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Procter & Gamble: CEO Regression Comes at a Big Price

NEW YORK ( TheStreet) -- If Procter & Gamble (PG - Get Report) was a baseball team and the manager was fired, you wouldn't expect it to go over to the high-cost box seats and rehire its old manager.

Well, maybe you would, but would you pay him (or her) 25% more than you were paying the manager you just fired? The fans would be confused and boos might start to overcome the cheers. We're not talking about the New York Mets here. This is a publicly traded, widely held corporate behemoth with a market cap of more than $216 billion.

After firing controversial CEO Robert McDonald P&G caused the equivalent of shareholder whiplash by bringing back former CEO A.G. Lafley. It seemed obvious that the board of directors didn't like the direction the company was heading yet they didn't have an heir apparent to promote.

At the company's unremarkable Web site I found a news release with a 1980s looking portrait of a smiling McDonald. From the portrait one might think the news for him was about to be delightful.

Instead the headline read, "A.G. Lafley Rejoins Procter & Gamble as Chairman, President and Chief Executive Officer." Then in italics the subtitle, " Bob McDonald Retires from the Company after 33 Years." As Archie Bunker used to say, "Whoop-tee-doo!"

Reading the above release we learn that Lafley was also appointed to serve on the board of directors as its new-old chairman. That helped me understand why he's evidently worth a daily base salary of $5,555.55 based on a 260-day business year. With a $2 million annual base salary a CEO can feel quite motivated as well as comfortable.

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