Investors should reject J& J CEO pay package, proxy adviser Glass Lewis says FILE PHOTO: Alex Gorsky, New Jersey Supreme Court chair and CEO of Johnson Johnson, takes the stand in New Jersey Supreme Court in New Brunswick, New Jersey The Proxy adviser Glass Lewis is recommending investors reject the nearly$ 30 million pay package for Johnson Johnson Chief Executive Alex Gorsky, arguing that the healthcare company is shielding its top executives from the legal cost of poor business decisions.
J& J is attracted investor scrutiny because it excluded from its calculation of stock 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, Reuters reported on Monday.
Including the legal costs related to opioids and talc would have weighed on Gorsky's compensation, which totaled$ 29.6 million in 2020, up 17% from the previous year.
J& J said it has always set aside certain one-time costs like litigation from calculating stock awards for executives, an approach that is common across corporate America.
Glass Lewis did not respond to requests for comment on J& J's report on March 31. In the report to investors, Glass Lewis said it is critical of the significant financial adjustments to J& J's performance results and that shareholders should cast their votes against it.
A non-binding resolution on pay packages will be offered to the shareholders at the company's annual general meeting on April 22. In our opinion, the adjustments related to well-documented legal actions essentially shield executives' compensation from the adverse effects of their decisions for the company, Glass Lewis said.
Gorsky, who became CEO in 2012, has been at the helm of J& J during the opioid crisis and addiction crisis that claimed nearly 450,000 lives in the U.S. between 1999 and 2018 according to the Centers for Disease Control and Prevention in the United States.
According to the National Institute of Health in 2019, 50,000 people died from opioid related overdoses in the U.S. The company has denied any part in fueling the crisis, J& J is one of three companies with COVID-19 vaccines authorized for use in the US, although it has run into some early manufacturing stumbles.
Drug distributors AmerisourceBergen Corp and Cardinal Health Inc have also come under pressure from investors in their moves to set aside the costs of agreed-to opioid settlements in determining the pay for their CEOs. Cardinal Health has said it will engage shareholders to include their views in its executive compensation plan after a minority of them revolted in November against a similar executive pay structure.