AbbVie 2014 Annual Report Download - page 147

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10FEB201519481475
13NOV201221352027
Annual cash incentives are calculated as follows:
XX=
Target Short-Term
Incenve
Opportunity %
Base Salary
Performance against Annual Goals
(set based on internal and
market peer group expectaons)
Adjusted Diluted EPS
Financial metrics
(e.g., sales, income before taxes, and ROA)
Operaonal / strategic goaIs
(e.g., innovaon, pipeline, leadership-oriented goals)
Preliminary Incenve
Award Amount
Determined by
reviewing:
• Internal and
market-based
peer group
benchmarks
• Individual
performance
Established using:
• Market-based
peer group
benchmarks
• Internal
calibraon
While the compensation committee relies heavily on objective, quantitative metrics to determine short-term
incentive awards, the performance review also includes a qualitative element to ensure the review is comprehensive and
inclusive of all individual, strategic, and leadership goals whose assessment is not solely dictated by numeric or formulaic
applications. Moreover, while each participant has predetermined goals, the committee also considers relative
achievements and/or developments in the company, the marketplace, and the global economy that could not have been
foreseen when individual goals were established.
Annual Metrics and Goal Assessment
AbbVie’s short-term incentive structure is intended to align NEOs’ interests directly with AbbVie’s annual
operating strategies, financial goals, and leadership behaviors. In doing so, it provides a direct link between the NEOs’
short-term incentives and the company’s and the NEOs’ annual performance results through measurable financial and
operational performance and qualitative assessments of clearly defined strategic progress and leadership behaviors. The
compensation committee approves pre-established goals at the beginning of each year. The qualitative assessment
reflects NEOs’ overall leadership, progress on strategic initiatives, advancement of the pipeline, and enhancement of
AbbVie’s biopharmaceutical culture.
The financial and strategic/leadership goals and their respective weightings are summarized in the chart below.
The specific goals and weightings for each NEO, other than the CEO, are established at the start of each performance
year based on the NEO’s role and anticipated contributions to the company’s annual objectives. The CEO’s goals are
similarly established at the start of each performance year; however, to reflect the CEO’s overall accountability for
company financial performance and strategic outcomes, the committee considers all financial and non-financial goals
holistically, without specific weightings, when evaluating CEO performance.
EPS 20% to 40%
Sales 10% to 20%
Margin 0% to 40%
Total Tied to Financial Goals 40% to 70%
R&D/Biosimilars 0% to 60%
Business Development 0% to 20%
Other (including strategic initiatives, etc.) 0% to 30%
Total Tied to Strategic/Leadership Goals 30% to 70%
Assessments of performance against financial results consider the effect of specified adjustments and/or events,
and the appropriateness of these adjustments is reviewed annually by the committee. In 2014, specified adjustments
consisted of other revenue, intangible asset amortization, research and development, acquired in process research and
2015 Proxy Statement 27
Financial Goals % Weighting
Strategic/Leadership Goals % Weighting
EXECUTIVE COMPENSATION