Exhibit 10.8
As Amended and Restated
Effective as of January 1, 2008
1998 PERFORMANCE INCENTIVE PLAN (PIP)
RULES
409A DOCUMENT
The following rules shall govern the
administration of the 1998 Abbott Laboratories Performance
Incentive Plan (PIP) and any comparable successor plan with respect
to all amounts that are not Grandfathered Amounts.
Capitalized terms used but not otherwise defined in these
Rules shall have the meaning provided in the PIP. These
rules shall remain in effect until amended by the
Committee:
1.
Fiscal Year
. The term “fiscal
year”, as used in the PIP, means the fiscal period from time
to time employed by Abbott for the purpose of reporting earnings to
shareholders.
2.
Consolidated Net
Income .
“Consolidated Net Income” shall be the consolidated net
income for such fiscal year as stated in Abbott’s Audited
Financial Statements. Excluded from the calculation of
consolidated net income will be the effect of changes in GAAP and
the tax effects thereon, and extraordinary gains and loses and the
tax effects thereon if presented in the audited Consolidated
Statement of Earnings.
3.
Naming of Participants
. For any fiscal year, all
participants in the PIP must be named by the Committee prior to the
completion of the immediately preceding fiscal year. A PIP
participant may not be an active participant in the MIP in the same
fiscal year.
4.
Inclusion in Pensionable
Earnings . The full
amount of any PIP award earned under Rule 5 will be included
in the participant’s pensionable earnings.
5.
Time of Payment
. Beginning with any award
allocation paid after December 31, 1998, a participant must
direct payment or deferral of an allocation made to the participant
under the PIP by one or more of the following methods:
(a)
In cash to the participant, which
payment shall be made no later than the last day of the
“applicable 2 ½ month period”, as such term is
defined in Treasury Regulation
§ 1.409A-1(b)(4)(i)(A);
(b)
A portion in cash and deposited to a
grantor trust (the “Grantor Trust”) established by the
participant (in a form which the Committee determines is
substantially similar to the trust in Exhibit A) and the
balance paid to the participant approximately equal to the
participant’s aggregate federal, state and local individual
income and employment taxes; provided that all payments or
contributions
to the Grantor Trust and participant
contemplated by this Section 5(b) shall be made no later
than the last day of the “applicable 2 ½ month
period”, as such term is defined in Treasury Regulation
§ 1.409A-1(b)(4)(i)(A); or
(c)
Deferral of payment until the time,
and in the manner determined in Rule 17.
Amounts paid under the PIP will not
be considered amounts paid under the MIP for purposes of
subsections 3.3 and 3.4 and Section 4 of the MIP. The
base salaries of PIP participants will not be considered for
determination of the MIP amount in subsection 3.3 of the
MIP.
6.
Time of Election
.
(a)
A participant must make the election
described in Rule 5 by filing it with the Committee before
expiration of the election period established by the Committee,
which period shall end no later than December 31 of the fiscal
year prior to the year during which the performance incentive
compensation is earned under the PIP.
(b)
Notwithstanding the timing
requirements of Rule 6(a), an individual who newly becomes
eligible to participate in the PIP by being designated as a
participant under Section 3.1 of the PIP (and who was not
eligible to participate in any other plan that would be aggregated
with the Plan under Treasury Regulation §1.409A-1(c)) may make
the an initial deferral election described in Rule 5 by filing
it with the Committee or its delegate within the thirty (30) day
period immediately following the date he or she first is designated
as participant, provided , that the compensation deferred
pursuant to such election relates solely to services performed
after the date of such election. For this purpose, an
election shall be deemed to apply to compensation paid for services
performed after the election if the election applies to no more
than the amount prescribed by Treasury Regulation
§1.409A-2(a)(7)(i).
(c)
Any election described in
Rule 5 shall be irrevocable for the fiscal year to which the
election applies.
7.
Accounts . The Committee shall establish accounts
for participants who have made elections pursuant to
Rule 5(b) or 5(c) as follows.
(a)
The Committee will maintain a
“Deferred Account” in the name of each participant who
has elected to defer payment of all or a portion of his or her PIP
award under Rule 5(c). The Deferred Account shall
consist of allocations deferred according to
Rule 5(c) and any adjustments made in accordance with
Rule 8.
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(b)
The Committee will maintain two
separate Accounts, a “Pre-Tax Account” and an
“After-Tax Account”, in the name of each participant
who has declined to defer allocations by electing to have a portion
of his or her PIP award deposited in cash to a Grantor Trust
according to Rule 5(b). The Pre-Tax Account shall
consist of the aggregate of all allocations contemplated by
Rule 5(b), whether deposited to the participant’s
Grantor Trust or made in cash to the participant, and any
adjustments made in accordance with Rule 9. The
After-Tax Account shall consist of allocations deposited to the
participant’s Grantor Trust in cash according to
Rule 5(b) and any adjustments made in accordance with
Rule 10.
8.
Adjustment of Deferred
Accounts . At the
end of each fiscal year, a participant’s Deferred Account
will be adjusted as follows:
(a)
First, reduced by an amount equal to
any distribution made to the participant during the year according
to Rule 17 or Rule 18;
(b)
Next, increased by an amount equal
to any allocation for that year that is deferred according to
Rule 5(c); and
(c)
Last, increased by an amount equal
to the interest earned for that year according to
Rule 11.
9.
Adjustment of Pre-Tax
Accounts . At the
end of each fiscal year, a participant’s Pre-Tax Account will
be adjusted as follows:
(a)
First, reduced, in any year in which
the participant is entitled to receive a distribution from his or
her Grantor Trust, by an amount equal to the distribution that
would have been made to the participant if the aggregate amounts
allocated according to Rule 5(b) had instead been
deferred under Rule 5(c);
(b)
Next, increased by an amount equal
to any allocation for that year that is paid to the participant
(including the amount paid to the participant’s Grantor
Trust) according to Rule 5(b); and
(c)
Last, increased by an amount equal
to the interest earned for that year according to
Rule 11.
10.
Adjustment of After-Tax
Accounts . At the
end of each fiscal year, a participant’s After-Tax Account
will be adjusted as follows:
(a)
First, reduced, in any year in which
the participant is in receipt of a distribution from his or her
Grantor Trust, by an amount calculated as provided in Rule 28
which represents the distribution for such year;
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(b)
Next, increased by an amount equal
to the allocation for that year that is deposited in the
participant’s Grantor Trust according to Rule 5(b);
and
(c)
Last, increased by an amount equal
to the interest earned for that year according to
Rule 11.
11.
Interest Accruals on
Accounts .
(a)
As of the end of each fiscal year, a
participant’s Deferred Account or Pre-Tax Account, as
applicable, shall be credited with interest
(“Interest”) at the following rate:
(i)
the average of the “prime
rate” of interest published by The Wall Street Journal
(Mid-West Edition) or comparable successor quotation service on the
first business day of January and the last business day of
each month of the fiscal year; plus
(ii)
two hundred twenty-five (225) basis
points.
(b)
As of the end of each fiscal year, a
participant’s After-Tax Account shall be credited with the
amount of Interest set forth above, multiplied by the aggregate of
the federal, state and local individual income tax rates determined
in accordance with Rule 26 (the “After-Tax
Interest”).
(c)
The Interest and After-Tax Interest,
as applicable, shall be credited on the conditions established by
the Committee, provided that any award allocation shall be
considered to have been made and credited to a participant’s
Account as of the first day of the fiscal year in which the award
is made.
12.
Guaranteed Rate
Payments . In
addition to any allocation made to a participant for any fiscal
year in accordance with Rule 5(b), Abbott shall also make a
payment to a participant’s Grantor Trust (a “Guaranteed
Rate Payment”) for each year in which the Grantor Trust is in
effect. The Guaranteed Rate Payment shall equal the excess,
if any, of the participant’s Net Interest Accrual (as defined
below) over the net earnings of the participant’s Grantor
Trust for the year, and shall be paid within the thirty (30) days
beginning April 1 of the following fiscal year. A
participant’s Net Interest Accrual for a year is an amount
equal to the After-Tax Interest credited to the participant’s
After-Tax Account for that year in accordance with
Rule 11(b).
13.
Grantor Trust Assets
. Each participant’s
Grantor Trust assets shall be invested solely in the instruments
specified by investment guidelines established by the
Committee. Such investment guidelines, once established, may
be changed by the Committee, provided that any change shall not
take effect until the year following the year in which the change
is made and provided further that the instruments
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specified shall be consistent with
the provisions of Section 3(b) of the form of Grantor
Trust attached hereto as Attachment A.
14.
Designation of
Beneficiaries .
Subject to the conditions and limitations set forth below, each
participant, and after a participant’s death, each primary
beneficiary designated by a participant in accordance with the
provisions of this Rule 14, shall have the right from time to
time to designate a primary beneficiary or beneficiaries and,
successive or contingent beneficiary or beneficiaries to receive
unpaid amounts from the participant’s Deferred Account under
the PIP. Beneficiaries may be a natural person or persons or
a fiduciary, such as a trustee of a trust or the legal
representative of an estate. Any such designation shall take
effect upon the death of the participant or such beneficiary, as
the case may be, or in the case of any fiduciary beneficiary, upon
the termination of all of its duties (other than the duty to
dispose of the right to receive amounts remaining to be paid under
the PIP). The conditions and limitations relating to the
designation of beneficiaries are as follows:
(a)
A nonfiduciary beneficiary shall
have the right to designate a further beneficiary or beneficiaries
only if the original participant or the next preceding primary
beneficiary, as the case may be, shall have expressly so provided
in writing; and
(b)
A fiduciary beneficiary shall
designate as a further beneficiary or beneficiaries only those
persons or other fiduciaries that are entitled to receive the
amounts payable from the participant’s account under the
trust or estate of which it is a fiduciary.
Any beneficiary designation or grant
of any power to any beneficiary under this Rule 14 may be
exercised only by an instrument in writing, executed by the person
making the designation or granting such power and filed with the
Secretary of Abbott during the person’s lifetime or prior to
the termination of a fiduciary’s duties. If a deceased
participant or a deceased nonfiduciary benefi
