AbbVie
Here. Now.

2019 Annual Reporton Form 10-K
2020 Notice ofAnnual Meeting& Proxy Statement

Stockholder Information

AbbVie Inc. Corporate Headquarters
1 North Waukegan Road
North Chicago, IL 60064
847.932.7900
abbvie.com
Investor Relations
Dept. ZZ05, AP34
Corporate Secretary
Dept. V364, AP34
Stock Listing
The ticker for AbbVie’s common stock
is ABBV. The principal market for
AbbVie common stock is the NYSE.
AbbVie common stock is also listed on
the Chicago Stock Exchange.
Annual Meeting
The Annual Meeting will be held on
Friday, May 8, 2020, at 9 a.m. CT.
Please see the proxy statement for
information about how to attend thevirtual Annual Meeting.
Dividend Reinvestment Plan
The AbbVie Dividend Reinvestment
Plan offers registered stockholders an
opportunity to purchase additional shares,
commission-free, through automatic
dividend reinvestment and/or optional
cash investments. Interested persons may
contact the transfer agent.
Transfer Agent
EQ Shareowner Services
P.O. Box 64874
St Paul, MN 55164-0874
www.shareowneronline.com
877.881.5970
651.450.4064

About AbbVie
AbbVie is a global, research and development-based
biopharmaceutical company committed to developing
innovative advanced therapies for some of the world’s
most complex and critical conditions. The company’s
mission is to use its expertise, dedicated people andunique approach to innovation to markedly improvetreatments across four primary therapeutic areas:
immunology, oncology, virology and neuroscience.
In more than 75 countries, AbbVie employees areworking every day to advance health solutions forpeople around the world. For more information about
AbbVie, please visit us at www.abbvie.com.

13NOV201221365766

Dear AbbVie Shareholder,As we start a new decade, AbbVie embarks on our eighth year as an independent company.
What an amazing journey it has been—and a tremendously successful one. For patients, for our
employees and for you—our investors.
Record-setting performance and execution
In 2019, we delivered our fifth consecutive year of double-digit earnings per share growth—the
only company in our peer group to achieve that level of sustained performance. Adjusted earnings
per share grew 13 percent to $8.94. That growth was driven by operating margin profile
improvement while we continued to invest in our future. Operational revenue grew 2.7 percent to$33.3 billion—despite the entry of biosimilars to Humira in most international markets—and nearly
30 percent of our 2019 global sales were generated from products launched since our inception in2013.
A growing dividend is an enduring hallmark of AbbVie’s investment identity and in 2019, we
increased our quarterly cash dividend 10 percent to $1.18 per share. Since our inception, we haveincreased our dividend by 195 percent and have been a member of the S&P Dividend Aristocrat
Index since 2013.
A robust pipeline
Science and innovation have always been the cornerstones of our business. That’s why we’ve
increased our annual R&D investment by roughly 80 percent since inception—our pipeline is truly
the lifeblood of our business.
Last year, we launched two new immunology therapies—SKYRIZI for psoriasis and RINVOQ forrheumatoid arthritis—to bring new and differentiated therapeutic options for patients andstrengthen our leadership position in immunology. We’re very pleased with the reception these
medicines have received from physicians and patients and believe they will be important long-term
contributors to our growth.
Our pipeline is robust—with more than 60 active clinical development programs. In 2020, we
expect a number of late-stage data readouts and regulatory submissions for additional indicationsin immunology and oncology. Our early- and mid-stage pipeline continues to advance rapidly. We
will also continue to augment with external innovation to develop next-generation therapies incritical areas of need.
A new, more diversified AbbVie
In June, we took a transformative step with the announcement to acquire Allergan. A leader inmedical aesthetics, women’s health and eye care, Allergan enhances the scale and profitability of
AbbVie’s growth platform and diversifies our revenue base with nearly $50 billion in global sales
between the two companies. The combined organization will produce significant cashflow that will
immediately enable AbbVie to simultaneously support continued dividend growth, long-term
investment across our pipeline and debt reduction. This is an exciting step that positions ourcompany extremely well for the long-term.

A committed partner for patients and communities
At AbbVie, we are focused on doing all that we can to have a remarkable impact on people’s
lives. We are committed to helping patients in many ways to access and benefit from their
therapies. In 2019, we enhanced our patient assistance program, My AbbVie Assist, which provides
AbbVie medicines free of charge to ensure that patients can access our medicines. We did this bylowering the eligibility criteria, so more patients experiencing financial hardships can qualify forassistance and expanding the number of medications covered by our program. As a result,approximately 89,000 patients received AbbVie medicines at no cost. We also have a number ofother ways to financially assist patients, such as our co-pay assistance program. This programprovides co-pay support for AbbVie medicines to more than 97 percent of patients covered bycommercial insurance programs, with 98 percent of those patients paying less than $5 a month fortheir medicine.
Additionally, our company, our employees and our community partners spend hours andmillions of dollars to support communities, strengthen K-12 education, help families thrive andmuch more. Last year, AbbVie volunteers contributed more than 68,000 hours making an impact
across their local communities.
A sustainable businessAs a global biopharmaceutical company, we are thoughtful about how our business decisions
affect our patients, employees, contractors, the public and the environment. As we pursue
long-term sustainable growth, our corporate responsibility framework guides our priorities,
decisions and behaviors. We are committed to using our deep expertise to improve health, operate
an ethical and sustainable business, and help build stronger communities.
We care deeply about the environment and safety of our people. We have reduced ourabsolute carbon dioxide emissions by more than 16 percent, which is more than halfway toward
our target of a 25 percent reduction and we have made great progress against our 2025
environmental goals. And we were named to the Dow Jones Sustainability Index for the seventh
year in a row. You can find more information about our impact in our Responsible Action Report,
which can be found here: https://www.abbvie.com/responsibility.html
Committed to driving a remarkable impact
It has been an incredible seven years of impressive performance with the creation of a strong,innovative, high-executing company. I am proud of who we are as a company. Every single day, thepeople of AbbVie strive to make sure the patients we serve can live a better life. Thank you foryour support.
Sincerely,

4DEC201212233206
Richard A. Gonzalez
Chairman and Chief Executive Officer

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D. C. 20549
FORM 10-K(MARK ONE)嘺ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2019
OR䡺

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934
For the transition period fromtoCommission file number 001-35565

13NOV201221343408

AbbVie Inc.
(Exact name of registrant as specified in its charter)
Delaware(State or other jurisdiction ofincorporation or organization)

32-0375147(I.R.S. employer
identification number)

1 North Waukegan Road
North Chicago, Illinois 60064-6400(847) 932-7900(Address, including zip code, and telephone number of principal executive offices)
Securities Registered Pursuant to Section 12(b) of the Act:

Title of Each Class

Trading
Symbol(s)Common Stock, par value $0.01 per share

ABBV

Name of Each Exchange on Which Registered

New York Stock Exchange
Chicago Stock Exchange
1.375% Senior Notes due 2024
ABBV24
New York Stock Exchange
0.750% Senior Notes due 2027
ABBV27
New York Stock Exchange
2.125% Senior Notes due 2028
ABBV28
New York Stock Exchange
1.250% Senior Notes due 2031
ABBV31
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes 嘺
No 䡺
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.
Yes 䡺
No 嘺
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and(2) has been subject to such filing requirements for the past 90 days.
Yes 嘺
No 䡺
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit
such files).
Yes 嘺
No 䡺
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer’’ ‘‘smaller reporting company’’and emerging growth company in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer 嘺
Accelerated Filer 䡺
Non-Accelerated Filer 䡺
Smaller reporting company 䡺Emerging growth company 䡺
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period forcomplying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 䡺
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes 䡺
No 嘺
The aggregate market value of the 1,462,630,048 shares of voting stock held by non-affiliates of the registrant, computed by reference
to the closing price as reported on the New York Stock Exchange, as of the last business day of AbbVie Inc.’s most recently completed second
fiscal quarter (June 30, 2019), was $106,362,457,090. AbbVie has no non-voting common equity.
Number of common shares outstanding as of January 31, 2020: 1,479,156,683
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the 2020 AbbVie Inc. Proxy Statement are incorporated by reference into Part III. The Definitive Proxy Statement will be
filed on or about March 19, 2020.

ABBVIE INC.
FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2019
TABLE OF CONTENTS
Page
No.

PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Item 16.

BUSINESSRISK FACTORSUNRESOLVED STAFF COMMENTS
PROPERTIESLEGAL PROCEEDINGSMINE SAFETY DISCLOSURESINFORMATION ABOUT OUR EXECUTIVE OFFICERS
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIESSELECTED FINANCIAL DATAMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONSQUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKFINANCIAL STATEMENTS AND SUPPLEMENTARY DATACHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
CONTROLS AND PROCEDURESOTHER INFORMATION

1
14
26
26
26
26
27

29
31
32
51
52
105
105
108

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEEXECUTIVE COMPENSATIONSECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERSCERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
PRINCIPAL ACCOUNTING FEES AND SERVICES

109
109

EXHIBITS, FINANCIAL STATEMENT SCHEDULESFORM 10-K SUMMARY
SIGNATURES

111
116
117

110
110
110

PART IITEM
1. BUSINESS.....................................................................................................................................................................................................................................................................................................................................................
Overview
AbbVie(1) is a global, research-based biopharmaceutical company. AbbVie develops and markets
advanced therapies that address some of the world’s most complex and serious diseases. AbbVie’s products
are focused on treating conditions such as chronic autoimmune diseases in rheumatology, gastroenterology
and dermatology; oncology, including blood cancers; virology, including hepatitis C virus (HCV) and humanimmunodeficiency virus (HIV); neurological disorders, such as Parkinson’s disease; metabolic diseases,
including thyroid disease and complications associated with cystic fibrosis; pain associated withendometriosis; as well as other serious health conditions. AbbVie also has a pipeline of promising new
medicines in clinical development across such important medical specialties as immunology, oncology andneuroscience, with additional targeted investment in cystic fibrosis and women’s health.
In June 2019, AbbVie announced that it entered into a definitive transaction agreement under which
AbbVie will acquire Allergan plc (Allergan). Allergan is a global pharmaceutical leader focused on
developing, manufacturing and commercializing branded pharmaceutical, device, biologic, surgical andregenerative medicine products for patients around the world. Allergan markets a portfolio of brands andproducts primarily focused on key therapeutic areas including aesthetics, eye care, neuroscience,
gastroenterology and women’s health. See Note 5 to the Consolidated Financial Statements for additional
information regarding the proposed acquisition.
AbbVie was incorporated in Delaware on April 10, 2012. On January 1, 2013, AbbVie became an
independent, publicly-traded company as a result of the distribution by Abbott Laboratories (Abbott) of
100% of the outstanding common stock of AbbVie to Abbott’s shareholders.
Segments
AbbVie operates in one business segment—pharmaceutical products. See Note 16 to the Consolidated
Financial Statements and the sales information related to HUMIRA, IMBRUVICA and MAVYRET included
under Item 7, ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations.’’
Products
AbbVie’s portfolio of products includes a broad line of therapies that address some of the world’s mostcomplex and serious diseases.

(1) As used throughout the text of this report on Form 10-K, the terms ‘‘AbbVie’’ or ‘‘the company’’ refer
to AbbVie Inc., a Delaware corporation, or AbbVie Inc. and its consolidated subsidiaries, as the context
requires.

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13NOV201221352027 1

Immunology products. AbbVie maintains an extensive immunology portfolio across rheumatology,
dermatology and gastroenterology. AbbVie’s immunology products address unmet needs for patients with
autoimmune diseases. These products are:
HUMIRA. HUMIRA (adalimumab) is a biologic therapy administered as a subcutaneous injection.
It is approved to treat the following autoimmune diseases in the United States, Canada and Mexico(collectively, North America) and in the European Union:
Condition

Principal Markets

Rheumatoid arthritis (moderate to severe)
Psoriatic arthritis
Ankylosing spondylitis
Adult Crohn’s disease (moderate to severe)
Plaque psoriasis (moderate to severe chronic)
Juvenile idiopathic arthritis (moderate to severe polyarticular)
Ulcerative colitis (moderate to severe)
Axial spondyloarthropathy
Pediatric Crohn’s disease (moderate to severe)
Hidradenitis Suppurativa (moderate to severe)
Pediatric enthesitis-related arthritis
Non-infectious intermediate, posterior and panuveitis

North America, European Union
North America, European Union
North America, European Union
North America, European Union
North America, European Union
North America, European Union
North America, European Union
European Union
North America, European Union
North America, European Union
European Union
North America, European Union

HUMIRA is also approved in Japan for the treatment of intestinal Behçet’s disease.
HUMIRA is sold in numerous other markets worldwide, including Japan, China, Brazil andAustralia, and accounted for approximately 58% of AbbVie’s total net revenues in 2019.
SKYRIZI. SKYRIZI (risankizumab) is an interleukin-23 (IL-23) inhibitor that selectively blocks IL-23
by binding to its p19 subunit. It is a biologic therapy administered as a quarterly subcutaneous
injection following an induction dose. SKYRIZI is approved in the United States, Canada and theEuropean Union and is indicated for the treatment of moderate to severe plaque psoriasis in adults
who are candidates for systemic therapy or phototherapy. In Japan, SKYRIZI is approved for thetreatment of plaque psoriasis, generalized pustular psoriasis, erythrodermic psoriasis and psoriatic
arthritis in adult patients who have an inadequate response to conventional therapies.
RINVOQ. RINVOQ (upadacitinib) is a once-daily oral selective and reversible JAK inhibitor and isapproved in the United States, Canada and the European Union. RINVOQ is indicated for the treatmentof moderate to severe active rheumatoid arthritis in adult patients who have responded inadequately
to, or who are intolerant to one or more disease-modifying anti-rheumatic drugs (DMARDs). RINVOQ
may be used as monotherapy or in combination with methotrexate.
Oncology products. AbbVie’s oncology products target some of the most complex and difficult-totreat cancers. These products are:
IMBRUVICA. IMBRUVICA (ibrutinib) is an oral, once-daily therapy that inhibits a protein called
Bruton’s tyrosine kinase (BTK). IMBRUVICA was one of the first medicines to receive a United States
Food and Drug Administration (FDA) approval after being granted a Breakthrough Therapy Designationand is one of the few therapies to receive four separate designations. IMBRUVICA currently isapproved for the treatment of adult patients with:• Chronic lymphocytic leukemia (CLL)/Small lymphocytic lymphoma (SLL) and CLL/SLL with 17p
deletion;

2 13NOV201221352027

2019 Form 10-K

2• Mantle cell lymphoma (MCL) who have received at least one prior therapy*;• Waldenström’s macroglobulinemia (WM);• Marginal zone lymphoma (MZL) who require systemic therapy and have received at least one prioranti-CD20-based therapy*; and• Chronic graft versus host disease (cGVHD) after failure of one or more lines of systemic therapy.
*

Accelerated approval was granted for this indication based on overall response rate. Continued
approval for this indication may be contingent upon verification of clinical benefit in confirmatory
trials.

VENCLEXTA/VENCLYXTO. VENCLEXTA (venetoclax) is a BCL-2 inhibitor used to treat hematologicalmalignancies. VENCLEXTA is approved by the FDA for adults with CLL or SLL. In addition, VENCLEXTA isapproved in combination with azacitidine, or decitabine, or low-dose cytarabine to treat adults with
newly-diagnosed acute myeloid leukemia (AML) who are 75 years of age or older or have othermedical conditions that prevent the use of standard chemotherapy. VENCLYXTO is approved in Europe
for CLL in combination with rituximab in patients who have received at least one previous treatment.
Virology Products.

AbbVie’s virology products address unmet needs for patients living with HCV andHIV.
HCV products.

AbbVie’s HCV products are:

MAVYRET/MAVIRET. MAVYRET (glecaprevir/pibrentasvir) is approved in the United States andEuropean Union (MAVIRET) for the treatment of patients with chronic HCV genotype 1-6 infection
without cirrhosis and with compensated cirrhosis (Child-Pugh A). It is also indicated for the treatmentof adult patients with HCV genotype 1 infection, who previously have been treated with a regimen
containing an HCV NS5A inhibitor or an NS3/4A protease inhibitor, but not both. It is an 8-week,
pan-genotypic treatment for patients without cirrhosis and following the EXPEDITION-8 study, also inpatients with compensated cirrhosis who are new to treatment. MAVIRET is now also indicated for thetreatment of HCV genotypes 1-6 in children between 12-18 years.
VIEKIRA PAK AND TECHNIVIE. VIEKIRA PAK (ombitasvir, paritaprevir and ritonavir tablets;
dasabuvir tablets) is an all-oral, short-course, interferon-free therapy, with or without ribavirin, for thetreatment of adult patients with genotype 1 chronic HCV, including those with compensated cirrhosis.
In Europe, VIEKIRA PAK is marketed as VIEKIRAX + EXVIERA and is approved for use in patients withgenotype 1 and genotype 4 HCV. AbbVie’s TECHNIVIE (ombitasvir, paritaprevir and ritonavir) is
FDA-approved for use in combination with ribavirin for the treatment of adults with genotype 4 HCV
infection in the United States. The use of VIEKIRA in the United States, Europe and Japan is currently
limited given the significant use of pangenotypic regimens, including MAVIRET.
Additional Virology products.

AbbVie’s additional virology products include:

SYNAGIS. SYNAGIS (palivizumab) is a product marketed by AbbVie outside of the United Statesthat protects at-risk infants from severe respiratory disease caused by respiratory syncytial virus (RSV).
KALETRA. KALETRA (lopinavir/ritonavir), which is also marketed as ALUVIA in emerging markets,is a prescription anti-HIV-1 medicine that contains two protease inhibitors: lopinavir and ritonavir.
KALETRA is used with other anti-HIV-1 medications as a treatment that maintains viral suppression inpeople with HIV-1.

3

2019 Form 10-K

13NOV201221352027 3

Metabolics/Hormones products. Metabolic and hormone products target a number of conditions,
including testosterone deficiency due to certain underlying conditions, exocrine pancreatic insufficiency andhypothyroidism. These products include:
CREON. CREON (pancrelipase) is a pancreatic enzyme therapy for exocrine pancreatic
insufficiency, a condition that occurs in patients with cystic fibrosis, chronic pancreatitis and several
other conditions.
Synthroid. Synthroid (levothyroxine sodium tablets, USP) is used in the treatment ofhypothyroidism.
AndroGel. AndroGel (testosterone gel) is a testosterone replacement therapy for males diagnosed
with symptomatic low testosterone due to certain underlying conditions.
AbbVie has the rights to sell AndroGel, CREON and Synthroid only in the United States.
Endocrinology products. Lupron (leuprolide acetate), which is also marketed as Lucrin and LUPRONDEPOT, is a product for the palliative treatment of advanced prostate cancer, treatment of endometriosis
and central precocious puberty and for the preoperative treatment of patients with anemia caused byuterine fibroids. Lupron is approved for daily subcutaneous injection and one-month, three-month,four-month and six-month intramuscular injection.
Other products.

AbbVie’s other products include:

ORILISSA. ORILISSA (elagolix) is the first and only orally-administered, nonpeptide small molecule
gonadotropin-releasing hormone (GnRH) antagonist specifically developed for women with moderate tosevere endometriosis pain. The FDA approved ORILISSA under priority review. It represents the first
FDA-approved oral treatment for the management of moderate to severe pain associated withendometriosis in over a decade. ORILISSA inhibits endogenous GnRH signaling by binding competitively
to GnRH receptors in the pituitary gland. Administration results in dose-dependent suppression ofluteinizing hormone and follicle-stimulating hormone, leading to decreased blood concentrations ofovarian sex hormones, estradiol and progesterone. Outside the United States, ORILISSA is also launchedin Canada and Puerto Rico.
Duopa and Duodopa (carbidopa and levodopa). AbbVie’s levodopa-carbidopa intestinal gel forthe treatment of advanced Parkinson’s disease is marketed as Duopa in the United States and as
Duodopa outside of the United States.
Sevoflurane. Sevoflurane (sold under the trademarks Ultane and Sevorane) is an anesthesia
product that AbbVie sells worldwide for human use.
Marketing, Sales and Distribution Capabilities
AbbVie utilizes a combination of dedicated commercial resources, regional commercial resources anddistributorships to market, sell and distribute its products worldwide. AbbVie directs its primary marketing
efforts toward securing the prescription, or recommendation, of its brand of products by physicians, key
opinion leaders and other health care providers. Managed care providers (for example, health maintenanceorganizations and pharmacy benefit managers), hospitals and state and federal government agencies (forexample, the United States Department of Veterans Affairs and the United States Department of Defense)
are also important customers. AbbVie also markets directly to consumers themselves, although in the
United States all of the company’s products must be sold pursuant to a prescription. Outside of the UnitedStates, AbbVie focuses its marketing efforts on key opinion leaders, payers, physicians and country
regulatory bodies. AbbVie also provides patient support programs closely related to its products.

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2019 Form 10-K

4

AbbVie’s products are generally sold worldwide directly to wholesalers, distributors, government
agencies, health care facilities, specialty pharmacies and independent retailers from AbbVie-owned
distribution centers and public warehouses. Although AbbVie’s business does not have significant
seasonality, AbbVie’s product revenues may be affected by end customer and retail buying patterns,
fluctuations in wholesaler inventory levels and other factors.
In the United States, AbbVie distributes pharmaceutical products principally through independent
wholesale distributors, with some sales directly to pharmacies and patients. In 2019, three wholesale
distributors (McKesson Corporation, Cardinal Health, Inc. and AmerisourceBergen Corporation) accounted for
substantially all of AbbVie’s sales in the United States. No individual wholesaler accounted for greater than
42% of AbbVie’s 2019 gross revenues in the United States. Outside the United States, AbbVie sells products
primarily to customers or through distributors, depending on the market served. These wholesalerspurchase product from AbbVie under standard terms and conditions of sale.
Certain products are co-marketed or co-promoted with other companies. AbbVie has no single
customer that, if the customer were lost, would have a material adverse effect on the company’s business.
No material portion of AbbVie’s business is subject to renegotiation of profits or termination of contracts at
the election of the government. Orders are generally filled on a current basis and order backlog is notmaterial to AbbVie’s business.
Competition
The markets for AbbVie’s products are highly competitive. AbbVie competes with other research-based
pharmaceuticals and biotechnology companies that discover, manufacture, market and sell proprietary
pharmaceutical products and biologics. For example, HUMIRA competes with anti-TNF products and othercompetitive products intended to treat a number of disease states and AbbVie’s virology products competewith other available HCV treatment options. The search for technological innovations in pharmaceuticalproducts is a significant aspect of competition. The introduction of new products by competitors andchanges in medical practices and procedures can result in product obsolescence. Price is also a competitive
factor. In addition, the substitution of generic pharmaceutical products for branded pharmaceutical products
creates competitive pressures on AbbVie’s products that do not have patent protection. New products ortreatments brought to market by AbbVie’s competitors could cause revenues for AbbVie’s products todecrease due to price reductions and sales volume decreases.
Biosimilars. Competition for AbbVie’s biologic products is affected by the approval of follow-on
biologics, also known as ‘‘biosimilars.’’ Biologics have added major therapeutic options for the treatment ofmany diseases, including some for which therapies were unavailable or inadequate. The cost of developing
and producing biologic therapies is typically dramatically higher than for conventional (small molecule)
medications, and many biologic medications are used for ongoing treatment of chronic diseases, such as
rheumatoid arthritis or inflammatory bowel disease, or for the treatment of previously untreatable cancer.
Significant investments in biologics infrastructure and manufacturing are necessary to produce biologic
products.
HUMIRA is now facing direct biosimilar competition in Europe and other countries, and AbbVie willcontinue to face competitive pressure from these biologics and from orally administered products.
In the United States, the FDA regulates biologics under the Federal Food, Drug and Cosmetic Act, thePublic Health Service Act and implementing regulations. The enactment of federal health care reform
legislation in March 2010 provided a pathway for approval of biosimilars under the Public Health Service
Act, but the approval process for, and science behind, biosimilars is complex. Approval by the FDA isdependent upon many factors, including a showing that the biosimilar is ‘‘highly similar’’ to the original
product and has no clinically meaningful differences from the original product in terms of safety, purity andpotency. The types of data that could ordinarily be required in an application to show similarity may

52019 Form 10-K

13NOV201221352027 5

include analytical data, bioequivalence studies and studies to demonstrate chemical similarity, animalstudies (including toxicity studies) and clinical studies.
Furthermore, the law provides that only a biosimilar product that is determined to be‘‘interchangeable’’ will be considered substitutable for the original biologic product without the interventionof the health care provider who prescribed the original biologic product. To prove that a biosimilar productis interchangeable, the applicant must demonstrate that the product can be expected to produce the same
clinical results as the original biologic product in any given patient, and if the product is administered morethan once in a patient, that safety risks and potential for diminished efficacy of alternating or switching
between the use of the interchangeable biosimilar biologic product and the original biologic product is no
greater than the risk of using the original biologic product without switching. The law continues to beinterpreted and implemented by the FDA. As a result, its ultimate impact, implementation and meaning
remains subject to substantial uncertainty.
Intellectual Property Protection and Regulatory Exclusivity
Generally, upon approval, products may be entitled to certain kinds of exclusivity under applicable
intellectual property and regulatory regimes. AbbVie’s intellectual property is materially valuable to thecompany, and AbbVie seeks patent protection, where available, in all significant markets and/or countries
for each product in development. In the United States, the expiration date for patents is 20 years after thefiling date. Given that patents relating to pharmaceutical products are often obtained early in thedevelopment process and given the amount of time needed to complete clinical trials and otherdevelopment activities required for regulatory approval, the length of time between product launch andpatent expiration is significantly less than 20 years. The Drug Price Competition and Patent Term
Restoration Act of 1984 (commonly known as the Hatch-Waxman Act) permits a patent holder to seek apatent extension, commonly called a ‘‘patent term restoration,’’ for patents on products (or processes formaking the product) regulated by the Federal Food, Drug, and Cosmetic Act. The length of the patent
extension is roughly based on 50 percent of the period of time from the filing of an Investigational New
Drug Application (NDA) for a compound to the submission of the NDA for such compound, plus
100 percent of the time period from NDA submission to regulatory approval. The extension, however,cannot exceed five years and the patent term remaining after regulatory approval cannot exceed 14 years.
Biological products licensed under the Public Health Service Act are similarly eligible for terms of patent
restoration.
Pharmaceutical products may be entitled to other forms of legal or regulatory exclusivity upon
approval. The scope, length, and requirements for each of these exclusivities vary both in the United Statesand in other jurisdictions. In the United States, if the FDA approves a drug product that contains an active
ingredient not previously approved, the product is typically entitled to five years of non-patent regulatory
exclusivity. Other products may be entitled to three years of exclusivity if approval was based on the FDA’s
reliance on new clinical studies essential to approval submitted by the NDA applicant. If the NDA applicant
studies the product for use by children, the FDA may grant pediatric exclusivity, which extends by 180 days
all existing exclusivities (patent and regulatory) related to the product. For products that are either used totreat conditions that afflict a relatively small population or for which there is not a reasonable expectationthat the research and development costs will be recovered, the FDA may designate the pharmaceutical asan orphan drug and grant it seven years of market exclusivity.
Applicable laws and regulations dictate the scope of any exclusivity to which a product or particularcharacteristics of a product is entitled upon approval in any particular country. In certain instances,
regulatory exclusivity may offer protection where patent protection is no longer available or for a period oftime in excess of patent protection. It is not possible to estimate for each product in development the total
period and scope of exclusivity to which it may become entitled until regulatory approval is obtained.
However, given the length of time required to complete clinical development of a pharmaceutical product,
the periods of exclusivity that might be achieved in any individual case would not be expected to exceed a

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minimum of three years and a maximum of 14 years. These estimates do not consider other factors, suchas the difficulty of recreating the manufacturing process for a particular product or other proprietaryknowledge that may delay the introduction of a generic or other follow-on product after the expiration of
applicable patent and other regulatory exclusivity periods.
Biologics may be entitled to exclusivity under the Biologics Price Competition and Innovation Act,
which was passed on March 23, 2010 as Title VII to the Patient Protection and Affordable Care Act. The
law provides a pathway for approval of biosimilars following the expiration of 12 years of regulatory
exclusivity for the innovator biologic and a potential additional 180 day-extension term for conducting
pediatric studies. Biologics are also eligible for orphan drug exclusivity, as discussed above. The law also
includes an extensive process for the innovator biologic and biosimilar manufacturer to litigate patent
infringement, validity, and enforceability. The European Union has also created a pathway for approval ofbiosimilars and has published guidelines for approval of certain biosimilar products. The more complex
nature of biologics and biosimilar products has led to close regulatory scrutiny over follow-on biosimilar
products, which can reduce the effect of biosimilars on sales of the innovator biologic as compared to thesales erosion caused by generic versions of small molecule pharmaceutical products.
AbbVie owns or has licensed rights to a substantial number of patents and patent applications. AbbVie
licenses or owns a patent portfolio of thousands of patent families, each of which includes United States
patent applications and/or issued patents and may also contain the non-United States counterparts to thesepatents and applications.
These patents and applications, including various patents that expire during the period 2020 to the late
2030s, in aggregate are believed to be of material importance in the operation of AbbVie’s business.
However, AbbVie believes that no single patent, license, trademark (or related group of patents, licenses, ortrademarks), except for those related to adalimumab (which is sold under the trademark HUMIRA), arematerial in relation to the company’s business as a whole. The United States composition of matter (that is,compound) patent covering adalimumab expired in December 2016, and the equivalent European Union
patent expired in October 2018 in the majority of European Union countries. In the United States,
non-composition of matter patents covering adalimumab expire no earlier than 2022. AbbVie has enteredinto settlement and license agreements with several adalimumab biosimilar manufactures. Under theagreements, the license in the United States will begin in 2023 and the license in Europe began in 2018.
In addition, the following patents, licenses, and trademarks are significant: those related to ibrutinib(which is sold under the trademark IMBRUVICA) and those related to glecaprevir and pibrentasvir (which
are sold under the trademarks MAVYRET and MAVIRET). The United States composition of matter patent
covering ibrutinib is expected to expire in 2027. The United States composition of matter patents covering
glecaprevir and pibrentasvir are expected to expire in 2032.
AbbVie may rely, in some circumstances, on trade secrets to protect its technology. However, trade
secrets are difficult to protect. AbbVie seeks to protect its technology and product candidates, in part, byconfidentiality agreements with its employees, consultants, advisors, contractors, and collaborators. These
agreements may be breached and AbbVie may not have adequate remedies for any breach. In addition,
AbbVie’s trade secrets may otherwise become known or be independently discovered by competitors. To
the extent that AbbVie’s employees, consultants, advisors, contractors, and collaborators use intellectual
property owned by others in their work for the company, disputes may arise as to the rights in related or
resulting know-how and inventions.
Licensing, Acquisitions and Other Arrangements
In addition to its independent efforts to develop and market products, AbbVie enters into
arrangements such as acquisitions, option-to-acquire agreements, licensing arrangements, option-to-license
arrangements, strategic alliances, co-promotion arrangements, co-development and co-marketing
agreements, and joint ventures. The acquisitions and option-to-acquire agreements typically include, among

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other terms and conditions, non-refundable purchase price payments or option fees, option exercise
payments, milestones or earn-outs, and other customary terms and obligations. The licensing and otherarrangements typically include, among other terms and conditions, non-refundable upfront license fees,
option fees and option exercise payments, milestone payments and royalty and/or profit sharing obligations.
See Note 5, ‘‘Licensing, Acquisitions and Other Arrangements—Other Licensing & Acquisitions Activity,’’ to
the Consolidated Financial Statements included under Item 8, ‘‘Financial Statements and Supplementary
Data.’’
Third Party Agreements
AbbVie has agreements with third parties for process development, product distribution, analyticalservices and manufacturing of certain products. AbbVie procures certain products and services from alimited number of suppliers and, in some cases, a single supply source. In addition, AbbVie has agreementswith third parties for active pharmaceutical ingredient and product manufacturing, formulation anddevelopment services, fill, finish and packaging services, transportation and distribution and logistics
services for certain products. AbbVie does not believe that these manufacturing related agreements arematerial because AbbVie’s business is not substantially dependent on any individual agreement. In mostcases, AbbVie maintains alternate supply relationships that it can utilize without undue disruption of its
manufacturing processes if a third party fails to perform its contractual obligations. AbbVie also maintains
sufficient inventory of product to minimize the impact of any supply disruption.
AbbVie is also party to certain collaborations and other arrangements, as discussed in Note 5,‘‘Licensing, Acquisitions and Other Arrangements—Other Licensing & Acquisitions Activity,’’ to theConsolidated Financial Statements included under Item 8, ‘‘Financial Statements and Supplementary Data.’’
Sources and Availability of Raw Materials
AbbVie purchases, in the ordinary course of business, raw materials and supplies essential to its
operations from numerous suppliers around the world. In addition, certain medical devices and components
necessary for the manufacture of AbbVie products are provided by unaffiliated third party suppliers. AbbVie
has not experienced any recent significant availability problems or supply shortages that impacted
fulfillment of product demand.
Research and Development Activities
AbbVie makes a significant investment in research and development and has numerous compounds inclinical development, including potential treatments for complex, life-threatening diseases. AbbVie’s ability
to discover and develop new compounds is enhanced by the company’s use of integrated discovery anddevelopment project teams, which include chemists, biologists, physicians and pharmacologists who workon the same compounds as a team. AbbVie also partners with third parties, such as biotechnology
companies, other pharmaceutical companies and academic institutions to identify and prioritize promising
new treatments that complement and enhance AbbVie’s existing portfolio.
The research and development process generally begins with discovery research which focuses on theidentification of a molecule that has a desired effect against a given disease. If preclinical testing of an
identified compound proves successful, the compound moves into clinical development which generally
includes the following phases:• Phase 1—involves the first human tests in a small number of healthy volunteers or patients toassess safety, tolerability and potential dosing.
• Phase 2—tests the drug’s efficacy against the disease in a relatively small group of patients.
• Phase 3—tests a drug that demonstrates favorable results in the earlier phases in a significantly
larger patient population to further demonstrate efficacy and safety based on regulatory criteria.

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The clinical trials from all of the development phases provide the data required to prepare and submit
an NDA, a Biological License Application (BLA) or other submission for regulatory approval to the FDA orsimilar government agencies outside the United States. The specific requirements (e.g., scope of clinical
trials) for obtaining regulatory approval vary across different countries and geographic regions.
The research and development process from discovery through a new drug launch typically takes 8 to
12 years and can be even longer. The research and development of new pharmaceutical products has asignificant amount of inherent uncertainty. There is no guarantee when, or if, a molecule will receive theregulatory approval required to launch a new drug or indication.
In addition to the development of new products and new formulations, research and development
projects also may include Phase 4 trials, sometimes called post-marketing studies. For such projects, clinical
trials are designed and conducted to collect additional data regarding, among other parameters, thebenefits and risks of an approved drug.
Regulation—Discovery and Clinical Development
United States. Securing approval to market a new pharmaceutical product in the United Statesrequires substantial effort and financial resources and takes several years to complete. The applicant mustcomplete preclinical tests and submit protocols to the FDA before commencing clinical trials. Clinical trials
are intended to establish the safety and efficacy of the pharmaceutical product and typically are conductedin sequential phases, although the phases may overlap or be combined. If the required clinical testing is
successful, the results are submitted to the FDA in the form of an NDA or BLA requesting approval tomarket the product for one or more indications. The FDA reviews an NDA or BLA to determine whether aproduct is safe and effective for its intended use and whether its manufacturing is compliant with current
Good Manufacturing Practices (cGMP).
Even if an NDA or a BLA receives approval, the applicant must comply with post-approvalrequirements. For example, holders of an approval must report adverse reactions, provide updated safety
and efficacy information and comply with requirements concerning advertising and promotional materials
and activities. Also, quality control and manufacturing procedures must continue to conform to cGMP after
approval, and certain changes to the manufacturing procedures and finished product must be included in
the NDA or BLA and approved by the FDA prior to implementation. The FDA periodically inspects
manufacturing facilities to assess compliance with cGMP, which imposes extensive procedural and record
keeping requirements. In addition, as a condition of approval, the FDA may require post-marketing testingand surveillance to further assess and monitor the product’s safety or efficacy after commercialization,
which may require additional clinical trials, patient registries, observational data or additional work on
chemistry, manufacturing and controls. Any post-approval regulatory obligations, and the cost of complying
with such obligations, could expand in the future.
Outside the United States. AbbVie is subject to similar regulatory requirements outside the UnitedStates for approval and marketing of pharmaceutical products. AbbVie must obtain approval of a clinical
trial application or product from the applicable regulatory authorities before it can commence clinical trials
or marketing of the product. The approval requirements and process for each country can vary, and thetime required to obtain approval may be longer or shorter than that required for FDA approval in the
United States. For example, AbbVie may submit marketing authorizations in the European Union undereither a centralized or decentralized procedure. The centralized procedure is mandatory for the approval of
biotechnology products and many pharmaceutical products and provides for a single marketing
authorization that is valid for all European Union member states. Under the centralized procedure, a single
marketing authorization application is submitted to the European Medicines Agency (EMA). After the agency
evaluates the application, it makes a recommendation to the European Commission, which then makes the
final determination on whether to approve the application. The decentralized procedure provides for mutual

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recognition of individual national approval decisions and is available for products that are not subject to thecentralized procedure.
In Japan, applications for approval of a new product are made through the Pharmaceutical andMedical Devices Agency (PMDA). Bridging studies to demonstrate that the non-Japanese clinical data applies
to Japanese patients may be required. After completing a comprehensive review, the PMDA reports to the
Ministry of Health, Labour and Welfare, which then approves or denies the application.
The regulatory process in many emerging markets continues to evolve. Many emerging markets,
including those in Asia, generally require regulatory approval to have been obtained in a large developed
market (such as the United States or Europe) before the country will begin or complete its regulatory
review process. Some countries also require that local clinical studies be conducted in order to obtainregulatory approval in the country.
The requirements governing the conduct of clinical trials and product licensing also vary. In addition,
post-approval regulatory obligations such as adverse event reporting and cGMP compliance generally apply
and may vary by country. For example, after a marketing authorization has been granted in the European
Union, periodic safety reports must be submitted and other pharmacovigilance measures may be required(such as Risk Management Plans).
Regulation—Commercialization, Distribution and Manufacturing
The manufacture, marketing, sale, promotion and distribution of AbbVie’s products are subject tocomprehensive government regulation. Government regulation by various national, regional, federal, stateand local agencies, both in the United States and other countries, addresses (among other matters)
inspection of, and controls over, research and laboratory procedures, clinical investigations, productapprovals and manufacturing, labeling, packaging, marketing and promotion, pricing and reimbursement,
sampling, distribution, quality control, post-marketing surveillance, record keeping, storage and disposal
practices. AbbVie’s operations are also affected by trade regulations in many countries that limit the importof raw materials and finished products and by laws and regulations that seek to prevent corruption andbribery in the marketplace (including the United States Foreign Corrupt Practices Act and the United
Kingdom Bribery Act, which provide guidance on corporate interactions with government officials) andrequire safeguards for the protection of personal data. In addition, AbbVie is subject to laws andregulations pertaining to health care fraud and abuse, including state and federal anti-kickback and false
claims laws in the United States. Prescription drug manufacturers such as AbbVie are also subject to taxes,
as well as application, product, user and other fees.
Compliance with these laws and regulations is costly and materially affects AbbVie’s business. Amongother effects, health care regulations substantially increase the time, difficulty and costs incurred in
obtaining and maintaining approval to market newly developed and existing products. AbbVie expects
compliance with these regulations to continue to require significant technical expertise and capital
investment to ensure compliance. Failure to comply can delay the release of a new product or result in
regulatory and enforcement actions, the seizure or recall of a product, the suspension or revocation of theauthority necessary for a product’s production and sale and other civil or criminal sanctions, including finesand penalties.
In addition to regulatory initiatives, AbbVie’s business can be affected by ongoing studies of theutilization, safety, efficacy and outcomes of health care products and their components that are regularly
conducted by industry participants, government agencies and others. These studies can call into question
the utilization, safety and efficacy of previously marketed products. In some cases, these studies haveresulted, and may in the future result, in the discontinuance of, or limitations on, marketing of suchproducts domestically or worldwide, and may give rise to claims for damages from persons who believe
they have been injured as a result of their use.

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Access to human health care products continues to be a subject of oversight, investigation and action
by governmental agencies, legislative bodies and private organizations in the United States and othercountries. A major focus is cost containment. Efforts to reduce health care costs are also being made in theprivate sector, notably by health care payers and providers, which have instituted various cost reduction
and containment measures. AbbVie expects insurers and providers to continue attempts to reduce the costof health care products. Outside the United States, many countries control the price of health care products
directly or indirectly, through reimbursement, payment, pricing, coverage limitations, or compulsory
licensing. Political and budgetary pressures in the United States and in other countries may also heighten
the scope and severity of pricing pressures on AbbVie’s products for the foreseeable future.
United States. Specifically, U.S. federal laws require pharmaceutical manufacturers to pay certain
statutorily-prescribed rebates to state Medicaid programs on prescription drugs reimbursed under state
Medicaid plans, and the efforts by states to seek additional rebates affect AbbVie’s business. Similarly, theVeterans Health Care Act of 1992, as a prerequisite to participation in Medicaid and other federal healthcare programs, requires that manufacturers extend additional discounts on pharmaceutical products tovarious federal agencies, including the United States Department of Veterans Affairs, Department of Defense
and Public Health Service entities and institutions. In addition, recent legislative changes would require
similarly discounted prices to be offered to TRICARE program beneficiaries. The Veterans Health Care Act of1992 also established the 340B drug discount program, which requires pharmaceutical manufacturers toprovide products at reduced prices to various designated health care entities and facilities.
In the United States, most states also have generic substitution legislation requiring or permitting adispensing pharmacist to substitute a different manufacturer’s generic version of a pharmaceutical productfor the one prescribed. In addition, the federal government follows a diagnosis-related group (DRG)
payment system for certain institutional services provided under Medicare or Medicaid and has
implemented a prospective payment system (PPS) for services delivered in hospital outpatient, nursing
home and home health settings. DRG and PPS entitle a health care facility to a fixed reimbursement basedon the diagnosis and/or procedure rather than actual costs incurred in patient treatment, thereby
increasing the incentive for the facility to limit or control expenditures for many health care products.
Medicare reimburses Part B drugs based on average sales price plus a certain percentage to account forphysician administration costs, which have been reduced in the hospital outpatient setting. Medicare enters
into contracts with private plans to negotiate prices for most patient-administered medicine delivered underPart D.
Under the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation
Act (together, the Affordable Care Act), AbbVie pays a fee related to its pharmaceuticals sales togovernment programs. In addition, AbbVie provides a discount of 50% for branded prescription drugs soldto patients who fall into the Medicare Part D coverage gap, or ‘‘donut hole.’’The Affordable Care Act also includes provisions known as the Physician Payments Sunshine Act, which
require manufacturers of drugs and biologics covered under Medicare and Medicaid to record any transfersof value to physicians and teaching hospitals and to report this data to the Centers for Medicare andMedicaid Services for subsequent public disclosure. Similar reporting requirements have also been enacted
on the state level in the United States, and an increasing number of countries worldwide either haveadopted or are considering similar laws requiring disclosure of interactions with health care professionals.
Failure to report appropriate data may result in civil or criminal fines and/or penalties.
AbbVie expects debate to continue during 2020 at all government levels worldwide over themarketing, availability, method of delivery and payment for health care products and services. AbbVie
believes that future legislation and regulation in the markets it serves could affect access to health careproducts and services, increase rebates, reduce prices or the rate of price increases for health careproducts and services, change health care delivery systems, create new fees and obligations for thepharmaceuticals industry, or require additional reporting and disclosure. It is not possible to predict the112019 Form 10-K

13NOV201221352027 11

extent to which AbbVie or the health care industry in general might be affected by the matters discussed
above.
European Union. The European Union has adopted directives and other legislation governing labeling,
advertising, distribution, supply, pharmacovigilance and marketing of pharmaceutical products. Suchlegislation provides mandatory standards throughout the European Union and permits member states tosupplement these standards with additional regulations. European governments also regulate
pharmaceutical product prices through their control of national health care systems that fund a large partof the cost of such products to consumers. As a result, patients are unlikely to use a pharmaceuticalproduct that is not reimbursed by the government. In many European countries, the government either
regulates the pricing of a new product at launch or subsequent to launch through direct price controls orreference pricing. In recent years, many countries have also imposed new or additional cost containment
measures on pharmaceutical products. Differences between national pricing regimes create pricedifferentials within the European Union that can lead to significant parallel trade in pharmaceuticalproducts.
Most governments also promote generic substitution by mandating or permitting a pharmacist to
substitute a different manufacturer’s generic version of a pharmaceutical product for the one prescribedand by permitting or mandating that health care professionals prescribe generic versions in certain
circumstances. Many governments are also following a similar path for biosimilar therapies. In addition,
governments use reimbursement lists to limit the pharmaceutical products that are eligible forreimbursement by national health care systems.
Japan. In Japan, the National Health Insurance system maintains a Drug Price List specifying whichpharmaceutical products are eligible for reimbursement, and the Ministry of Health, Labour and Welfare
sets the prices of the products on this list. The government generally introduces price cut rounds every
other year and also mandates price decreases for specific products. New products judged innovative or
useful, that are indicated for pediatric use, or that target orphan or small population diseases, however,may be eligible for a pricing premium. The government has also promoted the use of generics, whereavailable.
Emerging Markets. Many emerging markets take steps to reduce pharmaceutical product prices, insome cases through direct price controls and in others through the promotion of generic/biosimilaralternatives to branded pharmaceuticals.
Since AbbVie markets its products worldwide, certain products of a local nature and variations of
product lines must also meet other local regulatory requirements. Certain additional risks are inherent in
conducting business outside the United States, including price and currency exchange controls, changes incurrency exchange rates, limitations on participation in local enterprises, expropriation, nationalization andother governmental action.
Environmental Matters
AbbVie believes that its operations comply in all material respects with applicable laws and regulations
concerning environmental protection. Regulations under federal and state environmental laws impose
stringent limitations on emissions and discharges to the environment from various manufacturing
operations. AbbVie’s capital expenditures for pollution control in 2019 were approximately $29 million andoperating expenditures were approximately $34 million. In 2020, capital expenditures for pollution control
are estimated to be approximately $5 million and operating expenditures are estimated to be approximately$35 million.
Abbott was identified as one of many potentially responsible parties in investigations and/or
remediations at several locations in the United States, including Puerto Rico, under the Comprehensive
Environmental Response, Compensation and Liability Act, commonly known as Superfund. Some of these

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locations were transferred to AbbVie in connection with the separation and distribution, and AbbVie has
become a party to these investigations and remediations. Abbott was also engaged in remediation atseveral other sites, some of which have been transferred to AbbVie in connection with the separation anddistribution, in cooperation with the Environmental Protection Agency or similar agencies. While it is not
feasible to predict with certainty the final costs related to those investigations and remediation activities,
AbbVie believes that such costs, together with other expenditures to maintain compliance with applicablelaws and regulations concerning environmental protection, should not have a material adverse effect on thecompany’s financial position, cash flows, or results of operations.
Employees
AbbVie employed approximately 30,000 persons as of January 31, 2020. Outside the United States,
some of AbbVie’s employees are represented by unions or works councils. AbbVie believes that it has good
relations with its employees.
Internet Information
Copies of AbbVie’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on
Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 are available free of charge through AbbVie’s investor relations website(www.abbvieinvestor.com) as soon as reasonably practicable after AbbVie electronically files the material
with, or furnishes it to, the Securities and Exchange Commission (SEC).
AbbVie’s corporate governance guidelines, outline of directorship qualifications, code of businessconduct and the charters of AbbVie’s audit committee, compensation committee, nominations andgovernance committee and public policy committee are all available on AbbVie’s investor relations website(www.abbvieinvestor.com).

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ITEM
1A. RISK FACTORS.....................................................................................................................................................................................................................................................................................................................................................
You should carefully consider the following risks and other information in this Form 10-K in evaluating
AbbVie and AbbVie’s common stock. Any of the following risks could materially and adversely affect
AbbVie’s results of operations, financial condition or cash flows. The risk factors generally have been
separated into three groups: risks related to AbbVie’s business, risks related to AbbVie’s proposed acquisitionof Allergan (the ‘‘Acquisition’’) and the combined company upon completion of the Acquisition, and risks
related to AbbVie’s common stock. Based on the information currently known to it, AbbVie believes that thefollowing information identifies the most significant risk factors affecting it in each of these categories ofrisks. However, the risks and uncertainties AbbVie faces are not limited to those set forth in the risk factors
described below and may not be in order of importance or probability of occurrence. Additional risks anduncertainties not presently known to AbbVie or that AbbVie currently believes to be immaterial may also
adversely affect its business. In addition, past financial performance may not be a reliable indicator of
future performance and historical trends should not be used to anticipate results or trends in future periods.
If any of the following risks and uncertainties develops into actual events, these events could have amaterial adverse effect on AbbVie’s business, results of operations, financial condition or cash flows. In suchcase, the trading price of AbbVie’s common stock could decline.
Risks Related to AbbVie’s Business
The expiration or loss of patent protection and licenses may adversely affect AbbVie’s future
revenues and operating earnings.
AbbVie relies on patent, trademark and other intellectual property protection in the discovery,
development, manufacturing and sale of its products. In particular, patent protection is, in the aggregate,
important in AbbVie’s marketing of pharmaceutical products in the United States and most major markets
outside of the United States. Patents covering AbbVie products normally provide market exclusivity, which isimportant for the profitability of many of AbbVie’s products.
As patents for certain of its products expire, AbbVie will or could face competition from lower priced
generic or biosimilar products. The expiration or loss of patent protection for a product typically is followed
promptly by substitutes that may significantly reduce sales for that product in a short amount of time. If
AbbVie’s competitive position is compromised because of generics, biosimilars or otherwise, it could have amaterial adverse effect on AbbVie’s business and results of operations. In addition, proposals emerge fromtime to time for legislation to further encourage the early and rapid approval of generic drugs orbiosimilars. Any such proposals that are enacted into law could increase the impact of generic competition.
AbbVie’s principal patents and trademarks are described in greater detail in Item 1, ‘‘Business—
Intellectual Property Protection and Regulatory Exclusivity’’ and Item 7, ‘‘Management’s Discussion andAnalysis of Financial Condition and Results of Operations—Results of Operations,’’ and litigation regardingthese patents is described in Item 3, ‘‘Legal Proceedings.’’ The United States composition of matter patentfor HUMIRA, which is AbbVie’s largest product and had worldwide net revenues of approximately$19.2 billion in 2019, expired in December 2016, and the equivalent European Union patent expired in the
majority of European Union countries in October 2018.
AbbVie’s major products could lose patent protection earlier than expected, which could adversely
affect AbbVie’s future revenues and operating earnings.
Third parties or government authorities may challenge or seek to invalidate or circumvent AbbVie’s
patents and patent applications. For example, manufacturers of generic pharmaceutical products file, andmay continue to file, Abbreviated New Drug Applications with the FDA seeking to market generic forms of
AbbVie’s products prior to the expiration of relevant patents owned or licensed by AbbVie by asserting thatthe patents are invalid, unenforceable and/or not infringed. In addition, petitioners have filed, and may

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continue to file, challenges to the validity of AbbVie patents under the 2011 Leahy-Smith America Invents
Act, which created inter partes review and post grant review procedures for challenging patent validity inadministrative proceedings at the United States Patent and Trademark Office.
Although most of the challenges to AbbVie’s intellectual property have come from other businesses,
governments may also challenge intellectual property rights. For example, court decisions and potential
legislation relating to patents, such as legislation regarding biosimilars, and other regulatory initiatives may
result in further erosion of intellectual property protection. In addition, certain governments outside theUnited States have indicated that compulsory licenses to patents may be sought to further their domestic
policies or on the basis of national emergencies, such as HIV/AIDS. If triggered, compulsory licenses could
diminish or eliminate sales and profits from those jurisdictions and negatively affect AbbVie’s results ofoperations.
AbbVie normally responds to challenges by vigorously defending its patents, including by filing patent
infringement lawsuits. Patent litigation, administrative proceedings and other challenges to AbbVie’s patents
are costly and unpredictable and may deprive AbbVie of market exclusivity for a patented product. To theextent AbbVie’s intellectual property is successfully challenged, circumvented or weakened, or to the extent
such intellectual property does not allow AbbVie to compete effectively, AbbVie’s business will suffer. To theextent that countries do not enforce AbbVie’s intellectual property rights or require compulsory licensing of
AbbVie’s intellectual property, AbbVie’s future revenues and operating earnings will be reduced.
A third party’s intellectual property may prevent AbbVie from selling its products or have a material
adverse effect on AbbVie’s future profitability and financial condition.
Third parties may claim that an AbbVie product infringes upon their intellectual property. Resolving an
intellectual property infringement claim can be costly and time consuming and may require AbbVie to enter
into license agreements. AbbVie cannot guarantee that it would be able to obtain license agreements oncommercially reasonable terms. A successful claim of patent or other intellectual property infringement
could subject AbbVie to significant damages or an injunction preventing the manufacture, sale, or use of
the affected AbbVie product or products. Any of these events could have a material adverse effect on
AbbVie’s profitability and financial condition.
Any significant event that adversely affects HUMIRA revenues could have a material and negative
impact on AbbVie’s results of operations and cash flows.
HUMIRA accounted for approximately 58% of AbbVie’s total net revenues in 2019. Any significant eventthat adversely affects HUMIRA’s revenues could have a material adverse impact on AbbVie’s results ofoperations and cash flows. These events could include loss of patent protection for HUMIRA (as describedfurther in ‘‘—The expiration or loss of patent protection and licenses may adversely affect AbbVie’s future
revenues and operating earnings’’ above), the commercialization of biosimilars of HUMIRA, the discovery ofpreviously unknown side effects or impaired efficacy, increased competition from the introduction of new,more effective or less expensive treatments and discontinuation or removal from the market of HUMIRA for
any reason.
AbbVie’s research and development efforts may not succeed in developing and marketing
commercially successful products and technologies, which may cause its revenues and profitability to
decline.
To remain competitive, AbbVie must continue to launch new products and new indications and/or
brand extensions for existing products, and such launches must generate revenue sufficient both to coverits substantial research and development costs and to replace revenues of profitable products that are lostto or displaced by competing products or therapies. Failure to do so would have a material adverse effecton AbbVie’s revenue and profitability. Accordingly, AbbVie commits substantial effort, funds, and other15

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resources to research and development and must make ongoing substantial expenditures without any
assurance that its efforts will be commercially successful. A high rate of failure in the biopharmaceuticalindustry is inherent in the research and development of new products, and failure can occur at any point in
the research and development process, including after significant funds have been invested. Products thatappear promising in development may fail to reach the market for numerous reasons, including failure todemonstrate effectiveness, safety concerns, superior safety or efficacy of competing therapies, failure toachieve positive clinical or pre-clinical outcomes beyond the current standards of care, inability to obtainnecessary regulatory approvals or delays in the approval of new products and new indications, limited
scope of approved uses, excessive costs to manufacture, the failure to obtain or maintain intellectual
property rights, or infringement of the intellectual property rights of others.
Decisions about research studies made early in the development process of a pharmaceutical productcandidate can affect the marketing strategy once such candidate receives approval. More detailed studies
may demonstrate additional benefits that can help in the marketing, but they also consume time andresources and may delay submitting the pharmaceutical product candidate for approval. AbbVie cannot
guarantee that a proper balance of speed and testing will be made with respect to each pharmaceuticalproduct candidate or that decisions in this area would not adversely affect AbbVie’s future results ofoperations.
Even if AbbVie successfully develops and markets new products or enhancements to its existingproducts, they may be quickly rendered obsolete by changing clinical preferences, changing industry
standards, or competitors’ innovations. AbbVie’s innovations may not be accepted quickly in themarketplace because of existing clinical practices or uncertainty over third-party reimbursement. AbbVie
cannot state with certainty when or whether any of its products under development will be launched,
whether it will be able to develop, license, or otherwise acquire compounds or products, or whether any
products will be commercially successful. Failure to launch successful new products or new indications forexisting products may cause AbbVie’s products to become obsolete, causing AbbVie’s revenues andoperating results to suffer.
A portion of AbbVie’s near-term pharmaceutical pipeline relies on collaborations with third parties,
which may adversely affect the development and sale of its products.
AbbVie depends on alliances with pharmaceutical and biotechnology companies for a portion of the
products in its near-term pharmaceutical pipeline. Failures by these parties to meet their contractual,
regulatory, or other obligations to AbbVie, or any disruption in the relationships between AbbVie and thesethird parties, could have an adverse effect on AbbVie’s pharmaceutical pipeline and business. In addition,
AbbVie’s collaborative relationships for research and development extend for many years and may give rise
to disputes regarding the relative rights, obligations and revenues of AbbVie and its collaboration partners,
including the ownership of intellectual property and associated rights and obligations. This could result inthe loss of intellectual property rights or protection, delay the development and sale of potential
pharmaceutical products and lead to lengthy and expensive litigation, administrative proceedings orarbitration.
Biologics carry unique risks and uncertainties, which could have a negative impact on future resultsof operations.
The successful discovery, development, manufacturing and sale of biologics is a long, expensive anduncertain process. There are unique risks and uncertainties with biologics. For example, access to andsupply of necessary biological materials, such as cell lines, may be limited and governmental regulations
restrict access to and regulate the transport and use of such materials. In addition, the development,
manufacturing and sale of biologics is subject to regulations that are often more complex and extensive
than the regulations applicable to other pharmaceutical products. Manufacturing biologics, especially inlarge quantities, is often complex and may require the use of innovative technologies. Such manufacturing

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also requires facilities specifically designed and validated for this purpose and sophisticated quality
assurance and quality control procedures. Biologics are also frequently costly to manufacture because
production inputs are derived from living animal or plant material, and some biologics cannot be madesynthetically. Failure to successfully discover, develop, manufacture and sell biologics—including HUMIRA—
could adversely impact AbbVie’s business and results of operations.
AbbVie’s biologic products are subject to competition from biosimilars.
The Biologics Price Competition and Innovation Act creates a framework for the approval of biosimilars
in the United States and could allow competitors to reference data from biologic products alreadyapproved. In Europe, the European Commission has granted marketing authorizations for several biosimilars
pursuant to a set of general and product class-specific guidelines for biosimilar approvals issued over the
past few years. In addition, companies are developing biosimilars in other countries that could and docompete with AbbVie’s biologic products, including HUMIRA. As competitors obtain marketing approval forbiosimilars referencing AbbVie’s biologic products, AbbVie’s products may become subject to competition
from such biosimilars, with the attendant competitive pressure and consequences. Expiration or successful
challenge of AbbVie’s applicable patent rights could also trigger competition from other products, assuming
any relevant exclusivity period has expired. As a result, AbbVie could face more litigation and administrative
proceedings with respect to the validity and/or scope of patents relating to its biologic products.
New products and technological advances by AbbVie’s competitors may negatively affect AbbVie’s
results of operations.
AbbVie competes with other research-based pharmaceutical and biotechnology companies that
discover, manufacture, market and sell proprietary pharmaceutical products and biologics. For example,
HUMIRA competes with anti-TNF products and other competitive products intended to treat a number of
disease states and AbbVie’s virology products compete with other available hepatitis C treatment options.
These competitors may introduce new products or develop technological advances that compete with
AbbVie’s products in therapeutic areas such as immunology, virology/liver disease, oncology andneuroscience. AbbVie cannot predict with certainty the timing or impact of the introduction by competitorsof new products or technological advances. Such competing products may be safer, more effective, more
effectively marketed or sold, or have lower prices or superior performance features than AbbVie’s products,
and this could negatively impact AbbVie’s business and results of operations.
The manufacture of many of AbbVie’s products is a highly exacting and complex process, and if
AbbVie or one of its suppliers encounters problems manufacturing AbbVie’s products, AbbVie’s
business could suffer.
The manufacture of many of AbbVie’s products is a highly exacting and complex process, due in partto strict regulatory requirements. Problems may arise during manufacturing for a variety of reasons,
including equipment malfunction, failure to follow specific protocols and procedures, problems with raw
materials, delays related to the construction of new facilities or the expansion of existing facilities, including
those intended to support future demand for AbbVie’s products, changes in manufacturing production sites
and limits to manufacturing capacity due to regulatory requirements, changes in the types of products
produced, physical limitations that could inhibit continuous supply, man-made or natural disasters andenvironmental factors. If problems arise during the production of a batch of product, that batch of productmay have to be discarded and AbbVie may experience product shortages or incur added expenses. This
could, among other things, lead to increased costs, lost revenue, damage to customer relations, time andexpense spent investigating the cause and, depending on the cause, similar losses with respect to otherbatches or products. If problems are not discovered before the product is released to the market, recall
and product liability costs may also be incurred.

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AbbVie uses a number of products in its pharmaceutical and biologic manufacturing processes thatare sourced from single suppliers, and an interruption in the supply of those products could
adversely affect AbbVie’s business and results of operations.
AbbVie uses a number of products in its pharmaceutical and biologic manufacturing processes that aresourced from single suppliers. The failure of these single-source suppliers to fulfill their contractual
obligations in a timely manner or as a result of regulatory noncompliance or physical disruption at a
manufacturing site may impair AbbVie’s ability to deliver its products to customers on a timely andcompetitive basis, which could adversely affect AbbVie’s business and results of operations. Finding analternative supplier could take a significant amount of time and involve significant expense due to thenature of the products and the need to obtain regulatory approvals. AbbVie cannot guarantee that it will
be able to reach agreement with alternative providers or that regulatory authorities would approve
AbbVie’s use of such alternatives. AbbVie does, however, carry business interruption insurance, which
provides a degree of protection in the case of a failure by a single-source supplier.
Significant safety or efficacy issues could arise for AbbVie’s products, which could have a material
adverse effect on AbbVie’s revenues and financial condition.
Pharmaceutical products receive regulatory approval based on data obtained in controlled clinical trialsof limited duration. Following regulatory approval, these products will be used over longer periods of timein many patients. Investigators may also conduct additional, and perhaps more extensive, studies. If newsafety or efficacy issues are reported or if new scientific information becomes available (including results ofpost-marketing Phase 4 trials), or if governments change standards regarding safety, efficacy or labeling,
AbbVie may be required to amend the conditions of use for a product. For example, AbbVie may
voluntarily provide or be required to provide updated information on a product’s label or narrow its
approved indication, either of which could reduce the product’s market acceptance. If safety or efficacy
issues with an AbbVie product arise, sales of the product could be halted by AbbVie or by regulatory
authorities and regulatory action could be taken by such regulatory authorities. Safety or efficacy issues
affecting suppliers’ or competitors’ products also may reduce the market acceptance of AbbVie’s products.
New data about AbbVie’s products, or products similar to its products, could negatively impact demandfor AbbVie’s products due to real or perceived safety issues or uncertainty regarding efficacy and, in somecases, could result in product withdrawal. Furthermore, new data and information, including information
about product misuse, may lead government agencies, professional societies, practice management groups
or organizations involved with various diseases to publish guidelines or recommendations related to the useof AbbVie’s products or the use of related therapies or place restrictions on sales. Such guidelines orrecommendations may lead to lower sales of AbbVie’s products.
AbbVie is subject to product liability claims and other lawsuits that may adversely affect its businessand results of operations.
In the ordinary course of business, AbbVie is the subject of product liability claims and lawsuits
alleging that AbbVie’s products or the products of other companies that it promotes have resulted or could
result in an unsafe condition for or injury to patients. Product liability claims and lawsuits and safety alerts
or product recalls, regardless of their ultimate outcome, may have a material adverse effect on AbbVie’s
business, results of operations and reputation and on its ability to attract and retain customers.
Consequences may also include additional costs, a decrease in market share for the product in question,
lower income and exposure to other claims. Product liability losses are self-insured.
AbbVie is also the subject of other claims, legal proceedings and investigations in the ordinary courseof business, which relate to the intellectual property, commercial, securities and other matters. Adverse
outcomes in such claims, legal proceedings and investigations may also adversely affect AbbVie’s businessand results of operations.

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AbbVie is subject to cost-containment efforts and pricing pressures that could cause a reduction in
future revenues and operating earnings, and changes in the terms of rebate and chargeback
programs, which are common in the pharmaceuticals industry, could have a material adverse effecton AbbVie’s operations.
Cost-containment efforts by governments and private organizations are described in greater detail in
Item 1, ‘‘Business—Regulation—Commercialization, Distribution and Manufacturing.’’ To the extent thesecost containment efforts are not offset by greater demand, increased patient access to health care, or otherfactors, AbbVie’s future revenues and operating earnings will be reduced. In the United States, theEuropean Union and other countries, AbbVie’s business has experienced downward pressure on productpricing, and this pressure could increase in the future.
AbbVie is subject to increasing public and legislative pressure with respect to pharmaceutical pricing. In
the United States, practices of managed care groups, and institutional and governmental purchasers, andUnited States federal laws and regulations related to Medicare and Medicaid, including the Medicare
Prescription Drug Improvement and Modernization Act of 2003 and the Patient Protection and Affordable
Care Act, contribute to pricing pressures. The potential for continuing changes to the health care system in
the United States and the increased purchasing power of entities that negotiate on behalf of Medicare,
Medicaid and private sector beneficiaries could result in additional pricing pressures.
In numerous major markets worldwide, the government plays a significant role in funding health careservices and determining the pricing and reimbursement of pharmaceutical products. Consequently, in thosemarkets, AbbVie is subject to government decision-making and budgetary actions with respect to its
products. In particular, many European countries have ongoing government-mandated price reductions formany pharmaceutical products, and AbbVie anticipates continuing pricing pressures in Europe. Differences
between countries in pricing regulations could lead to third-party cross-border trading in AbbVie’s productsthat results in a reduction in future revenues and operating earnings.
Rebates related to government programs, such as fee-for-service Medicaid or Medicaid managed careprograms, arise from laws and regulations. AbbVie cannot predict if additional government initiatives tocontain health care costs or other factors could lead to new or modified regulatory requirements that
include higher or incremental rebates or discounts. Other rebate and discount programs arise fromcontractual agreements with private payers. Various factors, including market factors and the ability ofprivate payers to control patient access to products, may provide payers the leverage to negotiate higher or
additional rebates or discounts that could have a material adverse effect on AbbVie’s operations.
AbbVie is subject to numerous governmental regulations, and it can be costly to comply with theseregulations and to develop compliant products and processes.
AbbVie’s products are subject to rigorous regulation by numerous international, supranational, federal
and state authorities, as described in Item 1, ‘‘Business—Regulation—Discovery and Clinical Development.’’
The process of obtaining regulatory approvals to market a pharmaceutical product can be costly and time
consuming, and approvals might not be granted for future products, or additional indications or uses ofexisting products, on a timely basis, if at all. Delays in the receipt of, or failure to obtain approvals for,future products, or new indications and uses, could result in delayed realization of product revenues,
reduction in revenues and substantial additional costs.
In addition, AbbVie cannot guarantee that it will remain compliant with applicable regulatory
requirements once approval has been obtained for a product. These requirements include, among otherthings, regulations regarding manufacturing practices, product labeling and advertising and post-marketing
reporting, including adverse event reports and field alerts due to manufacturing quality concerns. AbbVie
must incur expense and spend time and effort to ensure compliance with these complex regulations.

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Possible regulatory actions could result in substantial modifications to AbbVie’s business practices andoperations; refunds, recalls or seizures of AbbVie’s products; a total or partial shutdown of production in
one or more of AbbVie’s or its suppliers’ facilities while AbbVie or its supplier remedies the alleged
violation; the inability to obtain future approvals; and withdrawals or suspensions of current products fromthe market. Any of these events could disrupt AbbVie’s business and have a material adverse effect on its
business and results of operations.
Laws and regulations affecting government benefit programs could impose new obligations on
AbbVie, require it to change its business practices, and restrict its operations in the future.
The health care industry is subject to various federal, state and international laws and regulations
pertaining to government benefit programs reimbursement, rebates, price reporting and regulation andhealth care fraud and abuse. In the United States, these laws include anti-kickback and false claims laws,
the Medicaid Rebate Statute, the Veterans Health Care Act and individual state laws relating to pricing andsales and marketing practices. Violations of these laws may be punishable by criminal and/or civil sanctions,
including, in some instances, substantial fines, imprisonment and exclusion from participation in federal andstate health care programs, including Medicare, Medicaid and Veterans Administration health programs.
These laws and regulations are broad in scope and they are subject to change and evolving interpretations,which could require AbbVie to incur substantial costs associated with compliance or to alter one or more ofits sales or marketing practices. In addition, violations of these laws, or allegations of such violations, could
disrupt AbbVie’s business and result in a material adverse effect on its business and results of operations.
The international nature of AbbVie’s business subjects it to additional business risks that may cause
its revenue and profitability to decline.
AbbVie’s business is subject to risks associated with doing business internationally, including inemerging markets. Net revenues outside of the United States made up approximately 28% of AbbVie’s total
net revenues in 2019. The risks associated with AbbVie’s operations outside the United States include:• fluctuations in currency exchange rates;• changes in medical reimbursement policies and programs;• multiple legal and regulatory requirements that are subject to change and that could restrict
AbbVie’s ability to manufacture, market and sell its products;• differing local product preferences and product requirements;• trade protection measures and import or export licensing requirements;• international trade disruptions or disputes, including in connection with the ongoing tradenegotiations between the United States and China;• difficulty in establishing, staffing and managing operations;• differing labor regulations;• potentially negative consequences from changes in or interpretations of tax laws;• political and economic instability, including the United Kingdom’s exit from the European Union;• sovereign debt issues;• price and currency exchange controls, limitations on participation in local enterprises, expropriation,nationalization and other governmental action;• inflation, recession and fluctuations in interest rates;

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20• potential deterioration in the economic position and credit quality of certain non-U.S. countries,
including in Europe and Latin America; and• potential penalties or other adverse consequences for violations of anti-corruption, anti-bribery andother similar laws and regulations, including the United States Foreign Corrupt Practices Act and theUnited Kingdom Bribery Act.
Events contemplated by these risks may, individually or in the aggregate, have a material adverse effecton AbbVie’s revenues and profitability.
If AbbVie does not effectively and profitably commercialize its products, AbbVie’s revenues andfinancial condition could be adversely affected.
AbbVie must effectively and profitably commercialize its principal products by creating and meeting
continued market demand; achieving market acceptance and generating product sales; ensuring that theactive pharmaceutical ingredient(s) for a product and the finished product are manufactured in sufficientquantities and in compliance with requirements of the FDA and similar foreign regulatory agencies and withacceptable quality and pricing to meet commercial demand; and ensuring that the entire supply chain
efficiently and consistently delivers AbbVie’s products to its customers. The commercialization of AbbVie
products may not be successful due to, among other things, unexpected challenges from competitors, newsafety issues or concerns being reported that may impact or narrow approved indications, the relative priceof AbbVie’s product as compared to alternative treatment options and changes to a product’s label thatfurther restrict its marketing. If the commercialization of AbbVie’s principal products is unsuccessful,
AbbVie’s ability to generate revenue from product sales will be adversely affected.
AbbVie may acquire other businesses, license rights to technologies or products, form alliances, ordispose of assets, which could cause it to incur significant expenses and could negatively affectprofitability.
AbbVie may pursue acquisitions (such as the pending acquisition of Allergan), technology licensing
arrangements, and strategic alliances, or dispose of some of its assets, as part of its business strategy.
AbbVie may not complete these transactions in a timely manner, on a cost-effective basis, or at all, andmay not realize the expected benefits. If AbbVie is successful in making an acquisition, the products andtechnologies that are acquired may not be successful or may require significantly greater resources andinvestments than originally anticipated. AbbVie may not be able to integrate acquisitions successfully into
its existing business and could incur or assume significant debt and unknown or contingent liabilities.
AbbVie could also experience negative effects on its reported results of operations from acquisition or
disposition-related charges, amortization of expenses related to intangibles and charges for impairment oflong-term assets. These effects could cause a deterioration of AbbVie’s credit rating and result in increased
borrowing costs and interest expense.
Additionally, changes in AbbVie’s structure, operations, revenues, costs, or efficiency resulting frommajor transactions such as acquisitions, divestitures, mergers, alliances, restructurings or other strategic
initiatives, may result in greater than expected costs, may take longer than expected to complete or
encounter other difficulties, including the need for regulatory approval where appropriate.
AbbVie is dependent on wholesale distributors for distribution of its products in the United Statesand, accordingly, its results of operations could be adversely affected if they encounter financial
difficulties.
In 2019, three wholesale distributors (McKesson Corporation, Cardinal Health, Inc. andAmerisourceBergen Corporation) accounted for substantially all of AbbVie’s sales in the United States. If oneof its significant wholesale distributors encounters financial or other difficulties, such distributor may
decrease the amount of business that it does with AbbVie, and AbbVie may be unable to collect all the

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amounts that the distributor owes it on a timely basis or at all, which could negatively impact AbbVie’s
business and results of operations.
AbbVie has debt obligations that could adversely affect its business and its ability to meet its
obligations.
The amount of debt that AbbVie has incurred and intends to incur could have important consequences
to AbbVie and its investors. These consequences include, among other things, requiring a portion of
AbbVie’s cash flow from operations to make interest payments on this debt and reducing the cash flow
available to fund capital expenditures and other corporate purposes and to grow AbbVie’s business. To theextent AbbVie incurs additional indebtedness or interest rates increase, these risks could increase. In
addition, AbbVie’s cash flow from operations may not be sufficient to repay all of the outstanding debt as
it becomes due, and AbbVie may not be able to borrow money, sell assets, or otherwise raise funds on
acceptable terms, or at all, to refinance its debt.
AbbVie may need additional financing in the future to meet its capital needs or to makeopportunistic acquisitions, and such financing may not be available on favorable terms, if at all.
AbbVie may need to seek additional financing for its general corporate purposes. For example, it may
need to increase its investment in research and development activities or need funds to make acquisitions.
AbbVie may be unable to obtain any desired additional financing on terms favorable to it, if at all. If
AbbVie loses its investment grade credit rating or adequate funds are not available on acceptable terms,
AbbVie may be unable to fund its expansion, successfully develop or enhance products, or respond tocompetitive pressures, any of which could negatively affect AbbVie’s business. If AbbVie raises additional
funds by issuing debt or entering into credit facilities, it may be subject to limitations on its operations due
to restrictive covenants. Failure to comply with these covenants could adversely affect AbbVie’s business.
AbbVie depends on information technology and a failure of those systems could adversely affect
AbbVie’s business.
AbbVie relies on sophisticated software applications and complex information technology systems tooperate its business. These systems are potentially vulnerable to malicious intrusion, random attack, loss ofdata privacy, disruption, degradation or breakdown. Data privacy or security breaches by employees orothers may result in the failure of critical business operations or may cause sensitive data, including
intellectual property, trade secrets or personal information belonging to AbbVie, its patients, customers orbusiness partners, to be exposed to unauthorized persons or to the public. Although AbbVie has invested in
the protection of its data and information technology and also monitors its systems on an ongoing basis,
there can be no assurance that these efforts will prevent breakdowns or breaches in AbbVie’s information
technology systems that could adversely affect AbbVie’s business. Such adverse consequences could include
loss of revenue, or the loss of critical or sensitive information from AbbVie’s or third-party providers’
databases or IT systems and could also result in legal, financial, reputational or business harm to AbbVie
and potentially substantial remediation costs.
Failure to attract and retain highly qualified personnel could affect AbbVie’s ability to successfully
develop and commercialize products.
AbbVie’s success is largely dependent on its continued ability to attract and retain highly qualified
scientific, technical and management personnel, as well as personnel with expertise in clinical R&D,
governmental regulation and commercialization. Competition for qualified personnel in thebiopharmaceutical field is intense. AbbVie cannot be sure that it will be able to attract and retain quality
personnel or that the costs of doing so will not materially increase.

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Other factors can have a material adverse effect on AbbVie’s profitability and financial condition.
Many other factors can affect AbbVie’s results of operations, cash flows and financial condition,
including:• changes in or interpretations of laws and regulations, including changes in accounting standards,
taxation requirements, product marketing application standards, data privacy laws and environmentallaws;• differences between the fair value measurement of assets and liabilities and their actual value,
particularly for pension and post-employment benefits, stock-based compensation, intangibles andgoodwill; and for contingent liabilities such as litigation and contingent consideration, the absence ofa recorded amount, or an amount recorded at the minimum, compared to the actual amount;• changes in the rate of inflation (including the cost of raw materials, commodities and supplies),
interest rates, market value of AbbVie’s equity investments and the performance of investments heldby it or its employee benefit trusts;• changes in the creditworthiness of counterparties that transact business with or provide services to
AbbVie or its employee benefit trusts;• changes in the ability of third parties that provide information technology, accounting, humanresources, payroll and other outsourced services to AbbVie to meet their contractual obligations to
AbbVie; and• changes in business, economic and political conditions, including: war, political instability, terrorist
attacks, the threat of future terrorist activity and related military action; natural disasters; the costand availability of insurance due to any of the foregoing events; labor disputes, strikes, slow-downs,
or other forms of labor or union activity; and pressure from third-party interest groups.
Risks Related to the Acquisition and the Combined Company Upon Completion of the Acquisition
The pending acquisition of Allergan may not be completed on the currently contemplated timeline orterms, or at all, and may not achieve the intended benefits.
Consummation of the Acquisition is conditioned on, among other things, obtaining necessary
governmental and regulatory approvals. If any of the conditions to the Acquisition is not satisfied, it could
delay or prevent the Acquisition from occurring, which could negatively impact AbbVie’s share price andfuture business and financial results. Further, as a condition to their approval of the Acquisition, agencies
may impose requirements, limitations or costs or require divestitures or place restrictions on the conduct of
the AbbVie’s business after the closing. These requirements, limitations, costs, divestitures or restrictions
could jeopardize or delay the consummation of the Acquisition or may reduce the anticipated benefits ofthe transaction. In addition, changes in laws and regulations, including Irish legislation implementing a tax
increase payable upon completion of the Acquisition, could adversely impact AbbVie’s post-Acquisition
profitability and financial results. Following the Acquisition, AbbVie may not realize the Acquisition’s
intended benefits within the expected timeframe or at all.
The indebtedness of the combined company following the consummation of the Acquisition will be
substantially greater than AbbVie’s indebtedness on a standalone basis and greater than the
combined indebtedness of AbbVie and Allergan prior to the announcement of the acquisition. This
increased level of indebtedness could adversely affect the combined company’s business flexibility
and increase its borrowing costs.
AbbVie expects that the cash consideration due to Allergan’s shareholders under the transaction
agreement and related fees and expenses will be approximately $41 billion. In addition to using cash on
hand, AbbVie has incurred significant Acquisition-related debt financing, including unsecured term loans and23

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senior notes. For more information, see Note 10 ‘‘Debt, Credit Facilities and Commitments andContingencies,’’ to the Consolidated Financial Statements included under Item 8, ‘‘Financial Statements andSupplementary Data.’’ AbbVie also intends to assume all the existing indebtedness of Allergan and its
subsidiaries. AbbVie’s substantially increased indebtedness and higher debt to equity ratio following theconsummation of the Acquisition may have the effect of, among other things, reducing its flexibility torespond to changing business and economic conditions, lowering its credit ratings, increasing its borrowing
costs and/or requiring it to reduce or delay investments, strategic acquisitions and capital expenditures or
to seek additional capital or restructure or refinance its indebtedness.
Risks Related to AbbVie’s Common Stock
AbbVie cannot guarantee the timing, amount, or payment of dividends on its common stock.
Although AbbVie expects to pay regular cash dividends, the timing, declaration, amount and paymentof future dividends to stockholders will fall within the discretion of AbbVie’s board of directors. The board’s
decisions regarding the payment of dividends will depend on many factors, such as AbbVie’s financial
condition, earnings, capital requirements, debt service obligations, industry practice, legal requirements,
regulatory constraints and other factors that the board deems relevant. For more information, see Item 5,‘‘Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities.’’ AbbVie’s ability to pay dividends will depend on its ongoing ability to generate cash fromoperations and access capital markets. AbbVie cannot guarantee that it will continue to pay a dividend in
the future.
An AbbVie stockholder’s percentage of ownership in AbbVie may be diluted in the future.
In the future, a stockholder’s percentage ownership in AbbVie may be diluted because of equity
issuances for capital market transactions, equity awards that AbbVie will be granting to AbbVie’s directors,
officers and employees, acquisitions (including AbbVie’s pending acquisition of Allergan), or other purposes.
AbbVie’s employees have options to purchase shares of its common stock as a result of conversion of their
Abbott stock options (in whole or in part) to AbbVie stock options. AbbVie anticipates its compensationcommittee will grant additional stock options or other stock-based awards to its employees. Such awards
will have a dilutive effect on AbbVie’s earnings per share, which could adversely affect the market price of
AbbVie’s common stock. From time to time, AbbVie will issue additional options or other stock-based
awards to its employees under AbbVie’s employee benefits plans.
In addition, AbbVie’s amended and restated certificate of incorporation authorizes AbbVie to issue,
without the approval of AbbVie’s stockholders, one or more classes or series of preferred stock having suchdesignation, powers, preferences and relative, participating, optional and other special rights, including
preferences over AbbVie’s common stock respecting dividends and distributions, as AbbVie’s board of
directors generally may determine. The terms of one or more classes or series of preferred stock could
dilute the voting power or reduce the value of AbbVie’s common stock. For example, AbbVie could grant
the holders of preferred stock the right to elect some number of AbbVie’s directors in all events or on thehappening of specified events or the right to veto specified transactions. Similarly, the repurchase orredemption rights or liquidation preferences AbbVie could assign to holders of preferred stock could affectthe residual value of the common stock.
Certain provisions in AbbVie’s amended and restated certificate of incorporation and amended andrestated by-laws, and of Delaware law, may prevent or delay an acquisition of AbbVie, which could
decrease the trading price of AbbVie’s common stock.
AbbVie’s amended and restated certificate of incorporation and amended and restated by-laws contain,
and Delaware law contains, provisions that are intended to deter coercive takeover practices and

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inadequate takeover bids by encouraging prospective acquirors to negotiate with AbbVie’s board of
directors rather than to attempt a hostile takeover. These provisions include, among others:• the inability of AbbVie’s stockholders to call a special meeting;• the division of AbbVie’s board of directors into three classes of directors, with each class serving a
staggered three-year term;• a provision that stockholders may only remove directors for cause;• the ability of AbbVie’s directors, and not stockholders, to fill vacancies on AbbVie’s board of
directors; and• the requirement that the affirmative vote of stockholders holding at least 80% of AbbVie’s voting
stock is required to amend certain provisions in AbbVie’s amended and restated certificate ofincorporation and AbbVie’s amended and restated by-laws relating to the number, term and electionof AbbVie’s directors, the filling of board vacancies, the calling of special meetings of stockholders
and director and officer indemnification provisions.
In addition, Section 203 of the Delaware General Corporation Law provides that, subject to limited
exceptions, persons that acquire, or are affiliated with a person that acquires, more than 15% of theoutstanding voting stock of a Delaware corporation shall not engage in any business combination with that
corporation, including by merger, consolidation or acquisitions of additional shares, for a three-year period
following the date on which that person or its affiliates becomes the holder of more than 15% of thecorporation’s outstanding voting stock.
AbbVie believes these provisions protect its stockholders from coercive or otherwise unfair takeovertactics by requiring potential acquirors to negotiate with AbbVie’s board of directors and by providing
AbbVie’s board of directors with more time to assess any acquisition proposal. These provisions are notintended to make the company immune from takeovers. However, these provisions apply even if the offer
may be considered beneficial by some stockholders and could delay or prevent an acquisition that AbbVie’sboard of directors determines is not in the best interests of AbbVie and AbbVie’s stockholders. These
provisions may also prevent or discourage attempts to remove and replace incumbent directors.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains certain forward looking statements regarding businessstrategies, market potential, future financial performance and other matters. The words ‘‘believe,’’ ‘‘expect,’’‘‘anticipate,’’ ‘‘project’’ and similar expressions, among others, generally identify ‘‘forward looking
statements,’’ which speak only as of the date the statements were made. The matters discussed in theseforward looking statements are subject to risks, uncertainties and other factors that could cause actual
results to differ materially from those projected, anticipated or implied in the forward looking statements.
In particular, information included under Item 1, ‘‘Business,’’ Item 1A, ‘‘Risk Factors,’’ and Item 7,‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’ contain forward
looking statements. Where, in any forward looking statement, an expectation or belief as to future resultsor events is expressed, such expectation or belief is based on the current plans and expectations of AbbVie
management and expressed in good faith and believed to have a reasonable basis, but there can be noassurance that the expectation or belief will result or be achieved or accomplished. Factors that could cause
actual results or events to differ materially from those anticipated include the matters described under
Item 1A, ‘‘Risk Factors’’ and Item 7, ‘‘Management’s Discussion and Analysis of Financial Condition and
Results of Operations.’’ AbbVie does not undertake any obligation to update the forward-looking statements
included in this Annual Report on Form 10-K to reflect events or circumstances after the date hereof,
unless AbbVie is required by applicable securities law to do so.

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ITEM
1B. UNRESOLVED STAFF COMMENTS.....................................................................................................................................................................................................................................................................................................................................................
None.

ITEM
2. PROPERTIES.....................................................................................................................................................................................................................................................................................................................................................
AbbVie’s corporate offices are located at 1 North Waukegan Road, North Chicago, Illinois 60064-6400.
AbbVie’s manufacturing facilities are in the following locations:
United States

Outside the United States

Abbott Park, Illinois*
Barceloneta, Puerto Rico
North Chicago, Illinois
Worcester, Massachusetts*
Wyandotte, Michigan*

Campoverde di Aprilia, Italy
Cork, Ireland
Ludwigshafen, Germany
Singapore*
Sligo, Ireland*

Leased property.

In addition to the above, AbbVie has other manufacturing facilities worldwide. AbbVie believes its
facilities are suitable and provide adequate production capacity. There are no material encumbrances on
AbbVie’s owned properties.
In the United States, including Puerto Rico, AbbVie has one distribution center. AbbVie also has
research and development facilities in the United States located at: Abbott Park, Illinois; North Chicago,
Illinois; Redwood City, California; South San Francisco, California; Sunnyvale, California; Cambridge,
Massachusetts; and Worcester, Massachusetts. Outside the United States, AbbVie’s principal research anddevelopment facilities are located in Ludwigshafen, Germany.

ITEM
3. LEGAL PROCEEDINGS.....................................................................................................................................................................................................................................................................................................................................................
Information pertaining to legal proceedings is provided in Note 15, ‘‘Legal Proceedings andContingencies’’ to the Consolidated Financial Statements included under Item 8, ‘‘Financial Statements andSupplementary Data,’’ and is incorporated by reference herein.

ITEM
4. MINE SAFETY DISCLOSURES.....................................................................................................................................................................................................................................................................................................................................................
Not applicable.

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INFORMATION ABOUT OUR EXECUTIVE OFFICERS
The following table lists AbbVie’s executive officers, each of whom was first appointed as an AbbVie
corporate officer in December 2012, except as otherwise indicated:
Name

Age

Position

Richard A. Gonzalez
Michael E. Severino, M.D.*
Laura J. Schumacher
Carlos AlbanHenry O. Gosebruch*
Robert A. Michael*
Timothy J. RichmondAzita Saleki-Gerhardt, Ph.D.
Nicholas Donoghoe, M.D.*
Thomas J. Hudson, M.D.*

66
54
56
57
47
49
53
56
39
58

Jeffrey R. Stewart*
Brian L. Durkin*

51
59

Chairman of the Board and Chief Executive Officer
Vice Chairman and President
Vice Chairman, External Affairs and Chief Legal Officer
Vice Chairman, Chief Commercial Officer
Executive Vice President and Chief Strategy Officer
Executive Vice President, Chief Financial Officer
Executive Vice President, Chief Human Resources Officer
Executive Vice President, Operations
Senior Vice President, Enterprise Innovation
Senior Vice President, Research & Development and Chief
Scientific Officer
Senior Vice President, U.S. Commercial Operations
Vice President, Controller*

Dr. Severino was first appointed as a corporate officer in June 2014; Mr. Gosebruch was first
appointed as a corporate officer in December 2015; Dr. Donoghoe was first appointed as a corporate
officer in January 2019; Mr. Michael was first appointed as a corporate officer in December 2015;
Dr. Hudson was first appointed as a corporate officer in July 2019; Mr. Stewart was first appointed asa corporate officer in December 2018; and Mr. Durkin was first appointed as a corporate officer in
October 2018.

Mr. Gonzalez is the Chairman and Chief Executive Officer of AbbVie. 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 anddevelopment, 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.
Dr. Severino is AbbVie’s Vice Chairman and President, responsible for research and development,
human resources, operations, and the corporate strategy office. He served as Executive Vice President,
Research and Development and Chief Scientific Officer from 2014 to 2018. Dr. Severino served atAmgen Inc. as Senior Vice President, Global Development and Corporate Chief Medical Officer from 2012 to2014, as Vice President, Global Development from 2010 to 2012 and as Vice President, Therapeutic Area
Head, General Medicine and Inflammation Global Clinical Development from 2007 to 2012. He joined
AbbVie in 2014.
Ms. Schumacher is AbbVie’s Vice Chairman, External Affairs and Chief Legal Officer, responsible for
global legal, health economics outcomes research, corporate responsibility, brand and communications andgovernment affairs. Prior to her current appointment in 2018, she served as AbbVie’s Executive Vice
President, External Affairs, General Counsel and Corporate Secretary. Prior to AbbVie’s separation from
Abbott, Ms. Schumacher served as Executive Vice President, General Counsel from 2007 to 2012. Both at
Abbott and AbbVie, Ms. Schumacher also led Business Development and Ventures and Early Stage
Collaborations. Ms. Schumacher joined Abbott in 1990. She serves on the board of General Dynamics
Corporation.
Mr. Alban is AbbVie’s Vice Chairman, Chief Commercial Officer, responsible for global commercial
operations of the company, including the Pharmacyclics commercial functions. He previously served as

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Executive Vice President, Commercial Operations from 2013 to 2018. He served as Abbott’s Senior Vice
President, Proprietary Pharmaceutical Products, Global Commercial Operations from 2011 to 2012, as SeniorVice President, International Pharmaceuticals from 2009 to 2011, as Vice President, Western Europe andCanada from 2007 to 2009, and as Vice President, European Operations from 2006 to 2007. Mr. Albanjoined Abbott in 1986.
Mr. Gosebruch is AbbVie’s Executive Vice President and Chief Strategy Officer. He worked for morethan 20 years in the Mergers & Acquisitions Group at J.P. Morgan Securities LLC, serving as Managing
Director since 2007 and as Co-Head of M&A North America during 2015. Mr. Gosebruch joined AbbVie in
2015. He serves on the board of Aptinyx Inc.
Mr. Michael is AbbVie’s Executive Vice President, Chief Financial Officer. Mr. Michael previously served
as Senior Vice President, Chief Financial Officer from October 2018 to July 2019, and as Vice President,
Controller from March 2017 to October 2018. He served as AbbVie’s Vice President, Treasurer from 2015 to
2016, as Vice President, Controller, Commercial Operations from 2013 to 2015 and Vice President, Financial
Planning and Analysis from 2012 to 2013. At Abbott, Mr. Michael served as Division Controller, Nutrition
Supply Chain from 2010 to 2012. Mr. Michael joined Abbott in 1993.
Mr. Richmond is AbbVie’s Executive Vice President, Chief Human Resources Officer. He served as SeniorVice President, Human Resources from 2013 to 2018. Mr. Richmond served as Abbott’s Divisional Vice
President of Compensation & Benefits from 2008 to 2012, as Group Vice President of Talent and Rewards
from 2007 to 2008, and as Divisional Vice President of Talent Acquisition from 2006 to 2007. Mr. Richmondjoined Abbott in 2006.
Dr. Saleki-Gerhardt is AbbVie’s Executive Vice President, Operations. She served as Senior Vice
President, Operations from 2013 to 2018. Dr. Saleki-Gerhardt served as Abbott’s Vice President,
Pharmaceuticals Manufacturing and Supply from 2011 to 2012, and as Divisional Vice President, Quality
Assurance, Global Pharmaceutical Operations from 2008 to 2011. Dr. Saleki-Gerhardt joined Abbott in 1993.
She serves on the board of Entegris Inc.
Dr. Donoghoe is AbbVie’s Senior Vice President, Enterprise Innovation. He previously served as aPartner at McKinsey & Company, leading the firm’s West Coast pharma and biotechnology practice.
Dr. Donoghoe joined the firm in 2007 and supported multiple successful launches in therapeutic areas suchas oncology, immunology, and primary care. He joined AbbVie in 2019.
Dr. Hudson is AbbVie’s Senior Vice President, Research & Development and Chief Scientific Officer. He
previously served as Vice President, Head of Oncology Discovery and Early Development from 2016 to 2019.
Prior to joining AbbVie, Dr. Hudson served at the Ontario Institute for Cancer Research as President andScientific Director. He also previously served as Founder and Director of the McGill University and Genome
Quebec Innovation Centre and Assistant Director of the Whitehead/MIT Center for Genome Research.
Mr. Stewart is AbbVie’s Senior Vice President, U.S. Commercial Operations. Mr. Stewart previously
served as AbbVie’s President, Commercial Operations from 2013 to 2018. Prior to AbbVie’s separation from
Abbott, he served as Vice President, Abbott Proprietary Pharmaceutical Division, United States. Mr. Stewart
joined Abbott in 1992.
Mr. Durkin is AbbVie’s Vice President, Controller. Mr. Durkin previously served as Vice President,Internal Audit from 2016 to 2018. Prior to joining AbbVie, he served as Vice President of Finance andDivision Controller for Abbott’s Vision Care business from 2009 to 2016 and Controller Pharmaceutical
Research and Development from 2005 to 2009. Mr. Durkin joined Abbott in 1986.
The executive officers of AbbVie are elected annually by the board of directors. All other officers areelected by the board or appointed by the Chairman of the Board. All officers are either elected at the firstmeeting of the board of directors held after the annual stockholder meeting or appointed by the Chairmanof the Board after that board meeting. Each officer holds office until a successor has been duly elected or
appointed and qualified or until the officer’s death, resignation, or removal. There are no family
relationships between any of the executive officers listed above.

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PART IIITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES.....................................................................................................................................................................................................................................................................................................................................................
Principal Market
The principal market for AbbVie’s common stock is the New York Stock Exchange (Symbol: ABBV).
AbbVie’s common stock is also listed on the Chicago Stock Exchange and traded on various regional andelectronic exchanges.
Stockholders
There were 46,544 stockholders of record of AbbVie common stock as of January 31, 2020.
Performance Graph
The following graph compares the cumulative total returns of AbbVie, the S&P 500 Index and the NYSE
Arca Pharmaceuticals Index for the period from December 31, 2014 through December 31, 2019. This graphassumes $100 was invested in AbbVie common stock and each index on December 31, 2014 and also
assumes the reinvestment of dividends. The stock price performance on the following graph is notnecessarily indicative of future stock price performance.
COMPARISON OF CUMULATIVE TOTAL RETURN
$200

$175

$150

$125

$100

$75
12/31/2014

12/31/2015
AbbVie Inc.

12/31/2016

12/31/2017

S&P 500 Index

12/31/2018

12/31/2019

NYSE Arca Pharmaceutical Index

29FEB202000271461

This performance graph is furnished and shall not be deemed ‘‘filed’’ with the SEC or subject toSection 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in anyof AbbVie’s filings under the Securities Act of 1933, as amended.
Dividends
On November 1, 2019, AbbVie’s board of directors declared an increase in the quarterly cash dividend
from $1.07 per share to $1.18 per share, payable on February 14, 2020 to stockholders of record as of29

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13NOV201221352027 29

January 15, 2020. The timing, declaration, amount of and payment of any dividends by AbbVie in the
future is within the discretion of its board of directors and will depend upon many factors, including
AbbVie’s financial condition, earnings, capital requirements of its operating subsidiaries, covenantsassociated with certain of AbbVie’s debt service obligations, legal requirements, regulatory constraints,
industry practice, ability to access capital markets and other factors deemed relevant by its board of
directors. Moreover, if AbbVie determines to pay any dividend in the future, there can be no assurance that
it will continue to pay such dividends or the amount of such dividends.
Issuer Purchases of Equity Securities(a) Total
Numberof Shares(or Units)
Purchased(b)
Average
Price Paid
per Share(or Unit)(c) Total
Number of
Shares (or Units)
Purchased as Partof Publicly
Announced
Plans or
Programs

October 1, 2019 - October 31, 2019
November 1, 2019 - November 30, 2019
December 1, 2019 - December 31, 2019

4,293(1)1,086(1)1,016(1)$77.19(1)$80.53(1)$87.39(1)———$3,950,021,071$3,950,021,071$3,950,021,071

Total

6,395(1)$79.38(1)—$3,950,021,071

Period1.

(d) Maximum Number (orApproximate Dollar Value) of
Shares (or Units) that May
Yet Be Purchased Under thePlans or Programs

In addition to AbbVie shares repurchased on the open market under a publicly announced program, ifany, these shares also included the shares purchased on the open market for the benefit ofparticipants in the AbbVie Employee Stock Purchase Plan—4,293 in October; 1,086 in November; and1,016 in December.
These shares do not include the shares surrendered to AbbVie to satisfy minimum tax withholding
obligations in connection with the vesting or exercise of stock-based awards.

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ITEM
6. SELECTED FINANCIAL DATA.....................................................................................................................................................................................................................................................................................................................................................
The selected financial information should be read in conjunction with the financial statements andaccompanying notes included under Item 8, ‘‘Financial Statements and Supplementary Data’’ and Item 7,‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations.’’
as of and for the years ended December 31(in millions, except per share data)

Statement of earnings data
Net revenues
Net earnings
Basic earnings per share
Diluted earnings per share
Cash dividends declared per common share
Weighted-average basic shares outstanding
Weighted-average diluted shares outstanding
Balance sheet data
Total assets(a)Long-term debt and finance lease obligations(a)(b)

2019

2018

2017

2016

2015

$33,266
7,882$ 5.30$ 5.28$ 4.391,481
1,484$32,7535,687$ 3.67$ 3.66$ 3.951,541
1,546$28,216
5,309$ 3.31$ 3.30$ 2.63
1,596
1,603$25,638
5,953$ 3.65$ 3.63$ 2.35
1,622
1,631$22,859
5,144$ 3.15$ 3.13$ 2.101,625
1,637$89,115
66,728$59,352
36,611$70,786
36,968$66,099
36,465$53,050
31,265(a) In November 2019, AbbVie issued $30.0 billion aggregate principal amount of floating rate and fixed
rate unsecured senior notes at maturities ranging from 18 months to 30 years. AbbVie expects to use
the net proceeds to fund a portion of the aggregate cash consideration due to Allergan shareholders inconnection with the proposed acquisition and to pay related fees and expenses. See Note 5 to theConsolidated Financial Statements for information regarding the proposed acquisition and Note 10 for
information on the senior notes.
(b) Includes current portion of both long-term debt and finance lease obligations.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.....................................................................................................................................................................................................................................................................................................................................................
The following is a discussion and analysis of the financial condition of AbbVie Inc. (AbbVie or thecompany) as of December 31, 2019 and 2018 and results of operations for each of the three years in the
period ended December 31, 2019. This commentary should be read in conjunction with the consolidated
financial statements and accompanying notes appearing in Item 8, ‘‘Financial Statements andSupplementary Data.’’
EXECUTIVE OVERVIEW
Company Overview
AbbVie is a global, research-based biopharmaceutical company formed in 2013 following separationfrom Abbott Laboratories (Abbott). AbbVie uses its expertise, dedicated people and unique approach toinnovation to develop and market advanced therapies that address some of the world’s most complex andserious diseases. AbbVie’s products are focused on treating conditions such as chronic autoimmune diseases
in rheumatology, gastroenterology and dermatology; oncology, including blood cancers; virology, including
hepatitis C virus (HCV) and human immunodeficiency virus (HIV); neurological disorders, such as Parkinson’s
disease; metabolic diseases, including thyroid disease and complications associated with cystic fibrosis; pain
associated with endometriosis; as well as other serious health conditions. AbbVie also has a pipeline ofpromising new medicines in clinical development across such important medical specialties as immunology,
oncology and neuroscience, with additional targeted investment in cystic fibrosis and women’s health.
AbbVie’s products are generally sold worldwide directly to wholesalers, distributors, government
agencies, health care facilities, specialty pharmacies and independent retailers from AbbVie-owned
distribution centers and public warehouses. In the United States, AbbVie distributes pharmaceuticalproducts principally through independent wholesale distributors, with some sales directly to pharmacies andpatients. Outside the United States, AbbVie sells products primarily to customers or through distributors,
depending on the market served. Certain products are co-marketed or co-promoted with other companies.
AbbVie has approximately 30,000 employees. AbbVie operates in one business segment—pharmaceuticalproducts.
On June 25, 2019, AbbVie announced that it entered into a definitive transaction agreement underwhich AbbVie will acquire Allergan plc (Allergan). See Note 5 to the Consolidated Financial Statements for
additional information regarding the proposed acquisition.
2019 Financial Results
AbbVie’s strategy has focused on delivering strong financial results, advancing and investing in its
pipeline and returning value to shareholders while ensuring a strong, sustainable growth business over thelong term. The company’s financial performance in 2019 included delivering worldwide net revenues of$33.3 billion, operating earnings of $13.0 billion, diluted earnings per share of $5.28 and cash flows fromoperations of $13.3 billion. Worldwide net revenues grew by 3% on a constant currency basis, primarily
driven by revenue growth related to IMBRUVICA and VENCLEXTA as well as the continued strength of
HUMIRA in the U.S. and newly launched immunology assets SKYRIZI and RINVOQ, offset by international
HUMIRA biosimilar competition.
Diluted earnings per share in 2019 was $5.28 and included the following after-tax costs: (i) $3.2 billion
for the change in fair value of contingent consideration liabilities; (ii) $1.3 billion related to the amortizationof intangible assets; (iii) a Stemcentrx-related impairment charge of $823 million net of the related fairvalue adjustment to contingent consideration liabilities; (iv) $364 million for acquired in-process researchand development (IPR&D); and (v) $338 million of expenses related to the proposed Allergan acquisition.
These costs were partially offset by the following after-tax benefits: (i) $414 million from litigation matters

32 13NOV201221352027

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32

primarily due to the settlement of an intellectual property dispute with a third party; (ii) $400 million due
to the favorable resolution of various tax positions; and (iii) $297 million from an amended and restatedlicense agreement between AbbVie and Reata Pharmaceuticals, Inc. (Reata). Additionally, financial results
reflected continued funding to support all stages of AbbVie’s emerging pipeline assets and continued
investment in AbbVie’s on-market brands.
In November 2019, AbbVie’s board of directors declared a quarterly cash dividend of $1.18 per shareof common stock payable in February 2020. This reflects an increase of approximately 10.3% over theprevious quarterly dividend of $1.07 per share of common stock.
2020 Strategic Objectives
AbbVie’s mission is to be an innovation-driven, patient-focused specialty biopharmaceutical company
capable of achieving top-tier financial performance through outstanding execution and a consistent streamof innovative new medicines. AbbVie intends to continue to advance its mission in a number of ways,
including: (i) growing revenues by diversifying revenue streams, ensuring strong commercial execution of
new product launches and driving late-stage pipeline assets to the market; (ii) continuing to invest andexpand its pipeline in support of opportunities in immunology, oncology and neuroscience, with additionaltargeted investment in cystic fibrosis and women’s health as well as continued investment in key on-market
products; (iii) expanding operating margins; and (iv) returning cash to shareholders via a strong and growing
dividend while also reducing incremental debt. In addition, AbbVie anticipates several regulatory
submissions and key data readouts from key clinical trials in the next 12 months.
AbbVie expects to achieve its strategic objectives through:• Completion and successful integration of the proposed Allergan acquisition.
• Hematologic oncology revenue growth from both IMBRUVICA and VENCLEXTA.
• Immunology revenue growth driven by successful commercial launches of SKYRIZI and RINVOQ, aswell as HUMIRA U.S. sales growth.
• Effective management of HUMIRA international biosimilar erosion.
• The favorable impact of pipeline products and indications recently approved or currently underregulatory review where approval is expected in 2020. These products are described in greater detailin the section labeled ‘‘Research and Development’’ included as part of this Item 7.
AbbVie remains committed to driving continued expansion of operating margins and expects to achieve
this objective through continued leverage from revenue growth, productivity initiatives in supply chain andongoing efficiency programs to optimize manufacturing, commercial infrastructure, administrative costs andgeneral corporate expenses.
The combination of AbbVie and Allergan will create a diverse entity with leadership positions acrossimmunology, hematologic oncology, aesthetics, neuroscience, women’s health, eye care and virology.
AbbVie’s existing product portfolio and pipeline will be enhanced with numerous Allergan assets andAllergan’s product portfolio will benefit from AbbVie’s commercial strength, expertise and international
infrastructure.
Research and Development
Research and innovation are the cornerstones of AbbVie’s business as a global biopharmaceuticalcompany. AbbVie’s long-term success depends to a great extent on its ability to continue to discover anddevelop innovative pharmaceutical products and acquire or collaborate on compounds currently indevelopment by other biotechnology or pharmaceutical companies.

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AbbVie’s pipeline currently includes approximately 60 compounds or indications in clinical development
individually or under collaboration or license agreements and is focused on such important medical
specialties as immunology, oncology and neuroscience along with targeted investments in cystic fibrosis andwomen’s health. Of these programs, approximately 30 are in mid- and late-stage development.
The following sections summarize transitions of significant programs from Phase 2 development toPhase 3 development as well as developments in significant Phase 3 and registration programs. AbbVie
expects multiple Phase 2 programs to transition into Phase 3 programs in the next 12 months.
Significant Programs and Developments
Immunology
RINVOQ•In February 2019, the U.S. Food and Drug Administration (FDA) accepted for priority review
AbbVie’s New Drug Application (NDA) for upadacitinib, an investigational oral JAK1-selective
inhibitor, for the treatment of adult patients with moderate to severe rheumatoid arthritis (RA).

•In February 2019, AbbVie initiated a Phase 3 clinical trial to evaluate the efficacy and safety of
upadacitinib in subjects with giant cell arteritis.

•

In August 2019, the FDA approved RINVOQ (upadacitinib) for the treatment of adults withmoderately to severely active RA who have had an inadequate response or intolerance tomethotrexate.

•

In October 2019, AbbVie announced top-line results from its first Phase 3 clinical trial of
RINVOQ in adult patients with active psoriatic arthritis (PsA). Results from the SELECT-PsA 2
study, which evaluated RINVOQ versus placebo in patients who did not adequately respond totreatment with one or more biologic DMARDs, showed that both doses of RINVOQ (15 mg and
30 mg) met the primary and key secondary endpoints at week 12. The safety profile wasconsistent with that of previous studies across indications, with no new safety risks detected.

•

In November 2019, AbbVie announced data from the Phase 2/3 SELECT-AXIS 1 trial in which
twice as many adult patients with ankylosing spondylitis treated with RINVOQ achieved theprimary endpoint at week 14 versus placebo. The safety profile was consistent with that ofprevious studies across indications, with no new safety risks detected.

•

In November 2019, AbbVie initiated a Phase 3 clinical trial to evaluate the efficacy and safety of
RINVOQ in adult patients with axial spondyloarthritis.

•

In December 2019, the European Commission (EC) granted marketing authorization for RINVOQ
for the treatment of adult patients with moderate to severe active rheumatoid arthritis who
have had an inadequate response or intolerance to one or more DMARDs.

•

In February 2020, AbbVie announced top-line results from its second Phase 3 clinical trial of
RINVOQ in adult patients with active PsA. Results from the SELECT-PsA 1 study, which evaluated
RINVOQ versus placebo in patients who did not adequately respond to treatment with one ormore non-biologic DMARDs, showed that both doses of RINVOQ (15 mg and 30 mg) met the
primary and key secondary endpoints. The safety profile was consistent with that of previous
studies across indications, with no new safety risks detected.

SKYRIZI•In March 2019, AbbVie initiated two Phase 3 clinical trials to evaluate the efficacy and safety ofrisankizumab, an investigational interleukin-23 (IL-23) inhibitor, in subjects with psoriatic
arthritis.

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•In April 2019, the FDA approved SKYRIZI (risankizumab) for the treatment of moderate tosevere plaque psoriasis in adults who are candidates for systemic therapy or phototherapy.

•

In April 2019, the EC granted marketing authorization for SKYRIZI for the treatment of moderate
to severe plaque psoriasis in adult patients who are candidates for systemic therapy.

Oncology
IMBRUVICA•

In January 2019, the FDA approved IMBRUVICA, in combination with GAZYVA (obinutuzumab),for adult patients with previously untreated chronic lymphocytic leukemia (CLL)/small
lymphocytic lymphoma (SLL).

•In June 2019, AbbVie announced results from the Phase 3 CLL12 trial, evaluating IMBRUVICA inpatients with previously untreated CLL, which demonstrated that IMBRUVICA significantly
improved event- and progression-free survival.

•

In November 2019, AbbVie submitted a supplemental New Drug Application (sNDA) to the FDA
for IMBRUVICA in combination with rituximab for the first-line treatment of younger patientswith CLL or SLL.

VENCLEXTA•In March 2019, AbbVie announced that the FDA placed a partial clinical hold on all clinical trials
evaluating VENCLEXTA for the investigational treatment of multiple myeloma (MM). The partial
clinical hold followed a review of data from the ongoing Phase 3 BELLINI trial, a study inrelapsed/refractory MM, in which a higher proportion of deaths was observed in the
VENCLEXTA arm compared to the control arm of the trial. In June 2019, AbbVie announced that
the FDA lifted the partial clinical hold placed on the Phase 3 CANOVA trial, evaluating
VENCLEXTA for the investigational treatment of relapsed/refractory MM positive for thetranslocation (11;14) abnormality, based upon agreement on revisions to the CANOVA study
protocol, including new risk mitigation measures, protocol-specified guidelines and updated
futility criteria. This action does not impact any of the approved indications for VENCLEXTA,
such as CLL or acute myeloid leukemia (AML).

•In May 2019, the FDA approved VENCLEXTA, in combination with obinutuzumab, for adultpatients with previously untreated CLL/SLL. The approval was based on data from the Phase 3
CLL14 trial, evaluating the efficacy and safety of VENCLEXTA plus obinutuzumab versus
obinutuzumab plus chlorambucil in previously untreated patients with CLL, which demonstrated
that VENCLEXTA plus obinutuzumab prolonged progression-free survival and achieved higher
rates of complete response and minimal residual disease-negativity compared to commonlyused standard of care obinutuzumab plus chlorambucil.

•

In January 2020, AbbVie announced that the Committee for Medicinal Products for Human Use(CHMP) of the European Medicines Agency (EMA) granted a positive opinion for VENCLYXTO in
combination with obinutuzumab for patients with previously untreated CLL.

Depatux-M•

In May 2019, AbbVie announced the decision to discontinue the Phase 3 INTELLANCE-1 study ofdepatuxizumab mafodotin (Depatux-M, previously known as ABT-414) in patients with newly
diagnosed glioblastoma, whose tumors have EGFR (epidermal growth factor receptor)
amplification, at an interim analysis. An Independent Data Monitoring Committee recommended
stopping enrollment in INTELLANCE-1 due to lack of survival benefit for patients receiving

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Depatux-M compared with placebo when added to the standard regimen of radiation andtemozolomide. Enrollment has been halted in all ongoing Depatux-M studies.
Veliparib•

In July 2019, AbbVie announced that top-line results from the Phase 3 BROCADE3 study
evaluating veliparib, an investigational, oral poly (adenosine diphosphate-ribose) polymerase(PARP) inhibitor, in combination with carboplatin and paclitaxel met its primary endpoint ofprogression-free survival in patients with HER2 negative germline BRCA-mutated advanced
breast cancer.

•

In July 2019, AbbVie announced that top-line results from the Phase 3 VELIA study, conductedin collaboration with the GOG Foundation, Inc., evaluating veliparib with carboplatin andpaclitaxel followed by veliparib maintenance therapy met its primary endpoint ofprogression-free survival in patients with newly diagnosed ovarian cancer, regardless ofbiomarker status.

Rova-T•

In August 2019, AbbVie announced the decision to terminate the MERU trial, a Phase 3 study
evaluating rovalpituzumab tesirine (Rova-T) as a first-line maintenance therapy for advanced
small-cell lung cancer (SCLC). An Independent Data Monitoring Committee recommended
terminating the study after results demonstrated no survival benefit at a pre-planned interim
analysis for patients receiving Rova-T as compared with placebo. With the closing of the MERU
trial, AbbVie announced the termination of the Rova-T research and development program.

Virology/Liver Disease•

In August 2019, the EC granted marketing authorization for MAVIRET (glecaprevir/pibrentasvir)
to shorten the once-daily treatment duration from 12 to 8 weeks in treatment-naı̈ve,
compensated cirrhotic, chronic HCV patients with genotype (GT)1, 2, 4, 5 and 6 infection.

•

In September 2019, the FDA approved MAVYRET (glecaprevir/pibrentasvir) to shorten theonce-daily treatment duration from 12 to 8 weeks in treatment-naı̈ve, compensated cirrhotic,
chronic HCV patients across all genotypes (GT1-6).

•

In January 2020, AbbVie announced that the CHMP of the EMA has recommended a change tothe marketing authorization for MAVIRET to shorten once-daily treatment duration from 12 to
8 weeks in treatment-naı̈ve, compensated cirrhotic, chronic HCV patients with GT 3 infection.

Neuroscience•

In May 2019, AbbVie initiated a Phase 3 clinical trial to evaluate the safety and tolerability of
ABBV-951, a subcutaneous levodopa/carbidopa delivery system, in subjects with Parkinson’s
disease.

•In July 2019, AbbVie announced the decision to discontinue the Phase 2 ARISE study evaluating
ABBV-8E12, an investigational anti-tau antibody, in patients with progressive supranuclear palsy,
after an Independent Data Monitoring Committee recommended stopping the trial for futility
after the trial showed that ABBV-8E12 did not provide efficacy.

36 13NOV201221352027

2019 Form 10-K

36

Other•In July 2019, AbbVie submitted an NDA to the FDA for elagolix in combination with estradiol/
norethindrone acetate (E2/NETA) daily add-back therapy for the management of heavy
menstrual bleeding associated with uterine fibroids.

RESULTS OF OPERATIONSNet Revenues
The comparisons presented at constant currency rates reflect comparative local currency net revenues
at the prior year’s foreign exchange rates. This measure provides information on the change in net
revenues assuming that foreign currency exchange rates had not changed between the prior and thecurrent periods. AbbVie believes that the non-GAAP measure of change in net revenues at constantcurrency rates, when used in conjunction with the GAAP measure of change in net revenues at actual
currency rates, may provide a more complete understanding of the company’s operations and can facilitate
analysis of the company’s results of operations, particularly in evaluating performance from one period toanother.

2019

2018

2017

Percent change
At actual
At constantcurrency
currency
rates
rates
2019
2018
2019
2018

United States
International$23,907
9,359$21,524
11,229$18,251
9,965

11.1% 17.9% 11.1% 17.9%(16.7)% 12.8% (13.6)% 10.4%

Net revenues$33,266$32,753$28,216

years ended (dollars in millions)37

1.6% 16.1%

2019 Form 10-K

2.6% 15.2%

13NOV201221352027 37

The following table details AbbVie’s worldwide net revenues:
Percent change
At actualcurrency
rates

At constantcurrency
rates

years ended December 31 (dollars in millions)

2019

2018

2017

2019

2018

2019

2018

Immunology
HUMIRA
United States
International$14,864
4,305$13,6856,251$12,3616,066

8.6%(31.1)%

10.7%
3.1%

8.6%
(27.8)%

10.7%
0.6%

Total

$19,169$19,936$18,427(3.9)%

8.2%(2.9)%

7.4%

SKYRIZI
United States
International

$

311
44

$

—
—

$

—
—

n/m
n/m

n/m
n/m

n/m
n/m

n/m
n/m

Total

$

355

$

—

$

—

n/m

n/m

n/m

n/m

RINVOQ
United States
International

$

47
—

$

—
—

$

—
—

n/m
n/m

n/m
n/m

n/m
n/m

n/m
n/m

Total

$

47

$

—

$

—

n/m

n/m

n/m

n/m

Hematologic Oncology
IMBRUVICA
United States
Collaboration revenues$ 3,830844$ 2,968622$ 2,144
429

29.1%
35.8%

38.4%
45.0%

29.1%
35.8%

38.4%
45.0%

Total

$ 4,674$ 3,590$ 2,573

30.2%

39.5%

30.2%

39.5%

VENCLEXTA
United States
International

$

521
271

$

247
97

$

89
33

>100.0%>100.0%>100.0%>100.0%>100.0%>100.0%>100.0%>100.0%

Total

$

792

$

344

$

122

>100.0%>100.0%>100.0%>100.0%HCV
MAVYRET
United States
International$ 1,473
1,420$ 1,614
1,824

$

277
213

(8.8)%(22.1)%>100.0%>100.0%(8.8)%(19.6)%>100.0%>100.0%Total$ 2,893$ 3,438$490(15.9)%>100.0%(14.6)%>100.0%

VIEKIRA
United States
International

$

—
36

$

3
175

$

61
723

(100.0)%(79.2)%(96.7)%(75.6)%(100.0)%(77.2)%(96.7)%(74.8)%

Total

$

36

$

178

$

784

(79.6)%(77.2)%(77.6)%(76.5)%

Other Key Products
Creon
United States$ 1,041

$

928

$

831

12.2%

11.7%

12.2%

11.7%

LupronUnited States
International

$

720
167

$

726
166

$

669
160

(0.8)%
0.8%

8.6%
3.4%

(0.8)%
6.0%

8.6%
4.7%

Total

$

887

$

892

$

829

(0.5)%

7.6%

0.5%

7.9%

Synthroid
United States

$

786

$

776

$

781

1.3%

(0.6)%

1.3%(0.6)%

SynagisInternational

$

718

$

726

$

738

(1.2)%(1.6)%

0.9%(2.8)%

Duodopa
United States
International

$

97
364

$

80
350

$

61
294

20.4%
4.2%

31.4%
19.1%

20.4%
9.8%

31.4%
14.8%

Total

$

461

$

430

$

355

7.2%

21.2%

11.7%

17.7%

Sevoflurane
United States
International

$

74
274

$

74
317

$

78
332

2.0%
(13.8)%(6.2)%(4.4)%

2.0%(9.5)%(6.2)%(4.3)%

Total

$

348

$

391

$

410

(10.9)%(4.7)%(7.4)%(4.6)%

KaletraUnited States
International

$

38
245

$

55
281

$

71
352

(31.0)%(12.9)%(22.1)%(20.2)%(31.0)%(9.5)%(22.1)%(20.1)%

Total

$

283

$

336

$

423

(15.8)%(20.5)%(12.9)%(20.4)%

AndroGel
United States

$

172

$

469

$

577

(63.3)%(18.8)%(63.3)%(18.8)%ORILISSA
United States
International

$

91
2

$

11
—

$

—
—

>100.0%
n/m

n/m
n/m

>100.0%
n/m

n/m
n/m

Total

$

93

$

11

$

—

>100.0%n/m>100.0%n/m

All other

$

511

$

308

$

876

66.1%

(64.9)%

73.0%(73.2)%

Total net revenues$33,266$28,216

1.6%

16.1%

2.6%

15.2%

n/m—Not meaningful

38 13NOV201221352027

2019 Form 10-K

38

$32,753

The following discussion and analysis of AbbVie’s net revenues by product is presented on a constantcurrency basis.
Global HUMIRA sales decreased 3% in 2019 and increased 7% in 2018. The sales decrease in 2019 wasprimarily driven by direct biosimilar competition in certain international markets, partially offset by market
growth across therapeutic categories. The sales increase in 2018 was primarily driven by market growthacross therapeutic categories and geographies as well as favorable pricing in certain geographies. In the
United States, HUMIRA sales increased 9% in 2019 and 11% in 2018. The sales increases in 2019 and 2018
were primarily driven by market growth across all indications and favorable pricing. Internationally, HUMIRA
revenues decreased 28% in 2019 and increased 1% in 2018. The sales decrease in 2019 was primarily
driven by direct biosimilar competition in Europe following the expiration of the European Union
composition of matter patent for adalimumab in October 2018. The sales increase in 2018 was primarily
driven by market growth across indications partially offset by direct biosimilar competition. Biosimilarcompetition for HUMIRA is not expected in the United States until 2023. AbbVie continues to pursue
strategies intended to further differentiate HUMIRA from competing products and add to the sustainabilityof HUMIRA.
Net revenues for SKYRIZI were $355 million in 2019 following the April 2019 regulatory approvals forthe treatment of moderate to severe plaque psoriasis.
Net revenues for RINVOQ were $47 million in 2019 following the August 2019 FDA approval for thetreatment of moderate to severe rheumatoid arthritis.
Net revenues for IMBRUVICA represent product revenues in the United States and collaboration
revenues outside of the United States related to AbbVie’s 50% share of IMBRUVICA profit. AbbVie’s global
IMBRUVICA revenues increased 30% in 2019 and 39% in 2018 as a result of continued penetration of
IMBRUVICA for patients with CLL as well as favorable pricing.
Net revenues for VENCLEXTA increased by more than 100% in 2019 and 2018 primarily due to market
share gains following additional regulatory approvals of VENCLEXTA for the treatment of patients withrelapsed/refractory CLL and first-line AML in 2018 and first-line CLL in 2019.
Global MAVYRET sales decreased by 15% in 2019 primarily driven by lower patient volumes in certain
international markets and competitive dynamics in the U.S. Global MAVYRET sales increased more than
100% in 2018 as a result of market share gains following the FDA and EMA approvals of MAVYRET in thesecond half of 2017 as well as further geographic expansion. Global VIEKIRA sales decreased by 78% in2019 and 76% in 2018 primarily due to lower market share following the launch of MAVYRET.
Net revenues for Creon increased 12% in 2019 and 12% in 2018, primarily driven by continued market
growth and favorable pricing. Creon maintains market leadership in the pancreatic enzyme market.
Net revenues for Duodopa increased 12% in 2019 and 18% in 2018, primarily driven by increased
market penetration.
Gross Margin

years ended December 31 (dollars in millions)

Gross margin
as a percent of net revenues

Percentchange
2019
2018

2019

2018

2017

$25,82778%$25,035
76%$21,174
75%

3%

18%

Gross margin as a percentage of net revenues in 2019 increased from 2018 primarily due to the fullyear effect of the expiration of HUMIRA royalties, partially offset by the IMBRUVICA profit sharing
arrangement and unfavorable impact from higher intangible asset amortization.

39

2019 Form 10-K

13NOV201221352027 39

Gross margin as a percentage of net revenues in 2018 increased from 2017 primarily due to the
expiration of HUMIRA royalties and a 2017 intangible asset impairment charge of $354 million partially
offset by the IMBRUVICA profit sharing arrangement.
Selling, General and Administrative

years ended December 31 (dollars in millions)

Selling, general and administrative
as a percent of net revenues

2019

2018

2017

$6,942
21%$7,39923%$6,29522%

Percentchange
2019
2018

(6)%

18%

Selling, general and administrative (SG&A) expenses as a percentage of net revenues in 2019 decreased
from 2018 primarily due to the favorable impacts of international HUMIRA expense reductions and lower
litigation reserve charges that decreased by $326 million. This favorability was partially offset by new
product launch expenses, higher restructuring charges and $103 million of transaction expenses associatedwith the proposed Allergan transaction. Additionally, SG&A expenses in 2018 included non-recurring
philanthropic contributions of $350 million to certain U.S. not-for-profit organizations.
SG&A expenses as a percentage of net revenues in 2018 increased from 2017 primarily due to new
product launch expenses and non-recurring philanthropic contributions to certain U.S. not-for-profit
organizations partially offset by continued leverage from revenue growth.
Research and Development and Acquired In-Process Research and Development

years ended December 31 (dollars in millions)

Research and development
as a percent of net revenues
Acquired in-process research and development

2019

2018

2017

$6,40719%$ 385$10,32932%$ 424$5,00718%$ 327

Percentchange20192018(38)% >100%
(9)%

30%

Research and Development (R&D) expenses decreased in 2019 and increased in 2018 principally due toimpairment charges related to IPR&D acquired as part of the 2016 Stemcentrx acquisition. In 2019, thecompany recorded a $1.0 billion intangible asset impairment charge which represented the remaining valueof the IPR&D acquired following the decision to terminate the Rova-T R&D program. In 2018, the company
recorded a $5.1 billion intangible asset impairment charge following the decision to stop enrollment in the
TAHOE trial, which lowered the probabilities of success of achieving regulatory approval across Rova-T andother early-stage assets obtained in the acquisition. See Note 7 to the Consolidated Financial Statements
for additional information regarding these impairment charges.
Acquired IPR&D expenses reflect upfront payments related to various collaborations. There were no
individually significant transactions or cash flows during 2019 or 2018. Acquired IPR&D expense in 2017
included a charge of $205 million as a result of entering into a global strategic collaboration with
Alector, Inc. (Alector) to develop and commercialize medicines to treat Alzheimer’s disease and otherneurodegenerative disorders. See Note 5 to the Consolidated Financial Statements for additional
information regarding the Alector agreement.
Other Operating Expenses and Income
Other operating income in 2019 included $550 million of income from a legal settlement related to an
intellectual property dispute with a third party and $330 million of income related to an amended and

40 13NOV201221352027

2019 Form 10-K

40

restated license agreement between AbbVie and Reata. See Note 5 to the Consolidated Financial
Statements for additional information on the Reata agreement.
Other operating expenses in 2018 included a $500 million charge related to the extension of thepreviously announced Calico collaboration to discover, develop and bring to market new therapies forpatients with age-related diseases, including neurodegeneration and cancer. See Note 5 to the Consolidated
Financial Statements for additional information regarding the Calico agreement.
Other Non-Operating Expenses
years ended December 31 (in millions)

2019

2018

2017

Interest expense
Interest income$1,784 $1,348 $1,150
(275)
(204)
(146)

Interest expense, net$1,509$1,144$1,004

Net foreign exchange loss
Other expense, net

$ 42
3,006

$

$ 348
466

24
18

Interest expense in 2019 increased compared to 2018 primarily due to $363 million of incremental
interest and debt issuance costs associated with financing the proposed acquisition of Allergan, as well as
the unfavorable impact of higher interest rates on the company’s debt obligations. Interest expense in 2018
increased compared to 2017 primarily due to the unfavorable impact of higher interest rates on thecompany’s debt obligations and a higher average outstanding debt balance during 2018.
Interest income in 2019 increased compared to 2018 primarily due to a higher average cash and cash
equivalents balance during 2019, partially offset by decreased investments in debt securities. Interest
income in 2018 increased compared to 2017 primarily due to higher interest rates.
Net foreign exchange loss in 2017 included $316 million of historical currency translation losses thatwere reclassified from accumulated other comprehensive income (AOCI) related to the liquidation of certain
foreign entities following the enactment of U.S. tax reform.
Other expense, net included charges related to the change in fair value of the contingent consideration
liabilities of $3.1 billion in 2019, $49 million in 2018 and $626 million in 2017. The fair value of contingent
consideration liabilities is impacted by the passage of time and multiple other inputs, including theprobability of success of achieving regulatory/commercial milestones, discount rates, the estimated amountof future sales of the acquired products still in development and other market-based factors. In 2019, theBoehringer Ingelheim (BI) contingent consideration liability increased due to higher probabilities of success,higher estimated future sales, declining interest rates and passage of time. The higher probabilities ofsuccess primarily resulted from the April 2019 regulatory approvals of SKYRIZI for the treatment ofmoderate to severe plaque psoriasis. These changes were partially offset by a $91 million decrease in the
Stemcentrx contingent consideration liability due to the termination of the Rova-T R&D program during thethird quarter of 2019. In 2018, the BI contingent consideration liability increased due to the passage oftime and higher estimated future sales partially offset by the effect of rising interest rates. This increase in
the BI contingent consideration liability was primarily offset by a $428 million decrease in the Stemcentrx
contingent consideration liability recorded during the fourth quarter of 2018 due to a reduction inprobabilities of success of achieving regulatory approval across Rova-T and other early-stage Stemcentrx
assets. In 2017, the change in fair value represented mainly higher probabilities of success, the passage oftime and declining interest rates. Other expense, net for 2017 also included realized gains onavailable-for-sale investment securities of $90 million.

41

2019 Form 10-K

13NOV201221352027 41

Income Tax Expense
The effective income tax rate was 6% in 2019, negative 9% in 2018 and 31% in 2017. The effective tax
rate in each period differed from the statutory tax rate principally due to the allocation of the company’s
taxable earnings among jurisdictions, the benefit from foreign operations which reflects the impact of lower
income tax rates in locations outside the United States, tax incentives in Puerto Rico and other foreign tax
jurisdictions and business development activities. The increase in the effective tax rate for 2019 over theprior year was principally due to the timing of provisions of the Tax Cuts and Jobs Act (the Act) related tothe earnings from certain foreign subsidiaries. The increase is also attributable to changes in thejurisdictional mix of earnings, including a change in fair value of contingent consideration liabilities. These
increases were partially offset by the favorable resolution of various tax positions in the current year.
The effective tax rate for 2018 also included the effects of Stemcentrx intangible impairment related
expenses.
The effective tax rate in 2017 included tax expense of $4.5 billion on the one-time mandatory
repatriation of previously untaxed earnings of foreign subsidiaries, partially offset by a $3.6 billion net tax
benefit for the remeasurement of deferred taxes related to the Act and foreign tax law changes.
The Act significantly changed the U.S. corporate tax system. The Act reduced the U.S. federal corporate
tax rate from 35% to 21% and created a territorial tax system that included new taxes on certain foreignsourced earnings. See Note 14 to the Consolidated Financial Statements for additional information regarding
the Act.
FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
years ended December 31 (in millions)

2019

Cash flows from:Operating activities
Investing activities
Financing activities$13,324596
18,7082018

2017$ 13,427 $ 9,960(1,006)(274)(14,396) (5,512)

Operating cash flows in 2019 decreased slightly from 2018 primarily due to higher payments forincome taxes offset by improved results of operations resulting from an increase in operating earnings.
Operating cash flows in 2018 increased from 2017 primarily due to improved results of operations fromrevenue growth and a decrease in income tax payments. Operating cash flows also reflected AbbVie’scontributions to its defined benefit plans of $727 million in 2019, $873 million in 2018 and $246 million in2017.
Investing cash flows in 2019 included net sales and maturities of investments totaling $2.1 billion
resulting from the sale of substantially all of the company’s investments in debt securities, payments madefor other acquisitions and investments of $1.1 billion and capital expenditures of $552 million. Investing
cash flows in 2018 included payments made for other acquisitions and investments of $736 million andcapital expenditures of $638 million, partially offset by net sales and maturities of investment securities
totaling $368 million. Investing cash flows in 2017 included capital expenditures of $529 million andpayments made for other acquisitions and investments of $308 million, partially offset by net sales andmaturities of investment securities totaling $563 million.
Financing cash flows in 2019 included the issuance of $30.0 billion aggregate principal amount offloating rate and fixed rate unsecured senior notes at maturities ranging from 18 months to 30 years.
AbbVie expects to use the net proceeds of $29.8 billion to fund a portion of the aggregate cash
consideration due to Allergan shareholders in connection with the proposed acquisition and to pay related
fees and expenses. Pending the consummation of the proposed Allergan acquisition, the net proceeds fromthe offering are permitted to be invested temporarily in short-term investments. All of the notes are subject

42 13NOV201221352027

2019 Form 10-K

42

to special mandatory redemption at a redemption price equal to 101% of the aggregate principal amountof the notes plus accrued and unpaid interest if the proposed acquisition of Allergan is not completed by
January 30, 2021 or the company notifies the trustee in respect of the notes that it will not pursue theconsummation of the proposed Allergan acquisition.
Additionally, financing cash flows in 2019 included the issuance of e1.4 billion aggregate principal
amount of unsecured senior Euro notes which the company used to redeem e1.4 billion aggregate principal
amount of 0.38% senior Euro notes that were due to mature in November 2019, as well as the repaymentof a $3.0 billion 364-day term loan credit agreement that was scheduled to mature in June 2019.
Financing cash flows in 2018 included proceeds from the issuance of $3.0 billion drawn under the termloan in June 2018. In September 2018, the company issued $6.0 billion aggregate principal amount of
unsecured senior notes. Of the $5.9 billion net proceeds, $2.0 billion was used to repay the company’s
outstanding three-year term loan credit agreement in September 2018 and $1.0 billion was used to repay
the aggregate principal amount of 2.00% senior notes at maturity in November 2018. Financing cash flows
in 2018 also included the May 2018 repayment of $3.0 billion aggregate principal amount of the company’s
1.80% senior notes at maturity.
In 2019, 2018 and 2017, the company issued and redeemed commercial paper. There were nocommercial paper borrowings outstanding as of December 31, 2019 and there was $699 million outstanding
as of December 31, 2018. AbbVie may issue additional commercial paper or retire commercial paper tomeet liquidity requirements as needed.
Cash dividend payments totaled $6.4 billion in 2019, $5.6 billion in 2018 and $4.1 billion in 2017. The
increase in cash dividend payments was primarily driven by an increase in the dividend rate. On
November 1, 2019, AbbVie announced that its board of directors declared an increase in the quarterly cash
dividend from $1.07 per share to $1.18 per share beginning with the dividend payable on February 14,2020 to stockholders of record as of January 15, 2020. This reflects an increase of approximately 10.3%
over the previous quarterly rate. The timing, declaration, amount of and payment of any dividends by
AbbVie in the future is within the discretion of its board of directors and will depend upon many factors,
including AbbVie’s financial condition, earnings, capital requirements of its operating subsidiaries, covenantsassociated with certain of AbbVie’s debt service obligations, legal requirements, regulatory constraints,
industry practice, ability to access capital markets and other factors deemed relevant by its board of
directors.
On February 15, 2018, AbbVie’s board of directors authorized a new $10.0 billion stock repurchaseprogram, which superseded AbbVie’s previous stock repurchase program. On December 13, 2018, AbbVie’sboard of directors authorized a $5.0 billion increase to the existing $10.0 billion stock repurchase program.
The company’s stock repurchase authorization permits purchases of AbbVie shares from time to time inopen-market or private transactions at management’s discretion. The program has no time limit and can be
discontinued at any time. Under this authorization, AbbVie repurchased 4 million shares for $300 million in2019 and 109 million shares for $10.7 billion in 2018. AbbVie cash-settled $201 million of its December
2018 open market purchases in January 2019. AbbVie’s remaining stock repurchase authorization was$4.0 billion as of December 31, 2019.
Under previous stock repurchase programs, AbbVie made open market share repurchases of 11 million
shares for $1.3 billion in 2018 and 13 million shares for $1.0 billion in 2017. AbbVie cash-settled$285 million of its December 2016 open market purchases in January 2017.
In 2019, AbbVie made contingent consideration milestone and royalty payments to BI totaling$234 million following the commercial launch of SKYRIZI in certain geographies. $163 million of thesepayments were included in financing cash flows and $71 million of the payments were included inoperating cash flows. In 2018, AbbVie paid $100 million of contingent consideration to BI related to BLA
and MAA acceptance milestones. $78 million of these payments were included in financing cash flows and43

2019 Form 10-K

13NOV201221352027 43

$22 million of the payments were included in operating cash flows. In 2017, AbbVie paid $305 million ofcontingent consideration to BI related to a Phase 3 enrollment milestone. $268 million of this milestone
was included in financing cash flows and $37 million was included in operating cash flows.
In connection with the proposed acquisition of Allergan, on June 25, 2019, AbbVie entered into a$38.0 billion 364-day bridge credit agreement and on July 12, 2019, AbbVie entered into a $6.0 billion termloan credit agreement. The company incurred a total of $242 million of debt issuance costs related to thetwo agreements. On October 25, 2019, AbbVie commenced offers to exchange any and all outstanding
notes of certain series issued by Allergan for up to $15.5 billion aggregate principal amount and e3.7 billion
aggregate principal amount of new notes to be issued by AbbVie and cash, subject to conditions including
the closing of the proposed acquisition. See Note 10 to the Consolidated Financial Statements for additional
information. In February 2020, the remaining commitments under the bridge credit agreement werereduced to $0 as a result of cash on hand at AbbVie. AbbVie subsequently terminated the bridge credit
agreement in its entirety as permitted under its terms.
Credit Risk
AbbVie monitors economic conditions, the creditworthiness of customers and government regulations
and funding, both domestically and abroad. AbbVie regularly communicates with its customers regarding
the status of receivable balances, including their payment plans and obtains positive confirmation of thevalidity of the receivables. AbbVie establishes an allowance against accounts receivable when it is probablethey will not be collected. AbbVie may also utilize factoring arrangements to mitigate credit risk, although
the receivables included in such arrangements have historically not been a significant amount of total
outstanding receivables.
Credit Facility, Access to Capital and Credit Ratings
Credit Facility
In August 2019, AbbVie entered into an amended and restated $4.0 billion five-year revolving credit
facility that matures in August 2024. This amended facility enables the company to borrow funds on an
unsecured basis at variable interest rates and contains various covenants. At December 31, 2019, thecompany was in compliance with all its credit facility covenants. Commitment fees under the credit facility
were insignificant. No amounts were outstanding under the company’s credit facilities as of December 31,
2019 and 2018.
Access to Capital
The company intends to fund short-term and long-term financial obligations as they mature throughcash on hand, future cash flows from operations, or by issuing additional debt. The company’s ability togenerate cash flows from operations, issue debt or enter into financing arrangements on acceptable terms
could be adversely affected if there is a material decline in the demand for the company’s products or in
the solvency of its customers or suppliers, deterioration in the company’s key financial ratios or credit
ratings, or other material unfavorable changes in business conditions. At the current time, the company
believes it has sufficient financial flexibility to issue debt, enter into other financing arrangements andattract long-term capital on acceptable terms to support the company’s growth objectives.
Credit Ratings
Following the announcement of the proposed acquisition of Allergan and the $30.0 billion senior notes
issuance, Moody’s Investor Service affirmed its Baa2 senior unsecured long-term rating and Prime-2
short-term rating with a stable outlook. S&P Global Ratings revised its ratings outlook to negative fromstable and expects to lower the issuer credit rating by one notch to BBB+ from A- and the short-term rating
to A-2 from A-1 when the acquisition is complete.
Unfavorable changes to the ratings may have an adverse impact on future financing arrangements;
however, they would not affect the company’s ability to draw on its credit facility and would not result inan acceleration of scheduled maturities of any of the company’s outstanding debt.

44 13NOV201221352027

2019 Form 10-K

44

Contractual Obligations
The following table summarizes AbbVie’s estimated contractual obligations as of December 31, 2019:
Total

Less than
one year

One tothree years

Three tofive years

More than
five years

Long-term debt, including current portion
Interest on long-term debt(a)Non-cancelable operating and finance lease
payments(f)Purchase obligations and other(b)Other long-term liabilities(c)(d)(e)$ 67,233
30,494$3,7502,146$14,150
4,087$ 7,625
3,479$41,708
20,782774
3,532
11,544

129
3,295
166

224
186
1,395

125
45
2,123

296
6
7,860

Total

$113,577$9,486$20,042$13,397$70,652(in millions)(a) Includes estimated future interest payments on long-term debt. Interest payments on debt arecalculated for future periods using forecasted interest rates in effect at the end of 2019. Projectedinterest payments include the related effects of interest rate swap agreements. Certain of theseprojected interest payments may differ in the future based on changes in floating interest rates orother factors or events. The projected interest payments only pertain to obligations and agreements
outstanding at December 31, 2019. See Note 10 to the Consolidated Financial Statements for
additional information regarding the company’s debt instruments and Note 11 for additional
information on the interest rate swap agreements outstanding at December 31, 2019.
(b) Includes the company’s significant unconditional purchase obligations. These commitments do not
exceed the company’s projected requirements and are made in the normal course of business.
(c) Excludes liabilities associated with the company’s unrecognized tax benefits as it is not possible toreliably estimate the timing of the future cash outflows related to these liabilities. See Note 14 to theConsolidated Financial Statements for additional information on these unrecognized tax benefits.
(d) Includes $7.3 billion of contingent consideration liabilities which are recorded at fair value on the
consolidated balance sheet. Potential contingent consideration payments that exceed the fair value
recorded on the consolidated balance sheet are not included in the table of contractual obligations.
See Note 11 to the Consolidated Financial Statements for additional information regarding theseliabilities.
(e) Includes a one-time transition tax liability on a mandatory deemed repatriation of previously untaxed
earnings of foreign subsidiaries resulting from U.S. tax reform enacted in 2017. The one-time transition
tax is generally payable in eight annual installments. See Note 14 to the Consolidated Financial
Statements for additional information regarding these tax liabilities.
(f)Lease payments include approximately $350 million of contractual minimum lease payments for leases
executed but not yet commenced. These leases will commence in 2020 with lease terms ofapproximately 11 years.

AbbVie enters into R&D collaboration arrangements with third parties that may require future
milestone payments to third parties contingent upon the achievement of certain development, regulatory,
or commercial milestones. Individually, these arrangements are insignificant in any one annual reporting
period. However, if milestones for multiple products covered by these arrangements would happen to bereached in the same reporting period, the aggregate charge to expense could be material to the results ofoperations in that period. From a business perspective, the payments are viewed as positive because theysignify that the product is successfully moving through development and is now generating or is more likely
to generate future cash flows from product sales. It is not possible to predict with reasonable certainty
whether these milestones will be achieved or the timing for achievement. As a result, these potential

45

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payments are not included in the table of contractual obligations. See Note 5 to the Consolidated Financial
Statements for additional information on these collaboration arrangements.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements in accordance with generally accepted accounting principles in
the United States requires the use of estimates and assumptions that affect the reported amounts of assets
and liabilities and the reported amounts of revenue and expenses. A summary of the company’s significant
accounting policies is included in Note 2 to the Consolidated Financial Statements. Certain of these policies
are considered critical as these most significantly impact the company’s financial condition and results ofoperations and require the most difficult, subjective, or complex judgments, often as a result of the needto make estimates about the effect of matters that are inherently uncertain. Actual results may vary fromthese estimates.
Revenue Recognition
AbbVie recognizes revenue when control of promised goods or services is transferred to the company’s
customers, in an amount that reflects the consideration AbbVie expects to be entitled to in exchange forthose goods or services. Sales, value add and other taxes collected concurrent with revenue-producing
activities are excluded from revenue. AbbVie generates revenue primarily from product sales. For the
majority of sales, the company transfers control, invoices the customer and recognizes revenue upon
shipment to the customer.
Rebates
AbbVie provides rebates to pharmacy benefit managers, state government Medicaid programs,
insurance companies that administer Medicare drug plans, wholesalers, group purchasing organizations andother government agencies and private entities.
Rebate and chargeback accruals are accounted for as variable consideration and are recorded as a
reduction to revenue in the period the related product is sold. Rebates and chargebacks totaled$18.8 billion in 2019, $16.4 billion in 2018 and $12.9 billion in 2017. Rebate amounts are typically based
upon the volume of purchases using contractual or statutory prices, which may vary by product and by
payer. For each type of rebate, the factors used in the calculations of the accrual for that rebate include
the identification of the products subject to the rebate, the applicable price terms and the estimated lagtime between sale and payment of the rebate, which can be significant.
In order to establish its rebate and chargeback accruals, the company uses both internal and external
data to estimate the level of inventory in the distribution channel and the rebate claims processing lag timefor each type of rebate. To estimate the rebate percentage or net price, the company tracks sales byproduct and by customer or payer. The company evaluates inventory data reported by wholesalers, available
prescription volume information, product pricing, historical experience and other factors in order todetermine the adequacy of its reserves. AbbVie regularly monitors its reserves and records adjustments
when rebate trends, rebate programs and contract terms, legislative changes, or other significant events
indicate that a change in the reserve is appropriate. Historically, adjustments to rebate accruals have notbeen material to net earnings.

46 13NOV201221352027

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The following table is an analysis of the three largest rebate accruals and chargeback allowances,which comprise approximately 94% of the total consolidated rebate and chargebacks recorded as reductions
to revenues in 2019. Remaining rebate provisions charged against gross revenues are not significant in thedetermination of operating earnings.

(in millions)

Medicaid
andMedicareRebates

Balance at December 31, 2016
Provisions
Payments$ 1,167 $ 1,167
2,909
3,990
(2,736) (3,962)$

Balance at December 31, 2017
Provisions
Payments

1,340
3,493
(3,188)

1,195
4,729
(4,485)522
6,659(6,525)

Balance at December 31, 2018
Provisions
Payments

1,645
4,035
(3,915)

1,439
5,772
(5,275)656
7,947(7,917)

Balance at December 31, 2019

$ 1,765$ 1,936$

Managed
Care
Rebates

Wholesaler
Chargebacks

383
5,026
(4,887)686

Cash Discounts and Product Returns
Cash discounts and product returns, which totaled $1.6 billion in 2019, $1.6 billion in 2018 and$1.3 billion in 2017, are accounted for as variable consideration and are recorded as a reduction to revenue
in the same period the related product is sold. The reserve for cash discounts is readily determinablebecause the company’s experience of payment history is fairly consistent. Product returns can be reliably
estimated based on the company’s historical return experience.
Pension and Other Post-Employment Benefits
AbbVie engages outside actuaries to assist in the determination of the obligations and costs under thepension and other post-employment benefit plans that are direct obligations of AbbVie. The valuation of
the funded status and the net periodic benefit cost for these plans are calculated using actuarial
assumptions. The significant assumptions, which are reviewed annually, include the discount rate, theexpected long-term rate of return on plan assets and the health care cost trend rates, and are disclosed in
Note 12 to the Consolidated Financial Statements.
The discount rate is selected based on current market rates on high-quality, fixed-income investments
at December 31 each year. AbbVie employs a yield-curve approach for countries where a robust bondmarket exists. The yield curve is developed using high-quality bonds. The yield-curve approach reflects theplans’ specific cash flows (i.e. duration) in calculating the benefit obligations by applying the corresponding
individual spot rates along the yield curve. AbbVie reflects the plans’ specific cash flows and applies themto the corresponding individual spot rates along the yield curve in calculating the service cost and interest
cost portions of expense. For other countries, AbbVie reviews various indices such as corporate bond andgovernment bond benchmarks to estimate the discount rate. AbbVie’s assumed discount rates have asignificant effect on the amounts reported for defined benefit pension and other post-employment plans asof December 31, 2019. A 50 basis point change in the assumed discount rate would have had the following

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effects on AbbVie’s calculation of net periodic benefit costs in 2020 and projected benefit obligations as ofDecember 31, 2019:50 basis point
Increase Decrease(in millions) (brackets denote a reduction)

Defined benefit plans
Service and interest cost
Projected benefit obligation
Other post-employment plans
Service and interest cost
Projected benefit obligation$ (76)
(723)

$ 92
825

$ (11)
(101)

$ 14
117

The expected long-term rate of return is based on the asset allocation, historical performance and thecurrent view of expected future returns. AbbVie considers these inputs with a long-term focus to avoid
short-term market influences. The current long-term rate of return on plan assets for each plan is
supported by the historical performance of the trust’s actual and target asset allocation. AbbVie’s assumed
expected long-term rate of return has a significant effect on the amounts reported for defined benefit
pension plans as of December 31, 2019 and will be used in the calculation of net periodic benefit cost in
2020. A one percentage point change in assumed expected long-term rate of return on plan assets would
increase or decrease the net period benefit cost of these plans in 2020 by $71 million.
The health care cost trend rate is selected by reviewing historical trends and current views on
projected future health care cost increases. The current health care cost trend rate is supported by thehistorical trend experience of each plan. Assumed health care cost trend rates have a significant effect on
the amounts reported for health care plans as of December 31, 2019 and will be used in the calculation of
net periodic benefit cost in 2020. A one percentage point change in assumed health care cost trend rates
would have the following effects on AbbVie’s calculation of net periodic benefit costs in 2020 and the
projected benefit obligation as of December 31, 2019:(in millions) (brackets denote a reduction)

One percentage
point
Increase Decrease

Service and interest cost
Projected benefit obligation

$ 40
244

$ (28)(186)

Income Taxes
AbbVie accounts for income taxes under the asset and liability method. Provisions for federal, stateand foreign income taxes are calculated on reported pretax earnings based on current tax laws. Deferredtaxes are provided using enacted tax rates on the future tax consequences of temporary differences, which
are the differences between the financial statement carrying amount of assets and liabilities and theirrespective tax bases and the tax benefits of carryforwards. A valuation allowance is established or
maintained when, based on currently available information, it is more likely than not that all or a portionof a deferred tax asset will not be realized.
Litigation
The company is subject to contingencies, such as various claims, legal proceedings and investigations
regarding product liability, intellectual property, commercial, securities and other matters that arise in thenormal course of business. See Note 15 to the Consolidated Financial Statements for additional information.
Loss contingency provisions are recorded for probable losses at management’s best estimate of a loss, orwhen a best estimate cannot be made, a minimum loss contingency amount within a probable range is

48 13NOV201221352027

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recorded. Accordingly, AbbVie is often initially unable to develop a best estimate of loss and therefore, theminimum amount, which could be zero, is recorded. As information becomes known, either the minimum
loss amount is increased, resulting in additional loss provisions, or a best estimate can be made, also
resulting in additional loss provisions. Occasionally, a best estimate amount is changed to a lower amountwhen events result in an expectation of a more favorable outcome than previously expected.
Valuation of Goodwill and Intangible Assets
AbbVie has acquired and may continue to acquire significant intangible assets in connection withbusiness combinations that AbbVie records at fair value. Transactions involving the purchase or sale ofintangible assets occur with some frequency between companies in the pharmaceuticals industry andvaluations are usually based on a discounted cash flow analysis incorporating the stage of completion. The
discounted cash flow model requires assumptions about the timing and amount of future net cash flows,
risk, cost of capital, terminal values and market participants. Each of these factors can significantly affectthe value of the intangible asset. IPR&D acquired in a business combination is capitalized as an indefinitelived intangible asset until regulatory approval is obtained, at which time it is accounted for as a definitelived asset and amortized over its estimated useful life, or discontinuation, at which point the intangible
asset will be written off. IPR&D acquired in transactions that are not business combinations is expensed
immediately, unless deemed to have an alternative future use. Payments made to third parties subsequent
to regulatory approval are capitalized and amortized over the remaining useful life.
AbbVie reviews the recoverability of definite-lived intangible assets whenever events or changes incircumstances indicate the carrying value of an asset may not be recoverable. Goodwill and indefinite-lived
intangible assets are reviewed for impairment annually or when an event occurs that could result in an
impairment. See Note 2 to the Consolidated Financial Statements for further information.
Annually, the company tests its goodwill for impairment by first assessing qualitative factors todetermine whether it is more likely than not that the fair value is less than its carrying amount. Some of
the factors considered in the assessment include general macro-economic conditions, conditions specific to
the industry and market, cost factors, the overall financial performance and whether there have beensustained declines in the company’s share price. If the company concludes it is more likely than not thatthe fair value of the reporting unit is less than its carrying amount, a quantitative impairment test is
performed. AbbVie tests indefinite-lived intangible assets for impairment by first assessing qualitative factors
to determine whether it is more likely than not that the fair value is less than its carrying amount. If thecompany concludes it is more likely than not that the fair value is less than its carrying amount, aquantitative impairment test is performed.
For its quantitative impairment tests, the company uses an estimated future cash flow approach that
requires significant judgment with respect to future volume, revenue and expense growth rates, changes inworking capital use, the selection of an appropriate discount rate, asset groupings and other assumptions
and estimates. The estimates and assumptions used are consistent with the company’s business plans and amarket participant’s views. The use of alternative estimates and assumptions could increase or decrease theestimated fair value of the assets and could potentially impact the company’s results of operations. Actual
results may differ from the company’s estimates.
Contingent Consideration
The fair value measurements of contingent consideration liabilities are determined as of the acquisition
date based on significant unobservable inputs, including the discount rate, estimated probabilities andtiming of achieving specified development, regulatory and commercial milestones and the estimatedamount of future sales of the acquired products. Contingent consideration liabilities are revalued to fairvalue at each subsequent reporting date until the related contingency is resolved. The potential contingent
consideration payments are estimated by applying a probability-weighted expected payment model for

49

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contingent milestone payments and a Monte Carlo simulation model for contingent royalty payments, which
are then discounted to present value. Changes to the fair value of the contingent consideration liabilities
can result from changes to one or a number of inputs, including discount rates, the probabilities ofachieving the milestones, the time required to achieve the milestones and estimated future sales.
Significant judgment is employed in determining the appropriateness of certain of these inputs. Changes tothe inputs described above could have a material impact on the company’s financial position and results ofoperations in any given period. At December 31, 2019, a 50 basis point increase/decrease in the assumed
discount rate would have decreased/increased the value of the contingent consideration liabilities byapproximately $280 million. Additionally, at December 31, 2019, a five percentage point increase/decreasein the assumed probability of success across all potential indications would have increased/decreased thevalue of the contingent consideration liabilities by approximately $150 million.
Recent Accounting Pronouncements
See Note 2 to the Consolidated Financial Statements for additional information on recent accounting
pronouncements.

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ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.....................................................................................................................................................................................................................................................................................................................................................
The company is exposed to risk that its earnings, cash flows and equity could be adversely impacted
by changes in foreign exchange rates and interest rates. Certain derivative instruments are used whenavailable on a cost-effective basis to hedge the company’s underlying economic exposures. See Note 11 to
the Consolidated Financial Statements for additional information regarding the company’s financial
instruments and hedging strategies.
Foreign Currency Risk
AbbVie’s primary net foreign currency exposures are the Euro, Japanese yen, Canadian dollar andBritish pound. The following table reflects the total foreign currency forward exchange contracts
outstanding at December 31, 2019 and 2018:2019(in millions)Contract
amountWeighted
averageexchangerate

Receive primarily U.S. dollars in exchange
for the following currencies:
Euro
Japanese yen
Canadian dollar
British pound
All other currencies$6,217
820
504
427
1,508

1.116
108.7
1.324
1.305
n/a

Total

$9,4762018
Fair andcarrying
value
receivable/(payable)

Contract
amountWeighted
averageexchange
rate

Fair andcarrying
value
receivable/(payable)

$(12)
—
(6)
(6)
(10)

$ 6,660
1,076
406
499
1,370

1.157
111.5
1.314
1.328
n/a

$ 68
(12)
14
21
15

$(34)

$10,011$106

The company estimates that a 10% appreciation in the underlying currencies being hedged from theirlevels against the U.S. dollar, with all other variables held constant, would decrease the fair value of foreignexchange forward contracts by $942 million at December 31, 2019. If realized, this appreciation would
negatively affect earnings over the remaining life of the contracts. However, gains and losses on thehedging instruments offset losses and gains on the hedged transactions and reduce the earnings andstockholders’ equity volatility relating to foreign exchange. A 10% appreciation is believed to be areasonably possible near-term change in foreign currencies.
As of December 31, 2019, the company has e3.6 billion aggregate principal amount of unsecured
senior Euro notes outstanding, which are exposed to foreign currency risk. The company designated these
foreign currency denominated notes as hedges of its net investments in certain foreign subsidiaries andaffiliates. As a result, any foreign currency translation gains or losses related to the Euro notes will be
included in accumulated other comprehensive income. See Note 10 to the Consolidated Financial
Statements for additional information regarding to the senior Euro notes and Note 11 to the Consolidated
Financial Statements for additional information regarding to the net investment hedging program.
Interest Rate Risk
The company estimates that an increase in interest rates of 100 basis points would adversely impact
the fair value of AbbVie’s interest rate swap contracts by approximately $280 million at December 31, 2019.
If realized, the fair value reduction would affect earnings over the remaining life of the contracts. The
company estimates that an increase of 100 basis points in long-term interest rates would decrease the fairvalue of long-term debt by $5.0 billion at December 31, 2019. A 100 basis point change is believed to be areasonably possible near-term change in interest rates.

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ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.....................................................................................................................................................................................................................................................................................................................................................
Page

Consolidated Financial Statements
Consolidated Statements of Earnings
Consolidated Statements of Comprehensive Income
Consolidated Balance Sheets
Consolidated Statements of Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm

52 13NOV201221352027

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52

53
54
55
56
57
58
102

AbbVie Inc. and Subsidiaries
Consolidated Statements of Earnings
years ended December 31 (in millions, except per share data)

2019

2018

2017

$33,266$32,753$28,216

Cost of products soldSelling, general and administrative
Research and development
Acquired in-process research and development
Other operating expense (income)

7,439
6,942
6,407
385
(890)

7,718
7,399
10,329
424
500

7,042
6,295
5,007
327
—

Total operating costs and expenses

20,283

26,37018,671

Operating earnings

12,983

6,383

9,545

Interest expense, net
Net foreign exchange loss
Other expense, net

1,509
42
3,006

1,144
24
18

1,004
348
466

Earnings before income tax
Income tax expense (benefit)

8,426
544

5,197
(490)

7,727
2,418

$ 7,882$ 5,687$ 5,309

$
$

$
$

$
$

Net revenues

Net earnings
Per share data
Basic earnings per share
Diluted earnings per share
Weighted-average basic shares outstanding
Weighted-average diluted shares outstanding

5.30
5.28
1,481
1,484

3.67
3.66
1,541
1,546

3.31
3.30
1,596
1,603

The accompanying notes are an integral part of these consolidated financial statements.

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AbbVie Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
years ended December 31 (in millions)

2019

2018

2017

$ 7,882$5,687$5,309

(98)

(391)

996

74

138

(343)

(1,243)

197

(406)

10

(10)

(46)

141

313

(342)

Other comprehensive income (loss)(1,116)

247

(141)

Comprehensive income$ 6,766$5,934$5,168Net earnings
Foreign currency translation adjustments, net of tax expense (benefit) of $(4)in 2019, $(18) in 2018 and $34 in 2017
Net investment hedging activities, net of tax expense (benefit) of $22 in 2019,$40 in 2018 and $(194) in 2017
Pension and post-employment benefits, net of tax expense (benefit) of$(323) in 2019, $35 in 2018 and $(94) in 2017Marketable security activities, net of tax expense (benefit) of $— in 2019, $—in 2018 and $(8) in 2017
Cash flow hedging activities, net of tax expense (benefit) of $70 in 2019, $23
in 2018 and $(26) in 2017

The accompanying notes are an integral part of these consolidated financial statements.

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AbbVie Inc. and Subsidiaries
Consolidated Balance Sheets
as of December 31 (in millions, except share data)

2019

2018

$ 39,924
—
5,428
1,813
2,354

$ 7,289
772
5,384
1,605
1,895

Total current assets

49,51916,945Investments
Property and equipment, net
Intangible assets, net
Goodwill
Other assets

93
2,962
18,64915,604
2,288

1,420
2,883
21,233
15,663
1,208

Total assets$ 89,115$ 59,352

Liabilities and Equity
Current liabilities
Short-term borrowings
Current portion of long-term debt and finance lease obligations
Accounts payable and accrued liabilities

$

—
3,753
11,832$ 3,699
1,609
11,931

Total current liabilities

15,585

17,239Long-term debt and finance lease obligations
Deferred income taxes
Other long-term liabilities

62,975
1,130
17,59735,002
1,067
14,490AssetsCurrent assets
Cash and equivalents
Short-term investments
Accounts receivable, net
Inventories
Prepaid expenses and otherCommitments and contingencies
Stockholders’ equity (deficit)
Common stock, $0.01 par value, 4,000,000,000 shares authorized,
1,781,582,608 shares issued as of December 31, 2019 and
1,776,510,871 as of December 31, 2018
Common stock held in treasury, at cost, 302,671,146 shares as of December 31,
2019 and 297,686,473 as of December 31, 2018
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss

18

18

(24,504)
15,193
4,717(3,596)(24,108)
14,7563,368(2,480)Total stockholders’ equity (deficit)(8,172)(8,446)$ 89,115$ 59,352

Total liabilities and equity

The accompanying notes are an integral part of these consolidated financial statements.

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AbbVie Inc. and Subsidiaries
Consolidated Statements of Equity

years ended December 31 (in millions)

Accumulated
CommonAdditional
othersharesCommon Treasury paid-in Retained comprehensive
outstanding
stock
stock
capitalearnings
loss

Total

Balance at December 31, 2016
Net earnings
Other comprehensive loss, net of tax
Dividends declared
Purchases of treasury stock
Stock-based compensation plans and other

1,593
—
—
—
(15)
14

$18
—
—
—
—
—

$(10,852) $13,678
—
—
—
—
—
—
(1,125)—54592$ 4,378
5,309—(4,221)—(7)$(2,586)
—
(141)
—
—
—

$ 4,636
5,309(141)(4,221)(1,125)639

Balance at December 31, 2017
Adoption of new accounting standards(a)Net earnings
Other comprehensive income, net of tax
Dividends declared
Purchases of treasury stock
Stock-based compensation plans and other

1,592
—
—
—
—
(121)
8

18
—
—
—
—
—
—

(11,923)————(12,215)30

14,270
—
—
—
—
—
486

5,459
(1,733)
5,687—(6,045)——(2,727)
—
—
247
—
—
—

5,097
(1,733)5,687
247(6,045)(12,215)
516

Balance at December 31, 2018
Net earnings
Other comprehensive loss, net of tax
Dividends declared
Purchases of treasury stock
Stock-based compensation plans and other

1,479
—
—
—
(5)
5

18
—
—
—
—
—

(24,108)
—
—
—
(428)
32

14,756
—
—
—
—
437

3,368
7,882
—
(6,533)——(2,480)—(1,116)———(8,446)
7,882(1,116)(6,533)(428)
469

Balance at December 31, 2019

1,479

$18

$(24,504) $15,193$ 4,717$(3,596)$ (8,172)(a)

Adoption of new accounting standards primarily includes the cumulative-effect adjustment of Accounting Standards Update (ASU)
No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory.

The accompanying notes are an integral part of these consolidated financial statements.

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AbbVie Inc. and Subsidiaries
Consolidated Statements of Cash Flows
years ended December 31 (in millions) (brackets denote cash outflows)

2019

2018

2017

$ 7,882$ 5,687$ 5,309

464
1,553
3,091
430
490
(330)
1,030
—
43

471
1,294
49
421
1,061
—
5,070
424
76

425
1,076
626
365
470
—
354
1,242
84

(74)
(231)
97
(1,121)

(591)
(226)
(499)
190

(391)
93
(118)
425

Cash flows from operating activities

13,324

13,427

9,960

Cash flows from investing activities
Acquisitions and investments
Acquisitions of property and equipment
Purchases of investment securities
Sales and maturities of investment securities
Other(1,135)
(552)
(583)
2,699
167

(736)
(638)
(1,792)
2,160
—

(308)
(529)
(2,230)
2,793
—

596

(1,006)(274)

Cash flows from financing activities
Net change in commercial paper borrowings
Proceeds from issuance of other short-term borrowings
Repayments of other short-term borrowings
Proceeds from issuance of long-term debt
Repayments of long-term debt and finance lease obligations
Debt issuance costs
Dividends paid
Purchases of treasury stock
Proceeds from the exercise of stock options
Payments of contingent consideration liabilities
Other, net(699)—(3,000)31,482(1,536)(424)(6,366)
(629)
8
(163)
35

299
3,002
—
5,963
(6,035)(40)(5,580)(12,014)
73
(78)
14

23
—
—
—
(25)
—
(4,107)(1,410)
254
(268)
21

Cash flows from financing activities

18,708(14,396)(5,512)

7

(39)

29

Net change in cash and equivalents
Cash and equivalents, beginning of year

32,6357,289(2,014)
9,303

4,203
5,100

Cash and equivalents, end of year

$39,924$ 7,289$ 9,303

Other supplemental information
Interest paid, net of portion capitalized
Income taxes paid (received)$ 1,794
1,447$ 1,215 $ 1,099
(35)
1,696

Cash flows from operating activities
Net earnings
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation
Amortization of intangible assets
Change in fair value of contingent consideration liabilities
Stock-based compensation
Upfront costs and milestones related to collaborations
Gain on divestitures
Intangible asset impairment
Impacts related to U.S. tax reform
Other, net
Changes in operating assets and liabilities:
Accounts receivable
Inventories
Prepaid expenses and other assets
Accounts payable and other liabilities

Cash flows from investing activities

Effect of exchange rate changes on cash and equivalents

The accompanying notes are an integral part of these consolidated financial statements.

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AbbVie Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note
1 Background.....................................................................................................................................................................................................................................................................................................................................................
Background
The principal business of AbbVie Inc. (AbbVie or the company) is the discovery, development,
manufacture and sale of a broad line of pharmaceutical products. AbbVie’s products are generally soldworldwide directly to wholesalers, distributors, government agencies, health care facilities, specialty
pharmacies and independent retailers from AbbVie-owned distribution centers and public warehouses. In
the United States, AbbVie distributes pharmaceutical products principally through independent wholesale
distributors, with some sales directly to pharmacies and patients. Outside the United States, AbbVie sells
products primarily to customers or through distributors, depending on the market served.
AbbVie was incorporated in Delaware on April 10, 2012. On January 1, 2013, AbbVie became an
independent, publicly-traded company as a result of the distribution by Abbott Laboratories (Abbott) of
100% of the outstanding common stock of AbbVie to Abbott’s shareholders.
On June 25, 2019, AbbVie announced that it entered into a definitive transaction agreement underwhich AbbVie will acquire Allergan plc (Allergan). See Note 5 for additional information regarding the
proposed acquisition.

Note
2 Summary of Significant Accounting Policies.....................................................................................................................................................................................................................................................................................................................................................
Use of Estimates
The consolidated financial statements have been prepared in accordance with U.S. generally accepted
accounting principles (GAAP) and necessarily include amounts based on estimates and assumptions bymanagement. Actual results could differ from those amounts. Significant estimates include amounts forrebates, pension and other post-employment benefits, income taxes, litigation, valuation of goodwill andintangible assets, contingent consideration liabilities, financial instruments and inventory and accounts
receivable exposures.
Basis of Consolidation
The consolidated financial statements include the accounts of AbbVie and all of its subsidiaries inwhich a controlling interest is maintained. Controlling interest is determined by majority ownership interestand the absence of substantive third-party participating rights or, in the case of variable interest entities,
where AbbVie is determined to be the primary beneficiary. Investments in companies over which AbbVie
has a significant influence but not a controlling interest are accounted for using the equity method with
AbbVie’s share of earnings or losses reported in other expense, net in the consolidated statements ofearnings. Intercompany balances and transactions are eliminated.
Certain reclassifications have been made to conform the prior period consolidated financial statements
to the current period presentation.
Revenue Recognition
AbbVie recognizes revenue when control of promised goods or services is transferred to the company’s
customers, in an amount that reflects the consideration AbbVie expects to be entitled to in exchange forthose goods or services. Sales, value add and other taxes collected concurrent with revenue-producing
activities are excluded from revenue. AbbVie generates revenue primarily from product sales. For the
majority of sales, the company transfers control, invoices the customer and recognizes revenue upon

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shipment to the customer. The company recognizes shipping and handling costs as an expense in cost of
products sold when the company transfers control to the customer. Payment terms vary depending on thetype and location of the customer, are based on customary commercial terms and are generally less than
one year. AbbVie does not adjust revenue for the effects of a significant financing component for contracts
where AbbVie expects the period between the transfer of the good or service and collection to be one
year or less.
Discounts, rebates, sales incentives to customers, returns and certain other adjustments are accounted
for as variable consideration. Provisions for variable consideration are based on current pricing, executed
contracts, government pricing legislation and historical data and are provided for in the period the related
revenues are recorded. Rebate amounts are typically based upon the volume of purchases using contractualor statutory prices, which may vary by product and by payer. For each type of rebate, factors used in thecalculation of the accrual include the identification of the products subject to the rebate, the applicable
price terms and the estimated lag time between sale and payment of the rebate, which can be significant.
Sales incentives to customers are insignificant.
In addition to revenue from contracts with customers, the company also recognizes certain
collaboration revenues. See Note 6 for additional information related to the collaboration with Janssen
Biotech, Inc. Additionally, see Note 16 for disaggregation of revenue by product and geography.
Research and Development Expenses
Internal research and development (R&D) costs are expensed as incurred. Clinical trial costs incurred bythird parties are expensed as the contracted work is performed. Where contingent milestone payments are
due to third parties under research and development collaborations, prior to regulatory approval, thepayment obligations are expensed when the milestone results are achieved. Payments made to third parties
subsequent to regulatory approval are capitalized as intangible assets and amortized to cost of products
sold over the remaining useful life of the related product.
Collaborations and Other Arrangements
The company enters into collaborative agreements with third parties to develop and commercialize
drug candidates. Collaborative activities may include joint research and development and commercializationof new products. AbbVie generally receives certain licensing rights under these arrangements. These
collaborations often require upfront payments and may include additional milestone, research anddevelopment cost sharing, royalty or profit share payments, contingent upon the occurrence of certain
future events linked to the success of the asset in development and commercialization. Upfront payments
associated with collaborative arrangements during the development stage are expensed to acquired
in-process research and development (IPR&D) expenses in the consolidated statements of earnings.
Subsequent payments made to the partner for the achievement of milestones during the development
stage are expensed to R&D expense in the consolidated statements of earnings when the milestone isachieved. Milestone payments made to the partner subsequent to regulatory approval are capitalized as
intangible assets and amortized to cost of products sold over the estimated useful life of the related asset.
Royalties are expensed to cost of products sold in the consolidated statements of earnings when incurred.
Advertising
Costs associated with advertising are expensed as incurred and are included in selling, general andadministrative (SG&A) expense in the consolidated statements of earnings. Advertising expenses were$1.1 billion in 2019, $1.1 billion in 2018 and $846 million in 2017.

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Pension and Other Post-Employment Benefits
AbbVie records annual expenses relating to its defined benefit pension and other post-employment
benefit plans based on calculations which utilize various actuarial assumptions, including discount rates,
rates of return on assets, compensation increases, turnover rates and health care cost trend rates. AbbVie
reviews its actuarial assumptions on an annual basis and makes modifications to the assumptions based on
current rates and trends. Actuarial gains and losses are deferred in accumulated other comprehensive
income (AOCI), net of tax and are amortized over the remaining service attribution periods of theemployees under the corridor method. Differences between the expected long-term return on plan assets
and the actual annual return are amortized to net periodic benefit cost over a five-year period.
Income Taxes
Income taxes are accounted for under the asset and liability method. Provisions for federal, state andforeign income taxes are calculated on reported pretax earnings based on current tax laws. Deferred taxes
are provided using enacted tax rates on the future tax consequences of temporary differences, which are
the differences between the financial statement carrying amounts of assets and liabilities and theirrespective tax bases and the tax benefits of carryforwards. A valuation allowance is established or
maintained when, based on currently available information, it is more likely than not that all or a portionof a deferred tax asset will not be realized.
Cash and Equivalents
Cash and equivalents include money market funds and time deposits with original maturities of threemonths or less.
Investments
Investments consist primarily of time deposits, marketable debt securities, held-to-maturity debt
securities and equity securities. Investments in marketable debt securities are classified as available-for-saleand are recorded at fair value with any unrealized holding gains or losses, net of tax, included in AOCI on
the consolidated balance sheets until realized, at which time the gains or losses are recognized in earnings.
Investments in equity securities that have readily determinable fair values are recorded at fair value.
Investments in equity securities that do not have readily determinable fair values are recorded at cost andare remeasured to fair value based on certain observable price changes or impairment events as theyoccur. Held-to-maturity debt securities are recorded at cost. Gains or losses on investments are included inother expense, net in the consolidated statements of earnings.
AbbVie periodically assesses its marketable debt securities for other-than-temporary impairment losses.
This evaluation is based on a number of factors, including the length of time and the extent to which thefair value has been below the cost basis and adverse conditions related specifically to the security, including
any changes to the credit rating of the security, intent to sell, or whether AbbVie will more likely than not
be required to sell the security before recovery of its amortized cost basis. AbbVie also considers industry
factors and general market trends. When AbbVie determines that an other-than-temporary decline has
occurred, the cost basis of the investment is written down with a charge to other expense, net in the
consolidated statements of earnings and an available-for-sale investment’s unrealized loss is reclassified
from AOCI to other expense, net in the consolidated statements of earnings. Realized gains and losses onsales of investments are computed using the first-in, first-out method adjusted for any other-thantemporary declines in fair value that were recorded in net earnings.
Accounts Receivable
Accounts receivable are stated at their net realizable value. The allowance for doubtful accounts
reflects the best estimate of probable losses inherent in the receivables portfolio determined on the basis

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of historical experience, specific allowances for known troubled accounts and other currently available
information. Accounts receivable are written off after all reasonable means to collect the full amount(including litigation, where appropriate) have been exhausted. The allowance for doubtful accounts was$46 million at December 31, 2019 and $51 million at December 31, 2018.
Inventories
Inventories are valued at the lower of cost (first-in, first-out basis) or market. Cost includes materialand conversion costs. Inventories consisted of the following:
as of December 31 (in millions)

2019

2018

Finished goods
Work-in-process
Raw materials

$ 485
942
386

$ 473
862
270

Inventories$1,813$1,6052019

2018

Property and Equipment
as of December 31 (in millions)

Land
Buildings
Equipment
Construction in progress

$

72
1,613
6,012
491

$

73
1,603
6,362
358

Property and equipment, grossLess accumulated depreciation

8,188(5,226)

8,396(5,513)

Property and equipment, net$ 2,962$ 2,883

Depreciation for property and equipment is recorded on a straight-line basis over the estimated useful
lives of the assets. The estimated useful life for buildings ranges from 10 to 50 years. Buildings include
leasehold improvements which are amortized over the life of the related facility lease (including any
renewal periods, if appropriate) or the asset, whichever is shorter. The estimated useful life for equipment
ranges from 2 to 25 years. Equipment includes certain computer software and software development costs
incurred in connection with developing or obtaining software for internal use and is amortized over 3 to
10 years. Depreciation expense was $464 million in 2019, $471 million in 2018 and $425 million in 2017.
LeasesShort-term leases with a term of 12 months or less are not recorded on the balance sheet. For leases
commencing or modified in 2019 or later, AbbVie does not separate lease components from non-lease
components.
The company records lease liabilities based on the present value of lease payments over the lease
term. AbbVie generally uses an incremental borrowing rate to discount its lease liabilities, as the rate
implicit in the lease is typically not readily determinable. Certain lease agreements include renewal options
that are under the company’s control. AbbVie includes optional renewal periods in the lease term only
when it is reasonably certain that AbbVie will exercise its option.
Variable lease payments include payments to lessors for taxes, maintenance, insurance and otheroperating costs as well as payments that are adjusted based on an index or rate. The company’s leaseagreements do not contain any significant residual value guarantees or restrictive covenants.

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Litigation and Contingencies
Loss contingency provisions are recorded when it is probable that a liability has been incurred and theamount of the liability can be reasonably estimated based on existing information. When a best estimate
cannot be made, the minimum loss contingency amount in a probable range is recorded. Legal fees are
expensed as incurred. AbbVie accrues for product liability claims on an undiscounted basis. The liabilities
are evaluated quarterly and adjusted if necessary as additional information becomes available. Receivables
for insurance recoveries for product liability claims, if any, are recorded as assets on an undiscounted basis
when it is probable that a recovery will be realized.
Business Combinations
AbbVie utilizes the acquisition method of accounting for business combinations. This method requires,among other things, that results of operations of acquired companies are included in AbbVie’s results ofoperations beginning on the respective acquisition dates and that assets acquired and liabilities assumed
are recognized at fair value as of the acquisition date. Any excess of the fair value of considerationtransferred over the fair values of the net assets acquired is recognized as goodwill. Contingent
consideration liabilities are recognized at the estimated fair value on the acquisition date. Subsequentchanges to the fair value of contingent consideration liabilities are recognized in other expense, net in the
consolidated statements of earnings. The fair value of assets acquired and liabilities assumed in certain
cases may be subject to revision based on the final determination of fair value during a period of time not
to exceed 12 months from the acquisition date. Legal costs, due diligence costs, business valuation costs
and all other business acquisition costs are expensed when incurred.
Goodwill and Intangible Assets
Intangible assets acquired in a business combination are recorded at fair value using a discounted cash
flow model. The discounted cash flow model requires assumptions about the timing and amount of future
net cash flows, risk, the cost of capital and terminal values of market participants. Definite-lived intangibles
are amortized over their estimated useful lives using the estimated pattern of economic benefit. AbbVie
reviews the recoverability of definite-lived intangible assets whenever events or changes in circumstancesindicate the carrying value of an asset may not be recoverable. AbbVie first compares the projectedundiscounted cash flows to be generated by the asset to its carrying value. If the undiscounted cash flowsof an intangible asset are less than the carrying value, the intangible asset is written down to its fair value.
Where cash flows cannot be identified for an individual asset, the review is applied at the lowest level forwhich cash flows are largely independent of the cash flows of other assets and liabilities.
Goodwill and indefinite-lived assets are not amortized, but are subject to an impairment review
annually and more frequently when indicators of impairment exist. An impairment of goodwill could occur
if the carrying amount of a reporting unit exceeded the fair value of that reporting unit. An impairment ofindefinite-lived intangible assets would occur if the fair value of the intangible asset is less than the
carrying value.
The company tests its goodwill for impairment by first assessing qualitative factors to determine
whether it is more likely than not that the fair value is less than its carrying amount. If the company
concludes it is more likely than not that the fair value of the reporting unit is less than its carrying amount,a quantitative impairment test is performed. AbbVie tests indefinite-lived intangible assets for impairment
by first assessing qualitative factors to determine whether it is more likely than not that the fair value isless than its carrying amount. If the company concludes it is more likely than not that the fair value is lessthan its carrying amount, a quantitative impairment test is performed. For its quantitative impairment tests,
the company uses an estimated future cash flow approach that requires significant judgment with respect
to future volume, revenue and expense growth rates, changes in working capital use, the selection of an
appropriate discount rate, asset groupings and other assumptions and estimates. The estimates and

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assumptions used are consistent with the company’s business plans and a market participant’s views. The
use of alternative estimates and assumptions could increase or decrease the estimated fair value of theassets and potentially result in different impacts to the company’s results of operations. Actual results may
differ from the company’s estimates.
Acquired In-Process Research and Development
In an asset acquisition, the initial costs of rights to IPR&D projects acquired are expensed as IPR&D in
the consolidated statements of earnings unless the project has an alternative future use. These costs
include initial payments incurred prior to regulatory approval in connection with research and development
collaboration agreements that provide rights to develop, manufacture, market and/or sell pharmaceuticalproducts. In a business combination, the fair value of IPR&D projects acquired are capitalized andaccounted for as indefinite-lived intangible assets until the underlying project receives regulatory approval,
at which point the intangible asset will be accounted for as a definite-lived intangible asset, ordiscontinuation, at which point the intangible asset will be written off. R&D costs incurred after theacquisition are expensed as incurred.
Foreign Currency Translation
Foreign subsidiary earnings are translated into U.S. dollars using average exchange rates. The net assets
of foreign subsidiaries are translated into U.S. dollars using period-end exchange rates. The U.S. dollar
effects that arise from translating the net assets of these subsidiaries at changing rates are recognized inother comprehensive income (loss) (OCI) in the consolidated statements of comprehensive income. The net
assets of subsidiaries in highly inflationary economies are remeasured as if the functional currency were thereporting currency. The remeasurement is recognized in net foreign exchange loss in the consolidated
statements of earnings.
Derivatives
All derivative instruments are recognized as either assets or liabilities at fair value on the consolidatedbalance sheets and are classified as current or long-term based on the scheduled maturity of the
instrument.
For derivatives formally designated as hedges, the company assesses at inception and quarterly
thereafter whether the hedging derivatives are highly effective in offsetting changes in the fair value orcash flows of the hedged item. The changes in fair value of a derivative designated as a fair value hedge
and of the hedged item attributable to the hedged risk are recognized in earnings immediately. The
effective portions of changes in the fair value of a derivative designated as a cash flow hedge are reported
in AOCI and are subsequently recognized in earnings consistent with the underlying hedged item. If it isdetermined that a derivative is no longer highly effective as a hedge, the company discontinues hedge
accounting prospectively. If a hedged forecasted transaction becomes probable of not occurring, any gains
or losses are reclassified from AOCI to earnings. Derivatives that are not designated as hedges are adjusted
to fair value through current earnings.
The company also uses derivative instruments or foreign currency denominated debt to hedge its net
investments in certain foreign subsidiaries and affiliates. Realized and unrealized gains and losses from thesehedges are included in AOCI.
Derivative cash flows, with the exception of net investment hedges, are principally classified in theoperating section of the consolidated statements of cash flows, consistent with the underlying hedged item.
Cash flows related to net investment hedges are classified in the investing section of the consolidated
statements of cash flows.

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Recent Accounting Pronouncements
Recently Adopted Accounting Pronouncements
ASU No. 2016-02
In February 2016, the Financial Accounting Standards Board (FASB) issued ASU No. 2016-02, Leases(Topic 842). The standard outlined a comprehensive lease accounting model that superseded the previous
lease guidance and required lessees to recognize lease liabilities and corresponding right-of-use assets for
all leases with lease terms greater than 12 months. The guidance also changed the definition of a leaseand expanded the disclosure requirements of lease arrangements. AbbVie adopted the standard in the firstquarter of 2019 using the modified retrospective method. Results for reporting periods beginning after
December 31, 2018 have been presented in accordance with the standard, while results for prior periods
have not been adjusted and continue to be reported in accordance with AbbVie’s historical accounting. The
cumulative effect of initially applying the new leases standard was recognized as an adjustment to the
opening consolidated balance sheet as of January 1, 2019.
The company elected a package of practical expedients for leases that commenced prior to January 1,
2019 and did not reassess historical conclusions on: (i) whether any expired or existing contracts are orcontain leases; (ii) lease classification for any expired or existing leases; and (iii) initial direct costs
capitalization for any existing leases.
Under the new standard, on January 1, 2019, the company recognized a cumulative-effect adjustment
to its consolidated balance sheet primarily related to the recognition of liabilities and corresponding
right-of-use assets for operating leases. The adjustment to the consolidated balance sheet included: (i) a$405 million increase to other assets; (ii) a $115 million increase to accounts payable and accrued liabilities;and (iii) a $290 million increase to other long-term liabilities. Other cumulative-effect adjustments to theconsolidated balance sheet were insignificant.
Adoption of the standard did not have a significant impact on AbbVie’s consolidated statement of
earnings in 2019.
ASU No. 2018-02
In February 2018, the FASB issued ASU No. 2018-02, Income Statement—Reporting Comprehensive
Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,which allowed a reclassification from AOCI to retained earnings for stranded tax effects related toadjustments to deferred taxes resulting from the December 2017 enactment of the Tax Cuts and Jobs Act(the Act). AbbVie adopted the standard in the first quarter of 2019. Upon adoption, the company made anelection to not reclassify the income tax effects of the Act from AOCI to retained earnings. Therefore, theadoption of the standard had no impact on AbbVie’s consolidated financial statements.
Recent Accounting Pronouncements Not Yet Adopted
ASU No. 2016-13
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326). The
standard changes how credit losses are measured for most financial assets and certain other instruments.
For trade and other receivables, held-to-maturity debt securities, loans and other financial instruments, thestandard requires the use of a new forward-looking ‘‘expected credit loss’’ model that generally will resultin the earlier recognition of allowances for losses. For available-for-sale debt securities with unrealized
losses, the standard now requires allowances to be recorded instead of reducing the amortized cost of theinvestment. Additionally, the standard requires new disclosures and will be effective for AbbVie startingwith the first quarter of 2020. With certain exceptions, adjustments are to be applied using a modifiedretrospective approach by reflecting adjustments through a cumulative-effect impact to retained earnings as

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of the beginning of the fiscal year of adoption. AbbVie has completed its assessment of the new standard
as of December 31, 2019 and concluded that the adoption will not have a material impact on its
consolidated financial statements based on the company’s current portfolio of financial assets.
ASU No. 2019-12
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740). The standard includes
simplifications related to accounting for income taxes including removing certain exceptions related to theapproach for intraperiod tax allocation and the recognition of deferred tax liabilities for outside basis
differences. The standard also clarifies the accounting for transactions that result in a step-up in the tax
basis of goodwill. The standard will be effective for AbbVie starting with the first quarter of 2021, withearly adoption permitted. AbbVie is currently assessing the impact and timing of adopting this guidance on
its consolidated financial statements.

Note
3 Supplemental Financial Information.....................................................................................................................................................................................................................................................................................................................................................
Interest Expense, Net
years ended December 31 (in millions)

2019

2018

2017

Interest expense
Interest income$1,784 $1,348 $1,150
(275)
(204)
(146)

Interest expense, net$1,509$1,144$1,0042019

2018

Sales rebates
Dividends payable
Accounts payable
Salaries, wages and commissions
Royalty and license arrangements
Other$ 4,484
1,771
1,452
830
324
2,971

$ 3,939
1,607
1,546
787
304
3,748

Accounts payable and accrued liabilities$11,832$11,931

2019

2018

Contingent consideration liabilities
Income taxes payable
Pension and other post-employment benefits
Liabilities for unrecognized tax benefits
Other$ 7,201
3,453
2,949
2,772
1,222

$ 4,306
4,311
1,840
2,726
1,307

Other long-term liabilities$17,597$14,490

Accounts Payable and Accrued Liabilities
as of December 31 (in millions)

Other Long-Term Liabilities
as of December 31 (in millions)

Note
4 Earnings Per Share.....................................................................................................................................................................................................................................................................................................................................................
AbbVie grants certain restricted stock units (RSUs) that are considered to be participating securities.
Due to the presence of participating securities, AbbVie calculates earnings per share (EPS) using the more
dilutive of the treasury stock or the two-class method. For all periods presented, the two-class method wasmore dilutive.

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The following table summarizes the impact of the two-class method:
Years ended December 31,
2019
2018
2017

(in millions, except per share data)

Basic EPS
Net earnings
Earnings allocated to participating securities$7,88240$5,68730$5,30926

Earnings available to common shareholders$7,842$5,657$5,283Weighted-average basic shares outstanding

1,481

1,541

1,596

Basic earnings per share$ 5.30$ 3.67$ 3.31

Diluted EPS
Net earnings
Earnings allocated to participating securities$7,88240$5,68730$5,30926

Earnings available to common shareholders$7,842$5,657$5,283Weighted-average shares of common stock outstanding
Effect of dilutive securities

1,481
3

1,541
5

1,596
7

Weighted-average diluted shares outstanding

1,484

1,546

1,603

Diluted earnings per share$ 5.28$ 3.66$ 3.30Certain shares issuable under stock-based compensation plans were excluded from the computation of
EPS because the effect would have been antidilutive. The number of common shares excluded wasinsignificant for all periods presented.

Note
5 Licensing, Acquisitions and Other Arrangements.....................................................................................................................................................................................................................................................................................................................................................
Proposed Acquisition of Allergan plc
On June 25, 2019, AbbVie announced that it entered into a definitive transaction agreement underwhich AbbVie will acquire Allergan plc (Allergan) in a cash and stock transaction for a transaction equity
value of approximately $63 billion, based on the closing price of AbbVie’s common stock of $78.45 on
June 24, 2019. Under the terms of the transaction agreement, Allergan shareholders will receive 0.8660
AbbVie shares and $120.30 in cash for each Allergan share. On October 14, 2019, Allergan shareholders
approved the proposed transaction.
Allergan is a global pharmaceutical leader focused on developing, manufacturing and commercializing
branded pharmaceutical, device, biologic, surgical and regenerative medicine products for patients aroundthe world. Allergan markets a portfolio of brands and products primarily focused on key therapeutic areas
including aesthetics, eye care, neuroscience, gastroenterology and women’s health.
The transaction is subject to customary closing conditions and regulatory approvals. In September
2019, AbbVie and Allergan each received a Request for Additional Information (Second Request) from theFederal Trade Commission (FTC) in connection with the transaction. AbbVie and Allergan are cooperating
fully with the FTC. In January 2020, the European Commission approved the proposed acquisition ofAllergan by AbbVie conditional upon the divestiture of brazikumab, Allergan’s IL-23 inhibitor pipeline
product. In January 2020, Allergan entered into a definitive agreement to divest brazikumab contingent
upon regulatory approvals and closing of AbbVie’s acquisition of Allergan.
In anticipation of the proposed acquisition, AbbVie entered into several debt and financing
arrangements in 2019. See Note 10 for additional information.

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Other Licensing & Acquisitions Activity
Cash outflows related to other acquisitions and investments totaled $1.1 billion in 2019, $736 million
in 2018 and $308 million in 2017. AbbVie recorded acquired IPR&D charges of $385 million in 2019,$424 million in 2018 and $327 million in 2017. Significant arrangements impacting 2019, 2018 and 2017,
some of which require contingent milestone payments, are summarized below.
Reata Pharmaceuticals, Inc.
In October 2019, AbbVie and Reata Pharmaceuticals, Inc. (Reata) entered into an amended andrestated license agreement. Under the terms of the agreement, Reata reacquired exclusive development,
manufacturing and commercialization rights concerning its proprietary Nrf2 activator product platform
originally licensed to AbbVie for territories outside of the United States with respect to bardoxolone methyl
and worldwide with respect to omaveloxolone and other next-generation Nrf2 activators. As consideration
for the rights reacquired by Reata, AbbVie will receive a total of $330 million in cash payable in three
installments through 2021, which was recognized in other operating expense (income) in the fourth quarterof 2019. In addition, AbbVie will receive low single-digit, tiered royalties from worldwide sales ofomaveloxolone and certain next-generation Nrf2 activators.
Calico Life Sciences LLC
In June 2018, AbbVie and Calico Life Sciences LLC (Calico) entered into an extension of a collaboration
to discover, develop and bring to market new therapies for patients with age-related diseases, including
neurodegeneration and cancer. Under the terms of the agreement, AbbVie and Calico will each contributean additional $500 million to the collaboration and the term is extended for an additional three years.
Calico will be responsible for research and early development until 2022 and will advance collaboration
projects through Phase 2a through 2027. Following completion of Phase 2a, AbbVie will have the option to
exclusively license collaboration compounds. AbbVie will support Calico in its early research anddevelopment efforts and, upon exercise, would be responsible for late-stage development and commercial
activities. Collaboration costs and profits will be shared equally by both parties post option exercise. During
2018, AbbVie recorded $500 million in other operating expense (income) in the consolidated statement of
earnings related to its commitments under the agreement.
Alector, Inc.
In October 2017, AbbVie entered into a global strategic collaboration with Alector, Inc. (Alector) todevelop and commercialize medicines to treat Alzheimer’s disease and other neurodegenerative disorders.
AbbVie and Alector have agreed to research a portfolio of antibody targets, and AbbVie has an option to
global development and commercial rights to two targets. The terms of the arrangement included an initial
upfront payment of $205 million, which was expensed to IPR&D in the fourth quarter of 2017. Alector willconduct exploratory research, drug discovery and development for lead programs up to the conclusion of
the proof of concept studies. If the option is exercised, AbbVie will lead development andcommercialization activities and could make additional payments to Alector of up to $986 million uponachievement of certain development and regulatory milestones. Alector and AbbVie will co-funddevelopment and commercialization and will share global profits equally.
Other Arrangements
In addition to the significant arrangements described above, AbbVie entered into several otherarrangements resulting in charges to IPR&D of $385 million in 2019, $424 million in 2018 and $122 million
in 2017. In connection with the other individually insignificant early-stage arrangements entered into in
2019, AbbVie could make additional payments of up to $5.8 billion upon the achievement of certain
development, regulatory and commercial milestones.

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Note
6 Collaboration with Janssen Biotech, Inc.
.....................................................................................................................................................................................................................................................................................................................................................
In December 2011, Pharmacyclics, a wholly-owned subsidiary of AbbVie, entered into a worldwide
collaboration and license agreement with Janssen Biotech, Inc. and its affiliates (Janssen), one of theJanssen Pharmaceutical companies of Johnson & Johnson, for the joint development and commercializationof IMBRUVICA, a novel, orally active, selective covalent inhibitor of Bruton’s tyrosine kinase (BTK) andcertain compounds structurally related to IMBRUVICA, for oncology and other indications, excluding all
immune and inflammatory mediated diseases or conditions and all psychiatric or psychological diseases orconditions, in the United States and outside the United States.
The collaboration provides Janssen with an exclusive license to commercialize IMBRUVICA outside of
the United States and co-exclusively with AbbVie in the United States. Both parties are responsible for thedevelopment, manufacturing and marketing of any products generated as a result of the collaboration. The
collaboration has no set duration or specific expiration date and provides for potential future development,
regulatory and approval milestone payments of up to $200 million to AbbVie. The collaboration also
includes a cost sharing arrangement for associated collaboration activities. Except in certain cases, Janssen
is responsible for approximately 60% of collaboration development costs and AbbVie is responsible for theremaining 40% of collaboration development costs.
In the United States, both parties have co-exclusive rights to commercialize the products; however,
AbbVie is the principal in the end-customer product sales. AbbVie and Janssen share pre-tax profits andlosses equally from the commercialization of products. Sales of IMBRUVICA are included in AbbVie’s net
revenues. Janssen’s share of profits is included in AbbVie’s cost of products sold. Other costs incurred under
the collaboration are reported in their respective expense line items, net of Janssen’s share.
Outside the United States, Janssen is responsible for and has exclusive rights to commercialize
IMBRUVICA. AbbVie and Janssen share pre-tax profits and losses equally from the commercialization of
products. AbbVie’s share of profits is included in AbbVie’s net revenues. Other costs incurred under thecollaboration are reported in their respective expense line items, net of Janssen’s share.
The following table shows the profit and cost sharing relationship between Janssen and AbbVie:
years ended December 31 (in millions)

United States—Janssen’s share of profits (included in cost of products sold)International—AbbVie’s share of profits (included in net revenues)
Global—AbbVie’s share of other costs (included in respective line items)

2019

2018

2017

$1,803844
321$1,372622
326$1,001
429
288

AbbVie’s receivable from Janssen, included in accounts receivable, net, was $235 million at
December 31, 2019 and $177 million at December 31, 2018. AbbVie’s payable to Janssen, included inaccounts payable and accrued liabilities, was $455 million at December 31, 2019 and $376 million at
December 31, 2018.

68 13NOV201221352027

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Note
7 Goodwill and Intangible Assets.....................................................................................................................................................................................................................................................................................................................................................
Goodwill
The following table summarizes the changes in the carrying amount of goodwill:(in millions)

Balance as of December 31, 2017
Foreign currency translation$15,785(122)

Balance as of December 31, 2018
Foreign currency translation

15,663(59)

Balance as of December 31, 2019$15,604

The company performs its annual goodwill impairment assessment in the third quarter, or earlier if
impairment indicators exist. As of December 31, 2019, there were no accumulated goodwill impairment
losses.
Intangible Assets, Net
The following table summarizes intangible assets:
2019

2018

as of December 31 (in millions)Grosscarrying
amountDefinite-lived intangible assets
Developed product rights
License agreements$19,547
7,798$(6,405) $13,142 $15,872(2,291)
5,507
7,865

$(5,614) $10,258(1,810)6,055

Total definite-lived intangible assets
Indefinite-lived research and development

27,345—(8,696)—(7,424)—

Total intangible assets, net$27,345$(8,696) $18,649 $28,657

Accumulated
amortization

Net
carrying
amount18,649—Grosscarrying
amountAccumulated
amortization

23,737
4,920

Net
carrying
amount16,313
4,920$(7,424) $21,233

Indefinite-Lived Intangible Assets
Indefinite-lived intangible assets represent acquired IPR&D associated with products that have not yet
received regulatory approval. The company performs its annual impairment assessment of indefinite-lived
intangible assets in the third quarter, or earlier if impairment indicators exist.
In April 2019, the U.S. Food and Drug Administration (FDA) and the European Commission approved
SKYRIZI (risankizumab) for the treatment of moderate to severe plaque psoriasis. As a result, AbbVie
reclassified $3.9 billion of indefinite-lived intangible assets related to SKYRIZI to developed product rights
definite-lived intangible assets. This amount will be amortized over its estimated useful life using theestimated pattern of economic benefit.
During the fourth quarter of 2018, the company made a decision to stop enrollment for the TAHOE
trial, a Phase 3 study evaluating rovalpituzumab tesirine (Rova-T) as a second-line therapy for advanced
small-cell lung cancer following a recommendation from an Independent Data Monitoring Committee. Thisdecision lowered the probabilities of success of achieving regulatory approval across Rova-T and other earlystage assets and represented a triggering event which required the company to evaluate for impairment the
IPR&D assets associated with the Stemcentrx acquisition. The company utilized multi-period excess earnings
models of the ‘‘income approach’’ and determined that the fair value was $1.0 billion as of December 31,
2018, which was lower than the carrying value of $6.1 billion and resulted in an impairment charge of69

2019 Form 10-K

13NOV201221352027 69

$5.1 billion. This impairment charge was recorded to R&D expense in the consolidated statement of
earnings for the year ended December 31, 2018. In the third quarter of 2019, following the announcementof the decision to terminate the Rova-T research and development program, the company recorded an
impairment charge of $1.0 billion which represented the remaining value of the IPR&D acquired as part ofthe 2016 Stemcentrx acquisition. This impairment charge was recorded to R&D expense in the consolidated
statement of earnings for the year ended December 31, 2019.
No indefinite-lived intangible asset impairment charges were recorded in 2017.
Definite-Lived Intangible Assets
Definite-lived intangible assets are amortized over their estimated useful lives, which range between 2
to 16 years with an average of 11 years for both developed product rights and license agreements.
Amortization expense was $1.6 billion in 2019, $1.3 billion in 2018 and $1.1 billion in 2017 and wasincluded in cost of products sold in the consolidated statements of earnings. The anticipated annual
amortization expense for definite-lived intangible assets recorded as of December 31, 2019 is as follows:(in billions)

2020

2021

2022

2023

2024

Anticipated annual amortization expense

$1.8

$2.0

$2.3

$2.4

$2.5

No definite-lived intangible asset impairment charges were recorded in 2019 or 2018. In 2017, an
impairment charge of $354 million was recorded related to ZINBRYTA that reduced both the gross carrying
amount and net carrying amount of the underlying intangible assets due to lower expected future cash
flows for the product. The impairment charge was based on discounted cash flow analyses and wasincluded in cost of products sold in the consolidated statements of earnings.

Note
8 Restructuring Plans.....................................................................................................................................................................................................................................................................................................................................................
AbbVie continuously evaluates its operations to identify opportunities to optimize its manufacturing
and R&D operations, commercial infrastructure and administrative costs and to respond to changes in its
business environment. As a result, AbbVie management periodically approves individual restructuring plansto achieve these objectives. In 2019, 2018 and 2017, no such plans were individually significant.
Restructuring charges recorded were $234 million in 2019, $70 million in 2018 and $86 million in 2017 andwere primarily related to employee severance and contractual obligations. These charges were recorded incost of products sold, R&D expense and SG&A expenses in the consolidated statements of earnings basedon the classification of the affected employees or operations.
The following table summarizes the cash activity in the restructuring reserve for 2019, 2018 and 2017:(in millions)

Accrued balance as of December 31, 20162017 restructuring charges
Payments and other adjustments

$ 87
86
(87)

Accrued balance as of December 31, 20172018 restructuring charges
Payments and other adjustments

86
59
(46)

Accrued balance as of December 31, 20182019 restructuring charges
Payments and other adjustments

99
219
(178)

Accrued balance as of December 31, 2019

$ 140

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70

Note
9 Leases.....................................................................................................................................................................................................................................................................................................................................................
AbbVie’s lease portfolio primarily consists of real estate properties, vehicles and equipment. The
following table summarizes the amounts and location of operating and finance leases on the consolidatedbalance sheet:(in millions)

December 31,
2019

Balance sheet caption

AssetsOperating
Finance

Other assets
Property and equipment, net

$344
23

Total lease assets
Liabilities
OperatingCurrent
Noncurrent
Finance
Current
Noncurrent$367

Accounts payable and accrued liabilities
Other long-term liabilities

$109
251

Current portion of long-term debt and finance lease obligations
Long-term debt and finance lease obligations

7
20

Total lease liabilities$387

The following table summarizes the lease costs recognized in the consolidated statement of earnings:
year ended December 31 (in millions)

2019

Operating lease cost
Short-term lease cost
Variable lease cost

$124
34
62

Total lease cost

$220

Sublease income and finance lease costs were insignificant in 2019. Lease expense prior to theadoption of ASU No. 2016-02 was $161 million in 2018 and $169 million in 2017.
The following table presents the weighted-average remaining lease term and weighted-average
discount rate for operating and finance leases:
December 31,
2019

Weighted-average remaining lease term (years)
Operating
Finance
Weighted-average discount rate
Operating
Finance

5
3
3.9%
3.9%

The following table presents supplementary cash flow information regarding the company’s leases:year ended December 31 (in millions)

2019

Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases
Right-of-use assets obtained in exchange for new operating lease liabilities

$125
26

71

2019 Form 10-K

13NOV201221352027 71

Finance lease cash flows were insignificant in 2019.
The following table summarizes the future maturities of AbbVie’s operating and finance lease liabilities
as of December 31, 2019:(in millions)OperatingleasesFinanceleasesTotal(a)(b)

2020
2021
2022
2023
2024
Thereafter

$119
104
59
38
22
58

$10
9
8
1
—
—

$129
113
67
39
22
58

Total lease payments
Less: Interest

400
40

28
1

428
41

Present value of lease liabilities

$360

$27

$387

(a) Total lease payments exclude approximately $350 million of contractual minimum lease payments forleases executed but not yet commenced. These leases will commence in 2020 with lease terms ofapproximately 11 years.
(b) Lease payments recognized as part of lease liabilities for optional renewal periods are insignificant.
Future minimum lease payments for non-cancelable operating leases and capital leases as ofDecember 31, 2018 prior to the adoption of ASU No. 2016-02 did not differ materially from future lease
payments, inclusive of payments for leases executed but not yet commenced, under the new standard.

72 13NOV201221352027

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72

Note
10 Debt, Credit Facilities and Commitments and Contingencies.....................................................................................................................................................................................................................................................................................................................................................
The following table summarizes long-term debt:

as of December 31 (dollars in millions)

Senior notes issued in 2012
2.90% notes due 2022
4.40% notes due 2042
Senior notes issued in 2015
2.50% notes due 2020
3.20% notes due 2022
3.60% notes due 2025
4.50% notes due 2035
4.70% notes due 2045
Senior notes issued in 2016
2.30% notes due 2021
2.85% notes due 2023
3.20% notes due 2026
4.30% notes due 2036
4.45% notes due 2046
Senior Euro notes issued in 2016
0.375% notes due 2019 (e1,400 principal)
1.375% notes due 2024 (e1,450 principal)
2.125% notes due 2028 (e750 principal)
Senior notes issued in 20183.375% notes due 2021
3.75% notes due 2023
4.25% notes due 2028
4.875% notes due 2048
Senior Euro notes issued in 2019
0.75% notes due 2027 (e750 principal)
1.25% notes due 2031 (e650 principal)
Senior notes issued in 2019
Floating rate notes due May 2021
Floating rate notes due November 2021
Floating rate notes due 2022
2.15% notes due 2021
2.30% notes due 2022
2.60% notes due 2024
2.95% notes due 2026
3.20% notes due 2029
4.05% notes due 2039
4.25% notes due 2049
Other
Fair value hedges
Unamortized bond discounts
Unamortized deferred financing costs
Total long-term debt and finance lease obligations
Current portion
Noncurrent portion

Effective
interest rate
in 2019(a)2019

Effective
interest rate
in 2018(a)

2018

2.97%
4.46%

$ 3,100
2,600

2.97%
4.46%

$ 3,100
2,600

2.65%
3.28%
3.66%
4.58%
4.73%

3,750
1,000
3,750
2,500
2,700

2.65%
3.28%
3.66%
4.58%
4.73%

3,750
1,000
3,750
2,500
2,700

2.40%
2.91%
3.28%
4.37%
4.50%

1,800
1,000
2,000
1,000
2,000

2.40%
2.91%
3.28%
4.37%
4.50%

1,800
1,000
2,000
1,000
2,000

0.55%
1.46%
2.18%

—
1,625
840

0.55%
1.46%
2.18%

1,604
1,661
859

3.51%
3.84%
4.38%
4.94%

1,250
1,250
1,750
1,750

3.51%
3.84%
4.38%
4.94%

1,250
1,250
1,750
1,750

0.86%
1.30%

840
728

—
—

—
—

2.08%
2.12%
2.29%
2.23%
2.42%
2.69%
3.02%
3.25%
4.11%
4.29%

750
750
750
1,750
3,000
3,750
4,000
5,500
4,000
5,750
27
(48)
(161)
(323)
66,728
3,753$62,975

—
—
—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—
—
—
36
(466)
(120)
(163)
36,611
1,609$35,002(a) Excludes the effect of any related interest rate swaps.

732019 Form 10-K

13NOV201221352027 73

Allergan-Related Financing
In connection with the proposed acquisition of Allergan, in November 2019, the company issued$30.0 billion aggregate principal amount of unsecured senior notes, consisting of $750 million aggregate
principal amount of floating rate senior notes due May 2021, $750 million aggregate principal amount offloating rate senior notes due November 2021, $750 million aggregate principal amount of floating ratesenior notes due 2022, $1.75 billion aggregate principal amount of 2.15% senior notes due 2021,$3.0 billion aggregate principal amount of 2.30% senior notes due 2022, $3.75 billion aggregate principal
amount of 2.60% senior notes due 2024, $4.0 billion aggregate principal amount of 2.95% senior notes due
2026, $5.5 billion aggregate principal amount of 3.20% senior notes due 2029, $4.0 billion aggregate
principal amount of 4.05% senior notes due 2039 and $5.75 billion aggregate principal amount of 4.25%
senior notes due 2049. These senior notes rank equally with all other unsecured and unsubordinatedindebtedness of the company. AbbVie may redeem the fixed-rate senior notes prior to maturity at aredemption price equal to the greater of the principal amount or the sum of present values of theremaining scheduled payments of principal and interest on the fixed-rate senior notes to be redeemed plus
a make-whole premium. With exception of the fixed-rate notes due 2021 and 2022, AbbVie may also
redeem the fixed-rate senior notes at par between one and six months prior to maturity. In connection
with the offering, debt issuance costs incurred totaled $173 million and debt discounts totaled $52 million,
which are being amortized over the respective terms of the notes to interest expense, net in the
consolidated statements of earnings. AbbVie expects to use the net proceeds to fund a portion of theaggregate cash consideration due to Allergan shareholders in connection with the proposed acquisition
described in Note 5 and to pay related fees and expenses. Pending the consummation of the proposed
Allergan acquisition, the net proceeds from the offering are permitted to be invested temporarily inshort-term investments. All of the notes are subject to special mandatory redemption at a redemption priceequal to 101% of the aggregate principal amount of the notes plus accrued and unpaid interest if the
proposed acquisition of Allergan is not completed by January 30, 2021 or the company notifies the trustee
in respect of the notes that it will not pursue the consummation of the proposed Allergan acquisition.
On June 25, 2019, AbbVie entered into a $38.0 billion 364-day bridge credit agreement. On July 12,
2019, AbbVie entered into a term loan credit agreement with an aggregate principal amount of $6.0 billion
consisting of a $1.5 billion 364-day term loan tranche, a $2.5 billion three-year term loan tranche and a$2.0 billion five-year term loan tranche. In connection with the agreements, debt issuance costs incurred
totaled $242 million and were recorded to interest expense, net in the consolidated statements of earnings.
Upon commencement of the $6.0 billion term loan credit agreement and upon issuance of the $30.0 billion
aggregate principal amount of senior notes, commitments under the bridge credit agreement were reduced
to $2.0 billion. No amounts were drawn under the bridge credit agreement or term loan credit agreementat December 31, 2019. In February 2020, the remaining commitments under the bridge credit agreement
were reduced to $0 as a result of cash on hand at AbbVie. AbbVie subsequently terminated the bridge
credit agreement in its entirety as permitted under its terms.
On October 25, 2019, AbbVie commenced offers to exchange any and all outstanding notes of certain
series issued by Allergan for up to $15.5 billion aggregate principal amount and e3.7 billion aggregate
principal amount of new notes to be issued by AbbVie and cash, subject to conditions including the closingof the pending acquisition of Allergan. Concurrently with the offers to exchange the Allergan notes for
AbbVie notes, the company solicited consents to adopt certain proposed amendments to each of theindentures governing the Allergan notes to, among other things, eliminate substantially all of the restrictive
covenants in such indentures. In November 2019, the company announced that the requisite number ofconsents had been received to adopt the proposed amendments with respect to all Allergan notes and that
Allergan executed a supplemental indenture with respect to each Allergan indenture implementing theamendments, which will become operative only upon settlement of the exchange offers. The expiration of
the exchange offers is expected to occur on or about the closing date of AbbVie’s acquisition of Allergan.

74 13NOV201221352027

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74

Other Long-Term Debt
In September 2019, the company issued e1.4 billion aggregate principal amount of unsecured senior
Euro notes, consisting of e750 million aggregate principal amount of 0.75% senior notes due 2027 ande650 million aggregate principal amount of 1.25% senior notes due 2031. These senior notes rank equallywith all other unsecured and unsubordinated indebtedness of the company. AbbVie may redeem the seniornotes prior to maturity at a redemption price equal to the principal amount of the senior notes redeemed
plus a make-whole premium and may redeem the senior notes at par between one and three months prior
to maturity. In connection with the offering, debt issuance costs incurred totaled $9 million and debt
discounts totaled $5 million and are being amortized over the respective terms of the notes to interest
expense, net in the consolidated statements of earnings. In October 2019, the company used the proceeds
to redeem e1.4 billion aggregate principal amount of 0.375% senior Euro notes that were due to mature in
November 2019.
In September 2018, the company issued $6.0 billion aggregate principal amount of unsecured seniornotes, consisting of $1.25 billion aggregate principal amount of 3.375% senior notes due 2021, $1.25 billion
aggregate principal amount of 3.75% senior notes due 2023, $1.75 billion aggregate principal amount of
4.25% senior notes due 2028 and $1.75 billion aggregate principal amount of 4.875% senior notes due
2048. These senior notes rank equally with all other unsecured and unsubordinated indebtedness of thecompany. AbbVie may redeem the senior notes prior to maturity at a redemption price equal to theprincipal amount of the senior notes redeemed plus a make-whole premium, and except for the 3.375%
notes due 2021, AbbVie may redeem the senior notes at par between one and six months prior tomaturity. In connection with the offering, debt issuance costs incurred totaled $37 million and debt
discounts totaled $37 million and are being amortized over the respective terms of the senior notes tointerest expense, net in the consolidated statements of earnings. Of the $5.9 billion net proceeds,$2.0 billion was used to repay the company’s outstanding three-year term loan credit agreement in
September 2018 and $1.0 billion was used to repay the aggregate principal amount of 2.00% senior notes
at maturity in November 2018. The company used the remaining proceeds to repay term loan obligations in2019 as they became due.
In May 2018, the company also repaid $3.0 billion aggregate principal amount of 1.80% senior notes atmaturity.
AbbVie has outstanding e2.2 billion aggregate principal amount of unsecured senior Euro notes whichwere issued in 2016. AbbVie may redeem the senior notes prior to maturity at a redemption price equal tothe principal amount of the senior notes redeemed plus a make-whole premium and AbbVie may redeem
the senior notes at par between one and three months prior to maturity.
AbbVie has outstanding $7.8 billion aggregate principal amount of unsecured senior notes which were
issued in 2016 and $13.7 billion aggregate principal amount of unsecured senior notes which were issued in2015. AbbVie may redeem the senior notes, at any time, prior to maturity at a redemption price equal tothe principal amount of the senior notes redeemed plus a make-whole premium and AbbVie may redeem
the senior notes at par between one and six months prior to maturity.
AbbVie has outstanding $5.7 billion aggregate principal amount of unsecured senior notes which were
issued in 2012. AbbVie may redeem all of the senior notes of each series, at any time, or some of thesenior notes of each series, from time to time, at a redemption price equal to the principal amount of thesenior notes redeemed plus a make-whole premium.
At December 31, 2019, the company was in compliance with its senior note covenants and term loan
covenants.

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13NOV201221352027 75

Short-Term Borrowings
Short-term borrowings included commercial paper borrowings of $699 million as of December 31,
2018. There were no commercial paper borrowings as of December 31, 2019. The weighted-averageinterest rate on commercial paper borrowings was 2.5% in 2019, 2.0% in 2018 and 1.3% in 2017.
In August 2019, AbbVie entered into an amended and restated $4.0 billion five-year revolving credit
facility that matures in August 2024. This amended facility enables the company to borrow funds on an
unsecured basis at variable interest rates and contains various covenants, all of which the company was incompliance with as of December 31, 2019. Commitment fees under AbbVie’s revolving credit facilities were
insignificant in 2019, 2018 and 2017. No amounts were outstanding under the company’s credit facilities asof December 31, 2019 and December 31, 2018.
In March 2019, AbbVie repaid a $3.0 billion 364-day term loan credit agreement that was drawn on inJune 2018 and was scheduled to mature in June 2019.
Maturities of Long-Term Debt
The following table summarizes AbbVie’s debt maturities as of December 31, 2019:as of and for the years ending December 31 (in millions)

2020
2021
2022
2023
2024
Thereafter$ 3,750
6,300
7,850
2,250
5,375
41,708

Total obligations and commitments
Fair value hedges, unamortized bond discounts, deferred financing costs and finance leaseobligations

67,233

Total long-term debt and finance lease obligations$66,728(505)

Contingencies and Guarantees
In connection with the separation, AbbVie has indemnified Abbott for all liabilities resulting from theoperation of AbbVie’s business other than income tax liabilities with respect to periods prior to the
distribution date and other liabilities as agreed to by AbbVie and Abbott. AbbVie has no material exposures
to off-balance sheet arrangements and no special-purpose entities. In the ordinary course of business,
AbbVie has periodically entered into third-party agreements, such as the assignment of product rights,
which have resulted in AbbVie becoming secondarily liable for obligations for which AbbVie had previously
been primarily liable. Based upon past experience, the likelihood of payments under these agreements isremote.

Note
11 Financial Instruments and Fair Value Measures.....................................................................................................................................................................................................................................................................................................................................................
Risk Management Policy
The company is exposed to foreign currency exchange rate and interest rate risks related to its
business operations. AbbVie’s hedging policy attempts to manage these risks to an acceptable level basedon the company’s judgment of the appropriate trade-off between risk, opportunity and costs. The company
uses derivative and nonderivative instruments to reduce its exposure to foreign currency exchange rates.
AbbVie also periodically enters into interest rate swaps in which the company agrees to exchange, at
specified intervals, the difference between fixed and floating interest amounts calculated by reference to an

76 13NOV201221352027

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76

agreed-upon notional amount. Derivative instruments are not used for trading purposes or to manage
exposure to changes in interest rates for investment securities, and none of the company’s outstanding
derivative instruments contain credit risk related contingent features; collateral is generally not required.
Financial Instruments
Various AbbVie foreign subsidiaries enter into foreign currency forward exchange contracts to manage
exposures to changes in foreign exchange rates for anticipated intercompany transactions denominated in acurrency other than the functional currency of the local entity. These contracts, with notional amounts
totaling $957 million at December 31, 2019 and $1.4 billion at December 31, 2018, are designated as cash
flow hedges and are recorded at fair value. The durations of these forward exchange contracts weregenerally less than eighteen months. Accumulated gains and losses as of December 31, 2019 will bereclassified from AOCI and included in cost of products sold at the time the products are sold, generally notexceeding six months from the date of settlement.
In the third quarter of 2019, the company entered into treasury rate lock agreements with notionalamounts totaling $10.0 billion to hedge exposure to variability in future cash flows resulting from changes
in interest rates related to the issuance of long-term debt in connection with the proposed acquisition ofAllergan. The treasury rate lock agreements were designated as cash flow hedges and recorded at fairvalue. The agreements were net settled upon issuance of the senior notes in November 2019 resulting in again of $383 million recognized in other comprehensive income (loss). This gain will be reclassified tointerest expense, net over the lives of the related debt.
In the fourth quarter of 2019, the company entered into interest rate swap contracts with notionalamounts totaling $2.3 billion at December 31, 2019. The effect of the hedge contracts is to change afloating-rate interest obligation to a fixed rate for that portion of the floating-rate debt. The contracts were
designated as cash flow hedges and are recorded at fair value. Realized and unrealized gains or losses areincluded in AOCI and will be reclassified to interest expense, net over the lives of the floating-rate debt.
The company also enters into foreign currency forward exchange contracts to manage its exposure toforeign currency denominated trade payables and receivables and intercompany loans. These contracts are
not designated as hedges and are recorded at fair value. Resulting gains or losses are reflected in net
foreign exchange loss in the consolidated statements of earnings and are generally offset by losses or gains
on the foreign currency exposure being managed. These contracts had notional amounts totaling$7.1 billion at December 31, 2019 and $8.6 billion at December 31, 2018.
The company also uses foreign currency forward exchange contracts or foreign currency denominateddebt to hedge its net investments in certain foreign subsidiaries and affiliates. The company had e3.6 billion
aggregate principal amount of senior Euro notes designated as net investment hedges at December 31,
2019 and December 31, 2018. In the third quarter of 2019, the company issued e1.4 billion aggregate
principal amount of senior Euro notes and designated the principal amounts of this foreign denominateddebt as net investment hedges. Concurrently, the company elected to de-designate hedge accounting fore1.4 billion aggregate principal amount of existing senior Euro notes which were subsequently repaid in
October 2019. In addition, in 2019, the company entered into foreign currency forward exchange contracts
and designated the instruments as net investment hedges. These contracts had notional amounts totaling
e971 million, £204 million and CHF62 million at December 31, 2019. The company uses the spot method ofassessing hedge effectiveness for derivative instruments designated as net investment hedges. Realized andunrealized gains and losses from these hedges are included in AOCI and the initial fair value of hedge
components excluded from the assessment of effectiveness is recognized in interest expense, net over thelife of the hedging instrument.
AbbVie is a party to interest rate swap contracts designated as fair value hedges with notionalamounts totaling $10.8 billion at December 31, 2019 and December 31, 2018. The effect of the hedge
contracts is to change a fixed-rate interest obligation to a floating rate for that portion of the debt. AbbVie

772019 Form 10-K

13NOV201221352027 77

records the contracts at fair value and adjusts the carrying amount of the fixed-rate debt by an offsetting
amount.
No amounts are excluded from the assessment of effectiveness for cash flow hedges or fair value
hedges.
The following table summarizes the amounts and location of AbbVie’s derivative instruments on the
consolidated balance sheets:

as of December 31 (in millions)

Fair value—Derivatives in asset position
Balance sheet caption
2019 2018

Foreign currency forward exchange contracts
Designated as cash flow hedges
Prepaid expenses and other $ 3$113

Designated as net investment hedges

Designated as fair value hedges

Accounts payable andaccrued liabilities $ 14 $ —Accounts payable andaccrued liabilities
24—
Accounts payable andaccrued liabilities
18
26

Prepaid expenses and other——Prepaid expenses and other

19

19

Other assets

3

Prepaid expenses and other
Other assets—
28— Other long-term liabilities
Accounts payable and—accrued liabilities— Other long-term liabilities

Not designated as hedges
Interest rate swap contracts
Designated as cash flow hedges
Designated as fair value hedges

Fair value—Derivatives in liability
position
Balance sheet caption 2019 2018

Total derivatives

$53

$132

—

—

2
74

—
466

$132 $492

While certain derivatives are subject to netting arrangements with the company’s counterparties, thecompany does not offset derivative assets and liabilities within the consolidated balance sheets.
The following table presents the pre-tax amounts of gains (losses) from derivative instruments
recognized in other comprehensive income (loss):years ended in December 31 (in millions)

2019

2018

Foreign currency forward exchange contracts
Designated as cash flow hedges
Designated as net investment hedges
Interest rate swap contracts designated as cash flow hedges
Treasury rate lock agreements designated as cash flow hedges$ (5) $175
33
—
4
—
383
—

2017

$(250)———

Assuming market rates remain constant through contract maturities, the company expects to transfer
pre-tax losses of $10 million into cost of products sold for foreign currency cash flow hedges, pre-tax gainsof $7 million into interest expense, net for interest rate swap cash flow hedges and pre-tax gains of$24 million into interest expense, net for treasury rate lock agreement cash flow hedges during the next
12 months.
Related to AbbVie’s non-derivative, foreign currency denominated debt designated as net investment
hedges, the company recognized in other comprehensive income (loss) pre-tax gains of $90 million in 2019,pre-tax gains of $178 million in 2018 and pre-tax losses of $537 million in 2017.

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The following table summarizes the pre-tax amounts and location of derivative instrument net gains(losses) recognized in the consolidated statements of earnings, including the net gains (losses) reclassified
out of AOCI into net earnings. See Note 13 for the amount of net gains (losses) reclassified out of AOCI.
years ended December 31 (in millions)

Statement of earnings caption

Foreign currency forward exchange contracts
Designated as cash flow hedges
Designated as net investment hedges
Not designated as hedges
Treasury rate lock agreements designated as cash flow
hedgesInterest rate swap contracts
Designated as cash flow hedges
Designated as fair value hedges
Debt designated as hedged item in fair value hedges

2019

2018

2017

Cost of products sold $ 167 $(161) $118
Interest expense, net
27——
Net foreign exchange loss
(70)
83
(96)
Interest expense, net

3

—

—

Interest expense, net
Interest expense, net
Interest expense, net

1
418
(418)

—
(71)
71

—
(63)
63

Fair Value Measures
The fair value hierarchy consists of the following three levels:• Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets that thecompany has the ability to access;• Level 2—Valuations based on quoted prices for similar instruments in active markets, quoted prices
for identical or similar instruments in markets that are not active and model-based valuations inwhich all significant inputs are observable in the market; and• Level 3—Valuations using significant inputs that are unobservable in the market and include the useof judgment by the company’s management about the assumptions market participants would use inpricing the asset or liability.
The following table summarizes the bases used to measure certain assets and liabilities carried at fairvalue on a recurring basis on the consolidated balance sheet as of December 31, 2019:(in millions)

Total

Basis of fair value measurement
Significant
Quoted prices inotherSignificant
active markets for observableunobservable
identical assets
inputs
Inputs(Level 1)(Level 2)(Level 3)

AssetsCash and equivalents
Debt securities
Equity securities
Interest rate swap contracts
Foreign currency contracts$39,9243
24
31
22$1,542—
24——$38,382
3
—
31
22

$

—
—
—
—
—

Total assets$40,004$1,566$38,438

$

—

$

76
56
7,340

$

—
—
—

$

76
56
—

$

$ 7,472

$

—

$

132

$7,340Liabilities
Interest rate swap contracts
Foreign currency contracts
Contingent consideration
Total liabilities

792019 Form 10-K

—
—
7,340

13NOV201221352027 79

The following table summarizes the bases used to measure certain assets and liabilities carried at fairvalue on a recurring basis on the consolidated balance sheet as of December 31, 2018:(in millions)

Total

Basis of fair value measurement
Significant
Quoted prices inotherSignificant
active markets for observableunobservable
identical assets
inputs
Inputs(Level 1)(Level 2)(Level 3)

AssetsCash and equivalents
Time deposits
Debt securities
Equity securities
Foreign currency contracts$7,289
568
1,536
4
132

$1,209——4—$6,080
568
1,536
—
132

$

—
—
—
—
—

Total assets$9,529$1,213$8,316$—

Liabilities
Interest rate swap contracts
Foreign currency contracts
Contingent consideration

$ 466
26
4,483

$

—
—
—

$ 466
26
—

$

Total liabilities$4,975

$

—

$ 492

$4,483——
4,483

The fair values of time deposits approximate their amortized cost due to the short maturities of these
instruments. The fair values of available-for-sale debt securities were determined based on prices obtained
from commercial pricing services. The derivatives entered into by the company were valued using
observable market inputs including published interest rate curves and both forward and spot prices forforeign currencies. The fair value measurements of the contingent consideration liabilities were determinedbased on significant unobservable inputs, including the discount rate, estimated probabilities and timing ofachieving specified development, regulatory and commercial milestones and the estimated amount of
future sales of the acquired products. The potential contingent consideration payments are estimated byapplying a probability-weighted expected payment model for contingent milestone payments and a Monte
Carlo simulation model for contingent royalty payments, which are then discounted to present value.
Changes to the fair value of the contingent consideration liabilities can result from changes to one or anumber of inputs, including discount rates, the probabilities of achieving the milestones, the time required
to achieve the milestones and estimated future sales. Significant judgment is employed in determining theappropriateness of certain of these inputs. Changes to the inputs described above could have a material
impact on the company’s financial position and results of operations in any given period. At December 31,
2019, a 50 basis point increase/decrease in the assumed discount rate would have decreased/increased thevalue of the contingent consideration liabilities by approximately $280 million. Additionally, at December 31,
2019, a five percentage point increase/decrease in the assumed probability of success across all potential
indications would have increased/decreased the value of the contingent consideration liabilities byapproximately $150 million.

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There have been no transfers of assets or liabilities between the fair value measurement levels. The
following table presents the changes in fair value of contingent consideration liabilities which are measured
using Level 3 inputs:
years ended December 31 (in millions)

2019

2018

2017

Beginning balance
Change in fair value recognized in net earnings
Payments$4,483 $4,534 $4,213
3,091
49
626
(234)
(100)
(305)

Ending balance$7,340$4,483$4,534The change in fair value recognized in net earnings is recorded in other expense, net in the
consolidated statements of earnings. During the second quarter of 2019, the company recorded a$2.3 billion increase in the SKYRIZI contingent consideration liability due to higher probabilities of success,higher estimated future sales and declining interest rates. The higher probabilities of success resulted fromthe April 2019 regulatory approvals of SKYRIZI for the treatment of moderate to severe plaque psoriasis.
During the third quarter of 2019, the company recorded a $91 million decrease in the Stemcentrx
contingent consideration liability due to the termination of the Rova-T research and development program.
During the fourth quarter of 2018, the company recorded a $428 million decrease in the Stemcentrx
contingent consideration liability due to a reduction in probabilities of success of achieving regulatory
approval.
Certain financial instruments are carried at historical cost or some basis other than fair value. The
book values, approximate fair values and bases used to measure the approximate fair values of certain
financial instruments as of December 31, 2019 are shown in the table below:(in millions)

Liabilities
Current portion of long-term debt andfinance lease obligations, excluding fairvalue hedges
Long-term debt and finance leaseobligations, excluding fair value hedges
Total liabilities

Basis of fair value measurement
Quoted prices
in active
Significant
markets for
other
Significant
identical
observableunobservable
assetsinputs
Inputs(Level 1)(Level 2)(Level 3)

Book value

Approximate
fair values$ 3,755$ 3,760$ 3,753$ 7$—

63,021

66,651

66,631

20—$66,776$70,411$70,384

$27

$—

81

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13NOV201221352027 81

The book values, approximate fair values and bases used to measure the approximate fair values ofcertain financial instruments as of December 31, 2018 are shown in the table below:(in millions)

Liabilities
Short-term borrowings
Current portion of long-term debt andfinance lease obligations, excluding fairvalue hedges
Long-term debt and finance leaseobligations, excluding fair value hedges
Total liabilities

Book value

Approximate
fair values$ 3,699$ 3,693

1,609

Basis of fair value measurement
Quoted prices
in active
Significant
markets for
other
Significant
identical
observableunobservable
assetsinputs
Inputs(Level 1)(Level 2)(Level 3)$—$3,693

$—

1,617

1,609

8

—

35,46834,052

34,024

28—$40,776$39,362$35,633$3,729$—

AbbVie also holds investments in equity securities that do not have readily determinable fair values.
The company records these investments at cost and remeasures them to fair value based on certain
observable price changes or impairment events as they occur. The carrying amount of these investments
was $66 million as of December 31, 2019 and $84 million as of December 31, 2018. No significant
cumulative upward or downward adjustments have been recorded for these investments as ofDecember 31, 2019.
Available-for-sale Securities
Substantially all of the company’s investments in debt securities were classified as available-for-salewith changes in fair value recognized in other comprehensive income. In the third quarter of 2019, thecompany sold substantially all of its investments in debt securities. There were no debt securities classified
as short-term as of December 31, 2019 and $204 million as of December 31, 2018. Long-term debt
securities mature primarily within five years. Estimated fair values of available-for-sale debt securities werebased on prices obtained from commercial pricing services.
The following table summarizes available-for-sale securities by type as of December 31, 2018:(in millions)

Amortized
cost

Gross
unrealized
Gains
LossesFair value

Asset backed securities
Corporate debt securities
Other debt securities

$ 423
1,042
81

$—
1
—

$ (2)
(9)
—

$ 421
1,034
81

Total

$1,546$ 1$(11)$1,536

AbbVie had no other-than-temporary impairments as of December 31, 2019. Net realized gains andlosses were insignificant in 2019 and 2018. Net realized gains were $90 million in 2017.
Concentrations of Risk
The company invests excess cash in time deposits, money market funds and debt securities to diversify
the concentration of cash among different financial institutions. The company has established credit
exposure limits and monitors concentrations of credit risk associated with financial institution deposits.

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Of total net accounts receivable, three U.S. wholesalers accounted for 68% as of December 31, 2019and 63% as of December 31, 2018, and substantially all of AbbVie’s net revenues in the United States wereto these three wholesalers.
HUMIRA (adalimumab) is AbbVie’s single largest product and accounted for approximately 58% of
AbbVie’s total net revenues in 2019, 61% in 2018 and 65% in 2017.

Note
12 Post-Employment Benefits.....................................................................................................................................................................................................................................................................................................................................................
AbbVie sponsors various pension and other post-employment benefit plans, including defined benefit,
defined contribution and termination indemnity plans, which cover most employees worldwide. In addition,
AbbVie provides medical benefits, primarily to eligible retirees in the United States and Puerto Rico,through other post-retirement benefit plans. Net obligations for these plans have been reflected on the
consolidated balance sheets as of December 31, 2019 and 2018.
The following table summarizes benefit plan information for the global AbbVie-sponsored defined
benefit and other post-employment plans:
Other
post-employment
plans
2019
2018

Definedbenefit plans
2019
2018

as of and for the years ended December 31 (in millions)

Projected benefit obligations
Beginning of period
Service cost
Interest cost
Employee contributions
Actuarial (gain) loss
Benefits paid
Other, primarily foreign currency translation adjustments$ 6,618 $ 6,985 $
269
285
259
227
2
2
1,703
(614)
(206)
(191)
1
(76)

561
25
29
—
451
(17)
1

$ 813
26
25
—
(287)
(16)
—

End of period

8,646

6,618

1,050

561

Fair value of plan assets
Beginning of period
Actual return on plan assets
Company contributions
Employee contributions
Benefits paid
Other, primarily foreign currency translation adjustments

5,637
946
727
2
(206)
10

5,399
(384)
873
2
(191)
(62)

—
—
17
—
(17)
—

—
—
16
—
(16)
—

End of period

7,116

5,637

—

—

$(1,530) $ (981) $(1,050)$(561)$

395 $ 321 $
—
(8)
(8)
(18)
(1,917) (1,294) (1,032)

$ —
(15)
(546)

Net obligation$(1,530) $ (981) $(1,050)$(561)

Actuarial loss, net
Prior service cost (credit)$ 3,63310$ 2,516
11

$

469
(16)

$ 25
(22)

Accumulated other comprehensive loss

$ 3,643$ 2,527$

453$

Funded status, end of period
Amounts recognized on the consolidated balance sheets
Other assets
Accounts payable and accrued liabilities
Other long-term liabilities

3

Actuarial losses for 2019 in the table above were primarily driven by lower discount rates.

83

2019 Form 10-K

13NOV201221352027 83

The projected benefit obligations (PBO) in the table above included $2.3 billion at December 31, 2019
and $1.9 billion at December 31, 2018, related to international defined benefit plans.
For plans reflected in the table above, the accumulated benefit obligations (ABO) were $7.6 billion at
December 31, 2019 and $6.0 billion at December 31, 2018. For those plans reflected in the table above inwhich the ABO exceeded plan assets at December 31, 2019, the ABO was $5.8 billion, the PBO was$6.7 billion and aggregate plan assets were $4.8 billion.
Amounts Recognized in Other Comprehensive Income (Loss)
The following table summarizes the pre-tax losses (gains) included in other comprehensive income(loss):
years ended December 31 (in millions)

2019

2018

2017

Defined benefit plans
Actuarial loss
Amortization of actuarial loss and prior service cost
Foreign exchange loss (gain) and other$1,231 $ 209 $ 412(109) (140) (107)
(6)
(13)
46

Total loss

$1,116

Other post-employment plans
Actuarial loss (gain)
Amortization of actuarial loss and prior service credit$ 451 $(287) $ 149
(1)
(1)
—

Total loss (gain)

$ 450

$ 56

$ 351

$(288) $ 149

The pre-tax amounts included in AOCI at December 31, 2019 expected to be recognized in net periodic
benefit cost in 2020 consisted of $219 million of expense related to actuarial losses and prior service costs
for defined benefit plans and $25 million of income related to actuarial losses and prior service credits forother post-employment plans.
Net Periodic Benefit Cost
years ended December 31 (in millions)

2019

2018

2017

Defined benefit plans
Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial loss and prior service cost

$ 269 $ 285 $ 236
259
227
204
(474) (439) (382)
109
140
107

Net periodic benefit cost

$ 163

$ 213

$ 165

Other post-employment plans
Service cost
Interest cost
Amortization of actuarial loss and prior service credit

$ 25
29
1

$ 26
25
1

$ 26
24
—

Net periodic benefit cost

$ 55

$ 52

$ 50

The components of net periodic benefit cost other than service cost are included in other expense, net
in the consolidated statements of earnings.

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84

Weighted-Average Assumptions Used in Determining Benefit Obligations at the Measurement Date
as of December 31

Defined benefit plans
Discount rate
Rate of compensation increases
Other post-employment plans
Discount rate

2019

2018

3.0%
4.6%

4.0%
4.6%

3.6%

4.6%

The assumptions used in calculating the December 31, 2019 measurement date benefit obligations will
be used in the calculation of net periodic benefit cost in 2020.
Weighted-Average Assumptions Used in Determining Net Periodic Benefit Cost
years ended December 31

Defined benefit plans
Discount rate for determining service cost
Discount rate for determining interest cost
Expected long-term rate of return on plan assets
Expected rate of change in compensation
Other post-employment plans
Discount rate for determining service cost
Discount rate for determining interest cost

2019

2018

2017

4.0%
4.0%
7.6%
4.6%

3.4%
3.1%
7.7%
4.4%

3.9%
3.7%
7.8%
4.4%

4.7%
4.3%

4.0%
3.7%

4.9%
4.1%

For the December 31, 2019 post-retirement health care obligations remeasurement, the company
assumed a 6.4% pre-65 (7.0% post-65) annual rate of increase in the per capita cost of covered health carebenefits. The rate was assumed to decrease gradually to 4.5% in 2050 and remain at that level thereafter.
For purposes of measuring the 2019 post-retirement health care costs, the company assumed a 6.6%
pre-65 (7.3% post-65) annual rate of increase in the per capita cost of covered health care benefits. The
rate was assumed to decrease gradually to 4.5% for 2050 and remain at that level thereafter.
Assumed health care cost trend rates have a significant effect on the amounts reported for health careplans. As of December 31, 2019, a one percentage point change in assumed health care cost trend rates
would have the following effects:

year ended December 31, 2019 (in millions) (brackets denote a reduction)

One percentage
point
Increase Decrease

Service cost and interest cost
Projected benefit obligation

$ 13
244

85

2019 Form 10-K

$ (10)(186)

13NOV201221352027 85

Defined Benefit Pension Plan Assets

as of December 31 (in millions)2019

Equities
U.S. large cap(a)U.S. mid cap(b)International(c)Fixed income securities
U.S. government securities(d)Corporate debt instruments(d)Non-U.S. government securities(d)Other(d)Absolute return funds(e)Real assets
Other(f)Basis of fair value measurement
Significant
Quoted prices inotherSignificant
active markets for observableunobservable
identical assets
inputsinputs(Level 1)(Level 2)(Level 3)

$ 884
138
349

$ 884
138
349

$ —
—
—

$—
—
—

149
372
202
320
296
9
132

21
112
84
318
4
9
132

128
260
118
2
292
—
—

—
—
—
—
—
—
—

Total

$2,851$2,051$800$—

Total assets measured at NAV

4,265

Fair value of plan assets$7,116as of December 31 (in millions)2018

Equities
U.S. large cap(a)U.S. mid cap(b)International(c)Fixed income securities
U.S. government securities(d)Corporate debt instruments(d)Non-U.S. government securities(d)Other(d)Absolute return funds(e)Real assets
Other(f)Basis of fair value measurement
Significant
Quoted prices inotherSignificant
active markets for observableunobservable
identical assets
inputsinputs(Level 1)(Level 2)(Level 3)

$ 719
67
226

$ 719
67
226

$ —
—
—

$—
—
—

140
385
175
232
261
7
147

21
123
48
225
3
7
147

119
262
127
7
258
—
—

—
—
—
—
—
—
—

Total

$2,359$1,586$773$—

Total assets measured at NAV

3,278

Fair value of plan assets$5,637(a) A mix of index funds and actively managed equity accounts that are benchmarked to various large cap
indices.
(b) A mix of index funds and actively managed equity accounts that are benchmarked to various mid cap
indices.

86 13NOV201221352027

2019 Form 10-K86(c) A mix of index funds and actively managed equity accounts that are benchmarked to various non-U.S.
equity indices in both developed and emerging markets.
(d) Securities held by actively managed accounts, index funds and mutual funds.
(e) Primarily funds having global mandates with the flexibility to allocate capital broadly across a wide
range of asset classes and strategies, including but not limited to equities, fixed income, commodities,
financial futures, currencies and other securities, with objectives to outperform agreed uponbenchmarks of specific return and volatility targets.
(f)

Investments in cash and cash equivalents.

Equities and registered investment companies having quoted prices are valued at the published market
prices. Fixed income securities that are valued using significant other observable inputs are quoted at prices
obtained from independent financial service industry-recognized vendors. Investments held in pooled
investment funds, common collective trusts or limited partnerships are valued at the net asset value (NAV)
practical expedient to estimate fair value. The NAV is provided by the fund administrator and is based on
the value of the underlying assets owned by the fund minus its liabilities.
The investment mix of equity securities, fixed income and other asset allocation strategies is based
upon achieving a desired return, balancing higher return, more volatile equity securities and lower return,less volatile fixed income securities. Investment allocations are established for each plan and are generally
made across a range of markets, industry sectors, capitalization sizes and in the case of fixed income
securities, maturities and credit quality. The 2019 target investment allocation for the AbbVie Pension Plan
was 35% in equity securities, 20% in fixed income securities and 45% in asset allocation strategies andother holdings. There are no known significant concentrations of risk in the plan assets of the AbbVie
Pension Plan or of any other plans.
The expected return on plan assets assumption for each plan is based on management’s expectationsof long-term average rates of return to be achieved by the underlying investment portfolio. In establishing
this assumption, management considers historical and expected returns for the asset classes in which theplans are invested, as well as current economic and capital market conditions.
Expected Benefit Payments
The following table summarizes total benefit payments expected to be paid to plan participants
including payments funded from both plan and company assets:
years ending December 31 (in millions)

2020
2021
2022
2023
2024
2025 to 2029

Definedbenefit plans

Other
post-employment
plans

$ 221
235
251
268
286
1,737

$ 18
21
24
26
29
186

Defined Contribution Plan
AbbVie’s principal defined contribution plan is the AbbVie Savings Plan. AbbVie recorded expense of$102 million in 2019, $89 million in 2018 and $82 million in 2017 related to this plan. AbbVie provides
certain other post-employment benefits, primarily salary continuation arrangements, to qualifying
employees and accrues for the related cost over the service lives of the employees.

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13NOV201221352027 87

Note
13 Equity.....................................................................................................................................................................................................................................................................................................................................................
Stock-Based Compensation
AbbVie grants stock-based awards to eligible employees pursuant to the AbbVie 2013 Incentive Stock
Program (2013 ISP), which provides for several different forms of benefits, including nonqualified stock
options, RSUs and various performance-based awards. Under the 2013 ISP, 100 million shares of AbbVie
common stock were reserved for issuance as awards to AbbVie employees. The 2013 ISP also facilitated theassumption of certain awards granted under Abbott’s incentive stock program, which were adjusted andconverted into Abbott and AbbVie stock-based awards as a result of AbbVie’s separation from Abbott.
AbbVie measures compensation expense for stock-based awards based on the grant date fair value ofthe awards and the estimated number of awards that are expected to vest. Forfeitures are estimated basedon historical experience at the time of grant and are revised in subsequent periods if actual forfeituresdiffer from those estimates. Compensation cost for stock-based awards is amortized over the service period,
which could be shorter than the vesting period if an employee is retirement eligible. Retirement eligible
employees generally are those who are age 55 or older and have at least 10 years of service.
Stock-based compensation expense is principally related to awards issued pursuant to the 2013 ISP and
is summarized as follows:(in millions)Years ended
December 31,
2019
2018
2017

Cost of products soldResearch and development
Selling, general and administrative

$ 29
171
230

$ 27
169
225

$ 23
159
183

Pre-tax compensation expense
Tax benefit

430
80

421
73

365
73

After-tax compensation expense

$350

$348

$292

Realized excess tax benefits associated with stock-based compensation totaled $15 million in 2019,$78 million in 2018 and $71 million in 2017.
Stock Options
Stock options awarded to employees typically have a contractual term of 10 years and generally vest in
one-third increments over a three-year period. The exercise price is equal to at least 100% of the market
value on the date of grant. The fair value is determined using the Black-Scholes model. The weightedaverage grant-date fair values of stock options granted were $12.54 in 2019, $21.63 in 2018 and $9.80 in
2017.

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88

The following table summarizes AbbVie stock option activity in 2019:
Weightedaverageremaining
life (in years)

Aggregate
intrinsic value(options in thousands, aggregate intrinsic value in millions)

Options

Weightedaverage
exercise price

Outstanding at December 31, 2018
GrantedExercised
Lapsed

6,143
1,002
(375)
(9)

$55.05
79.02
23.72
20.09

6.2

$242

Outstanding at December 31, 2019

6,761

$60.395.9$207

Exercisable at December 31, 2019

4,924

$51.904.9$186

The total intrinsic value of options exercised was $22 million in 2019, $215 million in 2018 and$371 million in 2017. The total fair value of options vested during 2019 was $13 million. As of
December 31, 2019, $6 million of unrecognized compensation cost related to stock options is expected tobe recognized as expense over approximately the next two years.
RSUs and Performance Shares
RSUs awarded to employees other than senior executives and other key employees generally vest in
one-third increments over a three year period. Recipients of these RSUs are entitled to receive dividend
equivalents as dividends are declared and paid during the RSU vesting period.
The majority of the equity awards AbbVie grants to its senior executives and other key employees are
performance-based. Equity awards granted to senior executives and other key employees consist of a
combination of performance-vested RSUs and performance shares as well as non-qualified stock options
described above. The performance-vested RSUs have the potential to vest in one-third increments during athree-year performance period based on AbbVie’s ROE relative to a defined peer group of pharmaceutical,
biotech and life sciences companies. The recipient may receive one share of AbbVie common stock for each
vested award. The performance shares have the potential to vest over a three-year performance period andmay be earned based on AbbVie’s EPS achievement and AbbVie’s total stockholder return (TSR) (a market
condition) relative to a defined peer group of pharmaceutical, biotech and life sciences companies. Dividend
equivalents on performance-vested RSUs and performance shares accrue during the performance period
and are payable at vesting only to the extent that shares are earned.
The weighted-average grant-date fair value of RSUs and performance shares generally is determinedbased on the number of shares/units granted and the quoted price of AbbVie’s common stock on the dateof grant. The weighted-average grant-date fair values of performance shares with a TSR market condition
are determined using the Monte Carlo simulation model.
The following table summarizes AbbVie RSU and performance share activity for 2019:
Share units

Weighted-average
grant date fair value

Outstanding at December 31, 2018
Granted
VestedForfeited

9,868
5,584
(4,616)(604)$79.90
78.03
71.30
82.19

Outstanding at December 31, 201910,232$81.72(share units in thousands)

The fair market value of RSUs and performance shares (as applicable) vested was $371 million in 2019,$583 million in 2018 and $348 million in 2017.

892019 Form 10-K

13NOV201221352027 89

As of December 31, 2019, $327 million of unrecognized compensation cost related to RSUs andperformance shares is expected to be recognized as expense over approximately the next two years.
Cash Dividends
Cash dividends declared per common share totaled $4.39 in 2019, $3.95 in 2018 and $2.63 in 2017.
The following table summarizes quarterly cash dividends declared during 2019, 2018 and 2017:
Date
Declared

2019
Payment
Date

Dividend Per
Share

Date
Declared

2018
Payment
Date

Dividend Per
Share

Date
Declared

2017
Payment
Date

Dividend Per
Share

11/01/19
09/06/19
06/20/19
02/21/19

02/14/20
11/15/19
08/15/19
05/15/19

$1.18
$1.07
$1.07
$1.07

11/02/18
09/07/18
06/14/18
02/15/18

02/15/19
11/15/18
08/15/18
05/15/18

$1.07
$0.96
$0.96
$0.96

10/27/17
09/08/17
06/22/17
02/16/17

02/15/18
11/15/17
08/15/17
05/15/17

$0.71
$0.64
$0.64
$0.64

Stock Repurchase Program
The company’s stock repurchase authorization permits purchases of AbbVie shares from time to timein open-market or private transactions at management’s discretion. The program has no time limit and canbe discontinued at any time. Shares repurchased under these programs are recorded at acquisition cost,
including related expenses and are available for general corporate purposes.
AbbVie repurchased 4 million shares for $300 million in 2019. AbbVie’s remaining stock repurchaseauthorization was approximately $4.0 billion as of December 31, 2019.
On February 15, 2018, AbbVie’s board of directors authorized a new $10.0 billion stock repurchaseprogram, which superseded AbbVie’s previous stock repurchase program. On December 13, 2018, AbbVie’sboard of directors authorized a $5.0 billion increase to the existing $10.0 billion stock repurchase program.
Under this authorization, AbbVie repurchased approximately 109 million shares for $10.7 billion in 2018.
Under previous stock repurchase programs, AbbVie made open-market share repurchases ofapproximately 11 million shares for $1.3 billion in 2018 and approximately 13 million shares for $1.0 billion
in 2017.

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90

Accumulated Other Comprehensive Loss
The following table summarizes the changes in each component of accumulated other comprehensive
loss, net of tax, for 2019, 2018 and 2017:(in millions) (brackets denote losses)

Foreigncurrencytranslation
adjustments

Net
investment
hedging
activities

Pension andpostemployment
benefits

Marketablesecurity
activities

Cash
flow
hedging
activities

Total

Balance as of December 31, 2016$(1,435)$ 140$(1,513)

$ 46

$ 176

$(2,586)

Other comprehensive income (loss)
before reclassifications
Net losses (gains) reclassified fromaccumulated other comprehensive
loss

680

(343)

(480)

29

(230)

(344)

316

—

74

(75)

(112)

203

Net current-period othercomprehensive income (loss)

996

(343)

(406)

(46)

(342)

(141)

Balance as of December 31, 2017

(439)

(203)

(1,919)—(166)(2,727)

(391)

138

84

(14)

156

(27)

—

—

113

4

157

274

Net current-period othercomprehensive income (loss)

(391)

138

197

(10)

313

247

Balance as of December 31, 2018

(830)

(65)

(1,722)(10)

147(2,480)(98)

95(1,330)12

298(1,023)

—

(21)

87

(2)

(157)

(93)

(98)

74

(1,243)10

141(1,116)9$(2,965)

$ —

$ 288

$(3,596)

Other comprehensive income (loss)
before reclassifications
Net losses reclassified fromaccumulated other comprehensive
loss

Other comprehensive income (loss)
before reclassifications
Net losses (gains) reclassified fromaccumulated other comprehensiveloss
Net current-period othercomprehensive income (loss)
Balance as of December 31, 2019$ (928)$Other comprehensive loss included foreign currency translation adjustments totaling losses of$98 million in 2019 and $391 million in 2018 which were principally due to the impact of the weakening of
the Euro on the translation of the company’s Euro-denominated assets.
In 2017, AbbVie reclassified $316 million of historical currency translation losses from AOCI related to
the liquidation of certain foreign entities following the enactment of U.S. tax reform. These losses were
included in net foreign exchange loss in the consolidated statement of earnings and had no related income
tax impacts. Other comprehensive loss in 2017 also included foreign currency translation adjustments
totaling a gain of $680 million, which was principally due to the impact of the strengthening of the Euro on
the translation of the company’s Euro-denominated assets.
Other comprehensive loss for 2019 included pension and post-employment benefit plan losses of$1.2 billion primarily due to an actuarial loss driven by lower discount rates. See Note 12 for additional
information.

91

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13NOV201221352027 91

The table below presents the impact on AbbVie’s consolidated statements of earnings for significant
amounts reclassified out of each component of accumulated other comprehensive loss:
years ended December 31 (in millions) (brackets denote gains)

2019

2018

2017

Net investment hedging activities
Gains on derivative amount excluded from effectiveness testing(a)Tax expense$ (27) $ —
6
—

$ —
—

Total reclassifications, net of tax$ (21) $ —$ —Pension and post-employment benefits
Amortization of actuarial losses and other(b)Tax benefit$ 110 $141 $ 107
(23)
(28)
(33)

Total reclassifications, net of tax$ 87

Cash flow hedging activities
Losses (gains) on foreign currency forward exchange contracts(c)Gains on treasury rate lock agreements and interest rate swap contracts(a)Tax expense (benefit)$(167) $161 $(118)
(4)
—
—
14
(4)
6

Total reclassifications, net of tax$(157) $157

$113

$ 74

$(112)(a) Amounts are included in interest expense, net (see Note 11).
(b) Amounts are included in the computation of net periodic benefit cost (see Note 12).
(c) Amounts are included in cost of products sold (see Note 11).
Other
In addition to common stock, AbbVie’s authorized capital includes 200 million shares of preferredstock, par value $0.01. As of December 31, 2019, no shares of preferred stock were issued or outstanding.

Note
14 Income Taxes.....................................................................................................................................................................................................................................................................................................................................................
Earnings Before Income Tax Expense
years ended December 31 (in millions)

2019

2018

2017

Domestic
Foreign$ (2,784) $(4,274) $ (2,678)
11,2109,471
10,405

Total earnings before income tax expense$ 8,426

92 13NOV201221352027

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92

$ 5,197$ 7,727

Income Tax Expense
years ended December 31 (in millions)

2019

2018

2017

Current
Domestic
Foreign

$ 102
320

$

593
434

$ 6,204376

Total current taxes$ 422$ 1,027$ 6,580

Deferred
Domestic
Foreign$(137) $(1,497) $(4,898)
259
(20)
736

Total deferred taxes$ 122$(1,517) $(4,162)

Total income tax expense (benefit)$ 544$ (490) $ 2,418

Impacts Related to U.S. Tax Reform
The Tax Cuts and Jobs Act (the Act) was signed into law in December 2017, resulting in significant
changes to the U.S. corporate tax system. The Act reduced the U.S. federal corporate tax rate from 35% to
21% and required companies to pay a one-time transition tax on a mandatory deemed repatriation of
earnings of certain foreign subsidiaries that were previously untaxed. These changes were generally effective
for tax years beginning in 2018.
The Act also created a minimum tax on certain foreign sourced earnings. The company’s accounting
policy for the minimum tax on foreign sourced earnings is to report the tax effects on the basis that theminimum tax will be recognized in tax expense in the year it is incurred as a period expense.
Additionally, the Act significantly changed the timing and manner in which earnings of foreignsubsidiaries are subject to U.S. tax. Therefore, unremitted foreign earnings previously considered indefinitely
reinvested that were subject to the Act’s transition tax are no longer considered indefinitely reinvested.
Post-2017 earnings subject to the U.S. minimum tax on foreign sourced earnings and the 100 percent
foreign dividends received deduction are also not considered indefinitely reinvested earnings. As such, thecompany records foreign withholding tax liabilities related to the future cash repatriation of such earnings.
However, the company considers instances of outside basis differences in foreign subsidiaries that would
incur additional U.S. tax upon reversal (e.g., capital gain distribution) to be permanent in duration. The
unrecognized tax liability is not practicable to determine.
Effective Tax Rate Reconciliation
years ended December 31

2019

2018

2017

Statutory tax rate
Effect of foreign operations
U.S. tax credits
Impacts related to U.S. tax reform
Stock-based compensation excess tax benefit
Tax audit settlements
Deferred tax remeasurements due to change in tax rate
All other, net

21.0%
(8.4)
(3.3)
(1.6)
(0.2)
(4.7)
3.1
0.6

21.0%
(28.7)
(7.3)
8.2
(1.5)
(2.5)
—
1.4

35.0%
(12.2)
(4.0)
12.0
(0.9)
(1.2)
—
2.6

Effective tax rate

6.5%(9.4)%

31.3%

The effective income tax rate fluctuates year to year due to the allocation of the company’s taxable
earnings among jurisdictions, as well as certain discrete factors and events in each year, including changes

932019 Form 10-K

13NOV201221352027 93

in tax law, acquisitions and collaborations. The effective income tax rates in 2019, 2018 and 2017 differedfrom the statutory tax rate principally due to changes in enacted tax rates and laws, the benefit fromforeign operations which reflects the impact of lower income tax rates in locations outside the UnitedStates, tax incentives in Puerto Rico and other foreign tax jurisdictions, business development activities, thecost of repatriation decisions, Boehringer Ingelheim accretion on contingent consideration and Stemcentrx
impairment related expenses. The effective tax rates for these periods also reflected the benefit from U.S.
tax credits principally related to research and development credits, the orphan drug tax credit and Puerto
Rico excise tax credits. The Puerto Rico excise tax credits relate to legislation enacted by Puerto Rico thatassesses an excise tax on certain products manufactured in Puerto Rico. The tax is levied on gross inventory
purchases from entities in Puerto Rico and is included in cost of products sold in the consolidated
statements of earnings. The majority of the tax is creditable for U.S. income tax purposes.
The effective income tax rate in 2019, 2018 and 2017 included impacts related to U.S. tax reform. In
2018, there was a favorable impact of the effective date of provisions of the Act related to the earnings
from certain foreign subsidiaries. For 2019, the impact of the Act affected the full year earnings of thesesubsidiaries, resulting in additional tax expense compared to prior year. The 2019 effective income tax rate
also reflects the effects of deferred tax remeasurement due to a change in foreign tax law, accretion forcontingent consideration and impairment related expenses. In addition, the company recognized a net tax
benefit of $400 million in 2019, $131 million in 2018 and $91 million in 2017 related to the resolution ofvarious tax positions pertaining to prior years.
Deferred Tax Assets and Liabilities
as of December 31 (in millions)2019

Deferred tax assets
Compensation and employee benefits
Accruals and reserves
Chargebacks and rebates
Advance payments
Net operating losses and other credit carryforwards
Other

$

810
371
477
615
838
406

2018

$

529
371
417
867
228
353

Total deferred tax assets
Valuation allowances

3,517
(731)

2,765
(103)

Total net deferred tax assets

2,786

2,662

Deferred tax liabilities
Excess of book basis over tax basis of intangible assets
Excess of book basis over tax basis in investments
Other(2,712)
(249)
(440)

(2,940)
(211)
(250)

Total deferred tax liabilities(3,401)(3,401)

Net deferred tax liabilities$ (615) $ (739)

As of December 31, 2019, gross state net operating losses were $1.0 billion and tax credit
carryforwards were $188 million. The state tax carryforwards expire between 2020 and 2039. As of
December 31, 2019, foreign net operating loss carryforwards were $2.9 billion. Foreign net operating loss
carryforwards of $2.8 billion expire between 2020 and 2036 and the remaining do not have an expiration
period.
The company had valuation allowances of $731 million as of December 31, 2019 and $103 million asof December 31, 2018. These were principally related to foreign and state net operating losses and credit
carryforwards that are not expected to be realized.

94 13NOV201221352027

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94

Unrecognized Tax Benefits
years ended December 31 (in millions)

2019

2018

2017

Beginning balance
Increase due to current year tax positions
Increase due to prior year tax positions
Decrease due to prior year tax positions
Settlements
Lapse of statutes of limitations$2,852 $2,701 $1,168
113
163
1,768
499
110
16
(21)
(36)
(2)
(749)
(79)
(233)
(33)
(7)
(16)

Ending balance$2,661$2,852$2,701

AbbVie and Abbott entered into a tax sharing agreement, effective on the date of separation, which
provides that Abbott is liable for and has indemnified AbbVie against all income tax liabilities for periods
prior to the separation. AbbVie will be responsible for unrecognized tax benefits and related interest andpenalties for periods after separation or in instances where an existing entity was transferred to AbbVie
upon separation.
If recognized, the net amount of potential tax benefits that would impact the company’s effective tax
rate is $2.4 billion in 2019 and $2.7 billion in 2018. Of the unrecognized tax benefits recorded in the table
above as of December 31, 2019, AbbVie would be indemnified for approximately $83 million. The ‘‘Increase
due to current year tax positions’’ and ‘‘Increase due to prior year tax positions’’ in the table above include
amounts related to federal, state and international tax items.
AbbVie recognizes interest and penalties related to income tax matters in income tax expense in the
consolidated statements of earnings. AbbVie recognized gross income tax expense of $51 million in 2019,$73 million in 2018 and $24 million in 2017, for interest and penalties related to income tax matters.
AbbVie had an accrual for the payment of gross interest and penalties of $191 million at December 31,
2019, $190 million at December 31, 2018 and $120 million at December 31, 2017.
The company is routinely audited by the tax authorities in significant jurisdictions and a number ofaudits are currently underway. It is reasonably possible during the next 12 months that uncertain tax
positions may be settled, which could result in a decrease in the gross amount of unrecognized tax
benefits. Due to the potential for resolution of federal, state and foreign examinations and the expiration ofvarious statutes of limitation, the company’s gross unrecognized tax benefits balance may change within thenext 12 months up to $54 million. All significant federal, state, local and international matters have beenconcluded for years through 2012. The company believes adequate provision has been made for all income
tax uncertainties.

Note
15 Legal Proceedings and Contingencies.....................................................................................................................................................................................................................................................................................................................................................
AbbVie is subject to contingencies, such as various claims, legal proceedings and investigations
regarding product liability, intellectual property, commercial, securities and other matters that arise in thenormal course of business. Loss contingency provisions are recorded for probable losses at management’s
best estimate of a loss, or when a best estimate cannot be made, a minimum loss contingency amountwithin a probable range is recorded. The recorded accrual balance for litigation was approximately$290 million as of December 31, 2019 and approximately $350 million as of December 31, 2018. Initiationof new legal proceedings or a change in the status of existing proceedings may result in a change in theestimated loss accrued by AbbVie. In addition, other operating income in 2019 included $550 million ofincome from a legal settlement related to an intellectual property dispute with a third party. While it is not
feasible to predict the outcome of all proceedings and exposures with certainty, management believes that
their ultimate disposition should not have a material adverse effect on AbbVie’s consolidated financial
position, results of operations or cash flows.

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13NOV201221352027 95

Subject to certain exceptions specified in the separation agreement by and between Abbott and
AbbVie, AbbVie assumed the liability for, and control of, all pending and threatened legal matters related toits business, including liabilities for any claims or legal proceedings related to products that had been partof its business, but were discontinued prior to the distribution, as well as assumed or retained liabilities,
and will indemnify Abbott for any liability arising out of or resulting from such assumed legal matters.
Four lawsuits against Unimed Pharmaceuticals, LLC, Solvay Pharmaceuticals, Inc. (a company Abbottacquired in February 2010 and now known as AbbVie Products LLC) and others remained consolidated forpre-trial purposes in the United States District Court for the Northern District of Georgia under the MultiDistrict Litigation (MDL) Rules as In re: AndroGel Antitrust Litigation, MDL No. 2084. These cases, broughtby direct AndroGel purchasers, generally allege Solvay’s 2006 patent litigation settlement agreements andrelated agreements with three generic companies violate federal antitrust laws. Plaintiffs seek monetarydamages and attorneys’ fees. Three of those lawsuits were settled in December 2019 and will be dismissed.
In September 2014, the FTC filed a lawsuit, FTC v. AbbVie Inc., et al., against AbbVie and others in the
United States District Court for the Eastern District of Pennsylvania, alleging that the 2011 patent litigation
with two generic companies regarding AndroGel was sham litigation and the settlements of that litigation
violated federal antitrust law. In May 2015, the court dismissed the FTC’s settlement-related claim. In June
2018, following a bench trial, the court found for the FTC on its sham litigation claim and ordered adisgorgement remedy of $448 million, plus prejudgment interest. The court denied the FTC’s request for
injunctive relief. AbbVie is appealing the court’s liability and disgorgement rulings and, based on anassessment of the merits of that appeal, no liability has been accrued for this matter. The FTC is also
appealing aspects of the court’s trial ruling and the dismissal of its settlement-related claim. In July 2018, a
purported class action was filed in the United States District Court for the Eastern District of Pennsylvania
on behalf of direct AndroGel purchasers based on the trial court’s ruling in the FTC’s case. In September
2019, two individual direct AndroGel purchasers substituted in as the plaintiffs in that lawsuit and withdrew
the class allegations. That case, which was pending as Rochester Drug Co-Operative, Inc., et al. v.
AbbVie Inc., et al., was settled in December 2019 and will be dismissed.
In August 2019, direct purchasers of AndroGel filed a lawsuit, King Drug Co. of Florence, Inc., et al. v.
AbbVie Inc., et al., against AbbVie and others in the United States District Court for the Eastern District ofPennsylvania, making allegations similar to those in In re: AndroGel Antitrust Litigation (No. II), MDL
No. 2084 (above) and FTC v. AbbVie Inc. (above).
Lawsuits are pending against AbbVie and others generally alleging that the 2005 patent litigation
settlement involving Niaspan entered into between Kos Pharmaceuticals, Inc. (a company acquired by
Abbott in 2006 and presently a subsidiary of AbbVie) and a generic company violates federal and state
antitrust laws and state unfair and deceptive trade practices and unjust enrichment laws. Plaintiffs generally
seek monetary damages and/or injunctive relief and attorneys’ fees. The lawsuits consist of four individual
plaintiff lawsuits and two consolidated purported class actions: one brought by Niaspan direct purchasers
and one brought by Niaspan end-payers. The cases are pending in the United States District Court for the
Eastern District of Pennsylvania for coordinated or consolidated pre-trial proceedings under the MDL Rules
as In re: Niaspan Antitrust Litigation, MDL No. 2460. In August 2019, the court certified a class of directpurchasers of Niaspan. In October 2016, the Orange County, California District Attorney’s Office filed alawsuit on behalf of the State of California regarding the Niaspan patent litigation settlement in Orange
County Superior Court, asserting a claim under the unfair competition provision of the California Businessand Professions Code seeking injunctive relief, restitution, civil penalties and attorneys’ fees. In May 2018,
the California Court of Appeal ruled that the District Attorney’s Office may not bring monetary claims
beyond the scope of Orange County, which the District Attorney’s Office is appealing.
Between March and May 2019, 12 putative class action lawsuits were filed in the United States District
Court for the Northern District of Illinois by indirect HUMIRA purchasers, alleging that AbbVie’s settlements

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96

with biosimilar manufacturers and AbbVie’s HUMIRA patent portfolio violate state and federal antitrust
laws. The court consolidated these lawsuits as In re: Humira (Adalimumab) Antitrust Litigation.
In November 2014, a putative class action lawsuit, Medical Mutual of Ohio v. AbbVie Inc., et al., wasfiled against several manufacturers of testosterone replacement therapies (TRTs), including AbbVie, in the
United States District Court for the Northern District of Illinois on behalf of all insurance companies, healthbenefit providers, and other third party payers who paid for TRTs, including AndroGel. The claims asserted
included violations of the federal RICO Act and state consumer fraud and deceptive trade practices laws.
The complaint sought monetary damages and injunctive relief. In July 2018, the court denied the plaintiff’s
motion for class certification. In November 2019, the United States Court of Appeals for the Seventh Circuit
affirmed the district court’s grant of the defendants’ summary judgment motion.
In July 2019, the New Mexico Attorney General filed a lawsuit, State of New Mexico ex rel. Balderas v.
AbbVie Inc., et al., in New Mexico District Court for Santa Fe County against AbbVie and other companies
alleging their marketing of AndroGel violated New Mexico’s Unfair Practices Act.
In September 2018, the Commissioner of the California Department of Insurance intervened in a qui
tam lawsuit, State of California and Lazaro Suarez v. AbbVie Inc., et al., brought under the California
Insurance Frauds Prevention Act, in California Superior Court for Alameda County. The Department of
Insurance’s complaint alleges that, through patient and reimbursement support services and other services
and items of value provided in connection with HUMIRA, AbbVie caused the submission of fraudulent
commercial insurance claims for HUMIRA in violation of the California statute. The complaint seeks
injunctive relief, an assessment of up to three times the amount of the claims at issue, and civil penalties.
In addition, a federal securities lawsuit (Holwill v. AbbVie Inc., et al.) is pending in the United States District
Court for the Northern District of Illinois) against AbbVie, its chief executive officer and former chief
financial officer, alleging that reasons stated for HUMIRA sales growth in financial filings between 2013 and2017 were misleading because they omitted the conduct alleged in the Department of Insurance’s
complaint.
In November 2014, five individuals filed a putative class action lawsuit, Rubinstein, et al. v Gonzalez, etal., on behalf of purchasers and sellers of certain Shire plc (Shire) securities between June 20 and
October 14, 2014, against AbbVie and its chief executive officer in the United States District Court for the
Northern District of Illinois alleging that the defendants made and/or are responsible for material
misstatements in violation of federal securities laws in connection with AbbVie’s proposed transaction with
Shire. In October 2019, the court granted final approval to the parties’ class settlement agreement.
In June 2016, a lawsuit, Elliott Associates, L.P., et al. v. AbbVie Inc., was filed by five investment funds
against AbbVie in the Cook County, Illinois Circuit Court alleging that AbbVie made misrepresentations andomissions in connection with its proposed transaction with Shire. Similar lawsuits were filed between July
2017 and October 2019 against AbbVie and in some instances its chief executive officer in the same court
by additional investment funds. Plaintiffs seek compensatory and punitive damages.
Product liability cases were filed in which plaintiffs generally allege that AbbVie and othermanufacturers of TRTs did not adequately warn about risks of certain injuries, primarily heart attacks,
strokes and blood clots. Approximately 3,500 claims against AbbVie are consolidated for pre-trial purposesin the United States District Court for the Northern District of Illinois under the MDL Rules as In re:
Testosterone Replacement Therapy Products Liability Litigation, MDL No. 2545. Approximately 175 claims
against AbbVie are pending in various state courts. Plaintiffs generally seek compensatory and punitive
damages. In November 2018, AbbVie entered into a Master Settlement Agreement with the Plaintiffs’
Steering Committee in the MDL encompassing existing claims in all courts. All proceedings in pending cases
are effectively stayed during the settlement administration process.
Product liability cases are pending in which plaintiffs generally allege that AbbVie did not adequately
warn about risk of certain injuries, primarily various birth defects, arising from use of Depakote.

97

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Approximately 120 cases are pending in the United States District Court for the Southern District of Illinois,
and approximately 14 others are pending in various federal and state courts. Plaintiffs generally seek
compensatory and punitive damages. Approximately eighty percent of these pending cases, plus otherunfiled claims, are subject to confidential settlement agreements and are expected to be dismissed withprejudice.
Beginning in May 2016, the Patent Trial & Appeal Board of the U.S. Patent & Trademark Office (PTO)
instituted five inter partes review proceedings brought by Coherus Biosciences and Boehringer Ingelheim
related to three AbbVie patents covering methods of treatment of rheumatoid arthritis using adalimumab.
In these proceedings, the PTO reviewed the validity of the patents and issued decisions of invalidity in May,
June and July of 2017. In January 2020, the Court of Appeals for the Federal Circuit affirmed the decisions.
In March 2017, AbbVie filed a lawsuit, AbbVie Inc. v. Novartis Vaccines and Diagnostics, Inc. and Grifols
Worldwide Operations Ltd., in the United States District Court for the Northern District of California against
Novartis Vaccines and Grifols Worldwide seeking a declaratory judgment that 11 HCV-related patents
licensed to AbbVie in 2002 are invalid.
Pharmacyclics LLC, a wholly owned subsidiary of AbbVie, is seeking to enforce its patent rights relating
to ibrutinib capsules (a drug Pharmacyclics sells under the trademark IMBRUVICA姞). In February 2018, cases
were filed in the United States District Court for the District of Delaware against the following defendants:
Fresenius Kabi USA, LLC, Fresenius Kabi USA, Inc., and Fresenius Kabi Oncology Limited; Sun Pharma Global
FZE and Sun Pharmaceutical Industries Ltd.; Cipla Limited and Cipla USA Inc.; and Zydus Worldwide DMCC,
Cadila Healthcare Limited, Sandoz Inc., and Lek Pharmaceuticals D.D. In each case, Pharmacyclics alleges thedefendant’s proposed generic ibrutinib product infringes certain Pharmacyclics patents and seeks declaratory
and injunctive relief. Janssen Biotech, Inc. which is in a global collaboration with Pharmacyclics concerning
the development and marketing of IMBRUVICA, is the co-plaintiff in these suits.
Pharmacyclics LLC, a wholly owned subsidiary of AbbVie, is seeking to enforce its patent rights relating
to ibrutinib tablets (a drug Pharmacyclics sells under the trademark IMBRUVICA姞). In a case filed in the
United States District Court for the District of Delaware in March 2019, Pharmacyclics alleges that Alvogen
Pine Brook LLC’s and Natco Pharma Ltd.’s proposed generic ibrutinib tablet product infringes certain
Pharmacyclics patents. Pharmacyclics seeks declaratory and injunctive relief. Janssen Biotech, Inc. which is ina global collaboration with Pharmacyclics concerning the development and marketing of IMBRUVICA, is theco-plaintiff in this suit.

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Note
16 Segment and Geographic Area Information.....................................................................................................................................................................................................................................................................................................................................................
AbbVie operates in one business segment—pharmaceutical products. Substantially all of AbbVie’s net
revenues in the United States are to three wholesalers. Outside the United States, products are soldprimarily to health care providers or through distributors, depending on the market served. The following
tables detail AbbVie’s worldwide net revenues:
years ended December 31 (in millions)
Immunology
HUMIRASKYRIZIRINVOQ

United States
International

HCV
MAVYRETVIEKIRA

Other Key Products
Creon

2018

2017

$14,864
4,305$13,6856,251$12,361
6,066

Total

$19,169$19,936$18,427

United States
International

$

311
44

$

—
—

$

—
—

Total

$

355

$

—

$

—

United States
International

$

47
—

$

—
—

$

—
—

Total

$

47

$

—

$

—

Hematologic Oncology
IMBRUVICA
United States
Collaboration revenues
VENCLEXTA

2019$ 3,830844$ 2,968622$ 2,144429

Total$ 4,674$ 3,590$ 2,573

United States
International

$

521
271

$

247
97

$

89
33

Total

$

792

$

344

$

122

United States
International$ 1,473
1,420$ 1,614
1,824

$

277
213

Total

$ 2,893$ 3,438$

490

United States
International

$

—
36

$

3
175

$

61
723

Total

$

36

$

178

$

784

United States$ 1,041

$

928

$

831

LupronUnited States
International

$

$

726
166

$

669
160

Total

$

887

$

892

$

829

Synthroid

United States

$

786

$

776

$

781

720
167

SynagisInternational

$

718

$

726

$

738

Duodopa

United States
International

$

97
364

$

80
350

$

61
294

Total

$

461

$

430

$

355

Sevoflurane

United States
International

$

74
274

$

74
317

$

78
332

Total

$

348

$

391

$

410

United States
International

$

38
245

$

55
281

$

71
352

Kaletra

Total

$

283

$

336

$

423

AndroGel

United States

$

172

$

469

$

577

ORILISSA

United States
International

$

91
2

$

11
—

$

—
—

Total

$

93

$

11

$

—

All other

$

511

$

308

$

876

Total net revenues$33,266

99

2019 Form 10-K

$32,753$28,216

13NOV201221352027 99

Net revenues to external customers by geographic area, based on product shipment destination, wereas follows:
years ended December 31 (in millions)

United StatesJapan
Germany
CanadaFranceSpain
United Kingdom
Italy
BrazilThe Netherlands
All other countries
Total net revenues

2019

2018

2017

$23,907
1,211
909
813
695
472
372
372
359
163
3,993
$33,266$21,524
1,591
1,292
730
783
611
855
652
350
352
4,013
$32,753$18,251
764
1,157
659
730
521
807
475
410
362
4,080
$28,216Long-lived assets, primarily net property and equipment, by geographic area were as follows:
as of December 31 (in millions)

2019

2018

United States and Puerto Rico
EuropeAll other$2,026646
290$1,993599
291

Total long-lived assets$2,962$2,883100 13NOV201221352027

2019 Form 10-K

100

Note
17 Quarterly Financial Data (unaudited).....................................................................................................................................................................................................................................................................................................................................................
(in millions except per share data)

2019

2018

First Quarter
Net revenues
Gross margin
Net earnings(a)Basic earnings per share
Diluted earnings per share
Cash dividends declared per common share$7,8286,134
2,456$ 1.65$ 1.65$ 1.07$ 7,934
6,007
2,783$ 1.74$ 1.74$ 0.96

Second Quarter
Net revenues
Gross margin
Net earnings(b)Basic earnings per share
Diluted earnings per share
Cash dividends declared per common share$8,255
6,436
741$ 0.49$ 0.49$ 1.07$ 8,278
6,344
1,983$ 1.26$ 1.26$ 0.96

Third Quarter
Net revenues
Gross margin
Net earnings(c)Basic earnings per share
Diluted earnings per share
Cash dividends declared per common share$8,4796,559
1,884$ 1.27$ 1.26$ 1.07$ 8,2366,401
2,747$ 1.81$ 1.81$ 0.96

Fourth Quarter
Net revenues
Gross margin
Net earnings (loss)(d)Basic earnings (loss) per share
Diluted earnings (loss) per share
Cash dividends declared per common share$8,7046,698
2,801$ 1.88$ 1.88$ 1.18$ 8,305
6,283(1,826)$ (1.23)$ (1.23)$ 1.07(a) First quarter results in 2019 included after-tax charges of $171 million related to the change in fairvalue of contingent consideration liabilities and restructuring charges of $133 million. First quarter
results in 2018 included an after-tax benefit of $148 million related to the change in fair value ofcontingent consideration liabilities partially offset by after-tax litigation reserves charges of$100 million.
(b) Second quarter results in 2019 included an after-tax charge of $2.3 billion related to the change in fairvalue of contingent consideration liabilities resulting from the April 2019 regulatory approvals of
SKYRIZI for the treatment of moderate to severe plaque psoriasis. Second quarter results in 2018
included after-tax charges of $500 million as a result of a collaboration agreement extension with
Calico and $485 million related to the change in fair value of contingent consideration liabilities.
(c) Third quarter results in 2019 included after-tax charges of $912 million related to intangible asset
impairment and $182 million related to the change in fair value of contingent consideration liabilities.
Third quarter results in 2018 included after-tax litigation reserves charges of $176 million and$95 million related to the change in fair value of contingent consideration liabilities.
(d) Fourth quarter results in 2019 included an after-tax charge of $438 million related to the change in fairvalue of contingent consideration liabilities offset by after-tax income of $435 million from a legal
settlement related to an intellectual property dispute with a third party and $297 million from anamended and restated license agreement between AbbVie and Reata. Fourth quarter results in 2018
included an after-tax intangible asset impairment charge of $4.5 billion partially offset by an after-tax
benefit of $375 million related to the change in fair value of contingent consideration liabilities.

101

2019 Form 10-K

13NOV201221352027 101

Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of AbbVie Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of AbbVie Inc. and subsidiaries (theCompany) as of December 31, 2019 and 2018, and the related consolidated statements of earnings,
comprehensive income, equity and cash flows for each of the three years in the period ended
December 31, 2019, and the related notes (collectively referred to as the ‘‘financial statements’’). In our
opinion, the financial statements present fairly, in all material respects, the financial position of theCompany at December 31, 2019 and 2018, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2019, in conformity with U.S. generally accepted
accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board(United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2019,
based on criteria established in Internal Control-Integrated Framework issued by the Committee ofSponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 21,
2020 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is toexpress an opinion on the Company’s financial statements based on our audits. We are a public accounting
firm registered with the PCAOB and are required to be independent with respect to the Company inaccordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that weplan and perform the audit to obtain reasonable assurance about whether the financial statements are freeof material misstatement, whether due to error or fraud. Our audits included performing procedures toassess the risks of material misstatement of the financial statements, whether due to error or fraud, andperforming procedures to respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that our audits provide a
reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of thefinancial statements that were communicated or required to be communicated to the audit committee andthat: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved ourespecially challenging, subjective or complex judgments. The communication of critical audit matters does
not alter in any way our opinion on the financial statements, taken as a whole, and we are not, bycommunicating the critical audit matters below, providing separate opinions on the critical audit matters oron the accounts or disclosures to which they relate.

102 13NOV201221352027

2019 Form 10-K

102

Sales rebate accruals for Medicaid, Medicare and managed care programs
Description of the
MatterAs discussed in Note 2 to the consolidated financial statements under the caption‘‘Revenue Recognition,’’ the Company established provisions for sales rebates inthe same period as the related product is sold. At December 31, 2019, theCompany had $4,484 million in sales rebate accruals, a large portion of whichwere for rebates provided to pharmacy benefit managers, state government
Medicaid programs, insurance companies that administer Medicare drug plans andprivate entities for Medicaid, Medicare and managed care programs. In order toestablish these sales rebate accruals, the Company estimated its rebates based
upon the identification of the products subject to a rebate, the applicable priceand rebate terms and the estimated lag time between the sale and payment of
the rebate.
Auditing the Medicaid, Medicare and managed care sales rebate accruals wascomplex and required significant auditor judgment because the accruals consider
multiple subjective and complex estimates and assumptions. These estimates andassumptions included the estimated inventory in the distribution channel, which
impacts the lag time between the sale to the customer and payment of therebate and the final payer related to product sales, which impacts the applicable
price and rebate terms. In deriving these estimates and assumptions, theCompany used both internal and external sources of information to estimate
product in the distribution channels, payer mix, prescription volumes andhistorical experience. Management supplemented its historical data analysis withqualitative adjustments based upon changes in rebate trends, rebate programs
and contract terms, legislative changes, or other significant events which indicate
a change in the reserve is appropriate.

How We Addressed
the Matter in Our
Audit

We obtained an understanding, evaluated the design and tested the operating
effectiveness of controls over the Company’s sales rebate accruals for Medicaid,
Medicare and managed care programs. This included testing controls overmanagement’s review of the significant assumptions and other inputs used in theestimation of Medicaid, Medicare and managed care rebates, among others,
including the significant assumptions discussed above. The testing was inclusive ofmanagement’s controls to evaluate the accuracy of its reserve judgments to actual
rebates paid, rebate validation and processing, and controls to ensure that thedata used to evaluate and support the significant assumptions was complete,accurate and, where applicable, verified to external data sources.
To test the sales rebate accruals for Medicaid, Medicare, and managed careprograms, our audit procedures included, among others, understanding andevaluating the significant assumptions and underlying data used in management’s
calculations. Our testing of significant assumptions included corroboration toexternal data sources. We evaluated the reasonableness of assumptions in light ofindustry and economic trends, product profiles, and other regulatory factors. We
assessed the historical accuracy of management’s estimates by comparing actual
activity to previous estimates and performed analytical procedures, based oninternal and external data sources, to evaluate the completeness of the reserves.
For Medicaid, we involved a specialist with an understanding of statutory
reimbursement requirements to assess the consistency of the Company’s
calculation methodologies with applicable government regulations and policy.

103

2019 Form 10-K

13NOV201221352027 103

Valuation of contingent consideration
Description of the
MatterAs discussed in Note 2 to the consolidated financial statements under the caption‘‘Business Combinations’’ and in Note 11 under the caption ‘‘Financial Instruments
and Fair Value Measures,’’ the Company recognized contingent consideration
liabilities at the estimated fair value on the acquisition date in connection with
applying the acquisition method of accounting for business combinations.
Subsequent changes to the fair value of the contingent consideration liabilities
were recorded within the consolidated statement of earnings in the period ofchange. At December 31, 2019, the Company had $7,340 million in contingent
consideration liabilities, which represented a ‘Level 3’ fair value measurement in
the fair value hierarchy due to the significant unobservable inputs used indetermining the fair value and the use of management judgment about theassumptions market participants would use in pricing the liabilities.
Auditing the valuation of contingent consideration liabilities was complex andrequired significant auditor judgment due to the use of a Monte Carlo simulation
model and the high degree of subjectivity in evaluating certain assumptions
required to estimate the fair value of contingent royalty payments. In particular,
the fair value measurement was sensitive to the significant assumptions
underlying the estimated amount of future sales of the acquired products.
Management utilized its expertise within the industry and knowledge of clinicaldevelopment and regulatory approval processes to determine certain of theseassumptions.

How We Addressed
the Matter in Our
Audit

We obtained an understanding, evaluated the design and tested the operating
effectiveness of controls over the Company’s contingent consideration liabilities
process including, among others, management’s process to establish thesignificant assumptions and measure the liability. This included testing controls
over management’s review of the significant assumptions and other inputs used in
the determination of fair value. The testing was inclusive of key management
review controls to monitor and evaluate clinical development of the acquired
products and estimated future sales, and controls to ensure that the data used toevaluate and support the significant assumptions was complete, accurate and,
where applicable, verified to external data sources.
To test the estimated fair value of contingent consideration liabilities, our audit
procedures included, among others, inspecting the terms of the executed
agreement, assessing the Monte Carlo simulation model used and testing the key
contractual inputs and significant assumptions discussed above. We evaluated theassumptions and judgments in light of observable industry and economic trends
and standards, external data sources and regulatory factors. Estimated amounts offuture sales were evaluated for reasonableness in relation to internal and external
analyses, clinical development progress and timelines, probability of successbenchmarks, and regulatory notices. Our procedures included evaluating the data
sources used by management in determining its assumptions and, where
necessary, included an evaluation of available information that either corroborated
or contradicted management’s conclusions. We involved a valuation specialist toassess the Company’s Monte Carlo simulation model and to perform corroborative
fair value calculations.

/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2013.
Chicago, Illinois
February 21, 2020

104 13NOV201221352027

2019 Form 10-K

104

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.....................................................................................................................................................................................................................................................................................................................................................
None.

ITEM
9A. CONTROLS AND PROCEDURES.....................................................................................................................................................................................................................................................................................................................................................
Disclosure Controls and Procedures; Internal Control Over Financial Reporting
Evaluation of disclosure controls and procedures. The Chief Executive Officer, Richard A. Gonzalez,
and the Chief Financial Officer, Robert A. Michael, evaluated the effectiveness of AbbVie’s disclosure
controls and procedures as of the end of the period covered by this report, and concluded that AbbVie’s
disclosure controls and procedures were effective to ensure that information AbbVie is required to disclosein the reports that it files or submits with the Securities and Exchange Commission under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified
in the Commission’s rules and forms, and to ensure that information required to be disclosed by AbbVie in
the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated andcommunicated to AbbVie’s management, including its principal executive officer and principal financial
officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in internal control over financial reporting. There were no changes in AbbVie’s internal
control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934)
that have materially affected, or are reasonably likely to materially affect, AbbVie’s internal control overfinancial reporting during the quarter ended December 31, 2019.
Inherent limitations on effectiveness of controls. AbbVie’s management, including its Chief Executive
Officer and its Chief Financial Officer, do not expect that AbbVie’s disclosure controls or internal control
over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how welldesigned and operated, can provide only reasonable, not absolute, assurance that the control system’s
objectives will be met. The design of a control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered relative to their costs. Further, because of theinherent limitations in all control systems, no evaluation of controls can provide absolute assurance thatmisstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any,
have been detected. These inherent limitations include the realities that judgments in decision-making can
be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be
circumvented by the individual acts of some persons, by collusion of two or more people, or bymanagement override of the controls.
The design of any system of controls is based in part on certain assumptions about the likelihood of
future events, and there can be no assurance that any design will succeed in achieving its stated goals
under all potential future conditions. Projections of any evaluation of controls effectiveness to future
periods are subject to risks. Over time, controls may become inadequate because of changes in conditions
or deterioration in the degree of compliance with policies or procedures.
Management’s annual report on internal control over financial reporting. Management of AbbVie is
responsible for establishing and maintaining adequate internal control over financial reporting, as such termis defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. AbbVie’s internal control overfinancial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles in the United States. However, all internal control systems, no matter how welldesigned, have inherent limitations. Therefore, even those systems determined to be effective can provide
only reasonable assurance with respect to financial statement preparation and reporting.

105

2019 Form 10-K

13NOV201221352027 105

Management assessed the effectiveness of AbbVie’s internal control over financial reporting as ofDecember 31, 2019. In making this assessment, management used the criteria set forth by the Committeeof Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework(2013 framework). Based on that assessment, management concluded that AbbVie maintained effective
internal control over financial reporting as of December 31, 2019, based on the COSO criteria.
The effectiveness of AbbVie’s internal control over financial reporting as of December 31, 2019 has
been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in theirattestation report below, which expresses an unqualified opinion on the effectiveness of AbbVie’s internal
control over financial reporting as of December 31, 2019.
Report of independent registered public accounting firm. The report of AbbVie’s independent
registered public accounting firm related to its assessment of the effectiveness of internal control overfinancial reporting is included below.

106 13NOV201221352027

2019 Form 10-K

106

Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of AbbVie Inc.
Opinion on Internal Control over Financial Reporting
We have audited AbbVie Inc. and subsidiaries’ internal control over financial reporting as of December 31,
2019, based on criteria established in Internal Control—Integrated Framework issued by the Committee ofSponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our
opinion, AbbVie Inc. and subsidiaries (the Company) maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2019, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board(United States) (PCAOB), the consolidated balance sheets of AbbVie Inc. and subsidiaries as ofDecember 31, 2019 and 2018, and the related consolidated statements of earnings, comprehensive income,equity and cash flows for each of the three years in the period ended December 31, 2019, and the related
notes and our report dated February 21, 2020 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reportingand for its assessment of the effectiveness of internal control over financial reporting included in theaccompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility
is to express an opinion on the Company’s internal control over financial reporting based on our audit. We
are a public accounting firm registered with the PCAOB and are required to be independent with respect to
the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that weplan and perform the audit to obtain reasonable assurance about whether effective internal control overfinancial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the riskthat a material weakness exists, testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk, and performing such other procedures as we considered necessary inthe circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations on Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. A company’s internal control overfinancial reporting includes those policies and procedures that (1) pertain to the maintenance of records
that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of thecompany; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and thatreceipts and expenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have amaterial effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the riskthat controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Chicago, Illinois
February 21, 20201072019 Form 10-K

13NOV201221352027 107

ITEM
9B. OTHER INFORMATION.....................................................................................................................................................................................................................................................................................................................................................
None.

108 13NOV201221352027

2019 Form 10-K

108

PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.....................................................................................................................................................................................................................................................................................................................................................

Incorporated herein by reference are ‘‘Information Concerning Director Nominees,’’ ‘‘The Board of
Directors and its Committees—Committees of the Board of Directors,’’ and ‘‘Procedure for Recommendation
and Nomination of Directors and Transaction of Business at Annual Meeting’’ to be included in the 2020
AbbVie Inc. Proxy Statement. The 2020 Definitive Proxy Statement will be filed on or about March 19,
2020. Also incorporated herein by reference is the text found in this Form 10-K under the caption,‘‘Information about Our Executive Officers.’’
AbbVie’s code of business conduct requires all its business activities to be conducted in compliancewith all applicable laws, regulations and ethical principles and values. All directors, officers and employees
of AbbVie are required to read, understand and abide by the requirements of the code of business conduct
applicable to them. AbbVie’s code of business conduct is available in the corporate governance section of
AbbVie’s investor relations website at www.abbvieinvestor.com.
Any waiver of the code of business conduct for directors or executive officers may be made only by
AbbVie’s audit committee. AbbVie will disclose any amendment to, or waiver from, a provision of the codeof conduct for the principal executive officer, principal financial officer, principal accounting officer orcontroller, or persons performing similar functions, on its website within four business days following thedate of the amendment or waiver. In addition, AbbVie will disclose any waiver from the code of businessconduct for the other executive officers and for directors on the website.
AbbVie has a chief ethics and compliance officer who reports to the Vice Chairman, External Affairs
and Chief Legal Officer and to the public policy committee. The chief ethics and compliance officer is
responsible for overseeing, administering and monitoring AbbVie’s compliance program.

ITEM
11. EXECUTIVE COMPENSATION.....................................................................................................................................................................................................................................................................................................................................................
The material to be included in the 2020 AbbVie Inc. Proxy Statement under the headings ‘‘Director
Compensation,’’ ‘‘Executive Compensation,’’ and ‘‘Compensation Committee Report’’ is incorporated hereinby reference. The 2020 Definitive Proxy Statement will be filed on or about March 19, 2020.

109

2019 Form 10-K

13NOV201221352027 109

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.....................................................................................................................................................................................................................................................................................................................................................
(a) Equity Compensation Plan Information.
The following table presents information as of December 31, 2019 about AbbVie’s equity compensationplans under which AbbVie common stock has been authorized for issuance:

Plan Category(a)Number of
securities to beissued upon
exercise ofoutstanding
options,
warrants andrights(1)(b)
Weightedaverage exercise
price ofoutstanding
options,
warrants andrights(2)(c)
Number of
securities
remaining
available for
future issuanceunder equity
compensationplans (excluding
securities
reflected incolumn (a))(3)

Equity compensation plans approved by security holders
Equity compensation plans not approved by security holders

16,991,269—$60.39—62,161,107
—

Total

16,991,269$60.3962,161,107(1) Includes 837,960 shares issuable under AbbVie’s Incentive Stock Program pursuant to awards
granted by Abbott and adjusted into AbbVie awards in connection with AbbVie’s separation from
Abbott.
(2) The weighted-average exercise price does not include outstanding restricted stock units, restricted
stock awards and performance shares that have no exercise price.
(3) Excludes shares issuable upon the exercise of stock options and pursuant to other rights granted
under the Stemcentrx 2011 Equity Incentive Plan, which was assumed by AbbVie upon the
consummation of its acquisition of Stemcentrx, Inc. As of December 31, 2019, 103,874 options
remained outstanding under this plan. The options have a weighted-average exercise price of$16.36. No further awards will be granted under this plan.
(b) Information Concerning Security Ownership. Incorporated herein by reference is the material under
the heading ‘‘Securities Ownership—Securities Ownership of Executive Officers and Directors’’ in the2020 AbbVie Inc. Proxy Statement. The 2020 Definitive Proxy Statement will be filed on or about
March 19, 2020.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.....................................................................................................................................................................................................................................................................................................................................................
The material to be included in the 2020 AbbVie Inc. Proxy Statement under the headings ‘‘The Boardof Directors and its Committees,’’ ‘‘Corporate Governance Materials,’’ and ‘‘Procedures for Approval of
Related Person Transactions’’ is incorporated herein by reference. The 2020 Definitive Proxy Statement will
be filed on or about March 19, 2020.

ITEM
14. PRINCIPAL ACCOUNTING FEES AND SERVICES.....................................................................................................................................................................................................................................................................................................................................................
The material to be included in the 2020 AbbVie Inc. Proxy Statement under the headings ‘‘Audit Fees
and Non-Audit Fees’’ and ‘‘Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit
Services of the Independent Registered Public Accounting Firm’’ is incorporated herein by reference. The
2020 Definitive Proxy Statement will be filed on or about March 19, 2020.

110 13NOV201221352027

2019 Form 10-K

110PART IVITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.....................................................................................................................................................................................................................................................................................................................................................

(a) Documents filed as part of this Form 10-K.
(1) Financial Statements: See Item 8, ‘‘Financial Statements and Supplementary Data,’’ on page 52
hereof, for a list of financial statements.
(2) Financial Statement Schedules: All schedules omitted are inapplicable or the information required
is shown in the consolidated financial statements or notes thereto.
(3) Exhibits Required by Item 601 of Regulation S-K: The information called for by this paragraph isset forth in Item 15(b) below.
(b) Exhibits:
Exhibit
NumberExhibit Description

2.1*Transaction Agreement, dated as of June 25, 2019, between AbbVie Inc., Allergan plc and Venice
Subsidiary, LLC (incorporated by reference to Exhibit 2.1 of the company’s Current Report on
Form 8-K filed on June 25, 2019).

2.2*Appendix III to the Rule 2.5 Announcement, dated as of June 25, 2019 (Conditions Appendix)(incorporated by reference to Exhibit 2.2 of the company’s Current Report on Form 8-K filed onJune 25, 2019).

2.3*Expenses Reimbursement Agreement, dated as of June 25, 2019, between AbbVie Inc. andAllergan plc (incorporated by reference to Exhibit 2.3 of the company’s Current Report on
Form 8-K filed on June 25, 2019).

2.4*Agreement and Plan of Merger, dated as of April 25, 2016, by and among Stemcentrx, Inc.,
AbbVie Inc., Sirius Sonoma Corporation, AbbVie Stemcentrx LLC (formerly Sirius Sonoma LLC) and,solely for the purposes set forth therein, Fertile Valley LLC (incorporated by reference to
Exhibit 2.1 of the company’s Current Report on Form 8-K/A filed on May 6, 2016).

2.5*Amendment No. 1, dated as of May 28, 2016, to the Agreement and Plan of Merger, dated as ofApril 25, 2016, by and among Stemcentrx, Inc., AbbVie Inc., Sirius Sonoma Corporation, AbbVie
Stemcentrx LLC (formerly Sirius Sonoma LLC) and, solely for the purposes set forth therein, Fertile
Valley LLC (incorporated by reference to Exhibit 2.2 of the company’s Current Report on Form 8-K
filed on June 1, 2016).

2.6*Agreement and Plan of Reorganization by and among AbbVie Inc., Oxford Amherst Corporation,
Oxford Amherst LLC and Pharmacyclics, Inc. dated as of March 4, 2015 (incorporated by reference
to Exhibit 2.1 of the company’s Current Report on Form 8-K filed on March 6, 2015).

2.7*Amendment No. 1 to Agreement and Plan of Reorganization by and among AbbVie Inc., Oxford
Amherst Corporation, Oxford Amherst LLC and Pharmacyclics, Inc. dated as of March 22, 2015
(incorporated by reference to Exhibit 2.1 of the company’s Current Report on Form 8-K filed on
March 23, 2015).

3.1*Amended and Restated Certificate of Incorporation of AbbVie Inc. (incorporated by reference to
Exhibit 3.1 of the company’s Current Report on Form 8-K filed on January 2, 2013).

3.2*Amended and Restated By-Laws of AbbVie Inc. (incorporated by reference to Exhibit 3.1 of thecompany’s Current Report on Form 8-K filed on October 22, 2019).

111

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13NOV201221352027 111

Exhibit
NumberExhibit Description

4.1

Description of the company’s securities registered pursuant to Section 12 of the Securities
Exchange Act of 1934.

4.2*Indenture dated as of November 8, 2012 between AbbVie Inc. and U.S. Bank National Association(incorporated by reference to Exhibit 4.1 of Amendment No. 5 to the company’s Registration
Statement on Form 10 filed on November 16, 2012).

4.3*Supplemental Indenture No. 1 dated as of November 8, 2012 among AbbVie Inc. and U.S. Bank
National Association, including forms of notes (incorporated by reference to Exhibit 4.2 ofAmendment No. 5 to the company’s Registration Statement on Form 10 filed on November 16,2012).

4.4*Supplemental Indenture No. 2 dated May 14, 2015, between AbbVie Inc. and U.S. Bank National
Association, as trustee, including forms of notes (incorporated by reference to Exhibit 4.1 of thecompany’s Current Report on Form 8-K filed on May 14, 2015).

4.5*Supplemental Indenture No. 3 dated May 12, 2016, between AbbVie Inc. and U.S. Bank National
Association, as trustee, including forms of notes (incorporated by reference to Exhibit 4.1 of thecompany’s Current Report on Form 8-K filed on May 12, 2016).

4.6*Supplemental Indenture No. 4, dated as of November 17, 2016, among AbbVie Inc., U.S. Bank
National Association, as trustee, Elavon Financial Services DAC, U.K. Branch, as paying agent andElavon Financial Services DAC, as transfer agent and registrar, including forms of notes(incorporated by reference to Exhibit 4.1 of the company’s Current Report on Form 8-K filed on
November 17, 2016).

4.7*Supplemental Indenture No. 5, dated September 18, 2018, between AbbVie Inc. and U.S. Bank
National Association, as trustee, including forms of notes (incorporated by reference to Exhibit 4.2of the company’s Current Report on Form 8-K filed on September 18, 2018).

4.8*Supplemental Indenture No. 6, dated September 26, 2019, among AbbVie Inc., U.S. Bank National
Association, as trustee, transfer agent and registrar, and Elavon Financial Services DAC, UK Branch,as paying agent, including forms of notes (incorporated by reference to Exhibit 4.2 of thecompany’s Current Report on Form 8-K filed on September 26, 2019).

4.9*Supplemental Indenture No. 7, dated November 21, 2019, by and between AbbVie Inc. and U.S.
Bank National Association, as trustee, including forms of notes (incorporated by reference to
Exhibit 4.2 of the company’s Current Report on Form 8-K filed on November 26, 2019).

4.10*Agency Agreement, dated as of November 17, 2016, among AbbVie Inc., U.S. Bank National
Association, as trustee, Elavon Financial Services DAC, U.K. Branch, as paying agent and Elavon
Financial Services DAC, as transfer agent and registrar (incorporated by reference to Exhibit 4.2 ofthe company’s Current Report on Form 8-K filed on November 17, 2016).

4.11*Agency Agreement, dated September 26, 2019, among AbbVie Inc., U.S. Bank National
Association, as trustee, transfer agent and registrar, and Elavon Financial Services DAC, UK Branch,as paying agent (incorporated by reference to Exhibit 4.3 of the company’s Current Report on
Form 8-K filed on September 26, 2019).

4.12*Registration Rights Agreement, dated November 21, 2019, among AbbVie Inc. and Morgan
Stanley & Co. LLC, BofA Securities, Inc. and Barclays Capital Inc. (acting for themselves and as
representatives of the several initial purchasers) (incorporated by reference to Exhibit 4.13 of thecompany’s Current Report on Form 8-K filed on November 26, 2019).

112 13NOV201221352027

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112

Exhibit
NumberExhibit Description

10.1*Form of Agreement Regarding Change in Control by and between AbbVie Inc. and its named
executive officers (incorporated by reference to Exhibit 10.13 of Amendment No. 5 to theCompany’s Registration Statement on Form 10 filed on November 16, 2012).**

10.2*AbbVie 2013 Incentive Stock Program (incorporated by reference to Exhibit A to the AbbVie Inc.
Definitive Proxy Statement on Schedule 14A dated March 15, 2013).**

10.3*AbbVie Inc. 2013 Incentive Stock Program Second Amendment (incorporated by reference to
Exhibit 10.5 of the company’s Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 2019).**10.4*AbbVie Performance Incentive Plan, as amended and restated (incorporated by reference to
Exhibit 10.4 of the company’s Annual Report on Form 10-K for the fiscal year ended December 31,2015).**

10.5*AbbVie Deferred Compensation Plan, as amended and restated (incorporated by reference to
Exhibit 10.5 of the company’s Annual Report on Form 10-K for the fiscal year ended December 31,2016).**

10.6*AbbVie Inc. Supplemental Pension Plan, as amended and restated (incorporated by reference to
Exhibit 10.2 of the company’s Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 2019).**10.7*AbbVie Inc. Supplemental Savings Plan, as amended and restated (incorporated by reference to
Exhibit 10.8 of the company’s Annual Report on Form 10-K for the fiscal year ended December 31,2015). **10.8*Form of AbbVie Inc. Non-Qualified Stock Option Agreement (incorporated by reference to
Exhibit 10.7 of the company’s Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 2013).**

10.9*Form of AbbVie Inc. Non-Employee Director Restricted Stock Unit Agreement (incorporated byreference to Exhibit 10.1 of the company’s Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2016).**

10.10*Form of AbbVie Inc. Non-Qualified Stock Option Agreement (incorporated by reference to
Exhibit 10.2 of the company’s Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 2016).**

10.11*Form of AbbVie Inc. Non-Employee Director Restricted Stock Unit Agreement (incorporated byreference to Exhibit 10.1 of the company’s Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2017).**

10.12*Form of AbbVie Inc. Non-Qualified Stock Option Agreement (incorporated by reference to
Exhibit 10.2 of the company’s Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 2017).**

10.13*Form of AbbVie Inc. Performance Share Award Agreement (incorporated by reference to
Exhibit 10.3 of the company’s Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 2017).**

10.14*Form of AbbVie Inc. Performance-Vested Restricted Stock Unit Agreement (incorporated byreference to Exhibit 10.4 of the company’s Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2017).**113

2019 Form 10-K

13NOV201221352027 113

Exhibit
NumberExhibit Description

10.15*Form of AbbVie Inc. Performance Share Award Agreement (incorporated by reference to
Exhibit 10.25 of the company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2017).**

10.16*Stemcentrx 2011 Equity Incentive Plan (incorporated by reference to Exhibit 4.3 of the Company’s
Registration Statement on Form S-8 filed on June 16, 2016).**

10.17*Form of AbbVie Inc. Performance Share Award Agreement (incorporated by reference to
Exhibit 10.2 of the company’s Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 2018).**

10.18*Form of AbbVie Inc. Performance-Vested Restricted Stock Unit Agreement (incorporated byreference to Exhibit 10.1 of the company’s Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2018).**

10.19*Form of AbbVie Inc. Non-Employee Director RSU Agreement (US) (incorporated by reference to
Exhibit 10.3 of the company’s Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 2018).**

10.20*Form of AbbVie Inc. Non-Qualified Stock Option Agreement (incorporated by reference to
Exhibit 10.4 of the company’s Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 2018).**

10.21*Form of AbbVie Inc. Performance Share Award Agreement (incorporated by reference to
Exhibit 10.2 of the company’s Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 2019).**10.22*Form of AbbVie Inc. Performance-Vested Restricted Stock Unit Agreement (incorporated byreference to Exhibit 10.1 of the company’s Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2019).**

10.23*AbbVie Non-Employee Directors’ Fee Plan, as amended and restated (incorporated by reference
to Exhibit 10.2 of the company’s Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2019).**10.24*Form of AbbVie Inc. Non-Employee Director RSU Agreement (US) (incorporated by reference to
Exhibit 10.3 of the company’s Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 2019).**10.25*Form of AbbVie Inc. Non-Qualified Stock Option Agreement (incorporated by reference to
Exhibit 10.4 of the company’s Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 2019).**

10.26*Pharmacyclics, Inc. 2014 Equity Incentive Award Plan (incorporated by reference to Exhibit 4.1 ofthe company’s Registration Statement on Form S-8 filed on May 27, 2015).**

10.27*Amended and Restated Revolving Credit Agreement, dated as of August 27, 2019, among
AbbVie Inc., the lenders and other parties party thereto and JPMorgan Chase Bank, N.A., asadministrative agent (incorporated by reference to Exhibit 10.1 of the company’s Current Reporton Form 8-K filed on August 30, 2019).

10.28*364-Day Bridge Credit Agreement, dated as of June 25, 2019, among AbbVie Inc., Morgan Stanley
Senior Funding, Inc. and the lenders party thereto (incorporated by reference to Exhibit 10.1 ofthe company’s Current Report on Form 8-K filed on June 25, 2019).

114 13NOV201221352027

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114

Exhibit
NumberExhibit Description

10.29*Term Loan Credit Agreement, dated as of July 12, 2019, among AbbVie Inc., certain lenders party
thereto and Morgan Stanley Senior Funding, Inc., as administrative agent (incorporated byreference to Exhibit 10.1 of the company’s Current Report on Form 8-K filed on July 16, 2019).

10.30*Underwriting Agreement, dated September 17, 2019, among AbbVie Inc. and Morgan
Stanley & Co. International plc, HSBC Bank plc and Merrill Lynch International (acting forthemselves and as representatives of the several underwriters named therein) (incorporated byreference to Exhibit 1.1 of the company’s Current Report on Form 8-K filed on September 23,2019).

10.31*Purchase Agreement, dated November 12, 2019, among AbbVie Inc. and Morgan
Stanley & Co. LLC, BofA Securities, Inc. and Barclays Capital Inc. (acting for themselves and as
representatives of the several initial purchasers named therein) (incorporated by reference to
Exhibit 1.1 of the company’s Current Report on Form 8-K filed on November 13, 2019).

21

Subsidiaries of AbbVie Inc.

23

Consent of Independent Registered Public Accounting Firm.

31.1

Certification of Chief Executive Officer Required by Rule 13a-14(a) (17 CFR 240.13a-14(a)).

31.2

Certification of Chief Financial Officer Required by Rule 13a-14(a) (17 CFR 240.13a-14(a)).

32.1

Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.

101

The following financial statements and notes from the AbbVie Inc. Annual Report on Form 10-K
for the year ended December 31, 2019 filed on February 21, 2020, formatted in Inline XBRL(eXtensible Business Reporting Language): (i) Consolidated Statements of Earnings; (ii) Consolidated
Statements of Comprehensive Income; (iii) Consolidated Balance Sheets; (iv) Consolidated
Statements of Equity; (v) Consolidated Statements of Cash Flows; and (vi) the Notes toConsolidated Financial Statements.

104

Cover Page Interactive Data File (the cover page from the AbbVie Inc. Annual Report on
Form 10-K formatted as Inline XBRL and contained in Exhibit 101).
The AbbVie Inc. 2020 Definitive Proxy Statement will be filed with the Securities and Exchange
Commission under separate cover on or about March 19, 2020.

*

Incorporated herein by reference. Commission file number 001-35565.

**

Denotes management contract or compensatory plan or arrangement required to be filed as an exhibit
hereto.

Exhibits 32.1 and 32.2, above, are furnished herewith and should not be deemed to be ‘‘filed’’ under
the Securities Exchange Act of 1934. AbbVie will furnish copies of any of the above exhibits to a
stockholder upon written request to the Secretary, AbbVie Inc., 1 North Waukegan Road, North Chicago,
Illinois 60064.

115

2019 Form 10-K

13NOV201221352027 115

ITEM
16. FORM 10-K SUMMARY.....................................................................................................................................................................................................................................................................................................................................................
None.

116 13NOV201221352027

2019 Form 10-K

116

SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
AbbVie Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
AbbVie Inc.
By: /s/ RICHARD A. GONZALEZ
Name: Richard A. Gonzalez
Title: Chairman of the Board andChief Executive Officer
Date: February 21, 2020
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of AbbVie Inc. on February 21, 2020 in the capacities indicatedbelow.
/s/ RICHARD A. GONZALEZ/s/ ROBERT A. MICHAEL

Richard A. Gonzalez
Chairman of the Board andChief Executive Officer(Principal Executive Officer)

Robert A. Michael
Executive Vice President,
Chief Financial Officer(Principal Financial Officer)/s/ BRIAN L. DURKIN
Brian L. Durkin
Vice President, Controller(Principal Accounting Officer)/s/ ROBERT J. ALPERN, M.D.

/s/ ROXANNE S. AUSTIN

Robert J. Alpern, M.D.
Director of AbbVie Inc.

Roxanne S. Austin
Director of AbbVie Inc.

/s/ WILLIAM H.L. BURNSIDE/s/ BRETT J. HART

William H.L. Burnside
Director of AbbVie Inc.

Brett J. Hart
Director of AbbVie Inc.

/s/ EDWARD M. LIDDY/s/ MELODY B. MEYER

Edward M. Liddy
Director of AbbVie Inc.

Melody B. Meyer
Director of AbbVie Inc.

/s/ EDWARD J. RAPP/s/ REBECCA B. ROBERTS

Edward J. Rapp
Director of AbbVie Inc.

Rebecca B. Roberts
Director of AbbVie Inc.

/s/ GLENN F. TILTON/s/ FREDERICK H. WADDELL

Glenn F. Tilton
Director of AbbVie Inc.

Frederick H. Waddell
Director of AbbVie Inc.

117

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13NOV201221352027 117

(This page has been left blank intentionally.)(This page has been left blank intentionally.)(This page has been left blank intentionally.)13NOV201221352027

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
25FEB202022013965
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on May 8, 2020
The Annual Meeting of Stockholders of AbbVie Inc. (the ‘‘Annual Meeting’’) will be held on Friday, May 8, 2020
at 9:00 a.m. CT. The safety of our stockholders is important to us, and given the current guidance by public healthofficials surrounding COVID-19 and group gatherings, this year’s Annual Meeting will be a ‘‘virtual meeting’’ ofstockholders. You will be able to attend the Annual Meeting, vote, and submit questions via live webcast by visitingwww.virtualshareholdermeeting.com/ABBV2020. The Annual Meeting will be held for the following purposes:•

To elect four directors to hold office until the 2023 Annual Meeting or until their successors are elected(Item 1),•

To ratify the appointment of Ernst & Young LLP as AbbVie’s independent registered public accounting firmfor 2020 (Item 2),•

To vote on an advisory vote on the approval of executive compensation (Item 3),•

To vote on a management proposal to eliminate supermajority voting (Item 4), and•To transact such other business as may properly come before the meeting, including consideration of threestockholder proposals, if presented at the meeting (Items 5, 6, and 7).

Your Vote Is Important
Please promptly vote your shares by telephone, using the Internet, or by signing and returning your proxy inthe enclosed envelope if you received a printed version of the proxy card.
The board of directors recommends that you vote FOR Items 1, 2, 3, and 4 on the proxy card.
The board of directors recommends that you vote AGAINST Items 5, 6, and 7 on the proxy card.
The close of business on March 13, 2020, has been fixed as the record date for determining the stockholders
entitled to receive notice of and to vote at the Annual Meeting.
AbbVie’s 2020 Proxy Statement and 2019 Annual Report on Form 10-K are available atwww.abbvieinvestor.com. If you are a registered stockholder, you may access your proxy card by either:•

Going to the following website: www.proxyvote.com, entering the information requested on your computer
screen and following the simple instructions, or•Calling (in the United States, U.S. territories, and Canada) toll free 1-800-690-6903 on a touch-tone
telephone and following the simple instructions provided by the recorded message.

To be admitted to the Annual Meeting at www.virtualshareholdermeeting.com/ABBV2020, you must enter thecontrol number found on your proxy card, voting instruction form or notice you received. You may vote during theAnnual Meeting by following the instructions available on the meeting website during the meeting.
By order of the board of directors.
Laura J. Schumacher
Secretary
March 23, 2020

13NOV201221352027

PROXY STATEMENT
25FEB202022014717

Table of Contents
Proxy Statement Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Information about the Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Who Can Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notice and Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Voting by Proxy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revoking a Proxy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discretionary Voting Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Quorum and Vote Required to Approve Each Item on the Proxy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of Broker Non-Votes and Abstentions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inspectors of Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of Soliciting Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
AbbVie Savings Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Information Concerning Director Nominees (Item 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Board of Directors and its Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Communicating with the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Director Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Securities Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation Discussion and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation Committee Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation Risk Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Summary Compensation Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 Grants of Plan-Based Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 Outstanding Equity Awards at Fiscal Year End . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 Option Exercises and Stock Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-Qualified Deferred Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Potential Payments upon Termination or Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ratification of Ernst & Young LLP as AbbVie’s Independent Registered Public Accounting Firm (Item 2) . . . . . . . . .
Audit Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Audit Fees and Non-Audit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of the Independent
Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Audit Committee Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Say on Pay—Advisory Vote on the Approval of Executive Compensation (Item 3) . . . . . . . . . . . . . . . . . . . . . . . .
Management Proposal to Eliminate Supermajority Voting (Item 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stockholder Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stockholder Proposal on Lobbying Report (Item 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stockholder Proposal on Independent Chair (Item 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stockholder Proposal on Compensation Committee Drug Pricing Report (Item 7) . . . . . . . . . . . . . . . . . . . . . . . . .
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1
11
11
11
11
11
11
12
12
12
12
12
13
18
23
24
26
28
28
46
47
48
51
53
56
56
60
60
64
65
65
65
66
67
68
69
69
72
74
77

13NOV201221352027

PROXY STATEMENT SUMMARY
25FEB202022014835
The accompanying proxy is solicited on behalf of the board of directors for use at the Annual Meeting ofStockholders. The Annual Meeting will be held on Friday, May 8, 2020 at 9:00 a.m. CT. The safety of our stockholders isimportant to us, and given the current guidance by public health officials surrounding COVID-19 and group gatherings,
this year’s Annual Meeting will be a ‘‘virtual meeting’’ of stockholders. You will be able to attend the Annual Meeting,vote, and submit questions via live webcast by visiting www.virtualshareholdermeeting.com/ABBV2020.
This summary highlights selected information in the proxy statement. Please review the entire proxy statement
and the AbbVie 2019 Annual Report before voting.

2020 Annual Meeting of Stockholders.................................................................................................................................................................................................................................................................................................................................

Date and Time: May 8, 2020 9:00 a.m. CT
Location: The Annual Meeting will be a ‘‘virtual meeting’’ of stockholders. You will be able to attend the Annual
Meeting, vote, and submit questions via live webcast by visiting www.virtualshareholdermeeting.com/ABBV2020.
Record Date: March 13, 2020
How to Vote: Stockholders as of the record date are entitled to vote via the Internet at www.proxyvote.com; bytelephone at 1-800-690-6903; by returning a completed proxy card; or during the Annual Meeting of Stockholders.

Voting Items and Board Recommendations.................................................................................................................................................................................................................................................................................................................................

Board Recommendations
Item 1
Item 2Item 3Item 4Item 5Item 6Item 7

Election of Directors
Ratification of Independent Auditor
Say on Pay—Advisory Vote on the Approval of Executive Compensation
Management Proposal to Eliminate Supermajority Voting
Stockholder Proposal on Lobbying Report
Stockholder Proposal on Independent Chair
Stockholder Proposal on Compensation Committee Drug Pricing Report

FOR All Nominees
FOR
FOR
FOR
AGAINSTAGAINSTAGAINST

Business Overview and Performance Highlights.................................................................................................................................................................................................................................................................................................................................

Business Overview
Since becoming a public company in 2013, AbbVie’s mission has been to create an innovation-driven, patientfocused biopharmaceutical company capable of achieving sustainable top-tier performance through outstanding execution
and a consistent stream of new medicines. In 2019, AbbVie achieved several new product approvals and continued toadvance its robust mid-and late-stage pipeline. Collectively, the new medicines that AbbVie has introduced since
inception—including new therapies in rheumatoid arthritis, psoriasis, hematologic oncology and hepatitis C virus—
represented more than a quarter of AbbVie’s total sales in 2019 and will be important contributors in 2020 and beyond.
AbbVie delivered another year of outstanding performance in 2019, which reflects the continued strength of its execution
across business priorities.

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PROXY STATEMENT SUMMARY

AbbVie’s products are focused on treating conditions such as chronic autoimmune diseases in rheumatology,
gastroenterology and dermatology; oncology, including blood cancers; virology, including hepatitis C virus and humanimmunodeficiency virus; neurological disorders, such as Parkinson’s disease; metabolic diseases, including thyroid diseaseand complications associated with cystic fibrosis; pain associated with endometriosis; as well as other serious healthconditions. AbbVie also has a pipeline of promising new medicines in clinical development across such important medical
specialties as immunology, oncology and neuroscience, with additional targeted investments in cystic fibrosis andwomen’s health.
In June 2019, AbbVie announced that it entered into a definitive transaction agreement under which AbbVie will
acquire Allergan plc (AGN). Allergan is a global pharmaceutical leader focused on developing, manufacturing andcommercializing branded pharmaceutical, device, biologic, surgical and regenerative medicine products for patientsaround the world. Allergan markets a portfolio of brands and products primarily focused on key therapeutic areas
including aesthetics, eye care, neuroscience, gastroenterology, and women’s health.
Business Performance Highlights
AbbVie has Delivered Robust Financial Results since Inception

Performance from 2013 Inception to 2019 Year End
10.0%

Adjusted net revenues - compound annual growth rate*

Approximately

Revenues in 2019 from products launched since inception$9BN

Brought to market six new medicines: IMBRUVICA, MAVYRET, ORILISSA, RINVOQ, SKYRIZI,VENCLEXTA

19.1%

Adjusted diluted earnings per share - compound annual
growth rate*

1,100

Operating margin expansion, adjusted*

Basis points

240.2%

7-year total stockholder return$77BN

Increase in market capitalization

195%

Increase in quarterly dividend

Approximately

60

Added significant stockholder value

Raised quarterly dividend to $1.18 per share from $0.40 per share at inception

Active clinical development programs
Approximately 30 new products or indications in mid- and late-stage development or underregulatory review

5MAR202011351197

The measures set forth above were calculated as of December 31, 2019.
* 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.

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PROXY STATEMENT SUMMARY

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 quartile of its Health Care Peer Group.
Additionally, AbbVie is committed to a robust return of capital to stockholders with an increase of 195% 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 240.2% also places AbbVie at the top of its Health Care Peer Group, and more than78 percentage points above the Standard & Poor’s 500 Index and more than 124 percentage points above the NYSE Arca
Pharmaceutical Index over the same time period.
AbbVie has Significantly Grown Revenue and EPS Since 2013

Adjusted Net Revenues*

Adjusted EPS*CAGR = 10.0%

CAGR = 19.1%$8.94**$32.7 $33.3**

$7.91

$28.2
$25.6
$5.60

($BN)

$22.8
$18.8 $19.9

$4.29

$4.82

$3.14 $3.32

2013 2014 2015 2016 2017 2018 20192013 2014 2015 2016 2017 2018 20192MAR202019015380* 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.
**Year-over-year growth in adjusted net revenues and EPS from 2018-2019
despite significant biosimilar competition for HUMIRA outside the UnitedStates.
AbbVie has Demonstrated an Outstanding Track Record, Consistently Delivering Top-Tier Financial Results% Revenue Growth% Adjusted EPS Growth

Total Shareholder Return

ABBV Rank vs. Peer Group (1)ABBV Rank vs. Peer Group (1)ABBV Rank vs. Peer Group (1)PeriodRank

PeriodRank

PeriodRank

2019#4 of 102019

#3 of 102019

#9 of 10

3 Years('17,'18,'19)

5 Years('15,'16,'17,'18,'19)#2 of 10

#1 of 10

3 Years#1 of 10('17,'18,'19)

5 Years#1 of 10('15,'16,'17,'18,'19)

3 Years('17,'18,'19)

5 Years('15,'16,'17,'18,'19)#5 of 10

#4 of 10

1MAR202007515641(1) 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 and Pfizer Inc.

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AbbVie also Delivered Strong Business Performance in 2019
AbbVie has built a strong foundation for its business and 2019 was an exceptional year, as evidenced by anumber of business highlights:•

Net Revenues: AbbVie reported full-year net revenues of $33.3 billion. Adjusted net revenues increased
2.7% over 2018, excluding the impact of foreign exchange. Excluding the unfavorable impact of international
HUMIRA net revenues due to biosimilar competition, full year adjusted net revenues grew 9.9%
operationally.

•

HUMIRA: AbbVie delivered global HUMIRA sales of $19.2 billion, a decrease of 3.9% on a reported basis, ora decrease of 2.9% excluding the impact of foreign exchange. HUMIRA’S performance was impacted bydirect biosimilar competition in certain international geographies.

•

IMBRUVICA: Global IMBRUVICA net revenue was $4.7 billion, an increase of 30.2%, driven by market share
growth in front-line chronic lymphocytic leukemia and other approved indications.

•

Gross and Operating Margins: In 2019, AbbVie reported a gross margin of 77.6% on a GAAP basis or 82.4%
of net revenues on an adjusted basis. AbbVie’s operating margin was 39.0% on a GAAP basis or 47.3% of
net revenues on an adjusted basis. The adjusted operating margin reflects an improvement of 270 basis
points versus 2018.

•

Earnings Per Share: AbbVie reported full-year diluted EPS of $5.28 on a GAAP basis and adjusted diluted
EPS of $8.94, up 13.0%. For 2020, AbbVie provided a diluted EPS guidance range of $7.66 to $7.76 on a
GAAP basis and $9.61 to $9.71 on an adjusted basis. The midpoint of the adjusted guidance represents
growth of 8.1% over 2019, reflecting strong operating dynamics in the underlying business.

•

Regulatory Milestones: AbbVie also achieved a number of regulatory milestones in markets worldwide forseveral key products, including regulatory approvals for SKYRIZI for the treatment of moderate to severeplaque psoriasis in adults who are candidates for systemic therapy or phototherapy, RINVOQ for thetreatment of adults with moderately to severely active rheumatoid arthritis who have had an inadequate
response or intolerance to methotrexate; IMBRUVICA in combination with GAZYVA (obinutuzumab) for adultpatients with previously untreated chronic lymphocytic leukemia (CLL)/small lymphocytic lymphoma (SLL);and VENCLEXTA in combination with GAZYVA for adult patients with previously untreated CLL/SLL. AbbVie
also submitted regulatory applications for ELAGOLIX in uterine fibroids and IMBRUVICA in combination withrituximab for the first-line treatment of younger patients with CLL or SLL.

•

Pipeline Development: With approximately 30 programs in mid- and late-stage development, AbbVie madesignificant pipeline advancements in 2019. The company initiated several important Phase 3 programs
including studies for upadacitinib in giant cell arteritis and axial spondyloarthritis, risankizumab in psoriatic
arthritis, and ABBV-951 in Parkinson’s disease. AbbVie also reported positive data from Phase 3 studies inother areas of the pipeline including veliparib in both breast cancer and ovarian cancer and upadacitinib inpsoriatic arthritis.

Corporate Governance Highlights.................................................................................................................................................................................................................................................................................................................................

Our board of directors is committed to strong corporate governance tailored to meet the needs of AbbVie andits stockholders to enhance long-term stockholder value. In connection with our ongoing, proactive engagement withstockholders (as described in greater detail on page 37), AbbVie’s board of directors:•

approved a management proposal to eliminate supermajority voting in this proxy statement (Item 4) toseek stockholder approval to amend the company’s Amended and Restated Certificate of Incorporation toprovide for a simple majority of shares outstanding for all provisions previously subject to a supermajority

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provision, as described in Item 4 and previously submitted the same supermajority proposal to stockholder
vote in 2019 and 2018 as well as a declassification management proposal to a stockholder vote in 2018,2017, and 2016;•

approved and implemented in 2016 a proxy access by-law provision to permit a stockholder, or a group of
up to 20 stockholders, owning at least 3% of the company’s outstanding common stock continuously for atleast 3 years to nominate and include in the company’s proxy materials director nominees constituting up to
25% of the board of directors, as further detailed in the company’s By-Laws;•

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;•

incorporated an overview of AbbVie’s corporate responsibility approach and initiatives in the proxystatement beginning in 2018; and•reviewed detailed feedback from AbbVie’s investor engagement program, which reaches out tostockholders holding approximately 45% of the company’s outstanding shares to discuss investor priorities,
including board oversight of company culture, board and workforce diversity, executive compensation, andcorporate responsibility.

Highlights of our governance practices include:
Governance Practice

For more information

Independent lead director with robust responsibilities is selectedby the board
All members of the audit, compensation, and nominations andgovernance committees are independent
Ten of AbbVie’s eleven directors are independent and regularly
meet in executive session
Adopted a proxy access By-Law provision for 3%/3 years
Policy prohibiting hedging and pledging
Robust stock ownership guidelines
Disclosure of our corporate political contributions and our tradeassociation dues and oversight process

p. 19

Broad clawback authority to recover incentive plan awards
For inclusion on the board, the nominations and governancecommittee considers diversity of ethnicity, gender, and geography
Related person transaction policy to ensure appropriate oversight
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 thedirector fails to receive a majority of the votes cast
We hold an annual say-on-pay advisory vote on executive
compensation
Our governance guidelines restrict the number of boards our
directors may serve on to prevent overboarding
Annual board and committee self-assessments and annual
succession planning
We are guided by strong ethics programs and supplier guidelines

p. 18
p. 18
p. 79
p. 46
p. 45
http://www.abbvie.com/responsibility/transparency-policies/corporate-politicalparticipation.html
p. 46
p. 21
p. 77
Certificate of Incorporation and By-Laws
p. 12

p. 67
Corporate Governance Guidelines
Corporate Governance Guidelines
http://www.abbvie.com/responsibility/
home.html

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PROXY STATEMENT SUMMARY

Corporate Responsibility 2019 Highlights.................................................................................................................................................................................................................................................................................................................................

At AbbVie, we strive to make a remarkable impact on patients and drive sustainable growth by discovering anddelivering a consistent stream of innovative medicines that address serious health problems. In order to drive thelong-term sustainability of our business we will continue to make responsible pricing decisions for these medicines, andthis is reflected in our long-range plan. Our growth is primarily driven by reaching more patients with innovative new
medicines, not increases in price.
In 2019, we launched our company Principles, which anchor our culture and what we believe in. Aligned to our
Principles, our corporate responsibility priorities guide the ways we advance our business strategy. Key highlights for theyear on these corporate responsibility priorities include:
Principles:

Responsibility Priority:

Transforming lives

Use our experse to improve health

Embracing diversity & inclusion
Driving innovaon

Creang real health improvement is our mission and the premiseof our business. To be a leading health care innovator, we mustaract, retain and support a diverse workforce and invest in theireﬀorts to develop medicines that bring value for paents. 29FEB202020325880

Attracting and retaining a diverse and inclusive workforce:•

In 2019, we implemented our new global Equality, Diversity and Inclusion strategy across the organization.
This includes a five-year roadmap that defines key global focus areas, objectives and associated initiatives,and implementation plans by function and geography. Our senior leaders have taken formal 2020 goalsaligned with executing this strategy.

•

We continued to advance equality and diversity across the organization. At the end of 2019, women
represented 48% of our management positions globally. In the United States, 32% of our workforce wascomprised of historically underrepresented populations. Both proportions increased since last year. Ourannual U.S. compensation assessment found our pay practices to be equitable across genders andethnicities.

•

An important part of our strategy is to instill an inclusive mindset in all leaders and employees, so we canrealize the full value of our diverse workforce. This year we launched a new toolkit for people who manageothers, to reinforce the importance of equality, diversity and inclusion to our business, educate leaders on
inclusive recruiting practices and modeling inclusive behavior, and encourage participation in our inclusive
culture learning opportunities.

•

Our Employee Resource Groups (ERGs) also help us nurture an inclusive culture, by building community,
hosting awareness events and providing leadership and career opportunities. In 2019 we created a seventh
ERG, Ability at AbbVie, to address the needs and concerns of individuals with disabilities and theircaregivers.

Delivering innovative medicines that offer significant health benefit:•

In 2019, AbbVie achieved nine new product or indication approvals or expansions. These included
treatments for rheumatoid arthritis, moderate to severe plaque psoriasis, and previously untreated chronic
lymphocytic leukemia.

•

ABBV-4083, an investigational compound that AbbVie is co-developing on a pro-bono basis, had a successful
end of phase 1 meeting with the U.S. Food and Drug Administration. A Phase 2 study in patients with river

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PROXY STATEMENT SUMMARY

blindness will be conducted by our partner, Drugs for Neglected Diseases initiative, with drug product andpro-bono technical support from AbbVie.
•

myAbbVie Assist, our U.S. patient assistance program, is one of the ways we help patients who may behaving trouble paying for their AbbVie medicine. In 2019, more than 89,000 patients—up from nearly
81,000 in 2018—received their AbbVie medicines at no cost through myAbbVie Assist. Broader eligibility
criteria and a new awareness campaign supported the expansion of the program.

•

AbbVie is committed to working toward the World Health Organization’s 2030 hepatitis C virus (HCV)
elimination goal. We support HCV micro-elimination projects around the world. In 2019, AbbVie partneredwith the Washington State Health Care Authority with the shared goal of eliminating HCV in the entire state.
The partnership is a modified subscription-type plan for our pan-genotypic medicine, with additional support
from AbbVie that will help the state control costs while also increasing the potential to care for HCV
patients.

Principles:

Responsibility Priority:Acng with Integrity

Steward our ethical and sustainable business
We recognize that health is of fundamental importance to all
people. To parcipate over the long term in the provision of healthcare, we must earn and maintain the trust of paents, health careproviders, regulators, policymakers, and the public.
29FEB202020330144

Advancing our environmental sustainability priorities:•

2019 marked the inaugural year for a new environmental sustainability strategy focused on reducing ourenvironmental footprint, growing sustainably and inspiring, educating and engaging our workforce to steward
sustainability within and beyond AbbVie. On Earth Day, we launched an employee sustainability awarenesscampaign called ‘‘Sustainable Steps Today. Healthy, Bright Tomorrows,’’ to encourage sustainable behavior atwork and home.

•

We launched the SPARK Innovation Accelerator, an incubator for employee-driven AbbVie sustainability
proposals. In its first year, the accelerator received over 100 proposals and selected 10 new environmental
sustainability projects to support.

•

We continued to make progress against our 2025 environmental targets.
•

Since 2015 we have reduced our absolute carbon dioxide emissions (scope 1 and 2) by more than
16%, over halfway to our 2025 target of 25%.

•

We increased the percentage of purchased electricity that is from renewable sources to more than
24%, up from 9% in 2016 and almost halfway to our 2025 target of 50%.

Stewarding our ethical business:•

As part of our longstanding commitment to acting with integrity, we recently launched a Leading with
Integrity communication campaign. People who manage others set the day-to-day expectations for our
employees and provide the most visible example of our culture. The campaign is our latest step in driving aculture of integrity, which is essential to strong business performance because it supports high levels of

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PROXY STATEMENT SUMMARY

quality, compliance and safety, builds trust and underpins strong partnerships. The program reinforces theways each manager can support integrity:••

honoring our Principles and our Code of Business Conduct,•

modeling and explaining good decision-making,•encouraging questions, discussion and reporting of ethics or compliance concerns,•

promoting an inclusive environment, and•ensuring employee data privacy.

All employees received AbbVie’s annual training on our Code of Business Conduct, and employees in
relevant functions received mandatory training on topics such as anti-corruption and anti-bribery, conflicts ofinterest, recognizing and reporting safety information, appropriate product promotion, and appropriate
interactions with health care providers and patient groups. Our compliance training is continually reviewed
and updated as necessary to ensure employees are receiving the most relevant and timely information onthese important topics.

Leading the industry in workplace safety:•

Since our launch as an independent company, AbbVie has been the Dow Jones Sustainability Index (DJSI)
leader in occupational health and safety across the biotechnology industry. This reflects our commitment tocontinuously improving our best-in-class safety programs for the benefit of all of our employees around theglobe.

Principles:

Responsibility Priority:

Serving the Community

Support long-term community strength
The health of our business is intertwined with that of ourcommunities. We can use our unique resources to support
well-being, resilience and growth in the communities where we dobusiness and help lay the foundation for broader community
vitality.
25FEB202022015802

Supporting communities through economic activity, community engagement and philanthropy:•

Our North America Supplier Diversity Program is designed to integrate small and diverse businesses into our
supply chain. We create meaningful opportunities for historically underutilized populations, including
minorities, women, military veterans and others, to do business with AbbVie. In 2019, AbbVie was named
Corporation of the Year by Diversity Alliance for Science, in recognition of our ongoing commitment tomentorship and development of small and diverse suppliers.

•

In 2018, AbbVie established or enhanced strategic relationships with partners making long-term impacts oncommunity strength by investing an additional $350 million in priority focus areas. In 2019, thesepartnerships, supported by funding from AbbVie, advanced shared goals in three areas:•

Helping families of sick children thrive by supporting family-centered care: Our partner Ronald
McDonald House Charities completed expansions of 24 Houses, adding more than 162,465 familynights close to hospital care. Additional expansions continue. Family Reach expanded its financial
support services to 25 new hospitals in 23 states, serving an additional 2,966 families in immediateneed.

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PROXY STATEMENT SUMMARY•

Strengthening K-12 education in underserved communities: City Year expanded math and literacy
support to another 16,000 students in Chicago and provided new curricula and training to more than
85 partner schools nationwide. Communities In Schools launched a new Student Supports Institute andUniversity of Chicago Education Lab developed new pilot programs in nine schools in partnership with
the Superintendent of Chicago Public Schools.

•

Supporting disaster relief and resilience in Puerto Rico: With support from AbbVie, Direct Relief
repaired and strengthened 14 community health centers and provided 17 mobile medical units to help
clinics reach the most remote and vulnerable populations. Nearly 800 emergency packs have been
supplied to the Medical Reserve Corps and other healthcare providers to enhance preparedness. New
solar power installations support 12 health facilities and 14 community water pumps. Our partner
Habitat for Humanity International completed 129 substantial home repairs, trained 194 local workers
in OSHA certified building practices and created an island-wide title clearance initiative to address
barriers to recovery.

We also align our commitments to the United Nations’ Sustainable Development Goals (SDGs). We focus on
Good Health & Well-Being (SDG 3), Quality Education (SDG 4), Gender Equality (SDG 5), Decent Work & Economic
Growth (SDG 8), Responsible Production and Consumption (SDG 12), and Climate Action (SDG 13). To further explore our
support for the SDGs, please visit globalhealthprogress.org.
For more information about our corporate responsibility efforts, please visit abbvie.com/responsibility.
DiversityInc.
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25FEB202022011997
Executive Compensation Highlights.................................................................................................................................................................................................................................................................................................................................

AbbVie’s board of directors believes a well-designed compensation program should align executive interests withthe drivers of stockholder returns and profitable growth, support achievement of the company’s primary business goals,
and attract and retain world-class executives whose talents and contributions sustain the growth in long-term stockholder
value. Consequently, the compensation committee of the board has designed and implemented an executive
compensation program in which a substantial majority of named executive officer (NEO) compensation at AbbVie isperformance-based.
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- andlong-term performance of the company.

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Three primary components make up AbbVie’s executive pay program: base salary, short-term incentives andlong-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.
Designed to be competitive with market and industry norms, and to reflect individual performance

Base Salary

Short-Term
Incentives

Long-Term
Incentives

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

Targets are based on expected business, market and regulatory
conditions, including expectations for our pipeline— Net revenues— Income before taxes— Operating margin— Return on assets— Strategic and leadership goals

Compensation committee establishes maximum award allocations
for plan participants each year as a percentage of consolidated net
earnings, and the plan imposes a maximum of 200% of target
Compensation committee uses a payout matrix based on financial
performance to define and cap the range of awards at or below theplan maximum when making its final determinations

Long-term incentive annual awards are
granted in the form of:— Performance shares and performancevested restricted stock units (80% ofNEO’s LTI award)— Non-qualified stock options (20% ofNEO’s LTI award)Awards are based on LTI program goals and company businessperformance, as well as individual factors

Level of awards NEOs receive varies
according to plan design and individual
performance as reviewed by ourcompensation committee

Annual award design incorporates multi-year performance periods andmultiple performance metrics, including relative total stockholder
returnCompensation committee determines grants for each NEO basedon its assessment of performance and progress against strategic
milestones

25FEB202022125192

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INFORMATION ABOUT THE ANNUAL MEETING
25FEB202022013117
Who Can Vote
Stockholders of record at the close of business on March 13, 2020 will be entitled to notice of and to voteduring the Annual Meeting. As of March 13, 2020, AbbVie had 1,476,672,808 outstanding shares of common stock,which are AbbVie’s only outstanding voting securities. Each stockholder has one vote per share. Stockholders do not havethe right to vote cumulatively in electing directors.
Notice and AccessIn accordance with the Securities and Exchange Commission (SEC) e-proxy rules, AbbVie mailed a Notice ofInternet Availability of Proxy Materials (the ‘‘Notice’’) to stockholders in March 2020. The Notice describes the matters to
be considered at the Annual Meeting and how stockholders can access the proxy materials online. It also provides
instructions on how stockholders can vote their shares. If you received the Notice, you will not receive a printed versionof the proxy materials unless you request one. If you would like to receive a printed version of the proxy materials, freeof charge, please follow the instructions on the Notice.
Voting by Proxy
AbbVie’s stockholders may vote their shares by telephone, the Internet, or during the Annual Meeting. If you
vote by telephone or the Internet, you do not need to return your proxy card. The instructions for voting can be foundon the Notice, on the website listed in the Notice, and, if you received one, on your proxy card. If you requested aprinted version of the proxy card, you may also vote by mail.
Revoking a Proxy
You may revoke your proxy by voting during the Annual Meeting or, at any time prior to the meeting:•by delivering a written notice to the secretary of AbbVie,•

by delivering an authorized proxy with a later date, or•by voting by telephone or the Internet after you have given your proxy.

Discretionary Voting Authority
Unless otherwise specified in accordance with the instructions on the proxy, the persons named in the proxy will
vote the shares of AbbVie common stock covered by proxies they receive to elect the four nominees named in Item 1
on the proxy card. If a nominee becomes unavailable to serve, the shares will be voted for a substitute designated by
the board of directors or for fewer than four nominees if, in the judgment of the proxy holders, such action is necessaryor desirable.
Where a stockholder has specified a choice for or against the proposals to be presented at the Annual Meetingor if the stockholder has chosen to abstain, the shares of AbbVie common stock represented by the proxy will be voted(or not voted) as specified. Where no choice has been specified, the proxy will be voted FOR the ratification of Ernst &Young LLP as auditors, FOR the approval of executive compensation, FOR the management proposal to eliminate
supermajority voting, and AGAINST each of the stockholder proposals.

112020 Proxy Statement

9MAR202010224538 11

INFORMATION ABOUT THE ANNUAL MEETINGThe board of directors is not aware of any other issue that may properly be brought before the meeting. Ifother matters are properly brought before the meeting, the accompanying proxy will be voted in accordance with thejudgment of the proxy holders.
Quorum and Vote Required to Approve Each Item on the Proxy
A majority of the outstanding shares entitled to vote generally in the election of directors, represented in personor by proxy, constitutes a quorum. Directors are elected by stockholders in an uncontested election if a majority of thevotes cast are ‘‘for’’ a director’s re-election at the Annual Meeting, excluding abstentions and broker non-votes. For othermatters, the affirmative vote of a majority of the shares represented, in person or by proxy, at the meeting and entitledto vote on a matter shall be the act of the stockholders with respect to that matter; except for the management
proposal to eliminate supermajority voting, which requires the affirmative vote of shares representing not less thaneighty percent (80%) of the outstanding shares of capital stock of AbbVie entitled to vote generally in the election of
directors pursuant to Article XI of AbbVie’s Amended and Restated Certificate of Incorporation.
Effect of Broker Non-Votes and Abstentions
A proxy submitted by an institution such as a broker or bank that holds shares for the account of a beneficial
owner may indicate that all or a portion of the shares represented by that proxy are not being voted with respect to aparticular matter. This could occur, for example, when the broker or bank is not permitted to vote those shares in theabsence of instructions from the beneficial owner of the stock. These ‘‘non-voted shares’’ will be considered shares notpresent and, therefore, not entitled to vote on those matters, although these shares may be considered present andentitled to vote for other purposes. Brokers and banks have discretionary authority to vote shares in the absence of
instructions on matters the New York Stock Exchange considers ‘‘routine,’’ such as the ratification of the appointment of
the auditors. They do not have discretionary authority to vote shares in absence of instructions on ‘‘non-routine’’matters. The election of directors, the advisory vote on the approval of executive compensation, the management
proposal to eliminate supermajority voting, and the stockholder proposals are considered ‘‘non-routine’’ matters.
Non-voted shares will not affect the determination of the outcome of the vote on any matter to be decided at themeeting. Shares represented by proxies that are present and entitled to vote on a matter but that have elected toabstain from voting on that matter, other than the election of directors, will have the effect of votes against that matter.
Inspectors of Election
The inspectors of election and the tabulators of all proxies, ballots, and voting tabulations that identify
stockholders are independent and are not AbbVie employees.
Cost of Soliciting Proxies
AbbVie will bear the cost of making solicitations from its stockholders and will reimburse banks and brokeragefirms for out-of-pocket expenses incurred in connection with this solicitation. Proxies may be solicited by mail, telephone,Internet, or in person by directors, officers, or employees of AbbVie and its subsidiaries.
AbbVie has retained Alliance Advisors LLC to aid in the solicitation of proxies, at an estimated cost of $15,000
plus reimbursement for reasonable out-of-pocket expenses.
AbbVie Savings Plan
Participants in the AbbVie Savings Plan will receive voting instructions for their shares of AbbVie common stock
held in the AbbVie Savings Plan Trust. The Trust is administered by both a trustee and an investment committee. The
trustee is The Northern Trust Company. The members of the investment committee are William H.S. Preece, Scott T.
Reents and Michael J. Thomas, employees of AbbVie. The voting power with respect to the shares is held by and shared
between the investment committee and the participants. The investment committee must solicit voting instructions fromthe participants and follow the voting instructions it receives. The investment committee may use its own discretion withrespect to those shares of AbbVie common stock for which no voting instructions are received.

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12

INFORMATION CONCERNING DIRECTOR NOMINEES(ITEM 1)25FEB202022013233
The board of directors consists of three classes currently comprised of three directors in Class I, four directors inClass II, and four directors in Class III. Directors of one class are elected each year for a term of three years. The Class II
directors are presented for re-election to hold office until the expiration of their term at the 2023 annual meeting ofstockholders and until their successors are elected and qualified or until their earlier death or resignation.
Directors are elected by stockholders if a majority of the votes cast are ‘‘for’’ a director’s re-election at theAnnual Meeting, excluding abstentions and broker non-votes. For more information on the director majority votestandard, see AbbVie’s By-Laws as listed as an exhibit to AbbVie’s 2019 Annual Report on Form 10-K. All of the nominees
are currently serving as directors.

Class II—Directors Whose Terms Expire in 2020.................................................................................................................................................................................................................................................................................................................................

Robert J. Alpern, M.D.
Ensign Professor of Medicine, Professor of Internal Medicine, and Former Dean of Yale School of
Medicine
Dr. Alpern has served as the Ensign Professor of Medicine and Professor of Internal Medicine at
Yale School of Medicine since June 2004. He served as Dean of Yale School of Medicine from June
2004 to January 2020. From July 1998 to May 2004, Dr. Alpern was the Dean of The University ofTexas Southwestern Medical Center. Dr. Alpern served on the board of Yale-New Haven Hospital
17JAN201314181230 from October 2005 to January 2020. Dr. Alpern also serves as a director of Abbott Laboratories
Committees:
and Tricida, Inc.
Nominations &Key Contributions to the Board: Through his position as Ensign Professor of Medicine, Professor
Governanceof Internal Medicine, as well as his previous service as Dean of Yale School of Medicine, Dean of
Public Policy
The University of Texas Southwestern Medical Center, and on the board of Yale-New Haven
Director since: 2013 Hospital, Dr. Alpern contributes valuable insights to the board through his medical and scientificAge: 69
expertise and his knowledge of the health care environment and the scientific nature of AbbVie’s
key research and development initiatives.
Edward M. Liddy
Retired Chairman & CEO, The Allstate Corporation
Mr. Liddy served as a partner in the private equity investment firm Clayton, Dubilier & Rice, LLC
from January 2010 to December 2015. At the request of the Secretary of the U.S. Department of
the Treasury, Mr. Liddy served as interim chairman and chief executive officer of American
International Group, Inc. (AIG), a global insurance and financial services holding company, from
September 2008 to August 2009. From January 1999 to April 2008, Mr. Liddy served as chairman
17JAN201314191789 of the board of The Allstate Corporation (insurance). He served as chief executive officer ofCommittees:
Allstate from January 1999 to December 2006, president from January 1995 to May 2005, andCompensation
chief operating officer from August 1994 to January 1999. Mr. Liddy currently serves on the board
Public Policyof directors of Abbott Laboratories, 3M Company, and The Boeing Company. Mr. Liddy has reachedthe mandatory retirement age for directors at both Boeing and 3M and will not stand for reDirector since: 2013
election at either company’s 2020 annual meeting.
Age: 74
Key Contributions to the Board: Mr. Liddy’s executive leadership at Allstate and AIG and his board
service at several Fortune 100 companies enable him to provide our board with valuable insights
on corporate strategy, risk management, corporate governance and other issues facing large,
global enterprises. Additionally, as a former chief financial officer, audit committee chair at
Goldman Sachs and 3M, and a private equity firm partner, Mr. Liddy provides our board withsignificant knowledge and understanding of corporate finance, capital markets, financial reporting
and accounting matters.

13

2020 Proxy Statement

9MAR202010224538 13

INFORMATION CONCERNING DIRECTOR NOMINEES

Melody B. Meyer

25FEB202005212245
Committees:
Audit
Public Policy

Retired President, Chevron Asia Pacific Exploration and Production
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 National
Oilwell Varco, Inc.

Key Contributions to the Board: As a result of her tenure at Chevron, Ms. Meyer has acquired
Director since: 2017 operational, management, strategic planning, and financial expertise with extensive global
Age: 62
experience and provides an informed perspective to the board on financial and operational
matters faced by a complex international company.

Frederick H. Waddell
Former Chairman of the Board and Chief Executive Officer of Northern Trust Corporation and The
Northern Trust Company
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
17JAN201314192826 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
Committees:
director of International Business Machines Corporation.
Audit
Compensation
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
Director since: 2013
experience with a strong record of leadership in a highly regulated industry.
Age: 66Class III—Directors Whose Terms Expire in 2021.................................................................................................................................................................................................................................................................................................................................

Roxanne S. Austin
President, Austin Investment Advisors
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., aof Internet television services. Ms. Austin served as president and chief operating officer
17JAN201314185859 provider
of DIRECTV, Inc. Ms. Austin also served as executive vice president and chief financial officer ofCommittees:
Hughes Electronics Corporation and as a partner of Deloitte & Touche LLP. Ms. Austin is also a
Audit
director of Abbott Laboratories, Crowdstrike, Inc., Target Corporation, and Teledyne
Compensation
Technologies, Inc. Ms. Austin has informed Target she will not stand for re-election when her
current term concludes in June 2020. Ms. Austin also served as a director of Telefonaktiebolaget
Director since: 2013
LM Ericsson from 2008 to 2016.
Age: 59
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 theboard, including financial expertise and knowledge of financial statements, corporate finance andaccounting matters.

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INFORMATION CONCERNING DIRECTOR NOMINEES

Richard A. Gonzalez
Chairman of the Board and Chief Executive Officer, AbbVie Inc.
Mr. Gonzalez is the chairman and chief executive officer of AbbVie. 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
25FEB202005213005 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
Director since: 2013 joined Abbott in 1977 and held various management positions before briefly retiring in 2007,
Age: 66
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 andCanada.
Key Contributions to the Board: As a result of his service as Abbott’s executive vice president,
Pharmaceutical Products Group, his previous service as Abbott’s president and chief operating
officer and his more than 30-year career at Abbott, Mr. Gonzalez has developed valuable business,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.
Rebecca B. Roberts

25FEB201801543127
Committees:
Nominations &GovernancePublic Policy

Retired President of Chevron Pipe Line Company
Ms. Roberts served as president of Chevron Pipe Line Company from 2006 until her retirement in2011. 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 careerwith 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.
Director since: 2018 She provides an informed perspective to the board on regulatory and operational matters faced by
a complex international company.
Age: 67152020 Proxy Statement

9MAR202010224538 15

INFORMATION CONCERNING DIRECTOR NOMINEES

Glenn F. Tilton
Retired Chairman and Chief Executive Officer of the UAL Corporation
Mr. Tilton was chairman of the Midwest for JPMorgan Chase & Co. from 2011 until his retirementin 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
17JAN201314185103 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
Committees:
Corp., Mr. Tilton enjoyed a 30-year multi-disciplinary career with Texaco Inc., culminating in his
Auditelection as chairman and chief executive officer. Mr. Tilton is also a director of Abbott Laboratories
Compensation
and Phillips 66. Mr. Tilton also served on the board of directors of Lincoln National Corporation
Nominations &from 2002 to 2007, of TXU Corporation from 2005 to 2007, of Corning Incorporated from 2010 toGovernance2012, and of United Continental Holdings, Inc. from 2010 to 2012.
Public Policy
Lead Independent
Director

Key Contributions to the Board: As chairman of the Midwest for JPMorgan Chase & Co. andhaving previously served as non-executive chairman of the board of United Continental
Director since: 2013 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
Age: 71
acquired strong management experience overseeing complex multinational businesses operating inhighly 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. alsoenhances his contributions as AbbVie’s lead independent director.

Class I—Directors Whose Terms Expire in 2022.................................................................................................................................................................................................................................................................................................................................

William H.L. Burnside

28FEB201906525124
Committees:
Audit
Nominations &Governance

Retired Senior Vice President and Director at The Boston Consulting GroupMr. 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 intelecommunications, 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 broadbase of industries.

Director since: 2013
Age: 68

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16

INFORMATION CONCERNING DIRECTOR NOMINEES

Brett J. Hart
Executive Vice President and Chief Administrative Officer, United Airlines Holdings, Inc.
Mr. Hart is the executive vice president and chief administrative officer of United Airlines
Holdings, Inc. (UAL) and United Airlines, Inc. He served as 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
8MAR201622161098
acting chief executive officer of UAL and United Airlines, Inc. from October 2015 to March 2016.
Committees:
From December 2010 to February 2012, he served as senior vice president, general counsel andNominations &secretary of UAL, United and Continental. From June 2009 to December 2010, Mr. Hart served asGovernanceexecutive vice president, general counsel and corporate secretary at Sara Lee Corporation.
Public Policy
Key Contributions to the Board: As an executive vice president and general counsel for two large
Director since: 2016
public companies with international operations and having served as an acting CEO, Mr. Hart
Age: 50contributes 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.

Edward J. Rapp
Retired Group President for Resource Industries of Caterpillar Inc.
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 groupin 2007. He is currently a member of the University of Missouri College of Business
17JAN201314183678 president
Advisory Board. Mr. Rapp previously served as a director of FM Global.
Committees:
Audit
Key Contributions to the Board: As a result of his tenure as group president and chief financial
Nominations &officer at Caterpillar Inc., Mr. Rapp has acquired management, operational, and financial expertise
Governancewith extensive global experience and provides the board with an informed perspective on financial
and operational matters faced by a complex international company.
Director since: 2013
Age: 62172020 Proxy Statement

9MAR202010224538 17

THE BOARD OF DIRECTORS AND ITS COMMITTEES
25FEB202022015926
The Board of Directors.................................................................................................................................................................................................................................................................................................................................

The board of directors held eleven meetings in 2019. The average attendance of all incumbent directors at board
and committee meetings in 2019 was ninety-nine percent, and each director attended at least seventy-five percent of thetotal number of board meetings and meetings of the committees of which he or she served. AbbVie encourages its
board members to attend the annual stockholder meeting. All of AbbVie’s directors attended the 2019 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. 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 ofcompanies 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 boardof Abbott Laboratories (Abbott), AbbVie’s former parent. In making its determination, the board relied on bothinformation 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 withassistance from its committees. The board reviews enterprise risks and discusses them with our senior management on aregular basis. AbbVie’s risk management program focuses on issues relevant to AbbVie’s business, reputation, andstrategy, including but not limited to pipeline advancement, healthcare industry dynamics such as pricing and patient
access, manufacturing, regulatory and compliance matters, and others. For more details about committee responsibilities
and oversight, please see the committee discussion on pages 21-23.
The board also 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 aremarkable impact on patients’ lives around the world.
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 theappropriate 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 theindependent members of the board of directors.

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18THE BOARD OF DIRECTORS AND ITS COMMITTEESThe lead independent director responsibilities include:1.

reviews and guides agenda items for board meetings;

2.

leads the CEO succession planning process;3.

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;

4.

reviews and approves matters, such as schedule sufficiency, and, where appropriate, information provided toother board members;

5.

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

6.

has the authority to call meetings of the independent directors;

7.

leads the board’s evaluation of the CEO;8.

leads the annual board and committee evaluation process, including discussing evaluations with eachdirector individually;

9.

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

10. involved in selection and interviewing of new board members;
11. if requested by major stockholders, ensures that he or she is available for consultation and directcommunication as needed;
12. if required, represents independent board members externally; and13. 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 thatserve 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 ofendeavor, 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 isrelevant to the board’s oversight role with respect to AbbVie’s business and affairs. They must also be able and willing torepresent the stockholders’ economic interests and satisfy their fiduciary duties to stockholders without conflicts ofinterest. 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 andcommittee 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 areanonymous. 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.

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9MAR202010224538 19

THE BOARD OF DIRECTORS AND ITS COMMITTEESEach 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 eachskill also is noted.
Such skills include, among others:•

Healthcare Industry—Relevant to an industry understanding and review of our business and strategy forcontinued innovation.

•

Leadership—For a board that can successfully advise and oversee the company’s business performance andrepresent stockholders’ interests.

•

Global Business and Strategy—For oversight of a complex global organization like AbbVie to successfully
advise and oversee the strategic development and direction of the company.

•

Corporate Governance and Public Company Board—Ensuring directors have background and knowledge toperform 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.

Director Skills, Knowledge and Experience Matrix

Healthcare
Industry
Dr. Alpern
Ms. Austin
Mr. Gonzalez
Mr. Burnside
Mr. Hart
Mr. Liddy
Ms. Meyer
Mr. Rapp
Ms. Roberts
Mr. Tilton
Mr. Waddell

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2020 Proxy Statement

Leadership

GlobalBusinessandStrategy

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20

Corporate
Governanceand PublicCompany
Board
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Finance or
Accounting
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Government
Relations andRegulatory
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THE BOARD OF DIRECTORS AND ITS COMMITTEES

Board Diversity.................................................................................................................................................................................................................................................................................................................................

AbbVie is committed to diversity in its workforce and on its board of directors. In the process of identifying
nominees to serve as a member of the board of directors, the nominations and governance committee considers theboard’s diversity of ethnicity, gender, age, and geography and assesses the effectiveness of the process in achieving thatdiversity. More details about our workforce diversity are available in the ‘‘Corporate Responsibility Highlights’’ section ofthis proxy statement.

45%

Members of AbbVie’s board who are women or ethnically diverse
individuals

25FEB202022013587
Committees of the Board of Directors.................................................................................................................................................................................................................................................................................................................................

The board of directors has five committees established in AbbVie’s By-Laws: the audit committee, compensationcommittee, nominations and governance committee, public policy committee, and executive committee. Each of themembers of the audit committee, compensation committee, and nominations and governance committee is independent.
Mr. Tilton serves as AbbVie’s lead independent director.

Audit
Committee

Nominations andGovernanceCommittee

Compensation
Committee

25FEB202022013712

R. Alpern
R.25FEB202022012611
Austin25FEB202022011493
25FEB202022013712

W. Burnside

25FEB202022013712
25FEB202022013712
25FEB202022011493

25FEB202022013712
25FEB202022013712

M. MeyerE. RappR. Roberts
G.
25FEB202022013350
TiltonF. Waddell

25FEB202022013712
25FEB202022013712

25FEB202022013712
25FEB202022013712

64

Number of meetings

25FEB202022013350
Lead Director

25FEB202022013712

25FEB202022013712

B. Hart
E. Liddy

Public Policy
Committee

25FEB202022011493

25FEB202022011493
25FEB202022013712
25FEB202022013712

25FEB202022013712
25FEB202022013712

4425FEB202022013712

Chairperson

25FEB202022011493
25FEB202022013712
25FEB202022013712

Member

25FEB202022012611
Financial Expert

Audit Committee
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 areasof legal and regulatory compliance, and enterprise risk management. Each of the members of the audit committee is

212020 Proxy Statement

9MAR202010224538 21

THE BOARD OF DIRECTORS AND ITS COMMITTEES

financially literate, as required of audit committee members by the NYSE, and the independence requirements set forthin Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended (the ‘‘Exchange Act’’). The board of directors
has determined that Ms. Austin, the committee’s chairperson, is an ‘‘audit committee financial expert.’’Compensation Committee
The compensation committee is governed by a written charter. This committee assists the board of directors incarrying 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 thefull board regarding both the amount of director compensation that should be paid and the allocation of thatcompensation between equity-based awards and cash. In recommending director compensation, the compensationcommittee 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 theconsideration 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 plansin which the AbbVie executive officers participate and all of AbbVie’s equity-based plans. It may delegate theresponsibility to administer and make grants under these plans to management, except to the extent that suchdelegation 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 proxystatement. 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 meetsregularly, 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 2019.
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 thecompensation committee report is included in the ‘‘Compensation Committee Report’’ section of this proxy statement.
Nominations and Governance Committee
The nominations and governance committee is governed by a written charter. This committee assists the boardof 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 thechairman 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 toserve as a member of the board of directors depends on the qualities being sought, as described on pages 20-21. From
time to time, AbbVie engages an executive search firm to assist the committee in identifying individuals qualified to beboard members.

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2020 Proxy Statement

22THE BOARD OF DIRECTORS AND ITS COMMITTEES

Public Policy Committee
The public policy committee is governed by a written charter. This committee assists the board of directors infulfilling its oversight responsibility with respect to AbbVie’s public policy, certain areas of legal and regulatorycompliance, governmental affairs, healthcare compliance, and social responsibility and environmental matters that affector could affect AbbVie. Other topics within the committee’s purview include but are not limited to ethics and compliancematters, 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. 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.

Communicating with the Board of Directors.................................................................................................................................................................................................................................................................................................................................

Stockholders and other interested parties may communicate with the board of directors by writing a letter tothe 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 tothe 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 amember of the board and may request any correspondence on that log.

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9MAR202010224538 23

DIRECTOR COMPENSATION25FEB202022011878
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 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 thenprovided to the full board.
The following table sets forth the non-employee directors’ 2019 compensation.

Fees
Earned orPaid in Cash($)(1)

Restricted
Stock Unit
Awards($)(2)

OptionAwards($)(3)

Change in
Pension Valueand
NonqualifiedDeferredCompensation
Earnings($)(4)

R. Alpern$110,000$189,952$0$50,143$25,000$375,095

R. Austin

135,000

189,952

0

0

8,475

333,427

W. Burnside

116,000

189,9520027,755

333,707

B. Hart121,667

189,9520025,000336,619

E. Liddy

130,000

189,952000319,952

M. Meyer

116,000

189,9520025,000330,952

E. Rapp

136,000

189,9520026,077352,029

R. Roberts

110,000

189,9520024,800324,752

G. Tilton

169,750

189,9520028,043

387,745

F. Waddell

116,000

189,9520025,000330,952Name

All Other
Compensation($)(5)Total($)(1) Under the Non-Employee Directors’ Fee Plan as in effect during 2019, non-employee directors earned $110,000 per
year for service as a director and $20,000 per year for service as a chair of a board committee, other than thechair of the audit committee. The chair of the audit committee received $25,000 per year for service as chair ofthat committee and the other members of the audit committee received $500 for each month of service as acommittee member. During 2019, the lead director retainer was increased from $25,000 per year to $50,000 per
year in connection to additional responsibilities for the role identified at the 2019 annual meeting of stockholders.
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

24 9MAR202010224538

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DIRECTOR COMPENSATION

to a director’s trust so that as of year-end the stock equivalent account balance (net of taxes) is not less thanseventy-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 2019, determined in accordance with Financial Accounting Standards Board (FASB) AccountingStandards 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 at the 2019 annual stockholder meeting received under the AbbVie 2013 Incentive Stock Program vested
restricted stock units with a target grant date value of $190,000. In 2019, this equated to 2,419 restricted stock
units (after rounding the award down to the nearest whole unit), with a reportable value of $189,952. The
non-employee directors receive cash payments equal to the dividends paid on the shares covered by the units atthe same rate as other stockholders, but do not otherwise have access to the restricted stock units during theirboard service. Upon termination or retirement from the board, death, or a change in control of the company, anon-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, 2019: R. Alpern, 26,107; R. Austin,
33,770; W. Burnside, 17,548; B. Hart, 10,062; E. Liddy, 21,534; M. Meyer, 7,088; E. Rapp, 17,548; R. Roberts, 4,318;
G. Tilton, 29,754; and F. Waddell, 17,548. 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, 2019.
(4) The totals in this column include reportable interest credited under the AbbVie Non-Employee Directors’ Fee Plan
during 2019.
(5) Charitable contributions made by AbbVie’s non-employee directors are eligible for a matching contribution (up to$25,000 annually). For 2019 contributions, the AbbVie Foundation made charitable matching contributions on behalfof the following AbbVie directors: R. Alpern, $25,000; W. Burnside, $25,000; B. Hart, $25,000; M. Meyer, $25,000;
E. Rapp, $25,000; R. Roberts, $24,800; G. Tilton, $25,000; and F. Waddell, $25,000. This column also includes
reimbursement for certain taxes.

25

2020 Proxy Statement

9MAR202010224538 25

SECURITIES OWNERSHIP
25FEB202022015439
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,
2020, by each director and director nominee, the chief executive officer, the chief financial officer, and the three othermost 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.

SharesBeneficially
Owned(1)(2)(3)

Stock Options
Exercisable
within 60 daysof January 31, 2019

Stock
Equivalent
Units

R. Gonzalez

334,589

770,1990

R. Alpern

26,1070

6,933

R. Austin

117,11400

W. Burnside

17,54800

B. Hart

10,06200

E. Liddy

22,6690

24,692

M. Meyer

7,088

0

0

E. Rapp30,6620

16,872

R. Roberts

4,318

0

0

G. Tilton

42,5040

32,020F. Waddell

19,54800R. Michael

10,91345,0860

L. Schumacher

164,480

335,175

0

C. Alban

168,319525,299

0

115,857

423,2540

1,352,824

3,018,896

80,517Name

M. Severino(4)

All directors and executive officers as a group(1) The table includes shares held in the executive officers’ accounts in the AbbVie Savings Plan as follows: all executive
officers as a group, 4,586. 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 instock 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, 7,615; G. Tilton,
350; C. Alban, 40,442; and all directors and executive officers as a group, 88,457.
(4) The directors and executive officers as a group own less than one percent of the outstanding shares of AbbVie.

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26

SECURITIES OWNERSHIP

Securities Ownership of Principal Stockholders.................................................................................................................................................................................................................................................................................................................................

The table below reports the number of shares of AbbVie common stock beneficially owned as of December 31,
2019 by Capital Research Global Investors, BlackRock, Inc. and The Vanguard Group (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 12, 2020, by BlackRock, Inc. on February 5, 2020 and by Capital Research Global Investors
on February 14, 2020. The Vanguard Group reported that it had sole voting power with respect to 2,293,312 shares,
shared voting power with respect to 402,994 shares, sole dispositive power with respect to 120,014,023 shares andshared dispositive power with respect to 2,560,697 shares. BlackRock, Inc. reported that it had sole voting power withrespect to 83,787,858 shares, shared voting power with respect to 0 shares, sole dispositive power with respect to98,593,810 shares and shared dispositive power with respect to 0 shares. Capital Research Global Investors reported thatit had sole voting power with respect to 86,601,345 shares, shared voting power with respect to 0 shares, sole
dispositive power with respect to 86,602,693 shares and shared dispositive power with respect to 0 shares.
Name and Address of Beneficial Owner

Shares Beneficially Owned

Percent of ClassThe Vanguard Group
100 Vanguard Boulevard
Malvern, PA 19355

122,574,720

8.3%BlackRock, Inc.
55 East 52nd Street
New York, NY 10055

98,593,810

6.7%

Capital Research Global Investors
333 South Hope Street
Los Angeles, CA 90071

86,602,693

5.8%2020 Proxy Statement

9MAR202010224538 27

27

EXECUTIVE COMPENSATION25FEB202022012120
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 thecontext of executive pay decisions, and the performance goals and results for each NEO:
Richard A. Gonzalez

Chairman of the Board and Chief Executive Officer

Robert A. Michael

Executive Vice President, Chief Financial Officer

Laura J. Schumacher

Vice Chairman, External Affairs and Chief Legal Officer

Carlos Alban

Vice Chairman, Chief Commercial Officer

Michael E. Severino

Vice Chairman and President

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.
CD&A Table of Contents
The CD&A is organized as follows:
I. Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation Philosophy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Business Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Business Performance Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Components of our Compensation Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 Performance Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stockholder Engagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation Program Governance Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
II. Executive Compensation Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commitment to Performance-Based Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Committee Process for Setting Total Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation Benchmarking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Role of the Compensation Consultant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation Risk Oversight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
III. Compensation Plan Elements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Base Salary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-Term Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-Term Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Excise Tax Gross-Ups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in Control Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
IV. Other Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock Ownership Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Clawback Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Anti-Hedging and Anti-Pledging Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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EXECUTIVE COMPENSATIONI.

Executive Summary

Compensation Philosophy
At AbbVie, the board of directors and management believe a well-designed compensation program should alignexecutive 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, and attract and retain world-class executives
whose talents and contributions sustain the growth in long-term stockholder value. The board believes it has
implemented a compensation program that appropriately balances short- and long-term strategic objectives and directly
links compensation to stockholder value with more than three-fourths of the total direct compensation paid to NEOs tiedto performance. The compensation program also supports the board’s philosophy of paying fairly and equitably
irrespective of gender and ethnicity.
Business Overview
AbbVie’s products are focused on treating conditions such as chronic autoimmune diseases in rheumatology,
gastroenterology and dermatology; oncology, including blood cancers; virology, including hepatitis C virus and humanimmunodeficiency virus; neurological disorders, such as Parkinson’s disease; metabolic diseases, including thyroid diseaseand complications associated with cystic fibrosis; pain associated with endometriosis; as well as other serious healthconditions. AbbVie also has a pipeline of promising new medicines in clinical development across such important medical
specialties as immunology, oncology and neuroscience, with additional targeted investments in cystic fibrosis andwomen’s health.
In June 2019, AbbVie announced that it entered into a definitive transaction agreement under which AbbVie will
acquire Allergan plc (AGN). Allergan is a global pharmaceutical leader focused on developing, manufacturing andcommercializing branded pharmaceutical, device, biologic, surgical and regenerative medicine products for patientsaround the world. Allergan markets a portfolio of brands and products primarily focused on key therapeutic areas
including aesthetics, eye care, neuroscience, gastroenterology, and women’s health.

292020 Proxy Statement

9MAR202010224538 29

EXECUTIVE COMPENSATIONBusiness Performance Highlights
AbbVie has Delivered Robust Financial Results since Inception

Performance from 2013 Inception to 2019 Year End
10.0%

Adjusted net revenues - compound annual growth rate*

Approximately

Revenues in 2019 from products launched since inception$9BN

Brought to market six new medicines: IMBRUVICA, MAVYRET, ORILISSA, RINVOQ, SKYRIZI,VENCLEXTA

19.1%

Adjusted diluted earnings per share - compound annual
growth rate*

1,100

Operating margin expansion, adjusted*

Basis points

240.2%

7-year total stockholder return$77BN

Increase in market capitalization

195%

Increase in quarterly dividend

Approximately

60

Added significant stockholder value

Raised quarterly dividend to $1.18 per share from $0.40 per share at inception

Active clinical development programs
Approximately 30 new products or indications in mid- and late-stage development or underregulatory review

5MAR202011351197

The measures set forth above were calculated as of December 31, 2019.
* 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.
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 quartile of its Health Care Peer Group.
Additionally, AbbVie is committed to a robust return of capital to stockholders with an increase of 195% in its quarterly

30 9MAR202010224538

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EXECUTIVE COMPENSATION

dividend since 2013 as part of a balanced and disciplined capital allocation program. AbbVie’s total stockholder return(TSR) since inception of 240.2% also places AbbVie at the top of its Health Care Peer Group, and more than78 percentage points above the Standard & Poor’s 500 Index and more than 124 percentage points above the NYSE Arca
Pharmaceutical Index over the same time period.
AbbVie also Delivered Strong Business Performance in 2019
AbbVie has built a strong foundation for its business and 2019 was an exceptional year, as evidenced by anumber of business highlights:•

Net Revenues: AbbVie reported full-year net revenues of $33.3 billion. Adjusted net revenues increased
2.7% over 2018, excluding the impact of foreign exchange. Excluding the unfavorable impact of international
HUMIRA net revenues due to biosimilar competition, full year adjusted net revenues grew 9.9%
operationally.

•

HUMIRA: AbbVie delivered global HUMIRA sales of $19.2 billion, a decrease of 3.9% on a reported basis, ora decrease of 2.9% excluding the impact of foreign exchange. HUMIRA’S performance was impacted bydirect biosimilar competition in certain international geographies.

•

IMBRUVICA: Global IMBRUVICA net revenue was $4.7 billion, an increase of 30.2%, driven by market share
growth in front-line chronic lymphocytic leukemia and other approved indications.

•

Gross and Operating Margins: In 2019, AbbVie reported a gross margin of 77.6% on a GAAP basis or 82.4%
of net revenues on an adjusted basis. AbbVie’s operating margin was 39.0% on a GAAP basis or 47.3% of
net revenues on an adjusted basis. The adjusted operating margin reflects an improvement of 270 basis
points versus 2018.

•

Earnings Per Share: AbbVie reported full-year diluted EPS of $5.28 on a GAAP basis and adjusted diluted
EPS of $8.94, up 13.0%. For 2020, AbbVie provided a diluted EPS guidance range of $7.66 to $7.76 on a
GAAP basis and $9.61 to $9.71 on an adjusted basis. The midpoint of the adjusted guidance represents
growth of 8.1% over 2019, reflecting strong operating dynamics in the underlying business.

•

Regulatory Milestones: AbbVie also achieved a number of regulatory milestones in markets worldwide forseveral key products, including regulatory approvals for SKYRIZI for the treatment of moderate to severeplaque psoriasis in adults who are candidates for systemic therapy or phototherapy, RINVOQ for thetreatment of adults with moderately to severely active rheumatoid arthritis who have had an inadequate
response or intolerance to methotrexate; IMBRUVICA in combination with GAZYVA (obinutuzumab) for adultpatients with previously untreated chronic lymphocytic leukemia (CLL)/small lymphocytic lymphoma (SLL);and VENCLEXTA in combination with GAZYVA for adult patients with previously untreated CLL/SLL. AbbVie
also submitted regulatory applications for ELAGOLIX in uterine fibroids and IMBRUVICA in combination withrituximab for the first-line treatment of younger patients with CLL or SLL.

•

Pipeline Development: With approximately 30 programs in mid- and late-stage development, AbbVie madesignificant pipeline advancements in 2019. The company initiated several important Phase 3 programs
including studies for upadacitinib in giant cell arteritis and axial spondyloarthritis, risankizumab in psoriatic
arthritis, and ABBV-951 in Parkinson’s disease. AbbVie also reported positive data from Phase 3 studies inother areas of the pipeline including veliparib in both breast cancer and ovarian cancer and upadacitinib inpsoriatic arthritis.

31

2020 Proxy Statement

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EXECUTIVE COMPENSATION

The graphs below illustrate AbbVie’s growth of net revenue and diluted EPS in 2019 versus 2018.

Adjusted
Net Revenues*$33.3**

2018

2019

$8.94**
$7.91

($BN)

$32.7

Adjusted EPS*

2018

2019

2MAR202019015246* Net revenues and diluted earnings per share are adjusted for specified
items and are non-GAAP measures, which are reconciled in Appendix B.
**Year-over-year growth in adjusted net revenues and EPS from 2018-2019
despite significant biosimilar competition for HUMIRA outside the UnitedStates.
Performance Relative to Peer Group
AbbVie is in the top tier of its peers on several financial measures. The chart below outlines AbbVie’s six-year
performance relative to its Health Care Peer Group.

AbbVie Percentile Rank – 2013-2019

Metric

0th

25th

50th

75th

100th
92%

GAAP Sales Growth
Adjusted Operating Income Growth100%

Adjusted EPS Growth91%

GAAP Operating Cash Flow Growth

91%

100%

Adjusted Return on Equity

25FEB202022124116

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EXECUTIVE COMPENSATION

In 2019, AbbVie outperformed its Health Care Peer Group in most of these categories, as demonstrated in thechart below.
AbbVie Percentile Rank − 2019*
Metric0th

25th

GAAP Sales Growth

50th

75th

100th

38%

Adjusted Operating Income Growth55%

Adjusted EPS Growth79%

GAAP Operating Cash Flow Growth54%

Adjusted Return on Equity

100%

2MAR202019015102* Strong financial performance versus peers in 2019 despite significant biosimilar competition for HUMIRA
outside the United States.

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EXECUTIVE COMPENSATION

Total Stockholder Return (TSR) Performance
Since becoming a public company in 2013, AbbVie has delivered a total stockholder return of 240.2%, whichplaces AbbVie at the top 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 fromJanuary 2, 2013 (the first day AbbVie’s common stock began ‘‘regular-way’’ trading on the NYSE) through December 31,
2019. 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 indicativeof future stock price performance.
Comparison of Cumulative Total Return since AbbVie’s Launch
$350
$300
$250
$200
$150
$100
01/02/2013 12/31/2013 12/31/2014 12/31/2015 12/31/2016 12/31/2017 12/31/2018 12/31/2019
Period Ending
AbbVie Inc.

S&P 500 Index

NYSE Arca Pharmaceutical Index

25FEB202022124662

AbbVie’s TSR for calendar year 2019 was 1.5%, which did not reflect the company’s top tier operational andfinancial performance. As the chart above indicates, despite this 1-year result, AbbVie’s returns since launch significantly
exceed industry comparisons.

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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 ourcompensation program are listed below.
Designed to be compeve with market and industry norms, and to reﬂect
individual performance
Base Salary

Individual salaries are established relave to market median based on each
NEO’s individual performance, skills, and experience, and internal equity, as
well as the company’s annual operang budget
Performance Incenve Plan (PIP)
Based on non-GAAP performance measures such as:

Short-Term Incenves

Long-Term Incenves— Net revenues— Income before taxes— Operang margin— Return on assets— Strategic and leadership goals

80% Performance shares and performance-vested restricted stock units
20% Non-qualiﬁed stock opons

25FEB202022011618

The committee is dedicated to ensuring that a substantial portion of executive compensation is ‘‘at-risk’’ andvariable. Generally, more than three-fourths of our NEOs’ total direct compensation is variable and directly affected byboth the company’s and the NEO’s performance.
2019 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 2019 performance goals. The specific weightings for each NEO are established at the start of eachperformance 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.
Financial Goals

Goal and Expected Result(1)
A.
B.
C.
D.

2018 Actual 2019 Target

Non-GAAP Net Revenues$32.3BN(2)Non-GAAP Income Before Taxes $13.3BN(2)Adjusted Return on Assets
23.9%
Non-GAAP Operating Margin$14.4BN(2)$32.8BN
$14.1 BN
30.3%
$15.3BN2019 Target vs.
2018 Actual2019 Actual2019 Actual vs.
2019 Target

102%
106%
127%
106%

$33.3 BN(2)$14.7 BN(2)30.5%$15.8 BN(2)

101%
104%
101%
103%

(1) Results achieved reflect certain specified items, which are reconciled in Appendix B.
(2) Evaluated on a constant currency basis.

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EXECUTIVE COMPENSATION

In addition to the financial goals set forth above, each of our NEOs also has individual performance goals thatthe committee reviews and ensures are appropriately rigorous and in line with the long-term success of the company.
Each NEO achieved or exceeded his or her 2019 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.

•

Carlos Alban: Achieve key product milestones; and successfully adapt and execute market strategies relative
to external considerations.

•

Michael E. Severino: Achieve key research and development milestones per company strategy; and achieve
proprietary pipeline enhancement objectives.

Beginning in 2019, our NEOs also took formal 2019 goals aligned to protecting AbbVie’s reputation as a top employer
and ensuring its long-term sustainability by driving the company’s culture in a manner consistent with our Principles.
Key achievements included, for example:•

Implementation of our new global Equality, Diversity and Inclusion strategy across the organization. This
includes a three-year roadmap that defines key global focus areas, objectives and associated initiatives, andimplementation plans by function and geography.

•

Being named to prestigious ‘‘top employer’’ lists, including DiversityInc. ‘‘Top 50 Companies for Diversity,’’
Fortune’s ‘‘100 Best Companies to Work For,’’ Great Place to Work’s ‘‘World’s Best Workplaces,’’ Science
Magazine’s Top Employers, and Working Mother’s ‘‘100 Best Companies,’’ and achieving a score of 100/100
on Human Rights Campaign’s Corporate Equality Index.

•

Maintaining a position on the Dow Jones Sustainability World Index and the FTSE4Good Index, and being a
constituent of the newly launched S&P 500 ESG Index.

•

Launching a new enterprise-wide environmental sustainability strategy and advancing toward 2025
environmental sustainability targets.

•

Launching a new ‘‘Leading with Integrity’’ communication campaign to reinforce the specific ways managers
can support a culture of integrity in their day-to-day leadership roles.

Stockholder Engagement
2019 Say on Pay Results
At our 2019 Annual Meeting, the say on pay proposal received support from over 91% of our stockholders. The
board and compensation committee are encouraged by the continued, consistent stockholder support for our executive
compensation program.

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EXECUTIVE COMPENSATION

AbbVie is committed to regular, ongoing engagement with stockholders to ensure that we continue tounderstand stockholder feedback about our compensation program and incorporate that feedback into the compensation
decision-making process. To that end, in 2019 AbbVie reached out to stockholders holding approximately 45% of thecompany’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 thelevel of stockholder support for our say on pay proposals since inception. The feedback informs the compensationcommittee’s continuous assessment of the program design and ongoing discussions with stockholders, which contributeto the evolution of the program.

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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 andare committed to good governance practices, including the following:

Balanced Incenve Plan Design
Annual incenve plan includes ﬁnancial, operaonal, and strategic metrics to assess
performance
Annual incenve payout matrix used to deﬁne and cap the range for the commiee's
determinaons (at or below the plan maximum of 200% of target)
Long-term incenve design emphasizing mulple, relave performance metrics andmul-year performance periods
No duplicaon of performance metrics in short- and long-term incenves

29FEB202020325594

Pay Equity and Sustainability
Equitable pay across genders and ethniciesIncorporaon of reputaon and sustainability into the strategic/leadership goals
within the annual incenve plan

29FEB202020330277

Strong Governance Pracces
Commiee has broad discreon to claw back incenve awards in the unlikely eventof a restatement of earnings or material breach of the AbbVie Code of Business ConductAn-hedging and an-pledging policies
Conduct comprehensive compensaon program risk review annually
Independent compensaon consultant that performs no other work for the company

29FEB202020330794

Pay for Performance and Stockholder Alignment
Short- and long-term incenve programs closely align with performance
Majority of NEO compensaon ed to long-term performance
Proacve stockholder engagement process

29FEB202020330408

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 unl the minimum stock ownership requirement
is sasﬁed

29FEB202020330666

Responsible Pay Pracces
No single trigger vesng of equity or other beneﬁts in the event of a change in control
No repricing of stock opons without express stockholder approval
No tax gross-ups in execuve compensaon programNo employment contracts
No guaranteed short-term incenves or equity awards

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29FEB202020330539

EXECUTIVE COMPENSATIONII.

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 toensure the overall assessment of performance and pay decisions are aligned with the company’s true performance overa 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 andthe 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 thepeer median in each instance. Awards can be differentiated from the peer compensation levels based on 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 importantcharacteristics with AbbVie, particularly the global emphasis on research-based pharmaceuticals and biopharmaceuticaltherapies 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 ourcompetitive 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 meetsregularly, 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, andcompensation 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 andmitigate 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.
The committee, in collaboration with its independent compensation consultant, identified no material risks in AbbVie’scompensation programs in 2019.

III.

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.
CEO Pay Mix

All Other NEO Average Pay Mix

10%

16%

Base Salary

Base Salary

25%

65%

53%

Short-term
Incenves

Long-term
Incenves

Long-term
Incenves

31%
Short-term
Incenves

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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 foreach 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.
NEO target incentive amounts are set as a percentage of base salary. Mr. Gonzalez’s target is 150% of basesalary. For the 2019 performance year, the target for the other NEOs range from 110% to 125% of base salary, based on
the positions they held at the time their performance goals were established. The maximum potential payout under the
PIP is capped at 200% of target for all participants.

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EXECUTIVE COMPENSATION

Determining actual incentive amounts is a multi-step process. First, an initial performance score is calculated foreach 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 compensationcommittee based on a qualitative assessment of holistic performance. A formal payout matrix based on net revenues andoperating margin 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 2019 Incentive Calculation

TargetAwardx

Performance
Score

=

Preliminary
Award

Final Committee
Decision

Maximum
100% of Target
per plan design

Plan Governance:

Final
Award

=

2019 Performance results:
Capped at 175% of Target per payout matrix(below 200% plan maximum)

25FEB202022124926
Initial Performance Score
Initial performance scores are calculated for each NEO based on performance against weighted financial andstrategic/leadership goals. The goals and their respective weightings are summarized in the chart below. The specificgoals 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.

Richard A. Gonzalez
Robert A. Michael
Laura J. Schumacher
Carlos Alban
Michael E. Severino

IncomeBeforeTaxes

Net Revenues,
Operating Margin,
and Return on Assets

20%
20%
20%
20%
20%

60%
60%
20%
50%
20%

R&D/
Innovation

Business
Development

Reputation/
Sustainability

10%
10%

10%
10%

40%

10%

10%
10%
10%
10%
10%

Other

30%
20%

Assessments of performance against financial results consider the effect of specified adjustments and/or unusualor unpredictable events, and the appropriateness of these adjustments is reviewed annually by the committee. In 2019,
specified adjustments included intangible asset amortization, acquisition-related costs, milestones and other research anddevelopment expenses, acquired in process research and development, change in fair value of contingent consideration,
Reata divestiture, litigation matters, a tax audit settlement, restructuring, and other items, as described in Exhibit 99.1 to
AbbVie’s Form 8-K filed on February 7, 2020.
Annual Incentive Payout Matrix and Final Committee Decisions
The annual incentive payout matrix establishes a potential range of final incentive outcomes based on net
revenues and operating margin performance. For 2019, actual net revenue performance was 101% compared to target,

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EXECUTIVE COMPENSATION

while actual income before taxes was 104% compared to target. As a result of this performance, the annual incentive
payout matrix capped the annual incentives at 175% of target, below the plan maximum of 200% of target.
Annual Incentive Payout Matrix(1)2018 Actual2019 Target

2019 Target vs.
2018 Actual2019 Actual2019 Actual vs.
2019 Target

Non-GAAP Net Revenues
Non-GAAP Income Before Taxes$32.3BN(2)$13.3BN(2)$32.8BN
$14.1BN102%
106%$33.3BN(2)$14.7BN(2)

101%
104%

2019 Payout Matrix Result

Capped at 175% of target(below 200% plan maximum)(1) Results achieved reflect certain specified items, which are reconciled in Appendix B.
(2) Evaluated on a constant currency basis.
Final awards are determined by the compensation committee based on a qualitative assessment of holistic
performance. While the committee relies heavily on objective, quantitative metrics to determine PIP awards, thisqualitative element ensures the review is comprehensive and includes all individual, strategic, and leadership goals forwhich assessment is not dictated solely by numeric or formulaic applications. Moreover, while each participant has
predetermined goals, the committee also considers relative achievements and/or developments in the company, themarketplace, and the global economy that could not have been foreseen when individual goals were established.

Richard A. Gonzalez
Robert A. Michael
Laura J. Schumacher
Carlos Alban
Michael E. Severino

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TargetAward

Actual Award
Paid

Actual Award
as a % ofTarget$2,475,000
1,045,000
1,421,400
1,421,400
1,673,750$4,335,000
1,800,000
2,400,000
2,400,000
2,400,000

175%
172%
169%
169%
143%

EXECUTIVE COMPENSATION

Long-Term Incentives
The LTI program design aligns AbbVie’s long-term incentive compensation with key operational and financial
initiatives, including sustained EPS growth and generation of superior investment returns relative to peers. In 2019, NEOs
received annual grant LTI awards with the following characteristics:
Long-Term Incentive ProgramAward Type
40% Performance Shares
40% Performance-Vested Restricted Stock
20% Non-Qualified Stock Options

MetricPerformance Period

EPS 3-Year Relative TSR Modifier
Relative Return on Equity
Stock Price Appreciation

3 Years
3 Years
10-year term•

Performance Shares (40% of total LTI award)—These awards have the potential to vest at 0% to 250% of
target after a three-year performance period and are earned based on company performance in earnings
per share (EPS) and relative total stockholder return (TSR). TSR performance is measured relative to a groupmade up of companies that are constituents in either the S&P Pharmaceutical, Biotech, and Life ScienceIndex or the NYSE Arca Pharmaceutical Index. Dividends on performance shares accrue during theperformance period and are paid at vesting only to the extent that shares are earned.

•

Performance-Vested Restricted Stock (40% of total LTI award)—These awards have the potential to vest at
0% to 150% of target in one-third increments during a three-year performance period based on AbbVie’s
return on equity articulated as pre-set goals and measured relative to a group made up of companies thatare constituents in either the S&P Pharmaceutical, Biotech, and Life Science Index or the NYSE Arca
Pharmaceutical Index. Dividends accrue during the performance period and are paid at vesting only to theextent that shares are earned.

•

Non-Qualified Stock Options (20% of total LTI award)—These awards have the potential to vest in one-third
increments on each of the first three annual anniversaries of the grant date, subject to continued
employment with the company. The option exercise price is set at or above fair market value on the grant
date. To the extent that the options vest, the award expires ten years after the grant date.

Performance Share and Performance-Vested Restricted Stock Performance Targets and Results
Performance targets and results associated with the 2019 annual grant awards of performance shares andperformance-vested restricted stock are shown below. Total shareholder return results are in progress; these results andtheir impact on final payout will be disclosed following the completion of the three-year performance period.
Performance Objective

ThresholdTargetMaximum

ResultImpact on Payout

Adjusted Diluted EPS(1)Relative TSR
Relative ROE

$8.65
$8.70
$8.85
$8.94
200%
Relative TSR is measured over a 3-year performance period and used as a modifier
50th - 75th
75th - 90th
>90th
>90th
150%
percentile
percentile
percentile
percentile(1) Diluted earnings per share is adjusted to exclude certain specified items and is a non-GAAP measure, which isreconciled in Appendix B.
AbbVie’s policy with respect to its annual equity award for all eligible employees, including the NEOs, is to grant
the award and set the grant price at the compensation committee’s regularly scheduled February meeting each year.

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EXECUTIVE COMPENSATION

These meeting dates generally are the third Thursday of February and are scheduled two years in advance. The grantprice is the average of the highest and lowest trading prices of a common share on the date of the grant (rounded up to
the next even penny). The grant price for the 2019 annual grant was $79.02. The high, low and closing prices of an
AbbVie common share on the grant date (February 21, 2019) were $79.91, $78.10, and $78.75 respectively. All LTI
awards are subject to a minimum vesting period of 12 months.
AbbVie granted performance shares in 2017 that were subject to a 3-year performance cycle that ended
December 31, 2019. The table below describes the performance objectives, outcomes, and shares earned.

Performance Objective

ThresholdTargetMaximum

ActualRelative TSR

15 pts below
index

Equal to index
performance

15 pts aboveindex

11.2 pts above
index

Performance
Modifier
120%

Benefits
Benefits are an important part of retention and capital preservation for all employees, helping to protect against
the impact of unexpected catastrophic loss of health and/or earnings potential, as well as providing a means to save andaccumulate for retirement or other post-employment needs.
Each of the benefits described below supports the company’s objective of providing a market competitive total
rewards program. Individual benefits do not directly affect decisions regarding other benefits or pay components, except
to the extent that all benefits and pay components must, in aggregate, be competitive, as previously discussed.
Retirement Benefits
All eligible U.S. employees, including NEOs, participate in the AbbVie Pension Plan, the company’s principal
qualified defined benefit plan. NEOs and certain other employees also participate in the AbbVie Supplemental Pension
Plan. These plans are described in greater detail in the section of this proxy statement captioned ‘‘Pension Benefits.’’
The Supplemental Pension Plan is a non-qualified defined benefit plan that cannot be secured in a manner
similar to a qualified plan, for which assets are held in trust, so eligible NEOs receive an annual cash payment equal tothe increase in the present value of their Supplemental Pension Plan benefit. Eligible NEOs have the option of depositing
the annual payment into an individually established grantor trust, net of tax withholdings. Deposited amounts may becredited with the difference between the NEO’s actual annual trust earnings and the rate used to calculate trust funding(currently 8 percent). Amounts deposited in the individual trusts are not tax-deferred and the NEOs personally pay thetaxes on those amounts without gross-ups.
The manner in which the grantor trust assets are to be distributed to an NEO upon retirement from thecompany generally follows the distribution method elected by the NEO under the AbbVie Pension Plan. If an NEO (or theNEO’s surviving spouse, depending on the pension distribution method elected by the NEO under the AbbVie PensionPlan) lives beyond the actuarial life expectancy age used to determine the Supplemental Pension Plan benefit, andtherefore exhausts the trust balance, the Supplemental Pension Plan benefit will be paid to the NEO (or his or her
surviving spouse) by AbbVie.
Savings Plans
All U.S. employees, including NEOs, are eligible to defer a portion of their annual base salary under the AbbVie
Savings Plan, the company’s principal qualified defined contribution plan, up to the IRS contribution limits. Eligible NEOsalso may defer up to 18 percent of their base salary, less contributions to the AbbVie Savings Plan, to the AbbVie
Supplemental Savings Plan, which is a non-qualified defined contribution plan. Eligible NEOs may defer these amounts tounfunded book accounts or choose to have the amounts paid in cash on a current basis and deposited into individually

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EXECUTIVE COMPENSATION

established grantor trusts, net of tax withholdings. These amounts are credited annually with earnings. Amounts
deposited in the individual trusts are not tax-deferred and the NEOs personally pay the taxes on those amounts withoutgross-ups.
NEOs elect the manner in which the assets held in their grantor trusts will be distributed to them uponretirement or other separation from the company. These arrangements are described in greater detail in this proxystatement beginning with the section captioned ‘‘Summary Compensation Table.’’Financial Planning
NEOs are paid an annual stipend of $10,000 for estate planning advice, tax preparation and general financial
planning fees. The stipend is income to the NEO, who is responsible for payment of all resulting taxes without gross-ups.
Company-Provided Transportation
NEOs are eligible for transportation perquisites that are designed to improve the effectiveness and efficiency of
their work, including the use of a company-leased vehicle and access to company-provided air travel, as appropriate. In
some circumstances, these benefits may be used for personal travel, which would then be considered part of the NEO’s
total compensation and treated as taxable income to them under applicable tax laws. The NEOs pay the taxes on suchincome without gross-ups.
Disability Benefits
In addition to AbbVie’s standard disability benefits, NEOs are eligible for a monthly long-term disability benefit,
which is described on page 60 of this proxy statement.
Employment Agreements
AbbVie does not have employment agreements with any of its NEOs.
Excise Tax Gross-ups
AbbVie does not provide excise tax gross-ups on NEO compensation.
Change in Control Agreements
AbbVie has entered into change in control agreements with its NEOs to aid in retention and recruitment,
encourage continued attention and dedication to assigned duties during periods involving a possible change in control of
the company, and to protect the earned benefits of the NEOs against potential adverse changes resulting from a change
in control.
The change in control agreements contain a double-trigger feature, meaning that if the NEO’s employment isterminated other than for cause or permanent disability, or if the NEO elects to terminate employment for good reason,
within two years following a change in control, he or she is entitled to receive certain pay and benefits as described in
the section of this proxy statement captioned ‘‘Potential Payments upon Termination or Change in Control.’’

IV. Other Matters
Stock Ownership Guidelines
AbbVie’s stock ownership guidelines are designed to further promote sustained stockholder return and to ensure
the company’s senior executives remain focused on both short- and long-term objectives. Each senior executive has five
years from the date of election or appointment to his or her position to achieve the ownership level associated with his

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EXECUTIVE COMPENSATION

or her position. NEOs are not allowed to sell stock, except for tax withholding at vesting or exercise, if they do notsatisfy the minimum stock ownership requirement. The minimum stock ownership guidelines for the CEO and other NEOs
are as follows:
Executive
Richard A. Gonzalez
Robert A. Michael
Laura J. Schumacher
Carlos Alban
Michael E. Severino

Stock Ownership Requirement

Requirement Met?

6x Base Salary
3x Base Salary
3x Base Salary
3x Base Salary
3x Base Salary

Yes
Yes
Yes
Yes
Yes

In addition, AbbVie’s non-employee directors are required to own AbbVie stock valued at five times (5x) the
annual fee for service as a director under the AbbVie Non-Employee Directors’ Fee Plan within five years of joining theboard or as soon as practicable thereafter.
Clawback Policy
The committee does not anticipate there would ever be circumstances where a restatement of earnings uponwhich any incentive plan award decisions were based would occur or circumstances where an executive officer engages
in misconduct that would constitute a material breach of the AbbVie Code of Business Conduct. Nevertheless, thecommittee, in evaluating such circumstances, has broad discretion to take all actions necessary to protect the interests ofstockholders, up to and including actions to recover incentive awards. Further, the company is committed to disclosing in
its annual proxy statement the occurrence of any recoupment regarding an executive officer when the underlying
violation has already been publicly disclosed in company filings with the SEC. For more details, AbbVie’s Code of BusinessConduct is available in the corporate governance section of AbbVie’s investor relations website atwww.abbvieinvestor.com.
Anti-Hedging and Anti-Pledging Policies
AbbVie has a formal policy that prohibits directors and officers subject to Section 16 of the Exchange Act,
including all of the NEOs, from entering into or engaging in the purchase or sale of financial instruments that aredesigned to hedge or offset any decrease in the market value of AbbVie equity securities they hold. AbbVie also has aformal policy that prohibits directors and officers subject to Section 16 of the Exchange Act, including all of the NEOs,from pledging AbbVie common stock as collateral for a loan.
In addition, the AbbVie Incentive Stock Program provides that no long-term incentive award may be assigned,alienated, sold or transferred other than by will or by the laws of descent and distribution or as permitted by thecompensation committee for estate planning purposes, and no award and no right under any award may be pledged,
alienated, attached or otherwise encumbered. All members of senior management, including the company’s NEOs andcertain other employees, are required to clear any transaction involving company stock with the Legal department prior
to entering into such transaction.

Compensation Committee Report.................................................................................................................................................................................................................................................................................................................................

The compensation committee of the board of directors is primarily responsible for reviewing, approving andoverseeing AbbVie’s compensation plans and practices, and works with management and the committee’s independentcompensation consultant to establish AbbVie’s executive compensation philosophy and programs. The committee
reviewed and discussed the Compensation Discussion and Analysis with management and recommended to the board of
directors that the Compensation Discussion and Analysis be included in this proxy statement.
Compensation Committee
E. Liddy, Chairman, R. Austin, G. Tilton, and F. Waddell

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EXECUTIVE COMPENSATION

Compensation Risk Assessment.................................................................................................................................................................................................................................................................................................................................

During 2019, in collaboration with the compensation committee’s independent compensation consultant, AbbVie
conducted an in-depth risk assessment of its compensation policies and practices, including those related to executive
compensation programs for NEOs. The risk assessment included a quantitative and qualitative analysis of AbbVie’s
executive compensation programs and broader employee incentive compensation plans. AbbVie also considered how
these programs compare, from a design perspective, to programs maintained by other companies. Based on thisassessment, it was determined that AbbVie’s executive compensation programs are balanced and appropriately incent
employees, and any risks arising from the compensation policies and practices are not reasonably likely to have amaterial adverse effect on AbbVie. The following factors were among those considered in making this determination:•

Annually, AbbVie completes a review to ensure pay is equitable across genders and ethnicities among U.S.
employees.

•

AbbVie’s compensation structure contributes to a corporate culture that encourages our NEOs to regard
AbbVie as a long-term employer. For example, equity awards vest over multi-year periods, which encourages
NEOs to consider the long-term impact of their decisions and align their interests with those of AbbVie’s
stockholders.

•

AbbVie’s annual incentive program is based on multiple performance measures, balancing earnings
achievement with other factors. Since earnings are a key component of stock price performance, this aspectof AbbVie’s compensation plan also promotes alignment with stockholder interests.

•

AbbVie does not include certain pay design features that may have the potential to encourage excessiverisk-taking, such as: over-weighting toward annual incentives, highly leveraged payout curves, unreasonable
thresholds or dramatic changes in payout opportunity at certain performance levels that may encourage
inappropriate short-term business decisions to meet payout thresholds. In addition, a limit of 200% of target
applies to any awards made under the NEO short-term incentive plan.

•

AbbVie’s long-term incentive program focuses NEOs on longer-term operating performance and aligns NEOs
with stockholder interests through the use of multi-year performance periods and multiple performancemeasures, including relative total stockholder return. In 2019, AbbVie’s NEOs received roughly two-thirds oftheir total direct compensation in the form of long-term incentives (20% of which are stock options that
may vest over a three-year period and 80% of which are performance-based awards that may vest over athree-year performance period).

•

AbbVie makes equity awards and sets grant prices at the same time each year, at the compensationcommittee’s regularly scheduled meeting in February. In addition, AbbVie does not award discounted stock
options or immediately vesting equity awards.

•

AbbVie has robust stock ownership guidelines for its senior executives, which promotes alignment withstockholder interests, and other good governance equity practices such as anti-hedging and anti-pledging
policies.

•

AbbVie’s compensation committee has the ability to exercise downward discretion in determining annual
incentive plan payouts.

•

AbbVie’s compensation committee has broad discretion to claw back incentive compensation that wasawarded based on financials that were later restated or based on a material breach of the AbbVie Code ofBusiness Conduct.

•

AbbVie requires mandatory training on its code of conduct and policies and procedures to educate its
employees on appropriate behaviors and the consequences of taking inappropriate actions.

The risk assessment results were presented to the compensation committee by its independent compensation
consultant.

47

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9MAR202010224538 47

EXECUTIVE COMPENSATION

Summary Compensation Table.................................................................................................................................................................................................................................................................................................................................

This section contains compensation information for AbbVie’s NEOs for the fiscal year ended December 31, 2019.
The following table summarizes compensation awarded to, earned by and/or paid to AbbVie’s NEOs in connection with
their service to AbbVie during 2019, 2018 and 2017, as applicable. Mr. Michael was not an NEO before 2018. The sectionof this proxy statement captioned ‘‘Compensation Plan Elements’’ describes in greater detail the information reported inthis table.

Bonus
($)

Stock
Awards($)(1)

OptionAwards($)(2)

Non-Equity
Incentive
Plan
Compensation($)(3)

Change in
PensionValue andNon-qualifiedDeferredCompensation
Earnings($)(4)(5)

All Other
Compensation($)(6)

Total($)

Name and Principal Position

Year

Salary($)

Richard A. Gonzalez
Chairman of the Board andChief Executive Officer

2019
2018
2017

$1,650,000
1,650,000
1,638,462$000$ 8,887,088
11,509,090
9,606,360$2,246,253
2,760,764
2,559,270$4,335,000
3,898,125
4,331,250$3,366,720
463,205
3,496,704$1,125,537
1,002,403
993,197$21,610,598
21,283,587
22,625,243

Robert A. Michael
Executive Vice President,
Chief Financial Officer
Laura J. Schumacher
Vice Chairman, External Affairs
and Chief Legal Officer

2019
2018

906,865
553,654002,704,766
724,041

683,643
173,724

1,800,000
950,000

2,622,108
679,532

55,47137,937

8,772,853
3,118,888

2019
2018
2017

1,176,538
1,043,582
1,008,5260003,400,155
4,134,594
7,681,631

859,429991,720
980,980

2,400,000
1,954,549
1,954,549

6,579,440
2,739,969
2,957,506

727,225
518,745
396,164

15,142,787
11,383,159
14,979,356

Carlos Alban
Vice Chairman, Chief Commercial
Officer

2019
2018
2017

1,176,538
1,016,526
947,46900
03,091,161
4,005,388
3,522,250

781,305
961,216
938,350

2,400,000
1,836,219
1,836,219

6,456,803
821,930
4,832,949

500,283
341,800
257,751

14,406,090
8,983,079
12,334,988

Michael E. Severino
Vice Chairman and President

2019
2018
2017

1,330,000
1,100,605
1,004,460

0003,199,248
4,176,037
3,681,906

808,642
1,002,105
980,980

2,400,000
1,818,200
1,955,069

1,525,091
359,057
653,582

245,467
151,355
119,279

9,508,448
8,607,359
8,395,276(1) In accordance with Securities and Exchange Commission (SEC) rules, the amounts in this column represent theaggregate grant date fair value of the awards determined in accordance with Financial Accounting Standards Board(FASB) Accounting Standards Codification (ASC) Topic 718. AbbVie generally determines the grant date fair value ofstock awards by multiplying the number of shares granted by the average of the high and low market prices of one
share of AbbVie common stock on the award grant date. The grant date fair value of performance shares with a
TSR market condition are determined using the Monte Carlo simulation model.
(2) In accordance with SEC rules, the amounts in this column represent the aggregate grant date fair value of theawards determined in accordance with FASB ASC Topic 718. These amounts were determined as of the option grant
date using a Black-Scholes stock option valuation model. These amounts are being reported solely for the purposeof comparative disclosure in accordance with the SEC rules. There is no certainty that the amount determined usinga Black-Scholes stock option valuation model would be the value at which employee stock options would be tradedfor cash. The weighted-average assumptions used to estimate the grant date fair value of options granted in 2019,
along with the weighted-average grant date fair value, are shown below:
Assumption
Risk-free interest rate
Average life of options (years)
Volatility
Dividend yield
Fair value per stock option

2.51%
5.6
27.94%
4.99%$12.54(3) The compensation reported in this column for 2019 was earned as a performance-based incentive award pursuant
to the AbbVie Performance Incentive Plan. Additional information regarding the plan can be found in theCompensation Plan Elements section of this proxy statement.

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EXECUTIVE COMPENSATION(4) The plan amounts shown below are reported in this column, except as described in this paragraph. The amounts
shown beside each NEO’s name are for 2019, 2018, and 2017, respectively, as applicable. Negative amounts underthe AbbVie Pension Plan and the AbbVie Supplemental Pension Plan are excluded from this column in accordancewith SEC rules.
AbbVie Pension Plan
R. Gonzalez: $(8,305) / $(111,651) / $(38,501); R. Michael: $246,392 / $(46,048); L. Schumacher: $318,167 /$72,009 / $170,782; C. Alban: $353,675 / $(33,817) / $296,728; and M. Severino: $57,916 / $11,833 / $37,394.
AbbVie Supplemental Pension Plan
R. Gonzalez: $2,485,115 / $(1,790,327) / $3,157,627; R. Michael: $2,375,716 / $725,580; L. Schumacher:$5,040,017 / $2,027,233 / $2,244,142; C. Alban: $5,265,442 / $432,490 / $4,195,321; and M. Severino:$1,127,049 / $210,855 / $535,907.
The changes in pension value result primarily from the following factors: (i) the effect of changes in the actuarial
assumptions AbbVie uses to calculate plan liability for financial reporting purposes; (ii) additional pension benefit
accrual under the Pension Plan and the Supplemental Pension Plan; and (iii) the impact of the time value of moneyon the pension value.
Non-Qualified Defined Contribution Plan Earnings
The totals in this column include reportable interest credited under the AbbVie Performance Incentive Plan and the
AbbVie Supplemental Savings Plan.
R. Gonzalez: $889,910 / $463,205 / $377,578; L. Schumacher: $1,221,256 / $640,727 / $542,582; C. Alban:$837,686 / $423,257 / $340,900; and M. Severino: $340,126 / $136,369 / $80,281.
(5) The amounts shown in this column include the change in pension value during the applicable year, which is
attributable to changes in actuarial assumptions (primarily discount rate and mortality tables) and other factors
based on plan design (primarily pay, service and age).
The present value of a pension benefit is determined, in part, by the discount rate used for accounting purposes.
The discount rate is determined by reference to the prevailing market rate of interest. In 2019, interest rates
decreased and the discount rates used for the Pension Plan and the Supplemental Pension Plan were decreased toreflect that change. A decrease in the discount rate increases the present value of participants’ pension benefits
while actual payments to be made to participants are not changed. The discount rate used for 2019 was 3.56% for
the Pension Plan and 3.51% for the Supplemental Pension Plan. The discount rate used for 2018 was 4.62% for thePension Plan and 4.58% for the Supplemental Pension Plan, while the discount rate used for 2017 was 3.91% for
the Pension Plan and 3.87% for the Supplemental Pension Plan. The mortality assumptions that apply for actuarial
purposes also affect pension values.
In addition to the effect of the changes in actuarial assumptions, other factors built into the plans contributed tothe change in pension value. The change in pension value numbers reflect the application of the benefit formulas
under the Pension Plan and the Supplemental Pension Plan, which are described in the section of this proxystatement captioned ‘‘Pension Benefits.’’ As participants’ pay changes, the formulas yield revised pension values.
Furthermore, as a participant ages and service credit accumulates year over year (before the participant is eligible
for unreduced pension benefits), the present value of his or her pension benefits increases, even without changes
in pay or actuarial assumptions.
(6) The amounts shown below are reported in this column for 2019, 2018 and 2017, respectively, as applicable.
Earnings for Non-Qualified Defined Benefit and Non-Qualified Defined Contribution Plans
R. Gonzalez: $372,310 / $246,041 / $159,056; L. Schumacher: $621,724 / $420,337 / $304,784; C. Alban:$412,229 / $266,141 / $182,139; and M. Severino: $135,497 / $66,157 / $34,853.
Each of the NEOs’ awards under the AbbVie Performance Incentive Plan is paid in cash to the NEO on a current
basis and, for eligible NEOs, may be deposited into a grantor trust established by the NEO, net of maximum tax
withholdings. Each of the eligible NEOs has also established grantor trusts in connection with the AbbVie
Supplemental Pension Plan and the AbbVie Supplemental Savings Plan. These amounts include earnings net of thereportable interest included in footnote (4).

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EXECUTIVE COMPENSATION

Employer Contributions to Defined Contribution Plans
R. Gonzalez: $82,500 / $82,500 / $81,923; R. Michael: $14,000 / $13,750; L. Schumacher: $58,827 / $52,179 /$50,426; C. Alban: $58,827 / $50,826 / $47,373; and M. Severino: $66,500 / $55,030 / $50,223.
These amounts include AbbVie contributions to the AbbVie Savings Plan and the AbbVie Supplemental Savings Plan,
as applicable. The Supplemental Savings Plan permits eligible NEOs to contribute amounts in excess of the annual
limit set by the Internal Revenue Code for employee contributions to 401(k) plans up to the excess of (i) 18 percentof their base salary over (ii) the amount contributed to AbbVie’s tax-qualified 401(k) plan. AbbVie matches
participant contributions at the rate of 250 percent of the first 2 percent of compensation contributed to the plan.
The eligible NEOs have these amounts paid to them in cash on a current basis and deposited into a grantor trust
established by the NEO, net of maximum tax withholdings.
Other 2019 Compensation
The totals shown in the table include the cost of providing a corporate automobile less the amount reimbursed by
the NEO: R. Gonzalez: $20,944; R. Michael: $31,471; L. Schumacher: $19,755; C. Alban: $19,227; and M. Severino:$20,834. AbbVie imputes income to the NEO, if required, and the NEO pays taxes in accordance with tax
regulations without gross-ups.
The totals shown in the table include a $10,000 financial planning services allowance for each NEO. AbbVie imputes
income to the NEO, if required, and the NEO pays taxes in accordance with tax regulations without gross-ups.
The totals shown in the table include the following costs for non-business-related air travel: R. Gonzalez: $547,549;
L. Schumacher: $16,918; and M. Severino $12,636. AbbVie determines the incremental cost for flights based on the
direct cost to AbbVie, including fuel costs, parking, handling and landing fees, catering, travel fees, and othermiscellaneous direct costs. AbbVie imputes income to the NEO, if required, and the NEO pays taxes in accordancewith tax regulations without gross-ups.
For Mr. Gonzalez, the total includes $92,235 for costs associated with security, determined based on AbbVie’s actual
costs for such services. The security was provided on the recommendation of an independent security study and inaccordance with the AbbVie security program. AbbVie imputes income to Mr. Gonzalez, if required, and he pays
taxes in accordance with tax regulations without gross-ups.
The NEOs also are eligible to participate in an executive disability benefit, which is described on page 60 of thisproxy statement.
Required Pay Ratio Disclosure
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act andItem 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual totalcompensation of our employees and the annual total compensation of our CEO, Richard Gonzalez. The pay ratio includedin this information is a reasonable estimate calculated in a manner consistent with Regulation S-K Item 402(u). The ratioof Mr. Gonzalez’s annual total compensation for 2019, as reported in the Summary Compensation Table in this proxystatement, to the median employee annual total compensation determined on the same basis was 139:1. For 2019, theannual total compensation of our median employee (other than Mr. Gonzalez) was $155,885. To identify the median
employee, we prepared a list of all active AbbVie employees throughout the world as of December 27, 2019. The
consistently applied compensation measure used to identify the median employee was annual base pay and target
bonus, using hours worked during 2019 for hourly employees and base salary for the remaining employees. This process
resulted in a median group consisting of several employees and a representative employee was selected in accordancewith SEC guidance, taking into account demographic characteristics that best represent a typical AbbVie employee,
including tenure, location, employment status and applicable compensation and benefit programs.

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2019 Grants of Plan-Based Awards.................................................................................................................................................................................................................................................................................................................................

The following table summarizes the equity awards granted under the AbbVie 2013 Incentive Stock Program to
the NEOs during 2019.
Estimated Future
Payouts Under
Non-Equity
Incentive Plan
Awards(1)Name
R. Gonzalez

R. Michael

L. Schumacher

C. Alban

M. Severino

Grant
Date

Target($)

Maximum($)

Estimated
FuturePayouts
Under Equity
Incentive
Plan Awards
Target(#)

All Other
OptionAwards:Numbers of
Securities
Underlying
Options(#)

Exerciseor BasePrice ofOptionAwards($/Sh)

Closing
MarketPrice on
Grant
Date

58,213(2)58,213(3)2/21/20192/21/20192/21/20192/21/20192/21/20192/21/20192/21/20192/21/20192/21/20192/21/20192/21/20192/21/20192/21/20192/21/20192/21/2019179,127(5)$79.02$78.7554,517(5)

79.02

78.75

68,535(5)

79.02

78.75

62,305(5)

79.02

78.75

64,485(5)

79.02

78.75

(2)

17,717
17,717(3)22,272(2)22,272(3)20,248(2)20,248(3)20,956(2)20,956(3)Grant Date
Fair Valueof Stockand Option
Awards$4,287,970(4)4,599,118(4)2,246,253(6)1,305,034(4)1,399,732(4)683,643(6)1,640,556(4)1,759,599(4)859,429(6)1,491,468(4)1,599,693(4)781,305(6)1,543,619(4)1,655,629(4)808,642(6)(1) During 2019, each of the NEOs participated in the AbbVie Performance Incentive Plan. The annual cash incentive
award earned by the NEO in 2019 under the plan is shown in the Summary Compensation Table in the column
captioned ‘‘Non-Equity Incentive Plan Compensation.’’ No future pay-outs will be made with respect to the 2019
awards under the plan. The plan is described in greater detail in the section of this proxy statement captioned‘‘Compensation Discussion and Analysis—Compensation Plan Elements—Short-Term Incentives.’’(2) This is a performance share award that has the potential to vest at 0% to 250% of target during a three-year
performance period based on company performance in earnings per share (EPS) and relative total stockholder
return (TSR). TSR performance is measured relative to a group made up of companies that are constituents ineither the S&P Pharmaceutical, Biotech, and Life Science Index or the NYSE Arca Pharmaceutical Index. Dividends
accrue during the performance period and are paid in cash at vesting only to the extent that shares are earned. In
2019, AbbVie’s EPS performance resulted in the banking of the award on February 28, 2020 at 200% of target, withvesting to be determined based on the company’s relative TSR performance following the three-year performance
period that ends December 31, 2021. The performance metrics are described in the section of this proxy statement
captioned ‘‘Compensation Discussion and Analysis—Compensation Plan Elements—Long-Term Incentives.’’(3) This is a performance-vested restricted stock unit award that has the potential to vest at 0% to 150% of target, in
one-third increments, during a three-year performance period based on AbbVie’s return on equity (ROE) articulated
as pre-set goals and measured relative to a group made up of companies that are constituents in either the S&P
Pharmaceutical, Biotech, and Life Science Index or the NYSE Arca Pharmaceutical Index. Dividends accrue during theperformance period and are paid in cash at vesting only to the extent that shares are earned. In 2019, AbbVie’srelative ROE performance resulted in the vesting on February 28, 2020 of one-third of the award at 150% of target.
The performance metrics are described in the section of this proxy statement captioned ‘‘Compensation Discussion
and Analysis—Compensation Plan Elements—Long-Term Incentives.’’(4) The grant date fair value of stock awards is generally determined by multiplying the number of shares or units
granted by the average of the high and low market prices of one share of AbbVie common stock on the award

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EXECUTIVE COMPENSATION

grant date. The grant date fair value of performance shares with a TSR market condition is determined using theMonte Carlo simulation model. In the event of a grantee’s death or disability, these awards will be deemed earned
either based on actual performance through the date of death or disability or at target, depending on the timing of
the death or disability, as set forth in the award agreement. Upon a change in control, the treatment of theseawards is determined as described in the section of this proxy statement captioned ‘‘Potential Payments upon
Termination or Change in Control—Equity Awards.’’(5) One-third of the shares of common stock covered by these options are exercisable after one year, two-thirds after
two years, and all after three years, subject to satisfaction of the service requirements set forth in the award
agreements. The options vest in the event of the grantee’s death or disability. Upon a change in control, thetreatment of these awards is determined as described in the section of this proxy statement captioned ‘‘Potential
Payments upon Termination or Change in Control—Equity Awards.’’ Under the AbbVie 2013 Incentive Stock
Program, these options have an exercise price equal to the average of the high and low market prices (rounded up
to the next even penny) of one share of AbbVie common stock on the date of grant. These options do not containa replacement option feature.
(6) The grant date fair value of option awards is determined as of the option grant date using a Black-Scholes stock
option valuation model. The assumptions used to determine the grant date fair value are described in footnote (2)to the Summary Compensation Table.

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EXECUTIVE COMPENSATION

2019 Outstanding Equity Awards at Fiscal Year End.................................................................................................................................................................................................................................................................................................................................

The following table summarizes the outstanding AbbVie equity awards held by the NEOs at year end.
Option Awards(1)(2)

Stock Awards
EquityIncentive
Plan Awards:
Market or
Payout Valueof Unearned
Sharesor Other
Rights That
Have Not
Vested ($)

Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable

Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable

OptionExercise
Price ($)

OptionExpiration
Date

R. Gonzalez

109,097
255,170
174,100
42,537———87,050(3)85,073(3)179,127(3)$58.8800
54.8600
61.3600
114.3600
79.0200

2/18/2025
2/17/2026
2/15/2027
2/14/2028
2/20/2029

116,442(3)78,683(3)116,426(3)——10,309,775
6,966,593
10,308,358——

R. Michael

10,140
7,613
2,677
—

—
3,807(3)5,353(3)54,517(3)54.8600
61.3600
114.3600
79.0200

2/17/2026
2/15/2027
2/14/2028
2/20/2029

5,091(3)4,950(3)35,434(3)—450,757
438,273
3,137,326—

L. Schumacher

103,220
78,45066,733
15,280———33,367(3)30,560(3)68,535(3)58.8800
54.8600
61.3600
114.3600
79.0200

2/18/2025
2/17/2026
2/15/2027
2/14/2028
2/20/2029

44,628(3)28,266(3)44,544(3)——3,951,363
2,502,672
3,943,926——

C. Alban

115,830
81,500101,960
79,87063,833
14,810—————31,917(3)29,620(3)62,305(3)35.8800
51.4200
58.8800
54.8600
61.3600
114.3600
79.0200

2/13/2023
2/19/2024
2/18/2025
2/17/2026
2/15/2027
2/14/2028
2/20/2029

42,694(3)27,383(3)40,496(3)————3,780,127
2,424,491
3,585,516————

M. Severino

74,309104,480
91,99066,733
15,440————33,367(3)30,880(3)64,485(3)54.4400
58.8800
54.8600
61.3600
114.3600
79.0200

6/1/2024
2/18/2025
2/17/2026
2/15/2027
2/14/2028
2/20/2029

44,628(3)28,550(3)41,912(3)———3,951,363
2,527,817
3,710,888
—
—
—

Name

Number of
Shares ofStock That
Have Not
Vested (#)

MarketValue of
Shares ofStock That
Have Not
Vested ($)

EquityIncentive
Plan Awards:
Number ofUnearned
Sharesor Other
Rights That
Have Not
Vested (#)(1) Four of AbbVie’s NEOs were employed by Abbott Laboratories (Abbott) prior to AbbVie’s separation from Abbott on
January 1, 2013 (the ‘‘Separation’’). When AbbVie separated from Abbott, outstanding Abbott equity awards
generally converted into adjusted awards based on Abbott common shares and AbbVie common stock (except tothe extent prohibited by local law or with respect to certain awards described below). Such awards are subject tosubstantially the same terms, vesting conditions and other restrictions that applied to the original Abbott awards
immediately before the Separation.
Each Abbott stock option was converted into an adjusted Abbott stock option and an AbbVie stock option, withadjustments to the stock option exercise prices that were intended to preserve the value of the original Abbott
award as measured immediately before and immediately after the Separation. Each such adjusted Abbott stock

53

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EXECUTIVE COMPENSATION

option and AbbVie stock option is subject to substantially the same terms, vesting conditions, post-termination
exercise rules and other restrictions that applied to the original Abbott stock option immediately before theSeparation.
As a result of the Separation, one NEO held the following Abbott equity awards as of December 31, 2019:•

C. Alban: Vested options to purchase 16,033 Abbott common shares with an exercise price of $27.03 per share.

(2) Except as noted, the stock options are fully vested.
(3) The vesting dates of AbbVie unexercisable stock options and unvested performance share and restricted stock/unit
awards outstanding at December 31, 2019 are as follows:
Option Awards

Name
R. Gonzalez

R. Michael

L. Schumacher

C. Alban

M. Severino

Number of
Unexercised
SharesRemainingfrom
Original
Grant

Number of
OptionSharesVesting—
Date
Vested 2020

Number of
OptionSharesVesting—
Date
Vested 2021

87,05085,073
179,127

87,050—2/16
42,536—2/15
59,709—2/21

42,537—2/15
59,709—2/21

3,807
5,353
54,51733,36730,56068,53531,917
29,62062,30533,36730,88064,485

3,807—2/16
2,676—2/15
18,173—2/21

33,367—2/16
15,280—2/15
22,845—2/21

31,917—2/16
14,810—2/15
20,769—2/21

33,367—2/16
15,440—2/15
21,495—2/21

2,677—2/15
18,172—2/21

15,280—2/15
22,845—2/21

14,810—2/15
20,768—2/21

15,440—2/15
21,495—2/21

Stock or Unit Awards

Number of
OptionSharesVesting—
Date
Vested 2022

59,709—2/21

18,172—2/21

22,845—2/21

20,768—2/21

21,495—2/21

Number of
Shares ofRestricted
Stock or
Units

Number of
Shares ofRestricted
Stock or
Units
Vesting—
Date
Vested 2020

90,36926,07347,21031,47358,21358,213

(a)

3,951
1,140
2,970
1,980
17,717
17,717(a)34,635
9,993
16,96011,30622,272
22,272(a)33,134
9,560
16,43010,953
20,24820,248(a)34,635
9,993
17,13011,42020,956
20,956(a)Number of
Shares ofRestricted
Stock or
Units
Vesting—
Date
Vested 2021

Number of
Shares ofRestricted
Stock orUnits Vesting—
Date
Vested 2022

(b)
(c)
(d)
(e)
(f)

(b)
(c)
(d)
(e)
(f)

(b)
(c)
(d)
(e)
(f)

(b)
(c)
(d)
(e)
(f)

(b)
(c)
(d)
(e)
(f)

(a) These are performance shares that remained outstanding and unvested on December 31, 2019 from an award
made on February 16, 2017. The award has the potential to vest at 0% to 250% of target during a 3-year
performance period based on company performance in earnings per share (EPS) and relative total stockholder
return (TSR). TSR performance is measured relative to a group made up of companies that are constituents ineither the S&P Pharmaceutical, Biotech, and Life Science Index or the NYSE Arca Pharmaceutical Index.
Dividends accrue during the performance period and are paid at vesting only to the extent that shares areearned. In 2017, in connection with the phase-in of the redesigned long-term incentive program, AbbVie’s EPS
performance resulted in the vesting on February 28, 2018 of one-third of the award at 173.3% of target, and54 9MAR202010224538

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54

EXECUTIVE COMPENSATION

the remainder of the award was banked for vesting to be determined based on the company’s relative TSR
performance during the 3-year performance period that ends December 31, 2019. In aggregate, this award
vested at 196.4% of target (out of a maximum of 250% of target) based on the application of all performanceadjustments.
(b) These are performance-vested restricted stock units that remained outstanding and unvested on December 31,
2019, from an award made on February 16, 2017. The award has the potential to vest at 0% to 150% of
target, in one-third increments, during a 3-year performance period based on AbbVie’s return on equity (ROE)
articulated as pre-set goals and measured relative to a group made up of companies that are constituents ineither the S&P Pharmaceutical, Biotech, and Life Science Index or the NYSE Arca Pharmaceutical Index.
Dividends accrue during the performance period and are paid at vesting only to the extent that shares areearned. In 2019, AbbVie’s relative ROE performance resulted in the vesting on February 28, 2020 of one-thirdof the award at 150% of target.
(c) These are performance shares that remained outstanding and unvested on December 31, 2019 from an award
made on February 15, 2018. The award has the potential to vest at 0% to 250% of target during a 3-year
performance period based on company performance in earnings per share (EPS) and relative total stockholder
return (TSR). TSR performance is measured relative to a group made up of companies that are constituents ineither the S&P Pharmaceutical, Biotech, and Life Science Index or the NYSE Arca Pharmaceutical Index.
Dividends accrue during the performance period and are paid at vesting only to the extent that shares areearned. In 2018, AbbVie’s EPS performance resulted in the banking of the award at 200% of target, withvesting to be determined based on the company’s relative TSR performance during the 3-year performance
period that ends December 31, 2020.
(d) These are performance-vested restricted stock units that remained outstanding and unvested on December 31,
2019, from an award made on February 15, 2018. The award has the potential to vest at 0% to 150% of
target, in one-third increments, during a 3-year performance period based on AbbVie’s return on equity (ROE)
articulated as pre-set goals and measured relative to a group made up of companies that are constituents ineither the S&P Pharmaceutical, Biotech, and Life Science Index or the NYSE Arca Pharmaceutical Index.
Dividends accrue during the performance period and are paid at vesting only to the extent that shares areearned. In 2019, AbbVie’s relative ROE performance resulted in the vesting on February 28, 2020 of one-thirdof the award at 150% of target.
(e) These are performance shares that remained outstanding and unvested on December 31, 2019 from an award
made on February 21, 2019. The award has the potential to vest at 0% to 250% of target during a 3-year
performance period based on company performance in earnings per share (EPS) and relative total stockholder
return (TSR). TSR performance is measured relative to a group made up of companies that are constituents ineither the S&P Pharmaceutical, Biotech, and Life Science Index or the NYSE Arca Pharmaceutical Index.
Dividends accrue during the performance period and are paid at vesting only to the extent that shares areearned. In 2019, AbbVie’s EPS performance resulted in the banking of the award at 200% of target, withvesting to be determined based on the company’s relative TSR performance during the 3-year performance
period that ends December 31, 2021.
(f)

These are performance-vested restricted stock units that remained outstanding and unvested on December 31,
2019, from an award made on February 21, 2019. The award has the potential to vest at 0% to 150% of
target, in one-third increments, during a 3-year performance period based on AbbVie’s return on equity (ROE)
articulated as pre-set goals and measured relative to a group made up of companies that are constituents ineither the S&P Pharmaceutical, Biotech, and Life Science Index or the NYSE Arca Pharmaceutical Index.
Dividends accrue during the performance period and are paid at vesting only to the extent that shares areearned. In 2019, AbbVie’s relative ROE performance resulted in the vesting on February 28, 2020 of one-thirdof the award at 150% of target.

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EXECUTIVE COMPENSATION

2019 Option Exercises and Stock Vested.................................................................................................................................................................................................................................................................................................................................

The following table summarizes for each NEO the number of shares acquired on the exercise of AbbVie stock
options and the number of shares acquired on the vesting of AbbVie stock awards in 2019:
Option Awards

Stock Awards

Number of
SharesAcquired On
Exercise (#)

Value
Realized On
Exercise ($)

Number of
SharesAcquired On
Vesting (#)

Value
Realized On
Vesting ($)

R. Gonzalez—$—

164,609$13,071,601

R. Michael

—

—

7,243

575,167

L. Schumacher——

54,7914,350,953

C. Alban——

54,4504,323,875

M. Severino——

60,286

4,787,311

Name

Pension Benefits
During 2019, the NEOs participated in two AbbVie-sponsored defined benefit pension plans: the AbbVie Pension
Plan, a tax-qualified pension plan; and the AbbVie Supplemental Pension Plan, a non-qualified supplemental pension
plan. The Supplemental Pension Plan also includes a benefit feature AbbVie uses to attract senior executives who are
mid-career hires, which provides an additional benefit to such participants that is less valuable to participants who havespent most of their career at the company. Except as provided in AbbVie’s change in control agreements, AbbVie does
not have a policy granting extra years of credited service under the plans. The change in control agreements aredescribed in the section of this proxy statement captioned ‘‘Potential Payments upon Termination or Change in Control.’’
The compensation considered in determining the pensions payable to the NEOs is the compensation shown inthe ‘‘Salary’’ and ‘‘Non-Equity Incentive Plan Compensation’’ columns of the Summary Compensation Table.
Pension Plan
The Pension Plan is a broad-based plan that covers most AbbVie employees in the United States, age 21 orolder, and provides participants with a life annuity benefit at normal retirement equal to A plus the greater of B or C
below.
A.

1.10% of 5-year final average earnings multiplied by years of benefit service after 2003.

B.

1.65% of 5-year final average earnings multiplied by years of benefit service prior to 2004 (up to 20); plus
1.50% of 5-year final average earnings multiplied by years of benefit service prior to 2004 in excess of 20(but no more than 15 additional years); less 0.50% of the lesser of 3-year final average earnings (but not
more than the social security wage base in any year) or the social security covered compensation level
multiplied by years of benefit service.

C.

1.10% of 5-year final average earnings multiplied by years of benefit service prior to 2004.

The benefit for service prior to 2004 (B or C above) is reduced for the cost of preretirement surviving spouse
benefit protection. The reduction is calculated using formulas based on age and employment status during the period inwhich coverage was in effect.

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EXECUTIVE COMPENSATION

Final average earnings are the average of the employee’s 60 highest-paid consecutive calendar months ofcompensation (salary and non-equity incentive plan compensation). The Pension Plan covers earnings up to the limit
imposed by Internal Revenue Code Section 401(a)(17) and provides for a maximum of 35 years of benefit service.
Participants become fully vested in their pension benefit upon the completion of five years of service. The
benefit is payable on an unreduced basis at age 65. Employees hired after 2003 who terminate employment prior toage 55 with at least 10 years of service may choose to commence their benefits on an actuarially reduced basis as earlyas age 55. Employees hired before 2004 who terminate employment prior to age 50 with at least 10 years of service
may choose to commence their benefits on an actuarially reduced basis as early as age 50. Employees hired before 2004
who terminate employment prior to age 50 with fewer than 10 years of service may choose to commence their benefits
on an actuarially reduced basis as early as age 55.
The Pension Plan offers several optional forms of payment, including certain and life annuities, joint and survivor
annuities, and level income annuities. The benefit paid under any of these options is actuarially equivalent to the life
annuity benefit produced by the formula described above.
Employees who retire from AbbVie prior to their normal retirement age may receive subsidized early retirement
benefits. Employees hired after 2003 are eligible for early retirement at age 55 with 10 years of service. Employees hired
before 2004 are eligible for early retirement at age 50 with 10 years of service or age 55 if the employee’s age plus
years of benefit service total 70 or more. Mr. Gonzalez, Ms. Schumacher and Mr. Alban are eligible for early retirement
benefits under the plan.
The subsidized early retirement reductions applied to the benefit payable for service after 2003 (A above)
depend upon the participant’s age at retirement. If the participant retires after reaching age 55, the benefit is reduced
5 percent per year for each year that payments are made before age 62. If the participant retires after reaching age 50
but prior to reaching age 55, the benefit is actuarially reduced from age 65.
The early retirement reductions applied to the benefit payable for service prior to 2004 (B and C above) depend
upon age and service at retirement:•

In general, the 5-year final average earnings portions of the benefit are reduced 3 percent per year for eachyear that payments are made before age 62 and the 3-year final average earnings portion of the benefit isreduced 5 percent per year for each year that payments are made before age 62.

•

Employees who participated in the plan before age 36 may elect ‘‘Special Retirement’’ on the last day ofany month after reaching age 55 with age plus Seniority Service points of at least 94 or ‘‘Early Special
Retirement’’ on the last day of any month after reaching age 55, provided their age plus Seniority Service
points would reach at least 94 before age 65. Seniority Service includes periods of employment prior toattaining the minimum age required to participate in the plan. If Special Retirement or Early Special
Retirement applies, Seniority Service is used in place of benefit service in the formulas. The 5-year final
average earnings portions of the benefit in B above are reduced 12⁄3 percent for each year between ages 59
and 62 plus 21⁄2 percent for each year between ages 55 and 59. The 3-year final average earnings portion of
the benefit is reduced 5 percent per year for each year that payments are made before age 62. Benefit C ispayable on an unreduced basis at Special Retirement and is reduced 3 percent per year for each year thatpayments are made before age 62, if Early Special Retirement applies.

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EXECUTIVE COMPENSATION

Supplemental Pension Plan
The provisions of the Supplemental Pension Plan (which covers AbbVie employees in the United States whose
compensation exceeds certain limits under the Internal Revenue Code) are substantially the same as those of the Pension
Plan, with the following exceptions:•

Participants’ 5-year final average earnings are calculated using the average of the 5 highest years of baseearnings and the 5 highest years of payments under AbbVie’s non-equity incentive plans.

•

The Pension Plan does not include amounts deferred or payments received under the AbbVie Deferred
Compensation Plan in its calculation of a participant’s final average earnings. To preserve the pension
benefits of Deferred Compensation Plan participants, the Supplemental Pension Plan includes amounts
deferred by a participant under the Deferred Compensation Plan in its calculation of final average earnings.

•

In addition to the benefits outlined above for the Pension Plan, the NEOs are eligible for an additional
Supplemental Pension Plan benefit equal to 0.6% of 5-year final average earnings for each year of service
for each of the first 20 years of service occurring after the participant attains age 35. The benefit is further
limited by the maximum percentage allowed under the Pension Plan under that plan’s benefit formulas (A, B
and C above). The portion of this additional benefit attributable to service before 2004 is reduced 3 percent
per year for each year that payments are made before age 60. The portion attributable to service after
2003 is reduced 5 percent per year for each year that payments are made before age 60 if the participant
is at least age 55 at early retirement. If the participant is under age 55 at retirement, the portion
attributable to service after 2003 is actuarially reduced from age 65.

•

The Supplemental Pension Plan provides early retirement benefits similar to those provided under thePension Plan. The benefits provided to NEOs under the Supplemental Pension Plan are not, however,reduced for the period between age 60 and age 62, unless the benefit is being actuarially reduced fromage 65. Mr. Gonzalez, Ms. Schumacher and Mr. Alban are eligible for early retirement benefits under the
plan.

•

Vested benefits accrued under the Supplemental Pension Plan may be funded through a grantor trust
established by an eligible NEO. Consistent with the distribution requirements of Internal Revenue Code
Section 409A and its regulations, an eligible NEO who became an officer prior to 2009 may have the entire
amount of his or her vested plan benefits funded through a grantor trust. An eligible NEO who became an
officer after 2008 may have only the vested benefits that accrue following the calendar year in which he or
she is first elected as an officer funded through a grantor trust.

Benefits payable under the Supplemental Pension Plan are offset by the benefits payable from the Pension Plan,
calculated as if benefits under the plans commenced at the same time. The amounts paid to an eligible NEO’s
Supplemental Pension Plan grantor trust to fund plan benefits are actuarially determined. The plan is designed to resultin AbbVie paying the eligible NEO’s Supplemental Pension Plan benefits to the extent assets held in his or her trust are
insufficient.

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EXECUTIVE COMPENSATION

Pension Benefits Table

Number ofYears
CreditedService (#)

Present
Value ofAccumulated
Benefit($)(1)

Payments
During Last
Fiscal Year($)$0
1,011,773(2)NamePlan Name

R. Gonzalez

AbbVie Pension Plan
AbbVie Supplemental Pension Plan

35
35$272,676
19,534,981

R. Michael

AbbVie Pension Plan
AbbVie Supplemental Pension Plan

27
27

739,546
4,054,032

L. Schumacher

AbbVie Pension Plan
AbbVie Supplemental Pension Plan29
29

1,275,472
17,995,769

0
2,343,649(2)C. Alban

AbbVie Pension Plan
AbbVie Supplemental Pension Plan

33
33

1,443,090
17,432,216

01,307,772(2)M. Severino

AbbVie Pension Plan
AbbVie Supplemental Pension Plan

6
6

164,2882,546,877

0
0

0
0

(1) AbbVie calculated these present values using: (i) a discount rate of 3.56% for the Pension Plan and a discount rateof 3.51% for the Supplemental Pension Plan, the same discount rates it uses for Financial Accounting Standards
Board (FASB) Accounting Standards Codification (ASC) Topic 715 calculations for financial reporting purposes; and(ii) each plan’s unreduced retirement age, which is age 62 under the AbbVie Pension Plan and age 60 under the
AbbVie Supplemental Pension Plan for those participants who are eligible for early retirement benefits and age 65
under both plans for other participants. The present values shown in the table reflect postretirement mortality,
based on the FASB ASC Topic 715 assumption (the RP2006 Healthy Annuitant table projected fully generationallywith MP2019 mortality improvement scale), but do not include a factor for preretirement termination, mortality, or
disability.
(2) During 2019, the amounts shown, less applicable tax withholdings, were distributed and deposited into theindividual grantor trusts established by the eligible NEOs and included in the NEOs’ income, as applicable.
Consistent with the distribution requirements of Internal Revenue Code Section 409A and its regulations, vested
Supplemental Pension Plan benefits, to the extent not previously funded, are distributed to the eligible participants’
individual grantor trusts and included in their income. Amounts held in an eligible NEO’s individual trust are
expected to offset AbbVie’s obligations to him or her under the plan. Grantor trusts are described in greater detailin the section of this proxy statement captioned ‘‘Compensation Plan Elements—Benefits—Retirement Benefits.’’

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EXECUTIVE COMPENSATION

Non-Qualified Deferred Compensation.................................................................................................................................................................................................................................................................................................................................

The following table summarizes Ms. Schumacher’s non-qualified deferred compensation under the AbbVie
Deferred Compensation Plan. No additional contributions have been made to her account under the plan since such timeas Ms. Schumacher became an officer and ceased to be eligible to contribute to the plan. None of the other NEOs has
any non-qualified deferred compensation under the plan.

Name

Plan Name(1)(2)

L. Schumacher

Deferred Compensation Plan

Executive
contributions
in last FY($)

Registrant
contributions
in last FY($)

Aggregateearnings
in last FY($)(3)

Aggregate
withdrawals/
distributions($)(4)

Aggregatebalance atlast FYE($)

0039,164.83(512,982.79)

0(1) Ms. Schumacher’s contributions to the Deferred Compensation Plan ceased in 2002.
(2) The plan permits participants to defer up to 75% of their base salary and up to 75% of their annual cash incentives
and credits a participant’s account with an amount equal to the employer matching contributions that otherwise
would have been made for the participant under AbbVie’s tax-qualified defined contribution plan. Participants may
direct the investment of their deferral accounts into one or more of several funds chosen by the administrator, andthe deferral account is credited with investment returns based on the performance of the fund(s) selected. During
2019, the weighted average rate of return credited to the account was 8.3% for Ms. Schumacher.
The plan provides for cash distributions in either a lump sum or installments after separation from service andpermits in-service withdrawals in accordance with specific procedures. Participants make distribution elections eachyear that apply to the deferrals to be made in the following calendar year, in accordance with the requirements ofInternal Revenue Code Section 409A. Participants may request withdrawals due to financial hardship; if a hardshipwithdrawal is approved, it is limited to the amount needed to address the hardship.
(3) The amounts reported in this column are not included in the Summary Compensation Table of this proxystatement.
(4) The amounts reported in this column have not been previously reported as compensation in AbbVie’s Summary
Compensation Tables because they relate to contributions made before the applicable individual became an NEO.

Potential Payments upon Termination or Change in Control.................................................................................................................................................................................................................................................................................................................................

Potential Payments upon Termination—Generally
AbbVie does not have employment agreements with its NEOs.
The following summarizes the payments that the NEOs would have received if their employment had terminatedon December 31, 2019. Earnings would have continued to be paid for the NEO’s Performance Incentive Plan and
Supplemental Savings Plan grantor trusts, as applicable, until the trust assets were fully distributed. The amount of thesepayments would depend on the trust earnings and fees and the period over which the trust assets were distributed.
Based on current earnings rates, if the trust assets were distributed over a 10-year period, the NEOs would receive thefollowing average annual earnings payments over such 10-year period: Mr. Gonzalez, $955,769; Ms. Schumacher,$1,319,422; Mr. Alban, $941,835; and Dr. Severino, $453,052. In addition, the following one-time deposits would havebeen made under the AbbVie Supplemental Pension Plan for each of the following NEOs, respectively: Mr. Gonzalez, $0;
Ms. Schumacher, $1,978,945; Mr. Alban, $2,012,782 and Dr. Severino, $1,016,149. As of December 31, 2019,
Mr. Gonzalez, Ms. Schumacher and Mr. Alban were eligible to retire, and therefore were eligible to receive the pension
benefits previously described.
If the termination of employment had been due to disability, then the respective NEO also would have received,in addition to AbbVie’s standard disability benefits, a monthly long-term disability benefit in the following amount:
Mr. Gonzalez: $216,750; Mr. Michael, $90,000; Ms. Schumacher: $120,000; Mr. Alban: $120,000; and Dr. Severino:

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EXECUTIVE COMPENSATION$120,000. This long-term disability benefit would continue for up to 24 months following termination of employment. It
ends if the NEO retires, recovers, dies or ceases to meet eligibility criteria.
If the NEO’s employment had terminated due to death or disability, his or her unvested stock options, restricted
stock or unit awards and performance shares would have vested on December 31, 2019 with values as set forth below inthe subsection of this proxy statement captioned ‘‘Equity Awards.’’
Potential Payments upon Change in Control
AbbVie has entered into change in control agreements with its NEOs. Each change in control agreement
continues in effect until December 31, 2020, and can be renewed for successive two-year terms upon notice prior to the
expiration date. If notice of non-renewal is given, the agreement will expire on the later of the scheduled expiration date
and the one-year anniversary of the date of such notice. If no notice is given, the agreement will expire on the one-year
anniversary of the scheduled expiration date. Each agreement also automatically extends for two years following any
change in control (see below) that occurs while the agreement is in effect.
The agreements provide that if the employee is terminated other than for cause or permanent disability or if
the employee elects to terminate employment for good reason (see below) within two years following a change incontrol, he or she is entitled to receive a lump sum payment equal to three times his or her annual salary and annual
incentive (‘‘bonus’’) award (assuming for this purpose that all target performance goals have been achieved or, if higher,
based on the average bonus for the last three years), plus any unpaid bonus owing for any completed performance
period and the pro rata bonus for any current bonus period (based on the highest of the bonus assuming achievementof target performance, the average bonus for the past three years or, in the case of the unpaid bonus for any completed
performance period, the actual bonus earned). If the employee is terminated other than for cause or permanent
disability or if the employee elects to terminate employment for good reason during a potential change in control (seebelow), he or she is entitled to receive a lump sum payment of the annual salary and bonus payments described above,
except that the amount of the bonus to which the employee is entitled will be based on the actual achievement of theapplicable performance goals. If the potential change in control becomes a ‘‘change in control event’’ (within themeaning of Internal Revenue Code Section 409A), the employee will be entitled to receive the difference between thebonus amounts the officer received upon termination during the potential change in control and the bonus amounts thatwould have been received had such amounts instead been based on the higher of the employee’s target bonus or the
average bonus paid to the employee in the preceding three years.
Bonus payments include payments made under the Performance Incentive Plan. The employee also will receive
up to two years of additional employee benefits (including welfare benefits, outplacement services and tax and financial
counseling) and the value of three more years of pension accruals. If change in control-related payments and benefits
become subject to the excise tax imposed under Internal Revenue Code Section 4999, payments under the agreement
will be reduced to prevent application of the excise tax if such a reduction would leave the employee in a better
after-tax position than if the payments were not reduced and the tax applied. The agreements also limit the conduct for
which awards under AbbVie’s incentive stock programs can be terminated and generally permit options to remain
exercisable for the remainder of their term.
For purposes of the agreements, the term ‘‘change in control’’ includes the following events: any person
becoming the beneficial owner of AbbVie securities representing 20 percent or more of the outstanding voting power(not including an acquisition directly from AbbVie and its affiliates); a change in the majority of the members of theboard of directors whose appointment was approved by a vote of at least two-thirds of the incumbent directors; and theconsummation of certain mergers or similar corporate transactions involving AbbVie. A ‘‘potential change in control’’under the agreements includes, among other things, AbbVie’s entry into an agreement that would result in a change incontrol. Finally, the term ‘‘good reason’’ includes: a significant adverse change in the employee’s position, duties, orauthority; the company’s failure to pay the employee’s compensation or a reduction in the employee’s base pay or
benefits; or the relocation of the company’s principal executive offices to a location that is more than 35 miles from thelocation of the offices at the time of the change in control.

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EXECUTIVE COMPENSATION

If a change in control had occurred on December 31, 2019, immediately followed by one of the covered
circumstances described above, Mr. Gonzalez, Mr. Michael, Ms. Schumacher, Mr. Alban, and Dr. Severino would havebeen entitled to receive the following payments and benefits under the change in control agreements:•

Mr. Gonzalez: cash termination payments—$16,779,375; additional Supplemental Pension Plan benefits—$1,897,901; welfare and fringe benefits—$80,262.

•

Mr. Michael: cash termination payments—$5,713,250; additional Supplemental Pension Plan benefits—$1,410,259; welfare and fringe benefits—$82,442.

•

Ms. Schumacher: cash termination payments—$9,064,663; additional Supplemental Pension Plan benefits—$4,363,498; welfare and fringe benefits—$67,381.

•

Mr. Alban: cash termination payments—$8,712,033; additional Supplemental Pension Plan benefits—$4,904,865; welfare and fringe benefits—$62,474.

•

Dr. Severino: cash termination payments—$9,359,300; additional Supplemental Pension Plan benefits—$993,543; welfare and fringe benefits—$83,633.

Equity Awards
The AbbVie 2013 Incentive Stock Program was approved by AbbVie’s stockholders and covers approximately
9,000 participants, including a broad group of management and professional staff.
The AbbVie 2013 Incentive Stock Program provides that any unvested equity awards granted in or after January
2013 may be assumed, converted or replaced on an equivalent basis by the surviving company upon a change in control.
If the surviving company does not do so, the vesting of the awards is accelerated. If the surviving company does assume,
convert or replace the awards on an equivalent basis, then accelerated vesting of the awards is limited to circumstancesin which, during the period from six months before through two years after a change in control, the grantee’s
employment is terminated without cause or the grantee resigns for good reason. The terms ‘‘cause’’ and ‘‘good reason’’have the same definitions as in the change in control agreements.
If a change in control had occurred on December 31, 2019 and the surviving company did not assume, convert
or replace any of the awards granted in or after January 2013, or the NEO’s employment had terminated without cause
or he or she had resigned for good reason, as described above, then the unvested equity awards of the NEOs would
have vested as follows:•

Mr. Gonzalez would have vested in (i) 351,250 unvested AbbVie stock options with a value of $4,071,309,(ii) 146,366 AbbVie restricted stock units with a value of $12,959,246, and (iii) 319,312 AbbVie performance
shares with a value of $28,271,863.

•

Mr. Michael would have vested in (i) 63,677 unvested AbbVie stock options with a value of $622,475,(ii) 72,101 AbbVie restricted stock units with a value of $6,383,778, and (iii) 127,108 AbbVie performance
shares with a value of $11,254,178.

•

Ms. Schumacher would have vested in (i) 132,462 unvested AbbVie stock options with a value of$1,559,367, (ii) 97,038 AbbVie restricted stock units with a value of $8,591,700 and (iii) 191,919 AbbVie
performance shares with a value of $16,992,505.

•

Mr. Alban would have vested in (i) 123,842 unvested AbbVie stock options with a value of $1,460,647,(ii) 95,947 AbbVie restricted stock units with a value of $8,495,103, and (iii) 189,056 AbbVie performance
shares with a value of $16,738,983.

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EXECUTIVE COMPENSATION•

Dr. Severino would have vested in (i) 128,732 unvested AbbVie stock options with a value of $1,520,811,(ii) 97,180 AbbVie restricted stock units with a value of $8,604,317, and (iii) 192,259 AbbVie performance
shares with a value of $17,022,608.

The value of stock options shown is based on the excess of the closing price of one share of common stock on
December 31, 2019 over the exercise price of such options, multiplied by the number of unvested stock options held by
the NEO. The value of restricted stock units and performance shares shown is determined by multiplying the number ofunits or shares that would vest as of December 31, 2019 in accordance with the applicable equity award agreement
terms and the closing price of one share of common stock on December 31, 2019.

632020 Proxy Statement

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RATIFICATION OF ERNST & YOUNG LLP AS ABBVIE’S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(ITEM 2)
25FEB202022014954
The audit committee of the board of directors is directly responsible for the appointment, compensation,
retention and oversight of the independent registered public accounting firm retained to audit the company’s financial
statements. On October 17, 2019, the audit committee appointed Ernst & Young LLP (the independent auditor) toperform independent audit services for the fiscal year ending December 31, 2020. Ernst & Young LLP has served as our
independent auditor since 2013. In conjunction with the periodic mandated rotation of the audit firm’s lead engagement
partner, the chair of the audit committee would be involved in the selection of a new lead engagement partner. Further,
the audit committee will periodically consider whether there should be a regular rotation of the independent auditor.
Although the audit committee has sole authority to appoint the independent auditor, it would like to know theopinion of the stockholders regarding its appointment of Ernst & Young LLP for 2020. For this reason, stockholders arebeing asked to ratify this appointment. If the stockholders do not ratify the appointment of Ernst & Young LLP for 2020,
the audit committee will take that fact into consideration, but may, nevertheless, continue to retain Ernst & Young LLP.
The audit committee and the board believe that the continued retention of Ernst & Young LLP to serve as the company’s
independent auditor is in the best interests of the company and its stockholders.
Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting and will be given theopportunity to make a statement if they desire to do so. They will also be available to respond to appropriate questions.
The board of directors recommends that you vote FOR ratification of the appointment of Ernst & Young LLP as
AbbVie’s independent registered public accounting firm for 2020.

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AUDIT INFORMATION25FEB202022010965
Audit Fees and Non-Audit Fees.................................................................................................................................................................................................................................................................................................................................

The following table presents fees for professional audit services rendered to AbbVie by Ernst & Young LLP for
the years ended December 31, 2019 and December 31, 2018, and fees for other services rendered to AbbVie by Ernst &Young LLP for those periods.
2019(millions)2018(millions)

$10.6
0.9
2.5
—

$10.3
0.7
2.3
—

$14.0

$13.3

Audit fees:(1)Audit related fees:(2)Tax fees:(3)All other fees:
Total(1) Ernst & Young LLP billed or will bill AbbVie for professional services rendered for the audit of AbbVie’s annual
financial statements, the review of AbbVie’s financial statements included in AbbVie’s quarterly reports, the auditsof AbbVie’s internal control over financial reporting, statutory and subsidiary audits, the review of documents filedwith the Securities and Exchange Commission, comfort letters, consents and certain accounting consultations inconnection with the audits.
(2) Audit related fees include audits of certain employee benefit plan financial statements, accounting consultations inconnection with proposed acquisitions, and other agreed upon procedures.
(3) Tax fees consist principally of professional services for corporate tax compliance and tax advisory services.

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of the Independent
Registered Public Accounting Firm.................................................................................................................................................................................................................................................................................................................................
The audit committee has established policies and procedures to pre-approve all audit and permissible non-audit
services performed by the independent registered public accounting firm (the independent auditor) and its related
affiliates.
Prior to engagement of the independent auditor for the next year’s audit, management will submit a scheduleof all proposed permissible services expected to be rendered during that year for each of four categories of services tothe audit committee for approval.
Prior to engagement, the audit committee pre-approves these services by category of service. The fees arebudgeted and the audit committee requires the independent auditor and management to report actual fees versus thebudget periodically by category of service. During the year, circumstances may arise when it may become necessary toengage the independent auditor for additional services not contemplated in the original pre-approval. In those instances,
the audit committee requires specific pre-approval before engaging the independent auditor.
The audit committee may delegate pre-approval authority to one or more of its members. The member towhom such authority is delegated must report any pre-approval decisions to the audit committee at its next scheduled
meeting.

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AUDIT INFORMATION

Audit Committee Report.................................................................................................................................................................................................................................................................................................................................

The audit committee is comprised of six non-employee members of the board of directors. Each audit
committee member meets the independence requirements of the New York Stock Exchange and Rule 10A-3 of the
Exchange Act. The committee operates under a written charter adopted by the board of directors. Consistent with the
responsibilities set forth in its charter, the audit committee assists the board of directors in its oversight of AbbVie’s
accounting, auditing and financial reporting practices.
The audit committee has reviewed and discussed the audited financial statements contained in the 2019 Annual
Report on Form 10-K with AbbVie’s management and its independent registered public accounting firm (the independent
auditor). Management is responsible for the preparation and integrity of AbbVie’s consolidated financial statements. The
independent auditor is responsible for performing an audit of the consolidated financial statements and expressing an
opinion on the conformity of those financial statements with accounting principles generally accepted in the UnitedStates of America. The audit committee reviews these processes on behalf of the board of directors. Periodically, during
the year, the audit committee reviewed and discussed with AbbVie’s management, internal auditors, and independent
auditor the effectiveness of AbbVie’s internal control over financial reporting and the overall quality of AbbVie’s financial
reporting.
The audit committee has discussed with the independent auditor the matters required to be discussed by theapplicable requirements of the Public Company Accounting Oversight Board (PCAOB). In addition, the audit committee
has received the written disclosures and the letter from the independent auditor regarding its independence required by
PCAOB Ethics and Independence Rule 3526, Communications with Audit Committees Concerning Independence, and has
discussed with the independent auditor the firm’s independence. The audit committee has also considered whether theprovision of non-audit services is compatible with maintaining the independence of the independent auditor andconcluded the independent auditor’s independence has not been impaired.
Based on the review and discussions referred to above, the audit committee recommended to the board of
directors that the audited financial statements be included in AbbVie’s Annual Report on Form 10-K for the year ended
December 31, 2019 filed with the Securities and Exchange Commission.
Audit Committee
R. Austin, Chair, W. Burnside, M. Meyer, E. Rapp, G. Tilton, and F. Waddell

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SAY ON PAY—ADVISORY VOTE ON THE APPROVAL OFEXECUTIVE COMPENSATION (ITEM 3)
25FEB202022015322
Stockholders are being asked to approve the compensation of AbbVie’s named executive officers, as disclosed
under Securities and Exchange Commission rules, including the Compensation Discussion and Analysis, the compensationtables and related material included in this proxy statement.
The independent compensation committee of the board of directors, with the counsel of its independentcompensation consultant, has thoroughly examined AbbVie’s programs, the company’s performance related to ourindustry and peer group, and market factors. The committee has determined that the specific pay decisions for thenamed executive officers are appropriate given the company’s performance, the executives’ contributions, and ourstockholders’ interests.
While this vote is advisory and non-binding, the board of directors and the compensation committee value theopinion of the stockholders and will review the voting results and take them into account when future compensation
decisions are made.
Accordingly, the board of directors recommends that you vote FOR the approval of the named executive
officers’ compensation.

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MANAGEMENT PROPOSAL TO ELIMINATE SUPERMAJORITY
VOTING ITEM 4
25FEB202022013469
Currently, AbbVie’s Amended and Restated Certificate of Incorporation (the ‘‘Certificate of Incorporation’’)provides that certain amendments to the Certificate of Incorporation or AbbVie’s Amended and Restated By-Laws (the‘‘By-Laws’’) require the affirmative vote of shares representing no less than 80 percent of AbbVie’s outstanding shares ofstock entitled to vote generally in the election of directors. We refer to these provisions listed below as the‘‘Supermajority Voting Requirement.’’
Specifically, Article VIII of the Certificate of Incorporation provides that any stockholder-approved alteration,
amendment, or repeal of any of the By-Law provisions listed below, or the adoption of any stockholder-approved By-Law
provision inconsistent with those By-Law provisions, must be approved pursuant to the Supermajority Voting
Requirement. The By-Law provisions covered by the Supermajority Voting Requirement are in regards to:•

special meetings of stockholders and written consents by stockholders (Article II, Sections 2.2 and 2.12,
respectively);•board size and tenure, classes of directors, board vacancies, and director removal (Article III, Sections 3.2,
3.3, 3.10 and 3.11, respectively);•indemnification of directors and officers (Article VII); and•amendments to the By-Laws (Article X).

Article XI of the Certificate of Incorporation provides that any alteration, amendment, or repeal of any of theprovisions of the Certificate of Incorporation listed below, or the adoption of any provision inconsistent with those
provisions, must be approved pursuant to the Supermajority Voting Requirement. The provisions covered by theSupermajority Voting Requirement are in regards to:•board size, classes of directors, board vacancies, and director removal (Article VI, Sections 1, 2, 3 and 4,
respectively); and•written consents by stockholders and special meetings of stockholders (Article VII, Sections 1 and 2,
respectively).

After reviewing the advantages and disadvantages of the Supermajority Voting Requirement at this time, theboard approved, and recommends that stockholders approve, the amendment and restatement of Articles VIII and XI of
the Certificate of Incorporation to remove the Supermajority Voting Requirement contained therein. If approved, future
stockholder-approved amendments to the By-Law and Certificate of Incorporation provisions listed above will not be
subject to the Supermajority Voting Requirement and will instead require the affirmative vote of a majority of AbbVie’soutstanding shares of stock entitled to vote generally in the election of directors.
The proposed Certificate of Amendment to the Certificate of Incorporation is attached to this proxy statement as
Appendix A, which the company would file promptly following the 2020 Annual Meeting if our stockholders approve theamendment. The affirmative vote of the holders of 80 percent of the outstanding shares of stock entitled to vote
generally in the election of directors on the Record Date is required to approve this proposal pursuant to the Certificate
of Incorporation. The board has approved certain conforming changes to the company’s By-Laws, contingent on theeffectiveness of the proposed amendment to the Certificate of Incorporation.
The board of directors recommends that you vote FOR the management proposal to amend and restate theCertificate of Incorporation to eliminate supermajority voting.

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STOCKHOLDER PROPOSALS
25FEB202022015556
Three stockholder proposals will be voted upon at the Annual Meeting if properly presented by or on behalf ofthe proponent. The address of each of the proponents is available upon request. The proposed resolutions and thestatements made in support thereof, as well as the board of directors’ statements in opposition to these proposals, arepresented on the following pages. The proposal may contain assertions about AbbVie or other statements that we
believe are incorrect.
The board of directors recommends that you vote AGAINST the proposals for the reasons set forth following
the proposals.

Stockholder Proposal on Lobbying Report (Item 5 on Proxy Card).................................................................................................................................................................................................................................................................................................................................

Zevin Asset Management, on behalf of William Creighton, and co-filers Dana Investment Advisors, Friends
Fiduciary Corporation, Fresh Pond Capital, and Echo Foundation have notified AbbVie that they intend to present thefollowing proposal at the Annual Meeting and that they each own at least $2,000 worth of AbbVie shares.
Whereas, we believe in full disclosure of AbbVie’s direct and indirect lobbying activities and expenditures toassess whether AbbVie’s lobbying is consistent with its expressed goals and in the best interests of stockholders.
Resolved, the stockholders of AbbVie request the preparation of a report, updated annually, disclosing:
1.
2.
3.
4.

Company policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying
communications.
Payments by AbbVie used for (a) direct or indirect lobbying or (b) grassroots lobbying communications, in eachcase including the amount of the payment and the recipient.
AbbVie’s membership in and payments to any tax-exempt organization that writes and endorses model
legislation.
Description of management’s decision-making process and the Board’s oversight for making payments describedin section 2 above.

For purposes of this proposal, a ‘‘grassroots lobbying communication’’ is a communication directed to thegeneral public that (a) refers to specific legislation or regulation, (b) reflects a view on the legislation or regulation and(c) encourages the recipient of the communication to take action with respect to the legislation or regulation. ‘‘Indirect
lobbying’’ is lobbying engaged in by a trade association or other organization of which AbbVie is a member.
Both ‘‘direct and indirect lobbying’’ and ‘‘grassroots lobbying communications’’ include efforts at the local, stateand federal levels.
The report shall be presented to the Public Policy Committee and posted on AbbVie’s website.
Supporting Statement
Investors urge transparency in AbbVie’s use of funds to lobby. AbbVie spent $32,360,000 from 2013 - 2018 on
federal lobbying. This does not include lobbying expenditures to influence legislation in states, where AbbVie also lobbies
but disclosure is uneven or absent. For example, AbbVie had at least 68 lobbyists in 19 states in 2018
(followthemoney.org) and spent $2,269,103 on lobbying in California and $433,961 on lobbying in New York from2013 - 2018. AbbVie also lobbies abroad, spending between e200,000 - 299,000 on lobbying in Europe for 2018.

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AbbVie is a member of the Chamber of Commerce, which has spent over $1.5 billion on lobbying since 1998,
and sits on the board of the Pharmaceutical Research and Manufacturers of America (PhRMA), which spends millions
lobbying against drug pricing measures.1 AbbVie does not disclose the portions of its payments to trade associations thatare used for lobbying.
We are concerned that poor lobbying disclosure presents significant reputational risk, especially when AbbVie’s
lobbying contradicts company public positions. For example, AbbVie believes patients need access to affordable
medicines, yet it helps fund PhRMA’s opposition to lower drug price initiatives.2 Media outlets such as CNBC havehighlighted AbbVie’s claims to support policies that lower the cost of medicines, while AbbVie helps to fund PhRMA’s
opposition to initiatives aimed at lowering drug prices.3
We believe the reputational damage stemming from this misalignment between general policy positions andactual direct and indirect lobbying efforts harms long-term value creation by AbbVie. Therefore, we urge AbbVie toexpand its lobbying disclosure.
1

https://www.opensecrets.org/news/2019/09/big-pharma-invests-millions-drug-pricing-bills/

2

https://www.cnn.com/2019/01/23/health/phrma-lobbying-costs-bn/index.html

3

https://www.cnbc.com/2019/02/26/pharma-execs-offer-senate-ideas-to-lower-drug-costs-except-price-cuts.html

Board of Directors Statement in Opposition to the Stockholder Proposal on Lobbying Report (Item 5 on
Proxy Card).................................................................................................................................................................................................................................................................................................................................
The board of directors recommends that stockholders vote AGAINST this proposal. This proposal is unnecessary,
because AbbVie already makes extensive disclosures regarding our lobbying and political activities as required by law and
we voluntarily disclose additional related information on our website, as outlined below. AbbVie has alreadydemonstrated transparency with respect to lobbying activities and strong risk mitigation procedures governing suchactivities. The preparation and maintenance of an additional report, as proposed, is neither a good use of resources, norwould it increase stockholder value.
The board, through its public policy committee, exercises oversight of AbbVie’s political and lobbying activities.
•

The board of directors public policy committee exercises oversight of AbbVie’s political expenditures andlobbying activities, as specifically enumerated in the committee’s charter, and which are further governed by
the Committee’s approved policy on political contributions. The public policy committee and AbbVie’s senior
management review these activities and expenditures on a regular basis.

•

Our Vice Chairman, External Affairs and Chief Legal Officer, who reports directly to the CEO, and our Vice
President, Government Affairs, each review and approve AbbVie’s lobbying strategy and all plans forcorporate political contributions at the recommendation of AbbVie’s Government Affairs function to ensurethat these activities are consistent with the company’s guidelines and comply with applicable laws.

•

We believe this approach, as explained on our website, minimizes risk and reflects our guiding commitment
to transparency, stewardship of corporate and stockholder funds, sound corporate practice, and highstandards of ethical conduct.

AbbVie already makes extensive disclosures regarding lobbying and political activities and has been recognized as aleader in this area.
•

Since our launch as a new public company in 2013, AbbVie has provided robust transparency through thedisclosures described below. AbbVie’s website describes our oversight process and our guiding principles for

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lobbying and political activities. We pursue activities that shape policies to benefit patients, with a focus on
improving patient access to new medical advances.
•

In part due to the extensive disclosures described below, AbbVie has been consistently recognized as aleader in providing the highest level of political transparency and accountability. In 2019, AbbVie was again
recognized as a ‘‘trendsetter’’ in this area by the CPA-Zicklin Index, the highest ranking a company canreceive. This index, which is produced by the non-profit Center for Political Accountability in conjunction
with the Zicklin Center for Business Ethics Research at The Wharton School at the University ofPennsylvania, benchmarks the political disclosure and accountability policies and practices of leading U.S.
public companies. AbbVie was also ranked in the top tier of companies in 2018, 2017, 2016, 2015, and
2014.

•

AbbVie files quarterly reports that include (i) total federal lobbying expenditures, (ii) the name of thelegislation or subject matter covered, (iii) individuals who lobbied on behalf of AbbVie, and (iv) identificationof the legislative body or executive branch that was contacted, in compliance with the Lobbying DisclosureAct. These reports include expenses associated with lobbying the federal government and the portion of
trade association dues associated with federal lobbying. AbbVie provides links to these reports on our
website at http://www.abbvie.com/responsibility/transparency-policies/home.html#cpc. We file similar
publicly-available lobbying reports with state and local agencies as required by law.

•

In 2016, we enhanced our website with a comprehensive list of our state lobbying reports with direct links
to our state filings or the relevant database.

•

AbbVie also provides a listing of corporate contributions to political candidates, political parties, politicalcommittees, ballot measure committees, and organizations operating under Section 527 of the Internal
Revenue Code. These reports are updated every six months and are archived for reference on our website
identified above.

•

AbbVie does not currently make direct expenditures toward U.S. federal or state grassroots lobbying
communications to the general public and does not currently contribute funds intended for use in elections
to tax-exempt organizations under Section 501(c)(4) of the Internal Revenue Code, as disclosed on our
website. If such a contribution were made, it would be enumerated in AbbVie’s reports on other corporate
political contributions.

•

AbbVie discloses trade associations to which AbbVie provides $50,000 or more in annual membership, which
are reviewed by the Public Policy Committee. This threshold was lowered in 2016 from $100,000. AbbVie
also posts a list of global trade associations in which an AbbVie employee serves on the organization’s boardof directors. Both of these lists are available on our website. AbbVie chooses to participate as a member ofvarious associations based on our commitment to voice our concerns as appropriate through our colleagues
who serve on the boards and committees of these groups. Such participation does not imply that we always
agree with the positions of the larger organization and/or other members.

•

AbbVie also provides a link to the Federal Election Commission reports of the AbbVie Political Action
Committee (‘‘PAC’’), which detail the PAC’s political contributions and expenditures.

•

Attempting to quantify indirect lobbying would be difficult to estimate and potentially misleading tostockholders as AbbVie is not directing the lobbying activities of trade, civic or patient groups. Further, it
would be difficult for us to determine which third parties may endorse model legislation and whether suchactivities fall within the proposal’s request.

In summary, our robust oversight mechanisms and extensive disclosures address the concerns underlying the
proposal, but without the unnecessary business risks and additional resources the proposal would introduce if
implemented.
The board of directors recommends that you vote AGAINST the proposal.

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Stockholder Proposal on Independent Chair (Item 6 on Proxy Card).................................................................................................................................................................................................................................................................................................................................

The Employees’ Retirement System of Rhode Island and co-filer Vermont Pension Investment Committee havenotified AbbVie that they intend to present the following proposal at the Annual Meeting and that they collectively own
92,716 AbbVie shares.
RESOLVED: AbbVie Inc. (‘‘AbbVie’’ or the ‘‘Company’’) shareholders request the Board of Directors adopt as
policy (the ‘‘Policy’’), and amend the bylaws as necessary, to require henceforth that the Chair of the board be an
independent member of the board. The Policy should apply prospectively so as not to violate any contractual obligations.
If the board determines that a Chair who was independent when selected is no longer independent, the board shallselect a new Chair who satisfies the requirements of the policy within a reasonable amount of time. Compliance withthis policy is waived if no independent director is available and willing to serve as Chair.
Supporting Statement
We believe:•

The role of the Chief Executive Officer (CEO) and management is to run the company.

•

The role of the Board is to provide independent oversight of management and the CEO.

•

There is a potential conflict of interest for a CEO to have a non-independent director act as Chair.

34% of S&P 500 companies are chaired by an independent director, up from 31% last year and 16% in 20091.
Numerous institutional investors recommend such a separation. For example, Norges Bank Investment
Management states that the board should be chaired by an independent director, and CalPERS’ Governance andSustainability Principles recommend an independent chair in all but ‘‘very limited circumstances.’’ The Council of
Institutional Investors’ corporate governance policies favor independent board chairs.
AbbVie has been criticized for anticompetitive practices that prevent market forces from acting to lower the costof drugs such as AbbVie’s Humira, which accounts for a majority of AbbVie’s revenue. A federal class action filed onbehalf of benefit funds claims that AbbVie engaged in an ‘‘anticompetitive scheme to restrain competition in the market
for Humira and its biosimilar competitors in the United States,’’ including abusing the patent system and colluding withpotential biosimilar manufacturers to prevent market entry.2 AbbVie was singled out during a February 2019congressional hearing on high drug prices for aggressive increases in the price of Humira.3
Concerns about these risks have led to growing investor interest in the Company’s governance practices. In ourview, shareholders are best served by an independent board Chair who can provide a balance of power between the
CEO and the board. The board is responsible for overseeing management, and conflicts of interest may arise when one
person holds both the Chair and CEO positions. A 2019 survey by PwC found that 61% of directors on boards with aunified Chair/CEO believed that at least one fellow director should be replaced, a significantly larger proportion than the
47% of directors on boards with an independent chair or lead independent director who voiced that view.4
We believe that AbbVie’s board should adopt best practice governance policies, including having an independent
board Chair. We urge shareholders to vote for this proposal.
1

https://www.spencerstuart.com/-/media/2019/ssbi-2019/us_board_index_2019.pdf

2https://www.courtlistener.com/recap/gov.uscourts.ilnd.362729/gov.uscourts.ilnd.362729.1.0_3.pdf

3https://www.cnbc.com/2019/02/26/sen-ron-wyden-grills-pharma-execs-for-raising-drug-prices.html

4https://www.pwc.com/us/en/services/governance-insights-center/assets/pwc-2019-annual-corporate-directorssurvey-full-report-v2.pdf.pdf, at 572 9MAR202010224538

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Board of Directors Statement in Opposition to the Stockholder Proposal on Independent Chair (Item 6 on
Proxy Card).................................................................................................................................................................................................................................................................................................................................
The board of directors recommends that stockholders vote AGAINST this proposal.
Our board of directors believes that our stockholders are best served by preserving the flexibility to determine theappropriate leadership structure for the company in light of the circumstances at the time.
We believe the proposal would unnecessarily restrict the board’s ability to exercise its fiduciary duty todetermine the board leadership structure most appropriate for the company given the specific circumstances andleadership needs at any particular point in time. The company’s robust governance framework ensures that board
leadership is balanced with independent participation given the extensive involvement of the lead director and hisoversight. Therefore, adopting a proposal that would limit the board’s ability to exercise decision making on theappropriate leadership is not in stockholders’ best interests.
AbbVie’s existing leadership structure and corporate governance practices provide strong independent oversight.
Since its inception in 2013, AbbVie has had a robust lead independent director role. The lead independent
director has significant authority and responsibilities and works directly with the Chairman and CEO, as well as theindependent directors, to ensure meaningful oversight of the board. Among other duties, our lead independent director:•

reviews and guides agenda items for board meetings;•

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 toother 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 eachdirector individually;•

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 directcommunication as needed;•

if required, represents independent board members externally; and•performs such other duties as the board may determine from time to time.

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AbbVie has other robust corporate governance practices designed to protect long-term shareholder value. All
directors, other than the CEO, are independent. All key committees and committee chairs are comprised completely of
independent directors. Our independent directors meet regularly in executive session, which is presided over by the leaddirector. Our directors are also subject to majority voting as set forth in our By-Laws. Other corporate governancepractices, which are highlighted in our Governance Guidelines (available at www.abbvieinvestor.com) and throughout thisproxy statement, include a comprehensive board risk management oversight process; an annual investor engagement
program, reaching over 45% of outstanding shares; annual say on pay votes; and proxy access.
The board periodically considers AbbVie’s leadership structure and has determined that its needs are best met throughthe existing structure.
In light of the lead independent director authority and responsibilities and other corporate governance practices,
the board has determined that its current leadership structure, in which the offices of Chairman and Chief Executive
Officer are held by one individual, along with a strong and independent Lead Director, ensures the appropriate level ofoversight, independence, and responsibility is applied to all board decisions and is in the best interests of AbbVie and its
stockholders.
The board of directors recommends that you vote AGAINST the proposal.

Stockholder Proposal on Compensation Committee Drug Pricing Report (Item 7 on Proxy Card).................................................................................................................................................................................................................................................................................................................................

United Church Funds, and co-filers, including The Sisters of Charity of Saint Elizabeth, Mercy Investment Services,
Dominican Sisters of Springfield Illinois, Bon Secours Mercy Health, Inc., Sisters of Providence, Trinity Health, Robeco,
Congregation of the Sisters of St. Joseph of Peace, and Benedictine Sisters of Virginia have notified AbbVie that they
intend to present the following proposal at the Annual Meeting and that they collectively own 586,439 AbbVie shares.
Resolved: AbbVie Inc. (‘‘AbbVie’’) shareholders request that the Compensation Committee of the board of
directors publish a report (at reasonable expense, within a reasonable time, and omitting confidential or propriety
information) assessing the feasibility of incorporating public concern over high drug prices into the senior executive
compensation arrangements described in AbbVie’s annual proxy materials.
Supporting Statement
To reward the creation of long-term value, incentive compensation arrangements for senior executives ofbranded pharmaceutical companies should promote responsible risk management. A key strategic risk now facing
pharmaceutical firms is backlash against the high price of medicines. The effects of high drug prices on patient access,government payer budgets and the broader health care system have kept drug prices in the public spotlight, especially as
campaigning for 2020 presidential and congressional elections intensifies.
A 2019 Credit Suisse analyst report stated that US drug price rises contributed 33% of industry net income
growth in 2018 and noted ‘‘strong political pressure to reduce absolute drug prices.’’ The report ranked AbbVie as one of
the companies at greatest risk from regulatory changes that have been floated, such as using international reference
pricing and eliminating Medicare rebates, and identified Humira as benefiting substantially from high rebates. (Global
Pharmaceuticals, ‘‘Future of US Drug Rebates Under Review,’’ Apr. 29, 2019, at 4, 6-7, 11) One estimate pegged theincrease in US healthcare costs from AbbVie’s January 2018 9.7% price increase for Humira at $1 billion for 2018 alone.
(https://splinternews.com/your-meds-dont-have-to-cost-this-much-1830657097)
We are concerned that AbbVie’s senior executive incentive compensation arrangements may not encourage
consideration of risks created by high prices. For example, 80% of CEO Richard Gonzalez’s annual bonus is determined by
one-year financial metrics, including net revenue, income before taxes and Humira sales, while only 20% depends on
R&D/lnnovation. (2019 Proxy Statement, at 38) Although the final vesting of performance share awards occurs after athree-year cycle, performance on one of the two metrics, earnings per share, depends on meeting three separate annual

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targets. (See id. at 53-54) Excessive dependence on drug price increases and tactics like high rebates that limit
competition create significant risks, which may be exacerbated when price hikes drive large senior executive payouts.
Accordingly, we believe it is advisable for the Compensation Committee to explore incorporating measures that
relate to the financial and strategic risks created by high drug prices into senior executive compensation arrangements.
This Proposal gives the compensation committee total discretion in selecting potential measures and in analyzing thefeasibility of incorporating them. By way of illustration, though, such measures could reward executives for increasing
access or limit the extent to which price increases can be used to meet revenue and income targets.
We urge shareholders to vote for this Proposal.

Board of Directors Statement in Opposition to the Stockholder Proposal on Compensation Committee
Drug Pricing Report (Item 7 on Proxy Card).................................................................................................................................................................................................................................................................................................................................
The board of directors recommends that stockholders vote AGAINST this proposal. AbbVie has demonstrated acommitment to both balanced, appropriate executive compensation programs and to responsible drug pricing. The
preparation and maintenance of the proposed report would not provide meaningful information to stockholders, would
not be a good use of AbbVie’s resources, and is unnecessary.
AbbVie’s compensation programs effectively account for responsible risk management.
In collaboration with the compensation committee’s independent compensation consultant, AbbVie conducts anannual in-depth compensation risk assessment with respect to its compensation policies and practices. The results of thisassessment, including the major factors used to arrive at the results, are already published in this proxy statement. This
comprehensive risk assessment appropriately evaluates AbbVie’s compensation risk exposure and its potential impact oncompensation outcomes, resulting in compensation decisions that are aligned with creating stockholder value andimproving company performance without undue risk-taking. A report specifically focused only on drug pricing risk would
be redundant to, and much less meaningful than, the broader compensation risk assessment already conducted by
AbbVie.
Executive officers are evaluated based on quantitative financial metrics and qualitative factors, such as individual,
strategic and leadership achievements, as well as relative accomplishments and/or developments in the company and themarketplace. Further, our executive officers are also evaluated on contributions to the company’s reputation andsustainability. The use of both quantitative and qualitative metrics effectively mitigates the impact of a single risk, suchas dependence on drug pricing, on overall compensation. In addition, AbbVie’s compensation programs use both
short-term and long-term metrics, which mitigates the potential risks of over-reliance on short-term actions, such as
excessive increases in prices, and encourages strategies that result in long-term value creation.
Further, AbbVie’s current compensation policies and practices provide the compensation committee, comprised
entirely of independent directors, with the authority to exercise discretion to substantially adjust incentive payments, if
needed.
AbbVie is committed to responsible drug pricing.
AbbVie evaluates specific pricing decisions on an annual basis with careful consideration of a variety of factors.
In 2019, as in 2017 and 2018, AbbVie publicly committed to taking no more than one, single-digit price increase, as partof our ongoing commitment to acting responsibly with regard to drug pricing. Indeed, the proponents acknowledge and‘‘applaud’’ AbbVie’s commitment. This commitment is factored into our long-range plan and executive performance
metrics are set in advance. Therefore, AbbVie already limits the risk of extreme price increases being used toinappropriately meet performance goals.

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AbbVie’s strategy is to address some of the world’s toughest health challenges by developing innovative
therapies that have a meaningful impact on patients’ lives. Our strategy does not rely on price increases. Since thecompany’s inception, AbbVie has launched more than 15 new products or indications across key therapeutic areas,
including in indications for which there was previously substantial unmet medical need. AbbVie has also developed oneof the strongest late-stage pipelines in the industry with several programs positioned for market leadership.
In summary, given our responsible compensation program design, existing compensation risk assessment,
responsible drug pricing and other practices, the proposal would not provide meaningful information to stockholders,would not be a good use of AbbVie resources, and is unnecessary.
The board of directors recommends that you vote AGAINST this proposal.

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ADDITIONAL INFORMATION25FEB202022010846
Corporate Governance Materials.................................................................................................................................................................................................................................................................................................................................

AbbVie’s corporate governance guidelines with the outline of directorship qualifications; director independence
guidelines; code of business conduct; and audit committee, compensation committee, nominations and governancecommittee, and public policy committee charters are all available in the corporate governance section of AbbVie’s
investor relations website at www.abbvieinvestor.com.

Procedures for Approval of Related Person Transactions.................................................................................................................................................................................................................................................................................................................................

It is AbbVie’s policy that the nominations and governance committee review, approve, ratify or disapprove of alltransactions in which AbbVie participates and in which any related person has a direct or indirect material interest if
such transaction involves or is expected to involve payments of $120,000 or more in the aggregate per fiscal year.
Related person transactions requiring review by the nominations and governance committee pursuant to this policy are
identified in:•questionnaires annually distributed to AbbVie’s directors and executive officers;•

certifications submitted annually by AbbVie executive officers related to their compliance with AbbVie’s Codeof Business Conduct; or•communications made directly by the related person to the chief financial officer or general counsel.

In determining whether to approve or ratify a related person transaction, the nominations and governancecommittee will consider the following items, among others:•

the related person’s relationship to AbbVie and interest in the transaction;•

the material facts of the transaction, including the aggregate value of such transaction or, in the case ofindebtedness, the amount of principal involved;•

the benefits to AbbVie of the transaction;•

if applicable, the availability of other sources of comparable products or services;•

an assessment of whether the transaction is on terms that are comparable to the terms available to an
unrelated third party or to employees generally;•

whether a transaction has the potential to impair director independence; and•whether the transaction constitutes a conflict of interest.

This process is included in the nominations and governance committee’s written charter, which is available on
the corporate governance section of AbbVie’s investor relations website at www.abbvieinvestor.com.

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ADDITIONAL INFORMATION

Delinquent Section 16(a) Reports.................................................................................................................................................................................................................................................................................................................................

Section 16(a) of the Exchange Act requires AbbVie’s directors and executive officers, and persons who own morethan 10% of a registered class of AbbVie’s equity securities, to file with the SEC initial reports of ownership and reportsof changes in beneficial ownership of such equity securities of AbbVie. With the exception of one report filed on behalfof an executive officer on December 7, 2018, which was filed one day late due to an administrative error, to AbbVie’sknowledge, no executive officer or director of AbbVie failed to file reports required by Section 16(a) on a timely basis.

Performance-Based Compensation Arrangements.................................................................................................................................................................................................................................................................................................................................

The Performance Incentive Plan and the Incentive Stock Program are intended to comply with Internal Revenue
Code Section 162(m) to permit deductibility of performance-based compensation with respect to awards granted before
November 2017. In connection with such awards, the compensation committee expects to take appropriate steps topreserve deductibility, but has the flexibility to take actions that may be based on considerations in addition to tax
deductibility. The committee believes that stockholder interests are best served by not restricting the committee’s
discretion and flexibility in crafting compensation programs, even if such programs may result in certain non-deductiblecompensation expenses. Accordingly, the committee may approve components of compensation for certain executive
officers that are not deductible.

Exclusive Forum.................................................................................................................................................................................................................................................................................................................................

AbbVie is incorporated in the state of Delaware and Delaware law governs the relationship among its directors,
officers, and stockholders (also known as the internal affairs doctrine). To provide for the orderly, efficient andcost-effective resolution of Delaware-law issues affecting AbbVie, the company’s Certificate of Incorporation provides thatunless the board of directors otherwise determines, Delaware courts are the exclusive forum for cases involving theinternal affairs doctrine, derivative actions brought on behalf of the company, claims for breach of fiduciary duty, andother matters concerning Delaware statutory and common law. The provision does not apply to any other cases brought
against AbbVie.

Other Matters.................................................................................................................................................................................................................................................................................................................................

The board of directors knows of no other business to be transacted at the 2020 Annual Meeting ofStockholders, but if any other matters do come before the meeting, it is the intention of the persons named in theaccompanying proxy to vote or act with respect to them in accordance with their best judgment.

Date for Receipt of Stockholder Proposals for the 2021 Annual Meeting Proxy Statement.................................................................................................................................................................................................................................................................................................................................

Stockholder proposals for presentation at the 2021 Annual Meeting must be received by AbbVie no later thanNovember 25, 2020 and must otherwise comply with the applicable requirements of the Securities and Exchange
Commission to be considered for inclusion in the proxy statement and proxy for the 2021 meeting.

Procedure for Recommendation and Nomination of Directors and Transaction of Business at Annual
Meeting.................................................................................................................................................................................................................................................................................................................................
A stockholder may recommend persons as potential nominees for director by submitting the names of such
persons in writing to the secretary of AbbVie. Recommendations must be accompanied by certain information aboutboth the nominee and the stockholder making the nomination, as set forth in AbbVie’s Amended and Restated By-Laws.
A nominee who is recommended by a stockholder following these procedures will receive the same consideration asother comparably qualified nominees.

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ADDITIONAL INFORMATIONA stockholder entitled to vote for the election of directors at an Annual Meeting and who is a stockholder ofrecord on:•

the record date for that Annual Meeting,•the date of this proxy statement, and•the date of the Annual Meeting

may nominate persons for director, or make proposals of other business to be brought before the Annual Meeting, by
providing proper timely written notice to the secretary of AbbVie. That notice must include certain information required
by Article II of AbbVie’s Amended and Restated By-Laws, including information about the stockholder, any beneficial
owner on whose behalf the nomination or proposal is being made, their respective affiliates or associates or others
acting in concert with them, and any proposed director nominee.
For each matter the stockholder proposes to bring before the Annual Meeting, the notice must also include abrief description of the business to be discussed, the reasons for conducting such business at the Annual Meeting, anymaterial interest of the stockholder in such business and certain other information specified in the By-Laws. In addition,in the case of a director nomination, the notice must include a completed and signed questionnaire, representation andagreement of the nominee addressing matters specified in the By-Laws.
To be timely, written notice either to directly nominate persons for director or to bring business properly before
the Annual Meeting must be received at AbbVie’s principal executive offices not less than ninety days and not more than
one hundred twenty days prior to the anniversary date of the preceding Annual Meeting. If the Annual Meeting is called
for a date that is more than thirty days before or sixty days after such anniversary date, notice by the stockholder must
be received not less than ninety days and not more than one hundred twenty days prior to the date of such Annual
Meeting and not later than the close of business on the later of ninety days prior to the date of such Annual Meeting,or, if the first public announcement of the date of such Annual Meeting is less than one hundred days prior to the dateof such Annual Meeting, the tenth day following the day on which public announcement of the date of such meeting is
first made by AbbVie. To be timely for the 2021 Annual Meeting, this written notice must be received by AbbVie no later
than February 15, 2021.
In addition, the notice must be updated and supplemented, if necessary, so that the information provided or
required to be provided is true and correct as of the record date for the Annual Meeting and as of the date that is ten
business days prior to the meeting. Any such update or supplement must be delivered to the secretary of AbbVie at
AbbVie’s principal executive offices not more than five business days after the record date for the Annual Meeting, andnot less than eight business days before the date of the Annual Meeting in the case of any update or supplement
required to be made as of ten business days prior to the Annual Meeting.

Procedure for Stockholder Nominations to be Included in AbbVie’s Proxy Materials.................................................................................................................................................................................................................................................................................................................................

AbbVie recently adopted a proxy access By-Law provision to permit a stockholder, or a group of up to 20
stockholders, continuously owning shares of our company for at least 3 years and representing an aggregate of at least
3% of the outstanding shares of common stock, to nominate and include in our proxy materials director nominee(s)constituting up to 25% of the total number of the directors in office, provided that the stockholder(s) and thenominee(s) satisfy the requirements in our By-Laws. Notice must include certain information required by Article II of
AbbVie’s Amended and Restated By-Laws. To be timely, written notice must be received at AbbVie’s principal executive
offices not earlier than 150 days and not later than 120 days before the anniversary of the date that the company
mailed its proxy statement for the prior year’s annual meeting of stockholders. To be timely for the 2021 Annual
Meeting, this written notice must be received by AbbVie no later than November 25, 2020 and must include the specificinformation required by, and otherwise comply with the requirements of, our By-Laws.

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ADDITIONAL INFORMATIONHouseholding of Proxy Materials.................................................................................................................................................................................................................................................................................................................................

The Securities and Exchange Commission has adopted rules that permit companies and intermediaries (such as
brokers or banks) to satisfy the delivery requirements for proxy statements with respect to two or more security holders
sharing the same address by delivering a single Notice or proxy statement addressed to those security holders. This
process, which is commonly referred to as ‘‘householding,’’ potentially provides extra convenience for security holders
and cost savings for companies.
Several brokers and banks with accountholders who are AbbVie stockholders will be ‘‘householding’’ our proxymaterials. As indicated in the notice provided by these brokers to AbbVie stockholders, a single proxy statement will bedelivered to multiple stockholders sharing an address unless contrary instructions have been received from an affected
stockholder. Once you have received notice from your broker that it will be ‘‘householding’’ communications to youraddress, ‘‘householding’’ will continue until you are notified otherwise or until you revoke your consent. If, at any time,
you no longer wish to participate in ‘‘householding’’ and you prefer to receive a separate proxy statement, please notify
your broker, or contact Broadridge Financial Solutions at 1-866-540-7095, or write to us at Investor Relations, AbbVie Inc.,
1 North Waukegan Road, North Chicago, Illinois 60064. Stockholders who currently receive multiple copies of the proxystatement at their address and would like to request ‘‘householding’’ of their communications should contact theirbroker or bank.

Cautionary Statement Regarding Forward-Looking Statements.................................................................................................................................................................................................................................................................................................................................

This proxy statement contains certain forward-looking statements regarding business strategies, market potential,
future financial performance and other matters. The words ‘‘believe,’’ ‘‘expect,’’ ‘‘anticipate,’’ ‘‘project’’ and similar
expressions, among others, generally identify ‘‘forward-looking statements,’’ which speak only as of the date thestatements were made. The matters discussed in these forward-looking statements are subject to risks, uncertainties andother factors that may cause actual results to differ materially from those projected, anticipated or implied in theforward-looking statements. Where, in any forward-looking statement, an expectation or belief as to future results orevents is expressed, such expectation or belief is based on the current plans and expectations of AbbVie management
and expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation
or belief will result or be achieved or accomplished. Factors that could cause actual results or events to differ materiallyfrom those anticipated include the matters described in AbbVie’s Annual Report on Form 10-K for the year ended
December 31, 2019 under Item 1A, ‘‘Risk Factors’’ and Item 7, ‘‘Management’s Discussion and Analysis of Financial
Condition and Results of Operations.’’ AbbVie does not undertake any obligation to update the forward-looking
statements included in this proxy statement to reflect events or circumstances after the date hereof, unless AbbVie isrequired by applicable securities law to do so.

General.................................................................................................................................................................................................................................................................................................................................

It is important that proxies be returned promptly. Stockholders are urged to vote, regardless of the number ofshares of AbbVie common stock owned. Stockholders may vote by telephone, by Internet, or by mail if a printed versionof the proxy card was received or requested. Stockholders who vote by telephone or the Internet do not need to returna proxy card.
The Annual Meeting will be held on Friday, May 8, 2020 at 9:00 a.m. CT. The safety of our stockholders isimportant to us, and given the current guidance by public health officials surrounding COVID-19 and group gatherings,
this year’s Annual Meeting will be a ‘‘virtual meeting’’ of stockholders. You will be able to attend the Annual Meeting,vote, and submit questions via live webcast by visiting www.virtualshareholdermeeting.com/ABBV2020. This website canbe accessed on a computer, tablet, or phone with internet connection. For stockholders without access to the internet,
you may listen to the Annual Meeting by telephone at 1-877-328-2502. AbbVie will make any required list of
stockholders available during the meeting.

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ADDITIONAL INFORMATION

To be admitted to the Annual Meeting at www.virtualshareholdermeeting.com/ABBV2020, you must enter thecontrol number found on your proxy card, voting instruction form or notice you received. You may vote during theAnnual Meeting by following the instructions available on the meeting website during the meeting.
By order of the board of directors.
LAURA J. SCHUMACHERSECRETARY

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(This page has been left blank intentionally.)Appendix A

Proposed Certificate of Amendment to the Amended and Restated Certificate of Incorporation of AbbVie Inc.
The text of the proposed amendment is marked to reflect the proposed changes.
AbbVie Inc., a corporation organized and existing under and by virtue of the General Corporation Law of theState of Delaware (the ‘‘Corporation’’), does hereby certify:
1. Articles VIII and XI of AbbVie’s Amended and Restated Certificate of Incorporation are amended to read as follows:
ARTICLE VIIIAMENDMENTS TO BY-LAWS
In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware, the By-lawsof the Corporation (the ‘‘By-laws’’) may be altered, amended or repealed, in whole or in part, and new By-laws may be
adopted, (i) by the affirmative vote of shares representing a majority of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors; provided, however, that any proposed alteration,
amendment or repeal of, or the adoption of any By-law inconsistent with, Sections 2.2, 2.12, 3.2, 3.3, 3.10 or 3.11,
Article VII or Article X of the By-laws (in each case, as in effect on the date hereof), or the alteration, amendment or
repeal of, or the adoption of any provision inconsistent with this sentence, may only be made by the affirmative vote ofshares representing not less than eighty percent (80%) of the outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors; and provided further, however, that in the case of any suchstockholder action at a meeting of stockholders, notice of the proposed alteration, amendment, repeal or adoption of
the new By-law or By-laws must be contained in the notice of such meeting, or (ii) by action of the Board of Directors of
the Corporation; provided, however, that the case of any such action at a meeting of the Board of Directors, notice ofthe proposed alteration, amendment, repeal or adoption of the new By-law or By-laws must be given not less than twodays prior to the meeting.
***
ARTICLE XIAMENDMENTS
The Corporation reserves the right to amend, alter or repeal any provision contained in this Amended andRestated Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred uponstockholders herein are subject to this reservation. In furtherance and not in limitation of the powers conferred by thelaws of the State of Delaware as they presently exist or may hereafter be amended, subject to any limitations contained
elsewhere in this Amended and Restated Certificate of Incorporation, the Corporation may from time to time adopt,
amend or repeal any provisions of this Amended and Restated Certificate of Incorporation; provided, however, that any
proposed alteration, amendment or repeal of, or the adoption of any provision inconsistent with, Article VI and
Article VII of this Amended and Restated Certificate of Incorporation (in each case, as in effect on the date hereof), or
the alteration, amendment or repeal of, or the adoption of any provision inconsistent with this sentence, may only bemade by the affirmative vote of shares representing not less than eighty percent (80%) of the outstanding shares ofcapital stock of the Corporation entitled to vote generally in the election of directors.
2. The foregoing amendment to the Amended and Restated Certificate of Incorporation of the Corporation was duly
adopted in accordance with the provisions of Section 242 of the Delaware General Corporation Law.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to the Amended and Restated
Certificate of Incorporation to be executed by the undersigned officer, duly authorized, as of the
day of2020.
AbbVie Inc.
By:
Name:
Title:

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(This page has been left blank intentionally.)Appendix B

AbbVie Inc.
Reconciliation of GAAP Reported to Non-GAAP Adjusted Information
Year Ended December 31, 2019
(Unaudited) (In millions, except per share data)
Non-GAAP Financial Results
Financial results are presented on both a reported and a non-GAAP basis. Reported results were prepared in accordancewith GAAP and include all revenues and expenses recognized during the period. Non-GAAP results adjust for certain
non-cash items and for factors that are unusual or unpredictable, and exclude those costs, expenses, and other specified
items. AbbVie’s management believes non-GAAP financial measures provide useful information to investors regarding
AbbVie’s results of operations and assist management, analysts, and investors in evaluating the performance of thebusiness. Non-GAAP financial measures should be considered in addition to, and not as a substitute for, measures offinancial performance prepared in accordance with GAAP.
Business Performance Highlights Reconciliations
1.

Net Revenues since 2013 Inception and Compound Annual Growth Rate

2019

2018

2017

2016

2015

2014

2013

2019-2013CAGR

As reported (GAAP)
Adjusted for specified items:$33,266—$32,753 $28,216(20)—$25,638 $22,859 $19,960 $18,790
(78)
(40)
(81)
—

10.0%
—

As adjusted (non-GAAP)$33,266$32,733$25,560

10.0%$28,216$22,819$19,879$18,790

The 2018 specified revenue item represents a milestone payment received under a previously announced collaboration.
The 2016 specified revenue items included milestone revenue under previously announced collaborations and priorperiod royalty revenue related to a patent lawsuit settlement. The 2015 net revenue specified item represents amilestone payment received under a previously announced collaboration. The 2014 net revenue specified item reflects
royalty income from prior periods recognized in the fourth quarter of 2014 as a result of the settlement of a licensing
arrangement.
2.

Diluted Earnings Per Share Compound Annual Growth Rate and Operating Margin Expansion since 2013 Inception
Earnings Per Share
2019

2013

As reported (GAAP)
Adjusted for specified items:

$5.28
3.66

$2.56
0.58

As adjusted (non-GAAP)

$8.94

$3.14

3.

2019-2013
CAGR

Operating Margin Expansion
2019

2018

2013

2019-2018
Expansion

2019-2013
Expansion

12.8%

39.0%
8.3%

19.5%
25.1%

30.1%
6.2%

1,950 bps
(1,680) bps

890 bps210 bps

19.1%

47.3%

44.6%

36.3%

270 bps

1,100 bps

Net Revenues Increase and Humira Sales Growth over 2018
Net Revenues

Humira Sales

As reported (GAAP)
Adjusted for specified and other items:
Adjusted for foreign exchange:

1.6%
—%
1.1%

(3.9)%—%
1.0%

As adjusted (non-GAAP)

2.7%(2.9)%

2020 Proxy Statement

13NOV201221352027 B-1

B-1

Appendix B

4.

Diluted Earnings Per Share since 2013 Inception
2019

2018

2017

2016

2015

2014

2013

As reported (GAAP)
Adjusted for specified items:
Intangible asset amortization
Separation costs
Milestones and other R&D expenses
Acquired IPR&D
Reata divestiture
Calico collaboration
Stemcentrx-related impairment
Charitable contribution
Acquisition related costs
Shire transaction and termination costs
Change in fair value of contingent consideration
Restructuring(1)Litigation reserves
Intangible asset impairment
Venezuela devaluation loss
Revaluation due to Section 987 tax law change
Impacts related to tax law changes
Other$ 5.28$ 3.66

$3.30

$3.63

$3.13

$1.10

$2.56

0.86
—
0.20
0.25
(0.20)
—
0.56
—
0.23
—
2.14
0.10
(0.28)———(0.27)
0.07

0.69
—
0.09
0.27
—
0.32
2.66
0.18
—
—
0.31
—
0.18
—
—
—
(0.49)
0.04

0.51
—
0.09
0.20
—
—
—
—
0.03
—
0.39
—
0.18
0.15
—
—
0.71
0.04

0.38
—
0.05
0.12
—
—
—
—
0.16
—
0.14
—
—
—
0.18
0.12
—
0.04

0.20
0.13
0.26
0.09
—
—
—
—
0.25
0.10
—
—
0.08
—
—
—
—
0.05

0.18
0.24
0.48
0.15
—
—
—
—
—
1.12
—
—
—
—
—
—
—
0.05

0.23
0.10
—
0.21
—
—
—
—
—
—
—
—
—
—
—
—
—
0.04

As adjusted (non-GAAP)$ 8.94$ 7.91

$5.60

$4.82

$4.29

$3.32

$3.14

(1) Prior to 2019, restruturing impacts were minimal and included in the Other category.
2019 Performance Results for Financial Goals Reconciliations
Net Revenues

Income Before Taxes

Operating Margin

Humira Sales

As reported (GAAP)
Adjusted for specified items:
Adjusted for foreign exchange:$33,266—4$ 8,426
6,150
103$12,983
2,747
39$19,169—
4

As adjusted (non-GAAP)$33,270$14,679$15,769$19,173

The calculation of Adjusted Return on Assets reflects Adjusted Net Earnings and Adjusted Net Assets.

28FEB201710025299

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B-2

AbbVie’s Commitment to Corporate Responsibility
We strive to make a remarkable impact on patients and drive sustainable growth by discovering anddelivering a consistent stream of innovative medicines that address serious health problems.
In accordance with our Principles:
Transforming lives
Embracing diversity and inclusion
Driving innovation

Acting with integrity

Serving the community

Our Corporate Responsibility priorities are:Using our expertise toimprove health

Stewarding our ethical and 
sustainable businessSupporting long-term
community strength

Creating real health improvement is
our mission and the premise of ourbusiness. To be a leading health careinnovator, we must attract, retain andsupport a diverse workforce and invest
in their efforts to develop medicinesthat bring value to patients.

We recognize that health is offundamental importance to all people.
To participate over the long term in theprovision of health care, we must earn andmaintain the trust of patients,
health care providers, regulators,
policymakers, and the public.

The health of our business isintertwined with that of our communities.
We can use our unique resources tosupport well-being, resilience andgrowth in the communities where we dobusiness and help lay the foundation forbroader community vitality.

2019 Highlights
Using our expertise to improve health:
ABBV-4083
had a successful end of phase
1 meeting with the U.S. FDA. A
phase 2 study in patients with river
blindness will be conducted byour partner, Drugs for Neglected
Diseases initiative, with drug
product and pro bono technicalsupport from AbbVie.

89,000+U.S. patients received AbbVie
medicines at no cost through the
myAbbVie Assist patient assistanceprogram, up from nearly 81,000 in
2018. This program is just one of theways AbbVie helps to expand accessto our medicines.

Attracting and retaining a diverse and inclusive workforce:48%

of management positions areheld by women globally.

Ability at AbbVie
We introduced a new Employee Resource
Group (ERG) focused on people withdisabilities and their caregivers.

Supporting long-term community strength:

40,000 hours

spent by AbbVie volunteers in 50
countries contributing to communities
during Week of Possibilities, our annual
employee volunteer event.

$13 MM

raised, including AbbVie Foundation
matching donations, for community
organizations during the 2019 U.S. /Puerto Rico Employee Giving Campaign.

Advancing ourenvironmental
sustainability priorities:–16%change in absolute carbon emissions(scopes 1 and 2) since 2015, more thanhalfway to our 2025 target of 25%.

24%
of our purchased electricity came fromrenewable sources, up from 9% in 2016
and almost halfway to our 2025 targetof 50%.

10
new environmental sustainability
projects were approved throughour SPARK innovation accelerator,
an incubator for employee-driven
sustainability proposals.

For more on how we support the United Nations Sustainable Development Goals,
visit globalhealthprogress.org.
For more on our corporate responsibility efforts, visit abbvie.com/responsibility.

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