AbbVie 2013 Annual Report Download - page 155

‘‘Compensation Discussion and Analysis—How Executive Pay Decisions Are Made—Long-Term
Incentives.’’
(4) Shares of outstanding restricted stock receive dividends at the same rate as all other stockholders.
In the event of a grantee’s death or disability, these awards are deemed fully earned. Upon a
change in control, the treatment of these awards is determined as described in the section of this
proxy statement captioned ‘‘Potential Payments upon Termination or Change in Control—Equity
Awards.’’
(5) The grant date fair value of stock awards is determined by multiplying the number of shares
granted by the average of the high and low market prices of one share of AbbVie common stock
on the award grant date.
(6) One-third of the shares of common stock covered by these options are exercisable after one year,
two-thirds after two years, and all after three years. The options vest in the event of the grantee’s
death or disability. Upon a change in control, the treatment of these awards is determined as
described in the section of this proxy statement captioned ‘‘Potential Payments upon Termination
or Change in Control—Equity Awards.’’ Under the AbbVie 2013 Incentive Stock Program, these
options have an exercise price equal to the average of the high and low market prices (rounded up
to the next even penny) of one share of AbbVie common stock on the date of grant. These
options do not contain a replacement option feature.
(7) The grant date fair value of option awards is determined as of the option grant date using a Black-
Scholes stock option valuation model. The assumptions used to determine the grant date fair value
are described in Note 11, ‘‘Equity,’’ of AbbVie’s Notes to Consolidated Financial Statements
included under Item 8, ‘‘Financial Statements and Supplementary Data,’’ in AbbVie’s 2013 Annual
Report on SEC Form 10-K. The assumptions used to determine the grant date fair value for
replacement options are described in footnote (3) to the Summary Compensation Table.
(8) This was an AbbVie replacement option. On August 16, 2013, Ms. Schumacher also received an
Abbott replacement option upon the exercise of pre-Separation Abbott stock options that
contained a replacement feature. The Abbott replacement option covered 5,671 Abbott common
shares, bore an exercise price of $35.03 per share, and expired on February 19, 2014. None of the
remaining AbbVie or Abbott stock options held by any of the named executive officers contain a
replacement feature. When it was in effect, the replacement feature provided that when the
exercise price (or withholding tax) for an option with the feature was paid with company common
stock held by the named executive officer, a replacement option could be granted for the number
of shares of common stock used to make that payment.
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