Eli Lilly 2012 Annual Report Download - page 130
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26
The committee determined the following:
• Program elements. The 2012 program consisted of base salary, a cash incentive bonus, and two forms of
performance-based equity grants: PAs and SVAs. Executives also received the company employee benefits
package. This total compensation program balances the mix of cash and equity compensation, the mix of
current and longer-term compensation, the mix of internally and externally focused goals, and the security of
foundational benefits in a way that furthers the compensation objectives discussed above.
• Targets. The company generally maintained pay ranges and a balance of pay elements similar to 2011. The
committee believes this overall program continues to provide cost-effective delivery of total compensation that:
— encourages employee retention and engagement by delivering competitive cash and equity components
— maintains a strong link to company performance and shareholder returns through a balanced equity
incentive program without encouraging excessive risk-taking
—maintains appropriate internal pay relativity
— provides opportunity for total pay within the broad middle range of expected peer-group pay when company
performance is comparable to that of our peers.
The graph below shows the balance of fixed and performance-based target compensation determined by the
committee and actual compensation received for 2012 bonus. The target compensation reflects decisions made
by the compensation committee for 2012. This includes the 2012-2013 PA and the 2012-2014 SVA. Actual
compensation includes base salary and cash incentive bonus earned in 2012 and the equity awards that
completed their performance periods in 2012, namely, the 2011-2012 PA and the 2010-2012 SVA.
2012 Target and Actual Compensation (millions)
Fixed Performance based One-time
Base salary Bonus PA SVA RSU upon Hire
Cash Long-term equity
Actual base salary and bonus amounts are shown in the “Summary Compensation Table.” The PA payout for
2011-2012 performance period paid out at 50 percent of target, as shown in the “Outstanding Equity Awards at
December 31, 2012” table. The SVA payout for 2010-2012 performance was 140 percent of target, as shown in the
“Options Exercised and Stock Vested in 2012” table. Additionally, the graph above includes the vesting of a
portion of restricted stock units (RSUs) that Dr. Lundberg received upon joining the company.