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P&G's Incentive Compensation Now Rewards Market Share Gain

  • Ad Age, Monday, August 30, 2010 10:56 AM
Jack Neff reports that Procter & Gamble is changing its incentive program for top managers to reward them for market share gains against competitors even if sales are in the doldrums across the board. In essence, he says, P&G is redefining winning in relative rather than absolute terms.

Under the old "Business Growth Plan" executives were compensated in cash or stock based on organic sales growth. The new "Performance Stock Program" compensates top managers -- in stock only -- based on how the company's organic sales growth does in comparison to peer companies.

"While P&G plays down the significance of the change, it essentially positions managers of the world's biggest ad spender to win even if their categories slow, their prices decline and if what's already been a nearly three-year U.S. recession by official reckoning lasts another three," Neff writes.



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