DEF 14A of Procter & Gamble Co
Filed Aug 26, 2022 · FY20220001193125-22-230548
Our Director Nominees’ Combined Skills, Experiences, and Backgrounds
Our Director Nominees’ Combined Skills, Experiences, and Backgrounds P&G is a diverse consumer products company that operates in a dynamic, complex, and competitive environment in markets around the globe. Our leaders, including our Directors, must consistently bring to bear the practical wisdom and seasoned judgment gained from significant leadership skill and experience, while remaining agile and adept at overseeing emerging risks and business challenges. The Company’s Director nominees bring a variety of these skills and experiences to the Board and represent a diversity of backgrounds, including with respect to age, gender, global background, race, and specialized experience. Further, the Board’s balanced tenure reflects its goal to achieve a blend of new and experienced Directors.
Our Director Nominees’ Combined Skills, Experiences, and Backgrounds
| | | | | | Marketing | Consumer Industry/Retail | Global | Corporate Governance | | | | | | | Leadership, Strategy, and Risk Management | Digital, Technology, and Innovation | Finance | Government/Regulatory |
Our Director Nominees’ Combined Skills, Experiences, and Backgrounds
| Average Age | Gender | Race/Ethnicity | Independence | Average Tenure | Refreshment | | 60 years | 45% | 45% | 10/11 | ~5 years | 45% | | | 5/11 are women | 5/11 are racially/ethnically diverse | are independent | | 5/11 added in the last 2 years |
Our Director Nominees’ Combined Skills, Experiences, and Backgrounds
| 2022 Proxy Statement i |
Our Director Nominees
Our Director Nominees You are being asked to vote on the election of the 11 Directors listed below. Additional information about each nominee’s background and experience can be found beginning on page 2. All of the Directors are independent, with the exception of Mr. Moeller, who is an employee of the Company.
Our Director Nominees
| Name | Position | Age | Board Tenure | Committee Memberships | | B. Marc Allen | Chief Strategy Officer and Senior Vice President of Strategy and Corporate Development at The Boeing Company | 49 | 1 year | Audit I&T | | Angela F. Braly | Former Chair of the Board, President and Chief Executive Officer of WellPoint, Inc. (now known as Elevance Health) | 61 | 12 years | Audit G&PR (Chair) | | Amy L. Chang | Former Executive Vice President and Executive Advisor at Cisco Systems, Inc.; Founder and Former Chief Executive Officer of Accompany, Inc. | 45 | 5 years | G&PR I&T | | Joseph Jimenez (Lead Director) | Co-Founder and Managing Director of Aditum Bio; Former Chief Executive Officer of Novartis AG | 62 | 4 years | C&LD I&T | | Christopher Kempczinski | President and Chief Executive Officer of McDonald’s Corporation | 53 | 1 year | Audit C&LD | | Debra L. Lee | Chair of Leading Women Defined Foundation; Former Chairman and Chief Executive Officer of BET Networks | 68 | 2 years | C&LD G&PR | | Terry J. Lundgren | Former Operating Partner of Long-Term Private Capital, a BlackRock fund; Former Executive Chairman, Chairman of the Board and CEO of Macy’s, Inc. | 70 | 9 years | C&LD (Chair) I&T | | Christine M. McCarthy | Senior Executive Vice President and Chief Financial Officer of The Walt Disney Company | 67 | 3 years | Audit C&LD | | Jon R. Moeller | Chairman of the Board, President and Chief Executive Officer of the Company | 58 | 1 year | None† | | Rajesh Subramaniam | President and Chief Executive Officer of FedEx Corporation | 56 | - | § | | Patricia A. Woertz | Former Chairman and Chief Executive Officer of Archer Daniels Midland Company | 69 | 14 years | Audit (Chair) G&PR |
Our Director Nominees
† Not on any Committees because the Committees are all comprised of independent Directors.
Our Director Nominees
| C&LD | Compensation & Leadership Development |
Our Director Nominees
| G&PR | Governance & Public Responsibility |
Our Director Nominees
| I&T | Innovation & Technology |
Our Director Nominees
| The Board will determine Mr. Subramaniam’s Committee assignments upon his election.§ |
Our Director Nominees
| ii The Procter & Gamble Company |
Corporate Governance Highlights
Corporate Governance Highlights
Corporate Governance Highlights
| BOARD STRUCTURE & COMPOSITION | | | | ● 10 of 11 Directors, and all Board Committee members, are independent ● Annual assessment and determination of optimal Board leadership structure ● Active and engaged Lead Director has significant role, strong autonomy, and meaningful governance duties ● Executive sessions of the independent Directors at every regular meeting of the Board, without management present | ● Balance of new and experienced Directors. More than half of incumbent Director nominees have tenures of 5 years or less, and average tenure is about 5 years ● 8 of 11 Directors are women and/or ethnically diverse | ● Annual Board and Committee self-assessments, with one-on-one reviews with individual Directors to ensure thoughtful, candid feedback ● Annual independent Director evaluation of Chairman and CEO and continuous Director feedback ● Incumbent Directors attended about 98% of Board and Committee meetings combined in FY 2021-22 | | BOARD OPERATIONS & OVERSIGHT | | | | ● Full Board oversees the development and execution of the Company’s strategic plans ● Committee core areas of focus include financial integrity and legal compliance (Audit), corporate governance (G&PR), compensation and succession planning (C&LD), and innovation strategy (I&T) ● Annual Board discussion of key significant risks identified in the Company’s enterprise risk management process (described further on page 20) | ● Board oversight and ongoing engagement with senior executives on key ESG matters, including cybersecurity (Audit), organizational diversity and gender pay equity (C&LD), and community impact, environmental sustainability, and responsible sourcing practices (G&PR) ● Directors participate in focused sessions on emerging topics, such as a recent cybersecurity tabletop exercise | ● Directors have significant interaction with senior business leaders and access to other employees as desired ● Directors have ability to hire outside experts and consultants and to conduct independent investigations | | SHAREHOLDER RIGHTS & ENGAGEMENT | | | | ● Proxy access for Director nominees, available to a shareholder, or group of up to 20 shareholders, holding 3% of the Company’s common stock for at least 3 years | ● Ongoing shareholder engagement (described further on page 11) ● Shareholder ability to contact Directors (as described on page 24) | ● All Directors elected annually ● Simple majority voting standard for all uncontested Director elections ● Shareholder right to call special meetings | | GOVERNANCE BEST PRACTICES | | | | ● 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 22) | ● CEO, senior executives, and Directors required to own shares or RSUs at multiples of their salaries or annual retainer ● Retirement age and term limit for Directors ● Ongoing Board assessment and refreshment led by the G&PR Committee | ● Policies consistent with the Investor Stewardship Group’s Corporate Governance Principles ● Signatory to Commonsense Corporate Governance Principles 2.0 ● Board policy limits Director membership on other public company boards |
Corporate Governance Highlights
| 2022 Proxy Statement iii |
Key Elements of FY 2021-22 Executive Compensation Program
Key Elements of FY 2021-22 Executive Compensation Program We Received Strong Shareholder Support with 91.09% Say on Pay Support at the 2021 Annual Meeting. This vote is a positive endorsement of the Company’s executive compensation practices and decisions. We Emphasize Pay for Performance. On average, 88% 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, 74% 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 45-46. 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. The CEO must own shares of Company stock and/or RSUs valued at a minimum of eight times salary. All other NEOs must own stock valued at four times salary.
CEO Compensation Highlights
CEO Compensation Highlights Salary. Mr. Moeller’s salary was established at $1,600,000 upon his promotion to CEO effective November 1, 2021. STAR Annual Bonus Program. Mr. Moeller’s STAR target was established at 200% of salary and prorated to 180%, reflecting his mid-year election to CEO. His STAR payout was $3,955,968, which is approximately 137% of target. Long-Term Incentive Programs. The C&LD Committee approved a long-term incentive award of $11,200,000 for Mr. Moeller. 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 60% stock options and 40% RSUs for fiscal 2021-22.
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 | | ESG | Environmental, Social, and Governance | | 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 |
ITEM 1. ELECTION OF DIRECTORS
ITEM 1. 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 11 individuals listed on pages 5-10 for election at the 2022 annual meeting. All of the Director nominees, except Mr. Subramaniam, currently serve on the Board, and all but Mr. Subramaniam were elected for a one-year term at the 2021 annual meeting. The current terms of the incumbent nominees for Director will expire at the 2022 annual meeting when their successors are elected, and the Board has nominated each of these individuals and Mr. Subramaniam for a one-year term that will expire at the 2023 annual meeting when their successors are elected. 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
Director Skills, Qualifications, and Diversity P&G is a diverse consumer products company that operates in a dynamic, complex, and competitive environment in markets around the globe. Our leaders, including our Directors, must consistently bring to bear the practical wisdom and seasoned judgment gained from significant leadership experience, while remaining agile and adept at overseeing emerging risks and business challenges. Accordingly, our Board looks for leaders who embrace strong governance and oversight, exemplify the Company’s Purpose, Values, and Principles, and provide a breadth of experience and expertise across disciplines. As the summary on pages 3-4 provides in additional detail, the Company’s 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 or apply a strict “Rooney Rule” approach, the Board’s overall diversity is a significant consideration in the Director nomination process and a component of our direction to the independent search firm that helps us identify potential candidates. Further, as reflected in the current makeup of the Board and the diverse slate of nominees, one of our priorities in the Director nomination process is ensuring that our Board reflects the diversity of our Company and our consumers. 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 11 individuals to the Board. Their collective experience covers a wide range of geographies and industries. These 11 Director nominees range in age from 45 to 70. Five of these nominees, or 45%, are women, and five are racially/ethnically diverse. Further, our Board has a good balance of experienced and new Directors, with more than half of our incumbent Director nominees having tenures of five years or less. Our Director Nominees’ Skills, Experience, and Background
Director Skills, Qualifications, and Diversity
| 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 platforms and practices. | Consumer Industry/Retail Directors with experience serving consumers, particularly in the areas of marketing and selling products or services, 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. | Global 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. |
Director Skills, Qualifications, and Diversity
| 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. | Leadership, Strategy, and Risk Management Directors with significant leadership experience over an extended period, including as chief executive officers, provide the Company with singular 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. |
Director Skills, Qualifications, and Diversity
| 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. |
Director Skills, Qualifications, and Diversity
Each of our Director nominees brings valuable and diverse skills, experience, and background to the Board. We summarize in the table below the core competencies and attributes that each Director particularly exemplifies and that the G&PR Committee and our Board considered in nominating them. We expect all of our Directors to provide broad strategic insight and perspective across disciplines in their service on the Board.
Director Skills, Qualifications, and Diversity
| Skills & Experience | | | | | | | | | | | | | | | Marketing | | | ● | ● | ● | ● | ● | | | ● | ● | | | Consumer Industry/Retail | | ● | ● | ● | ● | ● | ● | ● | ● | | | | | Global | ● | | | ● | | | | | ● | ● | ● | | | Corporate Governance | | ● | | | | ● | | ● | ● | | ● | | | Leadership, Strategy, and Risk Management | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | | | Digital, Technology, and Innovation | | | ● | ● | ● | | | | | ● | | | | Finance | ● | | | | | | | ● | ● | | ● | | | Government/ Regulatory | ● | ● | | | | | | | | | | | Background | | | | | | | | | | | | | | | Gender | Male | Female | Female | Male | Male | Female | Male | Female | Male | Male | Female | | | Race/Ethnicity | African Ancestry | White | Asian Pacific | Hispanic/ Latinx | White | African Ancestry | White | White | White | Asian Pacific | White | | | Age | 49 | 61 | 45 | 62 | 53 | 68 | 70 | 67 | 58 | 56 | 69 |
Director Skills, Qualifications, and Diversity
The Board of Directors recommends a vote FOR each of the following Director nominees to hold office until the 2023 annual meeting of shareholders and until their successors are elected.
Director Skills, Qualifications, and Diversity
| | B. Marc Allen INDEPENDENT DIRECTOR SINCE 2021 |
Director Skills, Qualifications, and Diversity
Mr. Allen, age 49, 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. Skills & Qualifications Mr. Allen brings a wealth of insight and practical expertise to the Board, including notable Global 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. Committees
Director Skills, Qualifications, and Diversity
| ● | Audit |
Director Skills, Qualifications, and Diversity
| ● | Innovation & Technology |
Director Skills, Qualifications, and Diversity
| | Angela F. Braly INDEPENDENT DIRECTOR SINCE 2009 |
Director Skills, Qualifications, and Diversity
Ms. Braly, age 61, is the former Chair of the Board, President and Chief Executive Officer of WellPoint, Inc. (healthcare insurance), now known as Elevance Health. 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. Skills & Qualifications 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. In this regard, she has been actively engaged in the Company’s efforts across environmental sustainability, responsible sourcing, and corporate citizenship. Other Public Company Boards
Director Skills, Qualifications, and Diversity
| ● | ExxonMobil Corp. (since 2016) |
Director Skills, Qualifications, and Diversity
| ● | Brookfield Asset Management, Inc. (since 2015) |
Director Skills, Qualifications, and Diversity
| ● | Lowe’s Companies (2013 to 2021) |
Director Skills, Qualifications, and Diversity
Committees
Director Skills, Qualifications, and Diversity
| ● | Governance & Public Responsibility (Chair) |
Director Skills, Qualifications, and Diversity
| ● | Audit |
Director Skills, Qualifications, and Diversity
| | Amy L. Chang INDEPENDENT DIRECTOR SINCE 2017 |
Director Skills, Qualifications, and Diversity
Ms. Chang, age 45, is a former Executive Vice President at Cisco Systems, Inc. (networking technology), 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. (relationship intelligence), 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. In addition to her directorships below, she 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. Skills & Qualifications 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. Other Public Company Boards
Director Skills, Qualifications, and Diversity
| ● | The Walt Disney Company (since 2021) |
Director Skills, Qualifications, and Diversity
| ● | Marqeta, Inc. (since 2021) |
Director Skills, Qualifications, and Diversity
| ● | Cisco Systems, Inc. (2016 to 2018) |
Director Skills, Qualifications, and Diversity
Committees
Director Skills, Qualifications, and Diversity
| ● | Governance & Public Responsibility |
Director Skills, Qualifications, and Diversity
| ● | Innovation & Technology |
Director Skills, Qualifications, and Diversity
| | Joseph Jimenez INDEPENDENT DIRECTOR SINCE 2018 LEAD DIRECTOR SINCE 2021 |
Director Skills, Qualifications, and Diversity
Mr. Jimenez, age 62, is Co-Founder and Managing Director of Aditum Bio (biotech venture fund). He is the former Chief Executive Officer of Novartis AG (global healthcare), 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. Skills & Qualifications 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 Global 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. Other Public Company Boards
Director Skills, Qualifications, and Diversity
| ● | Graphite Bio, Inc. (since 2020)* |
Director Skills, Qualifications, and Diversity
| ● | Century Therapeutics, Inc. (since 2019)* |
Director Skills, Qualifications, and Diversity
| ● | General Motors Company (since 2015) |
Director Skills, Qualifications, and Diversity
Committees
Director Skills, Qualifications, and Diversity
| ● | Compensation & Leadership Development |
Director Skills, Qualifications, and Diversity
| ● | Innovation & Technology |
Director Skills, Qualifications, and Diversity
| *became | public in 2021 |
Director Skills, Qualifications, and Diversity
| | Christopher Kempczinski INDEPENDENT DIRECTOR SINCE 2021 |
Director Skills, Qualifications, and Diversity
Mr. Kempczinski, age 53, 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 Kraft Heinz Company (food and beverage), 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. Skills & Qualifications 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, 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 current economic environment and have been highly valuable to the Board as it oversees the Company’s long-term growth and operating strategy. Other Public Company Boards
Director Skills, Qualifications, and Diversity
| ● | McDonald’s Corporation (since 2019) |
Director Skills, Qualifications, and Diversity
Committees
Director Skills, Qualifications, and Diversity
| ● | Audit |
Director Skills, Qualifications, and Diversity
| ● | Compensation & Leadership Development |
Director Skills, Qualifications, and Diversity
| | Debra L. Lee INDEPENDENT DIRECTOR SINCE 2020 |
Director Skills, Qualifications, and Diversity
Ms. Lee, age 68, is Chair of Leading Women Defined Foundation (nonprofit education and advocacy organization), which she founded in 2009. Previously, she served as Chairman and Chief Executive Officer of BET Networks (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. Skills & Qualifications 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 continues to evolve its media strategy. Other Public Company Boards
Director Skills, Qualifications, and Diversity
| ● | Warner Bros. Discovery (since April 2022) |
Director Skills, Qualifications, and Diversity
| ● | Burberry Group plc (since 2019) |
Director Skills, Qualifications, and Diversity
| ● | Marriott International, Inc. (since 2004) |
Director Skills, Qualifications, and Diversity
| ● | AT&T, Inc. (2019 to April 2022) |
Director Skills, Qualifications, and Diversity
| ● | Twitter, Inc. (2016 to 2019) |
Director Skills, Qualifications, and Diversity
| ● | WGL Holdings, Inc. (2000 to 2018) |
Director Skills, Qualifications, and Diversity
Committees
Director Skills, Qualifications, and Diversity
| ● | Compensation & Leadership Development |
Director Skills, Qualifications, and Diversity
| ● | Governance & Public Responsibility |
Director Skills, Qualifications, and Diversity
| | Terry J. Lundgren INDEPENDENT DIRECTOR SINCE 2013 |
Director Skills, Qualifications, and Diversity
Mr. Lundgren, age 70, is a former Operating Partner of Long-Term Private Capital (BlackRock private equity fund) and the former Chairman and Chief Executive Officer of Macy’s, Inc. (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. Earlier in his career, Mr. Lundgren was Chairman and CEO of Neiman Marcus. Skills & Qualifications 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. Other Public Company Boards
Director Skills, Qualifications, and Diversity
| ● | Macy’s, Inc. (2003 to 2018) |
Director Skills, Qualifications, and Diversity
Committees
Director Skills, Qualifications, and Diversity
| ● | Compensation & Leadership Development (Chair) |
Director Skills, Qualifications, and Diversity
| ● | Innovation & Technology |
Director Skills, Qualifications, and Diversity
| | Christine M. McCarthy INDEPENDENT DIRECTOR SINCE 2019 |
Director Skills, Qualifications, and Diversity
Ms. McCarthy, age 67, is Senior Executive Vice President and Chief Financial Officer of The Walt Disney Company (global entertainment), 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. Skills & Qualifications 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 technology, investor relations, risk management, tax, and treasury, provides her with extensive Leadership, Strategy, and Risk Management skills and valuable Corporate Governance experience. Committees
Director Skills, Qualifications, and Diversity
| ● | Audit |
Director Skills, Qualifications, and Diversity
| ● | Compensation & Leadership Development |
Director Skills, Qualifications, and Diversity
| | Jon R. Moeller DIRECTOR SINCE 2021 |
Director Skills, Qualifications, and Diversity
Mr. Moeller, age 58, is Chairman of the Board, President and Chief Executive Officer of the Company. He assumed the role of President and CEO in November 2021 and was named Chairman of the Board effective July 2022. Mr. Moeller previously served as Vice Chairman and Chief Operating Officer from 2021 until his appointment as President and CEO, 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. In addition to his leadership of the Company over the last year, Mr. Moeller has held numerous and significant responsibilities in his career at P&G. As the Company’s Chief Operating Officer, he had responsibility for P&G’s Enterprise Markets, which include Latin America, India, the Middle East, Africa, Southeast Asia, and Eastern Europe. He also led the Company’s Investor Relations, Information Technology, Global Business Services, Sales, Market Operations, Purchasing, Manufacturing, and Distribution efforts. In addition, 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. Skills & Qualifications Mr. Moeller has significant and recognized Financial expertise, seasoned Corporate Governance insight, and extensive Leadership, Strategy, and Risk Management skills and experience, which he has built over his nearly 34 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 Global work and responsibility, including current role as President and CEO and prior 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. Other Public Company Boards
Director Skills, Qualifications, and Diversity
| ● | Monsanto Company (2011 to 2018) |
Director Skills, Qualifications, and Diversity
| | Rajesh Subramaniam DIRECTOR NOMINEE |
Director Skills, Qualifications, and Diversity
Mr. Subramaniam, age 56, is President and Chief Executive Officer of FedEx Corporation (transportation and business services), a position he has held since June 2022. He previously served as President and Chief Operating Officer of FedEx from March 2019 to May 2022, as President and Chief Executive Officer of Federal Express Corporation (“FedEx Express”) from January 2019 to March 2019, and as Executive Vice President – Chief Marketing & Communications Officer of FedEx from January 2017 to December 2018. Prior to these roles, Mr. Subramaniam held various leadership positions in operations and marketing across the FedEx portfolio of operating companies, including as a Senior Vice President and Vice President in the company’s Canada and Asia Pacific businesses. Originally from India, he holds master’s degrees in chemical engineering and business administration and began his career with FedEx in 1991. Skills & Qualifications Mr. Subramaniam’s significant leadership roles across FedEx’s businesses afford him broad Leadership, Strategy, and Risk Management skills, particularly in the areas of corporate operations, strategy, communications, and Marketing. In addition, his Global leadership experience in markets outside the United States and focus on the continued globalization of FedEx’s operations and business will allow him to contribute unique insights and perspective to the Board. Mr. Subramaniam has also been recognized for his Digital, Technology, and Innovation skills, which include strengthening FedEx’s operating strategy, growing its e-commerce business, and driving digital transformation of its global supply chain. These skills will be highly valuable to the Board as the Company continues to focus on strategic opportunities for ongoing supply chain innovation and increased digital acumen. Other Public Company Boards
Director Skills, Qualifications, and Diversity
| ● | FedEx Corporation (since 2020) |
Director Skills, Qualifications, and Diversity
| ● | First Horizon Corporation (2016 to August 2022) |
Director Skills, Qualifications, and Diversity
| | Patricia A. Woertz (Pat) INDEPENDENT DIRECTOR SINCE 2008 |
Director Skills, Qualifications, and Diversity
Ms. Woertz, age 69, 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. Skills & Qualifications 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 Global 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. Other Public Company Boards
Director Skills, Qualifications, and Diversity
| ● | 3M Company (2016 to May 2022) |
Director Skills, Qualifications, and Diversity
| ● | Royal Dutch Shell plc (2014 to 2017) |
Director Skills, Qualifications, and Diversity
Committees
Director Skills, Qualifications, and Diversity
| ● | Audit (Chair) |
Director Skills, Qualifications, and Diversity
| ● | Governance & Public Responsibility |
Director Skills, Qualifications, and Diversity
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 oversight and management accountability and serve the best interests of our Company, our shareholders, and other stakeholders.
The Board’s Oversight of Risk
The Company’s Enterprise Risk Management Program Throughout the year, members of a cross-functional team within the Company conduct extensive interviews of 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. 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 strategies to appropriately manage and mitigate these risks. Annually, 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 long-term strategy and success. 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 senior executives. The Board also interacts with these executives as part of Board business and functional 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, and personal skills. In order to ensure a strong pipeline for future succession, the C&LD Committee also conducts regular reviews of the Company’s highly rated more junior executives across business units and functions to ensure that appropriate development plans are in place for the next generation of leadership. Compensation-Related Risk As part of its risk oversight responsibilities, the C&LD Committee annually reviews the Company’s compensation policies and practices. In fiscal 2021-22, the C&LD Committee employed an independent compensation consultant, Meridian Consulting Partners, which does not work for management and, among other tasks, reviewed and reported 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 Meridian Consulting Partners, please see the section entitled “Role of Compensation Consultant” found on page 45 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 risk assessment of the Company’s other compensation programs including 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, internal controls, etc.). These non-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 stock 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-vesting for stock options, three-year cliff-vesting for restricted stock units, and a three-year performance period for 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 are: organic sales growth relative to competitive peers, constant currency core before-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. We believe that using this sliding scale approach, versus an all-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 40 of this proxy statement. Finally, the C&LD Committee acknowledged that the Company maintains several policies intended to mitigate inappropriate 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.
Additional Governance Matters
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 FY 2021-22 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 serves 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 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 more than 25 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 at boardofdirectors.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, which logs the material for tracking purposes. The Board has asked the Corporate Secretary’s Office 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. Director Compensation One objective of the C&LD Committee is to provide non-employee members of the Board a compensation package consistent with the median of the Peer Group, as described on pages 45-46. 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 FY 2021-22. Non-employee members of the Board received the following compensation:
Additional Governance Matters
| ● | A grant of RSUs following election to the Board at the Company’s October 12, 2021 annual meeting of shareholders, with a value of $200,000. These units are forfeited if the Director resigns during the year, unless the resignation is for reasons of antitrust laws, or the Company’s conflict of interest, corporate governance, or continued service policies. These RSUs do not deliver in shares until at least one year after the Director leaves the Board and cannot be sold or traded until delivered in shares, thus encouraging alignment with the Company’s long-term interests and the interests of shareholders. These RSUs will earn dividend equivalents at the same rate as dividends paid to shareholders |
Additional Governance Matters
| Director Compensation Table | | | | | | | | | Fees | | | | | | | Name | Annual Retainer ($) | Committee Chair & Lead Director Fees ($) | Total Fees Earned or Paid in Cash(1) ($) | Stock Awards(2) ($) | All Other Compensation(3) ($) | Total ($) | | B. Marc Allen | 120,000 | — | 120,000 | 200,000 | 0 | 320,000 | | Francis S. Blake | 33,934 | — | 33,934 | 0 | 3,500 | 37,434 | | 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 | | Joseph Jimenez | 120,000 | 35,000 | 155,000 | 200,000 | 0 | 355,000 | | Christopher Kempczinski | 86,557 | — | 86,557 | 200,000 | 0 | 286,557 | | Debra L. Lee | 120,000 | — | 120,000 | 200,000 | 0 | 320,000 | | 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. | 33,934 | 11,312 | 45,246 | 0 | 3,500 | 48,746 | | Nelson Peltz | 33,934 | — | 33,934 | 0 | 3,500 | 37,434 | | Margaret C. Whitman | 120,000 | 15,000 | 135,000 | 200,000 | 0 | 335,000 | | Patricia A. Woertz | 120,000 | 30,000 | 150,000 | 200,000 | 0 | 350,000 |
Additional Governance Matters
1 Director fees are paid quarterly. Each Director may elect to take these fees in cash, unrestricted stock, RSUs (which vest immediately and earn dividend equivalents), or a combination of the three. Mr. Allen elected to take $115,000 of his fees in RSUs, which had a grant date fair value of $115,387. Mr. Blake elected to take $30,000 of his fees in unrestricted stock, which had a grant date fair value of $30,104. Ms. Braly elected to take $135,000 of her fees in RSUs, which had a grant date fair value of $135,338. Ms. Chang elected to receive $60,000 of her fees in RSUs, which had a grant date fair value of $60,172. Mr. Jimenez elected to take $150,000 of his fees in RSUs, which had a grant date fair value of $150,187. Mr. Kempczinski elected to take $55,000 of his fees in RSUs, which had a grant date fair value of $55,215. Mr. Lundgren elected to take $140,000 of his fees in RSUs, which had a grant date fair value of $140,292. Ms. McCarthy elected to take $115,000 of her fees in RSUs, which had a grant date fair value of $115,387. Mr. McNerney elected to take $40,000 of his fees in unrestricted stock, which had a grant date fair value of $40,139. Ms. Woertz elected to take $145,000 of her fees in RSUs, which had a grant date fair value of $145,223. Mr. Kempczinski was appointed to the board in October, while Messrs. Blake, McNerney, and Peltz did not stand for reelection to the Board at the 2021 annual meeting and their respective terms expired on October 12, 2021. Other than as noted above, the remaining director fees were paid 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. Each Director has 1,433 RSUs outstanding (representing the grant on October 12, 2021, and subsequent dividend equivalents). Messrs. Blake, McNerney and Peltz retired at the 2021 annual meeting and therefore did not receive the October 2021 RSU grant. In addition, Ms. Braly has 4,992 shares of retirement restricted stock outstanding as of June 30, 2022. 3 Messrs. Blake, McNerney and Peltz each received a commemorative retirement gift valued at approximately $3,500. 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. 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 $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 FY 2021-22, two payments were made. The Company also made a $12,000 donation on behalf of the Board of Directors to Matthew 25 Ministries to support tornado relief in Kentucky. This donation was 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.
Our Compensation Philosophy and Objectives
| ● | Pay Competitively by setting target compensation opportunities to be competitive with a Peer Group of other global corporations of similar size, value, and complexity. |
Our Compensation Philosophy and Objectives
| ● | 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. |
Executive Compensation Program Overview
| | | Program | Purpose | Key Characteristics | | | | Base Salary | Rewards Individual Performance | Market-competitive based on the median cash compensation of comparable positions in the compensation 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 Factor and 30% Total Company Performance Factor (as modified by the ESG Factor discussed below). Each factor ranges from 0%-200%, so that exceptional performance results in higher awards and poor performance could result in a zero payout. The ESG Factor adjusts the Total Company Performance Factor portion of the STAR award as a multiplier in the range of 80% to 120%. Executives can elect to receive stock options in lieu of cash or may elect to defer into a non-qualified deferred compensation account. | | | | 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 marketplace 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. | | | | Other Compensation | Ensure the safety and productivity of executive officers | Annual physicals, financial planning, transportation, security, life insurance, and corporate aircraft use. | | | | ● P&G Profit Sharing Trust and Employee Stock Ownership Plan (“PST”) ● NQDC 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 executives participate in the IRP, 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 Non-Qualified Deferred Compensation (NQDC) is provided on page 42. |
Annual Cash Compensation
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 participates in discussions of or recommends their own STAR awards to the C&LD Committee. The Business Unit Performance Factors can range between 0% and 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 and enterprise market operations 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. 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 Total Company Performance Factor to encourage a balanced focus on both topline 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 targets and a payout scale from 0% to 200% for each measure, with each weighted 50% and added together to produce the Total Company Performance Factor. ESG Factor. Senior executives, including the NEOs, have an ESG Factor applied to their Total Company Performance Factor as a multiplier in a range of 80%—120%. The ESG Factor is recommended by the STAR Committee and determined by the C&LD Committee based on an ESG scorecard assessment of FY 2021-22 progress towards key long-term environmental sustainability and equality and inclusion goals. 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. FY 2021-22 STAR Annual Bonus Mr. Taylor’s STAR target was adjusted from 200% to 150% in conjunction with his transition from CEO to Executive Chairman of the Board. His target was prorated at 167% reflecting the time he spent in each role during the fiscal year. Mr. Moeller’s STAR target was increased from 140% in his prior role to 200% as CEO and was prorated at 180%, reflecting his mid-year election to CEO. Mr. Schulten’s STAR target was increased from 110% to 115% effective July 1, 2021 based on a competitive market review. The STAR target for Mr. Jejurikar increased from 110% to 120%, effective October 1, 2021, but was prorated at 117.5%, reflecting his mid-year appointment as COO. Ms. Francisco’s and Ms. Keith’s STAR targets increased from 100% to 110% effective July 1, 2021, based on a competitive market review of their positions. Ms. Tastad’s STAR target increased from 100% to 105%, effective July 1, 2021, based on the competitive market, and then increased again to 110%, effective August 1, 2021, based on her appointment to CEO – Health Care. Her final target award was prorated at 109.5%. At the beginning of FY 2021-22, the C&LD Committee established the Company’s Organic Sales Growth target at 3-3.5% and the Core EPS Growth target at 4.5%. These targets reflected a highly volatile outlook on projections of significant increases in raw materials and transportation costs, as well as pandemic-related supply chain constraints. These goals were used to establish 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 Total Company Performance Factor. Organic Sales Growth and Core EPS Growth were 6.7% and 2.7%, respectively, resulting in a Total Company Performance Factor of 132%. These results reflected the strong execution of our integrated strategy and the agility of the organization to navigate the challenges of increased inflationary pressures and supply chain constraints. The C&LD Committee established an ESG Scorecard at the beginning of the Fiscal Year, which included progress and plans towards key goals in the areas of greenhouse gas emission reduction, sustainable packaging, responsible sourcing of palm oil and certified fiber, and women and US ethnic representation at management and executive levels. Based on a retrospective assessment of results delivered and plans towards these key environmental sustainability ambitions and equality and inclusion goals, the C&LD Committee approved an ESG Factor of 110%. This resulted in a modified Total Company Factor of 145% for the NEOs. The approved ESG Factor reflects the Committee’s assessment that, in light of results delivered in FY2021-22 and plans in place to enable future progress, the Company currently expects to reach each of the measured environmental sustainability and equality and inclusion goals by their target date, and in some cases, sooner. The C&LD Committee then reviewed the recommendations provided for the Business Unit Performance Factors and, after considering the performance of the total Company and ESG results, and the appropriate combination of Business Unit Performance Factors for each NEO, approved the following STAR awards:
Long-Term Incentives
Long-Term Incentives The majority of the NEOs’ compensation is delivered through two long-term incentives 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 compensation peer group, regressed for revenue 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. These recommendations can be up to 50% above or 50% below the benchmarked target for each level and role. The CEO also recommends additional LTI bonus amounts for NEOs that have delivered exceptional results in Equality & Inclusion in their business area. The C&LD Committee retains full authority to accept, modify, or reject these recommendations. In exceptional cases, no grant will be awarded. One half of each NEO’s annual long-term compensation is allocated to PSP through an initial PSU grant as described below. The other half is an LTIP grant. Performance Stock Program (PSP) The PSP aligns the interests of the NEOs with those of 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 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. The C&LD Committee sets targets at the beginning of each performance period for the following categories (“Performance Categories”):
Long-Term Incentives
| | Goal | What It Measures | Purpose of Measure | | | Relative Organic Sales Growth | 3-year compounded organic sales growth relative to the competitive peer group | Rewards strong organic 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 Before–Tax Operating Profit Growth | 3-year core before tax profit excluding the impact of foreign exchange | Rewards meeting / exceeding operating profit growth target | | | Adjusted Free Cash Flow Productivity | 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 |
Long-Term Incentives
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. To determine the vested PSUs at the end of each three-year performance period, the C&LD Committee multiplies the initial PSU grant (plus compounded dividend equivalents) by the 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. The formula is as follows: PSUs vest at the end of the three-year performance period, and the final payouts are determined. Upon settlement of their PSUs, NEOs may elect to defer receipt of the shares of Common Stock by choosing to instead receive retirement deferred RSUs. 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 they expire ten years from the date of grant or earlier in the case of certain termination events. RSUs cliff-vest three years after grant date and are delivered, upon vesting, in shares of Common Stock, along with compounded dividend equivalents. 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. FY 2021-22 Long-Term Incentive Grants The following long-term incentive grants were made on October 1, 2021. These award amounts were based on market median and each individual’s performance and business results during the prior fiscal year (2020-21). Award amounts approved by the C&LD Committee vary from the grant date fair value shown in 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.
Long-Term Incentives
| FY 2021-22 LONG-TERM INCENTIVE GRANTS | | | | | | | | | PSP Grant | | LTIP Grant | | | Total | | | PSUs | Grant Date | Options | RSUs | Grant Date | Grant Date | | | | Fair Value | | | Fair Value | Fair Value | | NEO | (#) | ($) | (#) | (#) | ($) | ($) | | David S. Taylor | 44,778 | 6,963,427 | 187,212 | 15,673 | 6,250,137 | 13,213,564 | | Jon R. Moeller | 40,121 | 6,239,217 | 154,839 | 16,049 | 5,600,125 | 11,839,342 | | Andre Schulten | 12,896 | 2,005,457 | 62,212 | 3,224 | 1,800,006 | 3,805,463 | | Ma. Fatima D. Francisco | 12,825 | 1,994,416 | 82,489 | 0 | 1,790,011 | 3,784,427 | | Shailesh Jejurikar | 14,329 | 2,228,303 | 92,166 | 0 | 2,000,002 | 4,228,305 | | R. Alexandra Keith | 13,645 | 2,121,934 | 65,824 | 3,412 | 1,904,628 | 4,026,562 | | Carolyn Tastad | 13,004 | 2,022,252 | 62,731 | 3,251 | 1,815,038 | 3,837,290 |
Long-Term Incentives
Long-Term Incentive Grants were determined by the C&LD Committee as follows:
Long-Term Incentives
| ● | Mr. Taylor received a $12,500,000 long-term incentive award. In determining this award, the Committee reviewed competitive market data for both CEO and Executive Chair positions and accounted for Mr. Taylor’s strong performance as CEO and his new position as Executive Chairman. |
Long-Term Incentives
| ● | Mr. Moeller received a long-term incentive award of $11,200,000 after the Committee reviewed competitive market data for CEO positions and accounted for his prior performance as Vice Chairman and COO. |
Long-Term Incentives
| ● | Mr. Schulten received a long-term incentive award of $3,600,000 based on competitive market data and his performance in his first full year as CFO. |
Long-Term Incentives
| ● | Ms. Francisco received a long-term incentive award of $3,580,000 based upon market data for her position, as well as strong business results as the CEO of the Baby and Feminine Care businesses. |
Long-Term Incentives
| ● | Mr. Jejurikar received a long-term incentive award of $4,000,000 in connection with his appointment as COO and based on his prior business results as CEO – Fabric and Home Care. |
Long-Term Incentives
| ● | Ms. Keith received a long-term incentive award of $3,809,000 based on updated market data for her position, as well as her strong business results in her role as CEO – Beauty and her additional duties as Executive |
Long-Term Incentives
| Sponsor for Corporate Sustainability. Ms. Keith’s award also included the LTI Equality & Inclusion bonus as recommended by the CEO for her exceptional contributions to Equality & Inclusion initiatives within the Beauty organization. |
Long-Term Incentives
| ● | Ms. Tastad received a long-term incentive award of $3,630,000 based on updated market data for her position, as well as her strong business results in her role as Group President – North America and Chief Sales Officer. Ms. Tastad’s award also included the LTI Equality & Inclusion bonus as recommended by the CEO for her exceptional contributions to Equality & Inclusion initiatives in North America. |
Long-Term Incentives
PSP Goal Setting In conjunction with deciding the amount and allocation of the NEOs’ long-term incentive opportunities for FY 2021-22, the C&LD Committee set the PSP goals listed below for the three-year performance period starting July 1, 2021 through June 30, 2024. The delivery of results against these goals, combined with the relative TSR multiplier, will determine the ultimate payout for this portion of compensation.
Long-Term Incentives
| PSP GOALS FOR PERFORMANCE PERIOD JULY 1, 2021–JUNE 30, 2024 | | | | | | | | | Organic Sales Growth Percentile Rank in Peer Group (30% Weighting)(1) | | Constant Currency Core Before-Tax Operating 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 | | 80(th) | 200% | ≥9.7 | 200% | ≥11.2 | 200% | ≥115 | 200% | | 70(th) | 167% | 8.0 | 167% | 9.5 | 167% | 107 | 167% | | 60(th) | 133% | 6.4 | 133% | 7.9 | 133% | 98 | 133% | | Target 50(th) | 100% | Target 4.7 | 100% | Target 6.2 | 100% | Target 90 | 100% | | 40(th) | 67% | 3.0 | 67% | 4.5 | 67% | 82 | 67% | | 30(th) | 33% | 1.4 | 33% | 2.9 | 33% | 73 | 33% | | <20(th) | 0% | ≤0.3 | 0% | ≤1.2 | 0% | ≤65 | 0% |
Long-Term Incentives
1 Organic Sales Growth is a measure of sales growth excluding the impacts of acquisitions, divestitures, foreign exchange, and certain other items (as appropriate) from year-over-year comparisons. Relative Organic Sales growth is a measure of the percentile rank of the 3-year compound annual growth rate within a peer group of directly competitive consumer product companies. See Exhibit A for a definition 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 definition of non-GAAP measures. The target for Constant Currency Core Before-Tax Operating Profit Growth reflects the forecast for increased commodity and transportation costs. 3 Core EPS Growth is a measure of the Company’s diluted net earnings per share 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 definition 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 definition of non-GAAP measures. Looking Back: Realized Pay for PSP Performance Period July 1, 2019–June 30, 2022 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, 2019 to June 30, 2022), which paid out in August 2022. 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. PSP paid out at 200% of target based on exceptional financial results and top quartile TSR results vs. our competitive marketplace peers.
Long-Term Incentives
| PSP RESULTS FOR JULY 1, 2019–JUNE 30, 2022 | | | | | | Performance Factors | Target | Actual | Weight | Result | | Relative Organic Sales Growth(1) | 50(th) Percentile | 83(rd) Percentile | 30% | 200% | | Constant Currency Core Before-Tax Operating Profit Growth(2) | 6.0% | 10.0% | 20% | 180% | | Core EPS Growth(3) | 7.0% | 8.7% | 30% | 134% | | Adjusted Free Cash Flow Productivity(4) | 90% | 104% | 20% | 156% | | Weighted Average of Performance Factors | | | | 167% | | Relative TSR Modifier(5) | | | | 125% | | Final PSP Payout(6) | | | | 200% |
Long-Term Incentives
1 Organic Sales Growth is the sales growth excluding the impacts of divestitures and foreign exchange from year-over-year comparisons. Relative Organic Sales growth is a measure of the percentile rank of the 3-year compound annual growth rate within a peer group of directly competitive consumer product companies. See Exhibit A for a reconciliation of non-GAAP measures. 2 Constant Currency Core Before-Tax Operating Profit Growth is the 3-year compound annual growth rate of Before-Tax Operating Profit, adjusted to exclude foreign exchange impacts and incremental restructuring in fiscal year 2020. See Exhibit A for a reconciliation of non-GAAP measures. 3 Core EPS Growth is the 3-year compound annual growth rate of the Company’s diluted net earnings per share, adjusted for charges for early extinguishment of debt in fiscal 2021 and incremental restructuring in fiscal year 2020. See Exhibit A for a reconciliation of non-GAAP measures. 4 Adjusted Free Cash Flow Productivity is the ratio of the 3-year sum of Operating Cash Flow (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 2020, less the 3-year sum of Capital Expenditures) to the 3-year sum of Net Earnings (excluding the losses on early extinguishment of debt in fiscal 2021). See Exhibit A for a reconciliation of non-GAAP measures. 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 stock price including the impact of reinvested dividends. 6 The Final PSP payout was capped at 200% according to the program rules. The resulting NEO payouts are indicated below:
Long-Term Incentives
| REALIZED PAY FOR PERFORMANCE PERIOD JULY 1, 2019– JUNE 30, 2022 | | | | | | | Named Executive Officer | Initial # of PSUs Granted Plus Dividend Equivalents | Market Value of Target Award @ $143.79 | PSP Payout Factor | Final # of PSUs Awarded | Market Value of Final Award @ $143.79 | | David S. Taylor | 64,092 | 9,215,784 | 200% | 128,184 | 18,431,577 | | Jon R. Moeller | 32,628 | 4,691,640 | 200% | 65,257 | 9,383,304 | | Andre Schulten | 1,423 | 204,586 | 200% | 2,846 | 409,226 | | Ma. Fatima D. Francisco | 14,188 | 2,040,118 | 200% | 28,377 | 4,080,329 | | Shailesh Jejurikar | 15,607 | 2,244,116 | 200% | 31,214 | 4,488,261 | | R. Alexandra Keith | 15,840 | 2,277,674 | 200% | 31,681 | 4,555,411 | | Carolyn Tastad | 15,292 | 2,198,783 | 200% | 30,584 | 4,397,673 |
Long-Term Incentives
The market value of PSUs was calculated by multiplying the number of PSUs and accumulated dividend equivalents by the Company stock price as of June 30, 2022. These PSUs will deliver in shares of Common Stock or retirement deferred RSUs (as elected by the participants) in August 2022. The market value of the final award does not include a final payment of dividend equivalents on the PSUs, which took place on August 15, 2022, prior to delivery in shares.
Special Equity Awards
Special Equity Awards On occasion, the C&LD Committee makes special equity grants in the form of RSUs to senior executives to encourage retention of the talent necessary to manage the Company successfully or to recognize superior performance. On July 1, 2021, the C&LD Committee approved an RSU award of $2,000,000 to Ms. Keith, which was granted on August 2, 2021. The award vests 50% on August 2, 2024, and the remaining 50% on August 3, 2026.
Retirement Programs
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 contributions 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 become non-forfeitable after five years of service. In addition, some individuals who would otherwise participate in the PST are ineligible due to their work 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 become non-forfeitable after five years of service. 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. For non-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 and Mses. Francisco and Tastad participate in the IRA. Mr. Schulten also participates in a German Pension Plan, while Ms. Tastad participates in a Canadian Pension Plan.
Compensation Governance Practices and Oversight
| 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. |
Compensation Governance Practices and Oversight
| 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. |
Role of the Committee
Role of the Committee The C&LD Committee is responsible to the Board for the Company’s overall compensation policies and their specific application to principal officers elected by the Board. In setting and overseeing executive pay, the C&LD Committee reviews 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 page 66 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 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 the degree of pay alignment with the Company’s relative Total Shareholder Return (TSR) rank and the appropriate mix of short- and long-term pay and fixed and performance-based pay.
Role of Compensation Consultant
Role of Compensation Consultant For FY 2021-22, the C&LD Committee entered into an agreement with Meridian Compensation Partners, LLC (“Meridian”), 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. In August 2021, the C&LD Committee evaluated the independence of Meridian, taking into account any relationships with the Company’s Directors, officers, and employees in accordance with NYSE listing standards. Based on this evaluation, the C&LD Committee concluded that Meridian was an independent advisor. Under the terms of its agreement with the C&LD Committee, Meridian does not conduct 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 Meridian. The C&LD Committee generally meets with its independent compensation consultant in an executive session at regularly scheduled C&LD Committee meetings.
Establishing Peer Groups and Market-Based Compensation
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 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 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. In the February 2021 C&LD Committee meeting, the Peer Group to be used for FY 21-22 compensation decisions was determined objectively based on global companies that meet the following criteria:
Establishing Peer Groups and Market-Based Compensation
| ● | Have revenue comparable to the Company ($72.5 billion) and/or market capitalization comparable to the Company (approximately $345 billion) using data as of December 2020 |
Establishing Peer Groups and Market-Based Compensation
| ● | Peer Group revenues range from $16 billion to $548 billion with a median of $66 billion |
Establishing Peer Groups and Market-Based Compensation
| ● | Peer Group market capitalization ranges from $32 billion to $1,682 billion with a median of $181 billion |
Establishing Peer Groups and Market-Based Compensation
| ● | Compete with the Company in the marketplace for business and investment capital |
Establishing Peer Groups and Market-Based Compensation
| ● | Compete with the Company for executive talent |
Establishing Peer Groups and Market-Based Compensation
| ● | 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 from our mix of pay elements and program structure |
Establishing Peer Groups and Market-Based Compensation
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 ensure continuity from year to year. For compensation decisions made in FY 2021-22, the Committee did not make any changes to the Peer Group.
Peer Group for Relative Organic Sales Growth and Relative TSR Multiplier
Peer Group for Relative Organic Sales Growth and 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 Relative Organic Sales Growth and Relative TSR Multiplier
| Peer Group for FY 2021-22 Compensation Decisions | | | Peer Group for Relative Organic Sales Growth and TSR Multiplier for 2021-24 | | | | | 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 | Verizon | | Reckitt Benckiser | | Home Depot | Wal-Mart Stores | | Unicharm | | IBM | | | Unilever |
Peer Group for Relative Organic Sales Growth and Relative TSR Multiplier
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.
Summary Compensation
| FY 2021-22 SUMMARY COMPENSATION TABLE | | | | | | | | | | | Name and Principal Position | Year | Salary ($) | Bonus(1) ($) | Stock Awards(2) ($) | Option Awards(3) ($) | Non- Equity Incentive Plan Compen- sation ($) | Change in Pension Value and Non- qualified Deferred Compen- sation Earnings(4) ($) | All Other Compen- sation(5) ($) | Total ($) | | David S. Taylor Executive Chairman of the Board and Former Chief Executive Officer | 2021-22 | 1,400,000 | 3,296,640 | 9,490,185 | 4,062,500 | 0 | 0 | 346,057 | 18,595,382 | | | 2020-21 | 1,783,333 | 6,570,000 | 10,652,543 | 4,631,265 | 0 | 0 | 263,240 | 23,900,381 | | | 2019-20 | 1,700,000 | 6,014,600 | 11,242,037 | 3,437,505 | 0 | 0 | 510,986 | 22,905,128 | | Jon R. Moeller President and Chief Executive Officer | 2021-22 | 1,466,667 | 3,955,968 | 8,684,664 | 3,360,006 | 0 | 0 | 248,710 | 17,716,015 | | | 2020-21 | 1,191,667 | 3,066,000 | 5,157,020 | 2,756,266 | 0 | 0 | 92,223 | 12,263,176 | | | 2019-20 | 1,150,000 | 2,848,090 | 4,863,501 | 2,625,010 | 0 | 0 | 119,421 | 11,606,022 | | Andre Schulten Chief Financial Officer | 2021-22 | 802,500 | 1,295,305 | 2,528,746 | 1,350,000 | 0 | 0 | 87,630 | 6,064,181 | | | 2020-21 | 608,583 | 951,563 | 666,792 | 0 | 0 | 0 | 71,177 | 2,298,115 | | Ma. Fatima D. Francisco | | | | | | | | | | | CEO—Baby , Feminine, and Family Care | 2021-22 | 825,000 | 1,348,439 | 2,104,274 | 1,790,011 | 0 | 0 | 88,921 | 6,156,645 | | Shailesh Jejurikar Chief Operating Officer | 2021-22 | 952,500 | 1,661,143 | 2,292,712 | 2,000,002 | 0 | 0 | 131,916 | 7,038,273 | | | 2020-21 | 798,333 | 1,614,330 | 1,900,372 | 1,674,109 | 0 | 0 | 236,329 | 6,223,473 | | R. Alexandra Keith | | | | | | | | | | | CEO—Beauty | 2021-22 | 885,000 | 996,596 | 4,714,986 | 1,428,381 | 0 | 0 | 323,785 | 8,348,748 | | Carolyn M. Tastad Sector CEO—Health Care, Special Advisor | 2021-22 | 847,500 | 1,411,016 | 2,594,491 | 1,361,263 | 0 | 0 | 96,598 | 6,310,868 | | | 2020-21 | 808,333 | 924,000 | 2,105,711 | 1,790,011 | 0 | 0 | 90,109 | 5,718,164 | | | 2019-20 | 793,333 | 1,544,000 | 2,299,344 | 1,230,165 | 0 | 899,000 | 85,215 | 6,851,057 |
Grants of Plan-Based Awards
Grants of Plan-Based Awards The following table and footnotes provide information regarding grants of equity under Company plans made to the NEOs during FY 2021-22.
Grants of Plan-Based Awards
| GRANTS OF PLAN-BASED AWARDS | | | | | | | | | | | | Grant Date(1) | Compensation & Leadership Development Committee Action Date | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares or Stock Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards(2) ($ per share) | Grant Date Fair Value of Stock and Option Awards(3) ($) | | Name/Plan Name | | | Threshold (#) | Target (#) | Maximum (#) | | | | | | David S. Taylor | | | | | | | | | | | LTIP Options(4) | 10/01/2021 | 08/10/2021 | | | | | 187,212 | 139.58 | 4,062,500 | | LTIP RSUs(5) | 10/01/2021 | 08/10/2021 | | | | 15,673 | | | 2,187,637 | | PSUs(6) | 10/01/2021 | 08/10/2021 | 0 | 44,778 | 89,556 | | | | 6,963,427 | | PST Restoration RSUs(7) | 08/05/2021 | 06/08/2021 | | | | 2,522 | | | 339,121 | | STAR Stock Options(8) | 09/15/2021 | 08/10/2021 | | | | | 154,226 | 145.12 | 3,285,014 | | Jon R. Moeller | | | | | | | | | | | LTIP Options(4) | 10/01/2021 | 08/10/2021 | | | | | 154,839 | 139.58 | 3,360,006 | | LTIP RSUs(5) | 10/01/2021 | 08/10/2021 | | | | 16,049 | | | 2,240,119 | | PSUs(6) | 10/01/2021 | 08/10/2021 | 0 | 40,121 | 80,242 | | | | 6,239,217 | | PST Restoration RSUs(7) | 08/05/2021 | 06/08/2021 | | | | 1,527 | | | 205,328 | | Andre Schulten | | | | | | | | | | | LTIP Options(4) | 10/01/2021 | 08/10/2021 | | | | | 62,212 | 139.58 | 1,350,000 | | LTIP RSUs(5) | 10/01/2021 | 08/10/2021 | | | | 3,224 | | | 450,006 | | PSUs(6) | 10/01/2021 | 08/10/2021 | 0 | 12,896 | 25,792 | | | | 2,005,457 | | PST Restoration RSUs(7) | 08/05/2021 | 06/08/2021 | | | | 545 | | | 73,283 | | Ma. Fatima D. Francisco | | | | | | | | | | | LTIP Options(4) | 10/01/2021 | 08/10/2021 | | | | | 82,489 | 139.58 | 1,790,011 | | PSUs(6) | 10/01/2021 | 08/10/2021 | 0 | 12,825 | 25,650 | | | | 1,994,416 | | PST Restoration RSUs(7) | 08/05/2021 | 06/08/2021 | | | | 817 | | | 109,858 | | Shailesh Jejurikar | | | | | | | | | | | LTIP Options(4) | 10/01/2021 | 08/10/2021 | | | | | 92,166 | 139.58 | 2,000,002 | | PSUs(6) | 10/01/2021 | 08/10/2021 | 0 | 14,329 | 28,658 | | | | 2,228,303 | | PST Restoration RSUs(7) | 08/05/2021 | 06/08/2021 | | | | 479 | | | 64,409 | | STAR Stock Options(8) | 09/15/2021 | 08/10/2021 | | | | | 75,791 | 145.12 | 1,614,348 | | R. Alexandra Keith | | | | | | | | | | | LTIP Options(4) | 10/01/2021 | 08/10/2021 | | | | | 65,824 | 139.58 | 1,428,381 | | LTIP RSUs(5) | 10/01/2021 | 08/10/2021 | | | | 3,412 | | | 476,247 | | PSUs(6) | 10/01/2021 | 08/10/2021 | 0 | 13,645 | 27,290 | | | | 2,121,934 | | PST Restoration RSUs(7) | 08/05/2021 | 06/08/2021 | | | | 867 | | | 116,581 | | Special RSU Award(9) | 08/02/2021 | 07/01/2021 | | | | 14,098 | | | 2,000,224 |
Grants of Plan-Based Awards
| GRANTS OF PLAN-BASED AWARDS | | | | | | | | | | | | Grant Date(1) | Compensation & Leadership Development Committee Action Date | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares or Stock Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards(2) ($ per share) | Grant Date Fair Value of Stock and Option Awards(3) ($) | | Name/Plan Name | | | Threshold (#) | Target (#) | Maximum (#) | | | | | | Carolyn M. Tastad | | | | | | | | | | | LTIP Options(4) | 10/01/2021 | 08/10/2021 | | | | | 62,731 | 139.58 | 1,361,263 | | LTIP RSUs(5) | 10/01/2021 | 08/10/2021 | | | | 3,251 | | | 453,775 | | PSUs(6) | 10/01/2021 | 08/10/2021 | 0 | 13,004 | 26,008 | | | | 2,022,252 | | PST Restoration RSUs(7) | 08/05/2021 | 06/08/2021 | | | | 881 | | | 118,464 | | STAR Stock Options(8) | 09/15/2021 | 08/10/2021 | | | | | 72,862 | 145.12 | 1,551,961 |
Grants of Plan-Based Awards
1 Grant dates for annual equity awards are consistent from year to year. 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 one year after the grant date, will become exercisable on October 1, 2024, and will expire on October 1, 2031. For the retirement eligible NEOs (Mr. Taylor, Mr. Moeller, Mr. Jejurikar and Ms. Tastad), prior to the first-year anniversary of grant, the award will be prorated based on the number of days worked that year. 5 These units are forfeitable until the later of retirement eligibility or one year after the grant date and will deliver in shares on October 1, 2024. For the retirement eligible NEOs (Mr. Taylor, Mr. Moeller, Mr. Jejurikar and Ms. Tastad), prior to the first-year anniversary of grant, the award will be prorated 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 38 of the Compensation Discussion & Analysis for applicable performance measures. These units are forfeitable until the later of retirement eligibility or one year after the grant date, and will deliver in shares in August 2024 unless elected otherwise by the NEO, subject to applicable tax rules and regulations. For the retirement eligible NEOs (Mr. Taylor, Mr. Moeller, Mr. Jejurikar and Ms. Tastad), prior to the first-year anniversary of grant, the award will be prorated 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. 8 These options are nonforfeitable, will become exercisable on September 13, 2024, and will expire on September 15, 2031. These options reflect payment of the FY 2020-21 STAR award, which was previously included in the Bonus column of the Summary Compensation Table in the 2021 Proxy Statement. 9 These units are forfeitable until vesting, which occurs 50% on August 2, 2024, and 50% on August 3, 2026. These units will deliver in shares and accumulate dividend equivalents at the same rate as dividends paid on common stock.
Option Exercises and Stock Vested
Option Exercises and Stock Vested The following table and footnotes provide information regarding stock option exercises and stock vestings during FY 2021-22 for the NEOs.
Option Exercises and Stock Vested
| OPTION EXERCISES AND STOCK VESTED | | | | | | | | | Option Awards | | | Stock Awards | | | | Name/ Plan Name | Option Grant Date | Number of Shares Acquired on Exercise(1) (#) | Value Realized on Exercise(2) ($) | Stock Award Grant Date | Number of Shares Acquired on Vesting(3) (#) | Value Realized on Vesting(4) ($) | | David S. Taylor(5) | | | | | | | | Key Manager | 02/29/2016 | 205,095 | 15,312,449 | | | | | STAR | 09/15/2016 | 90,000 | 6,830,869 | | | | | PSP 2019-2022 | | | | 02/28/2020 | 128,184 | 18,431,577 | | LTIP | | | | 10/01/2020 | 4,601 | 653,468 | | PST Restoration | | | | 08/05/2021 | 2,522 | 339,121 | | LTIP | | | | 10/01/2021 | 11,808 | 1,697,891 | | Jon R. Moeller(5) | | | | | | | | Key Manager | 02/29/2016 | 150,393 | 12,074,627 | | | | | LTIP | 02/28/2017 | 190,034 | 13,174,948 | | | | | PSP 2019-2022 | | | | 02/28/2020 | 65,257 | 9,383,304 | | LTIP | | | | 10/01/2020 | 1,695 | 240,677 | | PST Restoration | | | | 08/05/2021 | 1,527 | 205,328 | | LTIP | | | | 10/01/2021 | 12,087 | 1,738,051 | | Andre Schulten | | | | | | | | LTIP | | | | 02/28/2019 | 4,444 | 691,064 | | PSP 2019-2022 | | | | 02/28/2020 | 2,846 | 409,226 | | PST Restoration | | | | 08/05/2021 | 545 | 73,283 |
Option Exercises and Stock Vested
| OPTION EXERCISES AND STOCK VESTED | | | | | | | | | Option Awards | | | Stock Awards | | | | Name/ Plan Name | Option Grant Date | Number of Shares Acquired on Exercise(1) (#) | Value Realized on Exercise(2) ($) | Stock Award Grant Date | Number of Shares Acquired on Vesting(3) (#) | Value Realized on Vesting(4) ($) | | Ma. Fatima D. Francisco | | | | | | | | STAR | 09/15/2014 | 8,115 | 523,661 | | | | | Key Manager | 02/27/2015 | 16,000 | 1,262,499 | | | | | PSP 2019-2022 | | | | 02/28/2020 | 28,377 | 4,080,329 | | PST Restoration | | | | 08/05/2021 | 817 | 109,858 | | Shailesh Jejurikar | | | | | | | | Key Manager | 02/28/2013 | 12,465 | 817,579 | | | | | Key Manager | 02/28/2014 | 38,196 | 2,447,982 | | | | | Key Manager | 02/27/2015 | 49,337 | 3,749,612 | | | | | PSP 2019-2022 | | | | 02/28/2020 | 31,214 | 4,488,261 | | PST Restoration | | | | 08/05/2021 | 479 | 64,409 | | R. Alexandra Keith | | | | | | | | LTIP | | | | 02/28/2019 | 12,631 | 1,964,184 | | PSP 2019-2022 | | | | 02/28/2020 | 31,681 | 4,555,411 | | PST Restoration | | | | 08/05/2021 | 867 | 116,581 | | Carolyn M. Tastad(5) | | | | | | | | PSP 2019-2022 | | | | 02/28/2020 | 30,584 | 4,397,673 | | LTIP | | | | 10/01/2020 | 763 | 108,325 | | PST Restoration | | | | 08/05/2021 | 881 | 118,464 | | LTIP | | | | 10/01/2021 | 2,449 | 352,109 |
Option Exercises and Stock Vested
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 Number of Shares Acquired on Vesting is the gross number of shares acquired or deemed non-forfeitable. Please see footnote 2 in the Outstanding Equity at Fiscal Year-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 closing price on the vesting date. The value of PSUs was determined by multiplying the closing market price of Company stock on June 30, 2022 ($143.79) by the number of PSUs. The market value of the PSUs does not include a final payment of dividend equivalents on the PSUs, which took place on August 15, 2022, prior to delivery in shares. 5 Mr. Taylor, Mr. Moeller, and Ms. Tastad are retirement eligible and therefore 25% of their October 2020 LTIP RSU became non-forfeitable on October 1, 2021, and 75% of their October 2021 LTIP RSU grant was non-forfeitable on June 30, 2022.
Pension Benefits
Pension Benefits The following table and footnotes provide information regarding the Company’s pension plans for Mr. Schulten, Ms. Francisco, Mr. Jejurikar and Ms. Tastad as of the end of FY 2021-22. None of the other NEOs had any such arrangements with the Company.
Pension Benefits
| PENSION BENEFITS | | | | | | Name | Plan Name | Number of Years of Credited Service(1) | Present Value of Accumulated Benefit(2) ($) | Payments During Last Fiscal Year ($) | | Andre Schulten | The Procter & Gamble Company Global IRA | 8 years, 9 months | 1,562,000 | | | | The Procter & Gamble Pension Fund (Germany) | 8 years, 9 months | 182,000 | | | Ma. Fatima D. Francisco | The Procter & Gamble Company Global IRA | 13 years, 3 months | 2,488,000 | | | Shailesh Jejurikar | The Procter & Gamble Company Global IRA | 23 years, 5 months | 4,771,000 | | | Carolyn Tastad | The Procter & Gamble Company Global IRA | 16 years, 2 months | 2,742,000 | | | | The Procter & Gamble Company Canada Plan | 11 years, 1 month | 287,000 | |
Pension Benefits
1 Numbers in this column are computed as of the same pension plan measurement date used for financial statement reporting purposes for the Company’s audited financial statements as found in Note 8 to the Consolidated Financial Statements contained in the Company’s 2022 Annual Report on Form 10-K. 2 The following provides the assumptions used in each plan to calculate present value under SEC rules. The actual calculation of the benefit at the time of retirement may vary according to the terms of the Global IRA, the German Pension Plan and the Canada Plan at the time:
Pension Benefits
| Assumptions | Global IRA | German Pension Plan | Canada Plan | | Retirement Age | 60 | 65 | 60 (unreduced retirement age) | | Discount Rate | 4.59% | 3.37% | 5.00% | | Salary Increase Rate | 3.50% | N/A | N/A | | Pension Increase Rate | N/A | 2.00% | 0.50% | | Pre-Retirement Decrements | None | None | N/A | | Post-Retirement Mortality Table | Pri-2012 using MP-2021 Projection Scale Blended | Heubeck 2018 G | 94% of the 2014 Private Sector Canadian Pensioners’ Mortality Table, projected generationally using improvement scale MI-2017 |
Pension Benefits
The following exchange rates as of June 30, 2022, were used to calculate present value: (1)US$ 1.04519 : Euro €1.00000; (2)US$ 0.01823 : Philippine Peso 1.00000; (3)US$ 0.71865 : Singapore Dollar S$1.00000; and (4)US$ 0.77586 : Canadian Dollar 1.00000.
Nonqualified Deferred Compensation
Nonqualified Deferred Compensation The following table and footnotes provide information regarding the Company’s non-tax-qualified defined contribution and deferred compensation plans for each of the NEOs for FY 2021-22. For a complete understanding of the table and the footnotes, please read the narrative that follows the table.
Nonqualified Deferred Compensation
| NONQUALIFIED DEFERRED COMPENSATION TABLE | | | | | | | | | Name | Plan Name | Aggregate Balance at FYE ‘21 (6/30/21) ($) | Executive Contributions in Last FY ($) | Registrant Contributions in Last FY ($) | Aggregate Earnings in Last FY(1) ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at FYE ‘22 (6/30/22) ($) | | David S. Taylor | Executive Deferred Compensation Plan | 4,432,544 | | | (490,441) | | 3,942,103(2) | | | Employee Stock and Incentive Compensation Plan(3) | 9,934,022 | | 2,351,360(4) | 1,286,270 | 5,090,890(5) | 8,480,761(6) | | | PST Restoration Program | 5,150,246 | | 339,121(7) | (336,484) | 26,508 | 5,126,374(8) | | Jon R. Moeller | Employee Stock and Incentive Compensation Plan(3) | 2,674,555 | | 1,978,728(4) | 360,958 | 1,269,231(5) | 3,745,010(9) | | | PST Restoration Program | 3,365,568 | | 205,328(7) | 328,273 | 16,567 | 3,882,601(10) | | Andre Schulten | International Retirement Plan | 958,999 | | | 87,051 | | 1,046,050 | | | PST Restoration Program | 128,385 | | 73,283(7) | 19,234 | 5,874 | 215,029(11) | | Ma. Fatima D. Francisco | Executive Deferred Compensation Plan | 4,459,673 | 1,247,954 | | (1,083,181) | | 4,624,446 | | | PST Restoration Program | 578,540 | | 109,858(7) | 59,349 | 7,229 | 740,517 | | Shailesh Jejurikar | Executive Deferred Compensation Plan | 496,726 | | | (52,887) | | 443,839 | | | PST Restoration Program | 374,100 | | 64,409(7) | 41,074 | 5,121 | 474,462(12) | | R. Alexandra Keith | PST Restoration Program | 878,859 | | 116,581(7) | 92,621 | 12,953 | 1,075,108 | | Carolyn Tastad | Employee Stock and Incentive Compensation Plan(3) | 2,291,262 | | 460,434(4) | 340,982 | 1,815,387(5) | 1,277,291(13) | | | International Retirement Plan | 1,164,062 | | | 54,277 | | 1,218,339 | | | PST Restoration Program | 1,074,069 | | 118,464(7) | 52,521 | 9,338 | 1,235,715(14) |
Nonqualified Deferred Compensation
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. 2 Total includes $1,400,703 previously reported in Summary Compensation Tables for prior years. 3 Amounts shown include awards granted under the terms of either the 2009 Plan, the 2014 Plan, or the 2019 Plan, depending on which plan was in effect at the time the NEO elected to defer the award. 4 Total reflects 25% of the 2020 LTIP RSU grant and 75% of the 2021 LTIP RSU grant (less taxes paid on the grant at the end of calendar year 2021) which became nonforfeitable pro rata because the NEO is retirement eligible. These awards are also reported in the Summary Compensation Table found on page 48 of this proxy statement. 5 Total reflects the delivery of a 2019 LTIP grant, and taxes withheld on prior grants. 6 Total includes $5,931,338 previously reported in Summary Compensation Tables for prior years. 7 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 48 of this proxy statement. 10 Total includes $1,526,191 previously reported in the Summary Compensation Tables for prior years. 11 Total includes $41,090 previously reported in the Summary Compensation Tables for prior years. 12 Total includes $55,530 previously reported in the Summary Compensation Tables for prior years. 13 Total includes $1,545,218 previously reported in the Summary Compensation Tables for prior years. 14 Total includes $180,351 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 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 the 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’s tax-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 grants made in the form of RSUs that become 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. As described on pages 42-43 of this proxy statement, federal tax rules limit the size of contributions that can be made to individuals pursuant to tax-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 become non-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 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 the 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
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.
Estimated Post-Employment Treatment of Compensation and Benefits
| PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL | | | | | | | Name | Voluntary Separation or Termination for Cause ($) | Written Separation Agreement ($) | Retirement or Disability ($) | Change in Control ($) | Death ($) | | David S. Taylor | | | | | | | Salary | 0 | 1,200,000 | 0 | 0 | 0 | | STAR(1) | 0 | 0 | 0 | 0 | 2,521,927 | | Long-Term Incentive Program(2) | 0 | 8,518,162 | 8,518,162 | 9,281,167 | 9,281,167 | | PSP(3) | 0 | 12,581,481 | 12,581,481 | 14,219,249 | 14,219,249 | | Executive Group Life Insurance | 0 | 0 | 0 | 0 | 5,000,000 | | Total | 0 | 22,299,643 | 21,099,643 | 23,500,416 | 31,022,343 | | Jon R. Moeller | | | | | | | Salary | 0 | 1,600,000 | 0 | 0 | 0 | | STAR(1) | 0 | 0 | 0 | 0 | 0 | | Long-Term Incentive Program(2) | 0 | 6,374,973 | 6,374,973 | 7,117,291 | 7,117,291 | | PSP(3) | 0 | 8,357,578 | 8,357,578 | 9,825,027 | 9,825,027 | | Executive Group Life Insurance | 0 | 0 | 0 | 0 | 4,800,000 | | Total | 0 | 16,332,551 | 14,732,551 | 16,942,318 | 21,742,318 | | Andre Schulten | | | | | | | Salary | 0 | 820,000 | 0 | 0 | 0 | | STAR(1) | 0 | 0 | 0 | 0 | 0 | | Long-Term Incentive Program(2) | 0 | 1,532,840 | 1,532,840 | 1,839,339 | 1,839,339 | | PSP(3) | 0 | 1,579,461 | 1,579,461 | 2,051,164 | 2,051,164 | | Executive Group Life Insurance | 0 | 0 | 0 | 0 | 1,763,000 | | Total | 0 | 3,932,301 | 3,112,301 | 3,890,503 | 5,653,503 | | Ma. Fatima D. Francisco | | | | | | | Salary | 0 | 840,000 | 0 | 0 | 0 | | STAR(1) | 0 | 0 | 0 | 0 | 0 | | Long-Term Incentive Program(2) | 0 | 3,671,225 | 3,671,225 | 3,758,045 | 3,758,045 | | PSP(3) | 0 | 3,118,050 | 3,118,050 | 3,587,129 | 3,587,129 | | Executive Group Life Insurance | 0 | 0 | 0 | 0 | 1,764,000 | | Total | 0 | 7,629,275 | 6,789,275 | 7,345,174 | 9,109,174 |
Estimated Post-Employment Treatment of Compensation and Benefits
| PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL | | | | | | | Name | Voluntary Separation or Termination for Cause ($) | Written Separation Agreement ($) | Retirement or Disability ($) | Change in Control ($) | Death ($) | | Shailesh Jejurikar | | | | | | | Salary | 0 | 1,000,000 | 0 | 0 | 0 | | STAR(1) | 0 | 0 | 0 | 0 | 370,385 | | Long-Term Incentive Program(2) | 0 | 4,026,888 | 4,026,888 | 4,123,893 | 4,123,893 | | PSP(3) | 0 | 3,374,176 | 3,374,176 | 3,898,290 | 3,898,290 | | Executive Group Life Insurance | 0 | 0 | 0 | 0 | 2,250,000 | | Total | 0 | 8,401,064 | 7,401,064 | 8,022,183 | 10,642,568 | | R. Alexandra Keith | | | | | | | Salary | 0 | 910,000 | 0 | 0 | 0 | | STAR(1) | 0 | 0 | 0 | 0 | 153,716 | | Long-Term Incentive Program(2) | 0 | 3,877,806 | 2,945,408 | 4,071,880 | 4,071,880 | | PSP(3) | 0 | 3,326,006 | 3,326,006 | 3,825,101 | 3,825,101 | | Special Equity Awards(4) | 0 | 0 | 2,062,524 | 2,062,524 | 2,062,524 | | Executive Group Life Insurance | 0 | 0 | 0 | 0 | 1,911,000 | | Total | 0 | 8,113,812 | 8,333,938 | 9,959,505 | 12,024,221 | | Carolyn M. Tastad | | | | | | | Salary | 0 | 860,000 | 0 | 0 | 0 | | STAR(1) | 0 | 0 | 0 | 0 | 2,134,307 | | Long-Term Incentive Program(2) | 0 | 2,945,408 | 2,945,408 | 3,128,802 | 3,128,802 | | PSP(3) | 0 | 3,206,517 | 3,206,517 | 3,682,174 | 3,682,174 | | Executive Group Life Insurance | 0 | 0 | 0 | 0 | 1,806,000 | | Total | 0 | 7,011,924 | 6,151,924 | 6,810,976 | 10,751,283 |
Pay Ratio
Pay Ratio As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of the CEO position, which was held by Mr. Taylor from July 1, 2021 to October 31, 2021, and by Mr. Moeller from November 1, 2021 to June 30, 2022. The pay ratio was calculated in a manner consistent with Item 402(u) of Regulation S-K and based upon our reasonable judgment and assumptions. For FY 2021-22, the median of the annual total compensation of all employees of the company (other than our CEO) was $65,918, and the annual total compensation of the CEOs, prorated for time worked, was $18,006,587. Based on this information, the ratio of the annual total compensation of CEO to the median of the annual total compensation of employees was 273 to 1. In accordance with SEC requirements, we determined that there have been no changes to our employee population or compensation arrangements in FY 2021-22 that we believe would significantly affect our pay ratio disclosure. In determining our pay ratio for FY 2021-22, we used the same median employee as was identified last year according to the process outlined below. The median employee’s pay increased in local currency (Euro); however, due to significant changes in the USD to Euro exchange rate during FY 2021-22, the median employee reportable pay appears lower when converted to USD. To identify the median of the annual total compensation of all our employees, we determined that, as of April 1, 2021, our employee population consisted of approximately 99,441 active employees working at our parent company and consolidated subsidiaries. Applying the de minimis exemption under the rule, we chose to exclude approximately 4,929 employees in 29 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 To identify the “median employee” from the resulting population of 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 and bi-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 2021. For purposes of determining the consistently applied compensation measure, 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 FY 2021-22 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K. With respect to the annual total compensation of our CEO, we used prorated amounts from the amounts reported in the “Total” column (column (j)) of our FY 2021-22 Summary Compensation Table included in this Proxy Statement. 1 We excluded the following approximate number of employees by jurisdiction: Turkey, 661; Ukraine, 521; Czech Republic, 518; Austria, 506, Pakistan; 493; United Arab Emirates, 487; South Africa, 397; Greece, 228; Nigeria, 190; Morocco, 153; Netherlands, 151; Portugal, 140; Sweden, 108; Ecuador, 48; Israel, 40; Kazakhstan, 39; Croatia, 37; Serbia, 36; Slovakia, 35; Bulgaria, 29; Azerbaijan, 22; Finland, 21; Denmark, 20; Kenya, 18; Norway, 11; Latvia, 10; Ghana, 5; Bangladesh, 3; Algeria, 2. Beneficial Ownership
ITEM 1. ELECTION OF DIRECTORS
ITEM 1. ELECTION OF DIRECTORS