Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under applicable Securities and Exchange Commission (SEC) regulations, management of a reporting company, with the participation of the principal executive officer and principal financial officer, must periodically evaluate the company's "disclosure controls and procedures," which are defined generally as controls and other procedures designed to ensure that information required to be disclosed by the reporting company in its periodic reports filed with the SEC (such as this Form 10-K) is recorded, processed, summarized, and reported on a timely basis.
Our management, with the participation of David A. Ricks, president and chief executive officer, and Anat Ashkenazi, senior vice president and chief financial officer, evaluated our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of December 31, 2021, and concluded that they were effective.
Management's Report on Internal Control over Financial Reporting
Mr. Ricks and Ms. Ashkenazi provided a report on behalf of management on our internal control over financial reporting, in which management concluded that the company's internal control over financial reporting is effective at December 31, 2021 based on the framework in "Internal Control—Integrated Framework" (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States. Due to the inherent limitations, no evaluation over internal control can provide absolute assurance that no material misstatements or fraud exist.
In addition, Ernst & Young LLP, the company's independent registered public accounting firm, issued an attestation report on the company's internal control over financial reporting as of December 31, 2021.
You can find the full text of management's report and Ernst & Young's attestation report in Item 8.
Changes in Internal Control over Financial Reporting
During the fourth quarter of 2021, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
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Part III
Item 10. Directors, Executive Officers, and Corporate Governance
Directors and Executive Officers
Information relating to our board of directors is found in our Definitive Proxy Statement, to be dated on or about March 18, 2022 (Proxy Statement), under "Governance - Board Operations and Governance" and is incorporated in this Annual Report on Form 10-K by reference.
Information relating to our executive officers is found at Item 1, "Business - Executive Officers of the Company" and is incorporated by reference herein.
Code of Ethics
Information relating to our code of ethics is found in our Proxy Statement under "Governance - Board Oversight of Strategy, Compliance, and Risk Management - Code of Ethics" and is incorporated in this Annual Report on Form 10-K by reference.
Corporate Governance
Information about the procedures by which shareholders can recommend nominees to our board of directors is found in our Proxy Statement under "Shareholder Engagement on Governance Issues - Shareholder Recommendations and Nominations for Director Candidates" and is incorporated in this Annual Report on Form 10-K by reference.
The board of directors has appointed an audit committee consisting entirely of independent directors in accordance with applicable Securities and Exchange Commission and New York Stock Exchange requirements for audit committees. Information about our audit committee is found in our Proxy Statement under "Governance - Membership and Meetings of the Board and Its Committees - Audit Committee" and is incorporated in this Annual Report on Form 10-K by reference.
Item 11. Executive Compensation
Information on director compensation, executive compensation, and compensation committee matters can be found in the Proxy Statement under "Governance - Director Compensation," "- Membership and Meetings of the Board and Its Committees - Compensation Committee," "Compensation - Compensation Discussion and Analysis," and "- Executive Compensation." Such information is incorporated in this Annual Report on Form 10-K by reference.
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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Security Ownership of Certain Beneficial Owners and Management
Information relating to ownership of the company's common stock by management and by persons known by the company to be the beneficial owners of more than five percent of the outstanding shares of common stock is found in the Proxy Statement under "Ownership of Company Stock" and incorporated in this Annual Report on Form 10-K by reference.
Securities Authorized for Issuance Under Equity Compensation Plans
The following table presents information as of December 31, 2021 regarding the company's compensation plans under which shares of the company's common stock have been authorized for issuance.
Plan category (a) Number of securities to be issued upon exercise of outstanding options, warrants, and rights (1)
(b) Weighted-average exercise price of outstanding options, warrants, and rights (c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by security holders — $ — 50,646,706
Equity compensation plan not approved by security holders — — —
Total — — 50,646,706
(1) 5,605,694 shares are underlying outstanding equity awards other than options.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Related Person Transactions
Information relating to the policies and procedures for approval of related person transactions by our board of directors can be found in the Proxy Statement under "Governance - Highlights of the Company's Corporate Governance - Conflicts of Interest and Transactions with Related Persons." Such information is incorporated in this Annual Report on Form 10-K by reference.
Director Independence
Information relating to director independence can be found in the Proxy Statement under "Governance - Director Independence" and is incorporated in this Annual Report on Form 10-K by reference.
Item 14. Principal Accountant Fees and Services
Information related to the fees and services of our principal independent accountants, Ernst & Young LLP, can be found in the Proxy Statement under "Audit Matters - Item 3. Ratification of the Appointment of the Independent Auditor - Audit Committee Report - Services Performed by the Independent Auditor" and "- Independent Auditor Fees." Such information is incorporated in this Annual Report on Form 10-K by reference.
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Item 15. Exhibits and Financial Statement Schedules
(a)1. Financial Statements
The following consolidated financial statements of the company and its subsidiaries are found at Item 8:
• Consolidated Statements of Operations—Years Ended December 31, 2021, 2020, and 2019
• Consolidated Statements of Comprehensive Income (Loss)—Years Ended December 31, 2021, 2020, and 2019
• Consolidated Balance Sheets—December 31, 2021 and 2020
• Consolidated Statements of Shareholders' Equity—Years Ended December 31, 2021, 2020, and 2019
• Consolidated Statements of Cash Flows—Years Ended December 31, 2021, 2020, and 2019
• Notes to Consolidated Financial Statements
(a)2. Financial Statement Schedules
The consolidated financial statement schedules of the company and its subsidiaries have been omitted because they are not required, are inapplicable, or are adequately explained in the financial statements.
Financial statements of interests of 50 percent or less, which are accounted for by the equity method, have been omitted because they do not, considered in the aggregate as a single subsidiary, constitute a significant subsidiary.
(a)3. Exhibits
The following documents are filed as part of this report:
Exhibit Location
3.1
Amended Articles of Incorporation
Incorporated by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 2013
3.2
Bylaws, as amended
Incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on December 16, 2021
4.1
Indenture, dated February 1, 1991, between the Company and Deutsche Bank Trust Company Americas, as successor trustee to Citibank, N.A., as Trustee
Incorporated by reference to Exhibit 4.1 to the Company ' s Registration Statement on Form S-3, Registration No. 333-186979
4.2
Tripartite Agreement, dated September 13, 2007, appointing Deutsche Bank Trust Company Americas as Successor Trustee under the Indenture listed in Exhibit 4.1
Incorporated by reference to Exhibit 4.2 to the Company ' s Annual Report on Form 10-K for the year ended December 31, 2008
4.3
Description of the Company's Common Stock
Incorporated by reference to Exhibit 4.3 to the Company's Annual Report on Form 10-K for the year ended December 31, 2019
4.4
Description of the Company's 1.000% Notes due 2022, 1.625% Notes due 2026, and 2.125% Notes due 2030
Incorporated by reference to Exhibit 4.4 to the Company's Annual Report on Form 10-K for the year ended December 31, 2019
4.5
Description of the Company's 6.77% Notes due 2036
Incorporated by reference to Exhibit 4.5 to the Company's Annual Report on Form 10-K for the year ended December 31, 2019
4.6
Description of the Company's 7 1/8% Notes due 2025
Incorporated by reference to Exhibit 4.6 to the Company's Annual Report on Form 10-K for the year ended December 31, 2019
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4.7
Description of the Company's 0.625% Notes due 2031 and 1.700% Notes due 2049
Incorporated by reference to Exhibit 4.7 to the Company's Annual Report on Form 10-K for the year ended December 31, 2019
4.8
Description of the Company's 0.500% Notes due 2033, 1.125% Notes due 2051, and 1.375% Notes due 2061
Attached
4.9
Description of the Company's 1.625% Notes due 2043
Attached
10.1
Amended and Restated 2002 Lilly Stock Plan (1)
Incorporated by reference to Exhibit 10.1 to the Company ' s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018
10.2
Form of Performance Award under the 2002 Lilly Stock Plan (1)
Attached
10.3
Form of Performance Award under the 2002 Lilly Stock Plan (with non-compete) (1)
Attached
10.4
Form of Performance Award under the 2002 Lilly Stock Plan (non-executive officer) (1)
Attached
10.5
Form of Shareholder Value Award under the 2002 Lilly Stock Plan (1)
Attached
10.6
Form of Shareholder Value Award under the 2002 Lilly Stock Plan (with non-compete) (1)
Attached
10.7
Form of Shareholder Value Award under the 2002 Lilly Stock Plan (non-executive officer) (1)
Attached
10.8
Form of Relative Value Award under the 2002 Lilly Stock Plan (1)
Attached
10.9
Form of Relative Value Award under the 2002 Lilly Stock Plan (with non-compete) (1)
Attached
10.10
Form of Relative Value Award under the 2002 Lilly Stock Plan (non-executive) (1)
Attached
10.11
Form of Restricted Stock Unit Award under the 2002 Lilly Stock Plan (1)
Attached
10.12
Form of Restricted Stock Unit Award under the 2002 Lilly Stock Plan (with non-compete) (1)
Incorporated by reference to Exhibit 10.1 to the Company ' s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021
10.13
Release Agreement, effective as of February 9, 2021, by and between Eli Lilly and Company and Joshua L. Smiley (1)
Incorporated by reference to Exhibit 10.2 to the Company ' s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021
10.14
The Lilly Deferred Compensation Plan, as amended (1)
Incorporated by reference to Exhibit 10.5 to the Company's annual report on Form 10-K for the year ended December 31, 2013
10.15
The Lilly Directors' Deferral Plan, as amended (1)
Incorporated by reference to Exhibit 10 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2017
10.16
The Eli Lilly and Company Bonus Plan, as amended (1)
Incorporated by reference to Exhibit 10.14 to the Company's Annual Report on Form 10-K for the year ended December 31, 2020
10.17
The Loxo Oncology, Inc. Bonus Plan (1)
Attached
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10.18
2007 Change in Control Severance Pay Plan for Select Employees, as amended (1)
Incorporated by reference to Exhibit 10.15 to the Company's Annual Report on Form 10-K for the year ended December 31, 2020
21
List of Subsidiaries
Attached
23
Consent of Independent Registered Public Accounting Firm
Attached
31.1
Rule 13a-14(a) Certification of David A. Ricks, Chair, President, and Chief Executive Officer
Attached
31.2
Rule 13a-14(a) Certification of Anat Ashkenazi, Senior Vice President and Chief Financial Officer
Attached
32
Section 1350 Certification
Attached
101 Interactive Data File Attached
104 Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) Attached
(1) Indicates management contract or compensatory plan.
Item 16. Form 10-K Summary
Not applicable.
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Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Eli Lilly and Company
By /s/ David A. Ricks
David A. Ricks
Chair, President, and Chief Executive Officer
February 23, 2022
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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on February 23, 2022 by the following persons on behalf of the Registrant and in the capacities indicated.
Signature Title
/s/ David A. Ricks Chair, President, and Chief Executive Officer (principal executive officer)
DAVID A. RICKS
/s/ Anat Ashkenazi Senior Vice President and Chief Financial Officer (principal financial officer)
ANAT ASHKENAZI
/s/ Donald A. Zakrowski Vice President, Finance, and Chief Accounting Officer (principal accounting officer)
DONALD A. ZAKROWSKI
/s/ Ralph Alvarez Director
RALPH ALVAREZ
/s/ Katherine Baicker, Ph.D. Director
KATHERINE BAICKER, Ph.D.
/s/ Michael L. Eskew Director
MICHAEL L. ESKEW
/s/ J. Erik Fyrwald Director
J. ERIK FYRWALD
/s/ Jamere Jackson Director
JAMERE JACKSON
/s/ Kimberly H. Johnson Director
KIMBERLY H. JOHNSON
/s/ William G. Kaelin, Jr., M.D. Director
WILLIAM G. KAELIN, JR., M.D.
/s/ Juan R. Luciano Director
JUAN R. LUCIANO
/s/ Marschall S. Runge, M.D., Ph.D. Director
MARSCHALL S. RUNGE, M.D., Ph.D.
/s/ Gabrielle Sulzberger Director
GABRIELLE SULZBERGER
/s/ Jackson P. Tai Director
JACKSON P. TAI
/s/ Karen Walker Director
KAREN WALKER
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Trademarks Used In This Report
Trademarks or service marks owned by Eli Lilly and Company or its affiliates, when first used in each item of this report, appear with an initial capital and are followed by the symbol ® or ™ , as applicable. In subsequent uses of the marks in the item, the symbols may be omitted.
Actos ® is a trademark of Takeda Pharmaceutical Company Limited.
Byetta ® is a trademark of Amylin Pharmaceuticals, Inc.
Glyxambi ® , Jardiance ® , Jentadueto ® , Synjardy ® , Trajenta ® , and Trijardy ® are trademarks of Boehringer Ingelheim International GmbH.
Tyvyt ® is a trademark of Innovent Biologics (Suzhou) Co., Ltd.
Viagra ® is a trademark of G.D. Searle LLC, a Viatris Company.
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