Eli Lilly and Company - Public Policy and Compliance Committee Charter

Public Policy and Compliance Committee Charter

Purpose

The public policy and compliance committee shall review, identify and when appropriate bring to the attention of the board political, social, and legal trends and issues, and compliance matters that may have an impact on the business operations, financial performance or public image of the company. The committee shall also review, monitor and make recommendations to the board on corporate policies and practices that relate to public policy and compliance.

Composition and Term

The committee shall consist of no fewer than three directors, all of whom shall meet the New York Stock Exchange standards for director independence. At least one member of the committee shall serve concurrently on the audit committee. The committee members shall be appointed for one-year terms at the annual meeting of the board. The chairperson shall be designated by the board.

Administrative Matters

The committee shall meet at least five times per year, including semiannual private sessions to discuss compliance and enterprise risk management with the Chief Ethics and Compliance Officer, the General Auditor, and the Vice President of Quality, and at such other times as it determines to be necessary or appropriate. The committee shall meet at least once each year with the audit committee. The committee shall report to the full board of directors at the first board meeting following each committee meeting. The committee may, at any time, retain its own outside advisors at the company's expense. The committee and its members are free to talk directly and independently with any members of management in discharging committee responsibilities. The chairperson may designate any officer or employee of the company for attendance at any committee meeting.

Supporting Corporate Staff

Senior vice president, corporate affairs and communications
Senior vice president, compliance and enterprise risk management and chief ethics compliance officer
Office of the corporate secretary

Duties and Responsibilities

The committee shall have the following duties and responsibilities:

Review policies and practices of the company and monitor compliance in areas of legal and social responsibility and when appropriate report and make recommendations to the board with respect to such policies and practices including those involving:
- environmental protection
- health and safety of employees
- privacy
- employment
- clinical research
- research and development
- sales and marketing
- product quality
- the ethical, social and political aspects of pricing decisions
Together with the audit committee, assist the board in its oversight of legal and regulatory compliance. The audit committee shall have sole oversight over matters of financial compliance (accounting, auditing, financial reporting, and investor disclosures). As to all other areas of compliance ("non-financial compliance"), the public policy and compliance committee shall have oversight responsibilities in the first instance; however, the two committees shall meet jointly at least annually to review the major non-financial compliance matters, including:
- Overall state of compliance
- Significant legal or regulatory compliance exposure
- Material reports or inquiries from regulators.
Review and approve annually the company's annual internal audit plans related to non-financial compliance, manufacturing quality, Good Manufacturing Practices compliance, and Good Clinical Practices compliance.
Receive reports from the Chief Ethics and Compliance Officer at least four times per year, from the General Auditor at least annually, and from the Vice President of Quality as appropriate.
On an annual basis, reach a conclusion as to whether the company has implemented an effective compliance program to meet Federal health care program requirements, FDA requirements, and the obligations of the corporate integrity agreement between the company and the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services (HHS).
Together with the audit committee, review at least annually a summary of the enterprise risk assessment and enterprise risk management processes and policies. The public policy and compliance committee will oversee the process by which enterprise risk management is reviewed by various board committees and the full board. The committee will coordinate its activities with those of the audit committee to assist in ensuring that appropriate disclosures of material risks to the company's business are included in its public financial disclosures in accordance with applicable laws and regulations.
Identify and bring to the attention of the board as appropriate current and emerging political, social and environmental trends and public policy issues that may affect the business operations, performance or public image of the company.
Review and make recommendations to the board regarding proposals of shareholders that relate to matters overseen by the committee.
Review and make recommendations to the board with respect to the company's policy regarding support of charitable, educational and business/trade organizations.
Annually review and assess the effectiveness of the committee and the adequacy of the reporting and information flows it is receiving, and make such changes as are required to maintain and enhance the committee's effectiveness, including recommending to the Directors and Corporate Governance Committee and the board any changes to the committee's charter or membership.