* Meeting is notable for absence of activist investor Ackman
* CEO defends "40/20/10" strategy
* Pershing Square analysts attend, but not Ackman
* All board members re-elected; shares down in afternoon
By Jessica Wohl
CINCINNATI, Oct 9 (Reuters) - Procter & Gamble Co's CEO stood behind the company's plan for increasing profit and sales at a drama-free annual meeting notable for the absence of William Ackman, the activist investor who has pushed hard for change in recent months at the world's largest maker of household products.
Chief Executive Bob McDonald defended the strategy of developing major new products while the company at the same time seeks to cut $10 billion in costs.
Tuesday's meeting, held in P&G's hometown of Cincinnati, came as something of a respite for McDonald months after Ackman's Pershing Square Capital Management took a stake in P&G,
putting pressure on the CEO and the board to improve performance.
McDonald, who has been at the helm since July 2009, is refocusing on core categories, countries and innovations with both the $10 billion restructuring and a strategy laid out in June that homes in on the company's 40 biggest businesses, 20 biggest new products and 10 key developing markets.
Ackman, who disclosed his stake in the maker of Tide detergent and Crest toothpaste too late to have any proposals on the agenda, was not in attendance, and only one shareholder referred to him, asking why it took the investment of an activist to boost P&G's stock.
"If we remain focused on the plan I talked about, the 40/20/10 plan, with improved innovation from discontinuous innovation, with productivity improvement, then we are all convinced that shareholders will get an increase in value and the stock will reflect that," McDonald replied, without mentioning Ackman directly. "We are focused like a laser, we are holding our own feet to the fire to do this."
Though Ackman was absent, several of his analysts - who are far less recognizable than the 6-foot, 3-inch hedge fund manager with the shock of gray hair - were in the crowd listening closely.
Since Ackman became involved in the stock, P&G's board has expressed confidence in the plans laid out by chairman, president and CEO McDonald. The board has publicly backed McDonald, giving the former Army captain time to overhaul the 175-year old company, which is struggling keep up with competitors.
Shares of P&G have risen since Ackman's stake was disclosed but have trailed the gains in the Dow Jones industrial average , of which they are a component, so far this year.
All 11 board members, including McDonald, were elected for another year at the meeting. A shareholder proposal on adopting a simple majority vote to pass all such proposals passed, while two other shareholder proposals were defeated.
P&G shares were down 0.6 percent at $68.69 on Tuesday afternoon on the New York Stock Exchange. The stock is up 9.3 percent since Ackman's stake was disclosed in July.
McDonald was under pressure even before news of Ackman's stake surfaced, after lackluster earnings and the February announcement of the $10 billion restructuring plan that analysts deemed insufficiently transformative.
"In our view, management cannot afford to fall short of its promises again, as the clock is ticking on its turnaround," Morningstar analyst Erin Lash said earlier this month. "It is possible that P&G could be forced to consider breaking up this household and personal-care behemoth."
Pershing Square is P&G's 10th-largest shareholder, with 21.92 million shares, or 0.79 percent of the company's outstanding shares, according to Thomson Reuters data.
Only a week ago in New York, Ackman exerted public pressure on P&G by answering a few questions about his plans for the company. Ackman met with P&G's board in September at the Manhattan office of Kenneth Chenault, the CEO of American Express Co and a P&G board member.
At that meeting, Ackman did not mince words about what he considered McDonald's lackluster performance and the aspects that need repair if company performance is to improve. For now, Ackman has left his suggestions with the board.
Ackman has been instrumental in shaking up management at Canadian Pacific Railway Ltd and retailer J.C. Penney Co Inc .
P&G stumbled in recent months as competitors failed to match
some of the price increases it imposed on goods including laundry and dish detergents to mitigate higher commodity costs. The strengthening dollar has also trimmed the value of sales in overseas markets.
"The announced restructuring is a direct result of persistent questions about P&G's ability to grow profitably," said Lash.
Still, several of the attendees at Tuesday's event said they stand behind the company and its leader.
"They are going in the right direction," said Bill Harding, an 86-year-old shareholder who lives in Kettering, Ohio, after growing up in Cincinnati. Harding and his wife, Pat, said that they reinvest their dividends in P&G and still think it is one of the best companies in the country, if not the world.
(Additional reporting by Svea Herbst-Bayliss in Boston; editing by Matthew Lewis)
Keywords: PROCTER MEETING/