Eli Lilly 2006 Annual Report Download - page 98

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PROXY STATEMENT
9696
investment power with respect to all of its shares.
Wellington Management Company, LLP, acts as investment advisor to various clients. It has shared voting
power with respect to 26,252,339 shares (approximately 2.3 percent of shares outstanding) and shared investment
power with respect to all of its shares.
Items of Business to Be Acted Upon at the Meeting
Item 1. Election of Directors
Under the company’s articles of incorporation, the board is divided into three classes with approximately one-third
of the directors standing for election each year. The term for directors elected this year will expire at the annual
meeting of shareholders held in 2010. Each of the nominees listed below has agreed to serve that term. If any
director is unable to stand for election, the board may, by resolution, provide for a lesser number of directors or
designate a substitute. In the latter event, shares represented by proxies may be voted for a substitute director.
The board recommends that you vote FOR each of the following nominees:
• Sir Winfried Bischoff
• J. Michael Cook
• Franklyn G. Prendergast, M.D., Ph.D.
• Kathi P. Seifert
Biographical information about these nominees may be found on page 62 of this proxy statement.
Item 2. Proposal to Ratify the Appointment of Principal Independent Auditors
The audit committee has appointed the fi rm of Ernst & Young LLP as principal independent auditors for the com-
pany for the year 2007. In accordance with the bylaws, this appointment is being submitted to the shareholders for
ratifi cation. Ernst & Young served as the principal independent auditors for the company in 2006. Representatives
of Ernst & Young are expected to be present at the annual meeting and will be available to respond to appropriate
questions. Those representatives will have the opportunity to make a statement if they wish to do so.
The board recommends that you vote FOR ratifying the appointment of Ernst & Young LLP as principal indepen-
dent auditors for 2007.
Item 3. Proposal to Amend the Company’s Articles of Incorporation to Provide for Annual Election of Directors
The company’s Amended Articles of Incorporation currently provide that the board of directors is divided into three
classes, with each class elected every three years. In December 2006, on the recommendation of the directors and
corporate governance committee, the board unanimously adopted resolutions approving, and recommending to the
shareholders for approval, amendments to provide for the annual election of directors.
If approved, this proposal will become effective upon the fi ling of Amended Articles of Incorporation containing
these amendments with the Secretary of State of Indiana, which the company intends to do promptly after shareholder
approval is obtained. Directors elected prior to the effectiveness of the amendments will stand for election for one-
year terms once their then-current terms expire. This means that directors whose terms expire at the 2008 and 2009
annual meetings of shareholders would be elected for one-year terms, and beginning with the 2010 annual meeting,
all directors would be elected for one-year terms at each annual meeting. In addition, in the case of any vacancy on the
board occurring after the 2007 annual meeting, including a vacancy created by an increase in the number of directors,
the vacancy would be fi lled by interim election of the board, with the new director to serve a term ending at the next
annual meeting. At all times, directors are elected to serve for their respective terms and until their successors have
been elected and qualifi ed. This proposal would not change the present number of directors, and it would not change
the board’s authority to change that number and to fi ll any vacancies or newly created directorships.
Article 9(b) of the company’s Amended Articles of Incorporation contains the provisions that will be affected if
this proposal is adopted. This article, set forth in Appendix A to this proxy statement, shows the proposed changes
with deletions indicated by strike-outs and additions indicated by underlining. The board has also adopted con-
forming amendments to the company’s bylaws, to be effective immediately upon the effectiveness of the amend-
ments to the Amended Articles of Incorporation.