AbbVie 2015 Annual Report Download

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2015 ANNUAL REPORT
ON FORM 10-K
2016 NOTICE OF
ANNUAL MEETING AND
PROXY STATEMENT
PEOPLE. PASSION. POSSIBILITIES.

Table of contents

  • Page 1
    2015 ANNUAL REPORT ON FORM 10-K 2016 NOTICE OF ANNUAL MEETING AND PROXY STATEMENT PEOPLE. PASSION. POSSIBILITIES.

  • Page 2
    about abbvie AbbVie is a global, research-based biopharmaceutical company formed in 2013 following separation from Abbott Laboratories. The company's mission is to use its expertise, dedicated people, and unique approach to innovation to develop and market advanced therapies that address some of the...

  • Page 3
    ...2015 growth. We also expanded our operating margin to 42% of sales-up 610 basis points-and improved gross margin to 83% of sales-up 280 basis points since 2014. In just three years, AbbVie has become a leading biopharmaceutical company with top-tier business performance, financial results and return...

  • Page 4

  • Page 5
    ... market value of the 1,637,027,201 shares of voting stock held by non-affiliates of the registrant, computed by reference to the closing price as reported on the New York Stock Exchange, as of the last business day of AbbVie Inc.'s most recently completed second fiscal quarter (June 30, 2015...

  • Page 6

  • Page 7
    ... in clinical development across such important medical specialties as immunology, virology/liver disease, oncology, neurological diseases and women's health. On May 26, 2015, AbbVie completed its acquisition of Pharmacyclics, Inc., a biopharmaceutical company that develops and commercializes novel...

  • Page 8
    ... an all-oral, short-course, interferon-free therapy, with or without ribavirin, for the treatment of adult patients with genotype 1 chronic HCV, including those with compensated cirrhosis. VIEKIRA PAK was approved by the FDA in December 2014. In Europe, AbbVie's HCV treatment is marketed as VIEKIRAX...

  • Page 9
    ...HIV-1 infection. Synagis. Synagis (palivizumab) is a product marketed by AbbVie outside of the United States that protects at-risk infants from severe respiratory disease caused by RSV. Metabolics/Hormones products. Metabolic and hormone products target a number of conditions, including testosterone...

  • Page 10
    ...designed and conducted to collect additional data regarding, among other parameters, the benefits and risks of an approved drug. AbbVie spent approximately $4.3 billion in 2015, $3.3 billion in 2014, and $2.9 billion in 2013 on research to discover and develop new products, indications and processes...

  • Page 11
    ...For products that are either used to treat conditions that afflict a relatively small population or for which there is not a reasonable expectation that the research and development costs will be recovered, the FDA may designate the pharmaceutical as an orphan drug and grant it seven years of market...

  • Page 12
    ... patient support programs closely related to its products. AbbVie's products are generally sold worldwide directly to wholesalers, distributors, government agencies, health care facilities, specialty pharmacies, and independent retailers from AbbVie-owned distribution centers and public warehouses...

  • Page 13
    ... on a current basis, and order backlog is not material to AbbVie's business. Third Party Agreements AbbVie has agreements with third parties for process development, analytical services, and manufacturing of certain products. AbbVie procures certain products and services from a limited number of...

  • Page 14
    ... material adverse effect on the company's financial position, cash flows, or results of operations. Competition The markets for AbbVie's products are highly competitive. AbbVie competes with other research-based pharmaceuticals and biotechnology companies that discover, manufacture, market, and sell...

  • Page 15
    ... for approval of a new product are made through the Pharmaceutical and Medical Devices Agency (PMDA). Bridging studies to demonstrate that the non-Japanese clinical data applies to Japanese patients may be required. After completing a comprehensive review, the PMDA reports to the Ministry of...

  • Page 16
    ... United States. Prescription drug manufacturers such as AbbVie are also subject to taxes, as well as application, product, user, establishment, and other fees. Compliance with these laws and regulations is costly and materially affects AbbVie's business. Among other effects, health care regulations...

  • Page 17
    ... of financial payments to doctors. If AbbVie fails to comply with the CIA, the Office of Inspector General for the United States Department of Health and Human Services may impose monetary penalties or exclude AbbVie from federal health care programs, including Medicare and Medicaid. 2015 Form 10...

  • Page 18
    ... qualifications, code of business conduct and the charters of AbbVie's audit committee, compensation committee, nominations and governance committee, and public policy committee are all available on AbbVie's investor relations website (www.abbvieinvestor.com). 12 13NOV201221352027 2015 Form 10-K

  • Page 19
    ... and uncertainties develops into actual events, these events could have a material adverse effect on AbbVie's business, results of operations, financial condition or cash flows. In such case, the trading price of AbbVie's common stock could decline. Risks Related to AbbVie's Business The expiration...

  • Page 20
    ...effect on AbbVie's profitability and financial condition. Any significant event that adversely affects HUMIRA revenues could have a material and negative impact on AbbVie's results of operations and cash flows. HUMIRA accounted for approximately 61 percent of AbbVie's total net revenues in 2015. Any...

  • Page 21
    ... of operations. The successful discovery, development, manufacturing and sale of biologics is a long, expensive and uncertain process. There are unique risks and uncertainties with biologics. For example, access to and supply of necessary biological materials, such as cell lines, may be limited, and...

  • Page 22
    ...synthetically. Failure to successfully discover, develop, manufacture and sell biologics-including HUMIRA- could adversely impact AbbVie's business and results of operations. AbbVie's biologic products may become subject to competition from biosimilars. The Biologics Price Competition and Innovation...

  • Page 23
    ... material adverse effect on AbbVie's revenues and financial condition. Pharmaceutical products receive regulatory approval based on data obtained in controlled clinical trials of limited duration. Following regulatory approval, these products will be used over longer periods of time in many patients...

  • Page 24
    ...by greater demand, increased patient access to health care, or other factors, AbbVie's future revenues and operating earnings will be reduced. In the United States, the European Union and other countries, AbbVie's business has experienced downward pressure on product pricing, and this pressure could...

  • Page 25
    ... of the United States make up approximately 41 percent of AbbVie's total net revenues in 2015. The risks associated with AbbVie's operations outside the United States include: • fluctuations in currency exchange rates; • changes in medical reimbursement policies and programs; 2015 Form 10...

  • Page 26
    ... of its business strategy. AbbVie may not complete these transactions in a timely manner, on a cost-effective basis, or at all, and may not realize the expected benefits. If AbbVie is successful in making an acquisition, the products and technologies that are acquired may not be successful or may...

  • Page 27
    ..., its results of operations could be adversely affected if they encounter financial difficulties. In 2015, three wholesale distributors-AmerisourceBergen Corporation, Cardinal Health, Inc. and McKesson Corporation-accounted for substantially all of AbbVie's net revenues in the United States. If one...

  • Page 28
    ... a dilutive effect on AbbVie's earnings per share, which could adversely affect the market price of AbbVie's common stock. From time to time, AbbVie will issue additional options or other stock-based awards to its employees under AbbVie's employee benefits plans. In addition, AbbVie's amended and...

  • Page 29
    ... relating to the number, term and election of AbbVie's directors, the filling of board vacancies, the calling of special meetings of stockholders and director and officer indemnification provisions. In addition, Section 203 of the Delaware General Corporation Law provides that, subject to limited...

  • Page 30
    ... Annual Report on Form 10-K to reflect events or circumstances after the date hereof, unless AbbVie is required by applicable securities law to do so. ITEM 1B. UNRESOLVED STAFF COMMENTS ...None. ITEM 2. PROPERTIES ...AbbVie's corporate offices are located at 1 North Waukegan Road, North Chicago...

  • Page 31
    ... entitled ''Legal Proceedings and Contingencies'' of the Notes to Consolidated Financial Statements included under Item 8, ''Financial Statements and Supplementary Data,'' and is incorporated by reference herein. ITEM 4. MINE SAFETY DISCLOSURES ...Not applicable. 2015 Form 10-K 13NOV201221352027...

  • Page 32
    ... Mr. Gonzalez is AbbVie's Chairman of the Board and Chief Executive Officer. He served as Abbott's Executive Vice President, Pharmaceutical Products Group from 2010 to 2012, and was responsible for Abbott's worldwide pharmaceutical business, including commercial operations, research and development...

  • Page 33
    ...Schumacher joined Abbott in 1990. She serves on the board of General Dynamics Corporation. Dr. Severino is AbbVie's Executive Vice President, Research and Development, Chief Scientific Officer. Dr. Severino served at Amgen Inc. as Senior Vice President, Global Development and Corporate Chief Medical...

  • Page 34
    ... New York Stock Exchange (NYSE). AbbVie's common stock is also listed on the Chicago Stock Exchange and traded on various regional and electronic exchanges. Outside the United States, AbbVie's common stock is listed on NYSE Euronext Paris and the SIX Swiss Exchange. Market Price Per Share 2015 2014...

  • Page 35
    ... 2014, AbbVie announced that its board of directors authorized the purchase of up to $5.0 billion of its common stock. Purchases of AbbVie shares under this program may be made from time to time at management's discretion. The program has no time limit and can be discontinued at any time. 2015 Form...

  • Page 36
    ... of Financial Condition and Results of Operations.'' as of and for the years ended December 31 (in millions, except per share data) 2015 2014 2013 2012 2011 Statement of earnings data Net revenues Net earnings(a)(b) Basic earnings per share(a)(b) Diluted earnings per share(a)(b) Cash dividends...

  • Page 37
    ... under Item 8, ''Financial Statements and Supplementary Data'' for information regarding the acquisition of Pharmacyclics, Inc., the senior notes and the accelerated share repurchase program, respectively. (f) Also includes current portion of long-term debt and lease obligations. 2015 Form 10...

  • Page 38
    ... has a pipeline of promising new medicines across such important medical specialties as immunology, virology/liver disease, oncology, neurology, cystic fibrosis and women's health. AbbVie's products are generally sold worldwide directly to wholesalers, distributors, government agencies, health care...

  • Page 39
    ...-stage pipeline assets, continued investment in AbbVie's growth brands, and the global launch of AbbVie's interferon-free HCV treatment, VIEKIRA PAK. In 2015, the company generated cash flows from operations of $7.5 billion. These cash flows enabled the company to pay cash dividends to shareholders...

  • Page 40
    ... programs to optimize manufacturing, commercial infrastructure, administrative costs and general corporate expenses, and continued leverage from revenue growth. AbbVie also remains committed to returning cash to shareholders via dividends and share repurchases. Research and Development Research...

  • Page 41
    ... 2016, the FDA granted IMBRUVICA orphan drug designation for the treatment of patients with extranodal marginal zone lymphoma. • AbbVie submitted regulatory applications in the United States and the EU for venetoclax (ABT-199), an inhibitor of the B-cell lymphoma-2 (Bcl-2) protein developed...

  • Page 42
    ... regulatory action on the new formulation in 2016. • The FDA accepted AbbVie's sNDA and granted priority review for VIEKIRA PAK without RBV in patients with genotype 1b (GT1b) chronic HCV infection and compensated cirrhosis (Child-Pugh A). Neurology • On January 12, 2015, AbbVie announced...

  • Page 43
    ... with gemcitabine and nab-paclitaxel for first-line treatment of patients with metastatic pancreatic adenocarcinoma. Virology/Liver Disease • In October 2015, in consultation with the FDA, the product inserts in the United States for VIEKIRA PAK and TECHNIVIE were updated from ''not recommended...

  • Page 44
    ... ''Financial Statements and Supplementary Data'' for further information regarding the license agreement with C2N. RESULTS OF OPERATIONS Net Revenues The comparisons presented at constant currency rates reflect comparative local currency net revenues at the prior year's foreign exchange rates. This...

  • Page 45
    ... AbbVie's worldwide net revenues: Percent change At actual At constant currency currency rates rates 2015 2014 2015 2014 years ended December 31 (in millions) 2015 2014 2013 HUMIRA United States International Total IMBRUVICA United States Collaboration revenues Total VIEKIRA United States...

  • Page 46
    ...of AbbVie's net revenues by product is presented on a constant currency basis. Global HUMIRA sales increased 19 percent in both 2015 and 2014, primarily as a result of market growth across therapeutic categories and geographies, higher market share, approval of new indications, and favorable pricing...

  • Page 47
    ... both 2015 and 2014, reflecting increased selling and marketing support for new products, including the global launch of VIEKIRA, as well as spending relating to new indications and geographic expansion for HUMIRA and other growth brands. SG&A expenses in 2015 also included Pharmacyclics acquisition...

  • Page 48
    ...agreement entered into in September 2014 with Calico to discover, develop and commercialize new therapies for patients with age-related diseases. Other Non-Operating Expenses Interest expense, net was $686 million in 2015, $391 million in 2014, and $278 million in 2013 and was comprised primarily of...

  • Page 49
    ... and net sales (purchases) of short-term investments. Capital expenditures in 2014 included the purchase of a small molecule active pharmaceutical ingredient manufacturing facility in Singapore. AbbVie incurred additional expenditures in 2015 to build a new biologics facility on the site to...

  • Page 50
    ... an $18 billion, 364-Day Bridge Term Loan Credit Agreement as well as $93 million of costs relating to the issuance of senior notes. Cash dividend payments totaled $3.3 billion in 2015 and $2.7 billion in 2014. On October 30, 2015, AbbVie announced that its board of directors declared an increase in...

  • Page 51
    .... There were no amounts outstanding under the credit facility as of December 31, 2015 and 2014. Access to Capital The company intends to fund short-term and long-term financial obligations as they mature through cash on hand, future cash flows from operations, or by issuing additional debt. The...

  • Page 52
    ... with Pharmacyclics, Moody's Investor Service confirmed its Baa1 senior unsecured long-term rating and Prime-2 short-term rating and revised its ratings outlook to ''negative'' from ''stable''. On March 5, 2015, Standard & Poor's Rating Services (S&P) affirmed AbbVie's ''A'' corporate credit rating...

  • Page 53
    ..., group purchasing organizations, and other government agencies and private entities. Rebate and chargeback accruals are recorded as a reduction to revenue in the period the related product is sold. Rebates and chargebacks totaled $8.6 billion, $5.9 billion and $4.9 billion in 2015, 2014 and 2013...

  • Page 54
    ...AbbVie. The valuation of the funded status and the net periodic benefit cost for these plans are calculated using actuarial assumptions. The significant assumptions, which are reviewed annually, include the discount rate, the expected long-term rate of return on plan assets, and the health care cost...

  • Page 55
    ...term rate of return on plan assets would have increased or decreased the net period benefit cost of these plans in 2016 by $45 million. The health care cost trend rate is selected by reviewing historical trends and current views on projected future health care cost increases. The current health care...

  • Page 56
    .... Goodwill and indefinite-lived intangible assets, which relate to IPR&D, are reviewed for impairment annually or when an event occurs that could result in an impairment. Refer to Note 2 to the consolidated financial statements for further information. Annually, the company tests its goodwill for...

  • Page 57
    ... application permitted for financial statements that have not been issued. AbbVie elected to early adopt the standard, effective in the year ended December 31, 2015. The impact of this adoption was not material. In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance...

  • Page 58
    ... interim periods within those fiscal years. The standard does not permit early adoption with the exception of certain targeted provisions. AbbVie is currently assessing the impact and timing of adopting this guidance on its consolidated financial statements. 52 13NOV201221352027 2015 Form 10-K

  • Page 59
    ... not designated as hedges, are marked-to-market, and resulting gains or losses are reflected in net foreign exchange on AbbVie's consolidated statements of earnings and are generally offset by losses or gains on the foreign currency exposure being managed. At December 31, 2015 and 2014, AbbVie held...

  • Page 60
    ... at December 31, 2015. A 100-basis point change is believed to be a reasonably possible near-term change in interest rates. Market Price Sensitive Investments AbbVie holds equity securities in other pharmaceutical and biotechnology companies that are traded on public stock exchanges. The fair value...

  • Page 61
    ...Consolidated Statements of Cash Flows ...Notes to Consolidated Financial Statements ...Report of Independent Registered Public Accounting Firm ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... 56 57 58 59 60 61 103 2015 Form...

  • Page 62
    ... Statements of Earnings years ended December 31 (in millions, except per share data) 2015 2014 2013 Net revenues Cost of products sold Selling, general and administrative Research and development Acquired in-process research and development Other expense Total operating costs and expenses Operating...

  • Page 63
    ...tax (benefit) expense of ($139) in 2015, ($158) in 2014, and $71 in 2013 Pension and post-employment benefits, net of tax expense (benefit) of $96 in 2015, ($351) in 2014, and $309 in 2013 Unrealized gains on marketable equity securities, net of tax expense of $22 in 2015, $1 in 2014, and $- in 2013...

  • Page 64
    AbbVie Inc. and Subsidiaries Consolidated Balance Sheets as of December 31 (in millions, except share data) 2015 2014 Assets Current assets Cash and equivalents Short-term investments Accounts and other receivables, net Inventories, net Deferred income taxes Prepaid expenses and other Total current...

  • Page 65
    ...-related adjustments Reclassification of parent company net investment in connection with separation Issuance of common shares at separation Net earnings Other comprehensive income, net of tax Dividends declared Share repurchases Stock-based compensation plans and other Balance at December 31, 2013...

  • Page 66
    ...short-term borrowings Proceeds from issuance of long-term debt Repayments of long-term debt and capital leases Debt issuance cost Dividends paid Purchases of treasury stock Proceeds from the exercise of stock options Net transactions with Abbott Laboratories, excluding non-cash items Other, net Cash...

  • Page 67
    ... business of AbbVie Inc. (AbbVie or the company) is the discovery, development, manufacture and sale of a broad line of pharmaceutical products. AbbVie's products are generally sold worldwide directly to wholesalers, distributors, government agencies, health care facilities, specialty pharmacies...

  • Page 68
    ... assets and liabilities and results of operations have been reported in AbbVie's consolidated financial statements as of and for the years ended December 31, 2015, 2014, and 2013. Net revenues related to these operations for 2015, 2014, and 2013 totaled approximately $213 million, $282 million...

  • Page 69
    ... annual expenses relating to its defined benefit pension and other post-employment plans based on calculations which include various actuarial assumptions, including discount rates, assumed asset rates of return, compensation increases, turnover rates and health care cost trend rates. AbbVie reviews...

  • Page 70
    ... gains or losses, net of tax, included in accumulated other comprehensive loss (AOCI) in AbbVie's consolidated balance sheets. Investments in equity securities that are not traded on public stock exchanges and held-to-maturity debt securities are recorded at cost. AbbVie reviews the carrying value...

  • Page 71
    ... information becomes available. Receivables for insurance recoveries, if any, for product liability claims are recorded as assets, on an undiscounted basis, when it is probable that a recovery will be realized. Business Combinations Results of operations of acquired companies are included in AbbVie...

  • Page 72
    ... in connection with research and development collaboration agreements that provide rights to develop, manufacture, market and/or sell pharmaceutical products. The fair value of IPR&D projects acquired in a business combination are capitalized and accounted for as indefinite-lived intangible assets...

  • Page 73
    ... is permitted only for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. AbbVie is currently assessing the timing of its adoption and the impact of adopting this guidance on its consolidated financial statements and the implementation...

  • Page 74
    .... AbbVie is currently assessing the impact and timing of adopting this guidance on its consolidated financial statements. Note 3 Supplemental Financial Information ...Interest Expense, Net years ended December 31 (in millions) 2015 2014 2013 Interest expense Interest income Interest expense, net...

  • Page 75
    ...the two-class method. Earnings allocable to participating securities for 2015, 2014, and 2013 were $26 million, $9 million, and $26 million, respectively. As further described in Note 12, AbbVie entered into and executed a $5.0 billion accelerated share repurchase agreement (ASR) with Morgan Stanley...

  • Page 76
    ... kinase (BTK) inhibitor, targeting B-cell malignancies. Each outstanding Pharmacyclics share was exchanged for (i) $152.25 in cash and $109.00 in fair market value of AbbVie common stock, (ii) $261.25 in cash, or (iii) $261.25 in fair market value of AbbVie common stock, at the election of each...

  • Page 77
    ... its remaining useful life. Some of the more significant assumptions inherent in the development of those asset valuations include the estimated net cash flows for each year for each asset or product (including net revenues, cost of sales, R&D costs, selling and marketing costs, and working capital...

  • Page 78
    ... Financial Information The following table presents the unaudited pro forma combined results of operations of AbbVie and Pharmacyclics for 2015 and 2014 as if the acquisition of Pharmacyclics had occurred on January 1, 2014: years ended December 31 (in millions, except per share data) 2015 2014 Net...

  • Page 79
    ...well as royalties on net sales. Calico Life Sciences LLC In September 2014, AbbVie and Calico entered into a novel R&D collaboration agreement to discover, develop and commercialize new therapies for patients with age-related diseases, including neurodegeneration and cancer. In 2014, AbbVie recorded...

  • Page 80
    ... United States, AbbVie is the principal in the end customer product sales. Operating expenses for costs incurred under the collaboration are reported in their respective expense line items, net of any payments due or reimbursements due from Janssen. Revenues and profit share costs related to sales...

  • Page 81
    Janssen's share of the pre-tax profits in the United States under the collaboration was $306 million for 2015 and was recorded within cost of products sold in the consolidated statement of earnings. For 2015, AbbVie's share of pre-tax profits outside the United States and cost sharing expenses under...

  • Page 82
    ... amortization was completed in the third quarter of 2015. No impairment charges were recorded in 2015. Impairment charges recorded in 2014 related to indefinite-lived intangible assets were not material. Future impairment tests for indefinite-lived intangible assets will be performed annually in the...

  • Page 83
    ...$29,240 $10,538 On September 25, 2015, AbbVie entered into a $2 billion three-year term loan credit agreement and a $2 billion 364-day term loan credit agreement (collectively, the term loan facilities). In November 2015, AbbVie drew on these term loan facilities and used the proceeds to refinance...

  • Page 84
    ... with Morgan Stanley. Refer to Notes 5 and 12 for additional information related to the acquisition of Pharmacyclics and the ASR, respectively. In March 2015, AbbVie entered into an $18 billion, 364-Day Bridge Term Loan Credit Agreement (the bridge loan) in support of the then planned acquisition of...

  • Page 85
    ... 2016 include the $2.0 billion floating rate notes due in 2016 drawn under the 364-day term loan credit agreement. Contingencies and Guarantees In connection with the separation, AbbVie has indemnified Abbott for all liabilities resulting from the operation of AbbVie's business other than income tax...

  • Page 86
    first quarter of 2015 but were net settled in the fourth quarter of 2014. In 2014, the company realized $490 million in net foreign exchange losses associated with the Shire-related forward exchange contracts. AbbVie is a party to interest rate hedge contracts, designated as fair value hedges, ...

  • Page 87
    ... as of December 31, 2015: Basis of fair value measurement Significant Quoted prices in other Significant active markets for observable unobservable identical assets inputs Inputs (Level 1) (Level 2) (Level 3) (in millions) Total Assets Cash and equivalents Time deposits Equity securities Interest...

  • Page 88
    ... and short-term investments are determined based on a discounted cash flow analysis reflecting quoted market rates for the same or similar instruments. The fair values of time deposits approximate their amortized cost due to the short maturities of these instruments. Available-for-sale equity...

  • Page 89
    ..., as well as the financial information of the investee, which represents a Level 3 basis of fair value measurement. The fair value of held-to-maturity debt securities was estimated based upon the quoted market prices for the same or similar debt instruments. The fair values of short-term and current...

  • Page 90
    ... pension plan on December 31, 2012 automatically became eligible for the AbbVie Pension Plan. During the first quarter of 2013, the AbbVie Pension Plan assumed the obligations and related assets for AbbVie employees from Abbott. AbbVie made voluntary contributions of 84 13NOV201221352027 2015 Form...

  • Page 91
    ... at December 31, 2015 and 2014, respectively, related to international defined benefit plans, a number of which generally are not funded as permitted by local regulations. Benefit payments under those plans are funded from company assets. AbbVie considered the release of the new mortality tables and...

  • Page 92
    ... included in other comprehensive (loss) income: years ended December 31 (in millions) 2015 2014 2013 Defined benefit plans Actuarial (gain) loss Prior service cost Amortization of actuarial losses and prior service costs Foreign exchange (gain) loss Total pre-tax (gain) loss recognized in other...

  • Page 93
    ...ended December 31 2015 2014 2013 Defined benefit plans Discount rate Expected long-term rate of return on plan assets Expected rate of change in compensation Other post-employment plans Discount rate 3.9% 7.8% 4.4% 4.5% 4.9% 7.9% 5.0% 5.3% 4.3% 8.2% 5.0% 4.5% Effective December 31, 2015, AbbVie...

  • Page 94
    ...asset classes and strategies, including but not limited to equities, fixed income, commodities, financial futures, currencies, and other securities, with objectives to outperform agreed upon benchmarks of specific return and volatility targets. (f) Investments in cash and cash equivalents. 2015 Form...

  • Page 95
    ... as of and for the years ended December 31 (in millions) 2015 2014 Beginning of period Actual return on plan assets on hand at end of period Purchases, sales and settlements, net End of period $474 5 161 $640 $411 21 42 $474 The investment mix of equity securities, fixed income and other asset...

  • Page 96
    ... the vesting schedule and expiration date of the original awards. No AbbVie awards have been granted to Abbott employees other than in connection with the separation. In 2015, 2014, and 2013, realized excess tax benefits associated with stock-based compensation and recorded in additional paid-in...

  • Page 97
    ... previously recognized compensation expense is reversed. The following table summarizes AbbVie RSA and RSU activity (including performance-based awards) for both AbbVie and Abbott employees for 2015: year ended December 31 (share units in thousands) Share units Weighted-average grant date fair value...

  • Page 98
    ...permits purchases of AbbVie shares from time to time in open market or private transactions at management's discretion depending on the company's cash flows, net debt level and market conditions. The program has no time limit and can be discontinued at any time. In March 2015, the board of directors...

  • Page 99
    ... changes in each component of AOCI, net of tax, for 2015, 2014 and 2013: Unrealized gains (losses) on marketable equity securities (in millions) (brackets denote losses) Foreign currency translation adjustments Pension and postemployment benefits Hedging activities Total Balance as of December...

  • Page 100
    ... domestic loss before income taxes in 2014 was driven by transaction and financing-related costs associated with the terminated proposed combination with Shire. Refer to Note 5 for further information. Income Tax Expense years ended December 31 (in millions) 2015 2014 2013 Current Domestic Foreign...

  • Page 101
    ... events in each year, including acquisitions and collaborations. The effective tax rates in 2015, 2014 and 2013 differed from the statutory tax rate principally due to the benefit from foreign operations which reflects the impact of lower income tax rates in locations outside the United States, tax...

  • Page 102
    ... in the deferred tax liabilities are primarily due to the acquisition of Pharmacyclics in which AbbVie recorded the excess of book basis over tax basis of intangible assets and investments. Gross federal net operating loss and tax credit carryforwards as of December 31, 2015 were $293 million...

  • Page 103
    ... business development activities during the year. Uncertain tax positions are generally included as a long-term liability on the consolidated balance sheets. AbbVie recognizes interest and penalties related to income tax matters in income tax expense. In 2015, 2014, and 2013, AbbVie recognized gross...

  • Page 104
    ... from such assumed legal matters. Several pending lawsuits filed against Unimed Pharmaceuticals, Inc., Solvay Pharmaceuticals, Inc. (a company Abbott acquired in February 2010 and now known as AbbVie Products LLC) and others are consolidated for pre-trial purposes in the United States District Court...

  • Page 105
    ... class action lawsuit, Medical Mutual of Ohio v. AbbVie Inc., et al., was filed against several manufacturers of testosterone replacement therapies (TRTs), including AbbVie, in the United States District Court for the Northern District of Illinois on behalf of all insurance companies, health benefit...

  • Page 106
    .... Outside the United States, products are sold primarily to health care providers or through distributors, depending on the market served. The following tables detail AbbVie's worldwide net revenues: years ended December 31 (in millions) 2015 2014 2013 HUMIRA IMBRUVICA VIEKIRA Creon Synagis Lupron...

  • Page 107
    Note 16 Quarterly Financial Data (unaudited) ...(in millions except per share data) 2015 2014 First Quarter Net revenues Gross margin Net earnings(a) Basic earnings per share Diluted earnings per share Cash dividends declared per common share Second Quarter Net revenues Gross margin Net earnings(b)...

  • Page 108
    ... a collaboration partner related the company's oncology program. Net revenues and gross margin in 2014 include royalty income of $81 million relating to prior periods as a result of the settlement of a licensing arrangement. (e) Fourth quarter results for 2015 included after-tax costs totaling $68...

  • Page 109
    ...-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 19, 2016 expressed an unqualified opinion thereon. /s/ Ernst & Young LLP Chicago, Illinois February 19, 2016 2015 Form 10-K 13NOV201221352027 103

  • Page 110
    ... the information technology infrastructure and transactional services provided to AbbVie by Abbott under various transition services agreements. These initiatives, which were completed in 2015, included modifications to the design and operation of controls over financial reporting. AbbVie reviewed...

  • Page 111
    ... management's assessment of internal controls over financial reporting) related to Pharmacyclics. In addition, AbbVie's consolidated statement of net earnings for 2015 included $774 million of net revenues and reflected a net loss of $331 million related to Pharmacyclics. The effectiveness of AbbVie...

  • Page 112
    ...income, equity and cash flows for each of the three years in the period ended December 31, 2015 of AbbVie Inc. and subsidiaries and our report dated February 19, 2016 expressed an unqualified opinion thereon. /s/ Ernst & Young LLP Chicago, Illinois February 19, 2016 106 13NOV201221352027 2015 Form...

  • Page 113
    ...who reports to the chief executive officer and to the public policy committee. The chief ethics and compliance officer is responsible for overseeing, administering, and monitoring AbbVie's compliance program. ITEM 11. EXECUTIVE COMPENSATION ...The material to be included in the 2016 Proxy Statement...

  • Page 114
    ...included in the 2016 Proxy Statement under the headings ''The Board of Directors and its Committees,'' ''Corporate Governance Materials,'' and ''Procedures for Approval of Related Person Transactions'' is incorporated herein by reference. The 2016 Definitive Proxy Statement will be filed on or about...

  • Page 115
    ... ...(a) Documents filed as part of this Form 10-K. (1) Financial Statements: See Item 8, ''Financial Statements and Supplementary Data,'' on page 47 hereof, for a list of financial statements. (2) Financial Statement Schedules: All schedules omitted are inapplicable or the information required is...

  • Page 116
    ... of AbbVie Inc. /s/ ROY S. ROBERTS Roy S. Roberts Director of AbbVie Inc. /s/ FREDERICK H. WADDELL Frederick H. Waddell Director of AbbVie Inc. /s/ WILLIAM J. CHASE William J. Chase Executive Vice President, Chief Financial Officer (Principal Financial Officer) 110 13NOV201221352027 2015 Form 10...

  • Page 117
    ... *AbbVie 2013 Incentive Stock Program (incorporated by reference to Exhibit A to the AbbVie Inc. Definitive Proxy Statement on Schedule 14A dated March 15, 2013).** *AbbVie 2013 Management Incentive Plan (incorporated by reference to Exhibit 10.14 of the Company's Annual Report on Form 10-K filed on...

  • Page 118
    ...Report on Form 10-Q for the quarterly period ended March 31, 2013).** *Pharmacyclics, Inc. 2014 Equity Incentive Award Plan (incorporated by reference to Exhibit 4.1 of the Company's Registration Statement on Form S-8 filed on May 27, 2015).** *Revolving Credit Agreement, dated as of August 18, 2014...

  • Page 119
    ...of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. The following financial statements and notes from the AbbVie Inc. Annual Report on Form 10-K for the year ended December 31, 2015 filed on February 19, 2016, formatted...

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  • Page 123
    ... the Annual Meeting. AbbVie's 2016 Proxy Statement and 2015 Annual Report on Form 10-K are available at www.abbvieinvestor.com. If you are a registered stockholder, you may access your proxy card by either: • • Going to the following website: www.proxyvote.com, entering the information requested...

  • Page 124
    ... Public Accounting Firm ...Audit Committee Report ...Say on Pay-Advisory Vote on the Approval of Executive Compensation (Item 3) ...Management Proposal Regarding Annual Election of Directors (Item 4) ...Approval of Material Terms of the Performance Goals under the AbbVie Performance Incentive Plan...

  • Page 125
    ... information in the Proxy Statement. Please review the entire Proxy Statement and the AbbVie 2015 Annual Report before voting. 2016 Annual Meeting of Stockholders ... Date and Time: May 6, 2016 9:00 a.m. CT Location: Fairmont Chicago, Millennium Park, 200 North Columbus Drive, Chicago, Illinois...

  • Page 126
    ... in development across important medical specialties such as immunology, oncology, virology/liver disease, neurological diseases and women's health. Business Performance Highlights AbbVie has Delivered Robust Financial Results since Separation Performance from 2013 Inception to 2015 Year End 10...

  • Page 127
    ...42.3% of net revenues-up 610 basis points-and improved gross margin to 82.9% of net revenues-up 280 basis points-since 2014. Earnings Per Share: AbbVie reported full-year adjusted EPS of $4.29, up 29.2%. This reflects top-tier growth, second in AbbVie's Health Care Peer Group. AbbVie's 2016 adjusted...

  • Page 128
    ... AbbVie's nine directors are independent and regularly meet in executive session All members of the audit, compensation, nominations and governance and public policy committees are independent Adopted a Proxy Access By-Law provision for 3%/3 years Policy prohibiting hedging and pledging Robust stock...

  • Page 129
    ... payout matrix based on financial performance and capped at 200% of target Short-Term Incentives Plan utilizes non-GAAP financial goals as well as an assessment of individual performance against strategic objectives: - Diluted EPS - Net revenues - Income before taxes - Return on assets - Strategic...

  • Page 130
    ... based on net revenues and operating margin to guide NEO annual incentive awards, beginning with awards for the 2015 performance year. ߜ Simplified the peer group used for compensation benchmarking, the AbbVie Health Care Peer Group. 1MAR201607422023 6 13NOV201221352027 2016 Proxy Statement

  • Page 131
    ... proxy will be voted FOR the ratification of Ernst & Young LLP as auditors, FOR the approval of executive compensation, FOR the management proposal regarding the annual election of directors, FOR the approval of the material terms of the performance goals under the AbbVie Performance Incentive Plan...

  • Page 132
    ...their shares of AbbVie common stock held in the AbbVie Savings Plan Trust. The Trust is administered by both a trustee and an investment committee. The trustee is Mercer Trust Company. The members of the investment committee are Robert A. Michael, William H.S. Preece and Michael J. Thomas, employees...

  • Page 133
    ... by the nominations and governance committee. Mr. Roberts is retiring as a director following the Annual Meeting and is not standing for reelection. Class I-Directors Whose Terms Expire in 2016 ... William H.L. Burnside Retired Senior Vice President and Director at The Boston Consulting Group...

  • Page 134
    ... of Business Strategic Development Board. 17JAN201314183678 Committees: Audit Public Policy Key Contributions to the Board: As a result of his tenure as group president and chief financial officer at Caterpillar Inc., Mr. Rapp has acquired management, operational, and financial expertise Director...

  • Page 135
    ... of Abbott Laboratories, Target Corporation, Teledyne Technologies, Inc. and Telefonaktiebolaget LM Ericsson. 17JAN201314185859 Committees: Audit Compensation Director since: 2013 Key Contributions to the Board: Through her extensive management and operating roles, including Age: 55 her financial...

  • Page 136
    ... and Canada. Key Contributions to the Board: As a result of his service as Abbott's executive vice president, Pharmaceutical Products Group, his previous service as Abbott's president and chief operating officer and his more than 30-year career at Abbott, Mr. Gonzalez has developed valuable business...

  • Page 137
    ... encourages its board members to attend the annual stockholder meeting. All of AbbVie's directors attended the 2015 annual stockholder meeting. The board has determined that each of the following individuals is independent in accordance with the New York Stock Exchange (NYSE) listing standards: Dr...

  • Page 138
    ... represent stockholders interests. Global Business and Strategy-For oversight of a complex global organization like AbbVie to successfully advise and oversee the strategic development and direction of the company. Corporate Governance and Public Company Board-Ensuring directors have background and...

  • Page 139
    ...1MAR201604004106 Member 1MAR201604003122 Financial Expert The audit committee is governed by a written charter. This committee assists the board of directors in fulfilling its oversight responsibility with respect to AbbVie's accounting and financial reporting practices and the audit process, the...

  • Page 140
    ... pay should be examined, metrics to be used in incentive plans to assess AbbVie's performance, competitive short- and long-term incentive practices in the marketplace, and compensation levels relative to market benchmarks. The committee negotiates and approves all fees paid to CAP for these services...

  • Page 141
    ... to AbbVie's public policy, certain areas of legal and regulatory compliance, and governmental affairs and health care compliance matters that affect AbbVie by discharging the responsibilities set forth in its charter. Executive Committee The executive committee members are Mr. Gonzalez, chair...

  • Page 142
    ...on the board or board committees. AbbVie's non-employee directors are compensated for their service under the AbbVie Non-Employee Directors' Fee Plan and the AbbVie 2013 Incentive Stock Program. The following table sets forth the non-employee directors' 2015 compensation. Change in Pension Value and...

  • Page 143
    DIRECTOR COMPENSATION In addition to the fees described in footnote (1), each non-employee director elected to or serving on the board of directors at the 2015 annual stockholder meeting received under the AbbVie 2013 Incentive Stock Program vested restricted stock units with a target grant date ...

  • Page 144
    ... directors' units are payable in stock as described in footnote (2) to the Director Compensation table. (3) The table includes shared voting and/or investment power over shares as follows: R. Gonzalez, 5,050; G. Tilton, 350; C. Alban, 40,442; W. Chase, 501; and all directors and executive officers...

  • Page 145
    ... to 3,252,090 shares. Name and Address of Beneficial Owner BlackRock, Inc. 40 East 52nd Street New York, NY 10022 The Vanguard Group 100 Vanguard Boulevard Malvern, PA 19355 Shares Beneficially Owned 99,591,579 Percent of Class 6.1% 99,619,621 6.09% 2016 Proxy Statement 13NOV201221352027 21

  • Page 146
    ... Executive Vice President, Chief Financial Officer Executive Vice President, External Affairs, General Counsel and Corporate Secretary Executive Vice President, Commercial Operations Executive Vice President, Research & Development and Chief Scientific Officer Although we describe our programs...

  • Page 147
    ...; as well as other serious health conditions. Our pipeline includes more than 50 compounds or indications in development across important medical specialties such as immunology, oncology, virology/liver disease, neurological diseases and women's health. 2016 Proxy Statement 13NOV201221352027 23

  • Page 148
    EXECUTIVE COMPENSATION Business Performance Highlights AbbVie has Delivered Robust Financial Results since Separation Performance from 2013 Inception to 2015 Year End 10.2% 16.9% +600 basis points Net revenues - compound annual growth rate* Earnings per share - compound annual growth rate* ...

  • Page 149
    ... second in AbbVie's Health Care Peer Group. Operating Margins: In 2015, AbbVie expanded its adjusted operating margin to 42.3% of net revenues-up 610 basis points-and improved gross margin to 82.9% of net revenues-up 280 basis points-since 2014. Earnings Per Share: AbbVie reported full-year adjusted...

  • Page 150
    EXECUTIVE COMPENSATION AbbVie is in the Top Tier of its Peers on Several Financial Measures The chart below outlines AbbVie's performance relative to its Health Care Peer Group in 2015: AbbVie Percentile Rank Metric Net Revenue Growth Operating Income Growth Adjusted EPS Growth Operating Cash Flow ...

  • Page 151
    ... market median based on each NEO's individual performance, skills, experience, and internal equity, as well as the company's annual operating budget Performance Incentive Plan (PIP) Based on non-GAAP performance measures such as: Short-Term Incentives Diluted EPS Net revenues Income before taxes...

  • Page 152
    ...; and successfully transition corporate services infrastructure to a standalone model. Laura J. Schumacher: Successfully continue to develop and implement strategies to effectively resolve key litigation matters; achieve proprietary pharmaceutical pipeline enhancement objectives; execute biologics...

  • Page 153
    ... generally supportive of the compensation program, consistent with the level of stockholder support for our say on pay proposals in the last two years, and was not prescriptive about our compensation plan design. The feedback informs the compensation committee's continuous assessment of the program...

  • Page 154
    ..., the AbbVie Health Care Peer Group. Performance Incentive Plan Peer Comparisons The new design is discussed in more detail in Section III. 2016 Compensation Decisions The compensation committee's typical practice is to make decisions related to NEO pay at its February meeting, including...

  • Page 155
    ... benefits in the event of a change in control ߜ No tax gross-ups in executive compensation program ߜ No duplication of performance metrics in short-and long-term incentives ߜ No repricing of stock options without express stockholder approval ߜ No employment contracts ߜ No guaranteed short-term...

  • Page 156
    ... Abbott in 2013. In 2015, the committee added Gilead Sciences to the Health Care Peer Group. Prior to 2016, the committee also periodically considered benchmarking information from AbbVie's High-Performing Peer Group, which consisted of companies operating complex businesses with significant global...

  • Page 157
    ...to address and mitigate compensation-related risk, such as employing a diverse set of performance metrics, maintaining robust stock ownership guidelines for its executives and non-employee directors, and retaining broad discretion to recover incentive awards in the unlikely event that incentive plan...

  • Page 158
    ... Section 162(m) cap. Annual Metrics and Goal Assessment AbbVie's PIP structure is intended to align NEOs' interests directly with AbbVie's annual operating strategies, financial goals, and leadership behaviors. In doing so, it provides a direct link between the NEOs' short-term incentives and the...

  • Page 159
    ...specific weightings, when evaluating CEO performance. Annual Incentive Payout Matrix Net Revenues Operating Margin Range 0% to 200% of target 0% to 200% of target Financial Goals Earnings Per Share Net Revenues, Income Before Taxes, Operating Margin, Humira Sales, and Return on Assets Total Tied to...

  • Page 160
    ...years in advance. The grant price is the average of the highest and lowest trading prices of a common share on the date of the grant (rounded up to the next even penny). The grant price for the 2015 annual grant was $58.88. The high, low and closing prices of an AbbVie common share on the grant date...

  • Page 161
    EXECUTIVE COMPENSATION Long-Term Incentives-2016 Redesign AbbVie redesigned its LTI program effective with the 2016 annual grant, based in part on feedback from stockholders. The new design increases the alignment of AbbVie's long-term incentive compensation with key operational and financial ...

  • Page 162
    ... advice, tax preparation and general financial planning fees. If an NEO chooses to utilize this benefit, fees for such services are paid by the company and are treated as imputed income to the NEO, who then is responsible for payment of all taxes due on the fees paid by the company without gross-ups...

  • Page 163
    ... follows: Executive Richard A. Gonzalez William J. Chase Laura J. Schumacher Carlos Alban Michael E. Severino Stock Ownership Requirement 6x 3x 3x 3x 3x Base Base Base Base Base Salary Salary Salary Salary Salary Requirement Met? Yes Yes Yes Yes Yes In addition, AbbVie's non-employee directors are...

  • Page 164
    ... of its compensation policies and practices, including those related to executive compensation programs for NEOs. The risk assessment included a quantitative and qualitative analysis of AbbVie's executive compensation programs and broader employee incentive compensation plans. AbbVie also considered...

  • Page 165
    ...the NEO short-term incentive plan. AbbVie's long-term incentive program focuses NEOs on longer-term operating performance and stockholder returns. In 2015, AbbVie's NEOs received roughly two-thirds of their total direct compensation in the form of long-term incentives (25% of which are stock options...

  • Page 166
    ... Laura J. Schumacher Executive Vice President, External Affairs, General Counsel and Corporate Secretary Carlos Alban Executive Vice President, Commercial Operations Michael E. Severino Executive Vice President, Research & Development and Chief Scientific Officer Year 2015 2014 2013 2015 2014 2013...

  • Page 167
    ...-free interest rate Average life of options (years) Volatility Dividend yield Fair value per stock option All NEOs 1.76% 6.0 24.86% 3.27% $9.96 (5) The compensation reported in this column for 2015 was earned as a performance-based incentive bonus pursuant to the AbbVie Performance Incentive Plan...

  • Page 168
    .... AbbVie imputes income to the NEO for these costs and the NEO pays taxes on that income in accordance with tax regulations without gross-ups. The totals shown in the table include the following costs associated with financial planning services: R. Gonzalez: $10,000; W. Chase: $10,000; L. Schumacher...

  • Page 169
    ...Awards.'' Under the AbbVie 2013 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 one share of AbbVie common stock on the date of grant. These options do not contain a replacement option feature...

  • Page 170
    EXECUTIVE COMPENSATION 2015 Outstanding Equity Awards at Fiscal Year End ... The following table summarizes the outstanding AbbVie equity awards held by the NEOs at year end. Option Awards(1)(2) Stock Awards(1) Equity Incentive Plan Awards: Number of Unearned Shares or Other Rights That Have Not ...

  • Page 171
    ...the end of the relevant year. In 2015, AbbVie reached its minimum return on equity target and these shares vested on February 29, 2016. (b) These are the shares of performance-vested restricted stock that remained outstanding and unvested on December 31, 2015, from an award made on February 20, 2014...

  • Page 172
    ... Gonzalez W. Chase L. Schumacher C. Alban M. Severino Pension Benefits ... During 2015, the NEOs participated in two AbbVie-sponsored defined benefit pension plans: the AbbVie Pension Plan, a tax-qualified pension plan; and the AbbVie Supplemental Pension Plan, a non-qualified supplemental pension...

  • Page 173
    ...-equity incentive plan compensation). The Pension Plan covers earnings up to the limit imposed by Internal Revenue Code Section 401(a)(17) and provides for a maximum of 35 years of benefit service. Participants become fully vested in their pension benefit upon the completion of five years of service...

  • Page 174
    ...made before age 62, if Early Special Retirement applies. Supplemental Pension Plan The provisions of the Supplemental Pension Plan (which covers AbbVie employees in the United States whose compensation exceeds certain limits under the Internal Revenue Code) are substantially the same as those of the...

  • Page 175
    ... Plan AbbVie Pension Plan AbbVie Supplemental Pension Plan AbbVie Pension Plan AbbVie Supplemental Pension Plan Number of Years Credited Service (#) 35 35 27 27 25 25 29 29 2 2 Payments During Last Fiscal Year ($) $0 2,782,444(2) 0 399,791(2) 0 587,336(2) 0 871,300(2) 0 0 W. Chase L. Schumacher...

  • Page 176
    ... would receive the following average annual payments over such 10-year period: Mr. Gonzalez, $942,637; Mr. Chase, $615,169; Ms. Schumacher, $543,691; and Mr. Alban, $461,264. In addition, the following one-time deposits would have been made under the AbbVie Supplemental Pension Plan for each of the...

  • Page 177
    ...'s failure to pay the employee's compensation or a reduction in the employee's base pay or benefits; or the relocation of the company's principal executive offices to a location that is more than 35 miles from the location of the offices at the time of the change in control. 2016 Proxy Statement...

  • Page 178
    ..., including a broad group of management and professional staff. The AbbVie 2013 Incentive Stock Program provides that any unvested stock options and restricted stock or unit awards granted in or after February 2013 may be assumed, converted or replaced on an equivalent basis by the surviving company...

  • Page 179
    ... the company's financial statements. On October 8, 2015, the audit committee appointed Ernst & Young LLP to perform independent audit services for the fiscal year ending December 31, 2016. Ernst & Young LLP has served as our independent registered public accounting firm since 2013. In conjunction...

  • Page 180
    ... certain employee benefit plan financial statements. (3) Tax fees consist principally of professional services for corporate tax compliance, expatriate tax compliance and tax advisory services. (4) Other fees represent Independent Review Organization services. Policy on Audit Committee Pre-Approval...

  • Page 181
    ... to the board of directors that the audited financial statements be included in AbbVie's Annual Report on Form 10-K for the year ended December 31, 2015 filed with the Securities and Exchange Commission. Audit Committee R. Austin, Chair, W. Burnside, E. Rapp, and F. Waddell 2016 Proxy Statement...

  • Page 182
    ...of AbbVie's named executive officers, as disclosed under Securities and Exchange Commission rules, including the Compensation Discussion and Analysis, the compensation tables and related material included in this proxy statement. The independent compensation committee of the board of directors, with...

  • Page 183
    ... the State of Delaware, which the company would file promptly following the 2016 Annual Meeting if our stockholders approve the amendment. The proposed amendment would not change the present number of directors or the board's authority to change that number and to fill any vacancies or newly created...

  • Page 184
    ... which is attached as Exhibit 10.4 to our 2015 Annual Report on Form 10-K. Plan Administration and Participants The PIP is administered by the compensation committee of the board of directors. The committee has sole responsibility for identifying the participants, establishing performance objectives...

  • Page 185
    ... not determinable. The Non-Equity Incentive Plan Compensation column of the Summary Compensation Table set forth in this proxy statement shows the awards paid to the NEOs under the PIP in 2013 through 2015. Plan Modification or Termination The AbbVie board of directors may modify, amend, suspend or...

  • Page 186
    ... of Ontario, Canada enacted a regulation in 2012 assigning responsibility for end-of-life management of pharmaceutical waste to manufacturers. Many European countries have industry-funded drug take back programs. While the company has published detailed social responsibility statements on issues...

  • Page 187
    ... a number of steps to address this concern in a socially responsible manner. AbbVie has a comprehensive collection, containment, return, and waste treatment option for patients using Humira, our flagship product. To mitigate potential risk posed by injection needles, we developed the HUMIRA Sharps...

  • Page 188
    ... EPA on its new Clear Power Plan to address climate change (''Move to Fight Obama's Climate Plan Started Early,'' New York Times, Aug. 3, 2015). Board of Directors Statement in Opposition to the Stockholder Proposal on Lobbying Report (Item 7 on Proxy Card) ...The Board of Directors recommends that...

  • Page 189
    ... Public Policy Committee and AbbVie's senior management review these activities and expenditures on a regular basis. Our Executive Vice President, External Affairs, who reports directly to the CEO, and our Vice President, Government Affairs, each review and approve all plans for corporate political...

  • Page 190
    ... in the 2015 CPA-Zicklin Index of Corporate Political Accountability and Disclosure. Attempting to quantify indirect lobbying would be difficult to estimate and potentially misleading to stockholders as AbbVie is not directing the lobbying activities of trade, civic or patient groups. Further...

  • Page 191
    ... related to their compliance with AbbVie's Code of Business Conduct; or communications made directly by the related person to the chief financial officer or general counsel. • In determining whether to approve or ratify a related person transaction, the nominations and governance committee...

  • Page 192
    ...... The board of directors knows of no other business to be transacted at the 2016 Annual Meeting of Stockholders, but if any other matters do come before the meeting, it is the intention of the persons named in the accompanying proxy to vote or act with respect to them in accordance with their best...

  • Page 193
    ... Article II of AbbVie's Amended and Restated By-Laws. To be timely, written notice must be received at AbbVie's principal executive offices not earlier than 150 days and not later than 120 days before the anniversary of the date that the company mailed its proxy statement for the prior year's annual...

  • Page 194
    ... events to differ materially from those anticipated include the matters described in AbbVie's Annual Report on Form 10-K for the year ended December 31, 2015 under Item 1A, ''Risk Factors'' and Item 7, ''Management's Discussion and Analysis of Financial Condition and Results of Operations.'' AbbVie...

  • Page 195
    ..., be divided, with respect to the time for which they severally hold office, into three classes, as nearly equal in number as is reasonably possible. , with tThe term of office of the class of directors elected at the annual meeting of stockholders in 2016 shall first class to expire at the 201913...

  • Page 196
    ... A IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to the Amended and Restated Certificate of Incorporation to be executed by the undersigned officer, duly authorized, as of the day of 2016. AbbVie Inc. By: Name: Title: A-2 13NOV201221352027 2016 Proxy Statement

  • Page 197
    ... Number ( ) Name Address City State Zip Code Phone Number ( ) If you plan to attend the meeting, please complete the Reservation Form and send it to AbbVie Inc., Annual Meeting Ticket Requests, AP34, 1 North Waukegan Road, North Chicago, Illinois 60064. Due to space limitations, Reservation Forms...

  • Page 198

  • Page 199
    ... Columbus Drive, Chicago, IL 60601. Dividend Reinvestment Plan The AbbVie Dividend Reinvestment Plan offers registered stockholders an opportunity to purchase additional shares, commission-free, through automatic dividend reinvestment and/or optional cash investments. Interested persons may contact...

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