J&J shareholders urged by others to reject CEO’s $ 30 million salary
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Johnson & johnson CEO Alex Gorsky is ready for a whopping $ 30 million salary. However, several leading investors are urging shareholders to reject the compensation program because it protects the executive from billions of dollars in opioid litigation costs for the company.
J&J is the target of multiple lawsuits concerning the marketing of its opioid products. Despite these legal concerns and settlements of nearly $ 5 billion over the past two years, the CEO was in favor of a pay rise.
A group of shareholders, led by the State of Illinois, several faith-based organizations and the charity OxFam called on the board of directors to cut Gorsky’s compensation by around $ 2 million instead of the increase.
“We believe Johnson & Johnson should protect investors by not intervening to remove the financial impact of opioid litigation costs from executive compensation. Managers must be held accountable for all consequences of corporate conduct, ”investors said in a statement. letter to shareholders.
In the letter, shareholders say the company did not explain its decision to remove the impact of the opioid litigation that cost the company $ 5 billion over the past two years for Gorsky’s profits. Shareholders said it protects Gorsky and other executives from the fall of these legal issues by excluding those costs.
Johnson & Johnson’s opioid marketing took the company to California court this week. J& J., Along with three other companies, was sued by Santa Clara, Los Angeles and Orange Counties and the City of Oakland on their role in the opioid crisis. Local governments are asking for $ 50 billion in damages from the four companies.
In a filing with the U.S. Securities and Exchange Commission earlier this month, Johnson & Johnson said the exclusion of litigation costs from compensation was “in line with its past practices and motivates good behavior. management ”. Reuters reported.
Gorsky has been CEO for nine years. His compensation totaled $ 29.6 million in 2020, up 17% from the previous year. The authors of the letter said they would understand compensation protection if he had only been in the post for a short time and that the legal issues related to opioids and talc were a legacy of a management team. previous. However, this is not the case with Gorsky and the current CEOs. In addition to the opioid litigation, the life sciences giant is also facing litigation over its talc-based products, but the letter’s editors saw this as a legacy issue.
“In expressing these concerns, we recognize the important role that Johnson & Johnson has played in the fight against the COVID-19 pandemic. We support compensation plans that reward executives for such laudable accomplishments as vaccine development despite the recent recommendation by the US Centers for Disease Control and Prevention and the US Food and Drug Administration to suspend it. use of the Janssen vaccine in response to rare side effects involving the blood. clots, ”notes the letter.
“Compensation plans work most effectively when they consider both successes and failures. We believe that the question of linking executive compensation to the costs of the opioid crisis is both singularly important and distinct from the question of whether executives deserve to be recognized in the development of a vaccine ”, continues the letter. “With CEO Gorsky receiving nearly $ 30 million in salary in 2020, and enjoying an increase in his long-term incentive opportunity this year (125% of target) in light of the performance of the last year, we believe there is ample scope to balance these competitors. requests. “
Complaints raised by Illinois Treasurer OxFam and others echo concerns raised earlier this month by Institutional Shareholder Services (ISS) and Glass Lewis. As Reuters reported earlier this month, ISS wrote in a note to its shareholders that “… investors can nonetheless expect an explanation from the company on how the compensation committee took into account litigation costs. extraordinarily high when making compensation decisions.