March 25, 2009

Dear Fellow Colgate Stockholder:

You are cordially invited to attend our Annual Meeting of Stockholders on Friday, May 8, 2009, at 10:00 a.m. in the Broadway Ballroom of the Marriott Marquis Hotel, 1535 Broadway, between 45th and 46th Streets, New York, New York 10036.

At the meeting, we will ask you to elect the Board of Directors, to ratify the selection of the independent registered public accounting firm and to approve an executive incentive compensation plan to replace, with minor updates, the existing executive incentive compensation plan, which expires on May 31, 2009. In addition, one stockholder proposal will be offered for your consideration. We will also review the progress of the Company during the past year and answer your questions.

This booklet includes the Notice of Annual Meeting and Proxy Statement. The Proxy Statement describes the business we will conduct at the meeting and provides information about the Company that you should consider when you vote your shares.

The Proxy Statement includes a section highlighting the Company’s corporate governance standards. The Company and its Board of Directors have a long-standing commitment to good governance, and the Board reviews its governance practices on an ongoing basis to ensure that they promote shareholder value. In 2008, the Company updated its Code of Conduct and distributed the revised version to its employees around the world. The Code of Conduct is a set of principles that guides the behavior of Colgate people and promotes the highest ethical standards in the Company’s business dealings. We invite you to review the governance section beginning on page 5 of the Proxy Statement to learn more about our continuing commitment to excellence in corporate governance.

It is important that your stock be represented at the meeting. Whether or not you plan to attend the meeting in person, we hope that you will vote on the matters to be considered. You may vote your proxy via the Internet or by telephone. If you received a printed copy of your proxy materials, you may also vote by mail by signing, dating and returning your proxy card in the envelope provided.

Very truly yours,

March 25, 2009

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

The 2009 Annual Meeting of Stockholders of Colgate-Palmolive Company will be held in the Broadway Ballroom of the Marriott Marquis Hotel, 1535 Broadway, between 45th and 46th Streets, New York, New York 10036, on Friday, May 8, 2009, at 10:00 a.m., for the following purposes:

Stockholders of record at the close of business on March 9, 2009 are entitled to vote at the Annual Meeting.

Your vote is important. We encourage you to vote by proxy, even if you plan to attend the meeting. You may vote your proxy via the Internet or by telephone by following the instructions included on your Notice of Internet Availability or, if you received a printed copy of your proxy materials, on your proxy card. If you received a printed copy of your proxy materials, you may also vote by mail by signing, dating and returning your proxy card in the envelope provided. Voting now will not limit your right to change your vote or to attend the meeting.

Andrew D. Hendry
Senior Vice President, General Counsel and Secretary
Colgate-Palmolive Company
300 Park Avenue
New York, New York 10022

TABLE OF CONTENTS

PROXY STATEMENT

Colgate-Palmolive Company (referred to in this Proxy Statement as “we,” “Colgate” or the “Company”) is sending you this Proxy Statement in connection with the solicitation by the Board of Directors (the “Board”) of proxies to be voted at the 2009 Annual Meeting of Stockholders (the “Annual Meeting”).

We are mailing a printed copy of this Proxy Statement, a proxy card and the 2008 Annual Report of the Company to our registered stockholders who have not consented to electronic delivery of their proxy materials and a Notice of Internet Availability to all of our other stockholders beginning March 25, 2009. The Annual Report being made available on the Internet and mailed with the Proxy Statement is not part of the proxy-soliciting material.

VOTING PROCEDURES

Who Can Vote

The Company has two classes of voting stock outstanding: Common Stock and Series B Convertible Preference Stock. If you were a record owner of either of these classes of stock on March 9, 2009, the record date for voting at the Annual Meeting, you are entitled to vote at the meeting. At the close of business on March 9, 2009, there were 500,287,999 shares of Common Stock and 2,713,246 shares of Series B Convertible Preference Stock outstanding and entitled to vote.

Determining the Number of Votes You Have

Each share of Common Stock has one vote, and each share of Series B Convertible Preference Stock, which is convertible into eight shares of Common Stock, has eight votes. When originally issued in 1989, each share of Series B Convertible Preference Stock was convertible into one share of Common Stock. Since then, the Common Stock has split three times while the Series B Convertible Preference Stock has not split. To maintain its parity with the Common Stock, the voting rights, dividends and conversion ratio of the Series B Convertible Preference Stock have been adjusted accordingly. Thus, each share of Series B Convertible Preference Stock has eight votes.

How to Vote

You can vote your shares in two ways: either by proxy or in person at the Annual Meeting by written ballot. If you choose to vote by proxy, you may do so using the Internet, the telephone or, if you received a printed copy of your proxy materials, the mail. Each of these procedures is more fully explained below. Even if you plan to attend the meeting, the Board recommends that you vote by proxy.

Voting by Proxy

Because many stockholders cannot attend the Annual Meeting in person, it is necessary that a large number of stockholders be represented by proxy. You may vote your proxy by Internet, telephone or mail, each as more fully explained below. In each case, we will vote your shares as you direct. When you vote your proxy, you can specify whether you wish to vote for or against or abstain from voting on each nominee for director, the ratification of the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2009, the Colgate-Palmolive Company 2009 Executive Incentive Compensation Plan (the “2009 Plan”) and one stockholder proposal. If you vote using the Internet or telephone, you will be instructed how to record your vote on each of these proposals.

If any other matters are properly presented for consideration at the Annual Meeting, the Company’s directors named on your proxy card and the voting website as the Proxy Committee (the “Proxy Committee”) will have discretion to vote for you on those matters. At the time this Proxy Statement was printed, we knew of no other matters to be raised at the Annual Meeting.

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Voting at the Annual Meeting

If you wish to vote at the Annual Meeting, written ballots will be available from the ushers at the meeting. If your shares are held in the name of a bank, broker or other holder of record, you must obtain a proxy, executed in your favor, from the holder of record to be able to vote at the meeting. Voting by proxy, whether by Internet, telephone or mail, will not limit your right to vote at the Annual Meeting if you decide to attend in person. However, if you vote by proxy and also attend the meeting, there is no need to vote again at the meeting unless you wish to change your vote.

Revocation of Proxies

You can revoke your proxy at any time before it is exercised at the Annual Meeting by taking any one of the following actions: (1) you can follow the instructions given for changing your vote via the Internet or by telephone or deliver a valid written proxy with a later date; (2) you can notify the Secretary of the Company in writing that you have revoked your proxy (using the address in the Notice of Annual Meeting of Stockholders above); or (3) you can vote in person by written ballot at the Annual Meeting.

Quorum

To carry on the business of the Annual Meeting, a minimum number of shares, constituting a quorum, must be present. The quorum for the Annual Meeting is a majority of the votes represented by the outstanding stock of the Company. This majority may be present in person or by proxy. Abstentions and “broker non-votes” (which are explained below) are counted as present to determine whether there is a quorum for the Annual Meeting.

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Broker Non-Votes

A “broker non-vote” occurs when your broker submits a proxy for your shares but does not indicate a vote for a particular proposal because the broker does not have authority to vote on that proposal and has not received voting instructions from you. “Broker non-votes” are not counted as votes against the proposal in question or as abstentions, nor are they counted to determine the number of votes present for the particular proposal.

Under the rules of the New York Stock Exchange (the “NYSE”), if your broker holds shares in your name and delivers this Proxy Statement to you, the broker is entitled to vote your shares on Proposals 1 and 2 even if the broker does not receive voting instructions from you. The broker is not entitled to vote your shares on Proposals 3 or 4 without your instructions.

Required Vote

Proposal 1: Election of Directors. Each of the nine nominees for director who receives at least a majority of the votes cast for such nominee will be elected. Votes cast include votes for or against each nominee and exclude abstentions. This means that if you abstain from voting for a particular nominee, your vote will not count for or against the nominee. As more fully described in “Majority Voting in Director Elections” on page 12, any nominee in this election who does not receive a majority of the votes cast will be required to tender his or her resignation to the Board. The Nominating and Corporate Governance Committee will then consider the resignation and make a recommendation to the Board. When voting your proxy, the Proxy Committee will vote for each of the nominees unless you instruct otherwise.

Proposal 2: Ratification of Selection of Independent Registered Public Accounting Firm. The affirmative vote of a majority of the votes represented at the meeting, either in person or by proxy, and entitled to vote on this proposal, is required to ratify the selection of the independent registered public accounting firm. This means that if you abstain from voting on this proposal, it will have the same effect as if you voted against it. When voting your proxy, the Proxy Committee will vote for this proposal unless you instruct otherwise.

Proposal 3: Approval of the Company’s 2009 Executive Incentive Compensation Plan. The affirmative vote of a majority of the votes represented at the meeting, either in person or by proxy, and entitled to vote on this proposal, is required to approve the 2009 Plan. This means that if you abstain from voting on this proposal, it will have the same effect as if you voted against it. When voting your proxy, the Proxy Committee will vote for this proposal unless you instruct otherwise. As discussed above, under NYSE rules, if your broker holds shares in your name and delivers this Proxy Statement to you, the broker is not entitled to vote your shares on this proposal without your instructions.

Proposal 4: Stockholder Proposal. The affirmative vote of a majority of the votes represented at the meeting, either in person or by proxy, and entitled to vote on this proposal, is required for adoption of the proposed resolution. If you abstain from voting on the stockholder proposal, it will have the same effect as if you voted against it. When voting your proxy, the Proxy Committee will vote against this proposal unless you instruct otherwise. As discussed above, under NYSE rules, if your broker holds shares in your name and delivers this Proxy Statement to you, the broker is not entitled to vote your shares on this proposal without your instructions.

Confidential Voting

All proxies, ballots and vote tabulations that identify stockholders are confidential. An independent tabulator will receive, inspect and tabulate your proxy whether you vote by Internet, telephone or mail. Your vote will not be disclosed to anyone other than the independent tabulator without your consent, except if proxies are being solicited for a change in control of the Company or if doing so is necessary to meet legal requirements.

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Voting by Employees Participating in the Company’s Savings and Investment Plan

If you are a Colgate employee who participates in the Colgate-Palmolive Company Employees Savings and Investment Plan (the “Savings and Investment Plan”), your Notice of Internet Availability contains instructions on how to vote your shares via the Internet or telephone. The notice also indicates the aggregate number of shares of Series B Convertible Preference Stock and Common Stock credited to your account under the Savings and Investment Plan as of March 9, 2009, the record date for voting at the meeting.

Voting by Employees Participating in a Stock Ownership Program outside the United States

If you are a Colgate employee who participates in one of Colgate’s employee stock ownership plans outside the United States, you will receive separate voting instructions from your local Human Resources Department.

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GOVERNANCE OF THE COMPANY

Colgate’s Corporate Governance Commitment

Colgate’s Board believes strongly that good corporate governance accompanies and greatly aids our long-term business success. This success has been the direct result of Colgate’s key business strategies, including its focus on core product categories and global brands, people development programs emphasizing “pay for performance” and the highest business standards. Colgate’s Board has been at the center of these key strategies, seeing that they guide the Company’s operations.

The Board believes that the Company has consistently been at the forefront of good corporate governance. Reflecting its commitment to continuous improvement, the Board reviews its governance practices on an ongoing basis to ensure that they promote shareholder value. In 2008, the Company updated its Code of Conduct and distributed the revised version to its employees around the world.

Board Independence and Expertise

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Directors are Stockholders

Established Policies Guide Governance and Business Integrity

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Board Focused on Key Business Priorities

Direct Access to Management

Ensuring Management Accountability

Board Practices Promote Effective Oversight

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Continuous Improvement through Evaluation

External Recognition for Colgate’s Governance Practices

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The Board of Directors

The Board oversees the business, assets, affairs, performance and financial integrity of the Company. In accordance with the Company’s long-standing practice, the Board is independent, consisting of a substantial majority of outside directors. Currently, the Board has nine directors, with eight independent directors and one employee director, Ian Cook, who is the President and Chief Executive Officer of the Company. Reuben Mark, the Company’s former Chief Executive Officer, retired from his position as Chairman of the Board effective December 31, 2008.

The Board met ten times during 2008. On average, the directors attended 98% of the meetings of the Board and the committees on which they served in 2008. No director attended less than 90% of these meetings. During 2008, the independent directors met regularly in executive session without Mr. Mark or Mr. Cook present.

The independence standards adopted by the Board are stricter than those mandated by the NYSE. The Board has made an affirmative determination, based on these standards, that each director (other than Mr. Cook) is independent. A copy of the director independence standards is available on the Company’s website at www.colgate.com. For more information regarding the Board’s independence determinations, see “Director Independence” on page 11.

The name, age, principal occupation and length of service of each director nominee, together with certain other biographical information, are set forth below. All nominees have been directors since last year’s annual meeting.

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Director Independence

As described above, the Board has adopted director independence standards which are substantially stricter than those required by the listing standards of the NYSE. Specifically, a director is not considered independent if the director has any relationship with Colgate or its senior management or with another director that in the Board’s judgment may impair the director’s ability to make independent judgments. Such relationships could include voting arrangements and personal, economic or professional ties between a director and an officer of Colgate or another Colgate director. Relationships and transactions that may impair independence include: (i) current or former employment with the Company; (ii) affiliation with Colgate’s advisors; (iii) compensation from the Company (other than board and committee fees); (iv) direct or indirect material business relationships with the Company; (v) loans between directors and the Company or its senior management; (vi) direct or indirect material investments with the Company, its officers or other directors; (vii) leadership roles in charitable organizations supported by Colgate; (viii) affiliation or employment with a present or former Colgate auditor; and (ix) service on interlocking boards of directors or compensation committees. A copy of the complete standards is available on the Company’s website at www.colgate.com.

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In making its determination regarding the independence of each non-employee director, the Board considers any transactions, relationships or arrangements as required by the Company’s director independence standards. Based on these standards, the Board has determined that each director, other than Mr. Cook, who is the Company’s Chairman of the Board, President and CEO, is independent as there were no transactions, relationships or arrangements of the types described in the Company’s director independence standards.

Majority Voting in Director Elections

Under Colgate’s by-laws, in an uncontested election for directors (i.e., an election where there are the same number of nominees as seats on the Board), directors must be elected by a majority of the votes cast at the meeting. A majority of votes cast is defined to mean that the number of shares voted “for” a director’s election exceeds 50% of the votes cast with respect to that director’s election. “Votes cast” include votes for or against each nominee and exclude abstentions.

If a nominee for director who is an incumbent director is not re-elected by a majority of the votes cast as set forth above, and no successor has been elected at the meeting, the by-laws require the director to promptly tender his or her resignation to the Board in accordance with an agreement that each nominee is required to sign in order to be eligible for election or re-election as a director.

The Nominating and Corporate Governance Committee shall then make a recommendation to the Board as to whether to accept or reject the tendered resignation or to take other action. The Board shall act on the tendered resignation, taking into account the committee’s recommendation, and shall publicly disclose its decision and rationale within 90 days from the date of certification of the election results. The committee, in making its recommendation, and the Board, in making its decision, may each consider any factors or other information that it considers appropriate or relevant. The director who tenders his or her resignation shall not participate in the recommendation of the committee or the decision of the Board with respect to his or her resignation.

To the extent that one or more directors’ resignations are accepted by the Board, or if a nominee who is not an incumbent director is not elected, then the Board in its discretion may determine either to fill such vacancy or vacancies or to reduce the size of the Board.

In contested elections, where there are more nominees than seats on the Board, directors are elected by a plurality vote. This means that the nominees who receive the most votes of all the votes cast for directors will be elected.

Communications to the Board of Directors

Stockholders and other interested parties are encouraged to communicate directly with the Company’s independent directors by sending an e-mail to directors@colpal.com or by writing to Directors, c/o Office of the General Counsel, Colgate-Palmolive Company, 300 Park Avenue, 11th Floor, New York, NY 10022-7499. Stockholders and other interested parties may also communicate with individual independent directors and committee chairs by writing to them at the above mailing address, in care of the Office of the General Counsel.

Under procedures established by the Company’s independent directors, each letter and e-mail sent in accordance with the above instructions is reviewed by the Legal Department and, unless such communications fall within one of the categories listed below, distributed to all of the independent directors or to individual directors, as appropriate, with copies to the Office of the Chairman.

The types of communications that are not forwarded to the independent directors are as follows:

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Concerns and questions relating to accounting, internal accounting controls, financial policy, risk management or auditing matters are immediately brought to the attention of the Audit Committee chair and handled in accordance with the procedures established by the Audit Committee. Under these procedures, the Company’s Global Ethics and Compliance function, in conjunction with the Company’s Internal Audit and Corporate Legal departments, addresses these concerns in accordance with the directions of the Audit Committee chair. The Audit Committee chair approves recommendations regarding the handling of each matter, oversees any investigations and approves the disposition of each matter. In the Audit Committee chair’s discretion, he or she may engage outside counsel and other independent advisors.

Concerns relating to accounting, internal accounting controls, financial policy, risk management or auditing matters may also be reported to the Global Ethics and Compliance function by telephone, facsimile and e-mail as follows: 24-hour hotline: (800) 778-6080 (toll free from United States, Canada and Puerto Rico) or (212) 310-2330 (collect from all other locations); facsimile number: (212) 310-3745; and e-mail: ethics@colpal.com.

Colgate policy prohibits the Company from retaliating against any individual who provides information to the directors. Concerns may be submitted to the directors on an anonymous basis through their postal address or through the 24-hour hotline numbers maintained by the Global Ethics and Compliance function. If requested, Colgate will endeavor to keep information submitted confidential, subject to the need to conduct an effective investigation and take appropriate action.

Director Attendance at Annual Meetings

It is the Company’s policy that all members of the Board should attend the Company’s Annual Meeting of Stockholders, unless extraordinary circumstances prevent a director’s attendance. All directors who were elected to the board at the 2008 Annual Meeting were in attendance.

Committees of the Board of Directors

The Board has four standing committees: the Audit Committee, the Finance Committee, the Nominating and Corporate Governance Committee and the P&O Committee. The members and a summary of the responsibilities of these committees are set forth below. The committee charters are available on the Company’s website at www.colgate.com.

Committee Membership (* indicates Chair and ** indicates Deputy Chair, if applicable)

Audit Committee

The Audit Committee assists the Board in its oversight of management’s fulfillment of its financial reporting and disclosure responsibilities and its maintenance of an appropriate internal control system. It also appoints the Company’s independent registered public accounting firm, subject to ratification by stockholders, and oversees the activities of the Company’s Internal Audit function and the Global Ethics and Compliance function. All members of the Audit Committee are independent directors. The Board, in its business judgment, has determined that all members of the Audit Committee are “independent,” as required by the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), the listing standards of the NYSE and Colgate’s own, stricter director independence standards.

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The Audit Committee met eight times during 2008, including to review and participate in discussions regarding each quarterly earnings press release prior to its announcement. The Audit Committee also met separately on four occasions with the Company’s independent registered public accounting firm, head of Internal Audit and other members of management.

Finance Committee

The Finance Committee oversees the financial policies and practices of the Company, reviews the budgets of the Company and makes recommendations to the Board on financial and strategic matters. It also oversees the Company’s finance, treasury and related functions. The Finance Committee met five times during 2008. All members of the Finance Committee are independent directors.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee recommends nominees for the Board and develops and implements formal Board self-evaluation procedures. It also makes recommendations to the Board regarding Board and committee structure, corporate governance and director compensation. In making recommendations to the Board regarding director compensation, the Nominating and Corporate Governance Committee annually reviews information provided by the Global Human Resources function regarding emerging best practices in director compensation and comparison data regarding peer company practices, both at the industry peer group used in the cumulative total shareholder return graphs on pages 64 to 65 (the “Industry Peer Group”) and the Compensation Comparison Group discussed on pages 20 to 21 of the Compensation Discussion and Analysis. The Global Human Resources function purchases such comparison data from Towers Perrin. Based on this review, the Nominating and Corporate Governance Committee determines whether to recommend to the Board any changes in the director compensation program. During the most recent review, in October 2008, the committee determined not to recommend any changes. The director compensation program is described beginning on page 48. Other than the use of survey data purchased from outside consultants described above, the Nominating and Corporate Governance Committee does not use outside compensation consultants in making director compensation recommendations. Nor does it delegate any of its authority in this area.

The Nominating and Corporate Governance Committee met seven times during 2008. All members of the Nominating and Corporate Governance Committee are independent directors.

Personnel and Organization Committee

The P&O Committee is appointed by the Board to act on its behalf with respect to overseeing the personnel and organizational matters of the Company, including the compensation of the Company’s executives. All members of the P&O Committee are independent directors. The P&O Committee met seven times during 2008.

The P&O Committee devotes substantial time each year to executive compensation matters. It recommends and approves, with the participation and concurrence of the other independent directors of the Board, the compensation of the CEO. The CEO plays no role in recommending or determining his own compensation. The P&O Committee also reviews and approves the compensation recommended by the Global Human Resources function of the Company and the CEO for the other executive officers of the Company in accordance with the compensation programs described in the Compensation Discussion and Analysis section of this Proxy Statement. In reviewing and approving compensation for executive officers, the P&O Committee uses tally sheets that summarize all material components of compensation. The P&O Committee does not delegate any of its responsibilities regarding the consideration and determination of executive compensation.

The P&O Committee periodically retains the services of outside compensation consultants to provide it with objective, third party advice on the appropriateness of the Company’s compensation of the CEO and other senior executives. In 2009, the P&O Committee adopted a written policy regarding its selection and use of outside compensation consultants, a copy of which is available on the Company’s website at www.colgate.com. The policy contains the following key principles:

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During 2007 through July 2008, the P&O Committee engaged Mercer Human Resource Consulting (“Mercer”) to assist with the P&O Committee’s evaluation of the compensation of the Company’s CEO. In addition, in 2007 Mercer advised the P&O Committee regarding the changes proposed by the Global Human Resources function in connection with the comprehensive review of the Company’s incentive compensation program conducted by the Global Human Resources function in 2007 (see page 18 of the Compensation Discussion and Analysis).

During 2008, the P&O Committee decided to change compensation consultants in light of other human resource consulting services provided by Mercer to the Company as well as the potential to utilize Mercer in the future for benefits administration services. Accordingly, in August 2008, the P&O Committee retained Frederic W. Cook & Co., Inc. (“F.W. Cook & Co.”) to advise it with respect to the CEO’s compensation and such other matters as the Committee may direct. F.W. Cook & Co. does not provide any other services to the Company. F.W. Cook & Co. works directly with the P&O Committee and its Chair and meets with it in executive session.

During 2008 and early 2009, the Human Resources function of the Company purchased executive compensation survey data from Mercer and Hewitt Associates and used Hewitt Associates to provide change of control and similar calculations for this Proxy Statement.

Compensation Committee Interlocks and Insider Participation

During 2008, the following directors were members of the P&O Committee: Mrs. Conway and Messrs. Cahill, Johnson, Kogan, Lewis, Reinhard and Sadove. None of the members of the P&O Committee has been an officer of the Company and none were employees of the Company during 2008, and none had any relationship with the Company or any of its subsidiaries during 2008 that would be required to be disclosed as a transaction with a related person. None of the executive officers of the Company has served on the board of directors or compensation committee of another company at any time during which an executive officer of such other company served on the Company’s Board or the P&O Committee.

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Nominating and Corporate Governance Committee Report

The Nominating and Corporate Governance Committee recommends nominees for the Board of Directors, among other responsibilities. A copy of the charter of the Nominating and Corporate Governance Committee, which describes this and other responsibilities of the committee, is available on the Company’s website at www.colgate.com. The Board has determined that each member of the Nominating and Corporate Governance Committee is independent, as independence for nominating committee members is defined in the NYSE listing standards and in Colgate’s own, stricter director independence standards.

The Board selects new director candidates based on the recommendation of the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee identifies, screens and recruits potential candidates for membership on the Board of Directors, taking into account the needs of the Company and the Board at the time. The Company has engaged an international executive search firm to assist the Nominating and Corporate Governance Committee in identifying and evaluating potential director nominees.

On the recommendation of the Nominating and Corporate Governance Committee, the Board has adopted a written statement of the criteria for Board membership that is used by the committee in evaluating individual director candidates. This statement outlines the qualities needed for Board membership, including experience in business, education and public service fields, international experience, educational achievement, strong moral and ethical character and diversity. In addition, prospective directors must satisfy the Company’s director independence standards and be willing and able to devote sufficient time to discharge their duties. A copy of Colgate’s criteria for Board membership, entitled “Independent Board Candidate Qualifications,” is available on the Company’s website at www.colgate.com.

The Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders and others if such candidates meet Colgate’s criteria for Board membership, evaluating them in the same manner in which the committee evaluates other candidates. Such recommendations should be made in writing to the Nominating and Corporate Governance Committee or the Company’s Secretary and should include a description of the qualifications of the proposed candidate. Any stockholder of the Company may also nominate a director in accordance with the information and timely notice requirements of the Company’s by-laws relating to stockholder nominations as described in “Other Information—Nominations for Director” on page 66 below. The Nominating and Corporate Governance Committee has approved nine director nominees for election at the 2009 Annual Meeting.

The foregoing report has been submitted by the members of the Nominating and Corporate Governance Committee: Delano E. Lewis (Chair), Jill K. Conway (Deputy Chair), Ellen M. Hancock, David W. Johnson and Stephen I. Sadove.

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Audit Committee Report

The Audit Committee is comprised of five independent directors. The Board of Directors has determined that it would be desirable for all Audit Committee members to be “audit committee financial experts” as that term is defined by the SEC. The Board has conducted an inquiry into the qualifications and experience of each member of the Audit Committee, and has determined that they each meet the SEC’s criteria for audit committee financial experts.

The Audit Committee assists the Board of Directors in its oversight of the Company’s financial statements and reporting processes, including the internal control over financial reporting. The committee also oversees the Company’s Global Ethics and Compliance function. A copy of the charter of the Audit Committee, which describes these and other responsibilities of the committee, is available on the Company’s website at www.colgate.com. Management has the direct and primary responsibility for the financial statements and the reporting processes, including establishing and maintaining adequate internal control over financial reporting. The independent registered public accounting firm is responsible for auditing the annual financial statements prepared by management and expressing an opinion as to whether those financial statements conform with accounting principles generally accepted in the United States of America. The independent registered public accounting firm is also responsible for auditing the Company’s internal control over financial reporting.

The Audit Committee appointed PricewaterhouseCoopers LLP to audit the Company’s financial statements as of and for the year ended December 31, 2008 and the effectiveness of the related systems of internal control over financial reporting as of December 31, 2008. The Audit Committee met eight times in 2008.

The Audit Committee reviewed and discussed the audited financial statements with management and the independent registered public accounting firm together and separately. These discussions and reviews included the reasonableness of significant judgments, significant accounting policies (including critical accounting policies), the auditors’ assessment of the quality, not just acceptability, of the Company’s accounting principles and such other matters as are required to be discussed with the Audit Committee under the standards of the Public Company Accounting Oversight Board (United States) (the “PCAOB”). In addition, the Audit Committee has received the written disclosures of the independent registered public accounting firm as required by the applicable requirements of the PCAOB, and has discussed with the independent registered public accounting firm, and received a letter from them confirming, their independence from management and the Company. The Audit Committee also met with management and the independent registered public accounting firm together and separately to discuss matters related to the design and operating effectiveness of the Company’s internal control over financial reporting.

Based upon the review and discussions described in this report, the Audit Committee recommended to the Board of Directors that the audited financial statements be accepted and included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 filed with the SEC.

The foregoing report has been submitted by the members of the Audit Committee: David W. Johnson (Chair), John T. Cahill, Jill K. Conway, Ellen M. Hancock and Richard J. Kogan.

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Introduction

Colgate believes that people are the most important driver of its business success and, accordingly, views compensation as an important tool to attract, retain and motivate leaders at all levels of the organization. Colgate’s executive compensation programs are designed to:

Colgate’s executive compensation programs are reviewed regularly by Company management and the Personnel and Organization Committee of the Board (the “P&O Committee”) to ensure that the programs achieve these goals. Most recently:

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This CD&A discusses the compensation paid to the executive officers listed in the Summary Compensation Table on page 28 of this Proxy Statement (the “Named Officers”). The compensation programs described, however, apply broadly to other officers and management personnel at the Company, with changes as appropriate to reflect different levels and types of job responsibility. The Company believes that having one set of programs helps to align Colgate people into one global team sharply focused on the Company’s key strategic initiatives.

Compensation Components

Compensation Mix. Colgate’s executive compensation program consists of the following three primary components:

In allocating compensation among these three components, the Company seeks to provide reasonable and competitive levels of fixed compensation (i.e., salary), while emphasizing performance-based compensation that varies based on overall Company or business unit performance and/or the performance of the Company’s common stock. Accordingly, of the compensation paid for 2008, base salaries for the Named Officers represented approximately 10-20% of the three compensation components noted above, and incentive compensation, both annual and long-term, represented approximately 80-90%. The mix between annual incentive pay (cash bonus) and long-term incentives (stock options and restricted stock) is determined based on competitive practice (see discussion in the Compensation Comparison Group section below) and Colgate’s desire to focus, first, on long-term performance and shareholder value and, second, on annual performance. Accordingly, for the Named Officers in 2008, long-term incentives represented 55-70% of the three compensation components noted above, and annual incentives represented 15-25%. Within the long-term incentive category, the mix for the Named Officers is weighted towards stock options because such awards provide payouts to executives only to the extent that the Company’s stock price appreciates, thereby providing a highly effective link to changes in shareholder value that align the interests of executives and stockholders.

The perquisites that the Company provides to its executives are modest and represent less than 1% of the total compensation reflected in the Summary Compensation Table on page 28, not including personal benefits paid in connection with an executive’s relocation at the Company’s request. At the level of the Named Officers, such perquisites consist primarily of an annual allowance of up to $11,500 for various qualifying items, such as financial planning or tax preparation and planning and, in the case of Mr. Cook, the use of a Company car and driver. For more information on perquisites provided to the Named Officers in 2008, see note 7 on page 30. Any income taxes due as a result of these perquisites, other than those related to relocation at the Company’s request, are the responsibility of the Named Officers.

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The compensation and benefits payable to the Named Officers in the event of retirement, severance and change in control are described on pages 42 to 44. The Company’s retirement plans are designed to provide the Company’s long-service, retiring employees with fair and adequate replacement income based on then current market trends. In general, the Named Officers participate in the same retirement programs that are available to other U.S. employees, with supplemental benefits provided to make up benefits under plans that are subject to certain IRS limits. The Company’s severance program is designed to provide participants with reasonable compensation if their employment is terminated in the event of a change in control or for Company convenience. The potential payments and benefits under these various programs did not influence the decisions discussed in the balance of this CD&A regarding the setting of salary, annual bonus and long-term incentives for the Named Officers since these programs serve very different purposes.

Tax and Accounting Considerations. In designing its compensation programs, the Company considers the applicable accounting treatment and seeks to preserve tax deductibility, including under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), to the extent consistent with the primary objectives of the compensation program outlined above. Of the incentive compensation components currently awarded by the Company, the annual incentive, stock option and performance-based restricted stock programs are all generally deductible under Section 162(m). Specific recent instances where tax deductibility was taken into account in designing compensation programs are: (a) the decision, as a result of the 2007 Compensation Review, to eliminate time-vested restricted stock awards for the Named Officers and replace them with an additional award opportunity under the performance-based restricted stock program (see page 23), (b) the decision to eliminate qualitative individual performance objectives from the annual incentive awards for the Named Officers with divisional responsibilities (as reflected in note 1 to the Summary Compensation Table on page 28) and (c) the decision to reduce the maximum amount of severance payable under the Executive Severance Plan to maintain deductibility under Section 280G of the Internal Revenue Code (see page 42).

The Compensation Comparison Group

Colgate uses comparative compensation data from a group of other leading companies, referred to in this CD&A as the “Comparison Group,” as a point of reference in designing its compensation programs and in setting compensation levels. Colgate does not use this data as a single determinative factor but rather as an external check to verify that its compensation programs are reasonable and competitive in light of compensation levels at similarly situated companies.

The Comparison Group is selected to represent both the Company’s peer companies from a performance perspective as well as the market for executive talent in which the Company competes. It consists primarily of consumer products companies with major branded product portfolios, including those making up the Industry Peer Group and other select companies that are similarly situated to the Company in terms of overall size or performance against relevant measures. The companies comprising the Comparison Group are approved annually by the P&O Committee after taking into account observations and recommendations of management and the Committee’s compensation consultant. In 2008, the P&O Committee decided to de-emphasize pharmaceutical companies in the Comparison Group, in light of divestitures of certain of their consumer products divisions, and also to restructure the Comparison Group so that the median size company in terms of revenue aligned more closely with Colgate. This resulted in the deletion of seven companies (Abbott Laboratories, Altria Group, Bristol-Myers Squibb, Nestle, Pfizer, Inc., SC Johnson and Wyeth) and the addition of four companies (ConAgra Foods, Estee Lauder, Kraft and 3M) to the Comparison Group. Following these changes, the Comparison Group for 2008 consisted of the following 18 companies:

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Benchmark data is collected for all of the Company’s three primary compensation components (base salary, annual incentive pay and long-term incentive pay), both individually and in the aggregate.

Base Salary

Base salaries for the Named Officers and all other employees are based on established salary ranges for each grade level, with the exception of the CEO, whose salary is set independently by the P&O Committee, without the involvement of the CEO or other Company management. The P&O Committee determines salaries for other Named Officers based on recommendations from the Global Human Resources function and the CEO in accordance with the established salary ranges and the guidelines described below.

Since base salaries are designed to provide a reasonable, competitive level of fixed compensation, the mid-point of each salary range is set at the median pay level for similar jobs at companies in the Comparison Group. Salaries above the median are available for exceptional performers and key contributors to the success of the Company.

Decisions regarding where in the range a particular individual’s salary should be and whether he or she should be granted a salary increase during the year are based on the following factors:

All of the Named Officers are high-performing executives, most of them with long tenure at the Company. Accordingly, salaries for the Named Officers other than Mr. Cook ranged between approximately the 75th and 95th percentile of salaries for similar jobs in the Comparison Group based on the most recent data available to the Company. Mr. Cook’s salary for 2008 is below the 50th percentile for CEOs in the Comparison Group because the P&O Committee has determined in Mr. Cook’s case to place greater emphasis on equity and long-term incentive compensation (stock options and restricted stock) than on cash compensation (salary and annual bonus), thereby holding him to a higher standard of accountability than the executives whom he is charged with leading. Accordingly, as set forth and more fully discussed in the CEO compensation section of this CD&A (see pages 26 to 27), the total compensation (salary, bonus and long-term incentives) awarded to Mr. Cook for 2008 is at the 63rd percentile of the Comparison Group, with 70% of this compensation consisting of long-term incentive pay.

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Annual Incentives—Cash Bonuses

Award Opportunities. Cash bonuses, which are granted under the stockholder-approved Executive Incentive Compensation Plan (the “EICP Plan”),² are designed to reward performance over a one-year period against one or more pre-established performance measures set by the P&O Committee at the beginning of the year. Awards are determined by the P&O Committee the following year in accordance with a set formula based on achievement against the designated goals. The P&O Committee has discretion to adjust the calculated awards downward, but not upward.

Executives, including the Named Officers, are each assigned a bonus award opportunity, which is based on salary grade level, expressed as a percentage of salary and generally set at or below the median of the Comparison Group. For 2008, Mr. Cook’s bonus award opportunity was 137.5% of base salary, and the bonus award opportunity for each of the other Named Officers was 70% of base salary. The formula-driven award payouts depend upon performance against the pre-established measures discussed below and range from zero, if performance falls below a certain level, to a maximum of two times the assigned award opportunity for Mr. Cook and the Named Officers with divisional responsibilities (Messrs. Tangney and Garcia), and 1.5 times the assigned award opportunity for the other Named Officers with corporate-wide responsibilities (Messrs. Patrick and Moison). The maximum bonus provided to Mr. Cook is set at a higher multiple of the assigned award opportunity than other Named Officers with corporate-wide responsibilities to reflect the lower positioning of his salary in 2008 relative to external market rates and to ensure that a greater portion of his maximum total compensation opportunity is variable and tied to performance.

Performance Measures and Bonus Payouts.

Named Officers with Corporate-Wide Responsibilities. Earnings per share is the performance measure for annual bonuses for the Named Officers with corporate-wide responsibilities (Messrs. Cook, Patrick and Moison). The earnings-per-share measure was selected to create a strong link to the Company’s overall profit goal. As required by applicable EICP Plan procedures, the earnings-per-share measure used for 2008 (“Base Business Earnings Per Share”) excludes charges associated with the 2004 Restructuring Program (a four-year restructuring and business-building program that was finalized at the end of 2008), although savings generated by the program are included, since these are continuing.³ For 2008, in order for Named Officers with corporate-wide responsibilities to earn bonuses at the maximum level, Base Business Earnings Per Share had to grow by at least 11% above the 2007 Base Business Earnings Per Share. The 11% goal was set based on the Company’s business strategy to deliver consistent double-digit earnings per share growth each year. Since Base Business Earnings Per Share grew by 14% in 2008, bonuses for the Named Officers with corporate-wide responsibilities were awarded at the maximum level allowed, and ranged from 105% to 275% of salary.

Named Officers with Divisional Responsibilities. The primary performance measures for annual bonuses for the Named Officers with divisional responsibilities (Messrs. Tangney and Garcia), representing 60% of their award opportunities, are growth in net sales and net profit after tax of their respective divisions. These measures were chosen because the Company believes that net sales and net profit after tax together reflect the underlying momentum of the business and its ability to generate cash to reinvest in business building activities and return value to shareholders. Additional performance measures for Messrs. Tangney and Garcia in 2008, representing 40% of their award opportunities, were increases in gross margin and cash generation and successful

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implementation of key training and compliance objectives for their divisions, all of which were chosen because of their importance to the Company’s strategic initiatives. For these two Named Officers to earn bonuses in 2008 at the maximum level, (a) in the case of Mr. Tangney, growth in net sales and net profit after tax for the European/South Pacific, Greater Asia and Africa/Middle East Divisions on a combined basis had to average at least 7.3%, and (b) in the case of Mr. Garcia, growth in net sales and net profit after tax for the Latin America Division had to average at least 8.3%. While actual net sales and net profit after tax growth in Greater Asia, Latin America and Africa/Middle East exceeded these levels, they did not in the European/South Pacific divisions, and the additional goals relating to gross margin and cash generation were only partially achieved in various divisions due to difficult economic conditions globally. Accordingly, the formula-driven awards were: for Mr. Tangney, 74.7% of base salary, and, for Mr. Garcia, 117.8% of base salary. Although these awards were above these two officers’ assigned award opportunities (70% of base salary), they were below the maximum (140% of base salary) since not all objectives were achieved or exceeded.

Long-term Incentives

Overview. Colgate’s long-term incentive compensation is designed to focus the Named Officers and other Colgate managers on shareholder value and to reward their contribution to the long-term growth and performance of the Company. Colgate uses three types of long-term incentives in general, all paid in the form of equity: stock options, performance-based restricted stock and, except in the case of executive officers, time-vested restricted stock. As a result of the 2007 Compensation Review, the P&O Committee determined to eliminate the annual grant of time-vested restricted stock for executive officers (including the Named Officers) and replace it with an additional award opportunity for these officers under the performance-based restricted stock program. Consistent with Colgate’s long-standing practice of encouraging stock ownership at all levels of the organization to reward employees for the long-term value they create and to create common interests between management and stockholders, long-term equity grants are the largest component of total compensation for the Named Officers. In general, following a review of the practices of the Comparison Group, long-term incentives are targeted at the median of the Comparison Group, with above-target awards available based on superior performance. In 2008, Colgate’s annual stock option and restricted stock utilization for all awards was 1.0% of outstanding stock, placing it below the median, at the 45th percentile, of the Comparison Group based on the most recently available market data.

Equity Grant Process and Policies. The Company makes equity awards at the same pre-determined times each year, at regularly scheduled P&O Committee meetings in the first and third quarters. The calendar for such meetings is set in July of the preceding year. Equity awards for new hires or newly promoted employees or special awards for recognition or retention purposes are made at the next regularly scheduled Board meeting after the hire, promotion, recognition or retention recommendation is made. The timing and amount of equity awards to directors, which are described on page 48, are fixed by the terms of the applicable plans and also occur at the same time each year. Equity awards, including stock options, are never backdated or issued at below-market prices. The grant date of any award is the date of the Board meeting at which such award is approved, and the grant price of any award is never less than the closing price of the Company’s common stock on the date of grant. Repricing of stock options without stockholder approval is expressly prohibited.

Stock Options

Overview. Stock options are granted under the stockholder-approved 2005 Employee Stock Option Plan. The number of stock options granted to individual executives is determined based on guidelines set for each salary grade level, with actual awards varying from such guidelines based on a qualitative assessment of factors similar to those used to determine salary, including each individual’s performance and the performance of the business unit or function for which they are responsible. (See discussion of salary guidelines on page 21.) As with other compensation

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decisions, in the case of the CEO, the P&O Committee makes such assessment with the participation and concurrence of the other independent directors of the Board. In the case of the other Named Officers, the P&O Committee reviews and approves the recommendations of the Global Human Resources function and the CEO.

Stock Option Grants. During 2008, stock option grants to Colgate’s Named Officers were either at or above the guideline award level, due to high individual, business unit and/or Company performance. See column (j) of the “Grants of Plan-Based Awards” Table on page 32 for the number of stock options granted to the Named Officers in 2008. For a discussion of the stock option grant to the CEO, see page 27.

Performance-Based Restricted Stock Awards

Award Opportunities. Performance-based restricted stock awards are made to executive officers, including the Named Officers, under the stockholder-approved EICP Plan.

Each Named Officer is assigned a restricted stock award opportunity, expressed as a dollar amount, by the P&O Committee at the beginning of a three-year measurement cycle. As noted above, for the 2006–2008 cycle, each Named Officer received an additional award opportunity to address the elimination of the annual grant of time-vested restricted stock as a result of the 2007 Compensation Review. At the conclusion of each three-year cycle, actual performance is measured against pre-established performance goals that are set by the P&O Committee at the beginning of the cycle. The calculated award value is then converted into restricted stock awards by dividing the dollar value by the then-current share price. As with bonuses, the P&O Committee has discretion to adjust the calculated awards downward, but not upward. Awards are made in the form of restricted stock units, which are subject to a three-year vesting period during which time the recipient must remain employed by the Company unless he or she is eligible for retirement. At the conclusion of the vesting period, awards are distributed in the form of shares of common stock. The combination of this additional three- year vesting period with the original three-year performance period underscores the long-term focus of this award program.

Award opportunities are expressed in dollars, as noted above, and are set as a percentage of the mid-point of the salary range for the executive’s grade level. For the 2006–2008 measurement cycle, Mr. Cook’s assigned award opportunity was 285% of his salary grade midpoint, and the assigned award opportunity for the other Named Officers ranged from 115% to 125% of salary grade midpoint. Depending upon performance against the pre-established measures discussed below, actual award payouts range from zero, if performance falls below a certain level, to a maximum of two times the assigned award opportunity.

Performance Measures and Award Payouts. The primary performance measures used are growth in compounded annual net sales and earnings per share over the three-year measurement period. The earnings-per-share measure is adjusted using the same methodology as the Base Business Earnings-Per-Share measure discussed on page 22. The two measures of net sales and earnings-per-share growth were chosen based on the Company’s view that together they reflect the underlying momentum of the Company’s business and its ability to generate cash to reinvest in business-building activities and return value to shareholders.

A “Profitable Growth Matrix,” approved by the P&O Committee for each performance cycle, sets forth the percentage of the assigned award opportunity that will be paid for various levels of compounded annual growth in net sales and earnings per share over the three-year measurement period. The payout levels reflected in the Profitable Growth Matrix are selected to support the sales and earnings-per-share goals that the Company has set for itself in its multi-year strategic plan. For the 2006–2008 cycle, a payout at 100% of the assigned award opportunity required compounded annual growth in net sales and Base Business Earnings-Per-Share over the three-year period of 6% and 11%, respectively. Actual compounded annual growth in net sales and Base Business Earnings Per Share for the 2006-2008 cycle were 10.4% and 13.6%, respectively.

Following the 2007 Compensation Review, a supplementary measure of total shareholder return versus peers over the same three-year period was added to include a relative performance

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measure. If the Company’s total shareholder return during the period, defined as stock price appreciation plus dividends accrued, is one of the top two when compared with the total shareholder return of the six companies making up the Industry Peer Group, a supplemental award equal to 25% of an individual’s assigned award opportunity may be made. For the 2006–2008 cycle, the Company’s total shareholder return was the highest in the Industry Peer Group.

Given the Company’s performance in terms of actual growth in earnings per share, net sales and total shareholder return for the 2006–2008 cycle, as set forth above, restricted stock awards to the Named Officers for this cycle were 162.4% of their individual assigned award opportunities. (See note 2 to the Grants of Plan-Based Awards Table on page 33 for the number of restricted shares granted to each Named Officer in respect of the 2006–2008 cycle.)

Since awards for the 2006–2008 cycle were granted in February 2009, after results for the 2006–2008 period were known, they are not part of the compensation expense recognized in the Company’s 2008 financial statements that is shown in column (e) (“Stock Awards”) of the Summary Compensation Table on page 28. The percentage payout versus assigned award opportunities for the Named Officers for the earlier award cycles that are reflected in column (e) of the Summary Compensation Table was 125% for the 2005–2007 cycle, 63% for the 2004–2006 cycle and 52% for the 2003–2005 cycle. The same performance measures described above, other than the new supplemental measure of comparative total shareholder return, applied. The variability in payout percentage among the cycles reflects the Company’s philosophy that executives should have the potential for increased awards when performance objectives are exceeded, provided there is appropriate downward adjustment if performance objectives are not met.

Restricted Stock Terms. The above restricted stock awards vest and are distributed as shares of common stock three years from the date of the award. Awards are forfeited if the recipient terminates his or her employment with the Company, other than through retirement, prior to the end of the three-year vesting period. For more information regarding the effect of various types of termination of employment on the vesting of outstanding equity awards, including restricted stock awards, see page 44. Recipients of restricted stock awards do not have voting rights or receive dividends until the awards vest. During the vesting period, since the performance goals for the applicable measurement cycle have been met, even though the award is subject to a further vesting requirement, dividend equivalents in the form of additional restricted stock accrue at the same rate that dividends are paid on the Company’s common stock, to be distributed as shares together with the underlying award.

Other Awards

The P&O Committee has the authority under the EICP Plan to make additional awards of cash, common stock, restricted stock or a combination thereof. The P&O Committee granted an additional award to Mr. Patrick of 3,000 shares with respect to services performed in 2008, to address a reduction in his maximum award opportunity under the annual incentive program made in connection with the 2007 Compensation Review.

Stock Ownership Guidelines

To further align the interests of the Company’s officers with those of its stockholders, the Board has established minimum stock ownership guidelines applicable to members of senior management. The CEO is required to own Colgate stock equal in value to five times his annual salary, and the other Named Officers must hold Colgate stock in amounts equal to three times their annual salaries. Other senior managers of the Company are subject to ownership requirements ranging from one to two times their annual salary. Executives have five years from their initial promotion into an eligible position to achieve required ownership levels. Compliance with these guidelines is evaluated on an annual basis. All of the Named Officers are in compliance with this policy.

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Chief Executive Officer Compensation⁴

Total Compensation

Mr. Cook was elected CEO in July 2007. The P&O Committee worked with Mercer to develop an appropriate compensation program for Mr. Cook consistent with Colgate’s compensation philosophy, competitive data from the Comparison Group and market trends. Based on this review, the P&O Committee determined, to the extent warranted by Mr. Cook’s and overall Company performance, to bring Mr. Cook’s total target compensation to the median of the Comparison Group over approximately a two-year period, with the possibility of above-median compensation up to the 75th percentile of the Comparison Group based on exceptional performance. In addition, for 2008, the P&O Committee decided to set the cash portion of Mr. Cook’s target compensation (salary and annual bonus) below median and the long-term equity incentive portion (stock options and restricted stock) above median to ensure a strong link between pay and long-term performance.

In 2008, based on Mr. Cook’s contributions to the strong performance of the Company since his election as CEO, the P&O Committee determined it was appropriate to move Mr. Cook’s total target compensation for 2008 fully to the median of the Comparison Group. In reaching this decision, the P&O Committee considered the following factors:

The Company’s performance in 2008 and the three-year performance cycle ending in 2008, as measured by net sales, earnings per share and total shareholder return, were in the upper quartile of both the Industry Peer Group and the Comparison Group. Accordingly, since these measures drive the Company’s compensation programs, Mr. Cook’s total actual compensation for 2008 was above median, at the 63rd percentile of the Comparison Group. Each separate element of Mr. Cook’s compensation is discussed below.

As noted above, in setting Mr. Cook’s target compensation during this period, the P&O Committee consulted with Mercer. Mr. Cook had no role in setting his own compensation.

Salary

The P&O Committee determined in July 2008 to increase Mr. Cook’s annual salary from $1,000,000 to $1,150,000. Consistent with the decision of the P&O Committee noted above to emphasize long-term equity incentives over cash compensation, Mr. Cook’s salary is below the median of salaries for CEOs in the Comparison Group.

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Annual Bonus

For 2008, Mr. Cook’s assigned annual bonus award opportunity was 137.5% of his base salary, which is below the median of the Comparison Group for the reasons discussed above. Like the other Named Officers, the CEO’s annual bonus is formula-driven, and is payable based upon the strength of earnings-per-share growth achieved by the Company, subject to the P&O Committee’s discretion to adjust the award downward. As discussed on page 22, since Base Business Earnings-Per-Share growth in 2008 exceeded the level necessary under the pre-established formula to generate maximum awards to the Named Officers with corporate-wide responsibilities, Mr. Cook’s award was 275% of his base salary.

Stock Options

In September 2008, Mr. Cook received 355,000 stock options under the Stock Option Award program described above, due to high individual and Company performance.

Performance-Based Restricted Stock Awards

For the 2006–2008 performance cycle, Mr. Cook’s assigned restricted stock award opportunity was 285% of his base salary midpoint, which is above the median of the Comparison Group for the reasons discussed above. Like the other Named Officers, the CEO’s restricted stock award is formula- driven and is payable based upon the strength of compounded annual growth in annual net sales and earnings per share over a three-year measurement period and the Company’s total shareholder return as compared to its peers, subject to the P&O Committee’s discretion to adjust the award downward. In February 2009, Mr. Cook was granted 89,309 shares of restricted stock, or 162.4% of his assigned award opportunity, which is subject to a further three-year vesting requirement as described above. As is the case for all other executives, as discussed on pages 24 to 25, this award was above the assigned award opportunity due to the Company’s strong sales and earnings performance over the 2006–2008 performance cycle and achievement of the highest total shareholder return of the Industry Peer Group during that period.

Conclusion

In summary, the Company believes that strong executive performance is vital to strong Company performance. Thus, its approach to executive compensation is guided by the principle that executives should have the potential for increased compensation when performance objectives are exceeded, provided that there is appropriate downward adjustment if performance objectives are not met.

P&O Committee Report

The P&O Committee has reviewed and discussed with management the foregoing Compensation Discussion and Analysis and, based on such review and discussion, recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K and this Proxy Statement.

The foregoing P&O Committee report has been submitted by the members of the P&O Committee: Richard J. Kogan (Chair), John T. Cahill (Deputy Chair), Jill K. Conway, David W. Johnson, Delano E. Lewis, J. Pedro Reinhard and Stephen I. Sadove.

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Summary Compensation Table

The following table shows the compensation of the Company’s Chairman of the Board, President and Chief Executive Officer, Chief Financial Officer and three other most highly compensated executive officers (the “Named Officers”) for 2008 and, to the extent an officer was a “Named Officer” in the prior years, for 2007 and 2006.

Notes to the Summary Compensation Table

(Notes continued on next page)

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The grant date fair value of restricted stock awards made to the Named Officers in 2008 appears in the table below. For more information regarding these awards and the programs under which they were made, including the terms and conditions and applicable performance measures, see pages 24 to 25 of the CD&A and the Grants of Plan-Based Awards Table on page 32.

(Notes continued on next page)

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(Notes continued on next page)

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Grants of Plan-Based Awards

The following table shows information about the non-equity incentive awards, stock options and restricted stock awards that are reflected in the Summary Compensation Table for 2008 and that were granted to the Named Officers either during or with respect to services rendered in 2008.