J&J CEO's hefty retirement package
Unlike many Americans, Bill Weldon has nothing to fear from retirement.
Bill Weldon is stepping down next month as Johnson & Johnson's (JNJ) CEO, but he will remain chairman of the board. When he eventually retires from the chairman position, he stands to collect a package currently valued at $143.5 million. As Napoleon Dynamite would put it: "sweet!"
Weldon's package, as reported by Dow Jones based on the company's filing, breaks down to two main components. The first is accumulated-pension benefits valued at $48.4 million. The second is accumulated deferred compensation, which amounts to $95.1 million.
Weldon's retirement package is somewhat difficult to swallow for several reasons.
Plagued by recalls
The New Brunswick, N.J., health-care giant, which makes everything from Band-Aids to implants to HIV drugs, has suffered from endless recalls of many products over the past few years.
Since 2009, dozens of products have been recalled, including hip replacement DePuy, some prescription drugs and over-the-counter products such as children's Tylenol and Motrin. Just last month, the company recalled infant Tylenol weeks after returning it to market.
The reasons for the recalls were varied, and included labeling mistakes, strange odors, incorrect active medicines and even glass shards in some bottles. Many recalls were concentrated at McNeil Consumer Healthcare unit, but not all. They pointed to severe quality-control problems at a company that once held one of the highest reputations for quality among consumers.
With the recalls, consumer confidence dwindled and sales suffered. The recalls have cost well over $1 billion in lost sales. They also triggered a series of Senate and regulatory investigations. In addition, J&J is spending hundreds of millions to improve its factories. It is also fighting consumer and shareholder lawsuits.
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After all this, Weldon is not only getting this retirement package, but a raise as well. J&J actually raised his performance-based bonus for last year by 55%. His base salary, too, has increased about 3%, or about $50,000, each year since 2009, including in 2012. (His total salary, however, declined by 7% to $26.8 million because other items were lowered.)
The rationale? Weldon "successfully managed our company through a challenging economic environment in 2011," with solid financial results, such as a 5.6% sales growth, and advances in J&J's pharmaceutical pipeline, the company said in the filing. At least the board admitted that while there was progress in addressing manufacturing-quality issues in 2011, more focus on that area is needed.
More generally, the board also said that J&J's "reputation continued to be challenged" last year and that it is "deeply disappointed in our continued challenges to restore a reliable supply of our cancer drug, Doxil."
More to be concerned about
Shareholders cannot be happy. Since the recalls began in the fourth quarter of 2009, J&J shares have risen 8% compared with gains of 40% and 38% in the the Dow Jones industrials ($INDU) and the Standard & Poor's 500 Index ($INX), respectively. Although outperforming the overall market in the last year, shares have been stuck in the mid-$60 range since May.
To add to investors' anxiety, J&J could be on the hook for a settlement as high as $1.8 billion over the marketing of the schizophrenia drug Risperdal for unapproved uses.
Meanwhile, outside of the company, a new poll shows that about 60% of workers report total savings and investments of under $25,000. Weldon's retirement package is more than 5,700 times that. No doubt, he has more than that saved.
In an era of Occupy Wall Street, and with a growing resentment of the 1% and issues of inequality at the forefront of the national debate, this package won't sit well with many.
OH -YEs CEO'S are always the ones that increase the sales. BULL****!!! It is the people on the ground who do the work. I never did something for a boss or CEO. I always did what I did because I had pride and deire to succeed.
Of course today companies want UH -ROBOTS - you know; I tell you what to do and how to do it. You are not suppose to think for yourself.
This CEO is disgusting just like most of the rest like him!!!
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