Procter & Gamble Co.'s directors are facing a timemanagement challenge: monitoring Chief Executive Officer RobertMcDonald's turnaround plan while running their own companies.

Until Angela Braly resigned as WellPoint Inc.'s top executivelast week, six of the 10 outside directors on P&G's board wereactive CEOs, the highest number of any company in the Standard& Poor's 500 Index, according to an analysis by GMI Ratings inNew York. Now that Braly is no longer a CEO, P&G tiesInternational Business Machines Corp. with five, GMI found.

The concentration of leaders on P&G's board threatens toturn from benefit to burden as the executives confront financial,operational and macroeconomic difficulties at the companies theyrun. Braly stepped down from health insurer WellPoint afterinvestors called for her ouster, while James McNerney, anotherP&G director, is steering Boeing Co. through defense spendingcuts and delays to new jets. P&G director Meg Whitman, CEO ofHewlett-Packard Co., had an $8.86 billion record loss last quarteras her company wrote down the value of its enterprise-servicesunit.

“This is probably not the kind of board you want for a companythat's about to face a crisis,” said Jay Lorsch, a managementprofessor at Harvard Business School in Boston. “When you havedirectors who are busy with their own companies, that limits timethey have for P&G and that can be problematic.”

McDonald, who lowered profit forecasts three times this calendaryear at the world's largest maker of consumer products, is tryingto cut $10 billion in costs and restructure the Cincinnati-basedcompany to focus on developing products and winning back marketshare. He also faces pressure from activist investor Bill Ackman,founder of Pershing Square Capital Management LP, who disclosed astake in P&G in July.

P&G's board unanimously supports McDonald and his plan andis monitoring its effectiveness, directors said in a July 18 filingwith the U.S. Securities and Exchange Commission. The statementfollowed a Bloomberg News report that directors had discussedwhether to replace McDonald, who has been CEO since July 2009,according to people with knowledge of the matter.

McDonald, who is 59, has been given more time after improvementsin how he delivered financial results for the most recent quarter,said another person.

“P&G's board has an extraordinary level of leadershipexperience, is highly engaged and has a strong track record ofattendance and participation,” Jennifer Chelune, a companyspokeswoman, said in an e-mailed statement.

Time Commitment

So far P&G directors have kept up with board commitments,with 97 percent in attendance at seven board meetings and 23committee meetings in the fiscal year ended June 30, 2012,according to regulatory filings. While a typical board seatrequires about 20 hours a month of work, a company facingchallenges can quickly consume more time, said David Larcker, a lawprofessor at Stanford University.

“From the outside, Procter & Gamble is an all-star board butit's hard to know what the dynamics will be in a crisis situation,”said Larcker, who co-wrote the book “Corporate Governance Matters.”“If they have an active position of their own and on another board,it can really ratchet up.”

During Hewlett-Packard's fiscal 2010, when former CEO Mark Hurdresigned, the board met 34 times, compared with 10 times in 2009and 9 in 2008, regulatory filings show.

Charles Elson, who was a director at Sunbeam Corp. andHealthSouth Corp. during restructurings at those companies, said aturnaround effort will increase the time requirement for P&Gboard members “dramatically.” Directors would typically need tomonitor the plan's execution at each stage, looking at everythingfrom how products are selling to financial statements to employeeretention and hiring, he said.

“In some months, it would double or even triple your timerequirements,” said Elson, who is director of the John L. WeinbergCenter for Corporate Governance at the University of Delaware. “Iknow, I've been there.”

Ackman's involvement with P&G gives board members anadditional responsibility. Ackman may seek management changes,people familiar with the matter said in July. He previously wagedcampaigns for changes at Target Co. and Fortune Brands Inc., and inJune he successfully installed his candidate for CEO at CanadianPacific Railway Ltd. after a proxy fight.

CEO Directors

In addition to Hewlett-Packard and Boeing, the public companyCEOs on P&G's board are the leaders of American Express Co.,Archer-Daniels-Midland Co. and Frontier Communications Corp.McDonald, who is the board's chairman, and four of the other CEOsare on at least one additional public board.

The CEOs for the companies declined to comment throughspokesmen. Braly, the former WellPoint CEO, remains a “productiveand valued member” of Procter & Gamble's board, P&G'sChelune said.

“Under our governance guidelines, a major job change requiresthe board to reassess the director's continued service on theboard, and the board will follow its established process,” Chelunesaid. There isn't a specific timetable for the review, shesaid.

Kristin Binns, a Wellpoint spokeswoman, declined to comment onbehalf of Braly.

GMI, a corporate governance advisory company, gave P&G aletter grade of “D” on corporate governance last year, saying“multiple overcommitted directors can seriously weaken a board.”American Express, Boeing, Hewlett-Packard and WellPoint alsoreceived “D” grades for governance issues relating to compensationor board composition, while Archer-Daniels-Midland and Frontierwere given “C” grades.

Frontier CEO Maggie Wilderotter, who joined P&G's board in2009, is trying to reverse seven straight quarters of revenuedeclines after the company purchased Verizon Communications Inc.'slocal wireline business in 14 states for more than $8 billion. Sheis also a director at Xerox Corp. alongside McDonald and atbankrupt media company Tribune Co.

Archer-Daniels-Midland, the corn processer led by P&Gdirector Patricia Woertz, is confronting the U.S. drought andrising costs to buy corn from farmers. The Decatur, Illinois-basedcompany has missed analysts' earnings estimates in four of the lastfive quarters.

Best Performer

American Express CEO Kenneth Chenault leads the best-performingcompany among the chief executives on the P&G board. Thebiggest credit-card issuer by purchases reported a second- quarterprofit in July that beat analysts' estimates. The shares have risen24 percent this year. Chenault, who joined the P&G board in2008, is also on the board of IBM with McNerney.

The other P&G directors include Intuit Inc. founder ScottCook, who remains an Intuit board member and is also an EBay Inc.director; Susan Desmond-Hellman, chancellor of the University ofCalifornia, San Francisco; Johnathan A. Rodgers, former CEO of TVOne LLC and a director at Nike Inc. and Comcast Corp.; and ErnestoZedillo, former president of Mexico, who is also a director atAlcoa Inc., Citigroup Inc. and Grupo Prisa.

The lineup at P&G is increasingly an anomaly, saidStanford's Larcker, who recently wrote a paper on whether CEOs makethe best board members. In 2000, 53 percent of newly elected,independent directors were a CEO or other active high-levelexecutive compared with 26 percent in 2010, he said, citing a 2010study by recruiting company Spencer Stuart.

In a separate survey last year of corporate directors fromStanford's Rock Center for Corporate Governance and recruiterHeidrick & Struggles, 87 percent of respondents said active CEOdirectors are too busy with their own companies to be effective,Larcker said.

A better strategy is to mix directors with experience in theindustry of the company, specialists like technologists oraccounting experts and then a minority of generalists such assitting or retired CEOS in other fields, said Robert Pozen, asenior lecturer for Harvard Business School and the BrookingsInstitute.

“It's easy to see what expertise each of these CEOs bring, but Iwouldn't have a majority of these people as a general rule,” saidPozen, who is also a director at Nielsen Holdings NV and MedtronicInc. “These are all very good, smart people but CEOs have less timeto be on boards.”

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