Eli Lilly 2003 Annual Report Download - page 72

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PROXY STATEMENT
70
Option Shares Granted in the Last Fiscal Year (1)
Individual Grants
Grant Date
Present
Value (3)Name
Number of Securities
Underlying
Options Granted
% of Total Option Shares
Granted to Employees in
Fiscal Year
Exercise or
Base Price
Per Share (2) Expiration Date
Sidney Taurel 350,000 2.24 $57.85 2/15/13 $7,161,000
Gerhard N. Mayr 120,000 0.77 $57.85 2/15/13 $2,455,200
Charles E. Golden 120,000 0.77 $57.85 2/15/13 $2,455,200
John C. Lechleiter, Ph.D. 120,000 0.77 $57.85 2/15/13 $2,455,200
Pedro P. Granadillo 100,000 0.64 $57.85 2/15/13 $2,046,000
(1) The company’s stock plans do not provide for stock appreciation rights. Accordingly, none were granted in 2003.
(2) Options are granted at the market price of company common stock on the date of grant. Options are exercisable
three years after their grant date.
(3) These values were established using the Black-Scholes stock option valuation model. Assumptions used to
calculate the grant date present value of option shares granted during 2003 were in accordance with SFAS 123
as follows:
(a) Expected Volatility—The standard deviation of the continuously compounded rates of return calculated on
the average daily stock price over a period of time immediately preceding the grant and equal in length to
the expected life. The volatility was 35.10 percent.
(b) Risk-Free Interest Rate—The rate available at the time the grant was made on zero-coupon U.S. gov-
ernment issues with a remaining term equal to the expected life. The risk-free interest rate was 3.32
percent.
(c) Dividend Yield—The expected dividend yield was 1.50 percent based on the historical dividend yield over a
period of time immediately preceding the grant date equal in length to the expected life of the grant.
(d) Expected Life—The expected life of the grant was seven years, calculated based on the historical expect-
ed life of previous grants.
(e) Forfeiture Rate— Under SFAS 123, forfeitures may be estimated or assumed to be zero. The forfeiture
rate was assumed to be zero, based on the immateriality of actual calculated forfeiture rates.
Aggregate Option Shares Exercised in the Last Fiscal Year and Fiscal Year-End Option Values (1)
Name
Number of
Shares
Acquired
On Exercise Value Realized
Number of
Securities Underlying
Unexercised Options at
Fiscal Year-End
Value of
Unexercised,
In-the-Money Options
at Fiscal Year-End (2)
Exercisable Unexercisable Exercisable Unexercisable
Sidney Taurel 87,162 $4,445,487 2,161,521 351,317 $26,210,573 $4,368,000
Gerhard N. Mayr -0- -0- 534,684 240,000 $10,431,070 $1,497,600
Charles E. Golden -0- -0- 758,683 121,317 $8,537,800 $1,497,600
John C. Lechleiter, Ph.D. 25,180 $1,372,625 479,521 121,317 $2,211,353 $1,497,600
Pedro P. Granadillo -0- -0- 659,411 101,317 $10,082,847 $1,248,000
(1) The company’s stock plans do not provide for stock appreciation rights. Accordingly, no stock appreciation
rights were exercised during 2003 and none were outstanding on December 31, 2003.
(2) Represents the amount by which the market price of Lilly stock exceeded the exercise prices of unexercised op-
tions held by the named individuals on December 31, 2003.