6      Abbott Laboratories

SHAREHOLDER OUTREACH:

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, sustainability and other strategic matters. During 2019, we conducted outreach with a cross-section of shareholders representing more than 65% of our outstanding shares. Investor sentiment and specific feedback was summarized and shared with executive management and the Board of Directors as appropriate.

7

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

world.

Ethical Business Practices		Environmental		Innovation, Access
Chief Ethics and Compliance Officer reports regularly to the CEO and Board		Active management of our environmental impact across several areas		Accessibility incorporated into product design and commercialization strategy

Cybersecurity	​	Supply Chain
	​
Incorporated into product design and foundational data infrastructure; dedicated senior management role with regular updates to the Board	​	Supplier selection, risk evaluation processes; diverse global footprint with redundancies

R&D / Pipeline & Affordability		Talent Management		Product Quality
Robust market-insights driven developmentinternal innovation process that targets the world's most pressing healthcare challenges and prioritization processes with economic valuation metricsincorporates access and affordability considerations into the design process		Award winning development programs, integrated talent management and succession planning processes		Head of Quality Assurance reports regularly toFocused on ensuring the CEOhighest quality standards and Boardsystems

Abbott Laboratories      7

Climate & Water Use		Supply Chain, Packaging & Waste		Data & Data Privacy
Active management of our environmental impact throughout our value chain		Committed to maintaining a high-quality, sustainable and resilient supply chain		Utilizing data to create healthcare solutions while ensuring responsible data protection

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

8      

8      Abbott Laboratories 9

INFORMATION ABOUT THE ANNUAL MEETING

WHO CAN VOTE

Shareholders of record at the close of business on February 27, 201926, 2020 will be entitled to notice of and to vote at the Annual Meeting. As of January 31, 2019,2020, Abbott had 1,756,470,2691,763,433,243 outstanding common shares, which are Abbott's only outstanding voting securities. All shareholders have cumulative voting rights in the election of directors and one vote per share on all other matters.

NOTICE AND ACCESS

In accordance with the Securities and Exchange Commission's "Notice and Access" rules, Abbott mailed a Notice of Internet Availability of Proxy Materials (the "Notice") to certain shareholders in mid-March of 2019.2020. The Notice describes the matters to be considered at the Annual Meeting and how the shareholders can access the proxy materials online. It also provides instructions on how those shareholders can vote their shares. If you received the Notice, you will not receive a print version of the proxy materials, unless you request one. If you would like to receive a print version of the proxy materials, free of charge, please follow the instructions on the Notice.

CUMULATIVE VOTING

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

VOTING BY PROXY

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

REVOKING A PROXY

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

•

by delivering a written notice to the Secretary of Abbott,



•

by delivering an authorized proxy with a later date, or



•

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

DISCRETIONARY VOTING AUTHORITY

Unless authority is withheld in accordance with the instructions on the proxy, the persons named in the proxy will vote the shares covered by proxies they receive to elect the 1314 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 1314 nominees if, in the judgment of the proxy holders, such action is necessary or desirable. The persons named in the proxy may also decide to vote shares cumulatively in their sole discretion so that one or more of the nominees may receive fewer votes than the other nominees (or no votes at all), although they have no present intention of doing so. The proxy holders may not cast your vote for any nominee from whom you have withheld authority to vote.

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

Abbott Laboratories      910      

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

With the exception ofAside from matters omitted fromset forth in this proxy statement, pursuant to the rules of the Securities and Exchange Commission, the Board of Directors is not aware of any other issue which may properly be brought before the meeting. If other matters are properly brought before the meeting, the accompanying proxy will be voted in accordance with the judgment of the proxy holders.

QUORUM AND VOTE REQUIRED TO APPROVE EACH ITEM ON THE PROXY

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

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

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

INSPECTORS OF ELECTION

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

COST OF SOLICITING PROXIES

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

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

ABBOTT LABORATORIES STOCK RETIREMENT PLAN

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

10      Abbott Laboratories 11

CONFIDENTIAL VOTING

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

•

where disclosure may be required by law or regulation,



•

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



•

where a shareholder provides comments with a proxy,



•

where a shareholder expressly requests disclosure,



•

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



•

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

HOUSEHOLDING OF PROXY MATERIALS

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

Abbott Laboratories      1112      

NOMINEES FOR ELECTION AS DIRECTORS

	​	ROBERT J. ALPERN, M.D. Director since 2008 Age 6869 Ensign Professor of Medicine and Professor of Internal Medicine, and Former Dean of Yale School of Medicine, New Haven, Connecticut	​

	​	ROXANNE S. AUSTIN Director since 2000 Age 5859 President and Chief Executive Officer, Austin Investment Advisors, Newport Coast, California (Private Investment and Consulting Firm)			​

12      Abbott Laboratories 13

	​	SALLY E. BLOUNT, PH.D. Director since 2011 Age 5758 Michael L. Nemmers Professor of Strategy and Former Dean of the J.L. Kellogg Graduate School of Management at Northwestern University, Evanston, Illinois	​

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

14      

	​	MICHELLE A. KUMBIER Director since 2018 Age 5152 Senior Vice President and Chief Operating Officer of Harley-Davidson Motor Company, Company, Milwaukee, Wisconsin (Motorcycle and Related Products Manufacturer)			​

Abbott Laboratories      13

	​	EDWARD M. LIDDY Director since 2010 Age 7374 Retired Chairman & CEO, The Allstate Corporation, Northbrook, Illinois (Insurance (Insurance Company)	​

15

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

	​	NANCY MCKINSTRY Director since 2011 Age 6061 Chief Executive Officer and Chairman of the Executive Board of Wolters Kluwer N.V., Alphen aan den Rijn, the Netherlands (Global (Global Information, Software, and Services Provider)	​

14      Abbott Laboratories16      

	​	PHEBE N. NOVAKOVIC Director since 2010 Age 6162 Chairman and Chief Executive Officer, General Dynamics Corporation, Falls Church, Virginia (Worldwide (Worldwide Defense, Aerospace, and Other Technology Products Manufacturer)	​

	​	WILLIAM A. OSBORN Lead Independent Director Director since 2008 Age 7172 Retired Chairman and Chief Executive Officer of Northern Trust Corporation (Multibank Holding Company) and The Northern Trust Company, Chicago, Illinois (Banking Services Company)			​

Abbott Laboratories      15 17

	​	SAMUEL C. SCOTT III Director since 2007 Age 74 Retired Chairman, President and Chief Executive Officer of Corn Products International, Inc., Westchester, Illinois (Corn Refining Company)	​

	​	DANIEL J. STARKS Director since 2017 Age 6465 Retired Chairman, President and Chief Executive Officer of St. Jude Medical, Inc., St. Paul, Minnesota (Medical Device Manufacturer)			​

16      Abbott Laboratories

	​	JOHN G. STRATTON Director since 2017 Age 5859 Retired Executive Vice President and President of Global Operations, Verizon Communications Inc., New York, New York (Telecommunications (Telecommunications and Media Company)	​

18      

	​	GLENN F. TILTON Director since 2007 Age 7071 Retired Chairman, President and Chief Executive Officer of UAL Corporation, Chicago, Illinois (Airline Holding Company)	​

Abbott Laboratories      17

	​	MILES D. WHITE Director since 1998 Age 6465 Chairman of the Board and Chief Executive Officer, Abbott Laboratories	​

18      Abbott Laboratories 19

THE BOARD OF DIRECTORS AND ITS COMMITTEES

The Board of Directors held 67 meetings in 2018.2019. The average attendance of all directors at Board and committee meetings in 20182019 was 98 percent95% and each director attended at least 75% of the total number of Board meetings and meetings of the committees on which he or she served. Abbott encourages its Board members to attend the annual shareholders meeting. Last year, all of Abbott's directors attended the annual shareholders meeting.

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

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

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

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

Chairman/Chief Executive Officer

•

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



•

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



•

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



•

With our CEO leading management and chairing thetransition.

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

Lead Independent Director

•

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



•

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

•

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



•

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



•

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



•

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



•

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



•

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

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

​

Abbott Laboratories      1920      

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DIRECTOR SELECTION

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

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

In addition, Board members should have backgrounds that, when combined, provide a portfolio of experience and knowledge that will serve Abbott's governance and strategic needs. Board candidates will be considered on the basis of a range of criteria, including broad-based business knowledge and relationships, prominence, and excellent reputations in their primary fields of endeavor, as well as a global business perspective and commitment to good corporate citizenship. Directors should have demonstrated experience and ability that is relevant to the Board of Directors' oversight role with respect to Abbott's business and affairs. Each director's biography includes the particular experience and qualifications that led the Board to conclude that the director should serve on the Board. The directors' biographies are on pages 1213 through 18.19.

A description of the procedure for the recommendation and nomination of directors, including by proxy access, is on page 73.82.

​

21

​

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BOARD DIVERSITY AND COMPOSITION

In the process of identifying nominees to serve as a membermembers of the Board of Directors, the Nominations and Governance Committee considers the Board's diversity of relevant experience, areas of expertise, ethnicity, gender, and geography and assesses the effectiveness of the process in achieving that diversity. Six of the 13 directors nominated for election are women or minorities.

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

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


Board Composition Metrics




​

20      Abbott Laboratories22      

​

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

		Abbott Business Characteristic		​		Board Attributes, Skills, and Experience		​
​	​	​	​	​	​	​	​	​
		A Broad and Diverse Company with Different Healthcare Businesses				• Senior Leadership Experience with Diverse Business Models • Extensive Knowledge of Healthcare and Medical Devices Industries
		​		​		​		​
​		A Multinational Company		​		• Director or Senior Leadership Experience with Multinational Corporations • Global Perspective • Senior Leadership Experience with Global Supply Chain Operations		​
		A Consumer-facing Company				• Academic and Senior Leadership Experience with Consumer Products
		​		​		​		​
​		Financial Expertise and Risk Management		​		• Extensive Financial Expertise, Including Public Company Financial Experience • Data and Cybersecurity Oversight/Management Expertise		​
		Regulated Industry				• Senior Leadership Experience in Regulated Industries • Senior Level Government Experience
		​		​		​		​
​		Corporate Governance		​		• Director or Senior Leadership Experience with Multinational Corporations • Experience with Diverse Business Models		​

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, and their peers, as follows:



​

Abbott Laboratories      21 23

​

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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

​

​

​

​

​

​

​

​

M. A. Kumbier

​

​

​

​

​

​

​

​

​

​

​

​

R. B. Ford

​

​

​

​

​

​

​

​

​

​

​

​

E. M. Liddy

​

​

​

​

​

​

​

M. A. Kumbier

​

​

​

​

​

​

​

​

N. McKinstry

​

​

​

​

​

​

​

​

​

​

​

E. M. Liddy

​

​

​

​

​

​

​

​

​

​

P. N. Novakovic

​

​

​

​

​

​

​

D. W. McDew

​

​

​

​

​

​

​

​

W. A. Osborn

​

​

​

​

​

​

​

​

​

​

N. McKinstry

​

​

​

​

​

​

​

​

​

​

​

S. C. Scott III

​

​

​

​

​

​

​

P. N. Novakovic

​

​

​

​

​

​

​

​

D. J. Starks

​

​

​

​

​

​

​

​

​

​

​

​

W. A. Osborn

​

​

​

​

​

​

​

​

​

J. G. Stratton

​

​

​

​

​

​

​

S. C. Scott III

​

​

​

​

​

​

​

​

G. F. Tilton

​

​

​

​

​

​

​

​

​

​

​

D. J. Starks

​

​

​

​

​

​

​

​

​

​

​

​

M. D. White

​

​

​

​

​

​

​

J. G. Stratton

​

​

​

​

​

​

​

​

Total Meetings Held in 2018

​

7

​

4

​

5

​

4

​

0

​

​

​

G. F. Tilton

​

​

​

​

​

​

​

​

​

​

​

M. D. White

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total Meetings Held in 2019

​

7

​

4

​

4

​

4

​

0

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​



*

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

Audit Committee


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

•

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



•

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



•

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



•

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

​

24      

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•

Legal and regulatory compliance;compliance relating to financial matters, including accounting, auditing, financial reporting, and enterprisesecurities law issues, and



•

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

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 65.69.

Compensation Committee


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

•

Review director compensation annually reviews the compensation paid to the members of the Board and gives its recommendationsrecommend to the full Board regarding both the amount of director compensation that should be paid and the allocation of that compensation between equity-based awards and cash. In recommending director

​

22      Abbott Laboratories

​

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compensation, the Compensation Committee takes comparable director fees into account and reviews any arrangement that could be viewed as indirect director compensation.

This Committee also reviews, approves,



•

Review, approve, and administersadminister the incentive compensation plans in which any executive officer of Abbott participates and all of Abbott's equity-based plans. ItThe Compensation Committee may delegate the responsibility to administer and make grants under these plans to management, except to the extent that such delegation would be inconsistent with applicable law or regulation or with the listing rules of the New York Stock Exchange. The processes and 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 2018. Meridian performs no other work for Abbott. The Committee engages



•

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

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

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

A copy of the Compensation Committee report is on page 46.50.

Nominations and Governance Committee


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

•

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



•

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



•

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



•

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

The process used by this Committee to identify a nominee to serve as a member of the Board of Directors depends on the qualities being sought. From time to time, Abbott engages an executive search firm to assist the Committee in identifying individuals qualified to be Board members. The process used by the Committee to identify nominees is described on page 2021 in the section captioned, "Director Selection."

​

25

​

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Public Policy Committee


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

•

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



•

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

Abbott, and



•

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

Executive Committee


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

​

Abbott Laboratories      23

​

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COMMUNICATING WITH THE BOARD OF DIRECTORS

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

CORPORATE GOVERNANCE MATERIALS

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

​

26      

​

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20182019 DIRECTOR COMPENSATION

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

The following table sets forth a summary of the non-employee directors' 20182019 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

​

​

$

174,977

​

​

$

0

​

​

$

35,499

​

​

$

25,000

(5)

​

$

361,476

​

​

R. J. Alpern

​

​

$

126,000

​

​

$

174,910

​

​

$

0

​

​

$

64,323

​

​

$

25,000

​

​

$

390,233

​

​

R. S. Austin

​

​

152,000

​

​

174,977

​

​

0

​

​

0

​

​

0

​

​

326,977

​

​

​

R. S. Austin

​

​

152,000

​

​

174,910

​

​

0

​

​

0

​

​

0

​

​

326,910

​

​

​

S. E. Blount

​

​

126,000

​

​

174,977

​

​

0

​

​

6,168

​

​

25,000

(5)

​

332,145

​

​

S. E. Blount

​

​

126,000

​

​

174,910

​

​

0

​

​

10,355

​

​

25,000

​

​

336,265

​

​

​

M. A. Kumbier

​

​

64,500

​

​

0

​

​

0

​

​

0

​

​

0

​

​

64,500

​

​

​

M. A. Kumbier

​

​

132,000

​

​

174,910

​

​

0

​

​

0

​

​

0

​

​

306,910

​

​

​

E. M. Liddy

​

​

151,000

​

​

174,977

​

​

0

​

​

0

​

​

0

​

​

325,977

​

​

E. M. Liddy

​

​

151,000

​

​

174,910

​

​

0

​

​

0

​

​

0

​

​

325,910

​

​

​

N. McKinstry

​

​

132,000

​

​

174,977

​

​

0

​

​

0

​

​

10,000

(5)

​

316,977

​

​

​

D. W. McDew

​

​

31,500

​

​

0

​

​

0

​

​

0

​

​

0

​

​

31,500

​

​

​

P. N. Novakovic

​

​

141,000

​

​

174,977

​

​

0

​

​

0

​

​

0

​

​

315,977

​

​

N. McKinstry

​

​

132,000

​

​

174,910

​

​

0

​

​

0

​

​

0

​

​

306,910

​

​

​

W. A. Osborn

​

​

156,000

​

​

174,977

​

​

0

​

​

0

​

​

0

​

​

330,977

​

​

​

P. N. Novakovic

​

​

141,000

​

​

174,910

​

​

0

​

​

0

​

​

0

​

​

315,910

​

​

​

S. C. Scott III

​

​

132,000

​

​

174,977

​

​

0

​

​

0

​

​

25,000

(5)

​

331,977

​

​

W. A. Osborn

​

​

156,000

​

​

174,910

​

​

0

​

​

0

​

​

0

​

​

330,910

​

​

​

D. J. Starks

​

​

126,000

​

​

174,977

​

​

0

​

​

0

​

​

0

​

​

300,977

​

​

​

S. C. Scott III

​

​

132,000

​

​

174,910

​

​

0

​

​

0

​

​

25,000

​

​

331,910

​

​

​

J. G. Stratton

​

​

126,000

​

​

174,977

​

​

0

​

​

0

​

​

0

​

​

300,977

​

​

D. J. Starks

​

​

126,000

​

​

174,910

​

​

0

​

​

0

​

​

0

​

​

300,910

​

​

​

G. F. Tilton

​

​

132,000

​

​

174,977

​

​

0

​

​

0

​

​

25,000

(5)

​

331,977

​

​

​

J. G. Stratton

​

​

126,000

​

​

174,910

​

​

0

​

​

0

​

​

0

​

​

300,910

​

​

​

G. F. Tilton

​

​

132,000

​

​

174,910

​

​

0

​

​

0

​

​

25,000

​

​

331,910

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

⁽¹⁾

Under the Abbott Laboratories Non-Employee Directors' Fee Plan, non-employee directors earn $10,500 for each month of service as a director. Audit Committee members, other than the Audit Committee chair, receive $500 for each month of service on the Audit Committee. Board Committee chairmenchairs receive monthly fees of: $2,083.33 for the Audit Committee chairman,chair, $1,666.66 for the Compensation Committee chairman,chair, $1,250.00 for the Public Policy Committee chairman,chair, and $1,250.00 for the chairmanchair of any other Board committee. In addition, the lead independent director earns $2,500 for each month of such service and does not receive a fee for service as Nominations and Governance Committee chairman.chair. Fees earned under the Abbott Laboratories Non-Employee Directors' Fee Plan are paid in cash to the director, paid in the form of vested non-qualified stock options (based on an independent appraisal of their fair value), deferred (as a non-funded obligation of Abbott),

​

24      Abbott Laboratories

​

---

or paid currently into an individual grantor trust established by the director. The distribution of deferred fees and amounts held in a director's grantor trust generally commences when the director reaches age 65, or upon retirement from the Board of Directors, if later. The director may elect to have deferred fees and fees deposited in trust credited to either a guaranteed interest account or to a stock equivalent account that earns the same return as if the fees were invested in Abbott stock.shares. If necessary, Abbott contributes funds to a director's trust so that as of year-end the stock equivalent account balance (net of taxes) is not less than seventy-five percent of the market value of the related common stockshares at year-end.





⁽²⁾

The amounts reported in this column represent the aggregate grant date fair value of the awards calculated in accordance with Financial Accounting Standards Board ASC Topic 718. Abbott determines the grant date fair value of stock unit awards by multiplying the number of restricted stock units granted by the average of the high and low market prices of an Abbott common share on the date of grant. In addition to the fees described in footnote 1, each non-employee director elected to the Board of Directors at the annual shareholders meeting receives vested restricted stock units having a value of $175,000 (rounded down) under the Abbott Laboratories 2017 Incentive Stock Program)Program (effective as of the 2020 Annual Meeting, this will increase to $185,000 (rounded down)). In 2018,2019, this was 2,9452,241 units. The non-employee directors receive cash payments equal to the dividends paid on the shares covered by the units at the same rate as other shareholders. Upon termination, retirement from the Board, death, or a change in control of Abbott, a non-employee director will receive one common

​

27

​

---

share of common stock for each restricted stock unit outstanding under the Incentive Stock Program. Each director is required to own, within five years of becoming a director, the number of shares of Abbott stock having a fair market value equal to four times the annual director fees earned or paid in cash. All directors with 5five years tenure meet or exceed the guidelines. The following Abbott restricted stock units were outstanding as of December 31, 2018:2019: R. J. Alpern, 28,165;30,406; R. S. Austin, 35,828;38,069; S. E. Blount, 21,425;23,666; M. A. Kumbier, 2,241; E. M. Liddy, 23,592;25,833; N. McKinstry, 21,425;23,666; P. N. Novakovic, 23,592;25,833; W. A. Osborn, 30,082;32,323; S. C. Scott III, 31,812;34,053; D. J. Starks, 6,382;8,623; J. G. Stratton, 2,945;5,186; and G. F. Tilton, 31,812.

34,053.

⁽³⁾

The following options were outstanding as of December 31, 2018:2019: R. S. Austin, 36,200;47,883; E. M. Liddy, 35,137;46,743; N. McKinstry, 37,756;47,902; P. N. Novakovic, 92,106;102,943; W. A. Osborn, 37,200;49,190; and S. C. Scott III, 31,476.41,622.



⁽⁴⁾

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



⁽⁵⁾

Charitable contributions made by Abbott's non-employee directors are eligible for a matching contribution (up to $25,000 annually). The amounts reported in this column includerepresent charitable matching grant contributions, as follows: R. J. Alpern, $25,000; S. E. Blount, $25,000; N. McKinstry, $10,000; S. C. Scott III, $25,000; and G. F. Tilton, $25,000.

​

Abbott Laboratories      2528      

​

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SECURITY OWNERSHIP OF EXECUTIVE OFFICERS AND DIRECTORS


The table below reflects the number of Abbott common shares beneficially owned as of January 31, 20192020 by each director, the Chief Executive Officer, the Chief Financial Officer, and the three other most highly paid executive officers in 2019 (the "named officers"), and by all directors 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, 2019(3)		Stock Equivalent Units				Name		Shares Beneficially Owned(1)(2)		Stock Options Exercisable Within 60 Days of January 31, 2020(3)		Stock Equivalent Units
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
		H. L. Allen		134,114		909,294		0				R. J. Alpern		30,406		0		7,766
​		R. J. Alpern		28,165		0		7,270		​		R. S. Austin		44,913		47,883		0		​
		R. S. Austin		42,672		36,200		0				S. E. Blount		26,266		0		0
​		S. E. Blount		26,525		0		0		​		L. D. Earnhardt		56,946		0		0
		R. B. Ford		166,267		713,059		0				R. B. Ford		197,382		926,022		0
​		S. R. Fussell		162,773		477,685		0		​		M. A. Kumbier		3,258		0		0		​
		M. A. Kumbier		1,004		0		0				E. M. Liddy		28,153		46,743		21,268
​		E. M. Liddy		25,912		35,137		20,932		​		D. W. McDew		0		0		0		​
		N. McKinstry		21,425		37,756		0				N. McKinstry		23,666		47,902		0
​		P. N. Novakovic		24,092		92,106		0		​		P. N. Novakovic		26,333		102,943		0		​
		W. A. Osborn		54,082		37,200		28,061				W. A. Osborn		56,323		49,190		28,512
​		S. C. Scott III		37,812		31,476		7,025		​		D. G. Salvadori		95,088		461,015		0
		D. J. Starks		7,016,442		0		0				S. C. Scott III		40,053		41,622		7,138
​		J. G. Stratton		6,400		0		3,085		​		D. J. Starks		7,018,683		0		0		​
		G. F. Tilton		39,162		0		32,193				J. G. Stratton		8,641		0		4,651
​		M. D. White		3,160,054		5,390,671		0		​		G. F. Tilton		41,403		0		32,710		​
		B. B. Yoor		99,679		553,613		0				M. D. White		3,194,710		5,417,294		0
​		All directors and executive officers as a group(4)(5)		12,274,355		12,983,686		98,566		​		B. B. Yoor		116,620		184,281		0		​
												All directors and executive officers as a group(4)(5)		12,502,322		12,334,341		102,045
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

⁽¹⁾

This column includes shares held in the officers' accounts in the Abbott Laboratories Stock Retirement Trust as follows: M. D. White, 33,224;34,239; B. B. Yoor, 2,204; S. R. Fussell, 1,668;2,239; and all executive officers as a group, 56,877.69,290. Each officer has shared voting power and sole investment power with respect to the shares held in his or her account.



⁽²⁾

This column includes restricted stock units held by the non-employee directors and payable in stock upon their retirement from the Board as follows: R. J. Alpern, 28,165;30,406; R. S. Austin, 35,828;38,069; S. E. Blount, 21,425;23,666; M. A. Kumbier, 2,241; E. M. Liddy, 23,592;25,833; N. McKinstry, 21,425;23,666; P. N. Novakovic, 23,592;25,833; W. A. Osborn, 30,082;32,323; S. C. Scott III, 31,812;34,053; D. J. Starks, 6,382;8,623; J. G. Stratton, 2,945;5,186; G. F. Tilton, 31,812;34,053; and all directors as a group, 257,060.283,952.



⁽³⁾

This column also includes 51,40866,145 restricted stock units held by all named officers and executive officers as a group that will be payable in stock within 60 days of January 31, 2019.2020.



⁽⁴⁾

Certain executive officers of Abbott are fiduciaries of several employee benefit trusts maintained by Abbott. As such, they have shared voting and/or investment power with respect to the common shares held by those trusts. The table does not include the shares held by the trusts. As of January 31, 2019,2020, these trusts owned a total of 31,706,151 (1.8%30,557,888 (1.7%) of the outstanding shares of Abbott.


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

⁽⁵⁾

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

​

26      Abbott Laboratories 29

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EXECUTIVE COMPENSATION


COMPENSATION DISCUSSION AND ANALYSIS

INTRODUCTION


This Compensation Discussion and Analysis (CD&A) describes Abbott's executive compensation program in 2018.2019. In particular, this CD&A explains how the Compensation Committee (the Committee) and Board of Directors made compensation decisions for the Company's executives, including the five named officers: Miles D. White, Chairman of the Board and Chief Executive Officer; Robert B. Ford, President and Chief Operating Officer; Brian B. Yoor, Executive Vice President, Finance and Chief Financial Officer; Hubert L. Allen,Lisa Earnhardt, Executive Vice President, General CounselMedical Devices; and Secretary; Robert B. Ford, President and Chief Operating Officer; and Stephen R. Fussell,Daniel G. Salvadori, Executive Vice President, Human Resources.Nutritional Products.

The CD&A also describes 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 extensive 20182019 shareholder outreach described on page 28.31.

20182019 PERFORMANCE


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

Abbott delivered strong returns for shareholders in 2019 and achieved or exceeded the financial targets set at the beginning of last year. Abbott's one-year TSR was 22.1%, delivering significant shareholder returns on top of the one-year TSR of 29% in 2018, Abbott again achieved outstanding returns to shareholders. Wewhich ranked first#1 in our peer group on a 3-year TSR basis and 1-year TSR basis and second on a 5-year TSR basis. Our returns over each of these periods significantly exceeded the S&P 500 and the Dow Jones Industrial Average. In addition, we continued our focus on strategic positioning for future growth through expanding manufacturing capability in our most important business segments and achieving important product approvals. For more details on our 2018 performance, see page 3.group.

		Primary performance metric for long-term incentive program

​

Abbott Laboratories      2730      

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

•

Increased investments to sustain growth of several important products including:



–

FreeStyle Libre®, our easy-to-use and affordable revolutionary continuous glucose monitor



–

MitraClip®, the market-leading device for the minimally invasive treatment of mitral regurgitation



–

Alinity®, our suite of innovative diagnostic instruments



•

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



•

Returned $2.3B to shareholders through dividends in 2019 and announced a 12.5% increase to the dividend payable in 2020, demonstrating Abbott's financial strength and commitment to shareholder returns.

CHANGES BASED ON SHAREHOLDER FEEDBACK AND MARKET PRACTICES

During 2018,2019, we conducted extensive shareholder outreach to discuss our compensation program.

In the spring, we engaged shareholders representing approximately 60%over 65% of our outstanding shares in an open dialogue to discuss various topics, including the enhanced disclosures in our executive compensation program. Many of these discussions included our Lead Independent Director and the Chair of our Compensation Committee, giving shareholders the opportunity to provide important feedback directly to members of our Board. The feedback we received indicated2019 proxy that overall, shareholders viewed our executive compensation program favorably, and that additional enhancements to our proxy disclosure could furtherfurthered shareholder understanding of how pay decisions are made and how the metrics we use are linked to our business strategy and goals. Their feedback was overwhelmingly positive which was also reflected in the 94% support for the Say-on-Pay Vote.

In the fall, we continued our dialogue with shareholders regardingand shared the process we used to review and update our executive compensation programpeer group in 2019 to better reflect Abbott's size and the results of the 2018 annual Say on Pay vote. Our Lead Independent Director and the Chaircomplexity. Shareholders were very supportive of our approach and agreed with the changes approved by the Compensation Committee again facilitated manyCommittee. Additional information regarding the changes to Abbott's peer group can be found on page 32 of these discussions, where we shared the enhancements we intended to make to ourthis proxy disclosure following the shareholder input we received in the spring. Shareholder responses were overwhelmingly positive.statement.

As illustrated in the table below, over the past several years we have made numerous changes to our program and our proxy statement based on feedback from our shareholders as well as a review of market practices.

RECENT EXECUTIVE COMPENSATION CHANGES
		• Significantly increased disclosure related to payouts for both annual and long-term incentives • Revised annual cash incentive plan goals and weighting • Introduced new long-term incentive measures to reflect sustained performance over a three-year period • Significantly strengthened peer group to reflect new business portfolio • 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 • Increased the ROE target for vesting of performance restricted shares Implemented a strengthened recoupment policy		• ImplementedIntroduced new long-term incentive measures to reflect sustained performance over a hedging policy and a pledging policy • Implemented a strengthened recoupment policythree-year period • Increased director share ownership guidelines • Revised executive share ownership guidelinesIncreased the ROE target for vesting of performance restricted shares • Added a share retention requirement which applies until share ownership guidelines are met • Eliminated tax gross-ups in our executive officer pay program • Granted equity awards with double-trigger vesting in the eventUpdated peer group to reflect increased size and complexity of a change in control • Engaged a Compensation Committee consultant that performs no other work for Abbottbusiness

​

28      Abbott Laboratories 31

​

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ABBOTT'S PEER GROUP FOR PAY AND COMPANY PERFORMANCE BENCHMARKING

To determine the competitiveness of our compensation and benefit programs, the Committee, in consultation with its independent consultant, annually compares the level of compensation, pay practices, and our relative performance to those of peer companies.

Our As we previewed in last year's proxy, our Compensation Committee reviewed our peer group was selectedin 2019 to determine whether any changes were necessary to better reflect the increased size (sales and market capitalization) and complexity of Abbott's business.

Based on this review, the Compensation Committee revised the peer group to reflect the breadth of our business, reflecting our diverse and balanced portfolio.It This new peer group strikes the appropriate balance between size (both revenues(revenue and market capitalization)capitalization between approximately one-third and three times Abbott's), return profiles, geographic breadth, and management and operating structure. This approach has been overwhelmingly supported by our investors during shareholder outreach. It does not, however, provide a direct comparison to any one of our four business segments, as the peer group is intended to reflect the entirety of our businesses.

Our shareholders compare us to other global multinational companies, not limited to those in healthcare. These companies share similar characteristics aligned with our investment identity.

ThisThe updated peer group is summarized below, showing the primary characteristics for each company 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) Represented

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

3M Company

​

​

$

32.1

​

$

101.5

​

ü

​

ü

​

ü

​

Diagnostics

​

​

Becton Dickinson

​

​

$

17.3

​

$

73.6

​

ü

​

ü

​

ü

​

Diagnostics, Medical Devices

​

​

Company Name

Sales/ Rev.(1) (billions)

​

Market Cap(1) (billions)

​

% Rev. Outside U.S.

​

Similar # Employees

​

Mfg. Driven/ Consumer- Facing

​

Abbott Business Segment(s) Represented

​

​

Boston Scientific

​

​

$

10.4

​

$

63.0

​

ü

​

​

ü

​

Medical Devices

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Bristol-Myers Squibb

​

​

$

24.2

​

$

150.5

​

ü

​

​

​

ü

​

Established Pharmaceuticals

​

​

3M Company

​

​

$

32.8

​

$

110.9

​

ü

​

ü

​

ü

​

Diagnostics

​

​

The Coca-Cola Company

​

​

$

37.3

​

$

237.1

​

ü

​

ü

​

ü

​

Nutrition

​

​

​

Becton Dickinson

​

​

$

16.0

​

$

60.7

​

​

​

ü

​

ü

​

Medical Devices, Diagnostics

​

​

Danaher Corporation

​

​

$

19.9

​

$

110.2

​

ü

​

ü

​

ü

​

Diagnostics

​

​

Bristol-Myers Squibb

​

​

$

22.6

​

$

84.8

​

​

​

ü

​

Established Pharmaceuticals, Medical Devices

​

​

Honeywell International

​

​

$

36.7

​

$

126.5

​

ü

​

ü

​

ü

​

Diagnostics, Medical Devices

​

​

​

The Coca-Cola Company

​

​

$

32.3

​

$

201.5

​

ü

​

ü

​

ü

​

Nutrition

​

​

Johnson & Johnson

​

​

$

82.1

​

$

383.9

​

ü

​

ü

​

ü

​

Diagnostics, Established Pharmaceuticals, Medical Devices

​

​

Danaher Corporation

​

​

$

19.9

​

$

72.3

​

ü

​

ü

​

ü

​

Diagnostics

​

​

Medtronic

​

​

$

30.9

​

$

152.1

​

ü

​

ü

​

ü

​

Medical Devices

​

​

​

Eaton Corporation

​

​

$

21.6

​

$

29.8

​

​

​

ü

​

ü

​

Diagnostics

​

​

Merck

​

​

$

46.0

​

$

231.6

​

ü

​

ü

​

ü

​

Established Pharmaceuticals

​

​

Emerson Electric

​

​

$

17.4

​

$

37.4

​

ü

​

ü

​

ü

​

Medical Devices, Diagnostics

​

​

Mondelez International

​

​

$

25.9

​

$

79.3

​

ü

​

ü

​

ü

​

Nutrition

​

​

​

Honeywell International

​

​

$

42.9

​

$

97.8

​

ü

​

ü

​

ü

​

Medical Devices, Diagnostics

​

​

Procter & Gamble

​

​

$

69.6

​

$

311.5

​

ü

​

ü

​

ü

​

Nutrition

​

​

Johnson & Johnson

​

​

$

81.6

​

$

346.1

​

​

ü

​

ü

​

Established Pharmaceuticals, Medical Devices, Diagnostics

​

​

Reckitt Benckiser(2)

​

​

$

16.2

​

$

57.6

​

ü

​

ü

​

ü

​

Nutrition

​

​

​

Johnson Controls

​

​

$

31.4

​

$

27.4

​

ü

​

ü

​

ü

​

Diagnostics

​

​

Stryker Corporation

​

​

$

14.9

​

$

78.6

​

​

​

​

​

ü

​

Medical Devices

​

​

Kimberly-Clark

​

​

$

18.5

​

$

39.5

​

ü

​

ü

​

ü

​

Nutrition

​

​

Thermo Fisher Scientific

​

​

$

25.5

​

$

130.3

​

ü

​

ü

​

ü

​

Diagnostics

​

​

​

Medtronic

​

​

$

30.4

​

$

122.2

​

ü

​

ü

​

ü

​

Medical Devices

​

​

United Technologies

​

​

$

77.0

​

$

129.3

​

ü

​

​

​

ü

​

Diagnostics

​

​

Mondelēz International

​

​

$

25.9

​

$

58.2

​

ü

​

ü

​

ü

​

Nutrition

​

​

Peer Group Median

​

​

$

28.3

​

$

127.9

​

​

​

​

​

​

​

Procter & Gamble

​

​

$

66.9

​

$

229.0

​

ü

​

ü

​

ü

​

Nutrition

​

​

Abbott

​

​

$

31.9

​

$

153.5

​

ü

​

ü

​

ü

​

​

​

​

Thermo Fisher Scientific

​

​

$

24.4

​

$

90.1

​

​

ü

​

ü

​

Diagnostics

​

​

Abbott Percentile Rank

​

​

59th

​

73rd

​

​

​

​

​

​

​

United Technologies

​

​

$

66.5

​

$

91.9

​

ü

​

​

​

ü

​

Diagnostics

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Peer Group Median

​

​

$

28.2

​

$

87.5

​

​

​

​

​

​

​

Abbott

​

​

$

30.6

​

$

127.0

​

ü

​

ü

​

ü

​

​

​

​

Abbott Percentile Rank(2)

​

​

55th

​

80th

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

⁽¹⁾

Data source: S&P's Capital IQNasdaq IR Insight database reflects most recently disclosed (as of January 31, 2019)2020) trailing 12-month sales/revenue. The market cap reflects values on December 31, 2018.2019.



⁽²⁾

The Committee will be reviewing the peer group in 2019Revenue/Market Cap converted to determine any changes necessary to better reflect Abbott's size (sales and market capitalization) and complexity.USD for OUS companies.

​

Abbott Laboratories      2932      

​

---

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. AlmostApproximately two-thirds of our pay is equity-based, directly tying a significant portion of executive compensation to shareholder returns.

Our compensation program ismarket-based (to ensure our ability to attract and retain talented executives) and produces compensation outcomes that areperformance-based (to incent the achievement of profitable growth that increases shareholder value).

COMPENSATION 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


Base salary targets are initially set using the median of the peer group as a benchmark. Base salaries then vary depending on the officer's experience, expertise, and performance. The average base salary of our executive officers is approximately at the market median.

Annual Incentive Plan


Annual incentive targets are initially set using 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 is achieved by setting targets that require our officers to exceed the anticipated growth of the market in which they compete in order to achieve a target payout of their annual incentives.

Long-Term Incentive Plan (LTI)


To set annual LTI award guidelines, the Committee first reviews LTI grants made by peer companies to identify the competitive market range. Each year the guidelines are set at the appropriate level within the competitive market range based on Abbott's relative performance, as described below.on the following 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 grants long-term incentive awards in the form of 50% stock options and 50% performance restricted shares. This mix of incentive awards is consistent with our peers.

COMPENSATION OUTCOMES ARE PERFORMANCE-BASED


Other than base salary, which is the smallest component of our executives' compensation, all remaining components of Total Direct Compensation (i.e., annual incentive, performance-based restricted stock awards, and stock options) are aligned with individual, Companybusiness segment and business segmentCompany performance.

Annual Incentive Plan


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%; COO cap is 0.10%; 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

​

​

​

​

​

​

​

​

​

​

​

​

​

​

30      Abbott Laboratories 33

​

---

For 20182019 performance, annual incentive payouts for Abbott executive officers averaged 96% of target. For individual calculations for each named officer, see pages 3438 to 43.47. The annual incentive plan is formula driven based on financial, strategic, and talent and succession results. Officer financial goals are based on adjusted 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.

Long-Term Incentive Plan


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 20182019 were set at the 75^th percentile of our peer group, reflecting strong 63100^rdth percentile relative 3-year TSR rankingperformance for the period ending in 2017.2018. The 5-year TSR ranked at the median100^th percentile of our peer group for the period ending in 2017,2018, while the 1-year TSR was at the top94^th 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

SAMPLE INDIVIDUAL LTI PERFORMANCE ASSESSMENT

​

METRIC

​

2015

​

2016

​

2017

​

OVERALL

​

METRIC

​

2016

​

2017

​

2018

​

OVERALL

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Sales and Market Growth Contribution

​

Met (0)

​

Did not meet (-1)

​

Exceeded (+1)

​

0

​

Sales and Market Growth Contribution

​

Met (0)

​

Did not meet (-1)

​

Exceeded (+1)

​

0

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Margin Contribution

Met (0)

Met (0)

Exceeded (+1)

+1

Margin Contribution

Met (0)

Met (0)

Exceeded (+1)

+1

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Strategic Financial Contribution

​

Met (0)

​

Met (0)

​

Met (0)

​

0

​

Strategic Financial Contribution

​

Met (0)

​

Met (0)

​

Met (0)

​

0

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total

+1

Total

+1

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

LTI Adjustment

​

110%

​

​

​

​

​

​

​

LTI Adjustment

​

110%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

 


LTI ADJUSTMENT LEGEND
​  TOTAL		​RESULT
​	​	​
+3 or More		125%
​	​	​
+1 or +2		110%
​	​	​
0		100%
​	​	​
-1 or -2		90%
​	​	​
-3 or Less		75%
​	​	​

Awards granted in 2018,2019, based on individual officer performance for the three-year period ending in 2017,2018, resulted in awards ranging from the 2454^th percentile to the 90th90^th percentile of our peer group, with an average of the 7778^th percentile. For individual calculations for each named officer, see pages 3438 to 43.47.

Since stock options realize value only 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. Options are also aligned with shareholder value through the impact of relative TSR in determining the LTI award guidelines.

​

Abbott Laboratories      3134      

​

---

Performance restricted shares vest 1/3one-third each year only 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 and no additional vesting upside if the Company over-performs. The Committee believes 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 2019, the Adjusted ROE vesting target to determine future vesting was increased from 12% to 13%. This increase follows similar increases in prior years, which have increased this target 30% 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 their Abbott and AbbVie shares the past six years since the AbbVie separation would have seen a 151%168% appreciation in their holdings.		IMPACT OF ABBOTT/ABBVIE SEPARATION

Summary of LTI Process


The graphic below summarizes the LTI process and its direct linkage to the market and company and individual performance.



​

32      Abbott Laboratories 35

---

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 our annual and long-term incentive plans.

		EVALUATION OF PERFORMANCE
​		METRIC		​		STRATEGIC LINK		​
​	​	​	​	​	​	​	​	​
		Our annual incentive plan is aligned to the following drivers of shareholder value:
​	​	​	​	​	​	​	​	​
		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.		​
​	​	​	​	​	​	​	​	​
		Diluted EPS				Basis on which Abbott sets annual performance expectations and consistent with how we report operating results to the financial community.
​	​	​	​	​	​	​	​	​
​		Return on Assets		​		Measures profitability and how effectively companyCompany assets are used to generate profit.		​
​	​	​	​	​	​	​	​	​
		OperatingFree Cash Flow				Recognizes the importance of generating cash to fund ongoing investments in our business and to pay down debt.debt, pay dividends, and fund investments outside of capital expenditures.
​	​	​	​	​	​	​	​	​
		Our long-term incentive plan relies on the following Company metrics, and 3-year sustained individual performance metrics, to determine award value:
​	​	​	​	​	​	​	​	​
		Total Shareholder Return		​		Measures Abbott's stock and dividend performance against our peer group. Used to position LTI award guidelines relative to the market.		​
​	​	​	​	​	​	​	​	​
		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.
​	​	​	​	​	​	​	​	​
​		Return on Equity		​		Measures how much profit Abbott generates over the long-term with the capital that shareholders have invested. Used to determine itif performance-restricted awards vest.		​
​	​	​	​	​	​	​	​	​

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 provide greater visibility on the 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 are determinedencourage decision-making that considers long-term value. They also align compensation goals with the financial guidance we communicate to investors, which is also based on adjusted measures.

COMPENSATION LINK TO SUSTAINABILITY


Our leadership covenant includes commitments to multiple environmental, social and governance efforts. Examples include:

•

A sustainable infrastructure to drive quality, environmental, health and safety performance



•

Human capital management to ensure an inclusive culture and the expected market growthfair and balanced treatment of our employees



•

Quality products provided at competitive prices to patients and consumers at hospitals and retailers



•

Abbott's Code of Conduct to ensure adequate internal controls for financial reporting and compliance with applicable laws and regulations.

​

36      

​

---

Since this covenant is considered the businessesminimum requirement of being an officer at Abbott, any officer that does not fulfill the covenant can receive a reduction of up to 100% of their annual incentive and/or long-term incentive awards.

In addition, we maintain several sustainability commitments, which are further described in our Proxy Summary on page 8, and markets in which we compete.include:

•

Innovation, Access and Affordability



•

Talent



•

Product Quality



•

Data and Data Privacy



•

Supply Chain, Packaging and Waste



•

Climate and Water Use

PAY DECISIONS FOR NAMED EXECUTIVE OFFICERS


The following pages detail the goals and metrics used to determine each named officer's payout under our annual and long-term incentive plans. For some goals, the target is not disclosed for competitive reasons. The long-term incentive decisions shown in the Summary Compensation Table of this proxy statement and detailed here were based upon performance through 2017,2018, whereas the annual incentive plan payouts are based upon performance during 2018.2019.

​

Abbott Laboratories      33 37

​

---

NAMED EXECUTIVE OFFICER COMPENSATION DECISIONS


	​	MILES D. WHITE   Chairman of the Board, Chief Executive Officer and Director Since 1999
	​
​	​	​

Base Salary


Mr. White's annual base salary of $1,900,000 has not changed since 2010.

Annual Incentive Plan


Mr. White's target bonus of 175% was not changed during 2018.2019. Based on performance in 2018,2019, Mr. White received a bonus in February 20192020 which was calculated as follows:

​

​

​

​

​

2017

​

​

​

​

​

​

2018 GOAL MEASUREMENT

​

​

2018

​

​

​

​

​

​

​

​

​

​

2018

​

​

​

​

​

​

2019 GOAL MEASUREMENT

​

​

2019

​

​

​

​

​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​ ​

​

​​

​

​​

​

​​

​

​​

​

​ ​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​ ​

​

​​

​

​​

​

​​

​

​​

​

​ ​

​

​​

​

​​

​

​​

​

​​

​

​

GOAL

​

RESULTS ACHIEVED

​

GOAL WEIGHT

​

THRESHOLD

​

TARGET

​

MAXIMUM

​

RESULTS ACHIEVED

​

GOAL SCORE

​

GOAL

​

RESULTS ACHIEVED

​

GOAL WEIGHT

​

THRESHOLD

​

TARGET

​

MAXIMUM

​

RESULTS ACHIEVED

​

GOAL SCORE

​

FINANCIAL METRICS(1)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

FINANCIAL METRICS(1)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

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​​

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​​

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​​

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​​

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​​

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​​

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​​

​

​​

​

​​

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​​

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​​

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​​

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​​

​

​

Adjusted Sales(2)

​

​

​

$26.7B

​

​

​

25%

​

​

​

$30.5B

​

​

​

$30.97B

​

​

​

$31.20B

​

​

​

$31.2B

​

​

​

37.5%

​

​

​

Adjusted Sales(2)

​

​

​

$31.2B

​

​

​

25%

​

​

​

$31.65B

​

​

​

$31.80B

​

​

​

$31.95B

​

​

​

$31.96B

​

​

​

37.5%

​

​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​

Adjusted Diluted EPS

​

​

$2.50

​

​

25%

​

​

$2.80

​

​

$2.85

​

​

$2.90

​

​

$2.88

​

​

31.25%

​

​

Adjusted Diluted EPS

​

​

$2.88

​

​

25%

​

​

$3.15

​

​

$3.20

​

​

$3.25

​

​

$3.24

​

​

35.0%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Adjusted ROA

​

​

​

7.5%

​

​

​

10%

​

​

​

8.9%

​

​

​

9.0%

​

​

​

9.1%

​

​

​

9.2%

​

​

​

15.0%

​

​

​

Adjusted ROA

​

​

​

9.2%

​

​

​

10%

​

​

​

10.5%

​

​

​

10.6%

​

​

​

10.7%

​

​

​

10.9%

​

​

​

15.0%

​

​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​

Operating Cash Flow

​

​

$5.57B

​

​

10%

​

​

$5.6B

​

​

$5.8B

​

​

$6.0B

​

​

$6.3B

​

​

15.0%

​

​

Free Cash Flow(3)

​

​

$4.9B

​

​

10%

​

​

$4.1B

​

​

$4.3B

​

​

$4.5B

​

​

$4.5B

​

​

15.0%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

STRATEGIC METRICS

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

STRATEGIC METRICS

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​

Achieve Alinity C/I Instrument Placements

​

​

​

10%

​

​

​

85% of Target

​

​

​

Target

​

​

​

125% of Target

​

​

​

>Maximum

​

​

​

15.0%

​

​

​

Diabetes Care Sales Growth

​

​

​

10%

​

​

​

92.6% of Target

​

​

​

Target

​

​

​

106.8% of Target

​

​

​

>Maximum

​

​

​

15.0%

​

​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​

Achieve Diabetes Care Sales Growth

​

​

10%

​

​

18.6%

​

​

20.7%

​

​

23.8%

​

​

34.8%

​

​

15.0%

​

​

Structural Heart Sales Growth

​

​

10%

​

​

76.2% of Target

​

​

Target

​

​

109.5% of Target

​

​

>Maximum

​

​

15.0%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Achieve Nutrition Sales Growth

​

​

​

10%

​

​

​

1.5%

​

​

​

3.0%

​

​

​

4.5%

​

​

​

4.9%

​

​

​

15.0%

​

​

​

Alinity C/I Instrument Placements

​

​

​

10%

​

​

​

85.5% of Target

​

​

​

Target

​

​

​

103.2% of Target

​

​

​

<Threshold

​

​

​

0.0%

​

​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​​

​

​

​

​

​

​

​

​

​

​

​

​

Total

​

​

143.75%

​

​

​

​

​

​

​

​

​

​

​

​

Total

​

​

132.5%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​




BASE SALARY

BONUS TARGET %

TOTAL GOAL SCORE

AWARD PAYOUT

$1,900,000

x

175%

x

132.5%

=

$4,405,625

​

​

​

​

​

​

​

​

​

​

​

​

​

⁽¹⁾

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, such as intangible amortization expense and various other costs including expenses related to restructuring actions or business acquisitions. Adjusted Return on Assets (ROA) reflects earnings from continuing operations, excluding interest expense and specified items. Adjusted ROA also reflects total assets less current liabilities excluding short-term borrowings. Diabetes Care, Structural Heart and Nutrition Sales Growth exclude the impact of foreign exchange. Free Cash Flow equals Operating Cash Flow less acquisitions of property and equipment.



⁽²⁾

Set based on expected market growth of the businesses and markets in which we compete. To achieve target payout, must increase market share.



⁽³⁾

2019 target lower than 2018 results due to increased capital expenditures to support strategic initiatives and timing of pension funding and tax payments.




BASE SALARY

BONUS TARGET %

TOTAL GOAL SCORE

PRELIMINARY AWARD PAYOUT

$1,900,000

x

175%

x

143.75%

=

$4,779,688

​

​

​

​

​

​

​

​

​

​

​

​

​