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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
PROCTER & GAMBLE CO.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[P&G LOGO]
THE PROCTER & GAMBLE COMPANY
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NOTICE OF ANNUAL MEETING
AND
PROXY STATEMENT
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PROCTER & GAMBLE HALL
AT THE ARONOFF CENTER FOR THE ARTS
ANNUAL MEETING OF SHAREHOLDERS
OCTOBER 12, 1999
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[P&G LOGO]
THE PROCTER & GAMBLE COMPANY
PO BOX 599
CINCINNATI, OHIO 45201-0599
August 27, 1999
Fellow P&G Shareholders:
It is my pleasure to invite you to this year's annual meeting of
shareholders, which will be held on Tuesday, October 12.
The meeting will convene at 12:00 noon, Eastern Daylight Time, on October 12
in the Procter & Gamble Hall at The Aronoff Center for the Arts, 650 Walnut
Street, in Cincinnati.
Earlier this year, we announced the second phase of Organization 2005, P&G's
far-reaching, strategic initiative to accelerate growth. This redesign of our
structure, work processes and culture is focused on one objective: fully
leveraging P&G's innovative capability. During this year's annual meeting, I
will expand on our plans and detail the progress we're making to generate
bigger, breakthrough innovations and greater speed to market. I hope you'll plan
to join us.
We appreciate your continued confidence in the Company, and look forward to
seeing you on October 12.
Sincerely,
/s/ Durk I. Jager
Durk I. Jager
PRESIDENT AND CHIEF EXECUTIVE
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[P&G LOGO]
THE PROCTER & GAMBLE COMPANY
PO Box 599
Cincinnati, Ohio 45201-0599
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
August 27, 1999
The annual meeting of shareholders of The Procter & Gamble Company will be
held at the Procter & Gamble Hall of The Aronoff Center for the Arts, 650 Walnut
Street, Cincinnati, Ohio 45202 on Tuesday, October 12, 1999 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 on October 13, 1998 and to act thereon if they are
incorrectly recorded;
B. To receive reports of officers;
C. To elect five members of the Board of Directors with terms expiring
at the annual meeting in 2002, as described at pages 3-4 in the proxy
statement;
D. To consider and act upon a proposal described at page 22 in the proxy
statement to ratify the appointment of independent auditors;
E. To consider and act upon a proposal described at pages 23-24 in the
proxy statement to ratify and approve certain grants of stock options or
stock appreciation rights.
F. To consider and act upon, if presented at the meeting, a proposal
submitted by a certain shareholder as described at pages 24-25 in the proxy
statement; and
G. To consider such other matters as may properly come before the
meeting.
Shareholders of record at the close of business on Friday, July 30, 1999
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, 1999 has been mailed to each shareholder of record as of July 30, 1999.
SHAREHOLDERS ARE URGED TO VOTE THEIR PROXY PROMPTLY, WHETHER OR NOT THEY
EXPECT TO ATTEND THE ANNUAL MEETING. SHAREHOLDERS CAN VOTE THEIR SHARES (1) VIA
A TOLL-FREE TELEPHONE CALL IN THE U.S. AND CANADA, (2) VIA THE INTERNET, OR (3)
BY MAILING THEIR SIGNED PROXY CARD IN THE ENCLOSED ENVELOPE. ANY PROXY NOT
DELIVERED AT THE MEETING SHOULD BE RECEIVED BY THE COMPANY'S PROXY TABULATOR,
AUTOMATIC DATA PROCESSING, BY 9:00 A.M. ON TUESDAY, OCTOBER 12, 1999. SPECIFIC
INSTRUCTIONS TO BE FOLLOWED BY ANY REGISTERED SHAREHOLDER INTERESTED IN VOTING
VIA TELEPHONE OR THE INTERNET ARE SET FORTH ON THE PROXY CARD.
By order of the Board of Directors,
TERRY L. OVERBEY
Secretary
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PROXY STATEMENT
THE PROCTER & GAMBLE COMPANY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD OCTOBER 12, 1999
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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, by telephone, via online methods 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 through any voting method offered
when casting the proxy being revoked, including a writing signed by the
shareholder, or telephonic, online or telegraph processes. Such notice of
revocation should be delivered to the Company's proxy tabulator, Automatic Data
Processing.
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 Automatic Data
Processing 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, July 30,
1999 are entitled to vote on matters to come before the meeting. On that date,
1,315,150,346 shares of Common Stock, 58,085,562 shares of Series A ESOP
Convertible Class A Preferred Stock and 37,484,836 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 have the right to instruct the Trustees of such Trust as to how
to vote shares of stock allocated to their accounts. The Plan also provides that
the Trustees 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 Plan provides 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.
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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
five Directors of the Company whose terms expire at the annual meeting in 1999.
The five Directors whose terms are expiring in 1999 are described in the section
immediately below. It is the Board's intention that these five persons will be
nominated for new terms extending to the annual meeting in 2002 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 five nominees. In the election of members of the Board of Directors, the
five 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 2000 and 2001 are
described in separate sections below.
NOMINEES FOR ELECTION AS DIRECTORS WITH TERMS EXPIRING IN 2002
Donald R. Beall -- Retired Chairman and Chief Executive
[PHOTO] Officer, Rockwell International Corporation (industrial
automation, avionics and communications, and electronic
commerce) and Chairman of the Executive Committee. Director
of Rockwell International Corporation, Conexant Systems,
Inc., Meritor Automotive, Inc. and Times-Mirror Company;
Director of the Company since 1992; Chairman of the Audit
Committee and member of the Executive and Public Policy
Committees; age 60.
Gordon F. Brunner -- Chief Technology Officer. Director of
[PHOTO] the Company since 1991; age 60.
Richard B. Cheney -- Chief Executive Officer, Halliburton
[PHOTO] 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 58.
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Durk I. Jager -- President and Chief Executive. Director of
[PHOTO] Eastman Kodak Company; Director of the Company since 1989;
member of the Executive Committee; age 56. As previously
announced, Mr. Jager will succeed Mr. Pepper as Chairman of
the Board on September 1, 1999.
Charles R. Lee -- Chairman and Chief Executive Officer, GTE
[PHOTO] 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
Compensation Committees; age 59.
All of the nominees for election as Directors with terms expiring in 2002,
except Mr. Cheney, have been, or were prior to retirement, 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 nominees for election as Directors with terms expiring in 2002
was elected a Director by the shareholders at the annual meeting in 1996.
DIRECTORS WITH TERMS EXPIRING IN 2000
Edwin L. Artzt -- Retired Chairman of the Board and Chief
[PHOTO] Executive, Chairman of the Board of Spalding Sports
Worldwide, Inc. Director of American Express Company, Delta
Air Lines, Inc., Evenflo Company, 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 69. Mr. Artzt will
retire from the Board effective September 14, 1999.
Norman R. Augustine -- Chairman of the Executive Committee,
[PHOTO] Lockheed Martin Corporation (aerospace, electronics,
telecommunications, information management, and energy
systems). 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 64.
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Richard J. Ferris -- Retired Co-Chairman, Doubletree
[PHOTO] Corporation. Director of BP Amoco Corporation and Candlewood
Hotel Company, Inc.; Director of the Company since 1979;
Chairman of the Finance Committee and member of the
Executive, and Public Policy Committees; age 63.
John C. Sawhill, Ph.D. -- President and Chief Executive
[PHOTO] Officer, The Nature Conservancy (an international
conservation organization). Director of Pacific Gas &
Electric Company, NACCO Industries, Newfield Exploration
Company, 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 63.
John F. Smith, Jr. -- Chairman and Chief Executive Officer,
[PHOTO] 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 61.
Marina v.N. Whitman, Ph.D. -- Professor of Business
[PHOTO] 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 64.
All of the Directors with terms expiring in 2000, except Dr. Whitman, have
been, or were prior to retirement, executive officers of their respective
employers for more than the past five years. 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 2000 was elected a Director by
the shareholders at the annual meeting in 1997.
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DIRECTORS WITH TERMS EXPIRING IN 2001
Joseph T. Gorman -- Chairman and Chief Executive Officer,
[PHOTO] 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 61.
Lynn M. Martin -- Professor, J. L. Kellogg Graduate School
[PHOTO] of Management, Northwestern University. Director of
Ameritech Corporation, Ryder System, Inc., TRW Inc., Dreyfus
Funds and Harcourt General Inc.; Director of the Company
since 1994; member of the Finance, Board Organization and
Nominating, and Public Policy Committees; age 59.
John E. Pepper -- Chairman of the Board. Director of
[PHOTO] Motorola, Inc. and Xerox Corporation; Director of the
Company since 1984; member of the Executive Committee; age
61. As previously announced, Mr. Pepper will be succeeded as
Chairman of the Board by Mr. Jager on September 1, 1999.
Effective September 14, 1999, following Mr. Artzt's
retirement from the Board, Mr. Pepper will become Chairman
of the Executive Committee.
Ralph Snyderman, M.D. -- Chancellor for Health Affairs,
[PHOTO] Executive Dean, School of Medicine at Duke University, and
President/CEO of Duke University Health System. Director of
Ariad, Inc.; Director of the Company since 1995; member of
the Audit, Board Organization and Nominating, and Public
Policy Committees; age 59.
Robert D. Storey -- Partner in the law firm of Thompson,
[PHOTO] Hine & Flory, L.L.P., 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 63.
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All of the Directors with terms expiring in 2001, 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 has been a partner in the law firm of
Thompson, Hine & Flory since January 1, 1993.
Each of the Directors with terms expiring in 2001 was elected a Director by
the shareholders at the annual meeting in 1998.
COMMITTEES OF THE BOARD
The EXECUTIVE COMMITTEE (established in 1905) met once during the fiscal
year ended June 30, 1999. 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 four times during the fiscal
year ended June 30, 1999 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
three times during the fiscal year ended June 30, 1999. 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 five times during the fiscal year ended June
30, 1999. 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, 1999. 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
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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, 1999. 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, 1999 a total of ten meetings of the
Board and 19 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 85%. Mr. Augustine was only able to attend 63.2% of
such meetings partly as a result of a death in the family.
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 26, 1999 with a term of fifteen years to purchase 1,000
shares of the Company's Common Stock at an exercise price of $89.2188, the fair
market value of the Common Stock on the date of grant. The Company does not pay
directors' fees to Directors who are employees of the Company. Directors who are
not employees of the Company are also provided insurance coverage in the amount
of $750,000 payable in the event of accidental death or disability occurring
while traveling on Company business. Such Directors also receive reimbursement
for expenses of such travel.
Fees otherwise payable to a 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.
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, Durk I. Jager, 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
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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, with whom the Committee meets annually.
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Annual compensation elements for fiscal 1998-99 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.
Organization 2005, the largest reorganization in Company history, involves a
change from regional to global profit centers, local market development
organizations, centralized/streamlined business services and smaller corporate
function organizations. This effort will create an environment that will support
a culture embracing the concepts of stretch, innovation and speed.
Beginning in fiscal 1999-00, consistent with the Company's compensation
principles as well as the changes required by our Organization 2005 direction,
the Committee approved a number of revisions to the Company's executive
compensation program. These changes are designed to encourage breakthrough
results. They will support the Company's accelerated growth strategy and, by
placing more pay at risk, provide greater rewards for superior performance with
appropriate downside risk. They will encourage stretch performance, greater
innovation, intelligent risk taking and greater speed while simplifying the
program by combining the current two forms of short-term incentive into one.
ANNUAL COMPENSATION
Annual compensation currently 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 as well as an
assessment of such business unit's overall performance. If this performance,
after any adjustments approved by the Compensation Committee for unusual items,
is not satisfactory, 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 currently 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 three years and
have a fifteen-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
10
<PAGE>
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. We are shifting our grant cycle from February to September for future
grants to be able to take fiscal year results into consideration. As a result,
the February grant was reduced by 50% to avoid higher than competitive grant
levels.
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 one-fifth 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 its most senior managers .
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. Shares held in The Procter & Gamble Profit Sharing
Trust and Employee Stock Ownership Plan are not counted towards the achievement
of these ownership targets.
Regarding the limitation of deductions 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
Effective January 1, 1999, Durk I. Jager, previously President and Chief
Operating Officer, succeeded John E. Pepper as Chief Executive Officer. Mr.
Pepper continues to serve as Chairman of the Board. The compensation of Messrs.
Jager and Pepper during fiscal year 1998-99, consists of the same elements as
for other senior executives, namely base salary, annual incentives, stock
options, and LTIP awards.
In determining Messrs. Jager's and Pepper's compensation package, the
Committee reviewed the Company's financial and business performance for 1998-99.
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
1998-99 was a record year for sales and earnings. The Company's profit margins
reached their highest level in 58 years. The Company's underlying strategy of
offering consumers products providing better value continues to build the
business. There has been an increased emphasis on both new product initiatives
and strategic acquisitions while divesting non-strategic brands. The Company's
shareholder return remains strong. After ranking in the top
11
<PAGE>
third among a group of peer companies during the past five and ten years, P&G
ranked near to top third during the latest three year period by averaging a 27%
annualized return. While we recognize that the Company continues to fall short
of its net sales growth objective, plans are in place to meet our long-term
goals. In fact, the Company made excellent progress during the past year in
designing and transitioning to its new Organization 2005 structure, which will
enable the employees to accelerate the Company's growth rate by better
leveraging global opportunities.
Mr. Jager'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 promotion to Chief Executive, and competitive chief
executive officer pay information derived from an independent consulting
organization. Mr. Pepper's base salary was established based on similar
considerations. Their Performance Bonus Award was based on the Committee's
overall evaluation of individual performance.
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 70% of Messrs. Jager's
and Pepper's Performance Bonus Award.
Messrs. Jager's and Pepper's regular award of stock options for 1998-99, as
with other optionees, was based on their total short-term compensation and
competitive survey data.
In February, 1999, two grants of stock options were made for those senior
executives, including Messrs. Jager and Pepper, who are subject to Section
162(m) referenced earlier. Both grants were for the same number of shares and at
the same grant price. One grant had a one-year vesting and ten-year term
(current form) and the other had three-year vesting and 15-year term. If the
shareholders approve the proposal described in this proxy statement to provide
for the 15-year term grants for these executives, they will remain in force and
the one-year vesting, ten-year term grants will be canceled. If the proposal is
not approved, the three-year vesting, 15-year term grants will be canceled and
grants with the current one-year vesting and ten-year term will remain in force.
Similar dual grants of stock options were made to Mr. Jager in connection with
his Performance Bonus and LTIP awards, which he received in the form of stock
options as explained in the Executive Compensation Tables below.
NORMAN R. AUGUSTINE, Chairman CHARLES R. LEE
RICHARD B. CHENEY MARINA V.N. WHITMAN
JOSEPH T. GORMAN
12
<PAGE>
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, 1999, 1998 and 1997.
SUMMARY COMPENSATION TABLE
(DOLLAR FIGURES SHOWN IN THOUSANDS)
<TABLE>
<CAPTION>
Long-Term Compensation
Awards
-------------------------
Annual Compensation Securities
--------------------------------------------------------- Restricted Underlying
Name and Principal Other Annual Stock Options/ All Other
Position Year Salary Bonus(1) Compensation(2) Awards(3) SARs(4) Compensation(5)
- ------------------------- ------- ----------- ---------- --------------- ------------ ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
John E. Pepper 1998-99 $ 1,250.0(6) 0(7) $ 0 $2,023.0 108,632 $ 341.6
Chairman of the 1997-98 1,250.0 0(8) 0 1,974.0 134,917 327.5
Board 1996-97 1,180.0 0(9) 0 1,661.0 142,691 306.8
Durk I. Jager 1998-99 1,318.3 0(10) 0 0 128,551 350.6
President and 1997-98 1,185.0 0(11) 0 0 158,336 306.0
Chief Executive 1996-97 1,035.0 0(12) 0 0 166,212 265.9
Wolfgang C. Berndt 1998-99 765.3 340.0(13) 334.6(14) 0 42,730 241.3
President-Global 1997-98 711.7 0(15) 122.1(14) 0 83,675 230.2
Fabric & Home Care 1996-97 663.3 0(16) 345.0(14) 0 96,796 215.5
and Europe
Jorge P. Montoya 1998-99 730.7 0(17) 218.1(14) 544.0 34,791 55.5
President-Global 1997-98 655.1 0(18) 249.5(14) 476.8 66,708 63.4
Food & Beverage 1996-97 584.1 137.5(19) 378.2(14) 306.6 64,730 173.2
and Latin America
A. G. Lafley 1998-99 712.9 250.0(20) 126.9(14) 0 42,760 597.4
President-Global 1997-98 635.0 336.6(21) 178.9(14) 0 63,237 742.2
Beauty Care and 1996-97 555.0 0(22) 13.1(14) 478.8 57,676 1,093.6
North America
Gordon F. Brunner 1998-99 610.0 0(23) 0 290.0 35,107 166.1
Chief Technology 1997-98 580.0 0(24) 0 406.0 56,655 152.6
Officer 1996-97 550.0 0(25) 0 448.0 72,850 143.6
</TABLE>
(1) 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. Any Profit Incentive Award that might be
made for fiscal 1998-99 is not yet calculable and, in accordance with
Securities and Exchange Commission regulations, will be reported in the
proxy statement for the annual meeting of shareholders on October 10, 2000.
(2) 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).
(3) All restricted stock awarded to the named executives for 1998-99 will vest
on retirement. The number and value (in thousands of dollars) of aggregate
restricted stock holdings of each of the named
13
<PAGE>
executives on June 30, 1999 was: Mr. Pepper, 163,988 shares ($14,277); Mr.
Jager, 34,241 shares ($2,981); Mr. Berndt, 3,246 shares ($282); Mr.
Montoya, 20,338 shares ($1,770); Mr. Lafley, 13,508 shares ($1,176); and
Mr. Brunner, 61,283 shares ($5,335). 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, 1999 ($87.0625). Dividends are paid on all restricted Common Stock
at the same rate as paid on the Company's Common Stock.
(4) For fiscal year 1998-99, in addition to the regular award of stock options,
these figures include options granted on July 1, 1999 to Messrs. Jager and
Lafley for the 1998-99 Performance Bonus Award and options granted on July
9, 1999 to Messrs. Jager, Berndt, Lafley and Brunner for the 1998-99
Long-Term Incentive Plan Award. See footnotes 10, 13, 20 and 23 below.
Options for the 1998-99 Profit Incentive Award will be granted on or about
September 15, 1999 and reported in the proxy statement for the annual
meeting of shareholders on October 10, 2000. As explained in the Report of
the Compensation Committee, and as detailed in the Option Grants Table,
Messrs. Jager, Pepper and Lafley received dual, conditional grants of stock
options. Each grant was for the same number of shares and at the same grant
price, but with different vesting and exercise periods. One of the grants
will be automatically canceled on October 12, 1999 following the vote of
the shareholders on the Proposal to Ratify and Approve Certain Grants of
Stock Options or Stock Appreciation Rights (see pages 23-24).
(5) All Other Compensation (in thousands of dollars) -- details for 1998-99:
<TABLE>
<CAPTION>
Profit Flexible International
Sharing and Compensation Assignment Total All
Related Program Imputed Equalization Other
Name Contributions Contributions Income Payments Compensation
- --------------------------------------- ------------- --------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
John E. Pepper $ 281.8 $ 50.0 $ 9.8 $ 0 $ 341.6
Durk I. Jager 297.3 47.4 5.9 0 350.6
Wolfgang C. Berndt 0 0 2.8 238.5 241.3
Jorge P. Montoya 0 0 1.4 54.1 55.5
A. G. Lafley 160.7 19.0 2.8 414.8 597.4
Gordon F. Brunner 137.5 23.2 5.4 0 166.1
</TABLE>
(6) In addition to the salary listed above for Mr. Pepper, he also received
1,861 shares ($170,000 value) of retirement restricted stock in lieu of a
salary increase effective July 1, 1998.
(7) Mr. Pepper's Performance Bonus Award of $1,090,000 was paid in the form of
retirement restricted stock; and his Long-Term Incentive Plan Award of
$763,000 was paid in the form of retirement restricted stock.
(8) In fiscal year 1997-98, Mr. Pepper's Performance Bonus Award of $940,000
was paid in the form of retirement restricted stock; his Long-Term
Incentive Plan Award of $658,000 was paid in the form of retirement
restricted stock; and his Profit Incentive Award of $376,000 was paid in
the form of retirement restricted stock.
(9) In fiscal year 1996-97, 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 Profit
Incentive Award of $474,000 was paid in the form of retirement restricted
stock ($355,500) and stock options ($118,500).
(10) Mr. Jager's Performance Bonus Award of $815,000 was paid in the form of
stock options; and his Long-Term Incentive Plan Award of $570,500 was paid
in the form of stock options.
(11) In fiscal year 1997-98, Mr. Jager's Performance Bonus Award of $640,000 was
paid in the form of stock options; his Long-Term Incentive Plan Award of
$448,000 was paid in the form of stock options; and his Profit Incentive
Award of $256,000 was paid in the form of stock options.
14
<PAGE>
(12) In fiscal year 1996-97, 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 Profit Incentive
Award of $339,000 was paid in the form of stock options.
(13) Mr. Berndt's Performance Bonus Award of $340,000 was paid in the form of
cash; and his Long-Term Incentive Plan Award of $238,000 was paid in the
form of stock options.
(14) Tax equalization payments to cover incremental taxes required to be paid to
Belgium for Mr. Berndt, to Venezuela for Mr. Montoya and to Japan for Mr.
Lafley, as paid in accordance with Company policies applicable generally to
managers assigned outside their home countries.
(15) In fiscal year 1997-98, Mr. Berndt's Performance Bonus Award of $290,000
was paid in the form of stock options; his Long-Term Incentive Plan Award
of $203,000 was paid in the form of stock options; and his Profit Incentive
Award of $165,300 was paid in the form of stock options.
(16) In fiscal year 1996-97, 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 Profit Incentive
Award of $243,750 was paid in the form of stock options.
(17) Mr. Montoya's Performance Bonus Award of $320,000 was paid in the form of
retirement restricted stock; and his Long-Term Incentive Plan Award of
$224,000 was paid in the form of retirement restricted stock.
(18) In fiscal year 1997-98, Mr. Montoya's Performance Bonus Award of $320,000
was paid in the form of retirement restricted stock; his Long-Term
Incentive Plan Award of $224,000 was paid in the form of stock options; and
his Profit Incentive Award of $156,800 was paid in the form of retirement
restricted stock.
(19) In fiscal year 1996-97, Mr. Montoya's Performance Bonus Award of $275,000
was paid in the form of cash ($137,500) and retirement restricted stock
($137,500); his Long-Term Incentive Plan Award of $239,250 was paid in the
form of stock options; and his Profit Incentive Award of $169,125 was paid
in the form of retirement restricted stock.
(20) Mr. Lafley's Performance Bonus Award of $305,000 was paid in the form of
cash ($250,000) and stock options ($55,000); and his Long-Term Incentive
Plan Award of $213,500 was paid in the form of stock options.
(21) In fiscal year 1997-98, Mr. Lafley's Performance Bonus Award of $305,000
was paid in the form of cash; his Long-Term Incentive Plan Award of
$213,500 was paid in the form of stock options; and his Profit Incentive
Award of $61,000 was paid in the form of cash ($31,600) and stock options
($29,400).
(22) In fiscal year 1996-97, Mr. Lafley's Performance Bonus Award of $255,000
was paid in the form of retirement restricted stock; his Long-Term
Incentive Plan Award of $221,850 was paid in the form of stock options; and
his Profit Incentive Award of $223,763 was paid in the form of retirement
restricted stock.
(23) Mr. Brunner's Performance Bonus Award of $290,000 was paid in the form of
retirement restricted stock; and his Long-Term Incentive Plan Award of
$203,000 was paid in the form of stock options.
(24) In fiscal year 1997-98, Mr. Brunner's Performance Bonus Award of $290,000
was paid in the form of retirement restricted stock; his Long-Term
Incentive Plan Award of $203,000 was paid in the form of stock options; and
his Profit Incentive Award of $116,000 was paid in the form of retirement
restricted stock.
(25) In fiscal year 1996-97, 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 Profit Incentive Award of $168,000 was paid in the form of retirement
restricted stock.
15
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
(DOLLAR FIGURES SHOWN IN THOUSANDS)
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Number of % of Total Price Appreciation
Securities Options for Option Term(2)
Underlying Granted to Exercise ---------------------
Options Employees in or Base Expiration (a) (b)
Name Granted(1) Fiscal Year Price Date 5% 10%
- --------------------------------------------- ----------- ------------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
John E. Pepper 108,632(3) 1.6% $ 89.2188 2/26/14 $10,457.0 $30,793.9
Durk I. Jager(4) 80,620(3) 1.2% 89.2188 2/26/14 7,760.5 22,853.4
28,056(3) 0.4% 87.1563 7/1/14 2,638.3 7,769.2
19,875(3) 0.3% 86.1250 7/9/14 1,846.8 5,438.6
Wolfgang C. Berndt(5) 34,438 0.5% 89.2188 2/26/14 3,315.0 9,762.1
8,292 0.1% 86.1250 7/9/14 770.5 2,269.0
Jorge P. Montoya 34,791 0.5% 89.2188 2/26/14 3,349.0 9,862.2
A. G. Lafley(6) 33,427(3) 0.5% 89.2188 2/26/14 3,217.7 9,475.6
1,896(3) 0.0% 87.1563 7/1/14 178.3 525.0
7,437(3) 0.1% 86.1250 7/9/14 691.1 2,035.1
Gordon F. Brunner 28,033 0.4% 89.2188 2/26/14 2,698.5 7,946.5
7,074 0.1% 86.1250 7/9/14 657.3 1,935.7
</TABLE>
(1) 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 third anniversary of the date of grant, and have
a term of fifteen years. Stock options expiring on July 1, 2014 and July 9,
2014 are related to Performance Bonus and Long-Term Incentive Plan Awards,
respectively. In addition to the options with a 15-year term and three-year
vesting, Messrs. Pepper, Jager and Lafley also received a second grant of
stock options for the same number of shares and at the same grant price,
but with a ten-year term and one-year vesting. All of the stock option
grants to Messrs. Pepper, Jager and Lafley were conditional. If the
shareholders adopt the resolution set forth in the Proposal to Ratify and
Approve Certain Grants of Stock Options or Stock Appreciation Rights (see
pages 23-24), the conditions on the 15-year term grants will be removed and
the ten-year term grants will be canceled. If the shareholders fail to
adopt this resolution, the conditions on the ten-year term grants will be
removed and the 15-year term grants will be canceled.
(2) 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 fifteen (or 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
fifteen (or ten) years later. Depending on inflation rates, these amounts
may be worth significantly less in fifteen (or ten) years in real terms,
than the value shown.
(3) Conditional options granted with one-year vest and ten-year term.
Calculations provided assuming shareholder approval of three-year vest and
15-year term.
(4) Mr. Jager also received an award of 11,088 stock options on September 15,
1998 with an exercise price of $69.2813 and an expiration date of September
15, 2008 for his Profit Incentive Award earned in fiscal year 1997-98. This
option award had potential realizable values of $483.1 and $1,224.3 at
assumed rates of appreciation of 5% and 10%, respectively.
16
<PAGE>
(5) Mr. Berndt also received an award of 7,158 stock options on September 15,
1998 with an exercise price of $69.2813 and an expiration date of September
15, 2008 for his Profit Incentive Award earned in fiscal year 1997-98. This
option award had potential realizable values of $311.9 and $790.4 at
assumed rates of appreciation of 5% and 10%, respectively.
(6) Mr. Lafley also received an award of 1,275 stock options on September 15,
1998 with an exercise price of $69.2813 and an expiration date of September
15, 2008 for his Profit Incentive Award earned in fiscal year 1997-98. This
option award had potential realizable values of $55.6 and $140.8 at assumed
rates of appreciation of 5% and 10%, respectively.
AGGREGATED OPTION/STOCK APPRECIATION RIGHT (SAR)
EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES(1)
(DOLLAR FIGURES SHOWN IN THOUSANDS)
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised In-
Shares Underlying Unexercised the-Money Options/SARs at
Acquired Options/SARs at FY End FY End(3)
on Value ------------------------- -------------------------
Name Exercise Realized(2) Exercisable Unexercisable Exercisable Unexercisable
- --------------------------------------------- --------- ----------- ---------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
John E. Pepper 119,874 $ 7,274.0 1,043,428 108,632 $ 46,749.0 $ 0.0
Durk I. Jager 31,000 1,988.4 855,594 175,405 35,847.3 215.8
Wolfgang C. Berndt 0 0.0 464,603 66,094 19,832.1 135.1
Jorge P. Montoya 9,000 560.2 239,161 42,168 7,654.6 29.6
A. G. Lafley 18,000 971.9 261,471 51,064 9,307.7 0.0
Gordon F. Brunner 44,000 3,192.7 396,813 41,791 17,543.1 6.6
</TABLE>
(1) 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.
(2) Options/SARs prior to 1999 were granted for terms of up to ten years. The
value realized on options/ SARs exercised during the last fiscal year
represents the total gain over the years the options/SARs were held by the
executive. If this total gain is divided by the average number of years the
options/SARs were held, a more relevant annualized gain is produced. The
annualized gains (in thousands of dollars) on these option/SAR exercises
were as follows: Mr. Pepper, $884.9; Mr. Jager, $220.9; Mr. Berndt, $0.0;
Mr. Montoya, $112.0; Mr. Lafley, $162.0; and Mr. Brunner, $354.7.
(3) Calculated based on the fair market value of the Company's Common Stock on
June 30, 1999 ($87.0625 per share) minus the exercise price.
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.
These are defined contribution plans. 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. Jager is enrolled in the Pension Plan of Procter &
Gamble Benelux N.V. (Netherlands Branch), where he joined the Company. Messrs.
Jager and Montoya are also enrolled in a 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 $365,883 for Mr. Jager, $866,759 for Mr. Berndt and $142,899
for Mr. Montoya.
17
<PAGE>
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.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
FISCAL YEARS
<S> <C> <C> <C>
P&G COMMON COMPOSITE GROUP S&P 500
1994 $100.00 $100.00 $100.00
1995 $135.97 $136.82 $126.05
1996 $175.90 $160.72 $158.90
1997 $273.60 $230.14 $213.82
1998 $362.36 $266.16 $278.40
1999 $350.17 $292.08 $341.67
</TABLE>
The graph assumes a $100 investment made on July 1, 1994 and the
reinvestment of all dividends, as follows:
<TABLE>
<CAPTION>
Dollar Value of $100 Investment at June 30
----------------------------------------------------------------
1994 1995 1996 1997 1998 1999
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
P&G Common............................ $ 100.00 $ 135.97 $ 175.90 $ 273.60 $ 362.36 $ 350.17
Composite Group....................... $ 100.00 $ 136.82 $ 160.72 $ 230.14 $ 266.16 $ 292.08
S&P 500............................... $ 100.00 $ 126.05 $ 158.90 $ 213.82 $ 278.40 $ 341.67
</TABLE>
18
<PAGE>
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 July 30, 1999:
COMMON STOCK
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL
OWNERSHIP
--------------------------------------
DIRECT(1) AND
PROFIT TRUSTEESHIPS PERCENT
SHARING RIGHT TO AND FAMILY OF
OWNER PLAN(2) ACQUIRE(3) HOLDINGS(4) CLASS
- ------------------------------------------------------------- ------------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Edwin L. Artzt 471,499.0 676,000 -- (5)
Norman R. Augustine 12,096.0 8,000 -- (5)
Donald R. Beall 7,170.0 8,000 14,444 (5)
Wolfgang C. Berndt 65,132.0 480,809 -- (5)
Gordon F. Brunner 188,386.3 403,497 -- (5)
Richard B. Cheney 4,666.0 8,000 2,800 (5)
Richard J. Ferris 36,310.0 8,000 -- (5)
Joseph T. Gorman 8,461.0 8,000 2,000 (5)
Durk I. Jager 128,179.1 891,360 -- (5)
A. G. Lafley 42,956.9 268,500 3,504 (5)
Charles R. Lee 11,140.0 8,000 -- (5)
Lynn M. Martin 4,191.0 8,000 -- (5)
Jorge P. Montoya 54,205.9 246,538 95,558 (5)
John E. Pepper 841,008.4 1,043,428 3,164 (5)
John C. Sawhill 5,498.0 4,000 -- (5)
John F. Smith, Jr. 7,036.0 6,000 -- (5)
Ralph Snyderman 5,708.0 6,000 -- (5)
Robert D. Storey 3,418.0 2,000 -- (5)
Marina v.N. Whitman 8,428.9 8,000 1,600 (5)
28 Directors and executive officers, as a group 2,478,936.9 5,583,819 132,070 .623%
</TABLE>
(1) Sole discretion as to voting and investment of shares.
(2) 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.
(3) If acquired, would have sole discretion as to voting and investment of
shares.
(4) The individuals involved share voting and/or investment powers with other
persons.
(5) Less than .145% for any one Director or executive officer.
19
<PAGE>
SERIES A ESOP CONVERTIBLE CLASS A PREFERRED STOCK
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
---------------------------
PROFIT
SHARING PERCENT
OWNER PLAN(1) TRUSTEESHIPS OF SERIES
- -------------------------------------------------------------------------- --------- ---------------- ---------
<S> <C> <C> <C>
Edwin L. Artzt -- -- --
Norman R. Augustine -- -- --
Donald R. Beall -- -- --
Wolfgang C. Berndt -- -- --
Gordon F. Brunner 7,477.9 -- (2)
Richard B. Cheney -- -- --
Richard J. Ferris -- -- --
Joseph T. Gorman -- -- --
Durk I. Jager 7,427.5 -- (2)
A. G. Lafley 5,757.0 -- (2)
Charles R. Lee -- -- --
Lynn M. Martin -- -- --
Jorge P. Montoya 6,519.7 -- (2)
John E. Pepper 7,477.9 -- (2)
John C. Sawhill -- -- --
John F. Smith, Jr. -- -- --
Ralph Snyderman -- -- --
Robert D. Storey -- -- --
Marina v.N. Whitman -- -- --
28 Directors and executive officers, as a group 86,364.8 -- .149%
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) -- 28,325,845.9(3) 48.77%
</TABLE>
(1) 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.
(2) Less than .014% 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.
(3) 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.
20
<PAGE>
SERIES B ESOP CONVERTIBLE CLASS A PREFERRED STOCK
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
---------------------------
PROFIT
SHARING PERCENT
OWNER PLAN(1) TRUSTEESHIPS OF SERIES
- --------------------------------------------------------------------------- --------- ---------------- ---------
<S> <C> <C> <C>
Edwin L. Artzt 694.7 -- (2)
Norman R. Augustine -- -- --
Donald R. Beall -- -- --
Wolfgang C. Berndt -- -- --
Gordon F. Brunner 518.2 -- (2)
Richard B. Cheney -- -- --
Richard J. Ferris -- -- --
Joseph T. Gorman -- -- --
Durk I. Jager 184.7 -- (2)
A. G. Lafley -- -- --
Charles R. Lee -- -- --
Lynn M. Martin -- -- --
Jorge P. Montoya -- -- (2)
John E. Pepper 518.2 -- (2)
John C. Sawhill -- -- --
John F. Smith, Jr. -- -- --
Ralph Snyderman -- -- --
Robert D. Storey -- -- --
Marina v.N. Whitman -- -- --
28 Directors and executive officers, as a group 1,915.8 -- .0051%
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) -- 29,510,608.1(3) 78.73%
</TABLE>
(1) 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.
(2) Less than .002% for any one Director or executive officer.
(3) 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.
21
<PAGE>
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
July 30, 1999, Lynn M. Martin, a Director, filed a Form 5 for fiscal year ended
June 30, 1999 to correct inadvertent failures to report 590 shares acquired on
May 8, 1998 and 145 shares acquired on September 1, 1998 directly owned by Ms.
Martin. On August 12, 1999, Jorge P. Montoya, an executive officer, filed a Form
5 for fiscal year ended June 30, 1999 to correct inadvertent failures to report
a change from direct to indirect beneficial ownership of 92,558 shares placed in
a trust arrangement dated March 25, 1998.
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 1999-00. 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 12, 1999. 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, 2000 is hereby ratified, confirmed and approved.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE 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.
22
<PAGE>
PROPOSAL TO RATIFY AND APPROVE CERTAIN
GRANTS OF STOCK OPTIONS
OR STOCK APPRECIATION RIGHTS
The following proposal will be presented for action at the annual meeting by
direction of the Board of Directors:
RESOLVED, That all outstanding grants of conditional stock options with
a life of more than ten (10) years, granted under The Procter & Gamble 1992
Stock Plan to the Chief Executive or to any other executive officer subject
to the provisions of Section 162(m) of the Internal Revenue Code and subject
to taxation under United States law, are hereby ratified and approved and
such conditions are hereby removed effective October 12, 1999; and
RESOLVED FURTHER, That stock options or stock appreciation rights
granted after October 12, 1999 under The Procter & Gamble 1992 Stock Plan to
the Chief Executive or to any officer subject to the provisions of Section
162(m) of the Internal Revenue Code and subject to taxation under United
States law shall have a maximum life of no more than fifteen (15) years from
the date of grant.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS RESOLUTION FOR THE
FOLLOWING REASONS:
On January 12, 1999, the Board of Directors amended Article G, paragraph 1
of The Procter & Gamble 1992 Stock Plan as follows to permit the granting of
stock options or stock appreciation rights with a maximum life of no more than
fifteen (15) years (previously, the maximum life was ten (10) years):
ARTICLE G -- EXERCISE OF STOCK OPTIONS AND STOCK APPRECIATION RIGHTS.
1. All stock options and stock appreciation rights granted hereunder
shall have a maximum life of no more than <*>fifteen (15)</*> <#>ten
(10)</#> years from the date of grant<*>; provided, however, that any stock
options or stock appreciation rights with a life of more than ten (10) years
from the date of grant that have been conditionally granted to the Chief
Executive or to any other executive officer subject to the provisions of
Section 162(m) of the Internal Revenue Code and subject to taxation under
United States law, as it may be amended from time to time, prior to the
annual meeting of shareholders scheduled for October 12, 1999 shall
automatically be canceled effective October 12, 1999 if the shareholders do
not adopt a resolution at such annual meeting approving grants to such
officers with a maximum life of up to fifteen (15) years from the date of
grant.(1)</*>
As recommended by the Compensation Committee, the Board approved this
amendment as part of a comprehensive re-design of the Company's executive
compensation programs related to the Organization 2005 program. The Compensation
Committee recommended moving to the longer term grants to encourage participants
to hold their stock options for a longer period. At the same time, the
Compensation Committee extended the vesting period on stock options from one
year to three years thereby making this change essentially cost neutral to the
Company.
The Procter & Gamble 1992 Stock Plan, which was approved by the shareholders
at the annual meeting on October 13, 1992, authorizes the award of stock
options, stock appreciation rights or shares of common stock to key employees as
part of their compensation. The Plan is administered by the Compensation
Committee, which establishes the terms and amount of all awards within the
parameters set forth in the Plan.
The Plan currently provides that the exercise price for any stock option may
not be less than 100% of the fair market value of the Company's common stock on
the day of the grant and stock options may not be exercisable within one (1)
year from the date of grant except in the case of death. The maximum number of
shares available for award under the Plan in each calendar year is one percent
(1%) of the total issued shares of the common stock of the Company as of June 30
of the immediately preceding year. Any shares
(1) New language is indicated by underlining. Language to be deleted is lined
out.
23
<PAGE>
authorized, but not awarded in any calendar year, are permitted to be awarded in
succeeding calendar years. The maximum number of stock options that may be
granted to any employee in any calendar year shall not exceed five percent (5%)
of the number of shares available for award.
As discussed in the Report of the Compensation Committee and as detailed in
the Executive Compensation Tables set forth earlier in this Proxy Statement, the
senior executives who are subject to the provisions of Section 162(m) of the
Internal Revenue Code and subject to taxation under United States laws received
dual, conditional grants of stock options. Each grant was for the same number of
shares and at the same grant price, with one grant having a ten-year term and
one-year vesting and the other a 15-year term and three-year vesting. If the
shareholders approve this resolution, the conditions on the 15-year term grants
will be removed and the ten-year term grants will be canceled. If the
shareholders fail to approve this resolution, the conditions on the ten-year
term grants will be removed and the 15-year term grants will be canceled. The
approval of this resolution will also permit the future granting to such
executives of stock options or stock appreciation rights with a maximum life of
up to fifteen (15) years.
The Board believes it is in the best interests of the shareholders for the
senior executives to receive grants of stock options with a 15-year term
identical to the grants made to all other participants receiving grants of stock
options or stock appreciation rights under The Procter & Gamble 1992 Stock Plan.
Accordingly, the Board recommends a vote FOR this resolution.
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. Proxies will be voted FOR the resolution unless the Proxy
Committee is instructed otherwise on a proxy returned to such Committee.
Abstentions and "broker non-votes" will be counted as a vote AGAINST this
proposal.
SHAREHOLDER PROPOSALS
SHAREHOLDER PROPOSAL NO. 1
Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Avenue, N.W.,
Suite 215, Washington, DC 20037, owning 400 shares of Common Stock of the
Company, has given notice that she intends to present for action at the annual
meeting the following resolution:
RESOLVED: That the shareholders of P&G recommend that the Board of
Directors take the necessary steps to reinstate the election of directors
ANNUALLY, instead of the stagger system which was recently adopted.
Mrs. Davis has submitted the following statement in support of her
resolution:
REASONS: Until recently, directors of P&G were elected annually by all
shareholders.
The great majority of New York Stock Exchange listed corporations elect
all their directors each year.
This insures that ALL directors will be more accountable to ALL
shareholders each year and to a certain extent prevents the
self-perpetuation of the Board.
Last year the owners of 364,480,347 shares, representing approximately
36.4% of shares voting, voted FOR this proposal.
If you AGREE, please mark your proxy FOR this resolution.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS RESOLUTION FOR THE
FOLLOWING REASONS:
The shareholders of Procter & Gamble decided, by action at the annual
meeting of shareholders in 1985, that its Board of Directors shall be divided
into three classes with Directors elected to staggered three-year terms. This
was to insure continuity of experienced Board members.
24
<PAGE>
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 63% 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.
2000 ANNUAL MEETING DATE
It is anticipated that the 2000 annual meeting of shareholders will be held
on Tuesday, October 10, 2000. 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, April 28,
2000.
OTHER MATTERS
No action will be taken with regard to the minutes of the annual meeting of
shareholders held October 13, 1998 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.
25
<PAGE>
[LOGO]
PRINTED ON RECYCLED PAPER
#0038-7106
<PAGE>
[LOGO]
ADMISSION TICKET
You are cordially invited to attend the annual meeting of shareholders of The
Procter & Gamble Company to be held on Tuesday, October 12, 1999 at 12:00 noon
at the Procter & Gamble Hall at the Aronoff Center for the Arts, 650 Walnut
Street, Cincinnati, Ohio.
You should present this admission ticket in order to gain admittance to the
meeting. This ticket admits only the shareholder listed on the reverse side and
is not transferable. If 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 PROCTER & GAMBLE COMPANY
[LOGO]
SHAREHOLDER'S PROXY AND CONFIDENTIAL VOTING INSTRUCTION CARD
ANNUAL MEETING OF SHAREHOLDERS-TUESDAY, OCTOBER 12, 1999
The undersigned hereby appoints John E. Pepper, Durk I. Jager and Gordon F.
Brunner, 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 12, 1999 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
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 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 TRUST
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,
AUTOMATIC DATA PROCESSING, 51 MERCEDES WAY, EDGEWOOD, NY 11717 BY 9:00 A.M. ON
TUESDAY, OCTOBER 12, 1999 FOR COMMON SHARES TO BE VOTED AND 5:00 P.M. ON MONDAY,
OCTOBER 11, 1999 FOR THE TRUSTEES TO VOTE THE PLAN SHARES. AUTOMATIC DATA
PROCESSING 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 AUTOMATIC DATA
PROCESSING AND NOT PROVIDED TO THE COMPANY.
<PAGE>
[LOGO]
PROXY SERVICES VOTE BY PHONE - 1-800-690-6903
P.O. BOX 9139 Use any touch-tone telephone to transmit your
FARMINGDALE, NY 11735 voting instructions anytime before 12:00 a.m.
on October 12, 1999. Have your proxy card in hand
when you call. You will be prompted to enter your
12-digit Control Number which is located below and
then follow the simple instructions the Vote Voice
provides you.
VOTE BY INTERNET - www.proxyvote.com
Use the internet to transmit your voting
instructions anytime before 12:00 a.m. on
October 12, 1999. Have your proxy card in hand
when you access the web site. You will be
prompted to enter your 12-digit Control Number
which is located below to obtain your records
and create an electronic voting instruction
form.
VOTE BY MAIL
Mark, sign and date your proxy card and return it
in the postage-paid envelope we've provided or
return to The Procter & Gamble Company, c/o ADP,
51 Mercedes Way, Edgewood, NY 11717
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
- -------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
THE PROCTER & GAMBLE COMPANY
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.
VOTE ON DIRECTORS
1. ELECTION OF DIRECTORS (terms expiring in 2002)
Nominees: 01) Donald R. Beall, 02) Gordon F. Brunner, 03) Richard
B. Cheney, 04) Durk I. Jager, and 05) Charles R. Lee
For Withheld For All To withhold authority to vote,
All All Except mark "For All Except" and write
/ / / / / / the nominee's number on the line
below.
-----------------------
VOTE ON PROPOSALS For Against Abstain
2. Ratify Appointment of Independent Auditors / / / / / /
3. Ratify and Approve Certain Grants of Stock
Options or Stock Appreciation Rights
/ / / / / /
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.
For Against Abstain
4. Board of Directors terms / / / / / /
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 [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
<PAGE>
- --------------------------------------------------------------------------------
[LOGO]
Dear Shareholder:
On August 27, 1999 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 12, 1999.
As of September 28 your proxy card has not been received by Automatic Data
Processing, the Company's proxy tabulator. If you have in fact already voted,
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. You can also
vote by telephone or internet. Instructions are included on the proxy card.
Thank you for your attention to this matter.
THE PROCTER & GAMBLE COMPANY
- --------------------------------------------------------------------------------
