ABBVIE INC. | Independent Board Chair at Abbvie Inc.

Status
28.43% votes in favour
AGM date
Previous AGM date
Proposal number
8
Resolution details
Company ticker
ABBV
Lead filer
Undisclosed filer
Resolution ask
Amend board structure
ESG theme
  • Governance
ESG sub-theme
  • CEO / chair duality
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Health Care
Company HQ country
United States
Resolved clause
Shareholders request the Board of Directors adopt as policy, and amend the bylaws as necessary, to require henceforth that the Chair of the Board of Directors, whenever possible, be an
independent member of the Board. This independence policy shall apply prospectively so as not to violate any contractual obligations. If the Board determines that a Chair who was independent whe selected is no longer independent, the Board shall select a new Chair who satisfies the requirements of the policy within a reasonable amount of time. Compliance with this policy is waived if no independent director is available and willing to serve as Chair.

This policy would be phased in for the next CEO transition.
Supporting statement
We believe:

* The role of the CEO and management is to run the company.
* The role of the Board of Directors is to provide independent oversight of management and the CEO.
* There is a potential conflict of interest for a CEO to have an inside director act as Chair.

As of March 2020, approximately 33% of S&P 500 firms had an independent chair. ISS reported in
September 2020 that 85% percent of investors responding to its policy survey indicated that an
independent chair is their preferred model.

We are concerned by the number and types of patent litigation in which AbbVie and its wholly-owned
subsidiaries are, and have been, involved, including significant issues of alleged antitrust and
anticompetitive pharmaceutical agreements. It is alleged that these settlement agreements violate state
and federal antitrust laws and allowed the company to raise the price of Humira and limit options for
patients.

Additionally, the U.S. House of Representatives Committee on Oversight and Reform has issued a
subpoena to the company for documents, as part of the Committee's ongoing investigation of drug
company pricing practices. In a September 1, 2020 memorandum, Chairwoman Maloney explained the
need for a subpoena, stating that "After more than 18 months, AbbVie has demonstrated its
unwillingness to comply voluntarily with the Committee's investigation".

In light of rising material legal, regulatory, financial and reputational risks, as well as the controversies
and legal challenges facing the company we are concerned that the Board is not providing the necessary oversight of the company's culture, strategy, and risk management.

In our view, shareholders are best served by an independent Board Chair who can provide a balance of
power between the CEO and the Board. Taking this step is in the long-term interests of shareholders and will promote effective oversight of management.

In order to ensure that our Board can provide rigorous oversight for our Company with greater
independence and accountability, we urge a vote FOR this shareholder proposal.

How other organisations have declared their voting intentions

Organisation name Declared voting intentions Rationale
Pathfinder Asset Management For An independent chair is better able to oversee the executives of a company and set a pro-shareholder agenda
KBI Global Investors For
Dana Investment Advisors (Delisted) For
Universities Superannuation Scheme - USS For USS strongly supports the appointment of an independent Chairman

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