AbbVie 2014 Annual Report Download - page 148

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13NOV201221352027
development, collaboration and transaction costs, separation costs, and other items, as described in Exhibit 99.1 to
AbbVie’s Form 8-K filed on January 30, 2015.
The PIP is intended to comply with the requirements of Internal Revenue Code Section 162(m) for performance-
based compensation.
2014 PIP Awards
Richard A. Gonzalez $3,100,000 $3,500,000 113%
Michael E. Severino $ 929,500 $1,200,000 129%
Carlos Alban $ 935,000 $1,300,000 139%
Laura J. Schumacher $1,023,000 $1,490,000 146%
William J. Chase $1,017,500 $1,490,000 146%
Long-Term Incentives
Performance-Vested Restricted Stock
Performance-vested restricted stock is 75% of the total long-term incentive (LTI) value delivered to NEOs each
year. AbbVie’s performance-vested restricted stock awards (or restricted stock units where required outside the U.S.) are
subject to the following terms, including a challenging performance metric that prevents awards from vesting if pre-
established goals are not met:
•Term. Each award has a five-year term.
•Return on Equity (ROE) Performance Metric. During the term of the award, one-third of the award vests in each
year that AbbVie’s prior year ROE is at least 18%. Unlike performance-based awards that can increase or decrease
relative to a target amount, these are performance-vested awards that cannot be released to the NEO unless the
ROE performance goal is achieved during the term of the award. If the thresholds are met in three of the five years,
100% of the performance-vested shares vest. If the thresholds are missed in all five years, 100% of the performance-
vested shares will be forfeited.
•Setting the ROE Performance Target. The compensation committee considers the company’s operating plan, historic
performance, peer-group performance (particularly the High-Performing Peer Group), the company’s pipeline, and
anticipated business and market conditions when setting the ROE target. The committee concluded that the High-
Performing Peer Group five-year average return on equity of 18% is an appropriate target for AbbVie that will
require successful execution of the company’s long-term strategic objectives.
•Dividends. These awards receive dividends (or dividend-equivalent payments in the case of restricted stock units)
during the vesting term.
Non-Qualified Stock Options
Stock options are 25% of the total LTI value delivered to NEOs each year. AbbVie’s stock options are subject to
the following terms:
•Term. Each option has a ten-year term.
•Price. The option exercise price is set at or above fair market value on the date of grant. AbbVie has never granted
discounted stock options.
•Vesting. 1/3 of the award vests each year after the date of the grant.
28 2015 Proxy Statement
Target Bonus Actual Bonus Paid Actual Bonus as % of Target
EXECUTIVE COMPENSATION