The compensation committee shall establish the compensation of executive
officers of the company and shall provide oversight of the company's global
compensation philosophy. The committee shall also act as the governing
committee with respect to the company's deferred compensation plans,
management stock plans, and the company's bonus plans covering executive
officers and other senior management.
Composition and Term
The committee shall consist of no fewer than three directors, all of whom
must be independent as determined by the Board in accordance with its
guidelines and applicable New York Stock Exchange listing requirements.
Committee members shall also meet applicable independence requirements of
Rule 16b-3 of the Securities Exchange Act of 1934 and the regulations under
Section 162(m) of the Internal Revenue Code. No committee member shall be a
former officer or employee of the company.
The committee members shall be appointed by the board for one-year terms,
and shall serve such terms as the board may determine, or until their
earlier resignation or death. The chairperson shall be designated by the
The committee shall meet at such times as it determines to be necessary or
appropriate, but not less than twice each year. The committee shall meet in
executive session at least once each year in connection with the assessment
of the performance and compensation of the chief executive officer, and may
meet in executive session at any other time it deems appropriate.
The committee shall report to the full board of directors at the next board
meeting following each such committee meeting.
Supporting Corporate Staff
Senior vice president responsible for human resources
Global compensation and benefits
Office of the corporate secretary
Duties and Responsibilities
The committee shall have the following duties and responsibilities:
Together with the other independent directors, review and
approve corporate goals and objectives relevant to the compensation of the
chief executive officer and evaluate the CEO's performance in light of
those goals and objectives; then, based on that evaluation, exercise sole
responsibility to determine the CEO's compensation level.
Establish the compensation of each other employee of the
company who is an executive officer. The committee's responsibilities in
connection with establishing the compensation of the CEO and other
executive officers shall include:
Reviewing and approving the company's statement of total
compensation philosophy and strategy
Approving the selection of peer companies to monitor the
company's compensation competitiveness
Approving any special benefits or perquisites provided to
Approving any special employment, termination or retirement
contracts, agreements or terms applicable to executive officers
Approving any change-in-control provisions applicable to
executive officers and other employees
Act as the governing committee with respect to the company's
bonus plans covering senior management, the deferred compensation plans
available to senior management, and the company's management stock plans
(including selecting employees eligible to participate and the level of
participation of each such employee and establishing the performance
metrics for incentive plans). The committee may delegate authority with
respect to these plans to members of senior management, except that no
authority may be delegated with respect to (i) any element of the
compensation of executive officers or (ii) the equity compensation of
officers subject to Section 16(b) of the Securities Exchange Act of 1934.
Produce an annual committee report on executive compensation
for the company's proxy statement in accordance with applicable rules and
Periodically review Lilly stock ownership of executive
officers and, if appropriate, establish stock ownership and/or retention
guidelines for executive officers.
Make recommendations to the Board with respect to incentive
compensation plans, equity-based plans and other compensation matters
coming before the Board or the shareholders.
Advise management on other employee compensation and benefits
matters as requested by the chief executive officer or the senior vice
president responsible for human resources.
Exercise sole authority to retain and terminate consulting
firms to assist the committee in the evaluation of executive officer
compensation, including sole authority to establish the relationship and
roles and responsibilities and to approve the firm's fees and other
Annually review and assess this charter and the performance of
The committee shall also undertake such additional activities within the
scope of its primary functions as the committee may from time to time