Eli Lilly 2003 Annual Report Download - page 79

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PROXY STATEMENT
77
Equity Compensation Plan Information
The following table presents information as of December 31, 2003, about our other compensation plans under
which shares of Lilly stock have been authorized.
Plan category (a) Number of
securities to be issued
upon exercise of
outstanding options,
warrants, and rights
(b) Weighted-
average exercise
price of outstanding
options, warrants,
and rights
(c) Number of
securities remaining
available for future
issuance under equity
compensation plans
(excluding securities
refl ected in column (a))
Equity compensation plans approved by security holders 70,227,853 $64.94 74,455,872
Equity compensation plans not approved by security holders (1) 12,582,622 $67.93 2,121,420
Total 82,810,475 $65.39 76,577,292
(1) Represents shares in the Lilly GlobalShares Stock Plan, which permits the company to grant stock options to
nonmanagement employees worldwide. The plan is administered by the senior vice president responsible for
human resources. The stock options are nonqualifi ed for U.S. tax purposes. The option price cannot be less than
the fair market value at the time of grant. The options shall not exceed 11 years in duration and shall be subject
to vesting schedules established by the plan administrator. There are provisions for early vesting and early
termination of the options in the event of retirement, disability, and death. In the event of stock splits or other
recapitalizations, the administrator may adjust the number of shares available for grant, the number of shares
subject to outstanding grants, and the exercise price of outstanding grants.
Item 4. Shareholder Proposal Regarding Executive Compensation
The Sheet Metal Workers’ National Pension Fund, Edward F. Carlough Plaza, 601 North Fairfax Street, Suite 500,
Alexandria, Virginia 22314, benefi cial owner of approximately 34,200 shares, has notifi ed the company that it in-
tends to present the following proposal at the annual meeting.
The board recommends that you vote AGAINST this proposal.
Executive Compensation Proposal
Resolved, that the shareholders of Lilly (Eli) & Co. (“Company”) request that the Company’s Board of Directors and
its Executive Compensation Committee replace the current system of compensation for senior executives with the
following “Commonsense Executive Compensation” program including the following features:
(1) Salary—The chief executive offi cer’s salary should be targeted at the mean of salaries paid at peer group com-
panies, not to exceed $1,000,000 annually. No senior executive should be paid more than the CEO.
(2) Annual Bonus—The annual bonus paid to senior executives should be based on well-defi ned quantitative (fi nan-
cial) and qualitative (non-fi nancial) performance measures. The maximum level of annual bonus should be a
percentage of the executive’s salary level, capped at 100% of salary.
(3) Long-Term Equity Compensation—Long-term equity compensation to senior executives should be in the form
of restricted shares, not stock options. The restricted share program should utilize justifi able performance cri-
teria and challenging performance benchmarks. It should contain a vesting requirement of at least three years.
Executives should be required to hold all shares awarded under the program for the duration of their employ-
ment. The value of the restricted share grant should not exceed $1,000,000 on the date of grant.
(4) Severance—The maximum severance payment to a senior executive should be no more than one year’s salary
and bonus.
(5) Disclosure—Key components of the executive compensation plan should be outlined in the Compensation
Committee’s report to shareholders, with variances from the Commonsense program explained in detail.
The Commonsense compensation program should be implemented in a manner that does not violate any existing
employment agreement or equity compensation plans.
Statement of Support: We believe that compensation paid to senior executives at most companies, including