Johnson & Johnson is fighting back against investors who suggest CEO William Weldon (photo) is overpaid. Facing critics who are lobbying for a vote against Weldon's pay package, the company defended the CEO's compensation and urged its shareholders to mark their ballots in favor.
J&J disclosed in a SEC filing that it has mailed a defense of Weldon's pay to institutional shareholders. The mailing points out that J&J reduced Weldon's bonus by 45 percent in 2010 because the company's performance was "decidedly mixed," Dow Jones reports. It also contends that J&J has closely tied Weldon's pay to the company's short-term and long-term performance.
"The board believes its compensation decisions clearly demonstrate the link of CEO pay to company performance year-to-year," the filing stated, "as well as the significant proportion of CEO pay that is tied to the long-term performance of the company." Weldon's bonus for 2010 was cut to $1.98 million, and his overall compensation dropped to $28.7 million from $30.8 million, the news service reports.
But some executive-compensation watchdogs have argued that $28.7 million is still a lot for a CEO presiding over a company with as many serious problems as J&J has had over the past two years, including recalls, government probes and plant shutdowns. Institutional Shareholder Services, for instance, said last week that Weldon hasn't done enough to address those problems. "Shareholders are concerned when CEO pay levels continue to be high despite flat returns and financial metrics, and significant ongoing challenges to a company's reputation and industry leadership--as has been the case at JNJ due to product recalls and manufacturing issues," ISS wrote (as quoted by Dow Jones).