Eli Lilly 2012 Annual Report Download - page 133

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Performance and Holding Periods for PAs and SVAs
2010 2011 2012 2013 2014 2015 2016
2010-2011 PA 2011-2012 PA Performance Period
2012-2013 PA Restricted Stock Units
2013-2014 PA
2010-2012 SVA Performance Period
2011-2013 SVA Required Holding Period
2012-2014 SVA2013-2015 SVA
Target grant values. For 2012, the committee set the aggregate target values for
the named executive officers based on internal relativity, individual performance,
and aggregated peer-group data. Dr. Lundberg's target grant value was increased,
reflecting his leadership in helping the company achieve key pipeline milestones.
The target grant values for the remaining named executive officers were
maintained. Consistent with the company's compensation objectives, individuals at
higher levels received a greater proportion of total compensation in the form of
equity. The committee determined that for members of senior management, a
50/50 split between PAs and SVAs appropriately balances the company financial
Equity Compensation:
• Performance metrics of
growth in non-GAAP EPS
and share price are
objective and align with
shareholder interests
• Target grant values set
based on internal relativity,
performance, and peer data
performance and shareholder equity return metrics of the two programs. Target values for the 2011 and 2012
equity grants for the named executive officers were as follows:
Target Grant Values (thousands)
Name 2011-2012 PA 2012-2013 PA 2011-2013 SVA 2012-2014 SVA Percentage Increase (total)
Dr. Lechleiter $3,750 $3,750 $3,750 $3,750 0%
Mr. Rice $1,900 $1,900 $1,900 $1,900 0%
Dr. Lundberg $1,375 $1,500 $1,375 $1,500 9%
Mr. Armitage $1,000 $1,000 $1,000 $1,000 0%
Mr. Conterno $1,000 $1,000 $1,000 $1,000 0%
Equity Incentives—Performance Awards
PAs provide employees with shares of company stock if certain company
performance goals are achieved. The awards are structured as a schedule of
potential shares earned based on cumulative, compounded annual growth in
adjusted non-GAAP EPS over a two-year period. The growth rates are based on
expected peer group adjusted non-GAAP EPS growth for the period. Possible
payouts for the 2012-2013 PA range from 0 to 150 percent of the target
depending on adjusted non-GAAP EPS growth over the performance period. No
dividends are accrued or paid on the awards during the performance period.
Performance Awards:
• Target two-year ajdusted
non-GAAP EPS growth for
2012-2013 PA is 3.3%
annually, slightly above
median expected peer-
group performance
• Payout in RSUs for executive
officers vests after one year
Company performance measure. For the 2012 grants, the committee once again established the performance
measure as adjusted non-GAAP EPS growth. The committee believes adjusted non-GAAP EPS growth is an effective
motivator because it is closely linked to shareholder value, is broadly communicated to the public, is easily
understood by employees, and allows for objective comparisons to peer-group performance. The target
compounded growth percentage of 3.3 percent per year slightly exceeded the median expected adjusted non-GAAP
EPS growth of companies in our peer group, based on investment analysts’ published estimates. Accordingly,
consistent with our compensation objectives, company performance exceeding the expected peer-group median will
result in above-target payouts, while company performance lagging the expected peer-group median will result in
below-target payouts. The measure of adjusted non-GAAP EPS used in the PA program differs from the adjusted
non-GAAP EPS measure used in our annual bonus program in two ways. First, the bonus program measures
adjusted non-GAAP EPS over a one-year period, while the PA program measures adjusted non-GAAP EPS over a