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JNJvsDerivative-NJfedcrt-boardreport

JNJvsDerivative-NJfedcrt-boardreport

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Published by roslyn rudolph

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Categories:Business/Law
Published by: roslyn rudolph on Oct 21, 2011
Copyright:Attribution Non-commercial

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10/21/2011

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REPORT OF THE SPECIAL COMMITTEEOF THE BOARD OF DIRECTORS OF JOHNSON & JOHNSON
Special Committee Members
 Charles Prince (Chairman)Michael M.E. JohnsAnne MulcahyWilliam D. Perez
 Legal Counsel to the Special Committee
Douglas S. Eakeley, Esq.Lowenstein Sandler PC
June 27, 2011
Case 3:10-cv-02033-FLW -DEA Document 149-1 Filed 07/18/11 Page 1 of 133 PageID:4542
 
TABLE OF CONTENTS
 PART ONE Introduction
............................................................................................................... 1
 
 PART TWOSummary Of The Allegations And The Investigation
............................................. 4
 
I. The Shareholder Demand Letters And Derivative Complaints ............ 4II. Formation And Mandate Of The Special Committee ......................... 11III. The Special Committee Investigation ................................................. 13
 PART THREE Applicable Standards For The Committee’s Investigation
................................... 16
 
I. Relevant Legal Standards .................................................................... 16A. Board Independence And Disinterestedness............................. 16B. The Fiduciary Duties Of Care And Loyalty ............................. 18II. Other Factors To Be Considered By The Board ................................. 21A. Impact On Pending Or Potential Litigation .............................. 21B. Indemnification ......................................................................... 22C. Application Of Insurance .......................................................... 22D. Potential Recovery .................................................................... 23E. Time And Expense Of Litigation .............................................. 23
Case 3:10-cv-02033-FLW -DEA Document 149-1 Filed 07/18/11 Page 2 of 133 PageID:4543
 
ii
PART FOUR
 Factual Findings Of The Special Committee
........................................................ 23I. Background On Johnson & Johnson ................................................... 23A. Management Approach And Organization ............................... 24B. Executive Management ............................................................. 26C. Board Of Directors .................................................................... 26II. J&J’s Corporate And Board Oversight Of Compliance...................... 27A. Evolution Of Corporate Oversight Of Compliance .................. 271. Pre-Corporate Center Review (1990s-2006) .................. 282. Corporate Center Review (2007-2008) .......................... 303. Post-Corporate Center Review (2010-2011) .................. 34B. Board Oversight Of Compliance .............................................. 38III. J&J’s Quality And Compliance Issues ................................................ 40A. FDA Regulation Of Prescription And OTC Drugs ................... 40B. Quality Issues At McNeil OTC................................................. 421. The Motrin Recall ........................................................... 422. The B. Cepacia Issue ...................................................... 453. The “Musty Odor” Issue ................................................. 474. The Closing Of Fort Washington, Related Recalls,And Additional 483 Observations .................................. 51
Case 3:10-cv-02033-FLW -DEA Document 149-1 Filed 07/18/11 Page 3 of 133 PageID:4544

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