(Reuters) – The Office of the Illinois State Treasurer is calling on Johnson & Johnson shareholders to reject Chief Executive Alex Gorsky’s $29.6 million pay package because it shields him from the U.S. healthcare company’s opioid litigation costs.
J&J is attracting investor scrutiny because it excluded from its calculation of stock awards to its top executives some $9 billion in costs related to lawsuits claiming it helped fuel the U.S. opioid crisis and that traces of asbestos in its talc baby powder caused cancer, Reuters reported last month.
Including the opioid and talc-related legal costs would have weighed on Gorsky’s compensation, which totaled $29.6 million in 2020, up 17% from the previous year.
The Office of the Illinois State Treasurer, which manages a $38 billion fund that includes state and local funds and retirement plans, said in a letter to other J&J investors on Wednesday that was reviewed by Reuters that the company was protecting executives “from the financial penalty of opioid-related lawsuits” without explaining why.
“Executives should be accountable for all consequences of corporate conduct,” the treasurer’s office said in the letter.
J&J did not respond to a request for comment. In a filing with the U.S. Securities and Exchange Commission this month, the company said excluding litigation costs from pay is consistent with its past practices and motivates the right executive behaviors.
A nonbinding resolution on the pay packages will be up for a vote at the company’s annual general meeting on April 22.
The state treasurer’s office said that it is “mindful” of the important role that J&J has played in developing a vaccine to battle the COVID-19 pandemic.
A U.S. health advisory panel on Wednesday is set to review six reported cases of rare blood clots in women who received J&J’s COVID-19 vaccine one day after federal regulators paused the use of the shot to assess the issue.
The state treasurer’s office, which has a $10 million stake in J&J, is a member of the Investors for Opioid and Pharmaceutical Accountability (IOPA) coalition, which has 61 members with $4.2 trillion in assets under management. IOPA wrote to J&J’s board in January asking it to review its pay practices in light of the opioid litigation and agreed-to settlements.
Proxy advisers Institutional Shareholder Services Inc and Glass Lewis have both recommended that investors reject Gorsky’s pay plan.
(Reporting by Jessica DiNapoli in New York; editing by Jonathan Oatis)