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•	2016 revenue increased 6 percent to approximately $21.2 billion.

•	2016 earnings per share (EPS) increased 14 percent on a reported basis to $2.58, and increased 3 percent on a non-GAAP basis to $3.52.

•	U.S. approval of a new cardiovascular (CV) indication for Jardiance® (empagliflozin) tablets and an EU label update to include a change to the indication statement regarding the reduction of  risk of CV death in adults with type 2 diabetes and established CV disease.

•	U.S. approval and conditional EU approval for LartruvoTM (olaratumab) for soft tissue sarcoma.

•	U.S., EU, and Japan approval for Taltz® (ixekizumab) for moderate-to-severe plaque psoriasis.

•	Multiple new indications in the EU and Japan for Cyramza.

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ü	Our board membership is marked by leadership, experience, and diversity.

ü	All of our non-employee directors, and all board committee members, are independent, with the exception of Dr. John Lechleiter, our former President and CEO. Dr. Lechleiter will retire in May 2017.

ü	We have a strong, independent lead director role.

ü	Our board actively participates in company strategy and CEO/senior executive succession planning, most recently with respect to our new President and CEO.

ü	Our board oversees compliance and enterprise risk management practices.

ü	We have in place meaningful stock ownership requirements.

ü	We have a majority voting standard and resignation policy for the election of directors.

ü	We have had strong shareholder support of compensation practices: in 2016, over 98 percent of shares cast voted in favor of our executive compensation.

ü	Our compensation programs are designed to align with shareholder interests and link pay to performance through a blend of short- and long-term performance measures.

ü	Our Compensation Committee annually reviews compensation programs to ensure they provide incentives to deliver long-term, sustainable business results while discouraging excessive risk-taking or other adverse behaviors.

ü	We have a broad compensation recovery policy that applies to all executives and covers a wide range of misconduct.

ü	Our executive officers (EOs) are subject to robust stock ownership guidelines and are prohibited from hedging or pledging their company stock.

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 EOs (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 generally require a double trigger.

ü	We do not have employment agreements with any of our EOs.

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ü	all shares must be held until the second January following the director's departure from board service

ü	no stock options can be issued under the plan.

ü	authorizing an additional 750,000 shares (the same amount approved in 2003)

ü	an annual compensation cap of $800,000 for non-employee directors.

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•	Michael L. Eskew

•	William G. Kaelin, Jr., M.D.

•	John C. Lechleiter, Ph.D.

•	David A. Ricks

•	Marschall S. Runge, M.D., Ph.D.

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3

This column consists of amounts donated by the Eli Lilly and Company Foundation, Inc. ("Foundation") under its matching gift program, which is generally available to U.S. employees as well as the 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, Ms. Horn, Mr. Kaelin, Ms. Marram, and Ms. Seifert include matching contributions for donations made at the end of 2015 (Mr. Fyrwald - $17,434; Ms. Horn - $7,150; Mr. Kaelin - $19,500; Ms. Marram - $8,000; and Ms. Seifert - $2,550), for which the matching contribution was not paid until 2016.

4	Directors do not participate in a company pension plan or non-equity incentive plan.

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•	The integrity of financial information provided to the shareholders and others;

•	Management's systems of internal controls and disclosure controls;

•	The performance of internal and independent audit functions; and

•	The company's compliance with legal and regulatory requirements.

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

•	Reviews succession plans for the CEO and other senior leadership positions.

•	is or has been a participant in a related-person transaction with the company (see “Review and Approval of Transactions with Related Persons” for a description of our policy on related-person transactions); or

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

•	Together with the lead director, leads the process for director recruitment;

•	Recommends to the board candidates for membership on the board and its committees, as well as for the role of lead director; and

•	Oversees matters of corporate governance, including board performance, director independence and compensation, the corporate governance guidelines, and shareholder engagement on governance matters.

•	capital structure and strategies;

•	dividends;

•	stock repurchases;

•	capital expenditures;

•	investments, financing, and borrowings;

•	benefit plan funding and investments;

•	financial risk management; and

•	significant business development opportunities.

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•	Oversees the processes by which the company conducts its business so that the company will do so in a manner that complies with laws and regulations and reflects the highest standards of integrity; and

•	Reviews and makes recommendations regarding policies, practices, and procedures of the company that relate to public policy and social, political, and economic issues.

•	Reviews and makes recommendations regarding the company’s strategic research goals and objectives;

•	Reviews new developments, technologies, and trends in pharmaceutical research and development;

•	Reviews the progress of the company's product pipeline;

•	Reviews the scientific aspects of significant business development opportunities; and

•	Oversees matters of scientific and medical integrity and risk management.

C	Committee Chair

LD	Lead Director

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•	providing general oversight of the business;

•	approving corporate strategy;

•	approving major management initiatives;

•	selecting, compensating, evaluating, and, when necessary, replacing the chief executive officer, and

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•	ensuring that an effective succession plan is in place for all executive officers and reviewing the broader talent management process, including diversity and inclusion;

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

•	nominating, compensating, and evaluating directors; and

•	overseeing the company's enterprise risk management program.

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

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

◦	leading the board’s processes for selecting and evaluating the CEO;

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

◦	serving as a liaison between the chairman and the independent directors;

◦	if requested by major shareholders, ensures that she is available for consultation and direct communication;

◦	approving meeting agendas and schedules and generally approving information sent to the board;

◦	conducting executive sessions of the independent directors;

◦	overseeing the independent directors' annual performance evaluation of the chairman and CEO; and

◦	together with the Directors and Corporate Governance Committee, leading the director recruitment process.

•

Director access to management and independent advisors: Independent directors have direct access to members of management whenever they deem it necessary, and the company's EOs attend part of each regularly scheduled board meeting. The independent directors and all committees are also free to retain their own independent advisors, at company expense, whenever they feel it would be desirable to do so.

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

•	the overall fairness of the transaction to the company.

•	Management or the affected director or EO will bring the matter to the attention of the chairman, the lead director, the chair of the Directors and Corporate Governance Committee, or the corporate secretary.

•	The chairman and the lead director shall jointly determine (or, if either is involved in the transaction, the other shall determine) whether the matter should be considered by the board or by one of its existing committees.

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

•	The transaction must be approved in advance whenever practicable, and if not practicable, must be ratified, if appropriate, as promptly as practicable.

•	The board or relevant committee will review the transaction annually to determine whether it continues to be in the company’s best interests.

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1

The sum of the "Shares Owned" and "Options Exercisable/Stock Units Distributable Within 60 Days" columns represents the shares considered "beneficially owned" for purposes of disclosure in the 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. No person listed in the table owns more than 0.1 percent of the outstanding common stock of the company. All directors and EOs as a group own approximately 0.2 percent of the outstanding common stock of the company.

3	This column sets forth RSUs that vest within 60 days.

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•

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

•	Attract and retain talented employees. Compensation opportunities should be competitive with our peer group and reflect the level of job impact and responsibilities. Retention of talent is an important factor in the design of our compensation and benefit programs.

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•	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 compensation and benefit programs.

•	Assessment of the executive's individual performance and contribution.

•

CEO: Generally, the independent directors, under the direction of the lead director, meet with the CEO at the beginning of each year to agree upon the CEO's performance objectives for the year. 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 and ethics and integrity. The year-end evaluation is used in setting the CEO's compensation for the next year. In June 2016, David A. Ricks was appointed to serve as CEO, effective January 1, 2017. His compensation for the role of President and CEO was set at the time of his appointment.

•

Other Executive Officers (EOs): The committee receives individual performance assessments and compensation recommendations from the CEO and exercises its judgment based on the board's knowledge and interactions with the EOs. Each EO's performance assessment is based on achievement of objectives established between such EO and the CEO at the start of the year, as well as other factors, including the demonstration of Lilly values and leadership behaviors. For new EOs, compensation is set at time of promotion or offer.

•	Assessment of company performance. The Compensation Committee considers company performance in two ways:

•	As a factor in establishing potential compensation for the coming year, the committee considers overall company performance during the prior year across a variety of metrics.

•	To determine payouts under the cash and equity incentive programs, the committee establishes specific company performance goals related to revenue, earnings per share (EPS), progress of our pipeline portfolio, stock price growth, and Total Shareholder Return (TSR) relative to our peer companies.

•	Peer-group analysis. The committee uses peer-group data as a market check for compensation decisions, but does not use this data as the sole basis for its compensation targets. The company does not target a specific position within that range of market data.

•	Input from an independent compensation consultant concerning executive pay. The role of the independent compensation consultant is described in more detail under the "Compensation Committee Matters" section that follows the CD&A.

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1.	Base Salary

2.	Annual Cash Bonus

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3.	Equity Incentives

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•	2 new molecular entity (NME) product approvals versus a goal of 2, and 19 other significant approvals versus a goal of 12.

•	1 NME entering into Phase 3 versus a goal of 2 entrants.

•	12 NMEs entering into Phase 1 versus a goal of 9-11 entrants.

•	4 new indications or line extensions (NILEX) entering into Phase 3 versus a goal of 4-5 entrants.

•	exceeded targets for Speed to Launch: project plans across the portfolio reflected faster time to launch than industry benchmarks scoring a 4 of 5; progressed projects in the portfolio faster than planned timelines scoring a 5 of 5.

•	subjective assessment of the quality of the pipeline, considering many factors—awarded a score of 4 of 5, recognizing a strong year for innovation.

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

•	provide post-retirement income; and

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

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•

Double trigger. Unlike “single trigger” plans that pay out immediately upon a change in control, our plans generally require a “double trigger”—a change in control followed by an involuntary loss of employment within two years thereafter. This is consistent with the plan's intent to provide employees with financial protection upon loss of employment. A partial exception is made for outstanding PAs, a portion of which would be paid out upon a change in control on a pro-rated basis for time worked based on the forecasted payout level at the time of the change in control. This partial payment is appropriate because it is not possible to convert the company EPS targets into an award based on the surviving company’s EPS. Likewise, if Lilly is not the surviving entity, a portion of outstanding SVAs would be paid out on a pro-rated basis for time worked up to the change in control based on the merger price for company stock.

•

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 is defined in the plan. See “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 assure employees a reasonable period of protection of their income and core employee benefits.

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•	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 and life insurance would be continued 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 change in control-related benefits 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.

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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. See the "All Other Compensation" column in the “Summary Compensation

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•	The Retirement Plan, a tax-qualified defined benefit plan that provides monthly benefits to retirees. See the “Pension Benefits in 2016” table below for additional information about the value of these pension benefits.

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•	The benefit for employees with between 80 and 90 points is reduced by 3 percent for each year under 90 points or age 62.

•	The benefit for employees who have less than 80 points, but who reached age 55 and have at least 10 years of service, is reduced as described above and is further reduced by 6 percent for each year under 80 points or age 65.

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•	accrued salary and vacation pay.

•	regular pension benefits under the Retirement Plan and the nonqualified pension plan. See “Retirement Benefits” above.

•	welfare benefits provided to all U.S. retirees, including retiree medical and dental insurance. The amounts shown in the table above as “Continuation of Medical / Welfare Benefits” are explained below.

•	distributions of plan balances under the 401(k) Plan, the nonqualified savings plan, and the Deferred Compensation Plan. See the narrative following the “Nonqualified Deferred Compensation in 2016” table for information about these plans.

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Covered terminations. The table assumes a termination of employment that is eligible for severance under the terms of the plan, based on the named executive officer’s compensation, benefits, age, and service credit at December 31, 2016. Eligible terminations include an involuntary termination for reasons other than for cause or a voluntary termination by the executive for good reason, within two years following the change in control.

•

A termination of an EO by the company is for cause if it is for any of the following reasons: (i) the employee’s willful and continued refusal to perform, without legal cause, his or her material duties, resulting in demonstrable economic harm to the company; (ii) any act of fraud, dishonesty, or gross misconduct resulting in significant economic harm or other significant harm to the business reputation of the company; or (iii) conviction of or the entering of a plea of guilty or nolo contendere to a felony.

•

A termination by the EO is for good reason if it results from: (i) a material diminution in the nature or status of the executive’s position, title, reporting relationship, duties, responsibilities, or authority, or the assignment to him or her of additional responsibilities that materially increase his or her workload; (ii) any reduction in the executive’s then-current base salary; (iii) a material reduction in the executive’s opportunities to earn incentive bonuses below those in effect for the year prior to the change in control; (iv) a material reduction in the executive’s employee benefits from the benefit levels in effect immediately prior to the change in control; (v) the failure to grant to the executive stock options, stock units, performance shares, or similar incentive rights during each 12-month period following the change in control on the basis of a number of shares or units and all other material terms at least as favorable to the executive as those rights granted to him or her on an annualized average basis for the three-year period immediately prior to the change in control; or (vi) relocation of the executive by more than 50 miles.

•	Cash severance payment. The cash severance payment amounts to two times the EO's annual base salary plus two times the EO’s bonus target for that year under the bonus plan.

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Continuation of medical and welfare benefits. This amount represents the present value of the change-in-control plan’s provision, following a covered termination, of 18 months of continued coverage equivalent to the company’s current active employee medical, dental, life, and long-term disability insurance. Similar actuarial assumptions to those used to calculate incremental pension benefits apply to the calculation for continuation of medical and welfare benefits, with the addition of actual COBRA rates based on current benefit elections.

•

Acceleration of equity awards. Upon a covered termination, any unvested equity awards would vest and a partial payment of outstanding PAs would be made, reduced to reflect the portion of the performance period worked prior to the change in control. Likewise, in the case of a change in control in which Lilly is not the surviving entity, SVAs would pay out based on the change-in-control stock price and be prorated for the portion of the three-year performance period elapsed. The amount in this column represents the value of the acceleration of unvested equity grants, prorated for PAs and SVAs that would have been applicable at December 31, 2016.

•

Excise taxes. Upon a change in control, employees may be subject to certain excise taxes under Section 280G of the Internal Revenue Code. The company does not reimburse the affected employees for those excise taxes or any income taxes payable by the employee. To reduce the employee's exposure to excise taxes, the employee’s change-in-control benefit may be decreased to maximize the after-tax benefit to the individual.

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•	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 committee of evolving best practices;

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

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

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

•	undertake special projects at the request of the committee chair.

•	The committee is comprised of independent directors only.

•	The committee engages its own independent compensation consultant.

•	The committee has downward discretion to lower compensation plan payouts.

•	The 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 sub-optimal or improper behavior.

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

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

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Audit services: The committee approves the annual audit services engagement and, if necessary, any changes in terms, conditions, and fees resulting from changes in audit scope, company structure, or other matters. Audit services include internal controls attestation work under Section 404 of the Sarbanes-Oxley Act. The committee may also preapprove other audit services, which are those services that only the independent auditor reasonably can provide.

•	Audit-related services: Audit-related services are assurance and related services that are reasonably related to the performance of the audit or reviews of the financial statements, and that are traditionally performed by the independent auditor. The committee believes that the provision of these services does not impair the independence of the auditor.

•	Tax services: The committee believes that, in appropriate cases, the independent auditor can provide tax compliance services, tax planning, and tax advice without impairing the auditor’s independence.

•	Other services: The committee may approve other services to be provided by the independent auditor if (i) the services are permissible under SEC and PCAOB rules, (ii) the committee believes the provision of the services would not impair the independence of the auditor, and (iii) management believes that the auditor is the best choice to provide the services.

•

Approval process: At the beginning of each audit year, management requests prior committee approval of the annual audit, statutory audits, and quarterly reviews for the upcoming audit year as well as any other services known at that time. Management will also present at that time an estimate of all fees for the upcoming audit year. As specific engagements are identified thereafter, they are brought forward to the committee for approval. To the extent approvals are required between regularly scheduled committee meetings, preapproval authority is delegated to the committee chair.

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•	all shares must be held until the second January following the director's departure from board service

•	no stock options can be issued under the plan.

•	authorizing an additional 750,000 shares (the same amount approved in 2003)

•	a cap on non-employee directors’ compensation.

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1.	Company policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications.

2.	Payments by Eli Lilly used for (a) direct or indirect lobbying or (b) grassroots lobbying communications, in each case including the amount of the payment and the recipient.

3.	Eli Lilly’s membership in and payments to any tax-exempt organization that writes and endorses model legislation.

4.	Description of the decision making process and oversight by management and the Board for making payments described in section 2 and 3 above.

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•	policies and procedures for company and PAC contributions

•	contributions to candidates, including information about the candidate's office (for example, state, local, or federal; House or Senate), party affiliation, state, and district

•	contributions to political organizations and Section 527 organizations reported by state.

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•	held directly in your name as the shareholder of record

•	held for you in an account with a broker, bank, or other nominee

•	attributed to your account in the 401(k) plan.

•	The five nominees for director will be elected if the votes cast for the nominee exceed the votes cast against the nominee. Abstentions will not count as votes cast either for or against a nominee.

•	The following items of business will be approved if the votes cast for the proposal exceed those cast against the proposal:

•	advisory approval of executive compensation;

•	advisory vote on frequency of vote on named executive officer compensation, with the option receiving the highest number of votes to be given due consideration by the board when determining frequency of such votes;

•	ratification of the appointment of principal independent auditor;

•	amend the directors' deferral plan; and

•	one shareholder proposal.

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8	On the Internet. You may vote online at www.proxyvote.com. Follow the instructions on your proxy card or notice. If you received these materials electronically, follow the instructions in the e-mail message that notified you of their availability. Voting on the Internet has the same effect as voting by mail. If you vote on the Internet, do not return your proxy card.

)	By telephone. Shareholders in the U.S., Puerto Rico, and Canada may vote by telephone by following the instructions on your proxy card or notice. If you received these materials electronically, follow the instructions in the e-mail message that notified you of their availability. Voting by telephone has the same effect as voting by mail. If you vote by telephone, do not return your proxy card.

*

By mail. Sign and date each proxy card you receive and return it in the prepaid envelope. Sign your name exactly as it appears on the proxy. If you are signing in a representative capacity (for example, as an attorney-in-fact, executor, administrator, guardian, trustee, or the officer or agent of a corporation or partnership), please indicate your name and your title or capacity. If the stock is held in custody for a minor (for example, under the Uniform Transfers to Minors Act), the custodian should sign, not the minor. If the stock is held in joint ownership, one owner may sign on behalf of all owners. If you return your signed proxy but do not indicate your voting preferences, we will vote on your behalf with the board’s recommendations.

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

•	avoid volatile, artificial inflation or deflation of awards due to unusual items in the award year, and, where relevant, the previous (comparator) year.

•	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.

•	Eliminated the impact of the charge related to the Venezuelan financial crisis, including the significant deterioration of the bolivar.

•	Eliminated the impact of the charge recognized for acquired in-process research and development.

•	Eliminated the impact of asset impairments, restructuring and other special charges.

•	Eliminated the impact of amortization of certain intangible assets.

•	2016: Eliminated the impact of the Venezuelan financial crisis.

•	2016, 2015 and 2014: Eliminated the impact of the charges recognized for acquired in-process research and development.

•	2016, 2015 and 2014: Eliminated the impact of asset impairments, restructuring, and other special charges.

•	2016 and 2015: Eliminated the impact of amortization of certain intangible assets.

•	2015: Eliminated the impact of the debt extinguishment loss.

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•	2015: Eliminated the impact of inventory step-up for Novartis Animal Health.

•	2014: Eliminated the impact of the charge for an extra year of the U.S. Branded Prescription Drug Fee.

•	2014: Eliminated the impact of gain related to transfer of our linagliptin and empagliflozin commercial rights in certain countries to Boehringer Ingelheim.

•	When the Compensation Committee set 2015-2017 PA targets, the transfer of the commercialization rights for Erbitux® in North America to Lilly (which occurred in October 2015) was not contemplated. Accordingly, the committee adjusted the 2016 and 2015 results to neutralize the expected EPS impact of the transfer of commercialization rights.

•	When the Compensation Committee set 2015-2017 PA targets, the EPS goals were set assuming the acquisition of Novartis Animal Health (which occurred in January 2015). Accordingly, the committee adjusted the base year 2014 results to include the results of Novartis Animal Health as if the acquisition and financing had occurred as of January 1, 2014.

•	When the Compensation Committee set 2015-2017 PA targets, the company began excluding amortization of certain intangible assets from non-GAAP financial measures in 2015. To make effective comparisons, the committee adjusted the 2014 non-GAAP results to exclude the impact of amortization of certain intangible assets.

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Section 1.	Definition of Terms

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Section 2.	Plan Administrator

Section 3.	Participation

Section 4.	Elections to Participate

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Section 5.	Accounts and Interest Credits

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Section 6.	Distribution of Accounts

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Section 7.	Administrative Matters

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Section 8.	Unfunded Status

Section 9.	Nontransferability; Successors

Section 10.	Limitation of Rights

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Section 11.	Enforceability and Governing Law

Section 12.	Forum Selection

Section 13.	Scrivener’s Errors

Section 14.	Rules of Construction

(a)	the use of the masculine gender in this Plan shall also include within its meaning the feminine gender and vice versa;

(b)	the use of the singular shall also include within its meaning the plural and vice versa;

(c)	the word "include" shall mean to include, but not to be limited to;

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(d)	any reference to a statute or section of a statute shall further be a reference to any successor or amended statute or section, and any regulations or other guidance of general applicability issued thereunder;

(e)	the title of an officer, employee, or entity used in this Plan means the respective officer, employee, or entity of Eli Lilly and Company and means any successor title to such position as such title may be changed from time to time;

(f)	references to the Plan Administrator, or other named fiduciary, officer or employee of the Company, or other person or entity with responsibility or authority under the Plan shall include delegates (if any) of such entity or person, with respect to such entity's or person's delegated responsibilities; and

(g)	the captions and headings of each article, section, paragraph, and other provision of the Plan are for convenience and reference only and are not to be considered in interpreting the terms and conditions of the Plan.

Section 15.	Effective Date; Amendment and Termination

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