Eli Lilly 2008 Annual Report Download - page 99

Download and view the complete annual report

Please find page 99 of the 2008 Eli Lilly annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 132

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132

P R OX Y S TAT E M E N T
9797
Employee and Post-Employment Benefits
The company offers core employee benefits coverage in order to:
• provide our global workforce with a reasonable level of nancial support in the event of illness or injury
• enhance productivity and job satisfaction through programs that focus on work/life balance.
The benets available are the same for all U.S. employees and include medical and dental coverage, disability
insurance, and life insurance.
In addition, the Lilly 401(k) Plan and the Lilly Retirement Plan provide a reasonable level of retirement income
reecting employees’ careers with the company. U.S. employees are eligible to participate in these plans. To the
extent that any employee’s retirement benet exceeds IRS limits for amounts that can be paid through a qualied
plan, Lilly also offers a nonqualied pension plan and a nonqualied savings plan. These plans provide only the dif-
ference between the calculated benets and the IRS limits, and the formula is the same for all U.S. employees.
The cost of both employee and post-employment benets is partially borne by the employee, including each
executive ofcer.
Perquisites
The company provides very limited perquisites to executive ofcers. The company aircraft is made available for the
personal use of Dr. Lechleiter, where the committee believes the security and efciency benets to the company
clearly outweigh the expense. The company aircraft was similarly made available to Mr. Taurel prior to his retire-
ment and is also made available to other executive ofcers for the more limited purpose of travel to outside board
meetings. In addition, depending on seat availability, family members of executive ofcers may travel on the com-
pany aircraft to accompany executives who are traveling on business. There is no incremental cost to the company
for these trips.
Mr. Taurel’s primary use of the corporate aircraft for personal ights in 2008 was to attend outside board
meetings for the two public companies at which he serves as an independent director. The committee believes that
Mr. Taurel’s service on these boards, and his ability to conduct Lilly business while traveling to board meetings,
provided clear benets to the company. Mr. Taurel entered into a time-share arrangement (now ended) for use of
corporate aircraft under which he paid the company a lease fee for personal use, other than for attending outside
board meetings. This amount offset part of the company’s incremental cost of providing the aircraft. Dr. Lechleiter
had minimal use of the corporate aircraft for personal ights during 2008. Mr. Rice’s personal use of the aircraft
was limited to travel to outside board meetings.
Deferred Compensation Program
Executives may defer receipt of part or all of their cash compensation under the company’s deferred compensa-
tion program. The program allows executives to save for retirement in a tax-effective way at minimal cost to the
company. Under this unfunded program, amounts deferred by the executive are credited at an interest rate of 120
percent of the applicable federal long-term rate, as described in more detail following the Nonqualied Deferred
Compensation in 2008 table on page 107.
Severance Benefits
Except in the case of a change in control of the company, the company is not obligated to pay severance to named
executive ofcers upon termination of their employment.
The company has adopted a change-in-control severance pay program for nearly all employees of the com-
pany, including the executive ofcers. The program is intended to preserve employee morale and productivity and
encourage retention in the face of the disruptive impact of an actual or rumored change in control of the company.
In addition, for executives, the program is intended to align executive and shareholder interests by enabling execu-
tives to consider corporate transactions that are in the best interests of the shareholders and other constituents
of the company without undue concern over whether the transactions may jeopardize the executives’ own employ-
ment. Because this program is guided by different objectives than the regular compensation program, decisions
made under this program do not affect the regular compensation program.
Although there are some differences in benet levels depending on the employee’s job level and seniority, the
basic elements of the program are comparable for all employees:
• Double trigger. Unlike “single trigger” plans that pay out immediately upon a change in control, the Lilly program
generally requires a “double trigger”—a change in control followed by an involuntary loss of employment within
two years thereafter. This is consistent with the purpose of the program, which is to provide employees with a
guaranteed level of nancial protection upon loss of employment. A partial exception is made for performance