Eli Lilly 2013 Annual Report Download - page 121

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23
the company and related persons (directors and executive officers, their immediate family members, or
shareholders of 5 percent or greater of the company’s outstanding stock). The policy covers any related-
person transaction that meets the minimum threshold for disclosure in the proxy statement under the relevant
SEC rules (generally, transactions involving amounts exceeding $120,000 in which a related person has a
direct or indirect material interest).
Policy: Related-person transactions must be approved by the Board or by a committee of the Board
consisting solely of independent directors, who will approve the transaction only if they determine that it is in
the best interests of the company. In considering the transaction, the Board or committee will consider all
relevant factors, including:
• The company’s business rationale for entering into the transaction;
• The alternatives to entering into a related-person transaction;
• Whether the transaction is on terms comparable to those available to third parties, or in the case of
employment relationships, to employees generally;
• The potential for the transaction to lead to an actual or apparent conflict of interest and any
safeguards imposed to prevent such actual or apparent conflicts; and
• The overall fairness of the transaction to the company.
The Board or relevant committee will periodically monitor the transaction to ensure there are no changed
circumstances that would render it advisable to amend or terminate the transaction.
Procedures:
• Management or the affected director or executive officer will bring the matter to the attention of the
chairman, the lead director, the chair of the Directors and Corporate Governance Committee, or the
secretary.
• The chairman and the lead director shall jointly determine (or, if either is involved in the transaction,
the other shall determine) whether the matter should be considered by the Board or by one of its
existing committees.
• If a director is involved in the transaction, he or she will be recused from all discussions and decisions
about the transaction.
• The transaction must be approved in advance whenever practicable, and if not practicable, must be
ratified as promptly as practicable.
• The Board or relevant committee will review the transaction annually to determine whether it
continues to be in the company’s best interests.
The Directors and Corporate Governance Committee has approved the following employment relationships
which are considered related-party transactions under the SEC rules.
Dr. John Bamforth, vice president, chief marketing officer, Lilly Bio-Medicines, is the spouse of Dr. Susan
Mahony, one of the company's executive officers, and has been employed by the company for over 20 years.
In 2013, he was paid approximately $381,000 in cash compensation, and he received grants under the
company’s performance-based equity program valued at approximately $60,000 based upon the fair value
computed in accordance with stock-based compensation accounting rules (FASB ASC Topic 718). Similarly,
Mr. Myles O’Neill, senior vice president, global drug products, is the spouse of Dr. Fionnuala Walsh, a Lilly
executive officer, and has been employed by the company for over 10 years. His cash compensation in 2013
was approximately $700,000 and his equity grants were valued at approximately $375,000. Both Dr. Bamforth
and Mr. O’Neill participate in the company’s benefit programs generally available to U.S. employees, and their
compensation was established in accordance with the company’s compensation practices applicable to
employees with equivalent qualifications and responsibilities and holding similar positions.
Compensation Discussion and Analysis
This Compensation Discussion and Analysis (CD&A) provides a detailed description of our executive
compensation philosophy, the Compensation Committee's process for setting executive compensation, the