Skip to Content

Eli Lilly CEO's Total Pay Rose To $20.9M In 2009

Eli Lilly CEO's Total Pay Rose To $20.9M In 2009: Proxy Shows Adjustments Helped Compensation of Lechleiter Jump by 44% [The Indianapolis Star]

From Indianapolis Star (IN) (February 9, 2010)

Feb. 9--The top executive of Eli Lilly and Co. saw his total compensation rise last year by 44 percent, to $20.9 million, but the Indianapolis drug maker attributed most of the increase to accounting adjustments and said the actual package was much lower.

Without the adjustments, John L. Lechleiter's total compensation would have been $15.9 million, an increase of about 9 percent, the company said.

Even so, that could keep Lechleiter at the top of the field of CEOs in Indiana, as companies file their proxy statements in coming weeks with the Securities and Exchange Commission. Lilly filed its preliminary proxy statement Monday. Two years ago, Lechleiter was No. 1, followed by Tim Solso of Cummins and Angela Braly of WellPoint.

Lilly handed out the raises in a challenging year in which the company announced it would cut 5,500 jobs worldwide to cope with the upcoming patent expirations of several leading products. Competition from generic drug companies is expected to cut sharply into revenues, beginning next year.

The raises also occurred during a year in which Lilly's stock fluctuated widely but fell by a net 11 percent. The lagging stock price resulted in no payout to any executive in a category called "shareholder value award."

Changes in accounting affected two categories of executive compensation: change in pension value and stock awards. The changes did not affect salary, cash bonus or other compensation.

Lechleiter saw his base salary increase 11 percent to $1.48 million. Lilly attributed the rise to the fact that Lechleiter served his first full year as CEO last year. The previous year, he was CEO for nine months. Lechleiter succeeded the previous CEO, Sidney Taurel, in April 2008.

Lechleiter got a cash bonus of $3.5 million, an increase of 31 percent from a year earlier.

Lechleiter's stock awards, on paper, increased by $2.3 million, to $11.25 million last year. Lilly said it was forced to state such a large number only for accounting purposes, and that Lechleiter's stock awards actually decreased by 7 percent last year, to $7.5 million. The unusual accounting, Lilly said, reflects the fact that the board's compensation committee has changed how it is paying stock awards. The stock award is based on two measurements: how the company's earnings per share compared with its peers and how the stock price performed.

As part of the change, Lilly's board extended the period during which it measures the earnings-per-share portion, from one year to two years, Lilly spokesman Mark Taylor said. Therefore, the company will pay out a performance award for 2009 twice: this year and again next year. But under accounting rules, Lilly is required to recognize both stock awards in the year they are granted.

Likewise, Lechleiter's pension increased by $2.3 million to about $14 million on paper last year, but Lilly attributed much of that to changes in actuarial assumptions, including a change in the discount rate. Without that change, Lechleiter's pension would have increased by about $1 million, Taylor said.

Call Star reporter John Russell at (317) 444-6283.

To see more of the Indianapolis Star or to subscribe to the newspaper, go to

Copyright (c) 2010, The Indianapolis Star

Distributed by McClatchy-Tribune Information Services.

For reprints, email, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

Posted: February 2010