AbbVie 2013 Annual Report Download - page 30

From time to time, AbbVie will issue additional options or other stock-based awards to its employees
under AbbVie’s employee benefits plans.
In addition, AbbVie’s amended and restated certificate of incorporation authorizes AbbVie to
issue, without the approval of AbbVie’s stockholders, one or more classes or series of preferred stock
having such designation, powers, preferences and relative, participating, optional and other special
rights, including preferences over AbbVie’s common stock respecting dividends and distributions, as
AbbVie’s board of directors generally may determine. The terms of one or more classes or series of
preferred stock could dilute the voting power or reduce the value of AbbVie’s common stock. For
example, AbbVie could grant the holders of preferred stock the right to elect some number of
AbbVie’s directors in all events or on the happening of specified events or the right to veto specified
transactions. Similarly, the repurchase or redemption rights or liquidation preferences AbbVie could
assign to holders of preferred stock could affect the residual value of the common stock.
Certain provisions in AbbVie’s amended and restated certificate of incorporation and amended and restated
by-laws, and of Delaware law, may prevent or delay an acquisition of AbbVie, which could decrease the
trading price of AbbVie’s common stock.
AbbVie’s amended and restated certificate of incorporation and amended and restated by-laws
contain, and Delaware law contains, provisions that are intended to deter coercive takeover practices
and inadequate takeover bids by making such practices or bids unacceptably expensive to the bidder
and to encourage prospective acquirors to negotiate with AbbVie’s board of directors rather than to
attempt a hostile takeover. These provisions include, among others:
• the inability of AbbVie’s stockholders to call a special meeting;
• the division of AbbVie’s board of directors into three classes of directors, with each class serving
a staggered three-year term;
• a provision that stockholders may only remove directors for cause;
• the ability of AbbVie’s directors, and not stockholders, to fill vacancies on AbbVie’s board of
directors; and
• the requirement that the affirmative vote of stockholders holding at least 80 percent of AbbVie’s
voting stock is required to amend certain provisions in AbbVie’s amended and restated
certificate of incorporation and AbbVie’s amended and restated by-laws relating to the number,
term and election of AbbVie’s directors, the filling of board vacancies, the calling of special
meetings of stockholders and director and officer indemnification provisions.
In addition, Section 203 of the Delaware General Corporation Law provides that, subject to
limited exceptions, persons that acquire, or are affiliated with a person that acquires, more than
15 percent of the outstanding voting stock of a Delaware corporation shall not engage in any business
combination with that corporation, including by merger, consolidation or acquisitions of additional
shares, for a three-year period following the date on which that person or its affiliates becomes the
holder of more than 15 percent of the corporation’s outstanding voting stock.
AbbVie believes these provisions protect its stockholders from coercive or otherwise unfair
takeover tactics by requiring potential acquirors to negotiate with AbbVie’s board of directors and by
providing AbbVie’s board of directors with more time to assess any acquisition proposal. These
provisions are not intended to make the company immune from takeovers. However, these provisions
apply even if the offer may be considered beneficial by some stockholders and could delay or prevent
an acquisition that AbbVie’s board of directors determines is not in the best interests of AbbVie and
AbbVie’s stockholders. These provisions may also prevent or discourage attempts to remove and
replace incumbent directors.
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