AbbVie 2012 Annual Report Download - page 158

Bonus payments include payments made under the Performance Incentive Plan. The officer will
also receive up to three years of additional employee benefits (including welfare benefits, outplacement
services and tax and financial counseling, and the value of three more years of pension accruals). If
change in control-related payments and benefits become subject to the excise tax imposed under
Internal Revenue Code Section 4999, payments under the agreement will be reduced to prevent
application of the excise tax if such a reduction would leave the executive in a better after-tax position
than if the payments were not reduced and the tax applied. The agreements also limit the conduct for
which awards under Abbott’s incentive stock programs can be terminated and generally permit options
to remain exercisable for the remainder of their term. The Compensation Committee’s independent
compensation consultant has confirmed that the level of payments provided under the agreements is
consistent with current market practice.
For purposes of the agreements, the term ‘‘change in control’’ includes the following events: any
person becoming the beneficial owner of Abbott securities representing 20 percent or more of the
outstanding voting power (not including an acquisition directly from Abbott and its affiliates); a change
in the majority of the members of the board of directors whose appointment was approved by a vote of
at least two-thirds of the incumbent directors; and the consummation of certain mergers or similar
corporate transactions involving Abbott. A ‘‘potential change in control’’ under the agreements
includes, among other things, Abbott’s entry into an agreement that would result in a change in
control. Finally, the term ‘‘good reason’’ includes: a significant adverse change in the executive’s
position, duties, or authority; the company’s failure to pay the executive’s compensation or a reduction
in the executive’s base pay or benefits; or the relocation of the company’s principal executive offices to
a location that is more than 35 miles from the location of the offices at the time of the change in
control.
If a change in control had occurred on December 31, 2012, immediately followed by one of the
covered circumstances described above, Mr. Gonzalez, Ms. Schumacher, Messrs. Chase and Alban, and
Dr. Leonard would have been entitled to receive the following payments and benefits under the change
in control agreements:
• Mr. Gonzalez: Cash termination payments—$9,598,900; Welfare and fringe benefits—$68,198.
• Ms. Schumacher: Cash termination payments—$5,548,318; Additional Supplemental Pension
Plan benefits—$977,177; Welfare and fringe benefits—$68,741.
• Mr. Chase: Cash termination payments—$3,770,000; Additional Supplemental Pension Plan
benefits—$546,744; Welfare and fringe benefits—$57,577.
• Mr. Alban: Cash termination payments—$4,635,000; Additional Supplemental Pension Plan
benefits—$3,586,270; Welfare and fringe benefits—$84,570.
• Dr. Leonard: Cash termination payments—$4,334,300; Additional Supplemental Pension Plan
benefits—$1,929,297; Welfare and fringe benefits—$73,468.
The separation of AbbVie from Abbott was not a change in control or potential change in control
under the agreements, and no payments or benefits were triggered in connection with the Separation.
Effective January 1, 2013, AbbVie assumed the change in control agreements for Messrs. Gonzalez,
Chase and Alban, Ms. Schumacher and Dr. Leonard, as well as for certain other AbbVie officers.
Accelerated Vesting of Equity Awards
Under the Abbott Laboratories Incentive Stock Programs, all outstanding stock options, restricted
stock and restricted stock units granted prior to February 2013 vest upon a change in control, including
performance-based restricted shares, which are deemed earned in full. These Programs, which were
approved by Abbott’s shareholders, cover approximately 14,000 participants, including a broad group of
management and professional staff.
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