Eli Lilly 2013 Annual Report Download - page 120

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access to members of management whenever they deem it necessary; and the company's executive
officers attend at least part of each regularly scheduled Board meeting. The independent directors and all
committees are also free to retain their own independent advisors, at company expense, whenever they
feel it would be desirable to do so.
CEO Succession Planning
The lead director, Board and CEO maintain and annually review the company's succession plans for the CEO
and other key senior leadership positions. During these reviews, the CEO and independent directors discuss
future candidates for the CEO and other senior leadership positions, succession timing, and development
plans for the highest-potential candidates. The company ensures that the directors have multiple opportunities
to interact with the company's top leadership talent in both formal and informal settings in order to allow them
to most effectively assess the candidates' qualifications and capabilities.
The CEO maintains in place at all times, and reviews with the independent directors, a confidential plan for
the timely and efficient transfer of his responsibilities in the event of an emergency or his sudden departure,
incapacitation, or death.
Board Education and Annual Performance Assessment
The company engages in a comprehensive orientation process for incoming new directors. Directors also
receive ongoing continuing educational sessions on areas of particular relevance or import to our company
and we hold periodic mandatory training sessions for the Audit Committee.
Additionally, the Directors and Corporate Governance Committee conducts an annual assessment of the
Board's performance, Board committee performance, and all Board processes based on input from all
directors.
Prior Management Proposals to Eliminate Classified Board and
Supermajority Voting Requirements
Between 2006 - 2012, each year we submitted management proposals to eliminate the company's classified
board structure. The proposals did not pass because they failed to receive a “supermajority vote” of 80
percent of the outstanding shares, as required in the company's articles of incorporation. In addition, in 2010,
2011, 2012, we submitted management proposals to eliminate the supermajority voting requirements
themselves. Those proposals also fell short of the required 80 percent vote.
Prior to 2012, these proposals received support ranging from 72 to 77 percent of the outstanding shares. In
2012, the vote was even lower, approximately 63 percent of the outstanding shares, driven in part by a 2012
NYSE rule revision prohibiting brokers from voting their clients' shares on corporate governance matters
absent specific instructions from such clients. We have concluded that the proposals would achieve a similar
result in 2014 and therefore we are not resubmitting them. We will continue to monitor this situation and
engage in dialogue with our shareholders on these and other governance topics to ensure that Lilly continues
to demonstrate strong corporate governance and accountability to shareholders.
Conflicts of Interest and Transactions with Related Persons
Conflicts of Interest
Directors must disclose to the company all relationships that create a conflict or an appearance of a conflict.
The Board, after consultation with counsel, takes appropriate steps to identify actual or apparent conflicts and
ensure that all directors voting on an issue are disinterested. A director may be excused from discussions on
the issue, as appropriate.
Review and Approval of Transactions with Related Persons
The board has adopted a policy and procedures for review, approval, and monitoring of transactions involving