Johnson & Johnson (JNJ:US), the world’s biggest maker of consumer health products, said Chief Executive Officer Alex Gorsky was elected chairman of the board, succeeding Bill Weldon who will retire next year.
Weldon, 64, will resign as chairman on Dec. 28 and plans to retire in the first quarter of 2013, the New Brunswick, New Jersey-based company said today in a statement. Gorsky replaced him as CEO in April.
Weldon will begin to receive $95.1 million in deferred and long-term compensation and $48 million in pension payments upon retirement, according to the company. He started at J&J as a sales representative in 1971. Gorsky, 52, who had led J&J’s device and supply chain units, said when he took over as CEO that he saw value in J&J staying a large, diversified company.
“Gorsky now has the wheel, without a parent riding shotgun,” said Erik Gordon, a business professor at the University of Michigan in Ann Arbor who follows the industry. “Now it’s entirely his show to run and he can make changes without insulting a chairman who was his predecessor. Those changes aren’t going to be dramatic because Gorsky is Weldon’s protégé and he is cut from the same mold.”
J&J has struggled with quality issues for the past several years, recalling prescription drugs and over-the-counter medicines like Tylenol, Motrin and Benadryl. It stopped selling several types of vaginal mesh implants tied to internal injuries in June and recalled a bone putty used to stop bleeding in August because it could catch fire during surgery.
Gorsky is unlikely to “strike off in a sharp new direction or make any hairpin turns” as chairman, said Matt Miksic, an analyst at Piper Jaffray & Co., in a telephone interview. “I’m interested to see where the company goes under his leadership, but I don’t look at it as if we are opening a brand new and significant chapter for J&J. They will have to work through some of the same issues they have has for the past couple of years.”
J&J also said today it is changing the board’s governance structure by expanding the role of the independent presiding director, who will now have more responsibility for shareholder communications, executive performance evaluations and succession planning.
J&J gained less than 1 percent to $69.73 at the close in New York. The shares have gained 6.3 percent this year.
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