Out with the old, in with the … older.

That’s what’s happening at Procter & Gamble (NYSE: PG) today after the company decided to replace CEO Robert McDonald with his retired predecessor, A.G. Lafley.

McDonald was roundly criticized for failing to adapt P&G to the modern age in his four-year tenure as the company’s CEO. Specifically, McDonald was criticized for allowing rival Unilever (NYSE: UL) to gain ground and for failing to trim Procter & Gamble’s rising costs.

So P&G is turning back to Lafley, who presided over the company from 2002-2009.

Investors seem to like the move. P&G shares are up 4% today on news of McDonald’s ousting, pushing the stock to its highest level in a month.

However, from a shareholder standpoint, McDonald’s tenure as Procter & Gamble’s chief executive wasn’t all bad. Here’s how McDonald’s reign stacks up against Lafley’s first CEO stint:

McDonald (Jan. 2010-Yesterday)

P&G Share Price Change: +29.8%

YOY Earnings Growth: +7.3%

Lafley (July 2002-Dec. 2009)

P&G Share Price Change: +35%

YOY Earnings Growth: 5.7%

Given that Lafley’s original tenure was double the length of McDonald’s term, the 35% share price appreciation is fairly modest compared to the 30% gains under McDonald over the last three and a half years. It’s far from an apples to apples comparison, however.

Lafley’s first tenure spanned the worst recession since the Great Depression, while McDonald’s tenure did not. For proper perspective, the S&P 500 returned 48% during McDonald’s tenure vs. just 13% during Lafley’s first tenure. So Procter & Gamble’s stock almost tripled the broad market’s returns during Lafley’s tenure as CEO, while the shares trailed the market by a wide margin under McDonald.

That said, while earnings growth had stagnated a bit of late under McDonald, the company still grew last quarter at a faster rate than it did during Lafley’s last quarter in 2009.

The good news for Procter & Gamble shareholders is that the company still has enough cash on hand ($6 billion) to continue increasing its generous dividend like it has every year for the past half-century. That likely won’t change regardless of who is CEO.

Published by Wyatt Investment Research at