Eli Lilly 2011 Annual Report Download - page 121

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PROXY STATEMENT
2011 revenue, EPS, and pipeline multiples are illustrated by this chart:
Revenue multiple
Revenue growth
EPS multiple
EPS growth
Pipeline multiple
Pipeline score
-9%-19% -14% -4% 1%+
-9% -4% 1% 6% 11%+
0.0
0.0
1.0
0.5 1.0
3.0
2.0
1.5
4.0
2.0
5.0
0.5 1.0 1.5 2.0
2.0
Target
0.0 0.5 1.0 1.5
EPS
multiple
1.10
Revenue multiple
1.41
Pipeline
multiple
1.40
2011 adjusted revenue of $24.3 billion represented 5.1 percent growth over 2010, exceeding the goal of $23.2 billion,
and resulted in a revenue multiple of 1.41. 2011 adjusted non-GAAP EPS of $4.36 represented a reduction of
8 percent from 2010, exceeding the 2011 goal of $4.31 and resulting in an EPS multiple of 1.10.
The pipeline output and sustainability metrics were set consistent with corporate goals. The science and technol-
ogy committee of the board of directors assessed the company’s progress toward achieving these goals at 3.8 (on a
scale of 1 to 5), noting 3 major product approvals (plus 4 other approvals) versus a goal of 3, and 5 new molecular
entities (NMEs) moved into Phase III versus a goal of 3 NMEs. Additionally, 61 percent of pipeline projects met their
milestone goals, which was below the target of 70 percent. The science and technology committee also performed a
subjective assessment of the quality of the pipeline. Based on the recommendation of the science and technology
committee, the compensation committee certified a pipeline score of 3.8 resulting in a pipeline multiple of 1.40.
Combined, the sales, EPS, and pipeline progress multiples yielded a bonus multiple of 1.25.
(0.25 x 1.41) + (0.50 x 1.10) + (0.25 x 1.40) = 1.25 bonus multiple
Equity Incentives—Total Equity Program
We employ two forms of equity incentives granted under the 2002 Lilly Stock Plan: performance awards (PAs) and
shareholder value awards (SVAs). These incentives are designed to focus company leaders on long-term share-
holder value. For executive officers, SVAs have a three-year performance period followed by a one-year holding
requirement; PAs have a two-year performance period and pay out in restricted stock units (RSUs) that vest one year
after the performance period. The following chart shows the performance and holding periods for PA and SVA grants
over time:
Restricted Stock Units
Required Holding Period
Performance and Holding Periods for PAs and SVAs
2009 2010 2011 2012 2013 2014 2015
Performance Period
Performance Period
2009-2010 PA
2010-2011 PA
2011-2012 PA
2012-2013 PA
2009-2011 SVA
2010-2012 SVA
2011-2013 SVA
2012-2014 SVA
31