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.