Item 402(v) of Regulation S-K, we have identified the following financial performance measures as being the most important in linking actual compensation paid to executives to AbbVie’s performance.
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Adjusted Diluted Earnings Per Share |
Adjusted Relative Return on Invested Capital |
Adjusted Return on Assets |
Non-GAAP Income Before Taxes |
Non-GAAP Operating Margin |
Platform Revenue |
Total Shareholder Return |
Potential Payments upon Termination or Change in Control
POTENTIAL PAYMENTS UPON TERMINATION – GENERALLY
In accordance with AbbVie’s longstanding practice, the company has not entered into employment agreements with its NEOs. NEOs do not have any rights or entitlements to any cash termination or severance payments or equity vesting acceleration outside of the change in control context and subsequent termination of an NEO (double trigger), as discussed in more detail below.
The following summarizes the payments that the NEOs would have received if their employment had terminated on December 31, 2022. Earnings would have continued to be paid for the NEO’s Performance Incentive Plan and Supplemental Savings Plan grantor trusts, as applicable, until the trust assets were fully distributed. The amount of these payments would depend on the trust earnings and fees and the period over which the trust assets were distributed. Based on current earnings rates, if the trust assets were distributed over a 10-year period, the NEOs would receive the following average annual earnings payments over such 10-year period: Mr. Gonzalez, $1,280,376; Mr. Michael, $114,614; Mr. Reents, $281,960; Ms. Schumacher, $1,770,048; Mr. Stewart, $570,926; and Dr. Saleki-Gerhardt, $680,835. In addition, the following one-time deposits would have been made under the AbbVie Supplemental Pension Plan for each of the following NEOs, respectively: Mr. Gonzalez, $0; Mr. Michael, $7,946,974; Mr. Reents, $3,401,416; Ms. Schumacher, $909,293; Mr. Stewart, $6,006,735; and Dr. Saleki-Gerhardt, $649,441. As of December 31, 2022, Mr. Gonzalez, Mr. Michael, Mr. Reents, Ms. Schumacher, Mr. Stewart, and Dr. Saleki-Gerhardt were eligible to retire, and therefore were eligible to receive the pension benefits previously described.
If the termination of employment had been due to disability, then the respective NEO also would have received, in addition to AbbVie’s standard disability benefits, a monthly long-term disability benefit in the following amount: Mr. Gonzalez, $196,350; Mr. Michael, $125,530; Mr. Reents, $70,000; Ms. Schumacher, $112,605; Mr. Stewart, $82,710; and Dr. Saleki-Gerhardt, $71,965. This long-term disability benefit would continue for up to 24 months following termination of employment. It ends if the NEO retires, recovers, dies or ceases to meet eligibility criteria.
If the NEO’s employment had terminated due to death or disability, his or her unvested stock options, restricted stock or unit awards and performance shares would have vested on December 31, 2022 with values as set forth below in the subsection of this proxy statement captioned “Equity Awards.”
POTENTIAL PAYMENTS UPON CHANGE IN CONTROL
AbbVie has entered into change in control agreements with its NEOs. Each change in control agreement continues in effect until December 31, 2027, and can be renewed for successive five-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. As discussed in more detail below, AbbVie’s internal policies and individual change in control agreements with its NEOs prohibit a cash lump sum payment in excess of 2.99 times an NEO’s annual salary and bonus, unless shareholders ratify an exception.