Johnson & Johnson hit—and exceeded—all its financial goals in 2018. So why did its top executive take a $9 million-plus pay cut?
Pension value, mostly. Helmsman Alex Gorsky’s compensation for the year totaled $20.1 million, down from $29.8 million in 2017. And the biggest difference was in the accounting for his pension value: A flat zero in the increase column, down from $6.96 million the year before.
But Gorsky also took a $2 million hit to his stock awards, which sank to $10.32 million from $12.35 million in 2017. And he nabbed just $4.32 million in options, down from $5.05 million.
As far as base salary goes, Gorsky actually saw his rise—if only slightly—after a year in which J&J surpassed its sales and EPS growth targets, and nailed strategic goals, including boosting J&J's pipeline and creating value via M&A. His salary inched up by $42,308, reaching $1.64 million.
Gorsky’s other compensation—a category that includes personal use of J&J’s corporate aircraft, a car and driver for personal transportation, and home security-related fees, crept upward as well, to $259,710 from $236,279 in 2017.
And Gorsky wasn’t the only member of the New Jersey drugmaker’s executive team to see his pay fall in 2018. On the contrary, he was in good company—top leaders Paul Stoffels, J&J’s chief scientific officer, and Joaquin Duato, a vice chairman of its executive committee responsible for pharma, consumer health and more, also netted less money for the year than they did in 2017.
In Duato’s case, the difference was a big one, totaling just over $10 million. But he can chalk that up to an outsize bonus in 2017. That $9 million retention award vaulted his total pay that year to $19.36 million.
For 2019, how J&J fares—and how its executives are rewarded—will depend in part on the company’s newer cancer and immunology drugs, which are helping make up for declines from older treatments Zytiga, Tracleer and Remicade.