AbbVie 2012 Annual Report Download - page 124

Committees of the Board of Directors
The board of directors has five committees established in AbbVie’s By-Laws: the executive
committee, audit committee, compensation committee, nominations and governance committee, and
public policy committee. Each of the members of the audit committee, compensation committee,
nominations and governance committee, and public policy committee is independent.
The executive committee, whose members are R. A. Gonzalez, chairman, R. S. Austin,
E. M. Liddy, G. F. Tilton, and R. S. Roberts, did not meet prior to the Separation in 2012. This
committee may exercise all the authority of the board in the management of AbbVie, except for
matters expressly reserved by law for board action.
The audit committee, whose members are R. S. Austin, chair, W. H.L. Burnside, E. J. Rapp, and
F. H. Waddell, did not meet prior to the Separation in 2012. The committee is governed by a written
charter. This committee assists the board of directors in fulfilling its oversight responsibility with
respect to AbbVie’s accounting and financial reporting practices and the audit process, the quality and
integrity of AbbVie’s financial statements, the independent auditors’ qualifications, independence, and
performance, the performance of AbbVie’s internal audit function and internal auditors, certain areas
of legal and regulatory compliance, and enterprise risk management. Each of the members of the audit
committee is financially literate, as required of audit committee members by the New York Stock
Exchange, and the independence requirements set forth in Section 10A(m)(3) of the Securities
Exchange Act of 1934, as amended (the ‘‘Exchange Act’’). The board of directors has determined that
R. S. Austin, the committee’s chair, is an ‘‘audit committee financial expert.’’
The compensation committee, whose members are E. M. Liddy, chairman, R. S. Austin,
G. F. Tilton, and F. H. Waddell, did not meet prior to the Separation in 2012. The committee is
governed by a written charter. This committee assists the board of directors in carrying out the board’s
responsibilities relating to the compensation of AbbVie’s executive officers and directors. The
compensation committee annually reviews the compensation paid to the directors and gives its
recommendations to the full board regarding both the amount of director compensation that should be
paid and the allocation of that compensation between equity-based awards and cash. In recommending
director compensation, the compensation committee takes comparable director fees into account and
reviews any arrangement that could be viewed as indirect director compensation. The processes and
procedures used for the consideration and determination of executive compensation are described in
the section of the proxy captioned ‘‘Compensation Discussion and Analysis.’’ This committee also
reviews, approves, and administers the incentive compensation plans in which any executive officer of
AbbVie participates and all of AbbVie’s equity-based plans. It 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 regulations or with the listing rules of the New
York Stock Exchange. The compensation committee has the sole authority, under its charter, to select,
retain and/or terminate independent compensation advisors. The compensation committee reviews and
discusses with management and its independent compensation advisor potential risks associated with
AbbVie’s compensation policies and practices as discussed in the section captioned ‘‘Compensation
Risk Assessment.’’ Each member of the committee qualifies as a ‘‘non-employee director’’ for purposes
of Rule 16b-3 under the Exchange Act and as an ‘‘outside director’’ for purposes of Section 162(m) of
the Internal Revenue Code. The committee has engaged Aon Hewitt to provide counsel and advice on
executive and non-employee director compensation matters. Aon Hewitt, 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 AbbVie or its senior executives. The committee determines what
variables it will instruct Aon Hewitt to consider, and they include: peer groups against which
performance and pay should be examined, financial metrics to be used to assess AbbVie’s relative
performance, competitive long-term incentive practices in the marketplace, and compensation levels
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