We met with the lead independent director and management at Johnson & Johnson, a U.S. health care company, and had a constructive conversation about a shareholder proposal requesting that the company report on the board’s oversight of opioid-related risks.
Johnson & Johnson leaders felt the proposal was unnecessary given the company’s existing public disclosure. We shared that although Johnson & Johnson’s existing disclosures about its corporate response to the opioid epidemic were robust, a consolidated view of the board’s governance of financial and reputational risks related to the epidemic, as suggested in the proposal, would benefit shareholders and enable the board to better communicate its oversight of such risks.
Our prior engagements gave us confidence that company leaders and the board are focused on this topic and appreciate the risk it poses. Support for the board’s approach was reflected in the Vanguard funds’ support for the company’s directors at the annual meeting. We noted in our discussions, however, that we believed that consolidated disclosure of the board’s oversight of risks related to the opioid epidemic would be valuable. We encouraged Johnson & Johnson to view the funds’ support of the shareholder proposal as encouragement to enhance its disclosures and better describe the board’s role in oversight of opioid-related risks. We discussed with the company that such disclosure would be helpful for shareholders, and the proposal ultimately received a majority of shareholders’ support.