AbbVie 2012 Annual Report Download - page 130

EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
During 2012, AbbVie was part of Abbott Laboratories. On January 1, 2013, AbbVie became an
independent Fortune 200 biopharmaceutical company. Due to the timing of the business separation,
Abbott’s compensation committee and board of directors made many of the compensation decisions
described in this proxy statement regarding the Company’s executives, including the five named
executive officers: Richard A. Gonzalez, Chairman of the Board and Chief Executive Officer; Laura J.
Schumacher, Executive Vice President, Business Development, External Affairs and General Counsel;
William J. Chase, Executive Vice President, Chief Financial Officer; Carlos Alban, Executive Vice
President, Commercial Operations; and John M. Leonard, M.D., Senior Vice President, Chief Scientific
Officer.
Subsequent to the business separation, AbbVie’s compensation committee (the ‘‘Committee’’) and
board of directors adopted compensation and benefit programs that are based on Abbott’s, and
reviewed decisions made by Abbott in 2012. In this Compensation Discussion and Analysis (‘‘CD&A’’),
decisions made or reviewed by AbbVie’s Committee are indicated by phrases like ‘‘the Committee
established’’ or ‘‘the Committee decided.’’ Decisions made by Abbott prior to AbbVie’s separation are
indicated by phrases like ‘‘Abbott established’’ or ‘‘Abbott decided.’’
The CD&A describes the pay philosophy established for the Company’s named executive officers,
the process used to examine performance in the context of executive pay decisions, and the
performance goals and results for each named executive officer.
The Committee believes performance must always be evaluated compared to the goals of the
business and assessed in the context of market and business conditions.
Abbott achieved record sales of nearly $40 billion in 2012. The proprietary pharmaceutical segment
of Abbott, representing the majority of AbbVie’s revenue, delivered sales of $18 billion, up more than
8 percent globally on an operational basis, excluding a nearly 3 percent negative impact from foreign
exchange. Performance was driven by double-digit growth from both HUMIRA and AndroGel and
continued growth from the company’s portfolio of market-leading therapies, including Creon and
Synthroid.
In addition to strong sales growth, in 2012 the proprietary pharmaceutical segment of Abbott that
became AbbVie continued to execute on its regulatory and clinical objectives. This includes securing
approvals for four new HUMIRA indications; the addition of two promising mid-stage compounds,
including a next-generation JAK1 inhibitor and a novel therapy for acute kidney injury; and the
advancement of key development programs, including the start of phase three studies for our
interferon-free Hepatitis C (HCV) combination and elagolix.
Compensation Philosophy and Components of Pay
AbbVie has established a compensation philosophy that aligns executives’ interests with both short-
and long-term profitable growth and shareholder returns, and is designed to attract and retain
executives whose talent and contributions sustain the profitable growth of the Company. The intent of
this philosophy is to directly support achievement of the Company’s primary business strategies and
goals, while also aligning executives’ performance and rewards with shareholders’ interests.
Consequently, the Committee believes the vast majority of executive compensation at AbbVie should
be, and by definition is, performance-based. AbbVie and the Committee will continue to consider and
develop AbbVie’s compensation structure, practices and procedures in order to effectively meet the
Company’s business needs and goals.
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