THE PROCTER & GAMBLE COMPANY ANNUAL MEETING OF SHAREHOLDERS - PROCTER & GAMBLE CO

Explicit Guidance:

• No specific financial guidance (revenue, earnings, margins, capex, opex, or full-year forecasts) was provided in this transcript.
• Dividend: Declared quarterly dividend of $1.0885 per share, payable on or after November 16, 2026 to shareholders of record as of October 23, 2026 (common stock) and October 23, 2027 (preferred stock).
• Dividend History: Committed to the track record of 70 consecutive years of dividend increases.
• FY2026 Tariff Impact: Disclosed a net tariff headwind of $250 million (before tax) for Fiscal 2026, contributing to a total headwind of $1.2 billion including commodities, FX, and interest.
• FY2026 Canada Tariffs: Pending further detail to be disclosed in the earnings call later this month.

Business-Segment Outlook:

• Innovation Strategy: Intent to strengthen the "core" of every brand while expanding the "big plus" (growth sources) via superior innovation to win against private label and emerging brands.
• Category Focus: Targeting user growth in key categories (e.g., Laundry North America) through upgraded existing lines (e.g., Tide) and new product launches (e.g., Tide Evo, Downy Unstoppable).
• M&A Integration: Thorne brand acquired to expand the beauty and health portfolio; expected to provide attractive margins and strong top-line growth to complement the existing personal healthcare business.
• Geographic Supply: Maintaining a supply footprint where >85% of products sold in the U.S. are manufactured in the U.S., with similar local manufacturing strategies in other regions to ensure reliability and cost efficiency.

Market and Competitive Outlook:

• Competitive Landscape: Acknowledged performance trending below peer group and S&P 500 in the recent period; positioned as a catalyst for evolving into the "CPG company of the future" to address market shifts.
• Demand & Execution: Adjusting execution frameworks to close "superiority gaps" faster, adapting product packaging, communication, and in-store/online presentation to counter media fragmentation, shifting retailer landscapes, and cumulative inflation.
• Innovation as Moat: Viewing innovation as the "lifeblood" to maintain performance superiority against private label and new entrants.

Macro / Industry Outlook:

• Tariffs & Trade: Recognizing tariffs as a volatile cost structure component; managing impact through ongoing productivity and savings initiatives.
• FX & Commodities: Acknowledged as part of the $1.2 billion combined headwind for FY2026.
• Regulatory Environment: Monitoring potential changes to SEC Rule 14a-8 (shareholder proposal thresholds), noting uncertainty regarding federal vs. state law impacts on governance.

Strategic Initiatives:

• AI Implementation: Leveraging AI as an "amplifier of human potential" to enhance consumer insights, innovation modeling, supply chain efficiency, and decision-making; focused on upskilling employees rather than eliminating jobs.
• Supply Chain Transformation: Transforming supply chains to be more agile and cost-effective; simplifying internal work processes to free up resources for consumer engagement.
• Sustainability & Packaging:
  • Goal: 80% of consumer packaging designed to be recyclable or reusable (up from 55% in 2018).
  • Material Reduction: Reduced virgin petroleum plastic use by 24% vs. 2018.
  • Collaboration: Partnering with industry coalitions to advance a circular economy and scale recycling infrastructure.
• Growth via Product Launches: Continued rollout of breakthrough products like Tide Evo to capture new usage occasions and users.

Risks and Headwinds to Outlook:

• External Cost Volatility: Tariffs, commodity prices, foreign exchange rates, and interest rates are identified as drivers of operating volatility.
• Infrastructure Limitations: Progress on recycling and circular economy goals is constrained by recycling infrastructure and supply chain capabilities outside P&G's direct control.
• Governance Uncertainty: Potential changes to federal rules on shareholder proposal eligibility could create a "patchwork" of state laws affecting governance.
• Consumer & Retail Dynamics: Risks associated with media fragmentation and the shifting retail landscape requiring continuous adaptation of execution.

Management Tone on the Future:

• Confidence: Expressed confidence in short-term and long-term value creation despite recent relative underperformance vs. peers.
• Strategic Stance: Reiterated commitment to the core competency and fundamental business model ("winning with consumers and retail partners"); explicitly stated that fundamentals do not change, only the world around them.
• Capital Allocation: Rejected stock split, emphasizing focus on organic growth in sales, earnings, and cash flow; prioritized sustainable dividend growth over administrative cost savings from splits.
• Hedging: Used phrases like "evolve into the CPG company of the future" and "adjusting almost every part of our execution framework" to signal active adaptation rather than passive defense.

Miscellaneous:

• Board Composition: Board size set at 12 directors (within the 10-15 range), with a refresh of 7 new directors in the past four years.
• Director Compensation: Benchmarking indicated compensation is at the 44th percentile of peers.
• Election Results: All 12 director nominees, audit ratification, and Say-on-Pay proposals passed; all three shareholder proposals (special meeting threshold, proposal eligibility policy, charitable reporting) failed.