Counterparties: Washing out with the Tide
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A.G. Lafley is hoping that his management skills, along with a bit of Febreze, can get rid of the stench of mediocrity in Procter & Gambleâ€™s C-suite. After a rough four years at the consumer goods conglomerate, Lafley is returning to the top spot after outgoing CEO Bob McDonald announced his resignation on Thursday night.
Itâ€™s far from assured that Lafley can bring back his magic touch. The record of CEO second acts is quite mixed, as Matthew Bishop points out: for every Steve Jobs, thereâ€™s a Paul Allaire; for every Howard Schultz, thereâ€™s a Ted Waitt.
Though the companyâ€™s share price makes the timing of switch unexpected — itâ€™s up 20% so far this year — P&G has had a number of stumbles under McDonaldâ€™s leadership, as Fortuneâ€™s Jennifer Reingold outlined back in February: a headfirst dive into emerging markets that was too much, too soon; a dearth of product innovations; an attempt to get customers to buy more of its premium products that faltered when the recession pinched consumer spending; the archetype of a muddled corporate vision (â€śpurpose-inspired growthâ€ť); and a convoluted org-chart that frustrated top managers and led to brain drain.
McDonaldâ€™s departure was a big score for Bill Ackman, something the activist hedge fund manager hasnâ€™t experienced much of lately. McDonald tendered his resignation just over two weeks after Ackman blasted the ex-CEO at the Ira Sohn Conference for spending at least a quarter of his time being a director on 21 other boards. Before this coup, Ackmanâ€™s highlights over the last six month included seeing his very public Herbalife short get hammered (shares are up 95% from the lows they touched the week after he disclosed his position in December) and watching the man he hand-picked to turn around JC Penney flame out.
Despite the early optimism over Lafleyâ€™s comeback — P&G shares are up nearly 5% since yesterday, and one equity analyst raised his price target on the stock from $75 to $95 on the news of the appointment alone — the biggest test of his return will come when, eventually, he leaves again. Because heâ€™s already demonstrated that he erred in choosing a replacement, Lafley will need to show a more rigorous approach to succession planning this time around. — Peter Rudegeair
On todayâ€™s links:
France and Germany team up for a “New Deal” on youth unemployment – Telegraph
“It is highly possible we are at or near the bottom of the cycle” in Europe -Â Sober Look
IMF searches soul, blames EuropeÂ - WSJ
And, of course, there are many more links at Counterparties.