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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[ ] Check box if any part of the fee is offset as provided by Exchange
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statement number, or the Form or Schedule and the date of its filing.
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JOHNSON & JOHNSON
[LOGO]
Notice of Annual Meeting
and Proxy Statement
March 11, 1998
The Annual Meeting of the Shareowners of Johnson & Johnson will be held on
April 23, 1998 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 24, 1998 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
1,346,454,644 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 11, 1998 concurrently with the
mailing of the Company's 1997 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.
SHAREOWNER PROPOSALS. To be included in the Board of Directors' proxy
statement for the 1999 Annual Meeting of Shareowners, a shareowner proposal must
be received by the Company on or before November 10, 1998. 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 13 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 are currently serving as directors of the Company,
except Mr. Snow who is a nominee for the first time. In accordance with the
Board's policy on retirement of directors, Messrs. Philip M. Hawley, Thomas S.
Murphy and Roger B. Smith are 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., Special Advisor to the President of
Yale University for Health Affairs.
[PHOTO]
Dr. Burrow, 65, was elected to the Board of Directors in
1993 and is a member of the Benefits Committee and Chairman
of the Science and Technology Advisory Committee. He was
named to his present position at Yale University in 1997
following service since 1992 as Dean of the Yale University
School of Medicine. He served the five years prior to his
return to Yale as Vice Chancellor for 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 and a Fellow
of the American Association for the Advancement of Science.
He is also a Director of Neurex Corporation and The Sea
Research Foundation and on the Board of Overseers of Brown
University School of Medicine.
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JOAN GANZ COONEY, Chairman, Executive Committee, Children's
Television Workshop.
[PHOTO]
Mrs. Cooney, 68, 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 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, Square One T.V. and Ghostwriter. Mrs. Cooney is a
Director of Metropolitan Life Insurance Company, the Museum
of Television and Radio and The New York and Presbyterian
Hospitals, Inc., as well as a Trustee of the National Child
Labor Committee.
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JAMES G. CULLEN, Vice Chairman, Bell Atlantic Corporation.
[PHOTO]
Mr. Cullen, 55, was elected to the Board of Directors in
September 1995 and is a member of the Compensation Committee
and the Audit Committee. Mr. Cullen assumed his present
position with Bell Atlantic Corporation in February 1995
after having been President since February 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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M. JUDAH FOLKMAN, M.D., Senior Associate in Surgery and
Director, Surgical Research Laboratory, Children's Hospital
and Andrus Professor of Pediatric Surgery and Professor of
Cell Biology, Harvard Medical School, Departmentof Surgery.
[PHOTO]
Dr. Folkman, 65, was elected to the Board of Directors in
February 1998 and is a member of the Science and Technology
Advisory Committee. Dr. Folkman has been with the Children's
Hospital since 1967, having served as Surgeon-in-Chief of
Children's Hospital from 1967 to 1981, and with Harvard
Medical School since 1967. He is a member of the National
Academy of Sciences and the American Academy of Arts and
Sciences. In recognition of his founding the field of
angiogenesis research he has received numerous honary
degrees and awards, the most recent of which is the 1997
Charles S. Mott Prize of the General Motors Cancer Rearch
Foundation.
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ANN DIBBLE JORDAN, Former Director, Social Services
Department, Chicago Lying-In Hospital, University of Chicago
Medical Center.
[PHOTO]
Mrs. Jordan, 63, 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 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 Coleman Company, Salant
Corporation and Travelers Inc. Mrs. Jordan is also a
Director of The Phillips Collection, The Child Welfare
League and the National Symphony Orchestra.
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ARNOLD G. LANGBO, Chairman of the Board and Chief Executive
Officer, Kellogg Company.
[PHOTO]
Mr. Langbo, 60, 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 1992 after having
been President and Chief Operating Officer since December
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.
[PHOTO]
Mr. Larsen, 59, 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 President of
Marketing for the McNeil Consumer Products Company in 1980.
He left Johnson & Johnson for two years to serve 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.
[PHOTO]
Dr. Mayo, 68, 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 President Emeritus in 1995. Dr. Mayo is a member
of the National Academy of Engineering and The Swedish Royal
Academy of Engineering Sciences. He is 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.
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PAUL J. RIZZO, Retired Vice Chairman, International Business
Machines Corporation.
[PHOTO]
Mr. Rizzo, 70, 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 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. and
Ryder Systems, Inc.
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HENRY B. SCHACHT, Former Chairman of the Board, Lucent
Technologies Inc.
[PHOTO]
Mr. Schacht, 63, was elected to the Board of Directors in
September 1997 and is a member of the Audit Committee and
the Benefits Committee. Mr. Schacht was the Chairman of the
Board of Lucent Technologies Inc. from April 1996 until
February 1998 and was its Chief Executive Officer from
February 1996 to October 1997. Mr. Schacht was Chairman
(1977-1995) and Chief Executive Officer (1973-1994) of
Cummins Engine Company, Inc. He is also a Director of Lucent
Technologies Inc, Aluminum Company of America, The Chase
Manhattan Corporation, The Chase Manhattan Bank, N.A. and
Cummins Engine Company, Inc. Mr. Schacht is Chairman of the
Board of Trustees of The Ford Foundation and a Trustee of
The Yale Corporation and the Business Enterprise Trust.
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MAXINE F. SINGER, PH.D., President of the Carnegie
Institution of Washington.
[PHOTO]
Dr. Singer, 67, 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 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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JOHN W. SNOW, Chairman, President and Chief Executive
Officer, CSX Corporation.
[PHOTO]
Mr. Snow, 58, was elected President and Chief Executive
Officer of CSX Corporation in 1989 and added the title of
Chairman in 1991. Mr. Snow is also a Director of Circuit
City Stores, Inc., Textron, Inc. and USX Corporation and is
a member of the Board of Trustees of Johns Hopkins
University.
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ROBERT N. WILSON, Vice Chairman, Board of Directors and Vice
Chairman, Executive Committee.
[PHOTO]
Mr. Wilson, 57, 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 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 director, 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. Because they serve as co-trustees of two trusts which hold stock for the
benefit of others, Messrs. Larsen and Wilson "control" an additional 8,942,706
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 1,501,752 shares, the aggregate of 10,444,458 shares
representing less than 1% of the shares outstanding. Except as noted, all stock
ownership is as of January 30, 1998.
NUMBER OF COMMON SHARES UNDER
SHARES EXERCISABLE
NAME (1)(2) OPTIONS (3)
- - ---- ------------ ------------
Gerard N. Burrow ...................... 6,518 1,100
Joan Ganz Cooney ...................... 10,916 1,100
James G. Cullen ....................... 3,623 1,100
M. Judah Folkman ...................... 150 --
Ronald G. Gelbman ..................... 94,412 184,840
Philip M. Hawley ...................... 9,367 1,100
Ann Dibble Jordan ..................... 8,454 1,100
Christian A. Koffmann ................. 28,252 171,480
Arnold G. Langbo ...................... 12,340 1,100
Ralph S. Larsen ....................... 362,680 882,480
James T. Lenehan ...................... 23,660 158,000
John S. Mayo .......................... 42,641 1,100
Thomas S. Murphy ...................... 129,857 1,100
Paul J. Rizzo ......................... 72,291 1,100
Henry B. Schacht ...................... 1,668 --
Maxine F. Singer ...................... 16,765 1,100
Roger B. Smith ........................ 44,833 1,100
John W. Snow .......................... -- --
Robert N. Wilson ...................... 475,382 459,080
All directors and executive
officers as a group (22) ............ 1,501,752 2,208,580
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(1) Includes an aggregate of 271,353 Common Stock equivalent units credited to
nonemployee directors under the Deferred Fee Plan for Nonemployee Directors
and an aggregate of 19,371 Common Stock equivalent units credited to the
named executive officers (22,250 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. Dr.
Folkman's stock ownership is as of February 9, 1998.
(3) Includes shares under options exercisable on January 30, 1998 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 the Company's
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. Directors also receive non-retainer equity compensation each year
in the form of a stock option grant. The number of options granted is determined
annually and is currently 900
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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, Mr. Schacht 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), Darretta (Vice President, Finance)
and Deyo (Vice President, Administration) 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 four meetings of the Compensation Committee.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE OF THE BOARD
The Compensation Committee is composed 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
opportunities which are comparable to the opportunities provided by a select
group of high performing,
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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. New Product Flow is assessed by reviewing
the percentage of sales resulting from the sale of new products introduced in
the past five years. Shareowner Value is measured as the increase in stock price
plus dividend return over a five year period.
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 1997 performance reviewed by the Compensation Committee can
be found under "Decisions on 1997 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 Market 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 1997 was 4.0%
for merit increases plus 1% for market parity and 1% for promotion adjustments.
The domestic salary guideline for 1998 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 at the discretion of the Committee.
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 was
modified in December 1997 to move from a "career multiple" approach to stock
option design to an "annual multiple" approach.
The annual multiple approach uses a percentage of each year's base salary,
expressed as a range of opportunity, to arrive at the range of option shares
available to be granted. Individual grants are made annually and vary within
that range based on performance. This approach will result in grants which will
vary from year to year based on assessed performance, stock price and base
salary.
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 made prior
to December 1997 generally occurred over a period from two to six years. Vesting
in awards granted in or after December 1997 occurs three years from grant.
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 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.
10
<PAGE>
DECISIONS ON 1997 COMPENSATION
Johnson & Johnson's performance for the most recent five year period ranked
in the upper half 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 1997 were made at target.
Mr. Larsen was awarded an annual salary increase for 1997 in January 1997
of 6.1% versus a 6.0% total performance guideline. In the first half of 1997,
the Company conducted a comprehensive Executive Compensation Study. As a result
of that Study, compensation adjustments were made to several executives in June,
including Mr. Larsen. A base salary increase of 10.1% was made in June to
reflect the market level for the position of Chief Executive Officer, and Mr.
Larsen's performance and tenure in the position. The 1997 annual incentive for
the Chief Executive Officer was paid approximately at target. Two stock option
grants were awarded during 1997 to the Chief Executive Officer. A grant was made
in June to provide Mr. Larsen with total cumulative stock option grants which
were more consistent with the competitive marketplace. In addition, a stock
option grant was made as part of the administration of stock option grants which
provided him with options valued at the target annual multiple of pay. A grant
of Certificates of Extra Compensation was made to Mr. Larsen to maintain his
1998 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 which allows an
individual to elect to defer a portion of Base Salary, CEC Dividend Equivalents
and Cash and Stock Bonus Awards. Participation in the Plan is limited to
Executive Committee Members and is voluntary. 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 Income Deferral Plan, no
tax deduction was lost as a result of Section 162(m) on compensation paid to
Johnson & Johnson executives in 1997 and none is anticipated to be lost in 1998
Thomas S. Murphy, Chairman
Joan G. Cooney
James G. Cullen
Philip M. Hawley
Arnold G. Langbo
11
<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, 1992 and ending
December 31, 1997. The graph and table assume that $100 was invested on December
31, 1992 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.
--GRAPHICAL REPRESENTAIONS OF DATA TALK BELOW--
- - --------------------------------------------------------------------------------
1992 1993 1994 1995 1996 1997
- - --------------------------------------------------------------------------------
Johnson &
Johnson $100.00 $90.98 $113.71 $180.92 $213.69 $287.03
- - --------------------------------------------------------------------------------
S&P 500 Stock
Index $100.00 $110.04 $111.49 $153.33 $188.51 $251.39
- - --------------------------------------------------------------------------------
S&P Diversified
Health Care $100.00 $95.30 $110.99 $164.26 $207.16 $302.63
- - --------------------------------------------------------------------------------
12
<PAGE>
EXECUTIVE COMPENSATION
The following table shows, for each of the last three fiscal years, the
annual compensation paid to or earned by the Company's Chief Executive Officer
and the other four most highly compensated executive officers (the "Named
Officers") in all capacities in which they served:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION (1) LONG TERM
------------------------------------------- COMPENSATION
NAME OTHER AWARDS
AND ANNUAL ------------- ALL OTHER
PRINCIPAL COMPEN- OPTIONS COMPEN-
POSITION YEAR SALARY ($) BONUS ($) SATION ($) (#) SATION ($)
-------- ---- ---------- --------- ---------- ------- ----------
(2) (3) (4) (5
<S> <C> <C> <C> <C> <C> <C>
R. S. Larsen 1997 $1,192,500 $1,400,871 $980,552 450,000 $53,663
Chairman/CEO 1996 1,070,000 1,001,900 744,221 26,000 48,150
1995 1,005,000 1,135,931 534,456 51,000 6,750
R. N. Wilson 1997 $ 850,000 $ 902,594 $909,371 235,000 $38,250
Vice Chairman 1996 800,000 751,425 787,782 23,000 36,000
1995 750,000 873,069 541,788 44,200 6,750
R. G. Gelbman 1997 $ 537,500 $ 427,514 $349,857 150,000 $24,188
Worldwide Chairman 1996 450,000 318,094 274,723 15,000 20,250
Pharmaceuticals & 1995 390,000 407,500 168,873 27,400 6,75
Diagnostics Group
J. T. Lenehan 1997 $ 537,500 $ 411,880 $228,152 150,000 $24,188
Worldwide Chairman 1996 450,000 313,094 187,820 11,000 20,250
Consumer 1995 375,000 402,520 101,120 31,000 6,750
Pharmaceuticals &
Professional Group
C. A. Koffmann 1997 $ 525,000 $ 401,500 $234,017 125,000 $23,625
Worldwide Chairman 1996 450,000 303,094 203,178 12,000 20,250
Consumer/Personal 1995 387,500 402,520 113,731 73,400 6,750
Care Group
</TABLE>
- - -------------
(1) Includes amounts paid and deferred.
(2) Bonus amounts include both cash and stock awards.
(3) Amounts include dividend equivalents paid under the Certificate of Extra
Compensation (CEC) Program (long-term incentive plan).
(4) 1995 stock option shares adjusted for 1996 stock split.
(5) Amount shown is the Company's matching contribution to the 401(k) Savings
Plan and related supplemental plan.
13
<PAGE>
STOCK OPTIONS
The following table contains information concerning the grant of stock
options under the Company's 1995 Stock Option Plan to the Named Officers during
the Company's last fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS GRANT DATE
UNDERLYING GRANTED TO EXERCISE PRESENT
OPTIONS EMPLOYEES PRICE EXPIRATION VALUE(2)
NAME GRANTED (#)(1) IN 1997 ($/SH) DATE ($)
---- -------------- ---------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Ralph S. Larsen ......................... 250,000 2.2% $65.25 6/24/07 $5,418,750
200,000 1.7% 64.75 12/03/07 $3,414,800
Robert N. Wilson ........................ 150,000 1.3% $65.25 6/24/07 $3,251,250
85,000 0.7% 64.75 12/03/07 $1,451,290
Ronald G. Gelbman ....................... 100,000 0.9% $65.25 6/24/07 $2,167,500
50,000 0.4% 64.75 12/03/07 $ 853,700
James T. Lenehan ........................ 100,000 0.9% $65.25 6/24/07 $2,167,500
50,000 0.4% 64.75 12/03/07 $ 853,700
Christian A. Koffmann ................... 75,000 0.6% $65.25 6/24/07 $1,625,625
50,000 0.4% 64.75 12/03/07 $ 853,700
- - -------------
</TABLE>
(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
expiring on June 24, 2007 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 and Mr. R.
N. Wilson 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
options expiring on December 3, 2007, like the vesting schedule for all
executives granted options on such date, vest all of the shares at the end
of the third year.
(2) The grant date present values per option share were derived using the
Black-Scholes option pricing model in accordance with the rules and
regulations of the Securities and Exchange Commission and are not intended
to forecast future appreciation of the Company's stock price. The options
expiring on June 24, 2007 had a grant date present value of $21.68 per
option share. The Black-Scholes model was used with the following
assumptions: volatility of 21.5% based on a historical weekly average over
seven years; dividend yield of 1.43%; risk free interest of 6.45% based on
a U.S. Treasury rate of seven years; and a seven year option life.
The options expiring on December 3, 2007 had a grant date present value of
$17.07 derived from using the Black-Scholes option pricing model. Since the
vesting schedule is different from past options granted to employees, the
following assumptions were made: volatility of 21.5% based on a historical
weekly average over five years; dividend yield of 1.43%; risk free interest
of 5.81% based on a U.S. Treasury rate of five years; and a five year
option life.
14
<PAGE>
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth information with respect to the Named
Officers concerning the exercise of options during the last fiscal year and
unexercised options held as of the end of the fiscal year:
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT YEAR END 1997 (#) YEAR END 1997 ($) (1)
ACQUIRED ON VALUE ---------------------------- ------------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ralph S. Larsen ........ 158,300 $8,430,640 882,480 533,420 $41,201,139 $2,049,910
Robert N. Wilson ....... 146,000 $7,736,880 469,080 408,520 $21,570,823 $6,000,503
Ronald G. Gelbman ...... 28,000 $1,446,200 184,840 106,360 $ 8,478,119 $3,411,499
James T. Lenehan ....... -- -- 158,000 270,000 $ 6,857,724 $3,993,050
Christian A. Koffman ... 5,500 $ 285,645 171,480 234,720 $ 7,709,933 $3,440,017
</TABLE>
- - --------------
(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
($64.875).
CERTIFICATE OF EXTRA COMPENSATION PROGRAM
The following table provides information concerning awards made during the
last fiscal year under the Company's Certificate of Extra Compensation (CEC)
Program.
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
ESTIMATED
NUMBER OF PERIOD UNTIL FUTURE
NAME UNITS (#) PAYOUT PAYOUT ($)
- - ---- -------- ------------ ----------
(1) (2)
Ralph S. Larsen ............. 165,000 $ 2,684,550
Robert N. Wilson ............ --
Ronald G. Gelbman ........... 20,000 325,400
James T. Lenehan ............ 10,000 162,700
Christian A. Koffmann ....... 10,000 162,700
- - --------------
(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
$16.27 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
$16.27 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 $16.27 per unit value
as of the end of the last fiscal year, are: Mr. R. S. Larsen 852,400 CEC units
($13,868,548); Mr. R. N. Wilson 858,000 CEC units ($13,959,660); Mr. R. G.
Gelbman 295,600 CEC units ($4,809,412); Mr. J. T. Lenehan 161,600 CEC units
($2,629,232) and Mr. C. A. Koffmann 166,000 CEC units ($2,700,820).
15
<PAGE>
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.
<TABLE>
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>
$ 700,000 $171,600 $228,800 $ 286,000 $ 343,300 $ 400,500 $ 457,700
800,000 196,600 262,200 327,700 393,300 458,800 524,400
900,000 221,600 295,600 369,400 443,300 517,200 591,100
1,000,000 246,600 328,900 411,100 493,300 575,500 657,700
1,200,000 296,700 395,500 494,400 593,300 692,200 791,100
1,400,000 346,700 462,200 577,800 693,300 808,900 924,400
1,600,000 396,700 528,900 661,100 793,300 925,600 1,057,800
1,800,000 446,700 595,600 744,500 893,400 1,042,300 1,191,200
2,000,000 496,700 662,300 827,800 993,400 1,158,900 1,324,500
2,200,000 546,700 728,900 911,200 1,093,400 1,275,600 1,457,900
2,400,000 596,700 795,600 994,500 1,193,400 1,392,300 1,591,200
2,600,000 646,700 862,300 1,077,900 1,293,400 1,509,000 1,724,600
</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 $2,164,850; Mr. R. N. Wilson $1,615,130; Mr. Mr. R. G. Gelbman
$813,427; Mr. J. T. Lenehan $715,515; and Mr. C. A. Koffmann $729,184. The
approximate years of service for each Named Officer as of the end of the last
fiscal year is: Mr. R. S. Larsen 34 years; Mr. R. N. Wilson 33 years; Mr. R. G.
Gelbman 26 years; Mr. J. T. Lenehan 21 years; and Mr. C. A. Koffmann 9 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.
16
<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
1998. 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 CUMULATIVE VOTING
The following shareowner proposal has been submitted to the Company for
action at the meeting by the Central Pension Fund of the International Union of
Operating Engineers and Participating Employers, 4115 Chesapeake Street, NW,
Washington, DC 20016, owner of 253,569 shares of the Company's Common Stock. 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 the shareowner proposal. The text
of the proposal is as follows:
RESOLVED: That the shareholders of Johnson & Johnson ("Company") recommend
that our Board of Directors take the necessary steps to adopt and implement a
policy of cumulative voting for all elections of directors.
SUPPORTING STATEMENT
In the American corporate governance system, the election of corporate
directors is the primary vehicle for shareholders to influence corporate affairs
and exert accountability on management. We believe that the Company's financial
performance is affected by its corporate governance policies and procedures and
the level of accountability they impose. We believe cumulative voting increases
the possibility of electing independent-minded directors that will enforce
management's accountability to shareholders.
The election of independent-minded directors can have an invigorating
effect on the Board of Directors, fostering improved financial performance and
increased shareholder wealth. Management nominees often bow to a Chairman's
desires on business strategies and executive pay without question.
Cumulative voting grants shareholders the number of votes equal to the
number of shares owned multiplied by the number of directors to be elected. The
shareholder may cast all of his or her votes for a single director or apportion
the votes among the candidates. At Johnson & Johnson, shareholders owning
approximately 7.7% of the outstanding shares casting all their votes for one
individual would be able to elect one director, absent any other support.
Currently, the Company's Board of Directors is composed entirely of
management nominees. Cumulative voting places a check and balance on management
nominees by creating more competitive elections.
The argument that the adoption of cumulative voting will lead to the
election of dissidents to the Board of Directors who represent the special
interests of a minority of shareholders instead of the best interest of all
shareholders is misleading. Legally binding standards of fiduciary duty compel
all directors, no matter what combination of shareholders elected them, to act
in the best interest of all shareholders. Any director who fails to respect the
fiduciary duties of loyalty and/or care exposes himself or herself to
significant liability. Legal recourse is available to correct any breaches of
fiduciary duty.
We do not accept the claim that, in the complex world in which our Company
competes, an honest difference of opinion over business strategies and other
policies of the Company makes the minority view a so called "special interest."
Quite the contrary, dissent stimulates debate which leads to thoughtful action.
Cumulative voting will increase the competitiveness of director elections. We
believe competitive elections for directors will deter complacency on the Board
of Directors, which in turn will improve the performance of our Company and
increase shareholder wealth.
We urge your support for this proposal.
17
<PAGE>
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:
Johnson & Johnson believes that the present system of voting used by the
Company and most corporations (one vote for each share owned for each director)
best assures that the members of the Board of Directors will honor their duties
to represent the interests of all shareowners, and not just particular groups.
The unusual practice of cumulative voting, which the proponent recommends, would
permit a minority of shareowners to pool their voting power to attempt to elect
special interest directors who may fail to exercise independent judgement and
instead advocate factional viewpoints, even when these viewpoints may diverge
from the best interests of the Company and its shareowners as a whole.
IT IS, THEREFORE, RECOMMENDED THAT 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.
18
<PAGE>
[Johnson & Johnson]
[LOGO]
NOTICE OF
1998 ANNUAL
MEETING AND
PROXY
STATEMENT
<PAGE>
APPENDIX
(Pursuant to Rule 304 of Regulation S-T)
1. Page 12 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, 1992 and ending December 31, 1997, 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 23, 1998
The undersigned hereby appoints R.J Daretta, R.S. Fine, 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 23, 1998 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, M. Judah Folkman, Ann D.
Jordan, Arnold G. Langbo, Ralph S. Larsen, John S. Mayo, Paul J. Rizzo, Henry B.
Schacht, Maxine F. Singer, John W. Snow, 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 Cumulative Voting. [ ] [ ] [ ]
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
