Eli Lilly 2011 Annual Report Download - page 104

Download and view the complete annual report

Please find page 104 of the 2011 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 164

  • 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
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164

PROXY STATEMENT
executive officer and considered by the compensation committee in establishing the chief executive officer’s compen-
sation for the next year.
Corporate Strategy
Once each year, the board devotes an extended meeting with senior management to discuss the strategic issues and
opportunities facing the company, allowing the board an opportunity to provide direction for the corporate strategic
plan. These strategy sessions also provide the board an opportunity to interact extensively with the company’s senior
leadership team. This assists the board in its succession-management responsibilities.
Throughout the year, significant corporate strategy decisions are brought to the board in a timely way for its
consideration.
Code of Ethics
The board approves the company’s code of ethics. This code is set out in:
•The Red Book, a comprehensive code of ethical and legal business conduct applicable to all employees world-
wide and to our board of directors
•Code of Ethical Conduct for Lilly Financial Management, a supplemental code for our chief executive officer and all
members of financial management that recognizes the unique responsibilities of those individuals in assuring
proper accounting, financial reporting, internal controls, and financial stewardship.
Both documents are available online at http://www.lilly.com/about/compliance/conduct/ or in paper form upon
request to the company’s corporate secretary.
The audit committee and public policy and compliance committee assist in the board’s oversight of compliance
programs with respect to matters covered in the code of ethics.
Risk Oversight
The company has an enterprise risk management program overseen by its chief ethics and compliance officer and
senior vice president of enterprise risk management, who reports directly to the CEO and is a member of the
company’s top leadership committee. Enterprise risks are identified and prioritized by management, and the top
prioritized risks are assigned to a board committee or the full board for oversight. For example, strategic risks are
typically overseen by the full board; financial risks are overseen by the audit or finance committee; compliance and
reputational risks are typically overseen by the public policy and compliance committee; and scientific risks are
overseen by the science and technology committee. Management periodically reports on each such risk to the rele-
vant committee or the board. The enterprise risk management program as a whole is reviewed annually at a joint
meeting of the audit and public policy and compliance committees, and enterprise risks are also addressed at the
annual board strategy session. Additional review or reporting on enterprise risks is conducted as needed or as
requested by the board or committee. Also, the compensation committee periodically reviews the most important
enterprise risks to ensure that compensation programs do not encourage excessive risk-taking. The board’s role in
the oversight of risk had no effect on the board’s leadership structure.
V. Functioning of the Board
Executive Sessions of Directors
The independent directors meet alone in executive session and in private session with the CEO at every regularly
scheduled board meeting.
Lead Director
The board annually appoints a lead director from among the independent directors. Currently the lead director is
Ms. Horn, but effective in April 2012, Ms. Marram will become lead director. The board has no set policy for rotation
of the lead director role but believes that periodic rotation is appropriate. The lead director:
• leads the board’s processes for selecting and evaluating the CEO;
• presides at all meetings of the board at which the chairman is not present, including executive sessions of the
independent directors unless the directors decide that, due to the subject matter of the session, another
independent director should preside;
• serves as a liaison between the chairman and the independent directors;
• approves meeting agendas and schedules and generally approves information sent to the board;
• has the authority to call meetings of the independent directors; and
• has the authority to retain advisors to the independent directors.
14