Eli Lilly 2008 Annual Report Download - page 85

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PROXY STATEMENT
8383
Directors’ Compensation
Directors who are employees receive no additional compensation for serving on the board or its committees.
Cash Compensation
The company provides nonemployee directors the following cash compensation:
• retainer of $80,000 per year (payable monthly)
• $1,000 for each committee meeting attended
• $2,000 to the committee chairpersons for each committee meeting conducted as compensation for the
chairperson’s preparation time
• retainer of $20,000 per year to the presiding director
• reimbursement for customary and usual travel expenses.
Stock Compensation
Stock compensation for nonemployee directors consists of:
• shares of Lilly stock equaling $145,000, deposited annually in a deferred share account in the Lilly Directors’
Deferral Plan (as described below), payable after service on the board has ended.
Lilly Directors’ Deferral Plan
This plan allows nonemployee directors to defer receipt of all or part of their retainer and meeting fees until after
their service on the board has ended. Each director can choose to invest the funds in one or both of two accounts:
• Deferred Share Account. This account allows the director, in effect, to invest his or her deferred cash
compensation in Lilly stock. In addition, the annual award of shares to each director noted above (4,513 shares
in 2008) is credited to this account on a pre-set annual date. Funds in this account are credited as hypothetical
shares of Lilly stock based on the market price of the stock at the time the compensation would otherwise have
been earned. Hypothetical dividends are “reinvested” in additional shares based on the market price of the stock
on the date dividends are paid. All shares in the deferred share accounts are hypothetical and are not issued or
transferred until the director ends his or her service on the board.
• Deferred Compensation Account. Funds in this account earn interest each year at a rate of 120 percent of the
applicable federal long-term rate, compounded monthly, as established the preceding December by the U.S.
Treasury Department under Section 1274(d) of the Internal Revenue Code. The rate for 2009 is 5.2 percent.
The aggregate amount of interest that accrued in 2008 for the participating directors was $148,138, at a rate
of 5.5 percent.
Both accounts may be paid in a lump sum or in annual installments for up to 10 years, beginning the second
January following the director’s departure from the board. Amounts in the deferred share account are paid in
shares of Lilly stock.