Abbott Laboratories

Annual Meeting:  April 26, 2019

CEO Miles White’s total compensation increased more than 25% in 2018, for a total of $24,254,238.  White’s option and stock awards increased by $3 million each. His performance-based incentive bonus accounted for another $4.8 million. Adjusted diluted EPS was included in metrics contributing to both the annual bonus and the restricted stock award of $7.5 million.

Joe Cahill wrote an excellent article in Crain’s Chicago Business, “What's behind Miles White's 28% pay raise at Abbott? The CEO benefits from the upside of acquisitions without bearing significant downside costs.” Specifically, Hill notes that while revenue generated by the acquired companies are included in calculation for achievement of metrics, the pay calculations “strip out billions of dollars in dealmaking expenses that squeezed the medical products giant’s actual profits. ‘Adjusted diluted earnings per share’ excludes costs such as amortization of intangible assets, restructuring charges and general acquisition expenses.” According to Hill, Abbott wrote off $2.2 billion in intangibles in 2018 and $2 billion in 2017, compared to $550 million in 2016.

“By excluding amortization costs and other acquisition-related expenses from bonus calculations, the plan rewards White for bagging buyouts regardless of their impact on actual, bottom-line profitability.”

This is not the first time Abbott executives sought to benefit from these acquisitions. As I wrote last year, the company derided ISS for not taking into account the 2017 acquisitions St. Jude and Alere in 2017, contending that its increased size justified increased pay.