Public Responsibility (“G&PR”) Committee reviews the Director nominees (including any shareholder nominees) and ascertains whether, as a whole, the group meets the Governance Guidelines in this regard. For this year’s election, the Board has nominated 13 individuals who bring valuable diversity to the Board. Their collective experience covers a wide range of countries, geographies, and industries. These 13 Director nominees range in age from 41 to 76. Four of these nominees, or 33%, are women, and four are ethnically diverse.
The Board also believes that tenure diversity should be considered in order to achieve an appropriate balance between the detailed Company knowledge and wisdom that comes with many years of service and the fresh perspective of newer Board members. Our current Board has a good balance of experienced and new Directors, with tenure of the current Directors averaging less than 8 years.
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The Board of Directors recommends a vote FOR each of the following Director nominees to hold office until the 2019 annual meeting of shareholders and until their successors are elected.
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| PROXY SUMMARY | ||||
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8SHAREHOLDER RIGHTS & ENGAGEMENT
Proxy Access
Special Meetings
Board Accountability
Board Engagement
| iv The Procter & Gamble Company | ||
| PROXY SUMMARY | ||
ESG: Board Oversight, Stakeholder Engagement, and Expanded Disclosures
P&G strives to be a force for good and a force for growth. We serve shareholders and investors and, in doing so, serve employees, business partners, suppliers, communities, governments, and the broader world around us. We have a responsibility to all our stakeholders, and we engage with them throughout the year on our efforts. Below are some highlights of our Board’s involvement in our ESG work, our conversations with stakeholders, and the ways we have expanded and enhanced our disclosures this year.
Board Oversight of ESG
The Board and its Committees are actively engaged in our environmental and social efforts, in addition to their critical governance oversight role. For example, this year:
Brand Officer on matters including talent development, recruiting, succession planning, workplace policies and employee engagement, and external efforts to promote equality and inclusion in society. |
In their oversight role, our Directors ask questions, probe our thinking, provide strategic input, and give guidance informed by their diverse skills and experiences. The Board’s engagement helps ensure that our efforts in these areas remain closely linked to our broader Company strategy in a way that serves our goal of balanced, long-term growth and value creation.
Stakeholder Engagement
In the summer and fall, we spoke with many of our shareholders, including most of our top 20, listening to their perspectives on our efforts, impact, and disclosures across several aspects of ESG. We also responded to inquiries received from other shareholders and stakeholders, sharing our work and approach and inviting further input.
In the winter and spring, we held follow up conversations with multiple stakeholders, including shareholders, sharing our planned actions and inviting additional feedback. We also continue to respond to inquiries and letters we receive from institutional shareholders, advocacy groups, and retail investors.
In our conversations and exchanges, we heard several themes, including:
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| 2021 Proxy Statement
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| PROXY SUMMARY | ||||
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9As described further below and elsewhere in this Proxy Statement, this feedback helps inform our policies, practices, and disclosures.
Expanded Disclosures
We recognize that actions and progress do not always fully speak for themselves. Meaningful transparency is an important aspect of serving our investors and stakeholders. In response to stakeholder feedback and to help strengthen our broader efforts, we enhanced and expanded our ESG-related disclosures in several ways this year:
| • | Launching an ESG for Investors site on our www.pginvestor.com/esg website, which gathers data and information across our various efforts into a single platform and allows for more frequent updates that complement our annual Citizenship Report, and proactively discussing feedback on the content with investors. |
We will continue to engage with our many stakeholders as we look for opportunities to serve consumers and our communities, in the interests of our long-term shareholders and our many other stakeholders.
| vi The Procter & Gamble Company | ||
| PROXY SUMMARY | ||
| Key Elements of FY 2020-21 Executive Compensation Program |
We Received Strong Shareholder Support with 91.78% Say on Pay Support at the 2020 Annual Meeting. This vote is a positive endorsement of the Company’s executive compensation practices and decisions.
We Emphasize Pay for Performance. On average, 89% of the four main components of NEO compensation (Salary, Short-Term Achievement Reward (“STAR”), Long-Term Incentive Program (“LTIP”), and Performance Stock Program (“PSP”)) was performance-based. Of this, 67% was tied to long-term performance.
Consistent with our design principles, performance-based programs pay out at 100% when target goals are achieved. Payouts below 100% occur when target goals are not achieved, and payouts above 100% are possible when target goals are exceeded.
Payouts under these programs are based on the results achieved as compared to the pre-established
performance targets, highlighting the clear link between pay and performance that is the cornerstone of our compensation programs.
We Pay Competitively. The C&LD Committee structures executive compensation to be competitive with the targets for comparable positions at companies considered to be our peers, as described on pages 50-51.
We Focus on Long-Term Success. The majority of the NEOs’ compensation is delivered through two long-term incentive programs tied to Company performance: PSP and LTIP.
NEOs must meet significant share ownership and shareholding requirements. For FY 2020-21, the CEO must own shares of Company stock and/or RSUs (including granted Performance Stock Units) valued at a minimum of eight times salary. All other NEOs must own stock valued at a specific multiple of salary, depending on the NEO’s role.
CEO Compensation Highlights
Salary. Mr. Taylor’s annualized base salary increased to $1,800,000.
STAR Annual Bonus Program. Mr. Taylor’s STAR target remained at 200% of salary. His STAR payout was $6,570,000, which is approximately 183% of target.
Long-Term Incentive Programs. The C&LD Committee approved a long-term incentive award of $14,250,000 for Mr. Taylor. One half of the award value was delivered in the PSP. The remaining half is in the LTIP grant, which the C&LD Committee determined would be delivered as 65% stock options and 35% RSUs.
ESG and Incentive Compensation
To reinforce our key commitments to ESG initiatives, the C&LD Committee elected at its August 2021 meeting to add an ESG Factor that will be applied to the STAR award for senior executives beginning in FY2021-22. The ESG Factor will adjust the Company
Factor portion of the STAR award as a multiplier in the range of 80% to 120%, based on an assessment of the Company’s progress toward certain long-term Equality & Inclusion and Environmental Sustainability goals. For more information, see page 48.
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| 2021 Proxy Statement vii | ||||
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The Board’s Leadership Structure
The Board regularly considers the appropriate leadership structure for the Company and has concluded that the Company and its shareholders are best served by the Board retaining discretion to determine whether the same individual should serve as both Chief Executive Officer (“CEO”) and Chairman of the Board, or whether the roles should be separated. This approach allows the Board to utilize its considerable experience and knowledge to elect the most qualified Director as Chairman of the Board, while maintaining the ability to separate the Chairman of the Board and CEO roles when necessary. Accordingly, at some points in the Company’s history, the CEO and Chairman of the Board roles were held by the same person. At other times, the roles were held by different individuals. The Board believes that it is important to retain the flexibility to make this determination at any given point in time based on what it believes will provide the best leadership structure for the Company and best serve the interests of the Company’s shareholders.
During the Board’s annual evaluation of its leadership structure, and upon recommendation of the G&PR Committee, thenon-employee Directors of the Board concluded that the current leadership structure continues to be the right leadership structure for the Company at this time and that it is in the best interest of the shareholders to maintain the combined Chairman and CEO role currently held by Mr. Taylor. The Board believes that Mr. Taylor has served the Company well as Chairman and CEO, and that this combined structure provides unified leadership and focus on the Company’s strategy, business plans, and productivity efforts. The Board also recognizes that the combined Chairman and CEO role has worked well in the past and that introduction of a split leadership structure would not be in the best interests of the Company at this time.
When the Board determines that the same individual should hold the positions of CEO and Chairman of the Board, or if the Chairman of the Board is not independent, the independent Directors of the Board elect a Lead Director from among the independent Directors, for an annual term. The Lead Director role is a significant one, with responsibilities consistent with accepted best practices, including:
preside at all meetings of the Board in the absence of, or upon the request of, the Chairman of the Board;
lead regular executive sessions of the independent Directors;
provide input to and approve agendas for the Board meetings and information sent to the Board;
approve meeting schedules to assure that there is sufficient time for discussion of all agenda items;
call meetings of thenon-employee and/or independent Directors, with appropriate notice;
advise the G&PR Committee and the Chairman of the Board on the membership of the various Board committees and the selection of committee chairpersons;
advise the Chairman of the Board on the retention of advisors and consultants who report directly to the Board;
advise the Chairman of the Board and CEO, as appropriate, on issues discussed at executive sessions ofnon-employee and/or independent Directors;
with the Chair of the C&LD Committee, review with the CEO thenon-employee Directors’ annual evaluation of the CEO’s performance;
serve as principal liaison between thenon-employee and/or independent Directors, as a group, and the Chairman of the Board and CEO, as necessary;
serve when necessary and appropriate, after consultation with the Chairman of the Board and CEO, as the liaison between the Board and the Company’s shareholders; and
select an interim Lead Director to preside over meetings at which he or she cannot be present.
Mr. McNerney serves as the Board’s current Lead Director and has beenre-elected annually to that role since 2007. Mr. McNerney is a strong, independent Lead Director, who fulfilled each of the above duties during the past year. He has helped lead the Board through executive leadership transitions and the Company’s recent major strategic transformation. As the former CEO and Chairman of the Board of The Boeing Company, and former CEO of 3M Company, he brings a wealth of diverse experiences and outside perspective to his Lead Director role, which allows him to serve as a trusted advisor to Mr. Taylor and ensure efficient and effective Board engagement.
15
In FY2017-18, thenon-employee Directors, led by Mr. McNerney, met six times in regularly scheduled executive sessions (without the presence of Mr. Taylor or other employees of the Company) to discuss various matters related to the oversight of the Company, the management of Board affairs, succession planning for the Company’s top management, and the CEO’s performance. Mr. McNerney fosters an open and constructive dialogue among the independent Directors, and after each executive session, Mr. McNerney advised Mr. Taylor on the independent Directors’ discussions, including performance feedback, and followed up on meeting outcomes and deliverables.
In conjunction with the Board’s decision to maintain the combined Chairman and CEO role, as recommended by the G&PR Committee, thenon-employee Directors reappointed Mr. McNerney to serve as Lead Director for FY2018-19. The Board is confident that Mr. Taylor, as Chairman and CEO, and Mr. McNerney, as Lead Director, will continue to work well together, and that the appropriate balance of power will be maintained. The Board will continue to periodically evaluate the Company’s leadership structure.
Director Independence
Board Leadership
Board Refreshment & Diversity
Evaluation & Effectiveness
Director Engagement
Director Access
GOVERNANCE BEST PRACTICES
Clawback and Anti-Hedging and Pledging Policies
| • | Clawback policy permits the Company to recoup certain compensation payments in the event of a significant restatement of financial results for any reason |
| • | Insider Trading Policy prohibits Directors, senior executives, and other designated employees from engaging in any pledging, short sales, or hedging investments involving Company stock (as described on page 26) |
Share Ownership Requirements
| • | CEO, senior executives, and Directors required to hold shares at multiples of their salaries or annual retainer |
| • | Any executive who has not met the requirements of the Executive Share Ownership Program is subject to the Share Holding Requirement for any net shares resulting from stock option exercises or settlement of PSUs or RSUs |
Corporate Governance Principles
ESG Oversight and Reporting
| 2021 Proxy Statement iii | ||||
| PROXY SUMMARY | ||
SHAREHOLDER RIGHTS & ENGAGEMENT
Proxy Access
Special Meetings
Board Accountability
Board Engagement
| iv The Procter & Gamble Company | ||
| PROXY SUMMARY | ||
ESG: Board Oversight, Stakeholder Engagement, and Expanded Disclosures
P&G strives to be a force for good and a force for growth. We serve shareholders and investors and, in doing so, serve employees, business partners, suppliers, communities, governments, and the broader world around us. We have a responsibility to all our stakeholders, and we engage with them throughout the year on our efforts. Below are some highlights of our Board’s involvement in our ESG work, our conversations with stakeholders, and the ways we have expanded and enhanced our disclosures this year.
Board Oversight of ESG
The Board and its Committees are actively engaged in our environmental and social efforts, in addition to their critical governance oversight role. For example, this year:
Brand Officer on matters including talent development, recruiting, succession planning, workplace policies and employee engagement, and external efforts to promote equality and inclusion in society. |
In their oversight role, our Directors ask questions, probe our thinking, provide strategic input, and give guidance informed by their diverse skills and experiences. The Board’s engagement helps ensure that our efforts in these areas remain closely linked to our broader Company strategy in a way that serves our goal of balanced, long-term growth and value creation.
Stakeholder Engagement
In the summer and fall, we spoke with many of our shareholders, including most of our top 20, listening to their perspectives on our efforts, impact, and disclosures across several aspects of ESG. We also responded to inquiries received from other shareholders and stakeholders, sharing our work and approach and inviting further input.
In the winter and spring, we held follow up conversations with multiple stakeholders, including shareholders, sharing our planned actions and inviting additional feedback. We also continue to respond to inquiries and letters we receive from institutional shareholders, advocacy groups, and retail investors.
In our conversations and exchanges, we heard several themes, including:
| 2021 Proxy Statement v | ||||
| PROXY SUMMARY | ||
As described further below and elsewhere in this Proxy Statement, this feedback helps inform our policies, practices, and disclosures.
Expanded Disclosures
We recognize that actions and progress do not always fully speak for themselves. Meaningful transparency is an important aspect of serving our investors and stakeholders. In response to stakeholder feedback and to help strengthen our broader efforts, we enhanced and expanded our ESG-related disclosures in several ways this year:
| • | Launching an ESG for Investors site on our www.pginvestor.com/esg website, which gathers data and information across our various efforts into a single platform and allows for more frequent updates that complement our annual Citizenship Report, and proactively discussing feedback on the content with investors. |
We will continue to engage with our many stakeholders as we look for opportunities to serve consumers and our communities, in the interests of our long-term shareholders and our many other stakeholders.
| vi The Procter & Gamble Company | ||
| PROXY SUMMARY | ||
| Key Elements of FY 2020-21 Executive Compensation Program |
We Received Strong Shareholder Support with 91.78% Say on Pay Support at the 2020 Annual Meeting. This vote is a positive endorsement of the Company’s executive compensation practices and decisions.
We Emphasize Pay for Performance. On average, 89% of the four main components of NEO compensation (Salary, Short-Term Achievement Reward (“STAR”), Long-Term Incentive Program (“LTIP”), and Performance Stock Program (“PSP”)) was performance-based. Of this, 67% was tied to long-term performance.
Consistent with our design principles, performance-based programs pay out at 100% when target goals are achieved. Payouts below 100% occur when target goals are not achieved, and payouts above 100% are possible when target goals are exceeded.
Payouts under these programs are based on the results achieved as compared to the pre-established
performance targets, highlighting the clear link between pay and performance that is the cornerstone of our compensation programs.
We Pay Competitively. The C&LD Committee structures executive compensation to be competitive with the targets for comparable positions at companies considered to be our peers, as described on pages 50-51.
We Focus on Long-Term Success. The majority of the NEOs’ compensation is delivered through two long-term incentive programs tied to Company performance: PSP and LTIP.
NEOs must meet significant share ownership and shareholding requirements. For FY 2020-21, the CEO must own shares of Company stock and/or RSUs (including granted Performance Stock Units) valued at a minimum of eight times salary. All other NEOs must own stock valued at a specific multiple of salary, depending on the NEO’s role.
CEO Compensation Highlights
Salary. Mr. Taylor’s annualized base salary increased to $1,800,000.
STAR Annual Bonus Program. Mr. Taylor’s STAR target remained at 200% of salary. His STAR payout was $6,570,000, which is approximately 183% of target.
Long-Term Incentive Programs. The C&LD Committee approved a long-term incentive award of $14,250,000 for Mr. Taylor. One half of the award value was delivered in the PSP. The remaining half is in the LTIP grant, which the C&LD Committee determined would be delivered as 65% stock options and 35% RSUs.
ESG and Incentive Compensation
To reinforce our key commitments to ESG initiatives, the C&LD Committee elected at its August 2021 meeting to add an ESG Factor that will be applied to the STAR award for senior executives beginning in FY2021-22. The ESG Factor will adjust the Company
Factor portion of the STAR award as a multiplier in the range of 80% to 120%, based on an assessment of the Company’s progress toward certain long-term Equality & Inclusion and Environmental Sustainability goals. For more information, see page 48.
| 2021 Proxy Statement vii | ||||
| GLOSSARY OF TERMS | ||
Commonly Used Terms in This Proxy Statement
C&LD | Compensation & Leadership Development | |
CEO | Chief Executive Officer | |
CFO | Chief Financial Officer | |
CHRO | Chief Human Resources Officer | |
CLO | Chief Legal Officer | |
COO | Chief Operating Officer | |
EDCP | Executive Deferred Compensation Plan | |
EGLIP | Executive Group Life Insurance Program | |
EPS | Earnings Per Share | |
FY | Fiscal Year | |
G&PR | Governance & Public Responsibility | |
I&T | Innovation & Technology | |
IRA | International Retirement Arrangement | |
IRP | International Retirement Plan | |
ISOP | International Stock Ownership Plan | |
LTIP | Long-Term Incentive Program | |
NEO | Named Executive Officer | |
NYSE | New York Stock Exchange | |
PSP | Performance Stock Program | |
PST | Profit Sharing Trust and Employee Stock Ownership Plan | |
PSU | Performance Stock Unit | |
RSU | Restricted Stock Unit | |
SEC | Securities and Exchange Commission | |
STAR | Short-Term Achievement Reward | |
TSR | Total Shareholder Return | |
| 2021 Proxy Statement 1 | ||||
| VOTING AND MEETING INFORMATION | ||
Voting and Meeting Information
In connection with the Company’s 2021 annual meeting of shareholders, which will take place virtually on October 12, 2021, the Board of Directors has provided these materials to you, either over the Internet or via mail. The Notice was mailed to Company shareholders beginning August 27, 2021, and our proxy materials were posted on the website referenced in the Notice on that same date. The Company, on behalf of its Board, is soliciting your proxy to vote your shares at the 2021 annual meeting of shareholders. We solicit proxies to give shareholders an opportunity to vote on matters that will be presented at the annual meeting. In the proxy statement, you will find information on these matters, which is provided to assist you in voting your shares.
| 1. | Who can vote? |
You can vote if, as of the close of business on August 13, 2021, you were a shareholder of record of the Company’s:
Common Stock;
Series A ESOP Convertible Class A Preferred Stock; or
Series B ESOP Convertible Class A Preferred Stock.
Each share of Company stock, including the Series A and Series B ESOP Convertible Class A Preferred Stock, gets one vote. On August 13, 2021, there were issued and outstanding:
2,428,315,667 shares of Common Stock;
29,378,895 shares of Series A ESOP Convertible Class A Preferred Stock; and
51,551,581 shares of Series B ESOP Convertible Class A Preferred Stock.
| 2. | How do I vote by proxy? |
Most shareholders can vote by proxy in three ways:
| • | By Internet — You can vote via the Internet by following the instructions in the Notice or by accessing the Internet at www.proxyvote.com and following the instructions contained on that website; |
By Telephone — In the United States and Canada, you can vote by telephone by following the instructions in the Notice or by calling (800) 690-6903 (toll-free) and following the instructions; or
By Mail — You can vote by mail by requesting a full packet of proxy materials be sent to your home address. Upon receipt of the materials, you may fill out the enclosed proxy card and return it per the instructions on the card.
If you vote by proxy, your shares will be voted at the annual meeting as you direct. If you sign your proxy card but do not specify how you want your shares to be voted, they will be voted as the Board recommends.
If you are a participant in The Procter & Gamble Direct Stock Purchase Plan and/or The Procter & Gamble International Stock Ownership Plan, you can vote the shares of P&G common stock held for your account through any of the proxy voting options set forth above.
For participants in The Procter & Gamble Profit Sharing Trust and Employee Stock Ownership Plan, The Procter & Gamble Savings Plan, The Gillette Company Employee Stock Ownership Plan, The Procter & Gamble Commercial Company Employees’ Savings Plan and/or The Profit Sharing Retirement Plan of The Procter & Gamble Commercial Company (the “NA Plans”):
If you are a participant in the NA Plans, you are the beneficial owner of the P&G shares allocated to your account and have the right to instruct the respective plan fiduciaries how to vote those shares. Please refer to the materials provided to you by the NA Plans for instructions and relevant deadlines. Unless otherwise
| 2 The Procter & Gamble Company | ||
| VOTING AND MEETING INFORMATION | ||
required by the Employee Retirement Income Security Act of 1974, as amended, or other applicable law, the plan fiduciaries will vote shares of P&G stock as follows: if your properly signed and executed voting instructions are timely received, the plan fiduciaries will vote the shares allocated to your account as you instructed. If you do not provide voting instructions or your voting instructions are not properly signed and executed or if they are not timely received, the plan fiduciaries will vote the shares allocated to your account in direct proportion to the shares of the same class for which the respective plan fiduciaries timely received properly signed and executed voting instructions. The plan fiduciaries also will vote the shares held in trust that have not been allocated to any account in the same manner as shares that are allocated to accounts but for which voting instructions are not received.
For participants in The Procter & Gamble U.K. 1-4-1 Plan, The Procter & Gamble U.K. Share Investment Scheme and/or The Procter & Gamble Ireland Employee Stock Ownership Plan (the “UK and Ireland Plans”):
If you are a participant in the UK and Ireland Plans, you are the beneficial owner of the P&G shares allocated to your account, and you have the right to instruct the respective plan fiduciaries how to vote those shares. If you do not vote your shares, the plan fiduciaries will not submit a vote for your shares. Please refer to the materials provided to you by the UK and Ireland Plans for instructions and relevant deadlines.
See question 7 for an explanation of the difference between a “shareholder of record” and a “beneficial owner.”
| 3. | Can I change or revoke my vote after I return my proxy card? |
Yes, shareholders of record may change or revoke their proxy at any time before it is exercised at the annual meeting by Internet, telephone, or mail prior to 11:59 p.m. Eastern Daylight Time on Monday, October 11, 2021, or by attending the virtual annual meeting and following the voting instructions provided on the meeting platform. If you are the beneficial owner of shares held in street name, you must follow the instructions provided by your broker, bank, or other holder of record (including shares held in the NA Plans or the UK and Ireland Plans) for changing or revoking your proxy. Beneficial owners, other than plan participants as outlined below, may also attend and vote online during the annual meeting, which will replace any previous votes. Participants in the NA Plans or the UK and Ireland Plans will not be able to vote shares held in those plans during the meeting.
| 4. | Can I vote during the virtual annual meeting instead of voting by proxy? |
Yes, shareholders of record may vote during the virtual annual meeting by logging into the meeting website and following the instructions provided on the meeting platform. If you are the beneficial owner of shares held in street name, you should refer to the voting instructions provided by your brokerage firm, bank, or other holder of record. Beneficial owners, other than plan participants as outlined below, may also attend and vote online during the annual meeting. We encourage you to vote your proxy by Internet, telephone, or mail prior to the meeting, even if you plan to attend the virtual annual meeting. Participants in the NA Plans and UK and Ireland Plans must provide timely voting instructions to their respective plan fiduciaries prior to the meeting, as detailed in their materials.
| 5. | What are the voting procedures and what vote is required for approval of proposals? |
Election of Directors—As provided in the Company’s Amended Articles of Incorporation, each of the 12 nominees for Director who receives a majority of votes cast will be elected as a member of the Board. A “majority of votes cast” means that the number of shares cast “for” a nominee must exceed the number of votes cast “against” that nominee. Abstentions and broker non-votes will have no effect. Pursuant to the By Laws of the Board of Directors, if a non-incumbent nominee for Director receives a greater number of votes cast “against” than votes cast “for,” such nominee shall not be elected as a member of the Board. Any incumbent nominee for Director who receives a greater number of votes cast “against” than votes cast “for”
| 2021 Proxy Statement 3 | ||||
| VOTING AND MEETING INFORMATION | ||
shall continue to serve on the Board pursuant to Ohio law, but shall immediately tender his or her resignation as a Director to the Board. Within 90 days, the Board will decide after taking into account the recommendation of the Governance & Public Responsibility Committee (in each case excluding the nominee in question), whether to accept the resignation. Absent a compelling reason for the Director to remain on the Board, the Board shall accept the resignation. The Board’s explanation of its decision shall be promptly disclosed on a Form 8-K submitted to the SEC.
All other proposals require the affirmative vote of a majority of shares participating in the voting on each proposal for approval. Abstentions and broker non-votes will not be counted as participating in the voting and will therefore have no effect.
| 6. | Who pays for the Company’s proxy solicitation? |
The Company will bear the cost of the solicitation of proxies by the Company. We have hired D.F. King & Co., Inc., a proxy solicitation firm, to assist us in soliciting proxies for a fee of $35,000, plus reasonable expenses. In addition, D.F. King and the Company’s Directors, officers, and employees may also solicit proxies by mail, telephone, personal contact, email, or other online methods. We will reimburse their expenses for doing this.
We will also reimburse brokers, fiduciaries, and custodians for their costs in forwarding proxy materials to beneficial owners of Company stock. Other proxy solicitation expenses that we will pay include those for preparing, mailing, returning, and tabulating the proxies.
| 7. | What is the difference between a “shareholder of record” and a “beneficial owner” of shares held in street name? |
You are the “shareholder of record” for any P&G shares that you own directly in your name in an account with P&G’s stock transfer agent, EQ Shareowner Services.
You are a “beneficial owner” of shares held in street name if your P&G shares are held in an account with a broker, bank, or other holder of record as custodian on your behalf, including shares held in the NA Plans or the UK and Ireland Plans. The broker, bank, or other holder of record is considered the shareholder of record of these shares, commonly referred to as holding the shares in “street name.” As the beneficial owner, you have the right to instruct the broker, bank, or other holder of record how to vote your P&G shares.
| 8. | How do I vote my P&G shares held in street name? |
If your shares are held by a bank, broker, or other holder of record, you will receive voting instructions from the holder of record. Your broker is required to vote your shares in accordance with your properly submitted instructions.
| 9. | Can I attend the annual meeting in person? |
To support the health and well-being of our employees and our shareholders, particularly given the continuing uncertainty of the COVID-19 pandemic and significant variations in local transmission and vaccination rates, this year’s meeting will be held exclusively online, with no option to attend in person. If you plan to attend the virtual meeting, you will need to visit www.virtualshareholdermeeting.com/PG2021 and use your 16-digit control number provided in the Notice or proxy card to log into the meeting. If you do not have a 16-digit control number, you may still attend the meeting as a guest in listen-only mode. We encourage shareholders to log in to the website and access the webcast early, beginning approximately 15 minutes before the annual meeting’s 12:00 p.m. EDT start time. If you experience technical difficulties, please contact the technical support telephone number posted on www.virtualshareholdermeeting.com/PG2021.
| 4 The Procter & Gamble Company | ||
| VOTING AND MEETING INFORMATION | ||
| 10. | Will I be able to ask questions and participate in the virtual annual meeting? |
Shareholders of record and proxy holders who provide their valid 16-digit control number will be able to participate in the annual meeting by asking questions and voting their shares as outlined above.
To submit questions during the meeting, shareholders may log in to the virtual meeting website with their 16-digit control number and either:
type the question into the “Ask a Question” field on the meeting platform and click “Submit,” or
call the shareholder question telephone number listed on the meeting platform, provide their 16-digit control number, and enter the queue to ask a question.
Only shareholders with a valid control number will be allowed to ask questions. Questions pertinent to meeting matters will be answered during the meeting as time allows. If we receive substantially similar written questions, we may group such questions together and provide a single response to avoid repetition and allow time for additional question topics. If we are unable to respond to a shareholder’s properly submitted question due to time constraints, we will respond directly to that shareholder using the contact information provided.
Additional information regarding the rules and procedures for participating in the virtual annual meeting will be provided in our meeting rules of conduct, which shareholders can view during the meeting on the meeting platform.
| 11. | What is the Record Date? |
August 13, 2021 is the record date for the meeting. This means that owners of Procter & Gamble stock at the close of business on that date are entitled to:
receive notice of the meeting; and
vote at the meeting and any adjournments or postponements of the meeting.
| 12. | How is P&G distributing proxy materials? |
On or about August 27, 2021, we began mailing a Notice of Internet Availability of Proxy Materials (the “Notice”) to shareholders of record as of August 13, 2021, and we posted our proxy materials on the website referenced in the Notice (www.proxyvote.com). As more fully described in the Notice, shareholders may choose to access our proxy materials at www.proxyvote.com or may request a printed set of our proxy materials. In addition, the Notice and website provide information regarding how shareholders may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis. Those who previously requested printed proxy materials or electronic materials on an ongoing basis will receive those materials as requested.
| 13. | Why were my proxy materials included in the same envelope as other people at my address? |
Shareholders of record who have the same address and last name and have not previously requested electronic delivery of proxy materials will receive a single envelope containing the Notices for all shareholders having that address. The Notice for each shareholder will include that shareholder’s unique control number needed to vote his or her shares. This procedure reduces our printing costs and postage fees. If you prefer to receive a separate copy of the proxy materials, please call us toll-free at (800) 742-6253 in the U.S., or inform us in writing at: The Procter & Gamble Company Shareholder Services, c/o EQ Shareowner Services, P.O. Box 64874, St. Paul, MN 55164-0874, or by email at www.shareowneronline.com (click “Contact Us” under the “Email” section). We will promptly deliver a separate copy of the proxy materials in response to any such request. If, in the future, you do not wish to participate in householding, you should contact us at the above telephone number, address, or email.
| 2021 Proxy Statement 5 | ||||
| VOTING AND MEETING INFORMATION | ||
For those shareholders who have the same address and last name and who request to receive a printed copy of the proxy materials by mail, we will send only one copy of such materials to each address unless one or more of those shareholders notifies us, in the same manner described above, that they wish to receive a printed copy for each shareholder at that address.
Beneficial owners can request information about householding from their banks, brokers, or other holders of record.
YOUR VOTE IS IMPORTANT Please vote your proxy promptly so your shares can be represented, even if you plan to attend the virtual annual meeting. You can vote by Internet, by telephone, or by requesting a printed copy of the proxy materials and using the enclosed proxy card. Our proxy tabulator, Broadridge Financial Solutions, must receive any proxy that will not be voted at the annual meeting by 11:59 p.m. Eastern Daylight Time on Monday, October 11, 2021. |
| 6 The Procter & Gamble Company | ||
| ELECTION OF DIRECTORS | ||
Our Board of Directors has general oversight responsibility for the Company’s affairs pursuant to Ohio’s General Corporation Law and the Company’s Amended Articles of Incorporation, Code of Regulations, and By Laws of the Board of Directors. In exercising its fiduciary duties, the Board represents and acts on behalf of the Company’s shareholders and is committed to strong corporate governance, as reflected through its policies and practices. The Board is deeply involved in the Company’s strategic planning process, leadership development, succession planning, and oversight of risk management.
Our Board of Directors nominated the 12 individuals listed on pages 10-15 for election at the 2021 annual meeting. All of the Director nominees, except Mr. Kempczinski, currently serve on the Board and all but Mr. Kempczinski, Mr. Allen, and Mr. Moeller were elected for a one-year term at the 2020 annual meeting. The current terms of the incumbent nominees for Director will expire at the 2021 annual meeting when their successors are elected, and the Board has nominated each of these individuals and Mr. Kempczinski for a one-year term that will expire at the 2022 annual meeting when their successors are elected. Mr. McNerney, Mr. Blake, and Mr. Peltz, who have each served the Company and its shareholders with distinction, including Mr. McNerney’s service as Lead Director since 2007, are not standing for re-election when their terms expire at the annual meeting in October.
Each of the Director nominees identified in this proxy statement has consented to being named as a nominee in our proxy materials and has accepted the nomination and agreed to serve as a Director if elected by the Company’s shareholders. If any nominee becomes unable or unwilling to serve between the date of the proxy statement and the annual meeting, the Board may designate a new nominee, and the persons named as proxies will vote on that substitute nominee.
Director Skills, Qualifications, and Diversity
A strong Board is a critical component of a strong company.
As a global, diverse consumer products company, our leaders must embrace strong governance, epitomize the Company’s Purpose, Values, and Principles, and bring to bear the practical wisdom and seasoned judgment that comes from significant leadership skill and experience. As the summary on pages 8-9 provides in additional detail, the Director nominees bring a variety of these skills and experiences to the Board and reflect an appropriate combination of qualifications to represent and further the long-term interests of the Company’s shareholders.
In addition, meaningful skills and experiences are just one aspect of diversity that the Board highly values. Our Corporate Governance Guidelines set forth the minimum qualifications for Board members and specify that the Board “seeks to achieve a mix of Board members that represents a diversity of background and experience, including with respect to age, gender, international background, race, and specialized experience.” Although the Board does not establish specific goals with respect to diversity, the Board’s overall diversity is a significant consideration in the Director nomination process.
The G&PR Committee oversees our Director nomination process and devotes substantial time, in conjunction with the Board, to prioritizing the Board’s needs and assessing potential candidates for both the short term and for longer-term Board refreshment. The G&PR Committee also ascertains whether the Director nominees (including any properly submitted shareholder nominees) fulfill the requirements of the Corporate Governance Guidelines.
For this year’s election, the Board has nominated 12 individuals who bring valuable and diverse skills, experiences, and characteristics to the Board. Their collective experience covers a wide range of geographies and industries. These 12 Director nominees range in age from 44 to 69. Six of these nominees, or 50%, are women, and four are racially/ethnically diverse. Further, our Board has a good balance of experienced and new Directors, with more than half our incumbent Director nominees having tenures of six years or less.
| 2021 Proxy Statement 7 | ||||
| ELECTION OF DIRECTORS | ||
Our Director Nominees’ Combined Skills and Experience | ||
Consumer Industry/Retail | Directors with experience serving consumers, particularly in the areas of marketing and selling products or services to consumers, provide valuable insights to the Company. They understand consumer needs, recognize products and marketing campaigns that might resonate with consumers, and identify potential changes in consumer trends and buying habits. | |
Corporate Governance | Directors with experience in corporate governance, such as service on boards and board committees, or as governance executives of other large, public companies, are familiar with the dynamics and operation of a board of directors and the impact that governance policies have on the Company. This experience supports the Company’s goals of strong Board and management accountability, transparency, and protection of shareholder interests. | |
Digital, Technology, and Innovation | Directors with digital and technology experience help the Company understand the evolution of fast-paced technology, assess and respond to potential information security challenges, and improve efficiency and productivity through oversight of the selection and implementation of new technologies to enhance business operations, marketing, and selling. Additionally, innovation is one of the Company’s core strengths and is critical in helping us translate our consumer understanding into new and successful products. Directors with an understanding of innovation help the Company focus its efforts in this important area and track progress against strategic goals and benchmarks. | |
Finance | Directors with an understanding of accounting and financial reporting processes, particularly in large, global businesses, provide an important oversight role. The Company employs several financial targets to measure its performance, and accurate financial reporting is critical to the Company’s legal compliance and overall success. Directors with financial experience are essential for ensuring effective oversight of the Company’s financial measures and processes. | |
Government/Regulatory | Directors with government experience, whether as members of the government or through extensive interactions with government and government agencies, can recognize, identify, and understand the key issues the Company faces in an economy increasingly affected by the role of governments around the world. This experience is particularly helpful during current times of increased volatility and uncertainty in global politics and economics. | |
International | Directors who have worked in global companies have experience in markets outside of the United States and bring valuable knowledge to the Company, including exposure to different cultural perspectives and practices, and provide critical insight in light of the Company’s global scope and significant international revenues. | |
| 8 The Procter & Gamble Company | ||
| ELECTION OF DIRECTORS | ||
Leadership, Strategy, and Risk Management | Directors with significant leadership experience over an extended period, including as chief executive officers, provide the Company with special insights. These individuals demonstrate a practical understanding of how large organizations operate, the importance of talent management, and the method of setting employee and executive compensation. They understand strategy, productivity, and risk management, and how these factors impact the Company’s operations and controls. Further, their own significant leadership skills and experiences enable them to help identify and develop other leaders. | |
Marketing | Directors with experience identifying, developing, and marketing new products, as well as identifying new areas for existing products, can positively impact the Company’s operational results, including by helping the Company understand and anticipate evolving marketing practices. | |
| 2021 Proxy Statement 9 | ||||
| ELECTION OF DIRECTORS | ||
The Board of Directors recommends a vote FOR each of the following Director nominees to hold office until the 2022 annual meeting of shareholders and until their successors are elected.
B. Marc Allen
DIRECTOR SINCE FEBRUARY 2021 • AGE 48
Mr. Allen is Chief Strategy Officer and Senior Vice President of Strategy and Corporate Development at The Boeing Company (aerospace, commercial jetliners, and military defense systems), a position he has held since October 2020. He previously served as Senior Vice President and President, Embraer Partnership and Group Operations from April 2019 to October 2020 and as Senior Vice President and President, Boeing International from February 2015 to April 2019. Prior to these roles, Mr. Allen held several other senior positions at Boeing from 2007 to 2015, including responsibility for the operational and financial performance of Boeing’s wholly-owned customer finance subsidiary as President of Boeing Capital Corporation, responsibility for the company’s business in China as Chairman and President of Boeing (China) Co., Ltd., and leadership of the company’s international legal practice group as Vice President for Global Law Affairs and Boeing International General Counsel.
Mr. Allen brings a wealth of insight and practical expertise to the Board, including notable International experience gained from his leadership of significant international operations at Boeing. Further, his proven Leadership, Strategy, and Risk Management skills, developed over more than a decade of senior business and legal roles at Boeing, and most recently in his position as Chief Strategy Officer, allow Mr. Allen to provide thoughtful strategic counsel to the Company in matters as wide ranging as Financial oversight and Government/Regulatory affairs. In this regard, in addition to his tenure at Boeing, Mr. Allen draws upon his prior experience as a practicing attorney and as a law clerk for former U.S. Supreme Court Justice Anthony M. Kennedy.
Member of the Audit and Innovation & Technology Committees.
Angela F. Braly
DIRECTOR SINCE 2009 • AGE 60
Ms. Braly is the former Chair of the Board, President and Chief Executive Officer of WellPoint, Inc. (a healthcare insurance company), now known as Anthem, Inc. She served as Chair of the Board from 2010 to 2012 and as President and Chief Executive Officer from 2007 to 2012. She previously served as Executive Vice President, General Counsel, and Chief Public Affairs Officer of WellPoint from 2005 to 2007, and President and Chief Executive Officer of Blue Cross Blue Shield of Missouri from 2003 to 2005. Ms. Braly is also a co-founder of The Policy Circle, a nonprofit organization promoting civic engagement and public policy thought leadership among women. Ms. Braly has been a Director of Brookfield Asset Management since 2015 and of ExxonMobil Corporation since 2016. She was a Director of Lowe’s Companies, Inc. from 2013 to 2021.
Ms. Braly’s diverse Leadership, Strategy, and Risk Management experience at WellPoint enables her to provide valuable insight about risk management and governance matters, particularly as it pertains to the Consumer Industry/Retail sector, to the Board. Additionally, her role as General Counsel and Chief Public Affairs Officer for WellPoint, where she was responsible for the company’s government relations, public policy development, social responsibility, and corporate governance initiatives, her experience on other public company boards, and her ongoing engagement in public policy matters enable her to bring significant Corporate Governance expertise and Government/Regulatory skills to the Board, which is critical during current times of political and economic uncertainty.
Chair of the Governance & Public Responsibility Committee and member of the Audit Committee.
| 10 The Procter & Gamble Company | ||
| ELECTION OF DIRECTORS | ||
Amy L. Chang
DIRECTOR SINCE 2017 • AGE 44
Ms. Chang is a former Executive Vice President at Cisco Systems, Inc. (a networking technology company), where she served as Executive Vice President and Executive Advisor from 2020 to 2021 and as General Manager of Cisco’s Collaboration Technology Group from 2018 to 2020. She is the founder and former Chief Executive Officer of Accompany, Inc. (a relationship intelligence company), a position she held from 2013 to 2018.She previously held positions of increasing responsibility at Google, Inc. from 2005 to 2012, most recently serving as Global Head of Product, Google Ads Measurement and Reporting. Prior to joining Google, she held product management and strategy positions at eBay, Inc. and served as a consultant with McKinsey & Company, specializing in semi-conductors, software, and services. Ms. Chang has been a Director of The Walt Disney Company and of Marqeta (payment card issuing) since 2021. She was a Director of Cisco Systems, Inc. from 2016 to 2018, of Informatica from 2012 to 2015, and of Splunk, Inc. from 2015 to 2017, and was a member of Target Corporation’s Digital Advisory Council from 2013 to 2016. She also serves on the executive committee for USCF Health and on the Stanford School of Engineering Dean’s Advisory Council.
Ms. Chang’s extensive Digital, Technology, and Innovation and Marketing experience, both as a digital startup founder and as head of product at Google Analytics, enables her to provide unique and important insights to the Board about digital industry trends, evolving marketing practices and data analytics, with particular application to the Consumer Industry/Retail space. Additionally, as a former Cisco executive, with experience running a global team at an enterprise with a significant global footprint and supply chain, and as the founder and CEO of a digital startup company, Ms. Chang’s Leadership, Strategy, and Risk Management experience in a fast-paced environment gives her critical perspective on understanding consumers and driving innovation.
Member of the Audit and Innovation & Technology Committees.
Joseph Jimenez
DIRECTOR SINCE 2018 • AGE 61
Mr. Jimenez is Co-Founder and Managing Director of Aditum Bio (a biotech venture fund). He is the former Chief Executive Officer of Novartis AG (global healthcare company), a position he held from 2010 to 2018. Prior to this role, he held several senior positions at Novartis from 2007 to 2010, including Division Head, Novartis Pharmaceuticals, and leadership of the company’s Consumer Health Division. Mr. Jimenez was an Advisor to the Blackstone Group L.P. from 2006 to 2007. He also held various leadership roles at H. J. Heinz Company (packaged food) in Europe and North America from 1999 to 2006, including Executive Vice President, President, and CEO of Heinz Europe from 2002 to 2006 and President and CEO of H.J. Heinz Company North America from 1999 to 2002. Mr. Jimenez also held several leadership positions at ConAgra Foods (packaged food) from 1993 to 1998. Mr. Jimenez has been a Director of General Motors since 2015. He was a Director of Colgate-Palmolive from 2010 to 2015.
Mr. Jimenez has a strong track record of strategic Digital, Technology, and Innovation expertise, particularly in the healthcare business, one of the Company’s key sectors. He is recognized for his innovation pipeline development while serving as CEO of Novartis and brings to the Board deep skills and experiences in Leadership, Strategy, and Risk Management in both healthcare and the Consumer Industry/Retail segment more broadly. In addition, not only does Mr. Jimenez offer critical International perspective gained from his multiple leadership roles outside the United States, he provides the Board with unique perspective on adapting and innovating business models in a dynamic external environment. This extensive experience across the consumer products and healthcare industries enables him to meaningfully advise the Board and management on commercial, innovation, Marketing, and strategic issues.
Chair of the Innovation & Technology Committee and member of the Compensation & Leadership Development Committee.
| 2021 Proxy Statement 11 | ||||
| ELECTION OF DIRECTORS | ||
Christopher Kempczinski
DIRECTOR NOMINEE • AGE 52
Mr. Kempczinski is President and Chief Executive Officer of McDonald’s Corporation (restaurant operator and franchisor), a position he has held since 2019. He previously served as President, McDonald’s USA from 2017 to 2019 and as Executive Vice President – Strategy, Business Development and Innovation from 2015 to 2016. Before joining McDonald’s, Mr. Kempczinski held several leadership roles at The KraftHeinz Company (packaged food), including Executive Vice President of Growth Initiatives and President of Kraft International from 2014 to 2015; President of Kraft Canada from 2012 to 2014; and Senior Vice President – U.S. Grocery from 2008 to 2012. Mr. Kempczinski began his career in brand management at P&G and was also a strategy consultant at The Boston Consulting Group. He has served as a Director of McDonald’s since 2019.
Mr. Kempczinski’s considerable experience in Consumer Industry/Retail, as a leader in both the consumer packaged food and the dynamic quick-service restaurant industries, will enable him to bring relevant and actionable insights, including valuable Marketing and brand building perspective, to the Board. He has further demonstrated his skills in Digital, Technology, and Innovation in his leadership of global strategy and innovation at McDonald’s and key role in accelerating growth through innovation at the company. Further, Mr. Kempczinski’s recognized Leadership, Strategy, and Risk Management abilities have allowed him to guide McDonald’s through the dynamic operating challenges posed by the pandemic and will be highly valuable to the Board as it oversees the Company’s long-term growth and operating strategy.
Debra L. Lee
DIRECTOR SINCE 2020 • AGE 67
Ms. Lee is Chair of Leading Women Defined Foundation (a nonprofit education and advocacy organization), which she founded in 2009. Previously, she served as Chairman and Chief Executive Officer of BET Networks (a media and entertainment subsidiary of Viacom, Inc.) from 2006 to 2018. Ms. Lee joined BET Networks in 1986, serving as President and Chief Executive Officer from 2005 to 2006, President and Chief Operating Officer from 1995 to 2005, and Executive Vice President and General Counsel from 1986 to 1995. She has been a Director of Marriott International, Inc. since 2004 and of Burberry Group plc and AT&T, Inc. since 2019. She previously served as a Director of Revlon, Inc. from 2006 to 2015, WGL Holdings, Inc. from 2000 to 2018, and Twitter, Inc. from 2016 to 2019.
Ms. Lee brings a depth of Leadership, Strategy, and Risk Management experience to the Board, gained through her long-tenured leadership of BET Networks and her service on numerous public company boards. As a result of her experience and service, her depth and breadth of knowledge on matters of Corporate Governance allows her to provide the Board with valuable perspective on oversight and accountability in a dynamic operating environment. Further, Ms. Lee’s more than 30 years of experience as an executive in the media industry, along with her broad board experience, provide her with extensive Marketing and Consumer Industry/Retail skills, which are particularly valuable as the Company seeks to further evolve its media strategy.
Member of the Compensation & Leadership Development and Governance & Public Responsibility Committees.
| 12 The Procter & Gamble Company | ||
| ELECTION OF DIRECTORS | ||
Terry J. Lundgren
DIRECTOR SINCE 2013 • AGE 69
Mr. Lundgren is an Operating Partner of Long-Term Private Capital (a BlackRock private equity fund) and the former Chairman and Chief Executive Officer of Macy’s, Inc. (a national retailer that includes Macy’s, Bloomingdale’s, and Blue Mercury, and operates one of the largest online retail businesses in the U.S.), a position he held from 2003 to 2017. Mr. Lundgren then served as Executive Chairman and Chairman of the Board of Macy’s, Inc. from 2017 to 2018. From 2003 to 2014, he also held the title of President of the company. He was a Director of Kraft Foods Group from 2012 to 2015. Earlier in his career, Mr. Lundgren was Chairman and CEO of Neiman Marcus.
Mr. Lundgren has extensive Marketing experience, including merchandising, digital and in-store execution, as well as Leadership, Strategy, and Risk Management experience, which he garnered from over 35 years working in the retail Consumer Industry, including 20 combined years as CEO of Neiman Marcus and subsequently Macy’s. During his tenure at Macy’s, Mr. Lundgren also gained significant experience in acquisitions and integration. His extensive retail career enables him to contribute his deep knowledge of the evolving consumer and retail landscape, plus his broad experience with dynamic marketing practices, including digital marketing, to the Board.
Chair of the Compensation & Leadership Development Committee and member of the Innovation & Technology Committee.
Christine M. McCarthy
DIRECTOR SINCE 2019 • AGE 66
Ms. McCarthy is Senior Executive Vice President and Chief Financial Officer of The Walt Disney Company (a global entertainment company), a position she has held since 2015. Prior to her appointment as CFO, she held positions of increasing responsibility at Disney, serving as Executive Vice President, Corporate Real Estate, Alliances and Treasurer from 2005 to 2015, after joining Disney as Senior Vice President and Treasurer in 2000. Ms. McCarthy previously served as Executive Vice President and Chief Financial Officer of Imperial Bancorp from 1997 to 1999. From 1981 to 1996, she held various positions at First Interstate Bank, rising to be Executive Vice President, Finance in 1993.
Ms. McCarthy’s more than 30 years of experience in Finance, including service as CFO of The Walt Disney Company, enable her to contribute to the Board her extensive understanding of complex financial analysis and reporting for a global, consumer-facing company. In addition, her experience at Disney affords her valuable perspective on the Consumer Industry and long-term brand building. Further, Ms. McCarthy’s oversight of Disney’s worldwide finance organization, which includes corporate strategy, brand and franchise management, corporate alliances, enterprise controllership, enterprise social responsibility, enterprise technology, investor relations, risk management, tax, and treasury, provides her with extensive Leadership, Strategy, and Risk Management skills and valuable Corporate Governance experience.
Member of the Audit and Compensation & Leadership Development Committees
| 2021 Proxy Statement 13 | ||||
| ELECTION OF DIRECTORS | ||
Jon R. Moeller
DIRECTOR SINCE JULY 2021 • AGE 57
Mr. Moeller is Vice Chairman and Chief Operating Officer of the Company. In November 2021, he will assume the role of President and Chief Executive Officer. Mr. Moeller has been Vice Chairman and Chief Operating Officer since 2021 and previously served as Vice Chairman, Chief Operating Officer, and Chief Financial Officer from 2019 to 2021, as Vice Chairman and Chief Financial Officer from 2017 to 2019, and as Chief Financial Officer from 2009 to 2017. As the Company’s Chief Operating Officer, Mr. Moeller has responsibility for P&G’s Enterprise Markets, which include Latin America, India, the Middle East, Africa, Southeast Asia, and Eastern Europe. He also leads the Company’s Investor Relations, Information Technology, Global Business Services, Sales, Market Operations, Purchasing, Manufacturing, and Distribution efforts. Prior to his role as Chief Financial Officer, Mr. Moeller held leadership positions in various categories, sectors, and regions, including China, and has led significant merger and acquisition efforts in line with the Company’s portfolio optimization strategy. From 2011 to 2018, Mr. Moeller was a Director of Monsanto Company (agricultural products), where he chaired the Audit Committee.
Mr. Moeller has significant and recognized Financial expertise and extensive Leadership, Strategy, and Risk Management skills and experience, which he has built over his nearly 33 years with the Company. In that time, he has both developed and executed global strategy, served as a key member of senior management, and led numerous, complex transactions and initiatives. Mr. Moeller has also held leadership positions in many of the Company’s global categories, including Beauty Care, Health Care, and Feminine Care, affording him meaningful Consumer Industry/Retail understanding. His International work and responsibility, including oversight of the Company’s Enterprise Markets, complements this perspective, affording him critical insight on P&G’s operations and strategic efforts around the globe.
David S. Taylor
DIRECTOR SINCE 2015 • AGE 63
Mr. Taylor is Chairman of the Board, President and Chief Executive Officer of the Company. In November 2021, he will assume the role of Executive Chairman of the Board. He has been President and CEO since 2015 and was elected Chairman of the Board in 2016. Mr. Taylor joined the Company in 1980 and, since that time, has held numerous positions of increasing responsibility in North America, Europe, and Asia in virtually all of the Company’s core businesses. Prior to becoming CEO, Mr. Taylor’s roles included Group President-Global Beauty, Grooming & Health Care, Group President-Global Health & Grooming, Group President-Global Home Care, and President-Global Family Care. He also played a key role in the design of P&G’s portfolio optimization strategy and has been leading the company through a transformation since 2015. Mr. Taylor also serves as the Chairman of The Alliance to End Plastic Waste, an initiative to advance solutions to eliminate unmanaged plastic waste in the environment. Mr. Taylor has been a Director of Delta Airlines since 2019.
Mr. Taylor is a proven leader with more than 41 years of experience across many of P&G’s core categories, functions, and markets. Mr. Taylor has uniquely broad experience, having begun his career at P&G gaining more than a decade of valuable hands-on supply chain and operations experience, including a role as plant manager of the Company’s largest manufacturing facility. His subsequent transition to and more than twenty years of experience in marketing and general management roles provided Mr. Taylor with vast Marketing, Innovation and Consumer Industry/Retail expertise, and his assignments living in Asia and Europe, along with global management across the Company’s businesses, have given him an International perspective. All of these experiences, together with his significant Leadership, Strategy, and Risk Management skills and robust knowledge of the Company, enable him to provide valuable insight to and leadership of the Board and the Company.
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| ELECTION OF DIRECTORS | ||
Margaret C. Whitman (Meg)
DIRECTOR SINCE 2011 • AGE 65
Ms. Whitman is the former Chief Executive Officer of Quibi (mobile media), a position she held from 2018 to 2021. She was President and Chief Executive Officer of Hewlett Packard Enterprise (a multinational information technology enterprise) from 2015 to 2017 and Chief Executive Officer from 2017 to 2018. Prior to her role at Hewlett Packard Enterprise, she was President and Chief Executive Officer of Hewlett-Packard Company from 2011 to 2015, as well as Chairman of the Board from 2014 to 2015. She served as President and Chief Executive Officer of eBay Inc. from 1998 to 2008. Since 2021, Ms. Whitman has been a Director of General Motors and a Director of Lead Edge Growth Opportunities, Ltd. (a blank check company). She served as a Director of Dropbox from 2017 to 2020, Hewlett Packard Enterprise from 2015 to 2018, DXC Technology in 2017, and Zipcar, Inc. from 2011 to 2013 and as Chairman of the Board of HP Inc. from 2015 to 2017. Ms. Whitman also served as a Director of the Company from 2003 to 2008, having resigned in preparation for her 2010 California gubernatorial bid.
Ms. Whitman’s roles as CEO of Hewlett Packard Enterprise, Hewlett-Packard Company, and eBay provide her extensive Consumer Industry/Retail and Digital, Technology, and Innovation experience, enabling her to contribute valuable perspective to the Board in these areas. In addition, her service on numerous public company boards affords her practical knowledge and understanding of Corporate Governance. Ms. Whitman also uses her considerable Leadership, Strategy, and Risk Management experience gained through both her past management roles and her entrepreneurial work with start-up companies to provide the Board with significant insight into the Company’s priorities and strategic plans for growth.
Member of the Innovation & Technology Committee.
Patricia A. Woertz (Pat)
DIRECTOR SINCE 2008 • AGE 68
Ms. Woertz is the former Chairman of the Board and Chief Executive Officer of Archer Daniels Midland Company (“ADM”) (agricultural origination and processing), where she joined in 2006 as Chief Executive Officer and President and was named Chairman in 2007. Ms. Woertz retired as Chief Executive Officer of ADM in 2015 and as Chairman in 2016. Prior to joining ADM, Ms. Woertz was with Chevron Corp. for 29 years and retired as EVP Global Downstream. She began her career as a certified public accountant with Ernst & Ernst. Ms. Woertz has been a Director of 3M Company since 2016. She was a Director of Royal Dutch Shell plc from 2014 to 2017.
With broad executive experience at Chevron and ADM, including as CEO of ADM, and having started her career as a CPA, Ms. Woertz contributes a valuable mix of International and Marketing experience and Finance expertise, enabling her to provide critical perspective on operational and financial aspects of the Company, including accounting and corporate finance matters. Additionally, Ms. Woertz’s experience as an executive of public companies and a director on other public company boards provides her with significant Leadership, Strategy, and Risk Management skills and Corporate Governance experience from which she draws to provide a broad perspective on governance matters and issues facing public companies.
Chair of the Audit Committee and member of the Governance & Public Responsibility Committee.
| 2021 Proxy Statement 15 | ||||
| CORPORATE GOVERNANCE | ||
The Company’s Purpose, Values, and Principles (our PVPs) are the foundation of everything we do, including Corporate Governance. We believe that strong governance practices contribute to better results for shareholders. As described below, we maintain governance principles, policies, and practices that support Board and management accountability and serve the best interests of our Company, our shareholders, and other stakeholders.
Corporate Governance Overview
We have evaluated the Company’s governance practices against the Corporate Governance Principles published by the Investor Stewardship Group (“ISG”), a collective of some of the largest U.S.-based institutional investors and global asset managers, and found they were highly consistent. P&G’s strong corporate governance policies and practices are disclosed throughout this proxy statement, but the following table highlights some of the key ways that P&G’s governance practices are consistent with ISG’s Corporate Governance Principles. Overall, we believe our approach to governance strengthens the Board’s ability to provide meaningful oversight, review, and counsel to the Company, as it acts on behalf of all of our shareholders.
ISG Principles | P&G Practice | |
Principle 1 | ||
Boards are accountable to shareholders. | • Annual Board self-assessments • Declassified Board – all Directors elected annually • Proxy access for Director nominees • Individual Directors tender resignation if they fail to receive majority of votes cast • No poison pill • Extensive disclosure of corporate governance and Board practices | |
Principle 2 | ||
Shareholders should be entitled to voting rights in proportion to their economic interest. | • One share, one vote • No disparate voting rights | |
Principle 3 | ||
Boards should be responsive to shareholders and be proactive in order to understand their perspectives. | • Directors available for shareholder engagement • Shareholder outreach process • Disclose key actions taken in response to shareholder feedback, including shareholder votes on proposals at the annual meeting | |
Principle 4 | ||
Boards should have a strong, independent leadership structure. | • Annual review and determination of leadership structure • Independent Lead Director if Chairman not independent • Lead Director has robust role and significant duties | |
Principle 5 | ||
Boards should adopt structures and practices that enhance their effectiveness. | • 10 of 12 Director nominees are independent • All 4 Committees fully independent • Approximately 98% average attendance by incumbent Directors at Board and Committee meetings in FY 2020-21 • Specified retirement age and term limits for Directors | |
Principle 6 | ||
Boards should develop management incentive structures that are aligned with the long-term strategy of the company. | • Board oversees executive compensation programs to align with long-term strategy of the Company • Combination of short- and long-term performance goals • Executive share ownership program and equity holding requirements | |
| 16 The Procter & Gamble Company | ||
| CORPORATE GOVERNANCE | ||
Shareholder Engagement
We value our relationships with all of our shareholders. Engagement with shareholders builds mutual understanding and a basis for progress, and the input we receive from them impacts and informs our corporate practices. In general, we approach shareholder engagement through a cycle of:
Outreach and Engagement
Senior management, our investor relations team, and subject matter experts from the Company maintain a year-round dialogue with investors to gain their perspectives on current issues and address any questions or concerns, and we make our Directors available for engagement with shareholders when appropriate. These engagements cover a variety of topics, including corporate strategy, risk oversight, corporate governance, sustainability practices, executive compensation, and human capital.
Review and Evaluation
We assess the feedback we receive from investors and share it with senior management and the Board. We also discuss key aspects with the appropriate Board Committee, reviewing, for example, compensation-related comments and questions with the C&LD Committee and input regarding corporate governance or environmental sustainability matters with the G&PR Committee.
Updates and Action
We consider feedback received as we update our policies, practices, and disclosures. For example, in direct response to feedback we received, this year we launched an ESG for Investors site on our investor relations website, making relevant ESG data and information available to investors and other stakeholders in a single location with updates that complement the highlights and impacts detailed in our annual Citizenship Report.
We will continue our shareholder engagement during FY 2021-22, including participation at analyst meetings and conferences. The Company’s top 100 institutional shareholders collectively own over 50% of the Company’s outstanding shares of common stock, and we generally focus our proactive shareholder outreach efforts on these shareholders. We conduct meetings with institutional shareholders in person, via telephone calls, and one-on-one at conferences throughout the year. We also routinely respond to individual shareholders and other stakeholders who provide feedback about our business.
We remain committed to these ongoing discussions and welcome feedback from all shareholders, who can reach our Investor Relations team by calling (513) 945-6941 or visiting www.pginvestor.com or contact our Directors or executive officers as described on page 29.
The Board’s Leadership Structure
The Company’s Board retains discretion to determine whether the same individual should serve as both Chief Executive Officer (“CEO”) and Chairman of the Board or whether the roles should be separated. This approach allows the Board to use its considerable experience and knowledge to elect the most qualified Director as Chairman of the Board, while maintaining the ability to separate the Chairman of the Board and CEO roles when appropriate, as the roles have been in previous periods.
The Board regularly considers this discretionary structure and whether to combine or separate the roles, depending on which leadership structure best serves the Company and its shareholders. The Board believes this discretion, including the flexibility to make this determination at any given point, best enables it to promote the long-term interests of the Company and its shareholders.
During its annual evaluation of its leadership structure in June, the Board was also considering plans to carry out the upcoming CEO succession. Upon recommendation of the G&PR Committee, the non-employee Directors of the Board concluded that the Board should retain its current combined Chairman and CEO leadership structure for the remainder of Mr. Taylor’s tenure as CEO. The Board believes that this combined structure allows Mr. Taylor to provide critical leadership and focus during this important transition period.
In July, when the Board elected Mr. Moeller to the role of President and Chief Executive Officer, effective November 1, 2021, the Board determined it was in the best interests of the Company and its shareholders to separate the roles of CEO and Chairman effective as of that same date. Accordingly, the non-employee Directors elected Mr. Taylor
| 2021 Proxy Statement 17 | ||||
| CORPORATE GOVERNANCE | ||
Executive Chairman of the Board, effective November 1, 2021. This action continues the Company’s past practice of retaining a prior CEO as the Chairman for a transition period. Splitting the roles for this time allows Mr. Taylor to provide important continuity of Board leadership and strategic oversight, while Mr. Moeller can focus on transitioning into his role as the Company’s new CEO, executing the Company’s strategies, and managing the global organization. As CEO, Mr. Moeller will report to the Board and, given his appointment as a Director, will attend all Board meetings. The Board believes that Mr. Taylor and Mr. Moeller, who have worked collaboratively for several years, will continue to work collaboratively with the Board through this CEO transition. The Board retains its discretion to combine the Chairman and CEO roles in the future, depending on which leadership structure best serves the long-term interests of the Company and its shareholders at that time.
Lead Independent Director
When the Board determines that the same individual should hold the positions of CEO and Chairman of the Board or if the Chairman of the Board is not independent, the independent Directors of the Board elect for an annual term a Lead Director from among the independent Directors. The Lead Director role is significant, with responsibilities consistent with accepted best practices, including:
Mr. McNerney, who, in keeping with the Director term limits in the Company’s Corporate Governance Guidelines, is not standing for re-election when his term expires at the annual meeting of shareholders in October, serves as the Board’s current Lead Director and has been re-elected annually to that role since 2007. Mr. McNerney is a strong, independent Lead Director, who fulfilled each of the above duties during the past year. In FY2020-21, the non-employee Directors, led by Mr. McNerney, met seven times in regularly scheduled executive sessions (without the presence of Mr. Taylor or other employees of the Company) to discuss various matters related to the oversight of the Company, the management of Board affairs, succession planning for the Company’s top management, and the CEO’s performance. Mr. McNerney fosters an open and constructive dialogue among the independent Directors, and after each executive session, Mr. McNerney advises Mr. Taylor on the independent Directors’ discussions, including performance feedback, and follows up on meeting outcomes and deliverables.
In conjunction with the Board’s decision to maintain the combined Chairman and CEO role through the remainder of Mr. Taylor’s term as CEO, the non-employee Directors determined that Mr. McNerney should continue to serve as Lead Director through the conclusion of his term at the annual meeting of shareholders in October. As with its decision to maintain the combined Chairman and CEO until Mr. Taylor transitions into the role of Executive Chairman, at which time the roles will be separated, the Board believes that Mr. Taylor and Mr. McNerney will continue to work well together and provide consistent leadership ahead of the transition.
| 18 The Procter & Gamble Company | ||
| CORPORATE GOVERNANCE | ||
In anticipation of Mr. McNerney not standing for re-election, upon recommendation of the G&PR Committee, the non-employee Directors appointed Mr. Jimenez to serve as Lead Director for the remainder of FY2021-22, effective immediately following the conclusion of the annual meeting of shareholders. Mr. Jimenez is an experienced executive and Director, having served as CEO of Novartis AG, in leadership positions with H.J. Heinz Company and ConAgra Foods, and as a Director of General Motors. He is recognized for his innovation and leadership skills and has provided important insight and guidance to the Company and the Board during his tenure as a Director. The Board is confident that Mr. Jimenez, as Lead Director, will work in close partnership with Mr. Taylor, as Executive Chairman, and Mr. Moeller, as CEO, to ensure a successful CEO transition, strong and independent oversight of ongoing Board matters, and effective collaboration among the Directors. The Board will continue to periodically evaluate its leadership structure.
Board Evaluation
In addition to regularly reviewing its leadership structure, the Board conducts an annual self-assessment of its overall functioning and effectiveness. In order to maximize input and facilitate useful feedback, the Company’s Chief Legal Officer conducts candid, one-on-one interviews with each Director. This feedback includes comments on overall Board performance, Board priorities, interaction with management, Board discussion topics, agendas, and processes, and how to further improve overall Board functioning. The results of these interviews are aggregated and anonymized and then shared with the full Board for review, discussion, and appropriate action.
The Board addresses items raised both through this formal evaluation process and through informal feedback as warranted. For example, this year, Directors continued to prioritize the need for flexible and responsive meeting agendas that allowed the Board to interact efficiently with management on key strategic topics relevant to the business in the dynamic external environment. Similarly, the Board made ongoing adjustments and improvements to its virtual Board and Committee meetings throughout the year to help ensure efficient and effective interaction and performance of its critical governance and risk oversight roles. Finally, if during the evaluation process, any issue with regard to an individual Director is identified, the Chairman or Lead Director will address such issue with the individual Director.
Director Independence
The Board has determined that all of the Company’s Directors,Director nominees, with the exception of Mr. Taylor and Mr. Moeller, are independent under NYSE’s listing standards and the Independence Guidelines. All members of the Board’s Audit, Compensation & Leadership Development, Governance & Public Responsibility, and Innovation & Technology Committees are independent under the NYSE listing standards and Independence Guidelines, and allGuidelines. All members of the Audit Committee and C&LD Committee are also compliant with the SEC enhanced independence requirementrequirements for audit committee members.members and compensation committee members respectively. The Board of Directors has determined that Ms. Woertz and Mr. ChenaultMs. McCarthy meet the criteria for “Audit Committee Financial Expert” as defined by SEC rules. The Board of Directors has also determined that all Audit Committee members are financially literate.
In making these independence determinations, the Board applied the NYSE listing standards and the categorical independence standards contained in the Board of Directors’ Guidelines for Determining the Independence of its Members (the “Independence Guidelines”). Under the Independence Guidelines, certain relationships were considered immaterial and, therefore, were not considered by the Board in determining independence, but were reported to the Chair of the G&PR Committee. Applying the NYSE listing standards and the Independence Guidelines, the Board determined that there are no transactions, relationships, or arrangements that would impair the independence or judgment of any of the DirectorsDirector nominees deemed independent by the Board.
As part of its independence determinations, the G&PR Committee and the Board reviewed the Company’s relationship with FC Cincinnati (a Major League Soccer club). Ms. Whitman is an investor in FC Cincinnati. The Company’s transactions with FC Cincinnati during FY 2020-21 are described on page 28. The Committee and Board considered that the Company’s relationship with FC Cincinnati was initiated in the normal course of business prior to Ms. Whitman’s investment in the club, that Ms. Whitman has not been involved in the negotiation of the Company’s agreements with the club, and that the Company’s spending commitments to FC Cincinnati are modest. Ultimately, the Committee and the Board concluded that Ms. Whitman remains independent under both the NYSE listing standards and the Company’s Independence Guidelines.
| 2021 Proxy Statement 19 | ||||
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Mr. Taylor is Chairman of the Board, President and CEO of the Company. Mr. Moeller is the Company’s Vice Chairman and Chief Operating Officer. As an employeeemployees of the Company, hethey cannot be deemed independent under the NYSE listing standards or the Independence Guidelines.
Service on Other Public Boards
The Board believes that service on the boards of other public companies provides valuable governance and leadership experience that ultimately benefits the Company. The Board also recognizes that outside public board service requires a significant commitment of time and attention, and therefore, in accordance with best governance practices, limits Director participation on other public boards. Under the Corporate Governance Guidelines, Directors who are active CEOs of other public companies may sit on no more than two additional outside public boards (including his/her own company board), and other non-employee Directors may sit on no more than three additional outside public boards. The Board must approve any exception. This practice helps ensure that our Directors can give appropriate time and attention to the affairs of the Company. In addition, when nominating a Director for service on the Board, the G&PR Committee considers whether the nominee will have adequate time to serve as a Director of the Company. We expect each Director to demonstrate their strong engagement and high attendance and to have adequate time to devote to the affairs of the Company.
Board Meetings and Committees of the Board
Our Directors aretake seriously their commitment to active oversight, meaningful engagement, and engaged. Board agendas are set in advance byeffective stewardship of the long-term interests of the Company and its shareholders. The Chairman of the Board and Lead Director set Board agendas in advance to ensure that appropriate subjects are covered and that there is sufficientwith time for meaningful discussion. Committee Chairs also work closely with management to set agendas for Committee meetings, to ensureensuring that each Committee reviews relevant subjects are reviewed by the Committees.in a timely and meaningful manner. Directors are provided withreceive comprehensive materials in advance of Board and Committee meetings and are expected to review these materials before each meeting to ensure that time in Board and Committee meetings ismeeting. This process allows for focused, on active discussions versusduring meetings, instead of lengthy, passive presentations.
During the fiscal year ended June 30, 2018,2021, the Board held 13seven meetings, and the Committees of the Board collectively held 2622 meetings, for a total of 3929 meetings. Average attendance at these meetings by Directors during the past year was 96.5%, and all DirectorsEach incumbent Director attended greatermore than 75% of the aggregate meetings of the Board and the Committees on which they serve.served, with average attendance of about 98% among incumbent Directors. The Board expects all Directors to attend the annual meeting of shareholders;shareholders, and all Directors with the exception of Joseph Jimenez, who joined the Board in March 2018,then serving attended the October 10, 201713, 2020 annual meeting. Nelson Peltz attended the 2017 annual meeting in his role as a shareholder of the Company.
To assist the Board in discharging its duties and to facilitate deeper penetration into certain key areas of oversight, the Board has established four standing committees. Each committee is fully independent under the NYSE
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| 20 The Procter & Gamble Company | ||
| CORPORATE GOVERNANCE | ||
listing standardsThe table below shows the current membership of each Committee of the Board and the Independence Guidelines, which can be found atwww.pg.com.number of meetings each Committee held during the fiscal year ended June 30, 2021. The charterBoard will determine Committee assignments for each of these committees can be found in the corporate governance section of the Company’s website atwww.pg.com.Mr. Kempczinski upon his election.
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B. Marc Allen |
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Joseph Jimenez | ● |
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Debra L. Lee | ● | ● | ● | |||||||||||||
Terry J. Lundgren | ● | Chair | ● | |||||||||||||
Christine M. McCarthy | ● | ● | ● | |||||||||||||
W. James McNerney, Jr.† | Lead | ● | ● | |||||||||||||
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Nelson Peltz† |
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Margaret C. Whitman | ● | ● | ||||||||||||||
Patricia A. Woertz | ● | Chair | ● | |||||||||||||
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†Messrs. Blake, McNerney, and Peltz are not standing for re-election and are each concluding multiple years of significant service to the Company and its shareholders when their current terms expire at the 2021 annual meeting.
* Effective August 15, 2018.To assist the Board in discharging its duties and to facilitate deeper understanding and engagement in certain key areas of oversight, the Board has established four standing Committees. Each Committee is fully independent under the NYSE listing standards and the Independence Guidelines, which can be found at www.pg.com. Each Committee has a charter that sets out its primary purposes, duties, and responsibilities. These charters can be found in the corporate governance section of the Company’s website at www.pg.com.
Audit Committee
TheAudit Committee has primary responsibility for assisting the responsibilities set forthBoard in its charter with respect to:oversight of:
accounting,Accounting, financial reporting and disclosure processes, and adequacy of systems of disclosure and internal controlcontrols established by management;management
theThe quality and integrity of the Company’s financial statements;statements
theThe Company’s compliance with legal and regulatory requirements;requirements
theThe Company’s overall risk management profile, including with respect to information security;security
theThe independent registered public accounting firm’sauditor’s qualifications and independence;independence
theThe performance of the Company’s internal audit function and the independent registered public accounting firm;auditor
theThe performance of the Company’s ethics and compliance function; andfunction
preparingThe Audit Committee also prepares the annual Report of the Audit Committee to be included in the Company’s proxy statement.
At each meeting, representatives of Deloitte & Touche LLP, the Company’s independent registered public accounting firm, and financialfinance management were present to review accounting, control, auditing, and financial reporting matters. During certain of these meetings, the Audit Committee also held private sessions with the Company’s CEO, CFO, Chief Legal Officer,CLO, COO, Chief Ethics & Compliance Officer, chief audit executive,Chief Audit Executive, and representatives of Deloitte & Touche LLP.
| 2021 Proxy Statement 21 | ||||
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Compensation & Leadership Development Committee
TheC&LD Committee has a charter, under which::
the Committee has full authority and responsibility forOversees the Company’s overall compensation practices, principles, and policies, including base pay, short- and long-term incentive pay, retirement benefits, perquisites, severance arrangements, recoupment policies, stock ownership requirements,guidelines, and stock option holding requirements, if any, and their specific application to principal officers elected by the Board and to Directors; andnon-employee Directors
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the Committee assistsAssists the Board in its oversight of the development, implementation, and effectiveness of the Company’s policies and strategies related to its human capital management, including matters related to diversity, equality, and inclusion, and talent management
Assists the Board in leadership development, succession planning, and evaluation ofcontinuity planning for principal officers and also has the responsibility to periodically review organizational diversity.
The CEO makes recommendations to the C&LD Committee regarding the compensation elements of the principal officers (other than his own compensation) based on Company performance, individual performance, and input from Company management and the Committee’s independent compensation consultant. AllThe C&LD Committee makes all final decisions regarding compensation for principal officers are made by the C&LD Committee, and the C&LD Committee makes a recommendation to the Board regarding the shareholder votes related to executive compensation. For more details regarding principal officer compensation or the C&LD Committee’s process for making decisions regarding the compensation of principal officers, please see the Compensation Discussion & Analysis section found beginning on page 30of34of this proxy statement. The C&LD Committee retains an independent compensation consultant, hired directly by the Committee, to advise it regarding executive compensation matters.
Governance & Public Responsibility Committee
TheG&PR Committee has governance responsibilities set forth in its charter with respect to:primary responsibility for:
identifyingIdentifying individuals qualified to become Directors;Directors
recommendingRecommending when new members should be added to the Board and individuals to fill vacant Board positions;positions
recommendingRecommending to the Board the Director nominees for the next annual meeting of shareholders and whether to accept the resignation of any incumbent Director nominee who received a greater number of “against” votes than “for” votes in anon-contested election;election
recommendingRecommending Board committeesCommittees and committee assignments;Committee assignments, including assignments and succession planning for Committee Chairs
periodicallyPeriodically reviewing and recommending updates to the Corporate Governance Guidelines;Guidelines
educatingEducating the Board and the Company inon applicable governance laws and regulations;regulations
assistingAssisting the Board and the Company in interpreting and applying the Corporate Governance Guidelines and other issues related to Board governance; andgovernance
evaluatingEvaluating the Board and the Directors.Directors
TheG&PR Committee also coversoversees the Company’s strategies and work related to its public responsibility, topics, including:
overseeingOverseeing the Company’s commitment to making a meaningful impact around the world through the Company’s Citizenship efforts in the areas of social investments and environmental sustainability, by reviewing strategies and plans for improving lives in ways that enable people to thrive and that increase their quality of living;living
overseeingOverseeing the Company’s community and government relations;relations
overseeingOverseeing the Company’s product quality and quality assurance systems;systems
overseeingOverseeing protection of the Company’s corporate reputation;reputation and
other matters of importance to the Company and its stakeholders (including employees, consumers, customers, suppliers, shareholders, governments, local communities, and the general public).
| 22 The Procter & Gamble Company | ||
| CORPORATE GOVERNANCE | ||
Innovation & Technology Committee
TheI&T Committee has the responsibilities set forth in its charter with respect to reviewingreviews and makingmakes recommendations to the Board on major strategies for technical and commercial innovation to increase shareholder value and other subjects relating to:has responsibility for:
overseeingOverseeing the Company’s approach to technical and commercial innovation;innovation
overseeingOverseeing the innovation, technology development, and acquisition process to assure ongoing business growth; andgrowth
overseeingOverseeing development of measurement and tracking systems that are important to successful product and commercial innovation.innovation
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The I&T Committee reviews annually:
productProduct and package performance via a holistic product assessment;assessment
historicalHistorical tracking of initiatives vs.versus targets, and the impact of initiatives on brand growth; andgrowth
theThe Company’s forward-looking innovation portfolio.portfolio
The Board’s Oversight of Risk
The Company’s senior management has the responsibility to develop and implement the Company’s strategic plans and to identify, evaluate, manage, and mitigate the risks inherent in those plans. It is the responsibility of the Board to understandoversee the development and overseeexecution of the Company’s strategic plans and to understand the associated risks and the steps that senior management is taking to manage and mitigate those risks. The Board takes an active approach to its role in overseeing the development and execution of the Company’s business strategies as well as its risk oversight role.
This approach is bolstered by the Board’s leadership and committeeCommittee structure, which ensures proper considerationthe full Board properly considers and evaluation ofevaluates potential enterprise risks by the full Board under the auspices of the Chairman of the Board and Lead Director, and further considerationconsiders and evaluation ofevaluates certain risks at the committeeCommittee level.
In addition, the Board has delegated certain risk management oversight responsibilities to specific Board Committees, each of which reports regularly to the full Board. In performing these oversight responsibilities, each Committee has full access to management, as well as the ability to engage independent advisors. Additionally, each Committee ensures that management has developed sufficient plans to mitigate the risks identified. In general, the Committees oversee:
Audit Committee | Governance & Public Responsibility Committee | Compensation & Leadership Development Committee | Innovation & Technology Committee | |||
Oversees the Company’s overall risk management process, focusing on accounting and financial controls, financial statement integrity, information security, cybersecurity, legal and regulatory compliance, tax policy and compliance, business continuity planning, and ethics and compliance programs, and routinely discusses the Company’s risk profile, risk management, and exposure with management, internal auditors, and our independent registered public accounting firm. | Reviews risks related to the Company’s corporate governance structure and processes, including Director qualifications, Board and Committee succession planning, and independence, as well as risks related to product quality, public policy, social issues, environmental sustainability, and the Company’s reputation. | Reviews risks related to the development of and succession planning for the Company’s executive officers, risks associated with the Company’s equality and inclusion practices and policies, and risks associated with the Company’s compensation policies and practices, as discussed further below under “Compensation-Related Risk.” | Reviews risks related to emerging technologies, the changing media landscape, the Company’s integration of new technology, ingredient safety, and our overall innovation strategy. | |||
| 2021 Proxy Statement 23 | ||||
| CORPORATE GOVERNANCE | ||
As part of its strategic risk management oversight, the full Board conductsand its Committees conduct a number of reviews throughout the year to ensure that the Company’s strategy and risk management is appropriate and prudent, including:
Direct discussions with the Chairman and CEO, in semi-executive sessions held at sevensix Board meetings, about the state of the business.
Reviews of the strategic plans and results for the Company’s business sectorsand Enterprise Markets, including the risks associated with these strategic plans, at Board meetings during the year.
ReviewsOngoing Audit Committee updates from senior management on cybersecurity activities and programs, including an at least annual briefing by the Chief Information Officer on the Company’s cybersecurity risk management program, which continually analyzes emerging cybersecurity threats, and updates on the Company’s plans and strategies to address them.
Annual review of the conclusionsCompany’s key legal and recommendations generated by management’s enterprise risk management process. This process involves a cross-functional groupcompliance risks, including mitigation strategies and compliance priorities.
The Company’s Enterprise Risk Management Program
Throughout the year, members of a cross-functional team within the Company conduct extensive interviews of numerous Company experts, leaders, and specialists across functions, geographies, and levels. This team seeks to identify, on a continual basis, the most pressing current and future potential risks facing the Company, partnering withCompany. Led by experienced risk and compliance professionals in Global Internal Audit, these risks are analyzed and reported to relevant business and governance leaders within the Company, who partner to develop plans and other governance organizations on actionsstrategies to appropriately manage and mitigate those potentialthese risks. In conjunctionAnnually, the full Board discusses with senior management the most significant risks identified in the ERM process, providing input on the steps taken to mitigate each risk and plans for additional mitigation in the year ahead.
Succession Planning
Ensuring that the Company has skilled, seasoned leaders in its executive ranks and talent pipeline is a critical aspect of the Company’s enterprise risk management process, management also maintains an informationlong-term strategy and operational technology risk management program, which analyzes emerging cybersecurity threats as well assuccess. Underscoring this importance, the Board, with assistance from the C&LD Committee, directly oversees succession planning for all executive officers, including the CEO. To support its oversight and planning, the Board, in both regular and executive sessions, reviews and discusses the performance of and development plans for the Company’s planssenior executives. The Board also interacts with these executives as part of Board business and strategies to address them.
In addition, the Board has delegated certain riskfunctional reviews and in regularly scheduled one-on-one meetings, helping ensure that our Directors are familiar with not only these individuals’ business results but also their broader leadership, management, oversight responsibilities to specific Board committees, each of which reports regularlyand personal skills.
Leading up to the full Board.recently announced CEO transition, the Directors completed extensive assessments of each candidate through one-on-one and group meetings with each candidate and engaged an external consultant to compile detailed feedback and 360° assessments to help inform the discussion. The AuditBoard conducted a thorough review process over the course of many regular and special meetings and executive sessions prior to making its decision.
In order to ensure a strong pipeline for future succession, the C&LD Committee managesalso conducts regular reviews of the Company’s overall risk management process, with a focus on accountinghighly rated more junior executives across business units and financial controls, financial statement integrity, information security, cybersecurity, legal and regulatory compliance, tax policy and compliance, business continuity planning and ethics and compliance programs, and routinely discussesfunctions to ensure that appropriate development plans are in place for the Company’s risk profile, risk management, and exposure with management, internal auditors, and our independent registered public accounting firm. The Compensation & Leadership Development Committee reviews risks related to the development and succession planningnext generation of our executive officers as well as risks associated with the Company’s compensation policies and practices, as discussed further below under “Compensation-Related Risk.” The Governance & Public Responsibility Committee considers risks related to the Company’s corporate governance structure and processes, including Director qualifications, succession planning, and independence, as well as risks related to product quality, public policy, social issues, environmental sustainability, and the Company’s reputation. Finally, the Innovation & Technology Committee reviews risks related to emerging technologies, the changing media landscape, the Company’s integration of new technology, ingredient safety, and our overall innovation strategy. In performing these oversight responsibilities, each committee has full access to management, as well as the ability to engage independent advisors.leadership.
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| 24 The Procter & Gamble Company | ||
| CORPORATE GOVERNANCE | ||
Compensation-Related Risk
As part of its risk oversight responsibilities, the C&LD Committee annually reviews the Company’s compensation policies and practices. TheIn fiscal 2020-21, the C&LD Committee employsemployed an independent compensation consultant, Frederic W. Cook & Co., Inc., whowhich does not work for management and, among other tasks, reviewsreviewed and reportsreported on all of the Company’s executive compensation programs, including the potential risks and other impacts of incentives created by the programs. For more details on the arrangement with Frederic W. Cook & Co., Inc., please see the section entitled “Engagement“Role of Independent Advisor”Compensation Consultants” found on page 4250 of this proxy statement.
The independent compensation consultant’s review included an analysis of the Company’s short-, medium-, and long-term compensation programs covering key program details, performance factors for each program, target award ranges, maximum funding levels, and plan administrative oversight and control requirements. Key program elements assessed relating to potential compensation risks were pay mix, performance metrics, performance goals and payout curves, payment timing and adjustments, severance packages, equity incentives, stock ownership requirements, prohibitions on hedging and pledging, and trading policies. Members of management also performed a similar reviewrisk assessment of the Company’s other compensation programs including maximum program spending,incentive programs from acquisitions, cost of programs, design elements, payment authorizations, and overall confirmation that plans do not encourage excessive risk-taking. The results of the consultant’s analysis of the Company’s executive compensation programs, as well as management’s review of the Company’s other compensation programs, were shared with the C&LD Committee, which concluded that the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on the Company.
In reaching its conclusion, the C&LD Committee noted that the Company’s compensation programs include a mix of cash and equity, as well as annual, medium-term, and long-term incentives. This mix of compensation, the design features of these programs, and the Company’s respective oversight and control requirements mitigate the potential of any individual inclination toward taking unnecessary risks. The C&LD Committee also acknowledged various other features of the Company’s compensation programs, policies, and practices designed to mitigate unwarranted risk. For example, the Company’s annual cash bonus program, STAR, provides the C&LD Committee with discretion to reduce or eliminate any award that would otherwise be payable. In addition, the performance metrics under STAR include both quantitative measures (e.g.,top-line growth, bottom-line profits, free cash flow, etc.) and qualitative measures (e.g., relative performance, strategic strength, innovation,internal controls, etc.). Thesenon-metric features mitigate the risk of an executive focusing too much on the specific financial metrics under STAR. Moreover, the performance metrics associated with the STAR Company Factor (core earnings per share growth and organic sales growth) are aligned with the Company’s business plans and strategic objectives.
Further, the C&LD Committee recognized that the Company’s longer-term incentives include a balanced portfolio of stock options, restricted stock units, and performance-vestedperformance stock (under Performance Stock Program, or PSP).units. These longer-term incentives incorporate a variety of payout horizons that focus executives on long-term performance:10-year terms with three-year cliff vestingcliff-vesting for stock options, three-year cliff vestingcliff-vesting for restricted stock units, and a three-year performance period for performance-vested stock.performance stock units granted under the Performance Stock Program, or PSP. The C&LD Committee also noted that the design of the PSP reduces the likelihood that an executive will focus too much on a single performance measure by including four different performance categories with weightings of 20% or 30% each to provide a balanced risk profile. The categories areare: organic sales growth relative to competitive peers, constant currency corebefore-tax operating profit growth, core earnings per share growth, and free cash flow productivity. In addition, actual performance against goals with respect to each of these performance measures will yield a payout from a minimum of 0% to a maximum of 200% of a senior executive’s target incentive opportunity. UsingWe believe that using this sliding scale approach, versus anall-or-nothing approach, discourages participants from taking unnecessary risks. Furthermore, the PSP also includes a relative Total Shareholder Return Multiplier to ensure further alignment with shareholder interests. Each of the financial measures is defined and further explained on page 4045 of this proxy statement. Additionally, the C&LD Committee noted the updated performance measures for the upcoming program now include a relative TSR measure to further ensure executive pay is aligned with winning in the marketplace.
Finally, the C&LD Committee acknowledged that the Company has established a global compensation and benefits policy review board to authorize any new plans and monitor existing plans as well as maintainingmaintains several policies intended to mitigate inappropriate risk taking,risk-taking, including stock ownership guidelines for senior executives, a recoupment policy that can be applied in the event of any significant financial restatement, and an insider trading policy that prohibits margin and hedging transactions by senior executives.
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Service on Other Public Boards
The Board believes that service on the boards of other public companies provides valuable governance and leadership experience that ultimately benefits the Company. The Board also recognizes that outside public board service requires a significant commitment of time and attention, and therefore, in accordance with best governance practices, limits Director participation on other public boards. Under the Corporate Governance Guidelines, Directors who are active CEOs of other public companies may sit on no more than two additional outside public boards (including his/her own company board), and othernon-employee Directors may sit on no more than three additional outside public boards; any exception must be approved by the Board. This practice helps ensure that our Directors can give appropriate levels of time and attention to the affairs of the Company. In addition, when nominating a Director for service on the Board, the G&PR Committee considers whether the nominee will have adequate time to serve as a Director of the Company. Each Director demonstrates their strong engagement and high attendance and has adequate time to devote to the affairs of the Company.
Code of Ethics
The Company has a code of ethics for its Directors, officers, and employees. The most recent version of this code of ethics is contained in the Worldwide Business Conduct Manual. The Worldwide Business Conduct Manual is reviewed each year for appropriate updates, and employees, officers, and Directors are asked to annually certify their understanding of, and compliance with, its requirements. Only the Board may grant a waiver of any provision for a Director or executive officer, and any such waiver, or any amendment to the manual, will be promptly disclosed as required atwww.pg.com. The Worldwide Business Conduct Manual, which is firmly rooted in the Company’s long-standing Purpose, Values and Principles, is made available to employees in 28 different languages and can be found on the Company’s website atwww.pg.com.
Corporate Citizenship
P&G is committed to being a good corporate citizen and doing the right thing. We are known as a company that is governed responsibly and behaves ethically, that is open and transparent in its business dealings, that makes a positive social impact and protects the environment, and that provides a work environment where our employees are treated well and are given the opportunity to be all they can be. By growing the Company responsibly, we earn the trust on which our business is based, and we build the relationships on which our future depends.
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P&G’s Corporate Citizenship comes to life through five focus areas: Ethics & Corporate Responsibility, Community Impact, Diversity & Inclusion, Gender Equality, and Environmental Sustainability.
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You can find more details about our work in each of these Corporate Citizenship areas in our 2017 Citizenship Report, which is available athttps://us.pg.com/who-we-are/citizenship/2017-citizenship-report.
Shareholder Engagement
We value our relationships with all of our shareholders. Engagement with shareholders builds mutual understanding and a basis for progress, and the input we receive from them significantly impacts our corporate governance practices. Senior management, our investor relations team, and subject matter experts from the Company maintain a year-round dialogue with investors to gain their perspectives on current issues and address any questions or concerns, and we make our Directors available for engagement with shareholders when appropriate. The Company’s top 100 institutional shareholders collectively own nearly 50% of the Company’s outstanding shares of common stock, and we generally focus our proactive shareholder outreach efforts on these shareholders. We conduct meetings with institutional shareholders in person, via telephone calls, andone-on-one at conferences throughout the year. We also routinely respond to individual shareholders and other stakeholders who provide feedback about our business.
In addition to input on current corporate governance and executive compensation topics specific to P&G, we invite dialogue about any other topics or trends shareholders may wish to discuss. The Board considers feedback from these conversations during its deliberations, and our engagement activities have produced valuable feedback that informs our decisions and our strategy. For example, as a result of our shareholder engagement in recent years, P&G took the following actions:
Revised disclosure in our proxy statement to clarify how P&G’s share repurchase impacts the EPS calculation (see page 36).
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Added two new Directors, Joseph Jimenez and Nelson Peltz.
Modified the Performance Stock Program to include relative sales growth metrics and a total shareholder return modifier to ensure executive compensation awards reflect performance versus external competitive benchmarks.
Proactively adopted a proxy access right for shareholders.
We will continue our shareholder engagement during FY2018-19, including our normal participation at analyst meetings and conferences. We remain committed to these ongoing discussions and welcome feedback from all shareholders, who can reach our Investor Relations team by calling (513)945-6941 or visitingwww.pginvestor.com or can contact our Directors or executive officers as described on page 26.
ISG Corporate Governance Principles
We have evaluated the Company’s governance practices against the Corporate Governance Principles published by the Investor Stewardship Group (“ISG”), a collective of some of the largest U.S.-based institutional investors and global asset managers, and we believe that the Company’s policies and practices are consistent with these principles. P&G’s strong corporate governance policies and practices are disclosed throughout this proxy statement, but the following table provides some key highlights.
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Additional Governance Matters
Company Policy Regarding Employee, Officer, and Director Hedging
The Company’s Global Insider Trading Policy generally prohibits Directors, senior executives, other designated employees, and certain persons or entities related to these individuals, from engaging in hedging, short sales, pledging, collars, or any other derivative transaction involving the use of market investments to manage the risk of price movements in Company stock or to leverage the potential return of a predicted move in Company stock. Exceptions to this general policy require approval from the Company’s CLO. Certain aspects of this policy do not apply to Trian Fund Management, L.P. (“Trian”), an institutional investment manager of which Mr. Peltz is Chief Executive Officer, and the funds and investment vehicles managed by Trian. The Company’s general policy nevertheless applies to Mr. Peltz in his individual capacity.
Review and Approval of Transactions with Related Persons
TheWorldwide Business Conduct Manual requires that all employees and Directors disclose all potential conflicts of interest and promptly take actions to eliminate any such conflict when the Company requests. In addition, the Company has adopted a written Related Person Transaction Policy that prohibits any of the Company’s executive officers, Directors, or any of their immediate family members from entering into a transaction with the Company, except in accordance with the policy.
24
Under our Related Person Transaction Policy, the Chief Legal Officer is charged withCLO has primary responsibility for determining whether, based on the facts and circumstances, a related person has a direct or indirect material interest in a proposed or existing transaction. If the Chief Legal OfficerCLO determines that the related person would have a direct or indirect material interest in the transaction, the Chief Legal OfficerCLO must present the transaction to the Audit Committee for review or, if impracticable under the circumstances, to the Chair of the Audit Committee, who must then either approve or reject the transaction in accordance with the terms of the policy. In the course ofWhile making this determination, the Audit Committee shallmust consider all relevant information available and, as appropriate, must take into consideration the following:
whether the transaction was undertaken in the ordinary course of business of the Company;
whether the transaction was initiated by the Company or the related person;
whether the transaction contains terms no less favorable to the Company than terms that could have been reached with an unrelated third party;
the purpose of the transaction and theits potential benefits to the Company of, the transaction;Company;
the approximate dollar value of the transaction, particularly as it involves the related person;
the related person’s interest in the transaction; and
any other information regarding the related person’s interest in the transaction that would be material to investors under the circumstances.
The Audit Committee may only approve the transaction if it determines that the transaction is not inconsistent with the best interests of the Company as a whole. Further, in approving any such transaction, the Audit Committee has the authority to impose any terms or conditions it deems appropriate on the Company or the related person. Absent this approval, no such transaction may be entered into by the Company with any related person. The Audit Committee has reviewed and approved the following transactions.
Jon R. Moeller, the Company’s Vice Chairman and Chief FinancialOperating Officer (“CFO”),(COO) and a Director, is married to Lisa Sauer, a long-tenuredretired employee of the Company who currently holdsin the first half of FY2020-21 held the position of Senior Vice President—Product Supply, Global Home Products.Care and P&G Professional. Her total compensation last year was approximately $954,000,$574,000, consisting of salary, bonus, equity grants, and retirement and health benefits. Her compensation is consistent with the Company’s overall compensation principles based on her years of experience, performance, and position within the Company. Prior to Mr. Moeller becoming CFO, the Audit Committee approved the continued employment of Ms. Sauer with the Company under the Company’s Related Person Transaction Policy, concluding that her continued employment was not inconsistent with the best interests of the Company as a whole.
Deborah P. Majoras, the Company’s Chief Legal Officer and Secretary, is married to John M. Majoras, one of approximately 950900 partners in the law firm of Jones Day. The Company has hired Jones Day, in the ordinary course of business, to perform legal services. The Company’s relationship with Jones Day dates back more than 30 years and significantly precedes Ms. Majoras joining the Company as Vice President and General Counsel in 2008 from
| 26 The Procter & Gamble Company | ||
| CORPORATE GOVERNANCE | ||
the Federal Trade Commission, where she served as Chairman. Mr. Majoras does not receive any direct compensation from the fees paid to Jones Day by the Company, his ownership in the Jones Day law firm is significantly less than 1%, and the fees paid by the Company to Jones Day in the last fiscal year were less than 1% of their annual revenues. Under the Company’s Related Person Transaction Policy, the Audit Committee reviewed and approved the continued use of Jones Day as a provider of legal services to the Company, but required the Company’s CEO to approve any recommendations by Ms. Majoras to hire Jones Day for a specific legal matter. In doing so, the Committee concluded that the Majorases did not have a direct or indirect material interest in the Company’s hiring of Jones Day and that the relationship was not inconsistent with the best interests of the Company as a whole.
R. Alexandra Keith, President—Global Hair Care and Chief Executive Officer—Beauty, Sector, is married to Christopher Keith, a long-tenured employee of the Company who currently holds the position of Senior Vice President—Feminine Care, Europe, and Brand Franchise Leader Liners.and Sustainability, Baby Care and Brand Building Organization, Baby and Feminine Care. His total compensation last year was approximately $815,000,$1.3 million, consisting of salary, bonus, equity grants, and retirement and health benefits. His compensation is consistent with the Company’s overall compensation principles based on his years of experience, performance, and position within the Company. Upon Ms. Keith becoming President—Global Hair Care and Beauty Sector, the Audit Committee approved the continued
25
employment of Mr. Keith with the Company under the Company’s Related Person Transaction Policy, concluding that his continued employment was not inconsistent with the best interests of the Company as a whole.
Ma. Fatima D. Francisco, Chief Executive Officer—Baby and Feminine Care, is married to Crispin Noel C. Francisco, a retired P&G employee who previously held the position of Senior Manager—Human Resources, International Benefits & Expat Medical Plan Design. His total compensation last year was approximately $163,000, consisting of a retirement separation allowance. Mr. Francisco started with the Company well before Ms. Francisco’s appointment as an executive officer. In addition, his compensation last year was consistent with the Company’s overall compensation principles based on his years of experience, performance, and positions within the Company. Upon Ms. Francisco becoming President—Global Baby Care and Baby and Feminine Care Sector, the Audit Committee approved the continued employment of Mr. Francisco with the Company under the Company’s Related Person Transaction Policy, concluding that his continued employment was not inconsistent with the best interests of the Company as a whole.
M. Tracey Grabowski, the Company’s Chief Human Resources Officer, is the sister-in-law of Mr. Andy Ingal, a long-tenured P&G employee who currently holds the position of Director—Sales, North America Market Operations. His total compensation last year was approximately $269,000, consisting of salary, bonus, and retirement and health benefits. His compensation is consistent with the Company’s overall compensation principles based on his years of experience, performance, and position within the Company. Upon Ms. Grabowski’s appointment as the Company’s Chief Human Resources Officer, the Audit Committee approved the continued employment of Mr. Ingal with the Company under the Company’s Related Person Transaction Policy, concluding that his continued employment was not inconsistent with the best interests of the Company as a whole.
In addition, Ms. Grabowski is the mother of James Grabowski, an employee of the Company who currently holds the position of Brand Director—North America Personal Care, Olay. His total compensation last year was approximately $132,000, consisting of salary, bonus, and retirement and health benefits. His compensation is consistent with the Company’s overall compensation principles based on his years of experience, performance, and position within the Company. Mr. Grabowski was hired into an entry-level position with the Company through its standard hiring process prior to Ms. Grabowski’s appointment as Chief Human Resources Officer. Ms. Grabowski was not involved in Mr. Grabowski’s hiring nor has she been involved in managing his career or compensation since his hire date, other than through her involvement with the Company’s general compensation and employment programs as a whole. In anticipation of Mr. Grabowski’s total compensation exceeding $120,000 in FY 2020-21, the Audit Committee reviewed and approved the continued employment of Mr. Grabowski with the Company under the Company’s Related Person Transaction Policy, concluding that his continued employment was not inconsistent with the best interests of the Company as a whole.
Francis S. Blake, a Director, is the stepfather of Asher Lanier, an employee of the Company who currently holds the position of Account Executive, OralDirector—Global Family Care, Albertsons.Market Strategy & Planning. Mr. Lanier’s total compensation last year was
| 2021 Proxy Statement 27 | ||||
| CORPORATE GOVERNANCE | ||
approximately $127,000,$182,000, consisting of salary and retirement and health benefits. His compensation is consistent with the Company’s overall compensation principles based on his years of experience, performance, and position within the Company. Mr. Lanier was hired into an entry-level position with the Company, and Mr. Blake played no role in Mr. Lanier’s hiring. In addition, Mr. Blake does not directly or indirectly manage Mr. Lanier’s ongoing career or individual compensation. Finally, Mr. Lanier does not share a household with Mr. Blake. In anticipation of Mr. Lanier’s total compensation exceeding $120,000 in FY2017-18, the Audit Committee reviewed and approved the continued employment of Mr. Lanier with the Company under the Company’s Related Person Transaction Policy, concluding that his continued employment was not inconsistent with the best interests of the Company as a whole.
Margaret C. Whitman, a Director, is the former Chief Executive Officer of Quibi, a now-concluded mobile media startup in which she also held an approximately 5% ownership stake. In June 2019, the Company agreed to enter into a marketing agreement with Quibi, under which the Company paid a net sum of approximately $216,000 in FY2020-21. The Company’s discussions with Quibi regarding a potential business relationship began with Quibi founder Jeffrey Katzenberg prior to Ms. Whitman’s investment and employment; the 2019 agreement was entered in the normal course of business and was not initiated by Ms. Whitman. The Company ultimately entered into the agreement with Quibi after an extensive two-sided, arms-length negotiation. The Audit Committee reviewed and approved the Company’s agreement with Quibi under the Company’s Related Person Transaction Policy, and that approval required that someone other than Ms. Whitman continue to be the primary manager of Quibi’s relationship with the Company. In doing so, the Committee concluded that the agreement was not inconsistent with the best interests of the Company as a whole.
In addition, Ms. Whitman, together with her husband, is an approximately 20% owner of FC Cincinnati, a Major League Soccer club based in Cincinnati. Ms. Whitman and her husband purchased this stake in November 2019. Prior to their investment in FC Cincinnati, the Company had in place a sponsorship agreement with the club. In spring 2020, the Company negotiated a nine-year sponsorship agreement valued at approximately $4.3 million. In spring 2021, the Company and FC Cincinnati entered into an addendum to increase the sponsorship amount by $4 million. Under these agreements, the Company paid $630,000 to FC Cincinnati in FY2020-21. The Company’s nine-year sponsorship was initiated prior to Ms. Whitman’s investment in FC Cincinnati; and both the agreement and addendum were entered in the normal course of business and were not influenced by Ms. Whitman. The Audit Committee reviewed and approved the Company’s initial sponsorship agreements with FC Cincinnati and the 2021 addendum under the Company’s Related Person Transaction Policy, and those approvals required that Ms. Whitman continue to remain uninvolved in the Company’s arrangements with FC Cincinnati and that any future agreements with the club be under terms substantially consistent with the Company’s other sports-related sponsorships. In doing so, the Committee concluded that the agreements were not inconsistent with the best interests of the Company as a whole.
Other than as noted above, there were no transactions, in which the Company or any of its subsidiaries was a participant, the amount involved exceeded $120,000, and any Director, Director nominee, executive officer, or any of their immediate family members had a direct or indirect material interest reportable under applicable SEC rules or that required approval of the Audit Committee under the Company’s Related Person Transaction Policy, nor are there any currently proposed.
Compensation Committee Interlocks and Insider Participation
All members of the Compensation & Leadership Development Committee during FY2017-182020-21 were independent directors, and none were employees or former employees of the Company. There are no Compensation Committee interlocks between the Company and any other entities in which one of our executive officers servedserves on the compensation committee (or equivalent) or the board of directors of another entity whose executive officer(s) served on our C&LD Committee or Board of Directors.
Availability of Corporate Governance Documents
The Company’s corporate governance documents are available on the Company’s website at www.pg.com (information on the Company’s website is not incorporated by reference herein). Additionally, copies of the Company’s Amended Articles of Incorporation, the Company’s Code of Regulations, all Committee Charters, the
| 28 The Procter & Gamble Company | ||
| CORPORATE GOVERNANCE | ||
Corporate Governance Guidelines (including Independence Guidelines, Confidentiality Policy, and Financial Literacy and Expertise Guidelines), the Worldwide Business Conduct Manual, the Company’s Purpose, Values, and Principles and the Related Person Transaction Policy are available in print upon request by writing to the Corporate Secretary at One Procter & Gamble Plaza, Cincinnati, OH 45202-3315.
Code of Ethics
The Company has a code of ethics for its Directors, officers, and employees. The most recent version of this code of ethics is contained in the Worldwide Business Conduct Manual. The Worldwide Business Conduct Manual is reviewed each year for appropriate updates, and employees, officers, and Directors are asked to annually certify their understanding of, and compliance with, its requirements. Only the Board may grant a waiver of any provision for a Director or executive officer, and any such waiver, or any amendment to the manual, will be promptly disclosed as required at www.pg.com. The Worldwide Business Conduct Manual, which is firmly rooted in the Company’s long-standing Purpose, Values and Principles, is made available to employees in 28 different languages and can be found on the Company’s website at www.pg.com (information on the Company’s website is not incorporated by reference herein).
Communication with Directors and Executive Officers
Shareholders and others who wish to communicate with the Board or any particular Director, including the Lead Director, or with any executive officer of the Company, may do so by email atboardofdirectors.im@pg.com or by writing to the following address:
[Name of Director(s)/Executive Officer or “Board of Directors”]
The Procter & Gamble Company
c/o The Corporate Secretary’s Office
One Procter & Gamble Plaza
Cincinnati, OH 45202-3315
All such correspondence is reviewed by the Corporate Secretary’s office,Office, which logs the material for tracking purposes. The Board has asked the Corporate Secretary’s officeOffice to forward to the appropriate Director(s) all correspondence, except for personal grievances, items unrelated to the functions of the Board, business solicitations, advertisements, and materials that are profane.
Availability of Corporate Governance Documents
The Company’s corporate governance documents are available on the Company’s website atwww.pg.com. Additionally, copies of the Company’s Amended Articles of Incorporation, the Company’s Code of Regulations, all Committee Charters, the Corporate Governance Guidelines (including Independence Guidelines, Confidentiality Policy, and Financial Literacy and Expertise Guidelines), theWorldwide Business Conduct Manual, the Company’s Purpose, Values, and Principles and the Related Person Transaction Policy are available in print upon request by writing to the Corporate Secretary at One Procter & Gamble Plaza, Cincinnati, OH 45202-3315.
26
| 2021 Proxy Statement 29 | ||||
| DIRECTOR COMPENSATION | ||
The objective of the C&LD Committee is to providenon-employee members of the Board a compensation package consistent with thesize-adjusted median of the Peer Group.Group, as described on pages 50-51. Directors can elect to receive any part of their fees or retainer (other than the annual grant of Restricted Stock Units (“RSUs”)) as cash, RSUs, or unrestricted stock. Consistent with the practice of the past several years, the Company did not grant any stock options to Directors in FY2017-18.Non-employee2020-21. Non-employee members of the Board received the following compensation:
a grant of RSUs following election to the Board at the Company’s October 10, 201713, 2020 annual meeting of shareholders, with a grant date fair value of $175,000.$200,000. These units are forfeited if the Director resigns during the year, unless the resignation is for reasons of antitrust laws, or the Company’s conflict of interest, corporate governance, or continued service policies,policies. These RSUs do not deliver in shares until at least one year after the Director leaves the Board and cannot be sold or traded until delivered in shares, thus encouraging alignment with the Company’s long-term interests and the interests of shareholders. These RSUs will earn dividend equivalents at the same rate as dividends paid to shareholders;
an annual retainer fee of $110,000$120,000 paid in quarterly increments; and
an additional annual retainer paid to the Lead Director and Chair of each committee as follows: Lead Director, $30,000;$40,000; Chair of the Audit Committee, $25,000;$30,000; Chair of the C&LD Committee, $20,000;$25,000; Chairs of the Governance & Public Responsibility and Innovation & Technology Committees, $15,000.$20,000.
At its June 12, 2018 meeting, the Board of Directors, upon the recommendation of the C&LD Committee, agreed to maintain the current Director compensation package for the upcoming fiscal year.
Non-employee members of the Board must own Company stock and/or RSUs worth six times their annual cash retainer. A number of thenon-employee Directors were appointed or elected to the Board within the last few years. However, allnon-employee Directors either meet or are on track to meet the ownership requirements within the five-year period established by the C&LD Committee.
27
| 30 The Procter & Gamble Company | ||
| DIRECTOR COMPENSATION | ||
The following table and footnotes provide information regarding the compensation paid to the Company’snon-employee Directors in FY2017-18.2020-21. Directors who are employees of the Company receive no compensation for their service as Directors. For FY 2020-21, Mr. Taylor and Mr. Moeller were employee directors and did not receive a retainer, fees or a stock award.
| Director Compensation Table | ||||||||||||||||||||||||||||||
| Fees | ||||||||||||||||||||||||||||||
| Name
| Annual ($) | Committee Chair & Lead ($) | Total Fees Paid in Cash1 ($) | Stock Awards2 ($) | All Other ($) | Total ($) | ||||||||||||||||||||||||
Francis S. Blake
|
|
110,000
|
|
|
—
|
|
|
110,000
|
|
|
175,000
|
|
|
0
|
|
|
285,000
|
| ||||||||||||
Angela F. Braly
|
|
110,000
|
|
|
15,000
|
|
|
125,000
|
|
|
175,000
|
|
|
0
|
|
|
300,000
|
| ||||||||||||
Amy Chang
|
|
110,000
|
|
|
—
|
|
|
110,000
|
|
|
175,000
|
|
|
0
|
|
|
285,000
|
| ||||||||||||
Kenneth I. Chenault
|
|
110,000
|
|
|
—
|
|
|
110,000
|
|
|
175,000
|
|
|
0
|
|
|
285,000
|
| ||||||||||||
Scott D. Cook
|
|
110,000
|
|
|
15,000
|
|
|
125,000
|
|
|
175,000
|
|
|
0
|
|
|
300,000
|
| ||||||||||||
Joseph Jimenez
|
|
37,079
|
|
|
—
|
|
|
37,079
|
|
|
0
|
|
|
0
|
|
|
37,079
|
| ||||||||||||
Terry J. Lundgren
|
|
110,000
|
|
|
15,000
|
|
|
125,000
|
|
|
175,000
|
|
|
0
|
|
|
300,000
|
| ||||||||||||
W. James McNerney, Jr.
|
|
110,000
|
|
|
35,000
|
|
|
145,000
|
|
|
175,000
|
|
|
0
|
|
|
320,000
|
| ||||||||||||
Nelson Peltz
|
|
37,079
|
|
|
—
|
|
|
37,079
|
|
|
0
|
|
|
0
|
|
|
37,079
|
| ||||||||||||
Margaret C. Whitman
|
|
110,000
|
|
|
—
|
|
|
110,000
|
|
|
175,000
|
|
|
0
|
|
|
285,000
|
| ||||||||||||
Patricia A. Woertz
|
|
110,000
|
|
|
25,000
|
|
|
135,000
|
|
|
175,000
|
|
|
0
|
|
|
310,000
|
| ||||||||||||
Ernesto Zedillo
|
|
110,000
|
|
|
—
|
|
|
110,000
|
|
|
175,000
|
|
|
0
|
|
|
285,000
|
| ||||||||||||
Director Compensation Table | ||||||||||||
Fees | ||||||||||||
Name | Annual | Committee | Total Fees | Stock | All Other | Total | ||||||
B. Marc Allen | 46,066 | — | 46,066 | 0 | 0 | 46,066 | ||||||
Francis S. Blake | 120,000 | — | 120,000 | 200,000 | 0 | 320,000 | ||||||
Angela F. Braly | 120,000 | 20,000 | 140,000 | 200,000 | 0 | 340,000 | ||||||
Amy L. Chang | 120,000 | — | 120,000 | 200,000 | 0 | 320,000 | ||||||
Scott D. Cook | 30,000 | — | 30,000 | 0 | 0 | 30,000 | ||||||
Joseph Jimenez | 120,000 | 20,000 | 140,000 | 200,000 | 0 | 340,000 | ||||||
Debra L. Lee | 106,066 | — | 106,066 | 200,000 | 0 | 306,066 | ||||||
Terry J. Lundgren | 120,000 | 25,000 | 145,000 | 200,000 | 0 | 345,000 | ||||||
Christine M. McCarthy | 120,000 | — | 120,000 | 200,000 | 0 | 320,000 | ||||||
W. James McNerney, Jr. | 120,000 | 40,000 | 160,000 | 200,000 | 0 | 360,000 | ||||||
Nelson Peltz | 120,000 | — | 120,000 | 200,000 | 0 | 320,000 | ||||||
Margaret C. Whitman | 120,000 | — | 120,000 | 200,000 | 0 | 320,000 | ||||||
Patricia A. Woertz | 120,000 | 30,000 | 150,000 | 200,000 | 0 | 350,000 | ||||||
1 Director fees are paid quarterly. Each Director may elect to take these fees in cash, unrestricted stock, RSUs (which vest immediately)immediately and earn dividend equivalents), or a combination of the three. Mr. Allen was appointed to the board in February and his fees were prorated accordingly. Mr. Allen elected to take $46,066 of his fees in RSUs, which had a grant date fair value of $46,220. Mr. Blake elected to take $115,000 of his fees in unrestricted stock, which had a grant date fair value of $115,317. Ms. Braly elected to take $135,000 of her fees in RSUs, which had a grant date fair value of $135,226. Ms. Chang elected to take $60,000 of her fees in cash and $55,000 in RSUs, which had a grant date fair value of $55,179. Mr. Cook did not stand for reelection to the Board at the 2020 Annual Meeting and his term expired on October 13, 2020. His retainer was prorated accordingly, and he elected to take his fees in cash. Mr. Jimenez elected to take $135,000 of his fees in RSUs, which had a grant date fair value of $135,226. Ms. Lee was appointed to the Board in August 2020 and her fees were prorated to $106,066 which she took in cash. Mr. Lundgren elected to take $140,000 of his fees in RSUs, which had a grant date fair value of $140,168. Ms. McCarthy elected to take $120,000 of her fees in RSUs, which had a grant date fair value of $120,238. Mr. McNerney elected to take $155,000 of his fees in unrestricted stock, which had a grant date fair value of $155,262. Ms. Woertz elected to take $150,000 of her fees in RSUs, which had a grant date fair value of $150,291. The remaining Directors took their fees in cash.
2 Each year, upon election at the Company’s annual meeting of shareholders, every Director is awarded a $200,000 grant of RSUs which vest after one year as long as the Director remains on the Board. The RSUs earn dividend equivalents that are subject to the same vesting provision as the underlying RSUs and are accrued in the form of additional RSUs each quarter and credited to each Director’s holdings. Mr. Jimenez joined the Board on March 1, 2018, and took apro-rated retainer of $37,079 in RSUs which had a grant date fair value of $37,221. Mr. Peltz joined the Board on March 1, 2018, and took apro-rated retainer in cash. Mr. Blake elected to take $105,000 of his fees in unrestricted stock, which had a grant date fair value of $105,305. Ms. Braly and Mr. Lundgren elected to take $120,000 of their fees in RSUs, which had a grant date fair value of $120,183 for Ms. Braly, and $120,133Except for Mr. Lundgren. Mr. Cook elected to take $120,000 of his fees in unrestricted stock, which had a grant date fair value of $120,183. Mr. McNerney elected to take $140,000 of his fees in unrestricted stock, which had a grant date fair value of $140,185. Mr. Chenault elected to take $105,000 of his fees in RSUs, which had a grant date fair value of $105,305. The remaining Directors took their fees in cash.
2 Each year, upon election at the Company’s annual meeting of shareholders, every Director is awarded a $175,000 grant of RSUs. These RSUs vest after one year as long as the Director remains on the Board. Messrs. Jimenez and Peltz did not participate in the October 2017 grant. Except for Messrs. Jimenez and Peltz,Allen, each Director has 1,9401,387 RSUs outstanding (representing the grant on October 10, 201713, 2020, and subsequent dividend equivalents). Mr. Cook retired at the 2020 annual meeting and therefore did not receive the October 2020 RSU grant. In addition, Ms. Braly has 4,992 shares of retirement restricted stock outstanding as of June 30, 2018.2021.
| 2021 Proxy Statement 31 | ||||
| DIRECTOR COMPENSATION | ||
3 For all Board meetings throughout the fiscal year, Directors were entitled to bring a guest so long as the Director used the Company aircraft to attend the meeting and the guest’s attendance did not result in any incremental aircraft costs, although no Director brought a guest to any Board meeting in FY2017-18.costs. Directors are also covered under the same insurance policy as all Company employees for accidental death while traveling on Company business (coverage is $750,000 for each Director). The incremental cost to the Company for this benefit is $3,521.$1,854. In addition, the Company maintains a Charitable Awards Program for current and retired Directors who were participants prior to July 1, 2003. Under this program, at their death, the Company donates $1,000,000 per Director to up to five qualifying charitable organizations selected by each Director. Directors derive no financial benefit from the program because the charitable deductions accrue solely to the Company. The Company funds this contribution from general corporate assets. In FY2017-18,2020-21, no payments wereone payment was made. The Company also made a $500 donation on behalf of each Director to the Children’s Safe Drinking Water Program or to a different charity of their choice. These donations were also funded from general corporate assets, and the Directors derive no financial benefit from these donations because the charitable deductions accrue solely to the Company. As an employee Director, Mr. Taylor did not receiveIn recognition of Scott D. Cook’s service on the Board, the Company made a retainer, fees, or a stock award.contribution of $10,000 to the United Way.
28
| 32 The Procter & Gamble Company | ||
| C&LD COMMITTEE REPORT | ||
Compensation Committee Report
The Compensation & Leadership Development Committee of the Board of Directors has reviewed and discussed the following section of this proxy statement entitled “Compensation Discussion & Analysis” with management. Based on this review and discussion, the Committee has recommended to the Board that the section entitled “Compensation Discussion & Analysis,” as it appears on the following pages, be included in this proxy statement and incorporated by reference into the Company’s Annual Report on Form10-K for the fiscal year ended June 30, 2018.2021, dated August 6, 2021 (the “Form 10-K”).
Terry J. Lundgren, Chair
Kenneth I. ChenaultJoseph Jimenez
Scott D. CookDebra L. Lee
Joseph JimenezChristine M. McCarthy
W. James McNerney, Jr.
Margaret C. Whitman
29
| 2021 Proxy Statement 33 | ||||
| COMPENSATION DISCUSSION & ANALYSIS | ||
Compensation Discussion & Analysis
Introduction
The focus of this discussion and analysis is on the Company’s compensation philosophies and programs for its named executive officers (“NEOs”) for FY2017-18:2020-21. For each of these NEOs, the compensation described herein is for their roles during FY 2020-21. Titles reflect the roles held by each NEO on June 30, 2021.
Leadership Changes
As announced on July 29, 2021, the Board elected Mr. Moeller as President and Chief Executive Officer and Mr. Taylor as Executive Chairman, both effective November 1, 2021, while Shailesh Jejurikar was elected Chief Operating Officer, effective October 1, 2021. In addition, on June 8, 2021, Steven D. Bishop, Chief Executive Officer – Health Care, announced his intention to retire from the Company effective February 18, 2022, and Mary Lynn Ferguson-McHugh, Chief Executive Officer – Family Care and New Business, announced her intention to retire from the Company effective October 1, 2021.
| David S. Taylor Chairman of the Board, President and Chief Executive Officer | |||||||||
| Jon R. Moeller Vice Chairman and Chief
|  | Andre Schulten
| |||||||
|  |  | ||||||||
Steven D. Bishop
| ||||||||||
|
|
| Mary Lynn
| Shailesh Jejurikar
| ||||||
30
| 34 The Procter & Gamble Company | ||
| COMPENSATION DISCUSSION & ANALYSIS | ||
FY2017-182020-21 Results—Company Performance and Key Compensation MeasuresMeasure Overview
The Company’s focus for FY2017-18 was on the executionOur integrated strategy continues to deliver strong results. We have a focused portfolio of three key strategic priorities: acceleratetop-line growth by improving the five elements of noticeable superiority (product, package,daily use products that provide health, hygiene, and cleaning benefits in categories where performance drives brand choice. We are creating superior performing products that are delivered with superior packaging, consumer communication, retail execution, and value), drivevalue. We use productivity improvements and cost savings to fund investments in superiority, to help mitigate input cost increases, and cash productivity,to deliver profit margin improvement needed to deliver balanced top- and transformbottom-line growth. We are leading constructive disruption across the value chain, including identifying new consumer needs and addressing them in new ways. We have an empowered, agile, and accountable organization, effectively executing our integrated strategy and culture. Whilepriorities.
In the midst of the global pandemic, the Company met orhas three priorities: protecting the health and well-being of employees; serving consumers around the world who count on our brands and the benefits they provide; and supporting communities, relief organizations, and people who are on the front lines of the health crisis. Our strategy enabled us to create strong business momentum ahead of the pandemic and accelerate results thus far during the pandemic, and we believe it continues to be the right strategy going forward.
The Company exceeded itsgoing-in targets for Core EPS growth and Adjusted Free Cash Flow Productivity, top-line results were below the low end of our target range.its key compensation measures. This led to below-targetabove-target payouts in our bonus programs.
Delivered Strong Financial Results1
Organic sales grew 6%, above both market growth and our target of 2-4%.
Core earnings per share were $5.66, up 11% versus last year, exceeding our target range of 3-7%.
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Fiscal Year 2020-21
1 The targets abovementioned in this section reflect the original FY2017-18 2020-21 financial guidance provided by the Company on July 27, 2017.
230, 2020. FY2017-18 2020-21 actuals for Organic Sales Growth, Core EPS Growth and Adjusted Free Cash Flow Productivity were used in the calculation of Year 3 Performance Stock Program results, as further detailed on pages 39-41.
3page 43. Organic Sales Growth is a measure of sales growth excluding the impacts of India Goodsacquisitions and Services Tax implementation, acquisitions, divestitures and foreign exchange from year-over-year comparisons. See Exhibit A for a reconciliation ofnon-GAAP measures.
4 Core EPS Growth is a measure of the Company’s diluted net earnings per share from continuing operations growth adjusted for the transitional impactsexcluding certain items that are not judged to be part of the U.S. Tax Act in fiscal 2018 and for losses on early extinguishment of debt and incremental restructuring in fiscal 2018 and 2017. See Exhibit A for a reconciliation ofnon-GAAP measures.
5Company’s sustainable results or trends. Adjusted Free Cash Flow Productivity is the ratio of Operatingadjusted free cash flow (Operating Cash Flow less the sum of Capital Expenditures and payments for the transitional tax related to the U.S. Tax Act) to Net Earnings, excluding the transitional impact of the U.S. Tax Act and the loss onadjusted for early retirement of debt.debt extinguishment charges. See Exhibit A for a reconciliation ofnon-GAAP measures. measures, including details on items being adjusted.
Organic Sales
| 2021 Proxy Statement 35 | ||||
| COMPENSATION DISCUSSION & ANALYSIS | ||
Returning Value to Shareholders
2 Through dividends and share repurchase combined.
Executed Our Integrated Growth was 1%. This was belowStrategy
A Focused Portfolio
We have built a focused portfolio of ten categories that leverage P&G strengths and where we have leading or significant market positions. These are daily use categories where performance drives brand choice. In each of these performance-driven categories, we continue to work to increase the low endsuperiority of our original target range dueofferings.
Superiority to challengesWin with Consumers
We are working to create superior performing products delivered with superior packaging, brand communication, retail execution, and value in all price tiers where we compete. This is the Baby Carebasis for competitive advantage—meaningful and Grooming businesses, significant external disruption in the Middle East/Africa markets, and retail inventory reductions. Core EPS Growth of 8% was above the high end of the original target range despite headwinds from commodities and transportation costs (approximately-5% or -$0.5 billion, in total).
To address the cost challenges, the Company accelerated work on savingsnoticeable superiority across all elements of cost: costthe consumer experience. Superior offerings drive market growth, household penetration, strong share positions, and a winning proposition for our retailers. We continue to make investments in extending our margin of advantage to better meet consumer needs across the world.
Productivity to Fuel Investments and Increase Profitability
Investing to gain and extend superiority, creating the financial flexibility to manage through increased external volatility, and an ongoing need to drive balanced top- and bottom-line growth, requires productivity up and down the income statement and across the balance sheet.
Cost of goods sold is the largest element of our cost structure. We are delivering cost savings in product and materials design and driving automation solutions to fuel productivity and accelerate our journey towards an non-manufacturingEnd-to-End overhead,Synchronized Supply Network.
In Brand Building, data, analytics, and marketing.digital technology are reinventing how we work. We have already saved meaningful amounts in agency fees and production costs while increasing the reach and effectiveness of our communications with consumers.
We are discovering lower cost ways of working with fewer resources, leveraging new digital tools. For example, the Company delivered $1.4 billionpandemic provided a unique chance to learn how we can effectively operate our business with significantly less business travel. While some level of face-to-face interaction is beneficial, more virtual connections with suppliers, customers, and our own organization is likely to be the “new normal.”
Constructive Disruption Across the Value Chain
We are leading constructive disruption across the value chain—changing in gross costmeaningful ways that lead to competitive advantage and creates value for retailers, investors, employees, and consumers.
We are innovating how we innovate, moving faster by combining over 180 years of goods savings, spanning materials, manufacturing, and logistics. This wasexpertise with the entrepreneurial spirit of a in-linestart-up. We are reinventing brand building, including how we reach consumers with our target annual run rate. In total, productivity improvements contributed 260 basis points of operating margin benefit.
Adjusted Free Cash Flow Productivity was 104%, ahead of target. These cash results enabled the return of over $14 billion to shareholders ($7 billion in dividendsmedia investment. We are achieving mass reach but with greater precision, and $7 billion in share repurchase).
31we are accelerating automated, programmatic media buying.
Executive Compensation Practices
Our executive compensation practices are designed to support good governance and mitigate excessive risk-taking.
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With the increasing shift to e-commerce and the use of digital for commerce with omni-retailers, we are accelerating our in-house capability in search to ensure our brands are seen first in key search terms and to serve content that clearly demonstrates the superiority of our brands versus competition.
Empowered, Agile, and Accountable Organization and Culture
At the beginning of FY2019-20, we moved to a new organization structure, with the goal of creating a more engaged, agile, and accountable organization, enabling P&G people to accelerate growth and value creation.
Operating through five industry-based Sector Business Units (SBUs)
Providing greater clarity on responsibilities and reporting lines
Strengthening leadership accountability
Flowing resources seamlessly to new demands and opportunities
Our Compensation Philosophy and Objectives
Our fundamental and overriding objective is to create value for our shareholders at leadership levels on a consistent long-term basis. To accomplish this goal, theThe C&LD Committee designsapproaches CEO and overall executive compensation programs that:with the same pay principles used to set compensation at all levels of the Company.
| • | Emphasize Pay for Performance by aligning incentives with business strategies to reward executives who achieve or exceed Company, business unit, and individual goals, while removing any incentive to focus on a single |
| • | Pay Competitively by setting target compensation opportunities to be competitive with a Peer Group of other global corporations of similar size, value, and complexity. |
| • | Focus on Long-Term Success by including equity as a cornerstone of our executive pay programs and by using a combination of short-term and long-term incentives to ensure a strong connection between Company performance and actual compensation realized. |
Pay for Performance Alignment
32Consistent with our design principles, performance-based programs are designed to pay at 100% of target when goals are met, above target when goals are exceeded, and below target when goals are not fully met. Over the previous ten years, the average STAR payout for NEOs ranged from a low of 67% of target to a high of 185% of target. Since the inception of the PSP in 2010, the final performance result has ranged from a low of 20% to a high of 200%. For the current year, the average STAR payout for the NEOs was 185% of target, and the PSP performance result for the three years ending June 30, 2021 was 200%. Payouts under these programs were based on the results achieved as compared to the pre-established performance targets, highlighting the clear link between pay and performance that is the foundation of our compensation programs.
Compensation and Environmental, Social, and Governance Goals
The Company’s Corporate Citizenship efforts are focused on Environmental Sustainability, Community Impact, and Equality & Inclusion, all supported by a strong foundation of Ethics & Corporate Responsibility. Our businesses in each geography have programs designed to address goals and challenges in these areas. Ethics & Compliance results are a formal part of principal officer evaluations each year. The Board reviews progress on our Equality & Inclusion efforts; principal officers are also eligible for incremental long-term incentives based on their performance on Equality & Inclusion initiatives within their respective business or geography. Business Unit short-term bonus determinations also take into account execution of the business strategy and Ethics & Compliance results.
| 2021 Proxy Statement 37 | ||||
| COMPENSATION DISCUSSION & ANALYSIS | ||
Emphasizing Pay for PerformanceCompensation Mix
Our executive compensation program consists of four key components: salary, the Short-Term Achievement Reward (STAR), and two long-term incentive equity programs—the Performance Stock Program (PSP) and the Long-Term Incentive Program (LTIP). For FY2017-18, these four components constituted approximately 97% on average of each NEO’s total compensation. The remaining 3% consisted of retirement income, expatriate expenses, and other benefits.
We design our programs so that the main components of NEO compensation varies(salary, STAR, LTIP, and PSP) vary by type (fixed versus performance-based), length of performance period (short-term versus long-term), and form (cash versus equity). We believe that such variation is necessary to: (1) strike the appropriate balance between short- and long-term business goals; (2) encourage appropriate behaviors and discourage excessive risk-taking; and (3) align the interests of the Company’s executives with our shareholders.
While salary is considered a fixed component of compensation, salary progression over time is based on individual performance and the scope of responsibilities of the role. The remainingThese compensation components vary based onare determined by the performance of the individual, the performance of the individual’s business unit, and the performance of the Company as a whole. ThisThe mix of components is designed to incentivize both individual accountability and collaboration to build long-term shareholder value. The charts below show the average mix of the four keymain components of FY2017-182020-21 NEO compensation based on type, length of performance period, and form of compensation.
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| 38 The Procter & Gamble Company | ||
| COMPENSATION DISCUSSION & ANALYSIS | ||
Consistent with our design principles, performance-based programs pay out at 100% when target goals are achieved. Payouts below 100% occur when target goals are not achieved, and payouts above 100% are possible when target goals are exceeded. Over the previous ten years, the average STAR payout for NEOs ranged from a low of 67% of target to a high of 137% of target. Since the inception of PSP in 2010, the program has delivered payouts from a low of 20% of target to a high of 62% of target. For the current year, the average STAR payout for the NEOs was 78% of target, and the current PSP payout for the three years ending June 30, 2018, was 62% of target, resulting in a combined average STAR and PSP performance-based payout of 67% for all NEOs. In aggregate, STAR and PSP performance-based pay for the NEOs was 64% of target over the past five years. Payouts under these programs were based on the results achieved as compared to thepre-established performance targets, highlighting the clear link between pay and performance that is the cornerstone of our compensation programs.
Paying CompetitivelyExecutive Compensation Program Overview
The C&LD Committee structures executive compensation so that total targeted annual cashfollowing table outlines the key components of our Executive Compensation Programs and long-term compensation opportunities are competitive with the targets for comparable positions at companies considered to be our peers (“Peer Group”), based on criteria described below. The C&LD Committee sets targets for each element of compensation considering the same elements of compensation paid to those holding similar jobs at companies in our Peer Group, focusing on positions with similar management and revenue responsibility. For the CEO’s compensation analysis, the C&LD Committee considers the Company’s revenue, market capitalization, and relative performance compared to our Peer Group.
The Peer Group is objectively determined and consists of global companies that generally meet the following criteria:their purpose.
have revenue comparable to the Company ($65 billion in FY2017-18) and/or market capitalization comparable to the Company (approximately $233 billion as of December 2017);
§ Peer Group revenues range from $15 billion to $495 billion with a median of $62 billion; and
§ Peer Group market capitalization ranges from $15 billion to $861 billion with a median of $162 billion.
compete with the Company in the marketplace for business and investment capital;
compete with the Company for executive talent; and
have generally similar pay models. We do not compare with companies in the financial services or insurance industries, where the mix of pay elements or program structure is generally materially different.
Each year, the C&LD Committee evaluates and, if appropriate, updates the composition of the Peer Group. Changes to the Peer Group are carefully considered and made infrequently to assure continuity from year to year. For FY2017-18, the Committee did not make any changes to the Peer Group, which consists of the following companies:
| Program | Key Characteristics | |||||||||||
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| Market-competitive based on the median cash compensation of comparable positions in the Peer Group, regressed for revenue size. Fixed component with progression over time based on individual performance and scope of responsibility. | ||||||||||
| Short-Term Achievement Reward (STAR) | Rewards Business Unit and Company Performance | At the beginning of the year, the C&LD Committee sets a market-competitive target as a percentage of salary for each NEO based on total cash compensation benchmarking. The STAR award is based on a weighted formula of 70% Business Unit Performance and 30% Total Company Performance. Each factor ranges from 0%-200%, so that exceptional performance results in higher awards and poor performance could result in a zero payout. Executives can elect to receive stock options in lieu of cash or may elect to defer into a non-qualified deferred compensation account. | ||||||||||
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| Long-Term Incentive Program (LTIP) | Award size rewards individual performance. Focuses executives on the long-term success of the Company and enhances retention. | Target grant values are based on peer median long-term compensation target values. Final award amounts are based on business results and individual contributions. 50% of the executive’s total LTI value is delivered in the LTIP. Executives can elect to receive their LTIP as stock options with three-year cliff-vesting and 10-year expiration or RSUs with three-year cliff-vesting, or a combination of both. | ||||||||
 | Performance Stock Program (PSP) | Award size rewards individual performance. Focuses executives on key financial measures intended to drive P&G to the top-third of our competitive peer group. | 50% of the executive’s total LTI value is delivered in the PSP. The initial grant of Performance Stock Units (PSUs) pays out at the end of a three-year performance period based on the Company’s performance against four balanced financial metrics that are the key drivers of Total Shareholder Return, and is further modified by a Relative TSR Multiplier. | |||||||||
| Retention and Recognition | Retention of talent or recognition of exceptional performance. | RSUs with special vesting. No NEOs received a special equity award in FY 2020-21. | |||||||||
| Other Compensation | Ensure the safety and productivity of executives. | Annual physicals, financial planning, transportation, security, life insurance, and corporate aircraft use. | |||||||||
 | • P&G Savings Plan • P&G Profit Sharing Trust and Employee Stock Ownership Plan (“PST”) • Nonqualified Deferred Compensation Plan • International Retirement Plan (“IRP”) • Global International Retirement Arrangement (“IRA”) | Provides market-competitive benefits for retirement income and tax-advantaged financial planning. | U.S. employees participate in the PST, in which the Company makes an annual contribution used to purchase Company stock. Foreign employees participate in the International Retirement Plan, in which they receive RSUs valued at an amount equal to the contribution that would have been contributed under the PST. A full description of Retirement Programs and Deferred Compensation is provided on page 47. | |||||||||
While the target total compensation for our NEOs is set considering thesize-adjusted median target total compensation within our Peer Group, actual compensation varies depending on the NEO’s experience in the particular role, as well as on total Company, business unit, and individual performance. Consistent with our principles to pay for performance and pay competitively, substantial differences may exist among NEOs’ pay.
Focus on Long-Term Success
To reinforce the importance of stock ownership and long-term focus for our most senior executives, including the NEOs, the C&LD Committee established the Executive Share Ownership Program and Equity Holding Requirement.
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| 2021 Proxy Statement 39 | ||||
| COMPENSATION DISCUSSION & ANALYSIS | ||
The Executive Share Ownership Program requires the CEO to own shares of Company stock and/or RSUs (including granted Performance Stock Units (“PSUs”)) valued at a minimum of eight times salary. Mr. Taylor currently holds approximately 18 times salary. All other NEOs must own stock and/or RSUs (including granted PSUs) valued at a minimum of four or five times salary, depending on the NEO’s role. The C&LD Committee annually reviews these holdings, and in 2018 each NEO exceeded these requirements.
The Equity Holding Requirement ensures executives remain focused on sustained shareholder value even after exercising their stock options or receiving shares from RSU settlements or PSU payouts. The equity holding requirement applies when an executive, including an NEO, has not met the ownership requirements of the Executive Share Ownership Program. When the holding requirement applies, the CEO is required to hold the net shares received from stock option exercises and RSU and PSU settlements for at least three years, and the other NEOs are required to hold net shares received for at least one year. The holding requirement does not apply to unrestricted stock or to STAR awards that executives elect to take as stock options instead of cash.
Elements of Our Compensation Programs
Annual Cash Compensation
The Company’s annual cash compensation consists of salary and STAR. While salary is considered a fixed component of compensation, salary progression over time is based on individual performance and the scope of responsibilities of the role. We collect and analyze data from the Peer Group on the total annual cash compensation opportunity (salary plus annual bonus target) for positions comparable to those at the Company. We consider the target median annual cash compensation opportunity for each position within our Peer Group, adjusted for size using a regression analysis of Peer Group revenues, to set a salary rangemid-point and a target for STAR, as a percentage of salary (“STAR target”).
Salary
Mr. Taylor’s annualizedannual salary remained unchanged at $1,600,000increased by 5.9% to $1,800,000, effective September 1, 2020, based on exceptional business results and his leadership during FY2017-18. Concurrent withthe challenging pandemic year. Mr. Moeller’s appointment as Vice Chairman andSchulten was appointed Chief Financial Officer, on Julyeffective March 1, 2017, the C&LD Committee increased Mr. Moeller’s2021, and concurrent with his promotion, his annual salary to $1,000,000, a 5.3% increase. The C&LD Committee approved a 4.4% increase to bring Mr. Ciserani’s salary to $940,000was set at $750,000, based on competitive market movementdata for newly appointed peer CFOs. The salary for Mr. Moeller increased by 4.3% to $1,200,000, effective September 1, 2020, reflecting strong performance in his expansive role of Vice Chair, COO, and to recognizeCFO, including his responsibility for managing a significant portion ofSales, Product Supply, Market Operations, Information Technology, and Global Business Services. Mr. Moeller transitioned the total Company businesses. The Committee also increasedCFO role to Mr. Schulten, effective March 1, 2021. Mr. Bishop’s and Ms. Ferguson-McHugh’s salaries remained fixed at $910,000. Mr. Jejurikar’s salary increased 9.5% to $850,000, a 3.7% increase$810,000, effective September 1, 2020, based on market movement and her business performance in Family Care and P&G Ventures. Finally, the committee approved a 3.6% increase to $870,000 for Mr. Bishop based on market movement and for hisoutstanding business results in Oralhis leadership of Fabric & Home Care, and Personal Health Care.our largest business segment.
STAR Annual Bonus
The STAR program links a substantial portion of each NEO’sannualNEO’sannual cash compensation to the Company’sperformanceCompany’sperformance for the fiscal year. The program focuses on the achievement of business unit results (weighted as applicable for each NEO), but also includes a component that measures the performance of the overall Company. STAR awards are generally paid in cash, but executives can also elect to receive all or part of their awards in stock options or non-qualifieddeferred compensation.
STAR awards are calculated using the following formula:
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The basis for each element of STAR is:
STAR Target. The C&LD Committee sets STAR targets as a percentage of salary for NEOs using annual bonus benchmarks for similar positions in our Peer Group.
| 40 The Procter & Gamble Company | ||
| COMPENSATION DISCUSSION & ANALYSIS | ||
Business Unit Performance Factor. The CEO, COO, CFO, and CHRO (“STAR Committee”) recommend Business Unit Performance Factors for each business unit, based on a retrospective assessment of the performance of each of the 1815 business units against six metrics: operating TSR, organic sales growth, operating profit growth, adjusted free cash flow productivity, market share, and internal controls.
Goal | What It Measures | Purpose of the Measure | ||||||
Organic Sales Growth | One-year business unit sales growth | Rewards meeting / exceeding sales growth targets | ||||||
Operating Profit Growth | One-year business unit profit growth | Rewards meeting / exceeding profit growth targets | ||||||
Adjusted Free Cash Flow Productivity | One-year business unit cash flow productivity | Rewards effective conversion of earnings into cash | ||||||
Value Share | One-year business unit increase in value share | Rewards market share growth versus competition | ||||||
Operating TSR | One-year business unit total shareholder return | Rewards balanced top- and bottom-line growth with strong cash flow | ||||||
Internal Controls | One-year measure of audit results and issue remediation | Rewards strong governance and stewardship |
This assessment is compared to each business unit’s role in the portfolio, reflecting the different industries in which the Company’s businesses compete and their growth potential. The C&LD Committee then determines the Business Unit Performance Factors based on the STAR Committee’s recommendations. None of the officers on the STAR Committee participateparticipates in discussions of or recommendrecommends their own STAR awards to the C&LD Committee. The Business Unit Performance Factors can range between 50%0% and 150%200%. The Business Unit Performance Factor for global business services and corporate functions is the weighted average of the Business Unit Performance Factors for all the global business units (“GBU”) and selling andenterprise market operations (“SMO”) Business Unit Performance Factors in order to align all organizations with the six metrics.
The Business Unit Performance Factor for NEOs who lead multiple business units is based on a combination, as determined by the STAR Committee, of the results of the business units for which the NEO is ultimately responsible. There are no separate performance goals for the business unit combinations for purposes of compensation.
To better align STAR awards with individual and local performance, the President of each business may differentiate award levels based on the overall performance of lower level divisions, provided the total expenditure does not exceed what was approved by the STAR committee.Committee. This differentiation only impacts awards for those employees below the President level and thus does not impact NEO compensation.
Total Company Performance Factor.The C&LD Committee sets targets for the Company’s annual Organic Sales Growth and Core EPS Growth as the basis for the Company Performance Factor to encourage a balanced focus on bothtop-line and bottom-line results and to encourage collaboration among the business units. These targets are typically linked to the external financial guidance provided at the beginning of the fiscal year, and the Core EPS target specifically includes the expected impact of our share repurchase program. The Committee establishes performance levelstargets and a payout matrix that determine ascale from 0% to 200% for each measure, with each weighted 50% and added together to produce the Total Company Performance Factor between 70% and 130%.Factor.
While the formula described above is used to calculate potential STAR awards, the C&LD Committee retains the authority to make no STAR award in a given year and the discretion to accept, modify, or reject management’s recommendations for any or all employees, including the NEOs.
| 2021 Proxy Statement 41 | ||||
| COMPENSATION DISCUSSION & ANALYSIS | ||
FY2017-182020-21 STAR Annual Bonus
Mr. Taylor’s STAR target remained unchanged from last fiscal year, at 200% of salary. Mr. Schulten’s STAR target was 50% of salary for the first 8 months of the fiscal year and was increased to 110% of salary when he assumed the role of CFO on March 1, 2021. The STAR target for Mr. Moeller increased to 130%remained unchanged from last fiscal year, at 140% of salary. The target for Mr. Ciserani remained at 120% of salary, and the targets for Mr. Bishop, and Ms. Ferguson-McHugh, and Mr. Jejurikar remained unchanged at 100% of salary.
At the beginning of FY2017-18,2020-21, the C&LD Committee established the Company’s Organic Sales Growth target at 2.8%3% and the Core EPS Growth target at 6%, to be5%. These targets reflected a highly uncertain outlook on how underlying consumer markets would develop in the midst of the pandemic. These goals were used to computeestablish a payout scale from 0% to 200% of target for each measure with a 100% payout for target performance. Both measures’ results were weighted at 50% and added together to derive the FY2017-18Total Company Performance Factor, and established a payout matrix that would generate a Company Performance Factor between 70% and 130% depending on the actual Organic Sales and Core EPS Growth achieved.Factor. Organic Sales Growth and Core EPS Growth were 1%6.4% and 8%10.5%, respectively, resulting in a Total Company Performance Factor of 90%200%.
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These results reflected the very strong execution of our integrated strategy and the agility of the organization to navigate the challenges linked to the pandemic. The C&LD Committee then reviewed the recommendations provided for the 18 Business Unit Performance Factors and, after considering the performance of the total Company and the appropriate combination of Business Unit Performance Factors for each NEO, approved the following STAR awards:
FY2017-18 STAR Awards
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FY 2020-21 STAR AWARDS | FY 2020-21 STAR AWARDS | ||||||||||||||||||||||||||||||||||||||
NEO
| STAR Target ($)
| Business Unit Performance Factor (%)
| Total Company Performance Factor (%)
| STAR Award ($)
| STAR Award
| STAR ($)
| Business Unit Factor (70% Weight) (%)
| Total Company (30% Weight)
| STAR ($)
| STAR Award
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David S. Taylor
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3,200,000
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95
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90
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2,736,000
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85
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| 3,600,000 | 175 | 200 | 6,570,000 | 183 | |||||||||||||||||||
Andre Schulten | 525,000 | 170 (NA Baby) / 175 (BU Average) | 200 | 951,563 | 181 | ||||||||||||||||||||||||||||||||||
Jon R. Moeller
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1,300,000
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95
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90
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1,111,500
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85
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| 1,680,000 | 175 | 200 | 3,066,000 | 183 | |||||||||||||||||||
Steven D. Bishop
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870,000
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83
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90
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645,975
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74
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| 910,000 | 195 | 200 | 1,788,150 | 197 | |||||||||||||||||||
Giovanni Ciserani
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1,128,000
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72
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90
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730,944
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65
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Mary LynnFerguson-McHugh
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850,000
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91
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90
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| 698,062
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82
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| 910,000 | 156 | 200 | 1,541,313 | 169 | |||||||||||||||||||
Shailesh Jejurikar | 810,000 | 199 | 200 | 1,614,330 | 199 | ||||||||||||||||||||||||||||||||||
In keeping with good governance practices, the NEO members of the STAR Committee (CEO, CFO)COO, CFO, CHRO) did not recommend their own awards. Instead, the C&LD Committee used the weighted average of all Business Unit Performance Factors multiplied byand the Total Company Performance Factor to determine the awards for the NEO members ofaccording to the STAR Committee. This resulted in an award of $2,736,000formula for Mr. Taylor and $1,111,500 for Mr. Moeller. For Mr. Schulten, the C&LD Committee pro-rated his award to reflect six months in his prior role of Senior Vice President—Baby Care, North America, two months in Corporate during his transition period, and four months in his role as CFO using the weighted average of all Business Unit Performance Factors as described above.
The STAR awardawards recommended to the C&LD Committee for Mr. Ciserani, Mr. Bishop, and Ms. Ferguson-McHugh wasthe remaining NEOs were computed using the formula described on page 3540 of this proxy statement. Mr. Bishop’s STAR award was based on a combination of the Health Care and Oral Care businesses, Ms. Ferguson-McHugh’s STAR award was based on a combination of Family Care and New Business, and Mr. Jejurikar’s STAR award was based on a combination of the Fabric Care, Home Care, and P&G Professional businesses.
Long-Term Incentive ProgramsIncentives
The majority of the NEOs’ compensation is delivered through two long-term incentive programsincentives tied to sustained Company performance: the PSP and the LTIP.
The C&LD Committee uses competitive market data to set total long-term compensation targets considering the median total long-term target compensation of comparable positions in the Peer Group, regressed for revenue size.
| 42 The Procter & Gamble Company | ||
| COMPENSATION DISCUSSION & ANALYSIS | ||
size. The CEO recommends NEO grants to the C&LD Committee based on benchmarked long-term compensation targets, adjusted for business results and individual contributions attributable to each NEO, including that individual’s leadership skills.skills and progress on key Equality & Inclusion and Sustainability initiatives. These recommendations can be up to 50% above or 50% below the benchmarked target.target for each level and role.
The C&LD Committee retains full authority to accept, modify, or reject these recommendations. In exceptional cases, no grant will be awarded. HalfOne half of each NEO’s annual long-term compensation is allocated to PSP viathrough an initial PSU grant as defineddescribed below. The other half is an LTIP Grant.grant.
Performance Stock Program (PSP)
The PSP aligns the interests of the NEOs with shareholders by encouraging NEOs to focus on the aspects of the long-term performance of the Company that create shareholder value. In the first year of each three-year performance period, the C&LD Committee grants PSUs to participants.each NEO. The number of PSUs that vest at the end of the performance period will depend on Company results against predetermined performance goals over the three-year period.
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The C&LD Committee sets targets at the beginning of each performance period for the following categories (“Performance Categories”): Organic Sales Growth weighted 30%; Constant Currency CoreBefore-Tax Operating Profit Growth weighted 20%;
Goal | What It Measures | Purpose of Measure | ||||||||
| Relative Organic Sales | 3-year compounded sales growth relative to the competitive peer group | Rewards strong sales growth relative to peers | |||||||
Core EPS Growth | 3-year compounded core earnings per share growth | Rewards meeting / exceeding Core EPS growth target | ||||||||
 | Constant Currency Core | 3-year core before tax profit excluding the impact of foreign exchange | Rewards meeting / exceeding operating profit growth target | |||||||
Adjusted Free Cash Flow | 3-year average free cash flow productivity | Rewards effective conversion of earnings into cash to enable strong cash return to shareholders | ||||||||
Relative TSR Multiplier | 3-year Total Shareholder Return relative to competitive peer group | Increases payouts for top quartile performance and reduces payouts for bottom quartile performance | ||||||||
The Core EPS Growth weighted 30%; and Adjusted Free Cash Flow Productivity weighted 20%. The Core EPS growth target for year one of the PSP program is typically linked to the external financial guidance provided at the beginning of the fiscal year. The Core EPS Growth targets for years two and three are based on our longer-term expected growth rates. These targets include the best estimates of the impact of our share repurchase program. The C&LD Committee then assigns a minimum and maximum performance goal for each Performance Category. At the end of the three-year performance period, each Performance Category will have a Performance Factor between 0% and 200%, depending on results achieved in each category. The Performance Factor will be 100% if the business results for the category are at target. Business results falling between the minimum and maximum performance goals are determined via linear interpolation. We believe that using a sliding scale to reward performance, as opposed to “all or nothing” goals, discourages participants from taking unnecessary risks to earn payments under the program. AtTo determine the vested PSUs at the end of each three-year performance period, the C&LD Committee multiplies the weighted average of the four Performance Factors by the initial PSU grant (plus compounded dividend equivalents) to determineby the vested PSUs. weighted average of the Performance Factors and the Relative TSR Multiplier, which is set at 125% for results in the top quartile of our peer set and 75% for results in the bottom quartile.
| 2021 Proxy Statement 43 | ||||
| COMPENSATION DISCUSSION & ANALYSIS | ||
The formula is as follows:
PSUs vest at the earliest of the end of the three-year performance period or whenat which time the individual becomes retirement eligible, provided the NEO was an employee on June 30 following the grant date of the PSUs. Finalfinal payouts are not determined until the end of the three-year performance period.determined. Upon vestingsettlement of their PSUs, participantsNEOs may elect to defer receipt of the shares of Common Stock by choosing to instead receive retirement deferred RSUs.
Note that the Performance Factors for the 2015-2018 PSP Performance Period, which paid out on June 30, 2018, are different from the factors described above (see page 40 for details).
Long-Term Incentive Program (LTIP) Grant
The LTIP grant is the second component of the Company’s long-term incentive compensation for its senior executives. Executives can elect to receive all or a portion of their LTIP grants in either RSUs or stock options prior to the grant date, with the exception of the CEO, whose grant form and amount is solely determined by the C&LD Committee. Stock options do not vest (and therefore are not exercisable) until three years from the date of grant and expire ten years from the date of grant, or earlier in the case of certain termination events. RSUs cliff vestcliff-vest three years after grant date and are delivered, upon vesting, in shares of Common Stock, along with compounded dividend equivalents. In addition, NEOs must be employed on the June 30 following the grant date to retain the awards, even if they are eligible for retirement. These awards focus executives on the long-term success of the Company, and we believe the vesting restrictions enhance retention because employees who voluntarily resign from the Company during the specified vesting periods forfeit their grants.
38
FY2017-182020-21 Long-Term Incentive Grants
The following long-term incentive grants were made on October 1, 2020. Award amounts approved by the C&LD Committee vary from the grant date fair value shown in FY2017-18.the table due to the impact of the Relative TSR Multiplier on the fair value of the PSUs granted under the PSP on the grant date. The actual compensation realized by each NEO will be determined by future Company performance.
| FY2017-18 Long-Term Incentive Grants | ||||||||||||||||||||||||||||||||||||||||||||
FY 2020-21 LONG-TERM INCENTIVE GRANTS | FY 2020-21 LONG-TERM INCENTIVE GRANTS | |||||||||||||||||||||||||||||||||||||||||||
| PSP Grant | LTIP Grant | Total | ||||||||||||||||||||||||||||||||||||||||||
| PSUs | Grant Date | Options | RSUs | Grant Date | Grant Date | |||||||||||||||||||||||||||||||||||||||
| PSP Grant | LTIP Grant | Total | Fair Value | Fair Value | Fair Value | |||||||||||||||||||||||||||||||||||||||
NEO
| PSUs (#)
|
Grant Date Fair Value ($)
| Options (#)
| RSUs (#)
| Grant Date Fair Value ($)
| Grant Date Fair Value ($)
| (#) | ($) | (#) | (#) | ($) | ($) |
| |||||||||||||||||||||||||||||||
David S. Taylor
|
|
79,598
|
|
|
6,250,035
|
|
|
252,017
|
|
|
39,799
|
|
|
6,250,028
|
|
|
12,500,063
|
| 51,171 | 7,851,167 | 218,250 | 17,910 | 7,125,053 | 14,976,220 |
| |||||||||||||||||||
Andre Schulten | 1,096 | 168,159 | 0 | 3,286 | 457,543 | 625,702 |
| |||||||||||||||||||||||||||||||||||||
Jon R. Moeller
|
|
35,662
|
|
|
2,800,180
|
|
|
169,365
|
|
|
8,916
|
|
|
2,800,210
|
|
|
5,600,390
|
| 26,394 | 4,049,631 | 129,890 | 6,599 | 3,675,111 | 7,724,742 |
| |||||||||||||||||||
Steven D. Bishop
|
|
19,858
|
|
|
1,559,250
|
|
|
125,746
|
|
|
0
|
|
|
1,559,250
|
|
|
3,118,500
|
| 12,024 | 1,844,842 | 78,893 | 0 | 1,674,109 | 3,518,951 |
| |||||||||||||||||||
Giovanni Ciserani
|
|
24,723
|
|
|
1,941,250
|
|
|
0
|
|
|
24,723
|
|
|
1,941,250
|
|
|
3,882,500
|
| ||||||||||||||||||||||||||
Mary Lynn Ferguson-McHugh
|
|
20,718
|
|
|
1,626,777
|
|
|
65,596
|
|
|
10,359
|
|
|
1,626,779
|
|
|
3,253,556
|
| 12,024 | 1,844,842 | 0 | 12,024 | 1,674,222 | 3,519,064 |
| |||||||||||||||||||
Shailesh Jejurikar | 12,024 | 1,844,842 | 78,893 | 0 | 1,674,109 | 3,518,951 |
| |||||||||||||||||||||||||||||||||||||
The C&LD Committee approved $12,500,000 ina $14,250,000 long-term incentive valueaward for Mr. Taylor. In awarding a modest increase inat-risk performance-based pay,determining this award, the Committee considered Mr. Taylor’s total compensation package comparedperformance in leading the Company to significantly improved financial results while navigating the market medianchallenges of the competitivepandemic and delivering correspondingly high total shareholder returns. Market-based compensation data from our peer set, as well asgroup CEOs was taken into consideration when making the fact that his base salary and bonus target have not increased for the past two fiscal years. The Committee also assessed his performance during one of the most significant business transformations the Company has ever undertaken. final award decision.
The award shown for Mr. Taylor positions him very closeSchulten was based on his position of Senior Vice President, North America Baby Care, prior to the long-term incentive and total compensation market median.his promotion to CFO.
| 44 The Procter & Gamble Company | ||
| COMPENSATION DISCUSSION & ANALYSIS | ||
The C&LD Committee approved a total long-term incentive award of $5,600,310$7,350,000 for Mr. Moeller. This award reflectsreflected the scope of Mr. Moeller’s role as Vice Chair, COO, and CFO, which includesand his performance during FY 19/20. His position was unique within our peer companies, based on responsibilities that far exceed most other Peer Group CFOs, including oversight of the Company’s Global Business ServicesCFOs.
Mr. Bishop, Ms. Ferguson-McHugh, and Information Technology organizations.
The Committee approved a long-term incentiveMr. Jejurikar each received an award of $3,882,400 for Mr. Ciserani. This is a reduction versus last year, reflecting below target business performance. The committee approved $3,118,500 for Mr. Bishop$3,348,180 based on exceptional results in each of their respective business performance, and approved $3,253,550units, as well as taking into account market competitive data for Ms. Ferguson-McHugh also based on business results, including an additional amount to recognize her significant contributions to the Company’s Diversity & Inclusion objectives.their positions.
PSP Goal Setting
In conjunction with deciding the amount and allocation of the NEOs’ long-term incentive opportunities for FY2017-18,2020-21, the C&LD Committee set the PSP Performance Factors listed below for the three-year performance period starting July 1, 20172020 through June 30, 2020.2023. The delivery of results against these factorsgoals, combined with the relative TSR multiplier, will determine the ultimate payout for this portion of compensation.
39
PSP Goals for Performance Period July 1, 2017-June 30, 2020 | ||||||||||||||||||
Organic Sales Growth (30% Weighting)1 |
Constant Currency Core (20% Weighting)2 | Core EPS Growth (30% Weighting)3 | Adjusted Free Cash Flow Productivity (20% Weighting)4 | |||||||||||||||
% Growth | Payout Factor | % Growth | Payout Factor | % Growth | Payout Factor | % | Payout Factor | |||||||||||
4.5
|
200%
|
³8.7
|
200%
|
³9.7
|
200%
|
³115
|
200%
| |||||||||||
4.0
|
167%
|
7.7
|
167%
|
8.7
|
167%
|
107
|
167%
| |||||||||||
3.5
|
133%
|
6.7
|
133%
|
7.7
|
133%
|
98
|
133%
| |||||||||||
Target 3.0
|
100%
|
Target 5.7
|
100%
|
Target 6.7
|
100%
|
Target 90
|
100%
| |||||||||||
2.5
|
67%
|
4.7
|
67%
|
5.7
|
67%
|
82
|
67%
| |||||||||||
2.0
|
33%
|
3.7
|
33%
|
4.7
|
33%
|
73
|
33%
| |||||||||||
£1.5
|
0%
|
£2.7
|
0%
|
£3.7
|
0%
|
£65
|
0%
| |||||||||||
PSP GOALS FOR PERFORMANCE PERIOD JULY 1, 2020–JUNE 30, 2023 | ||||||||||||||||||
| Organic Sales Growth (30% Weighting)1 | Constant Currency Core Profit Growth (20% Weighting)2 | Core EPS Growth (30% Weighting)3 | Adjusted Free Cash Flow Productivity (20% Weighting)4 | ||||||||||||||
% Growth | Payout Factor | % Growth | Payout Factor | % Growth | Payout Factor | % | Payout Factor | |||||||||||
|
| 80th | 200% | ³12.0 | 200% | ³11.3 | 200% | ³115 | 200% |
| |||||||||
|
| 70th | 167% | 10.3 | 167% | 9.6 | 167% | 107 | 167% |
| |||||||||
|
| 60th | 133% | 8.7 | 133% | 8.0 | 133% | 98 | 133% |
| |||||||||
|
| Target 50th | 100% | Target 7.0 | 100% | Target 6.3 | 100% | Target 90 | 100% |
| |||||||||
|
| 40th | 67% | 5.3 | 67% | 4.6 | �� | 67% | 82 | 67% |
| ||||||||
|
| 30th | 33% | 3.7 | 33% | 3.0 | 33% | 73 | 33% |
| |||||||||
|
| £20th | 0% | £2.0 | 0% | £1.3 | 0% | £65 | 0% |
| |||||||||
1 Organic Sales Growth is a measure of sales growth excluding the impacts of acquisitions, divestitures, foreign exchange, and (as appropriate) certain other items (as appropriate) from year-over-year comparisons, and will be based oncomparisons. Relative Organic Sales growth is a measure of the percentile rank of the 3-year compound annual growth rate.rate within a peer group of directly competitive consumer product companies. See Exhibit A for a reconciliationdefinition of non-GAAP measures.
2 Constant Currency Core Before-Tax Operating Profit Growth is a measure of operating profit growth adjusted to exclude foreign exchange impacts and certain items that are not deemed to be part of the Company’s sustainable results, and will be based on the 3-year compound annual growth rate. See Exhibit A for a reconciliationdefinition of non-GAAP measures.
3 Core EPS Growth is a measure of the Company’s diluted net earnings per share from continuing operations growth, adjusted for certain items that are not deemed to be part of the Company’s sustainable results, and will be based on the 3-year compound annual growth rate. See Exhibit A for a reconciliationdefinition of non-GAAP measures.
4 Adjusted Free Cash Flow Productivity is the ratio of the 3-year sum of Operating Cash Flow excluding (as appropriate) certain impacts less the 3-year sum of Capital Expenditures to the 3-year sum of Net Earnings excluding (as appropriate) certain charges. See Exhibit A for a reconciliationdefinition of non-GAAP measures.
| 2021 Proxy Statement 45 | ||||
| COMPENSATION DISCUSSION & ANALYSIS | ||
Looking Back: Realized Pay for PSP Performance Period JulyJULY 1, 2015-June2018–JUNE 30, 20182021
In addition to setting the performance goals for the new PSP cycle, the C&LD Committee reviewed the results for the Performance Period (July 1, 20152018 to June 30, 2018)2021), which will paypaid out at the end of FY2017-18.in August 2021. The C&LD Committee reviewed these results against the goals established at the beginning of that Performance Period to determine the realized pay for each NEO. Note that the measures used in the FY2015-18 program differ from those used in programs beginning with performance period July 1, 2016 to June 30, 2019 as follows: Organic Sales Growth is a relative measurePSP paid out at 200% of target based on a percentile rank within a peer group, CoreBefore-Tax Operating Profit Growth is not based on constant currency,exceptional financial results and the four Performance Factors were equally weighted at 25%.top quartile TSR results vs. our competitive marketplace peers.
PSP Results for July 1, 2015-June 30, 2018 | ||||||
Performance Factors (25% Equal Weighting)
|
Target
|
Actual
|
Payout
| |||
Organic Sales Growth Percentile Rank in Peer Group1
|
50th
|
17th
|
0%
| |||
CoreBefore-Tax Operating Profit Growth2
|
5.3%
|
1.4%
|
0%
| |||
Core EPS Growth3
|
4.2%
|
3.9%
|
90%
| |||
Adjusted Free Cash Flow Productivity4
|
90%
|
104%
|
156%
| |||
PSP Payout (Average of Performance Factors)
|
62%
| |||||
PSP RESULTS FOR JULY 1, 2018–JUNE 30, 2021 | ||||||||
Performance Factors | Target | Actual | Weight | Result | ||||
Relative Organic Sales Growth1 | 50th Percentile | 67th Percentile | 30% | 157% | ||||
Constant Currency Core Before-Tax Operating Profit Growth2 | 5.7% | 13.0% | 20% | 200% | ||||
Core EPS Growth3 | 6.3% | 10.3% | 30% | 180% | ||||
Adjusted Free Cash Flow Productivity4 | 90% | 108% | 20% | 172% | ||||
Weighted Average of Performance Factors |
|
|
| 175% | ||||
Relative TSR Modifier5 |
|
|
| 125% | ||||
Final PSP Payout6 |
|
|
| 200% | ||||
1 Organic Sales Growth is a measure ofthe sales growth excluding the impacts of Venezuelan deconsolidationthe adoption of a new accounting standard on revenue recognition in fiscal 2016, India Goods and Services Tax implementation in fiscal 2018,2019, acquisitions, divestitures and foreign exchange from year-over-year comparisons, andcomparisons. Relative Organic Sales growth is based ona measure of the percentile rank of the 3-year compound annual growth rate within a peer group of directly competitive consumer product companiescompanies. See Exhibit A for a reconciliation of the3-year compound annual growth rate.
40
non-GAAP measures.
2 Constant Currency CoreBefore-Tax Operating Profit Growth is the3-year compound annual growth rate ofBefore-Tax Operating Profit, adjusted forto exclude foreign exchange impacts, the charges for certain European legal mattersShave Care impairment in fiscal 2016 and 2015, Venezuela balance sheet remeasurement & devaluation impacts and Venezuela deconsolidation charge in 20152019, and incremental restructuring.restructuring in fiscal years 2019 and 2020. See Exhibit A for a reconciliation ofnon-GAAP measures.
3 Core EPS Growth is the3-year compound annual growth rate of the Company’s diluted net earnings per share, from continuing operations growth, adjusted for the transitional impacts of the U.S. Tax Act in fiscal 2018, losses oncharges for early extinguishment of debt in fiscal 2018 and 2017, Venezuela balance sheet remeasurement & devaluation impacts, Venezuela deconsolidation charge and2021, the gain on dissolution of the PGT Healthcare partnership, the charges for certain European legal mattersShave Care impairment and anti-dilutive impacts in fiscal 20152019, and incremental restructuring.restructuring in fiscal years 2019 and 2020. See Exhibit A for a reconciliation ofnon-GAAP measures.
4 Adjusted Free Cash Flow Productivity is the ratio of the3-year sum of Operating Cash Flow excluding certain divestiture impacts(excluding tax payments related to the transitional taxes from the U.S. Tax Act in all periods and tax payments related to the Merck Consumer OTC Healthcare acquisition in fiscal 20172020, less the3-year sum of Capital ExpendituresExpenditures) to the3-year sum of the Net Earnings excluding(excluding the transitional impactShave Care impairment charges in fiscal 2019 and the gain on the dissolution of the U.S. Tax ActPGT Healthcare partnership in fiscal 2018,2019, and the losses on early extinguishment of debt in fiscal 2018 and 2017, the gain on the sale of the Beauty Brands business in fiscal 2017, the gain on the sale of the Batteries business in fiscal 2016 and the batteries impairment in fiscal 2016.2021). See Exhibit A for a reconciliation ofnon-GAAP measures.
Based on results delivered,5 The Relative TSR Modifier is a measure of P&G’s relative market total shareholder return performance versus a competitive peer group, calculated as a 3-year compound annual growth rate of the NEOs receivedstock price including the impact of reinvested dividends.
6 The Final PSP payoutspayout was capped at 62% of target, which resulted in200% according to the following PSU awards for each NEO.program rules.
Realized Pay for Performance Period July 1, 2015-June 30, 2018 | |||||||||||||||||||||||||
Named Executive Officer
| Initial # of PSUs
|
Market Value of
| PSP
| Final # of PSUs
| Market Value of Final Award @ $78.06/share1
| ||||||||||||||||||||
David S. Taylor
|
|
76,113
|
|
|
5,941,381
|
|
|
62
|
%
|
|
47,191
|
|
|
3,683,729
|
| ||||||||||
Jon R. Moeller
|
|
37,241
|
|
|
2,907,032
|
|
|
62
|
%
|
|
23,090
|
|
|
1,802,405
|
| ||||||||||
Steven D. Bishop
|
|
20,426
|
|
|
1,594,454
|
|
|
62
|
%
|
|
12,665
|
|
|
988,630
|
| ||||||||||
Giovanni Ciserani
|
|
29,020
|
|
|
2,265,301
|
|
|
62
|
%
|
|
17,993
|
|
|
1,404,534
|
| ||||||||||
Mary Lynn Ferguson-McHugh
|
|
20,426
|
|
|
1,594,454
|
|
|
62
|
%
|
|
12,665
|
|
|
988,630
|
| ||||||||||
| 46 The Procter & Gamble Company | ||
| COMPENSATION DISCUSSION & ANALYSIS | ||
1The resulting NEO payouts are indicated below:
REALIZED PAY FOR PERFORMANCE PERIOD JULY 1, 2018–JUNE 30, 2021 | ||||||||||
Named Executive Officer | Initial # of PSUs Granted Plus Dividend Equivalents | Market Value of Target Award @ $134.93 | PSP Payout Factor | Final # of PSUs Awarded | Market Value of Final Award @ $134.93 | |||||
David S. Taylor | 58,935 | 7,952,133 | 200% | 117,871 | 15,904,334 | |||||
Andre Schulten | 1,253 | 169,130 | 200% | 2,507 | 338,270 | |||||
Jon R. Moeller | 27,835 | 3,755,840 | 200% | 55,671 | 7,511,688 | |||||
Steven D. Bishop | 12,843 | 1,732,839 | 200% | 25,686 | 3,465,812 | |||||
Mary Lynn Ferguson-McHugh | 14,254 | 1,923,235 | 200% | 28,508 | 3,846,584 | |||||
Shailesh Jejurikar | 13,760 | 1,856,582 | 200% | 27,520 | 3,713,274 | |||||
The value of PSUs at target and awarded was calculated by multiplying the number of PSUs and accumulated dividend equivalents by the Company stock price as of June 29, 2018.30, 2021. These PSUs will deliver in shares of Common Stock or retirement deferred RSUs (as elected by the participants) in August 2018.
Special Equity Awards
On occasion, the C&LD Committee makes special equity grants in the form of RSUs to senior executives to encourage retention2021. The market value of the talent necessaryfinal award does not include a final payment of dividend equivalents on the PSUs, which took place on August 16, 2021, prior to manage the Company successfully or to recognize superior performance. No special equity award was granted to any NEOdelivery in FY2017-18.shares.
Retirement Programs
The Procter & Gamble Profit Sharing Trust and Employee Stock Ownership Plan (“PST”) is the Company’s primary retirement program for U.S.-based employees. The PST is a qualified defined contribution plan providing retirement benefits for full-time U.S. employees, including the NEOs. Under the PST, the Company makes an annual contribution of cash, which is used to purchase Company stock that is credited to each participant’s PST account, upon which dividends are earned. The amount of the stock grant varies based upon individual salaries and years of service.
Some participants in the PST (including the NEOs) do not receive their full contributioncontributions due to federal tax limitations. As a result, they participate in the nonqualified PST Restoration Program. These individuals receive RSUs valued at an amount equal to the difference between the contribution made under the PST and what would have otherwise been contributed under the PST but for the tax limitations. Participants are vested in their PST accounts after five years of service, and similarly, their PST Restoration RSUs becomenon-forfeitable after five years of service.
In addition, some individuals who would otherwise participate in the PST are ineligible due to their work location (including Mr. Ciserani).locations. As a result, they participate in the nonqualified International Retirement Plan (“IRP”). These individuals receive RSUs valued at an amount equal to the contribution that would have otherwise been contributed under the PST had they been eligible to participate in the PST. IRP RSUs also becomenon-forfeitable after five years of service.
41
The PST, the PST Restoration Program, and the IRP have created ownership at all levels of the Company. These programs continue to serve the Company and its shareholders well by focusing employees on the long-term success of the business.
Fornon-U.S.-based employees, individual country plans provide retirement benefits. In addition, employees who work in multiple countries during their careers may also be eligible for supplemental benefits under the Global International Retirement Arrangement (“IRA”). Messrs. Schulten and Jejurikar participate in the IRA. Mr. CiseraniSchulten also participates in this program.a German Plan.
Deferred Compensation Plan
The Procter & Gamble Company Executive Deferred Compensation Plan (“EDCP”) allows executives to defer receipt of up to 100% of their STAR awards and up to 75% of their annual salary. Executives may also elect to
| 2021 Proxy Statement 47 | ||||
| COMPENSATION DISCUSSION & ANALYSIS | ||
convert a portion of their PST Restoration RSUs into notional cash with investment choices that mirror those available to all U.S. employees who participate in the Company’s 401(k) plan. No above-market or preferential interest is credited on deferred compensation, as those terms are defined by the SEC.
Executive Benefits
The Company provides certain other limited benefits to senior executives to fulfill particular business purposes, which are primarily for convenience and personal security. No changes were made to executive benefits over the past year, and the Company continues to manage executive benefits as a very small percentage (less than 1%2%) of total compensation for the NEOs during FY2017-18.2020-21.
Benefits that safeguard senior executives, such as home security systems, secured workplace parking, and annual physical health examinations, are available to NEOs as needed. While Company aircraft are generally only used for Company business, for security reasons the CEO is required by the Board to use Company aircraft for all air travel, including personal travel. To increase executive efficiency, in limited circumstances, NEOs may travel to outside board meetings on Company aircraft. In addition, if a Company aircraft flight is already scheduled for business purposes and can accommodate additional passengers, NEOs and their spouses/guests may join these flights for personal travel. To the extent any travel on Company aircraft (e.g. personal/spouse/guest travel) results in imputed income to an NEO, the NEO is responsible for paying the taxes on that income, and the Company does not provide separategross-up payments based on the NEO’s personal income tax due. We also reimburse NEOs for the cost of some tax preparation and financial counseling to keep NEOs’ attention focused on Company business and assureto support accurate personal tax reporting. To remain competitive and retain our top executives,further increase executive efficiency, we offerprovide limited local transportation within Cincinnati. We provided executive group whole life insurance coverage (equal to annual salary rate plus STAR target up to $5,000,000). Also, to further increase executive efficiency, we provide limited local transportation within Cincinnati.certain executives, including the NEOs, under a program now closed to new participants. The C&LD Committee periodically reviews these arrangements as needed to ensure they meet business needs and remain in line with market practices.
Employment ContractsExecutive Compensation Changes for FY 2021-22
ESG and Incentive Compensation
At its August 9, 2021 meeting, the C&LD Committee elected to introduce a new Environmental, Social, and Governance (ESG) Factor that will be applied to the annual incentive (STAR) program for senior executives commencing July 1, 2021. The ESG Factor reinforces our key commitments to ESG initiatives (which the Company collectively refers to as Citizenship) by linking a portion of senior executive pay directly to outcomes and progress achieved. The C&LD Committee will determine the ESG Factor at the end of the fiscal year, based on the STAR Committee’s recommendation, which is derived from an assessment of total Company fiscal year progress towards long-term Equality & Inclusion and Environmental Sustainability goals. These goals are based on various targets and ambitions reported in our annual Citizenship Report and reinforce our desire to be a “force for good and a force for growth” by ensuring a continued focus on gender diversity and multicultural representation, as well as our long-term environmental sustainability goals. The ESG Factor will adjust the Company Factor portion of the STAR award as a multiplier in the range of 80% to 120%.
Leadership Changes
On July 29, 2021, the Board elected Mr. Moeller as President and Chief Executive Officer of the Company and elected Mr. Tayor as Executive Chairman of the Board, both effective November 1, 2021. Accordingly, as of November 1, Mr. Moeller’s salary will increase to $1,600,000, his STAR target will increase to 200% of salary, and his long-term incentive opportunity will be valued at $11,200,000, with approximately 50% of the long-term incentive value in the PSP and 50% in LTIP. Also effective November 1, Mr. Taylor’s salary will decrease to $1,200,000, his STAR target will be 150% of salary, and his long-term incentive opportunity will be valued at $12,500,000, with approximately 50% of the long-term incentive value in the PSP and 50% in LTIP. The payout for the PSP grants made in FY 2021-22 will be made in August 2024 and will be based on the achievement goals established for the three-year performance cycle. The compensation to be realized from the LTIP grants will depend on the Company’s future stock price.
| 48 The Procter & Gamble Company | ||
| COMPENSATION DISCUSSION & ANALYSIS | ||
In connection with his appointment as Chief Operating Officer, effective October 1, 2021, Mr. Jejurikar will receive an annual base salary of $1,000,000 and will participate in the Company’s annual incentive program with a target award equal to 120% of base salary. In relation to his election, and in connection with the Company’s annual equity grant cycle, the Board of Directors approved a long-term incentive award valued at $4,000,000, with approximately 50% of the long-term incentive value in the PSP and 50% in the LTIP.
Compensation Governance Practices and Oversight
Our executive compensation practices are designed to incent strong performance, support good governance, and mitigate excessive risk-taking.
| What We Do: |
| ☑ | Target compensation at the median of an appropriate peer group, with substantial variation based on performance. |
| ☑ | Significant share ownership and equity holding requirements are in place for senior executives. |
| ☑ | Multiple performance metrics under STAR and PSP remove any incentive to focus on a single performance goal to the detriment of other goals. |
| ☑ | Appropriate balance between short-term and long-term compensation discourages short-term risk-taking at the expense of long-term results. |
| ☑ | Double Trigger. Time-based equity awards do not vest solely on account of a change in control (requires a qualifying termination following a change in control). |
| ☑ | Engagement of an Independent Advisor. Our C&LD Committee engages an independent compensation consultant, who performs no other work for the Company, to advise on executive compensation matters. |
| ☑ | Clawback policy permits the C&LD Committee to recoup certain compensation payments in the event of a significant restatement of financial results for any reason. Additionally, the two most recent stock plans allow recovery of proceeds from stock awards if a participant violates certain plan provisions such as taking actions that may damage the reputation, goodwill, or stability of the Company. |
| What We Do Not Do: |
| ☒ | No employment contracts with executives containing special severance payments such as golden parachutes. |
| ☒ | No special executive retirement programs and no severance programs that are specific to executive officers. |
| ☒ | No gross-up payments to cover personal income taxes or excise taxes that pertain to executive or severance benefits. |
| ☒ | No excessive perquisites for executives. |
| ☒ | No hedging or engaging in the following transactions that include shares of Common Stock: pledging, collars, short sales, and other derivative transactions. |
| ☒ | No re-pricing or backdating stock options. |
| 2021 Proxy Statement 49 | ||||
| COMPENSATION DISCUSSION & ANALYSIS | ||
Board and Compensation Committee Oversight
Role of the Committee
The C&LD Committee believes employment contractsis responsible to the Board for executives are not necessary because our executives have developed a focus on the Company’s long-term success. Moreover,overall compensation policies and their specific application to principal officers elected by the Board. In setting and overseeing executive pay, the C&LD Committee does not provide specialreviews a broad spectrum of information, including the ratio between the total compensation of the median employee and the total compensation of the CEO (found on pages 70-71 of this proxy). Across the Company, total compensation is benchmarked against an appropriate peer group, using median market pay as the competitive benchmark. Compensation can then be adjusted based on performance. In setting CEO and executive severance payments,pay, the C&LD Committee takes into account the executive’s experience in the particular role, as well as the performance of the total Company and business units, and also considers individual performance. In setting CEO pay, other factors are considered by the Committee, such as golden parachutes, to its executives. In the event the Company encourages an NEO, or any other U.S. employee, to terminate employmentdegree of pay alignment with the Company (but not for cause), that individual may receive a separation allowanceCompany’s relative Total Shareholder Return (TSR) rank and the appropriate mix of up to one year’s annual salary, calculated based on yearsshort- and long-term pay and fixed and performance-based pay.
Role of service.
Other Key Compensation Program FeaturesConsultants
This additional information may assistFor FY 2020-21, the reader in better understanding the Company’s compensation practices and principles.
Engagement of Independent Advisor
The C&LD Committee renewed its agreement with Frederic W. Cook & Co., Inc. to advise on various compensation matters, including Peer Group identification, competitive practices and trends, specific program design, and actions with respect to NEO and principal officer compensation. Prior to the renewal, the C&LD Committee evaluated the independence of Frederic W. Cook & Co., Inc., taking into account any relationships with the Company’s directors,Directors, officers, and employees in accordance with NYSE listing standards. Based on this evaluation, the C&LD Committee concluded that Frederic W. Cook & Co. is, Inc. was an independent advisor. Under the terms of its agreement with the C&LD Committee, Frederic W. Cook & Co. is, Inc. was prohibited from conducting any other business for the Company or its management, and the C&LD Committee has direct responsibility for oversight and compensation of the work performed by Frederic W. Cook & Co., Inc. The C&LD Committee generally meets with its independent compensation consultant in an Executive Sessionexecutive session at regularly scheduled C&LD Committee meetings.
42
During FY 2020-21,Company management usesused a separate compensation consultant, Meridian Compensation Partners, LLC (“Meridian”), to provide compensation advice, competitive survey analysis, and other benchmark information related to trends and competitive practices in executive compensation.
TaxGross-Ups
Generally,Beginning on July 1, 2021, the C&LD Committee transitioned to Meridian as its sole independent compensation consultant to advise on compensation matters. Meridian will no longer provide compensation consulting services to Company does not increase payments to any employees, including NEOs, to covernon-business-related personal income taxes. However, certain expatriate allowances, relocation reimbursements, and tax equalization payments are made to employees assigned to work outside their home countries, andmanagement. At its August 9, 2021 meeting, the Company will coverC&LD Committee evaluated the personal income taxes due on these itemsindependence of Meridian in accordance with expatriate policy because thereNYSE listing standards and concluded that Meridian is an independent advisor.
Consideration of Most Recent “Say on Pay” Vote
The Committee reviewed the results of the annual shareholder advisory vote on NEO compensation (the “Say on Pay” vote) that was held at the 2020 annual meeting of shareholders. Approximately 92% of the votes cast on the proposal were cast in support of the compensation of our NEOs. Given the positive endorsement of the Company’s executive compensation decisions, the Committee did not make any changes to the Company’s program or policies as a business purposeresult of the Say on Pay vote.
Establishing Peer Groups and Market-Based Compensation
The C&LD Committee structures executive compensation so that total targeted annual cash and long-term compensation opportunities are competitive with the targets for comparable positions at companies considered to their relocation. In addition, from timebe our peers (“Peer Group”), based on criteria described below. The C&LD Committee sets targets for each element of compensation considering the same elements of compensation paid to time,those holding similar roles at companies in our Peer Group, focusing on positions with similar management and revenue responsibility. For the CEO’s compensation analysis, the C&LD Committee considers the Company’s revenue, market capitalization, and relative performance compared to our Peer Group.
| 50 The Procter & Gamble Company | ||
| COMPENSATION DISCUSSION & ANALYSIS | ||
The Peer Group is objectively determined and consists of global companies that generally meet the following criteria:
Have revenue comparable to the Company may be required($72.5 billion) and/or market capitalization comparable to pay personal income taxes for certain separating executives hired through acquisitions in conjunctionthe Company (approximately $345 billion) as of December 2020;
Peer Group revenues range from $16 billion to $548 billion withpre-existing contractual obligations.
Governing Plans, Timing, Pricing, and Vesting a median of Stock-Based Grants$66 billion; and
All grantsPeer Group market capitalization ranges from $32 billion to $1,682 billion with a median of stock options, PSUs, and/or RSUs made to employees andnon-employee directors after October 14, 2014, are made under The Procter & Gamble 2014 Stock and Incentive Compensation Plan (as amended) (“2014 Plan”). The 2014 Plan was approved by Company shareholders at the 2014 annual shareholder meeting. Previous grants were made under The Procter & Gamble 2001 Stock and Incentive Compensation Plan (as amended) (“2001 Plan”), The Procter & Gamble 2003Non-Employee Directors’ Plan (“2003 Plan”), The Procter & Gamble 2009 Stock and Incentive Compensation Plan (as amended) (“2009 Plan”), The Gillette Company 2004 Long-Term Incentive Plan (“2004 Gillette Plan”). The 2001, 2003, 2009, and 2014 Plans were approved by Company shareholders. The 2004 Gillette Plan was approved by Gillette shareholders and adopted by$181 billion.
Compete with the Company in 2005 as part of its mergerthe marketplace for business and investment capital;
Compete with The Gillette Company.the Company for executive talent; and
The 2014 Plan contains a vesting provision commonly known as a “double trigger,” which limits accelerated vestingHave generally similar pay models. We do not compare with companies in the eventfinancial services or insurance industries, where the mix of a change in control. Time-based awards assumed as partpay elements or program structure is generally materially different from our mix of a change in control would only vest for involuntary terminationspay elements and program structure.
Each year, the C&LD Committee evaluates and, if appropriate, updates the composition of employment for reasons other than causethe Peer Group. Changes to the Peer Group are carefully considered and for terminations of employment for good reason. Performance awards not assumed as part of a change in control would be paid at the target level.
With the exception of any special equity awards discussed on page 41 of this proxy statement, the Company grants stock, PSUs, RSUs, and stock options on dates that are consistentmade infrequently to ensure continuity from year to year. IfFor FY 2020-21, the Committee did not make any changes to the Peer Group.
Peer Group for Relative TSR Multiplier
The Company also establishes a peer group to calculate Relative Organic Sales Growth and the Relative TSR Multiplier used in our PSP formula. These companies are ones with which we compete in the marketplace.
Peer Group for 2020 Compensation Decisions | Peer Group for Relative Organic Sales Growth and TSR Multiplier for 2020-23 | |||||
| Performance Period | ||||||
Unique Peers | Common Peers | Unique Peers | ||||
3M | Lockheed Martin | Colgate-Palmolive | Beiersdorf | |||
Abbott Laboratories | Merck | Johnson & Johnson | Church & Dwight | |||
AT&T | Microsoft | Kimberly-Clark | Clorox | |||
Boeing | Mondelez | Edgewell | ||||
Chevron | Nike | Essity | ||||
Coca-Cola | PepsiCo | Henkel | ||||
ExxonMobil | Pfizer | Kao | ||||
General Electric | Raytheon Technologies | L’Oreal | ||||
HP Inc. | Verizon | Reckitt Benckiser | ||||
Home Depot | Wal-Mart Stores | Unicharm | ||||
IBM | Unilever | |||||
While the target total compensation for our NEOs is set considering size-adjusted median target total compensation within our Peer Group, actual compensation varies depending on the NEO’s responsibility and experience in the particular role, as well as on total Company, business unit, and individual performance. Consistent with our principles to pay for performance and pay competitively, substantial differences may exist among NEOs’ pay.
Stock Ownership Requirements
To reinforce the importance of stock ownership and long-term focus for our most senior executives, including the NEOs, the C&LD Committee changesestablished the Executive Share Ownership Program and Equity Holding Requirement.
The Executive Share Ownership Program requires the CEO to own shares of Company stock and/or RSUs (including granted Performance Stock Units) valued at a grant date, it is done in advance and only after careful review and discussion. Thepre-established grant dates for the programs are as follows: PST Restoration and IRP, first Thursday in August; STAR, last business day on minimum of eight times salary. Mr. Taylor currently holds approximately 22 times salary. All other NEOs must own stock and/or before September 15; and PSP and LTIP Grants, last business dayRSUs (including granted PSUs) valued at a minimum of February (and, if necessary for corrections,four or five times salary, depending on the last business dayNEO’s role. The C&LD Committee annually reviews these holdings, and as of April 1, 2021, each NEO exceeded these requirements.
| 2021 Proxy Statement 51 | ||||
| COMPENSATION DISCUSSION & ANALYSIS | ||
At its meeting on or before May 9).August 9, 2021, the C&LD Committee approved changes to the Executive Share Ownership Program based on an assessment of peer and market prevalent practices. Changes were made to exclude PSUs from the calculation of share ownership and to change the ownership requirements so that all NEOs other than the CEO are required to hold four times salary. The CEO ownership requirement will remain at eight times salary.
The Company has neverEquity Holding Requirementre-priced ensures executives remain focused on sustained shareholder value even after exercising their stock options or receiving shares from RSU settlements or PSU payouts. The equity holding requirement applies when an executive, including NEOs, has not met the ownership requirements of the Executive Share Ownership Program. When the holding requirement applies, the CEO is required to hold the net shares received from stock option exercises and is not permittedRSU and PSU settlements for at least three years, and the other NEOs are required to do so without prior shareholder approval.hold net shares received for at least one year. The Companyholding requirement does not backdateapply to unrestricted stock options. We useor to STAR awards that executives elect to take as stock options instead of cash.
Special Equity Awards
On occasion, the closing priceC&LD Committee makes special equity grants in the form of RSUs to senior executives to encourage retention of the Common Stock ontalent necessary to manage the date of grantCompany successfully or to determine the grant price for executive compensation awards. However, because the PST uses the value of shares based on the average price of common stock for the last five daysrecognize superior performance. No special equity award was granted to any NEO in June, the grants of RSUs made under the PST Restoration Program and IRP follow this same grant price practice.FY 2020-21.
Mitigation of Excessive Risk-Taking
Recoupment & Clawback
The C&LD Committee’s Senior Executive Officer Recoupment Policy permits the C&LD Committee to recoup or “clawback” certain STAR or long-term incentive program payments made to executives in the event of a significant restatement of financial results for any reason. This authority is in addition to the C&LD Committee’s authority under the 2014The Procter & Gamble 2019 Stock and Incentive Compensation Plan (“2019 Plan”) and prior plans to suspend or terminate any outstanding stock optionsequity if the C&LD Committee determines that the participant violated certain plan provisions. Moreover, the 2019 Plan, The Procter & Gamble 2014 Stock and Incentive Compensation Plan (“2014 Plan”), and The Procter & Gamble 2009 Stock and Incentive Compensation Plan (as amended) (“2009 Plan”), each havehas a clawback provision that allows the Company or the C&LD Committee to recover certain proceeds from option exercises or delivery of shares if the participant violates certain plan provisions, such as taking actions that are significantly contrary to the best interests of the Company, including actions that cause harm to the Company’s reputation, stability, or goodwill.
43
Prohibition of Use of Company Stock in Derivative Transactions
The Company’s Global Insider Trading Policy prohibits NEOs from engaging in derivative transactions involving Company stock, including pledging, collars, short sales, hedging investments, and other derivative transactions. Purchases and sales of Company stock by NEOs can only be made during the approximately one-month period following a public earnings announcement or, if outside these window periods, with express permission from the Company’s Legal Division or in accordance with a previously established trading plan that meets SEC requirements.
Deferred Compensation PlanTax Gross-Ups
The Procter & GambleGenerally, the Company Executive Deferred Compensation Plan (“EDCP”) allows executivesdoes not increase payments to defer receipt of up to 100% of their STAR awards and up to 75% of their annual salary. Executives may also elect to convert a portion of their PST Restoration RSUs into notional cash with investment choices that mirror those available to all U.S.any employees, who participate in the Company’s 401(k) plan. No above-market or preferential interest is credited on deferred compensation, as those terms are defined by the SEC.
Tax Treatment of Certain Compensation
Section 162(m) of the Internal Revenue Code limits the deductibility of executive compensation paid to certainincluding NEOs, to $1,000,000 per year. Priorcover non-business-related personal income taxes. However, certain expatriate allowances, relocation reimbursements, and tax equalization payments are made to the passage of the Tax Cutemployees assigned to work outside their home countries, and Jobs Act of 2017 (“TCJA”), the limitation did not apply to certain performance-based compensation. Stock options awarded under LTIP, as well as awards granted under the STAR and PSP programs, were intended to satisfy the performance-based requirements for deductible compensation pursuant to Section 162(m). The C&LD Committee, however, reserved the discretion to authorize payment of compensation that might not be deductible if it believed the payment of such compensation was in the best interests of the Company and its shareholders.
The TCJA repealedwill cover the performance-based compensation exemption, effective for taxable years beginning January 1, 2018, and expandedpersonal income taxes due on these items in accordance with expatriate policy because there is a business purpose to their relocations. In addition, from time to time, the definition of covered employees whose compensation is subjectCompany may be required to the annual $1 million deduction limitation to cover compensation paid to the CFO plus any individual who has previously been a covered employee, even if the individual no longer holds the position. The law provides limited transition reliefpay personal income taxes for certain employment arrangementsseparating executives hired through acquisitions in place as of November 2, 2017. Due to the uncertainty of the application of Section 162(m) as a result of the TCJA, there is no assurance that historical compensation intended to satisfy the performance-based requirements for exemption will be deductible in future years. New compensation awarded to NEOs in excess of $1 million starting in 2018 and later will generally no longer be deductible even if performance-based.conjunction with pre-existing contractual obligations.
Although this tax deduction is no longer available, the C&LD Committee intends to continue to use performance metrics in compensation because it believes aligning NEO incentives with Company performance is essential to creating long-term value for our shareholders.
| 52 The Procter & Gamble Company | ||
| COMPENSATION DISCUSSION & ANALYSIS | ||
Executive Compensation Changes for FY2018-19Employment Contracts
The C&LD Committee reviewed current salary competitiveness and positioningbelieves employment contracts for executives are not necessary because our executives have developed a focus on the CEO, CFO, and Group Presidents at its June 12, 2018 meeting. The committee increasedCompany’s long-term success. Moreover, the salary of Ms. Ferguson-McHugh to $880,000 effective August 1, 2018, based on competitive market movement and her individual performance managing the Family Care and P&G Ventures businesses. The Committee also increased the salary of Mr. Moeller to $1,050,000 effective July 1, 2018, reflecting market movement, individual performance, and his current role profile which includes responsibility for Information Technology, Shared Services, and Mergers and Acquisitions.
The C&LD Committee also reviewed several proposed changes to our compensation programs to better align rewards to business results and company strategy, and also reflects suggestions by institutional shareholders during last year’s dialogue with investors. In December 2017, the Committee modified the PSP to replace the Organic Sales Growth metric with a Relative Organic Sales Growth metric that compares our sales growth performance to that of our
44
consumer products competitive peer set. The Committee also added a Relative Total Shareholder Return(R-TSR) modifier comparing our shareholder return to our consumer products competitive peer set. TheR-TSR modifier willdoes not provide a 125% multiplier for results in the top quartile of our peer set, and 75% multiplier for results in the bottom quartile. These changes ensure that awards reflect performance versus external competitive benchmarks and will go into effect starting with the FY2018-21 PSP Performance Period on July 1, 2018.
The Committee also approved several changesspecial executive severance payments, such as golden parachutes, to the STAR program in June 2018. These changes reflect prevalent market best practice, provide a stronger emphasis on business unit results, increaseCompany’s executives. In the range of possible outcomes to better match the incentive with performance, and also reflects investor feedback. Beginning with the FY2018-19 STAR program on July 1, 2018, the range ofevent the Company and Business Unit Factors will be expandedencourages an NEO, or any other U.S. employee, to0%-200%, replacing the current ranges of50%-150% and70%-130%, respectively. With this change, exceptional performance will result in higher rewards, or may now not pay out at all based on weak performance. In addition, the formula will be additive rather than multiplicative and will be weighted to increase focus on Business Unit results, terminate employment with the Company Factor weighted 30% and the Business Unit Factor weighted 70%.(but not for cause), that individual may receive a separation allowance of up to one year’s annual salary, calculated based on years of service.
45
| 2021 Proxy Statement 53 | ||||
| EXECUTIVE COMPENSATION | ||
The following tables, footnotes, and narratives provide information regarding the compensation, benefits, and equity holdings in the Company for the NEOs.
The following table and footnotes provide information regarding the compensation of the NEOs for the fiscal years shown. Titles reflect the roles held by each NEO on June 30, 2021.
| FY 2017-18 Summary Compensation Table | |||||||||||||||||||||||||||||||||||||||||||||
Name and Principal Position
|
Year
| Salary ($)
| Bonus1
| Stock
| Option
| Non- Equity
| Change in ($)
| All Other
| Total ($)
| ||||||||||||||||||||||||||||||||||||
David S. Taylor | 2017-18 | 1,600,000 | 2,736,000 | 9,642,358 | 3,125,011 | 0 | 0 | 250,887 | 17,354,256 | ||||||||||||||||||||||||||||||||||||
Chairman of the Board, President and Chief Executive Officer | 2016-17 | 1,600,000 | 4,080,384 | 9,226,929 | 3,000,001 | 0 | 0 | 188,863 | 18,096,177 | ||||||||||||||||||||||||||||||||||||
| 2015-16 | 1,393,333 | 2,482,771 | 8,507,680 | 1,743,864 | 0 | 0 | 277,005 | 14,404,653 | |||||||||||||||||||||||||||||||||||||
Jon R. Moeller | 2017-18 | 1,000,000 | 1,111,500 | 3,637,453 | 2,100,126 | 0 | 0 | 110,277 | 7,959,356 | ||||||||||||||||||||||||||||||||||||
Vice Chairman and | 2016-17 | 950,000 | 1,453,637 | 3,520,417 | 2,029,563 | 0 | 0 | 75,184 | 8,028,801 | ||||||||||||||||||||||||||||||||||||
Chief Financial Officer | 2015-16 | 950,000 | 1,016,652 | 3,526,353 | 1,278,748 | 0 | 0 | 73,899 | 6,845,652 | ||||||||||||||||||||||||||||||||||||
Steven D. Bishop | 2017-18 | 845,000 | 645,975 | 1,670,893 | 1,559,250 | 0 | 0 | 74,103 | 4,795,221 | ||||||||||||||||||||||||||||||||||||
Group President - Global Health Care | 2016-17 | 822,500 | 1,311,828 | 1,524,431 | 1,417,503 | 0 | 0 | 74,933 | 5,151,195 | ||||||||||||||||||||||||||||||||||||
| 2015-16 | 796,667 | 873,464 | 2,342,867 | 465,966 | 0 | 0 | 71,003 | 4,549,967 | |||||||||||||||||||||||||||||||||||||
Giovanni Ciserani6 | 2017-18 | 936,667 | 730,944 | 4,061,942 | 0 | 0 | (377,000 | ) | 271,906 | 5,624,459 | |||||||||||||||||||||||||||||||||||
Group President - Global Fabric & Home Care and Global Baby & Feminine Care | 2016-17 | 895,833 | 1,085,011 | 2,425,147 | 2,255,007 | 0 | (258,000 | ) | 1,211,420 | 7,614,418 | |||||||||||||||||||||||||||||||||||
| 2015-16 | 845,833 | 1,044,225 | 2,280,962 | 1,334,347 | 0 | 1,052,000 | 291,337 | 6,848,704 | |||||||||||||||||||||||||||||||||||||
Mary Lynn Ferguson-McHugh | 2017-18 | 847,500 | 698,062 | 2,550,837 | 813,390 | 0 | 0 | 67,867 | 4,977,656 | ||||||||||||||||||||||||||||||||||||
Group President - Global Family Care and P&G Ventures | 2016-17 | 817,500 | 1,409,974 | 2,370,115 | 755,001 | 0 | 0 | 80,329 | 5,432,919 | ||||||||||||||||||||||||||||||||||||
FY 2020–21 SUMMARY COMPENSATION TABLE | ||||||||||||||||||
Name and Principal Position
| Year
| Salary
| Bonus1
| Stock
| Option
| Non- Incentive Plan sation ($)
| Change in qualified ($)
| All
| Total ($)
| |||||||||
David S. Taylor | ||||||||||||||||||
Chairman of the | 2020-21 | 1,783,333 | 6,570,000 | 10,652,543 | 4,631,265 | 0 | 0 | 263,240 | 23,900,381 | |||||||||
Board, President | 2019-20 | 1,700,000 | 6,014,600 | 11,242,037 | 3,437,505 | 0 | 0 | 510,986 | 22,905,128 | |||||||||
and Chief Executive Officer | 2018–19 | 1,650,000 | 5,409,400 | 9,768,118 | 3,251,263 | 0 | 0 | 420,031 | 20,498,812 | |||||||||
Andre Schulten Chief Financial Officer | 2020–21 | 608,583 | 951,563 | 666,792 | 0 | 0 | 0 | 71,177 | 2,298,115 | |||||||||
Jon R. Moeller | ||||||||||||||||||
Vice Chairman, | 2020-21 | 1,191,667 | 3,066,000 | 5,157,020 | 2,756,266 | 0 | 0 | 92,223 | 12,263,176 | |||||||||
Chief Operating Officer | 2019-20 | 1,150,000 | 2,848,090 | 4,863,501 | 2,625,010 | 0 | 0 | 119,421 | 11,606,022 | |||||||||
(Former CFO) | 2018–19 | 1,050,000 | 2,171,715 | 3,911,517 | 2,258,157 | 0 | 0 | 85,939 | 9,477,328 | |||||||||
Steven D. Bishop | 2020-21 | 910,000 | 1,788,150 | 1,981,378 | 1,674,109 | 0 | 0 | 87,229 | 6,440,866 | |||||||||
Chief Executive Officer— | 2019-20 | 910,000 | 1,628,900 | 2,371,962 | 1,255,571 | 0 | 0 | 82,246 | 6,248,679 | |||||||||
Health Care | 2018–19 | 870,000 | 1,390,260 | 2,200,194 | 694,580 | 0 | 0 | 76,245 | 5,231,279 | |||||||||
Mary Lynn | ||||||||||||||||||
Chief Executive Officer— | 2020-21 | 910,000 | 1,541,313 | 3,655,600 | 0 | 0 | 0 | 87,334 | 6,194,247 | |||||||||
Family Care | 2019-20 | 910,000 | 1,767,448 | 3,629,011 | 0 | 0 | 0 | 101,000 | 6,407,459 | |||||||||
and New Business | 2018–19 | 877,500 | 1,543,300 | 2,429,675 | 770,875 | 0 | 0 | 75,741 | 5,697,091 | |||||||||
Shailesh Jejurikar6 | ||||||||||||||||||
Chief Executive Officer— | 2020-21 | 798,333 | 1,614,330 | 1,900,372 | 1,674,109 | 0 | 0 | 236,329 | 6,223,473 | |||||||||
Fabric and Home Care |
|
|
|
|
|
|
|
|
| |||||||||
1 For FY2017-18,2020-21, Bonus reflects FY2017-182020-21 STAR awards that will be paid on September 15, 2018.2021. Each NEO who participated in STAR could elect to take his or her STAR award in cash, deferred compensation, or stock options. For FY2017-18,2020-21, Mr. Taylor chose to take his STAR award as 60%35% cash, 55% stock options, 35% cash, and 5%10% deferred compensation. Ms. Ferguson-McHugh and Messrs.Mr. Schulten, Mr. Moeller, Mr. Bishop, and CiseraniMs. Ferguson-McHugh took their awards in cash. Mr. Jejurikar took his award in stock options.
2 For FY2017-18,2020-21, Stock Awards include the grant date fair value of any PST Restoration Program and International Retirement Plan awards granted in August 2020 and the PSUs granted in February 2018October 2020 under the PSP. For Ms. Ferguson-McHugh and Messrs. Taylor, Moeller, and Ciserani, FY2017-18 Stock AwardsIt also includeincludes the grant date fair value of RSUs granted in February 2018October 2020 under the LTIP Stock Grant. The amount shown is determined in accordance with FASB ASC Topic 718. For more information regarding these awards, including retention and vesting requirements and applicable performance measures, see pages 38-4342-45 of the Compensation Discussion & Analysis. For PSP awards, which are subject to performance conditions, the value is based on the probable outcome of the conditions at grant date. The value of the PSUs assuming the highest level of performance conditions will be achieved is: Mr. Taylor, $14,250,100; Mr. Schulten, $305,214 ; Mr. Moeller, $7,350,201; Mr. Bishop, $3,348,444; Ms. Ferguson-McHugh, $3,348,444; and Mr. Jejurikar, $3,348,444.
3Option Awards for FY2017-182020-21 include the grant date fair value of each LTIP Stock Grant, determined in accordance with FASB ASC Topic 718.
| 54 The Procter & Gamble Company | ||
| EXECUTIVE COMPENSATION | ||
We utilize an industry standard lattice-based valuation model to calculate the fair value for stock options granted. Assumptions utilized in the model, which are evaluated and revised to reflect market conditions and experience, were as follows:
Years ended June 30:
|
2018
|
2017
|
2016
| |||||||||
Interest rate
|
|
1.9-2.9%
|
|
|
0.8-2.6%
|
|
|
0.7-1.9%
|
| |||
Weighted average interest rate
|
|
2.8%
|
|
|
2.6%
|
|
|
1.8%
|
| |||
Dividend yield
|
|
3.1%
|
|
|
3.2%
|
|
|
3.2%
|
| |||
Expected volatility
|
|
18%
|
|
|
15%
|
|
|
16%
|
| |||
Expected life in years
|
|
9.2
|
|
|
9.6
|
|
|
8.3
|
| |||
46
Years ended June 30: | 2021 | 2020 | 2019 | |||
Interest rate | 0.1–0.7% | 1.1–1.4% | 2.5-2.7% | |||
Weighted average interest rate | 0.6% | 1.3% | 2.6% | |||
Dividend yield | 2.4% | 2.4% | 3.0% | |||
Expected volatility | 20% | 17% | 17% | |||
Expected life in years | 9.2 | 9.2 | 9.2 | |||
Lattice-based option valuation models incorporate ranges of assumptions for inputs and those ranges are disclosed in the preceding table. Expected volatility is based on a combination of historical volatility of our stock and implied volatilities of call options on our stock. We use historical data to estimate option exercise and employee termination patterns within the valuation model. The expected life of options granted is derived from the output of the option valuation model and represents the average period of time that options granted are expected to be outstanding. The interest rate for periods within the contractual life of the options is based on the U.S. Treasury yield curve in effect at the time of grant. For information on the valuation assumptions with respect to grants made in prior fiscal years, please see the corresponding note to the Consolidated Financial Statements contained in the Company’s Annual Report for the respective fiscal year. For more information regarding these awards, including retention and vesting requirements and applicable performance measures, see page 39pages 42-45 of the Compensation Discussion & Analysis.
4This column reflects aggregate changes in the actuarial present value of Mr. Ciserani’sSchulten’s and Mr. Jejurikar’s pension benefits under The Procter & Gamble Company Global IRA.IRA (the “IRA”) and Mr. Schulten’s pension benefits under the The Procter & Gamble Pension Plan (Germany). The amounts for Mr. Schulten and Mr. Jejurikar were $(324,000) and $(382,000), respectively, and are not included in the Summary Compensation Table. None of the other NEOs hasparticipates in a pension plan. None of the NEOs had above-market earnings on deferred compensation.
5Please see the table below for information on the numbers that comprise the All Other Compensation column.
6Mr. Ciserani’sJejurikar’s salary in FY 2020-21 was established in U.S. dollarsconverted to and receivedpaid in Swiss francs based onusing a Bloomberg monthly spot rate representing the average of the buy and sell rates for the month.
| All Other Compensation | |||||||||||||||||||||||||||||||||||
| Name and Principal Position | Year | Retirement Plan Contributionsi | Executive Group Life Insuranceii | Flexible Compensation Program Contributionsiii | Expatriate, Relocation and Tax Equalization Paymentsiv | Executive Benefitsv | Totalvi | ||||||||||||||||||||||||||||
| ($) | ($) | ($) | ($) | ($) | ($) | ||||||||||||||||||||||||||||||
David S. Taylor | 2017-18 | 54,157 | 9,384 | 5,350 | 0 | 181,996 | 250,887 | ||||||||||||||||||||||||||||
Chairman of the Board, | 2016-17 | 52,648 | 5,177 | 5,300 | 0 | 125,738 | 188,863 | ||||||||||||||||||||||||||||
President and Chief Executive Officer | 2015-16 | 52,843 | 3,875 | 5,250 | 594 | 214,443 | 277,005 | ||||||||||||||||||||||||||||
Jon R. Moeller | 2017-18 | 54,157 | 7,710 | 5,350 | 0 | 43,060 | 110,277 | ||||||||||||||||||||||||||||
Vice Chairman and | 2016-17 | 52,648 | 6,281 | 5,300 | 0 | 10,955 | 75,184 | ||||||||||||||||||||||||||||
Chief Financial Officer | 2015-16 | 52,843 | 5,431 | 5,250 | 0 | 10,375 | 73,899 | ||||||||||||||||||||||||||||
Steven D. Bishop | 2017-18 | 54,157 | 5,726 | 5,350 | 0 | 8,870 | 74,103 | ||||||||||||||||||||||||||||
Group President - Global Health Care | 2016-17 | 52,648 | 4,786 | 5,300 | 0 | 12,199 | 74,933 | ||||||||||||||||||||||||||||
| 2015-16 | 52,843 | 4,100 | 5,250 | 0 | 8,810 | 71,003 | |||||||||||||||||||||||||||||
Giovanni Ciserani | 2017-18 | 0 | 8,920 | 5,350 | 257,636 | 0 | 271,906 | ||||||||||||||||||||||||||||
Group President - Global Fabric & Home Care, Global Baby & Feminine Care
| 2016-17 | 0 | 6,287 | 5,300 | 1,199,833 | 0 | 1,211,420 | ||||||||||||||||||||||||||||
| 2015-16 | 0 | 4,221 | 5,250 | 281,866 | 0 | 291,337 | |||||||||||||||||||||||||||||
Mary Lynn Ferguson-McHugh | 2017-18 | 54,157 | 3,025 | 5,350 | 0 | 5,335 | 67,867 | ||||||||||||||||||||||||||||
Group President - Global Family Care and P&G Ventures | 2016-17 | 52,648 | 1,741 | 5,300 | 1,187 | 19,453 | 80,329 | ||||||||||||||||||||||||||||
ALL OTHER COMPENSATION | ||||||||||||||
Name and Principal Position | Year | Retirement Plan Contributionsi ($) | Executive Group Life Insuranceii ($) | Flexible Compensation Program Contributionsiii ($) | Expatriate, Relocation and Tax Equalization Paymentsiv ($) | Executive Benefitsv ($) | Totalvi ($) | |||||||
David S. Taylor | ||||||||||||||
Chairman of the | 2020-21 | 64,088 | 17,856 | 5,650 | 0 | 175,646 | 263,240 | |||||||
Board, President | 2019-20 | 60,244 | 15,825 | 5,550 | 0 | 429,367 | 510,986 | |||||||
and Chief Executive Officer | 2018-19 | 55,555 | 13,776 | 5,450 | 0 | 345,250 | 420,031 | |||||||
Andre Schulten | ||||||||||||||
Chief Financial Officer | 2020-21 | 64,088 | 1,926 | 4,238 | 0 | 925 | 71,177 | |||||||
Jon R. Moeller | 2020-21 | 64,088 | 13,985 | 5,650 | 0 | 8,500 | 92,223 | |||||||
Vice Chairman and | 2019-20 | 60,244 | 11,827 | 5,550 | 0 | 41,800 | 119,421 | |||||||
Chief Operating Officer | 2018-19 | 55,555 | 9,314 | 5,450 | 0 | 15,620 | 85,939 | |||||||
Steven D. Bishop | 2020-21 | 64,088 | 8,991 | 5,650 | 0 | 8,500 | 87,229 | |||||||
Chief Executive | 2019-20 | 60,244 | 7,952 | 5,550 | 0 | 8,500 | 82,246 | |||||||
Officer—Health Care | 2018-19 | 55,555 | 6,740 | 5,450 | 0 | 8,500 | 76,245 | |||||||
Mary Lynn | ||||||||||||||
Ferguson-McHugh | 2020-21 | 64,088 | 5,788 | 5,650 | 0 | 11,808 | 87,334 | |||||||
Chief Executive Officer— | 2019-20 | 60,244 | 5,162 | 5,550 | 0 | 30,044 | 101,000 | |||||||
Family Care and | 2018-19 | 55,555 | 4,507 | 5,450 | 0 | 10,229 | 75,741 | |||||||
New Business |
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Shailesh Jejurikar | ||||||||||||||
Chief Executive Officer— | 2020-21 | 35,482 | 6,105 | 5,650 | 174,199 | 14,893 | 236,329 | |||||||
Fabric & Home Care |
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| 2021 Proxy Statement 55 | ||||
| EXECUTIVE COMPENSATION | ||
iAmounts contributed by the Company pursuant to the PST, a qualified defined contribution plan providing retirement benefits for U.S.-based employees. NEOs also receive contributions in the form of RSU grants pursuant to the PST Restoration Program, a nonqualified defined contribution plan. Mr. Ciserani receives IRP RSUs in lieu of a PST contribution. These RSU awards are included in the Stock Awards column of the Summary Compensation Table.
ii Under the Executive Group Life Insurance Program (“EGLIP”), which was closed to new participants in 2013, the Company offersprovides key executives who have substantially contributed to the success and development of the business, and upon whom the future of the Company chiefly depends, life insurance coverage equal to salary plus their STAR target up to a maximum of $5,000,000. These policies are owned by the Company. Because premium payments are returned to the Company when the benefit is paid out, we believe the annual premiums paid by the Company overstate the Company’s true cost of providing this life insurance benefit. Accordingly, the amounts shown in the table are an average based on Internal Revenue Service tables used to value the term cost of such coverage for calendar year 20172020 and calendar year 2018,2021, which reflect what it would cost the executive to obtain the same coverage in a term life insurance policy. The average of the two calendar years was used because fiscal year data is not available. The average of the dollar value of the premiums actually paid by the Company in calendar years 20172020 and 20182021 under these policies were as follows: Mr. Taylor, $118,686,$354,897, Mr. Schulten, $21,874, Mr. Moeller, $76,933,$84,578, Mr. Bishop, $57,446, Mr. Ciserani, $82,217, and$40,334, Ms. Ferguson-McHugh, $76,201.$19,429, Mr. Jejurkar, $50,795. This program is in addition to any other Company-provided group life insurance in which an NEO may enroll that is also available to all employees on the same basis.
iii Flexible Compensation Program Contributions are given in the form of credits to pay for coverage in a number of benefit plans including, but not limited to, medical insurance and additional life insurance. Employees may also receive unused credits as cash. Credits are earned based on PST years of service.
iv The Company provides assistance to certain employees, including NEOs, related to expenses incurred in connection with expatriate assignments and Company-required relocations. Mr. Ciserani’sJejurikar’s payment for expatriate assignment expenses resulted from his current assignment in Switzerland, which included a housing allowance and related support of $140,547; cost$36,287; costs of living adjustments of $69,402;$86,543; a transportationtravel allowance of $11,757; and
47
$24,915; relocation-related expenses of $14,368.$19,354 and tax preparation cost of $7,100. Expenses were paid in Swiss francs and converted to U.S. dollars using a Bloomberg monthly spot rate representing the average of the buy and sell rates for the month.
v In addition, all NEOs are entitled to the following personal benefits: financial counseling (including tax preparation), an annual physical examination, occasional use of a Company car, secure workplace parking, and home security and monitoring. The costs associated with Mr. Taylor’s use of a Company car were $19,546.$16,079. The costs associated with home security and monitoring for Mr. Taylor were $2,044. While Company aircraft is generally used for Company business only, the CEO is required to use Company aircraft for all air travel, including travel to outside board meetings and personal travel, pursuant to the Company’s executive security programrequirements established by the Board of Directors. While traveling on Company aircraft, the CEO and Chairman of the Board may bring a limited number of guests (spouse, family member, or similar guest) to accompany him. The aggregate incremental aircraft usage costs associated with Mr. Taylor’s personal use of the Company aircraft during FY2017-182020-21 were $151,100. Ms. Ferguson-McHugh and Messrs. Moeller, Bishop, and Ciserani$147,223. Subject to the approval of the CHRO, certain executives are permitted to use the Company aircraft for travel to outside board meetings, if any, and, if the Company aircraft is already scheduled for business purposes and can accommodate additional passengers, may use it for personal travel and guest accompaniment. The aggregate incremental aircraft usage costs associated with Mr. Moeller’s personal use of the Company aircraft were $34,560. Noneaccompaniment; none of the other NEOs used the Company aircraft for either of these purposes in FY2017-18.2020-21. The incremental costs to the Company for these benefits, other than use of Company aircraft, are the actual costs or charges incurred by the Company for the benefits. The incremental cost to the Company for use of the Company aircraft is calculated by using an hourly rate for each flight hour. Beginning in fiscal 2020-21, the Company began using a new methodology for determining the hourly rate for flights that is more in line with industry standards and more accurately reflects the incremental variable costs for personal travel. The hourly rate is based on the incremental variable operational costs of each flight, including fuel, maintenance, flight crew travel expense, catering, communications and fees, including flight planning, ground handling and landing permits. For any flights that involved mixed personal and business usage, any personal usage hours that exceed the business usage are utilized to determine the incremental cost to the Company.
vi This total does not reflect a charitable donation of $10,000 made by the Company to the Children’s Safe Drinking Water Program on behalf of the Company’s Global Leadership Council, of which each NEO is a member. This donation was funded from general corporate assets, and the NEOs derived no financial benefits from this donation because this charitable deduction accrues solely to the Company.
48
| 56 The Procter & Gamble Company | ||
| EXECUTIVE COMPENSATION | ||
The following table and footnotes provide information regarding grants of equity under Company plans made to the NEOs during FY2017-18.2020-21.
| Grants of Plan-Based Awards | ||||||||||||||||||||||||||||||
Name/Plan Name | Grant | Compensation Action Date | All Other Stock Awards: Number of Shares or Stock Units (#) | All Other (#) | Exercise or Base Price of Option Awards2 ($ per share) | Grant Date Fair Value of Stock Option ($) | ||||||||||||||||||||||||
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| ||||||||||||||||||||||||||||||
| Estimated Future Payouts Under Equity Incentive Plan Awards | ||||||||||||||||||||||||||||||
| Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||
David S. Taylor | ||||||||||||||||||||||||||||||
LTIP Options4 | 02/28/2018 | 02/13/2018 | 252,017 | 78.52 | 3,125,011 | |||||||||||||||||||||||||
LTIP RSUs5 | 02/28/2018 | 02/13/2018 | 39,799 | 3,125,017 | ||||||||||||||||||||||||||
PSUs6 | 02/28/2018 | 02/13/2018 | 0 | 79,598 | 159,196 | 6,250,035 | ||||||||||||||||||||||||
PST Restoration RSUs7 | 08/03/2017 | 06/13/2017 | 3,024 | 267,306 | ||||||||||||||||||||||||||
STAR Stock Options8 | 09/15/2017 | 07/28/2017 | 315,392 | 93.27 | 3,264,307 | |||||||||||||||||||||||||
Jon R. Moeller | ||||||||||||||||||||||||||||||
LTIP Options4 | 02/28/2018 | 02/13/2018 | 169,365 | 78.52 | 2,100,126 | |||||||||||||||||||||||||
LTIP RSUs5 | 02/28/2018 | 02/13/2018 | 8,916 | 700,084 | ||||||||||||||||||||||||||
PSUs6 | 02/28/2018 | 02/13/2018 | 0 | 35,662 | 71,324 | 2,800,180 | ||||||||||||||||||||||||
PST Restoration RSUs7 | 08/03/2017 | 06/13/2017 | 1,552 | 137,189 | ||||||||||||||||||||||||||
Steven D. Bishop | ||||||||||||||||||||||||||||||
LTIP Options4 | 02/28/2018 | 02/13/2018 | 125,746 | 78.52 | 1,559,250 | |||||||||||||||||||||||||
PSUs6 | 02/28/2018 | 02/13/2018 | 0 | 19,858 | 39,716 | 1,559,250 | ||||||||||||||||||||||||
PST Restoration RSUs7 | 08/03/2017 | 06/13/2017 | 1,263 | 111,643 | ||||||||||||||||||||||||||
Giovanni Ciserani | ||||||||||||||||||||||||||||||
LTIP RSUs5 | 02/28/2018 | 02/13/2018 | 24,723 | 1,941,250 | ||||||||||||||||||||||||||
PSUs6 | 02/28/2018 | 02/13/2018 | 0 | 24,723 | 49,446 | 1,941,250 | ||||||||||||||||||||||||
IRP RSUs9 | 08/03/2017 | 06/13/2017 | 2,030 | 179,442 | ||||||||||||||||||||||||||
Mary Lynn Ferguson-McHugh | ||||||||||||||||||||||||||||||
LTIP Options4 | 02/28/2018 | 02/13/2018 | 65,596 | 78.52 | 813,390 | |||||||||||||||||||||||||
LTIP RSUs5 | 02/28/2018 | 02/13/2018 | 10,359 | 813,389 | ||||||||||||||||||||||||||
PSUs6 | 02/28/2018 | 02/13/2018 | 0 | 20,718 | 41,436 | 1,626,777 | ||||||||||||||||||||||||
PST Restoration RSUs7 | 08/03/2017 | 06/13/2017 | 1,252 | 110,671 | ||||||||||||||||||||||||||
GRANTS OF PLAN-BASED AWARDS | ||||||||||||||||||||||||||||||||
Grant | Compensation & Leadership Development Committee Action Date |
Estimated Future Payouts Under Equity Incentive Plan Awards | All Stock | All Other of | Exercise of | Grant Date Fair Value of Stock and Option ($) | ||||||||||||||||||||||||||
Name/Plan Name | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||
David S. Taylor | ||||||||||||||||||||||||||||||||
LTIP Options4 | 10/01/2020 | 08/11/2020 | 218,250 | 139.24 | 4,631,265 | |||||||||||||||||||||||||||
LTIP RSUs5 | 10/01/2020 | 08/11/2020 | 17,910 | 2,493,788 | ||||||||||||||||||||||||||||
PSUs6 | 10/01/2020 | 08/11/2020 | 0 | 51,171 | 102,342 | 7,851,167 | ||||||||||||||||||||||||||
PST Restoration RSUs7 | 08/06/2020 | 06/09/2020 | 2,620 | 307,588 | ||||||||||||||||||||||||||||
STAR Stock Options8 | 09/15/2020 | 08/11/2020 | 162,717 | 138.63 | 3,308,037 | |||||||||||||||||||||||||||
Andre Schulten | ||||||||||||||||||||||||||||||||
LTIP RSUs5 | 10/01/2020 | 08/11/2020 | 3,286 | 457,543 | ||||||||||||||||||||||||||||
PSUs6 | 10/01/2020 | 08/11/2020 | 0 | 1,096 | 2,192 | 168,159 | ||||||||||||||||||||||||||
PST Restoration RSUs7 | 08/06/2020 | 06/09/2020 | 350 | 41,090 | ||||||||||||||||||||||||||||
Jon R. Moeller | ||||||||||||||||||||||||||||||||
LTIP Options4 | 10/01/2020 | 08/11/2020 | 129,890 | 139.24 | 2,756,266 | |||||||||||||||||||||||||||
LTIP RSUs5 | 10/01/2020 | 08/11/2020 | 6,599 | 918,845 | ||||||||||||||||||||||||||||
PSUs6 | 10/01/2020 | 08/11/2020 | 0 | 26,394 | 52,788 | 4,049,631 | ||||||||||||||||||||||||||
PST Restoration RSUs7 | 08/06/2020 | 06/09/2020 | 1,606 | 188,544 | ||||||||||||||||||||||||||||
Steven D. Bishop | ||||||||||||||||||||||||||||||||
LTIP Options4 | 10/01/2020 | 08/11/2020 | 78,893 | 139.24 | 1,674,109 | |||||||||||||||||||||||||||
PSUs6 | 10/01/2020 | 08/11/2020 | 0 | 12,024 | 24,048 | 1,844,842 | ||||||||||||||||||||||||||
PST Restoration RSUs7 | 08/06/2020 | 06/09/2020 | 1,163 | 136,536 | ||||||||||||||||||||||||||||
Mary Lynn Ferguson-McHugh | ||||||||||||||||||||||||||||||||
LTIP RSUs5 | 10/01/2020 | 08/11/2020 | 12,024 | 1,674,222 | ||||||||||||||||||||||||||||
PSUs6 | 10/01/2020 | 08/11/2020 | 0 | 12,024 | 24,048 | 1,844,842 | ||||||||||||||||||||||||||
PST Restoration RSUs7 | 08/06/2020 | 06/09/2020 | 1,163 | 136,536 | ||||||||||||||||||||||||||||
Shailesh Jejurikar | ||||||||||||||||||||||||||||||||
LTIP Options4 | 10/01/2020 | 08/11/2020 | 78,893 | 139.24 | 1,674,109 | |||||||||||||||||||||||||||
PSUs6 | 10/01/2020 | 08/11/2020 | 0 | 12,024 | 24,048 | 1,844,842 | ||||||||||||||||||||||||||
PST Restoration RSUs7 | 08/06/2020 | 06/09/2020 | 473 | 55,530 | ||||||||||||||||||||||||||||
STAR Stock Options8 | 09/15/2020 | 08/11/2020 | 71,780 | 138.63 | 1,459,287 | |||||||||||||||||||||||||||
1 Grant dates for equity awards are consistent from year to year. Beginning with the 2020-21 fiscal year, as described on page 43 of this proxy statement.LTIP and PSP grants are made in October.
2 The options granted were awarded using the closing price of the Company stock on the date of the grant.
3 This column reflects the grant date fair value of each award computed in accordance with FASB ASC Topic 718. For stock awards, the actual amount paid will be based on the stock price on the delivery date. For options, the actual amount paid will be determined by multiplying the number of shares acquired by the difference between the market price of the Company’s common stock upon exercise and the grant price of the options.
4 These options are forfeitable until the later of retirement eligibility or June 30thone year after the grant date, and will become exercisable on February 26, 2021,September 29, 2023, and will expire on February 28, 2028.October 1, 2030. For the retirement eligible NEOs (Mr. Taylor, Mr. Moeller, and
| 2021 Proxy Statement 57 | ||||
| EXECUTIVE COMPENSATION | ||
Mr. Bishop,), prior to the first year anniversary of grant, the award will be pro-rated based on the number of days worked that year.
5 These units are forfeitable until the later of retirement eligibility or June 30thone year after the grant date and will deliver in shares on February 26, 2021.September 29, 2023. For the retirement eligible NEOs (Mr. Taylor, Mr. Moeller, and Ms. Ferguson McHugh), prior to the first year anniversary of grant, the award will be pro-rated based on the number of days worked that year. These units accumulate dividend equivalents at the same rate as dividends paid on common stock.
6 For awards granted under the Performance Stock Program, see page 4043 of the Compensation Discussion & Analysis for applicable performance measures. These units are forfeitable until the later of retirement eligibility or June 30thone year after the grant date, and will deliver in shares in August 20202023 unless elected otherwise by the NEO, subject to applicable tax rules and regulations. For the retirement eligible NEOs (Mr. Taylor, Mr. Moeller, Mr. Bishop, and Ms. Ferguson McHugh), prior to the first year anniversary of grant, the award will be pro-rated based on the number of days worked that year. These units accumulate dividend equivalents at the same rate as dividends paid on common stock.
7 For awards granted under the PST Restoration Program, dividend equivalents are earned at the same rate as dividends paid on common stock. These units will deliver in shares one year following retirement unless elected otherwise by the NEO, subject to applicable tax rules and regulations.
8These options are nonforfeitable, and will become exercisable on September 15, 2020,2023, and will expire on September 15, 2027.
9 For awards granted under13, 2030. These options reflect payment of the IRP, dividend equivalents are earned atFY 2019-20 STAR award, which was previously included in the same rate as dividends paid on common stock. These units will deliverBonus column of the Summary Compensation Table in shares one year following retirement unless elected otherwise by the NEO, subject to applicable tax rules and regulations.2020 Proxy Statement.
49
| 58 The Procter & Gamble Company | ||
| EXECUTIVE COMPENSATION | ||
Outstanding Equity at Fiscal Year End
The following table and footnotes provide information regarding unexercised stock options and stock awards that have not yet vested as of the end of FY2017-18.2020-21.
Outstanding Equity at FiscalYear-End Table
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| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||
| Name/Plan | Grant Date | Number of Securities Underlying Unexercised Options Exercisable1 (#) | Number of Securities Underlying Unexercised Options Unexercisable1 (#) | Option ($) | Option Expiration Date | Number of Shares or Units of Stock that Have Not Vested2 (#) | Market Value of Shares or Units of Stock that Have Not Vested3 ($) | Equity Incentive Plan | Equity Incentive Plan that Have Not ($) | |||||||||||||||||||||||||||||||||
OUTSTANDING EQUITY AT FISCAL YEAR-END TABLE | OUTSTANDING EQUITY AT FISCAL YEAR-END TABLE | |||||||||||||||||||||||||||||||||||||||||
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||
Name/ Plan Name | Grant Date | Number of Securities Underlying Unexercised Options Exercisable1 (#) | Number of Securities Underlying Unexercised Options Unexercisable1 (#) | Option ($) | Option Expiration Date | Number of Shares or Units of Stock that Have Not Vested2 (#) | Market Value of Shares or Units of Stock that Have Not Vested3 ($) | Equity Incentive Plan | Equity Incentive Plan | |||||||||||||||||||||||||||||||||
David S. Taylor | David S. Taylor | |||||||||||||||||||||||||||||||||||||||||
Key Manager | 02/26/2010 | 33,113 | 63.2800 | 02/26/2020 | 02/29/2016 | 205,095 | 80.2900 | 02/27/2026 | ||||||||||||||||||||||||||||||||||
Key Manager | 02/28/2011 | 98,335 | 63.0500 | 02/28/2021 | ||||||||||||||||||||||||||||||||||||||
STAR | 09/15/2011 | 16,338 | 62.7800 | 09/15/2021 | 09/15/2016 | 126,874 | 88.0600 | 09/15/2026 | ||||||||||||||||||||||||||||||||||
Key Manager | 02/29/2012 | 103,673 | 67.5200 | 02/28/2022 | ||||||||||||||||||||||||||||||||||||||
LTIP | 02/28/2017 | 280,899 | 91.0700 | 02/26/2027 | ||||||||||||||||||||||||||||||||||||||
STAR | 09/14/2012 | 43,045 | 69.1600 | 09/14/2022 | 09/15/2017 | 315,392 | 93.2700 | 09/15/2027 | ||||||||||||||||||||||||||||||||||
Key Manager | 02/28/2013 | 108,297 | 76.1800 | 02/28/2023 | ||||||||||||||||||||||||||||||||||||||
LTIP | 02/28/2018 | 252,017 | 78.5200 | 02/28/2028 | ||||||||||||||||||||||||||||||||||||||
STAR | 09/13/2013 | 74,520 | 79.0500 | 09/13/2023 | 09/14/2018 | 143,748 | 83.6100 | 09/14/2028 | ||||||||||||||||||||||||||||||||||
Key Manager | 02/28/2014 | 116,960 | 78.6600 | 02/28/2024 | ||||||||||||||||||||||||||||||||||||||
STAR | 09/15/2014 | 65,054 | 83.8700 | 09/15/2024 | ||||||||||||||||||||||||||||||||||||||
Key Manager | 02/27/2015 | 176,202 | 85.1300 | 02/27/2025 | ||||||||||||||||||||||||||||||||||||||
STAR | 09/15/2015 | 68,275 | 69.4500 | 09/15/2025 | ||||||||||||||||||||||||||||||||||||||
Key Manager | 02/29/2016 | 205,095 | 80.2900 | 02/27/2026 | ||||||||||||||||||||||||||||||||||||||
LTIP | 02/28/2019 | 230,586 | 98.5500 | 02/28/2029 | ||||||||||||||||||||||||||||||||||||||
STAR | 09/15/2016 | 126,874 | 88.0600 | 09/15/2026 | 09/13/2019 | 77,633 | 122.1200 | 09/13/2029 | ||||||||||||||||||||||||||||||||||
LTIP | 02/28/2017 | 280,899 | 91.0700 | 02/26/2027 | 02/28/2020 | 226,898 | 113.2300 | 02/28/2030 | ||||||||||||||||||||||||||||||||||
PSP | 02/28/2017 | 68,667 | 5,360,146(3) | 02/28/2020 | 62,614 | 8,448,507 | ||||||||||||||||||||||||||||||||||||
STAR | 09/15/2017 | 315,392 | 93.2700 | 09/15/2027 | 09/15/2020 | 162,717 | 138.6300 | 09/13/2030 | ||||||||||||||||||||||||||||||||||
LTIP | 02/28/2018 | 252,017 | 78.5200 | 02/28/2028 | 10/01/2020 | 218,250 | 139.2400 | 10/01/2030 | 4,493 | 606,202 | ||||||||||||||||||||||||||||||||
PSP | 02/28/2018 | 80,380 | 6,274,463(4) | 10/01/2020 | 52,098 | 7,029,718 | ||||||||||||||||||||||||||||||||||||
Jon R. Moeller | ||||||||||||||||||||||||||||||||||||||||||
Key Manager | 02/26/2010 | 82,965 | 63.2800 | 02/26/2020 | ||||||||||||||||||||||||||||||||||||||
Key Manager | 02/28/2011 | 107,058 | 63.0500 | 02/28/2021 | ||||||||||||||||||||||||||||||||||||||
Key Manager | 02/29/2012 | 122,187 | 67.5200 | 02/28/2022 | ||||||||||||||||||||||||||||||||||||||
Key Manager | 02/28/2013 | 127,987 | 76.1800 | 02/28/2023 | ||||||||||||||||||||||||||||||||||||||
Special Award | 08/13/2013 | 6,123 | 477,961 | |||||||||||||||||||||||||||||||||||||||
Key Manager | 02/28/2014 | 130,626 | 78.6600 | 02/28/2024 | ||||||||||||||||||||||||||||||||||||||
Key Manager | 02/28/2014 | 8,709 | 679,825 | |||||||||||||||||||||||||||||||||||||||
Key Manager | 02/27/2015 | 132,151 | 85.1300 | 02/27/2025 | ||||||||||||||||||||||||||||||||||||||
Andre Schulten | Andre Schulten | |||||||||||||||||||||||||||||||||||||||||
Key Manager | 02/27/2015 | 8,811 | 687,787 | 02/28/2014 | 17,220 | 78.6600 | 02/28/2024 | |||||||||||||||||||||||||||||||||||
Key Manager | 02/29/2016 | 150,393 | 80.2900 | 02/27/2026 | 02/27/2015 | 18,095 | 85.1300 | 02/27/2025 | ||||||||||||||||||||||||||||||||||
Key Manager | 02/29/2016 | 10,027 | 782,708 | 02/29/2016 | 22,203 | 80.2900 | 02/27/2026 | |||||||||||||||||||||||||||||||||||
LTIP | 02/28/2017 | 190,034 | 91.0700 | 02/26/2027 | 02/28/2017 | 33,624 | 91.0700 | 02/26/2027 | ||||||||||||||||||||||||||||||||||
LTIP | 02/28/2017 | 7,743 | 604,419 | (1) | 02/28/2018 | 30,677 | 78.5200 | 02/28/2028 | ||||||||||||||||||||||||||||||||||
PSP | 02/28/2017 | 30,970 | 2,417,518(3) | |||||||||||||||||||||||||||||||||||||||
LTIP | 02/28/2018 | 169,365 | 78.5200 | 02/28/2028 | 02/28/2019 | 4,367 | 589,239 | |||||||||||||||||||||||||||||||||||
LTIP | 02/28/2018 | 9,004 | 702,852 | (2) | ||||||||||||||||||||||||||||||||||||||
PSP | 02/28/2018 | 36,012 | 2,811,097(4) | |||||||||||||||||||||||||||||||||||||||
Steven D. Bishop | ||||||||||||||||||||||||||||||||||||||||||
Key Manager | 02/26/2010 | 41,088 | 63.2800 | 02/26/2020 | ||||||||||||||||||||||||||||||||||||||
Key Manager | 02/28/2011 | 55,512 | 63.0500 | 02/28/2021 | ||||||||||||||||||||||||||||||||||||||
Key Manager | 02/29/2012 | 62,945 | 67.5200 | 02/28/2022 | ||||||||||||||||||||||||||||||||||||||
Key Manager | 02/28/2013 | 98,452 | 76.1800 | 02/28/2023 | ||||||||||||||||||||||||||||||||||||||
Key Manager | 02/28/2014 | 99,797 | 78.6600 | 02/28/2024 | ||||||||||||||||||||||||||||||||||||||
STAR | 09/15/2014 | 22,336 | 83.8700 | 09/15/2024 | ||||||||||||||||||||||||||||||||||||||
Key Manager | 02/27/2015 | 96,324 | 85.1300 | 02/27/2025 | ||||||||||||||||||||||||||||||||||||||
STAR | 09/15/2015 | 47,777 | 69.4500 | 09/15/2025 | ||||||||||||||||||||||||||||||||||||||
Key Manager | 02/29/2016 | 54,802 | 80.2900 | 02/27/2026 | ||||||||||||||||||||||||||||||||||||||
Key Manager | 02/29/2016 | 10,961 | 855,616 | |||||||||||||||||||||||||||||||||||||||
LTIP | 02/28/2017 | 132,725 | 91.0700 | 02/26/2027 | 02/28/2020 | 4,167 | 562,277 | |||||||||||||||||||||||||||||||||||
PSP | 02/28/2017 | 16,222 | 1,266,289(3) | 02/28/2020 | 1,390 | 187,553 | ||||||||||||||||||||||||||||||||||||
LTIP | 02/28/2018 | 125,746 | 78.5200 | 02/28/2028 | 10/01/2020 | 3,346 | 451,415 | |||||||||||||||||||||||||||||||||||
PSP | 02/28/2018 | 20,053 | 1,565,337(4) | 10/01/2020 | 1,116 | 150,582 | ||||||||||||||||||||||||||||||||||||
Jon R. Moeller | Jon R. Moeller | |||||||||||||||||||||||||||||||||||||||||
Key Manager | 02/29/2016 | 150,393 | 80.2900 | 02/27/2026 | ||||||||||||||||||||||||||||||||||||||
LTIP | 02/28/2017 | 190,034 | 91.0700 | 02/26/2027 | ||||||||||||||||||||||||||||||||||||||
LTIP | 02/28/2018 | 169,365 | 78.5200 | 02/28/2028 | ||||||||||||||||||||||||||||||||||||||
LTIP | 02/28/2019 | 160,153 | 98.5500 | 02/28/2029 | ||||||||||||||||||||||||||||||||||||||
LTIP | 02/28/2020 | 173,268 | 113.2300 | 02/28/2030 | ||||||||||||||||||||||||||||||||||||||
PSP | 02/28/2020 | 31,876 | 4,301,029 | |||||||||||||||||||||||||||||||||||||||
LTIP | 10/01/2020 | 129,890 | 139.2400 | 10/01/2030 | 1,655 | 223,269 | ||||||||||||||||||||||||||||||||||||
PSP | 10/01/2020 | 26,872 | 3,625,974 | |||||||||||||||||||||||||||||||||||||||
50
| 2021 Proxy Statement 59 | ||||
| EXECUTIVE COMPENSATION | ||
OUTSTANDING EQUITY AT FISCAL YEAR-END TABLE | ||||||||||||||||||
| Option Awards | Stock Awards | |||||||||||||||||
Name/ Plan Name | Grant Date | Number of Securities Underlying Unexercised Options Exercisable1 (#) | Number of Securities Underlying Unexercised Options Unexercisable1 (#) | Option ($) | Option Expiration Date | Number of Shares or Units of Stock that Have Not Vested2 (#) | Market Value of Shares or Units of Stock that Have Not Vested3 ($) | Equity Incentive Plan | Equity Incentive Plan | |||||||||
Steven D. Bishop | ||||||||||||||||||
Key Manager | 02/28/2014 | 39,797 | 78.6600 | 02/28/2024 | ||||||||||||||
STAR | 09/15/2014 | 22,336 | 83.8700 | 09/15/2024 | ||||||||||||||
Key Manager | 02/27/2015 | 96,324 | 85.1300 | 02/27/2025 | ||||||||||||||
STAR | 09/15/2015 | 47,777 | 69.4500 | 09/15/2025 | ||||||||||||||
Key Manager | 02/29/2016 | 54,802 | 80.2900 | 02/27/2026 | ||||||||||||||
LTIP | 02/28/2017 | 132,725 | 91.0700 | 02/26/2027 | ||||||||||||||
LTIP | 02/28/2018 | 125,746 | 78.5200 | 02/28/2028 | ||||||||||||||
LTIP | 02/28/2019 | 49,261 | 98.5500 | 02/28/2029 | ||||||||||||||
LTIP | 02/28/2020 | 82,876 | 113.2300 | 02/28/2030 | ||||||||||||||
PSP | 02/28/2020 | 15,247 | 2,057,278 | |||||||||||||||
LTIP | 10/01/2020 | 78,893 | 139.2400 | 10/01/2030 | ||||||||||||||
PSP | 10/01/2020 | 12,242 | 1,651,813 | |||||||||||||||
Mary Lynn Ferguson-McHugh | ||||||||||||||||||
Key Manager | 02/28/2014 | 49,899 | 78.6600 | 02/28/2024 | ||||||||||||||
Key Manager | 02/27/2015 | 48,162 | 85.1300 | 02/27/2025 | ||||||||||||||
Key Manager | 02/29/2016 | 54,802 | 80.2900 | 02/27/2026 | ||||||||||||||
LTIP | 02/28/2017 | 70,693 | 91.0700 | 02/26/2027 | ||||||||||||||
LTIP | 02/28/2018 | 65,596 | 78.5200 | 02/28/2028 | ||||||||||||||
LTIP | 02/28/2019 | 54,672 | 98.5500 | 02/28/2029 | ||||||||||||||
PSP | 02/28/2020 | 15,247 | 2,057,278 | |||||||||||||||
LTIP | 10/01/2020 | 3,016 | 406,974 | |||||||||||||||
PSP | 10/01/2020 | 12,242 | 1,651,813 | |||||||||||||||
Shailesh Jejurikar | ||||||||||||||||||
Key Manager | 02/28/2013 | 12,465 | 76.1800 | 02/28/2023 | ||||||||||||||
Key Manager | 02/28/2014 | 38,196 | 78.6600 | 02/28/2024 | ||||||||||||||
Key Manager | 02/27/2015 | 49,337 | 85.1300 | 02/27/2025 | ||||||||||||||
Key Manager | 02/29/2016 | 62,275 | 80.2900 | 02/27/2026 | ||||||||||||||
LTIP | 02/28/2017 | 94,289 | 91.0700 | 02/26/2027 | ||||||||||||||
LTIP | 02/28/2018 | 105,170 | 78.5200 | 02/28/2028 | ||||||||||||||
LTIP | 02/28/2019 | 105,559 | 98.5500 | 02/28/2029 | ||||||||||||||
LTIP | 02/28/2020 | 110,501 | 113.2300 | 02/28/2030 | ||||||||||||||
PSP | 02/28/2020 | 15,247 | 2,057,278 | |||||||||||||||
STAR | 09/15/2020 | 71,780 | 138.6300 | 09/13/2030 | ||||||||||||||
LTIP | 10/01/2020 | 78,893 | 139.2400 | 10/01/2030 | ||||||||||||||
PSP | 10/01/2020 | 12,242 | 1,651,813 | |||||||||||||||
Outstanding Equity at FiscalYear-End Table
| ||||||||||||||||||||||||
| Option Awards | Stock Awards | |||||||||||||||||||||||
| Name/Plan | Grant Date | Number of Securities Underlying Unexercised Options Exercisable1 (#) | Number of Securities Underlying Unexercised Options Unexercisable1 (#) | Option ($) | Option Expiration Date | Number of Shares or Units of Stock that Have Not Vested2 (#) | Market Value of Shares or Units of Stock that Have Not Vested3 ($) | Equity Incentive Plan | Equity Incentive Plan that Have Not ($) | |||||||||||||||
| Giovanni Ciserani | ||||||||||||||||||||||||
Key Manager | 02/27/2009 | 57,090 | 48.1700 | 02/27/2019 | ||||||||||||||||||||
Key Manager | 02/26/2010 | 43,363 | 63.2800 | 02/26/2020 | ||||||||||||||||||||
Key Manager | 02/28/2011 | 95,163 | 63.0500 | 02/28/2021 | ||||||||||||||||||||
Key Manager | 02/29/2012 | 103,673 | 67.5200 | 02/28/2022 | ||||||||||||||||||||
Key Manager | 02/28/2013 | 105,015 | 76.1800 | 02/28/2023 | ||||||||||||||||||||
Key Manager | 02/28/2014 | 116,960 | 78.6600 | 02/28/2024 | ||||||||||||||||||||
Key Manager | 02/27/2015 | 136,850 | 85.1300 | 02/27/2025 | ||||||||||||||||||||
Key Manager | 02/29/2016 | 156,932 | 80.2900 | 02/27/2026 | ||||||||||||||||||||
Key Manager | 02/28/2017 | 211,143 | 91.0700 | 02/26/2027 | ||||||||||||||||||||
PSP | 02/28/2017 | 25,808 | 2,014,572(3) | |||||||||||||||||||||
PSP | 02/28/2018 | 24,966 | 1,948,846(4) | |||||||||||||||||||||
Mary Lynn Ferguson- McHugh | ||||||||||||||||||||||||
Key Manager | 02/26/2010 | 55,310 | 63.2800 | 02/26/2020 | ||||||||||||||||||||
Key Manager | 02/28/2011 | 67,407 | 63.0500 | 02/28/2021 | ||||||||||||||||||||
Key Manager | 02/29/2012 | 37,027 | 67.5200 | 02/28/2022 | ||||||||||||||||||||
Key Manager | 02/28/2013 | 39,381 | 76.1800 | 02/28/2023 | ||||||||||||||||||||
Key Manager | 02/28/2014 | 49,899 | 78.6600 | 02/28/2024 | ||||||||||||||||||||
Special Award | 11/03/2014 | 5,723 | 446,737 | |||||||||||||||||||||
Key Manager | 02/27/2015 | 48,162 | 85.1300 | 02/27/2025 | ||||||||||||||||||||
Key Manager | 02/29/2016 | 54,802 | 80.2900 | 02/27/2026 | ||||||||||||||||||||
LTIP | 02/28/2017 | 70,693 | 91.0700 | 02/26/2027 | ||||||||||||||||||||
PSP | 02/28/2017 | 17,281 | 1,348,955(3) | |||||||||||||||||||||
LTIP | 02/28/2018 | 65,596 | 78.5200 | 02/28/2028 | ||||||||||||||||||||
PSP | 02/28/2018 | 20,922 | 1,633,171(4) | |||||||||||||||||||||
| 60 The Procter & Gamble Company | ||
| EXECUTIVE COMPENSATION | ||
1 The following provides details regarding the vesting date for each of the option grants included in the table. The Vest Date indicates the date the options become exercisable.
Option Awards | |||||||||||||
Grant Date | Vest Date | Grant Date | Vest Date | ||||||||||
02/28/2013 | 02/28/2016 | ||||||||||||
09/15/2017 | 09/15/2020 | ||||||||||||
02/28/ | 02/28/ | 02/ | 02/ | ||||||||||
09/15/2014 | |||||||||||||
09/15/2017 | 09/ | 09/ | |||||||||||
02/27/2015 | 02/27/2018 | 02/28/2019 | 02/28/2022 | ||||||||||
09/15/2015 | 09/15/2018 | 09/13/2019 | 09/13/2022 | ||||||||||
02/29/2016 | 02/28/2019 | ||||||||||||
02/28/2020 | 02/28/2023 | ||||||||||||
09/ | 09/ | 09/15/ | 09/15/ | ||||||||||
02/28/2017 | |||||||||||||
02/28/2020 | 10/01/2020 | ||||||||||||
09/ | 29/2023 | ||||||||||||
51
2 The following provides details regarding the vesting date for RSUPSU and PSURSU holdings included in the table. The Vest Date for RSUs indicates the date such units become nonforfeitable. The Vest Date for PSUs indicates the date the award is earned. The PSU awards are delivered in shares in August following the date the award is earned.earned after the board certifies payout results. The Vest Date for RSUs indicates the date of vesting listed in the award agreement. For Mr. Taylor, Mr. Moeller, and Ms. Ferguson-McHugh, the amount of RSUs reflected in the table above includes the 25% of the RSU award granted on 10/01/2020 that has not yet become non-forfeitable. The remaining 75% became non-forfeitable pro-rata through June 30, 2021 because Mr. Taylor, Mr. Moeller, and Ms. Ferguson-McHugh are retirement eligible.
Stock Awards | ||||||||
| ||||||||
Award Type | Grant Date | Vest Date | ||||||
LTIP RSUs | ||||||||
| 2/28/ | |||||||
| 02/28/ | |||||||
| 2/28/ | |||||||
| 02/28/2023 | |||||||
LTIP RSUs | 10/01/2020 | 09/29/2023 | ||||||
PSP PSUs | 02/28/2020 | 06/30/2022 | ||||||
PSP PSUs | ||||||||
10/01/2020 | 06/30/2023 | |||||||
3The Market Value of PSUs or RSUs that have not vested was determined by multiplying the closing market price of Company stock on June 29, 201830, 2021 ($78.06)134.93) by the number of PSUs or RSUs, respectively.
Option Exercises and Stock Vested
The following table and footnotes provide information regarding stock option exercises and stock vestingvestings during FY2017-182020-21 for the NEOs.
| Option Exercises and Stock Vested | ||||||||||||||||||||||||||||||
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||
| Name/Plan Name | Option Grant | Number of Shares | Value Realized on Exercise2 ($) | Stock Award Grant Date | Number of Acquired | Value on Vesting4 ($) | ||||||||||||||||||||||||
David S. Taylor5 | ||||||||||||||||||||||||||||||
PSP 2015-2018 | 02/29/2016 | 47,191 | 3,683,729 | |||||||||||||||||||||||||||
PST Restoration | 08/03/2017 | 3,024 | 276,046 | |||||||||||||||||||||||||||
LTIP | 02/28/2018 | 40,190 | 3,131,202 | |||||||||||||||||||||||||||
Jon R. Moeller | ||||||||||||||||||||||||||||||
Key Manager | 02/28/2013 | 8,533 | 670,615 | |||||||||||||||||||||||||||
Special Award | 06/09/2015 | 12,675 | 981,155 | |||||||||||||||||||||||||||
PSP 2015-2018 | 02/29/2016 | 23,090 | 1,802,405 | |||||||||||||||||||||||||||
PST Restoration | 08/03/2017 | 1,552 | 141,674 | |||||||||||||||||||||||||||
Steven D. Bishop | ||||||||||||||||||||||||||||||
Special Award | 05/01/2013 | 6,495 | 466,796 | |||||||||||||||||||||||||||
PSP 2015-2018 | 02/29/2016 | 12,665 | 988,630 | |||||||||||||||||||||||||||
PST Restoration | 08/03/2017 | 1,263 | 115,293 | |||||||||||||||||||||||||||
Giovanni Ciserani6 | ||||||||||||||||||||||||||||||
Special Award | 06/09/2015 | 25,349 | 1,962,233 | |||||||||||||||||||||||||||
PSP 2015-2018 | 02/29/2016 | 17,993 | 1,404,534 | |||||||||||||||||||||||||||
International Retirement Plan | 08/03/2017 | 2,030 | 185,309 | |||||||||||||||||||||||||||
LTIP | 02/28/2018 | 24,966 | 1,945,092 | |||||||||||||||||||||||||||
Mary Lynn Ferguson-McHugh7 | ||||||||||||||||||||||||||||||
Key Manager | 02/27/2012 | 4,363 | 169,415 | |||||||||||||||||||||||||||
Key Manager | 02/27/2012 | 21,537 | 836,282 | |||||||||||||||||||||||||||
Special Award | 11/03/2014 | 5,723 | 532,130 | |||||||||||||||||||||||||||
PSP 2015-2018 | 02/29/2016 | 12,665 | 988,630 | |||||||||||||||||||||||||||
PST Restoration | 08/03/2017 | 1,252 | 114,289 | |||||||||||||||||||||||||||
LTIP | 02/28/2018 | 10,461 | 814,998 | |||||||||||||||||||||||||||
OPTION EXERCISES AND STOCK VESTED | ||||||||||||
| Option Awards | Stock Awards | |||||||||||
Name/ Plan Name
| Option
| Number of Shares (#)
| Value Realized
| Stock Award
| Number of
| Value Realized
| ||||||
David S. Taylor5 | ||||||||||||
Key Manager | 02/28/2014 | 86,960 | 4,710,246 | |||||||||
STAR | 09/15/2014 | 65,054 | 3,818,265 | |||||||||
Key Manager | 02/27/2015 | 176,202 | 9,731,213 | |||||||||
STAR | 09/15/2015 | 68,275 | 4,507,560 | |||||||||
PSP 2018-2021 | 02/28/2019 | 117,871 | 15,904,334 | |||||||||
PST Restoration | 08/06/2020 | 2,620 | 307,588 | |||||||||
LTIP | 10/01/2020 | 13,673 | 1,844,898 | |||||||||
52
| 2021 Proxy Statement 61 | ||||
| EXECUTIVE COMPENSATION | ||
OPTION EXERCISES AND STOCK VESTED | ||||||||||||
| Option Awards | Stock Awards | |||||||||||
Name/ Plan Name
| Option
| Number of Shares (#)
| Value Realized
| Stock Award
| Number of
| Value Realized
| ||||||
Andre Schulten | ||||||||||||
Key Manager | 02/29/2012 | 22,952 | 1,582,311 | |||||||||
PSP 2018-2021 | 02/28/2019 | 2,507 | 338,270 | |||||||||
PST Restoration | 08/06/2020 | 350 | 41,090 | |||||||||
Special Award | 04/01/2019 | 2,029 | 270,924 | |||||||||
Key Manager | 02/26/2016 | 4,441 | 547,841 | |||||||||
Jon R. Moeller6 | ||||||||||||
Key Manager | 02/27/2015 | 132,151 | 6,538,841 | |||||||||
PSP 2018-2021 | 02/28/2019 | 55,671 | 7,511,688 | |||||||||
PST Restoration | 08/06/2020 | 1,606 | 188,544 | |||||||||
LTIP | 10/01/2020 | 5,038 | 679,777 | |||||||||
Steven D. Bishop | ||||||||||||
Key Manager | 02/28/2013 | 68,452 | 3,684,087 | |||||||||
Key Manager | 02/28/2014 | 60,000 | 3,590,400 | |||||||||
PSP 2018-2021 | 02/28/2019 | 25,686 | 3,465,812 | |||||||||
PST Restoration | 08/06/2020 | 1,163 | 136,536 | |||||||||
Mary Lynn Ferguson-McHugh7 | ||||||||||||
Key Manager | 02/28/2013 | 39,381 | 2,290,005 | |||||||||
PSP 2018-2021 | 02/28/2019 | 28,508 | 3,846,584 | |||||||||
PST Restoration | 08/06/2020 | 1,163 | 136,536 | |||||||||
LTIP | 10/01/2020 | 9,180 | 1,238,657 | |||||||||
Shailesh Jejurikar | ||||||||||||
Key Manager | 02/29/2012 | 31,209 | 1,967,415 | |||||||||
PSP 2018-2021 | 02/28/2019 | 27,520 | 3,713,274 | |||||||||
PST Restoration | 08/06/2020 | 473 | 55,530 | |||||||||
1 The Number of Shares Acquired on Exercise is the gross number of shares acquired.
2 The Value Realized on Exercise was determined by multiplying the number of shares acquired by the difference between the market price of the Company’s common stock upon exercise and the grant price of the options.
3 NumbersNumber of Shares Acquired on Vesting is the gross number of shares acquired.acquired or deemed non-forfeitable. Please see footnote 2 in the Outstanding Equity at FiscalYear-End Table for the definition of vesting for Stock Awards.
4 Value Realized on Vesting was determined by multiplying the number of shares acquired by the actual market price obtained or, in the absence of a broker transaction, value was determined by the average of the high and lowclosing price on the vesting date. The value of PSUs was determined by multiplying the closing market price of Company stock on June 29, 201830, 2021 ($78.06)134.93) by the number of PSUs. The market value of the PSUs does not include a final payment of dividend equivalents on the PSUs, which took place on August 16, 2021, prior to delivery in shares.
5 Mr. Taylor’s February 2018Taylor is retirement eligible and therefore 75% of his October 2020 LTIP RSU Grant vestedwas non-forfeitable on June 30, 2018 because he2021.
6 Mr. Moeller is retirement eligible.
6Mr. Ciserani’s February 2018eligible and therefore 75% of his October 2020 LTIP RSU Grant vestedwas non-forfeitable on June 30, 2018 because he2021.
7 Ms. Ferguson-McHugh is retirement eligible.
7Ms. Ferguson-McHugh’s February 2018eligible and therefore 75% of her October 2020 LTIP RSU Grant vestedwas non-forfeitable on June 30, 2018 because she is retirement eligible.2021.
| 62 The Procter & Gamble Company | ||
| EXECUTIVE COMPENSATION | ||
The following table and footnotes provide information regarding the Company’s pension plans for Mr. CiseraniSchulten and Mr. Jejurikar as of the end of FY2017-18.2020-21. None of the other NEOs had any such arrangements with the Company.
| Pension Benefits | ||||||||
| Name | Plan Name | Number of Years of Credited Service1 | Present Value ($) | Payments During ($) | ||||
Giovanni Ciserani | The Procter & Gamble Company Global IRA | 20 years, 4 months | 2,404,000 | 0 | ||||
PENSION BENEFITS | ||||||||
Name | Plan Name | Number of Years of Credited Service1 | Present Value of Accumulated Benefit2 ($) | Payments During ($) | ||||
Andre Schulten | The Procter & Gamble Company Global IRA | 8 years, 9 months | 2,138,000 |
| ||||
| The Procter & Gamble Pension Fund (Germany) | 8 years, 9 months | 359,000 | ||||||
Shailesh Jejurikar | The Procter & Gamble Company Global IRA | 11 years, 1 months | 5,566,000 | |||||
1 Numbers in this column are computed as of the same pension plan measurement date used for financial statement reporting purposes for the Company’s audited financial statements as found in Note 8 to the Consolidated Financial Statements contained in the Company’s 20182021 Annual Report on Form10-K.
2 The following provides the assumptions used in each plan to calculate present value:value under SEC rules. The actual calculation of Mr. Schulten’s and Mr. Jejurikar’s benefit at the time of retirement may vary according to the terms of the Global IRA and the German Pension Plan at the time:
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Assumptions
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Global IRA
|
German Pension Plan
| ||
Retirement Age | 60 | 65 | ||
Discount Rate | 2.37% | 1.15% | ||
Salary Increase Rate | 3.50% | N/A | ||
Pension Increase Rate | N/A | 1.70% | ||
Pre-Retirement Decrements | None | None | ||
Post-Retirement Mortality Table |
Pri-2012 using MP-2020 |
Heubeck 2018 G |
The following exchange ratesrate as of June 30, 2018, were2021, was used to calculate present value:
US$ 1.16380:1.1902: Euro €1.00000
53
The Procter & Gamble Global International Retirement Arrangement Plan (“Global IRA”)
The Global IRA is designed to provide a supplemental retirement benefit to certain employees who permanently transfer from one country to another country during the course of their employment with the Company. The Global IRA is an unfunded plan that is maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees. The benefit is intended to provide a supplement theto mitigate any adverse impact to total pension benefits (both Company-provided and government-provided) that such employees earned while working for the Company, in light of salary increases received and retirement benefits provided in the finalvalue caused by moving between home country.countries. The program is closed to new participants. To calculate the Global IRA benefit, first a Global IRA target is calculated using the following formula:
Global IRA Last 3 Years Average Salary Years of Service in Previous Home Countries Accrual Rate for Final Home Country
| 2021 Proxy Statement 63 | ||||
| EXECUTIVE COMPENSATION | ||
The Global IRA target is converted to apresent-day lump sum amount using discount and mortality rates for the final home country.actuarial factors. This lump sum amount is reduced by thepresent-day lump sum value of certain benefits earned while working in previous home countries (such as Company-provided and government-provided pension benefits)., as well as other actuarial factors and assumptions, which may change from time to time. The reduced lump sum amount is the Global IRA benefit.
The Procter & Gamble Pension Fund (Germany) (“German Pension Plan”)
The German Pension Plan is a defined benefit plan for Germany-based employees hired after December 31, 1991. The German Pension Plan provides for post-retirement payments based on the employee’s pensionable income and years of service at the time of retirement.
Pensionable Income under the plan is the 36-month average of base salary plus additional 13th and 14th month salaries. For each year of credited service, the pension benefit is calculated as follows:
.5% x Pensionable Income below the 36th month average of statutory social security contribution ceiling (“SSCC”), plus
1.5% x Pensionable Income above the 36th month average SSCC
The benefit begins to pay out at retirement, and the normal retirement age for the plan is 65. There is a surviving spouse benefit (60%) and an orphan benefit (20%) under the plan. Pension payments are checked every third year against the development of the German cost of living index and are increased appropriately according to German law.
Nonqualified Deferred Compensation
The following table and footnotes provide information regarding the Company’snon-tax-qualified defined contribution and deferred compensation plans for each of the NEOs for FY2017-18.2020-21. For a complete understanding of the table and the footnotes, please read the narrative that follows the table.
| Nonqualified Deferred Compensation Table | ||||||||||||||||||||||||||
| Name | Plan Name | Aggregate Balance at | Executive ($) | Registrant ($) | Aggregate Earnings in Last FY1 ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at | |||||||||||||||||||
David S. Taylor | Executive Deferred Compensation Plan | 2,200,343 | 40,000 | 230,902 | 2,471,245 | 2 | ||||||||||||||||||||
| Employee Stock and Incentive Compensation Plan3 | 6,184,311 | 3,137,230 | 4 | (539,418 | ) | 234,226 | 8,547,897 | 5 | ||||||||||||||||||
| PST Restoration Program | 2,264,463 | 267,306 | 6 | 81,665 | 22,456 | 2,590,978 | 7 | |||||||||||||||||||
Jon. R. Moeller | PST Restoration Program | 1,446,651 | 137,189 | 6 | (118,564 | ) | 9,220 | 1,456,056 | 8 | |||||||||||||||||
Steven D. Bishop | PST Restoration Program | 1,311,071 | 111,643 | 6 | (106,348 | ) | 7,668 | 1,308,698 | 9 | |||||||||||||||||
Giovanni Ciserani | Employee Stock and Incentive Compensation Plan3 | 1,948,837 | 10 | 1,948,837 | ||||||||||||||||||||||
| International Retirement Plan | 1,750,493 | 179,442 | 11 | (129,134 | ) | 7,942 | 1,792,859 | 12 | ||||||||||||||||||
| Mary Lynn Ferguson-McHugh | Employee Stock and Incentive Compensation Plan3 | 3,906,683 | 816,568 | 13 | (376,872 | ) | 651,087 | 14 | 3,694,572 | 15 | ||||||||||||||||
| PST Restoration Program | 1,441,048 | 110,671 | 6 | (115,656 | ) | 9,311 | 1,426,752 | 16 | ||||||||||||||||||
NONQUALIFIED DEFERRED COMPENSATION TABLE | ||||||||||||||
Name | Plan Name | Aggregate Balance at | Executive ($) | Registrant ($) | Aggregate Earnings in Last FY1 ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at | |||||||
David S. Taylor | Executive Deferred Compensation Plan | 3,097,841 | 601,460 | 733,243 | 4,432,5442 | |||||||||
Employee Stock and Incentive Compensation Plan3 | 16,510,800 | 1,870,3414 | 1,683,795 | 10,130,9145 | 9,934,0226 | |||||||||
PST Restoration Program | 4,020,365 | 307,5887 | 847,475 | 25,182 | 5,150,2468 | |||||||||
Andre Schulten | International Retirement Plan | 830,126 | 128,873 | 958,999 | ||||||||||
PST Restoration Program | 72,681 | 41,0907 | 18,329 | 3,715 | 128,385 | |||||||||
Jon R. Moeller | Employee Stock and Incentive Compensation Plan3 | 3,959,390 | 689,1344 | 406,256 | 2,380,2255 | 2,674,5559 | ||||||||
PST Restoration Program | 2,738,352 | 188,5447 | 454,497 | 15,825 | 3,365,56810 | |||||||||
| 64 The Procter & Gamble Company | ||
| EXECUTIVE COMPENSATION | ||
NONQUALIFIED DEFERRED COMPENSATION TABLE | ||||||||||||||
Name | Plan Name | Aggregate Balance at | Executive ($) | Registrant ($) | Aggregate Earnings in Last FY1 ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at | |||||||
Steven D. Bishop | Employee Stock and Incentive Compensation Plan3 | 2,490,034 | 260,203 | 1,324,47711 | 1,425,76012 | |||||||||
PST Restoration Program | 2,422,756 | 136,5367 | 397,500 | 9,908 | 2,946,88413 | |||||||||
Mary Lynn Ferguson-McHugh | Employee Stock and Incentive Compensation Plan3 | 5,115,487 | 1,255,6664 | 555,451 | 2,758,8855 | 4,167,71914 | ||||||||
PST Restoration Program | 2,612,392 | 136,5367 | 427,040 | 11,284 | 3,164,68415 | |||||||||
Shailesh Jejurikar | Executive Deferred Compensation Plan | 352,783 | 143,943 | 496,726 | ||||||||||
PST Restoration Program | 274,448 | 55,5307 | 51,002 | 6,880 | 374,100 | |||||||||
1 Because none of the amounts included in this column are above-market earnings under SEC reporting rules, they are not reflected in the Summary Compensation Table.
54
2 Total includes $351,973$799,243 previously reported in Summary Compensation Tables for prior years.
3 Amounts shown include awards granted under the terms of either The Procter & Gamblethe 2009 Plan, the 2014 Plan, or The 2014the 2019 Plan, depending on which plan was in effect at the time the NEO elected to defer the award.
4 Total reflects 75% of the 20182020 LTIP Stock Grant (less taxes paid on the grant at the end of calendar year 2020) which became nonforfeitable onpro-rata through June 30, 20182021 because Mr. Taylorthe NEO is retirement eligible. This award isThese awards are also reported in the Summary Compensation Table found on page 4654 of this proxy statement.
5Total reflects the delivery of a 2016 Key Manager grant, 2018 LTIP grant, and taxes withheld on prior grants.
6 Total includes $5,810,958$6,561,388 previously reported in Summary Compensation Tables for prior years.
67 Total reflects registrant contributions in the form of RSUs pursuant to the PST Restoration Program, 100% of which are also reported in the Stock Awards column on the Summary Compensation Table found on page 4654 of this proxy statement.
78 Total includes $500,511$1,316,777 previously reported in Summary Compensation Tables for prior years.
89 Total includes $938,121$1,627,766 previously reported in Summary Compensation Tables for prior years.
910 Total includes $207,244$1,380,800 previously reported in the Summary Compensation Tables for prior years.
1011 Total reflects the 2018 LTIP Stock Grant which became nonforfeitabledelivery of a 2016 Key Manager grant and taxes withheld on June 30, 2018 because Mr. Ciserani is retirement eligible. This award is also reported in the Summary Compensation Table found on page 46 of this proxy statement.
11 Total reflects registrant contributions in the form of RSUs pursuant to the International Retirement Plan, 100% of which are also reported in the Stock Awards column on the Summary Compensation Table found on page 46 of this proxy statement.prior grants.
12Total includes $634,717$418,611 previously reported in Summary Compensation Tables for prior years.
13Total reflects the 2018 LTIP Stock Grant which became nonforfeitable on June 30, 2018 because Ms. Ferguson-McHugh is retirement eligible. This award is alsoincludes $439,933 previously reported in the Summary Compensation Table found on page 46 of this proxy statement.Tables for prior years.
14 Total reflects the delivery of a 2013 Key Manager Stock Grant.
15 Total includes $755,061$2,445,063 previously reported in Summary Compensation Tables for prior years.years
1615Total includes $105,022$455,201 previously reported in the Summary Compensation Tables for prior years.
The NEOs are eligible to participate in EDCP. Under EDCP, a participant may defer up to 75% of base salary (an increase from 50% in prior years) and up to 100% of the STAR award. Amounts may be deferred for a minimum of one year or until termination of employment. Payments that commence upon retirement, death, or disability may be taken in a lump sum or installments (over a maximum period of ten years). All other payments under the plan are paid as a lump sum.
Amounts deferred under EDCP are credited with market earnings based on the same fund choices available to all employees under The Procter & Gamble Profit Sharing Trust and Employee Stock Ownership Plan, one of the Company’stax-qualified plans, with the exception of P&G stock, which is not offered as an investment option in the EDCP. Participants may change fund choices on a daily basis.
LTIP Stock Grants made in the form of RSUs that vestbecome non-forfeitable prior to delivery due to the NEO being retirement eligible are included in the aggregate balance as deferred compensation awards under an employee stock and incentive compensation plan. Participants may also defer delivery of incentive awards earned under the PSP program and its predecessors, including the Business Growth Program, which terminated on June 30, 2010, by electing to receive RSUs with deferred delivery. The RSUs are governed by the employee stock and incentive compensation plan that was in effect at the time the award was granted. Similarly, other special equity awards that were deferred by an NEO are included in the aggregate balance for amounts deferred under an employee stock and incentive compensation plan.
| 2021 Proxy Statement 65 | ||||
| EXECUTIVE COMPENSATION | ||
As described on page 4147 of this proxy statement, federal tax rules limit the size of contributions that can be made to individuals pursuant totax-qualified defined contribution plans like the PST. To account for these limitations, the Company utilizes the PST Restoration Program to make an additional annual contribution in the form of RSUs.
Similar to the PST, these RSUs becomenon-forfeitable once an executive has at least five years of service. The default form of payment is a lump sum distribution one year after retirement, or the executive can elect to defer the lump sum to six or eleven years after retirement or to commence ten annual installments at six or eleven years after retirement. Generally, executives have until retirement to change a previous deferral election, with any such deferral elections or changes to deferral elections made in compliance with Section 409A of the Internal Revenue Code. These RSUs earn dividend equivalents at the same rate as dividends on Common Stock and are accrued in the form of additional RSUs each quarter and credited to the executive’s holdings. The value of each RSU may increase or decrease over time as the value is tied to the price of the Common Stock. Finally, NEOs may convert certain of their PST Restoration Program RSUs into notional cash with the same investment choices as those available under the EDCP.
The Company’s IRP is designed to provide retirement benefits for employees whose participation in retirement plans in their home countries has been suspended because they are on assignments outside of that country. Under the IRP, the Company makes an annual contribution for each participant equal to the contribution that would have been
55
made under the participant’s home country retirement plan had the participant remained in that country and eligible to participate in that plan.
Historically, Company contributions to IRP were placed into one of several investment vehicles available within the IRP, at each participant’s election. Participants in the U.S. receive their contributions in RSUs. These contributions vest according to the terms and conditions of the participant’s home country retirement plan. Upon retirement from the Company, participants must elect to receive distributions from the IRP Trust in one of four ways: (1) fixed-income annuity, (2) variable annuity, (3) lump sum, or (4) annual installments (over a maximum of 15 years).
Amounts the NEOs defer under any of the above-mentioned plans that are scheduled to be paid after termination of employment must be held by the Company for a minimum of six months in order to comply with Section 409A of the Internal Revenue Code.
Payments upon Termination or Change in Control
The Company does not have any employment contracts with its NEOs that require severance payments upon termination of their employment. The only situation in which a separation allowance may be paid is if an employee is encouraged to separate from the Company. Certain elements of compensation are, however, treated differently depending upon the specific circumstances of an NEO’s separation.
| 66 The Procter & Gamble Company | ||
| EXECUTIVE COMPENSATION | ||
Key Compensation Programs
The following table describes the general treatment of compensation under the Company’s key programs under various separation scenarios for all Company employees, including the NEOs.
Compensation Element | Voluntary Separation or Termination for Cause |
| Retirement or Disability | Change in Control | Death | |||||
Separation Allowance | None | Company has discretion to pay up to 1 times salary. | None | None | None | |||||
STAR | No acceleration of awards. Eligible for award only if worked the entire year. | No acceleration of awards.Pro-rated payment based on time worked. | No acceleration of awards.Pro-rated payment based on time worked. | No acceleration of awards.Pro-rated payment based on time worked. | No acceleration of awards.Pro-rated payment based on time worked. | |||||
LTIP Stock Grant | All outstanding awards forfeited at separation. | No acceleration of option vesting or RSU delivery. Prior to the first year anniversary of grant, the award will be pro-rated based on the number of days worked that year. After first year anniversary of grant, all awards are retained subject to original | No acceleration of option vesting or RSU delivery. Prior to the first year anniversary of grant, the award will be pro-rated based on the number of days worked that year. After first year anniversary of grant, all awards are retained subject to original |
| Vesting accelerated for all awards. | |||||
PSP Grant | All outstanding awards forfeited at separation. | No acceleration of payment. Prior to the first year anniversary of grant, the award will be prorated based on the number of days worked that year. After first year anniversary of grant, all awards are retained subject to original | No acceleration of payment. Prior to the first year anniversary of grant, the award will be prorated based on the number of days worked that year. After first year anniversary of grant, all awards are retained subject to original | Awards paid out at target at time of the Change in Control. | No acceleration of payment. All awards are retained subject to original terms. | |||||
Special Equity Awards | Unvested awards are forfeited at separation. | Unvested awards are forfeited at separation unless otherwise specified by the CHRO as authorized by the C&LD Committee. | Unvested awards are forfeited at separation unless otherwise specified by the CHRO as authorized by the C&LD Committee. | Vesting only accelerated and award paid at time of the Change in Control if awards not assumed, unless termination without cause or resignation with “good reason.” | Vesting accelerated and award paid at time of death. | |||||
All equity awards listed above are governed by the employee stock plan under which the award was granted. The scenarios described above assume that former employees comply with the terms and conditions of the applicable
56
| 2021 Proxy Statement 67 | ||||
| EXECUTIVE COMPENSATION | ||
employee stock plan, including compliance with the Company’s Purpose, Values, and Principles and restrictions on competing with the Company following termination of employment. Failure to comply with either of these provisions can result in forfeiture and/or cancellation of outstanding equity awards.
Retirement Plans and Other Deferred Compensation
The retirement plans in which the NEOs participate do not discriminate in scope, terms, or operation for NEOs versus all other participants. All NEOs who participate are fully vested in the PST and will retain all shares upon termination of employment regardless of reason. Mr. Ciserani is fully vested in the IRP. PST Restoration and IRP RSUs vest at the NEO’s fifth anniversary date. All NEOs are beyond their fifth anniversary date.
Salary and STAR bonuses deferred under EDCP, have been earned and therefore are retained upon termination for any reason. Similarly, amounts deferred under the Business Growth Program and PSP have been earned and are retained upon termination for any reason. Vested amounts related to deferred compensation plans are not included in the following table because they are reported in the Nonqualified Deferred Compensation Table on page 5465 of this proxy statement.
Executive Benefits
| • | Executive Group Life Insurance—Benefits are retained if employee is eligible for early retirement. |
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| • | Unused Vacation—Employee is entitled to lump sum payment equal to value of accrued, but unused, vacation days. |
| • | Other Programs—In most cases, participation ends on the last day worked, unless otherwise agreed to by the C&LD Committee. |
Expatriate and Relocation Program
If an employee’s expatriate assignment terminates for any reason, the Company would pay for relocation to the home country and would cover future taxes due related to the expatriate assignment.
57
| 68 The Procter & Gamble Company | ||
| EXECUTIVE COMPENSATION | ||
Estimated Post-Employment Treatment of Compensation and Benefits
The following table and footnotes quantify the treatment of compensation or value of benefits that each NEO would receive under the Company’s compensation programs upon various scenarios for termination of employment or a change in control of the Company. The amounts shown assume the event that triggered the treatment occurred on June 30, 2018.2021. Mr. Schulten and Mr. Jejurikar are not retirement eligible and, therefore, the amounts in the Retirement or Disability column reflect disability only.
Payments upon Termination or Change in Control | ||||||||||||||||||||||||||||||
PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL | PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL | |||||||||||||||||||||||||||||
| Name | Voluntary ($) | Company Encouraged Separation ($) | Retirement or Disability ($) | Change in ($) | Death ($) | Voluntary Separation or Termination for Cause ($) | Written Separation Agreement ($) | Retirement Disability ($) | Change in Control ($) | Death ($) | ||||||||||||||||||||
David Taylor | ||||||||||||||||||||||||||||||
David S. Taylor |
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Salary | 0 | 1,600,000 | 0 | 0 | 0 | 0 | 1,800,000 | 0 | 0 | 0 | ||||||||||||||||||||
STAR1 | 0 | 0 | 0 | 0 | 587,848 | 0 | 0 | 0 | 0 | 8,371,626 | ||||||||||||||||||||
Long-Term Incentive Program2 | 0 | 0 | 0 | 0 | 0 | 0 | 13,312,406 | 13,312,406 | 13,918,608 | 13,918,608 | ||||||||||||||||||||
PSP3 | 0 | 11,634,609 | 11,634,609 | 11,634,609 | 11,634,609 | 0 | 13,720,796 | 13,720,796 | 15,478,225 | 15,478,225 | ||||||||||||||||||||
Executive Group Life Insurance | 0 | 0 | 0 | 0 | 4,800,000 | 0 | 0 | 0 | 0 | 5,000,000 | ||||||||||||||||||||
Total | 0 | 28,833,202 | 27,033,202 | 29,396,833 | 42,768,459 | |||||||||||||||||||||||||
Andre Schulten |
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Salary | 0 | 750,000 | 0 | 0 | 0 | |||||||||||||||||||||||||
STAR1 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||
Long-Term Incentive Program2 | 0 | 1,490,077 | 1,490,077 | 1,602,931 | 1,602,931 | |||||||||||||||||||||||||
PSP3 | 0 | 300,490 | 300,490 | 338,135 | 338,135 | |||||||||||||||||||||||||
Special Equity Awards4 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||
Executive Group Life Insurance | 0 | 0 | 0 | 0 | 1,800,000 | |||||||||||||||||||||||||
Total | 0 | 2,540,567 | 1,790,567 | 1,941,066 | 3,741,066 | |||||||||||||||||||||||||
Jon R. Moeller |
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Salary | 0 | 1,000,000 | 0 | 0 | 0 | 0 | 1,200,000 | 0 | 0 | 0 | ||||||||||||||||||||
STAR1 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Long-Term Incentive Program2 | 0 | 3,457,591 | 3,457,591 | 3,457,591 | 3,457,591 | 0 | 9,586,282 | 9,586,282 | 9,809,551 | 9,809,551 | ||||||||||||||||||||
PSP3 | 0 | 5,228,615 | 5,228,615 | 5,228,615 | 5,228,615 | 0 | 7,020,510 | 7,020,510 | 7,927,003 | 7,927,003 | ||||||||||||||||||||
Special Equity Awards4 | 0 | 0 | 0 | 477,961 | 477,961 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Executive Group Life Insurance | 0 | 0 | 0 | 0 | 2,300,000 | 0 | 0 | 0 | 0 | 2,880,000 | ||||||||||||||||||||
Total | 0 | 17,806,792 | 16,606,792 | 17,736,554 | 20,616,554 | |||||||||||||||||||||||||
Steven D. Bishop |
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Salary | 0 | 870,000 | 0 | 0 | 0 | 0 | 910,000 | 0 | 0 | 0 | ||||||||||||||||||||
STAR1 | 0 | 0 | 0 | 0 | 411,360 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Long-Term Incentive Program2 | 0 | 855,616 | 855,616 | 855,616 | 855,616 | 0 | 3,590,524 | 3,590,524 | 3,590,524 | 3,590,524 | ||||||||||||||||||||
PSP3 | 0 | 2,831,626 | 2,831,626 | 2,831,626 | 2,831,626 | 0 | 3,296,138 | 3,296,138 | 3,709,091 | 3,709,091 | ||||||||||||||||||||
Special Equity Awards4 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Executive Group Life Insurance | 0 | 0 | 0 | 0 | 1,740,000 | 0 | 0 | 0 | 0 | 1,820,000 | ||||||||||||||||||||
Giovanni Ciserani | ||||||||||||||||||||||||||||||
Salary | 0 | 940,000 | 0 | 0 | 0 | |||||||||||||||||||||||||
STAR1 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||
Long-Term Incentive Program2 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||
PSP3 | 0 | 3,963,418 | 3,963,418 | 3,963,418 | 3,963,418 | |||||||||||||||||||||||||
Special Equity Awards4 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||
Executive Group Life Insurance | 0 | 0 | 0 | 0 | 2,068,000 | |||||||||||||||||||||||||
Mary Lynn Ferguson-McHugh | ||||||||||||||||||||||||||||||
Salary | 0 | 850,000 | 0 | 0 | 0 | |||||||||||||||||||||||||
STAR1 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||
Long-Term Incentive Program2 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||
PSP3 | 0 | 2,982,126 | 2,982,126 | 2,982,126 | 2,982,126 | |||||||||||||||||||||||||
Special Equity Awards4 | 0 | 0 | 0 | 446,737 | 446,737 | |||||||||||||||||||||||||
Executive Group Life Insurance | 0 | 0 | 0 | 0 | 1,700,000 | |||||||||||||||||||||||||
Total | 0 | 7,796,662 | 6,886,662 | 7,299,615 | 9,119,615 | |||||||||||||||||||||||||
| 2021 Proxy Statement 69 | ||||
| EXECUTIVE COMPENSATION | ||
PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL | ||||||||||
Name | Voluntary Separation or Termination for Cause ($) | Written Separation Agreement ($) | Retirement Disability ($) | Change in Control ($) | Death ($) | |||||
Mary Lynn Ferguson-McHugh |
|
|
|
|
| |||||
Salary | 0 | 910,000 | 0 | 0 | 0 | |||||
STAR1 | 0 | 0 | 0 | 0 | 0 | |||||
Long-Term Incentive Program2 | 0 | 1,988,967 | 1,988,967 | 2,395,941 | 2,395,941 | |||||
PSP3 | 0 | 3,296,138 | 3,296,138 | 3,709,091 | 3,709,091 | |||||
Special Equity Awards4 | 0 | 0 | 0 | 0 | 0 | |||||
Executive Group Life Insurance | 0 | 0 | 0 | 0 | 1,820,000 | |||||
Total | 0 | 6,195,105 | 5,285,105 | 6,105,032 | 7,925,032 | |||||
Shailesh Jejurikar |
|
|
|
|
| |||||
Salary | 0 | 810,000 | 0 | 0 | 0 | |||||
STAR1 | 0 | 0 | 0 | 0 | 0 | |||||
Long-Term Incentive Program2 | 0 | 6,238,108 | 6,238,108 | 6,238,108 | 6,238,108 | |||||
PSP3 | 0 | 3,296,138 | 3,296,138 | 3,709,091 | 3,709,091 | |||||
Special Equity Awards4 | 0 | 0 | 0 | 0 | 0 | |||||
Executive Group Life Insurance | 0 | 0 | 0 | 0 | 1,620,000 | |||||
Total | 0 | 10,344,246 | 9,534,246 | 9,947,199 | 11,567,199 | |||||
1 STAR awards previously elected in stock options that would vest and become exercisable immediately upon death. No other amounts are included for STAR because the NEO would be entitled to the same payment whether or not separation occurred on June 30, 2018.2021.
2 Upon voluntary separation or termination, all outstanding awards would be forfeited. While allAll unvested awards are retained (except for the current year grant if separation occurs before June 30)the first anniversary of the grant date, in which case such grant will be pro-rated based on the number of days worked during the year) in the event of Company encouraged separation, retirement, or disability, thesedisability. These events do not trigger any change in the original payment terms of the awards. The amounts shown for the LTIP Stock Grant in the event of Company-encouraged separation, retirement, or disability represents the value of the unexercisable stock options and undelivered RSUs as of June 30, 2018,2021 that would be retained at separation and payout according to the original terms and timing of the grants. Awards vest and become immediately exercisable in the event of death or change in control with termination for reasons other than cause or for good reason.
3 Upon voluntary separation or termination, all outstanding awards would beare forfeited. While allAll unvested awards are retained (except for the current year grant if separation occurs before June 30)the first anniversary of the grant date, in which case such grant will be pro-rated based on the number of days worked during the year) in the event of Company-encouraged separation, retirement or disability. In the event of death, all unvested awards are retained. These events (written separation, retirement, disability or death, these eventsand death) do not trigger any change in the original payment terms of the awards. In the event of a change in control, PSP will pay out at target on the date of the change in control. The amounts shown for the PSP grants represent the value of the unvested PSUs as of June 30, 20182021 that would be retained on the triggering event and pay out according to the original terms and timing of the grants.
4 Upon voluntary separation or termination, all outstanding awards would beare forfeited. In the event of Company encouraged separation, retirement or disability, the CHRO has the discretion to allow retention of the awards with delivery under the original payment terms. Awards vest and become immediately deliverable in the event of death or change in control with termination for reasons other than cause or resignation for good reason.
58
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of RegulationS-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of Mr. David S. Taylor, our Chairman of the Board, President and Chief Executive Officer. The pay ratio was calculated in a manner consistent with Item 402(u) of RegulationS-K and based upon our reasonable judgment and assumptions.
| 70 The Procter & Gamble Company | ||
| EXECUTIVE COMPENSATION | ||
For FY2017-18,2020-21, the median of the annual total compensation of all employees of the company (other than our CEO) was $60,412,$69,671, and the annual total compensation of our CEO was $17,354,256.$23,900,381. Based on this information, the ratio of the annual total compensation of Mr. Taylor to the median of the annual total compensation of employees was 287343 to 1.
In accordance with SEC requirements, we have replaced our prior median employee with a new median employee using the methodology outlined below.
To identify the median of the annual total compensation of all our employees, we determined that, as of April 1, 2018,2021, our employee population consisted of approximately 94,48199,441 active employees working at our parent company and consolidated subsidiaries. Applying thede minimisexemption under the rule, we chose to exclude approximately 4,5394,929 employees in 3129 countries where payroll data is maintained outside the system that holds data for the majority of our employees, or less than 5% of the total.1 We also excluded 7 employees of Snowberry and 10 employees of Native because those businesses were acquired during FY2017-18.
To identify the “median employee” from the resulting employee population of 89,942,approximately 94,512 employees, we selected Total Gross Pay as the consistently applied compensation measure. Total Gross Pay reflects a wide variety of pay items, including monthly andbi-weekly wages earned, time-related bonuses (such as overtime, shift premiums, holiday bonuses), vacation pay, bonuses, stock option exercises, and other benefits and allowances. Because pay periods vary across jurisdictions, we measured Total Gross Pay using a three-month period covering January, February, and March 2018. We adjusted the Total Gross Pay of approximately 1,477 employees who were hired during the three-month period but did not work the entire period.2021.
For purposes of this disclosure, we converted the gross salary amounts from the local currency paid in the country into U.S. dollar amounts using an average of the exchange rates at the end of each month in the three-month period.
With respect to the annual total compensation of the “median employee,” we identified and calculated the elements of such employee’s compensation for FY2017-182020-21 in accordance with the requirements of Item 402(c)(2)(x) of RegulationS-K. With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column (column (j)) of our FY2017-182020-21 Summary Compensation Table included in this Proxy Statement.
1 We excluded the following approximate number of employees by jurisdiction: Saudi Arabia, 834;Turkey, 661; Ukraine, 585;521; Czech Republic, 555;518; Austria, 506; Pakistan, 413; Nigeria, 363; South Africa, 323;493; United Arab Emirates, 290;487; South Africa, 397; Greece, 228; Nigeria, 190; Morocco, 201; Greece, 197;153; Netherlands, 144;151; Portugal, 140; Sweden, 129; Portugal, 84;108; Ecuador, 48; Israel, 40; Kazakhstan, 56; Austria, 47; Israel, 45;39; Croatia, 44;37; Serbia, 36; Slovakia, 35; Bulgaria, 29; Azerbaijan, 22; Finland, 21; Denmark, 20; Kenya, 43; Serbia, 28; Slovakia, 25; Denmark, 24; Finland, 23; Bulgaria, 19; Azerbaijan, 19;18; Norway, 15;11; Latvia, 10; Ghana, 8;5; Bangladesh, 3; Algeria, 7; Ethiopia, 3; Luxembourg, 2; Dominican Republic, 2; Bangladesh, 1.2.
59
| 2021 Proxy Statement 71 | ||||
| BENEFICIAL OWNERSHIP | ||
Security Ownership of Management and Certain Beneficial Owners
The following table shows all entities that are the beneficial owners of more than 5% of any class of the Company’s voting securities:
| Title of Class | Name and Address of Beneficial Owner | Amount and Nature | Percent of Class | |||||||||
Common |
BlackRock, Inc. 55 East 52nd Street New York, NY 10055 |
|
159,639,663 |
1 |
6.3% | |||||||
Common | The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355 | 185,434,627 | 2 | 7.3% | ||||||||
Title of Class
| Name and Address of Beneficial Owner | Amount and | Percent of Class3 | |||
Common | BlackRock, Inc. 55 East 52nd Street New York, NY 10055 | 162,134,0091 | 6.67% | |||
Common | The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355 | 217,956,0362 | 8.97% | |||
1 Based on information as of December 31, 20172020, contained in a Schedule 13G/A filed with the SEC on February 8, 2018January 29, 2021 by BlackRock, Inc. The Schedule 13G/A indicates that BlackRock, Inc. has (i) sole power to vote or direct to vote with respect to 136,352,872138,917,498 shares, and (ii) sole dispositive power with respect to 159,639,663162,134,009 shares.
2 Based on information as of December 31, 20172020, contained in a Schedule 13G/A filed with the SEC on February 12, 201810, 2021 by The Vanguard Group. The Schedule 13G13G/A indicates that The Vanguard Group has (i) sole power to vote or direct to vote with respect to 3,578,0550 shares, (ii) shared voting power with respect to 567,0774,166,888 shares, (iii) sole dispositive power with respect to 181,376,639206,890,593 shares, and (iv) shared dispositive power with respect to 4,057,98811,065,443 shares.
3 Percentage calculated based on 2,429,705,628 shares of common stock outstanding as of June 30, 2021.
60
| 72 The Procter & Gamble Company | ||
| BENEFICIAL OWNERSHIP | ||
The following tables and footnotes provide information regarding the ownership of the Company’s Common Stock and Series A and B ESOP Convertible Class A Preferred Stock by all Directors and nominees, each NEO, and all Directors and executive officers as a group on June 30, 2018:2021:
Common Stock Number of shares/options | ||||||||||||||||||||||
| Amount and Nature of Beneficial Ownership | ||||||||||||||||||||||
| Name | Direct1 and Profit Sharing Plan2 | Right to Acquire3 | Trusteeships and Family Holdings4 | Indirect Holdings | Total | Percent of Class | Restricted Stock Units5 | |||||||||||||||
| Steven D. Bishop | 45,683 | 489,650 | 2,101 | 537,434 | 6 | 27,726 | ||||||||||||||||
| Francis S. Blake | 4,323 | 4,323 | 6 | 6,616 | ||||||||||||||||||
| Angela F. Braly | 9,148 | 9,148 | 6 | 25,939 | ||||||||||||||||||
| Amy L. Chang | 6 | 1,940 | ||||||||||||||||||||
| Kenneth I. Chenault | 6,700 | 6,700 | 6 | 31,021 | ||||||||||||||||||
| Giovanni Ciserani | 38,097 | 676,107 | 714,204 | 6 | 45,536 | |||||||||||||||||
| Scott D. Cook | 35,139 | 32,636 | 67,775 | 6 | 40,641 | |||||||||||||||||
| Mary Lynn Ferguson-McHugh7 | 27,368 | 310,382 | 28,491 | 366,241 | 6 | 70,653 | ||||||||||||||||
| Joseph Jimenez | 12,468 | 12,468 | 6 | 479 | ||||||||||||||||||
| Terry J. Lundgren | 2,686 | 530 | 3,216 | 6 | 16,495 | |||||||||||||||||
| W. James McNerney, Jr. | 32,125 | 32,125 | 6 | 40,641 | ||||||||||||||||||
| Jon R. Moeller8 | 103,221 | 853,787 | 7,949 | 964,957 | 6 | 70,895 | ||||||||||||||||
| Nelson Peltz9 | 37,908,621 | 37,908,621 | 1.52% | |||||||||||||||||||
| David Taylor | 82,417 | 883,258 | 965,675 | 6 | 118,365 | |||||||||||||||||
| Margaret C. Whitman | 11,075 | 11,075 | 6 | 17,520 | ||||||||||||||||||
| Patricia A. Woertz | 1,660 | 1,660 | 6 | 26,358 | ||||||||||||||||||
| Ernesto Zedillo | 5,785 | 5,785 | 6 | 41,430 | ||||||||||||||||||
| 31 Directors and executive officers, as a group | 696,990 | 7,173,525 | 94,850 | 37,908,621 | 45,873,986 | 1.84% | 918,766 | |||||||||||||||
COMMON STOCK |
|
|
|
| ||||||||||
Number of shares/options |
|
|
|
| ||||||||||
| Amount and Nature of Beneficial Ownership
| ||||||||||||||
Name
| Direct1
| Right to
| Trusteeships
| Indirect
| Total
| Percent
| Restricted
| |||||||
B. Marc Allen |
|
|
|
|
|
| 352 | |||||||
Steven D. Bishop | 65,931 | 545,540 | 2,101 |
| 613,572 | 6 | 32,428 | |||||||
Francis S. Blake | 7,261 |
|
|
| 7,261 | 6 | 12,590 | |||||||
Angela F. Braly | 9,907 |
|
|
| 9,907 | 6 | 37,007 | |||||||
Amy L. Chang |
|
|
|
|
|
| 7,949 | |||||||
Mary Lynn Ferguson-McHugh7 | 107,206 | 318,007 | 28,356 |
| 453,569 | 6 | 57,379 | |||||||
Shailesh Jejurikar | 4,290 | 389,444 | 10,243 |
| 403,977 | 6 | 2,781 | |||||||
Joseph Jimenez | 12,468 |
|
|
| 12,468 | 6 | 9,373 | |||||||
Christopher Kempczinski |
|
|
|
|
|
|
| |||||||
Debra L. Lee |
|
|
|
|
|
| 1,412 | |||||||
Terry J. Lundgren | 2,820 |
| 530 |
| 3,350 | 6 | 26,916 | |||||||
Christine M. McCarthy |
|
|
|
|
|
| 4,564 | |||||||
W. James McNerney, Jr. | 35,949 |
|
|
| 35,949 | 6 | 49,442 | |||||||
Jon R. Moeller8 | 138,875 | 638,254 |
|
| 777,129 | 6 | 51,076 | |||||||
Nelson Peltz |
|
|
| 5,786,3619 | 5,786,361 | .238% | 5,424 | |||||||
Andre Schulten | 7,204 | 124,673 |
|
| 131,877 | 6 | 19,946 | |||||||
David S. Taylor | 189,758 | 1,298,495 |
|
| 1,488,253 | 6 | 85,369 | |||||||
Margaret C. Whitman |
|
| 11,075 |
| 11,075 | 6 | 24,400 | |||||||
Patricia A. Woertz | 1,660 |
|
|
| 1,660 | 6 | 35,754 | |||||||
28 Directors and executive officers, as a group
|
813,275
|
5,774,059
|
53,504
|
5,786,361
|
12,427,199
|
.511%
|
644,825
| |||||||
1Includes unrestricted Common Stock over which each Director or executive officer has sole voting and investment power and restricted Common Stock over which they have voting power but no investment power (until restrictions lapse).
2Common Stock allocated to personal accounts of executive officers under the Retirement Trust pursuant to PST.PST, the Procter & Gamble International Stock Ownership Plan (ISOP), or The Procter & Gamble U.K. 1-4-1 Plan. Plan participants have sole discretion as to voting and, within limitations provided by PST, investment of shares. SharesPST shares are voted by the Trustees in accordance with instructions from participants. If instructions are not received by the Trustees as to the voting of particular shares, shares are to be voted in proportion to instructions actually received from other participants in the Retirement Trust. ISOP and U.K. 1-4-1 shares are voted in accordance with instructions from participants. If instructions are not received as to the voting of particular shares, a vote will not be submitted for those shares.
3Total includes stock options that have vested or will vest within 60 days, Common Stock pursuant to the PST that will be allocated to personal accounts of executive officers within 60 days, PSP awards (as described beginning on page 37)45) that will deliver as Common Stock in August 2018,2021, any Restricted Stock that will vest within 60 days, and any RSUs that will deliver as Common Stock within 60 days. The total does not include the final payment of dividend equivalents that took place on August 16, 2021 on PSP awards that will deliver as Common Stock in August.
4This column includes shares in which voting and/or investment powers are shared. It also includes shares indirectly held through family members who reside in the household of the directorDirector or officer.officer, other than family members who are or were employed by the Company and are therefore included in the direct ownership columns for each NEO, as applicable.
| 2021 Proxy Statement 73 | ||||
| BENEFICIAL OWNERSHIP | ||
5RSUs represent the right to receive unrestricted shares of Common Stock upon the lapse of restrictions, at which point the holders will have anon-forfeitable right to delivery of Common Stock on a specific date in the future. Total includes RSUs that will not deliver as Common Stock within 60 days and any PSP awards that will deliver as RSUs in August 2018.2021. RSUs that will not deliver within 60 days of the record date are not considered “beneficially owned” because holders are not entitled to voting rights or investment control until the shares are delivered. RSUs that will deliver within 60 days are listed in the “Right to Acquire” column.
6Excluding Mr. Peltz, less than .039%.0613% for any one Director or NEO.
7Totals include shares, stock options, and RSUs indirectly held by Ms. Ferguson-McHugh through her spouse, who was previously employed by the Company.
8Totals include shares, stock options, and RSUs indirectly held by Mr. Moeller through his spouse, who is alsowas previously employed by the Company.
61
9These shares are owned by certain funds and investment vehicles (the “Trian Funds”) managed by Trian Fund Management, L.P. (“Trian”), an institutional investment manager. None of such shares are held directly by Mr. Peltz. From time to time, certain of these shares are held in the ordinary course of business with other investment securities owned by the Trian Funds inco-mingled margin accounts with a prime broker, which prime broker may, from time to time, extend margin credit to certain Trian Funds, subject to applicable federal margin regulations, stock exchange rules and credit policies. Trian Fund Management GP, LLC, of which Mr. Peltz is a member, is the general partner of Trian and, therefore, is in a position to determine the investment and voting decisions made by the Trian Funds. Accordingly, Mr. Peltz and Trian may be deemed to indirectly beneficially own the shares that the Trian Funds directly and beneficially own.
| |||||||||||
CLASS A PREFERRED STOCK | |||||||||||
NUMBER OF SHARES | |||||||||||
| Amount and Nature of Beneficial Ownership | |||||||||||
Name | Profit Sharing | Trusteeships | Percent of Series | ||||||||
B. Marc Allen | |||||||||||
Steven D. Bishop |
| 2 | |||||||||
Francis S. Blake |
|
|
| ||||||||
Angela F. Braly |
|
|
| ||||||||
Amy L. Chang |
|
|
| ||||||||
| |||||||||||
| |||||||||||
| |||||||||||
Mary Lynn Ferguson-McHugh3 |
| 2 | |||||||||
| 822 |
| 2 | ||||||||
Joseph Jimenez |
|
| |||||||||
|
|
| |||||||||
Debra L. Lee | |||||||||||
Terry J. Lundgren | |||||||||||
Christine M. McCarthy | |||||||||||
W. James McNerney, Jr. |
|
| |||||||||
Jon R. Moeller4 |
| 2 | |||||||||
| |||||||||||
Nelson Peltz | |||||||||||
Andre Schulten | 1,302 |
| 2 | ||||||||
| 13,027 |
| 2 | ||||||||
Margaret C. Whitman |
|
| |||||||||
|
|
|
| ||||||||
| |||||||||||
| |||||||||||
|
| 2 | |||||||||
Employee Stock Ownership Trust of The Procter & Gamble Profit Sharing Trust and Employee Stock Ownership Plan P.O. Box 599, Cincinnati, Ohio 45201-0599
|
|
|
| ||||||||
| 74 The Procter & Gamble Company | ||
| BENEFICIAL OWNERSHIP | ||
1 Shares allocated to personal accounts of executive officers under the Employee Stock Ownership Trust pursuant to PST. Plan participants have sole discretion as to voting and, within limitations provided by PST, investment of shares. Shares are voted by the Trustees in accordance with instructions from participants. If instructions are not received by the Trustees as to the voting of particular shares, shares are to be voted in proportion to instructions actually received from other participants in the Trust.
2 Less than .036%.30% for any NEO, and for the Directors and executive officers, as a group; by the terms of the stock, only persons who are or have been employees can have beneficial ownership of these shares.
3 Total includes shares indirectly held by Ms. Ferguson-McHugh through her spouse, who was previously employed by the Company.
4 Total includes shares indirectly held by Mr. Moeller through his spouse, who is alsowas previously employed by the Company.
5 Unallocated shares. The voting of these shares is governed by the terms of PST, which provides that the Trustees shall vote unallocated shares held by them in proportion to instructions received from Trust participants as to voting of allocated shares. The disposition of these shares in connection with a tender offer would be governed by the terms of PST, which provides that the Trustees shall dispose of unallocated shares held by them in proportion to instructions received from Trust participants as to the disposition of allocated shares.
62
| |||||||||||
CLASS A PREFERRED STOCK | |||||||||||
NUMBER OF SHARES | |||||||||||
| Amount and Nature of Beneficial Ownership | |||||||||||
Name | Profit Sharing | Trusteeships | Percent of Series | ||||||||
B. Marc Allen | |||||||||||
Steven D. Bishop |
|
|
| ||||||||
Francis S. Blake |
|
|
| ||||||||
Angela F. Braly |
|
|
| ||||||||
Amy L. Chang |
|
|
| ||||||||
| |||||||||||
| |||||||||||
| |||||||||||
Mary Lynn Ferguson-McHugh3 |
| 2 | |||||||||
|
|
|
| ||||||||
Joseph Jimenez |
|
| |||||||||
Christopher Kempczinski | |||||||||||
Debra L. Lee | |||||||||||
Terry J. Lundgren | |||||||||||
Christine C. McCarthy | |||||||||||
W. James McNerney, Jr. |
|
|
| ||||||||
Jon R. Moeller |
|
|
| ||||||||
Nelson Peltz | |||||||||||
Andre Schulten | |||||||||||
David S. Taylor |
| 2 | |||||||||
|
|
|
| ||||||||
|
|
|
| ||||||||
| |||||||||||
| |||||||||||
|
| 2 | |||||||||
Employee Stock Ownership Trust of The Procter & Gamble P.O. Box 599, Cincinnati, Ohio 45201-0599 (R. L. Antoine, S. P. Donovan, Jr. and R. C. Stewart, Trustees)
|
| ||||||||||
1Shares allocated to personal accounts of executive officers under the Employee Stock Ownership Trust pursuant to PST. Plan participants have sole discretion as to voting and, within limitations provided by PST, investment of shares. Shares are voted
| 2021 Proxy Statement 75 | ||||
| BENEFICIAL OWNERSHIP | ||
by the Trustees in accordance with instructions from participants. If instructions are not received by the Trustees as to the voting of particular shares, shares are to be voted in proportion to instructions actually received from other participants in the Trust.
2 Less than .0005%.0013% for any NEO, and for the Directors and executive officers, as a group; by the terms of the stock, only persons who are or have been employees can have beneficial ownership of these shares.
3Total includes shares indirectly held by Ms. Ferguson-McHugh through her spouse, who was previously employed by the Company.
4 Unallocated shares. The voting of these shares is governed by the terms of PST, which provides that the Trustees shall vote unallocated shares held by them in proportion to instructions received from Trust participants as to voting of allocated shares. The disposition of these shares in connection with a tender offer would be governed by the terms of PST, which provides that the Trustees shall dispose of unallocated shares held by them in proportion to instructions received from Trust participants as to the disposition of allocated shares.
Section 16(a) Beneficial Ownership Reporting Compliance
Ownership of, and transactions in, Company stock by executive officers and Directors of the Company are required to be reported to the SEC pursuant to Section 16 of the Securities Exchange Act of 1934. As a practical matter, the Company assists its Directors and officers by monitoring transactions and completing and filing Section 16 reports on their behalf. All Directors and officers complied with these requirements during the past fiscal year.
63
| 76 The Procter & Gamble Company | ||
| AUDIT COMMITTEE REPORT | ||
Report of the Audit Committee
Each member of the Audit Committee is an independent Director as determined by the Board of Directors, based on the NYSE listing standards and the Board’s own Independence Guidelines. Each member of the Committee also satisfies the SEC’s additional independence requirement for members of audit committees. The Board of Directors has determined that Ms. Woertz and Mr. ChenaultMs. McCarthy meet the criteria for “Audit Committee Financial Expert” as defined by SEC rules. The Board of Directors has also determined that all Audit Committee members are financially literate. See page 1721 for further detail on Audit Committee composition.
As noted previously in the proxy statement, the Committee’s work is guided by a charter, which can be found in the corporate governance section of the Company’s website atwww.pg.com. The Audit Committee has the responsibilities set forth in its charter with respect to:
Accounting, financial reporting and disclosure processes, and adequacy of systems of disclosure and internal control established by management;
Quality and integrity of the Company’s financial statements;
Company’s compliance with legal and regulatory requirements;
Company’s overall risk management profile;
Independent registered public accounting firm’s qualifications and independence;
Performance of the Company’s internal audit function and the independent registered public accounting firm;auditor;
Performance of the Company’s ethics and compliance function;
Preparing this annual Report of the Audit Committee to be included in the Company’s proxy statement.
Management has the Company’s primary responsibility for establishing and maintaining adequate internal financial controllership, for preparing the financial statements, and for the public reporting process. Deloitte & Touche LLP, the Audit Committee-appointed independent registered public accounting firm for the fiscal year ended June 30, 2018,2021, is responsible for expressing opinions on the conformity of the Company’s audited financial statements with generally accepted accounting principles and on management’s assessment of the effectiveness of the Company’s internal control over financial reporting.
In its role of financial reporting oversight, the Committee reviewed and discussed with management and Deloitte & Touche LLP the audited financial statements for the year ended June 30, 2018,2021 and management’s assessment of the effectiveness of the Company’s internal control over financial reporting. In this context, the Committee met nineeight times (including telephone meetings to discuss quarterly results) during the fiscal year ended June 30, 2018.2021. The Committee has reviewed with Deloitte & Touche LLP matters required to be discussed pursuant to auditing standards adopted by the Public Company Accounting Oversight Board (“PCAOB”). In addition, the Committee has discussed various matters with Deloitte & Touche LLP related to the Company’s consolidated financial statements, including critical accounting policies and practices used, alternative treatments for material items that have been discussed with management, and other material written communications between Deloitte & Touche LLP and management. The Committee has also received written disclosures and the letter from Deloitte & Touche LLP required by PCAOB Rule 3526, “Communication with Audit Committees Concerning Independence,” and has discussed with Deloitte & Touche LLP its independence from the Company and its management. In addition, the Committee has received written material addressing Deloitte & Touche LLP’s internal quality control procedures and other matters, as required by the NYSE listing standards. The Committee understands the need for Deloitte & Touche LLP to maintain objectivity and independence in its audit of the Company’s financial statements and internal controls over financial reporting. The Committee has implemented a formalpre-approval process fornon-audit fee spending, and it seeks to limit this spending to a level that keeps the core relationship with Deloitte & Touche LLP focused on financial statement review and evaluation. A copy of thispre-approval process is attached to this proxy statement as Exhibit B.
Based on the considerations referred to above, the Committee recommended to our Board of Directors that the audited financial statements for the year ended June 30, 20182021 be included in our Annual Report on Form10-K for
64
2018 2021 and selected Deloitte & Touche LLP as the independent registered public accounting firm for the Company for the fiscal year ending June 30, 2019.2022. This report is provided by the following independent Directors, who constitute the Committee:
Patricia A. Woertz, Chair
B. Marc Allen
Frank S. Blake
Angela F. Braly
Amy L. Chang
Kenneth I. ChenaultChristine M. McCarthy
| 2021 Proxy Statement 77 | ||||
| AUDIT COMMITTEE REPORT | ||
Fees Paid to the Independent Registered Public Accounting Firm
The Audit Committee, with the ratification of the shareholders, engaged Deloitte & Touche LLP to perform an annual audit of the Company’s financial statements for the fiscal year ended June 30, 2018.2021. The Audit Committee was responsible for determination and approval of audit fees primarily based on audit scope, with consideration of audit team skills and experiences.
Pursuant to rules of the SEC, the fees billed by Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates (collectively “Deloitte”), are disclosed in the table below:
Fees Paid to Deloitte
(Dollars in Thousands)
(Dollars in Thousands)
| (Dollars in Thousands)
| |||||||||||
FY 2016-17 |
FY 2017-18 |
FY 2019-20
|
FY 2020-21
| |||||||||
Audit Fees
|
|
$30,375
|
|
|
$28,684
|
| $28,418 | $28,468 | ||||
Audit-Related Fees
|
|
3,421
|
|
|
2,439
|
| 1,901 | 2,262 | ||||
Tax Fees
|
|
384
|
|
|
285
|
| 303 | 428 | ||||
|
| |||||||||||
Subtotal
|
|
34,180
|
|
|
31,408
|
| 30,622 | 31,157 | ||||
All Other Fees
|
|
584
|
|
|
501
|
| 370 | 349 | ||||
|
| |||||||||||
Deloitte Total Fees |
|
$34,764 |
|
|
$31,909 |
| $30,992 | $31,506 | ||||
|
| |||||||||||
Services Provided by Deloitte
All services provided by Deloitte are permissible under applicable laws and regulations. The Company has adopted policies and procedures forpre-approval of services by Deloitte as described in Exhibit B to this proxy statement. The fees paid to Deloitte shown in the table above were allpre-approved in accordance with these procedures and include:
| 1) | Audit Fees—These are fees for professional services performed by Deloitte for the audit of the Company’s annual financial statements and review of financial statements included in the Company’s10-Q filings, and services that are normally provided in connection with statutory and regulatory filings or engagements. |
| 2) | Audit-Related Fees—These are fees for assurance and related services performed by Deloitte that are reasonably related to the performance of the audit or review of the Company’s financial statements. This includes: employee benefit and compensation plan audits; due diligence related to mergers and acquisitions; other attestations by Deloitte, including those that are required by statute, regulation, or contract; and consulting on financial accounting/reporting standards and controls. |
| 3) | Tax Fees—These are fees for professional services performed by Deloitte with respect to tax compliance and tax returns. This includes review of original and amended tax returns for the Company and its consolidated subsidiaries; refund claims, payment planning/tax audit assistance; and tax work stemming from “Audit-Related” items. |
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| 4) | All Other Fees—These are fees for other permissible work performed by Deloitte that does not meet the above category descriptions. The fees cover training programs, consulting, and various subscriptions and local engagements that are permissible under applicable laws and regulations including tax filings for individual employees included in the Company expatriate program. |
These services are actively monitored (both spending level and work content) by the Audit Committee to maintain the appropriate objectivity and independence in Deloitte’s core work, which is the audit of the Company’s consolidated financial statements. The Committee also concluded that Deloitte’s provision of audit andnon-audit services to the Company and its affiliates is compatible with Deloitte’s independence.
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| 78 The Procter & Gamble Company | ||
| BOARD PROPOSALS | |
The Audit Committee is directly responsible for the appointment, compensation, retention, and oversight of the independent external audit firm retained to audit the Company’s financial statements. In order to assure continuing audit independence and objectivity, the Audit Committee will periodically consider whether there should be a rotation of the independent external audit firm. In accordance with theSEC-mandated rotation of the audit firm’s lead engagement partner, the Audit Committee is also involved in the selection of the external audit firm’s lead engagement partner.
The Audit Committee selected Deloitte & Touche LLP as the Company’s independent registered public accounting firm to perform the audit of our financial statements and our internal controls over financial reporting for the fiscal year ending June 30, 2019.2022. Deloitte & Touche LLP was our independent registered public accounting firm for the fiscal year ended June 30, 2018.2021. The members of the Audit Committee and Board believe that the retention of Deloitte & Touche LLP to serve as the Company’s independent external auditor is in the best interest of the Company and its shareholders. In the course of these reviews, the Audit Committee considers, among other things: external auditor capability, effectiveness and efficiency of audit services, results from periodic management and Audit Committee performance assessments, and appropriateness of fees in the context of audit scope. The Committee also reviews and approvesnon-audit fees.
Deloitte & Touche LLP representatives are expected to attend the 20182021 annual meeting. They will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate shareholder questions.
We are asking our shareholders to ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm. Although ratification is not required by the Company’s Code of Regulations, the By Laws of the Board of Directors, or otherwise, the Board is submitting the selection of Deloitte & Touche LLP to our shareholders for ratification as a matter of good corporate practice. The Board will take into consideration the shareholder vote, but the Audit Committee, in its discretion, may retain Deloitte & Touche LLP or select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interestinterests of the Company and our shareholders.
The Board of Directors recommends a vote FOR the following proposal:
RESOLVED, That action by the Audit Committee appointing Deloitte & Touche LLP as the Company’s independent registered public accounting firm to conduct the annual audit of the financial statements of the Company and its subsidiaries for the fiscal year ending June 30, 20192022 is hereby ratified, confirmed, and approved.
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| 2021 Proxy Statement 79 | ||||
| BOARD PROPOSALS | ||
ITEM 3. PROPOSAL FOR AN ADVISORY VOTE ON EXECUTIVE COMPENSATION (THE SAY ON PAY VOTE)
Pursuant to Section 14A of the Securities Exchange Act of 1934, we are providing our shareholders with the opportunity to vote to approve, on anon-binding, advisory basis, the compensation of our NEOs as set forth in this proxy statement in accordance with the compensation disclosure rules of the SEC. This proposal is also referred to as the “Say on Pay” vote.
Our executive compensation program pays for performance, supports our business strategies, discourages excessive risk-taking, makes us competitive with other multinational corporations for top talent, and aligns our executives’ interests with the long-term interests of our shareholders. In 2017,2020, shareholders approved the compensation paid to the NEOs with a FOR vote of 92.95%91.78%. In FY2017-18, the C&LD Committee approved several changes to our executive compensation programs to better align rewards to business results and company strategy, and to reflect suggestions by shareholders during last year’s dialogue with investors.
Our Compensation Discussion & Analysis, which begins on page 3034 of this proxy statement, describes in detail the components of our executive compensation program and the process by which our Board makes executive compensation decisions. Highlights of our program include the following:
Consistent with ourpay-for-performance philosophy, about 87%89% of our total NEO compensation is tied to Company performance;
Multiple performance metrics are utilized to discourage excessive risk-taking by removing any incentive to focus on a single performance goal to the detriment of others;
Substantial stock ownership requirements ensure that our senior executives maintain a significant stake in our long-term success;
Equity plans prohibitre-pricing and backdating of stock options;
Clawback policies allow recovery of certain compensation payments and proceeds from stock transactions from executives in the event of a significant restatement of financial results for any reason or for a violation of certain stock plan provisions;
We do not grant time-based equity awards that vest immediately solely on account of a change in control;
We do not execute employment agreements with executives that contain special severance payments such as golden parachutes;
We do not providegross-ups to cover personal income taxes that pertain to executive or severance benefits; and
We do not provide special executive retirement programs.
We design our compensation programs to motivate our executives to win during tough economic times and to achieve our fundamental and overriding objective—to create value for our shareholders at leadership levels on a consistent basis.
This vote isnon-binding; however, we highly value the opinions of our shareholders. Accordingly, the Board and the C&LD Committee will consider the outcome of this advisory vote in connection with future executive compensation decisions.
The Board of Directors recommends that you vote FOR the following resolution:
RESOLVED, That the compensation paid to the NEOs, as disclosed pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion & Analysis, compensation tables and narrative discussion, is hereby approved.
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| 80 The Procter & Gamble Company | ||
| SHAREHOLDER PROPOSAL | ||
Shareholder Proposal
James McRitchie and Myra K. Young, 9295 Yorkship Court, Elk Grove, California, 95758, the owners of at least $2,000 in value of Common Stock of the Company, have given notice that they intend to present for action at the annual meeting the following resolution:
Proposal 4 — Increase Diversity of Director Nominees
Resolved: Procter & Gamble Company (‘PG” or ‘Company’) shareholders urge our board to adopt a policy (‘Policy’) of promoting significant representation of employee perspectives among corporate decision makers by requiring the initial list of candidates from which new director nominees are chosen (‘Initial List’) by the Governance and Public Responsibility Committee include (but need not be limited to) current or past PG non-management employees. The Policy should provide that any third-party consultant asked to furnish an Initial List will be requested to include such candidates.
Whereas: There is growing consensus that employees on corporate boards can contribute to long-term corporate sustainability. Policymakers note, having companies run exclusively to benefit shareholders contributes to “stagnant wages, runaway executive compensation and underinvestment in research and innovation.”1 The Business Roundtable asks corporations to align with stakeholder interests, including employees.2 Last year, 37% of shares voted in favor of PG reporting annually on Diversity and Inclusion Efforts.
Employee representation grows long-term value of companies in several ways. According to the National Bureau of Economic Research, giving workers formal control rights increases female board representation and raises capital formation.3 Employees are also often more diverse than boards in terms of race, gender, and wealth. The German “co-determination” model of shared governance provides a check against short-term capital allocation practices and other benefits.4
The 2018 UK Corporate Governance Code encourages boards to establish a method for gathering workforce views. Options include a director appointed from the workforce, a formal workforce advisory panel or designating a director to liaise with workers.5
Senators Baldwin and Warren introduced legislation codifying employee representation on corporate boards, noting that modern corporate governance needs to be accountable wider interests, notably employees.6 Polling demonstrates bipartisan public support (over 53%) for employee representation.7
Anticipated benefits include reduced turnover as employees are more empowered to influence firm-specific investments, better informed decision-making because employees have specialized knowledge, better monitoring of management with increased information channels, and reduced myopia since employees often take a longer-term view.8
While our Board satisfies independence requirements and strives for a culture of participation, it lacks formal representation from non-management employees, who bring a different understanding of operations than typical directors. Additionally, PG’s CEO was reportedly one of the 100 most overpaid CEOs.9
| 1 | https://www.nytimes.com/2019/01/06/opinion/warren-workers-boards.html |
| 2 | https://www.nytimes.com/2020/09/22/business/business-roudtable-stakeholder-capitalism.html |
| 3 | http://economics.mit.edu/files/17273 |
| 4 | https://rooseveltinstitute.org/wp-content/uploads/2020/07/RI_Policies-for-Worker-Representation-on-Corporate-Boards-Working-Paper-201910.pdfandhttps://ssrn.com/abstract=3684690 |
| 5 | https://assets.kpmg/content/dam/kpmg/uk/pdf/2018/07/designated-NED.pdf |
| 6 | https://www.wsj.com/articles/companies-shouldnt-be-accountable-only-to-shareholders-1534287687 |
| 7 | https://www.dataforprogress.org/blog/2018/12/14/employee-governance |
| 8 | https://www.corpgov.net/2020/04/kokkinis-and-sergakis-employee-participation-in-uk-companies/ |
| 9 | https://www.asyousow.org/report-page/the-100-most-overpaid-ceos-2021#appendixa |
| 2021 Proxy Statement 81 | ||||
| SHAREHOLDER PROPOSAL | ||
The Policy we propose resembles the Rooney Rule, which requires teams to interview minority candidates for head coaching and senior operations openings. By adopting the Rooney Rule, National Football League teams increased diversity and set a precedent for other industries. Policies similar to the Rooney Rule have been adopted by Amazon, Costco, Home Depot, Activision Blizzard, Dover, Expedia, Fastenal, Hilton Worldwide Holdings, L Bands, Robert Half International, Ross Stores and others.
Increase Long-Term Shareholder Value
Vote to Increase Diversity of Director Nominees – Proposal 4
THE BOARD RECOMMENDS A VOTE AGAINST THIS PROPOSAL FOR THE FOLLOWING REASONS:
We believe our current Director candidate selection process is sound and serves the best interests of our Company and shareholders. We are proud of the robust Director candidate assessment and selection process that our Board follows, which has resulted in a diverse set of active, capable, and diligent Board members. In addition, our employees have a wide variety of channels to communicate with senior leadership and the Board of Directors, and we ensure through our annual employee survey that our senior leaders and our Board of Directors are aware of any issues of particular concern to our employee population. The proposal to alter our Director nomination process is unnecessary and not in the best interests of our shareholders or our Company.
P&G has a robust Director nomination processes designed to identify skilled, experienced, and committed Director candidates.
Our Board and Governance & Public Responsibility Committee (the “G&PR Committee”) devote substantial time to assessing the Board’s needs and evaluating potential candidates against the skills and qualifications set out in our Corporate Governance Guidelines. As discussed in the Election of Directors – Director Skills, Qualifications and Diversity section of this proxy statement, our leaders must embrace strong governance, epitomize the Company’s Purpose, Values, and Principles, and bring to bear the practical wisdom and seasoned judgment that comes from significant leadership skill and experience. Additionally, as set forth in our Corporate Governance Guidelines, the Board “seeks to achieve a mix of Board members that represents a diversity of background and experience, including with respect to age, gender, international background, race, and specialized experience.” Given the Board’s significant risk oversight and critical governance duties, our Corporate Governance Guidelines require that any employee Director nominee have relevant and broad experience to help ensure they can meaningfully fulfill their important duties to the Company and our shareholders. The G&PR Committee is uniquely situated to determine these critical skills, qualifications and diversity of backgrounds and experiences that best serve our Company, shareholders and other stakeholders, and to assess potential candidates against such criteria. Each Director must have the skills, experience, and perspective to appropriately represent the broad range of shareholder interests, not just those of any one group. Our G&PR Committee carefully evaluates potential Director candidates against the Board’s needs and assesses potential candidates for both the short term and for longer-term Board refreshment.
Our G&PR Committee will consider shareholder recommendations for candidates to the Board, including a non-management employee candidate. As discussed in the Shareholder Recommendations of Board Nominees and Committee Process for Recommending Board Nominees section of this proxy statement, the G&PR Committee considers all candidates using the criteria discussed above and described in more detail in the Corporate Governance Guidelines, regardless of the source of the recommendation. We believe this process should apply to all Director candidates and that non-management employee Director candidates should not undergo a different, and potentially more favorable, process.
Our approach has resulted in a Board of eminently qualified individuals, who bring seasoned judgment and a variety of skills and experiences with them into the boardroom. Our Director nominees are also demographically diverse—50% women and 33% multicultural—with a mix of tenure, age, and industry experience.
We expect that Board members will exercise diligently and in good faith their independent judgment in the best interests of the Company and its shareholders as a whole, notwithstanding their other activities or affiliations. As outlined in this proxy statement, 10 of 12 members of the Board of Directors are independent, and all members
| 82 The Procter & Gamble Company | ||
| SHAREHOLDER PROPOSAL | ||
who serve on Committees are independent. We highly value Board independence, and adding non-management employee Board members would lessen that independence.
P&G provides numerous opportunities for employees to interact with senior leaders and communicate with the Board, ensuring the voices of our employees are heard and represented in the boardroom.
Our people are critical to the success of our Company, and we are committed to ensuring that our employees know that they are valued, appreciated, and integral to the meaningful work that we do. Our employees have open access to senior leadership through regular town halls, mentoring programs, senior leadership email accounts, and regular site visits from the CEO and other senior leadership. This access to the senior leaders of our company ensures that employee voices are heard and represented in the boardroom. Directors have regular one-on-one meetings with senior leaders, where those leaders can raise employee concerns and provide additional perspective on the health and engagement of their specific organizations. Additionally, we have a helpline run by an independent third party where employees can voice any compliance or ethical concerns on a confidential basis (if desired), with results escalated to senior management or the Audit Committee as appropriate. Each year, we conduct an extensive employee survey covering topics such as confidence in the Company’s leadership and direction, equality and inclusion, decision making, and organization design and culture, the results of which are shared with the full Board of Directors. Over 68,000 of our employees (approximately 70%) provide input to the survey. We review the input at the Company level and organizational unit level, and we communicate back to employees in a timely way about what we heard and what actions will be taken. We believe this demonstrated commitment to understanding and action contributes to the very high response rate from employees.
As discussed in the Communication with Directors and Executive Officers section of this proxy statement, employees and shareholders can communicate with the Board through email or by written correspondence. The Corporate Secretary’s Office reviews and tracks such correspondence and must forward all emails and/or letters to the appropriate Director, with exceptions for personal grievances and items unrelated to the functions of the Board. Our Board also holds meetings at different P&G sites, such as a 2019 Board visit to our offices in China, where Board members have the opportunity to visit and interact with employees.
Given our robust Director nomination process and existing opportunities for employees’ voices to be represented in the boardroom, the proposal to alter our Director nomination process is unnecessary and not in the best interests of our shareholders or our Company.
The Board of Directors recommends a vote AGAINST this proposal.
| 2021 Proxy Statement 83 | ||||
| OTHER MATTERS | ||
Specific information on how to file notices, proposals, and/or recommendations pursuant to either SEC Rule14-814a-8 or the provisions in the Company’s Regulations is noted in the following sections. All notices/proposals/notices, proposals, or recommendations should be sent to:
The Procter & Gamble Company
c/o The Corporate Secretary’s Office
One Procter & Gamble Plaza
Cincinnati, OH 45202-3315
20192022 Annual Meeting Date and Shareholder Proposals
It is anticipatedWe anticipate that the 20192022 annual meeting of shareholders will be held on Tuesday, October 8, 2019.11, 2022. Pursuant to regulations issued by the SEC, to be considered for inclusion in the Company’s proxy statement for presentation at that meeting, all shareholder proposals must be received by the Company on or before the close of business on April 26, 2019.29, 2022.
Annual Meeting Advance Notice Requirements
Our Code of Regulations requires advance notice for any business to be brought before an annual meeting of shareholders. For business to be properly brought before an annual meeting by a shareholder (other than in connection with the election of Directors, see sections entitled “Director Nominations for Inclusion in the 20192022 Proxy Statement” and “Shareholder Recommendations of Board Nominees and Committee Process for Recommending Board Nominees” below; or any matter brought pursuant to SEC Rule14a-8), the shareholder must meet the requirements set forth in our Regulations, which are publicly available atwww.pg.com. A shareholder wishing to bring such business before the 20192022 annual meeting must provide such notice no earlier than February 11, 201914, 2022, and no later than July 11, 2019.14, 2022.
If a shareholder notifies the Company of an intent to present business at the 20192022 annual meeting of shareholders, and such business may be properly presented at that meeting consistent with the Company’s Code of Regulations and Amended Articles of Incorporation, the Company will have the right to exercise its discretionary voting authority with respect to such business without including information regarding such proposal in its proxy materials.
Director Nominations for Inclusion in the 20192022 Proxy Statement
In 2016, our Board amended the Company’s Code of Regulations to permit a shareholder, or a group of up to 20 shareholders, who has owned at least 3% of our outstanding Common Stock for at least 3 years, to nominate and include in our proxy statement candidates for our Board, subject to certain requirements. Each eligible shareholder, or group of shareholders, may nominate candidates for Director, up to a limit of the greater of 2 or 20% of the number of Directors on the Board. Any nominee must meet the qualification standards set forth in the Corporate Governance Guidelines, as described below.
Any such notice and nomination materials must be received at the address above not less than 120 days and not more than 150 days prior to theone-year anniversary of the preceding year’s annual shareholder meeting. Certain other notice periods apply if the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date. Based on the anticipatedone-year anniversary of the 20182021 annual meeting, an eligible shareholder wishing to nominate a candidate for election to the Board at the 20192022 annual meeting must provide such notice no earlier than May 12, 201915, 2022 and no later than June 11, 2019.14, 2022. Any such notice and accompanying nomination materials must meet the requirements set forth in our Regulations, which are publicly available atwww.pg.com.
| 84 The Procter & Gamble Company | ||
| OTHER MATTERS | ||
Shareholder Recommendations of Board Nominees and
Committee Process for Recommending Board Nominees
The Governance & Public Responsibility Committee will consider shareholder recommendations for candidates for the Board. The minimum qualifications and preferred specific qualities and skills required for Directors are set forth in Article II, Sections B through E of the Corporate Governance Guidelines. The Committee considers all candidates
69
using these criteria, regardless of the source of the recommendation. The Committee’s process for evaluating candidates also includes the considerations set forth in Article II, Section B of the Committee’s Charter. After initial screening for minimum qualifications, the Committee determines appropriate next steps, including requests for additional information, reference checks, and interviews with potential candidates. In addition to shareholder recommendations, the Committee also relies on recommendations from current Directors, Company personnel, and others. From time to time, the Committee may engage the services of outside search firms to help identify candidates. During the fiscal year ended June 30, 2018,2021, the Company engaged Egon Zehnder to help identify potential candidates for the Board. All nominees for election as Directors who currently serve on the Board are known to the Committee and were recommended by the Committee to the Board as Director nominees. Mr. Kempczinski was recommended to the Committee by the Company’s third-party search firm.
Pursuant to the Company’s Regulations, a shareholder wishing to nominate a candidate for election to the Board at an annual meeting of shareholders without being included in the Company’s proxy statement is required to give written notice to the Secretary of the Company of his or her intention to make such nomination. The notice of nomination must be received at the Company’s principal executive offices not less than 140 days nor more than 240 days prior to theone-year anniversary of the preceding year’s annual shareholder meeting. Certain other notice periods apply if the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date. Based on the anticipatedone-year anniversary of the 20182021 annual meeting, a shareholder wishing to nominate a candidate for election to the Board at the 20192022 annual meeting must provide such notice no earlier than February 11, 2019,14, 2022, and no later than May 22, 2019.25, 2022.
As set forth in the Company’s Code of Regulations, the notice of nomination is required to contain information about both the nominee and the shareholder making the nomination, including information sufficient to allow the G&PR Committee to determine if the candidate meets certain criteria. A nomination that does not comply with the requirements set forth in the Company’s Code of Regulations will not be considered for presentation at the annual meeting.
Unless corrections are identified, the minutes of the annual meeting of shareholders held October 10, 201713, 2020, will be approved as recorded. Any such action approving the minutes does not constitute approval or disapproval of any of the matters referenced therein.
If any matters other than those set forth in the notice should be properly presented for action at the annual meeting, the persons named in the proxy will use their discretion to take such action as they deem to be in harmony with the policies of the Company.
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| 2021 Proxy Statement 85 | ||||
| EXHIBIT A | ||
Reconciliation ofNon-GAAP Financial Measures
In accordance with the SEC’s Regulation G and item 10(e) of Regulation S-K,the following provides definitions of thenon-GAAP measures used in this proxy statement and the reconciliation to the most closely related GAAP measure. We believe that thesethe non-GAAP measures provide useful perspective of underlying business trends (i.e. trends excludingnon-recurring or unusual items) and results and provide a supplemental measure ofyear-on-year results. Thenon-GAAP measures described below are used by Managementmanagement in making operating decisions, allocating financial resources and for business strategy purposes. These measures may be useful to investors as they provide supplemental information about business performance and provide investors with a view of our business results through the eyes of Management.management. These measures are also used to evaluate senior management and are a factor in determining theirat-risk compensation. Thesenon-GAAP measures are not intended to be considered by the user in place of the related GAAP measure, but rather as supplemental information to our business results. Thesenon-GAAP measures may not be the same as similar measures used by other companies due to possible differences in method and in the items or events being adjusted.
Thenon-GAAP measures provided are as follows:
Organic Sales Growth; Adjusted Free Cash Flow; Adjusted Free Cash Flow Productivity; Coresales growth: Organic sales growth is a Before-Taxnon-GAAP Operating Profit Growth 3 Year CAGR; Core EPS Growthmeasure of sales growth excluding the impacts of the July 1, 2018 adoption of new accounting standards for “Revenue from Contracts with Customers”, acquisitions, divestitures and Core EPS Growth 3 Year CAGR.foreign exchange from year-over-year comparisons. We believe that this measure provides investors with a supplemental understanding of underlying sales trends by providing sales growth on a consistent basis.
The CoreFollowing are the adjustments that are used as applicable to reconcile the non-GAAP earnings and cash measures included in the following reconciliation tables refer to the equivalentmost closely related GAAP measures adjusted as applicable for the following items:measure:
| • | Incremental restructuring: The Company has historically had |
| • | Early debt extinguishment charges: In fiscal 2021, 2018 and 2017, the Company recorded after-tax charges of $427 million, $243 million and $345 million, respectively, due to the early extinguishment of certain long-term debt. These charges represent the difference between the reacquisition price and the par value of the debt extinguished. |
| • | Shave Care Impairment: In fiscal 2019, the Company recognized a one-time, non-cash after-tax charge of $8.0 billion ($8.3 billion before tax) to adjust the carrying value of the Shave Care reporting unit. This was comprised of a before and after-tax impairment charge of $6.8 billion related to goodwill and an after-tax impairment charge of $1.2 billion ($1.6 billion before tax) to reduce the carrying value of the Gillette indefinite-lived intangible assets. |
| • | Anti-Dilutive Impacts: The Shave Care impairment charges caused preferred shares that are normally dilutive (and hence, normally assumed converted for purposes of determining diluted earnings per share) to be anti-dilutive. Accordingly, for U.S. GAAP, the preferred shares were not assumed to be converted into common shares for diluted earnings per share and the related dividends paid to the preferred shareholders were deducted from net income to calculate the earnings available to common shareholders. As a result of the non-GAAP Shave Care impairment adjustment, these instruments are dilutive for non-GAAP core earnings per share. |
| • | Gain on Dissolution of the PGT Healthcare Partnership: The Company dissolved our PGT Healthcare partnership, a venture between the Company and Teva Pharmaceuticals Industries, Ltd (Teva) in the OTC |
| 2021 Proxy Statement A-1 | ||||
| EXHIBIT A | ||
consumer healthcare business during the year ended June 30, 2019. The transaction was accounted for as a sale of the Teva portion of the PGT business; the Company recognized an after-tax gain on the dissolution of $353 million. |
| • | Transitional Impact of the U.S. Tax |
|
|
|
|
A-1
We do not view the above items to be part of our sustainable results, and their exclusion from core earnings measures provides a more comparable measure ofyear-on-year resultsresults.
Organic sales growth:Constant currency core before-tax operating profit and 3-year compound annual growth rate (CAGR): Organic sales growthConstant currency core before-tax operating profit is a measure of the Company’s operating profit adjusted to exclude foreign exchange impact and other items as indicated. Management believes this non-GAAP measure provides a supplemental perspective to the Company’s operating efficiency over time. Constant currency core before-tax operating profit 3-year compound annual growth rate (CAGR) is the annualized average rate of sales growth excludingbetween the impactsspecified years.
Core EPS and 3-year compound annual growth rate (CAGR): Core EPS is a measure of the India Goods & Services Tax changes, acquisitions, divestitures and foreign exchange from year-over-year comparisons. We believeCompany’s diluted net earnings per share adjusted as indicated. Management views this non-GAAPmeasure provides investors withas a useful supplemental understandingmeasure of underlying sales trends by providing salesCompany performance over time. The tables below provide a reconciliation of diluted net earnings per share to Core EPS. Core EPS 3-year compound annual growth on a consistent basis.rate (CAGR) is the annualized average rate of growth between the specified years.
Adjusted free cash flow and3-year total adjusted free cash flow: Adjusted free cash flow is defined as operating cash flow less capital spending and excluding certain divestiture impacts (taxtax payments related to certain divestitures)the Merck OTC Consumer Healthcare acquisition and the tax payments related to the transitional tax resulting from the U.S. Tax Act (the Company incurred a transitional tax liability of approximately $3.8 billion from the U.S. Tax Act, which is payable over a period of 8 years). Adjusted free cash flow represents the cash that the Company is able to generate after taking into account planned maintenance and asset expansion. We view adjusted free cash flow as an important measure because it is one factor used in determining the amount of cash available for dividends, share repurchases, acquisitions and other discretionary investments.3-year total adjusted free cash flow is the sum of the adjusted free cash flows over the specified period.
Adjusted free cash flow productivity and3-year total adjusted free cash flow productivity: Adjusted free cash flow productivity is defined as the ratio of adjusted free cash flow to net earnings excluding the transitional impacts of the U.S. Tax Act, the lossesfiscal 2021 loss on early debt extinguishment, the fiscal 2019 Shave Care impairment and gain on the saledissolution of the Batteries and Beauty Brands businesses and the Batteries impairments.PGT Healthcare partnership. We view adjusted free cash flow productivity as a useful measure to help investors understand P&G’s ability to generate cash. Adjusted free cash flow productivity is used by management in making operating decisions, allocating financial resources and for budget planning purposes. The Company’s long-term target is to generate annual adjusted free cash flow productivity at or above 90 percent.3-year total adjusted free cash flow productivity is the ratio of3-year adjusted cash flow to3-year net earnings excluding the specified adjustments.
Corebefore-tax operating profit and3-year compound annual growth rate (CAGR): Corebefore-tax operating profit is a measure of the Company’s operating profit adjusted for items as indicated. Management believes thisnon-GAAP measure provides a supplemental perspective to the Company’s operating efficiency over time. Corebefore-tax operating profit3-year compound annual growth rate (CAGR) is the annualized average rate of growth between specified years.
Core EPS and3-year compound annual growth rate (CAGR): Core EPS is a measure of the Company’s diluted net earnings per share from continuing operations adjusted as indicated. Management views thisnon-GAAP measure as a useful supplemental measure of Company performance over time. The tables below provide a reconciliation of diluted net earnings per share to Core EPS. Core EPS3-year compound annual growth rate (CAGR) is the annualized average rate of growth between specified years.
Organic Sales Growth
Total Company | Net Sales Growth | Foreign Exchange Impact | Acquisition & Divestiture Impact /Other* | Organic Sales Growth | Net Sales Growth
| Foreign Exchange
| Acquisition & Divestiture
| Organic Sales
| ||||||||
FY2017-18 | 3% | (2)% | —% | 1% | ||||||||||||
FY 2020-21 | 7.3% | (0.9%) | 0.0% | 6.4% | ||||||||||||
FY 2019-20 | 4.8% | 1.7% | (0.5)% | 6.0% | ||||||||||||
FY 2018-19 | 1.3% | 3.6% | 0.2% | 5.1% | ||||||||||||
3 Year Compound Annual Growth Rate | 5.8% | |||||||||||||||
*Acquisition & Divestiture Impact/Other includes the volume and mix impact of acquisitions and divestitures, the impact from the July 1, 2018 adoption of India Goods and Services Tax implementationa new accounting standard for “Revenue from Contracts with Customers”, and rounding impacts necessary to reconcile net sales to organic sales.
| A-2 The Procter & Gamble Company | ||
| EXHIBIT A | ||
Adjusted Free Cash Flow
(Amounts in millions, unless otherwise noted)
| Operating Cash Flow | Capital Spending | Tax Payment on Divestitures | Adjusted Free Cash Flow | |||||||||||||
FY2017-18 | $ | 14,867 | ($ | 3,717 | ) | $ | — | $ | 11,150 | |||||||
FY2016-17 | 12,753 | (3,384 | ) | 418 | 9,787 | |||||||||||
FY2015-16 | 15,435 | (3,314 | ) | $ | — | 12,121 | ||||||||||
|
| |||||||||||||||
3-Year Total | $ | 43,055 | ($ | 10,415 | ) | $ | 418 | $ | 33,058 | |||||||
|
| |||||||||||||||
Operating Cash Flow
| Capital Spending
| Adjustments to Operating
| Adjusted Free
| |||||
FY 2020-21 | $18,371 | ($2,787) | $225 | $15,809 | ||||
FY 2019-20 | 17,403 | (3,073) | 543 | 14,873 | ||||
FY 2018-19 | 15,242 | (3,347) | 235 | 12,130 | ||||
Three Year Total | $51,016 | ($9,207) | $1,003 | $42,812 | ||||
(1) Adjustments to Operating Cash Flow relate to tax payments related to the Merck OTC Consumer Healthcare acquisition in fiscal 2020 and for the transitional tax payments resulting from the U.S. Tax Act in fiscal 2021, 2020, and 2019.
A-2
Adjusted Free Cash Flow Productivity
(Amounts in millions, unless otherwise noted)
| Adjusted Free Cash Flow | Net Earnings | Adjustments to Net Earnings(1) | Net Earnings Excluding Adjustments | Adjusted Free Cash Flow Productivity | ||||||||||||||||
FY2017-18 | $ | 11,150 | $ | 9,861 | $ | 845 | $ | 10,706 | 104% | |||||||||||
FY2016-17 | 9,787 | 15,411 | (4,990 | ) | 10,421 | |||||||||||||||
FY2015-16 | 12,121 | 10,604 | (72 | ) | 10,532 | |||||||||||||||
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3-Year Total | $ | 33,058 | $ | 35,876 | ($ | 4,217 | ) | $ | 31,659 | 104% | ||||||||||
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Adjusted Free
| Net Earnings
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FY 2020-21 | $15,809 | $14,352 | $427 | $14,779 | 107% | |||||
FY 2019-20 | 14,873 | 13,103 | — | 13,103 | ||||||
FY 2018-19 | 12,130 | 3,966 | 7,625 | 11,591 | ||||||
Three Year Total | $42,812 | $31,421 | $8,052 | $39,473 | 108% | |||||
(1) Adjustments to Net Earnings relate to the transitional impacts of the U.S. Tax Act in fiscal 2018, the lossesloss on early extinguishment of debt in fiscal 20182021 and 2017,the Shave Care impairment charges and the gain on the saledissolution of the Beauty Brands businessPGT Healthcare partnership in fiscal 2017, the gain on the sale of the Batteries business in fiscal 2016 and the Batteries impairment in fiscal 2016.2019.
Constant Currency CoreBefore-Tax Operating Profit 3-Year3 Year CAGR
(Amounts in millions, unless otherwise noted)
| FY 2017-18 | FY 2016-17 | FY 2015-16 | FY 2014-15 | |||||||||||||
Before-Tax Operating Profit | $ | 13,711 | $ | 13,955 | $ | 13,441 | $ | 11,049 | ||||||||
Incremental Restructuring | 739 | 399 | 593 | 621 | ||||||||||||
Venezuela B/S Remeasurement & Devaluation Impacts | — | 138 | ||||||||||||||
Charges for European Legal Matters | 13 | 29 | ||||||||||||||
Venezuela Deconsolidation Charge | — | 2,028 | ||||||||||||||
Rounding | (1 | ) | ||||||||||||||
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CoreBefore-Tax Operating Profit | $ | 14,450 | $ | 14,354 | $ | 14,047 | $ | 13,864 | ||||||||
3-Year Compound Annual Growth Rate | 1.4 | % | ||||||||||||||
FY 2020-21
| FY 2019-20
| FY 2018-19
| FY 2017-18
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Before-Tax Operating Profit | $17,986 | $15,706 | $5,487 | $13,363 | ||||||||||||||||
Incremental Restructuring | — | 438 | 403 | 725 | ||||||||||||||||
Shave Care Impairment | — | — | 8,345 | — | ||||||||||||||||
Rounding | — | (1) | 1 | — | ||||||||||||||||
Core Before-Tax Operating Profit | 17,986 | 16,143 | 14,236 | 14,088 | ||||||||||||||||
Currency impact | 206 | 481 | 1,195 | |||||||||||||||||
Constant Currency Core Before-Tax Operating Profit | 18,192 | 16,624 | 15,431 | |||||||||||||||||
Percentage change versus the prior period Core Before-Tax Operating Profit | 12.7% | 16.8% | 9.5% | |||||||||||||||||
3 Year Compound Annual Growth Rate | 13.0% | |||||||||||||||||||
| 2021 Proxy Statement A-3 | ||||
| EXHIBIT A | ||
Core EPS
| FY 2017-18 | FY 2016-17 | |||||||||||||||||
Diluted Net Earnings Per Share from Continuing Operations, attributable to P&G | $ | 3.67 | $ | 3.69 | ||||||||||||||
FY 2020-21
| FY 2019-20
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Diluted Net Earnings Per Share attributable to P&G | $5.50 | $4.96 | ||||||||||||||||
Incremental Restructuring | 0.23 | 0.10 | — | 0.16 | ||||||||||||||
Early Debt Extinguishment Charges | 0.09 | 0.13 | 0.16 | — | ||||||||||||||
Transitional Impacts of the U.S. Tax Act | 0.23 | — | ||||||||||||||||
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Core EPS | $ | 4.22 | $ | 3.92 | $5.66 | $5.12 | ||||||||||||
Percentage change vs. prior period | 8% | 11% | ||||||||||||||||
Note – Note–All reconciling items are presented net of tax. Tax effects are calculated consistent with the nature of the underlying transaction.
Core EPS 3 Year CAGR
FY 2020-21
| FY 2019-20
| FY 2018-19
| FY 2017-18
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Diluted Net Earnings Per Share attributable to P&G | $5.50 | $4.96 | $1.43 | $3.67 | ||||||||||||||||
Incremental Restructuring | — | 0.16 | 0.13 | 0.23 | ||||||||||||||||
Early Debt Extinguishment Charges | 0.16 | — | — | 0.09 | ||||||||||||||||
Transitional Impact of the U.S. Tax Act | — | — | — | 0.23 | ||||||||||||||||
Shave Care Impairment | — | — | 3.03 | — | ||||||||||||||||
Anti-Dilutive Impacts | — | — | 0.06 | — | ||||||||||||||||
Gain on Dissolution of PGT Healthcare Partnership | — | — | (0.13) | — | ||||||||||||||||
Core EPS | $5.66 | $5.12 | $4.52 | $4.22 | ||||||||||||||||
3 Year Compound Annual Growth Rate | 10.3% | |||||||||||||||||||
Note–All reconciling items are presented net of tax. Tax effects are calculated consistent with the nature of the underlying transaction.
A-3
| A-4 The Procter & Gamble Company | ||
Core EPS 3-Year CAGR
| FY 2017-18 | FY 2016-17 | FY 2015-16 | FY 2014-15 | |||||||||||||||
Diluted Net Earnings Per Share from Continuing Operations, attributable to P&G | $ | 3.67 | $ | 3.69 | $ | 3.49 | $ | 2.84 | ||||||||||
Incremental Restructuring | 0.23 | 0.10 | 0.18 | 0.17 | ||||||||||||||
Transitional Impact of the U.S. Tax Act | 0.23 | — | — | — | ||||||||||||||
Early Debt Extinguishment Charges | 0.09 | 0.13 | — | — | ||||||||||||||
Venezuela B/S Remeasurement & Devaluation Impacts | — | — | — | 0.04 | ||||||||||||||
Charges for European Legal Matters | — | — | — | 0.01 | ||||||||||||||
Venezuela Deconsolidation Charge | — | — | — | 0.71 | ||||||||||||||
Rounding | — | — | — | -0.01 | ||||||||||||||
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Core EPS | $ | 4.22 | $ | 3.92 | $ | 3.67 | $ | 3.76 | ||||||||||
3-Year Compound Annual Growth Rate | 3.9 | % | ||||||||||||||||
Note – All reconciling items are presented net of tax. Tax effects are calculated consistent with the nature of the underlying transaction.
A-4
| EXHIBIT B | ||
The Procter & Gamble Company Audit Committee Policies
I. Guidelines forPre-Approval of Independent Auditor Services |
The Audit Committee (the “Committee”) has adopted the following guidelines regarding the engagement of the Company’s independent auditor to perform services for the Company:
| A. | For audit services (including statutory audit engagements as required under local country laws), the independent auditor will provide the Committee with an engagement letter during the fourth quarter of each fiscal year outlining the scope of the audit services proposed to be performed during the coming fiscal year. If agreed to by the Committee, this engagement letter will be formally accepted by the Committee. |
| B. | The independent auditor will submit to the Committee for approval an audit services fee proposal with the engagement letter. |
| C. | Fornon-audit services, Company management will submit to the Committee for approval the list ofnon-audit services that it recommends the Committee engage the independent auditor to provide for the fiscal year. Company management and the independent auditor will each confirm to the Committee that eachnon-audit service on the list is permissible under all applicable legal requirements. In addition to the list of plannednon-audit services, a budget estimatingnon-audit service spending for the fiscal year will be provided. The Committee will approve both the list of permissiblenon-audit services and the budget for such services. The Committee will be informed routinely as to thenon-audit services actually provided by the independent auditor pursuant to thispre-approval process. |
| D. | To ensure prompt handling of unexpected matters, the Committee delegates to the Chair the authority to amend or modify the list of approved permissiblenon-audit services and fees. The Chair will report action taken to the Committee at the next Committee meeting. |
| E. | The independent auditor must ensure that all audit andnon-audit services provided to the Company have been approved by the Committee. The Senior Vice President of Internal Controls will be responsible for tracking all independent auditor fees against the budget for such services and report at least annually to the Audit Committee. |
B-1
| 2021 Proxy Statement B-1 | ||||
The Procter & Gamble Company General Offices
For information about available parking, go tohttp://www.downtowncincinnati.com/exploring-downtown/downtown-cincinnati-parking
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SHAREOWNER SERVICES P.O. BOX 64945 ST. PAUL, MN 55164-0945 |
VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions anytime before 11:59 p.m. Eastern Time on October
During The Meeting - Go to www.virtualshareholdermeeting.com/PG2021 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions anytime before 11:59 p.m. Eastern Time on October
VOTE BY MAIL Mark, sign, and date your proxy/voting instruction card and return it in the postage-paid envelope we have provided, or return it toThe Procter & Gamble Company, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
| KEEP THIS PORTION FOR YOUR RECORDS |
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. | DETACH AND RETURN THIS PORTION ONLY |
THE PROCTER & GAMBLE COMPANY
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Vote on Directors
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The Board of Directors recommends a voteFORthe following action:
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1. ELECTION OF DIRECTORS
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Nominees:
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1b. Angela F. Braly | ☐ | ☐ | ☐ | 1k. Margaret C. Whitman | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||
1c. Amy L. Chang | ☐ | ☐ | ☐ | 1l. Patricia A. Woertz | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||
1d. Joseph Jimenez | ☐ | ☐ | ☐ | Vote on Proposals | |||||||||||||||||||||||||||||
1e. Christopher Kempczinski | ☐ | ☐ | ☐ | The Board of Directors recommends a vote FOR the following proposals: | |||||||||||||||||||||||||||||
1f. Debra L. Lee | ☐ | ☐ | ☐ |
2. Ratify Appointment of the Independent Registered Public Accounting Firm |
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1g. Terry J. Lundgren |
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☐ | 3. Advisory Vote to Approve the Company’s Executive Compensation (the “Say on Pay” vote) | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||
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☐ | The Board of Directors recommends a vote AGAINST the following proposals: | |||||||||||||||||||||||||||||
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☐ | 4. Shareholder Proposal - Inclusion of Non-Management Employees on Director Nominee Candidate Lists | |||||||||||||||||||||||||||||
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1j. David S. Taylor |
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NOTE: Please sign exactly as name(s) appear(s) hereon. When signing as attorney, executor, administrator, trustee, or guardian, please give full title as such. | |||||||||||||||||||||||||||||||||
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Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date | |||||||||||||||||||||||||||||||
NOTICE OF ANNUAL MEETING
OF
SHAREHOLDERS
This is notice of the annual meeting of shareholders of The Procter & Gamble Company to be held on Tuesday, October 9, 201812, 2021, at 9:12:00 a.m.p.m. at the General Offices of the Procter & Gamble Company, 1 Procter & Gamble Plaza, Cincinnati, OH 45202.www.virtualshareholdermeeting.com/PG2021.
In addition to reviewing the minutes of last year’s annual meeting and receiving reports of officers, the purposes of the meeting are listed on the voting portion of the proxy card, which is located on the reverse side of this notice.
ADMISSION PROCEDURES: If you would likeHow to Attend the Virtual Annual Meeting: To support the health and well-being of our employees and shareholders, particularly given the continuing uncertainty of the COVID-19 pandemic and significant variations in local transmission and vaccination rates, this year’s annual meeting of shareholders will be a virtual meeting, held exclusively via live audio webcast at www.virtualshareholdermeeting.com/PG2021. You will not be able to attend the meeting in person, you may register for admission for yourself and one guest by:person.
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If you do not register for admission in advance, we will request to see your photo identification at the entrance to the meeting. We will then determine if you owned common stock on the record date by:
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
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E50717-P11529D58637-P60359
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THE PROCTER & GAMBLE COMPANY
SHAREHOLDER’S PROXY AND CONFIDENTIAL VOTING INSTRUCTION CARD Annual Meeting of Shareholders – Tuesday, October
With respect to any shares of Common Stock held by the undersigned directly or via the Company’s Direct Stock Purchase Plan, the undersigned hereby appoints Angela F. Braly, W. James McNerney, Jr., and David S. Taylor (the “Proxy Committee”), and each of them, as proxies to attend the annual meeting of shareholders of the Company to be held online on Tuesday, October
With respect to any shares of Common Stock, Series A ESOP Convertible Class A Preferred Stock, and Series B ESOP Convertible Class A Preferred Stock that are allocated to an account for you as a participant in any of the following plans – The Procter & Gamble Profit Sharing Trust and Employee Stock Ownership Plan, The Procter & Gamble Savings Plan, The Gillette Company Employee Stock Ownership Plan, The Procter & Gamble Commercial Company Employees’ Savings Plan, and/or The Profit Sharing Retirement Plan of The Procter & Gamble Commercial Company (the “NA Plans”), the undersigned hereby instructs the respective plan fiduciaries to vote such shares as indicated on the reverse side of this card for the election of Directors and on
If other matters properly come before the meeting, the Proxy Committee in its discretion will vote all shares of Stock with respect to such matters.
This proxy/voting instruction card is solicited jointly by the Board of Directors of the Company and the respective plan fiduciaries identified above and pursuant to a separate Notice of Annual Meeting and Proxy Statement, receipt of which is hereby acknowledged. Votes should be received by the Company’s proxy tabulator, Broadridge Financial Solutions, 51 Mercedes Way, Edgewood, NY 11717 by 11:59 p.m. ET on Monday, October
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