Eli Lilly 2003 Annual Report Download - page 70

Download and view the complete annual report

Please find page 70 of the 2003 Eli Lilly annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 100

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100

PROXY STATEMENT
68
Chief Executive Offi cer Compensation for 2003
In establishing Mr. Taurel’s compensation for 2003, we applied the principles outlined above in the same manner
as they were applied to the other executives. We compared company performance with that of the peer group com-
panies, including EPS growth, EVA, and total shareholder return. We did not assign these performance measures
relative weights but rather made a subjective determination after considering the data collectively. In addition,
consistent with our annual process, in an executive session including all independent directors, we assessed Mr.
Taurel’s 2002 performance. We considered the company’s and Mr. Taurel’s accomplishment of objectives that had
been established at the beginning of the year and our own subjective assessment of his performance.
In recognition of his strong leadership and many contributions in a challenging year for the company, we established
Mr. Taurel’s salary at $1.43 million. Because Mr. Taurel chose to accept only $1.00 in salary for 2002, the salary
growth rate in 2003 is not meaningful. However, the 2003 salary amount is 4 percent higher than his 2001 salary.
Consistent with past practice and to maintain internal relativity, we established Mr. Taurel’s 2003 target bonus
under the EVA Plan at 110 percent of his base salary. These amounts restored Mr. Taurel’s competitive position for
both salary and cash bonus within the broad middle range of peer group chief executives. There was no EVA bonus
payout for 2003, but the committee decided to award a discretionary bonus to all members of management, includ-
ing Mr. Taurel, for the reasons described earlier in this report under Annual Compensation—Cash Bonuses. As
noted there, bonuses for the executive offi cers were 75 percent of target EVA amounts.
In 2003, Mr. Taurel received a stock option grant for 350,000 shares, the same size as he received in the prior year. The
option shares vest after three years and expire after 10 years. In late 2002, we granted Mr. Taurel a performance award
to be earned based on 2003 EPS growth. However, the company’s EPS growth for 2003 was insuffi cient for a payout. In
late 2003, we granted Mr. Taurel a performance award to be earned based on 2004 EPS growth. If the growth target is
achieved, he will receive 28,000 shares (before taxes) in 2005. Consistent with the other executive offi cers, any shares
paid under this performance award will be in the form of restricted stock.
In determining the size of the stock option and performance award grants, we took into consideration internal rela-
tivity, peer group data, and the size of grants previously made to Mr. Taurel.
Compensation Committee
Steven C. Beering, M.D., Chair
George M.C. Fisher
Karen N. Horn, Ph.D.
Ellen R. Marram