AbbVie 2012 Annual Report Download - page 163

SAY WHEN ON PAY—AN ADVISORY VOTE ON THE FREQUENCY OF FUTURE APPROVALS OF
EXECUTIVE COMPENSATION (ITEM 4 ON PROXY CARD)
The Dodd-Frank Act provides stockholders the opportunity to vote, on an advisory and
non-binding basis, their preference as to the frequency of future advisory approvals of named executive
officer compensation. This vote is often referred to as ‘‘say when on pay.’’ Stockholders can vote on
whether future advisory approvals of named executive officer compensation should occur every year,
every two years or every three years, or they can abstain from voting.
After careful consideration, the board of directors recommends that future advisory approvals of
executive officer compensation occur every year.
While this vote is advisory and non-binding, the board of directors values the opinion of the
stockholders and will review the voting results and take them into account.
Accordingly, the Board of Directors recommends that you vote for a vote to approve executive
compensation every 1 YEAR.
APPROVAL OF THE ABBVIE 2013 INCENTIVE STOCK PROGRAM (ITEM 5 ON PROXY CARD)
Before the Separation, the AbbVie 2013 Incentive Stock Program (the ‘‘Program’’) was approved
by the AbbVie board of directors and AbbVie’s sole stockholder. The Program is being presented for
stockholder approval as part of this proxy statement to comply with stock exchange requirements and
the performance-based compensation exception under Internal Revenue Code Section 162(m). A copy
of the Program is attached to this proxy statement as Exhibit A, and the following summary of the
principal features of the Program is qualified in its entirety by reference to that Exhibit. The board of
directors recommends that the stockholders vote FOR the approval of the Program.
The purposes of the Program are to attract and retain outstanding directors, officers and other
employees of AbbVie and its subsidiaries, to provide incentives to such individuals through opportunities
to acquire shares of AbbVie common stock or to receive monetary payments based on the value of such
shares or on the financial performance of AbbVie, or both, on advantageous terms as provided in the
Program, and to further align such persons’ interests with those of AbbVie’s other stockholders through
compensation that is based on the value of AbbVie common stock. The board of directors believes the
adoption of the Program will allow AbbVie to maintain the flexibility the company needs to continue to
adapt the compensation of key individuals to changes in law, accounting principles and corporate
objectives affecting such compensation. In addition, the Program facilitated the assumption of certain
awards (‘‘Adjusted Awards’’) granted under the Abbott Laboratories Incentive Stock Programs in
connection with the Separation. To accomplish the purposes of the Program, the Program authorizes the
grant of several different forms of benefits, including nonqualified stock options, restricted stock awards,
restricted stock units, performance awards, and other share-based awards (including stock appreciation
rights, dividend equivalents and recognition awards) (the ‘‘Benefits’’).
The Program is intended to enable compensation awarded to the executives named in the
Summary Compensation Table to qualify for the performance-based exception from the deductibility
limitation of Internal Revenue Code Section 162(m). The Program, as required by Section 162(m), sets
the following maximums on the number of shares of AbbVie common stock subject to awards or dollar
value of such awards on the date of grant that any individual participant can receive in any year under
the Program: 2 million shares subject to stock options or stock appreciation rights, and $15 million
under all performance awards for any one year for any one participant. Accordingly, if the Program is
approved by the stockholders and other conditions of Section 162(m) relating to the exclusion for
performance-based compensation are satisfied, certain compensation paid to executive officers pursuant
to the Program will not be subject to the deduction limit of Section 162(m). While the Program is
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