AbbVie 2014 Annual Report Download - page 161

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B. 1.65% of 5-year final average earnings multiplied by years of benefit service prior to 2004 (up to 20); plus
1.50% of 5-year final average earnings multiplied by years of benefit service prior to 2004 in excess of 20
(but no more than 15 additional years); less 0.50% of the lesser of 3-year final average earnings (but not
more than the social security wage base in any year) or the social security covered compensation level
multiplied by years of benefit service.
C. 1.10% of 5-year final average earnings multiplied by years of benefit service prior to 2004.
The benefit for service prior to 2004 (B or C above) is reduced for the cost of preretirement surviving spouse
benefit protection. The reduction is calculated using formulas based on age and employment status during the period in
which coverage was in effect.
Final average earnings are the average of the employee’s 60 highest-paid consecutive calendar months of
compensation (salary and non-equity incentive plan compensation). The Pension Plan covers earnings up to the limit
imposed by Internal Revenue Code Section 401(a)(17) and provides for a maximum of 35 years of benefit service.
Participants become fully vested in their pension benefit upon the completion of five years of service. The
benefit is payable on an unreduced basis at age 65. Employees hired after 2003 who terminate employment prior to age
55 with at least 10 years of service may choose to commence their benefits on an actuarially reduced basis as early as
age 55. Employees hired before 2004 who terminate employment prior to age 50 with at least 10 years of service may
choose to commence their benefits on an actuarially reduced basis as early as age 50. Employees hired before 2004 who
terminate employment prior to age 50 with fewer than 10 years of service may choose to commence their benefits on
an actuarially reduced basis as early as age 55.
The Pension Plan offers several optional forms of payment, including certain and life annuities, joint and survivor
annuities, and level income annuities. The benefit paid under any of these options is actuarially equivalent to the life
annuity benefit produced by the formula described above.
Employees who retire from AbbVie prior to their normal retirement age may receive subsidized early retirement
benefits. Employees hired after 2003 are eligible for early retirement at age 55 with 10 years of service. Employees hired
before 2004 are eligible for early retirement at age 50 with 10 years of service or age 55 if the employee’s age plus
years of benefit service total 70 or more. Mr. Gonzalez, Mr. Alban and Ms. Schumacher are eligible for early retirement
benefits under the plan.
The subsidized early retirement reductions applied to the benefit payable for service after 2003 (A above)
depend upon the participant’s age at retirement. If the participant retires after reaching age 55, the benefit is reduced
5 percent per year for each year that payments are made before age 62. If the participant retires after reaching age 50
but prior to reaching age 55, the benefit is actuarially reduced from age 65.
The early retirement reductions applied to the benefit payable for service prior to 2004 (B and C above) depend
upon age and service at retirement:
• In general, the 5-year final average earnings portions of the benefit are reduced 3 percent per year for each
year that payments are made before age 62 and the 3-year final average earnings portion of the benefit is
reduced 5 percent per year for each year that payments are made before age 62.
• Employees who participated in the plan before age 36 may elect ‘‘Special Retirement’’ on the last day of
any month after reaching age 55 with age plus Seniority Service points of at least 94 or ‘‘Early Special
Retirement’’ on the last day of any month after reaching age 55, provided their age plus Seniority Service
points would reach at least 94 before age 65. Seniority Service includes periods of employment prior to
attaining the minimum age required to participate in the plan. If Special Retirement or Early Special
Retirement applies, Seniority Service is used in place of benefit service in the formulas. The 5-year final
average earnings portions of the benefit in B above are reduced 12 ⁄3 percent for each year between ages 59
and 62 plus 21 ⁄2 percent for each year between ages 55 and 59. The 3-year final average earnings portion of
2015 Proxy Statement 41
EXECUTIVE COMPENSATION