Eli Lilly 2007 Annual Report Download - page 119

PROXY STATEMENT
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Appendix B
Proposed Amendments to the 2002 Lilly Stock Plan
Proposed changes to the company’s 2002 Lilly Stock Plan are shown below related to Item 5, Items of Business to
Be Acted Upon at the Meeting. Additions are indicated by underlining and deletions are indicated by strike-outs.
2002
LILLY STOCK PLAN
As amended through October 18, 2004April 21, 2008
The 2002 Lilly Stock Plan (“2002 Plan”) authorizes the Board of Directors of Eli Lilly and Company (“Board”) and
the Compensation Committee of the Board, as applicable, to provide offi cers and other employees of Eli Lilly and
Company and its subsidiaries and nonemployee directors of Eli Lilly and Company (“Nonemployee Directors”)
with certain rights to acquire shares of Eli Lilly and Company common stock (“Lilly Stock”). The Company believes
that this incentive program will benefi t the Company’s shareholders by allowing the Company to attract, motivate,
and retain employees and directors and by providing those employees and directors stock-based incentives to
strengthen the alignment of interests between those persons and the shareholders. For purposes of the 2002 Plan,
the term “Company” shall mean Eli Lilly and Company and its subsidiaries, unless the context requires otherwise.
1. Administration.
(a) Grants to Eligible Employees. With respect to Grants to Eligible Employees (as those terms are defi ned in
Sections 2 and 3(a), respectively), the 2002 Plan shall be administered and interpreted by the Compensation
Committee of the Board consisting of not less than two independent directors appointed by the Board from
among its members. A person may serve on the Compensation Committee for purposes of administration and
interpretation of the 2002 Plan only if he or she (i) is a “Non-employee Director” for purposes of Rule 16b-3
under the Securities Exchange Act of 1934, as amended (the “1934 Act”), and (ii) satisfi es the requirements of
an “outside director” for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the
“Code”), and (iii) satisfi es the New York Stock Exchange rules for independence. The Compensation Committee
may, subject to the provisions of the 2002 Plan, from time to time establish such rules and regulations and
delegate such authority to administer the 2002 Plan as it deems appropriate for the proper administration of
the Plan, except that no such delegation shall be made in the case of awards intended to be qualifi ed under
Rule 16b-3 of the 1934 Act or Section 162(m) of the Code. The decisions of the Compensation Committee or its
authorized designees (the “Committee”) shall be made in its sole discretion and shall be fi nal, conclusive, and
binding with respect to the interpretation and administration of the 2002 Plan and any Grant made under it.
(b) Grants to Nonemployee Directors. With respect to Stock Option Grants made to Nonemployee Directors pursuant
to Section 8, the Board shall serve to administer and interpret the 2002 Plan and any such Grants, and all
duties, powers and authority given to the Committee in subsection (a) above or elsewhere in the 2002 Plan in
connection with Grants to Eligible Employees shall be deemed to be given to the Board in its sole discretion in
connection with Stock Option Grants to Nonemployee Directors.
2. Grants.
Incentives under the 2002 Plan shall consist of incentive stock options or other forms of tax-qualifi ed stock options
under the Code, nonqualifi ed stock options, performance awards, stock appreciation rights, stock unit awards,
and restricted stock grants (collectively, “Grants”). The Committee shall approve the form and provisions of each
Grant to Eligible Employees and the Board shall approve the form and provisions of each Stock Option Grant to
Nonemployee Directors. All Grants shall be subject to the terms and conditions set out herein and to such other
terms and conditions consistent with the 2002 Plan as the Committee or Board, as applicable, deems appropriate.
Grants under a particular section of the 2002 Plan need not be uniform and Grants under two or more sections
may be combined in one instrument. The Committee shall determine the fair market value of Lilly Stock for pur-
poses of the 2002 Plan.
3. Eligibility for Grants.
(a) Grants to Eligible Employees. Grants may be made to any employee of the Company, including a person who is
also a member of the Board of Directors (“Eligible Employee”). The Committee shall select the persons to receive
Grants (“Grantees”) from among the Eligible Employees and determine the number of shares subject to any
particular Grant.
(b) Grants to Nonemployee Directors. Grants of Stock Options may be made to any member of the Board who is not
an employee of the Company (a “Nonemployee Director”). The Board shall select the persons who will receive
Stock Options Grants (“Grantees”) from among the Nonemployee Directors and determine the number of
shares subject to any particular Stock Option Grant.
4. Shares Available for Grant.
(a) Shares Subject to Issuance or Transfer. Subject to adjustment as provided in Section 4(b), the aggregate number
of shares of Lilly Stock that may be issued or transferred under the 2002 Plan shall be the sum of the following
amounts:
(i) 80,000,000 119,000,000 shares;