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EXHIBIT 10.6
THE LILLY DEFERRED COMPENSATION PLAN
(As Amended and Restated as of January 1, 2004)
SECTION 1. ESTABLISHMENT OF THE PLAN.
There is hereby established for the benefit
of Participants an unfunded plan of
voluntarily deferred compensation known as
"The Lilly Deferred Compensation
Plan."
SECTION 2. DEFINITIONS.
When used in the Plan, the following terms
shall have the definitions set forth
in this Section 2:
2.1. Base Salary. The term "Base Salary"
means the base salary to which a
management employee is entitled for
services rendered to the Company as a
management employee.
2.2. Base Salary Year. The term "Base
Salary Year" means each calendar year in
which Base Salary deferred under the Plan
is earned by a Participant.
2.3. Beneficiary. The term "Beneficiary"
means the beneficiary or beneficiaries
(including any contingent beneficiary or
beneficiaries) designated pursuant to
subsection 6.2 hereof.
2.4. Board of Directors. The term "Board of
Directors" means the Board of
Directors of Eli Lilly and Company.
2.5. Bonus. The term "Bonus" means the
payment to which an Eligible Employee is
entitled pursuant to the Contingent
Compensation Plan,the Senior Executive Bonus
Plan or the Lilly Executive Bonus Plan (the
EVA Bonus Plan) of the Company or
any other similar compensation plan as may
from time to time be designated by
the Committee.
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2.6. Bonus Year. The term "Bonus Year"
means each calendar year in which a Bonus
deferred under the Plan is earned by a
Participant.
2.7. Committee. The term "Committee" means
the committee designated in
subsection 9.1 hereof to administer the
Plan.
2.8. Company. The term "Company" means Eli
Lilly and Company and its affiliates
and subsidiaries.
2.9. Company Credit. The term "Company
Credit" means an amount computed and
credited each calendar year or part thereof
to Participants' accounts as
described in Section 5 at a rate that is
equal to one hundred twenty percent
(120%) of the applicable federal long-term
rate, with compounding (as prescribed
under Section 1274(d) of the Internal
Revenue Code) that was in effect for the
month of December immediately preceding the
calendar year.
2.10. Disability. The term "Disability"
means a condition that the Committee
determines (i) is attributable to sickness,
injury, or disease and (ii) renders
a Participant incapable of engaging in any
activity for remuneration or profit
commensurate with the Participant's
education, experience, and training.
2.11. Eligible Employee. The term "Eligible
Employee" means a management
employee of the Company who is designated
by the Committee as eligible to defer
a Bonus earned in the following year.
2.12. Lilly. The term "Lilly" means Eli
Lilly and Company.
2.13. Participant. The term "Participant"
means an Eligible Employee who has
elected to defer all or part of a Bonus
pursuant to the Plan in accordance with
Section 3.1 hereof or an SEC Executive
Officer who has elected to defer all or
part of Base Salary pursuant to the Plan in
accordance with Section 3.2 hereof.
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2.14. Plan. The term "Plan" means "The
Lilly Deferred Compensation Plan" as set
forth herein and as it may be amended from
time to time.
2.15. Retirement. The term "Retirement"
means the first day of the month next
following the Participant's last day of
work for the Company, but only if such
first day of the month occurs on or after
the first to occur of (i) the day on
which the Participant attains age 65 or
(ii) the day on which the Participant is
eligible to commence receiving a monthly
retirement benefit under a funded,
defined benefit retirement plan maintained
by the Company and covering the
Participant.
2.16. SEC Executive Officers. The term "SEC
Executive Officers" shall mean those
officers and employees from time to time
designated as Executive Officers for
purposes of the proxy statement and Form
10-K.
SECTION 3. PARTICIPATION.
3.1. Bonuses. Prior to the beginning of
each Bonus Year, the Committee shall
select those Eligible Employees who may
elect to defer Bonuses pursuant to the
Plan. Upon selection by the Committee and
before the beginning of the applicable
Bonus Year, an Eligible Employee may defer
the receipt of a Bonus pursuant to
the Plan by filing a written election with
the Committee, in a form satisfactory
to the Committee, that
(i) defers payment of a designated
amount (of One Thousand Dollars
($1,000) or more) or percentage of the Bonus, if any, to be earned
in
the Bonus Year, and
(ii) specifies
the payment option selected by the Participant pursuant to
subsection 6.1 hereof.
The amount deferred may not exceed the
amount of the Bonus. Except as provided
in subsections 6.1 and 6.3 hereof, any
election made pursuant to this Section 3
(including any
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election made pursuant to paragraphs (i)
and (ii), above) with respect to a
Bonus Year shall be irrevocable when
made.
Selection of an Eligible Employee for
deferral of a Bonus during one year does
not confer upon the Eligible Employee a
right to defer Bonuses for subsequent
years. The Eligible Employees who shall be
permitted to defer Bonuses pursuant
to the Plan shall be selected annually by
the Committee. If an Eligible Employee
is also an SEC Executive Officer as of the
beginning of the Bonus Year, the
Eligible Employee may also defer the
receipt of Base Salary as provided in
Section 3.2.
3.2. Base Salary. Subject to the right of
the Committee to limit deferrals
described below, prior to the beginning of
each Compensation Year, an SEC
Executive Officer may defer the receipt of
up to one hundred percent (100%) of
Base Salary pursuant to the Plan by filing
a written election with the
Committee, in a form satisfactory to the
Committee, that
(i) defers payment of a designated
amount of One Thousand Dollars ($1,000)
or more or a percentage of Base Salary, and
(ii) specifies
the payment option selected by the Participation pursuant to
subsection 6.1 hereof.
The amount deferred may not exceed the
amount of Base Salary. Except as provided
in subsections 6.1 and 6.3 hereof, any
election made pursuant to this Section 3
(including any election made pursuant to
paragraphs (i) and (ii), above) with
respect to a Bonus Year shall be
irrevocable when made and shall not be affected
by the Participant's ceasing to be an SEC
Executive Officer after the beginning
of the Bonus Year.
The Committee reserves the right to limit
the amount of Deferrals of Base Salary
to assure that the Company has sufficient
funds to cover taxes, benefit
payments, and other necessary and
appropriate deductions.
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SECTION 4. INDIVIDUAL ACCOUNT.
The Treasurer of Lilly shall maintain an
account in the name of each
Participant. In the year following the
Bonus Year or Base Salary Year, each
Participant's account shall be credited, as
of the first day of the month in
which Bonuses or Base Salary are paid, with
the amount that the Participant has
elected to defer hereunder. Each
Participant shall be given an annual statement,
as of December 31 of each year, showing for
each year (i) the amount of Bonuses
or Base Salary deferred and (ii) the amount
of the Company Credit to the
Participant's account.
SECTION 5. ACCRUAL OF COMPANY CREDIT.
The Treasurer of Lilly shall determine the
applicable annual rate of Company
Credit on or before December 31 of each
calendar year. This rate shall be
effective for the following calendar year.
The Company Credit shall accrue
monthly, at one-twelfth of
