Eli Lilly and Company - Shareholder-Analyst Call - NYSE:LLY

NYSE:LLY

David A. Ricks, the Chairman, CEO, and President of Eli Lilly and Company, made several statements during the Shareholder/Analyst Call on May 4, 2020. Here is a detailed summary of his statements:

Opening Remarks

• Introduction: Introduced himself and thanked attendees for joining the first virtual shareholders meeting, held due to the COVID-19 pandemic.
• Format Change: Mentioned plans to resume in-person meetings the following year.
• Virtual Meeting Features: Noted that participants can submit questions and vote from the virtual meeting site.
• Executive Team Present: Mentioned that CFO Josh Smiley, Chief Scientific Officer Dr. Dan Skovronsky, General Counsel Anat Hakim, Corporate Secretary Bronwen Mantlo, and Vice President of Investor Relations Kevin Hern were participating.
• Additional Attendees: Noted the presence of the rest of the Lilly executive officers, independent directors, and representatives from Ernst & Young.

Formal Business

• Proxy Voting: Instructed shareholders who had not previously voted to do so by clicking the "Vote Here" button.
• Deadline for Proposals: Stated that November 23, 2019, was the deadline for notifying the company of intentions to nominate a candidate for Director or propose other business.
• Items of Business: Announced seven shareholder proposals and five management proposals.
• Election of Directors: Explained that the Board is divided into three classes, with one-third of directors standing for election each year. Five directors were up for election, and their terms would end in 2023.
• Say on Pay Vote: Recommended voting for the proposal on the compensation paid to named executive officers.
• Audit Committee Ratification: Recommended voting for the ratification of Ernst & Young as the principal independent auditor for 2020.
• Amendments to Articles of Incorporation: Explained two proposals to amend the articles of incorporation, one to eliminate the classified Board structure and the other to eliminate the supermajority voting requirement. Recommended approval of both proposals.

Shareholder Proposals

• Service Employees International Union Pension Plans Master Trust Proposal: Recommended voting against the proposal requesting a report on lobbying activities and expenditures.
• People for the Ethical Treatment of Animals Proposal: Recommended voting against the proposal requesting a report on the effectiveness of the forced swim test.
• Daughters of Charity Proposal: Recommended voting against the proposal requesting an amendment to the bylaws to require an independent Board chair.
• National Center for Public Policy Research Proposal: Recommended voting against the proposal requesting disclosure of specific minimum qualifications for Board membership and information about Board nominee skills, experience, and ideological perspective.
• Mercy Investment Services Proposal: Recommended voting against the proposal to publish a feasibility report on incorporating public concern over drug pricing into senior executive compensation arrangements.
• United Auto Workers Retiree Medical Benefits Trust Proposal: Recommended voting against the proposal requesting the implementation of a bonus deferral policy.
• Trinity Health Proposal: Recommended voting against the proposal requesting the Board adopt a policy to disclose clawbacks on executive incentive compensation due to misconduct.

Business Performance Overview

• Praise for Employees: Expressed gratitude to employees, suppliers, and partners for their contributions during the COVID-19 pandemic.
• Financial Results: Reported solid financial results for 2019, including 4% revenue growth to $22.3 billion, driven by volume growth of key products.
• New Medicines: Highlighted the launch of new medicines and the company's investment in driving future growth.
• Total Shareholder Return: Noted that over the past five years, the annualized total shareholder return averaged 16.7%.
• Patient Access: Discussed the importance of adapting, evolving, and improving to facilitate patient access to the latest treatments.
• Affordability Programs: Mentioned programs introduced to improve insulin affordability.
• Workforce Diversity: Discussed the company's commitment to engaging and developing a diverse workforce, including increased representation of women and minorities in management.

Questions and Answers

• Public Perception of Pharma Industry: Addressed concerns about the public perception of the pharma industry and the company's efforts to restore its reputation, particularly regarding high list prices and the affordability of COVID-19 treatments.
• Insulin Value Program: Addressed questions about the Lilly insulin value program and the company's commitment to exercise price restraint during the pandemic.
• COVID-19 Response: Discussed the company's response to the COVID-19 pandemic, including business and supply chain continuity, employee benefits, protection, and safety.
• Financial Implications of COVID-19: Addressed the financial implications of the pandemic, including the company's ability to navigate the situation with its balance sheet.

Voting Results

• Election of Directors: Confirmed that each of the five Director nominees received a majority of the votes cast and had been elected.
• Say on Pay Vote: Confirmed that a majority of the votes cast were in favor of the proposal.
• Audit Committee Ratification: Confirmed that a majority of the votes cast were in favor of the ratification of Ernst & Young as the principal independent auditor for 2020.
• Amendments to Articles of Incorporation: Stated that neither proposal received the required 80% of outstanding shares, so neither proposal had been adopted.
• Shareholder Proposals: Stated that none of the shareholder proposals received a majority of the votes cast, so none would be adopted.

Closing Remarks

• Purpose and Commitment: Reaffirmed the company's commitment to aiding the global health crisis and delivering medicines to sustain the health of patients.

• Future Opportunities: Mentioned the exceptional opportunity to create new standards of care and accessibility in serious diseases.

• Thank You: Thanked attendees for their support and concluded the meeting.

Bronwen L. Mantlo, Vice President, Deputy General Counsel & Corporate Secretary at Eli Lilly and Company, provided the following statements during the Shareholder/Analyst Call on May 4, 2020:

1. Confirmation of Proxy Materials Mailing and Quorum Presence:
   • Confirmed that proxy materials were mailed to shareholders.
   • Noted that a list of registered shareholders is available on the meeting website, showing the number of shares each shareholder is entitled to vote based on their holdings as of the record date, which was March 9, 2020.
   • Reported that the Inspector of Election has confirmed that the majority of common stock entitled to vote is represented, establishing a quorum for the meeting.

To summarize, Bronwen L. Mantlo confirmed that the proxy materials were mailed to shareholders and that a quorum was present for the meeting, allowing the business of the meeting to proceed.