SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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Check the appropriate box:
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[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
JOHNSON & JOHNSON
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11:*
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[ ] Check box if any part of the fee is offset as provided by Exchange
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JOHNSON AND JOHNSON
[LOGO]
Notice of Annual Meeting
and Proxy Statement
March 12, 1997
The Annual Meeting of the Shareowners of Johnson & Johnson will be held on
April 24, 1997 at 10:00 a.m. at the Hyatt Regency Hotel, Two Albany Street, New
Brunswick, New Jersey, to:
1. Elect directors;
2. Consider and act upon a proposal to ratify the appointment of Coopers
& Lybrand L.L.P. as the Company's independent auditors; and
3. Transact such other business, including action on a shareowner
proposal, as may properly come before the meeting.
Shareowners are cordially invited to attend the meeting. If you are a
shareowner of record and plan to attend, please complete and return the enclosed
Request for Admission Card. If you are a shareowner whose shares are not
registered in your own name and you plan to attend, please request an Admission
Card by writing to the Office of the Secretary, WH 2132, Johnson & Johnson, One
Johnson & Johnson Plaza, New Brunswick, New Jersey 08933. Evidence of your stock
ownership, which you can obtain from your bank, stockbroker, etc., must
accompany your letter.
By order of the Board of Directors,
PETER S. GALLOWAY
Secretary
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PLEASE SIGN, DATE AND RETURN YOUR PROXY
CARD PROMPTLY IN THE ENCLOSED ENVELOPE
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GENERAL INFORMATION
SHAREOWNERS ENTITLED TO VOTE. Holders of shares of the Common Stock of the
Company of record at the close of business on February 25, 1997 are entitled to
notice of and to vote at the Annual Meeting of Shareowners and at any and all
adjournments of the meeting. Each share entitles its owner to one vote. The
holders of a majority of the shares entitled to vote at the meeting must be
present in person or represented by proxy in order to constitute a quorum for
all matters to come before the meeting. On the record date there were
1,333,553,480 shares outstanding.
Other than the election of directors, which requires a plurality of the
votes cast, each matter to be submitted to the shareowners requires the
affirmative vote of a majority of the votes cast at the meeting. For purposes of
determining the number of votes cast with respect to a particular matter, only
those cast "For" or "Against" are included. Abstentions and broker non-votes are
counted only for purposes of determining whether a quorum is present at the
meeting.
PROXY SOLICITATION. The accompanying proxy is solicited by the Board of
Directors of the Company. In that connection, this Proxy Statement is being
mailed to the shareowners on or about March 12, 1997 concurrently with the
mailing of the Company's 1996 Annual Report. In addition to this solicitation by
mail, several regular employees of the Company may solicit proxies in person or
by telephone. The Company has also retained the firm of Georgeson & Company,
Inc. to aid in the solicitation of brokers, banks, institutional and other
shareowners for a fee of approximately $11,500. All costs of the solicitation of
proxies will be borne by the Company. Shareowners who execute proxies may revoke
them at any time before they are voted by executing a later dated proxy, by
voting by ballot at the meeting or by giving written notice to the Secretary of
the Company. On the accompanying proxy a shareowner may substitute the name of
another person in place of those persons presently named as proxies. In order to
vote, a substitute must present adequate identification to the Secretary before
the voting occurs.
PRINCIPAL SHAREOWNER. As of January 31, 1997, The Robert Wood Johnson
Foundation, located at Princeton Forrestal Center, Plainsboro Township, New
Jersey, was the only shareowner known to the Company to have the power to vote
or to direct the voting and/or the power to dispose or to direct the disposition
of more than 5% of the Company's outstanding Common Stock. On that date the
Foundation was the holder of 71,657,994 shares (5.4%) of the Company's
outstanding Common Stock.
SHAREOWNER PROPOSALS. To be included in the Board of Directors' proxy
statement for the 1998 Annual Meeting of Shareowners, a shareowner proposal must
be received by the Company on or before November 11, 1997. Proposals should be
directed to the attention of the Secretary at the principal office of the
Company, One Johnson & Johnson Plaza, New Brunswick, New Jersey 08933.
ELECTION OF DIRECTORS
NOMINEES. There are 14 nominees for election as directors of the Company to
hold office until the next Annual Meeting and until their successors have been
duly elected and qualified.
If the enclosed proxy is properly executed and received in time for the
meeting, it is the intention of the persons named in the proxy to vote the
shares represented thereby for the persons nominated for election as directors
unless authority to vote shall have been withheld. If any nominee should refuse
or be unable to serve, an event not anticipated, the proxy will be voted for
such person as shall be designated by the Board of Directors to replace such
nominee or, in lieu thereof, the Board of Directors may reduce the number of
directors.
All of the nominees were elected to the Board at the last Annual Meeting
and all are currently serving as directors of the Company. In accordance with
the Board's policy on retirement of directors, Dr. James W. Black is not
standing for re-election.
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Following are summaries of the background and business experience and
descriptions of the principal occupations of the nominees.
GERARD N. BURROW, M.D., Dean of the Yale University
School of Medicine.
Dr. Burrow, 64, was elected to the Board of Directors in
1993 and is a member of the Benefits Committee and the
Science and Technology Advisory Committee. He was named
to his present position at the Yale Medical School in
1992 following service since 1988 as Vice Chancellor for
[PHOTO] health sciences and Dean of the University of
California, San Diego School of Medicine. He previously
served as a Professor and Chairman of the Department of
Medicine at the University of Toronto and as
Physician-in-Chief at Toronto General Hospital following
earlier work in medical education, research and clinical
practice. Dr. Burrow is a member of the Institute of
Medicine of the National Academy of Sciences, the
Society for Clinical Investigation and a Fellow of the
American Association for the Advancement of Science.
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JOAN GANZ COONEY, Chairman, Executive Committee,
Children's Television Workshop.
Mrs. Cooney, 67, was elected to the Board of Directors
in 1978 and is a member of the Compensation Committee
and the Benefits Committee. She co-founded the
Children's Television Workshop as its Executive Director
in 1968 and was named its President-CEO in 1970 and
[PHOTO] Chairman-CEO in 1988. She assumed her present
responsibilities in 1990. The Workshop's activities
include production of the well-known children's
educational television programs Sesame Street, 3-2-1
Contact and Square One T.V. and Ghostwriter. Mrs. Cooney
is a Director of Metropolitan Life Insurance Company,
the Museum of Television and Radio and The Columbia
Presbyterian Medical Center of New York, as well as a
Trustee of the Educational Broadcasting Corporation
(Channel 13/WNET, New York City) and the National Child
Labor Committee.
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JAMES G. CULLEN, Vice Chairman, Bell Atlantic
Corporation.
Mr. Cullen, 54, was elected to the Board of Directors in
September 1995 and is a member of the Compensation
[PHOTO] Committee and the Audit Committee. Mr. Cullen assumed
his present position with Bell Atlantic Corporation in
February, 1995 after having been President since
February of 1993. He was President and Chief Executive
Officer of Bell Atlantic-New Jersey, Inc. from 1989 to
1993. He is a Director of Prudential Life Insurance
Company.
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PHILIP M. HAWLEY, Retired Chairman of the Board and
Chief Executive Officer, The Broadway Stores, Inc.;
Chairman of the Board and Chief Executive Officer,
Krause Furniture, Inc.
Mr. Hawley, 71, was elected to the Board of Directors in
[PHOTO] 1988 and is a member of the Compensation Committee and
the Benefits Committee. He served as Chairman and Chief
Executive Officer of The Broadway Stores, Inc. (formerly
Carter Hawley Hale Stores, Inc.) from 1983 to his
retirement in 1993. In August of 1996 he became Chairman
of the Board and Chief Executive Officer of Krause
Furniture, Inc. Mr. Hawley is also a Director of
Atlantic Richfield Company and Weyerhaeuser Company. He
is a member of the Conference Board and a member of The
Business Council.
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CLARK H. JOHNSON, CMA, Member, Executive Committee; Vice
President, Finance.
Mr. Johnson, 61, was elected to the Board of Directors
in 1988. He was named Chief Financial Officer in 1988
after having been General Controller since 1977. Mr.
[PHOTO] Johnson joined Johnson & Johnson in 1953 and held a
variety of financial positions with several affiliated
companies before being named Assistant Corporate
Controller of Johnson & Johnson in 1975 and General
Controller in 1977. Mr. Johnson serves as a Trustee of
Fairleigh Dickinson University and as President-elect of
the Institute of Management Accountants. He served as
Chairman of the Institute of Certified Management
Accountants and as a Trustee of the Financial Accounting
Foundation.
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ANN DIBBLE JORDAN, Former Director, Social Services
Department, Chicago Lying-In Hospital, University of
Chicago Medical Center.
Mrs. Jordan, 62, was elected to the Board of Directors
in 1981 and is a member of the Audit Committee and the
Public Policy Advisory Committee. She assumed her
[PHOTO] previous responsibilities at Chicago Lying-In Hospital
in 1970 after having served as a Caseworker and then a
Senior Caseworker at the University of Chicago Hospital.
She is also a former Assistant Professor at the
University of Chicago School of Social Service
Administration. She is a Director of Automatic Data
Processing, The Hechinger Company, Salant Corporation
and Travelers Inc. Mrs. Jordan is a Director of The
Phillips Collection, The Child Welfare League and of the
National Symphony Orchestra.
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ARNOLD G. LANGBO, Chairman of the Board and Chief
Executive Officer, Kellogg Company.
Mr. Langbo, 59, was elected to the Board of Directors in
1991 and is a member of the Audit Committee and the
Compensation Committee. Mr. Langbo assumed his present
position with Kellogg Company in January of 1992 after
[PHOTO] having been President and Chief Operating Officer since
December of 1990. Mr. Langbo joined Kellogg Canada Inc.
in 1956 and served in a number of management positions
in Canada and the United States before being named
President of Kellogg International in 1986. Mr. Langbo
is a Director of Kellogg Company and Whirlpool
Corporation. He is also a member of the Advisory Board
of the J. L. Kellogg Graduate School of Management at
Northwestern University and Chairman of the Board of
Trustees of Albion College.
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RALPH S. LARSEN, Chairman, Board of Directors and Chief
Executive Officer; Chairman, Executive Committee.
Mr. Larsen, 58, was elected to the Board of Directors in
1987 and appointed to the Executive Committee in 1986.
He assumed his present responsibilities in 1989. He
joined the Company in 1962 as a manufacturing trainee
with Johnson & Johnson Products, Inc. and was named Vice
[PHOTO] President of Marketing for the McNeil Consumer Products
Company in 1980. He left Johnson & Johnson for two years
as President of Becton Dickinson's Consumer Products
Division and returned to Johnson & Johnson as President
of its Chicopee subsidiary in 1983. Mr. Larsen was
appointed Company Group Chairman in 1986 before being
appointed Vice Chairman of the Executive Committee and
Chairman of a Sector Operating Committee later in 1986.
Mr. Larsen is a Director of Xerox Corporation, The New
York Stock Exchange and AT&T Corp. He is also a Member
of The Business Council and the Policy Committee of The
Business Roundtable. He serves on the Board of the
United Way of Tri-State.
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JOHN S. MAYO, PH.D., President Emeritus, AT&T Bell
Laboratories.
Dr. Mayo, 67, was elected to the Board of Directors in
1986 and is a member of the Science and Technology
Advisory Committee and Chairman of the Public Policy
Advisory Committee. He became President of AT&T Bell
Laboratories in 1991 after having served as Vice
President of Electronics Technology, Executive Vice
President of Network Systems and Senior Vice President,
Network Systems and Network Services. He became
[PHOTO] President Emeritus in 1995. Dr. Mayo is a member of the
National Academy of Engineering and a fellow of the
Institute of Electrical and Electronic Engineers. He is
a member of the Boards of Trustees of Polytechnic
University (Emeritus), the Liberty Science Center
(Chairman), and the Kenan Institute for Engineering,
Technology and Science, and served on the Board of
Overseers for the New Jersey Institute of Technology,
and the Board of Directors of the National Engineering
Consortium, Inc. Dr. Mayo was awarded the National Medal
of Technology in 1990, the Industrial Research Institute
Medal in 1992, the Navy League New York Council
Roosevelts Gold Medal for Science in 1993 and the State
of North Carolina Award in 1995.
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THOMAS S. MURPHY, Former Chairman of the Board and Chief
Executive Officer, Capital Cities/ABC, Inc.
Mr. Murphy, 71, was elected to the Board of Directors in
1980 and is Chairman of the Compensation Committee. He
joined Capital Cities when it was founded in 1954 and
served as Chairman and Chief Executive Officer from 1966
until its acquisition by The Walt Disney Company in
[PHOTO] February 1996. From June 1990 to February 1994 he served
as Chairman of the Board, only. Capital Cities/ABC
operates the ABC Television Network and eight affiliated
television stations, radio networks and radio stations;
provides programming for cable television; is partnered
with international broadcasters in program production
and distribution ventures as well as broadcast and cable
television services overseas; and publishes daily and
weekly newspapers and trade publications. Mr. Murphy is
a Director of The Walt Disney Company and Texaco Inc. He
is Chairman of the New York University Medical Center
Board and a member of the Board of Overseers of Harvard
College.
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PAUL J. RIZZO, Retired Vice Chairman, International
Business Machines Corporation.
Mr. Rizzo, 69, was elected to the Board of Directors in
1982 and is Chairman of the Benefits Committee and a
member of the Audit Committee. He first retired from
[PHOTO] International Business Machines Corporation as Vice
Chairman in 1987, and became Dean of the Kenan-Flagler
Business School at the University of North
Carolina-Chapel Hill. He returned to International
Business Machines Corporation in 1993 as Vice Chairman
and retired from that position in 1994. He is a partner
in Franklin St. Partners, an investment firm. Mr. Rizzo
is a director of The McGraw-Hill Companies, Inc., Ryder
Systems. Inc. and the Morgan Stanley Group.
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MAXINE F. SINGER, PH.D., President of the Carnegie
Institution of Washington.
Dr. Singer, 66, was elected to the Board of Directors in
1991 and is a member of the Science and Technology
Advisory Committee and the Public Policy Advisory
[PHOTO] Committee. Dr. Singer became President of the Carnegie
Institution of Washington in 1988 after serving for over
thirty years at the National Institutes of Health where
she advanced to be Chief of the Laboratory of
Biochemistry at NIH's National Cancer Institute. Dr.
Singer is a member of the National Academy of Sciences,
the American Philosophical Society, the Pontifical
Academy of Sciences and the Governing Board of the
Weizmann Institute of Science.
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ROGER B. SMITH, Retired Chairman of the Board and Chief
Executive Officer, General Motors Corporation.
[PHOTO] Mr. Smith, 71, was elected to the Board of Directors in
1985 and is Chairman of the Audit Committee and a member
of the Benefits Committee. He retired as Chairman of
General Motors Corporation in 1990. He is a member of
the Business Council and serves as a Trustee of the
Alfred P. Sloan Foundation. Mr. Smith also serves on the
Board of Directors of International Paper Company.
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ROBERT N. WILSON, Vice Chairman, Board of Directors and
Vice Chairman, Executive Committee.
Mr. Wilson, 56, was elected to the Board of Directors in
1986. He joined the Company in 1964, served in several
sales and marketing management positions and was
[PHOTO] appointed Company Group Chairman in 1981 and appointed
to the Executive Committee in 1983. He was appointed
Chairman of a Sector Operating Committee in 1985 and was
appointed Vice Chairman of the Board of Directors in
1989. He assumed his expanded responsibilities as Vice
Chairman of the Executive Committee in 1994. Mr. Wilson
is also a Director of U.S. Trust Corporation and Amerada
Hess Corporation.
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STOCK OWNERSHIP/CONTROL
The following table sets forth information regarding beneficial ownership
of the Company's Common Stock owned by each nominee for director and each
executive officer named in the Summary Compensation Table and by all directors
and executive officers as a group. Each of the individuals/groups listed below
is the owner of less than one percent of the Company's outstanding shares,
except as described below. Because they serve as co-trustees of two trusts which
hold stock for the benefit of others, Messrs. Larsen and Wilson "control" an
additional 10,425,828 shares of the Company's stock in which they have no
economic interest. In addition to such shares, the directors and executive
officers as a group own/control a total of 1,738,125 shares, the aggregate of
12,163,953 shares representing approximately 1% of the shares outstanding. All
stock ownership is as of January 31, 1997.
Number of Common Shares Under
Shares Exercisable
Name (1)(2) Options (3)
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Gerard N. Burrow ........................... 6,163
Joan Ganz Cooney ........................... 10,473
James G. Cullen ............................ 2,348
George S. Frazza ........................... 359,492 253,580
Ronald G. Gelbman .......................... 75,394 176,880
Philip M. Hawley ........................... 7,744
Clark H. Johnson ........................... 87,444 285,740
Ann Dibble Jordan .......................... 8,011
Arnold G. Langbo ........................... 10,773
Ralph S. Larsen ............................ 294,059 899,260
John S. Mayo ............................... 40,667
Thomas S. Murphy ........................... 127,403
Paul J. Rizzo .............................. 70,068
Maxine F. Singer ........................... 15,335
Roger B. Smith ............................. 43,019
Robert N. Wilson ........................... 464,884 515,520
All directors and executive
officers as a group (21),
including those named above ................ 1,738,125 2,640,880
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(1) Includes an aggregate of 256,745 Common Stock equivalent units credited to
nonemployee nominees under the Deferred Fee Plan for Nonemployee Directors
and an aggregate of 1,580 Common Stock equivalent units credited to the
named executive officers (1,597 units to all directors and executive
officers as a group) under the Executive Income Deferral Plan.
(2) The shares described as "owned" are shares of the Company's Common Stock
owned by each listed person and by members of his or her household and are
held either individually, jointly or pursuant to a trust arrangement.
(3) Includes shares under options exercisable on January 31, 1997 and options
which become exercisable within 60 days thereafter.
DIRECTORS' FEES, COMMITTEES AND MEETINGS. Directors who are employees of
the Company receive no compensation for their services as directors or as
members of committees. Each director who is not an employee of the Company
receives an award valued at approximately $10,000 in the form of Company Common
Stock upon first becoming a member of the Board of Directors and receives an
annual fee of $65,000 for his or her services as director. Of such annual fee,
$20,000 is required to be deferred in Common Stock equivalent units under the
Deferred Fee Plan for Nonemployee Directors until termination of his or her
directorship. Commencing January 1, 1997, Directors also receive non-retainer
equity compensation each year in the form of a stock option grant. The number of
options granted is determined
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annually and is currently 1,100 shares per person. In addition, directors
receive $5,000 for service on a committee of the Board of Directors, or $8,000
if chairperson of the committee. Nonemployee directors receive a meeting fee of
$1,500 per day for committee meetings held on days other than Board of Directors
meeting days. A director may elect to defer payment of all or a part of the fees
until, or beyond, termination of his or her directorship. Deferred fees (other
than the required deferral referred to above) may earn additional amounts based
either on the increase in value of units under the Certificate of Extra
Compensation Program or on a hypothetical investment in the Company's Common
Stock up to the time of termination of his/her directorship. Deferred fees
beyond termination of directorship can only earn additional amounts based on a
hypothetical investment in the Company's Common Stock. All Common Stock
equivalent units held in each nonemployee director's Deferred Fee Account
receive dividend equivalents.
During the last fiscal year the Board of Directors met seven times. Each
director attended at least 75% of the total meetings of the Board of Directors
and the committees on which they served.
The Board of Directors has a standing Audit Committee and Compensation
Committee. The Board of Directors has no standing Nominating Committee; however,
the Board of Directors serves as a Nominating Committee of the whole. The Board
considers suggestions from many sources, including shareowners, regarding
possible candidates for director. Such suggestions, together with appropriate
biographical information, should be submitted to the Secretary of the Company.
The members of the Audit Committee are Mr. Cullen, Mrs. Jordan, Mr. Langbo,
Mr. Rizzo and Mr. Smith (Chairman). The Audit Committee assists the Board of
Directors in fulfilling its responsibilities of ensuring that management is
maintaining an adequate system of internal controls such that there is
reasonable assurance that assets are safeguarded and that financial reports are
properly prepared; that there is consistent application of generally accepted
accounting principles; and that there is compliance with management's policies
and procedures. In performing these functions, the Audit Committee meets
periodically with the independent auditors, management, and internal auditors to
review their work and confirm that they are properly discharging their
respective responsibilities. In addition, the Audit Committee recommends the
independent auditors for appointment by the Board of Directors. The Audit
Committee met three times during the last fiscal year.
The members of the Compensation Committee are Mrs. Cooney, Mr. Cullen, Mr.
Hawley, Mr. Langbo and Mr. Murphy (Chairman). The primary function of the
Compensation Committee is to review the compensation philosophy and policy of
the Management Compensation Committee, a non-Board committee composed of Messrs.
Larsen (Chairman), Wilson (Vice Chairman), Deyo (Vice President, Administration)
and Johnson (Vice President, Finance) which determines management and executive
compensation and establishes fringe benefit and other compensation policies. The
compensation of the members of the Executive Committee (which includes the
members of the Management Compensation Committee) is determined by the
Compensation Committee. The Compensation Committee is also responsible for the
administration of the Company's stock option plans and is the approving
authority for management recommendations with respect to option grants. During
the last fiscal year there were three meetings of the Compensation Committee.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE OF THE BOARD
The Compensation Committee is comprised entirely of nonemployee,
independent members of the Board of Directors. It is the Compensation
Committee's responsibility to review, recommend and approve changes to the
Company's compensation policies and programs. It is also the Committee's
responsibility to review and approve all compensation actions for the Chief
Executive Officer and members of the Executive Committee.
JOHNSON & JOHNSON COMPENSATION POLICY AND OBJECTIVES
Johnson & Johnson's executive compensation programs are designed to enable
the Company to attract, retain and motivate the high caliber of executives
required for the success of the business. Overall, the intent of Johnson &
Johnson's Executive Compensation Program is to provide compensation
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opportunities which are comparable to the opportunities provided by a select
group of high performing, growth companies similar to Johnson & Johnson. This
objective is achieved through a variety of compensation programs, summarized
below, which support both the current and long term performance of the business.
The primary responsibility of the Company's Chief Executive Officer and
executive officers is to ensure the long-term health and growth of the Company.
This responsibility is summarized in the Johnson & Johnson Credo, which defines
the obligations of Johnson & Johnson employees to strengthen the ethical, human
and business foundations of the Company. The Credo describes the
responsibilities of the Company to its customers and others with whom it does
business, to its employees, to the communities in which the Company has a
presence as well as to the world community, and to its stockholders. The Credo
merges these business and ethical responsibilities by stating: "When we operate
according to these principles, the stockholders should realize a fair return."
The compensation of Johnson & Johnson's Chief Executive Officer is
determined by the Compensation Committee of the Board of Directors based on its
assessment of the Company's financial and non-financial performance against the
background of the factors and principles outlined in the Credo. With respect to
financial performance, the Committee has identified several factors which are
critical to the success of the business, including Sales Growth, Earnings Per
Share (EPS) Growth, increase in Cash Flow, New Product Flow and growth in
Shareowner Value. In evaluating performance against these factors, Johnson &
Johnson's results are compared to results of a premium group of high performing
companies in the consumer, pharmaceutical and professional health care fields
with comparable sales volumes and above average EPS growth rates and financial
strength. These companies include those in the Standard & Poor's Diversified
Health Care Index referred to in the Shareowner Return Performance Graph which
meet these criteria.
Sales Growth is measured as the percentage increase in sales volume from
one year to the next. EPS Growth is assessed in the same manner. Cash Flow is
measured as the Net Cash Flows from Operating Activities as reported in the
Consolidated Statement of Cash Flows. Shareowner Value is measured as the
increase in stock price plus dividend return over a five year period. New
Product Flow is assessed by reviewing the percentage of sales resulting from the
sale of new products introduced in the past five years.
The Compensation Committee believes it is crucial that these financial and
non-financial factors are managed well, in order to ensure superior return to
Johnson & Johnson's shareowners over the long term. Therefore, while performance
in these areas is reviewed on an annual basis, the primary consideration in
assessing performance is Corporate results over a longer period, usually five
years. No specific fixed weighting or formula is applied to these factors in
determining performance. Rather, the Compensation Committee exercises its
judgement in evaluating these factors and in determining appropriate
compensation.
A discussion of 1996 performance reviewed by the Compensation Committee can
be found under "Decisions on 1996 Compensation".
JOHNSON & JOHNSON'S COMPENSATION PROGRAMS
BASE SALARY
The Base Salary for all employees exempt from the Fair Labor Standards Act
(FLSA), which includes executives, is managed through the Johnson & Johnson
Salary Administration Program. Under this Program, increases in Base Salary are
governed by guidelines covering three factors: Merit (an individual's
performance); Market Parity (to adjust salaries of high performing individuals
based on the competitive market); and Promotions (to reflect increases in
responsibility). In assessing Mar?ket Parity, the Company targets to pay base
salaries which are, overall, at the median of the select group of premium
companies referred to above.
These guidelines are set each year and vary from year-to-year to reflect
the competitive environment and to control the overall cost of salary growth.
Individual merit increases are based on performance and can range from 0% to
200% of the merit guideline.
The domestic salary guideline for all exempt employees for 1996 was 4.0%
for merit increases plus 1% for market parity and 1% for promotion adjustments.
The domestic salary guideline for 1997 has been set at 4.0% for merit increases
plus 1% for market parity and 1% for promotion adjustments.
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CASH AND STOCK INCENTIVE COMPENSATION PROGRAMS
To reward performance, Johnson & Johnson provides its executive officers
with additional current compensation in the form of executive cash bonus and
stock awards which is competitive with annual incentives provided by other
companies in the premium community. No fixed weighting or formula is applied by
the Compensation Committee to corporate performance versus individual
performance in determining incentive cash bonus and stock awards for the Chief
Executive Officer and executive officers. The amounts of Awards to executive
officers are determined by the Committee acting in its discretion subject to the
maximum amounts specified in the Company's Executive Incentive Plan. Such
determination, except in the case of the Award for the Chairman, is made after
considering the recommendations of the Chairman and such other matters as the
Committee deems relevant. The Committee, acting in its discretion, may determine
to pay a lesser award than the maximum specified. For the Chief Executive
Officer and other executive officers the amount of the total incentive is
divided between cash and stock.
STOCK OPTIONS
The Stock Option Plan is a long-term plan designed to link executive
rewards with shareowner value over time. Johnson & Johnson's award practice is
unique in comparison to other companies. Stock Option awards are not based on an
annual value. They are designed around the concept of a "career multiple" of
salary.
Under a career multiple, awards are granted to maintain an executive's
total option holdings at a specified multiple of salary. Option holdings are the
sum of all unexpired option grants (i.e., less than 10 years old), valued at the
market price on the original date of grant.
When an executive becomes eligible, the appropriate option holdings
multiple is determined based on the range available and performance. Once the
performance based option multiple is determined, the value of that multiple is
awarded in the first year of eligibility. In subsequent years, the executive's
option value multiple is reassessed based upon the applicable range that year
and performance. Additional grants are made, if necessary, to bring the
executive's option holdings to the multiple of pay determined for that year. As
a result, awards can, and typically do, vary significantly from year to year.
No stock option awards are made in the absence of satisfactory performance.
Performance is evaluated by the Compensation Committee based on the executive's
individual contribution to the long term health and growth of the Company and
the Company's performance based on the factors discussed above. No fixed
weighting or formula is applied to corporate performance versus individual
performance in determining stock option awards. Specifically, for the Chief
Executive Officer and other named Executive Officers, the Committee does not
apply a mathematical formula which relates financial and/or non-financial
performance to the number of options awarded.
In the event that the stock price declines to a level below the option
grant price, options are not revalued or reissued. Vesting in awards generally
occurs over a period of six years.
CERTIFICATES OF EXTRA COMPENSATION
Certificates of Extra Compensation (CECs) provide deferred compensation
which is paid at the end of an executive's career. CECs are performance units
which measure the Company's value based on a formula composed of one half of the
Company's net asset value and one half of its earning power value, relative to
the number of shares of Johnson & Johnson Common Stock outstanding. Earning
power value is calculated by taking the capitalized value of earnings averaged
over the previous five years.
The CEC program uniquely reflects Johnson & Johnson's commitment to the
long term. No awards are paid out to executives during employment. Although the
units vest over a five year period from grant, the final value of those units is
not determined until retirement or termination of employment. The value of the
program is purely performance driven. The Company pays dividend equivalents on
units awarded. Dividend equivalents are paid at the same rate provided to
shareowners on a share of Johnson & Johnson Common Stock, and are paid
quarterly.
Awards of CECs to the Chief Executive Officer and executive officers are
targeted to provide an above average long-term compensation opportunity as
compared to the premium community. Award amounts
11
<PAGE>
are based on the Compensation Committee's evaluation of individual performance,
based on the executive's individual contribution to the long term health and
growth of the Company and the Company's performance based on the factors
discussed above. No fixed weighting or formula is applied to corporate
performance versus individual performance in determining CEC awards.
DECISIONS ON 1996 COMPENSATION
Johnson & Johnson's performance for the most recent five year period
exceeded that of the premium community companies in all financial factors
considered: Sales Growth, Shareowner Value, EPS Growth Rate and increase in Cash
Flow. The Company met its goal for New Product Flow.
With respect to non-financial performance, management continued to excel in
the area of managing Credo responsibility. Various initiatives undertaken by
Johnson & Johnson embody the principles of the Credo by addressing its
responsibilities to its customers, employees and the community.
Mr. Larsen's compensation awards were made based upon the Compensation
Committee's assessment of the Company's financial performance in the five areas
outlined above and its non-financial performance against the background of the
Credo as outlined above.
The above performance results were evaluated based on the overall judgement
of the Compensation Committee with no fixed or specific mathematical weighting
applied to each element of performance. Based on the Compensation Committee's
judgement, compensation awards for 1996 were made at target.
Mr. Larsen was awarded a salary increase for 1996 of 6.5% versus a 6.0%
total performance guideline. The 1996 annual incentive for the Chief Executive
Officer was paid approximately at target. Approximately one half of the annual
incentive was provided in cash with the balance paid in Johnson & Johnson Common
Stock. A Stock Option grant was awarded during 1996 to the Chief Executive
Officer which maintains his holdings value at the target multiple of pay. A
grant of Certificates of Extra Compensation was made to Mr. Larsen to maintain
his 1997 accrual at the competitive target.
TAX DEDUCTIBILITY CONSIDERATIONS
The Compensation Committee has reviewed the Company's compensation plans
with regard to the deduction limitation under the Omnibus Budget Reconciliation
Act of 1993 (the "Act") and the final regulations interpreting the Act which
have recently been adopted by the Internal Revenue Service and the Department of
the Treasury. Based on this review, the Committee has determined that the
Johnson & Johnson Stock Option Plans, as previously approved by shareowners,
meet the requirements for deductibility under the Act. In order to permit the
future deductibility of cash bonus and stock incentive awards for certain
executive officers of the Company, the Committee and the Board of Directors have
adopted an Executive Incentive Plan which was approved by shareowners. As a
result, all bonus and stock awards qualify as performance based and are not
subject to the tax deductibility limitation of Section 162(m). In addition, the
Committee has approved the Executive Income Deferral Plan. Participation in the
Plan is limited to Executive Committee Members and is voluntary. It allows an
individual to elect to defer a portion of Base Salary, CEC Dividend Equivalents,
and Cash Bonus Award. Accordingly, any amounts which would otherwise result in
non-tax deductible compensation may be deferred under the Plan. As a result of
the implementation of the Johnson & Johnson Executive Incentive Plan and
elections made under the Executive Deferral Plan, no tax deduction will be lost
as a result of Section 162(m) on compensation paid to Johnson & Johnson
executives in 1997.
Thomas S. Murphy, Chairman
Joan G. Cooney
James G. Cullen
Philip M. Hawley
Arnold G. Langbo
12
<PAGE>
SHAREOWNER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total shareowner
return on the Company's Common Stock against the cumulative total return of the
Standard & Poor's 500 Stock Index and the Standard & Poor's Diversified Health
Care Index for the period of five years commencing December 31, 1991 and ending
December 31, 1996. The graph and table assume that $100 was invested on December
31, 1991 in each of the Company's Common Stock, the Standard & Poor's 500 Stock
Index and the Standard & Poor's Diversified Health Care Index and that all
dividends were reinvested. This data was furnished by Standard & Poor's
Compustat Services, Inc.
<TABLE>
-- GRAPHICAL REPRESENTATION OF DATA TABLE BELOW --
<CAPTION>
- - ---------------------------------------------------------------------------------------------
1991 1992 1993 1994 1995 1996
- - ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Johnson & Johnson $100.00 $ 89.80 $ 81.69 $102.11 $162.47 $191.89
- - ---------------------------------------------------------------------------------------------
S&P 500 Stock Index $100.00 $107.62 $118.46 $120.03 $165.13 $203.05
- - ---------------------------------------------------------------------------------------------
S&P Diversified Health Care $100.00 $ 85.38 $ 81.37 $ 94.82 $140.68 $177.43
- - ---------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
<TABLE>
EXECUTIVE COMPENSATION
The following table shows, for each of the last three fiscal years, the annual compensation paid
to or earned by the Company's Chief Executive Officer and the other four most highly compensated
executive officers (the "Named Officers") in all capacities in which they served:
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation (1) | Long Term |
--------------------------------------- | Compensation |
Name Other | Awards |
and Annual | ------------- | All Other
Principal Compen- | Options | Compen-
Position Year Salary ($) Bonus ($) sation ($) | (#) | sation ($)
--------- ---- ---------- ---------- --------- | ------ | ----------
(2) (3) | | (4)
<S> <C> <C> <C> <C> <C> <C>
R. S. Larsen 1996 $1,070,000 $1,001,900 $774,221 | 26,000 | $48,150
Chairman/CEO 1995 1,005,000 1,135,931 534,456 | 51,000 | 6,750
1994 920,000 586,714 386,018 | 81,400 | 6,750
| |
R. N. Wilson 1996 $ 800,000 $ 751,425 $787,782 | 23,000 | $36,000
Vice Chairman 1995 750,000 873,069 541,788 | 44,200 | 6,750
1994 690,000 488,967 383,484 | 57,200 | 6,750
| |
C. H. Johnson 1996 $ 475,000 $ 332,227 $400,713 | 3,000 | $21,375
Vice President, 1995 437,500 457,000 342,280 | 35,000 | 6,750
Finance 1994 395,000 247,087 271,233 | 27,400 | 6,750
| |
G. S. Frazza 1996 $ 475,000 $ 332,227 $537,635 | 0 | $21,375
Vice President, 1995 425,000 448,375 431,415 | 49,000 | 6,750
General Counsel 1994 350,000 214,484 320,629 | 36,200 | 6,750
| |
R. G. Gelbman 1996 $ 450,000 $ 318,094 $274,723 | 15,000 | $20,250
Worldwide Chairman 1995 390,000 407,500 168,873 | 27,400 | 6,750
Pharmaceuticals & 1994 343,625 329,909 129,983 | 78,400 | 6,750
Diagnostics Group | |
- - ----------
(1) Includes amounts paid and deferred.
(2) Bonus amounts include both cash and stock awards.
(3) Amounts include dividend equivalents paid under the Certificate of Extra Compensation (CEC)
Program (long term incentive plan).
(4) Amount shown is the Company's matching contribution to the 401(k) Savings Plan and related
supplemental plan.
</TABLE>
14
<PAGE>
<TABLE>
STOCK OPTIONS
The following table contains information concerning the grant of stock options under the
Company's 1995 Stock Option Plan to the Named Officers during the Company's last fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
Individual Grants
------------------------------------------------------
Number of % of Total
Securities Options Grant Date
Underlying Granted to Exercise Present
Options Employees Price Expiration Value(2)
Name Granted (#)(1) In 1996 ($/Sh) Date ($)
---- -------------- ----------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Ralph S. Larsen .......... 26,000 0.3% $52.00 12/05/06 $349,440
Robert N. Wilson ......... 23,000 0.3% $52.00 12/05/06 $309,120
Clark H. Johnson ......... 3,000 0.0% $52.00 12/05/06 $ 40,320
George S. Frazza ......... -- -- -- -- --
Ronald G. Gelbman ........ 15,000 0.2% $52.00 12/05/06 $201,600
- - ------------
(1) The options were granted at an exercise price equal to the fair market value of the
Company's Common Stock on the date of grant. The options become exercisable over a six year
period in increments of 20% per year beginning with the second anniversary of the date of
grant except for the options granted to Mr. R. S. Larsen, Mr. R. N. Wilson and Mr. C. H.
Johnson which, like the vesting schedule for all executives in the Stock Option Plan over
age 55, become exercisable over a four year period in increments of 40% beginning with the
second anniversary of the date of grant and an additional 30% per year for each of the next
two years. The grant date of the options was December 5, 1996.
(2) Based on a grant date present value of $13.44 per option share which was derived using the
Black-Scholes option pricing model in accordance with the rules and regulations of the
Securities and Exchange Commission and is not intended to forecast future appreciation of
the Company's stock price. The Black-Scholes model was used with the following assumptions:
volatility of 18.24% based on a historical weekly average over seven years; dividend growth
of 14.51%; risk free interest rate of 6.11% based on a U.S. Treasury Strip of seven years;
and a seven year option life.
</TABLE>
15
<PAGE>
<TABLE>
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth information with respect to the Named Officers concerning the exercise of
options during the last fiscal year and unexercised options held as of the end of the fiscal year:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Shares Options at Year End 1996(#) Year End 1996 ($) (1)
Acquired On Value -------------------------- ---------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ralph S. Larsen ......... 64,800 $2,649,272 899,260 224,940 $31,504,373 $4,287,905
Robert N. Wilson ........ 51,600 $1,964,132 515,520 303,080 $18,869,814 $5,419,452
Clark H. Johnson ........ 8,400 $ 333,060 285,740 83,060 $ 9,642,993 $1,453,761
George S. Frazza ........ 15,700 $ 676,064 253,580 96,220 $ 8,526,232 $1,594,050
Ronald G. Gelbman ....... 24,000 $ 932,928 176,880 142,320 $ 6,158,794 $2,722,884
- - ------------
(1) Based on the New York Stock Exchange Composite closing price as published in the Wall Street Journal for the
last business day of the fiscal year ($50.50).
</TABLE>
CERTIFICATE OF EXTRA COMPENSATION PROGRAM
The following table provides information concerning awards made during the
last fiscal year under the Company's Certificate of Extra Compensation (CEC)
Program.
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
Estimated
Number of Period Until Future
Name Units (#) Payout Payout ($)
- - ---- --------- ------ ----------
(1) (2)
Ralph S. Larsen ................ 140,000 $2,013,200
Robert N. Wilson ............... --
Clark H. Johnson ............... --
George S. Frazza ............... --
Ronald G. Gelbman .............. 36,000 517,680
- - ----------
(1) Awards are paid out upon retirement or other termination of employment.
(2) The value used is the value as of the end of the last fiscal year and was
$14.38 per CEC unit. The value of the CEC units is subject to increase or
decrease based on the performance of the Company.
Since 1947, the Company has maintained a deferred compensation program
under which awards of CEC units may be made to senior management and other key
personnel of the Company and its subsidiaries worldwide. Typically, an award of
CEC units provides for a specified number of units which vest over a five year
period, though no awards are paid out to a participant until retirement or other
termination of employment. During employment, dividend equivalents are paid to
participants on CEC units in the same amount and at the same time as dividends
on the Company's Common Stock. The CEC units are valued in accordance with a
formula based on the Company's net assets and earning power over the five
preceding fiscal years. Until paid at retirement or termination of employment,
the final value of the CEC units is subject to increase or decrease based on the
performance of the Company. The value as of the end of the last fiscal year was
$14.38 per CEC unit. The cumulative number of CEC units earned as of the end of
the last fiscal year by each of the Named Officers during their careers with the
Company, valued for illustrative purposes at the $14.38 per unit value as of the
end of the last fiscal year are: Mr. R. S. Larsen 752,400 CEC units
($10,819,512); Mr. R. N. Wilson 778,000 CEC units ($11,187,640); Mr. C. H.
Johnson 433,200 CEC units ($6,229,416); Mr. G. S. Frazza 580,000 CEC units
($8,340,400) and Mr. R. G. Gelbman 255,600 CEC units ($3,675,528).
16
<PAGE>
<TABLE>
RETIREMENT PLAN
The following table shows the estimated annual retirement benefit payable on a straight life
annuity basis to participating employees in the compensation and years of service classifications
indicated, under the Company's Retirement Plan. The Retirement Plan generally covers salaried U.S.
employees of the Company and designated subsidiaries on a non-contributory basis.
PENSION PLAN TABLE
<CAPTION>
Five Year
Average Annual Benefits for Years of Service
Covered ----------------------------------------------------------------------------------
Compensation 15 Years 20 Years 25 Years 30 Years 35 Years 40 Years
- - ------------ -------- -------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
$ 600,000 $146,800 $195,800 $244,700 $ 293,600 $ 342,600 $ 391,500
700,000 171,800 229,100 286,400 343,600 400,900 458,200
800,000 196,800 262,400 328,000 393,600 459,300 524,900
900,000 221,800 295,800 369,700 443,700 517,600 591,500
1,000,000 246,800 329,100 411,400 493,700 575,900 658,200
1,100,000 271,800 362,500 453,100 543,700 634,300 724,900
1,300,000 321,800 429,100 536,400 643,700 751,000 858,300
1,500,000 371,900 495,800 619,800 743,700 867,700 991,600
1,700,000 421,900 562,500 703,100 843,700 984,400 1,125,000
1,900,000 471,900 629,200 786,500 943,800 1,101,100 1,258,300
2,100,000 521,900 695,900 869,800 1,043,800 1,217,700 1,391,700
2,300,000 571,900 762,500 953,200 1,143,800 1,334,400 1,525,100
</TABLE>
Covered compensation includes regular annual earnings, dividend equivalents
paid on non-vested CEC units, amounts paid under the Company's Achievement Award
Program, amounts paid under the Company's Executive Incentive Plan and amounts
deferred under the Company's Executive Income Deferral Plan. The calculation of
retirement benefits is based upon final average earnings (the average of the
highest covered compensation during the five consecutive years out of the last
ten years of employment with the Company). The benefits are subject to an offset
based on the Age 65 Primary Social Security Benefit. Five-Year Average Covered
Compensation for the Named Officers as of the end of the last fiscal year is:
Mr. R. S. Larsen $1,895,445; Mr. R. N. Wilson $1,459,959; Mr. C. H. Johnson
$798,828; Mr. G. S. Frazza $746,770; and Mr. R. G. Gelbman $692,193. The
approximate years of service for each Named Officer as of the end of the last
fiscal year is: Mr. R. S. Larsen 33 years; Mr. R. N. Wilson 32 years; Mr. C. H.
Johnson 40 years; Mr. G. S. Frazza 31 years; and Mr. R. G. Gelbman 25 years.
As permitted by the Employee Retirement Income Security Act of 1974, the
Company has adopted a supplemental plan which is designed to provide the amount
of retirement benefit which cannot be paid from the Retirement Plan by reason of
certain Internal Revenue Code limitations on qualified plan benefits. The
amounts shown in the Pension Plan Table include the amounts payable under the
supplemental plan.
17
<PAGE>
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Coopers & Lybrand L.L.P. as the
independent auditors for the Company and its subsidiaries for the fiscal year
1997. Shareowner ratification of the appointment is not required under the laws
of the State of New Jersey, but the Board has decided to ascertain the position
of the shareowners on the appointment. The Board of Directors will reconsider
the appointment if it is not ratified. The affirmative vote of a majority of the
shares voted at the meeting is required for ratification.
Representatives of Coopers & Lybrand L.L.P. are expected to be present at
the meeting and will be allowed to make a statement if they wish. Additionally,
they will be available to respond to appropriate questions from shareowners
during the meeting.
SHAREOWNER PROPOSAL ON MAQUILADORA OPERATIONS
The following shareowner proposal has been submitted to the Company for
action at the meeting by the Benedictine Resource Center, 3120 W. Ashby, San
Antonio, Texas 78228, owner of 32,000 shares of the Company's common stock.
Twelve other shareowners whose names, addresses and shareholdings will be
supplied upon oral or written request to the Secretary of the Company have
co-sponsored the proposal. The affirmative vote of a majority of the votes cast
at the meeting by or on behalf of the shareowners is required for approval of a
shareowner proposal. The text of the proposal is as follows:
REQUEST FOR REVIEW OF MAQUILADORA OPERATIONS
WHEREAS, we believe U.S. companies have the responsibility wherever they do
business to pay employees a living sustainable wage, enabling them to provide
for themselves and their families.
The economic crisis in Mexico, precipitated by the peso devaluation in
December, 1994, has further undermined the purchasing power of maquiladora
workers. Prior to the crisis, the average pay of a maquiladora worker was $30 to
$50 for a 48 hour week. The 1995 inflation rate of over 50%, contributed to the
dramatic decline in workers' purchasing power. We believe that the modest wage
increases suggested by the Mexican government in 1995 and 1996 do not adequately
address the workers' loss of purchasing power.
A 1994 market basket study, using First Quarter, 1994 figures prior to the
devaluation, reveals a maquiladora worker worked 69.0 minutes to purchase 5 lbs.
of rice, 113.2 minutes for cooking oil (48 oz.), 87.0 minutes for 1 lb. of
chicken, 142.9 minutes for a gallon of milk, and 69.8 minutes for one dozen eggs
(Market Basket Survey, Ruth Rosenbaum, 1994).
Pollution from the maquiladora industry is a bi-national problem which
threatens the health of citizens both in Mexico and the United States. Hazardous
waste pollutes rivers and aquifers and contaminates drinking water. Accidental
chemical leaks from plants or transportation vehicles carrying hazardous
materials impact both sides of the border.
RESOLVED: The shareholders request the Board of Directors to initiate a
review of our company's maquiladora operations, including the adequacy of wage
levels and environmental standards and practices. A summary report of the review
and recommendations for changes in policies, programs and practices in light of
this review to be made available to shareholders within six months of the 1997
meeting.
SUPPORTING STATEMENT
The proponents of this resolution firmly believe there is a need for
strict, enforceable standards of conduct for corporations operating around the
world, including Mexico. We believe corporations should protect the environment
and pay sustainable community wages which are significantly higher than the
marginal survival wages paid in the maquiladoras. We define a sustainable
community wage as one that allows a worker to meet basic needs, set aside money
for future purchases and earn enough discretionary income to participate in
support of the development of small businesses in a local community (Market
Basket Survey).
It is essential that our company regularly review its environmental
performance, as well as its wages and benefits policies, including average wages
paid to employees, how these compare to the local cost of
18
<PAGE>
living and poverty level, and the level of profit sharing with employees
(required by Mexican law). We propose that the reviews utilize an ongoing
Purchasing Power Index study to determine a sustainable community level salary.
Our company should consider additional ways to support environmentally sound
sustainable development in the communities where it operates.
MANAGEMENT'S STATEMENT IN OPPOSITION TO SHAREOWNER PROPOSAL
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THE ADOPTION OF THIS PROPOSAL
FOR THE FOLLOWING REASONS:
The workers at our maquiladora operations in Mexico are valued and
productive members of the Johnson & Johnson worldwide group of employees. They
are treated with the same concern for their personal well being and individual
fulfillment as are other members in the United States and around the world.
Besides providing a clean, safe work place, our companies in the maquiladora
facilities provide health, nutritional and transportation services to meet the
special needs of the people. In addition, we are deeply involved in community
programs that include support for improved housing, health, medical care and
education. Our work places do not harm the environment and all materials and
waste products are disposed of safely and efficiently.
Management in our maquiladora operations regularly measures and assesses
compensation and benefits relative to the competition and local markets. We do
not think that conducting a special "market basket study" comparing Mexican
wages and costs of living with U.S. standards and reporting its resultsto
shareowners is necessary or appropriate. As the bulk of our maquiladora
operations could not economically function in the U.S., the alternative would be
exiting those businesses altogether or seeking another country elsewhere in the
world.
IT IS, THEREFORE, RECOMMENDED THAT THE SHAREOWNERS VOTE AGAINST THIS
PROPOSAL.
OTHER MATTERS
The Board of Directors does not intend to bring other matters before the
meeting except items incident to the conduct of the meeting. However, on all
matters properly brought before the meeting by the Board or by others, the
persons named as proxies in the accompanying proxy, or their substitutes, will
vote in accordance with their best judgment.
19
<PAGE>
[Johnson & Johnson]
[LOGO]
NOTICE OF
1997 ANNUAL
MEETING AND
PROXY
STATEMENT
<PAGE>
APPENDIX
(Pursuant to Rule 304 of Regulation S-T)
1. Page 13 contains a description in tabular form of a graph entitled
"Stockholder Return Performance Graph" which represents the comparison of the
cumulative total stockholder return on the Company's Common Stock against the
cumulative total return of the Standard and Poor's 500 Stock Index and the
Standard and Poor's Diversified Health Care Index for the period of five years
commencing December 31, 1991 and ending December 31, 1996, which graph is
contained in the paper format of this Proxy Statement being sent to
Stockholders.
<PAGE>
JOHNSON & JOHNSON
Proxy Solicited by the Board of Directors for the
Annual Meeting of Shareowners on April 24, 1997
The undersigned hereby appoints R.S. Fine, C.H. Johnson and R.N.
Wilson and each or any of them as proxies, with full power of
P substitution and revocation, to represent the undersigned and to vote
R all shares of the Common Stock of Johnson & Johnson which the
O undersigned is entitled to vote at the Annual Meeting of Shareowners
X of the Company to be held on April 24, 1997 at 10:00 a.m. at the Hyatt
Y Regency Hotel, Two Albany Street, New Brunswick, New Jersey, and any
adjournment thereof, upon the matters listed on the reverse side hereof
and, in their discretion, upon such other matters as may properly come
before the meeting. The proxies appointed hereby may act by a majority
of said proxies present at the meeting (or if only one is present, by
that one).
Election of Directors. Nominees:
Gerard N. Burrow, Joan G. Cooney, James G. Cullen, Philip M. Hawley,
Clark H. Johnson, Ann D. Jordan, Arnold G. Langbo, Ralph S. Larsen,
John S. Mayo, Thomas S. Murphy, Paul J. Rizzo, Maxine F. Singer,
Roger B. Smith, Robert N. Wilson.
(change of address/comments)
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
(If you have written in the above space, please mark the
corresponding box on the reverse side of this card.)
You are encouraged to specify your choices by marking the appropriate boxes, SEE
REVERSE SIDE, but you need not mark any boxes if you wish to vote in accordance
with the Board of Directors' recommendations. The Proxies cannot vote your
shares unless you sign and return this card.
SEE REVERSE SIDE
DETACH PROXY CARD HERE
- - --------------------------------------------------------------------------------
<PAGE>
[X] Please mark your
votes as in this
example
This proxy when properly executed will be voted in the manner directed herein.
If no direction is made, this proxy will be voted FOR election of directors,
FOR proposal 2 and AGAINST proposal 3.
The Board of Directors recommends a vote FOR proposals 1 and 2.
FOR WITHHELD
1. Election of Directors (see reverse) [ ] [ ]
For, except vote withheld from the following nominee(s):
- - --------------------------------------------------------
FOR AGAINST ABSTAIN
2. Ratification of Coopers and Lybrand, [ ] [ ] [ ]
L.L.P. as independent auditors
The Board of Directors recommends a vote AGAINST proposal 3.
FOR AGAINST ABSTAIN
3. Proposal on Maquiladora Operations. [ ] [ ] [ ]
Change of Address/Comments on Reverse Side [ ]
The signer hereby revokes all proxies heretofore given by the signer to vote at
said meeting or any adjournments thereof.
Please sign exactly as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
- - --------------------------------------------------------------------------------
SIGNATURE(S) ____________________________________________ DATE ________________
PLEASE CAREFULLY DETACH HERE AND RETURN THIS PROXY
IN THE ENCLOSED REPLY ENVELOPE.
JOHNSON & JOHNSON
The Signature of Quality
