Eli Lilly 2005 Annual Report Download - page 72

PROX Y S TATEM ENT
7070
Orientation and Continuing Education
A comprehensive orientation process is in place for new directors. In addition, directors receive ongoing continu-
ing education through educational sessions at meetings, the annual strategy retreat, and periodic mailings be-
tween meetings. We hold periodic mandatory training sessions for the audit committee, to which other directors
and executive officers are invited. We also afford directors the opportunity to attend external director education
programs.
Director Access to Management and Independent Advisers
Independent directors have direct access to members of management whenever they deem it necessary. The inde-
pendent directors and the committees are also free to retain their own independent advisers, at company expense,
whenever they feel it would be desirable to do so. In accordance with New York Stock Exchange listing standards,
the audit, compensation, and directors and corporate governance committees have sole authority to retain inde-
pendent advisers to their respective committees.
Assessment of Board Processes and Performance
The directors and corporate governance committee annually assesses the performance of the board, its commit-
tees, and board processes based on inputs from all directors. The committee also considers the contributions of
individual directors at least every three years when considering whether to recommend nominating the director to
a new three-year term.
VI. Board Committees
Number, Structure, and Independence
The duties and membership of the six board-appointed committees are described below. Only independent direc-
tors may serve on the audit, compensation, directors and corporate governance, and public policy and compliance
committees. Only independent directors may chair any committee.
Committee membership and selection of committee chairs are recommended to the board by the directors and
corporate governance committee after consulting the chairman of the board and after considering the desires of
the board members.
Functioning of Committees
Each committee reviews and approves its own charter annually, and the directors and corporate governance com-
mittee reviews and approves all committee charters annually. The board may form new committees or disband
a current committee (except the audit, compensation, and directors and corporate governance committees) as it
deems appropriate. The chair of each committee determines the frequency and agenda of committee meetings.
All six committee charters are available online at http://investor.lilly.com/board-committees.cfm or in paper
form upon request to the company’s corporate secretary.
Committees of the Board of Directors
Audit Committee
The duties of the audit committee are described in the audit committee report found on page 74 of this proxy
statement.
Directors and Corporate Governance Committee
The duties of the directors and corporate governance committee are described on page 73.
Compensation Committee
• evaluates and establishes compensation for executive officers
• oversees the deferred compensation plan, the company’s management stock plans, and other management
incentive programs.
The compensation committee report is shown on pages 76–79 of this proxy statement.