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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )

Filed by the Registrant Filed by a party other than the Registrant      

CHECK THE APPROPRIATE BOX:
  Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
Definitive Proxy Statement
  Definitive Additional Materials
Soliciting Material under §240.14a-12

Abbott Laboratories

(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

PAYMENT OF FILING FEE (CHECK ALL BOXES THAT APPLY):
  No fee required
Fee paid previously with preliminary materials
Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11


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NOTICE OF ANNUAL MEETING

 

OF SHAREHOLDERS AND

 

PROXY STATEMENT 2022


 

 


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Abbott Laboratories
100 Abbott Park Road
Abbott Park, Illinois 60064-6400 U.S.A.
   
     

On the Cover: Dr. Veronika Meyer

St. Gallen, Switzerland

Veronika, a retired professor of chromatography, has been active her entire life, and takes every opportunity she can to go hiking in the mountains – those near her home, and others far afield. Notably, she was the first woman with a mechanical heart valve to reach the summit of Mt. Everest.

   

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TABLE OF CONTENTS

 

  PAGE
   
Notice of 2022 Annual Meeting of Shareholders 2
   
Proxy Summary 3
   
Nominees for Election as Directors
(Item 1 on Proxy Card)
10
   
The Board of Directors and Its Committees 16
The Board of Directors 16
Leadership Structure 16
Board Diversity and Composition 18
Director Selection 19
Board Oversight 20
Committees of the Board of Directors 21
Shareholder Engagement 24
Board Evaluation Process 24
Communicating with the Board of Directors 25
Corporate Governance Materials 25
Director Compensation 26
   
Executive Compensation 28
Compensation Discussion and Analysis 28
Compensation Committee Report 51
Compensation Risk Assessment 52
Summary Compensation Table 54
2021 Grants of Plan Based Awards 57
2021 Outstanding Equity Awards at Fiscal Year End 58
2021 Option Exercises and Stock Vested 61
Pension Benefits 61
Potential Payments Upon Termination or Change in Control 65
CEO Pay Ratio 68
   
Ratification of Ernst & Young LLP as Auditors (Item 2 on Proxy Card) 69
Report of the Audit Committee 70
   
Say on Pay—An Advisory Vote on the Approval of Executive Compensation (Item 3 on Proxy Card) 71
  PAGE
   
Shareholder Proposals 73
Shareholder Proposal on Special Shareholder Meeting Threshold (Item 4 on Proxy Card) 73
Shareholder Proposal on Independent Board Chairman (Item 5 on Proxy Card) 75
Shareholder Proposal on Rule 10b5-1 Plans (Item 6 on Proxy Card) 78
Shareholder Proposal on Lobbying Disclosure (Item 7 on Proxy Card) 80
Shareholder Proposal on Antimicrobial Resistance Report (Item 8 on Proxy Card) 83
   
Additional Information 86
Security Ownership of Executive Officers and Directors 86
Information Concerning Security Ownership 87
Approval Process for Related Person Transactions 87
Date for Receipt of Shareholder Proposals for the 2023 Annual Meeting Proxy Statement 88
Procedure for Recommendation and Nomination of Directors and Transaction of Business at Annual Meeting 88
General 89
   
Information About the Annual Meeting 90
   
Cautionary Statement Regarding Forward-Looking Statements 94
   
Exhibit A—Director Independence Standard A-1


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NOTICE OF 2022 ANNUAL MEETING OF SHAREHOLDERS

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to Be Held on April 29, 2022

The Annual Meeting of the Shareholders of Abbott Laboratories will be held on Friday, April 29, 2022, at 9:00 a.m. Central Time.

The 2022 Annual Meeting of Shareholders will be held virtually to enable broader and more convenient shareholder participation and to support the health and safety of Abbott’s shareholders, employees, and communities during the ongoing coronavirus pandemic. There will not be a physical location for the Annual Meeting, and shareholders will not be able to attend the Annual Meeting in person.

Shareholders of record as of the close of business on March 2, 2022 will be able to attend the Annual Meeting at meetnow.global/ABT2022. To be admitted to the Annual Meeting, shareholders will be required to enter a 15-digit control number. Shareholders who wish to attend the meeting on a listen-only phone line should contact Abbott representatives at 224-668-7238 or abbottshareholders@abbott.com to obtain the meeting telephone number in advance of the meeting. Please see page 90 for further instructions on how to be admitted to the Annual Meeting.

Shareholders will be asked to vote on the following items of business:

Agenda               Board Voting
Recommendation
Item 1   Election of the 12 director nominees named in this proxy statement to hold office until the next Annual Meeting or until the next meeting of shareholders at which directors are elected   FOR Each Director Nominee
Item 2   Ratification of the appointment of Ernst & Young LLP as auditors of Abbott for 2022   FOR
Item 3   Approval, on an advisory basis, of executive compensation   FOR
Items 4-8   Five shareholder proposals, if properly presented at the meeting   AGAINST

Shareholders will also transact such other business as may properly come before the meeting, including any adjournment or postponement thereof.

This proxy statement and the accompanying proxy card, and the Notice of Internet Availability of Proxy Materials, are being provided to shareholders on or about March 18, 2022.

Abbott’s 2022 Proxy Statement and 2021 Annual Report to Shareholders are available at www.abbott.com/proxy.

YOUR VOTE IS IMPORTANT

Please sign and promptly return your proxy or voting instruction form in the enclosed envelope, or vote your shares by telephone or using the Internet.

If you are a registered shareholder (you received your proxy materials from Abbott through Abbott’s transfer agent, Computershare), you may vote your shares by telephone (1-800-652-VOTE (8683)) or on the Internet at www.investorvote.com/abt.

If you are a beneficial shareholder (you received your proxy materials from a broker, bank, or other agent), please refer to the voting instructions provided to you by your broker, bank, or other agent.

By order of the Board of Directors.

HUBERT L. ALLEN
Secretary

March 18, 2022

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PROXY SUMMARY

This summary contains highlights about Abbott and the upcoming 2022 Annual Meeting of Shareholders. This summary does not contain all of the information that you should consider in advance of the meeting, and we encourage you to read the entire proxy statement carefully before voting.

ABBOTT’S DIVERSIFIED BUSINESS MODEL DELIVERS LEADING SHAREHOLDER RETURNS

Abbott’s sustained strong performance has resulted in total shareholder return (TSR) exceeding the peer median and major market indices on a one-, three-, and five-year basis.

Abbott’s three-year TSR of 104% is more than twice that of the peer group median, and Abbott’s five-year TSR of 300% is more than four times that of the peer median. These consistent top-tier returns are driven by strong execution, an effective governance structure, and the strength of our diversified business model with leadership positions in some of the largest and fastest growing markets in healthcare and innovative product portfolios across our businesses.

Abbott delivered strong returns for shareholders in 2021, despite the continued global impact and uncertainty of COVID-19, and exceeded the financial targets that were set at the beginning of the year. Abbott’s one-year TSR was 31%, more than two and a half times the peer median TSR, a testament to the strength of our diversified business model and ability to innovate and deliver in this challenging environment.

In addition to delivering significant shareholder returns, Abbott continued to take important steps to position the Company for long-term, sustainable growth.

ROBUST INNOVATION
PIPELINE
  INVESTING FOR
FUTURE GROWTH
  SHAREHOLDER
RETURNS
  GLOBAL LEADER IN
COVID-19 TESTING
● Steady stream of important product approvals across our businesses that will be significant contributors to growth in the coming years.  

 Increased manufacturing scale and capabilities across several important products.

 Nearly $2 billion invested in internal capital projects in the past year.

 

   Returned 50% of operating cash flow to shareholders in 2021 and announced the 50th year of consecutive dividend increases, demonstrating Abbott’s financial strength and commitment to shareholder returns.  

 Delivered 1 billion tests in 2021 to help meet global testing needs.

● Abbott’s rapid response and significant scale have allowed for broad access to testing and further positioned Abbott as a global leader in diagnostics.

   
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EXECUTIVE COMPENSATION

SHAREHOLDER FEEDBACK

In 2021, we met or initiated contact with shareholders representing over 60% of our outstanding shares, including 100% of our top 20 investors, in an open dialogue to discuss our compensation program and various topics, including:

  The pandemic’s impact on our business, our COVID-19 testing response, and the strength and resilience of our diversified business model.
  Business and sustainability strategy, including Abbott’s new 2030 Sustainability Plan and its focus on creating new life-changing technologies and products, expanding access and affordability of new product innovations and advancing health equity.
  Human capital management and Abbott’s commitment to diversity, equity, and inclusion, including Abbott’s new Diversity, Equity and Inclusion Report which provides goals, our progress against them, and disclosure of EEO-1 data.
  Board composition and refreshment, including the addition of four new independent directors since 2018, three of whom are women and/or minorities.
  Executive compensation program, including Abbott’s continued enhanced compensation disclosure.

Their feedback was overwhelmingly positive, which was reflected in the 92% support for our Say-on-Pay Proposal.

KEY FEATURES OF OUR EXECUTIVE COMPENSATION PROGRAM

The following practices and policies ensure alignment of interests between shareholders and executives, and effective ongoing compensation governance.

Compensation Practice   Abbott Policy More
Information
On Page
Compensation is Market-Based Yes Benchmark peers with investment profiles, operating characteristics, and employment and business markets similar to Abbott. Annual incentive plan goals are set to exceed market growth in relevant markets/business segments 30-33
Compensation is Performance-Based Yes Short-term and long-term incentive awards are 100% performance based. Annual incentive plan goals are set to exceed market growth in relevant markets/business segments 31-33
Double-Trigger Change in Control Yes Provide change in control benefits under double-trigger circumstances only 66-67
Recoupment Policy Yes Forfeiture for misconduct provision in equity grants and recoup compensation when warranted 51
Robust Share Ownership Guidelines Yes Require significant share ownership for officers and directors, and share retention requirements until guidelines are met 27 and 50
Capped Incentive Awards Yes Incentive award payments are capped 32 and 53
Independent Compensation Committee Consultant Yes Committee consultant performs no other work for Abbott 22
Tax Gross Ups No No tax gross ups under our executive officer pay program 49-50
Guaranteed Bonuses No No guaranteed bonuses 31
Employment Contracts No No employment contracts 65
Excessive Risk Taking No No highly leveraged incentive plans that encourage excessive risk taking 52-53
Hedging of Company Shares No No hedging of Abbott shares is allowed 51 and 53
Discounted Stock Options No No discounted stock options are allowed or granted 52

Details of the compensation decisions made for our named executive officers are outlined on pages 38 to 48.

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DIRECTOR NOMINEES

The Board of Directors recommends a vote FOR the election of each of the following nominees for director. All nominees are currently serving as directors. Additional information about each director nominee’s background and experience can be found beginning on page 10.

Name       Principal Occupation       Age       Director
Since
     Committee
Memberships
ROBERT J. ALPERN, M.D. Independent   Professor and Former Dean, Yale School of Medicine   71   2008  

 Nominations and Governance

 Public Policy

SALLY E. BLOUNT, PH.D. Independent   President and CEO, Catholic Charities of the Archdiocese of Chicago, and Professor and Former Dean, J.L. Kellogg Graduate School of Management   60   2011  

● Nominations and Governance

● Public Policy

ROBERT B. FORD   Chairman of the Board and Chief Executive Officer, Abbott Laboratories   48   2019    Executive (Chair)
PAOLA GONZALEZ Independent   Vice President and Treasurer, The Clorox Company   50   2021   ● Audit
MICHELLE A. KUMBIER Independent   President, Turf & Consumer Products, Briggs & Stratton, LLC   54   2018  

 Audit

 Compensation

DARREN W. McDEW Independent   Retired General, U.S. Air Force, and Former Commander of U.S. Transportation Command   61   2019  

 Nominations and Governance

● Public Policy

NANCY McKINSTRY Independent   CEO and Chairman of the Executive Board, Wolters Kluwer N.V.   63   2011  

 Audit (Chair)

 Compensation

 Executive

WILLIAM A. OSBORN Lead Independent Director   Retired Chairman and CEO, Northern Trust Corporation   74   2008  

● Compensation

 Nominations and Governance (Chair)

● Executive

MICHAEL F. ROMAN Independent   Chairman, President, and CEO, 3M Company   62   2021  

● Audit

● Compensation

DANIEL J. STARKS Independent   Retired Chairman, President and CEO, St. Jude Medical, Inc.   67   2017    Public Policy
JOHN G. STRATTON Independent   Executive Chairman, Frontier Communications Parent, Inc.   61   2017  

● Audit

 Public Policy

GLENN F. TILTON Independent   Retired Chairman, President and CEO, UAL Corporation   73   2007  

 Audit

 Public Policy (Chair)

 Executive

   
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CORPORATE GOVERNANCE

Abbott is committed to strong corporate governance that is aligned with shareholder interests. Our Board spends significant time with Abbott’s senior management to understand the dynamics, issues, and opportunities for Abbott, and also regularly monitors leading practices in governance and adopts measures that it determines are in the best interest of Abbott and its shareholders.

LEAD INDEPENDENT DIRECTOR WITH DISTINCT RESPONSIBILITIES

 

Elected annually by independent directors
Regularly presides over executive sessions of independent directors at Board meetings and provides feedback to management
Reviews matters, such as agenda items and schedule sufficiency
Leads annual performance review process
Oversees process for identifying and evaluating director candidates
Authority to call meetings of independent directors
Communicate regularly with the Chairman regarding appropriate agenda topics and other Board-related matters
Confers with the Nominations and Governance Committee and the CEO regarding management succession planning
Liaises between Chairman and independent directors
Engages directly with major shareholders as appropriate


ROBUST BOARD EVALUATION AND REFRESHMENT PROCESS

OTHER BOARD GOVERNANCE HIGHLIGHTS

Fully independent Audit Committee, Compensation Committee, Nominations and Governance Committee, and Public Policy Committee
Committee chairs recommended to the Board by the Nominations and Governance Committee and approved by the full Board
All directors elected annually by majority vote
Executive sessions of the independent directors, led by the Lead Independent Director, at each regularly scheduled Board meeting
Annual anonymous evaluations of the Board, Committees, and each director
Strong risk oversight, with areas of focus including business strategy, human capital, cybersecurity and data protection, and Abbott’s sustainability, environmental, and social responsibility practices
   
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HIGHLY QUALIFIED BOARD, WITH BROAD DIVERSITY ACROSS BACKGROUNDS, SKILLS AND EXPERIENCES

 

THE 12 DIRECTOR NOMINEES COMPRISE A WELL-BALANCED, DIVERSE BOARD.
RELEVANT EXPERTISE TO PROVIDE OVERSIGHT AND GUIDANCE FOR ABBOTT’S DIVERSIFIED OPERATING MODEL   

TENURE

 

Healthcare and Medical Device Industry  
Finance  
Risk Management, including Data/Cybersecurity  
Global Strategy and Operations  
Regulatory/Compliance  

BOARD DIVERSITY

Consumer Products
Senior Leadership with Multinational Corporations and Diverse Business Models
Global Supply Chain Operations
Government and Military Leadership  
   
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OUR COMMITMENT TO SUSTAINABILITY

At Abbott, sustainability means managing our company to deliver long-term positive impact for the people we serve—shaping the future of healthcare and helping the greatest number of people live better and healthier lives.

Our sustainability efforts are focused on the most relevant industry and company-specific risks and opportunities. In December 2020, we launched our new 2030 Sustainability Plan focused on Abbott’s greatest opportunities to make an impact.

These areas have been identified through an in-depth materiality analysis, directed by executive management, and in partnership with numerous diverse external stakeholders, including suppliers, customers, and investors. We aim to deliver sustainable, responsible growth that improves lives and creates value in communities around the world.

2030 SUSTAINABILITY PLAN GOALS

Our work touched 2 billion lives this past year, and by 2030, we intend to reach more than 3 billion lives per year, improving the lives of 1 in every 3 people on the planet by 2030.

INNOVATE FOR ACCESS AND AFFORDABILITY

Make access and affordability core to new product innovation     Transform care for chronic disease, malnutrition and infectious diseases     Advance health equity through partnership
               
Integrate access, affordability and data insights as design principles into our work and portfolio.  

Innovate to transform the standard of care for diabetes and deliver break-through technologies to improve clinical outcomes for people with cardiovascular disease.

Deliver scalable, integrated solutions to reduce preventable deaths and infectious diseases with diagnostics, treatment and education programs.

 

Expand affordable access to healthcare for underserved, diverse and at-risk communities by delivering innovative, decentralized models of care.

Partner with stakeholders to improve health outcomes by advancing standards and building access to affordable, integrated solutions.

               

BUILD A FOUNDATION FOR THE FUTURE

CLIMATE

Protect a healthy environment

Protect our climate and water, including reducing absolute Scope 1 and 2 carbon emissions by 30% from 2018 baseline

Reduce product packaging and waste, including addressing 50 million pounds of packaging and using circular economy approach to achieve at least 90% waste diversion rate

    

OUR PEOPLE

Build the diverse, innovative workforce of tomorrow

Create opportunities in Abbott’s STEM programs and internships for more than 100,000 young people

Achieve gender balance across our global management team and ensure one-third of our U.S. leadership roles are held by people from underrepresented groups

SUPPLY CHAIN

Ensure a resilient, diverse and responsible supply chain

 

DATA AND DATA PRIVACY

Responsibly connect data, technology, and care

 

Certify that 80% of newly contracted direct material spends incorporate social responsibility requirements

 

Ensure ethical sourcing from suppliers with high-risk sustainability factors through 100% auditing

Increase spend with diverse and small businesses 50%

    Be a trusted healthcare leader in secure and responsible data collection, use, management and privacy, in order to protect our patients and customers, empower them to make better, more complete decisions about their health, and drive innovation through insights and analytics

The Board of Directors and its committees have oversight over Abbott’s environmental, social and governance practices. The Board has regular discussions with management on all the above sustainability matters, as well as workplace, management, and Board diversity, emerging governance practices and trends, global compliance matters, and sustainability reporting.

Executive compensation is linked to Sustainability commitments, as discussed in more detail on pages 36 and 37.

To learn more about Abbott’s Sustainability efforts, please visit www.abbott.com/responsibility/sustainability.html.

   
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VOTING MATTERS AND BOARD RECOMMENDATIONS

 

ITEM
1
     

Election of 12 Director Nominees Named in this Proxy Statement: The Board recommends a vote FOR each nominee

  Highly qualified Board, with diversity in backgrounds, skills and experiences.

  Relevant expertise to provide oversight and guidance for Abbott’s diversified operating model. See pages 10 to 15 for more information.

     
ITEM
2
 

Ratification of Ernst & Young LLP as Auditors: The Board recommends a vote FOR

  Independent firm with significant industry and financial reporting expertise.

  See pages 69 to 70 for more information.

     
ITEM
3
 

Say on Pay: Advisory Vote on the Approval of Executive Compensation: The Board recommends a vote FOR

  Market-based structure producing differentiated awards based on both company and individual performance, managed with independent oversight by the Compensation Committee.

  Aligned to drive Abbott’s strategic priorities, reflects consistent above-market TSR and upper quartile relative 3-year TSR performance vs. peers, as well as upper quartile 1-year and 5-year TSR. See pages 71 and 72 for more information.

     

SHAREHOLDER

PROPOSALS
4-8

 

The Board recommends a vote AGAINST

  Proposal 4: Special Shareholder Meeting Threshold

  Proposal 5: Independent Board Chairman

  Proposal 6: 10b5-1 Plans

  Proposal 7: Lobbying Disclosure

  Proposal 8: Antimicrobial Resistance Report

  See pages 73 to 85 for more information.

   
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NOMINEES FOR ELECTION AS DIRECTORS

   

ROBERT J. ALPERN, M. D.

Director Since 2008  Age 71

Ensign Professor of Medicine and Physiology and Professor of Internal Medicine and Cellular and Molecular Physiology, and Former Dean of Yale School of Medicine

PROFESSIONAL BACKGROUND

Ensign Professor of Medicine and Professor of Internal Medicine at Yale School of Medicine since June 2004.
Dean of Yale School of Medicine from June 2004 to January 2020.
Dean of The University of Texas Southwestern Medical Center from July 1998 to May 2004.
Served on the Board of Directors of Yale New Haven Hospital from October 2005 to January 2020.

OTHER PUBLIC COMPANY BOARDS

AbbVie Inc., Tricida, Inc.

KEY QUALIFICATIONS AND EXPERTISE

As a result of his long-tenured leadership positions at the Yale School of Medicine and The University of Texas Southwestern Medical Center, and as a former Director on the Board of Yale New Haven Hospital, Dr. Alpern contributes valuable insights to the Board through his medical and scientific expertise and his knowledge of the health care environment and the scientific nature of Abbott’s key research and development initiatives.

 

   

SALLY E. BLOUNT, PH. D.

Director Since 2011  Age 60

President and Chief Executive Officer, Catholic Charities of the Archdiocese of Chicago, and Michael L. Nemmers Professor of Strategy and Former Dean of the J.L. Kellogg Graduate School of Management at Northwestern University

PROFESSIONAL BACKGROUND

President and Chief Executive Officer and Board Member of Catholic Charities of the Archdiocese of Chicago since August 2020.
Michael L. Nemmers Professor of Strategy and Dean of the J.L. Kellogg Graduate School of Management at Northwestern University from 2010 to 2018.
Dean of the New York University Undergraduate College and Vice Dean of its Leonard N. Stern School of Business from 2004 to 2010. 
Professor at the New York University Leonard School of Business from 2001 to 2010, and became the Abraham L. Gitlow Professor of Management in 2004.
Held academic posts at the University of Chicago’s Graduate School of Business from 1992 to 2001.
Serves on the Board of Directors of the Joyce Foundation.

OTHER PUBLIC COMPANY BOARDS

Ulta Beauty, Inc.

KEY QUALIFICATIONS AND EXPERTISE

Having served as Dean of the J.L. Kellogg Graduate School of Management at Northwestern University and as Vice Dean and Dean of the Undergraduate College of New York University’s Leonard N. Stern School of Business, Ms. Blount provides Abbott’s Board with expertise on business organization, governance and business management matters.

 

   
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ROBERT B. FORD

Director Since 2019  Age 48

Chairman of the Board and Chief Executive Officer, Abbott Laboratories

PROFESSIONAL BACKGROUND

Chairman of the Board and Chief Executive Officer of Abbott since December 2021.
President and Chief Executive Officer of Abbott from March 2020 to December 2021.
President and Chief Operating Officer of Abbott from 2018 to 2020.
Executive Vice President, Medical Devices of Abbott from 2015 to 2018.
Senior Vice President, Diabetes Care of Abbott from 2014 to 2015.
Held various leadership roles across Abbott’s Diagnostics, Nutrition, and Diabetes Care businesses in the U.S. and Latin America since joining Abbott in 1996.

KEY QUALIFICATIONS AND EXPERTISE

As Abbott’s Chairman of the Board and Chief Executive Officer, and having previously held various leadership positions at Abbott, including Chief Operating Officer, where he was responsible for all of Abbott’s operating businesses, Mr. Ford contributes an extensive knowledge of the Company’s global operations, a wide breadth of experience in strategy and execution, and valuable insights into global healthcare markets.

 

   

PAOLA GONZALEZ

Director Since 2021  Age 50

Vice President and Treasurer, The Clorox Company

PROFESSIONAL BACKGROUND

Vice President and Treasurer of The Clorox Company, a manufacturer and marketer of consumer and professional products, since January 2018.
Vice President of Finance, Household and Lifestyle Segments of Clorox from 2010 to 2017.
Vice President of Finance, Global Strategic Initiatives of Clorox from 2008 to 2010.
Held various leadership roles in finance across Clorox since joining Clorox in 1997.
Prior to Clorox, worked in finance for American Airlines in Latin America.

KEY QUALIFICATIONS AND EXPERTISE

As Vice President and Treasurer of The Clorox Company, Ms. Gonzalez is responsible for treasury, investor relations and real estate matters, and through her prior financial roles in several of its businesses, has considerable experience providing financial leadership to a multinational public company with multiple businesses, contributing significant financial expertise and knowledge of financial statements, corporate finance and accounting matters.

 

   
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MICHELLE A. KUMBIER

Director Since 2018  Age 54

President, Turf & Consumer Products, Briggs & Stratton, LLC

PROFESSIONAL BACKGROUND

Senior Vice President and President, Turf & Consumer Products of Briggs & Stratton, LLC, a manufacturer and marketer of engines and outdoor power equipment, since March 2022.
Senior Vice President and Chief Operating Officer of Harley-Davidson Motor Company, a motorcycle and related products manufacturer, from 2017 to 2020.
Senior Vice President of Motor Company Product and Operations of Harley-Davidson from 2015 to 2017.
Held various other executive roles across Harley-Davidson, from 1997 to 2015.
Held various positions at Kohler Company, maker of premium plumbing products, from 1986 to 1997.

OTHER PUBLIC COMPANY BOARDS

Teledyne Technologies Incorporated, Tenneco Inc. In connection with Tenneco’s publicly announced agreement to be acquired by Apollo Funds, Ms. Kumbier would cease to be a Tenneco Director upon the acquisition closing.

KEY QUALIFICATIONS AND EXPERTISE

Having served in several executive roles at Harley-Davidson, Ms. Kumbier contributes extensive experience in the management of a multinational public company, including significant manufacturing, product development, business development and strategic planning experience.

 

   

DARREN W. MCDEW

Director Since 2019  Age 61

Retired General, United States Air Force, and Former Commander of U.S. Transportation Command

PROFESSIONAL BACKGROUND

Four-star general who served for 36 years in the United States military before retiring in October 2018.
Commander, U.S. Transportation Command, the single manager for global air, land and sea transportation for the U.S. Department of Defense from 2015 to 2018.
Held various leadership roles across the U.S. Military, including Vice Director for Strategic Plans and Policy for the Joint Chiefs of Staff, Military Aide to the President, Director of Air Force Public Affairs, and Chief of Air Force Senate Liaison Division.
Serves on the Board of Directors of Rolls-Royce, North America, Inc., United Services Automobile Association, and Boys & Girls Club of America.

OTHER PUBLIC COMPANY BOARDS

Parsons Corporation

KEY QUALIFICATIONS AND EXPERTISE

Through his extensive leadership in the U.S. Air Force, General McDew contributes significant experience managing large, complex global operations, including strategic planning, security and risk management, cybersecurity, and supply chain and infrastructure management.

 

   
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NANCY MCKINSTRY

Director Since 2011  Age 63

Chief Executive Officer and Chairman of the Executive Board, Wolters Kluwer N.V.

PROFESSIONAL BACKGROUND

Chief Executive Officer and Chairman of the Executive Board of Wolters Kluwer N.V., a global information, software, and services provider, since September 2003, and a member of its Executive Board since June 2001.
Member of the European Round Table of Industrialists.
Serves on the Board of Directors of Russell Reynolds Associates and the Board of Overseers of Columbia Business School.
Served on the Board of Directors of Telefonaktiebolaget LM Ericsson from 2004 to 2012.

OTHER PUBLIC COMPANY BOARDS

Accenture plc

KEY QUALIFICATIONS AND EXPERTISE

As the Chief Executive Officer and Chairman of the Executive Board of Wolters Kluwer N.V., Ms. McKinstry contributes global perspectives and management experience, including an understanding of key issues facing a multinational business such as Abbott’s.

 

   

WILLIAM A. OSBORN

Lead Independent Director

Director Since 2008  Age 74

Retired Chairman and Chief Executive Officer, Northern Trust Corporation

PROFESSIONAL BACKGROUND

Chairman of Northern Trust Corporation, a multibank holding company, from 1995 to 2009 and Chief Executive Officer from 1995 to 2008.
President of Northern Trust Corporation and The Northern Trust Company, a banking services company, from 2003 to 2006.
Served on the Board of Directors of Nicor, Inc. from 1999 to 2006.
Served on the Board of Directors of Tribune Company from 2001 to 2012.
Served on the Board of Directors of Caterpillar Inc. from 2000 to 2021.
Served on the Board of Directors of General Dynamics Corporation from 2009 to 2021.

KEY QUALIFICATIONS AND EXPERTISE

Having served as the Chairman and Chief Executive Officer of Northern Trust Corporation, Mr. Osborn acquired broad experience in successfully overseeing complex global businesses operating in highly regulated industries, including oversight of financial, operational, and governance matters facing large public companies.

 

   
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MICHAEL F. ROMAN

Director Since 2021  Age 62

Chairman of the Board, President and Chief Executive Officer, 3M Company

PROFESSIONAL BACKGROUND

Chairman of the Board, President and Chief Executive Officer of 3M Company, a global manufacturing and technology company, since May 2019.
Chief Executive Officer of 3M from July 2018 to May 2019.
Chief Operating Officer and Executive Vice President of 3M from July 2017 to June 2018 with direct responsibilities for 3M’s five business groups and its international operations.
Executive Vice President, Industrial Business Group of 3M from June 2014 to July 2017.
Senior Vice President, Business Development of 3M from May 2013 to June 2014.
Vice President and General Manager of Industrial Adhesives and Tapes Division of 3M from September 2011 to May 2013.

OTHER PUBLIC COMPANY BOARDS

3M Company

KEY QUALIFICATIONS AND EXPERTISE

As Chairman of the Board, President and Chief Executive Officer of 3M Company, Mr. Roman has extensive experience leading a multinational public company with multiple businesses, contributing significant manufacturing, supply chain, technology, and finance experience, as well as valuable insights into corporate strategy and risk management.

 

   

DANIEL J. STARKS

Director Since 2017  Age 67

Retired Chairman, President and Chief Executive Officer, St. Jude Medical, Inc.

PROFESSIONAL BACKGROUND

Executive Chairman of the Board of St. Jude Medical, Inc., a medical device manufacturer, from January 2016 to January 2017, when Abbott completed its acquisition of St. Jude Medical.
Chairman, President and Chief Executive Officer of St. Jude Medical from 2004 until his retirement in January 2016.
President and Chief Operating Officer of St. Jude Medical from 2001 to 2004.
President and CEO, Cardiac Rhythm Management Business of St. Jude Medical from 1997 to 2001.

KEY QUALIFICATIONS AND EXPERTISE

Having served as St. Jude Medical’s Executive Chairman and its Chairman, President and Chief Executive Officer, and having joined St. Jude Medical in 1996, Mr. Starks contributes not only comprehensive and critical knowledge of St. Jude Medical’s operations, but also extensive business and management experience operating a global public company in a highly regulated industry.

 

   
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JOHN G. STRATTON

Director Since 2017   Age 61

Executive Chairman, Frontier Communications Parent, Inc.

PROFESSIONAL BACKGROUND

Executive Chairman of Frontier Communications Parent, Inc., a telecommunications company, since April 2021.
Executive Vice President and President of Global Operations of Verizon Communications Inc. from 2015 to 2018.
Executive Vice President and President of Global Enterprise and Consumer Wireline of Verizon from 2014 to 2015.
President of Verizon Enterprise Solutions from 2012 to 2014.
Chief Operating Officer and Executive Vice President of Verizon Wireless from 2010 to 2012.
Member of The President’s National Security Telecommunications Advisory Committee from 2012 to 2018.
Director of the Cellular Telecommunications Industry Association from 2015 to 2018.

OTHER PUBLIC COMPANY BOARDS

Frontier Communications Parent, Inc., General Dynamics Corporation

KEY QUALIFICATIONS AND EXPERTISE

Through his executive leadership experience, Mr. Stratton contributes extensive business and management expertise operating a global public company such as Abbott, including valuable insights on corporate strategy and risk management. His service on the National Security Telecommunications Advisory Committee enables him to provide government perspective and experience in a highly regulated industry.

 

   

GLENN F. TILTON

Director Since 2007  Age 73

Retired Chairman, President and Chief Executive Officer, UAL Corporation

PROFESSIONAL BACKGROUND

Chairman, President and Chief Executive Officer of UAL Corporation, an airline holding company, and Chairman and Chief Executive Officer of United Air Lines, Inc., an air transportation company and wholly owned subsidiary of UAL Corporation, from September 2002 to October 2010.
Served on the Board of Directors of United Continental Holdings, Inc. from 2001 to 2013 and served as its Non-Executive Chairman of the Board from October 2010 to December 2012.
Served on the Board of Directors of Lincoln National Corporation from 2002 to 2007, TXU Corporation from 2005 to 2007, and Corning Incorporated from 2010 to 2012.
Chairman of the Midwest for JPMorgan Chase & Co. and a member of its companywide Executive Committee from June 2011 to June 2014.

OTHER PUBLIC COMPANY BOARDS

AbbVie Inc., Phillips 66

KEY QUALIFICATIONS AND EXPERTISE

Having previously served as Chief Executive Officer of UAL Corporation and United Air Lines, Non-Executive Chairman of the Board of United Continental Holdings, Inc., Chairman of the Midwest for JPMorgan Chase & Co., Chairman, President, and Vice Chairman of Chevron Texaco, and as Interim Chairman of Dynegy, Inc., Mr. Tilton acquired strong management experience overseeing complex multinational businesses operating in highly regulated industries, as well as expertise in finance and capital markets matters.

 

   
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THE BOARD OF DIRECTORS AND ITS COMMITTEES

THE BOARD OF DIRECTORS

The Board of Directors held 8 meetings in 2021. The average attendance of all directors at Board and committee meetings in 2021 was 95% and each director attended at least 75% of the total number of Board meetings and meetings of the committees on which he or she served. Abbott encourages its Board members to attend the annual shareholders meeting. Last year, all of Abbott’s directors attended the annual shareholders meeting.

The Board has determined that each of following director nominees is independent in accordance with the New York Stock Exchange listing standards: Robert J. Alpern, M.D., Sally E. Blount, Ph.D., Paola Gonzalez, Michelle A. Kumbier, Darren W. McDew, Nancy McKinstry, William A. Osborn, Michael F. Roman, Daniel J. Starks, John G. Stratton, and Glenn F. Tilton, as well as Roxanne S. Austin, who will continue to serve as a director until the 2022 Annual Meeting, and Edward M. Liddy and Phoebe N. Novakovic, who served as directors during a portion of 2021.

To determine independence, the Board applied the categorical standards attached as Exhibit A to this proxy statement. The Board also considered whether a director has any other material relationships with Abbott or its subsidiaries and concluded that none of these directors had a relationship that impaired his or her independence. This included consideration of the fact that some of the directors or their family members are officers or serve on boards of companies or entities to which Abbott sold products or made contributions or from which Abbott purchased products and services during the year. In making its determination, the Board relied on both information provided by the directors and information developed internally by Abbott.

LEADERSHIP STRUCTURE

Abbott’s current Board leadership is comprised of the Chairman of the Board and Chief Executive Officer, a Lead Independent Director, and independent Committee chairs.

Robert B. Ford currently serves as Chairman of the Board and Chief Executive Officer. The Board believes this is in the best interests of Abbott and its shareholders, as it provides cohesive leadership and direction for the Board and executive management, as well as clear accountability and unified leadership in the execution of strategic initiatives and business plans. Mr. Ford also has extensive industry expertise and familiarity with Abbott’s global businesses, such that his strategic and operational insights provide the Board with a comprehensive vision, from long-term strategic direction to day-to-day execution.

Abbott’s Board leadership is further strengthened by:

A strong Lead Independent Director with significant roles and responsibilities who is selected by and from the independent members of the Board. Currently, the Chair of the Nominations and Governance Committee, Mr. Osborn, is the Lead Independent Director.
Fully independent Audit Committee, Compensation Committee, Nominations and Governance Committee, and Public Policy Committee, as required by Abbott’s Governance Guidelines.
Committee chairs who are recommended to the Board by the Nominations and Governance Committee and approved by the full Board.
Executive sessions of the independent directors, led by the Lead Independent Director, that generally take place at each regularly scheduled Board meeting.
Annual anonymous evaluations of each director, including the Chairman of the Board and Chief Executive Officer, led by the Lead Independent Director and conducted by all directors.
   
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Key functions and responsibilities of the Lead Independent Director include:

 Preside at regularly conducted executive sessions of the independent directors and provide feedback to the Chairman and CEO and other senior management, as appropriate,

 Preside at all meetings of the Board at which the Chairman is not present,

 Facilitate communication with the Board and serve as liaison between the Chairman and the independent directors,

 Communicate regularly with the Chairman regarding appropriate agenda topics and other Board related matters,

 Review and approve matters, such as agenda items, meeting schedules to assure sufficient time for discussion of all agenda items, and, where appropriate, information provided to the Board,

 Confer with the Nominations and Governance Committee and the CEO regarding management succession planning,

 Lead the annual performance reviews of individual directors, the full Board, and each of its Committees,

 Oversee the process for identifying and evaluating director candidates,

 Work with management on corporate governance issues and developments,

 Has the authority to call meetings of the independent directors, and

 Engage directly with major shareholders as appropriate.

The Board reviews its leadership structure at least annually and has determined that this structure is in the best interests of Abbott and its shareholders at this time. This structure balances strong, independent oversight with extensive business knowledge and experience. The Board also retains the flexibility necessary to adopt the leadership structure in the best interests of Abbott and its shareholders based on the specific circumstances and needs of the business over time.

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BOARD DIVERSITY AND COMPOSITION

In the process of identifying nominees to serve as members of the Board of Directors, the Nominations and Governance Committee considers the Board’s diversity of relevant experience, areas of expertise, ethnicity, gender, and geography and assesses the effectiveness of the process in achieving that diversity.

The process used to identify and select nominees has resulted in a balanced, diverse, and well-rounded Board of Directors that possesses the skills, experiences, and perspectives necessary for its oversight role. All of Abbott’s directors exhibit:

Global business perspective
Successful track record
Innovative thinking
Knowledge of corporate governance requirements and practices
High integrity
Commitment to good corporate citizenship
   
THE 12 DIRECTOR NOMINEES COMPRISE A WELL-BALANCED, DIVERSE BOARD.
RELEVANT EXPERTISE TO PROVIDE OVERSIGHT AND GUIDANCE FOR ABBOTT’S DIVERSIFIED OPERATING MODEL   TENURE
Healthcare and Medical Device Industry  
Finance  
Risk Management, including Data/Cybersecurity  
Global Strategy and Operations  
Regulatory/Compliance   BOARD DIVERSITY
Consumer Products  
Senior Leadership with Multinational Corporations and Diverse Business Models  
Global Supply Chain Operations  
Government and Military Leadership  
   
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DIRECTOR SELECTION

The Nominations and Governance Committee assists the Board of Directors in identifying individuals qualified to become Board members and recommends to the Board the nominees for election as directors at the next annual meeting of shareholders. The process used by the Nominations and Governance Committee to identify a nominee to serve as a member of the Board of Directors depends on the qualities being sought. From time to time, Abbott engages an executive search firm to assist the Committee in identifying individuals qualified to be Board members.

Abbott’s outline of directorship qualifications, which is part of Abbott’s corporate governance guidelines, is available in the corporate governance section of Abbott’s investor relations website (www.abbottinvestor.com). These qualifications describe specific characteristics that the Nominations and Governance Committee and the Board take into consideration when selecting nominees for the Board, such as:

  strong management experience and senior level experience in medicine,
  hospital administration,
  medical and scientific research and development,
  finance,
  international business,
  technology,
  government, and
  academic administration.

An individual nominee is not required to satisfy all the characteristics listed in the outline of directorship qualifications and there is no requirement that all such characteristics be represented on the Board.

In addition, Board members should have backgrounds that, when combined, provide a portfolio of experience and knowledge that will serve Abbott’s governance and strategic needs. Board candidates will be considered on the basis of a range of criteria, including broad based business knowledge and relationships, prominence, and excellent reputations in their primary fields of endeavor, as well as a global business perspective and commitment to good corporate citizenship. Directors should have demonstrated experience and ability that is relevant to the Board of Directors’ oversight role with respect to Abbott’s business and affairs. Each director’s biography includes the particular experience and qualifications that led the Board to conclude that the director should serve on the Board. The directors’ biographies are on pages 10 through 15.

A description of the procedure for the recommendation and nomination of directors, including by proxy access, is on page 88.

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BOARD OVERSIGHT

Abbott is committed to strong governance that is aligned with shareholder interests. Our Board spends significant time with Abbott’s senior management to understand global dynamics, challenges, and opportunities for Abbott. During these interactions, directors provide insights and ask probing questions which guide management decision making. This collaborative approach to risk oversight and emphasis on long-term sustainability begins with our leaders and is engrained in Abbott’s culture.

OVERSIGHT OF RISK

The Board has risk oversight responsibility for Abbott, which it administers directly and with assistance from its Committees. Throughout the year, the Board and its Committees engage with management to discuss a wide range of enterprise risks, such as risks related to Abbott’s businesses, enterprise and product cybersecurity, litigation, and human capital management, and they confirm the alignment of risk assessment and mitigation with business strategy. The Audit Committee conducts an annual review of the enterprise risk management process, including the program structure, risk assessment, and risk mitigation. The Board and its Committees also consult with advisors, including legal counsel, internal and external auditors, and consultants. Such engagement and consultations are done by the full Board, independent directors in executive sessions, or fully independent Committees, as appropriate.

Specific risk areas of focus for the Board, its Committees, and management include:

                                        

BOARD OF DIRECTORS

 Business strategy and operations

 Management development and succession planning

 Human capital and diversity, equity and inclusion

 Litigation

 
     
                                                                       
       
                   

AUDIT COMMITTEE

 Accounting, internal controls, and financial reporting

●  Enterprise cybersecurity

 Information security and data protection

 Major financial and business risk exposures

   

COMPENSATION
COMMITTEE

 Executive officer compensation, including incentive compensation plans

●  Equity-based plans

 Director compensation

   

NOMINATIONS
AND GOVERNANCE
COMMITTEE

 Board composition, refreshment, and succession planning

 Board governance structure

 Governance guidelines and practices

   

PUBLIC POLICY
COMMITTEE

●  Sustainability, environment, and social responsibility

 Global ethics and compliance programs

 Product quality and cybersecurity, and data privacy

                   
                   
                                                                      
       
         
          

MANAGEMENT

 Design and execution of Abbott’s enterprise risk management process

 Identification, evaluation, and prioritization of risks

 Development and implementation of mitigating actions

 Regular communication with the Board and its Committees on how risks are being managed

 
   
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OVERSIGHT OF STRATEGY

One of the Board’s key responsibilities is overseeing and monitoring business strategy. The Board conducts an annual in-depth review of the long-term strategy and areas of focus for Abbott and its businesses. The Board also regularly engages with management throughout the year to review and discuss the strategic planning for Abbott’s businesses, including operating and financial plans, strategic business priorities and initiatives, and key risks and opportunities. These reviews include discussions of matters such as global talent management and succession planning, diversity, equity and inclusion, global market dynamics and changes in regulatory and competitive landscapes, supply chain initiatives and sustainability programs, and significant corporate actions such as acquisitions and capital expenditures.

The Board monitors management’s strategy execution, receiving regular updates to confirm that activities align with such strategies and that progress is made toward strategic objectives. Most years, the Board also visits Abbott facilities and locations around the world to observe business dynamics and strategy execution by the businesses.

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors has five committees established in Abbott’s By-Laws: Audit Committee, Compensation Committee, Nominations and Governance Committee, Public Policy Committee, and Executive Committee.

All members of the Audit Committee, Compensation Committee, Nominations and Governance Committee, and Public Policy Committee are independent. These Committees are governed by written charters setting forth their respective responsibilities, and each Committee reviews its charter at least annually, with any changes being recommended to the full Board for approval. Copies of the Committee charters are all available in the governance section of Abbott’s investor relations website (www.abbottinvestor.com).

    COMMITTEE MEMBERSHIPS
Current Members     Audit
Committee*
    Compensation
Committee
    Nominations
and Governance
Committee
    Public Policy
Committee
    Executive
Committee
   
Robert J. Alpern, M.D.                  
Roxanne S. Austin                
Sally E. Blount, Ph.D.                  
Robert B. Ford                    
Paola Gonzalez                    
Michelle A. Kumbier                  
Darren W. McDew                  
Nancy McKinstry                
William A. Osborn                
Michael F. Roman                  
Daniel J. Starks                    
John G. Stratton                  
Glenn F. Tilton                
Total Meetings Held in 2021   7   4   5   4   0  
Chair Member
* Each of the committee members is financially literate, as is required of audit committee members by the New York Stock Exchange. The Board of Directors has determined that Nancy McKinstry is an “audit committee financial expert.”
Ms. Austin is not standing for re-election at the Annual Meeting. The Board of Directors will appoint a new Compensation Committee chair upon conclusion of her tenure at the Annual Meeting.
   
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AUDIT COMMITTEE

The Audit Committee assists the Board of Directors in fulfilling its oversight responsibility with respect to:

  Abbott’s accounting and financial reporting practices and the audit process,
  The quality and integrity of Abbott’s financial statements,
  The independent auditors’ qualifications, independence, and performance,
  The performance of Abbott’s internal audit function and internal auditors,
  Legal and regulatory compliance relating to financial matters, including accounting, auditing, financial reporting, and securities law issues, and
  Enterprise risk management, including major financial and cybersecurity risk exposures.

In performing these functions, the Audit Committee meets regularly with the independent auditor, Abbott’s management, and Abbott’s internal auditors to review the adequacy, effectiveness and quality of Abbott’s accounting and financial reporting principles, policies, procedures and controls, as well as Abbott’s enterprise risk management, including Abbott’s risk assessment and risk management policies. The Audit Committee also receives regular reports from management on Abbott’s information security and enterprise cybersecurity risk programs.

A copy of the report of the Audit Committee is on page 70.

COMPENSATION COMMITTEE

The Compensation Committee assists the Board of Directors in carrying out the Board’s responsibilities relating to the compensation of Abbott’s executive officers and directors. Its primary responsibilities include:

  Review, approve, and administer the incentive compensation plans in which any executive officer participates and all of Abbott’s equity-based plans. The Compensation Committee may delegate the responsibility to administer and make grants under these plans to management, except to the extent that such delegation would be inconsistent with applicable law or regulation or with the listing rules of the New York Stock Exchange.
  Review director compensation annually and recommend to the full Board both the amount and the allocation between equity-based awards and cash. In recommending director compensation, the Compensation Committee takes comparable director fees into account and reviews any arrangement that could be viewed as indirect director compensation.
  Engage compensation consultants to provide counsel and advice on executive and non-employee director compensation matters. The consultant and its principal report directly to the Chair of the Committee. The principal meets regularly and as needed with the Committee in executive sessions, has direct access to the Chair during and between meetings, and performs no other services for Abbott or its senior executives.
    The Committee determines what variables it will instruct the consultant to consider, including peer groups against which performance and pay should be examined, financial metrics to be used to assess Abbott’s relative performance, competitive incentive practices in the marketplace, and compensation levels relative to market practice. The Committee negotiates and approves any fees paid to the consultant for these services.

The Compensation Committee engaged Meridian Compensation Partners, LLC as its compensation consultant for 2021. Meridian performs no other work for Abbott. Based on its evaluation of Meridian’s independence in accordance with the New York Stock Exchange listing standards and information provided by Meridian, the Committee determined that the work performed by Meridian does not present any conflicts of interest.

A copy of the report of the Compensation Committee is on page 51.

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NOMINATIONS AND GOVERNANCE COMMITTEE

The Nominations and Governance Committee assists the Board in fulfilling its oversight responsibility with respect to governance matters. Its primary responsibilities include:

  Assist the Board in identifying individuals qualified to become Board members, and recommend to the Board the nominees for election as directors at the next annual meeting of shareholders,
  Recommend to the Board the people to be elected as executive officers of Abbott,
  Develop and recommend to the Board the corporate governance guidelines applicable to Abbott, and
  Serve in an advisory capacity to the Board and the Chairman of the Board on matters of organization, management succession plans, major changes in the organizational structure of Abbott, and the conduct of Board activities.

The process used by this Committee to identify a nominee to serve as a member of the Board of Directors depends on the qualities being sought. From time to time, Abbott engages an executive search firm to assist the Committee in identifying individuals qualified to be Board members. The process used by the Committee to identify nominees is described on page 19 in the section captioned, “Director Selection.”

PUBLIC POLICY COMMITTEE

The Public Policy Committee assists the Board of Directors in fulfilling its oversight responsibility with respect to:

  Legal, regulatory, and healthcare compliance matters, including evaluating Abbott’s compliance policies and practices and reviewing Abbott’s compliance program,
  Product quality and cybersecurity matters,
  Governmental affairs and political participation, including advocacy priorities, political contributions, lobbying activities, and trade association memberships,
  Sustainability and social responsibility policies and practices, and
  Social, political, economic, and environmental trends and public policy issues that affect or could affect Abbott’s business activities, performance, and public image.

EXECUTIVE COMMITTEE

The Executive Committee may exercise all the authority of the Board in the management of Abbott, except for matters expressly reserved by law for Board action.

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SHAREHOLDER ENGAGEMENT

Active shareholder engagement throughout the year is essential to maintaining good corporate governance. We routinely seek investor input on a variety of topics, including corporate governance, executive compensation, sustainability and other strategic matters. During 2021, we met or initiated contact with shareholders representing over 60% of our outstanding shares, including 100% of our top 20 investors, in an open dialogue to discuss our compensation program and other topics. Investor sentiment and specific feedback was shared with executive management and the Board of Directors, as appropriate.

Topics discussed with our investors included:

  The pandemic’s impact on our business, our COVID-19 testing response, and the strength and resilience of our diversified business model.
  Business and sustainability strategy, including Abbott’s new 2030 Sustainability Plan and its focus on creating new life-changing technologies and products, expanding access and affordability of new product innovations and advancing health equity.
  Human capital management and Abbott’s commitment to diversity, equity, and inclusion,including Abbott’s new Diversity, Equity and Inclusion Report which provides goals, our progress against them, and disclosure of EEO-1 data.
  Board composition and refreshment, including the addition of four new independent directors since 2018, three of whom are women and/or minorities.
  Executive compensation program, including Abbott’s continued enhanced compensation disclosure.
BOARD EVALUATION PROCESS

Each year, Abbott’s directors evaluate the effectiveness of the Board and its Committees in performing its governance and risk oversight responsibilities. Directors assess the performance of their peers, as well as the full Board of Directors and each of the Committees on which they serve, as follows:

PEER, BOARD, AND COMMITTEE EVALUATIONS

Written evaluations solicit feedback on the performance of:

Each individual director, including:         The full Board and Board Committees, including:     

●  Independent thinking and action

●  Contributions to discussions and decisions

 

●  Ethical standards and values

●  Professional competence in matters of oversight and governance

 

●  Structure and composition

●  Effectiveness of oversight and other responsibilities

 

●  Encouragement of open communication and differing viewpoints

             

 

   
COLLECTION AND REVIEW OF RESULTS INCORPORATION OF FEEDBACK
   
To ensure candid feedback, directors submit their evaluation responses to an independent third party, who anonymizes all responses and compiles them into reports for the Board and Committees.

The Nominations and Governance Committee reviews the peer and full Board reports, and each Committee reviews its respective report. All evaluation responses are shared with the full Board.
Feedback requiring additional consideration is addressed at subsequent Board and Committee meetings, and opportunities for additional enhancements are identified, considered and implemented as appropriate.

The Chair of the Nominations and Governance Committee discusses peer evaluation results with individual directors as needed.
   
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COMMUNICATING WITH THE BOARD OF DIRECTORS

Interested parties may communicate with the Board of Directors by writing a letter to the Chairman of the Board, to the Chair of the Nominations and Governance Committee, who acts as the lead independent director, or to the independent directors c/o Abbott Laboratories, 100 Abbott Park Road, D-364, AP6D, Abbott Park, Illinois 60064, Attention: Corporate Secretary. The General Counsel and Corporate Secretary regularly forwards to the addressee all letters other than mass mailings, advertisements, and other materials not relevant to Abbott’s business. In addition, directors regularly receive a log of all correspondence received by Abbott that is addressed to a member of the Board and may request any correspondence on that log.

CORPORATE GOVERNANCE MATERIALS

Abbott’s corporate governance guidelines, outline of directorship qualifications, director independence standards, code of business conduct, and the charters of Abbott’s Audit Committee, Compensation Committee, Nominations and Governance Committee, and Public Policy Committee are all available in the corporate governance section of Abbott’s investor relations website (www.abbottinvestor.com).

   
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DIRECTOR COMPENSATION

Mr. Ford is not compensated for serving on the Board or Board committees. Mr. White was not compensated for serving on the Board or Board committees during his tenure as Executive Chairman of the Board. Abbott’s remaining directors, who are all non-employee directors, are compensated for their service under the Abbott Laboratories Non-Employee Directors’ Fee Plan and the Abbott Laboratories 2017 Incentive Stock Program.

The following table sets forth a summary of the non-employee directors’ 2021 compensation.

Name     Fees Earned
or Paid in Cash
($)(1)
    Stock
Awards
($)(2)
    Option
Awards
($)(3)
    Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings
($)(4)
    All Other
Compensation
($)(5)
    Total
($)
R. J. Alpern   $ 126,000   $184,944   $0   $53,408   $25,000   $389,352
R. S. Austin   146,000   184,944   0   0   25,000   355,944
S. E. Blount   126,000   184,944   0   7,590   25,000   343,534
P. Gonzalez   43,500   0   0   0   0   43,500
M. A. Kumbier   132,000   184,944   0   0   0   316,944
E. M. Liddy   50,333   0   0   0   0   50,333
D. W. McDew   126,000   184,944   0   0   0   310,944
N. McKinstry   144,667   184,944   0   0   5,000   334,611
P. N. Novakovic   47,000   0   0   0   0   47,000
W. A. Osborn   156,000   184,944   0   0   0   340,944
M. F. Roman   88,000   184,944   0   0   0   272,944
D. J. Starks   126,000   184,944   0   0   0   310,944
J. G. Stratton   132,000   184,944   0   0   0   316,944
G. F. Tilton   142,000   184,944   0   0   25,000   351,944
(1) Under the Abbott Laboratories Non-Employee Directors’ Fee Plan, non-employee directors earn $10,500 for each month of service as a director. Audit Committee members, other than the Audit Committee chair, receive $500 for each month of service on the Audit Committee. Board Committee chairs receive monthly fees of: $2,083.33 for the Audit Committee chair, $1,666.66 for the Compensation Committee chair, $1,250.00 for the Public Policy Committee chair, and $1,250.00 for the chair of any other Board committee. In addition, the lead independent director earns $2,500 for each month of such service and does not receive a fee for service as Nominations and Governance Committee chair. Fees earned under the Abbott Laboratories Non-Employee Directors’ Fee Plan are paid in cash to the director, paid in the form of vested non-qualified stock options (based on an independent appraisal of their fair value), deferred (as a non-funded obligation of Abbott), or paid currently into an individual grantor trust established by the director. The distribution of deferred fees and amounts held in a director’s grantor trust generally commences when the director reaches age 65, or upon retirement from the Board of Directors, if later. The director may elect to have deferred fees and fees deposited in trust credited to either a guaranteed interest account or to a stock equivalent account that earns the same return as if the fees were invested in Abbott shares. If necessary, Abbott contributes funds to a director’s trust so that as of year-end the stock equivalent account balance (net of taxes) is not less than seventy-five percent of the market value of the related common shares at year-end.
   
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(2) The amounts reported in this column represent the aggregate grant date fair value of the awards calculated in accordance with Financial Accounting Standards Board ASC Topic 718. Abbott determines the grant date fair value of stock unit awards by multiplying the number of restricted stock units granted by the average of the high and low market prices of an Abbott common share on the date of grant. In addition to the fees described in footnote 1, each non-employee director elected to the Board of Directors at the annual shareholders meeting receives vested restricted stock units having a value of $185,000 (rounded down) under the Abbott Laboratories 2017 Incentive Stock Program). In 2021, this was 1,499 units. The non-employee directors receive cash payments equal to the dividends paid on the shares covered by the units at the same rate as other shareholders. Upon termination, retirement from the Board, death, or a change in control of Abbott, a non-employee director will receive one common share for each restricted stock unit outstanding under the Incentive Stock Program. Each director is required to own, within five years of becoming a director, the number of Abbott shares having a fair market value equal to five times the annual director fees earned or paid in cash. All directors with five years tenure or more meet or exceed the guidelines. The following Abbott restricted stock units were outstanding as of December 31, 2021: R. J. Alpern, 33,879; R. S. Austin, 41,542; S. E. Blount, 27,139; M. A. Kumbier, 5,714; D. W. McDew, 3,473; N. McKinstry, 27,139; W. A. Osborn, 35,796; M. F. Roman, 1,499; D. J. Starks, 12,096; J. G. Stratton, 8,659; and G. F. Tilton, 37,526.
(3) The following options were outstanding as of December 31, 2021: R. S. Austin, 64,718; E. M. Liddy, 58,861; N. McKinstry, 63,391; P. N. Novakovic, 81,381; and W. A. Osborn, 29,567.
(4) The totals in this column include reportable interest credited under Abbott Laboratories Non-Employee Directors’ Fee Plan during the year.
(5) Charitable contributions made by Abbott’s non-employee directors are eligible for a matching contribution (up to $25,000 annually). The amounts reported in this column represent charitable matching grant contributions.
   
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EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

INTRODUCTION

This Compensation Discussion and Analysis (CD&A) describes Abbott’s executive compensation program in 2021. In particular, this CD&A explains how the Compensation Committee (the Committee) and Board of Directors made compensation decisions for the Company’s executives, including the six named officers: Robert B. Ford, Chairman of the Board and Chief Executive Officer effective December 10, 2021 (previously President and Chief Executive Officer); Robert E. Funck, Jr., Executive Vice President, Finance and Chief Financial Officer; Hubert L. Allen, Executive Vice President, General Counsel and Secretary; Daniel G. Salvadori, Executive Vice President and Group President, Established Pharmaceuticals and Nutritional Products effective December 1, 2021 (previously Executive Vice President, Nutritional Products); Andrea F. Wainer, Executive Vice President, Rapid and Molecular Diagnostics; and Miles D. White, Former Executive Chairman of the Board.

The CD&A also describes the process the Committee utilizes to examine performance in the context of executive pay decisions, the performance goals and results for each named officer, and recent updates to our compensation program. This year’s CD&A reflects the feedback from our shareholders gathered during our 2021 shareholder outreach described on page 29.

VALUE CREATION FOR SHAREHOLDERS

Abbott’s sustained strong performance has resulted in total shareholder return (TSR) exceeding the peer median and major market indices on a one, three-, and five-year basis.

Abbott’s three-year TSR of 104% is more than twice that of the peer group median, and Abbott’s five-year TSR of 300% is more than four times that of the peer median. These consistent top-tier returns are driven by strong execution, an effective governance structure, and the strength of our diversified business model with leadership positions in some of the largest and fastest growing markets in healthcare and innovative product portfolios across our businesses.

Abbott delivered strong returns for shareholders in 2021, despite the continued global impact and uncertainty of COVID 19, and exceeded the financial targets that were set at the beginning of the year. Abbott’s one-year TSR was 31%, more than two and a half times the peer median TSR, a testament to the strength of our diversified business model and ability to innovate and deliver in this challenging environment.

   
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CHANGES BASED ON SHAREHOLDER FEEDBACK AND MARKET PRACTICES

In 2021, we met or initiated contact with shareholders representing over 60% of our outstanding shares, including 100% of our top 20 investors in an open dialogue to discuss our compensation program and various topics, including:

  The pandemic’s impact on our business, our COVID-19 testing response, and the strength and resilience of our diversified business model.
  Business and sustainability strategy, including Abbott’s new 2030 Sustainability Plan and its focus on creating new life-changing technologies and products, expanding access and affordability of new product innovations and advancing health equity.
  Human capital management and Abbott’s commitment to diversity, equity, and inclusion, including Abbott’s new Diversity, Equity and Inclusion Report which provides goals, our progress against them, and disclosure of EEO-1 data.
  Board composition and refreshment, including the addition of four new independent directors since 2018, three of whom are women and/or minorities.
  Executive compensation program, including Abbott’s continued enhanced compensation disclosure.

Their feedback was overwhelmingly positive, which was reflected in the 92% support for our Say-on-Pay Proposal.

As illustrated in the table below, over the past several years we have made numerous changes to our program and our proxy statement based on feedback from our shareholders as well as a review of market practices.

CHANGES BASED ON SHAREHOLDER FEEDBACK       

  Increased disclosure related to Abbott’s 2030 Sustainability Plan goals and linkage to executive pay

  Revised annual cash incentive plan goals and weighting

  Significantly increased disclosure related to payouts for both annual and long term incentives

  Changed performance-based restricted stock awards to vest only over a 3-year term with no more than one-third of the award vesting in any one year

 

  Introduced new long-term incentive measures to reflect sustained performance over a three-year period

  Increased director share ownership guidelines

  Increased the target for vesting of performance restricted shares

  Updated our peer group to reflect increased size and complexity of business

  Implemented a strengthened recoupment policy

   
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ABBOTT’S PEER GROUP FOR PAY AND COMPANY PERFORMANCE BENCHMARKING

To determine the competitiveness of our compensation and benefit programs, the Committee, in consultation with its independent consultant, annually compares the level of compensation, pay practices, and our relative performance to those of peer companies. Our Compensation Committee reviewed our peer group in 2021 and determined that the existing peer group strikes the appropriate balance between size (revenue and market capitalization between approximately one-third and three-times Abbott’s), growth and return profiles, geographic breadth, and management and operating structure. This approach has been overwhelmingly supported by our investors during shareholder outreach.

The peer group is summarized below, showing the primary characteristics for each company selected, including the Abbott business segment(s) represented by the peer company.

Company Name   Sales/
Rev.(1)
(billions)
  Market
Cap(1)
(billions)
  % Rev.
Outside
U.S.
  Similar #
Employees
  Mfg.
Driven/
Consumer-
Facing
  Abbott Business Segment(s)/
Characteristics Represented
3M Company   $35.4   $102.4         Diagnostics
Becton Dickinson   $20.2   $  71.7         Diagnostics, Medical Devices
Boston Scientific   $11.5   $  60.5           Medical Devices
Bristol-Myers Squibb   $45.5   $138.4           Established Pharmaceuticals
Cisco   $50.8   $267.3         Diagnostics, Medical Devices
The Coca-Cola Company   $37.8   $255.8         Consumer
Danaher Corporation   $29.5   $235.1         Diagnostics
Honeywell International   $34.6   $143.5         Diagnostics, Medical Devices
Johnson & Johnson   $93.8   $450.4         Consumer, Diagnostics, Established Pharmaceuticals, Medical Devices
Medtronic   $31.8   $139.1         Medical Devices
Merck   $49.2   $193.6         Established Pharmaceuticals
Mondelez International   $28.7   $  92.5         Consumer
Nike   $46.3   $263.8         Consumer
Procter & Gamble   $78.3   $395.9         Consumer
Reckitt Benckiser(2)   $24.6   $  60.7           Nutrition
Stryker Corporation   $17.1   $100.9         Medical Devices
Thermo Fisher Scientific   $39.1   $262.9         Diagnostics
Peer Group Median   $35.4   $143.5                
Abbott   $43.1   $248.9          
Abbott Percentile Rank   65th   65th                
(1) Data source: Nasdaq IR Insight database reflects most recently disclosed (as of January 31, 2022) trailing 12-month sales/revenue. The market cap reflects values on December 31, 2021.
(2) Revenue/Market Cap converted to USD for companies outside the U.S.
   
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BASIS FOR COMPENSATION DECISIONS

Abbott and its Compensation Committee have designed a compensation program that balances short- and long-term objectives to focus our executives on actions that create value today, while building for sustainable future success. Approximately 90% of our pay is performance-based, directly tying a significant portion of executive compensation to Company performance and shareholder returns.

Our compensation program is market-based (to ensure our ability to attract and retain talented executives) and produces compensation outcomes that are performance-based (to incent the achievement of profitable growth that increases shareholder value).

COMPENSATION PROGRAM IS MARKET-BASED

All components of total direct compensation are market-based. Each year, the Compensation Committee reviews market data with the independent compensation consultant to ensure our programs are aligned and our officers are positioned appropriately relative to the market.

Base Salary

Base salary targets are initially set using the median of the peer group as a benchmark. Base salaries then vary depending on the officer’s experience, expertise, and performance. The average base salary of our executive officers is approximately at the market median.

Annual Incentive Plan

Annual incentive targets are initially set using the median of the peer group as a benchmark. The targets may vary based on other factors, including internal pay comparisons. Further linkage to the market is achieved by setting targets that require our officers to exceed the anticipated growth of the market in which they compete in order to achieve a target payout of their annual incentives.

Long-Term Incentive Plan (LTI)

To set annual LTI award guidelines, the Committee first reviews LTI grants made by peer companies to identify the competitive market range. Each year the guidelines are set at the appropriate level within the competitive market range based on Abbott’s relative performance, as described on pages 32 and 33. To recognize the continued growth focus of Abbott and to directly align the interests of executive officers with the interests of our shareholders, the Compensation Committee grants long-term incentive awards in the form of 50% stock options and 50% performance restricted shares. This mix of incentive awards is consistent with our peers.

COMPENSATION OUTCOMES ARE PERFORMANCE-BASED

Other than base salary, which is the smallest component of our executives’ compensation, all remaining components of Total Direct Compensation (i.e., annual incentive, performance-based restricted stock awards, and stock options) are aligned with individual, business segment and Company performance.

   
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Annual Incentive Plan

Payouts are determined based upon performance relative to annual goals and are capped as a percentage of consolidated net earnings (CEO cap is 0.15%; other NEO cap is 0.075%). The following formula summarizes the annual incentive payout process for officers.

For example:

BASE SALARY   BONUS TARGET %   TOTAL GOAL SCORE   AWARD PAYOUT
$525,000 x 90% x 95% = $448,875

For 2021 performance, annual incentive payouts for Abbott executive officers averaged 101% of target. For individual calculations for each named officer, see pages 38 to 48. The annual incentive plan is formula driven based on financial, strategic, talent and succession, and diversity results. Officer financial goals are based on adjusted financial measures that reflect the true results of our ongoing operations and are set based on the expected market growth of the businesses in the markets in which we compete.

Long-Term Incentive Plan

Abbott’s process to determine long-term incentive awards is based on both company and individual performance. Guidelines are set based on relative performance of the Company to peers. Those guidelines are adjusted, up or down, based on individual officer performance over the prior three years. Performance restricted shares vest only if performance achieves expectations over the following three years, and stock options provide value only through share price appreciation. Conversely, most other companies reflect performance only at the Company level through future relative TSR. Abbott’s process is much more rigorous, reflecting both company and individual performance over a longer period of time.

The Committee positions LTI award guidelines relative to the market by comparing Abbott’s 3-year TSR performance against our peers. 5- and 1-year TSR performance are also referenced to ensure long-term performance is sustained, and current performance is on track with shareholder expectations.

   
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For example, guidelines for grants made in February 2021 were set at the 75th percentile of our peer group, reflecting 82nd percentile relative 3-, 5-, and 1-year TSR performance for the period ending in 2020, as summarized in the graphic below.

The information below represents the February 2021 annual grant.

STEP 1: Link to Market

Compare Abbott’s 3-year TSR performance against our peer group, consider 5-, and 1-year TSR to ensure long-term performance is sustained

STEP 2: Link to Company Performance

Position LTI guideline value relative to peer group

STEP 3: Link to Individual Performance

Adjust for individual performance


5-year relative TSR = 82%
3-year relative TSR = 82%
1-year relative TSR = 82%
2021 LTI Guideline = 75th
percentile of Peer Group LTI
LTI Award guideline adjusted up or down based on individual officer's sustained 3-year contributions to:

● Sales and market growth

● Margin

● Strategic financial measures

The recommendation for each officer starts with the Company LTI award guideline (based on relative TSR performance and market data as described above) for the officer’s position and is adjusted based upon assessment of their sustained contributions over the last three years. Contribution scores are totaled and used to adjust each officer’s award guideline. Final awards may be increased or decreased based on the long-term impact each individual officer had on the organization. For example:

SAMPLE INDIVIDUAL LTI PERFORMANCE ASSESSMENT
Metric   2018   2019   2020   Overall
Sales and Market Growth Contribution   Met (0)   Did Not Meet (-1)   Exceeded (+1)   0
Margin Contribution   Met (0)   Met (0)   Exceeded (+1)   +1
Strategic Financial Contribution   Met (0)   Met (0)   Met (0)   0
            Total   +1
            LTI Adjustment   110%

 

LTI ADJUSTMENT LEGEND
Total       Result
+4 or More   125%
+1 to +3   110%
0   100%
-1 or -2   90%
-3 or Less   75%
   
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Awards granted in 2021, based on individual officer performance for the three-year period ending in 2020, resulted in awards ranging from the 49th percentile to the 90th percentile of our peer group. For individual calculations for each named officer, see pages 38 to 48.

Since stock options realize value only through share price appreciation, the value realized upon the exercise of vested stock options directly aligns the compensation earned with the value shareholders received over the same period. Options are also aligned with shareholder value through the impact of relative TSR in determining the LTI award guidelines.

Performance restricted shares vest one-third each year only if the Adjusted Return on Equity (ROE) performance target is achieved. Vesting is absolute—either 100% or 0%. There is no partial vesting if the target is missed and no additional vesting upside if the Company over-performs. The Committee believes Adjusted ROE is the appropriate performance measure for vesting because ROE measures how much profit the Company generates over the long-term with the capital that shareholders have invested and is a measure reflecting deployment of capital or capital allocation.

In 2021, the Adjusted ROE vesting target to determine future vesting was increased from 13% to 14%. This increase follows similar increases in prior years, which have increased this target 40% since 2014. This is consistent with our stated intent to increase our Adjusted ROE targets over time following the separation of AbbVie, which had a significant impact on our ROE and other return measures, including Return on Assets (ROA).

Prior to the separation of Abbott and AbbVie, the AbbVie business accounted for the majority (65%) of Abbott’s adjusted net income. However, at the separation of AbbVie, Abbott retained the majority (90%) of the equity. While Abbott’s ROE was disproportionally lower following the AbbVie separation, shareholders that retained both their Abbott and AbbVie shares over the past eight years since the AbbVie separation would have seen a 322% appreciation in their holdings.

Impact of Abbott/
AbbVie Separation

   
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COMPENSATION PROGRAM IS DIRECTLY LINKED TO BUSINESS STRATEGY

Our compensation program is also linked directly to our business strategy, to ensure that officers are focused on those activities that drive our business strategy and create value for shareholders.

The table below explains the strategic link of the key metrics used in our annual and long-term incentive plans.

EVALUATION OF PERFORMANCE      
METRIC       STRATEGIC LINK
Our annual incentive plan is aligned to the following drivers of shareholder value:
Sales   Measures Abbott’s ability to compete effectively in the markets in which we participate and focuses management on achieving strong top-line growth, consistent with our business strategy.
Diluted EPS   Measures Abbott’s ability to deliver profitable growth, contributing to strong shareholder returns.
Return on Assets   Measures profitability and how effectively Company assets are used to generate profit.
Free Cash Flow   Recognizes the importance of generating cash to fund ongoing investments in our business and to pay down debt, pay dividends, and fund investments outside of capital expenditures.
Our long-term incentive plan relies on the following Company metrics, and 3-year sustained individual performance metrics, to determine award value:
Total Shareholder Return   Measures Abbott’s stock and dividend performance against our peer group. Used to position LTI award guidelines relative to the market.
3-year LTI Contribution Metrics   Measures how each officer has performed relative to their sales, margin, and strategic financial contribution goals. Used to adjust LTI award guidelines to reflect individual performance.
Return on Equity   Measures how much profit Abbott generates over the long-term with the capital that shareholders have invested. Used to determine if performance-restricted awards vest.

Officer financial goals are set and assessed based on adjusted measures that the Committee believes more accurately reflect the results of our ongoing operations. We make certain adjustments for specified items, whether favorable or unfavorable, that are unusual or unpredictable, such as cost reduction initiatives, restructuring programs, integration activities and other business acquisition-related costs, and the impact of significant tax changes. We also exclude intangible amortization expense to provide greater visibility on the results of operations excluding these costs, similar to how Abbott’s management internally assesses performance.

The Committee believes these adjusted measures provide a more stable assessment of Abbott’s core business and encourage decision-making that considers long-term value. They also align compensation goals with the financial guidance we communicate to investors, which is also based on adjusted measures.

   
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COMPENSATION LINK TO SUSTAINABILITY

Our leadership covenant is considered the minimum requirement of being an officer at Abbott. Any officer that does not fulfill the covenant can receive a reduction of up to 100% of their annual incentive and/or long-term incentive awards. In addition, our leadership covenant specifically states that senior leaders are accountable for the achievement of Abbott’s 2030 Sustainability Plan goals.

The sustainability plan is integrated into our business plans, financial planning processes and existing governance structures. Each senior manager is responsible for taking actions in their organization that help achieve our targeted priority goals regarding:

Making access and affordability core to new product innovation

This approach has helped create some of our most successful products, including FreeStyle Libre®, the world’s most-used glucose-monitoring system, and our BinaxNOW™ COVID-19 test. In our rapid diagnostics business, we’re bringing testing closer to the patient, even in the most remote locations. Importantly, many of our tests are used at the point of care and provide answers while the patient is still present, accelerating treatment decisions and reducing life-threatening delays. Access and affordability are also core to our Established Pharmaceuticals business strategy, bringing our high-quality, trusted medicines to emerging markets at affordable prices.

Transforming care for chronic disease, malnutrition, and infectious diseases

In 2021, we launched the Abbott Malnutrition Solution Center. This internal, cross-functional innovation hub will help identify, treat and prevent malnutrition among vulnerable populations. We also launched the Abbott Pandemic Defense Coalition, a first-of-its-kind global scientific and public health partnership dedicated to the early detection of, and rapid response to, future pandemic threats. The coalition is designed with a comprehensive approach to containing emerging threats, with partners ranging in expertise from scientific research, public health and diagnostic testing to attack new viral threats from all angles. This coalition is in full force as our scientists are currently monitoring new COVID-19 variants. We’re collecting and analyzing samples from around the globe to look for mutations that may impact the function of the virus to ensure that our tests are able to detect them, aiming to prevent further spread.

Advancing health equity through partnership

Abbott and the American Diabetes Association® launched a first-of-its-kind community initiative to advance access to diabetes care and technology. The program launched in Columbus, Ohio in partnership with the National Center for Urban Solutions (NCUS). As part of the program, NCUS will provide up to 150 Black adults living with diabetes in the Columbus community with health education and access to Abbott’s FreeStyle® Libre flash glucose monitoring technology. By removing existing barriers to tools and technology, this program aims to demonstrate how continuous glucose monitoring can help improve diabetes management and quality of life for Black people living with diabetes in the Columbus community.

In addition to these priority goals, senior leaders will also take actions in key areas, including:

Protecting a healthy environment

In 2020, we implemented 54 energy efficiency and air emissions projects at 28 sites in nine countries. These resulted in more than 30 million kWh in annual energy savings, preventing more than 8,900 metric tons of CO2e emissions and delivered more than $1.1 million annual cost savings.

In 2020, we also implemented 16 water efficiency and reduction projects at 12 manufacturing and R&D sites across six countries, four of which are located in water-stressed areas. These projects resulted in savings of around 14.6 million gallons of water per year and $120,000.

   
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Our Zero Waste to Landfill program provides our sites with a clear target for diverting waste away from landfills. Thirty-one Abbott manufacturing facilities and seven nonmanufacturing facilities, located across 18 countries, have now achieved Zero Waste to Landfill status.

We set an aggressive target to reduce the total weight of packaging for Abbott products by 10% by 2020, when compared with our 2010 baseline. We surpassed our initial goal and reduced our total weight of packaging by 14.2% since 2010. In doing so, we eliminated approximately 42.1 million pounds of packaging and saved more than $100 million.

Building the diverse, innovative workforce of tomorrow

In 2021, all of our U.S. employees received unconscious bias training, and 97% of our people managers globally completed “Leading with Impact”, a development program focused on inclusive leadership. We published our first ever Diversity, Equity and Inclusion report which provides goals, our progress against them, and disclosure of EEO-1 data.

Responsibly connecting data, technology and care

The NeuroSphere™ Virtual Clinic which offers a telehealth service, from a patient’s iPhone to their physician’s iPad, but also allows for a digital prescription to be delivered, near-instantaneously, from the physician’s iPad to a patient’s brain, over the internet. This allows doctors to assess patients live, treat them over the internet, and assess the effects of the treatment, in real-time, without the patient having to leave home.

Creating a resilient, diverse and responsible supply chain

The COVID-19 pandemic tested the resilience of our supply chain to the extreme. Working across our business functions, we rose to the challenge by building an inventory of raw materials and products to support continuity of supply, monitoring performance more tightly to identify distressed suppliers early enough to implement contingency plans, mapping supplier manufacturing sites in known COVID-19 “hot spots” or in locations affected by government lockdowns, and offering COVID-19 testing for employees at a few strategic suppliers to ensure continued operations and supply.

PAY DECISIONS FOR NAMED EXECUTIVE OFFICERS

The following pages detail the goals and metrics used to determine each named officer’s payout under our annual and long-term incentive plans. For some goals, the target is not disclosed for competitive reasons. The long-term incentive decisions shown in the Summary Compensation Table of this proxy statement and detailed here were based upon performance through 2020, whereas the annual incentive plan payouts are based upon performance during 2021.

   
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NAMED EXECUTIVE OFFICER COMPENSATION DECISIONS

     

ROBERT B. FORD

Chairman of the Board and Chief Executive Officer

     

Mr. Ford previously served as President and Chief Executive Officer until his appointment to the role of Chairman of the Board and Chief Executive Officer on December 10, 2021.

Base Salary

Mr. Ford’s annual base salary was increased to $1,500,000 in March 2021 based on competitive market data among Abbott’s peers.

Annual Incentive Plan

Mr. Ford’s target bonus of 175% was not changed in 2021. Based on performance in 2021, Mr. Ford received a bonus in February 2022 which was calculated as follows:

GOAL 2020
RESULTS
ACHIEVED
GOAL
WEIGHT
2021 GOAL MEASUREMENT 2021
RESULTS
ACHIEVED
GOAL
SCORE
THRESHOLD TARGET MAXIMUM
FINANCIAL METRICS(1)
Adjusted Sales(2) $34.92B 25% $42.99B $43.19B $44.20B $43.61B 30.2%
Adjusted Diluted EPS $3.65 25% $4.93 $5.00 $5.25 $5.21 35.5%
Adjusted ROA 11.8% 10% 14.9% 15.0% 15.5% 15.9% 15.0%
Free Cash Flow $5.7B 10% $6.9B $7.2B $7.6B $8.6B 15.0%
STRATEGIC METRICS(3)
COVID-19 Test Sales   10% 92.9%
of target
Target 114.3%
of Target
108.6%
of Target
13.1%
Diabetes Care Sales Growth   10% 89.1%
of Target
Target 108.7%
of Target
103.3%
of Target
11.9%
Core Diagnostics Sales Growth   10% 89.7%
of Target
Target 109.2%
of Target
Below
Threshold
0.0%
            Total 120.7%

 

(1) Adjusted Sales exclude the impact of foreign exchange on actual sales relative to the goal target. Adjusted Diluted EPS is diluted earnings per common share from continuing operations excluding specified items, such as intangible amortization expense and various other costs including expenses related to restructuring actions or business acquisitions. Adjusted Return on Assets (ROA) reflects earnings from continuing operations, excluding interest expense and specified items. Adjusted ROA also reflects total assets less current liabilities excluding short-term borrowings. Free Cash Flow equals Operating Cash Flow less acquisitions of property and equipment.
(2) Set based on expected market growth of the businesses and markets in which we compete. To achieve target payout, must increase market share.
(3) Target not disclosed for competitive reasons. Diabetes Care and Core Diagnostics Sales Growth exclude the impact of foreign exchange.

 

BASE SALARY   BONUS TARGET %   TOTAL GOAL SCORE   AWARD PAYOUT
$1,500,000   ×   175%   ×   120.7%   =   $3,168,400
   
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Long-Term Incentives

Based on the Committee’s review of Abbott and individual performance through 2020, Mr. Ford received an LTI award in February 2021 with a value of $17,380,000, which was 110% of the market value equity award for a CEO in Abbott’s peer group. This award was paid 50% in stock options(1) and 50% in performance restricted shares(2).

LTI AWARD
GUIDELINE
  LTI ADJUSTMENT   AWARD ALLOCATION   AWARD
VALUE
$15,800,000   ×   110%   ×   50% Stock Options(1)   =    $8,690,000
50% Performance Restricted Shares(2) $8,690,000
          Total   $17,380,000

 

INDIVIDUAL LTI PERFORMANCE ASSESSMENT
METRIC 2018 2019 2020 OVERALL
Sales and Market Growth Contribution Exceeded (+1) Exceeded (+1) Exceeded (+1) +3
Margin Contribution Exceeded (+1) Exceeded (+1) Exceeded (+1) +3
Strategic Financial Contribution Met (0) Did Not Meet (-1) Exceeded (+1) 0
  Total +6
Preliminary Adjustment 125%
Impact(3) -
LTI Adjustment 110%

 

LTI ADJUSTMENT LEGEND
PRELIMINARY ADJUSTMENT IMPACT
TOTAL RESULT IMPACT ON
BUSINESS PRIORITIES
SCORE RESULT
+4 or More 125% High Impact ++ +25% or More
+1 to +3 110% Medium/High Impact + Up to +25%
0 100% Medium Impact = 0%
-1 or -2 90% Medium/Low Impact - Up to -25%
-3 or Less 75% Low Impact -- -25% or More
(1) Stock options realize value only through share price appreciation.
(2) Performance restricted shares vest only if the 14% Adjusted Return on Equity (ROE) performance target is achieved.
(3) Individual LTI performance assessment was based upon Mr. Ford’s roles as Chief Operating Officer through March 31, 2020 and as President and Chief Executive Officer thereafter.
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ROBERT E. FUNCK, JR

Executive Vice President, Finance and Chief Financial Officer

     

Base Salary

Mr. Funck’s annual base salary of $825,000 did not change in 2021.

Annual Incentive Plan

Mr. Funck’s target bonus of 115% was not changed in 2021. Based on performance in 2021, Mr. Funck received a bonus in February 2022 which was calculated as follows:

GOAL 2020
RESULTS
ACHIEVED
GOAL
WEIGHT
2021 GOAL MEASUREMENT 2021
RESULTS
ACHIEVED
GOAL
SCORE
THRESHOLD TARGET MAXIMUM
FINANCIAL METRICS(1)
Adjusted Sales(2) $34.92B 10% $42.99B $43.19B $44.20B $43.61B 12.1%
Adjusted Diluted EPS $3.65 20% $4.93 $5.00 $5.25 $5.21 28.4%
Free Cash Flow $5.7B 10% $6.9B $7.2B $7.6B $8.6B 15.0%
Achieve Key Treasury and Tax Metrics(3) Achieved 15% Target Target Target Achieved 15.0%
STRATEGIC METRICS(3)
Goal (10% weight): Execute milestones related to data asset management
Result: Achieved
10.0%
Goal (10% weight): Implement a global guided buying platform
Result: Partially Achieved
5.0%
Goal (10% weight): Implement key financial systems implementations within select countries
Result: Achieved
10.0%
HUMAN CAPITAL METRICS
Goal (15% weight): Meet talent, succession planning, and diversity targets.
Result: Achieved
  15.0%
            Total 110.5%
(1) Adjusted Sales exclude the impact of foreign exchange on actual sales relative to the goal target. Adjusted Diluted EPS is diluted earnings per common share from continuing operations excluding specified items. Free Cash Flow equals Operating Cash Flow less acquisitions of property and equipment.
(2) Set based on expected market growth of the businesses and markets in which we compete. To achieve target payout, must increase market share
(3) Target not disclosed for competitive reasons.

 

BASE SALARY   BONUS TARGET %   TOTAL GOAL SCORE   AWARD PAYOUT
$825,000   ×   115%   ×   110.5%   =   $1,048,400
   
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Long-Term Incentives

Based on the Committee’s review of Abbott and individual performance through 2020, Mr. Funck received an LTI award in February 2021 with a value of $6,000,000, which was equal to 113.2% of the market value equity award for a CFO in Abbott’s peer group. Additional calculation details are as follows:

LTI AWARD
GUIDELINE
  LTI ADJUSTMENT   AWARD ALLOCATION   AWARD
VALUE
$5,300,000   ×   113.2%   ×   50% Stock Options(1)   =   $3,000,000
50% Performance Restricted Shares(2) $3,000,000
          Total   $6,000,000

 

INDIVIDUAL LTI PERFORMANCE ASSESSMENT
METRIC 2018 2019 2020 OVERALL
Sales and Market Growth Contribution Exceeded (+1) Exceeded (+1) Exceeded (+1) +3
Margin Contribution Exceeded (+1) Exceeded (+1) Exceeded (+1) +3
Strategic Financial Contribution Met (0) Met (0) Exceeded (+1) +1
  Total +7
Preliminary Adjustment 125%
Impact(3) -
LTI Adjustment 113.2%

 

LTI ADJUSTMENT LEGEND
PRELIMINARY ADJUSTMENT IMPACT
TOTAL RESULT IMPACT ON
BUSINESS PRIORITIES
SCORE RESULT
+4 or More 125% High Impact ++ +25% or More
+1 to +3 110% Medium/High Impact + Up to +25%
0 100% Medium Impact = 0%
-1 or -2 90% Medium/Low Impact - Up to -25%
-3 or Less 75% Low Impact -- -25% or More
(1) Stock options realize value only through share price appreciation.
(2) Performance restricted shares vest only if the 14% Adjusted Return on Equity (ROE) performance target is achieved.
(3) Individual LTI performance assessment was based upon Mr. Funck’s roles as Senior Vice President, Finance and Controller through February 29, 2020 and as Executive Vice President, Finance and Chief Financial Officer thereafter.
   
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HUBERT L. ALLEN

Executive Vice President, General Counsel and Secretary

     

Base Salary

Mr. Allen’s annual base salary of $760,000 did not change in 2021.

Annual Incentive Plan

Mr. Allen’s target bonus of 105% was not changed in 2021. Based on performance in 2021, Mr. Allen received a bonus in February 2022 which was calculated as follows:

GOAL 2020
RESULTS
ACHIEVED
GOAL
WEIGHT
2021 GOAL MEASUREMENT 2021
RESULTS
ACHIEVED
GOAL
SCORE
THRESHOLD TARGET MAXIMUM
FINANCIAL METRICS(1)
Adjusted Sales(2) $34.92B 10% $42.99B $43.19B $44.20B $43.61B 12.1%
Adjusted Diluted EPS $3.65 20% $4.93 $5.00 $5.25 $5.21 28.4%
Free Cash Flow $5.7B 10% $6.9B $7.2B $7.6B $8.6B 15.0%
Other Financial Returns(3) Achieved 10% Target Target Target Achieved 10.0%
STRATEGIC METRICS
Goal (35% weight): Resolve certain key litigation matters and investigations.
Result: Achieved
35.0%
HUMAN CAPITAL METRICS
Goal (15% weight): Meet talent, succession planning, and diversity targets.
Result: Achieved
  15.0%
            Total 115.5%
(1) Adjusted Sales exclude the impact of foreign exchange on actual sales relative to the goal target. Adjusted Diluted EPS is diluted earnings per common share from continuing operations excluding specified items. Free Cash Flow equals Operating Cash Flow less acquisitions of property and equipment.
(2) Set based on expected market growth of the businesses and markets in which we compete. To achieve target payout, must increase market share
(3) Target not disclosed for competitive reasons.

 

BASE SALARY   BONUS TARGET %   TOTAL GOAL SCORE   AWARD PAYOUT
$760,000   ×   105%   ×   115.5%   =   $921,700
   
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Long-Term Incentives

Based on the Committee’s review of Abbott and individual performance through 2020, Mr. Allen received an LTI award in February 2021 with a value of $4,231,250, which was equal to 125% of his LTI award guideline. Additional calculation details are as follows:

LTI AWARD
GUIDELINE
  LTI ADJUSTMENT   AWARD ALLOCATION   AWARD
VALUE
$3,385,000   ×   125%   ×   50% Stock Options(1)   =   $2,115,625
50% Performance Restricted Shares(2) $2,115,625
          Total   $4,231,250

 

INDIVIDUAL LTI PERFORMANCE ASSESSMENT
METRIC 2018 2019 2020 OVERALL
Sales and Market Growth Contribution Exceeded (+1) Exceeded (+1) Exceeded (+1) +3
Margin Contribution Exceeded (+1) Exceeded (+1) Exceeded (+1) +3
Strategic Financial Contribution Met (0) Met (0) Met (0) 0
  Total +6
LTI Adjustment 125%

 

LTI ADJUSTMENT LEGEND
TOTAL RESULT
+4 or More 125%
+1 to +3 110%
0 100%
-1 or -2 90%
-3 or Less 75%
(1) Stock options realize value only through share price appreciation.
(2) Performance restricted shares vest only if the 14% Adjusted Return on Equity (ROE) performance target is achieved.
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DANIEL G. SALVADORI

Executive Vice President and Group President, Established Pharmaceuticals and Nutritional Products

     

Mr. Salvadori previously served as Executive Vice President, Nutritional Products. Mr. Salvadori was appointed to the role of Executive Vice President and Group President, Established Pharmaceuticals and Nutritional Products effective December 1, 2021.

Base Salary

Mr. Salvadori’s annual base salary was increased in December 2021 to $790,000 in connection with his promotion to Executive Vice President and Group President, Established Pharmaceuticals and Nutritional Products.

Annual Incentive Plan

Mr. Salvadori’s target bonus of 115% was not changed in 2021. Based on performance in 2021, Mr. Salvadori received a bonus in February 2022 which was calculated as follows:

  2020
RESULTS
GOAL  2021 GOAL MEASUREMENT  2021
RESULTS
 GOAL
GOAL ACHIEVED WEIGHT  THRESHOLD  TARGET MAXIMUM ACHIEVED SCORE
FINANCIAL METRICS(1)              
Adjusted Division Net Sales(2) $7.68B 20% $7.79B $7.88B $7.98B $8.14B 30.0%
Adjusted Division Margin(3) 20% Target Target 103.6%
of Target
102.6%
of Target
27.2%
Adjusted Division Gross Margin(3) 5% 99.4%
of Target
Target 103.8%
of Target
97.3%
of Target
0%
Gross Margin Improvement(3)   5% Target Target 110.0%
of Target
101.2%
of Target
5.3%
Market Share(3) 10% Target Target Target Mostly
Achieved
7.5%
Adjusted Division Free Cash Flow(3) 5% Target Target 102.4%
of Target
108.4% of Target 7.5%
Cash Conversion Cycle(3) 5% 5 days over Target Target Target 2 days under Target 5.0%
STRATEGIC METRICS              
Goal (20% weight): Complete all commercialization milestones and implement key capital projects.
Result: Achieved
  20.0%
HUMAN CAPITAL METRICS              
Goal (10% weight): Meet talent, succession planning, and diversity targets.
Result: Achieved
  10.0%
            Total 112.5 %
(1) Adjusted Division Net Sales exclude the impact of foreign exchange on actual Nutrition sales relative to the goal target. Adjusted Division Margin and Adjusted Division Gross Margin exclude the impact of foreign exchange on actual Nutrition division margin and gross margin relative to the respective goal target. Adjusted Division Free Cash Flow reflects Nutrition’s pre-tax operating cash flow less capital expenditures and excludes the impact of foreign exchange.
(2) Set based on expected growth in Nutrition market. To achieve target payout, must increase market share
(3) Target not disclosed for competitive reasons.
   
BASE SALARY   BONUS TARGET %   TOTAL GOAL SCORE   AWARD PAYOUT
$715,539   ×   115%   ×   112.5%   =   $925,700
   
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Long-Term Incentives

Based on the Committee’s review of Abbott and individual performance through 2020, Mr. Salvadori received an LTI award in February 2021 with a value of $4,777,500, which was equal to 125% of his LTI award guideline. Additional calculation details are as follows:

LTI AWARD
GUIDELINE
  LTI ADJUSTMENT   AWARD ALLOCATION   AWARD
VALUE
$3,822,000   ×   125%   ×   50% Stock Options(1)   =    $2,388,750
50% Performance Restricted Shares(2) $2,388,750
          Total   $4,777,500
               

 

INDIVIDUAL LTI PERFORMANCE ASSESSMENT
METRIC 2018 2019 2020 OVERALL
Sales and Market Growth Contribution Exceeded (+1) Exceeded (+1) Exceeded (+1) +3
Margin Contribution Met (0) Exceeded (+1) Exceeded (+1) +2
Strategic Financial Contribution Met (0) Exceeded (+1) Did Not Meet (-1) 0
  Total +5
LTI Adjustment 125%

 

LTI ADJUSTMENT LEGEND
TOTAL RESULT
+4 or More 125%
+1 to +3 110%
0 100%
-1 or -2 90%
-3 or Less 75%
(1) Stock options realize value only through share price appreciation.
(2) Performance restricted shares vest only if the 14% Adjusted Return on Equity (ROE) performance target is achieved.
   
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ANDREA F. WAINER

Executive Vice President, Rapid and Molecular Diagnostics

     

Base Salary

Ms. Wainer’s annual base salary was increased from $650,000 to $710,000 in March 2021.

Annual Incentive Plan

Ms. Wainer’s target bonus of 115% was not changed in 2021. Based on performance in 2021, Ms. Wainer received a bonus in February 2022 which was calculated as follows:

  2020
RESULTS
GOAL  2021 GOAL MEASUREMENT  2021
RESULTS
 GOAL
GOAL ACHIEVED WEIGHT  THRESHOLD  TARGET MAXIMUM ACHIEVED SCORE
FINANCIAL METRICS(1)
Adjusted Division Net Sales(2) $6.16B 20% $9.47B $9.83B $10.85B $10.52B 26.7%
Adjusted Division Margin(3) 20% Target Target 120.0%
of Target
112.2%
of Target
26.1%
Adjusted Division Gross Margin(3) 5% 98.1%
of Target
Target 120.0%
of Target
101.3%
of Target
5.2%
Gross Margin Improvement(3)   5% Target Target 120.0%
of Target
Above
Maximum
7.5%
Market Share(3) 10% Target Target Target Achieved 10.0%
Adjusted Division Free Cash Flow(3) 10% Target Target 120.0%
of Target
114.6%
 of Target
13.6%
STRATEGIC METRICS
Goal (20% weight): Complete the necessary innovation, development, and expansion metrics per approved plans.
Result: Mostly Achieved
15.5%
HUMAN CAPITAL METRICS
Goal (10% weight): Meet talent, succession planning, and diversity targets.
Result: Mostly Achieved
9.5%
            Total 114.1%
(1) Adjusted Division Net Sales exclude the impact of foreign exchange on actual Rapid and Molecular Diagnostics sales relative to the goal target. Adjusted Division Margin and Adjusted Division Gross Margin exclude the impact of foreign exchange on actual Rapid and Molecular Diagnostics division margin and gross margin relative to the respective goal target. Adjusted Division Free Cash Flow reflects Rapid and Molecular Diagnostics’ pre-tax operating cash flow less capital expenditures and excludes the impact of foreign exchange. Given the significant fluctuations in demand for COVID-19 diagnostic tests during the year, Adjusted Division Net Sales target for 2021 was revised from $12.3 billion to $9.8 billion and other financial targets were determined based on that sales target.
(2) Set based on expected growth in Rapid and Molecular Diagnostics market.
(3) Target not disclosed for competitive reasons.
   
BASE SALARY   BONUS TARGET %   TOTAL GOAL SCORE   AWARD PAYOUT
$710,000   ×   115%   ×   114.1%   =   $931,600
   
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Long-Term Incentives

Based on the Committee’s review of Abbott and individual performance through 2020, Ms. Wainer received an LTI award in February 2021 with a value of $4,777,500, which was equal to 125% of her LTI award guideline. Additional calculation details are as follows:

LTI AWARD
GUIDELINE
  LTI ADJUSTMENT   AWARD ALLOCATION   AWARD
VALUE
$3,822,000   ×   125%   ×   50% Stock Options(1)      $2,388,750
50% Performance Restricted Shares(2) $2,388,750
          Total   $4,777,500
               
INDIVIDUAL LTI PERFORMANCE ASSESSMENT
METRIC 2018 2019 2020 OVERALL
Sales and Market Growth Contribution Met (0) Did Not Meet (-1) Exceeded (+1) 0
Margin Contribution Exceeded (+1) Did Not Meet (-1) Exceeded (+1) +1
Strategic Financial Contribution Met (0) Did Not Meet (-1) Exceeded (+1) 0
  Total +1
Preliminary Adjustment 110%
Impact +
LTI Adjustment 125%

 

LTI ADJUSTMENT LEGEND
PRELIMINARY ADJUSTMENT IMPACT
TOTAL RESULT
IMPACT ON
BUSINESS PRIORITIES
SCORE RESULT
+4 or More 125% High Impact ++ +25% or More
+1 to +3 110% Medium/High Impact + Up to +25%
0 100% Medium Impact = 0%
-1 or -2 90% Medium/Low Impact - Up to -25%
-3 or Less 75% Low Impact -- -25% or More
(1) Stock options realize value only through share price appreciation.
(2) Performance restricted shares vest only if the 14% Adjusted Return on Equity (ROE) performance target is achieved.
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MILES D. WHITE

Former Executive Chairman of the Board

     

Mr. White retired from Abbott on December 31, 2021.

Base Salary

Mr. White had an annual base salary of $1,900,000.

Long-term Incentives

Based on the Committee’s review of Abbott and individual performance through 2020, Mr. White received an LTI award in February 2021 with a value of $11,000,000, which was equal to 110% of his LTI award guideline. Additional calculation details are as follows:

 

LTI AWARD
GUIDELINE
  LTI ADJUSTMENT   AWARD ALLOCATION   AWARD
VALUE
$10,000,000   ×   110%   ×   50% Stock Options(1)   =    $5,500,000
50% Performance Restricted Shares(2) $5,500,000
          Total   $11,000,000
               
INDIVIDUAL LTI PERFORMANCE ASSESSMENT
METRIC 2018 2019 2020 OVERALL
Sales and Market Growth Contribution Exceeded (+1) Exceeded (+1) Exceeded (+1) +3
Margin Contribution Exceeded (+1) Exceeded (+1) Exceeded (+1) +3
Strategic Financial Contribution Exceeded (+1) Met (0) Exceeded (+1) +2
  Total +8
Preliminary Adjustment 125%
Impact(3) -
LTI Adjustment 110%

 

LTI ADJUSTMENT LEGEND
PRELIMINARY ADJUSTMENT IMPACT
TOTAL RESULT IMPACT ON
BUSINESS PRIORITIES
SCORE RESULT
+4 or More 125% High Impact ++ +25% or More
+1 or +3 110% Medium/High Impact + Up to +25%
0 100% Medium Impact = 0%
-1 or -2 90% Medium/Low Impact - Up to -25%
-3 or Less 75% Low Impact -- -25% or More
(1) Stock options realize value only through share price appreciation.
(2) Performance restricted shares vest only if the 14% Adjusted Return on Equity (ROE) performance target is achieved.
(3) Individual LTI performance assessment was based upon Mr. White’s roles as Chairman and Chief Executive Officer through March 31, 2020 and as Executive Chairman thereafter.
   
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BENEFITS AND PERQUISITES

Each of the benefits described below was designed to support the Company’s objective of providing a competitive total pay program. Individual benefits do not directly affect decisions regarding other benefits or pay components, except to the extent that benefits and pay components must, in aggregate, be competitive.

BENEFITS AND PERQUISITES       DESCRIPTION
Retirement Benefits   The named officers participate in Abbott-sponsored defined benefit plans: the Abbott Laboratories Annuity Retirement Plan and the Abbott Laboratories Supplemental Pension Plan. These plans are described in greater detail in the “Pension Benefits” section of the proxy.
    Since officers’ Supplemental Pension Plan benefits cannot be secured in a manner similar to qualified plans, which are held in trust, officers receive an annual cash payment equal to the increase in present value of their Supplemental Pension Plan benefit. Officers have the option of depositing these annual payments to an individually established grantor trust, net of tax withholdings. Deposited amounts may be credited with the difference between the officers’ actual annual trust earnings and the rate used to calculate trust funding (currently 8%) while they are employed. Amounts deposited in the individual trusts are not tax deferred.
    Officers do not receive tax gross-ups on their grantor trusts. The manner in which the grantor trust will be distributed to an officer upon retirement from the Company generally follows the manner elected by the officer under the Annuity Retirement Plan. Should an officer (or the officer’s spouse, depending upon the pension distribution method elected by the officer under the Annuity Retirement Plan) live beyond the actuarial life expectancy age used to determine the Supplemental Pension Plan benefit and, therefore, exhaust the trust balance, the Supplemental Pension Plan benefit will be paid by the Company.
Deferred Compensation   Officers of the Company, like all U.S. employees, are eligible to defer a portion of annual base salary and bonus (in certain cases), on a pre-tax basis, to the Company’s qualified 401(k) plan, up to the IRS contribution limits. Officers are also eligible to defer up to 18% of their base salary, less contributions to the 401(k) plan, to a non-qualified plan. Unlike other U.S. managers, officers are not eligible to elect to defer compensation into the Deferred Compensation Plan. However, up to one hundred percent (100%) of annual incentive awards earned under the Company’s Performance Incentive Plan is eligible for deferral to a non-qualified plan. Officers may defer these amounts to unfunded book accounts or choose to have the amounts paid in cash on a current basis and deposited into individually established grantor trusts, net of tax withholdings. These amounts are credited annually with earnings. Officers do not receive tax gross-ups on their grantor trusts. Officers elect the manner in which the assets held in their grantor trusts will be distributed to them upon retirement or other separation from the Company.
   
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BENEFITS AND PERQUISITES       DESCRIPTION
Change in Control Arrangements   Mr. White did not have an Abbott change in control agreement. The other named officers have Abbott change in control agreements, the purpose of which is to aid in retention and recruitment, encourage continued attention and dedication to assigned duties during periods involving a possible change in control of the Company, and protect the earned benefits of the officer against adverse changes resulting from a change in control. The level of payments provided under the agreements is established to be consistent with market practices as confirmed by data provided to the Committee by its independent compensation consultant. These arrangements are described in greater detail in the “Potential Payments Upon Termination or Change in Control” section of this proxy.
Financial Planning   Named officers are eligible to receive up to $10,000 of fees annually associated with estate planning advice, tax preparation, and general financial planning. If an officer chooses to utilize this benefit, fees for services received up to the annual allocation are paid by the Company and are treated as imputed income to the officer, who then is responsible for payment of all taxes due on the fees paid by the Company.
Company Automobile   Named officers are eligible for use of a Company-leased vehicle, with a lease term of 50 months. Seventy-five percent (75%) of the cost of the vehicle is imputed to the officer as income for federal income tax purposes.
Company Aircraft   Non-business-related flights on corporate aircraft by Messrs. Ford and White are covered by time-sharing lease agreements, pursuant to which incremental costs associated with those flights are reimbursed by the executive to the Company in accordance with Federal Aviation Administration regulations.
Disability Benefit   In addition to Abbott’s standard disability benefits, the U.S. named officers are eligible for a monthly long-term disability benefit, which is described in greater detail in the “Potential Payments Upon Termination or Change in Control” section of this proxy.

SHARE OWNERSHIP AND RETENTION GUIDELINES

To further promote sustained shareholder returns and to ensure the Company’s executives remain focused on both short- and long-term objectives, the Company has established share ownership guidelines. Each officer has five years from the date appointed/elected to his/her position to achieve the ownership level associated with the position.

ROLE       GUIDELINE
Chief Executive Officer   6 times base salary
Executive Vice Presidents   3 times base salary
Senior Vice Presidents   3 times base salary
All other officers   2 times base salary

Any officer who has not achieved at least 50% of the share ownership guideline after three years in their current position will be required to hold 50% of future equity awards until they meet the ownership guideline. All named officers with 5 years tenure in their current position meet or exceed the guidelines.

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HEDGING

Directors and officers are prohibited from entering into or engaging in any financial transaction that is designed to reduce the financial risk associated with owning Abbott shares. These financial transactions include, but are not limited to, engaging in short sales, derivative transactions (such as equity swaps, straddles, puts, or calls), and hedging or monetizing transactions (such as collars, exchange funds, or prepaid forward variable contracts) that are linked directly to Abbott stock.

PLEDGING

Directors and officers are prohibited from holding Abbott stock in a margin account, pledging Abbott stock, or otherwise securing any of their obligations by assigning Abbott stock as collateral. The Compensation Committee, or its delegate, may grant an exception provided that:

  The director or officer meets Abbott’s applicable minimum stock ownership guideline; and
  Only Abbott stock in excess of the applicable minimum stock ownership guideline is held in the margin account, pledged, or assigned as collateral.

RECOUPMENT POLICY

The Compensation Committee has broad discretion to administer and implement the Company’s policy and seek recoupment of equity or cash incentive awards if it determines that a senior executive engaged in misconduct or failed in a supervisory capacity, resulting in a material violation of law or Abbott policy that causes significant financial harm to Abbott. The Compensation Committee may recover incentive compensation awarded to a senior executive in the prior three years or reduce future awards. The policy will not affect awards made prior to its effective date or following a change in control.

COMPLIANCE

The Committee considers the deductibility of executive compensation in making its compensation decisions, but believes that shareholder interests are best served by not restricting the Committee’s discretion and flexibility in crafting compensation programs, even if such programs may result in certain non-deductible compensation expenses. Accordingly, Abbott may provide compensation that is not deductible.

COMPENSATION COMMITTEE REPORT

The Compensation Committee of the Board is primarily responsible for reviewing, approving, and overseeing Abbott’s compensation plans and practices, and works with management and the Committee’s independent consultant to establish Abbott’s executive compensation philosophy and programs. The Committee has reviewed and discussed the Compensation Discussion and Analysis with management and has recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.

Compensation Committee

R. S. Austin, Chair

M. A. Kumbier

N. McKinstry

W. A. Osborn

M. F. Roman

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COMPENSATION RISK ASSESSMENT

During 2021, Abbott conducted its annual risk assessment of its compensation policies and plan design practices for employees and executives. Abbott’s risk assessment is reinforced by Abbott’s adherence to a number of industry leading best practices, including:

  Compensation Committee chaired by independent, non-employee director
  Representation from the Audit Committee on the Compensation Committee
  Review of executive compensation programs by the Compensation Committee’s independent consultant
  Robust review of compensation program design elements and key performance drivers
  Detailed measurement of short- and long-term compensation elements, and related performance metrics and requirements, to ensure balance
  Review of Abbott’s historical performance, peer performance and Board-approved strategic plan and related financial goals to determine appropriate incentive plan goals
  Incorporation of multiple program requirements that mitigate excessive risk taking (e.g., recoupment policy, stock ownership and share retention guidelines, caps on incentive payouts)

Based on this assessment, Abbott determined its compensation and benefit programs appropriately align employees’ compensation and performance without incentivizing risky behaviors. Abbott concluded that risks arising from compensation policies and practices are not reasonably likely to have a material adverse effect on Abbott or its shareholders.

The following factors were among those considered:

  Regular training on code of business conduct and policies and procedures is mandatory for all employees.
  Compensation structure encourages employees to regard Abbott as a career employer, to consider the long-term impact of their decisions, and to align their interests with those of Abbott’s shareholders (e.g., equity awards that vest over multi-year periods, ten-year term on stock options, and retirement plans).
  Annual benchmarking ensures performance achievement and incentive payout opportunities that are aligned with a peer group that reflects the size, investment profile, operating characteristics, and employment and business markets of Abbott. Appropriateness of this group is assessed annually by the Compensation Committee’s independent consultant and reviewed and approved by the Compensation Committee. Our selection criteria and peer companies are reported each year to our shareholders and have received favorable reviews.
  Abbott’s annual incentive plan places an appropriate weighting on earnings achievement by balancing it with other factors, including key operational and strategic measures, disclosed to shareholders. Since earnings are a key component of stock price performance, this aspect of Abbott’s compensation plan promotes alignment with shareholder interests without creating duplication across incentive plans.
  Abbott’s long term incentive plan focuses on longer-term operating performance and shareholder returns and awards 50% stock options and 50% performance based restricted stock. In 2021, roughly three-quarters of named officer total compensation was in the form of long-term equity incentives that can be earned or vest over multiple years.
  Equity awards are made, and grant prices are set at the same time each year, at the Compensation Committee’s regularly scheduled meeting. In addition, Abbott does not reprice or backdate stock options, award discounted stock options, or immediately vest stock options or restricted stock. Equity awards are based on multiple performance factors and are set at competitive market levels, adjusted by Abbott’s long-term performance vs. our Board-approved peer group. Both executive and Director share ownership guidelines and share retention requirements promote alignment with shareholders.
   
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  Abbott’s compensation program does not include features that could encourage excessive risk taking, such as over weighting toward annual incentives, highly leveraged payout curves, uncapped incentive award payments, unreasonable thresholds, or steep payout cliffs at certain levels that may encourage short term business decisions to meet payout criteria.
  Abbott’s recoupment policy allows the Compensation Committee to seek recoupment of incentive compensation, forfeit existing awards or reduce future awards if it determines that a senior executive engaged in misconduct or failed in a supervisory capacity, resulting in a material violation of law or Abbott policy that caused significant financial harm to Abbott.
  Abbott’s hedging policy prohibits directors and officers from entering into financial transactions designed to reduce the financial risk associated with owning Abbott shares.
  Abbott’s pledging policy prohibits directors and officers from holding Abbott shares in a margin account, pledging Abbott shares, or securing obligations by assigning Abbott shares as collateral unless granted an exception by the Compensation Committee.

This assessment was discussed with the Compensation Committee and its independent compensation consultant. The Committee and the consultant both agreed with the assessment.

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SUMMARY COMPENSATION TABLE

The following table summarizes compensation awarded to, earned by, or paid to the named officers. The section of the proxy statement captioned, “Compensation Discussion and Analysis—Basis for Compensation Decisions” describes in greater detail the information reported in this table.

Name and Principal
Position
   Year    Salary    Stock
Awards(2)
   Option
Awards(3)
   Non-Equity
Incentive Plan
Compensation(4)
   Change in
Pension
Value and
Non-qualified
Deferred
Compensation
Earnings(5)
   All Other
Compensation(6)
   SEC Total    Total
Without
Change in
Pension
Value ($)(7)
Robert B. Ford,   2021   $1,482,692   $8,689,294   $ 8,689,978   $3,168,400   $2,755,343   $129,179   $24,914,886   $22,485,091
Chairman of the Board
and Chief Executive
Officer
  2020   1,298,462   5,623,995   5,624,993   3,675,000   4,150,264   77,872   20,450,586   16,549,550
  2019   1,000,000   3,475,992   3,476,054   1,562,500   2,311,499   71,841   11,897,886   9,777,514
Robert E. Funck, Jr.,   2021   825,000   2,999,666   2,999,977   1,048,400   1,507,073   159,193   9,539,309   8,373,417
Executive Vice President,
Finance and Chief
Financial Officer
  2020   813,462   2,215,867   2,216,247   1,280,800   3,100,265   173,568   9,800,209   7,069,425
                                   
                                   
Hubert L. Allen,   2021   760,000   2,115,332   2,115,612   921,700   768,954   172,158   6,853,756   6,395,592
Executive Vice President,
General Counsel and
Secretary
  2020   751,346   1,874,607   1,874,988   917,700   2,904,940   154,596   8,478,177   5,919,894
  2019   710,000   2,199,962   2,199,990   879,700   1,429,523   66,905   7,486,080   6,386,933
Daniel G. Salvadori,   2021   715,539   2,388,446   2,388,734   925,700   251,604   72,276   6,742,299   6,533,923
Executive Vice
President and Group
President, Established
Pharmaceuticals and
Nutritional Products
  2020   710,000   1,901,708   1,902,099   905,500   477,011   79,421   5,975,739   5,518,569
  2019   704,923   2,351,989   2,351,986   903,400   395,710   59,806   6,767,814   6,388,821
                                   
                                   
Andrea F. Wainer,   2021   699,616   2,388,446   2,388,734   931,600   772,906   69,112   7,250,414   6,564,595
Executive Vice President,
Rapid and Molecular
Diagnostics
                                   
                                     
Miles D. White,(1)   2021   1,900,000   5,499,490   5,499,982   0   1,918,135   1,135,477   15,953,084   15,953,084
Former Executive
Chairman of the Board
  2020   1,900,000   5,998,934   5,999,997   1,250,000   3,415,343   1,264,110   19,828,384   18,799,774
  2019   1,900,000   7,562,448   7,562,499   4,405,625   5,707,836   664,409   27,802,817   24,675,423
(1) Mr. White retired from Abbott on December 31, 2021.
(2) In accordance with the Securities and Exchange Commission’s rules, the amounts in this column represent the aggregate grant date fair value of the awards in accordance with Financial Accounting Standards Board ASC Topic 718. Abbott determines grant date fair value by multiplying the number of shares granted by the average of the high and low market prices of an Abbott common share on the award’s date of grant.
(3) In accordance with the Securities and Exchange Commission’s rules, the amounts in this column represent the aggregate grant date fair value of the awards in accordance with Financial Accounting Standards Board ASC Topic 718. These amounts were determined as of the option’s grant date using a Black-Scholes stock option valuation model. These amounts are being reported solely for the purpose of comparative disclosure in accordance with the Securities and Exchange Commission’s rules. There is no certainty that the amount determined using a Black-Scholes stock option valuation model would be the value at which employee stock options would be traded for cash. The assumptions are the same as those described in Note 8, entitled “Incentive Stock Program” of Abbott’s Notes to Consolidated Financial Statements included under Item 8, “Financial Statements and Supplementary Data” in Abbott’s 2021 Annual Report on Securities and Exchange Commission Form 10-K.
(4) This compensation is earned as a performance-based incentive bonus, pursuant to the 1998 Abbott Laboratories Performance Incentive Plan. Additional information regarding the Performance Incentive Plan can be found in the section of this proxy statement captioned, “Compensation Discussion and Analysis—Basis for Compensation Decisions.”
   
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(5) The plan amounts shown below are reported in this column.
  For Messrs. Ford, Allen, Salvadori, and White, the amounts shown alongside the officer’s name are for 2021, 2020, and 2019, respectively. For Mr. Funck, Jr., the amounts shown are for 2021 and 2020, respectively. For Ms. Wainer, the amounts shown are for 2021.
  Abbott Laboratories Annuity Retirement Plan
  R. B. Ford: $22,149 / $142,819 / $176,268; R. E. Funck, Jr.: $89,455 / $256,555; H. L. Allen: $47,024 / $184,384 / $117,142; D. G. Salvadori: $19,272 / $45,483 / $41,282; A. F. Wainer: $34,273; and M. D. White: ($56,525) / $34,629 / $180,690.
  Abbott Laboratories Supplemental Pension Plan
  R. B. Ford: $2,407,646 / $3,758,217 / $1,944,104; R. E. Funck, Jr.: $1,076,437 / $2,474,229; H. L. Allen: $411,140 / $2,373,899 / $982,005; D. G. Salvadori: $189,104 / $411,687 / $337,711; A. F. Wainer: $651,546; and M. D. White: ($2,126,024) / $993,981 / $2,946,704.
  Non-Qualified Defined Contribution Plan Earnings
  The totals in this column include reportable interest credited under the 1998 Abbott Laboratories Performance Incentive Plan, the Abbott Laboratories 401(k) Supplemental Plan, and the 1986 Abbott Laboratories Management Incentive Plan (although none of the named officers currently receives awards under this plan).
  R. B. Ford: $325,548 / $249,228 / $191,127; R. E. Funck, Jr.: $341,181 / $369,481; H. L. Allen: $310,790 / $346,657 / $330,376; D. G. Salvadori: $43,228 / $19,841 / $16,717; A. F. Wainer: $87,087; and M. D. White: $1,918,135 / $2,386,733 / $2,580,442.
(6) The amounts shown below are reported in this column.
  For Messrs. Ford, Allen, Salvadori, and White, the amounts shown alongside the officer’s name are for 2021, 2020, and 2019, respectively. For Mr. Funck, Jr., the amounts shown are for 2021 and 2020, respectively. For Ms. Wainer, the amounts shown are for 2021.
  Earnings on Non-Qualified Defined Contribution Plans (net of the reportable interest included in footnote 5).
  R. B. Ford: $8,148 / $8,116 / $0 ; R. E. Funck, Jr.: $86,107 / $106,106; H. L. Allen: $95,227 / $81,695 / $896; D. G. Salvadori: $3,566 / $1,701 / $0; A. F. Wainer: $2,162; and M. D. White: $799,031 / $926,052 / $105,715.
  Each of the named officers’ awards under the 1998 Abbott Laboratories Performance Incentive Plan is paid in cash to the officer on a current basis. Each of the named officers has a grantor trust into which the awards may be deposited, net of maximum tax withholdings. The named officers also have grantor trusts in connection with the Abbott Laboratories 401(k) Supplemental Plan and the 1986 Abbott Laboratories Management Incentive Plan (although none of the named officers currently receives awards under the Management Incentive Plan). These amounts include the trusts’ earnings (net of the reportable interest included in footnote 5).
  Employer Contributions to Defined Contribution Plans
  R. B. Ford: $74,135 / $64,924 / $50,000; R. E. Funck, Jr.: $41,250 / $40,673; H. L. Allen: $38,000 / $37,568 / $35,500; D. G. Salvadori: $35,777 / $35,500 / $35,247; A. F. Wainer: $34,981; and M. D. White: $95,000 / $95,000 / $95,000.
  These amounts include employer contributions to both Abbott’s tax-qualified defined contribution plan and the Abbott Laboratories 401(k) Supplemental Plan. The Abbott Laboratories 401(k) Supplemental Plan permits eligible Abbott officers to contribute amounts in excess of the limit set by the Internal Revenue Code for employee contributions to 401(k) plans up to the excess of (i) 18% of their base salary over (ii) the amount contributed to Abbott’s tax-qualified 401(k) plan. Abbott matches participant contributions at the rate of 250% of the first 2% of compensation contributed to the plan. The named officers have these amounts paid to them in cash on a current basis and deposited into a grantor trust established by the officer, net of maximum tax withholdings.
   
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  Other Compensation
  Messrs. Ford’s and White’s non-business-related flights on corporate aircraft are covered by time-sharing lease agreements, pursuant to which they reimburse Abbott for certain costs associated with those flights in accordance with Federal Aviation Administration regulations. The following amounts are included in the totals in this column, which reflect Abbott’s incremental cost less reimbursements for non-business-related flights: R. B. Ford: $46,419 / $4,832 / $0; M. D. White: $0 / $10,792 / $226,633.
  Abbott determines the incremental cost for flights based on the direct cost to Abbott, including fuel costs, parking, handling and landing fees, catering, travel fees, and other miscellaneous direct costs.
  For Mr. White, the following costs associated with security less the amount reimbursed are included: $240,446 / $232,266 / $237,061. Abbott determines the cost for these expenses based on its actual costs. The security is provided on the recommendation of an independent security study.
  Also included in the totals shown in the table is the cost of providing a corporate automobile less the amount reimbursed by the officer: R. B. Ford: $0 / $0 / $21,841; R. E. Funck, Jr.: $22,661 / $20,319; H. L. Allen: $27,613 / $28,666 / $25,509; D. G. Salvadori: $21,933 / $26,773 / $24,559; and A. F. Wainer: $20,969.
  For Messrs. Funck, Jr., Allen, and Salvadori and Ms. Wainer, the following costs associated with financial planning are included: R. E. Funck, Jr.: $8,175 / $6,470; H. L. Allen: $10,000 / $6,667 / $5,000; D. G. Salvadori: $10,000 / $15,447 / $0; and A. F. Wainer: $10,000. For Mr. Salvadori, the 2020 amount includes payments for services incurred in 2020 and 2019.
  The totals shown in the table include other miscellaneous benefits in 2021: R. B. Ford: $477; R. E. Funck, Jr.: $1,000; H. L. Allen: $1,318; D. G. Salvadori: $1,000; A. F. Wainer: $1,000; and M. D. White: $1,000.
  The named officers are also eligible to participate in an executive disability benefit described on page 65.
(7) To demonstrate how year over year changes in pension value impact total compensation, as determined under SEC rules, we have included this column to show total compensation without pension value changes. The amounts reported in this column are calculated by subtracting the change in pension value reported in the Change in Pension Value and Non-qualified Deferred Compensation Earnings column, as described in footnote 5 to this table, from the amounts reported in the SEC Total column. The amounts reported in this column differ from, and are not a substitute for, the amounts reported in the SEC Total column.
   
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2021 GRANTS OF PLAN BASED AWARDS

 

         Estimated Future
Payouts
Under Non-Equity
Incentive Plan
Awards(1)
  Estimated
Future Payouts
Under Equity
Incentive
Plan Awards
  All Other
Option Awards:
Numbers of
Securities
Underlying
  Exercise or
Base Price
of Options
  Closing
Market
  Grant Date Fair
Value of Stock
Name   Grant
Date
   Target
($)
   Maximum
($)
   Target
(#)(2)(3)
   Options
(#)(4)
   Awards
($/Sh.)
   Price on
Grant Date
   and Option
Awards
R. B. Ford   2/19/2021           70,058               $8,689,294(5) 
    2/19/2021               359,090   $124.04   $123.04   8,689,978(6) 
R. E. Funck, Jr.   2/19/2021           24,185               2,999,666(5) 
    2/19/2021               123,966   124.04   123.04   2,999,977(6) 
H. L. Allen   2/19/2021           17,055               2,115,332(5) 
    2/19/2021               87,422   124.04   123.04   2,115,612(6) 
D. G. Salvadori   2/19/2021           19,257               2,388,446(5) 
    2/19/2021               98,708   124.04   123.04   2,388,734(6) 
A. F. Wainer   2/19/2021           19,257               2,388,446(5) 
    2/19/2021               98,708   124.04   123.04   2,388,734(6) 
M. D. White   2/19/2021           44,340               5,499,490(5) 
    2/19/2021               227,272   124.04   123.04   5,499,982(6) 

 

(1) During 2021, each of the named officers participated in the 1998 Abbott Laboratories Performance Incentive Plan, an annual, non-equity incentive plan. The annual cash incentive award earned by the named officer in 2021 under the plan is shown in the Summary Compensation Table under the column captioned, “Non-Equity Incentive Plan Compensation.” No future payouts will be made under the plan’s 2021 annual cash incentive award. The Performance Incentive Plan is described in greater detail in the section of the proxy statement captioned, “Compensation Discussion and Analysis—Basis for Compensation Decisions.”
(2) These are performance-based restricted stock awards that have a 3-year term and vest upon Abbott reaching a minimum return on equity target, with no more than one-third of the award vesting in any one year. In 2021, Abbott reached its minimum return on equity target and one-third of each of the awards made on February 19, 2021 vested on February 28, 2022. The equity targets are described in the section of the proxy statement captioned, “Compensation Discussion and Analysis—Basis for Compensation Decisions.”
(3) In the event of a grantee’s death or disability, these awards are deemed fully earned. The treatment of these awards upon a change in control is described in the section of the proxy statement captioned, “Potential Payments Upon Termination or Change in Control—Equity Awards.” Outstanding restricted shares and restricted stock units receive dividend payments at the same rate as all other shareholders.
(4) Options with respect to one-third of the shares covered by these awards 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. The treatment of these awards upon a change in control is described in the section of the proxy statement captioned, “Potential Payments Upon Termination or Change in Control—Equity Awards.” Under the Abbott Laboratories 2017 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 an Abbott common share on the date of grant.
(5) Abbott determines the grant date fair value of stock and stock unit awards by multiplying the number of restricted shares or restricted stock units granted by the average of the high and low market prices of a common share on the grant date.
(6) These values were determined as of the option’s grant date using a Black-Scholes stock option valuation model. The model uses the assumptions described in Note 8, entitled “Incentive Stock Program” of Abbott’s Notes to Consolidated Financial Statements included under Item 8, “Financial Statements and Supplemental Data” in Abbott’s 2021 Annual Report on Securities and Exchange Commission Form 10-K.
   
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2021 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

The following table summarizes the outstanding equity awards held by the named officers at year end.

    Option Awards(1)(2)   Stock Awards(2)
Name    Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
   Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
   Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
   Option
Exercise
Price
($)
   Option
Expiration
Date
   Number
of Shares
or Units of
Stock That
Have Not
Vested
(#)
   Market
Value
of Shares
or Units of
Stock That
Have Not
Vested
($)
   Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(#)
   Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($)
R. B. Ford                               15,265   $2,148,396
                                42,749   6,016,494
                                70,058   9,859,963
    45,492           $ 39.12   02/20/24                
    56,933           41.14   06/30/24                
    127,436           47.00   02/19/25                
    14,243           48.90   05/31/25                
    285,388           38.40   02/18/26                
    151,869           44.40   02/16/27                
    246,963           59.94   02/15/28                
    160,039   80,020       75.90   02/21/29                
    130,298   260,598       87.72   02/20/30                
        359,090       124.04   02/18/31                
R. E. Funck, Jr.                               7,781   $1,095,098
                                16,843   2,370,484
                                24,185   3,403,797
    55,097           $ 47.00   02/19/25                
    48,831           44.40   02/16/27                
    110,146           59.94   02/15/28                
    81,578   40,789       75.90   02/21/29                
    51,337   102,676       87.72   02/20/30                
        123,966       124.04   02/18/31                
H. L. Allen                               9,661   $1,359,689
                                14,249   2,005,404
                                17,055   2,400,321
    157,421           $ 47.00   02/19/25                
    189,788           38.40   02/18/26                
    167,056           44.40   02/16/27                
    246,963           59.94   02/15/28                
    101,288   50,645       75.90   02/21/29                
    43,432   86,866       87.72   02/20/30                
        87,422       124.04   02/18/31                
   
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    Option Awards(1)(2)   Stock Awards(2)
Name    Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
   Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
   Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
   Option
Exercise
Price
($)
   Option
Expiration
Date
   Number
of Shares
or Units of
Stock That
Have Not
Vested
(#)
   Market
Value
of Shares
or Units of
Stock That
Have Not
Vested
($)
   Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(#)
   Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($)
D. G. Salvadori                               10,329   $1,453,703
                                14,455   2,034,397
                                19,257   2,710,230
    23,771           $ 38.40   02/18/26                
    75,591           44.40   02/16/27                
    49,611           50.72   07/20/27                
    182,935           59.94   02/15/28                
    108,286   54,144       75.90   02/21/29                
    44,060   88,122       87.72   02/20/30                
        98,708       124.04   02/18/31                
A. F. Wainer                               3,035   $ 427,146
                                3,989   561,412
                                9,050   1,273,697
                                19,257   2,710,230
    8,226           $ 47.00   02/19/25                
    5,000           38.40   02/18/26                
    53,271           44.40   02/16/27                
    64,449           59.94   02/15/28                
    31,825   15,913       75.90   02/21/29                
    41,816   20,909       76.12   06/02/29                
    27,585   55,172       87.72   02/20/30                
        98,708       124.04   02/18/31                
M. D. White                               33,212   $4,674,257
                                45,599   6,417,603
                                44,340   6,240,412
    727,699           $ 39.12   02/20/24                
    937,031           47.00   02/19/25                
    1,198,630           38.40   02/18/26                
    638,629           44.40   02/16/27                
    688,073           59.94   02/15/28                
    348,181   174,091       75.90   02/21/29                
    138,985   277,971       87.72   02/20/30                
        227,272       124.04   02/18/31                
(1) Except as noted, these options are fully vested.
   
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 (2) The vesting dates of outstanding unexercisable stock options and unvested restricted stock awards at December 31, 2021 are as follows.
            Option Awards      Stock Awards(a)
Name   Number of
Unexercised Shares
Remaining from
Original Grant
     Number of
Option Shares
Vesting—Date
Vested 2022
     Number of
Option Shares
Vesting—Date
Vesting 2023
     Number of
Option Shares
Vesting—Date
Vesting 2024
  Number of
Restricted
Shares or
Units
     Number of
Restricted
Shares or Units
Vesting—Date
Vested 2022
R. B. Ford   80,020   80,020 - 2/22           15,265   (b)
    260,598   130,299 - 2/21   130,299 - 2/21       42,749   (c)
    359,090   119,696 - 2/19   119,697 - 2/19   119,697 - 2/19   70,058   (d)
R. E. Funck, Jr.   40,789   40,789 - 2/22           7,781   (b)
    102,676   51,338 - 2/21   51,338 - 2/21       16,843   (c)
    123,966   41,322 - 2/19   41,322 - 2/19   41,322 - 2/19   24,185   (d)
H. L. Allen   50,645   50,645 - 2/22           9,661   (b)
    86,866   43,433 - 2/21   43,433 - 2/21       14,249   (c)
    87,422   29,140 - 2/19   29,141 - 2/19   29,141 - 2/19   17,055   (d)
D. G. Salvadori   54,144   54,144 - 2/22           10,329   (b)
    88,122   44,061 - 2/21   44,061 - 2/21       14,455   (c)
    98,708   32,902 - 2/19   32,903 - 2/19   32,903 - 2/19   19,257   (d)
A. F. Wainer   15,913   15,913 - 2/22           3,035   (b)
    20,909   20,909 - 6/3           3,989   (e)
    55,172   27,586 - 2/21   27,586 - 2/21       9,050   (c)
    98,708   32,902 - 2/19   32,903 - 2/19   32,903 - 2/19   19,257   (d)
M. D. White   174,091   174,091 - 2/22           33,212   (b)
    277,971   138,985 - 2/21   138,986 - 2/21       45,599   (c)
    227,272   75,757 - 2/19   75,757 - 2/19   75,758 - 2/19   44,340   (d)
(a) The equity targets are described in the section of the proxy statement captioned, “Compensation Discussion and Analysis—Basis for Compensation Decisions.”
(b) These are the restricted shares that remained outstanding and unvested on December 31, 2021, from an award made on February 22, 2019. The award has a 3-year term with no more than one-third of the original award vesting in any one year upon Abbott reaching a minimum return on equity target, measured at the end of the relevant year. In 2021, Abbott reached its minimum return on equity target and these shares vested on February 28, 2022.
(c) These are the restricted shares that remained outstanding and unvested on December 31, 2021, from an award made on February 21, 2020. The award has a 3-year term with no more than one-third of the original award vesting in any one year upon Abbott reaching a minimum return on equity target, measured at the end of the relevant year. In 2021, Abbott reached its minimum return on equity target and half of these shares vested on February 28, 2022.
(d) These are the restricted shares that remained outstanding and unvested on December 31, 2021, from an award made on February 19, 2021. The award has a 3-year term with no more than one-third of the original award vesting in any one year upon Abbott reaching a minimum return on equity target, measured at the end of the relevant year. In 2021, Abbott reached its minimum return on equity target and one-third of these shares vested on February 28, 2022.
(e) These are the restricted shares that remained outstanding and unvested on December 31, 2021, from an award made on June 3, 2019. The award has a 3-year term, with no more than one-third of the original award vesting in any one year upon Abbott reaching a minimum return on equity target, measured at the end of the relevant year. In 2021, Abbott reached its minimum return on equity target and these shares will vest on June 3, 2022.
   
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2021 OPTION EXERCISES AND STOCK VESTED

The following table summarizes for each named officer the number of shares the officer acquired on the exercise of stock options and the number of shares the officer acquired on the vesting of stock awards in 2021:

    Option Awards   Stock Awards
Name      Number of Shares
Acquired on Exercise
(#)
       Value Realized
on Exercise
($)
     Number of Shares
Acquired on Vesting
(#)
       Value
Realized on
Vesting
($)
R. B. Ford     0     $ 0     51,611     $ 6,274,865
R. E. Funck, Jr.     31,325       2,613,132     22,880       2,781,750
H. L. Allen     203,393       17,225,354     31,757       3,861,016
D. G. Salvadori     110,000       10,526,252     28,646       3,482,781
A. F. Wainer     79,000       7,112,661     15,457       1,820,704
M. D. White     1,282,500       130,073,916     97,721       11,880,919

 

PENSION BENEFITS

During 2021, the named officers participated in two Abbott sponsored defined benefit pension plans: the Abbott Laboratories Annuity Retirement Plan, a tax qualified pension plan; and the Abbott Laboratories Supplemental Pension Plan, a non-qualified supplemental pension plan. The Supplemental Pension Plan also includes a benefit feature Abbott uses to attract officers who are at the mid-point of their careers. This feature provides an additional benefit to officers who are mid-career hires that is less valuable to officers who have spent most of their careers at Abbott. Except as provided in Abbott’s change in control agreements, Abbott does not have a policy granting extra years of credited service under the plans. These change in control agreements are described on pages 66 and 67.

The compensation considered in determining the pension payable to the named officers is the compensation shown in the “Salary” and “Non-Equity Incentive Plan Compensation” columns of the Summary Compensation Table on page 54.