DOUGLAS K. CHIA

Secretary

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2015 PROXY STATEMENT – SUMMARY

Voting Guidelines

GENERAL INFORMATION

Shareholders Entitled to Vote

How to Vote

Notice and Access

Revoking Your Proxy or Changing Your Vote

Effect of Not Casting Your Vote

Proxy Solicitation

Electronic Access to Proxy Materials

Important Changes to this Year’s Annual Meeting

Admission Ticket Procedures

Reduce Duplicate Mailings

Johnson & Johnson Employee Savings Plans

Advance Notice of Shareholder Proposals and Other Items of Business

CORPORATE GOVERNANCE

ITEM 1:      ELECTION OF DIRECTORS

Director Compensation – 2014

STOCK OWNERSHIP AND SECTION 16 COMPLIANCE

TRANSACTIONS WITH RELATED PERSONS

COMPENSATION COMMITTEE REPORT

COMPENSATION DISCUSSION AND ANALYSIS

Executive Summary

Executive Compensation Philosophy

Components of Executive Compensation

Setting Compensation & Performance Targets

Compensation Decision Process

Governance of Executive Compensation

Additional Information Concerning Executive Compensation

EXECUTIVE COMPENSATION TABLES

Summary Compensation Table

Grants of Plan-Based Awards

Outstanding Equity Awards at Fiscal Year-End

Option Exercises and Stock Vested

Pension Benefits

Non-Qualified Deferred Compensation

Potential Payments Upon Termination

ITEM 2:       ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION

AUDIT COMMITTEE REPORT

ITEM 3:       RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

ITEM 4:       SHAREHOLDER PROPOSAL – COMMON SENSE POLICY REGARDING OVEREXTENDED DIRECTORS

ITEM 5:       SHAREHOLDER PROPOSAL – ALIGNMENT BETWEEN CORPORATE VALUES AND POLITICAL CONTRIBUTIONS

ITEM 6:       SHAREHOLDER PROPOSAL – INDEPENDENT BOARD CHAIRMAN

OTHER MATTERS

Shareholders Entitled to Vote

Shareholders of record of our common stock at the close of business on February 24, 2015 are entitled to notice of and to vote at the Annual Meeting of Shareholders and at any and all adjournments or postponements of the meeting. Each share entitles its owner to one vote. The holders of a majority of the shares entitled to vote at the meeting must be present in person or represented by proxy in order to constitute a quorum for all matters to come before the meeting. On February 24, 2015, there were 2,780,559,526 shares outstanding.

Each matter to be submitted to the shareholders, including the election of Directors, requires the affirmative vote of a majority of the votes cast at the meeting. For purposes of determining the number of votes cast with respect to a particular matter, only those cast “For” or “Against” are included. Abstentions and broker non-votes are counted only for purposes of determining whether a quorum is present at the meeting.

Notice and Access

We are distributing proxy materials to many shareholders via the Internet under the Securities and Exchange Commission’s (SEC’s) “Notice and Access” rules, which will save costs and paper. Using this method of distribution, on or about March 11, 2015, we mailed a Notice Regarding the Availability of Proxy Materials (“Notice”) that contains basic information about our 2015 Annual Meeting and instructions on how to view all proxy materials, and vote electronically, on the Internet. If you receive the Notice and prefer to receive a paper or e-mail copy of the proxy materials, follow the instructions in the Notice for making this request, and the materials will be sent promptly to you via the preferred method. If you prefer to vote by phone rather than Internet, the website listed on the Notice (www.proxyvote.com) has instructions for voting by phone.

Revoking Your Proxy or Changing Your Vote

You may change your vote at any time before the proxy is exercised. For registered shareholders, if you voted by mail, you may revoke your proxy at any time before it is exercised by executing and delivering a timely and valid later-dated proxy, by voting by ballot at the meeting or by giving written notice to the Secretary. If you voted via the Internet or by telephone, you may also change your vote with a timely and valid later Internet or telephone vote, as the case may be, or by voting by ballot at the meeting. Attendance at the meeting will not have the effect of revoking a proxy unless (1) you give proper written notice of revocation to the Corporate Secretary before the proxy is exercised, or (2) you vote by ballot at the meeting.

If you hold your shares beneficially, you must follow the specific directions provided to you by your bank, broker or other holder of record to change or revoke any voting instructions you have already provided. Alternatively, you may vote your shares by ballot at the meeting if you obtain a legal proxy from your bank, broker or other holder of record and bring it with you to the meeting.

Effect of Not Casting Your Vote

If you are a registered shareholder and you do not cast your vote, no votes will be cast on your behalf on any of the items of business at the Annual Meeting.

If you hold your shares beneficially, it is critical that you cast your vote if you want it to count in the election of Directors and most other items on the agenda. Under applicable regulations, if you hold your shares beneficially and do not instruct your bank or broker how to vote your shares, your bank or broker will only have discretion to vote your uninstructed shares on the ratification of the appointment of our independent registered public accounting firm (Item 3). They will not have discretion to vote your uninstructed shares on the election of Directors (Item 1), the advisory vote to approve named executive officer compensation (Item 2), or the shareholder proposals (Items 4, 5 and 6), resulting in “broker non-votes” on those items.

Proxy Solicitation

In addition to the solicitation of proxies by mail, several regular employees of Johnson & Johnson may solicit proxies in person or by telephone. We have also retained the firm of Morrow & Co., LLC to aid in the solicitation of brokers, banks and institutional and other shareholders for a fee of approximately $20,000, plus reimbursement of expenses. We will bear all costs of the solicitation of proxies. On the accompanying proxy, a shareholder may substitute the name of another person in place of those persons presently named as proxies. In order to vote, a substitute proxy must present adequate identification to the Secretary.

Electronic Access to Proxy Materials

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This Proxy Statement and our 2014 Annual Report are available on our website at www.investor.jnj.com/annual-reports.cfm. If you received paper copies of this year’s Proxy Statement and Annual Report by mail, you can elect to receive in the future an e-mail message that will provide a link to those documents on the Internet. By opting to access your proxy materials via the Internet, you will:

•   gain faster access to your proxy materials;

•    save us the cost of producing and mailing documents to you;

•   reduce the amount of mail you receive; and

•    help preserve environmental resources.

Johnson & Johnson shareholders who have enrolled in the electronic access service previously will receive their materials online this year.

Registered shareholders may enroll in the electronic proxy and Annual Report access service for future Annual Meetings of Shareholders by registering online at www.computershare-na.com/green. If you vote via the Internet, simply follow the prompts that will link you to that website. Beneficial shareholders who wish to enroll for electronic access may register online at https://enroll.icsdelivery.com/jnj.

Reduce Duplicate Mailings

We are required to provide a Proxy Statement and Annual Report to all shareholders as of the record date of February 24, 2015. If you are a registered shareholder and have more than one registered account in your name, or have an account at the same address and same surname as other registered shareholders, and you receive paper copies of the proxy materials in the mail, you may authorize us to discontinue duplicate mailings of these proxy materials in the future (also referred to as “householding”). To do so, mark the box on your proxy card to request discontinuation of duplicate copies of proxy materials. The members of the household will continue to receive separate proxy cards for voting the shares held in each account. If you are voting via the Internet or by telephone, you can either follow the prompts when you vote or give instructions to discontinue duplicate copies for future mailings of proxy materials. Beneficial shareholders who wish to discontinue receiving duplicate mailings of future proxy materials should review the information provided in the materials mailed to them by their bank or broker.

If, now or in the future, you wish to discontinue householding and receive separate copies of proxy materials, please notify us by calling (800) 950-5089 or sending a written request to the Office of the Corporate Secretary, Johnson & Johnson, One Johnson & Johnson Plaza, New Brunswick, New Jersey 08933, and we will promptly deliver a separate copy.

Johnson & Johnson Employee Savings Plans

If you are an employee of a Johnson & Johnson company and hold shares in one of our employee savings plans, you will receive one proxy card that covers the shares held for you in your savings plan, as well as any other shares registered directly in your name (but not shares held beneficially). If you vote the plan shares via the Internet, by telephone or by mail, as described above, by 5:00 p.m. (Eastern) on April 21, 2015, the Trustee of your savings plan will vote your shares as you have directed (your voting instructions will be kept confidential). It is important that you direct the Trustee how to vote your shares. In accordance with the terms of the Johnson & Johnson Savings Plan, the Johnson & Johnson Savings Plan for Union Represented Employees and the Johnson & Johnson Puerto Rico Retirement Savings Plan, you are the named fiduciary for shares held in your savings plan and have the right to direct the Trustee with respect to those shares. If you hold shares in either of these plans and do not vote, the plan Trustee will vote your shares in direct proportion to all shares held in that plan for which votes were cast. Participants in the Johnson & Johnson employee savings plans may attend the Annual Meeting. However, shares held in those plans can only be voted as described in this paragraph, and cannot be voted at the meeting.

Advance Notice of Shareholder Proposals and Other Items of Business

To be included in the Proxy Statement and proxy card for the 2016 Annual Meeting of Shareholders, a shareholder proposal must be received at our principal office on or before November 12, 2015 and must comply with Rule 14a-8 under the U.S. Securities and Exchange Act of 1934, as amended.

In addition, under the terms of our By-Laws, a shareholder who intends to present an item of business at the 2016 Annual Meeting of Shareholders (other than a proposal submitted for inclusion in our proxy materials) must provide us with written notice of such business, including the information specified in the By-Laws, which must be received on or before November 12, 2015.

Proposals and other items of business should be directed to the attention of the Office of the Corporate Secretary at our principal office, One Johnson & Johnson Plaza, New Brunswick, New Jersey 08933.

Mayo Clinic

Foundation

Continuing

Medical Education

grants

Reagan-Udall

Foundation

Not-for-Profit

Foundation

for the FDA

Board Agendas and Schedules

•   Approves information sent to the Board and determines timeliness of information flow from management.

•   Periodically provides feedback on quality and quantity of information flow from management.

•    Participates in setting, and ultimately approves, the agenda for each Board meeting.

•    Approves meeting schedules to assure that there is sufficient time for discussion of all agenda items.

•    With the Chair/CEO, determines who attends Board meetings, including management and outside advisors.

•   Reviews in advance the schedule of committee meetings.

•    Monitors flow of information from Committee Chairs to the full Board.

•   Has the authority to call meetings and Executive Sessions of the Independent Directors.

•    Presides at all meetings of the Board at which the Chair/CEO is not present, including Executive Sessions of the Independent Directors.

•   After each Executive Session of the Independent Directors, communicates with the Chair/CEO to provide feedback and also to effectuate the decisions and recommendations of the Independent Directors.

•   Acts as liaison between the Independent Directors and the Chair/CEO and management on a regular basis and when special circumstances exist or communication out of the ordinary course is necessary.

•   As necessary, meets with major shareholders or other external parties, after
discussions with the Chair/CEO.

•    Is regularly apprised of inquiries from shareholders and involved in correspondence responding to these inquiries.

•    Under the Board’s guidelines for handling shareholder and employee communications to the Board, is advised promptly of any communications directed to the Board or any member of the Board that allege misconduct on the part of company management, or raise legal, ethical or compliance concerns about company policies or practices.

•   Leads the annual performance evaluation of the Chair/CEO, distinguishing as necessary between performance as Chair and performance as CEO.

•   Leads the annual performance evaluation of the Board.

•   Interviews Board candidates, as appropriate.

•   Leads the CEO succession process.

•   Plays an increased role in crisis management oversight, as appropriate.

•   May only serve as chair, lead or presiding director, or similar role, or as CEO or similar role at another public company if approved by the full Board upon recommendation from the Nominating & Corporate Governance Committee.

Designated as an “audit committee financial expert” for purposes of Section 407 of the Sarbanes-Oxley Act.

Not standing for re-election in 2015.

Does not include teleconferences held prior to each release of quarterly earnings (four in total).

To be appointed Committee Chairman upon re-election to the Board.

FWC does not provide any other services to the company and reports directly to the Compensation & Benefits Committee;

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

FWC has no significant business or personal relationship with any member of the Compensation & Benefits Committee or any executive officer;

The amount of fees paid to FWC in relation to FWC’s total revenues; and

Neither FWC nor any principal of FWC owns any shares of our common stock.

Strategy: Business Vitality; Strategic Planning; Talent Management; Reputation; Sustainability; Diversity

Reporting: Financial Results; Finance/Accounting; Internal Audit; Independent Audit; Tax; Treasury

Compliance: Law/Legal Proceedings; Legislative/Regulatory Environment; Health Care Compliance; Foreign Corrupt Practices Act; Environment, Health & Safety; Privacy; Quality; Product Safety/Scientific Issues

Operations: Supply Chain (including Manufacturing/Business Continuity Planning); Security (including security of products, sites, personnel, and information); Research & Development

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 “Setting Compensation Targets” on page 46 of this Proxy Statement.

Balanced Approach to Performance-Based Awards:

–  Performance targets are tied to multiple financial metrics, including operational sales growth, free cash flow, adjusted earnings per share growth, and long-term total shareholder return.

–  Performance-based awards are based on the achievement of strategic and leadership objectives in addition to financial metrics.

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.

Capped Incentive Awards: Annual performance bonuses and long-term incentive awards are capped at 200% of target. See “Range of Awards” on page 47 of this Proxy Statement.

Stock Ownership Guidelines: The guidelines require our CEO to directly or indirectly own equity in our company of six times salary, and our other Executive Committee members to own equity of three times salary, and to retain this level of equity at all times while serving as an Executive Committee member. See “Stock Ownership Guidelines for Named Executive Officers” on page 50 of this Proxy Statement.

Executive Compensation Recoupment Policy: This Policy gives our Board authority to recoup executive officers’ past compensation in the event of a material restatement of our financial results and for events involving material violations of company policy relating to the manufacturing, sales or marketing of our products. See “Executive Compensation Recoupment Policy” on page 50 of this Proxy Statement.

No Change-in-Control Arrangements: None of our executive officers have in place any change-in-control arrangements that would result in guaranteed payouts. See “No Change-in-Control Arrangements and Agreements” on page 49 of this Proxy Statement.

the highest ethical character and shared values with Our Credo;

reputation consistent with our image and reputation;

accomplishment within candidate’s field, with superior credentials and recognition;

active and former chief executive officers of public companies and leaders of major complex organizations, including scientific, government, educational and other non-profit institutions;

widely recognized leaders in the fields of medicine or biological sciences, including those who have received the most prestigious awards and honors in their fields;

relevant expertise and experience and the ability to offer advice and guidance to the CEO based on that expertise and experience;

independence, without the appearance of any conflict in serving as a Director, and ability to represent all shareholders;

ability to exercise sound business judgment; and

diversity reflecting gender, ethnic background and professional experience.

MARY SUE COLEMAN, Ph.D., President Emerita, University of Michigan

Having served as President of two of the nation’s largest and most prestigious public universities and having a long and decorated career in the sciences, Dr. Coleman brings to our Board a unique point of view regarding organizational management and academic research vital to a company competing in science-based industries.

Director since 2003; Independent

Audit Committee; Science, Technology & Sustainability Committee

Dr. Coleman, 71, joined the Board of Directors in 2003 and is a member of the Audit Committee and the Science, Technology & Sustainability Committee. She is President Emerita of the University of Michigan, having served as President from August 2002 to July 2014. She also was a Professor of Biological Chemistry in the University of Michigan Medical School and a Professor of Chemistry in the University of Michigan College of Literature, Science and the Arts. From 1995 to July 2002, Dr. Coleman served as President of the University of Iowa. Prior to 1995, Dr. Coleman served as Provost and Vice President for Academic Affairs at the University of New Mexico, Vice Chancellor for Graduate Studies & Research and Associate Provost and Dean of Research at the University of North Carolina at Chapel Hill, and a member of the biochemistry faculty and an administrator at the Cancer Center of the University of Kentucky in Lexington. Elected to the National Academy of Sciences’ Institute of Medicine in 1997, Dr. Coleman is a Fellow of the American Academy of Arts and Sciences and the American Association for the Advancement of Science. Dr. Coleman is a Trustee of the Gerald R. Ford Foundation, the Gates Cambridge Scholarship program, and the Mayo Clinic Foundation, and is on the Board of Directors of The Kavli Foundation.

Other Public Company Board Service: Meredith Corporation (1997 to present)

D. SCOTT DAVIS, Chairman and Former 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

Audit Committee; Regulatory, Compliance & Government Affairs Committee

Mr. Davis, 63, joined the Board of Directors in 2014, and is a member of the Audit Committee and the Regulatory, Compliance & Government Affairs Committee. Mr. Davis is Chairman of United Parcel Service, Inc. (UPS), the largest package delivery company in the world and a leading U.S. less-than-truckload transport and global supply chain solutions provider (shipment and logistics). From 2008 to September 2014, Mr. Davis served as the Chairman and Chief Executive Officer of UPS, and prior to this, he served as Vice Chairman and Chief Financial Officer. Previously, Mr. Davis held various leadership positions with UPS, primarily in the finance and accounting areas. 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 (2003-2009), serving as Chairman in 2009. Mr. Davis is a Director of EndoChoice, Inc., a trustee of the Annie E. Casey Foundation, a member of the President’s Intelligence Advisory Board, and a member of The Carter Center Board of Councilors.

Other Public Company Board Service: United Parcel Service, Inc. (2008 to present); Honeywell International, Inc. (2005 to present)

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

Audit Committee; Science, Technology & Sustainability Committee

Mr. Davis, 64, joined the Board of Directors in 2010 and is a member of the Audit Committee and the Science, Technology & Sustainability Committee. Mr. Davis is currently 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, a global network of independent social enterprises working to expand educational opportunities in their nations; a Director of global energy group, BP plc.; a member of the UK’s Cabinet Office Board; a Director of Majid Al Futtaim Holding LLC; and 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)

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

Finance Committee

Mr. Gorsky, 54, 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 the 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)

SUSAN L. LINDQUIST, Ph.D., Member and Former Director, Whitehead Institute for Biomedical Research; Professor of Biology, Massachusetts Institute of Technology

With her long and decorated career in scientific research and her global reputation as a pioneer in biomedical innovation, Dr. Lindquist brings to our Board an incomparable perspective on the intersection of academic and commercial medical research critical to a company in the health care industry.

Director since 2004; Independent

Regulatory, Compliance & Government Affairs Committee;

Science, Technology & Sustainability Committee

Dr. Lindquist, 65, joined the Board of Directors in 2004 and is Chairman of the Science, Technology & Sustainability Committee and a member of the Regulatory, Compliance & Government Affairs Committee. She is a member of the Whitehead Institute, a non-profit, independent research and educational institution, a Professor of Biology at the Massachusetts Institute of Technology and an Investigator of the Howard Hughes Medical Institute. Dr. Lindquist served as Director of the Whitehead Institute from 2001 to 2004. Previously she was affiliated with the University of Chicago where she was the Albert D. Lasker Professor of Medical Sciences in the Department of Molecular Genetics and Cell Biology. Dr. Lindquist was elected to the American Academy of Arts and Sciences in 1996, the National Academy of Sciences in 1997, the American Philosophical Society in 2003 and the Institute of Medicine in 2006. She received the Novartis/Drew Award for Biomedical Research in 2000, the Dickson Prize in Medicine in 2002, the Sigma Xi William Procter Prize for Academic Achievement in 2006, the Nevada Silver Medal for Scientific Achievement in 2007, the Genetics Society of America Medal and the Centennial Medal of the Harvard University Graduate School of Arts and Sciences in 2008. In 2010, she received the Mendel Medal from the Genetics Society (UK), The Delbrück Medal from Bayer Schering, and the National Medal of Science (USA). In 2012, Dr. Lindquist received the Wilson Medal in Cell Biology and in 2013 the Dart Prize in Biotechnology. She has served on the Scientific Advisory boards of many independent research institutes, associations and foundations, including: the Massachusetts General Hospital, Brigham and Women’s Hospital and the Institute für Molekulare Biotechnology GmbH. Dr. Lindquist was a Co-Founder of FoldRx Pharmaceuticals, Inc., a subsidiary of Pfizer Inc., and is a Founder of Yumanity Therapeutics.

Other Public Company Board Service: None

MARK B. McCLELLAN, M.D., Ph.D., Senior Fellow in Economic Studies and Director of the Initiative on Value and Innovation in Health Care, Brookings Institution

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

Regulatory, Compliance & Government Affairs Committee;

Science, Technology & Sustainability Committee

Dr. McClellan, 51, joined the Board of Directors in 2013, and is a member of the Regulatory, Compliance & Government Affairs Committee, and the Science, Technology & Sustainability Committee. He currently is a Senior Fellow in Economic Studies, and Director of the Initiatives on Value and Innovation in Health Care at the Brookings Institution, which he joined in 2007, following a year as a visiting senior fellow at the American Enterprise Institute-Brookings Joint Center for Regulatory Studies. As former commissioner of the U.S. Food and Drug Administration from 2002 to 2004, and as the former administrator of the Centers for Medicare & Medicaid Services for the U.S. Department of Health and Human Services from 2004 to 2006, Dr. McClellan has more than two decades of public service and academic research experience. From 2001 to 2002, he served as a member of the President’s Council of Economic Advisers and senior director for health care policy at the White House. During President William J. Clinton’s administration, Dr. McClellan held the position of deputy assistant secretary of the Treasury for economic policy. 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.

Other Public Company Board Service: Aviv REIT, Inc. (2013 to present)

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 presents 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.

Director since 2009; Independent Lead Director

Audit Committee; Nominating & Corporate Governance Committee;

Finance Committee

Ms. Mulcahy, 62, joined the Board of Directors in 2009 and became the Lead Director of the Board in 2012. Ms. Mulcahy is a member of the Audit Committee, the Nominating & Corporate Governance Committee, and the Finance Committee. Ms. Mulcahy was both 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 has also served as President of Xerox’s General Markets Operations, which created and sold products for reseller, dealer and retail channels. During a 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)

Recent Past Public Company Board Service: Xerox Corporation (2000 to 2010)

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

Compensation & Benefits Committee;

Nominating & Corporate Governance Committee

Mr. Perez, 67, joined the Board of Directors in 2007 and is Chairman of the Nominating & Corporate Governance Committee and a member of the Compensation & Benefits Committee. Mr. Perez 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)

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

Compensation & Benefits Committee;
Nominating & Corporate Governance Committee

Mr. Prince, 65, joined the Board of Directors in 2006 and is Chairman of the Compensation & Benefits Committee and a member of the Nominating & Corporate Governance Committee. Mr. Prince 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)

A. EUGENE WASHINGTON, M.D., M.Sc., Vice Chancellor of Health Sciences, Dean of the David Geffen School of Medicine at the University of California, Los Angeles (UCLA); Chief Executive Officer of the UCLA 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

Compensation & Benefits Committee;
Science, Technology & Sustainability Committee

Dr. Washington, 64, joined the Board of Directors in 2012 and is a member of the Compensation & Benefits Committee, and the Science, Technology & Sustainability Committee. Dr. Washington is currently 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. Effective April 1, 2015, he will become Duke University’s next Chancellor for Health Affairs and the President and Chief Executive Officer of the Duke University Health System. 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 the 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 also served as Chair of the Board of Directors of the California HealthCare Foundation, as a member of the Scientific Management Review Board for the National Institutes of Health, and as founding Chair of the Board of Governors of the Patient-Centered Outcomes Research Institute. Dr. Washington is currently Chairman of the Board of Directors of The California Wellness Foundation.

Other Public Company Board Service: None

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

Compensation & Benefits Committee;
Regulatory, Compliance & Government Affairs Committee

Mr. Williams, 65, joined the Board of Directors in 2011 and is a member of the Compensation & Benefits Committee and the Regulatory, Compliance & Government Affairs Committee. Mr. Williams 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 currently serves on President Obama’s Management Advisory Board, which is helping to bring the best of business practices to the management and operation of federal government. He is also an advisor to the private equity firm, Clayton, Dubilier & Rice, LLC, and serves as Lead Director of the board of Envision Healthcare Holdings, Inc. Mr. Williams also serves as Chairman of the Board of Clayton, Dubilier & Rice, LLC’s portfolio companies, PharMedium Healthcare Corporation and Healogics, Inc. In addition, Mr. Williams also serves on the board of MIT Corporation, Peterson Institute for International Economics and on the Advisory Board of Peterson Center on Healthcare. Previously, Mr. Williams served 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)

Recent Past Public Company Board Service: Aetna Inc. (2006 to 2011)

M. S. Coleman

J. G. Cullen⁽¹⁾

D. S. Davis⁽²⁾

I. E. L. Davis

M. M. E. Johns⁽³⁾

S. L. Lindquist

M. B. McClellan

A. M. Mulcahy

L. F. Mullin⁽¹⁾

W. D. Perez

C. Prince

A. E. Washington

R. A. Williams

Not standing for re-election in 2015.

Joined the Board on June 19, 2014. Cash fees are pro-rated for six months of service.

Retired from the Board in April 2014. Cash fees are pro-rated for partial year of service.

(#)

M. S. Coleman

J. G. Cullen⁽¹⁾

D. S. Davis⁽²⁾

I. E. L. Davis

S. L. Lindquist

M. B. McClellan

A. M. Mulcahy

L. F. Mullin⁽¹⁾

W. D. Perez

C. Prince

A. E. Washington

R. A. Williams

Not standing for re-election in 2015.

Joined the Board on June 19, 2014.

Annual Cash Retainer of $110,000

Annual Grant of Deferred Share Units valued at $155,000

Common
Shares⁽¹⁾
(#)

Share

Units⁽²⁾
(#)

or Stock
Units⁽³⁾
(#)

of Shares

Beneficially

Owned
(#)

Dominic J. Caruso

Mary Sue Coleman

James G. Cullen⁽⁴⁾

D. Scott Davis⁽⁵⁾

Ian E. L. Davis

Alex Gorsky

Susan L. Lindquist

Mark B. McClellan

Anne M. Mulcahy

Leo F. Mullin⁽⁴⁾

William D. Perez

Sandra E. Peterson

Charles Prince

Paulus Stoffels

Michael H. Ullmann

A. Eugene Washington

Ronald A. Williams

All Directors and executive officers as a group (18)

The shares described as “owned” are shares of our common stock directly or indirectly owned by each listed person, including shares held in 401(k) and Employee Stock Ownership Plans, and by members of his or her household, and are held individually, jointly or pursuant to a trust arrangement. Mr. Prince disclaims beneficial ownership of 800 shares listed as owned by him.

Includes Deferred Share Units credited to Non-Employee Directors under our Amended and Restated Deferred Fee Plan for Directors and Deferred Share Units credited to the executive officers under our Executive Income Deferral Plan (Amended and Restated).

Includes shares underlying options exercisable on February 24, 2015, options that become exercisable within 60 days thereafter and Restricted Share Units that vest within 60 days thereafter.

Not standing for re-election in 2015.

Became a member of the Board in June 2014.

of Beneficial
Ownership

BlackRock, Inc.

55 East 52nd Street

New York, NY 10022

The Vanguard Group

100 Vanguard Boulevard

Malvern, PA 19355

State Street Corporation

State Street Financial Center

One Lincoln Street

Boston, MA 02111

Based solely on an Amendment to Schedule 13G filed with the SEC on February 9, 2015, BlackRock, Inc. reported aggregate beneficial ownership of approximately 6.1%, or 171,475,096 shares, of our common stock as of December 31, 2014. BlackRock reported that it possessed sole voting power of 143,351,223 shares and sole dispositive power of 171,475,096 shares. BlackRock also reported that it did not possess shared voting or dispositive power over any shares beneficially owned.

Based solely on a Schedule 13G filed with the SEC on February 10, 2015, The Vanguard Group reported aggregate beneficial ownership of approximately 5.85%, or 163,863,072 shares of our common stock as of December 31, 2014. Vanguard reported that it possessed sole dispositive power of 159,279,960 shares, sole voting power of 4,828,711 shares, shared dispositive power of 4,583,112 shares, and no shared voting power over any shares beneficially owned.

Based solely on a Schedule 13G filed with the SEC on February 12, 2015, State Street Corporation reported aggregate beneficial ownership of approximately 5.7%, or 159,065,904 shares, of our common stock as of December 31, 2014. State Street reported that it possessed shared voting power and shared dispositive power of 159,065,904 shares, and that it did not possess sole voting power or sole dispositive power over any shares beneficially owned.

Certain of our U.S. and international employee savings and retirement plans have retained BlackRock and its affiliates to provide investment management services. In connection with these services, we paid BlackRock approximately $2.9 million in fees during fiscal year 2014.

Certain of our U.S. employee savings plans have retained Vanguard and its affiliates to provide investment management, trustee, custodial and administrative services. In connection with these services, we paid Vanguard approximately $2.1 million in fees during fiscal year 2014.

Certain of our U.S. and international employee savings and retirement plans and other affiliates have retained State Street and its affiliates to provide investment management, trustee, custodial, administrative and ancillary investment services. In connection with these services, we paid State Street approximately $10.2 million in fees during fiscal year 2014.

compensation paid by the company for service as a Director or executive officer of the company;

transactions with other companies where the related person’s only relationship is as a non-executive employee, less than 10% equity owner, or limited partner, and the transaction does not exceed the greater of $1 million or 2% of that company’s annual revenues;

contributions by the company to charitable organizations where the related person is an employee and the transaction does not exceed the lesser of $500,000 or 2% of the charitable organization’s annual receipts;

transactions where the related person’s only interest is as a holder of company stock and all holders receive proportional benefits, such as the payment of regular quarterly dividends;

transactions involving competitive bids;

transactions where the rates or charges are regulated by law or government authority; and

transactions involving bank depositary, transfer agent, registrar, trustee under a trust indenture, or party performing similar banking services.

EXECUTIVE SUMMARY

Key Performance and Compensation Highlights

2014 Company Performance

Key Features of Our 2015 Executive Compensation Program

Shareholder Outreach and Compensation Program Changes

CEO Performance and Compensation Decisions

Other Named Executive Officer Performance

2015 Compensation Decisions for 2014 Performance

EXECUTIVE COMPENSATION PHILOSOPHY

Importance of Credo Values in Assessing Performance

Guiding Principles

COMPONENTS OF EXECUTIVE COMPENSATION

Base Salary

Annual Performance Bonus

Long-Term Incentives

Executive Perquisites & Other Benefits

SETTING COMPENSATION & PERFORMANCE TARGETS

Use of Peer Groups for Pay and Performance

Executive Peer Group

Competitor Composite Peer Group

Setting Compensation Targets

COMPENSATION DECISION PROCESS

Timing

2014 Compensation Decisions for 2013 Performance

Individual Performance Assessment

Range of Awards

GOVERNANCE OF EXECUTIVE COMPENSATION

Compensation & Benefits Committee

Independent Members of the Board of Directors

Chairman/CEO

Independent Compensation Consultant

ADDITIONAL INFORMATION CONCERNING EXECUTIVE COMPENSATION

Use of Tally Sheets

Limited Employment Arrangements and Agreements

No Change-in-Control Arrangements and Agreements

No Option Repricing

No Long-Term Incentive Backdating

No Hedging of Company Stock

Stock Ownership Guidelines for Named Executive Officers

Executive Compensation Recoupment Policy

Tax Impact on Compensation

2014 Update on Performance of Performance Share Unit Awards Versus Goals

Source: IMS MIDAS Q3 2014 (growth vs. previous year (moving annual total) in local currency dollars).

Non-GAAP measures; See page 33 for details on non-GAAP measures.

2014 Operational Sales Growth

2014 Free Cash Flow

2014 Adjusted Operational EPS Growth

Non-GAAP measures; see page 33 for details on non-GAAP performance measures.

Total sales on an operational basis grew 6.1%, which exceeded our goal of 3.7% – 4.7% growth.

Generated free cash flow of $14.8 billion, which met our goal of $14 – $15 billion.

Grew adjusted earnings per share (excluding special items) 8.7% on an operational basis, which exceeded our goal of 3.3% – 5.1% growth.

Exceeded our Creating Value through Innovation objectives.

2014 Operational Sales Growth

0% 1% 2% 3% 4% 5% 6% 7% 8%

6.1% Goal

2014 Free Cash Flow ($ Billions)

$0 $2 $4 $6 $8 $10 $12 $14 $16 $18 $20

$14.8 Goal

2014 Adjusted Operational EPS Growth

0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%

8.7% Goal

Exceeded our Excellence in Execution (portfolio, organizational effectiveness, quality, and supply) objectives.

Met our Global Reach with Local Focus (global sales growth) objectives.

Exceeded our Leading with Purpose (talent, engagement, and reputation) objectives.

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 3 of the “Management’s Discussion and Analysis” section of our Annual Report on Form 10-K for the fiscal year ended December 28, 2014 (“2014 Form 10-K”), our 2014 Operational Sales Growth was 6.1%.

Free Cash Flow: As set forth in the Consolidated Statements of Cash Flows on page 24 of our 2014 Form 10-K, net cash flows from operating activities was $18.5 billion, and additions to property, plant and equipment were $3.7 billion. For compensation purposes, Free Cash Flow is the net cash from operating activities less additions to property, plant and equipment ($18.5 billion – $3.7 billion = $14.8 billion).

Adjusted Operational EPS Growth: Adjusted EPS and Adjusted Operational EPS are non-GAAP financial measures. Adjusted EPS excludes special items as set forth in Exhibit 99.2O to the company’s Current Report on Form 8-K dated January 20, 2015. For compensation purposes, Adjusted Operational EPS Growth also excludes the effect of currency translation. The following is a reconciliation of Adjusted EPS and Adjusted Operational EPS to Diluted EPS (the most directly comparable U.S. GAAP measure):

$ per share

Diluted EPS

Special Items

0.27

Adjusted EPS

Currency Translation

0.03

Adjusted Operational EPS

Redesigned our U.S. pension plan: We redesigned our U.S. pension plan for new participants effective January 1, 2015. The redesigned pension plan continues to provide competitive retirement benefits and reward long service while reducing the long-term financial exposure to our company.

Closed executive life insurance to new participants: Effective January 2015, the U.S. executive life insurance program was closed to new participants. U.S. executives will continue to be able to purchase supplemental term life insurance coverage at the same group rates offered to other employees.

    Alex Gorsky

Chairman, Board of Directors; Chief Executive Officer

Performance:

The Board based its assessment of Mr. Gorsky primarily upon its evaluation of the company’s performance. The Board believes that the company delivered excellent financial and strong strategic performance in 2014 under Mr. Gorsky’s leadership as summarized under “2014 Company Performance” on pages 32 and 33 and it approved compensation for 2014 reflecting this strong performance.

Compensation Decisions:

The Board’s compensation decisions for Mr. Gorsky reflect the Board’s assessment of his 2014 performance: delivering strong company performance and above-expectations leadership. The Board recognized Mr. Gorsky’s 2014 performance by awarding him an annual performance bonus at 135% of target and long-term incentives at 130% of target. After reviewing market data as one factor and his overall compensation, performance, alignment with Our Credo values, complexity and scope of responsibilities, and experience, the Board set Mr. Gorsky’s salary rate at $1,600,000 per year, effective March 2, 2015 (a 6.7% increase).

2015 Compensation Decisions for 2014 Performance:

2014 Annual Performance Bonus

2015 Long-Term Incentive Awards

Please see “2015 Compensation Decisions for 2014 Performance” and “2015 Salary Increases” on pages 38 to 40 for details on the awards, total direct compensation, and base salary increase.

The actual pay mix for Mr. Gorsky for 2014 is displayed below. Please see “2015 Compensation Decisions for 2014 Performance” on pages 38 to 40 for details on the mix of base salary, annual performance bonus, and long-term incentive awards.

    Dominic J. Caruso

Vice President, Finance; Chief Financial Officer

In addition to his contribution to our company’s overall performance, Mr. Caruso:

•   Drove strong financial management, financial metrics and cash flow management, reflected by the organization exceeding its 2014 business plan for operational Sales and adjusted operational EPS, meeting its target for Free Cash Flow, and the company continuing to increase the dividend for the 52^nd consecutive year by 6.1% in 2014.

•  Drove clear and effective analysis of merger and acquisition activity with prioritization and focus on capital allocation, and delivered above benchmark results in procurement.

•  Continued to build strong relationships and external partnerships with the financial community and was actively involved in industry coalitions.

•  Provided strong leadership within Finance including strengthening the talent pipeline in key roles across the function.

See pages 38 to 40 for details on “2015 Compensation Decisions for 2014 Performance.”

    Paulus Stoffels, M.D.

Chief Scientific Officer; Worldwide Chairman, Pharmaceuticals

In addition to his contribution to our company’s overall performance, Dr. Stoffels:

•  Significantly contributed to the extraordinary results of our Pharmaceutical business.

•   Provided strong leadership within the Pharmaceutical Research & Development organization, building on the industry leading track record of launching 14 new products over the last 5 years.

•   Strengthened the product pipeline through targeted licensing & acquisitions, partnerships and collaborations.

•   Led the development of a company wide external innovation strategy through the Innovation Centers and the assessment of the health of the company’s R&D portfolio.

•   Led Johnson & Johnson in having a major impact on health in the world with innovative therapies in cancer, schizophrenia, diabetes, cardiovascular diseases, inflammation, HIV, and HCV and becoming the leading prescription pharmaceutical company in the U.S.