Like many of its Big Pharma peers, Johnson & Johnson suffered some disappointments in its financial results last year, as COVID-19 shutdowns prompted millions of people to put off health care needs unrelated to the virus. But J&J turned the pandemic into an opportunity to speed a vaccine to market—and that benefited CEO Alex Gorsky.
Gorsky’s 2020 compensation swelled—to the tune of $4.2 million over the 2019 level—hitting a total of $29.58 million, according to a proxy filing.
The pay jump came despite J&J missing both its sales and adjusted earnings-per-share goals. The company recorded sales of $83 billion after taking currency effects into consideration. That was below the $86.2 billion operational goal the board has set, mainly thanks to the medical devices business falling about $4 billion below target.
The decline was mostly blamed on a major drop in the company’s medical devices business, as patients delayed or canceled elective medical procedures during the pandemic.
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But J&J did perform well on some strategic measures that aren’t quantifiable in the short term. Most importantly, the company developed a COVID-19 vaccine, which recently won FDA emergency use authorization. That played into the board's strategy to “look towards the longer term when determining long-term incentive awards for 2021,” Ronald Williams, chair of the compensation and benefits committee, wrote in the securities filing.
Taking the financial and strategic factors together, the board awarded Gorksy long-term incentives at 125% of target, leading to a payment of $18.14 million at grant value. The CEO nabbed a 90.5% payout of his annual incentive that amounted to $2.61 million. Gorsky is also benefiting from a $6.44 million increase in pension values.
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Gorksy most definitely has his work cut out for him this year. J&J is racing to meet the demand for its COVID-19 vaccine, which is growing despite initial worries that many people wouldn’t be willing to take the one-dose shot, due to perceptions that the two-dose mRNA vaccines from Pfizer/BioNTech and Moderna showed higher efficacy numbers in phase 3 trials.
Now J&J is under pressure to ramp up supply of the vaccine. Like other vaccine developers, J&J has reportedly run into a supply issue in Europe ahead of its authorization there.
To help boost supply in the U.S., Merck & Co. has signed on as a manufacturing partner with up to $268.8 million in financial support from the Department of Health and Human Services’ Biomedical Advanced Research and Development Authority. And the Biden administration is expected to make an additional purchase of 100 million doses of the J&J shot.