AbbVie 2012 Annual Report Download - page 154

reduced 5 percent per year for each year that payments are made before age 62. Benefit C is
payable on an unreduced basis at Special Retirement and is reduced 3 percent per year for each
year that payments are made before age 62, if Early Special Retirement applies.
Supplemental Pension Plan
With the following exceptions, the provisions of the Supplemental Pension Plan are substantially
the same as those of the Annuity Retirement Plan:
• Officers’ 5-year final average earnings are calculated using the average of the 5 highest years of
base earnings and the 5 highest years of payments under Abbott’s non-equity incentive plans.
• The Annuity Retirement Plan does not include amounts deferred or payments received under
the Abbott Laboratories Deferred Compensation Plan in its calculation of a participant’s final
average earnings. To preserve the pension benefits of Deferred Compensation Plan participants,
the Supplemental Pension Plan includes amounts deferred by a participant under the Deferred
Compensation Plan in its calculation of final average earnings. Beginning in the year following
their election as an officer, Abbott officers are no longer eligible to defer compensation under
the Deferred Compensation Plan.
• In addition to the benefits outlined above for the Annuity Retirement Plan, officers are eligible
for a benefit equal to 0.6% of 5-year final average earnings for each year of service for each of
the first 20 years of service occurring after the participant attains age 35. The benefit is further
limited by the maximum percentage allowed under the Annuity Retirement Plan under that
plan’s benefit formulas (A, B and C above). The portion of this additional officer benefit
attributable to service prior to 2004 is reduced 3 percent per year for each year that payments
are made before age 60. The portion attributable to service after 2003 is reduced 5 percent per
year for each year that payments are made before age 60 if the participant is at least age 55 at
early retirement. If the participant is under age 55 at retirement, the portion attributable to
service after 2003 is actuarially reduced from age 65.
• The Supplemental Pension Plan provides early retirement benefits similar to those provided
under the Annuity Retirement Plan. The benefits provided to officers under the Supplemental
Pension Plan are not, however, reduced for the period between age 60 and age 62, unless the
benefit is being actuarially reduced from age 65. Mr. Alban and Dr. Leonard are eligible for
early retirement benefits under the plan.
• Vested benefits accrued under the Supplemental Pension Plan may be funded through a grantor
trust established by the officer. Consistent with the distribution requirements of Internal
Revenue Code Section 409A and its regulations, those officers who were elected prior to 2009
may have the entire amount of their vested plan benefits funded through a grantor trust.
Officers elected after 2008 may have only the vested benefits that accrue following the calendar
year in which the officer is first elected funded through a grantor trust. Vested benefits accrued
through December 31, 2008, to the extent not previously funded, were distributed to the
participants’ individual trusts and included in the participants’ income.
Benefits payable under the Supplemental Pension Plan are offset by the benefits payable from the
Annuity Retirement Plan, calculated as if benefits under the plans commenced at the same time. The
amounts paid to an officer’s Supplemental Pension Plan grantor trust to fund plan benefits are
actuarially determined. The plan is designed to result in Abbott paying the officer’s Supplemental
Pension Plan benefits to the extent assets held in the officer’s trust are insufficient.
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