Two retired executives challenge Gillette sale

Two retired Gillette Co. executives and directors, key members of the management team that fought off corporate raiders in the 1980s, have criticized the company's planned sale to Procter & Gamble Co. and urged the board to reconsider.

Joseph F. Turley and Joseph E. Mullaney said the sale of Gillette was unnecessary and questioned the motives of chief executive James Kilts, who stands to make an estimated $173 million in the transaction.

''We can understand how [Kilts] could be persuaded that a sale to P&G was the best way to go," Turley and Mullaney wrote in the letter delivered to Gillette last Friday. ''But how could you directors go along with it? You have a duty to look out for the best interests of the shareholders and the stakeholders."

Turley was president and chief operating officer when he left Gillette after a 36-year career. Mullaney, who worked at the company for 26 years, was vice chairman when he retired. Both remained on the board until the mid-1990s.

The proposed $57 billion sale of Gillette to P&G would trigger about 6,000 layoffs in the companies' combined workforce of 140,000. Gillette employs about 3,750 people in Massachusetts, mostly in its headquarters office, South Boston shaving facility, and a factory in Andover.

Gillette has said it needed scale to negotiate with retailers and invest in new products. The merger with Cincinnati's P&G would create one of the world's biggest consumer-products firms, bringing together Tide detergent, Pampers diapers, Crest toothpaste, and Gillette razors.

In the letter, Turley and Mullaney argue recent financial results show Gillette's business to be robust and reject the company's explanation of why a merger would be compelling as ''faulty judgment and logic." It also criticizes the Kilts pay package as excessive.

''He has everything to gain and nothing to lose," Mullaney said in an interview yesterday. ''I don't think he could care less about Gillette or Boston or the employees, no one except himself."

Mullaney said Gillette executives called him last weekend, offering to arrange meetings with directors if he did not go public with his letter but he declined.

A Gillette spokesman said the company ''strongly disagrees with the assertions, suggestions and tone" of the letter. ''Mr. Mullaney's loyalty and allegiance to Gillette's prior management are well-articulated and justified, just as his doubts and suspicions about the current management are ill-founded and unjustified," spokesman Eric Kraus said in a written response.

Kraus said the Gillette board was ''firmly committed" to pay for performance and described the Kilts compensation package as ''entirely appropriate."

Turley and Mullaney were senior executives at Gillette when the company faced threats from corporate raiders Ronald Perelman and Coniston Partners in the mid-1980s.

''Some of you were there when a different group of directors successfully fought to keep the company independent," their letter said. Directors at that time, they wrote, recognized a duty to maximize shareholder value.

''However, they also recognized that there were other stakeholders in the company whose interests could and should be considered," the retired executives wrote, citing employees and suppliers.

Turley and Mullaney wrote that the current merger plan would unnecessarily hurt employees and community interests in Boston. ''The directors should find an opportunity to reconsider this transaction."

Mullaney said yesterday he and Turley discussed writing to the board earlier but held off fearing Gillette's business performance was faltering.

That changed after the company reported record results for the fourth quarter and full year in February.

''It clearly demonstrates the company is in wonderful shape and capable of handling itself as an independent company," Mullaney said.

Steven Syre can be reached at syre@globe.com.