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TABLE OF CONTENTS

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.          )

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Preliminary Proxy Statement

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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

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Definitive Proxy Statement

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Definitive Additional Materials

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Soliciting Material under §240.14a-12

 

Abbott Laboratories

(Name of Registrant as Specified In Its Charter)

 

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LOGO


Table of Contents

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

On the Cover: Glucerna

Juliana Auler, São Paulo, Brazil

    Juliana Auler is an English teacher, translator and dedicated mom to a highly active toddler. As a person with diabetes, Juliana understands better than most the importance of proper nutrition. She relies on
Glucerna to help fill in the gaps in her diet, while keeping her blood sugar at optimal levels.


TABLE OF CONTENTS

 
  PAGE
Notice of Annual Meeting of Shareholders   2

Proxy Summary

 

3

Information About the Annual Meeting

 

14
Who Can Vote   14
Notice and Access   14
Cumulative Voting   14
Voting by Proxy   14
Revoking a Proxy   14
Discretionary Voting Authority   14
Quorum and Vote Required to Approve Each Item on the Proxy   15
Effect of Broker Non-Votes and Abstentions   15
Inspectors of Election   15
Cost of Soliciting Proxies   15
Abbott Laboratories Stock Retirement Plan   15
Confidential Voting   16
Householding of Proxy Materials   16

Nominees for Election as Directors (Item 1 on Proxy Card)

 

17

The Board of Directors and its Committees

 

23
The Board of Directors   23
Leadership Structure   23
Director Selection   24
Board Diversity   24
Committees of the Board of Directors   24
Communicating with the Board of Directors   26
Corporate Governance Materials   26
2014 Director Compensation   26

Security Ownership of Executive Officers and Directors

 

28

Executive Compensation

 

29
Compensation Discussion and Analysis   29
Compensation Committee Report   41
Compensation Risk Assessment   42
Summary Compensation Table   43
2014 Grants of Plan-Based Awards   46
2014 Outstanding Equity Awards at Fiscal Year-End   47
2014 Option Exercises and Stock Vested   53
Pension Benefits   53

 
  PAGE
2014 Nonqualified Deferred Compensation   56
Potential Payments Upon Termination or Change in Control   57

Ratification of Ernst & Young LLP as Auditors (Item 2 on Proxy Card)

 

60
Report of the Audit Committee   61

Say on Pay—An Advisory Vote on the Approval of Executive Compensation (Item 3 on Proxy Card)

 

62

Shareholder Proposals

 

64
Shareholder Proposal on Genetically Modified Ingredients (Item 4 on Proxy Card)   65

Proponent's Statement in Support of the Shareholder Proposal

  65

Board of Directors' Statement in Opposition to the Shareholder Proposal

  66
Shareholder Proposal on Independent Board Chairman (Item 5 on Proxy Card)   67

Proponent's Statement in Support of the Shareholder Proposal

  67

Board of Directors' Statement in Opposition to the Shareholder Proposal

  68

Approval Process for Related Person Transactions

 

70

Additional Information

 

71
Information Concerning Security Ownership   71
Section 16(a) Beneficial Ownership Reporting Compliance   71
Other Matters   71
Date for Receipt of Shareholder Proposals for the 2016 Annual Meeting Proxy Statement   72
Procedure for Recommendation and Nomination of Directors and Transaction of Business at Annual Meeting   72
General   73

Exhibit A—Director Independence Standard

 

A-1
Annex I—Non-GAAP Reconciliation of Financial Information   I-1
Reservation Form for Annual Meeting   Back Cover
Abbott Laboratories      1

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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

YOUR VOTE IS IMPORTANT

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


Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to Be Held on April 24, 2015

The Annual Meeting of the Shareholders of Abbott Laboratories will be held at Abbott's headquarters, 100 Abbott Park Road, at the intersection of Route 137 and Waukegan Road, Lake County, Illinois, on Friday, April 24, 2015, at 9:00 a.m. for the following purposes:

The Board of Directors recommends that you vote FOR Items 1, 2, and 3 on the proxy card.

The Board of Directors recommends that you vote AGAINST Items 4 and 5 on the proxy card.

The close of business on February 25, 2015, has been fixed as the record date for determining the shareholders entitled to receive notice of and to vote at the Annual Meeting.

Abbott's 2015 Proxy Statement and 2014 Annual Report to Shareholders are available at www.abbott.com/proxy.

If you are a registered shareholder, you may access your proxy card by either:

    Admission to the meeting will be by admission card only. If you plan to attend, please complete and return the reservation form on the back cover, and an admission card will be sent to you. Due to space limitations, reservation forms must be received before April 17, 2015. Each admission card, along with photo identification, admits one person. A shareholder may request two admission cards, but a guest must be accompanied by a shareholder.

By order of the Board of Directors.

Hubert L. Allen

Secretary

March 13, 2015

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PROXY SUMMARY

This summary contains highlights about our Company and the upcoming 2015 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.

The accompanying proxy is solicited on behalf of the Board of Directors for use at the Annual Meeting of Shareholders. The meeting will be held on April 24, 2015, at Abbott's headquarters, 100 Abbott Park Road, at the intersection of Route 137 and Waukegan Road, Lake County, Illinois. This proxy statement and the accompanying proxy card are being mailed to shareholders on or about March 13, 2015.

ABBOTT—DURABLE GROWTH AND INCOME

Abbott's investment identity is one of long-term durable growth and increasing returns to shareholders. In 2014, Abbott achieved another strong year of financial results and returns. Abbott's 1-year total shareholder return (TSR) of 20.1% significantly outperformed both the Standard & Poor's 500 Index (S&P 500) and the Dow Jones Industrial Average (DJIA)*. Our 1-year TSR performance ranked in the 89th percentile versus Abbott's peer group. Abbott also returned $3.5 billion to shareholders in the form of dividends and share repurchases in 2014, an increase of 40% versus the prior year. Over the last 10 years, Abbott has delivered a cumulative TSR of 165%, significantly outperforming both the S&P 500 and DJIA over that same time horizon. In addition to sustained TSR over-performance during this period, Abbott's diversified model delivered more durable performance during market correction periods over this cycle, including the global financial crisis in 2008.

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ABBOTT OVERVIEW—UNIQUELY DIVERSE AND BALANCED

Abbott is one of the most globalized healthcare companies, with approximately 70% of our revenue coming from international markets, including nearly 50% of revenue coming from faster-growing emerging geographies. And approximately 50% of our sales are direct to consumers and patients, rather than third-party payers, making Abbott one of the most consumer-facing healthcare companies in the world.

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The four businesses that compose Abbott are leaders in large, attractive markets and aligned with favorable, long-term healthcare trends. These businesses operate in different sectors of the overall healthcare market: nutritionals, pharmaceuticals, diagnostics, and innovation-driven medical devices. Our broad presence and expertise allow us to create new solutions-across the spectrum of health, around the world, for all stages of life-that help people maximize their potential through better health. We leverage our diverse business model and broad exposure across many geographies to deliver durable and reliable long-term growth while minimizing volatility that may present itself from time to time in any one business or market.

 
NUTRITION

34% of Abbott revenue

Leadership in pediatric and adult nutrition

Science-based new product pipeline

Competes in medical and consumer markets
    



 
       
ESTABLISHED PHARMACEUTICALS

16% of Abbott revenue

100% of sales in emerging geographies following the sale of the developed markets business

Competes in branded generic pharmaceutical markets; high patient/consumer interactions
    



 
 

 

 

 

 

 

 

 

 

 

 

 


 

DIAGNOSTICS

23% of Abbott revenue

Leadership in immunoassay diagnostics and blood screening

Capital-intensive business

Competes in core laboratory diagnostics, molecular diagnostics, and point-of-care diagnostics markets
    



 

 

 

 

 

MEDICAL DEVICES

27% of Abbott revenue

Leadership in coronary devices, mitral valve repair, and LASIK

Entered electrophysiology market in 2014

Competes in innovation-driven medical devices in vascular, diabetes, and vision care markets
    



 

 
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SELECT STRATEGIC GROWTH INITIATIVES EXECUTED IN 2014

2014 was another year of major strategic progress and accomplishment for each of our businesses. During the year, Abbott executed a number of initiatives that are reflected in the long-term goals of our officers as we continue to build and shape our company. Decisions and actions taken in 2014 provide the basis for sustainable success over the long term.

 
  Established Pharmaceuticals-Reshaped for accelerated growth   Repositioned our Established Pharmaceuticals business for rapid and sustainable growth, including:

Acquired CFR Pharmaceuticals, establishing Abbott among the top 10 pharmaceuticals companies in Latin America.

Acquired Veropharm, establishing Abbott as a top 5 branded generic pharmaceuticals company in Russia.

In February 2015, completed the sale of the developed markets business of our Established Pharmaceuticals segment. Abbott's Established Pharmaceuticals business now operates entirely in emerging geographies.


  

 


 

 
 
  Nutrition-Strengthened and expanded in key geographies   Continued to build our local R&D presence and capabilities in key emerging geographies, including opening state-of-the-art manufacturing plants in China and India.

Invested in our local supply chain in China by partnering with the world's largest dairy cooperative to support long-term demand.


  

 


 

 
 
  Medical Devices-Launched several new products and advanced key clinical programs   Launched several new cataract lens products, which replace the natural lens to improve vision for patients with cataracts.

Launched the FreeStyle® Libre flash glucose monitor in Europe. This unique device reads glucose levels through a small sensor that can be worn discreetly and eliminates finger sticks.

Entered the $3 billion, fast growing, electrophysiology market with a technology that can improve the treatment of atrial fibrillation, one of the most common heart rhythm disorders in the world.


  

 


 

 
 
  Diagnostics-Advanced several next-generation systems in R&D   Continued to advance several next-generation R&D platforms for the core laboratory, molecular, and point-of-care diagnostics markets that will positively impact patient care, improve service to customers, enhance laboratory productivity, and reduce costs. The first of those platforms launched at the end of 2014.

  

 


 

 
 
  Continued to make significant progress in expanding our operating margins   Expanded our adjusted operating margin ratio from continuing operations by nearly 200 basis points over 2013, primarily by improvements in the Diagnostics, Nutritionals, and Vascular businesses.

  

 


 

 
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2014 RESULTS

In 2014, Abbott generated revenue of $22.3 billion, including revenue from discontinued operations associated with the divestitures of certain businesses that were initiated during 2014.* Operational sales from continuing operations, which excludes the impact of foreign exchange and the divested businesses, increased 5.5% versus 2013. The operational sales growth rate from continuing operations increased sequentially for each quarter of 2014. Adjusted diluted earnings-per-share (EPS), excluding specified items, was $2.28 in 2014, reflecting growth of 13.4% versus the prior year and exceeding the mid-point of our original 2014 guidance range by $0.07 or 3.2%*. Abbott's adjusted diluted EPS growth ranked in the top 3 out of 19 peers over each of the past two years since the separation with AbbVie. (See Annex I for a reconciliation of GAAP and non-GAAP financial measures).

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GOVERNANCE HIGHLIGHTS

The Board of Directors continuously monitors best practices in governance and adopts measures that it determines are in the best interest of Abbott's shareholders. Highlights of our governance practices include:

BOARD OF DIRECTORS

SHAREHOLDER INTERESTS

   

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EXECUTIVE COMPENSATION PROGRAM

Last year 96% of our shareholders approved the compensation of our named executive officers. Those compensation decisions were made by the Compensation Committee and our Board of Directors based upon financial metrics, including total shareholder return.

Abbott's 3-year total shareholder return was 80% from 2012-2014. During that same period, our CEO's compensation declined by 29% as a result of aligning our pay practices to the new peer group which was selected following the separation with AbbVie on January 1, 2013.


CUMULATIVE TSR* AND ANNUAL ABBOTT CEO PAY

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ABBOTT 3-YEAR TSR* VS CHANGE IN CEO PAY
(2012-2014)

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During 2014, we reached out to more than 200 investors and conducted meetings with investors representing more than 35% of our outstanding shares. We continue to evolve our compensation program based upon feedback we receive during those discussions with investors, as well as continual review of market practices.


EXECUTIVE COMPENSATION CHANGES FOR 2014
    

 

Increased ROE target for vesting of performance shares granted in 2015

Added a policy prohibiting hedging

 

Added an anti-pledging policy

Added a shareholding retention requirement

Strengthened our recoupment policy
    

Over the past several years, we have made numerous other changes to our program, including:

For additional details on our compensation program, see the Compensation Discussion and Analysis section of this proxy statement, which starts on page 29.

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KEY FEATURES OF OUR EXECUTIVE COMPENSATION PROGRAM

The compensation program for our executive officers includes key features that align the interests of our executives with Abbott's business strategies and goals, as well as the interests of our shareholders. The program does not include features that could misalign these interests.

  What We Do   What We Don't Do

 

 

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Use equity for long-term incentive awards

 

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No tax gross-ups under our executive officer pay program

 

 

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Determine long-term incentive award guidelines based on relative TSR

 

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No change in control agreement for the CEO

 

 

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Vest long-term incentive awards only upon achievement of ROE target

 

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No employment contracts


 

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Benchmark against peers whose investment profile, operating characteristics, and employment and business markets share similarities with Abbott

 

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No repricing of stock options

 

 

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Align payout of annual incentive awards to drivers of shareholder value, such as adjusted EPS

 

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No guaranteed bonuses


 

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Provide change in control benefits under double-trigger circumstances only

 

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No discounted stock options

 

 

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Include forfeiture for misconduct provision in equity grants and recoup compensation when warranted

 

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No hedging of Company shares


 

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Require significant share ownership

 

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No highly leveraged incentive plans that encourage excessive risk taking

 

 

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Require retention of vested long-term incentive awards

 

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No immediate vesting of stock options or restricted stock


 

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Apply anti-pledging policy for Company shares

 

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No uncapped incentive award payments
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PEER GROUP

Our investors compare us to other global multinational companies, not necessarily in healthcare, that share similar characteristics aligned with our investment identity of durable growth and returns to shareholders. Therefore, our peer group was selected to strike the right balance between size, similar return profiles, geographic breadth, and management and operating structure. The peer group includes companies that are outside the healthcare space and, after the separation with AbbVie, excludes companies that focus primarily on proprietary pharmaceuticals. It also purposely excludes companies whose revenues are predominately derived from the U.S. and small non-diverse healthcare companies, since our investors tell us that these companies are not viable peers. In selecting our peer group for performance and compensation benchmarking, we considered:

 

3M Company

Baxter International

Caterpillar, Inc.

The Coca-Cola Company

Covidien PLC

 

Danaher Corporation

E. I. du Pont

Eaton Corporation

Emerson Electric Co.

Honeywell International

 

Illinois Tool Works

Johnson & Johnson

Kimberly-Clark Corp.

McDonald's Corp.

Medtronic

 

Novartis AG

Procter & Gamble Co.

Thermo Fisher Scientific

United Technologies Corp.

As it pertains to healthcare peers, Johnson & Johnson most closely reflects our durable growth and income identity, as well as the lines of business in which we operate. Other healthcare companies in our peer group reflect specific aspects of our business and/or compete directly with Abbott in specific businesses or product areas while also reflecting our financial and operating scale.

Although Abbott has been assigned to the GICS of "Health Care Equipment," this code does not describe Abbott:

Our peer group also includes companies that reflect the breadth of our international operations. We currently generate approximately 70% of our revenues internationally and continue to expand our international presence and operations in order to move closer to the markets we serve.

This particular set of companies was determined shortly after the separation with AbbVie to reflect the nature of our business going forward. The Compensation Committee, working with its outside consultant, determined the selection criteria and then chose the companies listed above. In 2014, the Committee reviewed with its consultant and reaffirmed this group of companies.

Given that there had been no significant change in Abbott's revenue size or market capitalization, the positive feedback we had received from investors, and the Committee's strong opinion that stability in a peer group is important, the Committee and its consultant determined that there is no reason to change this peer group.

See pages 33 and 34 for additional details on our peer group.

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OVERVIEW OF TOTAL COMPENSATION MIX

Our compensation program provides an appropriate and competitive mix of elements to incentivize our executives to achieve the Company's business strategies and goals, while also aligning executive performance and rewards with shareholder interests. Our compensation structure has contributed to a corporate culture that encourages employees to regard Abbott as a career employer while rewarding employees for both short-and long-term contributions.

The vast majority of compensation for our officers is performance-based and objectively determined. The remainder of this section provides additional information regarding our compensation programs, including the mix of total compensation and how incentive awards are determined.


TOTAL COMPENSATION MIX

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Compensation Element

  Abbott CEO   Other Abbott NEOs    

 

Base Salary

  $ 1,973,077   $ 3,142,680    

 

Annual Cash Incentive Plan

  $ 3,800,000   $ 2,923,400    

 

Long-Term Incentive Awards

               

 

    Grant made in 2014 based on 2013 results

  $ 9,299,996   $ 8,588,977    

 

 

 

               
       

 

Total Compensation (See page 43)

  $ 17,732,241   $ 20,013,822    
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ANNUAL CASH INCENTIVE PAYOUT CALCULATION FOR EXECUTIVES

Under the annual cash incentive plan, the Compensation Committee sets a target payout (expressed as a percentage of base salary) for each officer based upon market benchmarks and internal calibration. The final payout is determined based upon achievement of certain annual goals.

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The Compensation Committee may adjust the calculated annual cash incentive plan award amount up or down based on additional factors. Note that the quantitative assessment on its own does not produce above-target payouts. An above-target payout can only be produced when the Compensation Committee believes performance merits an above-target payout.

Examples of Factors That Could Create Upward Adjustment

Examples of Factors That Could Create Downward Adjustment

For 2014, individual payouts for Abbott's 19 executive officers ranged from 53% to 125% of target. Seven officers received payouts above their target and ten received payouts below their target. The two remaining officers received payouts at their target. Only officers whose individual and business performance were well above expectations were awarded payouts in excess of their target.

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LONG-TERM INCENTIVE GRANTS FOR EXECUTIVES

Unlike many other companies that use performance measures to adjust their long-term incentive (LTI) awards solely during the vesting process, Abbott uses performance measures three times to determine the amount of equity awards to be granted and vested.

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To align with Company performance, guideline award levels are set using the percentile ranking of Abbott's TSR (1, 3, and 5 years) as compared to our peers. For example, if the combination of TSR percentile rankings is approximately the 60th percentile, then LTI guideline award levels will be set at the 60th percentile of the peer group market data for LTI.

             
             
              
              
               


Starting with the guideline award level set in step 1, individual officer awards are adjusted up or down based upon individual performance and the performance of their business.

 

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Officer performance is determined using a 50/50 weighting of individual performance and progress toward long-range plan objectives. This calculation is then raised or lowered depending on the officer's relative contribution to the overall enterprise.

Awards granted in 2014, based on individual officer performance in 2013, resulted in individual awards ranging from 80%-130% of guideline award levels. Eight executive officers received a grant of less than their guideline award level, and six received a grant in excess of their guideline award level. All other executive officers received a grant equal to the guideline award level.

             
             
              
              
              
              
               


In our final step, options and performance shares are again aligned to performance.

Since our initial guideline award levels are based upon relative TSR, we do not use a relative metric for vesting of our performance-restricted shares. Instead, we vest awards at 100% or 0% depending upon the achievement of our ROE target, meaning there is no upside and no partial vesting if ROE falls short of the target.

The focus on ROE ensures that our growth and investment return objectives are achieved before awards vest. Because ROE measures how much profit the Company generates over the long term with the capital that shareholders have invested, the Compensation Committee believes it is an appropriate metric for vesting equity granted to the Company's executive officers. The ROE target for awards granted in 2015 was increased from 10% to 11%.

Options accrue value only through stock price appreciation. This directly aligns the compensation earned with the value shareholders would have received over the same period of time.

Abbott Laboratories      13

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INFORMATION ABOUT THE ANNUAL MEETING

Who Can Vote

Shareholders of record at the close of business on February 25, 2015 will be entitled to notice of and to vote at the Annual Meeting. As of January 31, 2015, Abbott had 1,508,977,828 outstanding common shares, which are Abbott's only outstanding voting securities. All shareholders have cumulative voting rights in the election of directors and one vote per share on all other matters.

Notice and Access

In accordance with the Securities and Exchange Commission's "Notice and Access" rules, Abbott mailed a Notice of Internet Availability of Proxy Materials (the "Notice") to certain shareholders in mid-March of 2015. The Notice describes the matters to be considered at the Annual Meeting and how the shareholders can access the proxy materials online. It also provides instructions on how those shareholders can vote their shares. If you received the Notice, you will not receive a print version of the proxy materials, unless you request one. If you would like to receive a print version of the proxy materials, free of charge, please follow the instructions on the Notice.

Cumulative Voting

Cumulative voting allows a shareholder to multiply the number of shares owned by the number of directors to be elected and to cast the total for one nominee or distribute the votes among the nominees, as the shareholder desires. Nominees who receive the greatest number of votes will be elected. If you wish to cumulate your votes, you must sign and mail in your proxy card or attend the Annual Meeting.

Voting by Proxy

All of Abbott's shareholders may vote by mail or at the Annual Meeting. Abbott's By-Laws provide that a shareholder may authorize no more than two persons as proxies to attend and vote at the meeting. Most of Abbott's shareholders may also vote their shares by telephone or the Internet. If you vote by telephone or the Internet, you do not need to return your proxy card. The instructions for voting can be found with your proxy card or on the Notice.

Revoking a Proxy

You may revoke your proxy by voting in person at the Annual Meeting or, at any time prior to the meeting:

Discretionary Voting Authority

Unless authority is withheld in accordance with the instructions on the proxy, the persons named in the proxy will vote the shares covered by proxies they receive to elect the 11 nominees named in Item 1 on the proxy card. Should a nominee become unavailable to serve, the shares will be voted for a substitute designated by the Board of Directors, or for fewer than 11 nominees if, in the judgment of the proxy holders, such action is necessary or desirable. The persons named in the proxy may also decide to vote shares cumulatively so that one or more of the nominees may receive fewer votes than the other nominees (or no votes at all), although they have no present intention of doing so.

Where a shareholder has specified a choice for or against the ratification of the appointment of Ernst & Young LLP as auditors, the advisory vote on the approval of executive compensation, or the approval of the shareholder proposals, or where the shareholder has abstained on these matters, the shares represented by the proxy will be voted (or not voted) as specified. Where no choice has been specified, the proxy will be voted FOR the ratification of Ernst & Young LLP as auditors, FOR the approval of executive compensation, and AGAINST the shareholder proposals.

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The Board of Directors is not aware of any other issue which may properly be brought before the meeting. If other matters are properly brought before the meeting, the accompanying proxy will be voted in accordance with the judgment of the proxy holders.

Quorum and Vote Required to Approve Each Item on the Proxy

A majority of the outstanding shares entitled to vote on a matter, represented in person or by proxy, constitutes a quorum for consideration of that matter at the meeting. The affirmative vote of a majority of the shares represented at the meeting and entitled to vote on a matter shall be the act of the shareholders with respect to that matter.

Effect of Broker Non-Votes and Abstentions

A proxy submitted by an institution such as a broker or bank that holds shares for the account of a beneficial owner may indicate that all or a portion of the shares represented by that proxy are not being voted with respect to a particular matter. This could occur, for example, when the broker or bank is not permitted to vote those shares in the absence of instructions from the beneficial owner of the stock. These "non-voted shares" will be considered shares not present and, therefore, not entitled to vote on those matters, although these shares may be considered present and entitled to vote for other purposes. Brokers and banks have discretionary authority to vote shares in absence of instructions on matters the New York Stock Exchange considers "routine", such as the ratification of the appointment of the auditors. They do not have discretionary authority to vote shares in absence of instructions on "non-routine" matters. The election of directors, the advisory vote on the approval of executive compensation, and the shareholder proposals are considered "non-routine" matters. Non-voted shares will not affect the determination of the outcome of the vote on any matter to be decided at the meeting. Shares represented by proxies which are present and entitled to vote on a matter but which have elected to abstain from voting on that matter will have the effect of votes against that matter.

Inspectors of Election

The inspectors of election and the tabulators of all proxies, ballots, and voting tabulations that identify shareholders are independent and are not Abbott employees.

Cost of Soliciting Proxies

Abbott will bear the cost of making solicitations from its shareholders and will reimburse banks and brokerage firms for out-of-pocket expenses incurred in connection with this solicitation. Proxies may be solicited by mail, telephone, Internet, or in person by directors, officers, or employees of Abbott and its subsidiaries.

Abbott has retained Georgeson Inc. to aid in the solicitation of proxies, at an estimated cost of $19,500 plus reimbursement for reasonable out-of-pocket expenses.

Abbott Laboratories Stock Retirement Plan

Participants in the Abbott Laboratories Stock Retirement Plan will receive voting instructions for their shares held in the Abbott Laboratories Stock Retirement Trust. The Stock Retirement Trust is administered by both a trustee and an Investment Committee. The trustee of the Trust is Mercer Trust Company. The members of the Investment Committee are Stephen R. Fussell and Brian P. Wentworth, employees of Abbott. The voting power with respect to the shares is held by and shared between the Investment Committee and the participants. The Investment Committee must solicit voting instructions from the participants and follow the voting instructions it receives. The Investment Committee may use its own discretion with respect to those shares for which no voting instructions are received.

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Confidential Voting

It is Abbott's policy that all proxies, ballots, and voting tabulations that reveal how a particular shareholder has voted be kept confidential and not be disclosed, except:

Householding of Proxy Materials

Shareholders sharing an address may receive only one copy of the proxy materials or the Notice of Internet Availability of Proxy Materials, unless their broker, bank or other intermediary has received contrary instructions from any shareholder at that address. This is known as "householding." Shareholders wishing to discontinue householding and receive separate copies of the proxy materials or the Notice of Internet Availability of Proxy Materials should notify their broker, bank, or other intermediary.

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NOMINEES FOR ELECTION AS DIRECTORS

GRAPHIC   ROBERT J. ALPERN, M.D.
Director since 2008 Age 64
Ensign Professor of Medicine, Professor of Internal Medicine, and Dean of
Yale School of Medicine, New Haven, Connecticut
      

Dr. Alpern has served as the Ensign Professor of Medicine, Professor of Internal Medicine, and Dean of Yale School of Medicine since June 2004. From July 1998 to June 2004, Dr. Alpern was the Dean of The University of Texas Southwestern Medical Center. Dr. Alpern also serves as a Director of AbbVie Inc. and as a Director on the Board of Yale—New Haven Hospital.

As the Ensign Professor of Medicine, Professor of Internal Medicine, and Dean of Yale School of Medicine, Dean of The University of Texas Southwestern Medical Center, and as a 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.


GRAPHIC   ROXANNE S. AUSTIN
Director since 2000 Age 54
President, Austin Investment Advisors, Newport Coast, California (Private
Investment and Consulting Firm)
      

Ms. Austin is President of Austin Investment Advisors, a private investment and consulting firm, a position she has held since 2004. From July 2009 through July 2010, Ms. Austin also served as the President and Chief Executive Officer of Move Networks, Inc., a provider of Internet television services. Ms. Austin served as President and Chief Operating Officer of DIRECTV, Inc. Ms. Austin also previously served as Executive Vice President and Chief Financial Officer of Hughes Electronics Corporation and as a partner of Deloitte & Touche LLP. Ms. Austin is also a Director of AbbVie Inc., Target Corporation, Teledyne Technologies, Inc., and Telefonaktiebolaget LM Ericsson.

Through her extensive management and operating roles, including her financial roles, Ms. Austin contributes significant oversight and leadership experience, including financial expertise and knowledge of financial statements, corporate finance and accounting matters.

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GRAPHIC   SALLY E. BLOUNT, PH.D.
Director since 2011 Age 53
Dean of the J.L. Kellogg Graduate School of Management at Northwestern
University, Evanston, Illinois
      

Ms. Blount has served as Dean of the J.L. Kellogg Graduate School of Management at Northwestern University since July 2010. From 2004 to 2010, she served as the Vice Dean and Dean of the undergraduate college of New York University's Leonard N. Stern School of Business. Ms. Blount joined the faculty of New York University's Leonard N. Stern School of Business in 2001 and was the Abraham L. Gitlow Professor of Management and Organizations. Prior to joining NYU in 2001, Ms. Blount held academic posts at the University of Chicago's Graduate School of Business from 1992 to 2001.

As Dean of the J.L. Kellogg Graduate School of Management at Northwestern University and as the 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.


GRAPHIC   W. JAMES FARRELL
Director since 2006 Age 72
Retired Chairman and Chief Executive Officer of Illinois Tool Works Inc.,
Glenview, Illinois (Worldwide Manufacturer of Highly Engineered Products
and Specialty Systems)
      

Mr. Farrell served as the Chairman of Illinois Tool Works Inc. from 1996 to 2006 and as its Chief Executive Officer from 1995 to 2005. Mr. Farrell also served on the Board of Directors of 3M Company from 2006 to 2014, Allstate Insurance Company from 1999 to 2013, and UAL Corporation from 2001 to 2012.

As a result of his tenure as Chairman and Chief Executive Officer of Illinois Tool Works, Mr. Farrell brings valuable business, leadership and management experience to the Board and provides guidance on key matters relevant to a major international company.

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GRAPHIC   EDWARD M. LIDDY
Director since 2010 Age 69
Partner, Clayton, Dubilier & Rice, LLC, New York, New York (Private Equity
Investment Firm)
      

Mr. Liddy has been a partner in the private equity investment firm Clayton, Dubilier & Rice, LLC since January 2010, having also been a partner at such firm from April to September 2008. From September 2008 to August 2009, Mr. Liddy was the Interim Chairman and Chief Executive Officer of American International Group, Inc. (AIG), a global insurance and financial services holding company. He served at AIG at the request of the U.S. Department of the Treasury. From January 1999 to April 2008, Mr. Liddy served as Chairman of the Board of the Allstate Corporation. He served as Chief Executive Officer of Allstate from January 1999 to December 2006, President from January 1995 to May 2005, and Chief Operating Officer from August 1994 to January 1999. Mr. Liddy currently serves on the Board of Directors of AbbVie Inc., 3M Company, and The Boeing Company. In addition, Mr. Liddy formerly served on the Board of The Boeing Company from 2007 to 2008.

As the Chairman and Chief Executive Officer of Allstate Corporation and American International Group, Inc., Mr. Liddy brings valuable insights from the perspective of the insurance industry into Abbott's pharmaceutical and medical device businesses. As a partner of Clayton, Dubilier & Rice, LLC, Mr. Liddy gained significant knowledge and understanding of finance and capital markets matters, as well as global and domestic strategic advisory experience.

 

GRAPHIC   NANCY MCKINSTRY
Director since 2011 Age 55
Chief Executive Officer and Chairman of the Executive Board of Wolters
Kluwer N.V., Alphen aan den Rijn, the Netherlands (Global Information,
Software, and Services Provider)
      

Ms. McKinstry has been the Chief Executive Officer and Chairman of the Executive Board of Wolters Kluwer N.V. since September 2003 and a member of its Executive Board since June 2001. Ms. McKinstry also serves on the Advisory Board of the University of Rhode Island, the Board of Overseers of Columbia Business School, and the Advisory Board of the Harrington School of Communication and Media. Ms. McKinstry served on the Board of Directors of Telefonieaktiebolaget LM Ericsson (LM Ericsson Telephone Company) from 2004 to 2012. Ms. McKinstry also served on the Board of Directors of MortgageIT Holdings, Inc. from 2004 to 2007.

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.

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GRAPHIC   PHEBE N. NOVAKOVIC
Director since 2010 Age 57
Chairman and Chief Executive Officer, General Dynamics Corporation, Falls
Church, Virginia (Worldwide Defense, Aerospace, and Other Technology
Products Manufacturer)
      

Ms. Novakovic has been Chairman and Chief Executive Officer of General Dynamics Corporation since January 1, 2013. Previously, she served as President and Chief Operating Officer from May 2012 to December 2012 and as Executive Vice President, Marine Systems of General Dynamics from May 2010 to May 2012. From May 2005 to April 2010, Ms. Novakovic served as its Senior Vice President—Planning and Development. She was elected Vice President of General Dynamics in October 2002 after joining the company in May 2001. Previously, Ms. Novakovic was Special Assistant to the Secretary and Deputy Secretary of Defense, and had been a Deputy Associate Director of the Office of Management and Budget.

As a member of the Board of Directors and Chief Executive Officer of General Dynamics Corporation, Ms. Novakovic has strong management experience with a major public company, including significant marketing, operational and manufacturing experience, and contributes valuable insights into finance and capital markets. Her tenure with the Office of Management and Budget and as Special Assistant to the Secretary and Deputy Secretary of Defense enables her to provide government perspective and experience in a highly regulated industry.


GRAPHIC   WILLIAM A. OSBORN
Director since 2008 Age 67
Retired Chairman and Chief Executive Officer of Northern Trust Corporation
(A Multibank Holding Company) and The Northern Trust Company, Chicago,
Illinois (Banking Services Company)
      

Mr. Osborn was Chairman of Northern Trust Corporation from 1995 through 2009 and served as its Chief Executive Officer from 1995 through 2007. Mr. Osborn currently serves as a Director of Caterpillar Inc. and General Dynamics Corporation. He is Chairman of the Board of Trustees of Northwestern University. Mr. Osborn served on the Board of Directors of Nicor, Inc. from 1999 to 2006 and on the Board of Directors of Tribune Company from 2001 to 2012.

As the Chairman and Chief Executive Officer of Northern Trust Corporation and The Northern Trust Company, Mr. Osborn acquired broad experience in successfully overseeing complex global businesses operating in highly regulated industries.

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GRAPHIC   SAMUEL C. SCOTT III
Director since 2007 Age 70
Retired Chairman, President and Chief Executive Officer of Corn Products
International, Inc., Westchester, Illinois (A Corn Refining Company)
      

Mr. Scott retired as Chairman, President and Chief Executive Officer of Corn Products International in 2009. He served as Chairman, President, and Chief Executive Officer from February 2001 until he retired in May of 2009. He was President and Chief Operating Officer from January 1998 until February 2001. He was President of the Corn Refining Division of CPC International from 1995 through 1997, when CPC International spun off Corn Products International as a separate corporation. Mr. Scott currently serves on the Board of Directors of Bank of New York Mellon Corporation and Motorola Solutions, Inc.

As the Chairman, President and Chief Executive Officer of Corn Products International, Mr. Scott acquired valuable business, leadership and management experience, including critical insights into matters relevant to a major public company and experience in finance and capital markets matters.


GRAPHIC   GLENN F. TILTON
Director since 2007 Age 66
Retired Chairman of the Midwest, JPMorgan Chase & Co., Chicago, Illinois
(Banking and Financial Services Company)
      

Mr. Tilton served as Chairman of the Midwest for JPMorgan Chase & Co. and a member of its companywide Executive Committee from June 2011 to June 2014. From October 2010 to December 2012, Mr. Tilton also served as the Non-Executive Chairman of the Board of United Continental Holdings, Inc. From September 2002 to October 2010, he served as Chairman, President and Chief Executive Officer of UAL Corporation, a holding company, and Chairman and Chief Executive Officer of United Air Lines, Inc., an air transportation company and wholly owned subsidiary of UAL Corporation. Mr. Tilton is also a Director of AbbVie Inc. and Phillips 66. Mr. Tilton also served on the Board of Directors of Lincoln National Corporation from 2002 to 2007, of TXU Corporation from 2005 to 2007, of Corning Incorporated from 2010 to 2012, and of United Continental Holdings, Inc. from 2001 to 2013.

Having previously served as Chairman of the Midwest for JPMorgan Chase & Co., Non-Executive Chairman of the Board of United Continental Holdings, Inc., Chairman, President, and Chief Executive Officer of UAL Corporation and United Air Lines, 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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GRAPHIC   MILES D. WHITE
Director since 1998 Age 60
Chairman of the Board and Chief Executive Officer, Abbott Laboratories
      

Mr. White has served as Abbott's Chairman of the Board and Chief Executive Officer since 1999. He served as an Executive Vice President of Abbott from 1998 to 1999. He joined Abbott in 1984. He currently serves as a Director of Caterpillar Inc. and McDonald's Corporation.

Serving as Abbott's Chairman of the Board and Chief Executive Officer since 1999 and having joined Abbott in 1984, Mr. White contributes not only his valuable business, management and leadership experience, but also his extensive knowledge of the Company and its global operations, as well as key insights into strategic, management and operation matters, ensuring the appropriate level of oversight and responsibility is applied to all Board decisions.

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THE BOARD OF DIRECTORS AND ITS COMMITTEES

THE BOARD OF DIRECTORS

The Board of Directors held seven meetings in 2014. The average attendance of all directors at Board and committee meetings in 2014 was ninety-seven percent and each director attended at least seventy-five percent 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 the following directors is independent in accordance with the New York Stock Exchange listing standards: R. J. Alpern, R. S. Austin, S. E. Blount, W. J. Farrell, E. M. Liddy, N. McKinstry, P. N. Novakovic, W. A. Osborn, S. C. Scott III, and G. F. Tilton. 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 the director's independence. This included consideration of the fact that some of the directors 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.

The Board has risk oversight responsibility for Abbott and administers this responsibility both directly and with assistance from its committees.

LEADERSHIP STRUCTURE

The Board has determined that the current leadership structure, in which the offices of Chairman and Chief Executive Officer are held by one individual and an independent director acts as lead director, ensures the appropriate level of oversight, independence, and responsibility is applied to all Board decisions, including risk oversight, and is in the best interests of Abbott and its shareholders.

Chairman/Chief Executive Officer

Lead Independent Director

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DIRECTOR SELECTION

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. 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 17 to 22.

BOARD DIVERSITY

In the process of identifying nominees to serve as a member 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. Currently, 50% of the independent directors are composed of women or individuals who are minorities.

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors has five committees established in Abbott's By-Laws: the Executive Committee, Audit Committee, Compensation Committee, Nominations and Governance Committee, and Public Policy Committee. Each of the members of the Audit Committee, Compensation Committee, Nominations and Governance Committee, and Public Policy Committee is independent.

    Committee

Current Members




Number of
2014
Meetings




 

 

Audit

 


Roxanne S. Austin (Chair, audit committee financial expert); Edward M. Liddy; Nancy McKinstry; Samuel C. Scott III; Glenn F. Tilton. 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 Roxanne S. Austin, the Committee's Chair, is an "audit committee financial expert."


 

 

8

 

 


 

Compensation

 


W. James Farrell (Chair); Roxanne S. Austin; Edward M. Liddy; William A. Osborn; Samuel C. Scott III


 



4




 

 

Nominations and Governance

 


William A. Osborn (Chair); Robert J. Alpern, M.D.; Sally E. Blount, Ph.D.; W. James Farrell; Phebe N. Novakovic


 

 

4

 

 


 

Public Policy

 


Phebe N. Novakovic (Chair); Robert J. Alpern, M.D.; Sally E. Blount, Ph.D.; Nancy McKinstry, Glenn F. Tilton


 



4




 

 

Executive

 


Miles D. White (Chair); Roxanne S. Austin; W. James Farrell; Phebe N. Novakovic; William A. Osborn


 

 

0

 

 

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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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, and certain areas of legal and regulatory compliance. The Committee is governed by a written charter. A copy of the report of the Audit Committee is on page 61.

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. The Committee is governed by a written charter. The Compensation Committee annually reviews the compensation paid to the members of the Board and gives its recommendations to the full Board regarding both the amount of director compensation that should be paid and the allocation of that compensation 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.

This Committee also reviews, approves, and administers the incentive compensation plans in which any executive officer of Abbott participates and all of Abbott's equity-based plans. It 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. The processes and procedures used for the consideration and determination of executive compensation are described in the section of the proxy captioned, "Compensation Discussion and Analysis."

The Compensation Committee has the sole authority, under its charter, to select, retain and/or terminate independent compensation advisors. The Committee engaged Meridian as its compensation consultant for 2014. Meridian performs no other work for Abbott. The Committee engages 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, and they include: peer groups against which performance and pay should be examined, financial metrics to be used to assess Abbott's relative performance, competitive long-term 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. 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 Compensation Committee report is on page 41.

Nominations and Governance Committee

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, recommends to the Board the persons to be elected as executive officers of Abbott, develops and recommends to the Board the corporate governance guidelines applicable to Abbott, and serves 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 Committee is governed by a written charter. 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 24 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 Abbott's public policy, certain areas of legal and regulatory compliance, and governmental affairs and healthcare compliance issues that affect Abbott. The Committee is governed by a written charter.

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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 Chairman of the Nominations and Governance Committee, who acts as the lead director at the meetings of the independent directors, or to the independent directors c/o Abbott Laboratories, 100 Abbott Park Road, D-364, AP6D, Abbott Park, Illinois 60064-6400 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 the Company 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 Web site (www.abbottinvestor.com).

2014 DIRECTOR COMPENSATION

Our CEO is not compensated for serving on the Board or Board committees. 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 2009 Incentive Stock Program.

The following table sets forth a summary of the non-employee directors' 2014 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   $134,913   $0   $12,332   $ 5,000   $278,245    

 

R. S. Austin

  144,000   134,913   0   0   0   278,913  

 

S. E. Blount

  126,000   134,913   0   679     15,000   276,592    

 

W. J. Farrell

  138,000   134,913   0   25,191   0   298,104  

 

E. M. Liddy

  132,000   134,913   0   0     0   266,913    

 

N. McKinstry

  132,000   134,913   0   0   25,000   291,913  

 

P. N. Novakovic        

  138,000   134,913   0   0     0   272,913    

 

W. A. Osborn

  138,000   134,913   0   0   0   272,913  

 

S. C. Scott III

  132,000   134,913   0   0     25,000   291,913    

 

G. F. Tilton

  132,000   134,913   0   0   25,000   291,913  
(1)
Under the Abbott Laboratories Non-Employee Directors' Fee Plan, non-employee directors earn $10,500 for each month of service as a director and $1,000 for each month of service as a chairman of a Board committee (other than the Audit Committee). The Chairman of the Audit Committee receives $1,500 for each month of service as a Chairman of that committee and the other members of the Audit Committee receive $500 for each month of service as a Committee member. 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 stock. 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
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(2)
The amounts reported 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 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 $135,000 (rounded down) under the Abbott Laboratories 2009 Incentive Stock Program. In 2014, this was 3,535 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 share of common stock for each restricted stock unit outstanding under the Incentive Stock Program. The following Abbott restricted stock units were outstanding as of December 31, 2014: R. J. Alpern, 15,191; R. S. Austin, 22,854; S. E. Blount, 8,451; W. J. Farrell, 20,965; E. M. Liddy, 10,618; N. McKinstry, 8,451; P. N. Novakovic, 10,618; W. A. Osborn, 17,108; S. C. Scott III, 18,838; and G. F. Tilton, 18,838. The following AbbVie restricted stock units were outstanding as of December 31, 2014: R. J. Alpern, 8,559; R. S. Austin, 16,222; S. E. Blount, 1,819; W. J. Farrell, 14,333; E. M. Liddy, 3,986; N. McKinstry, 1,819; P. N. Novakovic, 3,986; W. A. Osborn, 10,476; S. C. Scott III, 12,206; and G. F. Tilton, 12,206.

(3)
The following options and converted (AbbVie) options were outstanding as of December 31, 2014: N. McKinstry, 6,280 (Abbott) and 6,280 (AbbVie); and P. N. Novakovic, 32,877 (Abbott) and 7,072 (AbbVie).

(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 include charitable matching grant contributions, as follows: R. J. Alpern, $5,000; S. E. Blount, $15,000; N. McKinstry, $25,000; S. C. Scott III, $25,000; and G. F. Tilton, $25,000.
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SECURITY OWNERSHIP OF EXECUTIVE OFFICERS AND DIRECTORS

The table below reflects the number of Abbott common shares beneficially owned as of January 31, 2015, by each director, the Chief Executive Officer, the Chief Financial Officer, and the three other most highly paid executive officers (the "named officers"), and by all directors and executive officers of Abbott as a group. It also reflects the number of stock equivalent units and restricted stock units held by non-employee directors under the Abbott Laboratories Non-Employee Directors' Fee Plan.

    Name   Shares
Beneficially
Owned(1)(2)


 
Stock Options
Exercisable
within 60 days
of January 31, 2015



 
Stock
Equivalent
Units


 
       R. J. Alpern   15,191   0   4,197       
  R. S. Austin   29,698   0   0  
    B. J. Blaser   102,034   260,520   0    
  S. E. Blount   8,451   0   0  
    J. M. Capek   226,945   559,493   0    
  W. J. Farrell   21,965   0   0  
    T. C. Freyman   490,599   838,759   0    
  J. C. Landgraf   116,079   495,851   0  
    E. M. Liddy   11,753   0   13,153    
  N. McKinstry   8,451   6,280   0  
    P. N. Novakovic   11,118   32,877   0    
  W. A. Osborn   41,108   0   19,132  
    S. C. Scott III   24,838   0   6,446    
  G. F. Tilton   26,188   0   21,019  
    M. D. White   1,457,183   3,631,100   0    
  All directors and executive officers as a group(3)(4)   3,803,844   8,232,648   63,947  
(1)
The table includes shares held in the officers' accounts in the Abbott Laboratories Stock Retirement Trust as follows: T. C. Freyman, 1,093; J. C. Landgraf, 18,864; M. D. White, 27,503; and all executive officers as a group, 67,012. Each officer has shared voting power and sole investment power with respect to the shares held in his or her account.

(2)
The table includes restricted stock units held by the non-employee directors and payable in stock upon their retirement from the Board as follows: R. J. Alpern, 15,191; R. S. Austin, 22,854; S. E. Blount, 8,451; W. J. Farrell, 20,965; E. M. Liddy, 10,618; N. McKinstry, 8,451; P. N. Novakovic, 10,618; W. A. Osborn, 17,108; S. C. Scott III, 18,838; G. F. Tilton, 18,838; and all directors as a group, 151,932.

(3)
Certain executive officers of Abbott are fiduciaries of several employee benefit trusts maintained by Abbott. As such, they have shared voting and/or investment power with respect to the common shares held by those trusts. The table does not include the shares held by the trusts. As of January 31, 2015, these trusts owned a total of 33,384,785 (2.2%) of the outstanding shares of Abbott.


None of the directors, named officers, or executive officers has pledged shares.

(4)
Excluding the shared voting and/or investment power over the shares held by the trusts described in footnote 3, the directors, director nominees, and executive officers as a group together own beneficially less than one percent of the outstanding shares of Abbott.
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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 2014. In particular, this CD&A explains how the Compensation Committee (the "Committee") and Board of Directors made its compensation decisions for the Company's executives, including the five named officers: Miles D. White, Chairman of the Board and Chief Executive Officer; Thomas C. Freyman, Executive Vice President, Finance and Chief Financial Officer; Brain J. Blaser, Executive Vice President, Diagnostics Products; John M. Capek, Executive Vice President, Medical Devices; and John C. Landgraf, Executive Vice President, Nutritional Products.

The CD&A also describes the pay philosophy the Committee has established for the Company's executive officers, 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.

In 2014, Abbott achieved another strong year of financial results and returns. Abbott's 1-year total shareholder return (TSR) of 20.1% significantly outperformed both the Standard & Poor's 500 Index (S&P 500) and the Dow Jones Industrial Average (DJIA). Our 1-year TSR performance ranked in the 89th percentile versus Abbott's peer group. Abbott also returned $3.5 billion to shareholders in the form of dividends and share repurchases in 2014, an increase of 40% versus the prior year.

GRAPHIC

   

* Source: Thomson Reuters.

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Last year, 96% of our shareholders approved the compensation of our named executive officers. Those compensation decisions are made by the Compensation Committee and our Board of Directors based upon financial metrics, including total shareholder return.

Abbott's 3-year total shareholder return was 80% from 2012-2014. During that same period, our CEO's compensation declined by 29% as a result of aligning our pay practices to the new peer group which was selected following the separation with AbbVie on January 1, 2013.

GRAPHIC

   

*
Cumulative TSR of investment initiated on December 31, 2011.
Source: Thomson Reuters. Thomson Reuters applied an adjustment factor to adjust Abbott historical prices prior to and up through December 31, 2012 to account for the AbbVie separation, which was effective on January 1, 2013. To accurately reflect the TSR created by Abbott since the AbbVie separation, Abbott uses the daily dividend reinvestment methodology to calculate TSR. Other financial data providers may use different methodologies to adjust for the AbbVie separation, which may produce different results.
30      Abbott Laboratories

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COMPENSATION PHILOSOPHY AND COMPONENTS OF PAY

Abbott and its Compensation Committee have designed a compensation program to attract and retain executives whose talent and contributions support and advance the profitable growth of the Company and growth in shareholder value. The program is designed to be:


TOTAL COMPENSATION MIX

GRAPHIC

 

Compensation Element

  Abbott CEO   Other Abbott NEOs    

 

Base Salary

  $ 1,973,077   $ 3,142,680    

 

Annual Cash Incentive Plan

  $ 3,800,000   $ 2,923,400    

 

Long-Term Incentive Awards

               

 

    Grants made in 2014 based on 2013 results

  $ 9,299,996   $ 8,588,977    
                     
       

 

Total Compensation (see page 43)

  $ 17,732,241   $ 20,013,822    
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There are three primary pay components that make up our executive pay program:

CHANGES BASED ON SHAREHOLDER FEEDBACK AND MARKET PRACTICES

Last year, 96% of our shareholders approved the compensation of our named executive officers. We reached out to more than 200 investors and conducted meetings with investors representing more than 35% of our outstanding shares. In those meetings, we discussed our pay programs broadly, including aspects that were previously subject to shareholder resolutions. Based on shareholder discussions and recommendations, the Committee, during its annual evaluation of the Company's compensation programs and evolving market practices, made several changes to our programs.

 
EXECUTIVE COMPENSATION CHANGES FOR 2014
    

 

Increased ROE target for vesting of performance shares granted in 2015

Added a policy prohibiting hedging

 

Added an anti-pledging policy

Added a shareholding retention requirement

Strengthened our recoupment policy
    

These changes in 2014 continue our practice of evolving our program based upon shareholder feedback as well as a review of market practices. Over the past several years, we have made numerous other changes to our program, including:

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HOW EXECUTIVE PAY DECISIONS ARE MADE

The Committee makes compensation decisions in the context of the objectives of our program. They ensure the compensation delivered to our executives is competitive, based on performance, balanced between the short- and long-term, and aligned with shareholder interests.

BENCHMARKING USING PEER COMPANIES

To determine the competitiveness of our compensation and benefit programs, the Committee, in consultation with its independent consultant, annually compares the level of compensation, market pay practices, and our relative performance to those of peer companies.

Our investors compare us to other global multinational companies, not necessarily in healthcare, that share similar characteristics aligned with our investment identity of durable growth and returns to shareholders. Therefore, our peer group was selected to strike the right balance between size, similar return profiles, geographic breadth, and management and operating structure. The peer group includes companies that are outside the healthcare space and, after the separation with AbbVie, excludes companies that focus primarily on proprietary pharmaceuticals. It also purposely excludes companies whose revenues are predominately derived from the U.S. and small non-diverse healthcare companies, since our investors tell us that these companies are not viable peers. In selecting our peer group for performance and compensation benchmarking, we considered:

As it pertains to healthcare peers, Johnson & Johnson most closely reflects our durable growth and income identity, as well as the lines of business in which we operate. Other healthcare companies in our peer group reflect specific aspects of our business and/or compete directly with Abbott in specific businesses or product areas, while also reflecting our financial and operating scale.

Although Abbott has been assigned to the GICS of "Health Care Equipment," this code does not describe Abbott:

Our peer group also includes companies that reflect the breadth of our international operations. We currently generate approximately 70% of our revenues internationally and continue to expand our international presence and operations in order to move closer to the markets we serve.

This particular set of companies was determined shortly after the separation with AbbVie to reflect the nature of our business going forward. The Compensation Committee, working with its outside consultant, determined the selection criteria and then chose the companies listed on the following page. In 2014, the Committee reviewed with its consultant and reaffirmed this group of companies.

Given that there had been no significant change in Abbott's revenue size or market capitalization, the positive feedback we had received from investors, and the Committee's strong opinion that stability in a peer group is important, the Committee and its consultant determined that there is no reason to change this peer group.

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This group is summarized below, showing the primary characteristics for which each company was selected.

    Company Name


Sales/Rev.1
(billions)

 


Market
Cap1
(billions)


 
% Rev.
Outside
U.S.


 
Similar #
Employees

 
Health Care-
Related

 
Mfg. Driven/
Consumer-
Facing


 
 
    3M Company   $ 31.8   $ 104.5   ü   ü   ü   ü    
  Baxter International Inc.   $ 16.7   $ 39.7   ü   ü   ü   ü    
    Caterpillar, Inc.   $ 55.2   $ 55.4   ü   ü       ü    
  The Coca-Cola Company   $ 46.2   $ 184.9   ü   ü     ü    
    Covidien PLC   $ 10.7   $ 46.3   ü   ü   ü   ü    
  Danaher Corporation   $ 19.9   $ 60.2   ü   ü   ü   ü    
    E. I. du Pont de Nemours   $ 34.7   $ 67.0   ü   ü       ü    
  Eaton Corporation   $ 22.6   $ 32.3   ü   ü     ü    
    Emerson Electric Co.   $ 24.5   $ 42.7   ü   ü       ü    
  Honeywell International Inc.   $ 40.3   $ 78.2   ü   ü     ü    
    Illinois Tool Works Inc.   $ 14.5   $ 37.0   ü   ü       ü    
  Johnson & Johnson   $ 74.3   $ 292.7   ü   ü   ü   ü    
    Kimberly-Clark Corporation   $ 19.7   $ 43.0   ü   ü   ü   ü    
  McDonald's Corporation   $ 27.4   $ 91.2   ü       ü    
    Medtronic, Inc.   $ 17.3   $ 71.1       ü   ü   ü    
  Novartis AG   $ 53.6   $ 224.9   ü   ü   ü   ü    
    Procter & Gamble Co.   $ 82.1   $ 246.1   ü   ü   ü   ü    
  Thermo Fisher Scientific, Inc.   $ 16.9   $ 50.1     ü   ü   ü    
    United Technologies Corporation   $ 65.1   $ 104.8   ü           ü    
  Peer Group Median   $ 27.4   $ 67.0   ü   ü   ü   ü    
    Abbott   $ 22.3   $ 67.8   ü   ü   ü   ü    
(1)
Data source: S&P's Capital IQ database reflects most recently disclosed (as of February 2, 2015) trailing 12-month sales/revenue. The market cap reflects values on December 31, 2014.
34      Abbott Laboratories

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BASE SALARY

Base salary targets are set using the median of the peer group as an initial benchmark. Specific pay rates are based on an executive's performance, experience, unique skills, and internal equity with others at Abbott. Once the rate of pay is set at the time of hire or upon promotion, subsequent changes in pay, including salary increases, are based on the executive's performance, the job he or she is performing, internal equity, and the Company's operating budget.

ANNUAL CASH INCENTIVE PLAN (PERFORMANCE INCENTIVE PLAN)

During 2014, all of Abbott's five named officers participated in the 1998 Abbott Laboratories Performance Incentive Plan (PIP). The PIP is designed to comply with the requirements of Section 162(m) of the Internal Revenue Code of 1986 for performance-based compensation.

Each year, the Committee sets the maximum award allocations under the PIP for each named officer as a percentage of consolidated net earnings. For 2014, the maximum award for the Chief Executive Officer was 0.15% of adjusted consolidated net earnings for the fiscal year-end and, for all of the other named officers, 0.075% of adjusted consolidated net earnings. Historically, and in 2014, the Committee exercised its discretion to deliver PIP awards that were below the maximum awards that are authorized by these formulas based on achieved performance against annual goals and other factors described below.

Under the PIP, the Committee sets a target payout (expressed as a percentage of base salary) for each officer based upon market benchmarks and internal calibration. The final payout is determined based upon achievement of certain annual goals. Each PIP participant carried a goal of Adjusted Diluted EPS that comprised 20% of his or her goals. In addition to EPS, officers had other financial goals specific to each officer's area of responsibility. The process of scoring each officer's goals will determine an initial payout of not more than 100% of the target payout.

GRAPHIC

The Compensation Committee may adjust the calculated annual PIP award amount up or down based on additional factors. Note that the quantitative determination of an officer's cash incentive cannot result in above-target payouts. However, the Committee in its sole discretion may determine that an above-target payout is warranted based on achieved levels of performance.

  Examples of Factors That Could Create Upward Adjustment   Examples of Factors That Could Create Downward Adjustment    
   

Performance well above plan

Successful completion of unplanned acquisition

Acceleration of R&D milestones

 

Missing performance targets

Missing R&D milestones

Compliance breach

Violation of our Core Leadership Requirements

   

For 2014, individual payouts for Abbott's 19 executive officers ranged from 53% to 125% of target. Seven officers received payouts above their target and ten received payouts below their target. The two remaining officers received payouts at their target. Only officers whose individual and business performance were well above expectations were awarded payouts in excess of their target.

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LONG-TERM INCENTIVES (LTI)

Unlike many other companies that use performance measures to adjust their long-term incentive (LTI) awards solely during the vesting process, Abbott uses performance measures three times to determine the amount of equity awards to be granted and vested.

GRAPHIC

To align with Company performance, guideline award levels are set using the percentile ranking of Abbott's TSR (1, 3, and 5 years) as compared to our peers. For example, if the combination of TSR percentile rankings is approximately the 60th percentile, then LTI guideline award levels will be set at the 60th percentile of the peer group market data for LTI.

              
              
             
             
               


Starting with the guideline award level set in step 1, individual officer awards are adjusted up or down based upon individual performance and the performance of their business.

 

GRAPHIC

Officer performance is determined using a 50/50 weighting of individual performance and progress toward long-range plan objectives. This calculation is then raised or lowered depending on the officer's relative contribution to the overall enterprise.

Awards granted in 2014, based on individual officer performance in 2013, resulted in individual awards ranging from 80%-130% of guideline award levels. Eight executive officers received a grant of less than their guideline award level, and six received a grant in excess of their guideline award level. All other executive officers received a grant equal to the guideline award level.

             
             
              
              
              
              
               


In our final step, options and performance shares are again aligned to performance.

Since our initial guideline award levels are based upon relative TSR, we do not use a relative metric for vesting of our performance-restricted shares. Instead, we vest awards at 100% or 0% depending upon the achievement of our ROE target, meaning there is no upside and no partial vesting if ROE falls short of the target.

The focus on ROE ensures that our growth and investment return objectives are achieved before awards vest. Because ROE measures how much profit the Company generates over the long term with the capital that shareholders have invested, the Compensation Committee believes it is an appropriate metric for vesting equity granted to the Company's executive officers. The ROE target for awards granted in 2015 was increased from 10% to 11%.

Options accrue value only through stock price appreciation. This directly aligns the compensation earned with the value shareholders would have received over the same period of time.

36      Abbott Laboratories

In 2015, 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 granted the long-term incentive awards in the form of 50% stock options and 50% performance-restricted shares. This mix is consistent with the practices of our peer group.

In the separation of Abbott and AbbVie, Abbott retained the vast majority of shareholder equity. Consequently, Abbott's ROE declined. It is our intent to increase our ROE and ROE target over time by means of effective deployment of cash to generate returns on shareholder capital. Consistent with that intent and in response to feedback from shareholders, the awards granted in 2015 will vest only if an ROE target of 11% is achieved. By comparison, the 2014 awards will vest only if an ROE target of 10% is achieved.

PERFORMANCE GOALS

DISCUSSION OF NAMED OFFICERS' ACHIEVEMENT OF GOALS DURING 2014

FINANCIAL GOALS

  Executive   Metric   Expected Results   Results Achieved    

 

 

Miles D. White

 

Adjusted Diluted EPS

 

$2.21

 

$2.28

 

 
        Sales   $22.8 Billion   $22.3 Billion    
        Adjusted Net Income   $3.4 Billion   $3.5 Billion    
        Adjusted Return on Assets   9.7%   10.1%    
        Adjusted Operating Cash Flow   $4.2 Billion   $3.9 Billion    

 

 

Thomas C. Freyman

 

Adjusted Diluted EPS

 

$2.21

 

$2.28

 

 
    Adjusted Return on Assets   9.7%   10.1%    
    Adjusted Operating Cash Flow   $4.2 Billion   $3.9 Billion    

 

 

Brian J. Blaser

 

Adjusted Diluted EPS

 

$2.21

 

$2.28

 

 
        Diagnostics Division Net Sales   $4.8 Billion   $4.8 Billion    
        Diagnostics Division Margin   $1,035.4 Million   $1,070.3 Million    

 

 

John M. Capek

 

Adjusted Diluted EPS

 

$2.21

 

$2.28

 

 
    Medical Devices Division Net Sales   $5.6 Billion   $5.4 Billion    
    Medical Devices Division Margin   $1,461.5 Million   $1,498.4 Million    

 

 

John C. Landgraf

 

Adjusted Diluted EPS

 

$2.21

 

$2.28

 

 
        Nutrition Division Net Sales   $7.2 Billion   $7.0 Billion    
        Nutrition Division Margin   $1,502.9 Million   $1,477.5 Million    

The results reflect an increase of 5.5% in operational sales from continuing operations, an increase of 13.4% in adjusted diluted EPS, and an increase of 9.8% in adjusted net income. For a reconciliation to GAAP, see Annex I.

Abbott Laboratories      37

OTHER GOALS

Miles D. White

 

 

Goals:

 

Continue Abbott's growth focus by launching new products in the established pharmaceuticals, diagnostics, medical devices and nutrition businesses; achieve strategic objectives supporting emerging market growth; execute strategies to drive gross margin growth; develop key senior management talent.

 

 

Results:

 

Mr. White achieved the above goals in all material aspects.

Thomas C. Freyman

 

 

Goals:

 

Execute phase two of global Finance back office restructure and other cost reduction initiatives; support Business Development/M&A efforts; support appropriate valuation of the Company given growth prospects through Investor Relations activities.

 

 

Results:

 

Mr. Freyman partially achieved the global Finance back office initiative goal and achieved his other goals in all material aspects.

Brian J. Blaser

 

 

Goals:

 

Achieve new product platform development objectives in Diagnostics divisions; accomplish key strategic objectives for Diagnostics, including projects in core laboratory, molecular, and diagnostics; achieve division gross margin objectives.

 

 

Results:

 

Mr. Blaser achieved the above goals in all material aspects.

John M. Capek

 

 

Goals:

 

Accomplish key strategic objectives for Medical Devices including projects in diabetes care, vascular, and medical optics; achieve division gross margin objectives.

 

 

Results:

 

Mr. Capek achieved the above goals in all material aspects.

John C. Landgraf

 

 

Goals:

 

Accomplish key strategic objectives for Nutrition including projects in adult nutrition, pediatric nutrition, new product launches and execution of dairy strategy; achieve division gross margin objectives.

 

 

Results:

 

Mr. Landgraf achieved the dairy strategy goal and partially achieved his other goals in all material aspects.
38      Abbott Laboratories

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, as previously discussed.

             
 

Benefits and Perquisites

 

Description

   

 

 

 

 

 

 

 
    Retirement Benefits  

The named officers participate in two 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 officer's 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, 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, 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.

   
    Change in Control Arrangements  

Mr. White does not have a change in control agreement. The other named officers have 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 to 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.

   
Abbott Laboratories      39

   

Benefits and Perquisites

 

Description

   

 

 

 

 

 

 

 
    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. White and Freyman are covered by time-sharing lease agreements, pursuant to which incremental costs associated with those flights are reimbursed by the executives to the Company in accordance with Federal Aviation Administration regulations.

   
    Disability Benefit  

In addition to Abbott's standard disability benefits, the 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 return 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 and 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 stock ownership guideline after three years in their current position will be required to hold 50% of future shares until they meet the ownership guideline.

All named officers with 5 years tenure in their current position meet or exceed the guidelines.

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 stock. 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:

40      Abbott Laboratories

RECOUPMENT POLICY

In 2014, following discussions by management with shareholders, the Compensation Committee adopted a recoupment policy. The Compensation Committee has broad discretion to administer and implement the 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 Performance Incentive Plan and Incentive Stock Program, which are described above, are intended to comply with Internal Revenue Code Section 162(m) to ensure deductibility.

The Committee reserves the flexibility to take actions that may be based on considerations in addition to tax deductibility. The Committee 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, the Committee may from time to time approve components of compensation for certain officers that are 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
W. J. Farrell, Chairman
R. S. Austin
E. M. Liddy
W. A. Osborn
S. C. Scott III

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COMPENSATION RISK ASSESSMENT

During 2014, Abbott conducted its annual risk assessment of its compensation policies and practices for employees and executives. Abbott's risk assessment is reinforced by Abbott's adherence to a number of industry-leading best practices, including:

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

The following factors were among those considered:

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—How Executive Pay Decisions Are Made" describes in greater detail the information reported in this table.

    Name and Principal
Position


Year   Salary
($)(1)

 

Bonus
($)

 
Stock
Awards
($)(2)


 
Option
Awards
($)(4)


 
Non-Equity
Incentive Plan
Compensation
($)(6)



 
Change in
Pension
Value and
Non-qualified
Deferred
Compensation
Earnings
($)(7)







 
All Other
Compensation
($)(8)


 
Total
($)

 
    Miles D. White,   2014   $1,973,077   $ 0   $4,649,999   $4,649,997   $3,800,000   $1,552,732   $1,106,436   $17,732,241    
    Chairman of the   2013   1,900,000     0   7,337,400 (3) 7,062,220 (3)(5) 3,150,000   336,153   1,079,895   20,865,668    
    Board, Chief   2012   1,900,000     0   9,429,176   2,057,000   4,700,000   6,162,947   869,713   25,118,836    
    Executive Officer                                          
    and Director                                          

 

 

Thomas C. Freyman,

 

2014

 

1,012,604

 


0

 

1,281,024

 

1,281,048

 

1,200,000

 

2,369,141

 

164,011

 

7,307,828

 

  Executive Vice   2013   969,748   0   2,009,050 (3) 1,784,319 (3)(5) 912,000   49,516   157,121   5,881,754  
  President, Finance   2012   946,700   1,200,000 (9) 3,341,844   729,640   1,270,000   2,049,188   126,406   9,663,778  
  and Chief                    
  Financial Officer                    

 

 

Brian J. Blaser,

 

2014

 

690,000

 

 

0

 

1,119,262

 

1,119,298

 

668,000

 

563,615

 

90,094

 

4,250,269

 

 
    Executive Vice President,   2013   614,608     0   1,107,598 (3) 952,050 (3) 800,000   28,390   76,896   3,579,542    
    Diagnostic Products                                          

 

 

John M. Capek,

 

2014

 

696,807

 


0

 

904,024

 

904,044

 

653,800

 

530,230

 

110,490

 

3,799,395

 

  Executive Vice President,                    
  Medical Devices                    

 

 

John C. Landgraf,

 

2014

 

743,269

 

 

0

 

990,127

 

990,150

 

401,600

 

1,285,826

 

245,358

 

4,656,330

 

 
    Executive Vice President,                                          
    Nutrition Products                                          
(1)
In a typical year, such as 2013 and 2012, Abbott's U.S. salaried employees are paid on a bi-weekly 26 pay period schedule. 2014 included an extra pay period for Abbott's U.S. salaried employees, resulting in salaries approximately 3.8 percent higher than in a typical year having 26 pay periods.

(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)
When Abbott and AbbVie separated on January 1, 2013, all holders of outstanding Abbott equity awards received (except where prohibited by local law) an identical number of AbbVie equity awards to preserve the value of the initial Abbott awards. Because these AbbVie awards resulted from an antidilution adjustment pursuant to the terms of Abbott's Incentive Stock Programs meant to preserve the value of the existing Abbott awards, they have no impact on the amounts set forth in the table. Additional information regarding the conversion of Abbott's outstanding equity awards when Abbott and AbbVie separated is contained in the introduction to the 2014 Outstanding Equity Awards table on page 47.

(4)
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. For options, other than the replacement options, the assumptions are the same as those described in Note 9 entitled "Incentive Stock Program" of Abbott's Notes to Consolidated Financial Statements included under Item 8, "Financial Statements and Supplementary Data" in Abbott's 2014 Annual Report on Securities and Exchange Commission Form 10-K. For Abbott replacement options, the model used the following assumptions: expected volatility of 14%; dividend yield ranging between 1.6% and 1.7%; risk-free interest of 0.1%; and an option life equal to 60% of the option's remaining life. For AbbVie replacement options, the model used the following assumptions: expected volatility of 32.63%; dividend yield of 4.5%; risk-free interest of 0.1%; and an option life equal to 60% of the option's remaining life.

(5)
These amounts include the grant date fair values of $1,407,620 and $57,358 attributable to replacement stock options issued in 2013 to M. D. White and T. C. Freyman, respectively, with respect to original option grants made before 2005. No options with a replacement option feature remain outstanding.
Abbott Laboratories      43

Table of Contents


Prior to 2014, when the exercise price of an Abbott option with a replacement feature was paid (or, in the case of a non-qualified stock option, when the option's exercise price or the withholding taxes resulting on exercise of that option were paid) with Abbott common shares held by the named officer, an Abbott replacement option may have been granted for the number of shares used to make that payment. The closing price of an Abbott common share on the business day before the exercise was used to determine the number of shares required to exercise the related option and the exercise price of the replacement option. The replacement option was exercisable in full six months after the date of grant, and had a term expiring on the expiration date of the original option. Other terms and conditions of the replacement option award were the same in all material respects to those applicable to the original grant. AbbVie replacement options had substantially similar terms, except that AbbVie common stock was used to pay for the exercise price or withholding taxes.

(6)
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—How Executive Pay Decisions Are Made—Annual Cash Incentive Plan."

(7)
The plan amounts shown below are reported in this column.


For Messrs. White and Freyman, the amounts shown alongside the officer's name are for 2014, 2013, and 2012, respectively. For Mr. Blaser, the amounts shown are for 2014 and 2013, respectively. For Messrs. Capek, and Landgraf, the amount shown is for 2014.


Abbott Laboratories Annuity Retirement Plan


M. D. White: $254,100 / $11,805 / $177,433; T. C. Freyman: $266,632 / $14,517 / $210,536; B. J. Blaser: $65,871 / $(3,130); J. M. Capek: $62,858; and J. C. Landgraf: $238,825.


Abbott Laboratories Supplemental Pension Plan


M. D. White: $770,577 / $(1,411,638) / $5,444,865; T. C. Freyman: $2,020,109 / $(539,519) / $1,771,959; B. J. Blaser: $470,457 / $15,511; J. M. Capek: $400,130; and J. C. Landgraf: $826,545.


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).


M. D. White: $528,055 / $336,153 / $540,649; T. C. Freyman: $82,400 / $49,516 / $66,693; B. J. Blaser: $27,287 / $16,009; J. M. Capek: $67,242; and J. C. Landgraf: $220,456.

(8)
The amounts shown below are reported in this column.


For Messrs. White and Freyman, the amounts shown alongside the officer's name are for 2014, 2013, and 2012, respectively. For Mr. Blaser, the amounts shown are for 2014 and 2013 respectively. For Messrs. Capek, and Landgraf, the amount shown is for 2014.


Earnings, Fees and Pre-2013 Tax Payments for Non-Qualified Defined Benefit and Non-Qualified Defined Contribution Plans (net of the reportable interest included in footnote 7).


M. D. White: $596,788 / $583,735 / $392,759; T. C. Freyman: $84,855 / $70,747 / $45,320; B. J. Blaser: $27,727 / $12,650; J. M. Capek: $56,940; and J. C. Landgraf: $191,461.


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 and may be deposited into a grantor trust established by the officer, net of maximum tax withholdings. Each of the named officers has also established grantor trusts in connection with the Abbott Laboratories Supplemental Pension 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 the Management Incentive Plan). These amounts include the earnings (net of the reportable interest included in footnote 7), and (for years prior to 2013) fees and tax payments paid in connection with these grantor trusts (such payments are no longer provided, effective January 1, 2013).


Employer Contributions to Defined Contribution Plans


M. D. White: $98,654 / $95,000 / $95,000; T. C. Freyman: $50,630 / $48,488 / $47,335; B. J. Blaser: $34,500 / $30,730; J. M. Capek: $34,840; and J. C. Landgraf: $37,163.


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 Abbott's 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
44      Abbott Laboratories

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Other Compensation


Messrs. White's and Freyman'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, M. D. White: $217,954 / $218,280 / $213,435; and T. C. Freyman: $9,682 / $15,687 / $13,686.


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 are included: $193,040 / $182,880 / $168,519. 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: T. C. Freyman: $15,395 / $12,199 / $17,280; B. J. Blaser: $27,867 / $27,016; J. M. Capek: $18,710; and J. C. Landgraf: $14,734.


For Messrs. Freyman, Blaser, and Landgraf, the following costs associated with financial planning are included: T. C. Freyman: $3,449 / $10,000 / $2,785; B. J. Blaser: $0 / $6,500; and J. C. Landgraf: $2,000.


The named officers are also eligible to participate in an executive disability benefit described on page 57.

(9)
Bonus paid in recognition of performance related to the business separation.
Abbott Laboratories      45

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2014 GRANTS OF PLAN-BASED AWARDS

                    Estimated
Future
Payouts
Under Non-Equity
Incentive
Plan Awards(1)






Estimated
Future
Payouts
Under Equity
Incentive
Plan Awards
Target







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
($)


​(#)(2)(3)

Options
(#)


Awards
($/Sh.)


Price on
Grant Date




and Option
Awards


    M. D. White   2/21/14           118,865                 $4,649,999(5)    
        2/21/14               727,699(4)   $39.12   $38.82     4,649,997(6)    
  T. C. Freyman   2/21/14       32,746         1,281,024(5)  
    2/21/14         200,477(4)   39.12   38.82   1,281,048(6)  
    B. J. Blaser   2/21/14           28,611                 1,119,262(5)    
        2/21/14               175,164(4)   39.12   38.82     1,119,298(6)    
  J. M. Capek   2/21/14       23,109            904,024(5)  
    2/21/14         141,478(4)   39.12   38.82      904,044(6)  
    J. C. Landgraf   2/21/14           25,310                    990,127(5)    
        2/21/14               154,953(4)   39.12   38.82        990,150(6)    
(1)
During 2014, 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 2014 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 2014 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—How Executive Pay Decisions Are Made."

(2)
These are performance-based restricted stock awards that have a 5-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 2014, Abbott reached its minimum return on equity target and one-third of each of the awards made on February 21, 2014, vested on February 27, 2015. The equity targets are described in the section of the proxy statement captioned, "Compensation Discussion and Analysis—How Executive Pay Decisions Are Made—Long-Term Incentives."

(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 receive dividends 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 2009 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. These options do not contain a replacement option feature.

(5)
Abbott determines the grant date fair value of stock awards by multiplying the number of restricted shares 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 9, entitled, "Incentive Stock Program" of Abbott's Notes to Consolidated Financial Statements included under Item 8, "Financial Statements and Supplemental Data" in Abbott's 2014 Annual Report on Securities and Exchange Commission Form 10-K.
46      Abbott Laboratories

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2014 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

When Abbott and AbbVie separated on January 1, 2013, all holders of Abbott equity awards received (except where prohibited by local law) an identical number of AbbVie equity awards to preserve the value of existing Abbott equity awards.

Each Abbott stock option was converted into an adjusted Abbott stock option and an AbbVie stock option, which together were intended to preserve the aggregate value of the original Abbott stock option as measured immediately before and immediately after the distribution. The adjusted Abbott stock option and the resulting AbbVie stock option each cover the same number of shares as the original Abbott stock option, but their exercise prices were adjusted to reflect the distribution. The adjusted Abbott stock options and the AbbVie stock options are subject to substantially the same terms, vesting conditions, post-termination exercise rules, and other restrictions that applied to the original Abbott stock option immediately before the distribution.

Holders of Abbott restricted shares or restricted stock units retained those awards and also received restricted stock or restricted stock units of AbbVie, to reflect the distribution to Abbott shareholders. Together, the Abbott and AbbVie awards were intended to preserve the value of the original Abbott restricted shares or restricted stock units as measured immediately before and immediately after the distribution. The original Abbott restricted shares and restricted stock units and the AbbVie restricted stock and restricted stock units are subject to substantially the same terms, vesting conditions and other restrictions that applied to the original Abbott restricted shares and restricted stock units, respectively, immediately before the distribution.

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

            Option Awards(1)(2)  

  Stock Awards(1)  

    Name

Security

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
($)












    M. D. White   Abbott                                     55,867   $ 2,515,132    
        AbbVie                                     55,867     3,655,936    
        Abbott                                     140,000     6,302,800    
        Abbott                                     118,865     5,351,302    
        Abbott   438,000           $ 21.2194   02/16/16                          
        AbbVie   438,000             22.9407   02/16/16                          
        Abbott   550,000             25.2461   02/15/17                          
        AbbVie   550,000             27.2940   02/15/17                          
        Abbott   530,000             26.6973   02/14/18                          
        AbbVie   530,000             28.8628   02/14/18                          
        Abbott   325,000             26.0150   02/19/19                          
        AbbVie   325,000             28.1251   02/19/19                          
        Abbott   295,000             26.1879   02/18/20                          
        AbbVie   295,000             28.3122   02/18/20                          
        Abbott   294,700             22.3919   02/17/21                          
        AbbVie   294,700             24.2082   02/17/21                          
        Abbott   201,667   100,833         27.0336   02/16/22                          
        AbbVie   201,667   100,833         29.2265   02/16/22                          
        Abbott   326,667   653,333         34.9400   02/14/23                          
        Abbott       727,699         39.1200   02/20/24                          

See footnote on page 52.

Abbott Laboratories      47

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2014 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END (CONTINUED)

            Option Awards(1)(2)  

  Stock Awards(1)  

    Name

Security

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
($)












    T. C. Freyman   Abbott                                   19,800   $ 891,396    
        AbbVie                                   19,800     1,295,712    
        Abbott                                   38,333     1,725,752    
        Abbott                                   32,746     1,474,225    
        Abbott   56,000           $25.2461   02/15/17                          
        Abbott   127,500           26.6973   02/14/18                          
        AbbVie   127,500           28.8628   02/14/18                          
        Abbott   108,200           26.0150   02/19/19                          
        AbbVie   108,200           28.1251   02/19/19                          
        Abbott   87,100           26.1879   02/18/20                          
        AbbVie   87,100           28.3122   02/18/20                          
        Abbott   86,300           22.3919   02/17/21                          
        Abbott   71,533   35,767       27.0336   02/16/22                          
        AbbVie   71,533   35,767       29.2265   02/16/22                          
        Abbott   99,767   199,533       34.9400   02/14/23                          
        Abbott       200,477       39.1200   02/20/24                          

See footnote on page 52.

48      Abbott Laboratories

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2014 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END (CONTINUED)

            Option Awards(1)(2)  

  Stock Awards(1)  

    Name

Security

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
($)












    B. J. Blaser   Abbott                                   8,900   $ 400,678    
        AbbVie                                   8,900     582,416    
        Abbott                                   1,833     82,522    
        AbbVie                                   1,833     119,952    
        Abbott                                   21,133     951,408    
        Abbott                                   28,611     1,288,067    
        Abbott   3,233           $26.1879   02/18/20                          
        Abbott   6,333           23.2280   05/16/20                          
        Abbott   27,733           22.3919   02/17/21                          
        Abbott   32,067   16,033       27.0336   02/16/22                          
        AbbVie   32,067   16,033       29.2265   02/16/22                          
        Abbott   6,733   3,367       29.2920   05/31/22                          
        AbbVie   6,733   3,367       31.6681   05/31/22                          
        Abbott   55,000   110,000       34.9400   02/14/23                          
        Abbott       175,164       39.1200   02/20/24                          

See footnote on page 52.

Abbott Laboratories      49

Table of Contents

2014 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END (CONTINUED)

            Option Awards(1)(2)  

  Stock Awards(1)  

    Name

Security

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
($)












    J. M. Capek   Abbott                                   9,633   $ 433,678    
        AbbVie                                   9,633     630,384    
        Abbott                                   19,200     864,384    
        Abbott                                   23,109     1,040,367    
        Abbott   83,000           $25.2461   02/15/17                          
        Abbott   22,000           24.3812   07/31/17                          
        Abbott   93,400           26.6973   02/14/18                          
        Abbott   64,900           26.0150   02/19/19                          
        Abbott   46,900           26.1879   02/18/20                          
        AbbVie   46,900           28.3122   02/18/20                          
        Abbott   50,100           22.3919   02/17/21                          
        AbbVie   50,100           24.2082   02/17/21                          
        Abbott   34,867   17,433       27.0336   02/16/22                          
        AbbVie   34,867   17,433       29.2265   02/16/22                          
        Abbott   49,867   99,733       34.9400   02/14/23                          
        Abbott       141,478       39.1200   02/20/24                          

See footnote on page 52.

50      Abbott Laboratories

Table of Contents

2014 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END (CONTINUED)

            Option Awards(1)(2)  

  Stock Awards(1)  

    Name

Security

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
(#)