ABBOTT LABORATORIESABT
ABBOTT LABORATORIES Stock Compensation Disclosure
Incentive Stock Program
The 2017 Incentive Stock Program authorizes the granting of nonqualified stock options, restricted stock awards, restricted stock units, performance awards, foreign benefits, and other share-based awards. Stock options and restricted stock awards and units comprise the majority of benefits that have been granted and are currently outstanding under this program and a prior program. In 2025, Abbott granted 1,486,579 stock options, 365,499 restricted stock awards, and 4,439,430 restricted stock units under this program.
Under Abbott’s stock incentive programs, the purchase price of shares under option must be at least equal to the fair market value of the common stock on the date of grant, and the maximum term of an option is 10 years. Options generally vest equally over three years. Restricted stock awards generally vest over three years, with no more than one-third of the award vesting in any one year upon Abbott reaching a minimum return on equity target. Restricted stock units vest over three years and, upon vesting, the recipient receives one share of Abbott stock for each vested restricted stock unit. The aggregate fair market value of options and restricted stock awards and units is recognized as expense over the requisite service period, which may be shorter than the vesting period if an employee is retirement eligible. Forfeitures are estimated at the time of grant. Restricted stock awards and settlement of vested restricted stock units are issued out of treasury shares. Abbott generally issues new shares for exercises of stock options. As a policy, Abbott does not purchase its shares relating to its share-based programs.
In April 2017, Abbott’s shareholders authorized the 2017 Incentive Stock Program under which a maximum of 170 million shares were available for issuance. At December 31, 2025, approximately 51 million shares remained available for future issuance.
The following table summarizes stock option activity for the year ended December 31, 2025, and the outstanding stock options as of December 31, 2025.
| (intrinsic values in millions) | Options | Weighted Average Exercise Price | Weighted Average Remaining Life (Years) | Aggregate Intrinsic Value | ||||||||||||||||||||||
| Outstanding at December 31, 2024 | 26,546,749 | $ | 80.70 | 4.6 | $ | 906 | ||||||||||||||||||||
| Granted | 1,486,579 | 135.26 | ||||||||||||||||||||||||
| Exercised | (5,337,114) | 55.36 | ||||||||||||||||||||||||
| Lapsed | (107,419) | 121.45 | ||||||||||||||||||||||||
| Outstanding at December 31, 2025 | 22,588,795 | $ | 90.09 | 4.4 | $ | 810 | ||||||||||||||||||||
| Exercisable at December 31, 2025 | 19,426,784 | $ | 84.71 | 3.8 | $ | 788 | ||||||||||||||||||||
The following table summarizes restricted stock awards and units activity for the year ended December 31, 2025.
| Share Units | Weighted Average Grant-Date Fair Value | ||||||||||
| Outstanding at December 31, 2024 | 10,509,572 | $ | 113.48 | ||||||||
| Granted | 4,804,929 | 135.22 | |||||||||
| Vested | (5,191,859) | 113.61 | |||||||||
| Forfeited | (580,907) | 121.81 | |||||||||
| Outstanding at December 31, 2025 | 9,541,735 | $ | 123.85 | ||||||||
The fair market value of restricted stock awards and units vested in 2025, 2024, and 2023 was $685 million, $570 million, and $536 million, respectively.
The total intrinsic value of options exercised in 2025, 2024, and 2023 was $389 million, $238 million, and $102 million, respectively. The total unrecognized compensation cost related to all share-based compensation plans at December 31, 2025, amounted to $467 million, which is expected to be recognized over the next three years.
Total non-cash stock compensation expense charged against income in 2025, 2024, and 2023 for share-based plans totaled $664 million, $673 million, and $644 million, respectively, and the tax benefit recognized was $223 million, $181 million, and $144 million, respectively. Stock compensation cost capitalized as part of inventory is not significant.
The table below summarizes the fair value of an option granted in 2025, 2024, and 2023 and the assumptions included in the Black-Scholes option-pricing model used to estimate the fair value:
| 2025 | 2024 | 2023 | |||||||||||||||
| Fair value | $ | 36.27 | $ | 31.10 | $ | 26.87 | |||||||||||
| Risk-free interest rate | 4.2 | % | 4.3 | % | 4.0 | % | |||||||||||
| Average life of options (years) | 6.0 | 6.0 | 6.0 | ||||||||||||||
| Volatility | 24.8 | % | 25.2 | % | 24.4 | % | |||||||||||
| Dividend yield | 1.7 | % | 1.9 | % | 1.9 | % | |||||||||||
The risk-free interest rate is based on the rates available at the time of the grant for zero-coupon U.S. government issues with a remaining term equal to the option’s expected life. The average life of an option is based on both historical and projected exercise and lapsing data. Expected volatility is based on implied volatilities from traded options on Abbott’s stock and historical volatility of Abbott’s stock over the expected life of the option. Dividend yield is based on the option’s exercise price and annual dividend rate at the time of grant.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 20, 2026 | Showing above |
| 2024 | Feb 21, 2025 | |
| 2023 | Feb 16, 2024 | |
| 2022 | Feb 17, 2023 | |
| 2021 | Feb 18, 2022 | |
| 2020 | Feb 19, 2021 | |
| 2016 | Feb 17, 2017 | |
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.