DEF 14A of Johnson & Johnson, Mar 15, 2017

DEF 14A of Johnson & Johnson

Filed Mar 15, 2017 · FY20160000200406-17-000015

Open on EDGAR

  1. NOMINEES

    NOMINEES There are 10 director nominees for election at our 2017 Annual Meeting, to hold office until the next Annual Meeting and until their successors have been duly elected and qualified. All of the nominees were elected to the Board at the last Annual Meeting and are currently serving as directors. Dr. Susan Lindquist was also elected to the Board at the last Annual Meeting, but passed away on October 28, 2016. Below are summaries of the background, business experience and description of the principal occupation of each of the nominees.

  2. NOMINEES

    | | MARY C. BECKERLE, Ph.D., Chief Executive Officer and Director, Huntsman Cancer Institute at the University of Utah; Distinguished Professor of Biology, College of Science, University of Utah With her expertise in scientific research and organizational management in the health care arena, and her active participation in national and international scientific affairs, Dr. Beckerle provides a perspective crucial to a global health care company. Director since 2015; Independent Chairman, Science, Technology & Sustainability Committee; Member, Regulatory, Compliance & Government Affairs Committee | | Dr. Beckerle, 62, has served as CEO and Director of Huntsman Cancer Institute since 2006 and she was appointed in 2009 to an additional key health sciences leadership role as Associate Vice President for Cancer Affairs at the University of Utah. Dr. Beckerle joined the faculty of the University of Utah in 1986, and is a distinguished professor of biology and oncological sciences, holding the Ralph E. and Willia T. Main Presidential Professorship. Dr. Beckerle has served on the NIH Advisory Committee to the Director, on the Board of Directors of the American Association for Cancer Research, as president of the American Society for Cell Biology, and as the Chair of the American Cancer Society Council for Extramural Grants. She currently serves on a number of scientific advisory boards including, the Medical Advisory Board of the Howard Hughes Medical Institute and the Scientific Advisory Boards of the National Center for Biological Sciences at the Tata Institute of Fundamental Research in India, the Mechanobiology Institute in Singapore, and the Dana Farber/Harvard Cancer Center. Dr. Beckerle held a Guggenheim Fellowship at the Curie Institute in Paris, received the Utah Governor’s Medal for Science and Technology in 2001, the Sword of Hope Award from the American Cancer Society in 2004 and is an elected Fellow of the American Academy of Arts and Sciences. Dr. Beckerle was also named a National Association of Corporate Directors (NACD) Governance Fellow in 2012. Other Public Company Board Service: Huntsman Corporation (2011 to present) | |

  3. NOMINEES

    | | D. SCOTT DAVIS, Former Chairman and Chief Executive Officer, United Parcel Service, Inc. Having served as Chairman and CEO of the world’s largest publicly-traded logistics company, and given his knowledge and passion for emerging markets and international operations, deep understanding of public policy and global economic indicators, and expertise in management, strategy, finance and operations, Mr. Davis brings to our Board his unique expertise in supply chain logistics at a time of rapid global expansion in the health care industry. Director since 2014; Independent Chairman, Audit Committee; Member, Compensation & Benefits Committee | | Mr. Davis, 65, served as Chairman and Chief Executive Officer of United Parcel Service, Inc. (UPS) (shipment and logistics) from 2008 to 2014, and as Chairman from 2014 to 2016. Previously, Mr. Davis held various leadership positions with UPS, primarily in the finance and accounting area, including Vice Chairman and Chief Financial Officer. Prior to joining UPS, he was Chief Executive Officer of II Morrow Inc., a developer of general aviation and marine navigation instruments. Mr. Davis is a Certified Public Accountant. He previously served on the Board of the Federal Reserve Bank of Atlanta from 2003 to 2009, serving as Chairman in 2009. Mr. Davis is a trustee of the Annie E. Casey Foundation and a member of The Carter Center Board of Councilors. Other Public Company Board Service: Honeywell International, Inc. (2005 to present) Recent Past Public Company Board Service: United Parcel Service, Inc. (2008 to 2016); EndoChoice, Inc. (2014 to 2016) | |

  4. NOMINEES

    | | IAN E. L. DAVIS, Chairman, Rolls-Royce Holdings plc; Former Chairman and Worldwide Managing Director, McKinsey & Company Having served as Chairman and Worldwide Managing Director of one of the world’s leading management consulting firms, and as a consultant to a range of global organizations across the public, private and not-for-profit sectors, Mr. Davis brings considerable global experience, management insight and business knowledge to our Board. Director since 2010; Independent Member, Audit Committee; Member, Regulatory, Compliance & Government Affairs Committee | | Mr. Davis, 66, is currently non-executive Chairman, Rolls-Royce Holdings plc. Mr. Davis retired from McKinsey & Company (management consulting) in 2010 as a Senior Partner, having served as Chairman and Worldwide Managing Director from 2003 until 2009. In his more than 30 years at McKinsey, he served as a consultant to a range of global organizations across the public, private and not-for-profit sectors. Prior to becoming Chairman and Worldwide Managing Director, he was Managing Partner of McKinsey’s practice in the United Kingdom and Ireland. His experience included oversight for McKinsey clients and services in Asia, Europe, the Middle East and Africa, as well as expertise in the consumer products and retail industries. Mr. Davis is a Director of Teach for All, Inc., a global network of independent social enterprises working to expand educational opportunities in their nations; global energy group, BP plc.; and Majid Al Futtaim Holding LLC; and a Senior Advisor at Apax Partners, a private equity firm. Other Public Company Board Service: BP plc (2010 to present); Rolls-Royce Holdings plc (2013 to present) | |

  5. NOMINEES

    | | ALEX GORSKY, Chairman, Board of Directors; Chief Executive Officer; Chairman, Executive Committee, Johnson & Johnson Having started his career at Johnson & Johnson in 1988 and having been promoted to positions of increasing responsibility across business segments, culminating in his appointment to CEO and election to our Board of Directors in 2012, Mr. Gorsky brings a full range of strategic management expertise, a broad understanding of the issues facing a multinational business in the health care industry and an in-depth knowledge of the company’s business, history and culture to our Board and the Chairman position. Director since 2012; Management Chairman, Finance Committee | | Mr. Gorsky, 56, was appointed as Chairman, Board of Directors in December 2012. He was named Chief Executive Officer, Chairman of the Executive Committee and joined the Board of Directors in April 2012. Mr. Gorsky began his Johnson & Johnson career with Janssen Pharmaceutica Inc. in 1988. Over the next 15 years, he advanced through positions of increasing responsibility in sales, marketing, and management. In 2001, Mr. Gorsky was appointed President of Janssen Pharmaceutical Inc., and in 2003 he was named Company Group Chairman of the Johnson & Johnson pharmaceutical business in Europe, the Middle East and Africa. Mr. Gorsky left Johnson & Johnson in 2004 to join Novartis Pharmaceuticals Corporation, where he served as head of the company’s pharmaceutical business in North America. Mr. Gorsky returned to Johnson & Johnson in 2008 as Company Group Chairman for Ethicon. In early 2009, he was appointed Worldwide Chairman of the Surgical Care Group and member of the Executive Committee. In September 2009, he was appointed Worldwide Chairman of the Medical Devices and Diagnostics Group. Mr. Gorsky became Vice Chairman of the Executive Committee in January 2011. Mr. Gorsky also serves on the boards of the Travis Manion Foundation, the Congressional Medal of Honor Foundation and the National Academy Foundation. Other Public Company Board Service: International Business Machines Corporation (IBM) (2014 to present) | |

  6. NOMINEES

    | | MARK B. McCLELLAN, M.D., Ph.D., Director, Duke-Robert J. Margolis, MD, Center for Health Policy With his extensive experience in public health policy, including as Commissioner of the U.S. Food and Drug Administration and Administrator for the U.S. Centers for Medicare & Medicaid Services, Dr. McClellan possesses broad knowledge of, and unique insights into, the challenges facing the health care industry, making him a valuable member of the board of a broad-based health care company. Director since 2013; Independent Member, Regulatory, Compliance & Government Affairs Committee; Member, Science, Technology & Sustainability Committee | | Dr. McClellan, 53, became the inaugural Director of the Duke-Robert J. Margolis, MD, Center for Health Policy in January 2016, and the Margolis Professor of Business, Medicine and Policy at Duke University. He is also a faculty member at Dell Medical School at The University of Texas in Austin. Previously, he served from 2007 to 2015 as a Senior Fellow in Economic Studies, and Director of the Initiatives on Value and Innovation in Health Care at the Brookings Institution. Dr. McClellan served as Administrator of the Centers for Medicare & Medicaid Services for the U.S. Department of Health and Human Services from 2004 to 2006, and as Commissioner of the U.S. Food and Drug Administration from 2002 to 2004. He served as a member of the President’s Council of Economic Advisers and senior director for health care policy at the White House from 2001 to 2002, and during President Bill Clinton’s administration, held the position of Deputy Assistant Secretary for Economic Policy for the Department of the Treasury. Dr. McClellan previously served as an associate professor of economics and medicine with tenure at Stanford University, where he also directed the Program on Health Outcomes Research. Dr. McClellan is the founding chair and a current board member of the Reagan-Udall Foundation for the Food and Drug Administration, is a member of the National Academy of Medicine and chairs the Academy’s Leadership Consortium for Value and Science-Driven Health Care, and co-chairs the guiding committee of the Health Care Payment Learning and Action Network. Other Public Company Board Service: None Recent Past Public Company Board Service: Aviv REIT, Inc. (2013 to 2015) | |

  7. NOMINEES

    | | ANNE M. MULCAHY, Former Chairman and Chief Executive Officer, Xerox Corporation Having served as Chairman and CEO of a large, global manufacturing and services company with one of the world’s most recognized brands and track record for innovation, Ms. Mulcahy provides to our Board valuable insight into organizational and operational management issues crucial to a large public company, as well as a strong reputation for leadership in business innovation and talent development. Lead Director since 2012 Director since 2009; Independent Member, Audit Committee; Member, Nominating & Corporate Governance Committee; Member, Finance Committee | | Ms. Mulcahy, 64, was Chairman and Chief Executive Officer of Xerox Corporation (business equipment and services) until July 2009, when she retired as CEO after eight years in the position. Prior to serving as CEO, Ms. Mulcahy was President and Chief Operating Officer of Xerox. She also served as President of Xerox’s General Markets Operations, which created and sold products for reseller, dealer and retail channels. During her career at Xerox that began in 1976, Ms. Mulcahy also served as Vice President for Human Resources with responsibility for compensation, benefits, human resource strategy, labor relations, management development and employee training; and Vice President and Staff Officer for Customer Operations, covering South America and Central America, Europe, Asia and Africa. Ms. Mulcahy has been a U.S. Board Chair of Save the Children since March 2010. Other Public Company Board Service: Target Corporation (1997 to present); Graham Holdings Company (2008 to present); LPL Financial Holdings Inc. (2013 to present) | |

  8. NOMINEES

    | | WILLIAM D. PEREZ, Retired President and Chief Executive Officer, Wm. Wrigley Jr. Company With his experience as CEO of several large, consumer-focused companies across a wide variety of industries, Mr. Perez contributes to our Board significant organizational and operational management skills, combined with a wealth of experience in global, consumer-oriented businesses vital to a large public company in the consumer products space. Director since 2007; Independent Chairman, Nominating & Corporate Governance Committee; Member, Audit Committee | | Mr. Perez, 69, is currently a Senior Advisor at Greenhill & Co., Inc. (investment banking). Mr. Perez served as President and Chief Executive Officer for the Wm. Wrigley Jr. Company (confectionary and chewing gum) from 2006 to 2008. Before joining Wrigley, Mr. Perez served as President and Chief Executive Officer of Nike, Inc. Previously, he spent 34 years with S.C. Johnson & Son, Inc., including eight years as its President and Chief Executive Officer. Mr. Perez is a Trustee for Cornell University and Northwestern Memorial Hospital. Other Public Company Board Service: Whirlpool Corporation (2009 to present) Recent Past Public Company Board Service: Campbell Soup Company (2009 to 2012) | |

  9. NOMINEES

    | | CHARLES PRINCE, Retired Chairman and Chief Executive Officer, Citigroup Inc. Having served as Chairman and CEO of the nation’s largest and most diversified financial institution, Mr. Prince brings to our Board a strong mix of organizational and operational management skills combined with well-developed legal, global business and financial acumen critical to a large public company. Director since 2006; Independent Chairman, Regulatory, Compliance & Government Affairs Committee; Member, Nominating & Corporate Governance Committee | | Mr. Prince, 67, served as Chief Executive Officer of Citigroup Inc. (financial services) from 2003 to 2007 and as Chairman from 2006 to 2007. Previously he served as Chairman and Chief Executive Officer of Citigroup’s Global Corporate and Investment Bank from 2002 to 2003 and Chief Operating Officer from 2001 to 2002. Mr. Prince began his career as an attorney at U.S. Steel Corporation in 1975. Mr. Prince is a member of the Council on Foreign Relations and The Council of Chief Executives. Other Public Company Board Service: Xerox Corporation (2008 to present) | |

  10. NOMINEES

    | | A. EUGENE WASHINGTON, M.D., M.Sc., Duke University’s Chancellor for Health Affairs; President and Chief Executive Officer, Duke University Health System Dr. Washington brings to our Board his distinct expertise born of significant achievements as a senior executive in academia, an accomplished clinical investigator, an innovator in health care, and a leader in shaping national health policy. With his unique combination of knowledge, skills and experience in organizational management, medical research, patient care, and public health policy, Dr. Washington provides an invaluable perspective for a company in the health care industry. Director since 2012; Independent Member, Compensation & Benefits Committee; Member, Science, Technology & Sustainability Committee | | Dr. Washington, 66, is currently Duke University’s Chancellor for Health Affairs and the President and Chief Executive Officer of the Duke University Health System. Previously he was Vice Chancellor of Health Sciences, Dean of the David Geffen School of Medicine at UCLA; Chief Executive Officer of the UCLA Health System; and Distinguished Professor of Gynecology and Health Policy at UCLA. Prior to UCLA, he served as Executive Vice Chancellor and Provost at the University of California, San Francisco (UCSF) from 2004 to 2010. Dr. Washington co-founded UCSF’s Medical Effectiveness Research Center for Diverse Populations in 1993 and served as Director until 2005. He was Chair of the Department of Obstetrics, Gynecology, and Reproductive Sciences at UCSF from 1996 to 2004. Dr. Washington also co-founded the UCSF-Stanford Evidence-based Practice Center and served as its first Director from 1997 to 2002. Prior to UCSF, Dr. Washington worked at the Centers for Disease Control and Prevention. Dr. Washington was elected to the National Academy of Sciences’ Institute of Medicine in 1997, where he served on its governing Council. He was founding Chair of the Board of Governors of the Patient-Centered Outcomes Research Institute, served as a member of the Scientific Management Review Board for the National Institutes of Health, and also served as Chair of the Board of Directors of both the California HealthCare Foundation and The California Wellness Foundation. Dr. Washington currently serves on the Boards of Directors of the Kaiser Foundation Hospitals and Kaiser Foundation Health Plan, Inc. Other Public Company Board Service: None | |

  11. NOMINEES

    | | RONALD A. WILLIAMS, Former Chairman and Chief Executive Officer, Aetna Inc. With his long and distinguished career in the health care industry, from his experience leading one of Fortune’s Most Admired health care companies to his career-long role as an advocate for meaningful health care reform, Mr. Williams provides our Board with an exceptional combination of operational management expertise and insight into both public health care policy and the health care industry critical to a large public company in the health care industry. Director since 2011; Independent Chairman, Compensation & Benefits Committee; Member, Nominating & Corporate Governance Committee | | Mr. Williams, 67, served as Chairman and Chief Executive Officer of Aetna Inc. (managed care and health insurance) from 2006 to 2010, and as Chairman from 2010 until his retirement in April 2011. He is also an advisor to the private equity firm, Clayton, Dubilier & Rice, LLC. In addition, Mr. Williams also serves on the boards of MIT Corporation, Peterson Institute for International Economics, the Advisory Board of Peterson Center on Healthcare and is Vice Chairman of the Board of Trustees of The Conference Board. Previously, Mr. Williams served on President Obama's Management Advisory Board from 2011 to January 2017, as Chairman of the Council for Affordable Quality Healthcare from 2007 to 2010, and Vice Chairman of The Business Council from 2008 to 2010. Other Public Company Board Service: The Boeing Company (2010 to present), American Express Company (2007 to present), Envision Healthcare Holdings, Inc. (2011 to present) | | | The Board of Directors recommends a vote FOR election of each of the above-named nominees. | |

  12. Risk Related to Executive Compensation

    | • | Balanced Mix of Pay Components: The target compensation mix is not overly weighted toward annual incentive awards and represents a balance of cash and long-term equity-based compensation vesting over three years. See “2016 Pay Mix at Target” on page 53. |

  13. Risk Related to Executive Compensation

    | ▪ | See “Base Salary, Annual Performance Bonus, and Long-Term Incentives” on page 52. |

  14. Risk Related to Executive Compensation

    | • | Performance Period and Vesting Schedules: The performance period and vesting schedules for long-term incentives overlap, and therefore, reduce the motivation to maximize performance in any one period. Performance Share Units, Restricted Share Units, and Stock Options vest three years from the grant date. |

  15. Risk Related to Executive Compensation

    | • | Capped Incentive Awards: Annual performance bonuses and long-term incentive awards are capped at 200% of target. See “Aligning Compensation to "The What" & "The How"" on page 56. |

  16. Risk Related to Executive Compensation

    | • | No Change-in-Control Arrangements: None of our executive officers have in place any change-in-control arrangements that would result in guaranteed payouts. |

  17. Proxy Access

    | Ownership threshold: | 3% of outstanding shares of our common stock | | Holding period: | Continuously for 3 years | | Number of nominees: | Up to 20% of our Board, with a minimum of up to two Board seats if Board size is less than 10 | | Nominating group size: | Up to 20 shareholders may group together to reach the 3% ownership threshold |

  18. DIRECTOR COMPENSATION

    DIRECTOR COMPENSATION Our Compensation & Benefits Committee is required by its charter to review non-employee director compensation annually. The Committee reviews total compensation of our non-employees directors, as well as each element of our non-employee director compensation program. During its annual review, the Compensation & Benefits Committee analyzes the competitive position of our non-employee director compensation program and each element of that program against the programs of the peer group used for executive compensation purposes (see page 54 for information about the Executive Peer Group). Frederic W. Cook & Co., Inc., the Committee’s independent consultant, provides an independent assessment of the competitive data provided to the Committee and advises the Committee on decisions regarding non-employee director compensation. Decisions regarding our non-employee director compensation program are approved by our full Board of Directors, based on recommendations by our Compensation & Benefits Committee. The following table provides information concerning the compensation of our non-employee directors for fiscal 2016. Mr. Gorsky was an employee of the company, and therefore, received no additional compensation for his service as a director. For a complete understanding of the table, please read the footnotes and the narrative disclosures that follow the table.

  19. DIRECTOR COMPENSATION

    | A | B | C | D | E | F | | Name | (1) | Fees Earned or Paid in Cash ($) | Stock Awards ($) | All Other Compensation ($) | Total ($) | | M. C. Beckerle(2) | C | $111,667 | $164,985 | $17,800 | $294,452 | | M. S. Coleman(3) | | 36,666 | 164,985 | 20,000 | 221,651 | | D. S. Davis | AC | 135,000 | 164,985 | 0 | 299,985 | | I. E. L. Davis | | 110,000 | 164,985 | 0 | 274,985 | | S. L. Lindquist(4) | | 107,038 | 164,985 | 1,500 | 273,523 | | M. B. McClellan | | 110,000 | 164,985 | 0 | 274,985 | | A. M. Mulcahy | LD | 140,000 | 164,985 | 20,000 | 324,985 | | W. D. Perez | C | 130,000 | 164,985 | 20,000 | 314,985 | | C. Prince | C | 130,000 | 164,985 | 20,000 | 314,985 | | A. E. Washington | | 110,000 | 164,985 | 20,000 | 294,985 | | R. A. Williams | C | 130,000 | 164,985 | 20,000 | 314,985 |

  20. DIRECTOR COMPENSATION

    (1) Lead Director/Committee Chair (2) Appointed Chair of Science, Technology & Sustainability Committee in December 2016. Chairman retainer payment was prorated. (3) Retired from the Board in April 2016. Cash fees are pro-rated for partial year of service (4) Passed away in October 2016

  21. Fiscal 2017 Non-Employee Director Compensation

    Fiscal 2017 Non-Employee Director Compensation The Compensation & Benefits Committee’s analysis in 2016 of the competitive position of our non-employee director compensation program showed that overall compensation for non-employee directors and the retainer for the Lead Director were below the peer group median. As a result, our Compensation & Benefits Committee recommended, and our Board of Directors approved on September 13, 2016, the following non-employee director compensation program for 2017 to achieve an overall compensation structure in line with the peer group median:

  22. Fiscal 2017 Non-Employee Director Compensation

    | 2017 Non-Employee Director Compensation | ($) | | Cash Compensation | $110,000 | | Lead Director Cash Retainer(1) | 35,000 | | Audit Committee Chair Cash Retainer | 25,000 | | Committee Chair (other than Audit) Cash Retainer | 20,000 | | Value of Deferred Share Units(2) | 175,000 |

  23. Fiscal 2017 Non-Employee Director Compensation

    (1) Increase of $5,000 (2) Increase of $10,000 Item 2: Advisory Vote on Frequency of Voting to Approve Named Executive Officer Compensation The Board believes that having an advisory vote to approve named executive officer compensation EVERY ONE (1) YEAR is a meaningful and effective way to use this method of gathering feedback on the Company’s executive compensation philosophy, policies and procedures. Therefore, the Board of Directors recommends that shareholders vote, in an advisory manner, to hold an advisory vote to approve named executive officer compensation EVERY ONE (1) YEAR. We are asking shareholders to vote, in an advisory manner, on whether the advisory vote to approve named executive officer compensation should occur every one, two, or three years. Our prior say-on-frequency vote occurred in 2011. At that year’s annual meeting, shareholders agreed with the Board’s recommendation that advisory votes to approve executive compensation should occur every year. After careful consideration, the Board again believes that submitting the advisory vote to approve our named executive officer compensation program EVERY ONE (1) YEAR is appropriate for our company and our shareholders at this time. An annual advisory vote is consistent with our objective of engaging in regular dialogue with our shareholders on corporate governance and executive compensation matters. The Board believes that holding the advisory vote to approve named executive officer compensation annually allows for frequent and timely feedback from shareholders. Receiving feedback from shareholders on executive compensation philosophy, policies and procedures is important to us, and we regularly engage with shareholders to hear and understand their specific concerns. We will continue to do so as we continue to believe that direct engagement is the most meaningful way to conduct dialogue with our investors. This advisory vote on frequency is required pursuant to Section 14A of the Securities Exchange Act, as amended. As an advisory vote, the results of this vote will not be binding on the Board or the company. Although the vote is advisory and non-binding, the Board values the opinions of our shareholders, and will consider the outcome of this advisory vote when determining the frequency of the advisory vote to approve named executive officer compensation. The proxy card gives you four choices for voting on this item. You can choose whether the say-on-pay vote should be conducted EVERY ONE (1) YEAR, EVERY TWO (2) YEARS or EVERY THREE (3) YEARS. You may also abstain from voting on this item. You are not voting to approve or disapprove the Board’s recommendation on this item.

  24. Fiscal 2017 Non-Employee Director Compensation

    | Item 3: Advisory Vote to Approve Named Executive Officer Compensation | | | Before you vote, we urge you to read the "Compensation Discussion and Analysis" section found on pages 38 to 59, and the tables in the "Executive Compensation Tables" section found on pages 60 to 77, for additional details on our executive compensation. | The Board of Directors recommends that shareholders vote, in an advisory manner, FOR approval of the compensation of our named executive officers and the executive compensation philosophy, policies and procedures described in the Compensation Discussion and Analysis (CD&A) section of the 2017 Proxy Statement. The Board recognizes that executive compensation is an important matter for our shareholders. The guiding principles of our executive compensation philosophy and practice continue to be: Competitiveness; Pay for Performance; Accountability for Short- and Long-Term Performance; and Alignment to Shareholders’ Interests. Overarching these principles is adherence to Our Credo values, which emphasize the manner in which our financial and strategic objectives are achieved. We believe our compensation programs are strongly aligned with the long-term interests of our shareholders. | | | When casting your 2017 “Say on Pay” vote, we encourage you to consider: • The alignment of the 2016 compensation of our Chairman/CEO and our other named executive officers with our company’s 2016 performance • The pay-for-performance alignment built into the design of our incentive programs • Our continued evaluation of our executive compensation program • Our continued direct engagement with our shareholders, resulting this year in increased weighting of performance share units in our 2017 long-term incentive mix to increase the focus on long-term performance | | | As an advisory vote, the results of this vote will not be binding on the Board or the company. However, the Board of Directors values the opinions of our shareholders, and will consider the outcome of the vote when making future decisions on the compensation of our named executive officers and our executive compensation philosophy, policies and procedures. The Board of Directors is recommending to continue annual advisory votes on executive compensation in Item 2 of this Proxy Statement. Accordingly, following our 2017 shareholder meeting on April 27, 2017 the next advisory vote on executive compensation is expected to occur at the 2018 Annual Meeting of Shareholders, unless shareholders vote for a different frequency and the Board of Directors modifies its policy on the frequency of holding such advisory votes. |

  25. Fiscal 2017 Non-Employee Director Compensation

    | Compensation Committee Report The Compensation & Benefits Committee of the Board of Directors (the Committee) has reviewed and discussed the section of this Proxy Statement entitled “Compensation Discussion and Analysis” with management. Based on this review and discussion, the Committee has recommended to the Board that the section entitled “Compensation Discussion and Analysis,” as it appears on pages 38 through 59, be included in this Proxy Statement and incorporated by reference into the company’s Annual Report on Form 10-K for the fiscal year ended January 1, 2017. Ronald A. Williams, Chairman D. Scott Davis A. Eugene Washington |

  26. Fiscal 2017 Non-Employee Director Compensation

    Compensation Discussion and Analysis

  27. Fiscal 2017 Non-Employee Director Compensation

    | 2016 PERFORMANCE AND COMPENSATION | 39 | | Key Performance and Compensation Highlights | 39 | | 2016 Company Performance | 40 | | CEO Performance and Compensation Decisions | 43 | | Other Named Executive Officer Performance | 44 | | 2017 Compensation Decisions for 2016 Performance | 45 | | 2016 Update on Performance of Performance Share Unit Awards versus Goals | 47 | | Shareholder Outreach and Our Compensation Program | 50 | | EXECUTIVE COMPENSATION PHILOSOPHY | 51 | | Key Features of Our Executive Compensation Program | 51 | | Importance of Credo Values in Assessing Performance | 51 | | Guiding Principles | 51 | | COMPONENTS OF EXECUTIVE COMPENSATION | 52 | | Base Salary, Annual Performance Bonus, and Long-Term Incentives | 52 | | Executive Perquisites & Other Benefits | 53 | | Compensation Target Setting Process and Pay Position | 53 | | 2016 Pay Mix at Target | 53 | | PEER GROUPS FOR PAY AND PERFORMANCE | 54 | | Executive Peer Group | 54 | | Competitor Composite Peer Group | 55 | | COMPENSATION DECISION PROCESS | 56 | | Assessing "The What" & "The How" | 56 | | Aligning Compensation to "The What" & "The How" | 56 | | GOVERNANCE OF EXECUTIVE COMPENSATION | 57 | | Compensation & Benefits Committee | 57 | | Independent Members of the Board of Directors | 57 | | Chairman/CEO | 57 | | Independent Compensation Consultant | 57 | | ADDITIONAL INFORMATION CONCERNING EXECUTIVE COMPENSATION | 58 | | Use of Tally Sheets | 58 | | Limited Employment Arrangements and Agreements | 58 | | Stock Ownership Guidelines for Named Executive Officers | 58 | | Executive Compensation Recoupment Policy | 59 | | Tax Impact on Compensation | 59 | | 2016 Compensation Decisions for 2015 Performance | 59 |

  28. 2016 Performance and Compensation

    | Our strong results in 2016 were driven by our approach to managing for the long term, relentless drive for innovation, disciplined portfolio management, and capital allocation strategy. | | | | KEY PERFORMANCE AND COMPENSATION HIGHLIGHTS • Upheld Our Credo values by focusing on the needs and well-being of our stakeholders: • Patients, consumers, and health care professionals • Employees • Communities in which we live and work • Shareholders • Executed against our near-term priorities in 2016, consistent with our long-term strategic plan(1): • Exceeded our operational sales growth goal. • Exceeded our adjusted operational EPS growth goal. • Did not meet our free cash flow goal due to unanticipated litigation settlements. • Advanced our long-term strategic growth drivers: • Exceeded our "Creating Value through Innovation" objectives that measure the health of our priority business platforms across all 3 sectors. • Partially met our "Global Reach with Local Focus" objectives that measure the health of our business in regions offering significant growth opportunities. • Exceeded our "Excellence in Execution" objectives that track elements we need to execute to unleash additional growth opportunities. • Exceeded our "Leading with Purpose" objectives that measure our organizational health, diversity, and reputation. • Drove our strong results with contributions from all three businesses: • Our Pharmaceutical business continued to deliver strong growth, while also increasing investment to further develop our strong pipeline of innovative new medicines. • Our Consumer business continued gaining share across most major categories, and significantly improved margins with the goal of returning to benchmark profitability. • Our Medical Devices business continued to gain share in key platforms while refocusing and accelerating our pace of innovation, and developed novel commercial models to meet the evolving needs of today's healthcare systems. • Received continued strong support for our named executive officer compensation in our 2016 “Say on Pay” vote - 93% or more in favor since 2013 • Continued our shareholder outreach and increased the weighting of performance share units in our 2017 long-term incentive mix to increase the focus on long-term performance | 2016 FINANCIAL RESULTS(1) OPERATIONAL SALES GROWTH 3.9% ADJUSTED OPERATIONAL EPS GROWTH 9.4% FREE CASH FLOW $15.5B | | | | | | | | | • 22% of 2016 sales from products launched in the past 5 years • Invested >$9 billion in R&D • 14 Acquisitions & Licenses | | | | CEO Pay Decisions • Annual Bonus: 135% of target • LTI Award: 135% of target • Salary: No increase Total Direct Compensation • 2016: $22,228,019 • 2015: $18,141,454 (See page 43 for details) | | | 33 Consecutive years of adjusted operational earnings increases(1) | 54 Consecutive years of dividend increases |

  29. 2016 COMPANY PERFORMANCE

    | • | Strengthened our leadership talent pipeline, advanced diversity, and exceeded our employee engagement benchmarks. |

  30. 2016 COMPANY PERFORMANCE

    | • | Our Consumer business continued gaining share across most major categories, and significantly improved margins with the goal of returning to benchmark profitability: |

  31. 2016 COMPANY PERFORMANCE

    | • | Identified new opportunities for long-term growth by investing $4.2 billion across 6 acquisitions (including Vogue International, NeoStrata, and La Lumiere Light Mask) to strengthen our position in Beauty. |

  32. 2016 COMPANY PERFORMANCE

    | • | Identified new opportunities for long-term growth by investing $0.5 billion through licensing and acquisitions (including NeuWave and BioMedical Enterprises), and entering into an agreement to purchase Abbott Medical Optics. |

  33. 2016 COMPANY PERFORMANCE

    | Details on Non-GAAP Performance Measures | | | | | l | Operational Sales Growth: Operational Sales Growth is the sales increase due to volume and price, excluding the effect of currency translation. As set forth on page 15 of "Item 7. Management’s Discussion and Analysis of Results of Operations and Financial Conditions” of our Annual Report on Form 10-K for the fiscal year ended January 1, 2017 (2016 Form 10-K), our 2016 Operational Sales Growth was 3.9%, excluding currency translation of (1.3)%. | | | | l | Free Cash Flow: Free cash flow is the net cash from operating activities less additions to property, plant and equipment. As set forth in the Consolidated Statements of Cash Flows on page 38 of our 2016 Form 10-K, cash flows from operating activities was $18.7 billion, and additions to property, plant and equipment were $3.2 billion. ($18.7 billion – $3.2 billion = $15.5 billion.)(1) | | | | l | Adjusted Operational EPS Growth: Adjusted EPS and Adjusted Operational EPS are non-GAAP financial measures. Adjusted EPS excludes special items and intangible amortization expense as set forth in Exhibit 99.2O to the company’s Current Report on Form 8-K dated January 24, 2017 and in “Reconciliation of Non-GAAP Financial Measures” of our 2016 Annual Report included in our proxy materials. Adjusted Operational EPS Growth also excludes the effect of currency translation. The following is a reconciliation of Diluted EPS (the most directly comparable U.S. GAAP measure) to Adjusted EPS and Adjusted Operational EPS: | | | | | | 2016 Actual $ per share | % Change vs. Prior Year* | | | Diluted EPS Special Items and Intangible Amortization Expense | $5.93 0.80 | | | | Adjusted EPS Currency Translation | 6.73 0.05 | 8.5% | | | Adjusted Operational EPS | 6.78 | 9.4% | | | * Prior year Adjusted EPS = $6.20 | | | | | (1) The figures above are rounded for display purposes. | | |

  34. CEO PERFORMANCE AND COMPENSATION DECISIONS

    | Alex Gorsky | Chairman, Board of Directors and Chief Executive Officer Performance: The Board based its assessment of Mr. Gorsky primarily upon its evaluation of the company’s performance. The Board believes the company delivered excellent financial results and strong strategic performance in 2016 under Mr. Gorsky’s leadership, as summarized under “2016 Company Performance” on pages 40 through 42, and the Board approved compensation for 2016 reflecting this performance. 2016 CEO Compensation Decisions for 2015 Performance: The Board’s compensation decisions for Mr. Gorsky reflect the Board’s assessment of his 2016 performance. The Board recognized Mr. Gorsky’s 2016 performance by awarding him an annual performance bonus at 135% of target and long-term incentives at 135% of target. After reviewing market data and other factors, the Board kept Mr. Gorsky's salary rate unchanged at $1,600,000 per year. Mr. Gorsky’s total direct compensation for 2016 and, for comparison purposes, his total direct compensation for 2015 are displayed in the table below. | | | | | | | | 2015 | | 2016 | | | | | Amount ($) | Percent of Target (%) | Amount ($) | Percent of Target (%) | | | Salary Earned(1) | $1,613,462 | | $1,600,000 | | | | Annual Performance Bonus | 2,800,000 | 100% | 3,780,000 | 135% | | | Long-Term Incentive Awards | 13,727,992 | 110% | 16,848,019 | 135% | | | Total Direct Compensation | $18,141,454 | | $22,228,019 | | | | (1) Salaries earned in fiscal year 2015 were higher than each executive’s annualized base salary due to an additional earnings period that occurred in fiscal year 2015. U.S. salaried employees are paid on a bi-weekly schedule. There were 27 pay periods in fiscal year 2015 rather than the usual 26 pay periods. | | | | | | | | | | | | | | Please see “2017 Compensation Decisions for 2016 Performance” on pages 45 to 46 for details on the awards and total direct compensation. | | | | |

  35. How Compensation Decisions are Reported

    How Compensation Decisions are Reported In January and February of each year, based on the performance assessments of the named executive officers, the Compensation & Benefits Committee determines for each named executive officer: • The annual performance bonus earned for the prior year’s performance, • The long-term incentive award granted in the first quarter of the year based on the prior year's performance, and • The salary rate for the upcoming year. Decisions regarding these elements and the 2016 total direct compensation are summarized in the tables below. The Compensation & Benefits Committee believes that these tables best summarize the actions taken on the named executive officers’ compensation for the performance year. By contrast, most of the amounts required by the U.S. Securities and Exchange Commission’s (SEC) rules to be reported in the “Summary Compensation Table” on page 60 are the result of compensation decisions from prior years, earnings from prior long-term incentive awards, or participation in long-standing pension programs.

  36. 2016 Total Direct Compensation

    | A | B | C | D | E | | | Cash | | Equity | | | Name | Salary ($) | Annual Performance Bonus ($) | Long-Term Incentive ($) | Total Direct Compensation ($) | | A. Gorsky | $1,600,000 | $3,780,000 | $16,848,019 | $22,228,019 | | D. Caruso | 909,500 | 1,534,800 | 5,855,691 | 8,299,991 | | P. Stoffels | 1,144,000 | 1,600,000 | 6,199,992 | 8,943,992 | | S. Peterson | 963,462 | 1,600,000 | 6,199,992 | 8,763,454 | | J. Duato | 875,000 | 1,400,000 | 5,500,025 | 7,775,025 |

  37. Annual Performance Bonus (Column C)

    Annual Performance Bonus (Column C) Based on 2016 company performance and individual performance as discussed on pages 40 to 45, the Board and the Committee awarded annual performance bonuses on February 13, 2017 ranging from 131% to 160% of target for the named executive officers. See the “Grants of Plan-Based Awards” table on page 66 for the target bonus amounts.

  38. Long-Term Incentive Awards (for 2016 performance) (Column D)

    Long-Term Incentive Awards (for 2016 performance) (Column D) The Board and Committee granted the following long-term equity incentive awards on February 13, 2017 (ranging from 128% to 148% of target) to the named executive officers based on his or her 2016 performance, impact on the company’s long-term results, competitive market data, and the individual’s long-term potential within the organization. These awards included Performance Share Units (PSUs), Stock Options, and Restricted Share Units (RSUs).

  39. Long-Term Incentive Awards (for 2016 performance) (Column D)

    | Name | PSUs Granted(1) | | Options Granted(2) | | RSUs Granted(3) | | Total(4) | | | (#) | ($) | (#) | ($) | (#) | ($) | ($) | | A. Gorsky | 79,448 | $8,424,030 | 377,673 | $5,054,398 | 31,779 | $3,369,591 | $16,848,019 | | D. Caruso | 27,613 | 2,927,862 | 131,264 | 1,756,706 | 11,045 | 1,171,123 | 5,855,691 | | P. Stoffels | 29,236 | 3,099,952 | 138,982 | 1,859,996 | 11,695 | 1,240,044 | 6,199,992 | | S. Peterson(5) | 29,236 | 3,099,952 | 138,982 | 1,859,996 | 11,695 | 1,240,044 | 6,199,992 | | J. Duato(5) | 25,936 | 2,750,046 | 123,291 | 1,650,003 | 10,374 | 1,099,976 | 5,500,025 |

  40. Long-Term Incentive Awards (for 2016 performance) (Column D)

    | The estimated grant date fair value used to determine the number of PSUs granted was $106.032. The estimated grant date fair value per PSU was assumed to be equal to the estimated grant date fair value per RSU for the purpose of determining the number of PSUs.(1) |

  41. Long-Term Incentive Awards (for 2016 performance) (Column D)

    | The grant date fair value used to determine the number of options granted was $13.383. The option exercise price was $115.67 based on the average of the high and low prices of our common stock on the NYSE on the grant date. The Black-Scholes option valuation model was used to calculate the grant date fair value with the following assumptions: volatility of 15.30% based on a blended rate of historical average volatility and implied volatility based on at-the-money traded Johnson & Johnson stock options with a life of two years; dividend yield of 2.90%; risk-free interest rate of 2.25% based on a U.S. Treasury rate of seven years; and a seven-year option life.(2) |

  42. Long-Term Incentive Awards (for 2016 performance) (Column D)

    | The grant date fair value used to determine the number of RSUs granted was $106.032. The grant date fair value for the RSU awards as calculated under U.S. GAAP was based on the average of the high and low prices of our common stock on the NYSE on the grant date ($115.67) and discounted by an expected dividend yield of 2.90% as dividends are not paid on the RSUs prior to vesting.(3) |

  43. Long-Term Incentive Awards (for 2016 performance) (Column D)

    | Award values are rounded to the nearest whole share.(4) |

  44. Long-Term Incentive Awards (for 2016 performance) (Column D)

    | In addition to the long-term incentive awards included in the above table, on February 13, 2017 the Committee granted special awards to Ms. Peterson and Mr. Duato of 70,733 RSUs, each with a fair value on the grant date of $7.5 million. Ms. Peterson’s award recognizes her expanded responsibilities that will include the Hospital Medical Devices business and enhances her future retention. Mr. Duato’s award recognizes his ongoing outstanding performance and enhances his future retention.(5) |

  45. 2016 UPDATE ON PERFORMANCE OF PERFORMANCE SHARE UNIT AWARDS VERSUS GOALS

    2016 UPDATE ON PERFORMANCE OF PERFORMANCE SHARE UNIT AWARDS VERSUS GOALS In 2016, we completed the first year of the PSU performance period for our 2016-2018 awards, the second year of the PSU performance period for our 2015-2017 awards, and the third year of the PSU performance period for our 2014-2016 awards.

  46. Performance Share Units Earned to Date

    Performance Share Units Earned to Date The following table shows the PSUs earned to date highlighting the contribution of the performance periods completed in 2016. The number of PSUs earned based on our adjusted operational EPS and relative Total Shareholder Return (TSR) performance are determined after the completion of the 3-year performance periods. The entire PSU awards are subject to 3-year vesting periods, so earned units will only vest after the completion of the 3-year cycle.

  47. Performance Share Units Earned to Date

    | | | PSUs Earned Based on Performance to Date | | | | | | | Performance Period and Performance Measures | Weight | 2014 | 2015 | 2016 | 2017 | 2018 | Total | | 2014 - 2016 Performance Share Units | | | | | | | | | Operational Sales | 1/3(rd) | 160.5% | 106.3% | 118.2% | | | 42.8% | | Cumulative Adjusted Operational EPS | 1/3(rd) | 154.4% | | | | | 51.5% | | Relative TSR | 1/3(rd) | 137.0% | | | | | 45.7% | | Total | | | | | | | 139.9% | | 2015 - 2017 Performance Share Units | | | | | | | | | Operational Sales | 1/3(rd) | | 106.3% | 118.2% | TBD 2017 | | 24.9% | | Cumulative Adjusted Operational EPS | 1/3(rd) | | TBD 2015-2017 | | | | 0.0% | | Relative TSR | 1/3(rd) | | TBD 2015-2017 | | | | 0.0% | | Total | | | | | | | 24.9% | | 2016 - 2018 Performance Share Units | | | | | | | | | Operational Sales | 1/3(rd) | | | 118.2% | TBD 2017 | TBD 2018 | 13.1% | | Cumulative Adjusted Operational EPS | 1/3(rd) | | | TBD 2016-2018 | | | 0.0% | | Relative TSR | 1/3(rd) | | | TBD 2016-2018 | | | 0.0% | | Total | | | | | | | 13.1% |

  48. Performance Share Units Earned to Date

    Note: The percentages above are rounded to one decimal for display purposes.

  49. PSU Performance versus Goals for Performance Periods Completed in 2016

    PSU Performance versus Goals for Performance Periods Completed in 2016

  50. PSU Performance versus Goals for Performance Periods Completed in 2016

    | | Fiscal Year 2016 Operational Sales Goals | | Fiscal Year 2014 - 2016 Cumulative Adjusted Operational EPS Goal | | Fiscal Year 2014 - 2016 Relative TSR Goal | | | Level(1) | Operational Sales ($ Millions) | PSUs Earned (% of target) | Cum. Adj. Op. PSU EPS Goal | PSUs Vesting (% of target) | Relative TSR Goal | PSUs Vesting (% of target) | | Maximum | $75,785 | 200% | $19.75 | 200% | 10.0 % points | 200% | | Target | 72,175 | 100 | 17.95 | 100 | 0.0 % points | 100 | | Threshold | 68,565 | 50 | 16.16 | 50 | (10.0) % points | 50 | | <Threshold | < 68,565 | 0 | < 16.16 | 0 | < (10.0) % points | 0 | | Result | $72,833 | 118.2% | $18.93 | 154.4% | 3.7 % points | 137.0% |

  51. PSU Performance versus Goals for Performance Periods Completed in 2016

    (1) Non-GAAP measures; see page 49 for details on non-GAAP PSU performance measures. Note: If performance falls between threshold and target or between target and maximum, the vesting percentage is determined by the Committee using interpolation; provided, however, that no payout will be made with respect to a performance objective if the threshold level of performance is not attained for the objective.

  52. Our PSU Goal Setting Process

    Our PSU Goal Setting Process Our PSU goals support our long-term objectives to grow sales faster than our competitors and grow earnings faster than sales. Sales growth drives quality EPS growth and quality EPS growth drives TSR growth, all of which drive shareholder value creation. During the first quarter of the year, the Committee establishes the goals for the next PSU award 3-year cycle, and the Committee reviews the company’s performance against the PSU goals on a quarterly basis. Following year-end, the Committee certifies the result for the year’s operational sales performance and certifies the EPS and TSR results for the completed 3-year award cycle. Our PSU goals are based on our long-term strategic plan and take into account our product portfolio and pipeline, anticipated healthcare market growth and other external factors, including the competitive landscape. The sales goals and first-year EPS goal are also set to align with guidance. The 3-year TSR goal is set at meeting the performance of our Competitor Composite Peer Group. See page 55 for more information on our Competitor Composite Peer Group. Our annual operational sales goals are based on actual sales from the prior year and then aligned to the company’s annual operational sales growth guidance. Currency had a negative impact of approximately $5.6 billion on the 2015 sales base used to set the 2016 operational sales growth goal. The following table shows the 2015 operational and reported sales, the 2015 impact of currency, and the 2016 operational sales goal.

  53. Our PSU Goal Setting Process

    | | ($ Millions) | | Base Year Sales | | | 2015 Operational Sales | $75,687 | | Currency Translation | ($5,613) | | 2015 Reported Sales | $70,074 | | 2016 Operational Sales Goal | | | 2016 Operational Sales Growth Goal | 3.0% | | 2016 Operational Sales Goal | $72,175 |

  54. Our PSU Goal Setting Process

    | Details on Non-GAAP PSU Performance Measures | | | | | | l | 2016 Operational Sales Performance: Operational sales growth is the sales increase due to volume and price, excluding the effect of currency translation. The following is a reconciliation of operational sales to reported sales (the most directly comparable GAAP measure). | | | | | | | | ($ millions) | | | | | 2016 Reported Sales | $71,890 | | | | | Currency Translation | 943 | | | | | 2016 Operational Sales | $72,833 | | | l | 2014-2016 Cumulative Adjusted Operational PSU EPS Performance: 2014-2016 Cumulative Adjusted Operational PSU EPS is total EPS for the period adjusted to exclude: | | | | | | l | Special items as disclosed in reconciliation tables for fiscal years 2014, 2015, and 2016 as shown in the following table (Intangible amortization expense is not excluded for the 2014-2016 PSUs): | | | | | | | | ($) | | | | 2014 | | $0.27 | | | | 2015 | | | | | | Special items and intangible amortization expense Intangible amortization expense Special items included in intangible amortization expense | | 0.72 (0.39) 0.08 | | | | 2016 | | | | | | Special items and intangible amortization expense Intangible amortization expense | | 0.80 (0.33) | | | | 2014 – 2016 Total | | $1.15 | | | l | The effect of changes in currency exchange rates | | | | | l | PSU Plan adjustments: (1) Significant acquisitions, divestitures, share repurchases, and changes in accounting rules or tax laws that impact adjusted operational EPS results by more than 1%; and (2) earnings from products that were not approved when the targets were set | | | | | The following is a reconciliation of 2014-2016 cumulative reported EPS to cumulative adjusted operational EPS: | | | | | | | | | ($) | | | | Reported EPS | | $17.11 | | | | Special Items | | 1.15 | | | | Non-GAAP EPS | | 18.26 | | | | Currency Translation | | 1.37 | | | | PSU Plan Adjustments | | (0.70) | | | | Cumulative Adjusted Operational PSU EPS | | $18.93 | | l | 2014-2016 Relative TSR Performance: | | | | | | | TSR from January 1, 2014 to December 31, 2016 | | (%) | | | | Johnson & Johnson | | 10.5% | | | | Competitor Composite Peer Group | | 6.8% | | | | Relative TSR Performance (J&J minus Competitor Composite Peer Group) | | 3.7% points | | | | TSR performance is calculated using trailing 20-day average closing stock prices. | | |

  55. SHAREHOLDER OUTREACH AND OUR COMPENSATION PROGRAM

    | In 2016, we held an annual advisory vote to approve named executive officer compensation, commonly known as “Say on Pay”. Since 2013, 93% or more of the votes cast voted in favor of our executive compensation program as disclosed in our Proxy Statements. We believe that this continued strong support for the named executive officer compensation resulted from our direct engagement with our shareholders and the changes we made to our executive compensation program over the past several years. We regularly consider the feedback from our shareholders and we continue to evaluate our executive compensation program. During 2016, we continued our shareholder outreach on our executive compensation program. Our Lead Director and members of senior management had discussions with a diverse mix of U.S. and international institutional shareholders on our executive compensation program. | | | Change for 2017 Based on our shareholders' feedback, our competitive benchmarking, and to increase the focus on our long-term performance, we have increased the weighting of performance share units in our 2017 long-term incentive mix for our executive officers as follows: | | | | |

  56. KEY FEATURES OF OUR EXECUTIVE COMPENSATION PROGRAM

    | The Committee believes that the executive compensation program includes key features that align the interests of the named executive officers and Johnson & Johnson’s long-term strategic direction with shareholders and does not include features that could misalign their interests. | | | | | What We Do | | What We Don't Do | | | ü | Align CEO pay with company performance | û | No automatic or guaranteed annual salary | | | | | increases | | ü | Use long-term incentives to link the majority of | | | | | named executive officer pay to company | û | No guaranteed bonuses or long term incentive | | | performance | | awards | | ü | Balance short-term and long-term incentives | û | No above-median targeting of executive | | | | | compensation | | ü | Cap incentive awards | | | | | | û | No change-in-control benefits | | ü | Require named executive officers to own | | | | | significant amounts of company stock | û | No tax gross-ups (unless they are provided | | | | | pursuant to our standard relocation practices) | | ü | Have a compensation recoupment policy | | | | | applicable to our named executive officers | û | No option repricing without shareholder | | | | | approval | | ü | Actively engage with our shareholders | | | | | | û | No hedging of company stock | | ü | Use an independent compensation consultant | | | | | reporting directly to the Compensation & Benefits | û | No long-term incentive backdating | | | Committee | | | | | | û | No dividend equivalents on unvested long-term | | | | | incentives |

  57. GUIDING PRINCIPLES

    | • | Competitiveness: We compare our practices against appropriate peer companies that are of similar size and complexity, so we can continue to attract, retain, and motivate high-performing executives. |

  58. GUIDING PRINCIPLES

    | • | Pay for Performance: Annual bonuses and grants of long-term incentives are tied to performance, including the performance of the individual named executive officer and his or her specific business unit or function, as well as the overall performance of our company. |

  59. GUIDING PRINCIPLES

    | • | Accountability for Short- and Long-Term Performance: We structure performance-based compensation to reward an appropriate balance of short- and long-term financial and strategic business results, with an emphasis on managing the business for long-term results. As described under “Risk Oversight” on pages 20 and 21, the full Board is responsible for oversight of risk management (including product development, supply chain, and quality risks) and the executive compensation program’s emphasis on long-term value helps to reduce the possibility that our executive officers make excessively risky business decisions that could maximize short-term results at the expense of long-term value. |

  60. BASE SALARY, ANNUAL PERFORMANCE BONUS, AND LONG-TERM INCENTIVES

    BASE SALARY, ANNUAL PERFORMANCE BONUS, AND LONG-TERM INCENTIVES

  61. BASE SALARY, ANNUAL PERFORMANCE BONUS, AND LONG-TERM INCENTIVES

    | Compensation Component | Form | Vesting / Performance Period | How Size is Determined | Why We Pay Each Component | | Base Salary | Cash | Ongoing | • Salary rates based on: • Competitive data • Scope of responsibilities • Work experience • Time in position • Internal equity • Individual performance | • Recognize job responsibilities | | Annual Performance Bonus | Cash | 1 year | • Award opportunities as a percent of salary set based on competitive data • Award payouts based on business and individual performance | • Motivate attainment of our near-term priorities, consistent with our long-term strategic plan | | Long-Term Incentives | Equity | 3 years (options: 10-year term) | • Award opportunities as a percent of salary set based on competitive data • Grants based on business and individual performance, contribution, and long-term potential • Payouts based on achievement of long-term operational goals, TSR, and share price appreciation | • Motivate attainment of long-term goals, TSR, and share price growth • Help retain executives |

  62. Long-Term Incentives

    Long-Term Incentives

  63. Long-Term Incentives

    | Long-Term Incentive Form | 2016 Mix | Vesting / Performance Period | How Payouts are Determined | Why We Use Them | | Performance Share Units | 50% | • 0% to 200% vested 3 years after grant | • Measures and Weight: • 1/3 Sales: 1-year Operational Sales for each year of the 3-year performance period • 1/3 Earnings per Share: 3-year Cumulative Adjusted Operational EPS • 1/3 Relative Total Shareholder Return: 3-year Compound Annual Growth Rate versus the Competitor Composite Peer Group • Share Price • No dividend equivalents paid | • Aligns with our long-term objectives of growing sales faster than our competitors and earnings faster than sales • Measuring top line and bottom line growth ensures quality earnings growth • TSR relative to our competitors is a good overall outcome measure • PSU unit value is directly tied to the share price | | Stock Options | 30% | • 100% vested 3 years after grant • 10-year term | • Share price appreciation • No dividend equivalents paid | • Motivates share price appreciation over the long-term • Reinforces emphasis on long-term growth aligned with our objectives | | Restricted Share Units | 20% | • 100% vested 3 years after grant | • Share price • No dividend equivalents paid | • Value tied directly to the share price |

  64. COMPENSATION TARGET SETTING PROCESS AND PAY POSITION

    COMPENSATION TARGET SETTING PROCESS AND PAY POSITION Before each fiscal year begins, we set compensation targets to ensure that we can compete for talent and to maintain compensation equity and balance among positions with similar responsibilities. An annual review of publicly available information and executive compensation surveys is conducted to determine current Executive Peer Group pay levels. The Committee reviews market data to understand how our target pay levels compare to benchmark positions, but does not target total compensation to a specific percentile of the Executive Peer Group. In deciding on compensation for individual named executive officers, the Committee considers the individual’s performance and alignment with our Credo values, our internal bonus and long-term incentive opportunities as a percent of salary, the individual’s roles and responsibilities, and his or her experience in role.

  65. Peer Groups for Pay and Performance

    Peer Groups for Pay and Performance The Committee uses two peer groups for executive compensation. The Executive Peer Group is used to assess the competitiveness of the compensation of our named executive officers, and the Competitor Composite Peer Group is used to evaluate the relative performance of our company. As described below, the two peer groups vary because executive compensation levels and practices are influenced by business complexity and company size, and most of our business competitors are much smaller than Johnson & Johnson as a whole, or even as compared to each of our three individual business segments.

  66. EXECUTIVE PEER GROUP

    EXECUTIVE PEER GROUP The composition of the Executive Peer Group is reviewed by the Committee on an annual basis and consists of companies that generally: are similar to Johnson & Johnson's size and scope; have executive positions similar to ours; and compete with us for executive talent. In 2016, the Committee determined to add Medtronic plc to, and remove Hewlett Packard Enterprise Co. from, the Executive Peer Group for 2017. The Executive Peer Group does not include companies headquartered outside the U.S. (because comparable compensation data for the named executive officers is not available) or companies in industries whose compensation programs are not comparable to our programs, such as the financial services or oil and gas industries. The following table lists the companies in the 2016 Executive Peer Group and their business characteristics, along with Johnson & Johnson’s rankings among these companies, based on financial data reported by each company for the most recent four fiscal quarters. Market capitalization is calculated as of December 31, 2016. Johnson & Johnson ranks in the top half of the peers for revenue and in the top quartile for net income and market capitalization.

  67. EXECUTIVE PEER GROUP

    | Company (Ticker Symbol) | Revenue ($ Millions) | Net Income ($ Millions) | Market Cap ($ Billions) | Common Industry (Y/N)(1) | Gross Margin (>40%) | Global Presence (Inter-national > 33% of Sales) | Business Complexity(2) | Innovation Emphasis (R&D> or = 5% of Sales) | | 3M Company (MMM) | $30,109 | $5,050 | $107 | ü | ü | ü | ü | ü | | Abbott Laboratories (ABT) | 20,853 | 1,400 | 57 | ü | ü | ü | ü | ü | | The Boeing Company (BA) | 94,571 | 4,895 | 96 | | | ü | ü | | | Bristol-Myers Squibb Company (BMY) | 19,427 | 4,457 | 98 | ü | ü | ü | ü | ü | | Cisco Systems, Inc. (CSCO)(3) | 48,570 | 9,832 | 152 | | ü | ü | ü | ü | | The Coca-Cola Company (KO) | 41,863 | 6,527 | 179 | ü | ü | ü | | | | Eli Lilly and Company (LLY) | 21,222 | 2,738 | 81 | ü | ü | ü | ü | ü | | General Electric Company (GE) | 123,693 | 8,176 | 280 | ü | | ü | ü | | | Hewlett Packard Enterprise Co. (HPE)(4) | 50,123 | 3,161 | 39 | ü | | ü | ü | | | Intel Corporation (INTC) | 59,387 | 10,316 | 172 | | ü | ü | ü | ü | | International Business Machines Corporation (IBM) | 79,919 | 11,872 | 158 | | ü | ü | ü | ü | | Merck & Co., Inc. (MRK) | 39,807 | 5,712 | 162 | ü | ü | ü | ü | ü | | Microsoft Corporation (MSFT)(3) | 85,688 | 16,768 | 483 | ü | ü | ü | ü | ü | | PepsiCo, Inc. (PEP) | 62,799 | 6,329 | 150 | ü | ü | ü | | | | Pfizer Inc. (PFE) | 52,824 | 7,215 | 197 | ü | ü | ü | ü | ü | | The Procter & Gamble Company (PG)(3) | 65,231 | 15,290 | 225 | ü | ü | ü | ü | | | United Technologies Corporation (UTX) | 57,244 | 5,055 | 90 | | | ü | ü | | | Johnson & Johnson (JNJ) | 71,890 | 16,540 | 313 | ü | ü | ü | ü | ü | | Johnson & Johnson’s Ranking | 5th | 2nd | 2nd | | | | | | | Johnson & Johnson’s Percentile Rank | 76% | 94% | 94% | | | | | |

  68. EXECUTIVE PEER GROUP

    (1) Common Industry means that the company is in an industry similar to one of the company’s business segments: pharmaceutical, medical devices and consumer packaged goods. (2) Business Complexity means the company is a complex organization with multiple product lines. (3) Used last four calendar quarters ending December 31, 2016 for Cisco Systems, Inc., The Procter & Gamble Company and Microsoft Corporation. (4) Hewlett-Packard Enterprise Co. took the place of HP, Inc., after its December 31, 2015 spin-off.

  69. COMPETITOR COMPOSITE PEER GROUP

    COMPETITOR COMPOSITE PEER GROUP The Committee compares overall company performance to the weighted performance of its Competitor Composite Peer Group companies. The Competitor Composite Peer Group is a portfolio of companies that compete with one, or more, of our three business segments. The portfolio of companies is evaluated on an ongoing basis and is updated as necessary. These companies are selected based on the following criteria and financial metrics:

  70. COMPETITOR COMPOSITE PEER GROUP

    | • | Product Relevance |

  71. COMPETITOR COMPOSITE PEER GROUP

    | • | Financial Comparison: Sales growth, net income growth and margin, EPS growth, and TSR |

  72. COMPETITOR COMPOSITE PEER GROUP

    | • | Global Presence |

  73. COMPETITOR COMPOSITE PEER GROUP

    The following table lists our 2016 Competitor Composite Peer Group companies broken down by business segment.

  74. COMPETITOR COMPOSITE PEER GROUP

    | COMPETITOR COMPOSITE PEER GROUP | | | | Pharmaceuticals | Medical Devices | Consumer | | AbbVie Inc. Amgen Inc. AstraZeneca plc Bristol-Myers Squibb Company Eli Lilly and Company GlaxoSmithKline plc Merck & Co., Inc. Novartis AG Pfizer Inc. Roche Holding AG (Pharm Rx Only) Sanofi SA | Abbott Laboratories (Vascular & Diabetes) Allergan, Inc. (Breast Aesthetics) Boston Scientific Corporation C. R. Bard, Inc. Edwards Lifesciences Corporation Medtronic plc The Cooper Companies, Inc. (CooperVision) Roche Holding AG (Diabetes) Smith & Nephew plc St. Jude Medical, Inc. Stryker Corporation Zimmer Biomet Holdings, Inc. | Beiersdorf AG Bayer AG (Consumer Healthcare) Colgate-Palmolive Company GlaxoSmithKline plc (Consumer Healthcare) The L’Oréal Group Pfizer Inc. (Consumer Healthcare) The Procter & Gamble Company Reckitt Benckiser Group plc Sanofi SA (Consumer Healthcare) Unilever plc |

  75. COMPETITOR COMPOSITE PEER GROUP

    Effective in 2017, Allergan, Inc. (Breast Aesthetics) and St. Jude Medical, Inc. have been removed from the Competitor Composite Peer Group.

  76. ALIGNING COMPENSATION TO "THE WHAT" & "THE HOW"

    ALIGNING COMPENSATION TO "THE WHAT" & "THE HOW" An individual employee has the opportunity to earn from 0% to 200% of the applicable target for annual performance bonuses and long-term incentives based on the evaluation of his or her individual performance on both “the what” and “the how”. This broad range allows for meaningful differentiation based on performance. The Committee determines annual performance bonuses, long-term incentive awards and salary increases based on a component-by-component and a total direct compensation basis. In addition, the Committee compares the position of actual compensation for the performance year, as well as compensation opportunities for the current year, to Executive Peer Group data. The ultimate compensation decisions are based on the judgment and experience of the independent directors (in the case of the Chairman/CEO) and the Committee (in the case of the other named executive officers). While performance against goals is the most significant factor, the achievement of particular goals does not determine compensation award levels in a formulaic manner. In addition, an executive’s previous long-term incentive awards and total equity ownership are not considered when making annual long-term incentive awards.

  77. COMPENSATION & BENEFITS COMMITTEE

    | • | Sets the executive compensation philosophy and composition of the Executive Peer Group |

  78. INDEPENDENT COMPENSATION CONSULTANT

    INDEPENDENT COMPENSATION CONSULTANT The Committee has retained an independent compensation consultant from Frederic W. Cook & Co., Inc. (FWC) to advise it on executive compensation matters. The Committee has sole authority to negotiate the terms of service, including all fees paid to FWC. The independent compensation consultant:

  79. INDEPENDENT COMPENSATION CONSULTANT

    | • | Attends all Committee meetings, at the request of the Committee |

  80. INDEPENDENT COMPENSATION CONSULTANT

    | • | Advises the Committee on market trends, regulatory issues and developments and how they may impact our executive compensation programs |

  81. INDEPENDENT COMPENSATION CONSULTANT

    | • | Reviews the compensation strategy and executive compensation programs for alignment with our strategic business objectives |

  82. INDEPENDENT COMPENSATION CONSULTANT

    | • | Advises on the design of executive compensation programs to ensure the linkage between pay and performance |

  83. INDEPENDENT COMPENSATION CONSULTANT

    | • | Provides market data analyses to the Committee |

  84. INDEPENDENT COMPENSATION CONSULTANT

    | • | Advises the Committee on setting the Chairman/CEO’s pay |

  85. INDEPENDENT COMPENSATION CONSULTANT

    | • | Reviews the annual compensation of the other named executive officers as recommended by the Chairman/CEO |

  86. Independence of Compensation Consultant

    Independence of Compensation Consultant The Committee considered the following factors, among others, when assessing the independence of its compensation consultant:

  87. Independence of Compensation Consultant

    | • | FWC does not provide any other services to the company and reports directly to the Committee |

  88. Independence of Compensation Consultant

    | • | FWC has in place policies and procedures to prevent conflicts of interest |

  89. Independence of Compensation Consultant

    | • | No member of the FWC consulting team serving the Committee has a business or personal relationship with any member of the Committee or any executive officer of the company |

  90. Independence of Compensation Consultant

    | • | Neither FWC nor any principal of FWC owns any shares of our common stock |

  91. Independence of Compensation Consultant

    | • | The amount of fees paid to FWC is less than 1% of FWC's total consulting income |

  92. Independence of Compensation Consultant

    Based on this assessment, the Committee determined FWC’s service as its independent compensation consultant did not raise any conflict of interest concerns. In order to assure continuing independence, the Committee periodically considers whether there should be rotation of its independent compensation consulting firm or the lead consultant on the engagement.

  93. LIMITED EMPLOYMENT ARRANGEMENTS AND AGREEMENTS

    LIMITED EMPLOYMENT ARRANGEMENTS AND AGREEMENTS Our named executive officers are covered by our Severance Pay Plan that provides separation benefits to certain full-time U.S. employees who are involuntarily terminated. This coverage provides for two weeks base salary for each year of service, with certain guaranteed minimums based on level. The minimum number of weeks of base salary continuance for our named executive officers is 52 weeks. The severance is paid according to our normal payroll cycle and is not available as a lump sum payment. Pursuant to his offer letter, Dr. Stoffels receives an annual stipend of $320,000 to assist him in the payment of foreign taxes. While serving as a member of the Executive Committee, Dr. Stoffels is considered a U.S. employee even though he is a non-resident of the United States. As a result, Dr. Stoffels is subject to both U.S. taxation and foreign taxation. Dr. Stoffels will not receive any other tax equalization assistance. The stipend is reviewed annually by the Committee and can be terminated at any time. We do not have employment arrangements or agreements with any of our named executive officers, except for Dr. Stoffels as described above.

  94. Summary Compensation Table

    Summary Compensation Table The following table provides information concerning the compensation of our Chief Executive Officer, Chief Financial Officer and the three other most highly compensated executive officers for fiscal 2016 and, for those executive officers who were named in the 2016 and 2015 Proxy Statements, for fiscal 2015 and 2014. For a complete understanding of the table, please read the narrative disclosures that follow the table. It is important to note the significant impact of year-on-year differences in the change in pension value included in column G and detailed on page 64 on the total compensation amounts. For our Chief Executive Officer, the 2015-2016 year-on-year difference in the change in pension value amounts to 76% of the increase in his total compensation.

  95. Summary Compensation Table

    | A | B | C | D | E | F | G | H | I | | Name and Principal Position | Year | Salary ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Non- Qualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | | Alex Gorsky | 2016 | $1,600,000 | $10,608,901 | $4,118,398 | $4,652,556 | $5,663,771 | $228,094 | $26,871,720 | | Chairman, CEO | 2015 | 1,613,462 | 10,693,427 | 4,562,998 | 4,009,536 | 2,714,268 | 202,175 | 23,795,866 | | | 2014 | 1,500,000 | 9,467,380 | 4,168,139 | 5,018,779 | 4,606,142 | 228,866 | 24,989,306 | | Dominic Caruso | 2016 | 909,500 | 3,624,523 | 1,425,643 | 2,758,967 | 2,475,956 | 110,240 | 11,304,829 | | EVP, CFO | 2015 | 922,577 | 3,497,099 | 1,458,603 | 2,772,796 | 925,536 | 112,789 | 9,689,400 | | | 2014 | 878,115 | 3,271,853 | 1,332,376 | 3,234,152 | 1,511,238 | 121,299 | 10,349,033 | | Paulus Stoffels | 2016 | 1,144,000 | 4,383,454 | 1,750,317 | 2,425,461 | 2,642,012 | 380,232 | 12,725,476 | | EVP, CSO | 2015 | 1,158,385 | 4,208,874 | 1,823,246 | 2,172,098 | 1,022,024 | 401,118 | 10,785,745 | | | 2014 | 1,075,423 | 10,690,520 | 1,307,669 | 2,573,450 | 2,267,167 | 425,088 | 18,339,317 | | Sandra Peterson | 2016 | 963,462 | 3,897,074 | 1,539,002 | 1,600,000 | 592,000 | 141,246 | 8,732,784 | | EVP, Group Worldwide | 2015 | 908,654 | 3,504,177 | 1,574,621 | 1,125,000 | 367,000 | 147,000 | 7,626,452 | | Chairman | 2014 | 841,346 | 2,833,545 | 1,368,001 | 1,400,000 | 451,000 | 192,714 | 7,086,606 | | Joaquin Duato | 2016 | 875,000 | 3,198,483 | 1,260,002 | 2,158,006 | 2,535,760 | 77,278 | 10,104,529 | | EVP, Worldwide | | | | | | | | | | Chairman, Pharmaceuticals | | | | | | | | |

  96. Change in Pension Value and Non-Qualified Deferred Compensation Earnings (Column G)

    Change in Pension Value and Non-Qualified Deferred Compensation Earnings (Column G)

  97. Change In Non-Qualified Deferred Compensation Earnings

    Change In Non-Qualified Deferred Compensation Earnings We no longer grant CLCs and CLPs to our named executive officers. Previously granted CLCs and CLPs have vested and will be paid out in accordance with their original terms. The CLC and CLP Plans are cash-based long-term incentive plans. The values of unit awards under both of these plans are disclosed in several tables in this Proxy Statement:

  98. Change In Non-Qualified Deferred Compensation Earnings

    | • | When units vest, their value is included in the Summary Compensation Table in the “Non-Equity Incentive Plan Compensation” column. |

  99. Change In Non-Qualified Deferred Compensation Earnings

    | • | The annual change in value of vested units between the time the units vest and are paid out is included in the Summary Compensation Table in the “Change in Pension Value and Non-Qualified Deferred Compensation Earnings” column, but only to extent that the unit values grow at a rate that exceeds a reference rate of return. |

  100. Change In Non-Qualified Deferred Compensation Earnings

    | • | The total value of vested units that have not been paid out as of the fiscal year-end is included in the “Non-Qualified Deferred Compensation” table on page 73. |

  101. Change In Non-Qualified Deferred Compensation Earnings

    The change in the values of the CLCs and CLPs depend on our long-term operational performance. The amounts representing the above-reference-rate returns on all CLCs and CLPs vested as of the listed fiscal year-end are included in column G.

  102. Change In Non-Qualified Deferred Compensation Earnings

    | • | The above reference-rate calculations for vested CLCs and CLPs are unrealized amounts and not actual compensation received by the executive for the year. |

  103. Change In Non-Qualified Deferred Compensation Earnings

    | • | We use 120% of the December applicable federal long-term interest rate (AFR) as the reference rate to compare potential returns of CLCs and CLPs. |

  104. Change In Non-Qualified Deferred Compensation Earnings

    | • | Negative figures are not included in the Summary Compensation Table according to the SEC’s rules. |

  105. Change In Non-Qualified Deferred Compensation Earnings

    The following table shows the calculation of the above-reference-rate returns on CLCs and CLPs.

  106. Change In Non-Qualified Deferred Compensation Earnings

    | Above-Reference-Rate Return | CLC | CLP | | Beginning of Year Unit Value | $42.44 | $4.76 | | End of Year Unit Value | $46.55 | $5.25 | | Change in Unit Value ($) | $4.11 | $0.49 | | Change in Unit Value (%) | 9.68% | 10.29% | | Reference-Rate | 2.72% | 2.72% | | Above-Reference-Rate Return | 6.96% | 7.57% | | Above reference-rate return included in the Summary Compensation Table | 6.96% | 7.57% |

  107. Change In Non-Qualified Deferred Compensation Earnings

    The table below shows the specific amounts of change in pension value and above-reference-rate calculation for vested CLCs and CLPs for 2016, 2015, and 2014 included in column G.

  108. Change In Non-Qualified Deferred Compensation Earnings

    | Name | Fiscal Year | Change in Pension Value ($) | Above Reference- Rate Calculation for Vested CLCs ($) | Above Reference- Rate Calculation for Vested CLPs ($) | Total ($) | | A. Gorsky | 2016 | $5,012,000 | $354,676 | $297,095 | $5,663,771 | | | 2015 | 2,667,000 | 47,268 | 0 | 2,714,268 | | | 2014 | 4,488,000 | 38,596 | 79,546 | 4,606,142 | | D. Caruso | 2016 | 1,445,000 | 709,352 | 321,604 | 2,475,956 | | | 2015 | 831,000 | 94,536 | 0 | 925,536 | | | 2014 | 1,346,000 | 77,193 | 88,045 | 1,511,238 | | P. Stoffels | 2016 | 1,976,000 | 472,901 | 193,111 | 2,642,012 | | | 2015 | 959,000 | 63,024 | 0 | 1,022,024 | | | 2014 | 2,164,000 | 51,462 | 51,705 | 2,267,167 | | S. Peterson | 2016 | 592,000 | 0 | 0 | 592,000 | | | 2015 | 367,000 | 0 | 0 | 367,000 | | | 2014 | 451,000 | 0 | 0 | 451,000 | | J. Duato | 2016 | 1,920,000 | 458,123 | 157,637 | 2,535,760 |

  109. Grants of Plan-Based Awards

    Grants of Plan-Based Awards The following table provides information concerning the annual performance bonus and long-term incentive awards made to each of the named executive officers in fiscal 2016. For a complete understanding of the table, please read the narrative disclosures that follow the table.

  110. Grants of Plan-Based Awards

    | A | B | C | D | E | F | G | H | I | J | K | L | M | N | | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (Annual Performance Bonus) | | | Estimated Future Payouts Under Equity Incentive Plan Awards (Performance Share Units) | | | All other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/sh) | Closing Market Price on the Grant Date ($) | Grant Date Fair Value of Stock and Option Awards ($) | | Name | Award | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | | | | A. Gorsky | Bonus | | $0 | $2,800,000 | $5,600,000 | | | | | | | | | | | 2016-2018 PSU | 2/8/2016 | | | | 0 | 57,515 | 115,030 | | | | | $6,056,330 | | | 2015-2017 PSU | 2/8/2016 | | | | 0 | 9,213 | 18,426 | | | | | 882,108 | | | 2014-2016 PSU | 2/8/2016 | | | | 0 | 9,367 | 18,734 | | | | | 924,851 | | | RSU | 2/8/2016 | | | | | | | 29,579 | | | | 2,745,612 | | | Stock Awards Total | | | | | | | | | | | | 10,608,901 | | | Option Award | 2/8/2016 | | | | | | | | 411,264 | $101.87 | $102.00 | 4,118,398 | | D. Caruso | Bonus | | 0 | 1,136,875 | 2,273,750 | | | | | | | | | | | 2016-2018 PSU | 2/8/2016 | | | | 0 | 19,910 | 39,820 | | | | | 2,096,523 | | | 2015-2017 PSU | 2/8/2016 | | | | 0 | 2,945 | 5,890 | | | | | 281,972 | | | 2014-2016 PSU | 2/8/2016 | | | | 0 | 2,994 | 5,988 | | | | | 295,613 | | | RSU | 2/8/2016 | | | | | | | 10,239 | | | | 950,415 | | | Stock Awards Total | | | | | | | | | | | | 3,624,523 | | | Option Award | 2/8/2016 | | | | | | | | 142,365 | 101.87 | 102.00 | 1,425,643 | | P. Stoffels | Bonus | | 0 | 1,144,000 | 2,288,000 | | | | | | | | | | | 2016-2018 PSU | 2/8/2016 | | | | 0 | 24,444 | 48,888 | | | | | 2,573,953 | | | 2015-2017 PSU | 2/8/2016 | | | | 0 | 3,681 | 7,362 | | | | | 352,441 | | | 2014-2016 PSU | 2/8/2016 | | | | 0 | 2,939 | 5,878 | | | | | 290,182 | | | RSU | 2/8/2016 | | | | | | | 12,571 | | | | 1,166,878 | | | Stock Awards Total | | | | | | | | | | | | 4,383,454 | | | Option Award | 2/8/2016 | | | | | | | | 174,787 | 101.87 | 102.00 | 1,750,317 | | S. Peterson | Bonus | | 0 | 1,218,750 | 2,437,500 | | | | | | | | | | | 2016-2018 PSU | 2/8/2016 | | | | 0 | 21,493 | 42,986 | | | | | 2,263,213 | | | 2015-2017 PSU | 2/8/2016 | | | | 0 | 3,179 | 6,358 | | | | | 304,377 | | | 2014-2016 PSU | 2/8/2016 | | | | 0 | 3,074 | 6,148 | | | | | 303,511 | | | RSU | 2/8/2016 | | | | | | | 11,053 | | | | 1,025,973 | | | Stock Awards Total | | | | | | | | | | | | 3,897,074 | | | Option Award | 2/8/2016 | | | | | | | | 153,685 | 101.87 | 102.00 | 1,539,002 | | J. Duato | Bonus | | 0 | 875,000 | 1,750,000 | | | | | | | | | | | 2016-2018 PSU | 2/8/2016 | | | | 0 | 17,596 | 35,192 | | | | | 1,852,859 | | | 2015-2017 PSU | 2/8/2016 | | | | 0 | 2,726 | 5,452 | | | | | 261,004 | | | 2014-2016 PSU | 2/8/2016 | | | | 0 | 2,478 | 4,956 | | | | | 244,665 | | | RSU | 2/8/2016 | | | | | | | 9,049 | | | | 839,955 | | | Stock Awards Total | | | | | | | | | | | | 3,198,483 | | | Option Award | 2/8/2016 | | | | | | | | 125,824 | 101.87 | 102.00 | 1,260,002 |

  111. Outstanding Equity Awards at Fiscal Year-End

    Outstanding Equity Awards at Fiscal Year-End The following table provides information concerning the unexercised stock options outstanding and unvested RSUs and PSUs for each of the named executive officers as of fiscal year-end 2016.

  112. Outstanding Equity Awards at Fiscal Year-End

    | A | B | C | D | E | F | G | H | I | J | K | | | | | Options | | | | Stock Awards | | | | | | | | Number of Securities Underlying Unexercised Options (#) | | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock that Have Not Vested (#) | Market Value of Shares or Units of Stock that Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights That Have Not Vested (#) | Equity Incentive Plans: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | Name | Grant Date | Vesting Date | Exercisable | Unexercisable | | | | | | | | A. Gorsky | Stock Options and RSUs | | | | | | | | | | | | 2/08/2010 | 2/09/2013 | 119,770 | | $62.62 | 2/07/2020 | | | | | | | 1/10/2011 | 1/11/2014 | 144,695 | | 62.20 | 1/08/2021 | | | | | | | 1/17/2012 | 1/18/2015 | 231,951 | | 65.37 | 1/17/2022 | | | | | | | 1/16/2013 | 1/17/2016 | 547,692 | | 72.54 | 1/13/2023 | | | | | | | 2/10/2014 | 2/11/2017 | | 495,146 | 90.44 | 2/09/2024 | 33,720 | $3,884,881 | | | | | 2/09/2015 | 2/10/2018 | | 427,127 | 100.06 | 2/09/2025 | 33,165 | 3,820,940 | | | | | 2/08/2016 | 2/09/2019 | | 411,264 | 101.87 | 2/08/2026 | 29,579 | 3,407,797 | | | | | PSUs | | | | | | | | | | | | 2/10/2014(1) | 2/10/2017 | | | | | 96,914 | 11,165,462 | | | | | 2/09/2015(2) | 2/10/2017 | | | | | 9,957 | 1,147,146 | | | | | 2/08/2016(3) | 2/10/2017 | | | | | 11,072 | 1,275,605 | | | | | 2/09/2015(2) | 2/09/2018 | | | | | 9,791 | 1,128,021 | 55,276 | $6,368,348 | | | 2/08/2016(3) | 2/09/2018 | | | | | 10,890 | 1,254,637 | | | | | 2/08/2016(3) | 2/08/2019 | | | | | 9,712 | 1,118,920 | 49,298 | 5,679,623 | | D. Caruso | Stock Options and RSUs | | | | | | | | | | | | 2/11/2008 | 2/12/2011 | 82,591 | | 61.75 | 2/10/2018 | | | | | | | 2/09/2009 | 2/10/2012 | 110,578 | | 58.33 | 2/08/2019 | | | | | | | 2/08/2010 | 2/09/2013 | 119,770 | | 62.62 | 2/07/2020 | | | | | | | 1/10/2011 | 1/11/2014 | 145,447 | | 62.20 | 1/08/2021 | | | | | | | 1/17/2012 | 1/18/2015 | 173,702 | | 65.37 | 1/17/2022 | | | | | | | 1/16/2013 | 1/17/2016 | 233,846 | | 72.54 | 1/13/2023 | | | | | | | 2/10/2014 | 2/11/2017 | | 158,277 | 90.44 | 2/09/2024 | 10,779 | 1,241,849 | | | | | 2/09/2015 | 2/10/2018 | | 136,535 | 100.06 | 2/09/2025 | 10,601 | 1,221,341 | | | | | 2/08/2016 | 2/09/2019 | | 142,365 | 101.87 | 2/08/2026 | 10,239 | 1,179,635 | | | | | PSUs | | | | | | | | | | | | 2/10/2014(1) | 2/10/2017 | | | | | 30,980 | 3,569,206 | | | | | 2/09/2015(2) | 2/10/2017 | | | | | 3,183 | 366,713 | | | | | 2/08/2016(3) | 2/10/2017 | | | | | 3,539 | 407,728 | | | | | 2/09/2015(2) | 2/09/2018 | | | | | 3,129 | 360,492 | 17,670 | 2,035,761 | | | 2/08/2016(3) | 2/09/2018 | | | | | 3,481 | 401,046 | | | | | 2/08/2016(3) | 2/08/2019 | | | | | 3,362 | 387,336 | 17,066 | 1,966,174 | | P. Stoffels | Stock Options and RSUs | | | | | | | | | | | | 1/16/2013 | 1/17/2016 | 102,692 | | 72.54 | 1/13/2023 | | | | | | | 2/10/2014 | 2/11/2017 | | 155,342 | 90.44 | 2/09/2024 | 10,579 | 1,218,807 | | | | | 10/31/2014 | 10/31/2017 | | | | | 75,492 | 8,697,433 | | | | | 2/09/2015 | 2/10/2018 | | 170,668 | 100.06 | 2/09/2025 | 13,252 | 1,526,763 | | | | | 2/08/2016 | 2/09/2019 | | 174,787 | 101.87 | 2/08/2026 | 12,571 | 1,448,305 | | | | | PSUs | | | | | | | | | | | | 2/10/2014(1) | 2/10/2017 | | | | | 30,407 | 3,503,190 | | | | | 2/09/2015(2) | 2/10/2017 | | | | | 3,122 | 359,686 | | | | | 2/08/2016(3) | 2/10/2017 | | | | | 3,474 | 400,240 | | | | | 2/09/2015(2) | 2/09/2018 | | | | | 3,914 | 450,932 | 22,086 | 2,544,528 | | | 2/08/2016(3) | 2/09/2018 | | | | | 4,351 | 501,279 | | | | | 2/08/2016(3) | 2/08/2019 | | | | | 4,128 | 475,587 | 20,952 | 2,413,880 |

  113. Outstanding Equity Awards at Fiscal Year-End

    | A | B | C | D | E | F | G | H | I | J | K | | | | | Options | | | | Stock Awards | | | | | | | | Number of Securities Underlying Unexercised Options (#) | | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock that Have Not Vested (#) | Market Value of Shares or Units of Stock that Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights That Have Not Vested (#) | Equity Incentive Plans: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | Name | Grant Date | Vesting Date | Exercisable | Unexercisable | | | | | | | | S. Peterson | Stock Options and RSUs | | | | | | | | | | | | 1/16/2013 | 1/17/2016 | 61,538 | | $72.54 | 1/13/2023 | | | | | | | 2/10/2014 | 2/11/2017 | | 162,509 | 90.44 | 2/09/2024 | 11,067 | $1,275,029 | | | | | 2/09/2015 | 2/10/2018 | | 147,395 | 100.06 | 2/09/2025 | 11,445 | 1,318,578 | | | | | 2/08/2016 | 2/09/2019 | | 153,685 | 101.87 | 2/08/2026 | 11,053 | 1,273,416 | | | | | PSUs | | | | | | | | | | | | 2/10/2014(1) | 2/10/2017 | | | | | 31,808 | 3,664,600 | | | | | 2/09/2015(2) | 2/10/2017 | | | | | 3,268 | 376,506 | | | | | 2/08/2016(3) | 2/10/2017 | | | | | 3,633 | 418,558 | | | | | 2/09/2015(2) | 2/09/2018 | | | | | 3,380 | 389,410 | 19,074 | $2,197,516 | | | 2/08/2016(3) | 2/09/2018 | | | | | 3,758 | 432,959 | | | | | 2/08/2016(3) | 2/08/2019 | | | | | 3,630 | 418,212 | 18,422 | 2,122,399 | | J. Duato | Stock Options and RSUs | | | | | | | | | | | | 2/11/2008 | 2/12/2011 | 20,842 | | 61.75 | 2/10/2018 | | | | | | | 2/09/2009 | 2/10/2012 | 34,288 | | 58.33 | 2/08/2019 | | | | | | | 1/10/2011 | 1/11/2014 | 19,293 | | 62.20 | 1/08/2021 | | | | | | | 1/17/2012 | 1/18/2015 | 100,000 | | 65.37 | 1/17/2022 | | | | | | | 1/16/2013 | 1/17/2016 | 148,538 | | 72.54 | 1/13/2023 | | | | | | | 2/10/2014 | 2/11/2017 | | 130,969 | 90.44 | 2/09/2024 | 8,919 | 1,027,558 | | | | | 2/09/2015 | 2/10/2018 | | 126,369 | 100.06 | 2/09/2025 | 9,812 | 1,130,441 | | | | | 2/08/2016 | 2/09/2019 | | 125,824 | 101.87 | 2/08/2026 | 9,049 | 1,042,535 | | | | | PSUs | | | | | | | | | | | | 2/10/2014(1) | 2/10/2017 | | | | | 25,634 | 2,953,293 | | | | | 2/09/2015(2) | 2/10/2017 | | | | | 2,634 | 303,463 | | | | | 2/08/2016(3) | 2/10/2017 | | | | | 2,929 | 337,450 | | | | | 2/09/2015(2) | 2/09/2018 | | | | | 2,896 | 333,648 | 16,354 | 1,884,144 | | | 2/08/2016(3) | 2/09/2018 | | | | | 3,222 | 371,207 | | | | | 2/08/2016(3) | 2/08/2019 | | | | | 2,972 | 342,404 | 15,082 | 1,737,597 |

  114. Outstanding Equity Awards at Fiscal Year-End

    (1) The PSUs based on the achievement of 2014-2016 relative TSR and EPS achieved 137.0% and 154.4% of target, as discussed on page 47. The PSUs based on the achievement of 2014 operational sales performance achieved 160.5% of target, as reported in our 2015 Proxy Statement. The units tied to each of the performance measures have been adjusted to reflect actual performance and are listed in columns H and I. (2) The PSUs based on the achievement of 2015 operational sales performance achieved 106.3% of target, as reported in our 2016 Proxy Statement. The portion of the award that is based on the achievement of 2015 operational sales performance has been adjusted to reflect actual performance and is listed in columns H and I. (3) The PSUs based on the achievement of 2016 operational sales performance achieved 118.2% of target, as discussed on page 47. The portion of the award that is based on the achievement of 2016 operational sales performance has been adjusted to reflect actual performance and is listed in columns H and I.

  115. Option Exercises and Stock Vested

    Option Exercises and Stock Vested The following table provides information concerning the exercises of stock options and the vesting of RSUs and PSUs during fiscal 2016 on an aggregated basis for each of the named executive officers.

  116. Option Exercises and Stock Vested

    | | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized Upon Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized Upon Vesting ($) | | A. Gorsky | 0 | $0 | 114,875 | $11,573,245 | | D. Caruso | 41,146 | 2,438,723 | 49,047 | 4,941,308 | | P. Stoffels | 125,000 | 3,722,500 | 47,757 | 4,811,345 | | S. Peterson | 0 | 0 | 12,907 | 1,300,334 | | J. Duato | 100,275 | 4,507,790 | 38,076 | 3,836,019 |

  117. Option Exercises and Stock Vested

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  118. Pension Benefits

    Pension Benefits The following table provides information as of fiscal year-end 2016 with respect to our pension plans for each of the named executive officers. For a complete understanding of the table, please read the narrative disclosures that follow the table.

  119. Pension Benefits

    | | | | Present Value of Accumulated Benefit | | | | Name | Number of Years Credited Service (#) | Normal Retirement Age | Salaried Pension Plan ($) | Excess Pension Plan ($) | Total ($) | | A. Gorsky | 24.41 | 62 | $1,035,000 | $18,268,000 | $19,303,000 | | D. Caruso | 17.00 | 62 | 804,000 | 6,653,000 | 7,457,000 | | P. Stoffels | 23.33 | 62 | 888,000 | 8,070,000 | 8,958,000 | | S. Peterson | 4.08 | 62 | 183,000 | 1,501,000 | 1,684,000 | | J. Duato | 27.25 | 62 | 1,039,000 | 7,726,000 | 8,765,000 |

  120. Pension Benefits

    Each of the named executive officers participates in the same defined benefit pension plans offered to other U.S. non-union employees hired before January 1, 2015. Annuity benefits payable under the U.S. plans are calculated as: (1) Final average earnings multiplied by 1.667%, multiplied by years of service prior to 2005, plus (2) Final average earnings multiplied by 1.55%, multiplied by years of service after 2004, minus (3) Age 65 Social Security benefits multiplied by 1.429%, multiplied by total years of service. For this formula, “final average earnings” is defined as the average of the highest consecutive 60 months out of the last 120 months of pay, including base salary and bonus, and dividend equivalents paid or deferred on nonvested CLCs for years prior to 2009. The formula above produces the amount payable as a monthly annuity for the life of the named executive officer beginning as early as age 62. Benefits can begin as early as age 55, but are subject to a 4% per year reduction for the number of years before age 62 that benefits begin. The Salaried Pension Plan applies this formula to pay up to the IRS’s covered compensation limit ($265,000 in 2016). The Excess Pension Plan is a restorative supplemental retirement plan that uses the same formula (including the definition of final average earnings) as the Salaried Pension Plan without applying the IRS pay limits and is offset by amounts paid from the Salaried Pension Plan. Any U.S. non-union employee participates in the Excess Pension Plan if his or her covered compensation exceeds the IRS limit. Because Dr. Stoffels has provided periods of service in both Belgium and the U.S., his total Salaried Plan amount includes benefits from both the U.S. and Belgian Plans. The U.S. portion is calculated using the U.S. formula above for all service and subtracting the amount earned in the Belgian Plan. This treatment of service rendered outside the U.S. applies to all participants in the Salaried Plan who were hired before January 1, 2015, and who earned company service outside the U.S. before joining the U.S. pension plan on, or before, July 1, 2015. While a present value is shown in the table, benefits are not available as a lump sum and must be taken in the form of an annuity, except the Belgian portion of Dr. Stoffels’ benefit which is payable as a lump sum at retirement. Present values were calculated using the same actuarial assumptions applied in the calculation of pension liabilities reported in our 2016 Annual Report (discount rate of 4.41%, and mortality according to the RP-2014 table with generational improvements projected according to scale AA). No payments were made in 2016 under our pension plans to any of the named executive officers.

  121. Non-Qualified Deferred Compensation

    Non-Qualified Deferred Compensation The following table provides information with respect to our defined contribution and non-tax-qualified compensation deferral plans for each of the named executive officers for 2016. For a complete understanding of the table, please read the narrative disclosures that follow the table.

  122. Non-Qualified Deferred Compensation

    | A | B | C | D | E | | Name | Executive Contributions in Last FY ($) | Registrant Contributions in Last FY ($) | Aggregate Earnings in Last FY ($) | Aggregate Balance at Last FYE ($) | | A. Gorsky | $0 | $438,604 | $933,942 | $10,381,946 | | D. Caruso | 0 | 371,570 | 1,653,095 | 17,852,678 | | P. Stoffels | 0 | 285,599 | 941,996 | 10,542,963 | | S. Peterson | 0 | 31,431 | 8,974 | 125,081 | | J. Duato | 0 | 235,643 | 871,189 | 9,764,045 |

  123. Potential Payments Upon Termination

    Potential Payments Upon Termination Employees, including the named executive officers, are entitled to receive earned and unpaid compensation upon termination of employment. Accordingly, upon any termination of employment as of fiscal year-end 2016 the named executive officers would have received the following (except as noted):

  124. Potential Payments Upon Termination

    | • | Earned but unpaid annual performance bonuses for 2016 as shown in the “Non-Equity Incentive Plan Compensation” table on pages 61 and 62. However, in case of involuntary termination for cause, these amounts would be forfeited. |

  125. Potential Payments Upon Termination

    | • | Vested non-qualified deferred compensation balances as shown in the “Non-Qualified Deferred Compensation” table on page 73. This includes the account balances under the Executive Income Deferral Plan and Excess Savings Plan and the value of vested CLCs and CLPs as shown in the table on page 74. |

  126. Potential Payments Upon Termination

    | • | Pension benefits as described in the “Pension Benefits” table and notes on page 72. |

  127. Potential Payments Upon Termination

    We do not have any change-in-control agreements or arrangements in place for any of our named executive officers. In addition, there are no change-in-control provisions in any of our compensation plans or instruments. In addition to the compensation and benefits discussed above, the following table shows the compensation and benefits that would have been due to the named executive officers had their employment terminated as of fiscal year-end 2016 under the circumstances shown below.

  128. Potential Payments Upon Termination

    | Name | Type of Payment | Voluntary Termination ($) | Involuntary Termination Without Cause ($) | Involuntary Termination with Cause ($) | Death ($) | Disability ($) | | A. Gorsky | Cash Severance | $0 | $1,600,000 | $0 | $0 | $0 | | | Benefits | 271,000 | 274,000 | 271,000 | 140,000 | 268,000 | | | Equity Incentives | 67,427,942 | 67,427,942 | 0 | 67,427,942 | 67,427,942 | | | Total | 67,698,942 | 69,301,942 | 271,000 | 67,567,942 | 67,695,942 | | D. Caruso | Cash Severance | 0 | 1,084,404 | 0 | 0 | 0 | | | Benefits | 193,000 | 197,000 | 193,000 | 101,000 | 235,000 | | | Equity Incentives | 22,020,063 | 22,020,063 | 0 | 22,020,063 | 22,020,063 | | | Total | 22,213,063 | 23,301,467 | 193,000 | 22,121,063 | 22,255,063 | | P. Stoffels | Cash Severance | 0 | 1,144,000 | 0 | 0 | 0 | | | Benefits | 0 | 100,000 | 0 | 4,000 | 204,000 | | | Equity Incentives | 0 | 0 | 0 | 33,534,444 | 33,534,444 | | | Total | 0 | 1,244,000 | 0 | 33,538,444 | 33,738,444 | | S. Peterson | Cash Severance | 0 | 975,000 | 0 | 0 | 0 | | | Benefits | 0 | 14,000 | 0 | 4,000 | 144,000 | | | Equity Incentives | 0 | 0 | 0 | 23,269,364 | 23,269,364 | | | Total | 0 | 989,000 | 0 | 23,273,364 | 23,413,364 | | J. Duato | Cash Severance | 0 | 908,654 | 0 | 0 | 0 | | | Benefits | 0 | 101,000 | 0 | 8,000 | 205,000 | | | Equity Incentives | 0 | 0 | 0 | 19,194,163 | 19,194,163 | | | Total | 0 | 1,009,654 | 0 | 19,202,163 | 19,399,163 |

  129. Benefits

    Benefits The benefits amounts represent the present value of continued healthcare coverage post termination. Upon termination of employment, the named executive officers would receive the same continued healthcare coverage post termination provided to all other non-union U.S. employees. The values in the table vary based upon the termination circumstances as follows:

  130. Benefits

    | • | Voluntary Termination and Involuntary Termination With Cause: |

  131. Benefits

    | • | Not a Retirement: Employees that terminate voluntarily or are terminated for cause are not eligible to receive healthcare coverage post termination. |

  132. Benefits

    | • | Retirement: Employees are eligible to receive retiree healthcare coverage post termination. |

  133. Benefits

    In order to be considered retirement-eligible as it pertains to retiree healthcare coverage, an employee must have attained age 55 and have at least ten years of service. Messrs. Gorsky and Caruso are considered retirement-eligible as it pertains to retiree healthcare coverage.

  134. Benefits

    | • | Involuntary Termination Without Cause: |

  135. Benefits

    | • | Employees are eligible to receive active-employee healthcare coverage during their cash severance period up to a maximum of 52 weeks. |

  136. Benefits

    | • | Employees that are between the age 50 and 54 with at least ten years of service at the time of termination are eligible to receive separation healthcare coverage beginning on the earlier of the expiration of their cash severance period or 52 weeks after termination and continuing until they have attained age 65. |

  137. Benefits

    Dr. Stoffels and Mr. Duato are considered eligible for separation healthcare coverage.

  138. Benefits

    | • | Employees that are considered retirement-eligible are able to receive retiree healthcare coverage after their cash severance period expires. |

  139. Benefits

    Messrs. Gorsky and Caruso are considered retirement-eligible as it pertains to retiree healthcare coverage.

  140. Benefits

    | • | Death: Employees’ dependents are eligible to receive active-employee healthcare coverage for six months after termination. |

  141. Benefits

    | • | Disability: Employees are eligible to receive active-employee healthcare coverage while on long-term disability. |

  142. Benefits

    The following table provides detail with the respect to the “Benefits” provided in the preceding table.

  143. Benefits

    | Benefits | Eligibility | Voluntary Termination | Involuntary Termination Without Cause | Involuntary Termination with Cause | Death | Disability | | Retiree Healthcare Coverage | Employees age 55 with ten years of service | ü | ü | ü | ü Coverage for Dependents | ü | | Separation Healthcare Coverage | Employees between ages 50 and 54 with ten years of service | | ü | | | | | Active-employee Healthcare Coverage | All Employees | | ü While on severance - up to 52 weeks | | ü Coverage for Dependents for 6 months | ü While on LTD |

  144. Equity Incentives

    Equity Incentives The amount in the table reflects the value of unvested equity incentives as of fiscal year-end 2016 as shown in the “Outstanding Equity Awards at Fiscal Year-End” table on pages 69 and 70. The values in the table vary based upon the termination circumstances as follows:

  145. Equity Incentives

    | • | Voluntary Termination and Involuntary Termination Without Cause: |

  146. Equity Incentives

    | • | Not a Retirement: All unvested equity incentives would be forfeited. Vested options would remain exercisable for three months. |

  147. Equity Incentives

    | • | Retirement: All equity incentives would remain in effect and become vested on their normal vesting dates. Options would remain exercisable for their remaining terms. |

  148. Equity Incentives

    In order to be considered retirement-eligible as it pertains to equity incentives, an employee must have attained age 55 and have at least ten years of service with at least five consecutive years of service immediately before the date of termination or have attained age 62. Messrs. Gorsky and Caruso are considered retirement-eligible as it pertains to equity incentives.

  149. Equity Incentives

    | • | Involuntary Termination With Cause: All vested and unvested equity awards would be forfeited. |

  150. Equity Incentives

    | • | Death and Disability: All equity incentives would become vested upon termination due to death or disability. Options would remain exercisable for their remaining terms. |

  151. Equity Incentives

    Item 4: Re-approval of the Material Terms of Performance Goals Under the 2012 Long-Term Incentive Plan