ELI LILLY AND COMPANY | Eliminate Supermajority Voting Provisions at ELI LILLY AND COMPANY

Status
Filed
AGM date
Previous AGM date
Proposal number
7
Resolution details
Company ticker
LLY
Lead filer
Resolution ask
Adopt or amend a policy
ESG theme
  • Governance
ESG sub-theme
  • Shareholder rights
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Health Care
Company HQ country
United States
Resolved clause
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. 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. 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. 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. 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. 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. 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.

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