Procter & Gamble Co (PG.N) on Thursday brought back A.G. Lafley to run the world's largest household products maker, replacing Bob McDonald immediately in the midst of a major restructuring.
Lafley is taking on the roles of chairman, president and chief executive officer, effective immediately, while McDonald is set to retire on June 30 after 33 years at P&G.
The move comes as some investors have pushed for faster improvements from the maker of Tide detergent and Gillette razors. P&G unveiled a $10 billion restructuring program in February 2012. Since then, it has cut thousands of jobs and taken other steps to speed up its operations, improve its success with new products and do a better job in both fast-growing emerging markets and in larger, developed markets such as the United States.
"Bob retired, the board called me and I felt like duty called. I'm back to help maintain the business momentum and keep this productivity program going," Lafley told Reuters.
There was no single reason for McDonald's retirement, Lafley said. "I think it's a number of personal reasons."
McDonald, who had been Lafley's hand-picked successor, was not made available for an interview.
While the suddenness of the change was a shock, the move to bring back Lafley was not, said Matt McCormick, a portfolio manager at Bahl & Gaynor Investment Counsel in Cincinnati.
"The board has a known quantity in Lafley. He knows everyone, he knows the systems, and now that Procter is on firmer footing, it expects Lafley to be able to push the company and its stock price higher," said McCormick, whose firm invests more than $9.1 billion, with P&G as one of its biggest holdings.
Lafley, who will celebrate his 66th birthday in June, said P&G's board asked him days, not weeks, ago to come back, but he did not say exactly when he got the call.
Lafley said he is "fully engaged" in coming back and wants to finish the work that has been started on the productivity program.
"65 is the new 45," he joked, adding that he aims to build momentum at P&G by focusing on growth in emerging markets and innovation in brands and products.
Last summer, hedge fund Pershing Square Capital Management said it had a stake in P&G worth roughly $2 billion, or 1 percent of the company. CEO William Ackman, who has shaken up management at other companies, most recently J.C. Penney Co Inc (JCP.N), has blamed McDonald's team for missteps.
However, Ackman's pick for J.C. Penney, Ron Johnson, was ousted last month and replaced by his predecessor, Mike Ullman.
A Pershing representative was not immediately available for comment.
Lafley first joined Cincinnati-based P&G in 1977 and served as president and CEO from 2000 to 2009, when he handed the position over to McDonald. He stepped down as chairman in 2010.
"(P&G) wanted to bring someone back who knows the company well and can handle running it, both in the interim and to provide strategic guidance," said David Larcker, director of Stanford University's Rock Center for Corporate Governance.
"Reaching out to a successful past CEO can give the markets confidence, while still allowing time for a company to evaluate its strategy."
P&G also stood by its fiscal year, ending June 30, and fourth-quarter guidance. For the fourth quarter, P&G said profit should fall to 69 cents to 77 cents per share, from 82 cents per share a year earlier.
P&G's stock was up 54 cents, or 0.7 percent, in after hours trading after closing at $78.70 on the New York Stock Exchange.
(Reporting by Jessica Wohl in Chicago, additional reporting by Martinne Geller and John McCrank in New York and Jonathan Stempel in Chicago, and Svea Herbst in Boston; Editing by Bernard Orr and Stephen Coates)