DEF 14A
Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

Filed by the Registrant  x

Filed by a Party other than the Registrant  ¨

Check the appropriate box:

 

¨ Preliminary Proxy Statement

 

¨ Confidential, for the Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

x Definitive Proxy Statement

 

¨ Definitive Additional Materials

 

¨ Soliciting Material under § 240.14a-12

JOHNSON & JOHNSON

 

(Name of Registrant as Specified in Its Charter)

 

 

 

(Name of Person(s) Filing Proxy Statement, if Other Than Registrant)

Payment of Filing Fee (Check the appropriate box):

 

x No fee required.

 

¨ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

 

  (1) Title of each class of securities to which transaction applies:

 

 

 

  (2) Aggregate number of securities to which transaction applies:

 

 

 

  (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

 

 

  (4) Proposed maximum aggregate value of transaction:

 

 

 

  (5) Total fee paid:

 

 

 

¨ Fee paid previously with preliminary materials.

 

¨ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

  (1) Amount Previously Paid:

 

 

 

  (2) Form, Schedule or Registration Statement No.:

 

 

 

  (3) Filing Party:

 

 

 

  (4) Date Filed:

 

 


Table of Contents

LOGO

 

Notice of Annual Meeting and Proxy Statement

 

March 16, 2016

 

You are invited to attend the Annual Meeting of Shareholders of Johnson & Johnson to be held at the State Theatre, 15 Livingston Avenue, New Brunswick, New Jersey on Thursday, April 28, 2016 at 10:00 a.m., Eastern Time. Doors will open at 9:15 a.m.

 

We will broadcast the meeting as a live webcast at www.investor.jnj.com, under “Webcasts & Presentations”. The webcast will remain available for replay for three months following the meeting.

 

Items of Business:

 

1.  Elect the 11 nominees named in this Proxy Statement to serve as Directors for the coming year;

 

2.  Conduct an advisory vote to approve named executive officer compensation;

 

3.  Ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2016;

 

4.  Vote on the four (4) shareholder proposals contained in this Proxy Statement, if properly presented at the meeting; and

 

5.  Transact such other matters as may properly come before the meeting, and at any adjournment or postponement of the meeting.

 

You are eligible to vote if you were a shareholder of record at the close of business on March 1, 2016.

 

 

Ensure that your shares are represented at the meeting by voting in one of several  ways: 

 

  LOGO    Go to the website listed on your proxy card or Notice to vote VIA THE INTERNET
  LOGO    Call the telephone number specified on your proxy card or on the website listed on your Notice to vote BY TELEPHONE
  LOGO    If you received paper copies of your proxy materials, mark, sign, date and return your proxy card in the postage-paid envelope provided to vote BY MAIL
  LOGO   

Attend the meeting to vote IN PERSON (See “Annual Meeting Information” and changes to “Admission Ticket Procedures” on page 80 of this Proxy Statement.).

 

 

By order of the Board of Directors,

 

LOGO

 

THOMAS J. SPELLMAN III

Assistant General Counsel and Corporate Secretary


Table of Contents

 

Important Notice Regarding the Availability of Proxy Materials for the

Shareholder Meeting to be held on April 28, 2016:

The Proxy Statement and Annual Report to Shareholders are available at www.investor.jnj.com/gov/annualmeetingmaterials.cfm

 

 


Table of Contents

A Message from Our Lead Director

 

Dear Shareholder:

I am honored to serve as your Lead Director and feel incredibly proud to be a part of this remarkable company that plays a role in the health and well-being of billions of people throughout the world, every day. Johnson & Johnson manages its business using a strategic framework that begins with Our Credo, a document written over seventy years ago that provides a set of values to guide the decisions and direction of the company.

As part of the annual strategic planning process, our Board reviews the company’s strategy, challenges, capabilities and leadership to ensure the company is well-positioned to continue creating value for shareholders. My fellow independent directors and I are committed to, and value, our dialogue with management regarding the company’s disciplined portfolio review approach, capital allocation strategy and long-term plans for growth.

We believe effective governance is integral to any successful long-term strategy – beginning with a strong and independent Board. Ten of our eleven Director nominees are independent and our five main Board committees are composed entirely of independent directors. For us, effective governance also means regular and thoughtful evaluation of our governance structures and practices, in addition to constructive shareholder engagement regarding our current governance framework and emerging governance issues.

One area of focus for us and our shareholders alike is Board composition and refreshment. Understanding the importance of the Board’s responsibility to provide effective oversight, we strive to maintain an appropriate balance of tenure, diversity, skills and experience on the Board. Since 2010, we have brought on a new independent director each year, as we replaced our retiring directors. Together, women and minority directors comprise more than half of the directors on our Board. As a group, my fellow directors and I provide a valuable breadth of experience and insight – from experts in the fields of medicine, biological sciences and health policy, to seasoned executive leaders from a range of large, complex organizations with global presence.

I encourage you to read more about our Board, robust governance structures and practices, and compensation programs in the enclosed proxy statement.

We value your engagement and thank you for your continued support of Johnson & Johnson.

Sincerely,

 

LOGO

Anne M. Mulcahy

Lead Director

 

Johnson & Johnson 2016 Proxy Statement


Table of Contents

Table of Contents

 

2016 PROXY STATEMENT – SUMMARY

     i   

Voting Overview

     i   

CORPORATE GOVERNANCE

     1   

Corporate Governance Highlights

     1   

Shareholder Outreach

     1   

Proxy Access

     1   

Board Leadership Structure

     2   

Risk Oversight

     4   

Board Committees

     5   

Board Meetings

     7   

Contacting Our Board, Individual Directors and Committees

     8   

Additional Governance Features

     8   

Corporate Governance Materials

     9   

Director Independence

     9   

Related Party Transactions

     11   

Item 1: Election of Directors

     13   

Board Composition and Director Nomination Process

     13   

Nominees

     13   

Director Compensation – Fiscal 2015

     20   

Stock Ownership and Section 16 Compliance

     22   
  

COMPENSATION

  

Item 2: Advisory Vote to Approve Named Executive Officer Compensation

     24   

Compensation Committee Report

     25   

Compensation Discussion and Analysis

     26   

Executive Summary

     27   

Executive Compensation Philosophy

     36   

Components of Executive Compensation

     36   

Setting Compensation & Performance Targets

     38   

Compensation Decision Process

     41   

Governance of Executive Compensation

     42   

Additional Information Concerning Executive Compensation

     44   

Executive Compensation Tables

     48   

Summary Compensation Table

     48   

Grants of Plan-Based Awards

     53   

Outstanding Equity Awards at Fiscal Year-End

     56   

Option Exercises and Stock Vested

     58   

Pension Benefits

     59   

Non-Qualified Deferred Compensation

     60   

Potential Payments Upon Termination

     62   
AUDIT MATTERS   
Audit Committee Report      65   
Item 3: Ratification of Appointment of Independent Registered Public Accounting Firm      66   

 

Johnson & Johnson 2016 Proxy Statement


Table of Contents

 

SHAREHOLDER PROPOSALS & OTHER MATTERS   
Item 4: Shareholder Proposal – Policy for Share Repurchase Preference      68   
Item 5: Shareholder Proposal – Independent Board Chairman      70   
Item 6: Shareholder Proposal – Report on Lobbying Disclosure      73   
Item 7: Shareholder Proposal – Take-Back Programs for Unused Medicines      75   

Other Matters

     77   

GENERAL INFORMATION

     78   

Shareholders Entitled to Vote and Voting Standard

     78   

How to Vote

     78   

Notice and Access

     79   

Effect of Your Proxy

     79   

Effect of Not Casting Your Vote

     79   

Revoking Your Proxy or Changing Your Vote

     79   

Johnson & Johnson Employee Savings Plans

     80   

Annual Meeting Information

     80   

Admission Ticket Procedures

     80   

Proxy Solicitation

     81   

Electronic Access to Proxy Materials

     81   

Reduce Duplicate Mailings

     81   

Shareholder Proposals, Director Nominations by Shareholders and Other Items of Business

     82   

Helpful Websites

     82   

 

Johnson & Johnson 2016 Proxy Statement


Table of Contents

2016 Proxy Statement – Summary

This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information you should consider. You should read the entire Proxy Statement carefully before voting.

 

     
VOTING OVERVIEW      

Items of Business:

 

 

Board Vote

  Recommendation  

 

Page # for

Additional
  Information  

1     Election of 11 Director nominees

  FOR each nominee   13

Management Proposals:

       

2     Advisory Vote to Approve Named Executive Officer Compensation (“Say on Pay”)

  FOR   24

3     Ratification of Appointment of Independent Registered Public Accounting Firm (PricewaterhouseCoopers LLP)

  FOR   66

Shareholder Proposals:

       

4     Policy for Share Repurchase Preference

  AGAINST   68

5     Independent Board Chairman

  AGAINST   70

6     Report on Lobbying Disclosure

  AGAINST   73

7     Take-Back Programs for Unused Medicines

  AGAINST   75
         
 
CORPORATE GOVERNANCE HIGHLIGHTS (see page 1)

ü       Adopted Proxy Access By-Law in 2016

  

ü       Independent Lead Director with robust duties

ü       Active Shareholder Outreach

  

ü       Commitment to Board Refreshment

ü       Annual Board and Committee Evaluations

  

ü       No Supermajority Voting Requirements

ü       Majority Voting In Uncontested Director Elections

  

ü       No Shareholder Rights Plan

ü       Director Overboarding Policy

  

ü       Shareholder Right to Call Special Meetings

ü       Annual Director Election

    
 

DIRECTOR INDEPENDENCE (see pages 9 and 10)

 

        10 of our 11 Director nominees are independent (all except CEO)

 

        All 5 main Board committees composed of independent Directors

 

        Independent Directors met in executive session at each of the 7 regular 2015 Board meetings

DIRECTOR NOMINEES (see pages 13 - 19)
   
Name       Age      

Director

Since

  Primary Occupation                    

Mary C. Beckerle

  61   2015   Chief Executive Officer and Director, Huntsman Cancer Institute; Distinguished Professor of Biology, College of Science, University of Utah

D. Scott Davis

  64   2014   Chairman and Former Chief Executive Officer, United Parcel Service, Inc.

Ian E. L. Davis

  65   2010  

Chairman, Rolls-Royce Holdings plc; Former Chairman and Worldwide

Managing Director, McKinsey & Company

Alex Gorsky

  55   2012   Chairman, Board of Directors; Chief Executive Officer, Johnson & Johnson

Susan L. Lindquist

  66   2004   Member and Former Director, Whitehead Institute for Biomedical Research; Professor of Biology, Massachusetts Institute of Technology

Mark B. McClellan

  52   2013   Director, Duke-Robert J. Margolis, MD, Center for Health Policy

Anne M. Mulcahy (LD)

  63   2009   Former Chairman and Chief Executive Officer, Xerox Corporation

William D. Perez

  68   2007   Retired President and Chief Executive Officer, Wm. Wrigley Jr. Company

Charles Prince

  66   2006   Retired Chairman and Chief Executive Officer, Citigroup Inc.

A. Eugene Washington 

  65   2012   Duke University’s Chancellor for Health Affairs; President and Chief Executive Officer, Duke University Health System

Ronald A. Williams

  66   2011   Former Chairman and Chief Executive Officer, Aetna Inc.
(LD) - Lead Director            

 

i  •  Johnson & Johnson 2016 Proxy Statement


Table of Contents

 

 

 

 

2015 COMPANY PERFORMANCE (see pages 28 and 29)

 

Our overall performance in 2015 was consistent with our long-term strategic plan as we executed on the near-term priorities we established for the year. In 2015, we:

   

LOGO

 

  Exceeded our adjusted operational EPS goal and met our operational sales and free cash flow goals(1)
   

LOGO

 

  Partially met our Creating Value through Innovation objectives
   

LOGO

 

  Met our Excellence in Execution (portfolio, organizational effectiveness, quality, and supply) objectives
   

LOGO

 

  Partially met our Global Reach with Local Focus (global sales growth) objectives
   

LOGO

 

  Exceeded our Leading with Purpose (talent, engagement, and reputation) objectives
 
2016 CEO COMPENSATION DECISIONS FOR 2015 PERFORMANCE (see page 31)

 

The Board based its assessment of Mr. Gorsky primarily upon its evaluation of the company’s performance. The company met, or exceeded, its financial goals and executed against its strategic priorities in 2015 under Mr. Gorsky’s leadership.

 

   

2016 CEO Pay Decisions

     Annual Bonus: $  2,800,000 (100% of target)

    LTI Award:       $13,727,992 (110% of target)

     No Increase in Salary

   

CEO Total Direct Compensation

    2015: $18,141,454

    2014: $20,253,820

   
 
 

KEY FEATURES OF OUR EXECUTIVE COMPENSATION PROGRAM (see page 30)

 

   
What We Do   What We Don’t Do

ü    Align CEO pay with company performance

 

ü    Use long-term incentives to link the majority of Named Executive Officer pay to company performance

 

ü    Balance short-term and long-term incentives

 

ü    Cap incentive awards

 

ü    Require Named Executive Officers to own significant amounts of company stock

 

ü    Have a compensation recoupment policy applicable to our Named Executive Officers

 

ü    Actively engage with our shareholders

 

ü    Use an independent compensation consultant reporting directly to the Compensation Committee

 

 

LOGO      No automatic or guaranteed annual salary increases

 

LOGO      No guaranteed bonuses or long-term incentive awards

 

LOGO      No above-median targeting of executive compensation

 

LOGO      No change-in-control benefits

 

LOGO      No tax gross ups (unless they are provided pursuant to our standard relocation practices)

 

LOGO      No option repricing without shareholder approval

 

LOGO      No hedging of company stock

 

LOGO      No long-term incentive backdating

 

LOGO      No dividend equivalents on unvested long-term incentives

 
 
 
 
 
 
 
 
 

WHEN CASTING YOUR 2016 SAY ON PAY VOTE, WE ENCOURAGE YOU TO CONSIDER: (see page 24)

 

   Our continued direct engagement with our shareholders

 

  Our continued evaluation of our executive compensation program

 

   The pay-for-performance alignment built into the design of our incentive programs

 

  The alignment of the 2015 compensation of our Chairman/CEO and our other named executive officers with our company’s 2015 performance

 

 

  (1) Non-GAAP measures; see page 29 for details on non-GAAP performance measures

 

Johnson & Johnson 2016 Proxy Statement  •  ii


Table of Contents

 

iii  •  Johnson & Johnson 2016 Proxy Statement


Table of Contents

Corporate Governance

 

   

 

CORPORATE GOVERNANCE HIGHLIGHTS

 

  

 

For More Information See Page(s):

 

   
   

ü    Active Shareholder Outreach

 

  

1 & 30

 

   
   

ü    Proxy Access

 

  

1

 

   
   

ü    Independent Lead Director

 

  

2

 

   
   

ü    Constructive Board and Committee Evaluations

 

  

8

 

   
   

ü    Majority Voting in Uncontested Director Elections

 

  

8

 

   
   

ü    Director Overboarding Policy

 

  

8

 

   
   

ü    Director Independence

 

  

9

 

   
   

ü    Commitment to Board Refreshment

 

  

13

 

   
   

ü    Annual Election of Directors

 

  

13

 

   
   

ü    Robust Executive Compensation Governance

 

 

  

30 & 42

 

 

   

SHAREHOLDER OUTREACH

We engage with our shareholders throughout the year to seek input on emerging governance issues and to address their questions and concerns regarding our current governance policies and practices. During 2015, our Lead Director, Compensation & Benefits Committee Chair, and members of senior management had discussions with a diverse mix of our shareholders on a variety of corporate governance issues, including on our executive compensation program (see page 30 of this Proxy Statement for more information) and proxy access. As a result of those constructive conversations, we adopted proxy access in January of this year (see below), expanded our Proxy Statement disclosures on our governance practices and enhanced our website disclosure on political expenditures.

PROXY ACCESS

During the past year, as part of our long-standing shareholder outreach program, we engaged with a number of our shareholders regarding proxy access and the potential terms of proxy access provisions that our shareholders would view as appropriate for Johnson & Johnson. After taking into account the feedback provided as part of these discussions and considering developments in market practice, on January 26, 2016, we amended our By-Laws to implement proxy access with the following key parameters:

 

          
    

      Ownership threshold: 3% of outstanding shares of our common stock;

 

      Holding period: continuously for 3 years;

 

      Number of nominees: up to 20% of our Board, with a minimum of up to two Board seats if the Board size is less than 10; and

 

      Nominating group size: up to 20 shareholders may group together to reach the 3% ownership threshold.

   
          

We believe this proxy access framework reflects a thoughtfully designed and balanced approach to proxy access that mitigates the risk of abuse and protects the interests of all of our shareholders, while affording a meaningful proxy access right in light of our size and shareholder base. Shareholders who wish to nominate directors for inclusion in our Proxy Statement in accordance with the proxy access procedures in our By-Laws should follow the instructions under “General Information” in this Proxy Statement.

 

Johnson & Johnson 2016 Proxy Statement  •  1


Table of Contents

BOARD LEADERSHIP STRUCTURE

          
   
    

•     Chairman of the Board and CEO: Alex Gorsky

 

•     Independent Lead Director: Anne M. Mulcahy

 

è      Both positions designated annually by the independent Directors

 

•     All 5 main Board Committees composed of independent Directors

   
          

Our Directors believe that there are positives and negatives related to all possible board leadership structures, which must be considered in the context of the specific circumstances, culture and challenges facing a company, and that such consideration falls squarely on the shoulders of a company’s board, holding a diversity of views and experiences. As discussed in “Item 1: Election of Directors” on pages 13 to 19 of this Proxy Statement, our Directors come from a variety of organizational backgrounds with direct experience in a wide range of leadership and management structures. Moreover, our independent Directors appropriately challenge management and demonstrate the free-thinking expected of today’s directors. Given this, our Board is in a very strong position to evaluate the various types of board leadership structures and to ultimately decide which one will work in the best interests of our stakeholders, as they are defined in Our Credo (on the back cover of this Proxy Statement).

Our Board believes that it is in the best interests of the company to continue to have Mr. Gorsky serve as both Chairman and CEO. During the transitional period in 2012 when our previous Chairman/CEO served as Executive Chairman and Mr. Gorsky was appointed to serve as CEO, the Board gave thoughtful and rigorous consideration to its governance structure and ultimately determined that combining the Chairman and CEO positions under the strong leadership of Mr. Gorsky would benefit all our stakeholders because:

 

    It provides clear and unambiguous authority, essential to effective management;

 

    It sends an important signal to employees and shareholders about who is accountable; and

 

    Mr. Gorsky’s career experience gives him unquestioned industry knowledge, which the Board believes is critical for the chairman of a company that operates in a highly-regulated industry such as health care.

Independent Lead Director

While deciding to combine the Chairman and CEO roles under Mr. Gorsky, the Board also recognized the importance for a board to have in place, and build upon, a strong counterbalancing structure to ensure that it functions in an appropriately independent manner. Thus, at the same time that it decided to designate Mr. Gorsky as its Chairman and CEO in 2012, the Board took steps to enhance its governance structure. Specifically, the Board changed the title of the Presiding Director position, originally created in 2002, to Lead Director, and expanded the duties and responsibilities of the position. The following table describes the duties and responsibilities of our independent Lead Director, which are also incorporated into our Principles of Corporate Governance, found at www.investor.jnj.com/gov/policies.cfm.

 

2  •  Johnson & Johnson 2016 Proxy Statement


Table of Contents

Duties and Responsibilities of the Independent Lead Director

 

Board Agendas and Schedules  

ü        Approves information sent to the Board and determines timeliness of information flow from management.

 

ü        Periodically provides feedback on quality and quantity of information flow from management.

 

ü        Participates in setting, and ultimately approves, the agenda for each Board meeting.

 

ü        Approves meeting schedules to assure that there is sufficient time for discussion of all agenda items.

 

ü        With the Chair/CEO, determines who attends Board meetings, including management and outside advisors.

 

Committee Agendas and Schedules  

ü       Reviews in advance the schedule of committee meetings.

 

ü       Monitors flow of information from Committee Chairs to the full Board.

 

Board Executive Sessions  

ü       Has the authority to call meetings and Executive Sessions of the Independent Directors.

 

ü       Presides at all meetings of the Board at which the Chair/CEO is not present, including Executive Sessions of the Independent Directors.

 

Communicating with Management  

ü       After each Executive Session of the Independent Directors, communicates with the Chair/CEO to provide feedback and also to effectuate the decisions and recommendations of the Independent Directors.

 

ü        Acts as liaison between the Independent Directors and the Chair/CEO and management on a regular basis and when special circumstances exist or communication out of the ordinary course is necessary.

 

Communicating with Stakeholders  

ü       As necessary, meets with major shareholders or other external parties, after discussions with the Chair/CEO.

 

ü       Is regularly apprised of inquiries from shareholders and involved in correspondence responding to these inquiries.

 

ü       Under the Board’s guidelines for handling shareholder and employee communications to the Board, is advised promptly of any communications directed to the Board or any member of the Board that allege misconduct on the part of company management, or raise legal, ethical or compliance concerns about company policies or practices.

 

Chair and CEO Performance Evaluations

 

 

ü       Leads the annual performance evaluation of the Chair/CEO, distinguishing as necessary between performance as Chair and performance as CEO.

Board Performance Evaluation

 

 

ü       Leads the annual performance evaluation of the Board.

New Board Member Recruiting

 

 

ü       Interviews Board candidates, as appropriate.

CEO Succession

 

 

ü       Leads the CEO succession process.

Crisis Management

 

 

ü       Plays an increased role in crisis management oversight, as appropriate.

 

Limits on Leadership Positions of Other Boards

 

 

ü       May only serve as chair, lead or presiding director, or similar role, or as CEO or similar role at another public company if approved by the full Board upon recommendation from the Nominating & Corporate Governance Committee.

 

 

Johnson & Johnson 2016 Proxy Statement  •  3


Table of Contents

RISK OVERSIGHT

Board Oversight of Risk Management

The Board believes that overseeing management’s processes for assessing and managing the various risks we face is one of its most important responsibilities to our stakeholders. Our enterprise risk management framework reflects a collaborative process, whereby our Board of Directors, management and other personnel apply a common risk management approach to strategy setting and other decisions across the enterprise that is designed to identify potential events that may affect the entity and manage the associated risks and opportunities.

In light of the interrelated nature of the risks we face, the Board believes that oversight of risk management is ultimately the responsibility of the full Board. In carrying out this critical responsibility, the Board meets at regular intervals with key members of management with primary responsibility for risk management in their respective areas of responsibility. The subject matter of these meetings can generally be grouped into the following categories and risk areas:

 

                     
   
   

Strategy:

 

Business Vitality

 

Strategic Planning

 

Talent Management

 

Reputation

 

Sustainability

 

Diversity

 

 

Reporting:

 

Financial Results

 

Finance/Accounting

 

Internal Audit

 

Independent Audit

 

Tax

 

Treasury

 

Compliance:

 

Law/Legal Proceedings

 

Legislative/Regulatory Environment

 

Health Care Compliance

 

Foreign Corrupt Practices Act

 

Environment, Health & Safety

 

Privacy

 

Quality

 

Product Safety/Scientific Issues

 

 

Operations:

 

Supply Chain (including Manufacturing/Business Continuity Planning)

 

Security (including security of products, sites, personnel, and information)

 

Cybersecurity

 

Research & Development

   
                     

The Board also receives regular reports on aspects of our risk management from senior representatives of our independent auditor. In addition, the Audit Committee meets in private sessions with the Chief Financial Officer; General Counsel; Vice President of Internal Audit; and representatives of our independent auditor at the conclusion of every regularly-scheduled meeting, where aspects of risk management are discussed. The Regulatory, Compliance & Government Affairs Committee meets in private sessions with the General Counsel; Chief Compliance Officer; Chief Quality Officer; and Vice President of Internal Audit, where aspects of risk management are discussed.

A copy of the Johnson & Johnson Framework for Enterprise Risk Management can be found at www.jnj.com/about-jnj/management-approach.

Risk Related to Executive Compensation

The following characteristics of our executive compensation program work to reduce the possibility that our executive officers, either individually or as a group, make excessively risky business decisions that could maximize short-term results at the expense of long-term value:

 

    Balanced Mix of Pay Components: The target compensation mix is not overly weighted toward annual incentive awards and represents a balance of cash and long-term equity-based compensation vesting over three years. See “Setting Compensation Targets” on page 41 of this Proxy Statement.

 

    Balanced Approach to Performance-Based Awards:

 

  Ø   Performance targets are tied to multiple financial metrics, including operational sales growth, free cash flow, adjusted earnings per share growth, and long-term total shareholder return.

 

  Ø   Performance-based awards are based on the achievement of strategic and leadership objectives in addition to financial metrics.

 

  Ø  

See “Long-Term Incentives” on page 37 of this Proxy Statement.

 

4  •  Johnson & Johnson 2016 Proxy Statement


Table of Contents
    Performance Period and Vesting Schedules: The performance period and vesting schedules for long-term incentives overlap, and therefore, reduce the motivation to maximize performance in any one period. Performance Share Units, Restricted Share Units, and Stock Options vest three years from the grant date.

 

    Capped Incentive Awards: Annual performance bonuses and long-term incentive awards are capped at 200% of target. See “Range of Awards” on page 42 of this Proxy Statement.

 

    Stock Ownership Guidelines: These guidelines require our CEO to directly or indirectly own equity in our company of six times salary, and the other members of our Executive Committee (the principal management group) to own equity of three times salary, and to retain this level of equity at all times while serving as an Executive Committee member. See “Stock Ownership Guidelines for Named Executive Officers” on page 44 of this Proxy Statement.

 

    Executive Compensation Recoupment Policy: This Policy gives our Board authority to recoup executive officers’ past compensation in the event of a material restatement of our financial results and for events involving material violations of company policy relating to the manufacturing, sales or marketing of our products. See “Executive Compensation Recoupment Policy” on page 45 of this Proxy Statement.

 

    No Change-in-Control Arrangements: None of our executive officers have in place any change-in-control arrangements that would result in guaranteed payouts.

BOARD COMMITTEES

The Board of Directors has a standing Audit Committee, Compensation & Benefits Committee, Nominating & Corporate Governance Committee, Regulatory, Compliance & Government Affairs Committee and Science, Technology & Sustainability Committee, each composed entirely of non-employee Directors determined to be “independent” under the listing standards of the NYSE and our Standards of Independence. Under their written charters adopted by the Board, each of these committees is authorized and assured of appropriate funding to retain and consult with external advisors, consultants and counsel. In addition, the Board has a standing Finance Committee, composed of the Chairman of the Board and the Lead Director, which exercises the authority of the Board during intervals between Board meetings.

Board Committee Membership

The following table shows the current members and chairmen of each of the standing Board Committees and the number of meetings each committee held in 2015.

 

LOGO

 

  (1)  Not standing for re-election in 2016

 

  (2)  Designated as an “audit committee financial expert” for purposes of Section 407 of the Sarbanes-Oxley Act

 

  (3)  Does not include teleconferences held prior to each release of quarterly earnings (4 in total)

 

  (4)  Includes an annual joint meeting of the Audit and Regulatory, Compliance & Government Affairs Committees

 

Johnson & Johnson 2016 Proxy Statement  •  5


Table of Contents

Audit Committee

 

  Ø  

Oversees the company’s financial management and accounting and financial reporting processes and practices

  Ø  

Appoints, retains, compensates and evaluates independent auditor

  Ø  

Oversees the company’s internal audit organization, reviews its annual plan and reviews results of its audits

  Ø  

Oversees the quality and adequacy of the company’s internal accounting controls and procedures

  Ø  

Reviews and monitors the company’s financial reporting compliance and practices and its disclosure controls and procedures

  Ø  

Discusses with management the processes used to assess and manage the company’s exposure to risk, and monitors risks related to tax, treasury, IT and cybersecurity

In performing these functions, the Audit Committee meets periodically with the independent auditor, management, and internal auditors (including in private sessions) to review their work and confirm that they are properly discharging their respective responsibilities. For more information on Audit Committee activities in 2015, see the Audit Committee Report on page 65 of this Proxy Statement.

A copy of the charter of the Audit Committee is available at www.investor.jnj.com/gov/committee.cfm.

The Board has designated Mr. D. S. Davis, the Chairman of the Audit Committee and an independent Director, as an “audit committee financial expert” under the rules and regulations of the U.S. Securities and Exchange Commission (SEC), after determining that he meets the requirements for such designation. The determination was based on his being a Certified Public Accountant and his experience as Chief Financial Officer at United Parcel Service, Inc.

Any employee or other person who wishes to contact the Audit Committee to report fiscal improprieties or complaints about internal accounting control or other accounting or auditing matters can do so by writing to the Audit Committee at the address of our principal office: One Johnson & Johnson Plaza, New Brunswick, NJ 08933 or by using the online submission form at www.investor.jnj.com/gov/communication.cfm. Such reports may be made anonymously.

Compensation & Benefits Committee

 

  Ø  

Establishes the company’s executive compensation philosophy and principles

  Ø  

Reviews, and recommends for approval by the independent Directors of the Board, the compensation for our Chief Executive Officer and approves the compensation for the company’s other executive officers

  Ø  

Sets the composition of the group of peer companies used for comparison of executive compensation

  Ø  

Oversees the design and management of the various pension, long-term incentive, savings, health and welfare plans that cover our employees

  Ø  

Reviews, and recommends for approval by the full Board, the compensation for our non-employee Directors

  Ø  

Provides oversight of the compensation philosophy and policies of the Management Compensation Committee, a non-Board committee composed of Mr. Gorsky (Chairman/CEO), Mr. Dominic J. Caruso (Chief Financial Officer) and Dr. Peter M. Fasolo (Vice President, Global Human Resources), which, under delegation from the Compensation & Benefits Committee, determines management compensation and establishes perquisites and other compensation policies for employees other than our executive officers

A copy of the charter of the Compensation & Benefits Committee is available at www.investor.jnj.com/gov/committee.cfm.

The Compensation & Benefits Committee has retained Frederic W. Cook & Co., Inc. as its independent compensation consultant for matters related to executive officer and non-employee Director compensation. For further discussion of the role of the Compensation & Benefits Committee in the executive compensation decision-making process, and for a description of the nature and scope of the consultant’s assignment, see “Governance of Executive Compensation” on page 42 of this Proxy Statement.

Nominating & Corporate Governance Committee

 

  Ø  

Oversees matters of corporate governance, including the evaluation of the policies and practices of the Board

  Ø  

Oversees the process for performance evaluations of the Board and its committees

  Ø  

Reviews our executive succession plans

  Ø  

Considers any questions of possible conflicts of interest

  Ø  

Reviews potential candidates for the Board, as discussed on page 13 of this Proxy Statement, and recommends the nominees for Directors to the Board for approval

  Ø  

Reviews and recommends director orientation and continuing orientation programs for Board members

A copy of the charter of the Nominating & Corporate Governance Committee can be found at www.investor.jnj.com/gov/committee.cfm.

 

6  •  Johnson & Johnson 2016 Proxy Statement


Table of Contents

Regulatory, Compliance & Government Affairs Committee

 

  Ø   Oversees the company’s major compliance programs and systems with respect to legal and regulatory requirements
  Ø   Oversees compliance with any ongoing corporate integrity agreements or any similar significant undertakings by the company with a government agency
  Ø   Reviews the organization, implementation and effectiveness of the company’s compliance and quality programs
  Ø   Oversees the company’s Code of Business Conduct and Code of Business Conduct & Ethics for Members of the Board of Directors and Executive Officers
  Ø   Reviews the company’s governmental affairs policies and priorities
  Ø   Reviews the policies, practices and priorities for the company’s political expenditure and lobbying activities

A copy of the charter of the Regulatory, Compliance & Government Affairs Committee can be found at www.investor.jnj.com/gov/committee.cfm. Also see a copy of the Report on Regulatory, Compliance & Government Affairs Committee for Calendar Year 2015 at www.investor.jnj.com/gov/materials.cfm.

Science, Technology & Sustainability Committee

 

  Ø   Monitors and reviews the overall strategy, direction and effectiveness of the company’s research and development organization
  Ø   Serves as a resource and provides input, as needed, regarding the scientific and technological aspects of product safety matters
  Ø   Reviews the company’s policies, programs and practices on environment, health, safety and sustainability
  Ø   Assists the Board in identifying and comprehending significant emerging science and technology policy and public health issues and trends that may impact the company’s overall business strategy
  Ø   Assists the Board in its oversight of the company’s major acquisitions and business development activities as they relate to the acquisition or development of new science or technology

A copy of the charter of the Science, Technology & Sustainability Committee can be found at www.investor.jnj.com/gov/committee.cfm.

Finance Committee

 

  Ø   Composed of the Chairman and Lead Director of the Board
  Ø   Exercises the authority of the Board during the intervals between Board meetings, as permitted by law
  Ø   Acts from time-to-time between Board meetings, as needed, generally by unanimous written consent in lieu of a meeting
  Ø   Any action is taken pursuant to specific advance delegation by the Board or is later ratified by the Board

BOARD MEETINGS

Director Meetings and Attendance

During 2015, the Board of Directors held:

 

    7 regular meetings

 

    3 special meetings

Each Director attended at least 75% of the total of regularly-scheduled and special meetings of the Board of Directors and the committees on which he or she served (during the period that he or she served).

Executive Sessions

During 2015, each of the Audit, Compensation & Benefits, Nominating & Corporate Governance, Regulatory, Compliance & Government Affairs, and Science, Technology & Sustainability Committees met in executive sessions without members of management present. The independent Directors met in executive session at every regular Board meeting during 2015, and held a special executive session to perform the annual evaluation of the CEO/Chairman. The Lead Director acted as Chair at all of these executive sessions.

Annual Meeting Attendance

It has been our longstanding practice for all Directors to attend the Annual Meeting of Shareholders. All of our 11 Directors who were elected to the Board at the 2015 Annual Meeting attended the meeting.

 

Johnson & Johnson 2016 Proxy Statement  •  7


Table of Contents

CONTACTING OUR BOARD, INDIVIDUAL DIRECTORS AND COMMITTEES

You can contact any of our Directors, including our Lead Director, by writing to them c/o Johnson & Johnson, Office of the Corporate Secretary, One Johnson & Johnson Plaza, New Brunswick, NJ 08933. Employees and others who wish to contact the Board or any member of the Audit Committee to report any complaint or concern with respect to accounting, internal accounting controls or auditing matters, may do so anonymously by using the address above. You can also use the online submission forms on our website to contact the Board and the Audit Committee. Our process for handling communications to the Board or the individual Directors has been approved by the independent Directors and can be found at www.investor.jnj.com/gov/communication.cfm.

ADDITIONAL GOVERNANCE FEATURES

Board and Committee Evaluations

Our Principles of Corporate Governance require that the Board and each committee conduct an annual self-evaluation. These self-evaluations are intended to facilitate a candid assessment and discussion by the Board and each committee of its effectiveness as a group in fulfilling its responsibilities, its performance as measured against the Principles of Corporate Governance, and areas for improvement.

 

    Board Evaluations: Each year, the Lead Director, Chairman and Corporate Secretary meet with each Director individually to collect feedback on the Board’s responsibilities, structure, procedures, atmosphere and engagement. The input is then synthesized and discussed with the full Board.

 

    Committee Evaluations: Committee members are provided with a questionnaire to facilitate discussion during an executive session of the committee, and upon completion of the self-evaluation, the chair of the committee reports to the full Board on the discussion and any necessary follow-up actions.

Majority Voting In Uncontested Director Elections

Our By-Laws require that in uncontested elections (those where the number of nominees does not exceed the number of Directors to be elected), Director nominees receive the affirmative vote of a majority of the votes cast in order to be elected to our Board of Directors. Contested Director elections (those where the number of Director nominees exceeds the number of Directors to be elected) would be governed by the plurality standard under New Jersey law.

The Board has adopted a Director Resignation Policy for incumbent directors in uncontested elections. Specifically, if an incumbent Director receives more votes “Against” his or her election than votes “For” his or her election in an uncontested election, then such Director must promptly tender an offer of his or her resignation following certification of the shareholder vote. The Nominating & Corporate Governance Committee and the Board would then consider and take appropriate action on such offer of resignation in accordance with the Policy.

Our By-Laws and Principles of Corporate Governance, including the Director Resignation Policy for Incumbent Directors in Uncontested Elections, can be found at www.investor.jnj.com/gov/materials.cfm.

Director Overboarding Policy

Our Principles of Corporate Governance state that a Director who serves as a CEO (or similar position) at our, or any other, company should not serve on more than two public company boards (including the Johnson & Johnson board and his or her own board) and that other Directors should not serve on more than five public company boards (including the Johnson & Johnson board). Currently, all of our Directors are in compliance with this policy.

 

8  •  Johnson & Johnson 2016 Proxy Statement


Table of Contents

Political Spending Oversight and Disclosure

As a leader in the healthcare industry, Johnson & Johnson is committed to supporting the development of sound public policy in health care. We work with many organizations across the political spectrum on a variety of policy issues related to health and other topics that impact patients, consumers, and our company. As a result of constructive engagement with a number of our institutional investors, we were an early mover on the disclosure of corporate political expenditures and activities, and we have expanded that disclosure over the years as we continue to dialogue with our shareholders on this issue. Disclosure regarding the company’s political activities and expenditures, including the policies and procedures that govern that activity and spending, as well as the Board’s oversight role, are updated semi-annually and can be found at www.investor.jnj.com/gov/contributions.cfm.

As part of its oversight role in government affairs and policy, the Regulatory, Compliance & Government Affairs Committee receives an annual report of the company’s political contribution and lobbying policies, practices, and activities. In addition, the company’s Political Action Committee and U.S. corporate political spending is audited biennially by our internal auditors.

CORPORATE GOVERNANCE MATERIALS

Shareholders can see our Restated Certificate of Incorporation; By-Laws; Principles of Corporate Governance; Board Committee Charters; Code of Business Conduct for employees; Code of Business Conduct & Ethics for Members of the Board of Directors and Executive Officers; and other corporate governance materials at www.investor.jnj.com/gov/materials.cfm. Copies of these documents, as well as additional copies of this Proxy Statement, are available to shareholders, without charge, upon request to the Corporate Secretary at our principal office address.

DIRECTOR INDEPENDENCE

 
All Directors are independent except for our CEO
 

It is our goal that at least two-thirds of our Directors should be “independent,” not only as that term may be defined legally or mandated by the New York Stock Exchange (NYSE), but also without the appearance of any conflict in serving as a Director. The Board of Directors has determined that all non-employee Directors who served during fiscal 2015 are “independent” under the listing standards of the NYSE and our Standards of Independence, including: Dr. Beckerle, Mr. Cullen, Dr. Coleman, Mr. I. Davis, Mr. D. S. Davis, Dr. Lindquist, Dr. McClellan, Ms. Mulcahy, Mr. Mullin, Mr. Perez, Mr. Prince, Dr. Washington and Mr. Williams. Messrs. Cullen and Mullin retired in April 2015 and Dr. Coleman is retiring and not standing for re-election this year.

In order to assist the Board in making this determination, the Board adopted Standards of Independence as part of our Principles of Corporate Governance, which can be found at www.investor.jnj.com/gov/policies.cfm. These Standards conform to, or are more exacting than, the NYSE independence standards and identify, among other things, material business, charitable and other relationships that could interfere with a Director’s ability to exercise independent judgment.

As highly accomplished individuals in their respective industries, fields and communities, the non-employee Directors are affiliated with numerous corporations, educational institutions, hospitals and charities, as well as civic organizations and professional associations, many of which have business, charitable or other relationships with the company. The Board considered each of these relationships in light of the NYSE independence standards and our Standards of Independence and determined that none of these relationships conflict with the interests of the company or would impair the relevant non-employee Director’s independence or judgment.

 

Johnson & Johnson 2016 Proxy Statement  •  9


Table of Contents

The following table describes the relationships that were considered in making this determination. The nature of the transactions and relationships summarized in the table below, and the role of each of the Directors at their respective organizations, were such that none of the non-employee Directors had any direct business relationships with the company in 2015 or received any direct personal benefit from any of these transactions or relationships.

All of the transactions and relationships of the type listed below were entered into, and payments were made or received, by the company or one of its subsidiaries in the ordinary course of business and on competitive terms. In 2013, 2014 and 2015, the company’s transactions with, or discretionary charitable contributions to, each of the relevant organizations (not including gifts made under our matching gifts program) did not exceed the greater of $1 million or 1% of that organization’s consolidated gross revenues, and therefore did not exceed the thresholds in our Standards of Independence.

 

Director   Organization  

Type of

Organization

 

Relationship to

Organization

 

Type of

Transaction or

Relationship

 

2015

Aggregate

Magnitude

M. C. Beckerle

  American
Association for
Cancer Research
  Non-profit
Organization
  Director   Grants   <1%; <$1 million

M. C. Beckerle

  Huntsman Cancer
Institute
  Heath Care
Institution
 

Executive

Officer

 

Investigator

payments and sales
of health care
products

  <1%; <$1 million

M.C. Beckerle

  University of Utah   Educational
Institution
  Employee  

Investigator
payments, sales of

health care products
and grants

  <1%; <$1 million

M. S. Coleman

  Mayo Clinic
Foundation
  Health Care
Institution
  Trustee   Continuing Medical
Education grants
  <1%; <$1 million

S. L. Lindquist

  Massachusetts
Institute of
Technology
  Educational
Institution
  Employee   Research program
and other research
related payments;
sales of health care
products and
services
  <1%; <$1 million

M. B. McClellan

  Research! America   Public Education
and Advocacy
Organization
  Director   Annual fees;
contributions
  <$1 million

A. M. Mulcahy

  Save the Children   Charitable
Organization
  Trustee   Contributions   <1%

W. D. Perez

  Cornell University   Educational
Institution
  Trustee   Grants and
fellowships
  <1%; <$1 million

A. E. Washington

  Duke University   Educational
Institution
  Employee  

Payments related to
research, sales of

health care products
and services and
grants

  <1%

A. E. Washington

  Duke University
Health System
  Health Care
Institution
 

Executive

Officer

  Sales of health care
products and
services; rebates
  <1%

R. A. Williams

  The MIT
Corporation
  Educational
Institution
  Trustee   Event sponsorships   <1%; <$1 million

R. A. Williams

  National Academy
Foundation
  Non-profit
Organization
  Trustee   Contribution   <1%; <$1 million

Note, any transaction or relationship under $25,000 is not listed above.

In the event of Board-level discussions pertaining to a potential transaction or relationship involving an organization with which a Director is affiliated, that Director would be expected to recuse him or herself from the deliberation and decision-making process. In addition, none of the non-employee Directors has the authority to review, approve or deny any grant to, or research contract with, an organization.

 

10  •  Johnson & Johnson 2016 Proxy Statement


Table of Contents

RELATED PARTY TRANSACTIONS

Policies and Procedures

Our written Policy on Transactions with Related Persons requires the approval or ratification by the Nominating & Corporate Governance Committee for any transaction or series of transactions exceeding $120,000 in which the company is a participant and any related person has a direct or indirect material interest (other than solely as a result of being a director or trustee or less than 10% owner of another entity). Related persons include our Directors and executive officers and their immediate family members and persons sharing their households. It also includes persons controlling more than 5% of our outstanding common stock.

Under our Principles of Corporate Governance and Code of Business Conduct & Ethics for Members of the Board of Directors and Executive Officers, all of our Directors and executive officers have a duty to report to the Chairman or the Lead Director potential conflicts of interest, including transactions with related persons. Management also has established procedures for monitoring transactions that could be subject to approval or ratification under the Policy on Transactions with Related Persons.

Once a related person transaction has been identified, the Nominating & Corporate Governance Committee will review all of the relevant facts and circumstances and approve or disapprove of the entry into the transaction. The Committee will take into account, among other factors, whether the transaction is on terms no more favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related person’s interest in the transaction.

If advance Committee approval of a transaction is not feasible, the transaction will be considered for ratification at the Committee’s next regularly scheduled meeting. If a transaction relates to a member of the Committee, that member will not participate in the Committee’s deliberations. In addition, the Committee Chairman (or, if the transaction relates to the Committee Chairman, the Lead Director) may pre-approve or ratify any related person transactions involving up to $1 million.

The following types of transactions have been deemed by the Committee to be pre-approved or ratified, even if the aggregate amount involved will exceed $120,000:

 

    compensation paid by the company for service as a Director or executive officer of the company;

 

    transactions with other companies where the related person’s only relationship is as a non-executive employee, less than 10% equity owner, or limited partner, and the transaction does not exceed the greater of $1 million or 2% of that company’s annual revenues;

 

    contributions by the company to charitable organizations where the related person is an employee and the transaction does not exceed the lesser of $500,000 or 2% of the charitable organization’s annual receipts;

 

    transactions where the related person’s only interest is as a holder of company stock and all holders receive proportional benefits, such as the payment of regular quarterly dividends;

 

    transactions involving competitive bids;

 

    transactions where the rates or charges are regulated by law or government authority; and

 

    transactions involving bank depositary, transfer agent, registrar, trustee under a trust indenture, or party performing similar banking services.

Our Policy on Transactions with Related Persons can be found at www.investor.jnj.com/gov/policies.cfm.

 

Johnson & Johnson 2016 Proxy Statement  •  11


Table of Contents

Transactions with Related Persons for 2015

A sister-in-law of Dr. Paulus Stoffels, Chief Scientific Officer and Worldwide Chairman, Pharmaceuticals, is a Senior Manager at Janssen Pharmaceutica NV, a wholly-owned subsidiary of the company, and earned $168,586 in total compensation in 2015 (using an exchange rate of 1.1175 USD/1 EUR), including base salary, any annual incentive bonus, the value of any long-term incentive award granted in 2015, and any other compensation. She also participates in the general welfare and benefit plans of Janssen Pharmaceutica NV. Her compensation was established in accordance with Janssen Pharmaceutica NV’s employment and compensation practices applicable to employees with equivalent qualifications and responsibilities and holding similar positions. Dr. Stoffels does not have a material interest in his sister-in-law’s employment, nor does he share a household with her.

The daughter of Dr. Eugene Washington, one of our Directors, is a Senior Analyst at Johnson & Johnson Innovation LLC, a wholly-owned subsidiary of the company, and earned $135,381 in total compensation in 2015, including base salary, any annual incentive bonus, the value of any long-term incentive award granted in 2015, and any other compensation. She also participates in the general welfare and benefit plans of Johnson & Johnson Innovation LLC. Her compensation was established in accordance with Johnson & Johnson Innovation LLC’s employment and compensation practices applicable to employees with equivalent qualifications and responsibilities and holding similar positions. Dr. Washington does not have a material interest in his daughter’s employment, nor does he share a household with her.

These transactions were approved by the Nominating & Corporate Governance Committee in compliance with our Policy on Transactions with Related Persons described above.

 

12  •  Johnson & Johnson 2016 Proxy Statement


Table of Contents

Item 1: Election of Directors

BOARD COMPOSITION AND DIRECTOR NOMINATION PROCESS

The Nominating & Corporate Governance Committee of the Board of Directors annually considers the size, composition and needs of the Board, reviews possible candidates for the Board, and recommends the nominees for Directors to the Board for approval. The Committee considers and evaluates suggestions from many sources, including shareholders, regarding possible candidates for Directors. Such suggestions, together with appropriate biographical information, should be submitted to the Office of the Corporate Secretary at our principal office address.

 

Below are the General Criteria for Nomination to the Board of Directors, which, as part of the Principles of Corporate Governance, are posted at www.investor.jnj.com/gov/policies.cfm:

 

    the highest ethical character and shared values with Our Credo;

 

    reputation, both personal and professional, consistent with our image and reputation;

 

    accomplishment within candidate’s field, with superior credentials and recognition;

 

    active and former chief executive officers of public companies and leaders of major complex organizations, including scientific, government, educational and other non-profit institutions;

 

    widely recognized leaders in the fields of medicine or biological sciences, including those who have received the most prestigious awards and honors in their fields;

 

    relevant expertise and experience and the ability to offer advice and guidance to the CEO based on that expertise and experience;

 

    independence, without the appearance of any conflict in serving as a Director, and independence of any particular constituency with the ability to represent all shareholders;

 

    ability to exercise sound business judgment; and

 

    diversity, reflecting gender, ethnic background and professional experience.

Understanding the importance of Board composition and refreshment for effective oversight, the Nominating  & Corporate Governance Committee strives to maintain an appropriate balance of tenure, diversity, skills and experience on the Board. Below are highlights of the composition of our Director nominees:

 

LOGO

NOMINEES

There are 11 Director nominees for election at our 2016 Annual Meeting, to hold office until the next Annual Meeting and until their successors have been duly elected and qualified.

All of the nominees were elected to the Board at the last Annual Meeting and are currently serving as Directors of the company, except for Dr. Mary C. Beckerle who was appointed to the Board in June 2015. Dr. Beckerle was initially identified as a potential nominee by an executive search firm and recommended for nomination by the Nominating & Corporate Governance Committee. In keeping with the Board’s policy on retirement of Directors, Dr. Mary Sue Coleman, elected to the Board in 2003, will not stand for re-election. The Board thanks Dr. Coleman for her service.

 

Johnson & Johnson 2016 Proxy Statement  •  13


Table of Contents

Below are summaries of the background, business experience and description of the principal occupation of each of the nominees.

 

 

LOGO

 

 

MARY C. BECKERLE, Ph.D., Chief Executive Officer and Director, Huntsman Cancer Institute at the University of Utah; Distinguished Professor of Biology, College of Science, University of Utah

 

With her expertise in scientific research and organizational management in the health care arena, and her active participation in national and international scientific affairs, Dr. Beckerle provides a perspective crucial to a global health care company.

 

Director since 2015; Independent

 

Science, Technology & Sustainability Committee

 

 

Dr. Beckerle, 61, joined the Board of Directors in June 2015 and is a member of the Science, Technology & Sustainability Committee. She has served as CEO and Director of Huntsman Cancer Institute since 2006 and she was appointed in 2009 to an additional key health sciences leadership role as Associate Vice President for Cancer Affairs at the University of Utah. Dr. Beckerle joined the faculty of the University of Utah in 1986, and is a distinguished professor of biology and oncological sciences, holding the Ralph E. and Willia T. Main Presidential Professorship. Dr. Beckerle has served on the NIH Advisory Committee to the Director and as the Chair of the American Cancer Society Council for Extramural Grants. She currently serves on a number of scientific advisory boards including the Medical Advisory Board of the Howard Hughes Medical Institute and the Scientific Advisory Boards of the National Center for Biological Sciences at the Tata Institute of Fundamental Research in India and the Mechanobiology Institute in Singapore, and the Dana Farber/Harvard Cancer Center. Dr. Beckerle is also currently on the Board of Directors of the American Association for Cancer Research. Dr. Beckerle held a Guggenheim Fellowship at the Curie Institute in Paris, received the Utah Governor’s Medal for Science and Technology in 2001, the Sword of Hope Award from the American Cancer Society in 2004 and is an elected Fellow of the American Academy of Arts and Sciences. Dr. Beckerle was also named a National Association of Corporate Directors (NACD) Governance Fellow in 2012.

 

Other Public Company Board Service: Huntsman Corporation (2011 to present)

 

 

LOGO

 

 

D. SCOTT DAVIS, Chairman and Former Chief Executive Officer, United Parcel Service, Inc.

 

Having served as Chairman and CEO of the world’s largest publicly-traded logistics company, and given his knowledge and passion for emerging markets and international operations, deep understanding of public policy and global economic indicators, and expertise in management, strategy, finance and operations, Mr. Davis brings to our Board his unique expertise in supply chain logistics at a time of rapid global expansion in the health care industry.

 

Director since 2014; Independent

 

Audit Committee; Regulatory, Compliance & Government Affairs Committee

 

 

Mr. Davis, 64, joined the Board of Directors in 2014, and is the Chairman of the Audit Committee and a member of the Regulatory, Compliance & Government Affairs Committee. Mr. Davis is Chairman of United Parcel Service, Inc. (UPS), the largest package delivery company in the world and a leading U.S. less-than-truckload transport and global supply chain solutions provider (shipment and logistics). From 2008 to September 2014, Mr. Davis served as the Chairman and Chief Executive Officer of UPS, and prior to this, he served as Vice Chairman and Chief Financial Officer. Previously, Mr. Davis held various leadership positions with UPS, primarily in the finance and accounting areas. Prior to joining UPS, he was Chief Executive Officer of II Morrow Inc., a developer of general aviation and marine navigation instruments. Mr. Davis is a Certified Public Accountant. He previously served on the Board of the Federal Reserve Bank of Atlanta (2003-2009), serving as Chairman in 2009. Mr. Davis is a trustee of the Annie E. Casey Foundation and a member of The Carter Center Board of Councilors.

 

Other Public Company Board Service: United Parcel Service, Inc. (2008 to present); Honeywell International, Inc. (2005 to present); EndoChoice, Inc. (2014 to present)

 

14  •  Johnson & Johnson 2016 Proxy Statement


Table of Contents

 

LOGO

 

 

IAN E. L. DAVIS, Chairman, Rolls-Royce Holdings plc; Former Chairman and Worldwide Managing Director, McKinsey & Company

 

Having served as Chairman and Worldwide Managing Director of one of the world’s leading management consulting firms, and as a consultant to a range of global organizations across the public, private and not-for-profit sectors, Mr. Davis brings considerable global experience, management insight and business knowledge to our Board.

 

Director since 2010; Independent

 

Audit Committee; Science, Technology & Sustainability Committee

 

 

Mr. Davis, 65, joined the Board of Directors in 2010 and is a member of the Audit Committee and the Science, Technology & Sustainability Committee. Mr. Davis is currently non-executive Chairman, Rolls-Royce Holdings plc. Mr. Davis retired from McKinsey & Company (management consulting) in 2010 as a Senior Partner, having served as Chairman and Worldwide Managing Director from 2003 until 2009. In his more than 30 years at McKinsey, he served as a consultant to a range of global organizations across the public, private and not-for-profit sectors. Prior to becoming Chairman and Worldwide Managing Director, he was Managing Partner of McKinsey’s practice in the United Kingdom and Ireland. His experience included oversight for McKinsey clients and services in Asia, Europe, the Middle East and Africa, as well as expertise in the consumer products and retail industries. Mr. Davis is a Director of Teach for All, Inc., a global network of independent social enterprises working to expand educational opportunities in their nations; global energy group, BP plc.; and Majid Al Futtaim Holding LLC; and a Senior Advisor at Apax Partners, a private equity firm.

 

Other Public Company Board Service: BP plc (2010 to present), Rolls-Royce Holdings plc (2013 to present)

 

 

LOGO

 

 

ALEX GORSKY, Chairman, Board of Directors; Chief Executive Officer; Chairman, Executive Committee, Johnson & Johnson

 

Having started his career at Johnson & Johnson in 1988 and having been promoted to positions of increasing responsibility across business segments, culminating in his appointment to CEO and election to our Board of Directors in 2012, Mr. Gorsky brings a full range of strategic management expertise, a broad understanding of the issues facing a multinational business in the health care industry and an in-depth knowledge of the company’s business, history and culture to our Board and the Chairman position.

 

Director since 2012; Management

 

Finance Committee

 

 

Mr. Gorsky, 55, was appointed as Chairman, Board of Directors in December 2012 and is a member of the Finance Committee. He was named Chief Executive Officer, Chairman of the Executive Committee and joined the Board of Directors in April 2012. Mr. Gorsky began his Johnson & Johnson career with Janssen Pharmaceutica Inc. in 1988. Over the next 15 years, he advanced through positions of increasing responsibility in sales, marketing, and management. In 2001, Mr. Gorsky was appointed President of Janssen Pharmaceutical Inc., and in 2003 he was named Company Group Chairman of the Johnson & Johnson pharmaceutical business in Europe, the Middle East and Africa. Mr. Gorsky left Johnson & Johnson in 2004 to join Novartis Pharmaceuticals Corporation, where he served as head of the company’s pharmaceutical business in North America. Mr. Gorsky returned to Johnson & Johnson in 2008 as Company Group Chairman for Ethicon. In early 2009, he was appointed Worldwide Chairman of the Surgical Care Group and member of the Executive Committee. In September 2009, he was appointed Worldwide Chairman of the Medical Devices and Diagnostics Group. Mr. Gorsky became Vice Chairman of the Executive Committee in January 2011. Mr. Gorsky also serves on the boards of the Travis Manion Foundation, the Congressional Medal of Honor Foundation and the National Academy Foundation.

 

Other Public Company Board Service: International Business Machines Corporation (IBM) (2014 to present)

 

Johnson & Johnson 2016 Proxy Statement  •  15


Table of Contents

 

LOGO

 

 

SUSAN L. LINDQUIST, Ph.D., Member and Former Director, Whitehead Institute for Biomedical Research; Professor of Biology, Massachusetts Institute of Technology

 

With her long and decorated career in scientific research and her global reputation as a pioneer in biomedical innovation, Dr. Lindquist brings to our Board an incomparable perspective on the intersection of academic and commercial medical research critical to a company in the health care industry.

 

Director since 2004; Independent

 

Regulatory, Compliance & Government Affairs Committee; Science, Technology & Sustainability Committee

 

 

Dr. Lindquist, 66, joined the Board of Directors in 2004 and is Chairman of the Science, Technology & Sustainability Committee and a member of the Regulatory, Compliance & Government Affairs Committee. She is a member of the Whitehead Institute, a non-profit, independent research and educational institution, a Professor of Biology at the Massachusetts Institute of Technology and an Investigator of the Howard Hughes Medical Institute. Dr. Lindquist served as Director of the Whitehead Institute from 2001 to 2004. Previously she was affiliated with the University of Chicago where she was the Albert D. Lasker Professor of Medical Sciences in the Department of Molecular Genetics and Cell Biology. Dr. Lindquist was elected to the American Academy of Arts and Sciences in 1996, the National Academy of Sciences in 1997, the American Philosophical Society in 2003 and the Institute of Medicine in 2006. She received the Novartis/Drew Award for Biomedical Research in 2000, the Dickson Prize in Medicine in 2002, the Sigma Xi William Procter Prize for Academic Achievement in 2006, the Nevada Silver Medal for Scientific Achievement in 2007, the Genetics Society of America Medal and the Centennial Medal of the Harvard University Graduate School of Arts and Sciences in 2008. In 2010, she received the Mendel Medal from the Genetics Society (UK), The Delbrück Medal from Bayer Schering, and the National Medal of Science (USA). In 2012, Dr. Lindquist received the Wilson Medal in Cell Biology and in 2013 the Dart Prize in Biotechnology. She has served on the Scientific Advisory boards of many independent research institutes, associations and foundations, including: the Massachusetts General Hospital, Brigham and Women’s Hospital and the Institute für Molekulare Biotechnology GmbH. Dr. Lindquist was a Co-Founder of FoldRx Pharmaceuticals, Inc., a subsidiary of Pfizer Inc., and is a Founder of Yumanity Therapeutics and REVOLUTION Medicines.

 

Other Public Company Board Service: None

 

 

 

LOGO

 

 

MARK B. McCLELLAN, M.D., Ph.D., Director, Duke-Robert J. Margolis, MD, Center for Health Policy

 

With his extensive experience in public health policy, including as Commissioner of the U.S. Food and Drug Administration and Administrator for the U.S. Centers for Medicare & Medicaid Services, Dr. McClellan possesses broad knowledge of, and unique insights into, the challenges facing the health care industry, making him a valuable member of the board of a broad-based health care company.

 

Director since 2013; Independent

 

Regulatory, Compliance & Government Affairs Committee; Science, Technology & Sustainability Committee

 

 

Dr. McClellan, 52, joined the Board of Directors in 2013, and is a member of the Regulatory, Compliance & Government Affairs Committee and the Science, Technology & Sustainability Committee. Dr. McClellan became the inaugural Director of the Duke-Robert J. Margolis, MD, Center for Health Policy in January 2016, and the Margolis Professor of Business, Medicine and Health Policy at Duke University. He is also a faculty member at Dell Medical School at The University of Texas in Austin. Previously, he served from 2007 to 2015 as a Senior Fellow in Economic Studies, and Director of the Initiatives on Value and Innovation in Health Care at the Brookings Institution. Dr. McClellan served as Administrator of the Centers for Medicare & Medicaid Services for the U.S. Department of Health and Human Services from 2004 to 2006, and as Commissioner of the U.S. Food and Drug Administration from 2002 to 2004. He served as a member of the President’s Council of Economic Advisers and senior director for health care policy at the White House from 2001 to 2002, and during President Bill Clinton’s administration, held the position of Deputy Assistant Secretary for Economic Policy for the Department of the Treasury. Dr. McClellan previously served as an associate professor of economics and medicine with tenure at Stanford University, where he also directed the Program on Health Outcomes Research. Dr. McClellan is the founding chair and a current board member of the Reagan-Udall Foundation for the Food and Drug Administration, is a member of the National Academy of Medicine and chairs the Academy’s Leadership Council for Value and Science-Driven Health Care, and co-chairs the guiding committee of the Health Care Payment Learning and Action Network.

 

Other Public Company Board Service: None 

 

Recent Past Public Company Board Service: Aviv REIT, Inc. (2013 to 2015)

 

16  •  Johnson & Johnson 2016 Proxy Statement


Table of Contents

 

LOGO

 

 

 

ANNE M. MULCAHY, Former Chairman and Chief Executive Officer,
Xerox Corporation

 

Having served as Chairman and CEO of a large, global manufacturing and services company with one of the world’s most recognized brands and track record for innovation, Ms. Mulcahy provides to our Board valuable insight into organizational and operational management issues crucial to a large public company, as well as a strong reputation for leadership in business innovation and talent development.

 

Lead Director

 

Director since 2009; Independent

 

Audit Committee; Nominating & Corporate Governance Committee; Finance Committee

 

 

Ms. Mulcahy, 63, joined the Board of Directors in 2009 and became the Lead Director of the Board in 2012. Ms. Mulcahy is a member of the Audit Committee, the Nominating & Corporate Governance Committee, and the Finance Committee. Ms. Mulcahy was both Chairman and Chief Executive Officer of Xerox Corporation (business equipment and services) until July 2009, when she retired as CEO after eight years in the position. Prior to serving as CEO, Ms. Mulcahy was President and Chief Operating Officer of Xerox. She has also served as President of Xerox’s General Markets Operations, which created and sold products for reseller, dealer and retail channels. During a career at Xerox that began in 1976, Ms. Mulcahy also served as Vice President for Human Resources with responsibility for compensation, benefits, human resource strategy, labor relations, management development and employee training; and Vice President and Staff Officer for Customer Operations, covering South America and Central America, Europe, Asia and Africa. Ms. Mulcahy has been a U.S. Board Chair of Save the Children since March 2010.

 

Other Public Company Board Service: Target Corporation (1997 to present), Graham Holdings Company (2008 to present), LPL Financial Holdings Inc. (2013 to present)

 

 

LOGO

 

 

 

WILLIAM D. PEREZ, Retired President and Chief Executive Officer,
Wm. Wrigley Jr. Company

 

With his experience as CEO of several large, consumer-focused companies across a wide variety of industries, Mr. Perez contributes to our Board significant organizational and operational management skills, combined with a wealth of experience in global, consumer-oriented businesses vital to a large public company in the consumer products space.

 

Director since 2007; Independent

 

Compensation & Benefits Committee; Nominating & Corporate Governance Committee

 

 

Mr. Perez, 68, joined the Board of Directors in 2007 and is Chairman of the Nominating & Corporate Governance Committee and a member of the Compensation & Benefits Committee. Mr. Perez is currently a Senior Advisor at Greenhill & Co., Inc. (investment banking). Mr. Perez served as President and Chief Executive Officer for the Wm. Wrigley Jr. Company (confectionary and chewing gum) from 2006 to 2008. Before joining Wrigley, Mr. Perez served as President and Chief Executive Officer of Nike, Inc. Previously, he spent 34 years with S.C. Johnson & Son, Inc., including eight years as its President and Chief Executive Officer. Mr. Perez is a Trustee for Cornell University and Northwestern Memorial Hospital.

 

Other Public Company Board Service: Whirlpool Corporation (2009 to present)

 

Recent Past Public Company Board Service: Campbell Soup Company (2009 to 2012)

 

Johnson & Johnson 2016 Proxy Statement  •  17


Table of Contents

 

LOGO

 

 

 

CHARLES PRINCE, Retired Chairman and Chief Executive Officer, Citigroup Inc.

 

Having served as Chairman and CEO of the nation’s largest and most diversified financial institution, Mr. Prince brings to our Board a strong mix of organizational and operational management skills combined with well-developed legal, global business and financial acumen critical to a large public company.

 

Director since 2006; Independent

 

Compensation & Benefits Committee; Nominating & Corporate Governance Committee

 

Mr. Prince, 66, joined the Board of Directors in 2006 and is Chairman of the Compensation & Benefits Committee and a member of the Nominating & Corporate Governance Committee. Mr. Prince served as Chief Executive Officer of Citigroup Inc. (financial services) from 2003 to 2007 and as Chairman from 2006 to 2007. Previously he served as Chairman and Chief Executive Officer of Citigroup’s Global Corporate and Investment Bank from 2002 to 2003 and Chief Operating Officer from 2001 to 2002. Mr. Prince began his career as an attorney at U.S. Steel Corporation in 1975. Mr. Prince is a member of the Council on Foreign Relations and The Council of Chief Executives.

 

Other Public Company Board Service: Xerox Corporation (2008 to present)

 

 

LOGO

 

 

 

A. EUGENE WASHINGTON, M.D., M.Sc., Duke University’s Chancellor for Health Affairs; President and Chief Executive Officer, Duke University Health System

 

Dr. Washington brings to our Board his distinct expertise born of significant achievements as a senior executive in academia, an accomplished clinical investigator, an innovator in health care, and a leader in shaping national health policy. With his unique combination of knowledge, skills and experience in organizational management, medical research, patient care, and public health policy, Dr. Washington provides an invaluable perspective for a company in the health care industry.

 

Director since 2012; Independent

 

Compensation & Benefits Committee; Science, Technology & Sustainability Committee

 

 

Dr. Washington, 65, joined the Board of Directors in 2012 and is a member of the Compensation & Benefits Committee and the Science, Technology & Sustainability Committee. Dr. Washington is currently Duke University’s Chancellor for Health Affairs and the President and Chief Executive Officer of the Duke University Health System. Previously he was Vice Chancellor of Health Sciences, Dean of the David Geffen School of Medicine at UCLA; Chief Executive Officer of the UCLA Health System; and Distinguished Professor of Gynecology and Health Policy at UCLA. Prior to UCLA, he served as Executive Vice Chancellor and Provost at the University of California, San Francisco (UCSF) from 2004 to 2010. Dr. Washington co-founded UCSF’s Medical Effectiveness Research Center for Diverse Populations in 1993 and served as Director until 2005. He was Chair of the Department of Obstetrics, Gynecology, and Reproductive Sciences at UCSF from 1996 to 2004. Dr. Washington also co-founded the UCSF-Stanford Evidence-based Practice Center and served as its first Director from 1997 to 2002. Prior to UCSF, Dr. Washington worked at the Centers for Disease Control and Prevention. Dr. Washington was elected to the National Academy of Sciences’ Institute of Medicine in 1997, where he served on its governing Council. He was founding Chair of the Board of Governors of the Patient-Centered Outcomes Research Institute, served as a member of the Scientific Management Review Board for the National Institutes of Health, and also served as Chair of the Board of Directors of both the California HealthCare Foundation and The California Wellness Foundation. Dr. Washington currently serves on the Boards of Directors of the Kaiser Foundation Hospitals and Kaiser Foundation Health Plan, Inc.

 

Other Public Company Board Service: None

 

18  •  Johnson & Johnson 2016 Proxy Statement


Table of Contents

 

LOGO

 

 

 

RONALD A. WILLIAMS, Former Chairman and Chief Executive Officer, Aetna Inc.

 

With his long and distinguished career in the health care industry, from his experience leading one of Fortune’s Most Admired health care companies to his career-long role as an advocate for meaningful health care reform, Mr. Williams provides our Board with an exceptional combination of operational management expertise and insight into both public health care policy and the health care industry critical to a large public company in the health care industry.

 

Director since 2011; Independent

 

Compensation & Benefits Committee; Regulatory, Compliance & Government Affairs Committee

 

 

Mr. Williams, 66, joined the Board of Directors in 2011 and is the Chairman of the Regulatory, Compliance & Government Affairs Committee and a member of the Compensation & Benefits Committee. Mr. Williams served as Chairman and Chief Executive Officer of Aetna Inc. (managed care and health insurance) from 2006 to 2010, and as Chairman from 2010 until his retirement in April 2011. He currently serves on President Obama’s Management Advisory Board, which is helping to bring the best of business practices to the management and operation of federal government. He is also an advisor to the private equity firm, Clayton, Dubilier & Rice, LLC. In addition, Mr. Williams also serves on The MIT Corporation, the board of the Peterson Institute for International Economics and the Advisory Board of Peterson Center on Healthcare. Previously, Mr. Williams served as Chairman of the Council for Affordable Quality Healthcare from 2007 to 2010 and Vice Chairman of The Business Council from 2008 to 2010.

 

Other Public Company Board Service: The Boeing Company (2010 to present), American Express Company (2007 to present), Envision Healthcare Holdings, Inc. (2011 to present)

 

Recent Past Public Company Board Service: Aetna Inc. (2006 to 2011)

The Board of Directors recommends a vote FOR election of each of the above-named nominees.

 

Johnson & Johnson 2016 Proxy Statement  •  19


Table of Contents

DIRECTOR COMPENSATION – FISCAL 2015

The following table provides information concerning the compensation of our non-employee Directors for fiscal 2015. Mr. Gorsky was an employee of the company, and therefore, received no additional compensation for his service as a Director. For a complete understanding of the table, please read the footnotes and the narrative disclosures that follow the table.

 

A   B     C     D     E  
  Name  

Fees Earned or

Paid in Cash

($)

   

Stock Awards

($)

   

All Other

Compensation

($)

   

Total

($)

 

  M. C. Beckerle(1)

    $  64,167        $           0        $         0        $  64,167   

  M. S. Coleman(2)

    110,000        154,899        20,000        284,899   

  J. G. Cullen(3)

    45,000        154,899        0        199,899   

  D. S. Davis

    128,750        154,899        0        283,649   

  I. E. L. Davis

    110,000        154,899        0        264,899   

  S. L. Lindquist

    130,000        154,899        16,400        301,299   

  M. B. McClellan

    110,000        154,899        0        264,899   

  A. M. Mulcahy

    140,000        154,899        20,000        314,899   

  L. F. Mullin(3)

    43,333        154,899        20,000        218,232   

  W. D. Perez

    130,000        154,899        20,000        304,899   

  C. Prince

    130,000        154,899        20,000        304,899   

  A. E. Washington

    110,000        154,899        20,000        284,899   

  R. A. Williams

    125,003        154,899        20,000        299,902   

(1)     Joined the Board on June 9, 2015. Cash fees are pro-rated for six months of service.

(2)     Not standing for re-election in 2016.

(3)     Retired from the Board in April 2015. Cash fees are pro-rated for partial year of service.

        

        

        

Fees Earned or Paid in Cash (Column B)

Board Retainer. Each non-employee Director received an annual cash retainer of $110,000 for his or her service as a member of our Board of Directors, except as noted above in the table.

Committee Chair Retainer. The Chairman of the Audit Committee received an annual cash retainer of $25,000 and the chairs for all other Board committees received an annual cash retainer of $20,000.

Lead Director Retainer. In 2015, Ms. Mulcahy served as the Lead Director and was paid an additional annual cash retainer of $30,000.

Stock Awards (Column C)

All figures in column C represent the grant date fair value, computed in accordance with U.S. Generally Accepted Accounting Principles (U.S. GAAP).

Deferred Share Units. Pursuant to the terms of the Deferred Fee Plan for Non-Employee Directors, each non-employee Director received a grant of Deferred Share Units having a value of $155,000 on the grant date (to the nearest whole share). Accordingly, each non-employee Director was granted 1,524 Deferred Share Units on February 9, 2015, except for Dr. Mary C. Beckerle who joined the Board in June 2015. Deferred Share Units are settled in cash upon termination of directorship.

Stock Ownership Guidelines. Under the company’s stock ownership guidelines, non-employee Directors must own company stock equal to five times the annual Board retainer. Stock ownership for the purpose of these guidelines includes shares directly owned by the Director, shares held indirectly that are beneficially owned by the Director, and Deferred Share Units. Non-employee Directors are required to achieve the ownership threshold within five years after first becoming a Director. Our policy prohibits non-employee Directors from transacting in derivative instruments linked to the performance of our securities. As of March 1, 2016, all of our non-employee Directors, except for Dr. Beckerle, Mr. D. S. Davis and Dr. McClellan, who each joined the Board within the past three years, had met the stock ownership threshold.

All Other Compensation (Column D)

The amounts reported in column D represent the aggregate dollar amount for each non-employee Director for charitable matching contributions.

 

20  •  Johnson & Johnson 2016 Proxy Statement


Table of Contents

Charitable Matching Contributions. Non-employee Directors are eligible to participate in our charitable matching gift program on the same basis as employees, pursuant to which we will contribute, on a two-to-one basis for every dollar donated by a Director, up to $20,000 per year per person to certain charitable institutions.

Deferred Fee Plan for Non-Employee Directors

Voluntary Deferrals into Deferred Share Units. Under the Deferred Fee Plan for Non-Employee Directors, a non-employee Director may elect to defer payment of all or a portion of his or her cash retainers until termination of his or her directorship. Deferred fees earn additional amounts based on a hypothetical investment in our common stock. All Deferred Share Units held in each non-employee Director’s Deferred Fee Account accrue dividend equivalents in the same amount and at the same time as dividends on our common stock. In 2015, Drs. Lindquist and Washington and Messrs. Perez and Williams elected to defer all of their 2015 cash retainers.

Deferred Compensation Balances. At January 3, 2016, the aggregate number of Deferred Share Units (including dividend equivalents) held in each non-employee Director’s Deferred Fee Account was as follows:

 

Name   Deferred
Share Units
(#)
 

M. C. Beckerle(1)

    0   

M. S. Coleman(2)

    23,656   

D. S. Davis

    1,570   

I. E. L. Davis

    6,269   

S. L. Lindquist

    27,624   

M. B. McClellan

    3,384   

A. M. Mulcahy

    6,269   

W. D. Perez

    14,592   

C. Prince

    12,340   

A. E. Washington

    9,259   

R. A. Williams

    10,056   
  (1) 

Joined the Board on June 9, 2015

  (2) 

Not standing for re-election in 2016

Additional Arrangements

We pay for or provide (or reimburse Directors for out-of-pocket costs incurred for) transportation, hotel, food and other incidental expenses related to attending Board and committee meetings and director orientation or other relevant educational programs.

Fiscal 2016 Non-Employee Director Compensation

On September 17, 2015, the Board approved the following 2016 compensation for non-employee Directors:

 

 

Annual Cash Retainer of $110,000

 

 

Annual Grant of Deferred Share Units valued at $165,000

In addition, the Lead Director will receive an annual cash retainer of $30,000, the Chairman of the Audit Committee will receive an annual cash retainer of $25,000, and the chairs of all other Board committees will receive an annual cash retainer of $20,000.

 

Johnson & Johnson 2016 Proxy Statement  •  21


Table of Contents

Stock Ownership and Section 16

Compliance

The following table sets forth information regarding beneficial ownership of our common stock by each Director; our Chief Executive Officer, Chief Financial Officer and the three other most highly compensated executive officers named in the tables in the section “Executive Compensation Tables” on pages 48 through 64 of this Proxy Statement (each a “named executive officer”); and by all Directors and executive officers as a group. Each of the individuals/groups listed below is the owner of less than 1% of our outstanding shares. Because they serve as co-trustees of two trusts which hold stock for the benefit of others, Messrs. Gorsky and Ullmann are deemed to “control” an additional 5,732,024 shares of our stock in which they have no economic interest. In addition to such shares, the Directors and executive officers as a group own/control a total of 683,716 shares. In the aggregate, these 6,415,740 shares represent less than 1% of the shares outstanding. All stock ownership is as of March 1, 2016 (except shares held in our Savings Plans, which are included as of January 31, 2016).

 

Name  

Number of

Common

Shares(1)

(#)

   

Deferred

Share

Units(2)

(#)

   

Common Shares

Underlying

Options

or Stock

Units(3)

(#)

   

Total Number

of Shares

Beneficially

Owned

(#)

 

Mary C. Beckerle(4)

    0        1,629        0        1,629   

Dominic J. Caruso

    116,982        13,168        907,080        1,037,230   

Mary Sue Coleman(5)

    11,952        25,285        0        37,237   

D. Scott Davis

    0        3,199        0        3,199   

Ian E. L. Davis

    4,193        7,898        0        12,091   

Alex Gorsky

    178,308        0        1,044,108        1,222,416   

Susan L. Lindquist

    16,258        29,254        0        45,512   

Mark B. McClellan

    0        5,013        0        5,013   

Anne M. Mulcahy

    5,789        7,898        0        13,687   

William D. Perez

    19,622        16,221        0        35,843   

Sandra E. Peterson

    35,644        0        61,538        97,182   

Charles Prince

    26,445        13,969        0        40,414   

Paulus Stoffels

    122,543        0        102,692        225,235   

Michael H. Ullmann

    92,923        0        162,350        255,273   

A. Eugene Washington

    0        10,888        0        10,888   

Ronald A. Williams

    3,650        11,685        0        15,335   

All Directors and executive officers as a group (17)

    683,716        146,107        2,277,768        3,107,591   

 

  (1)

The shares described as “owned” are shares of our common stock directly or indirectly owned by each listed person, including shares held in 401(k) and Employee Stock Ownership Plans, and by members of his or her household, and are held individually, jointly or pursuant to a trust arrangement. Mr. Prince disclaims beneficial ownership of 800 shares listed as owned by him.

 

 

  (2)

Includes Deferred Share Units credited to Non-Employee Directors under our Amended and Restated Deferred Fee Plan for Directors and Deferred Share Units credited to the executive officers under our Executive Income Deferral Plan (Amended and Restated).

 

 

  (3)

Includes shares underlying options exercisable on March 1, 2016, options that become exercisable within 60 days thereafter and Restricted Share Units that vest within 60 days thereafter.

 

 

  (4) 

Became a member of the Board in June 2015.

 

 

  (5) 

Not standing for re-election in 2016.

 

 

22  •  Johnson & Johnson 2016 Proxy Statement


Table of Contents

As of March 1, 2016, the following are the only persons known to us to be the beneficial owners of more than five percent of any class of our voting securities:

 

Name and Address of Beneficial Owner   Title of Class    

Amount and Nature

of Beneficial

Ownership

    Percent of  Class  

The Vanguard Group

100 Vanguard Boulevard

Malvern, PA 19355

    Common Stock        175,393,093 shares(1)        6.3%(1)   

BlackRock, Inc.

55 East 52nd Street

New York, NY 10022

    Common Stock        173,844,909 shares(2)        6.3%(2)   

State Street Corporation

State Street Financial Center

One Lincoln Street

Boston, MA 02111

    Common Stock        148,294,748 shares(3)        5.4%(3)   

 

  (1) 

Based solely on an Amendment to Schedule 13G filed with the SEC on February 10, 2016, The Vanguard Group reported aggregate beneficial ownership of approximately 6.3%, or 175,393,093 shares, of our common stock as of December 31, 2015. Vanguard reported that it possessed sole dispositive power of 169,953,018 shares, sole voting power of 5,125,593 shares, shared dispositive power of 5,440,075 shares, and shared voting power of 276,500 shares.

 

 

  (2) 

Based solely on an Amendment to Schedule 13G filed with the SEC on February 10, 2016, BlackRock, Inc. reported aggregate beneficial ownership of approximately 6.3%, or 173,844,909 shares, of our common stock as of December 31, 2015. BlackRock reported that it possessed sole voting power of 149,441,859 shares and sole dispositive power of 173,844,909 shares. BlackRock also reported that it did not possess shared voting or dispositive power over any shares beneficially owned.

 

 

  (3) 

Based solely on a Schedule 13G filed with the SEC on February 16, 2016, State Street Corporation reported aggregate beneficial ownership of approximately 5.4%, or 148,294,748 shares, of our common stock as of December 31, 2015. State Street reported that it possessed shared voting power and shared dispositive power of 148,294,748 shares, and that it did not possess sole voting power or sole dispositive power over any shares beneficially owned.

 

As a result of being beneficial owners of more than 5% of our stock, The Vanguard Group (Vanguard), BlackRock, Inc. (BlackRock), and State Street Corporation (State Street) are currently considered “related persons” under our Policy on Transactions with Related Persons described on page 11 of this Proxy Statement.

 

   

Certain of our U.S. employee savings plans have retained Vanguard and its affiliates to provide investment management, trustee, custodial and administrative services. In connection with these services, we paid Vanguard approximately $1.0 million in fees during fiscal year 2015.

 

   

Certain of our U.S. and international employee savings and retirement plans have retained BlackRock and its affiliates to provide investment management services. In connection with these services, we paid BlackRock approximately $4.0 million in fees during fiscal year 2015.

 

   

Certain of our U.S. and international employee savings and retirement plans and other affiliates have retained State Street and its affiliates to provide investment management, trustee, custodial, administrative and ancillary investment services. In connection with these services, we paid State Street approximately $8.4 million in fees during fiscal year 2015.

Section 16(a) Beneficial Ownership Reporting Compliance

Based on our review of Forms 3, 4 and 5 and amendments thereto in our possession and written representations furnished to us, we believe that during 2015 all reports for our executive officers and Directors that were required to be filed under Section 16 of the Securities Exchange Act of 1934 were filed on a timely basis.

 

Johnson & Johnson 2016 Proxy Statement  •  23


Table of Contents

 

 

 

 

 

 

 

 

 

 

 

 


Before you vote, we urge you to read the “Compensation Discussion and Analysis” section found on pages 26 to 47, and the tables in the “Executive Compensation Tables” section found on pages 48 to 64, of this Proxy Statement for additional details on our executive compensation.

 

 

 


Item 2: Advisory Vote to Approve

Named Executive Officer

Compensation

The Board recognizes that executive compensation is an important matter for our shareholders. The guiding principles of our executive compensation philosophy and practice continue to be: Competitiveness; Pay for Performance; Accountability for Short- and Long-Term Performance; and Alignment to Shareholders’ Interests. Overarching these principles is adherence to Our Credo values, which emphasize the manner in which our financial and strategic objectives are achieved. We believe our compensation programs are strongly aligned with the long-term interests of our shareholders.

Pursuant to Section 14A of the Securities Exchange Act of 1934, we are asking you to vote, in an advisory manner, to approve the executive compensation philosophy, policies and procedures described in the Compensation Discussion and Analysis (CD&A) section of the 2016 Proxy Statement, and the compensation of our named executive officers, as disclosed in the 2016 Proxy Statement.

 

 

When casting your 2016 “Say on Pay” vote, we encourage you to consider:

 

    Our continued direct engagement with our shareholders

 

    Our continued evaluation of our executive compensation program

 

    The pay-for-performance alignment built into the design of our incentive programs

 

    The alignment of the 2015 compensation of our Chairman/CEO and our other named executive officers with our company’s 2015 performance

 

As an advisory vote, the results of this vote will not be binding on the Board or the company. However, the Board of Directors values the opinions of our shareholders, and will consider the outcome of the vote when making future decisions on the compensation of our named executive officers and our executive compensation philosophy, policies and procedures.

The Board of Directors has determined to hold annual advisory votes on executive compensation. Accordingly, following our 2016 shareholder meeting on April 28, 2016, the next advisory vote on executive compensation will occur at the 2017 Annual Meeting of Shareholders, unless the Board of Directors modifies its policy on the frequency of holding such advisory votes.

 

 

The Board of Directors recommends that shareholders vote, in an advisory manner, FOR approval of the executive compensation philosophy, policies and procedures described in the CD&A section of the 2016 Proxy Statement, and the compensation of our named executive officers, as disclosed in the 2016 Proxy Statement.

 

 


 

24  •  Johnson & Johnson 2016 Proxy Statement

 



Table of Contents

 

Compensation Committee Report

 

The Compensation & Benefits Committee of the Board of Directors (the Committee) has reviewed and discussed the section of this Proxy Statement entitled “Compensation Discussion and Analysis” with management. Based on this review and discussion, the Committee has recommended to the Board that the section entitled “Compensation Discussion and Analysis,” as it appears on pages 26 through 47, be included in this Proxy Statement and incorporated by reference into the company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2016.

 

Charles Prince, Chairman

William D. Perez

A. Eugene Washington

Ronald A. Williams

 

 

Johnson & Johnson 2016 Proxy Statement  •  25


Table of Contents

Compensation Discussion and Analysis

 

 

TABLE OF CONTENTS

 

 

 

EXECUTIVE SUMMARY

     27   

Key Performance and Compensation Highlights

     27   

2015 Company Performance

     28   

Key Features of Our Executive Compensation Program

     30   

Shareholder Outreach and Our Compensation Program

     30   

CEO Performance and Compensation Decisions

     31   

Other Named Executive Officer Performance

     32   

2016 Compensation Decisions for 2015 Performance

     33   

EXECUTIVE COMPENSATION PHILOSOPHY

     36   

Importance of Credo Values in Assessing Performance

     36   

Guiding Principles

     36   

COMPONENTS OF EXECUTIVE COMPENSATION

     36   

Base Salary

     36   

Annual Performance Bonus

     36   

Long-Term Incentives

     37   

Executive Perquisites & Other Benefits

     38   

SETTING COMPENSATION & PERFORMANCE TARGETS

     38   

Use of Peer Groups for Pay and Performance

     38   

Executive Peer Group

     38   

Competitor Composite Peer Group

     40   

Setting Compensation Targets

     41   

COMPENSATION DECISION PROCESS

     41   

Timing

     41   

2015 Compensation Decisions for 2014 Performance

     41   

Individual Performance Assessment

     42   

Range of Awards

     42   

GOVERNANCE OF EXECUTIVE COMPENSATION

     42   

Compensation & Benefits Committee

     42   

Independent Members of the Board of Directors

     43   

Chairman/CEO

     43   

Independent Compensation Consultant

     43   

ADDITIONAL INFORMATION CONCERNING EXECUTIVE COMPENSATION

     44   

Use of Tally Sheets

     44   

Limited Employment Arrangements and Agreements

     44   

Stock Ownership Guidelines for Named Executive Officers

     44   

Executive Compensation Recoupment Policy

     45   

Tax Impact on Compensation

     45   

2015 Update on Performance of Performance Share Unit Awards versus Goals

     46   

 

26  •  Johnson & Johnson 2016 Proxy Statement


Table of Contents

Executive Summary

 

 

Consistent with our long-term strategy, we met, or exceeded, our 2015 financial goals and executed against our enterprise priorities for long-term value creation.

 

 

 

KEY PERFORMANCE AND COMPENSATION HIGHLIGHTS

 

•   Upheld Our Credo values by prioritizing the needs and well-being of our stakeholders:

 

  Patients, consumers, and health care professionals

 

  Employees

 

  Communities in which we live and work

 

  Shareholders

 

•   Executed against our near-term priorities in 2015, consistent with our long-term strategic plan:

 

  Exceeded our adjusted operational earnings per share (EPS) growth goal and met our operational sales and free cash flow goals.*

 

  Our Pharmaceutical business: exceeded its operational sales goals and delivered strong financial results; continued to strengthen its industry-leading innovation pipeline; and received approval for new medicines including YONDELIS®, INVEGA TRINZA™ and DARZALEX™ and important line extensions.

 

  Our Consumer business: exceeded its operational sales goals; expanded market share in Oral Care and US OTC; and delivered solid operational growth in emerging markets with double digit growth in Brazil, India and Russia. Challenges in China impacted results for both Baby and Beauty.

 

  Our Medical Devices business did not meet its operational sales goals. We achieved strong operational sales growth in endocutters, biosurgicals, and electrophysiology, but underachieved in orthopaedics, vision care, and energy. We integrated the Global Orthopaedics and Global Surgery groups and initiated a restructuring, positioning us to operate at scale with large health systems and accelerate our pace of innovation in the evolving healthcare landscape.

 

•   Advanced our long-term strategic growth drivers:

 

  Partially met our Creating Value through Innovation objectives. We gained or held share in 11 of 19 key product platforms and exceeded sales growth targets in 8 of 19 of them.

 

  Met our Excellence in Execution (portfolio, organizational effectiveness, quality, and supply) objectives, by actively re-shaping our portfolio and completing divestitures of a number of businesses and brands (e.g., Cordis, Nucynta®, and Splenda®). All three McNeil facilities successfully received FDA notices of conformity.

 

  Partially met our Global Reach with Local Focus objectives. We had good overall operational sales growth against our goals. However, we did not meet our operational sales growth goal in the developing markets due to significant slow-downs in China, Russia, and Brazil.

 

  Exceeded our Leading with Purpose (talent, engagement, and reputation) objectives, strengthening our leadership talent pipeline, advancing diversity, exceeding employee engagement benchmarks, and maintaining our top quartile reputational standings.

 

•   Received strong support for our named executive officer compensation in our 2015 “Say on Pay” vote – 95% in favor

 

  

 

 

2015 FINANCIAL RESULTS*

 

OPERATIONAL SALES GROWTH

 

1.8%

 

FREE CASH FLOW

 

$15.8B

 

ADJUSTED OPERATIONAL EPS

GROWTH

 

5.8%

  

 

LOGO

  

 

 

25%

of 2015 sales from products launched

in the past 5 years

 

  

CEO Pay Decisions

 

  Annual Bonus: 100% of target

 

  LTI Award: 110% of target

 

  Salary: No Increase

 

Total Direct Compensation

 

  2015: $18,141,454

 

  2014: $20,253,820

 

(See page 31 for details)

 

  

 

 

32

Consecutive

years of

adjusted

operational

earnings

increases*

 

 

  

 

 

53

Consecutive

years of

dividend

increases

 

* Non-GAAP measures: see page 29 for details on non-GAAP measures.

 

Johnson & Johnson 2016 Proxy Statement  •  27


Table of Contents

2015 COMPANY PERFORMANCE

 

    Our overall performance in 2015 was consistent with our long-term strategic plan as we executed on the     near-term priorities we established for the year. In 2015, we:

 

•      Exceeded our adjusted operational EPS goal and met our operational sales and free cash flow goals.(1)

 

•      Advanced our long-term strategic growth drivers: Creating Value through Innovation; Excellence in Execution; Global Reach with Local Focus; and Leading with Purpose.

 

Performance Against Our Financial Goals(1)

 

    Met our operational sales growth goal

 

    Met our free cash flow goal

 

    Exceeded our total adjusted operational EPS growth goal

 

LOGO

 

 

Financial Objective(1)   Goal   2015 Results

2015 Operational Sales Growth

          1.0% - 2.0%                   1.8%        

2015 Free Cash Flow

          $15B - $16B                   $15.8B        

2015 Total Adjusted Operational EPS Growth

          2.3% - 4.7%                   5.8%        

 

(1) Non-GAAP measures; see page 29 for details on non-GAAP performance measures.

Performance Against Our Long-Term Strategic Growth Drivers

 

  Partially met our Creating Value through Innovation objectives

 

  In 2015, 25% of our sales were from new products launched in the past five years. Our in-line portfolio performance was solid, as we gained or held share in 11 of 19 key product platforms. 8 of the 19 key product platforms exceeded our sales growth targets. We advanced our pipeline and delivered on over 80% of our key milestones.

 

28  •  Johnson & Johnson 2016 Proxy Statement


Table of Contents
   

Met our Excellence in Execution (portfolio, organizational effectiveness, quality, and supply) objectives

We actively reshaped our portfolio and completed divestitures of several non-strategic businesses and brands in 2015. We continued to roll out our new functional support model, Enterprise Standards and Productivity, and delivered our savings goal for the year. We delivered strong performance in most quality metrics and all three McNeil facilities successfully received FDA notices of conformity.

 

   

Partially met our Global Reach with Local Focus (global sales growth) objectives

In 2015, we had good overall operational sales growth against our goals. However, we did not achieve our operational sales growth goal in developing markets due to significant slow-downs in China, Russia, and Brazil.

 

   

Exceeded our Leading with Purpose (talent, engagement, and reputation) objectives

We have made significant strides in: strengthening our leadership pipeline; advancing diversity; retaining critical talent; and exceeding benchmarks on employee engagement measures. We maintained our reputational standings, continuing to rank among the top 10 in Barron’s list of “Most Respected Companies” and ranking as the highest Pharmaceutical company on Fortune’s list of “The World’s Most Admired Companies”.

 

    Details on Non-GAAP Performance Measures

 

   

Operational Sales Growth: Operational Sales Growth is the sales increase due to volume and price, excluding the effect of currency translation. As set forth on page 10 of the “Management’s Discussion and Analysis” section of our Annual Report on Form 10-K for the fiscal year ended January 3, 2016 (2015 Form 10-K), our 2015 Operational Sales Growth was 1.8%, excluding currency translation of (7.5)%.

 

 

   

Free Cash Flow: Free cash flow is the net cash from operating activities less additions to property, plant and equipment. As set forth in the Consolidated Statements of Cash Flows on page 33 of our 2015 Form 10-K, cash flows from operating activities was $19.3 billion, and additions to property, plant and equipment were $3.5 billion. ($19.3 billion – $3.5 billion = $15.8 billion.)

 

 

   

Adjusted Operational EPS Growth: Adjusted EPS and Adjusted Operational EPS are non-GAAP financial measures. Adjusted EPS excludes special items and intangible amortization expense as set forth in Exhibit 99.2O to the company’s Current Report on Form 8-K dated January 26, 2016 and in “Reconciliation of Non-GAAP Financial Measures” of our 2015 Annual Report included in our proxy materials. Adjusted Operational EPS Growth also excludes the effect of currency translation. The following is a reconciliation of Diluted EPS (the most directly comparable U.S. GAAP measure) to Adjusted EPS and Adjusted Operational EPS:

 

 

     

2015 Actual      

$ per share      

    

% Change vs.   

Prior Year*   

 

Diluted EPS

Special Items and Intangible Amortization Expense

    

 

$5.48

0.72

  

  

        

Adjusted EPS

Currency Translation

    

 

6.20

0.56

  

  

     (3.0 )% 

Adjusted Operational EPS

     6.76         5.8

 

  * Prior year Adjusted EPS = $6.39

 

Johnson & Johnson 2016 Proxy Statement  •  29


Table of Contents

KEY FEATURES OF OUR EXECUTIVE COMPENSATION PROGRAM

 

The Committee believes that the executive compensation program includes key features that align the interests of the named executive officers and Johnson & Johnson’s long-term strategic direction with shareholders and does not include features that could misalign their interests.

 

   

 

What We Do

 

ü       Align CEO pay with company performance

 

ü       Use long-term incentives to link the majority of Named Executive Officer pay to company performance

 

ü       Balance short-term and long-term incentives

 

ü       Cap incentive awards

 

ü       Require Named Executive Officers to own significant amounts of company stock

 

ü       Have a compensation recoupment policy applicable to our Named Executive Officers

 

ü       Actively engage with our shareholders

 

ü       Use an independent compensation consultant reporting directly to the Compensation Committee

 

  

 

What We Don’t Do

 

LOGO     No automatic or guaranteed annual salary increases

 

LOGO     No guaranteed bonuses or long-term incentive awards

 

LOGO     No above-median targeting of executive compensation

 

LOGO     No change-in-control benefits

 

LOGO     No tax gross ups (unless they are provided pursuant to our standard relocation practices)

 

LOGO     No option repricing without shareholder approval

 

LOGO     No hedging of company stock

 

LOGO     No long-term incentive backdating

 

LOGO     No dividend equivalents on unvested long-term incentives

 

 

SHAREHOLDER OUTREACH AND OUR COMPENSATION PROGRAM

 

When casting your 2016 Say on Pay vote, we encourage you to consider:

 

•  Our continued direct engagement with our shareholders

 

•  Our continued evaluation of our executive compensation program

 

•  The pay-for-performance alignment built into the design of our incentive programs

 

•  The alignment of the 2015 compensation of our Chairman/CEO and our other named executive officers with our company’s 2015 performance

 

In 2015, we held an annual advisory vote to approve named executive officer compensation, commonly known as   

“Say on Pay”. Approximately 95% of the votes cast voted in favor of our executive compensation program as disclosed in our 2015 Proxy Statement. We believe that this continued strong support for the named executive officer compensation resulted from our direct engagement with our shareholders and the changes we made to our executive compensation program over the past several years.

 

During 2015, we continued our shareholder outreach on our executive compensation program. Our Lead Director, Compensation & Benefits Committee Chair, and members of senior management had discussions with a diverse mix of U.S. and international institutional shareholders on our executive compensation program.

    LOGO     

 

We regularly consider the feedback from our shareholders and we continue to evaluate our executive compensation program.

   

 

30  •  Johnson & Johnson 2016 Proxy Statement


Table of Contents

    

CEO PERFORMANCE AND COMPENSATION DECISIONS

 

LOGO

 

             Alex Gorsky              

 

Chairman, Board of Directors; Chief Executive Officer

 

Performance:

 

The Board based its assessment of Mr. Gorsky primarily upon its evaluation of the company’s performance. The company met, or exceeded, its financial goals and executed against its strategic priorities in 2015 under Mr. Gorsky’s leadership, as summarized under “2015 Company Performance” on pages 28 and 29, and the Board approved compensation for 2015 reflecting this performance.

 

2016 CEO Compensation Decisions for 2015 Performance:

 

The Board’s compensation decisions for Mr. Gorsky reflect the Board’s assessment of his 2015 performance. The Board recognized Mr. Gorsky’s 2015 performance by awarding him an annual performance bonus at 100% of target and long-term incentives at 110% of target. After reviewing market data and other factors, the Board kept Mr. Gorsky’s salary rate unchanged at $1,600,000 per year.

 

Mr. Gorsky’s total direct compensation for 2015 and, for comparison purposes, his total direct compensation for 2014 are displayed in the table below

 

             2014     2015
            

Amount

($)

   

Percent of

Target

(%)

   

Amount

($)

   

Percent of

Target

(%)

   

Salary Earned

    $  1,500,000          $  1,613,462       
   

Annual Performance Bonus

    3,543,800        135%        2,800,000      100%
   

Long-Term Incentive Awards

    15,210,020        130%        13,727,992      110%
   

Total Direct Compensation

    $20,253,820                $18,141,454       
 

 

The actual pay mix for Mr. Gorsky for 2015 is displayed below.

           
 

                 LOGO

 

 

Please see “2016 Compensation Decisions for 2015 Performance” and “2016 Salary Increases” on pages 33 to 35 for details on the awards, total direct compensation, and base salary increase.

 

Johnson & Johnson 2016 Proxy Statement  •  31


Table of Contents

OTHER NAMED EXECUTIVE OFFICER PERFORMANCE

The Committee based its assessment of each of the other named executives officers upon its evaluation of the company’s performance as well as the individual performance of each named executive officer. Each of the named executive officers contributed to the company’s performance as a member of the Executive Committee. See “2015 Company Performance” on pages 28 and 29 for the Committee’s evaluation of the company’s performance for 2015.

 

 

LOGO

 

Dominic J. Caruso

  

Vice President, Finance; Chief Financial Officer

 

In addition to his contribution to our company’s overall performance, Mr. Caruso:

 

 Drove strong financial and cash flow management, reflected by the organization meeting or exceeding its 2015 business plan for operational sales, adjusted operational EPS, and free cash flow.

 

 Drove focus on capital allocation; clear and effective analysis of merger and acquisition activity; and initiated a $10 billion share buyback program.

 

 Deepened relationships and external partnerships with the financial community and was actively involved in industry coalitions.

 

 Provided strong leadership within the Finance and Procurement functions, including strengthening the talent pipeline in key roles across those functions.

 

See pages 33 to 35 for details on “2016 Compensation Decisions for 2015 Performance.”

 

      
  

LOGO

 

Paulus Stoffels, M.D.

 

  

Chief Scientific Officer; Worldwide Chairman, Pharmaceuticals

 

In addition to his contribution to our company’s overall performance, Dr. Stoffels:

 

 Advanced the impact of our cross-sector R&D: prioritizing portfolio management; sourcing external innovation; and implementing a common global product development organization.

 

 Provided strong leadership within the Pharmaceutical Research & Development organization, as evidenced by the significant growth of our Pharmaceutical pipeline.

 

 Established Johnson & Johnson Global Public Health, an important new group to address the world’s greatest unmet public health needs, and delivered Ebola vaccine ready for emergency use.

 

 Strengthened Johnson & Johnson’s R&D talent pipeline and took on external leadership roles with the World Health Organization, the World Dementia Council, the United Nations Secretary General Panel for Access to Medicine, and TransCelerate BioPharma, the forum for pharmaceutical heads of R&D.

 

See pages 33 to 35 for details on “2016 Compensation Decisions for 2015 Performance.”

 

32  •  Johnson & Johnson 2016 Proxy Statement


Table of Contents

 

LOGO

 

Sandra E. Peterson

  

Group Worldwide Chairman

 

In addition to her contribution to the company’s overall performance, Ms. Peterson:

 

 Provided strong leadership to the Consumer, Vision Care, Diabetes Solutions, Information Technology, and Supply Chain businesses and functions.

 

 Oversaw all three McNeil facilities successfully receiving FDA notices of conformity and led our Consumer and Consumer Medical Devices groups to meet or exceed their operational sales, cash flow, and net income goals.

 

 Led our Supply Chain and Quality groups to deliver on all cost, quality, and reliability metrics, with no new substantive regulatory actions across the total product portfolio.

 

 Led the Information Technology group to: improve its delivery, cost, and speed; execute a new technology partner strategy; and complete a number of strategic partnerships and deals.

 

See pages 33 to 35 for details on “2016 Compensation Decisions for 2015 Performance.”

 

      
  

LOGO

 

Michael H. Ullmann

 

  

Vice President, General Counsel

 

In addition to his contribution to our company’s overall performance, Mr. Ullmann:

 

 Provided strong leadership to the Legal, Compliance, Government Affairs & Policy and Global Security functions.

 

 Led the Law Department in successfully managing a broad portfolio of legal matters, including, prevailing in significant litigation and settling several investigations and disputes on favorable terms.

 

 Oversaw legal support for all licensing, collaboration, acquisition and divestiture transactions.

 

 Provided strong leadership in advancing a diverse talent pipeline in his organization and participating in, and supporting, a wide range of Credo commitment activities and legal and ethics training throughout the company.

 

See pages 33 to 35 for details on “2016 Compensation Decisions for 2015 Performance.”

2016 COMPENSATION DECISIONS FOR 2015 PERFORMANCE

How Compensation Decisions are Reported

Each year, based on the performance assessments of the named executive officers, the Committee determines the salary rate for the upcoming year, the annual performance bonus earned for the prior year’s performance, and long-term incentive awards that are granted in the first quarter of the year for each named executive officer. Decisions regarding these elements and the amounts for 2015 performance are summarized in the tables below. The Committee believes that these tables best summarize the actions taken on the named executive officers’ compensation for the performance year. By contrast, most of the amounts required by the U.S. Securities and Exchange Commission’s (SEC) rules to be reported in the “Summary Compensation Table” on page 48 are the result of compensation decisions from prior years, earnings from prior long-term incentive awards, or participation in long-standing programs.

 

Johnson & Johnson 2016 Proxy Statement  •  33


Table of Contents

2015 Total Direct Compensation

The following table shows the salary paid during 2015 and the annual performance bonus and long-term incentive grants approved on February 8, 2016 for performance in 2015 for each named executive officer.

 

A   B     C     D     E  
Name   Cash     Equity    

Total Direct
             Compensation             

($)

 
 

                        Salary                

     ($)

   

         Annual Performance    
Bonus

($)

   

         Long-Term Incentive    

($)

   

A. Gorsky

    $1,613,462        $2,800,000        $13,727,992        $18,141,454   

D. Caruso

    922,577        1,136,900        4,752,141        6,811,618   

P. Stoffels

    1,158,385        1,144,000        5,834,436        8,136,821   

S. Peterson

    908,654        1,125,000        5,129,953        7,163,607   

M. Ullmann

    645,385        640,000        2,464,040        3,749,425   

Salary (Column B)

The amounts reported in column B represent base salaries paid to each of the named executive officers for the 2015 fiscal year. Salaries earned in fiscal year 2015 are higher than each executive’s annualized base salary due to an additional earnings period that occurred in fiscal year 2015. U.S. salaried employees are paid on a bi-weekly schedule. 27 pay periods fell in fiscal year 2015 rather than the usual 26 pay periods.

Annual Performance Bonus (Column C)

Based on 2015 company performance and individual performance as discussed on pages 28 to 29 and 31 to 33, the Board and the Committee awarded annual performance bonuses on February 8, 2016 (which were paid in 2016) at 100% of target for all of the named executive officers. See the “Grants of Plan-Based Awards” table on page 53 for the target bonus amounts.

Long-Term Incentive Awards (for 2015 performance) (Column D)

The Board and Committee granted the following long-term equity incentive awards on February 8, 2016 (ranging from 110% to 120% of target) to the named executive officers based on his or her 2015 performance and impact on the company’s long-term results, competitive market data, relative duties and responsibilities, and the individual’s long-term potential within the organization. These awards included Performance Share Units (PSUs), Stock Options, and Restricted Share Units (RSUs).

 

Name

  PSUs Granted(1)     Options Granted(2)     RSUs Granted(3)     Total(4)  
  (#)     ($)     (#)     ($)     (#)     ($)     ($)  

A. Gorsky

    73,947        $6,863,982        411,264        $4,118,398        29,579        $2,745,612        $13,727,992   

D. Caruso

    25,598        2,376,083        142,365        1,425,643        10,239        950,415        4,752,141   

P. Stoffels

    31,428        2,917,241        174,787        1,750,317        12,571        1,166,878        5,834,436   

S. Peterson

    27,633        2,564,978        153,685        1,539,002        11,053        1,025,973        5,129,953   

M. Ullmann

    13,273        1,232,040        73,817        739,203        5,309        492,797        2,464,040   

 

(1) 

The estimated grant date fair value used to determine the number of PSUs granted was $92.823. The estimated grant date fair value per PSU was assumed to be equal to the estimated grant date fair value per RSU for the purpose of determining the number of PSUs.

 

(2)

The grant date fair value used to determine the number of options granted was $10.014. The option exercise price was $101.87 based on the average of the high and low prices of our common stock on the NYSE on the grant date. The Black-Scholes option valuation model was used to calculate the grant date fair value with the following assumptions: volatility of 15.76% based on a blended rate of historical average volatility and implied volatility based on at-the-money traded Johnson & Johnson stock options with a life of two years; dividend yield of 3.10%; risk-free interest rate of 1.51% based on a U.S. Treasury rate of seven years; and a seven-year option life.

 

(3)

The grant date fair value used to determine the number of RSUs granted was $92.823. The grant date fair value for the RSU awards as calculated under U.S. GAAP was based on the average of the high and low prices of our common stock on the NYSE on the grant date ($101.870) and discounted by an expected dividend yield of 3.10% as dividends are not paid on the RSUs prior to vesting.

 

(4) 

Award values are rounded to the nearest whole share.

 

34  •  Johnson & Johnson 2016 Proxy Statement


Table of Contents

Total Direct Compensation (Column E)

The amounts reported in column E are the sum of columns B through D for each of the named executive officers. The Committee believes that totals in column E best summarize the total direct compensation paid to each named executive officer for the 2015 fiscal year.

2016 Salary Increases

Annual salary increases are neither automatic nor guaranteed. In determining the base salary rates for our named executive officers, the Committee reviewed the individual’s overall performance, compensation, alignment with Our Credo values, complexity and scope of responsibilities, and experience in those roles, as well as market data. The Committee can elect to leave a base salary rate unchanged.

The following table shows the annual base salary rate approved on February 8, 2016 for each named executive officer. The annual base salary rates are all effective as of February 28, 2016.

 

Name    2015 Base Salary Rate ($)        2016 Base Salary Rate ($)    

A. Gorsky

     $1,600,000         No Increase   

D. Caruso

     909,500         No Increase   

P. Stoffels

     1,144,000         No Increase   

S. Peterson

     900,000         $975,000   

M. Ullmann

     640,000         700,000   

 

Johnson & Johnson 2016 Proxy Statement  •  35


Table of Contents

Executive Compensation Philosophy

IMPORTANCE OF CREDO VALUES IN ASSESSING PERFORMANCE

For over 70 years, the Johnson & Johnson Credo has guided us in fulfilling our responsibilities to our customers, employees, communities, and shareholders. In assessing our named executive officers’ contributions to Johnson & Johnson’s performance, the Committee not only looks to results-oriented measures of performance, but also considers how those results were achieved – whether the decisions and actions leading to the results were consistent with the values embodied in Our Credo – and the long-term impact of a named executive officer’s decisions. Credo-based behavior is not something that can be precisely measured; thus, there is no formula for how Credo-based behavior can, or will, impact an executive’s compensation. The Committee and the Chairman/CEO use their judgment and experience to evaluate whether an executive’s actions were aligned with Our Credo values.

GUIDING PRINCIPLES

We design our executive compensation programs to achieve our goals of attracting, developing, and retaining global business leaders who can drive financial and strategic growth objectives and build long-term shareholder value. We use the following guiding principles to design our compensation programs:

 

  Competitiveness: We compare our practices against appropriate peer companies that are of similar size and complexity, so we can continue to attract, retain, and motivate high-performing executives.

 

  Pay for Performance: Annual bonuses and grants of long-term incentives are tied to performance, including the performance of the individual named executive officer and his or her specific business unit or function, as well as the overall performance of our company.

 

  Accountability for Short- and Long-Term Performance: We structure performance-based compensation to reward an appropriate balance of short- and long-term financial and strategic business results, with an emphasis on managing the business for long-term results.

 

  Alignment to Shareholders’ Interests: We structure performance-based compensation to align the interests of our named executive officers with the long-term interests of our shareholders.

Components of Executive Compensation

BASE SALARY

We provide competitive base salaries to our named executive officers in recognition of their job responsibilities. We reference competitive data from companies within our Executive Peer Group that are of similar size and complexity as Johnson & Johnson. In addition to competitive data, we consider individual work experience, alignment with Our Credo values, leadership, time in position, complexity and scope of responsibilities, knowledge, and internal parity among those performing similar jobs when setting salary levels.

ANNUAL PERFORMANCE BONUS

We establish competitive annual performance bonus opportunities as a percent of salary for our named executive officers that:

 

  motivate attainment of short-term goals

 

  link annual cash compensation to achievement of the annual priorities and key objectives of the business, which includes business unit/function and overall company performance

 

  reward individual performance and contribution

Our named executive officers participate in the Executive Incentive Plan (EIP). Under the EIP, payments of annual performance bonuses to named executive officers are prohibited unless Consolidated Net Earnings, as shown in the audited financial statements of our company, are positive. Individual bonuses cannot exceed 0.08% of Consolidated Net Earnings for the Chairman/CEO and any Vice Chairman and 0.04% of Consolidated Net Earnings for the other named executive officers. It is important to note that, while the EIP is designed so that the annual performance bonuses for our named executive officers are fully tax deductible under Section 162(m) of the Internal Revenue Code of 1986, as amended, the bonus amounts actually paid to them are based on consideration of both company and individual performance as discussed on pages 28 to 29 and 31 to 33.

 

36  •  Johnson & Johnson 2016 Proxy Statement


Table of Contents

LONG-TERM INCENTIVES

We establish competitive long-term incentive opportunities as a percent of salary for our named executive officers that:

 

  motivate achievement of long-term operational goals and increased total shareholder return (TSR)

 

  align the interests of participants with shareholders

 

  vary in the size of award, based on competitive market data, relative duties and responsibilities, the individual’s long-term potential within the organization, and his or her performance and impact on the company’s results

 

  vary in the ultimate actual value of the awards based on: (1) the degree to which long-term operational goals are attained and (2) the company’s actual TSR

We provide long-term incentives to our named executive officers using three types of equity awards to provide an appropriate balance of incentives tied to internal measures of performance (sales and EPS) and external measures of success (share price appreciation and equity value). The forms of equity awards and their weightings for our named executive officers are as follows:

 

 

LOGO

 

We granted our named executive officers the following long-term incentives based on competitive market data, relative duties and responsibilities, the individual’s long-term potential within the organization, and his or her performance and impact on the company’s results:

 

  Performance Share Units, which are converted into shares of our common stock after the end of a three-year performance period. Performance share units receive no dividend equivalents and are earned based on performance against the following metrics:

 

    Sales: 1-year Operational Sales for each year of the performance period

 

    Earnings Per Share: 3-year Cumulative Adjusted Operational EPS

 

    Relative Total Shareholder Return: 3-year Compound Annual Growth Rate versus the Competitor Composite Peer Group

 

  Stock Options, which vest 100% on the day following the third anniversary of the grant date, have an exercise price equal to the fair market value of our common stock on the grant date, and expire 10 years from the grant date.

 

  Restricted Share Units, which receive no dividend equivalents and are converted into shares of common stock on the third anniversary of the grant date.

 

Johnson & Johnson 2016 Proxy Statement  •  37


Table of Contents

EXECUTIVE PERQUISITES & OTHER BENEFITS

Our named executive officers received the same employee benefits provided to all other non-union U.S. employees, with the exception of the Executive Life Insurance Program, which is provided to approximately 300 executives. The executive life insurance premiums paid for named executive officers are disclosed in the Summary Compensation Table under “All Other Compensation (Column I)” on page 48 of this Proxy Statement. Effective January 2015, the executive life insurance program was closed to new participants.

In addition to the benefits offered to all employees, our named executive officers were provided benefits intended for business purposes. In some cases, these benefits may be used for personal use, which would then be considered part of the named executive officer’s total compensation and would be treated as taxable income under the applicable tax laws. In 2015, this included: limited access to the company aircraft for personal travel, access to company cars and drivers for commutation and other personal transportation, and reimbursement of home security system related fees.

Setting Compensation & Performance Targets

 

USE OF PEER GROUPS FOR PAY AND PERFORMANCE

The Committee uses two peer groups for executive compensation. The Executive Peer Group is used to assess the competitiveness of the compensation of our named executive officers, and the Competitor Composite Peer Group is used to evaluate the relative performance of our company. As described below, the two peer groups vary because executive compensation levels and practices are influenced by business complexity and company size, and most of our business competitors are much smaller than Johnson & Johnson as a whole, or even as compared to each of our three individual business segments.

 

EXECUTIVE PEER GROUP

The Committee considers relevant market pay practices when setting executive compensation to increase our ability to recruit and retain high performing talent. In assessing market competitiveness, the compensation of our named executive officers is reviewed against executive compensation at a designated set of companies (the “Executive Peer Group”). The Executive Peer Group, which is reviewed by the Committee on an annual basis, consists of companies that generally:

 

  are similar to Johnson & Johnson in terms of certain factors, including one or more of the following: size (i.e., revenue, net income, market capitalization), industry, gross margin, global presence and research and development investment;

 

  have named executive officer positions that are comparable to ours in terms of breadth, complexity and scope of responsibilities; and

 

  compete with us for executive talent.

The Executive Peer Group does not include companies headquartered outside the United States (because comparable compensation data for the named executive officers is not available) or companies in industries whose compensation programs are not comparable to our programs, such as the financial services or oil and gas industries.

 

38  •  Johnson & Johnson 2016 Proxy Statement


Table of Contents

The following table lists the companies in the 2015 Executive Peer Group and their business characteristics, along with Johnson & Johnson’s rankings among these companies, based on financial data reported by each company for the most recent four fiscal quarters. Market capitalization is calculated as of December 31, 2015. Johnson & Johnson ranks in the top half of the peers for revenue and in the top quartile for net income and market capitalization.

For 2015, the Committee has updated the Executive Peer Group to include Microsoft Corporation because its scale and business characteristics fit the criteria for the peer group and removed Honeywell International Inc, because its scale and business characteristics are no longer aligned with the peer group.

Executive Peer Group

 

Company (Ticker Symbol)   Revenue
(Millions)
    Net Income
(Millions)
    Market Cap
(Billions)
    Common
Industry
(Y/N)(1)
  Gross
Margin
(>40%)
  Global
Presence
(International
> 33% of
Sales)
  Business
Complexity(2)
  Innovation
Emphasis
(R&D>  or =
5% of Sales)
3M Company (MMM)     $  30,274        $  4,833        $  93      ü   ü   ü   ü   ü
Abbott Laboratories (ABT)     20,405        4,423        67      ü   ü   ü   ü   ü
The Boeing Company (BA)     96,114        5,176        97              ü   ü    
Bristol-Myers Squibb Company (BMY)     16,560        1,624        115      ü   ü   ü   ü   ü
Cisco Systems, Inc. (CSCO)(3)     49,589        10,333        138          ü   ü   ü   ü
The Coca-Cola Company (KO)     44,294        7,351        187      ü   ü   ü        
Eli Lilly and Company (LLY)     19,959        2,408        93      ü   ü   ü   ü   ü
General Electric Company (GE)     117,386        (6,145     294      ü       ü   ü    
HP Inc. (HPQ)(4)     103,355        4,554        21      ü       ü   ü    
Intel Corporation (INTC)     55,355        11,420        163          ü   ü   ü   ü
International Business Machines Corporation (IBM)     81,741        13,190        134          ü   ü   ü   ü
Merck & Co., Inc. (MRK)     39,498        4,442        148      ü   ü   ü   ü   ü
Microsoft Corporation (MSFT)(3)     88,084        11,408        443      ü   ü   ü   ü   ü
PepsiCo, Inc. (PEP)     63,056        5,452        146      ü   ü   ü        
Pfizer Inc. (PFE)     48,851        7,745        199      ü   ü   ü   ü   ü
The Procter & Gamble Company (PG)(3)     69,374        8,481        216      ü   ü   ü   ü    
United Technologies Corporation (UTX)     56,098        7,608        85              ü   ü    
Johnson & Johnson (JNJ)     70,074        15,409        284      ü   ü   ü   ü   ü
Johnson & Johnson’s Ranking     6th        1st        3rd                       
Johnson & Johnson’s Percentile Rank     71%        100%        88%                       

 

(1) 

Common Industry means that the company is in an industry similar to one of the company’s business segments: pharmaceutical, medical devices and consumer packaged goods.

 

(2) 

Business Complexity means the company is a complex organization with multiple product lines.

 

(3) 

Used last four calendar quarters ending December 31, 2015 for Cisco Systems, Inc., The Procter & Gamble Company and Microsoft Corporation.

 

(4) 

Hewlett-Packard Company (HPQ) sales and net income are as of fiscal year end October 31, 2015; market cap for HPQ is as of December 31, 2015 post spin-off of Hewlett Packard Enterprise (HPE) completed November 1, 2015. Combined Hewlett-Packard Company and Hewlett Packard Enterprise market cap, as of December 31, 2015, is approximated to be $48 billion.

 

Johnson & Johnson 2016 Proxy Statement  •  39


Table of Contents

COMPETITOR COMPOSITE PEER GROUP

 

The Committee compares overall company performance to the weighted performance of its Competitor Composite Peer Group companies. The Competitor Composite Peer Group is a portfolio of companies that compete with one, or more, of our three business segments. The portfolio of companies is evaluated on an ongoing basis and is updated as necessary. These companies are selected based on the following criteria and financial metrics:

 

  Product Relevance (i.e., must be a direct competitor to one of our business segments)

 

  Financial Comparison:

 

    Sales growth

 

    Net income growth and Net income margin

 

    EPS growth

 

    TSR

 

  Global Presence

The following table lists our 2015 Competitor Composite Peer Group companies broken down by business segment.

For 2015, the Competitor Composite Peer Group has been updated to better reflect the industries in which we compete by:

 

  Adding Unilever PLC, Reckitt Benckiser Group plc, Bayer AG (Consumer Healthcare), Roche Holding AG (Diabetes) and Sanofi (Consumer Healthcare)
  Removing Kimberly Clark Corporation, Merck & Co., Inc (Consumer Healthcare), Novartis AG (Consumer Healthcare), Covidien plc, Bayer AG (Diabetes), and Roche Holding AG (Diagnostics)

 

                 
   

COMPETITOR COMPOSITE PEER GROUP

 

   
    Pharmaceuticals   Medical Devices   Consumer    
   

AbbVie Inc.

 

Amgen Inc.

 

AstraZeneca PLC

 

Bristol-Myers Squibb Company

 

Eli Lilly and Company

 

GlaxoSmithKline plc

 

Merck & Co., Inc.

 

Novartis AG

 

Pfizer Inc.

 

Roche Holding AG (Pharm Rx Only)

 

Sanofi

 

Abbott Laboratories (Vascular & Diabetes)

 

Allergan, Inc. (Breast Aesthetics)

 

Boston Scientific Corporation

 

C. R. Bard, Inc.

 

Edwards Lifesciences Corporation

 

Medtronic, Inc.

 

The Cooper Companies, Inc.
(CooperVision)

 

Roche Holding AG (Diabetes)

 

Smith & Nephew plc

 

St. Jude Medical, Inc.

 

Stryker Corporation

 

Zimmer Biomet Holdings, Inc.

 

Beiersdorf AG

 

Bayer AG (Consumer Healthcare)

 

Colgate-Palmolive Company

 

GlaxoSmithKline plc

(Consumer Healthcare)

 

The L’Oréal Group

 

Pfizer Inc.

(Consumer Healthcare)

 

The Procter & Gamble Company

 

Reckitt Benckiser Group plc

 

Sanofi (Consumer Healthcare)

 

Unilever PLC

   
   
       
                 

 

40  •  Johnson & Johnson 2016 Proxy Statement


Table of Contents

SETTING COMPENSATION TARGETS

Compensation Target Setting Process and Pay Position

Before each fiscal year begins, compensation targets are set to ensure that we can compete for talent in the competitive marketplace and to maintain compensation equity and balance among positions with similar responsibilities. An annual review of publicly available information and executive compensation surveys is conducted to determine current Executive Peer Group pay levels.

The Committee reviews market data to understand how our target pay levels compare to benchmark positions, but does not target total compensation to a specific percentile of the Executive Peer Group. In deciding on compensation for individual named executive officers, the Committee considers the individual’s performance and alignment with Our Credo values, our internal bonus and long-term incentive opportunities as a percent of salary, the individual’s roles and responsibilities, and his or her experience in role.

2015 Pay Mix at Target

The pay mix at target for our named executive officers is a result of the compensation targets that emphasize long-term compensation versus short-term compensation. Actual salary levels, annual performance bonus awards and long-term incentive awards will vary based on an individual’s experience, responsibilities, performance, and business unit/function results.

The pay mix at target for Mr. Gorsky, our Chairman/CEO, and the other named executive officers for 2015 is displayed below.

 

 

LOGO

 

     

LOGO

 

Compensation Decision Process

 

TIMING

Compensation for the named executive officers is reviewed and approved by the Committee (and, for the Chairman/CEO, the independent members of the Board) during the first quarter of each, year based on performance during the prior year. 2015 compensation includes base salary earned during the fiscal year, the annual performance bonus earned for 2015 performance and paid in March 2016, and the long-term incentive grants made in February 2016 based on the individual’s long-term potential within the organization, and his or her performance and impact on the company’s results.

 

2015 COMPENSATION DECISIONS FOR 2014 PERFORMANCE

Some of the compensation figures included in the tables in the “Executive Compensation Tables” section of this Proxy Statement were paid (or granted) to the named executive officers in 2015 for performance in 2014. The decisions regarding these awards and payments were discussed in detail in our 2015 Proxy Statement dated

 

Johnson & Johnson 2016 Proxy Statement  •  41


Table of Contents

March 11, 2015. For a full understanding of these decisions, please refer to the sections of our 2015 Proxy Statement entitled “Compensation Discussion and Analysis – CEO Performance and Compensation Decisions” and “Compensation Discussion and Analysis – 2015 Compensation Values for 2014 Performance.”

INDIVIDUAL PERFORMANCE ASSESSMENT

Each of the named executive officers is evaluated against a set of financial and strategic goals. The Committee approves the Chairman/CEO’s annual financial and strategic goals, and the Chairman/CEO approves each of the other named executive officer’s goals, during the first quarter of each year. The Committee reviews the company’s performance against compensation goals on a quarterly basis. At the end of the performance period, the named executive officers are assessed against their goals and how these goals were accomplished.

The individual performance evaluations are based on overall business performance as well as the performance of the business segment or function that they lead. In addition, we consider whether the executive achieves business results in a manner that is consistent with the values embodied in Our Credo. The independent members of the Board of Directors evaluate the performance of the Chairman/CEO. The Committee receives an assessment from the Chairman/CEO for each of the other named executive officers and reviews these assessments, relying on its own judgment and knowledge of our company to evaluate performance for each of the named executive officers.

The individual performance assessments are used by the Committee to determine compensation actions for each of the named executive officers. The Committee reviews individual performance and considers the recommendations provided by the Chairman/CEO to assist it in determining appropriate salary increases, bonuses, and long-term incentives for named executive officers other than the Chairman/CEO.

The Committee determines base salary rates, annual performance bonuses, and long-term incentive awards based on a component-by-component and a total direct compensation basis. The position of salary relative to market data is also taken into account. The performance of each named executive officer is evaluated, and the ultimate compensation decisions are determined, based on the judgment and experience of the independent members of the Board (in the case of the Chairman/CEO) and the Committee (in the case of the other named executive officers). While performance against goals is the most significant factor, the achievement of particular goals does not determine compensation award levels in a formulaic manner. An executive’s previous long-term incentive awards and total equity ownership are not considered when making annual long-term incentive awards.

 

RANGE OF AWARDS

An individual employee has the opportunity to earn from 0% to 200% of the applicable target for annual performance bonuses and long-term incentives based on his or her individual performance. This broad range allows for meaningful differentiation based on performance.

Governance of Executive Compensation

The Committee is responsible for the executive compensation program design and decision-making process. The Committee solicits input from the independent members of the Board of Directors, the Chairman/CEO and other members of management, and its independent compensation consultant, to assist it with its responsibilities. The following summarizes the roles of each of the key participants in the executive compensation decision-making process.

 

COMPENSATION & BENEFITS COMMITTEE

  Acts on behalf of the Board by setting the principles that guide the design of our compensation and benefits programs

 

  Sets the executive compensation philosophy and composition of the Executive Peer Group

 

  Approves the setting of competitive compensation target levels

 

  Sets compensation programs and principles that are designed to link executive pay with company and individual performance

 

  Recommends to the Board the Chairman/CEO’s compensation

 

42  •  Johnson & Johnson 2016 Proxy Statement


Table of Contents
  Reviews and approves compensation decisions recommended by the Chairman/CEO for each of the other named executive officers

 

  Reviews the eligibility criteria and award guidelines for the corporate-wide compensation and benefits programs in which the named executive officers participate

 

INDEPENDENT MEMBERS OF THE BOARD OF DIRECTORS

  Participate in the performance assessment process for the Chairman/CEO

 

  Approve the Chairman/CEO’s compensation

 

CHAIRMAN/CEO

  Reviews and presents to the Committee the performance assessments and compensation recommendations for each of the other named executive officers

 

INDEPENDENT COMPENSATION CONSULTANT

The Committee has retained an independent compensation consultant from Frederic W. Cook & Co., Inc. (FWC) to advise it on executive compensation matters. The Committee has sole authority to negotiate the terms of service, including all fees paid to FWC. The Committee considered the following factors, among others, when assessing the independence of its compensation consultant:

 

  FWC does not provide any other services to the company and reports directly to the Compensation & Benefits Committee

 

  FWC has in place policies and procedures to prevent conflicts of interest

 

  FWC has no significant business or personal relationship with any member of the Compensation & Benefits Committee or any executive officer

 

  Neither FWC nor any principal of FWC owns any shares of our common stock

 

  The amount of fees paid to FWC in relation to FWC’s total revenues

Based on this assessment, the Compensation & Benefits Committee determined FWC’s service as its independent compensation consultant did not raise any conflict of interest concerns. In order to assure continuing independence, the Committee periodically considers whether there should be rotation of its independent compensation consulting firm or the lead consultant on the engagement.

In 2015, the independent compensation consultant:

 

  Attended all Committee meetings, at the request of the Committee

 

  Advised the Committee on market trends, regulatory issues and developments and how they may impact our executive compensation programs

 

  Reviewed the compensation strategy and executive compensation programs for alignment with our strategic business objectives

 

  Advised on the design of executive compensation programs to ensure the linkage between pay and performance

 

  Provided market data analyses to the Committee

 

  Advised the Committee on setting the Chairman/CEO’s pay

 

  Reviewed the annual compensation of the other named executive officers as recommended by the Chairman/CEO

 

Johnson & Johnson 2016 Proxy Statement  •  43


Table of Contents

Additional Information Concerning Executive Compensation

 

USE OF TALLY SHEETS

The Committee reviews compensation tally sheets, prepared by management and reviewed by the Committee’s independent compensation consultant, which present comprehensive data on the total compensation and benefits package for each of our named executive officers. These tally sheets include all obligations for compensation, as well as analyses for hypothetical terminations and retirements to consider the company’s obligations under such circumstances. The Committee does not use the tally sheets to determine the various elements of compensation or the actual amounts of compensation to be approved, but instead uses the tally sheets to evaluate the company’s obligations under the plans.

 

LIMITED EMPLOYMENT ARRANGEMENTS AND AGREEMENTS

Our named executive officers are covered by our Severance Pay Plan that provides separation benefits to certain full-time U.S. employees who are involuntarily terminated. This coverage provides for two weeks base salary for each year of service, with certain guaranteed minimums based on level. The minimum number of weeks of base salary continuance for our named executive officers is 52 weeks. The severance is paid according to our normal payroll cycle and is not available as a lump sum payment.

Pursuant to his offer letter, Dr. Stoffels receives an annual stipend of $320,000 to assist him in the payment of foreign taxes. While serving as a member of the Executive Committee, Dr. Stoffels is considered a U.S. employee even though he is a non-resident of the United States. As a result, Dr. Stoffels is subject to both U.S. taxation and foreign taxation. Dr. Stoffels will not receive any other tax equalization assistance and the stipend is reviewed annually by the Committee and can be terminated at any time.

We do not have employment arrangements or agreements with any of our named executive officers, except for Dr. Stoffels as described above.

STOCK OWNERSHIP GUIDELINES FOR NAMED EXECUTIVE OFFICERS

The company’s stock ownership guidelines for named executive officers are intended to further align their interests with the interests of our shareholders. Under these guidelines, our named executive officers must comply with the following requirements:

 

Name  

Stock Ownership Guideline

as a Multiple of Base Salary

 

2015 Compliance with Stock

Ownership Guidelines?

 

Ownership Threshold

Met?(1)

A. Gorsky

  6x   Yes   Yes

D. Caruso

  3x   Yes   Yes

P. Stoffels

  3x   Yes   Yes

S. Peterson

  3x   Yes   Yes

M. Ullmann

  3x   Yes   Yes

(1)        Executive Officers have five years after first becoming subject to the guidelines to achieve the required ownership thresholds.

Stock ownership for the purpose of these guidelines does not include shares underlying vested or unvested stock options, unvested RSUs or unvested PSUs. Our policy states that any named executive who has not yet met his or her respective ownership thresholds cannot sell net shares on the open market until such ownership level has been met. The Nominating & Corporate Governance Committee of the Board monitors compliance with these guidelines on an annual basis. Company policy prohibits named executive officers from transacting in derivative instruments linked to the performance of the company’s securities.

 

44  •  Johnson & Johnson 2016 Proxy Statement


Table of Contents

EXECUTIVE COMPENSATION RECOUPMENT POLICY

In the event of a material restatement of the company’s financial results, the Board is authorized to take such actions as it deems necessary and appropriate, including the recoupment of all or part of any bonus or other compensation paid to an executive officer. The Board will consider whether any executive officer received compensation based on the original financial statements because it appeared he or she achieved financial performance targets that in fact were not achieved based on the restatement. The Board will also consider the accountability of any executive officer whose acts or omissions were responsible in whole or in part for the events that led to the restatement and whether such actions or omissions constituted misconduct.

In the event of significant misconduct resulting in a violation of a significant company policy, law, or regulation relating to manufacturing, sales or marketing of products that causes material harm to Johnson & Johnson, the Board is authorized to recoup compensation from senior executives. The compensation recoupment policy can be found on our website at www.investor.jnj.com/governance/policies.cfm.

 

TAX IMPACT ON COMPENSATION

The Committee believes that preserving tax deductibility is an important, but not the sole, objective when designing executive compensation programs. In certain circumstances, the company may authorize compensation arrangements that are not fully tax deductible, but which promote other important objectives, such as attracting and retaining global business leaders who can drive financial and strategic growth objectives that maximize long-term shareholder value.

The Committee has reviewed our compensation plans with regard to the deduction limitation under the Omnibus Budget Reconciliation Act of 1993 (the Act) and the final regulations interpreting the Act that have been adopted by the U.S. Internal Revenue Service and the U.S. Department of the Treasury. Based on this review, the Committee believes that a significant portion of the compensation paid to our named executive officers qualifies as “performance-based compensation” for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended, and is, therefore, fully deductible for federal income tax purposes. The portions of compensation paid in 2015 that are not tax deductible include: (1) vesting of restricted share units as they are not deemed to be performance-based awards, (2) salary amounts in excess of $1 million paid to Mr. Gorsky and Dr. Stoffels, (3) dividend equivalents paid on previously awarded CLCs and CLPs that were granted after 1992, and (4) certain perquisites and other benefits paid to certain named executive officers. See “Summary Compensation Table” on page 48 of this Proxy Statement.

 

Johnson & Johnson 2016 Proxy Statement  •  45


Table of Contents

    

2015 UPDATE ON PERFORMANCE OF PERFORMANCE SHARE UNIT AWARDS VERSUS GOALS

In 2015, we completed the first year of the PSU performance period for our 2015-2017 awards, the second year of the PSU performance period for our 2014-2016 awards, and the third year of the PSU performance period for our 2013-2015 awards.

Performance Share Units Earned to Date

The following table shows the PSUs earned to date highlighting the contribution of the performance periods completed in 2015. Based on results through the end of fiscal 2015, 129.1% of the 2013-2015 PSUs, 29.6% of the 2014-2016 PSUs, and 11.8% of the 2015-2017 PSUs have been earned. For the 2014-2016 and 2015-2017 PSUs, the number of PSUs earned based on our adjusted operational EPS and relative TSR performance will be determined after the completion of the 3-year performance periods. The entire PSU awards are subject to 3-year vesting periods, so earned units will only vest after the completion of the 3-year cycle.

Detail for each performance measure for performance periods completed in 2015 follows the table.

 

          PSUs Earned Based on Performance to Date  
Performance Period and Performance Measures       Weight       2013   2014   2015   2016   2017       Total  

2013 – 2015 Performance Share Units

                 

Operational Sales

  1/3rd   137.0%   160.5%   106.3%           44.9%   

Cumulative Adjusted Operational EPS

  1/3rd   153.6%           51.2%   

Relative TSR

  1/3rd   99.0%           33.0%   

Total

                                129.1%   
   

2014 – 2016 Performance Share Units

                 

Operational Sales

  1/3rd     160.5%   106.3%   TBD 2016         29.6%   

Cumulative Adjusted Operational EPS

  1/3rd     TBD 2014-2016         0.0%   

Relative TSR

  1/3rd     TBD 2014-2016         0.0%   

Total

                                29.6%   
   

2015 – 2017 Performance Share Units

                 

Operational Sales

  1/3rd       106.3%   TBD 2016   TBD 2017       11.8%   

Cumulative Adjusted Operational EPS

  1/3rd       TBD 2015-2017       0.0%   

Relative TSR

  1/3rd       TBD 2015-2017       0.0%   

Total

                                11.8%   

PSU Performance versus Goals for Performance Periods Completed in 2015

The following table shows the company’s performance for performance periods completed in 2015.

 

     Fiscal Year 2015 Operational Sales
Goals
    Fiscal Year 2013 – 2015 Cumulative
Adjusted Operational EPS Goal
    Fiscal Year 2013 – 2015 Relative TSR
Goal
 
Level(1)  

Operational Sales

($ Millions)

   

PSUs Earned

(% of target)

    Cum. Adj. Op.
PSU EPS Goal
   

PSUs Vesting

(% of target)

    Relative TSR Goal    

PSUs Vesting

(% of target)

 

Maximum

    $79,220        200     $18.28        200     10.0 Pts        200

Target

    75,450        100        16.62        100        0.0 Pts        100   

Threshold

    71,680        50        14.96        50        (10.0) Pts        50   

<Threshold

    < 71,680        0        < 14.96        0        < (10.0) Pts        0   

Result

    $75,687        106.3 %      $17.51        153.6 %      (0.2) Pts        99.0 % 

 

(1) Non-GAAP measures; see page 47 for details on non-GAAP PSU performance measures.

Note: If performance falls between threshold and target or between target and maximum, the vesting percentage is determined by the Committee based on straight-line interpolation; provided, however, that no payout will be made with respect to a performance objective if the threshold level of performance is not attained for the objective.

 

46  •  Johnson & Johnson 2016 Proxy Statement


Table of Contents

 Details on Non-GAAP PSU Performance Measures

 

   

2015 Operational Sales Performance versus the PSU Goal: Operational sales growth is the sales increase due to volume and price, excluding the effect of currency translation. The following is a reconciliation of operational sales to reported sales (the most directly comparable GAAP measure).

 

     ($ millions)

2015 Reported Sales

  $70,074

Currency Translation

  5,613

2015 Operational Sales

  $75,687

 

   

2013-2015 Cumulative Adjusted Operational EPS Performance versus the PSU Goal: 2013-2015 Cumulative Adjusted Operational EPS is total EPS for the period adjusted to exclude:

 

   

Special items as disclosed in reconciliation tables for fiscal years 2013, 2014, and 2015 as shown in the following table (Intangible amortization expense is not excluded for the 2013-2015 PSUs):

 

     ($)  

2013

    $0.71   

2014

    0.27   

2015

   

Special items and intangible amortization expense

Intangible amortization expense

Special items included in intangible amortization expense

   

 

 

0.72

(0.39)

0.08

  

  

  

2013 – 2015 Total

    $1.39   

 

   

The effect of changes in currency exchange rates

 

   

Plan adjustments: (1) Significant acquisitions, divestitures, share repurchases, and changes in accounting rules or tax laws that impact adjusted operational EPS results by more than 1%; and (2) earnings from products that were not approved when the targets were set

The following is a reconciliation of 2013-2015 cumulative reported EPS to cumulative adjusted operational EPS.

 

     ($)  

Reported EPS

    $15.99   

Special Items

    1.39   

Non-GAAP EPS

    17.38   

Currency Translation

    0.49   

Plan Adjustments

    (0.36)   

Cumulative Adjusted Operational EPS

    $17.51   

 

   

2013-2015 Relative TSR Performance versus the PSU Goal: TSR from January 1, 2013 to December 31, 2015 (36 months) was 16.9% for Johnson & Johnson and 17.1% for the Peer Composite: 16.9 – 17.1 = (0.2) percentage points (Pts).

 

Johnson & Johnson 2016 Proxy Statement  •  47


Table of Contents

Executive Compensation Tables

Summary Compensation Table

The following table provides information concerning the compensation of our Chief Executive Officer, Chief Financial Officer and the three other most highly compensated executive officers for fiscal 2015 and, for those executive officers who were named in the 2015 and 2014 Proxy Statements, for fiscal 2014 and 2013. For a complete understanding of the table, please read the narrative disclosures that follow the table.

 

A   B   C     D     E     F     G     H     I     J  
Name and Principal
Position
  Year  

Salary

($)

   

Bonus

($)

   

Stock
Awards

($)

   

Option
Awards

($)

   

Non-Equity
Incentive Plan
Compensation

($)

   

Change in
Pension Value

and Non-
Qualified
Deferred
Compensation
Earnings

($)

   

All Other
Compensation

($)

   

Total

($)

 

Alex Gorsky(1)

  2015     $ 1,613,462      $ 0      $ 10,693,427        $ 4,562,998      $ 4,009,536      $ 2,714,268      $ 202,175     

 

$

 

23,795,866

 

  

Chairman/CEO   2014     1,500,000        0        9,467,380        4,168,139        5,018,779        4,606,142        228,866        24,989,306   
    2013

 

   

 

1,453,846

 

  

 

   

 

0

 

  

 

   

 

5,988,975

 

  

 

   

 

2,669,999

 

  

 

   

 

4,867,361

 

  

 

   

 

1,739,000

 

  

 

   

 

191,779

 

  

 

   

 

16,910,960

 

  

 

Dominic Caruso

  2015     922,577        0        3,497,099        1,458,603        2,772,796        925,536        112,789     

 

 

 

9,689,400

 

  

VP, Finance, CFO   2014     878,115        0        3,271,853        1,332,376        3,234,152        1,511,238        121,299        10,349,033   
  2013

 

   

 

842,308

 

  

 

   

 

0

 

  

 

   

 

2,663,229

 

  

 

   

 

1,139,999

 

  

 

   

 

3,222,868

 

  

 

   

 

252,000

 

  

 

   

 

112,911

 

  

 

   

 

8,233,315

 

  

 

Paulus Stoffels

  2015     1,158,385        0        4,208,874        1,823,246        2,172,098        1,022,024        401,118     

 

 

 

10,785,745

 

  

Chief Scientific Officer;   2014     1,075,423        0        10,690,520        1,307,669        2,573,450        2,267,167        425,088        18,339,317   

Worldwide Chairman, Pharmaceuticals

 

  2013     952,923        0        2,580,468        1,109,999        2,416,809        357,000        404,802        7,822,001   

Sandra Peterson

  2015     908,654        0        3,504,177        1,574,621        1,125,000        367,000        147,000     

 

 

 

7,626,452

 

  

Group Worldwide   2014     841,346        0        2,833,545        1,368,001        1,400,000        451,000        192,714        7,086,606   
Chairman   2013

 

    800,000        1,900,000        635,867        299,998        1,200,000        274,000        527,396        5,637,261   

Michael Ullmann

  2015     645,385        0        1,962,425        819,002        1,162,936        1,051,480        35,125     

 

 

 

5,676,353

 

  

VP, General   2014     591,346        0        1,615,191        721,877        1,502,105        1,494,001        36,171        5,960,691   
Counsel   2013

 

    542,308        0        1,390,982        656,248        1,348,953        394,000        30,845        4,363,336   

(1)    Mr. Gorsky became our Chief Executive Officer and Chairman of the Executive Committee on April 26, 2012 and our Chairman of the Board on December 28, 2012.

        

Salary (Column C)

The amounts reported in column C represent base salaries paid to each of the named executive officers for the listed fiscal year. Salaries earned in fiscal year 2015 are higher than each executive’s annualized base salary due to an additional earnings period that occurred in fiscal year 2015. U.S. salaried employees are paid on a bi-weekly schedule. 27 pay periods fell in fiscal year 2015 rather than the usual 26 pay periods.

Bonus (Column D)

The amounts reported in column D represent a cash sign-on bonus paid in two installments to Ms. Peterson. Ms. Peterson joined our company on December 1, 2012 as Group Worldwide Chairman and a member of the Executive Committee. Ms. Peterson received the cash bonus as part of the sign-on package that was intended to make her whole for the amounts she forfeited from her prior employer due to joining the company.

Stock Awards (Column E)

The amounts reported in column E represent the aggregate grant date fair value of Performance Share Unit (PSU) and Restricted Share Unit (RSU) awards. The 1/9th of the 2013–2015 and 2014–2016 PSUs that was based upon the achievement of 2015 sales goals was considered granted in 2015 in accordance with U.S. GAAP (and is included in the amounts in column E).

 

48  •  Johnson & Johnson 2016 Proxy Statement


Table of Contents

The number and value of the PSUs assuming achievement at (i) threshold performance, (ii) target performance and (iii) maximum performance at 200% is set forth below:

 

Name        Performance Share Units  
      Units     Grant Date Fair Value  
  Award  

Threshold

(#)

   

Target

(#)

   

Maximum

(#)

   

Threshold

($)

   

Target

($)

   

Maximum

($)

 

A. Gorsky

  2015-2017 PSU     0        64,487        128,974        $0        $6,031,921        $12,063,841   
    2014-2016 PSU     0        9,367        18,734        0        884,451        1,768,902   
    2013-2015 PSU     0        7,548        15,096        0        735,062        1,470,124   

D. Caruso

  2015-2017 PSU     0        20,614        41,228        0        1,928,172        3,856,343   
    2014-2016 PSU     0        2,994        5,988        0        282,699        565,399   
    2013-2015 PSU     0        3,223        6,446        0        313,872        627,744   

P. Stoffels

  2015-2017 PSU     0        25,768        51,536        0        2,410,261        4,820,523   
    2014-2016 PSU     0        2,939        5,878        0        277,506        555,013   
    2013-2015 PSU     0        3,138        6,276        0        305,594        611,188   

S. Peterson

  2015-2017 PSU     0        22,254        44,508        0        2,081,572        4,163,145   
    2014-2016 PSU     0        3,074        6,148        0        290,253        580,506   
    2013-2015 PSU     0        848        1,696        0        82,582        165,165   

M. Ullmann

  2015-2017 PSU     0        11,574        23,148        0        1,082,597        2,165,194   
    2014-2016 PSU     0        1,622        3,244        0        153,152        306,305   
    2013-2015 PSU     0        1,855        3,710        0        180,649        361,298   

Option Awards (Column F)

The amounts reported in column F represent the aggregate grant date fair value of stock option awards. The grant date fair values have been determined based on the assumptions detailed on pages 53 to 55 under the “Grants of Plan-Based Awards” table, in accordance with U.S. GAAP in the listed fiscal year.

Non-Equity Incentive Plan Compensation (Column G)

The amounts reported in column G represent the aggregate dollar value for each of the named executive officers of the annual performance bonus for the listed fiscal year, Certificates of Long-Term Compensation (CLCs) and Certificates of Long-Term Performance (CLPs) that vested in the listed fiscal year, and dividend equivalents received during the fiscal year on vested CLCs and CLPs. The specific amounts included in column G are shown below.

 

Non-Equity Incentive Plan Compensation  
Name   Year  

Annual
Performance
Bonus

($)

   

Value of CLC
Units that
Vested in Fiscal

Year

($)

   

Value of CLP
Units that
Vested in Fiscal
Year

($)

   

Value of CLC
Dividend
Equivalents
Earned During
the Fiscal Year

($)

   

Value of CLP
Dividend
Equivalents
Earned During
the Fiscal Year

($)

   

Total

($)

 

A. Gorsky

  2015   $ 2,800,000      $ 0      $ 761,427      $ 354,000      $ 94,109      $ 4,009,536   
    2014     3,543,800        352,440        715,280        331,200        76,059        5,018,779   
    2013     2,880,000        907,440        705,391        310,800        63,730        4,867,361   

D. Caruso

  2015     1,136,900        0        824,240        708,000        103,656        2,772,796   
    2014     1,400,000        313,280        774,286        662,400        84,186        3,234,152   
    2013     1,275,000        491,530        763,582        621,600        71,156        3,222,868   

P. Stoffels

  2015     1,144,000        0        494,927        472,000        61,171        2,172,098   
    2014     1,500,000        117,480        464,931        441,600        49,439        2,573,450   
    2013     1,200,000        302,480        458,504        414,400        41,425        2,416,809   

S. Peterson

  2015     1,125,000        0        0        0        0        1,125,000   
    2014     1,400,000        0        0        0        0        1,400,000   
    2013     1,200,000        0        0        0        0        1,200,000   

M. Ullmann

  2015     640,000        0        157,584        348,100        17,252        1,162,936   
    2014     780,000        234,960        148,033        325,680        13,432        1,502,105   
    2013     660,000        226,860        145,987        305,620        10,486        1,348,953   

Annual performance bonuses for the listed fiscal year were approved by the Committee and paid to the named executive officers in the first fiscal quarter of the following year.

 

Johnson & Johnson 2016 Proxy Statement  •  49


Table of Contents

We no longer grant CLCs and CLPs to our named executive officers. In prior years, CLCs and CLPs were awarded under cash-based long-term incentive plans. Previously granted CLCs and CLPs will continue to vest and be paid out in accordance with their original terms.

The 2015 dollar value of the vested CLCs and CLPs reported in this table were determined using the beginning of year CLC and CLP unit values. See details on CLC and CLP unit values on page 61. The dollar values for fiscal years 2014 and 2013 for the named executive officers were report