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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for the Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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)
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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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[Johnson & Johnson Logo]
NOTICE OF ANNUAL MEETING
AND PROXY STATEMENT
March 14, 2001
The Annual Meeting of the Shareowners of Johnson & Johnson will be held on
Thursday April 26, 2001 at 10:00 a.m. at the Hyatt Regency Hotel, Two Albany
Street, New Brunswick, New Jersey, to:
1. Elect directors;
2. Ratify the appointment of PricewaterhouseCoopers LLP as the Company's
independent auditors for 2001; 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.
If you are unable to attend the meeting, you will be able to access the
meeting on the Internet. The Company will broadcast the meeting live as a
webcast through the Johnson & Johnson website at www.jnj.com. The webcast will
remain available for replay for one week following the meeting. Visit the
Johnson & Johnson website at www.jnj.com and click on the Calendar of Events in
the Investor Relations section for details.
By order of the Board of Directors,
MICHAEL H. ULLMANN
Secretary
YOU CAN VOTE IN ONE OF THREE WAYS:
(1) Use the toll-free telephone number on your proxy card to vote by phone;
(2) Visit the web site noted on your proxy card to vote via the Internet;
or
(3) Sign, date and return your proxy card in the enclosed envelope to vote
by mail.
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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 27, 2001 are entitled to
notice of and to vote at the Annual Meeting of Shareowners and at any and all
adjournments or postponements 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 1,397,232,658 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.
HOW TO VOTE. Shareowners of record (that is, shareowners who hold their
shares in their own name) can vote any one of three ways:
(1) By Mail: Sign, date and return your proxy card in the enclosed
postage-paid envelope. If you sign and return your proxy card but do not
give voting instructions, the shares represented by that proxy will be
voted as recommended by the Board of Directors.
(2) By Telephone: Call the toll-free number on your proxy card to vote
by phone. You will need to follow the instructions on your proxy card and
the voice prompts.
(3) By Internet: Go to the web site listed on your proxy card to vote
through the Internet. You will need to follow the instructions on your
proxy card and the web site. If you vote through the Internet, you may
incur telephone and Internet access charges.
If you vote by telephone or the Internet, your electronic vote authorizes
the named proxies in the same manner as if you signed, dated and returned your
proxy card. IF YOU VOTE BY TELEPHONE OR THE INTERNET, YOU SHOULD NOT RETURN YOUR
PROXY CARD.
If your shares are held in the name of a bank, broker or other holder of
record (that is, "street name"), you will receive instructions from the holder
of record that you must follow in order for your shares to be voted. Telephone
and Internet voting also will be offered to shareowners owning shares through
most banks and brokers.
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 14, 2001 concurrently with the
mailing of the Company's 2000 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 Shareholder
Communications, Inc. to aid in the solicitation of brokers, banks and
institutional and other shareowners for a fee of approximately $11,500, plus
reimbursement of expenses. All costs of the solicitation of proxies will be
borne by 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.
CHANGING YOUR VOTE. You may change your vote at any time before the proxy
is exercised. If you voted by mail, you may revoke your proxy at any time before
it is voted by executing and delivering a timely and valid later-dated proxy, by
voting by ballot at the meeting or by giving written notice to the Secretary of
the Company. If you voted by telephone or the Internet you may also change your
vote with a timely and valid later telephone or Internet vote, as the case may
be. Attendance at the meeting will not have the effect of revoking a proxy
unless you give proper written notice of revocation to the Secretary before the
proxy is exercised or you vote by written ballot at the meeting.
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REDUCE DUPLICATE MAILINGS. The Company is required to provide an Annual
Report to all shareowners who receive this Proxy Statement. If you are a
shareowner of record and have more than one account in your name or at the same
address as other shareowners of record, you may authorize the Company to
discontinue mailings of multiple Annual Reports. To do so, mark the designated
box on each proxy card for which you wish to discontinue to receive a duplicate
Annual Report. If you are voting by telephone or the Internet you can either
follow the prompts when you vote or give us instructions to discontinue mailings
of future duplicate Annual Reports.
SHAREOWNER PROPOSALS. To be included in the Board of Directors' proxy
statement and proxy card for the 2002 Annual Meeting of Shareowners, a
shareowner proposal must be received by the Company on or before November 14,
2001. In addition, under the terms of the Company's By-Laws, a shareowner who
intends to present an item of business at the 2002 Annual Meeting of Shareowners
(other than a proposal submitted for inclusion in the Company's proxy materials)
must provide notice of such business to the Company on or before November 14,
2001. Proposals and other items of business 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 15 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.
Except for Mr. James T. Lenehan and Mr. William C. Weldon, who were elected
to the Board of Directors in February 2001, all of the nominees were elected to
the Board at the last Annual Meeting and all are currently serving as directors
of the Company.
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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, GERARD N. BURROW, M.D., Special Advisor to the President of
M.D. Photo] Yale University for Health Affairs.
Dr. Burrow, 68, was elected to the Board of Directors in
1993 and is a member of the Nominating & Corporate
Governance 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 Surx Corporation and the Sea Research
Foundation and on the Corporation Committee for Brown
University School of Medicine.
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[Joan Ganz Cooney JOAN GANZ COONEY, Chairman, Executive Committee, Sesame
Photo] Workshop.
Mrs. Cooney, 71, was elected to the Board of Directors in
1978 and is a member of the Compensation Committee and the
Chairperson of the Benefits Committee. She co-founded the
Sesame Workshop (originally called 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, Edison
Schools, Inc., the Museum of Television and Radio and The
New York and Presbyterian Hospitals, Inc.
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[James G. Cullen JAMES G. CULLEN, Retired President and Chief Operating
Photo] Officer, Bell Atlantic Corporation.
Mr. Cullen, 58, was elected to the Board of Directors in
1995 and is Chairman of the Audit Committee and a member of
the Compensation Committee. Mr. Cullen retired as President
and Chief Operating Officer of Bell Atlantic Corporation in
June 2000. He had assumed those positions in December 1998,
after having been Vice Chairman since February 1995 and,
prior to that, 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, Agilent Technologies,
Inc. and Quantum Bridge Communications Inc.
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[M. Judah Folkman, M. JUDAH FOLKMAN, M.D., Senior Associate in Surgery and
M.D. Photo] Director, Surgical Research Laboratory, Children's Hospital
and Andrus Professor of Pediatric Surgery and Professor of
Cell Biology, Harvard Medical School, Department of Surgery.
Dr. Folkman, 68, was elected to the Board of Directors in
1998 and is a member of the Science and Technology Advisory
Committee and the Public Policy Advisory Committee. Dr.
Folkman has been with 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
honorary degrees and awards, among the most recent of which
are The Franklin Institute's 2001 Benjamin Franklin Award in
Life Science, the 1998 Keio University (Tokyo) Medical
Science Prize and the 1997 Charles S. Mott Prize of the
General Motors Cancer Research Foundation.
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[Ann Dibble Jordan ANN DIBBLE JORDAN, Former Director, Social Services
Photo] Department, Chicago Lying-In Hospital, University of Chicago
Medical Center.
Mrs. Jordan, 66, was elected to the Board of Directors in
1981 and is a member of the Nominating & Corporate
Governance 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 and Citigroup Inc. Mrs. Jordan is also a Director
of The Phillips Collection, The Child Welfare League, the
National Symphony Orchestra and the Kennedy Center for the
Performing Arts.
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[Arnold G. Langbo ARNOLD G. LANGBO, Retired Chairman of the Board and Chief
Photo] Executive Officer, Kellogg Company.
Mr. Langbo, 63, was elected to the Board of Directors in
1991 and is a member of the Audit Committee and Chairman of
the Compensation Committee. Mr. Langbo retired as Chairman
of the Board of Kellogg Company in April 2000. He had held
that position since January 1992 after having been President
and Chief Operating Officer of Kellogg since December 1990.
He also served as Chief Executive Officer from January 1992
until April 1999. 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
Weyerhaeuser 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.
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[RALPH S. LARSEN RALPH S. LARSEN, Chairman, Board of Directors and Chief
PHOTO] Executive Officer; Chairman, Executive Committee.
Mr. Larsen, 62, 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 and AT&T Corp. He is also a former
Chairman and a member of the Executive Committee of The
Business Council and a member of the Policy Committee of The
Business Roundtable.
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[JAMES T. LENEHAN JAMES T. LENEHAN, Vice Chairman, Board of Directors; Member,
PHOTO] Executive Committee and Worldwide Chairman, Medical Devices
& Diagnostics Group.
Mr. Lenehan, 52, was elected to the Board of Directors and
named Vice Chairman of the Board in February 2001. Mr.
Lenehan joined the Company in 1976 and held several
marketing management positions before becoming President of
McNeil Consumer Products Company in 1990. He became a
Company Group Chairman in 1993 and was appointed to the
Executive Committee in 1994. Mr. Lenehan was named Worldwide
Chairman, Consumer Pharmaceuticals & Professional Group in
1994 and Worldwide Chairman, Medical Devices & Diagnostics
Group in 1999. He is a member of the Board of Trustees of
the Healthcare Leadership Council.
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[JOHN S. MAYO, PH.D. JOHN S. MAYO, PH.D., President Emeritus, AT&T Bell
PHOTO] Laboratories.
Dr. Mayo, 71, 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 (Emeritus), 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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[Leo F. Mullin Photo] LEO F. MULLIN, Chairman and Chief Executive Officer, Delta
Air Lines, Inc.
Mr. Mullin, 58, was elected to the Board of Directors in
1999 and is a member of the Audit Committee and the
Nominating & Corporate Governance Committee. Mr. Mullin has
been President and Chief Executive Officer of Delta since
August 1997 and was named Chairman in November 1999. Mr.
Mullin was Vice Chairman of Unicom Corporation and its
principal subsidiary, Commonwealth Edison Company, from 1995
to 1997. He was an executive of First Chicago Corporation
from 1981 to 1995, serving as that company's President and
Chief Operating Officer from 1993 to 1995, and as Chairman
and Chief Executive Officer of American National Bank, a
subsidiary of First Chicago Corporation, from 1991 to 1993.
Mr. Mullin is also a Director of BellSouth Corporation. He
is a member of the board of the Air Transport Association of
America and Chairman of the International Air Transport
Association. He is also a member of The Business Council and
The Business Roundtable.
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[Henry B. Schacht HENRY B. SCHACHT, Chairman of the Board and Chief Executive
Photo] Officer, Lucent Technologies Inc.; Managing Director and
Senior Advisor, E.M. Warburg, Pincus & Co. (currently on
non-paid leave of absence).
Mr. Schacht, 66, was elected to the Board of Directors in
1997 and is a member of the Audit Committee and the Chairman
of the Nominating & Corporate Governance Committee. Mr.
Schacht returned to Lucent Technologies in October 2000,
where he had been the Chairman of the Board from April 1996
until February 1998 and Chief Executive Officer from
February 1996 to October 1997. Earlier in 2000, Mr. Schacht
had served as Chairman of the Lucent spin-off, Avaya Inc.,
until his return to Lucent. Mr. Schacht was Chairman
(1977-1995) and Chief Executive Officer (1973-1994) of
Cummins Engine Company, Inc. He is also a Director of
Aluminum Company of America, The New York Times Company,
Avaya Inc. and Knoll, Inc., as well as a member of The
Business Council and The Business Roundtable. Mr. Schacht is
a former Chairman of the Board of Trustees of The Ford
Foundation and a Trustee of the Metropolitan Museum of Art.
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[Maxine F. Singer, MAXINE F. SINGER, PH.D., President of the Carnegie
Ph.D. Photo] Institution of Washington.
Dr. Singer, 70, was elected to the Board of Directors in
1991 and is a member of the Science and Technology Advisory
Committee and the Benefits 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. She is also a Director of Perlegen
Sciences Inc.
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[JOHN W. SNOW PHOTO] JOHN W. SNOW, Chairman, President and Chief Executive
Officer, CSX Corporation.
Mr. Snow, 61, was elected to the Board of Directors in 1998
and is a member of the Compensation Committee and the
Benefits Committee. Mr. Snow was named 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., Verizon Communications Inc. and
USX Corporation. He is a member of The Business Council and
The Business Roundtable and is serving a three-year term as
Chairman of the Air Traffic Services Subcommittee of the FAA
Management Advisory Council. Mr. Snow is also a member of
the Board of Trustees of Johns Hopkins University.
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[WILLIAM C. WELDON WILLIAM C. WELDON, Vice Chairman, Board of Directors and
PHOTO] Member, Executive Committee.
Mr. Weldon, 52, was elected to the Board of Directors and
named Vice Chairman of the Board in February 2001. Mr.
Weldon joined the Company in 1971, and served in several
sales, marketing and international management positions
before becoming President of Ethicon Endo-Surgery in 1992
and Company Group Chairman of Ethicon Endo-Surgery in 1995.
He was appointed to the Executive Committee and named
Worldwide Chairman, Pharmaceuticals Group in 1998. As Vice
Chairman, Mr. Weldon is responsible for the Pharmaceuticals
Group and the Consumer Pharmaceuticals & Nutritional
Products Group.
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[ROBERT N. WILSON ROBERT N. WILSON, Senior Vice Chairman, Board of Directors
PHOTO] and Vice Chairman, Executive Committee.
Mr. Wilson, 60, 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 (a wholly-owned subsidiary of The Charles Schwab
Corporation) and Amerada Hess Corporation.
STOCK OWNERSHIP/CONTROL
The following table sets forth information regarding beneficial ownership
of the Company's Common Stock owned by each 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 7,511,331 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 1,870,729
shares, the aggregate of 9,382,060 shares representing less than 1% of the
shares outstanding. All stock ownership is as of January 31, 2001,
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except for shares held in the Company's Dividend Reinvestment Plan or Savings
Plan, which are listed as of December 31, 2000.
SHARES UNDER
NUMBER OF COMMON EXERCISABLE
NAME SHARES(1)(2) OPTIONS(3)
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Gerard N. Burrow.................................... 7,088 4,600
Joan Ganz Cooney.................................... 11,968 4,600
James G. Cullen..................................... 26,450 4,600
M. Judah Folkman.................................... 3,341 2,600
Ann Dibble Jordan................................... 9,503 4,600
Christian A. Koffmann............................... 117,938 271,820
Arnold G. Langbo.................................... 15,591 4,600
Ralph S. Larsen..................................... 677,979 949,400
James T. Lenehan.................................... 67,018 306,200
John S. Mayo........................................ 47,322 4,600
Leo F. Mullin....................................... 3,918 1,100
Henry B. Schacht.................................... 4,481 3,500
Maxine F. Singer.................................... 17,447 4,600
John W. Snow........................................ 3,523 2,600
William C. Weldon................................... 46,807 102,340
Robert N. Wilson.................................... 554,886 576,600
All directors and executive officers as a
group(23)........................................... 1,870,729 2,881,106
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(1) Includes an aggregate of 110,825 Common Stock equivalent units credited to
nonemployee directors under the Deferred Fee Plan for Nonemployee Directors
and an aggregate of 33,215 Common Stock equivalent units credited to the
named executive officers (43,857 units to all executive officers as a group)
under the Executive Income Deferral Plan for an aggregate of 154,682 units
to all directors and executive officers as a group. In addition, 62,810 of
the shares listed as owned by Mr. Koffmann, 266,123 of the shares listed as
owned by Mr. Larsen and 50,515 of the shares listed as owned by Mr. Wilson,
represent the net gain of shares of Common Stock resulting from the exercise
of stock options, of which the actual distribution of these shares to these
executive officers has been deferred under the terms of the Company's Stock
Option Gain 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. The
directors and executive officers disclaim beneficial ownership of an
aggregate of 192,948 of these shares, including, 114,288 shares listed as
owned by Mr. Larsen, 10,000 shares listed as owned by Mr. Cullen, 600 shares
listed as owned by Mr. Lenehan, 100 shares listed as owned by Mr. Snow and
50,400 shares listed as owned by Mr. Wilson.
(3) Includes shares under options exercisable on January 31, 2001 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
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granted is determined annually and is currently 2,700 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. In fiscal year 2000, a total of
$7,500 was paid to two directors for attending additional committee meetings. 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 on a
hypothetical investment in the Company's Common Stock or, in the case of
Directors who have served on the Board since prior to January 1, 1996, on the
increase in value of units under the Certificate of Extra Compensation Program,
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 regularly scheduled meetings of the
Board of Directors and the committees on which they served, except for Mrs.
Cooney, who missed two Board of Directors meetings and one committee meeting.
The Board of Directors has a standing Audit Committee, Compensation
Committee and Nominating & Corporate Governance Committee.
The members of the Audit Committee are Mr. Langbo, Mr. Mullin, Mr. Schacht
and Mr. Cullen (Chairman). The Audit Committee is comprised entirely of
nonemployee, independent members of the Board of Directors and operates under a
written charter adopted by the Board of Directors. A copy of the Charter of the
Audit Committee is attached as Exhibit 1. 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.
Snow and Mr. Langbo (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 (Senior 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 three meetings of the Compensation Committee.
The members of the Nominating & Corporate Governance Committee are Dr.
Burrow, Mrs. Jordan, Mr. Mullin and Mr. Schacht (Chairman). The Nominating &
Corporate Governance Committee is responsible for overseeing matters of
corporate governance, including the evaluation of the performance and practices
of the Board of Directors and the Chief Executive Officer of the Company. It is
also within the charter of the Nominating & Corporate Governance Committee to
review the Company's management succession plans and executive resources. In
addition, the Nominating & Corporate Governance Committee reviews possible
candidates for the Board of Directors and recommends the nominees for directors
to the Board of Directors for approval. The
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Nominating & Corporate Governance Committee 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 Nominating & Corporate Governance
Committee met three times during the last fiscal year.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company believes that during 2000 all reports for the Company's
executive officers and directors that were required to be filed under Section 16
of the Securities Exchange Act of 1934 were timely filed.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee reports to and acts on behalf of the Board of Directors
by providing oversight of the financial management, independent auditors and
financial reporting procedures of the Company. The Company's management is
responsible for preparing the Company's financial statements and the independent
auditors are responsible for auditing those financial statements. The Audit
Committee is responsible for overseeing the conduct of these activities by the
Company's management and the independent auditors.
In this context, the Committee has met and held discussions with management
and the independent auditors. Management represented to the Committee that the
Company's consolidated financial statements were prepared in accordance with
generally accepted accounting principles, and the Committee has reviewed and
discussed the consolidated financial statements with management and the
independent auditors.
The Committee has discussed with the independent auditors matters required
to be discussed by Statement on Auditing Standards No. 61 (Communication With
Audit Committees). In addition, the independent auditors provided to the Audit
Committee the written disclosures required by Independent Standards Board
Standard No. 1 (Independence Discussions with Audit Committees), and the
Committee and the independent auditors have discussed the auditors' independence
from the Company and its management, including the matters in those written
disclosures. Additionally, the Committee considered the financial information
systems services and other non-audit services provided by the independent
auditors and the fees and costs billed and expected to be billed by the
independent auditors for those services (as shown on page 22 of this Proxy
Statement). The Committee has discussed with management the procedures for
selection of consultants and the related competitive bidding practices and fully
considered whether those services provided by the independent auditors are
compatible with maintaining auditor independence.
The Committee has discussed with the Company's internal and independent
auditors, with and without management present, their evaluations of the
Company's internal accounting controls and the overall quality of the Company's
financial reporting.
In reliance on the reviews and discussions with management and the
independent auditors referred to above, the Audit Committee recommended to the
Board of Directors on February 12, 2001, and the Board has approved, the
inclusion of the audited financial statements in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2000, for filing with the
Securities and Exchange Commission. The Audit Committee also recommended to the
Board of Directors, and the Board has approved, subject to shareowner
ratification, the selection of the Company's independent auditors.
Mr. James G. Cullen, Chairman
Mr. Arnold G. Langbo
Mr. Leo F. Mullin
Mr. Henry B. Schacht
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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, 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 shareowners. 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, medical device and diagnostics health
care fields with comparable sales volumes and above average EPS growth rates and
financial strength.
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
judgment in evaluating these factors and in determining appropriate
compensation.
A discussion of 2000 performance reviewed by the Compensation Committee can
be found under "Decisions on 2000 Compensation".
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JOHNSON & JOHNSON'S COMPENSATION PROGRAMS
BASE SALARY
The Base Salary for all employees exempt from the Fair Labor Standards Act,
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 that are, overall, equal on average to 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
over 200% of the merit guideline.
The domestic salary guideline for all exempt employees for 2000 was 4% for
merit increases plus 2% for market parity and promotion adjustments. The
domestic salary guideline for 2001 has been set at 4.5% for merit increases.
Guidelines for market parity and promotion adjustments are as approved in each
operating company's budget. Those guidelines are determined based on each unit's
overall competitive position with respect to salaries paid versus the
marketplace.
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 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 "annual
multiple" approach results in grants which 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 that 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
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period from two to six years. Vesting in awards granted in or after December
1997 generally occurs three years from grant.
CERTIFICATES OF EXTRA COMPENSATION
Certificates of Extra Compensation (CECs) provide deferred compensation
that 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.
DECISIONS ON 2000 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 judgment
of the Compensation Committee with no fixed or specific mathematical weighting
applied to each element of performance. Based on the Compensation Committee's
judgment, compensation awards for 2000, in total, were consistent with
established targets.
Mr. Larsen was awarded an annual salary increase in January 2000 of 6%. The
2000 annual incentive (comprised of cash and stock) paid to Mr. Larsen was
slightly above the target amount. In awarding Mr. Larsen his annual stock option
grant, consideration was given to J&J's overall performance during his tenure as
CEO and the competitive practices of our peer group. An analysis comparing Mr.
Larsen's total option grants to the competitive market since 1995 showed that
his long-term compensation over that period had been below J&J's competitive
target. Based on that analysis, Mr. Larsen was granted 750,000 stock options.
During 2000, Certificates of Extra Compensation were granted to Mr. Larsen to
maintain his 2001 accrual at the competitive target.
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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 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 that 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 that 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 that 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, the Company maximizes
the tax deduction available under Section 162(m). However, in some cases, the
Compensation Committee may elect to exceed the tax-deductible limits. This may
be necessary for the Company to meet competitive market pressures and to ensure
that it is able to attract and retain top talent to successfully lead the
organization.
Arnold G. Langbo, Chairman
Joan G. Cooney
James G. Cullen
John W. Snow
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SHAREOWNER RETURN PERFORMANCE GRAPHS
Following are line graphs 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 respective periods of five and ten years ending December 31,
2000. The graphs and tables assume that $100 was invested on December 31, 1995
and December 31, 1990 in the Company's Common Stock, the Standard & Poor's 500
Stock Index and the Standard & Poor's Diversified Health Care Index and that all
dividends were reinvested.
FIVE-YEAR CUMULATIVE TOTAL SHAREOWNER RETURN (1995-2000)
S&P DIVERSIFIED HEALTH
JOHNSON & JOHNSON S&P 500 INDEX CARE
----------------- ------------- ----------------------
1995 100.00 100.00 100.00
1996 118.11 122.94 126.12
1997 158.65 163.95 184.24
1998 204.69 210.80 268.39
1999 230.17 255.16 256.47
2000 263.02 231.93 351.86
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TEN-YEAR CUMULATIVE TOTAL SHAREOWNER RETURN (1990-2000)
S&P DIVERSIFIED HEALTH
JOHNSON & JOHNSON S&P 500 INDEX CARE
----------------- ------------- ----------------------
1990 100 100 100
1991 162 130 147
1992 145 140 126
1993 132 154 120
1994 164 156 139
1995 260 213 205
1996 307 262 258
1997 412 348 376
1998 531 447 546
1999 597 540 522
2000 681 491 714
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EXECUTIVE COMPENSATION
The following table shows, for each of the last three fiscal years, the
annual compensation paid to or earned by the Company's Chief Executive Officer
and the other four most highly compensated executive officers (the "Named
Officers") in all capacities in which they served:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION(1) LONG TERM
------------------------------------ COMPENSATION
NAME OTHER AWARDS
AND ANNUAL ------------ ALL OTHER
PRINCIPAL COMPEN- OPTIONS COMPEN-
POSITION YEAR SALARY($) BONUS($) SATION($) (#) SATION($)
--------- ---- ---------- ---------- ---------- ------------ ---------
(2) (3) (4)
R. S. Larsen 2000 $1,435,000 $1,550,287 $1,653,620 750,000 $64,575
Chairman/CEO 1999 1,365,000 1,409,629 1,437,529 250,000 61,425
1998 1,325,000 1,301,796 1,284,083 150,000 59,603
R. N. Wilson 2000 $ 980,000 $1,049,689 $1,420,374 250,000 $44,100
Senior Vice Chairman 1999 930,000 923,077 1,168,656 115,000 41,850
1998 900,000 882,886 1,042,273 75,000 40,500
J. T. Lenehan 2000 $ 730,000 $ 625,385 $ 440,471 120,000 $32,850
Vice Chairman 1999 660,000 505,641 299,930 80,000 29,700
1998 625,000 426,363 267,928 40,000 28,125
W. C. Weldon 2000 $ 712,500 $ 675,385 $ 298,171 120,000 $32,063
Vice Chairman 1999 575,000 476,806 206,169 80,000 25,875
1998 422,500 312,180 119,173 60,000 19,155
C. A. Koffmann 2000 $ 692,500 $ 574,903 $ 416,144 120,000 $31,163
Worldwide Chairman, 1999 625,000 402,919 312,821 80,000 28,125
Consumer & Personal 1998 590,000 417,052 279,221 40,000 26,550
Care Group
- - ------------------
(1) Includes amounts paid and deferred.
(2) Bonus amounts are comprised of cash and the fair market value of stock
awards on the date award is issued.
(3) Amounts include dividend equivalents paid under the Certificate of Extra
Compensation (CEC) Program (long-term incentive plan).
(4) Amount shown is the Company's matching contribution to the 401(k) Savings
Plan and related supplemental plan.
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STOCK OPTIONS
The following table contains information concerning the grant of stock
options under the Company's 2000 Stock Option Plan to the Named Officers during
the Company's last fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
----------------------------------------------------
% OF
TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED GRANT DATE
UNDERLYING TO EXERCISE PRESENT
OPTIONS EMPLOYEES PRICE EXPIRATION VALUE($)
NAME GRANTED(#)(1) IN 2000 ($/Sh) DATE (2)
- - ---- ------------- --------- -------- ---------- -----------
Ralph S. Larsen........... 750,000 3.6% $101.38 11/29/10 $22,340,250
Robert N. Wilson.......... 250,000 1.2% $101.38 11/29/10 $ 7,446,750
James T. Lenehan.......... 120,000 0.6% $101.38 11/29/10 $ 3,574,440
William C. Weldon......... 120,000 0.6% $101.38 11/29/10 $ 3,574,440
Christian A. Koffmann..... 120,000 0.6% $101.38 11/29/10 $ 3,574,440
- - ---------------
(1) The options were granted at an exercise price equal to the fair market value
of the Company's Common Stock on November 30, 2000, the date of grant. All
of the options become exercisable on the third anniversary of the date of
grant, which is the same vesting schedule for all executives granted options
on such date.
(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 November 29, 2010 had a grant date present value of $29.787 per
option share. The Black-Scholes model was used with the following
assumptions: volatility of 27% based on a historical weekly average over
five years; dividend yield of 1.40%; risk free interest of 5.45% based on a
U.S. Treasury rate of five years; and a five year option life.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth information with respect to the Named
Officers concerning the exercise of options during the last fiscal year and
unexercised options held as of the end of the fiscal year:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT YEAR END IN-THE-MONEY OPTIONS AT
SHARES 2000(#) YEAR END 2000($)(3)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#)(1) REALIZED($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------------- --------------- ----------- ------------- ----------- -------------
Ralph S. Larsen.......... 40,000 $2,921,800 949,400 1,150,000 $56,981,546 $7,697,500
Robert N. Wilson......... 52,000 $3,966,560 576,600 485,000 $37,613,662 $5,131,200
James T. Lenehan......... 8,400 $ 604,380 306,200 310,600 $20,181,172 $4,829,630
William C. Weldon........ 9,200 $ 684,112 102,340 271,560 $ 6,734,484 $3,085,490
Christian A. Koffmann.... 4,000 $ 328,680 271,820 277,180 $16,732,143 $3,744,121
- - ------------------
(1) 3,287 of the shares listed as acquired by Mr. Koffmann represent the net
gain of shares of Common Stock resulting from the exercise of stock options,
of which the actual distribution of these shares to this executive officer
has been deferred under the terms of the Company's Stock Option Gain
Deferral Plan.
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(2) For purposes of this footnote, the "value realized" by Mr. Koffmann includes
$328,680 from his exercise of stock options, of which the actual
distribution of the underlying shares is being deferred as described in the
prior footnote. This amount was determined by the difference between the
exercise price and the fair market value of the Common Stock on the date of
exercise.
(3) 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
($105.06).
CERTIFICATE OF EXTRA COMPENSATION PROGRAM
The following table provides information concerning awards made during the
last fiscal year to the Named Officers under the Company's Certificate of Extra
Compensation (CEC) Program.
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
ESTIMATED
NUMBER PERIOD UNTIL FUTURE
NAME OF UNITS(#) PAYOUT(1) PAYOUT($)(2)
- - ---- ----------- ------------ -------------
Ralph S. Larsen............................... 184,000 $4,268,800
Robert N. Wilson.............................. 228,000 5,289,600
James T. Lenehan.............................. 98,000 2,273,600
William C. Weldon............................. 40,000 928,000
Christian A. Koffmann......................... 140,000 3,248,000
- - ---------------
(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
$23.20 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
$23.20 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 $23.20 per unit value, are: Mr.
R. S. Larsen 1,213,200 CEC units ($28,146,240); Mr. R. N. Wilson 1,078,000 CEC
units ($25,009,600); Mr. J. T. Lenehan 281,600 CEC units ($6,533,120); Mr. W. C.
Weldon 140,600 CEC units ($3,261,920) and Mr. C. A. Koffmann 286,000 CEC units
($6,635,200).
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.
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PENSION PLAN TABLE
FIVE YEAR
AVERAGE ANNUAL BENEFITS FOR YEARS OF SERVICE
COVERED -------------------------------------------------------------------------
COMPENSATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS 40 YEARS
- - ------------ -------- -------- -------- -------- -------- --------
$ 900,000 $221,400 $ 295,100 $ 368,900 $ 442,700 $ 516,500 $ 590,300
1,150,000 283,900 378,500 473,100 567,700 662,400 757,000
1,400,000 346,400 461,800 577,300 692,800 808,200 923,700
1,650,000 408,900 545,200 681,500 817,800 954,100 1,090,400
1,900,000 471,400 628,500 785,700 942,800 1,100,000 1,257,100
2,150,000 533,900 711,900 889,900 1,067,800 1,245,800 1,423,800
2,400,000 596,400 795,200 994,100 1,192,900 1,391,700 1,590,500
2,650,000 658,900 876,600 1,098,200 1,317,900 1,537,500 1,757,200
2,900,000 721,500 961,900 1,202,400 1,442,900 1,683,400 1,923,900
3,150,000 784,000 1,045,300 1,306,600 1,567,900 1,829,300 2,090,600
3,400,000 846,500 1,128,600 1,410,800 1,693,000 1,975,100 2,257,300
3,650,000 909,000 1,212,000 1,515,000 1,818,000 2,121,000 2,424,000
Covered compensation includes regular annual earnings, dividend equivalents
paid on non-vested CEC units, amounts paid under the Company's Standards of
Leadership 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 $2,935,139; Mr. R. N. Wilson
$1,992,661; Mr. J. T. Lenehan $1,169,739; Mr. W. C. Weldon $920,701; and Mr. C.
A. Koffmann $1,102,228. The approximate years of service for each Named Officer
as of the end of the last fiscal year is: Mr. R. S. Larsen 37 years; Mr. R. N.
Wilson 36 years; Mr. J. T. Lenehan 24 years; Mr. W. C. Weldon 29 years and Mr.
C. A. Koffmann 12 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 benefits 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.
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed PricewaterhouseCoopers LLP as the
independent auditors for the Company and its subsidiaries for the fiscal year
2001. 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.
During fiscal year 2000, PricewaterhouseCoopers not only acted as the
independent auditors for the Company and its subsidiaries (work related to
auditing the annual financial statements for fiscal year 2000 and reviewing the
financial statements included in the Company's Forms 10-Q), but also rendered on
their behalf other services, including management consulting services,
litigation support services, tax-related services, human resource consulting
services and other accounting and auditing services. The following table sets
forth the aggregate fees billed or expected to be billed by
PricewaterhouseCoopers for audit services rendered in connection with the
financial
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statements and reports for fiscal year 2000 and for other services rendered
during fiscal year 2000 on behalf of the Company and its subsidiaries, as well
as all "out-of-pocket" costs incurred in connection with these services, which
have been or will be billed to the Company:
Audit Fees.................................................. $ 9,300,000
Financial Information Systems Design and Implementation..... 0
All Other Fees:
Management Consulting Services............................ $25,400,000
Tax Services.............................................. 7,800,000
Litigation Support Services............................... 3,400,000
Human Resource Consulting Services........................ 3,300,000
Other Accounting and Auditing Services.................... 3,200,000
-----------
Total All Other Fees...................................... $43,100,000
Representatives of PricewaterhouseCoopers LLP are expected to be present at
the Annual Meeting of Shareowners 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 PHARMACEUTICAL PRICING
The following shareowner proposal has been submitted to the Company for
action at the meeting and co-sponsored by The Dominican Sisters, Congregation of
Holy Cross, and 16 other shareowners, which are associated with the Interfaith
Center for Corporate Responsibility. The names, addresses and shareholdings of
these shareowners will be supplied upon oral or written request to the Secretary
of the Company. The affirmative vote of a majority of the shares voted at the
meeting is required for approval of the shareowner proposal. The text of the
proposal is as follows:
"JOHNSON & JOHNSON
DRUG PRICING RESOLUTION"
"WHEREAS:
Important as prescription drugs are, not everyone has access to them.
Millions of Americans have inadequate or no insurance coverage for drugs;
Most people without drug coverage purchase their needed drugs at a retail
pharmacy;
A Report prepared for the President by the Department of Health and Human
Services ("Prescription Drug Coverage, Spending, Utilization, and Prices", April
2000) found that:
- Individuals without drug coverage pay a higher price at the retail
pharmacy than the total price paid on behalf of those with drug coverage.
- In 1999, excluding the effects of rebates, the typical cash customer paid
nearly 15% more than the customer with third-party coverage. For a
quarter of the most common drugs, the price difference between cash and
third parties was even higher -- over 20%.
- For the most commonly prescribed drugs, the price difference between cash
customers and those with third-party coverage grew substantially larger
between 1996 and 1999.
This same Report found that the markup added by the wholesaler, after
purchase from the manufacturer, is "generally small, perhaps 2% - 4%" (ch.3,
p.101);
The literature cited in the Report suggests that pharmacy margins have been
falling in recent years; (p.103)
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Pharmaceutical manufacturers spent $1.9 billion on advertising in
1999 -- double the amount spent in 1997 ("Business Week", May 22, 2000);
RESOLVED: Shareholders request the Board of Directors to:
1. Create and implement a policy of price restraint on prescription drugs,
utilizing a combination of approaches to keep drug prices at reasonable levels.
2. Report to shareholders by September, 2001 on changes in policies and pricing
procedures for prescription drugs (withholding any competitive information, and
at reasonable cost).
SUPPORTING STATEMENT
We suggest that the policy include a restraint on each individual drug and
that it not be based on averages which can mask tremendous disparities: a low
price increase for one compound and a high price increase for another; one price
for a "favored customer" (usually low) and another for the retail customer
(usually high).
We understand the need for ongoing research and appreciate the role that
our company has played in the development of new medicines. We are also aware
that the cost of research is only one determinant for the final price of a drug.
Advertising is another significant company expenditure. Thus, we believe that
price restraint can be achieved without sacrificing necessary research efforts."
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 is keenly aware of the need to broaden access to
life-saving and life-enhancing pharmaceuticals. We also strongly support efforts
to achieve this goal through market-based approaches that provide consumers with
access to all FDA-approved medicines and the ability to choose among a variety
of prescription drug plans. The Company supports adding such a prescription drug
benefit to a modernized and strengthened Medicare program. Recognizing that
change may take time, the Company also supports interim solutions that would
improve seniors' access to medicines while not impeding progress toward
comprehensive Medicare modernization. Such approaches could include voluntary,
private-sector insurance for medicines with subsidies for lower-income seniors.
It could also include Federal grants to states to offer assistance to lower-
income elderly or those with high expenditures for medicines.
As a comprehensive health care products company, we will continue our
practice of pricing our products responsibly. Over the past ten years, the
weighted average compound growth rate of price increases for health care
products sold by the Company and its affiliates in the U.S., including
prescription and over-the-counter drugs and hospital and professional medical
products, has been well below the rate of inflation.
While much attention is focused on prescription drug prices, it is
important to remember that medicines are among the most effective and
cost-effective ways to prevent and cure disease and relieve human suffering.
Prescription medicines have been associated with a reduction in overall health
care costs, particularly costs associated with expensive or invasive
interventions, such as surgery and hospitalization. One independent study, for
example, found that every dollar spent on prescription medicines is associated
with a $4 reduction in hospital spending.
Continued intensive investment in research and development is essential for
the well-being of patients everywhere and the future of our pharmaceutical
business. Such research is costly and time-consuming. The Company must have the
latitude to price its products based on marketplace forces so as to be able to
continue to invest aggressively in research and development. A formal
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policy limiting U.S. price increases on individual prescription drugs would
impede research and development, inhibit the Company's ability to compete in the
marketplace, and is contrary to the interests of patients, the Company and its
shareowners.
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, and the Company has
not received timely notice from any shareowner of an intent to present a
proposal at the meeting. On any matter 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.
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EXHIBIT 1
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
OF JOHNSON & JOHNSON
The Audit Committee (the "Committee") shall report to and assist the Board
of Directors (the "Board") of Johnson & Johnson (the "Company") by providing
oversight of the financial management, independent auditors and financial
reporting procedures of the Company, as well as such other matters as directed
by the Board or this Charter.
MEMBERSHIP OF THE COMMITTEE
1. The Committee shall be comprised of not less than three members of the Board.
2. The composition of the Committee shall meet all the requirements of the Audit
Committee Policy of the New York Stock Exchange, which, among other things,
prohibits any officer or employee of the Company from serving on the
Committee.
3. Each Committee member shall have no other relationship to the Company that
may interfere with the exercise of his or her independence from management
and the Company.
4. Each Committee member shall be financially literate or shall become
financially literate within a reasonable period of time after appointment to
the Committee.
5. At least one member of the Committee shall have accounting or related
financial management expertise.
MEETINGS OF THE COMMITTEE
1. The Committee will meet formally at least three times each fiscal year.
2. The Committee, in its discretion, will invite to Committee meetings:
- The Chief Financial Officer of the Company
- The Vice President of Internal Audit
- The Corporate Controller
- The Treasurer
- The General Counsel
- A representative of the independent auditors.
3. The Committee will hold separate private meetings at least once each fiscal
year with each of the Vice President of Internal Audit, a representative of
the independent auditors and the General Counsel.
KEY RESPONSIBILITIES
The Company's management is responsible for preparing the Company's
financial statements and the independent auditors are responsible for auditing
those financial statements. The Committee is responsible for overseeing the
conduct of these activities by the Company's management and the independent
auditors. The financial management and the independent auditors of the Company
have more time, knowledge and more detailed information on the Company than do
Committee members. Consequently, in carrying out its oversight responsibilities,
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the Committee is not providing any expert or special assurance as to the
Company's financial statements or any professional certification as to the
independent auditors' work.
In carrying out its oversight responsibilities, the Committee shall perform
the following functions:
Oversight of Independent Auditors.
In the course of its oversight of the independent auditors as provided
under this Charter, the Committee will be guided by the premise that the
independent auditors are ultimately accountable to the Board and the Committee.
1. The Committee, subject to any action that may be taken by the full Board,
shall have the ultimate authority and responsibility to select, evaluate and,
where appropriate, replace the independent auditors.
2. The Committee shall:
(i) receive from the independent auditors annually, a formal written
statement delineating the relationships between the auditors and the
Company consistent with Independence Standards Board Standard Number 1;
(ii) discuss with the independent auditors the scope of any such disclosed
relationships and their impact or potential impact on the independent
auditors' independence and objectivity; and
(iii) recommend that the Board take appropriate action in response to the
independent auditors' report to satisfy itself of the auditors'
independence.
3. The Committee shall review the original proposed scope of the annual
independent audit of the Company's financial statements and the associated
fees, as well as any significant variations in the actual scope of the
independent audit and the associated fees.
4. The Committee shall review the independent auditors' report relating to
reportable conditions in the internal control structure and financial
reporting practices.
Oversight of Internal Auditors.
The Committee shall review and discuss with management and the independent
auditors:
1. The quality and adequacy of the Company's internal accounting controls.
2. Organization of the internal audit department, the adequacy of its resources
and the competence of the internal audit staff.
3. The audit risk assessment process and the proposed scope of the internal
audit department for the upcoming year and the coordination of that scope
with independent auditors.
4. Results of the internal auditors examination of internal controls including
summaries of inadequate reports issued and/or management improprieties
together with management's response thereto.
Oversight of Management's Conduct of the Company's Financial Reporting Process.
1. Audited Financial Statements. The Committee shall discuss with management
and the independent auditors the audited financial statements to be included
in the Company's Annual Report on Form 10-K (or the Annual Report to
Shareowners if distributed prior to the filing of Form 10-K) and review and
consider with the independent auditors the matters required to be discussed
by the applicable Statement of Auditing Standards ("SAS"). Based on these
discussions, the Committee will advise the Board of Directors whether it
recommends that the
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audited financial statements be included in the Annual Report on Form 10-K
(or the Annual Report to Shareowners).
2. Interim Financial Statements. The Committee, through its Chairman or the
Committee as a whole, will review with management and the independent
auditors, prior to the filing thereof, the Company's interim financial
results to be included in the Company's quarterly reports on Form 10-Q and
the matters required to be discussed by the applicable SAS.
3. Financial Reporting Practices. The Committee shall review:
(i) Changes in the Company's accounting policies and practices and
significant judgments that may affect the financial results.
(ii) The nature of any unusual or significant commitments or contingent
liabilities together with the underlying assumptions and estimates of
management.
(iii) The effect of changes on accounting standards that may materially
affect the Company's financial reporting practices.
Assist the Board in Oversight of the Company's Compliance with Policies and
Procedures Addressing Legal and Ethical Concerns.
The Committee shall review and monitor, as appropriate:
1. Results of compliance programs, including the Company's Policy on Business
Conduct.
2. Litigation or other legal matters that could have a significant impact on the
Company's financial results.
3. Significant findings of any examination by regulatory authorities or
agencies, in the areas of securities, accounting or tax, such as the
Securities and Exchange Commission or the Internal Revenue Service.
4. The adequacy of this Charter, which shall be reviewed by the Committee on an
annual basis. The Committee will recommend to the Board any modifications to
this Charter, which the Committee deems appropriate, for approval by the
Board.
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NOTICE OF
2001 ANNUAL
MEETING AND
PROXY
STATEMENT
[JOHNSON & JOHNSON LOGO]
30
[JOHNSON & JOHNSON LOGO]
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREOWNERS ON APRIL 26, 2001
PROXY
The undersigned hereby appoints R.J. Darretta and R.S. Fine and each or
either of them as proxies, with full power of substitution and revocation, to
represent the undersigned and to vote all shares of the Common Stock of Johnson
& Johnson which the undersigned is entitled to vote at the Annual Meeting of
Shareowners of the Company to be held on April 26, 2001 at 10:00 a.m. at the
Hyatt Regency Hotel, Two Albany Street, New Brunswick, New Jersey, and any
adjournments or postponements 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: (change of address/comments)
01. Gerard N. Burrow, 02. Joan G. Cooney, 03. James G. ___________________________________
Cullen, 04. M. Judah Folkman, 05. Ann D. Jordan,
06. Arnold G. Langbo, 07. Ralph S. Larsen, 08. James T. ___________________________________
Lenehan, 09. John S. Mayo, 10. Leo F. Mullin, 11. Henry
B. Schacht, 12. Maxine F. Singer, 13. John W. Snow, 14. ___________________________________
William C. Weldon, 15. Robert N. Wilson.
___________________________________
(If you have written in the above
space, please mark the corresponding
box on the reverse side of this card)
IF YOU DO NOT PLAN TO VOTE BY TELEPHONE OR THE INTERNET, PLEASE RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. TO VOTE IN ACCORDANCE WITH THE
BOARD OF DIRECTORS' RECOMMENDATIONS JUST SIGN THE REVERSE SIDE; NO BOXES NEED TO
BE MARKED.
____________
SEE REVERSE
SIDE
____________
_______________________________________________________________________________
- DETACH PROXY CARD HERE IF YOU ARE NOT VOTING BY TELEPHONE OR THE INTERNET -
ELECTRONIC DELIVERY OF PROXY MATERIALS
SIGN UP TO RECEIVE NEXT YEAR'S ANNUAL REPORT AND PROXY MATERIALS VIA
THE INTERNET. NEXT YEAR WHEN THE MATERIALS ARE AVAILABLE, WE WILL SEND
YOU AN E-MAIL WITH INSTRUCTIONS WHICH WILL ENABLE YOU TO REVIEW THESE
MATERIALS ON-LINE. TO SIGN UP FOR THIS OPTIONAL SERVICE, VISIT
http://www.econsent.com/jnj.
31
PLEASE MARK YOUR 0409
[X] 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 / / / / / /
appointment of
PricewaterhouseCoopers
as independent auditors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 3.
FOR AGAINST ABSTAIN
3. Proposal on pharmaceutical / / / / / /
pricing
SPECIAL ACTION
Discontinue Annual Report Mailing for this Account / /
Change of Address/Comments on Reverse Side; Mark this box / /
The signer hereby revokes all proxies heretofore given by the signer to vote at
said meeting or any adjournments or postponements 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
________________________________________________________________________________
- DETACH HERE AND RETURN THIS PROXY IN THE ENCLOSED
ENVELOPE IF YOU ARE NOT VOTING BY TELEPHONE OR THE INTERNET. -
VOTE BY TELEPHONE OR THE INTERNET
QUICK - EASY - IMMEDIATE
Johnson & Johnson encourages you to take advantage of two cost-effective and
convenient ways to vote your shares.
You may vote your proxy 24 hours a day, 7 days a week, using either a touch-tone
telephone or through the Internet. YOUR TELEPHONE OR INTERNET VOTE MUST BE
RECEIVED BY 12:00 MIDNIGHT NEW YORK TIME ON APRIL 25, 2001.
Your telephone or Internet vote authorizes the proxies named on the above proxy
card to vote your shares in the same manner as if you marked, signed and
returned your proxy card.
VOTE BY PHONE: ON A TOUCH-TONE TELEPHONE DIAL 1-877-PRX-VOTE
(1-877-779-8683) FROM THE U.S. AND CANADA OR DIAL
201-536-8073 FROM OTHER COUNTRIES.
You will be asked to enter the VOTER CONTROL NUMBER located
in the box just below the perforation on the proxy card. Then
follow the instructions.
OR
VOTE BY INTERNET: POINT YOUR BROWSER TO THE WEB ADDRESS:
http://www.eproxyvote.com/jnj
Click on the "PROCEED" icon -- You will be asked to enter
the VOTER CONTROL NUMBER located in the box just below the
perforation on the proxy card. Then follow the instructions.
OR
VOTE BY MAIL: Mark, sign and date your proxy card and return it in the
postage-paid envelope. IF YOU ARE VOTING BY TELEPHONE OR THE
INTERNET, PLEASE DO NOT MAIL YOUR PROXY CARD.