Eli Lilly 2010 Annual Report Download - page 149

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PROXY STATEMENT
Plan Administration
The EOIP will be administered by the compensation committee of the board (the committee), which is composed of at
least three outside directors as defined under the code.
Determination of Annual Incentive Bonus
The EOIP operates by establishing a maximum annual incentive bonus and granting the committee discretion to
reduce the bonus from the maximum. Under the EOIP, the maximum bonuses are based on Non-GAAP Net Income
(as defined below) for the year. For the chief executive officer, chief operating officer (if any), and executive chairman
(if any), the maximum is 0.3 percent of Non-GAAP Net Income. For other executive officers, the maximum is
0.15 percent of Non-GAAP Net Income. No payments can be made unless the company has positive Non-GAAP Net
Income for the year. The committee has discretion to reduce, but not increase, the annual incentive bonus.
In exercising this discretion, the committee intends generally to award executive officers the lesser of (i) the
bonuses they would have received under the bonus plan or (ii) the EOIP maximum amounts. Each year the committee
will establish target bonuses for the executive officers based on a percentage of salary. At the end of the year, the
committee will reduce the bonuses from the EOIP maximum based on the company’s achievement relative to
performance-based goals set by the committee (currently non-GAAP EPS growth, revenue growth, and progress of
our research and development pipeline) in a manner consistent with the committee’s administration of the bonus
plan. Accordingly, actual payouts under the EOIP are expected to be less than the EOIP maximum amounts. The
committee retains further discretion to reduce the bonuses below the results that would have been yielded under
the bonus plan.
“Non-GAAP Net Income” is the company’s positive consolidated net income as reported in its audited financial
statements, adjusted to exclude the effects during the year of (i) any acquisition occurring during the year,
(ii) material charges or income arising from litigation, (iii) corporate restructuring, asset impairments, or other
special charges, (iv) acquired in-process research and development costs, and (v) cumulative effect of changes to
U.S. generally accepted accounting principles.
Payments
Payments will be made in cash after the end of the year and prior to March 15 of the following year. Prior to payment,
the committee will certify the calculation of positive Non-GAAP Net Income, the EOIP maximums, and any reduction
of bonuses based on the committee’s exercise of discretion.
Amendment of EOIP
The board of directors or the committee may amend or terminate the EOIP at any time. To the extent the board or
committee determines that Section 162(m) requires shareholder approval of an amendment, it shall make such
action contingent on shareholder approval.
New Plan Benefits
No determination has been made as to the amounts payable in the future under the EOIP. If the EOIP had been in
effect in 2010, the following amounts would have been paid. These are equivalent to the payments made under the
bonus plan and are less than the EOIP maximum bonus amounts based on 2010 Non-GAAP Net Income of
$5,240.8 million.
Name Dollar Value
John C. Lechleiter, Ph.D. $2,982,000
Jan M. Lundberg, Ph.D. $1,209,501
Derica W. Rice $1,220,490
Bryce D. Carmine $1,210,373
Robert A. Armitage $950,624
All executive officers as a group (13 people): $11,858,095
The board recommends that you vote FOR the Executive Officer Incentive Plan.
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