Eli Lilly 2011 Annual Report Download - page 125

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PROXY STATEMENT
Reconciliations of these adjustments to our reported earnings per share are below. The shaded numbers are
the growth percentages used to calculate the 2011 bonus payout.
2011 2010 % Growth
2011
Revenue as reported ($ millions) $24,286.5 $23,076.0 5.2%
Impact of Xigris withdrawal ($32.9) —
Revenue—adjusted $24,253.6 $23,076.0 5.1%
EPS as reported $3.90 $4.58 -14.8%
Eliminate IPR&D charges for acquisitions and in-licensing transactions $0.23 $0.03
Eliminate asset impairments, restructuring and other special charges (including Xigris withdrawal in 2011) $0.29 $0.13
Non-GAAP EPS* $4.41 $4.74 -7.0%
Xigris withdrawal adjustment ($0.05) —
EPS—adjusted $4.36 $4.74 -8.0%
*Numbers may not add due to rounding.
Equity Incentive Grant Mechanics and Timing
The committee approves target grant values for equity incentives prior to the grant date. On the grant date, those
values are converted to shares based on:
• the closing price of company stock on the grant date
• the same valuation methodology the company uses to determine the accounting expense of the grants under
Financial Accounting Standards Board Accounting Standards Codification (FASB ASC) Topic 718.
The committee’s procedure for the timing of equity grants assures that grant timing is not being manipulated for
employee gain. The annual equity grant date for all eligible employees is in the first half of February. The committee
establishes this date in October. The February grant date timing is driven by these considerations:
• It coincides with the company’s calendar-year-based performance management cycle, allowing supervisors to
deliver the equity awards close in time to performance appraisals, which increases the impact of the awards by
strengthening the link between pay and performance.
• It follows the annual earnings release, so that the stock price at that time can reasonably be expected to fairly
represent the market’s collective view of our then-current results and prospects.
Grants to new hires and other off-cycle grants are effective on the first trading day of the following month.
Employee and Post-Employment Benefits
The company offers core employee benefits coverage to:
• provide our global workforce with a reasonable level of financial support in the event of illness, injury, and
retirement
• enhance productivity and job satisfaction through programs that focus on work/life balance.
The benefits available are the same for all U.S. employees and include medical and dental coverage, disability
insurance, and life insurance.
In addition, the 401(k) plan and The Lilly Retirement Plan (the retirement plan) provide U.S. employees a reason-
able level of retirement income reflecting employees’ careers with the company. To the extent that any employee’s
retirement benefit exceeds IRS limits for amounts that can be paid through a qualified plan, the company also offers
a nonqualified pension plan and a nonqualified savings plan. These plans provide only the difference between the
calculated benefits and the IRS limits, and the formula is the same for all U.S. employees.
The cost of both employee and post-employment benefits is partially borne by the employee, including each
executive officer.
Perquisites
The company provides very limited perquisites to executive officers. Executive officers generally do not have access
to the corporate aircraft for personal use; however, the aircraft is made available for the personal use of
Dr. Lechleiter when the security and efficiency benefits to the company outweigh the expense. Dr. Lechleiter did not
use the corporate aircraft for personal flights during 2011, nor did he receive any other perquisites. Until
March 2009, the company aircraft was made available to other executive officers for the limited purpose of travel to
outside board meetings. However, the company no longer allows this use. Depending on seat availability, family
members and personal guests of executive officers may travel on the company aircraft to accompany executives who
are traveling on business. There is no incremental cost to the company for these trips.
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