1 Boring Old Man

Despite Recalls, Legal Settlements and Guilty Pleas – A $143.5 Million (or Perhaps $197 Million) Golden Parachute for the Former Drug Represenative Who Is Now CEO of Johnson and Johnson
Healthcare Renewal
by Roy Poses
March 15, 2012

^{After 30 separate product recalls since 2009, and multiple legal settlements and guilty pleas, we noted that the former pharmaceutical representative who is now the CEO of Johnson and Johnson will be retiring.} 

^{The $143.5 Million (or Perhaps $197 Million) Golden Parachute – The Wall Street Journal just reported his retirement will come with an immense golden parachute:}

^{Johnson & Johnson Chairman and Chief Executive William Weldon stands to collect pension benefits and deferred compensation currently valued at $143.5 million after his retirement, according to new details released by the health-care conglomerate.}

…

^{Actually, an argument that the $143.5 million figure is an major under-estimate appeared in the Shearlings Got Plowed blog:}

^{The MSM reports calculate only the cash values for soon to be Ex-CEO Weldon, not the present value of his stock options, at today’s NYSE closing price for J&J of $65.08. So, that — plus the vesting of his February 2012 JNJ RSUs and Stock Option awards [see page 45 of the link (but such amounts are omitted from the year end 2011 proxy, on which the WSJ relied)] — add about $53.47 million to the Weldon walkaway haul.}

^{Thus, Mr Weldon’s golden parachute may be as big as $197 million…}

^{Summary
The ongoing news from the once proud Johnson and Johnson, whose credo famously states:}

^{We believe our first responsibility is to doctors, nurses and patients, to mothers and fathers, and all others who use our products and services. In meeting their needs, everything we do must be of high quality.}

suggests that instead, the company’s first responsibility is now to the hired managers, to obey their dictates no matter how they undermine the credo, and most importantly, to pay them so much as to make them some of the most wealthy people in the world. Johnson and Johnson has become exemplary, not of putting patients or health care professionals first, but of how hired managers took over health care, and turned it to their own advantage.

So should we trust Johnson and Johnson to do better, now that another former pharmaceutical representative will be its new CEO? The case of Johnson and Johnson indicates why we need a huge change in how health care organizations are lead. Health care organizations need leaders that uphold the core values of health care, and focus on and are accountable for the mission, not on secondary responsibilities that conflict with these values and their mission, and not on self-enrichment. Leaders ought to be rewarded reasonably, but not lavishly, for doing what ultimately improves patient care, or when applicable, good education and good research. On the other hand, those who authorize, direct and implement bad behavior ought to suffer negative consequences sufficient to deter future bad behavior.

If we do not fix the severe problems affecting the leadership and governance of health care, and do not increase accountability, integrity and transparency of health care leadership and governance, we will be as much to blame as the leaders when the system collapses.