From: LOOTENS_JAMES_B@LILLY.COM
Sent: Friday, October 11, 2002 6:04 PM
To: rule-comments@sec.gov
Subject: S7-31-02

Jonathan G. Katz 
Secretary 
United States Securities and Exchange Commission 
450 Fifth St. N.W. 
Washington, D.C. 20549 


Re:  S7-31-02 -- Ownership Reports and Trading by Officers, Directors, and 
Principal Security Holders 

Dear Sir: 

Eli Lilly and Company appreciates the opportunity to provide comments on the 
above rule implementing the accelerated Section 16 filing deadlines.   

The amendments to Rule 16a-3(g) provide a limited extension to the filing 
deadline for (i) transactions satisfying the Rule 10b5-1(c) affirmative 
defense and (ii) benefit plan Discretionary Transactions under Rule 16b-3(b)(1), 
if, in either case, the reporting person does not select the date of execution.   
As the adopting release states when discussing Discretionary Transactions, extra 
time is needed "where the logistics of plan administration may prevent a 
reporting person from selecting the date of execution." 

Applying the same logic, we believe the extension should also apply to certain 
exempt plan transactions other than Discretionary Transactions.  In particular, 
under the typical deferred compensation plan including a company stock or stock 
unit feature, the reporting person irrevocably elects at the beginning of the 
year to defer some or all of his or her cash compensation into company stock units.  
Thereafter, the stock units are routinely credited to the reporting person's 
account by the plan administrator based on the particular formula or schedule 
set forth in the plan. The reporting person has no control over the date of 
execution and in many cases, no awareness of the date until quarterly or annual 
statements are distributed.   

We believe that a strict two-day deadline is impractical for these routine, 
plan-driven "back-office" transactions that are completely outside the reporting 
person's control.   Based on the "plan administration logistics" rationale for 
the 16a-3(g) extension, we believe these periodic contributions should be given 
at least  the same three-day extension provided for Discretionary Transactions. 

In addition, we see no policy reason not to apply the extension.  These transactions 
are most akin to periodic insider contributions under Qualified Plans, Excess 
Benefit Plans, and Stock Purchase Plans, which are not required to be reported at 
all.  Further, because of the insider's total lack of control over the timing and 
amounts of  the transactions, we doubt that they are of great interest to investors.  
Indeed, from an investor perspective, we suspect that periodic contributions are of 
even less interest than Discretionary Transactions.  Therefore, we do not think that 
a limited extension will be harmful to investors. 

Thank you again for the opportunity to provide these comments. 


Very truly yours, 

James B. Lootens 
Assistant Secretary and Assistant General Counsel 
Eli Lilly and Company