Eli Lilly 2008 Annual Report Download - page 98

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PROXY STATEMENT
9696
2006 2006 2007 2007 2008 2008
Reported Adjusted Reported Pro Forma Adjusted Reported Pro Forma Adjusted
35
30
25
20
15
10
5
0
–5
Percent Growth vs. Prior Years
Sales Growth
EPS Growth
Reconciliations of the adjustments to our reported sales and earnings per share are below. The shaded num-
bers were used for calculating growth percentages for the compensation programs.
2008 2007
% Growth
2008 vs. 2007 2006
% Growth
2007 vs. 2006
Sales as reported ($ millions) $20,378.0 $18,633.5 9.4% $15,691.0 18.8%
Pro forma ICOS adjustment — $72.7 $755.2
Pro forma ImClone adjustment $35.6 — —
Sales—pro forma adjusted $20,342.4 $18,706.2 8.7% $16,446.2 13.7%
EPS as reported ($1.89) $2.71 NM $2.45 10.6%
Eliminate net impact associated with ImClone acquisition $4.46 — —
Eliminate charges related to Zyprexa investigations $1.20 — —
Eliminate IPR&D charges for acquisitions and in-licensing
transactions $0.10 $0.63 —
Eliminate asset impairments, restructuring and other
special charges (including product liability charges) $0.34 $0.21 $0.73
Eliminate benefi t from resolution of IRS audit ($0.19) — —
EPS—adjusted $4.02 $3.55 $3.18
Pro forma ICOS adjustment — ($0.01) ($0.15)
EPS—pro forma adjusted $4.02 $3.54 13.6% $3.03 16.8%
NM—Not meaningful
The bonus paid to all management was based on 13.6 percent growth between the adjusted EPS of $3.54 for 2007
and $4.02 for 2008.
Equity Incentive Grant Mechanics and Timing
The committee approves target grant values for equity incentives prior to the grant date. On the grant date, those
values are converted to shares based on:
• the closing price of Lilly stock on the grant date
• the same valuation methodology the company uses to determine the accounting expense of the grants under
Statement of Financial Accounting Standards (SFAS) 123R.
The committee’s procedure for timing of equity grants assures that grant timing is not being manipulated for
employee gain. The annual equity grant date for all eligible employees is in mid-February. This date is established
by the committee well in advance—typically at the committee’s October meeting. The mid-February grant date tim-
ing is driven by these considerations:
• It coincides with the company’s calendar-year-based performance management cycle, allowing supervisors to
deliver the equity awards close in time to performance appraisals, which increases the impact of the awards by
strengthening the link between pay and performance.
• I
t follows the annual earnings release by approximately two weeks, so that the stock price at that time can
reasonably be expected to fairly represent the market’s collective view of our then-current results and prospects.
Grants to new hires and other off-cycle grants are effective on the fi rst trading day of the following month.