UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No. )

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ELI LILLY AND COMPANY

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check all boxes that apply):
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Notice of 2022

Annual Meeting of Shareholders

and Proxy Statement

YOUR VOTE IS IMPORTANT

Please vote online, by telephone, or, if you received or requested paper copies of your proxy materials, by signing, dating, and returning your proxy card by mail.

Important notice regarding the availability of proxy materials for the shareholder meeting to be held May 2, 2022: The annual report to shareholders and proxy statement are available at ProxyVote.com as well as on our website at lilly.com/policies-reports/annual-report.

From Our Chair and Lead Independent Director

Dear fellow Lilly shareholders,

Thank you for your continued support of, and investment in, Eli Lilly and Company. We are proud of Lilly's achievements in 2021. We delivered on important pipeline advancements that help people with diabetes, immune disorders, neurodegenerative disorders, and cancer, continued our efforts to fight COVID-19, and strengthened our initiatives in support of patients and communities. We also worked hard to deliver value to you, our shareholders. We generated strong total shareholder returns through December 31, 2021, in terms of both share price appreciation and dividends.

To support the health and well-being of our employees, board of directors, shareholders, and other meeting participants, and to facilitate broad shareholder attendance and provide a consistent experience to all shareholders, regardless of location, the 2022 Annual Meeting of Shareholders (the Annual Meeting) will be held virtually via live webcast. We learned during the virtual annual meetings held in 2020 and 2021 that this format, in addition to being safer during the COVID-19 pandemic, actually enables more shareholders to attend, and gives our leadership team time to address more questions from those in attendance.

As part of our mission to improve lives around the world, we are committed to creating a safe, supportive, ethical, and rewarding work environment. Lilly’s core values of integrity, excellence, and respect for people, and our dedication to diversity, equity, and inclusion (DEI) are critical components of how we do business. We take a holistic approach because we’re a stronger company when we have a workforce of top talent from different backgrounds—people who are respected, valued, welcomed, and heard. To fulfill our purpose, we must look at challenges from multiple viewpoints and understand the diverse experiences of the patients who depend on us. In short, our differences make a difference—to patients and to our business.

Our board recognizes that one of its key responsibilities is to ensure that Lilly is governed in a manner that provides both independent oversight and efficient and effective decision-making. Our chief executive officer brings to the role of chair of our board substantial strategic and operational perspectives and a unique understanding of Lilly's opportunities and challenges. This familiarity with our business, as well as extensive experience and leadership in our industry, positions our CEO to establish the agenda and drive strategy at the board level. Further, our lead independent director, currently CEO of a Fortune 100 company, elucidates an "outside in" analysis of company decisions and performance, maintains frequent contact with our chair to ensure a productive partnership between our independent directors and management, and leads our independent directors in their important oversight function.

Our board continues to prioritize meaningful engagement with our shareholders and other key stakeholders. Since our 2021 annual meeting, we have spoken with a number of investors on an array of subjects, including: board leadership; environmental social and governance topics; drug pricing transparency and global access to our products; product quality and safety; key enterprise risks; executive compensation; DEI; and human capital management.

We appreciate the thoughtful and constructive feedback that we receive from our stakeholders. As a result of this input, as in past years, the board is putting forward management proposals at the Annual Meeting to eliminate the classified board structure and supermajority voting requirements in our articles of incorporation. In addition, the board is putting forward a management proposal to amend our articles of incorporation to provide shareholders the ability to amend our bylaws.

We remain committed to serving you and the millions of patients around the world whose lives it is our mission to make better. We look forward to welcoming you at the Annual Meeting.

Sincerely,

David A. Ricks	Juan Luciano
Chair, President, and CEO	Lead Independent Director

Table of Contents

Notice of 2022 Annual Meeting of Shareholders		1
Proxy Statement Summary		3
Governance		11
	Item 1 - Election of Directors	11
	Board Operations and Governance	11
	Director Qualifications and Nomination Process	19
	Director Compensation	20
	Director Independence	22
	Committees of the Board of Directors	22
	Membership and Meetings of the Board and Its Committees	23
	Board Oversight of Strategy, Compliance, and Risk Management	25
	Highlights of the Company's Corporate Governance	25
	Communication with the Board of Directors	34
Shareholder Engagement on Governance Issues		34
	Management Proposals to Eliminate Classified Board, to Eliminate Supermajority Voting Provisions, and to Give Shareholders the Ability to Amend Bylaws	34
	Shareholder Proposals	35
	Shareholder Recommendations and Nominations for Director Candidates	35
Ownership of Company Stock		36
Compensation		37
	Item 2 - Advisory Vote on Compensation Paid to Named Executive Officers	37
	Compensation Committee Matters	38
	Compensation Discussion and Analysis	39
	Executive Compensation	55
	CEO Pay Ratio	64
Audit Matters		64
	Item 3 - Ratification of the Appointment of the Independent Auditor	64
Management Proposals		66
	Item 4 - Proposal to Amend the Company's Articles of Incorporation to Eliminate the Classified Board Structure	66
	Item 5 - Proposal to Amend the Company's Articles of Incorporation to Eliminate Supermajority Voting Provisions	67
	Item 6 - Proposal to Amend the Company's Articles of Incorporation to Give Shareholders the Ability to Amend the Company’s Bylaws	68
Shareholder Proposals		69
	Item 7 - Proposal to Amend the Bylaws to Require an Independent Board Chair	70
	Item 8 - Proposal to Publish an Annual Report Disclosing Lobbying Activities	72
	Item 9 - Proposal to Disclose Lobbying Activities and Alignment with Public Policy Positions and Statements	75
	Item 10- Proposal to Report Oversight of Risks Related to Anticompetitive Pricing Strategies	77
Other Information		80
	Meeting and Voting Logistics	80
	Other Matters	83
Appendix A - Summary of Adjustments Related to the Annual Cash Bonus and Performance Award		A-1
Appendix B - Proposed Amendments to the Company's Articles of Incorporation		B-1
Appendix C - Proposed Amendments to the Company's Articles of Incorporation		C-1

Notice of 2022 Annual Meeting of Shareholders

To the holders of common stock of Eli Lilly and Company:

The 2022 Annual Meeting of Shareholders (the Annual Meeting) of Eli Lilly and Company (referred to as Lilly, we, us, or the company in this proxy statement) will be held at the time and location below:

TIME AND DATE	LOCATION	WHO CAN VOTE
11:00 a.m. EDT, Monday, May 2, 2022	Virtually at virtualshareholdermeeting.com/LLY2022	Shareholders of record at the close of business on February 22, 2022

To support the health and well-being of our employees, board of directors, shareholders, and other meeting participants, the Annual Meeting will be held virtually via live webcast. We have designed the Annual Meeting live webcast to provide shareholders the opportunity to participate virtually to facilitate shareholder attendance and to provide a consistent experience to all shareholders, regardless of location.

This proxy statement is dated March 18, 2022. We mailed a notice of internet availability of proxy materials on or about that date toour shareholders of record as of February 22, 2022 (other than those who previously requested electronic or paper delivery of our proxy materials and certain participants in The Lilly Employee 401(k) plan (401(k) Plan)).

ITEMS OF BUSINESS

Governance		Board Voting Recommendation	Page Reference
Item 1	Election of each of the three director nominees to serve three-year terms	FOR each of the director nominees	11
Compensation
Item 2	Approval, on an advisory basis, of the compensation paid to the company's named executive officers	FOR	37
Audit Matters
Item 3	Ratification of the appointment of Ernst & Young LLP as the independent auditor for 2022	FOR	64
Management Proposals
Item 4	Approval of amendments to the company’s Articles of Incorporation to eliminate the classified board structure	FOR	66
Item 5	Approval of amendments to the company’s Articles of Incorporation to eliminate supermajority voting provisions	FOR	67
Item 6	Approval of amendments to the company's Articles of Incorporation to give shareholders the ability to amend the company's bylaws	FOR	68
Shareholder Proposals
Item 7	Shareholder proposal to amend the bylaws to require an independent board chair, if properly presented at the meeting	AGAINST	70
Item 8	Shareholder proposal to publish an annual report disclosing lobbying activities, if properly presented at the meeting	AGAINST	72
Item 9	Shareholder proposal to disclose lobbying activities and alignment with public policy positions and statements, if properly presented at the meeting	AGAINST	75
Item 10	Shareholder proposal to report oversight of risks related to anticompetitive pricing strategies, if properly presented at the meeting	AGAINST	77

Admission Procedure for Attending the Annual Meeting

You will be able to attend the Annual Meeting, vote, and submit questions virtually via live webcast by visiting virtualshareholdermeeting.com/LLY2022. To be admitted to the Annual Meeting webcast, you must enter the 16-digit control number found on the proxy card, voting instruction form, or notice you received. You may vote during the Annual Meeting by following the instructions available on virtualshareholdermeeting.com/LLY2022 during the Annual Meeting.

For further information on how to attend the Annual Meeting, see the section titled "Other Information—Meeting and Voting Logistics."

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Every shareholder vote is important. Even if you plan to attend the Annual Meeting, we encourage you to vote promptly online, by telephone, or, if you received or requested paper copies of your proxy materials, by signing, dating, and returning your proxy card or voting instructions by mail, so that a quorum may be represented at the meeting.

By order of the Board of Directors,

Ms. Anat Hakim

Senior Vice President, General Counsel, and Secretary

March 18, 2022

Indianapolis, Indiana

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Proxy Statement Summary

New in This Year's Proxy Statement

In 2021, we focused on advancing our pipeline to help people with diabetes, immune disorders, neurodegenerative disorders, and cancer. In addition, we have continued to support patients, communities, and our employees affected by the COVID-19 pandemic.

We have undertaken a detailed review of our sustainability efforts, how we communicate progress toward our Environmental, Social and Governance (ESG) goals, and our broader ESG strategy. In 2021, we established new 2030 sustainability goals and held an ESG stakeholder day to share our strategy and progress. In 2021, we also issued Lilly’s first sustainability bond, which will help fund projects that will contribute to our ESG objectives.In this proxy statement, you will find additional information about our approach to ESG and sustainability. See "Governance—Highlights of the Company’s Corporate Governance—Environmental, Social and Governance."

In addition, we recently enhanced our disclosures related to our lobbying and political activities. For additional information, see “Governance—Highlights of the Company’s Corporate Governance—Political and Policy Participation.”

Our board has approved, and recommends that our shareholders approve, three important management proposals at the Annual Meeting. As in past years, the board recommends approval of amendments to the company’s articles of incorporation to eliminate the classified board structure (see Item 4 herein) and to eliminate supermajority voting provisions (see Item 5 herein). The board also recommends approval of amendments to the company’s articles of incorporation to give shareholders the ability to amend our bylaws (see Item 6 herein). The board believes these three proposals balance shareholder interests and demonstrate its accountability and willingness to take steps that address concerns expressed by shareholders.

Michael L. Eskew, who joined the board in 2008 and serves as the Chair of the Directors and Corporate Governance Committee, will retire from the board following the Annual Meeting.

Highlights of 2021 Performance

The following provides a brief overview of our 2021 performance in four dimensions: operating performance, progress in our innovation pipeline, business development, and shareholder return, both absolute and relative. See our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, for more details.

We continued to progress our company's purpose and strategy in 2021 as we remained focused on:

•discovering, developing, and acquiring first- or best-in-class medicines to address significant unmet needs in our core therapeutic areas—diabetes, immunology, neuroscience, and oncology;

•reaching patients who can benefit from our innovative medicines around the world, directly and through partnership with healthcare systems and collaborators, providing broad access to safe, life-changing medicines;

•focusing our time and resources on new medicines that patients value most, delivering volume-driven sustainable growth;

•expanding our manufacturing footprint and bolstering our supply chain to support our growing portfolio; and

•reinvesting in our business and our people to discover new medicines to address unmet medical needs, improve cost productivity, reduce environmental impact, and supply quality medicines, while returning capital to shareholders.

We believe our strategic choices, coupled with robust execution, delivered significant value for shareholders and patients in 2021. We reached over 47 million patients globally with our medicines, expanded our patient support programs, achieved significant pipeline advancements and key data readouts across our core therapeutic areas, leveraged external innovation to expand our pipeline, and delivered high total shareholder returns relative to our peers and the S&P 500 index. The discussion below expands on our considerable success in 2021.

Operating Performance

Performance highlights:

•2021 revenue increased 15 percent to approximately $28.3 billion;

•2021 earnings per share (EPS) on a reported basis were $6.12, compared to 2020 EPS on a reported basis of $6.79; and

•on a non-GAAP basis, 2021 EPS increased 20 percent to $8.16.

Reported results were prepared in accordance with U.S. generally accepted accounting principles (GAAP) and include all revenue and expenses recognized during the periods. A reconciliation of EPS on a reported basis to EPS on a non-GAAP basis is included in Appendix A.

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2021 Innovation and Business Development Progress

We made significant pipeline advances in 2021, including:

•U.S. approval of a new indication for Verzenio® (abemaciclib) for certain people with high-risk, early breast cancer;

•in collaboration with Boehringer Ingelheim International GmbH, U.S. and European Union approval of a new indication for Jardiance® in adults with heart failure with reduced ejection fraction, with and without diabetes;

•in collaboration with AbCellera Biologics Inc. and Junshi Biosciences Co., Ltd., the U.S. FDA granted Emergency Use Authorization for the administration of bamlanivimab and etesevimab together as a treatment for COVID-19 in patients at high risk for hospitalization; and

•in collaboration with Incyte Corporation, approval in Japan for Olumiant® (baricitinib), in combination with remdesivir, as a treatment for COVID-19.

We announced several key data readouts in 2021, including:

•positive topline results from four studies from tirzepatide’s Phase III type 2 diabetes program, SURPASS-2, 3, 4, and 5, and regulatory submission for tirzepatide for type 2 diabetes in the U.S. to which Lilly applied a priority review voucher, as well as submission in Europe and Japan;

•positive topline results from donanemab’s TRAILBLAZER-ALZ, a Phase II study evaluating the efficacy and safety of donanemab compared to placebo in patients with early symptomatic Alzheimer’s disease;

•updated data for pirtobrutinib from the LOXO-305 BRUIN Phase I/II clinical trial in mantle cell lymphoma and other non-Hodgkin lymphomas, as well as in chronic lymphocytic leukemia and small lymphocytic lymphoma, at the 2021 American Society of Hematology Annual Meeting;

•positive topline results from mirikizumab’s Phase III LUCENT-1 and 2 studies evaluating the efficacy and safety of mirikizumab compared to placebo for the treatment of patients with moderately-to-severely active ulcerative colitis;

•positive topline results from three studies of lebrikizumab’s Phase III program evaluating the efficacy and safety of lebrikizumab in people with moderate-to-severe atopic dermatitis; and

•in collaboration with Boehringer Ingelheim International GmbH, positive topline results from a Phase III study of Jardiance® (empagliflozin) in adults with heart failure with preserved ejection fraction, with and without diabetes, and submissions in the U.S., Europe, and Japan.

We also completed over fifteen acquisitions, license agreements, and research collaborations to complement our pipeline in 2021, including:

•acquisition of Prevail Therapeutics Inc. to complement our existing expertise as we work to develop a gene therapy platform anchored by Prevail’s portfolio of clinical-stage and late pre-clinical stage gene therapies across a range of neurodegenerative disorders;

•acquisition of Protomer Technologies Inc., a private biotechnology company whose proprietary peptide- and protein-engineering platform is used to identify and synthesize molecules that can sense glucose or other endogenous modulators of protein activity; and

•entry into a global exclusive license agreement and strategic collaboration with Rigel Pharmaceuticals, Inc. to co-develop and commercialize Rigel’s R552, a receptor-interacting serine/threonine-protein kinase 1 (RIPK1) inhibitor for all indications, including autoimmune and inflammatory diseases.

4

Shareholder Returns

We generated strong total shareholder returns (TSR) through December 31, 2021. Our TSR takes into account both share price appreciation and dividends. Any dividends paid by a given company are assumed to be reinvested in that company’s stock on a quarterly basis. Our returns significantly exceeded our compensation peer group and the S&P 500 during the three- and five-year periods presented below:

Health, Safety and Welfare

In 2021, we continued to supply our therapies for COVID-19 and continued our research and development efforts and our partnership with regulators and governments to bring COVID-19 treatments to patients around the world. Throughout the COVID-19 pandemic, we have prioritized maintaining supply of and access to our medicines, particularly insulin, reducing the strain on the medical system, protecting the health, safety, and well-being of our employees, and supporting our workforce, affected communities, and patients who need our medicines.

Maintaining Supplies of and Access to Lilly Medicines

Throughout 2021, we continued our efforts to protect our manufacturing processes and remained in close communication with key suppliers regarding logistics, transportation, and supplies of raw materials. As a result, we were able to largely maintain our normal operations and continue to provide medicines on which millions of patients rely in the face of global supply chain challenges. We also continued patient support programs to ensure patients maintained affordable access to their medications and adjusted how we operate to offer innovative solutions to our customers. We remain committed to working with stakeholders in healthcare systems to help patients get the medicines they need, including through our Insulin Value Program, which allows anyone with commercial insurance and those without insurance to fill their monthly prescription of Lilly insulin for $35, as well as our other access and affordability initiatives.

Working to Ensure Diversity in Clinical Trials

We continue to identify and address barriers to fair access and representation of communities in our clinical research to help develop innovative medicines. Diverse representation in clinical trials is critical to helping our researchers develop medicines that will be as effective as possible for patients who use them. We are working to ensure trial participants match the composition of the patient population that might use the trial’s medicine by selecting diverse investigators and collaborating with external groups to identify and implement solutions. We collaborate with patients, patient advocacy groups, regulatory agencies, health care professionals and community organizations to identify and implement solutions that will result in diverse representation, improve health equity and generate evidence to support better patient outcomes.

Keeping Our Employees Safe and Healthy

We remain focused on protecting the health and safety of our employees and strive to foster a healthy, vibrant work environment. For additional information on our employee health and safety initiatives, see "Governance—Highlights of the Company’s Corporate Governance—Human Capital Management—Employee Health and Safety."

5

Governance

Item 1: Election of Directors

For further information, see page 11

	Name, age* and principal occupation	Public boards	Management recommendation	Vote required to pass
	Ralph Alvarez, 66 Operating Partner, Advent International Corporation Director since 2009	Lowe's Companies, Inc.; Traeger, Inc.; First Watch Restaurant Group, Inc.	Vote FOR	Majority of votes cast
	Kimberly H. Johnson, 49 Executive Vice President and Chief Operating Officer, Federal National Mortgage Association (Fannie Mae) Director since 2021		Vote FOR	Majority of votes cast
	Juan R. Luciano, 60 Chairman, Chief Executive Officer and President, Archer-Daniels-Midland Company Director since 2016; Lead Independent Director since 2019	Archer-Daniels-Midland Company	Vote FOR	Majority of votes cast

*Age is as of the date of this proxy statement.

Our Corporate Governance Policies Reflect Best Practices

Strategy and risk oversight

ü	Our board approves and actively oversees our corporate strategy.
ü	Our board and board committee agendas are structured to engage our directors in informed reviews of strategic and forward-looking issues, as well as in constructive challenges to management initiatives and programs.
ü	Our board reviews the overall state of our compliance program at least annually and reviews our enterprise-level risks, including related to cybersecurity; our Audit Committee oversees the process by which we identify and create mitigation plans for enterprise-level risks.
ü	Our board and Audit Committee receive regular presentations on cybersecurity from our management as part of their oversight of enterprise-level risks; in addition to regular presentations, management updates our board regarding changes to the broader cybersecurity landscape, as well as significant threats or incidents as they arise.
ü	We have a comprehensive code of business conduct, called The Red Book, which applies to our board and all employees worldwide. This code is reviewed and approved annually by the board, and in 2022 we revised The Red Book training to update our Global Conduct in the Workplace procedure to continue to help ensure that we maintain a respectful, safe, inclusive, and professional workplace.
ü	We have a supplemental code of conduct for our CEO and all members of financial management, in recognition of their unique responsibilities to ensure proper accounting, financial reporting, internal controls, and financial stewardship.
ü	The charters of our board committees clearly establish the committees’ respective roles and responsibilities.
ü	We have an annual cap on director compensation.

6

Board skills and experience

ü	Our board membership is characterized by leadership, experience, and diversity.
ü	We conduct comprehensive orientation and continuing education programs for directors.
ü	Our board conducts a robust annual assessment of board performance led by the lead independent director, including an annual assessment of each director.
ü	We are committed to maintaining an active and insightful board and seek to balance continuity of experience with fresh perspectives. Currently, eight directors have served on the board for more than five years and five directors have served on the board for five years or less.

Focus on independence

ü	Each of our current board members other than the CEO is independent (12 of our 13 directors as of the date of this proxy statement).
ü	We have a strong lead independent director empowered with clearly defined responsibilities.
ü	All standing board committees are composed solely of independent directors and led by independent committee chairs.
ü	Our board holds executive sessions of the independent directors that are presided over by the lead independent director at every regular board meeting.
ü	Our independent directors actively engage in board meetings, have direct access to management, and, along with our board committees, have discretion to hire independent advisors at the company’s expense.
ü	Our independent directors lead the board’s process for selecting the CEO.
ü	Our Compensation Committee (and, in the case of our CEO, in consultation with other independent directors and our external compensation consultant) establishes the compensation for our CEO and other executive officers.
ü	Our conflict of interest policy requires disclosures of potential conflicts to Lilly and clarifies when Lilly board service must be disclosed to others.

Governance and accountability to shareholders

ü	Our board values active shareholder engagement. In response to input from our shareholders, we have put forward for consideration at the Annual Meeting management proposals to amend our articles of incorporation to eliminate the classified board structure, to eliminate supermajority voting provisions in our articles of incorporation, and to give shareholders the ability to amend our bylaws.
ü	Our bylaws provide proxy access rights for shareholders holding at least three percent of our common stock for at least three years to nominate to the board the greater of two directors or 20 percent of our board seats.
ü	We have a majority voting standard and resignation policy for the election of directors in uncontested elections.
ü	We do not have a shareholder rights plan ("poison pill").
ü	We have meaningful stock ownership and retention guidelines for our directors and executive officers to foster alignment with shareholders.

Sustainability

ü	Our board has a longstanding commitment to corporate responsibility.
ü	We have strong governance of corporate political spending and transparent policy engagement and recently enhanced our disclosures related to political and lobbying activities.
ü	Our board oversees and maintains ongoing engagement with our Compensation Committee, Directors and Corporate Governance Committee, and senior executives on key political, social, and governance matters, including sustainability and human capital management.
ü	We enhanced our environmental, social and governance sustainability reporting in 2021, including the adoption of additional prevalent reporting frameworks, and established new goals.

Compensation

Item 2: Advisory Vote on Compensation Paid to Named Executive Officers	Management recommendation	Vote required to pass
For further information, see page 37	Vote FOR	Majority of votes cast

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Our Executive Compensation Programs Reflect Best Practices

ü	Shareholders strongly support our compensation practices: for the last five years, greater than 95 percent of shares cast voted in favor of our executive compensation programs.
ü	Our compensation programs are designed to align executive pay with shareholder interests and link pay to performance through a blend of short- and long-term performance measures.
ü	Our Compensation Committee annually reviews our compensation programs to ensure they provide incentives to deliver long-term, sustainable business results while discouraging excessive risk-taking and other adverse behaviors.
ü	We have a comprehensive compensation recovery or "clawback" policy that applies to all executives and covers a wide range of misconduct. In 2021, we enhanced our clawback policy to provide more robust disclosure around facts and circumstances triggering recoupment.
ü	Our executive officers are subject to robust stock ownership and retention guidelines and are prohibited from hedging or pledging their company stock. In 2021, we increased stock ownership and retention requirements for executive officers.
ü	We do not have "top hat" retirement plans. Supplemental plans are open to all employees and are limited to restoring benefits lost due to IRS limits on qualified plans.
ü	We do not provide tax gross-ups to executive officers (except for limited gross-ups related to international assignments).
ü	We have a very restrictive policy on perquisites.
ü	Our severance plans related to change-in-control require a double trigger.
ü	We do not have employment agreements with any of our executive officers.

Executive Compensation Summary for 2021

At the time total target compensation was established at the end of 2020, the target compensation in aggregate for our named executive officers was comparable to the median of the company's peer group. Incentive compensation payouts exceeded target, consistent with strong company performance over the bonus and equity performance periods.

Pay for Performance

As described in the Compensation Discussion and Analysis (CD&A), we generally link our incentive pay programs to a mix of measures on three dimensions of company performance: operating performance; progress with our innovation pipeline; and shareholder return (both absolute and relative). The Compensation Committee adjusts reported EPS results to eliminate the distorting effect of certain unusual items on incentive compensation performance measures.

The summary below highlights how our incentive pay programs are intended to align with company performance. Please also see Appendix A for adjustments made to revenue and EPS for incentive compensation programs.

Bonus Plan

In 2021, the company exceeded its annual cash bonus target for revenue and nearly achieved its target for EPS. We also made significant pipeline advances. For purposes of the bonus, the Compensation Committee adjusted revenue and non-GAAP EPS to exclude estimated savings from certain discrete and unplanned performance items from the bonus plan multiple. See the CD&A for further discussion of the Eli Lilly and Company Bonus Plan (Bonus Plan).

8

2020-2022 Performance Award Multiple

We exceeded the EPS growth target set for our performance award program. The performance award target is based on expected EPS growth of peer companies over a two-year period. As a result of exceeding the EPS growth target set for our performance award program, the performance award payout was above target. See the CD&A for further discussion on the performance award program.

2019-2021 Shareholder Value Award (SVA) Multiple

Our stock price growth exceeded the target range (18.1 percent to 31.1 percent) under our shareholder value award program, which is based on expected large-cap company returns over a three-year period. This performance resulted in a shareholder value award payout above target.

For individuals who were executive officers when the award was granted, shareholder value award payouts were modified based on a three-year cumulative TSR relative to our peer companies. Lilly's relative TSR was 121.1 percentage points above the peer group median, resulting in a maximum award payout of 180 percent of target (SVA payout multiple of 150 percent multiplied by the 1.2 modifier = 180 percent final payout). See the CD&A for further discussion on the shareholder value award program and the TSR modifier.

9

Audit Matters

Item 3: Ratification of the Appointment of the Independent Auditor	Management recommendation	Vote required to pass
For further information, see page 64	Vote FOR	Majority of votes cast

Management Proposals

Item 4: Proposal to Amend the Company's Articles of Incorporation to Eliminate the Classified Board Structure	Management recommendation	Vote required to pass
For further information, see page 66	Vote FOR	80% of outstanding shares

Item 5: Proposal to Amend the Company's Articles of Incorporation to Eliminate Supermajority Voting Provisions	Management recommendation	Vote required to pass
For further information, see page 67	Vote FOR	80% of outstanding shares

Item 6: Proposal to Amend the Company's Articles of Incorporation to Provide Shareholders the Ability to Amend the Company’s Bylaws	Management recommendation	Vote required to pass
For further information, see page 68	Vote FOR	Majority of votes cast

Shareholder Proposals

Item 7: Proposal to Amend the Bylaws to Require an Independent Board Chair	Management recommendation	Vote required to pass
For further information, see page 70	Vote AGAINST	Majority of votes cast

Item 8: Proposal to Publish an Annual Report Disclosing Lobbying Activities	Management recommendation	Vote required to pass
For further information, see page 72	Vote AGAINST	Majority of votes cast

Item 9: Proposal to Disclose Lobbying Activities and Alignment with Public Policy Positions and Statements	Management recommendation	Vote required to pass
For further information, see page 75	Vote AGAINST	Majority of votes cast

Item 10: Proposal to Report Oversight of Risks Related to Anticompetitive Pricing Strategies	Management recommendation	Vote required to pass
For further information, see page 77	Vote AGAINST	Majority of votes cast

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Voting

How to Vote in Advance of the Meeting

Even if you plan to attend the Annual Meeting, we encourage you to vote prior to the meeting using one of the methods described below.

ONLINE	BY TELEPHONE	BY MAIL
Visit the website listed on your notice, proxy card, or voting instruction form	Call 1-800-690-6903 using a touch-tone phone and follow the instructions provided	If you received or requested paper copies of your proxy materials, sign, date, and return your proxy card or voting instruction form

Shareholders who hold their shares beneficially through an institutional holder of record, such as a broker or bank (sometimes referred to as holding shares in street name), will receive voting instructions from that holder of record. If you do not provide voting instructions to the holder of record, your shares will not be voted on any proposal on which the broker does not have discretionary authority to vote. See "Other Information—Meeting and Voting Logistics—Voting Shares Held by a Broker" for more information.

Further information on how to vote, including if you hold voting shares in the 401(k) Plan, is provided at the end of this proxy statement under "Other Information—Meeting and Voting Logistics."

You may vote your shares prior to the Annual Meeting until 11:59 p.m. EDT on May 1, 2022, online or by telephone. If you are voting by mail, your marked, signed, and dated proxy card must be received by May 1, 2022. Shareholders who hold their shares in the 401(k) Plan must vote in advance of the Annual Meeting, by April 27, 2022, so the plan trustee can vote their shares accordingly. See "Other Information—Meeting and Voting Logistics—Voting Shares Held in the Company 401(k) Plan" for more information.

Voting at Our 2022 Annual Meeting

You may also opt to vote by attending the Annual Meeting, which will be held online via live webcast at virtualshareholdermeeting.com/LLY2022 on Monday, May 2, 2022, at 11:00 a.m. EDT. See the section titled "Other Information—Meeting and Voting Logistics" for instructions.

Governance

Item 1. Election of Directors

Under our articles of incorporation, the board is divided into three classes with approximately one-third of the directors standing for election each year. The term for directors to be elected this year will expire at the annual meeting of shareholders held in 2025. Each of the director nominees listed below has agreed to serve that term. The following sections provide information about our director nominees, including their qualifications, the director nomination process, and director compensation.

Board Recommendation on Item 1

The board recommends that you vote FOR each of the following director nominees:

•Ralph Alvarez

•Kimberly H. Johnson

•Juan R. Luciano

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Board Operations and Governance

Board of Directors

Each of our directors is elected to serve until his or her successor is duly elected and qualified. If a bona fide nominee set forth in this proxy statement is unable to serve or for good cause will not serve, proxy holders may vote for another nominee proposed by the board or, as an alternative, the board may reduce the number of directors to be elected at the Annual Meeting.

Director Biographies

Set forth below is information, as of February 22, 2022, regarding our directors and director nominees, which has been confirmed by each of them for inclusion in this proxy statement. We have provided the most significant experiences, qualifications, attributes, and skills that led to the conclusion that each director or director nominee should serve as a director in light of our business and structure.

No family relationship exists among any of our directors, director nominees, or executive officers. To the best of our knowledge, there are no pending material legal proceedings in which any of our directors or nominees for director, or any of their associates, is a party adverse to us or any of our affiliates, or has a material interest adverse to us or any of our affiliates. Additionally, to the best of our knowledge, there have been no events under any bankruptcy laws, no criminal proceedings and no judgments, sanctions, or injunctions during the past 10 years that are material to the evaluation of the ability or integrity of any of our directors or nominees for director. There is no arrangement or understanding between any director or director nominee and any other person pursuant to which he or she was or is to be selected as a director or director nominee.

Class of 2022

The three directors listed below will seek reelection at the Annual Meeting. See "Item 1. Election of Directors" above for more information.

Ralph Alvarez Age: 66, Director since 2009, Board Committees: Audit; Compensation (chair)

PUBLIC BOARDS	PRIOR PUBLIC BOARDS	MEMBERSHIPS + OTHER ORGANIZATIONS
Lowe's Companies, Inc.; Traeger, Inc.; First Watch Restaurant Group, Inc.	Dunkin’ Brands Group, Inc.; McDonald's Corporation; KeyCorp; Skylark Co., Ltd.; Realogy Holdings Corp.	University of Miami President's Council
CAREER HIGHLIGHTS
• Advent International Corporation, a leading global private equity firm
- Operating Partner (2017 - present)
• Skylark Co., Ltd., a leading restaurant operator in Japan
- Chairman of the Board (2013 - 2018)
• McDonald's Corporation, a leading global foodservice retailer
- President and Chief Operating Officer (2006 - 2009)
QUALIFICATIONS
Through his positions at Skylark Co., Ltd. and McDonald’s Corporation, as well as with other global restaurant businesses, Mr. Alvarez has extensive experience in consumer marketing, global operations, international business, and strategic planning. Mr. Alvarez is an audit committee financial expert based on his public company experience, including his prior audit committee service on the Lowe’s board of directors. His international experience includes a special focus on Japan and emerging markets. He also has extensive corporate governance experience through his service on other public company boards as well as several private company boards.

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Kimberly H. Johnson Age: 49, Director since 2021, Board Committees: Compensation; Ethics and Compliance

NON-PROFIT BOARDS + OTHER ORGANIZATIONS

Princeton University, Trustee; Share Our Strength, Director; Planet Word, Director

CAREER HIGHLIGHTS

• Federal National Mortgage Association (Fannie Mae), provider of affordable mortgage financing in the United States

     - Executive Vice President and Chief Operating Officer (2018 - present)

     - Executive Vice President and Chief Risk Officer (2017 - 2018)

     - Senior Vice President and Chief Risk Officer (2015 - 2017)

     - Senior Vice President and Deputy Chief Risk Officer (2013 - 2015)

• Credit Suisse AG, a global wealth manager, investment bank, and financial services firm founded and based in Switzerland

     - Director, Interest Rate Derivative Products (2005 - 2006)

     - Vice President (2002 - 2004)

QUALIFICATIONS

Through her roles at Fannie Mae, where she also serves on the management committee, Ms. Johnson brings to the board significant financial expertise and a strong background in technology, governance, and strategy for global risk management.

Juan R. Luciano Age: 60, Director since 2016, Lead Independent Director since 2019, Board Committees: Compensation; Directors and Corporate Governance

PUBLIC BOARDS	NON-PROFIT BOARDS	MEMBERSHIPS + OTHER ORGANIZATIONS
Archer-Daniels-Midland Company	Intersect Illinois; Kellogg School of Management, Northwestern University; Rush University Medical Center Board of Trustees	Economic Club of Chicago; Commercial Club of Chicago; The Business Roundtable
CAREER HIGHLIGHTS
• Archer-Daniels-Midland Company, a global food-processing and commodities-trading company
- Chairman (2016 - present)
- Chief Executive Officer and President (2015 - present)
- President (2014 - 2015)
- Executive Vice President and Chief Operating Officer (2011 - 2014)
• The Dow Chemical Company, a multinational chemical company
- Executive Vice President and President, Performance Division (2010 - 2011)
QUALIFICATIONS
Mr. Luciano has chief executive officer and global business experience with Archer-Daniels-Midland Company, where he has established a reputation for strong results-oriented and strategic leadership, as well as many years of global leadership experience at The Dow Chemical Company. He brings to the board a strong technology and operations background, along with expertise in the highly regulated food and agriculture sectors.

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Class of 2023

The following five directors are serving terms that will expire in May 2023.

Michael L. Eskew* Age: 72, Director since 2008, Board Committees: Audit; Directors and Corporate Governance (chair)

PUBLIC BOARDS	NON-PROFIT BOARDS
3M Corporation; IBM Corporation; The Allstate Corporation	Chairman of the board of trustees of The Annie E. Casey Foundation
CAREER HIGHLIGHTS
• United Parcel Service, Inc. (UPS), a global shipping and logistics company
- UPS Board of Directors (1998 - 2014)
- Chairman and Chief Executive Officer (2002 - 2007)
- Vice Chairman (2000 - 2002)
QUALIFICATIONS
Mr. Eskew has chief executive officer experience with UPS, where he established a record of success in managing complex worldwide operations, strategic planning, and building a strong consumer-brand focus. He is an audit committee financial expert based on his chief executive officer experience and his service on other U.S. public company audit committees. He has extensive corporate governance experience through his service on the boards of other companies.
*Mr. Eskew will retire from the board following the Annual Meeting.

William G. Kaelin, Jr., M.D. Age: 64, Director since 2012, Board Committees: Directors and Corporate Governance; Science and Technology (chair)

INDUSTRY MEMBERSHIPS	HONORS
National Academy of Medicine; National Academy of Sciences; American College of Physicians; Association of American Physicians; American Society of Clinical Investigation (ASCI); American Academy of Arts and Sciences	Nobel Prize in Physiology or Medicine; Albert Lasker Basic Medical Research Award; Wiley Prize in Biomedical Sciences from the Rockefeller University; Steven C. Beering Award from the Indiana University School of Medicine; ASCI's Stanley J. Korsmeyer Award; Paul Marks Prize for Cancer Research from the Memorial Sloan Kettering Cancer Center; Richard and Hinda Rosenthal Prize from the American Association for Cancer Research; Scientific Grand Prix of the Foundation Lefoulon-Delalande; Canada Gairdner International Award; Doris Duke Distinguished Clinical Scientist Award; Helis Award from Baylor College of Medicine; Massry Prize from the Meira and Shaul G. Massry Foundation
CAREER HIGHLIGHTS
• Harvard Medical School
- Sidney Farber Professor of Medicine (2018 - present)
- Professor of Medicine (2002 - 2018)
• Dana-Farber Cancer Institute and Brigham and Women's Hospital
- Professor (2002 - present)
• Howard Hughes Medical Institute
- Investigator (2002 - present)
- Assistant Investigator (1998 - 2002)
QUALIFICATIONS
Dr. Kaelin is a prominent medical researcher and academician. He has extensive experience at Harvard Medical School, a major medical institution, as well as special expertise in oncology—a key component of Lilly's business. He also has deep expertise in basic science, including mechanisms of drug action, and experience with pharmaceutical discovery research.

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David A. Ricks Age: 54, Director since 2017, Board Committees: none

PUBLIC BOARDS	NON-PROFIT BOARDS	INDUSTRY MEMBERSHIPS
Adobe Inc.	Board of Governors for Riley Children's Foundation; Central Indiana Corporate Partnership	International Federation of Pharmaceutical Manufacturers & Associations (IFPMA) CEO Steering Committee; Pharmaceutical Research and Manufacturers of America (PhRMA); The Business Roundtable; National Council for Expanding American Innovation (NCEAI)
CAREER HIGHLIGHTS
• Eli Lilly and Company
- Chair, President, and Chief Executive Officer (2017 - present)
- Senior Vice President and President, Lilly Bio-Medicines (2012 - 2016)
QUALIFICATIONS
Mr. Ricks was named President and Chief Executive Officer on January 1, 2017, and Chair on June 1, 2017. Mr. Ricks joined Lilly in 1996, and most recently served as president of Lilly Bio-Medicines.He has significant expertise across Lilly’s value chain and global operations, as well as in public policy.

Marschall S. Runge, M.D., Ph.D. Age: 67, Director since 2013, Board Committees: Ethics and Compliance; Science and Technology

NON-PROFIT BOARDS	MEMBERSHIPS + OTHER ORGANIZATIONS
University of Michigan Health (vice chair); Michigan Health Corporation (chair)	American Association of Medical Colleges; American College of Cardiology; American Medical Association
CAREER HIGHLIGHTS
• University of Michigan
- CEO, Michigan Medicine (2015 - present)
- Executive Vice President for Medical Affairs (2015 - present)
- Dean, Medical School (2015 - present)
• University of North Carolina School of Medicine
- Executive Dean (2010 - 2015)
- Chair of the Department of Medicine (2000 - 2015)
- Principal Investigator and Director of the North Carolina Translational and Clinical Sciences Institute (2010 - 2015)
QUALIFICATIONS
Dr. Runge brings the unique perspective of a practicing physician who has a broad background in healthcare and academia. He has extensive experience as a practicing cardiologist, a strong understanding of healthcare facility systems, and deep expertise in biomedical research and clinical trial design.

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Karen Walker Age: 60, Director since 2018, Board Committees: Audit;Compensation

PUBLIC BOARDS	NON-PROFIT BOARDS	MEMBERSHIPS + OTHER ORGANIZATIONS
Sprout Social, Inc.	Salvation Army Advisory Board of Silicon Valley	Association of National Advertisers (board and executive committee)
CAREER HIGHLIGHTS
• Intel Corporation, a leader in the semiconductor industry
- Senior Vice President and Chief Marketing Officer (2019 - present)
• Cisco Systems, Inc., a provider of communications technologies and services to commercial and governmental customers
- Senior Vice President and Chief Marketing Officer (2015 - 2019)
- Senior Vice President, Marketing (2013 - 2015)
- Senior Vice President of Segment, Services and Partner Marketing (2012 - 2013)
QUALIFICATIONS
Ms. Walker brings extensive marketing and digital expertise. She has valuable business experience developed through her business and consumer leadership positions in the information technology industry and is a recognized industry authority on both technology and marketing. Her business expertise includes senior field and marketing roles in Europe, North America, and the Asia-Pacific region.

Class of 2024

The following five directors are serving terms that will expire in May 2024.

Katherine Baicker, Ph.D. Age: 50, Director since 2011, Board Committees: Ethics and Compliance (chair); Science and Technology

PRIOR PUBLIC BOARDS	MEMBERSHIPS + OTHER ORGANIZATIONS
HMS Holdings Corp.	Panel of Health Advisers to the Congressional Budget Office; Advisory Board of the National Institute for Health Care Management; Editorial Board of Health Affairs; Research Associate of the National Bureau of Economic Research; Trustee of the Mayo Clinic, National Opinion Research Center, and the Chicago Council on Global Affairs; Member of the National Academy of Medicine, the National Academy of Social Insurance, the Council on Foreign Relations, and the American Academy of Arts and Sciences
CAREER HIGHLIGHTS
•Harris School of Public Policy, University of Chicago
- Dean and the Emmett Dedmon Professor (2017 - present)
• Harvard T.H. Chan School of Public Health, Department of Health Policy and Management
- C. Boyden Gray Professor (2014 - 2017)
- Acting Chair (2014 - 2016)
- Professor of health economics (2007 - 2017)
• Council of Economic Advisers, Executive Office of the President
- Member (2005 - 2007)
- Senior Economist (2001 - 2002)
QUALIFICATIONS
Dr. Baicker is a leading researcher in the fields of health economics and public economics. As a valued adviser to numerous healthcare-related commissions and committees, her expertise in healthcare policy and healthcare delivery is recognized in both academia and government.

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J. Erik Fyrwald Age: 62, Director since 2005, Board Committees: Compensation; Science and Technology

PUBLIC BOARDS	PRIVATE BOARDS	NON-PROFIT BOARDS
Bunge Limited	Syngenta Group	UN World Food Program Farm to Market Alliance; CropLife International (chair); Swiss-American Chamber of Commerce; Syngenta Foundation for Sustainable Agriculture
CAREER HIGHLIGHTS
• Syngenta Group, a global Swiss-based agriculture technology company that produces agrochemicals and seeds
- President and Chief Executive Officer (2016 - present)
• Univar, Inc., a leading distributor of chemicals and provider of related services
- President and Chief Executive Officer (2012 - 2016)
• Ecolab Inc., a leading provider of cleaning, sanitization, and water products and services
- President (2012)
• Nalco Company, a leading provider of water treatment products and services
- Chairman and Chief Executive Officer (2008 - 2011)
• E.I. duPont de Nemours and Company, a global chemical company
- Group Vice President, agriculture and nutrition (2003 - 2008)
QUALIFICATIONS
Mr. Fyrwald has a strong record of operational and strategic leadership in complex worldwide businesses with a focus on technology and innovation. He is an engineer by training and has significant chief executive officer experience with Syngenta, Univar, and Nalco.

Jamere Jackson Age: 53, Director since 2016, Board Committees: Audit (chair); Ethics and Compliance

PUBLIC BOARDS

Hibbett Sports, Inc.

CAREER HIGHLIGHTS

• Autozone, Inc., a leading retailer and distributor of automotive replacement parts and accessories in the United States, Mexico, and Brazil

     - Executive Vice President and Chief Financial Officer (2020 - present)

• Hertz Global Holdings Inc., a global vehicle rental, leasing, and fleet management business

     - Chief Financial Officer (2018 - 2020)

• Nielsen Holdings plc, a global measurement and data analytics company

     - Chief Financial Officer (2014 - 2018)

• General Electric Company, an American multinational company and leader in the power, renewable energy, aviation and healthcare industries

     - Vice President and Chief Financial Officer, General Electric Oil & Gas, drilling and surface division (2013 - 2014)

     - Senior Executive, Finance, General Electric Aviation (2007 - 2013)

     - Finance Executive, General Electric Corporate (2004 - 2007)

QUALIFICATIONS

Through his senior financial roles at Autozone, Hertz, Nielsen, and General Electric, Mr. Jackson brings to the board significant global financial expertise and a strong background in strategic planning. He has spent his professional career in a broad range of financial and strategic planning roles. He is an audit committee financial expert, based on his chief financial officer experience and his training as a certified public accountant.

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Gabrielle Sulzberger Age: 61, Director since 2021, Board Committees: Audit; Ethics and Compliance

PUBLIC BOARDS	PRIOR PUBLIC BOARDS	NON-PROFIT BOARDS
Mastercard Incorporated; Cerevel Therapeutics Holdings, Inc.; Warby Parker Inc.	Whole Foods Markets, Inc.; Teva Pharmaceuticals Industries Limited; Stage Stores, Inc.; IndyMac Bancorp, Inc.; Bright Horizons Family Solutions Inc.; Brixmor Property Group Inc.	Metropolitan Museum of Art; Ford Foundation; Trinity Wall Street; Sesame Street Workshop; TimesUp
CAREER HIGHLIGHTS
• Teneo, a global CEO advisory firm
- Chair of Global ESG Advisory (2021 - present)
• TwoSigma Impact, a private equity fund based in New York, New York
- Strategic Advisor (2021 - present)
• Rustic Canyon/Fontis Partners L.P., a private equity fund based in Pasadena, California
- General Partner (2005 - 2018)
QUALIFICATIONS
Ms. Sulzberger brings 30 years of experience advising public and privately held companies in consumer products, retail, financial services, and life sciences, and deep corporate governance experience through her work with corporate boards. She is an audit committee financial expert based on her audit committee service at Cerevel and Whole Foods, her experience in private equity, and her prior service as chief financial officer of several public and private companies.

Jackson P. Tai Age: 71, Director since 2013, Board Committees: Audit; Directors and Corporate Governance

PUBLIC BOARDS	PRIOR PUBLIC BOARDS	NON-PROFIT BOARDS	MEMBERSHIPS + OTHER ORGANIZATIONS
Mastercard Incorporated; HSBC Holdings plc	Canada Pension Plan; Investment Board; Koninklijke Philips N.V.; The Bank of China Limited; Singapore Airlines Limited; NYSE Euronext; ING Groep N.V.; CapitaLand Limited (Singapore); DBS Group Holdings Ltd and DBS Bank Ltd	Metropolitan Opera; Rensselaer Polytechnic Institute	Harvard Business School Asia-Pacific Advisory Board
CAREER HIGHLIGHTS
• DBS Group Holdings Ltd and DBS Bank Ltd (formerly the Development Bank of Singapore), one of the largest financial services groups in Asia
- Vice Chairman and Chief Executive Officer (2002 - 2007)
- President and Chief Operating Officer (2001 - 2002)
- Chief Financial Officer (1999 - 2001)
• J.P. Morgan & Co. Incorporated, a leading global financial institution
- Managing Director in the Investment Banking Division (1974 - 1999), including service as the senior officer for Japan Capital Markets and chairman of the Asia Pacific Management Committee
QUALIFICATIONS
Mr. Tai is a former chief executive officer with extensive experience in international business and finance, and he is an audit committee financial expert based on his public company experience, including as an audit committee member of HSBC Holdings and Mastercard, and as chair of the risk committee of HSBC Holdings. He has deep expertise in the Asia-Pacific region, an important growth market for Lilly. He also has broad corporate governance experience from his service on public company boards in North America, Europe, and Asia.

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Director Qualifications and Nomination Process

Director Qualifications

Experience:Our directors are responsible for overseeing the company's business consistent with their fiduciary duties. This significant responsibility requires highly skilled individuals with various qualities, attributes, and professional experience. We believe the board is well-rounded, with a balance of relevant perspectives and experience, as illustrated in the following chart. Categories referencing "expertise" indicate that the director is an expert in the field, while "experience" indicates direct experience, including management and oversight of significant operations:

CEO Experience:			5
Financial Expertise:					9
Relevant Scientific/Academic Expertise:	3
Healthcare Experience:		4
Operational/Strategic Expertise:					9
International Experience:				7
Marketing and Sales Expertise:			5
Digital/Technology Expertise:	3

Board Tenure: As the following chart demonstrates, our director composition reflects a mix of tenure on the board, which provides an effective balance of historical perspective and an understanding of the evolution of our business with fresh perspectives and insights. Mr. Eskew, who joined the board in 2008, will retire from the board following the Annual Meeting. The following graphic highlights the tenure of our current board members:

Less than 3 Years:	2
3-5 Years:		3
6-10 Years:			4
More than 10 Years:			4

Diversity:The board strives to achieve diversity in the broadest sense, including persons diverse in geography, gender, ethnicity, age, and experiences. Although the board does not establish specific diversity goals or have a standalone diversity policy, the board's overall diversity is an important consideration in the director selection and nomination process. The Directors and Corporate Governance Committee assesses the effectiveness of board diversity efforts in connection with the annual nomination process as well as in new director searches. The company's current 13 directors range in age from 49 to 72 and include four women and six minority group members (MGM).

Character:Board members should possess the personal attributes necessary to be an effective director, including unquestioned integrity, sound judgment, a collaborative spirit, and commitment to the company, our shareholders, and other constituencies.

Director Refreshment

Together with our lead independent director, the Directors and Corporate Governance Committee performs periodic assessments of the overall composition and skills of the board to ensure that the board is actively engaged in succession planning for directors, and that our board reflects the viewpoints, diversity, and expertise necessary to support our complex and evolving business. The Directors and Corporate Governance Committee, with input from all board members, also considers the contributions of the individual directors.

The results of these assessments inform the board's recommendations on nominations for directors at the annual meeting of shareholders each year and help provide us with insight on the types of experiences, skills, perspectives, and other characteristics we should be seeking for future director candidates. Based on this assessment, the Directors and Corporate Governance Committee has recommended that each of the directors in the class of 2022 be elected at the Annual Meeting.

The board delegates the director screening process to the Directors and Corporate Governance Committee, which receives input from other board members. Director candidates are identified from several sources, including executive search firms retained by the committee, incumbent directors, management, and shareholders. The Directors and Corporate Governance Committee has retained Russell Reynolds Associates, an executive search and leadership consulting firm, to assist with identifying potential director candidates.

The Directors and Corporate Governance Committee employs the same process to evaluate all candidates, including those submitted by shareholders. The committee initially evaluates a candidate based on publicly available information and any additional information supplied by the party recommending the candidate. If the candidate appears to satisfy the selection criteria and the committee’s initial evaluation is favorable, the committee, assisted by management or a search firm, gathers

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additional data on the candidate’s qualifications, availability, probable level of interest, and any potential conflicts of interest. If the committee’s subsequent evaluation continues to be favorable, the candidate is contacted by the chair of the board and one or more of the independent directors, including the lead independent director, for direct discussions to determine the mutual level of interest in pursuing the candidacy. If these discussions are favorable, the committee recommends that the board nominate the candidate for election by the shareholders (or elects the candidate to fill a vacancy, as applicable).

Director Compensation

Directors who are employees receive no additional compensation for serving on the board. Non-employee director compensation is reviewed and approved by the board, on the recommendation of the Directors and Corporate Governance Committee.

Cash Compensation

The following table shows the retainers and meeting fees in effect in 2021 for all non-employee directors:

Board and Committee Membership Retainers (annual, paid in monthly installments)		Leadership Retainers (annual, paid in monthly installments)
Annual board retainer	$110,000	Lead independent director	$35,000
Audit Committee and Science and Technology Committee members (including the chairs)	$6,000	Audit Committee chair	$18,000
Compensation Committee, Directors and Corporate Governance Committee, and Ethics and Compliance Committee members (including the chairs)	$3,000	Science and Technology Committee chair	$15,000
		All other committee chairs	$12,000

Directors are reimbursed for customary and usual travel expenses in connection with their travel to and from board meetings and other company events. Non-employee directors may also receive additional cash compensation for serving on ad hoc committees that may be formed by the board from time to time.

Effective January 1, 2022, leadership retainers for committee chairs were increased to $22,000 for the Audit Committee chair, $18,000 for the Science and Technology Committee chair, and $17,000 for all other committee chairs. No increase was made to the lead independent director retainer.

Stock Compensation

A significant portion of non-employee director compensation is linked to the long-term performance of Lilly stock. In 2021, non-employee directors received an annual equity-based award valued at $175,000. The award was credited to each non-employee director’s deferred stock account established under the Lilly Directors’ Deferral Plan as a number of units calculated by dividing $175,000 by the closing stock price on a pre-set annual date (approximately 677 units). The units track the economic value of shares of company stock with stock dividends being deemed "reinvested" in additional units based on the market price of the stock on the date dividends are paid. The units become converted into and issuable to the non-employee directors as shares of company stock commencing on the second January following a director's departure from board service (either in lump sum or installments as described below). When applicable, the annual equity-based award is prorated for time served.

Effective January 1, 2022, non-employee directors will receive an annual equity-based award valued at $180,000.

Share Ownership Guidelines

Directors are required to hold meaningful equity ownership positions in the company. Non-employee directors are required to hold Lilly stock, directly or through units representing the right to receive shares of Lilly stock under the Lilly Directors’ Deferral Plan, valued at not less than five times their annual board retainer; new non-employee directors are allowed five years to reach this ownership level. All non-employee directors serving at least five years have satisfied these guidelines. All other non-employee directors are, or in the case of recently elected directors, are expected to begin making progress toward these requirements.

Annual Compensation Cap for Directors

In 2018, the board approved an annual cap to the total annual compensation (cash and equity compensation) for non-employee directors of $800,000. The cap is intended to avoid excessive director compensation and is included in both the Lilly Directors' Deferral Plan and in the Amended and Restated 2002 Lilly Stock Plan approved by shareholders at the 2018 annual meeting of shareholders.

Lilly Directors’ Deferral Plan

In addition to the annual equity-based grants credited to each non-employee director’s deferred stock account as described above, the Lilly Directors' Deferral Plan allows non-employee directors to defer receipt of all or part of their cash

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compensation until after their service on the board has ended. Each director can choose to invest any amounts deferred in one or both of the following two accounts:

Deferred Stock Account.This account allows the non-employee director, in effect, to invest his or her deferred cash compensation in company stock. Funds in this account are credited as units representing the right to receive shares of company stock based on the closing stock price on pre-set monthly dates. Hypothetical dividends are deemed "reinvested" in additional units based on the market price of the stock on the date dividends are paid. The units become converted into and issuable to the non-employee director as shares of company stock commencing on the second January following the director's departure from board service (either in a lump sum or installments as described below). The deferral stock account is the same account where the annual equity-based awards are credited with the same conversion timing and procedure applicable to the annual equity-based awards.

Deferred Compensation Account.Deferred cash compensation in this account earns interest each year at a rate of 120 percent of the applicable federal long-term rate, compounded monthly, as established the preceding December by the U.S. Treasury Department under Section 1274(d) of the Internal Revenue Code of 1986 (the Internal Revenue Code). The aggregate amount of interest that accrued in 2021 for the participating directors was $68,808, at a rate of 1.6 percent. The rate for 2022 is 2.3 percent.

Both accounts may be paid out in a lump sum or in annual installments for up to 10 years based on individual director annual elections. All payments begin the second January following the director’s departure from board service. Amounts in the deferred stock account are paid in shares of company stock.

2021 Compensation for Non-Employee Directors

Name	Fees Earned or Paid in Cash ($)	Stock Awards ($)1	All Other Compensation and Payments ($)2	Total ($)3
Mr. Alvarez	$131,000	$175,000	$0	$306,000
Dr. Baicker	$131,000	$175,000	$0	$306,000
Mr. Eskew	$131,000	$175,000	$10,000	$316,000
Mr. Fyrwald	$119,000	$175,000	$52,708	$346,708
Mr. Jackson	$137,000	$175,000	$0	$312,000
Ms. Johnson	$101,155	$160,417	$0	$261,572
Dr. Kaelin	$134,000	$175,000	$7,000	$316,000
Mr. Luciano	$151,000	$175,000	$0	$326,000
Dr. Runge	$119,000	$175,000	$0	$294,000
Ms. Sulzberger	$111,323	$175,000	$0	$286,323
Mr. Tai	$119,000	$175,000	$60,000	$354,000
Ms. Walker	$119,000	$175,000	$40,000	$334,000
Former Directors:
Carolyn R. Bertozzi, Ph.D.	$79,333	$116,667	$0	$196,000
Kathi P. Seifert	$39,602	$72,917	$46,500	$159,019

1 Each non-employee director received an equity-based award of units valued at $175,000 (approximately 677 units) except Ms. Johnson, Dr. Bertozzi and Ms. Seifert, each of whom received a pro-rated award for a partial year of service. These units, and all prior awards of such units, are fully vested; however, the shares subject to such awards of units are not issued until the second January following the director's departure from board service when, as described above under "Lilly Directors’ Deferral Plan," the units are converted into shares of company stock and distributed to the former director. The column shows the grant date fair value for each director’s equity-based award computed in accordance with FASB ASC Topic 718, based on the closing stock price on the grant date. See Note 12 of the consolidated financial statements in the company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, for additional detail regarding assumptions underlying the valuation of equity awards. Aggregate outstanding stock awards are shown in the "Common Stock Ownership by Directors and Executive Officers" table in the "Stock Units Not Distributable Within 60 Days" column.

2 This column consists of amounts donated by the Eli Lilly and Company Foundation, Inc. (the Foundation) under its matching gift program, which is generally available to U.S. employees as well as non-employee directors. Under this program, the Foundation matched 100 percent of charitable donations over $25 made to eligible charities, up to a maximum of $30,000 per year for each individual. The Foundation matched these donations via payments made directly to the recipient charity. The amounts for Mr. Fyrwald, Mr. Kaelin, Ms. Seifert, Mr. Tai and Ms. Walker include matching contributions for donations made at the end of 2020 (Mr. Fyrwald - $27,926; Mr. Kaelin - $4,000; Ms. Seifert - $9,000; Mr. Tai - $30,000; Ms. Walker - $20,000) for which the matching contribution was not paid until 2021. The amount for Ms. Seifert also includes a $10,000 donation by the Foundation to a charity of Ms. Seifert's choosing in honor of her retirement from the board, consistent with the company's traditional practice for retiring directors.

3 Non-employee directors do not participate in a company pension plan or non-equity incentive plan.

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2022 Director Compensation

The Directors and Corporate Governance Committee performs regular reviews of non-employee director compensation. In 2021, the Directors and Corporate Governance Committee performed an in depth review of non-employee director compensation, including a general industry peer group analysis and a pharmaceutical company peer group analysis conducted with the assistance of an outside compensation consultant, discussions regarding the effectiveness of the non-employee directors in their various duties, and other considerations, including the desire to have non-employee director compensation positioned near the market median when compared against the general industry peer group. Following this review, and upon the recommendation of the Directors and Corporate Governance Committee, the board approved increases to the non-employee director committee leadership retainers effective January 1, 2022, and the annual non-employee director equity-award beginning in 2022, as further described above.

Director Independence

The board annually determines the independence of directors based on a review and recommendation by the Directors and Corporate Governance Committee. No director is considered independent unless the board has affirmatively determined that he or she has no material relationship with the company, either directly or as a partner, shareholder, or officer of an organization that has a relationship with the company. In assessing whether a director has no material relationship with Lilly, the board of directors also considers any persons or organizations with which the director has an affiliation. Material relationships can include commercial, industrial, banking, consulting, legal, accounting, charitable, and familial relationships, among others. To evaluate the materiality of any such relationship, the board has adopted categorical independence standards consistent with the New York Stock Exchange (NYSE) listing standards.

The company's process for determining director independence is set forth in our Standards for Director Independence, which can be found on our website atlilly.com/leadership/governance, along with our corporate governance guidelines.

On the recommendation of the Directors and Corporate Governance Committee, the board determined that each current non-employee director is independent. The board also determined that the members of our Audit and Compensation Committees also meet the heightened independence standards applicable to those committees. Prior to their departures from our board in 2021, the board had reached the same conclusions about Dr. Bertozzi and Ms. Seifert. The board determined that none of the current non-employee directors has had during the last three years (i) any of the relationships identified in the company’s categorical independence standards or (ii) any other material relationship with the company that would compromise his or her independence.

In making its independence determinations, the board considered that some of the current non-employee directors are affiliated with companies or entities to which the company sold products or made payments, or from which the company purchased products or services during the year. Drs. Baicker, Kaelin, and Runge are employed at medical or academic institutions with which the company engages in clinical research, provides research grants, and/or engages in commercial transactions in the ordinary course of business. Mr. Luciano is employed by Archer-Daniels-Midland Company and Mr. Fyrwald is employed by Syngenta Group. The company engages in routine business transactions with these organizations. Aggregate payments to or from each such organization, in each of the last three fiscal years, did not exceed the greater of $1 million or 2 percent of that organization's consolidated gross revenues in a single fiscal year. In reviewing these relationships, the board considers all relevant factors, including:

•whether any transactions were entered into at arm's length in the normal course of business and, to the extent they are commercial relationships, have standard commercial terms; and

•whether any director had any direct business relationships with the company or received any direct personal benefit from any of these transactions, relationships, or arrangements.

Committees of the Board of Directors

The duties and membership of our board-appointed committees are described below.

All committee members are independent as defined in the NYSE listing requirements and Lilly's independence standards. The members of the Audit and Compensation Committees each meet the additional independence requirements applicable to them as members of those committees.

The Directors and Corporate Governance Committee, together with the lead independent director, identifies and recommends to the board candidates for membership on the board and board committees, and develops and recommends criteria and policies relating to service and tenure of directors. The board has no set policy for rotation of committee members or chairs but annually reviews committee memberships and chair positions, seeking the best blend of continuity and innovative perspectives on the committees.

The chair of each committee determines the frequency and agenda of committee meetings, subject to any minimums specified in the relevant committee charter, and the committees meet alone in executive session on a regular basis.

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Membership and Meetings of the Board and Its Committees

In 2021, each director attended at least 75 percent of the total number of meetings of the board and the committees on which he or she served during his or her tenure as a board or committee member. In addition, all board members are expected to attend the Annual Meeting. All directors then serving on the board attended the 2021 annual meeting of shareholders with the exception of Ms. Seifert, who retired following the 2021 annual meeting. Current committee membership and the number of meetings of the board and each committee held in 2021 are shown in the table below.

Name	Board	Audit	Compensation	Directors and Corporate Governance	Ethics and Compliance	Science and Technology
Mr. Alvarez	ü	ü	C
Dr. Baicker	ü				C	ü
Mr. Eskew	ü	ü		C
Mr. Fyrwald	ü		ü			ü
Mr. Jackson	ü	C			ü
Ms. Johnson	ü		ü		ü
Dr. Kaelin	ü			ü		C
Mr. Luciano	LD		ü	ü
Mr. Ricks	ü
Dr. Runge	ü				ü	ü
Ms. Sulzberger	ü	ü			ü
Mr. Tai	ü	ü		ü
Ms. Walker	ü	ü	ü
Number of 2021 Meetings	7	9	9	4	6	9

C    Committee Chair

LD    Lead Independent Director

All committee charters are available online at lilly.com/leadership/governance. Key responsibilities of each committee are set forth below.

Audit Committee

The Audit Committee assists the board in fulfilling its oversight responsibilities by monitoring:

•the integrity of financial information provided to our shareholders and others

•management's systems of internal controls and disclosure controls

•the performance of internal and independent audit functions

•the qualifications and independence of the company’s independent auditor

•the company's compliance with legal and regulatory requirements

•processes and procedures related to identifying and mitigating enterprise-level risks.

The committee has sole authority to appoint or replace the independent auditor, subject to shareholder ratification.

The board has determined that Mr. Alvarez, Mr. Eskew, Mr. Jackson, Ms. Sulzberger, and Mr. Tai are audit committee financial experts, as defined in the rules of the U.S. Securities and Exchange Commission (SEC).

Compensation Committee

The Compensation Committee:

•establishes the compensation of our CEO, in consultation with other independent directors and our external compensation consultant, and other executive officers

•oversees the company's global compensation philosophy and human management capital efforts, including DEI efforts

•acts as the oversight committee with respect to the company’s deferred compensation plans, management stock plans, and other management incentive and benefit programs

•reviews succession plans for the CEO and other key senior leadership positions, including a broad review of our succession management

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•advises our management and the board regarding other human capital management, DEI efforts, and employee compensation and benefits matters

•reviews, monitors, and oversees stock ownership guidelines for executive officers

•oversees the company’s executive compensation recovery policy

•oversees the company’s engagement with shareholders regarding executive compensation matters, including reviewing and evaluating the results of advisory votes on executive compensation.

Compensation Committee Interlocks and Insider Participation

During the year ended December 31, 2021, Mr. Alvarez, Mr. Fyrwald, Ms. Johnson, Mr. Luciano, Ms. Seifert, and Ms. Walker served on the Compensation Committee, with Ms. Seifert’s service on the Compensation Committee concluding in May 2021, upon her retirement from the board and Ms. Walker’s service on the Compensation Committee beginning January 1, 2021.

None of the Compensation Committee members:

•has ever been an officer or employee of the company

•is or has been a participant in a related person transaction with the company (see "Governance—Highlights of the Company's Corporate Governance—Conflicts of Interest and Transactions with Related Persons—Review and Approval of Transactions with Related Persons" for a description of our policy on related person transactions)

•has any other interlocking relationships requiring disclosure under applicable SEC rules.

Directors and Corporate Governance Committee

The Directors and Corporate Governance Committee:

•reviews and recommends to the board the size and composition of the board and its committees

•leads the process for director recruitment, together with the lead independent director

•reviews recommendations for nominees for the board of directors

•oversees matters of corporate governance, including board performance, non-employee director independence and compensation, corporate governance guidelines, and shareholder engagement on governance matters

•identifies and brings to the attention of the board as appropriate current and emerging environmental, social, political, and governance trends and public policy issues that may affect the business operations, performance, or reputation of the company

•annually assesses the performance of the board, board committees and board processes, and reviews such findings with the board.

Ethics and Compliance Committee

The Ethics and Compliance Committee:

•reviews, identifies and, when appropriate, brings to the attention of the board legal and regulatory trends and issues, and compliance and quality matters that may have an impact on the business operations, financial performance, or reputation of the company

•reviews, monitors, and makes recommendations to the board on corporate policies and practices related to compliance, including those related to employee health and safety.

Science and Technology Committee

The Science and Technology Committee:

•reviews and advises the board regarding the company’s long-term strategic goals and objectives and the quality and direction of the company’s research and development programs

•reviews and advises the board and management on the company’s major technology positions and strategies relative to emerging technologies, emerging concepts of therapy and health care, and changing market requirements

•monitors and evaluates developments, technologies, and trends in pharmaceutical research and development

•regularly reviews the company's product pipeline

•assists the board with its oversight responsibility for enterprise risk management in areas affecting the company's research and development.

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Board Oversight of Strategy, Compliance, and Risk Management

The board takes an active approach to its role in overseeing the development and execution of the company’s business strategies. On an annual basis, the board and executive management conduct an extended review and discussion of the company’s strategy, evaluating goals, the external environment, key questions, and key risks. Board meetings include discussions of company performance relative to the strategy. The board also reviews strategic focus areas for the company, such as innovation, information security, cybersecurity, and human capital management. See also "Governance—Highlights of the Company’s Corporate Governance—Human Capital Management."

The board, together with its committees, oversees the processes by which the company conducts its business to ensure the company operates in a manner that complies with laws and regulations and reflects the highest standards of integrity. The Ethics and Compliance Committee meets at least four times per year, including semi-annual private sessions to discuss compliance with the company’s chief ethics and compliance officer, the general auditor, and the senior vice president, global quality. On an annual basis, the full board reviews the company's overall state of compliance and the Ethics and Compliance Committee receives an update on compliance at each meeting.

The chief ethics and compliance officer and the senior vice president, global quality report directly to the CEO.

The company also has an enterprise risk management program directed by its chief ethics and compliance officer. Enterprise risks are identified and prioritized by management through both top-down and bottom-up processes. Key enterprise-level risks are overseen by the full board and our enterprise risk management process is overseen by the Audit Committee. Company management is charged with managing risk through robust internal processes and controls. The enterprise-level risks are reviewed annually at a full board meeting, and relevant enterprise risks are also addressed in periodic business function reviews and at the annual board and senior management strategy session.

Code of Ethics

The board approves the company's code of ethics, which is set out in:

The Red Book:A comprehensive code of ethical and legal business conduct applicable to all employees worldwide and to our board. The Red Book is reviewed and approved annually by the board. In 2022, we revised The Red Book training to update our Global Conduct in the Workplace procedure to continue to help ensure that we maintain a respectful, safe, inclusive, and professional workplace.

Code of Ethical Conduct for Lilly Financial Management: A supplemental code for our CEO and all members of financial management, in recognition of their unique responsibilities to ensure proper accounting, financial reporting, internal controls, and financial stewardship.

These documents are available online at lilly.com/operating-responsibly/ethics-compliance and lilly.com/operating-responsibly/ethics-compliance/financial-management-ethical-conduct. In the event of any amendments to, or waivers from, a provision of the code affecting the CEO, chief financial officer, chief accounting officer, controller, or persons performing similar functions, we intend to post on the above website, within four business days after the event, a description of the amendment or waiver as required under applicable SEC rules, and we will maintain that information on our website for at least 12 months.

Highlights of the Company’s Corporate Governance

We are committed to good corporate governance, which promotes the long-term interests of shareholders and other company stakeholders, builds confidence in our leadership, and strengthens accountability by the board and management. The board has adopted corporate governance guidelines that set forth the company's basic principles of corporate governance. The section that follows outlines key elements of the guidelines and other important governance matters. Investors can learn more by reviewing the corporate governance guidelines, which are available online at lilly.com/leadership/governance.

Role of the Board

Directors are elected by the shareholders to oversee the actions and results of the company’s management. The board exercises oversight over a broad range of areas, but the board's key responsibilities include the following (certain of which are carried out through the board's committees):

•providing general oversight of the business

•approving corporate strategy

•approving major management initiatives

•overseeing capital allocation

•selecting, compensating, evaluating, and, when necessary, replacing the CEO, and compensating other senior executives

•ensuring that an effective succession plan is in place for all key senior leadership positions and reviewing our broader talent management process, including human capital management strategies, overall corporate culture, and DEI programs

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•overseeing the company’s ethics and compliance program and management of significant business risks

•selecting, compensating, and evaluating directors

•evaluating board processes and performance

•overseeing the company's enterprise risk management program, including receiving regular briefings on cyber,

technology and information risks

•overseeing the company’s approach to current and emerging environmental, social, political, and governance trends and public policy issues that may affect the business operations, performance or reputation of thecompany

•overseeing the company’s political expenditures and lobbying activities.

The board takes an active role in its oversight of our corporate strategy. Each year, the board and executive management closely examine the company's strategy, including key risks and decisions facing the company. Decisions reached in this session are updated throughout the year, including as the board discusses the company's financial performance, the performance of our business units, and progress in our product pipeline.

Board Composition and Requirements

Mix of Independent Directors and Officer-Directors

We believe there should always be a substantial majority (75 percent or more) of independent directors. The CEO should be a member of the board.

Voting for Directors

In an uncontested election, directors are elected by a majority of votes cast. An incumbent nominee who fails to receive a greater number of votes "for" than "against" his or her election will tender his or her resignation from the board following the certification of the shareholder vote. The board, on recommendation of the Directors and Corporate Governance Committee, will decide whether to accept the resignation. The company will promptly disclose the board's decision, including, if applicable, the reasons the board rejected the resignation.

Director Tenure and Retirement Policy

Non-employee directors must retire from the board no later than the date of the annual meeting that follows their seventy-second birthday, although the Directors and Corporate Governance Committee may recommend exceptions to this policy. The Directors and Corporate Governance Committee, with input from all board members, also considers the contributions of the individual directors annually, with a more robust assessment at least every three years when considering whether to nominate directors to new three-year terms. The company has not adopted term limits because the board believes that the company benefits from having a mix of longer- and shorter-tenured members of the board.

Other Board Service

To ensure proper engagement from our directors and effective functioning of our board, we have instituted certain limitations on service on the boards of other companies. In general, no director may serve on more than three other public company boards. No director that is an executive officer of a public company may serve on more than two public company boards (inclusive of Lilly).The Directors and Corporate Governance Committee may approve exceptions if it determines that the additional service will not impair the director's effectiveness on the Lilly board. In addition, no director serving on the Audit Committee may serve simultaneously on the audit committee of more than two other public companies without the prior approval of the board.

Board Confidentiality Policy

The board has adopted a Confidentiality Policy, applicable to all current and future members of the board. The policy prohibits a director from sharing confidential information obtained in his or her role as a director with any third party except under limited circumstances where the director is seeking legal advice or is required by law to disclose information. The Confidentiality Policy can be viewed on the company's website: lilly.com/leadership/governance.

Leadership Structure; Oversight of Chair, CEO, and Senior Management

Leadership Structure

Our board believes that there is no "one-size-fits-all" approach to board leadership and recognizes that one of its key responsibilities is to evaluate its optimal leadership structure to ensure both independent oversight of management and an engaged board with complementary qualities, perspectives, and experiences. The board regularly reviews its leadership structure and developments in the area of corporate governance to ensure that our chosen leadership structure continues to strike the appropriate balance for the company and our stakeholders and enables us to promote the long-term interests of our shareholders. Throughout 2021, the board continued its proactive assessment of board succession and refreshment. After thoughtful consideration of our business, long-term strategy, and related risks, and the strong role of our lead independent director, the independent directors believe that combining the chair and CEO roles, coupled with a strong lead independent director position, continues to be in the best interest of the company and our shareholders. The board believes

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that Mr. Ricks’ extensive knowledge of, and experience in, the pharmaceutical industry enables him to effectively set the long-term strategic direction of the company and provide diligent, long-term leadership and direction for management and our board.

Mr. Luciano serves as the current lead independent director. Mr. Luciano is a strong lead independent director who fulfilled each of the duties below during the past year. As the CEO and president of Archer-Daniels-Midland Company, he brings valuable and diverse experience and outside perspective to his lead independent director role, which permits him to serve as a trusted adviser to Mr. Ricks and ensure effective board management.

In 2021, the independent directors, led by Mr. Luciano, met at each regularly scheduled board meeting in executive session to discuss various matters related to the oversight of the company, the management of the board’s affairs, and the CEO’s performance. We believe Mr. Luciano fosters an open and constructive dialogue during these sessions as well as during individual discussions with the independent directors. Mr. Luciano advises Mr. Ricks on the independent directors’ discussions, including performance feedback.

Board Independence

The board has put in place a number of governance practices to ensure effective independent oversight, including:

•Executive sessions of the independent directors: Held after every regular board meeting and presided over by the lead independent director.

•Annual performance evaluation of the chair and CEO: Conducted by the independent directors, the results of which are reviewed with the CEO and considered by the Compensation Committee and independent directors in establishing the CEO’s compensation for the next year.

•A strong, independent, clearly defined lead independent director role: The lead independent director's responsibilities include:

◦leading the board’s processes for selecting the CEO

◦overseeing the independent directors’ annual performance evaluation of the chair and CEO

◦serving as a liaison between the chair and the independent directors

◦presiding at all meetings of the board at which the chair is not present

◦presiding at executive sessions of the independent directors

◦calling meetings of the independent directors, as appropriate

◦approving meeting agendas and schedules and reviewing information to be provided to the board

◦being available for consultation and direct communication with shareholders, as appropriate

◦together with the chair and the chair of the Directors and Corporate Governance Committee, conducting the annual board assessment process

◦together with the Directors and Corporate Governance Committee, leading the director succession planning process

◦retaining advisors for the independent directors, as appropriate.

•Lead independent director assessment: The lead independent director is elected by and from among the independent directors of the board, which conducts an assessment of his or her performance as part of the annual board assessment process. Currently, Mr. Luciano is the lead independent director.

•Director access to independent advisors:The independent directors and all committees have the ability to retain their own independent advisors, at the company’s expense, whenever they deem it desirable to do so.

•Director access to management: Independent directors have direct access to members of management whenever they deem it necessary, and the company's executive officers attend part of each regularly scheduled board meeting.

CEO Succession Planning

The Compensation Committee, board, and CEO annually review the company's succession plans for the CEO and other key senior leadership positions. The independent directors also meet without the CEO to discuss CEO succession planning.

During these reviews, the CEO and directors discuss:

•future candidates for the CEO and other senior leadership positions

•succession timing

•development plans for potential candidates.

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The independent directors and the CEO maintain a confidential plan for the timely and efficient transfer of the CEO's responsibilities in the event of an emergency or his sudden departure, incapacitation, or death.

The company ensures that the directors have multiple opportunities to interact with the company's top leadership talent in both formal and informal settings to allow them to most effectively assess the candidates' qualifications and capabilities.

Environmental, Social and Governance

Overview and Oversight

Our purpose is to unite caring with discovery to create medicines that make life better for people around the world. This purpose guides our ESG strategy, which includes five key pillars: Increase Access to Medicines, Improve Lives and Communities, Empower a Diverse Workforce, Minimize Our Environmental Impact, and Operate Ethically and Responsibly.

We have undertaken a detailed review of our sustainability efforts, how we communicate our progress toward our ESG goals, and our broader ESG strategy. In 2021, we adopted additional prevalent reporting frameworks, established new 2030 sustainability goals, and held an ESG stakeholder day to share our strategy and progress. In 2021, we also issued Lilly’s first sustainability bond, which will help fund projects that will contribute to our ESG objectives.

We made progress toward our ESG goals in 2021 by, among other things:

•Continuing our 30x30 global health effort, including an expansion of our partnership with Life for a Child to provide diabetes support to children in more than 60 countries over the next 10 years and the establishment of royalty-free licensing agreements with Indian pharmaceutical companies to accelerate manufacturing and distribution of our COVID-19 therapy baricitinib.

•Making investments in our communities, including our investment in Sixty8 Capital, and a $5 million commitment to Direct Relief’s Fund for Health Equity.

•Lilly employees completing 10,015 hours of 25,000 volunteer hours pledged over five years by Lilly as part of our Racial Justice Commitment.

•Sharing our EEO-1 data for 2020 in an effort to enhance transparency about our workforce diversity and respond to stakeholder interest in this information.

•Bringing on-line the largest solar field in Ireland at our facility in Kinsale, Ireland and completing solar installations at our facilities in Spain.

Our approach to ESG governance includes board oversight, management accountability, corporate policies and management systems, and stated public policies and positions on key ESG topics. Our full board is engaged in strategic ESG oversight, receiving regular updates on ESG matters, reviewing and approving our long-term environmental goals, and weighing in on significant strategic investments, including those related to ESG. The Directors and Corporate Governance Committee is also responsible for identifying and bringing to the attention of the board, as appropriate, current and emerging environmental, social, political, and governance trends and public policy issues that may affect our business operations, performance or reputation. In addition, the Compensation Committee is responsible for oversight of human capital management matters, including DEI.

In addition, we have formed an ESG Governance Committee that includes senior leaders across many of our business functions. The committee reports to our senior leadership Executive Committee. Throughout Lilly, leaders are responsible for embedding ESG goals in their operations and are accountable for progress and achievement of those goals.

We have adopted the Sustainability Accounting Standards Board for Biotechnology and Pharmaceuticals and the Task Force on Climate-Related Financial Disclosures frameworks to communicate our progress toward our ESG objectives and continue to report our progress on the United Nations Sustainable Development Goals.

Additional information on our ESG efforts is available at the ESG page of our website.

Increase Access to Medicines

We work with global health systems and organizations to improve equitable access to our medicines and address complex global health challenges, such as the COVID-19 pandemic and the growing prevalence of diabetes. We have established a comprehensive goal—Lilly 30x30—to improve access to quality health care for 30 million people living in communities with limited resources, annually, by 2030.

Improve Lives and Communities

Beyond our medicines, we invest our time, expertise, and resources to drive social impact with a focus on health. We focus on action and advocacy that build stronger communities where people and companies can prosper and thrive. We collaborate with organizations that have proven track records of social impact. We also encourage our employees to volunteer and give in meaningful ways.

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Empower a Diverse Workforce

DEI is at the core of how we do business. Our long-standing values of integrity, excellence, and respect for people foster an environment where team members are encouraged to speak up, share ideas, and be fully engaged in our work, while bringing their full authentic selves to work every day. By doing so, we help innovate, accelerate, and deliver life-changing medicines that make a difference for people around the world. See below under “—Human Capital Management” for additional information regarding our DEI efforts and progress.

Minimize our Environmental Impact

We believe that making life better means protecting and preserving the world in which we live. While making medicines requires the use of valuable resources, including energy, water, and raw materials, we remain committed to improving our environmental impact across our product life cycles and supply chain. We have set new 2030 sustainability goals to reduce our emissions and waste and to continue using water responsibly and efficiently.

Recognizing our responsibility to reduce our carbon footprint to help fight climate change, we have set new targets and have an established global energy-management program. Our 2030 climate goals include:

•Sourcing 100% of our purchased electricity from renewable sources.

•Becoming carbon neutral in our own operations.

•Enhancing the tracking and reporting of emissions from our full value chain.

We are committed to minimizing waste and conserving energy, resources, and landfill space. We have enhanced our commitment to reduce landfill waste and have introduced new goals focused on addressing plastic waste from our operations and integrating sustainability into the designs of our products. Our 2030 waste goals include:

•Zero waste to landfill from routine operations.

•Repurposing 100% of plastic waste for beneficial use, with at least 90% recycled or reused.

•Integrating sustainability-focused design principles into product and packaging design processes.

Water is essential to both our operations and the facilities where we discover and manufacture our medicines, and we are committed to using this critical resource more efficiently. We have set new water-related goals for 2030 that include establishing and implementing water management plans for all Lilly sites in water-stressed areas, as well as working to ensure our internal and external manufacturing operations do not adversely impact our waterways as a result of discharges of pharmaceuticals. These goals include:

•Establishing and implementing water management plans for Lilly sites in water-stressed areas.

•Ensuring 100% of Lilly sites meet predicted no-effect concentrations (PNEC) for Pharmaceuticals in the Environment.

•Ensuring appropriate controls are in place by Lilly contract manufacturers to prevent discharge of pharmaceuticals in wastewater above applicable PNEC values.

Operate Ethically and Responsibly

We strive to earn and maintain the trust of people we serve by acting ethically and responsibly. We set high standards for our products, operations and performance, and we show caring and respect for those touched by our work. Our actions are grounded in our company’s core values of integrity, excellence, and respect for people. See “Board Oversight of Strategy, Compliance, and Risk Management—Code of Ethics” for additional information.

Human Capital Management

Overview and Oversight

At Lilly, dedication to human capital management is a core component of our corporate governance and culture. Our comprehensive approach to human capital management is grounded in our core values of integrity, excellence, and respect for people, which reflect our commitment to creating a safe, supportive, ethical, and rewarding work environment.

The board exercises active oversight over our overall talent management process, including human capital management strategies, corporate culture, and DEI programs. The board also oversees the work of its committees in developing corporate policies and frameworks designed to attract, retain, engage, and develop a workforce that aligns with our values and mission. The Compensation Committee advises the board and management on and is responsible for oversight of human capital management, DEI efforts, and employee compensation and benefits matters, and annually reviews our leadership development and succession planning practices. The Directors and Corporate Governance Committee is responsible for identifying and bringing to the attention of the board, as appropriate, current and emerging environmental, social, political, and governance trends and public policy issues that may affect our business operations, performance, or reputation.

The board also oversees human capital management by regularly engaging with management and facilitating a system of reporting that highlights the importance of DEI to Lilly. For example, as part of our commitment to DEI, our board considers the contributions related to DEI of our CEO and other executive committee members when determining their compensation.

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Our board also oversees the activities of our CEO and executive committee in setting expectations for inclusive leadership and holding leaders accountable for building diverse and inclusive teams. Our CEO receives regular reports from Lilly’s senior vice president for human resources and diversity. In addition, our chief DEI officer is a vice president who also has responsibility for all aspects of talent management in the company, which enables full integration of DEI into our talent systems. The vice president of DEI and talent managementreports to the senior vice president for human resources and diversity, who is a member of our executive committee. We believe this system of oversight and reporting by the board and our key executives is critical to our success in fostering an inclusive, supportive, and rewarding workplace.

Measuring Progress on Diversity, Equity, and Inclusion

We are committed to fairness and nondiscrimination in our employment practices, and we deeply value diverse backgrounds, skills, and global perspectives. To fulfill our purpose, we believe we must look at challenges from multiple viewpoints and understand the diverse experiences of the patients who depend on us. In short, our differences make a difference—to patients and to our business.

We believe that fostering DEI begins with understanding, and we have approached DEI with the same rigor as our other business-critical priorities. Our Employee Journeys research has yielded important insights about the experiences of women, Black/African American, Latinx, Asian, and LGBTQ+ employees at Lilly. In response to insights from our Employee Journeys research, we developed, among others, an education and awareness program to help build cultural literacy and foster an understanding of employee expectations for feeling psychologically safe at work. More than 3,500 leaders and more than 13,000 employees have participated in required training to gain greater awareness of how unconscious bias and microaggressions can harm team cohesiveness and hurt employee engagement. Our Employee Journeys research has also resulted in growing energy around DEI, with a company-wide network of DEI champions, initiatives, and teams across business areas—and an expanding appreciation of the value of different perspectives. The results of this research are reviewed by our senior leadership, and we deploy actions and activities in response to these insights to improve our workplace and corporate culture.

In 2020, Lilly and the Lilly Foundation launched the Racial Justice Commitment, with Lilly pledging 25,000 volunteer hours over five years and the Lilly Foundation committing $25 million over five years to help decrease the burden of racial injustice and its effects on communities of color. The Racial Justice Commitment aims to drive change across five areas: internal people development, health equity, social impact, diversity partners, and family sustaining jobs, through the use of financial and people resources. In 2021, we made progress in these efforts, including through the development of two apprenticeship programs at Lilly for individuals without college degrees.

Since 2017, we have committed to increasing the number of women, Black/African American, Latinx, and Asian populations in leadership roles, and we actively monitor our progress. From the end of 2017 through the end of 2021, we increased the percentage of women in management globally from 41 percent to 48 percent. For MGM in the U.S. over the same period, we increased management representation from 16 percent to 24 percent. Across all levels of our workforce, from the end of 2017 through the end of 2021, we have seen increased representation for MGMs in the U.S. and women globally.

Our focus on DEI is also a critical component of our broader corporate governance. Five of fifteen current members (approximately 33 percent) of our executive committee (which includes our CEO) are women and two are MGM. In addition,

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as of the date of this proxy statement, the company's 13 directors range in age from 49 to 72 and include four women and six members who are MGMs.

Recognition

At Lilly we strive to be leaders in DEI and workplace benefits, and we are honored when we receive recognition for our efforts to improve the lives of our employees. Below are some of our accolades for 2021:

Employee Development

We believe talent begins with the hiring process. We therefore require hiring managers to consider a diverse pool of candidates, and we strive to provide a diverse panel of interviewers for open positions. We believe that hiring in this way helps ensure that people from all backgrounds have equal opportunity to advance their careers.

We offer training to enable our employees to perform their duties in our highly regulated industry. We also strive to cultivate a culture that promotes ongoing learning by encouraging employees to seek further education and growth experiences, helping them build rewarding careers. We have introduced online programming to facilitate access to our learning and development offerings. Many training courses are designed to improve accessibility for people with disabilities and other unique needs. Across Lilly, we are working to design learning experiences to be more inclusive and effective. In addition, we have implemented tools and resources and improved our talent programs and processes to provide broad access to information and transparency regarding career development and advancement at Lilly.

In early 2022, we launched Discover, a 12-month new employee onboarding program with multiple touchpoints designed to foster integration into the Lilly culture, to accelerate learning in their new roles and to create connections to further a sense of belonging at Lilly. Discover was shaped in part by external benchmarking, feedback from employees and learnings from onboarding remotely during the COVID-19 pandemic.

Employee resource groups (ERGs) are another important component of developing talent at Lilly. We currently have 11 ERGs representing groups including women, MGMs, LGBTQ+ individuals, veterans, and people with disabilities. ERGs offer our diverse workforce opportunities to build relationships, engage with senior leaders, advance our caring community, and offer unique insights and perspectives to improve our business.

We have continued our efforts to create an inclusive workplace with the goal of ensuring that all employees feel safe to speak up and share their ideas at work.OurMake it Safe to Thriveeducation and awareness program is designed to help employees and leaders understand how individual psychological safety can be created and enhanced and includes live and online training and a monthly video series.

Lilly is committed to fostering a culture of diversity and respect in the workplace—an environment free of discrimination, harassment, or retaliation of any kind. In 2022, as part of our annual review of The Red Book and related policies and procedures, we revised the Global Conduct in the Workplace procedure to continue to help ensure that we maintain a respectful, safe, inclusive, and professional workplace.

Compensation, Benefits, and Pay Equity

While our rewards programs vary around the world, we take a holistic approach to employee benefits. These may include flexible work arrangements, on-site conveniences, such as cafes, fitness centers, child development centers, competitive time-off programs, retirement benefits, and health and disability programs that are available to eligible employees when they need support. We are committed to rewarding, supporting, and developing our employees who make it possible to fulfill our mission to unite caring with discovery to create medicines that make life better for people around the world.

We are also committed to ensuring pay is administered equitably across our workforce. For more than 20 years, we have regularly conducted pay equity studies of our workforce in the U.S. and have more recently started conducting studies of our workforce outside of the U.S. While infrequent, we have made pay adjustments as warranted based on these analyses. We believe that pay equity is critical to our success in supporting a global, diverse, and inclusive workforce.

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Employee Health and Safety

We strive to foster a healthy, vibrant work environment, which includes keeping our employees safe. We seek to create a companywide culture where best-in-class safety practices are consistently followed. To do this, we assess and continuously attempt to improve our companywide safety performance to promote the well-being of employees and to help safeguard communities where we operate. As the COVID-19 pandemic has evolved, we have taken various measures to protect and support the health and safety of our employees globally, including instituting travel restrictions and work-from-home arrangements, offering onsite testing and vaccination options where possible, and instituting safety precautions such as masking, social distancing, and enhanced cleaning practices. To support employee well-being in the U.S., we also enhanced local benefits related to health care, childcare, and time off. We believe this holistic approach and dedication to safety helps us be our best as we deliver on our company purpose to improve lives around the world.

Political and Policy Participation

As a biopharmaceutical company that develops treatment for serious diseases, we believe it is important for our company to be a responsible participant in global political and public policy debates. Our engagement in the political arena helps ensure that patients have access to needed medications. Through public policy engagement, we provide a way for all our locations globally to offer Lilly’s perspective on the political environment in a manner that supports access to innovative medicines and a way to engage on issues specific to local business environments.

The board exercises governance oversight of our political expenditures and lobbying activities, ensuring our commitment to stewardship of corporate funds and risk minimization with respect to such activities. The Directors and Corporate Governance Committee is responsible for identifying current and emerging environmental, social, political, and governance trends and public policy issues that may affect the business operations, performance, or reputation of the company. In addition, the board receives regular updates at board meetings from our senior vice president, corporate affairs, and communications, which include updates on public policy issues and the company’s political corporate activity, as needed. The board also receives semi-annual updates on political engagement, including information on the contributions made by our employee political action committee (LillyPAC) and the company, as well as trade association memberships.

In particular, our board is deeply engaged in oversight over Lilly’s approach to drug pricing and access. Guided by this active oversight, Lilly has taken numerous steps to address drug pricing and access concerns. For example, Lilly introduced two additional lower-priced versions of Humalog in January 2020 and added the Lilly Insulin Value Program to Lilly’s comprehensive suite of insulin affordability solutions in September 2020, which now enables customers with commercial insurance or no insurance to purchase their monthly prescription of all Lilly insulins for $35. In addition, in September 2021, the company announced that it lowered the list price of all Lilly’s non-branded insulins, including Insulin Lispro Injection, by an additional 40% in the U.S. effective January 1, 2022, effectively reducing its list price to 2008 levels. These examples, among others, demonstrate Lilly’s commitment to providing effective oversight over drug pricing and access.

We provide information on our website related to direct company contributions and LillyPAC contributions to support candidates for political office, political parties, officials, or committees in the U.S., as well as information regarding our trade association memberships and the company's oversight of these activities. In response to input from our stakeholders, we have reviewed and enhanced the information available on our corporate website and plan to continue to engage with stakeholders on this topic.

Board Education and Annual Performance Assessment

The company provides a comprehensive orientation process for incoming directors. Directors also attend regular continuing education sessions on areas of relevance or importance to our company, and we hold periodic mandatory training sessions for the Audit Committee.

Every year, the Directors and Corporate Governance Committee, together with the chair and the lead independent director, conducts a robust assessment of the performance of the board and board committees, and of all board processes, based on input from all directors. We also conduct an annual assessment of each director's performance, and every three years we conduct a detailed review of individual director performance when considering whether to nominate the director to a new three-year term.

Conflicts of Interest and Transactions with Related Persons

Conflicts of Interest

Occasionally a director's business or personal relationships may give rise to an interest that conflicts, or appears to conflict, with the interests of the company. As outlined in the company's corporate governance guidelines, directors must disclose to the company all relationships that could create a conflict or an appearance of a conflict. The board, after consultation with counsel, takes appropriate steps to identify actual or apparent conflicts and ensure that all directors voting on an issue are disinterested with respect to that issue. A director may be excused from board discussions and decisions on an issue related to an actual or apparent conflict, as appropriate.

In addition, a director’s relationship with Lilly may give rise to an interest that conflicts, or appears to conflict, with the interests of another company, institution, or other stakeholder. A director must disclose his or her relationship with Lilly in connection with any scientific publication, using the International Committee of Medical Journal Editors (ICMJE) conflict of interest form for this purpose when possible. Each director must disclose his or her service on the board to his or her employer and any other organization with which the director has a relationship of trust and where the relationship with the

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company is relevant. In addition, directors must follow the internal conflict of interest policies and procedures of each such organization.

Review and Approval of Transactions with Related Persons

The board has adopted a written policy and procedures for review, approval, and monitoring of transactions involving the company and related persons (including current executive officers, directors, or director nominees and persons who served in those roles at any time since the beginning of our last fiscal year, greater than five percent shareholders of the company, immediate family members of such persons, and related entities of such persons, including entities in which any of such persons is employed, is a general partner or principal or in which such person has a 10 percent or greater beneficial ownership interest). The policy covers any related person transaction that meets the minimum threshold for disclosure in this proxy statement under relevant SEC rules (generally, transactions involving amounts exceeding $120,000 in which a related person has a direct or indirect material interest).

Policy:

Related person transactions must be preapproved by the Directors and Corporate Governance Committee of the board or another independent body of the board, who will approve the transaction only if the Directors and Corporate Governance Committee or such independent body determines it to be consistent with the interests of the company and its shareholders. In considering the transaction, the Directors and Corporate Governance Committee or such independent body will consider all relevant factors, including:

•the company’s business rationale for entering into the transaction;

•the purpose of, and potential benefits to the company of, the transaction;

•the alternatives to entering into a related person transaction;

•whether the transaction is on terms comparable to those available to third parties, or in the case of employment relationships, to employees generally;

•the potential for the transaction to lead to an actual or apparent conflict of interest and any safeguards imposed to prevent such actual or apparent conflicts;

•the overall fairness of the transaction to the company;

•the approximate dollar value of the amount involved in the transaction, particularly as it relates to the related person;

•the related person’s interest in the transaction; and

•any other information regarding the transaction or the related person that would be material to the company’s shareholders in light of the circumstances of the particular transaction.

Procedures:

•Prior to entering into a transaction that may be a related person transaction, the related person (or the appropriate executive officer or director, in the case of immediate family members) is required to bring the matter to the attention of the chair of the board or the lead independent director, or alternatively, the Senior Vice President, General Counsel and Secretary.

•The chair of the board and the lead independent director jointly determine (or, if either is involved in the transaction, the other determines in consultation with the chair of the Directors and Corporate Governance Committee) whether the matter should be considered by the Directors and Corporate Governance Committee or another independent body of the board.

•If a director is involved in the transaction, he or she will be recused from all discussions and decisions relating to the transaction.

•The Directors and Corporate Governance Committee or such other independent body may approve the related person transaction only if the Directors and Corporate Governance Committee or such other independent body determines in good faith that, under all of the circumstances, the transaction is consistent with the interests of the company and its shareholders.

•The Directors and Corporate Governance Committee or such other independent body may impose such conditions as it deems appropriate on the company or the related person in connection with the approval of the related person transaction.

•If the transaction is recurring and is approved, the Directors and Corporate Governance Committee or such other independent body will review the related person transaction annually to determine whether it continues to be consistent with the interests of the company and its shareholders.

The Directors and Corporate Governance Committee or another independent body of the board retains the right to review and ratify related person transactions. In addition, the Directors and Corporate Governance Committee or such other

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independent body may take or cause to be taken additional actions including, but not limited to, immediate discontinuation or rescission of the transaction, or modification of the transaction.

On August 23, 2021, the company entered into a multi-year research collaboration and licensing agreement with Lycia Therapeutics, Inc. (Lycia). Dr. Bertozzi, a former member of our board, is the academic founder of Lycia and held an approximate 10.1 percent ownership interest therein as of August 23, 2021. The transaction was approved in accordance with Lilly’s related persons transactions policy and Dr. Bertozzi did not participate in any discussions or votes relating to the transaction. Immediately upon the company’s entry into the collaboration and licensing agreement, Dr. Bertozzi resigned from our board. Lycia received an upfront payment of $35 million during the year ended December 31, 2021, and is eligible to receive over $1.6 billion in potential milestone payments based on the achievement of prespecified preclinical, development and commercial milestones, as well as tiered royalties from mid-single to low double-digits on sales resulting from the agreement.

Communication with the Board of Directors

You may send written communications to members of the board, including independent directors, addressed to:

Board of Directors

Eli Lilly and Company

c/o General Counsel and Secretary

Lilly Corporate Center

Indianapolis, IN 46285

Shareholder Engagement on Governance Issues

To ensure that a variety of perspectives are thoughtfully considered on several issues, each year the company engages large shareholders and other key constituents to discuss areas of interest or concern related to corporate governance, as well as any specific issues for the coming proxy season. Since our 2021 annual meeting of shareholders, we have spoken with a number of investors on an array of subjects, including board leadership; environmental, social and governance topics; drug pricing transparency and global access to our products; product quality and safety; key enterprise risks; executive compensation; DEI; and human capital management. We appreciate the thoughtful and constructive feedback that we receive from our stakeholders. While a few shareholders communicated differing views on some of our governance practices, the investors with whom we spoke were generally supportive of our performance and overall compensation and governance policies. This feedback has been discussed with our chair and CEO, the lead independent director, our Compensation Committee, and our Directors and Corporate Governance Committee, and it was a key input into board discussions on corporate governance topics. As a result of these discussions and its own deliberations, the board decided to recommend in favor of the three management proposals described below. We are committed to continuing to engage with our investors to ensure that their diverse perspectives on corporate governance and other issues are thoughtfully considered.

Management Proposals to Eliminate Classified Board, Supermajority Voting Requirements and to GiveShareholders the Ability to Amend the Company's Bylaws

Each year between 2007 and 2012, and again from 2019 through 2021, our management put forward proposals to eliminate the company's classified board structure. The proposals did not pass because they failed to receive a "supermajority vote" of 80 percent of the outstanding shares of our common stock, as required in the company's articles of incorporation. In addition, each year from 2010 through 2012, and again from 2018 through 2021, we submitted management proposals to eliminate the supermajority voting requirements. Those proposals also did not receive the required 80 percent vote.   

Prior to 2012, these proposals received support ranging from 72 to 77 percent of our outstanding shares. In 2012, the vote in support of these proposals was approximately 63 percent of our outstanding shares, driven in part by a 2012 NYSE rule revision prohibiting brokers from voting their clients' shares on corporate governance matters absent specific instructions from such clients. In 2018, 2019, 2020, and 2021, the vote in support was approximately 62, 66, 69, and 70 percent of our outstanding shares, respectively.

After considering the interests of the company and our shareholders, we have resubmitted for consideration at the Annual Meeting management proposals to eliminate the classified board structure and supermajority voting requirements (see Items 4 and 5).

Our articles of incorporation and bylaws currently do not allow shareholders to amend the bylaws. This position reflects the default under Indiana law, which reserves the exclusive authority to amend the bylaws to the board of directors. After considering feedback from our shareholders, we are submitting a management proposal to amend our articles of incorporation to give shareholders the ability to amend our bylaws (see Item 6).

We will continue to engage with our shareholders on these and other topics to ensure that we continue to demonstrate strong corporate governance and accountability to shareholders.

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Shareholder Proposals

Shareholder Proposals under Rule 14a-8

Shareholders interested in submitting a proposal considered for inclusion in the proxy statement for the 2023 annual meeting must follow the procedures set forth in Rule 14a-8 under the Securities Exchange Act of 1934. Proposals should be addressed to the General Counsel and Secretary and mailed to Lilly Corporate Center, Indianapolis, IN 46285. For convenience, emailed copies may also be sent toshareholderproposals@lilly.com. In general, to be eligible for inclusion in the proxy statement for the 2023 annual meeting, shareholder proposals must be received no later than November 18, 2022.

Other Shareholder Proposals

In addition, under section 1.8 of the company’s bylaws, any shareholder of record wishing to propose any other business (i.e., not pursuant to Rule 14a-8) at the 2023 annual meeting of shareholders must give the company written notice no later than the close of business on November 18, 2022, and no earlier than the close of business on September 19, 2022. However, if the date of the 2023 annual meeting is changed by more than 30 days from May 1, 2023 (the date contemplated for the 2023 annual meeting as set forth in this proxy statement), a shareholder must give the company written notice no later than the close of business on the later of 120 days in advance of the 2023 annual meeting or 10 days following the date we first publicly announce the date of 2023 annual meeting. Any such notice must also comply with the timing, disclosure, procedural and other requirements as set forth in the bylaws. A copy of the bylaws is available online at lilly.com/leadership/governance.

Shareholder Recommendations and Nominations for Director Candidates

Shareholder Recommendations of Director Candidates

A shareholder who wishes to recommend a director candidate for evaluation should forward the candidate's name and information about the candidate's qualifications to:

Chair of the Directors and Corporate Governance Committee

c/o General Counsel and Secretary

Lilly Corporate Center

Indianapolis, IN 46285

The candidate must meet the selection criteria described above under "Governance—Director Qualifications and Nomination Process—Director Qualifications" and must be willing and expressly interested in serving on the board.

Shareholder Nominations for Director Candidates for Inclusion in the Proxy Statement (“Proxy Access”)

If a shareholder or group of shareholders wishes to nominate one or more director candidates to be included in the proxy statement for the 2023 annual meeting pursuant to the “proxy access” provisions of the company’s bylaws (section 1.10), such shareholder or group of shareholders must give the company written notice no later than the close of business on November 18, 2022, and no earlier than the close of business on October 19, 2022. However, if the date of the 2023 annual meeting is changed by more than 30 days from May 1, 2023 (the date contemplated for the 2023 annual meeting as set forth in this proxy statement), a shareholder must give the company written notice no earlier than 150 days in advance of the date of the 2023 meeting and no later than the close of business on the later of 120 days in advance of the 2023 annual meeting or 10 days following the date we first publicly announce the date of 2023 annual meeting. Any such notice must also comply with the timing, disclosure, procedural, and other requirements as set forth in the bylaws.

Other Shareholder Nominations for Director Candidates

In addition, under Section 1.9 of the company’s bylaws, any shareholder of record wishing to directly nominate a director candidate at the 2023 annual meeting of shareholders (i.e., to propose a candidate for election who is not otherwise nominated by the board through the recommendation process described above and not pursuant to the “proxy access” provisions described above) must give the company written notice no later than the close of business on November 18, 2022, and no earlier than the close of business on September 19, 2022. However, if the date of the 2023 annual meeting is changed by more than 30 days from May 1, 2023 (the date contemplated for the 2023 annual meeting as set forth in this proxy statement), a shareholder must give the company written notice no later than the close of business on the later of 120 days in advance of the 2023 annual meeting or 10 days following the date we first publicly announce the date of 2023 annual meeting. Any such notice must also comply with the timing, disclosure, procedural and other requirements as set forth in the bylaws. A copy of the bylaws is available online at lilly.com/leadership/governance.

We know of no other matters to be submitted to shareholders at the Annual Meeting other than the proposals referred to in this proxy statement.

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Ownership of Company Stock

Common Stock Ownership by Directors and Executive Officers

The following table sets forth the number of shares of company common stock beneficially owned by the directors, the named executive officers, and all directors and executive officers as a group, as of February 22, 2022. On February 22, 2022, there were 952,347,126 shares of the company’s common stock outstanding. None of the stock or stock units owned by any of the listed individuals has been pledged as collateral for a loan or other obligation.

Beneficial Owners	Common Stock1
	Shares Owned2		Stock Units Distributable Within 60 Days3	Percent of Class	Stock Units Not Distributable Within 60 Days4
Ralph Alvarez	—		—	*	51,142
Anat Ashkenazi	31,603		—	*	11,499
Katherine Baicker, Ph.D.	—		—	*	21,381
Michael L. Eskew	—		—	*	45,237
J. Erik Fyrwald	100		—	*	68,742
Jamere Jackson	—		—	*	7,793
Kimberly H. Johnson	—		—	*	1,093
William G. Kaelin, Jr., M.D.	—		—	*	19,772
Juan R. Luciano	—		—	*	13,537
Diogo Rau	—		—	*	20,160
David A. Ricks	561,433	5	—	*	47,786
Marschall S. Runge, M.D., Ph.D.	—		—	*	15,234
Daniel Skovronsky, M.D., Ph.D.	148,559		—	*	15,675
Joshua L. Smiley	75,865	6	—	*	—
Gabrielle Sulzberger	—		—	*	720
Jackson P. Tai	46,936		—	*	15,159
Jacob Van Naarden	12,309		—	*	6,403
Karen Walker	—		—	*	4,967
All directors and current executive officers as a group (27 people):	1,171,778		7,929	*	424,724

* Less than 1.0 percent of the outstanding common stock of the company.

1 The sum of the "Shares Owned" and "Stock Units Distributable Within 60 Days" columns represents the shares considered "beneficially owned" for purposes of disclosure in this proxy statement. Unless otherwise indicated in a footnote, each person listed in the table possesses sole voting and sole investment power with respect to their shares.

2 This column includes the number of shares of common stock held directly or indirectly, including the number of 401(k) Plan shares held by the beneficial owners indirectly through the 401(k) Plan.

3 This column sets forth restricted stock units that vest within 60 days of February 22, 2022.

4 For the executive officers, this column reflects restricted stock units that will not vest within 60 days of February 22, 2022. For the non-employee directors, this column reflects the number of units representing the right to receive shares of company stock credited to the directors' accounts in the Lilly Directors' Deferral Plan.

5 The shares shown for Mr. Ricks include 23,030 shares that are owned by a family foundation for which he is a director. Mr. Ricks has shared voting power and shared investment power with respect to the shares held by the foundation.

6 Mr. Smiley resigned from his officer position on February 9, 2021. His share information is as of December 31, 2021, and his shares are excluded in the total for all directors and current executive officers as a group.

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Common Stock Ownership of Certain Beneficial Holders

The following table sets forth the number of shares of company common stock beneficially owned as of December 31, 2021, unless otherwise indicated, by each person known to the company to beneficially own more than 5 percent of the outstanding shares of the company’s common stock:

Name and Address		Number of Shares Beneficially Owned	Percent of Class*
Lilly Endowment Inc. (the Endowment) 2801 North Meridian Street Indianapolis, IN 46208	1	107,463,810	11.3%
The Vanguard Group100 Vanguard Blvd. Malvern, PA 19355	2	69,261,754	7.3%
BlackRock, Inc.55 East 52nd Street New York, NY 10055	3	63,877,023	6.7%
The PNC Financial Services Group, Inc. 300 Fifth Avenue Pittsburgh, PA 15222	4	51,888,455	5.4%

*Percent of class is calculated based on the shares of our common stock outstanding as of February 22, 2022.

1 Based on information provided to Lilly by the Endowment as of January 11, 2022, and a Schedule 13G/A filed by the Endowment with the SEC on January 27, 2022, the Endowment has sole voting and sole dispositive power with respect to all of its shares. The board of directors of the Endowment is composed of N. Clay Robbins, chairman & chief executive officer; Mary K. Lisher; William G. Enright; Daniel P. Carmichael; Charles E. Golden; Eli Lilly II; David N. Shane; Craig Dykstra; Jennett M. Hill, president; John C. Lechleiter; and Clarence Crain.

2 Based solely on the Schedule 13G/A filed with the SEC on February 9, 2022, by The Vanguard Group, it beneficially owns 69,261,754 shares altogether. It does not have sole voting power with respect to any of its shares and it has shared voting power with respect to 1,357,292 of its shares. It has sole dispositive power with respect to 65,918,837 of its shares and shared dispositive power with respect to 3,342,917 of its shares.

3 Based solely on the Schedule 13G/A filed with the SEC on February 8, 2022, by BlackRock, Inc., it has sole voting power with respect to 55,682,054 of its shares and sole dispositive power with respect to 63,877,023 of its shares.

4 Based solely on the Schedule 13G/A filed with the SEC on February 11, 2022, by The PNC Financial Services Group, Inc.; PNC Bancorp, Inc.; PNC Bank, National Association (PNC Bank); PNC Delaware Trust Company; and PNC Investments LLC (collectively, PNC), PNC beneficially owns 51,888,455 shares altogether. PNC has sole voting power with respect to 1,848,764 of its shares and shared voting power with respect to 50,005,199 of its shares. PNC has sole dispositive power with respect to 1,515,580 of its shares and shared dispositive power with respect to 50,333,641 of its shares. Of the total shares of common stock reported for PNC above, 50,000,000 shares are held in the Eli Lilly and Company Compensation Trust account for which PNC Bank serves as directed trustee. As directed trustee, PNC Bank is deemed to share both voting power and investment discretion with respect to those 50,000,000 shares.

Compensation

Item 2. Advisory Vote on Compensation Paid to Named Executive Officers

Section 14A of the Securities Exchange Act of 1934 provides the company's shareholders with the opportunity to approve, on an advisory basis, the compensation of the company's named executive officers as disclosed in the proxy statement. Our compensation philosophy is designed to attract, engage, and retain highly talented individuals from a variety of backgrounds and motivate them to create long-term shareholder value by achieving top-tier corporate performance while embracing the company’s core values of integrity, excellence, and respect for people.

The Compensation Committee and the board believe that our executive compensation aligns well with our philosophy and with corporate performance. Executive compensation is an important matter for our shareholders. We routinely review our compensation practices and engage in ongoing dialogue with our shareholders to ensure our practices are aligned with stakeholder interests and reflect best practices.

We request shareholder approval, on an advisory basis, of the compensation of the company’s named executive officers as disclosed in this proxy statement. As an advisory vote, this proposal is not binding on the company. However, the Compensation Committee values input from shareholders and will consider the outcome of the vote when making future executive compensation decisions. At our 2017 annual meeting of shareholders, our shareholders expressed a preference that advisory votes on executive compensation occur every year, as recommended by our board. Consistent with this preference, the board determined that the company would hold advisory votes on executive compensation on an annual basis until the next advisory vote on the frequency of advisory votes on executive compensation, which will occur no later than our 2023 annual meeting of shareholders.

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Board Recommendation on Item 2

The board recommends that you vote FOR the approval, on an advisory basis, of the compensation paid to the named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the CD&A, the compensation tables, and related narratives provided below in this proxy statement.

Compensation Committee Matters

Background

Role of the Independent Consultant in Assessing Executive Compensation

The Compensation Committee has retained Frederic W. Cook & Co., Inc. (FW Cook) as its independent compensation consultant. FW Cook reports directly to the Compensation Committee, and it is not permitted to have any business or personal relationship with management or members of the Compensation Committee. FW Cook’s responsibilities are to:

•review the company’s total compensation philosophy, peer group, and target competitive positioning for reasonableness and appropriateness;

•review the company’s executive compensation program and advise the Compensation Committee of evolving best practices;

•provide independent analyses and recommendations to the Compensation Committee on the CEO’s pay;

•review the draft CD&A and related tables for the proxy statement;

•proactively advise the Compensation Committee on best practices for board governance of executive compensation; and

•undertake special projects at the request of the Compensation Committee chair.

FW Cook interacts directly with members of company management only on matters under the Compensation Committee’s oversight and with the knowledge and permission of the Compensation Committee chair.

Role of Executive Officers and Management in Assessing Executive Compensation

With the oversight of the CEO and the senior vice president of human resources and diversity, the company’s global compensation group formulates recommendations on compensation philosophy, plan design, and compensation for executive officers (other than the CEO, as noted below). The CEO provides the Compensation Committee with a performance assessment and compensation recommendation for each of the other executive officers. The Compensation Committee considers those recommendations with the assistance of its compensation consultant. The CEO and the senior vice president of human resources and diversity attend Compensation Committee meetings; however, they are not present for executive sessions or any discussion of their own compensation. Only non-employee directors and the Compensation Committee’s consultant attend executive sessions.

The CEO does not participate in the formulation or discussion of his pay recommendations. He has no prior knowledge of the recommendations that FW Cook makes to the Compensation Committee.

Risk Assessment Process

As part of the company's overall enterprise risk management program, in 2021 (consistent with prior years), the Compensation Committee reviewed the company’s compensation policies and practices and concluded that the programs and practices are not reasonably likely to have a material adverse effect on the company. The Compensation Committee noted numerous policy and design features of the company’s compensation programs and governance structure that reduce the likelihood of inappropriate risk-taking, including, but not limited to:

•Only independent directors serve on the Compensation Committee

•The Compensation Committee engages its own independent compensation consultant

•The Compensation Committee has downward discretion to lower compensation plan payouts

•The Compensation Committee approves all adjustments to financial results that affect compensation calculations

•Different measures and metrics are used across multiple incentive plans that appropriately balance cash/stock, fixed/variable pay, and short-term/long-term incentives

•Incentive plans have predetermined maximum payouts

•Performance objectives are challenging but achievable

•Programs with operational metrics have a continuum of payout multiples based upon achievement of performance milestones, rather than "cliffs" that might encourage suboptimal or improper behavior

•A compensation recovery policy is in place for all members of senior management; negative compensation consequences can result in cases involving serious compliance violations

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•Meaningful share ownership and retention requirements are in place for all members of senior management and the board.

Compensation Committee Report

The Compensation Committee evaluates and establishes compensation for executive officers and oversees the deferred compensation plan, management stock plans, and other management incentive and benefit programs. Management has the primary responsibility for the company’s financial statements and reporting process, including the disclosure of executive compensation in the CD&A. With this in mind, the Compensation Committee has reviewed and discussed the CD&A with management. Based on this discussion, the Compensation Committee recommended to the board that the CD&A be included in this proxy statement and the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021, for filing with the SEC.

Compensation Committee

Ralph Alvarez, Chair

J. Erik Fyrwald

Kimberly H. Johnson

Juan R. Luciano

Karen Walker

Compensation Discussion and Analysis

This CD&A describes our executive compensation philosophy, the Compensation Committee’s process for setting executive compensation, the elements of our compensation program, the factors the Compensation Committee considered when setting executive compensation for 2021, and how the company’s results affected incentive payouts. This CD&A provides compensation information for our chief executive officer, David Ricks, our chief financial officer, Anat Ashkenazi, and our next three most highly compensated executive officers who were serving as executive officers on December 31, 2021, Daniel Skovronsky, Jacob Van Naarden, and Diogo Rau. The CD&A also includes our former chief financial officer, Joshua Smiley, who resigned from his officer position on February 9, 2021.

Name and principal occupation
	David A. Ricks Chair, President, and CEO
	Anat Ashkenazi Senior Vice President and Chief Financial Officer
	Daniel Skovronsky, M.D., Ph.D. Senior Vice President, Chief Scientific and Medical Officer and President, Lilly Research Laboratories
	Jacob Van Naarden Senior Vice President, CEO Loxo Oncology at Lilly and President, Lilly Oncology
	Diogo Rau Senior Vice President and Chief Information and Digital Officer

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Four of our named executive officers, Ms. Ashkenazi, Mr. Van Naarden, Mr. Rau, and Mr. Smiley, served in their respective roles for a portion of 2021. Ms. Ashkenazi succeeded Mr. Smiley as senior vice president and CFO on February 9, 2021. Prior to becoming CFO, Ms. Ashkenazi served as senior vice president, controller, and chief financial officer, Lilly Research Laboratories.

Mr. Van Naarden became senior vice president, CEO of Loxo Oncology at Lilly and President of Lilly Oncology on September 5, 2021. He previously served as CEO of Loxo Oncology at Lilly. Mr. Rau joined Lilly as senior vice president and chief information and digital officer on May 17, 2021. Prior to joining Lilly, Mr. Rau served as senior director, information systems and technology for retail and online stores at Apple, Inc.

Our Philosophy on Compensation

At Lilly, our purpose is to unite caring with discovery to create medicines that make life better for people around the world. To do this, we must attract, engage, and retain highly talented individuals from a variety of backgrounds and motivate them to create long-term shareholder value by achieving top-tier corporate performance while embracing the company's core values of integrity, excellence, and respect for people. Our compensation programs are designed to help us achieve these goals while balancing the long-term interests of our shareholders and customers.

Objectives

Our compensation and benefits programs are based on the following objectives:

•Reflect individual and company performance: We reinforce a high-performance culture by linking pay with individual and company performance. As employees assume greater responsibilities, the proportion of total compensation based on absolute company performance, relative company performance and shareholder returns increases. We perform annual reviews to ensure our programs provide an incentive to deliver long-term, sustainable business results while discouraging excessive risk-taking or other adverse behaviors.

•Attract and retain talented employees: Compensation opportunity is market competitive and reflects the level of job impact and responsibilities. Retention of talent is an important factor in the design of our compensation and benefit programs.

•Implement broad-based programs: While the amount of compensation paid to employees varies, the overall structure of our compensation and benefit programs is broadly similar across the organization to encourage and reward all employees who contribute to our success.

•Consider shareholder input: Management and the Compensation Committee consider the results of our annual say-on-pay vote and other sources of shareholder feedback when designing executive compensation and benefit programs.

Say-on-Pay Results

At our 2021 annual meeting of shareholders, greater than 95 percent of the shares cast voted in favor of the company's say-on-pay proposal on executive compensation. Management and the Compensation Committee view this vote as supportive of the company's overall approach toward executive compensation.

Compensation Committee's Processes and Analyses

Setting Compensation

The Compensation Committee considers individual performance assessments, compensation recommendations from the CEO (with respect to each of the other executive officers), company performance, peer group data, input from its compensation consultant, and its own judgment when determining compensation for the company's executive officers.

•Individual performance: Generally, the independent directors, under the direction of the lead independent director, meet with the CEO at the beginning of each year to establish the CEO's performance objectives. At the end of the year, the independent directors meet to assess the CEO's achievement of those objectives along with other factors, including contribution to the company’s performance, diversity, ethics, and integrity. This evaluation is used in setting the CEO's compensation opportunity for the next year.

The Compensation Committee receives individual performance assessments and target compensation recommendations from the CEO for each of the remaining executive officers. Each executive officer’s performance assessment is based on the achievement of objectives established at the start of the year, as well as other factors, including contribution to the company's performance, diversity, ethics, and integrity. The Compensation Committee considers these inputs, its knowledge of and interactions with each executive officer, and its judgment to develop a final individual performance assessment. For new executive officers, target compensation is set by the Compensation Committee at the time of promotion or offer.

•Company performance: Lilly performance is considered in multiple ways:

•Overall prior year performance is a factor in setting target compensation for the coming year.

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•At the beginning of each calendar year, annual performance goals are established and approved by the Compensation Committee. Performance against these annual goals is used to determine the short-term cash incentive payout.

•Prior to the annual equity grant, multi-year performance goals are established and approved by the Compensation Committee. Performance against these multi-year objectives is used to determine the long-term incentive equity payout.

•Peer group analysis: The Compensation Committee uses data from the peer group described below as a market check for compensation decisions but does not use this data as the sole basis for its compensation targets and does not target a specific position within that range of market data.

•Input from independent compensation consultant:The Compensation Committee considers the advice of its independent compensation consultant, FW Cook, when setting executive officer compensation.

Competitive Pay Assessment

Lilly’s peer group is composed of companies that directly compete with Lilly, use a similar business model, and employ people with the unique skills required to operate an established biopharmaceutical company. The Compensation Committee selects a peer group whose median market cap and revenue are broadly like Lilly's. The Compensation Committee reviews the peer group at least every three years. The Compensation Committee established the following peer group in May 2018 for purposes of assessing competitive pay:

AbbVie	Bristol-Myers Squibb	Merck	Sanofi
Allergan*	Celgene*	Novartis	Shire*
Amgen	Gilead	Novo Nordisk	Takeda
AstraZeneca	GlaxoSmithKline	Pfizer
Biogen	Johnson & Johnson	Roche
*Market data unavailable for assessing competitive 2021 pay due to business mergers.

At the time of the review in May 2018, all peer companies were no greater than two times our revenue or market cap except Johnson & Johnson, Novartis, Pfizer, and Roche. The Compensation Committee included these four companies despite their size because they compete directly with Lilly, have similar business models, and seek to hire from the same pool of management and scientific talent.

When determining pay levels for target compensation, the Compensation Committee considers an analysis of market competitive pay for each executive officer position (except CEO), along with internal factors such as the performance and experience of each executive officer. The independent compensation consultant for the Compensation Committee provides a similar analysis when recommending pay levels for the CEO. The CEO analysis includes a comparison of our CEO actual total direct compensation in the prior year to company performance on an absolute and relative basis. The analysis also includes a comparison of current target total direct compensation for our CEO to the most recently available data on CEO target total direct compensation for our peer group with an emphasis on peers that are headquartered in the U.S. On average, the named executive officers' target total direct compensation for 2021 was comparable to the median of the peer group.

Components of Our Compensation

Our 2021 executive compensation was primarily composed of three components:

•base salary

•annual cash bonus, which is generally based on company performance relative to internal targets for revenue, EPS, and the progress of our pipeline

•three different forms of equity incentives:

◦performance award, which is a performance-based equity award that vests over three years. Payout is based on the company's two-year growth in EPS relative to the median external analyst anticipated peer group EPS growth. The earned shares are then subject to a 13-month service-vesting period

◦shareholder value award, which is a performance-based equity award that pays out based on absolute company stock price growth measured over a three-year period, followed by a one-year holding period

◦relative value award, which is a performance-based equity award that pays out based on company TSR results relative to peers measured over a three-year period, followed by a one-year holding period.

Executives also receive a company benefits package, described below under "Other Compensation Practices and Information—Employee Benefits."

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Adjustments to Reported Financial Results

The Compensation Committee has authority to adjust the company's reported revenue and EPS upon which incentive compensation payouts are determined to eliminate the distorting effect of unusual income or expense items. The adjustments are intended to:

•align award payments with the underlying performance of the core business

•avoid volatile, artificial inflation or deflation of awards due to unusual items in any year in the performance period

•eliminate certain counterproductive short-term incentives—for example, incentives to refrain from acquiring new technologies, to defer disposing of underutilized assets, or to defer settling legacy legal proceedings to protect current bonus payments

•facilitate comparisons with peer companies.

The Compensation Committee considers the adjustments approved by the Audit Committee for reporting non-GAAP EPS and other adjustments, based on guidelines approved by the Compensation Committee prior to the performance period. The Compensation Committee reviews and approves adjustments on a quarterly basis and may adjust payouts for items, including but not limited to, the impact of significant acquisitions or divestitures, the impact of share repurchases that differ significantly from business plan, and large swings in foreign exchange rates. Further details on the adjustments for 2021 and the rationale for making these adjustments are set forth in Appendix A, "Summary of Adjustments Related to the Annual Cash Bonus and Performance Award." For ease of reference, throughout the CD&A and the other compensation disclosures, we refer simply to "revenue" and "EPS," but we encourage you to review the information in Appendix A to understand the adjustments from reported revenue and EPS that were approved.

The Compensation Committee also has general authority to apply downward discretion to bonus, performance award, shareholder value award, and relative value award payouts for individual or all executive officers.

1.Base Salary

In setting salaries, Lilly seeks to retain, motivate, and reward successful performers while maintaining affordability within the company's business plan. Base salaries are reviewed and established annually and may be adjusted upon promotion, following a change in job responsibilities, or to maintain market competitiveness. Salaries are based on each person's level of contribution, responsibility, expertise, and competitiveness and are compared annually with peer group data.

Base salary increases for 2021 were based on competitiveness. Generally, executive base salaries are positioned against market salaries, considering experience and performance over time. If an executive's salary is deemed competitive given their experience and performance, no salary increase is provided.

2.Annual Cash Bonus

The Bonus Plan is designed to reward the achievement of the company’s annual financial and innovation objectives. All the named executive officers participated in the Bonus Plan during 2021. Mr. Van Naarden's participation in the Bonus Plan commenced at the time of his promotion on September 5, 2021. For the portion of the 2021 performance year prior to his promotion, Mr. Van Naarden participated in The Loxo Oncology, Inc. Bonus Plan (Loxo Bonus Plan), and in lieu of the payments he would have been eligible to receive thereunder, the Company paid Mr. Van Naarden a one-time payment, as further described below in the Summary Compensation Table.

Bonus Plan

The Compensation Committee sets performance goals and individual bonus targets for the Bonus Plan at the beginning of each year. The bonus is based on three areas of company performance measured relative to internal targets: revenue, EPS, and pipeline progress. The annual cash bonus payout is calculated as follows:

Actual payouts can range from 0 to 200 percent of an individual's bonus target. The Compensation Committee references the annual operating plan and pipeline objectives to establish performance targets and to assess the relative weighting for each objective. In 2021, the weightings remain unchanged from the prior year:

Lilly Goals	Weighting
Revenue performance	25%
EPS performance	50%
Pipeline progress	25%

Based on this weighting, the company bonus multiple is calculated as follows:

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Loxo Bonus Plan

Performance goals for the Loxo Bonus Plan are determined by a committee consisting of senior company leadership (the Loxo Oncology Steering Committee) and mirror the goals under the Bonus Plan; provided, however, that eligible employees have an additional bonus opportunity that may be awarded for the attainment of other goals specific to oncology research and development (Additional Cash Award). These other goals can vary annually, but typically include preclinical, clinical, regulatory actions, external innovation and scientific publication milestones. These additional goals associated with molecule advancement and proof of concept milestones typically carry more weight in the Additional Cash Award results.

The annual Loxo Bonus Plan payout is calculated by multiplying a participant's base earnings, the individual bonus target and the sum of the Bonus Plan and Additional Cash Award payout multiples.

Base Earnings x Individual Bonus Target x (Bonus Plan Multiple + Additional Cash Award Multiple)

Actual payouts for the Loxo Bonus Plan can range from 0 to 400 percent of an individual's bonus target (0 to 200 percent for the Bonus Plan performance and 0 to 200 percent for the Additional Cash Award). Goal attainment is determined by the Loxo Oncology Steering Committee.

3.Equity Incentives

The company grants three types of equity incentives to executives and certain other employees: performance awards that are designed to focus leaders on multi‑year operational performance relative to peer companies, shareholder value awards that are intended to align earned compensation with long-term growth in shareholder value, and relative value awards which encourage TSR outperformance compared to our peer group. These awards, when considered together, align with shareholder interests by incenting long-term operational excellence, shareholder return and peer company outperformance without encouraging excessive risk-taking behaviors. The Compensation Committee has the discretion to adjust payout from an equity award granted to an executive officer downward from the amount yielded by the applicable formula.

Performance Awards

Performance awards vest over three years. Payouts are based on achieving EPS growth targets over a two-year performance period, followed by an additional 13-month service-vesting period for executive officers. During the service-vesting period, the award is held in the form of restricted stock units. The growth-rate targets are set relative to the median external analyst anticipated EPS growth for our peer group over the same performance period. These awards do not accumulate dividends during the two-year performance period, but they do accumulate dividend equivalent units during the service-vesting period.

The Compensation Committee believes EPS growth is an effective measure of operational performance because it is closely linked to shareholder value, is broadly communicated to the public, is understood by Lilly employees, and allows for objective comparisons to the performance of Lilly's peer group. Consistent with the objectives established by the Compensation Committee, Lilly company performance exceeding the expected peer group median results in above‑target payouts, while Lilly company performance lagging the expected peer group median results in below‑target payouts. Possible payouts range from 0 percent to 175 percent of the target number of shares, depending on Lilly EPS growth over the performance period.

The measure of EPS used in the performance award program differs from the measure used in the Bonus Plan in two ways. First, the EPS goal in the Bonus Plan is set with reference to internal goals that align to our annual operating plan, while the EPS goal in the performance award program is set based on the external analyst anticipated EPS growth rates of our peer group. Second, the Bonus Plan measures EPS over a one-year period, while the performance award program measures EPS over a two-year period. In any given year, the Bonus Plan may pay above target while the performance award pays below target (or vice versa).

Shareholder Value Awards

Shareholder value awards are earned based on Lilly's share price performance. Shareholder value awards pay above target if Lilly's stock outperforms an expected rate of return and below target if Lilly's stock underperforms that expected rate of return. The expected rate of return is based on the three-year TSR that a reasonable investor would consider appropriate when investing in a basket of large-cap U.S. companies, as determined by the Compensation Committee. The minimum price to achieve target is calculated by multiplying the starting share price of Lilly's stock by the three-year compounded expected rate of return less Lilly's dividend yield. Shareholder value awards have a three-year performance period, and any shares paid are subject to a one-year holding requirement. No dividends are accrued during the performance period. Possible payouts are based on share price growth and range from 0 to 175 percent of the target number of shares. Executive officers receive no payout if Lilly's TSR for the three-year period is zero or negative. 

Relative Value Awards

Relative value awards are earned based on Lilly's TSR performance relative to our peer group. The minimum performance to achieve target is a TSR that is equal to the median TSR performance for the peer group. Relative value awards have a three-year performance period, and any shares paid are subject to a one-year holding requirement. No dividends are accrued during the performance period. Executive officers receive no payout if Lilly's TSR for the three-year period is 30 or more percentage points below the median TSR performance for the peer group over the same time period. Possible payouts range from 0 to 175 percent of the target number of shares.

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Pay for Performance

The mix of compensation for our named executive officers reflects Lilly’s desire to link executive compensation with individual and company performance. As reflected in the charts below, a substantial portion of the target pay for executive officers is performance-based. The annual cash bonus and equity payouts are contingent upon company performance, with the bonus factoring in performance over a one-year period, and equity compensation factoring in performance over multi-year periods. The charts below depict the annualized mix of target compensation for Lilly’s CEO and the average for the other named executive officers annualized for Ms. Ashkenazi, Mr. Van Naarden, and Mr. Rau. The Other Named Executive Officers chart below excludes Mr. Smiley.

Target Total Compensation

Performance Review Process

In setting 2021 target compensation for the named executive officers, the Compensation Committee considered individual contributions, Lilly's performance during 2020, internal relativity, peer group data, and input from the CEO for named executive officers other than himself.

Evaluation of Individual Named Executive Officer Performance

A summary of the Compensation Committee's review of individual named executive officer performance in 2020 that influenced decisions on 2021 target compensation for these executives is provided below:

David Ricks, Chair, President, and CEO:

In accordance with the company’s corporate governance guidelines, the independent directors conducted an assessment of Mr. Ricks’ performance led by the lead independent director. The independent directors believe the company largely met or exceeded its combined financial and strategic goals for 2020 under Mr. Ricks’ leadership. In 2020, Mr. Ricks and his team:

•Launched several innovative medicines to patients globally. Additionally, 25 new indications for already marketed medicines were launched to patients around the world

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•Progressed 17 potential new medicines into Phase I clinical development from both internal research and external sources

•Initiated actions against the global COVID-19 pandemic, including (1) implementing diagnostic testing in our community, (2) discovering and developing SARS-CoV-2 neutralizing antibodies leading to the Emergency Use Authorization for bamlanivimab, and (3) striving to protect the health and safety of Lilly employees while continuing to provide life saving medicines

•Completed the acquisition of Dermira, expanded Lilly's strategic collaboration with Innovent for Tyvyt globally and completed seven preclinical asset transactions

•Continued to drive a cross-company productivity agenda resulting in savings that funded increased investment in research and development

•Implemented a strategy that improved diversity, equity and inclusion across the company, increased the representation of women and minorities in management and conducted pay equity studies to promote equality in pay. The company was ranked #3 on the DiversityInc top 50 companies list and received Women Business Collaborative CEO recognition for excellence in gender diversity

•Led the development of Lilly's comprehensive Racial Justice Commitment to help improve equity within Lilly and the communities in which it operates

•Achieved certain 2020 environmental performance goals first established in 2013, such as greenhouse gas emissions, energy efficiency, waste efficiency and wastewater

•Established new long-term goals for environmental, safety and governance goals for 2030

In addition, the company was named one of the world’s most ethical companies by the Ethisphere Institute.

Anat Ashkenazi, Senior Vice President and Chief Financial Officer:

Ms. Ashkenazi became Senior Vice President and Chief Financial Officer (CFO) on February 9, 2021. Prior to becoming CFO, Ms. Ashkenazi served as senior vice president and controller, and led corporate strategy at Lilly Research Laboratories. As controller, Ms. Ashkenazi:

•Played a key role in the company achieving its financial targets in 2020 and in the company’s efforts to reallocate financial resources in the fight against COVID-19

•Led the company’s broad productivity agenda for several years, having been a key partner to the operating units across the value cycle and played a key role in all business development activities

•Led the company’s 2021 strategic plan and 2021 operating plan

•Sponsors Lilly’s Veteran Network, an employee resource group focused on recruiting and advancing people who served in the country’s military

Daniel Skovronsky, M.D., Ph.D., Senior Vice President, Chief Scientific and Medical Officer and President, Lilly Research Laboratories:

Dr. Skovronsky advanced innovation for patients as the company's chief scientific and medical officer. His contributions in 2020 include:

•Advanced innovative medicines through the product pipeline leading to numerous first approvals, including bamlanivimab (under Emergency Use Authorization from the FDA) in partnership with AbCellera. Additionally, 25 new indications for already-marketed medicines were launched to patients globally

•Achieved several significant positive data readouts for Verzenio (Phase III in the adjuvant setting), LOXO-305 (advanced b-cell malignancies), Jardiance (cardiovascular outcomes in heart failure with reduced ejection fraction), mirikizumab (psoriasis head-to-head versus secukinumab), and tirzepatide (type 2 diabetes)

•Co-led the acquisition of Dermira, expanded Lilly's strategic collaboration with Innovent for Tyvyt globally, and completed seven preclinical asset transactions

•Sped research resulting in 17 potential new medicines advancing to Phase I clinical development including both internally discovered molecules and molecules sourced externally via business development

•Led the company’s efforts in the fight against SARS-CoV-2 including (1) implementing diagnostic testing at our headquarters in Indianapolis, Indiana and (2) discovering and developing SARS-CoV-2 neutralizing antibodies leading to the Emergency Use Authorization for bamlanivimab

•Enhanced strategies to further reduce drug discovery and development timelines, leading to earlier product launch

•Led DEI strategies in research and development to improve innovation and productivity.

Jacob Van Naarden, Senior Vice President, CEO Loxo Oncology at Lilly and President, Lilly Oncology:

Mr. Van Naarden served as chief operating officer of Loxo Oncology at Lilly when the company acquired Loxo Oncology, Inc. in 2019, and was later named CEO of Loxo Oncology at Lilly in January 2021. Mr. Van Naarden played an integral role with numerous oncology assets including the approval of Retevmo. As CEO of Loxo Oncology at Lilly, Mr. Van Naarden has built a

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science-first drug discovery and development organization. He has led numerous business development transactions and contributed to the company’s scientific efforts in other therapeutic areas.

Diogo Rau, Senior Vice President and Chief Information and Digital Officer:

Mr. Rau joined Lilly as senior vice president and chief information and digital officer in May 2021. Prior to joining Lilly, Mr. Rau served as senior director of information systems and technology for retail and online stores and most recently served as the top executive of information technology for retail and online stores at Apple, Inc. (Apple). During his 10 years at Apple, he led the development and implementation of the technology supporting the Apple Online Store and Apple retail stores, including e-commerce platform, mobile point of sale, the Apple Store App, and systems used by store team members. Prior to joining Apple, Mr. Rau was a partner with McKinsey & Company.

In connection with Mr. Smiley’s resignation as an officer on February 9, 2021, the Compensation Committee took action to reduce his 2020 Bonus Plan payout to zero, reduce his 2018-2020 shareholder value award and cancel all his other outstanding equity incentive awards granted in 2019 and 2020. The foregoing terms were agreed to by Mr. Smiley pursuant to his release agreement effective as of February 9, 2021. The material terms of the agreement were previously disclosed in the company’s 2021 proxy statement.

Target Compensation

The information below reflects total compensation at target for named executive officers for 2021. The actual compensation received is summarized below in "Compensation Results."

Rationale for Changes to Named Executive Officer Target Compensation

The Compensation Committee established the 2021 target total compensation for each named executive officer, except Ms. Ashkenazi, Mr. Van Naarden, and Mr. Rau, based on the named executive officer's 2020 performance, internal relativity, and peer group data. The Compensation Committee approved target total compensation for Ms. Ashkenazi, Mr. Van Naarden, and Mr. Rau upon their promotion or hire, as applicable, based on job scope, market data, experience, and internal relativity.

Base Salary

The following table shows the approved annualized salary for each named executive officer. Mr. Ricks and Dr. Skovronsky did not receive an adjustment to base pay in 2021 and the remaining executive officers' 2021 annualized salaries were effective on the day they assumed their new responsibilities. Each named executive officer's actual base salary earned during 2021 is reflected in the Summary Compensation Table in the "Executive Compensation" section of this proxy statement.

Name2	2020 Annual Base Salary Effective March 1, 2020		2021 Annual Base Salary Effective March 7, 2021	Increase
Mr. Ricks	$1,500,000		$1,500,000	0	%
Ms. Ashkenazi	N/A	1	$900,000	N/A
Dr. Skovronsky	$1,000,000		$1,000,000	0	%
Mr. Van Naarden	N/A	1	$675,000	N/A
Mr. Rau	N/A	1	$670,000	N/A

1 Ms. Ashkenazi, Mr. Van Naarden, and Mr. Rau were not named executive officers in 2020.

2 For the period beginning on January 1, 2021 through February 8, 2021, Mr. Smiley's annual base salary was $1,000,000, and for the transition period beginning on February 9, 2021 through July 31, 2021, Mr. Smiley earned a biweekly base salary of $9,000.

Annual Cash Bonus Targets

Based on a review of internal relativity, peer group data, and individual performance, the Compensation Committee retained the same percent-of-salary bonus target as in 2020 for Mr. Ricks, increased the bonus target for Dr. Skovronsky to 100 percent, set Ms. Ashkenazi's bonus target at 100 percent, and set Mr. Van Naarden's and Mr. Rau's bonus targets at 80 percent. Bonus targets are shown in the table below as a percentage of each named executive officer’s earnings from base salary in 2021:

Name3	2020 Bonus Target			2021 Bonus Target
Mr. Ricks	150	%		150	%
Ms. Ashkenazi	N/A		1	100	%
Dr. Skovronsky	95	%		100	%
Mr. Van Naarden	N/A		1	80	%	2
Mr. Rau	N/A		1	80	%	2

1 Ms. Ashkenazi, Mr. Van Naarden, and Mr. Rau were not named executive officers in 2020.

2 Mr. Van Naarden's Bonus Plan participation was initiated upon his promotion on September 5, 2021. Prior to his promotion, Mr. Van Naarden participated in the Loxo Bonus Plan, which entitled him to a target bonus equal to 60% of base salary.

3 Pursuant to the terms of his separation agreement with the company, Mr. Smiley was not entitled to an annual bonus for the 2020 and 2021 calendar years. See "Agreement with Former Chief Financial Officer" for additional information.

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Equity Incentives - Target Grant Values

For 2021 equity grants, the Compensation Committee set the total target values for named executive officers based on market data, individual performance, and internal relativity. Named executive officers have 35 percent of their equity target allocated to shareholder value awards and relative value awards, respectively, and 30 percent to performance awards. Total target values for the 2020 and 2021 equity grants to the named executive officers were as follows:

Name5	2020 Annual Equity Grant		2021 Annual Equity Grant
Mr. Ricks	$12,500,000		$14,000,000
Ms. Ashkenazi	N/A	1	$2,200,000	2
Dr. Skovronsky	$4,100,000		$4,700,000
Mr. Van Naarden	N/A	1	$1,300,000	3
Mr. Rau	N/A	1	N/A	4

1 Ms. Ashkenazi, Mr. Van Naarden, and Mr. Rau were not named executive officers in 2020.

2 Ms. Ashkenazi’s 2021 award was granted prior to her transition into the Chief Financial Officer role. As such, her 2021 annual equity grant aligns with the terms and conditions associated with her prior position.

3 Mr. Van Naarden was not an executive officer at the time of the 2021 annual equity grant. As such, his 2021 annual equity grant aligns with the terms and conditions associated with his prior position. Mr. Van Naarden also received equity awards of restricted stock units valued at (i) $1,650,000 in February 2021 representing transition equity following Lilly’s acquisition of Loxo Oncology, Inc. and (ii) $1,000,000 in December 2021 associated with Mr. Van Naarden's promotion.

4 Mr. Rau started with Lilly in May 2021, after annual grants were issued; however, he received an equity grant of restricted stock units valued at $4,000,000 upon hire to replace a portion of the outstanding equity he forfeited after leaving Apple and the missed opportunity for a 2021 annual equity award from Lilly.

5 Pursuant to the terms of his separation agreement with the company, Mr. Smiley was not entitled to an annual equity grant in 2021. See "Agreement with Former Chief Financial Officer" for additional information.

Performance Goals for Incentive Programs

Annual Cash Bonus Goals

The Compensation Committee established the company performance targets using the company's 2021 annual operating plan, which was approved by the board in 2020. These targets are described below under "Compensation Results."

Performance Award

In February 2021, the Compensation Committee established a compounded two-year EPS growth target of 8.8 percent per year based on investment analysts’ EPS growth estimates for our peer group companies at that time. To translate the 8.8 percent per year growth goal into a two-year cumulative EPS target, the Compensation Committee applied the target growth to the 2020 adjusted non-GAAP EPS of $6.78 to obtain target 2021 results of $7.38 and then applied the goal growth again to the target 2021 results to obtain target 2022 results of $8.02. The target 2021 and 2022 results were added together to yield a two-year cumulative EPS target of $15.40. Payouts for the 2021-2023 performance award can range from 0 to 175 percent of the target number of shares, as shown below:

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Shareholder Value Award

For purposes of establishing the stock price target for the shareholder value awards, the starting price was $152.16 per share, the average closing stock price for all trading days in November and December 2020. The target share price was established using the expected annual rate of return for large-cap companies (8 percent), less an assumed Lilly dividend yield (2.23 percent). To determine payout, the ending price will be the average closing price of company stock for all trading days in November and December 2023. The award is designed to deliver no payout to executive officers if the shareholder return (including projected dividends) is zero or negative. Possible payouts based on share price ranges are illustrated in the grid below.

Relative Value Award

The relative value award is based on the three-year Lilly TSR performance compared to our peer group. To determine payout, the TSR performance is calculated for Lilly and its peers. This calculation compares the average closing price of each company’s stock for all trading days in November and December 2020 to the average closing price of each company’s stock for all trading days in November and December 2023, assuming reinvestment of dividends, to obtain the TSR for each company. The median TSR for the peer companies is then subtracted from Lilly’s TSR to determine what payout has been earned. For example, if Lilly’s TSR was 55 percent over the three-year performance period and the median peer company performance was 41 percent, Lilly would have outperformed by 14 percentage points (55 percent - 41 percent). This outperformance would have resulted in a 130 percent payout based on the payout ranges depicted below.

Compensation Results

The information in this section reflects the amounts paid to named executive officers under the Bonus Plan and for equity awards granted in prior years for which the relevant performance period ended in 2021.

Lilly Performance

In 2021, we exceeded our revenue target and nearly achieved our EPS target. We also made significant pipeline advances. Key pipeline highlights include U.S. approval of a new indication for Verzenio® for certain people with high-risk, early breast cancer; the Emergency Use Authorization for the administration of bamlanivimab and etesevimab together for the treatment of COVID-19 in patients at high risk for hospitalization; the regulatory submission for tirzepatide for type 2 diabetes in the U.S. to which Lilly applied a priority review voucher, as well as submission in Europe and Japan; positive topline results from donanemab’s TRAILBLAZER-ALZ, a Phase II study evaluating the efficacy and safety of donanemab compared to placebo in

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patients with early symptomatic Alzheimer’s disease; updated data for pirtobrutinib, from the LOXO-305 BRUIN Phase I/II clinical trial in mantle cell lymphoma and other non-Hodgkin lymphomas, as well as in chronic lymphocytic leukemia and small lymphocytic lymphoma, at the 2021 American Society of Hematology Annual Meeting; positive topline results from mirikizumab’s Phase III LUCENT-1 and 2 studies evaluating the efficacy and safety of mirikizumab compared to placebo for the treatment of patients with moderately-to-severely active ulcerative colitis; and positive topline results from three studies of lebrikizumab’s Phase III program evaluating the efficacy and safety of lebrikizumab in people with moderate-to-severe atopic dermatitis. See "Proxy Statement Summary—Highlights of 2021 Performance."

By the end of 2021, Lilly exceeded its two-year EPS growth target for the performance award and our three-year stock price growth target for the shareholder value award. The company began granting relative value awards in 2020; therefore, no relative value awards were granted or earned for the 2019-2021 performance period. The discussion below details the measures used in each program, what the performance goal was to obtain target performance, how performance outcomes were assessed and what the Compensation Committee approved as the final payout multiple.

Bonus Plan

The company utilized revenue, EPS, and pipeline progress to incent the achievement of 2021 company objectives. Each measure contributes to the final payout multiple on a weighted basis: revenue (25 percent), EPS (50 percent), and pipeline progress (25 percent). Each performance measure is assessed a payout multiple of 0 to 200 percent.

For purposes of the bonus, the Compensation Committee adjusted revenue and non-GAAP EPS to exclude estimated savings from certain discrete and unplanned performance items from the bonus plan multiple. The Science and Technology Committee's assessment of the company's product pipeline achievements is detailed below:

Activity	Objective	Achievement
Approvals	2 new drug first approvals 14-15 other approvals	0 new drug first approvals 18 other approvals
Potential new drug Phase III starts	3	2
Potential new drug Phase I starts	16-17	12
Potential new indication or line extension Phase III starts	5	9
Plan Boldly	Meet industry benchmark for speed of development	Exceeded industry benchmark for speed of development
Deliver to Launch	Meet planned project timelines	Met planned project timelines
Qualitative Assessment	Assessment of the chief scientific and medical officer's evaluation of performance against strategic objectives

Based on the recommendation of the Science and Technology Committee, the Compensation Committee approved a pipeline multiple of 1.06.

The company's performance compared to targets as well as the resulting bonus multiple, is illustrated below:

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For additional information on financial results, see Appendix A, "Summary of Adjustments Related to the Annual Cash Bonus and Performance Award."

When combined, the revenue, EPS, and pipeline multiples yielded a bonus multiple of 1.10.

Loxo Bonus

The Loxo Bonus Plan Committee assessed the level of oncology research and development goal achievement compared to the preclinical, clinical, regulatory actions, external innovation and scientific disclosure milestones established at the beginning of the year. On a payout continuum between 0 – 200 percent, the Loxo Bonus Plan Committee determined the Additional Cash Award portion of the Loxo Bonus would pay at 200 percent. To determine the final Loxo Bonus payout multiple, the Loxo Bonus Plan Committee added the Bonus Plan multiple to the Additional Cash Award multiple to yield a total payout of 310 percent.

Bonus Payments

The 2021 bonuses paid to the applicable named executive officers under the Bonus Plan were as follows:

Name3	2021 Bonus ($)
Mr. Ricks	$2,475,000
Ms. Ashkenazi	$907,816
Dr. Skovronsky	$1,100,000
Mr. Van Naarden1	$1,029,507
Mr. Rau2	$362,831

1 A portion of the 2021 bonus payable to Mr. Van Naarden was attributable to achievement of the performance goals under the Loxo Bonus Plan. The 2021 Loxo Bonus Plan achievement was 310%. The amount of the 2021 bonus paid to Mr. Van Naarden in the table above reflects his achievement under both the Loxo Bonus Plan and the Bonus Plan, in each case, pro-rated to reflect the period in 2021 during which he was a participant in the respective plan. Mr. Van Naarden also received a one-time cash payment of $218,715 in lieu of compensation and benefits he was no longer eligible to receive following his transition to his new role, including compensation for the difference between the bonus he would have earned under the Loxo Bonus Plan and the Lilly Bonus Plan, and changes in his expected out-of-pocket costs for healthcare expenses.

2 Mr. Rau joined Lilly in May 2021, and the table reflects the pro-rated bonus paid for the portion of the year for which he was employed.

3 Pursuant to the terms of his separation agreement with the company, Mr. Smiley was not entitled to an annual bonus for calendar year 2021. See "Agreement with Former Chief Financial Officer" for additional Information.

2020-2022 Performance Awards

The target cumulative EPS for the 2020-2022 performance award was originally set in the first quarter of 2020, reflecting expected peer group EPS growth of 5.7 percent each year and a total target EPS of $13.13 over the two-year performance period. In December 2020, the Compensation Committee updated the award to align with Lilly's decision to adjust EPS results to remove the impact of gains and losses on investments in equity securities from its non-GAAP measures and compensation program outcomes. The updated award retained the Compensation Committee's decision to establish a compounded two-year EPS growth target of 5.7 percent per year, but the growth was applied to an adjusted 2019 non-GAAP EPS of $5.73 that excluded gains and losses on investments in equity securities. Using this methodology, the adjusted EPS target became $12.46 for the two-year performance period of 2020-2021. The company's actual adjusted EPS over the performance period was $14.94 representing a growth rate of 19.0 percent.

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For Mr. Ricks and Dr. Skovronsky, shares earned for the 2020-2021 performance period are subject to an additional 13-month service-vesting period and are shown in the table below as restricted stock units. Because she was not an executive officer when the award was granted, Ms. Ashkenazi's 2020-2021 performance award was paid in shares of Lilly common stock and not subject to the additional service-vesting period. Mr. Van Naarden was an employee of Loxo Oncology, Inc. and did not receive a performance award grant in 2020. Mr. Rau joined Lilly in May 2021, so he did not receive a performance award grant in 2020.

Name3	Target Shares	Shares Earned	RSUs
Mr. Ricks	27,306	N/A	47,786
Ms. Ashkenazi	2,731	4,779	N/A
Dr. Skovronsky	8,957	N/A	15,675
Mr. Van Naarden1	N/A	N/A	N/A
Mr. Rau2	N/A	N/A	N/A

1 Mr. Van Naarden was an employee of Loxo Oncology, Inc. and did not receive a performance award grant in 2020.

2 Mr. Rau joined Lilly in May 2021, so he did not receive a performance award grant in 2020.

3 Pursuant to the terms of his separation agreement with the company, Mr. Smiley forfeited his entire 2020-2022 performance award. See "Agreement with Former Chief Financial Officer" for additional information.

2019-2021 Shareholder Value Award

The target stock price range of $132.73 to $147.37 (18.1 percent to 31.1 percent total stock price growth) for the 2019-2021 shareholder value award was set in 2019 based on a beginning stock price of $112.38, which was the average closing price for Lilly stock for all trading days in November and December 2018. The ending stock price of $260.57 represents stock price growth of 131.9 percent over the relevant three-year period resulting in a payout multiple of 1.50.

The relative TSR modifier applies to those individuals who were executive officers when the award was granted. The cumulative TSR median for the company’s peer group was 24.6 percent, and Lilly’s TSR over the same period was 145.7 percent. Given this positive relative performance, Lilly's relative TSR was 121.1 percentage points above the peer group median resulting in a maximum award payout of 180 percent of target (SVA payout multiple of 150 percent multiplied by the 1.2 modifier = 180 percent final payout).

The number of shares paid to each of our named executive officers for the 2019-2021 performance period were as follows:

Name3	Target Shares	Shares Paid Out
Mr. Ricks	68,382	123,088
Ms. Ashkenazi1	3,633	5,450
Dr. Skovronsky	22,794	41,029
Mr. Van Naarden2	N/A	N/A
Mr. Rau2	N/A	N/A

1 The TSR modifier did not apply to Ms. Ashkenazi’s 2019-2021 shareholder value award payouts since she was not an executive

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officer at the time of grant.

2 Mr. Van Naarden was an employee of Loxo Oncology, Inc. in 2019 and so he did not receive a shareholder value award grant in 2019. Mr. Rau joined Lilly in May 2021, so he did not receive a shareholder value award grant in 2019.

3 Pursuant to the terms of his separation agreement with the company, Mr. Smiley forfeited his entire 2019-2021 shareholder value award. See "Agreement with Former Chief Financial Officer" for additional information.

Other Compensation Practices and Information

Employee Benefits

The company offers core employee benefits coverage to:

•provide our workforce with a reasonable level of financial support in the event of illness or injury

•provide post-retirement income

•enhance productivity and job satisfaction through benefit programs that focus on overall well-being.

The benefit programs available to executive officers are offered to all eligible U.S. employees and include benefits such as medical and dental coverage, disability insurance, and life insurance. In addition, the 401(k) Plan and The Lilly Retirement Plan (the Retirement Plan) are intended to provide U.S. employees a reasonable level of retirement income reflecting employees’ careers with the company. To the extent that any employee’s calculated retirement benefit exceeds Internal Revenue Service (IRS) limits for amounts that can be paid through a qualified plan, the company also offers a nonqualified pension plan and a nonqualified savings plan. These plans provide only the difference between the calculated benefits and the applicable IRS limits, and the formula is the same for all participating employees. The cost of employee benefits is partially borne by the employee, including each executive officer.

Perquisites

The company provides limited perquisites to executive officers. In response to the COVID-19 pandemic, the company considered various actions to promote the health and safety of its employees, including its named executive officers, recognizing that the company’s important objectives during this critical time would be significantly disadvantaged without the full services of its employees. As part of this process, the company has encouraged Mr. Ricks’ personal use of the corporate aircraft (up to a maximum incremental cost of $60,000) as a means to (i) increase his time available for company business; and (ii) protect his health and safety. The incremental cost of personal use of the corporate aircraft is included as a perquisite in the Summary Compensation Table under the heading "All Other Compensation."

The Lilly Deferred Compensation Plan

Members of senior management may defer receipt of part or all of their cash compensation under The Lilly Deferred Compensation Plan (Deferred Compensation Plan), which allows executives to save for retirement in a tax-effective way at minimal cost to the company. Under this unfunded plan, amounts deferred by the executive are credited at an interest rate of 120 percent of the applicable federal long-term rate, as described in more detail following the "Nonqualified Deferred Compensation in 2021" table.

Severance Benefits

Except in the case of certain terminations following a change in control of the company, the company is generally not obligated to pay severance to executive officers upon termination of their employment; any such payments are at the discretion of the Compensation Committee.

The company has adopted change-in-control severance pay plans for nearly all employees, including executive officers. The plans are intended to preserve employee morale and productivity and encourage retention in the face of the disruptive impact of an actual or rumored change in control. In addition, the plans are intended to align executive and shareholder interests by enabling executives to evaluate corporate transactions that may be in the best interests of the shareholders and other constituents of the company without undue concern over whether the transactions may jeopardize the executives’ own employment.

Highlights of Our Change-in-Control Severance Plans

•all regular employees are covered

•double trigger required

•no tax gross-ups

•up to two-year pay protection

•18-month benefit continuation

Although benefit levels may differ depending on the employee’s job level and seniority, the basic elements of the plans are comparable for all eligible employees:

•Double trigger:Unlike "single trigger" plans that pay out immediately upon a change in control, our plans require a "double trigger"—a change in control followed by an involuntary loss of employment within two years. This is consistent

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with the plans' intent to provide employees with financial protection upon loss of employment. With respect to unvested equity, performance to the date of the change in control will be used to determine the number of shares earned under an award, but vesting does not accelerate immediately upon a change in control. Rather, the performance-adjusted awards will convert to time-based restricted stock units that continue to vest with the new company. Shares will pay out upon the earlier of the completion of the original award period; upon a covered termination; or if the successor entity does not assume, substitute, or otherwise replace the awards.

•Covered terminations: Employees are eligible for payments if, within two years of the change in control, their employment is terminated (i) without cause by the company or (ii) for good reason by the employee, each as defined in the plans. See "Compensation—Executive Compensation—Payments upon Termination or Change in Control" for a more detailed discussion, including a discussion of what constitutes a change in control.

•Employees who suffer a covered termination receive up to two years of pay and 18 months of benefits protection:These provisions ensure employees a reasonable period of protection of their income and core employee benefits.

•Severance payment. Eligible terminated employees would receive a severance payment ranging from six months' to two years’ base salary. Executives are all eligible for two years’ base salary plus two times the then-current year’s target bonus.

•Benefit continuation. Basic employee benefits such as health, dental, life insurance and long-term disability would continue for 18 months following termination of employment, unless the individual becomes eligible for coverage with a new employer. All employees would receive an additional two years of both age and years-of-service credit for purposes of determining eligibility for retiree medical and dental benefits.

•Accelerated vesting of equity awards: Any unvested equity awards would vest at the time of a covered termination.

•Excise tax:In some circumstances, the payments or other benefits received by the employee in connection with a change in control could exceed limits established under Section 280G of the Internal Revenue Code. The employee would then be subject to an excise tax on top of normal federal income tax. The company does not reimburse employees for these taxes. However, the amount of any change-in-control-related benefit will be reduced to the 280G limit if the effect would be to deliver a greater after-tax benefit than the employee would receive with an unreduced benefit.

Share Ownership and Retention Guidelines

Share ownership and retention guidelines help create direct alignment of interests between senior management and shareholders over the longer term. Lilly has established a formal share ownership policy under which the CEO and other senior executives are required to acquire and hold Lilly shares in an amount representing a multiple of base salary. During 2021, the Compensation Committee approved an increase to share ownership requirements for the CEO and the other named executive officers as follows:

	Previous Share Ownership Requirement	Current Share Ownership Requirement
CEO	6X Base Salary	12X Base Salary
Other NEOs	4X Base Salary	6X Base Salary

Until ownership of the required number of shares is reached, an executive officer must hold 50 percent of all shares, net of tax, from all equity payouts. Executive officers are also required to hold all shares received from equity program payouts, net of taxes, for at least one year, even once share ownership requirements have been met. For performance awards granted to executive officers, this holding requirement is met by the 13-month service-vesting period after the end of the performance period.

All of the named executive officers are compliant with the share ownership guidelines. The following graphic shows each respective named executive officer's guideline and each named executive officer's holdings as of December 31, 2021, other than Mr. Smiley, who resigned effective as of February 9, 2021.

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Prohibition on Hedging and Pledging Shares

Non-employee directors and employees, including executive officers, are not permitted to hedge their economic exposures to company stock through short sales or derivative transactions. Non-employee directors and employees, including executive officers, are prohibited from pledging any company stock (i.e., using company stock as collateral for a loan or trading shares on margin).

Executive Compensation Recovery Policy

Pursuant to our executive compensation recovery policy (the Executive Compensation Recovery Policy), all incentive awards are subject to forfeiture upon termination of employment prior to the end of the performance or vesting period or for disciplinary reasons. In addition, the Compensation Committee adopted updates to the Executive Compensation Recovery Policy to be effective January 1, 2022 (the Executive Compensation Recovery Policy, as updated and effective January 1, 2022, the Updated Executive Compensation Recovery Policy) which provides the Compensation Committee broad discretion to claw back non-qualified retirement benefits accrued beginning January 1, 2022, from any member of senior management whose misconduct results in a material violation of law or company policy that causes significant harm to the company or who fails in his or her supervisory responsibility to prevent such misconduct by others.

Pursuant to the Executive Compensation Recovery Policy, the company could recover all or a portion of any incentive compensation and, effective as of January 1, 2022, pursuant to the Updated Executive Compensation Recovery Policy, the company could also recover non-qualified retirement benefits accrued beginning January 1, 2022, from an executive officer in the case of materially inaccurate financial statements or material errors in the performance calculation, whether such inaccuracies or errors result in a restatement and whether or not the executive officer has engaged in wrongful conduct.

The Executive Compensation Recovery Policy covers any incentive compensation awarded or paid to a member of senior management during the last three years and, effective as of January 1, 2022, pursuant to the Updated Executive Compensation Recovery Policy, covers non-qualified retirement benefits accrued beginning January 1, 2022. Subsequent changes in status, including retirement or termination of employment, do not affect the company’s rights to recover compensation under the policy.

The company will disclose decisions to take action pursuant to the Updated Executive Compensation Recovery Policy in its proxy materials when required by, and in compliance with, SEC rules and regulations and other applicable laws. In addition, when legally permissible to do so, the company will disclose a decision to take action under this policy when the facts and circumstances of the matter that triggered application of the policy have been publicly disclosed in the company’s filings with the SEC and where disclosure can be made without prejudicing the company and its shareholders.

The principles of our robust Updated Executive Compensation Recovery Policy are also incorporated into the terms of our incentive plans and award agreements, which, in the event of misconduct meeting the standards described above, allow the Compensation Committee to reduce or cancel awards or payouts that would otherwise have been earned based on company performance. Action by the Compensation Committee to reduce or cancel awards or payouts can occur during or following the relevant performance period.

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Executive Compensation

Summary Compensation Table

Name and Principal Position	Year	Salary ($)		Bonus ($)		Stock Awards ($) 1			Non-Equity Incentive Plan Compensation ($) 2		Change in Pension Value ($) 3	All Other Compensation ($) 4	Total Compensation ($)
David A. Ricks	2021	$1,500,000		$0		$	14,966,000		$2,475,000		$2,442,235	$126,750	$21,509,985
Chair, President, and Chief Executive Officer	2020	$1,483,333		$0		$	13,587,500		$2,625,500		$5,883,924	$128,372	$23,708,629
	2019	$1,400,000		$0		$	12,222,000		$2,919,000		$4,658,242	$84,000	$21,283,242
Anat Ashkenazi	2021	$850,432		$0		$2,453,000		7	$907,816		$395,335	$51,026	$4,657,609
Senior Vice President and Chief Financial Officer	2020	N/A		N/A		N/A		7	N/A		N/A	N/A	N/A
	2019	N/A		N/A		N/A		7	N/A		N/A	N/A	N/A
Daniel M. Skovronsky, M.D., Ph.D.	2021	$1,000,000		$0		$5,024,300			$1,100,000		$342,792	$60,000	$7,527,092
Senior Vice President, Chief Scientific and Medical Officer and President, Lilly Research Laboratories	2020	$983,333		$0		$4,456,700			$1,102,317		$751,223	$58,539	$7,352,112
	2019	$900,000		$0		$4,074,000			$1,188,450		$446,521	$54,000	$6,662,971
Jacob Van Naarden	2021	$745,649	5	$218,715	6	$4,099,500			$1,029,507		$16,909	$12,462	$6,122,742
Senior Vice President, CEO Loxo Oncology at Lilly and President, Lilly Oncology	2020	N/A		N/A		N/A			N/A		N/A	N/A	N/A
	2019	N/A		N/A		N/A			N/A		N/A	N/A	N/A
Diogo Rau7	2021	$412,308		$250,000	8	$4,000,000			$362,831		$44,519	$31,670	$5,101,328
Senior Vice President and Chief Information and Digital Officer	2020	N/A		N/A		N/A			N/A		N/A	N/A	N/A
	2019	N/A		N/A		N/A			N/A		N/A	N/A	N/A
Joshua L. Smiley	2021	$230,831		$0		$0		10	$0	9	$0	$13,850	$244,681
Former Senior Vice President and Chief Financial Officer	2020	$983,333		$0		$3,587,100		10	$0	9	$2,685,276	$58,539	$7,314,248
	2019	$895,833		$0		$3,142,800		10	$1,182,948		$2,073,070	$53,750	$7,348,401

1 This column shows the grant date fair value of performance awards, shareholder value awards and relative value awards for all named executive officers and additional restricted stock unit awards for Mr. Van Naarden and Mr. Rau computed in accordance with FASB ASC Topic 718. See Note 12 of the consolidated financial statements in the company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 for additional detail regarding assumptions underlying the valuation of equity awards. All values in the "Stock Awards" column were based upon the probable outcome of performance conditions as of the grant date, which vary year to year.

For purposes of comparison, the supplemental table below shows the total target grant values of stock awards approved by the Compensation Committee:

Name	2019 Total Equity		2020 Total Equity		2021 Total Equity
Mr. Ricks	$10,500,000		$12,500,000		$14,000,000
Ms. Ashkenazi	N/A	*	N/A	*	$2,200,000
Dr. Skovronsky	$3,500,000		$4,100,000		$4,700,000
Mr. Van Naarden	N/A	*	N/A	*	$4,099,500	**
Mr. Rau	N/A	*	N/A	*	$4,000,000	***
Mr. Smiley	$2,700,000	****	$3,300,000	****	$0	****
*Ms. Ashkenazi, Mr. Van Naarden, and Mr. Rau were not executive officers in 2019 and 2020.
**Mr. Van Naarden's total equity includes $1,300,000 non-executive officer annual equity grant when he held his former role with Loxo Oncology, Inc. and $2,650,000 of restricted stock units ($1,650,000 granted in February 2021 representing transition equity following Lilly’s acquisition of Loxo Oncology, Inc. and $1,000,000 granted in December 2021 associated with Mr. Van Naarden's promotion).
***Mr. Rau received a sign-on restricted stock unit to replace a portion of the outstanding equity he forfeited after leaving Apple and the missed opportunity for a 2021 annual equity award from Lilly.
****As a result of Mr. Smiley's resignation as an officer on February 9, 2021, his 2019 and 2020 equity awards were cancelled and he did not receive an equity grant in 2021.

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The table below shows the minimum, target, and maximum payouts (valuing the number of shares that would vest at each payout level using the grant date fair value of a share of Lilly common stock on the date of grant) for the 2021-2023 performance award included in the Summary Compensation Table, which will pay out in February 2024.

Name	Minimum Payout	Target Payout	Maximum Payout
Mr. Ricks	$0	$4,200,000	$7,350,000
Ms. Ashkenazi	$0	$1,100,000	$1,925,000
Dr. Skovronsky	$0	$1,410,000	$2,467,500
Mr. Van Naarden	$0	$650,000	$1,137,500
Mr. Rau*	N/A	N/A	N/A
Mr. Smiley**	N/A	N/A	N/A
*Mr. Rau joined Lilly in May 2021 and did not receive a 2021-2023 performance award grant.
**As a result of Mr. Smiley's resignation as an officer on February 9, 2021, Mr. Smiley did not receive a 2021-2023 performance award grant.

The table below shows the minimum, target, and maximum payouts (valuing the number of shares that would vest at each payout level using the grant date fair value of a share of Lilly common stock on the date of grant) for the 2021-2023 shareholder value award included in the Summary Compensation Table, which will pay out in February 2024.

Name	Minimum Payout	Target Payout	Maximum Payout
Mr. Ricks	$0	$4,900,000	$8,575,000
Ms. Ashkenazi	$0	$550,000	$962,500
Dr. Skovronsky	$0	$1,645,000	$2,878,750
Mr. Van Naarden	$0	$325,000	$568,750
Mr. Rau*	N/A	N/A	N/A
Mr. Smiley**	N/A	N/A	N/A
*Mr. Rau joined Lilly in May 2021 and did not receive a 2021-2023 shareholder value award grant.
**As a result of Mr. Smiley's resignation as an officer on February 9, 2021, Mr. Smiley did not receive a 2021-2023 shareholder value award grant.

The table below shows the minimum, target, and maximum payouts (valuing the number of shares that would vest at each payout level using the grant date fair value of a share of Lilly common stock on the date of grant) for the 2021-2023 relative value award included in the Summary Compensation Table, which will pay out in February 2024.

Name	Minimum Payout	Target Payout	Maximum Payout
Mr. Ricks	$0	$4,900,000	$8,575,000
Ms. Ashkenazi	$0	$550,000	$962,500
Dr. Skovronsky	$0	$1,645,000	$2,878,750
Mr. Van Naarden	$0	$325,000	$568,750
Mr. Rau*	N/A	N/A	N/A
Mr. Smiley**	N/A	N/A	N/A
*Mr. Rau joined Lilly in May 2021 and did not receive a 2021-2023 relative value award grant.
** As a result of Mr. Smiley's resignation as an officer on February 9, 2021, Mr. Smiley did not receive a 2021-2023 relative value award grant.

2 Payments under the Bonus Plan for performance in the years represented. For Mr. Van Naarden, the amount in this column reflects payments under the Bonus Plan and the Loxo Bonus Plan for 2021.

3 The amounts in this column reflect the change in pension value for each individual, calculated by an actuary. The changes in pension values in 2021 were driven by pay changes, an additional year of credited service, offset by changes in actuarial assumptions. The design of the pension benefit plan did not change. See the Pension Benefits in 2021 table below for information about the standard actuarial assumptions used. No named executive officer received preferential or above-market earnings on deferred compensation.

4 The amounts in this column are company matching contributions into each individual's 401(k) and nonqualified savings plan contributions. For Mr. Ricks, the amount in this column reflects $90,000 of company matching contributions and nonqualified savings plan contributions and $36,750 of aggregate incremental cost for his personal use of the corporate aircraft. The aggregate incremental costs for personal use of our aircraft are calculated based on our variable operating costs, which include crew travel expenses, on-board catering, landing fees, trip-related hangar/parking costs, fuel, trip-related maintenance, and other smaller variable costs. Because the vast majority of the use of the corporate aircraft is for business purposes, fixed costs such as aircraft purchase costs, maintenance not related to personal trips, and flight crew salaries are not included. For Mr. Rau, the amount in this column reflects $18,914 of company matching contributions and nonqualified savings plan contributions and $12,756 of moving expense reimbursements. The company does not reimburse executives for taxes outside of the limited circumstance of taxes related to a domestic employee relocation or a prior international assignment.

5 For Mr. Van Naarden, this column reflects $668,399 in salary payments and $77,250 of unused vacation pay from Loxo Oncology, Inc.

6 This column includes the amount which represents a one-time cash payment of $218,715 in lieu of compensation and benefits Mr. Van Naarden was no longer eligible to receive following his transition to his new role, including compensation for the difference between the bonus he would have earned under the Loxo Bonus Plan and the Lilly Bonus Plan, and changes in his expected out-of-pocket costs for healthcare expenses.

7 Mr. Rau joined Lilly in May 2021, and the amount in this column reflects the pro-rated annual incentive paid for the portion of the year for which he was employed.

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8 Mr. Rau received a cash sign-on award of $250,000 to replace a portion of the outstanding equity with near-term vesting provisions that he forfeited after leaving Apple and to cover other incidental expenses associated with his transition to the role with Lilly.

9 As a result of Mr. Smiley’s resignation as an officer on February 9, 2021, he did not receive a bonus payout for 2020 or 2021.

10 As a result of Mr. Smiley’s resignation as an officer on February 9, 2021, his 2019 and 2020 equity awards were cancelled and he did not receive a 2021 equity grant. Mr. Smiley realized $0 from these awards.

Grants of Plan-Based Awards During 2021

The compensation plans under which the grants in the following table were made are described in the CD&A above and consist of the Bonus Plan (a non-equity incentive plan) and the Amended and Restated 2002 Lilly Stock Plan which provides for performance awards, shareholder value awards, relative value awards and restricted stock units, among others.

To receive a payout under the performance award, the shareholder value award and the relative value award issued annually to executive officers, the participant must remain employed with the company through the end of the relevant award period, retire after December 31 of the year in which the award was issued or be subject to termination events outside of the control of the employee (death, disability, plant closing or reduction in workforce). Annual awards issued to executive officers are also generally subject to a one-year non-compete post company exit, other than the award of restricted stock units granted to Mr. Van Naarden on December 28, 2021, which does not include a non-compete covenant. The annual awards issued to executive officers (other than Mr. Van Naarden's award of restricted stock units granted on December 28, 2021) provide that if the former executive officer works for a direct competitor within the one-year restriction period, all annual cycle awards issued during the 2021 annual cycle or later would be forfeited. Awards issued to employees who were not executive officers at the time of grant generally do not include the non-compete or vesting into retirement provisions.

No dividends accrue on either performance awards, shareholder value awards, or relative value awards during the performance period. During the performance award 13-month service-vesting period and restricted stock unit award restriction period, non-preferential dividends accrue and are paid upon vesting.

Name	Award		Grant Date2	Compensation Committee Action Date	Estimated Possible Payouts Under Non-Equity Incentive Plan Awards 1			Estimated Possible and Future Payouts Under Equity Incentive Plan Awards			All Other Stock or Option Awards: Number of Shares of Stock, Options, or Units	Grant Date Fair Value of Equity Awards
					Threshold ($)	Target ($)	Maximum ($)	Threshold (# shares)	Target (# shares)	Maximum (# shares)
Mr. Ricks			__	__	$562,500	$2,250,000	$4,500,000
	2021-2023 PA	3	2/8/2021	12/11/2020				10,576	21,151	37,014		$	5,166,000
	2021-2023 SVA	4	2/8/2021	12/11/2020				11,271	22,541	39,447		$	4,900,000
	2021-2023 RVA	5	2/8/2021	12/11/2020				8,545	17,090	29,908		$	4,900,000
											—
Ms. Ashkenazi			__	__	$206,322	$825,287	$1,650,575
	2021-2023 PA	3	2/8/2021	12/11/2020				2,770	5,540	9,695		$	1,353,000
	2021-2023 SVA	4	2/8/2021	12/11/2020				1,176	2,351	4,114		$	550,000
	2021-2023 RVA	5	2/8/2021	12/11/2020				959	1,918	3,357		$	550,000
											—
Dr. Skovronsky			__	__	$250,000	$1,000,000	$2,000,000
	2021-2023 PA	3	2/8/2021	12/11/2020				3,551	7,101	12,427		$	1,734,300
	2021-2023 SVA	4	2/8/2021	12/11/2020				3,784	7,567	13,242		$	1,645,000
	2021-2023 RVA	5	2/8/2021	12/11/2020				2,869	5,738	10,042		$	1,645,000
											—
Mr. Van Naarden			__	__	$111,164	$444,655	$1,429,696
	2021-2023 PA	3	2/8/2021	12/11/2020				1,637	3,273	5,728		$	799,500
	2021-2023 SVA	4	2/8/2021	12/11/2020				695	1,389	2,431		$	325,000
	2021-2023 RVA	5	2/8/2021	12/11/2020				567	1,134	1,985		$	325,000
	RSU	6	2/8/2021	10/15/2020							5,461	$	1,100,000
	RSU	6	2/8/2021	10/15/2020							2,785	$	550,000
	RSU	6	12/28/2021	12/21/2021							3,618	$	1,000,000
Mr. Rau			__	__	$82,462	$329,846	$659,692
	RSU	7	6/1/2021	3/10/2021							20,160	$	4,000,000

1 These columns show the threshold, target and maximum payouts for performance under the Bonus Plan. For Mr. Van Naarden, the columns show the threshold, target, and maximum payouts for performance under both the Bonus Plan and the Loxo Bonus, pro-rated for the portion of the year he

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was participating in each plan. The Bonus Plan payouts range from 0 to 200 percent of target and the Loxo Bonus payouts range from 0 to 400 percent of target. The Bonus Plan and Loxo Bonus payments for 2021 performance were 110 percent of target and 310 percent of target, respectively. Actual payouts are shown in the Summary Compensation Table in the column titled "Non-Equity Incentive Plan Compensation."

2 To assure grant timing is not manipulated for employee gain, the annual grant date is established in advance by the Compensation Committee.

3 This row shows the possible payouts for the 2021-2023 performance awards ranging from 0 to 175 percent of target. This performance award will pay out in February 2024. Ms. Ashkenazi and Mr. Van Naarden were not executive officers at the time of grant and, therefore, their performance awards will not be subject to the 13-month service vesting period and will payout in February 2023.

4 This row shows the range of payouts for the 2021-2023 shareholder value awards. This shareholder value award will pay out in February 2024, with payouts ranging from 0 to 175 percent of target. We measure the fair value of the shareholder value award on the grant date using a Monte Carlo simulation model.

5 This row shows the range of payouts for the 2021-2023 relative value awards. This relative value award will pay out in February 2024, with payouts ranging from 0 to 175 percent of target. We measure the fair value of the relative value award on the grant date using a Monte Carlo simulation model.

6 These grants were made outside of the normal annual cycle in 2021 and 5,461 units will vest on February 16, 2022, 2,785 units will vest on February 16, 2023, and 3,618 units will vest on February 1, 2024.

7 This grant was made outside of the normal annual cycle in 2021 and 7,560 units will vest on July 1, 2022, 6,300 units will vest on July 1, 2023, and 6,300 units will vest on July 1, 2024.

Outstanding Equity Awards on December 31, 2021

The 2021 closing stock price used to calculate the values in the table below was $276.22.

		Stock Awards
Name	Award	Number of Shares or Units of Stock That Have Not Vested (#)		Market Value of Shares or Units of Stock That Have Not Vested ($)	Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights That Have Not Vested (#)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested ($)
Mr. Ricks	2021-2023 SVA				39,447	1	$10,896,050
	2020-2022 SVA				59,063	2	$16,314,382
	2021-2023 RVA				17,090	3	$4,720,600
	2020-2022 RVA				24,319	4	$6,717,394
	2021-2023 PA				37,014	5	$10,224,007
	2020-2022 PA	47,786	6	$13,199,449
	2019-2021 PA	56,205	7	$15,524,945
Ms. Ashkenazi	2121-2023 SVA				4,114	1	$1,136,369
	2020-2022 SVA				2,305	2	$636,687
	2021-2023 RVA				1,918	3	$529,790
	2020-2022 RVA				1,042	4	$287,821
	2021-2023 PA				9,695	5	$2,677,953
	RSU	11,499	8	$3,176,254
Dr. Skovronsky	2021-2023 SVA				13,242	1	$3,657,705
	2020-2022 SVA				19,373	2	$5,351,210
	2021-2023 RVA				5,738	3	$3,657,705
	2020-2022 RVA				7,977	4	$2,203,407
	2021-2023 PA				12,427	5	$3,432,586
	2020-2022 PA	15,675	6	$4,329,749
	2019-2021 PA	18,735	7	$5,174,982
Mr. Van Naarden	2021-2023 SVA				2,431	1	$671,491
	2021-2023 RVA				1,134	3	$671,491
	2021-2023 PA				5,728	5	$1,582,188
	RSU	11,864	9	$3,277,074
Mr. Rau	RSU	20,160	10	$5,568,595
Mr. Smiley		0		$0	0		$0

1 Shareholder value awards granted for the 2021-2023 performance period will vest on December 31, 2023. The number of shares reported reflects the maximum payout, which will be made if the average closing stock price in November and December 2023 is over $239.03. Actual payouts may vary from 0 to 175 percent of target. Net shares from any payout must be held by executive officers for a minimum of one year. Had the performance period ended December 31, 2021, the payout would have been at 175 percent of target.

2 Shareholder value awards granted for the 2020-2022 performance period will vest on December 31, 2022. The number of shares reported reflects the maximum payout, which will be made if the average closing stock price in November and December 2022 is over $187.17. Actual payouts may vary

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from 0 to 180 percent of target. Net shares from any payout must be held by executive officers for a minimum of one year. Had the performance period ended December 31, 2021, the payout would have been 175 percent of target.

3 Relative value awards granted for the 2021-2023 performance period will vest on December 31, 2023. The number of shares reported reflects the target payout, which will be paid if Lilly's absolute TSR is at or up to 5.9 percentage points above the actual peer median TSR. Net shares from any payout must be held by executive officers for a minimum of one year. Had the performance period ended December 31, 2021, the payout would have been 175 percent of target.

4 Relative value awards granted for the 2020-2022 performance period will vest on December 31, 2022. The number of shares reported reflects the target payout, which will be paid if Lilly's absolute TSR is at or up to 5.9 percentage points above the actual peer median TSR. Net shares from any payout must be held by executive officers for a minimum of one year. Had the performance period ended December 31, 2021, the payout would have been 175 percent of target.

5 This number represents the maximum value of performance award shares that could pay out for the 2021-2023 performance awards, provided performance goals are met. Once the combined cumulative EPS result and associated payout level are determined at the end of the 2021-2022 performance period, the associated number of shares will be granted as restricted stock units, vesting in February 2024. Actual payouts may vary from 0 to 175 percent of target. The number of shares recorded in the table reflects the payout if the combined cumulative EPS for 2021 and 2022 is at least $18.08 under the 2021-2023 performance award grid (see "Compensation Discussion and Analysis—Performance Goals for 2021 Incentive Programs—2021-2023 Performance Award"). Ms. Ashkenazi and Mr. Van Naarden were not executive officers at the time of grant and, therefore, their 2021-2023 performance awards will not be subject to the 13-month service vesting period and will payout in February 2023.

6 The performance period ended December 31, 2021, for the 2020-2022 performance award, resulting in the issuance of restricted stock units for 175 percent of target shares for Mr. Ricks and Dr. Skovronsky. These restricted stock units will vest in February 2023.

7 For Mr. Ricks and Dr. Skovronsky, restricted stock units vested from the 2019-2021 performance award on February 1, 2022.

8 These grants were made outside of the normal annual cycle in 2020, and 4,600 units will vest on November 1, 2024, and 6,899 units will vest on November 1, 2026.

9 These grants were made outside of the normal annual cycle in 2021, and 5,461 units will vest on February 16, 2022, 2,785 units will vest on February 16, 2023, and 3,618 units will vest on February 1, 2024.

10 This grant was made outside of the normal annual cycle in 2021. A total of 7,560 units will vest on July 1, 2022, 6,300 units will vest on July 1, 2023, and 6,300 units will vest on July 1, 2024.

Options Exercised and Stock Vested in 2021

	Option Awards		Stock Awards
Name	Number of Shares Acquired on Exercise (#)	Value-Realized on Exercise ($)	Number of Shares Acquired on Vesting (#)		Value Realized on Vesting ($)1
Mr. Ricks	0	$0	75,387	2	$15,678,234
			123,088	3	$29,943,618
Ms. Ashkenazi	0	$0	5,450	3	$1,325,822
			4,779	4	$1,162,587
Dr. Skovronsky	0	$0	41,029	3	$9,981,125
Mr. Van Naarden	0	$0	7,929	5	$1,624,573
Mr. Rau6	0	$0	0		$0
Mr. Smiley	0	$0	19,266	2	$4,006,750

1 Amounts reflect the market value of Lilly stock on the day value is realized.

2 Restricted stock units resulting from the 2018-2020 performance award that vested in February 2021.

3 Payout of the 2019-2021 shareholder value award at 150 percent of target, adjusted by Lilly’s three-year cumulative TSR (145.7 percent) relative to its peer companies’ median cumulative TSR of 24.6 percent, resulting in a maximum TSR modifier of 20 percent and a final payout of 180 percent of target. Since Ms. Ashkenazi was not an executive officer when the 2019-2021 shareholder value award was granted, her award was not subject to the TSR modifier. As a result, her payout multiple was 150 percent of target.

4 Payout of the 2020-2022 performance award at 175% of target for Ms. Ashkenazi. She was not an executive officer in 2020 at the time of grant; therefore, no additional 13-month service-vesting period applied.

5 This grant was made in 2020 before Mr. Van Naarden became an executive officer.

6 Mr. Rau joined Lilly in 2021 and had no option exercise or stock awards vest during 2021.

Retirement Benefits

We provide retirement income to eligible U.S. employees, including executive officers, through the following plans:

•The 401(k) Plan, a defined contribution plan qualified under Sections 401(a) and 401(k) of the Internal Revenue Code. Participants may elect to contribute a portion of their base salary to the plan, and the company provides matching contributions on employees’ contributions up to 6 percent of base salary up to IRS limits. The employee contributions, company contributions, and earnings thereon are paid out in accordance with elections made by the participant and the terms of the plan. See the "All Other Compensation" column in the Summary Compensation Table for information about company contributions under the 401(k) Plan for the named executive officers.

•The Retirement Plan, a tax-qualified defined benefit plan that provides monthly benefits to retirees. See the Pension Benefits in 2021 table below for additional information about the value of these pension benefits.

Sections 401 and 415 of the Internal Revenue Code generally limit the amount of annual pension that can be paid from a tax-qualified plan ($230,000 in 2021 and $245,000 in 2022) as well as the amount of annual earnings that can be used to calculate a pension benefit ($290,000 in 2021 and $305,000 in 2022). However, since 1975 the company has maintained a nonqualified pension plan that pays eligible retirees the difference between the amount payable under the Retirement Plan and the

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amount they would have received without the Internal Revenue Code limits. The nonqualified pension plan is unfunded and subject to forfeiture in the event of bankruptcy. Likewise, the company maintains a nonqualified savings plan that allows participants to contribute up to 6 percent of base salary exceeding the IRS limit. The company matches these contributions in the same manner as described in the 401(k) Plan. For more information, see footnote 2 to the "Nonqualified Deferred Compensation in 2021" table.

The following table shows benefits that the named executive officers have accrued under the Retirement Plan and the nonqualified pension plan.

Pension Benefits in 2021

Name	Plan	Number of Years of Credited Service	Present Value of Accumulated Benefit ($) 1	Payments During Last Fiscal Year ($)
Mr. Ricks	retirement plan (pre-2010)	14	$827,458
	retirement plan (post-2009)	12	$455,777
	nonqualified plan (pre-2010)	14	$11,555,253
	nonqualified plan (post-2009)	12	$6,246,306
	total		$19,084,794	$0
Ms. Ashkenazi	retirement plan (pre-2010)	9	$473,739
	retirement plan (post-2009)	12	$396,301
	retirement plan (post-2009)	9	$1,015,918
	nonqualified plan (post-2009)	12	$856,088
	total		$2,742,046	$0
Dr. Skovronsky	retirement plan (post-2009)	9	$294,986
	nonqualified plan (post-2009)	9	$1,676,195
	total		$1,971,181	$0
Mr. Van Naarden	retirement plan (post-2009)	0.3	$7,555
	nonqualified plan (post-2009)	0.3	$9,354
	total		$16,909	$0
Mr. Rau	retirement plan (post-2009)	1	$30,790
	nonqualified plan (post-2009)	1	$13,729
	total		$44,519	$0
Mr. Smiley	retirement plan (pre-2010)	14	$877,998
	retirement plan (post-2009)	12	$408,343
	retirement plan (post-2009)	14	$4,002,852
	nonqualified plan (post-2009)	12	$1,832,029
	total		$7,121,222	$0

1 The following standard actuarial assumptions were used to calculate the present value of each individual’s accumulated pension benefit:

Discount rate:	3.11 percent for the qualified plan and 2.91 percent for nonqualified plan
Mortality (post-retirement decrement only):	Private 2012 white collar table with generational projection using Scale MP-2021
Pre-2010 joint and survivor benefit (% of pension):	50 percent until age 62; 25 percent thereafter
Post-2009 benefit payment form:	Life annuity

The Retirement Plan benefits shown in the table are net present values. The benefits are not payable as a lump sum; they are generally paid as a monthly annuity for the life of the retiree and, if elected, any qualifying survivor. The annual benefit under the Retirement Plan is calculated using years of service and the average of the annual earnings (salary plus bonus) for the highest five out of the last ten calendar years of service (final average earnings).

Post-2009 Plan Information:Following amendment of our Retirement Plan formulas, employees first hired on or after February 1, 2008, have accrued retirement benefits only under the new plan formula. Employees hired before that date have accrued benefits under both the old and new plan formulas. All eligible employees, including those hired on or after February 1, 2008, can currently retire at age 65 with at least five years of service and receive an unreduced benefit. The annual benefit under the new plan formula is equal to 1.2 percent of final average earnings multiplied by years of service. Early retirement benefits under this plan formula are reduced six percent for each year under age 65. Transition benefits were afforded to employees with 50 points (age plus service) or more as of December 31, 2009. These benefits were intended to ease the transition to the new retirement formula for those employees who were closer to retirement or had been with the company longer at the time the plan was changed. For the transition group, early retirement benefits are reduced three percent for each year from age 65 to age 60 and six percent for each year under age 60. Mr. Ricks, Ms. Ashkenazi, and Mr. Smiley are in this transition group.

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Pre-2010 Plan Information:Employees hired prior to February 1, 2008 accrued benefits under both plan formulas. For these employees, benefits that accrued before January 1, 2010 were calculated under the old plan formula. The amount of the benefit is calculated using actual years of service through December 31, 2009, while total years of service are used to determine eligibility and early retirement reductions. The benefit amount is increased (but not decreased) proportionately based on final average earnings at termination compared to final average earnings at December 31, 2009. Full retirement benefits are earned by employees with 90 or more points (the sum of his or her age plus years of service). Employees electing early retirement receive reduced benefits as described below:

•The benefit for employees with between 80 and 90 points is reduced by three percent for each year before the earlier of 90 points or age 62.

•The benefit for employees who have fewer than 80 points, but who reached age 55 and have at least ten years of service, is reduced as described above and is further reduced by six percent for each year before the earlier of 80 points or age 65.

Nonqualified Deferred Compensation in 2021

Name	Plan	Executive Contributions in Last Fiscal Year ($)1	Registrant Contributions in Last Fiscal Year ($)2	Aggregate Earnings in Last Fiscal Year ($)	Aggregate Withdrawals/ Distributions in Last Fiscal Year ($)	Aggregate Balance at Last Fiscal Year End ($)3
Mr. Ricks	nonqualified savings	$72,600	$72,600	$1,140,638	$0	$3,131,383
	deferred compensation	$0	$0	$0	$0	$0
	total	$72,600	$72,600	$1,140,638	$0	$3,131,383
Ms. Ashkenazi	nonqualified savings	$33,626	$33,626	$20,659	$0	$212,556
	deferred compensation	$0	$0	$0	$0	$0
	total	$33,626	$33,626	$20,659	$0	$212,556
Dr. Skovronsky	nonqualified savings	$42,600	$42,600	$174,864	$0	$920,647
	deferred compensation	$0	$0	$0	$0	$0
	total	$42,600	$42,600	$174,864	$0	$920,647
Mr. Van Naarden	<