In his first year as Johnson & Johnson CEO, Joaquin Duato scored $13.1M payout

Joaquin Duato officially assumed Johnson & Johnson’s CEO position at the start of 2022, moving up from his prior role of vice chairman of the executive committee. But his pay package actually shrank in his first year as the company’s top exec.

Duato collected $13.1 million in total pay last year, compared with $13.8 million in 2021 when he was still former CEO Alex Gorsky’s right hand leading the pharmaceutical and consumer health sectors.

Duato’s pay package was less than half of the $26.7 million Gorsky scored in 2021 in his final year as CEO. Gorsky became J&J’s executive chairman during the CEO transition and handed Duato the board chair role this year.

When Duato moved into the CEO seat in 2022, his salary increased 4.5% to nearly $1.5 million and his cash incentive pay rose 32.8% to $3.1 million. But his equity awards declined by 12% to $8.3 million.

As J&J explained in a securities filing, the CEO’s long-term incentive award was granted in February 2022 based on the company’s business performance in 2021, when Duato had yet to become CEO.

Including the equity awards granted in February this year based on J&J’s 2022 performance, Duato’s 2022 “total direct compensation” rose to $19.9 million, versus $10.4 million in 2021.

Looking at J&J’s business last year, the board found that the company’s currency-adjusted sales and free cash flow both came below internal targets. J&J reported $94.9 billion sales in 2022, up 1.3% versus 2021.

In the pharma sector, several blockbuster products—including immunology drug Remicade, AbbVie-shared blood cancer therapy Imbruvica and prostate cancer med Zytiga—all posted double-digit sales declines last year. Plaque psoriasis treatment Tremfya, multiple myeloma antibody Darzalex and newer prostate cancer drug Erleada were the bright spots in the company's performance.

Duato’s leadership did lead to strategic achievements, J&J said, including having exceeded in its progress with the separation of Kenvue. The consumer health business just filed for an IPO with a plan to complete the spinoff by November this year. But the board said it slightly cut back the annual incentive payments to “align the payout more closely with” J&J’s peers.

On the M&A front, in 2022, J&J beefed up in medtech by splashing out $16.6 billion to acquire Abiomed. The target brought cardiovascular technologies for coronary artery disease and heart failure.

Meanwhile, J&J continues to struggle with thousands of talc lawsuits, although the company’s litigation costs for the consumer franchise in 2022 dropped to about $200 million from $1.6 billion in 2021.

A federal appeals court in January voted down J&J’s bid for a Texas two-step bankruptcy ploy, preventing J&J from clearing itself of the lawsuits. J&J hopes to save billions by channeling all talc suits to a holding company called LTL Management and calling it bankrupt.