Eli Lilly 2003 Annual Report Download - page 73

PROXY STATEMENT
71
Retirement Plan
Pension Plan Table
Average Annual
Earnings (Highest
5 of Last 10 Years) Years of Service
20 25 30 35 40 45
$ 500,000 $ 134,830 $ 168,550 $ 202,260 $ 235,970 $ 235,970 $ 243,300
1,000,000 275,270 344,100 412,910 481,730 481,730 486,610
1,500,000 415,705 519,635 623,555 727,490 727,490 729,910
2,000,000 556,140 695,185 834,215 973,250 973,705 973,705
2,500,000 696,575 870,720 1,044,865 1,219,010 1,219,010 1,219,010
3,000,000 837,000 1,046,270 1,255,510 1,464,770 1,464,770 1,464,770
3,500,000 977,435 1,221,805 1,466,160 1,710,530 1,710,530 1,710,530
4,000,000 1,117,870 1,397,350 1,676,810 1,956,290 1,956,290 1,956,290
4,500,000 1,258,310 1,572,890 1,887,455 2,202,050 2,202,050 2,202,050
5,000,000 1,398,745 1,748,435 2,098,116 2,447,810 2,447,810 2,447,810
5,500,000 1,539,170 1,923,970 2,308,765 2,693,555 2,693,555 2,693,555
The named executive offi cers will, upon retirement, be eligible for benefi ts under The Lilly Retirement Plan (retire-
ment plan). The above table sets forth a range of annual retirement benefi ts for various levels of average annual
earnings and years of service, assuming the employee retires at age 65 with a 50 percent survivor income benefi t.
The retirement plan benefi ts shown in the table are generally paid as a monthly annuity for the life of the retiree.
The amounts shown in the table are not subject to reduction for social security benefi ts or any other offset amounts
except that the ultimate pension benefi ts for Mr. Golden will be reduced by the amount of the pension payments he
receives from his previous employer. For the purpose of determining the annual benefi t from the Pension Plan Table,
one calculates the average of the annual earnings for the highest 5 out of the last 10 years of service (“average an-
nual earnings”). Annual earnings covered by the retirement plan consist of salary, bonus, and, for years prior to 2003,
long-term incentive plan payouts as set forth in the Summary Compensation Table on page 20 but calculated for the
amount of bonus paid (rather than credited) and for the year in which earnings are paid (rather than earned or cred-
ited). For purposes of determining benefi ts under the retirement plan, Mr. Taurel is currently credited with 32 years
of service, and his current average annual earnings are $4,618,368. Following his retirement in 2004, Mr. Mayr will
receive an annual retirement benefi t of $915,478. Beginning at age 62, Mr. Mayr will receive an additional $1,400 per
month, which is the estimated amount Mr. Mayr would have received as a social security benefi t had he worked in the
United States for more than 40 calendar quarters. His retirement benefi ts will include medical coverage beginning at
age 65, under which the company will reimburse the portion of his medical expenses that would typically be covered
by Medicare had he worked in the United States for more than 40 calendar quarters and related income taxes, if any,
attributable to such benefi t. Mr. Golden, who is credited with 34 years, received additional service credit when be be-
gan his employment in 1996. His retirement benefi ts will include standard retiree medical benefi ts. His current aver-
age annual earnings are $2,486,772. Dr. Lechleiter is credited with 24 years, and his current average annual earnings
are $1,416,888. Mr. Granadillo is credited with 34 years, and his current average annual earnings are $1,856,712.
Section 415 of the Internal Revenue Code (Code) generally places a limit of $165,000 on the amount of annual pen-
sion benefi ts that may be paid at age 65 from a plan such as the retirement plan. Under an unfunded plan adopted
in 1975, however, the company will make payments as permitted by the Code to any employee who is a participant
in the retirement plan in an amount equal to the difference, if any, between the benefi ts that would have been pay-
able under the plan without regard to the limitations imposed by the Code and the actual benefi ts payable under
the plan as so limited.
Change-in-Control Severance Pay Arrangements
The company has adopted a Change-in-Control Severance Pay Program (program) covering most employees of the
company and its subsidiaries, including the company’s executive offi cers. In general, the program would provide
severance payments and benefi ts for eligible employees and executive offi cers in the event their employment is ter-
minated under certain circumstances within fi xed periods of time following a change in control. A change in control