John Reed

About John Reed

John Reed, M.D., Ph.D., is Executive Vice President, Innovative Medicine R&D at Johnson & Johnson, joining in April 2023. His 2023 performance highlights included accelerating innovative product development, sharpening J&J’s focus on data science/digital health, and delivering robust pipeline growth exceeding internal goals; 2024 highlights similarly emphasized regulatory milestones and pipeline value creation in oncology, immunology, and neuroscience . Company incentive outcomes during his tenure: Enterprise annual incentives paid 130.4% of target for 2023 and 115.0% of target for 2024; PSUs paid 116.8% for 2021–2023 and 63.6% for 2022–2024, reflecting mixed TSR vs EPS outcomes . He holds M.D. and Ph.D. degrees (as designated in his title) .

Past Roles

Organization	Role	Years	Strategic Impact
Johnson & Johnson	EVP, Innovative Medicine R&D	Apr 2023–present	Accelerated product development, focused data science/digital, and grew R&D pipeline beyond internal goals; supported external innovation access

External Roles

Not disclosed in the proxy materials reviewed.

Fixed Compensation

Metric	2023	2024
Base salary rate ($)	$1,150,000	$1,200,000
Salary paid ($)	$840,385	$1,192,308
Target annual incentive ($)	$1,322,500	$1,500,000
Actual annual incentive paid ($)	$1,720,000	$1,725,000
Perquisites and other personal benefits ($)	$313,031 (incl. sign-on context, see 2023 SCT line)	$109,733 (aircraft $43,403; relocation $32,638; security $33,692); plus $34,378 relocation tax assistance

Notes:

Target bonus % (implied): 2023 ≈ 115% of salary ($1,322,500 on $1,150,000) and 2024 ≈ 125% ($1,500,000 on $1,200,000) .

Performance Compensation

Annual Incentive Design and Outcomes

Attribute	2023	2024
Financial vs strategic weighting (Enterprise)	70% financial / 30% strategic; Reed measured 75% Innovative Medicine and 25% Enterprise financial goals	70% financial / 30% strategic; Enterprise payout 115.0% (financial factor 128.8%, strategic 94.0%, discretion to 115%)
Enterprise payout factor	130.4%	115.0%
Reed actual annual incentive	$1,720,000	$1,725,000

Long-Term Incentives (PSUs, RSUs, Options)

Component	Grant date	Terms	2023	2024
PSUs (target units)	2/15/2024	3-year cliff; performance vs cumulative adjusted operational EPS and relative TSR	—	25,060 units; grant-date FV $3,352,101
RSUs (units)	5/1/2023	New-hire RSU; 3-year ratable; not eligible for continued vesting after qualifying separation	75,765 units; grant-date FV $11,699,934	—
RSUs (units)	2/15/2024	3-year ratable	—	4,048 units; grant-date FV $601,023
Stock options (qty/strike/expiry)	2/15/2024	3-year ratable	—	65,163 options @ $157.92; expire 2/15/2034; grant-date FV $1,802,995
PSU payouts (company-level cycles)	—	—	2021–2023: 116.8% (EPS 157.3%; TSR 76.3%)	2022–2024: 63.6%
2024 stock vested	—	RSUs/PSUs vesting realized values	—	25,255 shares vested; $3,651,620 value
2024 option exercises	—	—	—	0

Performance assumptions applied to outstanding PSUs in the 2025 proxy:

2023–2025 PSUs: Relative TSR vesting at 0.0% of target; cumulative adjusted EPS at 161.0% .
2024–2026 PSUs: Relative TSR vesting at 0.0%; cumulative adjusted EPS at 134.7% .

Equity Ownership & Alignment

Ownership item	Value
Common shares owned	15,542
Options/stock units counted in beneficial ownership	21,721
Total beneficial shares	37,263; less than 1% of outstanding shares (all officers/directors individually <1%)
Unvested RSUs (market value at 12/27/2024)	50,510 (May 2023 grant) valued $7,326,476; plus 4,048 (Feb 2024) valued $587,162
PSUs (earned to date and unearned est.)	Earned to date included in column H; unearned est. 0–16,878 units valued $2,448,154 (market at $145.05 on 12/27/2024)
Stock ownership guidelines	NEOs: 6x base salary; Reed compliant as of year-end 2024; 5 years to reach threshold for new execs
Pledging/hedging	Prohibited for directors and executive officers

Employment Terms

Term	Key details
Employment agreements	None for named executive officers (NEOs)
Severance plan	U.S. Severance Pay Plan: min 52 weeks base salary; paid through payroll cycle; 2 weeks per year of service; max 104 weeks for all employees
Reed severance examples	2023 involuntary w/o cause: cash severance $1,150,000; healthcare $19,000; equity incentives $0; total $1,169,000 . 2024 involuntary w/o cause: cash severance $1,200,000; healthcare $20,000; equity incentives $3,035,316; total $4,255,316 .
Change-in-control (CIC)	No CIC agreements; awards only accelerate if NOT assumed/substituted by acquirer; if assumed, they continue to vest
New severance policy (2025)	Cash severance >2.99x salary + target bonus for Section 16 officers requires shareholder approval
Non-compete / non-solicit	Violations during employment or within 18 months of termination can trigger forfeiture of vested/unvested PSUs, options, RSUs and repayment of awards vested/exercised in prior 12 months
Clawbacks	Comprehensive recoupment policies for restatements and specified misconduct; SEC 2022 rule-compliant 3-year lookback
Tax gross-ups	No tax gross-ups except standard relocation; Reed received $34,378 relocation tax assistance
Pension	Reed under Retirement Value Plan (RVP): 15% credit of plan earnings per year; lump-sum at retirement age; 2023 change in pension value $374,000; 2024 change $441,000
Deferred compensation	Aggregate balance: $24,479 (2023); $65,723 (2024); registrant contributions $22,967 (2023); $38,129 (2024)

Compensation Structure Analysis

Pay mix emphasizes long-term equity, capped incentives, and multi-year vesting; annual incentives and LTI awards capped at 200% of target . No change-in-control arrangements and no option repricing without shareholder approval—shareholder-friendly design .
2023 included significant new-hire awards: $5.7M cash sign-on (repayable if leaving within two years) and $11.7M RSUs vesting ratably over three years—clear retention lever through 2025–2026 .
PSU metrics balance EPS (non-GAAP adjusted) and relative TSR; recent cycles show strong EPS attainment but weaker TSR assumptions (0% for TSR in 2023–2025 and 2024–2026), moderating overall payouts .

Risk Indicators & Red Flags

Hedging/pledging prohibited; reduces misalignment risk .
No CIC agreements; severance constrained by policy and plan design (new 2.99x cap with shareholder approval beyond threshold) .
Relocation tax assistance provided ($34,378) but broader tax gross-ups restricted—lower governance risk .
Option repricing prohibited; clawback policies robust .

Equity Vesting & Insider Selling Pressure

2024: 25,255 shares vested for Reed ($3,651,620), creating potential supply from settlement; options exercised were zero, indicating no exercise-related sales pressure in 2024 .
Stock ownership guideline enforcement (6x salary) limits disposals until thresholds met; pledging/hedging prohibited .

Compensation Peer Group (Benchmarking)

Competitor composite peer group used for performance/TSR benchmarking in Innovative Medicine (e.g., AbbVie, Amgen, AstraZeneca, BMS, Lilly, GSK, Merck, Novartis, Pfizer, Roche, Sanofi) and MedTech peers; weighted by sales mix and market cap .

Say-on-Pay & Shareholder Feedback

2023 Say-on-Pay support 93% (strong approval) .

Expertise & Qualifications

M.D., Ph.D.; leadership in oncology, immunology, neuroscience, data science/digital health; enhanced pipeline value and regulatory outcomes .

Investment Implications

Alignment: High equity weighting, strict ownership/anti-pledging policies, and clawbacks align incentives with long-term performance; absence of CIC agreements reduces payout risks .
Retention: New-hire RSUs vesting through 2025–2026 and ongoing annual LTI awards support retention; severance benefits are formulaic/minimum 52 weeks, with a policy cap at 2.99x salary+target bonus without shareholder approval .
Performance Signals: Annual incentive payouts (115% in 2024; 130.4% in 2023) and PSU outcomes (EPS strong, TSR weak) suggest operational execution and pipeline productivity, but relative TSR headwinds may restrain PSU payouts unless TSR improves .
Trading Considerations: 2024 vesting delivered significant shares to Reed; no options exercised in 2024 reduces near-term exercise-driven supply. Ownership guideline constraints and anti-pledging limit sell pressure; monitor future Form 4 filings around vest dates for incremental supply signals .