UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
| ☑ | Filed by the Registrant | ☐ | Filed by a party other than the Registrant |
| CHECK THE APPROPRIATE BOX: | ||
| ☐ | Preliminary Proxy Statement | |
| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
| ☑ | Definitive Proxy Statement | |
| ☐ | Definitive Additional Materials | |
| ☐ | Soliciting Material under §240.14a-12 | |
Abbott Laboratories
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
| PAYMENT OF FILING FEE (CHECK ALL BOXES THAT APPLY): | ||
| ☑ | No fee required | |
| ☐ | Fee paid previously with preliminary materials | |
| ☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11 | |
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS AND
PROXY STATEMENT 2023
Abbott Laboratories
100 Abbott
Park Road
Abbott Park, Illinois 60064-6400 U.S.A.
On the Cover: Jay King ENSITE X EP SYSTEM/ ADVISOR HD GRID MAPPING CATHETER, SENSOR ENABLED/ TACTICATH ABLATION CATHETER, SENSOR ENABLED/GALLANT ICD During a routine physical, Jay King’s doctor discovered that Jay was suffering from atrial fibrillation. A series of ablations using Abbott’s TactiCath Ablation Catheter in conjunction with the EnSite X mapping system and HD Grid Mapping Catheter helped his heart restore a steady beat. Later, after suffering an episode of ventricular tachycardia, Jay had our Gallant cardioverter defibrillator implanted, which let him get back to the active life and outdoor activities he loves. |
TABLE OF CONTENTS
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1 |
NOTICE OF 2023 ANNUAL MEETING OF SHAREHOLDERS
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DATE AND TIME Friday, April 28, 2023 at |
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VIRTUAL MEETING SITE meetnow.global/ABT2023 |
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WHO CAN VOTE Shareholders of record at |
| ITEMS OF BUSINESS | Board
Voting Recommendation | |||
| Item 1 | 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 | FOR Each Director
Nominee | ||
| Item 2 | Ratification of the appointment of Ernst & Young LLP as auditors of Abbott for 2023 | FOR | ||
| Item 3 | Approval, on an advisory basis, of executive compensation | FOR | ||
| Item 4 | Approval, on an advisory basis, of the frequency of shareholder votes on executive compensation | FOR | ||
| Items 5-8 | Four shareholder proposals, if properly presented at the meeting | AGAINST | ||
Shareholders will also transact such other business as may properly come before the meeting, including any adjournment or postponement thereof.
ATTENDING THE ANNUAL MEETING
To attend the Annual Meeting, shareholders will be required to enter a control number. Please see page 91 for further instructions on how to attend the Annual Meeting. 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 no later than April 21, 2023 to obtain the meeting telephone number in advance of the meeting.
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.
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 17, 2023.
By order of the Board of Directors.
HUBERT L. ALLEN
Secretary
March 17, 2023
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to Be Held on April 28, 2023
Abbott’s 2023 Proxy Statement and 2022 Annual Report to Shareholders are available at www.abbott.com/proxy.
| 2 | |
PROXY SUMMARY
This summary contains highlights about Abbott and the upcoming 2023 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 three and five-year basis.
Abbott’s three-year TSR of 33% outpaced the peer group median, and Abbott’s five-year TSR of 109% is nearly twice 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.
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 | INVESTING FOR FUTURE GROWTH | SHAREHOLDER RETURNS | ||
● Steady stream of important product approvals across our businesses that will be significant contributors to growth in the coming years. |
● Increased manufacturing scale and capabilities
across several important products.
● Nearly $1.8 billion invested in internal capital
projects in the past year.
|
● Since the start of the COVID-19 pandemic in 2020, returned nearly $15 billion to shareholders in dividends and share buybacks. |
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3 |
| EXECUTIVE COMPENSATION |
SHAREHOLDER FEEDBACK
In 2022, 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:
| ● | Board oversight over governance structures, sustainability, and quality and regulatory matters. |
| ● | Human capital management and Abbott’s commitment to diversity, equity, and inclusion, including Abbott’s Diversity, Equity and Inclusion Report which provides goals, our progress against them, and disclosure of EEO-1 data. |
| ● | Board composition and refreshment, including the nomination of six new independent director nominees since 2018, three of whom are women and three of whom are minorities. |
| ● | Executive compensation program, including Abbott’s continued enhanced compensation disclosure. |
KEY FEATURES OF OUR EXECUTIVE COMPENSATION PROGRAM
The following practices and policies ensure alignment of interests between shareholders and executives, and effective ongoing compensation governance.
| Compensation Practice | Abbott Policy | More Information On Page | |
| 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 | 29-32 |
| 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 and business segments | 30-32 |
| Double-Trigger Change in Control | Yes | Provide change in control benefits under double-trigger circumstances only | 64-65 |
| Recoupment Policy | Yes | Compensation Committee can seek recoupment of incentive compensation, forfeit existing awards or reduce future awards | 50 |
| Robust Share Ownership Guidelines | Yes | Require significant share ownership for officers and directors, and share retention requirements until guidelines are met | 26 and 49 |
| Capped Incentive Awards | Yes | Incentive award payments are capped | 31 and 52 |
| 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 | 48-49 |
| Guaranteed Bonuses | No | No guaranteed bonuses | 30-31 |
| Employment Contracts | No | No employment contracts | 63 |
| Excessive Risk Taking | No | No highly leveraged incentive plans that encourage excessive risk taking | 51-52 |
| Hedging of Company Shares | No | No hedging of Abbott shares is allowed | 50 and 52 |
| Discounted Stock Options | No | No discounted stock options are allowed or granted | 51 |
Details of the compensation decisions made for our named executive officers are outlined on pages 38 to 47.
| THE STRENGTH OF OUR COMPENSATION PROGRAM IS EVIDENT IN OUR ‘SAY ON PAY’ VOTING RESULTS. IN 2022, ABBOTT ACHIEVED 91% SUPPORT FROM SHAREHOLDERS. |
| 4 | |
| DIRECTOR NOMINEES |
The Board of Directors recommends a vote FOR the election of each of the following nominees for director. All nominees, other than Mr. O’Grady, are currently serving as directors. Additional information about each director nominee’s background and experience can be found beginning on page 10.
| Name | Principal Occupation | Age | Director Since |
Committee Memberships |
| ROBERT J. ALPERN, M.D. Independent |
Professor and Former Dean, Yale School of Medicine |
72 | 2008 | ● Nominations and Governance ● Public Policy |
| CLAIRE BABINEAUX- FONTENOT Independent |
CEO, Feeding America | 58 | 2022 | ● Public Policy |
| SALLY E. BLOUNT, PH.D. Independent |
President and CEO, Catholic Charities of the Archdiocese of Chicago, and Professor and Former Dean, J.L. Kellogg Graduate School of Management | 61 | 2011 | ● Nominations and Governance ● Public Policy |
| ROBERT B. FORD | Chairman of the Board and CEO, Abbott Laboratories |
49 | 2019 | ● Executive (Chair) |
| PAOLA GONZALEZ Independent |
Vice President and Treasurer, The Clorox Company |
51 | 2021 | ● Audit ● Nominations and Governance |
| MICHELLE A. KUMBIER Independent |
President, Turf & Consumer Products, Briggs & Stratton, LLC | 55 | 2018 | ● Audit ● Compensation |
| DARREN W. McDEW Independent |
Retired General, U.S. Air Force, and Former Commander of U.S. Transportation Command | 62 | 2019 | ● Nominations and Governance ● Public Policy |
| NANCY McKINSTRY Independent |
CEO and Chairman of the Executive Board, Wolters Kluwer N.V. | 64 | 2011 | ● Audit (Chair) ● Compensation ● Executive |
| MICHAEL G. O’GRADY Independent |
Chairman and CEO, Northern Trust Corporation |
57 | New Nominee | |
| MICHAEL F. ROMAN Independent |
Chairman, President, and CEO, 3M Company |
63 | 2021 | ● Audit ● Compensation |
| DANIEL J. STARKS Independent |
Retired Chairman, President and CEO, St. Jude Medical, Inc. | 68 | 2017 | ● Compensation (Chair) ● Public Policy ● Executive |
| JOHN G. STRATTON Independent |
Executive Chairman, Frontier Communications Parent, Inc. |
62 | 2017 | ● Audit ● Public Policy |
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5 |
| CORPORATE GOVERNANCE |
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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Communicates 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 ASSESSMENT AND REFRESHMENT PROCESS
| Evaluation |  |
Assessment | |
Refreshment | ||||||||
Board regularly reviews Abbott’s governance practices, leadership structure, and Board and Committee composition All directors also conduct annual self-evaluations to assess Board, Committee, and director performance |
Board identifies how it can further its effectiveness through a combination of new perspectives and internal improvements |
To supplement the Board’s skills and provide fresh perspective, six new independent director nominees have been nominated since 2018, three of whom are women and three of whom are minorities | ||||||||||
OTHER BOARD GOVERNANCE HIGHLIGHTS
| ● | All directors elected annually by majority vote | |
| ● | Eleven out of twelve director nominees are independent | |
| ● | Fully independent Board Committees – Audit Committee, Compensation Committee, Nominations and Governance Committee, and Public Policy Committee | |
| ● | Executive sessions of the independent directors, led by the Lead Independent Director, at each regularly scheduled Board meeting | |
| ● | Annual evaluations of the Board, each Committee, and each director, conducted anonymously to facilitate candid feedback | |
| ● | Strong risk oversight, with areas of focus including human capital, cybersecurity and data protection, and sustainability, environmental, and social responsibility practices | |
| ● | Full Board oversight of corporate strategy and senior management succession planning |
| 6 | |
HIGHLY QUALIFIED BOARD, WITH DIVERSE BACKGROUNDS, SKILLS AND EXPERIENCES TO PROVIDE STRONG OVERSIGHT AND GUIDANCE
| THE 12 DIRECTOR NOMINEES COMPRISE A WELL-BALANCED, DIVERSE BOARD. | |
|
EXPERTISE
ALIGNED WITH ABBOTT’S DIVERSIFIED Healthcare and Medical Device Industry Finance and Accounting Risk Management, including Data Protection and Cybersecurity Global Supply Chain, Operations and Infrastructure Management Senior Leadership with Multinational Corporations and Diverse Business Models Regulatory and Compliance Consumer Products Government and Military Leadership |
WELL-BALANCED TENURE
|
BOARD DIVERSITY
| |
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7 |
| OUR COMMITMENT TO SUSTAINABILITY |
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 below 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 35 and 36.
2030 SUSTAINABILITY PLAN
At Abbott, sustainability means managing our company to deliver long-term impact for the people we serve — shaping the future of healthcare and helping the greatest number of people live better and healthier lives. Our work touched the lives of 2.2 billion people in 2021 and, by 2030, we intend to reach more than 3 billion people per year, improving the lives of 1 in every 3 people on the planet by 2030.
INNOVATE FOR ACCESS AND AFFORDABILITY
 affordability core to new product innovation |
 disease, malnutrition and infectious diseases |
 partnership | ||
| Integrate access, affordability and data insights as design principles into our R&D work and portfolio. | 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. |
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. |
BUILD A FOUNDATION FOR THE FUTURE
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CLIMATE Protect a healthy environment Protect our climate and water, including supporting the Science Based Targets initiative (SBTi) objective of reducing Scope 1, 2 and 3 carbon emissions. 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 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 by 50%. |
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DATA AND DATA PRIVACY Responsibly connect data, technology, and care 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. |
| 8 | |
| VOTING MATTERS AND BOARD RECOMMENDATIONS |
ITEM 1 Election of 12 |
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.
| |
ITEM 2 Ratification of |
The Board recommends a vote FOR this item. ● Independent firm with significant industry and financial
reporting expertise.
● See pages 71 to 72 for more information.
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ITEM 3 Say on Pay: Advisory Vote |
The Board recommends a vote FOR the approval of the named officers’ compensation. ● 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 and 5-year TSR performance vs. peers.
● See pages 73 and 74 for more information.
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ITEM 4 Say When on Pay: Advisory |
The Board recommends a vote for an ANNUAL (1 YEAR) shareholder advisory vote on approval of executive compensation. | |
ITEMS 5-8 Shareholder Proposals |
The Board recommends a vote AGAINST each shareholder proposal. ● Proposal 5: Special Shareholder Meeting Threshold
● Proposal 6: Independent Board Chairman
● Proposal 7: Lobbying Disclosure
● Proposal 8: Incentive Compensation
● See pages 75 to 86 for more information.
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9 |
NOMINEES FOR ELECTION AS DIRECTORS
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CLAIRE BABINEAUX-FONTENOT Director Since 2022 Age 58 Chief Executive Officer, Feeding America | |
PROFESSIONAL BACKGROUND ● Chief Executive Officer of Feeding America, a U.S.
hunger-relief charitable organization, since 2018.
● Founder of CBF Consulting Group, LLC, a business consulting
firm, since 2017.
● Executive Vice President and Global Treasurer of
Walmart Inc., a multinational retail corporation operating supercenters, discount department stores, and eCommerce websites,
from 2014 to 2017.
● Senior Vice President and Chief Tax Officer of
Walmart, from 2007 to 2014.
● Vice President of Audits and Tax Policy of Walmart, from
2004 to 2007.
● Serves on the Board of Directors of New York Life
Insurance Company and served on the Board of Directors of Charah Solutions, Inc. from 2018 to 2019.
KEY QUALIFICATIONS AND EXPERTISE As the Chief Executive Officer of Feeding America, Ms. Babineaux-Fontenot provides Abbott’s Board with substantial experience in organizational governance, strategic planning, and supply chain and infrastructure management, and through her prior financial leadership roles at Walmart, Ms. Babineaux-Fontenot contributes extensive expertise and knowledge of global risk management and corporate finance and accounting matters for a multinational public company. | ||
| 10 | |
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SALLY E. BLOUNT, PH.D. Director Since 2011 Age 61 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 ● President and Chief Executive Officer of Catholic
Charities of the Archdiocese of Chicago since August 2020.
● Michael L. Nemmers Professor of Strategy at the
J.L. Kellogg Graduate School of Management at Northwestern University since 2010.
● Dean of the J.L. Kellogg Graduate School of Management
at Northwestern University from 2010 to 2018.
● 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
and Economic Club of Chicago.
● Served on the Board of Directors of Ulta Beauty,
Inc. from 2017 to 2022.
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. | ||
 |
ROBERT B. FORD Director Since 2019 Age 49 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.
● President and Chief Operating Officer of Abbott from 2018
to 2020.
● Executive Vice President, Medical Devices of Abbott
from 2015 to 2018.
● 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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11 |
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PAOLA GONZALEZ Director Since 2021 Age 51 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, pursuant to which she is responsible for treasury, investor relations and real estate matters, and through her prior financial roles in several of its businesses, Ms. Gonzalez 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 55 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, batteries, 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 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, commercial, business development and strategic planning experience. | ||
| 12 | |
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DARREN W. MCDEW Director Since 2019 Age 62 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 United Services
Automobile Association, Boys & Girls Club of America, and Manns Home Youth Foundation.
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, succession planning and leadership development. | ||
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NANCY MCKINSTRY Director Since 2011 Age 64 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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13 |
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MICHAEL G. O’GRADY New Nominee Age 57 Chairman and Chief Executive Officer, Northern Trust Corporation | |
PROFESSIONAL BACKGROUND ● Chairman of Northern Trust Corporation, a multibank
holding company, since 2019, Chief Executive Officer since 2018, and President since 2017.
● President, Corporate & Institutional Services
of Northern Trust from 2014 to 2016.
● Chief Financial Officer of Northern Trust from 2011 to
2014.
● Managing Director, Investment Banking Group of
Bank of America Merrill Lynch from 2000 to 2011.
OTHER PUBLIC COMPANY BOARDS Northern Trust Corporation KEY QUALIFICATIONS AND EXPERTISE As the Chairman and Chief Executive Officer of Northern Trust Corporation, Mr. O’Grady has significant experience leading a global public company in a highly regulated industry, including oversight of operations and risk management, strategy and business development, and corporate governance. Mr. O’Grady also contributes broad financial expertise, including extensive experience in financial advisory and investment banking matters. | ||
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MICHAEL F. ROMAN Director Since 2021 Age 63 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. | ||
| 14 | |
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DANIEL J. STARKS Director Since 2017 Age 68 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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JOHN G. STRATTON Director Since 2017 Age 62 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. | ||
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15 |
THE BOARD OF DIRECTORS AND ITS COMMITTEES
| THE BOARD OF DIRECTORS |
The Board of Directors held 6 meetings in 2022. The average attendance of all directors at Board and committee meetings in 2022 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., Claire Babineaux-Fontenot, Sally E. Blount, Ph.D., Paola Gonzalez, Michelle A. Kumbier, Darren W. McDew, Nancy McKinstry, Michael G. O’Grady, Michael F. Roman, Daniel J. Starks, and John G. Stratton, as well as William A. Osborn and Glenn F. Tilton, who will continue to serve as directors until the 2023 Annual Meeting, and Roxanne S. Austin, who served as a director for a portion of 2022.
To determine independence, the Board applied the categorical standards attached as Exhibit A to this proxy statement. The Board also considered whether a director or director nominee has any other material relationships with Abbott or its subsidiaries and concluded that none of them had a relationship that impaired his or her independence. This included consideration of the fact that some of the directors or director nominees 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 director nominees and information developed internally by Abbott.
| LEADERSHIP STRUCTURE |
Abbott’s current Board leadership is comprised of the Chairman of the Board and CEO, a Lead Independent Director, and independent Committee Chairs. 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.
Robert B. Ford currently serves as Chairman of the Board and CEO. The Board has determined that 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 oversight and execution of strategic initiatives and business plans. Mr. Ford has extensive industry expertise and familiarity with Abbott’s diverse, 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 also maintains a strong Lead Independent Director with significant roles and responsibilities, who is appointed by and from the independent directors. 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, |
| ● | Call meetings of the independent directors, |
| ● | Preside at all meetings of the Board at which the Chairman is not present, |
| 16 | |
| ● | 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, |
| ● | 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, |
| ● | 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, and |
| ● | Engage directly with major shareholders as appropriate. |
Currently, the Chair of the Nominations and Governance Committee, Mr. Osborn, is the Lead Independent Director. Mr. Osborn will be retiring from the Board at the 2023 Annual Meeting. The Board has discussed candidates to succeed Mr. Osborn as the Lead Independent Director, including which candidates possess the appropriate governance expertise, tenure with Abbott’s Board, and ability to assume the additional time commitment and responsibilities of the role. In accordance with its established schedule, the Board will formally appoint the next Lead Independent Director at its Board meeting following the Annual Meeting.
Throughout the year, the Board and its Committees conduct a thorough review of Abbott’s corporate governance structures, taking into account the results of the annual shareholders meeting and shareholder feedback; the results of annual Board, Committee, and director assessments; regulatory developments; and advancements in the areas of corporate governance, compensation, and sustainability.
In addition, as part of its regular succession planning, the Board monitors the composition of backgrounds, skills, and experiences contributed by each of the directors, as well as director tenures and upcoming retirements. Based on these ongoing evaluations, the Board takes actions to continue shaping the Board’s leadership structure and composition to best serve the interests of Abbott and its shareholders. Such actions include evaluating director candidates to supplement the Board’s portfolio of skills, appointing new directors well in advance of anticipated retirement to provide sufficient time for onboarding and transfer of institutional knowledge, and adjusting Board Committee leadership and composition to refresh perspectives and further director development.
Abbott’s Board leadership is further strengthened by:
| ● | Eleven out of twelve director nominees are independent | |
| ● | Fully independent Board Committees – Audit Committee, Compensation Committee, Nominations and Governance Committee, and Public Policy Committee | |
| ● | 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, at each regularly scheduled Board meeting | |
| ● | Annual evaluations of the Board, each Committee, and each director, including the Chairman of the Board and CEO, that are led by the Lead Independent Director and conducted anonymously to facilitate candid feedback |
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17 |
| 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:
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Global business perspective |
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Successful track record |
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Innovative thinking |
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Knowledge of corporate governance requirements and practices |
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High integrity |
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Commitment to good corporate citizenship |
The Board of Directors believes that the 12 director nominees comprise a well-balanced and highly qualified Board, with diverse backgrounds, skills, and experiences to provide strong oversight and guidance.
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EXPERTISE ALIGNED WITH ABBOTT’S DIVERSIFIED Healthcare and Medical Device Industry Finance and Accounting Risk Management, including Data Protection and Cybersecurity Global Supply Chain, Operations and Infrastructure Management Senior Leadership with Multinational Corporations and Diverse Business Models Regulatory and Compliance Consumer Products Government and Military Leadership |
WELL-BALANCED TENURE
|
BOARD DIVERSITY
|
| 18 | |
| DIRECTOR SELECTION |
The Nominations and Governance Committee assists the Board of Directors in identifying individuals qualified to become Board members and recommends to the Board the nominees for election as directors at the next annual meeting of shareholders. The process used by the Nominations and Governance Committee to identify a nominee to serve as a member of the Board of Directors depends on the qualities being sought. From time to time, Abbott engages an executive search firm to assist the Committee in identifying individuals qualified to be Board members. Mr. O’Grady was recommended to the Board as a director nominee by the Nominations and Governance Committee.
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 nominee’s biography includes the particular experience and qualifications that led the Board to conclude that the nominee should serve on the Board. The director nominees’ 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 pages 89 and 90.
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19 |
| BOARD OVERSIGHT |
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 ingrained 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
| ||
 |
||
AUDIT COMMITTEE ● Accounting, internal controls, and financial reporting
● Enterprise cybersecurity
● Information security and data protection
● Major financial and business risk exposures
|
COMPENSATION ● Executive officer compensation, including incentive
compensation plans
● Equity-based plans
● Director compensation
|
NOMINATIONS ● Board composition, refreshment, and succession
planning
● Board governance structure
● Governance guidelines and practices
|
PUBLIC
POLICY ● Sustainability, environment, and social responsibility
● Regulatory compliance and 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
| ||
| 20 | |
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 |
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| Robert J. Alpern, M.D. |  |
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| Claire Babineaux-Fontenot |  |
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| Sally E. Blount, Ph.D. | |
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| Robert B. Ford |  |
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| Paola Gonzalez | |
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| Michelle A. Kumbier | |
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| Darren W. McDew | |
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| Nancy McKinstry | |
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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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| Glenn F. Tilton | |
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| Total Meetings Held in 2022 | 7 | 3 | 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.” |
| † | Messrs. Osborn and Tilton are not standing for re-election at the Annual Meeting. The Board of Directors will appoint a new Nominations and Governance Committee Chair and Public Policy Committee Chair, respectively, upon conclusion of their tenure at the Annual Meeting. |
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21 |
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 72.
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 2022. 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 50.
| 22 | |
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.
| SHAREHOLDER ENGAGEMENT |
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. In 2022, 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. Investor sentiment and specific feedback was shared with executive management and the Board of Directors, as appropriate.
Topics discussed with our investors included:
| ● | Board oversight over governance structures, sustainability, and quality and regulatory matters. | |
| ● | Human capital management and Abbott’s commitment to diversity, equity, and inclusion,including Abbott’s Diversity, Equity and Inclusion Report which provides goals, our progress against them, and disclosure of EEO-1 data. | |
| ● | Board composition and refreshment, including the nomination of six new independent director nominees since 2018, three of whom are women and three of whom are minorities. | |
| ● | Executive compensation program, including Abbott’s continued enhanced compensation disclosure. |
|
23 |
| BOARD EVALUATION PROCESS |
Each year, Abbott’s directors evaluate the effectiveness of the Board and its Committees in performing its governance and risk oversight responsibilities. Directors assess the performance of their peers, as well as the full Board of Directors and each of the Committees on which they serve, as follows:
COLLECTION AND REVIEW OF RESULTS 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. |
INCORPORATION OF FEEDBACK 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. |
| 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 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).
| 24 | |
| DIRECTOR COMPENSATION |
Mr. Ford is not compensated for serving on the Board or Board committees. Abbott’s remaining directors, who are all non-employee directors, are compensated for their service under the Abbott Laboratories Non-Employee Directors’ Fee Plan and the Abbott Laboratories 2017 Incentive Stock Program.
The following table sets forth a summary of the non-employee directors’ 2022 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 | $184,951 | $0 | $35,227 | $26,042 | $372,220 | ||||||
| R. S. Austin | 48,667 | 0 | 0 | 0 | 28,853 | 77,520 | ||||||
| C. Babineaux-Fontenot | 31,500 | 0 | 0 | 0 | 0 | 31,500 | ||||||
| S. E. Blount | 126,000 | 184,951 | 0 | 4,750 | 25,000 | 340,701 | ||||||
| P. Gonzalez | 132,000 | 184,951 | 0 | 0 | 0 | 316,951 | ||||||
| M. A. Kumbier | 132,000 | 184,951 | 0 | 0 | 0 | 316,951 | ||||||
| D. W. McDew | 126,000 | 184,951 | 0 | 0 | 0 | 310,951 | ||||||
| N. McKinstry | 151,000 | 184,951 | 0 | 0 | 0 | 335,951 | ||||||
| W. A. Osborn | 156,000 | 184,951 | 0 | 0 | 0 | 340,951 | ||||||
| M. F. Roman | 132,000 | 184,951 | 0 | 0 | 0 | 316,951 | ||||||
| D. J. Starks | 139,333 | 184,951 | 0 | 0 | 0 | 324,284 | ||||||
| J. G. Stratton | 132,000 | 184,951 | 0 | 0 | 0 | 316,951 | ||||||
| G. F. Tilton | 147,000 | 184,951 | 0 | 0 | 25,734 | 357,685 |
| (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 for the Public Policy Committee chair, and $1,250 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. Effective as of May 1, 2023, the Board committee chair monthly fees will be $2,500 for the Audit Committee chair, $2,083.33 for the Compensation Committee chair, $1,250 for the Public Policy Committee chair, and $1,250 for the chair of any other Board committee. In addition, the lead independent director will earn $3,333.33 for each month of such service and will 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. |
|
25 |
| (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 (effective as of the 2023 Annual Meeting, this will increase to $200,000 (rounded down)). In 2022, this was 1,602 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, 2022: R. J. Alpern, 35,481; S. E. Blount, 28,741; P. Gonzalez, 1,602; M. A. Kumbier, 7,316; D. W. McDew, 5,075; N. McKinstry, 28,741; W. A. Osborn, 37,398; M. F. Roman, 3,101; D. J. Starks, 13,698; J. G. Stratton, 10,261; and G. F. Tilton, 39,128. |
| (3) | The following options were outstanding as of December 31, 2022: R. S. Austin, 52,247; N. McKinstry, 64,957; and W. A. Osborn, 37,673. |
| (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 include charitable matching grant contributions as follows: R. J. Alpern, $25,000; R. S. Austin, $25,000; S. E. Blount, $25,000; and G. F. Tilton, $25,000. |
| 26 | |
EXECUTIVE COMPENSATION
| COMPENSATION DISCUSSION AND ANALYSIS |
INTRODUCTION
This Compensation Discussion and Analysis (CD&A) describes Abbott’s executive compensation program in 2022. In particular, this CD&A explains how the Compensation Committee (the Committee) and Board of Directors made compensation decisions for the Company’s executives, including the five named officers: Robert B. Ford, Chairman of the Board 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; and Andrea F. Wainer, Executive Vice President, Rapid and Molecular Diagnostics.
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 2022 shareholder outreach described on page 28.
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 three and five-year basis.
Abbott’s three-year TSR of 33% outpaced the peer group median, and Abbott’s five-year TSR of 109% is nearly twice 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.
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27 |
| CHANGES BASED ON SHAREHOLDER FEEDBACK AND MARKET PRACTICES |
In 2022, 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:
| ● | Board oversight over governance structures, sustainability, and quality and regulatory matters. | |
| ● | Human capital management and Abbott’s commitment to diversity, equity, and inclusion, including Abbott’s Diversity, Equity and Inclusion Report which provides goals, our progress against them, and disclosure of EEO-1 data. | |
| ● | Board composition and refreshment, including the nomination of six new independent director nominees since 2018, three of whom are women and three of whom are minorities. | |
| ● | Executive compensation program, including Abbott’s continued enhanced compensation disclosure. |
Their feedback was overwhelmingly positive, which was reflected in the 91% 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
● All Officers, including our
CEO, carry a human capital goal
● 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
● Increased director share ownership guidelines
|
● Introduced new long-term incentive
measures to reflect sustained performance over a three-year period
● Increased the target for vesting of performance restricted
shares
● Updated our peer group to reflect increased size and complexity
of business
● 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
|
| 28 | |
| 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 2022 and determined that the existing peer group continues to be positioned appropriately 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 | $34.2 | $ 66.3 | ✓ | ✓ | ✓ | Diagnostics | ||||||
| Becton Dickinson | $19.4 | $ 72.3 | ✓ | ✓ | ✓ | Diagnostics, Medical Devices | ||||||
| Boston Scientific | $12.7 | $ 66.3 | ✓ | ✓ | Medical Devices | |||||||
| Bristol-Myers Squibb | $46.7 | $153.0 | ✓ | ✓ | Established Pharmaceuticals | |||||||
| Cisco | $52.3 | $195.7 | ✓ | ✓ | ✓ | Diagnostics, Medical Devices | ||||||
| The Coca-Cola Company | $42.3 | $275.1 | ✓ | ✓ | ✓ | Consumer | ||||||
| Danaher Corporation | $31.5 | $193.2 | ✓ | ✓ | ✓ | Diagnostics | ||||||
| Honeywell International | $34.9 | $144.1 | ✓ | ✓ | ✓ | Diagnostics, Medical Devices | ||||||
| Johnson & Johnson | $94.9 | $461.8 | ✓ | ✓ | ✓ | Consumer, Diagnostics, Established Pharmaceuticals, Medical Devices | ||||||
| Medtronic | $30.8 | $103.4 | ✓ | ✓ | ✓ | Medical Devices | ||||||
| Merck | $59.0 | $281.3 | ✓ | ✓ | ✓ | Established Pharmaceuticals | ||||||
| Mondelez International | $31.5 | $ 91.0 | ✓ | ✓ | ✓ | Consumer | ||||||
| Nike | $49.1 | $183.1 | ✓ | ✓ | ✓ | Consumer | ||||||
| Procter & Gamble | $80.3 | $359.2 | ✓ | ✓ | ✓ | Consumer | ||||||
| Reckitt Benckiser(2) | $17.2 | $ 41.2 | ✓ | ✓ | Nutrition | |||||||
| Stryker Corporation | $18.4 | $ 92.5 | ✓ | Medical Devices | ||||||||
| Thermo Fisher Scientific | $44.9 | $216.0 | ✓ | ✓ | ✓ | Diagnostics | ||||||
| Peer Group Median | $34.9 | $153.0 | ||||||||||
| Abbott | $43.7 | $191.4 | ✓ | ✓ | ✓ | |||||||
| Abbott Percentile Rank | 59th | 59th |
| (1) | Data source: Nasdaq IR Insight database reflects most recently disclosed (as of January 31, 2023) trailing 12-month sales/revenue. The market cap reflects values on December 31, 2022. |
| (2) | Revenue/Market Cap converted to USD for companies outside the U.S. |
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| BASIS FOR COMPENSATION DECISIONS |
Abbott and its Compensation Committee have designed a compensation program that balances short- and long-term objectives to focus our executives on actions that create value today, while building for sustainable future success. Approximately 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 31 and 32. 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.
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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 |
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.
For 2022 performance, preliminary annual incentive payouts for Abbott named executive officers averaged 108% of target. While financial performance exceeded goals set at the beginning of 2022, the Compensation Committee reviewed 2022 performance and considered the significant fluctuations in demand for COVID-19 diagnostic tests during the year. Based on this review, the Committee applied downward discretion ranging from 14% to 30% to the payouts of each NEO whose performance metrics include COVID-19 diagnostic tests, which reduced the average to 91% of target. For individual calculations for each named officer, see pages 38 to 47.
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 considered to evaluate longer- and shorter-term performance.
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31 |
For example, guidelines for grants made in February 2022 were set at the 75th percentile of our peer group, reflecting 82nd percentile relative 3- and 1-year TSR performance and 88th percentile relative 5-year TSR performance for the period ending in 2021, as summarized in the graphic below.
The information below represents the February 2022 annual grant.
Compare Abbott’s 3-year TSR performance against our peer group, consider 5-, and 1-year TSR to evaluate longer- and shorter-term performance
Position LTI guideline value relative to peer group
Adjust for individual performance
3-year relative TSR = 82%
1-year relative TSR = 82%
percentile of Peer Group LTI
● 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:
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Awards granted in 2022 continue to produce strong differentiation, resulting in award adjustments that ranged from 75% to 125% of award guidelines based on individual performance measured over the three-year period ending in 2021. For individual calculations for each named officer, see pages 38 to 47.
Since stock options realize value only through share price appreciation, the value realized upon the exercise of vested stock options directly aligns the compensation earned with the value shareholders received over the same period. Options are also aligned with shareholder value through the impact of relative TSR in determining the LTI award guidelines.
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 ten years since the AbbVie separation would have seen a 314% appreciation in their holdings.
Impact of Abbott/
AbbVie Separation
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COMPENSATION PROGRAM IS DIRECTLY LINKED TO BUSINESS STRATEGY
Our compensation program is also linked directly to our business strategy, to ensure that officers are focused on those activities that drive our business strategy and create value for shareholders.
The table below explains the strategic link of the key metrics used in our annual and long-term incentive plans.
| EVALUATION OF PERFORMANCE | ||
| METRIC | STRATEGIC LINK | |
| Our annual incentive plan is aligned to the following drivers of shareholder value: | ||
| Sales | Measures Abbott’s ability to compete effectively in the markets in which we participate and focuses management on achieving strong top-line growth, consistent with our business strategy. | |
| Diluted EPS | 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.
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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
We established three design principles to embed innovating access and affordability in how we develop new technologies and products. These principles include 1) Design for broader reach and equity with an innovation portfolio that reaches more people, including new geographies and communities with limited access to care, 2) Design for access to identify and overcome barriers to access and adoption, prioritizing inclusive design as well as manufacturing, distribution and technology strategies to reduce costs across the value chain, and 3) Design to optimize reach and value across four factors: people reached, consumer benefit, business and societal value. These design principles can be seen in action in our products, including FreeStyle Libre®, the world’s most-used glucose-monitoring system, our BinaxNOW™ COVID-19 test, our iSTAT Alinity TBI Plasma blood test, the first rapid handheld traumatic brain injury blood test, which can reduce the need for expensive CT scans, and our medicines portfolio targeted at emerging markets populations.
Transforming care for chronic disease, malnutrition, and infectious diseases
We continue to advance technologies to improve the standard of care including the launch of the FreeStyle Libre 3, the world’s smallest, most accurate continuous glucose monitoring (CGM) sensor. In addition, we have begun connecting FreeStyle Libre products to partners’ delivery systems and coaching platforms to enhance personalized diabetes management. Building on our decades-long experience in viral surveillance, we also expanded 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, leveraging the expertise of global centers of excellence in laboratory testing, genetic sequencing, and public health research.
Advancing health equity through partnership
We launched a platform to promote more inclusive clinical trials and dedicated $5 million to scholarships for Historically Black Colleges and Universities (HBCUs) and minority nursing associations. The goal is to produce more racially and ethnically diverse nurses and trialists who, if given the opportunity, will dramatically impact trials in the future. By expanding the reach of studies to include diverse groups, we can achieve a clearer image of our products’ impacts in real-world situations. Armed with this information, we can continue to develop solutions that help even more people.
Protecting a healthy environment
Every year we establish and advance projects to sustainably reduce carbon emissions, expand use of renewable energy, manage water use, reduce the impact of our packaging and minimize waste.
In 2021, we implemented 71 environmental reduction projects at 38 sites across 15 countries. Combined, these projects resulted in annual savings of 6.6 million kWh, 1,700 metric tons of CO2e, 18.7 million gallons of water, and 457 U.S. tons of waste. These projects delivered nearly $1.0 million in annual cost savings.
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By the end of 2021, Abbott reduced absolute Scope 1 and 2 emissions by 5%, compared to 2018 baseline. Additionally, we completed an assessment to understand our key suppliers’ existing carbon management efforts and their impact on Scope 3 emissions. In 2022, we committed to supporting the Science Based Targets initiative (SBTi) objective of reducing Scope 1, 2 and 3 carbon emissions. This includes a commitment that suppliers representing 82% of emissions in our two largest categories – purchased goods and services, and upstream transportation and distribution – will have science-based targets by 2026. In September 2022, the SBTi approved Abbott’s near-term Scope 1, 2 and 3 science-based targets.
We continue to make progress on water, waste and packaging reduction initiatives. Two of our high-water-impact manufacturing sites that operate in areas of water stress achieved Alliance for Water Stewardship (AWS) certification in 2022. In 2021, eight facilities received Zero Waste-to-Landfill certification, bringing our total number of facilities certified to 46. Lastly, in 2021, we reduced nearly 300,000 pounds of packaging through sustainable design.
Building the diverse, innovative workforce of tomorrow
Each of our officers carry human capital goals to ensure that we have a diverse and innovative workforce that is ready for the future. We do this by providing differentiated benefits, extraordinary development opportunities and a powerful common purpose.
Our goal is to achieve gender balance across our global management team and in our Science, Technology, Engineering, and Mathematics (STEM) roles by 2030 and to ensure one-third of our leadership roles are held by people from underrepresented groups by 2025. Through the end of 2021, 40% of global management positions were filled by women, 44.6% of our STEM roles were filled by women, and 33% of our leadership roles were filled by people from underrepresented groups.
We start early, with highly rated internships that allow us to attract diverse talent that otherwise might not consider a career in STEM. We remain focused on developing future leaders through our mentoring and sponsorship programs that support internal development and succession planning.
Our market-leading benefits focus on those areas that have real impact for our employees. We were the first company to help U.S. employees save for retirement while repaying student loans through our Freedom 2 Save program, which was recently codified by the federal government through the Secure 2.0 Act.
We know that the skills that make our people successful today may not be the skills that are important for the future. So we offer upskilling programs for new career paths, and pathways to earn college degrees on flexible schedules and at no personal cost. During 2022, we launched a new apprenticeship program that prepares community college students who are studying trades – like HVAC, welding and industrial technologies – for long-term careers with Abbott after they graduate.
Responsibly connecting data, technology and care
We are dedicated to being a trusted healthcare partner and advocate for responsible data collection, access and insights. The NeuroSphere™ Virtual Clinic offers a telehealth service from a patient’s smart phone to their physician’s tablet and allows for a digital prescription to be delivered, near-instantaneously, from the physician’s tablet 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
We are committed to maintaining a high-quality, sustainable, and resilient supply chain to deliver products that millions of people depend on worldwide. We work with more than 75,000 suppliers in more than 150 countries; we have a robust supplier selection process and published supplier guidelines with 100% of suppliers assessed for sustainability risk. We launched an initiative with the Local Initiatives Support Corporation (LISC) to deliver $37.5 million in financial assistance to diverse small businesses.
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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.
Annual Incentive Plan
Each year our annual incentive targets are established to require that officers exceed the anticipated growth of the market in which they compete in order to achieve a target payout of their annual incentives. For 2022 performance, preliminary annual incentive payouts for Abbott named executive officers averaged 108% of target. While financial performance in 2022 exceeded goals set at the beginning of 2022, the Compensation Committee reviewed 2022 performance and considered the significant fluctuations in demand for COVID-19 diagnostic tests during the year. Based on this review, the Committee applied downward discretion ranging from 14% to 30% to the payouts of each NEO whose performance metrics include COVID-19 diagnostic tests, which reduced the average to 91% of target. For individual calculations for each named officer, see pages 38 to 47.
Long-Term Incentive Plan
It is important to note that the amounts shown in the Summary Compensation Table reflect the annual bonus for 2022 performance, but the LTI awards shown are for performance through 2021. Based on performance through 2022, the LTI award values granted during 2023 were much lower than 2022, including the LTI award value granted to the CEO, which was approximately 15% lower than 2022. More information on the grants made for performance through 2022 will be available in the 2024 proxy. More information on our approach to compensation, which definitively aligns our LTI grant guidelines with company performance relative to the market and individual performance based on sustained contributions over the last three years, can be found on pages 31 and 32.
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NAMED EXECUTIVE OFFICER COMPENSATION DECISIONS
 |
ROBERT B. FORD
Chairman of the Board and Chief Executive Officer | |
Base Salary
Mr. Ford’s annual base salary of $1,500,000 did not change in 2022.
Annual Incentive Plan
Mr. Ford’s target bonus of 175% was not changed in 2022. Based on performance in 2022, Mr. Ford received a bonus in February 2023 which was calculated as follows:
| (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, market share must increase. |
| (3) | Target not disclosed for competitive reasons. Diabetes Care and EPD and Nutrition Sales Growth exclude the impact of foreign exchange. |
| BASE SALARY | BONUS TARGET % | TOTAL GOAL SCORE | PRELIMINARY AWARD PAYOUT | |||
| $1,500,000 | × | 175% | × | 115.0% | = | $3,018,750 |
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Mr. Ford’s contributions to Abbott’s strong performance for the year resulted in a total goal score of 115.0% and preliminary award payout of $3,018,750. While financial performance exceeded goals set at the beginning of 2022, the Compensation Committee reduced Mr. Ford’s goal score by 30% as the goals did not fully reflect the significant fluctuations in demand for COVID-19 diagnostic tests during the year, resulting in an adjusted goal score of 85% and a final award payout of $2,231,250.
| BASE SALARY | BONUS TARGET % | ADJUSTED GOAL SCORE | FINAL AWARD PAYOUT | |||
| $1,500,000 | × | 175% | × | 85.0% | = | $2,231,250 |
Long-Term Incentives
Based on the Committee’s review of Abbott and individual performance through 2021, Mr. Ford received an LTI award in February 2022 with a value of $17,400,000, which was 120% 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 | ||||
| $14,500,000 | × | 120% | × | 50% Stock Options(1) | = | $8,700,000 | |
| 50% Performance Restricted Shares(2) | $8,700,000 | ||||||
| Total | $17,400,000 | ||||||
| INDIVIDUAL LTI PERFORMANCE ASSESSMENT | ||||
| METRIC | 2019 | 2020 | 2021 | 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 | Did Not Meet (-1) | Exceeded (+1) | Did Not Meet (-1) | -1 |
| Total | +5 | |||
| Preliminary Adjustment | 125% | |||
| Impact(3) | - | |||
| LTI Adjustment | 120% | |||
| 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. |
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 |
ROBERT E. FUNCK, JR
Executive Vice President, Finance and Chief Financial Officer | |
Base Salary
Mr. Funck’s annual base salary was increased to $875,000 in March 2022 based on competitive market data among Abbott’s peers.
Annual Incentive Plan
Mr. Funck’s target bonus of 115% was not changed in 2022. Based on performance in 2022, Mr. Funck received a bonus in February 2023 which was calculated as follows:
| GOAL | 2021 RESULTS ACHIEVED |
GOAL WEIGHT |
2022 GOAL MEASUREMENT | 2022 RESULTS ACHIEVED |
GOAL SCORE |
||
| THRESHOLD | TARGET | MAXIMUM | |||||
| FINANCIAL METRICS(1) | |||||||
| Adjusted Sales(2) | $43.61B | 10% | $39.77B | $39.96B | $40.96B | $44.80B | 15.0% |
| Adjusted Diluted EPS | $5.21 | 20% | $4.63 | $4.70 | $4.95 | $5.34 | 30.0% |
| Free Cash Flow | $8.6B | 10% | $6.3B | $6.6B | $6.9B | $7.8B | 15.0% |
| STRATEGIC METRICS(3) | |||||||
| Goal
(15% weight): Execute milestones related to data asset management Result: Mostly Achieved |
12.5% | ||||||
| Goal
(10% weight): Develop and execute plans to manage currency and economic risks. Result: Achieved |
10.0% | ||||||
| Goal
(10% weight): Complete licensing and acquisition opportunity assessments Result: Achieved |
10.0% | ||||||
| Goal
(5% weight): Implement a global guided buying platform Result: Partially Achieved |
2.5% | ||||||
| Goal
(5% weight): Implement key financial systems implementations within select countries Result: Achieved |
5.0% | ||||||
| HUMAN CAPITAL METRICS | |||||||
| Goal
(15% weight): Meet talent, succession planning, and diversity targets. Result: Achieved |
15.0% | ||||||
| Total | 115.0% | ||||||
| (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, market share must increase. |
| (3) | Target not disclosed for competitive reasons. |
| BASE SALARY | BONUS TARGET % | TOTAL GOAL SCORE | PRELIMINARY AWARD PAYOUT | |||
| $875,000 | × | 115% | × | 115.0% | = | $1,157,200 |
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Mr. Funck’s contributions to Abbott’s strong performance for the year resulted in a total goal score of 115.0% and preliminary award payout of $1,157,200. While financial performance exceeded goals set at the beginning of 2022, the Compensation Committee reduced Mr. Funck’s goal score by 20% as the goals did not fully reflect the significant fluctuations in demand for COVID-19 diagnostic tests during the year, resulting in an adjusted goal score of 95% and a final award payout of $956,000.
| BASE SALARY | BONUS TARGET % | ADJUSTED GOAL SCORE | FINAL AWARD PAYOUT | |||
| $875,000 | × | 115% | × | 95.0% | = | $956,000 |
Long-Term Incentives
Based on the Committee’s review of Abbott and individual performance through 2021, Mr. Funck received an LTI award in February 2022 with a value of $6,745,000, which was equal to 125% 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 | ||||
| $5,396,000 | × | 125% | × | 50% Stock Options(1) | = | $3,372,500 | |
| 50% Performance Restricted Shares(2) | $3,372,500 | ||||||
| Total | $6,745,000 | ||||||
| INDIVIDUAL LTI PERFORMANCE ASSESSMENT | ||||
| METRIC | 2019 | 2020 | 2021 | 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) | Exceeded (+1) | Did Not Meet (-1) | 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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 |
HUBERT L. ALLEN
Executive Vice President, General Counsel and Secretary | |
Base Salary
Mr. Allen’s annual base salary was increased to $830,000 in March 2022 based on competitive market data among Abbott’s peers.
Annual Incentive Plan
Mr. Allen’s target bonus of 105% was not changed in 2022. Based on performance in 2022, Mr. Allen received a bonus in February 2023 which was calculated as follows:
| GOAL | 2021 RESULTS ACHIEVED |
GOAL WEIGHT |
2022 GOAL MEASUREMENT | 2022 RESULTS ACHIEVED |
GOAL SCORE |
||
| THRESHOLD | TARGET | MAXIMUM | |||||
| FINANCIAL METRICS(1) | |||||||
| Adjusted Sales(2) | $43.61B | 10% | $39.77B | $39.96B | $40.96B | $44.80B | 15.0% |
| Adjusted Diluted EPS | $5.21 | 20% | $4.63 | $4.70 | $4.95 | $5.34 | 30.0% |
| Free Cash Flow | $8.6B | 10% | $6.3B | $6.6B | $6.9B | $7.8B | 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 | 120.0% | ||||||
| (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, market share must increase. |
| (3) | Target not disclosed for competitive reasons. |
| BASE SALARY | BONUS TARGET % | TOTAL GOAL SCORE | PRELIMINARY AWARD PAYOUT | |||
| $830,000 | × | 105% | × | 120.0% | = | $1,045,800 |
| 42 | |
Mr. Allen’s contributions to Abbott’s strong performance for the year resulted in a total goal score of 120.0% and preliminary award payout of $1,045,800. While financial performance exceeded goals set at the beginning of 2022, the Compensation Committee reduced Mr. Allen’s goal score by 20% as the goals did not fully reflect the significant fluctuations in demand for COVID-19 diagnostic tests during the year, resulting in an adjusted goal score of 100% and a final award payout of $871,500.
| BASE SALARY | BONUS TARGET % | ADJUSTED GOAL SCORE | FINAL AWARD PAYOUT | |||
| $830,000 | × | 105% | × | 100.0% | = | $871,500 |
Long-Term Incentives
Based on the Committee’s review of Abbott and individual performance through 2021, Mr. Allen received an LTI award in February 2022 with a value of $4,793,750, 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 | ||||
| $3,835,000 | × | 125% | × | 50% Stock Options(1) | = | $2,396,875 | |
| 50% Performance Restricted Shares(2) | $2,396,875 | ||||||
| Total | $4,793,750 | ||||||
| INDIVIDUAL LTI PERFORMANCE ASSESSMENT | ||||
| METRIC | 2019 | 2020 | 2021 | 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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 |
DANIEL G. SALVADORI
Executive Vice President and Group President, Established Pharmaceuticals and Nutritional Products | |
Base Salary
Mr. Salvadori’s annual base salary of $790,000 was not changed in 2022.
Annual Incentive Plan
Mr. Salvadori’s target bonus of 115% was not changed in 2022. Based on performance in 2022, Mr. Salvadori received a bonus in February 2023 which was calculated as follows:
| 44 | |
| (1) | Adjusted Division Net Sales exclude the impact of foreign exchange on actual sales relative to the goal target. Adjusted Division Margin and Adjusted Division Gross Margin exclude the impact of foreign exchange on actual division margin and gross margin relative to the respective goal target. Adjusted Division Free Cash Flow reflects pre-tax operating cash flow less capital expenditures and excludes the impact of foreign exchange. |
| (2) | Set based on expected market growth. To achieve target payout, market share must increase. |
| (3) | The Compensation Committee adjusted Mr. Salvadori’s goal score by approximately 12% due to unexpected challenges in emerging markets affecting the Established Pharmaceuticals business. |
| (4) | Target not disclosed for competitive reasons. |
| BASE SALARY | BONUS TARGET % | TOTAL GOAL SCORE | AWARD PAYOUT | |||
| $790,000 | × | 115% | × | 66.1% | = | $600,500 |
Long-Term Incentives
Based on the Committee’s review of Abbott and individual performance through 2021, Mr. Salvadori received an LTI award in February 2022 with a value of $5,625,000, which was equal to 125% of his LTI award guideline. Additional calculation details are as follows:
| LTI
AWARD GUIDELINE |
LTI ADJUSTMENT | AWARD ALLOCATION | AWARD VALUE | ||||
| $4,500,000 | × | 125% | × | 50% Stock Options(1) | = | $2,812,500 | |
| 50% Performance Restricted Shares(2) | $2,812,500 | ||||||
| Total | $5,625,000 | ||||||
| INDIVIDUAL LTI PERFORMANCE ASSESSMENT | ||||
| METRIC | 2019 | 2020 | 2021 | 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) | Did Not Meet (-1) | 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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 |
ANDREA F. WAINER
Executive Vice President, Rapid and Molecular Diagnostics | |
Base Salary
Ms. Wainer’s annual base salary of $710,000 was not changed in 2022.
Annual Incentive Plan
Ms. Wainer’s target bonus of 115% was not changed in 2022. Based on performance in 2022, Ms. Wainer received a bonus in February 2023 which was calculated as follows:
| (1) | Adjusted Division Net Sales exclude the impact of foreign exchange on actual sales relative to the goal target. Adjusted Division Margin and Adjusted Division Gross Margin exclude the impact of foreign exchange on actual division margin and gross margin relative to the respective goal target. Adjusted Division Free Cash Flow reflects pre-tax operating cash flow less capital expenditures and excludes the impact of foreign exchange. |
| (2) | Set based on expected market growth. To achieve target payout, market share must increase. |
| (3) | Target not disclosed for competitive reasons. |
| BASE SALARY | BONUS TARGET % | TOTAL GOAL SCORE | PRELIMINARY AWARD PAYOUT | |||
| $710,000 | × | 115% | × | 125.0% | = | $1,020,600 |
| 46 | |
Ms. Wainer’s contributions to Abbott’s strong performance for the year resulted in a total goal score of 125.0% and preliminary award payout of $1,020,600. While financial performance exceeded goals set at the beginning of 2022, the Compensation Committee reduced Ms. Wainer’s goal score by 14.0% as the goals did not fully reflect the significant fluctuations in demand for COVID-19 diagnostic tests during the year, resulting in an adjusted goal score of 111.0% and award payout of $906,300.
| BASE SALARY | BONUS TARGET % | ADJUSTED GOAL SCORE | FINAL AWARD PAYOUT | |||
| $710,000 | × | 115% | × | 111.0% | = | $906,300 |
Long-Term Incentives
Based on the Committee’s review of Abbott and individual performance through 2021, Ms. Wainer received an LTI award in February 2022 with a value of $4,461,600, which was equal to 110% of her LTI award guideline. Additional calculation details are as follows:
| LTI
AWARD GUIDELINE |
LTI ADJUSTMENT | AWARD ALLOCATION | AWARD VALUE | ||||
| $4,056,000 | × | 110% | × | 50% Stock Options(1) | = | $2,230,800 | |
| 50% Performance Restricted Shares(2) | $2,230,800 | ||||||
| Total | $4,461,600 | ||||||
| INDIVIDUAL LTI PERFORMANCE ASSESSMENT | ||||
| METRIC | 2019 | 2020 | 2021 | OVERALL |
| Sales and Market Growth Contribution | Did Not Meet (-1) | Exceeded (+1) | Exceeded (+1) | +1 |
| Margin Contribution | Did Not Meet (-1) | Exceeded (+1) | Exceeded (+1) | +1 |
| Strategic Financial Contribution | Did Not Meet (-1) | Exceeded (+1) | Did Not Meet (-1) | -1 |
| 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% |
| (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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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. | |
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| BENEFITS AND PERQUISITES | DESCRIPTION | |
| Change in Control Arrangements | All named officers have 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 Mr. Ford are covered by a time-sharing lease agreement, 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.
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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.
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
D. J. Starks, Chair
M. A. Kumbier
N. McKinstry
W. A. Osborn
M. F. Roman
| 50 | |
| COMPENSATION RISK ASSESSMENT |
During 2022, 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 2022, 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. |
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| ● | 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.
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| 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(1) |
Option Awards(2) |
Non-Equity Incentive Plan Compensation(3) |
Change
in Pension Value and Non-qualified Deferred Compensation Earnings(4) |
All
Other Compensation(5) |
Total | ||||||||
Robert B. Ford, Chairman of the Board and |
2022 | $1,500,000 | $8,699,609 | $8,699,985 | $2,231,250 | $ 269,586 | $321,722 | $21,722,152 | ||||||||
| 2021 | 1,482,692 | 8,689,294 | 8,689,978 | 3,168,400 | 2,755,343 | 129,179 | 24,914,886 | |||||||||
| 2020 | 1,298,462 | 5,623,995 | 5,624,993 | 3,675,000 | 4,150,264 | 77,872 | 20,450,586 | |||||||||
Robert E. Funck, Jr., Executive Vice President, Finance and |
2022 | 866,154 | 3,372,286 | 3,372,494 | 956,000 | 236,568 | 341,718 | 9,145,220 | ||||||||
| 2021 | 825,000 | 2,999,666 | 2,999,977 | 1,048,400 | 1,507,073 | 159,193 | 9,539,309 | |||||||||
| 2020 | 813,462 | 2,215,867 | 2,216,247 | 1,280,800 | 3,100,265 | 173,568 | 9,800,209 | |||||||||
Hubert L. Allen, Executive Vice President, General |
2022 | 817,615 | 2,396,766 | 2,396,850 | 871,500 | 214,873 | 322,031 | 7,019,635 | ||||||||
| 2021 | 760,000 | 2,115,332 | 2,115,612 | 921,700 | 768,954 | 172,158 | 6,853,756 | |||||||||
| 2020 | 751,346 | 1,874,607 | 1,874,988 | 917,700 | 2,904,940 | 154,596 | 8,478,177 | |||||||||
Daniel G. Salvadori, Executive Vice President and Group |
2022 | 790,000 | 2,812,276 | 2,812,489 | 600,500 | 45,607 | 96,812 | 7,157,684 | ||||||||
| 2021 | 715,539 | 2,388,446 | 2,388,734 | 925,700 | 251,604 | 72,276 | 6,742,299 | |||||||||
| 2020 | 710,000 | 1,901,708 | 1,902,099 | 905,500 | 477,011 | 79,421 | 5,975,739 | |||||||||
Andrea F. Wainer, Executive Vice President, Rapid and |
2022 | 710,000 | 2,230,633 | 2,230,786 | 906,300 | 74,737 | 134,662 | 6,287,118 | ||||||||
| 2021 | 699,616 | 2,388,446 | 2,388,734 | 931,600 | 772,906 | 69,112 | 7,250,414 |
| (1) | In accordance with the Securities and Exchange Commission (SEC) 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. |
| (2) | In accordance with SEC 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 SEC 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 2022 Annual Report on SEC Form 10-K. |
| (3) | 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.” |
| (4) | The plan amounts shown below are reported in this column. |
| For Messrs. Ford, Funck, Jr., Allen, and Salvadori, the amounts shown alongside the officer’s name are for 2022, 2021, and 2020, respectively. For Ms. Wainer, the amounts shown are for 2022 and 2021, respectively. | |
| Abbott Laboratories Annuity Retirement Plan | |
| R. B. Ford: ($220,128) / $22,149 / $142,819; R. E. Funck, Jr.: ($185,077) / $89,455 / $256,555; H. L. Allen: ($88,718) / $47,024 / $184,384; D. G. Salvadori: ($53,150) / $19,272 / $45,483; and A. F. Wainer: ($129,269) / $34,273. |
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| Abbott Laboratories Supplemental Pension Plan | |
| R. B. Ford: ($2,544,153) / $2,407,646 / $3,758,217; R. E. Funck, Jr.: ($962,130) / $1,076,437 / $2,474,229; H. L. Allen: ($770,934) / $411,140 / $2,373,899; D. G. Salvadori: ($442,633) / $189,104 / $411,687; and A. F. Wainer: ($107,714) / $651,546. | |
| 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: $269,586 / $325,548 / $249,228; R. E. Funck, Jr.: $236,568 / $341,181 / $369,481; H. L. Allen: $214,873 / $310,790 / $346,657; D. G. Salvadori: $45,607 / $43,228 / $19,841; and A. F. Wainer: $74,737 / $87,087. | |
| (5) | The amounts shown below are reported in this column. |
| For Messrs. Ford, Funck, Jr., Allen, and Salvadori, the amounts shown alongside the officer’s name are for 2022, 2021, and 2020, respectively. For Ms. Wainer, the amounts shown are for 2022 and 2021. | |
| Earnings on Non-Qualified Defined Contribution Plans (net of the reportable interest included in footnote 4). | |
| R. B. Ford: $240,102 / $8,148 / $8,116; R. E. Funck, Jr.: $268,399 / $86,107 / $106,106; H. L. Allen: $246,845 / $95,227 / $81,695; D. G. Salvadori: $24,607 / $3,566 / $1,701; and A. F. Wainer: $60,274 / $2,162. | |
| 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 4). | |
| Employer Contributions to Defined Contribution Plans | |
| R. B. Ford: $75,000 / $74,135 / $64,924; R. E. Funck, Jr.: $43,308 / $41,250 / $40,673; H. L. Allen: $40,881 / $38,000 / $37,568; D. G. Salvadori: $39,501 / $35,777 / $35,500; and A. F. Wainer: $35,500 / $34,981. | |
| These amounts include employer contributions to both Abbott’s tax-qualified defined contribution plan and the Abbott Laboratories 401(k) Supplemental Plan. The Abbott Laboratories 401(k) Supplemental Plan permits eligible Abbott officers to contribute amounts in excess of the limit set by the Internal Revenue Code for employee contributions to 401(k) plans up to the excess of (i) 18% of their base salary over (ii) the amount contributed to Abbott’s tax-qualified 401(k) plan. Abbott matches participant contributions at the rate of 250% of the first 2% of compensation contributed to the plan. The named officers have these amounts paid to them in cash on a current basis and deposited into a grantor trust established by the officer, net of maximum tax withholdings. | |
| Other Compensation | |
| Messrs. Ford’s non-business-related flights on corporate aircraft are covered by time-sharing lease agreements, pursuant to which he reimburses 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: $6,620 / $46,419 / $4,832. | |
| 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. | |
| 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. E. Funck, Jr.: $22,480 / $22,661 / $20,319; H. L. Allen: $24,305 / $27,613 / $28,666; D. G. Salvadori: $22,704 / $21,933 / $26,773; and A. F. Wainer: $28,867 / $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.: $6,895 / $8,175 / $6,470; H. L. Allen: $10,000 / $10,000 / $6,667; D. G. Salvadori: $10,000 / $10,000 / $15,447; and A. F. Wainer: $10,000 / $10,000. For Mr. Salvadori, the 2020 amount includes payments for services incurred in 2020 and 2019. | |
| The named officers are also eligible to participate in an executive disability benefit described on page 63. |
| 54 | |
| 2022 GRANTS OF PLAN BASED AWARDS |
| Name | Grant Date |
Estimated
Future Payouts Under Non-Equity Incentive Plan Awards(1) |
Estimated Future Payouts Under Equity Incentive Plan Awards Target (#)(2)(3) |
All
Other Option Awards: Numbers of Securities Underlying Options (#)(4) |
Exercise
or Base Price of Options Awards ($/Sh.) |
Closing Market Price on Grant Date |
Grant
Date Fair Value of Stock and Option Awards | |||||||||
| Target ($) |
Maximum ($) | |||||||||||||||
| R. B. Ford | 2/18/2022 | 73,992 | $8,699,609(5) | |||||||||||||
| 2/18/2022 | 344,827 | $117.58 | $116.79 | 8,699,985(6) | ||||||||||||
| R. E. Funck, Jr. | 2/18/2022 | 28,682 | 3,372,286(5) | |||||||||||||
| 2/18/2022 | 133,670 | 117.58 | 116.79 | 3,372,494(6) | ||||||||||||
| H. L. Allen | 2/18/2022 | 20,385 | 2,396,766(5) | |||||||||||||
| 2/18/2022 | 95,000 | 117.58 | 116.79 | 2,396,850(6) | ||||||||||||
| D. G. Salvadori | 2/18/2022 | 23,919 | 2,812,276(5) | |||||||||||||
| 2/18/2022 | 111,474 | 117.58 | 116.79 | 2,812,489(6) | ||||||||||||
| A. F. Wainer | 2/18/2022 | 18,972 | 2,230,633(5) | |||||||||||||
| 2/18/2022 | 88,418 | 117.58 | 116.79 | 2,230,786(6) | ||||||||||||
| (1) | During 2022, 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 2022 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 2022 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 2022, Abbott reached its minimum return on equity target and one-third of each of the awards made on February 18, 2022 vested on February 28, 2023. 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 2022 Annual Report on SEC Form 10-K. |
|
55 |
| 2022 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 | 21,374 | $ | 2,346,651 | |||||||||||||||||||
| 46,705 | 5,127,742 | |||||||||||||||||||||
| 73,992 | 8,123,582 | |||||||||||||||||||||
| 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 | ||||||||||||||||||||
| 240,059 | 75.90 | 02/21/29 | ||||||||||||||||||||
| 260,597 | 130,299 | 87.72 | 02/20/30 | |||||||||||||||||||
| 119,696 | 239,394 | 124.04 | 02/18/31 | |||||||||||||||||||
| 344,827 | 117.58 | 02/17/32 | ||||||||||||||||||||
| R. E. Funck, Jr. | 8,421 | $ | 924,542 | |||||||||||||||||||
| 16,123 | 1,770,144 | |||||||||||||||||||||
| 28,682 | 3,148,997 | |||||||||||||||||||||
| 55,097 | $ | 47.00 | 02/19/25 | |||||||||||||||||||
| 48,831 | 44.40 | 02/16/27 | ||||||||||||||||||||
| 110,146 | 59.94 | 02/15/28 | ||||||||||||||||||||
| 122,367 | 75.90 | 02/21/29 | ||||||||||||||||||||
| 102,675 | 51,338 | 87.72 | 02/20/30 | |||||||||||||||||||
| 41,322 | 82,644 | 124.04 | 02/18/31 | |||||||||||||||||||
| 133,670 | 117.58 | 02/17/32 | ||||||||||||||||||||
| 56 | |
| 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 ($) | |||||||||||||
| H. L. Allen | 7,124 | $ | 782,144 | |||||||||||||||||||
| 11,370 | 1,248,312 | |||||||||||||||||||||
| 20,385 | 2,238,069 | |||||||||||||||||||||
| 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 | ||||||||||||||||||||
| 151,933 | 75.90 | 02/21/29 | ||||||||||||||||||||
| 86,865 | 43,433 | 87.72 | 02/20/30 | |||||||||||||||||||
| 29,140 | 58,282 | 124.04 | 02/18/31 | |||||||||||||||||||
| 95,000 | 117.58 | 02/17/32 | ||||||||||||||||||||
| D. G. Salvadori | 7,227 | $ | 793,452 | |||||||||||||||||||
| 12,838 | 1,409,484 | |||||||||||||||||||||
| 23,919 | 2,626,067 | |||||||||||||||||||||
| 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 | ||||||||||||||||||||
| 162,430 | 75.90 | 02/21/29 | ||||||||||||||||||||
| 88,121 | 44,061 | 87.72 | 02/20/30 | |||||||||||||||||||
| 32,902 | 65,806 | 124.04 | 02/18/31 | |||||||||||||||||||
| 111,474 | 117.58 | 02/17/32 | ||||||||||||||||||||
| A. F. Wainer | 4,525 | $ | 496,800 | |||||||||||||||||||
| 12,838 | 1,409,484 | |||||||||||||||||||||
| 18,972 | 2,082,936 | |||||||||||||||||||||
| 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 | ||||||||||||||||||||
| 47,738 | 75.90 | 02/21/29 | ||||||||||||||||||||
| 62,725 | 76.12 | 06/02/29 | ||||||||||||||||||||
| 55,171 | 27,586 | 87.72 | 02/20/30 | |||||||||||||||||||
| 32,902 | 65,806 | 124.04 | 02/18/31 | |||||||||||||||||||
| 88,418 | 117.58 | 02/17/32 | ||||||||||||||||||||
| (1) | Except as noted, these options are fully vested. |
|
57 |
| (2) | The vesting dates of outstanding unexercisable stock options and unvested restricted stock awards at December 31, 2022 are as follows. |
| Option Awards | Stock Awards(a) | |||||||||||||
| Name | Number of Unexercised Shares Remaining from Original Grant |
Number of Option Shares Vesting—Date Vested 2023 |
Number of Option Shares Vesting—Date Vesting 2024 |
Number of Option Shares Vesting—Date Vesting 2025 |
Number of Restricted Shares or Units |
Number
of Restricted Shares or Units Vesting—Date Vested 2023 |
||||||||
| R. B. Ford | 130,299 | 130,299 - 2/21 | 21,374 | (b) | ||||||||||
| 239,394 | 119,697 - 2/19 | 119,697 - 2/19 | 46,705 | (c) | ||||||||||
| 344,827 | 114,942 - 2/18 | 114,942 - 2/18 | 114,943 - 2/18 | 73,992 | (d) | |||||||||
| R. E. Funck, Jr. | 51,338 | 51,338 - 2/21 | 8,421 | (b) | ||||||||||
| 82,644 | 41,322 - 2/19 | 41,322 - 2/19 | 16,123 | (c) | ||||||||||
| 133,670 | 44,556 - 2/18 | 44,557 - 2/18 | 44,557 - 2/18 | 28,682 | (d) | |||||||||
| H. L. Allen | 43,433 | 43,433 - 2/21 | 7,124 | (b) | ||||||||||
| 58,282 | 29,141 - 2/19 | 29,141 - 2/19 | 11,370 | (c) | ||||||||||
| 95,000 | 31,666 - 2/18 | 31,667 - 2/18 | 31,667 - 2/18 | 20,385 | (d) | |||||||||
| D. G. Salvadori | 44,061 | 44,061 - 2/21 | 7,227 | (b) | ||||||||||
| 65,806 | 32,903 - 2/19 | 32,903 - 2/19 | 12,838 | (c) | ||||||||||
| 111,474 | 37,158 - 2/18 | 37,158 - 2/18 | 37,158 - 2/18 | 23,919 | (d) | |||||||||
| A. F. Wainer | 27,586 | 27,586 - 2/21 | 4,525 | (b) | ||||||||||
| 65,806 | 32,903 - 2/19 | 32,903 - 2/19 | 12,838 | (c) | ||||||||||
| 88,418 | 29,472 - 2/18 | 29,473 - 2/18 | 29,473 - 2/18 | 18,972 | (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, 2022, 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 2022, Abbott reached its minimum return on equity target and these shares vested on February 28, 2023. | |
| (c) | These are the restricted shares that remained outstanding and unvested on December 31, 2022, 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 2022, Abbott reached its minimum return on equity target and half of these shares vested on February 28, 2023. | |
| (d) | These are the restricted shares that remained outstanding and unvested on December 31, 2022, from an award made on February 18, 2022. 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 2022, Abbott reached its minimum return on equity target and one-third of these shares vested on February 28, 2023. | |
| 58 | |
| 2022 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 2022:
| Option Awards | Stock Awards | |||||||
| Name | Number of Shares Acquired on Exercise (#) |
|||||||