Eli Lilly 2012 Annual Report Download - page 132

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28
(0.25 x adjusted revenue multiple) + (0.50 x adjusted non-GAAP EPS multiple) + (0.25 x pipeline multiple)
= bonus multiple
bonus multiple x bonus target x base salary earnings = payout
The committee can always lower (but not increase) payouts to individual executive officers when individual
performance goals are not achieved.
2012 adjusted revenue, adjusted non-GAAP EPS, and pipeline multiples are illustrated by this chart:
1.10
Target
Adjusted
Revenue
Multiple 0.0 0.5 1.0 1.5 2.0
Adjusted
Revenue $19,818 $21,033 $22,252 $23,461 $24,676
1.68
Adjusted Non-
GAAP EPS
Multiple 0.0 0.5 1.0 1.5 2.0
Adjusted Non-
GAAP EPS $2.74 $2.96 $3.18 $3.40 $3.62
1.20
Pipeline
multiple 0.0 0.5 1.0 1.5 2.0
Pipeline
score 1.0 2.0 3.0 4.0 5.0
2012 adjusted revenue of $22.5 billion exceeded the goal of $22.3 billion, and resulted in an adjusted revenue
multiple of 1.10. 2012 adjusted non-GAAP EPS of $3.48 exceeded the goal of $3.18, resulting in an adjusted non-
GAAP EPS multiple of 1.68.
The pipeline output and sustainability metrics were set consistent with corporate goals. The science and technology
committee of the board of directors assessed the company’s progress toward achieving these goals at 3.4 (on a
scale of 1 to 5), noting 11 product approvals versus a goal of 10, and two NMEs entering into Phase III versus a goal
of 1 NME. Additionally, 75 percent of pipeline projects met their milestone goals, which was in the target range of 70
to 80 percent. The science and technology committee also performed a subjective assessment of the quality of the
pipeline. Based on the recommendation of the science and technology committee, the compensation committee
certified a pipeline score of 3.4, resulting in a pipeline multiple of 1.20.
Combined, the revenue, EPS, and pipeline progress multiples yielded a bonus multiple of 1.42.
(0.25 x 1.10) + (0.50 x 1.68) + (0.25 x 1.20) = 1.42 bonus multiple
Equity Incentives—Total Equity Program
We employ two forms of equity incentives granted under the 2002 Lilly Stock Plan: PAs and SVAs. These incentives
are designed to focus company leaders on multi-year operational performance as well as long-term shareholder
value. In 2012, the company granted equity incentives to approximately 15 percent of our employee population. For
executive officers, SVAs pay out in shares that have a three-year performance period followed by a one-year holding
requirement; PAs have a two-year performance period and pay out in RSUs that vest one year after the performance
period. The following chart shows the performance and holding periods for PA and SVA grants over time: