Johnson & Johnson (NYSE:JNJ) Investor Files Lawsuit Against Directors Over Alleged Breaches Of Fiduciary Duties In Connection With CEO’s Compensation

If you are a current long term investor in shares of Johnson & Johnson (NYSE:JNJ), you have certain options and you should contact the Shareholders Foundation, Inc.

To have your information reviewed for options and to recieve notifications about this case, please use this form. You may also send an email to mail@shareholdersfoundation.com, or call us at (858) 779-1554.
Company Name(s): 
Johnson & Johnson
Case Name: 
Johnson & Johnson Shareholder Derivative Lawsuit 07/20/2012
Case Status: 
Lawsuit Filed
Affected Securities
NYSE: JNJ
Lawsuit Overview
Type of Lawsuit: 
Shareholder Derivative Action
Summary: 

July 24, 2012 (Shareholders Foundation) -- An investor in shares of Johnson & Johnson (NYSE:JNJ) filed a lawsuit against directors over alleged breaches of fiduciary duties in connection with the CEO’s compensation.

The plaintiff claims that the CEO of Johnson & Johnson (NYSE:JNJ), who earned a combined $175million from 2006 to present is grossly overpaid given the "highly publicized compliance failures, recalls and misconduct" at Johnson & Johnson. The plaintiff allegesthat the defendants breached their fiduciary duties by allegedly failing to follow Johnson & Johnson’s executive compensation policies and procedures. The plaintiff says that for purposes of Johnson & Johnson's executive compensation, evaluation of the executive 'performance' includes, among other things, the use of financial metrics, leadership measures, long-term growth measures, and the progress of Johnson & Johnson’s reputation and in these areas Johnson & Johnson has stagnated or suffered under the CEO's leadership.

In fact, while Johnson & Johnson’s Total Revenue rose from $61.58billion for a 12months period ending on Jan. 2, 2011, to $65.03billion for the 12months period ending on Jan. 1, 2012, its Net Income over the same time period declined from $13.33billion to $9.67billion.

In addition, while shares of Johnson & Johnson (NYSE:JNJ) rose from under $58 in July 2010 to as high as over $68 per share in July 2012, shares of Johnson & Johnson (NYSE:JNJ) traded in 2008 as high as $71.33 per share

The plaintiff also alleges that Johnson & Johnson has issued a number of expensive recalls, such as the 2010 recall of 200million of bacteria-tainted Motrin bottles or the recall of 93,000 artificial hips, that have hurt the company's reputation in the last few years. Furthermore, so the plaintiff, Johnson & Johnson’s unlawful marketing and sales of Risperdal alone will cost the company multiple billions of dollars in settlements and/or fine.

Yet, during the same extraordinary six-year period that Johnson & Johnson has experienced stagnant performance and unprecedented reputational harm, its CEO has seen his annual compensation double, from $14.3 million in 2005 to $28.7 million in 2010 to $26.8 million in 2011, so the plaintiff.

Shares of Johnson & Johnson (NYSE:JNJ) closed on July 24, 2012, at $67.35 per share.