2018 Guide to Effective Proxies

2.17.11 Shareholder engagement | 491 6 TH EDITION | GUIDE TO EFFECTIVE PROXIES WesharedthecontentofmanyofthesediscussionswithourfullBoardoritskeyCommittees. AsaresultoftheseshareholderconversationsandtheBoard’sowndiscussionsthatfollowed,ourBoardandits Committeestookanumberofactionsin2017,severalofwhicharehighlightedbelow: ShareholderFeedbackReceived ActionsTaken Page# Youshouldcontinuetoseekeven greaterdiversityonyourBoard. WestrengthenedourdiversitybyaddinganewBoard nominee,Dr.JenniferA.Doudna.Herdeepscientific background,vastacademicexperienceandenduring concernforethicsinsciencewilladdtotheglobal,ethical andscientificperspectiveanddiversityofourBoard. 13 YourBoardskillsanddiversitymatrices weregoodinlastyear’sProxy Statement,butcanyoumakethem evenbetterbybeingmoretransparent? WeenhancedourProxyStatement’sBoardNominee Compositionandskillsdisclosuresbyaddingseparateand moredetailedgraphicssettingoutthequalities,attributes, skillsandexperiencesofourBoard,includingseparate representationsofgenderandracialdiversity. 18 Yougiveargumentsaboutwhyyou believeyourcurrentBoardstructure withacombinedChairman&CEO worksbestforyourcompany.Buthow doweknowyourBoardisactually takingtheappropriatetimeona systemicbasistoreviewtheissuein lightofallcircumstances? WeamendedourPrinciplesofCorporateGovernanceto reflectthatourNominating&CorporateGovernance CommitteereviewstheBoard’sleadershipstructureonan annualbasis,andatotherappropriatetimes,including whethertherolesofChairmanandChiefExecutiveOfficer shouldbecombinedorseparate.See www.investor.jnj.com/ gov.cfm . 19 HowdotherolesofLeadDirectorand Chairmandifferfromoneanotherand howdotheyworktogether? WediscussedourLeadershipStructureextensivelyin shareholderengagementandweenhancedourdisclosureto bemoretransparentabouthowthetworolescollaborateat ourcompany.See BoardLeadershipStructure . 19 HowdoesyourBoardEvaluation Processwork? WediscussedourBoardEvaluationProcessandthe insightsfromfeedbackcomingoutofourBoardEvaluation Process,andweaddeddisclosureintheProxyStatementto providetransparencytoallourshareholdersaboutBoard andCommitteeevaluationprocessesandoutcomes. See BoardMeetingsandProcesses. 32 Couldyoubemoretransparentabout yourdrugpricingpractices? Inearly2017,theJanssenPharmaceuticalCompaniesof Johnson&Johnsonreleasedaground-breaking2016U.S. TransparencyReportwithinformationonpharmaceutical pricingandotherbusinesspractices,coveringeverything fromdiscoverytothecommercializationofpharmaceuticals. JanssenreleasedafollowupreportinMarch2018available at Janssen.com/2017USTransparencyReport . TellusaboutyoureffortsinCitizenship &Sustainability. InSeptember2016,weannouncedacomprehensiveUnited NationsSustainableDevelopmentGoals(UNSDG) commitmentfocusedonfivekeyareaswhereweare uniquelypositionedtocreatesustainableandscalable impact:GlobalDiseaseChallenges,EssentialSurgery, Women’s&Children’sHealth,HealthWorkforce,and EnvironmentalHealth.Wealsohaveworkedtoimproveand expandthecontentofourHealthforHumanityReport,which providestransparencytoourCitizenship&Sustainability commitments.SeeourHealthforHumanityReportavailable at http://healthforhumanityreport.jnj.com/downloads. 2018ProxyStatement-24 Total of 02 pages in section INVESCO LTD JOHNSON & JOHNSON 15 Shareholder Engagement Whywe engage One of our key priorities is ensuring robust outreach and engagementwith shareholders, the owners of the company in order to: •Provide transparency into our business, governance practices and compensation programs •Determinewhich issues are important to our shareholders and share our views on those issues • Identify emerging issues thatmay impact our business and influence our practices Howwe engage 1 Investor relations and seniormanagement We provide institutional investorswithmany opportunities to provide feedback to seniormanagement by participating in conferences, one-on-one and groupmeetings throughout the year. 2 Shareholders We also engagewith representatives of ourmajor shareholders through conference calls that occur outside of proxy season. These exchanges cover our executive compensation program, riskmanagement, ESG, strategic planning processes and emerging governance practices generally and specificallywith respect to Invesco. 3 Board involvement OurChairperson of theBoard andmembers of our compensation committee have participated in certain shareholdermeetings andmanagement provides feedback to our directors based on its shareholdermeetingswhere directorswere not present. 4 Outcomes from investor feedback –Adopted proxy access –DeclassifiedBoard –Added performance vesting criteria to our equity awards and increased the amount of such equity subject to performance vesting – Increased the required performance period from1 to3 years for our performance-based equity awards –Added a cash bonus cap to our chief executive officer pay – Enhanced our proxy disclosures regarding risk management, ESG and strategic planning –Highlighted ourCorporateSocialResponsibilityReport, which is posted on ourwebsite PROXY-BRO-1 03-18.indd 15 3/20/18 4:13PM SHAREHOLDER ENGAGEMENT Weactivelyengagewithourshareholdersthroughouttheyeartolistentoconcerns,askquestionsandshareinformation andperspectives. In2017,ourengagementtookanumberofforms: l Duringtheproxyseason,wereachedouttoourtop100shareholders,whorepresentapproximately45%ofour outstandingshares,andsoughtadialogueandfeedbackonissuesraisedinour2017ProxyStatement. l Weincludedasectiononourvotingcardinvitingallofourshareholderstogiveuscomments.Wewerepleasedthat over250shareholdersdidso.Thissupplementedthemeansweprovide—andhighlightinourProxyStatement—to contactourBoardatanytimethroughouttheyear. l AtthedirectionofourLeadDirector,wealsogreatlyexpandedfrom13to24thenumberofindividual,personal engagementmeetingsweheldwithshareholdersandkeyproxyadvisers WeareparticularlyproudthatanumberofourkeyengagementmeetingsincludedbothourChairmanandourLeadDirector —apracticeweunderstandisrare.Thesemeetingsenabledourshareholderstowitnessaswellasdiscusswithour leadershipthefrequencyoftheircommunications,howtheycollaboratetocreatetheagendasforBoardandCommittee meetings,howtheyevaluatethecontentandsuggestionsarisingfrompastBoardandCommitteemeetings,howthey handlearangeofboardgovernanceissuessuchasboardrefreshmentandsuccessionplanning,andhowtheyaddresskey corporatetransactions,capitalallocation,andtalentmanagement. Thesemeetingsalsoenabledthemtosharetheir personalcommitmentstoOurCredo. Our2017engagementmeetingsandothergovernanceexchangescoveredawiderangeofimportantcorporate governance,environmentalandsocialstewardship,compensation,publicpolicyandperformanceissues. Theseincluded: ShareholderEngagementTopics l BoardSkillsandSkillsMatrix l Board-ShareholderEngagement l BoardCompositionandDiversity l ExecutiveCompensationandCompensationMetrics l BoardSize l ShareholderProposalProcess l BoardTenure l Cybersecurity l Overboarding l Environment,SustainabilityandGovernanceReporting l BoardShareOwnershipRequirements l MaterialityandTransparency l SeparationoftheChairmanandCEORoles l TaxPolicy l BoardOversightofRisk l PharmaceuticalPricingTransparency l BoardEvaluationProcess,Outcomesand Refreshment l PharmaceuticalPricingandAccess l OpioidMarketing 2018ProxyStatement-23 InvitedComments FromAllShareholders NearlyDoubled Personal EngagementMeetings ShareholderEngagementProcess 45% outstanding shares represented 250 shareholder responses 24 personal engagement meetings