{"id":301939,"date":"2010-02-10T10:49:20","date_gmt":"2010-02-10T15:49:20","guid":{"rendered":"http:\/\/www.footnoted.org\/?p=4526"},"modified":"2010-02-10T10:49:20","modified_gmt":"2010-02-10T15:49:20","slug":"looking-past-%e2%80%9cthe-little-stuff%e2%80%9d-at-eli-lilly%e2%80%a6","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/301939","title":{"rendered":"Looking past \u201cthe little stuff\u201d at Eli Lilly\u2026"},"content":{"rendered":"

\"\"<\/a>Proxies \u2013 like novels \u2013 often take dramatic turns.\u00a0 An example is the preliminary proxy<\/a> that pharmaceutical giant Eli Lilly and Company<\/a> (LLY) filed on Monday.<\/p>\n

There were some small discoveries, such as the note on p. 41. \u00a0It said starting this year, the company will no longer pay executives for the tax reimbursements for expenses incurred when their spouses attend company functions.\u00a0 Mind you, these aren\u2019t the expenses<\/em> themselves, but the taxes<\/em> on those expenses.\u00a0 In 2009, those taxes ranged between $1,091 and $2,001 per executive. And\u00a0last March, Lilly changed its policies to say that executive officers could no longer fly on its corporate planes to attend outside board meetings for other companies.<\/p>\n

The next change affects Dr. John Lechleiter, who started with Lilly in 1979 as a senior organic chemist.\u00a0 In the past three decades, he has worked his way up, becoming president, then CEO in 2008, and chairman of the board in 2009. \u00a0Page 27 of the proxy states that \u201cIn light of the business challenges the company currently faces, at Dr.\u00a0Lechleiter\u2019s request, the compensation committee approved that no increases be made to his 2010 salary or incentive targets.\u201d<\/p>\n

These all sound like steps in the right direction; but as we read further, it became apparent how small they really were.<\/p>\n

According to the Summary Compensation Table and the oddly named “Supplement to the Summary Compensation Table”, both on p. 40, Dr. Lechleiter\u2019s total compensation package is worth either $20,927,649 or $15,905,108. (The numbers vary because the company is transitioning from a one-year performance award, “PA”, to a two-year award.) \u00a0Lilly’s filing says it believes the second method is \u201cmore representative of [Lechleiter’s] annual compensation.\u201d<\/p>\n

The company also says Dr. Lechleiter\u2019s 2009 total compensation (which increased his base salary, bonus target, and equity grant target) was appropriate because it reflected strong performance measured by growth in revenue and EPS.\u00a0 It acknowledges, however, that the company\u2019s performance \u201c[lagged] in total shareholder return.\u201d\u00a0 To account for that (p. 27), the executives did not receive yet another award \u2013 the shareholder value award, or SVA.<\/p>\n

What’s interesting here is that the company touts its progress on \u201cthe little stuff\u201d while glossing over the fact that the big dollars continue to flow to the top executives, even though it admits that shareholder return has suffered.<\/p>\n

A final irony is that the board of directors opposes two shareholder resolutions.\u00a0 One would prohibit the CEO from serving on the compensation committee (the board \u201cbelieves this proposal is not in the best long-term interests of the shareholders\u201d).\u00a0 The other resolution would give shareholders a \u201csay on pay.\u201d\u00a0 On this one, the board says that besides company representatives and its independent consultant periodically meeting with shareholder groups, shareholders need only \u201c[s]ee\u2026 page 5 for instructions on how [they] can communicate with the compensation committee or board.\u201d*<\/p>\n

(*Hint to Lilly\u2019s shareholders:\u00a0 It\u2019s at the bottom of page 5 on your proxy.)<\/p>\n

Image source: \u00a0Dowling Law Office<\/em><\/p>\n

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Proxies \u2013 like novels \u2013 often take dramatic turns.\u00a0 An example is the preliminary proxy that pharmaceutical giant Eli Lilly and Company (LLY) filed on Monday. There were some small discoveries, such as the note on p. 41. \u00a0It said starting this year, the company will no longer pay executives for the tax reimbursements for […]<\/p>\n","protected":false},"author":4072,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-301939","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/301939","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/4072"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=301939"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/301939\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=301939"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=301939"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=301939"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}