Eli Lilly 2008 Annual Report Download - page 83

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PROXY STATEMENT
8181
Procedures
• Management or the affected director or executive offi cer will bring the matter to the attention of the chairman,
the presiding director, the chair of the directors and corporate governance committee, or the secretary.
• The chairman and the presiding director shall jointly determine (or, if either is involved in the transaction, the
other shall determine in consultation with the chair of the directors and corporate governance committee)
whether the matter should be considered by the board or by one of its existing committees consisting only of
independent directors.
• If a director is involved in the transaction, he or she will be recused from all discussions and decisions about the
transaction.
• The transaction must be approved in advance whenever practicable, and if not practicable, must be ratifi ed as
promptly as practicable.
• The board or relevant committee will review the transaction annually to determine whether it continues to be in
the company’s best interests.
The only related-person transaction is a time-share arrangement (now ended) between the company and
Mr. Taurel as described on page 110. The compensation committee approved and monitored this arrangement
consistent with the above policy.
Orientation and Continuing Education
A comprehensive orientation process is in place for new directors. In addition, directors receive ongoing continuing
education through educational sessions at meetings, the annual strategy retreat, and periodic mailings between
meetings. We hold periodic mandatory training sessions for the audit committee, to which other directors and
executive offi cers are invited. We also afford directors the opportunity to attend external director education pro-
grams.
Director Access to Management and Independent Advisers
Independent directors have direct access to members of management whenever they deem it necessary. The inde-
pendent directors and the committees are also free to retain their own independent advisers, at company expense,
whenever they feel it would be desirable to do so. In accordance with New York Stock Exchange listing standards,
the audit, compensation, and directors and corporate governance committees have sole authority to retain inde-
pendent advisers to their respective committees.
Assessment of Board Processes and Performance
The directors and corporate governance committee annually assesses the performance of the board, its commit-
tees, and board processes based on inputs from all directors. The committee also considers the contributions of
individual directors at least every three years when considering whether to recommend nominating the director to
a new three-year term.
VI. Board Committees
Number, Structure, and Independence
The duties and membership of the six board-appointed committees are described below. Only independent direc-
tors may serve on the audit, compensation, directors and corporate governance, and public policy and compliance
committees. Only independent directors may chair any committee.
Committee membership and selection of committee chairs are recommended to the board by the directors
and corporate governance committee after consulting the chairman of the board and after considering the desires
of the board members.
Functioning of Committees
Each committee reviews and approves its own charter annually, and the directors and corporate governance com-
mittee reviews and approves all committee charters annually. The board may form new committees or disband
a current committee (except the audit, compensation, and directors and corporate governance committees) as it
deems appropriate. The chair of each committee determines the frequency and agenda of committee meetings.
In addition, the audit and compensation committees meet alone in executive session on a regular basis; all other
committees meet in executive session as needed.
All six committee charters are available online at http://investor.lilly.com/governance.cfm or in paper form
upon request to the company’s corporate secretary.