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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.          )

 

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Abbott Laboratories
100 Abbott Park Road
Abbott Park, Illinois 60064-6400 U.S.A.

On the Cover: FreeStyle Libre System

Lana and Ali Nadji-Tehrani, Frankfurt, Germany

    Both Lana and her father, Ali, rely on Abbott's FreeStyle Libre flash glucose-monitoring system to measure, track and analyze their glucose levels.

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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

YOUR VOTE IS IMPORTANT

Please sign and promptly return your proxy
in the enclosed envelope, or vote your
shares by telephone or using the Internet.

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Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to Be Held on April 28, 2017

The Annual Meeting of the Shareholders of Abbott Laboratories will be held at Abbott's headquarters, 100 Abbott Park Road, at the intersection of Route 137 and Waukegan Road, Lake County, Illinois, on Friday, April 28, 2017, at 9:00 a.m. for the following purposes:

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To elect 11 directors to hold office until the next Annual Meeting or until their successors are elected (Item 1 on the proxy card),



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To ratify the appointment of Ernst & Young LLP as auditors of Abbott for 2017 (Item 2 on the proxy card),



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



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To vote on an advisory vote on the approval of the frequency of shareholder votes on executive compensation (Item 4 on proxy card),



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To approve the adoption of the Abbott Laboratories 2017 Incentive Stock Program (Item 5 on the proxy card),



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To approve the adoption of the Abbott Laboratories 2017 Employee Stock Purchase Plan for Non-U.S. Employees (Item 6 on the proxy card), and



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To transact such other business as may properly come before the meeting, including consideration of a shareholder proposal, if presented at the meeting (Item 7 on the proxy card).

The Board of Directors recommends that you vote FOR Items 1, 2, 3, 5, and 6.

The Board of Directors recommends with respect to Item 4 that you vote FOR an ANNUAL (1 YEAR) shareholder advisory vote.

The Board of Directors recommends that you vote AGAINST Item 7.

The close of business on March 1, 2017, has been fixed as the record date for determining the shareholders entitled to receive notice of and to vote at the Annual Meeting.

Abbott's 2017 Proxy Statement and 2016 Annual Report to Shareholders are available at www.abbott.com/proxy.

If you are a registered shareholder, you may access your proxy card by either:

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Going to the following website: www.investorvote.com/abt, entering the information requested on your computer screen and then following the simple instructions, or



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Calling (in the United States, U.S. territories, and Canada) toll-free 1-800-652-VOTE (8683) on a touch-tone telephone, and following the simple instructions provided by the recorded message.

By order of the Board of Directors.

Hubert L. Allen
Secretary

March 17, 2017

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PROXY SUMMARY

This summary contains highlights about Abbott and the upcoming 2017 Annual Meeting of Shareholders. This summary does not contain all of the information that you should consider in advance of the meeting, and we encourage you to read the entire proxy statement carefully before voting.

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, 2017, at Abbott'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 17, 2017.

In 2016, Abbott achieved its expected financial commitments and operational goals and also continued to shape the company for balance, breadth, and sustainable leadership to ensure Abbott is in the right businesses that provide the best opportunities for future growth.

OPERATIONAL HIGHLIGHTS

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Named executive officers overachieved their goals related to earnings per share, net income, return on assets, and free cash flow, while achieving their goals related to sales at 99.8% or greater.



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Raised the dividend by approximately 7%, marking Abbott's 93rd consecutive year of dividends paid and the 45th straight year the dividend has been increased.



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Returned approximately $2.1 billion to Abbott shareholders through dividends and share repurchases.



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Re-invested more than $1.1 billion in Abbott through internal capital spending.

CONTINUED TO STRATEGICALLY SHAPE ABBOTT FOR LONG-TERM GROWTH

Over the last several years, Abbott continued to take important strategic steps to shape the company for long-term growth. With the separation of AbbVie in 2013, Abbott created a new, better-balanced Abbott with leading positions in attractive areas of healthcare that are aligned with important global trends. In 2014 and 2015, Abbott made important internal investments across its businesses in new product development and manufacturing and supply chain infrastructure to strengthen our local presence in some of the fastest growing healthcare markets in the world, such as India and China. Abbott also reshaped and significantly strengthened its branded generics pharmaceuticals business with the acquisitions of CFR Pharmaceuticals in Latin America and Veropharm in Russia, while also divesting its developed markets pharmaceuticals business. These actions created a leading branded generics business with significant scale and focus in some of the fastest growing geographies, including India, Latin America, and Russia. 2016 represented another significant year of shaping with the announced acquisition of St. Jude Medical, Inc. On Jan. 4, 2017, Abbott completed the acquisition, establishing Abbott as a leader in the broad medical device arena and providing expanded opportunities for future growth.

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Abbott operates a diverse and balanced portfolio of businesses which are all leaders in large, attractive markets and aligned with favorable, long-term healthcare trends. The strategic actions we've taken over the last several years have created leading positions in the areas of healthcare where we compete.

Our investors compare us to other global multinational companies, not necessarily in healthcare. These companies share similar characteristics that are aligned with our investment identity of diversified growth and returns to shareholders. In selecting our peer group for performance and compensation benchmarking, we considered:

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Globally diverse manufacturing-driven organizations with significant international operations



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Consumer-facing organizations



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Similar financial and operating measures, including market capitalization, revenue, and number of employees



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Similar return of cash profiles, including dividends and share repurchases



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Similar geographic mix of revenues and profits

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In 2016, we received 94% shareholder support for our annual advisory vote on "Say on Pay" demonstrating strong support for our approach to executive compensation. We continue to evolve our compensation program based upon feedback we receive during our ongoing shareholder outreach, as well as continual review of market practices. The following program changes and pay decisions demonstrate the direct alignment between the interests of our executive officers and shareholders.

KEY FEATURES OF OUR EXECUTIVE COMPENSATION PROGRAM

The compensation program for our executive officers includes key features that align the interests of our executive officers with our business strategies and goals, as well as the interests of our shareholders. The program does not include features that could misalign these interests.

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EXECUTIVE OFFICER COMPENSATION DECISIONS BASED ON 2016 PERFORMANCE

Compensation for executive officers is determined by the Compensation Committee based on Company performance relative to our peer group, executive officer performance relative to goals, and compensation levels relative to our peer group. Despite the significant positive impact of the closing of the St. Jude Medical acquisition on our stock price (moving Abbott's relative TSR to the top of our peer group at the time the Compensation Committee awarded bonuses and made LTI awards in 2017) and the critical importance of the transaction on our long-term strategy, the pay decisions outlined below did not reflect the impact of the acquisition, as it closed after the end of 2016. Compensation decisions based on 2016 performance were made in February 2017 as follows:

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Base salary increases averaged 1.3%. The CEO did not receive an increase; his base salary was last adjusted in 2010.



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Annual incentive payouts were tied to 2016 operating performance—results were aligned with our goals and the payouts reflect that. Average bonus payouts were 92% of target despite overachievement of goals related to EPS, net income, cash flow, and return on assets targets and 99.8% achievement of the sales goal. Individual payouts were aligned with performance and ranged from 10% to 122% of target.



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Long-term incentive awards are tied to longer-term returns to shareholders—results were low relative to peers and the awards reflect that. The value of 2017 LTI awards was targeted at the 25th percentile of our peer group, consistent with lower relative total shareholder returns through 2016. Individual awards were aligned with individual performance and ranged from the 5th to the 51st percentile. On average, the value of 2017 LTI grants that were awarded to executive officers was 22% less than the value of the 2016 grants, with the CEO receiving 22% less as well. If we had granted at the 50th percentile instead of the 25th, the grant guidelines would have been approximately $2 million higher for the CEO and $650,000 higher for each of the other NEOs.

The impact of these pay decisions on our CEO's compensation is shown in the table below:

CEO Pay Comparison for Performance Years 2015 and 2016

It is important to note that the amounts shown in the Summary Compensation Table (page 44) reflect the annual bonus for 2016 performance, but the LTI awards shown are for 2015 performance. Due to the significantly different LTI amounts granted in 2017 (using the 25^th percentile guidelines) vs. 2016 (using the 50^th percentile guidelines), we have disclosed the 2017 grant in this proxy to aid shareholders in their understanding of our approach to compensation which definitively aligns our LTI grant guidelines with relative TSR (as outlined on page 35).

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BOARD OF DIRECTORS

The Board of Directors regularly monitors best practices in governance and adopts measures that it determines are in the best interest of Abbott and its shareholders. Highlights of our governance practices include:

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10 of the 11 directors nominated for election are independent



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All directors elected annually by majority vote



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Independent lead director since 2005



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No former employees serve as directors



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Executive sessions of independent directors at each regularly scheduled Board meeting



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95% average attendance of all directors at Board and committee meetings in 2016



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Annual succession planning for management



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Annual Board and Board committee self-assessment

The independent directors nominated for election bring diverse and relevant skills, experience, and perspectives.

 

SHAREHOLDER INTERESTS

We actively engage with our shareholders throughout the year to understand and consider issues that matter most to them. During 2016, we conducted outreach with a cross-section of shareholders representing more than 40% of our outstanding shares. We received positive feedback on the following practices:

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Annual "Say on Pay" advisory vote to approve executive compensation



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Proxy Access



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Public Policy Committee oversees corporate political contributions, legal and regulatory compliance, and healthcare compliance



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No shareholder rights plan or "poison pill"

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The Board of Directors recommends a vote FOR the election of each of the following nominees for director. All nominees are currently serving as directors, additional information about each director's background and experience can be found beginning on page 13.

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As an innovative, responsible, and sustainable business, Abbott strives to foster economic, environmental, and social well-being everywhere we operate, in everything we do, and in partnership with others.

Product Excellence—Committed to offering products and services consistent with the highest standards of quality and safety.

Improving Access—Dedicated to creating technologies and products that meet local needs around the world, as well as informing and empowering people to make well-informed choices about healthcare.

Safeguarding the Environment—We've set 2020 goals to significantly reduce our environmental impacts in the areas of carbon dioxide emissions, total water intake and total generated waste.

Our sustainability progress and efforts are recognized by 3rd party organizations.

To learn more about Abbott's sustainability efforts, please visit www.abbott.com/citizenship.

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INFORMATION ABOUT THE ANNUAL MEETING

WHO CAN VOTE

Shareholders of record at the close of business on March 1, 2017 will be entitled to notice of and to vote at the Annual Meeting. As of January 31, 2017, Abbott had 1,727,997,596 outstanding common shares, which are Abbott's only outstanding voting securities. All shareholders have cumulative voting rights in the election of directors and one vote per share on all other matters.

NOTICE AND ACCESS

In accordance with the Securities and Exchange Commission's "Notice and Access" rules, Abbott mailed a Notice of Internet Availability of Proxy Materials (the "Notice") to certain shareholders in mid-March of 2017. The Notice describes the matters to be considered at the Annual Meeting and how the shareholders can access the proxy materials online. It also provides instructions on how those shareholders can vote their shares. If you received the Notice, you will not receive a print version of the proxy materials, unless you request one. If you would like to receive a print version of the proxy materials, free of charge, please follow the instructions on the Notice.

CUMULATIVE VOTING

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. Shareholders may not cumulate their votes against a nominee. If shares are voted cumulatively and there are more nominees than there are director vacancies, nominees who receive the greatest number of votes will be elected. If you wish to cumulate your votes, you must sign and mail in your proxy card or attend the Annual Meeting.

VOTING BY PROXY

All of Abbott's shareholders may vote by mail or at the Annual Meeting. Abbott's By-Laws provide that a shareholder may authorize no more than two persons as proxies to attend and vote at the meeting. Most of Abbott's shareholders may also vote their shares by telephone or the Internet. If you vote by telephone or the Internet, you do not need to return your proxy card. The instructions for voting can be found with your proxy card or on the Notice.

REVOKING A PROXY

You may revoke your proxy by voting in person at the Annual Meeting or, at any time prior to the meeting:

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by delivering a written notice to the Secretary of Abbott,



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by delivering an authorized proxy with a later date, or



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by voting by telephone or the Internet after you have given your proxy.

DISCRETIONARY VOTING AUTHORITY

Unless authority is withheld in accordance with the instructions on the proxy, the persons named in the proxy will vote the shares covered by proxies they receive to elect the 11 nominees named in Item 1 on the proxy card. 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 11 nominees if, in the judgment of the proxy holders, such action is necessary or desirable. The persons named in the proxy may also decide to vote shares cumulatively in their sole discretion so that one or more of the nominees may receive fewer votes than the other nominees (or no votes at all), although they have no present intention of doing so. The proxy holders may not cast your vote for any nominee from whom you have withheld authority to vote.

Where a shareholder has specified a choice for or against the ratification of the appointment of Ernst & Young LLP as auditors, the advisory vote on the approval of executive compensation, the advisory vote on the frequency of shareholder votes on executive compensation, the approval of the Abbott Laboratories 2017 Incentive Stock Program, the approval of the Abbott Laboratories Laboratories 2017 Employee Stock Purchase Plan for Non-U.S. Employees,

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or the approval of a shareholder proposal, or where the shareholder has abstained on these matters, the shares represented by the proxy will be voted (or not voted) as specified. Where no choice has been specified, the proxy will be voted FOR the ratification of Ernst & Young LLP as auditors, FOR the approval of executive compensation, FOR an annual (1 year) shareholder advisory vote on executive compensation, FOR the approval of the Abbott Laboratories 2017 Incentive Stock Program, FOR the approval of the Abbott Laboratories 2017 Employee Stock Purchase Plan for Non-U.S. Employees, and AGAINST the shareholder proposal.

The Board of Directors is not aware of any other issue which may properly 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.

QUORUM AND VOTE REQUIRED TO APPROVE EACH ITEM ON THE PROXY

A majority of the outstanding shares entitled to vote on a matter, represented in person or by proxy, constitutes a quorum for consideration of that 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.

EFFECT OF WITHHOLD VOTES, BROKER NON-VOTES, AND ABSTENTIONS

Shares represented by proxies which are present and entitled to vote on a matter but which have elected to withhold authority to vote for one or more directors or to abstain from voting on another matter will have the effect of votes against those directors or that matter. A proxy submitted by an institution, such as a broker or bank that holds shares for the account of a beneficial owner, may indicate that all or a portion of the shares represented by that proxy are not being voted with respect to a particular matter. This could occur, for example, when the broker or bank is not permitted to vote those shares in the absence of instructions from the beneficial owner of the shares. These "non-voted shares" will be considered shares not present and, therefore, not entitled to vote on those matters, although these shares may be considered present and entitled to vote for other purposes. Brokers and banks have discretionary authority to vote shares in absence of instructions on matters the New York Stock Exchange considers "routine", such as the ratification of the appointment of the auditors. They do not have discretionary authority to vote shares in absence of instructions on "non-routine" matters. The election of directors and the advisory vote on the approval of executive compensation are "non-routine" matters. Non-voted shares will not affect the determination of the outcome of the vote on any matter to be decided at the meeting.

INSPECTORS OF ELECTION

The inspectors of election and the tabulators of all proxies, ballots, and voting tabulations that identify shareholders are independent and are not Abbott employees.

COST OF SOLICITING PROXIES

Abbott will bear the cost of making solicitations from its shareholders and will reimburse banks and brokerage firms for out-of-pocket expenses incurred in connection with this solicitation. Proxies may be solicited by mail, telephone, Internet, or in person by directors, officers, or employees of Abbott and its subsidiaries.

Abbott has retained Georgeson LLC to aid in the solicitation of proxies at an estimated cost of $19,500 plus reimbursement for reasonable out-of-pocket expenses.

ABBOTT LABORATORIES STOCK RETIREMENT PLAN

Participants in the Abbott Laboratories Stock Retirement Plan will receive voting instructions for their shares held in the Abbott Laboratories Stock Retirement Trust. The Stock Retirement Trust is administered by both a trustee and an Investment Committee. The trustee of the Trust is The Northern Trust Company. The members of the Investment Committee are Stephen R. Fussell, Karen M. Peterson, and Brian P. Wentworth, employees of Abbott. The voting power with respect to the shares is held by and shared between the Investment Committee and the participants. The Investment Committee must solicit voting instructions from the participants and follow the voting instructions it receives. The Investment Committee may use its own discretion with respect to those shares for which no voting instructions are received.

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CONFIDENTIAL VOTING

It is Abbott'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:

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where disclosure may be required by law or regulation,



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where disclosure may be necessary in order for Abbott to assert or defend claims,



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where a shareholder provides comments with a proxy,



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where a shareholder expressly requests disclosure,



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to allow the inspectors of election to certify the results of a vote, or



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in other limited circumstances, such as a contested election or proxy solicitation not approved and recommended by the Board of Directors.

HOUSEHOLDING OF PROXY MATERIALS

Shareholders sharing an address may receive only one copy of the proxy materials or the Notice of Internet Availability of Proxy Materials, unless their broker, bank, or other intermediary has received contrary instructions from any shareholder at that address. This is known as "householding." Shareholders wishing to discontinue householding and receive separate copies of the proxy materials or the Notice of Internet Availability of Proxy Materials should notify their broker, bank, or other intermediary.

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NOMINEES FOR ELECTION AS DIRECTORS

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THE BOARD OF DIRECTORS AND ITS COMMITTEES

The Board of Directors held 11 meetings in 2016. The average attendance of all directors at Board and committee meetings in 2016 was ninety-five percent and each director attended at least seventy-five percent of the total number of Board meetings and meetings of the committees on which he or she served. Abbott encourages its Board members to attend the annual shareholders meeting. Last year, all of Abbott's directors attended the annual shareholders meeting.

The Board has determined that each of the following directors is independent in accordance with the New York Stock Exchange listing standards: R. J. Alpern, R. S. Austin, S. E. Blount, W. J. Farrell, E. M. Liddy, N. McKinstry, P. N. Novakovic, W. A. Osborn, S. C. Scott III, D. J. Starks, and G. F. Tilton. To determine independence, the Board applied the categorical standards attached as Exhibit A to this proxy statement. The Board also considered whether a director has any other material relationships with Abbott or its subsidiaries and concluded that none of these directors had a relationship that impaired the director's independence. This included consideration of the fact that some of the directors are officers or serve on boards of companies or entities to which Abbott sold products or made contributions or from which Abbott purchased products and services during the year. In making its determination, the Board relied on both information provided by the directors and information developed internally by Abbott.

The Board has risk oversight responsibility for Abbott and administers this responsibility both directly and with assistance from its committees.

The Board has determined that the current leadership structure, in which the offices of Chairman and Chief Executive Officer are held by one individual and an independent director acts as lead director, ensures the appropriate level of oversight, independence, and responsibility is applied to all Board decisions, including risk oversight, and is in the best interests of Abbott and its shareholders.

Chairman/Chief Executive Officer

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Coherent leadership and direction for the Board and executive management



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Clear accountability and a single focus for the chain of command to execute our strategic initiatives and business plans



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CEO's extensive industry expertise, leadership experience, and familiarity with our business



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By leading management and chairing the Board, we benefit from our CEO's strategic and operational insights, enabling a focused vision encompassing the full range, from long-term strategic direction to day-to-day execution

Lead Independent Director

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Currently, the Chairman of the Nominations and Governance Committee acts as the lead director



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Chosen by and from the independent members of the Board of Directors, and serves as the liaison between the Chairman of the Board and the independent directors



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Facilitates communication with the Board and presides over regularly conducted executive sessions of the independent directors or sessions where the Chairman of the Board is not present



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Reviews and approves matters, such as agenda items, schedule sufficiency, and, where appropriate, information provided to other Board members



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Has the authority to call meetings of the independent directors and, if requested by major shareholders, ensures that he or she is available for consultation and direct communication



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The lead director, and each of the other directors, communicates regularly with the Chairman and Chief Executive Officer regarding appropriate agenda topics and other Board related matters

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The Nominations and Governance Committee assists the Board of Directors in identifying individuals qualified to become Board members and recommends to the Board the nominees for election as directors at the next annual meeting of shareholders. The process used by the Nominations and Governance Committee to identify a nominee to serve as a member of the Board of Directors depends on the qualities being sought. From time to time, Abbott engages an executive search firm to assist the Committee in identifying individuals qualified to be Board members.

Abbott's outline of directorship qualifications, which as part of Abbott's corporate governance guidelines, is available in the corporate governance section of Abbott's investor relations website (www.abbottinvestor.com). These qualifications describe specific characteristics that the Nominations and Governance Committee and the Board take into consideration when selecting nominees for the Board, such as: strong management experience and senior level experience in medicine, hospital administration, medical and scientific research and development, finance, international business, government, and academic administration. An individual nominee is not required to satisfy all the characteristics listed in the outline of directorship qualifications and there is no requirement that all such characteristics be represented on the Board.

In addition, Board members should have backgrounds that, when combined, provide a portfolio of experience and knowledge that will serve Abbott's governance and strategic needs. Board candidates will be considered on the basis of a range of criteria, including broad-based business knowledge and relationships, prominence, and excellent reputations in their primary fields of endeavor, as well as a global business perspective and commitment to good corporate citizenship. Directors should have demonstrated experience and ability that is relevant to the Board of Directors' oversight role with respect to Abbott's business and affairs. Each director's biography includes the particular experience and qualifications that led the Board to conclude that the director should serve on the Board. The directors' biographies are on pages 13 through 18.

A description of the procedure for the recommendation and nomination of directors, including by proxy access, is on page 86.

In the process of identifying nominees to serve as a member of the Board of Directors, the Nominations and Governance Committee considers the Board's diversity of relevant experience, areas of expertise, ethnicity, gender, and geography and assesses the effectiveness of the process in achieving that diversity. Fifty percent of the independent directors nominated for election are women or minorities.

The process used to identify and select nominees has resulted in an experienced, diverse, and well-rounded Board of Directors that possesses the skills and perspectives necessary for its oversight role. All of Abbott's directors exhibit:

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The following table details some of the attributes, skills, and experience represented on Abbott's Board of Directors.

Other Abbott Independent Director Metrics

The independent directors nominated for election bring diverse and relevant skills, experience, and perspectives.

 

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The Board of Directors has five committees established in Abbott's By-Laws: Audit Committee, Compensation Committee, Nominations and Governance Committee, Public Policy Committee, and Executive Committee. Each of the members of the Audit Committee, Compensation Committee, Nominations and Governance Committee, and Public Policy Committee is independent.

Audit Committee

The Audit Committee assists the Board of Directors in fulfilling its oversight responsibility with respect to Abbott's accounting and financial reporting practices and the audit process; the quality and integrity of Abbott's financial statements; the independent auditors' qualifications, independence, and performance; the performance of Abbott's internal audit function and internal auditors; and certain areas of legal and regulatory compliance. The Committee is governed by a written charter. A copy of the report of the Audit Committee is on page 62.

Compensation Committee

The Compensation Committee assists the Board of Directors in carrying out the Board's responsibilities relating to the compensation of Abbott's executive officers and directors. The Committee is governed by a written charter. The Compensation Committee annually reviews the compensation paid to the members of the Board and gives its recommendations to the full Board regarding both the amount of director compensation that should be paid and the allocation of that compensation between equity-based awards and cash. In recommending director compensation, the Compensation Committee takes comparable director fees into account and reviews any arrangement that could be viewed as indirect director compensation.

This Committee also reviews, approves, and administers the incentive compensation plans in which any executive officer of Abbott participates and all of Abbott's equity-based plans. It may delegate the responsibility to administer and make grants under these plans to management, except to the extent that such delegation would be inconsistent

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with applicable law or regulation or with the listing rules of the New York Stock Exchange. The processes and procedures used for the consideration and determination of executive compensation are described in the section of the proxy captioned, "Compensation Discussion and Analysis."

The Compensation Committee has the sole authority, under its charter, to select, retain, and/or terminate independent compensation advisors. The Committee engaged Meridian as its compensation consultant for 2016. Meridian performs no other work for Abbott. The Committee engages compensation consultants to provide counsel and advice on executive and non-employee director compensation matters. The consultant and its principal report directly to the Chair of the Committee. The principal meets regularly and as needed with the Committee in executive sessions, has direct access to the Chair during and between meetings, and performs no other services for Abbott or its senior executives. The Committee determines what variables it will instruct the consultant to consider, and they include: peer groups against which performance and pay should be examined, financial metrics to be used to assess Abbott's relative performance, competitive long-term incentive practices in the marketplace, and compensation levels relative to market practice. The Committee negotiates and approves any fees paid to the consultant for these services. Based on its evaluation of Meridian's independence in accordance with the New York Stock Exchange listing standards and information provided by Meridian, the Committee determined that the work performed by Meridian does not present any conflicts of interest. A copy of the Compensation Committee report is on page 41.

Nominations and Governance Committee

The Nominations and Governance Committee assists the Board of Directors in identifying individuals qualified to become Board members and recommends to the Board the nominees for election as directors at the next annual meeting of shareholders; recommends to the Board the people to be elected as executive officers of Abbott; develops and recommends to the Board the corporate governance guidelines applicable to Abbott; and serves in an advisory capacity to the Board and the Chairman of the Board on matters of organization, management succession plans, major changes in the organizational structure of Abbott, and the conduct of Board activities. The Committee is governed by a written charter. The process used by this Committee to identify a nominee to serve as a member of the Board of Directors depends on the qualities being sought. From time to time, Abbott engages an executive search firm to assist the Committee in identifying individuals qualified to be Board members. The process used by the Committee to identify nominees is described on page 20 in the section captioned, "Director Selection."

Public Policy Committee

The Public Policy Committee assists the Board of Directors in fulfilling its oversight responsibility with respect to Abbott's public policy, certain areas of legal and regulatory compliance, and governmental affairs and healthcare compliance issues that affect Abbott. The Committee is governed by a written charter.

Executive Committee

The Executive Committee may exercise all the authority of the Board in the management of Abbott, except for matters expressly reserved by law for Board action.

Interested parties may communicate with the Board of Directors by writing a letter to the Chairman of the Board, to the Chairman of the Nominations and Governance Committee, who acts as the lead director at the meetings of the independent directors, or to the independent directors c/o Abbott Laboratories, 100 Abbott Park Road, D-364, AP6D, Abbott Park, Illinois 60064-6400, Attention: Corporate Secretary. The General Counsel and Corporate Secretary regularly forwards to the addressee all letters other than mass mailings, advertisements, and other materials not relevant to Abbott's business. In addition, directors regularly receive a log of all correspondence received by the Company that is addressed to a member of the Board and may request any correspondence on that log.

Abbott's corporate governance guidelines, outline of directorship qualifications, director independence standards, code of business conduct, and the charters of Abbott's Audit Committee, Compensation Committee, Nominations and Governance Committee, and Public Policy Committee are all available in the corporate governance section of Abbott's investor relations website (www.abbottinvestor.com).

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Our CEO is not compensated for serving on the Board or Board committees. Abbott's remaining directors, who are all non-employee directors, are compensated for their service under the Abbott Laboratories Non-Employee Directors' Fee Plan and the Abbott Laboratories 2009 Incentive Stock Program.

The following table sets forth a summary of the non-employee directors' 2016 compensation. Mr. Starks joined the Board in 2017 and did not receive any director compensation from Abbott in 2016.

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SECURITY OWNERSHIP OF EXECUTIVE OFFICERS AND DIRECTORS

The table below reflects the number of Abbott common shares beneficially owned as of January 31, 2017, (other than Mr. Starks for whom the date is February 16, 2017) by each director, the Chief Executive Officer, the Chief Financial Officer, and the three other most highly paid executive officers (the "named officers"), and by all directors and executive officers of Abbott as a group. It also reflects the number of stock equivalent units held by non-employee directors under the Abbott Laboratories Non-Employee Directors' Fee Plan and restricted stock units held by non-employee directors and executive officers.

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EXECUTIVE COMPENSATION

INTRODUCTION

This Compensation Discussion and Analysis (CD&A) describes Abbott's executive compensation program in 2016. While the Summary Compensation Table on page 44 provides the required disclosures for this proxy statement, we will also discuss the LTI grant made in February 2017, since that grant was based on 2016 performance. The LTI grant disclosed in the Summary Compensation Table was made in February 2016 and was based on 2015 performance.

In particular, this CD&A explains how the Compensation Committee (the Committee) and Board of Directors made its compensation decisions for the Company's executives, including the five named officers: Miles D. White, Chairman of the Board and Chief Executive Officer; Thomas C. Freyman, Executive Vice President, Finance and Administration; Brian B. Yoor, Executive Vice President, Finance and Chief Financial Officer; Brian J. Blaser, Executive Vice President, Diagnostic Products; and Michael J. Warmuth, Executive Vice President, Established Pharmaceuticals. Mr. Freyman has retired.

The CD&A also describes the pay philosophy the Committee has established for the Company's executive officers, the process the Committee utilizes to examine performance in the context of executive pay decisions, the performance goals and results for each named officer, and recent updates to our compensation program.

2016 PERFORMANCE

In 2016, Abbott achieved its financial commitments and operational goals and continued to shape the company for balance, breadth, and sustainable leadership to ensure we are in the right businesses that provide the best opportunities for future growth.

Abbott achieved the financial commitments and operational goals set forth at the beginning of the year:

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Named executive officers overacheived their goals related to EPS, net income, return on assets, and free cash flow, while achieving their goals related to sales at 99.8% or greater.



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Raised the dividend by nearly 7%, marking Abbott's 93^rd consecutive year of dividends paid and the 45^th straight year the dividend has been increased.



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Returned approximately $2.1 billion to Abbott shareholders through dividends and share repurchases.



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Re-invested more than $1.1 billion in Abbott through internal capital spending.

Abbott also initiated two major strategic decisions in 2016 to shape the company for maximum competitiveness with the divestment of Abbott Medical Optics and the acquisition of St. Jude Medical, which caps an almost 20-year process through which we have deliberately built one of the world's premier cardiac care businesses, as well as broad-based medical device leadership.

Despite the strong operational results and important strategic actions in 2016, Abbott's returns to shareholders on a 1-, 3- and 5-year basis were in the lower quartile relative to our peers. Consistent with Abbott's philosophy to align compensation with performance, these relatively lower total shareholder returns resulted in significantly below market long-term incentive grants for 2017.

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PAY DECISIONS BASED ON 2016 PERFORMANCE

In February 2017, our Compensation Committee made pay decisions for our executive officers based on the design of our programs and our performance in 2016. Despite the significant positive impact of the closing of the St. Jude Medical acquisition on our stock price (moving Abbott's relative TSR to the top of our peer group at the time the Compensation Committee awarded bonuses and made LTI awards in 2017) and the critical importance of the transaction on our long-term strategy, the pay decisions outlined below did not reflect the impact of the acquisition, as it closed after the end of 2016. The results of those pay decisions were as follows:

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Base salary increases averaged 1.3%. The CEO did not receive an increase; his base salary was last adjusted in 2010.



•

Average bonus payouts were 92% of target despite overachievement of goals related to EPS, net income, cash flow, and return on assets targets and 99.8% achievement of the sales target. Individual payouts were aligned with individual performance and ranged from 10% to 122% of target.



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The value of 2017 LTI awards was targeted at the 25th percentile of our peer group, consistent with lower relative total shareholder returns through 2016. Individual awards were aligned with individual performance and ranged from the 5th to the 51st percentile. On average, the value of 2017 LTI grants that were awarded to executive officers was 22% less than the value of the 2016 grants, with the CEO receiving 22% less as well. If we had granted at the 50th percentile instead of the 25th, the grant guidelines would have been approximately $2 million higher for the CEO and $650,000 higher for each of the other NEOs.

It is important to note that the amounts shown in the Summary Compensation Table (page 44) reflect the annual bonus for 2016 performance, but the LTI awards shown are for 2015 performance. Due to the significantly different LTI amounts granted in 2017 (using the 25th percentile guidelines) vs. 2016 (using the 50th percentile guidelines), we have disclosed the 2017 grant in this proxy to aid shareholders in their understanding of our approach to compensation which definitively aligns our LTI grant guidelines with relative TSR (as outlined on page 35).

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Abbott and its Compensation Committee have designed a compensation program to attract and retain executives whose talent and contributions support and advance the profitable growth of the Company and growth in shareholder value. The program is designed to be:

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Competitive: While we target competitive total compensation, actual payouts vary based upon Company and individual performance. The Compensation Committee sets LTI awards based on relative Company performance. Each year, we look at LTI market percentiles between the 10^th and the 90^th to determine appropriate award levels. Actual pay reflects actual performance relative to peers.



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Aligned to our shareholders' interests: Almost two-thirds of our pay is equity-based, directly tying a significant portion of executive compensation to shareholder returns.



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Performance-based: Other than base salary, which is the smallest component of our executives' compensation, all remaining components of Total Direct Compensation (i.e., annual cash incentive, performance-based restricted stock awards, and stock options) are aligned with Company and/or division performance.



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Balanced: Short- and long-term objectives focus our executives on actions that create value today while building for sustainable future success. Our compensation program rewards the achievement of short-term goals and milestones that will accelerate our success over the long-range plan.



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Annual incentive payouts are tied to current year operating performance vs. goals



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Long-term incentive awards are tied to longer-term returns to shareholders relative to peers and sustained performance

TOTAL COMPENSATION MIX

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Last year, 94% of our shareholders approved the compensation of our named executive officers. During 2016, we conducted outreach with a cross-section of shareholders representing more than 40% of our outstanding shares. In those meetings, we discussed our pay programs broadly, including aspects that were previously subject to shareholder resolutions. Based on shareholder discussions and recommendations, the Committee, during its annual evaluation of the Company's compensation programs and evolving market practices, made several changes to our programs.

These recent changes continue our practice of evolving our program based upon shareholder feedback as well as a review of market practices. Over the past several years, we have made numerous other changes to our program, including:

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Using three performance assessments to determine the amount of equity awards:



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Relative TSR (compared to peer companies)—Determines, as an aggregate target, where our equity grant guidelines should be positioned relative to the market



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Individual performance—Determines individual officer awards based on equity grant guidelines (grant guideline x individual performance factor)



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The ROE target—Ensures that performance has been sustained before awards vest



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Granting equity awards with double-trigger vesting in the event of a change in control



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Eliminating tax gross-ups in our executive officer pay program



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Engaging a Compensation Committee consultant that performs no other work for Abbott



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Adding a share retention requirement which applies until share ownership guidelines are met



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Revising executive share ownership guidelines:



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Chief Executive Officer—6 times base salary



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Executive Vice President/Senior Vice President—3 times base salary



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All other officers—2 times base salary

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The Committee makes compensation decisions in the context of the objectives of our program. The Committee ensures the compensation delivered to our executives is competitive, based on performance, balanced between the short- and long-term, aligned with shareholder interests, and does not encourage excessive risk-taking.

BENCHMARKING USING PEER COMPANIES

To determine the competitiveness of our compensation and benefit programs, the Committee, in consultation with its independent consultant, annually compares the level of compensation, market pay practices, and our relative performance to those of peer companies.

Our shareholders compare us to other global multinational companies, not necessarily in healthcare. These companies share similar characteristics aligned with our investment identity of diversified growth and returns to shareholders.

Our peer group was selected to strike the appropriate balance between size (both revenues and market capitalization), return profiles, geographic breadth, and management and operating structure. The peer group purposely includes companies that are outside the healthcare industry.

In selecting our peer group for performance and compensation benchmarking, we considered:

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Globally diverse manufacturing-driven organizations with significant international operations



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Consumer-facing organizations



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Similar financial and operating measures, including market capitalization, revenue, and number of employees



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Similar return of cash profiles, including dividends and share repurchases



•

Similar geographic mix of revenues and profits

In 2016, the Committee reviewed the peer group with its consultant and reaffirmed that these companies continue to represent an appropriate peer group. This group has been overwhelmingly supported by our investors during shareholder outreach.

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This peer group is summarized below, showing the primary characteristics for which each company was selected.

FIXED PAY—BASE SALARY

Base salary targets are set using the median of the peer group as an initial benchmark. Specific pay rates are based on an executive's performance, experience, contribution, unique skills, and internal equity with others at Abbott. Base salaries range from the 10^th to the 90^th percentile of the peer group, depending on experience, expertise, unique role requirements, and tenure. The average base salary of our executive officers was approximately at the market median. Once the rate of pay is set at the time of hire or upon promotion, subsequent changes in pay, including salary increases, are based on the executive's performance, the job he or she is performing, internal equity, and the Company's operating budget.

PERFORMANCE-BASED PAY

Abbott's primary performance-based compensation programs for executive officers are the annual cash incentive plan and the long-term incentive plan. These plans are described in more detail on the following pages. It is important to note that the annual and long-term incentive performance measures differ both in terms of the measures and the period over which results are assessed. However, both plans are formula-driven based on specific operating, strategic, and leadership results.

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ANNUAL CASH INCENTIVE PLAN (PERFORMANCE INCENTIVE PLAN)

Our annual cash incentive plan is a key part of our officers' total compensation. It rewards executives for achieving specific annual goals at the corporate and divisional levels. It also rewards executives for achieving operational and strategic goals.

During 2016, Abbott's five named officers participated in the 1998 Abbott Laboratories Performance Incentive Plan (PIP), which is designed to comply with the requirements of Section 162(m) of the Internal Revenue Code of 1986 for performance-based compensation.

Annual Cash Incentives Are Capped

Each year, the Committee sets the maximum award allocations under the PIP for each named officer as a percentage of consolidated net earnings. For 2016, the maximum award for the Chief Executive Officer was 0.15% of adjusted consolidated net earnings for the fiscal year-end and, for all of the other named officers, 0.075% of adjusted consolidated net earnings. Historically and in 2016, the Committee exercised its discretion to deliver PIP awards that were substantially below the maximum awards that are authorized by these formulas based on achieved performance against annual goals and other factors described below.

Process to Determine Awards

Under the PIP, the Committee sets a target payout (expressed as a percentage of base salary) for each officer based upon market benchmarks and internal equity. The final payout is determined based upon operating performance relative to annual goals. This process is described below. In 2016, annual incentive payouts for Abbott's executive officers ranged from 10% to 122% of target, with an average of 92% of target.

Step One: Fund Annual Incentive Pool Based on EPS Achievement

In order for the PIP to pay out, the EPS goal (see 2016 Performance Goals for Performance Incentive Plan on page 38) must be achieved. If the EPS goal is not achieved, then the PIP is not funded and there are no payouts.

Step Two: Assess Individual Performance vs. Goals

Individual goals are finalized at the beginning of each year based upon each executive officer's responsibilities. The weighting of goals depends upon whether the executive is a Business Unit leader or a Corporate leader, as follows:

Sales Growth Goals—To stress the importance of top-line growth, each officer is measured against Abbott's internal targets, which are established to exceed peer group growth rates.

Sales growth performance required to earn payouts above 100% varies by business to reflect each business's market. To exceed a target payout in Sales Growth, the business must grow market share, exceeding both peer sales growth rates and Abbott's internal targets.

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Financial Return Goals–While top-line growth is important, that growth must be profitable in order to drive value for our shareholders. To stress the importance of profitability, each officer is assessed on relevant return goals, primarily earnings, margin contribution, and cash flow.

Financial return performance required to earn payouts above 100% of target varies by business to reflect each business's market and operating environment.

Strategic Initiative Goals–Strategic initiative goals are primarily related to key planned strategic actions, such as portfolio expansion, key R&D milestones, gross margin expansion, and entry into new markets. Strategic goals are set such that fully successful achievement of the goals results in a 100% payout with no additional upside. Lower levels of achievement result in payouts of 75%, 50%, or 0% of target.

Leadership Goals–Leadership goals are primarily related to talent and succession planning initiatives. These goals are focused on stabilizing business leadership gaps, ensuring businesses have the talent they need to perform in the current period, and building our leadership bench to sustain our performance. Leadership goals are set such that fully successful achievement of the goals results in a 100% payout with no additional upside. Lower levels of achievement result in payouts of 75%, 50%, or 0% of target.

The following formula summarizes the PIP payout process, assuming the EPS goal is achieved.

For example:

Based on performance against goals, 2016 cash incentive payouts ranged from the 5^th percentile to the 90^th percentile of our peer group. The average 2016 cash incentive payout for our executive officers was at the 60^th percentile of our peer group.

LONG-TERM INCENTIVE PLAN (LTI)

Our long-term incentive plan is the largest component of our executive officers' total compensation. As such, we believe it is critical that LTI performance goals reflect Company and individual performance, on both an absolute and relative basis. The LTI process used in February 2016 (described below) resulted in annual grants to executive officers ranging from the 30^th percentile to the 68^th percentile of our peer group, with an average of the 48^th percentile. A preview of the February 2017 grant (which will be disclosed in our 2018 Summary Compensation table) is also described below.

Process to Determine Awards

Our process for determining guidelines, individual awards, and vesting of those awards incorporates:

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TSR performance relative to our peers on a one-, three-, and five-year basis

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Individual officer achievement of three-year sales, profitability, and strategic goals

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Each officer's performance relative to other officers

This process is far more rigorous than automatically granting LTI at the median of the market and adjusting the awards only for relative TSR at the end of the performance cycle to determine the extent to which awards vest.

We followed a rigorous two-stage process to determine the size of LTI awards ultimately granted to our executive officers:

Stage One: Determine LTI Awards
Stage Two: Determine if Options and Shares Vest

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Stage One: Determine LTI Awards

In order to determine LTI awards, Abbott follows three steps.

Step A—Company LTI Award Guidelines—Abbott obtains survey data annually to assess the competitive LTI market for our peer group companies for each executive position. Each year, we position our LTI award guidelines relative to the competitive LTI market by comparing Abbott's TSR performance to our peers. While most of our peer companies simply set their annual LTI level at the 50^th percentile of market, the following chart shows definitively how we adjust our LTI grant guidelines to align with our relative TSR performance. For example, grants made in February 2017 were granted at the 25^th percentile of our peer group as illustrated in the 2016 Performance Year consistent with our relatively lower TSR vs. peers. These grants will be disclosed in the 2018 Summary Compensation Table.

Step B—Determine Individual Officer Awards—The recommendation for each officer starts with the Company LTI award guideline (based on relative TSR performance as described above) for the officer's position, as established in Step A. Individual officer awards are then further adjusted up or down based upon assessment of their achievement of individual goals related to

1)

Three Year Sales and Market Growth

2)

Three Year Margin Contribution

3)

Three Year Strategic Milestones

Each officer is assigned an overall score based on whether they missed, achieved, or exceeded the specific targets in all three measures for all three years. That resulting assessment score determines the LTI performance adjustment.

Awards granted in 2016, based on individual officer performance in 2015, resulted in awards ranging from 75% to 125% of guideline award levels, with an average of 100% of guideline. These awards combined with the 50^th percentile guidelines resulted in annual grants to Abbott executive officers ranging from the 30^th percentile to the 68^th percentile of our peer group, with an average of the 48^th percentile.

Awards granted in 2017, based on individual officer performance in 2016, resulted in awards ranging from 26% to 135% of guideline award levels, with an average of 98% of guideline. These awards combined with the 25^th percentile guidelines resulted in annual grants to Abbott executive officers ranging from the 5^th percentile to the 51^st percentile of our peer group, with an average of the 27^th percentile.

Step C—Convert Individual LTI Award Values to Equity Grants—In 2016, to recognize the continued growth focus of Abbott and to directly align the interests of executive officers with the interests of our shareholders, the Compensation Committee granted the long-term incentive awards in the form of 50% stock options and 50% performance-restricted shares. This mix is consistent with the practices of our peer group and was continued for our grants in 2017.

Stage Two: Determine if Options and Shares Vest

Stock options vest over three years. Since stock options only accrue value through share price appreciation, the value realized upon the exercise of vested stock options directly aligns the compensation earned with the value shareholders received over the same period of time. Options are also aligned with shareholder value through the impact of relative TSR in determining the size of awards granted (Stage One).

Performance-restricted shares vest ¹/3 each year that the performance target is achieved. Vesting is absolute–either 100% or 0%. There is no partial vesting if the target is missed or additional vesting upside if the Company over-performs. The Committee believes adjusted return on equity (ROE) is the appropriate performance measure for vesting because ROE measures how much profit the Company generates over the long-term with the capital that shareholders have invested.

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Although Company TSR performance and individual officer performance are used in Stage One to grant the appropriate award level, the focus on ROE for vesting provides a second shareholder protection to ensure our growth and investment return objectives are sustained after the initial grant is made. ROE is only used for vesting; it is not used in the determination of LTI award guidelines or individual officer performance.

PAY DECISIONS FOR NAMED EXECUTIVE OFFICERS

The following pages highlight the rationale for the pay decisions for each named officer. It is important to note that annual incentive pay decisions were made in early 2017 based on 2016 results. Long-term incentive decisions (options and performance shares) shown in the Summary Compensation Table of this proxy statement were made in early 2016 based on 2015 results (see prior year proxy statement for discussion of 2015 results). We have also included information about our February 2017 LTI grants since they were based on 2016 TSR performance and were significantly lower than those made in 2016. Specific 2016 financial goals are detailed on page 38.

Despite the significant positive impact of the closing of the St. Jude Medical acquisition on our stock price (moving Abbott's relative TSR to the top of our peer group at the time the Compensation Committee awarded bonuses and made LTI awards in 2017) and the critical importance of the transaction on our long-term strategy, the pay decisions outlined below did not reflect the impact of the acquisition, as it closed after the end of 2016.

Miles D. White

Base Salary–No increase.

Performance Incentive Plan–Mr. White's target bonus is 175% of base salary, which is equal to the median of our peer group (appropriate given his long and successful tenure). Based on performance in 2016, Mr. White received a bonus in February 2017 of $3,200,000, which was equal to 96% of his target bonus. This payout reflects his goal achievement, including 131% achievement of his free cash flow goal, overachievement of his return goals, 99.8% achievement of his sales growth goal, and overcoming significant headwinds such as the impact of a strong dollar in global markets.

Long-Term Incentives–Based on performance in 2015, Mr. White received an LTI award in February 2016 with a value of $10,499,287, which was equal to approximately 100% of his 50^th percentile LTI award guideline. This award reflects Abbott's sustained strong financial returns, including exceeding its adjusted EPS growth commitments and consistently meeting or beating earnings targets annually for the past 14 years, as well as Mr. White's significant additional strategic and operational achievements, including completing the sale of the Established Pharmaceuticals developed markets business to Mylan and overcoming significant currency headwinds.

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Based on performance in 2016, Mr. White received an LTI award in February 2017 with a value of $8,199,521, which was equal to approximately 100% of his 25^th percentile LTI award guideline. Additional details regarding that award will be included in Abbott's 2018 proxy statement.

Thomas C. Freyman

Base Salary–Mr. Freyman received a base salary increase of 3% in March 2016. His last base salary increase was in 2013.

Performance Incentive Plan–Mr. Freyman's target bonus is 110% of his base salary. Based on performance in 2016, Mr. Freyman received a bonus in February 2017 of $1,347,500, which was equal to 122% of his target bonus. This payout reflects his goal achievement for 2016, including 131% achievement of his free cash flow goal, overachievement of his return goals, and 99.8% achievement of his sales growth goal. Mr. Freyman's strategic and leadership goals for 2016 included M&A activity support, transformation of the finance organization, and financial system conversions. His payout reflected achievement of his strategic and leadership goals in most respects.

Long-Term Incentives–Based on performance in 2015, Mr. Freyman received an LTI award in February 2016 with a value of $4,249,699, which was equal to approximately 125% of his 50^th percentile LTI award guideline. This award reflects the sustained overachievement of his strategic and financial return goals.

Mr. Freyman retired in March 2017 and he did not receive an LTI award.

Brian B. Yoor

Base Salary–Mr. Yoor's annual base salary was increased from $500,000 to $600,000 in March 2016 in connection with his transition to Senior Vice President, Chief Financial Officer.

Performance Incentive Plan–Mr. Yoor's target bonus was increased in 2016 from 90% to 100% of his base salary in connection with his transition to Senior Vice President, Chief Financial Officer. Based on performance in 2016, Mr. Yoor received a bonus in February 2017 of $622,800, which was equal to 104% of his target bonus. This payout reflects his goal achievement for 2016, including 131% achievement of his free cash flow goal, overachievement of his return goals, and 99.8% achievement of his sales growth goal. Mr. Yoor's strategic and leadership goals for 2016 included M&A activity support, transformation of the finance organization, and implementation of key financing and cash flow improvement initiatives. His payout reflected achievement of his strategic and leadership goals in most respects.

Long-Term Incentives–Based on performance in 2015, Mr. Yoor received an LTI award in February 2016 with a value of $1,869,840, which was equal to approximately 110% of his 50^th percentile LTI award guideline. This award reflects the sustained overachievement of his financial return and strategic goals.

Based on performance in 2016, Mr. Yoor received an LTI award in February 2017 with a value of $1,754,877, which was equal to 90% of his 25^th percentile LTI award guideline. Additional details regarding that award will be included in Abbott's 2018 proxy statement.

Brian J. Blaser

Base Salary–Mr. Blaser received a base salary increase of 3% in March 2016. His last base salary increase was in 2014.

Performance Incentive Plan–Mr. Blaser's target bonus is 105% of his base salary. Based on performance in 2016, Mr. Blaser received a bonus in February 2017 of $664,300, which was equal to 91% of his target bonus. This payout reflects his 2016 goal achievement, including achievement of his sales and margin goals. Mr. Blaser's strategic and leadership goals for 2016 included delivery and launch of new technology platforms, clinical milestones, and M&A activity. His payout reflected achievement of his strategic and leadership goals in most respects.

Long-Term Incentives–Based on performance in 2015, Mr. Blaser received an LTI award in February 2016 with a value of $3,124,792, which was equal to 125% of his 50^th percentile LTI award guideline. This award reflects the sustained overachievement of his financial return goals.

Based on performance in 2016, Mr. Blaser received an LTI award in February 2017 with a value of $2,339,846, which was equal to 120% of his 25^th percentile LTI award guideline. Additional details regarding that award will be included in Abbott's 2018 proxy statement.

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Michael J. Warmuth

Base Salary–Mr. Warmuth received a base salary increase of 3% in March 2016. His last base salary increase was in 2014.

Performance Incentive Plan–Mr. Warmuth's target bonus is 105% of his base salary. Based on performance in 2016, Mr. Warmuth received a bonus in February 2017 of $730,000, which was equal to 100% of his target bonus. This payout reflects his 2016 goal achievement, including overachievement of his sales and margin goals. Mr. Warmuth's strategic and leadership goals for 2016 included M&A activity, development of key products in priority markets, improvements in channel management. His payout reflected achievement of his strategic and leadership goals in most respects.

Long-Term Incentives–Based on performance in 2015, Mr. Warmuth received an LTI award in February 2016 with a value of $2,749,806, which was equal to 110% of his 50^th percentile LTI award guideline. This award reflects the sustained overachievement of his strategic and sales goals.

Based on performance in 2016, Mr. Warmuth received an LTI award in February 2017 with a value of $2,632,337, which was equal to 135% of his 25^th percentile LTI award guideline. Additional details regarding that award will be included in Abbott's 2018 proxy statement.

2016 PERFORMANCE GOALS FOR PERFORMANCE INCENTIVE PLAN

DISCUSSION OF NAMED OFFICERS' ACHIEVEMENT OF GOALS DURING 2016

FINANCIAL GOALS

The results shown below reflect an increase of 4.8% in operational sales excluding the impact of foreign exchange and an increase of 2.3% in adjusted diluted EPS from continuing operations. For a reconciliation to GAAP, see Annex 1.

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BENEFITS AND PERQUISITES

Each of the benefits described below was designed to support the Company's objective of providing a competitive total pay program. Individual benefits do not directly affect decisions regarding other benefits or pay components, except to the extent that benefits and pay components must, in aggregate, be competitive, as previously discussed.

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SHARE OWNERSHIP AND RETENTION GUIDELINES

To further promote sustained shareholder return and to ensure the Company's executives remain focused on both short- and long-term objectives, the Company has established share ownership guidelines. Each officer has five years from the date appointed/elected to his/her position to achieve the ownership level associated with the position.

Any officer who has not achieved at least 50% of the stock ownership guideline after three years in their current position will be required to hold 50% of future equity awards until they meet the ownership guideline.

All named officers with 5 years' tenure in their current position meet or exceed the guidelines.

HEDGING

Directors and officers are prohibited from entering into or engaging in any financial transaction that is designed to reduce the financial risk associated with owning Abbott stock. These financial transactions include, but are not limited to, engaging in short sales, derivative transactions (such as equity swaps, straddles, puts, or calls), and hedging or monetizing transactions (such as collars, exchange funds, or prepaid forward variable contracts) that are linked directly to Abbott stock.

PLEDGING

Directors and officers are prohibited from holding Abbott stock in a margin account, pledging Abbott stock, or otherwise securing any of their obligations by assigning Abbott stock as collateral. The Compensation Committee, or its delegate, may grant an exception provided that:

•

The director or officer meets Abbott's applicable minimum stock ownership guideline; and



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Only Abbott stock in excess of the applicable minimum stock ownership guideline is held in the margin account, pledged, or assigned as collateral.

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RECOUPMENT POLICY

In 2015, following discussions by management with shareholders, the Compensation Committee implemented a recoupment policy. The Compensation Committee has broad discretion to administer and implement the policy and seek recoupment of equity or cash incentive awards if it determines that a senior executive engaged in misconduct or failed in a supervisory capacity, resulting in a material violation of law or Abbott policy that causes significant financial harm to Abbott. The Compensation Committee may recover incentive compensation awarded to a senior executive in the prior three years or reduce future awards. The policy will not affect awards made prior to its effective date or following a change in control.

COMPLIANCE

The Committee considers the deductibility of executive compensation under Internal Revenue Code Section 162(m) and reserves the flexibility to take actions that may be based on considerations in addition to tax deductibility. The Committee believes that shareholder interests are best served by not restricting the Committee's discretion and flexibility in crafting compensation programs, even if such programs may result in certain non-deductible compensation expenses. Accordingly, Abbott may provide compensation that is not deductible. See the section captioned "Plan Summary" on page 67 for more information about Code Section 162(m).

The Compensation Committee of the Board is primarily responsible for reviewing, approving, and overseeing Abbott's compensation plans and practices, and works with management and the Committee's independent consultant to establish Abbott's executive compensation philosophy and programs. The Committee has reviewed and discussed the Compensation Discussion and Analysis with management and has recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.

Compensation Committee
W. J. Farrell, Chairman
R. S. Austin
E. M. Liddy
W. A. Osborn
S. C. Scott III

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Table of Contents

During 2016, Abbott conducted its annual risk assessment of its compensation policies and practices for employees and executives. Abbott's risk assessment is reinforced by Abbott's adherence to a number of industry-leading best practices, including:

Based on this assessment, Abbott determined its compensation and benefit programs appropriately align employees compensation and performance without incentivizing risky behaviors. Any risk arising from its compensation policies and practices is not reasonably likely to have a material adverse effect on Abbott or its shareholders.

The following factors were among those considered:

•

Regular training on code of business conduct and policies and procedures is mandatory for all employees and non-employee directors.



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Compensation structure encourages employees to regard Abbott as a career employer, to consider the long-term impact of their decisions, and to align their interests with those of Abbott's shareholders (e.g., equity awards that vest over multi-year periods, defined benefit pension plan).



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Annual benchmarking ensures performance achievement and incentive payout opportunities that are aligned with a peer group that reflects the size, investment profile, operating characteristics, and employment and business markets of Abbott. Appropriateness of this group is assessed annually by the Compensation Committee's independent consultant and approved by the Compensation Committee.



•

Abbott's annual incentive plan places an appropriate weighting on earnings achievement by balancing it with other factors, including operational and strategic measures. Since earnings are a key component of stock price performance, this aspect of Abbott's compensation plan promotes alignment with shareholder interests without creating duplication across incentive plans.



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Abbott's long-term incentive plan focuses on longer-term operating performance and shareholder returns, (e.g., in 2016, roughly 67% of CEO and 66% of other named officer total compensation was in the form of long-term equity incentives that can be earned or vest over multiple years).

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Equity awards are made, and grant prices are set at the same time each year, at the Compensation Committee's regularly scheduled meeting. In addition, Abbott does not reprice stock options, award discounted stock options, or immediately vest stock options or restricted stock. The equity awards are based on multiple performance factors. Both executive and Director share ownership guidelines and share retention requirements promote alignment with shareholders.



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Abbott's compensation program does not include features that could encourage excessive risk taking, such as over-weighting toward annual incentives, highly leveraged payout curves, uncapped incentive award payments, unreasonable thresholds, or steep payout cliffs at certain levels that may encourage short-term business decisions to meet payout thresholds.



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Abbott's recoupment policy allows the Compensation Committee to seek recoupment of incentive compensation or reduce future awards if it determines that a senior executive engaged in misconduct or failed in a supervisory capacity, resulting in a material violation of law or Abbott policy that caused significant financial harm to Abbott.



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Abbott's hedging policy prohibits directors and officers from entering into financial transactions designed to reduce the financial risk associated with owning Abbott shares.



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Abbott's pledging policy prohibits directors and officers from holding Abbott shares in a margin account, pledging Abbott shares, or securing obligations by assigning Abbott shares as collateral unless granted an exception by the Compensation Committee.

This assessment was discussed with the Compensation Committee and its independent compensation consultant. The Committee and the consultant both agreed with the assessment.

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The following table summarizes compensation awarded to, earned by, or paid to the named officers. The section of the proxy statement captioned, "Compensation Discussion and Analysis—How Executive Pay Decisions Are Made" describes in greater detail the information reported in this table.

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