Procter & Gamble CEO David Taylor to Step Aside

Mr. Taylor will serve as executive chairman.

The leadership change comes at a delicate moment for the maker of Pampers diapers, Crest toothpaste and Gillette razors. While the Covid-19 pandemic spurred demand for household products last year, it has strained supply chains and pushed up costs in a sector that operates on thin profit margins.

In an interview, Mr. Taylor said P&G’s decision to put Mr. Moeller in charge, which the board had deliberated over for years, reflects the company’s recent success. The board considered external candidates as well, he said.

“The strategy we have was working before the pandemic, is working in the pandemic and will continue to work well after the pandemic,” Mr. Taylor said. “Ultimately, when you go outside, it’s because the company is not delivering. Today the company is delivering some of the strongest results that it ever has.”

P&G is set to report its latest quarterly results on Friday. Many of its peers have warned of inflationary pressures and slowing demand in recent days.

Mr. Moeller, a low-key executive who joined P&G in 1988 as a cost analyst in the company’s food division, gave blunt assessments of P&G’s organizational woes while also defending the company’s strategy of focusing on big, mass-market brands.

He played a key role in the downsizing of P&G in the years before Mr. Taylor became CEO and was the chief architect of two separate plans to cut $10 billion in annual costs. Mr. Moeller also helped engineer the latest management restructuring, unwinding the corporate structure he called a “thicket.”

Both men joined P&G decades ago and worked their way up at the Cincinnati company. Mr. Taylor, a Charlotte, N.C., native, was a manufacturing-plant manager who switched to brand management. He took over in 2015, as P&G was struggling to regain steam in postrecession years.

“When I came into this role, we were not delivering what we knew we were capable of,” Mr. Taylor said on Thursday.

Sales slowed even more in Mr. Taylor’s first years, drawing ire from Wall Street and landing the company in a proxy fight with activist investor

Nelson Peltz.

P&G narrowly won a shareholder vote in 2017 but gave a seat on the board to Mr. Peltz, CEO of Trian Fund Management LP.

Critics said P&G needed to invest in trendy, e-commerce startups and lessen its reliance on bricks-and-mortar retailers and mass-market brands like Tide and Gillette. Instead, Mr. Taylor doubled down on P&G’s big names while eschewing deal making as rivals snapped up new brands.

He argued that P&G’s best prospects remain rooted in fundamentals: selling to the masses by way of big retailers on the strength of meticulously collected consumer research, a large research-and-development operation and the world’s biggest advertising budget. P&G, he said, needed to learn to do these things faster and more effectively.

The strategy proved to be especially prescient amid the pandemic, when shoppers flocked to known names and, largely unable to travel or dine out, were willing to pay top dollar for diapers, soap and detergent.

P&G’s organic sales growth, a closely watched measure that strips out currency moves and deals, mostly hovered between 1% and 3% in the years following the economic downturn of 2008. In 2019, P&G’s growth returned to prerecession levels of between 5% and 6%.

During Mr. Taylor’s tenure, P&G has recorded a total shareholder return, a measure of share price gains and dividends paid, of 46%, compared with a 138% total return for the S&P 500 index. P&G’s share price is hovering near record levels though it is essentially flat year to date, compared with a 17% advance in the S&P 500.

Corrections & Amplifications
David Taylor is 63 years old. An earlier version of this article incorrectly said he was 57. Also, Procter & Gamble CEO David Taylor assumed the role in 2015. An earlier version of this article incorrectly said 2016.(Corrected on July 29)

Write to Sharon Terlep at sharon.terlep@wsj.com