Lilly CEO Tightens His Belt: Getting By on $21M a Year; Private Jet Off Limits for Personal Use

(MoneyWatch)  At first, it seems as if Eli Lilly (LLY) CEO John Lechleiter had to tighten his belt just like the rest of us last year. He didn't get part of his bonus because the stock fell. He asked the board for no raise in 2010 due to "business challenges" faced by the company. And he gave up using Lilly's private aircraft for personal use.

But it's hardly sackcloth and ashes for Lechleiter. A proxy statement filed by the company shows that he's squeaking by on $21 million a year:

(Click to enlarge.) Most of that was in stock awards. Lechleiter's stock awards have doubled since 2007 to $11.2 million. Lilly shareholders didn't do so well, however. In 2009, the stock fell from $40.57 to $35.71, down from a 2007 high of $60.56. Just to restate that: In the period in which Lechleiter's stock awards doubled in value, the stock itself was nearly halved in value.

Lechleiter's compensation is so fantastically elaborate that it's impossible for me to describe to you exactly how his bonuses are paid. Lilly's explanation of Lechleiter's package is 24 pages long, written in single-spaced type, and accompanied by two dozen charts and graphs. Some highlights:

Lagging stock price resulted in no payout of shareholder value award (SVA). Total shareholder return for 2007-2009 failed to meet the threshold for the SVA; as a result, awards granted to executive officers did not pay out.

In light of the business challenges the company currently faces, at Dr. Lechleiter's request, the compensation committee approved that no increases be made to his 2010 salary or incentive targets.

Lechleiter didn't use the corporate jet for vacations last year, and his lieutenants no longer get free rides to boar meetings:

The company aircraft is made available for the personal use of Dr. Lechleiter, where the committee believes the security and efficiency benefits to the company clearly outweigh the expense. Dr. Lechleiter did not use the corporate aircraft for personal flights during 2009.

Until March 1, 2009, the company aircraft was made available to other executive officers for the more limited purpose of travel to outside board meetings. However, the company no longer allows this use.

But while you're standing in line for an economy-class seat, you're unlikely to find yourself standing next to a Lechleiter family member:

Depending on seat availability, family members of executive officers may travel on the company aircraft to accompany executives who are traveling on business. There is no incremental cost to the company for these trips.

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