Living Our Credo Values Johnson Johnson The Federation

Living Our Credo Values Johnson & Johnson The Federation of Korean Industries July 6, 2006

Johnson & Johnson 설립 : 1886년 소재지 : New Brunswick, New Jersey 사업 : 의약품 (Pharmaceutical), AAA 소비자용품 (Consumer), 의료기기(Medical Devices & Diagnostics) 매출액 : USD 50. 5 Billion in 2005 자회사 : 세계 54국가의 198개 자회사 (175개국에서 판매) 종업원수 : 110, 600명 포춘(Fortune)지가 선정한 미국에서 가장 존경 받는 제약기업 2

Johnson & Johnson AAA 115 -year-old company founded in 1886 Initially selling sterile gauze, sutures and then, band-aids Delivered 57 consecutive years of rising sales 68 years of increased dividends Reinvented itself as a major force in pharmaceuticals One of only a half-dozen U. S. companies with a triple-A credit rating Become a no-more-tears alternative for growth investors - the potential for outsize gains - the consistency - the ultimate buy-and-hold stock Excerpted from the monthly magazine, ‘MONEY 2001’ 3

J&J with the Best Reputation Since 1999 - Wall Street Journal 2005(Source: Harris Interactive) / Korea Economic Daily 42004

America’s Most admired Companies 2006 Overall Rank 6 th, Pharmaceutical rank 1 st 5 Feb 2006, Fortune

J&J Strategic Difference n Broadly based in Human Health Care n Decentralized Management n Manage for the Long Term n Ethical Principles l Our Credo 6

Sales by Segment Total J&J $13. 6 Billion MD&D $4. 6 Billion Consumer $4. 4 Billion 34% Total J&J $50. 5 Billion MD&D $19. 1 Billion Consumer $9. 1 Billion 38% 32% 34% Pharmaceutical $4. 6 Billion 1992 18% 44% Pharmaceutical $22. 3 Billion 2005 7

Sales by Geographic Area Asia, Pacific, Africa $5. 9 Billion W. Hemisphere $2. 5 Billion 14% 6% 56% Europe $11. 2 Billion 24% U. S. $27. 7 Billion 2005 8

J&J Sister Companies in Korea Janssen Korea Limited Johnson & Johnson Medical Korea Limited Johnson & Johnson Vision Care 9

Ethical Principles: CREDO • Responsibility to our Customers • Responsibility to our Employees • Responsibility to the Communities • Responsibility to our Stockholders 10

CREDO Values Behaves with honesty and integrity Demonstrates courage in applying the values of the Credo Treats others with dignity and respect Champions the Credo Takes action on the Credo Survey results to improve the organization Considers the interests of all constituents when making decisions Balances short-term business results with the long-term future of Johnson & Johnson 11

Living Our Credo Values A Process for Ethical Decision Making

Credo Values “The philosophy of values-driven leadership argues that an organization’s purposes and values can powerfully motivate employees. They can help them feel that they are serving worthwhile ends and channel their behavior in desired directions. But to have this effect, a company purposes and values must be clearly articulated and consistently reinforced. ‘Leadership and the Quest for Integrity’ 13

History of the Credo • Credo Published 1943 • Credo Challenge Meetings 1975 • Tylenol Incident 1982 • Credo Survey 1986 • Leadership at All Levels 1995 • EC III – Ethical Decisions 1997 14

Credo Leadership Ethical Action Ethical Reasoning Ethical Awareness Credo Values 15

There is no single satisfactory standard of ethical action agreeable to everyone that a manager can use to make specific operational decisions. 16

A Process for Ethical Decision Making Perspective Process 17

Various Ways of Examining Ethical Issues n Personal n Cost/Benefit n Human Values n Fairness n Common Good 18

Personal Focuses on attitudes, dispositions, or character traits that enable us to be and to act in ways that develop human potential. n Examples: Trustworthiness, Respect, responsibility, fairness, caring n What is ethical is what develops moral character in ourselves and our communities n 19

Cost/Benefit Focuses on the consequences that actions or policies have on the wellbeinig of all persons directly or indirectly affected by the action or policy. Of any two actions, the more ethical one will produce the greatest balance of benefits over harms. 20

Human Values Each person has a fundamental right to be valued and treated as a free and equal rational person capable of makinig his or her own decisions. The golden rule 21

Fairness requires consistency in the way people are treated. Treat people the same unless there are relevant differences between them 22

Common Good The community is comprised of individuals whose own good is bound to the good of the whole. What is ethical is what advances the common good. 23

Credo-Based Decision Process 24

A decision-making process is a reminder to slow down and deliberate; to consider the consequences, the constituencies, and the options. 25

Other ways to look at the “Whole” as a system Systems Thinking Porcess Mapping Balanced Scorecard Financials Customer data Innovation People data Cross Functional Teams SOQ / Process Excellence 26

CREDO VALUES Trustworthiness § Strive for a good, ethical solution § Align behavior with stated values § Keep promises § Be worthy of stakeshareholder loyalty Respect § Do not exploit, demean or discriminate § Our actions should earn respect from stakeholders Citizenship § Obey laws/regulations § Protect the environment § Support worthy causes Responsibility Caring § Recognize interests of all stakeholders § Be personally accountable § Consider impact long-term and beyond your area of responsibility § Be concerned about the well-being of others affected by our actions Fairness § Be fair in dealings with customers, suppliers, communities, employees and competitors § Be unbiased/objective § See things through the eyes of others 27

Credo-Based Decision Process Recognize the moral challenge Is there a conflict between two “goods? ” Proactively address the issue Avoid Rationalizations Gather pertinent facts Search for a good solution Test your provisional decision Ask yourself: Use more than one ethical approach • Does it pass the “Tell All” test? • Weigh conflicting interests against Credo values placing emphasis on core values • Could you explain it to those affected, to your family, your peers? • Assess motives/intent • Assess impact of alternatives on stakeshareholders In conflict, think long-term Address threshold issues Act with courage Accept the discomfort Acknowledge any downside • Will it harm the Company’s reputation if reported in the media? Talk with others: • Use your management, others at corporate as a sounding board 28

There is more than one ethically defensible solution to any problem, no matter how challenging 29

Credo Related Processes Credo Challenge Meeting Credo Survey Global Standard of Leadership (GSOL) 360 Degree Feedback Survey J&J Policy on Business Conduct Credo Hot Line 30

Credo Survey Objectives • To measure employees’ perception of our adherence to the principles contained in the Credo • To identify trends in employee opinions • To identify and analyze the organization’s response to current business issues • To provide feedback to management regarding the administration of policies, practices, and programs • To enable operating companies to obtain feedback data when implementing key initiatives • To develop appropriate action plans to increase organizational effectiveness 31

Credo Survey 32

Credo Survey Structure 5 Sections 20 Categories 78 Questionnaires 33

Credo Survey – Annual, Global, Online 2 0 0 2 ey v r u S do lts e r C u s e R 34

Credo Survey What’s Next 30 Days 60 Days 90 Days Survey Results Communicated down throughout the Organization Key Improvement areas Identified Action Plans Due Total Company (What, When, & Who) 35

Credo Related Processes Credo Challenge Meeting Credo Survey Global Standard of Leadership (GSOL) 360 Degree Feedback Survey J&J Policy on Business Conduct Credo Hot Line 36

37

Credo Values l Behaves with honesty and integrity l Demonstrates courage in applying the values of the Credo l Champions the Credo l Takes action on the Credo Survey results to improve the organization l Considers the interest of all constituents when making decisions l Balances short-term business results with the long-term future of Johnson & Johnson 38

CREDO Values Message from the Chairman. . . “If I had to pick out one thing that has made Johnson & Johnson a winner and which will keep the company competitive in the future, it is our value system. ” R. S. Larsen 39

Business Results Executes Against the Plan Cultivates a Results. Driven Environment 40

Customer & Market Place Focus Creates Value for Customers Focuses Externally 41

Innovation Forges a Vision of the Future Promotes Innovation and Continuous Learning 42

Collaboration § Builds Interdependent Partnerships 43

Complexity & Change Manages Complexity Implements Positive Change 44

Organizational & People Development Develops People for Optimal Performance Creates an Achievement Environment Personal Accountability 45

“Johnson & Johnson is well positioned in the global health care industry, and our organization is primed for growth. Our Credo firmly establishes our values and our Standards of Leadership set the behavior, character and commitment we expect from those who will lead us to greater achievement. ” William C. Weldon Executive Officer 46

2006 Transition to Global Leadership Profile(GLP) Global Leadership Profile (GLP) 47

Global Leadership Profile To Create a diverse, robust pipeline of extraordinary leaders n n Integrity and Credo-based Actions – builds trust; tells the truth; initiates transparency into problems; demonstrates genuine caring for people Strategic Thinking – driven to envision a better future; takes any role or job and makes it better; has relentless dissatisfaction with status quo; motivated to leave things better than they were; a change agent n Big Picture Orientation with Attention to Detail – able to operate in two “worlds” simultaneously e. g. , growth and cost control, enterprise and operating company success; sees the why as well as the what; can zoom in or out as needed n Ability to Inspire and Motivate – motivates and empowers others to achieve a desired action; enjoys developing a diverse group of people; instills confidence; attracts good people; brings out the best in others; invests time to be personally “connected” with the organization n Intellectual Curiosity – sees the possibilities; willing to experiment; cultivates new ideas; comfortable with ambiguity and uncertainty n Collaboration and Teaming – puts interests of enterprise above own; works well across functions and groups; builds teams effectively; inspires follower ship; instills a global mindset n Sense of Urgency – proactively senses and responds to problems and opportunities; works to reduce “cycle” time; takes action when needed n Prudent Risk-taking – inner confidence to take risks and learn from experience; courage to grab opportunities or shed non-viable businesses n Self-awareness and Adaptability – resilient; has personal modesty and humility; willing to learn from others; patient, optimistic, flexible and adaptable n Results and Performance Driven – assumes personal ownership and accountability for business results and solutions; willing to make tough calls; consistently delivers results that meet or exceed expectations; demonstrates a track record of people development; champions diversity; net exporter of successful talent 48

Credo Related Processes Credo Challenge Meeting Credo Survey Global Standard of Leadership (GSOL) 360 Degree Feedback Survey J&J Policy on Business Conduct Credo Hot Line 49

360 Degree Feedback Survey 50

Facts about the 360 feedback It is focused on development Acts like a 4 -way mirror Feedback is anonymous (except for boss) Measures “perceptions” Comprehensive and specific Gives responsibility for your own development 51

Key Components of Summary Report Your Self - Perception Your top five/bottom five by item average Advanced manager - top ten/bottom ten Top five/bottom five by Percentile Written comments 52

Analyzing Your Data Sample Analysis Form: Peers/Others Direct Reports Patterns • Are there any similarities or patterns in your bottom ten? Consistency • To what extent are the views consistent with those of others? • How do you explain this? Surprises • What responses did you least expect? • What are these surprises suggesting to you? Other Indicators • What other indicators (I. e. peer inputs to your performance evaluations, etc. ) support or are in inconsistent with these results? Impact • How do you think these results may impact people you manage, the business, and your future? Summary reactions 53

Action Planning Peers/Others Direct Reports Sample Planning Form: What will you start doing? What will you continue to do? What will you stop doing? 54

Credo Related Processes Credo Challenge Meeting Credo Survey Global Standard of Leadership (GSOL) 360 Degree Feedback Survey J&J Policy on Business Conduct Credo Hot Line 55

Johnson & Johnson Policy on Business Conduct v Responsibilities of Managers and Employees(관리자 및 직원의 책임) v Conflicts of Interest (이해관계의 상충) v Compliance with Laws and Regulations(법률과 규정의 준수) - Antitrust and Competition Laws (독점금지 및 자유경쟁 법률) - Environmental Laws and Regulations (환경 법률 및 규정) - Healthcare Compliance; Approval, Manufacture, Sales and Marketing of Drug, Medical Device, Diagnostics, and Consumer Products (보건법 준수; 승인, 제조, 의약품 및 의료기구, 진단용 시약, 소비재 제품의 판매와 마케팅) - Employment and Labor Laws and Policies (고용과 노동에 관한 법률과 규정) - Compliance with Securities Laws (유가증권 법률의 준수) - Political Activities and Contributions (정치적 활동 및 기부) - Respect for Trade Secrets and Confidential Information (거래기밀 및 중) 기밀정보의 존 v Use of Company Funds, Assets and Information and Complete and Accurate Books and Records; Second-Country Payments(회사자산과 자금의 사용, 회계장부나 기록의 정 확성 및 제 2국을 통한 지급) 56

Credo Related Processes Credo Challenge Meeting Credo Survey Global Standard of Leadership (GSOL) 360 Degree Feedback Survey J&J Policy on Business Conduct Credo Hot Line 57