AbbVie 2014 Annual Report Download - page 146

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5MAR201520111144 5MAR201520111268
13NOV201221352027
Role of the Compensation Consultant
The compensation committee had an engagement with Aon Hewitt through March 2014 to serve as its
independent compensation consultant to provide counsel and advice on executive and non-employee director
compensation matters. Due to the retirement of Aon Hewitt’s principal compensation consultant to the committee, the
committee engaged Compensation Advisory Partners as its independent compensation consultant beginning in April 2014.
The committee’s independent consultant reports directly to the chair of the committee. The consultant 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 its consultant to consider, which include: peer groups against which performance and pay should be examined,
metrics to be used to assess AbbVie’s performance, competitive incentive practices in the marketplace, and
compensation levels relative to market benchmarks.
Compensation Risk Oversight
The company has established, and the compensation committee endorses, several controls to address and
mitigate compensation-related risk, such as employing a diverse set of performance metrics, maintaining robust stock
ownership guidelines for its executives and non-employee directors, and retaining broad discretion to recover incentive
awards in the unlikely event that incentive plan award decisions are based on earnings that are subsequently restated.
The committee identified no material risks in AbbVie’s compensation programs in 2014.
III. Compensation Plan Elements
Three primary components make up AbbVie’s executive pay program: (1) base salary, (2) short-term incentives
and (3) long-term incentives. The structure of each component is tailored to serve a specific function and purpose.
Long-term
Incenves
69%
Base Salary
10%
Short-term
Incenves
21%
Long-term
Incenves
61%
Base Salary
14%
Short-term
Incenves
25%
Base Salary
The compensation committee sets appropriate levels of base salary to ensure that AbbVie can attract and retain
a leadership team that will continue to meet our commitments to customers and patients and sustain long-term
profitable growth for our stockholders. Generally, the committee considers the median of the Health Care Peer Group as
an initial benchmark, but also references the High-Performance Peer Group for additional context. Specific pay rates are
then established for each NEO relative to his or her market benchmark based on the NEO’s performance, experience,
unique skills, internal equity with others at AbbVie, and the company’s operating budget. In this sense, base pay is
performance-based as well as aligned with each individual’s relative skills, experience, and contributions to AbbVie’s
overall performance.
Short-Term Incentives
Performance Incentive Plan
Annual cash incentives are paid to NEOs through AbbVie’s Performance Incentive Plan (PIP), which rewards
executives for achieving key financial and non-financial goals that are measured at the company and individual levels.
26 2015 Proxy Statement
CEO Pay Mix All Other NEO Average Pay Mix
EXECUTIVE COMPENSATION