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Over the past four years, we have averaged 95% shareholder support for our annual advisory vote on "Say on Pay", demonstrating strong support for our approach to executive compensation. Our compensation program provides an appropriate and competitive mix of elements to incentivize our executives to achieve the Company's business strategies and goals, while also aligning executive performance and awards with shareholder interests.

COMPENSATION ALIGNED WITH PERFORMANCE

The vast majority of compensation for our executive officers is performance-based and objectively determined. Long Term Incentives (LTI), which comprise the largest percentage of compensation for our executive officers, are directly linked to shareholder returns. Each year, LTI award guidelines are determined based on relative TSR performance compared to our peer group. The Compensation Committee looks at 1-, 3-, and 5-year TSR in making these determinations. The table below illustrates the relative TSR and award guidelines since 2013 for executive officers at Abbott.

Not only is a direct link evident in these results; it can reasonably be concluded that Abbott has been conservative in setting target payout levels. This linkage translates into significant differentiation of pay for our executives, aligned with returns to our shareholders. The table below illustrates the pay outcomes for our CEO based on results each year since the separation of AbbVie. Again, a direct pay for performance link is very evident.

KEY FEATURES OF OUR EXECUTIVE COMPENSATION PROGRAM

Details of the compensation decisions made for our named executive officers are outlined on pages 38 to 47.

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The Board of Directors recommends a voteFOR the election of each of the following nominees for director. All nominees are currently serving as directors. Additional information about each director's background and experience can be found beginning on page 12.13.

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Abbott is committed to goodstrong corporate governance andthat is aligned with shareholder interests. Our Board spends significant time with the Company's senior management to understand the dynamics, issues, and opportunities for Abbott. During these interactions, directors provide insights and ask probing questions which guide management decision-making. This collaborative approach to risk oversight and emphasis on long term sustainability begins with our leaders and is engrained in the culture of our Company. The Board of Directorsalso regularly monitors bestleading practices in governance and adopts measures that it determines are in the best interest of Abbott and its shareholders.

GOVERNANCE HIGHLIGHTSCEO SUCCESSION PLANNING:

In November 2019, Abbott announced that Miles D. White will be stepping down as Chief Executive Officer on March 31, 2020, after a remarkable 21-year tenure. The Board of Directors appointed Robert B. Ford, Abbott's President and Chief Operating Officer and a 24-year Abbott veteran, to succeed Miles White as Chief Executive Officer. Mr. White will remain Executive Chairman of the Board.

With this transition, Mr. Ford will become the 13^th CEO of Abbott in its 131-year history, all having been appointed from within, a testament to Abbott's strong management philosophy and succession-planning discipline.

BOARD GOVERNANCE HIGHLIGHTS:

•

Strong Lead Independent Director since 2005



•

Two new directors in 2017 whoKey standing Board Committees are independent



•

Four fully independent Board Committees:independent: Audit, Compensation, Public Policy and Nominations &and Governance



•

All directors elected annually by majority vote



•

Executive sessions of independent directors at each regularly scheduled Board meeting



•

Annual Board and Board committee self-assessment



•

Annualconducts annual succession planning forreview of company management



•

Proxy Access

6      BOARD COMPOSITION

Our goal is to maintain a diverse board representing a wide range of skills, experience, and perspectives.

SHAREHOLDER OUTREACHOUTREACH:

Active shareholder engagement throughout the year is essential to maintaining good corporate governance. We routinely seek investor input on a variety of topics, including corporate governance, executive compensation, financial performancesustainability and other strategic matters. During 2017,2019, we conducted outreach with a cross-section of shareholders representing more than 60%65% of our outstanding shares. Investor sentiment and specific feedback was summarized and shared with executive management and the Board of Directors for their respective decision making process.as appropriate.

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At Abbott, we believe that being a responsible and sustainable business is an essential foundation for helping people live fuller, healthier lives. Abbott works hardOur Sustainability efforts are focused on the most relevant industry and company-specific risks and opportunities. The key areas of focus listed below are the basis of our Sustainability strategy. These areas have been identified through an in-depth materiality analysis, directed by executive management, and in partnership with several, diverse stakeholders. We aim to maximize the impact of the businessdeliver sustainable, responsible growth that improves lives and creates value in creating stronger communities around the world—focusing on operating responsibly and earning trust by doing the right things, for the long term.

Product Excellence—Committed to offering products and services consistent with the highest standards of quality and safety.

Improving Access—Dedicated to creating technologies and products that meet local needs around the world, as well as informing and empowering people to make well-informed choices about healthcare.

Safeguarding the Environment—We've set goals to significantly reduce our environmental impacts in the areas of carbon dioxide emissions, total water intake and total generated waste.

RECOGNITION BY THIRD-PARTY ORGANIZATIONS
world.

Innovation, Access & Affordability		Talent		Product Quality
Robust internal innovation process that targets the world's most pressing healthcare challenges and incorporates access and affordability considerations into the design process		Award winning development programs, integrated talent management and succession planning processes		Focused on ensuring the highest quality standards and systems

Climate & Water Use

Dow Jones Sustainability Index Industry Group Leader for the 5th consecutive year. Currently Abbott is the only U.S.-based company recognized as a global industry group leader.

Supply Chain, Packaging & Waste

Recognized by Working Mother, Diversity Inc., Science and many other publications for workplace leadership and diversity.Data & Data Privacy

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Ranked No. 1 for Social Responsibility in the Medical Products and Equipment sector on theFortune Most Admired Companies list each of the past five years.

Ranked as one of the global 100 Best Corporate Citizens by Corporate Responsibility Magazine for nine consecutive years and named Healthcare Sector Leader in 2017.

Active management of our environmental impact throughout our value chain

Committed to maintaining a high-quality, sustainable and resilient supply chain

Utilizing data to create healthcare solutions while ensuring responsible data protection

To learn more about Abbott's sustainability efforts, please visitwww.abbott.com/citizenship.responsibility/sustainability.

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INFORMATION ABOUT THE ANNUAL MEETING

WHO CAN VOTE

Shareholders of record at the close of business on February 28, 201826, 2020 will be entitled to notice of and to vote at the Annual Meeting. As of January 31, 2018,2020, Abbott had 1,746,333,8921,763,433,243 outstanding common shares, which are Abbott's only outstanding voting securities. All shareholders have cumulative voting rights in the election of directors and one vote per share on all other matters.

NOTICE AND ACCESS

In accordance with the Securities and Exchange Commission's "Notice and Access" rules, Abbott mailed a Notice of Internet Availability of Proxy Materials (the "Notice") to certain shareholders in mid-March of 2018.2020. The Notice describes the matters to be considered at the Annual Meeting and how the shareholders can access the proxy materials online. It also provides instructions on how those shareholders can vote their shares. If you received the Notice, you will not receive a print version of the proxy materials, unless you request one. If you would like to receive a print version of the proxy materials, free of charge, please follow the instructions on the Notice.

CUMULATIVE VOTING

Cumulative voting allows a shareholder to multiply the number of shares owned by the number of directors to be elected and to cast the total for one nominee or distribute the votes among the nominees, as the shareholder desires. Shareholders may not cumulate their votes against a nominee. If shares are voted cumulatively and there are more nominees than there are director vacancies, nominees who receive the greatest number of votes will be elected. If you wish to cumulate your votes, you must sign and mail in your proxy card or attend the Annual Meeting.

VOTING BY PROXY

All of Abbott's shareholders may vote by mail or at the Annual Meeting. Abbott's By-Laws provide that a shareholder may authorize no more than two persons as proxies to attend and vote at the meeting. Most of Abbott's shareholders may also vote their shares by telephone or the Internet. If you vote by telephone or the Internet, you do not need to return your proxy card. The instructions for voting can be found with your proxy card or on the Notice.

REVOKING A PROXY

You may revoke your proxy by voting in person at the Annual Meeting or, at any time prior to the meeting:

•

by delivering a written notice to the Secretary of Abbott,



•

by delivering an authorized proxy with a later date, or



•

by voting by telephone or the Internet after you have given your proxy.

DISCRETIONARY VOTING AUTHORITY

Unless authority is withheld in accordance with the instructions on the proxy, the persons named in the proxy will vote the shares covered by proxies they receive to elect the 1214 nominees named in Item 1 on the proxy card. Should a nominee become unavailable to serve, the shares will be voted for a substitute designated by the Board of Directors, or for fewer than 1214 nominees if, in the judgment of the proxy holders, such action is necessary or desirable. The persons named in the proxy may also decide to vote shares cumulatively in their sole discretion so that one or more of the nominees may receive fewer votes than the other nominees (or no votes at all), although they have no present intention of doing so. The proxy holders may not cast your vote for any nominee from whom you have withheld authority to vote.

Where a shareholder has specified a choice for or against the ratification of the appointment of Ernst & Young LLP as auditors, the advisory vote on the approval of executive compensation, or the approval of a shareholder proposal, or where the shareholder has abstained on these matters, the shares represented by the proxy will be

10      

voted (or not voted) as specified. Where no choice has been specified, the proxy will be voted FOR the ratification of Ernst & Young LLP as auditors, FOR the approval of executive compensation, and AGAINST the shareholder proposal.

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Table of Contentsproposals.

TheAside from matters set forth in this proxy statement, the Board of Directors is not aware of any other issue which may properly be brought before the meeting. If other matters are properly brought before the meeting, the accompanying proxy will be voted in accordance with the judgment of the proxy holders.

QUORUM AND VOTE REQUIRED TO APPROVE EACH ITEM ON THE PROXY

A majority of the outstanding shares entitled to vote on a matter, represented in person or by proxy, constitutes a quorum for consideration of that matter at the meeting. The affirmative vote of a majority of the shares represented at the meeting and entitled to vote on a matter shall be the act of the shareholders with respect to that matter.

EFFECT OF WITHHOLD VOTES, BROKER NON-VOTES, AND ABSTENTIONS

Shares represented by proxies which are present and entitled to vote on a matter but which have elected to withhold authority to vote for one or more directors or to abstain from voting on another matter will have the effect of votes against those directors or that matter. A proxy submitted by an institution, such as a broker or bank that holds shares for the account of a beneficial owner, may indicate that all or a portion of the shares represented by that proxy are not being voted with respect to a particular matter. This could occur, for example, when the broker or bank is not permitted to vote those shares in the absence of instructions from the beneficial owner of the shares. These "non-voted shares" will be considered shares not present and, therefore, not entitled to vote on those matters, although these shares may be considered present and entitled to vote for other purposes. Brokers and banks have discretionary authority to vote shares in the absence of instructions on matters the New York Stock Exchange considers "routine", such as the ratification of the appointment of the auditors. They do not have discretionary authority to vote shares in absence of instructions on "non-routine" matters. The election of directors, the advisory vote on the approval of executive compensation, and shareholder proposals are "non-routine" matters. Non-voted shares will not affect the determination of the outcome of the vote on any matter to be decided at the meeting.

INSPECTORS OF ELECTION

The inspectors of election and the tabulators of all proxies, ballots, and voting tabulations that identify shareholders are independent and are not Abbott employees.

COST OF SOLICITING PROXIES

Abbott will bear the cost of making solicitations from its shareholders and will reimburse banks and brokerage firms for out-of-pocket expenses incurred in connection with this solicitation. Proxies may be solicited by mail, telephone, Internet, or in person by directors, officers, or employees of Abbott and its subsidiaries.

Abbott has retained GeorgesonMorrow Sodali LLC to aid in the solicitation of proxies at an estimated cost of $19,500 plus reimbursement for reasonable out-of-pocket expenses.

ABBOTT LABORATORIES STOCK RETIREMENT PLAN

Participants in the Abbott Laboratories Stock Retirement Plan will receive voting instructions for their shares held in the Abbott Laboratories Stock Retirement Trust. The Stock Retirement Trust is administered by both a trustee and an Investment Committee. The trustee of the Trust is The Northern Trust Company. The members of the Investment Committee are Stephen R. Fussell,Mary K. Moreland, Karen M. Peterson, and Brian P. Wentworth, employees of Abbott. The voting power with respect to the shares is held by and shared between the Investment Committee and the participants. The Investment Committee must solicit voting instructions from the participants and follow the voting instructions it receives. The Investment Committee may use its own discretion with respect to those shares for which no voting instructions are received.

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CONFIDENTIAL VOTING

It is Abbott's policy that all proxies, ballots, and voting tabulations that reveal how a particular shareholder has voted be kept confidential and not be disclosed, except:

•

where disclosure may be required by law or regulation,



•

where disclosure may be necessary in order for Abbott to assert or defend claims,



•

where a shareholder provides comments with a proxy,



•

where a shareholder expressly requests disclosure,



•

to allow the inspectors of election to certify the results of a vote, or



•

in other limited circumstances, such as a contested election or proxy solicitation not approved and recommended by the Board of Directors.

HOUSEHOLDING OF PROXY MATERIALS

Shareholders sharing an address may receive only one copy of the proxy materials or the Notice of Internet Availability of Proxy Materials, unless their broker, bank, or other intermediary has received contrary instructions from any shareholder at that address. This is known as "householding." Shareholders wishing to discontinue householding and receive separate copies of the proxy materials or the Notice of Internet Availability of Proxy Materials should notify their broker, bank, or other intermediary.

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NOMINEES FOR ELECTION AS DIRECTORS

	​	ROBERT J. ALPERN, M.D. Director since 2008 Age 6769 Ensign Professor of Medicine and Professor of Internal Medicine, and Former Dean of Yale School of Medicine, New Haven, Connecticut	​

	​	ROXANNE S. AUSTIN Director since 2000 Age 5759 President and Chief Executive Officer, Austin Investment Advisors, Newport Coast, California (Private Investment and Consulting Firm)

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	​	SALLY E. BLOUNT, PH.D. Director since 2011 Age 5658 Dean of the J.L. Kellogg Graduate School of Management and the Michael L. Nemmers Professor of ManagementStrategy and OrganizationsFormer Dean of the J.L. Kellogg Graduate School of Management at Northwestern University, Evanston, Illinois	​

	​	ROBERT B. FORD Director since 2019 Age 46 President and Chief Operating Officer, Abbott Laboratories	​

14      

	​	MICHELLE A. KUMBIER Director since 2018 Age 52 Senior Vice President and Chief Operating Officer of Harley-Davidson Motor Company, Milwaukee, Wisconsin (Motorcycle and Related Products Manufacturer)

	​	EDWARD M. LIDDY Director since 2010 Age 7274 Retired Chairman & CEO, The Allstate Corporation, Northbrook, Illinois (Insurance (Insurance Company)	​

Abbott Laboratories      13 15

	​	DARREN W. MCDEW Director since 2019 Age 59 Retired General, United States Air Force, and Former Commander of U.S. Transportation Command, Scott Air Force Base, Illinois

	​	NANCY MCKINSTRY Director since 2011 Age 5961 Chief Executive Officer and Chairman of the Executive Board of Wolters Kluwer N.V., Alphen aan den Rijn, the Netherlands (Global Information, Software, and Services Provider)	​

16      

	​	PHEBE N. NOVAKOVIC Director since 2010 Age 6062 Chairman and Chief Executive Officer, General Dynamics Corporation, Falls Church, Virginia (Worldwide (Worldwide Defense, Aerospace, and Other Technology Products Manufacturer)	​

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	​	WILLIAM A. OSBORN Lead Independent Director Director since 2008 Age 7072 Retired Chairman and Chief Executive Officer of Northern Trust Corporation (Multibank Holding (Multibank Holding Company) and The Northern Trust Company, Chicago, Illinois (Banking Services Company)

17

	​	SAMUEL C. SCOTT III Director since 2007 Age 73 Retired Chairman, President and Chief Executive Officer of Corn Products International, Inc., Westchester, Illinois (Corn Refining Company)

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		DANIEL J. STARKS Director since 2017 Age 6365 Retired Chairman, President and Chief Executive Officer of St. Jude Medical, Inc., St. Paul, Minnesota (Medical Device Manufacturer)

	​	JOHN G. STRATTON Director since 2017 Age 5759 Retired Executive Vice President and President of Global Operations, Verizon Communications Inc., New York, New York (Telecommuncations(Telecommunications and Media Company)	​

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	​	GLENN F. TILTON Director since 2007 Age 6971 Retired Chairman, President and Chief Executive Officer of UAL Corporation, Chicago, Illinois (Airline Holding Company)	​

	​	MILES D. WHITE Director since 1998 Age 6365 Chairman of the Board and Chief Executive Officer, Abbott Laboratories	​

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THE BOARD OF DIRECTORS AND ITS COMMITTEES

The Board of Directors held 7 meetings in 2017.2019. The average attendance of all directors at Board and committee meetings in 20172019 was ninety-nine percent95% and each director attended at least seventy-five percent75% of the total number of Board meetings and meetings of the committees on which he or she served. Abbott encourages its Board members to attend the annual shareholders meeting. Last year, all of Abbott's directors attended the annual shareholders meeting.

The Board has determined that each of the following directors is independent in accordance with the New York Stock Exchange listing standards: R. J. Alpern, R. S. Austin, S. E. Blount, W. J. Farrell,M. A. Kumbier, E. M. Liddy, D. W. McDew, N. McKinstry, P. N. Novakovic, W. A. Osborn, S. C. Scott III, D. J. Starks, J. G. Stratton, and G. F. Tilton. To determine independence, the Board applied the categorical standards attached as Exhibit A to this proxy statement. The Board also considered whether a director has any other material relationships with Abbott or its subsidiaries and concluded that none of these directors had a relationship that impaired the director's independence. This included consideration of the fact that some of the directors or their family members are officers or serve on boards of companies or entities to which Abbott sold products or made contributions or from which Abbott purchased products and services during the year. In making its determination, the Board relied on both information provided by the directors and information developed internally by Abbott.

The Board has risk oversight responsibility for Abbott and administers this responsibility both directly and with assistance from its committees.

The BoardMiles D. White has determined that the current leadership structure, in which the offices ofserved as Abbott's Chairman and Chief Executive Officer are held by one individualsince 1999. In November 2019, Abbott announced that Mr. White will step down as Chief Executive Officer on March 31, 2020 and an independent director actsremain Executive Chairman. The Board also unanimously appointed Robert B. Ford, the current President and Chief Operating Officer and a 24-year Abbott veteran, to succeed Mr. White as lead director, ensuresChief Executive Officer and named him to the appropriate levelBoard, effective November 12, 2019.

The Board is actively involved in succession planning and is focused on ensuring leadership continuity. The Board believes that the continuation of oversight, independence, and responsibility is applied to all Board decisions, including risk oversight, andMr. White's service as Executive Chairman is in the best interests of Abbott and its shareholders.

Chairman/Chief Executive Officer

•

Coherent Mr. White contributes comprehensive, in-depth knowledge of Abbott's businesses and the global health care industry, as well as valuable insights on leadership and direction forstrategy. The Board believes that his advice and guidance to Mr. Ford and the Board and executive management



•

Clear accountability andwill help facilitate a single focus for the chain of command to execute our strategic initiatives and business plans



•

CEO's extensive industry expertise,successful leadership experience, and familiarity with our business



•

With our CEO leading management and chairing thetransition.

The Board we benefit from his strategic and operational insights, enablingalso has a focused vision encompassing the full range, from long-term strategic direction to day-to-day execution

Lead Independent Director

•

Currently, the Chairman of the Nominations and Governance Committee acts as the lead independent director



•

Chosen that is chosen by and from the independent members of the Board of Directors,Directors. Currently, the Chair of the Nominations and servesGovernance Committee, Mr. Osborn, is the lead independent director, whose key functions and responsibilities include:

•

Serve as the liaison between the Chairman of the Board and the independent directors,



•

FacilitatesFacilitate communication with the Board and presidespreside over regularly conducted executive sessions of the independent directors or sessions where the Chairman of the Board is not present,



•

ReviewsReview and approvesapprove matters, such as agenda items, schedule sufficiency, and, where appropriate, information provided to other Board members,



•

Lead annual performance reviews of individual directors and the full Board,



•

Has the authority to call meetings of the independent directors and, if requested by major shareholders, ensures that he or she is available for consultation and direct communication, and



•

The lead director, and each of the other directors, communicatesCommunicate regularly with the Chairman and Chief Executive Officerof the Board regarding appropriate agenda topics and other Board related mattersmatters.

The Board reviews its leadership structure on at least an annual basis. The Board has determined that this leadership structure ensures the appropriate level of oversight, independence and responsibility is applied to all Board decisions, including risk oversight, and is in the best interests of Abbott and its shareholders.

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18      Abbott Laboratories20      

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DIRECTOR SELECTION

The Nominations and Governance Committee assists the Board of Directors in identifying individuals qualified to become Board members and recommends to the Board the nominees for election as directors at the next annual meeting of shareholders. The process used by the Nominations and Governance Committee to identify a nominee to serve as a member of the Board of Directors depends on the qualities being sought. From time to time, Abbott engages an executive search firm to assist the Committee in identifying individuals qualified to be Board members.

Abbott's outline of directorship qualifications, which is part of Abbott's corporate governance guidelines, is available in the corporate governance section of Abbott's investor relations website (www.abbottinvestor.com). These qualifications describe specific characteristics that the Nominations and Governance Committee and the Board take into consideration when selecting nominees for the Board, such as: strong management experience and senior levelsenior-level experience in medicine, hospital administration, medical and scientific research and development, finance, international business, technology, government, and academic administration. An individual nominee is not required to satisfy all the characteristics listed in the outline of directorship qualifications and there is no requirement that all such characteristics be represented on the Board.

In addition, Board members should have backgrounds that, when combined, provide a portfolio of experience and knowledge that will serve Abbott's governance and strategic needs. Board candidates will be considered on the basis of a range of criteria, including broad-based business knowledge and relationships, prominence, and excellent reputations in their primary fields of endeavor, as well as a global business perspective and commitment to good corporate citizenship. Directors should have demonstrated experience and ability that is relevant to the Board of Directors' oversight role with respect to Abbott's business and affairs. Each director's biography includes the particular experience and qualifications that led the Board to conclude that the director should serve on the Board. The directors' biographies are on pages 1213 through 17.19.

A description of the procedure for the recommendation and nomination of directors, including by proxy access, is on page 71.82.

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21

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BOARD DIVERSITY AND COMPOSITION

In the process of identifying nominees to serve as a membermembers of the Board of Directors, the Nominations and Governance Committee considers the Board's diversity of relevant experience, areas of expertise, ethnicity, gender, and geography and assesses the effectiveness of the process in achieving that diversity. Five of the 12 directors nominated for election are women or minorities.

The process used to identify and select nominees has resulted in an experienced,a balanced, diverse, and well-rounded Board of Directors that possesses the skills, experiences, and perspectives necessary for its oversight role. All of Abbott's directors exhibit:

•✓		Global business perspective		✓ •		Successful track record		✓		Innovative thinking
✓		Knowledge of corporate governance requirements and practices		•✓ Successful track record •		High integrity		•✓ Innovative thinking •		Commitment to good corporate citizenship



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Abbott Laboratories      1922      

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The following table details some of the attributes, skills, and experience represented on Abbott's Board of Directors.

		Abbott Business Characteristic		​		Board Attributes, Skills, and Experience		​
​	​	​	​	​	​	​	​	​
		A Broad and Diverse Company with Different Healthcare Businesses				• Senior Leadership Experience with Diverse Business Models • Financial Literacy
		​		​		​		​
​		A Multinational Company		​		• Experience as a Director or Senior Officer of a Multinational Corporation • Global Perspective		​
		A Consumer-facing Company				• Academic and Senior Management Leadership Consumer Product Experience • Senior Leadership Experience with Diverse Business Models
		​		​		​		​
​		Financial Expertise and Risk Management		​		• Financial Literacy • Public Company Financial Experience		​
		Regulated Industry				• Senior Leadership Experience in Regulated Industries • Senior Level Government Experience
		​		​		​		​
​		Corporate Governance		​		• Senior Leadership Experience • Financial Literacy • Experience with Diverse Business Models		​


Other Board Composition Metrics


The directors nominated for election bring diverse and relevant skills, experience, and perspectives.





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BOARD EVALUATION PROCESS

Each year, Abbott's directors evaluate the effectiveness of the Board and its Committees in performing its governance and risk oversight responsibilities. Directors assess the performance of their peers, as well as the full Board of Directors and each of the Committees on which they serve, as follows:



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COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors has five committees established in Abbott's By-Laws: Audit Committee, Compensation Committee, Nominations and Governance Committee, Public Policy Committee, and Executive Committee. Each of the

All members of the Audit Committee, Compensation Committee, Nominations and Governance Committee, and Public Policy Committee isare independent. These Committees are governed by written charters setting forth their respective responsibilities, and each Committee reviews its charter at least annually, with any changes being recommended to the full Board for approval. Copies of the Committee charters are all available in the governance section of Abbott's investor relations website (www.abbottinvestor.com).

​

Current Members

Audit*

Compensation

Nominations and Governance

Public Policy

Executive

​

​

Current Members

Audit*

Compensation

Nominations and Governance

Public Policy

Executive

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

R. J. Alpern

​

​

​

​

​

​

​

R. J. Alpern

​

​

​

​

​

​

​

R. S. Austin

​

​

​

​

​

​

​

​

​

​

R. S. Austin

​

​

​

​

​

​

​

​

​

​

S. E. Blount

​

​

​

​

​

​

​

S. E. Blount

​

​

​

​

​

​

​

​

E. M. Liddy

​

​

​

​

​

​

​

​

​

​

R. B. Ford

​

​

​

​

​

​

​

​

​

​

​

​

N. McKinstry

​

​

​

​

​

​

​

M. A. Kumbier

​

​

​

​

​

​

​

​

P. N. Novakovic

​

​

​

​

​

​

​

​

​

​

E. M. Liddy

​

​

​

​

​

​

​

​

​

​

W. A. Osborn

​

​

​

​

​

​

​

D. W. McDew

​

​

​

​

​

​

​

​

S. C. Scott III

​

​

​

​

​

​

​

​

​

​

​

N. McKinstry

​

​

​

​

​

​

​

​

​

​

​

D. J. Starks

​

​

​

​

​

​

​

P. N. Novakovic

​

​

​

​

​

​

​

​

J. G. Stratton

​

​

​

​

​

​

​

​

​

​

​

W. A. Osborn

​

​

​

​

​

​

​

​

​

G. F. Tilton

​

​

​

​

​

​

​

S. C. Scott III

​

​

​

​

​

​

​

​

M. D. White

​

​

​

​

​

​

​

​

​

​

​

​

D. J. Starks

​

​

​

​

​

​

​

​

​

​

​

​

Total Meetings Held in 2017

​

7

​

3

​

4

​

4

​

1

​

​

J. G. Stratton

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

G. F. Tilton

​

​

​

​

​

​

​

​

​

​

​

M. D. White

​

​

​

​

​

​

​

​

Total Meetings Held in 2019

​

7

​

4

​

4

​

4

​

0

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​



*

Each of the committee members is financially literate, as is required of audit committee members by the New York Stock Exchange. The Board of Directors has determined that Edward M. Liddy, the Audit Committee's Chair, is an "audit committee financial expert."

Audit Committee


The Audit Committee assists the Board of Directors in fulfilling its oversight responsibility with respect to to:

•

Abbott's accounting and financial reporting practices and the audit process; theprocess,



•

The quality and integrity of Abbott's financial statements; thestatements,



•

The independent auditors' qualifications, independence, and performance; theperformance,



•

The performance of Abbott's internal audit function and internal auditors; and certain areas of legalauditors,

​

24      

​

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•

Legal and regulatory compliance. Thecompliance relating to financial matters, including accounting, auditing, financial reporting, and securities law issues, and



•

Enterprise risk management, including major financial and cybersecurity risk exposures.

In performing these functions, the Audit Committee is governed by a written charter. meets regularly with the independent auditor, Abbott's management, and Abbott's internal auditors to review the adequacy, effectiveness and quality of Abbott's accounting and financial reporting principles, policies, procedures and controls, as well as Abbott's enterprise risk management, including Abbott's risk assessment and risk management policies.

A copy of the report of the Audit Committee is on page 63.69.

Compensation Committee


The Compensation Committee assists the Board of Directors in carrying out the Board's responsibilities relating to the compensation of Abbott's executive officers and directors. The Committee is governed by a written charter. The Compensation CommitteeIts primary responsibilities include:

•

Review director compensation annually reviews the compensation paid to the members of the Board and gives its recommendationsrecommend to the full Board regarding both the amount of director compensation that should be paid and the allocation of that compensation between equity-based awards and cash. In recommending director compensation, the Compensation Committee takes comparable director fees into account and reviews any arrangement that could be viewed as indirect director compensation.

This Committee also reviews, approves,



•

Review, approve, and administersadminister the incentive compensation plans in which any executive officer of Abbott participates and all of Abbott's equity-based plans. ItThe Compensation Committee may delegate the responsibility to administer and make grants under these plans to management, except to the extent that such delegation would be inconsistent with applicable law or regulation or with the listing rules of the New York Stock Exchange. The processes and

​



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Table of Contents

procedures used for the consideration and determination of executive compensation are described in the section of the proxy captioned, "Compensation Discussion and Analysis."

The Compensation Committee has the sole authority, under its charter, to select, retain, and/or terminate independent compensation advisors. The Committee engaged Meridian Compensation Partners, LLC as its compensation consultant for 2017. Meridian performs no other work for Abbott. The Committee engages

•

Engage compensation consultants to provide counsel and advice on executive and non-employee director compensation matters. The consultant and its principal report directly to the Chair of the Committee. The principal meets regularly and as needed with the Committee in executive sessions, has direct access to the Chair during and between meetings, and performs no other services for Abbott or its senior executives.

The Committee determines what variables it will instruct the consultant to consider, and they include:including peer groups against which performance and pay should be examined, financial metrics to be used to assess Abbott's relative performance, competitive long-term incentive practices in the marketplace, and compensation levels relative to market practice. The Committee negotiates and approves any fees paid to the consultant for these services.

The Compensation Committee engaged Meridian Compensation Partners, LLC as its compensation consultant for 2019. Meridian performs no other work for Abbott. Based on its evaluation of Meridian's independence in accordance with the New York Stock Exchange listing standards and information provided by Meridian, the Committee determined that the work performed by Meridian does not present any conflicts of interest.

A copy of the Compensation Committee report is on page 41.50.

Nominations and Governance Committee


The Nominations and Governance Committee assists the Board of Directorsin fulfilling its oversight responsibility with respect to governance matters. Its primary responsibilities include:

•

Assist the Board in identifying individuals qualified to become Board members, and recommendsrecommend to the Board the nominees for election as directors at the next annual meeting of shareholders; recommendsshareholders,



•

Recommend to the Board the people to be elected as executive officers of Abbott; developsAbbott,



•

Develop and recommendsrecommend to the Board the corporate governance guidelines applicable to Abbott;Abbott, and serves



•

Serve in an advisory capacity to the Board and the Chairman of the Board on matters of organization, management succession plans, major changes in the organizational structure of Abbott, and the conduct of Board activities. The Committee is governed by a written charter.

The process used by this Committee to identify a nominee to serve as a member of the Board of Directors depends on the qualities being sought. From time to time, Abbott engages an executive search firm to assist the Committee in identifying individuals qualified to be Board members. The process used by the Committee to identify nominees is described on page 1921 in the section captioned, "Director Selection."

​

25

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Public Policy Committee


The Public Policy Committee assists the Board of Directors in fulfilling its oversight responsibility with respect to Abbott's public policy, certainto:

•

Certain areas of legal and regulatory compliance, including evaluating Abbott's compliance policies and governmentalpractices and reviewing Abbott's compliance program,



•

Governmental affairs and healthcare compliance issues that affect Abbott. The Committee is governed by a written charter.

Abbott, and



•

Abbott's public policy, including evaluating Abbott's social responsibility policies and practices and reviewing social, political, economic, and environmental trends and public policy issues that affect or could affect Abbott's business activities, performance, and public image.

Executive Committee


The Executive Committee may exercise all the authority of the Board in the management of Abbott, except for matters expressly reserved by law for Board action.

COMMUNICATING WITH THE BOARD OF DIRECTORS

Interested parties may communicate with the Board of Directors by writing a letter to the Chairman of the Board, to the ChairmanChair of the Nominations and Governance Committee, who acts as the lead director at the meetings of the independent directors,director, or to the independent directors c/o Abbott Laboratories, 100 Abbott Park Road, D-364, AP6D, Abbott Park, Illinois 60064-6400,60064, Attention: Corporate Secretary. The General Counsel and Corporate Secretary regularly forwards to the addressee all letters other than mass mailings, advertisements, and other materials not relevant to Abbott's business. In addition, directors regularly receive a log of all correspondence received by the CompanyAbbott that is addressed to a member of the Board and may request any correspondence on that log.

CORPORATE GOVERNANCE MATERIALS

Abbott's corporate governance guidelines, outline of directorship qualifications, director independence standards, code of business conduct, and the charters of Abbott's Audit Committee, Compensation Committee, Nominations and Governance Committee, and Public Policy Committee are all available in the corporate governance section of Abbott's investor relations website (www.abbottinvestor.com)(www.abbottinvestor.com).

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22      Abbott Laboratories26      

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Table of Contents

20172019 DIRECTOR COMPENSATION

Our CEO isMessrs. White and Ford are not compensated for serving on the Board or Board committees. Abbott's remaining directors, who are all non-employee directors, are compensated for their service under the Abbott Laboratories Non-Employee Directors' Fee Plan and the Abbott Laboratories 2017 Incentive Stock Program.

The following table sets forth a summary of the non-employee directors' 20172019 compensation.

​

Name

Fees Earned or Paid in Cash ($)(1)

Stock Awards ($)(2)

Option Awards ($)(3)

Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(4)

All Other Compensation ($)(5)

Total ($)

​

​

Name

Fees Earned or Paid in Cash ($)(1)

Stock Awards ($)(2)

Option Awards ($)(3)

Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(4)

All Other Compensation ($)(5)

Total ($)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

R. J. Alpern

​

​

$

126,000

​

​

$

149,939

​

​

$

0

​

​

$

30,527

​

​

$

25,000

(5)

​

$

331,466

​

​

R. J. Alpern

​

​

$

126,000

​

​

$

174,910

​

​

$

0

​

​

$

64,323

​

​

$

25,000

​

​

$

390,233

​

​

R. S. Austin

​

​

151,667

​

​

149,939

​

​

0

​

​

0

​

​

0

​

​

301,606

​

​

​

R. S. Austin

​

​

152,000

​

​

174,910

​

​

0

​

​

0

​

​

0

​

​

326,910

​

​

​

S. E. Blount

​

​

126,000

​

​

149,939

​

​

0

​

​

5,797

​

​

25,000

(5)

​

306,736

​

​

S. E. Blount

​

​

126,000

​

​

174,910

​

​

0

​

​

10,355

​

​

25,000

​

​

336,265

​

​

​

W. J. Farrell

​

​

48,667

​

​

0

​

​

0

​

​

52,303

​

​

0

​

​

100,970

​

​

​

M. A. Kumbier

​

​

132,000

​

​

174,910

​

​

0

​

​

0

​

​

0

​

​

306,910

​

​

​

E. M. Liddy

​

​

144,667

​

​

149,939

​

​

0

​

​

0

​

​

0

​

​

294,606

​

​

E. M. Liddy

​

​

151,000

​

​

174,910

​

​

0

​

​

0

​

​

0

​

​

325,910

​

​

​

N. McKinstry

​

​

132,000

​

​

149,939

​

​

0

​

​

0

​

​

5,000

(5)

​

286,939

​

​

​

D. W. McDew

​

​

31,500

​

​

0

​

​

0

​

​

0

​

​

0

​

​

31,500

​

​

​

P. N. Novakovic

​

​

141,000

​

​

149,939

​

​

0

​

​

0

​

​

0

​

​

290,939

​

​

N. McKinstry

​

​

132,000

​

​

174,910

​

​

0

​

​

0

​

​

0

​

​

306,910

​

​

​

W. A. Osborn

​

​

156,000

​

​

149,939

​

​

0

​

​

0

​

​

0

​

​

305,939

​

​

​

P. N. Novakovic

​

​

141,000

​

​

174,910

​

​

0

​

​

0

​

​

0

​

​

315,910

​

​

​

S. C. Scott III

​

​

132,000

​

​

149,939

​

​

0

​

​

0

​

​

25,000

(5)

​

306,939

​

​

W. A. Osborn

​

​

156,000

​

​

174,910

​

​

0

​

​

0

​

​

0

​

​

330,910

​

​

​

D. J. Starks

​

​

105,000

​

​

149,939

​

​

0

​

​

0

​

​

0

​

​

254,939

​

​

​

S. C. Scott III

​

​

132,000

​

​

174,910

​

​

0

​

​

0

​

​

25,000

​

​

331,910

​

​

​

J. G. Stratton

​

​

63,000

​

​

0

​

​

0

​

​

0

​

​

0

​

​

63,000

​

​

D. J. Starks

​

​

126,000

​

​

174,910

​

​

0

​

​

0

​

​

0

​

​

300,910

​

​

​

G. F. Tilton

​

​

132,000

​

​

149,939

​

​

0

​

​

0

​

​

25,000

(5)

​

306,939

​

​

​

J. G. Stratton

​

​

126,000

​

​

174,910

​

​

0

​

​

0

​

​

0

​

​

300,910

​

​

​

G. F. Tilton

​

​

132,000

​

​

174,910

​

​

0

​

​

0

​

​

25,000

​

​

331,910

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

⁽¹⁾

Under the Abbott Laboratories Non-Employee Directors' Fee Plan, non-employee directors earn $10,500 for each month of service as a director. Audit Committee members, other than the Audit Committee chair, receive $500 for each month of service on the Audit Committee. Board Committee chairmenchairs receive monthly fees of: $2,083.33 for the Audit Committee chairman,chair, $1,666.66 for the Compensation Committee chairman,chair, $1,250.00 for the Public Policy Committee chairman,chair, and $1,250.00 for the chairmanchair of any other Board committee. In addition, the lead independent director earns $2,500 for each month of such service and does not receive a fee for service as Nominations and Governance Committee chairman.chair. Fees earned under the Abbott Laboratories Non-Employee Directors' Fee Plan are paid in cash to the director, paid in the form of vested non-qualified stock options (based on an independent appraisal of their fair value), deferred (as a non-funded obligation of Abbott), or paid currently into an individual grantor trust established by the director. The distribution of deferred fees and amounts held in a director's grantor trust generally commences when the director reaches age 65, or upon retirement from the Board of Directors, if later. The director may elect to have deferred fees and fees deposited in trust credited to either a guaranteed interest account or to a stock equivalent account that earns the same return as if the fees were invested in Abbott stock.shares. If necessary, Abbott contributes funds to a director's trust so that as of year-end the stock equivalent account balance (net of taxes) is not less than seventy-five percent of the market value of the related common stockshares at year-end.



⁽²⁾

The amounts reported in this column represent the aggregate grant date fair value of the awards calculated in accordance with Financial Accounting Standards Board ASC Topic 718. Abbott determines the grant date fair value of stock unit awards by multiplying the number of restricted stock units granted by the average of the high and low market prices of an Abbott common share on the date of grant. In addition to the fees described in footnote 1, each non-employee director elected to the Board of Directors at the annual shareholders meeting receives vested restricted stock units having a value of $150,000$175,000 (rounded down) under the Abbott Laboratories 2017 Incentive Stock Program (effective as of the 20182020 Annual Meeting, this will increase to $175,000$185,000 (rounded down)). In 2017,2019, this was 3,4372,241 units. The non-employee directors receive cash payments equal to the dividends paid on the shares covered by the units at the same rate as other shareholders. Upon termination, retirement from the Board, death, or a change in control of Abbott, a non-employee director will receive one common

​

27

​

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share of common stock for each restricted stock unit outstanding under the Incentive Stock Program. Each director is required to own, within five years of becoming a director, the number of shares of Abbott stock having a fair market value equal to four times the annual director fees earned or paid in cash. All directors with five years tenure meet or exceed the guidelines. The following Abbott restricted stock units were outstanding as of December 31, 2017:2019: R. J. Alpern, 25,220;30,406; R. S. Austin, 32,883;38,069; S. E. Blount, 18,480;

​

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Table of Contents

23,666; M. A. Kumbier, 2,241; E. M. Liddy, 20,647;25,833; N. McKinstry, 18,480;23,666; P. N. Novakovic, 20,647;25,833; W. A. Osborn, 27,137;32,323; S. C. Scott III, 28,867;34,053; D. J. Starks, 3,437;8,623; J. G. Stratton, 5,186; and G. F. Tilton, 28,867.34,053.

⁽³⁾

The following options were outstanding as of December 31, 2017:2019: R. S. Austin, 20,852; W. J. Farrell, 6,691;47,883; E. M. Liddy, 19,890;46,743; N. McKinstry, 24,428;47,902; P. N. Novakovic, 77,869;102,943; W. A. Osborn, 21,448;49,190; and S. C. Scott III, 18,148.41,622.



⁽⁴⁾

The totals in this column include reportable interest credited under Abbott Laboratories Non-Employee Directors' Fee Plan during the year.



⁽⁵⁾

Charitable contributions made by Abbott's non-employee directors are eligible for a matching contribution (up to $25,000 annually). The amounts reported in this column includerepresent charitable matching grant contributions, as follows: R. J. Alpern, $25,000; S. E. Blount, $25,000; N. McKinstry, $5,000; S. C. Scott III, $25,000; and G. F. Tilton, $25,000.

​

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SECURITY OWNERSHIP OF EXECUTIVE OFFICERS AND DIRECTORS


The table below reflects the number of Abbott common shares beneficially owned as of January 31, 20182020 by (i) each director, and (ii) the Chief Executive Officer, the Chief Financial Officer, and the three other current and formermost highly paid executive officers listed in the Summary Compensation Table (collectively, the2019 (the "named officers"), and (iii)by all directors named officers, and executive officers of Abbott as a group. It also reflects the number of stock equivalent units held by non-employee directors under the Abbott Laboratories Non-Employee Directors' Fee Plan and restricted stock units held by non-employee directors, named officers, and executive officers.

		Name		Shares Beneficially Owned(1)(2)		Stock Options Exercisable Within 60 Days of January 31, 2018(3)		Stock Equivalent Units				Name		Shares Beneficially Owned(1)(2)		Stock Options Exercisable Within 60 Days of January 31, 2020(3)		Stock Equivalent Units
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
		H. L. Allen		100,879		676,159		0				R. J. Alpern		30,406		0		7,766
​		R. J. Alpern		25,220		0		6,671		​		R. S. Austin		44,913		47,883		0		​
		R. S. Austin		39,727		20,852		0				S. E. Blount		26,266		0		0
​		S. E. Blount		23,580		0		0		​		L. D. Earnhardt		56,946		0		0
		E. S. Fain		445,218		0		0				R. B. Ford		197,382		926,022		0
​		R. B. Ford		132,378		480,238		0		​		M. A. Kumbier		3,258		0		0		​
		E. M. Liddy		22,967		19,890		20,565				E. M. Liddy		28,153		46,743		21,268
​		N. McKinstry		18,480		24,428		0		​		D. W. McDew		0		0		0		​
		P. N. Novakovic		21,147		77,869		0				N. McKinstry		23,666		47,902		0
​		W. A. Osborn		51,137		21,448		27,570		​		P. N. Novakovic		26,333		102,943		0		​
		M. T. Rousseau		629,294		774,049		0				W. A. Osborn		56,323		49,190		28,512
​		D. G. Salvadori		73,798		159,652		0		​		D. G. Salvadori		95,088		461,015		0
		S. C. Scott III		34,867		18,148		6,902				S. C. Scott III		40,053		41,622		7,138
​		D. J. Starks		6,943,506		0		0		​		D. J. Starks		7,018,683		0		0		​
		J. G. Stratton		0		0		1,145				J. G. Stratton		8,641		0		4,651
​		G. F. Tilton		36,217		0		31,629		​		G. F. Tilton		41,403		0		32,710		​
		M. D. White		3,138,480		4,873,894		0				M. D. White		3,194,710		5,417,294		0
​		B. B. Yoor		63,823		327,339		0		​		B. B. Yoor		116,620		184,281		0		​
		All directors, named officers, and executive officers as a group(4)(5)		12,849,731		11,397,036		94,482				All directors and executive officers as a group(4)(5)		12,502,322		12,334,341		102,045
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

⁽¹⁾

This column includes shares held in the officers' accounts in the Abbott Laboratories Stock Retirement Trust as follows: M. D. White, 32,065;34,239; B. B. Yoor, 2,165;2,239; and all executive officers as a group, 54,963.69,290. Each officer has shared voting power and sole investment power with respect to the shares held in his or her account.



⁽²⁾

This column includes restricted stock units held by the non-employee directors and payable in stock upon their retirement from the Board as follows: R. J. Alpern, 25,220;30,406; R. S. Austin, 32,883;38,069; S. E. Blount, 18,480;23,666; M. A. Kumbier, 2,241; E. M. Liddy, 20,647;25,833; N. McKinstry, 18,480;23,666; P. N. Novakovic, 20,647;25,833; W. A. Osborn, 27,137;32,323; S. C. Scott III, 28,867;34,053; D. J. Starks, 3,437;8,623; J. G. Stratton, 5,186; G. F. Tilton, 28,867;34,053; and all directors as a group, 224,665.283,952.



⁽³⁾

This column also includes 41,39266,145 restricted stock units held by all named officers and executive officers as a group that will be payable in stock within 60 days of January 31, 2018.2020.



⁽⁴⁾

Certain executive officers of Abbott are fiduciaries of several employee benefit trusts maintained by Abbott. As such, they have shared voting and/or investment power with respect to the common shares held by those trusts. The table does not include the shares held by the trusts. As of January 31, 2018,2020, these trusts owned a total of 31,971,674 (1.8%30,557,888 (1.7%) of the outstanding shares of Abbott.


None of the directors, named officers, or executive officers has pledged shares.

⁽⁵⁾

Excluding the shared voting and/or investment power over the shares held by the trusts described in footnote 4, the directors, named officers, and executive officers as a group together own beneficially less than one percent of the outstanding shares of Abbott.

​

Abbott Laboratories      25 29

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EXECUTIVE COMPENSATION


COMPENSATION DISCUSSION AND ANALYSIS

INTRODUCTION


This Compensation Discussion and Analysis (CD&A) describes Abbott's executive compensation program in 2017. While the Summary Compensation Table on page 44 provides the required disclosures for this proxy statement, we will also discuss the LTI grant made in February 2018, since that grant was based on 2017 performance. The LTI grant disclosed in the Summary Compensation Table was made in February 2017 and was based on 2016 performance.

2019. In particular, this CD&A explains how the Compensation Committee (the Committee) and Board of Directors made compensation decisions for the Company's executives, including the sevenfive named officers: Miles D. White, Chairman of the Board and Chief Executive Officer; Robert B. Ford, President and Chief Operating Officer; Brian B. Yoor, Executive Vice President, Finance and Chief Financial Officer; Hubert L. Allen, Executive Vice President, General Counsel and Secretary; Robert B. Ford,Lisa Earnhardt, Executive Vice President, Medical Devices; and Daniel G. Salvadori, Executive Vice President, Nutritional Products; Michael T. Rousseau, President, Cardiovascular and Neuromodulation; and Eric S. Fain, Senior Vice President, Group President, Cardiovascular and Neuromodulation. Mr. Rousseau and Mr. Fain left during 2017.Products.

The CD&A also describes the pay philosophy the Committee has established for the Company's executive officers, the process the Committee utilizes to examine performance in the context of executive pay decisions, the performance goals and results for each named officer, and recent updates to our compensation program. This year's CD&A reflects the feedback from our shareholders gathered during our 2019 shareholder outreach described on page 31.

20172019 PERFORMANCE


In 2017, Abbott's three-year total shareholder return (TSR) of 139.5% is more than twice that of the peer group median and the broader Standard & Poor's 500 (S&P 500) and Dow Jones Industrial Average (DJIA) market indices. These consistent above-market returns are driven by the strength of our leadership positions in some of the largest and fastest growing markets in healthcare and innovative product portfolios across our businesses.

Abbott delivered strong returns for shareholders in 2019 and achieved outstandingor exceeded the financial targets set at the beginning of last year. Abbott's one-year TSR was 22.1%, delivering significant shareholder returns to shareholders, rankingon top of the one-year TSR of 29% in 2018, which ranked #1 in our peer group.

		Primary performance metric for long-term incentive program

Abbott's one-year total shareholder return (TSR) was 52.0%, which was 30.2 and 23.9 percentage points above the robust growth of both the Standard & Poor's 500 Index (S&P 500) and the Dow Jones Industrial Average (DJIA), respectively. ​

30      

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In addition Abbott:to delivering significant shareholder returns, Abbott continued to take important steps to position the Company for long-term, sustainable growth.

•

Raised the dividend by nearly 6%, marking Abbott's 94^th consecutive yearIncreased investments to sustain growth of dividends paid and the 46^th straight year the dividend has been increased.several important products including:



•

Returned $1.8 billion to Abbott shareholders through dividends.



•

Increased pre-tax earnings from continuing operations by 58%; including a $1.46 billion estimated net impact of U.S. tax reform, decreased net earnings by 67% or, excluding the one-time impact of tax reform, increased net earnings by 71%.



•

Increased adjusted EBITDA by 43%.



•

Completed three major strategic initiatives in 2017 to shape the company for maximum competitiveness



–

Divested Abbott Medical Optics (AMO)FreeStyle Libre®, our easy-to-use and affordable revolutionary continuous glucose monitor



–

Acquired St. Jude Medical



–

Acquired Alere Inc.

At a corporate level, all financial goalsMitraClip®, the market-leading device for officers were overachieved. This includes:

•

Growing adjusted diluted EPS by 14%, from $2.20 to $2.50, above company targets and at the top endminimally invasive treatment of the expected range.



•

Growing adjusted sales by 31%, an increase of $6.2 billion.



•

Increasing adjusted free cash flow by 113%, nearly 4 times the expected increase percentage.

As a result of the significant overachievement of these key financial and strategic goals, Abbott's market capitalization nearly doubled during 2017.

For reconciliation to GAAP, see Annex I.

​

26      Abbott Laboratories

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VARIABLE PAY DECISIONS BASED ON 2017 PERFORMANCE


In February 2018, our Compensation Committee made pay decisions for our executive officers based on the design of our programs and our extremely strong performance in 2017. The results of those pay decisions were as follows:

•

Average bonus payouts were 105% of target reflecting overachievement of goals related to EPS, net income, sales, cash flow, return on assets, and completion of three transactions critical to our strategic priorities. Individual payouts were aligned with individual performance and ranged from 18% to 163% of target.



•

2018 LTI award guidelines were set at the 75th percentile of our peer group, consistent with extremely strong relative total shareholder returns through 2017. Individual awards were aligned with individual performance and ranged from the 24th to the 90th percentile.

It is important to understand the effect of the "lag" in the Summary Compensation Table, resulting from SEC proxy disclosure rules. Specifically, the amounts shown on page 44 reflect the annual bonus for 2017 performance. However, the LTI awards shown in the table are for 2016 performance and were granted in February 2017. During 2016, despite strong operational results and the initiation of important strategic actions, Abbott's returns to shareholders on a 1-, 3- and 5-year basis were in the lower quartile relative to our peers. Consistent with Abbott's philosophy to align LTI compensation with TSR performance, these relatively lower total shareholder returns resulted in significantly below market long-term incentive grants for 2017.

Due to the significantly different LTI amounts granted in 2017 (using the 25th percentile guidelines) vs. 2018 (using the 75th percentile guidelines), we have disclosed the 2018 grant in this proxy to aid shareholders in their understanding of our approach to compensation, which definitively aligns our LTI grant guidelines with relative TSR performance as illustrated below.

Relative TSR Percentile vs. Peers

​

2013

​

2014

​

2015

​

2016

​

2017

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

1-Year

​

26th

​

89th

​

61st

​

0th

​

100th

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

3-Year

84th

53rd

44th

17th

63rd

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

5-Year

​

11th

​

47th

​

83rd

​

28th

​

50th

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Average

​

40th

​

63rd

​

63rd

​

15th

​

71st

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

LTI Award Guideline Percentile

37th

50th

50th

25th

75th

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Abbott Laboratories      27

​

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COMPENSATION PHILOSOPHY AND COMPONENTS OF PAY

Abbott and its Compensation Committee have designed a compensation program to attract and retain executives whose talent and contributions support and advance the profitable growth of the Company and growth in shareholder value. The program is designed to be:

•

Competitive: While we target competitive total compensation, actual payouts vary based upon Company and individual performance. The Compensation Committee sets LTI awards based on relative Company performance. Each year, we look at LTI market percentiles between the 10^th and the 90^th to determine appropriate award levels. Actual pay reflects actual performance relative to peers.



•

Aligned to our shareholders' interests: Almost two-thirds of our pay is equity-based, directly tying a significant portion of executive compensation to shareholder returns.



•

Performance-based: Other than base salary, which is the smallest component of our executives' compensation, all remaining components of Total Direct Compensation (i.e., annual cash incentive, performance-based restricted stock awards, and stock options) are aligned with Company and/or division performance.



•

Balanced: Short- and long-term objectives focus our executives on actions that create value today while building for sustainable future success. Our compensation program rewards the achievement of



–

Annual incentive payouts tied tocurrent year operating performance vs. goalsmitral regurgitation



–

Long-term incentive awards tiedAlinity®, our suite of innovative diagnostic instruments



•

Achieved several important product approvals in 2019 across our businesses that will be significant contributors to growth in the coming years.longer-term

returns

•

Returned $2.3B to shareholders relativethrough dividends in 2019 and announced a 12.5% increase to peersthe dividend payable in 2020, demonstrating Abbott's financial strength and sustained performance

commitment to shareholder returns.