With P&G's Arnold's Adieu, Speculation About Next CEO

Arnold also immersed herself in the retail world, forming strong relationships with mass merchants in particular. Several retailers said they were surprised by the news of her upcoming departure. They had not heard of her plans to retire at 55 and said they thought her imprint on P&G has been positive. “After hearing her speak at the Beauty Summit a few years ago, I thought she wanted to take over the world,” said one drugstore retailer.

Over the years, her message to retailers and to the financial community has been consistent: rather than talk at consumers, listen to them and respond to their needs.

For instance, as early as 2002, Arnold talked about the need to improve the at-home hair coloring experience, which was notoriously messy, time consuming and unpleasant. Last year, P&G introduced, Nice ’n Easy Perfect 10, a game-changing product that addressed many negative home hair coloring traits with a formula that worked in 10 minutes.

“She has totally reshaped beauty at P&G,” said Jill Scalamandre, chief marketing officer of Chrysallis, a portfolio company of private equity firm Catterton Partners, which sold the Frédéric Fekkai hair care brand to P&G last year. Referring to Arnold’s stamp on the Olay and Cover Girl brands in particular, Scalamandre said, “She has brought beauty to the forefront of P&G’s portfolio. She has worked diligently all her career and the results have shown that.”

With a replacement team, led by Ed Shirley, vice chair, global beauty & grooming, in place, Arnold may have felt that now was the right time to step away, and perhaps find a top job at another firm, suggested industry watchers. There have been unconfirmed reports that her résumé has been circulated among top recruiting firms in the past year.

That said, Wall Street seemed unfazed by the news — P&G shares closed Monday at $44.18, down $1.53 or 3.4 percent — particularly because, over the last 18 months, Arnold has increasingly moved away from the beauty business to more ancillary functions. For example, Arnold, who also served as the firm’s executive sponsor of sustainability, presented the company’s annual sustainability report at the company’s analysts’ meeting in December. To some, the additional role suggested Arnold was being wedged out of the executive ranks.

Others speculated that at P&G, a company known for mitigating risk at every turn, behind each key executive post the ranks are deep, and the loss of one person — regardless of his or her talent and ability — is not going to rock the company’s stock price.

“P&G is so big that one person cannot really change the way this business operates,” said William Schmitz, an analyst with Deutsche Bank. He nodded to Arnold’s success, saying, “Olay is her biggest legacy. It’s her crown achievement.” Schmitz also nodded to her successor, Shirley, who rose through the ranks at Gillette, which was acquired by P&G in 2005 for $57 billion. “Ed Shirley was great at Gillette. He has a great track record,” said Schmitz.