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.
So now if I were the recycled CEO of P&G what would I do to help shine up the company's somewhat tarnished sheen? I'd begin by reassuring shareholders by presenting a detailed plan to lower costs and improve the company's operating margin. As of the quarter ending March 31, 2013 P&G's operating margin was around 20%. That's not bad but it happens to be nearly 15% below its competitor Colgate-Palmolive ( CL). During the same quarter Colgate notched a 23.43% operating margin.
Then if I were CEO I'd tell investors that P&G will maintain its profit margin advantage. P&G's 15.6% profit margin is 14.7% higher than CL's 13.6% profit margin. I'd inform the financial press about P&G's most lucrative product lines and explain incentives to increase those highly profitable activities.
Time will tell if Lafley is worth his generous salary. Patience among big shareholders and activist investors is usually in short supply, so the faster he can steer this big corporate team to victory the better for all involved. At the time of publication the author held no positions in any of the stocks mentioned. Follow @m8a2r1 This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.