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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
ABBOTT LABORATORIES
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
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ABBOTT LABORATORIES
NOTICE OF
ANNUAL MEETING
OF SHAREHOLDERS
AND
PROXY STATEMENT
1995
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[LOGO]
ABBOTT LABORATORIES
100 ABBOTT PARK ROAD
ABBOTT PARK, ILLINOIS 60064-3500 U.S.A.
COVER:
WHEN RITA CHOY OF KOWLOON, HONG KONG, WAS PREGNANT WITH HER FIRST CHILD, SHE WAS
UNABLE TO GAIN THE WEIGHT NEEDED TO ENSURE GOOD HEALTH. RITA'S DOCTOR
RECOMMENDED ABBOTT'S FORMANCE-REGISTERED TRADEMARK-, A NUTRITIONAL SUPPLEMENT
SPECIFICALLY DESIGNED FOR PREGNANT AND BREAST-FEEDING MOTHERS. FORMANCE HELPED
RITA MEET HER TARGETED WEIGHT. STEPHANIE CHOY, SHOWN HERE WITH RITA IN HONG
KONG'S TIGER BALM GARDEN, WAS BORN IN MAY 1994.
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YOUR VOTE
IS IMPORTANT
PLEASE SIGN AND PROMPTLY RETURN YOUR
PROXY IN THE ENCLOSED ENVELOPE.
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
The Annual Meeting of the Shareholders of Abbott Laboratories will be held at
the corporation's headquarters, 100 Abbott Park Road, at the intersection of
Route 137 and Waukegan Road, Lake County, Illinois, on Friday, April 28, 1995 at
9:00 a.m. for the following purposes:
(1) To elect thirteen directors to hold office until the
next Annual Meeting or until their successors are elected (Item No. 1 on proxy
card);
(2) To ratify the appointment of Arthur Andersen LLP
as auditors of the corporation for 1995 (Item No. 2 on proxy card); and
(3) To transact such other business as may properly
come before the meeting, including consideration of a shareholder proposal on
infant formula, if such proposal is presented at the meeting.
The board of directors recommends that you vote FOR Items 1 and 2 on the proxy
card. The board of directors OPPOSES the shareholder proposal and recommends
that you vote AGAINST Item No. 3 on the proxy card.
The close of business March 2, 1995 has been fixed as the record date for
determining the shareholders entitled to receive notice of, and to vote at, the
Annual Meeting.
Admission to the meeting will be by admission card only. If you plan to attend,
please complete and return the reservation form on the back cover, and an
admission card will be sent to you.
By order of the board of directors.
JOSE M. DE LASA
SECRETARY
March 13, 1995
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ABBOTT LABORATORIES
PROXY STATEMENT
SOLICITATION OF PROXIES
The accompanying proxy is solicited on behalf of the board of directors for use
at the Annual Meeting of Shareholders. The meeting will be held on April 28,
1995 at the corporation's headquarters, 100 Abbott Park Road, at the
intersection of Route 137 and Waukegan Road, Lake County, Illinois. This proxy
statement and the accompanying proxy card are being mailed to shareholders on or
about March 13, 1995. The corporation will bear the cost of making solicitations
from its shareholders and may enlist the help of banks and brokerage firms in
soliciting proxies from their customers. The corporation will reimburse these
institutions for out-of-pocket expenses. Proxies may also be solicited by mail
or in person by directors, officers, or employees of the corporation and its
subsidiaries. The corporation has also retained Georgeson & Company Inc. to aid
in the solicitation of proxies, at an estimated cost of $13,000 plus
reimbursement for reasonable out-of-pocket expenses.
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VOTING SECURITIES AND RECORD DATE
Shareholders of record at the close of business on March 2, 1995 will be
entitled to notice of, and to vote at, the Annual Meeting. As of January 31,
1995, the corporation had 801,879,751 outstanding common shares, which are the
only outstanding voting securities.
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VOTING OF PROXIES
A shareholder may vote in person, by a duly executed proxy, or through an
authorized representative. The bylaws provide that a shareholder may authorize
no more than three persons as proxies to attend and vote at the meeting. Proxies
may be revoked at any time prior to the meeting. This may be done by written
notice delivered to the secretary of the corporation, or by signing and
delivering a proxy with a later date.
All shareholders have cumulative voting rights in the election of directors and
one vote per share on all other matters. Cumulative voting allows a shareholder
to multiply the number of shares owned by the number of directors to be elected
and to cast the total for one nominee or distribute the votes among the nominees
as the shareholder desires. Nominees who receive the greatest number of votes
will be elected.
Unless authority is withheld in accordance with instructions on the proxy, the
persons named in the proxy will vote the shares covered by proxies they receive
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1
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to elect the 13 nominees hereinafter named. These shares may be voted
cumulatively so that one or more of the nominees may receive fewer votes than
the other nominees (or no votes at all). Should a nominee become unavailable to
serve, the shares will be voted for a substitute designated by the board of
directors, or for fewer than 13 nominees if, in the judgment of the proxy
holders, such action is necessary or desirable.
Where a shareholder has specified a choice for or against either the
ratification of Arthur Andersen LLP as auditors or the shareholder proposal, or
has abstained on these matters, the shares represented by the proxy will be
voted as specified. Where no choice has been specified, the proxy will be voted
FOR ratification of Arthur Andersen LLP as auditors, and AGAINST the shareholder
proposal.
A majority of the outstanding shares, entitled to vote on a matter, represented
in person or by proxy, shall constitute a quorum for consideration of such
matter at the meeting. The affirmative vote of a majority of the shares
represented at the meeting and entitled to vote on a matter shall be the act of
the shareholders with respect to that matter.
A proxy may indicate that all or a portion of the shares represented by such
proxy are not being voted with respect to a particular matter. This could occur,
for example, when a broker or bank is not permitted to vote stock held in street
name on certain matters in the absence of instructions from the beneficial owner
of the stock. These "non-voted shares" will be considered shares not present
and, therefore, not entitled to vote on such matter, although these shares may
be considered present and entitled to vote for other purposes. Non-voted shares
will not affect the determination of the outcome of the vote on any matter to be
decided at the meeting.
The favorable vote of a majority of the shares represented at the meeting and
entitled to vote on these matters are required for approval of these matters.
Abstentions and withheld votes have the effect of votes against a matter.
It is the corporation's policy that all proxies, ballots and voting tabulations
that reveal how a particular shareholder has voted be kept confidential and not
be disclosed except: (i) where disclosure may be required by law or regulation,
(ii) where disclosure may be necessary in order for the corporation to assert or
defend claims, (iii) where a shareholder writes comments on his or her proxy
card, (iv) where a shareholder expressly requests disclosure, (v) to allow the
inspectors of election to certify the results of a vote, or (vi) in limited
circumstances such as a contested election or proxy solicitation not approved
and recommended by the board of directors.
The inspectors of election and the tabulators of all proxies, ballots and voting
tabulations that identify shareholders are independent and are not employees of
the corporation.
The board of directors is not aware of any other issue to be brought before the
meeting. If other matters are properly brought before the meeting, the
accompanying proxy will be voted in accordance with the judgment of the proxy
holders.
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INFORMATION CONCERNING SECURITY OWNERSHIP
On January 31, 1995, the Abbott Laboratories Stock Retirement Trust, c/o Abbott
Laboratories, 100 Abbott Park Road, Abbott Park, Illinois 60064-3500, held
65,804,166 common shares (approximately 8.2 percent of the outstanding common
shares) of the corporation. These shares were held for the individual accounts
of approximately 35,431 employees and other plan participants who participate in
the Abbott Laboratories Stock Retirement Plan. The trustees of the Stock
Retirement Trust are G. P. Coughlan, T. C. Freyman, and E. M. Walvoord, officers
of the corporation. The trustees share voting power with respect to the shares
owned by the Trust. The trustees must solicit and follow voting instructions
from the participants, if the trustees determine that a matter to be voted on at
a shareholder meeting could materially affect the interests of participants. The
individual participants have investment power over these shares, as provided by
the terms of the Trust. The Trust Agreement is of unlimited duration.
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COMMITTEES OF THE BOARD OF DIRECTORS
The board of directors, which held six meetings in 1994, has five committees
established in the corporation's bylaws: the executive committee, audit
committee, compensation committee, nominations committee, and board affairs
committee.
The executive committee, whose members are D. L. Burnham, chairman, H. L.
Fuller, W. D. Smithburg, J. R. Walter, and W. L. Weiss, did not hold any
meetings in 1994. This committee may exercise all the authority of the board in
the management of the corporation, except for matters expressly reserved by law
for board action.
The audit committee, whose members are J. R. Walter, chairman, H. L. Fuller, The
Lord Hayhoe PC, A. F. Jacobson, D. A. Jones, and W. A. Reynolds, held two
meetings in 1994. This committee provides advice and assistance regarding
accounting, auditing, and financial reporting practices of the corporation. Each
year, it recommends to the board a firm of independent
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2
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public accountants to serve as auditors. The audit committee reviews with such
auditors the scope and results of their audit, fees for services, and
independence in servicing the corporation. The committee also meets with the
corporation's internal auditors to evaluate the effectiveness of the work they
perform.
The compensation committee, whose members are W. D. Smithburg, chairman, K. F.
Austen, H. L. Fuller, A. F. Jacobson, B. Powell, Jr., A. B. Rand, J. R. Walter,
and W. L. Weiss held two meetings in 1994. This committee is responsible for
setting and administering the policies and programs that govern both annual
compensation and stock ownership programs.
The nominations committee, whose members are W. A. Reynolds, chairman, K. F.
Austen, D. A. Jones, B. Powell, Jr., A. B. Rand, W. D. Smithburg, and W. L.
Weiss, held two meetings in 1994. This committee develops general criteria
regarding the qualifications and selection of board members and officers, and
recommends candidates for such positions to the board of directors. A
shareholder may recommend persons as potential nominees for director or directly
nominate persons for director by complying with the procedures on page 15.
The board affairs committee, whose members are W. L. Weiss, chairman, K. F.
Austen, H. L. Fuller, The Lord Hayhoe PC, A. F. Jacobson, and D. A. Jones was
created in December of 1994 and held no meetings in 1994. J. M. de Lasa is the
secretary of this committee. This committee is responsible for advising the
board of directors with respect to the conduct of the board activities.
The average attendance of all directors at board and committee meetings in 1994
was 97 percent.
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INFORMATION CONCERNING NOMINEES FOR DIRECTORS
(ITEM NO. 1 ON PROXY CARD)
Thirteen directors are to be elected to hold office until the next Annual
Meeting or until their successors are elected. All of the nominees are currently
serving as directors.
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NOMINEES FOR ELECTION AS DIRECTORS
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K. FRANK AUSTEN, M.D. AGE 66 DIRECTOR SINCE 1983
PROFESSOR OF MEDICINE, HARVARD MEDICAL SCHOOL, BOSTON, MASSACHUSETTS
DR. AUSTEN IS CHAIRMAN OF THE DEPARTMENT OF RHEUMATOLOGY AND IMMUNOLOGY AT
BRIGHAM AND WOMEN'S HOSPITAL IN BOSTON, IN ADDITION TO SERVING AS PROFESSOR OF
MEDICINE ON THE FACULTY OF HARVARD MEDICAL SCHOOL. DR. AUSTEN IS A DIRECTOR OF
HUMANA INC. AND APPLIED IMMUNE SCIENCES, INC., AND A MEMBER OF THE NATIONAL
ACADEMY OF SCIENCES AND OF THE AMERICAN ACADEMY OF ARTS AND SCIENCES. HE HAS
SERVED AS PRESIDENT OF THE AMERICAN ASSOCIATION OF IMMUNOLOGISTS, THE AMERICAN
ACADEMY OF ALLERGY AND IMMUNOLOGY, AND THE ASSOCIATION OF AMERICAN PHYSICIANS.
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DUANE L. BURNHAM AGE 53 DIRECTOR SINCE 1985
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER, ABBOTT LABORATORIES
MR. BURNHAM JOINED ABBOTT IN 1982. HE WAS ELECTED VICE CHAIRMAN IN 1986, CHIEF
EXECUTIVE OFFICER IN 1989, AND CHAIRMAN OF THE BOARD IN 1990. MR. BURNHAM
RECEIVED BOTH HIS UNDERGRADUATE AND M.B.A. DEGREES FROM THE UNIVERSITY OF
MINNESOTA. HE SERVES AS A DIRECTOR OF SARA LEE CORPORATION, THE LYRIC OPERA OF
CHICAGO, AND THE HEALTHCARE LEADERSHIP COUNCIL; AS A TRUSTEE OF NORTHWESTERN
UNIVERSITY AND THE MUSEUM OF SCIENCE AND INDUSTRY; AS A MEMBER OF THE BUSINESS
ROUNDTABLE; AND AS CHAIRMAN OF THE EMERGENCY COMMITTEE FOR AMERICAN TRADE.
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H. LAURANCE FULLER AGE 56 DIRECTOR SINCE 1988
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER, AMOCO CORPORATION, CHICAGO,
ILLINOIS (INTEGRATED PETROLEUM AND CHEMICALS COMPANY)
MR. FULLER WAS ELECTED PRESIDENT OF AMOCO CORPORATION IN 1983, AND CHAIRMAN,
PRESIDENT, AND CHIEF EXECUTIVE OFFICER IN 1991. HE IS A MEMBER OF AMOCO
CORPORATION'S EXECUTIVE COMMITTEE AND HAS BEEN A DIRECTOR OF AMOCO SINCE 1981,
WHEN HE BECAME EXECUTIVE VICE PRESIDENT. FROM 1978 UNTIL 1981, MR. FULLER WAS
PRESIDENT OF AMOCO OIL COMPANY, WHICH WAS RESPONSIBLE FOR AMOCO CORPORATION'S
PETROLEUM REFINING, MARKETING, AND TRANSPORTATION OPERATIONS. HE IS A DIRECTOR OF
THE CHASE MANHATTAN CORPORATION AND THE CHASE MANHATTAN BANK, N.A., MOTOROLA,
INC., THE AMERICAN PETROLEUM INSTITUTE, AND THE REHABILITATION INSTITUTE OF
CHICAGO; AND A TRUSTEE OF THE ORCHESTRAL ASSOCIATION AND NORTHWESTERN UNIVERSITY.
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THE LORD HAYHOE PC AGE 69 DIRECTOR SINCE 1989
BRITISH MEMBER OF PARLIAMENT, LONDON, UNITED KINGDOM
BERNARD HAYHOE IS A BRITISH CITIZEN. CREATED A LIFE PEER IN AUGUST 1992 AND NOW A
MEMBER OF THE HOUSE OF LORDS, HE WAS AN ELECTED MEMBER OF THE U.K. HOUSE OF
COMMONS 1970-92. HE WAS APPOINTED A PRIVY COUNCILLOR IN 1985. HE SERVED IN THE
BRITISH GOVERNMENT AS MINISTER OF HEALTH, TREASURY MINISTER OF STATE, CIVIL
SERVICE MINISTER, AND ARMY MINISTER DURING THE YEARS 1979 TO 1986. LORD HAYHOE IS
A FELLOW OF THE INSTITUTION OF MECHANICAL ENGINEERS AND AN HONORARY FELLOW OF
BIRKBECK COLLEGE, LONDON, AND A DIRECTOR OF THE PORTMAN BUILDING SOCIETY. HE
BECAME CHAIRMAN OF THE GUYS AND ST. THOMAS HOSPITAL, LONDON IN APRIL, 1993.
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THOMAS R. HODGSON AGE 53 DIRECTOR SINCE 1985
PRESIDENT AND CHIEF OPERATING OFFICER, ABBOTT LABORATORIES
MR. HODGSON JOINED ABBOTT IN 1972. HE WAS ELECTED EXECUTIVE VICE PRESIDENT IN 1985, AND
PRESIDENT AND CHIEF OPERATING OFFICER IN 1990. MR. HODGSON HAS A B.S. DEGREE FROM PURDUE
UNIVERSITY, AN M.S.E. DEGREE IN CHEMICAL ENGINEERING FROM THE UNIVERSITY OF MICHIGAN, AN
M.B.A. DEGREE FROM HARVARD BUSINESS SCHOOL, AND WAS AWARDED AN HONORARY DOCTORATE OF
ENGINEERING FROM PURDUE UNIVERSITY. HE SERVES AS TRUSTEE OF RUSH-PRESBYTERIAN-ST. LUKE'S
MEDICAL CENTER AND ON THE COLLEGE OF ENGINEERING NATIONAL ADVISORY BOARD AT THE UNIVERSITY
OF MICHIGAN.
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ALLEN F. JACOBSON AGE 68 DIRECTOR SINCE 1993
RETIRED CHAIRMAN AND CHIEF EXECUTIVE OFFICER, MINNESOTA MINING & MANUFACTURING COMPANY,
ST. PAUL, MINNESOTA (MANUFACTURER OF INDUSTRIAL, IMAGING AND HEALTH CARE PRODUCTS)
MR. JACOBSON SERVES AS A DIRECTOR OF MINNESOTA MINING & MANUFACTURING COMPANY; HE SERVED
AS CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER FROM 1986 TO 1991. MR. JACOBSON ALSO
SERVES AS A DIRECTOR OF SARA LEE CORPORATION, DELUXE CORPORATION, MOBIL CORPORATION,
NORTHERN STATES POWER COMPANY, POTLATCH CORPORATION, PRUDENTIAL INSURANCE COMPANY, SILICON
GRAPHICS, INC., US WEST, INC., AND VALMONT INDUSTRIES, INC. HE IS A MEMBER OF THE NATIONAL
ACADEMY OF ENGINEERING.
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DAVID A. JONES AGE 63 DIRECTOR SINCE 1982
CHAIRMAN AND CHIEF EXECUTIVE OFFICER, HUMANA INC., LOUISVILLE, KENTUCKY (HEALTH PLAN
BUSINESS)
MR. JONES IS CO-FOUNDER OF HUMANA INC. AND HAS BEEN CHAIRMAN AND CHIEF EXECUTIVE OFFICER
SINCE ITS ORGANIZATION IN 1961. HE RECEIVED A B.S. DEGREE FROM THE UNIVERSITY OF
LOUISVILLE AND A J.D. DEGREE FROM YALE UNIVERSITY.
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BOONE POWELL, JR. AGE 58 DIRECTOR SINCE 1985
PRESIDENT AND CHIEF EXECUTIVE OFFICER, BAYLOR HEALTH CARE SYSTEM AND BAYLOR UNIVERSITY
MEDICAL CENTER, AND VICE PRESIDENT, BAYLOR UNIVERSITY, DALLAS, TEXAS
MR. POWELL HAS BEEN ASSOCIATED WITH BAYLOR UNIVERSITY MEDICAL CENTER SINCE 1980 WHEN HE
WAS NAMED PRESIDENT AND CHIEF EXECUTIVE OFFICER. PRIOR TO JOINING BAYLOR, HE WAS PRESIDENT
OF HENDRICK MEDICAL CENTER IN ABILENE, TEXAS. MR. POWELL SERVES AS AN ACTIVE MEMBER OF
VOLUNTARY HOSPITALS OF AMERICA. HE IS A DIRECTOR OF COMERICA BANK-TEXAS, PHYSICIAN
RELIANCE NETWORK AND CABLE HEALTHCARE AND A FELLOW OF THE AMERICAN COLLEGE OF HEALTH CARE
EXECUTIVES. MR. POWELL IS A GRADUATE OF BAYLOR UNIVERSITY. HE RECEIVED A MASTER'S DEGREE
IN HOSPITAL ADMINISTRATION FROM THE UNIVERSITY OF CALIFORNIA AND HAS BEEN AWARDED FIVE
HONORARY DOCTORATE DEGREES.
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ADDISON BARRY RAND AGE 50 DIRECTOR SINCE 1992
EXECUTIVE VICE PRESIDENT, XEROX CORPORATION, STAMFORD, CONNECTICUT (DOCUMENT PROCESSING,
INSURANCE AND FINANCIAL SERVICES COMPANY)
MR. RAND JOINED XEROX CORPORATION IN 1968. HE WAS ELECTED A CORPORATE OFFICER IN 1985,
NAMED PRESIDENT OF THE COMPANY'S U.S. MARKETING GROUP IN 1986, AND APPOINTED TO HIS
PRESENT POSITION IN 1992. MR. RAND EARNED A BACHELOR'S DEGREE FROM AMERICAN UNIVERSITY AND
MASTER'S DEGREES IN BUSINESS ADMINISTRATION AND MANAGEMENT SCIENCES FROM STANFORD
UNIVERSITY. HE HAS ALSO BEEN AWARDED SEVERAL HONORARY DOCTORATE DEGREES. MR. RAND SERVES
AS A DIRECTOR OF AMERITECH CORPORATION AND HONEYWELL, INC. HE IS ALSO A MEMBER OF THE
BOARD OF OVERSEERS OF THE ROCHESTER PHILHARMONIC ORCHESTRA AND A MEMBER OF THE STANFORD
UNIVERSITY GRADUATE SCHOOL OF BUSINESS ADVISORY COUNCIL. IN 1993 HE WAS ELECTED TO THE
NATIONAL SALES/MARKETING HALL OF FAME.
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W. ANN REYNOLDS, PH.D. AGE 57 DIRECTOR SINCE 1980
CHANCELLOR, THE CITY UNIVERSITY OF NEW YORK, NEW YORK, NEW YORK
DR. REYNOLDS WAS APPOINTED CHANCELLOR OF THE CITY UNIVERSITY OF NEW YORK IN 1990, AFTER
SERVING AS CHANCELLOR OF THE CALIFORNIA STATE UNIVERSITY SINCE 1982. PRIOR TO THAT, DR.
REYNOLDS SERVED AS CHIEF ACADEMIC OFFICER OF OHIO STATE UNIVERSITY AND ASSOCIATE VICE
CHANCELLOR FOR RESEARCH AND DEAN OF THE GRADUATE COLLEGE OF THE UNIVERSITY OF ILLINOIS
MEDICAL CENTER. SHE ALSO HELD APPOINTMENTS AS PROFESSOR OF ANATOMY, RESEARCH PROFESSOR OF
OBSTETRICS AND GYNECOLOGY, AND ACTING ASSOCIATE DEAN FOR ACADEMIC AFFAIRS AT THE
UNIVERSITY OF ILLINOIS COLLEGE OF MEDICINE. DR. REYNOLDS IS A GRADUATE OF EMPORIA STATE
UNIVERSITY (KANSAS) AND HOLDS M.S. AND PH.D. DEGREES IN ZOOLOGY FROM THE UNIVERSITY OF
IOWA. SHE IS ALSO A DIRECTOR OF HUMANA INC., MAYTAG CORPORATION, AND OWENS-CORNING
FIBERGLAS CORP.
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WILLIAM D. SMITHBURG AGE 56 DIRECTOR SINCE 1982
CHAIRMAN AND CHIEF EXECUTIVE OFFICER, THE QUAKER OATS COMPANY, CHICAGO, ILLINOIS
(DIVERSIFIED FOOD MANUFACTURER AND MARKETER)
MR. SMITHBURG JOINED QUAKER OATS IN 1966 AND BECAME PRESIDENT OF THE FOODS DIVISION IN
1975. HE WAS ELECTED EXECUTIVE VICE PRESIDENT, U.S. GROCERY PRODUCTS IN 1976, PRESIDENT
AND CHIEF EXECUTIVE OFFICER IN 1981, AND CHAIRMAN AND CHIEF EXECUTIVE OFFICER IN 1983, AND
ALSO SERVED AS PRESIDENT FROM NOVEMBER 1990 TO JANUARY 1993. MR. SMITHBURG WAS ELECTED TO
THE QUAKER BOARD IN 1978 AND SERVES ON ITS EXECUTIVE COMMITTEE. HE IS ALSO A DIRECTOR OF
NORTHERN TRUST CORPORATION, CORNING INCORPORATED, AND PRIME CAPITAL CORP. HE IS A MEMBER
OF THE BOARD OF TRUSTEES OF NORTHWESTERN UNIVERSITY AND A DIRECTOR OF NORTHWESTERN
MEMORIAL CORPORATION. MR. SMITHBURG EARNED A B.S. DEGREE FROM DEPAUL UNIVERSITY AND AN
M.B.A. DEGREE FROM NORTHWESTERN UNIVERSITY.
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JOHN R. WALTER AGE 48 DIRECTOR SINCE 1990
CHAIRMAN AND CHIEF EXECUTIVE OFFICER, R.R. DONNELLEY & SONS COMPANY, CHICAGO, ILLINOIS
(PRINTING COMPANY)
MR. WALTER JOINED R.R. DONNELLEY & SONS COMPANY IN 1969 AND WAS NAMED GROUP PRESIDENT IN
1985 AND EXECUTIVE VICE PRESIDENT IN 1986. HE WAS ELECTED PRESIDENT IN 1987 AND CHAIRMAN
OF THE BOARD AND CHIEF EXECUTIVE OFFICER IN 1989. MR. WALTER WAS ELECTED TO THE DONNELLEY
BOARD IN 1987 AND IS CHAIRMAN OF ITS EXECUTIVE COMMITTEE. HE HOLDS A BACHELOR'S DEGREE
FROM MIAMI UNIVERSITY OF OHIO. MR. WALTER SERVES AS A DIRECTOR OF DAYTON HUDSON
CORPORATION, DEERE & COMPANY, EVANSTON (ILLINOIS) HOSPITAL, AND AS A TRUSTEE OF THE
ORCHESTRAL ASSOCIATION AND NORTHWESTERN UNIVERSITY.
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WILLIAM L. WEISS AGE 65 DIRECTOR SINCE 1984
CHAIRMAN EMERITUS, AMERITECH CORPORATION, CHICAGO, ILLINOIS (TELECOMMUNICATIONS COMPANY)
IN 1983, MR. WEISS BECAME CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF AMERITECH CORPORATION
AND SERVED IN THAT CAPACITY UNTIL JANUARY 1994 WHEN HE WAS NAMED CHAIRMAN OF THE BOARD. HE
HAS BEEN CHAIRMAN EMERITUS SINCE MAY 1994. PRIOR TO THAT, HE WAS CHAIRMAN AND CHIEF
EXECUTIVE OFFICER (1982-83) AND PRESIDENT AND CHIEF EXECUTIVE OFFICER (1981-82) OF
ILLINOIS BELL TELEPHONE COMPANY. PREVIOUSLY, HE WAS PRESIDENT OF INDIANA BELL TELEPHONE
COMPANY (1978-81) AND SERVED IN VARIOUS OTHER CAPACITIES WITH THE BELL SYSTEM. MR. WEISS
IS A DIRECTOR OF THE QUAKER OATS COMPANY, MERRILL LYNCH & CO., INC., AND TENNECO
CORPORATION. HE IS ALSO A TRUSTEE OF NORTHWESTERN UNIVERSITY, THE PENNSYLVANIA STATE
UNIVERSITY, THE ORCHESTRAL ASSOCIATION, THE LYRIC OPERA OF CHICAGO, AND THE MUSEUM OF
SCIENCE AND INDUSTRY. HE SERVES AS CHAIRMAN OF THE BOARD OF GOVERNORS FOR THE CHICAGO
CENTRAL AREA CIRCULATOR, A PROJECT TO BUILD A MODERN, LIGHT RAIL TRANSPORTATION SYSTEM FOR
DOWNTOWN CHICAGO.
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EXECUTIVE COMPENSATION
Report of the Compensation Committee
The compensation committee of the board of directors is composed entirely of
directors who have never been employees of the corporation. The committee is
responsible for setting and administering the policies and programs that govern
both annual compensation and stock ownership programs.
The foundation of the executive compensation program is based on principles
designed to align compensation with the corporation's business strategy, values
and management initiatives. The program:
- Integrates compensation programs with both the corporation's annual and
long-term strategic planning and measurement processes.
- Supports a performance-oriented environment that rewards actual
performance that is related to both goals and performance of the
corporation as compared to that of industry performance levels.
- Helps attract and retain key executives critical to the long-term success
of the corporation.
The key components of the compensation program are base salary, annual incentive
award, and equity participation. These components are administered with the goal
of providing total compensation that is competitive in the marketplace,
recognizes meaningful differences in individual performance and offers the
opportunity to earn above average rewards when merited by individual and
corporate performance.
The marketplace is defined by comparing the corporation to a group of major
corporations with similar characteristics, including industry and technology
emphasis. These companies are included in the Standard and Poor's Healthcare
Composite Index. A select group of non-healthcare companies chosen for size and
performance comparability to the corporation is used as a secondary source of
comparison.
Using compensation survey data from the comparison groups, a target for total
compensation and each of its elements -- base, incentive, and equity-based
compensation -- is established. The intent is to deliver total compensation that
will be in the upper range of pay practices of peer companies when merited by
the corporation's performance. To achieve this objective, a substantial portion
of executive pay is delivered through performance-related variable compensation
programs which are based upon achievement of the corporation's goals. Each year
the committee reviews the elements of executive compensation to ensure that the
total compensation program, and each of its elements, meets the overall
objectives discussed above.
In 1994, total compensation was paid to executives based on individual
performance and on the extent to which the business plans for their areas of
responsibility were achieved or exceeded. On balance, performance goals were
substantially met or exceeded and therefore compensation was paid accordingly.
Base compensation was determined by an assessment of each executive's
performance, current salary in relation to the salary range designated for the
job, experience, and potential for advancement as well as by the performance of
the corporation. While many aspects of performance can be measured in financial
terms, the committee also evaluated the success of the management team in areas
of performance that cannot be measured by traditional accounting tools,
including the development and execution of strategic plans, the development of
management and employees, and the exercise of leadership within the industry and
in the communities that Abbott serves. All of these factors were collectively
taken into account by management and the compensation committee in determining
the appropriate level of base compensation and annual increases.
The Abbott Management Incentive Plan is designed to reward executives when the
corporation achieves certain financial objectives and when each executive's area
of responsibility meets its predetermined goals. These goals include financial
elements such as profitability, total sales, and earnings per common share and
non-financial elements such as the achievement of selected strategic goals and
the successful development of human resources. Each year individual incentive
targets are established for incentive plan participants based on competitive
survey data from the group of companies discussed above. As noted above, targets
are set to deliver total compensation between the mid and upper range of
competitive practice as warranted by corporate performance. For 1994, 40% of the
target award was earned for achievement of the corporation's earnings per common
share goal. The remainder of the targeted incentive was earned based on the
committee's overall assessment of each participant's achievement of the
predetermined goals discussed above.
The corporation has provided forms of equity participation as a key part of its
total program for motivating and rewarding executives and managers for many
years. Grants of stock options and restricted stock
- --------------------------------------------------------------------------------
8
<PAGE>
have provided an important part of the equity link to shareholders. Through
these vehicles, the corporation has encouraged its executives to obtain and hold
the corporation's stock. Targeted award ranges for stock options and restricted
stock opportunities are determined taking into account competitive practice
among the comparison companies noted above. Equity participation targets are set
based on established salary ranges and level of performance. As noted above, the
target ranges are established such that equity participation opportunities will
be in the mid-to-upper range of pay practices of peer companies when merited by
corporation and individual performance. Actual individual awards are determined
based on the established competitive target range and the committee's overall
assessment of individual performance. The committee considers the amounts of
options and restricted stock previously granted and the aggregate size of
current awards in deciding to award additional options and restricted stock.
In 1994, the committee granted Mr. Burnham, the corporation's Chairman and Chief
Executive Officer, a base salary increase of 2.8% which was consistent with the
corporation's established merit increase program. As reflected in the
corporation's financial statements, Abbott's performance in 1994 included 8.9%
growth in sales, and 10.7% growth in earnings per common share. In light of this
performance and their overall assessment of his performance, the committee
determined to grant Mr. Burnham a 10.3% increase in bonus and a stock option
grant.
It is the committee's policy to establish and maintain compensation programs for
executive officers which operate in the best interests of the corporation and
its stockholders in achieving the corporation's long-term business objectives.
To that end, the committee will continue to assess the impact of the Omnibus
Budget Reconciliation Act of 1993 on its executive compensation strategy and
take action to assure that appropriate levels of deductibility are maintained.
COMPENSATION COMMITTEE
W. D. Smithburg, chairman, K. F. Austen, H. L. Fuller, A. F. Jacobson, B.
Powell, Jr., A. B. Rand, J. R. Walter, and W. L. Weiss.
- --------------------------------------------------------------------------------
9
<PAGE>
- --------------------------------------------------------------------------------
Summary Compensation Table
The following table summarizes compensation earned in 1994, 1993 and 1992 by the
Chief Executive Officer and the four other most highly paid executive officers
(the "named officers") in 1994.
<TABLE>
<CAPTION>
Annual Compensation Long-term Compensation
-------------------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Other Restricted Securities
Annual Stock Underlying All Other
Name and Salary Compen- Award(s) Options/ Compen-
Principal Position Year ($)(1) Bonus ($) sation ($) ($)(2) SARs (#) sation ($)(5)
- ---------------------------------------------------------------------------------------------------------------
Duane L. Burnham 1994 $794,269 $800,000 $ 207,556 $ 0 195,000 $ 25,471
Chairman of the Board, 1993 772,615 725,000 192,449 787,500(3) 195,000 24,306
Chief Executive Officer and
Director 1992 761,535 682,500 64,592 823,125(4) 120,000 6,078
- ---------------------------------------------------------------------------------------------------------------
Thomas R. Hodgson 1994 569,438 650,000 58,311 0 130,002 18,847
President, 1993 554,146 605,000 62,036 472,500(3) 130,002 17,857
Chief Operating Officer and
Director 1992 512,063 550,000 31,303 548,750(4) 70,008 6,226
- ---------------------------------------------------------------------------------------------------------------
Paul N. Clark 1994 342,692 390,000 1,100 0 0 10,920
Senior Vice President 1993 332,692 362,500 7,552 0 0 8,722
Pharmaceutical Operations 1992 330,252 340,000 6,369 329,250(4) 84,024 6,048
- ---------------------------------------------------------------------------------------------------------------
Gary P. Coughlan 1994 406,923 380,000 40,684 0 0 12,715
Senior Vice President, Finance 1993 395,385 360,000 27,627 0 0 12,220
and Chief Financial Officer 1992 393,525 330,000 13,255 329,250(4) 81,324 5,959
- ---------------------------------------------------------------------------------------------------------------
David A. Thompson 1994 352,692 400,000 55,602 0 0 11,963
Senior Vice President 1993 342,692 385,000 45,629 0 0 11,274
Strategic Improvement Processes 1992 340,608 385,000 18,436 329,250(4) 84,024 6,345
- ---------------------------------------------------------------------------------------------------------------
<FN>
TABLE FOOTNOTES
(1) The 1994 and 1993 amounts reflect 26 two-week pay periods. The 1992 amounts
reflect 27 two-week pay periods.
(2) The number and value of restricted shares held, respectively, as of
December 31, 1994 were as follows: D. L. Burnham - 68,000/$2,218,500; T. R.
Hodgson - 37,600/$1,226,700; P. N. Clark - 16,000/$522,000; G. P. Coughlan
-28,800/$939,600; and D. A. Thompson - 16,000/$522,000. The officers
receive all dividends paid on these shares.
(3) The number of shares covered by these awards are 30,000 for D. L. Burnham
and 18,000 for T. R. Hodgson. These awards vest in three equal installments
on January 10, 1994, 1995 and 1996.
(4) The number of shares covered by these awards and the number of shares
vested, respectively, are as follows: D. L. Burnham - 30,000/6,000; T. R.
Hodgson - 20,000/4,000; P. N. Clark - 12,000/2,400; G. P. Coughlan -
12,000/2,400; and D. A. Thompson - 12,000/2,400. The remaining shares
covered by the awards vest five years from the date of grant.
(5) Employer contributions made to the Stock Retirement Plan and made or
accrued with respect to the 401(k) Supplemental Plan.
</TABLE>
- --------------------------------------------------------------------------------
10
<PAGE>
- --------------------------------------------------------------------------------
Stock Options
The following tables summarize the named officers' stock option activity during
1994.
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
- -------------------------------------------------------------------------------------------------
Exercise
% of Total Options/ or
Number of Securities SARs Granted to Base
Underlying Options/ Employees in Fiscal Price Expiration
Name SARs Granted (#)(1) Year ($/Sh.) Date (2)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Duane L. Burnham 195,000 10.3% $28.64 04/29/04
- -------------------------------------------------------------------------------------------------
Thomas R. Hodgson 130,002 6.9 28.64 04/29/04
- -------------------------------------------------------------------------------------------------
Paul N. Clark 0 0.0 N/A N/A
- -------------------------------------------------------------------------------------------------
Gary P. Coughlan 0 0.0 N/A N/A
- -------------------------------------------------------------------------------------------------
David A. Thompson 0 0.0 N/A N/A
- -------------------------------------------------------------------------------------------------
Gain for all Shareholders at
Assumed Rates for Appreciation
(4):
- -------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------ Potential Realized Value at
Assumed Annual Rates of Stock
Price Appreciation for Option
Term (3):
--------------------------------
Name 5% ($) 10% ($)
- ------------------------------
<S> <C> <C>
Duane L. Burnham $3,512,251 $8,900,733
- ------------------------------
Thomas R. Hodgson 2,341,536 5,933,913
- ------------------------------
Paul N. Clark N/A N/A
- ------------------------------
Gary P. Coughlan N/A N/A
- ------------------------------
David A. Thompson N/A N/A
- ------------------------------
Gain for all Shareholders at
Assumed Rates for Appreciation
(4): $16,481,442,069 $41,767,210,134
- --------------------------------------------------------------------------------
</TABLE>
TABLE FOOTNOTES
(1) Limited stock appreciation rights have been granted in tandem with these
options. These rights are only exercisable for sixty days following a change
in control of the corporation. Upon exercise, the optionee must surrender
the related option and will receive a payment, in cash, in an amount equal
to the difference between the option's price and the fair market value of
the shares subject to the option.
(2) One-third of the shares covered by these options are exercisable after one
year; two-thirds after two years; and all after three years.
(3) The dollar amounts under these columns are the result of calculations at the
5% and 10% rates required by the SEC and, therefore, are not intended to
forecast possible future appreciation, if any, of the stock price.
(4) Amounts were determined using total shares outstanding at December 31, 1994
of 803,279,722 and December 31, 1994 closing market price of $32.625 per
share.
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-end Option/SAR Values
<TABLE>
<CAPTION>
Number of
Securities
Underlying Value of Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
FY-end (#) FY-end ($)
Shares Acquired Value Realized Exercisable/ Exercisable/
Name on Exercise (#) ($) Unexercisable Unexercisable
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
Duane L. Burnham 0 $ 0 271,670 / 405,000 $2,369,746 / $1,794,575
- ----------------------------------------------------------------------------------------------------------------
Thomas R. Hodgson 0 0 136,672 / 263,342 918,450 / 1,188,901
- ----------------------------------------------------------------------------------------------------------------
Paul N. Clark 0 0 162,728 / 56,016 2,313,863 / 10,363
- ----------------------------------------------------------------------------------------------------------------
Gary P. Coughlan 0 0 107,110 / 54,216 1,010,243 / 10,030
- ----------------------------------------------------------------------------------------------------------------
David A. Thompson 0 0 239,376 / 56,016 3,985,937 / 10,363
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Annuity Retirement Plan
The corporation and certain subsidiaries maintain a defined benefit pension plan
known as the Abbott Laboratories Annuity Retirement Plan covering most employees
in the United States, age 21 or older. Pension benefits are generally based on
service and eligible earnings for the 60 consecutive months within the final 120
months of employment for which eligible earnings were highest. Pension benefits
are partially offset for Social Security benefits.
The following table shows the estimated annual benefits payable to employees
upon normal retirement. The amounts shown are computed on a straight life
annuity basis without giving effect to Social Security off-sets and include
supplemental benefits under a nonqualified supplemental pension plan. The
compensation considered in determining the pensions payable to the named
officers is the compensation shown in the "Salary" and "Bonus" columns of the
Summary Compensation Table on page 10.
- --------------------------------------------------------------------------------
11
<PAGE>
- --------------------------------------------------------------------------------
Pension Plan Table
<TABLE>
<CAPTION>
Years of Service
- ------------- -----------------------------------------------------
Remuneration 15 20 25 30 35
<S> <C> <C> <C> <C> <C>
- ------------- -----------------------------------------------------
$ 700,000 $ 236,250 $ 315,000 $ 367,500 $ 388,500 $ 388,500
900,000 303,750 405,000 472,500 499,500 499,500
1,100,000 371,250 495,000 577,500 610,500 610,500
1,300,000 438,750 585,000 682,500 721,500 721,500
1,500,000 506,250 675,000 787,500 832,500 832,500
1,700,000 573,750 765,000 892,500 943,500 943,500
1,900,000 641,250 855,000 997,500 1,054,500 1,054,500
2,100,000 708,750 945,000 1,102,500 1,165,500 1,165,500
- ------------- -----------------------------------------------------
</TABLE>
The table above covers the aggregate pension accrued under both the Annuity
Retirement Plan and the supplemental pension plan. Pensions accrued under the
Annuity Retirement Plan are funded through the Abbott Laboratories Annuity
Retirement Trust, established on behalf of all participants in that plan.
Pensions accrued under the nonqualified supplemental pension plan with present
values exceeding $100,000 are funded through individual trusts established on
behalf of the participants in that plan. During 1994, the following amounts,
less applicable tax withholdings, were deposited in such individual trusts
established on behalf of the named officers: D. L. Burnham, $78,775; T. R.
Hodgson, $81,677; P. N. Clark, $3,284; and D. A. Thompson, $59,768. As of
December 31, 1994, the years of service credited under the Plan for the named
officers were as follows: D. L. Burnham - 12; T. R. Hodgson - 22; P. N. Clark -
10; G. P. Coughlan - 4; and D. A. Thompson - 23.
- --------------------------------------------------------------------------------
Compensation of Directors
Employees of the corporation are not compensated for serving on the board or on
board committees. Non-employee directors are compensated under the Abbott
Laboratories Non-Employee Directors' Fee Plan in the amounts of $4,167 for each
month of service as director and $667 for each month of service as chairman of a
board committee ($1,600 for each month of service as chairman of the executive
committee).
Fees earned under this Plan are paid in cash to the director, or deferred (as a
non-funded obligation of the corporation or paid into a secular trust
established by the director) until payments commence (generally at age 65 or
upon retirement from the board of directors). If the fees are deferred, the
director may elect to have the fees credited to a stock equivalent account under
which the fees accrue the same return they would have earned if invested in
common shares of the corporation. Interest is accrued annually on deferred fees
not credited to a stock equivalent account.
Under the Plan, the corporation may grant a director who retires from the board
a retirement benefit, and such benefit will be payable to the surviving spouse
of any director who dies while serving as a director. The retirement benefit
consists of payment of an amount equal to the monthly director's fee in effect
on the date the director retires (or, for a director who dies, the fee in effect
on the date of death) for a period equal to his or her service on the board to a
maximum of 120 months. In return for the retirement benefit, the director agrees
to provide consulting services to the board.
Under the Abbott Laboratories 1991 Incentive Stock Program, each non-employee
director who is elected to the board of directors at the annual shareholder
meeting receives a restricted stock award with a fair market value on the date
of the award closest to, but not exceeding, twenty thousand dollars. In 1994,
this was 698 shares. The shares are nontransferable prior to termination,
retirement from the board, death, or a change in control of the corporation. The
non-employee directors are entitled to vote the shares and receive all dividends
paid on the shares.
In 1994, K. F. Austen, a non-employee director, performed services for the
corporation pursuant to a consulting agreement in the areas of research and
development, new technology and immunopharmacology. The consulting agreement,
which expires on March 31, 1998, provides that the fees he earns under the
agreement may receive the same treatment as fees earned under the Abbott
Laboratories Non-Employee Directors' Fee Plan. In 1994, Dr. Austen received
$50,000 for his consulting services.
- --------------------------------------------------------------------------------
Compensation Committee Interlocks and Insider Participation
The persons who served as members of the compensation committee of the
corporation's board of directors during 1994 are named on page 3, "Committees of
the Board of Directors."
- --------------------------------------------------------------------------------
12
<PAGE>
- --------------------------------------------------------------------------------
Performance Graph
The following graph compares the change in the corporation's cumulative total
shareholder return on its common shares with the Standard and Poor's 500 Stock
Index and the Standard and Poor's Healthcare Composite Index.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPANY/INDEX DEC-89 DEC-90 DEC-91 DEC-92 DEC-93 DEC-94
<S> <C> <C> <C> <C> <C> <C>
S&P 500 Index 100.00 96.90 126.42 136.05 149.76 151.74
Abbott Laboratories 100.00 135.24 210.87 189.49 189.36 213.87
Health Care Composite 100.00 117.45 180.89 151.42 138.70 156.89
</TABLE>
- --------------------------------------------------------------------------------
Security Ownership of Officers and Directors
The table below reflects the numbers of common shares beneficially owned by the
directors, the named officers, and all directors and executive officers of the
corporation as a group as of January 31, 1995. It also reflects the number of
equivalent stock units held by non-employee directors under the Abbott
Laboratories Non-Employee Directors' Fee Plan described on page 12 and by K. F.
Austen under the consulting agreement described on page 12.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
SHARES BENEFICIALLY
OWNED, EXCLUDING EQUIVALENT
NAME OPTIONS (1)(2) STOCK UNITS
<S> <C> <C>
- ---------------------------------------------------------------------
K. Frank Austen, M.D. 9,826 4,529
- ---------------------------------------------------------------------
Duane L. Burnham 418,301 0
- ---------------------------------------------------------------------
Paul N. Clark 105,197 0
- ---------------------------------------------------------------------
Gary P. Coughlan 78,196(3) 0
- ---------------------------------------------------------------------
H. Laurance Fuller 13,894 13,582
- ---------------------------------------------------------------------
The Lord Hayhoe PC 6,094 0
- ---------------------------------------------------------------------
Thomas R. Hodgson 412,785 0
- ---------------------------------------------------------------------
Allen F. Jacobson 3,488 2,858
- ---------------------------------------------------------------------
David A. Jones 146,890 38,115
- ---------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------
SHARES BENEFICIALLY
OWNED, EXCLUDING EQUIVALENT
NAME OPTIONS (1)(2) STOCK UNITS
<S> <C> <C>
- ---------------------------------------------------------------------
Boone Powell, Jr. 10,226 22,269
- ---------------------------------------------------------------------
Addison Barry Rand 3,863 0
- ---------------------------------------------------------------------
W. Ann Reynolds, Ph.D. 12,479 22,893
- ---------------------------------------------------------------------
William D. Smithburg 17,908 36,127
- ---------------------------------------------------------------------
David A. Thompson 137,996 0
- ---------------------------------------------------------------------
John R. Walter 6,826 9,248
- ---------------------------------------------------------------------
William L. Weiss 21,426 4,447
- ---------------------------------------------------------------------
All directors and executive
officers as a group (34
persons) (3)(4) 2,440,198 154,068
- ---------------------------------------------------------------
</TABLE>
TABLE FOOTNOTES
(1) The number of unexercised option shares which were exercisable within 60
days after January 31, 1995 were: D. L. Burnham, 271,670; T. R. Hodgson,
136,672; P. N. Clark, 162,728; G. P. Coughlan, 107,110; D. A. Thompson,
239,376; and all executive officers as a group (23 persons), 2,154,572.
(2) The table includes the shares held in the named officers' accounts in the
Abbott Laboratories Stock Retirement Trust as follows: D. L. Burnham, 4,934;
T. R. Hodgson, 25,653; P. N. Clark, 2,992; G. P. Coughlan, 3,280; and D. A.
Thompson, 33,908. Each officer has shared voting power and sole investment
power with respect to the shares held in his account.
(3) G. P. Coughlan is a trustee of the Abbott Laboratories Stock Retirement
Trust and has shared voting power with respect to all of the common shares
owned by that trust. He is also a director of the Abbott Laboratories Fund
and has shared voting and investment power with respect to all of the common
shares owned by the fund. The table does not include the shares held by
either the trust or the fund. As of January 31, 1995 the Abbott Laboratories
Stock Retirement Trust owned 65,804,166 shares (8.2%) of the outstanding
shares of the corporation; and the Abbott Laboratories Fund owned 1,085,640
shares (.1%) of the outstanding shares of the corporation.
(4) Excluding G. P. Coughlan's shared voting and/or investment power over the
shares held by the Abbott Laboratories Stock Retirement Trust and the Abbott
Laboratories Fund, (see footnote 3) the directors and executive officers as
a group together own beneficially less than one percent of the outstanding
shares of the corporation.
- --------------------------------------------------------------------------------
13
<PAGE>
- ---------------------------------------------------------------
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
The corporation believes that during 1994 its officers and directors complied
with all filing requirements under Section 16(a) of the Securities Exchange Act
of 1934 except as described below. Richard Morehead, an officer of the
corporation, filed one late report. Mr. Morehead amended his 1993 Form 5 to
report that his son acquired 7 shares and his daughter acquired 6 shares in 1993
through their participation in the Abbott Laboratories Dividend Reinvestment
Plan. John Kringel, an officer of the corporation, filed three late Form 4's,
each reporting a single additional transaction. One reported a sale of 40 shares
by his son. One reported a transfer of shares from his wife's account to his
account. One reported a sale of 1,200 shares by a trust of which he is a
co-trustee.
- --------------------------------------------------
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
(ITEM NO. 2 ON PROXY CARD)
The bylaws of the corporation provide that, upon the recommendation of the audit
committee, the board of directors shall appoint annually a firm of independent
public accountants to serve as auditors, and that such appointment shall be
submitted for ratification by the shareholders at the Annual Meeting. The board
has appointed Arthur Andersen LLP to act as auditors for the current year. This
firm has served as auditors of the corporation since 1963. The board of
directors recommends a vote FOR ratification of the selection of Arthur Andersen
LLP as independent public accountants for 1995.
Representatives of Arthur Andersen LLP are expected to be present at the Annual
Meeting and will be given the opportunity to make a statement if they desire to
do so. They will also be available to respond to appropriate questions.
- --------------------------------------------------
SHAREHOLDER PROPOSALS
A shareholder proposal is included in this proxy statement. The corporation is
advised that the proposal will be presented for action at the Annual Meeting.
The proposed resolution and statement made in support thereof are presented
below. The names and addresses of the shareholders submitting the proposal will
be furnished by the corporation to any person requesting such information. The
board of directors recommends that you vote AGAINST the proposal.
- --------------------------------------------------
SHAREHOLDER PROPOSAL ON INFANT FORMULA
(ITEM NO. 3 ON PROXY CARD)
WHEREAS - the misuse of infant formula is a serious health problem. When formula
is mixed with impure water or inadequate amounts of formula are used in
preparation, infants often become sick and many die. In fact UNICEF's Director,
James Grant has estimated that over one million babies lives could be saved
annually if their mothers breastfed instead of bottlefed. Thus, it is vitally
important that infant formula companies do not engage in marketing or promotion
practices which undermine breast-feeding and promote formula instead. We are
pleased that our company has stated publicly that it endorses breast-feeding as
the superior form of infant nutrition and is committed to the principle that its
marketing practices do not discourage breast-feeding.
Hiroshi Nakajima, M.D., Ph.D., Director-General of the World Health Organization
(WHO) and James P. Grant, Executive Director of UNICEF urge that infant formula
companies, "within the context of legal instruments and requirements within
countries, comply with the principles of the International Code (of Marketing
for Breast-Milk Substitutes) in all countries to the fullest extent possible."
Dr. Nakajima and Mr. Grant further state that "adherence to the International
Code of Marketing of Breast-Milk Substitutes in its entirety in all countries is
a minimum requirement and only one of several important actions required in
order to protect healthy practices in respect of infant and young child
feeding."
However, Abbott Ross has still not ended its practice of providing free supplies
of formula to hospitals as a marketing tool to encourage that hospital to buy
Ross formula unless forbidden to do so by government regulation. This is a clear
Code violation. In addition, Abbott continues to face other complaints that it
internationally violates the Code.
Our company also faces domestic controversy re: infant formula price fixing and
paid $140 million in settlement of a court case, and faces other cases that
could be very costly.
THEREFORE be it resolved that the shareholders request the board of directors to
endorse and implement, within any country's legal context, the International
Code of Marketing for Breast-Milk Substitutes wherever it sells infant formula.
- --------------------------------------------------------------------------------
14
<PAGE>
- --------------------------------------------------
PROPONENTS' STATEMENT IN SUPPORT OF SHAREHOLDER PROPOSAL ON INFANT FORMULA
Adopted by the World Health Assembly in 1981 to protect infant health from
inappropriate commercial pressures, the WHO/UNICEF Code is a reasonable standard
and minimum requirement for infant formula industry behavior.
Addressing the "universality of the Code," Dr. Hiroshi Nakajima, M.D.,
Director-General of the World Health Organization (WHO), says there is NO label
such as developed or developing when it comes to promoting breast-feeding. He
says the Code has "universal relevance."
"Breast is best" means the preferred feeding for infants in all countries. There
should be no national boundaries for the best nutrition and healthiest babies.
We want Abbott to commit to following the Code wherever it does business.
We ask you to support this resolution requesting that company policy be
consistent with internationally agreed upon health care practices and the aim of
the Code "to promote and protect breast-feeding."
- --------------------------------------------------
BOARD OF DIRECTORS STATEMENT IN OPPOSITION TO SHAREHOLDER PROPOSAL ON INFANT
FORMULA
(ITEM NO. 3 ON PROXY CARD)
Your board of directors opposes the shareholder proposal, and recommends that
you vote AGAINST the proposal.
Abbott believes that its marketing of infant formula is extremely responsible.
Abbott follows the WHO Code in its entirety in developing countries. Further,
Abbott has instructed its international affiliate management to eliminate free
and low cost supplies to institutions whenever government legislation has been
passed, whenever a hospital or group of hospitals request elimination of free
supplies, or whenever common business practice in a local area follows that
pattern.
Worldwide, Abbott supports breastfeeding as the best source of nutrition for
infants.
Your board of directors recommends that you vote AGAINST the proposal.
- --------------------------------------------------
DATE FOR RECEIPT OF 1996 SHAREHOLDER PROPOSALS
Shareholder proposals for presentation at the 1996 Annual Meeting must be
received by the corporation no later than November 14, 1995 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 1996 meeting.
- --------------------------------------------------
OTHER MATTERS
Over the course of the past year, the corporation has advanced defense costs on
behalf of a number of current and former officers and directors in connection
with ABBOTT LABORATORIES DERIVATIVE LITIGATION. This is a consolidated
shareholder derivative action instituted in May and June of 1993 against all of
the corporation's present directors (other than Allen F. Jacobson) and a former
executive officer that is pending in the Circuit Court of Cook County, Illinois.
The complaint seeks to hold the defendants liable for an amount exceeding $140
million, in connection with the corporation's settlement of certain antitrust
litigation arising out of its marketing of infant formula, plus additional
unspecified damages, on the ground that the defendants had a duty to prevent or
correct the conduct that gave rise to the underlying claims. In addition, on
April 29, 1994, the board of directors adopted resolutions indemnifying, to the
extent necessary, the individual defendants in connection with the settlement of
MORSE V. ABBOTT LABORATORIES, ROBERT A. SCHOELLHORN, DUANE L. BURNHAM ET. AL.
- --------------------------------------------------
PROCEDURE FOR RECOMMENDATION AND NOMINATION OF DIRECTORS AND TRANSACTION OF
BUSINESS AT ANNUAL MEETINGS
A shareholder may recommend persons as potential nominees for director by
submitting the names of such persons in writing to the chairman of the
nominations committee or the secretary of the corporation. Recommendations
should be accompanied by a statement of qualifications and confirmation of the
person's willingness to serve.
A shareholder may directly nominate persons for director only by complying with
the following procedure: the shareholder must submit the names of such persons
in writing to the secretary of the corporation not earlier than the October 1
nor later than the February 15 prior to the date of the Annual Meeting. The
nominations must be accompanied by a statement setting forth the name, age,
business address, residence address, principal occupation, qualifications, and
number of shares of the corporation owned by the nominee and the name, record
address, and number of shares of the corporation owned by the shareholder making
the nomination.
A shareholder may properly bring business before the Annual Meeting of
Shareholders only by complying with the following procedure: the shareholder
must submit to the secretary of the corporation, not earlier than the October 1
nor later than the February 15 prior to the date of the Annual Meeting, a
written statement describing the business to be discussed, the reasons for
conducting such business at the Annual Meeting, the name, record address, and
number of shares of the corporation owned by the shareholder making the
submission, and a description of any material interest of the shareholder in
such business.
- --------------------------------------------------------------------------------
15
<PAGE>
- --------------------------------------------------------------------------------
GENERAL
It is important that proxies be returned promptly. Shareholders are urged,
regardless of the number of shares owned, to sign and return their proxy card in
the enclosed business reply envelope.
The Annual Meeting will be held at the corporation's headquarters, 100 Abbott
Park Road, located at the intersection of Route 137 and Waukegan Road, Lake
County, Illinois. Admission to the meeting will be by admission card only. If
you plan to attend the meeting, please complete and return the reservation form.
An admission card will be sent to you.
By order of the board of directors.
JOSE M. DE LASA
SECRETARY
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16
<PAGE>
[LOGO]
ABBOTT LABORATORIES
100 ABBOTT PARK ROAD
ABBOTT PARK, ILLINOIS 60064-3500 U.S.A.
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
AND PROXY STATEMENT
MEETING DATE
APRIL 28, 1995
YOUR VOTE IS IMPORTANT!
Please sign and promptly return your
proxy in the enclosed envelope.
RESERVATION FORM FOR ANNUAL MEETING
I am a shareholder of Abbott Laboratories and
plan to attend the Annual Meeting to be held
at the corporation's headquarters, 100 Abbott
Park Road, located at the intersection of
Route 137 and Waukegan Road, Lake County,
Illinois at 9:00 a.m. on Friday, April 28,
1995.
Please send me an admission card.
Name _________________________________________________________________________
Please Print
Address ______________________________________________________________________
City __________________________ State ____ Zip Code __________________________
Area code and phone number ___________________________________________________
Please complete and return this form in the business reply envelope provided,
if you plan to attend the meeting. If you hold your Abbott shares through a
broker, it is suggested that you return this form directly to the corporation
(rather than through your broker) to ensure timely receipt of an admission
card.
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<PAGE>
ABBOTT LABORATORIES
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY
The undersigned, revoking previous proxies, acknowledges receipt of the
Notice and Proxy Statement dated March 13, 1995 in connection with the Annual
Meeting of Shareholders of Abbott Laboratories to be held at 9:00 a.m. on April
28, 1995 at the corporation's headquarters, and hereby appoints DUANE L. BURNHAM
and JOSE M. DE LASA, or either of them, proxy for the undersigned, with power of
substitution, to represent and vote all shares of the undersigned upon all
matters properly coming before the Annual Meeting or any adjournments thereof.
INSTRUCTIONS: THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR ITEMS 1 AND 2 AND AGAINST ITEM 3.
SEE REVERSE SIDE
(Important - Please sign and date on other side.)
<PAGE>
/X/ PLEASE MARK
VOTES AS IN
THIS EXAMPLE
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR ITEMS 1 AND 2.
1. Election of 13 Directors
Nominees: K.F. Austen, D.L. Burnham, H.L. Fuller, B.J. Hayhoe, T.R. Hodgson,
A.F. Jacobson, D.A. Jones, B. Powell, Jr., A.B. Rand, W.A. Reynolds, W.D.
Smithburg, J.R. Walter, and W.L. Weiss.
FOR / / WITHHELD / /
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FOR, EXCEPT VOTE WITHHELD FROM THE ABOVE NOMINEES:
2. Ratification of Arthur Andersen LLP as auditors.
FOR / / AGAINST / / ABSTAIN / /
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE AGAINST ITEM 3.
3. Shareholder Proposal - Infant Formula.
FOR / / AGAINST / / ABSTAIN / /
MARK HERE
FOR ADDRESS
CHANGE AND
NOTE BELOW / /
Date:
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Signature(s):
-------------------------------------
Signature(s):
-------------------------------------
Each joint tenant should sign; executors, administrators, trustees, etc. should
give full title and, where more than one is named, a majority should sign.
PLEASE READ OTHER SIDE BEFORE SIGNING.
