AbbVie 2014 Annual Report Download - page 133

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compensation between equity-based awards and cash. In recommending director compensation, the compensation
committee takes into account director fees paid by companies in AbbVie’s peer groups and reviews any arrangement that
could be viewed as indirect director compensation. The processes and procedures used for the consideration and
determination of executive compensation are described in the ‘‘Compensation Discussion and Analysis’’ section of this
proxy statement. The committee also reviews, approves, and administers the incentive compensation plans in which the
AbbVie executive officers participate and all of AbbVie’s equity-based plans. It may delegate the responsibility to
administer and make grants under these plans to management, except to the extent that such delegation would be
inconsistent with applicable law or regulations or with the listing rules of the New York Stock Exchange. The
compensation committee has the sole authority, under its charter, to select, retain and/or terminate independent
advisors who may assist the committee in carrying out its responsibilities. The compensation committee reviews and
discusses with management and its independent compensation advisor potential risks associated with AbbVie’s
compensation policies and practices as discussed in the ‘‘Compensation Risk Assessment’’ section of this proxy
statement. Each member of the committee qualifies as a ‘‘non-employee director’’ for purposes of Rule 16b-3 under the
Exchange Act and as an ‘‘outside director’’ for purposes of Internal Revenue Code Section 162(m).
Effective April 1, 2014, the committee engaged Compensation Advisory Partners (CAP) as its independent
compensation consultant due to the retirement of the committee’s prior principal compensation consultant from Aon
Hewitt. The independent compensation consultant provides counsel and advice to the committee on executive and non-
employee director compensation matters. CAP, and its principal, report directly to the chair of the committee. The
principal meets regularly, and as needed, with the committee in executive sessions, has direct access to the chair during
and between meetings, and performs no other services for AbbVie or its senior executives. The committee determines
what variables it will instruct CAP to consider, including: peer groups against which performance and pay should be
examined, metrics to be used in incentive plans to assess AbbVie’s performance, competitive short- and long-term
incentive practices in the marketplace, and compensation levels relative to market benchmarks. The committee
negotiates and approves all fees paid to CAP for these services. AbbVie did not engage CAP to perform any other
services during 2014.
Through March 31, 2014, the committee had engaged Aon Hewitt as its independent compensation consultant.
Aon Hewitt, and its principal, reported directly to the chair of the committee and performed duties similar to those
described above for CAP. The principal performed no other services for AbbVie or its senior executives. The committee
instructed Aon Hewitt on the variables to consider, which consisted of the same variables listed above in the description
of CAP’s engagement. The committee negotiated and approved all fees paid to Aon Hewitt for these services. Through
March 31, 2014, the committee authorized payment of approximately $40,000 to Aon Hewitt for services rendered to
the committee relating to executive compensation. Separately, AbbVie management engaged Aon Hewitt to perform
unrelated services and, through March 31, 2014, paid approximately $960,000 for those services, including actuarial
work, pension design and administration, insurance, and general consulting. The committee was informed about these
services, but its formal approval was not requested.
Based on an assessment of internally developed information and information provided by CAP and Aon Hewitt,
respectively, the committee has determined that its independent compensation advisors do not have a conflict of
interest. A copy of the compensation committee report is included in the ‘‘Compensation Committee Report’’ section of
this proxy statement.
Nominations and Governance Committee
The nominations and governance committee is governed by a written charter. This committee assists the board
of directors in identifying individuals qualified to become board members and recommends to the board the nominees
for election as directors at the next annual meeting of stockholders, recommends to the board the persons to be elected
as executive officers of AbbVie, recommends to the board the corporate governance guidelines applicable to AbbVie,
oversees the evaluation of the board and management, and serves in an advisory capacity to the board and the
chairman of the board on matters of organization, management succession plans, major changes in the organizational
structure of AbbVie, and the conduct of board activities. The process used by this committee to identify a nominee to
serve as a member of the board of directors depends on the qualities being sought. From time to time, AbbVie engages
an executive search firm to assist the committee in identifying individuals qualified to be board members. Board
2015 Proxy Statement 13
THE BOARD OF DIRECTORS AND ITS COMMITTEES