Eli Lilly 2010 Annual Report Download - page 105

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PROXY STATEMENT
• a director who is employed (or whose immediate family member is employed as an executive officer) by another
company where any Lilly executive officer serves on the compensation committee of that company’s board.
• a director who is employed by, who is a 10 percent shareholder of, or whose immediate family member is an
executive officer of a company that makes payments to or receives payments from Lilly for property or services
that exceed the greater of $1 million or 2 percent of that company’s gross revenue in a single fiscal year.
• a director who is an executive officer of a nonprofit organization that receives grants or contributions from the
company exceeding the greater of $1 million or 2 percent of that organization’s gross revenue in a single fiscal
year.
Members of board committees must meet all applicable independence tests of the NYSE, Securities and
Exchange Commission (SEC), and Internal Revenue Service (IRS).
The directors and corporate governance committee determined that all 12 nonemployee directors listed below
are independent, and that the members of each committee also meet the independence standards referenced above.
The committee recommended this conclusion to the board and explained the basis for its decision, and this
conclusion was adopted by the board. The committee and the board determined that none of the 12 directors has had
during the last four years (i) any of the relationships listed above or (ii) any other material relationship with the
company that would compromise his or her independence. In reaching this conclusion, the directors and corporate
governance committee reviewed directors’ responses to a questionnaire asking about their relationships with the
company and other potential conflicts of interest, as well as information provided by management related to
transactions, relationships, or arrangements between the company and the directors or parties related to the
directors. The table below includes a description of categories or types of transactions, relationships, or
arrangements considered by the board in reaching its determinations. All of these transactions were entered into at
arm’s length in the normal course of business and, to the extent they are commercial relationships, have standard
commercial terms. None of these transactions exceeded the thresholds described above or otherwise compromises
the independence of the named directors.
Name Independent Transactions/Relationships/Arrangements
Mr. Alvarez Yes None
Sir Winfried Bischoff Yes None
Mr. Eskew Yes None
Dr. Feldstein Yes None
Mr. Fyrwald Yes Nalco water treatment services—immaterial
Dr. Gilman Yes None
Mr. Hoover Yes None
Ms. Horn Yes None
Ms. Marram Yes None
Mr. Oberhelman Yes None
Dr. Prendergast Yes Lilly grants and contributions to Mayo Clinic and Mayo Foundation—immaterial
Ms. Seifert Yes None
Director Tenure and Retirement Policy
Subject to the company’s charter documents, the following are the board’s expectations for director tenure:
• A company officer-director, including the chief executive officer, will resign from the board at the time he or she
retires or otherwise ceases to be an active employee of the company.
• Nonemployee directors will retire from the board not later than the annual meeting of shareholders that follows
their seventy-second birthday.
• Directors may stand for reelection even though the board’s retirement policy would prevent them from
completing a full three-year term.
• A nonemployee director who retires or changes principal job responsibilities will offer to resign from the board.
The directors and corporate governance committee will assess the situation and recommend to the board
whether to accept the resignation.
Other Board Service
Effective November 1, 2009, no new director may serve on more than three other public company boards, and no
incumbent director may accept new positions on public company boards that would result in service on more than
three other public company boards. The directors and corporate governance committee or the chair of that
committee may approve exceptions to this limit upon a determination that such additional service will not impair the
director’s effectiveness on the board.
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