Eli Lilly 2010 Annual Report Download - page 154

PROXY STATEMENT
Appendix B
The Eli Lilly and Company Executive Officer Incentive Plan
Section 1. Purpose
The purpose of The Eli Lilly and Company Executive Officer Incentive Plan (“Plan”) is to provide an incentive for
covered Executive Officers to use their best efforts to further the business objectives of the Company and thereby
create shareholder value. To achieve this purpose, the Plan provides for a significant annual incentive bonus
component tied directly to the achievement of stated business objectives as part of each covered Executive Officer’s
compensation package.
All payments made pursuant to the Plan are intended to qualify as performance-based compensation under
Section 162(m) of the Internal Revenue Code.
Section 2. Effective Date and Term
The Plan is effective as of January 1, 2011, subject to approval by the affirmative vote of a majority of shares of the
Company’s common stock voting at the annual meeting of shareholders in April, 2011. The Plan shall remain in
effect until it is terminated by the Compensation Committee or the Board.
Section 3. Definitions and Rules of Interpretation
3.1 Definitions. The following words and phrases have the following meanings, when used in the Plan, unless a
different meaning is clearly required by the context.
(a) “Annual Incentive Bonus” means the bonus with respect to a Participant determined pursuant to Section 6.
(b) “Board” means the Board of Directors of Eli Lilly and Company.
(c) “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the rules and
regulations thereunder. Any reference to a provision of the Code shall include its successor.
(d) “Committee” or “Compensation Committee” means the Compensation Committee of the Board or the
successor of such committee, which in each case shall consist solely of two or more members who are “outside
directors” within the meaning of Code Section 162(m).
(e) “Company” means Eli Lilly and Company and its subsidiaries.
(f) “Disabled” means, (i) with respect to a Participant eligible to participate in The Lilly Extended Disability Plan,
that the Participant has become eligible for payment under that plan, or (ii) with respect to a Participant who is
not eligible to participate in The Lilly Extended Disability Plan, that the Participant is “disabled” under the
Company-sponsored disability benefit plan or program in which he participates.
(g) “Executive Officer” means, with respect to a Performance Year, any person designated by the Board as an
executive officer within the meaning of Rule 3b-7 under the Securities Exchange Act of 1934, as amended.
(h) “Lilly” means Eli Lilly and Company.
(i) “Non-GAAP Net Income” means, with respect to a Performance Year, the Company’s positive consolidated
net income, as determined in accordance with U.S. GAAP, adjusted to exclude the effects, as shown on the
financial statements filed as part of Form 10-K for the Performance Year, of (i) any acquisition during the
Performance Year, including the amortization expense of intangible assets acquired during the Performance
Year, (ii) material charges or income arising from litigation, (iii) corporate restructuring, asset impairment, or
other special charges, (iv) in-process research and development costs, and (v) cumulative effect of changes to
U.S. GAAP accounting.
(j) “Participant” means, with respect to a Performance Year, an Executive Officer who participates in the Plan for
part or all of the Performance Year.
(k) “Performance Year” means the calendar year for which the Company’s performance determines the amount
of a Participant’s Annual Incentive Bonus. The Performance Year shall be the calendar year preceding the year
of payment.
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