SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
[Amendment No. ]
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c)
or
Section 240.14a12
THE PROCTER & GAMBLE COMPANY
(Name of Registrant as Specified in Its Charter)
TERRY L. OVERBEY
(Name of Person(s) Filing Proxy Statement
Payment of Filing Fee (Check the appropriate box):
/x/$125 per Exchange Act Rules 0-11)(c)(1)(ii), 14a-6(j)(2).
/ /$500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
/ /Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11. 1) Title of each class of securities
to which transaction applies:
..........................................................
2) Aggregate number of securities to which transaction
applies:
..........................................................
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:*
..........................................................
4) Proposed maximum aggregate value of transaction:
..........................................................
*Set forth the amount on which the filing fee is calculated
and state how it was determined.
/ /Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount Previously Paid:________________________________
2) Form Schedule or Registration Statement No.:___________
3) Filing Party:__________________________________________
4) Date Filed:____________________________________________
[P&G LOGO]
T H E P R O C T E R & G A M B L E C O M P A N Y
NOTICE OF ANNUAL MEETING
AND
PROXY STATEMENT
ANNUAL MEETING OF
SHAREHOLDERS
OCTOBER 8, 1996
[P&G LOGO]
THE PROCTER & GAMBLE COMPANY
PO BOX 599
CINCINNATI, OHIO 45201-0599
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
August 30, 1996
The annual meeting of shareholders of The Procter & Gamble
Company will be held at the General Offices of the Company, Two
Procter & Gamble Plaza, Cincinnati, Ohio 45202-3314 on Tuesday,
October 8, 1996 at 12 o'clock noon, Eastern Daylight Time.
Attendance at the annual meeting will be limited to shareholders,
those holding proxies from shareholders and representatives of
the press and financial community.
IF YOU WISH TO ATTEND THE MEETING BUT YOUR SHARES ARE HELD IN
THE NAME OF A BROKER, TRUST, BANK OR OTHER NOMINEE, YOU SHOULD
BRING WITH YOU A PROXY OR LETTER FROM THE BROKER, TRUSTEE, BANK
OR NOMINEE CONFIRMING YOUR BENEFICIAL OWNERSHIP OF THE SHARES.
The purposes of this meeting are:
A. To hear the reading of the minutes of the annual meeting
of shareholders held October 10, 1995 and to act thereon
if they are incorrectly recorded;
B. To receive reports of officers;
C. To elect six members of the Board of Directors with terms
expiring at the annual meeting in 1999, as described at
pages 3-4 in the proxy statement;
D. To consider and act upon a proposal described at page 21
in the proxy statement to ratify the appointment of
independent auditors;
E. To consider and act upon, if presented at the meeting, a
shareholder proposal as described at page 22 in the proxy
statement; and
F. To consider such other matters as may properly come before
the meeting.
Shareholders of record at the close of business on Friday,
August 9, 1996 will receive notice of and be entitled to vote at
the meeting.
Shareholder attendees who are hearing-impaired should identify
themselves on registration at the meeting so they can be directed
to a special section where an interpreter will be available.
A copy of the annual report of the Company for the fiscal year
ended June 30, 1996 has been mailed to each shareholder of record
as of August 9, 1996.
SHAREHOLDERS ARE URGED TO EXECUTE THE ENCLOSED PROXY AND
RETURN IT PROMPTLY, WHETHER OR NOT THEY EXPECT TO ATTEND THE
MEETING. ANY PROXY NOT DELIVERED AT THE MEETING SHOULD BE MAILED
TO REACH THE COMPANY'S PROXY TABULATOR, THE FIRST NATIONAL BANK
OF BOSTON, P. O. BOX 1850, BOSTON, MA 02105-9812 BY 9:00 A.M ON
TUESDAY, OCTOBER 8, 1996 (USE THE ENCLOSED SPECIAL POSTAGE-PAID
ENVELOPE FOR MAILING IN THE UNITED STATES).
By order of the Board of Directors,
TERRY L. OVERBEY
Secretary
PROXY STATEMENT
THE PROCTER & GAMBLE COMPANY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD OCTOBER 8, 1996
SOLICITATION AND REVOCATION OF PROXIES
The enclosed proxy is being solicited by the Board of
Directors of the Company. In addition to the solicitation by
mail, proxies may be solicited in person or by telephone or
telegraph; such solicitation on behalf of the Proxy Committee of
the Board may be made by Directors, officers and regular
employees of the Company and by representatives of Georgeson &
Company Inc., a proxy solicitation firm. The Company has agreed
to pay Georgeson & Company Inc. a fee of $16,000, plus reasonable
expenses, for its services in this regard. Any proxy given
pursuant to this solicitation may be revoked by notice from the
person giving the proxy at any time before it is exercised. Any
such notice of revocation should be provided in writing signed by
the shareholder in the same manner as the proxy being revoked and
delivered to the Company's proxy tabulator, The First National
Bank of Boston.
The expense of making the solicitation will consist of
preparing and mailing the proxies and proxy statements; any
expenses incurred by Company representatives in making the
contacts referred to above; charges of brokerage houses and other
custodians, nominees or fiduciaries for forwarding documents to
security owners; costs of returning the proxies; and fees of The
First National Bank of Boston for tabulating the responses.
These are the only contemplated expenses of solicitation, and
they will be paid by the Company.
VOTING RIGHTS
The holders of record of the Company's Common Stock and Series
A and B ESOP Convertible Class A Preferred Stock at the close of
business on Friday, August 9, 1996 are entitled to vote on
matters to come before the meeting. On that date, 743,412,570
shares of Common Stock, 32,144,582 shares of Series A ESOP
Convertible Class A Preferred Stock and 19,102,420 shares of
Series B ESOP Convertible Class A Preferred Stock were issued and
outstanding. As provided in the Amended Articles of
Incorporation, each share of Common and Series A and B ESOP
Convertible Class A Preferred Stock is entitled to one vote.
Participants in The Procter & Gamble Shareholder Investment
Program are entitled to vote shares of the Company's Common Stock
held for their account under that Program pursuant to an omnibus
proxy executed in their favor by the Custodian of such Program.
Participants in The Procter & Gamble Profit Sharing Trust and
Employee Stock Ownership Plan and The Procter & Gamble/Noxell
Transitional Plan have the right to instruct the Trustees of any
Trust under such Plans in which they are participating as to how
to vote shares of stock allocated to their accounts. The Plans
also provide that the Trustees of each Trust shall vote any
shares allocated to accounts of participants as to which such
instructions have not been received in direct proportion to the
voting of allocated shares as to which voting instructions have
been received. In addition, the Plans provide that the Trustees
shall vote unallocated shares of stock held in such Trust in
direct proportion to the voting of allocated shares in such Trust
as to which voting instructions have been received.
The vote required for the election of Directors and approval
of the other proposals is set forth in the discussion of each
item to be voted upon.
ELECTION OF DIRECTORS
The Regulations of the Company provide that the Board of
Directors shall consist of three classes of Directors with
overlapping three-year terms. One class of Directors is to be
elected each year with terms extending to the third succeeding
annual meeting after such election. The Regulations provide that
the Board shall maintain the three classes so as to be as nearly
equal in number as the then total number of Directors permits.
Pursuant to the provisions of the Regulations described above,
there are six Directors of the Company whose terms expire at the
annual meeting in 1996. The six Directors whose terms are
expiring in 1996 are described in the section immediately below.
It is the Board's intention that these six persons will be
nominated for new terms extending to the annual meeting in 1999
and until their successors are duly elected. Proxies received in
response to this solicitation will be voted, unless such
authority is withheld, in favor of the election of these six
nominees. In the election of members of the Board of Directors,
the six candidates receiving the most votes will be elected.
While there is no reason to believe that any of the nominees
will, prior to the date of the meeting, refuse or be unable to
accept the nomination, should any nominee or nominees so refuse
or become unable to accept, it is the intention of the persons
named in the proxy to vote for such other person or persons as
the Directors may recommend.
Directors whose terms expire at the annual meetings in 1997
and 1998 are described in separate sections below.
NOMINEES FOR ELECTION AS DIRECTORS WITH TERMS EXPIRING IN 1999
[photograph of Donald R. Beall - Chairman and Chief
Mr. Beall] Executive Officer, Rockwell International
Corporation (automation, avionics and
communications, semiconductor systems and
automotive component systems). Director of
Rockwell International Corporation, Amoco
Corporation and Times-Mirror Company;
Director of the Company since 1992; Chairman
of the Audit Committee and member of the
Compensation and Executive Committees; age
57.
[photograph of Gordon F. Brunner - Senior Vice President.
Mr. Brunner] Director of the Company since 1991; age 57.
[photograph of Richard B. Cheney - Chairman of the Board,
Mr. Cheney] President and Chief Executive Officer,
Halliburton Company (energy services,
engineering and construction). Director of
Halliburton Company, Electronic Data Systems
Corporation, and Union Pacific Corporation;
Director of the Company since 1993; member of
the Audit, Compensation and Public Policy
Committees; age 55.
[photograph of Harald Einsmann - Executive Vice President.
Mr. Einsmann] Director of Thorn EMI plc; Director of the
Company since 1991; age 62.
[photograph of Durk I. Jager - President and Chief Operating
Mr. Jager] Officer. Director of the Company since 1989;
age 53.
[photograph of Charles R. Lee - Chairman and Chief Executive
Mr. Lee] Officer, GTE Corporation (telecommunication
services). Director of GTE Corporation,
United Technologies Corporation and USX
Corporation. Director of the Company since
1994; member of the Audit, Board Organization
and Nominating, and Public Policy Committees;
age 56.
All of the Directors with terms expiring in 1996, except Mr.
Cheney, have been executive officers of their respective
employers for more than the past five years. Mr. Cheney has been
an executive officer of Halliburton Company since October 1,
1995. He was a Senior Fellow at the American Enterprise
Institute for Public Policy Research, Washington, DC, from
January, 1993 until September 30, 1995. Prior to that,
Mr. Cheney was Secretary of Defense of the United States from
March 17, 1989 to January 20, 1993.
Each of the Directors with terms expiring in 1996 was elected
a Director by the shareholders at the annual meeting in 1993
except Mr. Lee. Mr. Lee was elected a Director in 1994 to fill a
vacancy on the Board.
DIRECTORS WITH TERMS EXPIRING IN 1997
[photograph of Edwin L. Artzt - Retired Chairman of the
Mr. Artzt] Board and Chief Executive. Director of
American Express Company, Barilla G.eR.F.11i
S.p.A. Italy, Delta Air Lines, Inc., GTE
Corporation and Teradyne, Inc.; Director of
the Company from 1972 to 1975 and since 1980;
Chairman of the Executive Committee and
member of the Finance and Public Policy
Committees; age 66.
[photograph of Norman R. Augustine - Vice Chairman of the
Mr. Augustine] Board, President and Chief Executive Officer,
Lockheed Martin Corporation (aerospace,
electronics, information management,
materials and energy systems and products).
Director of Lockheed Martin Corporation and
Phillips Petroleum Company; Director of the
Company since 1989; Chairman of the
Compensation Committee and member of the
Executive and Finance Committees; age 61.
[photograph of Richard J. Ferris - Co-Chairman, Doubletree
Mr. Ferris] Corporation. Director of Doubletree
Corporation and Amoco Corporation; Director
of the Company since 1979; Chairman of the
Finance Committee and member of the
Executive, and Board Organization and
Nominating Committees; age 59.
[photograph of John C. Sawhill, Ph.D. - President and Chief
Dr. Sawhill] Executive Officer, The Nature Conservancy (an
international conservation organization).
Director of Pacific Gas & Electric Company,
NAACO Industries, and Vanguard Group of
Mutual Funds; Director of the Company since
May 14, 1996; member of the Audit, Board
Organization and Nominating, and Public
Policy Committees; age 60.
[photograph of John F. Smith, Jr. - Chairman, Chief
Mr. Smith] Executive Officer and President, General
Motors Corporation (automobile and related
businesses). Director of General Motors
Corporation; Director of the Company since
1995; member of the Audit, Board Organization
and Nominating, and Public Policy Committees;
age 58.
[photograph of Marina v.N. Whitman, Ph.D. - Professor of
Dr. Whitman] Business Administration and Public Policy,
University of Michigan. Director of Aluminum
Company of America, Browning-Ferris
Industries, Inc., Chase Manhattan Corporation
and its subsidiary Chase Manhattan Bank, and
Unocal Corporation; Director of the Company
since 1976; Chairman of the Board
Organization and Nominating Committee, and
member of the Compensation and Finance
Committees; age 61.
All of the Directors with terms expiring in 1997, except Mr.
Ferris and Dr. Whitman, have been, or were prior to retirement,
executive officers of their respective employers for more than
the past five years. Prior to his association with Doubletree
Corporation (formerly Guest Quarters Hotels LP) in October, 1992,
Mr. Ferris was a private investor for more than five years
following his resignation as Chairman and Chief Executive Officer
of UAL Corporation (formerly Allegis Corporation - travel related
services) in June, 1987. Prior to her appointment at the
University of Michigan effective September 1, 1992, Dr. Whitman
was Vice President and Group Executive, General Motors
Corporation, for more than five years.
Each of the Directors with terms expiring in 1997 was elected
a Director by the shareholders at the annual meeting in 1994
except Mr. Smith and Dr. Sawhill. Mr. Smith was elected a
Director on June 13, 1995 to succeed John G. Smale effective upon
his retirement from the Board and Dr. Sawhill was elected a
Director on May 14, 1996 to succeed David M. Abshire effective
upon his retirement from the Board.
DIRECTORS WITH TERMS EXPIRING IN 1998
[photograph of Joseph T. Gorman - Chairman and Chief
Mr. Gorman] Executive Officer, TRW Inc. (electronic,
automotive, industrial and aerospace
equipment). Director of TRW Inc. and
Aluminum Company of America; Director of the
Company since 1993; member of the
Compensation, Executive and Finance
Committees; age 58.
[photograph of Lynn M. Martin - Professor, Davee Chair, J.
Ms. Martin] L. Kellogg Graduate School of Management,
Northwestern University. Director of
Ameritech Corporation, Ryder Systems, Inc.,
TRW Inc., and Harcourt General Inc.; Director
of the Company since 1994; member of the
Finance, Board Organization and Nominating,
and Public Policy Committees; age 56.
[photograph of John E. Pepper - Chairman of the Board and
Mr. Pepper] Chief Executive. Director of Motorola, Inc.
and Xerox Corporation; Director of the
Company since 1984; member of the Executive
Committee; age 58.
[photograph of Ralph Snyderman, M.D. - Chancellor for Health
Dr. Snyderman] Affairs, Dean, School of Medicine at Duke
University, and Chief Executive Officer of
Duke University Health System. Director of
Somatogen Inc.; Director of the Company since
1995; member of the Audit, Board Organization
and Nominating, and Public Policy Committees;
age 56.
[photograph of Robert D. Storey - Partner in the law firm of
Mr. Storey] Thompson, Hine & Flory, P.L.L., Cleveland,
Ohio. Director of Bank One, Cleveland,
GTE Corporation and The May Department Stores
Company; Director of the Company since 1988;
Chairman of the Public Policy Committee and
member of the Audit and Board Organization
and Nominating Committees; age 60.
All of the nominees for election as Directors with terms
expiring in 1998, except Ms. Martin and Mr. Storey, have been
executive officers of their respective employers for more than
the past five years. Ms. Martin has been a Professor at
Northwestern University since 1993. Prior to that, Ms. Martin
served as Secretary of Labor of the United States from January,
1991 to January, 1993, following service as a member of the U.S.
House of Representatives. Mr. Storey was a partner in the law
firm of Burke, Haber & Berick Co., L.P.A. and its successor firm,
McDonald, Hopkins, Burke & Haber Co., L.P.A., Cleveland, Ohio,
for more than five years prior to joining Thompson, Hine & Flory
on January 1, 1993.
Each of the nominees for election as Directors with terms
expiring in 1998 was elected a Director by the shareholders at
the annual meeting in 1995.
COMMITTEES OF THE BOARD
The EXECUTIVE COMMITTEE (established in 1905) met once during
the fiscal year ended June 30, 1996. As prescribed by the
Regulations of the Company, the Committee has the authority of
the Board of Directors for the management of the business and
affairs of the Company between meetings of the Board.
The AUDIT COMMITTEE (established in 1940) met three times
during the fiscal year ended June 30, 1996 with representatives
of Deloitte & Touche LLP and financial management to review
accounting, control, auditing and financial reporting matters.
The Committee is responsible, among other things, for
recommending to the Board the firm of independent auditors to be
retained, approving professional services rendered and reviewing
the scope of the annual audit and reports and recommendations
submitted by the independent audit firm, which regularly meets
privately with the Committee.
The BOARD ORGANIZATION AND NOMINATING COMMITTEE (established
in 1972) met four times during the fiscal year ended June 30,
1996. The Board Organization and Nominating Committee is
responsible for establishing the criteria for and reviewing the
qualifications of individuals for election as members of the
Board. When a vacancy on the Board occurs or is anticipated, the
Committee presents its recommendation of a replacement Director
to the Board. The Committee makes recommendations as to exercise
of the Board's authority to determine the number of its members,
within the limits provided by the Regulations of the Company.
The Committee also has responsibility for reviewing issues of
corporate governance and making recommendations thereon to the
Board. Shareholders wishing to communicate with the Board
Organization and Nominating Committee concerning potential
Director candidates may do so by corresponding with the Secretary
of the Company and including the name and biographical data of
the individual being suggested.
The COMPENSATION COMMITTEE met six times during the fiscal
year ended June 30, 1996. The Compensation Committee (or its
predecessor Committees, which served the same function under
different names and which were established commencing in 1960) is
responsible for fixing or agreeing to the salary and other
compensation of all principal officers of the Company elected by
the Board, and advising the Chief Executive on policy matters
concerning officers' compensation. The Compensation Committee is
also responsible for administration of The Procter & Gamble 1992
Stock Plan as approved at the annual meeting of shareholders on
October 13, 1992. The authority of the Committee under the Plan
includes selection of key employees for participation in the Plan
and determination of numbers of stock options and stock
appreciation rights and amounts of restricted and unrestricted
stock to be awarded to such employees pursuant to the Plan. The
Committee is also charged with on-going administration and
interpretation of the Plan and of its predecessor plans, The
Procter & Gamble 1983 Stock Plan and the Plan for Use of Shares
in Payment of Remuneration, both of which have been superseded as
to new grants by The Procter & Gamble 1992 Stock Plan.
The FINANCE COMMITTEE (established in 1994) met three times
during the fiscal year ended June 30, 1996. The Finance
Committee is responsible for reviewing and making recommendations
to the Board on the following matters: the Company's annual
financing plans; the Company's global financing objectives and
principles, financial strategies and capital structure; funding
and oversight of pension and benefit plans; the Company's
insurance program; and, after separately being cleared in
principle with the full Board, the financial implications of
major investments, restructurings, joint ventures, acquisitions
and divestitures.
The PUBLIC POLICY COMMITTEE (established in 1994) met three
times during the fiscal year ended June 30, 1996. The Public
Policy Committee is responsible for reviewing activities of
importance to the Company and its stakeholders, including
employees, consumers, customers, suppliers, shareholders,
governments and local communities. The Public Policy Committee
reviews equal employment opportunity and advancement,
environmental quality, employee safety and health, product
safety, contributions and community relations.
CERTAIN ADDITIONAL INFORMATION CONCERNING THE BOARD OF DIRECTORS
During the fiscal year ended June 30, 1996 a total of nine
meetings of the Board and 20 meetings of Committees of the Board
were held. Average attendance at these meetings by nominees and
incumbents serving as Directors during the past year was in
excess of 94%. Mr. Augustine was able to attend only 74% of such
meetings due to recovery from surgery and business conflicts.
During the fiscal year ended June 30, 1996 Directors who were
not employees of the Company were paid retainers at the rate of
$30,000 per year, plus a fee of $1,000 for each Board or Board
Committee meeting attended. In addition, non-employee Directors
who served on Board Committees were paid retainers at the rate of
$5,000 (for Committee Chairmen) or $3,000 (for Committee members)
per year. Non-employee Directors were also granted a stock
option on February 29, 1996 with a term of ten years to purchase
1,000 shares of the Company's Common Stock at an exercise price
of $81.8125, the fair market value of the Common Stock on the
date of grant. The Company does not pay directors' fees to
Directors who are employees of the Company. Directors who are
not employees of the Company are also provided insurance coverage
in the amount of $750,000 payable in the event of accidental
death or disability occurring while traveling on Company
business. Such Directors also receive reimbursement for expenses
of such travel.
Fees otherwise payable to a Director who has elected to come
under The Procter & Gamble Deferred Compensation Plan for
Directors are credited to such Director's account but not funded.
Interest is credited to such an account at the end of each month
at the prime rate then in effect at Morgan Guaranty Trust Company
of New York. Such a deferred compensation account is payable
either upon the retirement of the Director or after a term of
years specified by the electing Director, at the Director's
option, elected in advance of being earned. Directors may also
elect to convert a portion or all of their fees for services as a
Director into Common Stock of the Company pursuant to The Procter
& Gamble 1993 Non-Employee Directors' Stock Plan.
Directors who are not employees of the Company are presently
covered by a retirement plan pursuant to which retirement
benefits are payable to any such Director who has served at least
five years since original election to the Board. The annual
retirement benefit under this plan is specified as the amount of
the annual retainer for Board service in effect at the time of
retirement, payable quarterly for as many calendar quarters
following retirement as the retired Director served prior to
retirement, or until death, whichever occurs first. There are no
survivor benefits payable under this plan.
Effective January 1, 1997, the Board will substantially
simplify its compensation structure for non-employee Directors.
The retirement plan, all Committee membership/chairmanship fees
and all Board and Committee attendance fees will be eliminated.
In replacement of these various fees and plans, Directors who are
not employees will receive a retainer of $55,000 per year. The
last quarterly retainer payment will be contingent upon the
Director having attended at least 75% of the Board meetings held
during the fiscal year. The attendance requirement may be waived
by the Compensation Committee for reasons of health or other
urgent personal circumstances. These Directors will also receive
an annual grant of restricted stock with a value of approximately
$20,000 per year on the date of grant in addition to the existing
annual 1,000 share stock option grant. This simplification does
not increase the total compensation received by a typical non-
employee Director, but it does increase the percentage of pay in
the form of stock from 21% to 40%. This will further strengthen
each Director's alignment with the interests of the Company's
shareholders.
As a result of the termination of the retirement plan
effective January 1, 1997, an amount equal to the present value
of the projected benefit for each then-current Director will be
converted into Procter & Gamble Common Stock at the fair market
value on the first business day following the effective date of
the plan's termination. These shares will be restricted until
retirement or completion of service as a Director.
As part of its overall program of support for charitable
institutions and as an aid in attracting and retaining qualified
Directors, the Board of Directors established a Charitable Gifts
Program funded by life insurance on the lives of the non-employee
members of the Board of Directors and the Chairman of the Board
and Chief Executive. Directors derive no financial benefit from
the Program since all insurance proceeds and charitable
deductions accrue solely to the Company. Under this Program the
Company intends to make charitable contributions of up to a total
of $1 million following the death of any such participant with
such contribution to be allocated in accordance with each
participant's recommendations among up to five charitable
organizations. The following current and retired Directors of
the Company are participants in this Program: David M. Abshire,
Edwin L. Artzt, Norman R. Augustine, Donald R. Beall, Theodore F.
Brophy, Richard B. Cheney, Richard J. Ferris, Joseph T. Gorman,
Robert A. Hanson, Joshua Lederberg, Charles R. Lee, Lynn M.
Martin, John E. Pepper, David M. Roderick, John C. Sawhill, John
G. Smale, John F. Smith, Jr., Ralph Snyderman, Robert D. Storey
and Marina v.N. Whitman. Beneficiary organizations designated
under this Program must be tax-exempt under Section 501(c)(3) of
the Internal Revenue Code, and donations ultimately paid by the
Company will be deductible against federal and other income taxes
payable by the corporation in accordance with the tax laws
applicable at the time. Because of such deductions and use of
insurance, the Program should result in little or no long-term
cost to the Company under present law.
REPORT OF THE COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
OVERVIEW
The Compensation Committee of the Board of Directors (the
"Committee") consists entirely of outside, non-employee
Directors. The Committee establishes and regularly reviews
executive compensation levels and policies, and authorizes short-
and long-term awards in the form of cash or stock. All awards
are made within the authority of the Additional Remuneration
Plan, which dates back to 1949, and The Procter & Gamble 1992
Stock Plan.
Compensation for executives is based on the principles that
compensation must (a) be competitive with other quality companies
in order to help attract, motivate and retain the talent needed
to lead and grow Procter & Gamble's business; (b) provide a
strong incentive for key managers to achieve the Company's goals;
and (c) make prudent use of the Company's resources.
Procter & Gamble has an enviable record of recruiting,
training and developing its executive talent from within -- an
achievement few other corporations have matched. In addition,
the Company's long-term performance, as measured by sales and
earnings growth and other relevant measures, has been very
positive. This record suggests the principles that drive our
compensation program have, over time, delivered the desired
results.
Executive compensation is based on performance against a
combination of financial and non-financial measures including
business results and developing organization capacity. In
addition, employees are expected to uphold the fundamental
principles embodied in the Company's Statement of Purpose and
Environmental Quality Policy. These include a commitment to
integrity, doing the right thing, maximizing the development of
each individual, developing a diverse organization, and
continually improving the environmental quality of our products
and operations. In upholding these financial and non-financial
objectives, executives not only contribute to their own success,
but also help ensure our business, employees, shareholders and
the communities in which we live and work will prosper.
ELEMENTS OF EXECUTIVE COMPENSATION
It is the Company's long-standing policy that variable, at-
risk compensation, both annual and long-term, should make up a
significant portion of executive compensation. Depending upon
the level of the executive, the Company targets between 40% and
60% of executive compensation (other than retirement credits) to
be variable, at-risk elements. When the Company achieves solid
earnings growth and stock price appreciation, executive
compensation levels will be expected to equal or exceed the
middle compensation range for a comparative group of companies.
This group includes a combination of leading consumer products
companies and other corporations of size and reputation
comparable to Procter & Gamble (and with which Procter & Gamble
must compete in hiring and retaining the employees it needs).
The composition of this group is updated periodically in order to
assure its continued relevance.
The Committee believes the compensation levels of the
Company's executive officers are competitive and in line with
those of comparable companies.
Annual compensation elements include base salary and two forms
of incentives, the Performance Bonus Award and the Profit
Incentive Award. Long-term incentive compensation includes stock
options and a Long-Term Incentive Plan award based on Total
Shareholder Return relative to a peer group of companies.
In addition, executives participating in The Procter & Gamble
Profit Sharing Trust and Employee Stock Ownership Plan receive
retirement awards in the form of stock restricted (non-
transferable and subject to forfeiture) until retirement, or in
some cases, cash deferred until retirement. These awards make up
the difference between the Internal Revenue Code limit on
contributions that can be made to that Plan and what would
otherwise be contributed by the Company to the executive's
account. The Procter & Gamble Profit Sharing Trust and Employee
Stock Ownership Plan is a qualified plan providing retirement
benefits for U.S.-based employees.
ANNUAL COMPENSATION
Annual compensation consists of base salary and two forms of
annual incentives.
Executive pay ranges are established based on a careful
examination of survey data from a comparative group of companies
gathered by a leading consulting firm specializing in executive
compensation. A number, but not all, of these companies are
included in the line of business index shown on the performance
graph. Executive compensation ranges are targeted to be in the
middle of this group of companies. Within the established range
structure, the Committee approves changes in amounts of executive
compensation based on individual performance evaluations and time
in position.
One annual incentive award, the Performance Bonus Award, is
based on an evaluation of each executive's individual
performance. A separate annual award, the Profit Incentive
Award, is tied to the net profit achievement of the Company
and/or certain business units as compared to preset goals. If
these profits, after any adjustments for unusual items, are not
delivered, no awards are made.
Senior management and the Committee believe that differences
in performance should result in significantly different levels of
annual cash compensation.
LONG-TERM INCENTIVES
Long-term incentives consist of stock options and Long-Term
Incentive Plan (LTIP) awards. Both types of awards serve to
focus executive attention on the long-term performance of the
business.
The Company makes stock option grants annually at no less than
100% of the market price on the date of grant. Stock
appreciation rights (SARs) are granted instead of options in
countries where the holding of foreign stock is restricted.
These grants and rights are fully exercisable after one year and
have a ten-year life. The number of shares normally awarded is
based on the individual's total short-term compensation and
competitive grant values for that level of compensation. Grants
are performance-based in that they are tied to individual
compensation levels which are already performance-based. These
awards are designed to be competitive with awards made by
companies in the survey group. The number of option shares
currently held by each executive is not considered in determining
awards. Grants are only made to employees who have demonstrated
a capacity for contributing in a substantial way to the success
of the Company. Stock options encourage these managers to become
owners of the business, which helps to further align their
interests with the shareholders' interests. Options have no
value unless the price of the Company's stock increases, and they
are exercisable only by the employee and cannot be transferred
except in case of death.
The goal of the LTIP is to consistently deliver a Total
Shareholder Return (TSR) at least in the top half of a peer group
of companies over the most recent three-year period. When this
occurs, awards ranging from 50% to 150% of the Performance Bonus
Award can be earned. No awards are paid for ranking in the bottom
one-third of the peer group. Awards are generally made in the
form of stock, restricted for a term of years or until retirement,
or as stock options in accordance with the terms of the 1992 Stock
Plan.
To support the Company's desire to increase management's stock
ownership, the Committee approved a share retention program for
managers participating in LTIP. Specific guidelines require
participants to achieve and then retain a multiple of their base
salary in shares of Procter & Gamble stock. Higher level
managers are required to retain a larger multiple. The Chief
Executive's multiple is three times base salary.
The Committee is continuing its review of the new federal tax
legislation limiting the deduction available for compensation paid
to the Company's named executives under Internal Revenue Code
Section 162(m). Stock option and SAR grants under the 1992 Stock
Plan meet the requirements for deductible compensation. The
Committee granted some or all of the named executives' Performance
Bonus, Profit Incentive and Long-Term Incentive Plan awards in the
form of stock options or retirement restricted stock in order to
avoid the loss of deductibility related to such compensation. The
Executive Compensation Tables provide further details. With these
adjustments, the potential tax liability from any loss of
deductibility is nominal.
COMPENSATION OF THE CHIEF EXECUTIVE
The compensation of John E. Pepper, Chairman of the Board and
Chief Executive during fiscal year 1995-96, consists of the same
elements as for other senior executives, namely base salary,
annual incentives, stock options, and LTIP awards.
In determining Mr. Pepper's compensation package, the Committee
reviewed the Company's financial and business performance for 1995-
96. This review was based on a number of qualitative and
quantitative factors including sales, earnings, unit volume,
market share, profit margins, return on equity, growth in
earnings, total shareholder return, innovation and human resource
development. The Committee does not assign relative weights or
rankings to each of these factors, but instead makes a subjective
determination based on consideration of all such factors. In
addition, the Committee also noted significant progress on the
Company's long-term objectives. Fiscal year 1995-96 was a record
year for unit volume, sales and earnings. A favorable settlement
was reached with Bankers Trust on the derivative lawsuit, as a
result of which the bank is absorbing 83% of the amount in dispute
- -- a percentage which significantly exceeds its settlements with
other parties. The Company achieved its 1995-96 earnings target
and profit margins reached their highest level in 46 years.
Restructuring efforts are being successfully completed with
savings well in excess of original commitments. The Company's
strategy of offering consumers products providing better value
continues to build the business. This strategy is now being
expanded into Europe. Of 16 key global categories, market share
is up in 11. TSR has been strong. Since the beginning of the
1993-94 fiscal year, the Company's TSR has averaged 25% on an
annualized basis. This ranks P&G well into the top third of a
group of peer companies.
Mr. Pepper's base salary was established based on the
Committee's evaluation of his performance toward the achievement
of the Company's financial, strategic and other goals, his length
of service as Chief Executive, and competitive chief executive
officer pay information derived from an independent consulting
organization. His Performance Bonus Award was based on the
Committee's overall evaluation of his individual performance.
Although the final amount has not yet been determined, it is
expected that Mr. Pepper will qualify for a Profit Incentive
Award attributable to 1995-96 in the amount of approximately
$371,000.
The Chief Executive's LTIP award reflecting the Company's
relative TSR performance over the most recent three fiscal years
was calculated on the same basis as for all other covered
executives. This equaled 108% of Mr. Pepper's Performance Bonus
Award.
Mr. Pepper's regular award of stock options for 1996, as with
other optionees, was based on his total short-term compensation
and competitive survey data.
Norman R. Augustine, Chairman Joseph T.Gorman
Donald R. Beall Marina v.N. Whitman
Richard B. Cheney
EXECUTIVE COMPENSATION TABLES
The following tables and notes present the compensation
provided by the Company to its Chief Executive officer, and to
each of the Company's four most highly compensated executive
officers, other than the Chief Executive, for services rendered in
all capacities to the Company for the fiscal years ended June 30,
1996, 1995 and 1994.
<TABLE>
SUMMARY COMPENSATION TABLE
(DOLLAR FIGURES SHOWN IN THOUSANDS)
<CAPTION>
Annual Compensation
Name and ______________________________________________________
Principal Other Annual
Position Year Salary Bonus<F1> Compensation<F2>
_______________ ______ __________ ________________
<S> <C> <C> <C> <C>
John E. Pepper 1995-96 $1,110.0 $0<F6> $0
Chairman of the 1994-95 910.0 50.8 0
Board and Chief 1993-94 910.0 704.0 0
Executive
Durk I. Jager 1995-96 $910.0 $58.0<F7> $0
President and 1994-95 760.0 218.3 0
Chief Operating 1993-94 672.5 574.6 (28.6)<F8>
Officer
Harald Einsmann 1995-96 $635.0 $457.0<F9> $403.3<F10>
Executive Vice 1994-95 582.5 524.9 537.5<F10>
President 1993-94 565.0 463.8 249.9<F10>
Wolfgang C. Berndt 1995-96 $620.0 $378.0<F11> $338.5<F10>
Executive Vice 1994-95 555.0 293.7 318.0<F10>
President 1993-94 507.8 336.8 314.8<F10>
Gordon F. Brunner 1995-96 $525.0 $0<F12> $0
Senior Vice 1994-95 500.0 400.0 0
President 1993-94 475.0 372.4 0
<CAPTION>
Long-Term Compensation
Awards
________________________
Securities
Name and Restricted Underlying
Principal Stock Options/ All Other
Position Awards<F3> SARs<F4> Compensation<F5>
________________ __________ ___________ _______________
<S> <C> <C> <C>
John E. Pepper $480.0 91,200 $284.5
Chairman of the 571.3 70,542 240.0
Board and Chief 160.7 45,000 239.1
Executive
Durk I. Jager $0 81,521 $230.5
President and 228.7 55,322 189.4
Chief Operating 124.2 35,000 168.8
Officer
Harald Einsmann $0 43,531 $302.4
Executive Vice 84.0 25,300 290.1
President 55.8 24,000 256.5
Wolfgang C. Berndt $0 39,433 $295.4
Executive Vice 111.5 22,000 335.7
President 44.2 20,000 319.7
Gordon F. Brunner $561.3 33,196 $138.9
Senior Vice 126.8 19,800 130.9
President 82.2 18,000 125.4
<FN>
<F1> The Performance Bonus, Profit Incentive and Long-Term
Incentive Plan Awards may be made in the form of cash,
restricted stock or stock options as approved by the
Compensation Committee. Awards received in the form of
cash are reported in this column. Awards received in the
form of restricted stock or stock options are reported
under the appropriate long-term compensation column.
Although the final amount of the Profit Incentive Award
for fiscal year 1995-96 has not yet been determined,
the amount of the estimated award has been noted below
in footnotes 6, 7, 9, 11 and 12.
<F2> Any perquisites or other personal benefits received from
the Company by any of the named executives were substantially
less than the reporting thresholds established by the
Securities and Exchange Commission (the lesser of $50,000
or 10% of the individual's cash compensation).
<F3> All restricted stock awarded to the named executives for
1995-96 will vest on retirement. The number and value
(in thousands of dollars) of aggregate restricted stock
holdings of each of the named executives on June 30,
1996 was: Mr. Pepper, 82,829 shares ($7,558.1);
Mr. Jager, 22,773 shares ($2,078.0); Mr. Einsmann,
0 shares ($0); Mr. Berndt, 1,623 shares ($148.1);
Mr. Brunner, 23,606 shares ($2,154.0). The value of
the restricted stock is determined by multiplying
the total shares held by each named executive by the average
of the high and low price on the New York Stock Exchange on
June 28, 1996 ($91.25). Dividends are paid on all restricted
Common Stock at the same rate as paid on the Company's Common
Stock.
<F4> For fiscal year 1995-96, in addition to the regular award
of stock options, these figures include options granted on
July 1, 1996 to Messrs. Pepper and Jager for the 1995-96
Performance Bonus Award and options granted on July 10, 1996
to all five named executives for the 1995-96 Long-Term
Incentive Plan Award. See footnotes 6, 7, 9, 11 and 12
below. Options for the 1995-96 Profit Incentive Award
will be granted on or about September 13, 1996 and
reported in the proxy statement for the annual meeting
of shareholders on October 14, 1997. Similarly, for
fiscal year 1994-95, these figures include
options granted on July 3, 1995 to Messrs. Pepper and Jager
for their 1994-95 Performance Bonus Award.
<F5> All OtherCompensation (in thousands of dollars) -- details for 1995-
96:
</FN>
</TABLE>
<TABLE>
<CAPTION>
Profit Inter-
Sharing national
and Flexible Assignment
Related Compensation Equali- Total
Contribu- Program Imputed zation All Other
Name tions Contributions Income Payments Compensation
_______________ _______ _____________ _______ _________ ____________
<S> <C> <C> <C> <C> <C>
John E. Pepper $241.6 $36.4 $6.5 $0 $284.5
Durk I. Jager 198.1 30.4 2.0 0 230.5
Harald Einsmann 0 0 2.2 300.2 302.4
Wolfgang C. Berndt 0 0 1.4 294.0 295.4
Gordon F. Brunner 114.3 20.0 4.6 0 138.9
<FN>
<F6> Mr. Pepper's Performance Bonus Award of $640,041 was paid
in the form of retirement restricted stock ($480,041) and stock options
($160,000); his Long-Term Incentive Plan Award of $691,200
was paid in the form of stock options; and his estimated
Profit Incentive Award of $371,000 will be paid in the form
of stock options to be granted on or about September 13,
1996.
<F7> Mr. Jager's Performance Bonus Award of $490,000 was paid in the
form of cash ($58,000) and stock options ($432,000); his Long-Term
Incentive Plan Award of $529,200 was paid in the form of
stock options; and his estimated Profit Incentive Award of
$309,000 will be paid in the form of stock options to be
granted on or about September 13, 1996.
<F8> Reimbursement to the Company of foreign tax
credits attributable to previous tax equalization payments
pertaining to Mr. Jager's earlier service in Japan, as paid
in accordance with Company policies applicable generally to
managers assigned outside their home countries.
<F9> Mr. Einsmann's Performance Bonus Award of $275,000 was paid in the
form of cash; his Long-Term Incentive Plan Award of $297,000 was paid
in the form of stock options; and his estimated Profit
Incentive Award of $182,000 will be paid in the form of cash.
<F10> Tax equalization payments to cover incremental taxes required
to be paid to Belgium for Mr. Einsmann and to the United
Kingdom for Mr. Berndt, as paid in accordance with Company
policies applicable generally to managers assigned outside
their home countries.
<F11> Mr. Berndt's Performance Bonus Award of $240,000 was paid
in the form ofcash; his Long-Term Incentive Plan Award of
$259,200 was paid in the form of stock options; and his
estimated Profit Incentive Award of $148,000 will be paid
in the form of cash ($138,000) and stock options ($10,000)
to be granted on or about September 13, 1996.
<F12> Mr. Brunner's Performance Bonus Award of $265,000 was paid
in the form of retirement restricted stock; his Long-Term
Incentive Plan Award of $286,280 was paid in the form of
retirement restricted stock ($143,180) and stock options
($143,100); and his estimated Profit Incentive Award of
$153,000 will be paid in the form of retirement restricted stock.
</FN>
</TABLE>
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
(DOLLAR FIGURES SHOWN IN THOUSANDS)
<CAPTION>
Number of % of Total
Securities Options
Underlying Granted to
Options Employees Exercise or
Name Granted<F1> in Fiscal Year Base Price
_________________ __________ ______________ ____________
<S> <C> <C> <C>
John E. Pepper<F3> 62,454 1.3% $81.8125
5,298 0.1% 90.625
23,448 0.5% 88.4375
Durk I. Jager<F4> 49,268 1.0% 81.8125
14,301 0.3% 90.625
17,952 0.4% 88.4375
Harald Einsmann 33,454 0.7% 81.8125
10,077 0.2% 88.4375
Wolfgang C. Berndt 30,640 0.6% 81.8125
8,793 0.2% 88.4375
Gordon F. Brunner 28,339 0.6% 81.8125
4,857 0.1% 88.4375
<CAPTION>
Potential
Realizable Value
at Assumed Annual
Rates of Stock
Price Appreciation
for Option Term<F2>
___________________
Expiration (a) (b)
Name Date 5% 10%
___________________ ___________ __ ___
<S> <C> <C> <C>
John E. Pepper<F3> 3/1/06 3,213.3 $8,143.3
7/1/06 302.0 765.2
7/10/06 1,304.1 3,304.9
Durk I. Jager<F4> 3/1/06 2,534.9 6,424.0
7/1/06 815.1 2,065.5
7/10/06 998.5 2,530.3
Harald Einsmann 3/1/06 1,721.3 4,362.0
7/10/06 560.5 1,420.3
Wolfgang C. Berndt 3/1/06 1,576.5 3,995.1
7/10/06 489.0 1,239.3
Gordon F. Brunner 3/1/06 1,458.1 3,695.1
7/10/06 270.1 684.6
<FN>
<F1> All of these options, which were granted pursuant to The
Procter & Gamble 1992 Stock Plan, were non-qualified, were
granted at market value on the date of grant, vest on the
first anniversary of the date of grant, and have a term of
ten years. Stock options expiring on July 1, 2006 and July
10, 2006 related to Performance Bonus and Long-Term Incentive
Plan Awards, respectively.
<F2> We recommend caution in interpreting the financial
significance of these figures. They are calculated by
multiplying the number of options granted by the difference
between a future hypothetical stock price and the option
exercise price and are shown pursuant to rules of the
Securities and Exchange Commission. They assume the value of
Company stock appreciates 5% or 10% each year, compounded
annually, for ten years (the life of each option). They are
not intended to forecast possible future appreciation, if
any, of such stock price or to establish a present value of
options. Also, if appreciation does occur at the 5% or 10%
per year rate, the amounts shown would not be realized by the
recipients until the year 2006. Depending on inflation
rates, these amounts may be worth significantly less in 2006,
in real terms, than their value today.
<F3> Mr. Pepper also received an award of 22,542 stock options on
July 3, 1995 with an exercise price of $71.875 and an
expiration date of July 3, 2005 for his Performance Bonus
Award earned in fiscal year 1994-95. This option award had
potential realizable values of $1,018,900 and $2,582,200 at
assumed rates of appreciation of 5% and 10%, respectively.
<F4> Mr. Jager also received an award of 17,322 stock options on
July 3, 1995 with an exercise price of $71.875 and an
expiration date of July 3, 2005 for his Performance Bonus
Award earned in fiscal year 1994-95. This option award had
potential realizable values of $783,000 and $1,984,200 at
assumed rates of appreciation of 5% and 10%, respectively.
</FN>
</TABLE>
<TABLE>
AGGREGATED OPTION/STOCK APPRECIATION RIGHT (SAR)
EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES<F1>
(DOLLAR FIGURES SHOWN IN THOUSANDS)
<CAPTION>
Shares Number of Securities
Acquired Value Underlying Unexercised
Name on Exercise Realized<F2> Options/SARs at FY End
_________ ___________ _____________________________________
Exercisable Unexercisable
____________ _____________
<S> <C> <C> <C> <C>
John E. Pepper 37,000 $1,884.1 317,000 84,996
Durk I. Jager 14,000 873.5 234,000 66,590
Harald Einsmann 0 0 229,500 33,454
Wolfgang C. Berndt 0 0 114,000 30,640
Gordon F. Brunner 25,190 1,533.3 139,080 28,339
<CAPTION>
Value of Unexercised
In-the-Money
Name Options/SARs at FY End<F3>
_____________________ ______________________________
Exercisable Unexercisable
___________ _____________
<S> <C> <C>
John E. Pepper $13,480.2 $1,026.2
Durk I. Jager 10,541.7 800.6
Harald Einsmann 11,582.8 315.7
Wolfgang C. Berndt 4,360.1 289.2
Gordon F. Brunner 6,217.7 267.4
<FN>
<F1> Optionees may satisfy the exercise price by submitting
currently owned shares and/or cash. Income tax withholding
obligations may be satisfied by electing to have the Company
withhold shares otherwise issuable under the option/stock
appreciation right (SAR) with a fair market value equal to
such obligations.
<F2> Options/SARs were granted for terms of up to ten years. The
value realized on options/SARs exercised during the last
fiscal year represents the total gain over the years the
options/SARs were held by the executive. If this total gain
is divided by the average number of years the options/SARs
were held, a more relevant annualized gain is produced. The
annualized gains (in thousands of dollars) on these
option/SAR exercises were as follows: Mr. Pepper, $300.8;
Mr. Jager, $109.2; and Mr. Brunner, $207.9.
<F3> Calculated based on the fair market value of the Company's
Common Stock on June 28, 1996 ($91.25 per share) minus the
exercise price.
</FN>
</TABLE>
RETIREMENT BENEFITS
Retirement benefits for U.S.-based executive officers are
provided primarily by The Procter & Gamble Profit Sharing Trust
and Employee Stock Ownership Plan. This is a defined
contribution plan. Under the rules set by the Securities and
Exchange Commission, these Company contributions are included in
the Summary Compensation Table in the "All Other Compensation"
column (see footnote (5) to such Table). In addition,
Mr. Einsmann and Mr. Berndt are enrolled in the Pension Plan of
Procter & Gamble GmbH (Germany) and Mr. Jager is enrolled in the
Pension Plan of Procter & Gamble Benelux N.V. (Netherlands
Branch), where they joined the Company. Mr. Jager is also
enrolled in the Supplemental Retirement Plan for U.S.-based
managers who previously participated in pension plans of
international subsidiaries. These Plans are defined benefit
plans funded by book reserves or insurance contracts in order to
pay retirement benefits in cash. Given their age and service
with the Company, their estimated annual benefit, if payable in
the form of a straight annuity upon retirement at age 65, would
be $1,007,190 for Mr. Einsmann, $905,880 for Mr. Berndt and
$267,862 for Mr. Jager.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
The following graph compares the five-year cumulative total
return of the Company's Common Stock as compared with the S&P 500
Stock Index and a composite of the S&P Household Products Index,
the S&P Paper & Forest Products Index, the S&P Cosmetics Index,
the S&P Health Care Diversified Index and the S&P Foods Index
weighted based on the Company's current fiscal year revenues.
{Performance Graph}
The graph assumes a $100 investment made on July 1, 1991 and
the reinvestment of all dividends, as follows:
<TABLE>
<CAPTION>
DOLLAR VALUE OF $100 INVESTMENT AT JUNE 30
___________________________________________
1991 1992 1993 1994 1995 1996
____ ____ ____ ____ ____ ____
<S> <C> <C> <C> <C> <C> <C>
P&G Common $100.00 $121.79 $140.75 $149.88 $203.78 $263.63
Composite Group $100.00 $122.11 $131.68 $135.32 $185.43 $222.00
S&P 500 $100.00 $113.41 $128.87 $130.68 $164.75 $207.58
</TABLE>
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following tables give information concerning the
beneficial ownership of the Company's Common and Series A and B
ESOP Convertible Class A Preferred Stock by all Directors and
nominees, each named executive, all Directors and executive
officers as a group, and the owners of more than five percent of
the outstanding Series A and B ESOP Convertible Class A Preferred
Stock, on August 9, 1996:
<TABLE>
<CAPTION>
COMMON STOCK
Amount and Nature of Beneficial Ownership
_________________________________________
Direct<F1> and Trusteeships
Profit Right and Percent
Sharing to Family of
Owner Plan<F2> Acquire<F3> Holdings<F4> Class
________________ __________ __________ __________ _______
<S> <C> <C> <C> <C>
Edwin L. Artzt 245,180.8 585,000 -- <F5>
Norman R. Augustine 3,328.0 1,000 -- <F5>
Donald R. Beall 2,500.0 1,000 6,078 <F5>
Wolfgang C. Berndt 32,566.0 114,000 -- <F5>
Gordon F. Brunner 89,194.5 139,080 238 <F5>
Richard B. Cheney 1,717.0 1,000 -- <F5>
Harald Einsmann 11,516.0 229,500 -- <F5>
Richard J. Ferris 42,800.0 1,000 -- <F5>
Joseph T. Gorman 3,059.0 1,000 -- <F5>
Durk I. Jager 49,619.5 251,322 -- <F5>
Charles R. Lee 4,701.0 1,000 -- <F5>
Lynn M. Martin 500.0 1,000 -- <F5>
John E. Pepper 389,098.9 339,542 1,582 <F5>
John C. Sawhill 1,081.0 -- -- <F5>
John F. Smith, Jr. 1,765.0 -- -- <F5>
Ralph Snyderman 1,115.0 -- -- <F5>
Robert D. Storey 1,000.0 -- -- <F5>
Marina v.N. Whitman 2,400.0 1,000 -- <F5>
40 Directors and
executive
officers,
as a group 1,714,221.3 3,534,394 21,466 .709%
<FN>
<F1> Sole discretion as to voting and investment of shares.
<F2> Shares allocated to personal accounts of executive
officers under the Retirement Trust pursuant to The Procter &
Gamble Profit Sharing Trust and Employee Stock Ownership
Plan. Plan participants have sole discretion as to voting
and, within limitations provided by the Plan, investment of
shares. Shares are voted by the Trustees of such Trusts in
accordance with instructions from participants. If
instructions are not received by the Trustees as to the
voting of particular shares, shares are to be voted in
proportion to instructions actually received from other
participants in the Trust.
<F3> If acquired, would have sole discretion as to voting and
investment of shares.
<F4> The individuals involved share voting and/or investment
powers with other persons.
<F5> Less than .113% for any one Director.
</FN>
</TABLE>
<TABLE>
<CAPTION>
SERIES A ESOP CONVERTIBLE CLASS A PREFERRED STOCK
Amount and Nature of Beneficial Ownership
_________________________________________
Profit Percent
Sharing of
Owner Plan<F1> Trusteeships Series
___________________ ________ ____________ _______
<S> <C> <C> <C>
Edwin L. Artzt 2,829.3 - <F2>
Norman R. Augustine - - -
Donald R. Beall - - -
Wolfgang C. Berndt - - -
Gordon F. Brunner 3,036.6 - <F2>
Richard B. Cheney - - -
Harald Einsmann - - -
Richard J. Ferris - - -
Joseph T. Gorman - - -
Durk I. Jager 3,012.4 - <F2>
Charles R. Lee - - -
Lynn M. Martin - - -
John E. Pepper 3,036.6 - <F2>
John C. Sawhill - - -
John F. Smith, Jr. - - -
Ralph Snyderman - - -
Robert D. Storey - - -
Marina v.N. Whitman - - -
40 Directors and
executive
officers,
as a group 56,537.0 - .176%
Employee Stock Ownership
Trust of The Procter &
Gamble Profit Sharing
Trust and Employee Stock
Ownership Plan, PO Box
599, Cincinnati, Ohio
45201-0599 (G. V. Dirvin,
W. O. Coleman and
C. C. Carroll,
Trustees) -- 19,394,053.2<F3> 60.33%
<FN>
<F1> Shares allocated to personal accounts of executive officers
under the Employee Stock Ownership Trust pursuant to The
Procter & Gamble Profit Sharing Trust and Employee Stock
Ownership Plan. Plan participants have sole discretion as
to voting and, within limitations provided by the Plan,
investment of shares. Shares are voted by the Trustees of
such Trust in accordance with instructions from
participants. If instructions are not received by the
Trustees as to the voting of particular shares, shares are
to be voted in proportion to instructions actually received
from other participants in the Trust.
<F2> Less than .010% for any one Director; by the terms of the
stock, only persons who are or have been employees can have
beneficial ownership of these shares.
<F3> Unallocated shares. The voting of these shares is governed
by the terms of the Plan, which provides that the Trustees
shall vote unallocated shares held by them in proportion to
instructions received from Trust participants as to voting
of allocated shares. The disposition of these shares in
connection with a tender offer would be governed by the
terms of the Plan, which provides that the Trustees shall
dispose of unallocated shares held by them in proportion to
instructions received from Trust participants as to the
disposition of allocated shares.
</FN>
</TABLE>
<TABLE>
<CAPTION>
SERIES B ESOP CONVERTIBLE CLASS A PREFERRED STOCK
Amount and Nature of Beneficial Ownership
_________________________________________
Profit Percent
Sharing of
Owner Plan<F1> Trusteeships Series
__________________ ________ ____________ _______
<S> <C> <C> <C>
Edwin L. Artzt 224.3 - <F2>
Norman R. Augustine - - -
Donald R. Beall - - -
Wolfgang C. Berndt - - -
Gordon F. Brunner 115.1 - <F2>
Richard B. Cheney - - -
Harald Einsmann - - -
Richard J. Ferris - - -
Joseph T. Gorman - - -
Durk I. Jager - - -
Charles R. Lee - - -
Lynn M. Martin - - -
John E. Pepper 115.1 - <F2>
John C. Sawhill - - -
John F. Smith, Jr. - - -
Ralph Snyderman - - -
Robert D. Storey - - -
Marina v.N. Whitman - - -
40 Directors and
executive
officers,
as a group 1,124.1 - .006%
Employee Stock Ownership Trust
of The Procter & Gamble Profit
Sharing Trust and Employee Stock
Ownership Plan, PO Box 599,
Cincinnati, Ohio 45201-0599
(G. V. Dirvin, W. O. Coleman and
C. C. Carroll,
Trustees) -- 16,387,486.2<F3> 85.79%
<FN>
<F1> Shares allocated to personal accounts of current and former
executive officers under the Employee Stock Ownership Trust
pursuant to The Procter & Gamble Profit Sharing Trust and
Employee Stock Ownership Plan. Plan participants have sole
discretion as to voting and, within limitations provided by
the Plan, investment of shares. Shares are voted by the
Trustees of such Trust in accordance with instructions from
participants. If instructions are not received by the
Trustees as to the voting of particular shares, shares are
to be voted in proportion to instructions actually received
from other participants in the Trust.
<F2> Less than .0013% for any one Director.
<F3> Unallocated shares. The voting of these shares is governed
by the terms of the Plan, which provides that the Trustees
shall vote unallocated shares held by them in proportion to
instructions received from Trust participants as to voting
of allocated shares. The disposition of these shares in
connection with a tender offer would be governed by the
terms of the Plan, which provides that the Trustees shall
dispose of unallocated shares held by them in proportion to
instructions received from Trust participants as to the
disposition of allocated shares.
</FN>
</TABLE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Ownership of and transactions in Company stock by executive
officers and Directors of the Company are required to be reported
to the Securities and Exchange Commission pursuant to Section 16
of the Securities Exchange Act of 1934. On August 10, 1995,
Ralph Snyderman, Director, filed a Form 4 for June, 1995 to
correct an inadvertent failure to report his initial purchase of
400 shares.
TRANSACTIONS WITH EXECUTIVE OFFICERS, DIRECTORS AND OTHERS
During the past fiscal year, the Company and its subsidiaries
had no transaction in which any Director, or any member of the
immediate family of any Director, had a material direct or
indirect interest reportable under applicable rules of the
Securities and Exchange Commission. In the normal course of
business the Company had transactions with other corporations
where certain Directors are or were executive officers; and the
Company utilized the services of the law firm of Thompson, Hine &
Flory in which Robert D. Storey, a Director, is a partner. None
of the aforementioned matters was material in amount as to the
Company, the corporations or the law firm.
During the past fiscal year, the Company and its subsidiaries
had no transactions in which any executive officer of the
Company, or any member of the immediate family of any such
executive officer, had a material direct or indirect interest
reportable under applicable rules of the Securities and Exchange
Commission.
PROPOSAL TO RATIFY APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, acting upon the recommendation of the
Audit Committee of the Board, has appointed the firm of Deloitte
& Touche LLP as the Company's independent auditors for fiscal
year 1996-97. Although action by the shareholders in this matter
is not required, the Board believes that it is appropriate to
seek shareholder ratification of this appointment in light of the
critical role played by independent auditors in maintaining the
integrity of Company financial controls and reporting.
The following proposal will therefore be presented for action
at the annual meeting by direction of the Board of Directors:
RESOLVED, That action by the Board of Directors appointing
Deloitte & Touche LLP as the Company's independent auditors
to conduct the annual audit of the financial statements of
the Company and its subsidiaries for the fiscal year ending
June 30, 1997 is hereby ratified, confirmed and approved.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS RESOLUTION
FOR THE FOLLOWING REASONS:
The Board of Directors first appointed Deloitte & Touche LLP
as the Company's independent auditors in 1890 and has reappointed
them to this capacity each succeeding fiscal year. Deloitte &
Touche LLP has an outstanding reputation in the auditing field
and has served the Company well over the intervening years. The
Board of Directors and its Audit Committee believe that such firm
clearly has the necessary personnel, professional qualifications
and independence to continue to serve as the Company's
independent auditors.
In addition, Deloitte & Touche LLP's longstanding service to
the Company has given it a unique understanding of the operations
of Procter & Gamble, thereby giving it a significant advantage
over other firms in conducting a knowledgeable and efficient
audit.
One or more representatives of Deloitte & Touche LLP will be
in attendance at the annual meeting on October 8, 1996. The
representatives will have the opportunity to make a statement, if
desired, and will be available to respond to appropriate
questions from shareholders.
The affirmative vote of a majority of shares participating in
the voting on this proposal is required for adoption of this
resolution. Proxies will be voted FOR the resolution unless the
Proxy Committee is instructed otherwise on a proxy returned to
such Committee. Abstentions indicated on such a proxy card will
not be counted as either "for" or "against" this proposal.
SHAREHOLDER PROPOSAL
Evelyn Y. Davis, Watergate Office Building, 2600 Virginia
Avenue, N.W., Suite 215, Washington, DC 20037, owning 200 shares
of Common Stock of the Company, has given notice that she intends
to present for action at the annual meeting the following
resolution:
RESOLVED: That the shareholders of P&G recommend that the
Board of Directors take the necessary steps to reinstate the
election of directors ANNUALLY, instead of the stagger system
which was recently adopted.
Mrs. Davis has submitted the following statement in support of
her resolution:
REASONS: Until recently, directors of P&G were elected
annually by all shareholders.
The great majority of New York Stock Exchange listed
corporations elect all their directors each year.
This insures that ALL directors will be more accountable
to ALL shareholders each year and to a certain extent
prevents the self-perpetuation of the Board.
Last year the owners of 158,229,332 shares representing
approximately 28.7% of shares voting, voted FOR this
proposal.
If you AGREE, please mark your proxy FOR this resolution.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS
RESOLUTION FOR THE FOLLOWING REASONS:
The shareholders of Procter & Gamble decided, by action at the
annual meeting of shareholders in 1985, that its Board of
Directors shall be divided into three classes with Directors
elected to staggered three-year terms. This was to insure
continuity of experienced Board members.
This exercise by Procter & Gamble shareholders of their
rightful role in corporate governance has been challenged with
this same resolution at every annual meeting since 1986. On each
of these occasions, the shareholders confirmed that they wanted
to retain the continuity of experienced Directors by having a
classified Board of Directors with staggered terms.
In each such year they defeated the proposal to return to
annual election of the entire Board, with over 71% voting against
it at the most recent shareholders meeting. We believe this
affirms the Board's view that the current system of election is
working effectively.
This year's resolution and the arguments in support of it are
identical to those in prior years. The Board of Directors agrees
with the results of previous shareholder voting on this issue and
again recommends a vote AGAINST the proposal.
The affirmative vote of a majority of shares participating in
the voting on this proposal is required for adoption of this
resolution. Proxies will be voted AGAINST the resolution unless
the Proxy Committee is instructed otherwise on a proxy returned
to such Committee. Abstentions indicated on such a proxy card
will not be counted as either "for" or "against" this proposal.
"Broker non-votes" specified on proxies returned by brokers
holding shares for beneficial owners who have not provided
instructions as to voting on this issue will be treated as not
present for voting on this issue.
1997 ANNUAL MEETING DATE
It is anticipated that the 1997 annual meeting of shareholders
will be held on Tuesday, October 14, 1997. Pursuant to
regulations issued by the Securities and Exchange Commission, to
be considered for inclusion in the Company's proxy statement for
presentation at that meeting, all shareholder proposals must be
received by the Company on or before the close of business on
Friday, May 2, 1997.
OTHER MATTERS
No action will be taken with regard to the minutes of the
annual meeting of shareholders held October 10, 1995 unless they
have been incorrectly recorded.
The Board of Directors knows of no other matters which will
come before the meeting. However, if any matters other than
those set forth in the notice should be properly presented for
action, the persons named in the proxy intend to take such action
as will be in harmony with the policies of the Company and, in
that connection, will use their discretion.
THE PROCTER & GAMBLE COMPANY
[P&G LOGO]
SHAREHOLDER'S PROXY AND CONFIDENTIAL VOTING INSTRUCTION CARD
ANNUAL MEETING OF SHAREHOLDERS-TUESDAY, OCTOBER 8, 1996
The undersigned hereby appoints John E. Pepper, Durk I.
Jager and Harald Einsmann, and each of them (with respect to any
shares of Common Stock held by the undersigned directly or via
the Company's Shareholder Investment Program) as proxies to
attend the annual meeting of shareholders of the Company to be
held on Tuesday, October 8, 1996 at 12 o'clock noon in
Cincinnati, Ohio and any adjournment thereof and vote all shares
held by or for the benefit of the undersigned as indicated on the
reverse side of this card: for the election of Directors; upon
the Board of Directors and shareholder proposals listed; and,
finally, upon such other matters as may properly come before the
meeting.
This proxy also provides voting instructions for shares held
by the Trustees of the Retirement Trust and the Employee Stock
Ownership Trust of The Procter & Gamble Profit Sharing Trust and
Employee Stock Ownership Plan (as applicable, with respect to
shares of Common Stock and Series A and B ESOP Convertible Class
A Preferred Stock held for the benefit of the undersigned) and/or
the Trustees of The Procter & Gamble/Noxell Transitional Plan and
directs such Trustees to vote as indicated on the reverse side of
this card: for the election of Directors; upon the Board of
Directors and shareholder proposals listed; and, finally, upon
such other matters as may properly come before the meeting. The
Trustees of each Trust will vote shares of the Company's Stock
held by them for which instructions are not received in direct
proportion to the voting of shares for which instructions have
been received, provided that such voting is not contrary to the
Employee Retirement Income Security Act of 1974, as amended. The
Trustees will vote unallocated shares in direct proportion to
voting by allocated shares of the same Class in aggregate, for
which instructions have been received.
THIS PROXY/VOTING INSTRUCTION CARD IS SOLICITED JOINTLY BY
THE BOARD OF DIRECTORS OF THE PROCTER & GAMBLE COMPANY AND THE
TRUSTEES OF THE PLAN TRUSTS LISTED ABOVE PURSUANT TO A SEPARATE
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT, RECEIPT OF WHICH IS
HEREBY ACKNOWLEDGED. THIS CARD SHOULD BE MAILED IN THE ENCLOSED
ENVELOPE IN TIME TO REACH THE COMPANY'S PROXY TABULATOR, THE
FIRST NATIONAL BANK OF BOSTON, P.O. BOX 1850, BOSTON, MA 02105-
9812 BY 9:00 A.M. ON TUESDAY, OCTOBER 8, 1996 FOR COMMON SHARES
TO BE VOTED AND 5:00 P.M. ON MONDAY, OCTOBER 7, 1996 FOR THE
TRUSTEES TO VOTE THE PLAN SHARES. THE FIRST NATIONAL BANK OF
BOSTON WILL REPORT SEPARATELY TO THE PROXY COMMITTEE AND TO THE
TRUSTEES AS TO PROXIES RECEIVED AND VOTING INSTRUCTIONS PROVIDED,
RESPECTIVELY. INDIVIDUAL PROXY VOTING AND VOTING INSTRUCTIONS
WILL BE KEPT CONFIDENTIAL BY THE FIRST NATIONAL BANK OF BOSTON
AND NOT PROVIDED TO THE COMPANY.
(Continued from other side)
PLEASE MARK
X VOTES AS IN
THIS EXAMPLE
The Board of Directors recommends a vote FOR the following
actions or proposals (as described in the accompanying Proxy
Statement). If you sign and return this card without marking,
this proxy card will be treated as being FOR each proposal.
A. ELECTION OF DIRECTORS (terms expiring in 1999)
Nominees: Donald R. Beall, Gordon F. Brunner,
Richard B. Cheney, Harald Einsmann,
Durk I. Jager, Charles R. Lee
FOR WITHHELD
___ ___
EXCEPTIONS:
_______________________________________
For all nominees except as noted above
B. Ratify Appointment of
Independent Auditors
FOR AGAINST ABSTAIN
___ ___ ___
The Board of Directors recommends a vote AGAINST the following
shareholder proposal (as described in the accompanying Proxy
Statement), if presented at the annual meeting. If you sign and
return this card without marking, this proxy card will be treated
as being AGAINST such proposal.
1. Board of Directors Terms
FOR AGAINST ABSTAIN
___ ___ ___
NOTE: Please sign exactly as name(s) appear hereon. When
signing as attorney, executor, administrator, trustee, or
guardian, please give full name as such.
Signature(s)__________ Date______ 1996 Signature(s)________ Date______ 1996
PLEASE SIGN THIS PROXY AS NAME(S) APPEAR ABOVE.
[P&G LOGO]
September 24, 1996
Dear Shareholder:
On August 30, 1996 we sent you a notice and proxy statement
plus proxy card for the annual meeting of The Procter &
Gamble Company to be held on Tuesday, October 8, 1996.
As of this date your proxy card has not been received by the
First National Bank of Boston, the Company's proxy
tabulators for this year's meeting. If you have in fact
already mailed your card, we thank you. If not, we hope you
will do this now.
In case you have lost the original card and need a new one
to respond at this time, we enclose a duplicate together
with a return envelope addressed to The First National Bank
of Boston. Thank you for your attention to this matter.
THE PROCTER & GAMBLE COMPANY
