Reeling from product recalls that have sapped revenues and investor confidence, Johnson & Johnson last week told employees in a companywide e-mail that about half will receive 90 percent of what they would normally have received due to "mixed performance against our growth targets." J&J employs about 114,000 people, by the way.
The move comes amid ongoing concern - inside and outside the healthcare giant - about the implications of the recalls, which have involved hundreds of millions of over-the-counter products, such as Tylenol, Rolaids, Sudafed and Benadryl (the latest was last week), as well as contact lenses (look here) and surgical devices.
The recalls reflect systemic manufacturing woes that have, for now, shuttered one plant - which resulted in 300 job losses - and prompted speculation another will be closed under a consent decree (read this). Johnson & Johnson, consequently, faces government probes (see here and here) and shareholder lawsuits (read this).
The email, which was reported by The Wall Street Journal, was conveyed by ceo Bill Weldon and five other members of the executive committee, who maintained last year was "generally strong," but that J&J still faces "significant challenges" and "key challenges to the overall reputation" of the company. To calculate bonuses, J&J will use what it calls a '90 percent bonus multiplier,'
A J&J spokeswoman wrote us to say that employees covered by collective bargaining agreements and our sales force are excluded from the bonus decision, and that the multiplier is directly tied to company performance.
6 Comments
This could be indicative of the industry as a whole. I see overhead cuts which include salary reductions and plant closings and/or sales, thereof. Amgen sold their Fremont, California facility (announced today). There's a bit of reduction. And, the FDA is of questionable value as it stands now. They offer no warm feeling or kind anticipation for all the work the drug industry goes to. Even if the drugs are good.
One question--what did compensation look like for Weldon and the 5 other members of the executive committee who signed the email?
....about half will receive 90 percent of what they would normally have received... 10% cut in the bonous does not go far enough. Anyway what is average bonus for its employees?
Elmore,I have never seen any top executive going broke with any kind of adjustment, not even hurting a little. The low end are the salespeople who do all the grunt work and have no access to the corporate jets. The boss did not get where he/she is because of playing fair. The employees hold stock shares that may never raise to par. Most are pretty worthless. On the other hand, the top execs get NEW shares every year and cash out the old. They were given the shares at a low entry point, sometimes at no cost, just an outright gift. They always make out.
Pissed, there is no average bonus for any one company; it's sometimes based on the industry average. Usually, they get what the board comes up with. Bonuses can be changed for just about any reason such as need for more money to expand there product line or buy other companies.
An interesting case re bonuses is that of Microsoft whose employee options were for the most part, worthless. So, Micro cancelled the options and came up with share contributions. That hasn't worked out, either.
i'm a jnj employee and i see what is happening. the little guy gets it up the rear all the time. i was part of the 90% bonus. it is pretty sad when when your performance is recognized as excellent and then they tell you you have to take a cut. all jnj cares about is cutting costs on paper but the real loser is the consumer. sure we will save a little but the consumer Will suffer in the long run.