Eli Lilly 2015 Annual Report Download - page 131

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the Board to nominate the candidate for election by the shareholders (or to select the candidate to fill a
vacancy, as applicable).
The Directors and Corporate Governance Committee performs periodic assessments of the overall
composition and skills of the Board in order to ensure that the Board and management are actively engaged
in succession planning for directors, and that our Board reflects the appropriate viewpoints, diversity, and
expertise necessary to support our complex and evolving business. The results of this assessment inform the
Board's recommendations on nominations for directors at the annual meeting each year and help provide us
with insight on the types of experiences, skills, and other characteristics we should be seeking for future
director candidates. Based on this assessment, the committee has recommended that the directors in the
2016 class who are standing for election be elected at the 2016 annual meeting.
Director Compensation
Director compensation is reviewed and approved annually by the Board, on the recommendation of the
Directors and Corporate Governance Committee. Directors who are employees receive no additional
compensation for serving on the Board.
Cash Compensation
In 2015, nonemployee directors received an annual retainer of $110,000 (payable in monthly installments). In
addition, certain Board roles received additional annual retainers:
Lead director: $30,000
Committee chairs: $12,000 ($18,000 for Audit Committee chair; $15,000 for Science and Technology
Committee chair)
Audit Committee/Science and Technology Committee members (including the chair): $6,000
All other Committee members (including the chairs): $3,000
Directors are reimbursed for customary and usual travel expenses. Directors may also receive additional cash
compensation for serving on ad hoc committees that may be assembled from time-to-time.
Stock Compensation
Directors should hold meaningful equity ownership positions in the company; accordingly, a significant portion
of director compensation is in the form of Lilly stock. Directors are required to hold Lilly stock, directly or
through company plans, valued at not less than five times their annual board retainer; new directors are
allowed five years to reach this ownership level. All directors are in compliance with these guidelines.
Nonemployee directors received $145,000 of stock compensation (but no more than 7,500 shares), deposited
annually in a deferred stock account in the Lilly Directors’ Deferral Plan (as described below), payable after
their service on the Board has ended.
Lilly Directors’ Deferral Plan: In addition to stock compensation, this plan allows nonemployee directors to
defer receipt of all or part of their cash compensation until after their service on the Board has ended. Each
director can choose to invest the funds in one or both of the following two accounts:
Deferred Stock Account. This account allows the director, in effect, to invest his or her deferred cash
compensation in company stock. In addition, the annual stock compensation award as noted above is
credited to this account. The number of shares credited is calculated by dividing the $145,000 annual
compensation figure by the closing stock price on a pre-set annual date. Funds in this account are credited as
hypothetical shares of company stock based on the market price of the stock at the time the compensation
would otherwise have been earned. Hypothetical dividends are “reinvested” in additional shares based on the
market price of the stock on the date dividends are paid. Actual shares are issued after the director ends his
or her service on the Board.