J&J CEO Alex Gorsky Receives $4.2M Pay Increase Amid COVID-19 Vaccine Launch

Compiled by river

Like many large pharmaceutical companies, Johnson & Johnson’s financial performance last year was somewhat disappointing, as the pandemic caused millions of people to postpone medical needs unrelated to the virus. However, Johnson & Johnson turned the pandemic into an opportunity to accelerate vaccine launches, which greatly benefited CEO Alex Gorsky.

Reports indicate that Gorsky’s 2020 compensation increased by $4.2 million from 2019 levels, reaching a total of $29.58 million.

Despite Johnson & Johnson’s failure to meet its sales and adjusted earnings per share targets, executive compensation still increased. Taking into account the impact of foreign exchange rates, the company’s sales amounted to $83 billion, falling short of the $86.2 billion operational target set by the Board of Directors. This shortfall was primarily driven by the MedTech business, which underperformed its target by approximately $4 billion. The significant decline in this segment was largely attributable to patients postponing or canceling elective medical procedures during the COVID-19 pandemic.

However, Johnson & Johnson has indeed performed well on certain strategic metrics that are not quantifiable in the short term. Most importantly, the company developed a COVID-19 vaccine that recently received Emergency Use Authorization from the U.S. Food and Drug Administration (FDA). In filings submitted to securities regulators, Ronald Williams, Chair of the Compensation and Benefits Committee, noted that this achievement played a role in the Board’s strategy to “take a longer-term view when determining long-term incentive awards for 2021.”

Taking into account both financial and strategic factors, the Board awarded Gorsky 125% of his long-term incentive plan target, resulting in a final payout of $18.14 million. The CEO received 90.5% of his annual bonus, totaling $2.61 million, and also benefited from a $6.44 million increase in his pension.

Gorsky certainly has a lot on his plate this year. Johnson & Johnson is accelerating efforts to meet the demand for its COVID-19 vaccine, despite initial concerns that many people might be reluctant to accept its single-dose vaccine given the higher efficacy demonstrated by the two-dose mRNA vaccines from Pfizer/BioNTech and Moderna in Phase 3 trials.

Johnson & Johnson is currently facing pressure to increase vaccine supply. Like other vaccine developers, it encountered supply issues in Europe before its vaccine received authorization.

To help boost U.S. supply, Merck & Co. recently announced that it would assist Johnson & Johnson in producing its COVID-19 vaccine. Furthermore, Merck’s support for Johnson & Johnson’s vaccine production will receive up to $268.8 million in funding from the U.S. Biomedical Advanced Research and Development Authority (BARDA). The Biden administration is expected to purchase an additional 100 million doses of the Johnson & Johnson vaccine.

Source: J&J CEO Alex Gorsky scores $29.6M in 2020 pay, a $4.2M boost amid hopes for COVID-19 vaccine windfall