DEF 14A 1 d305470ddef14a.htm DEF 14A DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a)

of the Securities Exchange Act of 1934

(Amendment No.     )

 

Filed by the Registrant  

Filed by a Party other than the Registrant  

Check the appropriate box:

 

Preliminary Proxy Statement

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

Definitive Proxy Statement

 

Definitive Additional Materials

 

Soliciting Material Pursuant to §240.14a-12

 

 

The Procter & Gamble Company

 

(Name of Registrant as Specified In Its Charter)

Payment of Filing Fee (Check all boxes that apply):

 

No fee required.

 

Fee paid previously with preliminary materials.

 

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.


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Letter from our Chairman, President and CEO

August 26, 2022

Fellow Procter & Gamble Shareholders:

I want to begin by thanking you for your continued investment and confidence in and engagement with P&G. This past fiscal year was another very strong one, as our integrated strategy continued to yield strong results in an incredibly difficult operating environment. I invite you to read more about these results, and the outstanding work of P&G’s employees, in our 2022 Annual Report.

With the active engagement and oversight of our Board of Directors, we are focused on delighting consumers, customers, and you, our shareholders, through five strategic and integrated choices:

 

   

a portfolio of daily-use products in categories where performance drives brand choice;

   

superiority across product, package, brand communication, retail execution, and value;

   

productivity in everything we do;

   

constructive disruption across the value chain; and

   

an agile, accountable, and empowered organization.

These are not independent strategic choices. They reinforce and build on each other, and we continue to work to strengthen our execution of each.

In support of that work, we have identified four areas of focus going forward: strengthening our supply chain, driving environmental sustainability to delight consumers, increasing digital acumen, and providing a superior employee value equation. These focus areas are not new, nor are they separate from our strategy. They are necessary elements of focus in delivering long-term value.

Our Directors continue to provide guidance on and oversight of our efforts, sharing strategic counsel and practical expertise informed by their diverse skills, experiences, and backgrounds. I hope you will take the opportunity to read further in this proxy statement about their important role in our collective work.

As we look forward, we recognize we serve an increasing number of constituents—consumers, customers, employees, society, and shareholders. Here, we must be balanced in our approach. This work will not be easy, but it is necessary, and doing it well will help us thrive.

As I have shared with P&G’s employees around the globe, it is a tremendous honor to lead this Company and to serve as Chairman of your Board. My confidence in P&G’s future is rooted in my confidence in our people. Together, we are stepping forward into the challenges we face, not back, and redoubling our commitment to sustained excellence in everything we do—serving consumers, serving customers, and delivering for shareholders.

 

LOGO

Jon R. Moeller

Chairman of the Board, President and Chief Executive Officer


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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

August 26, 2022

Fellow Procter & Gamble Shareholders:

It is my pleasure to invite you to this year’s annual meeting of shareholders. The meeting will take place on Tuesday, October 11, 2022, at 12:00 p.m. Eastern Time. The meeting will be held virtually via a live audio webcast at www.virtualshareholdermeeting.com/PG2022. At the meeting, our shareholders will be asked to:

 

 

Elect the 11 Director nominees listed in the accompanying proxy statement;

 

Ratify the appointment of the independent registered public accounting firm;

 

Approve, on an advisory basis, the Company’s executive compensation (the “Say on Pay” vote); and

 

Transact such other business as may properly come before the meeting.

Shareholders of record as of the close of business on August 12, 2022 (the “record date”) are entitled to vote at the annual meeting and any postponement or adjournment thereof. Please see pages 76-80 for additional information regarding accessing the meeting and how to vote your shares. You do not need to attend the virtual meeting in order to vote your shares.

Your vote is important. Please vote your proxy promptly to ensure your shares are properly represented, even if you plan to join the annual meeting. You can vote by internet, by telephone, or by requesting a printed copy of the proxy materials and using the enclosed proxy card.

We appreciate your continued confidence in our Company and look forward to your joining us virtually on October 11, 2022.

 

    

 

LOGO

    

 

Susan Street Whaley

Chief Legal Officer and Secretary

REVIEW THE PROXY STATEMENT AND VOTE IN ONE OF FOUR WAYS:

 

LOGO   

 

VIA THE INTERNET IN ADVANCE

Visit www.proxyvote.com.

  

 

LOGO

  

 

BY MAIL

Sign, date, and return the enclosed proxy card or voting instruction form.

 

LOGO

  

 

BY TELEPHONE

Call the telephone number on your

proxy card, voting instruction form, or notice.

  

 

LOGO

  

 

AT THE MEETING

Attend the annual meeting virtually. See page 78 for additional details on how to attend.

The Company’s principal executive offices are located at 1 Procter & Gamble Plaza, Cincinnati, Ohio 45202. These proxy materials are first being made available to our shareholders on August 26, 2022.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be held on October 11, 2022: This Notice of Annual Meeting, the Proxy Statement, and the 2022 Annual Report are available at www.proxyvote.com.


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            TABLE OF CONTENTS
        

 

Table of Contents

 

Proxy Summary

   i

Glossary of Terms

   1

Election of Directors

   2

Item 1. Election of Directors

   2

Corporate Governance

   11

Director Compensation

   25

Compensation  & Leadership Development Committee Report

   28

Compensation Discussion & Analysis

   29

Executive Compensation

   48

Summary Compensation Table

   48

Grants of Plan-Based Awards Table

   51

Outstanding Equity at Fiscal Year-End Table

   53

Option Exercises and Stock Vested Table

   56

Pension Benefits Table

   58

Nonqualified Deferred Compensation Table

   60

Payments upon Termination or Change in Control

   62

Pay Ratio

   66

Beneficial Ownership

   67

Audit Committee Report

   72

Board Proposals

   74

Item 2. Proposal to Ratify Appointment of the Independent Registered Public Accounting Firm

   74

Item  3. Proposal for Advisory Vote on Executive Compensation

   75

Voting and Meeting Information

   76

Other Matters

   81

Exhibits

  

Exhibit A. Reconciliation of Non-GAAP Financial Measures

   A-1

Exhibit B. The Procter & Gamble Company Audit Committee Policies

  

B-1

Forward-Looking Statements

Certain statements in this proxy statement, including estimates, projections, objectives and expected results and including statements relating to our environmental sustainability, equality and inclusion, and other ESG targets, estimates, projections, goals, commitments, and expected results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are generally identified by the words “believe,” “expect,” “anticipate,” “intend,” “opportunity,” “plan,” “project,” “will,” “should,” “could,” “would,” “likely” and similar expressions. Forward-looking statements are based on current assumptions that are subject to risks and uncertainties that may cause actual results to differ materially from the forward-looking statements, including the risks and uncertainties discussed in Item 1A—Risk Factors of the Form 10-K included in our 2022 Annual Report. Such forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise publicly any forward-looking statements, except as required by law.


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            PROXY SUMMARY
        

 

Proxy Summary

This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information you should consider. Please carefully read the entire proxy statement before voting.

Voting Matters and Board Recommendations

 

    

Voting Matter

 

  

Vote Standard

 

  

 

Board Vote

Recommendation

 

  

See

Page

 

Item 1

 

Election of Directors

  

Majority of votes cast

  

FOR EACH NOMINEE

  

2

Item 2

 

Ratification of Independent Registered Public Accounting Firm

  

Majority of votes cast

  

FOR

  

74

Item 3

 

Advisory Vote on Executive Compensation

  

Majority of votes cast

  

FOR

  

75

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.

 

LOGO

 

 

LOGO

 

 

LOGO

 

 

LOGO

 

Marketing  

Consumer

Industry/Retail

 

  Global   Corporate Governance

LOGO

 

 

LOGO

 

 

LOGO

 

 

LOGO

 

 

Leadership,

Strategy, and Risk

Management

 

 

 

Digital, Technology,

and Innovation

 

  Finance   Government/Regulatory

 

           

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

 

              2022 Proxy Statement  i  
        


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PROXY SUMMARY            
          

 

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.

 

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

Not on any Committees because the Committees are all comprised of independent Directors.

  C&LD

Compensation & Leadership Development

 
  G&PR

Governance & Public Responsibility

 
  I&T

Innovation & Technology

 
  §

The Board will determine Mr. Subramaniam’s Committee assignments upon his election.

 

 

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            PROXY SUMMARY
        

 

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

 

              2022 Proxy Statement  iii  
        


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PROXY SUMMARY            
          

 

P&G’s Integrated Growth Strategy

The Board continues to provide guidance and counsel on our integrated and mutually reinforcing strategies, which are the foundation for long-term, balanced growth and value creation.

 

We are focused on delighting consumers, customers, society, and shareholders through five strategic and integrated choices: a portfolio of daily-use products in categories where performance drives brand choice; superiority across product, package, brand communication, retail execution, and value; productivity in everything we do; constructive disruption across the value chain; and an agile, accountable, and empowered organization.

 

1. A Portfolio of Superior, Daily-Use Products

 

P&G has a focused portfolio of daily-use products—many providing cleaning, health, and hygiene benefits—in 10 categories where performance drives brand choice: Fabric Care, Home Care, Baby Care, Feminine Care, Family Care, Hair Care, Skin & Personal Care, Oral Care, Personal Health Care, and Grooming. We know how to win in these categories by delivering irresistibly superior propositions to our consumers and retail partners across product performance, packaging, brand communication, and value.

   LOGO

2. Superiority to Win with Consumers

We continue to raise the bar on all aspects of superiority—product, package, brand communication, retail execution, and value – in all price tiers where we compete. We are leveraging this superiority to grow markets, and P&G’s share in them, as a way to sustainably build the business. The ability to create new business is powerful with our retail partners as we work to jointly create value. We are committed to keep investing to strengthen the superiority of our brands across innovation, supply chains, and brand equity to deliver superior value for consumers in every price tier in which we compete.

 

LOGO

3. Ongoing Productivity

The strategic need for investment to strengthen the long-term health and competitiveness of our brands, the short-term need to manage through significant cost increases, and the ongoing need to drive balanced top- and

 

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            PROXY SUMMARY
        

 

bottom-line growth, including margin expansion, underscore the importance of productivity. We have developed a strong productivity muscle over the last decade. Productivity is part of our DNA now, which will help us address some of the challenges we face. We remain fully committed to productivity as a core driver of balanced top- and bottom-line growth and strong cash generation.

4. A Constructive Disruption Mindset

Success in our highly competitive industry also requires agility that comes with a mindset of constructive disruption, a willingness to change, adapt, and create new trends and technologies that will shape our industry for the future. A mindset of constructive disruption is even more important in this challenging environment. Importantly, we apply this mindset not only to our product innovation but also to our broader brand building approach, launching products that address changing consumer habits, reinventing how we buy and measure media to improve cost and efficiency, and using data and analytics to drive greater precision and effectiveness in our advertising.

5. An Empowered, Agile, and Accountable Organization

We strive for an empowered, agile, and accountable organization with little overlap or redundancy—flowing to new demands and seamlessly supporting each other, through a culture of equality and inclusion, to deliver against our priorities around the world. P&G is organized around five industry-based Sector Business Units (SBUs). These five sectors manage our 10 product categories, with full sales, profit, cash, and value creation responsibility for our largest and most profitable markets – called Focus Markets. Enterprise Markets, which represent the rest of the world, are a separate unit with sales, profit, and value creation responsibility. This structure, and its resulting organizational speed and focus, has allowed us to manage through the challenges and headwinds we are experiencing. We continue to believe that this structure – with the SBUs squarely concentrated on Focus Markets while Enterprise Markets are run as a separate operating unit – is the best way to navigate successfully through the increasingly dynamic world in which we live.

 

LOGO

Strengthening Our Strategy

One of the most important things about our strategy is that it is inherently dynamic, not static. It requires being responsive to changing consumer needs and habits. It demands we serve evolving customer needs in rapidly transforming channels. Going forward, we have identified four areas of focus:

 

   

Supply. We are working to improve our supply chain capacity, agility, cost efficiency, and resilience for a new reality and a new age.

 

   

Environmental Sustainability. We are integrating sustainability into our product, packaging, and supply chain innovation work to develop superior offerings that allow consumers to reduce their footprint without tradeoffs in product performance.

 

   

Digital Acumen. We are increasing our skill set and toolkit to drive consumer and customer preference, reduce cost, and enable rapid and efficient decision making.

 

   

Superior Employee Value Equation. We are creating a superior value equation for all gender identities, races, ethnicities, sexual orientations, ages, and abilities – for all roles – to continue to attract, retain, and develop the best talent.

 

              2022 Proxy Statement  v  
        


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These are not new or separate strategies. They are necessary elements of focus in continuing to build superiority, in reducing cost to enable investment and value creation, and in strengthening our organization. They are part of the constructive disruption we must continue to lead.

Serving Our Stakeholders

Ultimately, in the ever more complex world in which we operate, we must endeavor to balance the needs of an increasing number of stakeholders—consumers, customers, employees, society, and shareholders. Serving the needs of each of these constituents in a balanced way will not be easy, but we aim to do so and to thrive, by rooting our work in our integrated growth strategy. We are committed to these strategies and guided by our Purpose, Values, and Principles as we continue to step forward, not back, into the challenges of the changing world around us. We are doing this in our interest, in society’s interest, and in the interest of our long-term shareholders.

ESG: Active Board Oversight, Ongoing Stakeholder Engagement, and a Continuing Commitment to Transparency

We serve shareholders and investors and, in doing so, serve consumers, employees, business partners, suppliers, communities, governments, and the broader world around us. Much of this work falls under the scope of our Environmental, Social, and Governance (ESG) efforts, which are integrated into our business and strategy. Below are some highlights of our Board’s active involvement in our ESG work, our engagement with stakeholders throughout the year, and the ways we have continued our commitment to transparency.

Active Board Oversight of ESG

The Board and its Committees are actively engaged in our environmental and social efforts, in addition to their critical governance oversight role. This year, the G&PR Committee reviewed the Board’s and Committees’ coverage of significant ESG topics to ensure appropriate Board awareness of external developments and oversight of Company efforts regarding these important matters. We describe in more detail on pages 15-18 the specific aspects of ESG that our Committees oversee. Highlights of Board and Committee engagement this year include:

 

Board of Directors

 

  Reviewed the Company’s ESG strategy and key risks and opportunities related to ESG focus areas

 

  Discussed the Company’s strategy and progress in sustainable packaging innovation

 

  Engaged on the Company’s publication of its Climate Transition Action Plan

  LOGO  

Reviewed new and proposed ESG disclosure and diligence requirements, including the Company’s plans for reporting compliance

 

Discussed the Company’s progress on gender and U.S. multicultural representation at various levels, reviewing the programs in place to continue advancement

 

Examined and discussed the Company’s sourcing strategy for forestry-related commodities and ongoing responsible sourcing priorities

 

Reviewed Company efforts to deliver irresistible superiority while providing environmentally conscious and socially responsible products

 

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            PROXY SUMMARY
        

 

In their oversight role, Directors ask questions, examine our thinking, provide strategic input, and give guidance informed by their diverse skills, experiences, and backgrounds. The Board’s engagement helps ensure that P&G’s efforts in these areas remain closely linked to our broader Company strategy in a way that serves the Company’s goal of balanced, long-term growth and value creation for its shareholders.

Ongoing Stakeholder Engagement

This year, we spoke with many of our shareholders, including most of our top 20 institutional holders, on matters of importance to them. In our conversations, they shared feedback on our efforts, impact, and disclosures across several aspects of ESG. We also continued to respond to inquiries received from other shareholders and stakeholders, sharing our work and approach and inviting further input. Below are some of the key themes we heard and related Company actions:

 

 

Key Themes

 

  Importance of Board engagement in and oversight of ESG risks and opportunities

 

  Desire for ongoing transparency around the Company’s climate and forestry efforts

 

  Significance of Board diversity, both in skills and experience and in background and related characteristics

 

 

Key Actions

 

  G&PR Committee reviewed the Board’s and Committees’ coverage of significant ESG topics, and the Company expanded disclosure of this oversight, including in this proxy statement

 

  Announced our 2040 net zero ambition and published our Climate Transition Action Plan, which describes the Company’s ongoing efforts toward reducing greenhouse gas emissions across scopes 1 and 2 and elements of scope 3

 

  In July 2022, published an updated Forestry Practices Report, which summarizes key forestry commitments and new actions taken during this past fiscal year

 

  Announced a new Strategy Toward a Water Positive Future, including a global portfolio of water restoration projects and two new 2030 goals to address water scarcity

 

  Engaged in ongoing Board refreshment and recruitment efforts, with a focus on candidates who bring unique skills and perspectives, in addition to their broad leadership and business expertise

 

  Included an ESG Factor for senior executives in the STAR award program, as described further on page 35.

 

Continuing Commitment to Meaningful Transparency

Meaningful transparency is an important aspect of serving our investors and stakeholders. In response to stakeholder feedback and to help strengthen our broader efforts, we again enhanced and expanded our ESG-related disclosures this year:

 

    Expanded and updated our ESG Portal on www.pginvestor.com/esg, simplifying navigation and providing even easier access to data and reporting across topics like climate, forestry, packaging, water, diversity, and governance.

 

    Published our Climate Transition Action Plan, which includes a long-term objective of net zero emissions for scopes 1 and 2 and elements of scope 3 and includes interim goals to help us pace our progress.
    Responded to the CDP-Forestry survey for wood pulp and palm oil, receiving A- and B scores respectively.

 

    Published on our ESG Portal an expanded overview of P&G’s Approach to Tax, discussing the Company’s global tax contribution, operations, and core tax principles.

 

    In July 2022, published an updated Forestry Practices Report, underscoring the Company’s commitment to continually refreshing and strengthening our responsible forestry practices.
 

 

We will continue to engage with our many stakeholders as we look for opportunities to serve consumers and our communities, in the interests of our long-term shareholders and our many other stakeholders.

 

              2022 Proxy Statement  vii  
        


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PROXY SUMMARY            
          

 

 

 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

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.

 

 

 

 ESG and Incentive Compensation

To reinforce our key commitments to ESG initiatives, the C&LD Committee elected at its August 2021 meeting to add an ESG Factor to be applied to the STAR award for senior executives beginning this fiscal year. The ESG Factor adjusts the Company Factor

portion of the STAR award as a multiplier in the range of 80% to 120%, based on the assessment of the Company’s progress toward certain long-term Equality & Inclusion and Environmental Sustainability goals. For more information, see page 35.

 

 

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            GLOSSARY OF TERMS
        

 

Glossary of Terms

Commonly Used Terms in this Proxy Statement

 

C&LD

   Compensation & Leadership Development

CEO

   Chief Executive Officer

CFO

   Chief Financial Officer

CHRO

   Chief Human Resources Officer

CLO

   Chief Legal Officer

COO

   Chief Operating Officer

EDCP

   Executive Deferred Compensation Plan

EGLIP

   Executive Group Life Insurance Program

EPS

   Earnings Per Share

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

 

              2022 Proxy Statement  1  
        


Table of Contents
ELECTION OF DIRECTORS            
          

 

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

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.

 

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            ELECTION OF DIRECTORS
        

 

Our Director Nominees’ Skills, Experience, and Background

 

LOGO

 

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.

  

LOGO

 

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.

  

LOGO

 

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.

 

LOGO

 

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.

  

LOGO

 

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.

 

LOGO

 

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.

  

LOGO

 

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.

  

LOGO

 

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.

 

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ELECTION OF DIRECTORS            
          

 

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.

 

 Skills & Experience   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO
                         

LOGO

  

Marketing

     

 

 

 

 

     

 

                         

LOGO

  

Consumer

Industry/Retail

   

 

 

 

 

 

 

 

   
                         

LOGO

  

Global

 

     

         

 

 

                         

LOGO

  

Corporate Governance

   

       

   

 

   

                         

LOGO

  

Leadership, Strategy,

and Risk Management

 

 

 

 

 

 

 

 

 

 

 

                         

LOGO

  

Digital, Technology,

and Innovation

     

 

 

         

 
                         

LOGO

  

Finance

 

             

 

   

                         

LOGO

  

Government/

Regulatory

 

 

                 
                       
 Background   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO
 

 

   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

 

LOGO

 

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            ELECTION OF DIRECTORS
        

 

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.

 

  LOGO   

 

B. Marc Allen

 

INDEPENDENT DIRECTOR

SINCE 2021

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

  Audit
  Innovation & Technology

  LOGO

  

 

Angela F. Braly

 

INDEPENDENT DIRECTOR

SINCE 2009

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

  ExxonMobil Corp. (since 2016)
  Brookfield Asset Management, Inc. (since 2015)

 

  Lowe’s Companies (2013 to 2021)

Committees

  Governance & Public Responsibility (Chair)
  Audit
 

 

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ELECTION OF DIRECTORS            
          

 

 

  LOGO

  

 

Amy L. Chang

 

INDEPENDENT DIRECTOR

SINCE 2017

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

  The Walt Disney Company (since 2021)
  Marqeta, Inc. (since 2021)

 

  Cisco Systems, Inc. (2016 to 2018)

Committees

  Governance & Public Responsibility
  Innovation & Technology

  LOGO

  

 

Joseph Jimenez

 

INDEPENDENT DIRECTOR

SINCE 2018 

 

LEAD DIRECTOR SINCE 2021

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

  Graphite Bio, Inc. (since 2020)*
  Century Therapeutics, Inc. (since 2019)*
  General Motors Company (since 2015)

Committees

  Compensation & Leadership Development
  Innovation & Technology

 

*became

public in 2021

 

 

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            ELECTION OF DIRECTORS
        

 

 

  LOGO

  

 

Christopher Kempczinski

 

INDEPENDENT DIRECTOR

SINCE 2021

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

  McDonald’s Corporation (since 2019)

Committees

  Audit
  Compensation & Leadership Development

  LOGO

  

 

Debra L. Lee

 

INDEPENDENT DIRECTOR

SINCE 2020

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

  Warner Bros. Discovery (since April 2022)
  Burberry Group plc (since 2019)
  Marriott International, Inc. (since 2004)

 

  AT&T, Inc. (2019 to April 2022)
  Twitter, Inc. (2016 to 2019)
  WGL Holdings, Inc. (2000 to 2018)

Committees

  Compensation & Leadership Development
  Governance & Public Responsibility
 

 

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ELECTION OF DIRECTORS            
          

 

 

  LOGO

  

 

Terry J. Lundgren

 

INDEPENDENT DIRECTOR

SINCE 2013

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

  Macy’s, Inc. (2003 to 2018)

Committees

  Compensation & Leadership Development (Chair)
  Innovation & Technology

  LOGO

 

 

Christine M. McCarthy

 

INDEPENDENT DIRECTOR

SINCE 2019

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

  Audit
  Compensation & Leadership Development
 

 

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            ELECTION OF DIRECTORS
        

 

 

  LOGO

  

 

Jon R. Moeller

 

DIRECTOR SINCE

2021

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

  Monsanto Company (2011 to 2018)

  LOGO

  

 

Rajesh Subramaniam

 

DIRECTOR NOMINEE

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

  FedEx Corporation (since 2020)

 

  First Horizon Corporation (2016 to August 2022)
 

 

              2022 Proxy Statement  9  
        


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ELECTION OF DIRECTORS            
          

 

 

  LOGO

  

 

Patricia A. Woertz (Pat)

 

INDEPENDENT DIRECTOR

SINCE 2008

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

  3M Company (2016 to May 2022)
  Royal Dutch Shell plc (2014 to 2017)

Committees

  Audit (Chair)
  Governance & Public Responsibility
 

 

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            CORPORATE GOVERNANCE
        

 

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.

Shareholder Engagement

We engage with our shareholders throughout the year, proactively seeking input and perspective on the Company’s progress and practices and responding to requests for information on various topics of shareholder interest. These engagements often inform our corporate practices, help sharpen our thinking, and strengthen our approach to long-term value creation. We value these opportunities for engagement and our relationships with all our shareholders.

In general, we approach this work through a cycle of:

 

   

Outreach and Engagement

Senior management, our investor relations team, and subject matter experts from the Company maintain a year-round dialogue with investors to gain their perspectives on current issues and address any questions or concerns, and we make our Directors available for engagement with shareholders when appropriate. These engagements cover a variety of topics, including corporate strategy, risk oversight, corporate governance, sustainability practices, workforce policies, and executive compensation.

 

   

Review and Evaluation

We assess the feedback we receive from investors and share it with senior management and the Board. We also discuss key aspects with the appropriate Board Committee, reviewing, for example, compensation-related comments and questions with the C&LD Committee and input regarding corporate governance or environmental sustainability matters with the G&PR Committee.

 

   

Updates and Action

We consider feedback received as we update our policies, practices, and disclosures. For example, in response to shareholder requests, we published the Company’s Climate Transition Action Plan earlier this year. We also published an updated Forestry Practices Report in July 2022 and released our Strategy Toward a Water Positive Future. On an ongoing basis, we continue to improve the utility of the reporting made available on our ESG Portal.

We will continue our shareholder engagement during FY 2022-23, including participation at analyst meetings and conferences. The Company’s top 100 institutional shareholders collectively own over 50% of the Company’s outstanding shares of common stock, and we generally focus our proactive shareholder outreach efforts on these shareholders. We conduct meetings with institutional shareholders in person, via telephone calls, and one-on-one at conferences throughout the year. We also routinely respond to individual shareholders and other stakeholders who provide feedback about our business.

We remain committed to these ongoing discussions and welcome feedback from all shareholders, who can reach our Investor Relations team by visiting www.pginvestor.com or contact our Directors or executive officers as described on page 24.

The Board’s Leadership Structure

The Company’s Board retains discretion to determine whether the same individual should serve as both Chief Executive Officer (“CEO”) and Chairman of the Board or whether the roles should be separated and to determine the nature and scope of the role of the Lead Director. This approach allows the Board to use its considerable experience and knowledge to elect the most qualified Director as Chairman of the Board, while maintaining the ability to separate the Chairman of the Board and CEO roles when appropriate, as the roles have been in previous periods.

 

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The Board regularly considers this discretionary structure and whether to combine or separate the roles, depending on which leadership structure best serves the Company and its shareholders. The Board believes this discretion, including the flexibility to make this determination at any given point, best enables it to promote the long-term interests of the Company and its shareholders.

In connection with David Taylor’s retirement as Executive Chairman of the Board, the Board reevaluated its leadership structure. After thoughtful review and discussion, the non-employee Directors concluded that it was in the best interests of the Company and its shareholders to recombine the roles of Chairman of the Board and CEO, with Mr. Moeller serving as Chairman of the Board in addition to his role as President and CEO. This action reflects the Board’s confidence in Mr. Moeller’s leadership, his depth of experience in the boardroom, and the importance of consistent focus on the Company’s strategy and operations afforded by his unified leadership. During Mr. Taylor’s tenure as Executive Chairman, Mr. Taylor and Mr. Moeller worked collaboratively to provide both Board and Company leadership in the face of significant and continuing external challenges and disruptions. With Mr. Taylor’s retirement, the Board believes Mr. Moeller is well positioned to provide strategic and effective leadership of both the Board and the Company at this time, in the best interests of its shareholders. As before, the Board retains its discretion to separate the Chairman and CEO roles in the future, depending on which leadership structure best serves the long-term interests of the Company and its shareholders at that time.

Lead Independent Director

When the Board determines that the same individual should hold the positions of CEO and Chairman of the Board or if the Chairman of the Board is not independent, the independent Directors of the Board elect for an annual term a Lead Director from among the independent Directors. The Lead Director role is significant, with responsibilities consistent with accepted best practices, including:

 

    Preside at all meetings of the Board in the absence of, or upon the request of, the Chairman of the Board
    Lead regular executive sessions of the independent Directors
    Provide input to and approve agendas for the Board meetings and information sent to the Board
    Approve meeting schedules to assure sufficient time for discussion of all agenda items
    Call special meetings of the Board as necessary to address important or urgent Company issues
    Call meetings of the non-employee and/or independent Directors, with appropriate notice
    Advise the G&PR Committee and the Chairman of the Board on the membership of the various Board Committees and the selection of Committee chairpersons
    Advise the Chairman of the Board on the retention of advisors and consultants who report directly to the Board
    Advise the Chairman of the Board and CEO, as appropriate, on issues discussed at executive sessions of non-employee and/or independent Directors
    Review with the CEO, throughout the year, the non-employee Directors’ ongoing evaluation of and feedback on the CEO’s performance
    Serve as principal liaison between the non-employee and/or independent Directors, as a group, and the Chairman of the Board and CEO, as necessary
    Engage when necessary and appropriate, after consultation with the Chairman of the Board and CEO, as the liaison between the Board and the Company’s shareholders and other stakeholders
    Foster open dialogue and constructive feedback among the independent Directors
    Facilitate cross-Committee feedback
    Select an interim Lead Director to preside over meetings at which he or she cannot be present
 

 

Mr. Jimenez serves as the Board’s current Lead Director, having been appointed to the role following the retirement of W. James McNerney, Jr., at the conclusion of the Company’s 2021 annual meeting of shareholders. In his capacity as Lead Director, Mr. Jimenez has worked closely with both Mr. Taylor and Mr. Moeller to ensure effective leadership, appropriate engagement, and meaningful oversight by the Board. Led by Mr. Jimenez—and Mr. McNerney before him—the non-employee Directors met six times during FY2021-22 in regularly scheduled executive sessions (without the presence of Mr. Taylor, Mr. Moeller, or other employees of the Company) to discuss various matters related to oversight, Board affairs, succession planning, and CEO performance. Mr. Jimenez continues to foster an open and constructive dialogue among the independent Directors and advises Mr. Moeller

 

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(and Mr. Taylor during his tenure as Executive Chairman) of the independent Directors’ discussions, including performance feedback, and follows up on meeting outcomes and actions.

In April 2022, in conjunction with the Board’s decision to recombine the Chairman and CEO roles upon Mr. Taylor’s retirement as Executive Chairman, the non-employee Directors determined that Mr. Jimenez should continue to serve as Lead Director. The Board believes that Mr. Jimenez and Mr. Moeller will continue to work well together in these respective roles. Mr. Jimenez is an experienced executive and Director, having served as CEO of Novartis AG, in leadership positions with H.J. Heinz Company and ConAgra Foods, and as a Director of several public companies. He is recognized for his innovation and leadership skills and has provided important insight and guidance to the Company and the Board during his tenure as a Director. Mr. Jimenez is a thoughtful, highly engaged Director, and the Board is confident that as Lead Director, he will continue to work in close partnership with Mr. Moeller to ensure strong and independent oversight of ongoing Board matters and effective collaboration among the Directors. The Board will continue to periodically evaluate its leadership structure.

Board Evaluation

In addition to regularly reviewing its leadership structure, the Board conducts an annual self-assessment of its overall functioning and effectiveness. In order to maximize input and facilitate candid, useful feedback, the Company’s Chief Legal Officer conducts one-on-one interviews with each Director. This feedback includes comments on overall Board performance, Board priorities, interaction with management, Board discussion topics, agendas, and processes, Board composition, Director contributions, and how to further improve overall Board operations. The results of these interviews are aggregated and anonymized and then shared with the full Board for review, discussion, and appropriate action.

The Board addresses items raised both through this formal evaluation process and through informal feedback as warranted. For example, this year, Directors sought even deeper understanding of the Company’s cybersecurity programs and capabilities, culminating in their participation in a cybersecurity tabletop exercise. The Directors also shared continued prioritization of ESG topics and coverage, including ensuring appropriate Committee scope and oversight responsibilities. Finally, if during the evaluation process, any issue with regard to an individual Director is identified, the Chairman or Lead Director will address such issue with the individual Director.

Director Independence

The Board has determined that all of the Company’s Director nominees, with the exception of Mr. Moeller, are independent under NYSE’s listing standards and the Independence Guidelines. All members of the Board’s Audit, Compensation & Leadership Development, Governance & Public Responsibility, and Innovation & Technology Committees are independent under the NYSE listing standards and Independence Guidelines. All members of the Audit Committee and C&LD Committee are also compliant with the SEC enhanced independence requirements for audit committee members and compensation committee members respectively. The Board of Directors has determined that Ms. Woertz and Ms. McCarthy meet the criteria for “Audit Committee Financial Expert” as defined by SEC rules. The Board of Directors has also determined that all Audit Committee members are financially literate.

In making these independence determinations, the Board applied the NYSE listing standards and the categorical independence standards contained in the Board of Directors’ Guidelines for Determining the Independence of its Members (the “Independence Guidelines”). Under the Independence Guidelines, certain relationships were considered immaterial and, therefore, were not considered by the Board in determining independence, but were reported to the Chair of the G&PR Committee. Applying the NYSE listing standards and the Independence Guidelines, the Board determined that there are no transactions, relationships, or arrangements that would impair the independence or judgment of any of the Director nominees deemed independent by the Board.

Mr. Moeller is Chairman of the Board, President and CEO of the Company. As an employee of the Company, he cannot be deemed independent under the NYSE listing standards or the Independence Guidelines.

Service on Other Public Boards

The Board believes that service on the boards of other public companies provides valuable governance and leadership experience that ultimately benefits the Company. The Board also recognizes that outside public board

 

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service requires a significant commitment of time and attention, and therefore, in accordance with best governance practices, limits Director participation on other public boards. Under the Corporate Governance Guidelines, Directors who are active CEOs of other public companies may sit on no more than two additional outside public boards (including his/her own company board), and other non-employee Directors may sit on no more than three additional outside public boards. The Board must approve any exception. This practice helps ensure that our Directors can give appropriate time and attention to the affairs of the Company. In addition, when nominating a Director for service on the Board or for re-election, the G&PR Committee considers whether, in light of other commitments, the nominee will have adequate time to serve as a Director of the Company. We expect each Director to demonstrate their strong engagement and high attendance and to have adequate time to devote to the affairs of the Company; and each of our Director nominees is currently compliant with the Company’s Corporate Governance Guidelines regarding their service on other company boards.

Board Meetings and Committees of the Board

Our Directors take seriously their commitment to active oversight, meaningful engagement, and effective stewardship of the long-term interests of the Company and its shareholders. The Chairman of the Board and Lead Director set Board agendas in advance to ensure that appropriate subjects are covered with time for meaningful discussion. Committee Chairs also work closely with management to set agendas for Committee meetings, ensuring that each Committee reviews relevant subjects in a timely and meaningful manner. Directors receive comprehensive materials in advance of Board and Committee meetings and review these materials before each meeting. This process allows for focused, active discussions during meetings, instead of lengthy, passive presentations.

During the fiscal year ended June 30, 2022, the Board held seven meetings, and the Committees of the Board collectively held 24 meetings, for a total of 31 meetings. Each incumbent Director attended more than 75% of the aggregate meetings of the Board and the Committees on which they served, with average attendance of about 98% among incumbent Directors. The Board expects all Directors to attend the annual meeting of shareholders, and all Directors then serving attended the October 12, 2021 annual meeting.

The table below shows the current membership of each Committee of the Board and the number of meetings each Committee held during the fiscal year ended June 30, 2022. The Board will determine Committee assignments for Mr. Subramaniam upon his election.

 

Name

   Board    Audit   

Compensation

& Leadership
Development

  

Governance &
Public

Responsibility

  

Innovation &

Technology

B. Marc Allen

  

  

            

Angela F. Braly

  

  

       

Chair

    

Amy L. Chang

  

            

  

Joseph Jimenez

  

       

       

Christopher Kempczinski

  

  

  

         

Debra L. Lee

  

       

  

    

Terry J. Lundgren

  

       

Chair

       

Christine M. McCarthy

  

  

  

         

Jon R. Moeller

  

                   

Patricia A. Woertz

  

  

Chair

       

    

Total FY 2021-22 Meetings

  

7

  

8

  

7

  

7

  

2

Margaret C. Whitman, who resigned from the Board effective upon her confirmation as the United States Ambassador to Kenya, served as Chair of the I&T Committee and as a member of the Governance & Public Responsibility Committee during FY2021-22. The Board will designate a new I&T Committee Chair to replace Ms. Whitman.

To assist the Board in discharging its duties and to facilitate deeper understanding and engagement in certain key areas of oversight, the Board has established four standing Committees. Each Committee is fully independent

 

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under the NYSE listing standards and the Independence Guidelines, which can be found at www.pg.com. Each Committee has a charter that sets out its primary purposes, duties, and responsibilities. These charters can be found in the corporate governance section of the Company’s website at www.pg.com.

 

Audit Committee

 

 

Key Responsibilities

 

Assisting the Board in oversight of:

 

  Accounting, financial reporting and disclosure processes, and adequacy of systems of disclosure and internal controls established by management

 

  The quality and integrity of the Company’s financial statements

 

  The Company’s compliance with legal, tax, and regulatory requirements

 

  The Company’s overall risk management profile, including with respect to information security

 

  The independent auditor’s qualifications and independence

 

  The performance of the Company’s internal audit function and the independent auditor

 

  The performance of the Company’s ethics and compliance function

 

The Audit Committee also prepares the Report of the Audit Committee to be included in the Company’s proxy statement. At each meeting, representatives of Deloitte & Touche LLP, the Company’s independent registered public accounting firm, and finance management were present to review accounting, control, auditing, and financial reporting matters. During certain of these meetings, the Audit Committee also held private sessions with the Company’s CFO, CLO, COO, Chief Ethics & Compliance Officer, Chief Audit Executive, and representatives of Deloitte & Touche LLP.

 

 

Recent Activities

 

  Comprehensive review of the Company’s information security program with the Chief Information Officer

 

  Discussion of new and proposed ESG disclosure and diligence laws and regulations, including Company plans for compliance

 

ESG Focus Areas

 

  Disclosure of ESG metrics and related information in financial and regulatory filings, including appropriate controls and procedures

 

  Integration of ESG topics into the Company’s Enterprise Risk Management program

 

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Compensation & Leadership Development Committee

Key Responsibilities

 

  Oversees the Company’s overall compensation practices, principles, and policies, including base pay, short- and long-term incentive pay, retirement benefits, perquisites, severance arrangements, recoupment policies, stock ownership guidelines, and stock holding requirements, if any, and their specific application to principal officers elected by the Board and to non-employee Directors

 

  Assists the Board in its oversight of the development, implementation, and effectiveness of the Company’s policies and strategies related to its human capital management, including matters related to diversity, equality, and inclusion, and talent management

 

  Assists the Board in leadership development, succession planning, and continuity planning for principal officers

 

The CEO makes recommendations to the C&LD Committee regarding the compensation elements of the principal officers (other than his own compensation) based on Company performance, individual performance, and input from Company management and the Committee’s independent compensation consultant. The C&LD Committee makes all final decisions regarding compensation for principal officers and makes a recommendation to the Board regarding the shareholder votes related to executive compensation. For more details regarding principal officer compensation or the C&LD Committee’s process for making decisions regarding the compensation of principal officers, please see the Compensation Discussion & Analysis section beginning on page 29 of this proxy statement. The C&LD Committee retains an independent compensation consultant, hired directly by the Committee, to advise it regarding executive compensation matters.

 

Recent Activities

 

  Discussed the Company’s progress on gender and U.S. multicultural representation at various levels, including benefits and training programs designed to continue advancement

 

  With the full Board, reviewed the impact of events like the pandemic and the war in Ukraine on the Company’s workforce and the Company’s response

 

ESG Focus Areas

 

  Incorporation of ESG goals and metrics into executive compensation

 

  Human capital management, including pay equity and diversity, equality, and inclusion

 

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Governance & Public Responsibility Committee

Key Responsibilities

 

Has primary responsibility for:

 

  Identifying individuals qualified to become Directors

 

  Recommending when new members should be added to the Board and individuals to fill vacant Board positions

 

  Recommending to the Board the Director nominees for the next annual meeting of shareholders and whether to accept the resignation of any incumbent Director nominee who received a greater number of “against” votes than “for” votes in a non-contested election

 

  Recommending Board Committees and Committee assignments, including assignments and succession planning for Committee Chairs

 

  Periodically reviewing and recommending updates to the Corporate Governance Guidelines

 

  Educating the Board and the Company on applicable governance laws and regulations

 

  Assisting the Board and the Company in interpreting and applying the Corporate Governance Guidelines and other issues related to Board governance

 

  Evaluating the Board and the Directors

 

Oversees the Company’s strategies, work, and reporting related to its public responsibility, including:

 

  Overseeing the Company’s commitment to making a meaningful impact around the world through efforts in the areas of social investments and environmental sustainability, by reviewing strategies and plans for improving lives in ways that enable people to thrive and that increase their quality of living

 

  Overseeing the Company’s community and government relations

 

  Overseeing the Company’s product quality and quality assurance systems

 

  Overseeing protection of the Company’s corporate reputation and other matters of importance to the Company and its stakeholders

 

Recent Activities

 

  Reviewed and provided input to the Company’s sourcing strategy for forest-related commodities and ongoing priorities

 

  Engaged with Company leaders and subject matter experts on the preparation of the Company’s Climate Transition Action Plan

 

  Continued ongoing review of short-term and long-term Board refreshment needs and ideal candidate skill, experience, and background profiles

 

ESG Focus Areas

 

  Sustainability goals—including those relating to climate, water, forestry, and packaging—and reviewing progress and interventions

 

  Human rights and responsible sourcing

 

  Community impact efforts

 

  ESG impact on corporate reputation

 

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Innovation & Technology Committee

 

 

Key Responsibilities

 

Reviews and makes recommendations to the Board on major strategies for technical and commercial innovation to increase shareholder value and has responsibility for overseeing:

 

  The Company’s approach to technical and commercial innovation

 

  The innovation, technology development, and acquisition process to assure ongoing business growth

 

  Development of measurement and tracking systems that are important to successful product and commercial innovation

 

and reviews:

 

  Product and package performance via a holistic product assessment

 

  Historical tracking of initiatives versus targets, and the impact of initiatives on brand growth

 

  The Company’s forward-looking innovation portfolio

 

Recent Activities

 

  Discussed Company efforts to deliver irresistible superiority while providing environmentally conscious and socially responsible products

 

  Reviewed the use of advanced digital technologies to enable rapid insights and innovation

 

ESG Focus Areas

 

  Incorporation of sustainability into product innovation strategy

 

  Development of sustainable packaging

 

  Impact of consumer insights and preferences for sustainable products

 

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The Board’s Oversight of Risk

The Company’s senior management has the responsibility to develop and implement the Company’s strategic plans and to identify, evaluate, manage, and mitigate the risks inherent in those plans. It is the responsibility of the Board to oversee the development and execution of the Company’s strategic plans and to understand the associated risks and the steps that senior management is taking to manage and mitigate those risks. The Board takes an active approach to its role in overseeing the development and execution of the Company’s business strategies as well as its risk oversight role.

This approach is bolstered by the Board’s leadership and Committee structure, which ensures the full Board properly considers and evaluates potential enterprise risks under the auspices of the Chairman of the Board and Lead Director, and further considers and evaluates certain risks at the Committee level.

In addition, the Board has delegated certain risk management oversight responsibilities to specific Board Committees, each of which reports regularly to the full Board. In performing these oversight responsibilities, each Committee has full access to management, as well as the ability to engage independent advisors. Additionally, each Committee ensures that management has developed sufficient plans to mitigate the risks identified. In general, the Committees oversee:

 

Audit Committee

  Oversees the Company’s overall risk management process, focusing on accounting and financial controls, financial statement integrity, information security, cybersecurity, legal and regulatory compliance, tax policy and compliance, business continuity planning, and ethics and compliance programs, and routinely discusses the Company’s risk profile, risk management, and exposure with management, internal auditors, and our independent registered public accounting firm.
 

Compensation & Leadership Development Committee

  Oversees risks related to the development of and succession planning for the Company’s executive officers, risks associated with the Company’s equality and inclusion practices and policies, and risks associated with the Company’s compensation policies and practices, as discussed further below under “Compensation-Related Risk.”
 

Governance & Public Responsibility Committee

  Oversees risks related to the Company’s corporate governance structure and processes, including Director qualifications, Board and Committee succession planning, and independence, as well as risks related to product quality, public policy, social issues, environmental sustainability, and the Company’s reputation.
 

Innovation & Technology Committee

  Oversees risks related to emerging technologies, the changing media landscape, the Company’s integration of new technology, ingredient safety, and our overall innovation strategy

 

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As part of its strategic risk management oversight, the Board and its Committees conduct a number of reviews throughout the year to ensure that the Company’s strategy and risk management is appropriate and prudent, including:

 

   

A comprehensive annual review of the Company’s overall strategic plan, with updates throughout the year.

 

   

Direct discussions with the Chairman and CEO, in semi-executive sessions held at six Board meetings, about the state of the business.

 

   

Reviews of the strategic plans and results for the Company’s business sectors and Enterprise Markets, including the risks associated with these strategic plans, at Board meetings during the year.

 

   

Ongoing Audit Committee updates from senior management on cybersecurity activities and programs, including an at least annual briefing by the Chief Information Officer on the Company’s cybersecurity risk management program, which continually analyzes emerging cybersecurity threats, and updates on the Company’s plans and strategies to address them.

 

   

Ongoing reviews of succession plans, as part of its responsibility for leadership succession planning for the Company’s most senior officers, including the CEO.

 

   

Review of the Company’s strategic supply chain operations, key risks, and programs to further increase resilience.

 

   

Annual review of the Company’s key legal and compliance risks, including mitigation strategies and compliance priorities.

 

   

Periodic review of key reputational and operational risks and strategies, including elements of the Company’s environmental sustainability and equality & inclusion programs, with more detailed reviews conducted by the relevant Committees.

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,

 

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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.

 

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Additional Governance Matters

Company Policy Regarding Employee, Officer, and Director Hedging

The Company’s Global Insider Trading Policy generally prohibits Directors, senior executives, other designated employees, and certain persons or entities related to these individuals, from engaging in hedging, short sales, pledging, collars, or any other derivative transaction involving the use of market investments to manage the risk of price movements in Company stock or to leverage the potential return of a predicted move in Company stock. Exceptions to this general policy, which are rarely requested or granted, require approval from the Company’s CLO, and none currently exist.

Review and Approval of Transactions with Related Persons

The Worldwide Business Conduct Manual requires that all employees and Directors disclose all potential conflicts of interest and promptly take actions to eliminate any such conflict when the Company requests. In addition, the Company has adopted a written Related Person Transaction Policy that prohibits any of the Company’s executive officers, Directors, or any of their immediate family members from entering into a transaction with the Company, except in accordance with the policy.

Under our Related Person Transaction Policy, the CLO has primary responsibility for determining whether, based on the facts and circumstances, a related person has a direct or indirect material interest in a proposed or existing transaction. If the CLO determines that the related person would have a direct or indirect material interest in the transaction, the CLO must present the transaction to the Audit Committee for review or, if impracticable under the circumstances, to the Chair of the Audit Committee, who must then either approve or reject the transaction in accordance with the terms of the policy. While making this determination, the Audit Committee must consider all relevant information available and, as appropriate, take into consideration the following:

 

   

whether the transaction was undertaken in the ordinary course of business of the Company

   

whether the transaction was initiated by the Company or the related person

   

whether the transaction contains terms no less favorable to the Company than terms that could have been reached with an unrelated third party

   

the purpose of the transaction and its potential benefits to the Company

   

the approximate dollar value of the transaction, particularly as it involves the related person

   

the related person’s interest in the transaction

   

any other information regarding the related person’s interest in the transaction that would be material to investors under the circumstances

The Audit Committee may only approve the transaction if it determines that the transaction is not inconsistent with the best interests of the Company as a whole. Further, in approving any such transaction, the Audit Committee has the authority to impose any terms or conditions it deems appropriate on the Company or the related person. Absent this approval, no such transaction may be entered into by the Company with any related person. The Audit Committee has reviewed and approved the following transactions.

Deborah P. Majoras, who will retire from the Company in September 2022, served as the Company’s Chief Legal Officer and Secretary in FY 2021-22 and is married to John M. Majoras, one of approximately 900 partners in the law firm of Jones Day. The Company has hired Jones Day, in the ordinary course of business, to perform legal services. The Company’s relationship with Jones Day dates back more than 30 years and significantly precedes Ms. Majoras joining the Company as Vice President and General Counsel in 2008 from the Federal Trade Commission, where she served as Chairman. Mr. Majoras does not receive any direct compensation from the fees paid to Jones Day by the Company, his ownership in the Jones Day law firm is significantly less than 1%, and the fees paid by the Company to Jones Day in the last fiscal year were less than 1% of their annual revenues. Under the Company’s Related Person Transaction Policy, the Audit Committee reviewed and approved the continued use of Jones Day as a provider of legal services to the Company but required the Company’s CEO to approve any recommendations by Ms. Majoras to hire Jones Day for a specific legal matter. In doing so, the Committee concluded that the Majorases did not have a direct or indirect material interest in the Company’s hiring of Jones Day and that the relationship was not inconsistent with the best interests of the Company as a whole.

R. Alexandra Keith, Chief Executive Officer—Beauty and Executive Sponsor for Corporate Sustainability, is married to Christopher Keith, a long-tenured employee of the Company who currently holds the position of Senior Vice

 

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            CORPORATE GOVERNANCE
        

 

President—Brand Franchise Leader and Sustainability, Baby Care and Brand Building Organization, Baby and Feminine Care. His total compensation last year was approximately $1.8 million, consisting of salary, bonus, equity grants, and retirement and health benefits. His compensation is consistent with the Company’s overall compensation principles based on his years of experience, performance, and position within the Company. Upon Ms. Keith becoming President—Global Hair Care and Beauty Sector, the Audit Committee approved the continued employment of Mr. Keith with the Company under the Company’s Related Person Transaction Policy, concluding that his continued employment was not inconsistent with the best interests of the Company as a whole.

M. Tracey Grabowski, the Company’s Chief Human Resources Officer, is the sister-in-law of Mr. Andy Ingal, a long-tenured P&G employee who currently holds the position of Director—Sales, North America Market Operations. His total compensation last year was approximately $262,000, consisting of salary, bonus, and retirement and health benefits. His compensation is consistent with the Company’s overall compensation principles based on his years of experience, performance, and position within the Company. Upon Ms. Grabowski’s appointment as the Company’s Chief Human Resources Officer, the Audit Committee approved the continued employment of Mr. Ingal with the Company under the Company’s Related Person Transaction Policy, concluding that his continued employment was not inconsistent with the best interests of the Company as a whole.

In addition, Ms. Grabowski is the mother of James Grabowski, an employee of the Company who currently holds the position of Brand Director—Olay Body, North America. His total compensation last year was approximately $173,000, consisting of salary, bonus, and retirement and health benefits. His compensation is consistent with the Company’s overall compensation principles based on his years of experience, performance, and position within the Company. Mr. Grabowski was hired into an entry-level position with the Company through its standard hiring process prior to Ms. Grabowski’s appointment as Chief Human Resources Officer. Ms. Grabowski was not involved in Mr. Grabowski’s hiring nor has she been involved in managing his career or compensation since his hire date, other than through her involvement with the Company’s general compensation and employment programs as a whole. In anticipation of Mr. Grabowski’s total compensation exceeding $120,000 in FY 2020-21, the Audit Committee reviewed and approved the continued employment of Mr. Grabowski with the Company under the Company’s Related Person Transaction Policy, concluding that his continued employment was not inconsistent with the best interests of the Company as a whole.

Francis S. Blake, who served as a Director during a portion of FY2021-22, is the stepfather of Asher Lanier, an employee of the Company who currently holds the position of Director—Global Family Care, Market Strategy & Planning. Mr. Lanier’s total compensation last year was approximately $183,000, consisting of salary and retirement and health benefits. His compensation is consistent with the Company’s overall compensation principles based on his years of experience, performance, and position within the Company. Mr. Lanier was hired into an entry-level position with the Company, and Mr. Blake played no role in Mr. Lanier’s hiring. In addition, Mr. Blake did not directly or indirectly manage Mr. Lanier’s ongoing career or individual compensation. In anticipation of Mr. Lanier’s total compensation exceeding $120,000 in FY 2017-18, the Audit Committee reviewed and approved the continued employment of Mr. Lanier with the Company under the Company’s Related Person Transaction Policy, concluding that his continued employment was not inconsistent with the best interests of the Company as a whole.

Margaret C. Whitman, who served as a Director during FY2021-22, together with her husband, is an approximately 20% owner of FC Cincinnati, a Major League Soccer club based in Cincinnati. Ms. Whitman and her husband purchased this stake in November 2019. Prior to their investment in FC Cincinnati, the Company had in place a sponsorship agreement with the club. In spring 2020, the Company negotiated a nine-year sponsorship agreement valued at approximately $4.3 million. In spring 2021, the Company and FC Cincinnati entered into an addendum to increase the sponsorship amount by $4 million. Under these agreements, the Company paid $1,015,000 to FC Cincinnati in FY2021-22. The Company’s nine-year sponsorship was initiated prior to Ms. Whitman’s investment in FC Cincinnati; and both the agreement and addendum were entered in the normal course of business and were not influenced by Ms. Whitman. The Audit Committee reviewed and approved the Company’s initial sponsorship agreements with FC Cincinnati and the 2021 addendum under the Company’s Related Person Transaction Policy, and those approvals required that Ms. Whitman continue to remain uninvolved in the Company’s arrangements with FC Cincinnati and that any future agreements with the club be under terms

 

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CORPORATE GOVERNANCE            
          

 

substantially consistent with the Company’s other sports-related sponsorships. In doing so, the Committee concluded that the agreements were not inconsistent with the best interests of the Company as a whole.

Other than as noted above, there were no transactions, in which the Company or any of its subsidiaries was a participant, the amount involved exceeded $120,000, and any Director, Director nominee, executive officer, or any of their immediate family members had a direct or indirect material interest reportable under applicable SEC rules or that required approval of the Audit Committee under the Company’s Related Person Transaction Policy, nor are there any currently proposed.

Compensation Committee Interlocks and Insider Participation

All members of the Compensation & Leadership Development Committee during 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.

 

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            DIRECTOR COMPENSATION
        

 

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:

 

   

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

   

An annual retainer fee of $120,000 paid in quarterly increments

   

An additional annual retainer paid to the Lead Director and Chair of each committee as follows: Lead Director, $40,000; Chair of the Audit Committee, $30,000; Chair of the C&LD Committee, $25,000; Chairs of the Governance & Public Responsibility and Innovation & Technology Committees, $20,000

Non-employee members of the Board must own Company stock and/or RSUs worth six times their annual retainer. A number of the non-employee Directors were appointed or elected to the Board within the last few years. However, all non-employee Directors either meet or are on track to meet the ownership requirements within the five-year period established by the C&LD Committee.

 

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DIRECTOR COMPENSATION            
          

 

The following table and footnotes provide information regarding the compensation paid to the Company’s non-employee Directors in FY 2021-22. Directors who are employees of the Company receive no compensation for their service as Directors. For FY 2021-22, Mr. Taylor and Mr. Moeller were employee directors and did not receive a retainer, fees or a stock award.

 

Director Compensation Table

                   
    

Fees

              

Name

  

Annual
Retainer
($)

  

Committee
Chair & Lead
Director Fees
($)

  

Total Fees
Earned or
Paid in
Cash1
($)

  

Stock
Awards2
($)

  

All Other
Compensation3
($)

  

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

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,

 

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            DIRECTOR COMPENSATION
        

 

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.

 

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C&LD COMMITTEE REPORT            
          

 

C&LD Committee Report

Compensation Committee Report

The Compensation & Leadership Development Committee of the Board of Directors has reviewed and discussed the following section of this proxy statement entitled “Compensation Discussion & Analysis” with management. Based on this review and discussion, the Committee has recommended to the Board that the section entitled “Compensation Discussion & Analysis,” as it appears on the following pages, be included in this proxy statement and incorporated by reference into the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2022, dated August 5, 2022 (the “Form 10-K”).

Terry J. Lundgren, Chair

Joseph Jimenez

Christopher J. Kempczinski

Debra L. Lee

Christine M. McCarthy

 

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            COMPENSATION DISCUSSION & ANALYSIS
        

 

Compensation Discussion & Analysis

Introduction

The focus of this discussion and analysis is on the Company’s compensation philosophies and programs for its named executive officers (“NEOs”) for FY 2021-22. For each of these NEOs, the compensation described herein is for their roles during FY 2021-22. Titles reflect the roles held by each NEO on June 30, 2022.

Leadership Changes

The Board elected Mr. Moeller as President and Chief Executive Officer and Mr. Taylor as Executive Chairman, both effective November 1, 2021, and Shailesh Jejurikar was elected Chief Operating Officer, effective October 1, 2021. As announced on April 14, 2022, Mr. Taylor retired from the Company effective June 30, 2022, and Mr. Moeller was appointed Chairman of the Board effective July 1, 2022. Additionally, on April 1, 2022, Ms. Tastad stepped down from her position as CEO-Health Care and became Sector CEO, Health Care, Special Advisor. She retired from the Company on June 30, 2022.

 

LOGO   LOGO   LOGO

 

David S. Taylor

Executive Chairman of the

Board

(Retired 6/30/2022)

 

 

 

Jon R. Moeller

President and Chief Executive

Officer

 

 

 

Andre Schulten

Chief Financial Officer

 

 

LOGO   LOGO   LOGO   LOGO

 

Ma. Fatima D. Francisco

Chief Executive Officer – Baby, Feminine & Family Care, Executive Sponsor for Gender Equality

 

 

 

Shailesh Jejurikar

Chief Operating Officer

 

 

 

R. Alexandra Keith

Chief Executive Officer – Beauty, Executive Sponsor for Corporate Sustainability

 

 

 

Carolyn Tastad

Sector Chief Executive

Officer, Health Care,

Special Advisor

(Retired 6/30/2022)

 

 

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COMPENSATION DISCUSSION & ANALYSIS            
          

 

FY 2021-22 Company Performance and Key Measure Overview

Our integrated strategy continues to deliver strong results. We have a focused portfolio of daily use products that provide health, hygiene, and cleaning benefits in categories where performance drives brand choice. We are creating superior performing products that are delivered with superior packaging, consumer communication, retail execution, and value. We use productivity improvements and cost savings to fund investments in superiority, to help mitigate input cost increases, and to deliver profit margin improvement needed to deliver balanced top- and bottom-line growth. We are leading constructive disruption across the value chain, including identifying new consumer needs and addressing them in new ways. We have an empowered, agile, and accountable organization, effectively executing our integrated strategy and priorities.

The Company met or exceeded its going-in targets for its key compensation measures. This led to above-target payouts in our bonus programs.

Delivered Strong Financial Results1

 

   

Organic sales grew 7%, above both market growth and our target range of 2-4%

 

   

Core earnings per share were $5.81, up 3% versus last year, within our target range of 3-6%

 

   

Strong adjusted free cash flow productivity results of 93% were above our target of >=90%

Fiscal Year 2021-22

 

 

LOGO

Returning Value to Shareholders

 

 

LOGO

 

1 The targets mentioned in this section reflect the original FY 2021-22 financial guidance provided by the Company on July 30, 2021. FY 2021-22 actuals for Organic Sales Growth, Core EPS Growth and Adjusted Free Cash Flow Productivity were used in the calculation of Year 3 Performance Stock Program results, as further detailed on page 41. Organic Sales Growth is a measure of sales growth excluding the impacts of acquisitions and divestitures and foreign exchange from year-over-year comparisons. Core EPS Growth is a measure of the Company’s diluted net earnings per share growth excluding certain items that are not judged to be part of the Company’s sustainable results or trends. Adjusted Free Cash Flow Productivity is the ratio of adjusted free cash flow (Operating Cash Flow less Capital Expenditures and payments for the transitional tax related to the U.S. Tax Act) to Net Earnings, adjusted for early debt extinguishment charges. See Exhibit A for a reconciliation of non-GAAP measures, including details on items being adjusted.

2 Through dividends and share repurchases combined.

 

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            COMPENSATION DISCUSSION & ANALYSIS
        

 

Our Compensation Philosophy and Objectives

Our fundamental and overriding objective is to create value for our shareholders at leadership levels on a consistent long-term basis. The C&LD Committee approaches CEO and overall executive compensation with the same pay principles used to set compensation at all levels of the Company.

 

   

Emphasize Pay for Performance by aligning incentives with business strategies to reward executives who achieve or exceed Company, business unit, and individual goals, while removing any incentive to focus on a single goal to the detriment of others.

 

   

Pay Competitively by setting target compensation opportunities to be competitive with a Peer Group of other global corporations of similar size, value, and complexity.

 

   

Focus on Long-Term Success by including equity as a cornerstone of our executive pay programs and by using a combination of short-term and long-term incentives to ensure a strong connection between Company performance and actual compensation realized.

Pay for Performance Alignment

Consistent with our design principles, performance-based programs are designed to pay at 100% of target when goals are met, above target when goals are exceeded, and below target when goals are not fully met. Over the previous ten years, the average STAR payout for NEOs ranged from a low of 67% of target to a high of 185% of target. Since the inception of the PSP in 2010, the final performance result has ranged from a low of 20% to a high of 200%. For the current year, the average STAR payout for the NEOs was 135% of target, and the PSP performance result for the three years ending June 30, 2022 was 200%. Payouts under these programs were based on the results achieved as compared to the pre-established performance targets, highlighting the clear link between pay and performance that is the foundation of our compensation programs.

Compensation and Environmental, Social, and Governance (ESG) Goals

The Company’s Corporate Citizenship efforts are focused on Environmental Sustainability, Community Impact, and Equality & Inclusion, all supported by a strong foundation of Ethics & Corporate Responsibility. Our businesses in each geography have programs designed to address goals and challenges in these areas.

ESG outcomes drive various elements of our NEOs’ compensation in the areas of salary, long-term incentive awards, and annual incentive payouts. These elements are described below:

 

     
Compensation Elements   ESG Impact   ESG Elements Considered
     
Salary   CEO assesses individual contributions for NEOs and can adjust salary increase size   Individual contributions measured by performance assessment which include the areas of Equality & Inclusion and Governance
     
Long-Term Incentive (LTI) Grant   CEO assesses individual contributions for NEOs and can adjust award size   Individual contributions measured by performance assessment which include the areas of Equality & Inclusion and Governance
  CEO can award a limited number of LTI Equality & Inclusion bonuses   Exceptional performance on Equality & Inclusion initiatives in their respective business area
     
Annual Incentive Payout   ESG Factor modifies the Company Factor of the annual incentive payout for executive officers   Progress against key long-term ESG goals in the areas of Environmental Sustainability and Equality & Inclusion over the course of the fiscal year
  Internal Controls is one of six key metrics in the scoring of the Business Unit Factor   Internal Controls and Governance

 

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COMPENSATION DISCUSSION & ANALYSIS            
          

 

Compensation Mix

We design our programs so that the main components of NEO compensation (salary, STAR, LTIP, and PSP) vary by type (fixed versus performance-based), length of performance period (short-term versus long-term), and form (cash versus equity). These compensation components are determined by the performance of the individual, the performance of the individual’s business unit, and the performance of the Company as a whole. The mix of components is designed to incentivize both individual accountability and collaboration to build long-term shareholder value. The charts below show the average mix of the four main components of FY 2021-22 NEO compensation based on type, length of performance period, and form of compensation.

 

 

LOGO    LOGO    LOGO

 

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            COMPENSATION DISCUSSION & ANALYSIS
        

 

Executive Compensation Program Overview

The following table outlines the key components of our executive compensation programs and their purpose.

 

     
           Program     Purpose     Key Characteristics  
LOGO     

 

LOGO

  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.

 

LOGO     

 

 

LOGO

  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.

 

   LOGO      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.

 

  

 

 

LOGO   

  Retention and Recognition  

Retention of talent or recognition of exceptional performance

 

  RSUs with special vesting.

 

LOGO

 

  Other Compensation   Ensure the safety and productivity of executive officers   Annual physicals, financial planning, transportation, security, life insurance, and corporate aircraft use.
LOGO  

 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.

 

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COMPENSATION DISCUSSION & ANALYSIS            
          

 

Elements of Our Compensation Programs

Annual Cash Compensation

The Company’s annual cash compensation consists of salary and STAR. While salary is considered a fixed component of compensation, salary progression over time is based on individual performance and the scope of responsibilities of the role. We collect and analyze data from the compensation peer group on the total annual cash compensation opportunity (salary plus annual bonus target) for positions comparable to those at the Company. We consider the target median annual cash compensation opportunity for each position within the peer group, adjusted for size using a regression analysis of peer group revenues, to set a salary range mid-point and a target for STAR as a percentage of salary (“STAR target”).

Salary

Mr. Taylor’s annual salary was adjusted to $1,200,000, effective November 1, 2021, based on his retirement as the Company’s CEO and his appointment as Executive Chairman. Mr. Moeller’s salary was established at $1,600,000, effective November 1, 2021, in connection with his appointment as CEO. Mr. Schulten’s annual salary increased by 9.3% to $820,000, based on CFO competitive market data and his performance during the fiscal year. Ms. Francisco’s salary increased by 7.7%, effective October 1, 2021, to $840,000 based on her pay position relative to the competitive market, as well as her impact as CEO-Baby and Feminine Care and her transition to CEO-Baby, Feminine and Family Care, effective September 1, 2021. Mr. Jejurikar’s salary increased to $1,000,000 in connection with his appointment as COO, effective October 1, 2021. Ms. Keith’s salary increased by 12.3% to $910,000, effective October 1, 2021, based on her performance and pay position relative to the competitive pay market, as well as the additional duties she took on as the Executive Sponsor for Corporate Sustainability. Effective October 1, 2021, Ms. Tastad’s salary increased by 6.2% to $860,000 based on her performance and her August 1, 2021, transition to CEO-Health Care.

STAR Annual Bonus

The STAR program links a substantial portion of each NEO’s annual cash compensation to the Company’s performance for the fiscal year. The program focuses on the achievement of business unit results (weighted as applicable for each NEO) but also includes a component that measures the performance of the overall Company. An ESG Factor measures total Company progress towards key ESG goals in the prior fiscal year. STAR awards are generally paid in cash, but executives can also elect to receive all or part of their awards in stock options or non-qualified deferred compensation.

STAR awards for NEOs are calculated using the following formula:

 

 

LOGO

The basis for each element of STAR is:

STAR Target. The C&LD Committee sets STAR targets for NEOs using annual bonus benchmarks for similar positions in our Peer Group.

 

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Business Unit Performance Factor. The CEO, CFO, and CHRO (“STAR Committee”) recommend Business Unit Performance Factors based on a retrospective assessment of the performance of each business unit against six metrics:

 

Goal

            

What It Measures

            

Purpose of the Measure

Organic Sales Growth

   

One-year business unit sales growth

   

Rewards meeting / exceeding sales growth targets

 

Operating Profit Growth

   

One-year business unit profit growth

   

Rewards meeting / exceeding profit growth targets

 

Adjusted Free Cash Flow Productivity

   

One-year business unit cash flow productivity

   

Rewards effective conversion of earnings into cash

 

Value Share

   

One-year business unit increase in value share

   

Rewards market share growth versus competition

 

Operating TSR

   

One-year business unit total shareholder return

   

Rewards balanced top- and bottom-line growth with strong cash flow

 

Internal Controls

   

One-year measure of audit results and issue remediation

 

   

Rewards strong governance and stewardship

 

This assessment is compared to each business unit’s role in the portfolio, reflecting the different industries in which the Company’s businesses compete and their growth potential. The C&LD Committee then determines the Business Unit Performance Factors based on the STAR Committee’s recommendations. None of the officers on the STAR Committee 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.

 

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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:

 

FY 2021-22 STAR AWARDS

NEO

 

STAR
Target

($)

 

   

Business Unit

Factor

(70% Weight)

(%)

 

 

Unadjusted
Total
Company
Factor

(%)

 

 

ESG
Factor
(%)

 

 

ESG Adjusted
Total Company

(30% Weight)
(%)

 

 

STAR
Award

($)

 

   

STAR

Award
(% of Target)   

 

David S. Taylor

    2,400,000     134   132   110   145     3,296,640     137

Jon R. Moeller

    2,880,000     134   132   110   145     3,955,968     137

Andre Schulten

    943,000     134   132   110   145     1,295,305     137

 

Ma. Fatima D. Francisco

 

 

 

 

924,000

 

 

  159 (Baby/Fem),

144 (Baby/Fem/Fam)

 

 

132

 

 

110

 

 

145

 

 

 

 

1,348,439

 

 

 

 

146

 

Shailesh Jejurikar

 

 

 

 

1,175,000

 

 

  158.5 (Fabric/Home),

134 (Average Award)

 

 

132

 

 

110

 

 

145

 

 

 

 

1,661,143

 

 

 

 

141

R Alexandra Keith

    1,001,000     80   132   110   145     996,596     100

 

Carolyn M. Tastad

 

 

 

 

942,417

 

 

  142 (N. America),

152.5 (Health)

 

 

132

 

 

110

 

 

145

 

 

 

 

1,411,016

 

 

 

 

150

 

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In keeping with good governance practices, the NEO members of the STAR Committee (CEO, CFO, CHRO) did not recommend their own awards. Instead, the C&LD Committee used the weighted average of all Business Unit Performance Factors and the Total Company Performance Factor (as modified by the ESG Factor) to determine the awards according to the STAR formula for Mr. Moeller and Mr. Schulten. Mr. Taylor also received the weighted average of all Business Unit Performance Factors.

The STAR awards recommended to the C&LD Committee for the remaining NEOs were computed using the formula described on page 34 of this proxy statement. Ms. Francisco’s Business Unit Performance Factor was based on two months as the CEO, Baby and Feminine Care and 10 months as the CEO – Baby, Feminine and Family Care. Mr. Jejurikar’s Business Unit Factor was prorated to reflect three months in his role of CEO – Fabric and Home Care and nine months as COO. For his role as CEO – Fabric and Home Care, the Business Unit Performance Factor was a combination of the Fabric Care, Home Care, and P&G Professional businesses. For his role as COO, Mr. Jejurikar received the weighted average of all Business Unit Performance Factors. Ms. Keith’s Business Unit Performance Factor was based on her role as CEO – Beauty. For Ms. Tastad, her Business Unit Performance Factor was based on one month of North America business results and 11 months based on Global Health Care business results.

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.

 

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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”):

 

  

 

 

Goal

    

 

 

What It Measures

    

 

 

Purpose of Measure

 

   LOGO   

 

 

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

   LOGO     

 

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

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:

 

 

LOGO

 

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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.

 

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 Incentive Grants were determined by the C&LD Committee as follows:

 

   

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.

   

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.

   

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.

   

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.

   

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.

   

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

 

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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.

   

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.

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.

 

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

    
 

 

  80th    200%    9.7    200%    11.2    200%    115    200%    

 

 

 

  70th    167%    8.0    167%    9.5    167%    107    167%    

 

 

 

  60th    133%    6.4    133%    7.9    133%    98    133%    

 

 

 

  Target 50th    100%    Target 4.7    100%    Target 6.2    100%    Target 90    100%    

 

 

 

  40th    67%    3.0    67%    4.5    67%    82    67%    

 

 

 

  30th    33%    1.4    33%    2.9    33%    73    33%    

 

 

 

  <20th    0%    0.3    0%    1.2    0%    65    0%    

 

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.

 

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Looking Back: Realized Pay for PSP Performance Period July 1, 2019June 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.

 

PSP RESULTS FOR JULY 1, 2019–JUNE 30, 2022

Performance Factors

   Target    Actual    Weight    Result

Relative Organic Sales Growth1

   50th Percentile    83rd Percentile    30%    200%

Constant Currency Core Before-Tax Operating Profit Growth2

   6.0%    10.0%    20%    180%

Core EPS Growth3

   7.0%    8.7%    30%    134%

Adjusted Free Cash Flow Productivity4

   90%    104%    20%    156%

Weighted Average of Performance Factors

    

 

    

 

    

 

   167%

Relative TSR Modifier5

    

 

    

 

    

 

   125%

Final PSP Payout6

    

 

    

 

    

 

   200%

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.

 

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The resulting NEO payouts are indicated below:

 

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

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

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

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.

 

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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.

Deferred Compensation Plan

The Procter & Gamble Company Executive Deferred Compensation Plan (“EDCP”) allows executives to defer receipt of up to 100% of their STAR awards and up to 75% of their annual salary. Executives may also elect to convert a portion of their PST Restoration RSUs into notional cash with investment choices that mirror those available to all U.S. employees who participate in the Company’s 401(k) plan. No above-market or preferential interest is credited on deferred compensation, as those terms are defined by the SEC.

Executive Benefits

The Company provides certain other limited benefits to senior executives to fulfill particular business purposes, which are primarily for convenience and personal security. No changes were made to executive benefits over the past year, and the Company continues to manage executive benefits as a very small percentage (less than 2%) of total compensation for the NEOs during FY 2021-22.

Benefits that safeguard senior executives, such as home security systems, secured workplace parking, and annual physical health examinations, are available to NEOs as needed. While Company aircraft are generally only used for Company business, for security reasons the CEO and the Executive Chairman are required by the Board to use Company aircraft for all air travel, including personal travel. To increase executive efficiency, in limited circumstances, NEOs may travel to outside board meetings on Company aircraft. In addition, if a Company aircraft flight is already scheduled for business purposes and can accommodate additional passengers, NEOs and their spouses/guests may join these flights for personal travel. To the extent any travel on Company aircraft (e.g. personal/spouse/guest travel) results in imputed income to an NEO, the NEO is responsible for paying the taxes on that income, and the Company does not provide separate gross-up payments based on the NEO’s personal income tax due. We also reimburse NEOs for the cost of some tax preparation and financial counseling to keep NEOs’ attention focused on Company business and to support accurate personal tax reporting. To further increase executive efficiency, we provide limited local transportation within Cincinnati. We provided executive group whole life insurance coverage (equal to annual salary rate plus STAR target up to $5,000,000) to certain executives, including the NEOs, under a program now closed to new participants. The C&LD Committee periodically reviews these arrangements as needed to ensure they meet business needs and remain in line with market practices.

 

              2022 Proxy Statement  43  
        


Table of Contents
COMPENSATION DISCUSSION & ANALYSIS            
          

 

Compensation Governance Practices and Oversight

Our executive compensation practices are designed to incent strong performance, support good governance, and mitigate excessive risk-taking.

 

  What We Do:

 

   Target compensation at the median of an appropriate peer group, with substantial variation based on performance.

 

   Significant share ownership and equity holding requirements are in place for senior executives.

 

   Multiple performance metrics under STAR and PSP remove any incentive to focus on a single performance goal to the detriment of other goals.

 

   Appropriate balance between short-term and long-term compensation discourages short-term risk-taking at the expense of long-term results.

 

   Double Trigger. Time-based equity awards do not vest solely on account of a change in control (requires a qualifying termination following a change in control).

 

   Engagement of an Independent Advisor. Our C&LD Committee engages an independent compensation consultant, who performs no other work for the Company, to advise on executive compensation matters.

 

   Clawback policy permits the C&LD Committee to recoup certain compensation payments in the event of a significant restatement of financial results for any reason. Additionally, the two most recent stock plans allow recovery of proceeds from stock awards if a participant violates certain plan provisions such as taking actions that may damage the reputation, goodwill, or stability of the Company.

  What We Do Not Do:

 

   No employment contracts with executives containing special severance payments such as golden parachutes.

 

   No special executive retirement programs and no severance programs that are specific to executive officers.

 

   No gross-up payments to cover personal income taxes or excise taxes that pertain to executive or severance benefits.

 

   No excessive perquisites for executives.

 

   No hedging or engaging in the following transactions that include shares of Common Stock: pledging, collars, short sales, and other derivative transactions.

 

   No re-pricing or backdating stock options.

 

 

Board and Compensation Committee Oversight

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.

 

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            COMPENSATION DISCUSSION & ANALYSIS
        

 

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.

Consideration of Most Recent “Say on Pay” Vote

The Committee reviewed the results of the annual shareholder advisory vote on NEO compensation (the “Say on Pay” vote) that was held at the 2021 annual meeting of shareholders. Approximately 91% of the votes cast on the proposal were cast in support of the compensation of our NEOs. Given the positive endorsement of the Company’s executive compensation decisions, the Committee did not make any changes to the Company’s program or policies as a result of the Say on Pay vote.

Establishing Peer Groups and Market-Based Compensation

The C&LD Committee structures executive compensation so that total targeted annual cash and long-term compensation opportunities are competitive with the targets for comparable positions at companies considered to 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:

 

   

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

   

Peer Group revenues range from $16 billion to $548 billion with a median of $66 billion

   

Peer Group market capitalization ranges from $32 billion to $1,682 billion with a median of $181 billion

   

Compete with the Company in the marketplace for business and investment capital

   

Compete with the Company for executive talent

   

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

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.

 

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COMPENSATION DISCUSSION & ANALYSIS            
          

 

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 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
           

While the target total compensation for our NEOs is set considering size-adjusted median target total compensation within our Peer Group, actual compensation varies depending on the NEO’s responsibility and experience in the particular role, as well as on total Company, business unit, and individual performance. Consistent with our principles to pay for performance and pay competitively, substantial differences may exist among NEOs’ pay.

Stock Ownership Requirements

To reinforce the importance of stock ownership and long-term focus for our most senior executives, including the NEOs, the C&LD Committee established the Executive Share Ownership Program and Equity Holding Requirement.

The Executive Share Ownership Program requires Executive Officers to hold a certain multiple of their salary in Company stock and/or RSUs. At its meeting on August 9, 2021, the C&LD Committee approved changes to the Executive Share Ownership Program based on an assessment of peer and market prevalent practices. Changes were made to exclude unvested PSUs from the calculation of share ownership and to change the ownership requirements so that all NEOs other than the CEO and Executive Chair are required to hold four times salary. The CEO and Executive Chair ownership requirement remained at eight times salary. The C&LD Committee annually reviews these holdings, and as of April 1, 2022, all of the NEOs, including the CEO and Executive Chair, exceeded these requirements.    

The Equity Holding Requirement ensures executives remain focused on sustained shareholder value even after exercising their stock options or receiving shares from RSU settlements or PSU payouts. The equity holding requirement applies when an executive, including NEOs, has not met the ownership requirements of the Executive Share Ownership Program. When the holding requirement applies, the CEO is required to hold the net shares received from stock option exercises and RSU and PSU settlements for at least three years, and the other NEOs are required to hold net shares received for at least one year. The holding requirement does not apply to unrestricted stock or to STAR awards that executives elect to take as stock options instead of cash.

Mitigation of Excessive Risk-Taking

Recoupment & Clawback

The C&LD Committee’s Senior Executive Officer Recoupment Policy permits the C&LD Committee to recoup or “clawback” certain STAR or long-term incentive program payments made to executives in the event of a

 

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            COMPENSATION DISCUSSION & ANALYSIS
        

 

significant restatement of financial results for any reason. This authority is in addition to the C&LD Committee’s authority under The Procter & Gamble 2019 Stock and Incentive Compensation Plan (“2019 Plan”) and prior plans to suspend or terminate any outstanding equity if the C&LD Committee determines that the participant violated certain plan provisions. Moreover, the 2019 Plan, The Procter & Gamble 2014 Stock and Incentive Compensation Plan (“2014 Plan”), and The Procter & Gamble 2009 Stock and Incentive Compensation Plan (as amended) (“2009 Plan”), each has a clawback provision that allows the Company or the C&LD Committee to recover certain proceeds from option exercises or delivery of shares if the participant violates certain plan provisions, such as taking actions that are significantly contrary to the best interests of the Company, including actions that cause harm to the Company’s reputation, stability, or goodwill.

Prohibition of Use of Company Stock in Derivative Transactions

The Company’s Global Insider Trading Policy prohibits NEOs from engaging in derivative transactions involving Company stock, including pledging, collars, short sales, hedging investments, and other derivative transactions. Purchases and sales of Company stock by NEOs can only be made during the approximately one-month period following a public earnings announcement or, if outside these window periods, with express permission from the Company’s Legal Division or in accordance with a previously established trading plan that meets SEC requirements.

Tax Gross-Ups

Generally, the Company does not increase payments to any employees, including NEOs, to cover non-business-related personal income taxes. However, certain expatriate allowances, relocation reimbursements, and tax equalization payments are made to employees assigned to work outside their home countries, and the Company will cover the personal income taxes due on these items in accordance with expatriate policy because there is a business purpose to their relocations. In addition, from time to time, the Company may be required to pay personal income taxes for certain separating executives hired through acquisitions in conjunction with pre-existing contractual obligations.

Employment Contracts

The C&LD Committee believes employment contracts for executives are not necessary because our executives have developed a focus on the Company’s long-term success. Moreover, the C&LD Committee does not provide special executive severance payments, such as golden parachutes, to the Company’s executives. In the event the Company encourages an NEO, or any other U.S. employee, to terminate employment with the Company (but not for cause), that individual may receive (but is not guaranteed) a separation allowance of up to one year’s annual salary, calculated based on years of service.

 

              2022 Proxy Statement  47  
        


Table of Contents
EXECUTIVE COMPENSATION            
          

 

Executive Compensation

The following tables, footnotes, and narratives provide information regarding the compensation, benefits, and equity holdings in the Company for the NEOs.

Summary Compensation

The following table and footnotes provide information regarding the compensation of the NEOs for the fiscal years shown. Titles reflect the roles held by each NEO on June 30, 2022.

 

FY 2021-22 SUMMARY COMPENSATION TABLE

Name and

Principal Position

 

 

Year

 

 

Salary
($)

 

 

Bonus1
($)

 

 

Stock
Awards2
($)

 

 

Option
Awards3
($)

 

 

Non-
Equity
Incentive
Plan

Compen-

sation

($)

 

 

Change in
Pension

Value and
Non-

qualified
Deferred
Compen-

sation
Earnings4

($)

 

 

All
Other
Compen-

sation5
($)

 

 

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

1 For FY 2021-22, Bonus reflects FY 2021-22 STAR awards that will be paid on September 15, 2022. Each NEO who participated in STAR could elect to take his or her STAR award in cash, deferred compensation, or stock options. For FY 2021-22, Mr. Taylor took his STAR award as 90% cash, and 10% deferred compensation. Mr. Moeller and Ms. Tastad took their awards as 100% cash. Mr. Schulten, Mr. Jejurikar, and Ms. Keith took their awards in 100% stock options. Ms. Francisco took her award in 100% deferred compensation

2 For FY 2021-22, Stock Awards include the grant date fair value of any PST Restoration Program awards granted in August 2021 and the PSUs granted in October 2021 under the PSP. It also includes the grant date fair value of RSUs granted in October 2021 under the LTIP Stock Grant and for Ms. Keith, the special award of RSUs granted in August 2021. The amount shown is determined in accordance with FASB ASC Topic 718. For more information regarding these awards, including retention and vesting requirements and applicable performance measures, see pages 37-40 of the Compensation Discussion & Analysis. For PSP awards, which are subject to performance conditions, the value is based on the probable outcome of the conditions at grant date. The value of the PSUs assuming the highest level of performance conditions will be achieved is: Mr. Taylor, $12,500,000; Mr. Moeller, $11,200,000 ; Mr. Schulten, $3,600,000 ; Ms. Francisco, $3,580,000; Mr. Jejurikar, $4,000,000; Ms. Keith, $3,809,000; and Ms. Tastad, $3,630,000.

3 Option Awards for FY 2021-22 include the grant date fair value of each LTIP Stock Grant, determined in accordance with FASB ASC Topic 718.

 

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            EXECUTIVE COMPENSATION
        

 

We utilize an industry standard lattice-based valuation model to calculate the fair value for stock options granted. Assumptions utilized in the model, which are evaluated and revised to reflect market conditions and experience, were as follows:

 

Years ended June 30:

    

2022

    

2021

    

2020

Interest rate

    

0.1–1.6%

    

0.1–0.7%

    

1.1–1.4%

Weighted average interest rate

    

1.5%

    

0.6%

    

1.3%

Dividend yield

    

2.4%

    

2.4%

    

2.4%

Expected volatility

    

19%

    

20%

    

17%

Expected life in years

    

9.1

    

9.2

    

9.2

Lattice-based option valuation models incorporate ranges of assumptions for inputs and those ranges are disclosed in the preceding table. Expected volatility is based on a combination of historical volatility of our stock and implied volatilities of call options on our stock. We use historical data to estimate option exercise and employee termination patterns within the valuation model. The expected life of options granted is derived from the output of the option valuation model and represents the average period of time that options granted are expected to be outstanding. The interest rate for periods within the contractual life of the options is based on the U.S. Treasury yield curve in effect at the time of grant. For information on the valuation assumptions with respect to grants made in prior fiscal years, please see the corresponding note to the Consolidated Financial Statements contained in the Company’s Annual Report for the respective fiscal year. For more information regarding these awards, including retention and vesting requirements and applicable performance measures, see pages 37-40 of the Compensation Discussion & Analysis.

4 This column reflects aggregate changes in the actuarial present value of Mr. Schulten’s, Ms. Francisco’s, Mr. Jejurikar’s and Ms. Tastad’s pension benefits under The Procter & Gamble Company Global IRA (the “IRA”), Mr. Schulten’s pension benefits under The Procter & Gamble Pension Plan (Germany) and Ms. Tastad’s pension benefits under The Procter & Gamble Company Canada Plan. The amounts for Mr. Schulten, Ms. Francisco, Mr. Jejurikar and Ms. Tastad were $(753,000), $(1,248,000), $(795,000), and $(920,000), respectively, and are not included in the Summary Compensation Table. None of the other NEOs participates in a pension plan. None of the NEOs had above-market earnings on deferred compensation.

5 Please see the table below for information on the numbers that comprise the All Other Compensation column.

6 Ms. Keith’s salary in FY 2021-22 was converted to and paid in Swiss francs using a Bloomberg monthly spot rate representing the average of the buy and sell rates for the month.

 

ALL OTHER COMPENSATION

Name and

Principal Position

  Year  

Retirement

Plan

Contributionsi
($)

 

Executive

Group Life

Insuranceii
($)

 

Flexible

Compensation

Program

Contributionsiii
($)

 

Expatriate,

Relocation

and Tax

Equalization

Paymentsiv
($)

 

Executive

Benefitsv
($)

  Total
($)

 

David S. Taylor

             

Executive Chairman

of the Board and Former
Chief Executive Officer

  2021-22   68,917   19,956   5,750   0   251,434   346,057
  2020-21   64,088   17,856   5,650   0   175,646   263,240
  2019-20   60,244   15,825   5,550   0   429,367   510,986

Jon R. Moeller

  2021-22   68,917   21,063   5,750   0   152,981   248,710

President and

Chief Executive Officer

  2020-21   64,088   13,985   5,650   0   8,500   92,223
  2019-20   60,244   11,827   5,550   0   41,800   119,421

Andre Schulten

  2021-22   68,917   4,101   4,313   0   10,300   87,630

Chief Financial Officer

  2020-21   64,088   1,926   4,238   0   925   71,177

Ma. Fatima D. Francisco

             

CEO—Baby, Feminine,

and Family Care

  2021-22   68,917   5,754   5,750   0   8,500   88,921

Shailesh Jejurikar

  2021-22   37,888   8,386   5,750   69,555   10,337   131,916

Chief Operating Officer

  2020-21   35,482   6,105   5,650   174,199   14,893   236,329

R. Alexandra Keith

             

CEO—Beauty

  2021-22   68,917   6,136   5,750   231,310   11,673   323,785

Carolyn M. Tastad

  2021-22   68,917   11,631   5,750   0   10,300   96,598

Sector CEO, Health Care,

Special Advisor

  2020-21   64,088   10,071   5,650   0   10,300   90,109
  2019-20   60,244   9,121   5,550   0   10,300   85,215

 

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EXECUTIVE COMPENSATION            
          

 

i Amounts contributed by the Company pursuant to the PST, a qualified defined contribution plan providing retirement benefits for U.S.-based employees. NEOs also receive contributions in the form of RSU grants pursuant to the PST Restoration Program, a nonqualified defined contribution plan. These RSU awards are included in the Stock Awards column of the Summary Compensation Table.

ii Under the Executive Group Life Insurance Program (“EGLIP”), which was closed to new participants in 2013, the Company provides key executives life insurance coverage equal to salary plus their STAR target up to a maximum of $5,000,000. These policies are owned by the Company. Because premium payments are returned to the Company when the benefit is paid out, we believe the annual premiums paid by the Company overstate the Company’s true cost of providing this life insurance benefit. Accordingly, the amounts shown in the table are an average based on Internal Revenue Service tables used to value the term cost of such coverage for calendar year 2021 and calendar year 2022, which reflect what it would cost the executive to obtain the same coverage in a term life insurance policy. The average of the two calendar years was used because fiscal year data is not available. The average of the dollar value of the premiums actually paid by the Company in calendar years 2021 and 2022 under these policies were as follows: Mr. Taylor, $0, Mr. Moeller, $172,244, Mr. Schulten, $46,454, Ms. Francisco, $46,348, Mr. Jejurikar, $51,033, Ms. Keith, $49,065, and Ms. Tastad, $56,511. This program is in addition to any other Company-provided group life insurance in which an NEO may enroll that is also available to all employees on the same basis.

iii Flexible Compensation Program Contributions are given in the form of credits to pay for coverage in a number of benefit plans including, but not limited to, medical insurance and additional life insurance. Employees may also receive unused credits as cash. Credits are earned based on PST years of service.

iv The Company provides assistance to certain employees, including NEOs, related to expenses incurred in connection with expatriate assignments and Company-required relocations. Mr. Jejurikar received tax preparation assistance of $14,655, as well as a tax equalization payment of $54,900 resulting from his previous assignment in Switzerland. Ms. Keith’s payment for expatriate assignment expenses resulted from her assignment in Switzerland, which included a housing allowance and related support of $84,273; costs of living adjustments of $69,909; a travel allowance of $14,611; bank transfer fee reimbursement of $27,910; relocation-related expenses of $18,424 and tax preparation cost of $14,775. Expenses were paid in Swiss francs and converted to U.S. dollars using a Bloomberg monthly spot rate representing the average of the buy and sell rates for the month.

v In addition, all NEOs are entitled to the following personal benefits: financial counseling (including tax preparation), an annual physical examination, occasional use of a Company car, secure workplace parking, and home security and monitoring. The cost associated with Mr. Taylor’s use of a Company car was $17,506. The costs associated with home security and monitoring for Mr. Moeller was $28,149. While Company aircraft is generally used for Company business only, the Executive Chairman and the CEO are required to use Company aircraft for all air travel, including travel to outside board meetings and personal travel, pursuant to the Company’s executive security requirements established by the Board of Directors. While traveling on Company aircraft, the CEO may bring a limited number of guests (spouse, family member, or similar guest) to accompany him. The aggregate incremental aircraft usage costs associated with Mr. Taylor’s and Mr. Moeller’s personal use of the Company aircraft during FY 2021-22 were $222,948 and $112,599, respectively. Subject to the approval of the CHRO, certain executives are permitted to use the Company aircraft for travel to outside board meetings, if any, and, if the Company aircraft is already scheduled for business purposes and can accommodate additional passengers, may use it for personal travel and guest accompaniment; Ms. Keith used this benefit on one occasion in FY 2021-22. The incremental costs to the Company for these benefits, other than use of Company aircraft, are the actual costs or charges incurred by the Company for the benefits. The incremental cost to the Company for use of the Company aircraft is calculated by using an hourly rate for each flight hour. The hourly rate is based on the incremental variable operational costs of each flight, including fuel, maintenance, flight crew travel expense, catering, and fees, including flight planning, ground handling and landing permits. For any flights that involved mixed personal and business usage, any personal usage hours that exceed the business usage are utilized to determine the incremental cost to the Company.

 

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            EXECUTIVE COMPENSATION
        

 

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

 
   

Grant
Date1

 

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
Awards2

($ per
share)

   

Grant
Date

Fair
Value

of

Stock
and
Option

Awards3
($)

 

Name/Plan Name

  Threshold
(#)
    Target
(#)
    Maximum
(#)
 

David S. Taylor

                                                               

LTIP Options4

  10/01/2021   08/10/2021                                     187,212       139.58       4,062,500  

LTIP RSUs5

  10/01/2021   08/10/2021                             15,673                       2,187,637  

PSUs6

  10/01/2021   08/10/2021     0       44,778       89,556                               6,963,427  

PST Restoration RSUs7

  08/05/2021   06/08/2021                             2,522                       339,121  

STAR Stock Options8

  09/15/2021   08/10/2021                                     154,226       145.12       3,285,014  

Jon R. Moeller

                                                               

LTIP Options4

  10/01/2021   08/10/2021                                     154,839       139.58       3,360,006  

LTIP RSUs5

  10/01/2021   08/10/2021                             16,049                       2,240,119  

PSUs6

  10/01/2021   08/10/2021     0       40,121       80,242                               6,239,217  

PST Restoration RSUs7

  08/05/2021   06/08/2021                             1,527                       205,328  

Andre Schulten

                                                               

LTIP Options4

  10/01/2021   08/10/2021                                     62,212       139.58       1,350,000  

LTIP RSUs5

  10/01/2021   08/10/2021                             3,224                       450,006  

PSUs6

  10/01/2021   08/10/2021     0       12,896       25,792                               2,005,457  

PST Restoration RSUs7

  08/05/2021   06/08/2021                             545                       73,283  

Ma. Fatima D. Francisco

                                                               

LTIP Options4

  10/01/2021   08/10/2021                                     82,489       139.58       1,790,011  

PSUs6

  10/01/2021   08/10/2021     0       12,825       25,650                               1,994,416  

PST Restoration RSUs7

  08/05/2021   06/08/2021                             817                       109,858  

Shailesh Jejurikar

                                                               

LTIP Options4

  10/01/2021   08/10/2021                                     92,166       139.58       2,000,002  

PSUs6

  10/01/2021   08/10/2021     0       14,329       28,658                               2,228,303  

PST Restoration RSUs7

  08/05/2021   06/08/2021                             479                       64,409  

STAR Stock Options8

  09/15/2021   08/10/2021                                     75,791       145.12       1,614,348  

R. Alexandra Keith

                                                               

LTIP Options4

  10/01/2021   08/10/2021                                     65,824       139.58       1,428,381  

LTIP RSUs5

  10/01/2021   08/10/2021                             3,412                       476,247  

PSUs6

  10/01/2021   08/10/2021     0       13,645       27,290                               2,121,934  

PST Restoration RSUs7

  08/05/2021   06/08/2021                             867                       116,581  

Special RSU Award9

  08/02/2021   07/01/2021                             14,098                       2,000,224  

 

              2022 Proxy Statement  51  
        


Table of Contents
EXECUTIVE COMPENSATION            
          

 

GRANTS OF PLAN-BASED AWARDS

 
   

Grant
Date1

 

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
Awards2

($ per
share)