Johnson & Johnson Shareholders Want Its Directors to Pay Up
In an amended derivative lawsuit filed Dec. 17 in federal court in Trenton, N.J., shareholders asked a judge to find that directors and top executives mismanaged J&J. They also want J&J to "improve its corporate governance and internal procedures."
"Years of Red Flag Warnings"
While J&J once set "the gold standard for integrity and excellence," the directors' "utter disregard for their fiduciary duties, including permitting and fostering a culture of systemic, calculated and widespread legal violations has destroyed J&J's hard-earned reputation," Bloomberg quotes the shareholders' claim.
The board received "years of red flag warnings of systemic misconduct," according to the complaint, including regulatory investigations, subpoenas, U.S. Food and Drug Administration warning letters, news articles and, of course, the recalls itself.
J&J issuedmanyotherrecalls after the April actions, prompting two Senate investigations. The Oversight Committee hearings revealed cover-ups and phantom recalls. Not only did the recalls tarnish J&J's reputation but they also hurt its financial results: Sales in its consumer health care unit declined a whopping 25% in the last quarter.
J&J also faces government investigations into kickback payments and off-label marketing -- the practice of marketing pharmaceuticals for unapproved uses by the FDA. Bloomberg says the company had no comment while it reviews the complaint.