 David Taylor, Chairman and CEO of Procter & Gamble, joining us. Thanks for taking the time, Mr. Taylor. I appreciate it. You're welcome. I look forward to talking with you, Brian. So there's obviously has been a lot going on with Procter & Gamble over the past couple of months, but I want to open the floor to you. Who is Procter & Gamble right now? You hear so many things by the activist investor Nelson Peltz out there. We read your financial statements and there seems to be a lot of good things going on, but we'd love to open the floor to you. I'm sorry, P&G is a profoundly different and a much stronger, more profitable company. We've gone through a major transformation the last several years and adjusted our portfolio, our efforts in productivity. We've accelerated our already strong innovation program and made changes in our organizational design and strengthened our culture to deliver sustainable, balanced results going forward. Take us through the innovation. I think that's been a key point in what Mr. Peltz has put out in this large, almost 100-page document. What does innovation look like in Procter & Gamble right now? Innovation P&G are brands that delight consumers that make a difference in their daily life and that are superior to the alternatives and the categories that we compete. There's many external measures that I think validate that P&G's innovation engine is alive and well. One good example, and I'll take the U.S., which is our largest market, is IRI does a report each year called the Paysetter Report. In this last year, we had five of the top ten innovations in the U.S., seven of the top 25, and if you go back even for the last 20 years, you'll find P&G has dominated that list. We have more than six of the largest competitors combined, so the innovation engine that has helped fuel our company over the decades is alive and well, and it shows up in our leading brands that in most of the categories we compete, we own. What do you think he's missing here? I think he believed he called the innovation machine is broken, but to be fair, I walk the supermarket aisles, I walk some of your biggest customers, Walmart, Target, and I see new products. What might Mr. Palski missing? I think there's a couple of points I'd make. One, I think he uses outdated information and tries to describe the company that may have existed five or ten years ago. Secondly, I think he mischaracterizes innovation as only being new brands you've never heard of. Frankly, a lot of our innovation shows up on brands, consumers' love and trust. Tide has been a great brand for a number of years, and we innovated the new form Tide Pods, which is growing fast in all the markets we've lost it in. We've innovated in the adult and content area with always discreet, and it's growing share in each of the markets it's in, double digit, which he wouldn't count. Unstoppables in the fabric refresher category is launched, and it's over a quarter billion dollars in growing because it brings extended freshness or freshness over time to close that didn't exist before. So there's a number of examples across our portfolio where we're bringing innovation to brands, consumers' trust and love, and new forms to many of them, which are powerful innovation that grows the brand and importantly grows the category, which is important not only for us but important for our customers. Are you open to launching new platforms? Is that something you're close to doing? Do you want to do it? Is it possible? Are there any very crowded supermarket aisles out there across all over the place? Certainly we're open to launch new brands when we find inappropriate or inter-new spaces with new brands or new forms of existing brands. Certainly both are important but the core of our growth has been and will continue to be innovating in our 10 core categories on brands, consumers, trust and love, and we will be looking at and we are looking at new brands to extend our presence in places where consumers shop. And we've funded that as part of our future upstream innovation which we certainly don't talk about until we're ready to announce. But yes, we have funded and are working on new spaces and that innovation is also alive and well at P&G. That's what I also want to touch upon with you. What I don't think a lot of people know is you have something called P&G Ventures. Take us through that. What type of things, what does that business do? Are you looking for new products? It seems very early stages. Certainly it's the early stages but the P&G Ventures is a supplement to the 10 core categories and that group is a very strong group of innovators that looks at new spaces that we believe we could play in where we could bring products that solve problems and where performance is a key driver purchase intent and that it plays to our strengths and capabilities. And so there are actually many transaction learning tests where we've got products or prototypes out in front of consumers or in consumers' homes being evaluated as we speak. But again, until we're ready to announce things, it's proprietary in the specific categories but we're absolutely committed to growing what we have and growing additional spaces. What we call new jobs to be done that can delight consumers, build our business and create value for share owners. Do you feel any pressure to go out and acquire business? I believe that's one of Mr. Pelt's many sticking points. You haven't used a lot of cash to go out and buy businesses. Do you feel the heat is on to do that? Do you feel you have to do that or the innovation is inside P&G? It just has to be unlocked maybe quicker. I think the answer is both but the primary source of our growth will be organic growth in the categories we're in, building on the brands we have but also we remain open to go into new spaces with new brands, capabilities or forms as we see opportunities. Where I differ from Mr. Pelt's is the belief that we ought to shift away from large brands saying that large brands don't matter when in fact whether you go on e-commerce sites or whether you go in limited distribution stores or in the established stores that exist. Today, what consumers look for most often is brands they trust that perform well over time and that's our brands. In fact, our 10 largest brands have grown the company average last year. Why? Because consumers trust them and they deliver them. There is an important and in that is each of the 10 presidents that is empowered to leave their category can look outside when they see opportunities. The message is the core is to build what you have because that works and we're seeing acceleration in our growth and to me that's a powerful way to create value but we'll also of course look to extend our portfolio when we see opportunities to create value. Take us through your board. I go to the PNG website. This looks like a heavy hitter type of board. Many well-known aims, tons of experience. Why do you think Pelt's has come out here and been so vocal against this board? It certainly seems like they know what they're doing. They certainly know what they're doing. It is an outstanding group of individuals that have distinguished careers and they're very dedicated to helping PNG. If I look at the independent directors on PNG, most of them you probably know or all of them you may have heard of because they all were successful in their home companies or previous professional lives and they're extremely focused at helping PNG continue to grow and to represent all share owners. Interestingly, he says they're not engaged. 95% or a little over 95% participation in all meetings or calls, whenever I need additional insight or thoughts, this board has been ready either individuals or group of individuals or collectively as a board to be available to help myself and the company. So they're providing to me the oversight that is right. They're overseeing a plan that is working. They provide the governance that I think our share owners would want to see and they are very to improve results. Why would, and I'm using your words in a quote in another interview, putting pelts on the board, why would he be dangerous? Does he not have the type of experience that you're looking for in a candidate but take us through that a little bit? I think there's several areas that I believe it is just not right or appropriate right now to add Nelson pelts to the board. And there's two different ways to look at it. For me, we have a very strong governance process that identifies the skills and abilities that are appropriate for future growth and to represent all share owners. And going through that filter, he hasn't been the best pick. We've just recently added someone that I think is a better illustration of what we would want for the future, which is an Amy Chang that brought a tremendous level of technical skills that have been applied in our industry and both innovation, as well as understanding how to leverage the digital ecosystem into our industry. Those kind of skills I think are additive to what our board currently has and we already have pretty strong skills with both Scott Cook and Meg Whitman being very accomplished leaders in the tech space. But specifically, he's got some ideas that I think could have a negative impact on our company and one would be eliminating corporate R&D or he called it corporate R&D as a hobby. In P&G, we have strong R&D in each one of our businesses, but we also see value in having a more focused group of outstanding innovators that bring innovation that may impact many of our categories and it may have a scope beyond what each individual business may choose to take on. And we've got many examples over time where innovation or process innovation, product or process innovation or package innovation has then had an impact across multiple business units and it would not have happened had not the company funded it. So to me there's a role for both and I think he takes a short-sighted view of innovation and maybe that comes from his background in food where he believes small brands, more flavor and short term changes drive growth. In our industry, there's a development and industrialization and a commercialization process that requires to me more thought and investment in a longer timeframe in many cases that he may not fully understand and unfortunately he hasn't asked many questions. He's more asserted what we should go do from the very beginning of our meetings. I'm more than willing to listen to him as an engaged investor and I respect his track record as an investor, but I also believe you've got to have the industry specific knowledge to understand what it takes to innovate and win over and I'm worried about the short, mid and long term. Do you think he's just being short-sighted here? He wants to come in, possibly break up P&G, boost the stock and then head for the hills with his profits? I'm listening to you here and it sounds as if the company might just be on the right direction. It's a longer term. You have to plan things out in the future but Mr. Pells may not understand that. I would agree with that statement. The company has made the changes and will continue to make changes to ensure that we're set up to win in the future and it's showing up in the improvement we delivered last year and we continue to deliver. Having said that, I think yes in your statement, I think he both has outdated information and has it sought to understand the changes that we've made in the progress that we're seeing. I think one of the worst things we could do for investors now would be to reorganize the company and disable some of the long-term innovation that is important for future growth. So I will continue to listen to him as an investor but believe it's the best interest of our share owners, our employees and all the stakeholders to support an outstanding board that's engaged and helping to oversee the transformation that's right now showing results. Let's talk of products for a little bit. Walmart came out launching a new service. They're going to come into your home and deliver products to your fridge. How is the retail environment? It seems to be changing each day. Much more online, mobile. How are you adapting to this? Certainly your observation is very correct and the retail environment is going through transformation and part of what we need to do is a major consumer products company that plays across many categories is to have our brands available across any channel or environment the consumer wants to shop. So we now have to be a very accomplished and well-developed e-commerce capability to work with our retailers. Today we have commerce business in the US, China and Europe comparable to our offline share because we've got products and packages and programs that work on e-commerce and then we also have products and packages and programs that work for our bricks and mortar customers and for the very fast growing small format limited selection in many parts of the world and that may show up in a variety of small formats for existing big retailers and may show up in a variety of different formats around the world but we need to be ready to meet the shopper with brands that they prefer in sizes and price points that meet their needs and P&G's positioned well to do that. Are you testing a store? I was looking over the last earnings call. There's so much debate on Wall Street if you should go directly consumer. Do you want to have a P&G store or a tie or a crest-only store? Is that what the future holds for P&G? P&G is testing a variety of formats and we remain open to go to market whatever way the consumer prefers. What I have seen to date is most consumers want to go through aggregators next be a bricks and mortar customer that's got a dot-com capability that's really an omni-channel retailer which is fine. It could be a pure e-commerce player but I haven't seen in our space consumers want to have accounts with every manufacturer for daily use items. Having said that, we do have a company store that helps us to learn about consumers and continue to build relationships with consumers and I think it's one we ought to continue to experiment and recognize that this space is evolving but that they want to shop at aggregators. Last question. You have spent many years at P&G and you've touched so many businesses and in many respects you've worked your tail off to get where you are today. How is this process, Mr. Pelts? What have you learned from it? What have you learned about yourself as a leader about P&G? Just anything. Certainly on any significant event you learn something and this has certainly been one that has demanded a lot of time and attention. I've had an opportunity to meet with many, many investors and I've got a much better understanding of what it is they're looking for out of our company and interestingly and very re-encouraging is most of them are longer term and they want to balance short, mid and long term and I've got just increased conviction on the need for us to reliably deliver results across each time frame. I've also seen P&G people come together because they're being challenged and questioned and this has been a great rally and cry inside the company to deliver outstanding sustained top and bottom line results and certainly I believe all P&G people recognize that we're being questioned by someone from the outside that's got limited and outdated information but the best answer to that is to get better over time and that's what we're going to do but I am convinced we have the right people the right plan the right portfolio to win going forward. David Taylor, Chairman and CEO of Procter & Gamble I appreciate it. Thank you very much