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NEW BRUNSWICK, NJ–A major shareholder in Johnson & Johnson (J&J) has urged several activists to pressure the Hub-City-based consumer products giant to split up its three divisions into separate companies, according to a Reuters report.
J&J's three divisions include its consumer products subsidiary, pharmaceuticals subsidiary, and medical devices subsidiary.
Sources said the investor, Artisan Partners, hopes the split would unlock as much as $90 billion in enterprise value, according to the report.
The shareholder also suggested that J&J should replace board members and review “standards for executive pay and financial reporting,” writes Reuters, citing documents the news outlet has seen.
“In a presentation to [J&J] last year that was seen by Reuters, Artisan said the firm has significantly underperformed its peers across each of its major divisions, due partly to opaque financial reporting and flawed executive compensation,” reads the report.
J&J is under scrutiny “as rival healthcare companies increasingly focus on a handful of areas of competitive advantage, while exiting other areas through divestitures or spin offs,” says the report.
A J&J spokesperson declined a request for comment but referenced remarks the company made during its investor presentation on January 26.
“Because of our broad base across healthcare, we are uniquely positioned to be a partner of choice,” said Alex Gorsky, chairman and chief executive officer of J&J.
“This broad-based structure has helped us deliver strong, consistent and sustainable financial performance.”
J&J recently announced that it is cutting 3,000 jobs in its struggling medical devices division.
Gorsky reportedly received a multimillion-dollar raise last year when J&J’s board increased his pay package to nearly $25 million. The package included more cash and much more J&J stock, as well as other options.
Paul Stoffels, the company's chief science officer and worldwide pharma chairman, received $10.69 million in J&J stock, which helped catapult his total compensation to $18.34 million for the year – more than double the year before.
The company managed to post fourth-quarter earnings on January 26 which are more optimistic than forecasts. However, its revenue projections for this year could be better – they are below financial analysts’ estimates.