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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 | ||
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o | Preliminary Proxy Statement | |
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
ý | 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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(1) | Amount Previously Paid: | |||
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Abbott Laboratories
100 Abbott Park Road
Abbott Park, Illinois 60064-6400 U.S.A.
On the Cover:Tyrone MorrisTyler Walsh, Quality Control Technician, Rapid Diagnostics
Milwaukee, Wisconsin
Tyrone Morris isBy leveraging Abbott's experience in
infectious disease assay development and
research—knowing which regions of the
virus to target and applying proven
development approaches—we were able
to quickly develop a very busy man. Withcomprehensive array
of highly accurate tests for COVID-19 in a
matter of months, a restaurant to run and a weekly bowlingprocess that oftenleague to dominate, he doesn't letanything slow him down—not even heartfailure. Abbott technologies have let himget back to leading the life he wants tolive.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 (Item 1 on Proxy Card) | ||
The Board of Directors and its Committees | ||
The Board of Directors | ||
Leadership Structure | ||
Director Selection | ||
Board Diversity and Composition | ||
Board Evaluation Process | ||
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 | ||
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 | ||
Shareholder Proposal on Lobbying Disclosure (Item | ||
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Shareholder Proposal on | ||
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Shareholder Proposal on | ||
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Approval Process for Related Person Transactions | ||
Additional Information | ||
Information Concerning Security Ownership | ||
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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1
NOTICE OF 2021 ANNUAL MEETING OF SHAREHOLDERS
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.
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to Be Held on April 24, 202023, 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 24, 2020,23, 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 untilabbottshareholders@abbott.com to obtain the next meeting telephone number in advance of shareholders at which directors are elected (Item 1the 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 shareholder proposals, if presented at the meeting (Items 4, 5, 6, and 7 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 Items 4, 5, 6, and 7.
The close of business on February 26, 2020, 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 20202021 Proxy Statement and 20192020 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 17, 2020. 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 13, 202012, 2021
2
This summary contains highlights about Abbott and the upcoming 20202021 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 by the Board of Directors on behalf of Abbott for use at the Annual Meeting of Shareholders. The meeting will be held on April 24, 2020,23, 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 13, 2020.12, 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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Abbott's three-yearsustained strong performance has resulted in total shareholder return (TSR) significantly exceeding the peer median and major market indices on a one-, three-, and five-year basis.
Abbott's three-year TSR of 139.5%101.7% is more than twice that of the peer group median and the broader Standard & Poor's 500 (S&P 500) and more than three times that of the Dow Jones Industrial Average (DJIA) market indicesindex. 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 20192020, despite the global market challenges from COVID-19, and achieved or exceeded the financial targets that were set atbefore the beginning of last year.pandemic in January 2020. Abbott's one-year TSR was 22.1%28.0%, delivering significant shareholder returns on topmore than three times the peer median TSR, and significantly above major market indices, a testament to the strength of the one-year TSR of 29%our diversified business model and ability to innovate and deliver in 2018, which ranked #1 in our peer group.this challenging environment.
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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.
3
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CONTRIBUTION TO GLOBAL TESTING NEEDS
Abbott quickly 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 uninterrupted 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 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 pandemic, we were able to continue providing our essential products to people around the world—even when route closures meant we needed to adapt and identify new delivery pathways. With more than 75,000 suppliers in 120 countries, Abbott's global supply chain enabled our life-changing technologies to get 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 our 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 inclusive 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 2019,2020, we conducted extensive shareholder outreach to discuss our compensation program, among other topics. In the spring, we engaged shareholders representing over 65%60% of our outstanding shares in an open dialogue to discuss various topics, including the enhancedAbbott's market-leading disclosures in our 2019 proxy that furtheredenhance shareholder understanding of how pay decisions are made and how the metrics we use are linked to business strategy and goals. Their feedback was overwhelmingly positive, which was reflected in the 94%92% support for Say-on-Pay Vote.
In the fall, we continued our dialogue with shareholders and shared the process we used to review and update our peer group in 2019 to better reflect Abbott's size and complexity. Shareholders were highly supportive of our approach and agreed with the changes approved by the Compensation Committee. Additional information regarding the changes to Abbott's peer group can be found on page 32 of this proxy statement.
KEY FEATURES OF OUR EXECUTIVE COMPENSATION PROGRAM
The following practices and policies ensure alignment of interests between shareholders and executives, and effective ongoing compensation governance.
| COMPENSATION PRACTICE | | ABBOTT POLICY | | MORE INFORMATION ON PAGE | | |||||||||||
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| | Compensation is Market-Based | | Yes | | Benchmark peers with investment profiles, operating characteristics, and employment and business markets similar to Abbott. Annual incentive plan goals are set to exceed market growth in relevant markets/business segments | | | |||||||||
| | | | | | | | | | | | | | | | | |
| Compensation is Performance-Based | Yes | Short-term and long-term incentive awards are 100% performance based. Annual incentive plan goals are set to exceed market growth in relevant markets/business segments | ||||||||||||||
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| | Double-Trigger Change in Control | | Yes | | Provide change in control benefits under double-trigger circumstances only | | | |||||||||
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| Recoupment Policy | Yes | Forfeiture for misconduct provision in equity grants and recoup compensation when warranted | ||||||||||||||
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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 | | | |||||||||
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| Capped Incentive Awards | Yes | Incentive award payments are capped | �� | |||||||||||||
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| | Independent Compensation Committee Consultant | | Yes | | Committee consultant performs no other work for Abbott | | | |||||||||
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| Tax Gross Ups | No | No tax gross ups under our executive officer pay program | ||||||||||||||
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| | Guaranteed Bonuses | | No | | No guaranteed bonuses | | | |||||||||
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| Employment Contracts | No | No employment contracts | ||||||||||||||
| | | | | | | | | | | | | | | | | |
| | Excessive Risk Taking | | No | | No highly leveraged incentive plans that encourage excessive risk taking | | | |||||||||
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| Hedging of Company Shares | No | No hedging of Abbott shares is allowed | ||||||||||||||
| | | | | | | | | | | | | | | | | |
| | Discounted Stock Options | | No | | No discounted stock options are allowed or granted | | | |||||||||
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Details of the compensation decisions made for our named executive officers are outlined on pages 3842 to 47.57.
46
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 13.16.
| Name | Principal Occupation | | Age | Director Since | Committee Memberships | | Name | Principal Occupation | | Age | Director Since | Committee Memberships | | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | ||||
| | Robert J. Alpern, M.D. | Professor and Former Dean, | | 69 | 2008 | • Nominations and | | 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 | | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Roxanne S. Austin | President and CEO, | 59 | 2000 | • Audit | Roxanne S. Austin | President and CEO, | 60 | 2000 | • Compensation (Chair) | |||||||||||||||||
| Austin Investment Advisors | • Compensation (Chair) | Austin Investment Advisors | • Nominations and | |||||||||||||||||||||||
• Executive | Governance | |||||||||||||||||||||||||
• Executive | ||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | ||
| | Sally E. Blount, Ph.D. | Professor and Former Dean, | | 58 | 2011 | • Nominations and | | Sally E. Blount, Ph.D. | CEO, Catholic Charities of the | | 59 | 2011 | • Nominations and | | ||||||||||||
| | J.L. Kellogg Graduate School | | | | Governance | | | Archdiocese of Chicago, and | | | | Governance | | |||||||||||||
| | | of Management | | | | • Public Policy | | | Professor and Former Dean, | | | | • Public Policy | | ||||||||||||
| | | | | | | | | | | | | | | J.L. Kellogg Graduate School | | | | | | |||||||
| | | of Management | | | | | | |||||||||||||||||||
| | | | | | | | | | | | | |||||||||||||||
| Robert B. Ford | President and CEO, | 47 | 2019 | • Executive | ||||||||||||||||||||||
| Robert B. Ford | President and COO, Abbott Laboratories | 46 | 2019 | • Executive | Abbott Laboratories | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | ||
| | Michelle A. Kumbier | Chief Operating Officer, | | 52 | 2018 | • Audit | | Michelle A. Kumbier | Former Chief Operating Officer, | | 53 | 2018 | • Audit | | ||||||||||||
| | | Harley-Davidson Motor Company | | | | • Compensation | | Harley-Davidson Motor Company | | | | • Compensation | | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |||
| Edward M. Liddy | Retired Chairman and CEO, | 74 | 2010 | • Audit (Chair) | Darren W. McDew | Retired General, U.S. Air Force, | 60 | 2019 | • Nominations and | |||||||||||||||||
| The Allstate Corporation | • Compensation | and Former Commander of | Governance | |||||||||||||||||||||||
• Executive | U.S. Transportation Command | • Public Policy | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | ||
| | Darren W. McDew | Retired General, U.S. Air Force, and | | 59 | 2019 | • Nominations and | | Nancy McKinstry | CEO and Chairman of the Executive | | 62 | 2011 | • Audit | | ||||||||||||
| | | Former Commander of U.S. | | | | Governance | | Board, Wolters Kluwer N.V. | | | | • Nominations and | | |||||||||||||
| | | Transportation Command | | | | • Public Policy | | | | | | Governance | | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Nancy McKinstry | CEO and Chairman of the | 61 | 2011 | • Audit | William A. Osborn | Retired Chairman and CEO, | 73 | 2008 | • Compensation | |||||||||||||||||
| Executive Board, | • Nominations and | (Lead Independent Director) | Northern Trust Corporation | • Nominations and | ||||||||||||||||||||||
| Wolters Kluwer N.V. | Governance | Governance (Chair) | ||||||||||||||||||||||||
| | | | | | | | | | | | | | ||||||||||||||
| | Phebe N. Novakovic | Chairman and CEO, | | 62 | 2010 | • Compensation | | |||||||||||||||||||
| | | General Dynamics Corporation | | | | • Public Policy (Chair) | | |||||||||||||||||||
| | | | | | | • Executive | | |||||||||||||||||||
| | | | | | | | | | | | | |||||||||||||||
| William A. Osborn | Retired Chairman and CEO, | 72 | 2008 | • Compensation | ||||||||||||||||||||||
| (Lead Independent Director) | Northern Trust Corporation | • Nominations and Governance (Chair) | ||||||||||||||||||||||||
• Executive | ||||||||||||||||||||||||||
| | | | | | | | | | | | | |||||||||||||||
| | Daniel J. Starks | Retired Chairman, President and CEO, | | 65 | 2017 | • Public Policy | | |||||||||||||||||||
| | | St. Jude Medical, Inc. | | | | | | |||||||||||||||||||
| | | | | | | | | | | | | | | |||||||||||||
| John G. Stratton | Retired Executive Vice President and | 59 | 2017 | • Nominations and | ||||||||||||||||||||||
| President of Global Operations, | Governance | |||||||||||||||||||||||||
| Verizon Communications Inc. | • Public Policy | • Executive | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | ||
| | Glenn F. Tilton | Retired Chairman, President and CEO, | | 71 | 2007 | • Audit | | Michael F. Roman | Chairman, President, and CEO, | | 61 | New | | | ||||||||||||
| | | UAL Corporation | | | | • Public Policy | | | 3M Company | | | Nominee | | | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Miles D. White | Chairman and CEO, | 65 | 1998 | • Executive (Chair) | Daniel J. Starks | Retired Chairman, President and CEO, | 66 | 2017 | • Public Policy | |||||||||||||||||
| Abbott Laboratories | St. Jude Medical, Inc. | |||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | ||||
| | John G. Stratton | Retired Executive Vice President and | | 60 | 2017 | • Audit | | |||||||||||||||||||
| | | President of Global Operations, | | | | • Public Policy | | |||||||||||||||||||
| | | Verizon Communications Inc. | | | | | | |||||||||||||||||||
| | | | | | | | | | | | | |||||||||||||||
| Glenn F. Tilton | Retired Chairman, President | 72 | 2007 | • Audit | ||||||||||||||||||||||
| and CEO, UAL Corporation | • Public Policy | |||||||||||||||||||||||||
| | | | | | | | | | | | | | ||||||||||||||
| | Miles D. White | Executive Chairman, | | 66 | 1998 | • Executive (Chair) | | |||||||||||||||||||
| | | Abbott Laboratories | | | | | | |||||||||||||||||||
| | | | | | | | | | | | | |||||||||||||||
57
CORPORATE GOVERNANCE |
Abbott is committed to strong corporate governance that is aligned with shareholder interests. Our Board spends significant time with the Company'sAbbott's senior management to understand the dynamics, issues, and opportunities for Abbott. During these interactions, directors provide insights and ask probing questions which guide management decision-making. This collaborative approach to risk oversight and emphasis on long term sustainability begins with our leaders and is engrained in the culture of our Company.Abbott's culture. The Board also regularly monitors leading practices in governance and adopts measures that it determines are in the best interest of Abbott and its shareholders.
In November 2019, Abbott announced thatOn March 31, 2020, Miles D. White will be steppingstepped down as Chief Executive Officer, on March 31, 2020, after a remarkable 21-year tenure. The Boardtenure and became Executive Chairman of Directors appointedthe Board. Robert B. Ford, Abbott'spreviously President and Chief Operating Officer and a 24-year Abbott veteran, to succeed Milessucceeded Mr. White as Abbott's President and Chief Executive Officer. Mr. White will remain Executive Chairman of the Board.
With this transition, Mr. Ford will becomebecame the 13th CEO of Abbott in its 131-year132-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 | ✓ | ||||
✓ | Leads annual Board and individual director performance reviews |
Robust Board Evaluation and Refreshment Process |
Other Board Governance Highlights |
68
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, sustainability and other strategic matters. During 2019,2020, we conducted outreach with a cross-section of shareholders representing more than 65%60% of our outstanding shares. Investor sentiment and specific feedback was summarized and shared with executive management and the Board of Directors, as appropriate.
79
SUSTAINABILITY |
At Abbott, sustainability means managing our company to deliver long-term impact for the people we believe that being a responsibleserve—shaping the future of healthcare and sustainable business is an essential foundation for helping the greatest number of people live fuller,better and healthier lives.
Our Sustainability efforts are focused on the most relevant industry and company-specific risks and opportunities. TheIn 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 focus listed below aretomorrow, responsibly applying data to advance care, building a more resilient, diverse and responsible supply chain and protecting health by safeguarding the basis of our Sustainability strategy. environment.
These areas have been identified through an in-depth materiality analysis, directed by executive management, and in partnership with several,numerous diverse stakeholders. We aim to deliver sustainable, responsible growth that improves lives and creates value in communities around the world.
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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 sustainabilitySustainability efforts, please visit www.abbott.com/responsibility/sustainability.sustainability.html.
SELECT RECOGNITION BY THIRD-PARTY ORGANIZATIONS |
| • Dow Jones Sustainability Index global Industry Group Leader for 8 consecutive years. • Fortune's Most Admired | |
 | •
• Recognized by Working Mother, Great Place to Work, DiversityInc, • 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 |
810
VOTING MATTERS AND BOARD |
| Election of • 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 | |
| Ratification of Ernst & Young as Auditors: The Board recommends a voteFOR • Independent firm with significant industry and financial reporting expertise. • See pages | |
| Say on Pay: Advisory Vote on the Approval of Executive Compensation: The Board recommends a voteFOR • 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 | |
| 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. | |
| The Board recommends a voteAGAINST • Proposal
• Proposal 6: • Proposal 7: • See pages |
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INFORMATION ABOUT THE ANNUAL MEETING
Shareholders of record at the close of business on February 26, 2020 will be entitled to notice of and to vote at the Annual Meeting. As of January 31, 2020, Abbott had 1,763,433,243 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.
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 2020.2021. 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 1413 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 1413 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
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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 proposals.
Aside 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 Morrow 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 Mary K. Moreland, Karen M. Peterson, and Brian P. Wentworth, employees of Abbott. The voting power with respect to the shares is held by and shared between the Investment Committee and the participants. The Investment Committee must solicit voting instructions from the participants and follow the voting instructions it receives. The Investment Committee may use its own discretion with respect to those shares for which no voting instructions are received.
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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 at 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 May 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 New Haven Hospital from October 2005 through January 2020.
As a result of his long-tenured leadership positions at the Yale School of Medicine and The University of Texas Southwestern Medical Center, and as a former Director on the Board of 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., CrowdStrike Holdings, Inc., Target Corporation, and Teledyne Technologies Inc.Incorporated, and Verizon Communications. Ms. Austin will not stand for re-election at Target Corporation's June 2020Teledyne Technologies Incorporated's 2021 annual meeting of shareholders.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 at Northwestern University, Evanston, Illinois | |
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 at Northwestern University from 2010 to 2018. From 2004 to 2010, she served as the Vice Dean and Dean of the Undergraduate 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.
Having 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 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.
  | | ROBERT B. FORD Director since 2019 Age President and Chief | |
Mr. Ford has served as Abbott's President and Chief OperatingExecutive Officer since 2018 and will succeed Mr. White as Abbott's Chief Executive Officer on March 31, 2020. Previously, Mr. Ford served as theAbbott's President and Chief Operating Officer from 2018 to 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. Ford joined Abbott in 1996.
HavingAs 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 Company's global operations, a wide breadth of experience in strategy and execution, and valuable insights into global healthcare markets.
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  | | MICHELLE A. KUMBIER Director since 2018 Age Former Senior Vice President and Chief Operating Officer of Harley-Davidson Motor Company, Milwaukee, Wisconsin (Motorcycle and Related Products Manufacturer) | |
Ms. Kumbier has served as Senior Vice President and Chief Operating Officer of Harley-Davidson Motor Company since October 2017.from 2017 to 2020. Previously, she served as its Senior Vice President of Motor Company Product and Operations from May 2015 to October 2017, as its Senior Vice President of Motorcycle Operations from September 2012 to April 2015, and as its Senior Vice President of Product Development from November 2010 to August 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.
As the Senior Vice President and Chief Operating Officer ofHaving served in several executive roles at Harley-Davidson, Motor Company, Ms. Kumbier contributes extensive experience in the management of a multinational public company, including significant manufacturing, product development, business development, and strategic planning experience.
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Mr. Liddy 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 Chairman 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, Mr. Liddy served as Chairman of the Board of the Allstate Corporation. He served as Chief Executive Officer of Allstate from January 1999 to December 2006, President from January 1995 to May 2005, and Chief Operating Officer from August 1994 to January 1999. Mr. Liddy currently serves on the Board of Directors of AbbVie Inc., 3M Company, and The Boeing Company. Mr. Liddy has reached the mandatory retirement age for directors at both Boeing and 3M and will not stand for re-election at either company's 2020 Annual Meeting.
Through his executive leadership at Allstate 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, 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.
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 | | DARREN W. MCDEW Director since 2019 Age 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 the Boys and Girls Club ofParsons Corporation, Rolls-Royce, North America, Inc., United Services Automobile Association, and Rolls-Royce, North America, Inc.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 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.
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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 Chairman 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.
 | | WILLIAM A. OSBORN Lead Independent Director Director since 2008 Age Retired Chairman and Chief Executive Officer of Northern Trust Corporation (Multibank Holding Company) and The Northern Trust Company, Chicago, 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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 | | MICHAEL F. ROMAN Director Nominee Age 61 Chairman of the Board, President and Chief Executive Officer, 3M Company, St. Paul, Minnesota (Global Manufacturing and Technology Company) | |
Mr. Roman has served as the Chairman of the Board, President and Chief Executive Officer of 3M Company since May 2019. Previously, he served as Chief Executive Officer from July 2018 to May 2019 and as Chief Operating Officer and Executive Vice President from 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 served 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 Board, President and Chief Executive Officer of 3M Company, Mr. Roman has extensive experience leading a multinational public company with multiple businesses, contributing significant manufacturing, supply chain, technology, and finance experience, as well as valuable insights into corporate strategy and risk management.
 | | 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. Mr. Starks also served as President and Chief Operating Officer of St. Jude Medical 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 (Telecommunications and Media Company) | |
Mr. Stratton served as Executive Vice President and President of Global Operations of Verizon Communications Inc. from February 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. Mr. Stratton currently 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 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.
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THE BOARD OF DIRECTORS AND ITS COMMITTEES
THE BOARD OF DIRECTORS |
The Board of Directors held 78 meetings in 2019.2020. The average attendance of all directors at Board and committee meetings in 20192020 was 95%98% 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 directorsindividuals 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, 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.
LEADERSHIP STRUCTURE |
On March 31, 2020, Miles D. White has served as Abbott's Chairman and Chief Executive Officer since 1999. In November 2019, Abbott announced that Mr. White will stepstepped down as Chief Executive Officer, on March 31, 2020after a remarkable 21-year tenure, and remainbecame Executive Chairman. The Board also unanimously appointedChairman of the Board. Robert B. Ford, the current PresidentAbbott's then-President and Chief Operating Officer, and a 24-year Abbott veteran, to succeedsucceeded Mr. White as Abbott's President and Chief Executive OfficerOfficer. 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 named him to the Board, effective November 12, 2019.succession 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 Executive Chairman is in the best interests of Abbott and its shareholders. 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 strategy. The Board believes that his advice and guidance to Mr. Ford and the Board will help continue to facilitate a successful leadership transition.
The Board also has a lead independent director that is chosen by and from the independent members of the Board of Directors. Currently, the Chair of the Nominations and Governance Committee, Mr. Osborn, is the lead independent director, whose key functions and responsibilities include:
The Board reviews its leadership structure on at least an annual basis. The Board has determined that this leadership structure ensures the appropriate level of oversight, independence and responsibility is applied to all Board decisions, including risk oversight, and is in the best interests of Abbott and its shareholders.
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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. 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-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 1316 through 19.22.
A description of the procedure for the recommendation and nomination of directors, including by proxy access, is on page 82.99.
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BOARD DIVERSITY AND COMPOSITION |
In the process of identifying nominees to serve as members 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.
The process used to identify and select nominees has resulted in 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 | ✓ | High integrity | ✓ | Commitment to good corporate citizenship |
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BOARD EVALUATION PROCESS |
Each year, Abbott's directors evaluate the effectiveness of the Board and its Committees in performing its governance and risk oversight responsibilities. Directors assess the performance of their peers, as well as the full Board of Directors and each of the Committees on which they serve, as follows:
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COMMITTEES OF THE BOARD OF DIRECTORS |
The Board of Directors has five committees established in Abbott's By-Laws: Audit Committee, Compensation Committee, Nominations and Governance Committee, Public Policy Committee, and Executive Committee.
All members of the Audit Committee, Compensation Committee, Nominations and Governance Committee, and Public Policy Committee are 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)(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 | | | | | | | | | |||||||||
| | | R. B. Ford | | | | | | | | | | | | | | R. B. Ford | | | | | | | | | | | | |
| | M. A. Kumbier | | | | | | | | | | M. A. Kumbier | | | | | | | | | |||||||||
| | | E. M. Liddy | | | | | | | | | | | | | | E. M. Liddy | | | | | | | | | | | | |
| | D. W. McDew | | | | | | | | | | D. W. McDew | | | | | | | | | |||||||||
| | | N. McKinstry | | | | | | | | | | | | | | N. McKinstry | | | | | | | | | | | | |
| | P. N. Novakovic | | | | | |  | | | | | P. N. Novakovic | | | | | |  | | | | |||||||
| | | W. A. Osborn | | | | | | | | | | | | | W. A. Osborn | | | | | | | | | | | | | |
| | S. C. Scott III | | | | | | | | | | D. J. Starks | | | | | | | | ||||||||||
| | | D. J. Starks | | | | | | | | | | | | | | J. G. Stratton | | | | | | | | | | | | |
| | J. G. Stratton | | | | | | | | | | G. F. Tilton | | | | | | | | | |||||||||
| | | G. F. Tilton | | | | | | | | | | | | | | M. D. White | | | | | | | | | | | | |
| | M. D. White | | | | | | | | | Total Meetings Held in 2020 | | 8 | | 4 | | 5 | | 4 | | 0 | | |||||||
| | | Total Meetings Held in 2019 | | 7 | | 4 | | 4 | | 4 | | 0 | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | ||||||||||||||
The Audit Committee assists the Board of Directors in fulfilling its oversight responsibility with respect to:
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In performing these functions, the Audit Committee 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 69.82.
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. Its primary responsibilities include:
The Committee determines what variables it will instruct the consultant to consider, including peer groups against which performance and pay should be examined, financial metrics to be used to assess Abbott's relative performance, competitive 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 2019.2020. 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 50.60.
Nominations and Governance Committee
The Nominations and Governance Committee assists the Board in 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 2124 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:
The Executive Committee may exercise all the authority of the Board in the management of Abbott, except for matters expressly reserved by law for Board action.
COMMUNICATING WITH THE BOARD OF DIRECTORS |
Interested parties may communicate with the Board of Directors by writing a letter to the Chairman of the Board, to the Chair of the Nominations and Governance Committee, who acts as the lead independent director, or to the independent directors c/o Abbott Laboratories, 100 Abbott Park Road, D-364, AP6D, Abbott Park, Illinois 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 Abbott that is addressed to a member of the Board and may request any correspondence on that log.
CORPORATE GOVERNANCE MATERIALS |
Abbott's corporate governance guidelines, outline of directorship qualifications, director independence standards, code of business conduct, and the charters of Abbott's Audit Committee, Compensation Committee, Nominations and Governance Committee, and Public Policy Committee are all available in the corporate governance section of Abbott's investor relations website (www.abbottinvestor.com)(www.abbottinvestor.com).
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|
Messrs. 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' 20192020 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 | | | $ | 174,910 | | | $ | 0 | | | $ | 64,323 | | | $ | 25,000 | | | $ | 390,233 | | | R. J. Alpern | | | $ | 126,000 | | | $ | 184,920 | | | $ | 0 | | | $ | 63,098 | | | $ | 25,000 | | | $ | 399,018 | | |||
| | R. S. Austin | | | 152,000 | | | 174,910 | | | 0 | | | 0 | | | 0 | | | 326,910 | | | | R. S. Austin | | | 152,000 | | | 184,920 | | | 0 | | | 0 | | | 25,000 | | | 361,920 | | | |||||||||||||
| | S. E. Blount | | | 126,000 | | | 174,910 | | | 0 | | | 10,355 | | | 25,000 | | | 336,265 | | | S. E. Blount | | | 126,000 | | | 184,920 | | | 0 | | | 9,508 | | | 25,000 | | | 345,428 | | |||||||||||||||
| | M. A. Kumbier | | | 132,000 | | | 174,910 | | | 0 | | | 0 | | | 0 | | | 306,910 | | | | M. A. Kumbier | | | 132,000 | | | 184,920 | | | 0 | | | 0 | | | 0 | | | 316,920 | | | ||||||||||||
| | E. M. Liddy | | | 151,000 | | | 174,910 | | | 0 | | | 0 | | | 0 | | | 325,910 | | | E. M. Liddy | | | 151,000 | | | 184,920 | | | 0 | | | 0 | | | 0 | | | 335,920 | | |||||||||||||||
| | D. W. McDew | | | 31,500 | | | 0 | | | 0 | | | 0 | | | 0 | | | 31,500 | | | | D. W. McDew | | | 126,000 | | | 184,920 | | | 0 | | | 0 | | | 0 | | | 310,920 | | | ||||||||||||
| | N. McKinstry | | | 132,000 | | | 174,910 | | | 0 | | | 0 | | | 0 | | | 306,910 | | | N. McKinstry | | | 132,000 | | | 184,920 | | | 0 | | | 0 | | | 20,000 | | | 336,920 | | |||||||||||||||
| | P. N. Novakovic | | | 141,000 | | | 174,910 | | | 0 | | | 0 | | | 0 | | | 315,910 | | | | P. N. Novakovic | | | 141,000 | | | 184,920 | | | 0 | | | 0 | | | 0 | | | 325,920 | | | ||||||||||||
| | W. A. Osborn | | | 156,000 | | | 174,910 | | | 0 | | | 0 | | | 0 | | | 330,910 | | | W. A. Osborn | | | 156,000 | | | 184,920 | | | 0 | | | 0 | | | 0 | | | 340,920 | | |||||||||||||||
| | S. C. Scott III | | | 132,000 | | | 174,910 | | | 0 | | | 0 | | | 25,000 | | | 331,910 | | | | S. C. Scott III | | | 44,000 | | | 0 | | | 0 | | | 0 | | | 0 | | | 44,000 | | | ||||||||||||
| | D. J. Starks | | | 126,000 | | | 174,910 | | | 0 | | | 0 | | | 0 | | | 300,910 | | | D. J. Starks | | | 126,000 | | | 184,920 | | | 0 | | | 0 | | | 0 | | | 310,920 | | |||||||||||||||
| | J. G. Stratton | | | 126,000 | | | 174,910 | | | 0 | | | 0 | | | 0 | | | 300,910 | | | | J. G. Stratton | | | 126,000 | | | 184,920 | | | 0 | | | 0 | | | 25,000 | | | 335,920 | | | ||||||||||||
| | G. F. Tilton | | | 132,000 | | | 174,910 | | | 0 | | | 0 | | | 25,000 | | | 331,910 | | | G. F. Tilton | | | 132,000 | | | 184,920 | | | 0 | | | 0 | | | 25,000 | | | 341,920 | | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||
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share 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 stockshares having a fair
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market value equal to fourfive 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, 2019:2020: R. J. Alpern, 30,406;32,380; R. S. Austin, 38,069;40,043; S. E. Blount, 23,666;25,640; M. A. Kumbier, 2,241;4,215; E. M. Liddy, 25,833;27,807; D. W. McDew, 1,974; N. McKinstry, 23,666;25,640; P. N. Novakovic, 25,833;27,807; W. A. Osborn, 32,323; S. C. Scott III, 34,053;34,297; D. J. Starks, 8,623;10,597; J. G. Stratton, 5,186;7,160; and G. F. Tilton, 34,053.36,027.
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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, 20202021 by (i) each director thenominee, (ii) each individual serving as Chief Executive Officer theand as Chief Financial Officer during 2020, and the three other most highly paid executive officers in 2019 (the2020 (collectively, the "named officers"), and by(iii) 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, 2020(3) | Stock Equivalent Units | Name | Shares Beneficially Owned(1)(2) | Stock Options Exercisable Within 60 Days of January 31, 2021(3) | Stock Equivalent Units | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| R. J. Alpern | 30,406 | 0 | 7,766 | H. L. Allen | 151,896 | 1,109,341 | 0 | |||||||||||||
| | R. S. Austin | 44,913 | 47,883 | 0 | | R. J. Alpern | 32,380 | 0 | 8,214 | | ||||||||||
| S. E. Blount | 26,266 | 0 | 0 | R. S. Austin | 40,043 | 57,618 | 0 | |||||||||||||
| | L. D. Earnhardt | 56,946 | 0 | 0 | S. E. Blount | 28,240 | 0 | 0 | | |||||||||||
| R. B. Ford | 197,382 | 926,022 | 0 | R. B. Ford | 244,868 | 1,218,661 | 0 | |||||||||||||
| | M. A. Kumbier | 3,258 | 0 | 0 | | R. E. Funck, Jr. | 200,475 | 378,314 | 0 | | ||||||||||
| E. M. Liddy | 28,153 | 46,743 | 21,268 | J. F. Ginascol | 89,003 | 169,059 | 0 | |||||||||||||
| | D. W. McDew | 0 | 0 | 0 | | M. A. Kumbier | 5,248 | 0 | 0 | | ||||||||||
| N. McKinstry | 23,666 | 47,902 | 0 | E. M. Liddy | 30,127 | 56,414 | 21,584 | |||||||||||||
| | P. N. Novakovic | 26,333 | 102,943 | 0 | | D. W. McDew | 1,974 | 0 | 0 | | ||||||||||
| W. A. Osborn | 56,323 | 49,190 | 28,512 | N. McKinstry | 25,640 | 56,356 | 0 | |||||||||||||
| | D. G. Salvadori | 95,088 | 461,015 | 0 | P. N. Novakovic | 41,004 | 93,553 | 0 | | |||||||||||
| S. C. Scott III | 40,053 | 41,622 | 7,138 | W. A. Osborn | 79,745 | 37,733 | 28,935 | |||||||||||||
| | D. J. Starks | 7,018,683 | 0 | 0 | | M. F. Roman | 0 | 0 | 0 | | ||||||||||
| J. G. Stratton | 8,641 | 0 | 4,651 | D. G. Salvadori | 102,433 | 594,254 | 0 | |||||||||||||
| | G. F. Tilton | 41,403 | 0 | 32,710 | | D. J. Starks | 7,020,657 | 0 | 0 | | ||||||||||
| M. D. White | 3,194,710 | 5,417,294 | 0 | J. G. Stratton | 10,615 | 0 | 6,049 | |||||||||||||
| | B. B. Yoor | 116,620 | 184,281 | 0 | | G. F. Tilton | 43,377 | 0 | 33,196 | | ||||||||||
| All directors and executive officers as a group(4)(5) | 12,502,322 | 12,334,341 | 102,045 | 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 | |||||||||||||||||
| | | | | | | | | | | | ||||||||||
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COMPENSATION DISCUSSION AND ANALYSIS |
This Compensation Discussion and Analysis (CD&A) describes Abbott's executive compensation program in 2019.2020. 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 fiveseven named officers: Miles D. White, Chairman of the Board and Chief Executive Officer; Robert B. Ford, President and Chief Executive Officer effective March 31, 2020 (previously President and Chief Operating Officer; Brian B. Yoor,Officer); Robert E. Funck, Jr., Executive Vice President, Finance and Chief Financial Officer; Lisa Earnhardt,Officer effective March 1, 2020; Hubert L. Allen, Executive Vice President, Medical Devices;General Counsel and Secretary; John F. Ginascol, Executive Vice President, Core Diagnostics; Daniel G. Salvadori, Executive Vice President, Nutritional Products.Products; Miles D. White, Executive Chairman of the Board effective March 31, 2020 (previously Chairman and Chief Executive Officer); and Brian B. Yoor, former Executive Vice President, Finance and Chief Financial Officer.
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 20192020 shareholder outreach described on page 31.34.
Abbott's three-yearsustained strong performance has resulted in total shareholder return (TSR) significantly exceeding the peer median and major market indices on a one-, three-, and five-year basis.
Abbott's three-year TSR of 139.5%101.7% is more than twice that of the peer group median and the broader Standard & Poor's 500 (S&P 500) and more than three times that of the Dow Jones Industrial Average (DJIA) market indices.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 20192020, despite the global market challenges from COVID-19, and achieved or exceeded the financial targets that were set atbefore the beginning of last year.pandemic in January 2020. Abbott's one-year TSR was 22.1%28.0%, delivering significant shareholder returns on topmore than three times the peer median TSR, and significantly above major market indices, a testament to the strength of the one-year TSR of 29%our diversified business model and ability to innovate and deliver in 2018, which ranked #1 in our peer group.this challenging environment.
 | ||||
 | |  |
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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.
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CHANGES BASED ON SHAREHOLDER FEEDBACK AND MARKET PRACTICES |
During 2019,2020, we conducted extensive shareholder outreach to discuss our compensation program.
program, among other topics. In the spring, we engaged shareholders representing over 65%60% of our outstanding shares in an open dialogue to discuss various topics, including the enhancedAbbott's market-leading disclosures in our 2019 proxy that furtheredenhance 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%92% support for theour Say-on-Pay Vote.
In the fall, we continued our dialogue with shareholders and shared the process we used to review and update our peer group in 2019 to better reflect Abbott's size and complexity. Shareholders were very supportive of our approach and agreed with the changes approved by the Compensation Committee. Additional information regarding the changes to Abbott's peer group can be found on page 32 of this proxy statement.Proposal.
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 • 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 • Implemented a strengthened recoupment policy | • Introduced new long-term incentive measures to reflect sustained performance over a three-year period • Increased director share ownership guidelines • Increased the ROE target for vesting of performance restricted shares • Updated our peer group to reflect increased size and complexity of business |
| ||||
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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. As we previewed in last year's proxy, ourOur Compensation Committee reviewed our peer group in 20192020 to determine 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 revised the peer group to reflect the breadth of our business, reflecting our diversereplaced Raytheon Technologies with Cisco and balanced portfolio.Nike. This newrevised peer group strikes the appropriate balance between size (revenue and market capitalization between approximately one-third and three times Abbott's), growth and return profiles, geographic breadth, and management and operating structure. This approach has been overwhelmingly supported by our investors during shareholder outreach.
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The 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 | | | 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 | | |||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
| | 3M Company | | | $ | 32.1 | | $ | 101.5 | | ü | | ü | | ü | | Diagnostics | | | 3M Company | | | $ | 32.2 | | $ | 100.8 | | ü | | ü | | ü | | Diagnostics | | |||
| | Becton Dickinson | | | $ | 17.3 | | $ | 73.6 | | ü | | ü | | ü | | Diagnostics, Medical Devices | | | Becton Dickinson | | | $ | 17.1 | | $ | 72.8 | | ü | | ü | | ü | | Diagnostics, Medical Devices | | |||
| | Boston Scientific | | | $ | 10.4 | | $ | 63.0 | | ü | | | ü | | Medical Devices | | | Boston Scientific | | | $ | 10.1 | | $ | 51.5 | | ü | | | ü | | Medical Devices | | |||||
| | | Bristol-Myers Squibb | | | $ | 24.2 | | $ | 150.5 | | ü | | | | ü | | Established Pharmaceuticals | | | Bristol-Myers Squibb | | | $ | 39.4 | | $ | 140.2 | | ü | | | | ü | | Established Pharmaceuticals | | ||
| | The Coca-Cola Company | | | $ | 37.3 | | $ | 237.1 | | ü | | ü | | ü | | Nutrition | | | Cisco | | | $ | 48.1 | | $ | 189.1 | | ü | | ü | | ü | | Diagnostics, Medical Devices | | |||
| | | Danaher Corporation | | | $ | 19.9 | | $ | 110.2 | | ü | | ü | | ü | | Diagnostics | | | The Coca-Cola Company | | | $ | 33.5 | | $ | 235.7 | | ü | | ü | | ü | | Consumer | | ||
| | Honeywell International | | | $ | 36.7 | | $ | 126.5 | | ü | | ü | | ü | | Diagnostics, Medical Devices | | | Danaher Corporation | | | $ | 22.3 | | $ | 157.8 | | ü | | ü | | ü | | Diagnostics | | |||
| | | Johnson & Johnson | | | $ | 82.1 | | $ | 383.9 | | ü | | ü | | ü | | Diagnostics, Established Pharmaceuticals, Medical Devices | | | Honeywell International | | | $ | 32.6 | | $ | 149.2 | | ü | | ü | | ü | | Diagnostics, Medical Devices | | ||
| | Medtronic | | | $ | 30.9 | | $ | 152.1 | | ü | | ü | | ü | | Medical Devices | | | Johnson & Johnson | | | $ | 82.6 | | $ | 414.3 | | ü | | ü | | ü | | Diagnostics, Established Pharmaceuticals, Medical Devices | | |||
| | | Merck | | | $ | 46.0 | | $ | 231.6 | | ü | | ü | | ü | | Established Pharmaceuticals | | | Medtronic | | | $ | 27.9 | | $ | 157.7 | | ü | | ü | | ü | | Medical Devices | | ||
| | Mondelez International | | | $ | 25.9 | | $ | 79.3 | | ü | | ü | | ü | | Nutrition | | | Merck | | | $ | 47.3 | | $ | 207.0 | | ü | | ü | | ü | | Established Pharmaceuticals | | |||
| | | Procter & Gamble | | | $ | 69.6 | | $ | 311.5 | | ü | | ü | | ü | | Nutrition | | | Mondelez International | | | $ | 26.6 | | $ | 83.6 | | ü | | ü | | ü | | Consumer | | ||
| | Reckitt Benckiser(2) | | | $ | 16.2 | | $ | 57.6 | | ü | | ü | | ü | | Nutrition | | | Nike | | | $ | 38.3 | | $ | 222.1 | | ü | | ü | | ü | | Consumer | | |||
| | | Stryker Corporation | | | $ | 14.9 | | $ | 78.6 | | | | | | ü | | Medical Devices | | ||||||||||||||||||||
| | Procter & Gamble | | | $ | 74.0 | | $ | 345.0 | | ü | | ü | | ü | | Consumer | | |||||||||||||||||||||
| | Thermo Fisher Scientific | | | $ | 25.5 | | $ | 130.3 | | ü | | ü | | ü | | Diagnostics | | | Reckitt Benckiser(2) | | | $ | 18.4 | | $ | 63.4 | | ü | | | ü | | Nutrition | | ||||
| | | United Technologies | | | $ | 77.0 | | $ | 129.3 | | ü | | | | ü | | Diagnostics | | | Stryker Corporation | | | $ | 14.4 | | $ | 92.1 | | | | | | ü | | Medical Devices | | ||
| | Peer Group Median | | | $ | 28.3 | | $ | 127.9 | | | | | | | Thermo Fisher Scientific | | | $ | 32.2 | | $ | 184.6 | | ü | | ü | | ü | | Diagnostics | | |||||||
| | | Abbott | | | $ | 31.9 | | $ | 153.5 | | ü | | ü | | ü | | | | | Peer Group Median | | | $ | 32.2 | | $ | 157.7 | | | | | | | | | | ||
| | Abbott Percentile Rank | | | 59th | | 73rd | | | | | | | Abbott | | | $ | 34.6 | | $ | 194.1 | | ü | | ü | | ü | | | ||||||||||
| | | | | | | | | | | | | | | | | | | Abbott Percentile Rank | | | 65th | | 71st | | | | | | | | | | ||||||
| | | | | | | | | | | | | | | | | | ||||||||||||||||||||||
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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 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 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.
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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 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, 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%; 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 | ||||||
| | | | | | | | | | | | | |
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For 20192020 performance, annual incentive payouts for Abbott executive officers averaged 96% of target. For individual calculations for each named officer, see pages 3842 to 47.57. 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 20192020 were set at the 7560th percentile of our peer group, reflecting 100th percentile relative 3-year TSR performance for the period ending in 2018.2019. The 5-year TSR ranked at the 10075th percentile of our peer group for the period ending in 2018,2019, while the 1-year TSR was at the 9425th 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 | | 2016 | | 2017 | | 2018 | | OVERALL | | METRIC | | 2017 | | 2018 | | 2019 | | 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 | LTI ADJUSTMENT LEGEND | LTI ADJUSTMENT LEGEND | ||
| TOTAL | RESULT | RESULT | ||
| | | | | |
| +3 or More | 125% | |||
| +4 or More | 125% | |||
| | | | | |
| +1 or +2 | 110% | |||
| +1 to +3 | 110% | |||
| | | | | |
| 0 | 100% | 100% | ||
| | | | | |
| -1 or -2 | 90% | 90% | ||
| | | | | |
| -3 or Less | 75% | 75% | ||
| | | | | |
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Awards granted in 2019,2020, based on individual officer performance for the three-year period ending in 2018,2019, resulted in awards ranging from the 5410th percentile to the 90th percentile of our peer group, with an average of the 7860th percentile. For individual calculations for each named officer, see pages 3842 to 47.57.
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.
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Performance restricted shares vest one-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 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 | IMPACT OF ABBOTT/ABBVIE SEPARATION
|
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The graphic below summarizes the LTI process and its direct linkage to the market and company and individual performance.
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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 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 Company assets are used to generate profit. | | ||||
| | | | | | | | | |
| 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. | |||||||
| | | | | | | | | |
| 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 if 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 encourage 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:
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Since this covenant is considered the minimum 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 8,10, and include:
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 2018,2019, whereas the annual incentive plan payouts are based upon performance during 2019.2020.
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NAMED EXECUTIVE OFFICER COMPENSATION DECISIONS
 | | |
| | | |
| | | |
Mr. Ford previously served as President and Chief Operating Officer until his appointment to President and Chief Executive Officer on March 31, 2020.
Mr. White'sFord's annual base salary of $1,900,000 has not changed since 2010.was increased to $1,400,000 in March 2020 in connection with his promotion to President and Chief Executive Officer.
Mr. White'sFord's target bonus ofwas increased to 175% was not changed during 2019.in connection with his promotion to President and Chief Executive Officer. Based on performance in 2019,2020, Mr. WhiteFord received a bonus in February 20202021 which was calculated as follows:
| | | | | | 2018 | | | | | | | 2019 GOAL MEASUREMENT | | | 2019 | | | | | | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | GOAL | | RESULTS ACHIEVED | | GOAL WEIGHT | | THRESHOLD | | TARGET | | MAXIMUM | | RESULTS ACHIEVED | | GOAL SCORE | |||||||||||||||||
| | FINANCIAL METRICS(1) | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Adjusted Sales(2) | | | | $31.2B | | | | 25% | | | | $31.65B | | | | $31.80B | | | | $31.95B | | | | $31.96B | | | | 37.5% | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Adjusted Diluted EPS | | | $2.88 | | | 25% | | | $3.15 | | | $3.20 | | | $3.25 | | | $3.24 | | | 35.0% | | |||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Adjusted ROA | | | | 9.2% | | | | 10% | | | | 10.5% | | | | 10.6% | | | | 10.7% | | | | 10.9% | | | | 15.0% | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Free Cash Flow(3) | | | $4.9B | | | 10% | | | $4.1B | | | $4.3B | | | $4.5B | | | $4.5B | | | 15.0% | | |||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | STRATEGIC METRICS | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Diabetes Care Sales Growth | | | | 10% | | | | 92.6% of Target | | | | Target | | | | 106.8% of Target | | | | >Maximum | | | | 15.0% | | | |||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Structural Heart Sales Growth | | | 10% | | | 76.2% of Target | | | Target | | | 109.5% of Target | | | >Maximum | | | 15.0% | | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Alinity C/I Instrument Placements | | | | 10% | | | | 85.5% of Target | | | | Target | | | | 103.2% of Target | | | | <Threshold | | | | 0.0% | | | |||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Total | | | 132.5% | | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 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% | | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| BASE SALARY | BONUS TARGET % | TOTAL GOAL SCORE | AWARD PAYOUT | |||||||||
| $1,900,000 | x | 175% | x | 132.5% | = | $4,405,625 | ||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 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% | | | |||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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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% | | | ||||
| | | | | | | | | | | | | | | | | |
| | | | | | 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 | ||||||
| | | | | | | | | | | | | |
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Based on the Committee's review of Abbott and individual performancethrough 20182019,, Mr. WhiteFord received an LTI award inFebruary 20192020 with a value of $15,125,000,$11,250,000, which was equal to 125%90% of his LTIthe market value equity award guideline. Additional calculation details are as follows:for a CEO in Abbott's peer group. This award was paid 50% in stock options(1) and 50% in performance restricted shares(2).
| LTI AWARD GUIDELINE | LTI ADJUSTMENT | AWARD ALLOCATION | AWARD VALUE | LTI ADJUSTMENT | AWARD ALLOCATION | AWARD VALUE | ||||||||||||||||||
$12,100,000 | x | 125% | x | 50% Stock Options(1) | = | $7,562,500 | ||||||||||||||||||
$12,500,000 | x | 90% | x | 50% Stock Options(1) | = | $5,625,000 | ||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 50% Performance Restricted Shares(2) | $7,562,500 | | 50% Performance Restricted Shares(2) | $5,625,000 | ||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | $15,125,000 | Total | $11,250,000 | | ||||||||||||||||||||
| INDIVIDUAL LTI PERFORMANCE ASSESSMENT | | INDIVIDUAL LTI PERFORMANCE ASSESSMENT | | |||||||||||||||||||||||||||||||||||||
| METRIC | | 2016 | | 2017 | | 2018 | | OVERALL | | METRIC | | 2017 | | 2018 | | 2019 | | OVERALL | | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Sales and Market Growth Contribution | | Did not meet (-1) | | Met (0) | | Exceeded (+1) | | 0 | | Sales and Market Growth Contribution | | Exceeded (+1) | | Exceeded (+1) | | Exceeded (+1) | | +3 | | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Margin Contribution | Exceeded (+1) | Exceeded (+1) | Exceeded (+1) | +3 | Margin Contribution | Met (0) | Exceeded (+1) | Exceeded (+1) | +2 | |||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Strategic Financial Contribution | | Exceeded (+1) | | Exceeded (+1) | | Exceeded (+1) | | +3 | | Strategic Financial Contribution | | Exceeded (+1) | | Met (0) | | Did not meet (-1) | | 0 | | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | +6 | Total | +5 | |||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | LTI Adjustment | | 125% | | Preliminary Adjustment | | 125% | | ||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Impact(3) | - | |||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||
| | LTI Adjustment | | 90% | | ||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||
| LTI ADJUSTMENT LEGEND | ||
| TOTAL | RESULT | |
| | | |
| +3 or More | 125% | |
| | | |
| +1 or +2 | 110% | |
| | | |
| 0 | 100% | |
| | | |
| -1 or -2 | 90% | |
| | | |
| -3 or Less | 75% | |
| | | |
| | | | | | | | | | | | | | | | | | | | | |
| 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 39
 | | ROBERT Executive Vice President, Finance and Chief |
| | | |
| | | |
Mr. Funck previously served as Senior Vice President, Finance and Controller. Mr. Funck was appointed to Executive Vice President, Finance and Chief Financial Officer effective March 1, 2020.
Mr. Ford'sFunck's annual base salary of $1,000,000 did not changewas increased in 2019.January 2020 to $825,000 in connection with his promotion to Executive Vice President, Finance and Chief Financial Officer.
Mr. Ford'sFunck's target bonus of 125%was increased to 115% of base salary was not changed during 2019.in 2020 in connection with his promotion to Executive Vice President, Finance and Chief Financial Officer. Based on performance in 2019,2020, Mr. FordFunck received a bonus in February 20202021 which was calculated as follows:
| | | | | | 2018 | | | | | | | 2019 GOAL MEASUREMENT | | | 2019 | | | | | | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | GOAL | | RESULTS ACHIEVED | | GOAL WEIGHT | | THRESHOLD | | TARGET | | MAXIMUM | | RESULTS ACHIEVED | | GOAL SCORE | |||||||||||||||||
| | FINANCIAL METRICS(1) | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Adjusted Sales(2) | | | | $31.2B | | | | 25% | | | | $31.65B | | | | $31.80B | | | | $31.95B | | | | $31.96B | | | | 37.5% | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Adjusted Diluted EPS | | | $2.88 | | | 25% | | | $3.15 | | | $3.20 | | | $3.25 | | | $3.24 | | | 35.0% | | |||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Adjusted ROA | | | | 9.2% | | | | 10% | | | | 10.5% | | | | 10.6% | | | | 10.7% | | | | 10.9% | | | | 15.0% | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Free Cash Flow(3) | | | $4.9B | | | 10% | | | $4.1B | | | $4.3B | | | $4.5B | | | $4.5B | | | 15.0% | | |||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | STRATEGIC METRICS | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Diabetes Care Sales Growth | | | | 15% | | | | 92.6% of Target | | | | Target | | | | 106.8% of Target | | | | >Maximum | | | | 22.5% | | | |||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Cardiovascular and Neuromodulation Sales Growth | | | 15% | | | 86.8% of Target | | | Target | | | 109.2% of Target | | | <Threshold | | | 0.0% | | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Total | | | 125.0% | | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 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 | | | 20% | | | $3.55 | | | $3.60 | | | $3.65 | | | $3.65 | | | 30.0% | | |||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Free Cash Flow | | | | $4.5B | | | | 10% | | | | $4.3B | | | | $4.6B | | | | $4.8B | | | | $5.7B | | | | 15.0% | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Achieve Key Treasury and Tax Metrics(3) | | | — | | | 15% | | | Target | | | Target | | | Target | | | Achieved | | | 15.0% | | |||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Financial Total | | | 75.0% | | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| BASE SALARY | BONUS TARGET % | TOTAL GOAL SCORE | AWARD PAYOUT | |||||||||
| $1,000,000 | x | 125% | x | 125.0% | = | $1,562,500 | ||||||
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | 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 | | ||||||||||
| | | | | | | | | | | | | |
4045
| | | |
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 performancethrough 20182019, Mr. FordFunck received an LTI award inFebruary 20192020 with a value of $6,952,132,$4,432,500, which was equal to 115%112.5% of his LTI award guideline. Additional calculation details are as follows:
| LTI AWARD GUIDELINE | LTI ADJUSTMENT | AWARD ALLOCATION | AWARD VALUE | LTI ADJUSTMENT | AWARD ALLOCATION | AWARD VALUE | ||||||||||||||||||
$6,045,332 | x | 115% | x | 50% Stock Options(1) | = | $3,476,066 | ||||||||||||||||||
$3,940,000 | x | 112.5% | x | 50% Stock Options(1) | = | $2,216,250 | ||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 50% Performance Restricted Shares(2) | $3,476,066 | | 50% Performance Restricted Shares(2) | $2,216,250 | ||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | $6,952,132 | Total | $4,432,500 | | ||||||||||||||||||||
| INDIVIDUAL LTI PERFORMANCE ASSESSMENT | | INDIVIDUAL LTI PERFORMANCE ASSESSMENT | | |||||||||||||||||||||||||||||||||||||
| METRIC | | 2016 | | 2017 | | 2018 | | OVERALL | | METRIC | | 2017 | | 2018 | | 2019 | | OVERALL | | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Sales and Market Growth Contribution | | Did not meet (-1) | | Exceeded (+1) | | Exceeded (+1) | | +1 | | Sales and Market Growth Contribution | | Met (0) | | Exceeded (+1) | | Exceeded (+1) | | +2 | | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Margin Contribution | Met (0) | Met (0) | Exceeded (+1) | +1 | Margin Contribution | Exceeded (+1) | Exceeded (+1) | Exceeded (+1) | +3 | |||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Strategic Financial Contribution | | Did not meet (-1) | | Exceeded (+1) | | Met (0) | | 0 | | Strategic Financial Contribution | | Exceeded (+1) | | Met (0) | | Met (0) | | +1 | | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | +2 | Total | +6 | |||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Preliminary Adjustment | | 110% | | Preliminary Adjustment | | 125% | | ||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Mr. Ford's contributions to the completion of the St. Jude and Alere acquisitions and other initiatives to drive future profitable growth for Abbott represented significant impact | + | Impact(3) | - | |||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | LTI Adjustment | | 115% | | LTI Adjustment | | 112.5% | | ||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| LTI ADJUSTMENT LEGEND | | LTI ADJUSTMENT LEGEND | | |||||||||||||||||||||||||||||||||||||
| | PRELIMINARY ADJUSTMENT | | IMPACT | | PRELIMINARY ADJUSTMENT | | IMPACT | | ||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | TOTAL | | RESULT | | IMPACT ON BUSINESS PRIORITIES | | SCORE | | RESULT | | TOTAL | | RESULT | | IMPACT ON BUSINESS PRIORITIES | | SCORE | | RESULT | | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| +3 or More | | 125% | | High Impact | | ++ | | +25% or More | | +4 or More | | 125% | | High Impact | | ++ | | +25% or More | | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| +1 or +2 | 110% | Medium/High Impact | + | +5% or More | +1 to +3 | 110% | Medium/High Impact | + | Up to +25% | |||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 0 | | 100% | | Medium Impact | | = | | 0% | | 0 | | 100% | | Medium Impact | | = | | 0% | | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| -1 or -2 | 90% | Medium/Low Impact | - | -5% or More | -1 or -2 | 90% | Medium/Low Impact | - | Up to -25% | |||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | -3 or Less | | 75% | | Low Impact | | -- | | -25% or More | | -3 or Less | | 75% | | Low Impact | | -- | | -25% or More | | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
47 41
  | | Executive Vice President, |
| | | |
| | | |
Mr. Yoor'sAllen's annual base salary of $825,000 did not changewas increased to $760,000 in 2019.March 2020.
Mr. Yoor's target bonus was increased to 115% of base salary in 2019. Based on performance in 2019,2020, Mr. YoorAllen received a bonus in February 20202021 which was calculated as follows:
| | | | | | 2018 | | | | | | | 2019 GOAL MEASUREMENT | | | 2019 | | | | | | | | | | | 2019 | | | | | | | 2020 GOAL MEASUREMENT | | | 2020 | | | | | | |||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 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) | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Adjusted Sales(2) | | | | $31.2B | | | | 10% | | | | $31.65B | | | | $31.80B | | | | $31.95B | | | | $31.96B | | | | 15.0% | | | | Adjusted Sales(2) | | | | $31.96B | | | | 10% | | | | $34.02B | | | | $34.18B | | | | $34.33B | | | | $34.92B | | | | 15.0% | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Adjusted Diluted EPS | | | $2.88 | | | 20% | | | $3.15 | | | $3.20 | | | $3.25 | | | $3.24 | | | 28.0% | | | Adjusted Diluted EPS | | | $3.24 | | | 15% | | | $3.55 | | | $3.60 | | | $3.65 | | | $3.65 | | | 22.5% | | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Free Cash Flow(3) | | | | $4.9B | | | | 10% | | | | $4.1B | | | | $4.3B | | | | $4.5B | | | | $4.5B | | | | 15.0% | | | | Free Cash Flow | | | | $4.5B | | | | 10% | | | | $4.3B | | | | $4.6B | | | | $4.8B | | | | $5.7B | | | | 15.0% | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Debt to Adjusted EBITDA Ratio | | | 3.0 | | | 5% | | | < 3.0 | | | < 3.0 | | | < 3.0 | | | 2.5 | | | 5.0% | | | Other Financial Returns(3) | | | — | | | 10% | | | Target | | | Target | | | Target | | | Achieved | | | 10.0% | | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Improve Credit Ratings | | | | — | | | | 5% | | | | — | | | | — | | | | — | | | | Achieved | | | | 5.0% | | | ||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||
| | STRATEGIC METRICS | | | | | | | | | | | | | | | | | | | | | | | | | | | | STRATEGIC METRICS | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Goal (10% weight): Execute integration milestones related to Cardiovascular entities, legacy St. Jude Medical expense reporting, and facility management services in North America. | | | | Goal (30% weight): Resolve certain key litigation matters and investigations. | | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | Result: All achieved. | | | 10.0% | | | Result: Achieved | | | 30.0% | | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Goal (15% weight): Develop methodology and evaluate individual country's attractiveness to guide future investments. | | | | | | Goal (10% weight): Achieve intellectual property strategy initiatives across all Abbott divisions. | | | | | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | Result: All achieved. | | | | 15.0% | | | | Result: Achieved | | | | 10.0% | | | ||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Goal (15% weight): Develop and execute plans to increase corporate cost savings and efficiencies and improve data analytics to measure ongoing results. Address specified technology challenges. | | | | TALENT AND SUCCESSION METRICS | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||
| | Result: All achieved. | | | 15.0% | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||
| | TALENT AND SUCCESSION METRICS | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Goal (10% weight): Meet talent and succession planning targets. | | | | Goal (15% weight): Meet talent and succession planning targets. | | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | Result: Mostly achieved. | | | 9.4% | | | Result: Mostly achieved | | | 12.5% | | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Total | | | 117.4% | | | | | | | | | | | | | Total | | | 115.0% | | |||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| BASE SALARY | BONUS TARGET % | TOTAL GOAL SCORE | AWARD PAYOUT | BONUS TARGET % | TOTAL GOAL SCORE | AWARD PAYOUT | ||||||||||||||||||
| $825,000 | x | 115% | x | 117.4% | = | $1,113,800 | ||||||||||||||||||
| $760,000 | x | 105% | x | 115% | = | $917,700 | ||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
4248
| | ||
| | | |
Based on the Committee's review of Abbott and individual performancethrough 20182019, Mr. YoorAllen received an LTI award inFebruary 20192020 with a value of $4,900,000,$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 | LTI ADJUSTMENT | AWARD ALLOCATION | AWARD VALUE | ||||||||||||||||||
$3,920,000 | x | 125% | x | 50% Stock Options(1) | = | $2,450,000 | ||||||||||||||||||
$3,000,000 | x | 125% | x | 50% Stock Options(1) | = | $1,875,000 | ||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 50% Performance Restricted Shares(2) | $2,450,000 | | 50% Performance Restricted Shares(2) | $1,875,000 | ||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | $4,900,000 | Total | $3,750,000 | | ||||||||||||||||||||
| INDIVIDUAL LTI PERFORMANCE ASSESSMENT | | INDIVIDUAL LTI PERFORMANCE ASSESSMENT | | |||||||||||||||||||||||||||||||||||||
| | METRIC | | 2016 | | 2017 | | 2018 | | OVERALL | | METRIC | | 2017 | | 2018 | | 2019 | | OVERALL | | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Sales and Market Growth Contribution | | Did not meet (-1) | | Met (0) | | Exceeded (+1) | | 0 | | Sales and Market Growth Contribution | | Met (0) | | Exceeded (+1) | | Exceeded (+1) | | +2 | | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Margin Contribution | Exceeded (+1) | Exceeded (+1) | Exceeded (+1) | +3 | Margin Contribution | Exceeded (+1) | Exceeded (+1) | Exceeded (+1) | +3 | |||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Strategic Financial Contribution | | Met (0) | | Met (0) | | Met (0) | | 0 | | Strategic Financial Contribution | | Exceeded (+1) | | Met (0) | | Met (0) | | +1 | | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | +3 | Total | +6 | |||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | LTI Adjustment | | 125% | | | | | | | | LTI Adjustment | | 125% | | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| LTI ADJUSTMENT LEGEND | LTI ADJUSTMENT LEGEND | LTI ADJUSTMENT LEGEND | ||
| TOTAL | RESULT | RESULT | ||
| | | | | |
| +3 or More | 125% | |||
| +4 or More | 125% | |||
| | | | | |
| +1 or +2 | 110% | |||
| +1 to +3 | 110% | |||
| | | | | |
| 0 | 100% | 100% | ||
| | | | | |
| -1 or -2 | 90% | 90% | ||
| | | | | |
| -3 or Less | 75% | 75% | ||
| | | | | |
4349
  | | Executive Vice President, |
| | | |
| | | |
Ms. Earnhardt has anMr. Ginascol's annual base salary of $710,000.was increased to $710,000 in March 2020.
Ms. Earnhardt's target bonus was set at 115% of base salary for 2019. Based on performance in 2019, Ms. Earnhardt2020, Mr. Ginascol received a bonus in February 20202021 which was calculated as follows:
| | | | | | 2018 | | | | | | | 2019 GOAL MEASUREMENT | | | 2019 | | | | | | | | | | | 2019 | | | | | | | 2020 GOAL MEASUREMENT | | | 2020 | | | | | | |||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 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) | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Adjusted Division Net Sales(2) | | | | $10.5B | | | | 20% | | | | $11.5B | | | | $11.6B | | | | $11.8B | | | | $11.8B | | | | 30.0% | | | | Adjusted Division Net Sales(2) | | | | $4.8B | | | | 20% | | | | $4.97B | | | | $5.03B | | | | $5.08B | | | | $4.52B | | | | 0.0% | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Adjusted Division Margin | | | — | | | 20% | | | Target | | | Target | | | 103.6% of Target | | | 105.0% of Target | | | 30.0% | | | Adjusted Division Margin(3) | | | — | | | 20% | | | Target | | | Target | | | 101.7% of Target | | | 72.5% of Target | | | 0.0% | | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Adjusted Division Gross Margin | | | | — | | | | 10% | | | | 99.7% of Target | | | | Target | | | | 102.9% of Target | | | | 100.9% of Target | | | | 11.5% | | | | Adjusted Division Gross Margin(3) | | | | — | | | | 5% | | | | 99.6% of Target | | | | Target | | | | 103.9% of Target | | | | 91.1% of Target | | | | 0.0% | | |
| | | | | | | | | | | | | | | | | | | | | ��� | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Market Share | | | — | | | 10% | | | — | | | — | | | — | | | — | | | 8.5% | | | Gross Margin Improvement(3) | | | — | | | 5% | | | 90.0% of Target | | | Target | | | 110.0% of Target | | | 105.7% of Target | | | 6.5% | | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Adjusted Division Free Cash Flow | | | | — | | | | 5% | | | | Target | | | | Target | | | | 105.8% of Target | | | | 106.6% of Target | | | | 7.5% | | | | Market Share(3) | | | | — | | | | 10% | | | | <Target | | | | Target | | | | Target | | | | Partially Achieved | | | | 6.0% | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Cash Conversion Cycle | | | — | | | 5% | | | — | | | Target | | | — | | | 2 days over target | | | 4.0% | | | 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 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 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 (20% weight): Execute specified product approvals, capacity increases, regulatory submissions and salesforce expansions. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||
| | | Result: Partially achieved. | | 10.0% | | | | Goal (10% weight): Meet talent and succession planning targets. Result: Achieved. | | | | 10.0% | | | ||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | TALENT AND SUCCESSION METRICS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 45.0% | | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Goal (10% weight): Meet talent and succession planning targets. | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | Result: Achieved. | | 10.0% | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||
| | | | | | | | | | | | Total | | | 111.5% | | |||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||
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 | BONUS TARGET % | TOTAL GOAL SCORE | AWARD PAYOUT | ||||||||||||||||||
| $710,000 | x | 115% | x | 111.5% | = | $910,400 | x | 115% | x | 105.0% | = | $857,300 | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
44 51
| | ||
| | | |
As partBased on the Committee's review of Ms. Earnhardt's employment offer, sheAbbott and individual performance through 2019, Mr. Ginascol received an LTI award in February 2020 with a grantvalue of 91,367 stock$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 45
 | | DANIEL G. SALVADORI Executive Vice President, Nutritional Products |
| | | |
| | | |
Mr. Salvadori's annual base salary was increased from $680,000 toof $710,000 did not change in March 2019.2020.
Mr. Salvadori's target bonus was increased to 115% of base salary in 2019. Based on performance in 2019,2020, Mr. Salvadori received a bonus in February 20202021 which was calculated as follows:
| | | | | | 2018 | | | | | | | 2019 GOAL MEASUREMENT | | | 2019 | | | | | | | | | | | 2019 | | | | | | | 2020 GOAL MEASUREMENT | | | 2020 | | | | | | |||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 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) | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Adjusted Division Net Sales(2) | | | | $7.2B | | | | 20% | | | | $7.3B | | | | $7.4B | | | | $7.5B | | | | $7.5B | | | | 27.6% | | | | Adjusted Division Net Sales(2) | | | | $7.47B | | | | 20% | | | | $7.54B | | | | $7.63B | | | | $7.74B | | | | $7.68B | | | | 24.2% | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Adjusted Division Margin | | | — | | | 20% | | | Target | | | Target | | | 103.6% of Target | | | 100.4% of Target | | | 21.2% | | | Adjusted Division Margin(3) | | | — | | | 20% | | | Target | | | Target | | | 103.2% of Target | | | 101.3% of Target | | | 24.2% | | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Adjusted Division Gross Margin | | | | — | | | | 5% | | | | 99.8% of Target | | | | Target | | | | 103.7% of Target | | | | 99.3% of Target | | | | 0.0% | | | | Adjusted Division Gross Margin(3) | | | | — | | | | 5% | | | | 99.8% of Target | | | | Target | | | | 103.7% of Target | | | | 100.0% of Target | | | | 5.0% | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Incremental Plan Savings | | | — | | | 5% | | | Target | | | Target | | | Target | | | 109.7% of Target | | | 5.0% | | | Gross Margin Improvement(3) | | | — | | | 5% | | | Target | | | Target | | | 110.0% of Target | | | 100.0% of Target | | | 5.0% | | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Market Share | | | | — | | | | 10% | | | | — | | | | — | | | | — | | | | — | | | | 10.0% | | | | Market Share(3) | | | | — | | | | 10% | | | | Target | | | | Target | | | | Target | | | | At Target | | | | 10.0% | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Adjusted Division Free Cash Flow | | | — | | | 5% | | | Target | | | Target | | | 105.6% of Target | | | 99.0% of Target | | | 0.0% | | | Adjusted Division Free Cash Flow(3) | | | — | | | 5% | | | Target | | | Target | | | 102.9% of Target | | | 119.7% of Target | | | 7.5% | | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Cash Conversion Cycle | | | | — | | | | 5% | | | | 5 days over Target | | | | Target | | | | — | | | | 5 days over Target | | | | 2.5% | | | | Cash Conversion Cycle(3) | | | | — | | | | 5% | | | | 5 days over Target | | | | Target | | | | Target | | | | 1 day less than Target | | | | 5.0% | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | STRATEGIC METRICS | | | | | | | | | | | | | | | | | | | | | | | | | | | | STRATEGIC METRICS | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Goal (20% weight): Execute specified product launches, e-commerce expansion, innovation sales, and key country initiatives. Result: Overachieved. | | | 21.6% | | | 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 | | | | | | | | | | | | | | | | | | | | | | | | | | | | TALENT AND SUCCESSION METRICS | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Goal (10% weight): Meet talent and succession planning targets. Result: Achieved. | | | | 10.0% | | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | Goal (10% weight): Meet talent and succession planning targets. | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | Result: Achieved. | | | | 10.0% | | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Total | | | 97.9% | | | | | | | | | | | | | Total | | | 110.9% | | |||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| BASE SALARY | BONUS TARGET % | TOTAL GOAL SCORE | PRELIMINARY AWARD PAYOUT | BONUS TARGET % | TOTAL GOAL SCORE | AWARD PAYOUT | ||||||||||||||||||
| $710,000 | x | 115% | x | 97.9% | = | $799,400 | x | 115% | x | 110.9% | = | $905,500 | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
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 2019, the Committee adjusted Mr. Salvadori's bonus (by $104,000) to reflect the unanticipated achievement.
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| | ||
| | | |
Based on the Committee's review of Abbott and individual performancethrough 20182019, Mr. Salvadori received an LTI award inFebruary 20192020 with a value of $4,704,000,$3,804,200, which was equal to 120%115% of his LTI award guideline. Additional calculation details are as follows:
| LTI AWARD GUIDELINE | LTI ADJUSTMENT | AWARD ALLOCATION | AWARD VALUE | LTI ADJUSTMENT | AWARD ALLOCATION | AWARD VALUE | ||||||||||||||||||
$3,920,000 | x | 120% | x | 50% Stock Options(1) | = | $2,352,000 | ||||||||||||||||||
$3,308,000 | x | 115% | x | 50% Stock Options(1) | = | $1,902,100 | ||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 50% Performance Restricted Shares(2) | $2,352,000 | | 50% Performance Restricted Shares(2) | $1,902,100 | ||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | $4,704,000 | Total | $3,804,200 | | ||||||||||||||||||||
| INDIVIDUAL LTI PERFORMANCE ASSESSMENT | | INDIVIDUAL LTI PERFORMANCE ASSESSMENT | | |||||||||||||||||||||||||||||||||||||
| | METRIC | | 2016 | | 2017 | | 2018 | | OVERALL | | ||||||||||||||||||||||||||||||
| METRIC | | 2017 | | 2018 | | 2019 | | OVERALL | | |||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Sales and Market Growth Contribution | | Exceeded (+1) | | Met (0) | | Exceeded (+1) | | +2 | | Sales and Market Growth Contribution | | Met (0) | | Exceeded (+1) | | Exceeded (+1) | | +2 | | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Margin Contribution | Exceeded (+1) | Met (0) | Met (0) | +1 | Margin Contribution | Met (0) | Met (0) | Exceeded (+1) | +1 | |||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Strategic Financial Contribution | | Did not meet (-1) | | Met (0) | | Met (0) | | -1 | | Strategic Financial Contribution | | Met (0) | | Met (0) | | Exceeded (+1) | | +1 | | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | +2 | Total | +4 | |||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Preliminary Adjustment | | 110% | | | | | | Preliminary Adjustment | | 125% | | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Mr. Salvadori contributions to the accelerated profitable growth in the Nutrition business represented significant impact | + | Impact | - | |||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | LTI Adjustment | | 120% | | | | | | | | LTI Adjustment | | 115% | | ||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| LTI ADJUSTMENT LEGEND | | LTI ADJUSTMENT LEGEND | | |||||||||||||||||||||||||||||||||||||
| | PRELIMINARY ADJUSTMENT | | IMPACT | | PRELIMINARY ADJUSTMENT | | IMPACT | | ||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | TOTAL | | RESULT | | IMPACT ON BUSINESS PRIORITIES | | SCORE | | RESULT | | TOTAL | | RESULT | | IMPACT ON BUSINESS PRIORITIES | | SCORE | | RESULT | | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| +3 or More | | 125% | | High Impact | | ++ | | +25% or More | | +4 or More | | 125% | | High Impact | | ++ | | +25% or More | | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| +1 or +2 | 110% | Medium/High Impact | + | +5% or More | +1 to +3 | 110% | Medium/High Impact | + | Up to +25% | |||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 0 | | 100% | | Medium Impact | | = | | 0% | | 0 | | 100% | | Medium Impact | | = | | 0% | | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| -1 or -2 | 90% | Medium/Low Impact | - | -5% or More | -1 or -2 | 90% | Medium/Low Impact | - | Up to -25% | |||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | -3 or Less | | 75% | | Low Impact | | -- | | -25% or More | | -3 or Less | | 75% | | Low Impact | | -- | | -25% or More | | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
4754
| | 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.
BENEFITS AND PERQUISITES | DESCRIPTION | | ||||
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 plan. Unlike other U.S. managers, officers are not eligible to elect to defer compensation into the Deferred Compensation Plan. However, up to one hundred percent (100%) of annual incentive awards earned under the Company's Performance Incentive Plan is eligible for deferral to a non-qualified plan. Officers may defer these amounts to unfunded book accounts or choose to have the amounts paid in cash on a current basis and deposited into individually established grantor trusts, net of tax withholdings. These amounts are credited annually with earnings. Officers do not receive tax gross-ups on their grantor trusts. Officers elect the manner in which the assets held in their grantor trusts will be distributed to them upon retirement or other separation from the Company. | |||||
| | | | | | | |
48 58
BENEFITS AND PERQUISITES | DESCRIPTION | | ||||
Change in Control Arrangements | Mr. White does not have an Abbott change in control agreement. The other named officers have Abbott change in control agreements, the purpose of which is to aid in retention and recruitment, encourage continued attention and dedication to assigned duties during periods involving a possible change in control of the Company, and protect the earned benefits of the officer against adverse changes resulting from a change in control. The level of payments provided under the agreements is established to be consistent with market practices as confirmed by data provided to the Committee by its independent compensation consultant. These arrangements are described in greater detail in the "Potential Payments Upon Termination or Change in Control" section of this proxy. | |||||
| | | | | | | |
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 returns 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.
| ROLE | | GUIDELINE | | ||||
|
| | 6 times base salary | | ||||
| | | | | | | | | |
|
| |||||||
| | | | | | | | | |
| Executive | | 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 share 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 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 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.
49
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:
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, or among the company's three most highly compensated executive officers, at any time during the year, or an individual whose compensation was subject to the $1 million cap on deductible compensation in 2017 or later years (under the once a covered employee always a covered employee rule), or beneficiary of any such individual.
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
50 60
COMPENSATION RISK ASSESSMENT |
During 2019,2020, 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:
51
61
This assessment was discussed with the Compensation Committee and its independent compensation consultant. The Committee and the consultant both agreed with the assessment.
52 62
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—Basis for Compensation Decisions" describes in greater detail the information reported in this table.
| | 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) | | | 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) | | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||
| | Miles D. White, | | 2019 | | $ | 1,900,000 | | $ | 7,562,448 | | $ | 7,562,499 | | | $ | 4,405,625 | | | $ | 5,707,836 | | | $ | 664,409 | | $ | 27,802,817 | | $ | 24,675,423 | | | 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 | | |||
| | Chairman of the Board, Chief | | 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 | | | 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 | | |||||||||||||||||||
| | Executive Officer, and Director | | 2017 | | 1,900,000 | | 4,099,523 | | 4,099,998 | | | 4,500,000 | | | 3,350,902 | | | 1,020,596 | | 18,971,019 | | 16,772,295 | | | 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 B. Ford, | | 2019 | | 1,000,000 | | 3,475,992 | | 3,476,054 | | | 1,562,500 | | | 2,311,499 | | | 71,841 | | 11,897,886 | | 9,777,514 | | | 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 | | ||||||||||||||||||
| | | President and Chief Operating | | 2018 | | 784,250 | | 2,691,621 | | 2,691,897 | | | 1,297,500 | | | 382,771 | | | 279,213 | | 8,127,252 | | 7,821,493 | | | Executive Vice President, Finance | | | | | | | | | | | | | | | |||||||||||||||||||||||||||
| | | Officer, and Director | | 2017 | | 675,000 | | 974,870 | | 974,999 | | | 1,066,400 | | | 949,748 | | | 60,891 | | 4,701,908 | | 3,797,358 | | | and Chief Financial Officer | | | | | | | | | | | | | | | |||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||
| | Brian B. Yoor,(1) | | 2019 | | 825,000 | | 2,449,976 | | 2,449,987 | | | 1,113,800 | | | 2,105,604 | | | 71,331 | | 9,015,698 | | 7,031,097 | | | 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 | | |||||||||||||||||||
| | Executive Vice President, Finance | | 2018 | | 796,057 | | 2,691,621 | | 2,691,897 | | | 974,600 | | | 385,178 | | | 73,483 | | 7,612,836 | | 7,280,548 | | | 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 | | |||||||||||||||||||
| | and Chief Financial Officer | | 2017 | | 643,269 | | 877,378 | | 877,498 | | | 1,062,400 | | | 1,013,539 | | | 62,990 | | 4,537,074 | | 3,553,412 | | | 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 | | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||
| | | Lisa D. Earnhardt, | | 2019 | | 400,058 | | 4,610,918 | | 1,353,145 | | | 910,400 | | | 184,522 | | | 19,798 | | 7,478,841 | | 7,295,162 | | | 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, Medical Devices | | | | | | | | | | | | | | | Executive Vice President, | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||
| | | Core Diagnostics | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||
| | Daniel G. Salvadori, | | 2019 | | 704,923 | | 2,351,989 | | 2,351,986 | | | 903,400 | | | 395,710 | | | 59,806 | | 6,767,814 | | 6,388,821 | | | Daniel G. Salvadori, | | 2020 | | 710,000 | | 1,901,708 | | 1,902,099 | | | 905,500 | | | 477,011 | | | 79,421 | | | 5,975,739 | | 5,518,569 | | |||||||||||||||||||
| | Executive Vice President, | | 2018 | | 675,038 | | 1,993,798 | | 1,993,992 | | | 803,200 | | | 53,668 | | | 434,514 | | 5,954,210 | | 5,907,979 | | | Executive Vice President, | | 2019 | | 704,923 | | 2,351,989 | | 2,351,986 | | | 903,400 | | | 395,710 | | | 59,806 | | | 6,767,814 | | 6,388,821 | | |||||||||||||||||||
| | Nutritional Products | | 2017 | | 608,461 | | 1,249,912 | | 1,262,326 | | | 733,700 | | | 179,461 | | | 54,628 | | 4,088,488 | | 3,913,693 | | | Nutritional Products | | 2018 | | 675,038 | | 1,993,798 | | 1,993,992 | | | 803,200 | | | 53,668 | | | 434,514 | | | 5,954,210 | | 5,907,979 | | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | 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 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 | | ||||||||||||||||||||||||||||||||||||||||||
| | | | 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 | | |||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| | Brian B. Yoor,(1) | | 2020 | | 207,837 | | 1,231,027 | | 1,231,237 | | | 0 | | | 781,114 | | | 38,264 | | | 3,489,479 | | 2,839,222 | | |||||||||||||||||||||||||||||||||||||||||||
| | 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 | | |||||||||||||||||||||||||||||||||||||||||||
| | 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 | | |||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||
For Messrs. Ford, Allen, Salvadori, White, Ford,and Yoor, and Salvadori, the amounts shown alongside the officer's name are for 2020, 2019, 2018, and 2017,2018, respectively. For Ms. Earnhardt,Messrs. Funck, Jr. and Ginascol, the amounts shown are for 2019.2020.
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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: $34,629 / $180,690 / ($87,156) / $153,425; R. B. Ford: $176,268 / ($37,501) / $106,226;; and B. B. Yoor: $94,394 / $188,095 / ($30,841) / $109,749; L. D. Earnhardt: $25,037; and D. G. Salvadori: $41,282 / $3,413 / $24,698..
53
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: $993,981 / $2,946,704 / ($3,700,892) / $2,045,299; R. B. Ford: $1,944,104 / $343,260 / $798,324;; and B. B. Yoor: $555,863 / $1,796,506 / $363,129 / $879,913; L. D. Earnhardt: $158,642; and D. G. Salvadori: $337,711 / $42,818 / $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: $2,386,733 / $2,580,442 / $1,381,845 / $1,152,178; R. B. Ford: $191,127 / $77,012 / $45,198;$1,381,845; and B. B. Yoor: $130,857 / $121,003 / $52,890 / $29,877; L. D. Earnhardt: $843; and D. G. Salvadori: $16,717 / $7,437 / $4,666.$52,890.
For Messrs. Ford, Allen, Salvadori, White, Ford,and Yoor, and Salvadori, the amounts shown alongside the officer's name are for 2020, 2019, 2018, and 2017,2018, respectively. For Ms. Earnhardt,Messrs. Funck, Jr. and Ginascol, the amounts shown are for 2019.2020.
Earnings on Non-Qualified Defined Contribution Plans (net of the reportable interest included in footnote 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: $926,052 / $105,715 / $638,710 / $423,890; R. B. Ford: $0 / $6,125 / $8,600;$638,710; and B. B. Yoor: $26,090 / $0 / $3,237 / $268; and D. G. Salvadori: $0 / $1,004 / $0.$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 have grantor trusts into which the awards may be deposited, net of maximum tax withholdings. The 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 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; R. B. Ford: $50,000 / $39,213 / $33,750;and B. B. Yoor: $7,139 / $41,250 / $39,803 / $32,163; L. D. Earnhardt: $19,798; and D. G. Salvadori: $35,247 / $33,752 / $30,423.$39,803.
These amounts include employer contributions to both Abbott's tax-qualified defined contribution plan and the Abbott Laboratories 401(k) Supplemental 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.
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: R. B. Ford: $4,832; M. D. White: $10,792 / $226,633 / $229,599 / $292,292.$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: $232,266 / $237,061 / $230,033 / $209,414.$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.
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$19,516; R. E. Funck, Jr.: $20,319; H. L. Allen: $28,666 / $18,541;$25,509 / $23,600; J. F. Ginascol: $ 24,017; D. G. Salvadori: $26,773 / $24,559 / $27,727; and B. B. Yoor: $35 / $20,081 / $20,443 / $20,559;$20,443.
64
For Messrs. Funck, Jr., Allen, Ginascol, Salvadori, and D. G. Salvadori: $24,559 / $27,727 / $18,360.
For Mr. Yoor, and Mr. Salvadori, 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: $10,000$5,000 / $10,000 / $10,000;$10,000. For Mr. Salvadori, the 2020 amount includes payments made for services incurred in 2020 and D. G. Salvadori: $0 / $0 / $5,845.2019.
The named officers are also eligible to participate in an executive disability benefit described on page 65.78.
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| | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock | All Other Option Awards: Numbers of Securities Underlying | Exercise or Base Price of Options | Closing Market Price on | Grant Date Fair Value of Stock and | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Option Awards: Numbers of Securities Underlying | Exercise or Base Price of Options | Closing Market Price on | Grant Date Fair Value of Stock and | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||
| | Name | Grant Date | Approval Date | Target ($) | Maximum ($) | Target (#)(2)(3) | of Units (#)(3) | Options (#)(4) | Awards ($/Sh.) | Grant Date | Option Awards | | Name | Grant Date | Target ($) | Maximum ($) | Target (#)(2)(3) | Options (#)(4) | Awards ($/Sh.) | Grant Date | Option Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||
| | M. D. White | | 2/22/19 | | 2/22/19 | | | | | | | 99,637 | | | | | | | | $ | 7,562,448 | (5) | | R. B. Ford | | 2/21/2020 | | | | | | | 64,124 | | | | | | | | $ | 5,623,995 | (5) | |||||||||||||||||||||||||||||
| | | 2/22/19 | | 2/22/19 | | | | | | | | | 522,272 | | | $ | 75.90 | | | $ | 76.13 | | 7,562,499 | (6) | | | 2/21/2020 | | | | | | | | 390,896 | | | $ | 87.72 | | | $ | 87.45 | | | 5,624,993 | (6) | |||||||||||||||||||||||||
| | | R. B. Ford | | 2/22/19 | | 2/22/19 | | | | | | | | | 45,797 | | | | | | | | | | | | 3,475,992 | (5) | | R. E. Funck, Jr. | | 2/21/2020 | | | | | | | | | 25,265 | | | | | | | | | | | 2,215,867 | (5) | | ||||||||||||||||||
| | | | | 2/22/19 | | 2/22/19 | | | | | | | | | | | | | 240,059 | | | 75.90 | | | 76.13 | | 3,476,054 | (6) | | | | 2/21/2020 | | | | | | | | | | | 154,013 | | | 87.72 | | | 87.45 | | | 2,216,247 | (6) | | ||||||||||||||||||
| | B. B. Yoor | | 2/22/19 | | 2/22/19 | | | | | | | 32,279 | | | | | | | | 2,449,976 | (5) | | H. L. Allen | | 2/21/2020 | | | | | | | 21,374 | | | | | | | | 1,874,607 | (5) | |||||||||||||||||||||||||||||||
| | | 2/22/19 | | 2/22/19 | | | | | | | | | 169,198 | | | 75.90 | | | 76.13 | | 2,449,987 | (6) | | | 2/21/2020 | | | | | | | | 130,298 | | | 87.72 | | | 87.45 | | | 1,874,988 | (6) | |||||||||||||||||||||||||||||
| | | L. D. Earnhardt | | 6/10/19 | | 4/25/19 | | | | | | | | | 17,431 | | | | | | | | | | | | 1,411,388 | (5) | | J. F. Ginascol | | 2/21/2020 | | | | | | | | | 18,855 | | | | | | | | | | | 1,653,678 | (5) | | ||||||||||||||||||
| | | | | 6/10/19 | | 4/25/19 | | | | | | | | | | | 39,515 | (7) | | | | | | | | | 3,199,530 | (5) | | | | 2/21/2020 | | | | | | | | | | | 114,940 | | | 87.72 | | | 87.45 | | | 1,653,987 | (6) | | ||||||||||||||||||
| | D. G. Salvadori | | 2/21/2020 | | | | | | | 21,683 | | | | | | | | 1,901,708 | (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) | | ||||||||||||||||||||||||||||||||||||||||||||||
| | | | | 6/10/19 | | 4/25/19 | | | | | | | | | | | | | 91,367 | | | 80.98 | | | 81.27 | | 1,353,145 | (6) | | | | 2/21/2020 | | | | | | | | | | | 416,956 | | | 87.72 | | | 87.45 | | | 5,999,997 | (6) | | ||||||||||||||||||
| | D. G. Salvadori | | 2/22/19 | | 2/22/19 | | | | | | | 30,988 | | | | | | | | 2,351,989 | (5) | | B. B. Yoor | | 2/21/2020 | | | | | | | 14,036 | | | | | | | | 1,231,027 | (5) | |||||||||||||||||||||||||||||||
| | | 2/22/19 | | 2/22/19 | | | | | | | | | 162,430 | | | 75.90 | | | 76.13 | | 2,351,986 | (6) | | | 2/21/2020 | | | | | | | | 85,562 | | | 87.72 | | | 87.45 | | | 1,231,237 | (6) | |||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||
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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 | 30,781 | $2,673,638 | R. B. Ford | 14,970 | $1,639,065 | |||||||||||||||||||||||||||||||||||||||||||
| 83,417 | 7,245,601 | 30,531 | 3,342,839 | |||||||||||||||||||||||||||||||||||||||||||||
| 99,637 | 8,654,470 | 64,124 | 7,020,937 | |||||||||||||||||||||||||||||||||||||||||||||
| 302,500 | $27.0336 | 2/16/22 | 45,492 | $39.1200 | 02/20/24 | |||||||||||||||||||||||||||||||||||||||||||
| 980,000 | 34.9400 | 2/14/23 | 56,933 | 41.1400 | 06/30/24 | |||||||||||||||||||||||||||||||||||||||||||
| 727,699 | 39.1200 | 2/20/24 | 127,436 | 47.0000 | 02/19/25 | |||||||||||||||||||||||||||||||||||||||||||
| 937,031 | 47.0000 | 2/19/25 | 14,243 | 48.9000 | 05/31/25 | |||||||||||||||||||||||||||||||||||||||||||
| 1,198,630 | 38.4000 | 2/18/26 | 285,388 | 38.4000 | 02/18/26 | |||||||||||||||||||||||||||||||||||||||||||
| 425,753 | 212,876 | 44.4000 | 2/16/27 | 151,869 | 44.4000 | 02/16/27 | ||||||||||||||||||||||||||||||||||||||||||
| 229,358 | 458,715 | 59.9400 | 2/15/28 | 164,642 | 82,321 | 59.9400 | 02/15/28 | |||||||||||||||||||||||||||||||||||||||||
| 522,272 | 75.9000 | 2/21/29 | 80,019 | 160,040 | 75.9000 | 02/21/29 | ||||||||||||||||||||||||||||||||||||||||||
| 390,896 | 87.7200 | 02/20/30 | ||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
See footnotes on page 61.74.
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| Option Awards(1)(2) | | Stock Awards(2) | | Option Awards(1)(2) | | Stock Awards(2) | | ||||||||||||||||||||||||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | 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 | 7,320 | $ | 635,815 | R. E. Funck, Jr. | 6,677 | $731,065 | |||||||||||||||||||||||||||||||||||||||||||
| 29,940 | 2,600,588 | 15,562 | 1,703,883 | ||||||||||||||||||||||||||||||||||||||||||||||
| 45,797 | 3,977,927 | 25,265 | 2,766,265 | ||||||||||||||||||||||||||||||||||||||||||||||
| 45,492 | $39.1200 | 2/20/24 | 31,325 | $39.1200 | 02/20/24 | ||||||||||||||||||||||||||||||||||||||||||||
| 56,933 | 41.1400 | 6/30/24 | 55,097 | 47.0000 | 02/19/25 | ||||||||||||||||||||||||||||||||||||||||||||
| 127,436 | 47.0000 | 2/19/25 | 48,831 | 44.4000 | 02/16/27 | ||||||||||||||||||||||||||||||||||||||||||||
| 14,243 | 48.9000 | 5/31/25 | 73,431 | 36,715 | 59.9400 | 02/15/28 | |||||||||||||||||||||||||||||||||||||||||||
| 285,388 | 38.4000 | 2/18/26 | 40,789 | 81,578 | 75.9000 | 02/21/29 | |||||||||||||||||||||||||||||||||||||||||||
| 101,246 | 50,623 | 44.4000 | 2/16/27 | 154,013 | 87.7200 | 02/20/30 | |||||||||||||||||||||||||||||||||||||||||||
| 82,321 | 164,642 | 59.9400 | 2/15/28 | ||||||||||||||||||||||||||||||||||||||||||||||
| 240,059 | 75.9000 | 2/21/29 | |||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
See footnotes on page 61.74.
5768
|
| Option Awards(1)(2) | | Stock Awards(2) | | Option Awards(1)(2) | | Stock Awards(2) | | ||||||||||||||||||||||||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | 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 | 6,588 | $ | 572,234 | H. L. Allen | 14,970 | $1,639,065 | |||||||||||||||||||||||||||||||||||||||||||
| 29,940 | 2,600,588 | 19,323 | 2,115,675 | ||||||||||||||||||||||||||||||||||||||||||||||
| 32,279 | 2,803,754 | 21,374 | 2,340,239 | ||||||||||||||||||||||||||||||||||||||||||||||
| 41,229 | $47.0000 | 2/19/25 | 107,793 | $39.1200 | 02/20/24 | ||||||||||||||||||||||||||||||||||||||||||||
| 81,709 | 48.9000 | 5/31/25 | 157,421 | 47.0000 | 02/19/25 | ||||||||||||||||||||||||||||||||||||||||||||
| 213,470 | 38.4000 | 2/18/26 | 285,388 | 38.4000 | 02/18/26 | ||||||||||||||||||||||||||||||||||||||||||||
| 91,121 | 45,561 | 44.4000 | 2/16/27 | 167,056 | 44.4000 | 02/16/27 | |||||||||||||||||||||||||||||||||||||||||||
| 82,321 | 164,642 | 59.9400 | 2/15/28 | 164,642 | 82,321 | 59.9400 | 02/15/28 | ||||||||||||||||||||||||||||||||||||||||||
| 169,198 | 75.9000 | 2/21/29 | 50,644 | 101,289 | 75.9000 | 02/21/29 | |||||||||||||||||||||||||||||||||||||||||||
| 130,298 | 87.7200 | 02/20/30 | |||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
See footnotes on page 61.74.
58
|
| Option Awards(1)(2) | | Stock Awards(2) | | |||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | 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 ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
| L. D. Earnhardt | 17,431 | $1,514,057 | ||||||||||||||||||||||
| 39,515 | $3,432,273 | |||||||||||||||||||||||
| 91,367 | $80.9800 | 6/09/29 | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
See footnotes on page 61.
59
|
| Option Awards(1)(2) | | Stock Awards(2) | | ||||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | 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 ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| D. G. Salvadori | 6,654 | $ | 577,966 | ||||||||||||||||||||||
| 2,391 | 207,682 | ||||||||||||||||||||||||
| 22,178 | 1,926,381 | ||||||||||||||||||||||||
| 30,988 | 2,691,618 | ||||||||||||||||||||||||
| 42,479 | $47.0000 | 02/19/25 | |||||||||||||||||||||||
| 71,313 | 38.4000 | 02/18/26 | |||||||||||||||||||||||
| 92,033 | 46,016 | 44.4000 | 02/16/27 | ||||||||||||||||||||||
| 33,074 | 16,537 | 50.7200 | 07/20/27 | ||||||||||||||||||||||
| 60,979 | 121,956 | 59.9400 | 02/15/28 | ||||||||||||||||||||||
| 162,430 | 75.9000 | 02/21/29 | |||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
See footnotes on page 61.
6069
2020 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END (CONTINUED) |
| Option Awards(1)(2) | | Stock Awards(2) | | |||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | 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 ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
| J. F. Ginascol | 2,344 | $256,645 | ||||||||||||||||||||||
| 4,856 | 531,683 | |||||||||||||||||||||||
| 7,978 | 873,511 | |||||||||||||||||||||||
| 18,855 | 2,064,434 | |||||||||||||||||||||||
| 45,709 | $47.0000 | 02/19/25 | ||||||||||||||||||||||
| 25,779 | 12,890 | 59.9400 | 02/15/28 | |||||||||||||||||||||
| 12,730 | 25,460 | 75.9000 | 02/21/29 | |||||||||||||||||||||
| 20,908 | 41,817 | 76.1200 | 06/02/29 | |||||||||||||||||||||
| 114,940 | 87.7200 | 02/20/30 | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
See footnotes on page 74.
70
2020 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END (CONTINUED) |
| Option Awards(1)(2) | | Stock Awards(2) | | |||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | 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 ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
| D. G. Salvadori | 11,089 | $1,214,135 | ||||||||||||||||||||||
| 20,658 | 2,261,844 | |||||||||||||||||||||||
| 21,683 | 2,374,072 | |||||||||||||||||||||||
| 71,313 | $38.4000 | 02/18/26 | ||||||||||||||||||||||
| 138,049 | 44.4000 | 02/16/27 | ||||||||||||||||||||||
| 49,611 | 50.7200 | 07/20/27 | ||||||||||||||||||||||
| 121,957 | 60,978 | 59.9400 | 02/15/28 | |||||||||||||||||||||
| 54,143 | 108,287 | 75.9000 | 02/21/29 | |||||||||||||||||||||
| 132,182 | 87.7200 | 02/20/30 | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
See footnotes on page 74.
71
2020 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END (CONTINUED) |
| Option Awards(1)(2) | | Stock Awards(2) | | |||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | 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 ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
| M. D. White | 41,709 | $4,566,718 | ||||||||||||||||||||||
| 66,424 | 7,272,764 | |||||||||||||||||||||||
| 68,399 | 7,489,007 | |||||||||||||||||||||||
| 302,500 | $27.0336 | 02/16/22 | ||||||||||||||||||||||
| 980,000 | 34.9400 | 02/14/23 | ||||||||||||||||||||||
| 727,699 | 39.1200 | 02/20/24 | ||||||||||||||||||||||
| 937,031 | 47.0000 | 02/19/25 | ||||||||||||||||||||||
| 1,198,630 | 38.4000 | 02/18/26 | ||||||||||||||||||||||
| 638,629 | 44.4000 | 02/16/27 | ||||||||||||||||||||||
| 458,715 | 229,358 | 59.9400 | 02/15/28 | |||||||||||||||||||||
| 174,090 | 348,182 | 75.9000 | 02/21/29 | |||||||||||||||||||||
| 416,956 | 87.7200 | 02/20/30 | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
See footnotes on page 74.
72
2020 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END (CONTINUED) |
| Option Awards(1)(2) | | Stock Awards(2) | | |||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | 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 20192020 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 2020 | Number of Option Shares Vesting—Date Vesting 2021 | Number of Option Shares Vesting—Date Vesting 2022 | | Number of Restricted Shares or Units | Number of Restricted Shares or Units Vesting— Date Vested 2020 | Number of Restricted Shares or Units Vesting— Date Vesting 2022 | 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 | 212,876 | 212,876 - 2/17 | 30,781 | (b) | R. B. Ford | 82,321 | 82,321 - 2/16 | 14,970 | (b) | |||||||||||||||||||||||||||||
| 458,715 | 229,357 - 2/16 | 229,358 - 2/16 | 83,417 | (c) | 160,040 | 80,020 - 2/22 | 80,020 - 2/22 | 30,531 | (c) | |||||||||||||||||||||||||||||
| 522,272 | 174,090 - 2/22 | 174,091 - 2/22 | 174,091 - 2/22 | 99,637 | (d) | 390,896 | 130,298 - 2/21 | 130,299 - 2/21 | 130,299 - 2/21 | 64,124 | (d) | |||||||||||||||||||||||||||
| R. B. Ford | 50,623 | 50,623 - 2/17 | | | | 7,320 | (b) | | | |||||||||||||||||||||||||||||
| | R. E. Funck, Jr. | 36,715 | 36,715 - 2/16 | | | | 6,677 | (b) | ||||||||||||||||||||||||||||||
| | | 164,642 | 82,321 - 2/16 | 82,321 - 2/16 | | | 29,940 | (c) | | | | 81,578 | 40,789 - 2/22 | 40,789 - 2/22 | | | 15,562 | (c) | ||||||||||||||||||||
| | | 240,059 | 80,019 - 2/22 | 80,020 - 2/22 | 80,020 - 2/22 | | 45,797 | (d) | | | | 154,013 | 51,337 - 2/21 | 51,338 - 2/21 | 51,338 - 2/21 | | 25,265 | (d) | ||||||||||||||||||||
| B. B. Yoor | 45,561 | 45,561 - 2/17 | 6,588 | (b) | H. L. Allen | 82,321 | 82,321 - 2/16 | 14,970 | (b) | |||||||||||||||||||||||||||||
| 164,642 | 82,321 - 2/16 | 82,321 - 2/16 | 29,940 | (c) | 101,289 | 50,644 - 2/22 | 50,645 - 2/22 | 19,323 | (c) | |||||||||||||||||||||||||||||
| 169,198 | 56,399 - 2/22 | 56,399 - 2/22 | 56,400 - 2/22 | 32,279 | (d) | 130,298 | 43,432 - 2/21 | 43,433 - 2/21 | 43,433 - 2/21 | 21,374 | (d) | |||||||||||||||||||||||||||
| L. D. Earnhardt | 91,367 | 30,455 - 6/10 | 30,456 - 6/10 | 30,456 - 6/10 | | 17,431 | (e) | | | |||||||||||||||||||||||||||||
| | 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) | ||||||||||||||||||||||||||||||
| | | | | | | | 39,515 | | 39,515 - 6/10 | | | 114,940 | 38,313 - 2/21 | 38,313 - 2/21 | 38,314 - 2/21 | | 18,855 | (d) | ||||||||||||||||||||
| D. G. Salvadori | 46,016 | 46,016 - 2/17 | 6,654 | (b) | D. G. Salvadori | 60,978 | 60,978 - 2/16 | 11,089 | (b) | |||||||||||||||||||||||||||||
| 16,537 | 16,537 - 7/21 | 2,391 | (f) | 108,287 | 54,143 - 2/22 | 54,144 - 2/22 | 20,658 | (c) | ||||||||||||||||||||||||||||||
| 121,956 | 60,978 - 2/16 | 60,978 - 2/16 | 22,178 | (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) | ||||||||||||||||||||||||||||||||||
| 162,430 | 54,143 - 2/22 | 54,143 - 2/22 | 54,144 - 2/22 | 30,988 | (d) | 85,562 | 28,520 - 2/21 | 28,521 - 2/21 | 28,521 - 2/21 | 14,036 | (d) | |||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
6174
|
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 2019:2020:
| 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 | 589,700 | $32,016,664 | 118,062 | $9,117,928 | R. B. Ford | 0 | $ | 0 | 37,556 | $2,974,060 | |||||||||||||||||||
| | R. B. Ford | 0 | 0 | | 33,140 | 2,559,402 | | R. E. Funck, Jr. | 120,033 | | 8,128,936 | | 16,813 | 1,331,421 | | ||||||||||||||
| B. B. Yoor | 43,763 | 2,089,351 | 29,673 | 2,291,646 | H. L. Allen | 0 | 0 | 32,684 | 2,588,246 | ||||||||||||||||||||
| | L. D. Earnhardt | 0 | 0 | | 0 | 0 | | J. F. Ginascol | 135,298 | | 8,418,723 | | 10,688 | 899,955 | | ||||||||||||||
| D. G. Salvadori | 71,000 | 3,237,607 | 28,249 | 2,206,202 | D. G. Salvadori | 42,479 | 2,755,188 | 30,464 | 2,460,001 | ||||||||||||||||||||
| | | | | | | | | | | | | | M. D. White | 0 | | 0 | | 105,702 | 8,370,541 | | |||||||||
| B. B. Yoor | 694,131 | 26,927,604 | 32,318 | 2,559,262 | |||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | ||||||||||||||
PENSION BENEFITS |
During 2019,2020, 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 6578 and 66.79.
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 53.63.
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��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
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.
62
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, 2019,2020, Messrs. White, Funck, Jr., Allen, and YoorGinascol 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
63
from the plan's unreduced retirement age, unless the benefit is being actuarially reduced from age 65. As of December 31, 2019,2020, Messrs. White, Funck, Jr., Allen, and YoorGinascol 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 | | 35 | | | $ | 1,683,301 | | $ | 0 | | | R. B. Ford | | Abbott Laboratories Annuity Retirement Plan | | 24 | | | $ | 682,422 | | | $ | 0 | | |||
| | | Abbott Laboratories Supplemental Pension Plan | | 35 | | | 38,777,529 | | 2,416,939 | (2) | | | Abbott Laboratories Supplemental Pension Plan | | 24 | | | 7,883,470 | | | 298,329 | (2) | |||||||||
| | | R. B. Ford | | Abbott Laboratories Annuity Retirement Plan | | 23 | | | 539,603 | | 0 | | | ||||||||||||||||||
| | | | | Abbott Laboratories Supplemental Pension Plan | | 23 | | | 4,125,253 | | 212,001 | (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) | | ||||||||||||||||||
| | B. B. Yoor | | Abbott Laboratories Annuity Retirement Plan | | 22 | | | 597,157 | | 0 | | | B. B. Yoor | | Abbott Laboratories Annuity Retirement Plan | | 23 | | | 691,551 | | | 24,430 | | |||||||
| | | Abbott Laboratories Supplemental Pension Plan | | 22 | | | 4,048,215 | | 233,883 | (2) | | | Abbott Laboratories Supplemental Pension Plan | | 23 | | | 4,604,078 | | | 1,169,843 | (2) | |||||||||
| | | L. D. Earnhardt | | Abbott Laboratories Annuity Retirement Plan | | 1 | | | 25,037 | | 0 | | | | | | | | | | | | | | | ||||||
| | | | | Abbott Laboratories Supplemental Pension Plan | | 1 | | | 158,642 | | 0 | (2) | | ||||||||||||||||||
| | D. G. Salvadori | | Abbott Laboratories Annuity Retirement Plan | | 5 | | | 98,291 | | 0 | | ||||||||||||||||||||
| | | Abbott Laboratories Supplemental Pension Plan | | 5 | | | 682,513 | | 0 | (2) | |||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
6477
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL |
POTENTIAL PAYMENTS UPON TERMINATION—GENERALLY
Abbott does not have employment agreements with its named officers.
The following summarizes the payments that the named officers, other than Mr. Yoor, would have received if their employment had terminated on December 31, 2019.2020. 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:
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, 20192020 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.Messrs. Ford, Mr. Yoor, Ms. Earnhardt,Funck, Jr., Allen, Ginascol, and Mr. Salvadori are described below.
Each change in control agreement continues in effect until December 31, 2020,2022, 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
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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.
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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).
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 a 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, 20192020 immediately followed by one of the covered circumstances described above, Mr.Messrs. Ford, Mr. Yoor, Ms. Earnhardt,Funck, Jr., Allen, Ginascol, and Mr. 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 | | $ | 8,312,500 | | | $ | 818,330 | | | $ | 70,570 | | | R. B. Ford | | $15,225,000 | | $2,437,080 | | $93,884 | | |||
| | B. B. Yoor | | 6,435,050 | | | 1,742,950 | | | 70,181 | | | | R. E. Funck, Jr. | | 4,937,083 | | 2,138,528 | | 60,029 | | | ||||
| | L. D. Earnhardt | | 5,489,900 | | | 237,835 | | | 69,916 | | | H. L. Allen | | 5,994,600 | | 1,627,907 | | 49,207 | | ||||||
| | J. F. Ginascol | | 5,436,800 | | 2,477,186 | | 68,653 | | | ||||||||||||||||
| | D. G. Salvadori | | 5,485,000 | | 168,302 | | 87,581 | | |||||||||||||||||
| | D. G. Salvadori | | 5,482,900 | | | 149,410 | | | 69,916 | | | | | | | | | | | | | |||
| | | | | | | | | | | | |||||||||||||||
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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.
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If a change in control had occurred on December 31, 2019,2020, and the surviving company did not assume, convert, or replace the awards, then Mr. Ford,the named officers, other than Mr. Yoor, Ms. Earnhardt, and Mr. 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 | | 1,193,863 | | $27,111,424 | | | 213,835 | | $18,573,709 | | | R. B. Ford | | 633,257 | | $17,964,556 | | | 109,625 | | $12,002,841 | | |||||
| | | R. B. Ford | | 455,324 | | 9,212,663 | | | | 83,057 | | 7,214,330 | | | | R. E. Funck, Jr. | | 272,306 | | 7,912,296 | | | | 47,504 | | 5,201,213 | | |
| | B. B. Yoor | | 379,401 | | 8,221,093 | | | 68,807 | | 5,976,576 | | | H. L. Allen | | 313,908 | | 10,317,891 | | | 55,667 | | 6,094,979 | | |||||
| | | L. D. Earnhardt | | 91,367 | | 537,238 | | | | 56,946 | | 4,946,330 | | | | J. F. Ginascol | | 195,107 | | 5,391,578 | | | | 34,033 | | 3,726,273 | | |
| | D. G. Salvadori | | 346,939 | | 7,614,775 | | | 62,211 | | 5,403,647 | | | 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, 20192020 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, 20192020 and the closing price of a common share on December 31, 2019.2020.
CEO PAY RATIO |
In 2019,2020, we compared CEO pay to that of our median employee. To identify our median employee, we first excluded all 2,579 employees who are employed in Egypt (348), Indonesia (631), Israel (138), and Pakistan (1,462), representing less than 5% of our global workforce of 108,275 employees as of October 1, 20201. We then examined the 2020 base salary of all remaining employees globally, excluding our CEO, who were employed by us on October 1, 2020. We annualized the base salary of all permanent employees who were hired in 2020, 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, previously identified in 2017 using the methodology described in our 2018 proxy statement. Abbott does not believe there have been changes in Abbott's employee population or employee compensation arrangements in 2019 that would significantly impact our median employee.
Wewe collected the 2019 annual total compensation for the medianthis employee using the same methodology we use for our named executive officers as disclosed in the Summary Compensation Table on page 5363 and then added the cost of medical and dental benefits ($12,674)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 $84,434,$77,594, resulting in a ratio of 329:266:1.
The above ratio and annual total compensation amount are reasonable estimates that have been calculated using methodologies and assumptions permitted by Securities and Exchange CommissionSEC rules.
6780
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 2019,2020, the Audit Committee appointed Ernst & Young LLP to act as auditors for 2020.2021. 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 2020.2021. 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 2020,2021, 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 2020.2021.
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, 20192020 and December 31, 20182019 and fees billed for other services rendered by Ernst & Young during these periods.
| | | 2019 | | 2018 | | | | 2020 | | 2019 | | ||||||||
| | | | | | | | | | | | | | | | | | | | | |
Audit fees:(1) | $ | 23,960,000 | $ | 25,381,000 | Audit fees:(1) | $ | 24,474,000 | $ | 23,960,000 | |||||||||||
| Audit related fees:(2) | | 1,029,000 | | 770,000 | Audit related fees:(2) | | 1,158,000 | | 1,029,000 | | |||||||||
Tax fees:(3) | 6,668,000 | 8,905,000 | Tax fees:(3) | 5,944,000 | 6,668,000 | |||||||||||||||
| All other fees:(4) | | 149,000 | | 8,000 | | All other fees:(4) | | 99,000 | | 149,000 | | ||||||||
| | | | | | | | | | | | | | | | | | | | | |
Total | $ | 31,806,000 | $ | 35,064,000 | Total | $ | 31,675,000 | $ | 31,806,000 | |||||||||||
| | | | | | | | | | | | | | | | | | | | | |
6881
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 20192020 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 by the applicable requirements of the Public Company Accounting Oversight 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 6881 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, 20192020 filed with the Securities and Exchange Commission.
E. M. Liddy,ChairR. S. Austin
M. A. Kumbier
N. McKinstryS. C. Scott IIIJ. G. Stratton
G. F. Tilton
6982
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.
Abbott's three-yearsustained strong performance has resulted in total shareholder return (TSR) significantly exceeding the peer median and major market indices on a one-, three-, and five-year basis.
Abbott's three-year TSR of 139.5%101.7% is more than twice that of the peer group median and the broader Standard & Poor's 500 (S&P 500) and more than three times that of the Dow Jones Industrial Average (DJIA) market indicesindex. 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 20192020, despite the global market challenges from COVID-19, and achieved or exceeded the financial targets that were set atbefore the beginning of last year.pandemic in January 2020. Abbott's one-year TSR was 22.1%28.0%, delivering significant shareholder returns on topmore than three times the peer median TSR, and significantly above major market indices, a testament to the strength of the strong one-year TSR of 29%our diversified business model and ability to innovate and deliver in 2018, which ranked #1 in our peer group.this challenging environment.
| | |
In addition to delivering significant shareholder returns, Abbott continued to take important steps to position the Company for long-term, sustainable growth.
Our compensation program is market-based and produces outcomes that directly link to both Company and 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. Our annual incentive plan links officer compensation to the metrics which ensure financial success for the short-term and position the Company for growth in the 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 3033 through 5060 of this proxy statement.
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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.
70 84
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 and 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 |
FourThree shareholder proposals 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 proposals will be presented for action at the Annual Meeting. The proposed resolutions and the statements made in support thereof, as well as the Board of Directors' statements in opposition to the proposals, are presented on the following pages.
The Board of Directors recommends that you vote AGAINST the proposals.
87 71
THE PROPOSALS |
The Unitarian Universalist Association, 24 Farnsworth Street, Boston, Massachusetts 02210-1409,02210, has informed Abbott that it intends to present the following proposal at the Annual Meeting and that it owns 3,0832,783 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.
We encourage transparency in Abbott's use of funds to lobby. Abbott spent $32,730,000$36,700,000 from 2010 – 20182019 on federal lobbying. This figure does not include state lobbying, expenditures to influence legislation in states, where Abbott also lobbies in 37 states1 but disclosure is uneven or absent. For example, Abbott spent $822,611$896,284 on lobbying in California from 2010 – 2018. Abbott was one of the top three lobbying medical device companies for the previous five years,2 and Abbott's lobbying on infant formula has attracted media scrutiny.32019.
Abbott sits on the board of the Chamber of Commerce, which has spent over $1.5$1.6 billion on lobbying since 1998, and also belongs to the Business Roundtable (BRT)boards of the Advanced Medical Technology Association and Nationalthe Medical Device Manufacturers Association, of Manufacturers (NAM), which together spent over $68 million$9,300,408 on lobbying for 20172018 and 2018. Both the BRT2019 and NAM arehave drawn scrutiny for lobbying restrict the abilityto weaken mandatory disclosure of shareholders to file resolutions.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 believes in addressing climate change, yetpublicly supported COVID-19 relief efforts, but the Chamber undermineddirectly lobbied against using the Paris climate accord.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 supports good health, yet the Chamber has worked to block global antismoking laws. 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 this misalignment between general policy positions and actual direct and indirect lobbying effortsthese 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 voteAGAINST the proposal.
In 2012, 2013, and 2014, a shareholder submitted thisThis same proposal which calls for various disclosures in an annual report in connection withhas come before Abbott's lobbying activities.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, disclosing its policies and procedures, lobbying activity, and trade-association memberships on Abbott's website or through other public means.activities. Preparing and maintaining the annual report the shareholder called for thenthis proposal requests would have addedadd cost and effortconsume resources, but not increasedwithout increasing any shareholder value. Thus, eachIndeed, as the Board laid out last year, Abbott's shareholders overwhelmingly rejected this proposal. In fact,Abbott already provides transparency around the last timecategories of disclosure sought by this proposal, was included in the annual meeting agenda, in 2014, only about 6% of Abbott's outstanding shares supported it.
enabling shareholders to assess whether Abbott has been no less transparent since 2014. Indeed, recently,any undue corporate influence over initiatives with which its investors disagree. Further, Abbott's political disclosure and accountability policies and practices have beencontinue to be recognized as top tier among S&P 500 companies.1 The Board believes Abbott's disclosures about its lobbying activities are transparent and informative, and responsive to the proposal. Consider the categories of disclosure called for by this proposal:proposal continue to be publicly available and are updated semiannually.
Abbott already discloses the information the shareholder seeks. RehashingRepeated reporting of existing disclosures would needlessly waste corporate resources and would not be in the best interests of Abbott or its shareholders.
The Board of Directors recommends that you vote AGAINST the proposal. this proposal again.
7390
The Vermont Pension Investment Committee, 109 StateHandlery Hotels, Inc., 180 Geary Street, Montpelier, Vermont 05609-6200,Suite 700, San Francisco, California 94108, has informed Abbott that it intends to present the following proposal at the Annual Meetingannual meeting and that it owns 4,4802,694 Abbott common shares.
PROPONENT'S STATEMENT IN SUPPORT OF SHAREHOLDER PROPOSAL
RESOLVEDWhereas:, that shareholders 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.1Abbott Laboratories (the "Company") urgeissued a statement, on its "corporate newsroom" website page, supporting racial justice and the Boardelimination of Directors (the "Board")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 adjusts or modifies any generally accepted accounting principles ("GAAP") financial performance metric for determining senior executive compensation,Company. Given heightened awareness around racism, failing to act and disclose policies and quantifiable data raises the Compensation Committee's Compensation Discussionmaterial risk of revenue loss and Analysis shall include a specific explanation of the Compensation Committee's rationale for each adjustment and a reconciliation of the adjusted metrics to GAAP.reduced brand value.
Resolved: SUPPORTING STATEMENT:
Our Company selects several metrics to assess senior executive performance for purposes of determining incentive compensation. On page 33 of the 2019 Proxy Statement, the Company detailed the metrics used for the annual incentive plan Shareholders request that are intended align the incentives of executives with shareholders: Sales; diluted EPS; Return on Assets;Abbott Labs publish a report, at reasonable expense and Operating Cash Flow. However, three-fourths of these metrics used an adjusted version of GAAP metrics.
The Company's 2018 diluted EPS calculated under GAAP yielded a result of $1.31, as reported on page 22 ofexcluding proprietary information, disclosing the Company's 2019 Form 10-K. However,plan, if any, to promote racial justice.
Similarly, on the Sales metric, the GAAP calculation yielded a result of $30.6 billion according to page 22 of 2019 Form 10-K. However, the 2019 Proxy Statement presents an Adjusted Sales result of $31.2 billion. The target goal for this metric was $30.97 billionethnic diversity in hiring and since theadjusted result exceeded the goal, the chief executive received above target payout.
These two metrics account for 50% of the Company's weighting for the annual incentive plan that provided the CEO with an award of $4,779,688 in 2018. We are concerned that the use of GAAP-adjusted metrics may inflate senior executive compensation by overstating the Company's financial performance as measured by GAAP. In our view, the Compensation Committee should provide a specific explanation for why these adjustments were made.
We believe that the Company's explanation on page 33 of 2019 Proxy Statement for using GAAP-adjusted metrics for executive pay was vague and unsatisfactory. The Company stated that "Officer financial goals are based on adjusted measures that the Committee believes more accurately reflect the results of our ongoing operations and are determined based on the expected market growth of the businesses and markets in which we compete.promotion?"
Many investors believe that companies should do a better job disclosing the purpose of using adjusted-GAAP metrics for executive compensation. For example, the Council of Institutional Investors has petitioned the SEC to address this lack of transparency. The petition seeks "...a requirement for clear explanations and GAAP reconciliations that would permit a shareholder to understand the company's approach and factor that into its say-on-pay vote and/or buy/sell decision" (https:,July 2020 https://www.sec.gov/rules/petitions/2019/petn4-745.pdf).
For these reasons, we urge a vote FOR this resolution.
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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 onNon-GAAP Financial Performance Metrics Disclosure Report on Racial Justice
The Board of Directors recommends that you voteAGAINST the proposal.
The shareholder's proposal is premised on Abbott's executive compensation program is designedpurported "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 evaluatedate on racial justice, or the Company's intentions moving forward. Rather, Abbott's current disclosures in its Global Sustainability Report and reward management performance.2030 Sustainability Plan depict Abbott's compensation program is intendedrobust commitment to focus executives on actions that create value today while building for sustainable future success. To that end,racial justice, diversity, and inclusion, which were not included by the program has bothproponent when creating their "scorecard." Further, going forward, Abbott will publish a long-Diversity and short-term component. The long-term component includes an award of stock options and performance restricted shares tied to several metrics designed to capture more durable results: 3-year performance relative to sales, margin, and strategic contribution; total shareholder return; and return on equity. The short-term component is an annual payout based on metrics designed to capture performance for that year: sales, diluted earnings per share (EPS), return on assets, and free cash flow. As explained in this and prior proxy statements, in setting targets and evaluating short-term performance, the Compensation Committee excludes categories of gains or losses that would distort the picture of management's performance. That is, the Committee excludes both positive and negative unusual or unpredictable events and circumstances,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 largelyprograms 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 within management's control (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.
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Table of foreign exchange rate changesContents
Ultimately, the shareholder proposal is consistent with what Abbott uses when announcing its quarterly financial results as well as what is used by other publicly traded companies. Non-GAAP measures are used to assist investors in understanding the companies' underlying performance.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 Abbott is and has been transparent about the way in which it sets its targets and measures executives' short-term performance.AGAINST The use of non-GAAP financial metrics when evaluating performance is consistent with the way many S&P 500 companies' report on management's performance for purposes of determining compensation. Non-GAAP financial metrics are intended to eliminate "noise" that would distort an annual or short-term picture, ultimately providingmore transparency into core performance for each year. Every quarter when Abbott releases its earnings, Abbott provides investors with what Abbott believes more accurately captures performance for that quarter—e.g., adjusted sales and adjusted diluted EPS—alongside with a reconciliation to the corresponding GAAP financial metrics. Thus, contrary to the proponent's claim, investors are already aware of the manner in which adjusted EPS relates to GAAP EPS. Inclusion of additional reconciliations in the proxy statement is unnecessary.this proposal.
Moreover, Abbott's proxy disclosure around executive compensation is robust. Each year, Abbott specifically describes its executive compensation program in detail—including the short-term and long-term components. And the proxy statement (pg. 36) describes why the Compensation Committee has chosen to use adjusted metrics rather than GAAP metrics as part of Abbott's compensation philosophy. Abbott is likewise transparent with adjustments to any metrics and the reasons for those adjustments when assessing performance. Preparing a reconciliation that neither increases shareholder value nor adds to shareholder understanding wastes corporate time and resources. In particular, for some officers, creating a reconciliation for adjusted divisional metrics would require significant time and effort while potentially compromising sensitive information regarding Abbott's operations, strategies, or initiatives.
Abbott's shareholders overwhelmingly approve of Abbott's compensation structure, including the way in which performance targets are set and measured. In past years, Abbott enhanced its disclosures around management compensation to address specific shareholder feedback. We consistently engage with shareholders representing approximately 65% of Abbott's outstanding shares. Feedback received in those discussions, some of which included the Chair of the Compensation Committee, indicated that overall, shareholders viewed Abbott's compensation program favorably. In fact, last year, approximately 94% of Abbott's shares voted were in favor of Abbott's executive compensation program.
The Board of Directors recommends that you vote AGAINST the proposal.
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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 less than 500 Abbott common shares.
PROPONENT'S STATEMENT IN SUPPORT OF SHAREHOLDER PROPOSAL
Proposal 6—Let Shareholders Vote on Bylaw Amendments7—Independent Board Chairman
ShareholdersThe shareholders request that the Board of Directors to adopt as policy, and amend the bylaws as necessary, to require the Chair of the Board of Directors, whenever possible, to be an independent member of the Board. This policy could be phased in for the next CEO transition.
If the Board determines that any amendmenta Chair who 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 bylaws thatserve as Chair.
This proposal topic 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 mere submission of this proposal may be an incentive for our Chairman of the Board to perform better leading up to the 2021 annual meeting.
Shareholders are best served by an independent Board Chair who can provide a balance of power between the board shall be subjectCEO and the Board. The primary duty of a Board of Directors is to oversee the management of a non-binding shareholder votecompany on behalf of shareholders. A CEO serving as soon as practical unless such amendment is already subjectchair can result in excessive management influence on the Board and weaker oversight of management. We urge the Board to take the opportunity to appoint a binding shareholder vote.new independent Board Chair.
It is also important that bylaw amendments take into considerationto have an independent board chairman to be the impact that such amendments can have on limitingshareholder watchdog and help make up for the rights2020 silencing of shareholders and/or on reducingat shareholder meetings with the accountabilitywidespread substitution of directors and managers. For example, Directors could adoptonline shareholder meetings using the pandemic as an easy steppingstone. Online meetings, which are a narrowly crafted exclusive forum bylaw to suit the unique circumstances facing our directors.
A proxy advisor recently adopted a policy to vote against directors who unilaterally adopt bylaw provisions or amendments to the articles of incorporation that materially diminish shareholder rights.
Our directors could be neutral on this proposal to obtain feedback from shareholders without interference. If our directors are opposed to this form of shareholder engagement thenand shareholder outreach wasteland, are so easy for management that management will never want to return to in-person shareholder meetings.
With tightly controlled online shareholder meetings everything is optional. For instance management reporting on the status of the company is optional. Also answers to questions are optional even if management misleadingly asks for questions. And it would be usefulwas easy for our directorsAbbott Laboratories to give recent examplescover up that Ms. Nancy McKinstry received 21% in negative votes at the 2020 online Abbott meeting.
For instance Goodyear management hit the mute button right in the middle of companies whose directors took the initiative and adopted bylaws that primarily benefitted shareholders. Aa formal shareholder vote is the best form ofproposal presentation at its 2020 online shareholder engagement because everymeeting to bar constructive criticism.
Please see:
Goodyear's virtual meeting creates issues with shareholder has an opportunity to be heard.
https://www.crainscleveland.com/manufacturing/goodyears-virtual-meeting-creates-issues-shareholder
Please vote yes:Let Shareholders Vote on Bylaw Amendments—Independent Board Chairman—Proposal 67
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Board of Directors' Statement in Opposition to the
Shareholder Proposal on Independent Board ChairmanShareholder Voting on By-law Amendments
The Board of Directors recommends that you voteAGAINST the proposal.
As stated in Abbott's governance structure ensures efficient useguidelines, "[t]he board of corporate timedirectors believes that it is important to retain the flexibility to allocate the responsibilities of the offices of chairman of the board and resources. Abbott's governing documents empower itschief 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 transitioned to a new CEO. The Board's current guidelines provided the Board with the abilityflexibility necessary to amend Abbott's By-Laws. Nearlyall large publicly traded companies empower their boardsadopt the leadership structure in the best interests of Abbott and its shareholders during this way for good reason. By-laws typically govern the company's operating rules for more administrative actions—transition.e.g., the time and place for Abbott's Annual Meeting, the number and tenure of Board members, as just a few examples.
Indeed, the last few timesevery year, the Board did amend Abbott's By-Laws, it did soreviews its leadership structure to ensure the appropriate level of oversight, independence, and responsibility. The Board continues to believe that flexibility coupled with a strong Lead Independent Director is best for purposes of board refreshment. Other key matters, such as a merger or amending Abbott's Articles of Incorporation, are reserved for shareholder vote. Developing, filing,Abbott and mailing proxy materials and devoting management and Board time to arrange shareholder vote—even the non-binding, advisory vote the proposal calls for here—on every By-Law amendment is an ineffective use of time and resources.
Abbott's governance structure and shareholder engagement already enable shareholders to voice their view on any amendment to Abbott's By-Laws. If Abbott shareholders are displeased withany change to the Company's By-Laws, then shareholders can undo that change by repealing that By-Law or adopting one of their own. And shareholders can hold the Board accountable through the annual director-election process. Indeed, the last few times the Board amended Abbott's By-Laws to add new directors, shareholders voted on those very directors at the subsequent Annual Meeting. As the proponent has done here, shareholders can also file an annual shareholder proposal to recommend governance changes to the Board and obtain the view of fellowits shareholders.
Additionally, throughout the year, Abbott management, Abbott's Lead Independent Director and other membersis selected from among the ranks of Abbott's Board are available to hear from Abbott'sindependent directors. In that role, the Lead Independent Director consults directly with major shareholders on their concerns. As mentioned earlier in this proxy, Abbott routinely seeks investor input on corporate governancebusiness. 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 matters and this year engaged with shareholders representing 65% of Abbott's outstanding shares.Board members.
Ultimately,Not only would the shareholder's generic proposal provides no benefithandcuff 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 Abbott's shareholders and, if implemented, would create unnecessary administrative waste and expense.do so. The shareholder's proposal confuses the existence This proposal fails to identify any problem with Abbott's governance or shareholder engagement, apart from imagining a future scenario in which Abbott's Board might amend a By-Law that might operate in some unspecified manner to the detriment of a shareholder who chooses to sueseparate and independent board chair among S&P 500 companies with the company. This hypothetical is offset by the very real time and cost this proposal would impose on Abbott and its shareholders if implemented. The proposal would requireadoption of a non-binding vote on any By-Law amendment "as soon as practical," which could entail organizing and soliciting proxies for aspecial meetingpolicy mandating, in all circumstances, the separation 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 andoes not serve every company. It does not even serve most S&P 500 companies. And it does not serve Abbott's interests or its shareholders, as demonstrated with this recent leadership transition.advisory vote. A
This is the fifth time this shareholder meeting for a non-binding vote any time a By-Law is amended transforms the otherwise nimble By-Law-amendment process into an expensive, time-consuming affair.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.
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John Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach, California 90278, has informed Abbott that he intends to present the following proposal at the Annual Meeting and that he owns no fewer than 50 Abbott common shares.
PROPONENT'S STATEMENT IN SUPPORT OF SHAREHOLDER PROPOSAL
Proposal 7—Simple Majority Vote
RESOLVED, Shareholders request that our board take each step necessary so that each provision in the governing documents of the company requiring a two-thirds vote of outstanding shares under Illinois Business Corporation Act is replaced by a majority vote of outstanding shares. This proposal shall apply only to the two-thirds vote provisions under Illinois Business Corporation Act that can be replaced by a majority vote of outstanding shares.
Shareholders are willing to pay a premium for shares of companies that have excellent corporate governance. Supermajority voting requirements have been found to be one of 6 entrenching mechanisms that are negatively related to company performance according to "What Matters in Corporate Governance" by Lucien Bebchuk, Alma Cohen and Allen Ferrell of the Harvard Law School. Supermajority requirements are used to block initiatives supported by most shareowners but opposed by a status quo management.
This proposal topic won from 74% to 88% support at Weyerhaeuser, Alcoa, Waste Management, Goldman Sachs, FirstEnergy, McGaw-Hill and Macy's. These votes would have been higher than 74% to 88% if more shareholders had access to independent proxy voting advice. The proponents of these proposals included Ray T. Chevedden and William Steiner. This proposal topic also received overwhelming 99%-support at the 2019 Fortive annual meeting.
Currently a 1%-minority can frustrate the will of our 66%-shareholder majority in an election with 67% of shares casting ballots. In other words a 1%-minority could have the power to prevent shareholders from improving the governance of our company. This can be particularly important during periods of management underperformance and/or an economic downturn. Currently the role of shareholders is downsized because management can simply say out-to-lunch in response to an overwhelming 66%-vote of shareholders.
Please vote yes:Simple Majority Vote—Proposal 7
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Board of Directors' Statement in Opposition to the Shareholder Proposal on Simple Majority Vote
The Board of Directors recommends that you voteAGAINST the proposal.
The shareholder proposal is not designed to address any issue specific to Abbott, nor does it identify any concrete benefit that Abbott's shareholders could derive if the Board were to implement it. Rather, this proponent has recycled this proposal from company to company over the years, changing only the company name. Abbott's Restated Articles of Incorporation and its By-Laws do not even contain any supermajority voting provisions to be "replaced."
Supermajority voting is imposed by default under the Illinois Business Corporation Act of 1983 to a narrow set of key matters (e.g., a merger, a sale of substantially all of Abbott's assets, a voluntary dissolution, and amendment to Abbott's Articles of Incorporation). Although these matters were never included in Abbott's governing documents, the Board believes this limited set of matters should depend on a broad consensus of Abbott's shareholders, and thus, a supermajority vote in these few settings is appropriate. All other matters put to shareholders, including ratification of compensation programs, are decided through a simple majority vote.
In the limited set of matters where supermajority voting does apply, it properly balances the need to afford Abbott shareholders a voice in corporate matters while protecting Abbott shareholders as a whole. Abbott's Board—whose directors are elected annually by a simple majority vote and 12 out of 14 of whom are independent under the New York Stock Exchange listing standards—has fiduciary duties to act in the best interests of all shareholders as a whole. But a group of activist shareholders has no such fiduciary duties and may act in their own short-term self-interests. The statutory supermajority voting standards are critical to safeguarding the long-term interests of Abbott and its shareholders.
The Illinois legislature recognized that requiring supermajority voting for a narrow set of extraordinary matters ensures that small shareholders have a voice in decisions that fundamentally affect their investment. Abbott's Board believes the same.
The Board of Directors recommends that you vote AGAINST the proposal.
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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, and the son of one of our executive officers, Roger Bird, arewas employed by Abbott. During 2019, their respective2020, her total compensation exceeded the foregoing threshold.
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INFORMATION CONCERNING SECURITY OWNERSHIP |
The table below reports the number of common shares beneficially owned as of December 31, 20192020 by BlackRock, Inc., Capital Research Global Investors, and The Vanguard Group (directly or through their subsidiaries), the only persons known to Abbott to beneficially own 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 | 124,728,602 | 7.1% | BlackRock, Inc.(1) 55 East 52nd Street New York, NY 10055 | 133,426,810 | 7.5% | |||||||||||||
| | | | | | | | | | | | | | | | | | | |
| Capital Research Global Investors(2) 333 South Hope Street Los Angeles, CA 90071 | 113,689,293 | 6.5% | The Vanguard Group(2) 100 Vanguard Blvd. Malvern, PA 19355 | 147,272,920 | 8.3% | | ||||||||||||
| | | | | | | | | | | | | | | | | | | |
| The Vanguard Group(3) 100 Vanguard Blvd. Malvern, PA 19355 | 151,783,436 | 8.6% | ||||||||||||||||
| | | | | | | | | | ||||||||||
DATE FOR RECEIPT OF SHAREHOLDER PROPOSALS FOR THE |
Shareholder proposals for presentation at the 20212022 Annual Meeting must be received by Abbott no later than November 13, 202012, 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 20212022 meeting.
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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 Chair 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.
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 20212022 Annual Meeting, this written notice must be received by Abbott no later than January 24, 2021.23, 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.
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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 17, 2020. 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
83100
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:
Exhibit A-1
PROPOSED AMENDMENTS TO ARTICLES OF INCORPORATION
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 Laboratories.
The corporation was incorporated March 6, 1900 under the name: The Abbott Alkaloidal Company.
Subsequent corporate names and the dates of their adoption are:
| Name | Date Adopted | |
|---|---|---|
| Abbott Laboratories | May 29, 1915 |
RESTATED ARTICLE R-II (Amended)
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:
Exhibit 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.
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 the par value, if any, of the shares of each class, or a statement that the shares of any class are without par value, are as follows:
| 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 special or relative rights in respect of the shares of each class are:
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 | $ | |||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
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 24, 202023, 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 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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MMMMMMMMMMMM 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 Your vote matters – here’s how to vote! You may vote online or by phone instead of mailing this card. Votes submitted electronically must be MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 received by April 24, 2020, at 1:00 A.M., Central Time. Online GIof ntoo welwewct.rinovneicstvoortviontge,.com/abt delete QR code and control # oΔo∆r scan thethe≈ QR code — login details are located in the shaded bar below. Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada Save paper, time and money! Sign up for electronic delivery at 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 VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q 5, 6 and 7. + Abstain 1. Election of 1413 Directors: 01 - R.J. Alpern 05 - M.A. Kumbier 09 - P.N. NovakovicM.F. Roman 13 - G.F. TiltonM.D. White For Against Abstain 2. Ratification of Ernst & Young LLP as Auditors 02 - R.S. Austin 06 - D.W. McDew 10 - D.J. Starks 03 - S.E. Blount 07 - D.W. McDewN. McKinstry 11 - D.J. StarksJ.G. Stratton 04 - R.B. Ford 08 - N. McKinstryW.A. Osborn 12 - J.G. Stratton For Against 06G.F. Tilton 3. Say on Pay - E.M. Liddy 10 - W.A. Osborn 14 - M.D. White 4. Shareholder Proposal - Lobbying DisclosureAn Advisory Vote to Approve Executive Compensation Mark here to vote FOR all nominees Mark here to WITHHOLD vote from all nominees 5. Shareholder Proposal - Non-GAAP Financial Performance Metrics Disclosure4. 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 For Against Abstain For Against Abstain For Against Abstain 5. Shareholder Proposal - Lobbying Disclosure 6. Shareholder Proposal - Shareholder VotingReport on By-Law Amendments _____________________________________________________________________Racial Justice 7. Shareholder Proposal - Simple Majority Vote For Against Abstain 2. Ratification of Ernst & Young LLP as Auditors 3. Say on Pay – An Advisory Vote to Approve Executive CompensationIndependent 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 4 6 4 1 9 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 MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND + 1 P C F 4 036EDD9 0 7 5 2 03DVJH MMMMMMMMM B Authorized Signatures — This section must be completed for your vote to count. Please date and sign below. The Board of Directors recommends a vote AGAINST Items 4,5, 6 and 7. A Proposals — The Board of Directors recommend a vote FOR all the nominees listed in Item 1 and FOR Items 2, 3 and 3. 20204. 2021 Annual Meeting Proxy Card1234 5678 9012 345
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, you must have the meeting password (ABT2021) and the 15-digit control number printed on the reverse side of this form. 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. q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q + Proxy Solicited on Behalf of the Board of Directors for Annual Meeting - April 24, 202023, 2021 The undersigned, revoking all previous proxies, acknowledges receipt of the Notice and Proxy Statement dated March 13, 2020,12, 2021, in connection with the Annual Meeting of Shareholders of Abbott Laboratories to be held at 9:00 a.m. on April 24, 2020,23, 2021, at the corporation’s headquarters, and hereby appoints Miles D. WhiteRobert B. Ford and Hubert L. 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 20202021 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. 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 3,4, and AGAINST Items 4, 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 new address below. Comments — Please print your comments below. + C Non-Voting Items Proxy — Abbott Laboratories Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.investorvote.com/abt
