Eli Lilly 2012 Annual Report Download - page 126

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22
Compensation Discussion and Analysis
Summary
Executive compensation for 2012 aligned well with the objectives of our compensation philosophy and with our
performance, driven by these factors:
• The company exceeded internal corporate goals for revenue and earnings per
share (EPS) as well as pipeline progress, as the company continued to
navigate through a challenging period of significant patent expirations. The
pipeline also progressed well, with approvals of Amyvid, Alimta®
continuation maintenance in the U.S., Cymbalta® for generalized anxiety
disorder in China, Cialis® for benign prostatic hyperplasia in the EU, and
Exenatide Once Weekly® as well as six other approvals. Two new molecular
entities (NMEs) entered Phase III, and 75 percent of project milestones for
molecules in development were met or accelerated. As a result, the annual
cash incentive bonus paid out at 142 percent of target.
• Two-year adjusted non-GAAP EPS growth fell to the bottom of our peer
group, an expected consequence of the Zyprexa patent expiration, resulting
in a payout of 50 percent of target for the 2011-2012 Performance Award
(PA). Three-year stock price growth of 35 percent resulted in the 2010-2012
Shareholder Value Award (SVA) paying out at 140 percent of target.
Highlights:
• No changes to
compensation and benefit
design in 2012
• Revenue and EPS decline
due to Zyprexa® patent
expiration, but both exceed
internal targets
• Above-target performance
in advancing the pipeline
• Strong stock price
performance in 2012
• No increase to CEO salary
or incentive targets
for 2010, 2011, or 2012
• A balanced program fosters employee achievement, retention, and engagement. We delivered a total
compensation package composed of salary, performance-based cash and equity incentives, and a competitive
employee benefits program. The Eli Lilly and Company Bonus Plan (the bonus plan) metrics of revenue, EPS,
and pipeline performance against internal goals are designed to drive solid operational performance, promote
innovation, and motivate employees during the next few years of patent expirations and business challenges. By
contrast, for our long-term equity programs, we use the external metrics of EPS growth versus our peers and