The drugmaker only speaks jargonese. Along with nearly 40 other large companies, Lilly was tagged for not using “plain English” in its proxy, according to a study that SEC chairman Chris Cox cited in a recent speech.

The latest proxy says this about incentive pay: Lilly’s board “maintained the same total grant values but continued to place greater emphasis on performance-based equity incentives by increasing the performance award portion of executive officers’ equity grants from 40 percent to 50 percent of the total grant value…In making this determination, the committee reviewed available peer group data but found it provided only limited insight because of rapidly changing equity grant practices.”

Get that? Of course.

There are rules about this sort of thing. The SEC requires companies to report compensation for the highest-paid execs in clear terms. In fact, the agency issued a guide way back in 1998. For his part, Bloomberg News notes that Cox promised companies would provide “intelligible disclosure that can be understood by a lay reader” after the SEC overhauled executive-pay rules in July.

Meanwhile, a Lilly spokesman had this to say: The drugmaker “takes pride in meeting both the letter and spirit of the SEC reporting rules, and our most recent disclosure regarding executive compensation is no exception.”

But did he read the proxy?

Further reading…
Bloomberg News;
Lilly’s proxy;
SEC’s 1998 guide to simple English, with a preface by Warren Buffett.

[tags]Corporate Governance, Eli Lilly[/tags]