Exhibit 10.3
ABBOTT LABORATORIES
SUPPLEMENTAL PENSION PLAN
(As amended and restated
effective January 1, 2008)
ABBOTT LABORATORIES SUPPLEMENTAL
PENSION PLAN
Section 1
INTRODUCTION
1-1.
On September 9, 1977,
December 14, 1979 and February 10, 1984 the Board of
Directors of Abbott Laboratories (“Abbott”) adopted
certain resolutions providing for payment of (i) pension
benefits calculated under the Abbott Laboratories Annuity
Retirement Plan (“Annuity Plan”) in excess of those
which may be paid under that plan under the limits imposed by
Section 415 of the U.S. Internal Revenue Code, as amended, and
the Employee Retirement Income Security Act (“ERISA”)
and (ii) the additional pension benefits that would be payable
under the Annuity Plan if deferred awards under the Abbott
Laboratories Management Incentive Plan were included in
“final earnings” as defined in the Annuity Plan.
The ABBOTT LABORATORIES SUPPLEMENTAL PENSION PLAN (this
“Supplemental Plan”) clarified, restated and superseded
the prior resolutions and is hereby amended and restated in
accordance with the requirements of Section 409A of the
Internal Revenue Code of 1986, as amended (“Code
Section 409A”).
1-2.
The Supplemental Plan shall apply to
employees of Abbott and its subsidiaries and affiliates existing as
of the date of adoption of the Supplemental Plan or thereafter
created or acquired. (Abbott and each of such subsidiaries
and affiliates are hereinafter referred to as an
“employer” and collectively as the
“employers”).
1-3.
All benefits provided under the
Supplemental Plan shall be provided from the general assets of the
employers and not from any trust fund or other designated
asset. All participants in the Supplemental Plan shall be
general creditors of the employers with no priority over other
creditors.
1-4.
The Supplemental Plan shall be
administered by the Abbott Laboratories Employee Benefit Board of
Review appointed and acting under the Annuity Plan (“Board of
Review”). Except as stated below, the Board of Review
shall perform all powers and duties with respect to the
Supplemental Plan, including the power to direct payment of
benefits, allocate costs among employers, adopt amendments and
determine questions of interpretation. The Board of Directors
of Abbott (the “Board of Directors”) shall have the
sole authority to terminate the Supplemental Plan.
1-5.
Notwithstanding anything in the
Supplemental Plan to the contrary, any amounts under the
Supplemental Plan that were earned and vested before
January 1, 2005 (as determined in accordance with Code
Section 409A) with respect to participants who retired before
January 1, 2005 (“Grandfathered Amounts”) shall be
subject to the terms and conditions of the Supplemental Plan as
administered and as in effect on December 31, 2004.
Amendments made to the Supplemental Plan pursuant to this amendment
and restatement or otherwise shall not affect the Grandfathered
Amounts unless expressly provided for in the amendment. The
terms and conditions applicable to the Grandfathered Amounts are
set forth in Appendix A attached hereto.
Section 2
ERISA ANNUITY PLAN SUPPLEMENTAL BENEFIT
2-1.
The benefits described in this
Section 2 shall apply to all participants in the Annuity Plan
who retire, or terminate with a vested pension under that plan, on
or after September 9, 1977.
2-2.
Each Annuity Plan participant whose
retirement or vested pension under that plan would otherwise be
limited by Section 415, Internal Revenue Code, shall receive a
supplemental pension under this Supplemental Plan in an amount,
which, when added to his or her Annuity Plan pension (calculated as
if such pension had been payable based on the distribution
rules established hereunder and the pension form selected by
the participant as permitted by subsections 8-3 and 8-4), will
equal the amount the participant would be entitled to under the
Annuity Plan as in effect from time to time, calculated as if such
pension had been payable based on the distribution
rules established hereunder and the pension form selected by
the participant as permitted by subsections 8-3 and 8-4, without
regard to the limitations imposed by Section 415, Internal
Revenue Code.
Section 3
1986 TAX REFORM ACT SUPPLEMENTAL BENEFIT
3-1.
The benefits described in this
Section 3 shall apply to all participants in the Annuity Plan
who retire, or terminate with a vested pension under that plan,
after December 31, 1988.
3-2.
Each Annuity Plan participant shall
receive a supplemental pension under this Supplemental Plan in an
amount determined as follows:
(a)
The supplemental pension shall be
the difference, if any, between:
i.
the hypothetical monthly benefit
that would have been payable under the Annuity Plan based on the
distribution rules established hereunder and the pension form
selected by the participant as permitted by subsections 8-3 and 8-4
plus any supplement provided by Section 2; and
ii.
the hypothetical monthly benefit
that would have been payable under the Annuity Plan, calculated
based on the distribution rules established hereunder and the
pension form selected by the participant as permitted by
subsections 8-3 and 8-4, (without regard to the limits imposed by
Section 415, Internal Revenue Code) if the participant’s
“final earnings”, as defined in the Annuity Plan, had
included compensation in excess of the limits imposed by
Section 401(a)(17), Internal Revenue Code, and any
“pre-tax contributions” made by the participant under
the Abbott Laboratories Supplemental 401(k) Plan.
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Section 4
DEFERRED COMPENSATION PLAN
ANNUITY PLAN SUPPLEMENTAL BENEFIT
4-1.
The benefits described in this
Section 4 shall apply to all participants in the Annuity Plan
who retire, or terminate with a vested pension, under that plan, on
or after January 1, 2002 and who made a Deferral Election
under the Abbott Laboratories Deferred Compensation Plan (the
“Deferred Compensation Plan”) with respect to any
calendar month during the one hundred twenty consecutive calendar
months immediately preceding retirement or termination of
employment.
4-2.
Each Annuity Plan participant shall
receive a supplemental pension under this Supplemental Plan in an
amount determined as follows:
(a)
The supplemental pension shall be
the difference, if any, between:
i.
the hypothetical monthly benefit
that would have been payable under the Annuity Plan based on the
distribution rules established hereunder and the pension form
selected by the participant as permitted by subsections 8-3 and 8-4
plus any supplement provided by Section 2 and Section 3;
and
ii.
the hypothetical monthly benefit
that would have been payable under the Annuity Plan, calculated
based on the distribution rules established hereunder and the
pension form selected by the participant as permitted by
subsections 8-3 and 8-4, (without regard to the limits imposed by
Section 415, Internal Revenue Code) if the participant’s
“base earnings”, as defined in the Annuity Plan,
included deferrals made under the Deferred Compensation Plan and
any compensation in excess of the limits imposed by
Section 401(a)(17), Internal Revenue Code.
Section 5
DEFERRED MIP ANNUITY PLAN SUPPLEMENTAL BENEFIT
5-1.
The benefits described in this
Section 5 shall apply to all participants in the Annuity Plan
who retire, or terminate with a vested pension, under that plan, on
or after December 14, 1979 and who were awarded Management
Incentive Plan awards for any calendar year during the ten
consecutive calendar years ending with the year of retirement or
termination of employment.
5-2.
Each Annuity Plan participant shall
receive a supplemental pension under this Supplemental Plan in an
amount determined as follows:
(a)
The supplemental pension shall be
the difference, if any, between:
i.
the hypothetical monthly benefit
that would have been payable under the Annuity Plan based on the
distribution rules established hereunder and the pension form
selected by the
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participant as permitted by
subsections 8-3 and 8-4 plus any supplement provided by
Section 2, Section 3, and Section 4; and
ii.
the hypothetical monthly benefit
that would have been payable under the Annuity Plan, calculated
based on the distribution rules established hereunder and the
pension form selected by the participant as permitted by
subsections 8-3 and 8-4, (without regard to the limits imposed by
Section 415, Internal Revenue Code) if the participant’s
“final earnings”, as defined in the Annuity Plan, were
one-sixtieth of the sum of:
A. the participant’s
total “basic earnings” (excluding any payments under
the Management Incentive Plan or any Division Incentive Plan)
received in the sixty consecutive calendar months for which his
basic earnings (excluding any payments under the Management
Incentive Plan or any Division Incentive Plan) were highest within
the last one hundred twenty consecutive calendar months immediately
preceding his retirement or termination of employment;
and
B. the amount of the
participant’s total awards under the Management Incentive
Plan and any Division Incentive Plan (whether paid immediately or
deferred) made for the five consecutive calendar years during the
ten consecutive calendar years ending with the year of retirement
or termination for which such amount is the greatest and (for
participants granted Management Incentive Plan awards for less than
five consecutive calendar years during such ten year period) which
include all Management Incentive Plan awards granted for
consecutive calendar years within such ten year period.
(b)
That portion of any Management
Incentive Plan award which the Compensation Committee of the Board
of Directors of Abbott (“Committee”) has determined
shall be excluded from the participant’s “basic
earnings” shall be excluded from the calculation of
“final earnings” for purposes of this subsection
5-2. “Final earnings” for purposes of this
subsection 5-2 shall include any compensation in excess of the
limits imposed by Section 401(a)(17), Internal Revenue
Code.
(c)
In the event the period described in
subsection 5-2(a)(ii)(B) is the final five calendar years of
employment and a Management Incentive Plan award is made to the
participant subsequent to retirement for the participant’s
final calendar year of employment, the supplemental pension shall
be adjusted by adding such new award and subtracting a portion of
the earliest Management Incentive Plan award included in the
calculation, from the amount determined under subsection
5-2(a)(ii)(B). The portion subtracted shall be equal to
that
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portion of the participant’s
final calendar year of employment during which the participant was
employed by Abbott.
Section 6
CORPORATE OFFICER ANNUITY PLAN SUPPLEMENTAL BENEFIT
6-1.
The benefits described in this
Section 6 shall apply to all participants in the Annuity Plan
who are corporate officers of Abbott as of September 30, 1993
or who become corporate officers thereafter, and who retire, or
terminate with a vested pension under that plan on or after
September 30, 1993. The term “corporate
officer” for purposes of this Supplemental Plan shall mean an
individual elected an officer of Abbott by its Board of Directors
(or designated as such for purposes of this Section 6 by the
Compensation Committee), but shall not include assistant
officers.
6-2.
Subject to the limitations and
adjustments described below, each participant described in
subsection 6-1 shall receive a monthly supplemental pension under
this Supplemental Plan commencing on the date determined in
accordance with subsection 8-2 and payable as a life annuity, equal
to 6/10 of 1 percent (.006) of the participant’s final
earnings (as determined under subsection 5-2) for each of the first
twenty years of the participant’s benefit service (as defined
in the Annuity Plan) occurring after the participant’s
attainment of age 35.
6-3.
In no event shall the sum of
(a) the participant’s aggregate percentage of final
earnings calculated under subsection 6-2 and (b) of the
participant’s aggregate percentage of final earnings
calculated under subsection 5-1 of the Annuity Plan, excluding
5-1(a)(ii)(B), exceed the maximum aggregate percentage of final
earnings allowed under subsection 5-1 (also excluding
5-1(a)(ii)(B)) of the Annuity Plan (without regard to any limits
imposed by the Internal Revenue Code), as in effect on the date of
the participant’s retirement or termination. In the
event the limitation described in this subsection 6-3 would be
exceeded for any participant, the participant’s aggregate
percentage calculated under subsection 6-2 shall be reduced until
the limit is not exceeded.
6-4.
Benefit service occurring between
the date a participant ceases to be a corporate officer of Abbott
and the date the participant again becomes a corporate officer of
Abbott shall be disregarded in calculating the participant’s
aggregate percentage under subsection 6-2.
6-5.
Any supplemental pension otherwise
due a participant under this Section 6 shall be reduced by the
amount (if any) by which:
(a)
the hypothetical benefits that would
be payable to such participant under the Annuity Plan, based on the
distribution rules established hereunder and the pension form
selected by the participant as permitted by subsections 8-3 and
8-4, and this Supplemental Plan exceeds
(b)
the hypothetical maximum benefit
that would be payable to the participant under the Annuity Plan,
calculated based on the distribution rules established
hereunder and the pension form selected by the participant as
permitted by subsections 8-3 and 8-4, (without regard to the limits
imposed by Section 415, Internal Revenue Code) based on the
participant’s final earnings (as
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determined under subsection 5-2), if
the participant had accrued the maximum benefit service recognized
by the Annuity Plan.
6-6.
Any supplemental pension due a
participant under this Section 6 shall be actuarially adjusted
as provided in the Annuity Plan to reflect the pension form
selected by the participant as permitted by subsections 8-3 and 8-4
and the participant’s age at commencement of the pension as
provided in Section 7.
Section 7
CORPORATE OFFICER ANNUITY PLAN
SUPPLEMENTAL EARLY RETIREMENT BENEFIT
7-1.
The benefits described in this
Section 7 shall apply to all persons described in subsection
6-1.
7-2.
The supplemental pension due under
Sections 2, 3, 4, 5 and 6 to each participant described in
subsection 7-1 shall be reduced in accordance with the
rules provided in subsections 5-3 and 5-6 of the Annuity Plan
for each month by which its commencement date precedes the last day
of the month in which the participant will attain age 60. No
reduction will be made for the period between the last day of the
months the participant will attain age 60 and age 62.
7-3.
Each participant described in
subsection 7-1 shall receive a monthly supplemental pension under
this Supplemental Plan equal to any hypothetical reduction made in
such participant’s Annuity Plan pension in accordance with
the rules provided in subsections 5-3 or 5-6 of the Annuity
Plan for the period between the last day of the months the
participant will attain age 60 and age 62, calculated as if the
participant had commenced receipt of the participant’s
Annuity Plan pension on the same date on which the participant
commences receipt of the participant’s supplemental pension
based on the distribution rules established hereunder and the
pension form selected by the participant as permitted by
subsections 8-3 and 8-4.
Section 8
MISCELLANEOUS
8-1.
For purposes of this Supplemental
Plan, the term “Management Incentive Plan” shall mean
the Abbott Laboratories 1971 Management Incentive Plan, the Abbott
Laboratories 1981 Management Incentive Plan and all successor plans
to those plans.
8-2.
The monthly vested supplemental
pension described in Sections 2, 3, 4, 5, 6 and 7 shall commence to
be paid to the participant or his or her beneficiary on the last
day of the month following the month in which:
(a)
For the participant hired before
2004, the later of the date on which such participant attains age
50 and the date such participant’s employment is terminated;
or
(b)
For the participant hired after
2003, the later of the date on which such participant attains age
55 and the date such participant’s employment is
terminated.
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Notwithstanding the foregoing provisions of
subsection 8-2, any participant eligible to make an election under
Section 9 may make such election with respect to any accruals
for services performed in the year following the year such election
is made.
Notwithstanding the foregoing provisions of
subsection 8-2, in the event that the present value of
participant’s supplemental pension under Sections 2, 3, 4, 5,
6 and 7 does not exceed in the aggregate $25,000 as of the
commencement date of the pension payable to such participant or his
or her beneficiary, and payment of such supplemental pension has
not been previously made under Section 9, the present value of
such supplemental pension shall be paid to such participant in a
lump-sum on such commencement date.
8-3.
Except as otherwise specifically
provided, payment of the monthly vested supplemental pension
described in Sections 2, 3, 4, 5, 6, and 7 shall be made to a
participant as follows:
(a)
Life Annuity
. A participant who is not
legally married on the date as of which such payments commence
shall receive a monthly retirement income or monthly deferred
vested benefit in accordance with the plan payable on a life
annuity basis, with the last payment to be made for the month in
which his or her death occurs.
(b)
50% Joint and Survivor
Annuity . A
participant who is legally married on the date as of which such
payments commence shall receive a 50% joint and survivor annuity
which is actuarially equivalent to the amount of monthly retirement
income or monthly deferred vested benefit otherwise payable to him
or her in accordance with the plan on a life annuity basis. Such
joint and survivor annuity shall consist of a reduced monthly
retirement income or monthly deferred vested benefit continuing
during the participant’s lifetime, and if the
participant’s spouse is living at the date of the
participant’s death, payment of one-half of such reduced
monthly retirement income or monthly deferred vested benefit to
such spouse until the spouse’s death occurs, with the last
payment to be made for the month of the death of the last to die of
the participant and his or her spouse. The joint and survivor
annuity payable hereunder to or with respect to a participant who
retires on a late retirement date shall be computed as if such
participant had retired on his or her normal retirement date using
for the age of his or her spouse as of his or her late retirement
date, that spouse’s age as of his or her normal retirement
date.
8-4.
In lieu of the form and amount of
supplemental pension benefit specified in subsection 8-3, a
participant may elect, prior to commencement, a supplemental
pension benefit, which is actuarially equivalent to the form of
payment specified in subsection 8-3(a), in the annuity forms
permitted by the Board of Review, provided that the scheduled date
for the first annuity payment is not changed as a result of such
election. For purposes of this provision, the term
“actuarially equivalent” shall have the meaning
provided by Treasury Regulation §1.409A-2(b)(2)(ii)(A),
applying reasonable actuarial methods and assumptions, which must
be the same for each annuity payment option and otherwise comply
with the rules provided by Treasury Regulation
§1.409A-2(b)(2)(ii)(D).
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An election under this subsection 8-4 must be in
writing, signed by the participant, and filed with the Board of
Review at such time and in such manner as the Board of Review shall
determine; and will be effective only if the participant’s
spouse, if any, consents to the election in writing, and such
consent acknowledges the effect of the election and is witnessed by
a plan representative or a notary public. In any case where a
participant elects an optional form of benefit, the option shall be
designed so that more than 50 percent of the actuarial reserve
required to provide the participant’s monthly vested
supplemental pension benefit in the normal form will be applied to
provide the participant’s benefits under the option during
the period of the participant’s life expectancy. Payment of
an optional form of benefit will commence no later than the date on
which the participant’s monthly supplemental pension benefit
would otherwise commence. An election under this subs 8-4 may not
be changed after payment of the participant’s supplemental
pension benefit has commenced.
8-5.
Notwithstanding any other provision of this Supplemental Plan, if a
participant terminates employment within two (2) years
following the occurrence of a Change in Control, the present value
of his or her supplemental pension under Sections 2, 3, 4 and 5,
but excluding any amounts with respect to which an election under
Section 9 has been made, whether or not then payable or
vested) shall be paid to such participant in a lump sum, calculated
using reasonable actuarial assumptions and methods, within thirty
(30) days following the date of such termination of employment;
provided that the event constituting a Change in Control is also a
“change in control event”, as such term is defined in
Treasury Regulation § 1.409A-3(i)(5). The supplemental
pension under Section 2 shall be computed using as the
applicable limit under Section 415 of the Internal Revenue
Code, such limit as is in effect on the termination date and
based on the assumption that the participant will receive his or
her supplemental pension in the form of a straight life annuity
with no ancillary benefits. The present values of the
supplemental pensions under Sections 2, 3, 4 and 5 shall be
computed as of the date of payment using an interest rate equal to
the Pension Benefit Guaranty Corporation interest rate applicable
to an immediate annuity, as in effect on the date of
payment.
8-6.
For purposes of subsection 8-5, a “Change in Control”
shall be deemed to have occurred on the earliest of the following
dates:
(a)
the date any Person is or becomes
the Beneficial Owner, directly or indirectly, of securities of
Abbott (not including in the securities beneficially owned by such
Person any securities acquired directly from Abbott or its
Affiliates) representing 20% or more of the combined voting power
of Abbott’s then outstanding securities, excluding any Person
who becomes such a Beneficial Owner in connection with a
transaction described in clause (i) of paragraph
(c) below; or
(b)
the date the following individuals
cease for any reason to constitute a majority of the number of
directors then serving: individuals who, on the date hereof,
constitute the Board of Directors and any new director (other than
a director whose initial assumption of office is in connection with
an actual or threatened election contest, including but not limited
to a consent solicitation, relating to the election of directors of
Abbott) whose appointment or election by the Board of Directors or
nomination for election by Abbott’s shareholders
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was approved or recommended by a
vote of at least two-thirds (2/3) of the directors then still in
office who either were directors on the date hereof or whose
appointment, election or nomination for election was previously so
approved or recommended; or
(c)
the date on which there is
consummated a merger or consolidation of Abbott or any direct or
indirect subsidiary of Abbott with any other corporation or other
entity, other than (i) a merger or consolidation
(A) immediately following which the individuals who comprise
the Board of Directors immediately prior thereto constitute at
least a majority of the Board of Directors of Abbott, the entity
surviving such merger or consolidation or, if Abbott or the entity
surviving such merger or consolidation is then a subsidiary, the
ultimate parent thereof and (B) which results in the voting
securities of Abbott outstanding immediately prior to such merger
or consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity or any parent thereof), in combination with the
ownership of any trustee or other fiduciary holding securities
under an employee benefit plan of Abbott or any subsidiary of
Abbott, at least 50% of the combined voting power of the securities
of Abbott or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or
(ii) a merger or consolidation effected to implement a
recapitalization of Abbott (or similar transaction) in which no
Person is or becomes the Beneficial Owner, directly or indirectly,
of securities of Abbott (not including in the securities
Beneficially Owned by such Person any securities acquired directly
from Abbott or its Affiliates) representing 20% or more of the
combined voting power of Abbott’s then outstanding
securities; or
(d)
the date the shareholders of Abbott
approve a plan of complete liquidation or dissolution of Abbott or
there is consummated an agreement for the sale or disposition by
Abbott of all or substantially all of Abbott’s assets, other
than a sale or disposition by Abbott of all or substantially all of
Abbott’s assets to an entity, at least 50% of the combined
voting power of the voting securities of which are owned by
shareholders of Abbott, in combination with the ownership of any
trustee or other fiduciary holding securities under an employee
benefit plan of Abbott or any subsidiary of Abbott, in
substantially the same proportions as their ownership of Abbott
immediately prior to such sale.
Notwithstanding the foregoing, a
“Change in Control” shall not be deemed to have
occurred by virtue of the consummation of any transaction or series
of integrated transactions immediately following which the record
holders of the common stock of Abbott immediately prior to such
transaction or series of transactions continue to have
substantially the same proportionate ownership in an entity which
owns all or substantially all of the assets of Abbott immediately
following such transaction or series of transactions.
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For purposes of this Supplemental
Plan: “Affiliate” shall have the meaning set forth in
Rule 12b-2 promulgated under Section 12 of the Exchange
Act; “Beneficial Owner” shall have the meaning set
forth in Rule 13d-3 under the Exchange Act; “Exchange
Act” shall mean the Securities Exchange Act of 1934, as
amended from time to time; and “Person” shall have the
meaning given in Section 3(a)(9) of the Exchange Act, as
modified and used in Sections 13(d) and 14(d) thereof,
except that such term shall not include (i) Abbott or any of
its subsidiaries, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of Abbott or any of its
Affiliates, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or
(iv) a corporation owned, directly or indirectly, by the
shareholders of Abbott in substantially the same proportions as
their ownership of stock of Abbott.
8-7.
POTENTIAL CHANGE IN CONTROL. A “Potential Change in
Control” shall exist during any period in which the
circumstances described in paragraphs (a), (b), (c) or (d),
below, exist (provided, however, that a Potential Change in Control
shall cease to exist not later than the occurrence of a Change in
Control):
(a)
Abbott enters into an agreement, the
consummation of which would result in the occurrence of a Change in
Control, provided that a Potential Change in Control
describ
