Ackman puts P&G management on hot seat, gives board time

* Blames management for high costs, declining revenues

* Understands why board wants to give CEO room to fix damage

* Ackman says board is one of the best in America

By Svea Herbst-Bayliss

NEW YORK, Oct 1 (Reuters) - Hedge fund manager William Ackman is blaming Procter & Gamble's top management for the consumer products company's problems, but said he understands the board wants to give the CEO more time to repair years of damage.

Ackman disclosed his stake in the maker of Tide laundry detergent and Pampers diapers in July and recently met board members to lay out his complaints about the company.

Three times this year, the company has cut earnings forecasts and Ackman complained on Monday about the company's high costs and squarely blamed top management for these problems.

But the activist investor who oversees roughly $10 billion in assets at Pershing Square Capital Management also said he understands why the board wants to allow the company's CEO, Robert McDonald, room to repair the damage.

"I respect that the board wants to give him more time," Ackman said when asked about P&G at the Value Investing Congress on Monday.

But Ackman also said that the board, which includes the heads of a number of U.S. blue chip companies, is going to keep McDonald on a "tight leash."

Less than a month after meeting with that board, Ackman had praise for the directors, but also put them on notice that he is watching them closely.

"This is one of the best boards in America and they don't want to be embarrassed," Ackman said about the board that includes Boeing Co CEO James McNerney Jr. and American Express Co CEO Kenneth Chenault.

Ackman scored a dramatic win earlier this year when he was able to shake up Canada's clubby business world by winning a proxy fight at Canadian Pacific Railway Ltd and ultimately getting a new CEO into the corner office.

Since winning big there, Ackman has not minced words about P&G's management, blaming top executives for high costs plus years of declining revenue.

"I attribute a lot of those problems to senior management," said Ackman.

But he added the company is very attractive and that it will pay off to wait for "this CEO or the next CEO" to shape up the company.

(Reporting By Svea Herbst-Bayliss. Editing by Andre Grenon)

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