Abbott shareholders nix governance proposals

Posted April 23, 2010 at 11:31 a.m.

By Wailin Wong | Abbott Laboratories shareholders voted down two proposals seeking
greater participation in corporate governance issues at the North
Chicago company’s annual meeting.

A “say on pay” proposal, which would have allowed shareholders to hold a
yearly advisory vote about senior executive compensation, was defeated
after garnering 41 percent approval, according to a preliminary tally. A
second proposal that would have given shareholders owning more than 10
percent of common stock the ability to convene a special meeting was
also defeated after reaching just 38 percent approval.

Abbott’s board of directors had opposed both proposals, which have gained momentum in recent years and been passed at other companies. Shareholders of Schaumburg-based Motorola Inc., for example, approved in 2009 the proposal to call a special meeting.

At the annual meeting, which drew more than 1,000 shareholders to Abbott’s headquarters, Chief Executive Miles White praised the company’s financial performance and said Abbott remains “as well-positioned as any company in our industry for future success,” even taking into account the ongoing effects of health care reform.

“Throughout the process (of discussing health care reform), we have supported action to expand patient access to care while maintaining an environment that fosters innovation,” White said in prepared remarks. “We believe the new law achieves these goals — but it does impose certain costs…Health care companies like ours will also be affected on the revenue line.”

The revamping of the health care system bit into Abbott’s first-quarter profits, which the company reported this week. Abbott still posted profit of $1 billion for the period, but that was down from $1.4 billion in the first quarter of 2008.

Concerns over health care reform’s negative effect on major drug companies have dragged down their stock prices over the last week. When asked by an Abbott shareholder about the possibility of a stock split, White said the company’s share price must first hit historical levels above $60 a share and it will take time to get there. He acknowledged the downward pressure on health care-related stocks over the last week and said he believes prices will bounce back as investors more thoroughly analyze the effect of the overhaul.

“There’s nothing more frustrating than not seeing the company’s performance in the stock price,” White said.

In mid-day trade, Abbott was down 37 cents at $50.75.

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