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. )
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Preliminary Proxy Statement |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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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)
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Table of Contents
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS AND
PROXY STATEMENT 2022
Table of Contents
Abbott Laboratories
100 Abbott Park Road
Abbott Park, Illinois 60064-6400 U.S.A. |
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On the Cover: Dr. Veronika Meyer
St. Gallen, Switzerland
Veronika, a retired professor of chromatography, has
been active her entire life, and takes every opportunity she can to go hiking in the mountains – those near her home, and
others far afield. Notably, she was the first woman with a mechanical heart valve to reach the summit of Mt. Everest.
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Table of Contents
TABLE OF CONTENTS
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Table of Contents
NOTICE OF 2022 ANNUAL MEETING OF SHAREHOLDERS
Important Notice Regarding the Availability of Proxy Materials for the
Shareholder Meeting to Be Held on April 29, 2022
The Annual Meeting of the Shareholders of Abbott Laboratories will be held
on Friday, April 29, 2022, at 9:00 a.m. Central Time.
The 2022 Annual Meeting of Shareholders will be held virtually to enable
broader and more convenient shareholder participation and to support the health and safety of Abbott’s shareholders, employees,
and communities during the ongoing coronavirus pandemic. There will not be a physical location for the Annual Meeting, and shareholders
will not be able to attend the Annual Meeting in person.
Shareholders of record as of the close of business on March 2, 2022 will
be able to attend the Annual Meeting at meetnow.global/ABT2022. To be admitted to the Annual Meeting, shareholders will be required
to enter 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 abbottshareholders@abbott.com to obtain the meeting telephone number in advance of the meeting.
Please see page 90 for further instructions on how to be admitted to the Annual Meeting.
Shareholders will be asked to vote on the following items of business:
Agenda |
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Board Voting
Recommendation |
Item 1 |
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Election of the 12 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 |
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FOR Each Director Nominee |
Item 2 |
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Ratification of the appointment of Ernst & Young LLP as auditors of Abbott for 2022 |
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FOR |
Item 3 |
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Approval, on an advisory basis, of executive compensation |
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FOR |
Items 4-8 |
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Five shareholder proposals, if properly presented at the meeting |
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AGAINST |
Shareholders will also transact such other business as may properly come
before the meeting, including any adjournment or postponement thereof.
This proxy statement and the accompanying proxy card, and the Notice of
Internet Availability of Proxy Materials, are being provided to shareholders on or about March 18, 2022.
Abbott’s 2022 Proxy Statement and 2021 Annual Report to Shareholders
are available at www.abbott.com/proxy.
YOUR VOTE IS IMPORTANT
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 vote 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 materials
from a broker, bank, or other agent), please refer to the voting instructions provided to you by your broker, bank, or other agent.
By order of the Board of Directors.
HUBERT L. ALLEN
Secretary
March 18, 2022
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Table of Contents
PROXY SUMMARY
This summary contains highlights about Abbott and the upcoming 2022 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.
ABBOTT’S DIVERSIFIED BUSINESS MODEL DELIVERS LEADING SHAREHOLDER RETURNS |
Abbott’s sustained strong performance has resulted in total shareholder
return (TSR) exceeding the peer median and major market indices on a one-, three-, and five-year basis.
Abbott’s three-year
TSR of 104% is more than twice that of the peer group median, and Abbott’s five-year TSR of 300% is more than four times
that of the peer median. These consistent top-tier returns are driven
by strong execution, an effective governance structure, and 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 2021, despite the continued global impact and uncertainty of COVID-19, and exceeded the financial targets
that were set at the beginning of the year. Abbott’s one-year TSR
was 31%, more than two and a half times the peer median TSR, a testament to the strength of our diversified business model and
ability to innovate and deliver in 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.
ROBUST INNOVATION
PIPELINE |
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INVESTING FOR
FUTURE GROWTH |
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SHAREHOLDER
RETURNS |
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GLOBAL LEADER IN
COVID-19 TESTING |
● Steady stream of important product approvals across our businesses that will be significant contributors to growth in the coming years. |
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● Increased
manufacturing scale and capabilities across several important products.
● Nearly
$2 billion invested in internal capital projects in the past year.
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● Returned
50% of operating cash flow to shareholders in 2021 and announced the 50th year of consecutive dividend increases, demonstrating
Abbott’s financial strength and commitment to shareholder returns. |
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● Delivered
1 billion tests in 2021 to help meet global testing needs.
● Abbott’s
rapid response and significant scale have allowed for broad access to testing and further positioned Abbott as a global leader
in diagnostics.
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Table of Contents
SHAREHOLDER FEEDBACK
In 2021, we met or initiated contact with shareholders representing over
60% of our outstanding shares, including 100% of our top 20 investors, in an open dialogue to discuss our compensation program
and various topics, including:
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The pandemic’s impact on our business, our COVID-19 testing response, and the strength and resilience of our diversified business model. |
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Business and sustainability strategy, including Abbott’s new 2030 Sustainability Plan and its focus on creating new life-changing technologies and products, expanding access and affordability of new product innovations and advancing health equity. |
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Human capital management and Abbott’s commitment to diversity, equity, and inclusion, including Abbott’s new Diversity, Equity and Inclusion Report which provides goals, our progress against them, and disclosure of EEO-1 data. |
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Board composition and refreshment, including the addition of four new independent directors since 2018, three of whom are women and/or minorities. |
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Executive compensation program, including Abbott’s continued enhanced compensation disclosure. |
Their feedback was overwhelmingly positive, which was reflected in the
92% support for our Say-on-Pay Proposal.
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 |
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Abbott Policy |
More
Information
On Page |
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 |
30-33 |
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 |
31-33 |
Double-Trigger Change in Control |
Yes |
Provide change in control benefits under double-trigger circumstances only |
66-67 |
Recoupment Policy |
Yes |
Forfeiture for misconduct provision in equity grants and recoup compensation when warranted |
51 |
Robust Share Ownership Guidelines |
Yes |
Require significant share ownership for officers and directors, and share retention requirements until guidelines are met |
27 and 50 |
Capped Incentive Awards |
Yes |
Incentive award payments are capped |
32 and 53 |
Independent Compensation Committee Consultant |
Yes |
Committee consultant performs no other work for Abbott |
22 |
Tax Gross Ups |
No |
No tax gross ups under our executive officer pay program |
49-50 |
Guaranteed Bonuses |
No |
No guaranteed bonuses |
31 |
Employment Contracts |
No |
No employment contracts |
65 |
Excessive Risk Taking |
No |
No highly leveraged incentive plans that encourage excessive risk taking |
52-53 |
Hedging of Company Shares |
No |
No hedging of Abbott shares is allowed |
51 and 53 |
Discounted Stock Options |
No |
No discounted stock options are allowed or granted |
52 |
Details of the compensation decisions made for our named executive officers
are outlined on pages 38 to 48.
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The Board of Directors
recommends a vote FOR the
election of each of the following nominees for director. All nominees are currently serving as directors. Additional information
about each director nominee’s background and experience can be found beginning on page 10.
Name |
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Principal Occupation |
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Age |
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Director
Since |
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Committee
Memberships |
ROBERT J. ALPERN, M.D. Independent |
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Professor and Former Dean, Yale School of Medicine |
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71 |
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2008 |
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● Nominations
and Governance
● Public
Policy
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SALLY E. BLOUNT, PH.D. Independent |
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President and CEO, Catholic Charities of the Archdiocese of Chicago, and Professor and Former Dean, J.L. Kellogg Graduate School of Management |
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60 |
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2011 |
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● Nominations
and Governance
● Public
Policy
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ROBERT B. FORD |
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Chairman of the Board and Chief Executive Officer, Abbott Laboratories |
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48 |
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2019 |
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● Executive (Chair) |
PAOLA GONZALEZ Independent |
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Vice President and Treasurer, The Clorox Company |
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50 |
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2021 |
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● Audit |
MICHELLE A. KUMBIER Independent |
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President, Turf & Consumer Products, Briggs & Stratton, LLC |
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54 |
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2018 |
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● Audit
● Compensation
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DARREN W. McDEW Independent |
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Retired General, U.S. Air Force, and Former Commander of U.S. Transportation Command |
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61 |
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2019 |
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● Nominations
and Governance
● Public
Policy
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NANCY McKINSTRY Independent |
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CEO and Chairman of the Executive Board, Wolters Kluwer N.V. |
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63 |
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2011 |
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● Audit
(Chair)
● Compensation
● Executive
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WILLIAM A. OSBORN Lead Independent Director |
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Retired Chairman and CEO, Northern Trust Corporation |
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74 |
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2008 |
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● Compensation
● Nominations
and Governance (Chair)
● Executive
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MICHAEL F. ROMAN Independent |
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Chairman, President, and CEO, 3M Company |
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62 |
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2021 |
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● Audit
● Compensation
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DANIEL J. STARKS Independent |
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Retired Chairman, President and CEO, St. Jude Medical, Inc. |
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67 |
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2017 |
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● Public Policy |
JOHN G. STRATTON Independent |
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Executive Chairman, Frontier Communications Parent, Inc. |
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61 |
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2017 |
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● Audit
● Public
Policy
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GLENN F. TILTON Independent |
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Retired Chairman, President and CEO, UAL Corporation |
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73 |
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2007 |
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● Audit
● Public
Policy (Chair)
● Executive
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Abbott is committed to strong corporate governance that is aligned with
shareholder interests. Our Board spends significant time with Abbott’s senior management to understand the dynamics, issues,
and opportunities for Abbott, and also regularly monitors leading practices in governance and adopts measures that it determines
are in the best interest of Abbott and its shareholders.
LEAD INDEPENDENT DIRECTOR WITH DISTINCT RESPONSIBILITIES
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Elected annually by independent directors |
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Regularly presides over executive sessions of independent directors at Board meetings and provides feedback to management |
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Reviews matters, such as agenda items and schedule sufficiency |
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Leads annual performance review process |
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Oversees process for identifying and evaluating director candidates |
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Authority to call meetings of independent directors |
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Communicate regularly with the Chairman regarding appropriate agenda topics and other Board-related matters |
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Confers with the Nominations and Governance Committee and the CEO regarding management succession planning |
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Liaises between Chairman and independent directors |
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Engages directly with major shareholders as appropriate |
ROBUST BOARD EVALUATION AND REFRESHMENT PROCESS
OTHER BOARD GOVERNANCE HIGHLIGHTS
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Fully independent Audit Committee, Compensation Committee, Nominations and Governance Committee, and Public Policy Committee |
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Committee chairs recommended to the Board by the Nominations and Governance Committee and approved by the full Board |
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All directors elected annually by majority vote |
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Executive sessions of the independent directors, led by the Lead Independent Director, at each regularly scheduled Board meeting |
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Annual anonymous evaluations of the Board, Committees, and each director |
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Strong risk oversight, with areas of focus including business strategy, human capital, cybersecurity and data protection, and Abbott’s sustainability, environmental, and social responsibility practices |
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HIGHLY QUALIFIED BOARD, WITH BROAD DIVERSITY ACROSS BACKGROUNDS,
SKILLS AND EXPERIENCES
THE 12 DIRECTOR NOMINEES COMPRISE A WELL-BALANCED, DIVERSE BOARD. |
RELEVANT EXPERTISE TO PROVIDE OVERSIGHT AND GUIDANCE FOR ABBOTT’S DIVERSIFIED OPERATING MODEL |
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TENURE
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Healthcare and Medical Device Industry |
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Finance |
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Risk Management, including Data/Cybersecurity |
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Global Strategy and Operations |
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Regulatory/Compliance |
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BOARD DIVERSITY
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Consumer Products |
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Senior Leadership with Multinational Corporations and Diverse Business Models |
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Global Supply Chain Operations |
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Government and Military Leadership |
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OUR
COMMITMENT TO SUSTAINABILITY |
At Abbott, sustainability means managing our company to deliver long-term
positive impact for the people we serve—shaping the future of healthcare and helping the greatest number of people live better
and healthier lives.
Our sustainability efforts are focused on the most relevant industry
and company-specific risks and opportunities. In December 2020, we launched our new 2030 Sustainability Plan focused on Abbott’s
greatest opportunities to make an impact.
These areas have been identified through an in-depth materiality
analysis, directed by executive management, and in partnership with numerous diverse external stakeholders, including suppliers,
customers, and investors. We aim to deliver sustainable, responsible growth that improves lives and creates value in communities
around the world.
2030 SUSTAINABILITY PLAN GOALS
Our work touched 2 billion lives this past year, and by 2030, we
intend to reach more than 3 billion lives per year, improving the lives of 1 in every 3 people on the planet by 2030.
INNOVATE FOR ACCESS AND AFFORDABILITY
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Make access and
affordability core to new product innovation |
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Transform care for chronic
disease, malnutrition and infectious diseases |
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Advance health equity through
partnership |
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Integrate access, affordability and data insights as design principles into our work and portfolio. |
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Innovate to transform the standard of care for diabetes and deliver break-through technologies to improve clinical outcomes for people with cardiovascular disease.
Deliver scalable, integrated solutions to reduce preventable deaths and infectious diseases with diagnostics, treatment and education programs. |
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Expand affordable access to healthcare for underserved, diverse and at-risk communities by delivering innovative, decentralized models of care.
Partner with stakeholders to improve health outcomes by advancing standards and building access to affordable, integrated solutions. |
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BUILD A FOUNDATION FOR THE FUTURE
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CLIMATE
Protect a healthy
environment
Protect our climate and
water, including reducing absolute Scope 1 and 2 carbon emissions by 30% from 2018 baseline
Reduce product packaging
and waste, including addressing 50 million pounds of packaging and using circular economy approach to achieve at least
90% waste diversion rate |
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OUR
PEOPLE
Build the diverse,
innovative workforce of tomorrow
Create opportunities in
Abbott’s STEM programs and internships for more than 100,000 young people
Achieve gender balance
across our global management team and ensure one-third of our U.S. leadership roles are held by people from underrepresented
groups |
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SUPPLY CHAIN
Ensure a resilient,
diverse and responsible supply chain |
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DATA AND DATA PRIVACY
Responsibly
connect data, technology, and care |
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Certify that 80% of newly contracted direct material spends
incorporate social responsibility requirements
Ensure ethical sourcing from suppliers with high-risk sustainability
factors through 100% auditing
Increase spend with diverse and small businesses 50% |
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Be a trusted healthcare leader in secure and responsible data collection, use, management and privacy, in order to protect
our patients and customers, empower them to make better, more complete decisions about their health, and drive innovation
through insights and analytics |
The Board of Directors and its committees have oversight over Abbott’s
environmental, social and governance practices. The Board 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.
Executive compensation is linked to Sustainability commitments, as
discussed in more detail on pages 36 and 37.
To learn more about Abbott’s Sustainability efforts, please
visit www.abbott.com/responsibility/sustainability.html.
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VOTING MATTERS AND BOARD RECOMMENDATIONS |
ITEM
1 |
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Election of 12 Director Nominees Named in this Proxy Statement:
The Board recommends a vote FOR each nominee
● 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 10 to 15 for more information. |
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ITEM
2 |
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Ratification of Ernst & Young LLP as Auditors: The
Board recommends a vote FOR
● Independent firm with significant industry and
financial reporting expertise.
● See pages 69 to 70 for more information. |
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ITEM
3 |
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Say on Pay: Advisory Vote on the Approval of Executive Compensation:
The Board recommends a vote FOR
● Market-based structure producing differentiated
awards based on both company and individual performance, managed with independent oversight by the Compensation Committee.
● Aligned to drive Abbott’s strategic priorities,
reflects consistent above-market TSR and upper quartile relative 3-year TSR performance vs. peers, as well as upper
quartile 1-year and 5-year TSR. See pages 71 and 72 for more information. |
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SHAREHOLDER
PROPOSALS
4-8 |
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The Board recommends a vote AGAINST
● Proposal 4: Special Shareholder Meeting Threshold
● Proposal 5: Independent Board Chairman
● Proposal 6: 10b5-1 Plans
● Proposal 7: Lobbying Disclosure
● Proposal 8: Antimicrobial Resistance Report
● See pages 73 to 85 for more information. |
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Table of Contents
NOMINEES FOR ELECTION AS DIRECTORS
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ROBERT J. ALPERN, M. D.
Director Since 2008 Age 71
Ensign Professor of Medicine and Physiology and Professor of
Internal Medicine and Cellular and Molecular Physiology, and Former Dean of Yale School of Medicine |
PROFESSIONAL BACKGROUND
● |
Ensign Professor of Medicine and Professor of Internal Medicine at Yale School of Medicine since June
2004. |
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Dean of Yale School of Medicine from June 2004 to January 2020. |
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Dean of The University of Texas Southwestern Medical Center from July 1998 to May 2004. |
● |
Served on the Board of Directors of Yale New Haven Hospital from October 2005 to January 2020. |
OTHER PUBLIC COMPANY BOARDS
AbbVie Inc., Tricida, Inc.
KEY QUALIFICATIONS AND EXPERTISE
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.
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SALLY E. BLOUNT, PH. D.
Director Since 2011 Age 60
President and 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 |
PROFESSIONAL BACKGROUND
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President and Chief Executive Officer and Board Member of Catholic Charities of the Archdiocese of
Chicago since August 2020. |
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Michael L. Nemmers Professor of Strategy and Dean of the J.L. Kellogg Graduate School of Management at Northwestern University
from 2010 to 2018. |
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Dean of the New York University Undergraduate College and Vice Dean of its Leonard N. Stern School of Business from 2004
to 2010. |
● |
Professor at the New York University Leonard School of Business from 2001 to 2010, and became the Abraham L. Gitlow Professor
of Management in 2004. |
● |
Held academic posts at the University of Chicago’s Graduate School of Business from 1992 to 2001. |
● |
Serves on the Board of Directors of the Joyce Foundation. |
OTHER PUBLIC COMPANY BOARDS
Ulta Beauty, Inc.
KEY QUALIFICATIONS AND EXPERTISE
Having served as Dean of the J.L. Kellogg Graduate School of Management
at Northwestern University and as 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.
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ROBERT B. FORD
Director Since 2019 Age 48
Chairman of the Board and Chief Executive Officer, Abbott Laboratories |
PROFESSIONAL BACKGROUND
● |
Chairman of the Board and Chief Executive Officer of Abbott since December 2021. |
● |
President and Chief Executive Officer of Abbott from March 2020 to December 2021. |
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President and Chief Operating Officer of Abbott from 2018 to 2020. |
● |
Executive Vice President, Medical Devices of Abbott from 2015 to 2018. |
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Senior Vice President, Diabetes Care of Abbott from 2014 to 2015. |
● |
Held various leadership roles across Abbott’s Diagnostics, Nutrition, and Diabetes Care businesses in the U.S. and
Latin America since joining Abbott in 1996. |
KEY QUALIFICATIONS AND EXPERTISE
As Abbott’s Chairman of the Board and Chief Executive Officer,
and having previously held various leadership positions at Abbott, including Chief Operating Officer, where he was responsible
for all of Abbott’s operating businesses, 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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PAOLA GONZALEZ
Director Since 2021 Age 50
Vice President and Treasurer, The Clorox Company |
PROFESSIONAL BACKGROUND
● |
Vice President and Treasurer of The Clorox Company, a manufacturer and marketer of consumer and professional
products, since January 2018. |
● |
Vice President of Finance, Household and Lifestyle Segments of Clorox from 2010 to 2017. |
● |
Vice President of Finance, Global Strategic Initiatives of Clorox from 2008 to 2010. |
● |
Held various leadership roles in finance across Clorox since joining Clorox in 1997. |
● |
Prior to Clorox, worked in finance for American Airlines in Latin America. |
KEY QUALIFICATIONS AND EXPERTISE
As Vice President and Treasurer of The Clorox Company, Ms. Gonzalez
is responsible for treasury, investor relations and real estate matters, and through her prior financial roles in several of its
businesses, has considerable experience providing financial leadership to a multinational public company with multiple businesses,
contributing significant financial expertise and knowledge of financial statements, corporate finance and accounting matters.
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MICHELLE A. KUMBIER
Director Since 2018 Age 54
President, Turf & Consumer Products, Briggs &
Stratton, LLC |
PROFESSIONAL BACKGROUND
● |
Senior Vice President and President, Turf & Consumer Products of Briggs & Stratton,
LLC, a manufacturer and marketer of engines and outdoor power equipment, since March 2022. |
● |
Senior Vice President and Chief Operating Officer of Harley-Davidson Motor Company, a motorcycle and related products
manufacturer, from 2017 to 2020. |
● |
Senior Vice President of Motor Company Product and Operations of Harley-Davidson from 2015 to 2017. |
● |
Held various other executive roles across Harley-Davidson, from 1997 to 2015. |
● |
Held various positions at Kohler Company, maker of premium plumbing products, from 1986 to 1997. |
OTHER PUBLIC COMPANY BOARDS
Teledyne Technologies Incorporated, Tenneco Inc. In connection with
Tenneco’s publicly announced agreement to be acquired by Apollo Funds, Ms. Kumbier would cease to be a Tenneco Director upon
the acquisition closing.
KEY QUALIFICATIONS AND EXPERTISE
Having served in several executive roles at Harley-Davidson, Ms.
Kumbier contributes extensive experience in the management of a multinational public company, including significant manufacturing,
product development, business development and strategic planning experience.
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DARREN W. MCDEW
Director Since 2019 Age 61
Retired General, United States Air Force, and Former Commander
of U.S. Transportation Command |
PROFESSIONAL BACKGROUND
● |
Four-star general who served for 36 years in the United States military before retiring in October
2018. |
● |
Commander, U.S. Transportation Command, the single manager for global air, land and sea transportation for the U.S. Department
of Defense from 2015 to 2018. |
● |
Held various leadership roles across the U.S. Military, including 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. |
● |
Serves on the Board of Directors of Rolls-Royce, North America, Inc., United Services Automobile Association, and Boys &
Girls Club of America. |
OTHER PUBLIC COMPANY BOARDS
Parsons Corporation
KEY QUALIFICATIONS AND EXPERTISE
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 63
Chief Executive Officer and Chairman of the Executive Board,
Wolters Kluwer N.V. |
PROFESSIONAL BACKGROUND
● |
Chief Executive Officer and Chairman of the Executive Board of Wolters Kluwer N.V., a global information,
software, and services provider, since September 2003, and a member of its Executive Board since June 2001. |
● |
Member of the European Round Table of Industrialists. |
● |
Serves on the Board of Directors of Russell Reynolds Associates and the Board of Overseers of Columbia Business School. |
● |
Served on the Board of Directors of Telefonaktiebolaget LM Ericsson from 2004 to 2012. |
OTHER PUBLIC COMPANY BOARDS
Accenture plc
KEY QUALIFICATIONS AND EXPERTISE
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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WILLIAM A. OSBORN
Lead Independent Director
Director Since 2008 Age 74
Retired Chairman and Chief Executive Officer, Northern Trust
Corporation |
PROFESSIONAL BACKGROUND
● |
Chairman of Northern Trust Corporation, a multibank holding company, from 1995 to 2009 and Chief Executive
Officer from 1995 to 2008. |
● |
President of Northern Trust Corporation and The Northern Trust Company, a banking services company, from 2003 to 2006. |
● |
Served on the Board of Directors of Nicor, Inc. from 1999 to 2006. |
● |
Served on the Board of Directors of Tribune Company from 2001 to 2012. |
● |
Served on the Board of Directors of Caterpillar Inc. from 2000 to 2021. |
● |
Served on the Board of Directors of General Dynamics Corporation from 2009 to 2021. |
KEY QUALIFICATIONS AND EXPERTISE
Having served as the Chairman and Chief Executive Officer of Northern
Trust Corporation, Mr. Osborn acquired broad experience in successfully overseeing complex global businesses operating in
highly regulated industries, including oversight of financial, operational, and governance matters facing large public companies.
|
|
|
13 |
Table of Contents
|
|
MICHAEL F. ROMAN
Director Since 2021 Age 62
Chairman of the Board, President and Chief Executive Officer,
3M Company |
PROFESSIONAL BACKGROUND
● |
Chairman of the Board, President and Chief Executive Officer of 3M Company, a global manufacturing
and technology company, since May 2019. |
● |
Chief Executive Officer of 3M from July 2018 to May 2019. |
● |
Chief Operating Officer and Executive Vice President of 3M from July 2017 to June 2018 with direct responsibilities for
3M’s five business groups and its international operations. |
● |
Executive Vice President, Industrial Business Group of 3M from June 2014 to July 2017. |
● |
Senior Vice President, Business Development of 3M from May 2013 to June 2014. |
● |
Vice President and General Manager of Industrial Adhesives and Tapes Division of 3M from September 2011 to May 2013. |
OTHER PUBLIC COMPANY BOARDS
3M Company
KEY QUALIFICATIONS AND EXPERTISE
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 67
Retired Chairman, President and Chief Executive Officer, St. Jude
Medical, Inc. |
PROFESSIONAL BACKGROUND
● |
Executive Chairman of the Board of St. Jude Medical, Inc., a medical device manufacturer, from January
2016 to January 2017, when Abbott completed its acquisition of St. Jude Medical. |
● |
Chairman, President and Chief Executive Officer of St. Jude Medical from 2004 until his retirement in January 2016.
|
● |
President and Chief Operating Officer of St. Jude Medical from 2001 to 2004. |
● |
President and CEO, Cardiac Rhythm Management Business of St. Jude Medical from 1997 to 2001. |
KEY QUALIFICATIONS AND EXPERTISE
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, but also extensive business and management
experience operating a global public company in a highly regulated industry.
|
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14 |
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Table of Contents
|
|
JOHN G. STRATTON
Director Since 2017 Age 61
Executive Chairman, Frontier Communications Parent, Inc. |
PROFESSIONAL BACKGROUND
● |
Executive Chairman of Frontier Communications Parent, Inc., a telecommunications company, since April
2021. |
● |
Executive Vice President and President of Global Operations of Verizon Communications Inc. from 2015 to 2018. |
● |
Executive Vice President and President of Global Enterprise and Consumer Wireline of Verizon from 2014 to 2015. |
● |
President of Verizon Enterprise Solutions from 2012 to 2014. |
● |
Chief Operating Officer and Executive Vice President of Verizon Wireless from 2010 to 2012. |
● |
Member of The President’s National Security Telecommunications Advisory Committee from 2012 to 2018. |
● |
Director of the Cellular Telecommunications Industry Association from 2015 to 2018. |
OTHER PUBLIC COMPANY BOARDS
Frontier Communications Parent, Inc., General Dynamics Corporation
KEY QUALIFICATIONS AND EXPERTISE
Through his executive leadership experience, Mr. Stratton contributes
extensive business and management expertise 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.
|
|
GLENN F. TILTON
Director Since 2007 Age 73
Retired Chairman, President and Chief Executive Officer, UAL Corporation |
PROFESSIONAL BACKGROUND
● |
Chairman, President and Chief Executive Officer of UAL Corporation, an airline holding company, 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. |
● |
Served on the Board of Directors 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. |
● |
Served on the Board of Directors of Lincoln National Corporation from 2002 to 2007, TXU Corporation from 2005 to 2007,
and Corning Incorporated from 2010 to 2012. |
● |
Chairman of the Midwest for JPMorgan Chase & Co. and a member of its companywide Executive Committee from
June 2011 to June 2014. |
OTHER PUBLIC COMPANY BOARDS
AbbVie Inc., Phillips 66
KEY QUALIFICATIONS AND EXPERTISE
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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THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors held 8 meetings in 2021. The average attendance of all directors
at Board and committee meetings in 2021 was 95% 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 following director nominees is independent in
accordance with the New York Stock Exchange listing standards: Robert J. Alpern, M.D., Sally E. Blount, Ph.D., Paola Gonzalez, Michelle
A. Kumbier, Darren W. McDew, Nancy McKinstry, William A. Osborn, Michael F. Roman, Daniel J. Starks, John G. Stratton, and Glenn F. Tilton,
as well as Roxanne S. Austin, who will continue to serve as a director until the 2022 Annual Meeting, and Edward M. Liddy and Phoebe
N. Novakovic, who served as directors during a portion of 2021.
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 his or her 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.
Abbott’s current Board leadership is comprised of the Chairman of the Board
and Chief Executive Officer, a Lead Independent Director, and independent Committee chairs.
Robert B. Ford currently serves as Chairman of the Board and Chief Executive Officer.
The Board believes this is in the best interests of Abbott and its shareholders, as it provides cohesive leadership and direction for
the Board and executive management, as well as clear accountability and unified leadership in the execution of strategic initiatives
and business plans. Mr. Ford also has extensive industry expertise and familiarity with Abbott’s global businesses, such that his
strategic and operational insights provide the Board with a comprehensive vision, from long-term strategic direction to day-to-day execution.
Abbott’s Board leadership is further strengthened by:
● |
A strong Lead Independent Director with significant roles
and responsibilities who is selected by and from the independent members of the Board. Currently, the Chair of the Nominations and
Governance Committee, Mr. Osborn, is the Lead Independent Director. |
● |
Fully independent Audit Committee, Compensation Committee,
Nominations and Governance Committee, and Public Policy Committee, as required by Abbott’s Governance Guidelines. |
● |
Committee chairs who are recommended to the Board by the
Nominations and Governance Committee and approved by the full Board. |
● |
Executive sessions of the independent directors, led by
the Lead Independent Director, that generally take place at each regularly scheduled Board meeting. |
● |
Annual anonymous evaluations of each director, including the Chairman of the
Board and Chief Executive Officer, led by the Lead Independent Director and conducted by all directors. |
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Key functions and responsibilities of the Lead Independent
Director include:
● Preside
at regularly conducted executive sessions of the independent directors and provide feedback to the Chairman and CEO and other senior
management, as appropriate,
● Preside
at all meetings of the Board at which the Chairman is not present,
● Facilitate
communication with the Board and serve as liaison between the Chairman and the independent directors,
● Communicate
regularly with the Chairman regarding appropriate agenda topics and other Board related matters,
● Review
and approve matters, such as agenda items, meeting schedules to assure sufficient time for discussion of all agenda items, and, where
appropriate, information provided to the Board,
● Confer
with the Nominations and Governance Committee and the CEO regarding management succession planning,
● Lead
the annual performance reviews of individual directors, the full Board, and each of its Committees,
● Oversee
the process for identifying and evaluating director candidates,
● Work
with management on corporate governance issues and developments,
● Has
the authority to call meetings of the independent directors, and
● Engage directly with
major shareholders as appropriate.
|
The Board reviews its leadership structure at least annually and has determined
that this structure is in the best interests of Abbott and its shareholders at this time. This structure balances strong, independent
oversight with extensive business knowledge and experience. The Board also retains the flexibility necessary to adopt the leadership
structure in the best interests of Abbott and its shareholders based on the specific circumstances and needs of the business over time.
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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 |
|
|
THE
12 DIRECTOR NOMINEES COMPRISE A WELL-BALANCED, DIVERSE BOARD. |
RELEVANT
EXPERTISE TO PROVIDE OVERSIGHT AND GUIDANCE FOR ABBOTT’S DIVERSIFIED OPERATING MODEL |
|
TENURE
|
Healthcare
and Medical Device Industry |
|
Finance |
|
Risk
Management, including Data/Cybersecurity |
|
Global
Strategy and Operations |
|
Regulatory/Compliance |
|
BOARD
DIVERSITY |
Consumer
Products |
|
|
Senior
Leadership with Multinational Corporations and Diverse Business Models |
|
Global
Supply Chain Operations |
|
Government
and Military Leadership |
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Table of Contents
The Nominations and Governance Committee assists the Board of Directors in identifying
individuals qualified to become Board members and recommends to the Board the nominees for election as directors at the next annual meeting
of shareholders. The process used by the Nominations and Governance Committee to identify a nominee to serve as a member of the Board
of Directors depends on the qualities being sought. From time to time, Abbott engages an executive search firm to assist the Committee
in identifying individuals qualified to be Board members.
Abbott’s outline of directorship qualifications, which is part of Abbott’s
corporate governance guidelines, is available in the corporate governance section of Abbott’s investor relations website (www.abbottinvestor.com).
These qualifications describe specific characteristics that the Nominations and Governance Committee and the Board take into consideration
when selecting nominees for the Board, such as:
|
● |
strong management experience and senior 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 10 through 15.
A description of the procedure for the recommendation and nomination of directors,
including by proxy access, is on page 88.
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Table of Contents
Abbott is committed to strong governance that is aligned with shareholder interests.
Our Board spends significant time with Abbott’s senior management to understand global dynamics, challenges, and opportunities
for Abbott. During these interactions, directors provide insights and ask probing questions which guide management decision making. This
collaborative approach to risk oversight and emphasis on long-term sustainability begins with our leaders and is engrained in Abbott’s
culture.
OVERSIGHT OF RISK
The Board has risk oversight responsibility for Abbott, which it administers directly
and with assistance from its Committees. Throughout the year, the Board and its Committees engage with management to discuss a wide range
of enterprise risks, such as risks related to Abbott’s businesses, enterprise and product cybersecurity, litigation, and human
capital management, and they confirm the alignment of risk assessment and mitigation with business strategy. The Audit Committee conducts
an annual review of the enterprise risk management process, including the program structure, risk assessment, and risk mitigation. The
Board and its Committees also consult with advisors, including legal counsel, internal and external auditors, and consultants. Such engagement
and consultations are done by the full Board, independent directors in executive sessions, or fully independent Committees, as appropriate.
Specific risk areas of focus for the Board, its Committees, and management include:
|
BOARD OF DIRECTORS
● Business strategy and operations
● Management development and succession planning
● Human capital and diversity, equity and inclusion
● Litigation
|
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|
AUDIT COMMITTEE
● Accounting, internal controls, and financial reporting
● Enterprise cybersecurity
● Information security and data protection
● Major financial and business risk exposures
|
|
|
COMPENSATION
COMMITTEE
● Executive officer compensation, including incentive compensation
plans
● Equity-based plans
● Director compensation
|
|
|
NOMINATIONS
AND GOVERNANCE
COMMITTEE
● Board composition, refreshment, and succession planning
● Board governance structure
● Governance guidelines and practices
|
|
|
PUBLIC POLICY
COMMITTEE
● Sustainability, environment, and social responsibility
● Global ethics and compliance programs
● Product quality and cybersecurity, and data privacy
|
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MANAGEMENT
● Design and execution of Abbott’s enterprise risk management
process
● Identification, evaluation, and prioritization of risks
● Development and implementation of mitigating actions
● Regular communication with the Board and its Committees on how risks
are being managed
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OVERSIGHT OF STRATEGY
One of the Board’s key responsibilities is overseeing and monitoring business
strategy. The Board conducts an annual in-depth review of the long-term strategy and areas of focus for Abbott and its businesses. The
Board also regularly engages with management throughout the year to review and discuss the strategic planning for Abbott’s businesses,
including operating and financial plans, strategic business priorities and initiatives, and key risks and opportunities. These reviews
include discussions of matters such as global talent management and succession planning, diversity, equity and inclusion, global market
dynamics and changes in regulatory and competitive landscapes, supply chain initiatives and sustainability programs, and significant
corporate actions such as acquisitions and capital expenditures.
The Board monitors management’s strategy execution, receiving regular updates
to confirm that activities align with such strategies and that progress is made toward strategic objectives. Most years, the Board also
visits Abbott facilities and locations around the world to observe business dynamics and strategy execution by the businesses.
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).
|
|
COMMITTEE MEMBERSHIPS |
Current
Members |
|
Audit
Committee* |
|
Compensation
Committee† |
|
Nominations
and Governance
Committee |
|
Public
Policy
Committee |
|
Executive
Committee |
|
Robert J. Alpern,
M.D. |
|
|
|
|
|
|
|
|
|
|
|
Roxanne S. Austin |
|
|
|
|
|
|
|
|
|
|
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Sally E. Blount,
Ph.D. |
|
|
|
|
|
|
|
|
|
|
|
Robert B. Ford |
|
|
|
|
|
|
|
|
|
|
|
Paola Gonzalez |
|
|
|
|
|
|
|
|
|
|
|
Michelle A.
Kumbier |
|
|
|
|
|
|
|
|
|
|
|
Darren W. McDew |
|
|
|
|
|
|
|
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|
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Nancy McKinstry |
|
|
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|
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William A. Osborn |
|
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Michael F. Roman |
|
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Daniel J. Starks |
|
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John G. Stratton |
|
|
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|
|
|
|
|
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Glenn
F. Tilton |
|
|
|
|
|
|
|
|
|
|
|
Total
Meetings Held in 2021 |
|
7 |
|
4 |
|
5 |
|
4 |
|
0 |
|
|
Chair
|
|
Member |
* |
Each of the committee members
is financially literate, as is required of audit committee members by the New York Stock Exchange. The Board of Directors has determined
that Nancy McKinstry is an “audit committee financial expert.” |
† |
Ms. Austin is not standing for re-election at the Annual Meeting. The Board of
Directors will appoint a new Compensation Committee chair upon conclusion of her tenure at the Annual Meeting. |
|
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|
21 |
Table of Contents
AUDIT COMMITTEE
The Audit Committee assists the Board of Directors in fulfilling its oversight responsibility
with respect to:
|
● |
Abbott’s accounting and financial reporting practices and the audit process,
|
|
● |
The quality and integrity of Abbott’s financial statements, |
|
● |
The independent auditors’ qualifications, independence, and performance,
|
|
● |
The performance of Abbott’s internal audit function and internal auditors,
|
|
● |
Legal and regulatory compliance relating to financial matters, including accounting,
auditing, financial reporting, and securities law issues, and |
|
● |
Enterprise risk management, including major financial and cybersecurity risk
exposures. |
In performing these functions, the Audit Committee 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. The Audit Committee also receives regular reports from management
on Abbott’s information security and enterprise cybersecurity risk programs.
A copy of the report of the Audit Committee is on page 70.
COMPENSATION COMMITTEE
The Compensation Committee assists the Board of Directors in carrying out the Board’s
responsibilities relating to the compensation of Abbott’s executive officers and directors. Its primary responsibilities include:
|
● |
Review, approve, and administer the incentive compensation plans in which any
executive officer participates and all of Abbott’s equity-based plans. The Compensation Committee may delegate the responsibility
to administer and make grants under these plans to management, except to the extent that such delegation would be inconsistent with
applicable law or regulation or with the listing rules of the New York Stock Exchange. |
|
● |
Review director compensation annually and recommend to the full Board both the
amount and the allocation between equity-based awards and cash. In recommending director compensation, the Compensation Committee
takes comparable director fees into account and reviews any arrangement that could be viewed as indirect director compensation. |
|
● |
Engage compensation consultants to provide counsel and advice on executive and
non-employee director compensation matters. The consultant and its principal report directly to the Chair of the Committee. The principal
meets regularly and as needed with the Committee in executive sessions, has direct access to the Chair during and between meetings,
and performs no other services for Abbott or its senior executives. |
|
|
The Committee determines what variables it will instruct the consultant to consider,
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 2021. 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 report of the Compensation Committee is on page 51.
22 |
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Table of Contents
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:
|
● |
Assist the Board in identifying individuals qualified to
become Board members, and recommend to the Board the nominees for election as directors at the next annual meeting of shareholders,
|
|
● |
Recommend to the Board the people to be elected as executive
officers of Abbott, |
|
● |
Develop and recommend to the Board the corporate governance
guidelines applicable to Abbott, and |
|
● |
Serve in an advisory capacity to the Board and the Chairman of the Board on matters
of organization, management succession plans, major changes in the organizational structure of Abbott, and the conduct of Board activities. |
The 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
19 in the section captioned, “Director Selection.”
PUBLIC POLICY COMMITTEE
The Public Policy Committee assists the Board of Directors in fulfilling its oversight
responsibility with respect to:
|
● |
Legal, regulatory, and healthcare compliance matters, including evaluating Abbott’s
compliance policies and practices and reviewing Abbott’s compliance program, |
|
● |
Product quality and cybersecurity matters, |
|
● |
Governmental affairs and political participation, including advocacy priorities,
political contributions, lobbying activities, and trade association memberships, |
|
● |
Sustainability and social responsibility policies and practices, and |
|
● |
Social, political, economic, and environmental trends and public policy issues
that affect or could affect Abbott’s business activities, performance, and public image. |
EXECUTIVE COMMITTEE
The Executive Committee may exercise all the authority of the Board in the management
of Abbott, except for matters expressly reserved by law for Board action.
|
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Table of Contents
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 2021, we met or initiated contact
with shareholders representing over 60% of our outstanding shares, including 100% of our top 20 investors, in an open dialogue
to discuss our compensation program and other topics. Investor sentiment and specific feedback was shared with executive management
and the Board of Directors, as appropriate.
Topics discussed with our investors included:
|
● |
The pandemic’s impact on our business, our COVID-19 testing response, and the strength and resilience
of our diversified business model. |
|
● |
Business and sustainability strategy, including Abbott’s new 2030 Sustainability Plan and its focus on creating
new life-changing technologies and products, expanding access and affordability of new product innovations and advancing health
equity. |
|
● |
Human capital management and Abbott’s commitment to diversity, equity, and inclusion,including Abbott’s new
Diversity, Equity and Inclusion Report which provides goals, our progress against them, and disclosure of EEO-1 data. |
|
● |
Board composition and refreshment, including the addition of four new independent directors since 2018, three of whom
are women and/or minorities. |
|
● |
Executive compensation program, including Abbott’s continued enhanced compensation disclosure. |
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:
PEER,
BOARD, AND COMMITTEE EVALUATIONS
Written
evaluations solicit feedback on the performance of:
Each individual director, including: |
|
The full Board and Board Committees, including: |
● Independent thinking and action
● Contributions to discussions and decisions |
|
● Ethical standards and values
● Professional competence in matters of oversight and governance |
|
● Structure and composition
● Effectiveness of oversight and other responsibilities |
|
● Encouragement of open communication and differing viewpoints |
|
|
|
|
|
|
|
|
|
COLLECTION AND REVIEW
OF RESULTS |
INCORPORATION OF FEEDBACK |
|
|
To ensure candid feedback, directors
submit their evaluation responses to an independent third party, who anonymizes all responses and compiles them into reports
for the Board and Committees.
The Nominations and Governance Committee reviews the peer and full Board reports, and each Committee
reviews its respective report. All evaluation responses are shared with the full Board. |
Feedback requiring additional consideration
is addressed at subsequent Board and Committee meetings, and opportunities for additional enhancements are identified, considered
and implemented as appropriate.
The Chair of the Nominations and Governance Committee discusses peer evaluation results with
individual directors as needed. |
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24 |
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Table of Contents
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).
|
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Table of Contents
Mr. Ford is not compensated for serving on
the Board or Board committees. Mr. White was not compensated for serving on the Board or Board committees during his tenure as
Executive Chairman of the Board. 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’ 2021 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
($) |
R. J. Alpern |
|
$ 126,000 |
|
$184,944 |
|
$0 |
|
$53,408 |
|
$25,000 |
|
$389,352 |
R. S. Austin |
|
146,000 |
|
184,944 |
|
0 |
|
0 |
|
25,000 |
|
355,944 |
S. E. Blount |
|
126,000 |
|
184,944 |
|
0 |
|
7,590 |
|
25,000 |
|
343,534 |
P. Gonzalez |
|
43,500 |
|
0 |
|
0 |
|
0 |
|
0 |
|
43,500 |
M. A. Kumbier |
|
132,000 |
|
184,944 |
|
0 |
|
0 |
|
0 |
|
316,944 |
E. M. Liddy |
|
50,333 |
|
0 |
|
0 |
|
0 |
|
0 |
|
50,333 |
D. W. McDew |
|
126,000 |
|
184,944 |
|
0 |
|
0 |
|
0 |
|
310,944 |
N. McKinstry |
|
144,667 |
|
184,944 |
|
0 |
|
0 |
|
5,000 |
|
334,611 |
P. N. Novakovic |
|
47,000 |
|
0 |
|
0 |
|
0 |
|
0 |
|
47,000 |
W. A. Osborn |
|
156,000 |
|
184,944 |
|
0 |
|
0 |
|
0 |
|
340,944 |
M. F. Roman |
|
88,000 |
|
184,944 |
|
0 |
|
0 |
|
0 |
|
272,944 |
D. J. Starks |
|
126,000 |
|
184,944 |
|
0 |
|
0 |
|
0 |
|
310,944 |
J. G. Stratton |
|
132,000 |
|
184,944 |
|
0 |
|
0 |
|
0 |
|
316,944 |
G. F. Tilton |
|
142,000 |
|
184,944 |
|
0 |
|
0 |
|
25,000 |
|
351,944 |
(1) |
Under the Abbott Laboratories Non-Employee Directors’ Fee Plan, non-employee directors earn $10,500
for each month of service as a director. Audit Committee members, other than the Audit Committee chair, receive $500 for each
month of service on the Audit Committee. Board Committee chairs receive monthly fees of: $2,083.33 for the Audit Committee
chair, $1,666.66 for the Compensation Committee chair, $1,250.00 for the Public Policy Committee chair, and $1,250.00 for
the chair of any other Board committee. In addition, the lead independent director earns $2,500 for each month of such service
and does not receive a fee for service as Nominations and Governance Committee chair. Fees earned under the Abbott Laboratories
Non-Employee Directors’ Fee Plan are paid in cash to the director, paid in the form of vested non-qualified stock options
(based on an independent appraisal of their fair value), deferred (as a non-funded obligation of Abbott), or paid currently
into an individual grantor trust established by the director. The distribution of deferred fees and amounts held in a director’s
grantor trust generally commences when the director reaches age 65, or upon retirement from the Board of Directors, if later.
The director may elect to have deferred fees and fees deposited in trust credited to either a guaranteed interest account
or to a stock equivalent account that earns the same return as if the fees were invested in Abbott shares. If necessary, Abbott
contributes funds to a director’s trust so that as of year-end the stock equivalent account balance (net of taxes) is
not less than seventy-five percent of the market value of the related common shares at year-end. |
|
|
26 |
|
Table of Contents
(2) |
The amounts reported in this column represent the aggregate grant date fair value of the awards calculated in accordance with Financial Accounting Standards Board ASC Topic 718. Abbott determines the grant date fair value of stock unit awards by multiplying the number of restricted stock units granted by the average of the high and low market prices of an Abbott common share on the date of grant. In addition to the fees described in footnote 1, each non-employee director elected to the Board of Directors at the annual shareholders meeting receives vested restricted stock units having a value of $185,000 (rounded down) under the Abbott Laboratories 2017 Incentive Stock Program). In 2021, this was 1,499 units. The non-employee directors receive cash payments equal to the dividends paid on the shares covered by the units at the same rate as other shareholders. Upon termination, retirement from the Board, death, or a change in control of Abbott, a non-employee director will receive one common 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 Abbott shares having a fair market value equal to five times the annual director fees earned or paid in cash. All directors with five years tenure or more meet or exceed the guidelines. The following Abbott restricted stock units were outstanding as of December 31, 2021: R. J. Alpern, 33,879; R. S. Austin, 41,542; S. E. Blount, 27,139; M. A. Kumbier, 5,714; D. W. McDew, 3,473; N. McKinstry, 27,139; W. A. Osborn, 35,796; M. F. Roman, 1,499; D. J. Starks, 12,096; J. G. Stratton, 8,659; and G. F. Tilton, 37,526. |
(3) |
The following options were outstanding as of December 31, 2021: R. S. Austin, 64,718; E. M. Liddy, 58,861; N. McKinstry, 63,391; P. N. Novakovic, 81,381; and W. A. Osborn, 29,567. |
(4) |
The totals in this column include reportable interest credited under Abbott Laboratories Non-Employee Directors’ Fee Plan during the year. |
(5) |
Charitable contributions made by Abbott’s non-employee directors are eligible for a matching contribution (up to $25,000 annually). The amounts reported in this column represent charitable matching grant contributions. |
|
|
|
27 |
Table of Contents
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS |
INTRODUCTION
This Compensation Discussion and Analysis (CD&A)
describes Abbott’s executive compensation program in 2021. 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 six named
officers: Robert B. Ford, Chairman of the Board and Chief Executive Officer effective December 10, 2021 (previously President and
Chief Executive Officer); Robert E. Funck, Jr., Executive Vice President, Finance and Chief Financial Officer; Hubert L. Allen,
Executive Vice President, General Counsel and Secretary; Daniel G. Salvadori, Executive Vice President and Group President, Established
Pharmaceuticals and Nutritional Products effective December 1, 2021 (previously Executive Vice President, Nutritional Products);
Andrea F. Wainer, Executive Vice President, Rapid and Molecular Diagnostics; and Miles D. White, Former Executive Chairman of the
Board.
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 2021 shareholder outreach described on page 29.
VALUE CREATION FOR SHAREHOLDERS
Abbott’s sustained strong performance
has resulted in total shareholder return (TSR) exceeding the peer median and major market indices on a one, three-, and five-year
basis.
Abbott’s
three-year TSR of 104% is more than twice that of the peer group median, and Abbott’s five-year TSR of 300% is more than
four times that of the peer median. These consistent top-tier returns are driven by strong
execution, an effective governance structure, and 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 2021, despite the continued global impact and uncertainty of COVID 19, and exceeded the financial
targets that were set at the beginning of the year. Abbott’s one-year TSR was 31%,
more than two and a half times the peer median TSR, a testament to the strength of our diversified business model and ability to
innovate and deliver in this challenging environment.
|
|
28 |
|
Table of Contents
CHANGES BASED ON SHAREHOLDER FEEDBACK AND MARKET
PRACTICES |
In 2021, we
met or initiated contact with shareholders representing over 60% of our outstanding shares, including 100% of our top 20 investors
in an open dialogue to discuss our compensation program and various topics, including:
|
● |
The pandemic’s impact on our business, our COVID-19 testing response, and the strength and resilience of our diversified
business model. |
|
● |
Business and sustainability strategy, including Abbott’s new 2030 Sustainability Plan and its
focus on creating new life-changing technologies and products, expanding access and affordability of new product innovations and advancing
health equity. |
|
● |
Human capital management and Abbott’s commitment to diversity, equity, and inclusion, including Abbott’s
new Diversity, Equity and Inclusion Report which provides goals, our progress against them, and disclosure of EEO-1 data. |
|
● |
Board composition and refreshment, including the addition of four new independent directors since 2018, three
of whom are women and/or minorities. |
|
● |
Executive compensation program, including Abbott’s continued enhanced compensation disclosure. |
Their feedback was overwhelmingly positive,
which was reflected in the 92% support for our Say-on-Pay 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.
CHANGES BASED ON SHAREHOLDER FEEDBACK |
● Increased disclosure related to Abbott’s 2030 Sustainability Plan goals and
linkage to executive pay
● Revised annual cash incentive plan goals and weighting
● Significantly increased disclosure related to payouts for both annual and long term
incentives
● Changed performance-based restricted stock awards to vest only over a 3-year term
with no more than one-third of the award vesting in any one year |
|
● Introduced new long-term incentive measures to reflect sustained performance over
a three-year period
● Increased director share ownership guidelines
● Increased the target for vesting of performance restricted shares
● Updated our peer group to reflect increased size and complexity of business
● Implemented a strengthened recoupment policy |
|
|
|
29 |
Table of Contents
ABBOTT’S PEER GROUP FOR PAY AND
COMPANY PERFORMANCE BENCHMARKING |
To determine the competitiveness of our compensation
and benefit programs, the Committee, in consultation with its independent consultant, annually compares the level of compensation,
pay practices, and our relative performance to those of peer companies. Our Compensation Committee reviewed our peer group in 2021
and determined that the existing 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.
The 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)/
Characteristics Represented |
3M Company |
|
$35.4 |
|
$102.4 |
|
✓ |
|
✓ |
|
✓ |
|
Diagnostics |
Becton Dickinson |
|
$20.2 |
|
$ 71.7 |
|
✓ |
|
✓ |
|
✓ |
|
Diagnostics, Medical Devices |
Boston Scientific |
|
$11.5 |
|
$ 60.5 |
|
✓ |
|
|
|
✓ |
|
Medical Devices |
Bristol-Myers Squibb |
|
$45.5 |
|
$138.4 |
|
✓ |
|
|
|
✓ |
|
Established Pharmaceuticals |
Cisco |
|
$50.8 |
|
$267.3 |
|
✓ |
|
✓ |
|
✓ |
|
Diagnostics, Medical Devices |
The Coca-Cola Company |
|
$37.8 |
|
$255.8 |
|
✓ |
|
✓ |
|
✓ |
|
Consumer |
Danaher Corporation |
|
$29.5 |
|
$235.1 |
|
✓ |
|
✓ |
|
✓ |
|
Diagnostics |
Honeywell International |
|
$34.6 |
|
$143.5 |
|
✓ |
|
✓ |
|
✓ |
|
Diagnostics, Medical Devices |
Johnson & Johnson |
|
$93.8 |
|
$450.4 |
|
✓ |
|
✓ |
|
✓ |
|
Consumer, Diagnostics, Established Pharmaceuticals, Medical Devices |
Medtronic |
|
$31.8 |
|
$139.1 |
|
✓ |
|
✓ |
|
✓ |
|
Medical Devices |
Merck |
|
$49.2 |
|
$193.6 |
|
✓ |
|
✓ |
|
✓ |
|
Established Pharmaceuticals |
Mondelez International |
|
$28.7 |
|
$ 92.5 |
|
✓ |
|
✓ |
|
✓ |
|
Consumer |
Nike |
|
$46.3 |
|
$263.8 |
|
✓ |
|
✓ |
|
✓ |
|
Consumer |
Procter & Gamble |
|
$78.3 |
|
$395.9 |
|
✓ |
|
✓ |
|
✓ |
|
Consumer |
Reckitt Benckiser(2) |
|
$24.6 |
|
$ 60.7 |
|
✓ |
|
|
|
✓ |
|
Nutrition |
Stryker Corporation |
|
$17.1 |
|
$100.9 |
|
|
|
|
|
✓ |
|
Medical Devices |
Thermo Fisher Scientific |
|
$39.1 |
|
$262.9 |
|
✓ |
|
✓ |
|
✓ |
|
Diagnostics |
Peer Group Median |
|
$35.4 |
|
$143.5 |
|
|
|
|
|
|
|
|
Abbott |
|
$43.1 |
|
$248.9 |
|
✓ |
|
✓ |
|
✓ |
|
|
Abbott Percentile Rank |
|
65th |
|
65th |
|
|
|
|
|
|
|
|
(1) |
Data source: Nasdaq IR Insight database reflects most recently disclosed (as of January 31, 2022)
trailing 12-month sales/revenue. The market cap reflects values on December 31, 2021. |
(2) |
Revenue/Market Cap converted to USD for companies outside the U.S. |
|
|
30 |
|
Table of Contents
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 90% of our pay is performance-based, directly
tying a significant portion of executive compensation to Company performance and shareholder returns.
Our compensation program is market-based
(to ensure our ability to attract and retain talented executives) and produces compensation outcomes that are performance-based
(to incent the achievement of profitable growth that increases shareholder value).
COMPENSATION PROGRAM
IS MARKET-BASED
All components of total direct compensation
are market-based. Each year, the Compensation Committee reviews market data with the independent compensation consultant to ensure
our programs are aligned and our officers are positioned appropriately relative to the market.
Base Salary
Base salary targets are initially set using
the median of the peer group as a benchmark. Base salaries then vary depending on the officer’s experience, expertise, and
performance. The average base salary of our executive officers is approximately at the market median.
Annual Incentive Plan
Annual incentive targets are initially set
using the median of the peer group as a benchmark. The targets may vary based on other factors, including internal pay comparisons.
Further linkage to the market is achieved by setting targets that require our officers to exceed the anticipated growth of the
market in which they compete in order to achieve a target payout of their annual incentives.
Long-Term Incentive Plan (LTI)
To set annual LTI award guidelines, the Committee
first reviews LTI grants made by peer companies to identify the competitive market range. Each year the guidelines are set at
the appropriate level within the competitive market range based on Abbott’s relative performance, as described on pages
32 and 33. 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.
|
|
|
31 |
Table of Contents
Annual Incentive Plan
Payouts are determined based upon performance
relative to annual goals and are capped as a percentage of consolidated net earnings (CEO cap is 0.15%; other NEO cap is 0.075%).
The following formula summarizes the annual incentive payout process for officers.
For example:
BASE
SALARY |
|
BONUS
TARGET % |
|
TOTAL
GOAL SCORE |
|
AWARD
PAYOUT |
$525,000 |
x |
90% |
x |
95% |
= |
$448,875 |
For 2021 performance, annual
incentive payouts for Abbott executive officers averaged 101% of target. For individual calculations for each named officer, see
pages 38 to 48. The annual incentive plan is formula driven based on financial, strategic, talent and succession, and diversity
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.
Long-Term Incentive Plan
Abbott’s process to determine long-term
incentive awards is based on both company and individual performance. Guidelines are set based on relative performance of the
Company to peers. Those guidelines are adjusted, up or down, based on individual officer performance over the prior three years.
Performance restricted shares vest only if performance achieves expectations over the following three years, and stock options
provide value only through share price appreciation. Conversely, most other companies reflect performance only at the Company
level through future relative TSR. Abbott’s process is much more rigorous, reflecting both company and individual performance
over a longer period of time.
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.
|
|
32 |
|
Table of Contents
For example, guidelines for grants made in
February 2021 were set at the 75th percentile of our peer group, reflecting 82nd percentile relative 3-, 5-, and 1-year TSR performance
for the period ending in 2020, as summarized in the graphic below.
The
information below represents the February 2021 annual grant.
STEP
1: Link to MarketCompare
Abbott’s 3-year TSR performance against our peer group, consider 5-, and 1-year TSR to ensure long-term performance is sustained
STEP
2: Link to Company PerformancePosition
LTI guideline value relative to peer group
STEP
3: Link to Individual PerformanceAdjust
for individual performance
5-year
relative TSR = 82%
3-year relative TSR = 82%
1-year relative TSR = 82%
2021
LTI Guideline = 75th
percentile of Peer Group LTI
LTI
Award guideline adjusted up or down based on individual officer's sustained 3-year contributions to:● Sales
and market growth
● Margin
● Strategic
financial measures
The recommendation for each officer starts
with the Company LTI award guideline (based on relative TSR performance and market data as described above) for the officer’s
position and is adjusted based upon assessment of their sustained contributions over the last three years. Contribution scores
are totaled and used to adjust each officer’s award guideline. Final awards may be increased or decreased based on the long-term
impact each individual officer had on the organization. For example:
SAMPLE
INDIVIDUAL LTI PERFORMANCE ASSESSMENT |
Metric |
|
2018 |
|
2019 |
|
2020 |
|
Overall |
Sales
and Market Growth Contribution |
|
Met
(0) |
|
Did
Not Meet (-1) |
|
Exceeded
(+1) |
|
0 |
Margin
Contribution |
|
Met
(0) |
|
Met
(0) |
|
Exceeded
(+1) |
|
+1 |
Strategic
Financial Contribution |
|
Met
(0) |
|
Met
(0) |
|
Met
(0) |
|
0 |
|
|
|
|
|
|
Total |
|
+1 |
|
|
|
|
|
|
LTI
Adjustment |
|
110% |
LTI
ADJUSTMENT LEGEND |
Total |
|
Result |
+4
or More |
|
125% |
+1
to +3 |
|
110% |
0 |
|
100% |
-1
or -2 |
|
90% |
-3
or Less |
|
75% |
|
|
|
33 |
Table of Contents
Awards granted in 2021, based on individual
officer performance for the three-year period ending in 2020, resulted in awards ranging from the 49th percentile to the 90th
percentile of our peer group. For individual calculations for each named officer, see pages 38 to 48.
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.
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.
In 2021, the Adjusted ROE vesting
target to determine future vesting was increased from 13% to 14%. This increase follows similar increases in prior
years, which have increased this target 40% since 2014. This is consistent with our stated intent to increase our Adjusted
ROE targets over time following the separation of AbbVie, which had a significant impact on our ROE and other return measures,
including Return on Assets (ROA).
Prior to the
separation of Abbott and AbbVie, the AbbVie business accounted for the majority (65%) of Abbott’s adjusted net income. However,
at the separation of AbbVie, Abbott retained the majority (90%) of the equity. While Abbott’s ROE was disproportionally
lower following the AbbVie separation, shareholders that retained both their Abbott and AbbVie shares over the past eight years
since the AbbVie separation would have seen a 322% appreciation in their holdings.
Impact of Abbott/
AbbVie Separation
|
|
34 |
|
Table of Contents
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 |
|
Measures
Abbott’s ability to deliver profitable growth, contributing to strong shareholder returns. |
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.
|
|
|
35 |
Table of Contents
COMPENSATION LINK
TO SUSTAINABILITY
Our leadership 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, our leadership covenant specifically states that senior
leaders are accountable for the achievement of Abbott’s 2030 Sustainability Plan goals.
The sustainability plan is integrated into
our business plans, financial planning processes and existing governance structures. Each senior manager is responsible for taking
actions in their organization that help achieve our targeted priority goals regarding:
Making access
and affordability core to new product innovation
This approach
has helped create some of our most successful products, including FreeStyle Libre®, the world’s most-used
glucose-monitoring system, and our BinaxNOW™ COVID-19 test. In our rapid diagnostics business, we’re bringing testing
closer to the patient, even in the most remote locations. Importantly, many of our tests are used at the point of care and provide
answers while the patient is still present, accelerating treatment decisions and reducing life-threatening delays. Access and
affordability are also core to our Established Pharmaceuticals business strategy, bringing our high-quality, trusted medicines
to emerging markets at affordable prices.
Transforming
care for chronic disease, malnutrition, and infectious diseases
In 2021, we launched the
Abbott Malnutrition Solution Center. This internal, cross-functional innovation hub will help identify, treat and prevent malnutrition
among vulnerable populations. We also launched the Abbott Pandemic Defense Coalition, a first-of-its-kind global scientific and
public health partnership dedicated to the early detection of, and rapid response to, future pandemic threats. The coalition is
designed with a comprehensive approach to containing emerging threats, with partners ranging in expertise from scientific research,
public health and diagnostic testing to attack new viral threats from all angles. This coalition is in full force as our scientists
are currently monitoring new COVID-19 variants. We’re collecting and analyzing samples from around the globe to look for
mutations that may impact the function of the virus to ensure that our tests are able to detect them, aiming to prevent further
spread.
Advancing
health equity through partnership
Abbott and the American
Diabetes Association® launched a first-of-its-kind community initiative to advance access to diabetes care and
technology. The program launched in Columbus, Ohio in partnership with the National Center for Urban Solutions (NCUS). As part
of the program, NCUS will provide up to 150 Black adults living with diabetes in the Columbus community with health
education and access to Abbott’s FreeStyle® Libre flash glucose monitoring technology. By removing existing
barriers to tools and technology, this program aims to demonstrate how continuous glucose monitoring can help improve diabetes
management and quality of life for Black people living with diabetes in the Columbus community.
In addition to these priority goals, senior
leaders will also take actions in key areas, including:
Protecting
a healthy environment
In 2020, we implemented
54 energy efficiency and air emissions projects at 28 sites in nine countries. These resulted in more than 30 million kWh in annual
energy savings, preventing more than 8,900 metric tons of CO2e emissions and delivered more than $1.1 million annual cost savings.
In 2020, we also implemented
16 water efficiency and reduction projects at 12 manufacturing and R&D sites across six countries, four of which are located
in water-stressed areas. These projects resulted in savings of around 14.6 million gallons of water per year and $120,000.
|
|
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Table of Contents
Our Zero Waste to Landfill
program provides our sites with a clear target for diverting waste away from landfills. Thirty-one Abbott manufacturing facilities
and seven nonmanufacturing facilities, located across 18 countries, have now achieved Zero Waste to Landfill status.
We set an aggressive target
to reduce the total weight of packaging for Abbott products by 10% by 2020, when compared with our 2010 baseline. We surpassed
our initial goal and reduced our total weight of packaging by 14.2% since 2010. In doing so, we eliminated approximately 42.1
million pounds of packaging and saved more than $100 million.
Building
the diverse, innovative workforce of tomorrow
In 2021, all of our U.S.
employees received unconscious bias training, and 97% of our people managers globally completed “Leading with Impact”,
a development program focused on inclusive leadership. We published our first ever Diversity, Equity and Inclusion report which
provides goals, our progress against them, and disclosure of EEO-1 data.
Responsibly
connecting data, technology and care
The NeuroSphere™
Virtual Clinic which offers a telehealth service, from a patient’s iPhone to their physician’s iPad, but also
allows for a digital prescription to be delivered, near-instantaneously, from the physician’s iPad to a patient’s
brain, over the internet. This allows doctors to assess patients live, treat them over the internet, and assess the effects of
the treatment, in real-time, without the patient having to leave home.
Creating
a resilient, diverse and responsible supply chain
The COVID-19 pandemic tested
the resilience of our supply chain to the extreme. Working across our business functions, we rose to the challenge by building
an inventory of raw materials and products to support continuity of supply, monitoring performance more tightly to identify distressed
suppliers early enough to implement contingency plans, mapping supplier manufacturing sites in known COVID-19 “hot spots”
or in locations affected by government lockdowns, and offering COVID-19 testing for employees at a few strategic suppliers to
ensure continued operations and supply.
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 2020, whereas the annual incentive plan payouts are based upon
performance during 2021.
|
|
|
37 |
Table of Contents
NAMED
EXECUTIVE OFFICER COMPENSATION DECISIONS
|
|
ROBERT
B. FORD
Chairman of the Board
and Chief Executive Officer |
|
|
|
Mr. Ford previously served as
President and Chief Executive Officer until his appointment to the role of Chairman of the Board and Chief Executive Officer on
December 10, 2021.
Base Salary
Mr. Ford’s annual base
salary was increased to $1,500,000 in March 2021 based on competitive market data among Abbott’s peers.
Annual Incentive Plan
Mr. Ford’s target bonus
of 175% was not changed in 2021. Based on performance in 2021, Mr. Ford received a bonus in February 2022 which was calculated
as follows:
GOAL |
2020
RESULTS
ACHIEVED |
GOAL
WEIGHT |
2021 GOAL MEASUREMENT |
2021
RESULTS
ACHIEVED |
GOAL
SCORE |
THRESHOLD |
TARGET |
MAXIMUM |
FINANCIAL METRICS(1) |
Adjusted Sales(2) |
$34.92B |
25% |
$42.99B |
$43.19B |
$44.20B |
$43.61B |
30.2% |
Adjusted Diluted EPS |
$3.65 |
25% |
$4.93 |
$5.00 |
$5.25 |
$5.21 |
35.5% |
Adjusted ROA |
11.8% |
10% |
14.9% |
15.0% |
15.5% |
15.9% |
15.0% |
Free Cash Flow |
$5.7B |
10% |
$6.9B |
$7.2B |
$7.6B |
$8.6B |
15.0% |
STRATEGIC METRICS(3) |
COVID-19 Test Sales |
|
10% |
92.9%
of target |
Target |
114.3%
of Target |
108.6%
of Target |
13.1% |
Diabetes Care Sales Growth |
|
10% |
89.1%
of Target |
Target |
108.7%
of Target |
103.3%
of Target |
11.9% |
Core Diagnostics Sales Growth |
|
10% |
89.7%
of Target |
Target |
109.2%
of Target |
Below
Threshold |
0.0% |
|
|
|
|
|
|
Total |
120.7% |
(1) |
Adjusted Sales exclude the impact of foreign exchange on actual sales relative to the goal target.
Adjusted Diluted EPS is diluted earnings per common share from continuing operations excluding specified items, such as intangible
amortization expense and various other costs including expenses related to restructuring actions or business acquisitions.
Adjusted Return on Assets (ROA) reflects earnings from continuing operations, excluding interest expense and specified items.
Adjusted ROA also reflects total assets less current liabilities excluding short-term borrowings. Free Cash Flow equals Operating
Cash Flow less acquisitions of property and equipment. |
(2) |
Set based on expected market growth of the businesses and markets in which we compete. To achieve target payout, must
increase market share. |
(3) |
Target not disclosed for competitive reasons. Diabetes Care and Core Diagnostics Sales Growth exclude the impact of foreign
exchange. |
BASE
SALARY |
|
BONUS
TARGET % |
|
TOTAL
GOAL SCORE |
|
AWARD
PAYOUT |
$1,500,000 |
× |
175% |
× |
120.7% |
= |
$3,168,400 |
|
|
38 |
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Table of Contents
Long-Term Incentives
Based on the Committee’s
review of Abbott and individual performance through 2020, Mr. Ford received an LTI award in February 2021 with a
value of $17,380,000, which was 110% of the market value equity award 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 |
$15,800,000 |
× |
110% |
× |
50% Stock Options(1) |
= |
$8,690,000 |
50% Performance Restricted Shares(2) |
$8,690,000 |
|
|
|
|
|
Total |
|
$17,380,000 |
INDIVIDUAL
LTI PERFORMANCE ASSESSMENT |
METRIC |
2018 |
2019 |
2020 |
OVERALL |
Sales and Market Growth Contribution |
Exceeded (+1) |
Exceeded (+1) |
Exceeded (+1) |
+3 |
Margin Contribution |
Exceeded (+1) |
Exceeded (+1) |
Exceeded (+1) |
+3 |
Strategic Financial Contribution |
Met (0) |
Did Not Meet (-1) |
Exceeded (+1) |
0 |
|
Total |
+6 |
Preliminary Adjustment |
125% |
Impact(3) |
- |
LTI Adjustment |
110% |
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 |
(1) |
Stock options realize value only through share price appreciation. |
(2) |
Performance restricted shares vest only if the 14% Adjusted Return on Equity (ROE) performance target is achieved. |
(3) |
Individual LTI performance assessment was based upon Mr. Ford’s roles as Chief Operating Officer through March 31,
2020 and as President and Chief Executive Officer thereafter. |
|
39 |
Table of Contents
|
|
ROBERT E. FUNCK, JR
Executive Vice President, Finance and Chief Financial Officer |
|
|
|
Base Salary
Mr. Funck’s annual base
salary of $825,000 did not change in 2021.
Annual Incentive Plan
Mr. Funck’s target bonus
of 115% was not changed in 2021. Based on performance in 2021, Mr. Funck received a bonus in February 2022 which was calculated
as follows:
GOAL |
2020
RESULTS
ACHIEVED |
GOAL
WEIGHT |
2021 GOAL MEASUREMENT |
2021
RESULTS
ACHIEVED |
GOAL
SCORE |
THRESHOLD |
TARGET |
MAXIMUM |
FINANCIAL METRICS(1) |
Adjusted Sales(2) |
$34.92B |
10% |
$42.99B |
$43.19B |
$44.20B |
$43.61B |
12.1% |
Adjusted Diluted EPS |
$3.65 |
20% |
$4.93 |
$5.00 |
$5.25 |
$5.21 |
28.4% |
Free Cash Flow |
$5.7B |
10% |
$6.9B |
$7.2B |
$7.6B |
$8.6B |
15.0% |
Achieve
Key Treasury and Tax Metrics(3) |
Achieved |
15% |
Target |
Target |
Target |
Achieved |
15.0% |
STRATEGIC METRICS(3) |
Goal (10% weight): Execute milestones related to data asset management Result: Achieved |
10.0% |
Goal (10% weight): Implement a global guided buying platform Result: Partially Achieved |
5.0% |
Goal (10% weight): Implement key financial systems implementations within select countries Result: Achieved |
10.0% |
HUMAN CAPITAL METRICS |
Goal (15% weight): Meet talent, succession planning, and diversity targets. Result: Achieved |
|
15.0% |
|
|
|
|
|
|
Total |
110.5% |
(1) |
Adjusted Sales exclude the impact of foreign exchange on actual sales relative to the goal target.
Adjusted Diluted EPS is diluted earnings per common share from continuing operations excluding specified items. Free Cash
Flow equals Operating Cash Flow less acquisitions of property and equipment. |
(2) |
Set based on expected market growth of the businesses and markets in which we compete. To achieve target payout, must
increase market share |
(3) |
Target not disclosed for competitive reasons. |
BASE
SALARY |
|
BONUS
TARGET % |
|
TOTAL
GOAL SCORE |
|
AWARD
PAYOUT |
$825,000 |
× |
115% |
× |
110.5% |
= |
$1,048,400 |
|
|
40 |
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Table of Contents
Long-Term Incentives
Based on the Committee’s
review of Abbott and individual performance through 2020, Mr. Funck received an LTI award in February 2021 with
a value of $6,000,000, which was equal to 113.2% of the market value equity award for a CFO in Abbott’s peer group. Additional
calculation details are as follows:
LTI
AWARD
GUIDELINE |
|
LTI
ADJUSTMENT |
|
AWARD ALLOCATION |
|
AWARD
VALUE |
$5,300,000 |
× |
113.2% |
× |
50% Stock Options(1) |
= |
$3,000,000 |
50% Performance Restricted Shares(2) |
$3,000,000 |
|
|
|
|
|
Total |
|
$6,000,000 |
INDIVIDUAL
LTI PERFORMANCE ASSESSMENT |
METRIC |
2018 |
2019 |
2020 |
OVERALL |
Sales and Market Growth Contribution |
Exceeded (+1) |
Exceeded (+1) |
Exceeded (+1) |
+3 |
Margin Contribution |
Exceeded (+1) |
Exceeded (+1) |
Exceeded (+1) |
+3 |
Strategic Financial Contribution |
Met (0) |
Met (0) |
Exceeded (+1) |
+1 |
|
Total |
+7 |
Preliminary Adjustment |
125% |
Impact(3) |
- |
LTI Adjustment |
113.2% |
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 |
(1) |
Stock options realize value only through share price appreciation. |
(2) |
Performance restricted shares vest only if the 14% Adjusted Return on Equity (ROE) performance target is achieved. |
(3) |
Individual LTI performance assessment was based upon Mr. Funck’s roles as Senior Vice President, Finance and Controller
through February 29, 2020 and as Executive Vice President, Finance and Chief Financial Officer thereafter. |
|
|
|
41 |
Table of Contents
|
|
HUBERT L. ALLEN
Executive Vice President,
General Counsel and Secretary |
|
|
|
Base Salary
Mr. Allen’s annual base
salary of $760,000 did not change in 2021.
Annual Incentive Plan
Mr. Allen’s target bonus
of 105% was not changed in 2021. Based on performance in 2021, Mr. Allen received a bonus in February 2022 which was calculated
as follows:
GOAL |
2020
RESULTS
ACHIEVED |
GOAL
WEIGHT |
2021 GOAL MEASUREMENT |
2021
RESULTS
ACHIEVED |
GOAL
SCORE |
THRESHOLD |
TARGET |
MAXIMUM |
FINANCIAL METRICS(1) |
Adjusted Sales(2) |
$34.92B |
10% |
$42.99B |
$43.19B |
$44.20B |
$43.61B |
12.1% |
Adjusted Diluted EPS |
$3.65 |
20% |
$4.93 |
$5.00 |
$5.25 |
$5.21 |
28.4% |
Free Cash Flow |
$5.7B |
10% |
$6.9B |
$7.2B |
$7.6B |
$8.6B |
15.0% |
Other Financial Returns(3) |
Achieved |
10% |
Target |
Target |
Target |
Achieved |
10.0% |
STRATEGIC METRICS |
Goal (35% weight): Resolve certain key litigation matters and investigations. Result: Achieved |
35.0% |
HUMAN CAPITAL METRICS |
Goal (15% weight): Meet talent, succession planning, and diversity targets. Result: Achieved |
|
15.0% |
|
|
|
|
|
|
Total |
115.5% |
(1) |
Adjusted Sales exclude the impact of foreign exchange on actual sales relative to the goal target.
Adjusted Diluted EPS is diluted earnings per common share from continuing operations excluding specified items. Free Cash
Flow equals Operating Cash Flow less acquisitions of property and equipment. |
(2) |
Set based on expected market growth of the businesses and markets in which we compete. To achieve target payout, must
increase market share |
(3) |
Target not disclosed for competitive reasons. |
BASE
SALARY |
|
BONUS
TARGET % |
|
TOTAL
GOAL SCORE |
|
AWARD
PAYOUT |
$760,000 |
× |
105% |
× |
115.5% |
= |
$921,700 |
|
|
42 |
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Table of Contents
Long-Term Incentives
Based on the Committee’s
review of Abbott and individual performance through 2020, Mr. Allen received an LTI award in February 2021 with
a value of $4,231,250, which was equal to 125% of his LTI award guideline. Additional calculation details are as follows:
LTI
AWARD
GUIDELINE |
|
LTI
ADJUSTMENT |
|
AWARD ALLOCATION |
|
AWARD
VALUE |
$3,385,000 |
× |
125% |
× |
50% Stock Options(1) |
= |
$2,115,625 |
50% Performance Restricted Shares(2) |
$2,115,625 |
|
|
|
|
|
Total |
|
$4,231,250 |
INDIVIDUAL
LTI PERFORMANCE ASSESSMENT |
METRIC |
2018 |
2019 |
2020 |
OVERALL |
Sales and Market Growth 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 |
|
Total |
+6 |
LTI Adjustment |
125% |
LTI
ADJUSTMENT LEGEND |
TOTAL |
RESULT |
+4 or More |
125% |
+1 to +3 |
110% |
0 |
100% |
-1 or -2 |
90% |
-3 or Less |
75% |
(1) |
Stock options realize value only through share price appreciation. |
(2) |
Performance restricted shares vest only if the 14% Adjusted Return on Equity (ROE) performance target is achieved. |
|
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Table of Contents
|
|
DANIEL G. SALVADORI
Executive Vice President
and Group President, Established Pharmaceuticals and Nutritional Products |
|
|
|
Mr. Salvadori previously served
as Executive Vice President, Nutritional Products. Mr. Salvadori was appointed to the role of Executive Vice President and Group
President, Established Pharmaceuticals and Nutritional Products effective December 1, 2021.
Base Salary
Mr. Salvadori’s annual
base salary was increased in December 2021 to $790,000 in connection with his promotion to Executive Vice President and Group
President, Established Pharmaceuticals and Nutritional Products.
Annual Incentive Plan
Mr. Salvadori’s target
bonus of 115% was not changed in 2021. Based on performance in 2021, Mr. Salvadori received a bonus in February 2022 which was
calculated as follows:
|
2020
RESULTS |
GOAL |
2021
GOAL MEASUREMENT |
2021
RESULTS |
GOAL |
GOAL |
ACHIEVED |
WEIGHT |
THRESHOLD |
TARGET |
MAXIMUM |
ACHIEVED |
SCORE |
FINANCIAL
METRICS(1) |
|
|
|
|
|
|
|
Adjusted
Division Net Sales(2) |
$7.68B |
20% |
$7.79B |
$7.88B |
$7.98B |
$8.14B |
30.0% |
Adjusted
Division Margin(3) |
— |
20% |
Target |
Target |
103.6%
of Target |
102.6%
of Target |
27.2% |
Adjusted
Division Gross Margin(3) |
— |
5% |
99.4%
of Target |
Target |
103.8%
of Target |
97.3%
of Target |
0% |
Gross
Margin Improvement(3) |
|
5% |
Target |
Target |
110.0%
of Target |
101.2%
of Target |
5.3% |
Market
Share(3) |
— |
10% |
Target |
Target |
Target |
Mostly
Achieved |
7.5% |
Adjusted
Division Free Cash Flow(3) |
— |
5% |
Target |
Target |
102.4%
of Target |
108.4% of Target |
7.5% |
Cash
Conversion Cycle(3) |
— |
5% |
5
days over Target |
Target |
Target |
2
days under Target |
5.0% |
STRATEGIC
METRICS |
|
|
|
|
|
|
|
Goal (20% weight): Complete all commercialization milestones and implement key capital projects. Result: Achieved |
|
20.0% |
HUMAN
CAPITAL METRICS |
|
|
|
|
|
|
|
Goal (10% weight): Meet talent, succession planning, and diversity targets. Result: Achieved |
|
10.0% |
|
|
|
|
|
|
Total |
112.5
% |
(1) |
Adjusted Division Net Sales
exclude the impact of foreign exchange on actual Nutrition sales relative to the goal target. Adjusted Division Margin and
Adjusted Division Gross Margin exclude the impact of foreign exchange on actual Nutrition division margin and gross margin
relative to the respective goal target. Adjusted Division Free Cash Flow reflects Nutrition’s pre-tax operating cash
flow less capital expenditures and excludes the impact of foreign exchange. |
(2) |
Set based on expected growth in Nutrition market.
To achieve target payout, must increase market share |
(3) |
Target not disclosed for competitive reasons. |
|
|
BASE
SALARY |
|
BONUS
TARGET % |
|
TOTAL
GOAL SCORE |
|
AWARD
PAYOUT |
$715,539 |
× |
115% |
× |
112.5% |
= |
$925,700 |
|
|
44 |
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Table of Contents
Long-Term Incentives
Based on the Committee’s
review of Abbott and individual performance through 2020, Mr. Salvadori received an LTI award in February 2021 with
a value of $4,777,500, which was equal to 125% of his LTI award guideline. Additional calculation details are as follows:
LTI
AWARD
GUIDELINE |
|
LTI
ADJUSTMENT |
|
AWARD
ALLOCATION |
|
AWARD
VALUE |
$3,822,000 |
× |
125% |
× |
50% Stock Options(1) |
= |
$2,388,750 |
50% Performance Restricted Shares(2) |
$2,388,750 |
|
|
|
|
|
Total |
|
$4,777,500 |
|
|
|
|
|
|
|
|
INDIVIDUAL
LTI PERFORMANCE ASSESSMENT |
METRIC |
2018 |
2019 |
2020 |
OVERALL |
Sales and Market Growth Contribution |
Exceeded (+1) |
Exceeded (+1) |
Exceeded (+1) |
+3 |
Margin Contribution |
Met (0) |
Exceeded (+1) |
Exceeded (+1) |
+2 |
Strategic Financial Contribution |
Met (0) |
Exceeded (+1) |
Did Not
Meet (-1) |
0 |
|
Total |
+5 |
LTI Adjustment |
125% |
LTI
ADJUSTMENT LEGEND |
TOTAL |
RESULT |
+4
or More |
125% |
+1
to +3 |
110% |
0 |
100% |
-1
or -2 |
90% |
-3
or Less |
75% |
(1) |
Stock options realize value
only through share price appreciation. |
(2) |
Performance restricted shares vest only if the
14% Adjusted Return on Equity (ROE) performance target is achieved. |
|
|
|
45 |
Table of Contents
|
|
ANDREA F. WAINER
Executive Vice President,
Rapid and Molecular Diagnostics |
|
|
|
Base Salary
Ms. Wainer’s annual base
salary was increased from $650,000 to $710,000 in March 2021.
Annual Incentive Plan
Ms. Wainer’s target bonus
of 115% was not changed in 2021. Based on performance in 2021, Ms. Wainer received a bonus in February 2022 which was calculated
as follows:
|
2020
RESULTS |
GOAL |
2021
GOAL MEASUREMENT |
2021
RESULTS |
GOAL |
GOAL |
ACHIEVED |
WEIGHT |
THRESHOLD |
TARGET |
MAXIMUM |
ACHIEVED |
SCORE |
FINANCIAL METRICS(1) |
Adjusted
Division Net Sales(2) |
$6.16B |
20% |
$9.47B |
$9.83B |
$10.85B |
$10.52B |
26.7% |
Adjusted Division
Margin(3) |
— |
20% |
Target |
Target |
120.0%
of Target |
112.2%
of Target |
26.1% |
Adjusted Division Gross Margin(3) |
— |
5% |
98.1%
of Target |
Target |
120.0%
of Target |
101.3%
of Target |
5.2% |
Gross Margin Improvement(3) |
|
5% |
Target |
Target |
120.0%
of Target |
Above
Maximum |
7.5% |
Market Share(3) |
— |
10% |
Target |
Target |
Target |
Achieved |
10.0% |
Adjusted Division
Free Cash Flow(3) |
— |
10% |
Target |
Target |
120.0%
of Target |
114.6%
of Target |
13.6% |
STRATEGIC METRICS |
Goal (20% weight): Complete the necessary innovation, development, and expansion metrics per approved plans.
Result: Mostly Achieved |
15.5% |
HUMAN CAPITAL METRICS |
Goal (10% weight): Meet talent, succession planning, and diversity targets. Result: Mostly Achieved |
9.5% |
|
|
|
|
|
|
Total |
114.1% |
(1) |
Adjusted Division Net Sales
exclude the impact of foreign exchange on actual Rapid and Molecular Diagnostics sales relative to the goal target. Adjusted
Division Margin and Adjusted Division Gross Margin exclude the impact of foreign exchange on actual Rapid and Molecular Diagnostics
division margin and gross margin relative to the respective goal target. Adjusted Division Free Cash Flow reflects Rapid and
Molecular Diagnostics’ pre-tax operating cash flow less capital expenditures and excludes the impact of foreign exchange.
Given the significant fluctuations in demand for COVID-19 diagnostic tests during the year, Adjusted Division Net Sales target
for 2021 was revised from $12.3 billion to $9.8 billion and other financial targets were determined based on that sales target. |
(2) |
Set based on expected growth in Rapid and Molecular
Diagnostics market. |
(3) |
Target not disclosed for competitive reasons. |
|
|
BASE
SALARY |
|
BONUS
TARGET % |
|
TOTAL
GOAL SCORE |
|
AWARD
PAYOUT |
$710,000 |
× |
115% |
× |
114.1% |
= |
$931,600 |
|
|
46 |
|
Table of Contents
Long-Term Incentives
Based on the Committee’s
review of Abbott and individual performance through 2020, Ms. Wainer received an LTI award in February 2021 with
a value of $4,777,500, which was equal to 125% of her LTI award guideline. Additional calculation details are as follows:
LTI
AWARD
GUIDELINE |
|
LTI
ADJUSTMENT |
|
AWARD
ALLOCATION |
|
AWARD
VALUE |
$3,822,000 |
× |
125% |
× |
50% Stock Options(1) |
= |
$2,388,750 |
50% Performance Restricted Shares(2) |
$2,388,750 |
|
|
|
|
|
Total |
|
$4,777,500 |
|
|
|
|
|
|
|
|
INDIVIDUAL
LTI PERFORMANCE ASSESSMENT |
METRIC |
2018 |
2019 |
2020 |
OVERALL |
Sales and Market Growth Contribution |
Met (0) |
Did Not
Meet (-1) |
Exceeded (+1) |
0 |
Margin Contribution |
Exceeded (+1) |
Did Not
Meet (-1) |
Exceeded (+1) |
+1 |
Strategic Financial Contribution |
Met (0) |
Did Not
Meet (-1) |
Exceeded (+1) |
0 |
|
Total |
+1 |
Preliminary Adjustment |
110% |
Impact |
+ |
LTI Adjustment |
125% |
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 |
(1) |
Stock options realize value
only through share price appreciation. |
(2) |
Performance restricted shares vest only if the
14% Adjusted Return on Equity (ROE) performance target is achieved. |
|
47 |
Table of Contents
|
|
MILES D. WHITE
Former Executive Chairman
of the Board |
|
|
|
Mr. White retired from Abbott
on December 31, 2021.
Base Salary
Mr. White had an annual base
salary of $1,900,000.
Long-term Incentives
Based on the Committee’s
review of Abbott and individual performance through 2020, Mr. White received an LTI award in February 2021 with
a value of $11,000,000, which was equal to 110% of his LTI award guideline. Additional calculation details are as follows:
LTI
AWARD
GUIDELINE |
|
LTI ADJUSTMENT |
|
AWARD
ALLOCATION |
|
AWARD
VALUE |
$10,000,000 |
× |
110% |
× |
50% Stock Options(1) |
= |
$5,500,000 |
50% Performance Restricted Shares(2) |
$5,500,000 |
|
|
|
|
|
Total |
|
$11,000,000 |
|
|
|
|
|
|
|
|
INDIVIDUAL
LTI PERFORMANCE ASSESSMENT |
METRIC |
2018 |
2019 |
2020 |
OVERALL |
Sales and Market Growth Contribution |
Exceeded (+1) |
Exceeded (+1) |
Exceeded (+1) |
+3 |
Margin Contribution |
Exceeded (+1) |
Exceeded (+1) |
Exceeded (+1) |
+3 |
Strategic Financial Contribution |
Exceeded (+1) |
Met (0) |
Exceeded (+1) |
+2 |
|
Total |
+8 |
Preliminary Adjustment |
125% |
Impact(3) |
- |
LTI Adjustment |
110% |
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 |
(1) |
Stock options realize value
only through share price appreciation. |
(2) |
Performance restricted shares vest only if the
14% Adjusted Return on Equity (ROE) performance target is achieved. |
(3) |
Individual LTI performance assessment was based
upon Mr. White’s roles as Chairman and Chief Executive Officer through March 31, 2020 and as Executive Chairman thereafter. |
|
|
48 |
|
Table of Contents
BENEFITS AND PERQUISITES
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 Abbott-sponsored defined benefit plans: the Abbott Laboratories Annuity Retirement Plan
and the Abbott Laboratories Supplemental Pension Plan. These plans are described in greater detail in the “Pension Benefits”
section of the proxy. |
|
|
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. |
|
|
|
49 |
Table of Contents
BENEFITS
AND PERQUISITES |
|
DESCRIPTION |
Change in Control Arrangements |
|
Mr. White did 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 Messrs. Ford and White are covered by time-sharing
lease agreements, pursuant to which incremental costs associated with those flights are reimbursed by the executive to the
Company in accordance with Federal Aviation Administration regulations. |
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 |
Chief Executive Officer |
|
6 times base salary |
Executive Vice Presidents |
|
3 times base salary |
Senior Vice Presidents |
|
3 times base salary |
All other officers |
|
2 times base salary |
Any officer who has not achieved at least 50%
of the 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.
50 |
|
Table of Contents
HEDGING
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.
PLEDGING
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 director or officer meets Abbott’s applicable minimum stock
ownership guideline; and |
|
● |
Only Abbott stock in excess of the applicable minimum stock ownership
guideline is held in the margin account, pledged, or assigned as collateral. |
RECOUPMENT POLICY
The Compensation Committee has broad discretion
to administer and implement the Company’s policy and seek recoupment of equity or cash incentive awards if it determines
that a senior executive engaged in misconduct or failed in a supervisory capacity, resulting in a material violation of law or
Abbott policy that causes significant financial harm to Abbott. The Compensation Committee may recover incentive compensation awarded
to a senior executive in the prior three years or reduce future awards. The policy will not affect awards made prior to its effective
date or following a change in control.
COMPLIANCE
The Committee considers the deductibility of
executive compensation in making 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.
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
N. McKinstry
W. A. Osborn
M. F. Roman
|
51 |
Table of Contents
COMPENSATION
RISK ASSESSMENT |
During 2021, Abbott conducted its annual risk
assessment of its compensation policies and plan design practices for employees and executives. Abbott’s risk assessment
is reinforced by Abbott’s adherence to a number of industry leading best practices, including:
|
● |
Compensation Committee chaired by independent, non-employee director |
|
● |
Representation from the Audit Committee on the Compensation Committee |
|
● |
Review of executive compensation programs by the Compensation Committee’s independent consultant |
|
● |
Robust review of compensation program design elements and key performance drivers |
|
● |
Detailed measurement of short- and long-term compensation elements, and related performance metrics and requirements,
to ensure balance |
|
● |
Review of Abbott’s historical performance, peer performance and Board-approved strategic plan and related financial
goals to determine appropriate incentive plan goals |
|
● |
Incorporation of multiple program requirements that mitigate excessive risk taking (e.g., recoupment policy, stock ownership
and share retention guidelines, caps on incentive payouts) |
Based on this assessment, Abbott determined
its compensation and benefit programs appropriately align employees’ compensation and performance without incentivizing risky
behaviors. Abbott concluded that risks arising from compensation policies and practices are not reasonably likely to have a material
adverse effect on Abbott or its shareholders.
The following factors were among those considered:
|
● |
Regular training on code of business conduct and policies and procedures is mandatory for all employees. |
|
● |
Compensation structure encourages employees to regard Abbott as a career employer, to consider the long-term impact of
their decisions, and to align their interests with those of Abbott’s shareholders (e.g., equity awards that vest over
multi-year periods, ten-year term on stock options, and retirement plans). |
|
● |
Annual benchmarking ensures performance achievement and incentive payout opportunities that are aligned with a peer group
that reflects the size, investment profile, operating characteristics, and employment and business markets of Abbott. Appropriateness
of this group is assessed annually by the Compensation Committee’s independent consultant and reviewed and approved
by the Compensation Committee. Our selection criteria and peer companies are reported each year to our shareholders and have
received favorable reviews. |
|
● |
Abbott’s annual incentive plan places an appropriate weighting on earnings achievement by balancing it with other
factors, including key operational and strategic measures, disclosed to shareholders. Since earnings are a key component of
stock price performance, this aspect of Abbott’s compensation plan promotes alignment with shareholder interests without
creating duplication across incentive plans. |
|
● |
Abbott’s long term incentive plan focuses on longer-term operating performance and shareholder returns and awards
50% stock options and 50% performance based restricted stock. In 2021, roughly three-quarters of named officer total compensation
was in the form of long-term equity incentives that can be earned or vest over multiple years. |
|
● |
Equity awards are made, and grant prices are set at the same time each year, at the Compensation Committee’s regularly
scheduled meeting. In addition, Abbott does not reprice or backdate stock options, award discounted stock options, or immediately
vest stock options or restricted stock. Equity awards are based on multiple performance factors and are set at competitive
market levels, adjusted by Abbott’s long-term performance vs. our Board-approved peer group. Both executive and Director
share ownership guidelines and share retention requirements promote alignment with shareholders. |
|
|
52 |
|
Table of Contents
|
● |
Abbott’s compensation program does not include features that could encourage excessive risk taking,
such as over weighting toward annual incentives, highly leveraged payout curves, uncapped incentive award payments, unreasonable
thresholds, or steep payout cliffs at certain levels that may encourage short term business decisions to meet payout criteria. |
|
● |
Abbott’s recoupment policy allows the Compensation Committee to seek recoupment of incentive compensation, forfeit
existing awards or reduce future 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 caused significant financial harm to Abbott. |
|
● |
Abbott’s hedging policy prohibits directors and officers from entering into financial transactions designed to reduce
the financial risk associated with owning Abbott shares. |
|
● |
Abbott’s pledging policy prohibits directors and officers from holding Abbott shares in a margin account, pledging
Abbott shares, or securing obligations by assigning Abbott shares as collateral unless granted an exception by the Compensation
Committee. |
This assessment was discussed with the Compensation
Committee and its independent compensation consultant. The Committee and the consultant both agreed with the assessment.
|
53 |
Table of Contents
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) |
Robert B. Ford, |
|
2021 |
|
$1,482,692 |
|
$8,689,294 |
|
$ 8,689,978 |
|
$3,168,400 |
|
$2,755,343 |
|
$129,179 |
|
$24,914,886 |
|
$22,485,091 |
Chairman
of the Board
and Chief Executive
Officer |
|
2020 |
|
1,298,462 |
|
5,623,995 |
|
5,624,993 |
|
3,675,000 |
|
4,150,264 |
|
77,872 |
|
20,450,586 |
|
16,549,550 |
|
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., |
|
2021 |
|
825,000 |
|
2,999,666 |
|
2,999,977 |
|
1,048,400 |
|
1,507,073 |
|
159,193 |
|
9,539,309 |
|
8,373,417 |
Executive
Vice President,
Finance and Chief
Financial Officer |
|
2020 |
|
813,462 |
|
2,215,867 |
|
2,216,247 |
|
1,280,800 |
|
3,100,265 |
|
173,568 |
|
9,800,209 |
|
7,069,425 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hubert L. Allen, |
|
2021 |
|
760,000 |
|
2,115,332 |
|
2,115,612 |
|
921,700 |
|
768,954 |
|
172,158 |
|
6,853,756 |
|
6,395,592 |
Executive
Vice President,
General Counsel and
Secretary |
|
2020 |
|
751,346 |
|
1,874,607 |
|
1,874,988 |
|
917,700 |
|
2,904,940 |
|
154,596 |
|
8,478,177 |
|
5,919,894 |
|
2019 |
|
710,000 |
|
2,199,962 |
|
2,199,990 |
|
879,700 |
|
1,429,523 |
|
66,905 |
|
7,486,080 |
|
6,386,933 |
Daniel G. Salvadori, |
|
2021 |
|
715,539 |
|
2,388,446 |
|
2,388,734 |
|
925,700 |
|
251,604 |
|
72,276 |
|
6,742,299 |
|
6,533,923 |
Executive
Vice
President and Group
President, Established
Pharmaceuticals and
Nutritional Products |
|
2020 |
|
710,000 |
|
1,901,708 |
|
1,902,099 |
|
905,500 |
|
477,011 |
|
79,421 |
|
5,975,739 |
|
5,518,569 |
|
2019 |
|
704,923 |
|
2,351,989 |
|
2,351,986 |
|
903,400 |
|
395,710 |
|
59,806 |
|
6,767,814 |
|
6,388,821 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Andrea F. Wainer, |
|
2021 |
|
699,616 |
|
2,388,446 |
|
2,388,734 |
|
931,600 |
|
772,906 |
|
69,112 |
|
7,250,414 |
|
6,564,595 |
Executive
Vice President,
Rapid and Molecular
Diagnostics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Miles D. White,(1) |
|
2021 |
|
1,900,000 |
|
5,499,490 |
|
5,499,982 |
|
0 |
|
1,918,135 |
|
1,135,477 |
|
15,953,084 |
|
15,953,084 |
Former
Executive
Chairman of the Board |
|
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 |
|
2019 |
|
1,900,000 |
|
7,562,448 |
|
7,562,499 |
|
4,405,625 |
|
5,707,836 |
|
664,409 |
|
27,802,817 |
|
24,675,423 |
(1) |
Mr. White retired from Abbott on December 31, 2021. |
(2) |
In accordance with the Securities and Exchange Commission’s rules, the amounts in this column represent the aggregate grant date fair value of the awards in accordance with Financial Accounting Standards Board ASC Topic 718. Abbott determines grant date fair value by multiplying the number of shares granted by the average of the high and low market prices of an Abbott common share on the award’s date of grant. |
(3) |
In accordance with the Securities and Exchange Commission’s rules, the amounts in this column represent the aggregate grant date fair value of the awards in accordance with Financial Accounting Standards Board ASC Topic 718. These amounts were determined as of the option’s grant date using a Black-Scholes stock option valuation model. These amounts are being reported solely for the purpose of comparative disclosure in accordance with the Securities and Exchange Commission’s rules. There is no certainty that the amount determined using a Black-Scholes stock option valuation model would be the value at which employee stock options would be traded for cash. The assumptions are the same as those described in Note 8, entitled “Incentive Stock Program” of Abbott’s Notes to Consolidated Financial Statements included under Item 8, “Financial Statements and Supplementary Data” in Abbott’s 2021 Annual Report on Securities and Exchange Commission Form 10-K. |
(4) |
This compensation is earned as a performance-based incentive bonus, pursuant to the 1998 Abbott Laboratories Performance Incentive Plan. Additional information regarding the Performance Incentive Plan can be found in the section of this proxy statement captioned, “Compensation Discussion and Analysis—Basis for Compensation Decisions.” |
|
|
54 |
|
Table of Contents
(5) |
The plan amounts shown below are reported in this column. |
|
For Messrs. Ford, Allen, Salvadori, and White, the amounts shown alongside the officer’s name are for 2021, 2020, and 2019, respectively. For Mr. Funck, Jr., the amounts shown are for 2021 and 2020, respectively. For Ms. Wainer, the amounts shown are for 2021. |
|
Abbott Laboratories Annuity Retirement Plan |
|
R. B. Ford: $22,149 / $142,819 / $176,268; R. E. Funck, Jr.: $89,455 / $256,555; H. L. Allen: $47,024 / $184,384 / $117,142; D. G. Salvadori: $19,272 / $45,483 / $41,282; A. F. Wainer: $34,273; and M. D. White: ($56,525) / $34,629 / $180,690. |
|
Abbott Laboratories Supplemental Pension Plan |
|
R. B. Ford: $2,407,646 / $3,758,217 / $1,944,104; R. E. Funck, Jr.: $1,076,437 / $2,474,229; H. L. Allen: $411,140 / $2,373,899 / $982,005; D. G. Salvadori: $189,104 / $411,687 / $337,711; A. F. Wainer: $651,546; and M. D. White: ($2,126,024) / $993,981 / $2,946,704. |
|
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: $325,548 / $249,228 / $191,127; R. E. Funck, Jr.: $341,181 / $369,481; H. L. Allen: $310,790 / $346,657 / $330,376; D. G. Salvadori: $43,228 / $19,841 / $16,717; A. F. Wainer: $87,087; and M. D. White: $1,918,135 / $2,386,733 / $2,580,442. |
(6) |
The amounts shown below are reported in this column. |
|
For Messrs. Ford, Allen, Salvadori, and White, the amounts shown alongside the officer’s name are for 2021, 2020, and 2019, respectively. For Mr. Funck, Jr., the amounts shown are for 2021 and 2020, respectively. For Ms. Wainer, the amounts shown are for 2021. |
|
Earnings on Non-Qualified Defined Contribution Plans (net of the reportable interest included in footnote 5). |
|
R. B. Ford: $8,148 / $8,116 / $0 ; R. E. Funck, Jr.: $86,107 / $106,106; H. L. Allen: $95,227 / $81,695 / $896; D. G. Salvadori: $3,566 / $1,701 / $0; A. F. Wainer: $2,162; and M. D. White: $799,031 / $926,052 / $105,715. |
|
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 has a grantor trust 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: $74,135 / $64,924 / $50,000; R. E. Funck, Jr.: $41,250 / $40,673; H. L. Allen: $38,000 / $37,568 / $35,500; D. G. Salvadori: $35,777 / $35,500 / $35,247; A. F. Wainer: $34,981; and M. D. White: $95,000 / $95,000 / $95,000. |
|
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. |
|
|
|
55 |
Table of Contents
|
Other Compensation |
|
Messrs. Ford’s and White’s non-business-related flights on corporate aircraft are covered by time-sharing lease agreements, pursuant to which they 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: $46,419 / $4,832 / $0; M. D. White: $0 / $10,792 / $226,633. |
|
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: $240,446 / $232,266 / $237,061. 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 / $0 / $21,841; R. E. Funck, Jr.: $22,661 / $20,319; H. L. Allen: $27,613 / $28,666 / $25,509; D. G. Salvadori: $21,933 / $26,773 / $24,559; and A. F. Wainer: $20,969. |
|
For Messrs. Funck, Jr., Allen, and Salvadori and Ms. Wainer, the following costs associated with financial planning are included: R. E. Funck, Jr.: $8,175 / $6,470; H. L. Allen: $10,000 / $6,667 / $5,000; D. G. Salvadori: $10,000 / $15,447 / $0; and A. F. Wainer: $10,000. For Mr. Salvadori, the 2020 amount includes payments for services incurred in 2020 and 2019. |
|
The totals shown in the table include other miscellaneous benefits in 2021: R. B. Ford: $477; R. E. Funck, Jr.: $1,000; H. L. Allen: $1,318; D. G. Salvadori: $1,000; A. F. Wainer: $1,000; and M. D. White: $1,000. |
|
The named officers are also eligible to participate in an executive disability benefit described on page 65. |
(7) |
To demonstrate how year over year changes in pension value impact total compensation, as determined under SEC rules, we have included this column to show total compensation without pension value changes. The amounts reported in this column are calculated by subtracting the change in pension value reported in the Change in Pension Value and Non-qualified Deferred Compensation Earnings column, as described in footnote 5 to this table, from the amounts reported in the SEC Total column. The amounts reported in this column differ from, and are not a substitute for, the amounts reported in the SEC Total column. |
|
|
56 |
|
Table of Contents
2021
GRANTS OF PLAN BASED AWARDS |
|
|
|
|
Estimated Future
Payouts
Under Non-Equity
Incentive Plan
Awards(1) |
|
Estimated
Future Payouts
Under Equity
Incentive
Plan Awards |
|
All Other
Option Awards:
Numbers of
Securities
Underlying |
|
Exercise or
Base Price
of Options |
|
Closing
Market |
|
Grant Date Fair
Value of Stock |
Name |
|
Grant
Date |
|
Target
($) |
|
Maximum
($) |
|
Target
(#)(2)(3) |
|
Options
(#)(4) |
|
Awards
($/Sh.) |
|
Price on
Grant Date |
|
and Option
Awards |
R. B. Ford |
|
2/19/2021 |
|
|
|
|
|
70,058 |
|
|
|
|
|
|
|
$8,689,294(5) |
|
|
2/19/2021 |
|
|
|
|
|
|
|
359,090 |
|
$124.04 |
|
$123.04 |
|
8,689,978(6) |
R. E. Funck, Jr. |
|
2/19/2021 |
|
|
|
|
|
24,185 |
|
|
|
|
|
|
|
2,999,666(5) |
|
|
2/19/2021 |
|
|
|
|
|
|
|
123,966 |
|
124.04 |
|
123.04 |
|
2,999,977(6) |
H. L. Allen |
|
2/19/2021 |
|
|
|
|
|
17,055 |
|
|
|
|
|
|
|
2,115,332(5) |
|
|
2/19/2021 |
|
|
|
|
|
|
|
87,422 |
|
124.04 |
|
123.04 |
|
2,115,612(6) |
D. G. Salvadori |
|
2/19/2021 |
|
|
|
|
|
19,257 |
|
|
|
|
|
|
|
2,388,446(5) |
|
|
2/19/2021 |
|
|
|
|
|
|
|
98,708 |
|
124.04 |
|
123.04 |
|
2,388,734(6) |
A. F. Wainer |
|
2/19/2021 |
|
|
|
|
|
19,257 |
|
|
|
|
|
|
|
2,388,446(5) |
|
|
2/19/2021 |
|
|
|
|
|
|
|
98,708 |
|
124.04 |
|
123.04 |
|
2,388,734(6) |
M. D. White |
|
2/19/2021 |
|
|
|
|
|
44,340 |
|
|
|
|
|
|
|
5,499,490(5) |
|
|
2/19/2021 |
|
|
|
|
|
|
|
227,272 |
|
124.04 |
|
123.04 |
|
5,499,982(6) |
(1) |
During 2021, each of the named officers participated in the 1998 Abbott Laboratories Performance Incentive
Plan, an annual, non-equity incentive plan. The annual cash incentive award earned by the named officer in 2021 under the
plan is shown in the Summary Compensation Table under the column captioned, “Non-Equity Incentive Plan Compensation.”
No future payouts will be made under the plan’s 2021 annual cash incentive award. The Performance Incentive Plan is
described in greater detail in the section of the proxy statement captioned, “Compensation Discussion and Analysis—Basis
for Compensation Decisions.” |
(2) |
These are performance-based restricted stock awards that have a 3-year term and vest upon Abbott reaching a minimum return
on equity target, with no more than one-third of the award vesting in any one year. In 2021, Abbott reached its minimum return
on equity target and one-third of each of the awards made on February 19, 2021 vested on February 28, 2022. The equity targets
are described in the section of the proxy statement captioned, “Compensation Discussion and Analysis—Basis for
Compensation Decisions.” |
(3) |
In the event of a grantee’s death or disability, these awards are deemed fully earned. The treatment of these awards
upon a change in control is described in the section of the proxy statement captioned, “Potential Payments Upon Termination
or Change in Control—Equity Awards.” Outstanding restricted shares and restricted stock units receive dividend
payments at the same rate as all other shareholders. |
(4) |
Options with respect to one-third of the shares covered by these awards are exercisable after one year; two-thirds after
two years; and all after three years. The options vest in the event of the grantee’s death or disability. The treatment
of these awards upon a change in control is described in the section of the proxy statement captioned, “Potential Payments
Upon Termination or Change in Control—Equity Awards.” Under the Abbott Laboratories 2017 Incentive Stock Program,
these options have an exercise price equal to the average of the high and low market prices (rounded-up to the next even penny)
of an Abbott common share on the date of grant. |
(5) |
Abbott determines the grant date fair value of stock and stock unit awards by multiplying the number of restricted shares
or restricted stock units granted by the average of the high and low market prices of a common share on the grant date. |
(6) |
These values were determined as of the option’s grant date using a Black-Scholes stock option valuation model. The
model uses the assumptions described in Note 8, entitled “Incentive Stock Program” of Abbott’s Notes to
Consolidated Financial Statements included under Item 8, “Financial Statements and Supplemental Data” in Abbott’s
2021 Annual Report on Securities and Exchange Commission Form 10-K. |
|
|
|
57 |
Table of Contents
2021 OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR END |
The following table summarizes the outstanding equity awards held by
the named officers at year end.
|
|
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
($) |
|
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(#) |
|
Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($) |
R. B. Ford |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,265 |
|
$2,148,396 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,749 |
|
6,016,494 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,058 |
|
9,859,963 |
|
|
45,492 |
|
|
|
|
|
$ 39.12 |
|
02/20/24 |
|
|
|
|
|
|
|
|
|
|
56,933 |
|
|
|
|
|
41.14 |
|
06/30/24 |
|
|
|
|
|
|
|
|
|
|
127,436 |
|
|
|
|
|
47.00 |
|
02/19/25 |
|
|
|
|
|
|
|
|
|
|
14,243 |
|
|
|
|
|
48.90 |
|
05/31/25 |
|
|
|
|
|
|
|
|
|
|
285,388 |
|
|
|
|
|
38.40 |
|
02/18/26 |
|
|
|
|
|
|
|
|
|
|
151,869 |
|
|
|
|
|
44.40 |
|
02/16/27 |
|
|
|
|
|
|
|
|
|
|
246,963 |
|
|
|
|
|
59.94 |
|
02/15/28 |
|
|
|
|
|
|
|
|
|
|
160,039 |
|
80,020 |
|
|
|
75.90 |
|
02/21/29 |
|
|
|
|
|
|
|
|
|
|
130,298 |
|
260,598 |
|
|
|
87.72 |
|
02/20/30 |
|
|
|
|
|
|
|
|
|
|
|
|
359,090 |
|
|
|
124.04 |
|
02/18/31 |
|
|
|
|
|
|
|
|
R. E. Funck, Jr. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,781 |
|
$1,095,098 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,843 |
|
2,370,484 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,185 |
|
3,403,797 |
|
|
55,097 |
|
|
|
|
|
$ 47.00 |
|
02/19/25 |
|
|
|
|
|
|
|
|
|
|
48,831 |
|
|
|
|
|
44.40 |
|
02/16/27 |
|
|
|
|
|
|
|
|
|
|
110,146 |
|
|
|
|
|
59.94 |
|
02/15/28 |
|
|
|
|
|
|
|
|
|
|
81,578 |
|
40,789 |
|
|
|
75.90 |
|
02/21/29 |
|
|
|
|
|
|
|
|
|
|
51,337 |
|
102,676 |
|
|
|
87.72 |
|
02/20/30 |
|
|
|
|
|
|
|
|
|
|
|
|
123,966 |
|
|
|
124.04 |
|
02/18/31 |
|
|
|
|
|
|
|
|
H. L. Allen |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,661 |
|
$1,359,689 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,249 |
|
2,005,404 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,055 |
|
2,400,321 |
|
|
157,421 |
|
|
|
|
|
$ 47.00 |
|
02/19/25 |
|
|
|
|
|
|
|
|
|
|
189,788 |
|
|
|
|
|
38.40 |
|
02/18/26 |
|
|
|
|
|
|
|
|
|
|
167,056 |
|
|
|
|
|
44.40 |
|
02/16/27 |
|
|
|
|
|
|
|
|
|
|
246,963 |
|
|
|
|
|
59.94 |
|
02/15/28 |
|
|
|
|
|
|
|
|
|
|
101,288 |
|
50,645 |
|
|
|
75.90 |
|
02/21/29 |
|
|
|
|
|
|
|
|
|
|
43,432 |
|
86,866 |
|
|
|
87.72 |
|
02/20/30 |
|
|
|
|
|
|
|
|
|
|
|
|
87,422 |
|
|
|
124.04 |
|
02/18/31 |
|
|
|
|
|
|
|
|
|
|
58 |
|
Table of Contents
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,329 |
|
$1,453,703 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,455 |
|
2,034,397 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,257 |
|
2,710,230 |
|
|
23,771 |
|
|
|
|
|
$ 38.40 |
|
02/18/26 |
|
|
|
|
|
|
|
|
|
|
75,591 |
|
|
|
|
|
44.40 |
|
02/16/27 |
|
|
|
|
|
|
|
|
|
|
49,611 |
|
|
|
|
|
50.72 |
|
07/20/27 |
|
|
|
|
|
|
|
|
|
|
182,935 |
|
|
|
|
|
59.94 |
|
02/15/28 |
|
|
|
|
|
|
|
|
|
|
108,286 |
|
54,144 |
|
|
|
75.90 |
|
02/21/29 |
|
|
|
|
|
|
|
|
|
|
44,060 |
|
88,122 |
|
|
|
87.72 |
|
02/20/30 |
|
|
|
|
|
|
|
|
|
|
|
|
98,708 |
|
|
|
124.04 |
|
02/18/31 |
|
|
|
|
|
|
|
|
A. F. Wainer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,035 |
|
$ 427,146 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,989 |
|
561,412 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,050 |
|
1,273,697 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,257 |
|
2,710,230 |
|
|
8,226 |
|
|
|
|
|
$ 47.00 |
|
02/19/25 |
|
|
|
|
|
|
|
|
|
|
5,000 |
|
|
|
|
|
38.40 |
|
02/18/26 |
|
|
|
|
|
|
|
|
|
|
53,271 |
|
|
|
|
|
44.40 |
|
02/16/27 |
|
|
|
|
|
|
|
|
|
|
64,449 |
|
|
|
|
|
59.94 |
|
02/15/28 |
|
|
|
|
|
|
|
|
|
|
31,825 |
|
15,913 |
|
|
|
75.90 |
|
02/21/29 |
|
|
|
|
|
|
|
|
|
|
41,816 |
|
20,909 |
|
|
|
76.12 |
|
06/02/29 |
|
|
|
|
|
|
|
|
|
|
27,585 |
|
55,172 |
|
|
|
87.72 |
|
02/20/30 |
|
|
|
|
|
|
|
|
|
|
|
|
98,708 |
|
|
|
124.04 |
|
02/18/31 |
|
|
|
|
|
|
|
|
M. D. White |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,212 |
|
$4,674,257 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,599 |
|
6,417,603 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,340 |
|
6,240,412 |
|
|
727,699 |
|
|
|
|
|
$ 39.12 |
|
02/20/24 |
|
|
|
|
|
|
|
|
|
|
937,031 |
|
|
|
|
|
47.00 |
|
02/19/25 |
|
|
|
|
|
|
|
|
|
|
1,198,630 |
|
|
|
|
|
38.40 |
|
02/18/26 |
|
|
|
|
|
|
|
|
|
|
638,629 |
|
|
|
|
|
44.40 |
|
02/16/27 |
|
|
|
|
|
|
|
|
|
|
688,073 |
|
|
|
|
|
59.94 |
|
02/15/28 |
|
|
|
|
|
|
|
|
|
|
348,181 |
|
174,091 |
|
|
|
75.90 |
|
02/21/29 |
|
|
|
|
|
|
|
|
|
|
138,985 |
|
277,971 |
|
|
|
87.72 |
|
02/20/30 |
|
|
|
|
|
|
|
|
|
|
|
|
227,272 |
|
|
|
124.04 |
|
02/18/31 |
|
|
|
|
|
|
|
|
(1) |
Except as noted, these options are fully vested. |
|
|
|
59 |
Table of Contents
(2) |
The vesting dates of outstanding unexercisable
stock options and unvested restricted stock awards at December 31, 2021 are as follows. |
|
|
Option Awards |
|
Stock Awards(a) |
Name |
|
Number of
Unexercised Shares
Remaining from
Original Grant |
|
Number of
Option Shares
Vesting—Date
Vested 2022 |
|
Number of
Option Shares
Vesting—Date
Vesting 2023 |
|
Number of
Option Shares
Vesting—Date
Vesting 2024 |
|
Number of
Restricted
Shares or
Units |
|
Number of
Restricted
Shares or Units
Vesting—Date
Vested 2022 |
R. B. Ford |
|
80,020 |
|
80,020 - 2/22 |
|
|
|
|
|
15,265 |
|
(b) |
|
|
260,598 |
|
130,299 - 2/21 |
|
130,299 - 2/21 |
|
|
|
42,749 |
|
(c) |
|
|
359,090 |
|
119,696 - 2/19 |
|
119,697 - 2/19 |
|
119,697 - 2/19 |
|
70,058 |
|
(d) |
R. E. Funck, Jr. |
|
40,789 |
|
40,789 - 2/22 |
|
|
|
|
|
7,781 |
|
(b) |
|
|
102,676 |
|
51,338 - 2/21 |
|
51,338 - 2/21 |
|
|
|
16,843 |
|
(c) |
|
|
123,966 |
|
41,322 - 2/19 |
|
41,322 - 2/19 |
|
41,322 - 2/19 |
|
24,185 |
|
(d) |
H. L. Allen |
|
50,645 |
|
50,645 - 2/22 |
|
|
|
|
|
9,661 |
|
(b) |
|
|
86,866 |
|
43,433 - 2/21 |
|
43,433 - 2/21 |
|
|
|
14,249 |
|
(c) |
|
|
87,422 |
|
29,140 - 2/19 |
|
29,141 - 2/19 |
|
29,141 - 2/19 |
|
17,055 |
|
(d) |
D. G. Salvadori |
|
54,144 |
|
54,144 - 2/22 |
|
|
|
|
|
10,329 |
|
(b) |
|
|
88,122 |
|
44,061 - 2/21 |
|
44,061 - 2/21 |
|
|
|
14,455 |
|
(c) |
|
|
98,708 |
|
32,902 - 2/19 |
|
32,903 - 2/19 |
|
32,903 - 2/19 |
|
19,257 |
|
(d) |
A. F. Wainer |
|
15,913 |
|
15,913 - 2/22 |
|
|
|
|
|
3,035 |
|
(b) |
|
|
20,909 |
|
20,909 - 6/3 |
|
|
|
|
|
3,989 |
|
(e) |
|
|
55,172 |
|
27,586 - 2/21 |
|
27,586 - 2/21 |
|
|
|
9,050 |
|
(c) |
|
|
98,708 |
|
32,902 - 2/19 |
|
32,903 - 2/19 |
|
32,903 - 2/19 |
|
19,257 |
|
(d) |
M. D. White |
|
174,091 |
|
174,091 - 2/22 |
|
|
|
|
|
33,212 |
|
(b) |
|
|
277,971 |
|
138,985 - 2/21 |
|
138,986 - 2/21 |
|
|
|
45,599 |
|
(c) |
|
|
227,272 |
|
75,757 - 2/19 |
|
75,757 - 2/19 |
|
75,758 - 2/19 |
|
44,340 |
|
(d) |
(a) |
The equity targets are described in the section of the proxy
statement captioned, “Compensation Discussion and Analysis—Basis for Compensation Decisions.” |
(b) |
These are the restricted shares that remained outstanding and unvested on
December 31, 2021, from an award made on February 22, 2019. The award has a 3-year term with no more than one-third of the original
award vesting in any one year upon Abbott reaching a minimum return on equity target, measured at the end of the relevant year.
In 2021, Abbott reached its minimum return on equity target and these shares vested on February 28, 2022. |
(c) |
These are the restricted shares that remained outstanding and unvested on December 31, 2021, from an award made on February
21, 2020. The award has a 3-year term with no more than one-third of the original award vesting in any one year upon Abbott
reaching a minimum return on equity target, measured at the end of the relevant year. In 2021, Abbott reached its minimum
return on equity target and half of these shares vested on February 28, 2022. |
(d) |
These are the restricted shares that remained outstanding and unvested on December 31, 2021, from an award made on February
19, 2021. The award has a 3-year term with no more than one-third of the original award vesting in any one year upon Abbott
reaching a minimum return on equity target, measured at the end of the relevant year. In 2021, Abbott reached its minimum
return on equity target and one-third of these shares vested on February 28, 2022. |
(e) |
These are the restricted shares that remained outstanding and unvested on December 31, 2021, from an award made on June
3, 2019. The award has a 3-year term, with no more than one-third of the original award vesting in any one year upon Abbott
reaching a minimum return on equity target, measured at the end of the relevant year. In 2021, Abbott reached its minimum
return on equity target and these shares will vest on June 3, 2022. |
|
|
60 |
|
Table of Contents
2021 OPTION EXERCISES AND STOCK VESTED |
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 2021:
| |
Option
Awards | |
Stock
Awards |
Name | |
Number of Shares Acquired
on Exercise (#) | | |
Value Realized on Exercise
($) | |
Number of Shares Acquired
on Vesting (#) | | |
Value
Realized on Vesting ($) |
R. B. Ford | |
| 0 | | |
$ | 0 | |
| 51,611 | | |
$ | 6,274,865 |
R. E. Funck, Jr. | |
| 31,325 | | |
| 2,613,132 | |
| 22,880 | | |
| 2,781,750 |
H. L. Allen | |
| 203,393 | | |
| 17,225,354 | |
| 31,757 | | |
| 3,861,016 |
D. G. Salvadori | |
| 110,000 | | |
| 10,526,252 | |
| 28,646 | | |
| 3,482,781 |
A. F. Wainer | |
| 79,000 | | |
| 7,112,661 | |
| 15,457 | | |
| 1,820,704 |
M. D. White | |
| 1,282,500 | | |
| 130,073,916 | |
| 97,721 | | |
| 11,880,919 |
During 2021, 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 66 and 67.
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 54.
ANNUITY RETIREMENT PLAN
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.
A. |
1.10% of 5-year final average earnings multiplied by years of benefit service after 2003. |
B. |
1.65% of 5-year final average earnings multiplied by years of benefit service prior to 2004 (up to 20); plus 1.50% of
5-year final average earnings multiplied by years of benefit service prior to 2004 in excess of 20 (but no more than 15 additional
years); less 0.50% of the lesser of 3-year final average earnings (but not more than the social security wage base in any
year) or the social security covered compensation level multiplied by years of benefit service. |
C. |
1.10% of 5-year final average earnings multiplied by years of benefit service prior to 2004. |
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.
|
61 |
Table of Contents
Final average earnings are the average of the employee’s 60 highest
paid consecutive calendar months of compensation (salary and non-equity incentive plan compensation). The Annuity Retirement Plan
covers earnings up to the limit imposed by Internal Revenue Code Section 401(a)(17) and provides for a maximum of 35 years of
benefit service.
Participants become fully vested in their pension benefit upon the completion
of five years of service. The benefit is payable on an unreduced basis at age 65. Participants hired after 2003 who terminate
prior to age 55 with at least 10 years of service may choose to commence their benefits on an actuarially reduced basis as early
as age 55. Participants hired prior to 2004 who terminate prior to age 50 with at least 10 years of service may choose to commence
their benefits on an actuarially reduced basis as early as age 50. Participants hired prior to 2004 who terminate prior to age
50 with less than 10 years of service may choose to commence their benefits on an actuarially reduced basis as early as age 55.
The Annuity Retirement Plan offers several optional forms of payment,
including certain and life annuities, joint and survivor annuities, and level income annuities. The benefit paid under any of
these options is actuarially equivalent to the life annuity benefit produced by the formula described above.
Participants who retire from Abbott prior to their normal retirement
age may receive subsidized early retirement benefits. Participants hired after 2003 are eligible for early retirement at age 55
with 10 years of service. Participants hired prior to 2004 are eligible for early retirement at age 50 with 10 years of service
or age 55 if the employee’s age plus years of benefit service total 70 or more. As of December 31, 2021, Mr. Funck, Jr.,
Mr. Allen, and Ms. Wainer 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:
|
● |
In general, the 5-year final average earnings portions of the benefit are reduced 3 percent per year
for each year that payments are made before age 62 and the 3-year final average earnings portion of the benefit is reduced
5 percent per year for each year that payments are made before age 62. |
|
● |
Employees who participated in the plan before age 36 may elect “Special Retirement” on the last day of any
month after reaching age 55 with age plus Seniority Service points of at least 94 or “Early Special Retirement”
on the last day of any month after reaching age 55, provided their age plus Seniority Service points would reach at least
94 before age 65. Seniority Service includes periods of employment prior to attaining the minimum age required to participate
in the plan. If Special Retirement or Early Special Retirement applies, Seniority Service is used in place of benefit service
in the formulas. The 5-year final average earnings portions of the benefit in B above are reduced 1⅔ percent for each year
between ages 59 and 62 plus 2½ percent for each year between ages 55 and 59. The 3-year final average earnings portion of
the benefit is reduced 5 percent per year for each year that payments are made before age 62. Benefit C is payable on an unreduced
basis at Special Retirement and is reduced 3 percent per year for each year that payments are made before age 62, if Early
Special Retirement applies. |
|
|
|
62 |
|
Table of Contents
SUPPLEMENTAL
PENSION PLAN
With the following exceptions, the provisions
of the Supplemental Pension Plan are substantially the same as those of the Annuity Retirement Plan:
|
● |
Officers’ 5-year final average earnings are calculated using the average of the 5 highest years
of base earnings and the 5 highest years of payments under Abbott’s non equity incentive plans. |
|
● |
The Annuity Retirement Plan does not include amounts deferred or payments received under the Abbott Laboratories Deferred
Compensation Plan in its calculation of a participant’s final average earnings. To preserve the pension benefits of
Deferred Compensation Plan participants, the Supplemental Pension Plan includes amounts deferred by a participant under the
Deferred Compensation Plan in its calculation of final average earnings. Beginning in the year following their election as
an officer, Abbott officers are no longer eligible to defer compensation under the Deferred Compensation Plan. |
|
● |
In addition to the benefits outlined above for the Annuity Retirement Plan, participating officers are eligible for a
benefit equal to 0.6% of 5-year final average earnings for each year of service for each of the first 20 years of service
occurring after the participant attains age 35. The benefit is further limited by the maximum percentage allowed under the
Annuity Retirement Plan under that plan’s benefit formulas (A, B, and C above). The portion of this additional officer
benefit attributable to service prior to 2004 is reduced 3 percent per year for each year that payments are made before the
plan’s unreduced retirement age. The portion attributable to service after 2003 is reduced 5 percent per year for each
year that payments are made before the plan’s unreduced retirement age if the participant is at least age 55 at early
retirement. If the participant is under age 55 at retirement, the portion attributable to service after 2003 is actuarially
reduced from age 65. |
|
● |
The Supplemental Pension Plan provides early retirement benefits similar to those provided under the Annuity Retirement
Plan. The benefits provided to Abbott’s officers under the Supplemental Pension Plan are reduced from the plan’s
unreduced retirement age, unless the benefit is being actuarially reduced from age 65. As of December 31, 2021, Mr. Funck,
Jr., Mr. Allen, and Ms. Wainer were eligible for early retirement benefits under the plan. |
|
● |
Vested plan benefits accrued under the Supplemental Pension Plan may be funded through a grantor trust established by
the officer. Consistent with the distribution requirements of Internal Revenue Code Section 409A and its regulations, those
officers who were elected prior to 2009 may have the entire amount of their vested plan benefits funded through a grantor
trust. Officers elected after 2008 may only have the vested plan benefits that accrue following the calendar year in which
the officer is first elected funded through a grantor trust. Vested plan benefits accrued through December 31, 2008, to the
extent not previously funded, were distributed to the participants’ individual trusts and included in the participants’
income. |
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.
|
63 |
Table of Contents
2021
PENSION BENEFITS
Name | |
Plan
Name | |
Number
of Years Credited
Service
(#) |
|
Present
Value of Accumulated Benefit
($)(1) | |
Payments
During Last Fiscal Year
($) |
|
R. B. Ford | |
Abbott Laboratories Annuity Retirement Plan | |
25 |
|
$ | 704,571 | |
$ | 0 | |
| |
Abbott Laboratories Supplemental Pension Plan | |
25 |
|
| 10,291,116 | |
| 667,730 | (2) |
R. E. Funck, Jr. | |
Abbott Laboratories Annuity Retirement Plan | |
34 |
|
| 1,783,737 | |
| 0 | |
| |
Abbott Laboratories Supplemental Pension Plan | |
34 |
|
| 9,129,556 | |
| 1,272,406 | (2) |
H. L. Allen | |
Abbott Laboratories Annuity Retirement Plan | |
16 |
|
| 633,478 | |
| 0 | |
| |
Abbott Laboratories Supplemental Pension Plan | |
16 |
|
| 6,034,554 | |
| 1,742,441 | (2) |
D. G. Salvadori | |
Abbott Laboratories Annuity Retirement Plan | |
7 |
|
| 163,046 | |
| 0 | |
| |
Abbott Laboratories Supplemental Pension Plan | |
7 |
|
| 1,283,304 | |
| 50,339 | (2) |
A. F. Wainer | |
Abbott Laboratories Annuity Retirement Plan | |
19 |
|
| 644,033 | |
| 0 | |
| |
Abbott Laboratories Supplemental Pension Plan | |
19 |
|
| 2,779,623 | |
| 275,528 | (2) |
M. D. White | |
Abbott Laboratories Annuity Retirement Plan | |
37 |
|
| 1,661,405 | |
| 0 | |
| |
Abbott Laboratories Supplemental Pension Plan | |
37 |
|
| 37,645,486 | |
| 2,852,203 | (2) |
(1) |
Abbott calculates these present values using: (i) a 3.17% discount rate for the Annuity Retirement
Plan and a 3.07% discount rate for the Supplemental Pension Plan, the same effective discount rates it uses for Financial
Accounting Standards Board ASC Topic 715 calculations for financial reporting purposes; and (ii) each plan’s unreduced
retirement age. The present values shown in the table reflect post-retirement mortality, based on the Financial Accounting
Standards Board ASC Topic 715 assumption (the Pri-2012 Healthy Annuitant table with projected mortality improvements), but
do not include a factor for pre-retirement termination, mortality, or disability. |
(2) |
Consistent with the distribution requirements of Internal Revenue Code Section 409A and its regulations, vested Supplemental
Pension Plan benefits, to the extent not previously funded, were distributed to the participants’ individual grantor
trusts and included in the participants’ income. Amounts held in the officer’s individual trust are expected to
offset Abbott’s obligations to the officer under the plan. During 2021, the amounts shown, less applicable tax withholdings,
were deposited in such individual trusts established by the named officers. Grantor trusts are described in greater detail
in the section of the proxy statement captioned, “Compensation Discussion and Analysis—Benefits and Perquisites.” |
|
|
64 |
|
Table of Contents
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. White, would have received if their employment had terminated on December 31, 2021. 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:
● |
R. B. Ford, $483,418 |
● |
R. E. Funck, Jr., $423,203 |
● |
H. L. Allen, $386,119 |
● |
D. G. Salvadori, $79,870 |
● |
A. F. Wainer, $132,867 |
In addition, the following one-time deposits would have been made
under the Abbott Laboratories Supplemental Pension Plan for the following named officers:
● |
R. B. Ford, $1,335,692 |
● |
R. E. Funck, Jr., $477,491 |
● |
H. L. Allen, $207,073 |
● |
D. G. Salvadori, $59,592 |
● |
A. F. Wainer, $609,540 |
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:
● |
R. B. Ford, $158,420 |
● |
R. E. Funck, Jr., $52,420 |
● |
H. L. Allen, $46,085 |
● |
D. G. Salvadori, $46,285 |
● |
A. F. Wainer, $46,580 |
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,
2021 with values as set forth below in the section captioned, “Equity Awards.”
As a retired Chairman and CEO, Mr. White
will continue to have use of an office and administrative support. The estimated annual cost of this benefit is approximately $150,000
to $200,000.
|
65 |
Table of Contents
POTENTIAL PAYMENTS UPON CHANGE IN CONTROL
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 Messrs. Ford, Funck, Jr., Allen, and Salvadori and Ms. Wainer are described below.
Each change in control agreement continues in effect until December
31, 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 on the later of the scheduled expiration date and the one-year anniversary of the date of such
notice. If no notice is given, the agreement will expire on the one-year anniversary of the scheduled expiration date. Each agreement
also automatically extends for two years following any change in control (see below) that occurs while the agreement is in effect.
The agreements provide that if the officer is terminated other than
for cause or permanent disability or if the officer elects to terminate employment for good reason (see below) within two years
following a change in control of Abbott, the officer is entitled to receive a lump sum payment equal to three times the officer’s
annual salary and annual incentive (“bonus”) award (assuming for this purpose that all target performance goals have
been achieved or, if higher, based on the average bonus for the last three years), plus any unpaid bonus owing for any completed
performance period and the pro rata bonus for any current bonus period (based on the highest of the bonus assuming achievement
of target performance, the average bonus for the past three years, or in the case of the unpaid bonus for any completed performance
period, the actual bonus earned). If the officer is terminated other than for cause or permanent disability or if the officer elects
to terminate employment for good reason during a potential change in control (see below), the officer is entitled to receive a
lump sum payment of the annual salary and bonus payments described above, except that the amount of the bonus to which the officer
is entitled will be based on the actual achievement of the applicable performance goals. If the potential change in control becomes
a “change in control event” (within the meaning of Section 409A of the Internal Revenue Code), the officer will be
entitled to receive the difference between the bonus amounts the officer received upon termination during the potential change
in control and the bonus amounts that would have been received had such amounts instead been based on the higher of the officer’s
target bonus or the average bonus paid to the officer in the preceding three years. Bonus payments include payments made under
the Performance Incentive Plan. The officer will also receive up to three years of additional employee benefits (including welfare
benefits, outplacement services and tax and financial counseling, and the value of three more years of pension accruals).
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.
66 |
|
Table of Contents
If a change in control had occurred on December 31, 2021 immediately
followed by one of the covered circumstances described above, Messrs. Ford, Funck, Jr., Allen, and Salvadori and Ms. Wainer 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 |
R. B. Ford | |
| $15,543,400 | |
| $1,894,488 | |
| $94,364 |
R. E. Funck, Jr. | |
| 6,368,900 | |
| 2,156,830 | |
| 62,853 |
H. L. Allen | |
| 5,901,100 | |
| 1,698,288 | |
| 51,242 |
D. G. Salvadori | |
| 6,021,200 | |
| 189,288 | |
| 87,613 |
A.
F. Wainer | |
| 5,511,100 | |
| 3,888,988 | |
| 74,152 |
EQUITY AWARDS
Under Abbott Laboratories’ Incentive Stock Programs, upon a
change in control, the surviving company may assume, convert, or replace awards to executive officers on an equivalent basis. If
the surviving company does not do so, then the awards vest. If the surviving company does assume, convert, or replace the awards
on an equivalent basis, then the awards vest if the officer’s employment is terminated without cause or the officer resigns
for good reason during the period six months prior to and through two years after a change in control. The term “good reason”
has the same definition as in the change of control agreements.
If a change in control had occurred on December 31, 2021, and the
surviving company did not assume, convert, or replace the awards, then the named officers, other than Mr. White, would have vested
in the following options, restricted shares, and restricted stock 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 |
R. B. Ford | |
| 699,708 | | |
| $25,002,206 | | |
| 128,072 | | |
| $18,024,853 |
R. E. Funck, Jr. | |
| 267,431 | | |
| 10,158,873 | | |
| 48,809 | | |
| 6,869,379 |
H. L. Allen | |
| 224,933 | | |
| 9,349,404 | | |
| 40,965 | | |
| 5,765,414 |
D. G. Salvadori | |
| 240,974 | | |
| 9,831,349 | | |
| 44,041 | | |
| 6,198,330 |
A. F. Wainer | |
| 190,702 | | |
| 6,956,582 | | |
| 35,331 | | |
| 4,972,485 |
The value of stock options shown is based on the excess of the closing
price of a common share on December 31, 2021 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, 2021 and the closing price of a common share on December 31, 2021.
|
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In 2021, we compared CEO pay to that of our median employee. To identify
our median employee, we first excluded all 4,035 employees who are employed in Bolivia (198), Georgia (12), Indonesia (650), Kazakhstan
(168), Pakistan (1,508), and Philippines (1,499), representing less than 5% of our global workforce of 112,060 employees as of
October 1, 20211. We then examined the 2021 base salary of all remaining employees globally, excluding our CEO, who
were employed by us on October 1, 2021. We annualized the base salary of all permanent employees who were hired in 2021, but did
not work for the entire year. The base salary for employees outside of the U.S. was converted to U.S. dollars.
After identifying the median employee, we collected annual total
compensation for this employee using the same methodology we use for our named executive officers as disclosed in the Summary Compensation
Table on page 54 and then added the cost of medical and dental benefits ($13,214) in the calculation of annual total compensation
for the median employee and CEO.
The annual total compensation of our median employee was $97,952,
resulting in a ratio of 254:1.
The above ratio and annual total compensation amount are reasonable
estimates that have been calculated using methodologies and assumptions permitted by SEC rules.
1 |
Total U.S. employees: 35,087; total non-U.S. employees: 76,973. |
|
|
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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 2021, the Audit Committee appointed
Ernst & Young LLP to act as auditors for 2022. 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 2022. 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 2022, 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 2022.
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.
AUDIT FEES AND NON-AUDIT FEES
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, 2021 and
December 31, 2020 and fees billed for other services rendered by Ernst & Young during these periods.
| |
| 2021 | | |
| 2020 |
Audit fees:(1) | |
| $24,709,000 | | |
| $24,474,000 |
Audit related fees:(2) | |
| 1,615,000 | | |
| 1,158,000 |
Tax fees:(3) | |
| 6,216,000 | | |
| 5,944,000 |
All other fees:(4) | |
| 91,000 | | |
| 99,000 |
Total | |
| $32,631,000 | | |
| $31,675,000 |
(1) |
Audit fees include amounts billed or to be billed for professional services rendered for the audit
of Abbott’s annual financial statements, the review of Abbott’s financial statements included in Abbott’s
quarterly reports, and the audits of Abbott’s internal control over financial reporting, statutory and subsidiary audits,
the review of documents filed with the Securities and Exchange Commission, and certain accounting consultations in connection
with the audits. |
(2) |
Audit related fees include: accounting consultations and audits in connection with proposed acquisitions and divestitures,
and audits of certain employee benefit plans’ financial statements. |
(3) |
Tax fees consist principally of professional services rendered for tax compliance and tax planning and advice including
assistance with tax audits and appeals, and tax advice related to mergers and acquisitions. |
(4) |
All other fees include regulatory and technical education services, participation in industry surveys, and a required
compliance assessment associated with Abbott’s hosting of certain health data. |
|
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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 2021 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 69 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, 2021 filed with the Securities and Exchange Commission.
Audit Committee
N. McKinstry, Chair
P. Gonzalez
M. A. Kumbier
M. F. Roman
J. G. Stratton
G. F. Tilton
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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 sustained strong performance has resulted in total
shareholder return (TSR) exceeding the peer median and major market indices on a one-, three-, and five-year basis.
Abbott’s three-year TSR of 104% is more than twice that
of the peer group median, and Abbott’s five-year TSR of 300% is more than four times that of the peer median. These consistent
top-tier returns are driven by strong execution, an effective governance structure, and 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 2021, despite
the continued global impact and uncertainty of COVID-19, and exceeded the financial targets that were set at the beginning of the
year. Abbott’s one-year TSR was 31%, more than two and a half times the peer median TSR, a testament to the strength
of our diversified business model and ability to innovate and deliver in 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.
ROBUST INNOVATION PIPELINE
● Steady stream of important product approvals across our businesses that will be significant contributors
to growth in the coming years. |
|
INVESTING FOR FUTURE GROWTH
● Increased manufacturing scale and capabilities across several important products.
● Nearly $2 billion invested in internal capital projects in the past year. |
|
SHAREHOLDER RETURNS
● Returned 50% of operating cash flow to shareholders in 2021 and announced the 50th year of consecutive
dividend increases, demonstrating Abbott’s financial strength and commitment to shareholder returns. |
|
GLOBAL LEADER IN COVID-19 TESTING
● Delivered 1 billion tests in 2021 to help meet global testing needs.
● Abbott’s rapid response and significant scale have allowed for broad access to testing and
further positioned Abbott as a global leader in diagnostics. |
|
|
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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 28 through 51 of this proxy statement.
While this vote is advisory and non-binding, the Board of Directors
and Compensation Committee value the opinion of the shareholders and will review the voting results and take into account the results
and our ongoing dialogue with shareholders when future compensation decisions are made.
Accordingly, the Board of Directors recommends that you vote
FOR the approval of the named officers’ compensation.
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SHAREHOLDER PROPOSALS
Five 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.
Shareholder
Proposal on Special Shareholder Meeting Threshold
(Item 4 on Proxy Card)
|
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
Special Shareholder Meeting Improvement -
Proposal 4
Shareholders ask our board to take the steps necessary to amend the
appropriate company governing documents to give the owners of a combined 10% of our outstanding common stock the power to call
a special shareholder meeting. This includes that each shareholder shall have an equal right per share to formally participate
in the calling for a special shareholder meeting.
Currently it takes a theoreticall 20% of all shares outstanding to
call for a special shareholder meeting. This theoreticall 20% of all shares outstanding translates into 26% of the shares that
vote at our annual meeting.
It would be hopeless to think that shares that do not have time to
vote would have the time to go through the special procedural stops to call for a special shareholder meeting.
A more reasonable shareholder right to call for a special shareholder
meeting to could be used to elect a new director. It could also be an incentive for our directors to take their jobs more seriously.
The following directors received a substantial number of negative votes at our 2021 annual meeting:
Glenn Tilton |
|
74 million negative |
|
|
Roxanne Austin |
|
87 million negative |
|
Chair of Management Pay Committee |
Miles White |
|
130 million negative |
|
23-years long-tenure |
William Osborn |
|
182 million negative |
|
Chair of Governance Committee |
Nancy McKinstry |
|
297 million negative |
|
|
The number of negative votes increased compared to 2020 for each
above director.
This is a best practice governance proposal in the same spirit as
the 2020 simple majority vote proposal to reform our undemocratic 67% shareholder voting thresholds that won our 84% support and
was adopted in 2021.
Shareholder votes for shareholder proposals are having a positive impact.
Please vote yes:
Special Shareholder Meeting Improvement -
Proposal 4
|
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BOARD OF DIRECTORS’
STATEMENT IN OPPOSITION TO THE
SHAREHOLDER PROPOSAL ON SPECIAL SHAREHOLDER MEETING THRESHOLD
(Item 4 on Proxy Card)
The Board of Directors recommends that you vote AGAINST the
proposal.
Abbott’s annual meeting provides its shareholders with a regular,
predictable opportunity to weigh in on its directors and other matters of importance to shareholders – ensuring shareholders’
ability to exert this critical influence at least once a year. If matters come up that cannot wait until an annual meeting, the
Chairman and CEO or Abbott’s Board is empowered to call a special meeting, subject to the same notification requirements
for a regular annual meeting. Likewise, a single shareholder or group owning at least 20% of Abbott’s outstanding shares
may call a special meeting and put a matter up for vote.
The proponent takes issue with the 20% threshold, saying it should
be lower so investors can invoke this safeguard more easily. Abbott’s Board believes 20% is the appropriate place to set
the line. It is worth noting that many S&P 500 companies require an even higher threshold – at least 25% of outstanding
shares – to call a special meeting. A “special” meeting is, by its nature, an extraordinary event that should
be called rarely and regarding only time-sensitive, significant issues that cannot be postponed until the next annual meeting.
The ability to convene a special meeting carries with it the power to impose potentially significant costs on the Company and divert
attention of Abbott’s Board, its officers, and its employees from the Company’s business objectives. To avoid waste
or expense of corporate resources in addressing narrowly supported concerns, the Board believes the appropriate threshold for this
special meeting is 20%.
Further, in the context of Abbott’s overall corporate governance
policies and practices, a further reduced threshold is unnecessary to ensure shareholders’ ability to express concerns on
important issues.
● |
Proxy Access: A shareholder (or group) who meet certain ownership requirements 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. |
● |
Written Consent: Shareholders can act by written consent in place of a meeting as a means for shareholders to raise
important matters outside the normal annual meeting cycle. |
● |
Shareholder Proposals: Under the proxy rules and Abbott’s By-Laws, shareholders may submit proposals for
inclusion in the company’s proxy statement, nominate directors for election, and present matters from the floor at the
annual meeting. |
● |
Director Election: Each of Abbott’s directors serves a one-year term and stands for re-election at the annual
meeting. The Company’s By-Laws also provide that directors must be elected by a majority vote in an uncontested election. |
● |
Simple Majority Voting: Further, Abbott explicitly implemented simple-majority voting in its By-Laws for all extraordinary
transactions like mergers and amendments to Abbott’s articles of incorporation. |
● |
Shareholder Engagement: As described in this proxy statement, Abbott promotes open communication between shareholders
and the Board, and it routinely seeks investor input on a variety of topics, including corporate governance, executive compensation,
sustainability, and other strategic matters. Further, Abbott engaged with shareholders representing over 60% of Abbott’s
outstanding shares in the 2021 proxy season, and none expressed concern with the current 20% threshold or their ability to
engage or raise issues with the Board. |
For these reasons, the Board of Directors recommends that Abbott’s
shareholders vote AGAINST this proposal.
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Shareholder Proposal on Independent Board Chairman
(Item 5 on Proxy Card) |
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 200 Abbott
common shares.
PROPONENT’S STATEMENT IN SUPPORT OF SHAREHOLDER
PROPOSAL
Independent Board Chairman - Proposal 5
The shareholders request that the Board of Directors adopt an enduring
policy, and amend the governing documents as necessary in order that 2 separate people hold the office of the Chairman and the
office of the CEO as follows:
Selection of the Chairman of the Board The Board requires the separation of the offices of the Chairman
of the Board and the Chief Executive Officer.
Whenever possible, the Chairman of the Board shall be an Independent
Director.
The Board has the discretion to select a Temporary Chairman of the
Board who is not an Independent Director to serve while the Board is seeking an Independent Chairman of the Board.
The Chairman shall not be a former CEO of the company.
This proposal topic won 52% support at Boeing and 54% support at
Baxter International in 2020. Boeing then adopted this proposal topic in June 2020. The roles of Chairman and CEO are fundamentally
different and should be held by 2 directors, a CEO and a Chairman who is completely independent of the CEO and our company.
This proposal topic won 33%-support at our 2021 annual meeting. This
33%-support likely represented 40+%-support from the shares that have access to independent proxy voting advice.
The role of the CEO and management is to run the company.
The role of the Board of Directors is to provide independent oversight
of management and the CEO.
Thus there is a potential conflict of interest for a CEO to have the oversight role of Chairman.
A CEO serving as Chair can result in excessive management influence
on the Board and weaker oversight of management. The CEO becomes his own boss. With the current CEO serving as Chair this means
giving up a substantial check and balance safeguard that can only occur with an independent Board Chairman. A lead director is
no substitute for an independent board chairman.
A lead director cannot call a special shareholder meeting and cannot
even call a special meeting of the board. A lead director can delegate most of his lead director duties to the office of the CEO
and then the lead director can simply rubber-stamp it.
The lack of an independent Board Chairman is an unfortunate way to
discourage new outside ideas and an unfortunate way to encourage the CEO to pursue pet projects that would not stand up to effective
oversight.
In an example from a company whose share price went from $130 to
$200 in 10 months, the 2020 Lowe’s annual meeting proxy said Lowe’s independent directors determined that having a
separate Chairman and Chief Executive Officer allows the Chairman to devote his time and attention to Board oversight and governance.
Please vote yes:
Independent Board Chairman - Proposal 5
|
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BOARD OF DIRECTORS’
STATEMENT IN OPPOSITION TO THE
SHAREHOLDER PROPOSAL ON INDEPENDENT BOARD CHAIRMAN
(Item 5 on Proxy Card)
The Board of Directors recommends that you vote AGAINST the
proposal.
Abbott’s Board believes that the Board is in the best position
to determine its structure in light of circumstances at a given moment and mindful of its obligations to shareholders to effectively
oversee the management of the company and maximize return to shareholders.
Abbott’s Board consists of former and current leaders from
business, medicine, academics, and public service who combined have decades of corporate board and other experience and are capable
to oversee the management of the company. At present, the Board believes that the current structure is in the best interests of
Abbott and its shareholders, as it provides cohesive leadership and direction for the Board and executive management, as well as
clear accountability and unified leadership in the execution of strategic initiatives and business plans. Still, the leadership
of the Chair is balanced by a fully independent board which is organized in a manner that has and will lead to effective oversight.
Abbott’s current board structure and corporate governance
practices provide strong independent oversight of a combined Chair and CEO.
As detailed in the 2022 Proxy Statement, apart from the Chair and
CEO, Abbott’s Board is composed entirely of independent directors who are elected by shareholders annually. These independent
directors comprise the Board’s principal committees – Audit, Compensation, Nominations and Governance, and Public Policy
– and oversee key matters such as the integrity of Abbott’s financial statements, executive compensation, the nomination
of directors, the selection of independent auditors, oversight of regulatory compliance, the evaluations of the Board and each
of its members, including the Chair and CEO, and the evaluation of the CEO’s performance objectives.
Abbott’s Board leadership consists of:
● |
A Lead Independent Director who is selected by and from the independent members of the Board. Created by the Board in
2005, the Lead Independent Director position has significant authority and responsibilities. As detailed above in this Proxy,
the Lead Independent Director presides at regularly conducted executive sessions of the independent directors and provides
feedback to the Chair and CEO and other senior management. The Lead Independent Director also communicates regularly with
the Chair and CEO regarding appropriate agenda topics and other Board related matters; confers with the Nominations and Governance
Committee and the Chair and CEO regarding management succession planning; leads the annual performance reviews of individual
directors, the full Board, and each of its Committees as well as overseeing the process for identifying and evaluating director
candidates. Also, the Lead Independent Director consults and engages with major shareholders as necessary. |
● |
Fully independent committees, which engage with management to review and discuss the strategic planning for Abbott’s
businesses, including operating and financial plans, strategic business priorities and key risks and opportunities. The independent
directors spend a significant time with Abbott’s senior management to understand global dynamics, challenges, and opportunities. |
● |
Committee chairs who are recommended to the Board by the Nominations and Governance Committee and approved by the full
Board. |
● |
Executive Sessions of the independent directors, led by the Lead Independent Director generally take place at each regularly
scheduled Board meeting at the option of the independent directors. |
● |
Annual anonymous evaluations of each director, including the Chair and CEO, led by the Lead Independent Director, and
conducted by all directors to provide further oversight. |
|
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The Board including the Lead Independent Director have repeatedly
demonstrated independence from and oversight of management. In the last several years, the Board has strengthened its recoupment
policy, increased targets for vesting of performance shares several times over the last several years, adopted a share-retention
policy, and increased share-ownership guidelines for executives and directors. Unquestionably, Abbott’s Board exercises independent
oversight of the Chair and CEO and Abbott’s management.
Abbott shareholders are best served by preserving the Board’s
flexibility to determine the appropriate leadership structure for the Company.
The Board regularly and carefully considers the merits of separating
or combining the Chair and CEO positions, including whether an independent director should be chair. The Board believes that it
is important to retain the flexibility to allocate the responsibilities of the offices of the Chair and CEO in the manner that
it determines to be in the best interests of Abbott and its shareholders. Adopting a singular approach without the flexibility
to adapt to company-specific circumstances would compromise the Board’s ability to assess and implement the optimal oversight
framework.
Historically, the current structure has greatly benefited Abbott
and its shareholders. Under a combined CEO and Chair, Abbott was strategically reshaped into one of the world’s leading health
technology companies, with the creation of $220 billion in shareholder value and a total return of 575%.1 Abbott’s
strong performance has resulted in total shareholder return (TSR) exceeding the peer median and major market indices on a one-,
three-, and five-year basis.
The Board believes that it should be able to select the leadership
the Company needs to fit the moment.
For these reasons, the Board of Directors recommends that Abbott’s
shareholders vote AGAINST this proposal.
1 |
Includes the combined market capitalization of Abbott, AbbVie and Hospira. |
|
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Shareholder Proposal on Rule 10b5-1 Plans
(Item 6 on Proxy Card) |
The Comptroller of the City of New York, One Centre Street, 8th Floor
North, New York, New York 10007, as custodian and a trustee of the New York City Employees’ Retirement System and custodian
of the New York City Board of Education Retirement System (together, the “Systems”), has informed Abbott that it intends
to present the following proposal at the Annual Meeting and that the Systems own an aggregate of 891,927 Abbott common shares.
PROPONENT’S STATEMENT IN SUPPORT OF SHAREHOLDER
PROPOSAL
RESOLVED: shareholders urge the Board of Directors of Abbott Laboratories
(“Abbott”) to adopt a policy for Rule 10b5-1 plans (“Plan” or “Plans”) requiring:
|
1. |
A “Cooling Off Period” of at least 120 days between Plan adoption and initial trading under
the Plan. |
|
2. |
An “Overlapping Plan Prohibition” preventing an individual/entity from having multiple Plans simultaneously. |
|
3. |
Named Executive Officers and Directors to disclose on the Company’s proxy statement the number of shares subject
to a Plan. |
|
4. |
Whenever a Section 16 corporate officer or director adopts, modifies, or cancels a Plan, a Form 8-K disclosure indicating
the name of the affected individual, the number of shares covered, and the date of adoption, modification, or cancellation
of the Plan. |
|
5. |
Disclosure on Form 4 of whether a trade was made under a Plan, and the Plan’s adoption or modification date. |
Supporting Statement
With proper safeguards, Plans allow company insiders to sell stock
without fear of prosecution for insider trading.
However, Abbot does not require several important safeguards: there
is no required “cooling off period” between Plan adoption and initial trading; participants can have multiple, overlapping
Plans simultaneously; and various Securities and Exchange Commission (“Commission”) disclosures that would shed light
on the adoption and use of Plans (thereby making abuse of the Plans less likely) are not required.
Commission Chair Gary Gensler has placed 10b5-1 plan reform on the
Commission’s rulemaking agenda. The proposed policy is consistent with the initial recommendations of the Commission’s
Investor Advisory Committee. (https://www.sec.gov/ spotlight/investor-advisory-committee-2012/draft-recommendation- of-the-iao-subcommittee-on-10b5-1-plans-082621.pdf)
A 2021 analysis, which examined over 20,000 plan adoption dates and
trades, identified several “red flags” associated with opportunistic use of 10b5-1 plans, which this proposal addresses.
(https://www.gsb.stanford.edu/ sites/default/files/publication-pdf/cgri-closer-look-88-gaming-the-system.pdf)
According to Professor Daniel Taylor, one of the study’s authors,
“Pharmaceutical companies tend to use the rules much more aggressively than other sectors…because there’s much
more of an opportunity for material non-public information.” (Grant’s Interest Rate Observer, March 19, 2021).
Since 2019, Abbott executives adopted at least a dozen 10b5-1 plans
where the first trade occurred within a month of Plan adoption and the trade avoided a stock price decline in the ensuing 30 days.
For example:
● |
Former CEO Miles White adopted a Plan on March 15, 2019 and sold $47 million in stock the next day;
Abbott’s share price fell more than 7 percent in the 30 days following the sale. (https://www.sec.gov/Archives/edgar/
data/1800/000117911019004117/xslF345X 03/edgar.xml) |
● |
Former CFO Brian Yoor adopted a Plan on January 27, 2020 and sold $46 million in stock on the next day; Abbott’s
share price fell 12 percent in the 30 days following the sale (https://www.sec.gov/Archives/edgar/ data/1800/000117911020000889/xslF345X03/edgar.xml) |
● |
EVP Andrea Wainer adopted a Plan on March 2, 2021 and sold 755,000 dollars in stock the next
day at $121.79 per share; the day after the sale, Abbott’s share price closed at $116.01, 5% below Wainer’s sale
price. (https://www.sec.gov/Archives/edgar/data/1800/000141588921001357/xslF345X 03/form4-03052021_040351.xml) |
The proposed policy would ensure that Abbott 10b5-1 plans are properly
safeguarded from potential abuse.
We urge shareholders to support this proposal.
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BOARD OF DIRECTORS’
STATEMENT IN OPPOSITION TO THE
SHAREHOLDER PROPOSAL ON RULE 10B5-1 PLANS
(Item 6 on Proxy Card)
The Board of Directors recommends that you vote AGAINST the
proposal.
The proposal is unnecessarily restrictive and burdensome in light
of the pending SEC rules relating to Rule 10b5-1 and Abbott’s protections against insider trading. Abbott should not have
Rule 10b5-1 plan-related obligations that go beyond the pending SEC rules and which would impose obligations not required of other
publicly traded companies.
After the proposal was submitted to Abbott, the SEC proposed rules
regarding the use of Rule 10b5-1 plans that largely cover what the proposal requests, including:
● |
a 120-day cooling-off period, |
● |
a prohibition on overlapping plans, |
● |
quarterly disclosure of plan adoption, activity, and terms, and |
● |
10b5-1 plan disclosure on Forms 4. |
The SEC proposed rules also have additional requirements beyond the
proposal, including limits on single-trade 10b5-1 plans, disclosure around option grants made within 14 days of material news releases,
and operation of the proposed 10b5-1 plans in good faith.
The shareholder’s proposal would impose additional restrictions
on Abbott that go beyond the proposed SEC rules, imposing burdens on Abbott without providing shareholders with meaningful benefit,
and would also put Abbott on unequal footing with other publicly traded companies. Specifically, the proposal would require Abbott
to file a Form 8-K disclosure each time an officer or director adopts, modifies, or cancels a plan, as well as annual proxy disclosure
of the number of shares subject to 10b5-1 plans entered into by named executive officers and directors. Disclosure of this information
is already covered in the SEC proposed rules through enhanced 10b5-1 plan quarterly disclosure requirements in companies’
Form 10-Qs and Form 10-Ks. To impose different and additional Form 8-K reporting and proxy disclosure obligations on Abbott would
be redundant and an inefficient use of company resources.
Abbott has existing, procedures around trading in its securities
which addresses concerns about the misuse of material non-public information. Abbott permits its officers to adopt Rule 10b5-1
plans to schedule trades in Abbott securities – but only within the confines of Abbott’s protections, prohibitions,
restrictions, and limitations already in place to guard against the risk of insider trading. For example:
|
● |
Abbott’s insider-trading policy prohibits any direct or indirect trading in the Company’s
securities while directors or officers are in the possession of material, non-public information. |
|
● |
Abbott’s policies and practices prohibit all director or officer transactions in Abbott securities during specified
“blackout” periods, including transactions pursuant to 10b5-1 plans. |
|
● |
Abbott’s policies and practices require obtaining preapproval through an expansive process designed to avoid execution
of transactions during a time where there may be material non-public information. |
|
● |
All base terms of any plan must be pre-approved by Abbott. |
|
● |
Amendments to plans are limited, and Abbott requires a 30-day cooling-off period between plan adoption (or change) and
any trading. |
|
● |
Abbott notes whether a trade was pursuant to a Rule 10b5-1 plan on Form 4 and Form 144 filed with the SEC. |
Abbott’s existing protections concerning trading in its securities
coupled with the fact that the proposal goes beyond the pending SEC rules on this topic make this shareholder proposal unnecessary.
The Board of Directors recommends that Abbott’s shareholders
vote AGAINST this proposal.
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Shareholder Proposal on Lobbying Disclosure
(Item 7 on Proxy Card) |
The Unitarian Universalist Association and additional proponents
have informed Abbott that they intend to present the following proposal at the meeting. Abbott will provide the proponents’
names and addresses to any shareholder who requests that information and, if provided by a proponent to Abbott, the number of Abbott
common shares held by that proponent.
PROPONENT’S STATEMENT IN SUPPORT OF SHAREHOLDER
PROPOSAL
Whereas, we believe in full disclosure of Abbott’s lobbying
activities and expenditures to assess whether Abbott’s lobbying is consistent with its expressed goals and in stockholder
interests.
Resolved, the stockholders of Abbott request the preparation
of a report, updated annually, disclosing:
1. |
Company policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying
communications. |
2. |
Payments by Abbott used for (a) direct or indirect lobbying or (b) grassroots lobbying communications, in each case including
the amount of the payment and the recipient. |
3. |
Abbott’s membership in and payments to any tax-exempt organization that writes and endorses model legislation. |
4. |
Description of management’s decision-making process and the Board’s oversight for making payments described
in section 2 above. |
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.
Supporting Statement
Abbott spent $41,810,000 from 2010 – 2020 on federal lobbying.
This figure does not include state lobbying, where Abbott also lobbies but disclosure is uneven or absent. For example, Abbott
lobbied in 19 states in 2020 and spent $1,018,489 on lobbying in California from 2010-2020.
Abbott fails to disclose its third-party payments to trade associations
and social welfare organizations, or the amounts used for lobbying, to shareholders. Companies can give unlimited amounts to third
party groups that spend millions on lobbying and often undisclosed grassroots activity, and these groups may be spending “at
least double what’s publicly reported.”1 Grassroots lobbying does not get reported at the federal level,
and disclosure is uneven or absent in states.
Abbott belongs to the Business Roundtable, National Association of
Manufacturers and Chamber Commerce, which together spent $108,148,000 on lobbying for 2020 and have drawn attention for launching
a “massive lobbying blitz” against raising corporate taxes to pay for infrastructure.2 Abbott also supports
social welfare groups like the Alliance for Aging Research, which lobbies and ran Facebook ads opposing drug pricing legislation.3
We believe Abbott’s lack of disclosure presents reputational risk when its lobbying contradicts company public positions
or takes controversial positions. For example, Abbott believes in addressing climate change, yet the Chamber opposed the Paris
climate accord. Abbott is committed to diversity and inclusion, yet the Chamber lobbied against protecting voting rights.4
And while Abbott has drawn scrutiny for avoiding federal income taxes,5 its trade associations are lobbying against
raising corporate taxes to fund infrastructure.
1 |
https://theintercept.com/2019/08/06/business-group-spending-on-lobbying-in-washington-is-at-least-double-whats-publicly-reported/. |
2 |
https://www.washingtonpost.com/us-policy/2021/08/31/business-lobbying-democrats-reconciliation/. |
3 |
https://www.prwatch.org/news/2020/01/13525/ex-pharma-lobbyist-embedded-white-house-tanked-drug-pricing-bill-while-his-former. |
4 |
https://www.cnn.com/2021/04/21/business/voting-rights-chamber-of-commerce/index.html. |
5 |
https://www.fiercepharma.com/pharma/pfizer-merck-and-j-j-shifting-profits-to-avoid-billions-tax-payments-each-year-report. |
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BOARD OF DIRECTORS’
STATEMENT IN OPPOSITION TO THE SHAREHOLDER PROPOSAL ON LOBBYING DISCLOSURE
(Item 7 on Proxy Card)
The Board of Directors recommends that you vote AGAINST the
proposal.
Abbott is transparent about its lobbying activities. Preparing and
maintaining the annual report this proposal requests would add cost and consume resources, but without increasing any shareholder
value or transparency. As the Board laid out last year, Abbott already provides transparency around the categories of disclosure
sought by this proposal, enabling shareholders to assess whether Abbott has any undue corporate influence over initiatives with
which they may disagree. Abbott’s political disclosure and accountability policies continue to be recognized as top tier
among S&P 500 companies, according to the 2021 CPA-Zicklin Index of Corporate Political Disclosure and Accountability report.1
The categories of disclosure called for by this proposal continue to be publicly available and are updated semiannually.
● |
Policies and Procedures Governing Lobbying. Abbott provides
its policies and procedures governing lobbying on its website. This year, Abbott has updated its website to enhance disclosures
around lobbying including clarifying the scope of advocacy activities managed by its Vice President of Government Affairs
and detailing how participation in trade associations and lobbying related expenditures are assessed and managed. Furthermore,
Abbott has detailed how this Public Policy Committee of the Abbott Board of Directors is responsible for oversight of Abbott’s
government affairs function and public policy issues that could affect Abbott’s business performance and public image.
The Public Policy Committee reviews and evaluates Abbott’s governmental affairs and political participation, including
advocacy priorities, political contributions, lobbying activities, and trade association memberships. (https://www.abbott.com/investors/governance/corporate-political-participation.html)
Also, annually in Abbott’s Global Sustainability Report, the Company discloses the key principles that guide its participation
in public policy engagement (including lobbying), the decision-making process surrounding that engagement, and oversight of
those activities by the Board, the Public Policy Committee, and Abbott’s Vice President of U.S. Government Affairs. |
● |
Payments Used for Lobbying. On its website, Abbott provides
links to the US House of Representatives Office of Clerk website and the US Senate office of Public Records website where
it discloses the Company’s total federal lobbying expenditures (paid directly and through trade associations), the name
of any legislation, or its subject that was the topic of communication, the individuals who lobbied on behalf of Abbott, and
the legislative body or executive branch contacted. Similarly, any indirect contribution (e.g., payments for events honoring
covered elected officials) is disclosed as part of mandatory filings available on the same websites. Payments Abbott makes
for outside lobbying services are disclosed by the outside firms as well and are also available and searchable on the same
websites. For shareholder ease, links to these sites are found on the Abbott website at (https://www.abbott.com/investors/governance/corporate-political-participation.html).
These disclosures are reported quarterly in compliance with the Lobbying Disclosure Act. Regarding state activity, in states
where Abbott has a registered lobbyist, reports are filed consistent with state law and are publicly available at the appropriate
state agency or on the state’s public website. Abbott does not currently make direct expenditures toward grassroots
lobbying communications to the general public. |
1 |
(https://www.politicalaccountability.net/wp-content/uploads/2021/11/2021-CPA-Zicklin-Index.pdf) |
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● |
Decision-making and Oversight
for Lobbying-Related Payments. Abbott’s decision-making and oversight process for lobbying-related payments is already
available to Abbott’s shareholders. As described on Abbott’s website, its Government Affairs office is responsible
for advocacy activities with Congress and the other branches of the federal government, as well as at the state and local
levels. This responsibility extends to all manner of public policy engagement, including advocacy priorities, political contributions,
lobbying activities, and trade association memberships. These activities are managed by Abbott’s Vice President of U.S.
Government Affairs, who makes the decision regarding advocacy activities, in consultation with senior management of relevant
business units. He then reports to senior management and annually to the Board’s Public Policy Committee. For additional
information regarding Abbott’s Public Policy Committee, please refer to the Committee’s charter here: https://dam.abbott.com/en-us/documents/pdfs/investors/Public-Policy-Committee-Charter.pdf,
and page 23 of this proxy statement. |
● |
Tax-Exempt, Lobbying Organizations. Abbott
is a member of various U.S. trade organizations that engage in lobbying and other political activities to champion and protect
Abbott, our industry, and the people who rely on our products to achieve better health. For years, Abbott has listed on its
website the trade organizations to which Abbott pays a significant amount of dues ($50,000 or more), and each year, the Board’s
Public Policy Committee reviews a report of Abbott’s major trade association memberships, the amount of dues, and the
amount used for lobbying. |
Abbott already discloses substantially all the information the proposal
seeks. Repeated reporting of existing disclosures would waste corporate resources and would not be in the best interests of Abbott
or its shareholders.
The Board of Directors recommends that Abbott’s shareholders vote AGAINST this proposal.
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Shareholder Proposal on Antimicrobial Resistance Report
(Item 8 on Proxy Card) |
The Shareholder Commons has informed Abbott that it intends to present
the following proposal at the annual meeting on behalf of the Jan McMillan Montgomery Generation Skipping Trust U/A DTD 05/20/2011
(the “Trust”), 65 3rd Street, Suite 22, P.O. Box 1270, Point Reyes Station, California 94956, and that the Trust owns
at least $2,000 in market value of Abbott common shares.
PROPONENT’S STATEMENT IN SUPPORT OF SHAREHOLDER
PROPOSAL
RESOLVED, shareholders ask that the Board of Directors
commission and publish a report on (1) the public health costs created by Company decisions not to invest additional resources
in slowing the growth of antimicrobial resistance (AMR), (2) market barriers to such additional investment, and (3) the manner
in which increasing AMR may affect financial market returns available to its diversified shareholders.
Supporting Statement:
AMR is the phenomenon of pathogens becoming resistant to antibiotics,
antifungals, and other antimicrobial drugs over time. Resistance can be accelerated by the overuse, misuse, or unavailability of
antimicrobials and by manufacturing processes that do not protect the surrounding environment from contamination. AMR is a serious
and growing problem: at least 700,000 people die annually from drug-resistant illnesses and AMR is on track to kill up to 10 million
people a year by 2050, with a cumulative cost to the global economy of more than US$80 trillion.1
The Antimicrobial Resistance Benchmark (“ARB”),
a respected program that rates major pharmaceutical companies on measures taken to slow AMR, recently scored our Company as having
achieved 21 of 40 possible points, leaving room for considerable additional investment in prevention.2 The ARB lists
numerous opportunities for the Company to do more, including ensuring supply in countries where access to medicine is limited,
expanding its environmental risk strategy, decoupling sales incentives for antimicrobials, and improving its brochures and packaging.3
However, in its most recent earnings call, the Company did not discuss AMR
at all, focusing instead on reducing manufacturing costs and increasing sales, in contrast to the ARB’s recommendations to
preserve antimicrobial efficacy by spending more on mitigating environmental contamination and reducing antimicrobial sales incentives.4
This narrow focus on improving Company financial metrics in the face of the AMR crisis does a disservice to our shareholders:
the effect of Company practices on public health is more important to its mostly diversified investors than are its profit margins.
(More than 20 percent of the Company’s shares are held by Vanguard, BlackRock, and State Street—investment managers
with indexed or otherwise broadly diversified investors.) Such shareholders and beneficial owners lose financially when companies
in their portfolios boost internal returns with practices that lower broad economic performance, because equity market values rise
and fall in proportion to GDP.5
While the Company may profit by ignoring externalized costs such
as AMR, diversified shareholders ultimately pay these costs, and they have a right to ask what they are. A study would help
shareholders determine whether to seek a change in corporate direction, structure, or form to better serve their interests.
Please vote for: Report on public health costs
of antimicrobial resistance – Proposal 8
1 |
https://www.globalpointofcare.abbott/en/knowledge-insights/viewpoints/antimicrobial-resistance.html |
2 |
https://accesstomedicinefoundation.org/amr-benchmark/report-cards/abbott-laboratories |
3 |
https://accesstomedicinefoundation.org/amr-benchmark/report-cards/abbott-laboratories#opportunities |
4 |
https://www.marketbeat.com/earnings/transcripts/65172/ |
5 |
https://www.unepfi.org/fileadmin/documents/universal_ownership_full.pdf |
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BOARD OF DIRECTORS’
STATEMENT IN OPPOSITION TO THE SHAREHOLDER PROPOSAL ON ANTIMICROBIAL RESISTANCE REPORT
(Item 8 on Proxy Card)
The Board of Directors recommends that you vote AGAINST the
proposal.
The Board believes that commissioning a study to track and evaluate
larger societal costs of antimicrobial resistance would be an inefficient use of the Company’s resources and a diversion
of management’s time, without providing any meaningful benefit to shareholders.
Abbott is a very small player in the global anti-infective market.
Abbott’s established pharmaceuticals business focuses on branded generic medicines, which are commercialized in emerging
countries only. Abbott does not design or develop new anti-infectives. Abbott ranks 31 overall in global anti-infective sales;
and, by value, Abbott’s sales of anti-infectives represent 0.6% total global sales of anti-infectives across all companies.
Sales of anti-infectives represent 0.5% of Abbott’s total global sales.
Nonetheless, Abbott is taking significant steps to do its part to
slow the growth of antimicrobial resistance. These standards and programs have been recognized by the independent Access to Medicine
Foundation as part of its 2021 Antimicrobial Resistance (AMR) Benchmark report, which designated Abbott as a “leader among
generic medicine manufacturers, taking steps to combat overselling of antimicrobials.”1 Abbott’s score in
the latest 2021 AMR Benchmark report was 31 out of a total 45 points, ranking second in the overall generics category.
At least three key components of Abbott’s standards and programs
are worth highlighting here. First, to minimize the environmental impact from manufacturing, the concentration of anti-infective
molecules emitted from Abbott’s manufacturing facilities meets industry standards set by the AMR Industry Alliance, one of
the largest private sector coalitions dedicated to measuring and driving the life-sciences industry’s progress to curb antimicrobial
resistance. Further, as captured in the 2021 AMR Benchmark, Abbott is one of the first companies to report setting discharge limits
consistent with AMR standards at its third-party suppliers’ manufacturing sites.2
Second, Abbott offers important
diagnostic tools to help doctors make informed decisions and avoid unnecessary use of antibiotics. Abbott provides products to
help accurately diagnose lower respiratory tract infections (Afinion CRP), influenza (ID NOW), MRSA (PBP2a SA Culture Colony),
and malaria (SD BIOLINE), to name just a few. Abbott also funded and is now a member of VALUE-Dx, an initiative by a multidisciplinary
consortium of diagnostic companies and non-industry partners to combat antimicrobial resistance. VALUE-Dx generates evidence on
the medical, economic, and public health value of leveraging diagnostics tools to help health care professionals make educated
treatment decisions in the context of antimicrobial resistance. Further, Abbott’s Test Target Treat initiative (www.testtargettreat.com),
is designed to fight antimicrobial resistance by educating healthcare professionals on the importance of using diagnostics to make
more targeted treatment decisions and reduce the inappropriate use of antibiotics. To fund that initiative, Abbott provided an
unrestricted educational grant to the Alliance for the Prudent Use of Antibiotics.
Last, even though Abbott’s antibiotic medicines account for
less than one percent of the antibiotics sold worldwide, Abbott seeks to provide safe, effective, and affordable antibiotics for
people who need them in emerging countries. To ensure responsible promotional practices for these products, Abbott regularly trains
its commercial teams on sensitivities around antibiotics and antimicrobial resistance. Abbott also provides healthcare professionals
with in-country events designed specifically to educate them on antimicrobial resistance.
1 |
The Access to Medicine Foundation, “Antimicrobial Resistance Benchmark,” pg. 7, 138 (2021), available at https://accesstomedicinefoundation.org/amr-benchmark/2021-benchmark#. |
2 |
The Access to Medicine Foundation, “Antimicrobial Resistance Benchmark,” pg. 7, 47 (2021), available at https://accesstomedicinefoundation.org/amr-benchmark/2021-benchmark#. |
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For instance, through an unrestricted educational grant to a third
party, Abbott engaged healthcare professionals in more than 90 countries on antibiotic use and resistance when treating upper respiratory
tract infections. In Colombia, Abbott reached more than 1,000 healthcare professionals with its “Rational Use Antibiotics”
campaign intended to educate those professionals on the correct usage of antibiotics. In India, since 2019, Abbott has been pioneering
its use of the ARISE program, which captures data on resistance to certain antibiotic strains across the country to help healthcare
professionals understand resistance patterns and antimicrobial sensitivity. There are more than 28,000 physicians registered on
the platform.
With respect to patients, since 2020, Abbott has adapted packaging
of several antibacterial medicines to account for adherence to treatment, literacy, and pediatric use and to facilitate the appropriate
use of such medicines by patients. The 2021 AMR Benchmark highlighted these efforts in its high ranking of Abbott’s stewardship
efforts.3
The Board of Directors recommends that Abbott’s shareholders vote AGAINST this proposal.
3 |
The Access to Medicine Foundation, “Antimicrobial Resistance
Benchmark,” pg. 16 (2021), available at https://accesstomedicinefoundation.org/amr-benchmark/2021-benchmark#. |
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ADDITIONAL INFORMATION
SECURITY OWNERSHIP OF EXECUTIVE OFFICERS AND DIRECTORS |
The table below reflects the number of Abbott common shares beneficially
owned as of January 31, 2022 by (i) each director nominee, (ii) the Chief Executive Officer, the Chief Financial Officer, and the
other current and former executive officers listed in the Summary Compensation Table (collectively, the “named officers”),
and (iii) all directors and executive officers 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, 2022(3) |
|
Stock
Equivalent
Units |
H. L. Allen |
158,038 |
|
1,029,166 |
|
0 |
R. J. Alpern |
33,879 |
|
0 |
|
8,591 |
R. S. Austin |
41,542 |
|
64,718 |
|
0 |
S. E. Blount |
29,739 |
|
0 |
|
0 |
R. B. Ford |
292,061 |
|
1,548,676 |
|
0 |
R. E. Funck, Jr. |
227,165 |
|
480,438 |
|
0 |
P. Gonzalez |
0 |
|
0 |
|
323 |
M. A. Kumbier |
8,795 |
|
0 |
|
0 |
D. W. McDew |
3,473 |
|
0 |
|
0 |
N. McKinstry |
27,139 |
|
63,391 |
|
0 |
W. A. Osborn |
96,996 |
|
29,567 |
|
29,356 |
M. F. Roman |
1,499 |
|
0 |
|
705 |
D. G. Salvadori |
100,430 |
|
615,361 |
|
0 |
D. J. Starks |
7,022,156 |
|
0 |
|
0 |
J. G. Stratton |
12,114 |
|
0 |
|
7,216 |
G. F. Tilton |
44,876 |
|
0 |
|
33,678 |
A. F. Wainer |
49,782 |
|
308,573 |
|
0 |
M. D. White |
3,128,722 |
|
5,066,061 |
|
0 |
All directors and executive officers as a group(4)(5) |
9,243,102 |
|
7,548,907 |
|
79,869 |
(1) |
This column includes shares held in the officers’ accounts in the Abbott Laboratories Stock Retirement
Trust as follows: R. E. Funck, Jr., 18,015; M. D. White, 35,870; and all executive officers as a group, 55,454. Each officer
has shared voting power and sole investment power with respect to the shares held in his or her account. |
(2) |
This column includes restricted stock units held by the non-employee directors and payable in stock upon their retirement
from the Board as follows: R. J. Alpern 33,879; R. S. Austin, 41,542; S. E. Blount, 27,139; M. A. Kumbier, 5,714; D. W. McDew,
3,473; N. McKinstry, 27,139; W. A. Osborn, 35,796; M. F. Roman, 1,499; D. J. Starks, 12,096; J. G. Stratton, 8,659; G. F.
Tilton, 37,526; and all directors as a group, 234,462. |
(3) |
This column also includes 25,193 restricted stock units held by all executive officers as a group that will be payable
in stock within 60 days of January 31, 2022. |
(4) |
Certain executive officers of Abbott are fiduciaries of several employee benefit trusts maintained by Abbott. As |
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such, they have shared voting and/or investment power with respect to the common shares held by those
trusts. The table does not include the shares held by the trusts. As of January 31, 2022, these trusts owned a total of 29,147,838
(1.7%) of the outstanding shares of Abbott. None of the directors, named officers, or executive officers has pledged shares. |
(5) |
No director or executive officer beneficially owns more than one percent of the outstanding shares of Abbott. Excluding
the shared voting and/or investment power over the shares held by the trusts described in footnote 4, the directors and executive
officers as a group beneficially own less than one percent of the outstanding shares of Abbott. |
INFORMATION CONCERNING SECURITY OWNERSHIP |
The table below reports the number of common shares beneficially
owned as of December 31, 2021 by BlackRock, Inc. 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 |
BlackRock, Inc.(1) |
137,155,602 |
|
7.8% |
55 East 52nd Street |
|
|
|
New York, NY 10055 |
|
|
|
The Vanguard Group(2) |
149,152,264 |
|
8.4% |
100 Vanguard Blvd. |
|
|
|
Malvern, PA 19355 |
|
|
|
(1) |
The information shown was provided by BlackRock, Inc. in a Schedule 13G/A it filed with the Securities and Exchange Commission on February 1, 2022. BlackRock reported that it has sole voting power over 121,108,038 of these shares and sole dispositive power over all of these shares. |
(2) |
The information shown was provided by The Vanguard Group in a Schedule 13G/A it filed with the Securities and Exchange Commission on February 9, 2022. Vanguard reported that it has shared voting power over 2,882,749 of these shares, sole dispositive power over 141,949,846 of these shares, and shared dispositive power over 7,202,418 of these shares. |
APPROVAL PROCESS FOR RELATED PERSON TRANSACTIONS |
It is Abbott’s policy that the Nominations and Governance
Committee oversee, review, and approve 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:
|
● |
Questionnaires annually distributed to Abbott’s directors and officers, |
|
● |
Certifications submitted annually by Abbott officers related to their compliance with Abbott’s Code of Business Conduct, or |
|
● |
Communications made directly by the related person to the Chief Financial Officer or General Counsel. |
In determining whether to approve a related person transaction,
the Nominations and Governance Committee will consider the following items, among others:
|
● |
The related person’s relationship to Abbott and interest in the transaction, |
|
● |
The material facts of the transaction, including the aggregate value of such transaction or, in the case of indebtedness, the amount of principal involved, |
|
● |
The benefits to Abbott of the transaction, |
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● |
If applicable, the availability of other sources of comparable products or services, |
|
● |
An assessment of whether the transaction is on terms that are comparable to the terms available to an unrelated third party or to employees generally, |
|
● |
Whether a transaction has the potential to impair director independence, and |
|
● |
Whether the transaction constitutes a conflict of interest. |
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 son of one of our former executive officers, Roger Bird, is employed by Abbott. During 2021, his total compensation exceeded
the foregoing threshold.
DATE FOR RECEIPT OF SHAREHOLDER PROPOSALS FOR THE 2023 ANNUAL MEETING PROXY STATEMENT |
Shareholder proposals for presentation at the 2023 Annual Meeting
must be received by Abbott no later than November 18, 2022 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 2023 meeting.
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:
|
● |
the record date for that Annual Meeting, |
|
● |
the date the shareholder provides timely notice to Abbott, and |
|
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the date of the Annual Meeting |
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.
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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 2023 Annual Meeting, this written notice must
be received by Abbott no later than January 29, 2023.
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.
In addition to satisfying the foregoing requirements under Abbott’s
By-Laws, to comply with the universal proxy rules once they become effective, shareholders who intend to solicit proxies in support
of director nominees other than Abbott’s nominees must provide notice that sets forth the information required by Rule 14a-19
under the Securities Exchange Act of 1934, as amended, no later than February 28, 2023.
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 2022 Annual Meeting will be held virtually to enable broader
and more convenient shareholder participation and to support the health and safety of Abbott’s shareholders, employees, and
communities during the ongoing coronavirus pandemic. There will not be a physical location for the meeting, and shareholders will
not be able to attend the meeting in person. Please see pages 90 to 91 for information on how to attend and participate in the
Annual Meeting.
By order of the Board of Directors.
HUBERT L. ALLEN
Secretary
| 89 |
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INFORMATION ABOUT THE ANNUAL MEETING
NOTICE AND ACCESS
In accordance with the Securities and Exchange Commission’s
“Notice and Access” rules, Abbott mailed a Notice of Internet Availability of Proxy Materials (the “Notice”)
to certain shareholders in mid-March of 2022. 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 meetnow.global/ ABT2022. Shareholders may log into the Annual Meeting beginning at 8:15 a.m. Central
Time on April 29, 2022. 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 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:
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A copy of the voter instruction form contained in the proxy materials mailed to you from your broker; |
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A copy of a broker statement evidencing that you are an Abbott shareholder; or |
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A legal proxy from your broker reflecting your ownership of Abbott shares. |
Please send your registration materials to Computershare at legalproxy@computershare.com,
with “Legal Proxy” in the subject line. Registration requests must be received by Computershare no later than 5 p.m.
Eastern Time on Tuesday, April 26, 2022.
Requests for registration can also be submitted by mail to:
Computershare
Abbott Legal Proxy
P.O. Box 43001
Providence, RI 02940-3001
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 meetnow.global/ABT2022.
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.”
90 | |
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WHO CAN VOTE
Shareholders of record at the close of business on March 2, 2022
will be entitled to notice of and to vote at the Annual Meeting. As of January 31, 2022, Abbott had 1,763,482,267 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.
HOW TO VOTE
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:
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by telephone (1-800-652-VOTE (8683)), or |
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or on the Internet at www.investorvote.com/abt. |
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.
HOW TO SUBMIT QUESTIONS
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.
TECHNICAL SUPPORT
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 meetnow.global/ABT2022.
The virtual meeting platform is fully supported across browsers
(Microsoft Edge, 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.
| 91 |
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REVOKING A PROXY
You may revoke your proxy by voting in person at the Annual Meeting
or, at any time prior to the meeting:
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● |
by delivering a written notice to the Secretary of Abbott, |
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by delivering an authorized proxy with a later date, or |
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by voting by telephone or using the Internet after you have given your proxy. |
CUMULATIVE VOTING
Cumulative voting allows a shareholder to multiply the number
of shares owned by the number of directors to be elected and to cast the total for one nominee or distribute the votes among the
nominees, as the shareholder desires. Shareholders may not cumulate their votes against a nominee. If shares are voted cumulatively
and there are more nominees than there are director vacancies, nominees who receive the greatest number of votes will be elected.
If you wish to cumulate your votes, you must sign and mail in your proxy card or attend the Annual Meeting.
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 12 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 12 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 a shareholder proposal, or where the shareholder has abstained on these matters, the shares represented by the proxy will be
voted (or not voted) as specified. Where no choice has been specified, the proxy will be voted FOR the approval of executive compensation,
FOR the ratification of Ernst & Young LLP as auditors, 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.
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
92 | |
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discretionary authority to vote shares in the absence of instructions
on matters the New York Stock Exchange considers “routine”, such as the ratification of the appointment of the auditors.
They do not have discretionary authority to vote shares in absence of instructions on “non-routine” matters. The election
of directors, the advisory vote on the approval of executive compensation, and shareholder proposals are “non-routine”
matters. Non-voted shares will not affect the determination of the outcome of the vote on any matter to be decided at the meeting.
INSPECTORS
OF ELECTION
The inspectors of election and the tabulators of all proxies,
ballots, and voting tabulations that identify shareholders are independent and are not Abbott employees.
COST
OF SOLICITING PROXIES
The accompanying proxy is solicited by the Board of Directors
on behalf of Abbott for use at the Annual Meeting.
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, John A. McCoy, Jr., 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.
CONFIDENTIAL VOTING
It is Abbott’s policy that all proxies, ballots, and voting
tabulations that reveal how a particular shareholder has voted be kept confidential and not be disclosed, except:
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where disclosure may be required by law or regulation, |
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where disclosure may be necessary in order for Abbott to assert or defend claims, |
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where a shareholder provides comments with a proxy, |
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where a shareholder expressly requests disclosure, |
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to allow the inspectors of election to certify the results of a vote, or |
|
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in other limited circumstances, such as a contested election or proxy solicitation not approved and recommended by the Board of Directors. |
HOUSEHOLDING OF PROXY MATERIALS
Shareholders sharing an address may receive only one copy of
the proxy materials or the Notice of Internet Availability of Proxy Materials, unless their broker, bank, or other intermediary
has received contrary instructions from any shareholder at that address. This is known as “householding.” Shareholders
wishing to discontinue householding and receive separate copies of the proxy materials or the Notice of Internet Availability of
Proxy Materials should notify their broker, bank, or other intermediary.
| 93 |
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CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement contains statements that may be forward-looking
statements for purposes of the Private Securities Litigation Reform Act of 1995. Words such as “expects,” “anticipates,”
“intends,” “plans,” “believes,” “seeks,” “estimates,” “forecasts,”
variations of these words, and similar expressions are intended to identify these forward-looking statements. Abbott cautions that
these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from
those indicated in the forward-looking statements, including but not limited to those risks and uncertainties identified under
“Item 1A. Risk Factors” of Abbott’s Annual Report on Form 10-K for the year ended Dec. 31, 2021.
Abbott undertakes no obligation to release publicly any revisions to forward-looking statements as the result of subsequent events
or developments, except as required by law.
The information on Abbott’s website, including the contents
of Abbott’s 2020 Global Sustainability Report, 2020 Diversity and Inclusion Report, and 2030 Sustainability Plan, is not,
and shall not be deemed to be, a part of this proxy statement or incorporated herein or into any of Abbott’s other filings
with the Securities and Exchange Commission.
94 | |
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EXHIBIT A –
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:
|
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A director is not independent if the director is, or has been within the last three years, an employee of Abbott or its subsidiaries, or an immediate family member is, or has been within the last three years, an executive officer of Abbott or its subsidiaries. |
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A director is not independent if the director has received, or has an immediate family member who has received, during any twelve-month period within the last three years, more than $120,000 in direct compensation from Abbott or its subsidiaries, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service), and other than amounts received by an immediate family member for service as an employee (other than an executive officer). |
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A director is not independent if (A) the director or an immediate family member is a current partner of a firm that is Abbott’s internal or external auditor; (B) the director is a current employee of such a firm; (C) the director has an immediate family member who is a current employee of such a firm and personally works on Abbott’s or its subsidiaries’ audit; or (D) the director or an immediate family member was within the last three years a partner or employee of such a firm and personally worked on Abbott’s or its subsidiaries’ audit within that time. |
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A director is not independent if the director or an immediate family member is, or has been within the last three years, employed as an executive officer of another company where any of the present executive officers of Abbott or its subsidiaries at the same time serves or served on that company’s compensation committee. |
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A director is not independent if the director is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to, or received payments from, Abbott or its subsidiaries for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million, or 2% of such other company’s consolidated gross revenues. |
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A director is not independent if the director is an executive officer of a charitable organization that received charitable contributions (other than matching contributions) from Abbott and its subsidiaries in the preceding fiscal year that are in excess of the greater of $1 million or 2% of such charitable organization’s consolidated gross revenues. |
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| A-1 |
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INDUSTRY LEADERSHIP
FORTUNE’S MOST ADMIRED COMPANIES
since 1984; #1 in Medical Products from 2014-2022 |
DOW JONES SUSTAINABILITY INDEX
Top Industry Score, 2013-2021, 17th year on the Index |
Fast Company’s 2021 World Changing Ideas
Recognized three of our technologies: MUAC z-score tape, BinaxNOW,
and FreeStyle Libre 2 iCGM |
Wall Street Journal Management Top 250 Companies
#23; #9 in “Sustainability Star” ranking for ESG
performance |
Boston Consulting Group 50 Most Innovative Companies
#29 in 2021 |
JUST Capital
#74 on 2022 JUST 100 list |
Investors Business Daily 100 Best ESG Companies
#76 on the list |
U.S. Chamber of Commerce Foundation Corporate Citizenship
Hall of Fame
Abbott was the sole 2021 inductee, one of only 9 companies recognized
for sustained, positive impact on society |
SCIENCE MAGAZINE TOP 20 EMPLOYERS
for 18 years |
100 BEST COMPANIES
Working Mother for 21 years in a row, Hall of Fame |
TOP 50 COMPANIES FOR DIVERSITY
DiversityInc, for 18 consecutive years |
WORKPLACE LEADERSHIP
in more than 25 countries |
Table of Contents
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 29, 2022
9:00 A.M. CENTRAL TIME
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. |
The 2022 Annual Meeting of Shareholders will be held virtually
to enable broader and more convenient shareholder participation and to support the health and safety of Abbott’s shareholders,
employees, and communities during the ongoing coronavirus pandemic. There will not be a physical location for the Annual Meeting,
and 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 meetnow.global/ABT2022.
To be admitted to the meeting, shareholders will be required to enter a 15-digit control number. Please see page 90 of this proxy
statement for instructions on how to be admitted to the Annual Meeting.
How to Attend the Meeting by Phone. Shareholders who wish
to attend the meeting by phone should contact Abbott representatives at 224-668-7238 or abbottshareholders@abbott.com to obtain
the meeting telephone number in advance of the meeting. Shareholders participating by phone will be able to listen to the meeting
but will not have the ability to vote or submit questions during the meeting. Shareholders who wish to vote their shares or submit
questions during the meeting should attend the meeting on the virtual meeting platform.
Table of Contents
2022
Annual Meeting Proxy Card |
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6 IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. 6
A |
Proposals
– The Board of Directors recommends a vote FOR all the nominees listed in Item 1 and FOR Items 2 and 3. |
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1. |
Election of 12 Directors: |
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For |
Against |
Abstain |
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01 - R. J. Alpern
04 - P. Gonzalez
07 - N. McKinstry
10 - D. J. Starks |
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02 - S. E. Blount
05 - M. A. Kumbier
08 - W. A. Osborn
11 - J. G. Stratton |
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03 - R. B. Ford
06 - D. W. McDew
09 - M. F. Roman
12 - G. F. Tilton |
2. |
Ratification of Ernst & Young LLP As Auditors |
☐ |
☐ |
☐ |
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3. |
Say on Pay - An Advisory Vote on the Approval of Executive Compensation |
☐ |
☐ |
☐ |
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☐ |
Mark
here to vote
FOR all nominees |
☐ |
Mark
here to WITHHOLD
vote from all nominees |
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☐ |
For All EXCEPT - To withhold authority to vote for any nominee(s), write the name(s) of such nominee(s) below. |
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The
Board of Directors recommends a vote AGAINST Items 4, 5, 6, 7 and 8. |
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For |
Against |
Abstain |
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For |
Against |
Abstain |
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For |
Against |
Abstain |
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4. Shareholder Proposal - Special Shareholder Meeting Threshold |
☐ |
☐ |
☐ |
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6. Shareholder Proposal - Rule 10b5-1 Plans |
☐ |
☐ |
☐ |
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8. Shareholder Proposal - Antimicrobial Resistance Report |
☐ |
☐ |
☐ |
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5. Shareholder Proposal - Independent Board Chairman |
☐ |
☐ |
☐ |
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7. Shareholder Proposal - Lobbying Disclosure |
☐ |
☐ |
☐ |
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B |
Authorized
Signatures – This section must be completed for your vote to count. Please date and sign below. |
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. |
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Signature 1 – Please keep signature within the box. |
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Signature 2 – Please keep signature within the box. |
/ / |
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03KRUJ
Table of Contents
The 2022 Annual Meeting of Shareholders will be held virtually to enable broader and more convenient shareholder participation
and to support the health and safety of Abbott’s shareholders, employees, and communities during the ongoing coronavirus
pandemic. There will not be a physical location for the Annual Meeting, and 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 meetnow.global/ABT2022. To be admitted to the meeting, you must have 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.
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Small steps make an impact.
Help the environment by consenting to receive electronic
delivery, sign up at www.investorvote.com/abt |
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6 IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. 6
Proxy — Abbott Laboratories |
|
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Proxy Solicited on Behalf of the Board of Directors for Annual Meeting - April 29, 2022
The undersigned, revoking all previous proxies, acknowledges receipt of the Notice and Proxy Statement dated March 18, 2022,
in connection with the Annual Meeting of Shareholders of Abbott Laboratories to be held at 9:00 a.m. Central Time on Friday,
April 29, 2022, and hereby appoints Robert 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 2022 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 and 3 and AGAINST Items 4, 5, 6, 7 and
8.
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. |
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Comments – Please print your comments below. |
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