Eli Lilly and Company | Interfaith Center on Corporate Responsibility

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<h4>Resolution Details</h4>
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<strong>Company:</strong>
<p>Eli Lilly and Company</p>
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<strong>Year:</strong>
<p>2026 </p>
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<strong>Issue Area:</strong>
<p>Corporate Governance </p>
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<strong>Focus Area:</strong>
<p>Annual Board Election </p>
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<strong>Status:</strong>
<p>Filed</p>
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<h2>Resolution Text</h2>
<p><strong>RESOLVED</strong>: Shareholders ask that Eli Lilly arrange for an advisory vote on each director who does not stand for election in a given year.</p>
<p><strong>SUPPORTING STATEMENT</strong>:</p>
<p dir=”ltr”>This proposal is necessary because Eli Lilly directors have 3-year terms which makes directors far less accountable. It is highly unlikely that this will change because the Lilly Endowment is opposed to annual election of each director and has enough voting power to prevent annual election of each director.</p>
<p dir=”ltr”>Advisory votes for certain directors is similar to the advisory vote on executive pay that LLY conducts. When LLY initiated advisory votes on executive pay it did not need to change the bylaws because the votes were advisory.</p>
<p dir=”ltr”>This proposal will focus LLY shareholders on the performance and qualifications of each LLY director each year so that LLY shareholders will be better prepared to cast informed votes when directors are up for a binding shareholder vote after 3-years. </p>
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<h3>Lead Filer</h3>
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<div class=”views-field views-field-nothing”><span class=”field-content”> John Chevedden</span></div><div class=”views-field views-field-title views-field-field-shareholder”><span class=”field-content”>Chevedden Corporate Governance</span></div>
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<strong>Focus Area:</strong>
<p>Lobbying </p>
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<strong>Status:</strong>
<p>Filed</p>
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<h2>Resolution Text</h2>
<p><strong>Resolved, </strong>shareholders of Eli Lilly (“Lilly”) request the preparation of a report, updated annually, omitting any proprietary data and produced at reasonable cost, disclosing:</p>
<p>Payments by Lilly used for direct or indirect lobbying, in each indirect case including the amount of the payment and the recipient. </p>
<p>For purposes of this proposal, payments used for direct lobbying are the annual aggregate amounts reported at the federal and state levels, broken out by federal and individual state.</p>
<p>Payments used for indirect lobbying are payments to trade associations or social welfare groups that are used for lobbying as defined by tax law. Both direct and indirect lobbying include efforts at the state and federal levels. </p>
<p>The report shall be posted on Lilly’s website</p>
<p><strong>Supporting Statement</strong></p>
<p>As long-term shareholders of Lilly, we support transparency and accountability in corporate lobbying. Companies and investors may benefit if lobbying leads to improved policies, reduced regulation or taxation, or government contracts or subsidies. However, lobbying activities also create costs and can create risks for a corporation – and by extension, shareholders. Currently, shareholders must search the federal and 50 state lobbying databases to assemble a picture of a company’s lobbying. And state disclosure requirements vary widely,[1] with an analysis of Lilly’s disclosures finding 25 out of 48 states did not disclose amounts spent.[2]</p>
<p>Lilly spent $8,430,000 on federal lobbying for 2024. This does not include state lobbying, where Lilly also lobbies. Lilly lists support of ten trade associations yet fails to disclose the amounts of its payments to those groups used for lobbying. And Lilly’s disclosure leaves out its memberships in and payments to social welfare groups, like the Alliance for Competitive Taxation and the Alliance for Patient Access.</p>
<p>The International Corporate Governance Network policy on lobbying recommends a company commit to public disclosure of its lobbying activities and any direct or indirect expenditure beyond a de minimis level (e.g., a contribution equal to or less than $10,000). Many companies already provide annual lobbying reports to shareholders, including Cardinal Health, Exxon, Procter & Gamble and Xcel Energy, which report on their federal and state lobbying and indirect lobbying through trade associations and social welfare groups, and Amazon and Walmart, which provide full state lobbying reports. Among our company’s peers, Biogen, Gilead Sciences, Merck and Pfizer each provide an annual report of their trade association payments used for lobbying to shareholders. Companies are required to report this information at the federal and state levels, so it is not overly burdensome to provide it to shareholders.</p>
<p>We urge Lilly to expand its lobbying disclosure. </p>
<p> </p>
<p><br> </p>
<p>[1]https://www.ncsl.org/ethics/how-states-define-lobbying-and-lobbyist.</p>
<p>[2]https://www.citizen.org/news/despite-company-claims-eli-lilly-fails-to-disclose-its-state-lobbying-spending-for-half-the-country/.</p>

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<h3>Lead Filer</h3>
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<div class=”views-field views-field-nothing”><span class=”field-content”> Laura Krausa</span></div><div class=”views-field views-field-title views-field-field-shareholder”><span class=”field-content”>CommonSpirit Health</span></div>
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<div class=”views-field views-field-nothing”><span class=”field-content”> Patricia Phillips</span></div><div class=”views-field views-field-title views-field-field-shareholder”><span class=”field-content”>Benedictine Sisters of Baltimore – Emmanuel Monastery</span></div>
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<strong>Focus Area:</strong>
<p>Access & Affordability </p>
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<strong>Status:</strong>
<p>Filed</p>
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<h2>Resolution Text</h2>
<p><strong>RESOLVED</strong>: Shareholders request the Board of Directors adopt as policy, and amend the bylaws as necessary, to require henceforth that the Chair of the Board of Directors, whenever possible, be an independent member of the Board. This independence policy shall apply prospectively so as not to violate any contractual obligations. If the Board determines that a Chair who was independent when selected is no longer independent, the Board shall select a new Chair who satisfies the requirements of the policy within a reasonable amount of time. Compliance with this policy is waived if no independent director is available and willing to serve as Chair. This policy would be phased in for the next chief executive officer (CEO) transition.</p>
<p><strong>WHEREAS</strong>:</p>
<p>We believe:</p>

The role of the CEO and management is to run the company.
The role of the Board of Directors is to provide independent oversight of management and the CEO.
There is a potential conflict of interest for a CEO to have a non-independent director act as Chair.
In August of 2025, the state of Texas sued for allegedly bribing and inducing medical providers to prescribe its most profitable drugs, including the high-demand GLP-1 medications. These inducements were designed to steer providers toward prescribing Eli Lilly’s drugs[3].

<p>In our view, shareholders are best served by an independent Board Chair who can provide a balance of power between the CEO and the Board. Taking this step is in the long-term interests of shareholders and will promote effective oversight of management.</p>
<p>As of 2024, approximately 40 percent[1] of S&P 500 firms had an independent chair. ISS reported in September 2025 that 81 percent[2] of investors responding to its policy survey indicated that an independent chair is their preferred model.</p>
<p>Pharmaceutical companies are particularly in need of effective and unconflicted oversight because of the industry’s high legal and regulatory risks related to product safety and the industry’s commercial practices. Eli Lilly is not immune to litigation and regulatory attention. </p>

An ongoing battle between Michigan and the company continues. The state is trying to investigate Eli Lilly’s pricing practices around insulin; these proceedings go back to 2022 and continue to make news even in November of 2025[4].
Eli Lilly is one of three pharmaceutical companies named as defendants in a lawsuit filed July of this year on behalf of the University of Pennsylvania and its health system. The suit alleges 20 years of price fixing on drugs that treat diabetes, like insulin.

<p>The risk of lawsuits, sustained public controversy and regulatory intervention, whether ultimately found to be justified or not, are strong arguments for the need for continuous, effective and unconflicted board oversight of corporate management.</p>
<p>In order to ensure that our Board can provide rigorous oversight for our Company with greater independence and accountability, we urge a vote FOR this shareholder proposal.</p>
<p class=”FootnoteText1″>[1] https://www.conference-board.org/publications/Board-Practices-and-Composition-2024-Edition</p>
<p class=”FootnoteText1″>[2] https://www.issgovernance.com/file/policy/active/policy-survey-summary-2025.pdf</p>
<p>[3] https://www.texasattorneygeneral.gov/news/releases/attorney-general-ken-paxton-sues-big-pharma-drug-manufacturer-eli-lilly-bribing-providers-prescribe</p>
<p>[4] https://www.michiganpublic.org/criminal-justice-legal-system/2025-11-06/michigan-supreme-court-hears-arguments-in-eli-lilly-insulin-case</p>

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<h3>Lead Filer</h3>
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<div class=”views-field views-field-nothing”><span class=”field-content”> Lydia Kuykendal</span></div><div class=”views-field views-field-title views-field-field-shareholder”><span class=”field-content”>Mercy Investment Services</span></div>
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<h3>Co-filer</h3>
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<div class=”views-field views-field-nothing”><span class=”field-content”> Lydia Kuykendal</span></div><div class=”views-field views-field-title views-field-field-shareholder”><span class=”field-content”>Adrian Dominican Sisters</span></div>
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<div class=”views-field views-field-nothing”><span class=”field-content”> Patricia Phillips</span></div><div class=”views-field views-field-title views-field-field-shareholder”><span class=”field-content”>Benedictine Sisters of Baltimore – Emmanuel Monastery</span></div>
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<div class=”views-field views-field-nothing”><span class=”field-content”> Lydia Kuykendal</span></div><div class=”views-field views-field-title views-field-field-shareholder”><span class=”field-content”>Daughters of Charity, Province of St Louise</span></div>
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<h4>Resolution Details</h4>
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<strong>Company:</strong>
<p>Eli Lilly and Company</p>
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<strong>Year:</strong>
<p>2025 </p>
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<strong>Issue Area:</strong>
<p>Corporate Governance </p>
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<strong>Focus Area:</strong>
<p>Majority Vote </p>
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<strong>Status:</strong>
<p>Omitted</p>
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<h2>Resolution Text</h2>
<p>Shareholders request that our board take each step necessary so that each voting requirement in our charter and bylaws (that is explicit or implicit due to default to state law) that calls for a greater than simple majority vote be replaced by a requirement for a majority of the votes cast for and against applicable proposals, or a simple majority in compliance with applicable laws. If necessary this means the closest standard to a majority of the votes cast for and against such proposals consistent with applicable laws. This includes making the necessary changes in plain English.</p>
<p>The Eli Lilly Board of Directors put this important proposal topic on the 2024 LLY annual meeting ballot and failed by not a large margin to obtain the required 80% vote from all shares outstanding for the 6th time since 2011. This is because less than 80% of LLY shares typically cast ballots. It is time that the LLY Board of Directors stop exercising its shareholders on this important topic and get serious with adopting this proposal topic.<br><br>The 80% approval requirement was adopted decades ago, not because it had any merit, but because it was adopted at a time when good corporate governance was not considered important plus mutual funds and institutional investors then did not fully recognize their duty to vote on corporate governance issues in the best interest of shareholders.</p>
<p>In order to determine whether the LLY Board is really serious about adopting this important proposal topic it would be useful to shareholders for the Board of Directors to prepare a detailed report, omitting proprietary data, on the Board of Directors’ expenses to proxy solicitors and other vendors to obtain the challenging 80% approval requirement from all shares outstanding on this proposal topic when less than 80% of LLY shares typically cast ballots. This report need not be prepared if each next LLY Board of Directors proposal on this important topic receive the required 80% vote.</p>
<p><br>At least a preliminary report shall be included with the Item 5.07 filing within 4-days of the annual meeting and a final report shall be included in an Item 5.07 filing within 30-days of the annual meeting. <br><br>This proposal at minimum is a reminder that there are limitations to any corporate governance improvements or increased shareholder rights that can be expected at LLY due to the current – all but impossible – 80% approval requirements that are baked into the LLY governing documents. This in turn negatively impacts the long-term performance that shareholders can expect from LLY stock. Shareholders who consider good governance important thus may be wise to diversify away from LLY.</p>
<p>Shareholders are willing to pay a premium for shares of companies that have excellent corporate governance but sadly LLY is not such a company. The shareholder rights governance score for LLY is 9 with 10 being the worse possible score.</p>

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<h4>Resolution Details</h4>
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<strong>Company:</strong>
<p>Eli Lilly and Company</p>
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<strong>Year:</strong>
<p>2025 </p>
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<strong>Issue Area:</strong>
<p>Health, Human Rights & Worker Rights </p>
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<strong>Focus Area:</strong>
<p>Human Rights Due Diligence, Pharmaceutical Prices and Access </p>
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<strong>Status:</strong>
<p>Filed</p>
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<h2>Resolution Text</h2>
<p> </p>
<p>RESOLVED, that shareholders of Eli Lilly and Company (“Lilly”) urge the board of directors to oversee conduct of human rights due diligence (“HRDD”) to produce a human rights impact assessment (“HRIA”) covering Lilly’s operations, activities, business relationships, and products, including access to medicines. The HRIA should be prepared at reasonable cost and omitting confidential and proprietary information and made available on Lilly’s web site. The HRIA should describe actual and potential adverse human rights impacts identified; identify rightsholders that were consulted; and discuss whether and how the results of the HRDD will be integrated into Lilly’s operations and decision making. </p>
<p> </p>
<p>SUPPORTING STATEMENT</p>
<p> </p>
<p>Lilly currently has a Code of Business Conduct (the “Code”), applicable to its suppliers, which contains provisions addressing various issues including protecting worker rights.[1] The Pharmaceutical Supply Chain Initiative (“PSCI”) Principles,[2] a link to which appears on Lilly’s web site, includes an expectation that suppliers respect workplace human rights. </p>
<p> </p>
<p>Article 12.1 of the International Covenant on Economic, Social, and Cultural Rights “recognize[s] the right of everyone to the enjoyment of the highest attainable standard of physical and mental health.”[3] Target 3.8 of Sustainable Development Goal 3 assesses progress toward “access to safe, effective, quality and affordable essential medicines and vaccines for all.”[4] The section of Lilly’s Sustainability Report on human rights states that Lilly is “deeply committed to equitable and affordable access to our medicines” and to monitoring the “safety and well-being” of clinical trial participants.[5]  </p>
<p> </p>
<p>Insulin has been on the World Health Organization’s essential medicines list since 1977.[6]  Recently, an “increasing lack of supply of critical insulin products [has] severely affect[ed] diabetes patients and healthcare providers.”[7] There is concern that insulin makers like Lilly are “turning their focus and resources away from insulin and toward the GLP-1s,” like Ozempic, that are more profitable but cannot substitute for the insulin required by some diabetics.[8]</p>
<p> </p>
<p>Lilly appears not to have adopted an HRDD process. According to Deloitte, it is not possible for a company to “really commit to respecting and promoting human rights without having full transparency of its human rights impacts.”[9] The Code makes no mention of how Lilly evaluates and enforces suppliers’ compliance, aside from a reporting hotline. That is worrisome given a recent letter from members of Congress indicating that U.S. pharmaceutical companies have conducted clinical trials in China’s Xinjiang Uyghur Autonomous Region, where forced labor is common.[10]  The PSCI Principles contemplate supplier audits,[11] which are not HRDD.  </p>
<p> </p>
<p>As well, Lilly does not indicate whether and how it identifies actual and potential adverse human rights impacts resulting from its own operations. The Sustainability Report section on human rights in health is silent on HRDD. Conducting comprehensive HRDD across Lilly’s operations and value chain would enable Lilly to identify actual and potential impacts, including those related to the human right to health, and publicly releasing the resulting HRIA would allow shareholders to assess Lilly’s human rights performance.<br> </p>
<p>[1]  https://assets.ctfassets.net/srys4ukjcerm/gVAGEcUTLBkaVdSHHyrd6/b4fb276dc3b73984e6b4af96f58545f2/Lilly_SCoBC_2024_EN.pdf</p>
<p>[2]  https://pscinitiative.org/principles</p>
<p>[3]  www.ohchr.org/en/instruments-mechanisms/instruments/international-covenant-economic-social-and-cultural-</p>
<p>rights; https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7605313/</p>
<p>[4]  www.un.org/en/development/desa/population/migration/generalassembly/docs/globalcompact/A_RES_70_1_E.pdf</p>
<p>[5]  https://sustainability.lilly.com/social/human-rights#human-rights-health</p>
<p>[6]  https://www.thelancet.com/journals/landia/article/PIIS2213-8587(21)00322-3/fulltext</p>
<p>[7]  https://medpak.com/insulin-shortage/</p>
<p>[8]  https://www.statnews.com/2024/07/17/insuln-novo-nordisk-eli-lilly-weight-loss-drugs/</p>
<p>[9]  https://www.deloitte.com/global/en/services/risk-advisory/blogs/human-rights-due-diligence-in-the-modern-era.html</p>
<p>[10]  https://www.dol.gov/agencies/ilab/against-their-will-the-situation-in-xinjiang</p>
<p>[11]  https://pscinitiative.org/sharedAudits</p>

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<div class=”views-field views-field-nothing”><span class=”field-content”> Cathy Rowan</span></div><div class=”views-field views-field-title views-field-field-shareholder”><span class=”field-content”>Trinity Health</span></div>
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<h3>Co-filer</h3>
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<div class=”views-field views-field-nothing”><span class=”field-content”> Susan Jordan</span></div><div class=”views-field views-field-title views-field-field-shareholder”><span class=”field-content”>School Sisters of Notre Dame Collaborative Investment Fund</span></div>
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<div class=”views-field views-field-nothing”><span class=”field-content”> Amy Carr</span></div><div class=”views-field views-field-title views-field-field-shareholder”><span class=”field-content”>Friends Fiduciary Corporation</span></div>
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<div class=”views-field views-field-nothing”><span class=”field-content”> Timnit Ghermay</span></div><div class=”views-field views-field-title views-field-field-shareholder”><span class=”field-content”>Sisters of St. Joseph of Peace, WA</span></div>
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<div class=”views-field views-field-nothing”><span class=”field-content”> Laura Krausa</span></div><div class=”views-field views-field-title views-field-field-shareholder”><span class=”field-content”>CommonSpirit Health</span></div>
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<div class=”views-field views-field-nothing”><span class=”field-content”> Josie Chrosniak</span></div><div class=”views-field views-field-title views-field-field-shareholder”><span class=”field-content”>Sisters of the Humility of Mary, OH</span></div>
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<div class=”views-field views-field-nothing”><span class=”field-content”> Barbara Aires</span></div><div class=”views-field views-field-title views-field-field-shareholder”><span class=”field-content”>Sisters of Charity of St. Elizabeth, NJ</span></div>
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<div class=”views-field views-field-nothing”><span class=”field-content”> Amy Orr</span></div><div class=”views-field views-field-title views-field-field-shareholder”><span class=”field-content”>Boston Common Asset Management</span></div>
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<div class=”views-field views-field-nothing”><span class=”field-content”> Ann Roberts</span></div><div class=”views-field views-field-title views-field-field-shareholder”><span class=”field-content”>Dana Investment Advisors</span></div>
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<div class=”views-field views-field-nothing”><span class=”field-content”> Lydia Kuykendal</span></div><div class=”views-field views-field-title views-field-field-shareholder”><span class=”field-content”>Adrian Dominican Sisters</span></div>
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<div class=”views-field views-field-nothing”><span class=”field-content”> Lydia Kuykendal</span></div><div class=”views-field views-field-title views-field-field-shareholder”><span class=”field-content”>Bon Secours Mercy Health</span></div>
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<div class=”views-field views-field-nothing”><span class=”field-content”> Lydia Kuykendal</span></div><div class=”views-field views-field-title views-field-field-shareholder”><span class=”field-content”>Daughters of Charity, Province of St Louise</span></div>
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<div class=”views-field views-field-nothing”><span class=”field-content”> Lydia Kuykendal</span></div><div class=”views-field views-field-title views-field-field-shareholder”><span class=”field-content”>Mercy Investment Services</span></div>
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<div class=”views-field views-field-nothing”><span class=”field-content”> Lydia Kuykendal</span></div><div class=”views-field views-field-title views-field-field-shareholder”><span class=”field-content”>Providence St. Joseph Health</span></div>
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<div class=”views-field views-field-nothing”><span class=”field-content”> Marie Cigrand</span></div><div class=”views-field views-field-title views-field-field-shareholder”><span class=”field-content”>Sisters of St. Francis Charitable Trust</span></div>
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Resolution Details

Company:

Eli Lilly and Company

Year:

2024

Issue Area:

Lobbying & Political Contributions

Focus Area:

Lobbying

Status:

Filed

Resolution Text

RESOLVED, the shareholders of Lilly request the preparation of a report, updated annually, disclosing:

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

2. Payments by 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. Lilly’s membership in and payments to any tax-exempt organization that writes and endorses model legislation.

4. Description of management’s and the Board’s decision-making process and oversight for making payments described in sections 2 and 3 above.

For purposes of this proposal, a “grassroots lobbying communication” is a communication directed to the general public that (a) refers to specific legislation or regulation, (b) reflects a view on the legislation or regulation and (c) encourages the recipient of the communication to take action with respect to the legislation or regulation. “Indirect lobbying” is lobbying engaged in by a trade association or other organization of which Lilly is a member.

Both “direct and indirect lobbying” and “grassroots lobbying communications” include efforts at the local, territorial, state and federal levels.

The report shall be presented to the Directors and Corporate Governance Committee and posted on Lilly’s website.

SUPPORTING STATEMENT

Full disclosure of Lilly’s lobbying activities and expenditures is needed to assess whether Lilly’s lobbying is consistent with its expressed goals and shareholder interests. Lilly spent $103,363,850 from 2010 – 2022 on federal lobbying. This figure does not include state lobbying, where Lilly lobbied in all 50 states in 2022. Lilly also lobbies abroad, spending between €900,000–999,000 on lobbying in Europe for 2022.

Companies can give unlimited amounts to third party groups that spend millions on lobbying and undisclosed grassroots activity.1 Unlike many of its peers, Lilly fails to disclose its third-party payments to trade associations and social welfare groups (SWGs), or the amounts used for lobbying, to shareholders. Lilly belongs to the Chamber of Commerce, Business Roundtable, National Association of Manufacturers and Pharmaceutical Research and Manufacturers of America (PhRMA), which together have spent over $2.9 billion on federal lobbying since 1998, and supports SWGs that lobby, like the Alliance for Patient Access (AfPA).2

Lilly’s lack of disclosure presents reputational risk when its lobbying contradicts company public positions. For example, Lilly states it supports more affordable medicines, yet funds PhRMA and AfPA’s opposition to lower prescription drug prices.3 Lilly believes in addressing climate change, yet the BRT lobbied against the Inflation Reduction Act4 and the Chamber reportedly has been a “central actor” in dissuading climate legislation over a two-decade period.5 Lilly opposed Indiana voter restrictions, yet groups have asked Lilly to cut ties with the American Legislative Exchange Council (ALEC) “because of its voter restriction efforts.”6 Lilly is also represented at ALEC by its trade associations, as the Chamber and PhRMA each sit on its Private Enterprise Advisory Council.7

Lilly should expand its lobbying disclosure.

1 https://theintercept.com/2019/08/06/business-group-spending-on-lobbying-in-washington-is-at-least-double-whats-publicly-reported/

2 https://prospect.org/power/astroturf-campaign-attacks-discount-drug-program-for-poor/

3 https://www.opensecrets.org/news/2021/09/pharmaceutical-industry-backs-democratic-holdouts-on-drug-pricing-plan/; https://nonprofitquarterly.org/alliance-for-patient-access-not-even-trying-subtlety/

4 https://www.theguardian.com/environment/2022/aug/19/top-us-business-lobby-group-climate-action-business-roundtable.

5 https://www.washingtonpost.com/politics/2023/08/02/climate-group-pushes-big-tech-exit-nations-largest-business-lobby/

6 https://www.thenation.com/article/politics/alec-corporations-democracy/

7 https://ohiocapitaljournal.com/2023/09/06/coming-soon-in-ohio-alec-releases-new-raft-of-model-legislation/

Resolution Details

Company:

Eli Lilly and Company

Year:

2024

Issue Area:

Inclusiveness

Focus Area:

Equal Employment Opportunity (EEO)

Status:

Filed

Resolution Text

BE IT RESOLVED: Shareholders request that Eli Lilly & Co. (Eli Lilly) report to shareholders on the effectiveness of the Company’s diversity, equity, and inclusion efforts. The report should be done at reasonable expense, exclude proprietary information, and provide transparency on outcomes, using quantitative metrics for workforce diversity, hiring, promotion, and retention of employees, including data by gender, race, and ethnicity.

SUPPORTING STATEMENT: Quantitative data is sought so that investors can assess and compare the effectiveness of companies’ diversity, equity, and inclusion programs.

It is advised that this content be provided through Eli Lilly’s existing sustainability reporting infrastructure. An independent report specific to this topic is not requested.

WHEREAS: Companies that release, or have committed to release, more inclusion data than Eli Lilly include: Baxter International, Biogen, CVS Health, Gilead Sciences, Pfizer, and UnitedHealth Group.

As You Sow and Whistle Stop Capital released research in November 2023 that reviewed over 4,500 EEO-1 reports, which show corporate workforce diversity.1 The data shows a positive correlation between manager diversity and corporate performance. Within the healthcare sector, statistically significant positive correlations were found between manager diversity and free cash flow per share, income after tax, long-term growth, and ten-year growth rate.

As of the date of the filing of this proposal, Eli Lilly had not yet shared sufficient hiring, retention, or promotion data to allow investors to determine the effectiveness of its diversity and inclusion programs.

As detailed below, inclusion indicators are also important in assessing Eli Lilly’s workplace equity efforts and if the Company will be able to successfully build, utilize, and retain a diverse management team.

Hiring: Studies conducted by economists at the University of Chicago and UC Berkeley found that “discriminating companies tend to be less profitable,” stating “it is costly for firms to discriminate against productive workers.”2

Promotion: Without equitable promotional practices, companies will be unable to build the necessary employee pipelines for diverse management.Women and employees of color experience “a broken rung” in their careers; for every 100 men who are promoted, only 87 women are. Whereas women of color comprise 18 percent of the entry-level workforce and only 6 percent of executives.3

Retention: Retention rates indicate if employees believe a company represents their best opportunity. Morgan Stanley has found that employee retention above industry average can indicate a competitive advantage and higher levels of future profitability.4 Investors have reason to be concerned about Eli Lilly’s workplace culture given allegations of age discrimination5 and sexual harassment at the Company,6 as well as the loss of an executive team member as a result of an “inappropriate personal relationship.”7

1 https://www.asyousow.org/report-page/2023-positive-relationships-linking-workforce-diversity-and-financial-performance

2 https://www.nytimes.com/2021/07/29/business/economy/hiring-racial-discrimination.html

3 https://www.mckinsey.com/featured-insights/diversity-and-inclusion/women-in-the-workplace

4 https://www.morganstanley.com/im/publication/insights/articles/article_culturequantframework_us.pdf , p. 2

5 https://www.fiercepharma.com/pharma/lilly-forks-over-24m-settle-federal-agencys-age-discrimination-lawsuit#:~:text=Eli%20Lilly%20will%20pay%20out%20%28PDF%29%20%242.4%20million,prioritize%20recruitment%20of%20more%20millennials%20to%20its%20workforce

6 https://endpts.com/after-dismissing-cfo-over-inappropriate-messages-eli-lilly-faces-new-accusations-of-sexual-harassment/

7 https://www.forbes.com/sites/palashghosh/2021/02/09/eli-lillys-cfo-josh-smiley-resigns-over-inappropriate-relationship-with-employee/?sh=183103643601

Resolution Details

Company:

Eli Lilly and Company

Year:

2024

Issue Area:

Health

Focus Area:

Access & Affordability, Human Rights, Human Rights Policy, Pharmaceutical Prices and Access

Status:

Filed

Resolution Text

RESOLVED, that shareholders of Eli Lilly and Company (“Lilly” or the “Company”) urge the board of directors to adopt a comprehensive human rights policy, referencing internationally recognized human rights standards, that applies to both its own operations and its suppliers that includes the right to health and establishes a process to identify, prevent, mitigate, and remedy adverse human rights impacts, above and beyond supplier audits.

Supporting Statement Lilly currently has a code of conduct (the “Code”) applicable to its suppliers, which refers to nondiscrimination and “uphold[ing] the human and employment rights of workers” and includes Lilly’s expectation that suppliers will “abstain from procuring materials from all conflict areas or sources including the Democratic Republic of Congo.” 1 Similarly, the Pharmaceutical Supply Chain Initiative (“PSCI”) Principles, 2 a link to which appears on Lilly’s website, includes an expectation that suppliers respect workplace human rights. Neither the Code nor PSCI Principles references any internationally recognized human rights standards, nor do they apply to Lilly’s own business and operations, just those of its suppliers.

Although the human rights of workers mentioned in the Code and PSCI Principles are important, we believe that a global pharmaceutical firm like Lilly must also commit to respect the human right to health. The Universal Declaration of Human Rights (“UDHR”) states, “Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including . . . medical care.” 3 Article 12.1 of the International Covenant on Economic, Social, and Cultural Rights (“ICESCR”) “recognize[s] the right of everyone to the enjoyment of the highest attainable standard of physical and mental health.” 4

Target 3.8 of Sustainable Development Goal 3 assesses progress toward “access to safe, effective, quality and affordable essential medicines and vaccines for all.” 5 Insulin has been on the World Health Organization’s essential medicines list since 1977.6 The UN Special Rapporteur on the Right to Health has made clear that responsibility for increasing access to medicines is shared between states and pharmaceutical firms7 and recommends that firms “should adopt a human rights policy statement which expressly recognises the importance of human rights generally, and the right to the highest attainable standard of health in particular.” 8 Novartis has done so, adopting a human rights commitment statement that incorporates the right to health, including access to medicine, and references the UDHR and ICRSCR.9

A process to identify, prevent, mitigate, and remedy adverse human rights impacts–”human rights due diligence”–is a key part of a comprehensive human rights policy. The Code makes no mention of how Lilly evaluates and enforces suppliers’ compliance with the Code’s vague expectations, aside from a reporting hotline. The PSCI Principles contemplate supplier audits, 10 whose effectiveness has been questioned.11 Including a human rights due diligence process in its human rights policy, as Novartis has done, 12 would enable Lilly to identify potential impacts before they occur, track its human rights performance, and embed human rights in its operations.

1 https://assets.ctfassets.net/srys4ukjcerm/1Y51D0izDLx03DFP1mlZps/eaaa5bbc50251e48ff3a020f0e81e6a5/Lilly_SC oBC_2021_EN.pdf

2 https://pscinitiative.org/principles

3 https://www.ohchr.org/en/human-rights/universal-declaration/translations/english

4 www.ohchr.org/en/instruments-mechanisms/instruments/international-covenant-economic-social-and-cultural-rights; https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7605313/

5 www.un.org/en/development/desa/population/migration/generalassembly/docs/globalcompact/A_RES_70_1_E.pdf

6 https://www.thelancet.com/journals/landia/article/PIIS2213-8587(21)00322-3/fulltext

7 https://documents-dds-ny.un.org/doc/UNDOC/GEN/N06/519/97/PDF/N0651997.pdf?OpenElement, paras. 82-93.

8 https://www.ohchr.org/Documents/Issues/Health/GuidelinesForPharmaceuticalCompanies.doc

9 https://www.novartis.com/sites/novartiscom/files/novartis-human-rights-commitment-statement.pdf

10 https://pscinitiative.org/sharedAudits

11 https://www.ajsosteniblebcn.cat/human-rights-due-diligence-in-global-supply-chains_28919.pdf, at 14, https://shiftproject.org/resource/from-audit-to-innovation-advancing-human-rights-in-global-supply-chains/

12 https://www.novartis.com/sites/novartiscom/files/novartis-human-rights-commitment-statement.pdf

Resolution Details

Company:

Eli Lilly and Company

Year:

2024

Issue Area:

Health

Focus Area:

Pharmaceutical Patents, Pharmaceutical Prices and Access

Status:

Filed

Resolution Text

RESOLVED, that shareholders of Eli Lilly & Co. (“Lilly”) ask the Board of Directors to establish and report on a process by which the impact of extended patent exclusivities on product access would be considered in deciding whether to apply for secondary and tertiary patents. Secondary and tertiary patents are patents applied for after the main active ingredient/molecule patent(s) and which relate to the product. The report on the process should be prepared at reasonable cost, omitting confidential and proprietary information, and be published on Lilly’s website.

SUPPORTING STATEMENT: According to a 2021 Congressional Research Service report, “Intellectual property rights play an important role in the development and pricing of prescription drugs and biologics.”[1] When patent protection on a drug ends, generic manufacturers can enter the market, reducing prices. According to the report, branded drug manufacturers may try to delay generic competition and impact access by extending their exclusivity periods.

In part because of this behavior, access to medicines is the subject of consistent and widespread public debate in the U.S. A 2021 Rand Corporation analysis concluded that U.S. prices for branded drugs were nearly 3.5 times higher than prices in 32 OECD member countries.[2] The Kaiser Family Foundation has “consistently found prescription drug costs to be an important health policy area of public interest and public concern.”[3]

This high level of concern has driven policy responses. The Inflation Reduction Act (“IRA”) empowers the federal government to negotiate some drug prices, and in fact some have argued it enacts significant patent reform, specifically around the issue this proposal addresses. The IRA provision stating that the only drugs that can be considered for price negotiations are those with no generic competition has the effect of discouraging extended patent exclusivities. One law firm asserts that “prevailing in a patent infringement lawsuit against a forthcoming competitor may no longer be as valuable for a branded drug company because high-expenditure single-source drugs are at risk of being selected for price negotiation if there is no generic or biosimilar competitor on the market.”[4]

Additionally, five bipartisan bills aimed at providing speedier access to generics have been introduced in the Senate:

Ensuring Timely Access to Generics Act of 2023 (S. 1067)
Expanding Access to Low-Cost Generics Act of 2023 (S. 1114)
Increasing Transparency in Generic Drug Applications Act of 2023 (S. 775)
Preserve Access to Affordable Generics and Biosimilars Act of 2023 (S. 142)
Stop STALLING Act of 2023 (S. 148)

In our view, a process that considers the impact of extended exclusivity periods on patient access would ensure that Lilly considers not only whether it can apply for secondary and tertiary patents but also whether it should do so. Such a process could, we believe, bolster Lilly’s reputation and help avoid regulatory blowback resulting from high drug prices and perceptions regarding abusive patenting practices.

[1] https://crsreports.congress.gov/product/pdf/R/R46679

[2] https://www.rand.org/news/press/2021/01/28.html

[3] https://www.kff.org/health-costs/poll-finding/public-opinion-on-prescription-drugs-and-their-prices/

[4] https://www.akingump.com/en/insights/alerts/the-impact-of-the-inflation-reduction-act-of-2022-on-pharmaceutical-innovation-patent-litigation-and-market-entry

Resolution Details

Company:

Eli Lilly and Company

Year:

2023

Issue Area:

Inclusiveness

Focus Area:

Equal Employment Opportunity (EEO)

Status:

Vote

Vote Percentage:

27.10%

Eli Lilly and Company Greater Disclosure of Material Corporate Diversity, Equity and Inclusion Data – Proxy Memo

23.LLY_.1+Eli+Lily+DEI+Proxy+Memo_WEB.pdf

Resolution Text

BE IT RESOLVED: Shareholders request that Eli Lilly and Co. (“Eli Lilly”) report to shareholders on the effectiveness of the Company’s diversity, equity, and inclusion efforts. The report should be done at reasonable expense, exclude proprietary information, and provide transparency on outcomes, using quantitative metrics for hiring, retention, and promotion of employees, including data by gender, race, and ethnicity.

SUPPORTING STATEMENT: Quantitative data is sought so investors can assess and compare the effectiveness of the Company’s diversity, equity, and inclusion programs.

WHEREAS: Eli Lilly has not shared sufficient quantitative hiring, retention, and promotion data to allow investors to determine the effectiveness of its human capital management programs.

Between September 2020 and September 2022, S&P 100 companies increased by 298 percent their release of hiring rate data by gender, race, and ethnicity; retention rate data by 481 percent; and promotion rate data by 300 percent.[1] Companies that release, or have committed to release, more inclusion data than Eli Lilly include CVS Health, Gilead Sciences, Illumina, Pfizer, and UnitedHealth Group.

Numerous studies have pointed to the benefits of a diverse workforce. Their findings include:

There is a positive association between diversity in management and cash flow, net profit, revenue, and return on equity.[2]
Companies in the top quartile for gender diversity are 21 percent more likely to outperform on profitability.[3]
The 20 most diverse companies had an average annual five year-stock return that was 5.8 percentage points higher than the 20 least diverse companies.[4]

Similar to how an income statement pairs with a balance sheet, hiring, promotion, and retention rate data show how well a company manages its workforce diversity. Without this data, investors are unable to assess the effectiveness of a company’s human capital management program.

Companies should look to hire the best talent. However, Black, and Latino applicants face hiring challenges. Results of a meta-analysis of 24 field experiments found that, with identical resumes, White applicants received an average of 36 percent more callbacks than Black applicants and 24 percent more callbacks than Latino applicants.[5]

Promotion rates show how well diverse talent is nurtured at a company. Unfortunately, women and employees of color experience “a broken rung” in their careers; for every 100 men who are promoted, only 86 women are. Women of color are particularly impacted, comprising 17 percent of the entry-level workforce and only four percent of executives.[6]

Retention rates show whether employees choose to remain at a company. Morgan Stanley has found that employee retention above industry average can indicate a competitive advantage and higher levels of future profitability.[7] Companies with high employee satisfaction have also been linked to annualized outperformance of over two percent.[8]

Investors have reason to be concerned as Eli Lilly has faced allegations of age, sex, and race discrimination.

[1] https://www.asyousow.org/our-work/social-justice/workplace-equity

[2] https://www.asyousow.org/report-pages/workplace-diversity-and-financial-performance

[3] Ibid

[4] https://www.wsj.com/articles/the-business-case-for-more-diversity-11572091200

[5] https://hbr.org/2017/10/hiring-discrimination-against-black-americans-hasnt-declined-in-25-years

[6] https://wiw-report.s3.amazonaws.com/Women_in_the_Workplace_2021.pdf

[7] https://www.morganstanley.com/im/publication/insights/articles/article_culturequantframework_us.pdf

[8] https://www.institutionalinvestor.com/article/b1tx0zzdhhnf5x/Want-to-Pick-the-Best-Stocks-Pick-the-Happiest-Companies?utm_medium=email&utm_campaign=The%20Essential%20II%20100721&utm_content=The%20Essential%20II%20100721%20CID_eb103a9e15359075f72a85f7ff534c79&utm_source=CampaignMonitorEmail&utm_term=Want%20to%20Pick%20the%20Best%20Stocks%20Pick%20the%20Happiest%20Companies

Elect Each Director Annually

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