Galvin broadens Gillette inquiry

Massachusetts Secretary of State William F. Galvin yesterday said Gillette Co. directors conducted a "very shallow" review of the company's proposed $57 billion sale to Procter & Gamble Co., and he is now investigating whether Gillette retirees would see their health benefits reduced because of the deal.

Galvin said the minutes of the directors meeting the company provided him are too skimpy to reflect what he said is the magnitude of the deal combining the two consumer product giants.

"There's no evidence of extensive deliberations," Galvin said. "I find it hard to accept that these are the actual minutes of what occurred."

Meanwhile, Galvin broadened his inquiry into the proposed sale of Gillette to include retiree benefits. That was sparked by a Feb. 7 letter to Gillette retirees in which P&G "committed not to reduce the overall level of Gillette retiree welfare benefits, such as health and life insurance, for two years after the deal closing."

After that period, P&G pledged it would only make changes to the Gillette retirees coverage if similar changes are made for P&G retirees.

Nonetheless, the notice has Gillette retirees such as Edward G. Flaherty, a 59-year-old Hanover resident who worked at Gillette for 33 years, wondering whether P&G will cut his benefits once the two-year period expires. Flaherty, who retired six years ago, said the Gillette healthcare benefit is particularly generous, and could be one place where P&G looks for cost savings.

Flaherty said Gillette had "committed to paying 91 percent of my medical for the rest of my life. It's a great benefit. Wouldn't they want to change it?"

A P&G spokesman said the company was unable to comment in detail last night.

Flaherty's concerns are just one of the anxieties hanging over Gillette's vast corporate family in Massachusetts and around the country. Another reason: P&G has said the acquisition would result in the elimination of 4 percent of the workforce, or 6,000 jobs.

Galvin has sought more details about these issues, including notes of the directors' discussions, as part of his inquiry into how the proposed sale affects Gillette stockholders, some of whom are company employees and retirees living in Massachusetts whose jobs or benefits might be at risk from cost-cutting and consolidations by P&G.

"What was the board of directors thinking when they choose to do this deal? What information were they relying on? Was there a discussion? Was there any dissent? These are all questions that have to be answered," Galvin said.

A Gillette spokesman, Eric Kraus, said the company provided a copy of the actual minutes of the directors meeting, as requested by Galvin, and he declined to speculate further on the secretary's reaction. Kraus was unavailable later last night to comment on how many retired Gillette workers receive benefits from the company.

Galvin and other critics have questioned whether Gillette, whose sales, profits, and share price all had been climbing in recent years under chief executive James M. Kilts, was sold for strategic business reasons, as the companies contend, or because of the compensation package due Kilts. The Wilson Group, executive compensation specialists based in Concord, estimated Kilts's package at $173 million.

As he did with Gillette, Galvin is asking P&G for more details about how the company arrived at the 4 percent reductions in jobs. Gillette had previously told the secretary that it is too early in the transition process to provide details such as how many cuts would be in Massachusetts. Gillette has about 4,000 workers in the state, and combined the two companies would have 140,000 employees worldwide.

Galvin said he was moved to inquire about the status of the health benefits to determine if Gillette shareholders who are also retirees risk being "shortchanged" by the sale of the company.

Citing the P&G statement about a two-year grace period on changes to retiree benefits, Galvin said, "When you're saying you're not going to reduce benefits in the first two years, you're implying quite clearly there are going to be reductions" down the road.

Andrew Caffrey can be reached at caffrey@globe.com.