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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934

Filed by the Registrant

Filed by a Party other than the Registrant

Check the appropriate box:

Preliminary Proxy Statement

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

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material under §240.14a-12

AbbVie Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

No fee required.

Fee paid previously with preliminary materials.

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11.


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Notice of 2022
Annual Meeting
of Stockholders

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To the stockholders of our company:

You are cordially invited to attend the 2022 Annual Meeting of Stockholders to be held on May 6, 2022, where we will be voting on the below matters. You will be able to attend the Annual Meeting, vote, and submit questions via live webcast by visiting www.virtualshareholdermeeting.com/ABBV2022.

Items of business

To elect four directors to hold office until the 2025 Annual Meeting or until their successors are elected.
To ratify the appointment of Ernst & Young LLP as AbbVie’s independent registered public accounting firm for 2022.
To vote on an advisory basis on the approval of executive compensation.
To vote on a management proposal to eliminate supermajority voting.
To consider any other matters that may properly come before the meeting, including four stockholder proposals, if presented during the meeting.

Your vote is important.
Please vote promptly using one of the methods mentioned below:

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Internet
Visit www.proxyvote.com to vote online.

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Mail
Sign and return your proxy card in the enclosed envelope if you received a printed version of the proxy card.

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Telephone
Call toll-free 1-800-690-6903 in the U.S. and Canada.

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At the virtual meeting
To be admitted to the virtual meeting, you must enter the control number found on your proxy card, voting instructions form, or notice you received.

The Annual Meeting of Stockholders of AbbVie Inc. (the “Annual Meeting”) will be held on Friday, May 6, 2022 at 9:00 a.m. CT. This year’s Annual Meeting will be a virtual meeting of stockholders.

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DATE AND TIME:

Friday, May 6, 2022
9:00 a.m. CT

WHERE:

Via live webcast online at
www.virtualshareholdermeeting.com/ABBV2022.

ADMISSION:

Stockholders of record at the close of business on March 7, 2022 are entitled to notice of and to vote at the annual meeting.

Thank you for your continued support of and interest in the company.

By Order of the Board of Directors,

Laura J. Schumacher

Secretary

March __, 2022


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TABLE OF CONTENTS

PROXY SUMMARY

1

About the Meeting

1

Who We Are

2

Our Business Performance

3

Our Governance Highlights

6

Our ESG Highlights

8

Executive Compensation Highlights

12

INFORMATION CONCERNING DIRECTOR NOMINEES

13

THE BOARD OF DIRECTORS AND ITS COMMITTEES

20

COMMUNICATING WITH THE BOARD OF DIRECTORS

26

DIRECTOR COMPENSATION

27

SECURITIES OWNERSHIP

29

EXECUTIVE COMPENSATION

31

Compensation Discussion and Analysis

31

Compensation Committee Report

49

Compensation Risk Assessment

49

Summary Compensation Table

51

2021 Grants of Plan-Based Awards

54

2021 Outstanding Equity Awards at Fiscal Year End

56

2021 Option Exercises and Stock Vested

58

Potential Payments upon Termination or Change in Control

62

RATIFICATION OF ERNST & YOUNG LLP AS ABBVIE’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

65

AUDIT INFORMATION

66

Audit Fees and Non-Audit Fees

66

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of the Independent Registered Public Accounting Firm

66

Audit Committee Report

67

SAY ON PAY—ADVISORY VOTE ON THE APPROVAL OF EXECUTIVE COMPENSATION

68

MANAGEMENT PROPOSAL TO ELIMINATE SUPERMAJORITY VOTING

69

STOCKHOLDER PROPOSALS

71

Stockholder Proposal on Independent Chair

71

Stockholder Proposal on Termination Pay

73

Stockholder Proposal on Report on Board Oversight of Competition Practices

75

Stockholder Proposal on Political Spending

77

ADDITIONAL INFORMATION

80

INFORMATION ABOUT THE ANNUAL MEETING

84

Who Can Vote

84

Notice and Access

84

Voting by Proxy

84

Revoking a Proxy

84

Discretionary Voting Authority

84

Quorum and Vote Required to Approve Each Item on the Proxy

84

Effect of Broker Non-Votes and Abstentions

85

Inspectors of Election

85

Cost of Soliciting Proxies

85

AbbVie Savings Plan

85


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PROXY SUMMARY

About the Meeting

The accompanying proxy is solicited on behalf of the Board of Directors for use at the Annual Meeting of Stockholders. This summary highlights selected information in the proxy statement. Please review the entire proxy statement and the AbbVie 2021 Annual Report before voting. The voting items expected to be proposed at the meeting are listed below along with the board’s voting recommendations.

    

2022 Annual Meeting of Stockholders Information

Date and Time: Friday, May 6, 2022 at 9:00 a.m. CT

Place: Via live webcast online at www.virtualshareholdermeeting.com/ABBV2022

Record Date: March 7, 2022

Proposal 1: Election of Directors

FOR
Each Nominee

William H.L. Burnside
Thomas C. Freyman

Brett J. Hart
Edward J. Rapp

Each of the nominees has the skills and experience necessary to fulfill his or her oversight role with respect to AbbVie’s business and culture. See pages 14-19 for more information about the qualifications of our directors.

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Proposal 2: Ratification of Independent Auditor

FOR

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Ernst & Young LLP has served as our independent auditor since 2013. The board and the audit committee believe it is in the best interests of the company and its stockholders to retain Ernst & Young LLP as the company’s independent auditor. See page 65 for more information.

Proposal 3: Say on Pay – Advisory Vote on Executive Compensation

FOR

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AbbVie’s compensation program aligns executive interests with the drivers of long-term, sustainable growth. Our program balances short- and long-term strategic objectives and directly links compensation to stockholder value. See pages 31-64 for more information.

Proposal 4:  Management Proposal to Eliminate Supermajority Voting

FOR

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AbbVie is again seeking stockholder approval to eliminate supermajority voting thresholds in our charter and by-laws. See pages 69-70 for more information.

Stockholder Proposals

Proposal 5:

Stockholder Proposal on Independent Chair

AGAINST

Proposal 6:

Stockholder Proposal on Termination Pay

AGAINST

Proposal 7:

Stockholder Proposal on Report on Board Oversight of Competition Practices

AGAINST

Proposal 8:

Stockholder Proposal on Political Spending

AGAINST

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PROXY SUMMARY

Who We Are

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~ 50,000
employees worldwide

In more than 70 countries, AbbVie employees are working every day to advance health solutions for people around the world.

AbbVie is a global, research-based biopharmaceutical company. AbbVie uses its expertise, dedicated people and unique approach to innovation to develop and market advanced therapies that address some of the world’s most complex and serious diseases.

At AbbVie, we care deeply for patients and customers, their families, our employees, and our communities. Our products and pipeline help us make a remarkable impact on our stakeholders and beyond. Our products help patients in over 175 countries around the world.

On May 8, 2020, AbbVie completed the acquisition of Allergan plc (Allergan). The acquisition of Allergan created a diversified biopharmaceutical company positioned for success with a comprehensive product portfolio that has leadership positions in key therapeutic areas of immunology, hematologic oncology, aesthetics, neuroscience, and eye care.

Since our inception as an independent company in 2013, we have invested over $50 billion in research and development. At AbbVie, research and development centers around the patient, from understanding disease biology to treatment delivery, clinical trials, and beyond. We combine our experience pioneering scientific breakthroughs, the best ideas in science, and advanced technologies to develop the next generation of medicines.

Globally, our employees represent diverse backgrounds and perspectives, and our company values treating everyone equally, with dignity and respect, which we believe allows us to achieve our best. We proudly do our part to serve and support our communities and protect the environment to make a lasting impact on health care and beyond.

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Launched in
2013

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Millions
of patient lives touched

AbbVie’s Principles are foundational:

Transforming Lives

We inspire hope and transform lives every day. We make decisions based on our deep caring and compassion for people, delivering a lasting impact to our patients, their families, our employees and the community.

  

Acting with Integrity

We strive to always do the right thing. With uncompromising integrity at the heart of everything we do, we pursue the highest standards in quality, compliance, safety and performance.

  

Driving Innovation
We innovate relentlessly in everything we do to tackle unmet needs. We invest in the discovery and development of new medicines and healthcare approaches for a healthier world.

  

Embracing Diversity & Inclusion

We treat everyone equally, with dignity and respect. Around the world, our employees embrace diverse backgrounds and perspectives, which allows us all to achieve our best.

  

Serving the Community

We are proud to serve and support the community and do our part to protect the environment. We make a remarkable impact that's felt within healthcare and beyond.

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PROXY SUMMARY

Our Business Performance

AbbVie has delivered robust financial results since our launch in 2013

14.7%

Adjusted net revenues

-   compound annual growth rate (CAGR)*

474.7%

9 year total stockholder return

21

Major product or indication approvals

~$185BN

Increase in market capitalization

-   added significant stockholder value

19.1%

Adjusted diluted earnings per share - compound annual growth rate*

>250%

Increase in quarterly dividend

-   raised quarterly dividend to $1.41 per share from $0.40 per share at inception

1,400 bps

Operating margin expansion, adjusted*

~90

Active clinical development programs**

-   focused on immunology, oncology, aesthetics, neuroscience, and eye care

The measures set forth above were calculated as of December 31, 2021.

*Net revenues, diluted earnings per share, and operating margin are adjusted to exclude certain specified items and are non-GAAP measures, which are reconciled in Appendix B.

**In development individually or under collaboration or license agreements

Adjusted Net Revenues*

Adjusted EPS*

($BN)

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*Net revenues and diluted earnings per share are adjusted for specified items, including the impact of intangible asset amortization, and are non-GAAP measures, which are reconciled in Appendix B.

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PROXY SUMMARY

Since its launch in 2013, AbbVie has demonstrated an outstanding track record, consistently delivering top-tier results

AbbVie has delivered a strong compound annual growth rate (CAGR) since inception on adjusted net revenues and adjusted diluted earnings per share (EPS), placing AbbVie in the top tier of its Health Care Peer Group.

Additionally, AbbVie is committed to a robust return of capital to stockholders with an increase of more than 250% in its quarterly dividend since 2013 as part of a balanced and disciplined capital allocation program. AbbVie’s total stockholder return (TSR) since inception of 474.7% also places AbbVie in the top tier of its Health Care Peer Group, and more than 175 percentage points above the Standard & Poor’s 500 Index and 285 percentage points above the NYSE Arca Pharmaceutical Index over the same time period.

Total stockholder return (TSR) since inception

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AbbVie Rankings* vs. Peer Group

% Revenue Growth

% Adjusted EPS Growth

2021

2021

2nd place out of 10

3rd place out of 10

3 Years

3 Years

2nd place out of 10

2nd place out of 10

5 Years

5 Years

2nd place out of 10

2nd place out of 10

Total Stockholder Return

Our Peer Group

2021

AbbVie’s peer group above includes:

Amgen, Inc.

Bristol-Myers Squibb Company

Eli Lilly and Company

Gilead Sciences, Inc.

GlaxoSmithKline plc

Johnson & Johnson

Merck & Company, Inc.

Novartis AG

Pfizer Inc.

*Rankings based on financial results as initially reported by AbbVie and peers in each respective fiscal year and may not be adjusted for the impact of mergers, acquisitions, and/or divestitures.

3rd place out of 10

3 Years

2nd place out of 10

5 Years

2nd place out of 10

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PROXY SUMMARY

AbbVie also delivered strong business performance in 2021*

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Net Revenues: AbbVie reported worldwide adjusted net revenues of $56.1 billion in 2021. Worldwide net revenues increased by 23% on a reported basis, or 11% on a comparable operational basis**, which included strong and balanced performance from immunology, hematologic oncology, aesthetics, and neuroscience.

Gross and Operating Margins: In 2021, AbbVie reported a gross margin of 69.0% on a GAAP basis or 83.2% of net revenues on an adjusted basis. AbbVie’s operating margin was 31.9% on a GAAP basis or 50.3% of net revenues on an adjusted basis. The adjusted operating margin reflects an improvement of 230 basis points versus 2020.

Earnings Per Share: For 2021, AbbVie reported full-year diluted EPS of $6.45 on a GAAP basis and adjusted diluted EPS of $12.70, up 20.3%. For 2022, AbbVie provided a diluted EPS guidance range of $9.26 to $9.46 on a GAAP basis and $14.00 to $14.20 on an adjusted basis. The midpoint of the 2022 adjusted guidance represents growth of 11% over 2021, reflecting strong operating dynamics in the underlying business.

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Regulatory Milestones: AbbVie also achieved a number of regulatory milestones in markets worldwide for several key products, including regulatory approvals for Skyrizi for the treatment of active psoriatic arthritis (PsA), Qulipta for the preventive treatment of episodic migraine in adults, Vuity for the treatment of presbyopia, and Rinvoq in three additional indications: for the treatment of adult patients with active psoriatic arthritis (PsA), for the treatment of adult patients with active ankylosing spondylitis (AS), and for the treatment of adults and adolescents with moderate to severe atopic dermatitis (AD). AbbVie also submitted regulatory applications for an additional indication for Skyrizi for the treatment of patients 16 years and older with moderate to severe Crohn’s Disease (CD), as well as Rinvoq in two additional indications: for the treatment of adults with moderately to severely active ulcerative colitis (UC) and for adults with non-radiographic axial spondyloarthritis (nr-AxSpa).

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Pipeline Development: With more than 50 programs in mid- and late-stage development, AbbVie made significant pipeline advancements in 2021. In addition to several positive Phase 3 readouts across multiple indications for Skyrizi and Rinvoq, AbbVie also reported positive registration enabling data for Vraylar as an adjunctive treatment for patients with major depressive disorder (MDD) and ABBV-951, a potentially transformative therapy for patients with advanced Parkinson’s Disease. Several important Phase 3 programs are ongoing in other areas of our pipeline, including studies for Venclexta in multiple myeloma (MM) and myelodysplatic syndrome (MDS) and Navitoclax for mylefibrosis.

*Net revenues, adjusted gross and operating margins, and diluted earnings per share are adjusted for specified items and are non-GAAP measures, which are reconciled in Appendix B.

**Comparable operational comparisons include full-period current year and prior year results for Allergan products, as if the acquisition closed on January 1, 2020, and are presented at constant currency rates that reflect comparative local currency net revenues at the prior year’s foreign exchange rates.

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PROXY SUMMARY

Our Governance Highlights

Our board of directors is committed to strong corporate governance tailored to meet the needs of AbbVie and its stockholders to enhance long-term stockholder value. Each year, AbbVie completes a robust investor engagement program with governance investment teams. In 2021, we reached out to stockholders representing nearly 40% of our outstanding shares. Our engagements in 2021 generally focused on (1) AbbVie’s business and strategy, (2) AbbVie’s environmental, social, and governance (ESG) strategy and initiatives, (3) AbbVie’s equity, equality, diversity, and inclusion programs and disclosures, (4) AbbVie’s disclosures related to its political expenditures and lobbying activities, (5) AbbVie’s executive compensation programs, and (6) AbbVie’s board composition and leadership structure, including the responsibilities of our lead independent director.

The board reviews feedback from these engagements and discusses opportunities to improve AbbVie’s governance practices. The following chart summarizes some of the governance practices that the board has adopted over the past several years as a result of dialogue with our stockholders:

Topic:

Actions taken by our board:

Stockholder
Voting Rights

approved a management proposal to eliminate supermajority voting in this proxy statement (Item 4) to seek stockholder approval to amend the company’s Amended and Restated Certificate of Incorporation to provide for a simple majority of shares outstanding for all provisions previously subject to a supermajority provision, as described in Item 4 and previously submitted the same proposal to stockholder vote from 2018 to 2021 as well as a declassification management proposal to a stockholder vote in 2016 to 2018

Proxy Access

approved and implemented in 2016 a proxy access by-law provision, as further detailed in the company’s By-Laws

Lead Independent Director Role

significantly expanded disclosure on the lead independent director responsibilities in the 2019 and 2018 proxy statements, to better inform our stockholders on the robust leadership that the role provides

appointed the lead independent director to all committees in 2019, further strengthening his active leadership role

Board Skills Disclosure

shared our board skills matrix beginning in 2016, which contains the skills considered by the nominations and governance committee to be the most relevant to the board’s oversight role with respect to AbbVie’s business and affairs and to drive our culture of innovation and responsibility

Environmental, Social, and Governance (ESG) Disclosures

enhanced our website disclosures on political contributions in 2022, including a description of the process used to determine such contributions

expanded the discussion of board oversight of executive succession planning and company culture in this proxy statement

disclosed detailed data on the diversity of AbbVie’s U.S. workforce by publishing AbbVie’s EEO-1 report on our website starting in 2020

incorporated an overview of AbbVie’s ESG approach and initiatives in the proxy statement beginning in 2018

expanded the description of AbbVie’s clawback policy, starting in the 2019 proxy statement

added board diversity data, starting in the 2019 proxy statement, along with an expanded discussion of the value of director diversity in the 2021 proxy statement

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PROXY SUMMARY

Additional highlights of our governance practices include:

Director independence

 Eleven of AbbVie’s twelve directors are independent and regularly meet in executive session

 Since our inception, we have had a lead independent director with robust responsibilities

 All members of our audit, compensation, nominations and governance, and public policy committees are independent

Stockholder rights

 Adopted a proxy access By-Law provision for 3%/3 years

 We do not have a stockholder rights plan or “poison pill”

 Our directors are elected by a majority vote of our stockholders for uncontested elections, and we have a resignation policy if the director fails to receive a majority of the votes cast

Board and executive accountability

 Annual executive succession planning, including an assessment of the diversity of executive candidates

 Minimum stock ownership guidelines are in place for the CEO and other NEOs

 We have a related person transaction policy to ensure appropriate oversight

 We hold an annual say-on-pay advisory vote on executive compensation

Board composition and effectiveness

 Our governance guidelines restrict the number of boards our directors may serve on to prevent overboarding

 Annual board and committee self-assessments and annual board succession planning

 For inclusion on the board, the nominations and governance committee considers diversity of race, ethnicity, gender, and geography, together with other voluntarily identified diversity criteria

Clawback and anti-hedging and anti-pledging policies

 The Board has broad authority to recover incentive plan awards

 Directors and executive officers are prohibited from buying or selling any financial instruments designed to hedge or offset any decrease in the market value of AbbVie equity securities they hold

 Directors and executive officers are prohibited from pledging AbbVie stock as collateral for a loan

Other ESG practices

 All executives have ESG and equity, equality, diversity, and inclusion goals

 We are guided by strong ethics programs and supplier guidelines

 We disclose our corporate political contributions, our trade association memberships, and oversight process on our website and expanded these disclosures in 2022

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PROXY SUMMARY

Our ESG Highlights

Acting responsibly is ingrained in everything we do and is how we drive a long-term, sustainable business that makes a genuine and lasting positive impact for patients, employees, and communities. During 2021, we enhanced our environmental, social, and governance (ESG) framework and governance while continuing to take meaningful action to deliver sustainable solutions that improve the health of our business and society.

Our ESG Framework

Our ESG Framework is built around three foundational pillars that align with our enterprise goals and principles. These have been developed based on an analysis of our material issues, taking into account the topics of most interest and relevance to our company and our stakeholders—including our patients and patient organizations, employees, investors, regulators & government, payers & providers, suppliers, and nonprofit partners.

Collaboration with stakeholders is critical to our success—our goal is value creation through building engaging and long-term relationships with all our partners and stakeholders. We engage in regular dialogue with a wide variety of stakeholders to understand their evolving needs, interests, and expectations of AbbVie. From these interactions, we develop our understanding of material drivers and identify additional opportunities to improve and make an impact.

We discover and deliver innovative medicines that solve serious health issues and enhance people’s lives by pushing the boundaries of innovation, putting people and patients first, creating high-quality therapeutic solutions and ensuring their safety, efficacy, and accessibility.

We unlock the full potential of diverse and talented teams—and partners—to deliver today and into the future. We do this by attracting and retaining the best talent, embracing diversity of thought and through collaboration. We know that when we unlock the full potential of our people and our partners, we accelerate innovation, enhance people’s lives, and meet our business objectives.

We innovate with integrity and intention to advance long-term patient health and business resiliency. We ensure that we are prepared for the future by operating a sustainable, agile business model and governance structure that anticipates and evolves in a dynamic industry and society. We are unwavering in assuring supply of innovative medicines to patients and life enhancing products to customers.

Our Material Drivers

Product Innovation

We strive to make a remarkable impact on patients and drive sustainable growth by consistently discovering and delivering innovative medicines that address serious health issues and advance people’s lives.

Patient Access and Patient Affordability

We believe everyone who needs our medicines should be able to get them.

Human Capital Management

We believe purposeful work drives meaningful change. We nurture diverse talents to solve the most complex health challenges and create remarkable impacts on people’s lives.

Business Ethics

We act with integrity in everything we do.

Patient Health and Engagement

We continuously strive to improve health outcomes for patients around the world.

Product Quality and Safety

We are committed to delivering safe and effective, quality products and medicines through robust quality systems.

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PROXY SUMMARY

We also prioritize environmental sustainability within and beyond AbbVie to support our patients, people and planet. Our environmental sustainability strategy is focused on reducing our environmental footprint, growing sustainably through inspiring innovation, and engaging our workforce to steward sustainability.

Our ESG Governance

We took action in 2021 to enhance our ESG oversight and governance. To further strategic, enterprise-aligned delivery on AbbVie’s ESG Framework, we established an ESG Council, chaired by our Vice Chairman, External Affairs and Chief Legal Officer and composed of senior-level leaders from across the company. The ESG Council’s purpose is to champion business sustainability and mitigate business risks by monitoring, reviewing, and recommending actions to the ESG Council Chair, other members of the Executive Leadership Team, and AbbVie’s CEO to advance AbbVie’s ESG framework and strategy. The ESG Council Chair may also present certain recommendations of the ESG Council from time to time to the board of directors as appropriate.

The ESG Council meets quarterly, or more frequently if needed, and maintains sub-committees that are aligned to AbbVie’s material drivers. With this governance in place, AbbVie is well-positioned to recognize ESG opportunities and advance its ESG objectives.

ESG Action Report

We refined our previous Responsible Action Report to clearly align to AbbVie’s ESG Framework (our foundational ESG pillars and material drivers). Published in June 2021, the newly titled 2020 ESG Action Report includes detailed commentary about our approach, actions, and commitments across material drivers; 45 year-over-year- KPIs showing our progress; and ESG-related recognitions of our efforts. The ESG Action Report outlines our alignment with United Nations Sustainable Development Goals (SDGs) and the Sustainability Accounting Standards Board (SASB) Index. The full ESG Action Report can be found at https://www.abbvie.com/societal-impact.html.

In 2022, AbbVie will release its 2021 ESG Action Report containing updated disclosures, including those aligning with the Task Force on Climate-Related Financial Disclosures (TCFD) framework, KPIs, and other information related to our ESG efforts in 2021.  Below are select 2021 ESG highlights across several of our material areas.

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PROXY SUMMARY

Product Innovation

$6.5 billion in adjusted research & development spend in 2021*
21 major product or indication approvals since inception
Over 14,000 research hours donated in 2021 to neglected tropical diseases, malaria and tuberculosis

Patient Access and Patient Affordability

Expanded access to patients who have difficulty paying for their medicine by providing medicine to more than 170,000 U.S. patients in 2021 at no cost through our patient assistance program

Human Capital Management

Continued to advance our Equity, Equality, Diversity & Inclusion (EED&I) 5-year strategy under the leadership of our CEO, Chief Equity Officer and Executive Leadership Team
Completed 2021 Employee Survey

Environmental Sustainability

Committed to joining the Science-based Targets Initiative (SBTi) by setting ambitious science-based emissions reduction targets to support limiting global temperature rise to no more than 1.5 degrees Celsius above pre-industrial levels. We intend to formally announce our SBTi-approved science-based targets in 2022, using 2021 as our baseline year

Patient Health and Engagement

To ensure that our clinical trials reflect the populations we serve, established Director of Clinical Trial Diversity and team as a key lever to amplify this focus
Over $38 million in grants and over 700,000 patients and healthcare providers reached through independent education grants in 2021

Business Ethics

All employees received AbbVie’s annual training on our Code of Business Conduct and conflicts of interest training
Our Code of Business Conduct is available in 31 languages
Employees in relevant functions also received mandatory training on topics such as anti-corruption, recognizing and reporting safety information, product promotion, and interactions with healthcare providers and patient groups

*Adjusted research and development spend is a non-GAAP measure, which is reconciled in Appendix B.

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PROXY SUMMARY

External Recognition as a Top Company

Our work hasn’t gone unnoticed. We’ve been honored to receive some of the most prestigious ratings and recognitions in our industry. And we’ve received more than 40 Top Employer Great Place to Work and Top Employer rankings globally. For more information, visit https://news.abbvie.com/media-resources/fact-sheets/abbvie-ratings-and-recognition-fact-sheet.htm

Workplace & Diversity

  

Environmental, Social
and Governance

  

Citizenship

  

Business
Performance

DiversityInc “Top 50 Companies for Diversity” – Top 15
FORTUNE “100 Best Companies to Work For” – Included for four consecutive years
Great Place to Work “World’s Best Workplaces” – Included for five consecutive years
Human Rights Campaign Corporate Equality Index – Scored 100% for six consecutive years
Seramount “100 Best Companies for Working Mothers” – Top 15 for four consecutive years

Dow Jones Sustainability World Index
Dow Jones Sustainability North America Index
Ecovadis Corporate Social Responsibility Assessment Gold Medal
FTSE4GoodIndex
S&P 500 ESG Index
AbbVie ranked on the 2021 Purpose Power Index

Civic 50
3BL Media “100 Best Corporate Citizens”
PEOPLE Companies that Care
Bioethics International Good Pharma Scorecard for clinical trial transparency – Tied for first

FORTUNE 100
FORTUNE World’s Most Admired Companies

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PROXY SUMMARY

Executive Compensation Highlights

The compensation committee has designed and implemented an executive compensation program in which a substantial majority of named executive officer (NEO) compensation at AbbVie is performance-based.

The goals of our compensation program are to:

1

Align executive interests with the drivers of stockholder returns and profitable growth

2

Support achievement of the company’s primary business goals to have a remarkable impact on patients’ lives

3

Attract and retain world-class executives whose talents and contributions sustain the growth in long-term stockholder value

When determining NEO compensation, the committee first considers the median of the competitive marketplace (as derived primarily from the Health Care Peer Group approved by the committee) as an initial benchmark for assessing compensation. The committee then takes into account the company’s overall performance against the financial, operating and strategic objectives that were established at the start of the performance period. Finally, specific pay determinations are made for each NEO based on his or her individual performance against goals and contributions to the short- and long-term performance of the company.

Key components and design of our executive compensation program:

Three primary components make up AbbVie’s executive pay program: base salary, short-term incentives, and long-term incentives. The structure of each component is tailored to serve a specific function and purpose. The following is a summary of the key components of our compensation program.

Element

Type

Primary
Objective

Key Characteristics

Base Salary

Fixed

Attract & retain top talent

Individual salaries are established relative to market median based on each NEO’s individual performance, skills, experience, and internal equity, as well as the company’s annual operating budget

Short-Term Incentives

At-Risk

Encourage achievement of company’s primary business goals

Plan utilizes non-GAAP financial goals as well as an assessment of individual performance against strategic objectives:

— Net revenues

— Income before taxes

— Operating margin

— Return on assets

— Strategic and leadership goals

Long-Term Incentives

At-Risk

Align NEO interests with stockholders

Long-term incentive annual awards are granted in the form of:

— Performance shares and performance vested restricted stock units (80% of NEO’s LTI award)

— Non-qualified stock options (20% of NEO’s LTI award)

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INFORMATION CONCERNING DIRECTOR NOMINEES

What am I voting on and how should I vote?

You are being asked to elect four Class I directors at the Annual Meeting.

The board of directors therefore recommends you vote “FOR” each of the nominees set forth below.

The board of directors consists of three classes currently comprised of four directors in Class I, four directors in Class II, and four directors in Class III. Directors of one class are elected each year for a term of three years. The Class I directors are presented for re-election to hold office until the expiration of their term at the 2025 annual meeting of stockholders and until their successors are elected and qualified or until their earlier death or resignation. All of the nominees are currently serving as directors.

AbbVie’s governance guidelines provide that a director shall retire on the day of the annual stockholder meeting following his or her 75th birthday; provided, however, that the full board may make exceptions from time to time due to special circumstances. In late 2020, the board determined that Mr. Liddy, a Class II director, should remain an additional year. Mr. Liddy will now retire as a director as of the 2022 annual stockholder meeting.

Directors are elected by stockholders if a majority of the votes cast are “for” a director’s re-election at the Annual Meeting, excluding abstentions and broker non-votes. For more information on the director majority vote standard, see AbbVie’s By-Laws as listed as an exhibit to AbbVie’s 2021 Annual Report on Form 10-K.

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INFORMATION CONCERNING DIRECTOR NOMINEES

Nominees (Class I)

Graphic

William H.L. Burnside

Director Since: 2013

Age: 70

Committees: Audit and Nominations & Governance

Primary Occupation: Retired Senior Vice President and Director at The Boston Consulting Group

Business Experience:

Mr. Burnside is a retired senior vice president and director at The Boston Consulting Group (BCG), where he currently serves as an advisor. Prior to becoming managing partner of BCG’s Los Angeles office in 1987, he worked in BCG’s London and Chicago offices, servicing clients in telecommunications, media, defense, financial services, and manufacturing.

Key Contributions to the Board:

    Through his experience with The Boston Consulting Group, Mr. Burnside contributes knowledge and understanding of corporate finance and capital markets matters to the board, as well as global and domestic strategic advisory experience across a broad base of industries.

2016

50

Executive Vice President and Chief Administrative Officer, United Airlines Holdings, Inc.

Graphic

Thomas C. Freyman

Director Since: 2020

Age: 67

Committees: Audit and Compensation

Primary Occupation: Retired Executive Vice President, Finance and Administration,

Abbott Laboratories

Business Experience:

Mr. Freyman served as a director at Allergan from 2018 to 2020, when AbbVie acquired Allergan plc. Mr. Freyman previously served as executive vice president, finance and administration at Abbott Laboratories from 2015 until his retirement in 2017. He previously served at Abbott as chief financial officer and executive vice president, finance and was first appointed chief financial officer and senior vice president, finance in 2001. He also serves as a director of Tenneco Inc. and Hanger, Inc.

Key Contributions to the Board:

·    Mr. Freyman’s extensive experience as a leader in the healthcare industry, knowledge of the Allergan businesses, and expertise in complex accounting and financial issues provides the board with significant global industry experience, continuity in oversight of the Allergan businesses, and finance and risk expertise.

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INFORMATION CONCERNING DIRECTOR NOMINEES

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Brett J. Hart

Director Since: 2016

Age: 52

Committees: Nominations & Governance and Public Policy

Primary Occupation: President, United Airlines Holdings, Inc.

Business Experience:

Mr. Hart is the president of United Airlines Holdings, Inc. (UAL) and United Airlines, Inc. He served as executive vice president and chief administrative officer between March 2019 and May 2020, executive vice president, chief administrative officer and general counsel between May 2017 and March 2019, and as executive vice president and general counsel between February 2012 and May 2017. Mr. Hart also served as acting chief executive officer of UAL and United Airlines, Inc. from October 2015 to March 2016. From December 2010 to February 2012, he served as senior vice president, general counsel and secretary of UAL, United and Continental. From June 2009 to December 2010, Mr. Hart served as executive vice president, general counsel and corporate secretary at Sara Lee Corporation.

Key Contributions to the Board:

·    As president and as executive vice president and general counsel for two large public companies with international operations and having served as an acting CEO, Mr. Hart contributes operational and strategic acumen with expertise in risk management, legal strategic matters, government and regulatory affairs, customer and external facing matters, corporate governance, and compliance.

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Edward J. Rapp

Director Since: 2013

Age: 64

Committees: Audit and Nominations & Governance

Primary Occupation: Retired Group President for Resource Industries of Caterpillar Inc.

Business Experience:

Mr. Rapp served as the Caterpillar Inc. group president for resource industries from 2014 until his retirement in mid-2016. He previously served at Caterpillar as group president based in Singapore in 2013 and 2014 and as the chief financial officer from 2010 to 2013, and he was named a group president in 2007. He also serves as a director of Xos, Inc. He is currently a member of the University of Missouri College of Business Advisory Board. Mr. Rapp previously served as a director of FM Global.

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 with extensive global experience and provides the board with an informed perspective on financial and operational matters faced by a complex international company.

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Class II—Directors whose terms expire in 2023

Graphic

Robert J. Alpern, M.D.

Director Since: 2013

Age: 71

Committees: Nominations & Governance and Public Policy

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

Business Experience:

Dr. Alpern is Ensign Professor of Medicine and Physiology and Professor of Internal Medicine and Cellular and Molecular Physiology at Yale School of Medicine. Dr. Alpern served as the Dean of Yale School of Medicine and Ensign Professor of Medicine and Professor of Internal Medicine at Yale School of Medicine from June 2004 to January 2020. From July 1998 to May 2004, Dr. Alpern was the Dean of The University of Texas Southwestern Medical Center. Dr. Alpern served on the board of Yale-New Haven Hospital from October 2005 to January 2020. Dr. Alpern also serves as a director of Abbott Laboratories and Tricida, Inc.

Key Contributions to the Board:

·    Through his position as Ensign Professor of Medicine and Physiology, Professor of Internal Medicine and Cellular and Molecular Physiology, as well as his previous service as Dean of Yale School of Medicine, Dean of The University of Texas Southwestern Medical Center, and 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 AbbVie’s key research and development initiatives.

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Melody B. Meyer

Director Since: 2017

Age: 64

Committees: Audit and Public Policy

Primary Occupation: Retired President, Chevron Asia Pacific Exploration and Production

Business Experience:

Ms. Meyer is president of Melody Meyer Energy, LLC, a private consulting firm, a position she has held since June 2016. From March 2011 to April 2016, Ms. Meyer served as the president of Chevron Asia Pacific Exploration and Production Company. She previously served as president of Chevron Energy Technology Company from 2008 to 2011, in addition to various other roles over her thirty-seven year career at Chevron. Ms. Meyer is also a director at bp p.I.c. and NOV, Inc.

Key Contributions to the Board:

·    As a result of her tenure at Chevron, Ms. Meyer has acquired operational, management, strategic planning, and financial expertise with extensive global experience and provides an informed perspective to the board on financial and operational matters faced by a complex international company.

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INFORMATION CONCERNING DIRECTOR NOMINEES

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Frederick H. Waddell

Director Since: 2013

Age: 68

Committees: Audit and Compensation

Primary Occupation: Former Chairman of the Board and Chief Executive Officer of Northern Trust Corporation and The Northern Trust Company

Business Experience:

Mr. Waddell served as chairman of the board of Northern Trust Corporation and The Northern Trust Company from November 2009 until his retirement in January 2019. He previously served as chief executive officer from 2008 through 2017, as president from 2006 to 2011 and again from October to December 2016, and chief operating officer from 2006 to 2008. Mr. Waddell is also a director of International Business Machines Corporation.

Key Contributions to the Board:

·    As former chairman and chief executive officer of Northern Trust Corporation and The Northern Trust Company, Mr. Waddell contributes broad financial services experience with a strong record of leadership in a highly regulated industry.

Class III—Directors whose terms expire in 2024

Graphic

Roxanne S. Austin

Director Since: 2013

Age: 61

Committees: Compensation

Primary Occupation: President, Austin Investment Advisors

Business Experience:

Ms. Austin is president of Austin Investment Advisors, a private investment and consulting firm, and chairs the U.S. Mid-market Investment Advisory Committee of EQT Partners. Previously, 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 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 Abbott Laboratories, Crowdstrike, Inc., Freshworks, Inc., and Verizon Communications Inc. Ms. Austin has notified Abbott of her intent to resign from its Board of Directors at the company’s next annual meeting of stockholders, currently planned for April 2022. Ms. Austin previously served as a director of Teledyne Technologies, Inc, from 2006 to 2021, Target Corporation from 2002 to 2020, and Telefonaktiebolaget LM Ericsson from 2008 to 2016.

Key Contributions to the Board:

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

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INFORMATION CONCERNING DIRECTOR NOMINEES

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Richard A. Gonzalez

Director Since: 2013

Age: 68

Primary Occupation: Chairman of the Board and Chief Executive Officer, AbbVie Inc.

Business Experience:

Mr. Gonzalez is the chairman and chief executive officer of AbbVie, a position he has held since 2013. He served as Abbott’s executive vice president of the pharmaceutical products group from July 2010 to December 2012, and was responsible for Abbott’s worldwide pharmaceutical business, including commercial operations, research and development, and manufacturing. He also served as president, Abbott Ventures Inc., Abbott’s medical technology investment arm, from 2009 to 2011. Mr. Gonzalez joined Abbott in 1977 and held various management positions before briefly retiring in 2007, including: Abbott’s president and chief operating officer; president, chief operating officer of Abbott’s Medical Products Group; senior vice president and president of Abbott’s former Hospital Products Division; vice president and president of Abbott’s Health Systems Division; and divisional vice president and general manager for Abbott’s Diagnostics Operations in the United States and Canada.

Key Contributions to the Board:

·    As a result of his service since 2013 as AbbVie’s chairman and chief executive officer and his more than 30-year career at Abbott, Mr. Gonzalez has developed valuable business, management, and leadership experience, as well as extensive knowledge of AbbVie and its global operations.

·    Mr. Gonzalez’s experience and knowledge enable him to contribute to AbbVie’s board key insights into strategic, management, and operational matters.

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Rebecca B. Roberts

Director Since: 2018

Age: 69

Committees: Nominations & Governance and Public Policy

Primary Occupation: Retired President of Chevron Pipe Line Company

Business Experience:

Ms. Roberts served as president of Chevron Pipe Line Company from 2006 until her retirement in 2011. She previously served as the president of Chevron Global Power Generation from 2003 to 2006, in addition to various technical and management positions during her thirty-six year career with Chevron. Ms. Roberts began her career as a chemist and research scientist. Ms. Roberts currently serves on the board of directors at Black Hills Corporation and MSA Safety Incorporated. Ms. Roberts served as a director of Enbridge, Inc. from 2015 to 2018.

Key Contributions to the Board:

·    Ms. Roberts brings management, operational, safety, and strategy development expertise with a scientific background and extensive global experience at Chevron.

·    She provides an informed perspective to the board on regulatory and operational matters faced by a complex international company.

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Glenn F. Tilton

Director Since: 2013

Age: 73

Committees: Audit, Compensation, Nominations & Governance, and Public Policy

Primary Occupation: Retired Chairman and Chief Executive Officer of the UAL Corporation

Lead Independent Director

Business Experience:

Mr. Tilton was chairman of the Midwest for JPMorgan Chase & Co. from 2011 until his retirement in 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, and chairman and chief executive officer of United Air Lines, Inc., its wholly owned subsidiary. Prior to becoming the vice chairman of Chevron Texaco following the merger of Texaco Inc. and Chevron Corp., Mr. Tilton enjoyed a 30-year multi-disciplinary career with Texaco Inc., culminating in his election as chairman and chief executive officer. Mr. Tilton is also a director of Abbott Laboratories 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 2010 to 2012.

Key Contributions to the Board:

·    As chairman of the Midwest for JPMorgan Chase & Co. and having previously served as non-executive chairman of the board of United Continental Holdings, Inc., and 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.

·    His experience as non-executive chairman of the board of United Continental Holdings, Inc. also enhances his contributions as AbbVie’s lead independent director.

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THE BOARD OF DIRECTORS AND ITS COMMITTEES

The board of directors held nine meetings in 2021. All directors attended one-hundred percent of the board and committee meetings in 2021. AbbVie encourages its board members to attend the annual stockholder meeting. All of AbbVie’s directors attended the 2021 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. Alpern, Ms. Austin, Mr. Burnside, Mr. Freyman, Mr. Hart, Mr. Liddy, Ms. Meyer, Mr. Rapp, Ms. Roberts, Mr. Tilton, and Mr. Waddell. To determine independence, the board applied the AbbVie Inc. director independence guidelines. The board also considered whether a director has any other material relationships with AbbVie 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 AbbVie sold products or made contributions or from which AbbVie purchased products and services during the year. This also included consideration of the fact that some of the directors serve on the board of Abbott Laboratories (Abbott), AbbVie’s former parent. In making its determination, the board relied on both information provided by the directors and information developed internally by AbbVie.

The board has risk oversight responsibility for AbbVie and administers this responsibility both directly and with assistance from its committees. The board reviews enterprise risks and discusses them with our senior management on a regular basis. AbbVie’s risk management program focuses on issues relevant to AbbVie’s business, reputation, and strategy, including but not limited to pipeline advancement, healthcare industry dynamics such as pricing and patient access, manufacturing, regulatory and compliance matters, and others. The board and its committees regularly review environmental, social, and governance (ESG) topics that are material to AbbVie. For more details about committee responsibilities and oversight, please see the committee discussion on pages 23-25.

Management succession planning is a key responsibility and area of focus for the board. The full board regularly reviews both short- and long-term succession plans for the CEO and other executive officers. This review, for which the lead independent director takes a leadership role, includes a discussion of the skillset needed for these executive roles, the timeline for any potential executive transitions, the leadership pipeline and their development plans, and the diversity of the leadership pipeline. Directors regularly interact with succession candidates. The board also reviews its own succession planning, including for committee chairs and the lead independent director.

The board oversees AbbVie’s culture, employee engagement, and overall management of human capital. This oversight ensures that AbbVie is attracting, developing, and retaining best in class employees dedicated to making a remarkable impact on patients’ lives around the world. Examples of this oversight include (1) reviewing results of the biennial all employee survey, which assesses topics like employee engagement, inclusion, agility in processes, ethical decision making, and other issues critical to the company’s culture, (2) oversight of the company’s equity, equality, diversity, and inclusion strategy, (3) oversight of employee health and safety data and priorities, (4) reviewing the company’s commitment to pay equity and results from the equity analysis to ensure this commitment is met, and (5) oversight of the company’s ESG strategy, including the human capital management components. The board also interacts with employees at various levels of seniority, not solely on the executive leadership team, which facilitates a better understanding of the company’s culture.

In 2021, the board continued to spend a significant amount of time overseeing the company’s ongoing responses to the COVID-19 pandemic, including the impact on AbbVie’s employees and the availability of resources to support employees’ health and well-being. The board also reviewed the pandemic’s impact on pipeline and marketed products, as well as overall company strategy.

The board has determined that the current leadership structure, in which the offices of chairman of the board and chief executive officer are held by one individual with a board appointed lead independent 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 AbbVie and its stockholders. The lead independent director is chosen by and from the independent members of the board of directors. The board regularly reviews its leadership structure, as well as feedback from stockholders on this topic.

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THE BOARD OF DIRECTORS AND ITS COMMITTEES

Our Lead Independent Director has robust and well-defined responsibilities that provide our board with significant leadership and oversight:

   leads the CEO succession planning process

   facilitates communication with the board and presides over regularly conducted executive sessions of the independent directors or sessions where the chairman of the board is not present

   reviews and approves matters, such as schedule sufficiency, and, where appropriate, information provided to other board members

   serves as the liaison between the chairman of the board and the independent directors

   has the authority to call meetings of the independent directors

   leads the board’s evaluation of the CEO

   leads the annual board and committee evaluation process, including discussing evaluations with each director individually

   reviews and guides agenda items for board meetings

   encourages effective director participation by fostering an environment of open dialogue and constructive feedback among independent directors

   involved in selection and interviewing of new board members

   if requested by major stockholders, ensures that he or she is available for consultation and direct communication as needed

   if required, represents independent board members externally

   performs such other duties as the board may determine from time to time

All directors are encouraged to, and in fact do, consult with the chairman on each of the above topics, as well. The lead director, and each of the other directors, communicates regularly with the chairman of the board and chief executive officer regarding appropriate agenda topics and other board related matters.

AbbVie directors have backgrounds that when combined provide a portfolio of experience and knowledge that serve AbbVie’s governance and strategic needs. Director nominees are considered based on 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, and ability to commit sufficient time and attention to the activities of the board. They must have demonstrated experience and ability that is relevant to the board’s oversight role with respect to AbbVie’s business and affairs. They must also be able and willing to represent the stockholders’ economic interests and satisfy their fiduciary duties to stockholders without conflicts of interest. For more details on director qualifications, please see Exhibit A to AbbVie’s Governance Guidelines.

Each year, the board and its committees conduct detailed self-evaluations covering topics such as board and committee leadership structure, composition and effectiveness, quality of board and committee materials and discussions, priority agenda items, schedule sufficiency, and board processes. To ensure candid feedback, the evaluations are anonymous. The full board, led by the lead independent director, discusses the evaluation reports to determine what, if any, actions or improvements should be undertaken in the near-term and long-term. The board, committee, and CEO evaluations are discussed in executive session to allow for additional candid discussion. In 2020, AbbVie engaged an independent firm to review the board and committee self-evaluation materials, in order to ensure the self-evaluation process reflects current best practices.

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 in the section of this proxy statement captioned “Information Concerning Director Nominees.”

The following table highlights our directors’ skills and experience. The skills identified below are considered by the nominations and governance committee to be the most relevant to the board’s oversight role with respect to AbbVie’s business and affairs and to drive our culture of innovation and responsibility. The specific importance of each skill also is noted.

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Such skills include, among others:

Healthcare Industry

Relevant to an industry understanding and review of our business and strategy for continued innovation.

Leadership

For a board that can successfully advise and oversee the company’s business performance and 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 the background and knowledge to perform oversight and governance roles.

Finance or Accounting

Enabling our directors to analyze our financial statements, oversee our capital structure, and consider financial transactions.

Government Relations and Regulatory

For an understanding of the complex regulatory and governmental environment in which our business operates.

ALPERN

AUSTIN

BURNSIDE

FREYMAN

  GONZALEZ  

HART

LIDDY

MEYER

RAPP

ROBERTS

TILTON

WADDELL

Healthcare
Industry

Leadership

Global Business
& Strategy

Corporate Governance & Public Company Board

Finance or Accounting

Government Relations & Regulatory

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Board Diversity

AbbVie is committed to diversity in its workforce and on its board of directors. AbbVie serves patients in over 175 countries and across many different diseases. A diverse workforce and a diverse board are critical to bringing innovative new medicines to patients and to meeting their unique needs. In particular, diverse perspectives strengthen the oversight of AbbVie’s business.

25%
female board
members

17%
ethnically or
racially diverse
board members

Diversity, including diversity of race, ethnicity, gender, and age, is an integral factor in identifying prospective directors. In the process of identifying nominees to serve as a member of the board of directors, the nominations and governance committee considers the existing board’s diversity and assesses the effectiveness of the recruitment process in achieving a diverse board. More details about our workforce diversity efforts are available in the ‘‘Our ESG Highlights’’ section of this proxy statement.

Committees of the Board of Directors

Audit Committee

Members

Key Characteristics and Responsibilities

Meetings in 2021: 6

W. Burnside

T. Freyman

(Chair)

M. Meyer

E. Rapp

G. Tilton

F. Waddell

   The audit committee is governed by a written charter. The charter sets forth the purposes of the audit committee, identifies qualifications required for the audit committee members, and describes the committee’s authority and responsibilities.

   The audit 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 quality and integrity of AbbVie’s financial statements, including a review of significant accounting policies, the independent auditors’ qualifications, independence, and performance, the performance of AbbVie’s internal audit function and internal auditors, certain areas of legal and regulatory compliance, and enterprise risk management. The audit committee is directly responsible for the appointment, fees, retention, and oversight of the work of AbbVie’s independent auditors.

   Each of the members of the audit committee is financially literate, as required of audit committee members by the NYSE, and the independence requirements set forth in Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended (the ‘‘Exchange Act’’).

   The board of directors has determined that Mr. Freyman, the committee’s chairperson, is an ‘‘audit committee financial expert.’’

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Compensation Committee

Members

Key Characteristics and Responsibilities

Meetings in 2021: 3

R. Austin

(Chair)

T. Freyman

E. Liddy

G. Tilton

F. Waddell

   The compensation committee is governed by a written charter. The charter sets forth the purposes of the compensation committee, identifies qualifications required for the compensation committee members, and describes the committee’s authority and responsibilities.

   This committee assists the board of directors in carrying out the board’s responsibilities relating to the compensation of AbbVie’s executive officers and directors. The compensation committee annually reviews the compensation paid to the directors 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 into account director fees paid by companies in AbbVie’s Health Care Peer Group and reviews any arrangement that could be viewed as indirect director compensation. The processes and procedures used for the consideration and determination of executive compensation are described in the ‘‘Compensation Discussion and Analysis’’ section of this proxy statement.

   The committee also reviews, approves, and administers the incentive compensation plans in which the AbbVie executive officers participate and all of AbbVie’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 regulations or with the listing rules of the New York Stock Exchange.

   The compensation committee has the sole authority, under its charter, to select, retain and/or terminate independent advisors who may assist the committee in carrying out its responsibilities.

   The compensation committee reviews and discusses with management and its independent compensation advisor potential risks associated with AbbVie’s compensation policies and practices as discussed in the ‘‘Compensation Risk Assessment’’ section of this proxy statement. Each member of the committee qualifies as a ‘‘non-employee director’’ for purposes of Rule 16b-3 under the Exchange Act and as an ‘‘outside director’’ for purposes of Internal Revenue Code Section 162(m).

The committee has engaged Compensation Advisory Partners (CAP) as its independent compensation consultant. The independent compensation consultant provides counsel and advice to the committee on executive and non-employee director compensation matters. CAP, and its principal, report directly to the chair of the committee. The principal meets regularly, and as needed, with the committee in executive sessions, and has direct access to the committee chair during and between meetings. The committee determines what variables it will instruct CAP to consider, including: peer groups against which performance and 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. AbbVie did not engage CAP to perform any other services during 2021.

Based on an assessment of internally developed information and information provided by CAP, the committee has determined that its independent compensation advisor does not have a conflict of interest. A copy of the compensation committee report is included in the ‘‘Compensation Committee Report’’ section of this proxy statement.

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Nominations and Governance Committee

Members

Key Characteristics and Responsibilities

Meetings in 2021: 4

R. Alpern

W. Burnside

B. Hart

E. Rapp

(Chair)

R. Roberts

G. Tilton

   The nominations and governance committee is governed by a written charter. The charter sets forth the purposes of the nominations and governance committee, identifies qualifications required for the nominations and governance committee members, and describes the committee’s authority and responsibilities.

   This 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 stockholders, recommends to the board the persons to be elected as executive officers of AbbVie, recommends to the board the corporate governance guidelines applicable to AbbVie, oversees the evaluation of the board and management, 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 AbbVie, and the conduct of board activities.

   The process used by this committee to identify a nominee to serve as a member of the board of directors depends on the qualities being sought, as described on pages 21-23.

   From time to time, AbbVie engages an executive search firm to assist the committee in identifying individuals qualified to be board members.

Public Policy Committee

Members

Key Characteristics and Responsibilities

Meetings in 2021: 4

R. Alpern

B. Hart

(Chair)

E. Liddy

M. Meyer

R. Roberts

G. Tilton

   The public policy committee is governed by a written charter. The charter sets forth the purposes of the public policy committee, identifies qualifications required for the public policy committee members, and describes the committee’s authority and responsibilities.

   This committee assists the board of directors in fulfilling its oversight responsibility with respect to AbbVie’s public policy, certain areas of legal and regulatory compliance, governmental affairs, healthcare compliance, social responsibility, and sustainability and environmental matters that affect or could affect AbbVie.

   Other topics within the committee’s purview include but are not limited to ethics and compliance matters, government and regulatory trends relevant to AbbVie’s business, political contributions, and corporate philanthropy.

Executive Committee

The executive committee members are Mr. Gonzalez, chair, Ms. Austin, Mr. Freyman, Mr. Hart, Mr. Liddy, Mr. Rapp, and Mr. Tilton. This committee may exercise all of the authority of the board in the management of AbbVie, except for matters expressly reserved by law for board action.

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COMMUNICATING WITH THE BOARD OF DIRECTORS

Stockholders and other interested parties may communicate with the board of directors by writing a letter to the chairman of the board, to the lead director, or to the independent directors c/o AbbVie Inc., 1 North Waukegan Road, AP34, North Chicago, Illinois 60064, Attention: corporate secretary. The corporate secretary regularly forwards to the addressee all letters other than mass mailings, advertisements, and other materials not relevant to AbbVie’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.

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DIRECTOR COMPENSATION

AbbVie employees are not compensated for serving 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 Amended and Restated 2013 Incentive Stock Program. As described in “Committees of the Board of Directors—Compensation Committee,” director compensation is reviewed annually by the compensation committee with the independent compensation consultant, including a review of director compensation against AbbVie’s Health Care Peer Group, and a recommendation is then provided to the full board.

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

Change in

Pension Value

and

 

Nonqualified

 

Fees

Restricted

Deferred

 

Earned or

Stock Unit

Option

Compensation

All Other

 

Paid in Cash

Awards

Awards

Earnings

Compensation

Total

Name

    

($)(1)

    

($)(2)

    

($)(3)

    

($)(4)

    

($)(5)

    

($)

R. Alpern

115,000

194,904

0

36,085

25,000

370,989

R. Austin

140,583

194,904

0

0

25,000

360,487

W. Burnside

121,000

194,904

0

0

25,000

340,904

T. Freyman

129,583

194,904

0

0

25,000

349,487

B. Hart

135,000

194,904

0

0

25,000

354,904

E. Liddy

123,333

194,904

0

0

0

318,237

M. Meyer

121,000

194,904

0

0

25,000

340,904

E. Rapp

141,000

194,904

0

0

25,000

360,904

R. Roberts

115,000

194,904

0

0

25,000

334,904

G. Tilton

171,000

194,904

0

0

26,151

392,055

F. Waddell

121,000

194,904

0

0

25,000

340,904


(1)Under the Non-Employee Directors’ Fee Plan as in effect during 2021, non-employee directors earned $115,000 per year for service as a director and $20,000 per year for service as a chair of a board committee, other than the chair of the audit committee. The chair of the audit committee received $25,000 per year for service as chair of that committee and the other members of the audit committee received $500 for each month of service as a committee member. The lead director received $50,000 in 2021 for service in that role. The non-employee director and committee fees are earned monthly for each calendar month or portion thereof that the director holds the position, excluding the month in which the director is first elected to the position.

Fees earned under the AbbVie Non-Employee Directors’ Fee Plan are, at the director’s election, paid in cash, delivered in the form of vested non-qualified stock options (based on an independent appraisal of their fair value), deferred until retirement (as an unfunded AbbVie obligation), or paid currently into an individual grantor trust established by an eligible director. The distribution of deferred fees and amounts held in a director’s grantor trust generally commences at the later of when the director reaches age 65 or upon retirement from the board of directors. Fees deposited in a trust may be credited to a stock equivalent account that earns the same return as if the fees were invested in AbbVie stock or to a guaranteed interest account. If necessary, AbbVie 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 AbbVie common stock at year end.

(2)The amounts in this column represent the aggregate grant date fair value of the restricted stock unit awards granted during 2021, determined in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718. AbbVie determines the grant date fair value of the awards by multiplying the number of units granted by the average of the high and low market prices of one share of AbbVie common stock on the award grant date.

In addition to the fees described in footnote (1), each non-employee director elected to or serving on the board of directors on the day of the 2021 annual stockholder meeting received under the AbbVie Amended

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DIRECTOR COMPENSATION

and Restated 2013 Incentive Stock Program vested restricted stock units with a target grant date value of $195,000. In 2021, this equated to 1,681 restricted stock units (after rounding the award down to the nearest whole unit), with a reportable value of $194,904. 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 stockholders, but do not otherwise have access to the restricted stock units during their board service. Upon termination or retirement from the board, death, or a change in control of the company, a non-employee director will receive one common share for each restricted stock unit outstanding under the Incentive Stock Program.

The following AbbVie restricted stock units were outstanding as of December 31, 2021: R. Alpern, 30,121; R. Austin, 37,784; W. Burnside, 21,562; T. Freyman, 4,014; B. Hart, 14,076; E. Liddy, 21,562; M. Meyer, 11,102; E. Rapp, 21,562; R. Roberts, 8,332; G. Tilton, 33,768; and F. Waddell, 21,562. These numbers include, where applicable, AbbVie restricted stock units issued with respect to Abbott Laboratories restricted stock units outstanding when AbbVie separated from Abbott on January 1, 2013.

(3)No AbbVie stock options were outstanding as of December 31, 2021.
(4)The totals in this column include reportable interest credited under the AbbVie Non-Employee Directors’ Fee Plan during 2021.
(5)Charitable contributions made by AbbVie’s non-employee directors are eligible for a matching contribution (up to $25,000 annually). For 2021 contributions, the AbbVie Foundation made charitable matching contributions on behalf of the following AbbVie directors: R. Alpern, $25,000; R. Austin, $25,000; W. Burnside, $25,000; T. Freyman, $25,000; B. Hart, $25,000; M. Meyer, $25,000; E. Rapp, $25,000; R. Roberts, $25,000; G. Tilton, $25,000; and F. Waddell, $25,000. This column also includes reimbursement for certain taxes.

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SECURITIES OWNERSHIP

Securities Ownership of Executive Officers and Directors

The table below reflects the number of shares of AbbVie common stock beneficially owned as of January 31, 2022, by each director and director nominee, the chief executive officer, the chief financial officer, and the three other most highly paid executive officers (NEOs), and by all directors and executive officers of AbbVie as a group. It also reflects the number of stock equivalent units and restricted stock units held by non-employee directors under the AbbVie Non-Employee Directors’ Fee Plan.

Stock Options

Stock

Shares

Exercisable

Equivalent

Beneficially

within 60 days

Units

Name

    

Owned(1)(2)(3)

    

of January 31, 2022

    

 

R. Gonzalez

406,012

610,724

0

R. Alpern

30,121

0

8,210

R. Austin

49,284

0

0

W. Burnside

21,562

0

0

T. Freyman

129,237

0

0

B. Hart

14,076

0

0

E. Liddy

26,683

0

28,024

M. Meyer

11,102

0

0

E. Rapp

37,551

0

21,434

R. Roberts

8,332

0

0

G. Tilton

46,518

0

35,217

F. Waddell

23,562

0

0

R. Michael

37,877

176,768

0

L. Schumacher

197,098

312,592

0

M. Severino

103,252

579,801

0

J. Stewart

48,442

164,606

0

All directors and executive officers as a group(4)

1,500,479

1,844,491

92,885


(1)The table includes shares held in the executive officers’ accounts in the AbbVie Savings Plan as follows: all executive officers as a group, 5,780. Each executive 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. The 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, 29,415; T. Freyman, 7,882; G. Tilton, 350; and all directors and executive officers as a group, 137,560.
(4)The directors and executive officers as a group own less than one percent of the outstanding shares of AbbVie.

Securities Ownership of Principal Stockholders

The table below reports the number of shares of AbbVie common stock beneficially owned as of December 31, 2021 by The Vanguard Group and BlackRock, Inc. (directly or through subsidiaries), respectively, the only persons known to AbbVie to own beneficially more than 5% of AbbVie’s outstanding common stock. It is based on information contained in Schedules 13G filed with the Securities and Exchange Commission by The Vanguard Group on February 9, 2022 and by BlackRock, Inc. on February 3, 2022. The Vanguard Group reported that it had sole voting power with respect to 0 shares, shared voting power with respect to 3,006,849 shares, sole dispositive power with respect to 138,828,740 shares and shared dispositive power with respect to 7,483,329 shares. BlackRock, Inc. reported that it had sole voting power with respect to 111,064,229 shares, shared voting power with respect to 0 shares, sole dispositive power with respect to 128,197,555 shares and shared dispositive power with respect to 0 shares.

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SECURITIES OWNERSHIP

Name and Address of Beneficial Owner

    

Shares Beneficially Owned

    

Percent of Class

The Vanguard Group

146,312,069

8.28

%

100 Vanguard Blvd.

Malvern, PA 19355

BlackRock, Inc.

128,197,555

7.3

%

55 East 52nd Street

New York, NY 10055

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

This Compensation Discussion and Analysis (CD&A) describes the pay philosophy established for AbbVie's named executive officers (NEOs), the design of our compensation programs, the process used to examine performance in the context of executive pay decisions, and the performance goals and results for each NEO:

RICHARD A. GONZALEZ

Chairman of the Board of Directors and Chief Executive Officer

ROBERT A. MICHAEL

Vice Chairman, Finance and Commercial Operations and Chief Financial Officer

LAURA J. SCHUMACHER

Vice Chairman, External Affairs and Chief Legal Officer

MICHAEL E. SEVERINO

Vice Chairman and President

JEFFREY R. STEWART

Executive Vice President, Chief Commercial Officer

Although we describe our programs in the context of the NEOs, it is important to note that our programs generally have broad eligibility and therefore in most cases apply to employee populations outside the NEO group as well. The content of this section is organized according to the following.

EXECUTIVE SUMMARY

32

    

COMPENSATION PLAN ELEMENTS

42

Compensation Philosophy

32

Base Salary

42

Business Overview

32

Short-Term Incentives

42

Business Performance Highlights

33

Long-Term Incentives

45

Components of our Compensation Program

37

Benefits

46

2021 Performance Results

37

Employment Agreements

47

Stockholder Engagement

39

Excise Tax Gross-Ups

47

Compensation Program Governance Summary

40

Change in Control Agreements

47

EXECUTIVE COMPENSATION PROCESS

41

OTHER MATTERS

48

Commitment to Performance-Based Awards

41

Stock Ownership Guidelines

48

Committee Process for Setting Total Compensation

41

Clawback Policy

48

Compensation Benchmarking

41

Anti-Hedging and Anti-Pledging Policies

48

Role of the Compensation Consultant

41

Compensation Risk Oversight

42

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EXECUTIVE COMPENSATION

Executive Summary

COMPENSATION PHILOSOPHY

We believe that a well-designed compensation program should:

1

Align executive interests with the drivers of stockholder returns and profitable growth

2

Support achievement of the company’s primary business goals to have a remarkable impact on patients’ lives

3

Attract and retain world-class executives whose talents and contributions sustain the growth in long-term stockholder value

WHAT WE DO

WHAT WE DO NOT DO

We balance short- and long-term strategic objectives and directly link compensation to stockholder value.

We tie more than three-fourths of our NEO compensation to performance.

We are committed to pay equity and conduct pay equity analyses annually to ensure pay is equitable across genders and ethnicities among U.S. employees.

We have broad discretion to claw back incentive awards in the unlikely event of a restatement of earnings or material breach of the AbbVie Code of Business Conduct.

We engage annually with our largest stockholders to gather feedback on our policies and practices.

We have robust stock ownership guidelines and prohibit the selling of shares unless ownership guidelines have been met.

X

We do not have employment agreements with any of our NEOs.

X

We do not provide excise tax gross-ups on NEO compensation.

X

NEOs are prohibited from entering or engaging in the purchase or sale of financial instruments that are designed to hedge or offset any decrease in the market value of AbbVie equity securities they hold.

X

We do not include pay design features that may have the potential to encourage excessive risk-taking.

X

We do not pay dividends on unearned performance shares.

X

We do not have single trigger change in control.

BUSINESS OVERVIEW

On May 8, 2020, AbbVie completed the acquisition of Allergan plc (Allergan). The acquisition of Allergan created a diversified biopharmaceutical company positioned for success with a comprehensive product portfolio that has leadership positions in key therapeutic areas of immunology, hematologic oncology, aesthetics, neuroscience, and eye care.

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EXECUTIVE COMPENSATION

BUSINESS PERFORMANCE HIGHLIGHTS

AbbVie has delivered robust financial results since our launch in 2013

Adjusted Net Revenues

TSR

Approvals

14.7%

474.7%

21

 compound annual growth rate*

9 year total stockholder return

major product or indication approvals

Market Capitalization Increase

Quarterly Dividend Increase

Adjusted Diluted EPS

~$185BN

>250%

19.1%

added significant stockholder value

raised to $1.41 per share from $0.40 per share at inception

 compound annual growth rate*

1,400 bps

~90

The measures set forth in this table were calculated as of 12/31/2021.

*  Net revenues, diluted earnings per share and operating margin are adjusted to exclude certain specified items and are non-GAAP measures, which are reconciled in Appendix B.

** In development individually or under collaboration or license agreements

operating margin expansion, adjusted*

active clinical development programs**

AbbVie has delivered a strong compound annual growth rate (CAGR) since inception on adjusted net revenues and adjusted diluted earnings per share (EPS), placing AbbVie in the top tier of its Health Care Peer Group. Additionally, AbbVie is committed to a robust return of capital to stockholders with an increase of more than 250% in its quarterly dividend since 2013 as part of a balanced and disciplined capital allocation program. AbbVie’s total stockholder return (TSR) since inception of 474.7% also places AbbVie in the top tier of its Health Care Peer Group, and more than 175 percentage points above the Standard & Poor’s 500 Index and 285 percentage points above the NYSE Arca Pharmaceutical Index over the same time period.

Adjusted Net Revenues*

Adjusted EPS*

($BN)

Graphic

Graphic

*Net revenues and diluted earnings per share are adjusted for specified items, including the impact of intangible asset amortization, and are non-GAAP measures, which are reconciled in Appendix B.

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EXECUTIVE COMPENSATION

NET REVENUES* 

AbbVie reported worldwide net revenues of $56.1 billion in 2021. Worldwide net revenues increased by 23% on a reported basis or 11% on a comparable operational basis**, which included strong and balanced performance from immunology, hematologic oncology, aesthetics, and neuroscience.

GROSS AND OPERATING MARGINS* 

In 2021, AbbVie reported a gross margin of 69.0% on a GAAP basis or 83.2% of net revenues on an adjusted basis.

AbbVie’s operating margin was 31.9% on a GAAP basis or 50.3% of net revenues on an adjusted basis. The adjusted operating margin reflects an improvement of 230 basis points versus 2020.

EARNINGS PER SHARE* 

For 2021, AbbVie reported full-year diluted EPS of $6.45 on a GAAP basis and adjusted diluted EPS of $12.70, up 20.3%.

For 2022, AbbVie provided a diluted EPS guidance range of $9.26 to $9.46 on a GAAP basis and $14.00 to $14.20 on an adjusted basis. The midpoint of the 2022 adjusted guidance represents growth of 11% over 2021, reflecting strong operating dynamics in the underlying business.

REGULATORY MILESTONES 

AbbVie also achieved a number of regulatory milestones in markets worldwide for several key products, including regulatory approvals for Skyrizi for the treatment of active psoriatic arthritis (PsA), Qulipta for the preventive treatment of episodic migraine in adults, Vuity for the treatment of presbyopia, and Rinvoq in three additional indications: for the treatment of adult patients with active psoriatic arthritis (PsA), for the treatment of adult patients with active ankylosing spondylitis (AS), and for the treatment of adults and adolescents with moderate to severe atopic dermatitis (AD). AbbVie also submitted regulatory applications for an additional indication of Skyrizi for the treatment of patients 16 years and older with moderate to severe Crohn’s Disease (CD) as well as Rinvoq in two additional indications: for the treatment of adults with moderately to severely active ulcerative colitis (UC) and for adults with non-radiographic axial spondyloarthritis (nr-AxSpa).

PIPELINE DEVELOPMENT 

With more than 50 programs in mid- and late-stage development, AbbVie made significant pipeline advancements in 2021. In addition to several positive Phase 3 readouts across multiple indications for Skyrizi and Rinvoq, AbbVie also reported positive registration enabling data for Vraylar as an adjunctive treatment for patients with major depressive disorder (MDD) and ABBV-951, a potentially transformative therapy for patients with advanced Parkinson’s Disease. Several important Phase 3 programs are ongoing in other areas of our pipeline, including studies for Venclexta in multiple myeloma (MM) and myelodysplatic syndrome (MDS) and Navitoclax for mylefibrosis.

* Net revenues, adjusted gross and operating margins, and diluted earnings per share are adjusted for specified items and are non-GAAP measures, which are reconciled in Appendix B.

**Comparable operational comparisons include full-period current year and prior year results for Allergan products, as if the acquisition closed on January 1, 2020, and are presented at constant currency rates that reflect comparative local currency net revenues at the prior year’s foreign exchange rates.

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Performance Relative to Peer Group*

AbbVie is in the top tier of its peers on several financial measures. The chart below outlines AbbVie’s eight-year performance relative to its Health Care Peer Group.

Table

Description automatically generated

*Rankings based on financial results as initially reported by AbbVie and peers in each respective fiscal year and may not be adjusted for the impact of mergers, acquisitions, and/or divestitures.

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EXECUTIVE COMPENSATION

TOTAL STOCKHOLDER RETURN (TSR)

Since becoming a public company in 2013, AbbVie has delivered a total stockholder return of 474.7%, which places AbbVie in the top tier of its Health Care Peers and surpasses the cumulative total returns of the Standard & Poor’s 500 Index and the NYSE Arca Pharmaceutical Index, as shown in the graph below. The graph covers the period from January 2, 2013 (the first day AbbVie’s common stock began “regular-way” trading on the NYSE) through December 31, 2021. The graph assumes $100 was invested in AbbVie common stock and each index on January 2, 2013 and also assumes the reinvestment of dividends. The stock price performance in the following graph is not necessarily indicative of future stock price performance.

Comparison of Cumulative Total Return since AbbVie’s Launch

Graphic

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EXECUTIVE COMPENSATION

COMPONENTS OF OUR COMPENSATION PROGRAM

The compensation committee of the board oversees our executive compensation program, which includes several compensation elements that have each been tailored to incentivize and reward specific aspects of company performance the board believes are central to delivering long-term stockholder value. Key components of our compensation program are listed below.

Base Salary

Designed to be competitive with market and industry norms, and to reflect individual performance

Individual salaries are established relative to market median based on each NEO’s individual performance, skills, and experience, and internal equity, as well as the company’s annual operating budget

Short-Term
Incentives

Performance Incentive Plan (PIP)

Based on non-GAAP performance measures such as:

— Net revenues

— Income before taxes

— Operating margin

— Return on assets

— Strategic and leadership goals

Long-Term
Incentives

80% Performance shares and performance-vested restricted stock units

20% Non-qualified stock options

Our Compensation
Philosophy

Align executive interests with the drivers of stockholder returns and profitable growth

Support achievement of the company’s primary business goals to have a remarkable impact on patients’ lives

Attract and retain world-class executives whose talents and contributions sustain the growth in long-term stockholder value

The compensation committee is dedicated to ensuring that a substantial portion of executive compensation is “at-risk” and variable. Generally, more than three-fourths of our NEOs’ total direct compensation is variable and directly affected by both the company’s and the NEO’s performance.

The committee believes the use of non-GAAP metrics to measure company performance for incentive plan purposes is appropriate. The use of certain non-GAAP metrics aligns NEOs to performance objectives that are commonly used to evaluate the performance of the company, provide accountability, and avoid inappropriate windfalls or penalties due to factors outside of their control. Importantly, both the goals and the financial performance are presented on a consistent non-GAAP basis.

2021 PERFORMANCE RESULTS

The performance targets established under our annual and long-term incentive plans are rigorous and calibrated to a range of potential outcomes, with above target payouts for strong performance and below target payouts (including no payout) for below target performance. Targets are based on expected business, market and regulatory conditions, including expectations for our pipeline. The financial goals shown in the following table were carried by all of the NEOs as part of their 2021 performance goals. The specific weightings for each NEO are established at the start of each performance year based on the NEO’s role and anticipated contributions to the company’s annual objectives. Financial goals are set rigorously; achievement of these targets has resulted in top-tier industry performance.

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EXECUTIVE COMPENSATION

Financial Goals

2021 Target vs.

2021 Actual vs.

Goal and Expected Result(1)

   

2020 Actual

   

2021 Target

   

2020 Actual

   

2021 Actual

   

2021 Target

A. NonGAAP Net Revenues

$

45.5 BN

(2)  

$

55.0 BN

121

%

$

55.5 BN

(2)  

101

%

B. NonGAAP Income Before Taxes

$

20.1 BN

(2)  

$

25.4 BN

126

%

$

25.9 BN

(2)  

102

%

C. Adjusted Return on Assets

 

22.1

%

 

19.4

% (3)  

88

% (3)  

 

19.5

%

101

%

D. NonGAAP Operating Margin

$

22.1 BN

(2)  

$

27.8 BN

126

%

$

28.2 BN

(2)  

102

%


(1)Results achieved reflect certain specified items, which are reconciled in Appendix B.
(2)Evaluated on a constant currency basis.
(3)2020 Actual included only 8 months of Allergan’s results; 2021 Target reflects 12 months of Allergan’s impact and the overall larger asset base due to Allergan.

The committee reviews and ensures all goals are appropriately rigorous and in line with the long-term success of the company. Each NEO achieved or exceeded his or her 2021 goals, which are listed below:

Richard A. Gonzalez: Drive top-tier business performance; execute key strategic initiatives to drive sustainable long-term business performance; deliver value to our stockholders, building investor confidence and credibility; successfully advance mid- and late-stage pipeline assets; continue to drive employee engagement and motivation around AbbVie’s mission and future prospects; and advance our transformation to a biopharmaceutical culture.
Robert A. Michael: Achieve proprietary pharmaceutical pipeline enhancement objectives; and provide support on corporate strategic initiatives and build shareholder value through investor activities.
Laura J. Schumacher: Successfully continue to develop and implement strategies to effectively resolve key litigation matters; achieve proprietary pharmaceutical pipeline enhancement objectives; execute biologics strategic development initiatives; and support research and development initiatives per company strategy.
Michael E. Severino: Achieve key research and development milestones per company strategy; and achieve proprietary pipeline innovation objectives.
Jeffrey R. Stewart: Achieve key product milestones; and successfully adapt and execute market strategies relative to external considerations.

In 2021, our NEOs continued to take a formal goal aligned to protecting AbbVie’s reputation across a range of environmental, social, and governance (ESG) topics aligned to our long-term company strategy and ESG framework. The ESG goal was weighted 10% within the short-term incentive program for each NEO. As part of this ESG goal category, all senior leaders, including the NEOs, continued to take a goal aligned to executing the Equity, Equality, Diversity & Inclusion (EED&I) strategy.

AbbVie’s senior executives have different areas of focus when it comes to driving the company’s ESG framework, and together, the executives’ ESG goals cover all of AbbVie’s material ESG drivers (which are discussed in more detail on page 8 of this proxy statement). These executives’ ESG goals are a mix of quantitative goals (for

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EXECUTIVE COMPENSATION

example, reducing carbon emissions using a specific target) and qualitative goals (for example, maintaining status as a top employer).

Key achievements under the ESG goal category in 2021 by AbbVie’s senior executives included, for example:

Committed to joining the Science-based Targets Initiative (SBTi) by setting ambitious science-based emissions reduction targets to support limiting global temperature rise to no more than 1.5 degrees Celsius above pre-industrial levels.
Expanded access to patients who have difficulty paying for their medicine by providing medicine to more than 170,000 U.S. patients at no cost through our patient assistance program.
Established an ESG Council, chaired by our Vice Chairman, External Affairs and Chief Legal Officer and composed of senior-level leaders from across the company to further strategic, enterprise-aligned delivery on AbbVie’s ESG Framework.
Continued progress on AbbVie’s EED&I strategy, including:
Our top EED&I indicators of performance – including representation and education – were included in AbbVie’s 2021-2022 Strategic Roadmap to help deliver AbbVie’s EED&I vision, strategy and priorities across the company.
We continue to drive an inclusive culture through driving awareness and understanding. Each year, AbbVie employees and people leaders complete learning sessions to strengthen our AbbVie community and realize the full value of our diverse workforce. More than 90% of employees and senior leaders completed a learning session.
We have several initiatives to develop and engage our diverse talent. In 2021, we increased participation in our Executive Diversity Mentoring Program by 300% and launched a Sponsorship program, building on our culture of mentorship with an emphasis on equity, to create more pathways for talent of diverse backgrounds and experiences to be successful at AbbVie.
We are focused on creating connections and building a sense of community, well-being and belonging. In 2021, we increased overall membership in Employee Resource Groups by 30% and conducted a series of virtual employee voice sessions focused on enhancing workplace culture and advancing inclusion.
Maintained recognition as a top employer in our industry, including:
DiversityInc “Top 50 Companies for Diversity” – Top 15
FORTUNE “100 Best Companies to Work For” – Included for four consecutive years
Great Place to Work “World’s Best Workplaces” – Included for five consecutive years
More details on the external recognition of AbbVie’s efforts can be found on page 11 of this proxy statement.

STOCKHOLDER ENGAGEMENT

2021 Say on Pay Results

At our 2021 Annual Meeting, the say on pay proposal received support from over 89% of our stockholders. The board and compensation committee are encouraged by the continued, consistent stockholder support for our executive compensation program.

89%
Say on Pay Results

AbbVie is committed to regular, ongoing engagement with stockholders to ensure that we continue to understand stockholder feedback about our compensation program and incorporate that feedback into the compensation decision-making process. To that end, in 2021 AbbVie reached out to stockholders representing nearly 40% of the company’s outstanding shares.

In these discussions, the aggregate feedback acknowledged the alignment of our executives’ pay with AbbVie’s performance and expressed support for our compensation program, consistent with the level of stockholder support for our say on pay proposals since inception. The feedback informs the compensation committee’s continuous assessment of the program design and ongoing discussions with stockholders, which contribute to the evolution of the programs.

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EXECUTIVE COMPENSATION

COMPENSATION PROGRAM GOVERNANCE SUMMARY

In addition to strong alignment of pay with the performance of the company and our NEOs, we maintain and are committed to good governance practices, including the following:

Good Governance Practices

Balanced Incentive Plan Design

Annual incentive plan includes financial, operational, and strategic metrics to assess performance
Annual incentive payout matrix used to define and cap the range for the committee’s determinations (at or below the plan maximum of 200% of target)
Long-term incentive design emphasizing multiple, relative performance metrics and multi-year performance periods
No duplication of performance metrics in short- and long-term incentives

Pay Equity and Sustainability

Commitment to pay equity and annual pay equity analyses to ensure pay is equitable across genders and ethnicities among U.S. employees
Incorporation of ESG into the strategic/leadership goals within the annual incentive plan

Strong Governance Practices

Committee has broad discretion to claw back incentive awards in the unlikely event of a restatement of earnings or material breach of the AbbVie Code of Business Conduct
Anti-hedging and anti-pledging policies
Annual comprehensive compensation program risk review
Independent compensation consultant that performs no other work for the company

Pay for Performance and Stockholder Alignment

Short- and long-term incentive programs closely align with performance
Majority of NEO compensation tied to long-term performance
Proactive stockholder engagement process

Robust Stock Ownership Requirements

6x salary for CEO and 3x salary for NEOs
5x annual fees for non-employee directors
NEOs must hold and not sell equity until the minimum stock ownership requirement is satisfied

Responsible Pay Practices

No single trigger vesting of equity or other benefits in the event of a change in control
No repricing of stock options without express stockholder approval
No tax gross-ups in executive compensation program
No employment contracts
No guaranteed short-term incentives or equity awards
No dividends paid on unearned performance awards

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EXECUTIVE COMPENSATION

Executive Compensation Process

COMMITMENT TO PERFORMANCE-BASED AWARDS

The majority of AbbVie’s NEO pay is performance-based. Specific goals and targets are the foundation of our pay-for-performance process, and this section describes how they apply to each pay component. Though quantitative metrics such as financial and operational results are a central part of our performance assessment, some goals such as leadership and progress against strategic and long-term objectives are difficult to measure using numeric or formulaic criteria. As such, the compensation committee also conducts a qualitative assessment of individual performance to ensure the overall assessment of performance and pay decisions are aligned with the company’s true performance over a period of time. A discussion of the decision-making criteria for each pay component follows.

COMMITTEE PROCESS FOR SETTING TOTAL COMPENSATION

Each February, the committee, with the assistance of its independent compensation consultant and AbbVie’s management team, determines pay levels for NEOs. The process starts with a consideration of compensation levels and the mix of compensation for comparable executives at companies in AbbVie’s Health Care Peer Group, which are listed below in the section captioned “Compensation Benchmarking.” After this benchmark review, the committee establishes NEO compensation—base salary adjustments, annual incentive awards, and long-term incentive awards—relative to the peer median in each instance. Awards can be differentiated from the peer compensation levels based on company performance, each NEO’s individual performance, leadership, and contributions to AbbVie’s business and strategic performance.

COMPENSATION BENCHMARKING

To provide the appropriate context for executive pay decisions, the committee, in consultation with its independent compensation consultant, assesses the compensation practices and pay levels of AbbVie’s Health Care Peer Group. The committee chooses to focus on the Health Care Peer Group because its constituents share important characteristics with AbbVie, particularly the global emphasis on research-based pharmaceuticals and biopharmaceutical therapies and the regulatory environment within which they operate. Members of the Health Care Peer Group are AbbVie’s primary competitors for executive talent and are companies the committee believes chiefly represent our competitive market:

Health Care Peer Group

Amgen, Inc.

Bristol-Myers Squibb Company

Eli Lilly and Company

Gilead Sciences, Inc.

GlaxoSmithKline plc

Johnson & Johnson

Merck & Company, Inc.

Novartis AG

Pfizer Inc.

ROLE OF THE COMPENSATION CONSULTANT

The compensation committee has engaged Compensation Advisory Partners as its independent compensation consultant. The committee’s independent consultant reports directly to the chair of the committee. The consultant 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 AbbVie or its senior executives. The committee determines what variables it will instruct its consultant to consider, which include: peer groups against which performance and pay should be examined, metrics to be used to assess AbbVie’s performance, competitive incentive practices in the marketplace, and compensation levels relative to market benchmarks.

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EXECUTIVE COMPENSATION

COMPENSATION RISK OVERSIGHT

The company has established, and the compensation committee endorses, several controls 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 award decisions are based on earnings that are subsequently restated or based on misconduct that would constitute a material breach of the AbbVie Code of Business Conduct. The committee, in collaboration with its independent compensation consultant, identified no material risks in AbbVie’s compensation programs in 2021.

When considering compensation-related risk, the committee is aware of certain risks associated with drug pricing decisions. The committee weighs these, as well as other risks material to the company, when designing AbbVie’s compensation programs. In addition, the committee, comprised entirely of independent directors, has discretion to adjust incentive payments, if needed, including to reflect decisions executives make that may impact AbbVie’s reputation and long-term sustainability.

Compensation Plan Elements

Three primary components make up AbbVie’s executive pay program: (1) base salary, (2) short-term incentives and (3) long-term incentives. The structure of each component is tailored to serve a specific function and purpose.

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BASE SALARY

The compensation committee sets appropriate levels of base salary to ensure that AbbVie can attract and retain a leadership team that will continue to meet our commitments to customers and patients and sustain long-term profitable growth for our stockholders. Generally, the committee considers the median of the Health Care Peer Group as an initial benchmark, but also references additional information as needed. Specific pay rates are then established for each NEO relative to his or her market benchmark based on the NEO’s performance, experience, unique skills, internal equity with others at AbbVie, and the company’s operating budget.

SHORT-TERM INCENTIVES

Performance Incentive Plan

Annual cash incentives are paid to NEOs through AbbVie’s Performance Incentive Plan (PIP), which rewards executives for achieving key financial and non-financial goals measured at the company and individual levels. AbbVie’s PIP structure is designed to align NEOs’ interests directly with AbbVie’s annual operating strategies to advance our mission, financial goals, and leadership behaviors. In doing so, it provides a direct link between the NEOs’ short-term incentives and the company’s and the NEOs’ annual performance results through measurable financial and operational performance followed by qualitative assessments of clearly defined strategic progress and leadership behaviors.

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EXECUTIVE COMPENSATION

NEO target incentive amounts are set as a percentage of base salary. Mr. Gonzalez’s target is 165% of base salary. The targets for the other NEOs range from 110% to 125% of base salary. The maximum potential payout under the PIP is capped at 200% of target for all participants.

Determining actual incentive amounts is a multi-step process. First, an initial performance score is calculated for each NEO based on performance against weighted financial and strategic/leadership goals. This performance score results in a preliminary award amount of up to 100% of target only. Final awards are determined by the compensation committee based on a qualitative assessment of holistic performance. A formal payout matrix based on net revenues and income before taxes guides the committee by capping the range of final awards at or below the plan maximum of 200% of target. This process is more fully described below:

Illustration of 2021 Incentive Calculation


Target
Award

x

Performance
Score

=

Preliminary
Award

Final Committee
Decision

=

Final
Award

Plan Governance:


Maximum
100% of Target
per plan design

2021 Performance results:
Capped at 175% of Target per payout matrix
(below 200% plan maximum)

Initial Performance Score

Initial performance scores are calculated for each NEO based on performance against weighted financial and strategic/leadership goals. The goals and their respective weightings are summarized in the chart below. The specific goals and weightings for each NEO (including the CEO) are established at the start of each performance year based on the NEO’s role and anticipated contributions to the company’s annual objectives.

Net Revenues,

Income

Operating Margin,