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TABLE OF CONTENTS
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrantý | ||
Filed by a Party other than the Registranto | ||
Check the appropriate box: | ||
Preliminary Proxy Statement | ||
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
Definitive Proxy Statement | ||
o | Definitive Additional Materials | |
o | Soliciting Material under §240.14a-12 |
Abbott Laboratories | ||||
(Name of Registrant as Specified In Its Charter) | ||||
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) | ||||
Payment of Filing Fee (Check the appropriate box): | ||||
ý | No fee required. | |||
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | |||
(1) | Title of each class of securities to which transaction applies: | |||
(2) | Aggregate number of securities to which transaction applies: | |||
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | |||
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Abbott Laboratories
100 Abbott Park Road
Abbott Park, Illinois 60064-6400 U.S.A.
On the Cover:FreeStyle Libre SystemTyler Walsh, Quality Control Technician, Rapid DiagnosticsGABRIELLE WEMPEFreeStyle LibreuserThe Netherlands
Since 2015, Gabrielle has relied onBy leveraging Abbott's experience in
infectious disease assay development and
research—knowing which regions of therevolutionary technologyvirus to target and applying proven
development approaches—we were able
to quickly develop a comprehensive array
of highly accurate tests for COVID-19 in Abbott'sFreeStyleaLibresystem to monitor her glucose levels.matter of months, a process that often
takes years.
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Notice of Annual Meeting of Shareholders | 2 | |
Proxy Summary | 3 | |
Information About the Annual Meeting | ||
Notice and Access | 12 | |
How to Attend the Meeting on the Virtual Meeting Platform | 12 | |
How to Attend the Meeting by Phone | 12 | |
Who Can Vote | ||
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Revoking a Proxy | ||
Cumulative Voting | 13 | |
Discretionary Voting Authority | ||
Quorum and Vote Required to Approve Each Item on the Proxy | ||
Effect of Withhold Votes, Broker Non-Votes, and Abstentions | ||
Inspectors of Election | ||
Cost of Soliciting Proxies | ||
Abbott Laboratories Stock Retirement Plan | ||
Confidential Voting | ||
Householding of Proxy Materials | ||
Nominees for Election as Directors | ||
The Board of Directors and its Committees | ||
The Board of Directors | ||
Leadership Structure | ||
Director Selection | ||
Board Diversity and Composition | ||
Board Evaluation Process | 26 | |
Committees of the Board of Directors | ||
Communicating with the Board of Directors | ||
Corporate Governance Materials | ||
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Security Ownership of Executive Officers and Directors | ||
Executive Compensation | ||
Compensation Discussion and Analysis | ||
Compensation Committee Report | ||
Compensation Risk Assessment | ||
Summary Compensation Table | ||
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Pension Benefits | ||
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Potential Payments Upon Termination or Change in Control | ||
CEO Pay Ratio |
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Ratification of Ernst & Young LLP as Auditors (Item 2 on Proxy Card) | ||
Report of the Audit Committee | ||
Say on Pay—An Advisory Vote on the Approval of Executive Compensation (Item 3 on Proxy Card) | ||
Approval and Adoption of Amendments to the Articles of Incorporation To Eliminate Statutory Supermajority Voting Standards (Item 4 on Proxy Card) | 85 | |
Shareholder Proposals | 87 | |
Shareholder Proposal on Lobbying Disclosure (Item 5 on Proxy Card) | ||
Shareholder Proposal on Report on Racial Justice (Item 6 on Proxy Card) | 91 | |
Shareholder Proposal on Independent Board Chairman (Item | ||
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Approval Process for Related Person Transactions | ||
Additional Information | ||
Information Concerning Security Ownership | ||
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Date for Receipt of Shareholder Proposals for the | ||
Procedure for Recommendation and Nomination of Directors and Transaction of Business at Annual Meeting | ||
General | ||
Exhibit A—Director Independence Standard | A-1 | |
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Abbott Laboratories 1
NOTICE OF 2021 ANNUAL MEETING OF SHAREHOLDERS
YOUR VOTE IS IMPORTANT
Please sign and promptly return your proxyin the enclosed envelope, or vote yourshares by telephone or using the Internet.
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to Be Held on April 27, 201823, 2021
The Annual Meeting of the Shareholders of Abbott Laboratories will be held at Abbott's headquarters, 100 Abbott Park Road, at the intersection of Route 137 and Waukegan Road, Lake County, Illinois, on Friday, April 27, 2018,23, 2021, at 9:00 a.m. for
In light of restrictions and guidelines on group gatherings issued by government and public health officials regarding the following purposes:
Shareholders of record as of the close of business on February 24, 2021 will be able to attend the Annual Meeting at www.meetingcenter.io/290382097. To be admitted to the Annual Meeting, shareholders will be required to enter the meeting password (ABT2021) and a 15-digit control number. Shareholders who wish to attend the meeting on a listen-only phone line should contact Abbott representatives at 224-668-7238 or until their successors are elected (Item 1abbottshareholders@abbott.com to obtain the meeting telephone number in advance of the meeting. Please see pages 12 and 13 for further instructions on how to be admitted to the proxy card),Annual Meeting.
Shareholders will be asked to vote on the approvalfollowing items of executive compensation (Item 3 on the proxy card), and
Agenda | Board Voting Recommendation | |||
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Item 1 | Election of the 13 director nominees named in this proxy statement to hold office until the next Annual Meeting or until the next meeting of shareholders at which directors are elected | FOR Each Director Nominee | ||
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Item 2 | Ratification of the appointment of Ernst & Young LLP as auditors of Abbott for 2021 | FOR | ||
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Item 3 | Approval, on an advisory basis, of executive compensation | FOR | ||
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Item 4 | Approval and adoption of amendments to the Articles of Incorporation to eliminate statutory supermajority voting standards for: | FOR | ||
(a) amendments to the Articles of Incorporation, and | ||||
(b) approval of certain extraordinary transactions | ||||
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Items 5 – 7 | Three shareholder proposals, if properly presented at the meeting | AGAINST | ||
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Shareholders will also transact such other business as may properly come before the meeting, including consideration of a shareholder proposal, if presented at the meeting (Item 4 on the proxy card).
The Board of Directors recommends that you vote FOR Items 1, 2, and 3.any adjournment or postponement thereof.
The Board of Directors recommends that you vote AGAINST Item 4.
The close of business on February 28, 2018, has been fixed as the record date for determining the shareholders entitled to receive notice of and to vote at the Annual Meeting.
Abbott's 20182021 Proxy Statement and 20172020 Annual Report to Shareholders are available at www.abbott.com/proxy.
Please sign and promptly return your proxy or voting instruction form in the enclosed envelope, or vote your shares by telephone or using the Internet.
If you are a registered shareholder (you received your proxy materials from Abbott through Abbott's transfer agent, Computershare), you may accessvote your shares by telephone (1-800-652-VOTE (8683)) or on the Internet at www.investorvote.com/abt.
If you are a beneficial shareholder (you received your proxy card by either:
Admission to the meeting will be by admission card only. If you plan to attend, please complete and return the reservation form on the back cover, and an admission card will be sent to you. Due to space limitations, reservation forms must be received before April 20, 2018. Each admission card, along with photo identification, admits one person. A shareholder may request two admission cards, but a guest must be accompanied by a shareholder.your broker, bank, or other agent.
By order of the Board of Directors.
Hubert L. Allen
Secretary
March 16, 2018[ ], 2021
2 Abbott Laboratories
This summary contains highlights about Abbott and the upcoming 20182021 Annual Meeting of Shareholders. This summary does not contain all of the information that you should consider in advance of the meeting, and we encourage you to read the entire proxy statement carefully before voting.
The accompanying proxy is solicited on behalf ofby the Board of Directors on behalf of Abbott for use at the Annual Meeting of Shareholders. The meeting will be held on April 27, 2018,23, 2021, at Abbott's headquarters, 100 Abbott Park Road, at the intersection of Route 137 and Waukegan Road, Lake County, Illinois. This proxy statement and the accompanying proxy card are being mailed to shareholders on or about March 16, 2018.[ ], 2021.
In light of restrictions and guidelines on group gatherings issued by government and public health officials regarding the ongoing coronavirus pandemic, and to support the health and safety of Abbott's shareholders, employees, and communities, any shareholder who wishes to attend the Annual Meeting may only attend virtually. Shareholders will not be able to attend the Annual Meeting in person. For more information on how to access and participate in the Annual Meeting, please see pages 12 to 13.
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In 2017, Abbott achieved outstanding returns to shareholders, ranking #1Abbott's sustained strong performance has resulted in our peer group. Abbott's one-year total shareholder return (TSR) was 52.0%significantly exceeding the peer median and major market indices on a one-, which was 30.2three-, and 23.9 percentage points abovefive-year basis.
Abbott's three-year TSR of 101.7% is more than twice that of the robust growth of bothpeer group median and the broader Standard & Poor's 500 Index (S&P 500) and more than three times that of the Dow Jones Industrial Average (DJIA), respectively. Abbott continues to be recognized as a member market index. These consistent above-market returns are driven by the strength of our diversified business model with leadership positions in some of the S&P 500 Dividend Aristocrat Index, having increased the dividend payout for 46 consecutive years.largest and fastest growing markets in healthcare and innovative product portfolios across our businesses.
Abbott delivered strong returns for shareholders in 2020, despite the global market challenges from COVID-19, and achieved or exceeded the financial targets that were set before the pandemic in January 2020. Abbott's one-year TSR was 28.0%, more than three times the peer median TSR, and significantly above major market indices, a testament to the strength of our diversified business model and ability to innovate and deliver in this challenging environment.
WELL-POSITIONED FOR LONG-TERM GROWTH
In 2017,addition to delivering significant shareholder returns, Abbott continued to strategically shape its business throughtake important steps to position the additions of St. Jude Medical and Alere Inc. The St. Jude Medical business expands Abbott's presence into multiple new areas of cardiovascular care, as well as neuromodulation, transforming Abbott into a broad-based leaderCompany for long-term, sustainable growth.
Abbott Laboratories 3
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CONTRIBUTION TO GLOBAL TESTING NEEDS
Abbott is celebratingquickly responded to the global spread of SARS-CoV-2. We leveraged our expertise in infectious disease diagnostic testing and in a short period time, developed multiple diagnostic tests to meet the various needs in the market. We have launched and scaled significant manufacturing capacity for our tests around the globe and sold over 400 million tests in 2020.
Abbott's rapid response, significant manufacturing scale, and affordable pricing strategy have allowed for broad access to testing and have further positioned Abbott as a world leader in diagnostic testing. The demand for COVID-19 tests remains strong and Abbott will continue to be a leader in supporting global testing needs.
As a healthcare company, Abbott has continued to provide an important milestoneuninterrupted supply of vital diagnostics, medical devices, medicines and nutritional products to our customers. To help keep our own people safe, Abbott has taken aggressive steps to limit exposure and enhance the safety of facilities for our employees, including implementing mandatory temperature screening and social distancing, providing and requiring the use of personal protective equipment, and at most U.S. facilities, on-site COVID-19 testing.
Abbott has 109,000 employees in 2018:more than 160 countries, and throughout 2020, there were no pay cuts and we did not lay off or furlough any employees due to COVID-19. We're also assisting Abbott families whose lives have been disrupted by COVID-19 including, paying people when sick or in quarantine, offering flexible working hours, providing support for employees with children, and expanding employee assistance programs that offer health and wellness resources.
MAINTAINING ACCESS TO OUR TECHNOLOGIES AND PRODUCTS
Throughout the company's 130th anniversary. A key element ofpandemic, we were able to continue providing our longevity and success has beenessential products to people around the abilityworld—even when route closures meant we needed to adapt and change continuallyidentify new delivery pathways. With more than 75,000 suppliers in 120 countries, Abbott's global supply chain enabled our life-changing technologies to ensure Abbott remains currentget to the millions of people who need them, when they need them. That's why we have spent years building our supply chain resilience to function even under the greatest stresses.
4
COMMITMENT TO DIVERSITY AND INCLUSION |
Diversity is fundamental at Abbott—from our people and relevant. Today, Abbott operatesour mindset to our business model. It's core to fulfilling our purpose, is embedded in our values and key to our long-term growth and success.
Over the years we have received numerous honors related to a diverse and balanced portfolioinclusive culture—Fortune 100 Best Workplaces for Diversity, Forbes Best Employers for Diversity, Working Mother, Top Company for Executive Women, DiversityInc, and Best Companies for Multicultural Women. Our Chief Executive Officer heads our Diversity Council and executive leader compensation has been tied to diversity results for several years.
During 2020, we reviewed our practices and took steps to further our commitment to diversity and inclusion, including:
Looking ahead, we are committed to further advancing diversity and inclusion across our company, and in our work with others, including:
5
EXECUTIVE COMPENSATION |
During 2020, we conducted extensive shareholder outreach to discuss our compensation program, among other topics. In the spring, we engaged shareholders representing over 60% of our outstanding shares to discuss various topics, including Abbott's market-leading disclosures that enhance shareholder understanding of how pay decisions are all leaders in large, attractive marketsmade and aligned with favorable, long-term healthcare trends. The strategic actions we've taken overhow the last several years have created leading positionsmetrics we use are linked to business strategy and goals. Their feedback was overwhelmingly positive, which was reflected in the segments92% support for Say-on-Pay Vote.
KEY FEATURES OF OUR EXECUTIVE COMPENSATION PROGRAM
The following practices and policies ensure alignment of healthcare where we compete.interests between shareholders and executives, and effective ongoing compensation governance.
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Our shareholders compare us to other global multinational companies, only some of which are in healthcare. These companies share similar investment identities and operating characteristics aligned with diversified growth, returns to shareholders, and capital structure.
The peer group used for performance and compensation benchmarking prior to 2017 was established at the time of the AbbVie separation in 2013. That group has been used without change from 2013 through 2016. Due to the acquisitions of St. Jude Medical and Alere Inc. and significant changes in several peers due to corporate transactions, the Compensation Committee (the Committee) and its consultant reviewed the peer group to be used for 2017 benchmarking. Based on that review, the Committee approved an update to the peer group to better align to our current size, scope, and global footprint.
In determining changes to our peer group for 2017 performance and compensation benchmarking, as in prior years, we considered:
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4 Abbott Laboratories
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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.
Relative TSR Percentile vs. Peers | | 2013 | | 2014 | | 2015 | | 2016 | | 2017 | | |||||||||||||
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| 1-Year | | 26th | | 89th | | 61st | | 0th | | 100th | | ||||||||||||
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3-Year | 84th | 53rd | 44th | 17th | 63rd | |||||||||||||||||||
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| 5-Year | | 11th | | 47th | | 83rd | | 28th | | 50th | | ||||||||||||
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| Average | | 40th | | 63rd | | 63rd | | 15th | | 71st | | ||||||||||||
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LTI Award Guideline Percentile | 37th | 50th | 50th | 25th | 75th | |||||||||||||||||||
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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.
Pay Linked to Performance | | | 2013 | | | 2014 | | | 2015 | | | 2016 | | | 2017 | | |||||||||||||
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| CEO Pay Decisions* | | $ | 15,766,044 | | $ | 19,905,536 | | $ | 17,403,023 | | $ | 15,062,628 | | $ | 23,572,774 | | ||||||||||||
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% Change in Pay vs. Prior Year | –30% | +26% | –13% | –13% | +56% | ||||||||||||||||||||||||
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| 1-Year TSR | | | +24% | | | +20% | | | +2% | | | –12% | | | +52% | | ||||||||||||
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KEY FEATURES OF OUR EXECUTIVE COMPENSATION PROGRAM
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| | Yes | | Benchmark peers with investment profiles, operating characteristics, and employment and business markets similar to | | |||||||||||
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Yes | Short-term and long-term incentive awards are 100% performance based. Annual incentive plan goals are set to exceed market growth in | |||||||||||||||
36-37 | ||||||||||||||||
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| Double-Trigger Change in Control | | Yes | | Provide change in control benefits under double-trigger circumstances only | | 78-80 | | ||||||||
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Recoupment Policy | Yes | Forfeiture for misconduct provision in equity grants and recoup compensation when warranted | 60 | |||||||||||||
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| Robust Share Ownership Guidelines | | Yes | | Require significant share ownership for officers and directors, and share retention requirements until guidelines are met | | 30-31 and 59 | | ||||||||
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Capped Incentive Awards | Yes | Incentive award payments are capped | 36 and 61 | |||||||||||||
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| Independent Compensation Committee Consultant | | Yes | | Committee consultant performs no other work for Abbott | | 28 | | ||||||||
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Tax Gross Ups | No | No tax gross ups under our executive officer pay program | 58-59 and 79 | |||||||||||||
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| Guaranteed Bonuses | | No | | No guaranteed bonuses | | 36 | | ||||||||
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Employment Contracts | No | No employment contracts | 78 | |||||||||||||
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| Excessive Risk Taking | | No | | No highly leveraged incentive plans that encourage excessive risk taking | | 61-62 | | ||||||||
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Hedging of Company Shares | No | No hedging of Abbott shares is allowed | 60 | |||||||||||||
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| Discounted Stock Options | | No | | No discounted stock options are allowed or granted | | 61 | | ||||||||
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Details of the compensation decisions made for our named executive officers are outlined on pages 42 to 57.
Abbott Laboratories 56
DIRECTOR NOMINEES |
The Board of Directors recommends a voteFOR the election of each of the following nominees for director. All nominees, other than Mr. Roman, are currently serving as directors. Additional information about each director'sdirector nominee's background and experience can be found beginning on page 12.16.
Name | Principal Occupation | | Age | Director Since | Committee Memberships | | Name | Principal Occupation | | Age | Director Since | Committee Memberships | | |||||||||||||
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| Robert J. Alpern, M.D. | Professor and Dean, | | 67 | 2008 | • Nominations & | | Robert J. Alpern, M.D. | Professor and Former Dean, | | 70 | 2008 | • Nominations and | | ||||||||||||
| Yale School of Medicine | | | | Governance | | Yale School of Medicine | | | | Governance | | ||||||||||||||
| | | | | • Public Policy | | | | | | • Public Policy | | ||||||||||||||
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Roxanne S. Austin | President and CEO, | 57 | 2000 | • Audit | Roxanne S. Austin | President and CEO, | 60 | 2000 | • Compensation (Chair) | |||||||||||||||||
Austin Investment Advisors | • Compensation (Chair) | Austin Investment Advisors | • Nominations and | |||||||||||||||||||||||
• Executive | Governance | |||||||||||||||||||||||||
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| Sally E. Blount, Ph.D. | Professor and Dean, | | 56 | 2011 | • Nominations & | | |||||||||||||||||||
| | J.L. Kellogg Graduate School | | | | Governance | | |||||||||||||||||||
| | of Management | | | | • Public Policy | | |||||||||||||||||||
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Edward M. Liddy | Retired Chairman and CEO, | 72 | 2010 | • Audit (Chair) | ||||||||||||||||||||||
The Allstate Corporation | • Compensation | |||||||||||||||||||||||||
• Executive | • Executive | |||||||||||||||||||||||||
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| Nancy McKinstry | CEO and Chairman, | | 59 | 2011 | • Audit | | |||||||||||||||||||
| Wolters Kluwer N.V. | | | | • Nominations & | | ||||||||||||||||||||
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Phebe N. Novakovic | Chairman and CEO, | 60 | 2010 | • Compensation | ||||||||||||||||||||||
General Dynamics Corporation | • Public Policy (Chair) | |||||||||||||||||||||||||
• Executive | ||||||||||||||||||||||||||
| | | | | | | | | | | | | Sally E. Blount, Ph.D. | CEO, Catholic Charities of the | | 59 | 2011 | • Nominations and | | |||||||
| William A. Osborn | Retired Chairman and CEO, | | 70 | 2008 | • Compensation | | | Archdiocese of Chicago, and | | | | Governance | | ||||||||||||
| | Northern Trust Company | | | | • Nominations & | | | Professor and Former Dean, | | | | • Public Policy | | ||||||||||||
| | | | | Governance (Chair) | | | J.L. Kellogg Graduate School | | | | | | |||||||||||||
| | | | | • Executive | | | of Management | | | | | | |||||||||||||
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Samuel C. Scott III | Retired Chairman, President and CEO, | 73 | 2007 | • Audit | Robert B. Ford | President and CEO, | 47 | 2019 | • Executive | |||||||||||||||||
Corn Products International, Inc. | • Compensation | Abbott Laboratories | ||||||||||||||||||||||||
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| Daniel J. Starks | Retired Chairman, President and CEO, | | 63 | 2017 | • Public Policy | | Michelle A. Kumbier | Former Chief Operating Officer, | | 53 | 2018 | • Audit | | ||||||||||||
| | St. Jude Medical, Inc. | | | | | | Harley-Davidson Motor Company | | | | • Compensation | | |||||||||||||
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John G. Stratton | Executive Vice President and | 57 | 2017 | • Nominations & | Darren W. McDew | Retired General, U.S. Air Force, | 60 | 2019 | • Nominations and | |||||||||||||||||
President of Global Operations, | Governance | and Former Commander of | Governance | |||||||||||||||||||||||
Verizon Communications, Inc. | • Public Policy | U.S. Transportation Command | • Public Policy | |||||||||||||||||||||||
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| Glenn F. Tilton | Retired Chairman, President and CEO, | | 69 | 2007 | • Audit | | Nancy McKinstry | CEO and Chairman of the Executive | | 62 | 2011 | • Audit | | ||||||||||||
| UAL Corporation | | | | • Public Policy | | Board, Wolters Kluwer N.V. | | | | • Nominations and | | ||||||||||||||
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William A. Osborn | Retired Chairman and CEO, | 73 | 2008 | • Compensation | ||||||||||||||||||||||
(Lead Independent Director) | Northern Trust Corporation | • Nominations and | ||||||||||||||||||||||||
Miles D. White | Chairman and CEO, | 63 | 1998 | • Executive (Chair) | Governance (Chair) | |||||||||||||||||||||
Abbott Laboratories | • Executive | |||||||||||||||||||||||||
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| Michael F. Roman | Chairman, President, and CEO, | | 61 | New | | | |||||||||||||||||||
| | 3M Company | | | Nominee | | | |||||||||||||||||||
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Daniel J. Starks | Retired Chairman, President and CEO, | 66 | 2017 | • Public Policy | ||||||||||||||||||||||
St. Jude Medical, Inc. | ||||||||||||||||||||||||||
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| John G. Stratton | Retired Executive Vice President and | | 60 | 2017 | • Audit | | |||||||||||||||||||
| | President of Global Operations, | | | | • Public Policy | | |||||||||||||||||||
| | Verizon Communications Inc. | | | | | | |||||||||||||||||||
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Glenn F. Tilton | Retired Chairman, President | 72 | 2007 | • Audit | ||||||||||||||||||||||
and CEO, UAL Corporation | • Public Policy | |||||||||||||||||||||||||
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| Miles D. White | Executive Chairman, | | 66 | 1998 | • Executive (Chair) | | |||||||||||||||||||
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6 Abbott Laboratories 7
CORPORATE GOVERNANCE |
Abbott is committed to goodstrong corporate governance andthat is aligned with shareholder interests. Our Board spends significant time with Abbott'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 Abbott's culture. 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:
On March 31, 2020, Miles D. White stepped down as Chief Executive Officer, after a remarkable 21-year tenure and became Executive Chairman of the Board. Robert B. Ford, previously President and Chief Operating Officer and a 24-year Abbott veteran, succeeded Mr. White as Abbott's President and Chief Executive Officer.
With this transition, Mr. Ford became the 13th CEO of Abbott in its 132-year history, all having been appointed from within, a testament to Abbott's strong management philosophy and succession-planning discipline.
Lead Independent Director with Distinct Responsibilities |
✓ | Elected annually by independent directors | ✓ | Authority to call meetings of independent directors | |||
✓ | Liaises between chairman and independent directors | ✓ | Reviews matters such as meeting topics and schedules | |||
✓ | Consults and engages directly with major shareholders | ✓ | Regularly presides over executive sessions of independent directors at Board meetings | |||
✓ | Leads annual Board and individual director performance reviews |
Robust Board Evaluation and Refreshment Process |
Other Board Governance Highlights |
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Table of ContentsBOARD COMPOSITION
Our goal is to maintain a diverse board representing a wide range of skills, experience, and perspectives.
Highly qualified Board, with broad diversity across backgrounds, skills and experiences |
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 2017,2020, we conducted outreach with a cross-section of shareholders representing more than 60% 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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SUSTAINABILITY |
At Abbott, sustainability means managing our company to deliver long-term impact for the people we serve—shaping the future of healthcare and helping the greatest number of people live better and healthier lives.
Our Sustainability efforts are focused on the most relevant industry and company-specific risks and opportunities. In December 2020, we launched our new 2030 Sustainability Plan focused on Abbott's greatest opportunities to make an impact: creating new life-changing technologies and products, expanding the access and affordability of this innovation, and breaking down barriers that prevent people from getting the care they need. That reach and impact requires a strong foundation and sustainable business, which is why we're also taking action in key areas, including building the workforce of tomorrow, responsibly applying data to advance care, building a more resilient, diverse and responsible supply chain and protecting health by safeguarding the environment.
These areas have been identified through an in-depth materiality analysis, directed by executive management, and in partnership with numerous diverse stakeholders. We aim to deliver sustainable, responsible growth that improves lives and creates value in communities around the world.
The Board of Directors and its committees have oversight over Abbott's environmental, social and governance practices. The Board was presented with sustainability objectives and efforts and has regular discussions with management on all the above sustainability matters, as well as workplace, management, and Board diversity, emerging governance practices and trends, global compliance matters, and sustainability reporting. In addition, executive compensation is linked to Sustainability commitments, as discussed in more detail on pages 40 and 41.
To learn more about Abbott's Sustainability efforts, please visit www.abbott.com/responsibility/sustainability.html.
SELECT RECOGNITION BY THIRD-PARTY ORGANIZATIONS |
• Dow Jones Sustainability Index global Industry Group Leader for 8 consecutive years. • Fortune's Most Admired Top 50 Company and leader in the Medical Products and Equipment sector for the past 8 years, and on Fortune's 2020 "Change the World" list for companies making positive social impacts through their core business. | ||
• Fast Company's 2020 World-Changing Company of the Year. • Recognized by Working Mother, Great Place to Work, DiversityInc, and several other publications for workplace leadership and diversity. • Member of the elite S&P 500 Dividend Aristocrats Index, which recognizes companies who have raised their dividend payout annually for at least 25 consecutive years. In December 2020, Abbott announced a 25% increase to its quarterly dividend. This is the 49th consecutive year that Abbott has increased its quarterly dividend. |
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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 hard to maximize the impact of the business 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
To learn more about Abbott's sustainability efforts, please visitwww.abbott.com/citizenship.
VOTING MATTERS AND BOARD RECOMMENDATIONS |
Election of 13 Director Nominees Named in this Proxy Statement: The Board recommends a vote • Highly qualified Board, with diversity in backgrounds, skills and experiences. • Relevant expertise to provide oversight and guidance for Abbott's diversified operating model. See pages 16 to 22 for more information. | ||||||||||||||||
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Ratification of Ernst & Young • Independent firm with significant industry and financial reporting expertise. • See pages 81 to 82 for more information. | ||||||||||||||||
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Say on Compensation: The Board recommends a vote FOR • Market-based structure producing differentiated awards based on both company and individual performance, managed with independent oversight by the Compensation Committee. • Aligned to drive Abbott's strategic priorities, reflects consistent above-market TSR and upper-quartile Relative 3-year TSR performance vs. Peers. See pages 83 to 84 for more information. | ||||||||||||||||
Approval and Adoption of Amendments to the Articles of Incorporation to Eliminate Statutory Supermajority Voting Standards: The Board recommends a vote FOR • Implementing majority voting standards for amendments to the Articles of Incorporation and approval of certain extraordinary transactions. See pages 85 to 86 for more information. | ||||||||||||||||
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• Proposal 5: Lobbying Disclosure • Proposal 6: Report on Racial Justice • Proposal 7: Independent Board Chairman | •
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8 Abbott Laboratories 11
INFORMATION ABOUT THE ANNUAL MEETING
Shareholders of record at the close of business on February 28, 2018 will be entitled to notice of and to vote at the Annual Meeting. As of January 31, 2018, Abbott had 1,746,333,892 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.
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 2018.2021. 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.
HOW TO ATTEND THE MEETING ON THE VIRTUAL MEETING PLATFORM
Shareholders can attend, vote their shares, and submit questions during the Annual Meeting at www.meetingcenter.io/290382097. Shareholders may log into the Annual Meeting beginning at 8:15 Central Time on April 23, 2021. The Annual Meeting will begin promptly at 9:00 a.m. Central Time.
To be admitted to the Annual Meeting, shareholders will be required to enter the meeting password (ABT2021) and a 15-digit control number.
Registered Shareholders. If you are a registered holder (i.e., you received your proxy materials from Abbott through Abbott's transfer agent, Computershare), you may attend the Annual Meeting without advance registration. Your 15-digit control number is provided on your proxy card, email, or Notice. Please follow the instructions on your proxy card, email, or Notice to attend the meeting. If you no longer have these documents, please contact Computershare at 1-888-332-2268.
Beneficial Shareholders. If you are a beneficial holder (i.e., you received your proxy materials from your broker, bank, or other agent), you must register in advance to receive a 15-digit control number and attend the Annual Meeting. To register, you must submit your name, email address, and one of the following registration materials to Computershare:
Please send your registration materials to Computershare at legalproxy@Computershare.com, with "Registration Materials" in the subject line. Registration requests must be received by Computershare no later than 5 p.m. Eastern Time on Tuesday, April 20, 2021.
You will receive a confirmation of your registration by email from Computershare, along with a 15-digit control number needed to be admitted to the Annual Meeting. If you have questions, please contact Computershare at the telephone support line provided on the virtual meeting platform at www.meetingcenter.io/290382097.
HOW TO ATTEND THE MEETING BY PHONE
Shareholders who wish to attend the Annual Meeting by phone should contact Abbott representatives at 224-668-7238 or abbottshareholders@abbott.com to obtain the meeting telephone number in advance of the meeting. Shareholders participating by phone will be able to listen to the meeting but will not have the ability to vote or submit questions during the meeting. If you would like to vote your shares or submit questions during the meeting, please follow the instructions above in "How to Attend the Meeting on the Virtual Meeting Platform."
Shareholders of record at the close of business on February 24, 2021 will be entitled to notice of and to vote at the Annual Meeting. As of January 31, 2021, Abbott had 1,771,529,358 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.
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Whether or not you plan to virtually attend the Annual Meeting, Abbott strongly urges you to submit your proxy or vote your shares in advance of the Annual Meeting.
Registered Shareholders. Registered shareholders may vote by mail by signing and promptly returning their proxy in the enclosed envelope. Abbott's By-Laws provide that a shareholder may authorize no more than two persons as proxies to attend and vote at the meeting. Registered shareholders may also vote their shares:
If you vote by telephone or using 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.
Registered shareholders who have not voted their shares in advance of the meeting may do so at the Annual Meeting by clicking the "Cast Your Vote" link on the meeting center site.
Beneficial Shareholders. Beneficial shareholders should refer to the voting instructions provided by their broker, bank, or other agent to direct the voting of their shares in advance of the meeting.
Beneficial shareholders may vote their shares at the Annual Meeting if they obtain a legal proxy from their broker, bank, or other agent giving the shareholder the right to vote such shares at the Annual Meeting. Please follow the instructions provided above in "How to Attend the Meeting on the Virtual Meeting Platform."
Shareholders participating by phone will not be able to vote their shares at the Annual Meeting.
Following conclusion of the business items on the agenda for the Annual Meeting, Abbott will hold a live question and answer session where questions pertinent to meeting matters will be answered, as time permits. Shareholders participating in the meeting on the virtual meeting platform can submit questions during the Annual Meeting by clicking on the message icon in the upper right-hand corner of the page on the meeting center site. Questions that are substantially similar may be grouped together in a single response to avoid repetition and to allow more time for other questions.
Shareholders participating in the meeting by phone will not be able to submit questions during the meeting.
If you experience technical difficulties accessing the Annual Meeting, a technical support telephone number and additional support information will be available on the virtual meeting platform at www.meetingcenter.io/290382097.
The virtual meeting platform is fully supported across browsers (Internet Explorer, Firefox, Chrome and Safari) and devices (desktops, laptops, tablets and cell phones) running the most up-to-date version of applicable software and plugins. Participants should ensure that they have a strong WiFi connection wherever they intend to participate in the Annual Meeting.
You may revoke your proxy by voting in person at the Annual Meeting or, at any time prior to the meeting:
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
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elected. If you wish to cumulate your votes, you must sign and mail in your proxy card or attend the Annual Meeting.
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.
You may revoke your proxy by voting in person at the Annual Meeting or, at any time prior to the meeting:
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 1213 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 1213 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 management proposal for approval and adoption of amendments to the Articles of Incorporation, or a shareholder proposal, or where the shareholder has abstained on these matters, the shares represented by the proxy will be 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, FOR the approval and adoption of amendments to the Articles of Incorporation, and AGAINST the shareholder proposal.
Abbott Laboratories 9
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.matter, except for the management proposal to approve and adopt amendments to Abbott's Articles of Incorporation, which requires the affirmative vote of at least two-thirds of the votes of the shares entitled to vote on such amendments.
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 management 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.meeting, except for the management proposal to approve and adopt amendments to Abbott's Articles of Incorporation, for which non-voted shares will have the effect of votes against that matter.
The inspectors of election and the tabulators of all proxies, ballots, and voting tabulations that identify shareholders are independent and are not Abbott employees.
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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.
10 Abbott Laboratories
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:
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 Ensign Professor of Medicine and Physiology and Professor of Internal Medicine and Cellular and Molecular Physiology, and Former Dean of Yale School of Medicine, New Haven, Connecticut | |
Dr. Alpern has served as the Ensign Professor of Medicine and Professor of Internal Medicine and Dean ofat Yale School of Medicine since June 2004. From June 2004 to January 2020, Dr. Alpern served as Dean of Yale School of Medicine. From July 1998 to JuneMay 2004, Dr. Alpern was the Dean of The University of Texas Southwestern Medical Center. Dr. Alpern also serves as a Director of AbbVie Inc. and Tricida, Inc. and served as a Director on the Board of Yale—Yale New Haven Hospital.Hospital from October 2005 through January 2020.
As the Ensign Professora result of Medicine, Professor of Internal Medicine, and Dean ofhis long-tenured leadership positions at the Yale School of Medicine Dean ofand The University of Texas Southwestern Medical Center, and as a former Director on the Board of Yale—Yale New Haven Hospital, Dr. Alpern contributes valuable insights to the Board through his medical and scientific expertise and his knowledge of the health care environment and the scientific nature of Abbott's key research and development initiatives.
| ROXANNE S. AUSTIN Director since 2000 Age President and Chief Executive Officer, Austin Investment Advisors, Newport Coast, California (Private Investment and Consulting Firm) | |
Ms. Austin is President and Chief Executive Officer of Austin Investment Advisors, a private investment and consulting firm, and chairs the U.S. Mid-Market Investment Advisory Committee of EQT Partners. Previously, Ms. Austin also served as the President and Chief Executive Officer of Move Networks, Inc., a provider of Internet television services. Ms. Austin served as President and Chief Operating Officer of DIRECTV, Inc. Ms. Austin also served as Executive Vice President and Chief Financial Officer of Hughes Electronics Corporation and as a partner of Deloitte & Touche LLP. Ms. Austin served on the Board of Directors of Telefonaktiebolaget LM Ericsson from 2008 to 2016.2016 and Target Corporation from 2002 to 2020. Ms. Austin currently serves on the Board of Directors of AbbVie Inc., Target Corporation, andCrowdStrike Holdings, Inc., Teledyne Technologies Inc.Incorporated, and Verizon Communications. Ms. Austin will not stand for re-election at Teledyne Technologies Incorporated's 2021 annual meeting of stockholders.
Through her extensive management and operating roles, including her financial roles, Ms. Austin contributes significant oversight and leadership experience, including financial expertise and knowledge of financial statements, corporate finance and accounting matters.
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| SALLY E. BLOUNT, PH.D. Director since 2011 Age Chief Executive Officer, Catholic Charities of the Archdiocese of Chicago, and Michael L. Nemmers Professor of Strategy and Former Dean of the J.L. Kellogg Graduate School of Management | |
Ms. Blount has served as Chief Executive Officer of Catholic Charities of the Archdiocese of Chicago since August 2020. Ms. Blount also is the Michael L. Nemmers Professor of Strategy and former Dean of the J.L. Kellogg Graduate School of Management and the Michael L. Nemmers Professor of Management and Organizations at Northwestern University since July 2010.from 2010 to 2018. From 2004 to 2010, she served as the Vice Dean and Dean of the undergraduate collegeUndergraduate College of New York University's Leonard N. Stern School of Business. Ms. Blount joined the faculty of New York University's Leonard N. Stern School of Business in 2001 and was the Abraham L. Gitlow Professor of Management and Organizations. Prior to joining NYU in 2001, Ms. Blount held academic posts at the University of Chicago's Graduate School of Business from 1992 to 2001. Ms. Blount currently serves on the Board of Directors of Ulta Beauty, Inc. and the Joyce Foundation.
AsHaving served as Dean of the J.L. Kellogg Graduate School of Management at Northwestern University and as the Vice Dean and Dean of the undergraduate collegeUndergraduate College of New York University's Leonard N. Stern School of Business, Ms. Blount provides Abbott's Board with expertise on business organization, governance and business management matters.
| Director since | |
Mr. LiddyFord has served as a partner in the private equity investment firm Clayton, Dubilier & Rice, LLC from January 2010 to December 2015. At the request of the Secretary of the U.S. Department of Treasury, Mr. Liddy served as Interim ChairmanAbbott's President and Chief Executive Officer of American International Group, Inc., a global insurance and financial services holding company, from September 2008 until August 2009. From January 1999 to April 2008,since March 2020. Previously, Mr. LiddyFord served as Chairman of the Board of the Allstate Corporation. He served as Chief Executive Officer of Allstate from January 1999 to December 2006,Abbott's President from January 1995 to May 2005, and Chief Operating Officer from August 19942018 to January 1999.2020, Executive Vice President, Medical Devices from 2015 to 2018, Senior Vice President, Diabetes Care from 2014 to 2015, and Vice President, Diabetes Care, Commercial Operations from 2008 to 2014. Prior to 2008, he served in various leadership roles across Abbott's Diagnostics, Nutrition, and Diabetes Care businesses in the U.S. and Latin America. Mr. Liddy currently serves onFord joined Abbott in 1996.
As Abbott's President and Chief Executive Officer, and having previously held leadership positions across several of Abbott's businesses, and ultimately assuming responsibility for all of Abbott's operating businesses as Chief Operating Officer, Mr. Ford contributes an extensive knowledge of the BoardCompany's global operations, a wide breadth of Directors of AbbVie Inc., 3M Company,experience in strategy and The Boeing Company.
Through his executive leadership at Allstateexecution, and American International Group, and his board service at several Fortune 100 companies across a broad range of industries, Mr. Liddy provides valuable insights on corporate strategy, risk management, corporate governance and many other issues facing large,into global enterprises. Additionally, as a former chief financial officer, audit committee chair at Goldman Sachs and 3M Company, and partner at Clayton, Dubilier & Rice, LLC, Mr. Liddy provides significant knowledge and understanding of corporate finance, capital markets, financial reports and accounting matters.healthcare markets.
Abbott Laboratories 13 17
| MICHELLE A. KUMBIER Director since 2018 Age 53 Former Senior Vice President and Chief Operating Officer of Harley-Davidson Motor Company, Milwaukee, Wisconsin (Motorcycle and Related Products Manufacturer) | |
Ms. Kumbier served as Senior Vice President and Chief Operating Officer of Harley-Davidson Motor Company from 2017 to 2020. Previously, she served as Senior Vice President of Motor Company Product and Operations from 2015 to 2017, as Senior Vice President of Motorcycle Operations from 2012 to 2015, and as Senior Vice President of Product Development from 2010 to 2012. She started her career with Harley-Davidson in 1997. Prior to Harley-Davidson, Ms. Kumbier was employed with Kohler Company, maker of premium plumbing products, in a variety of positions from 1986 to 1997. Ms. Kumbier currently serves as a Director of Teledyne Technologies Incorporated.
Having served in several executive roles at Harley-Davidson, Ms. Kumbier contributes extensive experience in the management of a multinational public company, including significant manufacturing, product development, business development, and strategic planning experience.
| DARREN W. MCDEW Director since 2019 Age 60 Retired General, United States Air Force, and Former Commander of U.S. Transportation Command, Scott Air Force Base, Illinois | |
General McDew is a retired four-star general who served for 36 years in the United States military before retiring in October 2018. From August 2015 to August 2018, General McDew served as Commander, U.S. Transportation Command, the single manager for global air, land and sea transportation for the U.S. Department of Defense. Previously, he also served as Vice Director for Strategic Plans and Policy for the Joint Chiefs of Staff, Military Aide to the President, Director of Air Force Public Affairs, and Chief of Air Force Senate Liaison Division. General McDew currently serves on the Board of Directors of Parsons Corporation, Rolls-Royce, North America, Inc., United Services Automobile Association, and Boys & Girls Club of America.
Through his extensive leadership in the U.S. Air Force, General McDew contributes significant experience managing large, complex global operations, including strategic planning, security and risk management, cybersecurity, and supply chain and infrastructure management.
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| NANCY MCKINSTRY Director since 2011 Age 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) | |
Ms. McKinstry has been the Chief Executive Officer and Chairman of the Executive Board of Wolters Kluwer N.V. since September 2003 and a member of its Executive Board since June 2001. Ms. McKinstry also serves on the Board of Accenture plc, the Board of Overseers of Columbia Business School, and the Board of Directors of Russell Reynolds Associates. Ms. McKinstry is also a member of the European Round Table of Industrialists. Ms. McKinstry served on the Board of Directors of Telefonaktiebolaget LM Ericsson (LM Ericsson Telephone Company) from 2004 to 2012.
As the Chief Executive Officer and Chairman of the Executive Board of Wolters Kluwer N.V., Ms. McKinstry contributes global perspectives and management experience, including an understanding of key issues facing a multinational business such as Abbott's.
Ms. Novakovic has been Chairman and Chief Executive Officer of General Dynamics Corporation since January 1, 2013. Previously, she served as President and Chief Operating Officer from May 2012 to December 2012 and as Executive Vice President, Marine Systems of General Dynamics from May 2010 to May 2012. From May 2005 to April 2010, Ms. Novakovic served as its Senior Vice President—Planning and Development. She was elected Vice President of General Dynamics in October 2002 after joining the company in May 2001. Previously, Ms. Novakovic was Special Assistant to the Secretary and Deputy Secretary of Defense, and had been a Deputy Associate Director of the Office of Management and Budget.
As a member of the Board of Directors and Chief Executive Officer of General Dynamics Corporation, Ms. Novakovic has strong management experience with a major public company, including significant marketing, operational and manufacturing experience, and contributes valuable insights into finance and capital markets. Her tenure with the Office of Management and Budget and as Special Assistant to the Secretary and Deputy Secretary of Defense enables her to provide government perspective and experience in a highly regulated industry.
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| WILLIAM A. OSBORN Lead Independent Director Director since 2008 Age Retired Chairman and Chief Executive Officer of Northern Trust Corporation Illinois (Banking Services Company) | |
Mr. Osborn was Chairman of Northern Trust Corporation from 1995 through 2009 and served as its Chief Executive Officer from 1995 through 2007. Mr. Osborn currently serves as a Director of Caterpillar Inc. and General Dynamics Corporation. Mr. Osborn served on the Board of Directors of Nicor, Inc. from 1999 to 2006 and on the Board of Directors of Tribune Company from 2001 to 2012.
As the Chairman and Chief Executive Officer of Northern Trust Corporation and The Northern Trust Company, Mr. Osborn acquired broad experience in successfully overseeing complex global businesses operating in highly regulated industries.
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| Director | |
Mr. Scott retiredRoman has served as the Chairman of the Board, President and Chief Executive Officer of Corn Products International in 2009. He3M Company since May 2019. Previously, he served as Chairman, President, and Chief Executive Officer from February 2001 until he retired inJuly 2018 to May of 2009. He was President2019 and as Chief Operating Officer and Executive Vice President from January 1998 until February 2001.July 2017 to June 2018 with direct responsibilities for 3M's five business groups and its international operations. From June 2014 to July 2017, Mr. Roman served as 3M's Executive Vice President, Industrial Business Group. He wasserved as 3M's Senior Vice President, Business Development, from May 2013 to June 2014 and as Vice President and General Manager of Industrial Adhesives and Tapes Division from September 2011 to May 2013.
As Chairman of the Corn Refining Division of CPC International from 1995 through 1997, when CPC International spun off Corn Products International as a separate corporation. Mr. Scott currently serves on the Board, of Directors of Bank of New York Mellon Corporation and Motorola Solutions, Inc.
As the Chairman, President and Chief Executive Officer of Corn Products International,3M Company, Mr. Scott acquiredRoman has extensive experience leading a multinational public company with multiple businesses, contributing significant manufacturing, supply chain, technology, and finance experience, as well as valuable business, leadership and management experience, including critical insights into matters relevant to a major public companycorporate strategy and experience in finance and capital markets matters.risk management.
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| DANIEL J. STARKS Director since 2017 Age Retired Chairman, President and Chief Executive Officer of St. Jude Medical, Inc., St. Paul, Minnesota (Medical Device Manufacturer) | |
Mr. Starks served as the Chairman, President and Chief Executive Officer of St. Jude Medical, Inc., from 2004 until his retirement in January 2016, after which he served as its Executive Chairman of the Board until January 2017, when Abbott completed the acquisition of St. Jude Medical, Inc.Medical. Mr. Starks also served as President and Chief Operating Officer of St. Jude Medical Inc. from 2001 to 2004 and as its President and CEO, Cardiac Rhythm Management Business from 1997 to 2001.
Having served as St. Jude Medical's Executive Chairman and its Chairman, President and Chief Executive Officer, and having joined St. Jude Medical in 1996, Mr. Starks contributes not only comprehensive and critical knowledge of St. Jude Medical's operations,the medical devices industry, but also extensive business and management experience operating a global public company in a highly regulated industry.
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| JOHN G. STRATTON Director since 2017 Age Retired Executive Vice President and President of Global Operations, Verizon Communications Inc., New York, New York | |
Mr. Stratton has served as Executive Vice President and President of Global Operations sinceof Verizon Communications Inc. from February 2015.2015 to December 2018. Previously, he served as Executive Vice President and President of Global Enterprise and Consumer Wireline from April 2014 to February 2015, as President of Verizon Enterprise Solutions from January 2012 to April 2014, and as Chief Operating Officer and Executive Vice President of Verizon Wireless from October 2010 to January 2012. Since October 2012, Mr. Stratton hascurrently serves on the Board of Directors of General Dynamics Corporation. Mr. Stratton also served as a member of The President's National Security Telecommunications Advisory Committee.Committee from October 2012 to July 2018 and as Director of the Cellular Telecommunications Industry Association from February 2015 to July 2018.
Through his executive leadership at Verizon Communications, Mr. Stratton contributes extensive business and management experience operating a global public company such as Abbott, including valuable insights on corporate strategy and risk management. His service on the National Security Telecommunications Advisory Committee enables him to provide government perspective and experience in a highly regulated industry.
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| GLENN F. TILTON Director since 2007 Age Retired Chairman, President and Chief Executive Officer of UAL Corporation, Chicago, Illinois (Airline Holding Company) | |
Mr. Tilton served as Chairman, President and Chief Executive Officer of UAL Corporation, and Chairman and Chief Executive Officer of United Air Lines, Inc., an air transportation company and wholly owned subsidiary of UAL Corporation, from September 2002 to October 2010. Mr. Tilton also served on the Board of United Continental Holdings, Inc. from 2001 to 2013 and served as its Non-Executive Chairman of the Board from October 2010 to December 2012. Mr. Tilton is also a Director of AbbVie Inc. and Phillips 66. Mr. Tilton also served on the Board of Directors of Lincoln National Corporation from 2002 to 2007, of TXU Corporation from 2005 to 2007, of Corning Incorporated from 2010 to 2012, and as Chairman of the Midwest for JPMorgan Chase & Co. and a member of its companywide Executive Committee from June 2011 to June 2014.
Having previously served as Chief Executive Officer of UAL Corporation and United Air Lines, Non Executive Chairman of the Board of United Continental Holdings, Inc., Chairman of the Midwest for JPMorgan Chase & Co., Chairman, President, and Vice Chairman of Chevron Texaco, and as Interim Chairman of Dynegy, Inc., Mr. Tilton acquired strong management experience overseeing complex multinational businesses operating in highly regulated industries, as well as expertise in finance and capital markets matters.
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| MILES D. WHITE Director since 1998 Age Executive Chairman of the Board, | |
Mr. White has served as Abbott's Executive Chairman of the Board since March 2020. Mr. White previously served as Abbott's Chairman of the Board and Chief Executive Officer since 1999. He servedfrom 1999 to 2020 and as an Executive Vice President of Abbott from 1998 to 1999. He joined Abbott in 1984. He currently serves as a Director of Caterpillar Inc. and McDonald's Corporation.
ServingHaving joined Abbott in 1984 and having served as Abbott's Chairman of the Board and Chief Executive Officer since 1999 and having joined Abbott in 1984,for 21 years, Mr. White contributes not only his valuable business, management and leadership experience, but also his extensive knowledge of the Company and its global operations, as well as key insights into strategic, management and operation matters, ensuring the appropriate level of oversight and responsibility is applied to all Board decisions.
Abbott Laboratories 1722
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors held 78 meetings in 2017.2020. The average attendance of all directors at Board and committee meetings in 20172020 was ninety-nine percent98% 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 directorsindividuals 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, M. F. Roman, 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 Board has determined thatOn March 31, 2020, Miles D. White stepped down as Chief Executive Officer, after a remarkable 21-year tenure, and became Executive Chairman of the current leadership structure, in which the offices of ChairmanBoard. Robert B. Ford, Abbott's then-President and Chief Operating Officer, succeeded Mr. White as Abbott's President and Chief Executive Officer are held by one individualOfficer. With this transition, Mr. Ford became the 13th CEO of Abbott in its 132-year history, all having been appointed from within, a testament to Abbott's strong management philosophy and an independent director actssuccession planning.
The Board is actively involved in succession planning and is focused on ensuring leadership continuity. The Board believes that the continuation of Mr. White's service as lead director, ensures the appropriate level of oversight, independence, and responsibility is applied to all Board decisions, including risk oversight, andExecutive Chairman is in the best interests of Abbott and its shareholders.
Chairman/Chief Executive Officer
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
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.
18 Abbott Laboratories 23
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. Mr. Roman was recommended as a director nominee by a third-party search firm retained to help identify and evaluate potential director nominees.
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 1216 through 17.22.
A description of the procedure for the recommendation and nomination of directors, including by proxy access, is on page 71.99.
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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 |
|
|
Abbott Laboratories 19
The following table details some of the attributes, skills, and experience represented on Abbott's Board of Directors.
|
| |||||||
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✓ | ||||||||
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✓ |
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Other Board Composition Metrics
The directors nominated for election bring diverse and relevant skills, experience, and perspectives.
20 Abbott Laboratories 25
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 | | | | | | | | D. J. Starks | | | | | | | |||||||||||||
| | M. D. White | | | | | | | | | | | | | J. G. Stratton | | | | | | | | | | | |||
| Total Meetings Held in 2017 | | 7 | | 3 | | 4 | | 4 | | 1 | | | G. F. Tilton | | | | | | | ||||||||
| | | | | | | | | | | | | | | | M. D. White | | | | | | | | | | | | |
| Total Meetings Held in 2020 | | 8 | | 4 | | 5 | | 4 | | 0 | | ||||||||||||||||
| | | | | | | | | | | | | | |
The Audit Committee assists the Board of Directors in fulfilling its oversight responsibility with respect to to:
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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 63.82.
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:
This Committee also reviews, approves,
Abbott Laboratories 21
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
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 2020. 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 41.60.
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:
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 1924 in the section captioned, "Director Selection."
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The Public Policy Committee assists the Board of Directors in fulfilling its oversight responsibility with respect to Abbott's public policy, certainto:
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.
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.
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).
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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' 20172020 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 | | | $ | 184,920 | | | $ | 0 | | | $ | 63,098 | | | $ | 25,000 | | | $ | 399,018 | | |||
| R. S. Austin | | | 151,667 | | | 149,939 | | | 0 | | | 0 | | | 0 | | | 301,606 | | | | R. S. Austin | | | 152,000 | | | 184,920 | | | 0 | | | 0 | | | 25,000 | | | 361,920 | | | |||||||||||||
| S. E. Blount | | | 126,000 | | | 149,939 | | | 0 | | | 5,797 | | | 25,000 | (5) | | 306,736 | | | S. E. Blount | | | 126,000 | | | 184,920 | | | 0 | | | 9,508 | | | 25,000 | | | 345,428 | | |||||||||||||||
| | W. J. Farrell | | | 48,667 | | | 0 | | | 0 | | | 52,303 | | | 0 | | | 100,970 | | | | M. A. Kumbier | | | 132,000 | | | 184,920 | | | 0 | | | 0 | | | 0 | | | 316,920 | | | ||||||||||||
| E. M. Liddy | | | 144,667 | | | 149,939 | | | 0 | | | 0 | | | 0 | | | 294,606 | | | E. M. Liddy | | | 151,000 | | | 184,920 | | | 0 | | | 0 | | | 0 | | | 335,920 | | |||||||||||||||
| | N. McKinstry | | | 132,000 | | | 149,939 | | | 0 | | | 0 | | | 5,000 | (5) | | 286,939 | | | | D. W. McDew | | | 126,000 | | | 184,920 | | | 0 | | | 0 | | | 0 | | | 310,920 | | | ||||||||||||
| P. N. Novakovic | | | 141,000 | | | 149,939 | | | 0 | | | 0 | | | 0 | | | 290,939 | | | N. McKinstry | | | 132,000 | | | 184,920 | | | 0 | | | 0 | | | 20,000 | | | 336,920 | | |||||||||||||||
| | W. A. Osborn | | | 156,000 | | | 149,939 | | | 0 | | | 0 | | | 0 | | | 305,939 | | | | P. N. Novakovic | | | 141,000 | | | 184,920 | | | 0 | | | 0 | | | 0 | | | 325,920 | | | ||||||||||||
| S. C. Scott III | | | 132,000 | | | 149,939 | | | 0 | | | 0 | | | 25,000 | (5) | | 306,939 | | | W. A. Osborn | | | 156,000 | | | 184,920 | | | 0 | | | 0 | | | 0 | | | 340,920 | | |||||||||||||||
| | D. J. Starks | | | 105,000 | | | 149,939 | | | 0 | | | 0 | | | 0 | | | 254,939 | | | | S. C. Scott III | | | 44,000 | | | 0 | | | 0 | | | 0 | | | 0 | | | 44,000 | | | ||||||||||||
| J. G. Stratton | | | 63,000 | | | 0 | | | 0 | | | 0 | | | 0 | | | 63,000 | | | D. J. Starks | | | 126,000 | | | 184,920 | | | 0 | | | 0 | | | 0 | | | 310,920 | | |||||||||||||||
| | G. F. Tilton | | | 132,000 | | | 149,939 | | | 0 | | | 0 | | | 25,000 | (5) | | 306,939 | | | | J. G. Stratton | | | 126,000 | | | 184,920 | | | 0 | | | 0 | | | 25,000 | | | 335,920 | | | ||||||||||||
| G. F. Tilton | | | 132,000 | | | 184,920 | | | 0 | | | 0 | | | 25,000 | | | 341,920 | | ||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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market value equal to five times the annual director fees earned or paid in cash. All directors with five years tenure or more meet or exceed the guidelines. The following Abbott restricted stock units were outstanding as of December 31, 2017:2020: R. J. Alpern, 25,220;32,380; R. S. Austin, 32,883;40,043; S. E. Blount, 18,480;
Abbott Laboratories 23
25,640; M. A. Kumbier, 4,215; E. M. Liddy, 20,647;27,807; D. W. McDew, 1,974; N. McKinstry, 18,480;25,640; P. N. Novakovic, 20,647;27,807; W. A. Osborn, 27,137; S. C. Scott III, 28,867;34,297; D. J. Starks, 3,437;10,597; J. G. Stratton, 7,160; and G. F. Tilton, 28,867.36,027.
24 Abbott Laboratories 31
SECURITY OWNERSHIP OF EXECUTIVE OFFICERS AND DIRECTORS
The table below reflects the number of Abbott common shares beneficially owned as of January 31, 20182021 by (i) each director andnominee, (ii) theeach individual serving as Chief Executive Officer theand as Chief Financial Officer during 2020, and the three other current and formermost highly paid executive officers listed in the Summary Compensation Table2020 (collectively, the "named officers"), and (iii) 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, 2021(3) | Stock Equivalent Units | |||||||||||||
| | | | | | | | | | | | | | | | | | | | |
H. L. Allen | 100,879 | 676,159 | 0 | H. L. Allen | 151,896 | 1,109,341 | 0 | |||||||||||||
| R. J. Alpern | 25,220 | 0 | 6,671 | | R. J. Alpern | 32,380 | 0 | 8,214 | | ||||||||||
R. S. Austin | 39,727 | 20,852 | 0 | R. S. Austin | 40,043 | 57,618 | 0 | |||||||||||||
| S. E. Blount | 23,580 | 0 | 0 | | S. E. Blount | 28,240 | 0 | 0 | | ||||||||||
E. S. Fain | 445,218 | 0 | 0 | R. B. Ford | 244,868 | 1,218,661 | 0 | |||||||||||||
| R. B. Ford | 132,378 | 480,238 | 0 | | R. E. Funck, Jr. | 200,475 | 378,314 | 0 | | ||||||||||
E. M. Liddy | 22,967 | 19,890 | 20,565 | J. F. Ginascol | 89,003 | 169,059 | 0 | |||||||||||||
| N. McKinstry | 18,480 | 24,428 | 0 | | M. A. Kumbier | 5,248 | 0 | 0 | | ||||||||||
P. N. Novakovic | 21,147 | 77,869 | 0 | E. M. Liddy | 30,127 | 56,414 | 21,584 | |||||||||||||
| W. A. Osborn | 51,137 | 21,448 | 27,570 | | D. W. McDew | 1,974 | 0 | 0 | | ||||||||||
M. T. Rousseau | 629,294 | 774,049 | 0 | N. McKinstry | 25,640 | 56,356 | 0 | |||||||||||||
| D. G. Salvadori | 73,798 | 159,652 | 0 | | P. N. Novakovic | 41,004 | 93,553 | 0 | | ||||||||||
S. C. Scott III | 34,867 | 18,148 | 6,902 | W. A. Osborn | 79,745 | 37,733 | 28,935 | |||||||||||||
| D. J. Starks | 6,943,506 | 0 | 0 | | M. F. Roman | 0 | 0 | 0 | | ||||||||||
J. G. Stratton | 0 | 0 | 1,145 | D. G. Salvadori | 102,433 | 594,254 | 0 | |||||||||||||
| G. F. Tilton | 36,217 | 0 | 31,629 | | D. J. Starks | 7,020,657 | 0 | 0 | | ||||||||||
M. D. White | 3,138,480 | 4,873,894 | 0 | J. G. Stratton | 10,615 | 0 | 6,049 | |||||||||||||
| B. B. Yoor | 63,823 | 327,339 | 0 | | G. F. Tilton | 43,377 | 0 | 33,196 | | ||||||||||
All directors, named officers, and executive officers as a group(4)(5) | 12,849,731 | 11,397,036 | 94,482 | M. D. White | 3,141,293 | 5,959,728 | 0 | |||||||||||||
| | | | | | | | | | | B. B. Yoor | 69,886 | 197,150 | 0 | | |||||
All directors and executive officers as a group(4)(5) | 12,367,861 | 14,370,846 | 97,978 | |||||||||||||||||
| | | | | | | | | | |
Abbott Laboratories 2532
COMPENSATION DISCUSSION AND ANALYSIS |
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.
2020. 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 seven named officers: Miles D. White, Chairman of the BoardRobert B. Ford, President and Chief Executive Officer; Brian B. Yoor,Officer effective March 31, 2020 (previously President and Chief Operating Officer); Robert E. Funck, Jr., Executive Vice President, Finance and Chief Financial Officer;Officer effective March 1, 2020; Hubert L. Allen, Executive Vice President, General Counsel and Secretary; Robert B. Ford,John F. Ginascol, Executive Vice President, Medical Devices;Core Diagnostics; Daniel G. Salvadori, Executive Vice President, Nutritional Products; Michael T. Rousseau, President, CardiovascularMiles D. White, Executive Chairman of the Board effective March 31, 2020 (previously Chairman and Neuromodulation;Chief Executive Officer); and Eric S. Fain, SeniorBrian B. Yoor, former Executive Vice President, Group President, CardiovascularFinance and Neuromodulation. Mr. Rousseau and Mr. Fain left during 2017.Chief Financial Officer.
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 2020 shareholder outreach described on page 34.
In 2017, Abbott achieved outstanding returns to shareholders, ranking #1Abbott's sustained strong performance has resulted in our peer group. Abbott's one-year total shareholder return (TSR) was 52.0%significantly exceeding the peer median and major market indices on a one-, which was 30.2three-, and 23.9 percentage points abovefive-year basis.
Abbott's three-year TSR of 101.7% is more than twice that of the robust growth of bothpeer group median and the broader Standard & Poor's 500 Index (S&P 500) and more than three times that of the Dow Jones Industrial Average (DJIA) market index. These consistent above-market returns are driven by the strength of our diversified business model with 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 2020, despite the global market challenges from COVID-19, and achieved or exceeded the financial targets that were set before the pandemic in January 2020. Abbott's one-year TSR was 28.0%, respectively. more than three times the peer median TSR, and significantly above major market indices, a testament to the strength of our diversified business model and ability to innovate and deliver in this challenging environment.
In addition Abbott:to delivering significant shareholder returns, Abbott continued to take important steps to position the Company for long-term, sustainable growth.
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At a corporate level, all financial goals for officers were overachieved. This includes:
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
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:
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 | |||||||||||||||||||
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Abbott Laboratories 27
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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:
28 Abbott Laboratories
CHANGES BASED ON SHAREHOLDER FEEDBACK AND MARKET PRACTICES |
Last year, shareholders owning 95% of our shares approved the compensation of our named executive officers. During 2017,2020, we conducted extensive shareholder outreach with a cross-section ofto discuss our compensation program, among other topics. In the spring, we engaged shareholders representing more thanover 60% of our outstanding shares. In those meetings,shares in an open dialogue to discuss various topics, including Abbott's market-leading disclosures that enhance shareholder understanding of how pay decisions are made and how the metrics we discusseduse are linked to business strategy and goals. Their feedback was overwhelmingly positive, which was reflected in the 92% support for our pay programs broadly, including aspects that were previously subject to shareholder resolutions. Based on shareholder discussions and recommendations,Say-on-Pay Proposal.
As illustrated in the Committee, during its annual evaluation oftable below, over the Company's compensation programs and evolving market practices,past several years we have made severalnumerous changes to our programs.program and our proxy statement based on feedback from our shareholders as well as a review of market practices.
RECENT EXECUTIVE COMPENSATION CHANGES | ||||||
• Significantly • Revised annual cash incentive plan goals and weighting • Changed performance-based restricted stock awards to vest only over a 3-year term with no more than one-third of the award vesting in any one year •
| • Introduced new long-term incentive measures to reflect sustained performance over a three-year period •
Increased director share ownership guidelines •
• Updated our peer group to reflect increased size and complexity of business |
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These recent changes continue our practice of evolving our program based upon shareholder feedback as well as a review of market practices. Over the past several years, we have made numerous other changes to our program, including:
Abbott Laboratories 29
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The Committee makes compensation decisions in the context of the objectives of our program. The Committee ensures the compensation delivered to our executives is competitive, based on performance, balanced between the short- and long-term, aligned with shareholder interests, and does not encourage excessive risk-taking.
To determine the competitiveness of our compensation and benefit programs, the Committee, in consultation with its independent consultant, annually compares the level of compensation, market pay practices, and our relative performance to those of peer companies.
Our shareholders compare us to other global multinational companies, only some of which are in healthcare. These companies share similar characteristics aligned with our investment identity of diversified growth, returns to shareholders, and capital structure.
The peer group used for performance and compensation benchmarking prior to 2017 was established at the time of the AbbVie separation in 2013. That group has been used without change from 2013 through 2016. Due to the acquisitions of St. Jude Medical and Alere Inc. and significant changes in several peers due to corporate transactions, theCompensation Committee and its consultant reviewed the peer group to be used for 2017 benchmarking. Based on that review, the Committee approved an update to the peer group to better align to our current size, scope, and global footprint.
Consistent with our prior approach, our peer group was selectedin 2020 to strikedetermine whether any changes were necessary to better reflect the increased size (sales and market capitalization) and complexity of Abbott's business. They also reviewed whether United Technologies should remain a peer following its corporate transaction with Raytheon in which they merged and spun off various businesses, resulting in the new company, Raytheon Technologies.
Based on this review, the Compensation Committee replaced Raytheon Technologies with Cisco and Nike. This revised peer group strikes the appropriate balance between size (both revenues(revenue and market capitalization)capitalization between approximately one-third and three times Abbott's), growth and return profiles, geographic breadth, and management and operating structure andstructure. This approach has been overwhelmingly supported by our investors during shareholder outreach. The peer group purposely includes companies that are outside the healthcare industry.
In selecting our peer group for 2017 performance and compensation benchmarking, we considered:
The resulting peer group:
30 Abbott Laboratories34
The updated peer group is summarized below, showing the primary characteristics for which each company was selected.selected, including the Abbott business segment(s) represented by the peer company.
| Company Name | | Sales/ Rev.(1) (billions) | | Market Cap(1) (billions) | | % Rev. Outside U.S. | | Similar # Employees | | Mfg. Driven/ Consumer- Facing | | Abbott Business Segment(s)/Characteristics Represented | | |||||||||||||||||||||||||
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| 3M Company | | | $ | 32.2 | | $ | 100.8 | | ü | | ü | | ü | | Diagnostics | | ||||||||||||||||||||||
| Becton Dickinson | | | $ | 17.1 | | $ | 72.8 | | ü | | ü | | ü | | Diagnostics, Medical Devices | | ||||||||||||||||||||||
Company Name | | Sales/Rev.1 (billions) | | Market Cap1 (billions) | % Rev. Outside U.S. | Similar # Employees | Health Care- Related | Mfg. Driven/ Consumer- Facing | Similar Operating Characteristics | | Boston Scientific | | | $ | 10.1 | | $ | 51.5 | | ü | | | ü | | Medical Devices | | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | Bristol-Myers Squibb | | | $ | 39.4 | | $ | 140.2 | | ü | | | | ü | | Established Pharmaceuticals | | |
3M Company | $ | 31.7 | $ | 140.2 | ü | ü | ü | ü | ü | | Cisco | | | $ | 48.1 | | $ | 189.1 | | ü | | ü | | ü | | Diagnostics, Medical Devices | | ||||||||||||
| Becton, Dickinson & Co. | $ | 12.3 | $ | 57.0 | | ü | ü | ü | ü | | The Coca-Cola Company | | | $ | 33.5 | | $ | 235.7 | | ü | | ü | | ü | | Consumer | | |||||||||||
Bristol-Myers Squibb | $ | 20.8 | $ | 100.3 | ü | ü | ü | | Danaher Corporation | | | $ | 22.3 | | $ | 157.8 | | ü | | ü | | ü | | Diagnostics | | ||||||||||||||
| The Coca-Cola Company | $ | 37.3 | $ | 195.5 | ü | ü | | ü | ü | | Honeywell International | | | $ | 32.6 | | $ | 149.2 | | ü | | ü | | ü | | Diagnostics, Medical Devices | | |||||||||||
Danaher Corporation | $ | 18.3 | $ | 64.6 | ü | ü | ü | ü | ü | | Johnson & Johnson | | | $ | 82.6 | | $ | 414.3 | | ü | | ü | | ü | | Diagnostics, Established Pharmaceuticals, Medical Devices | | ||||||||||||
| Eaton Corporation plc | $ | 20.4 | $ | 34.8 | | ü | | ü | ü | | Medtronic | | | $ | 27.9 | | $ | 157.7 | | ü | | ü | | ü | | Medical Devices | | |||||||||||
Emerson Electric Co. | $ | 15.9 | $ | 44.5 | ü | ü | ü | ü | | Merck | | | $ | 47.3 | | $ | 207.0 | | ü | | ü | | ü | | Established Pharmaceuticals | | |||||||||||||
| Honeywell International Inc. | $ | 40.5 | $ | 116.1 | ü | ü | | ü | ü | | Mondelez International | | | $ | 26.6 | | $ | 83.6 | | ü | | ü | | ü | | Consumer | | |||||||||||
Johnson & Johnson | $ | 76.5 | $ | 375.4 | ü | ü | ü | ü | | Nike | | | $ | 38.3 | | $ | 222.1 | | ü | | ü | | ü | | Consumer | | |||||||||||||
| Johnson Controls | $ | 30.5 | $ | 35.3 | ü | ü | | ü | ü | |||||||||||||||||||||||||||||
| Procter & Gamble | | | $ | 74.0 | | $ | 345.0 | | ü | | ü | | ü | | Consumer | | ||||||||||||||||||||||
Kimberly-Clark Corporation | $ | 18.3 | $ | 42.4 | ü | ü | ü | ü | ü | | Reckitt Benckiser(2) | | | $ | 18.4 | | $ | 63.4 | | ü | | | ü | | Nutrition | | |||||||||||||
| Medtronic plc | $ | 29.6 | $ | 109.3 | ü | ü | ü | ü | ü | | Stryker Corporation | | | $ | 14.4 | | $ | 92.1 | | | | | | ü | | Medical Devices | | |||||||||||
Mondelēz Inernational, Inc. | $ | 25.9 | $ | 64.0 | ü | ü | ü | ü | | Thermo Fisher Scientific | | | $ | 32.2 | | $ | 184.6 | | ü | | ü | | ü | | Diagnostics | | |||||||||||||
| Procter & Gamble Co. | $ | 65.7 | $ | 233.1 | ü | ü | ü | ü | ü | | Peer Group Median | | | $ | 32.2 | | $ | 157.7 | | | | | | | | | | |||||||||||
Thermo Fisher Scientific, Inc. | $ | 20.9 | $ | 76.1 | ü | ü | ü | ü | | Abbott | | | $ | 34.6 | | $ | 194.1 | | ü | | ü | | ü | | | ||||||||||||||
| United Technologies | $ | 59.8 | $ | 101.9 | ü | | | ü | ü | | Abbott Percentile Rank | | | 65th | | 71st | | | | | | | | | | |||||||||||||
Peer Group Median | $ | 27.8 | $ | 88.2 | Peer group approximates Abbott in market cap and sales | ||||||||||||||||||||||||||||||||||
| Abbott 12/31/17 | $ | 27.4 | $ | 99.3 | ü | ü | ü | ü | ü | | | | | | | | | | | | | | | | | |||||||||||||
Abbott + Alere Full Year 2017 | $ | 28.9 | 2 | ü | ü | ü | ü | ü | |||||||||||||||||||||||||||||||
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BASIS FOR COMPENSATION DECISIONS |
Abbott and its Compensation Committee have designed a compensation program that balances short- and long-term objectives to focus our executives on actions that create value today, while building for sustainable future success. Approximately two-thirds of our pay is equity-based, directly tying a significant portion of executive compensation to shareholder returns.
Our compensation program is market-based (to ensure our ability to attract and retain talented executives) and produces compensation outcomes that are performance-based (to incent the achievement of profitable growth that increases shareholder value).
FIXED PAY—BASE SALARYCOMPENSATION PROGRAM IS MARKET-BASED
All components of total direct compensation are market-based. Each year, the Compensation Committee reviews market data with the independent compensation consultant to ensure our programs are aligned and our officers are positioned appropriately relative to the market.
Base salary targets are initially set using the median of the peer group as an initiala benchmark. Specific pay rates are based on an executive's performance, experience, contribution, unique skills, and internal equity with others at Abbott. Base salaries range from the 10th to the 90th percentile of the peer group,then vary depending on the officer's experience, expertise, unique role requirements, and tenure.performance. The average base salary of our executive officers wasis approximately at the market median. Once the rate of pay is set at the time of hire or upon promotion, subsequent changes in pay, including salary increases, are based on the executive's performance, the job he or she is performing, internal equity, and the Company's operating budget.
Abbott's primary performance-based compensation programs for executive officers are the annual cash incentive plan and the long-term incentive plan. These plans are described in more detail on the following pages. While both plans are formula-driven based on specific operating, strategic, and leadership results, the performance criteria differs in terms of the measures and the performance period. It is important to note that officer financial goals are based on adjusted measures that reflect the true results of our ongoing operations, which is what our investors focus on and invest in.
Abbott Laboratories 31 35
ANNUAL CASH INCENTIVE PLAN (PERFORMANCE INCENTIVE PLAN)Annual Incentive Plan
Our annual cashAnnual incentive plan is a key part of our officers' total compensation. It rewards executives for achieving specific annual goals at the corporate and divisional levels. It also rewards executives for achieving operational and strategic goals.
During 2017, Abbott's seven named officers participated in the 1998 Abbott Laboratories Performance Incentive Plan (PIP), which was designed to comply with the requirements of Section 162(m) of the Internal Revenue Code of 1986 for performance-based compensation.
Annual Cash Incentives Are Capped
Each year, the Committee sets the maximum award allocations under the PIP for each named officer as a percentage of consolidated net earnings. For 2017, the maximum award for the Chief Executive Officer was 0.15% of adjusted consolidated net earnings for the fiscal year-end and, for all of the other named officers, 0.075% of adjusted consolidated net earnings. Historically and in 2017, the Committee exercised its discretion to deliver PIP awards that were substantially below the maximum awards thattargets are authorized by these formulas based on achieved performance against annual goals and other factors described below.
Under the PIP, the Committee sets a target payout (expressed as a percentage of base salary) for each officer based upon market benchmarks and internal equity. The final payout is determined based upon operating performance relative to annual goals. This process is described below. In 2017, annual incentive payouts for Abbott's executive officers ranged from 18% to 163% of target, with an average of 105% of target, reflecting strong performance on an operational and strategic basis during the year.
Step One: Fund Annual Incentive Pool Based on EPS Achievement
In order for the PIP to pay out, the EPS goal (see 2017 Performance Goals for Performance Incentive Plan on page 38) must be achieved. If the EPS goal is not achieved, then the PIP is not funded and there are no payouts.
Step Two: Assess Individual Performance vs. Goals
Individual goals are finalized at the beginning of each year based upon each executive officer's responsibilities. The weighting of goals depends upon whether the executive is a Business Unit leader or a Corporate leader, as follows:
Goal Category | | Business Unit Leader | | Corporate Leader | | |||||||
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Sales Growth vs Peers and Plan | | 30% | | 10% | | |||||||
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Financial Return | 40% | 40% | ||||||||||
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| Strategic Initiatives | | 20% | | 40% | | ||||||
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Leadership | 10% | 10% | ||||||||||
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| Total | | 100% | | 100% | | ||||||
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Sales Growth Goals—To stress the importance of top-line growth, each officer is measured against Abbott's internal targets, which are established to exceed peer group growth rates.
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Sales growth performance required to earn payouts above 100% varies by business to reflect each business's market.To exceed a target payout in Sales Growth, the business must grow market share, exceeding both peer sales growth rates and Abbott's internal targets.This approach sets a very high bar and is more rigorous than market practice.
32 Abbott Laboratories
Financial Return Goals—While top-line growth is important, that growth must be profitable in order to drive value for our shareholders. To stress the importance of profitability, each officer is assessed on relevant return goals, primarily earnings, margin contribution, and cash flow.
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Financial return performance required to earn payouts above 100% of target varies by business to reflect each business's market and operating environment.
Strategic Initiative Goals—Strategic initiative goals are primarily related to key planned strategic actions, such as portfolio expansion, key R&D milestones, gross margin expansion, and entry into new markets. Strategic goals areinitially set such that fully successful achievement of the goals results in a 100% payout with no additional upside. Lower levels of achievement result in payouts of 75%, 50%, or 0% of target.
Leadership Goals—Leadership goals are primarily related to talent and succession planning initiatives. These goals are focused on stabilizing business leadership gaps, ensuring businesses have the talent they need to perform in the current period, and building our leadership bench to sustain our performance. Leadership goals are set such that fully successful achievement of the goals results in a 100% payout with no additional upside. Lower levels of achievement result in payouts of 75%, 50%, or 0% of target.
The following formula summarizes the PIP payout process for a Business Unit leader, assuming the EPS goal is achieved (the process is identical for a Corporate leader).
For example:
Base Salary | Bonus Target % | Individual Goal Score | Final Award Payout | |||||||||||||||
| Goal Category | Goal Weighting | Payout | Goal Score | | |||||||||||||
| | Sales Growth | 30% | 100% | 30% | |||||||||||||
$525,000 | x | 90% | x | Financial Return | 40% | 100% | 40% | = | $448,875 | |||||||||
| | Strategic Initiatives | 20% | 75% | 15% | | ||||||||||||
| | Leadership | 10% | 100% | 10% | | ||||||||||||
| | | | | | | | | | | | | | | | | | |
| | Total | 95% | |
Based on performance against goals, 2017 cash incentive payouts ranged from the 10th percentile to the 90th percentile of our peer group. The average 2017 cash incentive payout for our executive officers was at the 56th percentile of our peer group, consistent with strong performance in 2017.
LONG-TERM INCENTIVE PLAN (LTI)
Our long-term incentive plan is the largest component of our executive officers' total compensation. As such, we believe it is critical that LTI performance goals reflect Company and individual performance, on both an absolute and relative basis. The LTI process used in February 2017 (described below) resulted in annual grants to executive officers ranging from the 5th percentile to the 51st percentile of our peer group, with an average of the 27th percentile. A preview of the February 2018 grant (which will be disclosed in our 2019 Summary Compensation table) is also described below.
Our process for determining guidelines, individual awards, and vesting of those awards incorporates:
Abbott Laboratories 33
This process is far more rigorous than automatically granting LTI atusing the median of the peer group as a benchmark. The targets may vary based on other factors, including internal pay comparisons. Further linkage to the market and adjustingis achieved by setting targets that require our officers to exceed the awards only for relative TSR at the endanticipated growth of the performance cyclemarket in which they compete in order to determine the extent to which awards vest.
We followedachieve a rigorous two-stage process to determine the sizetarget payout of LTI awards ultimately granted to our executive officers:
Stage One: Determine LTI AwardsStage Two: Determine if Options and Shares Vesttheir annual incentives.
Stage One: Determine LTI AwardsLong-Term Incentive Plan (LTI)
In order to determine LTI awards, Abbott follows three steps.
Step A—Determine Company LTI Award Guidelines—Abbott obtains survey data annually to assess the competitive LTI market for our peer group companies for each executive position. Each year, we position ourTo set annual LTI award guidelines, relativethe Committee first reviews LTI grants made by peer companies to identify the competitive LTI market by comparing Abbott's TSR performance to our peers.While most of our peer companies simply set their annual LTI level atrange. Each year the 50th percentile of market, the following chart shows definitively how we adjust our LTI grant guidelines to align with our relative TSR performance. For example, guidelines for grants made in February 2017 wereare set at the 25th percentile of our peer group as illustrated inappropriate level within the 2016 Performance Year consistent with our relatively lower TSR vs. peers. Conversely, guidelines for grants made in February 2018 were set at the 75th percentile of our peer group, reflecting very strong TSR vs. our peers. The variability produced by this process illustrates the direct alignment of our officers' pay with our shareholders' returns.
Step B—Determine Individual Officer Awards—The recommendation for each officer starts with the Company LTI award guideline (basedcompetitive market range based on Abbott's relative TSR performance, as described above) foron the officer's position, as established in Step A. Individual officer awards are then furtheradjusted up or down based upon assessment of their achievement of individual goals related to
Each officer is assigned an overall score based on whether they missed, achieved, or exceeded the specific targets in all three measures for all three years. That resulting assessment score determines the LTI performance adjustment.
Awards granted in 2017, based on individual officer performance in 2016, resulted in awards ranging from 26% to 135% of guideline award levels, with an average of 98% of the 25th percentile guideline. These awards resulted in annual grants to Abbott executive officers ranging from the 5th percentile to the 51st percentile of our peer group, with an average of the 27th percentile.
Awards granted in 2018, based on individual officer performance in 2017, resulted in awards ranging from 50% to 135% of guideline award levels, with an average of 104% of the 75th percentile guideline. These awards resulted in annual grants to Abbott executive officers ranging from the 24th percentile to the 90th percentile of our peer group, with an average of the 77th percentile.
34 Abbott Laboratories
Step C—Convert Individual LTI Award Values to Equity Grants—In 2017, tofollowing page. To recognize the continued growth focus of Abbott and to directly align the interests of executive officers with the interests of our shareholders, the Compensation Committee granted thegrants long-term incentive awards in the form of 50% stock options and 50% performance-restrictedperformance restricted shares. This mix of incentive awards is consistent with our peers.
COMPENSATION OUTCOMES ARE PERFORMANCE-BASED
Other than base salary, which is the practicessmallest component of our executives' compensation, all remaining components of Total Direct Compensation (i.e., annual incentive, performance-based restricted stock awards, and stock options) are aligned with individual, business segment and Company performance.
In order for the annual incentive plan to pay out, the EPS goal must be achieved. If the EPS goal is not achieved, then the annual incentive plan is not funded. Final payouts are determined based upon performance relative to annual goals and are capped as a percentage of consolidated net earnings (CEO cap is 0.15%; other NEO cap is 0.075%). The following formula summarizes the annual incentive payout process for officers, assuming the EPS goal is achieved.
For example:
BASE SALARY | BONUS TARGET % | TOTAL GOAL SCORE | AWARD PAYOUT | |||||||||
$525,000 | x | 90% | x | 95% | = | $448,875 | ||||||
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For 2020 performance, annual incentive payouts for Abbott executive officers averaged 96% of target. For individual calculations for each named officer, see pages 42 to 57. The annual incentive plan is formula driven based on financial, strategic, and talent and succession results. Officer financial goals are based on adjusted financial measures that reflect the true results of our ongoing operations and are set based on the expected market growth of the businesses in the markets in which we compete.
The goals used to determine annual incentive payouts for Abbott executive officers were set at the beginning of 2020. Abbott did not adjust 2020 financial goals due to the impact of the pandemic. Instead, the Compensation Committee evaluated and rewarded each business leader based on their original goals, as well as their contribution to the Company's extraordinary response to the pandemic.
This response, which enhanced Abbott's position as a world leader in diagnostic testing, included:
In addition, business continuity across the Company was maintained through close partnerships with existing suppliers and a focus on supply chain management that ensured customer needs were met and R&D programs continued yielding approvals and a strong pipeline for future growth.
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Throughout the process, Abbott's awards are based on Company and individual performance, from guideline positioning all the way through vesting. Conversely, most other companies reflect performance only at the company level, through relative TSR at vesting. Thus, Abbott's process is much more rigorous and performance-based than other companies' programs.
The Committee positions LTI award guidelines relative to the market by comparing Abbott's 3-year TSR performance against our peers. 5- and 1-year TSR performance are also referenced to ensure long-term performance is sustained, and current performance is on track with shareholder expectations.
For example, guidelines for grants made in February 2020 were set at the 60th percentile of our peer group, reflecting 100th percentile relative 3-year TSR performance for the period ending in 2019. The 5-year TSR ranked at the 75th percentile of our peer group for the period ending in 2019, while the 1-year TSR was at the 25th percentile of our peer group.
The recommendation for each officer starts with the Company LTI award guideline (based on relative TSR performance and market data as described above) for the officer's position and is adjusted based upon assessment of their sustained contributions over the last three years. Contribution scores are totaled and used to adjust each officer's award guideline. Final awards may be increased or decreased based on the long-term impact each individual officer had on the organization. For example:
SAMPLE INDIVIDUAL LTI PERFORMANCE ASSESSMENT | ||||||||||||||||||||
| METRIC | | 2017 | | 2018 | | 2019 | | OVERALL | | ||||||||||
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Sales and Market Growth Contribution | | Met (0) | | Did not meet (-1) | | Exceeded (+1) | | 0 | | |||||||||||
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Margin Contribution | Met (0) | Met (0) | Exceeded (+1) | +1 | ||||||||||||||||
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Strategic Financial Contribution | | Met (0) | | Met (0) | | Met (0) | | 0 | | |||||||||||
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Total | +1 | |||||||||||||||||||
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| | | | | | | LTI Adjustment | | 110% | | ||||||||||
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LTI ADJUSTMENT LEGEND | ||
TOTAL | RESULT | |
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+4 or More | 125% | |
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+1 to +3 | 110% | |
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0 | 100% | |
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-1 or -2 | 90% | |
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-3 or Less | 75% | |
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Awards granted in 2020, based on individual officer performance for the three-year period ending in 2019, resulted in awards ranging from the 10th percentile to the 90th percentile of our peer group, with respectan average of the 60th percentile. For individual calculations for each named officer, see pages 42 to performance-based equity grants and was continued for our grants in 2018.57.
Stage Two: Determine if Options and Shares Vest
Stock options vest over three years. Since stock options realize value only accrue value through share price appreciation, the value realized upon the exercise of vested stock options directly aligns the compensation earned with the value shareholders received over the same period of time.period. Options are also aligned with shareholder value through the impact of relative TSR in determining the size of awards granted (Stage One).LTI award guidelines.
Performance-restrictedPerformance restricted shares vest1/3 one-third each year thatonly if the Adjusted Return on Equity (ROE) performance target is achieved. Vesting is absolute—either 100% or 0%. There is no partial vesting if the target is missed orand no additional vesting upside if the Company over-performs.over-performs. The Committee believes adjusted return on equity (ROE)Adjusted ROE is the appropriate performance measure for vesting because ROE measures how much profit the Company generates over the long-term with the capital that shareholders have invested and is a measure reflecting deployment of capital or capital allocation. Adjusted ROE reflects earnings from continuing operations excluding specified items, such as intangible amortization expense and various other costs including expenses related to restructuring actions or business acquisitions. Adjusted ROE also excludes the impact of foreign exchange on equity.
In 2021, the Adjusted ROE vesting target to determine future vesting was increased from 13% to 14%. This increase follows similar increases in prior years, which have increased this target 40% since 2014. This is consistent with our stated intent to increase our Adjusted ROE targets over time following the separation of AbbVie, which had a significant impact on our ROE and other return measures, including Return on Assets (ROA). Prior to the separation of Abbott and AbbVie, the AbbVie business accounted for the majority (65%) of Abbott's adjusted net income. However, at the separation of AbbVie, Abbott retained the majority (90%) of the equity. While Abbott's ROE was disproportionally lower following the AbbVie separation, shareholders that retained both their Abbott and AbbVie shares over the past eight years since the AbbVie separation would have seen a 231% appreciation in their holdings. | IMPACT OF ABBOTT/ABBVIE SEPARATION |
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Although Company TSR performanceSummary of LTI Process
The graphic below summarizes the LTI process and its direct linkage to the market and company and individual officer performanceperformance.
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COMPENSATION PROGRAM IS DIRECTLY LINKED TO BUSINESS STRATEGY
Our compensation program is also linked directly to our business strategy, to ensure that officers are focused on those activities that drive our business strategy and create value for shareholders.
The table below explains the strategic link of the key metrics used in Stage Oneour annual and long-term incentive plans.
EVALUATION OF PERFORMANCE | ||||||||
| METRIC | | STRATEGIC LINK | | ||||
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Our annual incentive plan is aligned to the following drivers of shareholder value: | ||||||||
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Sales | | Measures Abbott's ability to compete effectively in the markets in which we participate and focuses management on achieving strong top-line growth, consistent with our business strategy. | | |||||
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Diluted EPS | Basis on which Abbott sets annual performance expectations and consistent with how we report operating results to the financial community. | |||||||
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| Return on Assets | | Measures profitability and how effectively Company assets are used to generate profit. | | ||||
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Free Cash Flow | Recognizes the importance of generating cash to fund ongoing investments in our business and to pay down debt, pay dividends, and fund investments outside of capital expenditures. | |||||||
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Our long-term incentive plan relies on the following Company metrics, and 3-year sustained individual performance metrics, to determine award value: | ||||||||
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Total Shareholder Return | | Measures Abbott's stock and dividend performance against our peer group. Used to position LTI award guidelines relative to the market. | | |||||
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3-year LTI Contribution Metrics | Measures how each officer has performed relative to their sales, margin, and strategic financial contribution goals. Used to adjust LTI award guidelines to reflect individual performance. | |||||||
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| Return on Equity | | Measures how much profit Abbott generates over the long-term with the capital that shareholders have invested. Used to determine if performance-restricted awards vest. | | ||||
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Officer financial goals are set and assessed based on adjusted measures that the Committee believes more accurately reflect the results of our ongoing operations. We make certain adjustments for specified items, whether favorable or unfavorable, that are unusual or unpredictable, such as cost reduction initiatives, restructuring programs, integration activities and other business acquisition-related costs, and the impact of significant tax changes. We also exclude intangible amortization expense to grantprovide greater visibility on the appropriate award level,results of operations excluding these costs, similar to how Abbott's management internally assesses performance.
The Committee believes these adjusted measures provide a more stable assessment of Abbott's core business and encourage decision-making that considers long-term value. They also align compensation goals with the focusfinancial guidance we communicate to investors, which is also based on ROE for vesting provides a second shareholder protectionadjusted measures.
COMPENSATION LINK TO SUSTAINABILITY
Our leadership covenant includes commitments to multiple environmental, social and governance efforts. Examples include:
40
Since this covenant is considered the initial grant is made. ROE is only used for vesting; it isminimum requirement of being an officer at Abbott, any officer that does not used infulfill the determinationcovenant can receive a reduction of LTI award guidelines up to 100% of their annual incentive and/or individual officer performance.long-term incentive awards.
In 2016, the ROE vesting target to determine future vesting was increased from 11% to 12%. This increase is after a similar increase from 10% to 11%addition, we maintain several sustainability commitments, which are further described in our Proxy Summary on page 10, and include:
Affordability
(There was a similar impact on other rate of return measures, including Return on Assets.)
PAY DECISIONS FOR NAMED EXECUTIVE OFFICERS
The following pages highlightdetail the rationale for the pay decisions forgoals and metrics used to determine each named officer. Itofficer's payout under our annual and long-term incentive plans. For some goals, the target is important to note that annualnot disclosed for competitive reasons. The long-term incentive pay decisions were made in early 2018 based on 2017 results. Long-term incentive decisions (options and performance shares) shown in the Summary Compensation Table of this proxy statement were made in early 2017 based on 2016 results (see prior year proxy statement for discussion of 2016 results). We have also included information about our February 2018 LTI grants since theyand detailed here were based on 2017 TSR performance. Specific 2017 financial goalsupon performance through 2019, whereas the annual incentive plan payouts are detailed on page 38.based upon performance during 2020.
41
Miles D. WhiteNAMED EXECUTIVE OFFICER COMPENSATION DECISIONS
| ROBERT B. FORD President and Chief Executive Officer, and Director | |
| ||
| | |
Mr. Ford previously served as President and Chief Operating Officer until his appointment to President and Chief Executive Officer on March 31, 2020.
Base Salary—No increase. Mr. White last received aFord's annual base salary increasewas increased to $1,400,000 in 2010.March 2020 in connection with his promotion to President and Chief Executive Officer.
Performance Incentive Plan—Mr. White'sFord's target bonus iswas increased to 175% of base salary.in connection with his promotion to President and Chief Executive Officer. Based on performance in 2017,2020, Mr. WhiteFord received a bonus in February 2018 of $4,500,000,2021 which was equalcalculated as follows:
| | | | | 2019 | | | | | | | 2020 GOAL MEASUREMENT | | | 2020 | | | | | | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| GOAL | | RESULTS ACHIEVED | | GOAL WEIGHT | | THRESHOLD | | TARGET | | MAXIMUM | | RESULTS ACHIEVED | | GOAL SCORE | |||||||||||||||||
| FINANCIAL METRICS(1) | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Adjusted Sales(2) | | | | $31.96B | | | | 25% | | | | $34.02B | | | | $34.18B | | | | $34.33B | | | | $34.92B | | | | 37.5% | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Adjusted Diluted EPS | | | $3.24 | | | 25% | | | $3.55 | | | $3.60 | | | $3.65 | | | $3.65 | | | 37.5% | | |||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Adjusted ROA | | | | 10.9% | | | | 10% | | | | 11.6% | | | | 11.7% | | | | 11.8% | | | | 11.8% | | | | 15.0% | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Free Cash Flow | | | $4.5B | | | 10% | | | $4.3B | | | $4.6B | | | $4.8B | | | $5.7B | | | 15.0% | | |||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Financial Total | | | 105.0% | | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| STRATEGIC METRICS(3) | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Diabetes Care Sales Growth | | | | 10% | | | | 93.7% of Target | | | | Target | | | | 106.0% of Target | | | | Below Threshold | | | | 0.0% | | | |||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Structural Heart Sales Growth | | | 10% | | | 83.6% of Target | | | Target | | | 109.3% of Target | | | Below Threshold | | | 0.0% | | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Core Diagnostics Sales Growth | | | | 10% | | | | 85.5% of Target | | | | Target | | | | 112.0% of Target | | | | Below Threshold | | | | 0.0% | | | |||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
42
| | |
Given the course of the pandemic, the strategic goals including 163% achievementset in February 2020 shifted immediately to focus on pandemic response. Our extraordinary response was focused on 3 specific goals, all of his free cash flow goal, sustained overachievement of his sales and return goals, and the successful reshaping of Abbott through the AMO divestiture and the acquisitions of St. Jude Medical and Alere Inc.which were overachieved.
| STRATEGIC METRICS | | | | 2020 RESULTS | | | | GOAL SCORE | | ||||||
| Goal (10% weight): Develop COVID-19 related tests across Abbott's broad diagnostic portfolios. | | | | Overachieved: Abbott developed 12 tests, half of which were approved for use during the first six months of 2020. | | | | 15.0% | | | |||||
| | | | | | | | | | | | | | | | |
��� | Goal (10% weight): Expand manufacturing capacity for COVID-19 tests in both the U.S. and internationally. | | | Overachieved: Authorized $639MM of spending to expand manufacturing at existing facilities and create two new facilities (in IL and ME). Sold 424MM COVID-19 tests during 2020, representing $3.9B in sales. | | | 15.0% | | ||||||||
| | | | | | | | | | | | | | | | |
| | Goal (10% weight): Ensure supply chain and business continuity for existing base business. | | | | Overachieved: Through proactive and continuous communication with suppliers and vendors, Abbott experienced no disruptions to our supply chain. | | | | 15.0% | | | ||||
| | | | | | | | | | | | | | | | |
| | | | | Strategic Total | | | 45.0% | | |||||||
| | | | | | | | | | | | | | | | |
| | | | | Financial Total (prior page) | | | 105.0% | | |||||||
| | | | | | | | | | | | | | | | |
| | | | | Total Goal Score | | | 150.0% | | |||||||
| | | | | | | | | | | | | | | | |
BASE SALARY | BONUS TARGET % | TOTAL GOAL SCORE | AWARD PAYOUT | |||||||||
$1,400,000 | x | 175% | x | 150% | = | $3,675,000 | ||||||
| | | | | | | | | | | | |
Abbott Laboratories 35 43
| | |
Based on the Committee's review of Abbott and individual performance in 2016,through 2019, Mr. WhiteFord received an LTI award in February 20172020 with a value of $8,199,521,$11,250,000, which was equal to approximately 100%90% of his 25th percentile LTIthe market value equity award guideline.for a CEO in Abbott's peer group. This award reflects a significant reductionwas paid 50% in his award vs.stock options(1) and 50% in performance restricted shares(2)
LTI AWARD GUIDELINE | LTI ADJUSTMENT | AWARD ALLOCATION | AWARD VALUE | |||||||||
$12,500,000 | x | 90% | x | 50% Stock Options(1) | = | $5,625,000 | ||||||
| | | | | | | | | | | | |
| | 50% Performance Restricted Shares(2) | $5,625,000 | |||||||||
| | | | | | | | | | | | |
Total | $11,250,000 | |||||||||||
| | | | | | | | | | | | |
INDIVIDUAL LTI PERFORMANCE ASSESSMENT | | |||||||||||||||||||
METRIC | | 2017 | | 2018 | | 2019 | | OVERALL | | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
Sales and Market Growth Contribution | | Exceeded (+1) | | Exceeded (+1) | | Exceeded (+1) | | +3 | | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
Margin Contribution | Met (0) | Exceeded (+1) | Exceeded (+1) | +2 | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| Strategic Financial Contribution | | Exceeded (+1) | | Met (0) | | Did not meet (-1) | | 0 | | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | +5 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| Preliminary Adjustment | | 125% | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Impact(3) | - | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| LTI Adjustment | | 90% | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
LTI ADJUSTMENT LEGEND | | |||||||||||||||||||
| PRELIMINARY ADJUSTMENT | | IMPACT | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| TOTAL | | RESULT | | IMPACT ON BUSINESS PRIORITIES | | SCORE | | RESULT | | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
+4 or More | | 125% | | High Impact | | ++ | | +25% or More | | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
+1 to +3 | 110% | Medium/High Impact | + | Up to +25% | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| 0 | | 100% | | Medium Impact | | = | | 0% | | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
-1 or -2 | 90% | Medium/Low Impact | - | Up to -25% | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| -3 or Less | | 75% | | Low Impact | | -- | | -25% or More | | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
44
Based on performance in 2017, Mr. White received an LTI award in February 2018 with a value of $15,000,000, which was equal to approximately 137% of the market. This award reflects Abbott's very strong operational performance during 2017, TSR performance at the top of the peer group and well ahead of the S&P 500 and DJIA, and the achievement of several important strategic goals including the sale of AMO and acquisition of St. Jude Medical and Alere Inc. The award also reflects Abbott's sustained strong financial returns under Mr. White's leadership, including exceeding its adjusted diluted EPS growth commitments and consistently meeting or beating earnings targets annually for the past 15 years. Additional details regarding that award will be included in Abbott's 2019 proxy statement.
Base Salary—Table of Contents
| ROBERT E. FUNCK, JR Executive Vice President, Finance and Chief Financial Officer | |
| ||
| | |
Mr. Yoor's annual base salaryFunck previously served as Senior Vice President, Finance and Controller. Mr. Funck was increased from $600,000 to $650,000 in February 2017 in connection with his transitionappointed to Executive Vice President, Finance and Chief Financial Officer.Officer effective March 1, 2020.
Performance Incentive Plan—Mr. Yoor's target bonus was increased in 2017 from 100% to 105% of his base salary. Based on performance in 2017, Mr. Yoor received a bonus in February 2018 of $1,062,400, which was equal to 156% of his target bonus. This payout reflects significant overachievement of both financial and strategic goals, including 163% achievement of his free cash flow goal, and overachievement of his sales and return goals. Mr. Yoor's strategic and leadership goals for 2017 included M&A activity support, transformation of the finance organization, and implementation of key financing and cash flow improvement initiatives which significantly overachieved their targets. In addition to the calculations derived from the scoring of financial and strategic goals, the plan allows further adjustments up or down by the Compensation Committee to reflect achievements not anticipated when goals were set. For 2017, the Committee adjusted Mr. Yoor's bonus (by $300,000) to reflect the unanticipated achievements.
Long-Term Incentives—Based on performance in 2016, Mr. Yoor received an LTI award in February 2017 with a value of $1,754,876, which was equal to 90% of his 25th percentile LTI award guideline.
Based on performance in 2017, Mr. Yoor received an LTI award in February 2018 with a value of $5,383,800, which was equal to approximately 135% of his 75th percentile LTI award guideline. This award reflects Abbott's and Mr. Yoor's strong performance during 2017. Additional details regarding that award will be included in Abbott's 2019 proxy statement.
Hubert L. Allen
Base Salary—No change in 2017.
Performance Incentive Plan—Mr. Allen's target bonus is 105% of his base salary. Based on performance in 2017, Mr. Allen received a bonus in February 2018 of $1,015,200, which was equal to 140% of his target bonus. This payout reflects significant overachievement of both financial and strategic goals, including 163% achievement of his free cash flow goal, and overachievement of his sales and return goals. Mr. Allen's strategic and leadership goals for 2017 included achieving key litigation and compliance initiatives, licensing and acquisition objectives, and successful integration activities. In addition to the calculations derived from the scoring of financial and strategic goals, the plan allows further adjustments up or down by the Compensation Committee to reflect achievements not anticipated when goals were set. For 2017, the Committee adjusted Mr. Allen's bonus (by $200,000) to reflect the unanticipated achievements.
Long-Term Incentives—Based on performance in 2016, Mr. Allen received an LTI award in February 2017 with a value of $2,144,861, which was equal to 110% of his 25th percentile LTI award guideline.
Based on performance in 2017, Mr. Allen received an LTI award in February 2018 with a value of $5,383,800, which was equal to approximately 135% of his 75th percentile LTI award guideline. This award reflects Abbott's and Mr. Allen's strong performance during 2017. Additional details regarding that award will be included in Abbott's 2019 proxy statement.
36 Abbott Laboratories
Robert B. Ford
Base Salary—No change in 2017.
Performance Incentive Plan—Mr. Ford's target bonus is 105% of his base salary. Based on performance in 2017, Mr. Ford received a bonus in February 2018 of $1,066,400, which was equal to 150% of his target bonus. This payout reflects significant overachievement of financial and strategic goals. Mr. Ford's strategic and leadership goals for 2017 included achieving key product approvals, successful integration of St. Jude Medical, and market share growth objectives. In addition to the calculations derived from the scoring of financial and strategic goals, the plan allows further adjustments up or down by the Compensation Committee to reflect achievements not anticipated when goals were set. For 2017, the Committee adjusted Mr. Ford's bonus (by $425,000) to reflect the unanticipated achievements.
Long-Term Incentives—Based on performance in 2016, Mr. Ford received an LTI award in February 2017 with a value of $1,949,869, which was equal to 90% of his 25th percentile LTI award guideline.
Based on performance in 2017, Mr. Ford received an LTI award in February 2018 with a value of $5,383,800, which was equal to approximately 135% of his 75th percentile LTI award guideline. This award reflects Abbott's and Mr. Ford's strong performance during 2017. Additional details regarding that award will be included in Abbott's 2019 proxy statement.
Daniel G. Salvadori
Base Salary—Mr. Salvadori'sFunck's annual base salary was increased from $575,000in January 2020 to $650,000 in July 2017 in connection with his promotion from Senior Vice President, Established Pharmaceuticals, Latin America to Executive Vice President, Nutritional Products.
Performance Incentive Plan—Mr. Salvadori's target bonus is 105% of his base salary. Based on performance in 2017, Mr. Salvadori received a bonus in February 2018 of $733,700, which was equal to 108% of his target bonus. This payout reflects 102.9% achievement of his regional sales goal, 109.4% achievement of his regional margin goal, and achievement of his other financial and strategic goals. Mr. Salvadori's strategic and leadership goals for 2017 included achieving new product development, market share growth, and talent related goals.
Long-Term Incentives—Based on performance in 2016, Mr. Salvadori received an LTI award in February 2017 with a value of $1,772,444, which was equal to 135% of his 25th percentile LTI award guideline. Mr. Salvadori received an additional award in July 2017 with a value of $739,794$825,000 in connection with his promotion to Executive Vice President, Nutritional Products.Finance and Chief Financial Officer.
Mr. Funck's target bonus was increased to 115% of base salary in 2020 in connection with his promotion to Executive Vice President, Finance and Chief Financial Officer. Based on performance in 2017,2020, Mr. SalvadoriFunck received an LTI award in February 2018 with a value of $3,988,000, which was equal to approximately 100% of his 75th percentile LTI award guideline. This award reflects Abbott's and Mr. Salvadori's strong performance during 2017. Additional details regarding that award will be included in Abbott's 2019 proxy statement.
Michael T. Rousseau
Base Salary—No increase.
Performance Incentive Plan—Mr. Rousseau's target bonus was 125% of base salary per the St. Jude Medical merger agreement. Based on the terms of his retention agreement, Mr. Rousseau received a prorated bonus in February 2018 of $643,800.
Long-Term Incentives—Mr. Rousseau did not receive an LTI award in 2017.
Eric S. Fain
Base Salary—No increase.
Performance Incentive Plan—Mr. Fain's target bonus was 100% of base salary per the St. Jude Medical merger agreement. Based on the terms of his retention agreement, Mr. Fain received a prorated bonus in February 2018 of $174,700.
Long-Term Incentives—Based on the terms of his retention agreement, Mr. Fain received an LTI award in February 2017 with a value of $2,049,8572021 which was equal to the value of his previous LTI grant at St. Jude Medical.
Abbott Laboratories 37
2017 PERFORMANCE GOALS FOR PERFORMANCE INCENTIVE PLAN
DISCUSSION OF NAMED OFFICERS' ACHIEVEMENT OF GOALS DURING 2017
The results shown below reflect the 2017 financial goals and results for the Named Officers.calculated as follows:
Executive | Metric | 2016 Results Achieved | 2017 Expected Results | 2017 Results Achieved | Percentage Achieved | Percentage Increase(1) 2017 vs. 2016 | | | | | | 2019 | | | | | | | 2020 GOAL MEASUREMENT | | | 2020 | | | | | | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
Miles D. White | Adjusted Sales(2) | $20.5 Billion | $26.4 Billion | $26.7 Billion | 101% | 31% | | GOAL | | RESULTS ACHIEVED | | GOAL WEIGHT | | THRESHOLD | | TARGET | | MAXIMUM | | RESULTS ACHIEVED | | GOAL SCORE | ||||||||||||||||||||||||||
Adjusted Diluted EPS(3) | $2.20 | $2.45 | $2.50 | 102% | 14% | | FINANCIAL METRICS(1) | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||
Adjusted Net Income(3) | $3.28 Billion | $4.3 Billion | $4.4 Billion | 102% | 34% | | Adjusted Sales(2) | | | | $31.96B | | | | 10% | | | | $34.02B | | | | $34.18B | | | | $34.33B | | | | $34.92B | | | | 15.0% | | | |||||||||||
Adjusted Return on Assets(3),(4) | 9.8% | 7.5% | 7.5% | 100% | (4) | |||||||||||||||||||||||||||||||||||||||||||
Adjusted Free Cash Flow(3) | $2.1 Billion | $2.7 Billion | $4.4 Billion | 163% | 113% | |||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||
Brian B. Yoor | Adjusted Sales(2) | $20.5 Billion | $26.4 Billion | $26.7 Billion | 101% | 31% | | Adjusted Diluted EPS | | | $3.24 | | | 20% | | | $3.55 | | | $3.60 | | | $3.65 | | | $3.65 | | | 30.0% | | ||||||||||||||||||
| | Adjusted Diluted EPS(3) | $2.20 | $2.45 | $2.50 | 102% | 14% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||
| | Adjusted Free Cash Flow(3) | $2.1 Billion | $2.7 Billion | $4.4 Billion | 163% | 113% | | Free Cash Flow | | | | $4.5B | | | | 10% | | | | $4.3B | | | | $4.6B | | | | $4.8B | | | | $5.7B | | | | 15.0% | | | |||||||||
Hubert L. Allen | Adjusted Sales(2) | $20.5 Billion | $26.4 Billion | $26.7 Billion | 101% | 31% | ||||||||||||||||||||||||||||||||||||||||||
Adjusted Diluted EPS(3) | $2.20 | $2.45 | $2.50 | 102% | 14% | |||||||||||||||||||||||||||||||||||||||||||
Adjusted Free Cash Flow(3) | $2.1 Billion | $2.7 Billion | $4.4 Billion | 163% | 113% | |||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||
Robert B. Ford | Adjusted Division Net Sales(2) | $5.2 Billion | $10.4 Billion | $10.4 Billion | 100% | 100% | | Achieve Key Treasury and Tax Metrics(3) | | | — | | | 15% | | | Target | | | Target | | | Target | | | Achieved | | | 15.0% | | ||||||||||||||||||
| | Adjusted Division Margin(3) | $1,335 Million | $2,992 Million | $3,018 Million | 101% | 126% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||
| | | | | | | | | | | Financial Total | | | 75.0% | | |||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted Sales exclude the impact of foreign exchange on actual sales relative to the goal target. Adjusted Diluted EPS is diluted earnings per common share from continuing operations excluding specified items. Free Cash Flow equals Operating Cash Flow less acquisitions of property and equipment.
| | | | | | | | | | | | |
| STRATEGIC METRICS | | | | | |||||||
| | | | | | | | | | | | |
| Goal (10% weight): Execute integration milestones related to Cardiovascular Entity/Enterprise Resource Planning, global expense reporting and management, and site strategies. Result: Achieved | | ||||||||||
| | | | | | | | | | | | |
| Goal (10% weight): Reduce operational risk associated with aging technology through specific application remediation, upgrading and replacing critical applications, and remediating unsupported infrastructure. Result: Mostly achieved | | | |||||||||
| | | | | | | | | | | | |
| Goal (10% weight): Execute improvements to key financial processes, including financial planning, monthly close, capital expenditure, and Financial Policies and Procedures. Result: Mostly achieved | | ||||||||||
| | | | | | | | | | | | |
45
| | |
Given the course of the pandemic, the strategic goals set in February 2020 shifted immediately to focus on pandemic response. Our extraordinary response was focused on 3 specific goals, all of which were overachieved.
| STRATEGIC METRICS | | | | 2020 RESULTS | | | | GOAL SCORE | | ||||||
| Goal (10% weight): Develop COVID-19 related tests across Abbott's broad diagnostic portfolios. | | | | Overachieved: Abbott developed 12 tests, half of which were approved for use during the first six months of 2020. | | | | 15.0% | | | |||||
| | | | | | | | | | | | | | | | |
| Goal (10% weight): Expand manufacturing capacity for COVID-19 tests in both the U.S. and internationally. | | | Overachieved: Authorized $639MM of spending to expand manufacturing at existing facilities and create two new facilities (in IL and ME). Sold 424MM COVID-19 tests during 2020, representing $3.9B in sales. | | | 15.0% | | ||||||||
| | | | | | | | | | | | | | | | |
| | Goal (10% weight): Ensure supply chain and business continuity for existing base business. | | | | Overachieved: Through proactive and continuous communication with suppliers and vendors, Abbott experienced no disruptions to our supply chain. | | | | 15.0% | | | ||||
| | | | | | | | | | | | | | | | |
| TALENT AND SUCCESSION METRICS | | | | 2020 RESULTS | | | | GOAL SCORE | | ||||||
| Goal (15% weight): Meet talent and succession planning targets. | | | Achieved | | | 15.0% | | ||||||||
| | | | | | | | | | | | | | | | |
| | | | | | Strategic and Talent Total | | | | 60.0% | | | ||||
| | | | | | | | | | | | | | | | |
| | | | | | Financial Total (prior page) | | | | 75.0% | | | ||||
| | | | | | | | | | | | | | | | |
| | | | | | Total Goal Score | | | | 135.0% | | | ||||
| | | | | | | | | | | | | | | | |
BASE SALARY | BONUS TARGET % | TOTAL GOAL SCORE | AWARD PAYOUT | |||||||||
$825,000 | x | 115% | x | 135.0% | = | $1,280,800 | ||||||
| | | | | | | | | | | | |
46
| | |
Based on the Committee's review of Abbott and individual performance through 2019, Mr. Funck received an LTI award in February 2020 with a value of $4,432,500, which was equal to 112.5% of his LTI award guideline. Additional calculation details are as follows:
LTI AWARD GUIDELINE | LTI ADJUSTMENT | AWARD ALLOCATION | AWARD VALUE | |||||||||
$3,940,000 | x | 112.5% | x | 50% Stock Options(1) | = | $2,216,250 | ||||||
| | | | | | | | | | | | |
| | 50% Performance Restricted Shares(2) | $2,216,250 | |||||||||
| | | | | | | | | | | | |
Total | $4,432,500 | |||||||||||
| | | | | | | | | | | | |
INDIVIDUAL LTI PERFORMANCE ASSESSMENT | | |||||||||||||||||||
METRIC | | 2017 | | 2018 | | 2019 | | OVERALL | | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
Sales and Market Growth Contribution | | Met (0) | | Exceeded (+1) | | Exceeded (+1) | | +2 | | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
Margin Contribution | Exceeded (+1) | Exceeded (+1) | Exceeded (+1) | +3 | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| Strategic Financial Contribution | | Exceeded (+1) | | Met (0) | | Met (0) | | +1 | | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | +6 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| Preliminary Adjustment | | 125% | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Impact(3) | - | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| LTI Adjustment | | 112.5% | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
LTI ADJUSTMENT LEGEND | | |||||||||||||||||||
| PRELIMINARY ADJUSTMENT | | IMPACT | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| TOTAL | | RESULT | | IMPACT ON BUSINESS PRIORITIES | | SCORE | | RESULT | | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
+4 or More | | 125% | | High Impact | | ++ | | +25% or More | | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
+1 to +3 | 110% | Medium/High Impact | + | Up to +25% | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| 0 | | 100% | | Medium Impact | | = | | 0% | | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
-1 or -2 | 90% | Medium/Low Impact | - | Up to -25% | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| -3 or Less | | 75% | | Low Impact | | -- | | -25% or More | | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
47
| HUBERT L. ALLEN Executive Vice President, General Counsel and Secretary | |
| ||
| | |
Mr. Allen's annual base salary was increased to $760,000 in March 2020.
Based on performance in 2020, Mr. Allen received a bonus in February 2021 which was calculated as follows:
| | | | | 2019 | | | | | | | 2020 GOAL MEASUREMENT | | | 2020 | | | | | | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| GOAL | | RESULTS ACHIEVED | | GOAL WEIGHT | | THRESHOLD | | TARGET | | MAXIMUM | | RESULTS ACHIEVED | | GOAL SCORE | |||||||||||||||||
| FINANCIAL METRICS(1) | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Adjusted Sales(2) | | | | $31.96B | | | | 10% | | | | $34.02B | | | | $34.18B | | | | $34.33B | | | | $34.92B | | | | 15.0% | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Adjusted Diluted EPS | | | $3.24 | | | 15% | | | $3.55 | | | $3.60 | | | $3.65 | | | $3.65 | | | 22.5% | | |||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Free Cash Flow | | | | $4.5B | | | | 10% | | | | $4.3B | | | | $4.6B | | | | $4.8B | | | | $5.7B | | | | 15.0% | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Other Financial Returns(3) | | | — | | | 10% | | | Target | | | Target | | | Target | | | Achieved | | | 10.0% | | |||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| STRATEGIC METRICS | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Goal (30% weight): Resolve certain key litigation matters and investigations. | | | |||||||||||||||||||||||||||||
| Result: Achieved | | | 30.0% | | |||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Goal (10% weight): Achieve intellectual property strategy initiatives across all Abbott divisions. | | | | | ||||||||||||||||||||||||||
| | Result: Achieved | | | | 10.0% | | | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| TALENT AND SUCCESSION METRICS | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Goal (15% weight): Meet talent and succession planning targets. | | | |||||||||||||||||||||||||||||
| Result: Mostly achieved | | | 12.5% | | |||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Total | | | 115.0% | | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
BASE SALARY | BONUS TARGET % | TOTAL GOAL SCORE | AWARD PAYOUT | |||||||||
$760,000 | x | 105% | x | 115% | = | $917,700 | ||||||
| | | | | | | | | | | | |
48
| | |
Based on the Committee's review of Abbott and individual performance through 2019, Mr. Allen received an LTI award in February 2020 with a value of $3,750,000, which was equal to 125% of his LTI award guideline. Additional calculation details are as follows:
LTI AWARD GUIDELINE | LTI ADJUSTMENT | AWARD ALLOCATION | AWARD VALUE | |||||||||
$3,000,000 | x | 125% | x | 50% Stock Options(1) | = | $1,875,000 | ||||||
| | | | | | | | | | | | |
| | 50% Performance Restricted Shares(2) | $1,875,000 | |||||||||
| | | | | | | | | | | | |
Total | $3,750,000 | |||||||||||
| | | | | | | | | | | | |
INDIVIDUAL LTI PERFORMANCE ASSESSMENT | | |||||||||||||||||||
| METRIC | | 2017 | | 2018 | | 2019 | | OVERALL | | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
Sales and Market Growth Contribution | | Met (0) | | Exceeded (+1) | | Exceeded (+1) | | +2 | | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
Margin Contribution | Exceeded (+1) | Exceeded (+1) | Exceeded (+1) | +3 | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| Strategic Financial Contribution | | Exceeded (+1) | | Met (0) | | Met (0) | | +1 | | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | +6 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | LTI Adjustment | | 125% | | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
LTI ADJUSTMENT LEGEND | ||
TOTAL | RESULT | |
| | |
+4 or More | 125% | |
| | |
+1 to +3 | 110% | |
| | |
0 | 100% | |
| | |
-1 or -2 | 90% | |
| | |
-3 or Less | 75% | |
| | |
49
| JOHN F. GINASCOL Executive Vice President, Core Diagnostics | |
| ||
| | |
Mr. Ginascol's annual base salary was increased to $710,000 in March 2020.
Based on performance in 2020, Mr. Ginascol received a bonus in February 2021 which was calculated as follows:
| | | | | 2019 | | | | | | | 2020 GOAL MEASUREMENT | | | 2020 | | | | | | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| GOAL | | RESULTS ACHIEVED | | GOAL WEIGHT | | THRESHOLD | | TARGET | | MAXIMUM | | RESULTS ACHIEVED | | GOAL SCORE | |||||||||||||||||
| FINANCIAL METRICS(1) | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Adjusted Division Net Sales(2) | | | | $4.8B | | | | 20% | | | | $4.97B | | | | $5.03B | | | | $5.08B | | | | $4.52B | | | | 0.0% | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Adjusted Division Margin(3) | | | — | | | 20% | | | Target | | | Target | | | 101.7% of Target | | | 72.5% of Target | | | 0.0% | | |||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Adjusted Division Gross Margin(3) | | | | — | | | | 5% | | | | 99.6% of Target | | | | Target | | | | 103.9% of Target | | | | 91.1% of Target | | | | 0.0% | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Gross Margin Improvement(3) | | | — | | | 5% | | | 90.0% of Target | | | Target | | | 110.0% of Target | | | 105.7% of Target | | | 6.5% | | |||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Market Share(3) | | | | — | | | | 10% | | | | <Target | | | | Target | | | | Target | | | | Partially Achieved | | | | 6.0% | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Adjusted Division Free Cash Flow(3) | | | — | | | 5% | | | Target | | | Target | | | 103.0% of Target | | | 88.7% of Target | | | 0.0% | | |||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Cash Conversion Cycle(3) | | | | — | | | | 5% | | | | 5 days over target | | | | Target | | | | Target | | | | 5 days over Target | | | | 2.5% | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| STRATEGIC METRICS | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Goal (20% weight): Execute specified reliability improvements, product submissions and launches, network strategies, and achieve test of record and utilization targets. Result: Achieved. | | | 20.0% | | |||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| TALENT AND SUCCESSION METRICS | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Goal (10% weight): Meet talent and succession planning targets. Result: Achieved. | | | | 10.0% | | | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Total | | | 45.0% | | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
50
| | |
Mr. Ginascol and his business contributed significant resources and expertise, particularly in R&D and manufacturing, to assist the Rapid Diagnostics Infectious Disease Developed Market (IDDM) business as they developed and produced COVID-19 tests. Given the significant contributions to both businesses, the Committee determined Mr. Ginascol's payout based on the sales and margin of the two businesses combined.
| | | | | | | | | 2020 GOAL MEASUREMENT | | | 2020 | | | | | | |||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| GOAL | | GOAL WEIGHT | | THRESHOLD | | TARGET | | MAXIMUM | | RESULTS ACHIEVED | | GOAL SCORE | |||||||||||||||
| Adjusted Division Net Sales Core + IDDM businesses(3) | | | | 20% | | | | 98.6% of Target | | | | Target | | | | 100.9% of Target | | | | 129.7% of Target | | | | 30.0% | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Adjusted Division Margin Core + IDDM businesses(3) | | | 20% | | | Target | | | Target | | | 101.8% of Target | | | 163.6% of Target | | | 30.0% | | ||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Sales and Margin Total | | | | 60.0% | | | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Total (prior page) | | | 45.0% | | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Total Goal Score | | | | 105.0% | | | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
BASE SALARY | BONUS TARGET % | TOTAL GOAL SCORE | AWARD PAYOUT | |||||||||
$710,000 | x | 115% | x | 105.0% | = | $857,300 | ||||||
| | | | | | | | | | | | |
51
38
| | |
Based on the Committee's review of Abbott Laboratoriesand individual performance through 2019, Mr. Ginascol received an LTI award in February 2020 with a value of $3,308,000, which was equal to 100% of his LTI award guideline. Additional calculation details are as follows:
LTI AWARD GUIDELINE | LTI ADJUSTMENT | AWARD ALLOCATION | AWARD VALUE | |||||||||
$3,308,000 | x | 100% | x | 50% Stock Options(1) | = | $1,654,000 | ||||||
| | | | | | | | | | | | |
| | 50% Performance Restricted Shares(2) | $1,654,000 | |||||||||
| | | | | | | | | | | | |
Total | $3,308,000 | |||||||||||
| | | | | | | | | | | | |
INDIVIDUAL LTI PERFORMANCE ASSESSMENT | | |||||||||||||||||||
| METRIC | | 2017 | | 2018 | | 2019 | | OVERALL | | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
Sales and Market Growth Contribution | | Did Not Meet (-1) | | Exceeded (+1) | | Exceeded (+1) | | +1 | | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
Margin Contribution | Did Not Meet (-1) | Met (0) | Did Not Meet (-1) | -2 | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| Strategic Financial Contribution | | Exceeded (+1) | | Met (0) | | Did Not Meet (-1) | | 0 | | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | -1 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| Preliminary Adjustment | | 90% | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Impact | + | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| LTI Adjustment | | 100% | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
LTI ADJUSTMENT LEGEND | | |||||||||||||||||||
| PRELIMINARY ADJUSTMENT | | IMPACT | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| TOTAL | | RESULT | | IMPACT ON BUSINESS PRIORITIES | | SCORE | | RESULT | | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
+4 or More | | 125% | | High Impact | | ++ | | +25% or More | | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
+1 to +3 | 110% | Medium/High Impact | + | Up to +25% | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| 0 | | 100% | | Medium Impact | | = | | 0% | | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
-1 or -2 | 90% | Medium/Low Impact | - | Up to -25% | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| -3 or Less | | 75% | | Low Impact | | -- | | -25% or More | | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
52
| DANIEL G. SALVADORI Executive Vice President, Nutritional Products | |
| ||
| | |
Mr. Salvadori's annual base salary of $710,000 did not change in 2020.
Based on performance in 2020, Mr. Salvadori received a bonus in February 2021 which was calculated as follows:
| | | | | 2019 | | | | | | | 2020 GOAL MEASUREMENT | | | 2020 | | | | | | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| GOAL | | RESULTS ACHIEVED | | GOAL WEIGHT | | THRESHOLD | | TARGET | | MAXIMUM | | RESULTS ACHIEVED | | GOAL SCORE | |||||||||||||||||
| FINANCIAL METRICS(1) | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Adjusted Division Net Sales(2) | | | | $7.47B | | | | 20% | | | | $7.54B | | | | $7.63B | | | | $7.74B | | | | $7.68B | | | | 24.2% | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Adjusted Division Margin(3) | | | — | | | 20% | | | Target | | | Target | | | 103.2% of Target | | | 101.3% of Target | | | 24.2% | | |||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Adjusted Division Gross Margin(3) | | | | — | | | | 5% | | | | 99.8% of Target | | | | Target | | | | 103.7% of Target | | | | 100.0% of Target | | | | 5.0% | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Gross Margin Improvement(3) | | | — | | | 5% | | | Target | | | Target | | | 110.0% of Target | | | 100.0% of Target | | | 5.0% | | |||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Market Share(3) | | | | — | | | | 10% | | | | Target | | | | Target | | | | Target | | | | At Target | | | | 10.0% | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Adjusted Division Free Cash Flow(3) | | | — | | | 5% | | | Target | | | Target | | | 102.9% of Target | | | 119.7% of Target | | | 7.5% | | |||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Cash Conversion Cycle(3) | | | | — | | | | 5% | | | | 5 days over Target | | | | Target | | | | Target | | | | 1 day less than Target | | | | 5.0% | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| STRATEGIC METRICS | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Goal (20% weight): Execute specified product launches, innovation sales, key country initiatives, ingredient supply strategy, and manufacturing capacity initiatives. | | | | ||||||||||||||||||||||||||||
| Result: Achieved. | | | 20.0% | | |||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| TALENT AND SUCCESSION METRICS | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Goal (10% weight): Meet talent and succession planning targets. | | | | | | | |||||||||||||||||||||||||
| Result: Achieved. | | | | 10.0% | | | |||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Total | | | 110.9% | | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
BASE SALARY | BONUS TARGET % | TOTAL GOAL SCORE | AWARD PAYOUT | |||||||||
$710,000 | x | 115% | x | 110.9% | = | $905,500 | ||||||
| | | | | | | | | | | | |
53
| | |
Based on the Committee's review of Abbott and individual performance through 2019, Mr. Salvadori received an LTI award in February 2020 with a value of $3,804,200, which was equal to 115% of his LTI award guideline. Additional calculation details are as follows:
LTI AWARD GUIDELINE | LTI ADJUSTMENT | AWARD ALLOCATION | AWARD VALUE | |||||||||
$3,308,000 | x | 115% | x | 50% Stock Options(1) | = | $1,902,100 | ||||||
| | | | | | | | | | | | |
| | 50% Performance Restricted Shares(2) | $1,902,100 | |||||||||
| | | | | | | | | | | | |
Total | $3,804,200 | |||||||||||
| | | | | | | | | | | | |
INDIVIDUAL LTI PERFORMANCE ASSESSMENT | | |||||||||||||||||||
METRIC | | 2017 | | 2018 | | 2019 | | OVERALL | | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
Sales and Market Growth Contribution | | Met (0) | | Exceeded (+1) | | Exceeded (+1) | | +2 | | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
Margin Contribution | Met (0) | Met (0) | Exceeded (+1) | +1 | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| Strategic Financial Contribution | | Met (0) | | Met (0) | | Exceeded (+1) | | +1 | | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | +4 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | Preliminary Adjustment | | 125% | | ||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Impact | - | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | LTI Adjustment | | 115% | | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
LTI ADJUSTMENT LEGEND | | |||||||||||||||||||
| PRELIMINARY ADJUSTMENT | | IMPACT | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| TOTAL | | RESULT | | IMPACT ON BUSINESS PRIORITIES | | SCORE | | RESULT | | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
+4 or More | | 125% | | High Impact | | ++ | | +25% or More | | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
+1 to +3 | 110% | Medium/High Impact | + | Up to +25% | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| 0 | | 100% | | Medium Impact | | = | | 0% | | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
-1 or -2 | 90% | Medium/Low Impact | - | Up to -25% | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| -3 or Less | | 75% | | Low Impact | | -- | | -25% or More | | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
54
| MILES D. WHITE Executive Chairman of the Board, and Director | |
| ||
| | |
Mr. White previously served as Chairman and Chief Executive Officer. Mr. White stepped down as Chief Executive Officer on March 31, 2020.
Mr. White has an annual base salary of $1,900,000.
Mr. White is eligible for a 2020 annual incentive plan payout for the 3 months he served as CEO. Based on Abbott and Mr. White's performance, the Committee awarded Mr. White a payout of 150% of his target.
Based on the Committee's review of Abbott and individual performance through 2019, Mr. White received an LTI award in February 2020 with a value of $12,000,000, which was equal to 96% of his LTI award guideline. Additional calculation details are as follows:
LTI AWARD GUIDELINE | LTI ADJUSTMENT | AWARD ALLOCATION | AWARD VALUE | |||||||||
$12,500,000 | x | 96% | x | 50% Stock Options(1) | = | $6,000,000 | ||||||
| | | | | | | | | | | | |
| | 50% Performance Restricted Shares(2) | $6,000,000 | |||||||||
| | | | | | | | | | | | |
Total | $12,000,000 | |||||||||||
| | | | | | | | | | | | |
INDIVIDUAL LTI PERFORMANCE ASSESSMENT | | |||||||||||||||||||
METRIC | | 2017 | | 2018 | | 2019 | | OVERALL | | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
Sales and Market Growth Contribution | | Met (0) | | Exceeded (+1) | | Exceeded (+1) | | +2 | | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
Margin Contribution | Exceeded (+1) | Exceeded (+1) | Exceeded (+1) | +3 | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| Strategic Financial Contribution | | Exceeded (+1) | | Exceeded (+1) | | Met (0) | | +2 | | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | +7 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | Preliminary Adjustment | | 125% | | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
Impact(3) | - | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | LTI Adjustment | | 96% | | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
55
| | |
| | | | | | | | | | | | | | | | | | | | |
LTI ADJUSTMENT LEGEND | | |||||||||||||||||||
| PRELIMINARY ADJUSTMENT | | IMPACT | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| TOTAL | | RESULT | | IMPACT ON BUSINESS PRIORITIES | | SCORE | | RESULT | | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
+4 or More | | 125% | | High Impact | | ++ | | +25% or More | | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
+1 or +3 | 110% | Medium/High Impact | + | Up to +25% | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| 0 | | 100% | | Medium Impact | | = | | 0% | | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
-1 or -2 | 90% | Medium/Low Impact | - | Up to -25% | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| -3 or Less | | 75% | | Low Impact | | -- | | -25% or More | | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
56
| BRIAN B. YOOR Former Executive Vice President, Finance and Chief Financial Officer | |
| ||
| | |
Mr. Yoor retired from Abbott on February 29, 2020.
Mr. Yoor had an annual base salary of $825,000.
Based on the Committee's review of Abbott and individual performance through 2019 and his upcoming retirement, Mr. Yoor received an LTI award in February 2020 with a value of $2,262,500. This award was paid 50% in stock options(1) and 50% in performance restricted shares(2)
57
Each of the benefits described below was designed to support the Company's objective of providing a competitive total pay program. Individual benefits do not directly affect decisions regarding other benefits or pay components, except to the extent that benefits and pay components must, in aggregate, be competitive, as previously discussed.competitive.
| | |||||
Retirement Benefits | The named officers participate in | |||||
Since officers' Supplemental Pension Plan benefits cannot be secured in a manner similar to qualified plans, which are held in trust, officers receive an annual cash payment equal to the increase in present value of their Supplemental Pension Plan benefit. Officers have the option of depositing these annual payments to an individually established grantor trust, net of tax withholdings. Deposited amounts may be credited with the difference between the officers' actual annual trust earnings and the rate used to calculate trust funding (currently 8%) while they are employed. Amounts deposited in the individual trusts are not tax deferred. | ||||||
Officers do not receive tax gross-ups on their grantor trusts. The manner in which the grantor trust will be distributed to an officer upon retirement from the Company generally follows the manner elected by the officer under the Annuity Retirement Plan. Should an officer (or the officer's spouse, depending upon the pension distribution method elected by the officer under the Annuity Retirement Plan) live beyond the actuarial life expectancy age used to determine the Supplemental Pension Plan benefit and, therefore, exhaust the trust balance, the Supplemental Pension Plan benefit will be paid by the Company. | ||||||
| | | | | | |
Deferred Compensation | Officers of the Company, like all U.S. employees, are eligible to defer a portion of annual base salary and bonus (in certain cases), on a pre-tax basis, to the Company's qualified 401(k) plan, up to the IRS contribution limits. Officers are also eligible to defer up to 18% of their base salary, less contributions to the 401(k) plan, to a non-qualified | |||||
| | | | | | |
Abbott Laboratories 3958
| | |||||
Change in Control Arrangements | Mr. White | |||||
| | | | | | |
Financial Planning | Named officers are eligible to receive up to $10,000 of fees annually associated with estate planning advice, tax preparation, and general financial planning. If an officer chooses to utilize this benefit, fees for services received up to the annual allocation are paid by the Company and are treated as imputed income to the officer, who then is responsible for payment of all taxes due on the fees paid by the Company. | |||||
| | | | | | |
Company Automobile | Named officers are eligible for use of a Company-leased vehicle, with a lease term of 50 months. Seventy-five percent (75%) of the cost of the vehicle is imputed to the officer as income for federal income tax purposes. | |||||
| | | | | | |
Company Aircraft | Non-business-related flights on corporate aircraft by | |||||
| | | | | | |
Disability Benefit | In addition to Abbott's standard disability benefits, the U.S. named officers are eligible for a monthly long-term disability benefit, which is described in greater detail in the "Potential Payments Upon Termination or Change in Control" section of this proxy. | |||||
| | | | | | |
SHARE OWNERSHIP AND RETENTION GUIDELINES
To further promote sustained shareholder returnreturns and to ensure the Company's executives remain focused on both short- and long-term objectives, the Company has established share ownership guidelines. Each officer has five years from the date appointed/elected to his/her position to achieve the ownership level associated with the position.
|
| | | |||||
|
| | 6 times base salary | | ||||
| | | | | | | | |
| Chief Executive Officer | 6 times base salary | ||||||
| | | | | | | | |
| Executive Vice Presidents | | 3 times base salary | | ||||
| | | | | | | | |
Senior Vice Presidents | 3 times base salary | |||||||
| | | | | | | | |
| All other officers | | 2 times base salary | | ||||
| | | | | | | | |
Any officer who has not achieved at least 50% of the stockshare ownership guideline after three years in their current position will be required to hold 50% of future equity awards until they meet the ownership guideline.
All named officers with 5 years'years tenure in their current position meet or exceed the guidelines.
59
Directors and officers are prohibited from entering into or engaging in any financial transaction that is designed to reduce the financial risk associated with owning Abbott stock.shares. These financial transactions include, but are not limited to, engaging in short sales, derivative transactions (such as equity swaps, straddles, puts, or calls), and hedging or monetizing transactions (such as collars, exchange funds, or prepaid forward variable contracts) that are linked directly to Abbott stock.
40 Abbott Laboratories
Directors and officers are prohibited from holding Abbott stock in a margin account, pledging Abbott stock, or otherwise securing any of their obligations by assigning Abbott stock as collateral. The Compensation Committee, or its delegate, may grant an exception provided that:
In 2015, following discussions by management with shareholders, the Compensation Committee implemented a recoupment policy. The Compensation Committee has broad discretion to administer and implement the Company's policy and seek recoupment of equity or cash incentive awards if it determines that a senior executive engaged in misconduct or failed in a supervisory capacity, resulting in a material violation of law or Abbott policy that causes significant financial harm to Abbott. The Compensation Committee may recover incentive compensation awarded to a senior executive in the prior three years or reduce future awards. The policy will not affect awards made prior to its effective date or following a change in control.
The Committee considers the deductibility of executive compensation under Internal Revenue Code Section 162(m) and reserves the flexibility to take actions that may be based on considerations in addition to tax deductibility. The Committeemaking its compensation decisions, but believes that shareholder interests are best served by not restricting the Committee's discretion and flexibility in crafting compensation programs, even if such programs may result in certain non-deductible compensation expenses. Accordingly, Abbott may provide compensation that is not deductible. Section 162(m) (as amended in 2017 by the Tax Cuts and Jobs Act) generally disallows, subject to certain exceptions, a federal income tax deduction to public companies for compensation in excess of $1 million per year paid to an individual who was the company's chief executive officer or chief financial officer at any time during the year, or was one of the company's three other most highly compensated executive officers as listed in the proxy.
COMPENSATION COMMITTEE REPORT |
The Compensation Committee of the Board is primarily responsible for reviewing, approving, and overseeing Abbott's compensation plans and practices, and works with management and the Committee's independent consultant to establish Abbott's executive compensation philosophy and programs. The Committee has reviewed and discussed the Compensation Discussion and Analysis with management and has recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.
Compensation Committee
R. S. Austin, Chair
M. A. Kumbier
E. M. Liddy
P. N. Novakovic
W. A. OsbornS. C. Scott III
Abbott Laboratories 4160
COMPENSATION RISK ASSESSMENT |
During 2017,2020, Abbott conducted its annual risk assessment of its compensation policies and practices for employees and executives. Abbott's risk assessment is reinforced by Abbott's adherence to a number of industry-leading best practices, including:
Based on this assessment, Abbott determined its compensation and benefit programs appropriately align employees' compensation and performance without incentivizing risky behaviors. Any risk arising from its compensation policies and practices is not reasonably likely to have a material adverse effect on Abbott or its shareholders.
The following factors were among those considered:
42 Abbott Laboratories
61
This assessment was discussed with the Compensation Committee and its independent compensation consultant. The Committee and the consultant both agreed with the assessment.
Abbott Laboratories 4362
SUMMARY COMPENSATION TABLE |
The following table summarizes compensation awarded to, earned by, or paid to the named officers. The section of the proxy statement captioned, "Compensation Discussion and Analysis—How Executive Pay Decisions Are Made"Basis for Compensation Decisions" describes in greater detail the information reported in this table.
Name and Principal Position | Year | Salary ($) | | Bonus ($) | Stock Awards ($)(4) | Option Awards ($)(5) | Non-Equity Incentive Plan Compensation ($)(6) | Change in Pension Value and Non-qualified Deferred Compensation Earnings ($)(7) | All Other Compensation ($)(8) | Total ($) | Total Without Change in Pension Value ($)(9) | | Name and Principal Position | Year | | Salary | | Stock Awards(2) | | Option Awards(3) | | Non-Equity Incentive Plan Compensation(4) | | Change in Pension Value and Non-qualified Deferred Compensation Earnings(5) | | All Other Compensation(6) | | SEC Total | | Total Without Change in Pension Value ($)(7) | | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||
| Robert B. Ford, | | 2020 | | $ | 1,298,462 | | $ | 5,623,995 | | $ | 5,624,993 | | | $ | 3,675,000 | | | $ | 4,150,264 | | | $ | 77,872 | | | $ | 20,450,586 | | $ | 16,549,550 | | |||||||||||||||||||||||||||
| President and Chief Executive | | 2019 | | 1,000,000 | | 3,475,992 | | 3,476,054 | | | 1,562,500 | | | 2,311,499 | | | 71,841 | | | 11,897,886 | | 9,777,514 | | |||||||||||||||||||||||||||||||||||
| Officer, and Director | | 2018 | | 784,250 | | 2,691,621 | | 2,691,897 | | | 1,297,500 | | | 382,771 | | | 279,213 | | | 8,127,252 | | 7,821,493 | | |||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||
| | Robert E. Funck, Jr., | | 2020 | | 813,462 | | 2,215,867 | | 2,216,247 | | | 1,280,800 | | | 3,100,265 | | | 173,568 | | | 9,800,209 | | 7,069,425 | | ||||||||||||||||||||||||||||||||||
| | Executive Vice President, Finance | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | and Chief Financial Officer | | | | | | | | | | | | | | | ||||||||||||||||||
Miles D. White, | 2017 | $1,900,000 | $ | 0 | $4,099,523 | $4,099,998 | $4,500,000 | $3,350,902 | $ 1,020,596 | $18,971,019 | $16,772,295 | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||
Chairman of the | 2016 | 1,900,000 | 0 | 5,249,288 | 5,249,999 | 3,200,000 | 3,860,715 | 825,589 | 20,285,591 | 17,362,394 | | Hubert L. Allen, | | 2020 | | 751,346 | | 1,874,607 | | 1,874,988 | | | 917,700 | | | 2,904,940 | | | 154,596 | | | 8,478,177 | | 5,919,894 | | ||||||||||||||||||||||||
Board, Chief | 2015 | 1,900,000 | 0 | 6,247,971 | 6,249,997 | 3,300,000 | 612,230 | 1,091,506 | 19,401,704 | 19,401,704 | | Executive Vice President, | | 2019 | | 710,000 | | 2,199,962 | | 2,199,990 | | | 879,700 | | | 1,429,523 | | | 66,905 | | | 7,486,080 | | 6,386,933 | | ||||||||||||||||||||||||
Executive Officer | | General Counsel and Secretary | | 2018 | | 706,709 | | 2,691,621 | | 2,691,897 | | | 902,000 | | | 205,233 | | | 120,316 | | | 7,317,776 | | 7,278,480 | | ||||||||||||||||||||||||||||||||||
and Director | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||
| Brian B. Yoor, | 2017 | 643,269 | | 0 | 877,378 | 877,498 | 1,062,400 | 1,013,539 | 62,990 | 4,537,074 | 3,553,412 | | | John F. Ginascol, | | 2020 | | 708,269 | | 1,653,678 | | 1,653,987 | | | 857,300 | | | 1,781,066 | | | 112,729 | | | 6,767,029 | | 5,208,537 | | |||||||||||||||||||||
| Executive Vice President, | 2016 | 584,231 | | 0 | 934,841 | 934,999 | 622,800 | 453,273 | 60,223 | 3,590,367 | 3,142,977 | | | Executive Vice President, | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||
| Finance and Chief | 2015 | 437,884 | | 0 | 841,779 | 833,069 | 427,500 | 131,926 | 40,493 | 2,712,651 | 2,583,215 | | | Core Diagnostics | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||
| Financial Officer | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||
| Daniel G. Salvadori, | | 2020 | | 710,000 | | 1,901,708 | | 1,902,099 | | | 905,500 | | | 477,011 | | | 79,421 | | | 5,975,739 | | 5,518,569 | | |||||||||||||||||||||||||||||||||||
Hubert L. Allen, | 2017 | 690,100 | 0 | 1,072,361 | 1,072,500 | 1,015,200 | 947,237 | 71,146 | 4,868,544 | 4,043,026 | | Executive Vice President, | | 2019 | | 704,923 | | 2,351,989 | | 2,351,986 | | | 903,400 | | | 395,710 | | | 59,806 | | | 6,767,814 | | 6,388,821 | | ||||||||||||||||||||||||
Executive Vice President, | | Nutritional Products | | 2018 | | 675,038 | | 1,993,798 | | 1,993,992 | | | 803,200 | | | 53,668 | | | 434,514 | | | 5,954,210 | | 5,907,979 | | ||||||||||||||||||||||||||||||||||
General Counsel and Secretary | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||
| Robert B. Ford, | 2017 | 675,000 | | 0 | 974,870 | 974,999 | 1,066,400 | 949,748 | 60,891 | 4,701,908 | 3,797,358 | | | Miles D. White, | | 2020 | | 1,900,000 | | 5,998,934 | | 5,999,997 | | | 1,250,000 | | | 3,415,343 | | | 1,264,110 | | | 19,828,384 | | 18,799,774 | | |||||||||||||||||||||
| Executive Vice President, | | | | | | | | | | | | | | Executive Chairman of the Board | | 2019 | | 1,900,000 | | 7,562,448 | | 7,562,499 | | | 4,405,625 | | | 5,707,836 | | | 664,409 | | | 27,802,817 | | 24,675,423 | | |||||||||||||||||||||
| Medical Devices | | | | | | | | | | | | | | | 2018 | | 1,900,000 | | 7,499,367 | | 7,499,996 | | | 4,779,688 | | | 1,381,845 | | | 1,193,342 | | | 24,254,238 | | 24,254,238 | | ||||||||||||||||||||||
Daniel G. Salvadori, | 2017 | 608,461 | 0 | 1,249,912 | 1,262,326 | 733,700 | 179,461 | 54,628 | 4,088,488 | 3,913,693 | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||
Executive Vice President, | | Brian B. Yoor,(1) | | 2020 | | 207,837 | | 1,231,027 | | 1,231,237 | | | 0 | | | 781,114 | | | 38,264 | | | 3,489,479 | | 2,839,222 | | ||||||||||||||||||||||||||||||||||
Nutritional Products | | Former Executive Vice President, | | 2019 | | 825,000 | | 2,449,976 | | 2,449,987 | | | 1,113,800 | | | 2,105,604 | | | 71,331 | | | 9,015,698 | | 7,031,097 | | ||||||||||||||||||||||||||||||||||
| Michael T. Rousseau(1), | 2017 | 644,231 | | 5,000,000 | (3) | 0 | 0 | 643,800 | 0 | 12,520,569 | 18,808,600 | 18,808,600 | | |||||||||||||||||||||||||||||||||||||||||||||
| President, Cardiovascular | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||||
| and Neuromodulation | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||||
Eric S. Fain(2), | 2017 | 556,971 | 0 | 3,024,589 | 1,024,998 | 174,700 | 0 | 8,549,565 | 13,330,823 | 13,330,823 | | Finance and Chief Financial Officer | | 2018 | | 796,057 | | 2,691,621 | | 2,691,897 | | | 974,600 | | | 385,178 | | | 73,483 | | | 7,612,836 | | 7,280,548 | | ||||||||||||||||||||||||
Senior Vice President, Group President, Cardiovascular and Neuromodulation | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
44 Abbott Laboratories
For Messrs. Ford, Allen, Salvadori, White, and Yoor, the amounts shown alongside the officer's name are for 2017, 2016,2020, 2019, and 2015,2018, respectively. For the other named officers,Messrs. Funck, Jr. and Ginascol, the amounts shown are for 2017.2020.
63
Abbott Laboratories Annuity Retirement Plan
R. B. Ford: $142,819 / $176,268 / ($37,501); R. E. Funck, Jr.: $256,555; H. L. Allen: $184,384 / $117,142 / ($2,013); J. F. Ginascol: $142,322; D. G. Salvadori: $45,483 / $41,282 / $3,413; M. D. White: $153,425$34,629 / $146,866$180,690 / $44,424;($87,156); and B. B. Yoor: $109,749$94,394 / $51,896$188,095 / ($2,330); H. L. Allen: $73,724; R. B. Ford: $106,226; and D. G. Salvadori: $24,698.30,841).
Abbott Laboratories Supplemental Pension Plan
R. B. Ford: $3,758,217 / $1,944,104 / $343,260; R. E. Funck, Jr.: $2,474,229; H. L. Allen: $2,373,899 / $982,005 / $41,309; J. F. Ginascol: $1,416,170; D. G. Salvadori: $411,687 / $337,711 / $42,818; M. D. White: $2,045,299$993,981 / $2,776,331$2,946,704 / ($332,475)3,700,892); and B. B. Yoor: $879,913$555,863 / $395,494$1,796,506 / $131,766; H. L. Allen: $751,794; R. B. Ford: $798,324; and D. G. Salvadori: $150,097.$363,129.
Non-Qualified Defined Contribution Plan Earnings
The totals in this column include reportable interest credited under the 1998 Abbott Laboratories Performance Incentive Plan, the Abbott Laboratories 401(k) Supplemental Plan, and the 1986 Abbott Laboratories Management Incentive Plan (although none of the named officers currently receives awards under this plan).
R. B. Ford: $249,228 / $191,127 / $77,012; R. E. Funck, Jr.: $369,481; H. L. Allen: $346,657 / $330,376 / $165,937; J. F. Ginascol: $222,574; D. G. Salvadori: $19,841 / $16,717 / $7,437; M. D. White: $1,152,178$2,386,733 / $937,518$2,580,442 / $612,230;$1,381,845; and B. B. Yoor: $29,877$130,857 / $5,883$121,003 / $2,490; H. L. Allen: $121,719; R. B. Ford: $45,198; D. G. Salvadori: $4,666.$52,890.
For Messrs. Ford, Allen, Salvadori, White, and Yoor, the amounts shown alongside the officer's name are for 2017, 2016,2020, 2019, and 2015,2018, respectively. For the other named officers,Messrs. Funck, Jr. and Ginascol, the amounts shown are for 2017.2020.
Earnings on Non-Qualified Defined Contribution Plans (net of the reportable interest included in footnote 7)5).
R. B. Ford: $8,116 / $0 / $6,125; R. E. Funck, Jr.: $106,106; H. L. Allen: $81,695 / $896 / $52,571; J. F. Ginascol: $47,348; D. G. Salvadori: $1,701 / $0 / $1,004; M. D. White: $423,890$926,052 / $306,382$105,715 / $567,345;$638,710; and B. B. Yoor: $268$26,090 / $0 / $304; H. L. Allen: $18,083; and R. B. Ford: $8,600.$3,237.
Each of the named officers' awards under the 1998 Abbott Laboratories Performance Incentive Plan is paid in cash to the officer on a current basis. Each of the named officers other than Messrs. Salvadori and Rousseau, have grantor trusts into which the awards may be deposited, net of maximum tax withholdings. Certain of theThe named officers also have grantor trusts in connection with the Abbott Laboratories 401(k) Supplemental Plan and the 1986 Abbott Laboratories Management Incentive Plan (although none of the named officers currently receives awards under the Management Incentive Plan). These amounts include the trusts' earnings (net of the reportable interest included in footnote 7)5).
Employer Contributions to Defined Contribution Plans
R. B. Ford: $64,924 / $50,000 / $39,213; R. E. Funck, Jr.: $40,673; H. L. Allen: $37,568 / $35,500 / $35,335; J. F. Ginascol: $35,414; D. G. Salvadori: $35,500 / $35,247 / $33,752; M. D. White: $95,000 / $95,000 / $95,000; and B. B. Yoor: $32,163$7,139 / $29,212$41,250 / $21,894; H. L. Allen: $34,505; R. B. Ford: $33,750; D. G. Salvadori: $30,423; M. T. Rousseau: $11,100; and E. S. Fain: $11,100.$39,803.
These amounts include employer contributions to both Abbott's tax-qualified defined contribution plans, for Messrs. White, Yoor, Allen, Ford,plan and Salvadori, the Abbott Laboratories 401(k) Supplemental Plan, and for Messrs. Rousseau and Fain, the Management Savings Plan (formerly known as the St. Jude Medical, Inc. Management Savings Plan).Plan. The Abbott Laboratories 401(k) Supplemental Plan permits eligible Abbott officers to contribute amounts in excess of the limit set by the Internal Revenue Code for employee contributions to 401(k) plans up to the excess of (i) 18% of their base salary over (ii) the amount contributed to Abbott's tax-qualified 401(k) plan. Abbott matches participant contributions at the rate of 250% of the first 2% of compensation contributed to the plan. The named officers have these amounts paid to them in cash on a current basis and deposited into a grantor trust established by the officer, net of maximum tax withholdings. Employer contributions to the Management Savings Plan are described in footnote 1 of the 2017 Nonqualified Deferred Compensation Table on page 58.
Other Compensation
Mr.Messrs. Ford's and White's non-business-related flights on corporate aircraft are covered by a time-sharing lease agreement,agreements, pursuant to which he reimbursesthey reimburse Abbott for certain costs associated with those flights in accordance with Federal Aviation Administration regulations. The following amounts are included in the totals in this column, which reflect Abbott's incremental cost less reimbursements for non-business-related flights: $292,292R. B. Ford: $4,832; M. D. White: $10,792 / $204,527$226,633 / $216,811.$229,599.
Abbott determines the incremental cost for flights based on the direct cost to Abbott, including fuel costs, parking, handling and landing fees, catering, travel fees, and other miscellaneous direct costs.
For Mr. White, the following costs associated with security less the amount reimbursed are included: $209,414$232,266 / $219,680$237,061 / $212,350.$230,033. Abbott determines the cost for these expenses based on its actual costs. The security is provided on the recommendation of an independent security study.
Abbott Laboratories 45
Also included in the totals shown in the table is the cost of providing a corporate automobile less the amount reimbursed by the officer: R. B. Ford: $0 / $21,841 / $19,516; R. E. Funck, Jr.: $20,319; H. L. Allen: $28,666 / $25,509 / $23,600; J. F. Ginascol: $ 24,017; D. G. Salvadori: $26,773 / $24,559 / $27,727; and B. B. Yoor: $20,559$35 / $20,178$20,081 / $18,295; H. L. Allen: $9,158; R. B. Ford: $18,541; D. G. Salvadori: $18,360; and E. S. Fain: $31,384.$20,443.
64
For Messrs. Yoor,Funck, Jr., Allen, Ginascol, Salvadori, and Salvadori,Yoor, the following costs associated with financial planning are included: R. E. Funck, Jr.: $6,470; H. L. Allen: $6,667 / $5,000 / $8,810; J. F. Ginascol: $5,950; D. G. Salvadori: $15,447 / $0 / $0; and B. B. Yoor: $5,000 / $10,000 / $10,833 / $0; H. L. Allen: $9,400; D. G. Salvadori: $5,845.
$10,000. For Messrs. RousseauMr. Salvadori, the 2020 amount includes payments made for services incurred in 2020 and Fain, the following amounts are included: (i) pursuant to, or in place of payments due under, their respective previous St. Jude Medical change in control agreements: (A) cash payments upon termination of employment: M. T. Rousseau: $12,488,519; E. S. Fain: $7,004,577; (B) health and welfare premiums: M. T. Rousseau: $16,180; and E. S. Fain: $13,882; and (C) life insurance premiums: M. T. Rousseau: $4,770; and E. S. Fain: $3,362; and (ii) a cash payment under the terms of a retention agreement entered into in connection with Abbott's acquisition of St. Jude Medical: E. S. Fain: $1,485,260.2019.
The named officers other than Messrs. Rousseau and Fain, are also eligible to participate in an executive disability benefit described on page 59.78.
46 Abbott Laboratories 65
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| Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock | All Other Option Awards: Numbers of Securities Underlying | Exercise or Base Price of Options | Closing Market Price on | Grant Date Fair Value of Stock and | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Option Awards: Numbers of Securities Underlying | Exercise or Base Price of Options | Closing Market Price on | Grant Date Fair Value of Stock and | ||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||
Name | Grant Date | Approval Date | | Target ($) | | Maximum ($) | Target (#)(2)(3) | of Units (#) | Options (#)(4) | Awards ($/Sh.) | Grant Date | Option Awards | | Name | Grant Date | Target ($) | Maximum ($) | Target (#)(2)(3) | Options (#)(4) | Awards ($/Sh.) | Grant Date | Option Awards | ||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||
M. D. White | 2/17/17 | 2/17/17 | 92,342 | $4,099,523(5) | | R. B. Ford | | 2/21/2020 | | | | | | | 64,124 | | | | | | | | $ | 5,623,995 | (5) | |||||||||||||||||||||||||||||||||||
2/17/17 | 2/17/17 | 638,629 | $44.40 | $44.69 | 4,099,998(6) | | | 2/21/2020 | | | | | | | | 390,896 | | | $ | 87.72 | | | $ | 87.45 | | | 5,624,993 | (6) | ||||||||||||||||||||||||||||||||
| B. B. Yoor | 2/17/17 | 2/17/17 | | | | | 19,763 | | | | | 877,378(5) | | | R. E. Funck, Jr. | | 2/21/2020 | | | | | | | | | 25,265 | | | | | | | | | | | 2,215,867 | (5) | | ||||||||||||||||||||
| | 2/17/17 | 2/17/17 | | | | | | | 136,682 | 44.40 | 44.69 | 877,498(6) | | | | | 2/21/2020 | | | | | | | | | | | 154,013 | | | 87.72 | | | 87.45 | | | 2,216,247 | (6) | | ||||||||||||||||||||
H. L. Allen | 2/17/17 | 2/17/17 | 24,155 | 1,072,361(5) | | H. L. Allen | | 2/21/2020 | | | | | | | 21,374 | | | | | | | | 1,874,607 | (5) | ||||||||||||||||||||||||||||||||||||
2/17/17 | 2/17/17 | 167,056 | 44.40 | 44.69 | 1,072,500(6) | | | 2/21/2020 | | | | | | | | 130,298 | | | 87.72 | | | 87.45 | | | 1,874,988 | (6) | ||||||||||||||||||||||||||||||||||
| R. B. Ford | 2/17/17 | 2/17/17 | | | | | 21,959 | | | | | 974,870(5) | | | J. F. Ginascol | | 2/21/2020 | | | | | | | | | 18,855 | | | | | | | | | | | 1,653,678 | (5) | | ||||||||||||||||||||
| | 2/17/17 | 2/17/17 | | | | | | | 151,869 | 44.40 | 44.69 | 974,999(6) | | | | | 2/21/2020 | | | | | | | | | | | 114,940 | | | 87.72 | | | 87.45 | | | 1,653,987 | (6) | | ||||||||||||||||||||
D. G. Salvadori | 2/17/17 | 2/17/17 | 19,961 | 886,169(5) | | D. G. Salvadori | | 2/21/2020 | | | | | | | 21,683 | | | | | | | | 1,901,708 | (5) | ||||||||||||||||||||||||||||||||||||
7/21/17 | 6/29/17 | 7,173 | 363,743(5) | | | 2/21/2020 | | | | | | | | 132,182 | | | 87.72 | | | 87.45 | | | 1,902,099 | (6) | ||||||||||||||||||||||||||||||||||||
| | M. D. White | | 2/21/2020 | | | | | | | | | 68,399 | | | | | | | | | | | 5,998,934 | (5) | | ||||||||||||||||||||||||||||||||||
| | | | 2/21/2020 | | | | | | | | | | | 416,956 | | | 87.72 | | | 87.45 | | | 5,999,997 | (6) | | ||||||||||||||||||||||||||||||||||
2/17/17 | 2/17/17 | 138,049 | 44.40 | 44.69 | 886,275(6) | | B. B. Yoor | | 2/21/2020 | | | | | | | 14,036 | | | | | | | | 1,231,027 | (5) | |||||||||||||||||||||||||||||||||||
7/21/17 | 6/29/17 | 49,611 | 50.72 | 50.84 | 376,051(6) | | | 2/21/2020 | | | | | | | | 85,562 | | | 87.72 | | | 87.45 | | | 1,231,237 | (6) | ||||||||||||||||||||||||||||||||||
| E. S. Fain | 2/17/17 | 2/17/17 | | | | | 23,085(7) | | | | | 1,024,859(5) | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||
| | 1/4/17 | 6/10/16 | | | | | | 50,761(8) | | | | 1,999,730(5) | | ||||||||||||||||||||||||||||||||||||||||||||||
| | 2/17/17 | 2/17/17 | | | | | | | 159,657(7) | 44.40 | 44.69 | 1,024,998(6) | | ||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Abbott Laboratories 4766
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The following table summarizes the outstanding equity awards held by the named officers at year-end.
Option Awards(1)(2) | | Stock Awards(2) | | Option Awards(1)(2) | | Stock Awards(2) | | |||||||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
M. D. White | 44,326 | $2,529,685 | R. B. Ford | 14,970 | $1,639,065 | |||||||||||||||||||||||||||||||||||||||||||
91,146 | 5,201,702 | 30,531 | 3,342,839 | |||||||||||||||||||||||||||||||||||||||||||||
92,342 | 5,269,958 | 64,124 | 7,020,937 | |||||||||||||||||||||||||||||||||||||||||||||
325,000 | $26.0150 | 02/19/19 | 45,492 | $39.1200 | 02/20/24 | |||||||||||||||||||||||||||||||||||||||||||
295,000 | 26.1879 | 02/18/20 | 56,933 | 41.1400 | 06/30/24 | |||||||||||||||||||||||||||||||||||||||||||
294,700 | 22.3919 | 02/17/21 | 127,436 | 47.0000 | 02/19/25 | |||||||||||||||||||||||||||||||||||||||||||
302,500 | 27.0336 | 02/16/22 | 14,243 | 48.9000 | 05/31/25 | |||||||||||||||||||||||||||||||||||||||||||
980,000 | 34.9400 | 02/14/23 | 285,388 | 38.4000 | 02/18/26 | |||||||||||||||||||||||||||||||||||||||||||
727,699 | 39.1200 | 02/20/24 | 151,869 | 44.4000 | 02/16/27 | |||||||||||||||||||||||||||||||||||||||||||
624,687 | 312,344 | 47.0000 | 02/19/25 | 164,642 | 82,321 | 59.9400 | 02/15/28 | |||||||||||||||||||||||||||||||||||||||||
399,544 | 799,086 638,629 | 38.4000 44.4000 | 02/18/26 02/16/27 | 80,019 | 160,040 | 75.9000 | 02/21/29 | |||||||||||||||||||||||||||||||||||||||||
390,896 | 87.7200 | 02/20/30 | ||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
See footnotes on page 54.74.
48 Abbott Laboratories 67
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Option Awards(1)(2) | | Stock Awards(2) | | Option Awards(1)(2) | | Stock Awards(2) | | |||||||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
B. B. Yoor | 1,950 | $111,287 | R. E. Funck, Jr. | 6,677 | $731,065 | |||||||||||||||||||||||||||||||||||||||||||
3,865 | 220,576 | 15,562 | 1,703,883 | |||||||||||||||||||||||||||||||||||||||||||||
16,232 | 926,360 | 25,265 | 2,766,265 | |||||||||||||||||||||||||||||||||||||||||||||
19,763 | 1,127,874 | 31,325 | $39.1200 | 02/20/24 | ||||||||||||||||||||||||||||||||||||||||||||
11,400 | $34.9400 | 02/14/23 | 55,097 | 47.0000 | 02/19/25 | |||||||||||||||||||||||||||||||||||||||||||
32,363 | 39.1200 | 02/20/24 | 48,831 | 44.4000 | 02/16/27 | |||||||||||||||||||||||||||||||||||||||||||
27,486 | 13,743 | 47.0000 | 02/19/25 | 73,431 | 36,715 | 59.9400 | 02/15/28 | |||||||||||||||||||||||||||||||||||||||||
54,473 | 27,236 | 48.9000 | 05/31/25 | 40,789 | 81,578 | 75.9000 | 02/21/29 | |||||||||||||||||||||||||||||||||||||||||
71,157 | 142,313 136,682 | 38.4000 44.4000 | 02/18/26 02/16/27 | 154,013 | 87.7200 | 02/20/30 | ||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
See footnotes on page 54.74.
Abbott Laboratories 4968
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Option Awards(1)(2) | | Stock Awards(2) | | Option Awards(1)(2) | | Stock Awards(2) | | ||||||||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
H. L. Allen | 7,447 | $ | 425,000 | H. L. Allen | 14,970 | $1,639,065 | |||||||||||||||||||||||||||||||||||||||||||
21,702 | 1,238,533 | 19,323 | 2,115,675 | ||||||||||||||||||||||||||||||||||||||||||||||
24,155 | 1,378,526 | 21,374 | 2,340,239 | ||||||||||||||||||||||||||||||||||||||||||||||
165,000 | $34.9400 | 02/14/23 | 107,793 | $39.1200 | 02/20/24 | ||||||||||||||||||||||||||||||||||||||||||||
107,793 | 39.1200 | 02/20/24 | 157,421 | 47.0000 | 02/19/25 | ||||||||||||||||||||||||||||||||||||||||||||
104,947 | 52,474 | 47.0000 | 02/19/25 | 285,388 | 38.4000 | 02/18/26 | |||||||||||||||||||||||||||||||||||||||||||
95,130 | 190,258 167,056 | 38.4000 44.4000 | 02/18/26 02/16/27 | 167,056 | 44.4000 | 02/16/27 | |||||||||||||||||||||||||||||||||||||||||||
164,642 | 82,321 | 59.9400 | 02/15/28 | ||||||||||||||||||||||||||||||||||||||||||||||
50,644 | 101,289 | 75.9000 | 02/21/29 | ||||||||||||||||||||||||||||||||||||||||||||||
130,298 | 87.7200 | 02/20/30 | |||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
See footnotes on page 54.74.
50 Abbott Laboratories 69
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Option Awards(1)(2) | | Stock Awards(2) | | Option Awards(1)(2) | | Stock Awards(2) | | ||||||||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
R. B. Ford | 6,028 | $ | 344,018 | J. F. Ginascol | 2,344 | $256,645 | |||||||||||||||||||||||||||||||||||||||||||
674 | 38,465 | 4,856 | 531,683 | ||||||||||||||||||||||||||||||||||||||||||||||
21,702 | 1,238,533 | 7,978 | 873,511 | ||||||||||||||||||||||||||||||||||||||||||||||
21,959 | 1,253,200 | 18,855 | 2,064,434 | ||||||||||||||||||||||||||||||||||||||||||||||
4,467 | $26.1879 | 02/18/20 | 45,709 | $47.0000 | 02/19/25 | ||||||||||||||||||||||||||||||||||||||||||||
10,400 | 22.3919 | 02/17/21 | 25,779 | 12,890 | 59.9400 | 02/15/28 | |||||||||||||||||||||||||||||||||||||||||||
19,600 | 27.0336 | 02/16/22 | 12,730 | 25,460 | 75.9000 | 02/21/29 | |||||||||||||||||||||||||||||||||||||||||||
49,000 | 34.9400 | 02/14/23 | 20,908 | 41,817 | 76.1200 | 06/02/29 | |||||||||||||||||||||||||||||||||||||||||||
45,492 | 39.1200 | 02/20/24 | 114,940 | 87.7200 | 02/20/30 | ||||||||||||||||||||||||||||||||||||||||||||
56,933 | 41.1400 | 06/30/24 | |||||||||||||||||||||||||||||||||||||||||||||||
84,957 | 42,479 | 47.0000 | 02/19/25 | ||||||||||||||||||||||||||||||||||||||||||||||
9,495 | 4,748 | 48.9000 | 05/31/25 | ||||||||||||||||||||||||||||||||||||||||||||||
95,130 | 190,258 151,869 | 38.4000 44.4000 | 02/18/26 02/16/27 | ||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
See footnotes on page 54.74.
Abbott Laboratories 5170
|
Option Awards(1)(2) | | Stock Awards(2) | | Option Awards(1)(2) | | Stock Awards(2) | | ||||||||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
D. G. Salvadori | 6,028 | $ | 344,018 | D. G. Salvadori | 11,089 | $1,214,135 | |||||||||||||||||||||||||||||||||||||||||||
16,232 | 926,360 | 20,658 | 2,261,844 | ||||||||||||||||||||||||||||||||||||||||||||||
19,961 | 1,139,174 | 21,683 | 2,374,072 | ||||||||||||||||||||||||||||||||||||||||||||||
7,173 | 409,363 | 71,313 | $38.4000 | 02/18/26 | |||||||||||||||||||||||||||||||||||||||||||||
42,479 | 47.0000 | 02/19/25 | 138,049 | 44.4000 | 02/16/27 | ||||||||||||||||||||||||||||||||||||||||||||
142,313 | 38.4000 | 02/18/26 | 49,611 | 50.7200 | 07/20/27 | ||||||||||||||||||||||||||||||||||||||||||||
138,049 49,611 | 44.4000 50.7200 | 02/16/27 07/20/27 | 121,957 | 60,978 | 59.9400 | 02/15/28 | |||||||||||||||||||||||||||||||||||||||||||
54,143 | 108,287 | 75.9000 | 02/21/29 | ||||||||||||||||||||||||||||||||||||||||||||||
132,182 | 87.7200 | 02/20/30 | |||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
See footnotes on page 54.74.
52 Abbott Laboratories 71
|
Option Awards(1) | | Stock Awards | | Option Awards(1)(2) | | Stock Awards(2) | | |||||||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable(i) | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
M. T. Rousseau | 77,739 | $28.5000 | 07/06/18 | M. D. White | 41,709 | $4,566,718 | ||||||||||||||||||||||||||||||||||||||||||
150,737 545,573 | 33.1400 29.5600 | 07/06/18 07/06/18 | 66,424 | 7,272,764 | ||||||||||||||||||||||||||||||||||||||||||||
68,399 | 7,489,007 | |||||||||||||||||||||||||||||||||||||||||||||||
302,500 | $27.0336 | 02/16/22 | ||||||||||||||||||||||||||||||||||||||||||||||
980,000 | 34.9400 | 02/14/23 | ||||||||||||||||||||||||||||||||||||||||||||||
727,699 | 39.1200 | 02/20/24 | ||||||||||||||||||||||||||||||||||||||||||||||
937,031 | 47.0000 | 02/19/25 | ||||||||||||||||||||||||||||||||||||||||||||||
1,198,630 | 38.4000 | 02/18/26 | ||||||||||||||||||||||||||||||||||||||||||||||
638,629 | 44.4000 | 02/16/27 | ||||||||||||||||||||||||||||||||||||||||||||||
458,715 | 229,358 | 59.9400 | 02/15/28 | |||||||||||||||||||||||||||||||||||||||||||||
174,090 | 348,182 | 75.9000 | 02/21/29 | |||||||||||||||||||||||||||||||||||||||||||||
416,956 | 87.7200 | 02/20/30 | ||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
See also footnotes on page 54.74.
72
Abbott Laboratories 53
2020 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END (CONTINUED) |
Option Awards(1)(2) | | Stock Awards(2) | | |||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
B. B. Yoor | 14,970 | $1,639,065 | ||||||||||||||||||||||
21,519 | 2,356,115 | |||||||||||||||||||||||
14,036 | 1,536,802 | |||||||||||||||||||||||
82,321 | $59.9400 | 02/15/28 | ||||||||||||||||||||||
112,799 | 75.9000 | 02/21/29 | ||||||||||||||||||||||
85,562 | 87.7200 | 02/20/30 | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
See footnotes on page 74.
73
Footnotes to 20172020 Outstanding Equity Awards At Fiscal Year-End table:
Option Awards | | Stock Awards(a) | | Option Awards | | Stock Awards(a) | ||||||||||||||||||||||||||||||
Name | Number of Unexercised Shares Remaining from Original Grant | Number of Option Shares Vesting—Date Vested 2018 | Number of Option Shares Vesting—Date Vested 2019 | Number of Option Shares Vesting—Date Vested 2020 | | Number of Restricted Shares or Units | Number of Restricted Shares or Units Vesting— Date Vested 2018 | Name | Number of Unexercised Shares Remaining from Original Grant | Number of Option Shares Vesting—Date Vested 2021 | Number of Option Shares Vesting—Date Vesting 2022 | Number of Option Shares Vesting—Date Vesting 2023 | | Number of Restricted Shares or Units | Number of Restricted Shares or Units Vesting— Date Vested 2021 | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
M. D. White | 312,344 | 312,344 - 2/20 | 44,326 | (b) | ||||||||||||||||||||||||||||||||
799,086 | 399,543 - 2/19 | 399,543 - 2/19 | 91,146 | (c) | ||||||||||||||||||||||||||||||||
638,629 | 212,877 - 2/17 | 212,876 - 2/17 | 212,876 - 2/17 | 92,342 | (d) | |||||||||||||||||||||||||||||||
B. B. Yoor | 13,743 | 13,743 - 2/20 | | | | 1,950 | (b) | | ||||||||||||||||||||||||||||
| | 27,236 | 27,236 - 6/01 | | | | 3,865 | (e) | | |||||||||||||||||||||||||||
| | 142,313 | 71,156 - 2/19 | 71,157 - 2/19 | | | 16,232 | (c) | | |||||||||||||||||||||||||||
| | 136,682 | 45,561 - 2/17 | 45,560 - 2/17 | 45,561 - 2/17 | | 19,763 | (d) | | |||||||||||||||||||||||||||
H. L. Allen | 52,474 | 52,474 - 2/20 | 7,447 | (b) | ||||||||||||||||||||||||||||||||
190,258 | 95,129 - 2/19 | 95,129 - 2/19 | 21,702 | (c) | R. B. Ford | 82,321 | 82,321 - 2/16 | 14,970 | (b) | |||||||||||||||||||||||||||
167,056 | 55,686 - 2/17 | 55,685 - 2/17 | 55,685 - 2/17 | 24,155 | (d) | 160,040 | 80,020 - 2/22 | 80,020 - 2/22 | 30,531 | (c) | ||||||||||||||||||||||||||
R. B. Ford | 42,479 | 42,479 - 2/20 | | | | 6,028 | (b) | | 390,896 | 130,298 - 2/21 | 130,299 - 2/21 | 130,299 - 2/21 | 64,124 | (d) | ||||||||||||||||||||||
| | 4,748 | 4,748 - 6/01 | | | | 674 | (e) | | R. E. Funck, Jr. | 36,715 | 36,715 - 2/16 | | | | 6,677 | (b) | |||||||||||||||||||
| | 190,258 | 95,129 - 2/19 | 95,129 - 2/19 | | | 21,702 | (c) | | | 81,578 | 40,789 - 2/22 | 40,789 - 2/22 | | | 15,562 | (c) | |||||||||||||||||||
| | 151,869 | 50,623 - 2/17 | 50,623 - 2/17 | 50,623 - 2/17 | | 21,959 | (d) | | | 154,013 | 51,337 - 2/21 | 51,338 - 2/21 | 51,338 - 2/21 | | 25,265 | (d) | |||||||||||||||||||
D. G. Salvadori | 42,479 | 42,479 - 2/20 | 6,028 | (b) | H. L. Allen | 82,321 | 82,321 - 2/16 | 14,970 | (b) | |||||||||||||||||||||||||||
142,313 | 71,156 - 2/19 | 71,157 - 2/19 | 16,232 | (c) | 101,289 | 50,644 - 2/22 | 50,645 - 2/22 | 19,323 | (c) | |||||||||||||||||||||||||||
138,049 49,611 | 46,017 - 2/17 16,537 - 7/21 | 46,016 - 2/17 16,537 - 7/21 | 46,016 - 2/17 16,537 - 7/21 | 19,961 7,173 | (d) (f) | 130,298 | 43,432 - 2/21 | 43,433 - 2/21 | 43,433 - 2/21 | 21,374 | (d) | |||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | J. F. Ginascol | 12,890 | 12,890 - 2/16 | | | | 2,344 | (b) | ||||||||||
| | 25,460 | 12,730 - 2/22 | 12,730 - 2/22 | | | 4,856 | (c) | ||||||||||||||||||||||||||||
| | 41,817 | 20,908 - 6/3 | 20,909 - 6/3 | | | 7,978 | (e) | ||||||||||||||||||||||||||||
| | 114,940 | 38,313 - 2/21 | 38,313 - 2/21 | 38,314 - 2/21 | | 18,855 | (d) | ||||||||||||||||||||||||||||
D. G. Salvadori | 60,978 | 60,978 - 2/16 | 11,089 | (b) | ||||||||||||||||||||||||||||||||
108,287 | 54,143 - 2/22 | 54,144 - 2/22 | 20,658 | (c) | ||||||||||||||||||||||||||||||||
132,182 | 44,060 - 2/21 | 44,061 - 2/21 | 44,061 - 2/21 | 21,683 | (d) | |||||||||||||||||||||||||||||||
| M. D. White | 229,358 | 229,358 - 2/16 | | | | 41,709 | (b) | ||||||||||||||||||||||||||||
| | 348,182 | 174,091 - 2/22 | 174,091 - 2/22 | | | 66,424 | (c) | ||||||||||||||||||||||||||||
| | 416,956 | 138,985 - 2/21 | 138,985 - 2/21 | 138,986 - 2/21 | | 68,399 | (d) | ||||||||||||||||||||||||||||
B. B. Yoor | 82,321 | 82,321 - 2/16 | 14,970 | (b) | ||||||||||||||||||||||||||||||||
112,799 | 56,399 - 2/22 | 56,400 - 2/22 | 21,519 | (c) | ||||||||||||||||||||||||||||||||
85,562 | 28,520 - 2/21 | 28,521 - 2/21 | 28,521 - 2/21 | 14,036 | (d) | |||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | |
54 Abbott Laboratories74
|
The following table summarizes for each named officer the number of shares the officer acquired on the exercise of stock options and the number of shares the officer acquired on the vesting of stock awards in 2017:2020:
Option Awards | | Stock Awards | | Option Awards | | Stock Awards | | ||||||||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | Name | Number of Shares Acquired on Exercise (#) | | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
M. D. White | 530,000 | $14,748,045 | 129,520 | $5,887,979 | R. B. Ford | 0 | $ | 0 | 37,556 | $2,974,060 | |||||||||||||||||||
| B. B. Yoor | — | — | | 15,693 | 714,177 | | R. E. Funck, Jr. | 120,033 | | 8,128,936 | | 16,813 | 1,331,421 | | ||||||||||||||
H. L. Allen | 8,000 | 171,203 | 24,165 | 1,098,541 | H. L. Allen | 0 | 0 | 32,684 | 2,588,246 | ||||||||||||||||||||
| R. B. Ford | — | — | | 23,128 | 1,061,298 | | J. F. Ginascol | 135,298 | | 8,418,723 | | 10,688 | 899,955 | | ||||||||||||||
D. G. Salvadori | 258,539 | 3,170,754 | 27,221 | 1,330,967 | D. G. Salvadori | 42,479 | 2,755,188 | 30,464 | 2,460,001 | ||||||||||||||||||||
| M. T. Rousseau | — | — | | 84,394 | 4,088,046 | | M. D. White | 0 | | 0 | | 105,702 | 8,370,541 | | ||||||||||||||
E. S. Fain | 293,519 | 5,463,589 | 83,179 | 4,229,328 | B. B. Yoor | 694,131 | 26,927,604 | 32,318 | 2,559,262 | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
PENSION BENEFITS |
During 2017, Messrs. White, Yoor, Allen, Ford, and Salvadori2020, the named officers participated in two Abbott-sponsored defined benefit pension plans: the Abbott Laboratories Annuity Retirement Plan, a tax-qualified pension plan; and the Abbott Laboratories Supplemental Pension Plan, a non-qualified supplemental pension plan. The Supplemental Pension Plan also includes a benefit feature Abbott uses to attract officers who are at the mid-point of their careers. This feature provides an additional benefit to officers who are mid-career hires that is less valuable to officers who have spent most of their careers at Abbott. Except as provided in Abbott's change in control agreements, Abbott does not have a policy granting extra years of credited service under the plans. These change in control agreements are described on pages 5978 and 60.79.
The compensation considered in determining the pension payable to the named officers is the compensation shown in the "Salary" and "Non-Equity Incentive Plan Compensation" columns of the Summary Compensation Table on page 44.63.
The Annuity Retirement Plan covers eligible employees in the United States who are age 21 or older, and provides participants with a life annuity benefit at normal retirement equal to A plus the greater of B or C below.
The benefit for service prior to 2004 (B or C above) is reduced for the cost of preretirement surviving spouse benefit protection. The reduction is calculated using formulas based on age and employment status during the period in which coverage was in effect.
Final average earnings are the average of the employee's 60 highest-paid consecutive calendar months of compensation (salary and non-equity incentive plan compensation). The Annuity Retirement Plan covers earnings up to the limit imposed by Internal Revenue Code Section 401(a)(17) and provides for a maximum of 35 years of benefit service.
Participants become fully vested in their pension benefit upon the completion of five years of service. The benefit is payable on an unreduced basis at age 65. Participants hired after 2003 who terminate prior to age 55 with at least 10 years of service may choose to commence their benefits on an actuarially reduced basis as early as age 55. Participants hired prior to 2004 who terminate prior to age 50 with at least 10 years of service may choose to commence their benefits on an actuarially reduced basis as early as age 50. Participants hired prior to 2004 who
Abbott Laboratories 55 75
terminate prior to age 50 with less than 10 years of service may choose to commence their benefits on an actuarially reduced basis as early as age 55.
The Annuity Retirement Plan offers several optional forms of payment, including certain and life annuities, joint and survivor annuities, and level income annuities. The benefit paid under any of these options is actuarially equivalent to the life annuity benefit produced by the formula described above.
Participants who retire from Abbott prior to their normal retirement age may receive subsidized early retirement benefits. Participants hired after 2003 are eligible for early retirement at age 55 with 10 years of service. Participants hired prior to 2004 are eligible for early retirement at age 50 with 10 years of service or age 55 if the employee's age plus years of benefit service total 70 or more. As of December 31, 2017, Mr.2020, Messrs. White, wasFunck, Jr., Allen, and Ginascol were eligible for early retirement benefits under the plan.
The subsidized early retirement reductions applied to the benefit payable for service after 2003 (A above) depend upon the participant's age at retirement. If the participant retires after reaching age 55, the benefit is reduced 5 percent per year for each year that payments are made before age 62. If the participant retires after reaching age 50 but prior to reaching age 55, the benefit is actuarially reduced from age 65.
The early retirement reductions applied to the benefit payable for service prior to 2004 (B and C above) depend upon age and service at retirement:
With the following exceptions, the provisions of the Supplemental Pension Plan are substantially the same as those of the Annuity Retirement Plan:
76
56 Abbott Laboratories
from the plan's unreduced retirement age, unless the benefit is being actuarially reduced from age 65. As of December 31, 2017, Mr.2020, Messrs. White, wasFunck, Jr., Allen, and Ginascol were eligible for early retirement benefits under the plan.
Benefits payable under the Supplemental Pension Plan are offset by the benefits payable from the Annuity Retirement Plan, calculated as if benefits under the plans commenced at the same time. The amounts paid to an officer's Supplemental Pension Plan grantor trust to fund plan benefits are actuarially determined. The plan is designed to result in Abbott paying the officer's Supplemental Pension Plan benefits to the extent assets held in the officer's trust are insufficient.
Name | Plan Name | Number Of Years Credited Service (#) | Present Value of Accumulated Benefit ($)(1) | | Payments During Last Fiscal Year ($) | | | Name | Plan Name | Number Of Years Credited Service (#) | Present Value of Accumulated Benefit ($)(1) | Payments During Last Fiscal Year ($) | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | ||||||
M. D. White | Abbott Laboratories Annuity Retirement Plan | 33 | $ 1,589,767 | $ 0 | | R. B. Ford | | Abbott Laboratories Annuity Retirement Plan | | 24 | | | $ | 682,422 | | | $ | 0 | | ||||||||||
Abbott Laboratories Supplemental Pension Plan | 33 | 39,531,717 | 2,212,762 | (2) | | | Abbott Laboratories Supplemental Pension Plan | | 24 | | | 7,883,470 | | | 298,329 | (2) | |||||||||||||
| B. B. Yoor | Abbott Laboratories Annuity Retirement Plan | 20 | 439,903 | | 0 | | ||||||||||||||||||||||
| | Abbott Laboratories Supplemental Pension Plan | 20 | 1,888,580 | | 92,691 | (2) | | |||||||||||||||||||||
| R. E. Funck, Jr. | | Abbott Laboratories Annuity Retirement Plan | | 33 | | | 1,694,282 | | | 0 | | | ||||||||||||||||
| | | Abbott Laboratories Supplemental Pension Plan | | 33 | | | 8,053,119 | | | 368,136 | (2) | | ||||||||||||||||
| H. L. Allen | | Abbott Laboratories Annuity Retirement Plan | | 15 | | | 586,454 | | | 0 | | |||||||||||||||||
| | Abbott Laboratories Supplemental Pension Plan | | 15 | | | 5,623,414 | | | 208,869 | (2) | ||||||||||||||||||
| J. F. Ginascol | | Abbott Laboratories Annuity Retirement Plan | | 37 | | | 1,948,534 | | | 0 | | | ||||||||||||||||
| | | Abbott Laboratories Supplemental Pension Plan | | 37 | | | 5,485,168 | | | 183,896 | (2) | | ||||||||||||||||
| D. G. Salvadori | | Abbott Laboratories Annuity Retirement Plan | | 6 | | | 143,774 | | | 0 | | |||||||||||||||||
| | Abbott Laboratories Supplemental Pension Plan | | 6 | | | 1,094,200 | | | 0 | (2) | ||||||||||||||||||
| M. D. White | | Abbott Laboratories Annuity Retirement Plan | | 36 | | | 1,717,930 | | | 0 | | | ||||||||||||||||
| | | Abbott Laboratories Supplemental Pension Plan | | 36 | | | 39,771,510 | | | 2,530,729 | (2) | | ||||||||||||||||
H. L. Allen | Abbott Laboratories Annuity Retirement Plan | 12 | 286,941 | 0 | | B. B. Yoor | | Abbott Laboratories Annuity Retirement Plan | | 23 | | | 691,551 | | | 24,430 | | ||||||||||||
Abbott Laboratories Supplemental Pension Plan | 12 | 2,226,201 | 193,264 | (2) | | | Abbott Laboratories Supplemental Pension Plan | | 23 | | | 4,604,078 | | | 1,169,843 | (2) | |||||||||||||
| R. B. Ford | Abbott Laboratories Annuity Retirement Plan | 21 | 400,836 | | 0 | | | | | | | | | | | | | | ||||||||||
| | Abbott Laboratories Supplemental Pension Plan | 21 | 1,837,889 | | 66,435 | (2) | | |||||||||||||||||||||
D. G. Salvadori | Abbott Laboratories Annuity Retirement Plan | 3 | 53,596 | 0 | |||||||||||||||||||||||||
Abbott Laboratories Supplemental Pension Plan | 3 | 301,984 | 0 | ||||||||||||||||||||||||||
| | | | | | | | | | |
Abbott Laboratories 57 77
|
The following table summarizes non-qualified deferred compensation of Messrs. Rousseau and Fain under the Management Savings Plan (formerly known as the St. Jude Medical, Inc. Management Savings Plan). None of Abbott's other named officers have any non-qualified deferred compensation.
| Name | Plan Name | Executive contributions in last FY ($)(3) | Registrant contributions in last FY ($)(4) | Aggregate earnings in last FY ($)(5) | Aggregate withdrawals/ distributions ($) | Aggregate balance at last FYE ($) | | ||||||||
| | | | | | | | | | | | | | | | |
| M. T. Rousseau | | Management Savings Plan(1)(2) | | $415,384 | | $3,000 | | $2,290,439 | | $0 | | $24,263,579 | | ||
| | E. S. Fain | | Management Savings Plan(1)(2) | | 41,415 | | 3,000 | | 530,745 | | 0 | | 3,363,541 | | |
| | | | | | | | | | | | | | | | |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL |
POTENTIAL PAYMENTS UPON TERMINATION—GENERALLY
Abbott does not have employment agreements with its named officers.
Messrs. Rousseau and Fain had change in control agreements with St. Jude Medical, Inc. prior to its acquisition by Abbott and entered into retention agreements with Abbott in connection with the acquisition. Payments made under their respective agreements are described in footnotes 3, 6, and 8 of the Summary Compensation Table on pages 44 through 46 and in the section of the proxy statement captioned "Potential Payments Upon Termination or Change in Control—Equity Awards" on pages 60 and 61.
The following summarizes the payments that the named officers, other than Messrs. Rousseau and Fain,Mr. Yoor, would have received if their employment had terminated on December 31, 2017.2020. Earnings would have continued to be paid to the named officer's Performance Incentive Plan, Management Incentive Plan, and Supplemental 401(k) Plan grantor trusts, until the trust assets were fully distributed. The amount of these payments would depend on the period over which the trusts' assets were distributed and the trusts' earnings. If the trusts' assets were distributed over a ten-year period and based on current earnings, the named officers would receive the following average annual payments over such ten-year period:
58 Abbott Laboratories
In addition, the following one-time deposits would have been made under the Abbott Laboratories Supplemental Pension Plan for the following named officers:
If the termination of employment was due to disability, then the following named officers also would have received, in addition to Abbott's standard disability benefits, a monthly long-term disability benefit in the amount of:
This long-term disability benefit would continue for up to 24 months following termination of employment. It ends if the officer retires, recovers, dies, or ceases to meet eligibility criteria.
In addition, if the employment of these named officers had terminated due to death or disability, the officer's unvested stock options and restricted shares would have vested on December 31, 20172020 with values as set forth below in the section captioned, "Equity Awards."
POTENTIAL PAYMENTS UPON CHANGE IN CONTROL
Mr. White does not have a change in control agreement with Abbott.
Abbott has change in control arrangements with other key members of its management team, in the form of change in control agreements for Abbott officers and a change in control plan for certain other management personnel. The agreements with Mr. Yoor,Messrs. Ford, Funck, Jr., Allen, Ford,Ginascol, and Salvadori are described below. Messrs. Rousseau and Fain did not have change in control agreements with Abbott.
Each change in control agreement continues in effect until December 31, 2018,2022, and can be renewed for successive two-year terms upon notice prior to the expiration date. If notice of non-renewal is given, the agreement will expire
78
on the later of the scheduled expiration date and the one-year anniversary of the date of such notice. If no notice is given, the agreement will expire on the one-year anniversary of the scheduled expiration date. Each agreement also automatically extends for two years following any change in control (see below) that occurs while the agreement is in effect.
The agreements provide that if the officer is terminated other than for cause or permanent disability or if the officer elects to terminate employment for good reason (see below) within two years following a change in control of Abbott, the officer is entitled to receive a lump sum payment equal to three times the officer's annual salary and annual incentive ("bonus") award (assuming for this purpose that all target performance goals have been achieved or, if higher, based on the average bonus for the last three years), plus any unpaid bonus owing for any completed performance period and the pro rata bonus for any current bonus period (based on the highest of the bonus assuming achievement of target performance, the average bonus for the past three years, or in the case of the unpaid bonus for any completed performance period, the actual bonus earned). If the officer is terminated other than for cause or permanent disability or if the officer elects to terminate employment for good reason during a potential change in control (see below), the officer is entitled to receive a lump sum payment of the annual salary and bonus payments described above, except that the amount of the bonus to which the officer is entitled will be based on the actual achievement of the applicable performance goals. If the potential change in control becomes a "change in control event" (within the meaning of Section 409A of the Internal Revenue Code), the officer will be entitled to receive the difference between the bonus amounts the officer received upon termination during the potential change in control and the bonus amounts that would have been received had such amounts instead been based on the higher of the officer's target bonus or the average bonus paid to the officer in the preceding three years. Bonus payments include payments made under the Performance Incentive Plan. The officer will also receive up to three years of additional employee benefits (including welfare benefits, outplacement services and tax and financial counseling, and the value of three more years of pension accruals).
Abbott Laboratories 59
If change in control-related payments and benefits become subject to the excise tax imposed under Section 4999 of the Internal Revenue Code, payments under the agreement will be reduced to prevent application of the excise tax if such a reduction would leave the executive in a better after-tax position than if the payments were not reduced and the tax applied. The agreements also limit the conduct for which awards under Abbott's incentive stock programs can be terminated and generally permit options to remain exercisable for the remainder of their term.
For purposes of the agreements, the term "change in control" includes the following events: any person becoming the beneficial owner of Abbott securities representing twenty percent or morea specified percentage of the outstanding voting power (not including an acquisition directly from Abbott and its affiliates); a change in the majority of the members of the Board of Directors whose appointment was approved by a vote of at least two-thirds of the incumbent directors; and the consummation of certain mergers or similar corporate transactions involving Abbott. A "potential change in control" under the agreements includes, among other things, Abbott's entry into an agreement that would result in a change in control. Finally, the term "good reason" includes: a significant adverse change in the executive's position, duties, or authority; Abbott's failure to pay the executive's compensation or a reduction in the executive's base pay or benefits; or the relocation of Abbott's principal executive offices to a location that is more than thirty-five miles from the location of the offices at the time of the change in control.
If a change in control had occurred on December 31, 20172020 immediately followed by one of the covered circumstances described above, Mr. Yoor,Messrs. Ford, Funck, Jr., Allen, Ford,Ginascol, and Salvadori would have been entitled to receive the following payments and benefits under the change in control agreements:
| Name | | Cash termination payments | Additional Supplemental Pension Plan benefits | Welfare and fringe benefits | | ||||||||||||||||||||
| | | | | | | | | | | ||||||||||||||||
| Name | Cash termination payments | Additional Supplemental Pension Plan benefits | Welfare and fringe benefits | | | R. B. Ford | | $15,225,000 | | $2,437,080 | | $93,884 | | ||||||||||||
| | | | | | | | | | | | R. E. Funck, Jr. | | 4,937,083 | | 2,138,528 | | 60,029 | | | ||||||
| B. B. Yoor | | | $ | 5,059,900 | | | $ | 692,859 | | | $ | 68,222 | | | H. L. Allen | | 5,994,600 | | 1,627,907 | | 49,207 | | |||
| H. L. Allen | | | 4,009,762 | | | 306,097 | | | 44,071 | | | | J. F. Ginascol | | 5,436,800 | | 2,477,186 | | 68,653 | | | ||||
| R. B. Ford | | | 3,656,407 | | | 461,602 | | | 68,122 | | | D. G. Salvadori | | 5,485,000 | | 168,302 | | 87,581 | | ||||||
| | D. G. Salvadori | | | 4,731,200 | | | 95,205 | | | 68,079 | | | | | | | | | | | | | |||
| | | | | | | | | | |
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Under Abbott Laboratories' Incentive Stock Programs, upon a change in control, the surviving company may assume, convert, or replace awards to executive officers on an equivalent basis. If the surviving company does not do so, then the awards vest. If the surviving company does assume, convert, or replace the awards on an equivalent basis, then the awards vest if the officer's employment is terminated without cause or the officer resigns for good reason during the period six months prior to and through two years after a change in control. The term "good reason" has the same definition as in the change of control agreements.
If a change in control had occurred on December 31, 2017,2020, and the surviving company did not assume, convert, or replace the awards, then Messrs. White,the named officers, other than Mr. Yoor, Allen, Ford, and Salvadori would have vested in the following options, restricted shares, and restricted stock units:
Unvested Stock Options | | Restricted Shares/Units | | | | Unvested Stock Options | | | Restricted Shares/Units | | ||||||||||||||||||
Name | Number of Option Shares | Value of Option Shares | Number of Restricted Shares/Units | Value of Restricted Shares/Units | | Name | Number of Option Shares | Value of Option Shares | | Number of Restricted Shares/Units | Value of Restricted Shares/Units | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
M. D. White | 1,750,059 | $26,155,669 | 227,814 | $13,001,345 | | R. B. Ford | | 633,257 | | $17,964,556 | | | 109,625 | | $12,002,841 | | ||||||||||||
| B. B. Yoor | 319,974 | 4,749,655 | | 41,810 | 2,386,097 | | | R. E. Funck, Jr. | | 272,306 | | 7,912,296 | | | | 47,504 | | 5,201,213 | | | |||||||
H. L. Allen | 409,788 | 6,197,130 | 53,304 | 3,042,059 | | H. L. Allen | | 313,908 | | 10,317,891 | | | 55,667 | | 6,094,979 | | ||||||||||||
| R. B. Ford | 389,354 | 5,942,852 | | 50,363 | 2,874,216 | | | J. F. Ginascol | | 195,107 | | 5,391,578 | | | | 34,033 | | 3,726,273 | | | |||||||
D. G. Salvadori | 372,452 | 5,148,859 | 49,394 | 2,818,915 | | D. G. Salvadori | | 301,447 | | 9,536,422 | | | 53,430 | | 5,850,051 | | ||||||||||||
| | | | | | | | | | | | | | | | M. D. White | | 994,496 | | 32,137,254 | | | | 176,532 | | 19,328,489 | | |
| | | | | | | | | | | | | | |
The value of stock options shown is based on the excess of the closing price of a common share on December 31, 20172020 over the exercise price of such options, multiplied by the number of unvested stock options held by the named officer. The value of restricted shares shown is determined by multiplying the number of restricted shares that would vest as of December 31, 20172020 and the closing price of a common share on December 31, 2017.
60 Abbott Laboratories
In addition, prior to its acquisition by Abbott, St. Jude Medical, Inc. had granted to Messrs. Rousseau and Fain restricted stock unit and stock option awards. In connection with the acquisition, rather than settling in cash as permitted under the St. Jude equity plans, Abbott assumed all of St. Jude Medical's outstanding and unvested restricted stock units and stock options and converted them into Abbott restricted stock units and options to purchase Abbott common shares, respectively, with substantially the same terms and conditions as were applicable to such St. Jude Medical award. In accordance with the terms of the St. Jude Medical award agreements assumed by Abbott, Messrs. Rousseau's and Fain's outstanding converted St. Jude Medical awards vested when they left Abbott on July 7, 2017 and July 21, 2017, respectively. A restricted stock award held by Mr. Fain also vested on July 21, 2017. Consistent with Internal Revenue Code Section 409A and its regulations, Messrs. Rousseau and Fain received portions of their converted St. Jude Medical restricted stock units on their respective vesting dates for payment of withholding taxes and the remainder were settled on January 7, 2018 and January 21, 2018, respectively. The values of the converted St. Jude Medical restricted stock unit awards received on their respective vesting and settlement dates were as follows: M. T. Rousseau: Vesting date: $159,271; Settlement date: $4,784,443; and E. S. Fain: Vesting date: $77,480; Settlement date: $1,832,323. The values of the converted St. Jude Medical stock options on their respective vesting dates were as follows: M. T. Rousseau: $14,156,810; E. S. Fain: $5,985,741. The value of Mr. Fain's restricted stock award on its vesting date was $2,581,197. The values of the converted St. Jude Medical restricted stock unit awards and Mr. Fain's restricted stock award are determined by multiplying the number of shares vested and the closing price of a common share on the applicable settlement date and July 21, 2017, respectively. The values of the converted St. Jude Medical stock options are based on the excess of the closing price of a common share on the applicable vesting date over the exercise price of such options, multiplied by the number of stock options held.2020.
CEO PAY RATIO |
In 2017,2020, we compared CEO pay to that of our median employee. To identify our median employee, we first excluded all 3,6532,579 employees who are employed in Bolivia (213), Egypt (332)(348), Indonesia (633)(631), Mexico (1,122), Peru (1,329)Israel (138), and Venezuela (24)Pakistan (1,462), representing less than 5% of our global workforce of 89,647108,275 employees as of October 1, 20171.2020. We then examined the 20172020 base salary of all remaining employees globally, excluding our CEO, who were employed by us on October 1, 2017.2020. We annualized the base salary of all permanent employees who were hired in 20172020, but did not work for the entire year. The base salary for employees outside of the U.S. was converted to U.S. dollars.
After identifying the median employee, we collected annual total compensation for this employee using the same methodology we use for our named executive officers as disclosed in the Summary Compensation Table on page 4463 and then added the cost of medical and dental benefits ($12,597)12,619) in the calculation of annual total compensation for the median employee and CEO.
Robert Ford became Abbott's CEO on March 31, 2020. In accordance with SEC rules, in determining our CEO annual total compensation for this calculation, we annualized Mr. Ford's base salary, company matching contributions, and pension accruals, which resulted in 2020 total CEO compensation of $20,639,568.
The annual total compensation of our median employee was $75,679,$77,594, resulting in a ratio of 251:266:1.
The above ratio and annual total compensation amount are reasonable estimates that have been calculated using methodologies and assumptions permitted by SEC rules.
Abbott Laboratories 6180
RATIFICATION OF ERNST & YOUNG LLP AS AUDITORS
(ITEM 2 ON PROXY CARD)
Abbott's By-Laws provide that the Audit Committee shall appoint annually a firm of independent registered public accountants to serve as auditors. In October 2017,2020, the Audit Committee appointed Ernst & Young LLP to act as auditors for 2018.2021. Ernst & Young LLP has served as Abbott's auditors since 2014.
Although the Audit Committee has sole authority to appoint auditors, it would like to know the opinion of the shareholders regarding its appointment of Ernst & Young LLP as auditors for 2018.2021. For this reason, shareholders are being asked to ratify this appointment. If the shareholders do not ratify the appointment of Ernst & Young LLP as auditors for 2018,2021, the Audit Committee will take that fact into consideration, but may, nevertheless, continue to retain Ernst & Young LLP.
The Board of Directors recommends a vote FOR ratification of the appointment of Ernst & Young LLP as auditors for 2018.2021.
Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting and will be given the opportunity to make a statement if they desire to do so. They will also be available to respond to appropriate questions.
The following table presents fees for professional audit services by Ernst & Young LLP for the audit of Abbott's annual financial statements for the years ended December 31, 20172020 and December 31, 20162019 and fees billed for other services rendered by Ernst & Young during these periods.
| | | 2017 | | 2016 | | | | 2020 | | 2019 | | ||||||||
| | | | | | | | | | | | | | | | | | | | |
Audit fees:(1) | $ | 26,863,000 | $ | 14,545,000 | Audit fees:(1) | $ | 24,474,000 | $ | 23,960,000 | |||||||||||
| Audit related fees:(2) | | 624,000 | | 404,000 | | Audit related fees:(2) | | 1,158,000 | | 1,029,000 | | ||||||||
Tax fees:(3) | 5,732,000 | 2,389,000 | Tax fees:(3) | 5,944,000 | 6,668,000 | |||||||||||||||
| All other fees:(4) | | — | | 853,000 | | All other fees:(4) | | 99,000 | | 149,000 | | ||||||||
| | | | | | | | | | | | | | | | | | | | |
Total | $ | 33,219,000 | $ | 18,191,000 | Total | $ | 31,675,000 | $ | 31,806,000 | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
62 Abbott Laboratories 81
POLICY ON AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT SERVICES OF THE INDEPENDENT AUDITOR
The Audit Committee has established policies and procedures to pre-approve all audit and permissible non-audit services performed by the independent auditor and its related affiliates.
Prior to engagement of the independent registered public accounting firm for the next year's audit, management will submit a schedule of all proposed services expected to be rendered during that year for each of four categories of services to the Audit Committee for approval.
Prior to engagement, the Audit Committee pre-approves these services by category of service. The fees are budgeted and the Audit Committee requires the independent registered public accounting firm and management to report actual fees versus the budget periodically by category of service. During the year, circumstances may arise when it may become necessary to engage the independent registered public accounting firm for additional services not contemplated in the original pre-approval. In those instances, the Audit Committee requires specific pre-approval before engaging the independent registered public accounting firm.
The Audit Committee may delegate pre-approval authority to one or more of its members. The member to whom such authority is delegated must report any pre-approval decisions to the Audit Committee at its next scheduled meeting.
REPORT OF THE AUDIT COMMITTEE |
Management is responsible for Abbott's internal controls and the financial reporting process. The independent registered public accounting firm is responsible for performing an audit of the consolidated financial statements and expressing an opinion on the conformity of those financial statements with accounting principles generally accepted in the United States of America, as well as expressing an opinion on the effectiveness of internal control over financial reporting. The Audit Committee reviews these processes on behalf of the Board of Directors. In this context, the Audit Committee has reviewed and discussed the audited financial statements contained in the 20172020 Annual Report on Form 10-K with Abbott's management and its independent registered public accounting firm.
The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed pursuant to Auditing Standard No. 16(Communications with Audit Committees), as adopted by the applicable requirements of the Public Company Accounting Oversight Board.Board and the Securities and Exchange Commission.
The Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm's communications with the Audit Committee concerning independence, and has discussed with the independent registered public accounting firm the firm's independence. The Audit Committee has also considered whether the provision of the services described on page 6281 under the caption "Audit Fees and Non-Audit Fees" is compatible with maintaining the independence of the independent registered public accounting firm.
Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in Abbott's Annual Report on Form 10-K for the year ended December 31, 20172020 filed with the Securities and Exchange Commission.
E. M. Liddy,ChairR. S. AustinM. A. Kumbier
N. McKinstryS. C. Scott IIIJ. G. Stratton
G. F. Tilton
Abbott Laboratories 6382
SAY ON PAY—AN ADVISORY VOTE ON THE APPROVAL OF EXECUTIVE COMPENSATION (ITEM 3 ON PROXY CARD)
Shareholders are being asked to approve the compensation of Abbott's named officers, as disclosed under Securities and Exchange Commission rules, including the Compensation Discussion and Analysis, the compensation tables, and related material included in this proxy statement.
In 2017, Abbott achieved outstanding returns to shareholders, ranking #1Abbott's sustained strong performance has resulted in our peer group. Abbott's one-year total shareholder return (TSR) was 52.0%significantly exceeding the peer median and major market indices on a one-, which was 30.2three-, and 23.9 percentage points abovefive-year basis.
Abbott's three-year TSR of 101.7% is more than twice that of the robust growth of bothpeer group median and the broader Standard & Poor's 500 Index (S&P 500) and more than three times that of the Dow Jones Industrial Average (DJIA), respectively. Abbott continues to be recognized as a member market index. These consistent above-market returns are driven by the strength of our diversified business model with leadership positions in some of the S&P 500 Dividend Aristocrat Index, having increased the dividend payout for 46 consecutive years.largest and fastest growing markets in healthcare and innovative product portfolios across our businesses.
Abbott delivered strong returns for shareholders in 2020, despite the global market challenges from COVID-19, and achieved or exceeded the financial targets that were set before the pandemic in January 2020. Abbott's one-year TSR was 28.0%, more than three times the peer median TSR, and significantly above major market indices, a testament to the strength of our diversified business model and ability to innovate and deliver in this challenging environment.
In 2017,addition to delivering significant shareholder returns, Abbott continued to strategically shape its business throughtake important steps to position the additions of St. Jude Medical and Alere Inc. The St. Jude Medical business expands Abbott's presence into multiple new areas of cardiovascular care, as well as neuromodulation, transforming Abbott into a broad-based leaderCompany for long-term, sustainable growth.
Our compensation program is market-based and produces outcomes that directly link to both developedCompany and emerging markets to create new market opportunities for long-term growth.
officer 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.
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 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
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
64 Abbott Laboratories
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.
Pay Linked to Performance | | | 2013 | | | 2014 | | | 2015 | | | 2016 | | | 2017 | | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| CEO Pay Decisions* | | $ | 15,766,044 | | $ | 19,905,536 | | $ | 17,403,023 | | $ | 15,062,628 | | $ | 23,572,774 | | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
% Change in Pay vs. Prior Year | –30% | +26% | –13% | –13% | +56% | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 1-Year TSR | | | +24% | | | +20% | | | +2% | | | –12% | | | +52% | | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
We continually evolve our compensation program based on feedback from shareholders, as well as changes in our business. Some of the recent changes made include the following:
We received positive feedback on these changes from our shareholders during our extensive shareholder outreach.future as well.
The Compensation Committee, with the counsel of its independent consultant, concluded that the compensation reported herein was earned and appropriate. The specific details of the executive compensation program and compensation paid to the named executive officers are described on pages 2633 through 4160 of this proxy statement. Consistent with the preference expressed by shareholders as part
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While this vote is advisory and non-binding, the Board of Directors and Compensation Committee value the opinion of the shareholders and will review the voting results and take into account the results and our ongoing dialogue with shareholders when future compensation decisions are made.
Accordingly, the Board of Directors recommends that you vote FOR the approval of the named officers' compensation.
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APPROVAL AND ADOPTION OF AMENDMENTS TO THE ARTICLES OF INCORPORATION TO ELIMINATE STATUTORY SUPERMAJORITY VOTING STANDARDS (ITEM 4 ON PROXY CARD)
Shareholders are being asked to approve and adopt amendments to Abbott's Articles of Incorporation (the "Articles") to replace and supersede certain supermajority voting standards set forth in the Illinois Business Corporation Act (the "IBCA") with majority voting standards. The proposed amendments to be approved by the shareholders are set forth in Items 4(a) and 4(b) below (each, a "Proposed Amendment"), and will be voted on separately. Approval and adoption of one Proposed Amendment is not conditioned upon approval and adoption of the other Proposed Amendment.
At the 2020 Annual Meeting, shareholders approved a shareholder proposal requesting that each provision in Abbott's governing documents requiring a two-thirds vote of outstanding shares under the IBCA be replaced by a majority vote of outstanding shares. As discussed below, under the IBCA, approval by at least two-thirds of the shares entitled to vote on a matter is required to amend the Articles and to approve certain extraordinary transactions. After consideration of shareholder input, including the approved shareholder proposal in 2020, the Board is recommending that shareholders approve and adopt the Proposed Amendments to supersede and replace the relevant IBCA supermajority voting standards with majority voting standards.
Item 4(a): Implement Majority Voting Standard for Amendments of the Articles of Incorporation and Effect Other Ministerial Changes
Currently, the Articles do not specify a voting standard for amendments to the Articles. As a result, the vote required to amend the Articles is determined by the provisions of the IBCA. Section 10.20 of the IBCA provides that an amendment of a corporation's articles of incorporation requires the affirmative vote of at least two-thirds of the votes of outstanding shares, and that this voting standard may be superseded in the corporation's articles of incorporation by a smaller requirement of not less than a majority of outstanding shares. Item 4(a) proposes to amend the Articles, by adding a new Article R-X, to provide that any amendment to the Articles subject to a vote of the shareholders under Section 10.20 of the IBCA shall require the affirmative vote of at least a majority of outstanding shares entitled to vote on such proposed amendment. The voting standard set forth in Article R-X, if adopted, would supersede the two-thirds voting standard set forth in Section 10.20 of the IBCA.
Item 4(a) also proposes ministerial changes to the Articles to (i) update the name and address of Abbott's registered agent (Article R-II), (ii) update the capitalization of Abbott Laboratories 65and remove references to a previous stock split (Article R-VII), and (iii) remove references to a prior restatement of the Articles (Article R-VIII).
Item 4(b): Implement Majority Voting standard for Certain Extraordinary Transactions
Currently, the Articles do not specify a voting standard for the following transactions:
As a result, the vote required for such transactions is determined by the relevant provisions of the IBCA. The IBCA provides that each such transaction requires the affirmative vote of at least two-thirds of the votes of the shares entitled to vote on the transaction. The IBCA also provides that this voting standard may be superseded in each case, in the corporation's articles of incorporation, by a smaller requirement of not less than a majority of outstanding shares.
Item 4(b) proposes to amend the Articles, by adding a new Article R-XI, to provide that each of the above transactions subject to a vote of the shareholders under the corresponding section of the IBCA shall require the affirmative vote of at least a majority of outstanding shares entitled to vote on such transaction. The voting
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standard set forth in Article R-XI, if adopted, would supersede the two-thirds voting standard set forth in the IBCA for each of the above described transactions.
The affirmative vote of the holders of at least two-thirds of the vote of the outstanding Abbott common shares is required to approve each of Item 4(a) and Item 4(b). Abstentions and broker non-votes, if any, have the same effect as votes against these Items.
The full text of the amended and restated Articles implementing the Proposed Amendments is set forth in Exhibit B. Additions and deletions implementing the Proposed Amendments are indicated, respectively, by underlining and strike-outs. The general description of the Proposed Amendments set forth above is qualified in its entirety by reference to the amended and restated Articles implementing the Proposed Amendments, which is attached as Exhibit B.
If shareholders approve either of the Proposed Amendments by the requisite vote, Abbott will file Articles of Amendment with the Secretary of State of the State of Illinois to implement each of the Proposed Amendments that was approved and restate the Articles, as amended by each Proposed Amendment that was approved, in its entirety. Each Proposed Amendment that was approved will become effective upon the filing of the Articles of Amendment by the Secretary of State of the State of Illinois. For any Proposed Amendment that does not receive the requisite vote, that Proposed Amendment will not be implemented and the respective IBCA voting standard or provision in the Articles (in the case of Item 4(a)) will remain in place.
The Board of Directors recommends that you vote FOR the approval of the proposed amendments to Abbott's Articles of Incorporation.
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INTRODUCTION |
OneThree shareholder proposal hasproposals have been received and will be voted upon at the annual meeting only if properly presented by or on behalf of the proponent. Abbott is advised that the proposalproposals will be presented for action at the Annual Meeting. The proposed resolutionresolutions and the statementstatements made in support thereof, as well as the Board of Directors' statementstatements in opposition to this proposal,the proposals, are presented on the following pages.
The Board of Directors recommends that you vote AGAINST the proposal.proposals.
66 Abbott Laboratories 87
THE |
The Unitarian Universalist Association, 24 Farnsworth Street, Boston, Massachusetts 02210, has informed Abbott that it intends to present the following proposal at the Annual Meeting and that it owns 2,783 Abbott common shares.
PROPONENT'S STATEMENT IN SUPPORT OF SHAREHOLDER PROPOSAL
Whereas, we believe in full disclosure of Abbott Laboratories' ("Abbott") direct and indirect lobbying activities and expenditures to assess whether Abbott's lobbying is consistent with its expressed goals and in the best interests of stockholders.
Resolved, the stockholders of Abbott request the preparation of a report, updated annually, disclosing:
For purposes of this proposal, a "grassroots lobbying communication" is a communication directed to the general public that (a) refers to specific legislation or regulation, (b) reflects a view on the legislation or regulation and (c) encourages the recipient of the communication to take action with respect to the legislation or regulation. "Indirect lobbying" is lobbying engaged in by a trade association or other organization of which Abbott is a member.
Both "direct and indirect lobbying" and "grassroots lobbying communications" include efforts at the local, state and federal levels.
The report shall be presented to the Public Policy Committee and posted on Abbott's website.
Abbott spent $36,700,000 from 2010 – 2019 on federal lobbying. This figure does not include state lobbying, where Abbott also lobbies in 37 states1 but disclosure is uneven or absent. For example, Abbott spent $896,284 on lobbying in California from 2010 – 2019.
Abbott sits on the board of the Chamber of Commerce, which has spent over $1.6 billion on lobbying since 1998, and the boards of the Advanced Medical Technology Association and the Medical Device Manufacturers Association, which together spent $9,300,408 on lobbying for 2018 and 2019 and have drawn scrutiny for lobbying to weaken mandatory disclosure of medical device incidents.2 Abbott does not disclose its payments to trade associations and social welfare organizations, or the amounts used for lobbying.
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We are concerned that Abbott's lack of lobbying disclosure presents significant reputational risk when its lobbying contradicts company public positions. For example, Abbott publicly supported COVID-19 relief efforts, but the Chamber directly lobbied against using the Defense Production Act for production of personal protective equipment for workers.3 Abbott supports the World Health Organization's goal of increasing breast-feeding rates, its lobbying on attracted scrutiny after the Trump administration blocked a World Health Organization resolution encouraging breastfeeding.4 And Abbott drew attention and ultimately cut ties with one of its lobbyists over his controversial statements about Black Lives Matter.5
We believe the reputational damage stemming from these misalignments harms long-term value creation by Abbott. Thus, we urge Abbott to expand its lobbying disclosure.
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Board of Directors' Statement in Opposition to the
Shareholder Proposal on Lobbying Disclosure
The Board of Directors recommends that you vote AGAINST the proposal.
This same proposal has come before Abbott's shareholders at least four times, most recently last year, when Abbott shareholders rejected it by more than 80%. Abbott was then and still is transparent about its lobbying activities. Preparing and maintaining the annual report this proposal requests would add cost and consume resources, but without increasing any shareholder value. Indeed, as the Board laid out last year, Abbott already provides transparency around the categories of disclosure sought by this proposal, enabling shareholders to assess whether Abbott has any undue corporate influence over initiatives with which its investors disagree. Further, Abbott's political disclosure and accountability policies continue to be recognized as top tier among S&P 500 companies.1 The categories of disclosure called for by this proposal continue to be publicly available and are updated semiannually.
Abbott already discloses the information the shareholder seeks. Repeated reporting of existing disclosures would waste corporate resources and would not be in the best interests of Abbott or its shareholders.
The Board recommends you vote AGAINST this proposal again.
90
Handlery Hotels, Inc., 180 Geary Street, Suite 700, San Francisco, California 94108, has informed Abbott that it intends to present the following proposal at the annual meeting and that it owns 2,694 Abbott common shares.
PROPONENT'S STATEMENT IN SUPPORT OF SHAREHOLDER PROPOSAL
Whereas: In the wake of the George Floyd murder by police officers on May 25, 2020 a majority of Russell 1000 corporations made public statements expressing their plans to address racial justice, thereby taking the first step to becoming antiracist organizations. Antiracism is the practice of identifying, challenging, and changing the values, structures, and behaviors perpetuating systemic racism.1 Abbott issued a statement, on its "corporate newsroom" website page, supporting racial justice and the elimination of systemic racism. The statement provides only a generalized overview of Abbott's plans to further this effort. It did not provide measurable targets, goals, or quantifiable outcomes.
Numerous studies cite material corporate benefits associated with adopting corporate policies promoting racial justice:
However, inequities in the workplace continue:
Abbott can play a critical role in ending systemic racism by promoting racial justice.
The need for action is underscored by Abbott's 40% score on a recent Racial Justice Scorecard. This score is significantly below peers AbbVie Inc. and Boston Scientific, which both scored above 60%. Abbott's low score is due to its lack of publicly accessible diversity and inclusion targets and lack of disclosed data concerning hiring, retention, and promotion rates of people of color within the Company. Given heightened awareness around racism, failing to act and disclose policies and quantifiable data raises the material risk of revenue loss and reduced brand value.
Resolved: Shareholders request that Abbott Labs publish a report, at reasonable expense and excluding proprietary information, disclosing the Company's plan, if any, to promote racial justice.
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Supporting statement: Investors seek quantitative, comparable data to understand if and how the Company is promoting a commitment to Racial Justice. Proponents suggest the report include:
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Board of Directors' Statement in Opposition to the
Shareholder Proposal on Report on Racial Justice
The Board of Directors recommends that you vote AGAINST the proposal.
The shareholder's proposal is premised on Abbott's purported "score" on a "Racial Justice Scorecard." But this "Scorecard" (put out by the proponent itself) does not accurately reflect Abbott's commitment and work to date on racial justice, or the Company's intentions moving forward. Rather, Abbott's current disclosures in its Global Sustainability Report and 2030 Sustainability Plan depict Abbott's robust commitment to racial justice, diversity, and inclusion, which were not included by the proponent when creating their "scorecard." Further, going forward, Abbott will publish a Diversity and Inclusion (D&I) report, which will enhance these disclosures as well as provide a consolidated EEO-1 report that provides a summary of Abbott employees by race, gender, and job category. Thus, the proposal's new called-for report is unnecessary.
As captured in Abbott's existing disclosures and will be discussed further in its forthcoming D&I report, Abbott has had a long-lasting commitment to diversity, inclusion, and racial justice. First, for years, Abbott has been dedicated to building a pipeline of diverse talent. Nearly three decades ago, Abbott helped found the nonprofit group Advancing Minorities' Interest in Engineering, which develops partnerships among industry, government, and universities to achieve diversity in the engineering workforce. Abbott remains a partner today. Since 2006, Abbott has been building a pipeline of diverse talent through its science, technology, engineering, and math (STEM) programs. Since that time, more than 6,000 Abbott scientists, engineers, and other employees have shared their expertise to support programs that advance STEM education around the world, reaching more than 325,000 students. Even further, Abbott has operated a STEM internship program for U.S. high-school students since 2012, and Abbott hosts hundreds of college students for paid internships. In 2020, 71% of the high-school and 39% of college students participating in those programs were minorities. By 2030, Abbott aims to create opportunities in STEM programs for more than 100,000 young people, including 50% from underrepresented groups.
Second, Abbott recruits job candidates through partnerships with historically black universities and colleges, Hispanic-serving institutes, and other organizations, such as the Association of Latino Professionals in Finance and Accounting, the National Society of Black Engineers, and the Society of Hispanic Professional Engineers, to name a few.
Third, Abbott has, for years, been dedicated to the retention and advancement of historically disenfranchised groups. Abbott facilitates ten employee affinity groups, including groups appealing to African Americans, Latinos, LGTBQ members, and women to expand opportunities for these historically underrepresented groups. Each group is supported by a corporate officer. Nearly 10,000 Abbott employees participate in these groups—an accomplishment that did not happen overnight. And, as a result of all these efforts, today, one third of Abbott's front-line leadership roles are held by minority talent.
As the proposal mentions, since the events of this summer, Abbott reaffirmed its commitment to promote racial justice. But, omitted from the proposal and its "scorecard," is that after the events of this summer, Abbott's CEO communicated with Abbott employees to understand their concerns and ideas about how Abbott could further support racial justice. Abbott held numerous sessions with employees on this topic, surveyed employees about diversity and inclusion, named a Divisional Vice President of Diversity and Inclusion, offered a match to employees for donations to organizations promoting racial justice, and issued a statement on its digital and social channels denouncing racism, the killing of George Floyd and others, and requested the parties responsible be brought to justice.
Abbott's achievements with respect to racial justice and workplace diversity and inclusion have been recognized by third parties for years.
93
Ultimately, the shareholder proposal is based on a flawed premise and erroneously seeks a new report of existing or planned disclosures based on that premise.
For all these reasons, the Board recommends voting AGAINST this proposal.
94
Mr. Kenneth Steiner, 14 Stoner Avenue, 2M, Great Neck, New York 11021, has informed Abbott that he intends to present the following proposal at the Annual Meeting and that he owns no fewerless than 500 Abbott common shares.
PROPONENT'S STATEMENT IN SUPPORT OF SHAREHOLDER PROPOSAL
Proposal 4—7—Independent Board Chairman
ShareholdersThe shareholders request ourthe Board of Directors to adopt as policy, and amend our governing documentsthe bylaws as necessary, to require henceforth that the Chair of the Board of Directors, whenever possible, to be an independent member of the Board. The Board would have the discretion to phaseThis policy could be phased in this policy for the next CEO transition, implemented so it does not violate any existing agreement.transition.
If the Board determines that a Chair ,whowho was independent when selected is no longer independent, the Board shall select a new Chair who satisfies the requirements of the policy within a reasonable amount of time. Compliance with this policy is temporarily waived if in the unlikely event no independent director is available and willing to serve as Chairman. Chair.
This proposal requests that alltopic won 52% support at Boeing and 54% support at Baxter International in 2020. Support for this proposal topic jumped from 34% to 52% in one-year at Boeing.
Support for this proposal topic received 17% higher support at U.S. companies in 2020. Since management performance setbacks often result in higher support for this proposal topic, the necessary stepsmere submission of this proposal may be takenan incentive for our Chairman of the Board to accomplishperform better leading up to the above.2021 annual meeting.
Caterpillar
Shareholders are best served by an exampleindependent Board Chair who can provide a balance of power between the CEO and the Board. The primary duty of a Board of Directors is to oversee the management of a company recently changing courseon behalf of shareholders. A CEO serving as chair can result in excessive management influence on the Board and naming anweaker oversight of management. We urge the Board to take the opportunity to appoint a new independent board chairman. Caterpillar had strongly opposed a shareholder proposal forBoard Chair.
It is also important to have an independent board chairman to be the shareholder watchdog and help make up for the 2020 silencing of shareholders at shareholder meetings with the widespread substitution of online shareholder meetings using the pandemic as recently as its 2016 annual meeting. Wells Fargo also changed coursean easy steppingstone. Online meetings, which are a shareholder engagement and named an independent board chairman in 2016.shareholder outreach wasteland, are so easy for management that management will never want to return to in-person shareholder meetings.
It was reported in 2015 that 53%With tightly controlled online shareholder meetings everything is optional. For instance management reporting on the status of the Standard & Poors 1,500 firms separate these 2 positions. This proposal topic won 50%-plus support at 5 major U.S. companies in 2013 including 73% support at Netflix.
Atcompany is optional. Also answers to questions are optional even if management misleadingly asks for questions. And it was easy for Abbott Laboratories this proposals topic climbed from 30%-supportto cover up that Ms. Nancy McKinstry received 21% in 2015 to 37%-support in 2017. This 37%-support would have been higher (possibility 42%) if small shareholders had the same access to corporate governance information as large shareholders.
Meanwhile our Chairman /CEO received the highest negative votes of any director. This was 10-timesat the negative votes received by Daniel Starks who is relatively new to our board. The management response to the 2017 proposal on this topic did not say that our Lead Director was important enough to call a special shareholder2020 online Abbott meeting.
InFor instance Goodyear management hit the mute button right in the middle of a formal shareholder proposal presentation at its response2020 online shareholder meeting to this proposal our company could possibly name one step it has taken in 2017 to advance management accountability to shareholders.bar constructive criticism.
Please see:
Goodyear's virtual meeting creates issues with shareholder
https://www.crainscleveland.com/manufacturing/goodyears-virtual-meeting-creates-issues-shareholder
Please vote to enhance CEO accountability to shareholders:yes:
Independent Board Chairman—Proposal 47
Abbott Laboratories 67 95
Board of Directors' Statement in Opposition to the
Shareholder Proposal on Independent Board Chairman
The Board of Directors recommends that shareholdersyou voteAGAINST thisthe proposal.
As stated in Abbott's governance guidelines, "[t]he board of directors believes that it is important to retain the flexibility to allocate the responsibilities of the offices of chairman of the board and chief executive officer in any manner that it determines to be in the best interests of Abbott."1 The need for that flexibility has never been more apparent than this past year, when Abbott has received this shareholder proposal seven times since 2005 (many of which were submitted by this very shareholder). And seven times, Abbott's shareholders have rejected it. Each time this proposal returns,transitioned to a new CEO. The Board's current guidelines provided the Board remindswith the flexibility necessary to adopt the leadership structure in the best interests of Abbott and its shareholders why they have rejectedduring this cookie-cutter proposal so many times already: (a) there is no proved improvement to governance or performance in separating the CEO role from the chairman role; (b) Abbott's existing governance structure ensures appropriate oversight of management; and (c)transition.
Indeed, every year, the Board is entrusted to act in shareholders' best interests already, and as such should be free to exercise its judgment to select the best person for the chairman role. Last year, the majority of Abbott's shareholders overwhelmingly rejected the proposal again. Given the considerable success Abbott has had withreviews its leadership structure to date, Abbott recommends that shareholders vote AGAINST this proposal for an eighth time.
When it comes to corporate governance, no single leadership structure isensure the appropriate for every company. Empirical studies have found that mandating a board chairman separate from the company CEO does not guarantee any better operating performance or improved corporate governance.(1) This is why, for the last two years, not a single proposal advocating this change has garnered enough shareholder support to passat any company. In fact, more large-cap companiescombined the chairmanlevel of oversight, independence, and CEO roles in 2017 than in the previous year.
Rather than preclude certain candidates from the chairmanship, Abbott ensures oversight of its management through other means—means the Board believes are more suitable to Abbott. For instance,every Abbott Board member (other than the Chairman) satisfies the New York Stock Exchange's criteria for being independent. This year, Abbott added two new independent directors. This full Board of independent directors evaluates the CEO's performance annually and regularly reviews leadership structure. And these independent directors sit on all key committees that oversee the integrity of Abbott's financial statements, executive compensation, and the nomination of new directors, among other functions. Further still, Abbott also has a lead independent director who can preside over meetings of the independent directors and meet with the Chairman to discuss any matter arising from these meetings. This lead director can also call additional meetings of the independent directors (which is, Abbott's entire Board minus the Chairman) as deemed necessary and perform any other function as the Board may direct.
This structure provides Abbott's Board with appropriate and desired flexibility. The Board is not unnecessarily precluded from considering certain candidates from serving as Chairman. Rather, after considering all the relevant factors, the candidate's experience, and the Board's own strategic vision for the company, the Board selects who is best suited to serve as Chairman. And when the time comes for Abbott to transition to new leadership, the Board is not arbitrarily prohibited from considering any of its options to lead Abbott's Board—be it the outgoing CEO, the new CEO, or an independent director.
Contrary to the suggestion in the shareholder's proposal, the Board believes that Abbott's existing leadership structure has served shareholders well. Under the current joint CEO and Chairman structure, Abbott has continuously transformed through several strategic actions. In just the past year, Abbott acquired St. Jude Medical, Inc., and Alere Inc., creating a medical devices and diagnostics leader, positioning the company for continued profitable growth. Abbott continues to develop one of the leading pipelines of innovative and promising new healthcare products. All of this activity has inured to the benefit of Abbott's shareholders. In fact, in just 2017, Abbott's one-year total shareholder return was 52%, which was 30.2 percentage points above the Standard & Poor's 500 Index. If a shareholder had invested in Abbott in 1999, and held those shares until about the end of January, that shareholder would have enjoyed an approximate gain of 299%.
responsibility. The Board continues to believe that providingflexibility coupled with a strong Lead Independent Director is best for Abbott and its shareholders. Abbott's Lead Independent Director is selected from among the ranks of independent directors. In that role, the Lead Independent Director consults directly with major shareholders on Abbott business. The Lead Independent Director oversees the Board evaluation process. The Lead Independent Director is empowered to call meetings of the independent directors, if necessary. And the Lead Independent Director can review and approve agenda items, the Board's schedule, and, where appropriate, information provided to other Board members.
Not only would the shareholder's proposal handcuff the Board when deciding on the best leadership structure for the Company, it misleadingly suggests there is a trend among S&P 500 companies to do so. The shareholder's proposal confuses the existence of a separate and independent board chair among S&P 500 companies with the ability to chooseadoption of a policy mandating, in all circumstances, the appropriate candidateseparation and independence of a company's board chair. A number of companies do have separate and independent board chairs, but the actual number of S&P 500 companies that have adopted an inflexible policy mandating the chair and CEO be separate, no matter the situation, is miniscule.2 The sort of rigidity this proposal calls for Chairman and/does not serve every company. It does not even serve most S&P 500 companies. And it does not serve Abbott's interests or CEO servesits shareholders, as demonstrated with this recent leadership transition.
This is the interest of shareholders.fifth time this shareholder has submitted this same proposal. Abbott shareholders have consistently voted against this proposal by significant margin, and should do so again here.
The Board of Directors recommends that you vote AGAINST the proposal.
68 Abbott Laboratories96
APPROVAL PROCESS FOR RELATED PERSON TRANSACTIONS
It is Abbott's policy that the Nominations and Governance Committee review, approve, or ratify any transaction in which Abbott participates and in which any related person has a direct or indirect material interest if such transaction involves or is expected to involve payments of $120,000 or more in the aggregate per fiscal year. Related person transactions requiring review by the Nominations and Governance Committee pursuant to this policy are identified in:
In determining whether to approve or ratify a related person transaction, the Nominations and Governance Committee will consider the following items, among others:
This process is included in the Nominations and Governance Committee's written charter, which is available in the corporate governance section of Abbott's investor relations website (www.abbottinvestor.com). The spouse of one of our former executive officers, Jaime Contreras, iswas employed by Abbott. During 2017,2020, her total compensation exceeded the foregoing threshold.
Abbott Laboratories 69 97
INFORMATION CONCERNING SECURITY OWNERSHIP |
The table below reports the number of common shares beneficially owned as of December 31, 20172020 by BlackRock, Inc. and The Vanguard Group (directly or through their subsidiaries), the only persons known to Abbott to beneficially own beneficially more than 5% of Abbott's outstanding common shares.
Name and Address of Beneficial Owner | Shares Beneficially Owned | Percent of Class | | Name and Address of Beneficial Owner | Shares Beneficially Owned | Percent of Class | | |||||||||||
| | | | | | | | | | | | | | | | | | |
BlackRock, Inc.(1) 55 East 52nd Street New York, NY 10055 | 110,201,384 | 6.3% | BlackRock, Inc.(1) 55 East 52nd Street New York, NY 10055 | 133,426,810 | 7.5% | |||||||||||||
| | | | | | | | | | |||||||||
| The Vanguard Group(2) 100 Vanguard Blvd. Malvern, PA 19355 | 133,768,355 | 7.68% | | The Vanguard Group(2) 100 Vanguard Blvd. Malvern, PA 19355 | 147,272,920 | 8.3% | | ||||||||||
| | | | | | | | | | | | | | | | | |
|
One report for Edward M. Liddy, reporting a purchase of shares, was filed late due to an administrative error by Mr. Liddy's financial advisor.
|
In accordance with Abbott's articles of incorporation, Abbott has advanced defense costs on behalf of a former officer in connection with the 2009 AMO acquisition transaction.
DATE FOR RECEIPT OF SHAREHOLDER PROPOSALS FOR THE |
Shareholder proposals for presentation at the 20192022 Annual Meeting must be received by Abbott no later than November 16, 201812, 2021 and must otherwise comply with the applicable requirements of the Securities and Exchange Commission to be considered for inclusion in the proxy statement and proxy for the 20192022 meeting.
70 Abbott Laboratories98
PROCEDURE FOR RECOMMENDATION AND NOMINATION OF DIRECTORS AND TRANSACTION OF BUSINESS AT ANNUAL MEETING |
Proxy Access: A shareholder, or a group of up to 20 shareholders, owning continuously for at least three years Abbott common shares representing an aggregate of at least 3% of the voting power entitled to vote in the election of directors, may nominate and have included in Abbott's proxy materials director nominees constituting up to 20% of the Board, provided that the shareholder(s) and the nominee(s) satisfy the requirements in Abbott's By-Laws.
Nominating shareholders are permitted to include in Abbott's proxy statement a 500-word statement in support of their nominee(s). Abbott may omit any information or statement that it, in good faith, believes is materially false or misleading, omits to state a material fact, or would violate any applicable law or regulation.
Other Nominations of Directors or Proposals to Transact Business: A shareholder may also recommend persons as potential nominees for director by submitting the names of such persons in writing to the ChairmanChair of the Nominations and Governance Committee or the Secretary of Abbott. Recommendations should be accompanied by a statement of qualifications and confirmation of the person's willingness to serve. A nominee who is recommended by a shareholder following these procedures will receive the same consideration as other comparably qualified nominees.
A shareholder entitled to vote for the election of directors at an Annual Meeting and who is a shareholder of record on:
may directly nominate persons for director, or make proposals of other business to be brought before the Annual Meeting, by providing proper timely written notice to the Secretary of Abbott.
Other Nominations of Directors or Proposals to Transact Business:Notice Requirements: The notice submitted by a shareholder must include certain information required by Article II of Abbott's By-Laws, including information about the shareholder, any beneficial owner on whose behalf the nomination or proposal is being made, their respective affiliates or associates or others acting in concert with them, and any proposed director nominee.
For each matter the shareholder proposes to bring before the Annual Meeting, the notice must also include a brief description of the business to be discussed, the reasons for conducting such business at the Annual Meeting, any material interest of the shareholder in such business and certain other information specified in the By-Laws. In addition, in the case of a director nomination, including through proxy access, the notice must include a completed and signed questionnaire, representation and agreement of the nominee addressing matters specified in the By-Laws.
To be timely, written notice either to directly nominate persons for director, including through proxy access, or to bring business properly before the Annual Meeting must be received at Abbott's principal executive offices not less than ninety days and not more than one hundred twenty days prior to the anniversary date of the preceding Annual Meeting. If the Annual Meeting is called for a date that is not within twenty-five days before or after such anniversary date, notice by the shareholder must be received not later than the close of business on the tenth day following the day on which such notice of the date of the Annual Meeting was mailed or made public in a press release or in a filing with the Securities and Exchange Commission, whichever occurs first. To be timely for the 20192022 Annual Meeting, this written notice must be received by Abbott no later than January 25, 2019.23, 2022.
In addition, the notice must be updated and supplemented, if necessary, so that the information provided or required to be provided is true and correct as of the record date for the Annual Meeting and as of the date that is ten business days prior to the meeting. Any such update or supplement must be delivered to the Secretary of Abbott at Abbott's principal executive offices not more than five business days after the record date for the Annual Meeting, and not less than eight business days before the date of the Annual Meeting in the case of any update or supplement required to be made as of ten business days prior to the Annual Meeting.
Abbott Laboratories 71 99
GENERAL |
It is important that proxies be returned promptly. Shareholders are urged, regardless of the number of shares owned, to vote their shares. Most of Abbott's shareholders may vote their shares by telephone or using the Internet. Shareholders who wish to vote by mail should sign and return their proxy card in the enclosed business reply envelope. Shareholders who vote by telephone or using the Internet do not need to return their proxy card.
The Annual Meeting will be held at Abbott's headquarters, 100 Abbott Park Road, located at the intersection of Route 137 and Waukegan Road, Lake County, Illinois. AdmissionIn light of restrictions and guidelines on group gatherings issued by government and public health officials regarding the ongoing coronavirus pandemic, and to support the meeting will be by admission card only. Ahealth and safety of Abbott's shareholders, employees, and communities, any shareholder planningwho wishes to attend the meeting should promptly completeAnnual Meeting may only attend virtually. Shareholders will not be able to attend the Annual Meeting in person. Please see pages 12 to 13 for information on how to virtually attend and returnparticipate in the reservation form. Reservation forms must be received before April 20, 2018. An admission card admits only one person. A shareholder may request two admission cards, but a guest must be accompanied by a shareholder.Annual Meeting.
By order of the Board of Directors.
HUBERT L. ALLEN
Secretary
72 Abbott Laboratories100
DIRECTOR INDEPENDENCE STANDARD
No director qualifies as "independent" unless the board affirmatively determines that the director has no material relationship with Abbott or its subsidiaries (either directly or as a partner, shareholder or officer of an organization that has a relationship with Abbott or any of its subsidiaries). In making this determination, the board shall consider all relevant facts and circumstances, including the following standards:
Abbott Laboratories Exhibit A-1
NON-GAAP RECONCILIATIONPROPOSED AMENDMENTS TO ARTICLES OF FINANCIAL INFORMATIONINCORPORATION
A B B O T T
L A B O R A T O R I E S
AMENDED AND RESTATED ARTICLES OF INCORPORATION
The name of the corporation is: Abbott uses various non-GAAP financial measures to adjust for specified items that are unusual or unpredictable, such as cost reduction initiatives, restructuring programs, integration activities and other business acquisition-related costs,Laboratories.
The corporation was incorporated March 6, 1900 under the estimated 2017 impact of U.S. tax reform,name: The Abbott Alkaloidal Company.
Subsequent corporate names and the recognitiondates of a gain and deferred taxes associated with the sale of the Medical Optics business. These non-GAAP financial measures also exclude intangible amortization expense to provide greater visibility on the results of operations excluding these costs, similar to how Abbott's management internally assesses performance.
Abbott's management believes the presentation of these non-GAAP financial measures provides useful information to investors regarding Abbott's results of operations as these non-GAAP financial measures allow investors to better evaluate ongoing business performance. Abbott's management also uses these non-GAAP financial measures internally to monitor performance. Abbott, however, cautions investors to consider these non-GAAP financial measures in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP.
The reconciliation of Adjusted EBITDA to Earnings from Continuing Operations is as follows:their adoption are:
(in millions) | | 2017 | | 2016 | | % Change | | ||||||
| | | | | | | | | | | | | |
Earnings from Continuing Operations | $ | 353 | $ | 1,063 | –67 | % | |||||||
Less Tax Expense on Earnings from Continuing Operations | | 1,878 | | 350 | | | | ||||||
Earnings from Continuing Operations before taxes | 2,231 | 1,413 | |||||||||||
| Specified Items Including Intangible Amortization | | 3,038 | | 2,617 | | | | |||||
Interest Expense | 879 | 186 | |||||||||||
| Depreciation | | 1,046 | | 803 | | | | |||||
Adjusted EBITDA | $ | 7,194 | $ | 5,019 | 43 | % | |||||||
| | | | | | | | | | | | | |
Name | Date Adopted | |
---|---|---|
Abbott Laboratories | May 29, 1915 |
Abbott Laboratories and SubsidiariesDetails of Specified ItemsYear Ended December 31, 2017(in millions, except per share data)(unaudited)RESTATED ARTICLE R-II (Amended)
| | Acquisition or Divestiture- related(a) | | Restructuring and Cost Reduction Initiatives(b) | | Intangible Amortization | | Other(c) | | Total Specifieds | | ||||||||
| | | | | | | | | | | | | | | | | | | |
Gross Margin | $ | 983 | $ | 195 | $ | 1,975 | $ | — | $ | 3,153 | |||||||||
R&D | | (72) | | (105) | | — | | (59) | | (236) | | ||||||||
SG&A | (812) | (50) | — | 1 | (861) | ||||||||||||||
| Interest expense, net | | (24) | | — | | — | | — | | (24) | | |||||||
Other (income) expense, net | 1,285 | (34) | — | (15) | 1,236 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | |
| Earnings from Continuing Operations before taxes | $ | 606 | $ | 384 | $ | 1,975 | $ | 73 | | 3,038 | | |||||||
| | | | | | | | | | | | | | | | | | | |
The address of its registered office in the State of Illinois on the date ofadoption offiling thisAmendmentAmended andRestatement ofRestated Articles of Incorporationwas: 14th Street and Sheridan Road, Northis: C T Corporation System, 208 South LaSalle Street, Suite 814, Chicago, Illinois,60604, County ofLakeCook, and the name of its Registered Agent at said addresswas: Laurence R. Leeis: C T Corporation.
The duration of the corporation is: Perpetual.
The purpose or purposes for which the corporation is organized are:
Annex I-1 Abbott LaboratoriesExhibit B-1
organization, and to pay for the same or any part or combination thereof in cash, shares of the capital stock, bonds, debentures, debenture stock, notes, or other obligations of the corporation or otherwise, or by undertaking and assuming the whole or any part of the liabilities or obligations of the transferor; and to hold or in any manner dispose of the whole or any part of the property and assets so acquired, and to conduct in any lawful manner the whole or any part of the business so acquired and to exercise all the powers necessary or convenient in and about the conduct, management and carrying on of such business.
Abbott LaboratoriesRESTATED ARTICLE R-V
The aggregate number of shares which the Corporation is authorized to issue is 2,401,000,000 divided into two classes. The designation of each class, the number of shares of each class, and SubsidiariesDetailsthe par value, if any, of Specified ItemsYear Ended December 31, 2016(in millions, except per share data)(unaudited)
the shares of each class, or a statement that the shares of any class are without par value, are as follows:
| | Acquisition or Divestiture- related(a) | | Restructuring and Cost Reduction Initiatives(b) | | Mylan Equity Investment Adjustment(c) | | Venezuela Devaluation(d) | | Intangible Amortization | | Other(e) | | Total Specifieds | | ||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
Gross Margin | $ | 24 | $ | 72 | $ | — | $ | 15 | $ | 550 | $ | — | $ | 661 | |||||||||||
R&D | | (9) | | (6) | | — | | — | | — | | (62) | | (77) | | ||||||||||
SG&A | (133) | (89) | — | (10) | — | (17) | (249) | ||||||||||||||||||
| Interest expense, net | | (240) | | — | | — | | — | | — | | — | | (240) | | |||||||||
Net foreign exchange (gain) loss | — | — | — | (480) | — | — | (480) | ||||||||||||||||||
| Other (income) expense, net | | 38 | | — | | (947) | | (1) | | — | | — | | (910) | | |||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
Earnings from Continuing Operations before taxes | $ | 368 | $ | 167 | $ | 947 | $ | 506 | $ | 550 | $ | 79 | 2,617 | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
Class | Series (if any) | Number of Shares | Par Value per Share or Statement that Shares are Without Par Value | ||||
---|---|---|---|---|---|---|---|
Preferred Shares | Issuable in series | 1,000,000 | $1 per share | ||||
Common Shares | None | 2,400,000,000 | Without par value |
The preferences, qualifications, limitations, restrictions and the integrationspecial or relative rights in respect of systems, processesthe shares of each class are:
Abbott Laboratories Annex I-2 Exhibit B-2
The Board of Directors may increase the number of shares designated for any existing series by a resolution adding to such series authorized and unissued Preferred Shares not designated for any other series.
Exhibit B-3
SECTION C
The Preferred and Common Shares
No holder of shares of any class of the Corporation shall be entitled as of right to subscribe to or purchase any additional or increased shares of any class (whether now or hereafter authorized), or obligations convertible into any class or classes of shares (whether now or hereafter authorized), or shares of any class convertible into shares of any other class or classes (whether now or hereafter authorized), or obligations, shares or other securities carrying warrants or rights to subscribe to shares of the Corporation of any class or classes (whether now or hereafter authorized), but any and all shares, bonds, debentures or other securities or obligations, whether or not convertible into shares or carrying warrants entitling the holders thereof to subscribe to shares, may be issued, sold or disposed of from time to time by the board of Directors to such persons, firms or corporations and for such consideration (so far as may be permitted by law, by the Articles of Incorporation of the Corporation, and by the terms of any resolution creating any series of Preferred Shares) as the Board of Directors shall from time to time in its absolute discretion determine. Among other things the Board of Directors shall have the right at any time and from time to time to offer, sell and issue shares of any class of the Corporation, or obligations, shares or other securities carrying warrants or rights to subscribe to shares of the Corporation of any class or classes, to employees of the Corporation and to employees of subsidiaries of the Corporation without first offering the same to itsshare holdersshareholders, for such prices or considerations, and upon such terms and conditions as the Board of Directors shall from time to time determine, and upon any such issuance and sale, or plan or proposal to issue and sell, the Board of Directors may classify employees as in its discretion it may deem advisable, and may differentiate between classes, and exclude any class from participation. The fact that an employee may be a director or an officer of the Corporation, or any of its subsidiaries, shall not disqualify him from participation as an employee in any such issuance or sale to employees.
Exhibit B-4
RESTATED ARTICLE R-VII (Amended)
1. The class and number of shares issued on the date ofadoption offiling thisRestatement of theAmended and Restated Articles of Incorporation and thestatedamount of paid-in capitaland paid-in surplus as of such datewereare:1
Class | Series (If Any) | Number of Shares | Par Value | with Respect Thereto | ||||||
---|---|---|---|---|---|---|---|---|---|---|
Common | None | $ | ||||||||
| None Designated | 0 | $1 | $ | ||||||
| | | | | | | | | | |
Total | $ | |||||||||
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| | | | | | | | | | |
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2. The class and number of shares and the stated capital and paid-in surplus set forth in paragraph 1 above are changed by this Amendment and Restatement as follows:
Effective as of the close of business on the date of filing this Amendment and Restatement with the Secretary of State of Illinois each of the presently issued Common Shares of $5 par value is hereby changed into three Common Shares without par value authorized by this amendment to and restatement of Articles of Incorporation. The amendment does not affect stated capital or paid-in surplus.
RESTATED ARTICLE R-VIII (Amended)
The foregoing Restated Articles R-I to R-VII are an amendment constituting a restatement of the Articles of Incorporation of Abbott Laboratories, effective as of the date of issuance of the Certificate of Amendment of Articles of Incorporation by the Secretary of State, and shall from that time supersede and stand in lieu of the Corporation's pre-existing Articles of Incorporation.[Intentionally omitted.]
A majority of the directors then in office may fill one or more vacancies occurring in the board of directors arising between meetings of shareholders by reason of an increase in the number of directors or otherwise and any director so elected shall serve until the next annual meeting of shareholders, provided that at no time may the number of directors selected to fill vacancies in this manner during any interim period between meetings of shareholders exceed 331/3 percent of the total membership of the board of directors.
RESTATED ARTICLE R-X (Amended)
Any proposed amendment to this Amended and Restated Articles of Incorporation subject to a vote of the shareholders pursuant to Section 10.20(c) of the Illinois Business Corporation Act ("IBCA") (or any successor thereto) shall be adopted by the shareholders of the Corporation upon receipt by the Corporation of the affirmative vote of at least a majority of the votes of the outstanding shares entitled to vote on such proposed amendment (unless any class or series of shares of the Corporation is entitled to vote as a class on such proposed amendment, in which event such proposed amendment shall be adopted by the shareholders of the Corporation upon receipt by the Corporation of the affirmative vote of at least a majority of the outstanding shares of each such class or series ofshares entitled to vote as a class on such proposed amendment and of the total outstanding shares entitled to vote on such proposed amendment). The vote requirement for shareholder approval set forth in this Restated Article R-X supersedes the two-thirds vote requirement set forth in Section 10.20(c) of the IBCA.
Exhibit B-5
RESTATED ARTICLE R-XI (Amended)
(i) | Any proposed plan of merger, consolidation or exchange subject to approval by the shareholders pursuant to Section 11.20(a) of the IBCA (or any successor thereto); | |
(ii) | any sale, lease, exchange, or other disposition of all, or substantially all, the property and assets, with or without the good will, of the Corporation, if not made in the usual and regular course of its business, subject to approval by the shareholders pursuant to Section 11.60(c) of the IBCA (or any successor thereto); and | |
(iii) | any voluntary dissolution of the Corporation subject to approval by the shareholders pursuant to Section 12.15(c) of the IBCA (or any successor thereto); |
in each case, shall be approved by the shareholders of the Corporation upon receipt by the Corporation of the affirmative vote of at least a majority of the votes of the outstanding shares of the Corporation entitled to vote on the applicable matter (unless any class or series of shares of the Corporation is entitled to vote as a class on such matter, in which event such matter shall be approved by the shareholders of the Corporation upon receipt by the Corporation of the affirmative vote of at least a majority of the outstanding shares of each such class or series of shares entitled to vote as a class on such matter and of the total outstanding shares entitled to vote on such matter). The vote requirement for shareholder approval set forth in this Restated Article R-XI supersedes the two-thirds vote requirement set forth in each of the sections of the IBCA referenced above in this Restated Article R-XI.
Exhibit B-6
Abbott Laboratories
100 Abbott Park Road
Abbott Park, Illinois 60064-6400 U.S.A.
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
AND PROXY STATEMENT
MEETING DATE
APRIL 27, 201823, 2021
9:00 A.M. CENTRAL TIME
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YOUR VOTE IS IMPORTANT Please sign and promptly return your proxy in the enclosed envelope or vote your shares by telephone or using the Internet. | ||||||
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In light of restrictions and guidelines on group gatherings issued by government and public health officials regarding the ongoing coronavirus pandemic, and to support the health and safety of Abbott's shareholders, employees, and communities, shareholders may only attend the Annual Meeting virtually. Shareholders will not be able to attend the Annual Meeting in person.
How to Attend the Meeting on the Virtual Meeting Platform. Shareholders will be able to attend, vote their shares, and submit questions during the Annual Meeting at www.meetingcenter.io/290382097. To be admitted to the meeting, shareholders will be required to enter the meeting password (ABT2021) and a 15-digit control number. Please see pages 12 to 13 of this proxy statement for instructions on how to be admitted to the Annual Meeting.
How to Attend the Meeting by Phone. Shareholders who wish to attend the meeting by phone should contact Abbott representatives at 224-668-7238 or abbottshareholders@abbott.com to obtain the meeting telephone number in advance of the meeting. Shareholders participating by phone will be able to listen to the meeting but will not have the ability to vote or submit questions during the meeting. Shareholders who wish to vote their shares or submit questions during the meeting should attend the meeting on the virtual meeting platform.
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NNNNNNNNNNNN . + NNNNNN C 1234567890MMMMMMMMMMMM MMMMMMMMMMMMMMM C123456789 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000004 ENDORSEMENT_LINE______________ SACKPACK_____________ MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 Important Notice Regarding the Availability of Proxy Materials for the Abbott Laboratories Annual Meeting of ShareholdersYour vote matters – here’s how to be Held on April 27, 2018 Under Securities and Exchange Commission rules, you are receiving this notice that the proxy materials for the Annual Meeting of Shareholders are available on the Internet. Follow the instructions below to view the materials andvote! You may vote online or request a paper copy. The items to be voted onby phone instead of mailing this card. Online GIof ntoo welwewct.rinovneicstvoortviontge,.com/abt delete QR code and location ofcontrol # or scan the annual meetingQR code — login details are on the reverse side. Your vote is important! This communication presents only an overview of the more complete proxy materials that are available to you on the Internet. We encourage you to access and review all of the important information contained in the proxy materials before voting. The proxy statement and annual report to shareholders are available at: www.investorvote.com/abt Easy Online Access — A Convenient Way to View Proxy Materials and Vote When you go online to view materials, you can also vote your shares. Step 1: Go to www.investorvote.com/abt. Step 2: Click the icon on the right to view the current meeting materials. Step 3: Return to the investorvote.com window and follow the instructions on the screen to log in. Step 4: Make your selection as instructed on each screen to select delivery preferences and vote. g, When you go online, you can also help the environment by consenting to receive electronic delivery of future materials. Obtaining a Paper Copy of the Proxy Materials – If you want to receive a paper copy of these documents, you must request one. There is no charge to you for this request. Please make your request as instructed on the reverse side of this Notice on or before April 13, 2018 to facilitate timely delivery. + 2 N O T C O Y 02QREC NNNNNNNNN Annual Meeting Notice1234 5678 9012 345 IMPORTANT ANNUAL MEETING INFORMATION
. Abbott Laboratories Annual Meeting of Shareholders will be held at 9:00 a.m. Central Time on April 27, 2018 at the corporation’s headquarters, 100 Abbott Park Road, at the intersection of Route 137 and Waukegan Road, Lake County, Illinois. Items to be voted on at the meeting are listed below along with the Board of Directors’ recommendations. The Board of Directors recommends a vote FOR Items 1, 2 and 3. 1. Election of 12 Directors: (01) R.J. Alpern, (02) R.S. Austin, (03) S.E. Blount, (04) E.M. Liddy, (05) N. McKinstry, (06) P.N. Novakovic, (07) W.A. Osborn, (08) S.C. Scott III, (09) D.J. Starks, (10) J.G. Stratton, (11) G.F. Tilton, and (12) M.D. White. Ratification of Ernst & Young LLP as auditors Say on Pay – An Advisory Vote to Approve Executive Compensation 2. 3. The Board of Directors recommends a vote AGAINST Item 4. 4.Shareholder Proposal – Independent Board Chairman PLEASE NOTE – YOU CANNOT VOTE BY RETURNING THIS NOTICE. To vote your shares you must vote online or request a paper copy of the proxy materials to receive a proxy card. If you plan to attend the Annual Meeting of Shareholders, please complete and return the reservation form on the back cover of the proxy statement, which can be found online at www.investorvote.com/abt. Directions to the Abbott Laboratories 2018 Annual Meeting of Shareholders are available in the proxy statement, which can be viewed at www.investorvote.com/abt. Here’s how to order a copy of the proxy materials and select a future delivery preference: Paper copies: Current and future paper delivery requests can be submitted via the telephone, Internet or email options below. Email copies: Current and future email delivery requests must be submitted via the Internet following the instructions below. If you request an email copy of the current meeting materials, you will receive an email with a link to the materials. PLEASE NOTE: You must use the number in the shaded bar on the reverse side of this notice when requesting a set of proxy materials. g Internet – Go to www.investorvote.com/abt. Follow the instructions to log in and order a copy of the current meeting materials and submit your preference for email or paper delivery of future meeting materials. Telephone – Call us free of charge at 1-866-641-4276 and follow the instructions to log in and order a paper copy of the materials by mail for the current meeting. You can also submit a preference to receive a paper copy for future meetings. Email – Send an email to investorvote@computershare.com with “Proxy Materials Abbott Laboratories” in the subject line. Include in the message your full name and address, plus the number located in the shaded bar onbelow. Phone Call toll free 1-800-652-VOTE (8683) within the reverse side of this notice,USA, US territories and state in the email that you want aCanada Save paper, copy of current meeting materials. You can also state your preference to receive a paper copy of future meeting materials. To facilitate timelytime and money! Sign up for electronic delivery all requests for a paper copy of the proxy materials must be received by April 13, 2018. g g 02QREC Annual Meeting Notice
MMMMMMMMMMMM . MMMMMMMMMMMMMMM C123456789 000004 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext ENDORSEMENT_LINE______________ SACKPACK_____________ MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6at www.investorvote.com/abt Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. q IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION,VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q Telephone and Internet Voting Instructions - You can vote by telephone OR Internet! Available 24 hours a day, 7 days a week! Instead of mailing your proxy, you may choose one of the two voting methods outlined below to vote your proxy. + To vote using the Telephone (within the USA, US territories & Canada) To vote using the Internet • Go to the following web site: www.investorvote.com/abt • Enter the information requested on your computer screen and follow the simple instructions. • Call toll free 1-800-652-VOTE (8683) in the USA, US territories & Canada any time on a touch tone telephone. There is NO CHARGE to you for the call. • Follow the simple instructions provided by the recorded message. 1. Election of 12 Directors Nominees: (01)14 Directors: 01 - R.J. Alpern (05) N. McKinstry, (09) D.J. Starks, ForAgainst Abstain (02) R.S. Austin, (06) P.N. Novakovic, (10) J.G. Stratton, (03) S.E. Blount, (07)05 - M.A. Kumbier 09 - W.A. Osborn (11)13 - G.F. Tilton and (04) E.M. Liddy, (08) S.C. Scott III, (12) M.D. White 4. Shareholder Proposal - Independent Board Chairman To Vote FOR All Nominees To WITHHOLD Vote From All Nominees To Vote FOR All Nominees, except withhold vote from the nominee(s) listed below ForAgainstFor Against Abstain 2. Ratification of Ernst & Young LLP as Auditors For address changes and/or comments please check this box and write them on the back where indicated.02 - R.S. Austin 03 - S.E. Blount 07 - N. McKinstry 11 - D.J. Starks 04 - R.B. Ford 08 - P.N. Novakovic 12 - J.G. Stratton 06 - D.W. McDew 10 - M.F. Roman 14 - M.D. White 3. Say on Pay –- An Advisory Vote to Approve Executive Compensation MMMMIMF VOTIMNG BYMAIL, YOU MUST COMPLETE BOTH SIDES OF THIS CARD.Mark here to vote FOR all nominees Mark here to WITHHOLD vote from all nominees 4. Amendments to the Articles of Incorporation to Eliminate Statutory Supermajority Voting Standards for: For Against Abstain For All EXCEPT - To withhold authority to vote for any nominee(s), write the name(s) of such nominee(s) below. (a) Amendments to the Articles of Incorporation _____________________________________________________________________ (b) Approval of Certain Extraordinary Transactions ForAgainst Abstain ForAgainst Abstain For Against Abstain 5. Shareholder Proposal - Lobbying Disclosure 6. Shareholder Proposal - Report on Racial Justice 7. Shareholder Proposal - Independent Board Chairman Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title and, where more than one is named, a majority should sign. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. MMMMMMM C 1234567890 J N T 9 0 7 5 2 MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND + MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND 1 P C F 3 6 1 8 7 8 1 MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND 02QRCD+ 1 P C F 4 03DVJE MMMMMMMMM B Authorized Signatures — This section must be completed for your vote to count. Please date and sign below. The Board of Directors recommends that youa vote AGAINST Item 4.Items 5, 6 and 7. A Proposals — The Board of Directors recommends that yourecommend a vote FOR all the nominees listed in Item 1 and FOR Items 1, 2, 3 and 3.4. 2021 Annual Meeting Proxy Card1234 5678 9012 345 X IMPORTANT ANNUAL MEETING INFORMATION
.In light of restrictions and guidelines on group gatherings issued by government and public health officials regarding the ongoing coronavirus pandemic, and to support the health and safety of Abbott’s shareholders, employees, and communities, shareholders may only attend the Annual Meeting virtually at www.meetingcenter.io/290382097. Shareholders will not be able to attend the Annual Meeting in person. To access the Annual Meeting, you must have the 15-digit control number that is printed in the circle in the shaded bar located on the reverse side of this form and the meeting password ABT2021. q IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION,VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q + Proxy — Abbott Laboratories + SOLICITED ON BEHALF OF THE BOARD OF DIRECTORSSolicited on Behalf of the Board of Directors for Annual Meeting - April 23, 2021 The undersigned, revoking all previous proxies, acknowledges receipt of the Notice and Proxy Statement dated March 16, 2018,12, 2021, in connection with the Annual Meeting of Shareholders of Abbott Laboratories to be held at 9:00 a.m. on April 27, 2018,23, 2021, at the corporation’s headquarters, and hereby appoints MILES D. WHITERobert B. Ford and HUBERTHubert L. ALLEN,Allen, or either of them, proxy for the undersigned, with full power of substitution, to represent and vote all shares of the undersigned upon all matters properly coming before the Annual Meeting or any adjournments thereof. If the undersigned is a participant in the Abbott Laboratories Stock Retirement Plan, then this card also instructs the plan’s Investment Committee to vote as specified at the 20182021 Annual Meeting of Shareholders, and any adjournments thereof, all shares of Abbott Laboratories held in the undersigned’s plan account upon the matters indicated and in their discretion upon such other matters as may properly come before the meeting. INSTRUCTIONS: This proxy when properly executed will be voted in the manner directed herein by the undersigned shareholder. If no direction is made, this proxy will be voted FOR Items 1 and 2 and 3, AGAINST Item 4, and in accordance with the judgment of the proxy holders on any other matters that are properly brought before the meeting. Abbott’s proxy holders reserve the right to vote shares cumulatively in their sole discretion so that one or more of the nominees may receive fewer votes than other nominees (or no votes at all). This proxy when properly executed will be voted in the manner directed herein by the undersigned shareholder. If no such directions are indicated, this proxy will be voted FOR the election of the nominees listed in Item 1, FOR Items 2, 3 and 4, and AGAINST Items 5, 6 and 7. In their discretion, the proxy holders are authorized to vote upon any other matters as may properly come before the meeting. (Items to be voted appear on reverse side) Change of Address — Please print your new address below. Comments — Please print your comments below. (Important - Please+ C Non-Voting Items Proxy — Abbott Laboratories Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign and date below.) Authorized Signatures - Sign Here - This section must be completed for your instructions to be executed. Each joint tenant should sign; executors, administrators, trustees, etc. should give full title and, where more than one is named, a majority should sign. Please read other side before signing. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. + IF VOTING BY MAIL, YOU MUST COMPLETE BOTH SIDES OF THIS CARD.up at www.investorvote.com/abt