Johnson & Johnson's reputation may be suffering from the steady drumbeat of consumer-drug recalls, but now, its employees are suffering, too. Specifically, their bonus checks are deflating. All bonus-eligible employees will get only 90 percent of what they would in a year unsullied by poor company performance.
The bonus-cutting move isn't a cost-control tactic, J&J says, but a reflection of what the New York Times called an "annus horribilis." Those repeated recalls, the plant shutdown, the resulting $600 million hit to sales--and the image woes--combined to weigh on J&J's stock, which, as Reuters points out, underperformed the pharma sector. The company failed to meet some of its internal financial goals, too, in part because of pricing pressures in Europe and the still-staggering U.S. economy.
About half of J&J's 114,000 employees are eligible for bonuses, and they've all been notified about the discount. Sales reps and union workers aren't affected. Nor are the bonuses for CEO Bill Weldon (photo) and other executive committee members, but spokesman Jeffrey Leebaw told the Wall Street Journal that the size of their bonuses "will absolutely reflect the overall performance of the company." We'll see those numbers when the proxy statement hits.
- see the Reuters news
- check out the article in the WSJ