(Natural News) Johnson & Johnson is coming under scrutiny from investors over CEO Alex Gorsky’s pay package, with critics complaining that the healthcare company is shielding executives from the legal costs of their poor business decisions.
In calculating stock awards to top executives, the company excluded costs related to some of the major lawsuits Johnson & Johnson has been involved in recently, including one claiming the company fueled America’s opioid crisis and another involving people who got cancer from the asbestos in its talc baby powder. Including these legal costs, which amount to around $9 billion, would have weighed on Gorsky’s compensation, which rose 17 percent from 2019 to reach $29.6 million in 2020.
Although Johnson & Johnson has said it always excludes certain one-time litigation costs in calculating executive stock awards, proxy adviser Glass Lewis said that shareholders should cast their ballots against the pay package when a non-binding resolution goes up for a vote at Johnson & Johnson’s annual general meeting this month.
Glass Lewis said: “In our opinion, the adjustments related to well-documented legal actions essentially shield executives’ compensation from the detrimental impact of their decisions for the company.”
Institutional Shareholder Serves (ISS) joined rivals Glass Lewis in recommending the compensation deal be rejected. According to ISS, Johnson & Johnson’s corporate governance is poor. They rated it at 7 on a scale where 10 is the worst and 1 is the best. They also gave them a score of 9, which is close the lowest score possible, on compensation alone.
Meanwhile, the state of Illinois, several religious organizations, and the charitable organization Oxfam have all filed letters with the Securities and Exchange Commission in opposition of Gorsky’s pay. The letters echo Glass Lewis’s call for shareholders to vote against the pay.
The state of Illinois owns shares of Johnson & Jonson in its municipal retirement fund. They are calling on the firm to cut the CEO’s pay by at least $2 million.
One of the company’s few “victories” in recent years, the development of a COVID-19 vaccine that gained FDA approval for emergency use, has also turned out to be a disaster, with the vaccine being put on hold while the link to serious blood clots is investigated.
J&J being hit with thousands of lawsuits, so why is their CEO being rewarded?
Gorsky has been in charge of the company during the opioid crisis, which the CDC reports has claimed almost 450,000 American lives from 1999 to 2018; 50,000 people died from opioid-related overdoses in 2019 alone. Johnson & Johnson paid out $4 billion for its role in the opioid epidemic. The company was one of several manufacturers of opioid-based pain medicine, although they have denied any wrongdoing in the overdose deaths.
They have also set aside another $4 billion for litigation related to claims that asbestos in its popular talc powder caused cancer. They are still facing a rising number of personal injury lawsuits related to the baby powder; the number of lawsuits stood at 25,000 in January. It emerged in 2018 that the company had known for years that its baby powder contained asbestos, a known human carcinogen. An expose by Reuters prompted a stock selloff that saw the company’s market value drop by around $40 billion in one day.
Talc is often mined near asbestos, and the company reportedly knew about the potential asbestos sine the 1970s, yet they continued to market and sell the product. In fact, they did not stop selling it in the U.S. and Canada until May 2020. Johnson & Johnson is also appealing a verdict from the Missouri Court of Appeals that asked the company to pay $2.1 billion to a group of women who said the powder caused their ovarian cancer.
It’s appalling to think that someone can run a company that is acting so dishonestly – selling products it knew were unsafe and enjoying the profits gained by contributing to a deadly overdose epidemic – and be rewarded with a hefty pay raise.
Sources for this article include: