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):
/ /$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:
.................................................
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*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
THE PROCTER & GAMBLE COMPANY
NOTINCE OF ANNUAL MEETING
AND
PROXY STATEMENT
ANNUAL MEETING OF
SHAREHOLDERS
OCTOBER 14, 1997
THE PROCTER & GAMBLE COMPANY
PO Box 599
Cincinnati, Ohio 45201-0599
August 29, 1997
Fellow P&G Shareholders:
It is my pleasure to invite you to this year's annual
meeting of shareholders, which will be held at Procter &
Gamble's General Offices in Cincinnati. The meeting this
year will convene at 12:00 noon, Eastern Daylight Time, on
October 14.
We've just completed fiscal year 1996/97 and we can look
back on a year of solid progress toward the Company's growth
objectives. At the meeting, I'll review this progress as
well as our strategies and plans for achieving our
leadership goals for the future. I hope you'll plan to join
us for the meeting.
We appreciate your continued confidence in the Company, and
look forward to seeing you at our annual meeting.
Sincerely,
John E. Pepper
Chairman of the Board and Chief Executive
THE PROCTER & GAMBLE COMPANY
PO Box 599
Cincinnati, Ohio 45201-0599
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
August 29, 1997
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 14, 1997 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 8, 1996 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 2000, 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 a proposal described at page
22 in the proxy statement to amend the Company's
Amended Articles of Incorporation to increase the
number of authorized shares of Common Stock;
F. To consider and act upon a proposal described at
pages 23-24 in the proxy statement to amend the
Company's Amended Articles of Incorporation to
revise the terms of the Series A and Series B
Preferred Stock;
G. To consider and act upon, if presented at the
meeting, proposals submitted by certain shareholders
as described at pages 24-26 in the proxy statement;
and
H. To consider such other matters as may properly come
before the meeting.
Shareholders of record at the close of business on
Friday, August 8, 1997 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, 1997 has been mailed to each shareholder
of record as of August 8, 1997.
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, BANKBOSTON,
N.A., P. O. BOX 9375, BOSTON, MA 02205-9375 BY 9:00 A.M. ON
TUESDAY, OCTOBER 14, 1997 (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 14, 1997
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, BankBoston, N.A.
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 BankBoston, N.A. 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 8, 1997 are entitled
to vote on matters to come before the meeting. On that
date, 675,159,126 shares of Common Stock, 31,338,706 shares
of Series A ESOP Convertible Class A Preferred Stock and
19,022,418 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 1997. The six Directors
whose terms are expiring in 1997 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 2000 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
1998 and 1999 are described in separate sections below.
NOMINEES FOR ELECTION AS DIRECTORS WITH TERMS EXPIRING IN 2000
[insert picture] Edwin L. Artzt - Retired Chairman of the
Board and Chief Executive. Director of
American Express Company, Barilla
G.eR.F.lli S.p.A. Italy, Delta Air
Lines, Inc., and GTE Corporation;
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 67.
[insert picture] Norman R. Augustine - Chairman of the
Board, Lockheed Martin Corporation
(aerospace, electronics, information
management, materials and energy systems
and products). Director of Lockheed
Martin Corporation, The Black and Decker
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 62.
[insert picture] Richard J. Ferris - Co-Chairman,
Doubletree Corporation. Director of
Doubletree Corporation, Amoco
Corporation and Candlewood Hotel
Company, Inc.; Director of the Company
since 1979; Chairman of the Finance
Committee and member of the Executive,
and Board Organization and Nominating
Committees; age 60.
[insert picture] John C. Sawhill, Ph.D. - President and
Chief 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
1996; member of the Audit, Board
Organization and Nominating, and Public
Policy Committees; age 61.
[insert picture] John F. Smith, Jr. - Chairman, Chief
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 59.
[insert picture] Marina v.N. Whitman, Ph.D. - Professor
of 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 62.
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 and Dr. Sawhill was
elected a Director on May 14, 1996.
DIRECTORS WITH TERMS EXPIRING IN 1998
[insert picture] Joseph T. Gorman - Chairman and Chief
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 59.
[insert picture] Lynn M. Martin - Professor, Davee Chair,
J. 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 57.
[insert picture] John E. Pepper - Chairman of the Board
and Chief Executive. Director of
Motorola, Inc. and Xerox Corporation;
Director of the Company since 1984;
member of the Executive Committee;
age 59.
[insert picture] Ralph Snyderman, M.D. - Chancellor for
Health 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 57.
[insert picture] Robert D. Storey - Partner in the law
firm of Thompson, Hine & Flory, P.L.L.,
Cleveland, Ohio. Director of
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 61.
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.
DIRECTORS WITH TERMS EXPIRING IN 1999
[insert picture] Donald R. Beall - Chairman and Chief
Executive Officer, Rockwell
International Corporation (automation,
avionics and communications,
semiconductor systems and automotive
component systems). Mr. Beall has
announced his intention to step down as
Chief Executive Officer on September 30,
1997, and as Chairman in February, 1998
when he will become Chairman of the
Executive Committee. Director of
Rockwell International Corporation,
Amoco Corporation and Times-Mirror
Company and will become Director of the
automotive company being spun-off by
Rockwell; Director of the Company since
1992; Chairman of the Audit Committee
and member of the Compensation and
Executive Committees; age 58.
[insert picture] Gordon F. Brunner - Senior Vice
President. Director of the Company
since 1991; age 58.
[insert picture] Richard B. Cheney - Chairman of the
Board 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 56.
[insert picture] Harald Einsmann - Executive Vice
President. Director of Thorn EMI plc;
Director of the Company since 1991; age
63.
[insert picture] Durk I. Jager - President and Chief
Operating Officer. Director of the
Company since 1989; age 54.
[insert picture] Charles R. Lee - Chairman and Chief
Executive 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 57.
All of the Directors with terms expiring in 1999, 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 1999 was
elected a Director by the shareholders at the annual meeting
in 1996.
COMMITTEES OF THE BOARD
The EXECUTIVE COMMITTEE (established in 1905). 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, 1997 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 twice during the fiscal year ended
June 30, 1997. 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 four times during the
fiscal year ended June 30, 1997. 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, 1997. 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, 1997. 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, 1997 a total of
nine meetings of the Board and 15 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 95%.
The Board elected to increase its alignment with the
interests of the Company's shareholders as well as to
simplify the elements of the compensation program for non-
employee Directors. As a result, all Committee membership
fees as well as all Board and Committee attendance fees were
eliminated. In their place, the Board increased the
retainer and the amount of stock-related compensation. At
the time of this change, the total compensation received by
a typical Director remained about the same.
Effective January 1, 1997, Directors who are not
employees receive a retainer of $55,000 per year, paid
quarterly. The last quarterly retainer payment is
contingent upon the Director's 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. 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.
Non-employee Directors also receive an annual grant of
restricted stock on the first business day in the calendar
year with a value of approximately $20,000 on the date of
grant. Non-employee Directors were also granted a stock
option on February 28, 1997 with a term of ten years to
purchase 1,000 shares of the Company's Common Stock at an
exercise price of $120.4375, 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.
For the period June 30, 1996 through December 31, 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.
Fees otherwise payable to a non-employee 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.
The Board also elected to terminate the Board of
Directors retirement plan, effective January 1, 1997. Until
that time, Directors who were not employees of the Company
were covered by a retirement plan pursuant to which
retirement benefits were payable to any Director who had
served at least five years since original election to the
Board. The annual retirement benefit under this plan was
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 occurred first. There were no survivor
benefits payable under the plan. On January 2, 1997, an
amount equal to the discounted present value of the
projected benefit for each then-current Director was
converted into Procter & Gamble Common Stock at a price of
$105.625, the fair market value on January 2, 1997. 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 has in place 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 80% 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. This conclusion is
derived in part from consultations with independent outside
compensation consultants.
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. 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 approved by the
Compensation Committee 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, stock
restricted until retirement, or as stock options in
accordance with the terms of the 1992 Stock Plan.
The Company firmly believes the interests of the Company
and its employees are inseparable. One of the ways this is
demonstrated is through share ownership and ownership
behavior. Globally, we estimate that our employees and
retirees currently own about 26% of Procter & Gamble's
outstanding shares. We believe this is significantly higher
than most other major corporations and serves to create a
strong focus on the long-term growth of the Company and its
stock.
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 1996-97, 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 1996-97. 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 its review, the
Committee noted significant progress against the Company's
long-term objectives. Fiscal year 1996-97 was a record year
for unit volume, sales, earnings and cash flow. The Company
achieved its 1996-97 earnings target and profit margins
reached their highest level in 47 years. The Company's
underlying strategy of offering consumers products providing
better value continues to build the business. TSR has been
strong. Since the beginning of the 1994-95 fiscal year, the
Company's TSR has averaged 38% on an annualized basis. This
ranks P&G in 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 1996-97 in the amount of approximately
$474,000.
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 87% of Mr. Pepper's
Performance Bonus Award.
Mr. Pepper's regular award of stock options for 1997, 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, 1997, 1996 and 1995.
<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 1996-97 $1,180.0 $0<F6> $0
Chairman of the 1995-96 1,110.0 0<F7> 0
Board and Chief 1994-95 910.0 50.8 0
Executive
Durk I. Jager 1996-97 $1,035.0 $0<F8> $0
President and 1995-96 910.0 58.0<F9> 0
Chief Operating 1994-95 760.0 218.3 0
Officer
Harald Einsmann 1996-97 $706.3 $0<F10> $106.1<F11>
Executive Vice 1995-96 635.0 457.2<F12> 403.3<F11>
President 1994-95 582.5 524.9 537.5<F11>
Wolfgang C. Berndt 1996-97 $663.3 $0<F13> $345.0<F11>
Executive Vice 1995-96 620.0 378.6<F14> 338.5<F11>
President 1994-95 555.0 293.7 318.0<F11>
Gordon F. Brunner 1996-97 $550.0 $0<F15> $0
Senior Vice 1995-96 525.0 0<F16> 0
President 1994-95 500.0 150.0 0
<CAPTION>
Long-Term Compensation Awards
_____________________________
Securities
Name and Restricted Underlying
Principal Stock Options/ All Other
Position Year Awards<F3> SARs<F4> Compensation<F5>
_______________ _______ ____________ ___________ ______________
<S> <C> <C> <C> <C>
John E. Pepper 1996-97 $1,661.0 68,725 $306.8
Chairman of the 1995-96 480.0 103,305 284.5
Board and Chief 1994-95 571.3 70,542 240.0
Executive
Durk I. Jager 1996-97 $0 75,612 $265.9
President and 1995-96 0 91,628 230.5
Chief Operating 1994-95 228.7 55,322 189.4
Officer
Harald Einsmann 1996-97 $558.9 41,068 $293.2
Executive Vice 1995-96 0 43,531 302.4
President 1994-95 84.0 25,300 290.1
Wolfgang C. Berndt 1996-97 $0 43,010 $215.5
Executive Vice 1995-96 0 39,748 295.4
President 1994-95 111.5 22,000 335.7
Gordon F. Brunner 1996-97 $448.0 36,425 $143.6
Senior Vice 1995-96 561.3 33,196 138.9
President 1994-95 376.8 19,800 130.9
<FN>
<F1>The Performance Bonus and Profit Incentive Awards may be
made in the form of cash, restricted stock or stock
options and Long-Term Incentive Plan Awards may be made
in the form of stock, restricted stock or stock options
as approved by the Compensation Committee. Awards
received in the form of cash or stock 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 1996-97 has not yet been determined, the amount of
the estimated award has been noted below in footnotes 6,
8, 10, 13 and 15.
<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
1996-97 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,
1997 was: Mr. Pepper, 82,295 shares ($11,493); Mr.
Jager, 19,389 shares ($2,708); Mr. Einsmann, 0 shares
($0); Mr. Berndt, 1,623 shares ($227); Mr. Brunner,
27,068 shares ($3,780). 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 30,
1997 ($139.6563). Dividends are paid on all restricted
Common Stock at the same rate as paid on the Company's
Common Stock.
<F4>For fiscal year 1996-97, in addition to the regular award of stock
options, these figures include options granted on July
1, 1997 to Messrs. Jager and Berndt for the 1996-97
Performance Bonus Award and options granted on July 9,
1997 to all five named executives for the 1996-97 Long-
Term Incentive Plan Award. See footnotes 6, 8, 10, 13
and 15 below. Options for the 1996-97 Profit Incentive
Award will be granted on or about September 15, 1997 and
reported in the proxy statement for the annual meeting
of shareholders on October 13, 1998.
<F5>All Other Compensation (in thousands of dollars) -- details for
1996-97:
</TABLE>
<TABLE>
<CAPTION>
Inter-
Profit Flexible national
Sharing Compen- Assign-
and sation ment Total
Related Program Equali- All Other
Contri- Contri- Imputed zation Compen-
Name butions Income Income Payments sation
_________________ _______ ________ ______ ________ _________
<S> <C> <C> <C> <C> <C>
John E. Pepper $255.4 $44.4 $7.0 $0 $306.8
Durk I. Jager 224.0 36.4 5.5 0 265.9
Harald Einsmann 0 0 2.7 290.5 293.2
Wolfgang C. Berndt 0 0 2.9 212.6 215.5
Gordon F. Brunner 119.1 21.0 3.5 0 143.6
<FN>
<F6>Mr. Pepper's Performance Bonus Award of $790,030 was paid in
the form of retirement restricted stock; his Long-Term
Incentive Plan Award of $687,300 was paid in the form of
retirement restricted stock ($515,475) and stock options
($171,825); and his estimated Profit Incentive Award of
$474,000 will be paid in the form of retirement
restricted stock ($355,500) and stock options ($118,500)
to be granted on or about September 15, 1997.
<F7>In fiscal year 1995-96, 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 Profit Incentive Award of
$371,200 was paid in the form of stock options.
<F8>Mr. Jager's Performance Bonus Award of $565,000 was paid in the form
of stock options; his Long-Term Incentive Plan Award of
$491,550 was paid in the form of stock options; and his
estimated Profit Incentive Award of $339,000 will be
paid in the form of stock options to be granted on or
about September 15, 1997.
<F9>In fiscal year 1995-96, 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 Profit Incentive Award of $309,925 was paid in
the form of stock options.
<F10>Mr. Einsmann's Performance Bonus Award of $305,035 was paid
in the form of retirement restricted stock; his Long-
Term Incentive Plan Award of $265,300 was paid in the
form of stock options; and his estimated Profit
Incentive Award of $253,913 will be paid in the form of
retirement restricted stock.
<F11>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.
<F12>In fiscal year 1995-96, 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 Profit Incentive Award of
$182,188 was paid in the form of cash.
<F13>Mr. Berndt's Performance Bonus Award of $260,000 was paid in
the form of stock options; his Long-Term Incentive Plan
Award of $226,200 was paid in the form of stock options;
and his estimated Profit Incentive Award of $243,750
will be paid in the form of stock options to be granted
on or about September 15, 1997.
<F14>In fiscal year 1995-96, Mr. Berndt's Performance Bonus Award of
$240,000 was paid in the form of cash; his Long-Term
Incentive Plan Award of $259,200 was paid in the form of
stock options; and his Profit Incentive Award of
$148,000 was paid in the form of cash ($138,610) and
stock options ($9,590).
<F15>Mr. Brunner's Performance Bonus Award of $280,048 was paid
in the form of retirement restricted stock; his Long-
Term Incentive Plan Award of $243,600 was paid in the
form of stock options; and his estimated Profit
Incentive Award of $168,000 will be paid in the form of
retirement restricted stock.
<F16>In fiscal year 1995-96, 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 Profit
Incentive Award of $153,732 was paid in the form of
retirement restricted stock.
</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> 65,311 1.3% $120.4375
3,414 0.1% 151.0625
Durk I. Jager<F4> 53,775 1.1% 120.4375
12,075 0.2% 140.3750
9,762 0.2% 151.0625
Harald Einsmann 35,797 0.7% 120.4375
5,271 0.1% 151.0625
Wolfgang C. Berndt<F5> 32,959 0.7% 120.4375
5,557 0.1% 140.3750
4,494 0.1% 151.0625
Gordon F. Brunner 31,586 0.6% 120.4375
4,839 0.1% 151.0625
<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> 2/28/07 $4,946.8 $12,536.2
7/9/07 324.3 821.9
Durk I. Jager<F4> 2/28/07 4,073.1 10,321.9
7/1/07 1,066.0 2,701.4
7/9/07 927.4 2,350.2
Harald Einsmann 2/28/07 2,711.4 6,871.1
7/9/07 500.8 1,269.0
Wolfgang C. Berndt<F5> 2/28/07 2,496.4 6,326.4
7/1/07 490.6 1,243.2
7/9/07 426.9 1,082.0
Gordon F. Brunner 2/28/07 2,392.4 6,062.8
7/9/07 459.7 1,165.0
<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,
2007 and July 9, 2007 are 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 2007. Depending on inflation
rates, these amounts may be worth significantly less in
2007, in real terms, than their value today.
<F3>Mr. Pepper also received an award of 12,105 stock
options on September 13, 1996 with an exercise price of
$92.00 and an expiration date of September 13, 2006 for
his Profit Incentive Award earned in fiscal year 1995-
96. This option award had potential realizable values
of $700,400 and $1,774,900 at assumed rates of
appreciation of 5% and 10%, respectively.
<F4>Mr. Jager also received an award of 10,107 stock options
on September 13, 1996 with an exercise price of $92.00
and an expiration date of September 13, 2006 for his
Profit Incentive Award earned in fiscal year 1995-96.
This option award had potential realizable values of
$584,800 and $1,481,900 at assumed rates of appreciation
of 5% and 10%, respectively.
<F5>Mr. Berndt also received an award of 315 stock options
on September 13, 1996 with an exercise price of $92.00
and an expiration date of September 13, 2006 for a
portion of his Profit Incentive Award earned in fiscal
year 1995-96. This option award had potential
realizable values of $18,200 and $46,200 at assumed
rates of appreciation of 5% and 10%, respectively.
</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>
Number of
Securities
Underlying
Shares Unexercised
Acquired Value Options/SARs
Name on Exercise Realized<F2> at FY End
_______________ ___________ ____________ ________________
Exercisable Unexercisable
___________ _____________
<S> <C> <C> <C> <C>
John E. Pepper 0 $0.0 401,996 106,162
Durk I. Jager 16,000 1,277.5 284,590 96,135
Harald Einsmann 65,200 6,225.1 197,754 45,874
Wolfgang C. Berndt 0 0.0 144,640 42,067
Gordon F. Brunner 4,480 503.4 162,939 36,443
<CAPTION>
Value of Unexercised
In-the-Money
Name Options/SARs at FY End<F3>
___________________ __________________________
Exercisable Unexercisable
___________ _____________
<S> <C> <C>
John E. Pepper $33,965.5 $3,292.8
Durk I. Jager 23,991.2 3,135.8
Harald Einsmann 16,930.9 1,204.1
Wolfgang C. Berndt 11,650.8 1,098.8
Gordon F. Brunner 14,062.7 855.8
<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. Jager, $151.2; Mr. Einsmann, $778.1;
and Mr. Brunner, $50.3.
<F3>Calculated based on the fair market value of the
Company's Common Stock on June 30, 1997 ($139.6563 per
share) minus the exercise price.
</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 is 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. Mr. Berndt is
enrolled in the Pension Plan of Procter & Gamble GmbH
(Germany). Mr. Berndt was a participant in the Austrian
pension plan and enrolled in the supplemental plan for
Germans who previously participated in other pension plans.
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 $917,007 for Mr. Einsmann, $317,311 for Mr. Jager and
$831,862 for Mr. Berndt.
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 Personal Care 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, 1992
and the reinvestment of all dividends, as follows:
<TABLE>
<CAPTION>
Dollar Value of $100 Investment at June 30
__________________________________________________
1992 1993 1994 1995 1996 1997
____ ____ ____ ____ ____ ____
<S> <C> <C> <C> <C> <C> <C>
P&G Common $100.00 $115.56 $123.06 $167.32 $216.46 $336.69
Composite Group $100.00 $107.79 $112.95 $154.73 $184.83 $266.94
S&P 500 $100.00 $113.63 $115.23 $145.27 $183.04 $246.55
</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 8, 1997:
<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 251,611.0 474,000 -- <F5>
Norman R. Augustine 5,151.0 2,000 -- <F5>
Donald R. Beall 3,349.0 2,000 6,561 <F5>
Wolfgang C. Berndt 32,566.0 153,433 -- <F5>
Gordon F. Brunner 90,793.0 167,796 -- <F5>
Richard B. Cheney 1,436.0 2,000 1,400 <F5>
Harald Einsmann 17,423.0 207,831 -- <F5>
Richard J. Ferris 44,947.0 2,000 -- <F5>
Joseph T. Gorman 3,250.0 2,000 1,000 <F5>
Durk I. Jager 56,615.7 306,843 -- <F5>
Charles R. Lee 4,673.0 2,000 -- <F5>
Lynn M. Martin 1,492.0 2,000 -- <F5>
John E. Pepper 390,373.7 430,742 1,589 <F5>
John C. Sawhill 1,852.0 -- -- <F5>
John F. Smith, Jr. 2,621.0 1,000 -- <F5>
Ralph Snyderman 1,957.0 1,000 -- <F5>
Robert D. Storey 2,423.0 -- -- <F5>
Marina v.N. Whitman 3,978.0 2,000 800 <F5>
43 Directors and
executive officers,
as a group 1,817,960.1 3,918,358 25,132 .853%
<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 .123% for any one Director or executive
officer.
</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 - - -
Norman R. Augustine - - -
Donald R. Beall - - -
Wolfgang C. Berndt - - -
Gordon F. Brunner 3,316.0 - <F2>
Richard B. Cheney - - -
Harald Einsmann - - -
Richard J. Ferris - - -
Joseph T. Gorman - - -
Durk I. Jager 3,291.4 - <F2>
Charles R. Lee - - -
Lynn M. Martin - - -
John E. Pepper 3,316.0 - <F2>
John C. Sawhill - - -
John F. Smith, Jr. - - -
Ralph Snyderman - - -
Robert D. Storey - - -
Marina v.N. Whitman - - -
43 Directors and
executive officers,
as a group 60,868.8 - .194%
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) -- 17,283,786.0<F3> 55.15%
<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 .012% for any one Director or executive
officer; 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.
</TABLE>
<TABLE>
SERIES B ESOP CONVERTIBLE CLASS A PREFERRED STOCK
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
_________________________________________
PROFIT PERCENT
SHARING OF
OWNER PLAN<F1> TRUSTEESHIPS SERIES
____________________ ________ ____________ _______
<S> <C> <C> <C>
Edwin L. Artzt 265.4 - <F2>
Norman R. Augustine - - -
Donald R. Beall - - -
Wolfgang C. Berndt - - -
Gordon F. Brunner 158.8 - <F2>
Richard B. Cheney - - -
Harald Einsmann - - -
Richard J. Ferris - - -
Joseph T. Gorman - - -
Durk I. Jager - - -
Charles R. Lee - - -
Lynn M. Martin - - -
John E. Pepper 158.8 - <F2>
John C. Sawhill - - -
John F. Smith, Jr. - - -
Ralph Snyderman - - -
Robert D. Storey - - -
Marina v.N. Whitman - - -
43 Directors and
executive officers,
as a group 1,593.9 - .008%
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) -- 15,841,905.4<F3> 83.28%
<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 .0015% for any one Director or executive
officer.
<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.
</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. On
September 30, 1996, Bruce L. Byrnes, Group Vice President,
filed a Form 4 for July, 1996 to correct an inadvertent
failure to report 697.413 shares purchased in his Profit
Sharing account. On March 3, 1997, Gordon F. Brunner,
Senior Vice President and Director, filed a Form 4 for
shares purchased from the reinvestment of dividends in a
custodial account on February 16, 1995, May 16, 1995, August
16, 1995, November 16, 1995, February 16, 1996 and May 16,
1996. On March 24, 1997, Charlotte R. Otto, Senior Vice
President, filed an amended Form 3 for September, 1996 to
correct an inadvertent failure to report 300 shares
indirectly owned by a General Partnership. On August 8,
1997, Stephen P. Donovan, Jr., Group Vice President, filed
an amended Form 4 for January, 1995 and an amended Form 4
for January, 1996 to correct inadvertent failures to report
200 and 100 shares respectively, indirectly acquired by a
General Partnership. On August 8, 1997, John E. Pepper,
Chairman of the Board and Chief Executive and Director,
filed a late Form 4 for January, 1997 to report 300 shares
indirectly owned by a General Partnership.
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 1997-98. 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.
One or more representatives of Deloitte & Touche LLP will
be in attendance at the annual meeting on October 14, 1997.
The representatives will have the opportunity to make a
statement, if desired, and will be available to respond to
appropriate questions from shareholders.
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, 1998 is hereby
ratified, confirmed and approved.
THE BOARD OF DIRECTORS RECOMMENDS A VOITE FOR THIS RESOLUTION.
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.
PROPOSAL TO AMEND THE COMPANY'S AMENDED ARTICLES OF INCORPORATION
The following proposal will be presented for action at
the annual meeting by direction of the Board of Directors:
RESOLVED, That the first paragraph of Article
Fourth of the Amended Articles of Incorporation of The
Procter & Gamble Company is hereby amended to read as
follows:
Fourth: The authorized number of shares
without par value is ++five billion eight hundred
million (5,800,000,000)++ [[two billion eight hundred
million (2,800,000,000)]] of which six hundred
million (600,000,000) are classified and
designated as Class A Preferred Stock, two hundred
million (200,000,000) are classified and
designated as Class B Preferred Stock and ++five++ [[two]]
billion ++(5,000,000,000++ [[2,000,000,000)]] are
classified and designated as Common Stock.<F1>
RESOLVED FURTHER, That the Board of Directors and
the appropriate officers of the Company are authorized
and directed to take appropriate steps to make
effective the foregoing amendment to the Amended
Articles of Incorporation of the Company including
filing such amendment in the office of the Secretary of
State of Ohio.
[Note: For Edgar purposes, language to be added is enclosed in "++";
language to be deleted is enclosed in "[[" "]]". The printed
version of the proxy statement that will be mailed to share-
holders will include underlining the new language and crossing
out the deleted language.]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS RESOLUTION
FOR THE FOLLOWING REASONS:
______________________
<F1> New language is indicated by underlining. Language to be
deleted is lined out.
The proposed amendment to Article Fourth would change
the number of authorized shares of Common Stock without par
value from 2,000,000,000 shares to 5,000,000,000 shares.
This change is recommended by the Board of Directors in
order to replace authority for the issuance of Common Stock
which was utilized in implementing the two-for-one stock
split effected in the form of a 100% stock dividend
distributed to shareholders of record at the close of
business on August 22, 1997. There would be no change in
the number of authorized shares of Preferred Stock of either
Class.
On July 8, 1997 the Board of Directors increased the
annual rate of dividend on the Company's Common Stock from
$1.80 to $2.02, by declaring a quarterly cash dividend of
$.505 per share. Simultaneously, the Board also declared a
two-for-one stock split in the form of a 100% stock dividend
on the Company's outstanding Common Stock, effective August
22, 1997. Distribution of this 100% stock dividend was made
using shares of Common Stock authorized by Article Fourth
but not issued.
This distribution is expected to result in the issuance
of 743,412,570 shares of Common Stock which were not
previously issued (including 68,253,444 shares payable on
treasury shares held by the Company itself which were
considered issued for purposes of receiving the stock
dividend but are not outstanding for cash dividend, quorum,
voting or other purposes).
As a result of the distributions described above, the
aggregate number of issued shares of Common Stock (including
treasury shares) at the close of business on August 22, 1997
is expected to be 1,486,825,140, leaving an unused balance
of 513,174,860 shares.
This amount of unused authority to issue Common Stock
represents a significant reduction in authorized but
unissued shares available for future corporate purposes.
The Board of Directors believes it would be in the best
interest of the Company and its shareholders to increase the
amount of authorized but unissued shares of Common Stock
available under the Amended Articles of Incorporation as
described above. The Company and the Board have no current
plans to use the additional shares for any particular
purpose, but the Board believes it is desirable to have such
shares available for possible use in future acquisitions or
for a future split of the Company's Common Stock by means of
a stock dividend, or for other purposes within the
limitations of Ohio law.
The affirmative vote of the holders of a majority of
the shares of the Company's Common Stock and Series A and B
ESOP Convertible Class A Preferred Stock issued and
outstanding, voting together as a class, is required to
adopt this proposal. If the proposal is adopted by the
shareholders, it will become effective upon the filing of a
certificate of amendment with the Secretary of State of
Ohio, which filing the Company would intend to make on
October 14, 1997 immediately following completion of the
annual meeting of shareholders.
PROPOSAL TO AMEND THE COMPANY'S AMENDED ARTICLES OF INCORPORATION
The following proposal will be presented for action at
the annual meeting by direction of the Board of Directors:
RESOLVED, That Appendix A of the Amended Articles
of Incorporation of the Company is hereby amended to
read as set forth in Exhibit A to the proxy statement
for this meeting; and
RESOLVED FURTHER, That Appendix B of the Amended
Articles of Incorporation of the Company is hereby
amended to read as set forth in Exhibit B to the proxy
statement for this meeting; and
RESOLVED FURTHER, That the Board of Directors and
the appropriate officers of the Company are authorized
and directed to take appropriate steps to make
effective the foregoing amendments to the Amended
Articles of Incorporation of the Company, including
filing such amendments in the office of the Secretary
of State of Ohio.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS RESOLUTIOIN
FOR THE FOLLOWING REASONS:
On January 10, 1989 the Board of Directors, as
authorized by the Company's Amended Articles of
Incorporation, established a series of Preferred Stock
designated as "Series A ESOP Convertible Class A Preferred
Stock" with an initial annual dividend rate of $8.12 per
share (the "Series A Preferred Stock"). Nine million ninety
thousand nine hundred nine (9,090,909) shares of Series A
Preferred Stock were sold to the Trustees of The Procter &
Gamble Profit Sharing Trust and Employee Stock Ownership
Plan (the "Profit Sharing Trust") to be used for the payment
of retirement benefits to employees participating in the
Profit Sharing Trust. The Series A Preferred Stock
allocated to a participant's account is automatically
converted into shares of the Company's Common Stock, no par
value (the "Common Stock") upon the withdrawal of a
participant from the Profit Sharing Trust, and it is also
convertible into shares of Common Stock at any time upon the
request of the Trustees.
Since the issuance of the Series A Preferred Stock, the
Common Stock has been split on a two for one basis three
times (including the recent split effective August 22,
1997), resulting in a reduction of the Series A Preferred
Stock annual dividend rate to $1.015 and an anticipated
increase in the number of shares of Series A Preferred Stock
issued and outstanding to 62,677,412 shares as of August 22,
1997, taking into account the shares that have already been
converted to Common Stock.
The Board of Directors is recommending that the
shareholders approve a change in the dividend rate of the
Series A Preferred Stock to make it equal to the higher of
$1.015, as adjusted, or the then current dividend rate on
the Common Stock. The holders of the Series A Preferred
Stock will receive the same dividend as the holders of
Common Stock in any quarter where the Common Stock dividend
exceeds $.25375 per share, as adjusted, without the need to
convert their shares of Series A Preferred Stock into Common
Stock. This will result in the Series A Preferred Stock
being converted gradually into shares of Common Stock on the
same basis as they have in the past, rather than being
converted all at once at such time as the dividend rate on
the Common Stock exceeds the dividend rate on the Series A
Preferred Stock.
A corresponding change is being recommended for the
19,022,418 shares of Series B ESOP Convertible Class A
Preferred Stock, which has a current annual dividend rate of
$2.06 per share (the "Series B Preferred Stock"). The
holders of the Series B Preferred Stock will receive the
same dividend as the holders of Common Stock in any quarter
where the Common Stock dividend exceeds $.515 per share, as
adjusted, without the need to convert their shares of Series
B Preferred Stock into Common Stock.
For both the Series A Preferred Stock and the Series B
Preferred Stock, when the dividend rate on the Common Stock
first exceeds the respective dividend rates on the Series A
Preferred Stock or the Series B Preferred Stock, the
dividends on the Series A Preferred Stock or the Series B
Preferred Stock will thereafter be paid on the same date as
the dividend on the Common Stock.
The affirmative vote of the holders of a majority of
the issued and outstanding shares of the Company's Common
Stock and Series B Preferred Stock, each voting as a class,
and of the holders of a majority of the issued and
outstanding shares of the Company's Common Stock and Series
A Preferred Stock and Series B Preferred Stock, voting
together as a class, is required to adopt this proposal. If
the proposal is adopted by the shareholders, it will become
effective upon the filing of a certificate of amendment with
the Secretary of State of Ohio, which filing the Company
would intend to make on October 14, 1997 immediately
following completion of the annual meeting of shareholders.
SHAREHOLDER PROPOSALS
SHAREHOLDER PROPOSAL NO. 1
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 as of the record date
of August 8, 1997, 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 168,678,826 shares,
representing approximately 32.3% of shares voting, voted
FOR my similar 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 67% 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.
SHAREHOLDER PROPOSAL NO. 2
Sisters of the Holy Names of Washington, 2911 W. Fort
Wright Drive, Spokane, Washington 99224, owning 800 shares
of Common Stock of the Company as of the record date of
August 8, 1997, in conjunction with six co-sponsoring
religious organizations (the names of which organizations,
with shares of Common Stock of the Company beneficially
held, will be furnished promptly to any person upon request
in writing to Ms. Linda D. Rohrer, Assistant Secretary, The
Procter & Gamble Company, PO Box 599, Cincinnati, Ohio 45201-
0599 or by telephone at 513-983-8697), have given notice
that they intend to present for action at the annual meeting
the following resolution:
WHEREAS: our company seeks to be an environmentally
responsible business, yet makes products using chlorine-
bleached paper (whose production creates dioxin and
other persistent toxins proven to harm human and
environmental health in even minute amounts);
Distinguished world bodies publicly recognize the
inherent dangers posed by chlorine-based bleaching of
pulp and paper. These include the World Bank, American
Public Health Association, International Joint
Commission on the Great Lakes, and the Intergovernmental
Forum on Chemical Safety (convened by the UN). Such
important scientific and economic findings reflect
worldwide financial and scientific support for phasing-
out the industrial use of chlorine-containing compounds;
The International Joint Commission has concluded
"that [these] persistent toxic substances are too
dangerous to the biosphere and to humans to permit their
release in any quantity. . . . [T]he primary means to
achieve zero should be the prevention of their
production, use and release rather than their subsequent
removal";
These substances pass up the food chain, accumulating
in living organisms. In humans, even minute amounts
result in or contribute to reproductive failure, birth
defects, and cancer. The Environmental Protection
Agency (EPA) has found that dioxins are linked to cancer
and numerous other health disorders, including hormone
disruption and dysfunctioning immune systems. In
children they cause developmental impairment, hormonal
disruption, and behavioral disorders. Every person
living on earth now has measurable organochlorine
contamination;
Using chlorine dioxide to bleach paper does not
eliminate dioxins or other chlorinated pollutants, it
only creates lower levels of organochlorine
contamination;
Estimates are that seventy percent of paper mills
will make major investments in upgrade construction over
the next decade. The demand of larger users like P&G
for totally chlorine-free (TCF) paper is critical to
determining industry's direction, which will affect
public health for decades to come;
There is momentum around the world to produce high-
quality, cost-effective paper products without dangerous
poisons. In Europe, market share for TCF market pulp
has grown from 0-25% since 1991. In the US, Inside EPA
reports the agency is considering "an order instructing
federal agencies to purchase only chlorine-free paper,"
and several states are developing TCF legislation. Our
company can lead in capturing market share by moving
toward TCF products;
RESOLVED: the shareholders request our company to
report on steps which it will take to use chlorine-free
pulp and paper, and its plans for a long-term phase-out
of chlorinated compounds in all its products. The
report will be completed within six months of the 1997
annual meeting.
The Sisters of the Holy Names of Washington have
submitted the following statement in support of their
resolution:
Our company's environmental efforts are commendable,
but good science indicates that NO safe or "acceptable"
level of exposure to many organochlorine chemicals
exists. P&G's use of chlorinated bleached paper
perpetuates the release of unnecessary toxins.
Our company is an environmental innovator. We should
use the technology that completely eliminates
organochlorines from our production and products,
protects our customers, captures an emerging market, and
improves all life on the planet.
Vote YES for this common-sense proposal which will
improve our children's health, our products'
desirability, and our company's reputation and
profitability.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS RESOLUTION
FOR THE FOLLOWING REASONS:
P&G is a world leader in developing scientific
understanding to ensure our products are safe for consumers
and the environment. As part of this commitment, P&G has
extensively studied the use of chlorine in the manufacture
of paper products, relying on both internal research and
outside experts.
Based on these studies, we now use pulp from "Elemental
Chlorine Free" (ECF) technology in paper production. The
Company believes this bleaching process delivers the high-
quality pulp required to produce superior-performing
products while virtually eliminating concerns over waste
water by-products.
The U.S. Environmental Protection Agency, in its
proposed new regulations, has established "Elemental
Chlorine Free" technology as an acceptable standard for the
pulp and paper industry. Further, we consider ECF and the
"Totally Chlorine Free" process advocated by the proposers
to be scientifically indistinguishable in improving the
environmental performance of pulp production. Several
expert scientific panels have supported this view.
The Company remains committed to on-going research
with suppliers, industry associations such as the American
Forest & Paper Association and the National Council for Air
and Stream Improvement, and outside scientists to understand
and develop new approaches to further improve the
environmental quality of our products and manufacturing
processes.
The Board of Directors therefore 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.
1998 ANNUAL MEETING DATE
It is anticipated that the 1998 annual meeting of
shareholders will be held on Tuesday, October 13, 1998.
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 1, 1998.
OTHER MATTERS
No action will be taken with regard to the minutes of the
annual meeting of shareholders held October 8, 1996 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.
EXHIBIT A<F*>
APPENDIX A
SERIES A ESOP CONVERTIBLE CLASS A PREFERRED STOCK
(HEREINAFTER REFERRED TO AS SERIES A PREFERRED STOCK)
2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the provisions for adjustment hereinafter
set forth, the holders of shares of Series A Preferred Stock
shall be entitled to receive, when and as declared by the
Board of Directors out of funds legally available therefor,
cash dividends ("Preferred Dividends") in an amount per
share initially equal to $8.12 per share per annum, subject
to adjustment from time to time as hereinafter provided, [[and
no more]] (such amount, as adjusted from time to time, being
hereinafter referred to as the "Preferred Dividend Rate"),
payable quarterly, one-fourth on the third day of March, one-
fourth on the third day of June, one-fourth on the third day
of September, and one-fourth on the third day of December of
each year (each a "Dividend Payment Date") commencing on
June 3, 1989, to holders of record at the start of business
on such Dividend Payment Date++, provided that if the Board of
Directors has declared since the prior Dividend Payment Date
a quarterly dividend on the Common Stock at a rate that
exceeds one-fourth of the Preferred Dividend Rate in effect
on such day, the holders of record on the start of business
on the payment date for such dividend on the Common Stock
shall be entitled to receive a cash dividend in an amount
per share equal to the quarterly dividend declared on a
share of Common Stock, payable on the same date as such
dividend on the Common Stock, and provided further that the
Dividend Payment Date for the Series A Preferred Stock shall
thereafter be the same date as the payment date for the
dividend on the Common Stock or if no dividend is declared
on the Common Stock in any quarter, the Dividend Payment
Date shall be, as appropriate, the fifteenth day of
February, May, August or November or if such days are not a
day on which the New York Stock Exchange is open for
business, then the next preceding day when the New York
Stock Exchange is open for business.++ Preferred Dividends
shall begin to accrue on outstanding shares of Series A
Preferred Stock from the date of issuance of such shares of
Series A Preferred Stock. Preferred Dividends shall accrue
on a daily basis, based on the Preferred Dividend Rate in
effect on such day, whether or not the Company shall have
earnings or surplus at the time, but Preferred Dividends
accrued after March 3, 1989 on the shares of Series A
Preferred Stock for any period less than a full quarterly
period between Dividend Payment Dates shall be computed on
the basis of a 360-day year of 30-day months. A full
quarterly dividend payment of $2.03 per share shall accrue
for the period from the date of issuance until June 3, 1989.
Accumulated but unpaid Preferred Dividends shall cumulate as
of the Dividend Payment Date on which they first become
payable, but no interest shall accrue on accumulated but
unpaid Preferred Dividends.
[Note: For Edgar purposes, language to be added is enclosed in "++";
language to be deleted is enclosed in "[[" "]]". The printed
version of the proxy statement that will be mailed to share-
holders will include underlining the new language and crossing
out the deleted language.]
<F*> Language to be added is indicated by underlining.
Language to be deleted is lined out.
EXHIBIT B<F*>
APPENDIX B
SERIES B ESOP CONVERTIBLE CLASS A PREFERRED STOCK
(HEREINAFTER REFERRED TO AS SERIES B PREFERRED STOCK)
2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the provisions for adjustment hereinafter
set forth, the holders of shares of Series B Preferred Stock
shall be entitled to receive, when and as declared by the
Board of Directors out of funds legally available therefor,
cash dividends ("Series B Preferred Dividends") in an amount
per share initially equal to $4.12 per share per annum,
subject to adjustment from time to time as hereinafter
provided, [[and no more]] (such amount, as adjusted from time to
time, being hereinafter referred to as the "Series B
Preferred Dividend Rate"), payable quarterly, one-fourth on
the twenty-seventh day of November, one-fourth on the twenty-
seventh day of February, one-fourth on the twenty-seventh
day of May, and one-fourth on the twenty-seventh day of
August of each year (each a "Series B Dividend Payment
Date") commencing on August 27, 1993, to holders of record
at the close of business on the second Friday of the
relevant Series B Dividend Payment Date month++, provided that
if the Board of Directors has declared since the prior
Dividend Payment Date a quarterly dividend on the Common
Stock at a rate that exceeds one-fourth of the Preferred
Dividend Rate in effect on such day, the holders of record
on the start of business on the payment date for such
dividend on the Common Stock shall be entitled to receive a
cash dividend in an amount per share equal to the quarterly
dividend declared on a share of Common Stock, payable on the
same date as such dividend on the Common Stock, and provided
further that the Dividend Payment Date for the Series B
Preferred Stock shall thereafter be the same date as the
payment date for the dividend on the Common Stock or if no
dividend is declared on the Common Stock in any quarter, the
Dividend Payment Date shall be, as appropriate, the
fifteenth day of February, May, August or November or if
such days are not a day on which the New York Stock Exchange
is open for business, then the next preceding day when the
New York Stock Exchange is open for business.++ Series B
Preferred Dividends shall begin to accrue on outstanding
shares of Series B Preferred Stock from the date of issuance
of such shares of Series B Preferred Stock. Series B
Preferred Dividends shall accrue on a daily basis, based on
the Series B Preferred Dividend Rate in effect on such day,
whether or not the Company shall have earnings or surplus at
the time, but Series B Preferred Dividends accrued after
June 30, 1993 on the shares of Series B Preferred Stock for
any period less than a full quarterly period between Series
B Dividend Payment Dates shall be computed on the basis of a
360-day year of 30-day months. A partial dividend payment
of $.64935 per share shall accrue for the period from the
date of issuance until August 27, 1993. Accumulated but
unpaid Series B Preferred Dividends shall cumulate as of the
Series B Dividend Payment Date on which they first become
payable, but no interest shall accrue on accumulated but
unpaid Series B Preferred Dividends.
Note: For Edgar purposes, language to be added is enclosed in "++";
language to be deleted is enclosed in "[[" "]]". The printed
version of the proxy statement that will be mailed to share-
holders will include underlining the new language and crossing
out the deleted language.]
<F*>Language to be added is indicated by underlining. Language
to be deleted is lined out.
THE PROCTER & GAMBLE COMPANY
P&G
SHAREHOLDER'S PROXY AND CONFIDENTIAL VOTING INSTRUCTION
CARD ANNUAL MEETING OF SHAREHOLDERS-TUESDAY, OCTOBER 14, 1997
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 14, 1997 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,
BANKBOSTON, P.O. BOX 9375, BOSTON, MA 02205-9375 BY 9:00 A.M. ON
TUESDAY, OCTOBER 14, 1997 FOR COMMON SHARES TO BE VOTED AND 5:00
P.M. ON MONDAY, OCTOBER 13, 1997 FOR THE TRUSTEES TO VOTE THE PLAN
SHARES. BANKBOSTON 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 BANKBOSTON 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 2000) Nominees:
Edwin L. Artzt, Norman R. Augustine, Richard J. Ferris, John C.
Sawhill, John F. Smith, Jr., Marina v.N. Whitman
FOR WITHHELD
___ ____
EXCEPTIONS:
_______________________________________
For all nominees except as noted above
B. Ratify Appointment of Independent Auditors
FOR AGAINST ABSTAIN
___ ___ ___
C. Amend Articles of Incorporation to increase Common Stock
FOR AGAINST ABSTAIN
___ ___ ___
D. Amend Articles of Incorporation to revise terms of Preferred Stock
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
___ ___ ___
2. Report on use of chlorine.
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 _____________Date______ 1997
Signature______________Date______ 1997
PLEASE SIGN THIS PROXY AS NAME(S) APPEAR ABOVE.
Dear Shareholder:
On August 29, 1997 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 14, 1997.
As of September 30 your proxy card has not been received by
BankBoston, N.A., the Company's proxy tabulator. If you have in fact
already mailed your card, we thank you. If not, we hope you will do
so 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.
Thank you for your attention to this matter.
THE PROCTER & GAMBLE COMPANY
