8-KMaterial Agreements

JOHNSON & JOHNSON 8-K Report, Material Agreement (Feb 17, 2006)

Filed February 17, 2006For Securities:JNJ

Summary

This Form 8-K filing from Johnson & Johnson, dated February 16, 2006, reports on the compensation decisions made by the Compensation & Benefits Committee for the company's executive officers for performance in 2005. The key information for investors pertains to the approved annual base salaries, bonus payments, and long-term incentive awards, including stock options and Restricted Share Units (RSUs), for the Named Executive Officers. These compensation packages are designed to align executive interests with shareholder value and reflect the company's performance over the past year. The filing details specific salary increases effective February 27, 2006, and bonus amounts awarded for 2005 performance, which can be a mix of cash and stock. Furthermore, significant grants of stock options and RSUs were approved under the 2005 Long-Term Incentive Plan, with vesting periods and exercise details provided. These long-term incentives aim to retain key talent and incentivize sustained growth and profitability. Investors should note that a more comprehensive overview of executive compensation will be available in the upcoming 2006 Proxy Statement.

Key Highlights

  • 1Johnson & Johnson's Compensation Committee approved 2005 compensation for Named Executive Officers, including salary adjustments, bonuses, and long-term incentives.
  • 2Annual base salaries for key executives, effective February 27, 2006, show increases across the board, with the Chairman/CEO receiving $1,670,000.
  • 3Bonus payments for 2005 performance were approved, totaling significant amounts for each executive, with flexibility in cash and stock awards.
  • 4Substantial grants of stock options and Restricted Share Units (RSUs) were awarded under the 2005 Long-Term Incentive Plan, with a set exercise price of $58.34 for options.
  • 5Stock options and RSUs are subject to a three-year vesting period, becoming exercisable or vesting on February 13, 2009.
  • 6Long-term incentive awards were also granted under the Certificate of Extra Compensation (CEC) program, with payouts deferred until retirement or termination.
  • 7The company anticipates filing its 2006 Proxy Statement around March 15, 2006, which will provide further details on executive compensation.

Frequently Asked Questions

The main purpose of this Form 8-K is to disclose the compensation decisions made by Johnson & Johnson's Compensation & Benefits Committee for its executive officers, specifically regarding their performance in 2005 and the resulting salary adjustments, bonuses, and long-term incentive awards.

The stock options granted will become exercisable on February 13, 2009, and the Restricted Share Units (RSUs) will vest on the same date. Holders will receive one share of common stock for each RSU if they are still employed by the company on February 13, 2009.

The stock options were granted with an exercise price of $58.34, which was the fair market value of Johnson & Johnson's common stock on the date of the grant (February 13, 2006).

More detailed information regarding Johnson & Johnson's executive compensation arrangements will be available in the company's 2006 Proxy Statement, which is expected to be filed on or about March 15, 2006.