Eli Lilly 2008 Annual Report Download - page 90

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PROXY STATEMENT
8888
Independent Auditor Fees
The following table shows the fees incurred for services rendered on a worldwide basis by Ernst & Young LLP, the
company’s independent auditor, in 2008 and 2007. All such services were preapproved by the committee in accor-
dance with the preapproval policy.
2008
(millions)
2007
(millions)
Audit Fees
• Annual audit of consolidated and subsidiary fi nancial statements, including Sarbanes-Oxley 404 attestation
• Reviews of quarterly fi nancial statements
• Other services normally provided by the auditor in connection with statutory and regulatory fi lings
$8.0 $7.0
Audit-Related Fees
• Assurance and related services reasonably related to the performance of the audit or reviews of the fi nancial statements
—2008 and 2007: primarily related to employee benefi t plan and other ancillary audits, and due diligence services on
acquisitions
$0.8 $0.4
Tax Fees
• 2008 and 2007: primarily related to consulting and compliance services
$1.7 $1.4
All Other Fees
• 2008 and 2007: primarily related to compliance services outside the U.S.
$0.2 $0.1
Total $10.7 $8.9
Compensation Committee Matters
Scope of Authority
The compensation committee oversees the company’s global compensation philosophy and establishes the com-
pensation of executive offi cers. The committee also acts as the oversight committee with respect to the company’s
deferred compensation plans, management stock plans, and bonus plans covering executives. In overseeing those
plans, the committee may delegate authority to company offi cers for day-to-day plan administration and interpre-
tation, including selecting participants, determining award levels within plan parameters, and approving award
documents. However, the committee may not delegate any authority for matters affecting the executive offi cers.
The Committee’s Processes and Procedures
The committee’s primary processes for establishing and overseeing executive compensation can be found in the
“Compensation Discussion and Analysis” section under “The Committee’s Processes and Analyses” on pages
90–91. Additional processes and procedures include:
• Meetings. The committee meets several times each year (nine times in 2008). Committee agendas are
established in consultation with the committee chair and the committee’s independent compensation
consultant. The committee meets in executive session after each meeting.
• Role of Independent Consultant. The committee has retained Frederic W. Cook and his fi rm, Frederic W. Cook &
Co., as its independent compensation consultant to assist the committee in evaluating executive compensation
programs and in setting executive offi cers’ compensation. Mr. Cook reports directly to the committee, and
neither he nor his fi rm is permitted to perform any services for management. The consultant’s duties include
the following:
—Review committee agendas and supporting materials in advance of each meeting and raise questions with
the company’s global compensation group and the committee chair as appropriate
—Review the company’s total compensation philosophy, peer group, and target competitive positioning for
reasonableness and appropriateness
—Review the company’s total executive compensation program and advise the committee of plans or practices
that might be changed to better refl ect evolving best practices
—Provide independent analyses and recommendations to the committee on the CEO’s pay
—Review draft Compensation Discussion and Analysis report and related tables for proxy statement
—Proactively advise committee on best practices ideas for board governance of executive compensation
—Undertake special projects at the request of the committee chair.
The consultant interacts directly with members of Lilly management only on matters under the committee’s
oversight and with the knowledge and permission of the committee chairperson.
• Role of Executive Offi cers and Management. With the oversight of the CEO and the senior vice president of human
resources, the company’s global compensation group formulates recommendations on matters of compensation
philosophy, plan design, and the specifi c compensation recommendations for executive offi cers (other