Eli Lilly 2008 Annual Report Download - page 117

PROXY STATEMENT
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entirely of independent directors. The committee has authority to delegate plan administration with respect to
employees other than the executive offi cers.
• Eligibility. Plan participants include all executive offi cers, all management employees worldwide, most U.S. and
Puerto Rico nonmanagement employees, and selected employees outside the United States. The committee may
include other employees at its discretion. For 2008, approximately 17,500 employees were eligible to participate.
• Performance Measures and Bonus Calculation. Prior to the beginning of each year, the committee establishes
the following elements necessary for the bonus calculation:
—Bonus targets are established for participants based on a schedule that associates job responsibilities with a
bonus target amount expressed as a percentage of regular earnings for the year.
—Company performance measures are established for the year. The committee may select one or more
from among the following measures: growth in net income or earnings per share; growth in sales; return
on assets; return on equity; total shareholder return; economic value added; market value added; or any
of the foregoing before the effect of acquisitions, divestitures, accounting changes, changes in corporate
capitalization, restructurings, and special charges or gains (determined according to objective criteria
established by the committee not later than 90 days after the beginning of the year). Unless the committee
chooses otherwise, the company performance measures are based 75 percent on earnings-per-share growth
and 25 percent on sales growth. Bonuses for 2009 will be based on this measure.
—A bonus multiple is used to adjust the bonus target to account for company performance. The committee
establishes performance benchmarks for sales and earnings growth after considering expected peer group
performance. If the benchmarks are met exactly, the bonus multiple would be 100 percent of the bonus
target. Actual bonus multiples will vary depending on company performance relative to the benchmarks.
The maximum bonus multiple is 200 percent of the bonus target and the threshold multiple is 25 percent of
the bonus target (zero for executive offi cers), except that the committee has discretion to reduce the bonus
multiple to a lower percentage or to zero. The committee does not have discretion to increase the multiple.
• Individual Performance Adjustments. For employees other than executive offi cers, the committee will establish
performance multipliers which correspond to individual performance ratings on an annual basis. Executive
offi cers’ awards may not be adjusted upward.
• Payment. Payment will be made following certifi cation by the committee of the company’s actual performance
results for the year. No executive offi cer’s bonus payment may exceed $7 million in any one year. Participants
must remain employed until the end of the year to receive a bonus, except in the case of retirement, death,
disability, and certain leaves of absence.
• Amendment. The plan may be amended at any time by the board or the committee. Shareholder approval
of amendments may be sought to the extent the company deems it necessary or advisable to preserve tax-
deductibility under Section 162(m) of the Code.
It is not possible to predict with certainty the bonuses that would be payable to the executive offi cers with respect
to 2009 performance. However, if the company were to meet the target performance benchmarks for earnings-
per-share growth and sales growth, and assuming no change in the regular earnings of the executive offi cers for
the year, the following bonuses would be paid for 2009 (before taxes):
Mr. Taurel—no longer eligible
Dr. Lechleiter—$2,100,000
Dr. Paul—$933,210
Mr. Carmine—$831,600
Mr. Rice—$720,800
Mr. Armitage—$653,120
All executive offi cers as a group (10 offi cers): $7,382,020
It is not possible to estimate the aggregate 2009 bonuses that would be payable to all eligible employees as a group.