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There’s one less name in the running for the top job at Procter & Gamble Co. Susan Arnold has vacated her management post and is ready for hire once she officially retires from P&G, where she began her career 29 years ago.
On Monday, the consumer products giant said Arnold — the firm’s highest-ranking female and among its most high-profile executives — had stepped down from her role as president of global business units, and plans to retire on Sept. 1.
Until her departure, P&G said Arnold will continue to serve in a special assignment, working with chairman and chief executive officer A.G. Lafley on long-term strategy. According to the firm’s proxy statement for the year ended Oct. 14, Arnold’s total compensation in 2008 was $6.7 million, including $1 million in salary, $1.5 million in bonuses and a $3.7 million grant “reflecting her experience and leadership in her current position and the overall performance of the company’s global business units.”
The company also said it had been Arnold’s intention to step down on her 55th birthday, which she celebrated on Sunday. If that were the case, P&G kept it a well guarded secret — Caris & Co. analyst Linda Bolton Weiser noted in a research report released Monday afternoon that Arnold’s intention to retire at 55 “was never publicly disclosed to our knowledge.”
Arnold’s post will not be filled, and the three vice chairs of P&G global business units who reported to her will now report to Lafley, “reducing a layer of management as part of the company’s ongoing simplification effort,” the firm stated. Neither Lafley nor Arnold were available for comment Monday.
Wall Street analysts have long considered Arnold and Robert McDonald, 55, P&G’s chief operating officer, as the two leading candidates for the ceo spot. Analysts said her abrupt departure seems to clear the way for McDonald to take over as ceo once Lafley, 61, decides to retire, a suggestion Lafley frequently dismisses. Asked by an analyst about his retirement plans at the firm’s analyst meeting in December, Lafley said, “We have a great team and a great business. We’re going to stay together. We have a lot left to do.” He added, “We have a ton of opportunity in this industry. I think there is tremendous upside, and I want to be part of it.”
P&G has not unveiled a succession time line, but many industry watchers and analysts have speculated Lafley plans to retire by 65 — within three and a half years. According to a P&G spokeswoman, the company does not have a mandatory retirement age, but “senior executives with enterprise-wide responsibilities” are expected not to stay on the job beyond 65 unless given the board’s approval.
Arnold’s departure from that management team has raised some eyebrows, given both P&G and the industry credit her as the architect of the company’s beauty strategy for at least the last decade. Under her stewardship, P&G’s beauty business has nearly tripled in size from about $7 billion in 1999 to $20 billion today. That growth catapulted the company from being mainly a maker of Tide, Pampers and other household products to one of the two leaders of the beauty industry, locked in a battle with L’Oréal.
When Arnold became president of P&G’s personal beauty care business 10 years ago, P&G had only one billion-dollar beauty brand, Pantene. Currently, there are eight billion-dollar brands in the beauty and grooming portfolio.
Unlike her predecessors, Arnold was an unusually visible top-tier executive who frequently spoke at P&G’s annual meetings, conferences hosted by financial firms and beauty events, including CEW panels and the WWD Beauty CEO Summit, where she was a keynote speaker in 2006.