Proxy Blog

Johnson & Johnson

March 30, 2020

The annual proxy for this manufacturing company had the following proposals: 

  1. Proforma votes on directors, appointment of auditors, and “say-on-pay” advisory vote 
  2. Board proposal on removal of directors without cause 
  3. Shareholder proposals on independent chairman and governance of opioid-related risks 

Magni voted as follows: 

  1. For proforma proposals.
    -Directors – The board has a majority of independent directors and some have CEO/CFO experience with other companies. The compensation of directors is disclosed with a meaningful portion in equity where the equity has restrictions to align director incentives with long-term value creation. 
    -Auditors – There appear to be no controversies with the financial statements of the company.
    -“Say-on-pay” – The proxy materials provided thorough disclosures on shareholder engagement and peer groups. 
  2. For board proposals on removing directors without cause. The proposal places more control of the board in the hands of the shareholders. That is consistent with good governance. 
  3. For and against shareholder proposals.
    -For independent chairman – Per the Magni position paper, Magni routinely votes in favor of these proposals.
    -Against governance of opioid-related risks – The opioid epidemic is a serious issue. That said, the proposal does not claim that the company did anything wrong. The proposal focuses on issues related to the crisis and some vague allegations of a need for governance changes within the company. If the proposal had identified some wrong or evidence that the company’s reputation had been hurt by association with the crisis, the proposal would have been a good starting point. If the proposal had also included an actionable recommendation with a good starting point, then the proposal would have deserved support.