Eli Lilly 2008 Annual Report Download - page 88

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PROXY STATEMENT
8686
The board delegates the screening process to the directors and corporate governance committee, which
receives direct input from other board members. Potential candidates are identifi ed by recommendations from
several sources, including:
• incumbent directors
• management
• shareholders
• an independent executive search fi rm retained by the committee to assist in locating and screening candidates
meeting the board’s selection criteria.
The committee employs the same process for evaluating all candidates, including those submitted by share-
holders. The committee initially evaluates a candidate based on publicly available information and any additional
information supplied by the party recommending the candidate. If the candidate appears to satisfy the selection cri-
teria and the committee’s initial evaluation is favorable, the committee, assisted by management or the search fi rm,
gathers additional data on the candidate’s qualifi cations, availability, probable level of interest, and any potential
confl icts of interest. If the committee’s subsequent evaluation continues to be favorable, the candidate is contacted
by the chairman of the board and one or more of the independent directors for direct discussions to determine the
mutual levels of interest in pursuing the candidacy. If these discussions are favorable, the committee makes a fi nal
recommendation to the board to nominate the candidate for election by the shareholders (or to select the candidate
to fi ll a vacancy, as applicable). Mr. Oberhelman, who is standing for election, and Mr. Alvarez, who will serve under
interim election beginning April 1, 2009, were referred to the committee by an independent executive search fi rm.
Process for Submitting Recommendations and Nominations
A shareholder who wishes to recommend a director candidate for evaluation by the committee pursuant to this
process should forward the candidate’s name and information about the candidate’s qualifi cations to the chairman
of the directors and corporate governance committee, in care of the corporate secretary, at Lilly Corporate Center,
Indianapolis, Indiana 46285. The candidate must meet the selection criteria described above and must be willing
and expressly interested in serving on the board.
Under Section 1.9 of the company’s bylaws, a shareholder who wishes to directly nominate a director candi-
date at the 2010 annual meeting (i.e., to propose a candidate for election who is not otherwise nominated by the
board through the recommendation process described above) must give the company written notice by November 9,
2009. The notice should be addressed to the corporate secretary at Lilly Corporate Center, Indianapolis, Indiana
46285. The notice must contain prescribed information about the candidate and about the shareholder proposing
the candidate as described in more detail in Section 1.9 of the bylaws. A copy of the bylaws is available online at
http://investor.lilly.com/governance.cfm. The bylaws will also be provided by mail without charge upon request to
the corporate secretary.
Audi t Committee Matters
Audit Committee Membership
All members of the audit committee are independent as defi ned in the New York Stock Exchange listing standards
applicable to audit committee members. The board of directors has determined that Mr. J. Michael Cook and Mr.
Michael L. Eskew are audit committee fi nancial experts, as defi ned in the rules of the Securities and Exchange
Commission.
Audit Committee Report
The audit committee (“we” or “the committee”) reviews the company’s fi nancial reporting process on behalf of the
board. Management has the primary responsibility for the fi nancial statements and the reporting process, includ-
ing the systems of internal controls and disclosure controls. In this context, we have met and held discussions with
management and the independent auditor. Management represented to us that the company’s consolidated fi nancial
statements were prepared in accordance with generally accepted accounting principles, and we have reviewed and
discussed the audited fi nancial statements and related disclosures with management and the independent auditor,
including a review of the signifi cant management judgments underlying the fi nancial statements and disclosures.
The independent auditor reports to us. We have sole authority to appoint (subject to shareholder ratifi cation)
and to terminate the engagement of the independent auditor.
We have discussed with the independent auditor matters required to be discussed by Statement on Auditing