AbbVie 2012 Annual Report Download - page 166

Certain Adjusted Awards comprised of stock options granted under an incentive stock program of
Abbott Laboratories or its subsidiaries before 2005 may qualify for the grant of replacement options
under the AbbVie Program. When an individual exercises a stock option granted with a replacement
option feature that has been held for at least six months and pays the exercise price or taxes incurred
in connection with the exercise by delivery or withholding of shares of AbbVie common stock, that
individual may be granted a new nonqualified stock option for the number of shares so used. The
replacement option will cover the number of shares surrendered to pay the purchase price, or
surrendered or withheld to pay the individual’s tax liability, if any, will have an exercise price equal to
the fair market value of such shares on the date the replacement option is granted, will be exercisable
in full six months from the date of grant, will expire on the expiration date of the original stock option
and will contain a similar replacement option feature. The AbbVie Program does not provide for the
grant of replacement options other than pursuant to Adjusted Awards.
No option may be exercised after the expiration of ten years from the date it is granted. The
Program contains special rules covering the time of exercise in case of retirement, death, disability, or
other termination of employment. The Program also provides that, unless otherwise provided in a
Benefit agreement, upon the occurrence of a ‘‘Change in Control’’ of AbbVie (as defined in the
Program) all stock options will become fully vested and exercisable as of the date of the Change in
Control.
Restricted Stock Awards and Restricted Stock Units
Restricted stock awards consist of shares of common stock transferred to participants, without
payment, as additional compensation for their services to AbbVie or one of its subsidiaries. Restricted
stock units consist of a contractual right of the participant to receive shares of common stock, or cash
equal in value to those shares, in the future, without payment, as additional compensation for their
services to AbbVie or one of its subsidiaries. Restricted stock awards and restricted stock units awarded
under the Program will be subject to such terms and conditions as the Committee determines are
appropriate including, without limitation, restrictions on the sale or other disposition of such shares.
The Committee may provide the right to vote and receive dividends on restricted stock granted under
the Program. Subject to Internal Revenue Code Section 409A, the Committee may provide the right to
receive dividend equivalents on restricted stock units granted under the Program. Unless otherwise
provided, any dividends or dividend equivalents received, including in connection with a stock split of
the shares of common stock underlying an award, will be subject to the same restrictions as the shares
underlying the award.
The Program provides that, unless otherwise provided in a Benefit agreement, upon the occurrence
of a Change in Control of AbbVie all terms and conditions of all restricted stock awards and restricted
stock units then outstanding will be deemed to be satisfied, and all restrictions will lapse, as of the date
of the Change in Control.
Performance Awards
The Program permits the grant of performance awards in the form of restricted stock, restricted
stock units and other share-based awards. The goals established by the Committee will be based on any
one or a combination of earnings per share, return on equity, return on assets, return on net assets,
return on investment, total stockholder return, net operating income, cash flow, increase in revenue,
economic value added, increase in share price or cash flow return on investment. The performance
goals may include a threshold level of performance below which no payment will be made (or no
vesting will occur), a level or levels of performance at which specified payments will be made (or
specified vesting will occur), and a maximum level of performance above which no additional payment
will be made (or at which full vesting will occur).
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