AbbVie 2012 Annual Report Download - page 168

Nontransferability
Except as provided by the Committee, Benefits granted under the Program will be exercisable only
by the holder during the holder’s lifetime; provided, however, that such Benefits will be transferable by
will or by the laws of descent and distribution.
Amendment and Termination
The Program may be amended from time to time or terminated by the board of directors. In the
absence of stockholder approval, however, no such amendment may increase the aggregate number of
shares available for Benefits, extend the term of the Program, or change or add a category or
categories of individuals who are eligible to participate in the Program. In addition, without the written
consent of the holder, no amendment or termination of the Program may materially and adversely
modify the holder’s rights under the express terms and conditions of an outstanding Benefit.
Program Benefits
Future awards of Benefits under the Program will be determined by the Committee and may vary
from year to year and from participant to participant. Future awards under the Program are not
determinable at this time because the awards are discretionary and, with respect to certain awards to
employees and non-employee directors, depend on the value of AbbVie’s common stock at the time
grants are determined.
U.S. Federal Income Tax Consequences
The following is a brief summary of the principal United States federal income tax consequences
of the Program under the provisions of the Internal Revenue Code, as currently in effect. The Internal
Revenue Code and regulations are subject to change. This summary is not intended to be exhaustive
and does not describe, among other things, state, local or foreign income and other tax consequences.
The specific tax consequences to a participant will depend upon the participant’s individual
circumstances.
Under existing law and regulations, the grant of nonqualified stock options and stock appreciation
rights will not result in income taxable to the employee or director or provide a deduction to AbbVie.
However, the exercise of a nonqualified stock option or stock appreciation right results in taxable
income to the holder, and AbbVie is entitled to a corresponding tax deduction. At the time of the
exercise of a nonqualified stock option, the participant will be taxed at ordinary income tax rates on the
excess of the fair market value of the shares purchased over the option exercise price. At the time of
the exercise of a stock appreciation right, the participant will be taxed at ordinary income tax rates on
the amount of the cash, or the fair market value of the shares, received by the employee upon exercise.
A participant in the Program who is granted a restricted stock award will not be taxed upon the
acquisition of such shares so long as the interest in such shares is subject to a ‘‘substantial risk of
forfeiture’’ within the meaning of Internal Revenue Code Section 83. Upon lapse or release of the
restrictions, the recipient will be taxed at ordinary income tax rates on an amount equal to the then
current fair market value of the shares. Any such awards that are not subject to a substantial risk of
forfeiture will be taxed at the time of grant. AbbVie will be entitled to a corresponding deduction when
the value of the award is included in the recipient’s taxable income. The basis of restricted shares held
after lapse or termination of restrictions will be equal to their fair market value on the date of lapse or
termination of restrictions, and upon subsequent disposition any further gain or loss will be a long-term
or short-term capital gain or loss, depending upon the length of time the shares are held.
A recipient of a restricted stock award may elect to be taxed at ordinary income tax rates on the
full fair market value of the restricted shares at the time of grant. If the election is made, the basis of
the shares so acquired will be equal to the fair market value at the time of grant. If the election is
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