Colgate Executives Get Thousands for Perks
Colgate Executives Get $11,500 a Year for Pet Sitters, Karate Lessons, Other Perks
The Associated PressNEW YORK Dec 8, 2004

  Colgate-Palmolive Co., which announced Tuesday it is eliminating 4,400 jobs, disclosed in a regulatory filing that many of its top executives and officers are given allowances of up to $11,500 a year to spend on anything from pet sitters to running shoes to karate lessons to movie rentals.

  The plan, called "Above and Beyond," was detailed in the consumer product company's quarterly filing in November with the Securities and Exchange Commission. The program has been in place since 1986 and covers 800 executives.
  Under the plan, executives and officers can ask for reimbursement for exercise equipment, such as rowing or skiing machines, instructional videos, grooming and boarding services for pets, pet walking services and sitters, and veterinarian fees and visits.
  Twenty top officers are each eligible for an $11,500 yearly allowance. Between 110 and 120 vice presidents are eligible for $10,000 allowances and 650 executives are eligible for allowances of either $2,000 or $4,000, depending on their rank. Not every eligible executive uses their allowance, the company said.
  The Associated Press came across the program while searching SEC filings from thousands of companies for information about compensation for the use of personal trainers and other perks. Few companies detailed programs as extensive as that of Colgate. A story was prepared on Monday, before the corporate restructuring was announced, but the AP held it for a day while waiting for the company's response.
  "Colgate has consistently tried to be fair and very modest in this distribution of any perquisites," said a company spokesman who asked not to be named. "A total of 800 people in the 'Above and Beyond' program have access to a modest, fixed stipend that can be used for home computers, baby sitters, fitness training, tax assistance and other benefits that can make their lives somewhat easier."
  The plan replaced previous benefits that were unfairly distributed and, in some cases, excessive, the spokesman said. "This perquisite program, by design, puts Colgate well below the median for perquisite programs among a very large comparative group," he said.
  Colgate, which makes Colgate toothpaste, Softsoap and Ajax cleaner, said it is cutting 12 percent of its work force and closing one third of its factories to improve profits by reducing manufacturing.
  The company had $9.9 billion in sales last year and paid its top five executives $23.3 million in cash and stock, plus another $9.1 million in stock options. The company's highest paid executive, chairman and CEO Reuben Mark, made $10.4 million in salary, bonus and stock awards.
  Some other expenses covered by the "Above and Beyond" plan, according to the SEC filing:
  Equipment and special clothes for fishing, boating, hiking, golf, running and yoga; music, golf, tennis and self-defense lessons; opera, ballet, museum, concert and sporting event tickets for the executive and the executive's immediate family; movie tickets and video purchases or rentals
  Membership for tennis, swimming, racquetball clubs or local YMCA-YWCAs and fitness centers. The company will also pay locker fees, court rentals and personal trainer fees.
  Housekeeping, house painting, snow removal, swimming pool care, landscaping, gutter cleaning and chimney sweeping bills are covered because "routine household chores can consume precious personal and family time," according to the filing.
  "To recognize the long hours spent in the office required by the responsibilities of your position," the plan covers personally selected artwork and desk accessories for the office, but executives are responsible for insuring those purchases.

<>While Procter & Gamble is confident of continued strong growth, Colgate-Palmolive plans to close a third of its factories in the next four years
<>NY TIMES NEWS SERVICE  Dec 11, 2004 
<>  Procter & Gamble used a presentation for investors on Thursday to champion its recent performance, in sharp contrast to a gathering held this week by Colgate-Palmolive, which announced it was regrouping after disappointing results.
  But beneath the surface the two companies share some similarities, both in the challenges they are confronting in the consumer products industry and the strategies they are using to surmount them.
  Alan Lafley, Procter's chairman and chief executive, who has led the company's turnaround since taking the helm four years ago, said that his plan emphasizing "balanced growth" continues to work.
  "We're confident we have the strategies, brands, innovation pipeline and new market opportunities to sustain strong growth," he said.
  But even with top-line success, Procter said operating profit margins were expected to improve only "modestly," and it did not raise its quarterly or annual earnings goals.
  Rising commodity costs led the company, meanwhile, to raise the price of some Folgers coffee products by 14 percent on Thursday. It has also raised prices about 5 percent on some tissue and pet food goods this year.
  "We have made tough interventions that are needed to restore the health of our business," said Clayton Daley, Procter's chief financial officer, who did not rule out increases on more products.
  Earlier in the week, Reuben Mark, Colgate's chairman and chief executive, expressed a similar determination to take action amid the sobering news of a sweeping reorganization.
  During a conference call with investors on Tuesday, he said Colgate would close about one-third of its 78 factories and eliminate 12 percent of its work force worldwide over the next four years. The changes should help Colgate improve its profitability, and he said the company would devote much of the cost savings to increasing sales.
  Investors appeared to like what both companies said. Shares of Procter climbed US$1.35, or 2.45 percent, on Thursday to US$56.38, while Colgate rose US$0.70, or 1.4 percent, to US$50.25.
  The consumer products industry is entering a challenging period, however, and analysts say no company is immune. Price pressure is growing as retail giants like Wal-Mart push for low prices and carry cheaper private-label brands. Rising commodity prices add to production costs. On top of that, intense competition is causing companies to spend more on advertising just to retain the market share they already have.
  "The market doesn't fully appreciate the challenges ahead," said William Steele, a household goods analyst for Banc of America Securities.
  "Companies like to tap you on the shoulder before they slap you in the face, and Unilever and Colgate were tapping people on the shoulder when they issued profit warnings this fall," Steele said.
  Even with its recent success, he said, Procter has been sacrificing some profit margin to maintain strong top-line growth.
  Having improved their balance sheets and operations, the road ahead for Colgate and Procter is very much the same: trying to drive revenue growth by introducing innovative products and capturing new customers, particularly those in fast-growing markets like China, Latin America and Eastern Europe.