Johnson & Johnson’s shareholders voted in opposition to a proposal on Thursday to discontinue gross sales of its talc child powder all over the world as the buyer items large tries to protect itself from tens of 1000’s of lawsuits over the product.
The proposal, which did not win a majority of votes on the firm’s annual assembly, was fueled by issues in regards to the child powder’s potential hyperlinks to most cancers and claims that the talc within the product may be contaminated by asbestos. Greater than 40,000 lawsuits have been filed in opposition to the corporate, some together with accusations that Johnson & Johnson marketed child powder to Black and obese ladies regardless of figuring out about attainable asbestos contamination for many years.
The product is not accessible in North America — Johnson & Johnson pulled it from cabinets in 2020, a yr after recalling a few of its child powder in 2019. However the product, which the corporate has repeatedly insisted is secure and free from contaminants, continues to be offered in markets resembling Asia and South America.
Johnson & Johnson had urged shareholders to vote in opposition to the shareholder decision, saying of child powder in its proxy assertion that “many years of science have reaffirmed its security.” The proxy advisory agency Institutional Shareholder Providers agreed, though it defined in a observe that “shareholders ought to stay conscious of potential continued dangers from this difficulty globally.”
Glass Lewis, one other proxy advisory agency, supported the proposal, writing in its suggestion that “stopping all gross sales of talc-based child powder might assist to restore some injury to the corporate’s repute and will forestall potential lawsuits, fines or penalties in markets outdoors North America.”
The proposal was submitted by Tulipshare, a British activist investor that has additionally focused corporations like Apple and Amazon and mentioned it appealed to Johnson & Johnson shareholders, resembling Vanguard and State Avenue, for assist this week. The decision highlighted Johnson & Johnson’s authorized and reputational burdens: Final yr, it confronted $1.6 billion in talc-related litigation bills, after setting apart $3.9 billion for authorized payments the yr earlier than.
“That is not a political or authorized or client drawback,” mentioned Antoine Argouges, the founding father of Tulipshare. “This can be a shareholder drawback.”
A separate shareholder proposal, submitted by the activist investor group Mercy Funding Providers, additionally raised issues about talc whereas asking Johnson & Johnson to rent outdoors auditors to evaluate the racial penalties of its insurance policies. The proposal, which handed, talked about “troubling” claims that the corporate “aggressively marketed” its talc merchandise to ladies of coloration regardless of well being issues.
