Glass Lewis says J&J is shielding top executives from legal costs

2 minutes
Glass Lewis says J&J is shielding top executives from legal costs

Alex Gorsky is recommending investors reject the nearly$ 30 million pay package for Johnson Johnson Chief Executive Glass Lewis, arguing that the healthcare company is shielding its top executives from the legal cost of poor business decisions.

J& J is attracting investor scrutiny because it excluded from its calculation of share awards to its top executives costs related to lawsuits claiming that the healthcare company helped fuel the nation's opioid crisis and that traces of asbestos in its talc baby powder cause cancer, reported Reuters on Monday.

The inclusion of the opioid and talc-related legal costs would have weighed on Gorsky's compensation, which totaled$ 29.6 million in 2020, up 17% from the previous year.

J& J said it had always set aside certain one-time costs such as litigation when calculating stock awards for executives, an approach that is common across corporate America. Glass Lewis and Gorsky did not respond to requests for comment on the J& J report dated March 31.

In the report to investors it is critical of the substantial financial adjustments to J& J performance results and that shareholders should cast their votes against it. A non-binding resolution on pay packages will be in the annual general meeting of the company on April 22 for a vote.

Glass Lewis said that the adjustments related to well-documented legal actions essentially shield executives' compensation from the detrimental effects of their decisions for the company.

Gorsky, who became CEO in 2012, has been at the helm of J& J during the opioid abuse and addiction crisis, which according to the United States Centers for Disease Control and Prevention claimed almost 450,000 lives in the United States between 1999 and 2018. According to the National Institute of Health in 2019, 50,000 people died from opioid overdoses in the US.

The company has denied any role in fueling the crisis; J& J is one of three companies with COVID 19 vaccines that can be used in the US, although it has run into some early manufacturing stumbles. AmerisourceBergen Corp and Cardinal Health Inc have also come under pressure from investors on their moves to set aside the costs of agreed-to opioid settlements in determining pay for their CEOs.

Cardinal Health has said it will engage with shareholders to incorporate their views in its executive compensation plan after a minority of them revolted in November against a similar executive pay structure.

  • Comments
Loading comments...