Pepper's legacy
He presented open image to Wall Street

Thursday, September 10, 1998

The Cincinnati Enquirer

John Pepper will be remembered as the chief executive who changed the fortresslike image of Procter & Gamble into one of a more open, approachable corporation.

Founders William Procter and James Gamble formed the company as a partnership in 1837 and incorporated the company in 1890. Here are the top officers since the turn of the century.

• William A. Procter, 1890-1906

• William C. Procter, 1907-1930

• Richard R. Deupree, 1930-1948

• Neil H. McElroy, 1948-1957

• Howard J. Morgens, 1957-1974

• Edward G. Harness, 1974-1981

• John G. Smale, 1981-1990

• Edwin L. Artzt, 1990-1995

• John E. Pepper, 1995-1998

• Durk I. Jager, 1999-

"They had always been one of the less-accessible companies around," said Steve Folker, chief equity strategist for Fifth Third Bank. "They've definitely made progress there (under Pepper). (Edwin) Artzt started that, maybe grudgingly. From our standpoint, they're very accessible now."

Mr. Pepper's more-open style of management worked magic on Wall Street analysts, who typically give more attention to companies that are easier to get information from, whether it be earnings guidance or answers to basic questions about operations.

That style was backed up with performance. Analysts credit Mr. Pepper with:

• Stabilizing the management of P&G, which had undergone some restructurings in the early 1990s.

• Establishing a strong strategic plan, highlighted by aggressive sales growth goals.

• Continuing product innovation, best exemplified by the rollout of Procter's fat substitute, olestra.

• Adding high-quality brands through acquisitions, such as Tambrands in 1997.

• Achieving Procter's goals for a slimmer organization brought on by Edwin Artzt's $1.5 billion restructuring.

During Mr. Pepper's tenure as CEO, P&G's stock nearly tripled to a peak of $94 July 6.

"He's been more forthcoming toward the investment community than previous CEOs, and that's been reflected in the stock price," said money manager William F. Bahl of Cincinnati's Bahl & Gaynor. Still, Mr. Pepper's reign has coincided with the greatest three-year run up in stock prices this century.

And while Mr. Pepper leaves a legacy of openness, he also leaves a company struggling mightily to grow revenue.

"I think John is extremely well-liked and respected within P&G and highly regarded as the CEO, but today's times may require a more abrupt approach to management," Mr. Bahl said.

Mr. Bahl thinks Durk Jager, who is several years younger than the 60-year-old Mr. Pepper and best-known for his success at expanding P&G's global presence, is the right man to lead the company into the next century.

"The company is going to make it happen," he said of Procter's aggressive goal to double sales every 10 years. "These goals are obtainable under either Pepper or Jager, but, again, it makes all the sense in the world to have the person with the most years in front of him to implement it."

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