SECURITIES AND EXCHANGE COMMISSION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. 1)
Filed by the Registrant xý Filed by a Party other than the Registrant ¨ Check the appropriate box:
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x¨ | | Preliminary Proxy Statement |
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| ¨ | | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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¨ý | | Definitive Proxy Statement |
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| ¨ | | Definitive Additional Materials |
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| ¨ | | Soliciting Material Under Rule 14a-12 |
| Illumina, Inc. |
Illumina, Inc. |
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| ¨ | | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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| ¨ | | Fee paid previously with preliminary materials. |
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| ¨ | | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
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San Diego, California 92122
You are cordially invited to participate in the 20122013 Annual Meeting of Stockholders of Illumina, Inc., which will be held on [Wednesday, ŸMay 29, 2013], 2012, at [Ÿ]10:00 a.m. [Pacific Time. As we did for our meetings in 2010 and 2011, this yearŸ’] Time, at [Ÿs annual meeting will be a completely virtual meeting of stockholders.]. You may find details regarding the business
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To participate, vote, or submit questions during the annual meeting via live webcast, please visit www.virtualshareholdermeeting.com/ilmn2013. You will not be able to attend the annual meeting in person. |
We are also pleased to be conducted infurnishing our proxy materials to stockholders primarily over the accompanying NoticeInternet. We believe this process will expedite stockholders’ receipt of Annual Meeting and Proxy Statement.Thisthe materials, lower the costs of our annual meeting, is of particular importanceand conserve natural resources. On or about April10, 2013, we will mail to all of Illumina’sour stockholders becausea notice containing instructions on how to access our 2013 Proxy Statement and our 2012 Annual Report on Form 10-K and how to vote by phone or online. The notice also will include instructions on how you can receive a paper copy of the ongoing and unsolicited attempt by CKH Acquisition Corporation (“Roche”), an indirect, wholly owned subsidiaryproxy materials, including the notice of Roche Holding Ltd, to acquire Illumina. As you may already know, Roche has launched an unsolicited tender offer to acquire all shares of Illumina’s common stock for $44.50 per share in cash.
Illumina’s Board of Directors has thoroughly reviewed the terms and conditions of Roche’s offer with Illumina’s financial and outside legal advisors and has unanimously determined that Roche’s offer is inadequate to Illumina’s stockholders and that the acceptance of the offer is not in the best interests of Illumina or its stockholders.In considering Roche’s offer, it is important to recognize that, unlike Illumina’s Board of Directors, Roche’s officers and directors have a duty to act in the best interests of Roche, not of Illumina’s stockholders. It is in Roche’s economic interest to acquire Illumina at the lowest possible value to Illumina’s stockholders. In other words, the interests of Roche and of Illumina’s stockholders are diametrically opposed.
In an attempt to pressure Illumina’s Board of Directors to give favorable consideration to Roche’s offer, Roche notified us and publicly announced that it intends to oppose the re-election of the four directors whose terms expire at the 2012 annual meeting, including our Chairman2013 Proxy Statement, and proxy card. If you received your proxy materials by mail, the notice of the Board and our Chief Executive Officer, all of whom were nominated for re-election by Illumina’s full Board of Directors. Instead, Roche is proposing to nominate for election to Illumina’s Board of Directors four individuals who have been selected and compensated for their service as nominees by Roche and who have no prior connection to Illumina. Roche also notified us and publicly announced that it intends to propose at the annual meeting, certain amendments to our bylaws that, among other things, would result in an increase in the size of Illumina’s Board of Directors2013 Proxy Statement, and proxy card from nine to eleven directors and allow only stockholders to fill newly created directorships. Roche is also proposing to nominate two additional individuals to fill the new directorships that its proposals would create. In the event that all of Roche’s proposals are adopted, and all of Roche’s nominees are elected, Roche’s nominees would constitute a majority of Illumina’s Board of Directors.
We strongly urge you to support Illumina’s current directors for re-election to Illumina’s Board of Directors and to reject Roche’s efforts to “pack” our Board of Directors were enclosed. If you received your proxy materials via e-mail, the e-mail contained voting instructions and links to the 2013 Proxy Statement and 2012 Annual Report on Form10-K on the Internet. We encourage you to read our 2012 Annual Report on Form10-K, which includes information on our operations, products, and services, as well as our audited financial statements.
Of particular importance this year is Proposal4, which requests stockholder approval of an amendment to our 2005 Stock and Incentive Plan under which we grant equity to our employees. Equity is a fundamental part of our compensation philosophy, and our success is dependent, in large part, on our ability to attract, retain, and motivate high-performing employees. We strongly believe that offering incentives in the form of equity awards is critical to our ability to do so and aligns the interests of our employees, including our executives, with its nominees.those of our stockholders. We take a disciplined approach to the management of our compensation programs. We have proactively managed the overall affordability of our equity compensation programs to prevent dilutive effects to our stockholders and have returned a significant amount of cash to our stockholders through stock repurchases. We believe that Illumina’s directors, including those who are upthe proposed amendment to our 2005 Stock and Incentive Plan is essential to our ability to achieve our objectives and to continue to create long-term value for re-election at the annual meeting and have been nominated by Illumina’sour stockholders. Therefore, Illumina’s Board of Directors with their extensive relevant and diverse experience, best represents the interests of Illumina’s stockholders. We believe Roche’s nominees have been nominated solely to facilitate the acquisition of Illumina at an inadequate price.Accordingly, Illumina’s Board of Directors unanimously recommends that you voteFOR its four nominees:
Illumina’s Board of Directorsstrongly urges you NOT to sign or return any [gold] proxy cards sent by Roche.If you have previously voted a [gold] proxy card from Roche, you can revoke that earlier proxy and vote for Illumina’s nominees and on the other matters to be voted on at the annual meeting by referring to the instructions on the enclosedWHITE proxy card to submit your vote by telephone or Internet, or by signing, dating and returning theWHITE proxy card in the postage-paid envelope provided.
“FOR” this proposal.
In addition to the Board of Directors elections,proposed amendment to our 2005 Stock and Incentive Plan, the agenda for this year’syear’s annual meeting includes the following agenda items: |
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Agenda Item | | Board Recommendation |
Election of Directors’
Recommendationthree director nominees | | FOR |
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| Ratification of Ernst & Young LLP as our independent registered public accounting firm | | FOR |
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| Advisory vote on executive compensation | | FOR |
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Please refer to the 2013 Proxy Statement for detailed information on each of the proposals and the annual meeting. Your vote is important, and we strongly urge you to cast your vote as soon as possible.
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| Sincerely, | |
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| JAY T. FLATLEY | |
| President and Chief Executive Officer |
TABLE OF CONTENTS
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| | 5200 Illumina Way San Diego, California 92122 | | | |
| | NOTICE OF ANNUAL MEETING OF STOCKHOLDERS | | | |
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| TIME AND DATE | | 10:00 a.m. (Pacific Time) on Wednesday, May 29, 2013 | |
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| PLACE | | Online only at: www.virtualshareholdermeeting.com/ilmn2013 | |
| | | You will not be able to attend the annual meeting in person. | |
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| MEETING ADMISSION | | To participate, vote, or submit questions during the annual meeting via live webcast, please visit www.virtualshareholdermeeting.com/ilmn2013 and be sure to have your 12-digit control number (included in your Notice of Internet Availability of Proxy Materials).
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| AGENDA | | (1)Elect three nominees to the Board of Directors; (2)Ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 30, 2012 | | FOR29, 2013; |
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(3)Hold an advisory vote to approve the compensation of the “named“named executive officers”officers” as disclosed in the Proxy Statement | | Statement; FOR(4)
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Consider Roche’s proposal to amend our bylaws to increase the number of directors on the Board of Directors | | AGAINST |
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Consider Roche’s proposal to amend our bylaws to require that newly created directorships be filled only by a stockholder vote | | AGAINST |
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Consider Roche’s proposal to fill the two newly created directorships with its nominees, if Roche’s Board expansion proposal is approved | | AGAINST |
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Consider Roche’s proposal to repeal any bylaw amendments adopted by Illumina’s Board of Directors without stockholder approval after April 22, 2010 | | AGAINST |
Please refer to the 2012 Proxy Statement for detailed information on each of the proposals and the annual meeting.
Your vote is important. Whether or not you plan to attend the annual meeting, we strongly urge you to cast your vote as soon as possible. You may vote by telephone or Internet, or by signing, dating and returning the enclosedWHITEproxy card in the postage-paid envelope provided. Please refer to theWHITE proxy card for easy voting instructions.
Sincerely,
JAY T. FLATLEY
President and Chief Executive Officer
TABLE OF CONTENTS
5200 Illumina Way
San Diego, California 92122
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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TIME AND DATE
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PLACE
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MEETING ADMISSION
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AGENDA
| | (1) Elect four individualsApprove an amendment to the Board of Directors;
(2) Ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 30, 2012;
(3) Hold an advisory vote to approve the compensation of the “named executive officers” as disclosed in the Proxy Statement;
(4) Consider the proposal by CKH Acquisition Corporation (“Roche”), an indirect, wholly owned subsidiary of Roche Holding Ltd, to amend our bylaws to increase the number of directors on the Board of Directors;
Illumina, Inc. 2005 Stock and Incentive Plan; and
(5) Consider Roche’s proposal to amend our bylaws to require that newly created directorships be filled only by a stockholder vote;(6) Consider Roche’s proposal to fill the two newly created directorships with its nominees, if Proposal 4 is approved;
(7) Consider Roche’s proposal to repeal any bylaw amendments adopted by Illumina’s Board of Directors without stockholder approval after April 22, 2010; and
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Transact such other business as may properly come before the meeting by or at the direction of the Board of Directors and any adjournment or postponement thereof. | |
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RECORD DATE
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VOTING
| | All stockholders
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| RECORD DATE | | April 2, 2013 | |
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| VOTING | | Please vote as soon as possible to record your vote promptly, even if you plan to participate in the meeting via live webcast. Your broker will NOT be able to vote your shares with respect to the election of the close of business on the record date are cordially inviteddirectors or amending our 2005 Stock and Incentive Plan if you have not given your broker specific instructions to attenddo so. We strongly encourage you to vote. You have three options for submitting your vote before the annual meeting, but whethermeeting:
•Internet;
•Phone; or not you attend, we urge you to review these materials carefully and to vote as promptly as possible by Internet, by telephone, or by signing, dating and returning yourWHITE proxy card.
ILLUMINA’S BOARD•Mail
WHETHER OR NOT YOU PLAN TO PARTICIPATE IN THE MEETING VIA LIVE WEBCAST, PLEASE CAST YOUR VOTE AS PROMPTLY AS POSSIBLE. THIS WILL HELP ENSURE THE PRESENCE OF DIRECTORS STRONGLY URGES YOU NOT TO SIGN OR RETURN ANY [GOLD] PROXY CARD SENT TO YOU BY ROCHE. If you have voted a [gold] proxy card sent to you by Roche, you can revoke that earlier proxy and vote for Illumina’s Board of Directors’ nominees and on the other matters to be voted on at the annual meeting by referring to the instructions on the enclosedWHITEproxy card to submit your vote by telephone or Internet, or by signing, dating and returning theWHITE proxy card in the postage-paid envelope provided. Only the latest dated proxy you submit will be counted.A QUORUM.
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| San Diego, California [Ÿ], 2012
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PRELIMINARY PROXY STATEMENT DATED MARCH 1, 2012, SUBJECT TO COMPLETION
San Diego, California 92122
FOR THE ANNUAL MEETING OF STOCKHOLDERS
To Be Held on[ŸMay 29, 2013],
We are providing these proxy materials in connection with Illumina, Inc.’s 2013 Annual Meeting of Stockholders. The Notice of Internet Availability of Proxy Materials, this proxy statement, any accompanying proxy card or voting instruction card, and our 2012 Annual Report on Form 10-K were first made available to stockholders on or about April 10, 2013. This proxy statement is furnished in connection withcontains important information for you to consider when deciding how to vote on each of the solicitation of proxies at the direction of Illumina’s Board of Directors for usematters to be acted upon at the annual meetingmeeting. Please read it carefully.
INTERNET AVAILABILITY OF PROXY MATERIALS
We are furnishing proxy materials to our stockholders primarily on the Internet rather than mailing printed copies of those materials to each stockholder. If you received a Notice of Internet Availability of Proxy Materials by mail, you will not receive a printed copy of the proxy materials unless you request one. Instead, the Notice of Internet Availability of Proxy Materials will instruct you as to how you may access and review the proxy materials and cast your vote via the Internet or by telephone. If you received a Notice of Internet Availability of Proxy Materials by mail and would like to receive a printed copy of our proxy materials, please follow the instructions included in the Notice of Internet Availability of Proxy Materials. Other stockholders, in accordance with their prior requests, have received e-mail notification of how to be held on [access our proxy materials and vote via the Internet, or have been mailed paper copies of our proxy materials and proxy card or vote instruction form. If you have previously elected to receive our proxy materials electronically, you will continue to receive these materials via e-mail unless you elect otherwise.
Ÿ], 2012 at [Ÿ].This proxy statement and
the enclosed formour 2012 Annual Report on Form10-K are available at www.proxyvote.com. In addition, if you have not received a paper copy of our proxy are expectedmaterials and would like to be mailed on or about [Ÿ], 2012. Stockholders of record at the close of business on [Ÿ], 2012 will be entitled to vote at the annual meeting. At the close of business on [Ÿ], 2012, [Ÿ] shares of common stock, par value $0.01 per share, were outstanding and entitled to vote. Stockholders are entitled toreceive one vote per share. |
IMPORTANT
YOUR VOTE IS EXTREMELY IMPORTANT THIS YEAR IN LIGHT OF THE PROXY CONTEST
BEING WAGED BY CKH ACQUISITION CORPORATION (“ROCHE”), AN INDIRECT WHOLLY OWNED SUBSIDIARY OF ROCHE HOLDING LTD
Whether or not you plan to attend the annual meeting and regardless of the number of shares you own, we urge you to vote promptly as follows by referring to the instructions on the enclosedWHITE proxy card to submit your vote by telephone or Internet, or by signing, dating and returning theWHITE proxy card in the postage-paid envelope provided:
(1) FOR the election of the following four individuals nominated by Illumina’s Board of Directors to serve as directors for three years until the 2015 annual meeting of stockholders: A. Blaine Bowman, Karin Eastham, Jay T. Flatley and William H. Rastetter;
(2) FOR the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 30, 2012;
(3) FOR the approval, on an advisory basis, of the compensation of the “named executive officers” as disclosed in this proxy statement;
(4) AGAINST Roche’s proposal to amend our bylaws to increase the number of directors on the Board of Directors;
(5) AGAINST Roche’s proposal to amend our bylaws to require that newly created directorships be filled only by a stockholder vote;
(6) AGAINST Roche’s proposal to fill the two newly created directorships with its nominees, if Proposal 4 is approved; and
(7) AGAINST Roche’s proposal to repeal any bylaw amendments adopted by Illumina’s Board of Directors without stockholder approval after April 22, 2010.
Illumina’s Board of Directors strongly urges youNOT to sign or return any [gold] proxy card sent to you by Roche. If you have previously voted a [gold] proxy card sent to you by Roche, you may change your vote by referring to the instructions on theWHITE proxy card to submit your vote by telephone or Internet, or by signing, dating and returning the enclosedWHITE proxy card in the postage-paid envelope provided. Only the latest dated proxy you submit will be counted.
If you have any questions, please contact our proxy solicitation firm:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, NY 10022
Stockholders May Call Toll-Free: (888) 750-5835
Banks & Brokers May Call Collect: (212) 750-5833
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ABOUT THE 2012 ANNUAL MEETING
Roche Proxy Contest and Tender Offer
What proposals are to be presented at the annual meeting?
The purpose of the annual meeting isor for future stockholder meetings, you may request copies as follows:
By telephone: call 1-800-579-1639 free of charge and follow the instructions;
By Internet: go to (i) elect four individualswww.proxyvote.com and follow the instructions; or
By e-mail: send an e-mail message to sendmaterial@proxyvote.com. Please send a blank e-mail and put the Board12-digit control number located in your Notice of Directors; (ii) ratifyInternet Availability of Proxy Materials in the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 30, 2012; (iii) hold an advisory vote to approve the compensation of the “named executive officers” as disclosed in this proxy statement; and (iv) transact such other business as may properly come beforesubject line.
PARTICIPATING IN THE ANNUAL MEETING
We will be hosting the annual meeting by or atlive via Internet webcast. You will not be able to attend the directionmeeting in person. A summary of the Boardinformation you need to attend the meeting online is provided below:
Any stockholder can listen to the meeting and participate live via webcast at www.virtualshareholdermeeting.com/ilmn2013
Webcast will begin at 10:00 a.m., Pacific Time, on May29, 2013
Stockholders may vote and submit questions during the meeting via live webcast
Please have your 12-digit control number to enter the meeting
If you do not have your 12-digit control number, you will be able to listen to the meeting only — you will not be able to vote or submit questions during the meeting
Instructions on how to connect and participate via the Internet, including how to demonstrate proof of Directors, including any adjournment or postponement thereof. Eachstock ownership, are posted at www.virtualshareholdermeeting.com/ilmn2013
Questions regarding how to connect and Roche has proposed a separate slateparticipate via the Internet will be answered by calling 1-855-449-0991 on the day before the meeting and the day of nominees for electionthe meeting
Webcast replay of the meeting will be available until 11:59p.m. Eastern Time on May28, 2014 atwww.virtualshareholdermeeting.com/ilmn2013
ABOUT THE 2013 ANNUAL MEETING
Can I attend the annual meeting. Atmeeting?
We will be hosting the 2013 annual meeting live via the Internet. You will not be able to attend the meeting in person. Any stockholder can listen to and participate in the annual meeting our stockholderslive via the Internet at www.virtualshareholdermeeting.com/ilmn2013. The webcast will also be asked to consider Roche’s proposals to (i) amend our bylaws to increase the number of directorsstart at 10:00 a.m., Pacific Time, on the Board of Directors; (ii) amend our bylaws to require that newly created directorships be filled only by a stockholder vote; (iii) fill the two newly created directorships (if Roche’s board expansion proposal is approved) with Roche’s nominees;May29, 2013. Stockholders may vote and (iv) repeal any bylaw amendments adopted by Illumina’s Board of Directors without stockholder approval after April 22, 2010.Roche has filed a preliminary proxy statement with the U.S. Securities and Exchange Commission (“SEC”). You may receive soliciting materials from Roche. Our Board of Directors urges youNOT to sign or return any [gold] proxy card sent to you by Roche.
What does Illumina’s Board of Directors recommend?
Illumina’s Board of Directors unanimously recommends the following votes, using theWHITEproxy card:
| (1) | FORthe election of the following four individuals nominated by Illumina’s Board of Directors to serve as directors for three years until the 2015 annual meeting of stockholders: |
| (2) | FORthe ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 30, 2012; |
| (3) | FORthe approval, on an advisory basis, of the compensation of the “named executive officers” as disclosed in this proxy statement; |
| (4) | AGAINST Roche’s proposal to amend our bylaws to increase the number of directors on the Board of Directors; |
| (5) | AGAINSTRoche’s proposal to amend our bylaws to require that newly created directorships be filled only by a stockholder vote; |
| (6) | AGAINSTRoche’s proposal to fill the two newly created directorships with its nominees, if Proposal 4 is approved; and |
| (7) | AGAINST Roche’s proposal to repeal any bylaw amendments adopted by Illumina’s Board of Directors without stockholder approval after April 22, 2010. |
Illumina’s Board of Directors strongly urges youNOT to sign or return any [gold] proxy card sent to you by Roche. It willNOT help your Board of Directors if you submit proxies to Roche on its [gold] proxy card voting “Against” or “Withhold” on Roche’s nominees. That will, in fact, cancel any previous vote you cast. The only way to support your Board of Directors’ nominees is to vote FOR your Board of Directors’ nominees on theWHITE proxy card.
Why is Illumina’s Board of Directors recommending against Roche’s proposals?
Roche’s Director Nominees and Board of Directors Expansion Proposals.In the event that all of Roche’s proposals are adopted, and should all of Roche’s nominees be elected, Roche’s nominees would constitute a majority of Illumina’s Board of Directors.
We strongly believe that the individuals selected and compensated by Roche would have conflicts of interest if elected to Illumina’s Board of Directors. We believe their ability to be independent is seriously compromised because each of Roche’s nominees is receiving from Roche $60,000 in cash compensation, as well as reimbursement for out-of-pocket expenses and indemnification for certain expenses in consideration for his agreement to be named as a nominee for this election, and has signed an agreement with Roche, which Roche has failed to furnish to Illumina. We believe Roche’s nominees have been nominated solely to facilitate Roche’s acquisition of Illumina at a price that is inadequate to Illumina’s stockholders. While Roche’s nominees may not be controlled by Roche or obligated to vote as directed by Roche, we believe their objectivity with respect to Roche’s unsolicited offer may be colored by their relationship with Roche, including the compensation and indemnification agreements referenced above. In contrast, we believe that our current Board of Directors, with its extensive relevant and diverse experience, best represents the interests of our stockholders and that the slate of four directors nominated by Illumina’s Board of Directors (including our Chairman and our Chief Executive Officer) should be elected.
Roche’s nominees haveNOT been endorsed by our Board of Directors and we are not responsible for the accuracy of any information provided by or pertaining to Roche contained in any proxy solicitation materials filed or disseminated by, or on behalf of, Roche or for any other statements that Roche may make.
Roche’s proposal to repeal bylaw amendments.Roche’s proposal seeks to repeal all amendments to our bylaws adopted by Illumina’s Board of Directors without stockholder approval after April 22, 2010 and prior to the effectiveness of such proposal without regard to the subject matter of any bylaw amendment in question.
We believe that such an automatic, blanket repeal of any bylaw amendment adopted by the Board of Directors without stockholder approval could have the effect of repealing one or more properly adopted bylaw amendments that Illumina’s Board of Directors determines to be in the best interests of Illumina and its stockholders and adopted in furtherance of its fiduciary duties. In addition, due to the time and expense required to solicit proxies, it might be impracticable for Illumina to obtain stockholder approval between now and the effectiveness of Roche’s approval for a bylaw amendment that Illumina’s Board of Directors has determined to be in the best interests of Illumina and its stockholders and in furtherance of its fiduciary duties within a timeframe necessary to serve the best interests of Illumina and its stockholders.
For this reason,questions while Illumina’s Board of Directors has not amended our bylaws in any manner since April 22, 2010, and does not currently expect to adopt any amendments to our bylaws priorconnected to the annual meeting we believe Roche’s proposal to repeal bylaw amendments represents Roche’s attempt to interfere with our Board of Directors’ ability to act in accordance with its fiduciary duties to you and therefore should be rejected.
It is the Board of Directors’ view that Roche has made each of its proposals solely to facilitate Roche’s acquisition of Illumina at an inadequate price. Please see Proposals 4, 5, 6 and 7 below for further information. We will provide Roche’s contact information and the number of Illumina’s voting securities held by Roche, promptly upon written request to Illumina at Illumina, Inc., 5200 Illumina Way, San Diego, California 92122, Attention: Investor Relations.
What should I do if I receive a proxy card from Roche?
You may receive proxy solicitation materials from Roche, including an opposition proxy statement and [gold] proxy card seeking the election of Roche’s director nominees and approval of other matters proposed by Roche.Illumina’s Board of Directors urges youNOT to sign or return any [gold] proxy card sent by Roche. If you have previously voted a [gold] proxy card sent to you by Roche, you may revoke that earlier proxy and vote for Illumina’s nominees and on the other mattersInternet.
What do I need in order to be voted atable to participate in the annual meeting by referringonline?
You will need the 12-digit control number included on your Notice of Internet Availability of Proxy Materials or your proxy card (if you received a printed copy of the proxy materials) in order to be able to vote your shares or submit questions during the meeting. Instructions on how to connect and participate via the Internet, including how to demonstrate proof of stock ownership, are posted at www.virtualshareholdermeeting.com/ilmn2013. If you do not have your 12-digit control number, you will be able to listen to the instructions on the enclosedWHITE proxy card and submit your vote by telephone or Internet, or by signing, dating and returning theWHITE proxy card in the postage-paid envelope provided. Only the latest dated proxymeeting only — you submit will be counted.What is Illumina’s Board of Directors’ position on the tender offer by Roche?
After careful consideration, including a thorough review of the terms and conditions of Roche’s tender offer with Illumina’s financial and outside legal advisors, Illumina’s Board of Directors has unanimously determined that Roche’s tender offer to acquire each share of Illumina’s common stock for $44.50 per share in cash is inadequate to Illumina’s stockholders and is not in the best interests of Illumina or its stockholders. Illumina’s Board of Directors has unanimously recommended that Illumina’s stockholders reject Roche’s tender offer and not tender their shares of Illumina common stock in the offer.
Illumina’s Board of Directors’ recommendations regarding Roche’s tender offer and reasons for those recommendations are contained in Illumina’s Solicitation/Recommendation Statement on Schedule 14D-9 filed with the SEC on February 7, 2012, as amended from time to time. That filing and related filings are available on the SEC’s website at www.sec.gov. We urge you to read the Schedule 14D-9 (including any amendments and supplements thereto) because it contains important information regarding Roche’s tender offer.
If you have already tendered shares to Roche, you may withdraw them at any time prior to the expiration of Roche’s tender offer. Please see “If I have already tendered my shares of common stock to Roche, can I still withdraw my shares?” below for more information.
You should be aware that if you vote for any of Roche’s proposals or nominees, it would help support Roche’s tender offer, which Illumina’s Board of Directors believes is NOT in the best interest of Illumina’s stockholders.We therefore strongly urge you NOT to return any [gold] proxy card provided to you by Roche.
If Illumina’s director nominees are elected, can I still tender my shares of common stock in Roche’s tender offer?
Yes. If Illumina’s director nominees are elected, you may accept Roche’s tender offer if you so elect and if it has not expired. However, as stated above, your Board of Directors unanimously recommends that you REJECT Roche’s tender offer and not tender your Illumina common stock to Roche.
In addition, you should be aware that Roche has imposed a lengthy list of conditions on its tender offer — some of which are beyond the control of Illumina or Roche. Roche’s obligation to purchase any shares of Illumina common stock in its tender offer is subject to the satisfaction or waiver of these conditions. Therefore, even if Roche’s nominees are elected to Illumina’s Board of Directors, the offer may not be consummated becauseable to vote or submit questions during the conditions to the offer may not have been satisfied or waived. The terms and conditions of Roche’s tender offer are set forth in the Offer to Purchase and the related Letter of Transmittal, both of which are exhibits to the Tender Offer Statement on Schedule TO that Roche filed with the SEC on January 27, 2012, as amended, which is available on the SEC’s website at www.sec.gov. For more details regarding the conditionality of Roche’s tender offer, please see Illumina’s Solicitation/Recommendation Statement on Schedule 14D-9 filed with the SEC on February 7, 2012 (including any amendments and supplements thereto), which is available at the SEC’s website at www.sec.gov.
If I have already tendered my shares of common stock to Roche, can I still withdraw my shares?meeting.
You can withdraw some or all of the shares that you previously tendered in Roche’s tender offer at any time prior to the expiration of the tender offer.WE URGE YOU TO WITHDRAW ANY SHARES YOU HAVE ALREADY TENDERED.For assistance in withdrawing your shares, you can contact your broker or Illumina’s proxy solicitation firm and information agent for the tender offer, Innisfree M&A Incorporated (“Innisfree”), at:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, NY 10022
Shareholders May Call Toll-Free: (888) 750-5835
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The Annual Meeting
What is the purpose of the annual meeting?
At our annual meeting, stockholders will act upon the matters described in this proxy statement. In addition, following the meeting, management will report on the performance of Illumina and respond to questions from stockholders.
Who may attend
What am I voting on at the annual meeting?
Only
Stockholders will be asked to vote on four proposals. The proposals are to:
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| (1) | Elect the two director nominees named in this proxy statement to hold office for three years until the 2016 annual meeting of stockholders and elect the one director nominee named in this proxy statement to hold office for one year until the 2014 annual meeting of stockholders; |
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| (2) | Ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 29, 2013; |
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| (3) | Hold an advisory vote on executive compensation; and |
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| (4) | Approve an amendment to the Illumina, Inc. 2005 Stock and Incentive Plan. |
Could other matters be decided at the annual meeting?
Our bylaws require that we receive advance notice of any proposal to be brought before the annual meeting by our stockholders, and we have not received notice of record on the close of business on [Ÿ], 2012 and our invited guests may attendany such proposals. If any other matter were to come before the annual meeting. Stockholders maymeeting, the proxy holders appointed by the Board of Directors will have the discretion to vote on those matters for you.
What is the recommendation of the Board on each of the matters scheduled to be required to present proofvoted on at the annual meeting?
The Board of ownershipDirectors recommends that you vote:
FOR each of our common stock, along with some form of personal identification (such as a driver’s license or passport), prior to being admittedthe nominees to the annual meeting.Board of Directors (ProposalVoting1);
FOR the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the 2013 fiscal year (Proposal2);
FOR the approval, on an advisory basis, of the compensation of the “named executive officers” as disclosed in this proxy statement (Proposal3); and
FOR the approval of an amendment to the Illumina, Inc. 2005 Stock and Incentive Plan (Proposal4).
Who can vote at the annual meeting?
Only holders of our common stock as of [ŸApril 2, 2013], 2012, the record date, or such holders’ proxies are entitled to notice of and to vote on the matters listed in this proxy statement and the accompanying Notice of Annual Meeting of Stockholders. At the close of business on the record date, there were 124,279,487 shares of common stock outstanding and entitled to vote [Ÿ] shares of common stock.vote. You have one vote for each share of common stock that you hold. A list of stockholders entitled to vote at the annual meeting will be available for examination at our principal executive offices at the address listed above for a period of 10 days prior to the annual meeting, and during the annual meeting such list will be available for examination.Who is conducting this proxy solicitation?
Illumina’s Board of Directors is soliciting your vote for matters being submitted for stockholder approvalexamination at the annual meeting www.virtualshareholdermeeting.com/ilmn2013.
How do I vote?
Stockholders of Record. If you are a stockholder of record, there are several ways for you to vote your shares.
| • | | By Telephone. Simply use a touch-tone telephone to dial the number shown on yourWHITE proxy card and follow the easy voice prompts. You will need to reference the Control Number shown on theWHITEproxy card.
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| • | | Via the Internet. Simply access the website indicated on yourWHITE proxy card and follow the easy prompts. You will need to reference the Control Number shown on theWHITE proxy card.
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| • | | By Mail. You may submit your vote by completing, signing, and dating eachWHITE proxy card received and returning it in the postage-paid envelope provided. Please sign your name exactly as it appears on the proxy card.
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During the Annual Meeting. You may vote by ballot in person at the annual meeting. Please note that even if you intend to vote in person at the annual meeting, we recommend that you still submit your proxy promptly to ensure that your shares are represented. Your vote by ballot at the annual meeting will revoke any prior proxy.
The Internet and telephone voting procedures described above, which comply with Delaware law, are designed to authenticate stockholders’ identities, to allow stockholders to vote their shares, and to confirm that their instructions have been properly recorded. Your vote by telephone or by Internet authorizes the named proxies to vote your shares in the same manner as if you had marked, dated, signed and returned a proxy card.
Beneficial Owners. If you are a beneficial owner of your shares, you should have received proxy materials from the broker or other nominee holding your shares. You should follow the voting instructions provided by your broker or other nominee in order to instruct your broker or other nominee on how to vote your shares. The availability of telephone and Internet voting will depend on the voting process of the broker or other nominee. If you desire to vote your shares in person at the annual meeting, you will need to obtain a legal proxy from your broker or other nominee and present it at the meeting.
What is the difference between holding shares as a stockholder of record and as a beneficial owner?
Stockholders of Record. You are a stockholder of record if at the close of business on the record date your shares were registered directly in your name with Computershare Trust Company, N.A., our transfer agent. Beneficial Owner. You are a beneficial owner if at the close of business on the record date your shares were held by a brokerage firm or other nominee and not in your name. Being a beneficial owner means that, like many of our stockholders, your shares are held in “street“street name.” As the beneficial owner, you have the right to direct your broker or other nominee how to vote your shares by following the voting instructions your broker or other nominee provides. If you do not provide your broker or other nominee with instructions on how to vote yourshares, your broker or other nominee may be able to vote your shares with respect to some of the proposals, but not all. Please see “What“What will happen if I do not vote my shares?” below for additional information.
How do I vote and what are the voting deadlines?
Stockholders of Record. If you are a stockholder of record, there are several ways for you to vote your shares.
Via the Internet. You may vote at www.proxyvote.com, 24 hours a day, seven days a week. You will need the 12-digit control number included on your Notice of Internet Availability of Proxy Materials or your proxy card (if you received a printed copy of the proxy materials). Votes submitted through the Internet must be received by 11:59 p.m., Eastern Time, on May28, 2013.
By Telephone. You may vote using a touch-tone telephone by calling 1-800-690-6903, 24 hours a day, seven days a week. You will need the 12-digit control number included on your Notice of Internet Availability of Proxy Materials or your proxy card (if you received a printed copy of the proxy materials). Votes submitted by telephone must be received by 11:59 p.m., Eastern Time, on May28, 2013.
By Mail. If you received printed proxy materials, you may submit your vote by completing, signing, and dating each proxy card received and returning it in the prepaid envelope. Sign your name exactly as it appears on the proxy card. Proxy cards submitted by mail must be received no later than May28, 2013, to be voted at the annual meeting.
During the Annual Meeting. Instructions on how to vote while participating in our annual meeting live via the Internet are posted at www.virtualshareholdermeeting.com/ilmn2013.
The Internet and telephone voting procedures described above, which comply with Delaware law, are designed to authenticate stockholders’ identities, to allow stockholders to vote their shares, and to confirm that their instructions have been properly recorded.
Beneficial Owners. If you are a beneficial owner of your shares, you should have received a Notice of Internet Availability of Proxy Materials or voting instructions from the broker or other nominee holding your shares. You should follow the instructions in the Notice of Internet Availability of Proxy Materials or voting instructions provided by your broker or nominee in order to instruct your broker or other nominee on how to vote your shares. The availability of telephone and Internet voting will depend on the voting process of the broker or nominee. Shares held beneficially may not be voted during our annual meeting.
Can I revoke or change my vote after I submit my proxy?
Stockholders of Record. If you are a stockholder of record, and you wish to vote for Illumina’s nominees, you may revoke or change your vote at any time before the final vote at the annual meeting by: | • | |
signing and returning a new proxy card with a later date;
signing and returning a newWHITE proxy card with a later date;
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submitting a later-dated vote by telephone or via the Internet;
Internet — only your latest Internet or telephone proxy received by 11:59 p.m., Eastern Time, on May28, 2013, will be counted; participating in the annual meeting live via the Internet and voting in person;again; or
delivering a written revocation to our Corporate Secretary at Illumina, Inc., 5200 Illumina Way, San Diego, California 92122, before the annual meeting.
If you have previously voted a [gold] proxy card sent to you by Roche, you may change your vote at any time by referring to the instructions on theWHITE proxy card to submit your vote by telephone or Internet, or by signing, dating and returning the enclosedWHITE proxy card in the postage-paid envelope provided. Only the latest dated proxy you submit will be counted.Beneficial Owners. If you are a beneficial owner of your shares, you must contact the broker or other nominee holding your shares and follow itstheir instructions for revoking or changing your vote.
What will happen if I do not vote my shares?
Stockholders of Record. If you are the stockholder of record and you do not vote, by proxy card, by telephone, via the Internet before the annual meeting, or during the annual meeting via live webcast, your shares will not be representedvoted at the annual meeting. Beneficial Owners. If you are the beneficial owner of your shares, your broker or other nominee may vote your shares only on those matters on which it has discretion to vote. IfUnder the rules of the New York Stock Exchange, or NYSE, your broker or other nominee provides you with proxy materials in opposition to the Board of Directors’ proxy materials, your broker or other nominee does not have discretion to vote your shares on any matters at the annual meeting. If opposition proxy materials are not forwarded to you by your broker or other nominee, your broker or other nominee still does not have discretion to vote your shares on non-routine matters (Proposalssuch as Proposals 1, 3, 4, 5, 6 and 7).4. However, in this event, your broker or other nominee does have discretion to vote your shares on routine matters (Proposal 2).such as Proposal 2. The broker’s or other nominee’sbroker’s inability to vote on non-discretionary matters for which the broker or other nominee has not received instructions from the beneficial owner is referred to as a “broker“broker non-vote.” Please see “What“What is a ‘broker non-vote’‘broker non-vote’?” below for more information. What is a “broker non-vote”?
The NYSE has rules that govern brokers who are holdershave record ownership of listed company stock (including stock such as ours that is listed on The NASDAQ Global Select Market) held in brokerage accounts for their clients who beneficially own the shares. Under these rules, brokers who do not receive voting instructions from their clients have the discretion to vote uninstructed shares on certain matters (“(“discretionary matters”matters”) but do not have discretion to vote uninstructed shares as to certain other matters (“(“non-discretionary matters”matters”). A broker may return a proxy card on behalf of a beneficial owner from whom the broker has not received instructions that casts a vote with regard to discretionary matters but expressly states that the broker is not voting as to non-discretionary matters. Under current NYSE interpretations, to the extent that your broker does not forward you proxy materials in opposition to the Board of Directors’ proxy materials, Proposals 1, 3, 4, 5, 6 and 74 are considered non-discretionary matters and Proposal 2 is considered a discretionary matter. What is the effect of a broker non-vote?
Broker non-votes will be counted for purposes of calculating whether a quorum is present at the annual meeting, but will not be counted for purposes of determining the number of
sharesvotes present in person or represented by proxy and entitled to vote with respect to a particular proposal. Thus, a broker non-vote will not impact our ability to obtain a quorum and will not otherwise affect the outcome of the vote on a proposal that
requires a plurality of votes cast (Proposal 1 and, if Proposal 4 is approved, but Proposal 5 is not approved, Proposal 6)1) or the approval of a majority of the sharesvotes present in person or represented by proxy and entitled to vote (Proposals 2, 3, 5 and 7)4). However,
Why did I receive a broker non-voteNotice of Internet Availability of Proxy Materials in the mail regarding the Internet availability of proxy materials instead of a full set of printed proxy materials?
Pursuant to rules adopted by the Securities and Exchange Commission, or the SEC, we are making this proxy statement available to our stockholders electronically via the Internet. On or about April10, 2013, we will mail the Notice of Internet Availability of Proxy Materials to our stockholders who held shares at the close of business on the record date, other than those stockholders who previously requested electronic or paper delivery of communications from us. The Notice of Internet Availability of Proxy Materials contains instructions on how to access an electronic copy of our proxy materials, including this proxy statement and our 2012 Annual Report on Form 10-K. The Notice of Internet Availability of Proxy Materials also contains instructions on how to request a proposal that requires the approval of 66 2/3%paper copy of the outstandingproxy statement. We believe that this process will allow us to provide you with the information you need in a timely manner, while conserving natural resources and lowering the costs of printing and distributing our proxy materials.
What does it mean if I receive more than one proxy card or Notice of Internet Availability of Proxy Materials?
If you receive more than one proxy card or Notice of Internet Availability of Proxy Materials, your shares are registered in more than one name or are registered in different accounts. To make certain all of your shares are voted, please follow the instructions included on the Notice of Internet Availability of Proxy Materials on how to access each proxy card and vote each proxy card over the Internet or by telephone. If you received paper proxy materials by mail, please complete, sign and return each proxy card to ensure that all of your shares are voted.
Can I vote my shares by filling out and returning the Notice of Internet Availability of Proxy Materials?
No. The Notice of Internet Availability of Proxy Materials only identifies the items to be voted on at the annual meeting. You cannot vote by marking the Notice of Internet Availability of Proxy Materials and returning it. The Notice of Internet Availability of Proxy Materials provides instructions on how to cast your vote. For additional information please see “How do I vote and what are the voting securities, voting together as a single class (Proposal 4), or the approval of a majority of the shares issued and outstanding and entitled to vote thereon (Proposal 6 if Proposals 4 and 5 are approved) will have the same effect as a vote AGAINST such proposal.deadlines?
” above. How is a quorum obtained, and why is a quorum required?
We will hold the annual meeting if a quorum is present. A quorum will be present if holders of a majority of the outstanding shares of common stock entitled to vote on a matter at the annual meeting are present or represented by proxy at the meeting. As of the close of business on the record date, we had [Ÿ124,279,487] shares of common stock outstanding and entitled to vote at the annual meeting, meaning that [Ÿ62,139,744] shares of common stock must be represented in person or by proxy to have a quorum. If a quorum is not present at the annual meeting, the meeting may be adjourned from time to time until a quorum is obtained. If you are a stockholder of record and submit a proxy, your shares will be counted to determine whether we have a quorum even if you abstain or fail to provide voting instructions on any of the proposals described in this proxy statement and listed on the proxy card. If your shares are held in the name of your broker or other nominee, and you do not tell your broker or other nominee how to vote your shares, these shares will be counted for purposes of determining the presence or absence of a quorum for the transaction of business.
How many votes are required to approve each proposal?
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| Proposal | | Vote Required | | Votes that May be Cast | | Board of
Directors
Directors’ Recommendation |
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Proposal 1 — Election of four individualsthree nominees to the Board of Directors | | The fourthree directors who receive the most votes will be elected | | WITHHOLD as to all ALL nominees FOR all nominees except ALL EXCEPT those specific nominees from whom you WITHHOLD your vote A withhold vote will have the same effect as an abstention However, neither an abstention nor a withhold vote will affect the outcome of the election.election | | FOR ALL |
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Proposal 2 — Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 30, 201229, 2013 | | Majority of the shares present in person or represented by proxy and entitled to vote on the proposal | | If you abstain from voting on this proposal, the abstention will have the same effect as an against vote | | FOR |
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Proposal | | Vote Required | | Votes that May be Cast | | Board of
Directors
Recommendation |
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| Proposal 3 — Advisory vote to approve the compensation of the “named executive officers” as disclosed in this proxy statement | | Majority of the shares present in person or represented by proxy and entitled to vote on the proposal | | If you abstain from voting on this proposal, the abstention will have the same effect as an against vote | | FOR |
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Proposal 4 — Roche’s proposalApproval of an amendment to amend our bylawsthe Illumina, Inc. 2005 Stock and Incentive Plan to increase the number of directors on shares available for issuance by 5,000,000 shares and to extend the Boardtermination date of Directors | | Sixty-six and two-thirds percent (66 2/3%) of Illumina’s outstanding voting securities, voting together as a single class | | FOR
AGAINST
ABSTAIN
If you abstain from voting on this proposal, the abstention will have the same effect as an against vote
| | AGAINST |
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Proposal 5 — Roche’s proposal to amend our bylaws to require that newly created directorships be filled only by a stockholder voteplan until June 28, 2016 | | Majority of the shares present in person or represented by proxy and entitled to vote on the proposal | | If you abstain from voting on this proposal, the abstention will have the same effect as an against vote | | AGAINST |
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Proposal 6 — Roche’s proposal to fill the two newly created directorships with Roche’s nominees, to the extent Proposal 4 is approved | | To the extent Proposals 4 and 5 are approved: Majority of the shares issued and outstanding and entitled to vote on the proposal
If Proposal 4 is approved and Proposal 5 is not approved: Plurality of votes cast.
| | FOR
AGAINST
ABSTAIN
If Proposals 4 and 5 are approved and you abstain from voting on this proposal, the abstention will have the same effect as an against vote
If Proposal 4 is approved, Proposal 5 is not approved and you abstain from voting on this proposal, the abstention will have the same effect as a withhold vote.
| | AGAINST |
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Proposal 7 — Roche’s proposal to repeal any bylaw amendments adopted by Illumina’s Board of Directors without stockholder approval after April 22, 2010 | | Majority of the shares present in person or represented by proxy and entitled to vote on the proposal | | FOR
AGAINST
ABSTAIN
If you abstain from voting on this proposal, the abstention will have the same effect as an against vote
| | AGAINSTFOR |
It will NOT help your Board of Directors if you submit a proxy to Roche on its [gold] proxy card, even if you vote “Against” or “Withhold” on Roche’s nominees. That will, in fact, cancel any previous vote you cast. The only way to support your Board of Directors’ nominees is to vote FOR the Board of Directors’ nominees on theWHITE proxy card.
How can I find the voting results of the annual meeting?
Voting
Preliminary results based onwill be announced at the preliminary tabulation of the Inspectors of Electionannual meeting. Final results also will be published in a current report on a Form 8-K to be filed with the SEC within four business days after the annual meeting. FinalIf the official results alsoare not available at that time, we will provide preliminary voting results in the Form 8-K and will provide the final results in an amendment to the Form 8-K as soon as they become available.
Who is conducting this proxy solicitation?
Illumina’s Board of Directors is soliciting your vote for matters being submitted for stockholder approval at the annual meeting. Solicitation may be made by our directors, officers, and selected other Illumina employees telephonically, electronically, or by other means of communication, and by Innisfree M&A Incorporated, whom we have hired to assist in the solicitation and distribution of proxies. Directors, officers, and employees who help us in the solicitation will not be specially compensated for those services, but they may be reimbursed for their out-of-pocket expenses incurred in connection with the solicitation. Innisfree M&A Incorporated will receive a fee of $17,500, plus reasonable out-of-pocket costs and expenses, for its services. Brokerage houses, nominees, fiduciaries, and other custodians will be published on a Form 8-Krequested to forward soliciting materials to beneficial owners and will be filed with the SEC promptly upon final certification by the Inspectorsreimbursed for their reasonable out-of-pocket expenses incurred in sending proxy materials to beneficial owners.
COMPANY INFORMATION AND MAILING ADDRESS
We were incorporated in California in April 1998 and reincorporated in Delaware in July 2000. Our principal executive offices are located at 5200 Illumina Way, San Diego, California 92122. Our telephone number is (858) 202-4500. Our website address iswww.illumina.com. References in this proxy statement to “Illumina,” “Company,” “we,” “us,” and “our” refer to Illumina, Inc. and our consolidated subsidiaries, unless the context requires otherwise. Information on our website is not incorporated into this proxy statement.
ROCHE’S OFFER AND PROXY SOLICITATIONRoche’s Tender Offer
On January 27, 2012, Roche commenced an unsolicited offer to acquire all outstanding shares
On January 3, 2012, Dr. Franz Humer, the Chairman of Roche Holding Ltd, sent a letter to Dr. Rastetter and Mr. Flatley making an unsolicited written offer to acquire Illumina for $40.00 per share in cash.
On January 24, 2012, Dr. Humer contacted Dr. Rastetter telephonically and stated that Roche had decided to increase its offer to $44.50 per share and to simultaneously make that offer public.
On January 24, 2012, Dr. Humer sent a letter to Dr. Rastetter and Mr. Flatley to confirm Roche’s unsolicited offer to acquire Illumina for $44.50 per share in cash.
The purpose of Roche’s tender offer, as stated by Roche, is to acquire control of, and the entire equity interest in, Illumina. Roche has also stated that it intends, as soon as practicable after the consummation of its tender offer, to seek to consummate a merger of CKH Acquisition Corporation (or one of its affiliates) with Illumina.
After careful consideration, including a thorough review of the terms and conditions of Roche’s tender offer with Illumina’s financial and outside legal advisors, Illumina’s Board of Directors, by unanimous vote at a meeting held on February 7, 2012, determined that Roche’s tender offer is inadequate to Illumina’s stockholders and that Roche’s offer is not in the best interests of Illumina or its stockholders. Illumina’s Board of Directors unanimously recommended that Illumina’s stockholders reject Roche’s tender offer and not tender their Illumina common stock in the offer. In reaching this conclusion, the Board of Directors took into consideration, among other things, the factors set forth in Illumina’s Solicitation/Recommendation Statement on Schedule 14D-9 filed with the SEC on February 7, 2012, as amended from time to time (“Schedule 14D-9”) which is available on the SEC’s website atwww.sec.gov.
A more detailed description of the background of Roche’s offer and the Board of Directors’ reasons for rejecting and recommendations regarding Roche’s offer can be found in Illumina’s Schedule 14D-9. Free copies may be obtained by directing a request to Illumina, Inc., Attn: Investor Relations, Kevin Williams, MD, kwilliams@illumina.com.
Background of the Proxy Solicitation
On January 24, 2012, Roche sent Illumina a letter stating, among other things, that Roche planned to nominate a slate of candidates for election to the Board and to make certain other proposals for the consideration of Illumina’s stockholders at the annual meeting, which, if adopted, would result in directors nominated by Roche comprising a majority of the Board. Later that day, Roche issued a press release stating, among other things, that Roche intended to nominate a slate of candidates for election to the Board and to propose certain other matters for the consideration of Illumina’s stockholders at the annual meeting. The press release included the text of Roche’s letter.
On January 31, 2012, Roche submitted to Illumina a notice of its nomination of a slate of four nominees for election to the Board at the annual meeting and five alternate nominees and proposals (i) to amend Illumina’s bylaws to increase the size of the Board from nine members to eleven members, (ii) to amend Illumina’s bylaws to require that newly created directorships be filled only by a stockholder vote, (iii) to fill the two newly created directorships with Roche’s nominees, if Roche’s Board expansion proposal is approved and (iv) to repeal all amendments to Illumina’s bylaws adopted by Illumina’s Board without stockholder approval since April 22, 2010. Later that day, Illumina issued a press release that confirmed Roche’s submission, and indicated, among other things, that the current Board consists of nine highly qualified directors (including eight independent directors and Mr. Flatley, who, in addition to his executive titles, is a substantial Illumina stockholder) and that the Board will continue to act independently and in the best interests of Illumina’s stockholders.
On February 3, 2012, Illumina sent Roche a letter to acknowledge receipt of the notice sent by Roche on January 31, 2012 and to confirm Illumina’s nominees to the Board of Directors.
On February 16, 2012, Roche filed with the SEC a preliminary proxy statement that included the proposals, as set forth above.
Legal Proceedings
On January 30, 2012, a putative class and derivative action entitledErste-Sparinvest Kapitalanlagegesellschaft M.B.H. v. Rastetter et al. was filed by an alleged stockholder of Illumina in the Superior Court of the State of California, County of San Diego, against William H. Rastetter, Jay T. Flatley, A. Blaine Bowman, Daniel M. Bradbury, Karin Eastham, Paul C. Grint, Gerald Möller, David R. Walt, Roy Whitfield (collectively, the “Director Defendants”) and Illumina, as a nominal party. The complaint alleges, among other things, that the Director Defendants breached their fiduciary duties to the stockholders of Illumina in connection with Roche’s tender offer, and seeks, among other things, declaratory and injunctive relief compelling the Director Defendants to “evaluate strategic alternatives and potential offers for Illumina,” “take decisive steps to maximize Company and shareholder value,” and/or to rescind or redeem the Rights Agreement, dated as of January 26, 2012, by and between Illumina and Computershare Trust Company, N.A. On February 17, 2012, the plaintiff filed an application for a temporary restraining order to prevent the Director Defendants from triggering the Rights Agreement and adopting other defensive measures. On February 22, 2012, the Superior Court heard argument on the application and declined to issue a temporary restraining order.
Between February 14 and February 29, 2012, six substantially identical putative class actions were filed in the Court of Chancery of the State of Delaware against the Director Defendants and Illumina entitledSteven S Weinstein MD PC Profit Sharing Plan v. Illumina, Inc. et al.,Lehigh County Employees Retirement Plan v. Illumina, Inc. et al.,Freedman v. Rastetter et al.,United Food and Commercial Workers Pension Fund of Northeastern Pennsylvania v. Illumina, Inc. et al.,Elliot v. Illumina, Inc. et al., andGoodman v. Rastetter et al. The complaints allege, among other things, that the Director Defendants breached their fiduciary duties to the stockholders of Illumina in connection with Roche’s tender offer, and seek, among other things, declaratory and injunctive relief ordering the Director Defendants to evaluate strategic alternatives and potential acquisition offers and use the Rights Agreement in a manner consistent with their fiduciary duties, and enjoining them from initiating further defensive measures that may render the acquisition of Illumina more burdensome or expensive for a potential acquirer. The complaints also allege certain purported deficiencies in the disclosure contained in Illumina’s Schedule 14D-9.
PROPOSAL 1:
Our certificate of incorporation and bylaws provide for a classified Board of Directors consisting of three classes of directors with staggered three-year terms. The Board of Directors currently consists of the following
nineten directors, having terms expiring at the respective annual meetings of stockholders noted below:
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20122013 Annual Meeting
| | 20132014 Annual Meeting
| | 20142015 Annual Meeting
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Robert S. Epstein, M.D. Paul C. Grint, M.D. Gerald Möller, Ph.D. David R. Walt, Ph.D. | | Daniel M. Bradbury Robert S. Epstein, M.D. Roy A. Whitfield | | William H. Rastetter, Ph.D. | | Paul C. Grint, M.D.
David R. Walt, Ph.D
Gerald Möller, Ph.D
| | Daniel M. Bradbury
Roy A. Whitfield
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Election of
FourTwo Directors to Hold Office for Three Years until the
20152016 Annual Meeting of Stockholders
As previously announced, on March 14, 2013 Dr. Paul C. Grint notified the Company that he would retire from the Board and would not stand for re-election at the annual meeting. In light of Dr. Grint’s decision to retire from the Board, the Board of Directors intends to reduce the number of authorized directors of the Company from ten to nine, effective as of immediately prior to the annual meeting.
Upon the recommendation of the Nominating/Corporate Governance Committee,
ourthe Board of Directors has nominated for election at the annual meeting the following slate of
fourtwo nominees to hold office for three years until the annual meeting of stockholders in the year
20152016 and until their successors are duly elected and qualified:
Karin Eastham, CPA
Gerald Möller, Ph.D.William H. Rastetter,David R. Walt, Ph.D.
Election of One Director to Hold Office for One Year until the 2014 Annual Meeting of Stockholders
Upon the recommendation of the Nominating/Corporate Governance Committee, the Board of Directors has nominated for election at the annual meeting the following nominee to hold office for one year until the annual meeting of stockholders in the year 2014 and until his successor is duly elected and qualified:
Robert S. Epstein, M.D.
Dr.Epstein was appointed to the Board of Directors in November 2012 to fill a newly created position. In accordance with our Corporate Governance Guidelines, any new director appointed to fill a newly created position on the Board of Directors is assigned to a particular class of directors and is required to stand for election by our stockholders at the first annual meeting of stockholders following such appointment, whether or not the other members of the class of directors to which he or she was appointed are otherwise standing for election at such annual meeting. At the time of his appointment, Dr.Epstein was assigned to the same class of directors composed of Messrs.Bradbury and Whitfield. Accordingly, Dr.Epstein is standing for election at the annual meeting to hold office for one year until the annual meeting of stockholders in the year 2014 and until his successor is duly elected and qualified.
For more information about each nominee and each of the other directors serving on our Board of Directors, please see “Information“Information about Directors”Directors” in this proxy statement. Each of the Board of Director nominees is currently serving as a director. These nominees have agreed to serve if elected, and management has no reason to believe that such nominees will be unable to serve. In the event any of these nominees is unable or declines to serve as a director at the time of the annual meeting, the proxies will be voted for any nominees who may be designated by the present Board of Directors to fill the vacancy.The persons designated as proxies on the form ofWHITE proxy card attached to this proxy statement intend to vote such proxyFOR the election of each of the four three
nominees named above, unless the stockholder indicates on the proxy that the vote should be withheld from any or all of these nominees.
Vote Required for Approval
A plurality of the votes of the shares present in person or represented by proxy at the annual meeting and entitled to vote on the election of directors is required for the election of directors. The
fourthree nominees receiving the highest number of affirmative votes of the shares entitled to vote at the annual meeting will be elected to the Board of Directors. You may not vote for more individuals than the number nominated. In addition, stockholders may not cumulate votes in the election of directors.
We urge you to vote FOR the foregoing nominees on theWHITE proxy card and NOT to sign or return any [gold] proxy card sent to you by Roche for the following reasons:
We believe that the individuals selected and compensated by Roche would have conflicts of interests if elected to Illumina’s Board of Directors. As disclosed by Roche, Roche has paid each of its nominees $60,000 in consideration for service as a nominee. In addition, Roche will reimburse each of its nominees for reasonable out-of-pocket expenses incurred by such nominee in connection with the solicitation of proxies or his service as a nominee for this election, including travel expenses and fees of an independent counsel incurred prior to the
annual meeting. Roche has also agreed to indemnify each of its nominees from and against any and all reasonable expenses, damages, losses, liabilities, judgments and amounts paid or payable in settlements arising out of or in connection with any threatened, pending or completed claim, action, suit, proceeding or investigation in connection with, relating to or arising out of the solicitation of proxies or such nominee’s role or status as a nominee, with certain limitations. Roche’s nominees’ indemnification rights include the right to require Roche to advance all reasonable expenses incurred by such nominees.
Furthermore, in order to consider any strategies other than Roche’s offer, Illumina’s Board of Directors believes it would be in the best interests of our stockholders if our directors are not associated in any way with Roche.
According to Roche’s notice, none of Roche’s nominees owns any shares of Illumina. The members of Illumina’s Board of Directors, on the other hand, have investments in Illumina. Illumina’s current directors beneficially own approximately 3.2% of Illumina’s shares (including stock options exercisable within 60 days of January 31, 2012) in the aggregate. We believe this stake firmly links the Board of Directors’ economic interests with those of our stockholders (see “Stock Ownership of Principal Stockholders and Management”).
We believe Roche’s nominees have been nominated solely to facilitate Roche’s acquisition of Illumina at a price that is inadequate to Illumina’s stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR”“FOR” THE ELECTION OF
EACH OF
ILLUMINA’STHE DIRECTOR NOMINEES SET FORTH ABOVE
ON THEWHITE PROXY CARD
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has selected Ernst& Young LLP as our independent registered public accounting firm to audit our consolidated financial statements for the fiscal year ending December 30, 2012,29, 2013, and the Board of Directors has determined that it would be desirable to request that the stockholders ratify such appointment. Before selecting Ernst& Young LLP, the Audit Committee considered the firm’sfirm’s qualifications as independent registered public accountants and concluded that, based on Ernst& Young LLP’sLLP’s prior performance and its reputation for integrity and competence, it was qualified. The Audit Committee also considered whether any non-audit services performed for us by Ernst& Young LLP would impair Ernst& Young LLP’sLLP’s independence and concluded that they did not. Even if the selection is ratified, the Audit Committee, in its sole discretion, may change the appointment at any time during the fiscal year if it determines that such a change would be in our best interests and that of our stockholders. A representative of Ernst& Young LLP is expected to be present at the annual meeting, will have an opportunity to make a statement if he or she desires to do so, and is expected to be available to respond to appropriate questions. Vote Required for Approval
Stockholder ratification is not required for making such appointment for the fiscal year ending December 30, 201229, 2013, because the Audit Committee has responsibility for the appointment of our independent registered public accounting firm. The appointment is being submitted for ratification with a view toward soliciting the opinion of stockholders, which opinion will be taken into consideration in future deliberations. No determination has been made as to what action the Board of Directors or the Audit Committee would take if stockholders diddo not approve the appointment of Ernst& Young LLP. Ratification of the appointment of Ernst& Young LLP as our independent registered public accounting firm requires the affirmative “FOR”“FOR” vote of a majority of the shares present in person or represented by proxy and entitled to vote on the proposal. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
“FOR”FOR” THE RATIFICATION OF THE APPOINTMENT OF ERNST& YOUNG LLP AS OUR
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON THEWHITE PROXY CARD
ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
As required by Rule 14a-21(a) of the Securities Exchange Act of 1934, we are seeking an advisory vote to approve the compensation of the named executive officers as disclosed in the section of this proxy statement titled “Executive“Executive Compensation.” Following the 2011 annual meeting of stockholders, and consistent with results of the advisory vote on executive compensation taken by our stockholders at that meeting, the Board of Directors adopted a policy to submit this advisory vote to the stockholders on an annual basis. Accordingly, stockholders are being asked to vote on the following advisory resolution: RESOLVED, that the compensation paid to Illumina’sIllumina’s named executive officers, as disclosed pursuant to Item402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables, and narrative discussion, is hereby APPROVED. We urge stockholders to read the “Compensation“Compensation Discussion and Analysis”Analysis” beginning on page 3642 of this proxy statement, which describes in more detail how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives, as well as the Summary Compensation Table and other related compensation tables and narrative, appearing on pages 4854 through 52,57, which provide detailed information on the compensation of our named executive officers. The Board of Directors and the Compensation Committee believe that the policies and procedures articulated in the “Compensation“Compensation Discussion and Analysis”Analysis” are effective in achieving our goals and that the compensation of our named executive officers reported in this proxy statement has contributed to our recent and long-term success. Vote Required for Approval
The advisory resolution set forth above, commonly referred to as a “say-on-pay”“say-on-pay” resolution, is not binding on the Board of Directors. Although not binding, the Board of Directors and the Compensation Committee will review and consider the voting results when making future decisions regarding executive compensation. Approval of the advisory resolution set forth above requires the affirmative “FOR”“FOR” vote of a majority of the shares present in person or represented by proxy and entitled to vote on the proposal. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
“FOR”FOR” THE FOREGOING RESOLUTION TO APPROVE, ON AN ADVISORY BASIS, THE COMPENSATION OF ILLUMINA’SILLUMINA’S NAMED EXECUTIVE OFFICERS ON
PROPOSAL 4: APPROVAL OF AN AMENDMENT TO THE
WHITE PROXY CARDPROPOSALS 4, 5, ILLUMINA, INC. 2005 STOCK AND 6: ROCHE’S BOARDINCENTIVE PLAN TO INCREASE THE NUMBER OF DIRECTORS EXPANSION PROPOSALS
Roche has asked our stockholders to adopt resolutions at our annual meeting that would amend our bylaws to increase the size of Illumina’sSHARES AVAILABLE FOR ISSUANCE BY 5,000,000 SHARES AND TO EXTEND THE TERMINATION DATE OF THE PLAN UNTIL JUNE 28, 2016
The Board of Directors,
by two membersbased on the recommendation of the Compensation Committee, has approved an amendment to
eleven membersthe Illumina, Inc. 2005 Stock and
require that newly created directorships be filled only by a stockholder vote. Roche also proposesIncentive Plan, subject to
fill the two newly created directorships with nominees that it has selected and compensated. Specifically, Roche intends to propose the following resolutionsapproval of our stockholders at the annual
meeting:PROPOSAL 4
RESOLVED, that Section 3.2meeting, to (1) authorize an additional 5,000,000 shares under the 2005 Stock and Incentive Plan and (2) extend the term of the bylaws is amended2005 Stock and restated as follows:
“3.2NUMBER OF DIRECTORS; ELECTION; AND TERM OF OFFICE OF DIRECTORS
The board of directors shall consist of eleven directors unless and until changed by a proper amendmentIncentive Plan to June 28, 2016. In connection with its review of this Section 3.2 orproposal, the Compensation Committee considered the information described below and the key objectives of attracting and retaining high caliber staff that have been critical to the growth of the business and creating value for our shareholders.
The 2005 Stock and Incentive Plan is an essential element of our total rewards strategy and our ability to reward and retain eligible employees and our non-employee directors. The Board of Directors believes that the 2005 Stock and Incentive Plan is in the best interest of stockholders and Illumina, as equity awards granted under the plan help to attract, motivate, and retain talented, key employees and non-employee directors, align employee and stockholder interests, link employee compensation with company performance, and maintain a culture based on employee stock ownership. The following summary of major features of the 2005 Stock and Incentive Plan is qualified in its entirety by a duly adoptedreference to the actual text of the 2005 Stock and Incentive Plan, set forth as Exhibit A.
If the amendment to the
certificate2005 Stock and Incentive Plan is approved by our stockholders, it will become immediately effective as of
incorporation.No reductionMay 29, 2013, with approximately 6.8 million shares available for future awards. This excludes any shares that will become available again under the 2005 Stock and Incentive Plan in connection with forfeited, lapsed, or terminated awards during such period. We expect that if the amendment to the 2005 Stock and Incentive Plan is approved by our stockholders, the additional shares will be sufficient to allow us to make equity awards in the amounts we believe are necessary for the next three years.
The Board of Directors recommends that our stockholders vote for the approval of the authorized number of directors shall have the effect of removing any director before that director’s term of office expires.Each director, including a director elected to fill a vacancy, shall hold office until his successor is elected and qualified or until his earlier resignation or removal.”
PROPOSAL 5
RESOLVED, that Section 3.4(a) of the bylaws is amended and restated as follows:
“(a) Vacancies resulting from any director’s resignation, death or removal may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. Newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class may be filled only by the holders of a majority of the stock issued and outstanding and entitled to vote thereon and may not be filled by the board of directors. Such holders of a majority of the stock shall have the authority to designate the class of directors into which any newly appointed director is to be elected.”
PROPOSAL 6
RESOLVED, that the following persons be electedamendment to the board of directors in2005 Stock and Incentive Plan for the classes indicated to fill the two newly created directorships resulting from the increase in the number of members of the board of directors:reasons discussed below.
| | |
Earl (Duke) Collier, Jr. | | Class Expiring at 2013 Annual Meeting |
| |
David Dodd | |
| Proposed Amendment |
| |
| Ÿ | Authorize an additional 5,000,000 shares under the 2005 Stock and Incentive Plan. |
| |
| Ÿ | Extend the term of the 2005 Stock and Incentive Plan from June 28, 2015 to June 28, 2016. |
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| Why Should You Vote to Approve the Proposed Amendment? |
| |
| Ÿ | Class ExpiringWe must attract, retain, and motivate high-performers. The ability to issue equity is fundamental to our compensation strategy. Our continued success is dependent, in large part, on our ability to deliver market relevant compensation to attract, retain, and motivate the most talented personnel with expertise in molecular biology, chemistry, biological information processing, sales, marketing, and technical support. We compete for qualified management and scientific personnel with other life science companies, universities, and research institutions, particularly those focusing on genomics. Competition for these individuals, particularly in the San Diego and San Francisco area, is intense, and the turnover rate can be high. Failure to attract and retain management and scientific personnel would prevent us from developing our products or technologies and impede our creation of stockholder value.
|
| |
| Ÿ | We use equity compensation to align employee and stockholder interests. Equity compensation is a critical means of aligning the interests of our employees with those of our stockholders. Our employees, particularly our senior executives, whose equity is tied to Company and individual performance, are motivated under our current equity compensation plans to drive the business to maximize returns over the long-term. We believe this, in part, has resulted in the long-term value we have created for our stockholders, as evidenced by our total stockholder returns over the last three- and five-year periods, which in each case, has significantly outperformed our peers and the market. During 2012, the Compensation Committee took steps to further strengthen the alignment of equity compensation for executive officers with stockholder interests by replacing annual stock option grants with performance stock units (PSUs) that vest at 2014 Annual Meetingthe end of a three-year performance period based on the achievement of specified earnings per share targets at the end of the three-year period. |
| |
| Ÿ | We have a disciplined annual share granting practice. Our burn rate has averaged 3.7% over the past three years and 3.9% over the past five years. During the last five years, our burn rate has ranged between 3.4% and 4.9%. We tightly manage who among our employees is granted equity. The vast majority of the equity awards are granted to our highest performing employees and senior executives. These are also the employees who will have the greatest impact on our continued success and creation of stockholder value. As a result, over the past three years the number of shares granted pursuant to equity awards has remained stable even as the number of employees has increased 36.2%. |
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| Ÿ | We proactively manage our outstanding shares and share granting practice to mitigate dilution. Over the last five years, our ratio of share repurchases to share issuances, excluding the impact of dilution and share repurchases in connection with our convertible debt and associated warrants, has resulted in a net increase of only 1% to our weighted average diluted shares. We expect to continue to mitigate the impact of future equity awards by continuing to engage in share repurchases, depending on market conditions and the Company's then-current and anticipated cash needs.
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Each
Background on Equity Compensation at Illumina
Illumina grants equity awards to a significant portion of our employees annually to attract, motivate, and retain talented, key employees, link employee compensation with company performance, and maintain a culture based on employee stock ownership. In 2012, we granted 2.4 million shares under the 2005 Stock and Incentive Plan, of which 431,653 shares, or 17.7%, were awarded to our named executive officers, whose compensation is discussed in the “Compensation Discussion and Analysis” section of this Proposal 6proxy statement; 129,920 shares or 5.3%, were awarded to our non-employee directors; and the remaining 1.9 million shares, or 76.9%, were awarded to our broad-based employee population.
Since 2009, our broad-based employee population has received restricted stock units (RSUs) exclusively. This allows us to maintain a broad-based equity program using fewer shares that provide more stable value, while maintaining employee and stockholder alignment. For employees with higher levels of responsibility (Vice President-level and above), through 2011 we used a combination of RSUs and stock options; however, during 2012, the Compensation Committee approved changes to the long-term equity incentive compensation program for our executive officers that placed greater emphasis on performance-based long-term incentives by replacing annual stock option grants with performance stock units (PSUs) that vest at the end of a three-year performance period based on the achievement of specified earnings per share targets at the end of the three-year period. At the end of the three-year performance period, the number of shares issued upon vesting will range from 50% to 150% of the number of shares specified in the PSU agreement, depending on performance relative to the earnings per share objectives approved by the Compensation Committee. As an employee's level of responsibility increases, the percentage of PSUs is a greater portion of the equity grant, equating to more at-risk compensation. This at-risk compensation provides management with a strong incentive to improve Illumina's performance and create stockholder value. For more information on our PSU program, see “Compensation Discussion and Analysis; Long Term Equity Compensation; Performance Stock Units.”
Over the past three years, the average annual dilution from our equity programs was 2.9% (2.6% in 2012). We define dilution as the total equity awards granted less cancellations, divided by the weighted average common shares outstanding. We manage our long-term dilution goal by limiting the number of equity awards that we grant annually, commonly referred to as burn rate. Burn rate differs from dilution, as it does not account for equity awards that have been cancelled. Over the past three years, our annual burn rate has averaged 3.7% (3.4% in 2012), and we regularly monitor the practices of our peers and guidance provided Illumina with his written consentfrom institutional investors and corporate governance advisors, such as ISS, to ensure that we appropriately manage our burn rate.
An additional metric that we use to measure the cumulative impact of our equity program is overhang (equity awards outstanding but not exercised, plus equity awards available to be namedgranted, divided by total common shares outstanding at the end of the year) and in this proxy statement2012 our overhang was 13.0%. Over the last three years, our overhang has decreased in part, because of our move to replace stock options with PSUs, which reduces overhang as fewer shares are granted to maintain the value previously granted as stock options.
Equity Compensation Plan Information
The following table presents information about shares of our common stock that may be issued under our equity compensation plans, including compensation plans that were approved by our stockholders as well as compensation plans that were not approved by our stockholders. Information in the table is as of December 30, 2012.
|
| | | | | | | | | | | |
Plan Category | (a) Number of Securities to Be Issued Upon Exercise of Outstanding Options and Rights | | (b) Weighted-Average Exercise Price per Share of Outstanding Options and Rights ($) | | (c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) |
| Equity compensation plans approved by security holders | 11,780,796 |
| (1) | | 31.15 |
| (2) | | 18,501,848 |
| (3) |
| Equity compensation plans not approved by security holders | 817,042 |
| (4) | | 41.33 |
| (2) | | N/A |
| (5) |
| Total | 12,597,838 |
| | | 32.10 |
| (2) | | 18,501,848 |
| |
| | | | | | | | | |
| |
| (1) | Represents 7,533,645 shares issuable upon exercise of options, 3,659,963 shares issuable under restricted stock unit awards, and 587,188 shares issuable under performance stock unit awards. Options outstanding include 370,975 options with a weighted-average exercise price of $19.11 that were assumed in connection with corporate acquisitions. |
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| (2) | RSUs have been excluded for purposes of computing weighted-average exercise price. |
| |
| (3) | Includes 3,064,963 shares available for grant under our 2005 Stock and Incentive Plan and 15,406,126 shares available for grant under our 2000 Employee Stock Purchase Plan, and 30,759 shares available for grant under the assumed Solexa Plan. |
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| (4) | Represents options granted under our New Hire Stock and Incentive Plan. |
| |
| (5) | There is no set number of shares reserved for issuance under the New Hire Stock and Incentive Plan. |
Key Terms of the 2005 Stock and Incentive Plan (as amended)
The following is a summary of the key provisions of the Illumina, Inc. 2005 Stock and Incentive Plan, as amended and restated herein pending stockholder approval: |
| |
| Plan Term: | June 28, 2005 to June 28, 2016 |
| Plan Administrator: | Illumina's Board of Directors or any designated committee. |
| Eligible Participants: | Where legally eligible to participate, our employees, consultants, and non-employee directors, in each case who are selected by, or under guidelines approved by, the Board of Directors |
| Shares Authorized: | 28,084,716 over the term of the plan, subject to adjustment only to reflect stock splits and similar events |
| Share-Based Award Types (available to all eligible participants, including non-employee directors): | (1) Stock options (2) Stock grants (including restricted stock) (3) Stock units (including restricted stock units (“RSUs”)) (4) Stock appreciation rights |
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| Stock Options: | Stock options granted under the 2005 Stock and Incentive Plan may be, non-qualified stock options or incentive stock options (“ISOs”), as described in Section 422 of the Internal Revenue Code of 1986, as amended, for U.S. federal income tax purposes (or other types of options in jurisdictions outside the United States), as evidenced by the related award agreements. Options granted will be subject to the following terms and conditions and to such other terms and conditions as the Committee determines.
Exercise Price; Term. Stock options will have a purchase price per share (“exercise price”) that is not less than the fair market value of a share on the date of grant and will be exercisable at such time and upon such terms and conditions as may be determined by the Committee. Stock options will have a term no longer than ten years.
Exercise of Stock Options. Except as otherwise provided in an award agreement, a stock option may be exercised for all, or from time to time any part, of the shares for which it is then exercisable. The purchase price for the shares as to which a stock option is exercised shall be paid in full no later than the time when the option is deemed exercised and before shares are delivered following the exercise of the stock option.
ISOs. The Committee may grant stock options under the 2005 Stock and Incentive Plan that are intended to be ISOs. No ISO will have a per share exercise price of less than the fair market value of a share on the date granted or have a term in excess of ten years. However, no ISO may be granted to any participant who, at the time of such grant, owns more than 10% of the total combined voting power of all classes of Illumina stock, unless:
Ÿ the exercise price for the ISO is at least 110% of the fair market value of a share on the date the ISO is granted, and
Ÿ the date on which the ISO terminates is a date not later than the day preceding the fifth anniversary of the date on which the ISO is granted.
All stock options granted under the 2005 Stock and Incentive Plan are intended to be nonqualified stock options, unless the applicable award agreement expressly states that the stock option is intended to be an ISO. If a stock option is intended to be an ISO, and if for any reason the stock option (or portion thereof) does not qualify as an ISO, then, to the extent of the non-qualification, the stock option (or portion thereof) will be regarded as a nonqualified stock option, provided that the stock option (or portion thereof) otherwise complies with the requirements relating to nonqualified stock options. |
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| Stock Grants and Stock Units: | The plan administrator may grant awards of shares, awards of restricted shares, and awards of RSUs representing the right to receive a share, and other awards that are valued in whole or in part by reference to, or are otherwise based on the fair market value of, shares (collectively, “other share-based awards”). These other share-based awards will be in such form, and dependent on such conditions, as the plan administrator determines. This includes, without limitation, the right to receive one or more shares (or the equivalent cash value of such shares) upon the completion of a specified period of service, the occurrence of an event, and/or the attainment of performance objectives. Other share-based awards may be granted alone or in addition to any other awards granted under the 2005 Stock and Incentive Plan. The plan administrator will determine:
Ÿ to whom and when other share-based awards will be made,
Ÿ the number of shares to be awarded under (or otherwise related to) these other share-based awards,
Ÿ whether these other share-based awards will be settled in cash, shares or a combination of cash and shares, and
Ÿ all other terms and conditions of the other share-based awards (including, without limitation, their vesting provisions, any required payments to be received from participants and other provisions ensuring that all shares so awarded and issued be fully paid and non-assessable). |
| Stock Appreciation Rights: | The plan administrator may grant a share appreciation right either alone or in addition to any other awards granted under the 2005 Stock and Incentive Plan. A stock appreciation right represents a right to receive cash and/or shares based on a change in the fair market value of a specific number of shares. |
| Not Permitted: | Once issued and outstanding, the exercise price of any stock option may not be reduced at any time during the term of such stock option nor may a stock option be cancelled and exchanged for a new stock option with a lower exercise price. |
Eligibility under Section 162(m) of the Tax Code
Awards may, but need not, include performance criteria that satisfy Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). To the extent that awards are intended to servequalify as “performance-based compensation” under Section 162(m) of the Code, the performance criteria will be based on stock price appreciation (in the case of stock options or stock appreciation rights) or on one or more of the following factors (in the case of stock grants (including restricted stock) and stock units (including RSUs), each of which may be adjusted as provided in the plan:
cash flow;
earnings (including gross margin, earnings before interest and taxes, earnings before taxes, and net earnings);
earnings per share;
growth in earnings or earnings per share;
stock price;
return on equity or average stockholders' equity;
total stockholder return;
return on capital;
return on assets or net assets;
return on investment;
revenue;
income or net income;
operating income or net operating income;
operating profit or net operating profit;
operating margin;
return on operating revenue;
market share;
contract awards or backlog;
overhead or other expense reduction;
growth in stockholder value relative to the moving average of the S&P 500 Index or a peer group index;
credit rating;
strategic plan development and implementation (including individual performance objectives that relate to achievement of the company's or any business unit's strategic plan);
improvement in workforce diversity, and
any other similar criteria as may be determined by the plan administrator.
To the extent that an award under the 2005 Stock and Incentive Plan is designated as a
director“performance award,” but is not intended to qualify as performance-based compensation under Section 162(m) of
Illumina if elected.Illumina’s Boardthe Code, the performance criteria can include the achievement of Directors’ Response to Roche’s Proposals 4, 5 and 6
such performance objectives as determined by the plan administrator.
Amendments Requiring Stockholder Approval
The Board of Directors strongly opposes Roche’s proposalsmay terminate, amend, or suspend the 2005 Stock and urges youIncentive Plan, provided that no action is taken by the Board (except those described in “Adjustments” below) without stockholder approval to:
increase the number of shares that may be issued under the 2005 Stock and Incentive Plan;
grant stock options at less than the market value;
reprice, repurchase, or exchange underwater stock options or stock appreciation rights;
extend the term of the 2005 Stock and Incentive Plan;
change the class of persons eligible to voteAGAINSTProposals 4, 5participate in the 2005 Stock and 6 onIncentive Plan; or
otherwise implement any amendment required to be approved by stockholders under theWHITE proxy card. NASDAQ rules.
Adjustments
In the event of a stock dividend, recapitalization, stock split, combination of shares, extraordinary dividend of cash or assets, reorganization, or exchange of our view, Roche is making Proposals 4, 5common stock, or any similar equity restructuring transaction affecting our common stock, the plan administrator will equitably adjust the number and 6 solelykind of shares available for grant under the 2005 Stock and Incentive Plan, and subject to facilitate its acquisitionthe various limitations set forth in the 2005 Stock and Incentive Plan, the number and kind of shares subject to outstanding awards under the 2005 Stock and Incentive Plan, and the exercise or settlement price of outstanding stock options and of other awards.
The impact of a merger or other reorganization of Illumina on outstanding awards granted under the 2005 Stock and Incentive Plan will be specified in the agreement related to the merger or reorganization, subject to the
limitations and restrictions set forth in the 2005 Stock and Incentive Plan. Such agreement may provide for, among other things, assumption of outstanding awards, accelerated vesting, or accelerated expiration of outstanding awards, or settlement of outstanding awards in cash.
Federal Income Tax Information
The following summary briefly describes current U.S. federal income tax consequences of rights under the 2005 Stock and Incentive Plan. However, the summary is not a detailed or complete description of all U.S. federal tax laws or regulations that may apply and does not address any local, state, or other country laws. Therefore, no one should rely on this summary for individual tax compliance, planning or decisions. Participants in the 2005 Stock and Incentive Plan should consult their own professional tax advisors concerning tax aspects of rights under the 2005 Stock and Incentive Plan and should be aware that tax laws may change at any time.
Stock Options
An employee to whom an inadequateISO that qualifies under Section 422 of the Code is granted generally will not recognize income at the time of grant or exercise of such option (although special alternative minimum tax rules may apply to the employee upon option exercise). No federal income tax deduction will be allowable to us upon the grant or exercise of such ISO.
When the employee sells shares acquired through the exercise of an ISO more than one year after the date of transfer of such shares and more than two years after the date of grant of such ISO, the employee will normally recognize a long-term capital gain or loss equal to the difference, if any, between the sale prices of such shares and the option price. If Proposals 4, 5the employee does not hold such shares for this period, when the employee sells such shares, the employee will recognize ordinary compensation income and 6possibly capital gain or loss in such amounts as are approved, Rocheprescribed by the Code and regulations thereunder, and we will generally be entitled to a federal income tax deduction in the amount of such ordinary compensation income.
An employee to whom an option that is not an ISO (a “non-qualified option”) is granted will not recognize income at the time of grant of such option. When such employee exercises a non-qualified option, the employee will recognize ordinary compensation income equal to the excess, if any, of the fair market value as of the date of a non-qualified option exercise of the shares the employee receives, over the option exercise price. The tax basis of such shares will be equal to the exercise price paid plus the amount includable in the employee's gross income, and the employee's holding period for such shares will commence on the day after which the employee recognized taxable income in respect of such shares. Subject to applicable provisions of the Code and regulations thereunder, we or one of our affiliates will generally be entitled to a federal income tax deduction in respect of the exercise of non-qualified options in an amount equal to the ordinary compensation income recognized by the employee. Any such compensation includable in the gross income of an employee in respect of a non-qualified option will be subject to appropriate federal, state, local and foreign income and employment taxes.
Restricted Shares
Unless an election is made by the participant under Section 83(b) of the Code, the grant of an award of restricted shares will have no immediate tax consequences to the chanceparticipant. Generally, upon the lapse of restrictions (as determined by the applicable restricted share agreement between the participant and the Company), a participant will recognize ordinary income in an amount equal to the product of (1) the fair market value of a share of our common stock on the date on which the restrictions lapse, less any amount paid with respect to the award of restricted shares, multiplied by (2) the number of restricted shares with respect to which restrictions lapse on such date. The participant's tax basis will be equal to the sum of the amount of ordinary income recognized upon the lapse of restrictions and any amount paid for such restricted shares. The participant's holding period will commence on the date on which the restrictions lapse.
A participant may make an election under Section 83(b) of the Code within 30 days after the date of transfer of an Award of restricted shares to recognize ordinary income on the date of award based on the fair market value of our common stock on such date. An employee making such an election will have individuals selecteda tax basis in the restricted shares equal to the sum of the amount the employee recognizes as ordinary income and compensated directlyany amount paid for such restricted shares, and the employee's holding period for such restricted shares for tax purposes will commence on the date after such date.
With respect to restricted shares upon which restrictions have lapsed, when the employee sells such shares, the employee will recognize capital gain or loss consistent with the treatment of the sale of shares received upon the exercise of non-qualified options, as described above.
Restricted Share Units
A participant to whom an RSU is granted generally will not recognize income at the time of grant. Upon delivery of a share of our common stock in respect of an RSU, a participant will recognize ordinary income in an amount equal to the product of (1) the fair market value of a share of our common stock on the date on which shares are delivered, multiplied by Roche(2) the number of shares of common stock delivered. The participant may become subject to employment taxes when the right to receive shares becomes “vested” due to retirement eligibility or otherwise. Subject to applicable provisions of the Code and regulations thereunder, we or one of our affiliates will generally be entitled to a federal income tax deduction in respect of the vesting of restricted stock units in an amount equal to the ordinary compensation income recognized by the employee.
Other Share-based Awards
With respect to other share-based awards paid in cash or shares of common stock, participants will generally recognize income equal to the fair market value of the shares of common stock or the amount of cash paid on the date on which delivery of shares or payment in cash is made to the participant.
Code Section 409A
Section 409A of the Code generally provides rules that must be followed with respect to covered deferred compensation arrangements in order to avoid the imposition of an additional 20% tax (plus interest) upon the service provider who is entitled to receive the deferred compensation. Certain awards that may be granted under the 2005 Stock and Incentive Plan may constitute “deferred compensation” within the meaning of and subject to Section 409A. While the plan administrator intends to administer and operate the 2005 Stock and Incentive Plan and establish terms with respect to awards subject to Section 409A in a manner that will avoid the imposition of additional taxation under Section 409A upon a participant, there can be no assurance that additional taxation under Section 409A will be avoided in all cases. In the event we are required to delay delivery of shares or any other payment under an award in order to avoid the imposition of an additional tax under Section 409A, we will deliver such shares (or make such payment) on the first day that would not result in the participant incurring any tax liability under Section 409A.
Resolution
The text of the resolution in respect of Proposal 4 is as follows:
RESOLVED, that approval be and is hereby given to the adoption by Illumina, Inc. of an amendment to the Illumina, Inc. 2005 Stock and Incentive Plan to (1)increase the number of shares available for issuance under the 2005 Stock and Incentive Plan by 5,000,000 shares and (2)extend the termination date of the 2005 Stock and Incentive Plan until June28, 2016.
Vote Required for Approval
The affirmative “FOR” vote of a majority of Illumina’s Board of Directors. In the event that Proposals 4shares present in person or represented by proxy and 5 are approved but Proposal 6 is not approved, the two new directorships created pursuantentitled to vote on Proposal 4 will remain vacant until the next meeting of Illumina’s stockholders at which directors are to be elected. We believe Proposals 4, 5 and 6 do not serve the interests of Illumina’s stockholders. You should use theWHITE proxy card to voteAGAINST Proposals 4, 5 and 6.In January 2012, Illumina’s Board of Directors rejected Roche’s proposal to acquire Illumina at a purchase price of $40.00 per share. Shortly thereafter, Roche commenced its tender offer to acquire all outstanding shares of Illumina common stock for $44.50 per share. On February 7, 2012, after careful consideration, including a thorough review of the terms and conditions of Roche’s unsolicited offer with Illumina’s financial and outside legal advisors, the Board of Directors unanimously determined that Roche’s offer of $44.50 per share is inadequate to Illumina’s stockholders and that Roche’s tender offer is not in the best interest of Illumina or its stockholders. The Board of Directors unanimously recommended that Illumina’s stockholders reject Roche’s offer and not tender their shares of Illumina’s common stock in the offer.
In reaching its recommendation, the Board of Directors considered numerous factors in consultation with Illumina’s management and its financial and outside legal advisors, including, but not limited to, the following:
Roche’s offer is inadequate and dramatically undervalues Illumina’s industry-leading position and growth opportunities:
Illumina is the leader in developing and commercializing tools and services for genetic analysis with an unrivaled breadth and depth of technological platforms;
The industry as a whole and Illumina in particular have substantial growth opportunities;
Illumina’s future prospects are underpinned by a robust pipeline of new products and services; and
Illumina has a long and proven track record of performance;
The timing of Roche’s offer is blatantly opportunistic and does not reflect Illumina’s strong platform of new products and pipeline:
Roche timed its offer opportunistically to capitalize on recent share price dislocation;
Roche timed its offer opportunistically to capture for itself the substantial growth opportunities inherent in Illumina’s strong platform of new products and pipeline; and
Illumina has a track record of continuous significant investment in novel platforms and, as a result, the Board of Directors believes that Illumina has a promising pipeline that will drive sustainable future growth and value in the near, medium and long term;
Roche’s offer fails to capture Illumina’s value as an enabler of personalized healthcare;
Roche’s tactics seek to disadvantage Illumina’s stockholders:
Illumina’s Board of Directors believes that Roche’s urgency in launching its offer reflects its tactic to act upon the short-term dislocation in Illumina’s stock price. Roche’s offer price of $44.50 per share was $34.90 below Illumina’s 52-week high of $79.40; and
Illumina’s Board of Directors believes that Roche acted to take advantage of Illumina’s depressed stock price levels in its attempt to transfer the significant future value of Illumina from Illumina’s stockholders to Roche and Roche’s stockholders;
Roche’s offer values Illumina at a price below recent trading levels:
The market price of Illumina’s stock has remained above Roche’s offer price of $44.50 per share since the public announcement of Roche’s offer on January 25, 2012; and
The closing price per share on the NASDAQ Global Select Market on February 6, 2012, the last trading day prior to the filing of Illumina’s Schedule 14D-9, was $51.97, which is 17% greater than Roche’s offer price of $44.50 per share; and
On February 7, 2012, each of Goldman Sachs & Co. (“Goldman Sachs”) and Merrill Lynch, Pierce, Fenner & Smith Incorporated (“Merrill Lynch”) rendered an oral opinion to the Board of Directors,
| subsequently confirmed in writing, that, as of the date of such opinion and based upon and subject to the factors and assumptions set forth in its written opinion, the consideration proposed to be paid to the holders of Illumina common stock (other than Roche and its affiliates) pursuant to Roche’s tender offer was inadequate from a financial point of view to such holders. The full texts of the written opinions of Goldman Sachs and Merrill Lynch, each dated February 7, 2012, which set forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with such opinion, are attached as Annexes B and C, respectively, to Illumina’s Schedule 14D-9 filed with the SEC on February 7, 2012. Each of Goldman Sachs and Merrill Lynch provided its opinion for the information and assistance of the Board of Directors in connection with its consideration of Roche’s tender offer. The opinions of Goldman Sachs and Merrill Lynch are not recommendations as to whether or not any holder of Illumina common stock should tender such Illumina common stock in connection with Roche’s tender offer or any other matter.
|
It is the Board of Directors’ view that Roche is making Proposals 4, 5 and 6 solely to facilitate the acquisition of Illumina at an inadequate price. We strongly believe that the individuals selected and compensated directly by Roche would have conflicts of interest if elected to Illumina’s Board of Directors. We believe their ability to represent the best interests of all stockholders would be seriously compromised, especially with regard to proposals made by Roche, because each Roche nominee was selected by Roche and is receiving cash compensation and indemnification directly from Roche. In addition, each of them has signed an agreement with Roche, which Roche has failed to furnish to Illumina or otherwise publicly disclose.
Votes Required for Approval
The affirmative vote of sixty-six and two-thirds percent (66 2/3%) of our outstanding voting securities, voting as a single class, is required to approve Proposal 4. If you abstain from voting on this proposal, the abstention will have the same effect as an against vote.
The affirmative vote of a majority of shares present in person or represented by proxy and entitled to vote on Proposal 5 is required to approve Proposal 5. If you abstain from voting on this proposal, the abstention will have the same effect as an against vote.
To the extent Proposals 4 and 5 are approved, the affirmative vote of a majority of shares issued and outstanding and entitled to vote is required to approve Proposal 6. In this case, if you abstain from voting on this proposal, the abstention will have the same effect as an against vote. If Proposal 4 is approved and Proposal 5 is not approved, the newly created directorships could be filled by a plurality of votes cast.
The effectiveness of Proposal 6 is conditioned on the approval of Proposal 4. If Proposal 4 does not receive sufficient votes for approval, Proposal 6 will not be approved or have any effect.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “AGAINST” EACH
“FOR” THE FOREGOING RESOLUTION TO AMEND THE ILLUMINA, INC. 2005 STOCK AND INCENTIVE PLAN TO INCREASE THE NUMBER OF PROPOSALS 4, 5SHARES AVAILABLE FOR ISSUANCE BY 5,000,000 SHARES AND 6 ONTO EXTEND THEWHITE PROXY CARD TERMINATION DATE OF THE PLAN UNTIL JUNE 28, 2016
PROPOSAL 7: ROCHE’S BYLAW AMENDMENT REPEAL PROPOSAL
Roche has asked our stockholders to repeal any amendment to our bylaws adopted by Illumina’s Board
INFORMATION ABOUT DIRECTORS
The following table sets forth the names, ages, committee assignments, and positions of our directors as of March 1, 2012.April 10, 2013. Our directors’ respective backgrounds and a discussion of the specific experience, qualifications, attributes, or skills of our directors that led the Board of Directors to conclude that each such person should serve as director are described following the table. Effective immediately following the 2013 annual meeting of stockholders, the Board of Directors has determined that the Chairman of the Board will be limited to serving on no more than one Board committee of the Chairman’s choosing and as a non-voting, ex officio member of all other Board committees. Pursuant to instruction 3 of Item 401 to Regulation S-K, information with respect to Dr. Paul C. Grint is not included in this section because, as previously announced, Dr. Grint will retire from the Board of Directors effective at the annual meeting. |
| | | | | |
Name | | Age | | Position with Company |
William H. Rastetter, Ph.D.(1)(2)(3) | | 6364 |
| | Chairman of the Board |
Jay T. Flatley | | 5960 |
| | Director; President and Chief Executive Officer |
A. Blaine Bowman(1) | | 6566 |
| | Director |
Daniel M. Bradbury(1)(2) | | 5051 |
| | Director |
Karin Eastham, CPA(1)(3) | | 6263 |
| | Director |
Paul C. Grint,Robert S. Epstein, M.D.(2)
(4) | | 5457 |
| | Director |
Gerald Möller, Ph.D.(4) | | 6869 |
| | Director |
David R. Walt, Ph.D.(3) | | 5960 |
| | Director |
Roy A. Whitfield(2) | | 5859 |
| | Director |
| |
| (1) | Member of the Audit Committee |
| |
| (2) | Member of the Compensation Committee |
| |
| (3) | Member of the Nominating/Corporate Governance Committee |
| |
| (4) | Member of the Diagnostics Advisory Committee |
William H. Rastetter, Ph.D., has been a director since November 1998 and Chairman of the Board since January 2005. Dr.Rastetter is a co-founder of Receptos, Inc., a privately-held drug discovery and development company, and has been serving as Chairman of the Board since 2009. Dr.Rastetter has also been servingserves as Chairman of Neurocrine Biosciences, Inc., a NASDAQ-listed biopharmaceutical company focused on neurological and endocrine diseases and disorders, a director of Regulus Therapeutics, Inc., a NASDAQ-listed biopharmaceutical company, and Chairman of Fate Therapeutics, a privately-held company focused on developing stem cell therapeutics. Dr.Rastetter served as a partner of Venrock Associates, a venture capital company since August 2006.from 2006 until February2013. From 2007 to 2009, Dr.Rastetter was Chief Executive Officer and the Executive Chairman of Apoptos, Inc., a privately-held oncology research and development company, which was acquired by Receptos in 2009. At the end of 2005, Dr.Rastetter retired as the Executive Chairman of Biogen Idec Inc., a biopharmaceutical company. He had served in this position since the merger of Biogen, Inc. and IDEC Pharmaceuticals Corporation in 2003. He served as Chief Executive Officer of IDEC Pharmaceuticals, a biotechnology company, from 1986 to 2003 and as Chairman of its Board of Directors from 1996 to 2003. Additionally, he served as President of IDEC Pharmaceuticals from 1986 to 2002, and as Chief Financial Officer from 1988 to 1993. From 1982 to 1986, Dr.Rastetter served in various positions at Genentech, Inc., a biotechnology company, and previously he was an associate professor at the Massachusetts Institute of Technology. Dr. Rastetter serves as Chairman of Neurocrine Biosciences, Inc., a NASDAQ-listed biopharmaceutical company focused on neurological and endocrine diseases and disorders, and Chairman and interim-CEO of Fate Therapeutics, a privately-held company focused on developing stem cell therapeutics. Dr. Rastetter holds an S.B. in Chemistry from the Massachusetts Institute of Technology and received his M.A. and Ph.D. in Chemistry from Harvard University. In selecting Dr.Rastetter as a past nominee for election to the Board of Directors, the Board considered, among other things, Dr. Rastetter’sRastetter’s scientific and technical expertise combined with his business experience in leading rapidly growing companies in the life science industry. Our continued growth is dependent on scientific and technical advances, and the Board of Directors believes that Dr.Rastetter offers both strategic and technical insight into the risks and opportunities associated with our business. In addition, Dr. Rastetter’sRastetter’s board and executive leadership experience at other life sciences companies provides valuable strategic and governance insight to the Board of Directors as a whole. Jay T. Flatley has served as our President and Chief Executive Officer and as a director since October 1999. Prior to joining Illumina, Mr.Flatley was co-founder, President, Chief Executive Officer, and a director of Molecular Dynamics, Inc., a NASDAQ-listed life sciences company focused on genetic discovery and analysis, from
1994 until its sale to Amersham Pharmacia Biotech Inc. in 1998. He served in various other positions of increasing responsibility with Molecular Dynamics from 1987 to 1994. From 1985 to 1987, Mr.Flatley was Vice President of Engineering and Vice President of Strategic Planning at Plexus Computers, a UNIX computer company. Mr.Flatley also serves as a director of Coherent, Inc., a NASDAQ-listed provider of photonics-based solutions to commercial and scientific research markets, and he is also a member of the Keck Graduate Institute Board of Trustees.markets. Mr.Flatley holds a B.A. in Economics from Claremont McKenna College and a B.S. and M.S. in Industrial Engineering from Stanford University.
In selecting Mr.Flatley as a past nominee for election to the Board of Directors, the Board considered, among other things, Mr. Flatley’sFlatley’s experience in leading and managing our remarkable growth and development over the past 10 years.development. The Board of Directors believes that Mr.Flatley, through his long experience with the Company and his prior executive and board experience with Molecular Dynamics, Inc., contributes to the Board’sBoard’s understanding of the needs of our customers, the markets in which we compete, and the risks and opportunities associated with our product development and technological advances. A. Blaine Bowman has been a director since January 2007. Mr.Bowman was formerly the Chairman, President, and Chief Executive Officer of Dionex Corporation, a NASDAQ-listed manufacturer of analytical instruments. Mr.Bowman retired as President and Chief Executive Officer of Dionex in 2002 and as Chairman of the Board in 2005, and he remained a director of Dionex until its sale to Thermo Fisher Scientific Inc. in 2011. He joined Dionex in 1977 and was named President and Chief Executive Officer in 1980. Before joining Dionex, Mr.Bowman was a management consultant with McKinsey& Company, a management consulting firm, and a product engineer with Motorola Semiconductor Products Division, a communication equipment company. Mr.Bowman also serves as a director of Altera Corporation, a NASDAQ-listed provider of programmable logic solutions, and ProteinSimple, a privately-held life sciences company focused on protein research through the use of nanoproteomics. He also served as a past director of Molecular Devices Corporation, a NASDAQ-listed supplier of instruments and consumables for life science researchers, from 1985 until its sale to MDS Inc. in 2007, and of Solexa, Inc. from 2006 until its sale to Illumina in 2007. Mr.Bowman received his B.S. in Physics from Brigham Young University and an M.B.A. from Stanford University. In selecting Mr.Bowman as a past nominee for election to the Board of Directors, the Board considered, among other things, Mr. Bowman’sBowman’s understanding of highly technical manufacturing processes associated with scientific instruments, his business leadership experience, and his deep understanding of operational financial issues. We design and manufacture our products, many of which are sophisticated scientific instruments used by scientists and researchers. The Board of Directors believes that Mr.Bowman contributes to the Board’sBoard’s understanding of the needs of our customers and the risks associated with our manufacturing processes. In addition, Mr. Bowman’sBowman’s experience as a management consultant and chief executive officer of a scientific equipment manufacturer contributes to the Board’sBoard’s strategic understanding and review of our business opportunities. Mr.Bowman also served as a director of Solexa, Inc. at the time we acquired Solexa, and through this position he gained an understanding of the DNA sequencing market which is our fastest growing market, and associated product development issues. Daniel M. Bradbury has been a director since January 2004. Mr.Bradbury has been servingserved as the Chief Executive Officer of Amylin Pharmaceuticals, Inc., a NASDAQ-listed biopharmaceutical company, since Marchfrom 2007 as President anduntil its acquisition by Bristol-Myers-Squibb Company in 2012. From 2006 until 2012, he was a board member of Amylin since June 2006,’s board of directors and served on its Finance and Risk Management Committee. Mr. Bradbury also served as Amylin’s President (2006-2007), Chief Operating Officer from 2003 to June 2006. He previously served as(2003-2006), and Executive Vice President from 2000 until his promotion in 2003.(2000-2003). He joined Amylin in 1994 and also held officer-level positions in Corporate Development and Marketing since that time.Marketing. From 1984 to 1994, Mr. Bradbury held a number of sales and marketing positions at SmithKline Beecham Pharmaceuticals, a global pharmaceutical manufacturer. Mr. Bradbury serves as a board memberdirector of BIOCOM,Corcept Therapeutics Incorporated, a NASDAQ-listed biopharmaceutical company, Geron Corporation, a NASDAQ-listed biopharmaceutical company, BioMed Realty Trust, Inc., a NYSE-listed real estate investment trust, and Castle Biosciences Inc., a privately-held molecular diagnostics company. Mr. Bradbury also serves on the BioMed Ventures Advisory Committee, the Investor Growth Capital Advisory Committee, the Keck Graduate Institute’sInstitute’s Board of Trustees, and the San Diego Regional Economic Development Corporation. Mr. Bradbury serves on the UCSD Rady School of Management’sManagement’s Advisory Council, the University of Miami’sMiami’s Innovation Corporate Advisory Council, and the University of Miami’sMiami’s Diabetes Research Institute Corporate Advisory Council. He received a Bachelor of Pharmacy from Nottingham University and a Diploma in Management Studies from Harrow and Ealing Colleges of Higher Education. In selecting Mr. Bradbury as a past nominee for election to the Board of Directors, the Board considered, among other things, Mr. Bradbury’sBradbury’s management and governance experience in the biopharmaceutical industry gained primarily through his involvement in leading the continuingrapid growth and development of Amylin, a rapidly growing, global biopharmaceutical company.Amylin. The Board of
Directors believes that Mr. Bradbury contributes to the Board’sBoard’s understanding of the risks and opportunities faced by a rapidly growing global business. In addition, Mr. Bradbury’sBradbury’s experience successfully commercializing pharmaceutical products contributes to the Board’sBoard’s understanding of the risks and opportunities associated with new product development in an industry regulated by the U.S. Food and Drug Administration. Karin Eastham, CPA, has been a director since July 2004. Ms. Eastham currently provides consulting and executive coaching to companies in the healthcare industry in addition to servingserves on the boards of directors for several life science companies. From May 2004 to September 2008, she served as Executive Vice President and Chief Operating Officer, and as a member of the Board of Trustees, of Burnham Institute for Medical Research, a non-profit corporation engaged in basic biomedical research. From 1999 to 2004, Ms.Eastham served as Senior Vice President, Finance, Chief Financial Officer and Secretary of Diversa Corporation, a biotechnology company. She previously held similar positions with CombiChem, Inc., a computational chemistry company, and CytelCorporation, a biopharmaceutical company. Ms.Eastham also held several positions, including Vice President, Finance, at Boehringer Mannheim Corporation, a biopharmaceutical company, from 1976 to 1988. Ms.Eastham also serves as a director for Amylin Pharmaceuticals, Inc.,MorphoSys AG, a NASDAQ-listed biopharmaceuticalFrankfurt Stock Exchange-listed biotechnology company; Geron Corporation, a NASDAQ-listed biopharmaceutical company; and Trius Therapeutics, Inc., a NASDAQ-listed biopharmaceutical company; and Veracyte, Inc., a privately-held molecular diagnostics company. Ms.Eastham also served as a past director of Amylin Pharmaceuticals, Inc., a NASDAQ-listed biopharmaceutical company, from 2005 until its sale to Bristol-Myers-Squibb Company in 2012; Genoptix, Inc., a NASDAQ-listed provider of specialized diagnostic laboratory services, from 2008 until its sale to Novartis AG in 2011; Tercica, Inc., a NASDAQ-listed biopharmaceutical company, from 2003 until its sale to Beaufour Ipsen Pharma in 2008; and SGX Pharmaceuticals, Inc., a NASDAQ-listed biopharmaceutical company, from 2005 until its sale to Eli Lilly and Company in 2008. Ms.Eastham received a B.S. and an M.B.A. from Indiana University and is a Certified Public Accountant.
In selecting Ms.Eastham as a past nominee for election to the Board of Directors, the Board considered, among other things, Ms. Eastham’sEastham’s understanding of biomedical research institutions combined with her business leadership and finance experience. A significant portion of our customers includes biomedical research institutions, and the Board of Directors believes that Ms.Eastham provides the Board with greater insight into the needs of such institutions. Ms.Eastham also contributes to the Board’sBoard’s understanding of governance and strategy for life sciences companies through her experience as a director in our industry. Additionally,Ms. Eastham’sEastham’s extensive senior management experience in the biopharmaceutical industry, particularly in key corporate finance and accounting positions, also provide the appropriate skills to serve on our Board of Directors. Paul C. Grint,Robert S. Epstein, M.D.,has been a director since April 2005.November 2012. Dr. GrintEpstein is currentlyan epidemiologist who worked in public health and academia before joining the private sector. From 2010 to 2012, Dr.Epstein was Chief R&D Officer and President of Cerexa, Inc.,Medco-UBC, a wholly-owned subsidiary2,400 person global research organization focused on conducting personalized medicine, health economics, drug safety, outcomes, and comparative effectiveness research on behalf of Forest Laboratories, Inc., a pharmaceutical company.the biopharmaceutical, medical device, and diagnostics industries. Prior to joining Cerexa,this role, Dr. Grint served as Senior Vice President at Forest Research Institute, Inc., the scientific development subsidiary of Forest Laboratories, Inc. Prior to joining Forest Laboratories, from 2006 to 2008 Dr. GrintEpstein was Medco’s Chief Medical Officer at Kalypsysfor 13 years, where he led formulary development, clinical guideline development, drug information services, personalized medicine program development, and client analytics and reporting. Dr.Epstein is also the former President of the International Society of Pharmacoeconomics and Outcomes Research (ISPOR), and has served on the board of directors of the Drug Information Association (DIA) and the International Society of Quality of Life. Dr. Epstein serves as a director of AVEO Pharmaceuticals, Inc., a biopharmaceuticalNASDAQ-listed cancer therapeutics company, and during 2006 he was Senior Vice PresidentProteus Digital Health, a privately-held healthcare technology company. Dr. Epstein has published more than 75 peer-reviewed medical articles and Chiefbook chapters and serves as a reviewer for several influential medical journals, including the New England Journal of Medicine and JAMA (The Journal of the American Medical Officer at Zephyr Sciences, Inc., a biopharmaceutical company. He has held similar executive positions at Pfizer Inc., IDEC Pharmaceuticals Corporation, and Schering-Plough Corporation.Association). Dr. Grint began his pharmaceutical career at the Wellcome Research Laboratories in the UK andEpstein received his medical degree and B.S. in Biomedical Science from the University of London, St. Bartholomew’s Hospital Medical College. He is a FellowMichigan and an M.S. in preventative medicine from the University of the Royal College of Pathologists, a member of numerous professional and medical societies, and the author or co-author of over 50 publications.Maryland.In selecting Dr. GrintEpstein as a past nominee for election to the Board of Directors, the Board considered, among other things, Dr. Grint’s product development expertise gained from more than 20 yearsEpstein’s in-depth experience and practical knowledge of how molecular diagnostic tests are reimbursed and the issues raised by payors and other evidentiary authorities. As our technology and products are increasingly utilized in molecular diagnostics and clinical settings, Dr. Epstein’s experience in biologics and small molecule drug development, marked bywill contribute to the successful development of numerous commercial products in the fields of infectious disease, immunology, and oncology, combined with hisBoard’s understanding of thethese markets that we serve. Our continued growth is dependent on developing and commercializing new products and services for both the research and clinical markets. The Board of Directors believes that Dr. Grint contributes to the Board’s understanding of the needs of research and clinical customers and the risks and opportunities associated with new product developmentoperating in an industrymarkets regulated by the U.S. Food and Drug Administration. Gerald Möller, Ph.D., has been a director since July 2010. Dr. Möller is currently an advisor at HBM Bio Ventures AG, a Swiss investment firm focusing on biotechnology, emerging pharmaceutical, medical technology, and related industries. Previously, Dr. Möller spent 23 years at Boehringer Mannheim in Germany, Japan, and the United States, where he held a number of leadership positions, including president of Decentralized Diagnostics,
president of Advanced Diagnostics and Biochemicals, and chief executive officer of Boehringer Mannheim Therapeutics. In 1995 he became chief executive officer of the worldwide Boehringer Mannheim Group. Following Boehringer’s acquisition by Roche in 1998, Dr. Möller became head of Global Development and Strategic Marketing, Pharmaceuticals, and a member of the Executive Committee at Hoffmann LaRoche where he served until the end of 1998. In addition to Illumina, Dr. Möller sits on several life sciences and diagnostics boards, including Morphosys AG, a Frankfurt Stock Exchange-listed biotechnology
company focusing on developing the next generation of fully human antibodies;company; Bionostics, Inc., a privately-held developer and manufacturer of calibrators and quality control products for diabetes diagnostics test systems;
Invendo-Medical GmbH, a privately-held medical technology company; Adrenomed AG, a privately-held biopharmaceutical company; and
Definiens AG, a privately-held provider of image analysis for digital pathology. Dr. Möller served as a past director of Vivacta Limited, a privately-held medical diagnostics
company.company, until its sale to Novartis AG in December 2012. Dr. Möller also is
chairmanvice-chairman of the Foundation for Innovative New Diagnostics (FIND), a product development and implementation partnership financed in part by the Bill & Melinda Gates Foundation. He holds a Ph.D. in physical chemistry from the University of Kiel in Germany.
In selecting Dr.Möller as a past nominee for election to the Board of Directors, the Board considered, among other things, Dr. Möller’s product development and diagnostics expertise gained from more than 30 years of leadership and strategic experience at global pharmaceutical and life science companies. The Board of Directors believes that Dr. Möller’s diagnostics experience, in particular, contributes to the Board’s understanding of the growing diagnostics market and the opportunity and risks associated with such market. David R. Walt, Ph.D., is one of our founders and has been a director and Chairman of our Scientific Advisory Board since June 1998. Dr.Walt has been the Robinson Professor of Chemistry at Tufts University since 1995 and has been a Howard Hughes Medical Institute Professor since 2006. Dr.Walt is a Member of the National Academy of Engineering, a Fellow of the American Institute of Medical and Biological Engineers, and a Fellow of the American Association for the Advancement of Science. Dr.Walt has published over 200250 papers and is named as an inventor or co-inventor of over 4060 patents, many of which are directed to our micro-array products. He also serves as a board member for Quanterix, Inc., a privately-held company focused on single molecule analysis for clinical diagnostics.diagnostics, and AuraSense, LLC, a privately-held company focused on developing therapeutic agents based on spherical nucleic acids. Dr.Walt holds a B.S. in Chemistry from the University of Michigan and received his Ph.D. in Chemical Biology from SUNY at Stony Brook. In selecting Dr. Walt as a past nominee for election to the Board of Directors, the Board considered, among other things, Dr. Walt’sWalt’s scientific and technical expertise combined with his understanding of the markets that we serve. Our continued growth is dependent on scientific and technical advances, and the Board believes that Dr.Walt offers both strategic and technical insight into the risks and opportunities associated with our business. In addition, Dr. Walt’sWalt’s academic and research experience provides the Board of Directors with valuable insight into the needs of our customers, many of which are scientific research institutions, and the opportunities associated with serving the research market. Roy A. Whitfield has been a director since January 2007. Mr.Whitfield is the former Chairman of the Board and Chief Executive Officer of Incyte Corporation (formerly Incyte Genomics), a NASDAQ-listed drug discovery and development company he co-founded in 1991. From 1993 to 2001, Mr.Whitfield served as its Chief Executive Officer and, from November 2001 until his retirement in June 2003, as its Chairman. Mr.Whitfield remains on the board of Incyte Corporation. From 1984 to 1989, Mr. Whitfield held senior operating and business development positions with Technicon Instruments Corporation, a medical instrumentation company, and its predecessor company, Cooper Biomedical, Inc., a biotechnology and medical diagnostics company. Earlier, Mr.Whitfield spent seven years with the Boston Consulting Group’sGroup’s international consulting practice. In addition to serving on the Incyte Board, since 2000 he has served as a director of Nektar Therapeutics, a NASDAQ-listed clinical-stage biopharmaceutical company, and he also serves as a director of Station X Inc., a privately-held developer of software products for analyzing large-scale human genome information. Mr.Whitfield also served as a past director of Solexa, Inc. from 2006 until its sale to Illumina in 2007. Mr.Whitfield received a B.S. in Mathematics from Oxford University and an M.B.A. from Stanford University. In selecting Mr.Whitfield as a past nominee for election to the Board of Directors, the Board considered, among other things, Mr. Whitfield’sWhitfield’s management and governance experience in the biotechnology and genomics industries gained primarily through his involvement in leading the growth and development of Incyte Corporation. The Board of Directors believes that Mr.Whitfield contributes to the Board’sBoard’s understanding of the risks and opportunities faced by a rapidly growing global business. In addition, Mr. Whitfield’sWhitfield’s experience as a management consultant contributes to the Board’sBoard’s strategic understanding and review of our business opportunities.
Mr.Whitfield also served as a director of Solexa, Inc. at the time we acquired Solexa, and through this position he gained an understanding of the DNA sequencing market which is our fastest growing market, and associated product development issues.
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Our business is managed under the direction of the Board of Directors. Our certificate of incorporation and bylaws provide for a classified Board of Directors consisting of three classes of directors with staggered three-year terms. The Board has determined that a majority of the members of the Board, specifically Mr. Bradbury, Mr. Bowman, Ms. Eastham, Dr.
Epstein, Dr. Grint, Dr. Möller, Dr. Rastetter, Dr. Walt, and Mr. Whitfield, are independent directors under the rules of The NASDAQ Global Select Market.
The Board of Directors intends to hold executive sessions of the non-management directors following each regularly scheduled in-person meeting of the Board of Directors. Executive sessions do not include any employee directors of the Company. At its meetings during the fiscal year ended January 1,December 30, 2012 (“fiscal 2011”2012”), the Board of Directors regularly met in executive sessions of non-employee directors. The Board of Directors has adopted Corporate Governance Guidelines outlining its duties. These guidelines can be viewed on our website atwww.illumina.com by clicking on “Company,” then “Investor Relations,” and then on “Corporate Governance.” The Board of Directors meets regularly to review significant developments affecting the Company and to act on matters requiring Board of Directors’ approval. The Board of Directors held eight18 formal meetings during fiscal 20112012 and acted oncethree times by written consent. Board members are requested to make attendance at Board and Board committee meetings a priority, to come to meetings prepared, having read any materials provided to the Board of Directors prior to the meeting, and to participate actively in the meetings.
During fiscal 2011,2012, each director attended, in person or by telephone, at least 75% of the total number of meetings of both the Board of Directors and Board committees on which such director served during the period. Board members are invited to attend our annual meetings of stockholders, but they are not required to do so. We reimburse the travel expenses of any director who travels to attend the annual meetings. TwoEight members of the Board of Directors attended our 20112012 annual meeting of stockholders.
The Board of Directors and our management believe that good corporate governance is an important component in enhancing investor confidence in the Company and increasing stockholder value. The imperative to continue to develop and implement best practices throughout our corporate governance structure is fundamental to our strategy to enhance performance by creating an environment that increases operational efficiency and ensures long-term productivity and growth. Sound corporate governance practices also ensure alignment with stockholder interests by promoting fairness, transparency, and accountability in business activities among employees, management, and the Board of Directors.
We maintain a corporate governance page on our website that includes key information about our corporate governance initiatives, including our Corporate Governance Guidelines, Code of Ethics, and charters for each of the committees of the Board of Directors, including the Audit Committee, the Compensation Committee, the Nominating/Corporate Governance Committee, and the Diagnostics Advisory Committee. The corporate governance page can be found on our website atwww.illumina.comby clicking on “Company,” then “Investor Relations,” and then on “Corporate Governance.”
Board Leadership Structure
We separate the positions of Chief Executive Officer and Chairman of the Board in recognition of the differences between the two roles. Our Chief Executive Officer is responsible for setting the strategic direction for the Company and its day-to-day leadership and performance, while the Chairman of the Board provides guidance to the Chief Executive Officer, reviews the schedules and agendas for Board meetings, and presides over meetings of the full Board. The Board of Directors believes that this leadership structure is best for the Company at the current time, as it appropriately balances the need for the Chief Executive Officer to run the Company on a day-to-day basis with significant involvement and authority vested in an outside independent board member. In addition, the Board of Directors believes that there are advantages to having an independent Chairman for matters such as communications and relations between the Board, the Chief Executive Officer, and other members of senior management; in assisting the Board in reaching consensus on particular strategies and policies; and in facilitating robust director, Board, and Chief Executive Officer evaluation processes. Under our Corporate Governance Guidelines, our independent Chairman is responsible for:
reviewing the schedules and agendas for Board meetings as determined and prepared by the Chief Executive Officer;
participating as an observer on any Board committee on which he or she is not a member, if appropriate;
discussing the results of the Chief Executive Officer’s performance evaluation with the Chair of the Compensation Committee; and
leading the Board in discussing and conveying to the Chief Executive Officer the results of the Chief Executive Officer’s performance evaluation.
In performing the duties described above, our independent Chairman is expected to consult with the Chairs of the appropriate Board committees and solicit their participation in order to avoid diluting the authority and responsibilities of such Committee Chairs.
Board’s Role in Risk Oversight
The Board of Directors is responsible for overseeing our risk management. To assist its oversight function, the Board has delegated many risk oversight functions to the Audit Committee. Under its charter, the Audit Committee is responsible for providing advice to the Board with respect to our risk evaluation and mitigation processes, including, in particular, the processes utilized by management for identifying, evaluating, and mitigating strategic, financial, operational, regulatory, and external risks inherent in our business. The Audit Committee also oversees our internal audit function. In addition to the Audit Committee’s work in overseeing risk management, our full Board regularly engages in discussions of the most significant risks that we face and how these risks are being managed, and the Board receives reports on risk management from our senior officers and outside consultants engaged to provide an enterprise-level review of the risks facing the Company.
Our senior executives provide the Board of Directors and its committees with regular updates about our strategies and objectives and the risks inherent within them at Board and committee meetings and in regular reports. Board and committee meetings also provide a venue for directors to discuss issues of concern with management. The Board of Directors and committees call special meetings when necessary to address specific issues or matters that should be addressed before the next regularly scheduled meeting. In addition, our directors have access to our management at all levels to discuss any matters of interest, including those related to risk. Those members of management most knowledgeable
ofabout the
applicable issues attend Board meetings to provide additional insight into items being discussed, including risk exposures. In addition, the Company’s General Counsel and the Company’s Chief Financial Officer report directly to our President and Chief Executive Officer, providing him with visibility to our risk profile. The Board of Directors believes that the work undertaken by the Audit Committee, together with the work of the full Board and the President and Chief Executive Officer, enables the Board to effectively oversee our risk management function.
The Compensation Committee, together with senior management, also reviews compensation programs and benefits plans affecting employees generally (in addition to those applicable to our executive officers), and we have concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. We also believe that our incentive compensation arrangements provide incentives that do not encourage risk-taking beyond our ability to effectively identify and manage significant risks; are compatible with effective internal controls and our risk management practices; and are supported by the oversight and administration of the Compensation Committee with regard to executive compensation programs.
Committees of the Board of Directors
The Board of Directors has four standing committees to facilitate and assist the Board in the execution of its responsibilities. These committees are currently the Audit Committee, the Compensation Committee, the Nominating/Corporate Governance Committee, and the Diagnostics Advisory Committee. In accordance with The NASDAQ Global Select Market listing standards, all of the committees are composed solely of non-employee,independent directors. Charters for each committee are available on our website atwww.illumina.com by first
clicking on “Company,” then “Investor Relations,” and then on “Corporate Governance.” The charter of each committee is also available in print to any stockholder who requests it.
Audit Committee
|
| | | |
Members:
Audit Committee | | |
| | | |
| Members: | | A. Blaine Bowman, Chairperson William H. Rastetter, Ph.D. |
| | |
| Number of Meetings in Fiscal 2011:2012: | | 8 |
| | |
| Purpose and Functions: | | Oversees
To oversee our accounting and financial reporting processes and audits of our financial statements on behalf of the Board of Directors and providesprovide advice with respect to our risk evaluation and mitigation processes. To monitor and advise the Board on: • the integrity of our financial statements and disclosures; • the independent auditor’s qualifications and independence; • the performance of internal and independent audit functions; • the adequacy of the our internal controls; • our compliance with legal and regulatory requirements; and • the processes utilized by management for identifying, evaluating, and mitigating strategic, financial, operational, regulatory, and external risks inherent in our business. |
| | |
| Financial Experts: | | The Board of Directors has unanimously determined that all Audit Committee members are financially literate under current NASDAQ listing standards, and at least one member has financial sophistication under NASDAQ listing standards. In addition, the Board of Directors has unanimously determined that all Audit Committee members qualify as an “audit committee financial expert” under SEC rules and regulations. Designation as an “audit committee financial expert” is an SEC disclosure requirement and does not impose any additional duties, obligations, or liability on any person so designated. |
Compensation Committee
|
| | | |
Members:
Compensation Committee | | |
| | | |
| Members: | | Roy A. Whitfield, Chairperson William H. Rastetter, Ph.D. |
| | |
| Number of Meetings in Fiscal 2011:2012: | | 67 (and acted five times by written consent) |
| | |
| Purpose and Functions: | | To discharge the responsibilities of the Board of Directors with respect to compensation matters for our executive officers and other employees and consultants. To report annually to our stockholders on executive compensation matters. To administer our equity and other compensation plans. To take or cause to be taken such other actions and address such other matters as the Board of Directors may from time to time authorize the committee to undertake. |
The Chief Executive Officer may not participate in or be present during any deliberations or determinations of the Compensation Committee regarding his compensation or individual compensation objectives.
Mr. Flatley, our President and Chief Executive Officer, has been delegated limited authority to grant, without any further action required by the Compensation Committee, stock options and restricted stock units to any employee who has a title below the rank of “Vice President,” who is not designated as a “Section 16 Officer,” and who does not report directly to him. The purpose of this delegation of authority is to enhance the flexibility of equity administration and to facilitate the timely grant of equity awards to non-management employees, particularly new employees, within specified limits approved by the Compensation Committee. At least annually, Mr. Flatley reports to the Compensation Committee on his exercise of this delegated authority during the preceding 12 months.
Nominating/Corporate Governance Committee
|
| | | |
Members:
Nominating/Corporate Governance Committee | |
| | | |
| Members: | | Karin Eastham, CPA, Chairperson William H. Rastetter, Ph.D. David R. Walt, Ph.D. |
| | |
| Number of Meetings in Fiscal 2011:2012: | | 5 |
| | |
| Purpose and Functions: | | To identify individuals qualified to serve as members of the Board of Directors. To select nominees for election as directors of the Company. To evaluate the performance of the Board of Directors. To develop and recommend to the Board of Directors corporate governance guidelines. To provide oversight with respect to corporate governance and ethical conduct. |
Diagnostics Advisory Committee
|
| | | |
Members:
Diagnostics Advisory Committee | | |
| Members: | | Gerald Möller, Ph.D., Chairperson Robert S. Epstein, M.D. |
| | |
| Number of Meetings in Fiscal 2011:2012: | | 3 |
| | |
| Purpose and Functions: | | To periodically review and advise the Board of Directors on the strategic direction and objectives of our diagnostics business, including providing understanding, clarification, and validation of the fundamental strategy of the diagnostics business (and its positioning and impact on our overall corporate strategy) in order to enable the Board to make informed business decisions. The committee is also responsible for identifying and discussing with the Board of Directors significant emerging trends and issues related, or of relevance, to the strategic goals and objectives of our diagnostics business. |
Compensation Committee Interlocks and Insider Participation
Our executive compensation program has been administered by the Compensation Committee of our Board of Directors. None of the members of the Compensation Committee has been an officer or employee of ours. None of our current executive officers has ever served as a member of a board of directors or compensation committee of any other entity that has or has had one or more executive officers serving as a member of our Board of Directors or Compensation Committee during fiscal 2011.2012. We have adopted a code of ethics that applies to all of our directors, officers, and employees, including our principal executive officer and principal financial officer. This code of ethics is reviewed by the Nominating/Corporate Governance Committee of our Board of Directors on an annual basis and modified as deemed necessary. Our code of ethics is available for download from our website,www.illumina.com, by first clicking on “Company,” then “Investor Relations,” and then on “Corporate Governance.” A copy of the Code of Ethics may also be obtained free of charge, from us upon a request directed to Illumina, Inc., 5200 Illumina Way, San Diego, California 92122, Attention: Investor Relations. We will disclose within four business days any substantive changes in or waivers of the Code of Ethics granted to our principal executive officer, principal financial officer, principal accounting officer, or controller, or persons performing similar functions, by posting such information on our website as set forth above rather than by filing a Form 8-K with the SEC.
Criteria for Board Membership
The Board of Directors has delegated to the Nominating/Corporate Governance Committee the responsibility for reviewing and recommending to the
boardBoard nominees for director. In accordance with our Corporate Governance Guidelines, the Nominating/Corporate Governance Committee, in evaluating
boardBoard candidates, considers factors such as depth and breadth of experience, wisdom, integrity, ability to make independent analytical inquiries, understanding of our business environment, and willingness to devote adequate time to
boardBoard duties, all in the context of an assessment of the needs of the
boardBoard at the time. The Nominating/Corporate Governance Committee seeks to ensure that at least a majority of directors are independent under the rules of The NASDAQ Global Select Market, that members of our Audit Committee meet the financial literacy and sophistication requirements under the rules of The NASDAQ Global Select Market, and at least one of them qualifies as an “audit committee financial expert” under the rules of the SEC.
The Nominating/Corporate Governance Committee’s objective is to maintain a board of individuals of the highest personal character, integrity, and ethical standards, and that reflects a range of professional backgrounds and skills relevant to our business. For each of the nominees to the
board,Board, the biographies shown above highlight the experiences and qualifications that were viewed as being among the most important by the Nominating/Corporate Governance Committee in concluding that the nominee should serve as a director of the Company. The Nominating/Corporate Governance Committee considers diversity as one of many, but not dispositive, factors in identifying nominees for director, including personal characteristics such as race and gender, as well as diversity in the experience and skills that contribute to the
board’sBoard’s performance of its responsibilities in the oversight of a complex and highly-competitive global business. The Nominating/Corporate Governance Committee does not assign specific weights to particular criteria and no particular criterion is necessarily applicable to all prospective nominees.
Process for Identifying and Evaluating Nominees
The Nominating/Corporate Governance Committee believes we are well-served by our current directors. In the ordinary course, absent special circumstances or a material change in the criteria for
boardBoard membership, the Nominating/Corporate Governance Committee will re-nominate incumbent directors who continue to be qualified for
boardBoard service and are willing to continue as directors. If an incumbent director is not standing for re-election, or if a vacancy on the
boardBoard occurs between annual stockholder meetings, the Nominating/Corporate Governance Committee will seek out potential candidates for
boardBoard appointment who meet the criteria for selection as a nominee and have the specific qualities or skills being sought. In addition, from time to time the
boardBoard may seek to expand its ranks to bring in new
boardBoard members with special skills and/or experience relevant and useful to us at our particular stage of development. Director candidates will be selected based on input from members of our Board of Directors, our senior management, and, if the Nominating/Corporate Governance Committee deems appropriate, a third-party search firm. The Nominating/Corporate Governance Committee will evaluate each candidate’s qualifications and check relevant references; in addition, such candidates will be interviewed by at least one member of the Nominating/Corporate Governance Committee. Candidates meriting serious consideration will meet with all members of the Board of Directors. Based on this input, the Nominating/Corporate Governance Committee will evaluate which of the prospective candidates is qualified to serve as a director and whether the committee should recommend to the
boardBoard that this candidate be appointed to fill a current vacancy on the
boardBoard or presented for the approval of the stockholders, as appropriate.
The Nominating/Corporate Governance Committee will consider written proposals from stockholders for nominees for director under the same criteria described above but, based on those criteria, may not necessarily recommend those nominees to the Board of Directors. Any such nominations should be submitted to the Nominating/Corporate Governance Committee, via the attention of our Secretary, and should include the following information:
all information relating to such nominee that is required to be disclosed pursuant to the Securities Exchange Act of 1934 (including such person’s written consent to a background check, to being named in the proxy statement as a nominee, and to serving as a director, if elected);
the names and addresses of the stockholder(s) making the nomination and the number of shares of our common stock that are owned beneficially and of record by such stockholder(s); and
appropriate biographical information and a statement as to the qualification of the nominee, including the specific experience, qualifications, attributes, or skills of the nominee, demonstrating the relevance and usefulness to our company of such experience, qualifications, attributes, and/or skills at our particular stage of development.
Nominations should be submitted in the timeframe described in our
Bylawsbylaws and under the caption “Stockholder Proposals for our
20132014 Annual Meeting” below.
From time to time, we have retained and may in the future retain the services of an independent third-party search firm to assist the Nominating/Corporate Governance Committee in identifying and evaluating potential candidates.
COMMUNICATIONS WITH THE BOARD OF DIRECTORS
All interested parties who wish to communicate with the Board of Directors or any of the non-management directors may do so by sending a letter to the Corporate Secretary, Illumina, Inc., 5200 Illumina Way, San Diego, California 92122, and should specify the intended recipient or recipients. All such communications will be forwarded to the appropriate director or directors for review, except for spam, junk mail, mass mailings, product complaints or inquiries, job inquiries, surveys, business solicitations or advertisements, or patently offensive or otherwise inappropriate material.
In addition, you may send, in an envelope marked “Confidential,” a written communication to the Chair of the Audit Committee, via the attention of our Corporate Secretary, at Illumina, Inc., 5200 Illumina Way, San Diego, California 92122. All such envelopes will be delivered unopened to the Chair of our Audit Committee.
DIRECTOR AND EXECUTIVE OFFICER STOCK OWNERSHIP POLICY
The Board of Directors, acting on the recommendation of the Compensation Committee, has adopted stock ownership guidelines that are applicable to each of our non-employee directors, each of our executive officers who is subject to
the restrictions of Section 16 of the Securities Exchange Act of 1934, and each of our officers having a title of “Senior Vice President” or above. Under the ownership guidelines each individual subject to the guidelines is expected to own and hold shares of our common stock having an aggregate value at least equal to:
with respect to non-employee directors, three times the annual cash retainer paid to non-employee directors for serving as a director, without regard to committee or chairperson assignments; and
with respect to executive officers, such executive officer’s base salary.
Under the ownership guidelines, each individual subject to the guidelines is required to achieve compliance with the applicable ownership levels set forth above within three years from the date such individual director or officer first became subject to the guidelines, which is typically from the later of when such individual joined the Company or March 8, 2010 (the effective date of the ownership guidelines).
Unvested shares of restricted stock, unvested restricted stock units
(RSUs)(“RSUs”), unvested performance stock units (“PSUs”), and unvested stock options do not count towards satisfaction of the ownership guidelines. Because we do not count such unvested awards, even if such awards are time vesting-only, we believe that our ownership policy is more robust than ownership policies adopted by other companies that may have higher ownership thresholds but count unvested awards if the passage of time is the only vesting requirement.
During such time as a covered officer or director is not in compliance with his or her applicable ownership guidelines, such officer or director:
is required to retain an amount equal to 100% of the net shares of common stock received as a result of the vesting of restricted stock or RSUs (“net shares” are those shares that remain after shares are sold or netted to pay withholding taxes); and
may not establish a qualified trading plan (i.e., a Rule 10b5-1 trading program) or modify an existing qualified trading plan to increase the number of shares of our common stock to be sold under such plan (under our Insider Trading Policy our directors, executive officers and each of our officers having a title of “Senior Vice President” or above may only sell shares of our common stock pursuant to a qualified trading plan).
| plan (under our Insider Trading Policy our directors, executive officers and each of our officers having a title of “Senior Vice President” or above may only sell shares of our common stock pursuant to a qualified trading plan).
|
Our directors play a critical role in guiding our strategic direction and overseeing the management of the Company. Ongoing developments in corporate governance and financial reporting have resulted in an increased demand for such highly qualified and productive public company directors. The many responsibilities and risks and the substantial time commitment of being a director of a public company require that we provide adequate incentives for our directors’ continued performance by paying compensation commensurate with our directors’ workload. Our non-employee directors are compensated based upon their respective levels of
boardBoard participation and responsibilities, including service on
boardBoard committees. Directors who are our employees, such as Mr. Flatley, receive no separate compensation for their services as directors.
Our director compensation is overseen by the Compensation Committee of our Board of Directors, which makes recommendations to the Board of Directors on the appropriate amount and structure of our programs in light of then-current competitive practice. The Compensation Committee typically receives advice and recommendations from a compensation consultant with respect to its determination on director compensation matters.
We use a combination of cash and stock-based compensation to attract and retain qualified candidates to serve on the Board of Directors.
During fiscal 2011,2012, each of our non-employee directors was eligible to receive an annual cash retainer of $50,000,$50,000, and the Chairman of the Board was eligible to receive an additional $20,000.$20,000. In January 2013, the Board of Directors, acting on the recommendation of the Compensation Committee, determined that effective immediately following the 2013 annual meeting of stockholders the Chairman of the Board be eligible to receive an additional $50,000 per year (increased from $20,000). The Board of Directors approved this increase, in part, because the Board determined that effective immediately following the 2013 annual meeting of stockholders the Chairman would be limited to serving on no more than one Board committee of the Chairman’s choosing and as a non-voting, ex officio member of all other Board committees. Other than the foregoing change with respect to the Chairman, the Board of Directors has determined not to make any changes to the amount of the foregoing annual retainers for the fiscal year ending on December 30, 2012.29, 2013
. In addition, during fiscal 20112012 each of our non-employee directors serving on one or more board committeeBoard committees was eligible to receive the applicable fees set forth below. | | | | | | | | | | | | | | | | |
| | | Fiscal 2011 Board Committee Fees ($) | |
| | | Audit
Committee | | | Compensation
Committee | | | Nominating/Corporate
Governance
Committee | | | Diagnostics
Advisory Committee | |
Chairperson | | | 25,000 | | | | 15,000 | | | | 12,500 | | | | 12,500 | (1) |
Member | | | 15,000 | | | | 10,000 | | | | 7,000 | | | | 7,000 | |
(1) | The Diagnostics Advisory Committee has only one member, who is also the Chairperson. |
|
| | | | | | | | | | | | |
| | | Fiscal 2012 Board Committee Fees ($) |
| | | Audit Committee | | Compensation Committee | | Nominating/Corporate Governance Committee | | Diagnostics Advisory Committee |
| Chairperson | | 25,000 |
| | 15,000 |
| | 12,500 |
| | 12,500 |
|
| Member | | 15,000 |
| | 10,000 |
| | 7,000 |
| | 7,000 |
|
The Board of Directors,
hasacting on the recommendation of the Compensation Committee, determined
notthat effective January 1, 2013, the Chairperson and members of the Compensation Committee be eligible to
make any changes to the foregoing applicable fees for the fiscal year ending on December 30, 2012.receive $25,000 and $15,000, respectively, per year.
Stock in Lieu of Cash Compensation
Non-employee directors may elect to receive shares of our common stock in lieu of all, but not less than all, cash retainers and
boardBoard committee fees (discussed above) otherwise payable by the Company to such director in a given calendar year. Shares issued to an eligible director electing to receive cash compensation in the form of shares will not be subject to vesting or forfeiture restrictions and will be issued on a quarterly basis. The number of shares issued to an eligible director electing to receive shares in lieu of cash will equal the amount of cash compensation otherwise payable by the Company to such director for the immediately preceding calendar quarter, divided by the weighted average closing price of our common stock during the immediately preceding
calendar quarter (calculated by reference to each trading day during such quarter). No fractional shares will be issued, and in lieu of fractional shares, the Company will pay to such electing director an amount of cash equal to any such fractional share multiplied by the weighted average closing price of our common stock during the immediately preceding calendar quarter (calculated by reference to each trading day during such quarter).
In connection with our 20112012 annual meeting of stockholders, each of our non-employee directors received a stock option grant of 10,800 shares and an award of 1,440 restricted stock units, or RSUs, in each case granted under our Amended and Restated 2005 Stock and Incentive Plan. Each stock option grant has an exercise price equal to the fair market value of our common stock on the grant date, May 10, 2011,April 18, 2012, which was the date of our 20112012 annual meeting of stockholders. Both the stock options and the RSUs vest on the earlier of (i) the one year anniversary of the grant date of the option or award and (ii) the date immediately preceding the date of the annual meeting of our stockholders for the year following the year of grant of the option or award. TheIn January 2013, the Board of Directors, hasacting on the recommendation of the Compensation Committee, determined not to make any changes tothat the foregoing applicablestock option equivalent ratio between stock option grants and RSU awards be roughly equal (with each RSU counted as the equivalent of a stock option grant of three shares). Accordingly, for the fiscal year ending on December 30, 2012, which awards29, 2013, each of our non-employee directors will be granted in connection with our 2012eligible to receive a stock option grant of 7,600 shares and an award of 2,500 RSUs, which grant or award is to be made automatically on the date of the 2013 annual meeting of stockholders.stockholders, with a stock option exercise price equal to the fair market value of our common stock on the grant date. Both the stock options and the RSUs will vest on the earlier of (i)
the one year anniversary of the grant date of the option or award and (ii)the date immediately preceding the date of the annual meeting of our stockholders for the year following the year of grant of the option or award. Awards Upon First Joining the Board of Directors
Upon
For the fiscal year ending on December 29, 2013, upon first joining the Board of Directors, each non-employee director is eligible to receive a one-time stock option grant of
28,00020,000 shares and an award of
4,0006,700 RSUs, which grant or award is to be made automatically on the date the individual is elected a director, whether by stockholder approval or appointment by the
board,Board, with a stock option exercise price equal to the fair market value of our common stock on the grant date. Both the stock options and the RSUs vest over a four-year period, with 25%
of the options vesting on the first anniversary of the grant and the remaining portion vesting monthly over the following 36 months and with 25% of the RSU vesting on each of the first four anniversaries of the grant.
Directors who receive RSUs are given the opportunity, at the time they execute award agreements providing for the RSU grant, to elect to receive, at the time the RSU vests, a portion of the award in cash rather than in shares in order to enable the director to satisfy his or her obligation to pay the federal income tax that becomes due at the time of such vesting.
In addition to the cash and equity compensation described above, we reimburse our non-employee directors for their expenses incurred in connection with attending
boardBoard and committee meetings. We do not provide directors with additional compensation for attending
boardBoard or committee meetings.
Non-Employee Director Compensation
The following table summarizes the total compensation paid by the Company to the non-employee directors for the fiscal 2011. | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name(1) | | Fees
Earned
or Paid
in Cash
($)(2) | | | Stock
Awards
($)(3)(4) | | | Option
Awards
($)(3)(5) | | | Non-Equity
Incentive Plan
Compensation
($) | | | Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings | | | All Other
Compensation
($) | | | Total
($) | |
William H. Rastetter | | | 102,000 | | | | 108,950 | | | | 337,337 | | | | — | | | | — | | | | — | | | | 548,287 | |
A. Blaine Bowman | | | 75,000 | | | | 108,950 | | | | 337,337 | | | | — | | | | — | | | | — | | | | 521,287 | |
Daniel M. Bradbury | | | 75,000 | | | | 108,950 | | | | 337,337 | | | | — | | | | — | | | | — | | | | 521,287 | |
Karin Eastham | | | 75,000 | | | | 108,950 | | | | 337,337 | | | | — | | | | — | | | | — | | | | 523,787 | |
Paul C. Grint(6) | | | — | | | | 108,950 | | | | 337,337 | | | | — | | | | — | | | | — | | | | 446,287 | |
Gerald Möller | | | 62,500 | | | | 108,950 | | | | 337,337 | | | | — | | | | — | | | | — | | | | 508,787 | |
David R. Walt | | | 57,000 | | | | 108,950 | | | | 337,337 | | | | — | | | | — | | | | — | | | | 503,287 | |
Roy A. Whitfield | | | 65,000 | | | | 108,950 | | | | 337,337 | | | | — | | | | — | | | | — | | | | 511,287 | |
|
| | | | | | | | | | | | | | | | | | | | |
| Name(1) | Fees Earned or Paid in Cash ($)(2) | | Stock Awards ($)(3)(4) | | Option Awards ($)(3)(5) | | Non-Equity Incentive Plan Compensation ($) | | Change in Pension Value and Nonqualified Deferred Compensation Earnings | | All Other Compensation ($) | | Total ($) |
| William H. Rastetter | 102,000 |
| | 64,094 |
| | 179,804 |
| | — |
| | — |
| | — |
| | 345,898 |
|
| A. Blaine Bowman | 75,000 |
| | 64,094 |
| | 179,804 |
| | — |
| | — |
| | — |
| | 318,898 |
|
| Daniel M. Bradbury | 75,000 |
| | 64,094 |
| | 179,804 |
| | — |
| | — |
| | — |
| | 318,898 |
|
| Karin Eastham | 77,500 |
| | 64,094 |
| | 179,804 |
| | — |
| | — |
| | — |
| | 321,398 |
|
| Robert S. Epstein(6) | 14,250 |
| | 204,680 |
| | 605,839 |
| | — |
| | — |
| | — |
| | 824,769 |
|
| Paul Grint | 60,000 |
| | 64,094 |
| | 179,804 |
| | — |
| | — |
| | — |
| | 303,898 |
|
| Gerald Möller | 62,500 |
| | 64,094 |
| | 179,804 |
| | — |
| | — |
| | — |
| | 306,398 |
|
| David R. Walt | 57,000 |
| | 64,094 |
| | 179,804 |
| | — |
| | — |
| | — |
| | 300,898 |
|
| Roy A. Whitfield | 65,000 |
| | 64,094 |
| | 179,804 |
| | — |
| | — |
| | — |
| | 308,898 |
|
| | | | | | | | | | | | | | |
| |
| (1) | Jay T. Flatley, our President and Chief Executive Officer, is not included in this table as he is our employee and receives no additional compensation for his service as a director. The compensation received by Mr. Flatley as our employee is shown in the Summary Compensation Table on page 48.54. |
| |
| (2) | Includes cashthe following number of shares received in lieu of stock at the time that an RSU award vests. Please see “Additional Benefits” above.cash payments: (a) 1,311 shares for Dr. Rastetter, (b) 1,607 shares for Mr. Bradbury, (c) 1,285 shares for Dr. Grint, (d) 1,339 shares for Dr. Möller, (e) 1,222 shares for Dr. Walt, and (f) 1,392 shares for Mr. Whitfield. |
| |
| (3) | This reflects the grant date fair value of awards granted during fiscal 2011.2012. Assumptions used in the calculation of these amounts are included in Note 1note 9 to our audited consolidated financial statements included in our Annual Report on Form 10-K filed with the SEC on February 28, 2011.15, 2013. |
| |
| (4) | Each of the directors received an award of 1,440 RSUs on May 10, 2011April 18, 2012 (the date of our 20112012 annual meeting of stockholders), with a per share value of $75.66$44.51 (the closing price of our common stock on NASDAQ on May 10, 2011)April 18, 2012). |
| |
| (5) | Each of the then serving directors received a stock option award for 10,800 shares on May 10, 2011April 18, 2012 (the date of our 20112012 annual meeting of stockholders), with a per share exercise price of $75.66$44.51 (the closing price of our common stock on NASDAQ on May 10, 2011)April 18, 2012). |
| |
| (6) | Dr. Grint waived fees payableEpstein was appointed to the Board of Directors in cashNovember 2012 to fill a newly created position. In connection with his appointment, Dr.Epstein received an award of 4,000 RSUs on November26, 2012, with a per share value of $51.17 (the closing price of our common stock on NASDAQ on November26, 2012) and a stock option award for board and committee service totaling $60,000.28,000 shares on November26, 2012, with a per share exercise price of $51.17 (the closing price of our common stock on NASDAQ on November26, 2012). |
The following table shows the total number of unvested RSUs and total stock options held by each of our non-employee directors as of January 1, 2012: | | | | | | | | | | | | |
| | | Unvested
RSUs | | | Stock Options Outstanding | |
Name | | Outstanding | | | Vested | | | Unvested | |
William H. Rastetter | | | 1,440 | | | | 135,500 | | | | 10,800 | |
A. Blaine Bowman | | | 1,440 | | | | 97,956 | | | | 10,800 | |
Daniel M. Bradbury | | | 1,440 | | | | 41,500 | | | | 10,800 | |
Karin Eastham | | | 1,440 | | | | 79,500 | | | | 10,800 | |
Paul C. Grint | | | 1,440 | | | | 89,500 | | | | 10,800 | |
Gerald Möller | | | 4,400 | | | | 10,500 | | | | 28,300 | |
David R. Walt | | | 1,440 | | | | 155,500 | | | | 10,800 | |
Roy A. Whitfield | | | 1,440 | | | | 70,700 | | | | 10,800 | |
|
| | | | | | | | |
| | Unvested RSUs | | Stock Options Outstanding |
| Name | Outstanding | | Vested | | Unvested |
| William H. Rastetter | 1,440 |
| | 146,300 |
| | 10,800 |
|
| A. Blaine Bowman | 1,440 |
| | 108,756 |
| | 10,800 |
|
| Daniel M. Bradbury | 1,440 |
| | 52,300 |
| | 10,800 |
|
| Karin Eastham | 1,440 |
| | 80,300 |
| | 10,800 |
|
| Robert S. Epstein | 4,000 |
| | — |
| | 28,000 |
|
| Paul C. Grint | 1,440 |
| | 100,300 |
| | 10,800 |
|
| Gerald Möller | 3,440 |
| | 27,716 |
| | 21,884 |
|
| David R. Walt | 1,440 |
| | 146,300 |
| | 10,800 |
|
| Roy A. Whitfield | 1,440 |
| | 81,500 |
| | 10,800 |
|
PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth the number of shares of our common stock beneficially owned by each of our directors and director nominees and each executive officer named in the Summary Compensation Table (the “named executive officers”), and by all of our directors, director nominees, and executive officers as a group.
The information set forth below is as of January 31, 2012April 2, 2013, and is based upon information supplied or confirmed by the named individuals. The address of each person named in the table below is c/o Illumina, Inc., 5200 Illumina Way, San Diego, California 92122. | | | | | | | | | | | | | | | | |
Name of Beneficial Owner | | Common Stock
Beneficially
Owned
(Excluding Stock
Options)(1) | | | Stock Options
Exercisable Within
60 Days of
January 31, 2012(2) | | | Total Common
Stock Beneficially
Owned(1)(2) | | | Percent of
Common Stock(3) | |
Jay T. Flatley(4) | | | 310,841 | | | | 1,830,728 | | | | 2,141,569 | | | | 1.7 | % |
Christian O. Henry | | | 12,928 | | | | 216,998 | | | | 229,926 | | | | * | |
Christian G. Cabou(5) | | | 17,029 | | | | 104,187 | | | | 121,216 | | | | * | |
Nicholas J. Naclerio | | | 1,546 | | | | 103,488 | | | | 105,034 | | | | * | |
Tristan B. Orpin | | | 20,636 | | | | 245,271 | | | | 265,907 | | | | * | |
William H. Rastetter | | | 92,480 | | | | 135,500 | | | | 227,980 | | | | * | |
A. Blaine Bowman | | | 5,800 | | | | 97,956 | | | | 103,756 | | | | * | |
Daniel M. Bradbury | | | 3,800 | | | | 41,500 | | | | 45,300 | | | | * | |
Karin Eastham | | | 3,480 | | | | 79,500 | | | | 82,980 | | | | * | |
Paul C. Grint | | | 4,200 | | | | 89,500 | | | | 93,700 | | | | * | |
Gerald Möller | | | 4,000 | | | | 11,666 | | | | 15,666 | | | | * | |
David R. Walt(6) | | | 1,057,846 | | | | 155,500 | | | | 1,213,346 | | | | * | |
Roy A. Whitfield | | | 3,000 | | | | 70,700 | | | | 73,700 | | | | * | |
All directors, director nominees, and executive officers as a group (17 persons, including those directors and executive officers named above) | | | 1,590,586 | | | | 3,612,069 | | | | 5,202,655 | | | | 4.1 | % |
|
| | | | | | | | | | | |
| Name of Beneficial Owner | Common Stock Beneficially Owned (Excluding Stock Options)(1) | | Stock Options Exercisable Within 60 Days of April 1, 2013(2) | | Total Common Stock Beneficially Owned(1)(2) | | Percent of Common Stock(3) |
| Jay T. Flatley(4) | 327,921 |
| | 1,943,750 |
| | 2,271,671 |
| | 1.8 | % |
| Marc A. Stapley | 4,818 |
| | 38,899 |
| | 43,717 |
| | * |
|
| Christian O. Henry | 20,317 |
| | 210,135 |
| | 230,452 |
| | * |
|
| Paul L. Bianchi | — |
| | — |
| | — |
| | * |
|
| Nicholas J. Naclerio | 5,883 |
| | 184,061 |
| | 189,944 |
| | * |
|
| Matthew L. Posard | 14,067 |
| | 72,198 |
| | 86,265 |
| | * |
|
| William H. Rastetter | 96,967 |
| | 157,100 |
| | 254,067 |
| | * |
|
| A. Blaine Bowman | 8,680 |
| | 119,556 |
| | 128,236 |
| | * |
|
| Daniel M. Bradbury | 8,650 |
| | 63,100 |
| | 71,750 |
| | * |
|
| Karin Eastham | 6,360 |
| | 91,100 |
| | 97,460 |
| | * |
|
| Robert S. Epstein | — |
| | — |
| | — |
| | * |
|
| Paul C. Grint | 8,365 |
| | 111,100 |
| | 119,465 |
| | * |
|
| Gerald Möller | 9,521 |
| | 42,016 |
| | 51,537 |
| | * |
|
| David R. Walt(5) | 1,061,948 |
| | 147,100 |
| | 1,209,048 |
| | * |
|
| Roy A. Whitfield | 7,272 |
| | 92,300 |
| | 99,572 |
| | * |
|
| All directors, director nominees, and executive officers as a group (20 persons, including those directors and executive officers named above) | 1,673,404 |
| | 4,230,282 |
| | 5,903,686 |
| | 4.8 | % |
| | | | | | | | |
| |
| * | Represents beneficial ownership of less than one percent (1%) of the issued and outstanding shares of common stock. |
| |
| (1) | Includes shares of stock beneficially owned as of January 31, 2012.April 2, 2013. Also includes restricted stock units, or RSUs, vesting within 60 days of January 31, 2012.April 2, 2013. An RSU represents a conditional right to receive one share of our common stock at a specified future date. |
| |
| (2) | Includes stock options that are exercisable as of January 31, 2012April 2, 2013 and stock options that vest, or become exercisable, within 60 days of January 31, 2012.April 2, 2013. |
| |
| (3) | Percentage ownership is based on 122,327,021124,279,487 shares of common shares of common stock outstanding on January 31, 2012.April 2, 2013. |
| |
| (4) | Includes 15,000 shares owned by Mr. Flatley’s children. |
| |
| (5) | Includes 1,000 shares for which Mr. Cabou shares voting power with his spouse. |
(6) | Includes 82,960 shares owned by Dr. Walt’s spouse. |
The following table sets forth, as of January 31, 2012,April 2, 2013, the amount of beneficial ownership of each beneficial owner of more than five percent of our common stock: | | | | | | | | |
Name and Address of Beneficial Owner | | Common Stock
Beneficially Owned | | | Percent of
Common Stock(1) | |
Capital Research Global Investors(2)
333 South Hope Street
Los Angeles, CA 90071 | | | 13,975,676 | | | | 11.4 | % |
Baillie Gifford & Co.(3)
Calton Square, 1 Greenside Row
Edinburgh EH1 3AN
Scotland UK | | | 13,690,903 | | | | 11.2 | % |
Sands Capital Management, LLC(4)
1101 Wilson Blvd.
Suite 2300
Arlington, VA 22209 | | | 11,122,866 | | | | 9.1 | % |
Morgan Stanley(5)
1585 Broadway
New York, NY 10036 | | | 9,317,417 | | | | 7.6 | % |
Prudential Financial, Inc.(6)
751 Broad Street
Newark, NJ 07102 | | | 7,029,429 | | | | 5.8 | % |
AllianceBernstein LP(7)
1345 Avenue of the Americas
New York, NY 10105 | | | 6,920,656 | | | | 5.7 | % |
Edgewood Management LLC(8)
350 Park Avenue, 18th Floor
New York, NY 10022 | | | 6,213,217 | | | | 5.1 | % |
|
| | | | | | |
| Name and Address of Beneficial Owner | | Common Stock Beneficially Owned | | Percent of Common Stock(1) |
Baillie Gifford & Co.(2)
Calton Square, 1 Greenside Row
Edinburgh EH1 3AN
Scotland UK | | 16,570,627 |
| | 13.3 | % |
Capital Research Global Investors(3)
333 South Hope Street, 55th floor
Los Angeles, CA 90071 | | 15,019,319 |
| | 12.1 | % |
Morgan Stanley(4)
1585 Broadway
New York, NY 10036 | | 10,727,404 |
| | 8.6 | % |
The Growth Fund of America, Inc.(5)
333 South Hope Street
Los Angeles, CA 90071 | | 7,246,900 |
| | 5.8 | % |
Prudential Financial, Inc.(6)
751 Broad Street
Newark, NJ 07102 | | 6,829,434 |
| | 5.5 | % |
Jennison Associates LLC(7)
466 Lexington Avenue
New York, NY 10017 | | 6,827,904 |
| | 5.5 | % |
| | | | | |
| |
| (1) | Percentage ownership is based on 122,327,021124,279,487 shares of common shares of common stock outstanding on January 31, 2012.April 2, 2013. |
| |
| (2) | This information is based on a Schedule 13G/A filed with the SEC on February 9, 2012. Capital Research Global Investors reports that it has sole voting power with respect to 13,975,676 shares and sole dispositive power with respect to 13,975,676 shares. |
(3) | This information is based on a Schedule 13G/A filed with the SEC on February 13, 2012.11, 2013. Baillie Gifford & Co. reports that it has sole voting power with respect to 10,199,41811,601,174 shares and sole dispositive power with respect to 13,690,90316,570,627 shares. |
(4) | |
| (3) | This information is based on a Schedule 13G/A filed with the SEC on February 14, 2012. Sands13, 2013. Capital Management, LLCResearch Global Investors reports that it has sole voting power with respect to 7,442,211 shares and sole dispositive power with respect to 11,122,866 shares and that such shares are beneficially owned by clients of Sands Capital Management, LLC.15,019,319 shares. |
(5) | |
| (4) | This information is based on a Schedule 13G/A filed with the SEC on February 8, 2012.13, 2013. Morgan Stanley reports that it has sole voting power with respect to 9,128,81910,568,459 shares and sole dispositive power with respect to 9,317,41710,727,404 shares. We understand that the shares being reported on by Morgan Stanley as a parent holding company are owned, or may be deemed to be beneficially owned, by Morgan Stanley Investment Management Inc., an investment adviser and a wholly ownedwholly-owned subsidiary of Morgan Stanley. |
| |
| (5) | This information is based on a Schedule 13G filed with the SEC on February 13, 2013. The Growth Fund of America, Inc. reports that it does not have sole or shared voting or dispositive power with respect to any of the shares. We understand that The Growth Fund of America, Inc. is an investment company and is advised by Capital Research and Management Company. Capital Research and Management Company manages equity assets for various investment companies through two divisions, Capital Research Global Investors and Capital World Investors. Accordingly, these shares may also be reflected in the Schedule 13G/A filed with the SEC on February 13, 2013 by Capital Research Global Investors referenced in note (3) above. |
| |
| (6) | This information is based on a Schedule 13G/A filed with the SEC on February 14, 2012.11, 2013. Prudential Financial, Inc. has sole voting and sole dispositive power over 137,651116,446 shares, shared voting power over 3,958,7684,156,969 shares, and shared dispositive power over 6,891,7786,712,970 shares, which are held for the benefit of its clients by its separate accounts, externally managed accounts, registered investment companies, subsidiaries and/or other affiliates. Prudential indirectly owns 100% of equity interests of Jennison Associates LLC. As a result, Prudential Financial, Inc. may be deemed to have shared dispositive power over the 7,002,319 shares reported on Jennison Associates LLC’s Schedule 13G/A filed with the SEC on February 13, 2012. Jennison Associates LLC does not file jointly with Prudential; as such, shares included2013 referenced in Jennison Associates LLC’s Schedule 13G/A may also be included in the shares reported in the Schedule 13G/A filed by Prudential Financial, Inc.note (7) below. |
| |
| (7) | This information is based on a Schedule 13G13G/A filed with the SEC on February 13, 2012. AllianceBernstein reports that it2013. Jennison Associates LLC has sole voting power with respect to 6,333,0004,271,903 shares, and sole dispositive power with respect to 6,911,793 shares, shared voting power over 7,563 shares, and shared dispositive power over 8,8636,827,904 shares. We understandJennison Associates LLC reports that AllianceBernstein is a majority owned subsidiary of AXAPrudential Financial, Inc. (an indirect majority owned subsidiaryindirectly owns 100% of AXA SA) and that AllianceBernsteinequity interests of Jennison Associates LLC. As a result, Prudential Financial, Inc. may be deemed to share beneficial ownershiphave the power to exercise or to direct the exercise of such voting and/or dispositive power that Jennison Associates LLC may have with AXA SA reporting personsrespect to the shares reported by virtue of 8,863Jennison Associates LLC. Accordingly, these shares of common stock acquired on behalf of general and special accounts ofmay also be reflected in the affiliated entities for which AllianceBernstein serves as subadvisor. |
(8) | This information is based on a Schedule 13G13G/A filed with the SEC on February 13, 2012. Edgewood Management LLC reports that it has shared voting power and shared dispositive power with respect to 6,213,217 shares. Edgewood Management has disclaimed beneficial ownership11, 2013 by Prudential Financial, Inc. referenced in the shares it reported except to the extent of its pecuniary interest therein.note (6) above. |
The following table sets forth the names, ages, positions, and business experience during the past five years of our executive officers as of March 1, 2012:Jay T. Flatley,age 59April 10, 2013
President & Chief Executive Officer:
1999 – present: present position
Joined Illumina 1999
|
| |
Jay T. Flatley, age 60 |
| President & Chief Executive Officer |
| ° | 1999 – present: present position |
| ° | Joined Illumina 1999 |
| |
Paul L. Bianchi, age 51 |
| Senior Vice President, Human Resources |
| ° | 2012 – present: present position |
| ° | 2009 – 2012: senior vice president, human resources at Risk Management Solutions, Inc. |
| ° | 2005 – 2009: principal at Strayer Consulting Group, Inc. |
| ° | Joined Illumina 2012 |
| |
Christian G. Cabou, age 63 |
| Senior Vice President, General Counsel & Secretary |
| ° | 2006 – present: present position |
| ° | 2001 – 2006: general counsel for GE Global Research, General Electric Company’s advanced industrial research and development industrial laboratories |
| ° | Joined Illumina 2006 |
| |
Gregory F. Heath, Ph.D., age 55 |
| Senior Vice President & General Manager, Diagnostics |
| ° | 2008 – present: present position |
| ° | 2004 – 2008: senior vice president for Roche Molecular Systems, Inc., responsible for its global molecular diagnostics business (2006-2008), global marketing and business development (2005-2006), and global product marketing (2004-2005) |
| ° | Joined Illumina 2008 |
| |
Christian O. Henry, age 45 |
| Senior Vice President & General Manager, Genomic Solutions |
| ° | 2012 – present: present position |
| ° | 2010 – 2012: Senior Vice President, Chief Financial Officer & General Manager, Life Sciences |
| ° | 2009 – 2010: Senior Vice President, Corporate Development & Chief Financial Officer |
| ° | 2006 – 2009: Senior Vice President & Chief Financial Officer |
| ° | Joined Illumina 2005 |
| |
|
Christian G. Cabou,age 62
Senior Vice President, General Counsel & Secretary
2006 – present: present position
2001 – 2006: general counsel for GE Global Research, General Electric Company’s advanced industrial research and development industrial laboratories
Gregory F. Heath, Ph.D.,age 54
Senior Vice President & General Manager, Diagnostics
2008 – present: present position
2004 – 2008: senior vice president for Roche Molecular Systems, Inc., responsible for its global molecular diagnostics business (2006-2008), global marketing and business development (2005-2006), and global product marketing (2004-2005)
Christian O. Henry,age 44
Senior Vice President & General Manager, Genomic Systems
2012 – present: present position
2010 – 2012: Senior Vice President, Chief Financial Officer & General Manager, Life Sciences
2009 – 2010: Senior Vice President, Corporate Development & Chief Financial Officer
2006 – 2009: Senior Vice President & Chief Financial Officer
Nicholas J. Naclerio,age 50
Senior Vice President, Corporate and Venture Development
2010 – present: present position
2007 – 2008: executive chairman of True Materials, a privately-held life science company that was acquired by Affymetrix, Inc.
2003 – 2005: chief executive officer of ParAllele BioScience, Inc., a privately-held life science company that was acquired by Affymetrix, Inc.
Tristan B. Orpin,age 46
Senior Vice President & Chief Commercial Officer
2010 – present: present position
2007 – 2010: Senior Vice President, Commercial Operations
2002 – 2007: Vice President of Worldwide Sales
Matthew L. Posard,age 44
Senior Vice President & General Manager, Translational and Consumer Genomics
2012 – present: present position
2007 – 2012: Vice President, Global Sales
2006 – 2007: Vice President, Marketing
Mostafa Ronaghi, Ph.D.,age 43
Senior Vice President & Chief Technology Officer
2008 – present: present position
2002 – 2008: principal investigator at Stanford University, where Dr. Ronaghi focused on the development of novel tools for molecular diagnostic applications
2007 – 2008: chairman and chief scientific officer for Avantome, Inc., a privately-held sequencing company co-founded by Dr. Ronaghi and acquired by Illumina in 2008
Marc A. Stapley,age 42
Senior Vice President & Chief Financial Officer
2012 – present: present position
2009 – 2012: senior vice president, finance at Pfizer, Inc.
2007 – 2009: chief financial officer, Americas at Alcatel-Lucent USA, Inc.
2006 – 2007: controller, wireless business group at Alcatel-Lucent USA, Inc.
|
| |
Mark L. Lewis, age 60 |
| Senior Vice President & General Manager, Molecular Biology and PCR |
| ° | 2012 – present: present position |
| ° | 2008 – 2012: Senior Vice President, Development |
| ° | 2002 – 2008: vice president, special order research products and general manager at BD Biosciences |
| ° | Joined Illumina 2005 |
| |
Nicholas J. Naclerio, age 52 |
| Senior Vice President, Corporate and Venture Development |
| ° | 2010 – present: present position |
| ° | 2007 – 2008: executive chairman of True Materials, a privately-held life science company that was acquired by Affymetrix, Inc. |
| ° | 2003 – 2005: chief executive officer of ParAllele BioScience, Inc., a privately-held life science company that was acquired by Affymetrix, Inc. |
| ° | Joined Illumina 2010 |
| |
| Tristan B. Orpin, age 47 |
| Senior Vice President & Chief Commercial Officer |
| ° | 2010 – present: present position |
| ° | 2007 – 2010: Senior Vice President, Commercial Operations |
| ° | 2002 – 2007: Vice President of Worldwide Sales |
| ° | Joined Illumina 2002 |
| |
| Matthew L. Posard, age 46 |
| Senior Vice President & General Manager, Translational and Consumer Genomics |
| ° | 2012 – present: present position |
| ° | 2007 – 2012: Vice President, Global Sales |
| ° | 2006 – 2007: Vice President, Marketing |
| ° | Joined Illumina 2006 |
| |
| Mostafa Ronaghi, Ph.D., age 44 |
| Senior Vice President & Chief Technology Officer |
| ° | 2008 – present: present position |
| ° | 2002 – 2008: principal investigator at Stanford University, where Dr. Ronaghi focused on the development of novel tools for molecular diagnostic applications |
| ° | 2007 – 2008: chairman and chief scientific officer for Avantome, Inc., a privately-held sequencing company co-founded by Dr. Ronaghi and acquired by Illumina in 2008 |
| ° | Joined Illumina 2008 |
|
| |
| |
| Marc A. Stapley, age 43 |
| Senior Vice President & Chief Financial Officer |
| ° | 2012 – present: present position |
| ° | 2009 – 2012: senior vice president, finance at Pfizer, Inc. |
| ° | 2007 – 2009: chief financial officer, Americas at Alcatel-Lucent USA, Inc. |
| ° | 2006 – 2007: controller, wireless business group at Alcatel-Lucent USA, Inc. |
| ° | Joined Illumina 2012 |
COMPENSATION DISCUSSION AND ANALYSIS
The Compensation Committee of the Board of Directors determines the compensation for our executive officers. The Compensation Committee considers, adopts, reviews, and revises executive officer compensation plans, programs, and guidelines, and reviews and determines all components of each executive officer’s compensation. Compensation programs, and the compensation components, for the President and Chief Executive Officer are, additionally, subject to approval by the Board of Directors. The Compensation Committee also consults with management and Illumina’s employee rewards and benefits group regarding both executive and non-executive employee compensation plans and programs, including administering our equity incentive plans.
This section of the proxy statement explains how our executive compensation programs are designed and operate with respect to Illumina’s “named executive officers,” who are the CEO, CFO, and the three other most highly compensated executive officers in a particular year. For fiscal 2011,2012, our named executive officers are: Jay T. Flatley — President & Chief Executive Officer
Marc A. Stapley — Senior Vice President & Chief Financial Officer
Christian O. Henry — Senior Vice President & General Manager, Genomic SystemsSolutions
Christian G. CabouPaul L. Bianchi — Senior Vice President, General Counsel & Secretary
Human ResourcesNicholas J. Naclerio — Senior Vice President, Corporate & Venture Development
Tristan B. OrpinMatthew L. Posard — Senior Vice President & Chief Commercial Officer
General Manager, Translational & Consumer GenomicsIn May 2011,April 2012, we held a stockholder advisory vote to approve the compensation of our named executive officers, commonly referred to as a “say-on-pay” vote. We received favorable consideration, with over 97%92% of stockholder votes cast approving the proposal, affirming stockholder support for our approach to executive compensation. As a result, the Compensation Committee decided to retain our general approach in the 20122013 fiscal year. The Compensation Committee will consider the outcome of the annual say-on-pay votes when making future compensation decisions.
Compensation Philosophy and Objectives
Our executive compensation and benefit programs aim to encourage our executive officers to continually pursue strategic opportunities, while effectively managing our day-to-day operations. Specifically, we have created a compensation package that combines short- and long-term components (cash and equity, respectively) at the levels we believe are most appropriate to motivate and reward our executive officers. The Compensation Committee and our management believe that the proportion of at-risk, performance-based compensation should rise as an employee’s level of responsibility increases.
Our executive compensation program is designed to achieve four primary objectives:
attract, retain, and reward executives who contribute to our success;
provide economic incentives for executives to achieve business objectives by linking executive compensation with our overall performance;
strengthen the relationship between executive pay and stockholder value through the use of long-term compensation; and
reward individuals for their specific contributions to our success.
Use of Market Data and Benchmarking
We strive to set executive compensation at competitive levels. This involves, among other things, establishing compensation levels that are generally consistent with levels at other companies with which we compete for talent.
During fiscal 2011,2012, the Compensation Committee retained Radford, an Aon Hewitt Company, as the Compensation Committee’s advisor reporting directly to the Chairperson. The Compensation Committee maintains sole authority to retain and determine the work to be performed by Radford. During fiscal 2011,2012, the Compensation Committee directed Radford to conduct a comprehensive formal review and analysis of our executive compensation and incentive programs relative to competitive benchmarks. This review consisted of a benchmarking analysis of our executive compensation philosophy and practices against prevailing market practices of identified peer group companies and broader industry trends. The analysis included the review of the total direct compensation (inclusive of salary, cash bonuses, and equity awards) of our executive officers. It was based on an assessment of market trends covering available public information in addition to proprietary data provided by Radford. The peer group was developed considering companies within the industry that have similar business challenges and complexities where we might recruit and lose executive talent. The Compensation Committee considered a number of factors in defining the peer group, including industry competitors of similar revenue range,
net income, growth rates, employee size, and market capitalization range that we believe reflects the market for talent and stockholder investment. Many of the industry competitors are located in our geographical area, which reflects
high-cost of livinghigh cost-of-living areas and therefore impacts rate of pay.
The following companies made up the compensation peer group for fiscal 2011:2012: The Cooper Companies, Inc.
Edwards Lifesciences Corporation
Life Technologies Corporation
National Instruments Corporation
(1) |
| In 2011, Beckman Coulter, | | | | | | |
| l | Affymetrix, Inc. was acquired by Danaher Corporation. | | l | Covance Inc.** | | l | National Instruments Corporation |
| l | Alere Inc. | | l | Edwards Lifesciences Corporation | | l | NuVasive, Inc.** |
| l | Bio-Rad Laboratories, Inc.** | | l | Hologic, Inc. | | l | PerkinElmer, Inc. |
| l | Bruker Corporation | | l | IDEXX Laboratories, Inc. | | l | QIAGEN N.V. |
| l | Cepheid** | | l | Intuitive Surgical, Inc. | | l | ResMed Inc. |
| l | The Cooper Companies, Inc. | | l | Life Technologies Corporation | | l | Waters Corporation |
**New companies added to the compensation peer group in 2012.
We target our total direct compensation for executive officers at between the 60thand 75thpercentile of compensation paid to executives within our compensation peer group, with the largest component of the total direct compensation being delivered through equity-based awards in order to retain our executives and align their interests with those of our stockholders. We may deviate from these general target levels to reflect the executive’s experience, the executive’s sustained performance level, and market factors as deemed appropriate by the Compensation Committee. The Compensation Committee reviews the information prepared by management from the Radford assessment, reviews each component of an executive’s compensation during the current year and prior years, and considers an executive’s contribution to the achievement of our strategic goals and objectives, the executive’s overall compensation, and other factors to determine the appropriate level and mix of compensation. An executive’s compensation is not determined by formula but, instead, in comparison to market and within our company to positions with similar responsibility and impact on operations.
Role of the Compensation Committee
The Compensation Committee has overall responsibility for approving and evaluating our executive officer compensation plans, policies, and programs. The Board of Directors has determined that each member of the Compensation Committee is independent within the meaning, and meets the requirements, of Rule 16b-3 of the Securities Exchange Act of 1934 and the rules of The NASDAQ Global Select Market. The Compensation Committee functions under a written charter, which was adopted by the Board of Directors. The charter is reviewed annually and updated as appropriate. A copy of the charter is available on our website atwww.illumina.comby clicking on “Company,” then “Investor Relations,” and then on “Corporate Governance.” The primary responsibilities of the Compensation Committee are to:
recommend to the Board of Directors the amount and form of compensation to be paid to our Chief Executive Officer, taking into account the results of the Board of Director’s annual performance evaluation of the Chief Executive Officer;
review and approve the amount and form of compensation to be paid to our other executive officers and senior, non-executive employees;
exercise oversight of our compensation practices for all other non-executive employees;
administer our equity compensation plans; and
review and make initial (in the case of new hires) and periodic (in the case of then-current Company employees) determinations with respect to who is (i) an “executive officer” of the Company with reference to Rule 3b-7 of the Securities Exchange Act of 1934 and (ii) a “Section 16 officer” of the Company with reference to Rule 16a-1(f) of the Securities Exchange Act of 1934.
The Compensation Committee meets as often as it considers necessary to perform its duties and responsibilities. The Compensation Committee held sixseven meetings during fiscal 2011,2012, and it has held two meetingsone meeting so far in 20122013 to review and finalize compensation elements related to fiscal 2011.2012. The Chairperson works with the Chief Executive Officer and the Senior Vice President of Human Resources to establish the meeting agenda in advance of each meeting. The Compensation Committee typically meets with the Chief Executive Officer, Chief Financial Officer, General Counsel, Senior Vice President of Human Resources, our external counsel, and, on occasion, with an independent compensation consultant retained by the Compensation Committee. When appropriate, such as when the Compensation Committee is discussing or evaluating compensation for the Chief Executive Officer, the Compensation Committee meets in executive session without management. The Compensation Committee receives and reviews materials in advance of each meeting. These materials include information that the independent compensation consultant and management believe will be helpful to the Compensation Committee, as well as materials that the Compensation Committee has specifically requested, including benchmark information, historical compensation data, performance metrics and criteria, the Board of Directors’ assessment of our performance against our goals, and the Chief Executive Officer’s assessment of each executive’s performance against pre-determined, individual objectives.
Components and Analysis of Fiscal 20112012 Executive Compensation For fiscal 2011,2012, the principal elements of our executive compensation program are summarized in the following table and described in more detail below.
|
| | | | | | |
Compensation Element | | Objective | | Designed to Reward | | Specific to Executives
|
| Base Salary | | To provide a competitive, fixed level of cash compensation for the executive officers | | Experience, expertise, knowledge of the industry, duties, scope of responsibility, and sustained (and expected) performance | | Adjustments are based on an individual’s current (and expected) future performance, base pay relative to our compensation peer group, and internal equity |
| | | |
| Performance-Based Cash Compensation | | To encourage and reward executive officers’ contributions in achieving strong financial and operational results by meeting or exceeding established goals | | Success in achieving annual results | | Annual performance-based cash compensation is based on a formula that includes achievement of corporate revenue and operating income goals and achievement of individual performance goals |
| | | |
| Long-Term Equity Compensation | | To retain executive officers and to align their interests with those of our stockholders in order to increase overall stockholder value | | Success in achieving long-term results | | Grants typically consist of both restricted stock optionsunits (RSUs) and performance stock units (PSUs) RSUs Stock options generally vest monthly over a four-year period,
RSUs vest 15% with 25% of the RSU vesting on each of the first anniversaryfour anniversaries of the grant date 20%
PSUs vest at the end of a three-year performance period based on the second anniversaryachievement of specified earnings per share targets at the end of the grant date, 30% on the third anniversary of the grant date, and 35% on the fourth anniversary of the grant datethree-year period time-based vesting RSUs Given our rapid growth and continued high growth profile, a majority of our executive officers’officers' compensation has been delivered, and is expected to be delivered, through long-term equity awards, with PSUs representing more than 75% of the total value of long-term equity awards (as determined on the grant date)
|
Base salary is the primary fixed component of our executive compensation program. In general, executive officers with the highest level of responsibility have a lower percentage of their compensation fixed as
base salary and a higher percentage of their compensation at risk. Base salary represented a relatively small percentage of total compensation (11%(12% in 2011)2012) for the named executive officers, as set forth in the Summary Compensation Table.under “Compensation Mix” below.
Salary levels are considered as part of our annual executive performance review process, as well as upon promotion or other material change in job responsibility. The Chief Executive Officer makes recommendations to the Compensation Committee for base salary changes for executive officers (excluding himself) based on performance and current pay relative to market practices for executive officers, other than himself. The Compensation Committee reviews these recommendations, makes any adjustments it considers necessary, and then approves the salary changes. The Compensation Committee recommends to the Board of Directors the base salary for our Chief Executive Officer based on performance and his current pay relative to other chief executives in our peer group. The Compensation Committee believes that increases to base salary should reflect the executive’s performance for the preceding year and pay level relative to similar positions in our peer group. Base salary increases also reflect anticipated future contributions of the executive.
Fiscal 20112012 Base SalariesAs illustrated in the table below,
For 2012, the average salary increase for all named executive officers in fiscal 2011, other than for Mr. Orpin,2012 was approximately 4.0%12.0%. Mr. OrpinEach of Messrs. Naclerio and Posard received a 9.0% increaseadditional salary adjustments based on competitive benchmarking analyses and, in his base salary for 2011the case of Mr.Posard, in recognition of Mr. Orpin’s successhis promotion in managing our commercial operations, including sales, during fiscal 2010, which saw record revenue and sales in large part dueJanuary2012 from Vice President, Worldwide Sales to the launch of our HiSeq 2000 sequencing system. | | | | | | | | |
Named Executive Officer | | Position | | 2010 Base
Salary ($) | | 2011 Base
Salary ($) | | % Increase |
Jay T. Flatley | | President & Chief Executive Officer | | 750,000 | | 780,000 | | 4.0% |
Christian O. Henry(1) | | Senior Vice President & General Manager, Genomic Systems | | 413,600 | | 430,100 | | 4.0% |
Christian G. Cabou | | Senior Vice President, General Counsel & Secretary | | 368,100 | | 382,800 | | 4.0% |
Nicholas J. Naclerio | | Senior Vice President, Corporate & Venture Development | | 325,000 | | 339,600 | | 4.5% |
Tristan B. Orpin | | Senior Vice President & Chief Commercial Officer | | 379,600 | | 413,600 | | 9.0% |
|
| | | | | | | | |
| Named Executive Officer | | Position | | 2011 Base Salary ($) | | 2012 Base Salary ($) | | % Increase |
| Jay T. Flatley | | President & Chief Executive Officer | | 780,000 | | 803,400 | | 3.0% |
| Marc A, Stapley(1) | | Senior Vice President & Chief Financial Officer | | — | | 435,000 | | — |
| Christian O. Henry(1) | | Senior Vice President & General Manager, Genomic Solutions | | 430,100 | | 450,000 | | 4.6% |
| Paul L. Bianchi(2) | | Senior Vice President, Human Resources | | — | | 350,000 | | — |
| Nicholas J. Naclerio | | Senior Vice President, Corporate & Venture Development | | 339,600 | | 400,800 | | 18.0% |
| Matthew L. Posard | | Senior Vice President & General Manager, Translational & Consumer Genomics | | 312,200 | | 381,600 | | 22.2% |
| | | | | | | | | |
| |
| (1) | Mr. Stapley joined Illumina as its Chief Financial Officer on January 20, 2012, prior to which Mr. Henry wasserved as our Chief Financial Officer during fiscal 2011.Officer. |
| |
| (2) | Mr. Bianchi joined Illumina as its Senior Vice President, Human Resources on September 5, 2012. |
Performance-Based Cash Compensation
In general, annual cash bonuses for our executive officers are paid out under our Executive Variable Compensation Plan, or VCP.eVCP. The VCPeVCP is an “at-risk” bonus compensation program designed to foster a performance-oriented culture, where individual performance is aligned with organizational objectives. The VCPeVCP provides guidelines for the calculation of annual non-equity, incentive-based compensation, subject to the Compensation Committee’s oversight and modification. Any executive officer that is hired during the year on or prior to October 1stis eligible to participate in the VCPeVCP for that year. Any bonus received by such executive is prorated based on the amount of time the executive officer served during the plan year. Target Amounts and Weighted Components
For fiscal 2011,2012, the Compensation Committee established target cash bonus amounts under the VCP,eVCP, calculated as a percentage of each executive officer’s base salary. For our President and Chief Executive Officer, Mr. Flatley, the target cash bonus amount as a percentage of his base salary was 100%, which remained unchanged for fiscal 20112012 as compared to fiscal 2010.2011. For each of our named executive officers, other than Mr. Flatley, the target cash bonus amount as a percentage of base salary was 55%, which also remained unchanged for fiscal 20112012 as compared to fiscal 2010.2011. Under the
VCP,eVCP, the target cash bonus amount is divided into three separate components with the following weighting (as a % of the target cash bonus amount):
50% based on the achievement of corporate revenue objectives (the “revenue VCPeVCP target”);
30% based on the achievement of corporate operating income objectives (the “operating income VCPeVCP target”); and
20% based on the achievement of individual performance objectives (the “individual performance VCPeVCP target”); however, if the applicable threshold objective levels are not met for both of the revenue VCPeVCP target and the operating income VCPeVCP target, then the individual performance VCPeVCP component will not be paid.
The Compensation Committee and the Board of Directors approve threshold,
guidance,target, budget, and maximum levels for each component of the revenue and operating income
VCPeVCP targets. Payments of the applicable component of the annual cash bonus amounts are based upon the achievement of such objectives for the year. No payouts are earned for a component if the threshold level is not achieved.
GuidanceTarget and budget levels represent a range of our desired level of performance that the Compensation Committee and the Board of Directors believe are both attainable and practical based on a realistic estimate of our future financial performance. Maximum levels are designed to motivate and reward realistically achievable superior performance.
At the beginning of each year, our Chief Executive Officer develops corporate objectives focused primarily on financial performance and other critical corporate goals, such as new product introductions, market penetration, infrastructure investments, and consistency of operating results. The corporate objectives are based on our annual operating plan, which is approved by the Board of Directors
in at the beginning of each fiscal year. In addition, our Chief Executive Officer, together with each executive eligible to participate in the
VCP,eVCP, develops a corresponding set of objectives to measure individual performance for the year. The Compensation Committee reviews the corporate and individual objectives for all named executive officers, and both the Compensation Committee and the Board of Directors approve the corporate objectives and the individual objectives for our Chief Executive Officer.
Shortly following completion of the fiscal year, the Compensation Committee and the Board of Directors assess our performance against each of the revenue and operating income
VCPeVCP targets, comparing the actual fiscal year results to the pre-determined threshold,
guidance,target, budget, and maximum levels for each objective, and an overall percentage amount for the corporate financial objectives is calculated. The Compensation Committee (and the Board of Directors with respect to our Chief Executive Officer) also reviews the performance of each named executive officer against such officer’s individual objectives, and an overall percentage amount for the individual performance objectives is calculated. Although the operation of the
VCPeVCP is largely formulaic, the Compensation Committee and the Board of Directors can use their discretion when determining the pay for our executive officers and also when assessing the attainment of individual and corporate performance goals.
For fiscal 2011,2012, each executive had the potential to earn up to a maximum of 130% of the revenue VCPeVCP target based on the Company’s performance against the following fiscal 20112012 revenue objectives (with the bonus amount calculated as a linear ratio for points between the threshold, guidance,target, budget, and maximum revenue objective levels): | | | | | | | | | | | | | | | | |
| | | Threshold | | | Guidance | | | Budget | | | Maximum | |
Revenue Objective ($ in millions) | | | 1,000.0 | | | | 1,080.0 | | | | 1,190.0 | | | | 1,250.0 | |
% of Revenue VCP Target Paid | | | 50% | | | | 95% | | | | 100% | | | | 130% | |
|
| | | | | | | | | | | | |
| | | Threshold | | Target | | Budget | | Maximum |
| Revenue Objective ($ in millions) | | 1,000.0 |
| | 1,100.0 |
| | 1,150.0 |
| | 1,200.0 |
|
% of Revenue eVCP Target Paid | | 50 | % | | 100 | % | | 110 | % | | 130 | % |
Operating Income
VCPeVCP Target
For fiscal 2011,2012, each executive had the potential to earn up to a maximum of 130% of the operating income VCPeVCP target based on the Company’s performance against the following fiscal 20112012 operating income objectives (with the bonus amount calculated as a linear ratio for points between the threshold, guidance,target, budget, and maximum operating income objective levels): | | | | | | | | | | | | | | | | |
| | | Threshold | | | Guidance | | | Budget | | | Maximum | |
Operating Income Objective ($ in millions)(1) | | | 317.0 | | | | 343.0 | | | | 412.0 | | | | 437.0 | |
% of Operating Income VCP Target Paid | | | 50% | | | | 95% | | | | 100% | | | | 130% | |
|
| | | | | | | | | | | | |
| | | Threshold | | Target | | Budget | | Maximum |
| Operating Income Objective ($ in millions)(1) | | 325.0 |
| | 360.0 |
| | 409.0 |
| | 440.0 |
|
% of Operating Income eVCP Target Paid | | 50 | % | | 100 | % | | 110 | % | | 130 | % |
| |
| (1) | Operating income is defined as the income from operations that excludes stock compensation expense, merger related charges, interest and other revenue and income tax expense. |
We have included a hypothetical example to demonstrate the calculation. For example, assume Executive A’s base salary for fiscal 20112012 was $400,000$400,000 and that Executive A’s target cash bonus amount as a percentage of base salary was set at 55%. Executive’s A’s target bonus amount would be $220,000$220,000 (i.e., 55% x $400,000)$400,000). Assuming that Executive A exceeded or outperformed all of his or her individual performance goals, Executive A’s actual bonus under the threshold, guidance,target, budget, and maximum financial objective levels could range from between $44,000$132,000 and $272,800$272,800 and would be determined as follows: | | | | | | | | | | | | | | | | | | | | |
| | | Below
Threshold ($) | | | At
Threshold ($) | | | At
Guidance ($) | | | At
Budget ($) | | | At or
Greater than
Maximum ($) | |
Revenue VCP Target
(50% x $220,000 = $110,000) | | | — | | | | 55,000 | | | | 104,500 | | | | 110,000 | | | | 143,000 | |
Operating Income VCP Target
(30% x $220,000 = $66,000) | | | — | | | | 33,000 | | | | 62,700 | | | | 66,000 | | | | 85,800 | |
Individual Performance VCP Target
(20% x $220,000 = $44,000) | | | — | | | | 44,000 | | | | 44,000 | | | | 44,000 | | | | 44,000 | |
| | | | | | | | | | | | | | | | | | | | |
Total | | | — | | | | 132,000 | | | | 211,200 | | | | 220,000 | | | | 272,800 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | |
| | | | | | | | | | | |
| | | Below Threshold ($) | | At Threshold ($) | | At Target ($) | | At Budget ($) | | At or Greater than Maximum ($) |
Revenue eVCP Target (50% x $220,000 = $110,000) | | — |
| | 55,000 |
| | 110,000 |
| | 121,000 |
| | 143,000 |
|
Operating Income eVCP Target (30% x $220,000 = $66,000) | | — |
| | 33,000 |
| | 66,000 |
| | 72,600 |
| | 85,800 |
|
Individual Performance eVCP Target (20% x $220,000 = $44,000) | | — |
| | 44,000 |
| | 44,000 |
| | 44,000 |
| | 44,000 |
|
| Total | | — |
| | 132,000 |
| | 220,000 |
| | 237,600 |
| | 272,800 |
|
| | | | | | | | | | | |
Performance-Based Cash Compensation Payments
The Compensation Committee met on December 12, 2011 and January 26 and February 1, 201229, 2013 to review fiscal 20112012 corporate and executive goal performance, make determinations for fiscal 20122013 performance-based incentive cash compensation awards based on the performance reviews, and establish the fiscal 20122013 executive compensation plan. The following table presents the performance-based cash compensation opportunities as a percentage of base salary and the actual amounts earned by each named executive officer for fiscal 2011: | | | | | | | | | | | | |
Named Executive Officer | | 2011 Target
Bonus as a % of
Base Salary | | | Actual Bonus
Payout
($)(1)(2) | | | Actual Bonus
Payout as a % of
Base
Salary(1)(2) | |
Jay T. Flatley | | | 100 | % | | | 650,988 | | | | 83 | % |
Christian O. Henry | | | 55 | % | | | 197,457 | | | | 46 | % |
Christian G. Cabou | | | 55 | % | | | 184,156 | | | | 48 | % |
Nicholas J. Naclerio | | | 55 | % | | | 159,644 | | | | 47 | % |
Tristan B. Orpin | | | 55 | % | | | 183,031 | | | | 44 | % |
|
| | | | | | | | | |
| Named Executive Officer | | 2012 Target Bonus as a % of Base Salary | | Actual Bonus Payout ($)(1) | | Actual Bonus Payout as a % of Base Salary(1) |
| Jay T. Flatley | | 100 | % | | 862,935 |
| | 107 | % |
| Marc A, Stapley(2) | | 55 | % | | 239,585 |
| | 55 | % |
| Christian O. Henry | | 55 | % | | 258,444 |
| | 57 | % |
| Paul L. Bianchi(3) | | 55 | % | | 64,933 |
| | 19 | % |
| Nicholas J. Naclerio | | 55 | % | | 230,170 |
| | 57 | % |
| Matthew L. Posard | | 55 | % | | 217,010 |
| | 57 | % |
| | | | | | | |
| |
| (1) | These bonuses were paid in February 20122013 and reflect fiscal 20112012 revenue that fell between the thresholdtarget and guidancebudget objectives and operating income that fell between the guidancetarget and budget objectives, in each case established for the fiscal 2011 VCP.eVCP. Accordingly, the revenue VCPeVCP component (50% of target bonus) paid out at a level of 81.2%109.7% and the operating income VCPeVCP component (30% of target bonus) paid out at a level of 96.2%108.5%. The individual performance VCPeVCP component (20% of target bonus) was determined based on achievement of pre-established individual performance objectives. |
| |
| (2) | Mr.Stapley joined Illumina as its Chief Financial Officer on January 20, 2012, and his eVCP bonus was prorated based on the amount of time he served during fiscal 2012. |
| |
| (3) | Mr. Bianchi joined Illumina as its Senior Vice President, Human Resources on September 5, 2012, and his eVCP bonus was prorated based on the amount of time he served during fiscal 2012. |
Performance-based cash compensation awards made to named executive officers under the
VCPeVCP for performance in fiscal
20092010 and
20102011 are reflected in the column titled “Non-Equity Incentive Plan Compensation” of the Summary Compensation Table on page
48.53. These bonuses were paid in February
20102011 and February
2011,2012, respectively.
Long-Term Equity Compensation
The Compensation Committee believes it is appropriate to align the interests of executives with those of stockholders. Accordingly, we award long-term incentives to reward performance and align executives with long-term stockholder interests by providing executives with an ownership stake in the Company, encouraging sustained long-term performance, and providing an important retention element to their compensation program. We believe that one of the most effective ways to accomplish this objective is to provide executive officers with a substantial economic interest in the long-term appreciation of our stock price through equity grants, which in fiscal 2012 were in the form of performance stock optionsunits (PSUs) and restricted stock units (RSUs).
Performance Stock Units
During fiscal 2012, the Compensation Committee approved changes to the long-term equity incentive compensation program for our executive officers that placed greater emphasis on performance-based long-term incentives by replacing annual stock option grants with PSUs that vest at the end of a three-year performance period based on the achievement of specified earnings per share targets at the end of the three-year period.
The PSU awards are intended to be an ongoing part of our long-term equity incentive compensation program. It is anticipated that the Compensation Committee will grant new PSU awards each year, based on earnings per share targets (or other appropriate financial metrics) established for a new three-year performance period commencing each year; however, the Compensation Committee is not obligated to grant PSUs or RSUs. any other equity incentive awards each year.
In keeping with our compensation philosophy to tie executive pay to stockholder value creation, executives realize full value through stock optionsfrom PSUs only to the extent that our stock price increases.we achieve specified earnings per share targets at the end of a three-year period. For instance, the number of shares issued will range from 50% to 150% of the number of shares specified in the PSU agreement based on performance relative to the earnings per share objectives approved by the Compensation Committee. If we fail to achieve the specified earnings per share target at the end of the three-year performance period, then the number of shares issued will range from 50% to 100% of the award amount, depending on the actual earnings per share. If, however, we exceed the specified earnings per share target at the end of the three-year performance period the number of shares issued will range from 100% to 150% of the award amount, depending on the actual earnings per share.
Restricted Stock Units
Since January1, 2008, long-term equity compensation packages to executives have included grants of time-based vesting RSUs. RSUs granted to executive officers during fiscal 2012 vest over a four year period , with 25% of the RSU vesting on each of the first four anniversaries of the grant. RSUs granted to executive officers in fiscal 2011 and 2010 vest over a four year period with 15% of the RSU vesting on the first anniversary of the grant date, 20% on the second anniversary of the grant date, 30% on the third anniversary of the grant date, and 35% on the fourth anniversary of the grant date. Vesting in all cases is subject to the individual's continued service to us through the vesting date.
Like PSUs, RSUs also provide a long-term incentive for executives to remain with
us, butus; however, because RSUs do not have
an exercise price and accordinglya performance component they provide some amount of value to recipients regardless of our stock price. During
2011,2012, we awarded approximately
20%75% of our
totalannual equity grants
(as measured by grant date fair value) to our named executive officers in the form of
PSUs and 25% in the form of RSUs,
in each case as measured by the grant date
fair valuestock equivalent ratio with each RSU counted as the equivalent of
three shares of common stock and each PSU counted as the
awards.equivalent of two shares of common stock.
Determination of Long-Term Equity Compensation
To determine the value for long-term incentives granted to an executive each year, we consider the following factors:
the proportion of long-term incentives relative to base pay;
the executive’s impact on Company performance and ability to create value;
long-term business objectives;
awards made to executives in similar positions within our compensation peer group of companies;
the market demand for the executive’s particular skills and experience;
the amount granted to other executives in comparable positions at the Company;
the executive’s demonstrated performance over the past few years; and
the executive’s leadership performance.
In addition, the new hire equity grant made to an executive officer upon first joining the Company is based primarily on competitive conditions applicable to the executive officer’s specific position. The Compensation Committee also considers the number and type of equity awards owned by executive officers in comparable positions, including the executive’s prior position. Subsequent equity grants to executive officers are generally considered and, if appropriate, awarded in connection with their annual performance review each January. Such subsequent grants serve to maintain a competitive position for us relative to new opportunities that may become available to our executive officers and to enhance the retention features of the program.
Stock Options
New Hire Awards. Stock options for newly-hired executives may be granted under our New Hire Stock and Incentive Plan or under our 2005 Stock and Incentive Plan, in each case on the date employment with us commences. New hire stock options granted prior to March 30, 2008 vest over a five-year period, with 20% of the options vesting on the first anniversary of the grant date and the remaining options vesting monthly over the next 48 months. New hire stock options granted on or after March 30, 2008 vest over a four-year period, with 25% of the options vesting on the first anniversary of the grant and the remaining options vesting monthly over the following 36 months. Each of the options has a maximum term of ten years, measured from the applicable grant date, subject to earlier termination if the optionee’s service with us ceases.Subsequent Awards. Stock options granted to executives subsequent to hiring are granted under our 2005 Stock and Incentive Plan. Prior to 2008, stock options granted under the 2005 Stock and Incentive Plan to executives subsequent to hiring vested monthly over a five-year period. Effective January 1, 2008, the Compensation Committee changed the vesting schedule for stock options to monthly vesting over a four-year period. Each of the options has a maximum term of ten years, measured from the applicable grant date, subject to earlier termination if the optionee’s service with us ceases.
Restricted Stock Units
Effective January 1, 2008, long-term equity compensation packages to executives have included grants of RSUs. RSUs for newly-hired executives may be granted under our New Hire Stock and Incentive Plan or under our 2005 Stock and Incentive Plan, in each case on the date employment with us commences. New hire awards vest over four years with 25% vesting on each of the first four anniversaries of the grant date. RSUs granted to executives subsequent to hiring are granted under our 2005 Stock and Incentive Plan and vest 15% on the first anniversary of the grant date, 20% on the second anniversary of the grant date, 30% on the third anniversary of
the grant date, and 35% on the fourth anniversary of the grant date. Vesting in all cases is subject to the individual’s continued service to us through the vesting date. The Compensation Committee and the Board of Directors have from time to time considered granting restricted stock unit awards that vest based on the achievement of performance metrics, whether financial or otherwise, and the Compensation Committee and the Board of Directors may in the future grant such awards.
Fiscal 20112012 Long-Term Equity Compensation
The following table presents the long-term equity compensation awarded to each named executive officer based on grant date fair value and as a multiple of base salary for fiscal 2011: | | | | | | | | | | | | | | | | |
Named Executive Officer | | Stock Options
(Grant Date Fair
Value) ($) | | | RSUs
(Grant Date Fair
Value)
($) (1) | | | Total ($) | | | Multiple of
2011 Base
Salary | |
Jay T. Flatley | | | 6,726,848 | | | | 1,770,500 | | | | 8,497,348 | | | | 10.9 | |
Christian O. Henry | | | 2,400,329 | | | | 416,040 | | | | 2,816,369 | | | | 6.5 | |
Christian G. Cabou | | | 1,580,704 | | | | 416,040 | | | | 1,996,744 | | | | 5.2 | |
Nicholas J. Naclerio | | | 1,646,567 | | | | 433,375 | | | | 2,079,942 | | | | 6.1 | |
Tristan B. Orpin | | | 1,756,338 | | | | 462,290 | | | | 2,218,628 | | | | 5.4 | |
|
| | | | | | | | | | | | | | | |
| Named Executive Officer | | Options (Grant Date Fair Value) ($) | | PSUs (Grant Date Fair Value) ($) (1) | | RSUs (Grant Date Fair Value) ($) (1) | | Total ($) | | Multiple of 2012 Base Salary |
| Jay T. Flatley | | — |
| | 4,939,619 |
| | 1,348,588 |
| | 6,288,207 |
| | 7.8 |
|
| Marc A, Stapley | | 1,837,208 |
| | — |
| | 889,350 |
| | 2,726,558 |
| | 6.3 |
|
| Christian O. Henry | | — |
| | 1,409,611 |
| | 565,947 |
| | 1,975,558 |
| | 4.4 |
|
| Paul L. Bianchi | | — |
| | 1,976,719 |
| | 439,285 |
| | 2,416,004 |
| | 6.9 |
|
| Nicholas J. Naclerio | | — |
| | 2,321,707 |
| | 768,612 |
| | 3,090,319 |
| | 7.7 |
|
| Matthew L. Posard | | — |
| | 1,658,369 |
| | 621,238 |
| | 2,279,607 |
| | 6.0 |
|
| | | | | | | | | | | |
| |
| (1) | With the introduction of PSUs in fiscal 2012, which vest only at the end of a three year performance period, the Compensation Committee approved an additional one time grant of RSUs, which vest over two years, to address the gap in vested equity awards executive officers receiving PSUs would have during the first and second years. |
The following table shows the mix of base salary, cash bonus, and long-term equity compensation for our named executive officers for fiscal 2011: | | | | | | | | |
| | | Amount ($) | | | Percent | |
Base Salary | | | 2,346,100 | | | | 11 | % |
Annual Cash Bonus(1) | | | 1,375,276 | | | | 6 | % |
Long-Term equity Compensation(2) | | | 17,609,031 | | | | 83 | % |
| | | | | | | | |
Total | | | 21,330,407 | | | | 100 | % |
| | | | | | | | |
|
| | | | | | |
| | | Amount ($) | | Percent |
| Base Salary | | 2,820,800 |
| | 12 | % |
| eVCP Performance-Based Cash Bonus(1) | | 1,873,077 |
| | 8 | % |
| Long-Term Equity Compensation(2) | | 18,776,253 |
| | 80 | % |
| Total | | 23,470,130 |
| | 100 | % |
| | | | | |
| |
| (1) | BonuseseVCP performance-based cash bonuses were earned during fiscal 20112012 and were paid in February 2012.2013. |
| |
| (2) | Reflects the grant date fair value of awards granted during fiscal 2011.2012. Assumptions used in the calculation of these amounts are included in Note 110 to our audited consolidated financial statements included in our Annual Report on Form 10-K filed with the SEC on February 28, 2011.15, 2013. |
Potential Payments upon a Termination or Change in Control
Our executive management and other employees have built Illumina into the successful enterprise that it is today. We believe that the interests of stockholders will be best served if the interests of our executive management are aligned with them, and providing change-in-control benefits may eliminate, or at least reduce, the reluctance of executive management to pursue potential change-in-control transactions that may be in the best interests of stockholders. As such, we provide change-in-control severance benefits to our named executive officers. The initial term of all change-in-control severance agreements expired in August 2009, after which the agreements automatically renew annually for additional one year periods unless a notice of non-extension is provided by either party. None of the named executive officers have an employment agreement with us.
For purposes of these benefits, in general, a change in control is deemed to occur in any of the following circumstances:
any merger or consolidation in which we are not the surviving entity;
the sale of all or substantially all of our assets to any other person or entity;
the acquisition of beneficial ownership of a controlling interest in the outstanding shares of our common stock by any person or entity;
a contested election of our directors as a result of which or in connection with which the persons who were directors before such election or their nominees cease to constitute a majority of the Board of Directors; or
any other event specified by the Board of Directors.
Under the change-in-control severance agreements, the executive would receive benefits if he were terminated within two years following the change in control either:
by the Company other than for “cause,” which is defined in each change-in-control severance agreement to include repeated failure or refusal to materially perform his duties that existed immediately prior to the change in control, conviction of a felony or a crime of moral turpitude, or engagement in an act of malfeasance, fraud, or dishonesty that materially damages our business; or
by the executive on account of “good reason,” which is defined in each change-in-control severance agreement to include certain reductions in the executive’s annual base salary, bonus, position, title, responsibility, level of authority, or reporting relationships that existed immediately prior to the change in control, or a relocation, without the executive’s written consent, of the executive’s principal place of business by more than 35 miles from the executive’s principal place of business immediately prior to the change in control.
Pursuant to the change-in-control severance agreements, if a covered termination of the executive’s employment occurs in connection with a change in control, then, with the exception of the Chief Executive Officer, the executive is generally entitled to the following benefits:
a severance payment equal to one year of the executive’s annual base salary plus the greater of (a) the executive’s then-current annual target bonus or other target incentive amount or (b) the annual bonus or other incentive paid or payable to the executive for the most recently completed fiscal year;
a lump sum payment of the executive’s earned but unpaid compensation, including any earned but unpaid bonus or other incentive payment from any completed fiscal year, and a pro rata portion of the executive’s annual target bonus or other target incentive amount for the fiscal year in which the termination occurs;
payments of the executive’s group health insurance coverage premiums under COBRA law, including coverage for the executive’s eligible dependents enrolled immediately prior to termination, for a maximum period of one year; however, our obligation to pay such premiums ceases immediately upon the date the executive becomes covered under any other group health plan;
continuance of the executive’s indemnification rights and liability insurance for a maximum of one year following termination;termination.
continuation of the executive’s perquisites to which the executive was entitled for a period of 12 months or, in the case of Mr. Flatley, 24 months;
automatic vesting of the executive’s unvested stock options and equity or equity-based awards; and
certain professional outplacement services consistent with the executive’s position for up to two years following termination.
Our Chief Executive Officer is entitled to a severance payment equal to twice the sum of his annual base salary and the greater of his target or most recently paid or payable target bonus or other target incentives and 24 months (instead of 12 months) of continued certain medical and other benefits in addition to the benefits previously described for the other named executive officers.
The change-in-control severance agreements provide that each executive’s total change-in-control payment may be reduced in the event such payment is subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, and such a reduction would provide a greater after-tax benefit for the executive. Additionally, change-in-control benefits are subject to limitations under IRC Section 280G “golden parachute” provisions. A full analysis of the financial impact of these limitations will be performed based on the facts and circumstances in the event a change in control were to occur.
Based upon a hypothetical change in control date of December 30, 2011,28, 2012, the last trading day of fiscal 2011,2012, the potential payments upon a termination following a change-in-control for our named executive officers would have been as follows: | | | | | | | | | | | | | | | | | | | | |
Name | | Cash ($)(1) | | | Equity ($)(2) | | | Pension/NQDC
($)(3) | | | Perquisites/Benefits ($)(4) | | | Total ($) | |
Jay T. Flatley | | | 3,785,988 | | | | 2,562,513 | | | | 1,132,520 | | | | 71,149 | | | | 7,552,170 | |
Christian O. Henry | | | 872,452 | | | | 793,963 | | | | 596,538 | | | | 46,374 | | | | 2,309,327 | |
Christian G. Cabou | | | 784,895 | | | | 707,385 | | | | 248,974 | | | | 38,188 | | | | 1,779,442 | |
Nicholas J. Naclerio | | | 692,594 | | | | 190,500 | | | | 334,330 | | | | 46,374 | | | | 1,263,798 | |
Tristan B. Orpin | | | 832,033 | | | | 736,422 | | | | 167,644 | | | | 46,374 | | | | 1,782,473 | |
|
| | | | | | | | | | | | | | | |
| Name | | Cash ($)(1) | | Equity ($)(2) | | Pension/NQDC ($)(3) | | Perquisites/Benefits ($)(4) | | Total ($) |
| Jay T. Flatley | | 3,532,670 |
| | 10,752,690 |
| | 1,611,742 |
| | 89,148 |
| | 15,986,250 |
|
| Marc A. Stapley | | 914,170 |
| | 3,859,800 |
| | — |
| | 64,574 |
| | 4,838,544 |
|
| Christian O. Henry | | 966,932 |
| | 3,260,982 |
| | 310,955 |
| | 64,574 |
| | 4,603,443 |
|
| Paul L. Bianchi | | 607,433 |
| | 3,136,737 |
| | — |
| | 64,574 |
| | 3,808,744 |
|
| Nicholas J. Naclerio | | 911,159 |
| | 4,681,746 |
| | 763,415 |
| | 64,574 |
| | 6,420,894 |
|
| Matthew L. Posard | | 815,576 |
| | 3,187,591 |
| | — |
| | 59,472 |
| | 4,062,639 |
|
| | | | | | | | | | | |
| |
| (1) | As described above, under the change-in-control severance agreements, upon a qualifying termination following a change in control, each of the named executive officers would be entitled to (i) a severance payment equal to one year (two years for Mr. Flatley) of the executive’s annual base salary plus the greater of (two times the greater of for Mr. Flatley) (a) the executive’s then-current annual target bonus or other target incentive amount or (b) the annual bonus or other incentive paid or payable to the executive for the most recently completed fiscal year (“Severance Payment”); and (ii) a lump sum payment of the executive’s earned but unpaid compensation and a pro rata portion of the executive’s annual target bonus or other target incentive amount (“Earned Compensation”). Earned Compensation in the table above includes bonus payments for fiscal 2011,2012, which were paid in February 2012.2013. Mr. Flatley would be entitled to receive a Severance Payment equal to $3,120,000$2,469,735 and Earned Compensation equal to $665,988;$1,062,935; Mr. Stapley would be entitled to receive a Severance Payment equal to $674,585 and Earned Compensation equal to $239,585; Mr. Henry would be entitled to receive a Severance Payment equal to $666,723$708,488 and Earned Compensation equal to $205,729;$258,444; Mr. CabouBianchi would be entitled to receive a Severance Payment equal to $593,377$542,500 and Earned Compensation equal to $191,518;$64,933; Mr. Naclerio would be entitled to receive a Severance Payment equal to $526,419$630,989 and Earned Compensation equal to $166,175;$280,170; and Mr. OrpinPosard would be entitled to receive a Severance Payment equal to $641,049$598,566 and Earned Compensation equal to $190,984.$217,010. |
| |
| (2) | The value of the stock options was calculated by multiplying the number of accelerated options by the difference between the exercise price and $30.48$54.75 (the closing price of our common stock on December 30, 2011)28, 2012). The value of the RSUs is based on the number of outstanding shares that would not ordinarily have vested December 30, 201128, 2012 multiplied by $30.48$54.75 (the closing price of our common stock on December 30, 2011)28, 2012). |
| |
| (3) | As described below, under the deferred compensation plan upon a separation from service within 24 months of a change in control, each named executive officer will be entitled to his or her retirement benefit or termination benefit in a lump sum payment equal to the unpaid balance of all of his or her accounts. All of the amounts for all of the named executive officers consist of the termination benefits. |
| |
| (4) | Represents payment of (i) the executive’s group health insurance coverage premiums under COBRA law, including coverage for executive’s eligible dependents enrolled immediately prior to termination, for a maximum period of one year (two years for Mr. Flatley) and (ii) professional outplacement services for up to two years following termination ($10,800($20,000 per year for each executive officer). |
Deferred Compensation Plan
Illumina’s Deferred Compensation Plan effective December 1, 2007 (the “Deferred Compensation Plan”), provides key employees and directors with an opportunity to defer a portion of their salary, bonus and other
specified compensation. The named executive officers participate in the Deferred Compensation Plan. The plan permits us to make discretionary contributions to the Deferred Compensation Plan on behalf of the participants, although we have not exercised such discretion. A participant is always fully vested in accounts under the plan attributable to a participant’s contributions and related earnings on such contributions. Upon a “change in control” (as defined in the plan) a participant will receive his or her “retirement benefit” or “termination benefit” (each as defined in the plan) in a lump sum payment equal to the unpaid balance of all of his or her accounts if a “separation from service” (as defined in the plan) occurs within 24 months following a change of control.
Other Benefits and Perquisites
We do not provide pension arrangements or post-retirement health coverage for our executives or employees, other than the change-in-control severance benefits previously discussed. Otherwise, we provide to our executives medical and other benefits that are generally available to other full-time employees, including dental, vision, and group term life insurance, AD&D premiums, a 401(k) plan, and an Employee Stock Purchase Plan. Our discretionary contributions to the 401(k) plan on behalf of each employee participating in the plan are set at up to 50% of the first 6% of employees’ contributions to the plan, based on our meeting certain financial targets.
All of our named executive officers participated in our 401(k) plan during fiscal
20112012 and received matching contributions.
Tax and Accounting Considerations
Section 162(m) of the Internal Revenue Code of 1986 limits the deductibility of compensation payable in any tax year to the Chief Executive Officer and the other four most highly compensated executive officers. Section 162(m) stipulates that a publicly held company cannot deduct compensation to its top officers in excess of $1 million. Compensation that is “performance-based” compensation within the meaning of the Internal Revenue Code does not count toward the $1 million limit. We believe that compensation paid under the executive incentive plans is generally fully deductible for federal income tax purposes with the exception of RSUs. However, in certain situations, the Compensation Committee may approve compensation that will not meet these requirements in order to ensure competitive levels of total compensation for our executive officers.
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis set forth above and, based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.
|
|
| RESPECTFULLY SUBMITTED BY THE COMPENSATION COMMITTEE. |
|
| Roy A. Whitfield (Chairperson) |
| Daniel M. Bradbury |
| Paul C. Grint, M.D. |
| William H. Rastetter, Ph.D. |
Summary Compensation Table
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Stock
Awards | | | Option
Awards | | | Non-Equity
Incentive Plan
Compensation
($)(2) | | | All Other
Compensation
($)(3) | | | | |
Name and Principal Position | | Year | | | Salary ($) | | | ($)(1) | | | ($)(1) | | | | | Total ($) | |
| | | | | | | |
Jay T. Flatley | | | 2011 | | | | 779,423 | | | | 1,770,500 | | | | 6,726,848 | | | | 650,988 | | | | 16,388 | | | | 9,944,147 | |
President, Chief Executive | | | 2010 | | | | 749,615 | | | | 907,500 | | | | 4,007,025 | | | | 922,500 | | | | 22,334 | | | | 6,608,974 | |
Officer & Director | | | 2009 | | | | 749,162 | | | | 839,100 | | | | 3,599,150 | | | | 498,731 | | | | 9,778 | | | | 5,695,921 | |
| | | | | | | |
Christian O. Henry(4) | | | 2011 | | | | 429,826 | | | | 416,040 | | | | 2,400,329 | | | | 197,457 | | | | 17,496 | | | | 3,461,148 | |
Senior Vice President, & General Manager, | | | 2010 | | | | 410,139 | | | | 277,800 | | | | 1,226,617 | | | | 277,526 | | | | 15,709 | | | | 2,207,791 | |
Genomic Systems | | | 2009 | | | | 390,203 | | | | 296,364 | | | | 1,372,847 | | | | 159,600 | | | | 6,502 | | | | 2,225,516 | |
| | | | | | | |
Christian G. Cabou | | | 2011 | | | | 382,541 | | | | 416,040 | | | | 1,580,704 | | | | 184,156 | | | | 36,373 | | | | 2,599,814 | |
Senior Vice President, General | | | 2010 | | | | 367,882 | | | | 277,800 | | | | 1,226,617 | | | | 246,995 | | | | 17,260 | | | | 2,136,554 | |
Counsel & Secretary | | | 2009 | | | | 366,677 | | | | 237,074 | | | | 1,098,278 | | | | 153,600 | | | | 7,659 | | | | 1,863,288 | |
| | | | | | | |
Nicholas J Naclerio(5) | | | 2011 | | | | 339,344 | | | | 433,375 | | | | 1,646,567 | | | | 159,644 | | | | 10,540 | | | | 2,589,470 | |
Senior Vice President, | | | 2010 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Corporate & Venture Development | | | 2009 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | |
Tristan B. Orpin | | | 2011 | | | | 412,926 | | | | 462,290 | | | | 1,756,338 | | | | 183,031 | | | | 12,945 | | | | 2,827,530 | |
Senior Vice President & Chief | | | 2010 | | | | 379,403 | | | | 277,800 | | | | 1,226,617 | | | | 258,887 | | | | 13,118 | | | | 2,115,825 | |
Commercial Officer | | | 2009 | | | | 380,123 | | | | 237,074 | | | | 1,098,278 | | | | 159,200 | | | | 7,644 | | | | 1,882,319 | |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Bonuses ($)(1) | | Stock Awards | | Option Awards | | Non-Equity Incentive Plan Compensation ($)(3) | | All Other
Compensation
($)(4) | | |
Name and Principal Position | | Year | | Salary ($) | | | ($)(2) | | ($)(2) | | | | Total ($) |
| Jay T. Flatley | | 2012 | | 802,950 |
| | 200,000 |
| | 6,288,207 |
| | — |
| | 862,935 |
| | 16,988 |
| | 8,171,080 |
|
| President, Chief Executive | | 2011 | | 779,423 |
| | — |
| | 1,770,500 |
| | 6,726,848 |
| | 650,988 |
| | 16,388 |
| | 9,944,147 |
|
| Officer & Director | | 2010 | | 749,615 |
| | — |
| | 907,500 |
| | 4,007,025 |
| | 922,500 |
| | 22,334 |
| | 6,608,974 |
|
Marc A. Stapley(5) Senior Vice President & Chief Financial Officer | | 2012 | | 403,212 |
| | 350,000 |
| | 889,350 |
| | 1,837,208 |
| | 239,585 |
| | 232,121 |
| | 3,951,476 |
|
| Christian O. Henry(5) | | 2012 | | 449,666 |
| | — |
| | 1,975,558 |
| | — |
| | 258,444 |
| | 24,467 |
| | 2,708,135 |
|
| Senior Vice President, & General Manager, | | 2011 | | 429,826 |
| | — |
| | 416,040 |
| | 2,400,329 |
| | 197,457 |
| | 17,496 |
| | 3,461,148 |
|
| Genomic Systems | | 2010 | | 410,139 |
| | — |
| | 277,800 |
| | 1,226,617 |
| | 277,526 |
| | 15,709 |
| | 2,207,791 |
|
Paul L. Bianchi(6) Senior Vice President, Human Resources | | 2012 | | 105,000 |
| | — |
| | 2,416,004 |
| | — |
| | 64,933 |
| | 644 |
| | 2,586,581 |
|
| Nicholas J Naclerio(7) | | 2012 | | 399,637 |
| | 50,000 |
| | 3,090,319 |
| | — |
| | 230,170 |
| | 8,566 |
| | 3,778,692 |
|
| Senior Vice President, | | 2011 | | 339,344 |
| | — |
| | 433,375 |
| | 1,646,567 |
| | 159,641 |
| | 10,540 |
| | 2,589,467 |
|
Corporate & Venture Development | | 2010 | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Matthew L. Posard(8)
| | 2012 | | 379,416 |
| | — |
| | 2,279,607 |
| | — |
| | 217,010 |
| | 10,461 |
| | 2,886,494 |
|
| Senior Vice President & General Manager, | | 2011 | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Translational & Consumer Genomics | | 2010 | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| | | | | | | | | | | | | | | | | |
| |
| (1) | Reflects discretionary one-time cash bonuses paid to: (a) Mr. Flatley in recognition of his leadership role and efforts in connection with the successful defense against Roche’s unsolicited attempt to acquire the Company; (b) Mr. Stapley as a hiring bonus; and (c) Mr. Naclerio in recognition of his leadership role in connection with the Company’s acquisition of Verinata Health, Inc. |
| |
| (2) | This reflects the grant date fair value of awards granted. Assumptions used in the calculation of these amounts are included in Note 1note 9 of our audited consolidated financial statements included in our Annual Report on Form 10-K filed with the SEC on February 28, 2011.15, 2013. |
(2) | |
| (3) | Reflects performance-based bonuses earned during fiscal 2011,2012, fiscal 2010, and fiscal 20092010 under Illumina’s Variable Compensation Plan (VCP)(eVCP), which were paid in February 2012,2013, February 2011,2012, and February 2010,2011, respectively. The VCPeVCP is described in the Compensation Discussion and Analysis, under the caption “Performance-Based Incentive Cash Compensation.” |
(3) | |
| (4) | These amounts represent Company contributions to 401(k) plans, Company-paid physical exams, compensation paid in lieu of paid time-off, and long-term disability premiums.premiums, and relocation expenses paid to Mr. Stapley. |
(4) | |
| (5) | Mr. Stapley joined Illumina as its Chief Financial Officer on January 20, 2012, prior to which Mr. Henry served as our Chief Financial Officer throughout fiscal 2011.Officer. |
(5) | |
| (6) | Mr. Bianchi joined Illumina as its Senior Vice President, Human Resources on September 5, 2012. |
| |
| (7) | Mr. Naclerio became a named executive officer in fiscal 2011; therefore information has been omitted for fiscal 20102010. |
| |
| (8) | Mr. Posard became a named executive officer in fiscal 2012; therefore information has been omitted for fiscal 2011 and 2009.2010. |
Grants of Plan-Based Awards Table
| | | | | | | | | | | | | | | | | | |
Name | | Grant Date | | All Other Stock
Awards: Number
of
Shares of Stock
or
Units (#)(1) | | | All Other Option
Awards: Number
of Securities
Underlying
Options (#)(2) | | | Exercise or
Base Price of
Option
Awards
($/sh)(3) | | | Grant Date Fair
Value of Stock and
Option Awards ($)(4) | |
Jay T. Flatley | | February 1, 2011 | | | — | | | | 225,000 | | | | 70.82 | | | | 6,726,848 | |
| | February 1, 2011 | | | 25,000 | | | | — | | | | — | | | | 1,770,500 | |
Christian O. Henry | | January 31, 2011 | | | — | | | | 82,000 | | | | 69.34 | | | | 2,400,329 | |
| | January 31, 2011 | | | 6,000 | | | | — | | | | — | | | | 416,040 | |
Christian G. Cabou | | January 31, 2011 | | | — | | | | 54,000 | | | | 69.34 | | | | 1,580,704 | |
| | January 31, 2011 | | | 6,000 | | | | — | | | | — | | | | 416,040 | |
Nicholas J. Naclerio | | January 31, 2011 | | | — | | | | 56,250 | | | | 69.34 | | | | 1,646,567 | |
| | January 31, 2011 | | | 6,250 | | | | — | | | | — | | | | 433,375 | |
Tristan B. Orpin | | January 31, 2011 | | | — | | | | 60,000 | | | | 69.34 | | | | 1,756,338 | |
| | January 31, 2011 | | | 6,667 | | | | — | | | | — | | | | 462,290 | |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | | Grant Date | | Estimated Future Payouts Under Equity Incentive Plan Awards(1): Number of Shares | | All Other Stock Awards: Number of Shares of Stock or Units (#)(2) | | All Other Option Awards: Number of Securities Underlying Options (#)(3) | | Exercise or Base Price of Option Awards ($/sh)(4) | | Grant Date Fair Value of Stock and Option Awards ($)(5) |
| Name | | | Threshold | | Target | | Maximum | | | | |
| Jay T. Flatley | | March 12, 2012 | | 49,219 |
| | 98,438 |
| | 147,657 |
| | — |
| | — |
| | — |
| | 4,939,619 |
|
| | | March 12, 2012 | | — |
| | — |
| | — |
| | 21,875 |
| | — |
| | — |
| | 1,097,688 |
|
| | | March 12, 2012 | | — |
| | — |
| | — |
| | 5,000 |
| | — |
| | — |
| | 250,900 |
|
| Marc A. Stapley | | January 20, 2012 | | — |
| | — |
| | — |
| | 24,500 |
| | — |
| | — |
| | 889,350 |
|
| | | January 20, 2012 | | — |
| | — |
| | — |
| | — |
| | 136,500 |
| | 36.30 |
| | 1,837,208 |
|
| Christian O. Henry | | March 8, 2012 | | 13,946 |
| | 27,891 |
| | 41,837 |
| | — |
| | — |
| | — |
| | 1,409,611 |
|
| | | March 8, 2012 | | — |
| | — |
| | — |
| | 6,198 |
| | — |
| | — |
| | 313,247 |
|
| | | March 8, 2012 | | — |
| | — |
| | — |
| | 5,000 |
| | — |
| | — |
| | 252,700 |
|
| Paul L. Bianchi | | September 5, 2012 | | 23,438 |
| | 46,875 |
| | 70,303 |
| | — |
| | — |
| | — |
| | 1,976,719 |
|
| | | September 5, 2012 | | — |
| | — |
| | — |
| | 10,417 |
| | — |
| | — |
| | 439,285 |
|
| Nicholas J. Naclerio | | March 8, 2012 | | 22,969 |
| | 45,938 |
| | 68,907 |
| | — |
| | — |
| | — |
| | 2,321,707 |
|
| | | March 8, 2012 | | — |
| | — |
| | — |
| | 10,208 |
| | — |
| | — |
| | 515,912 |
|
| | | March 8, 2012 | | — |
| | — |
| | — |
| | 5,000 |
| | — |
| | — |
| | 252,700 |
|
| Matthew L. Posard | | March 8, 2012 | | 16,407 |
| | 32,813 |
| | 49,220 |
| | — |
| | — |
| | — |
| | 1,658,369 |
|
| | | March 8, 2012 | | — |
| | — |
| | — |
| | 7,292 |
| | — |
| | — |
| | 368,538 |
|
| | | March 8, 2012 | | — |
| | — |
| | — |
| | 5,000 |
| | — |
| | — |
| | 252,700 |
|
| | | | | | | | | | | | | | | | | |
| |
| (1) | Equity incentive plan awards consist of PSUs. PSUs will vest in their entirety on December 28, 2014, based on the achievement of specified earnings per share targets for the fiscal year ending December 28, 2014. All PSU awards were granted from the 2005 Stock and Incentive Plan, except Mr. Bianchi’s awards, which were granted from the New Hire Stock and Incentive Plan. Vesting is subject to the individual’s continued service to us through the vesting date. |
| |
| (2) | Stock awards consist of RSUs. RSUs, depending on the specific grant, either vest 25% per year on each of the first four anniversaries of the grant date or vest 50% per year on each of the first two anniversaries of the grant date. All RSU awards were granted from the 2005 Stock and Incentive Plan, except Mr. Bianchi’s awards, which were granted from the New Hire Stock and Incentive Plan. Vesting is subject to the individual’s continued service to us through the vesting date. |
| |
| (3) | All options vest over a four-year period, with 25% of the options vesting on the first anniversary of the grant date and the remaining options vesting monthly over the following 36 months. All options were granted from the 2005 Stock and Incentive Plan, except Mr. Bianchi’s awards, which were granted from the New Hire Stock and Incentive Plan. Vesting is subject to the individual’s continued service to us through the vesting date. |
| |
| (4) | The exercise price of stock options awarded is the closing market price of our common stock on The NASDAQ Global Select Market on the date of grant. |
| |
| (5) | This reflects the grant date fair value of awards granted during fiscal 2012. Assumptions used in the calculation of these amounts are included in note 9 to our audited consolidated financial statements included in our Annual Report on Form 10-K filed with the SEC on February 15, 2013. |
Outstanding Equity Awards at Fiscal Year-End Table
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Option Awards | | Stock Awards |
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | Option Exercise Price ($) | | Option Expiration Date | | Number of Shares or Units of Stock that Have Not Vested | | Market Value of Shares or Units of Stock that Have Not Vested ($)(1) | | Number of Unearned Shares, Units or Other Rights That Have Not Vested (2) | | Market of Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (1) |
| Jay T. Flatley | — |
| | — |
| | | — |
| | — |
| | — |
| | | — |
| | 98,438 |
| | 5,389,481 |
|
| | — |
| | — |
| | | — |
| | — |
| | 48,000 |
| (3) | | 2,628,000 |
| | — |
| | — |
|
| | — |
| | — |
| | | — |
| | — |
| | 21,875 |
| (4) | | 1,197,656 |
| | — |
| | — |
|
| | — |
| | — |
| | | — |
| | — |
| | 5,000 |
| (5) | | 273,750 |
| | — |
| | — |
|
| | 480,000 |
| | — |
| | | $ | 10.49 |
| | 1/30/2016 |
| | — |
| | | — |
| | — |
| | — |
|
| | 700,000 |
| | — |
| | | $ | 20.04 |
| | 1/25/2017 |
| | — |
| | | — |
| | — |
| | — |
|
| | 225,000 |
| | — |
| | | $ | 33.80 |
| | 2/1/2018 |
| | — |
| | | — |
| | — |
| | — |
|
| | 244,791 |
| | 5,209 |
| (6) | | $ | 27.97 |
| | 1/29/2019 |
| | — |
| | | — |
| | — |
| | — |
|
| | 164,062 |
| | 60,938 |
| (6) | | $ | 36.30 |
| | 1/28/2020 |
| | — |
| | | — |
| | — |
| | — |
|
| | 103,125 |
| | 121,875 |
| (6) | | $ | 70.82 |
| | 2/1/2021 |
| | — |
| | | — |
| | — |
| | — |
|
| | — |
| | — |
| | | — |
| | — |
| | — |
| | | — |
| | — |
| | — |
|
| Marc A. Stapley | — |
| | — |
| | | — |
| | — |
| | 24,500 |
| (4) | | 1,341,375 |
| | — |
| | — |
|
| | — |
| | 136,500 |
| (7) | | $ | 36.30 |
| | 1/20/2022 |
| | — |
| | | — |
| | — |
| | — |
|
| Christian O. Henry | — |
| | — |
| | | — |
| | — |
| | — |
| | | — |
| | 27,891 |
| | 1,527,032 |
|
| | — |
| | — |
| | | — |
| | — |
| | 13,620 |
| (3) | | 745,695 |
| | — |
| | — |
|
| | — |
| | — |
| | | — |
| | — |
| | 6,198 |
| (4) | | 339,341 |
| | — |
| | — |
|
| | — |
| | — |
| | | — |
| | — |
| | 5,000 |
| (5) | | 273,750 |
| | — |
| | — |
|
| | 167 |
| | — |
| | | $ | 10.49 |
| | 1/30/2016 |
| | — |
| | | — |
| | — |
| | — |
|
| | 2,135 |
| | — |
| | | $ | 20.04 |
| | 1/25/2017 |
| | — |
| | | — |
| | — |
| | — |
|
| | 15,000 |
| | — |
| | | $ | 32.49 |
| | 1/29/2018 |
| | — |
| | | — |
| | — |
| | — |
|
| | 86,796 |
| | 1,954 |
| (6) | | $ | 28.45 |
| | 1/28/2019 |
| | — |
| | | — |
| | — |
| | — |
|
| | 49,218 |
| | 18,282 |
| (6) | | $ | 37.04 |
| | 1/27/2020 |
| | — |
| | | — |
| | — |
| | — |
|
| | 37,583 |
| | 44,417 |
| (6) | | $ | 69.34 |
| | 1/31/2021 |
| | — |
| | | — |
| | — |
| | — |
|
| Paul L. Bianchi | — |
| | — |
| | | — |
| | — |
| | — |
| | | — |
| | 46,875 |
| | 2,566,406 |
|
| | — |
| | — |
| | | — |
| | — |
| | 10,417 |
| (4) | | 570,331 |
| | — |
| | — |
|
| Nicholas J. Naclerio | — |
| | — |
| | | — |
| | — |
| | — |
| | | — |
| | 45,938 |
| | 2,515,106 |
|
| | — |
| | — |
| | | — |
| | — |
| | 5,312 |
| (3) | | 290,832 |
| | — |
| | — |
|
| | — |
| | — |
| | | — |
| | — |
| | 10,208 |
| (4) | | 558,888 |
| | — |
| | — |
|
| | — |
| | — |
| | | — |
| | — |
| | 5,000 |
| (5) | | 273,750 |
| | — |
| | — |
|
| | 128,333 |
| | 91,667 |
| (8) | | $ | 43.37 |
| | 6/29/2020 |
| | — |
| | | — |
| | — |
| | — |
|
| | 25,780 |
| | 30,470 |
| (6) | | $ | 69.34 |
| | 1/31/2021 |
| | — |
| | | — |
| | — |
| | — |
|
| Matthew L. Posard | — |
| | — |
| | | — |
| | — |
| | — |
| | | — |
| | 32,813 |
| | 1,796,512 |
|
| | — |
| | — |
| | | — |
| | — |
| | 8,636 |
| (3) | | 472,821 |
| | — |
| | — |
|
| | — |
| | — |
| | | — |
| | — |
| | 7,292 |
| (4) | | 399,237 |
| | — |
| | — |
|
| | — |
| | — |
| | | — |
| | — |
| | 5,000 |
| (5) | | 273,750 |
| | — |
| | — |
|
| | 8,334 |
| | — |
| | | $ | 20.04 |
| | 1/25/2017 |
| | — |
| | | — |
| | — |
| | — |
|
| | 5,032 |
| | — |
| | | $ | 32.49 |
| | 1/29/2018 |
| | — |
| | | — |
| | — |
| | — |
|
| | 16,800 |
| | 1,050 |
| (6) | | $ | 28.45 |
| | 1/28/2019 |
| | — |
| | | — |
| | — |
| | — |
|
| | 15,125 |
| | 12,290 |
| (6) | | $ | 37.04 |
| | 1/27/2020 |
| | — |
| | | — |
| | — |
| | — |
|
| | 16,602 |
| | 19,623 |
| (6) | | $ | 69.34 |
| | 1/31/2021 |
| | — |
| | | — |
| | — |
| | — |
|
| | | | | | | | | | | | | | | | | | |
| |
| (1) | Market value of stock awards was determined by multiplying the number of unvested shares by $54.75, which was the closing market price of our common stock on The NASDAQ Global Select Market on December 28, 2012, the last trading day of fiscal 2012. |
| |
| (2) | These stock awards consist of PSUs. PSUs vest at the end of a three-year performance period and the number of shares issuable will range from 50% to 150% of the share approved in the award based on the Company’s performance relative to specified earnings per share targets at the end of the three-year performance period. |
| |
| (3) | These stock awards consist of RSUs that vest 15% on the first anniversary of the grant date, 20% on the second anniversary of the grant date, 30% on the third anniversary of the grant date, and 35% on the fourth anniversary of the grant date. |
(2) | All options granted vest in equal monthly installments over four years. Vesting is subject to the individual’s continued service to us through the vesting date. |
(3) | The exercise price of stock options awarded is the closing market price of our common stock on The NASDAQ Global Select Market on the date of grant. |
| (4) | This reflects the grant date fair value of awards granted during fiscal 2011. Assumptions used in the calculation of these amounts are included in Note 1 to our audited consolidated financial statements included in our Annual Report on Form 10-K filed with the SEC on February 28, 2011. |
Outstanding Equity Awards at Fiscal Year-End Table
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards | | | Stock Awards | |
Name | | Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable | | | Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable | | | Option
Exercise
Price ($) | | | Option
Expiration
Date | | | Number of
Shares or
Units of Stock
that
Have Not
Vested(1) | | | Market Value of
Shares or Units
of
Stock that Have
Not
Vested ($)(2) | |
Jay T. Flatley | | | — | | | | — | | | | — | | | | — | | | | 74,500 | | | | 2,270,760 | |
| | | 25,000 | | | | — | | | | 4.30 | | | | 2/25/2015 | | | | — | | | | — | |
| | | 500,000 | | | | — | | | | 10.49 | | | | 1/30/2016 | | | | — | | | | — | |
| | | 688,333 | | | | 11,667 | (3) | | | 20.04 | | | | 1/25/2017 | | | | — | | | | — | |
| | | 220,312 | | | | 4,688 | (4) | | | 33.80 | | | | 2/1/2018 | | | | — | | | | — | |
| | | 182,291 | | | | 67,709 | (4) | | | 27.97 | | | | 1/29/2019 | | | | — | | | | — | |
| | | 107,812 | | | | 117,188 | (4) | | | 36.30 | | | | 1/28/2020 | | | | — | | | | — | |
| | | 51,562 | | | | 173,438 | (4) | | | 70.82 | | | | 2/1/2021 | | | | — | | | | — | |
Christian O. Henry | | | — | | | | — | | | | — | | | | — | | | | 22,645 | | | | 690,220 | |
| | | 1,500 | | | | — | | | | 5.23 | | | | 6/6/2015 | | | | — | | | | — | |
| | | 167 | | | | — | | | | 10.49 | | | | 1/30/2016 | | | | — | | | | — | |
| | | 57,135 | | | | 5,000 | (3) | | | 20.04 | | | | 1/25/2017 | | | | — | | | | — | |
| | | 43,125 | | | | 1,875 | (4) | | | 32.49 | | | | 1/29/2018 | | | | — | | | | — | |
| | | 68,359 | | | | 25,391 | (4) | | | 28.45 | | | | 1/28/2019 | | | | — | | | | — | |
| | | 32,343 | | | | 35,157 | (4) | | | 37.04 | | | | 1/27/2020 | | | | — | | | | — | |
| | | 18,791 | | | | 63,209 | (4) | | | 69.34 | | | | 1/31/2021 | | | | — | | | | — | |
Christian G. Cabou | | | — | | | | — | | | | — | | | | — | | | | 20,999 | | | | 640,050 | |
| | | 35,000 | | | | — | | | | 13.70 | | | | 5/30/2016 | | | | — | | | | — | |
| | | 12,500 | | | | 2,500 | (3) | | | 20.04 | | | | 1/25/2017 | | | | — | | | | — | |
| | | 8,781 | | | | 1,719 | (4) | | | 32.49 | | | | 1/29/2018 | | | | — | | | | — | |
| | | 9,687 | | | | 20,313 | (4) | | | 28.45 | | | | 1/28/2019 | | | | — | | | | — | |
| | | 9,343 | | | | 35,157 | (4) | | | 37.04 | | | | 1/27/2020 | | | | — | | | | — | |
| | | 12,375 | | | | 41,625 | (4) | | | 69.34 | | | | 1/31/2021 | | | | — | | | | — | |
Nicholas J. Naclerio | | | — | | | | — | | | | — | | | | — | | | | 6,250 | | | | 190,500 | |
| | | 73,333 | | | | 146,667 | (5) | | | 43.37 | | | | 6/29/2020 | | | | — | | | | — | |
| | | 12,890 | | | | 43,360 | (4) | | | 69.34 | | | | 1/31/2021 | | | | — | | | | — | |
Tristan B. Orpin | | | — | | | | — | | | | — | | | | — | | | | 21,666 | | | | 660,380 | |
| | | 1,667 | | | | — | | | | 10.49 | | | | 1/30/2016 | | | | — | | | | — | |
| | | 44,333 | | | | 3,334 | (3) | | | 20.04 | | | | 1/25/2017 | | | | — | | | | — | |
| | | 80,781 | | | | 1,719 | (4) | | | 32.49 | | | | 1/29/2018 | | | | — | | | | — | |
| | | 54,687 | | | | 20,313 | (4) | | | 28.45 | | | | 1/28/2019 | | | | — | | | | — | |
| | | 32,343 | | | | 35,157 | (4) | | | 37.04 | | | | 1/27/2020 | | | | — | | | | — | |
| | | 13,750 | | | | 46,250 | (4) | | | 69.34 | | | | 1/31/2021 | | | | — | | | | — | |
(1) | StockThese stock awards consist of RSUs. RSUs that vest 15%25% on the firsteach anniversary of the grant date 20%over four years. |
| |
| (5) | These stock awards consist of RSUs that vest 50% on the secondeach anniversary of the grant date 30% on the third anniversary of the grant date, and 35% on the fourth anniversary of the grant date.over two years. |
(2) | Market value of stock awards was determined by multiplying the number of unvested shares by $30.48, which was the closing market price of our common stock on The NASDAQ Global Select Market on December 30, 2011, the last trading day of fiscal 2011. |
(3) | These options vest monthly over a five year period from the date of grant. |
(4)(6) | These options vest monthly over a four year period from the date of grant. |
(5) | |
| (7) | 25% of these options vest on the first anniversary of the grant, and the remaining options vest monthly over the next 36 months. |
| |
| (8) | 25% of these options vest over 13.5 months from the date of grant, and the remaining options vest monthly over the following 36 months. |
Option Exercises and Stock Vested Table
| | | | | | | | | | | | | | | | |
| | | Option Awards | | | Stock Awards | |
Name | | Number of Shares
Acquired on Exercise (#) | | | Value Realized
on Exercise(1) ($) | | | Number of Shares
Acquired on Vesting (#) | | | Value Realized
on
Vesting ($) | |
Jay T. Flatley | | | 350,000 | | | | 22,935,750 | | | | 17,250 | | | | 1,206,128 | |
Christian O. Henry | | | 157,500 | | | | 7,010,900 | | | | 6,209 | | | | 431,368 | |
Christian G. Cabou | | | 71,000 | | | | 2,429,190 | | | | 5,540 | | | | 385,100 | |
Nicholas J. Naclerio | | | — | | | | — | | | | — | | | | — | |
Tristan B. Orpin | | | 91,667 | | | | 4,851,456 | | | | 5,540 | | | | 385,100 | |
|
| | | | | | | | | | | |
| | Option Awards | | Stock Awards |
| Name | Number of Shares Acquired on Exercise (#) | | Value Realized on Exercise(1) ($) | | Number of Shares Acquired on Vesting (#) | | Value Realized on Vesting ($) |
| Jay T. Flatley | 45,000 |
| | 1,975,100 |
| | 26,500 |
| | 1,363,065 |
|
| Marc A. Stapley | — |
| | — |
| | — |
| | — |
|
| Christian O. Henry | 96,500 |
| | 2,650,530 |
| | 9,025 |
| | 461,812 |
|
| Paul L. Bianchi | — |
| | — |
| | — |
| | — |
|
| Nicholas J. Naclerio | — |
| | — |
| | 938 |
| | 48,645 |
|
| Matthew L. Posard | — |
| | — |
| | 5,167 |
| | 264,582 |
|
| | | | | | | | |
| |
| (1) | Value realized on exercise of option awards is computed by determining the difference between the closing market price of our common stock on The NASDAQ Global Select Market on the dates of exercise and the exercise price per share exercised. |
Nonqualified Deferred Compensation for Fiscal 2011 | | | | | | | | | | | | | | | | | | |
Name | | Executive
Contributions in
Last Fiscal Year
($)(1) | | | Illumina
Contributions in
Last Fiscal Year
($) | | Aggregate
Earnings in Last
Fiscal Year
($)(2) | | | Aggregate
Withdrawals /
Distributions ($) | | | Aggregate
Balance at Last
Fiscal
Year-End
($)(3) | |
Jay T. Flatley | | | 888,000 | | | — | | | (26,894 | ) | | | 105,712 | | | | 1,132,520 | |
Christian O. Henry | | | 383,144 | | | — | | | (3,037 | ) | | | 149,349 | | | | 596,538 | |
Christian G. Cabou | | | 194,433 | | | — | | | (4,654 | ) | | | — | | | | 248,974 | |
Nicholas J. Naclerio | | | 274,463 | | | — | | | (22,069 | ) | | | — | | | | 334,330 | |
Tristan B. Orpin | | | — | | | — | | | (684 | ) | | | — | | | | 167,644 | |
|
| | | | | | | | | | | | | |
| Name | Executive Contributions in Last Fiscal Year ($)(1) | | Illumina Contributions in Last Fiscal Year ($) | | Aggregate Earnings in Last Fiscal Year ($)(2) | | Aggregate Withdrawals / Distributions ($) | | Aggregate Balance at Last Fiscal Year-End ($)(3) |
| Jay T. Flatley | 325,494 |
| | — | | 179,612 |
| | 25,884 |
| | 1,611,742 |
|
| Marc A. Stapley | — |
| | — | | — |
| | — |
| | — |
|
| Christian O. Henry | — |
| | — | | 46,796 |
| | 332,379 |
| | 310,955 |
|
| Paul L. Bianchi | — |
| | — | | — |
| | — |
| | — |
|
| Nicholas J. Naclerio | 357,056 |
| | — | | 72,029 |
| | — |
| | 763,415 |
|
| Matthew L. Posard | — |
| | — | | — |
| | — |
| | — |
|
| | | | | | | | | | |
| |
| (1) | Amounts included in the Summary Compensation Table in the “Salary” and “Non-Equity Incentive Plan Compensation” columns. |
| |
| (2) | These amounts are not included in the Summary Compensation Table because plan earnings were not preferential or above market. |
| |
| (3) | The Company made no contributions towards the deferred compensation plan for the participants in fiscal 20112012 or prior years. |
EQUITY COMPENSATION PLAN INFORMATION
The following table presents information about shares of our common stock that may be issued under our equity compensation plans, including compensation plans that were approved by our stockholders as well as compensation plans that were not approved by our stockholders. Information in the table is as of January 1, 2012.
| | | | | | | | | | | | |
Plan Category | | (a) Number of Securities
to Be Issued Upon
Exercise of Outstanding
Options and
Rights | | | (b) Weighted-Average
Exercise Price per Share
of Outstanding Options
and Rights
($) | | | (c) Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding
Securities Reflected
in Column (a)) | |
Equity compensation plans approved by security holders | | | 12,663,994 | (1) | | | 28.61 | (2) | | | 20,954,111 | (3) |
Equity compensation plans not approved by security holders | | | 1,094,445 | (4) | | | 37.64 | (2) | | | N/A | (5) |
| | | | | | | | | | | | |
Total | | | 13,758,439 | | | | 29.57 | (2) | | | 20,954,111 | |
| | | | | | | | | | | | |
(1) | Represents 9,198,700 shares issuable upon exercise of options and 3,465,294 shares issuable under restricted stock unit awards. Options outstanding include 655,597 options with a weighted-average exercise price of $18.50 that were assumed in connection with corporate acquisitions. |
(2) | RSUs have been excluded for purposes of computing weighted-average exercise price. |
(3) | Includes 5,219,902 shares available for grant under our 2005 Stock and Incentive Plan and 15,734,209 shares available for grant under our 2000 Employee Stock Purchase Plan. |
(4) | Represents options granted under our New Hire Stock and Incentive Plan. |
(5) | There is no set number of shares reserved for issuance under the New Hire Stock and Incentive Plan. |
The following report of the Audit Committee, the report of the Compensation Committee under “Compensation Committee Report,” along with statements in this proxy statement regarding the Audit Committee’s charter, are not considered “soliciting material” and are not considered to be “filed” with the SEC as part of this proxy statement. Any current or future cross-references to this proxy statement in filings with the SEC under either the Securities Act of 1933 or the Securities Exchange Act of 1934 will not include such reports or statements, except to the extent that we specifically incorporate it by reference in such filing.
The Audit Committee oversees our financial reporting process on behalf of the Board of Directors and provides advice with respect to our risk evaluation and mitigation processes. In fulfilling its oversight role, the Audit Committee monitors and advises the Board of Directors on:
the integrity of our consolidated financial statements and related schedule and disclosures;
the independent registered public accounting firm’s qualifications and independence;
the performance of our internal and independent audit functions;
the adequacy of our internal controls;
our compliance with legal and regulatory requirements; and
the processes utilized by management for identifying, evaluating, and mitigating strategic, financial, operational, regulatory, and external risks inherent in our business.
The Audit Committee meets with the independent registered public accounting firm, internal auditor, and our outside counsel, with and without our management present, to discuss the results of their examinations, their evaluations of our internal controls, and the overall quality of our financial reporting.
The Audit Committee, in its oversight role, has reviewed and discussed the consolidated financial statements and related schedule with management and Ernst & Young LLP, our independent registered public accounting firm. Management is responsible for the preparation, presentation, and integrity of our financial statements; accounting and financial reporting principles; establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)); establishing and maintaining internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)); evaluating the effectiveness of disclosure controls and procedures; evaluating the effectiveness of internal control over financial reporting; and evaluating any change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting. Ernst & Young LLP is responsible for performing an independent audit of the consolidated financial statements and related schedule and expressing an opinion on the conformity of those financial statements with U.S. generally accepted accounting principles, as well as expressing an opinion on the effectiveness of internal control over financial reporting.
During the course of fiscal 2011,2012, management completed the documentation, testing, and evaluation of our system of internal control over financial reporting in response to the requirements set forth in Section 404 of the Sarbanes-Oxley Act of 2002 and related regulations. The Audit Committee was kept apprised of the progress of the evaluation and provided oversight and advice to management during the process. In connection with this oversight, the Audit Committee received periodic updates from management and Ernst & Young LLP at each regularly scheduled Audit Committee meeting. At the conclusion of the process, management provided the Audit Committee with, and the Audit Committee reviewed, a report on the effectiveness of our internal control over financial reporting. The Audit Committee also reviewed the report of management contained in our Annual Report on Form 10-K for the fiscal year ended January 1,December 30, 2012 to be filed with the SEC, as well as Ernst & Young LLP’s Draft Reports of Independent Registered Public Accounting Firm included in our Annual Report on Form 10-K related to its audit of (i) the consolidated financial statements and related schedule and (ii) the effectiveness of internal control over financial reporting. The Audit Committee continues to oversee our efforts related to our internal control over financial reporting and management’s preparations for the evaluation for the fiscal year ending December 30, 2012.29, 2013
.
The Audit Committee has reviewed and discussed the consolidated audited financial statements with management, discussed with the independent registered public accounting firm the matters required to be discussed by SAS 61 (Codification of Statements of Auditing Standards), has received the draft written disclosures and the draft letter from Ernst & Young LLP required by Rule 3526 of the Public Company Accounting and Oversight Board (communication with Audit Committees Concerning Independence), and has had discussions with the independent registered public accounting firm regarding their independence. Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended January 1,December 30, 2012 for filing with the SEC.
RESPECTFULLY SUBMITTED BY THE AUDIT COMMITTEE
A. Blaine Bowman (Chairperson)
Daniel M. Bradbury
Karin Eastham
William H. Rastetter, Ph.D.
|
|
| A. Blaine Bowman (Chairperson) |
| Daniel M. Bradbury |
| Karin Eastham |
| William H. Rastetter, Ph.D. |
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Fees Paid to Ernst & Young LLP
During the fiscal years ended December 30, 2012 and January 1, 2012 and January 2, 2011,, the aggregate fees billed by Ernst & Young LLP for professional services were as follows: | | | | | | | | |
| | | Year Ended
January 1,
2012 | | | Year Ended
January 2,
2011 | |
Audit Fees | | $ | 1,560,806 | | | $ | 1,004,528 | |
Audit-Related Fees | | | 1,995 | | | | 19,450 | |
Tax Fees | | | 50,000 | | | | 91,422 | |
| | | | | | | | |
Total | | $ | 1,612,801 | | | $ | 1,115,400 | |
| | | | | | | | |
|
| | | | | | | |
| | Year Ended |
| | December 30,
2012 | | January 1,
2012 |
| Audit Fees | $ | 1,599,254 |
| | $ | 1,560,806 |
|
| Audit-Related Fees | 1,995 |
| | 1,995 |
|
| Tax Fees | 3,519 |
| | 50,000 |
|
| Total | $ | 1,604,768 |
| | $ | 1,612,801 |
|
Audit fees consist of amounts for professional services rendered in connection with the integrated audit of our consolidated financial statements and related schedule and internal control over financial reporting, review of the interim condensed consolidated financial statements included in quarterly reports, and statutory audits required internationally. For the fiscal years ended December 30, 2012 and January 1, 2012 and January 2, 2011,, audit-related fees were primarily incurred for accounting consultations. Tax fees for the fiscal years ended December 30, 2012 and January 1, 2012 and January 2, 2011 related to services rendered for the preparation of foreign tax filings. For the fiscal years ended December 30, 2012 and January 1, 2012 and January 2, 2011,, Ernst & Young LLP did not perform any professional services other than as stated under the captions Audit Fees, Audit-Related Fees, and Tax Fees above.Fees.
Pre-Approval Policies and Procedures
The Audit Committee, as required by the Securities Exchange Act of 1934, requires advance approval of all audit services and permitted non-audit services to be provided by our independent registered public accounting firm. The Audit Committee must approve the permitted service before the independent registered public accounting firm
areis engaged to perform it. The services listed as Audit Fees, Audit-Related Fees, and Tax Fees in the table above were pre-approved by our Audit Committee in accordance with this policy.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
We entered into a license agreement with Tufts University in 1998 in connection with the license of patents filed by Dr. David Walt, one of our directors. Dr. Walt is the Robinson Professor of Chemistry at Tufts University. Under that agreement, we pay royalties to Tufts University upon the commercial sale of products based on the licensed technology. Tufts University pays a portion of the royalties received from us to Dr. Walt, the amount of which is controlled solely by Tufts University. During fiscal 2011, no2012, the portion of royalties received from us werethat Tufts University shared with Dr. Walt by Tufts University.was approximately $705,000.
All future transactions between us and our officers, directors, principal stockholders, and affiliates will be subject to approval by a majority of the independent and disinterested members of our Board of Directors, and will be on terms determined by such members of the Board of Directors to be no less favorable to us than could be obtained from unaffiliated third parties.
We have entered into indemnification agreements with each of our directors and executive officers pursuant to which we have agreed to indemnify these persons to the fullest extent permitted by law in connection with certain claims that may arise generally relating to their acting in their capacities as our directors or executive officers.
As of the date of this proxy statement, we know of no other matters that will be presented for consideration at the annual meeting. If any other matters properly come before the meeting, it is the intention of the proxy agent named in the enclosed form of proxy to vote the shares represented as the Board of Directors may
recommend. Discretionary authority with respect to such other matters is granted by the execution of the enclosed proxy.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The members of our Board of Directors, our executive officers, and persons who hold more than 10% of our outstanding common stock are subject to the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934, which requires them to file reports with respect to their ownership of, and transactions related to, our common stock and related derivative securities. Based solely upon our review of copies of Section 16(a) reports, which we received from such persons for their transactions during fiscal 2011,2012, we believe that all reporting requirements under Section 16(a) for such fiscal year were met in a timely manner by these individuals, except that one Form 4 was not filed timely for each of Mr. Naclerio.Bianchi, Dr. Epstein, Mr. Lewis, and Mr. Posard.
STOCKHOLDER PROPOSALS FOR OUR 20132014 ANNUAL MEETING Stockholder proposals that are intended to be presented at our 20132014 annual meeting of stockholders must be received at our principal executive offices no later than [Ÿ], 2012,December 10, 2013, in order to be included in the proxy statement and form of proxy relating to that meeting, and must meet all other requirements as specified in our bylaws and Rule 14a-8 under the Securities Exchange Act of 1934. In addition, the proxy solicited by the Board of Directors for the 20132014 annual meeting will confer discretionary authority to vote on any stockholder proposal presented at that meeting, unless we receive notice of such proposal not later than [ŸFebruary 29, 2014.], 2012.
Our 20112012 Annual Report on Form 10-K, including our audited financial statements for fiscal 2011,2012, is being mailed to you along with this proxy statement. In order to reduce printing and postage costs, in certain circumstances only one annual report, or proxy statement, or Notice of Internet Availability of Proxy Materials, as applicable, will be mailed to multiple stockholders sharing an address unless we receive contrary instructions from one or more of the stockholders sharing an address. If your household has received only one annual report, or proxy statement, or Notice of Internet Availability of Proxy Materials, as applicable, we will deliver promptly a separate copy of the annual report, or proxy statement, or Notice of Internet Availability of Proxy Materials, as applicable, to any stockholder who sends a written or oral request to Illumina, Inc., 5200 Illumina Way, San Diego, California 92122, Attention: Corporate Secretary. Copies of the annual report or proxy statement can also be obtained by calling (858) 202-4500. If your household is receiving multiple copies of our annual reports, or proxy statements, or Notices of Internet Availability of Proxy Materials and you wish to request delivery of a single copy, you may send a written request to Illumina, Inc., 5200 Illumina Way, San Diego, California 92122, Attention: Corporate Secretary.
COST OF THE SOLICITATION
Illumina is paying the cost of soliciting proxies. We estimate that the total expenditures relating to our current proxy solicitation (other than salaries and wages of officers and employees, but including costs of litigation related to the solicitation) will be approximately $955,000, of which approximately $495,000 has been incurred as of the date hereof. In addition to solicitation by mail, our directors and the executive officers may, without additional compensation, solicit proxies by mail, in person, by telephone, by fax, by email or by other electronic means.
We have retained Innisfree as proxy solicitors, at an estimated fee of $155,000 plus reasonable out-of-pocket expenses, to assist in the proxy solicitation. We will reimburse brokerage houses, banks, custodians and other nominees and fiduciaries for out-of-pocket expenses incurred in forwarding our proxy solicitation materials to, and obtaining instructions relating to such materials from, beneficial owners of Illumina’s common stock. Innisfree has advised us that approximately 75 of its employees will be involved in the proxy solicitation by Innisfree on behalf of Illumina. Appendix A sets forth information relating to Illumina’s directors, director nominees, officers and employees who are considered “participants” in our solicitation under the rules of the SEC by reason of their position as directors or director nominees or because they may be soliciting proxies on our behalf.
In addition, Innisfree and certain related persons will be indemnified against certain liabilities arising out of or in connection with the engagement.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON [Ÿ], 2012
The Notice of Annual Meeting of Stockholders, this proxy statement and our 2011 Annual Report are also available online atwww.illumina.com.
WHERE YOU CAN FIND MORE INFORMATION
We maintain an Internet site atwww.illumina.com. We use our website as a channel of distribution of material company information. Our website and the information posted on it or connected to it shall not be deemed to be incorporated by reference into this proxy statement. BY ORDER OF THE BOARD OF DIRECTORS OF ILLUMINA, INC.
Dated: [ŸApril 10, 2013], 2012
APPENDIX
Exhibit A
ILLUMINA, INC.
2005 STOCK AND INCENTIVE PLAN
(as Amended and Restated Effective May 29, 2013)
1.Information Regarding Participants
Set forth belowPurposes of the Plan. The purposes of this 2005 Stock and Incentive Plan are to attract and retain the names, present principal occupationbest available personnel for positions of substantial responsibility, to provide additional incentive to Service Providers, and to promote the success of the Company's business. Options granted under the Plan may be Incentive Stock Options or employmentNonstatutory Stock Options, as determined by the Administrator at the time of grant. Stock Awards (including Stock Grants, Stock Units and Stock Appreciation Rights) and Cash Awards may also be granted under the name, principalPlan.
2.Definitions. As used herein, the following definitions shall apply:
| |
| (a) | “Administrator” means the Board or any of its Committees as shall be administering the Plan, in accordance with Section 4 hereof. |
| |
| (b) | “Applicable Laws” means the requirements relating to the administration of stock option and restricted stock plans, the grant of options and the issuance of shares under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any Nasdaq National Market, stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any other country or jurisdiction where Options or Awards are granted under the Plan, as such laws, rules, regulations and requirements shall be in place from time to time. |
| |
| (c) | “Award” means an Option, a Stock Award or a Cash Award granted in accordance with the terms of the Plan. |
| |
| (d) | “Award Agreement” means a Stock Award Agreement, Cash Award Agreement and/or Option Agreement, which may be in written or electronic format, in such form and with such terms and conditions as may be specified by the Administrator, evidencing the terms and conditions of an individual Award. Each Award Agreement is subject to the terms and conditions of the Plan. |
| |
| (e) | “Board” means the Board of Directors of the Company. |
| |
| (f) | “Cash Award” means a bonus opportunity awarded under Section 15 pursuant to which a Participant may become entitled to receive an amount based on the satisfaction of such performance criteria as are specified in the agreement or other documents evidencing the Award (the “Cash Award Agreement”). |
| |
| (g) | “Code” means the Internal Revenue Code of 1986, as amended. |
| |
| (h) | “Committee” means a committee of Directors appointed by the Board in accordance with Section 4 hereof. |
| |
| (i) | “Common Stock” means the common stock of the Company. |
| |
| (j) | “Company” means Illumina, Inc., a Delaware corporation. |
| |
| (k) | “Consultant” means any natural person, including an advisor, engaged by the Company or a Parent or Subsidiary to render services to such entity. |
| |
| (l) | “Corporate Transaction” means any of the following, unless the Administrator provides otherwise: |
| |
| (i) | any merger or consolidation in which the Company shall not be the surviving entity (or survives only as a subsidiary of another entity whose stockholders did not own all or substantially all of the Common Stock in substantially the same proportions as immediately prior to such transaction), |
| |
| (ii) | the sale of all or substantially all of the Company's assets to any other person or entity (other than a wholly-owned subsidiary), |
| |
| (iii) | the acquisition of beneficial ownership of a controlling interest (including, without limitation, power to vote) in the outstanding shares of Common Stock by any person or entity (including a “group” as defined by or under Section 13(d)(3) of the Exchange Act), |
| |
| (iv) | a contested election of Directors, as a result of which or in connection with which the persons who were Directors before such election or their nominees (the “Incumbent Directors”) cease to constitute a majority of the Board; provided, however, that if the election, or nomination for election by the Company's stockholders, of any new Director was approved by a vote of at least fifty percent (50%) of the Incumbent Directors, such new Director shall be considered as an Incumbent Director, or |
| |
| (v) | any other event specified by the Board or a Committee, regardless of whether at the time an Award is granted or thereafter. |
| |
| (m) | “Director” means a member of the Board. |
| |
| (n) | “Disability” means total and permanent disability as defined in Section 21 (e)(3) of the Code. |
| |
| (o) | “Effective Date” means the date on which the Company's stockholders approve the Plan. |
| |
| (p) | “Employee” means any person, including Officers and Inside Directors, employed by the Company or any Parent or Subsidiary of the Company. An Employee shall not be deemed to cease Employee status by reason of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor. For purposes of Incentive Stock Options, no such leave may exceed ninety days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then three (3) months following the 91st day of such leave any Incentive Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option. Neither service as Director |
nor payment of a director's fee by the Company shall be sufficient to constitute “employment” by the Company.
| |
| (q) | “Exchange Act” means the Securities Exchange Act of 1934, as amended. |
| |
| (r) | “Fair Market Value” means, as of any date, the value of a Share determined as follows: |
| |
| (i) | if the Common Stock is listed on any established stock exchange or traded on a national market system, including without limitation the Nasdaq National Market or the Nasdaq SmallCap Market of The Nasdaq Stock Market, the Fair Market Value of a Share shall be the closing selling price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; |
| |
| (ii) | if the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share shall be the mean between the high bid and low asked prices for the Common Stock on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or |
| |
| (iii) | in the absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith by the Administrator. |
| |
| (s) | “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder and as designated in the applicable Option Agreement. |
| |
| (t) | “Inside Director” means a Director who is an Employee. |
| |
| (u) | “Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock Option and/or as designated in the applicable Option Agreement. |
| |
| (v) | “Notice of Grant” means a written or electronic notice evidencing certain terms and conditions of an individual Option grant. The Notice of Grant is part of the Option Agreement. |
| |
| (w) | “Officer” means a person who is an executive officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder. |
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| (x) | “Option” means a stock option granted pursuant to the Plan. |
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| (y) | “Option Agreement” means an agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. The Option Agreement is subject to the terms and conditions of the Plan. |
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| (z) | “Optioned Shares” means the Shares subject to an Option. |
| |
| (aa) | “Optionee” means the holder of an outstanding Option granted under the Plan. |
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| (ab) | “Outside Director” means a Director who is not an Employee. |
| |
| (ac) | “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code or any successor provision. |
| |
| (ad) | “Participant” means any holder of one or more Options, Stock Awards or Cash Awards, or the Shares issuable or issued upon exercise of such Awards, under the Plan. |
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| (ae) | “Plan” means this 2005 Stock and Incentive Plan. |
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| (af) | “Predecessor Plan” means the Illumina, Inc. 2000 Stock Plan, as amended. |
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| (ag) | “Qualifying Performance Criteria” means any one or more of the following performance criteria, either individually, alternatively or in any combination, applied to either the Company as a whole or to a business unit, Parent, Subsidiary or business segment, either individually, alternatively or in any combination, and measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years' results or to a designated comparison group, in each case as specified by the Committee in the Award: (i) cash flow; (ii) earnings (including gross margin, earnings before interest and taxes, earnings before taxes, and net earnings); (iii) earnings per share; (iv) growth in earnings or earnings per share; (v) stock price; (vi) return on equity or average stockholders' equity; (vii) total stockholder return; (viii) return on capital; (ix) return on assets or net assets; (x) return on investment; (xi) revenue; (xii) income or net income; (xiii) operating income or net operating income; (xiv) operating profit or net operating profit; (xv) operating margin; (xvi) return on operating revenue; (xvii) market share; (xviii) contract awards or backlog; (xix) overhead or other expense reduction; (xx) growth in stockholder value relative to the moving average of the S&P 500 Index or a peer group index; (xxi) credit rating; (xxii) strategic plan development and implementation (including individual performance objectives that relate to achievement of the Company's or any business unit's strategic plan); (xxiii) improvement in workforce diversity, and (xxiv) any other similar criteria as may be determined by the Administrator. The Committee may appropriately adjust any evaluation of performance under a Qualifying Performance Criteria to exclude any of the following events that occurs during a performance period: (A) asset write-downs; (B) litigation or claim judgments or settlements; (C) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results; (D) accruals for reorganization and restructuring programs; and (E) any gains or losses classified as extraordinary or as discontinued operations in the Company's financial statements. |
| |
| (ah) | “Rule 16b-3” means Rule 16b-3 of the Exchange Act, as the same may be amended from time to time, or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan. |
| |
| (ai) | “Service Provider” means (i) an individual rendering services to the Company or any Parent or Subsidiary of the Company in the capacity of an Employee or Consultant or (ii) an individual serving as a Director. |
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| (aj) | “Share” means a share of the Common Stock, as adjusted in accordance with Section 17 hereof. |
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| (ak) | “Stock Appreciation Right” means a right to receive cash and/or Shares based on a change in the Fair Market Value of a specific number of Shares granted under Section 14. |
| |
| (al) | “Stock Award” means a Stock Grant, a Stock Unit or a Stock Appreciation Right granted under Sections 13 or 14 below or other similar awards granted under the Plan (including phantom stock rights). |
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| (am) | “Stock Award Agreement” means a written agreement, the form(s) of which shall be approved from time to time by the Administrator, between the Company and a holder of a Stock Award evidencing the terms and conditions of an individual Stock Award grant. Each Stock Award Agreement shall be subject to the terms and conditions of the Plan. |
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| (an) | “Stock Grant” means the award of a certain number of Shares granted under Section 13 below. |
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| (ao) | “Stock Unit” means a bookkeeping entry representing an amount equivalent to the Fair Market Value of one Share, payable in cash, property or Shares. Stock Units represent an unfunded and unsecured obligation of the Company, except as otherwise explicitly provided for by the Administrator. |
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| (ap) | “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code, or any successor provision. |
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| (aq) | “Withholding Taxes” means the federal, state and local income and employment withholding taxes, or any other taxes required to be withheld, to which the holder of an Award may be subject in connection with the grant, exercise, or vesting of an Award or the issuance or transfer of Shares issued or issuable pursuant to an Award. |
3.Stock Subject to the Plan.
| |
| (a) | Subject to the provisions of Section 17 hereof, the maximum aggregate number of Shares that may be issued and sold under the Plan is 23,084,71628,084,716 Shares. This maximum number of Shares reserved and available for issuance under the Plan consists of Shares reserved for issuance under the Predecessor Plan that as of May 2, 2005 were either (i) available for grant pursuant to awards that may be made under the Predecessor Plan or (ii) subject to outstanding options granted under the Predecessor Plan which Shares might be returned to the Predecessor Plan but such Shares shall become available for issuance hereunder only if and to the extent the options granted under the Predecessor Plan to which they are subject terminate or expire or become unexercisable for any reason without having been exercised in full. |
| |
| (b) | An annual increase in the number of Shares reserved for issuance hereunder shall automatically occur on the first day of each fiscal year of the Company, beginning with fiscal year 2006 and ending with fiscal year 2010, equal to the lesser of (i) 1,200,000 Shares (subject to adjustment under Section 17), (ii) 5% of the outstanding Shares as of the last day of the immediately preceding fiscal year or (iii) a number of Shares determined by the Board. The Shares may be authorized, but unissued, or reacquired Shares, including Shares repurchased by the Company on the open market. |
| |
| (b) | If an outstanding Award expires or terminates for any reason prior to exercise in full, or without the Shares subject thereto having been issued in full, the unpurchased or unissued Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated); provided, however, that Shares that have actually been issued under the Plan pursuant to an Award shall not be returned to the Plan and shall not become available for future distribution under the Plan, except that if unvested Shares are repurchased by the Company at their original purchase price or otherwise forfeited to the Company in connection with termination of a Participant's status as a Service Provider, such Shares shall become available for future grant under the Plan. Should the exercise or purchase price of an Award under the Plan be paid with Shares (including by withholding Shares from the Award) or should Shares otherwise issuable under the Plan be withheld by the Company in satisfaction of the Withholding Taxes incurred in connection with the exercise, purchase or issuance of Shares under an Award, then the number of Shares available for issuance under the Plan shall be reduced by the gross number of Shares issued in connection with the Award, and not by the net number of Shares issued to the holder of such Award. |
4.Administration of the Plan.
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| (i) | Multiple Administrative Bodies. Different Committees with respect to different groups of Service Providers may administer the Plan. |
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| (ii) | Section 162(m). To the extent that the Administrator determines it to be desirable to qualify Awards granted hereunder as “performance-based compensation” within the meaning of Section 162(m) of the Code, the Plan shall be administered by a Committee of two or more “outside directors” within the meaning of Section 162(m) of the Code. |
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| (iii) | Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder shall be structured to satisfy the requirements for exemption under Rule 16b-3. |
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| (iv) | Other Administration. Other than as provided above, the Plan shall be administered by (A) the Board, (B) a Committee, which committee shall be constituted to satisfy Applicable Laws or (C) subject to the Applicable Laws, one or more officers of the Company to whom the Board or Committee has delegated the power to grant Awards to persons eligible to receive Awards under the Plan provided such grantees may not be officers or Directors. |
| |
| (b) | Powers of the Administrator. Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator shall have the authority, in its discretion: |
(A)to determine the Fair Market Value of the Common Stock in accordance with Section 2(r) of the Plan;
(B)to select the Service Providers to whom Awards may be granted hereunder;
(C)to determine the number of Shares or amount of cash to be covered by each Award granted hereunder;
(D)to approve forms of Award Agreements for use under the Plan;
(E)to determine the terms and addressconditions, not inconsistent with the terms of the Plan, of any corporation Award granted hereunder, which terms and conditions include, but are not limited to, the exercise price and/or other organizationpurchase price (if applicable), the time or times when Awards may be exercised (which may be based on performance criteria), the vesting schedule, any vesting and/or exercisability acceleration or waiver of forfeiture restrictions, the acceptable forms of consideration, the term and any restriction or limitation regarding any Award or the Shares relating thereto, based in whicheach case on such employmentfactors as the Administrator, in its sole discretion, shall determine and may be established at the time an Award is carried ongranted or thereafter;
(F)to construe and interpret the terms of the directors, director nomineesPlan and Awards granted pursuant to the Plan;
(G)to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws;
(H)to modify or amend each Award (subject to Section 19 hereof), including the discretionary authority to extend the post-termination exercisability or purchase period of Awards longer than is originally provided for in the Award Agreement;
(I)to allow Participants to satisfy Withholding Tax obligations by electing to have the Company withhold from the Shares to be issued upon exercise or settlement of an Award that number of Shares having a Fair Market Value equal to the minimum amount required to be withheld. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of Withholding Tax is to be determined. All elections by a Participant to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable;
(J)to authorize any officers, employeesperson to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator;
(K)to make all other determinations deemed necessary or advisable for administering the Plan.
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| (c) | Effect of Administrator's Decision. The Administrator's decisions, determinations and interpretations shall be final and binding on all Participants and any other holders of Options, Stock Awards, Cash Awards or Shares issued under the Plan. |
5.Eligibility. Nonstatutory Stock Options and other representativesStock Awards may be granted to Service Providers. Incentive Stock Options and Cash Awards may be granted only to Employees.
6.Limitations.
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| (a) | Each Option shall be designated in the Option Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding designation as an Incentive Stock Option, no installment under such an Option shall qualify for favorable tax treatment as an Incentive Stock Option if (and to the extent) the aggregate Fair Market Value of the Shares (determined at the date of grant) for which such installment first becomes exercisable hereunder would, when added to the aggregate value (determined as of the respective date or dates of grant) of the Shares or other securities for which such Option or any other Incentive Stock Options granted to Optionee prior to the date of grant (whether under the Plan or any other plan of the Company or any Parent or Subsidiary of the Company) first become exercisable during the same calendar year, exceed One Hundred Thousand Dollars ($100,000) in the aggregate. Should such One Hundred Thousand Dollar ($100,000) limitation be exceeded in any calendar year, the Option shall nevertheless become exercisable for the excess Optioned Shares in such calendar year as a Nonstatutory Stock Option. For purposes of this Section 6(a), Incentive Stock Options shall be taken into account in the order in which they were granted. |
| |
| (b) | Neither the Plan nor any Award shall confer upon a Participant any right with respect to continuing the Participant's relationship as a Service Provider with the Company, nor shall they interfere in any way with the Participant's right or the Company's right to terminate such relationship at any time, with or without cause. |
| |
| (c) | The following limitations shall apply to grants of Options and Stock Awards: |
| |
| (i) | No Service Provider shall be granted, in any fiscal year of the Company, Awards covering more than 1,000,000 Shares, subject to adjustment as provided in Section 17 below. |
| |
| (ii) | However, in connection with his or her commencement of Service Provider status, an individual may be granted Awards covering up to an additional 2,000,000 Shares during the fiscal year in which such commencement occurs, which shall not count against the limit set forth in subsection (i) above and subject to adjustment as provided in Section 17 below. |
7.Term of proxiesPlan. The Plan shall become effective on the Effective Date. Unless the Plan is terminated earlier pursuant to Section 19 hereof, the Plan shall terminate upon the earliest to occur of (a) June 28, 20152016, (b) the date on which all Shares available for issuance under the Plan shall have been issued as fully vested Shares or (c) the termination of all outstanding Awards in connection with a dissolution or liquidation pursuant to Section 17(b) hereof or a Corporate Transaction pursuant to Section 17(c) hereof. Should the 2012 Annual MeetingPlan terminate on June 28, 20152016, then all Awards outstanding at that time shall continue to have force and effect in accordance with the provisions of Stockholders. These persons (collectively, the “Participants”) are “participants” under SEC rules.applicable Award Agreement.
8.Term of Option. The business addressterm of each ParticipantOption shall be stated in the Option Agreement; provided, however, that the term shall be no more than ten (10) years from the date of grant or such shorter term as may be provided in the Option Agreement. Moreover, in the case of an Incentive Stock Option granted to an Optionee who, at the time the Incentive Stock Option is c/o Illumina, Inc. 5200 Illumina Way, San Diego, CA 92122.granted, owns stock representing more than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option shall be five (5) years from the date of grant or such shorter term as may be provided in the Option Agreement.
9.Option Exercise Price and Consideration.
| | | | |
Name
(a) | Exercise Price. The per Share exercise price for the Shares to be issued pursuant to exercise of an Option shall be determined by the Administrator, subject to the following: |
| Present Principal Occupation or
Employment
|
| (i) | In the case of an Incentive Stock Option |
(A)granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant.
(B)granted to any Employee other than an Employee described in paragraph (A) immediately above, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant.
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| (ii) | In the case of a Nonstatutory Stock Option, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant. |
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| (b) | Name, Principal BusinessWaiting Period and AddressExercise Dates. At the time an Option is granted, the Administrator shall fix the period within which the Option may be exercised and shall determine any conditions (including any vesting conditions) that must be satisfied before the Option may be exercised.
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| (c) | Form of Consideration. The Administrator shall determine the acceptable form of consideration for exercising an Option, including the method of payment. Such consideration may consist entirely of: |
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| (iii) | other Shares which, in the case of Shares acquired directly or indirectly from the Company, (A) have been owned by the Optionee for more than six (6) months on the date of surrender (if it is required to eliminate or reduce accounting charges incurred by the Company in connection with the Option, or such other period (if any) required to so eliminate or reduce such charges), and (B) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised; |
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| (iv) | consideration received through a special sale and remittance procedure pursuant to which the Optionee shall concurrently provide irrevocable instructions to (A) a Company-designated brokerage firm to effect the immediate sale of the purchased Shares and remit to the Company, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased Shares plus all Withholding |
Taxes required to be withheld by the Company by reason of such exercise and (B) the Company to deliver the certificates for the purchased Shares directly to such brokerage firm in order to complete the sale;
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| (v) | a reduction in the amount of any Company liability to the Optionee, including any liability attributable to the Optionee's participation in any Company-sponsored deferred compensation program or arrangement; |
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| (vi) | any combination of the foregoing methods of payment; or |
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| (vii) | such other consideration and method of payment for the issuance of Optioned Shares as determined by the Administrator and to the extent permitted by Applicable Laws. |
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| (d) | No Option Repricings. Other than in connection with a change in the Company's capitalization (as described in Section 17(a) of the Plan), the exercise price of an Option may not be reduced without stockholder approval. |
10.Exercise of Option.
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| (a) | Procedure for Exercise; Rights as a Stockholder. |
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| (i) | Any Option granted hereunder shall be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement. Unless the Administrator provides otherwise, vesting of Options granted hereunder shall be suspended during any unpaid leave of absence. An Option may not be exercised for a fraction of a Share. |
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| (ii) | An Option shall be deemed exercised when the Company receives: (A) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, and (B) full payment for the Optioned Shares with respect to which the Option is exercised and (C) satisfaction of any Withholding Taxes. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Plan and shall be set forth in the Option Agreement. Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Optioned Shares, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 17 hereof. |
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| (iii) | Exercising an Option in any manner shall decrease the number of Optioned Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised. |
Organization | |
| (b) | Termination of Relationship as a Service Provider. If an Optionee ceases to be a Service Provider, other than upon the Optionee's death or Disability, such Optionee may exercise his or her Option for a period of three (3) months measured from the date of termination, or such longer period of time as specified in the Option Agreement, to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of the Option as set forth in the Option Agreement); provided, however, that, unless otherwise provided by the Administrator in the Option Agreement, any Officer or Outside Director (as of the date of termination) may exercise his or her Option for a period of twelve (12) months measured from the date of termination, or such longer period of time as specified in the Option Agreement, to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of the Option as set forth in the Option Agreement). If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Option shall immediately terminate as to all the Optioned Shares covered by the unvested portion of the Option, and those Optioned Shares shall revert immediately to the Plan. To the extent the Optionee does not, within the post-termination time period determined pursuant to this Section 10(b), exercise the Option for the Optioned Shares in which suchEmploymentOptionee is Carriedvested at the time of such termination of Service Provider status, the Option shall terminate with respect to those vested Optioned Shares at the end of such period, and those Optioned Shares shall revert to the Plan.
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| (c) | Disability of Optionee. If an Optionee ceases to be a Service Provider as a result of the Optionee's Disability, the Optionee may exercise his or her Option within twelve (12) months of termination, or such longer period of time as specified in the Option Agreement, to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Option shall immediately terminate as to the Optioned Shares covered by the unvested portion of the Option, and those Optioned Shares shall revert immediately to the Plan. To the extent the Optionee does not, within the post-termination time period determined pursuant to this Section 10(c), exercise the Option for the Optioned Shares in which Optionee is vested at the time of such termination of Service Provider status, the Option shall terminate with respect to those vested Optioned Shares at the end of such period, and those Optioned Shares shall revert to the Plan. |
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| (d) | Death of Optionee. If an Optionee dies while a Service Provider, the Option may be exercised within twelve (12) months following Optionee's death, or such longer period of time as specified in the Option Agreement, to the extent that the Option is vested on the date of death (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement) by the Optionee's designated beneficiary, provided such beneficiary has been designated prior to Optionee's death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Optionee, then such Option may be exercised by the personal representative of the Optionee's estate or by the person(s) to whom the Option is transferred pursuant to the Optionee's will or in accordance with the laws of descent and distribution. If, at the time of death, the Optionee is not vested as to his or her entire Option, the Option shall immediately terminate as to the Optioned Shares covered by the unvested portion of the Option, and those Optioned Shares shall immediately revert to the Plan. To the |
extent the Option is not, within the post-termination time period determined pursuant to this Section 10(d), exercised for the Optioned Shares in which Optionee is vested at the time of such termination of Service Provider status, the Option shall terminate with respect to those vested Optioned Shares, and those Optioned Shares shall revert to the Plan.
11.Awards to Outside Directors. Outside Directors shall automatically be granted Options and/or Stock Units as determined by the Board in accordance with the following provisions:
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| (a) | The number of Shares subject to each Option or Stock Unit granted pursuant to this Section 11, or the formula pursuant to which such number shall be determined, the date of grant, and the vesting, expiration, and other terms applicable to such Option or Stock Unit shall be specified from time to time by the Board, subject to the terms of this Plan. |
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| (b) | All Options granted pursuant to this Section shall be Nonstatutory Stock Options and, except as otherwise provided in this Section 11, shall be subject to the other terms and conditions of the Plan. |
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| (c) | Each individual who becomes an Outside Director after the Effective Date shall automatically be granted an Option to purchase, and/or a Stock Unit with respect to, such number of Shares, as determined from time to time by the Board (the “First Award”), on the date such individual is elected as a Director, whether through election by the stockholders of the Company or appointment by the Board to fill a vacancy; provided, however, that an Inside Director who ceases to be an Inside Director but who remains a Director shall not receive a First Award. |
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| (d) | On each annual stockholder meeting commencing with the Effective Date, each Outside Director who continues to serve in such capacity immediately after such annual stockholder meeting shall automatically be granted an Option to purchase, and/or a Stock Unit with respect to, such number of Shares, as determined from time to time by the Board (a “Subsequent Award”); provided that the Outside Director has served on the Board for at least six calendar months prior to the date of such annual stockholder meeting. |
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| (e) | The terms of a First Award or a Subsequent Award granted pursuant to this Section shall be as follows: |
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| (i) | The term of the Option shall be ten (10) years measured from the date of grant. |
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| (ii) | The Option shall be exercisable only during the time that the Outside Director remains a Director and, with respect to Optioned Shares vested on the last day of service as a Director, for the twelve (12) month period following the date of the Optionee's cessation of service as a Director, provided, however, that the Option cannot be exercised after the expiration of the term of the Option. If, at the time of Optionee's cessation of service as a Director, the Optionee is not vested as to his or her entire Option, the Option shall immediately terminate as to the Optioned Shares covered by the unvested portion of the Option, and those Optioned Shares shall immediately revert to the Plan. To the extent the Option is not, within the post-termination time period determined pursuant to |
this Section 11(d)(ii), exercised for the Optioned Shares in which the Optionee is vested at the time of his or her cessation of Director status, the Option shall terminate with respect to those vested Optioned Shares, and those Optioned Shares shall revert to the Plan.
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| (iii) | The exercise price per Share shall be 100% of the Fair Market Value per Share on the date of grant of the Option. |
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| (iv) | If an Outside Director dies or ceases to serve as a Director as a result of the Outside Director's Disability while holding any outstanding Option under this Section 11, then that Option may be exercised within twelve(12) months following such Outside Director's death or termination, or such longer period of time as specified in the Option Agreement, to the extent that the Option is vested on the date of death or termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement) by the Outside Director or the Outside Director's designated beneficiary, provided such beneficiary has been designated, prior to the death of the Outside Director, in a form acceptable to the Administrator. If no such beneficiary has been designated by the Outside Director, then such Option may be exercised by the personal representative of such Outside Director's estate or by the person(s) to whom the Option is transferred pursuant to such Outside Director's will or in accordance with the laws of descent and distribution. If, at the time of death or termination as a result of Disability, the Outside Director is not vested as to such Outside Director's entire Option, the Option shall immediately terminate as to the Optioned Shares covered by the unvested portion of the Option, and those Optioned Shares shall immediately revert to the Plan. To the extent the Option is not, within the post-termination time period determined pursuant to this Section 11(d)(vi), exercised for the Optioned Shares in which the Outside Director is vested at the time of death or termination as a result of Disability, the Option shall terminate with respect to those vested Optioned Shares, and those Optioned Shares shall revert to the Plan. |
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| (v) | In the event of a Corporate Transaction, all Options and Stock Units granted pursuant to this Section 11 shall be subject to the terms and conditions of Section 17(c); provided that in the event that the successor corporation does not assume or substitute each First Award and Subsequent Award, the Optionee shall fully vest in each Award and shall have the right to exercise the Option as to all of the Optioned Shares, including Shares as to which it would not otherwise be vested or exercisable. |
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| (f) | The Board shall have sole and exclusive authority to establish, maintain, amend, suspend, and terminate any program by which Outside Directors are automatically granted Nonstatutory Stock Options pursuant to this Section 11. |
12.Limited Transferability of Options. An Option generally may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee; provided however that Nonstatutory Stock Options may be transferred by instrument to an inter vivos or testamentary trust in which the Nonstatutory Stock Options are to be passed to beneficiaries upon the death of the trustor (settlor) or by gift or pursuant to domestic relations orders
to “Immediate Family Members” (as defined below) of the Optionee. “Immediate Family” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law (including adoptive relationships), a trust in which these persons have more than fifty percent of the beneficial interest, a foundation in which these persons (or the Optionee) control the management of assets, and any other entity in which these persons (or the Optionee) own more than fifty percent of the voting interests. The Optionee may designate one or more persons as the beneficiary or beneficiaries of his or her outstanding Options, and those Options shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon the Optionee's death while holding those Options. Such beneficiary or beneficiaries shall take the transferred Options subject to all the terms and conditions of the applicable agreement evidencing each such transferred Option, including (without limitation) the limited time period during which the Option may be exercised following the Optionee's death.
13.Stock Grants and Stock Unit Awards. Each Stock Award Agreement reflecting the issuance of a Stock Grant or Stock Unit shall be in such form and shall contain such terms and conditions as the Administrator shall deem appropriate. The terms and conditions of such agreements may change from time to time, and the terms and conditions of separate agreements need not be identical, but each such agreement shall include (through incorporation of provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions:
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| (a) | Consideration. A Stock Grant or Stock Unit may be awarded in consideration for such property or services as is permitted under Applicable Law, including for past services actually rendered to the Company or a Subsidiary for its benefit. |
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| (b) | Vesting. Shares of Common Stock awarded under an agreement reflecting a Stock Grant and a Stock Unit award may, but need not, be subject to a share repurchase option, forfeiture restriction or other conditions in favor of the Company in accordance with a vesting or lapse schedule to be determined by the Administrator. |
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| (c) | Termination of Participant's Relationship as a Service Provider. In the event a Participant's relationship as a Service Provider terminates, the Company may reacquire any or all of the Shares held by the Participant which have not vested or which are otherwise subject to forfeiture or other conditions as of the date of termination under the terms of the agreement. |
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| (d) | Transferability. Except as determined by the Board, no rights to acquire Shares under a Stock Grant or a Stock Unit shall be assignable or otherwise transferable by the Participant except by will or by the laws of descent and distribution. |
14.Stock Appreciation Rights.
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| (a) | General. Stock Appreciation Rights may be granted either alone, in addition to, or in tandem with other Awards granted under the Plan. The Administrator may grant Stock Appreciation Rights to eligible Participants subject to terms and conditions not inconsistent with this Plan and determined by the Administrator. The specific terms and conditions applicable to the Participant shall be provided for in the Stock Award Agreement. Stock Appreciation Rights shall be exercisable, in whole or in part, at such times as the Administrator shall specify in the Stock Award Agreement. |
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| (b) | Exercise of Stock Appreciation Right. Upon the exercise of a Stock Appreciation Right, in whole or in part, the Participant shall be entitled to a payment in an amount equal to the excess of the Fair Market Value on the date of exercise of a fixed number of Shares covered by the exercised portion of the Stock Appreciation Right, over the Fair Market Value on the grant date of the Shares covered by the exercised portion of the Stock Appreciation Right (or such other amount calculated with respect to Shares subject to the award as the Administrator may determine). The amount due to the Participant upon the exercise of a Stock Appreciation Right shall be paid in such form of consideration as determined by the Administrator and may be in cash, Shares or a combination thereof, over the period or periods specified in the Stock Award Agreement. A Stock Award Agreement may place limits on the amount that may be paid over any specified period or periods upon the exercise of a Stock Appreciation Right, on an aggregate basis or as to any Participant. A Stock Appreciation Right shall be considered exercised when the Company receives written notice of exercise in accordance with the terms of the Stock Award Agreement from the person entitled to exercise the Stock Appreciation Right. |
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| (c) | Transferability. Except as determined by the Board, no Stock Appreciation Rights shall be assignable or otherwise transferable by the Participant except by will or by the laws of descent and distribution. |
15.Cash Awards. Each Cash Award will confer upon the Participant the opportunity to earn a future payment tied to the level of achievement with respect to one or more performance criteria established for a performance period of not less than one (1) year.
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| (a) | Cash Award. Each Cash Award shall contain provisions regarding (i) the target and maximum amount payable to the Participant as a Cash Award, (ii) the Qualifying Performance Criteria and level of achievement versus these criteria which shall determine the amount of such payment, (iii) the period as to which performance shall be measured for establishing the amount of any payment, (iv) the timing of any payment earned by virtue of performance, (v) restrictions on the alienation or transfer of the Cash Award prior to actual payment, (vi) forfeiture provisions, and (vii) such further terms and conditions (including, without limitation, the effect that a termination as a Service Provider shall have on any Cash Award) in each case not inconsistent with the Plan, as may be determined from time to time by the Administrator. The maximum amount payable as a Cash Award may be a multiple of the target amount payable, but the maximum amount payable pursuant to that portion of a Cash Award granted under this Plan for any fiscal year to any Participant shall not exceed U.S. $1,000,000. |
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| (b) | Performance Criteria. The Administrator shall establish the Qualifying Performance Criteria and level of achievement versus these criteria which shall determine the target and the minimum and maximum amount payable under a Cash Award. The Administrator may specify the percentage of the target Cash Award that is intended to satisfy the requirements for “performance-based compensation” under Section 162(m) of the Code. Notwithstanding anything to the contrary herein, the performance criteria for any portion of a Cash Award that is intended to satisfy the requirements for “performance-based compensation” under Section 162(m) of the Code shall be a measure established by the Administrator based on one or more Qualifying Performance Criteria selected by the Administrator and specified in writing not later than 90 days after the commencement of the period of service to which the performance |
goals relates, provided that the outcome is substantially uncertain at that time (or in such other manner that complies with Section 162(m)).
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| (c) | Timing and Form of Payment. The Administrator shall determine the timing of payment of any Cash Award. The Administrator may provide for or, subject to such terms and conditions as the Administrator may specify and Applicable Laws, may permit a Participant to elect for the payment of any Cash Award to be deferred to a specified date or event. The Administrator may specify the form of payment of Cash Awards, which may be cash or other property, or may provide for a Participant to have the option for his or her Cash Award, or such portion thereof as the Administrator may specify, to be paid in whole or in part in cash or other property. Cash Awards shall be structured to comply with the “short-term deferral” rules of Section 409A of the Code. |
16.Section 162(m) Compliance. Any Stock Award (other than an Option or any other Stock Award having a purchase price equal to 100% of the Fair Market Value on the date such award is made) or Cash Award that is intended as “qualified performance-based compensation” within the meaning of Section 162(m) of the Code must vest or become exercisable or payable contingent on the achievement of one or more Qualifying Performance Criteria. Notwithstanding anything to the contrary herein, the Committee shall have the discretion to determine the time and manner of compliance with Section 162 (m) of the Code as required under applicable regulations and to conform the procedures related to the Award to the requirements of Section 162(m) and may in its discretion reduce the number of Shares granted or amount of cash or other property to which a Participant may otherwise have been entitled with respect to an Award designed to qualify as performance-based compensation under Section 162(m).
17.Adjustments Upon Changes in Capitalization, Dissolution or Corporate Transaction.
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| (a) | Changes in Capitalization. Subject to any required action by the stockholders of the Company, (i) the number of Shares which have been authorized for issuance under the Plan but as to which no Awards have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Award, (ii) the number of Shares that may be added annually to the Plan pursuant to Section 3(b) hereof, (iii) the number of Shares subject to each First Award and Subsequent Award under Section 11 hereof, (iv) the maximum numbers of Shares that may be granted under Awards to any Service Provider within any fiscal year as set forth in Section 6(c) and (v) the number of Shares as well as the price per Share subject to each outstanding Award, shall be proportionately adjusted for any increase or decrease in the number of issued Shares resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued Shares effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by the Administrator, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Shares. |
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| (b) | Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Participant as soon as practicable |
prior to the effective date of such proposed transaction. The Administrator in its discretion may (but need not) provide for a Participant to have the right to exercise his or her Option or Stock Award until ten (10) days prior to such transaction as to all of the Shares covered thereby, including Shares as to which the Option or Stock Award would not otherwise be exercisable. In addition, the Administrator may (but need not) provide that any Company repurchase option applicable to any unvested Shares purchased upon exercise of an Option or issued under a Stock Award shall lapse as to all such Shares, provided the proposed dissolution or liquidation takes place at the time and in the manner contemplated. To the extent it has not been previously exercised, an Award will terminate immediately prior to the consummation of such proposed action.
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| (c) | Corporate Transaction. |
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| (i) | In the event of a Corporate Transaction, as determined by the Board or a Committee, the Board or Committee may, in its discretion, (i) provide for the assumption or substitution of, or adjustment to, each outstanding Award; (ii) accelerate the vesting of Options and terminate any restrictions on Cash Awards or Stock Awards; and/or (iii) provide for termination of Awards as a result of the Corporate Transaction on such terms and conditions as it deems appropriate, including providing for the cancellation of Awards for a cash payment to the Participant. For the purposes of this paragraph, the Award shall be considered assumed if, following the Corporate Transaction, the Award confers the right to purchase or receive, for each Share or amount of cash covered by the Award immediately prior to the Corporate Transaction, the consideration (whether stock, cash, or other securities or property) received in the Corporate Transaction by holders of Common Stock for each Share held on the effective date of the Corporate Transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the Corporate Transaction is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Award, for each Share covered by the Award, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Shares in the Corporate Transaction. |
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| (ii) | Each Option or Stock Award which is assumed pursuant to this Section 17(c) shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the number and class of securities which would have been issuable to the Participant in consummation of such Corporate Transaction had the Option or Stock Award been exercised immediately prior to such Corporate Transaction. Appropriate adjustments to reflect such Corporate Transaction shall also be made to (A) the exercise or purchase price payable per share under each outstanding Option or Stock Award, provided the aggregate exercise or purchase price payable for such securities shall remain the same, (B) the maximum number and/or class of securities available for issuance over the remaining term of the Plan, (C) the maximum number and/or class of securities |
for which any one person may be granted Options or Stock Awards under the Plan per year, (D) the maximum number and/or class of securities by which the share reserve is to increase automatically each year and (E) the number and/or class of securities subject to the Options granted under Section 11.
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| (iii) | Notwithstanding the foregoing, as may be determined by the Administrator, any such adjustment shall not (i) cause an Award which is exempt from Section 409A of the Code to become subject to Section 409A of the Code or (ii) cause an Award subject to Section 409A of the Code not to comply with the requirements of Section 409A of the Code. |
18.Date of Grant. The date of grant of a First Award or Subsequent Award shall be the date on which it was automatically granted pursuant to Section 11 hereof. The date of grant of any other Award shall be, for all purposes, the date on which the Administrator grants such Award. Notice of the grant shall be provided to each Participant within a reasonable time after the date of such grant.
19.Amendment and Termination of the Plan. The Board may at any time amend, alter, suspend or terminate the Plan. However, the Company shall obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws. In addition, no amendment, alteration, suspension or termination of the Plan shall impair the rights of any Participant under any grant theretofore made, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company. Termination of the Plan shall not affect the Administrator's ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination. In addition, unless approved by the stockholders of the Company, no amendment shall be made that would result in a repricing of Options by (x) reducing the exercise price of outstanding Options or (y) canceling an outstanding Option held by a Participant and re-granting to the Participant a new Option with a lower exercise price, in either case other than in connection with a change in the Company's capitalization pursuant to Section 17(a) of the Plan.
20.Conditions Upon Issuance of Shares.
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| (a) | Awards shall not be granted and Shares shall not be issued pursuant to the exercise of an Award unless the grant of the Award, the exercise or settlement of such Award and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance. |
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| (b) | No Shares or other assets shall be issued or delivered under the Plan unless and until there shall have been compliance with all applicable requirements of Federal and state securities laws, including the filing and effectiveness of the Form S-8 registration statement for the Shares, and all applicable listing requirements of any stock exchange (or the Nasdaq National Market, if applicable) on which Common Stock is then listed for trading. |
21.Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction (including under Section 20), which authority is deemed by the Company's counsel to be necessary to the lawful grant of Awards and issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to grant such Awards or issue or sell such Shares as to which such requisite authority shall not have been obtained.
22.Reservation of Shares. The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.
23.Stockholder Approval. If required by Applicable Laws, continuance of the Plan shall be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted or after any amendment requiring stockholder approval is made. Such stockholder approval shall be obtained in the manner and to the degree required under Applicable Laws.
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William H. Rastetter
| | PartnerVOTE BY INTERNET |
| | Venrock Associates
3340 Hillview Avenue
Palo Alto, CA 94304
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Jay T. Flatley
| | President and Chief Executive Officer |
ILLUMINA, INC. 5200 ILLUMINA WAY SAN DIEGO, CA 92122 ATTN: REBECCA CHAMBERS | | Illumina, Inc.
5200 Illumina Way
San Diego, CA 92122
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:50 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. |
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| A. Blaine BowmanDuring The Meeting - Go to www.virtualshareholdermeeting.com/ILMN2013
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| | RetiredYou may attend the Meeting via the Internet and vote during the Meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. |
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Daniel M. Bradbury
| | Chief Executive OfficerVOTE BY PHONE - 1-800-690-6903 |
| | Amylin Pharmaceuticals, Inc.
9360 Towne Centre Drive
San Diego, California 92121
Use any touch-tone telephone to transmit your voting instructions up until 11:50 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions. |
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Karin Eastham
| | Consultant |
| | P.O. Box 3772
Rancho Santa Fe, CA 92067
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Paul C. Grint
| | President | | Cerexa, Inc.
2100 Franklin Street, Suite 900
Oakland, CA 94612
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Gerald Möller
| | Adviser | | HBM Bio Ventures AG
Bundesplatz 1
CH-6300 Zug
Switzerland
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David R. Walt
| | Robinson Professor of Chemistry | | Tufts University
274 Tremont Street
Boston, MA 02111
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Roy A. Whitfield
| | Retired | | — |
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Marc A. Stapley
| | Senior Vice President & Chief Financial Officer | | Illumina, Inc.
5200 Illumina Way
San Diego, CA 92122
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Christian O. Henry
| | Senior Vice President & General Manager, Genomic Systems | | Illumina, Inc.
5200 Illumina Way
San Diego, CA 92122
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Gregory F. Heath
| | Senior Vice President & General Manager, Diagnostics | | Illumina, Inc.
5200 Illumina Way
San Diego, CA 92122
|
| | |
Tristan B. Orpin
| | Senior Vice President & Chief Commercial Officer | | Illumina, Inc.
5200 Illumina Way
San Diego, CA 92122
|
| | |
Christian G. Cabou
| | Senior Vice President, General Counsel and Secretary | | Illumina, Inc.
5200 Illumina Way
San Diego, CA 92122
|
| | |
Matthew L. Posard
| | Senior Vice President & General Manager, Translational and Consumer Genomics | | Illumina, Inc.
5200 Illumina Way
San Diego, CA 92122
|
| | |
Nicholas J. Naclerio
| | Senior Vice President, Corporate and Venture Development | | Illumina, Inc.
5200 Illumina Way
San Diego, CA 92122
|
| | |
Mostafa Ronaghi
| | Senior Vice President & Chief Technology Officer | | Illumina, Inc.
5200 Illumina Way
San Diego, CA 92122
|
Information Regarding Transactions in our Securities by Participants
The following table sets forth information regarding purchases and sales of Illumina’s securities by Participants during the past two years. Except as set forth below or as otherwise disclosed in this proxy statement, no part of the purchase price or market value of these securities is represented by funds borrowed or otherwise obtained for the purpose of acquiring or holding such securities.
| | | | | | | | |
| Name | | Date of
Transaction | | Nature of Transaction | | Number
of Shares | | Transaction
Notes |
| | | | | | | | | |
William H. Rastetter | | 5/10/2011 | | Acquisition | | 1,440 | | (1) |
| | | | | Acquisition | | 10,800 | | (7) |
| | | 9/22/2010 | | Acquisition | | 20,000 | | (2)(3) |
| | | | | Disposition | | 20,000 | | (3) |
| | | 9/15/2010 | | Acquisition | | 2,340 | | (2)(3) |
| | | | | Disposition | | 2,340 | | (3) |
| | | 8/17/2010 | | Acquisition | | 17,660 | | (2)(3) |
| | | | | Disposition | | 17,660 | | (3) |
| | | 5/12/2010 | | Acquisition | | 13,500 | | (7) |
| | | | | Acquisition | | 1,800 | | (1) |
Jay T. Flatley | | 2/1/2012 | | Acquisition | | 411 | | (4) |
| | | 7/28/2011 | | Acquisition | | 25,000 | | (2)(3) |
| | | | | Disposition | | 25,000 | | (3) |
| | | 7/14/2011 | | Acquisition | | 25,000 | | (2)(3) |
| | | | | Disposition | | 25,000 | | (3) |
| | | 6/23/2011 | | Acquisition | | 25,000 | | (2)(3) |
| | | | | Disposition | | 25,000 | | (3) |
| | | 6/22/2011 | | Disposition | | 1,200 | | (3) |
| | | | | Disposition | | 3,800 | | (3) |
| | | 6/09/2011 | | Acquisition | | 25,000 | | (2)(3) |
| | | | | Disposition | | 25,000 | | (3) |
| | | 5/26/2011 | | Acquisition | | 25,000 | | (2)(3) |
| | | | | Disposition | | 25,000 | | (3) |
| | | 5/12/2011 | | Acquisition | | 25,000 | | (2)(3) |
| | | | | Disposition | | 25,000 | | (3) |
| | | 4/28/2011 | | Acquisition | | 25,000 | | (2)(3) |
| | | | | Disposition | | 25,000 | | (3) |
| | | | | | | | |
| Name | | Date of
Transaction | | Nature of Transaction | | Number
of Shares | | Transaction
Notes |
| | | | | | | | | |
| | | 4/14/2011 | | Acquisition | | 25,000 | | (2)(3) |
| | | | | Disposition | | 25,000 | | (3) |
| | | 3/24/2011 | | Acquisition | | 25,000 | | (2)(3) |
| | | | | Disposition | | 25,000 | | (3) |
| | | 3/10/2011 | | Acquisition | | 25,000 | | (2)(3) |
| | | | | Disposition | | 25,000 | | (3) |
| | | 2/24/2011 | | Acquisition | | 25,000 | | (2)(3) |
| | | | | Disposition | | 25,000 | | (3) |
| | | 2/10/2011 | | Acquisition | | 25,000 | | (2)(3) |
| | | | | Disposition | | 25,000 | | (3) |
| | | 2/01/2011 | | Acquisition | | 25,000 | | (1) |
| | | | | Acquisition | | 225,000 | | (7) |
| | | | | Disposition | | 3,501 | | (5) |
| | | 1/31/2011 | | Disposition | | 2,800 | | (5) |
| | | 1/28/2011 | | Disposition | | 1,750 | | (5) |
| | | 1/27/2011 | | Acquisition | | 25,000 | | (2)(3) |
| | | | | Disposition | | 25,000 | | (3) |
| | | 1/13/2011 | | Acquisition | | 25,000 | | (2)(3) |
| | | | | Disposition | | 25,000 | | (3) |
| | | 12/23/2010 | | Acquisition | | 25,000 | | (2)(3) |
| | | | | Disposition | | 25,000 | | (3) |
| | | 12/22/2010 | | Acquisition | | 2,000 | | (6) |
| | | 12/9/2010 | | Acquisition | | 25,000 | | (2)(3) |
| | | | | Disposition | | 25,000 | | (3) |
| | | 11/26/2010 | | Acquisition | | 25,000 | | (2)(3) |
| | | | | Disposition | | 25,000 | | (3) |
| | | 11/11/2010 | | Acquisition | | 20,000 | | (2)(3) |
| | | | | Disposition | | 20,000 | | (3) |
| | | 8/26/2010 | | Disposition | | 30,000 | | (3) |
| | | 8/12/2010 | | Acquisition | | 30,000 | | (2)(3) |
| | | | | Disposition | | 30,000 | | (3) |
| | | 7/22/2010 | | Disposition | | 30,000 | | (3) |
| | | | | | | | |
| Name | | Date of
Transaction | | Nature of Transaction | | Number
of Shares | | Transaction
Notes |
| | | | | | | | | |
| | | 7/20/2010 | | Acquisition | | 4,000 | | (2)(3) |
| | | | | Disposition | | 4,000 | | (3) |
| | | 7/08/2010 | | Acquisition | | 30,000 | | (2)(3) |
| | | | | Disposition | | 30,000 | | (3) |
| | | 6/24/2010 | | Disposition | | 30,000 | | (3) |
| | | 6/10/2010 | | Acquisition | | 30,000 | | (2)(3) |
| | | | | Disposition | | 30,000 | | (3) |
| | | 5/27/2010 | | Disposition | | 17,234 | | (3) |
| | | | | Disposition | | 12,676 | | (3) |
| | | 5/13/2010 | | Acquisition | | 30,000 | | (2)(3) |
| | | | | Disposition | | 30,000 | | (3) |
| | | 4/22/2010 | | Disposition | | 25,000 | | (3) |
| | | 4/08/2010 | | Acquisition | | 25,000 | | (2)(3) |
| | | | | Disposition | | 25,000 | | (3) |
| | | 3/25/2010 | | Disposition | | 25,000 | | (3) |
| | | 3/11/2010 | | Acquisition | | 30,000 | | (2)(3) |
| | | | | Disposition | | 30,000 | | (3) |
| | | 2/25/2010 | | Disposition | | 24,400 | | (3) |
| | | | | Disposition | | 600 | | (3) |
| | | 2/11/2010 | | Acquisition | | 25,000 | | (2)(3) |
| | | | | Disposition | | 25,000 | | (3) |
| | | 2/01/2010 | | Disposition | | 2,334 | | (5) |
| | | 1/29/2010 | | Disposition | | 2,100 | | (5) |
| | | 1/28/2010 | | Acquisition | | 25,000 | | (1) |
| | | | | Disposition | | 25,000 | | (2)(3) |
| | | | | Acquisition | | 225,000 | | (7) |
A. Blaine Bowman | | 5/10/2011 | | Acquisition | | 1,440 | | (1) |
| | | | | Acquisition | | 10,800 | | (7) |
| | | 5/12/2010 | | Acquisition | | 1,800 | | (1) |
| | | | | Acquisition | | 13,500 | | (7) |
| | | | | | | | |
| Name | | Date of
Transaction | | Nature of Transaction | | Number
of Shares | | Transaction
Notes |
| | | | | | | | | |
Daniel M. Bradbury | | 7/18/2011 | | Acquisition | | 4,000 | | (2)(3) |
| | | | | Disposition | | 4,000 | | (3) |
| | | 6/17/2011 | | Acquisition | | 4,000 | | (2)(3) |
| | | | | Disposition | | 4,000 | | (3) |
| | | 5/18/2011 | | Acquisition | | 5,000 | | (2)(3) |
| | | | | Disposition | | 5,000 | | (3) |
| | | 5/10/2011 | | Acquisition | | 1,440 | | (1) |
| | | | | Acquisition | | 10,800 | | (7) |
| | | 4/18/2011 | | Acquisition | | 4,000 | | (2)(3) |
| | | | | Disposition | | 4,000 | | (3) |
| | | 3/17/2011 | | Acquisition | | 4,000 | | (2)(3) |
| | | | | Disposition | | 4,000 | | (3) |
| | | 12/14/2010 | | Acquisition | | 2,000 | | (2)(3) |
| | | | | Disposition | | 2,000 | | (3) |
| | | 12/09/2010 | | Acquisition | | 6,400 | | (2)(3) |
| | | | | Disposition | | 6,400 | | (3) |
| | | 11/02/2010 | | Acquisition | | 6,400 | | (2)(3) |
| | | | | Disposition | | 6,400 | | (3) |
| | | 10/04/2010 | | Acquisition | | 6,400 | | (2)(3) |
| | | | | Disposition | | 6,400 | | (3) |
| | | 9/10/2010 | | Acquisition | | 6,400 | | (2)(3) |
| | | | | Disposition | | 6,400 | | (3) |
| | | 8/10/2010 | | Acquisition | | 6,400 | | (2)(3) |
| | | | | Disposition | | 6,400 | | (3) |
| | | 8/10/2010 | | Acquisition | | 1,865 | | (6) |
| | | 5/12/2010 | | Acquisition | | 13,500 | | (7) |
| | | | | Acquisition | | 1,800 | | (1) |
| | | 5/13/2010 | | Disposition | | 135 | | (6) |
| | | 3/08/2010 | | Disposition | | 137 | | (6) |
| | | 3/02/2010 | | Acquisition | | 3,600 | | (2)(3) |
| | | | | Disposition | | 3,600 | | (3) |
| | | | | | | | |
| Name | | Date of
Transaction | | Nature of Transaction | | Number
of Shares | | Transaction
Notes |
| | | | | | | | | |
| | | 2/26/2010 | | Disposition | | 1,703 | | (6) |
| | | 2/03/2010 | | Acquisition | | 3,600 | | (2)(3) |
| | | | | Disposition | | 3,600 | | (3) |
Karin Eastham | | 6/01/2011 | | Acquisition | | 10,000 | | (2)(3) |
| | | | | Disposition | | 10,000 | | (3) |
| | | 5/10/2011 | | Acquisition | | 1,440 | | (1) |
| | | | | Acquisition | | 10,800 | | (7) |
| | | 5/09/2011 | | Disposition | | 720 | | (5) |
| | | 3/17/2011 | | Acquisition | | 6,000 | | (2)(3) |
| | | | | Disposition | | 6,000 | | (3) |
| | | 6/01/2010 | | Acquisition | | 10,000 | | (2)(3) |
| | | | | Disposition | | 10,000 | | (3) |
| | | 5/12/2010 | | Acquisition | | 13,500 | | (7) |
| | | | | Acquisition | | 1,800 | | (1) |
| | | 5/10/2010 | | Disposition | | 800 | | |
Paul C. Grint | | 5/10/2011 | | Acquisition | | 1,440 | | (1) |
| | | | | Acquisition | | 10,800 | | (7) |
| | | 10/27/2010 | | Acquisition | | 10,000 | | (2)(3) |
| | | | | Disposition | | 10,000 | | (3) |
| | | 8/6/2010 | | Acquisition | | 10,000 | | (2)(3) |
| | | | | Disposition | | 10,000 | | (3) |
| | | 7/30/2010 | | Acquisition | | 10,000 | | (2)(3) |
| | | | | Disposition | | 10,000 | | (3) |
| | | 5/12/2010 | | Acquisition | | 13,500 | | (7) |
| | | | | Acquisition | | 1,800 | | (1) |
| | | 5/10/2010 | | Disposition | | 800 | | (6) |
Gerald Möller | | 11/01/11 | | Acquisition | | 3,000 | | |
| | | 5/10/2011 | | Acquisition | | 1,440 | | (1) |
| | | | | Acquisition | | 10,800 | | (7) |
| | | 7/01/2010 | | Acquisition | | 4,000 | | (1) |
| | | | | Acquisition | | 28,000 | | (7) |
| | | | | | | | |
| Name | | Date of
Transaction | | Nature of Transaction | | Number
of Shares | | Transaction
Notes |
| | | | | | | | | |
David R. Walt | | 8/17/2011 | | Disposition | | 5,000 | | (3) |
| | | 8/03/2011 | | Disposition | | 5,000 | | (3) |
| | | 7/20/2011 | | Disposition | | 5,000 | | (3) |
| | | 7/06/2011 | | Disposition | | 5,000 | | (3) |
| | | 6/22/2011 | | Disposition | | 5,000 | | (3) |
| | | 6/08/2011 | | Disposition | | 5,000 | | (3) |
| | | 5/25/2011 | | Disposition | | 5,000 | | (3) |
| | | 5/19/2011 | | Acquisition | | 15,000 | | (2)(3) |
| | | 5/11/2011 | | Acquisition | | 5,000 | | (2)(3) |
| | | | | Disposition | | 5,000 | | (3) |
| | | 5/10/2011 | | Acquisition | | 1,440 | | (1) |
| | | | | Acquisition | | 10,800 | | (7) |
| | | 4/27/2011 | | Disposition | | 5,000 | | (3) |
| | | 4/13/2011 | | Disposition | | 5,000 | | (3) |
| | | 3/30/2011 | | Disposition | | 5,000 | | (3) |
| | | 3/16/2011 | | Disposition | | 5,000 | | (3) |
| | | 3/2/2011 | | Disposition | | 5,000 | | (3) |
| | | 2/16/2011 | | Disposition | | 5,000 | | (3) |
| | | 2/2/2011 | | Disposition | | 5,000 | | (3) |
| | | 1/19/2011 | | Disposition | | 4,600 | | (3) |
| | | 1/05/2011 | | Disposition | | 5,000 | | (3) |
| | | 12/22/2010 | | Disposition | | 5,000 | | (3) |
| | | 12/08/2010 | | Disposition | | 5,000 | | (3) |
| | | 11/24/2010 | | Disposition | | 5,000 | | (3) |
| | | 11/10/2010 | | Disposition | | 5,000 | | (3) |
| | | 10/27/2010 | | Disposition | | 5,000 | | (3) |
| | | 10/13/2010 | | Disposition | | 5,000 | | (3) |
| | | 9/29/2010 | | Disposition | | 5,000 | | (3) |
| | | 9/17/2010 | | Disposition | | 5,740 | | |
| | | 9/15/2010 | | Disposition | | 5,000 | | (3) |
| | | 5/12/2010 | | Acquisition | | 13,500 | | (7) |
| | | | | Acquisition | | 1,800 | | (1) |
| | | | | | | | |
| Name | | Date of
Transaction | | Nature of Transaction | | Number
of Shares | | Transaction
Notes |
| | | | | | | | | |
Roy A. Whitfield | | 6/02/2011 | | Acquisition | | 800 | | (2)(3) |
| | | | | Disposition | | 800 | | (3) |
| | | | | Disposition | | 1,2000 | | (3) |
| | | 5/10/2011 | | Acquisition | | 1,440 | | (1) |
| | | | | Acquisition | | 10,800 | | (7) |
| | | 5/12/2010 | | Acquisition | | 13,500 | | (7) |
| | | | | Acquisition | | 1,800 | | (1) |
| | | 5/10/2010 | | Disposition | | 800 | | |
| | | 4/26/2010 | | Acquisition | | 3,000 | | (2)(3) |
| | | | | Disposition | | 3,000 | | (3) |
Marc A. Stapley | | 1/20/2012 | | Acquisition | | 24,500 | | (1) |
| | | | | Acquisition | | 136,500 | | (7) |
| | | 12/19/2011 | | Disposition | | 33 | | |
Christian O. Henry | | 2/14/2012 | | Acquisition | | 10,000 | | (2)(3) |
| | | | | Disposition | | 10,000 | | (3) |
| | | 2/1/2012 | | Acquisition | | 243 | | |
| | | 1/31/2012 | | Disposition | | 420 | | (5) |
| | | 1/29/2012 | | Disposition | | 1,283 | | (5) |
| | | 1/28/2012 | | Disposition | | 1,432 | | (5) |
| | | 1/27/2012 | | Disposition | | 550 | | (5) |
| | | 1/25/2012 | | Acquisition | | 26,500 | | (2)(3) |
| | | | | Disposition | | 26,500 | | (3) |
| | | 9/14/2011 | | Acquisition | | 17,500 | | (2)(3) |
| | | | | Disposition | | 17,500 | | (3) |
| | | 8/10/2011 | | Acquisition | | 17,500 | | (2)(3) |
| | | | | Disposition | | 17,500 | | (3) |
| | | 7/12/2011 | | Acquisition | | 17,500 | | (2)(3) |
| | | | | Disposition | | 17,500 | | (3) |
| | | 6/16/2011 | | Acquisition | | 17,500 | | (2)(3) |
| | | | | Disposition | | 17,500 | | (3) |
| | | 5/10/2011 | | Acquisition | | 17,500 | | (2)(3) |
| | | | | Disposition | | 17,500 | | (3) |
| | | | | | | | |
| Name | | Date of
Transaction | | Nature of Transaction | | Number
of Shares | | Transaction
Notes |
| | | | | | | | | |
| | | 4/12/2011 | | Acquisition | | 17,500 | | (2)(3) |
| | | | | Disposition | | 17,500 | | (3) |
| | | 3/9/2011 | | Acquisition | | 17,500 | | (2)(3) |
| | | | | Disposition | | 17,500 | | (3) |
| | | 2/22/2011 | | Acquisition | | 17,500 | | (2)(3) |
| | | | | Disposition | | 17,500 | | (3) |
| | | 1/31/2011 | | Acquisition | | 6,000 | | (1) |
| | | | | Acquisition | | 82,000 | | (7) |
| | | | | Disposition | | 1,400 | | (5) |
| | | 1/28/2011 | | Disposition | | 805 | | (5) |
| | | 1/27/2011 | | Disposition | | 412 | | (5) |
| | | 1/11/2011 | | Acquisition | | 17,500 | | (2)(3) |
| | | | | Disposition | | 17,500 | | (3) |
| | | 12/21/2010 | | Acquisition | | 5,000 | | (2)(3) |
| | | | | Disposition | | 5,000 | | (3) |
| | | 8/10/2010 | | Acquisition | | 14,500 | | (2)(3) |
| | | | | Disposition | | 14,500 | | (3) |
| | | 7/13/2010 | | Acquisition | | 5,000 | | (2)(3) |
| | | | | Disposition | | 5,000 | | (3) |
| | | 6/15/2010 | | Acquisition | | 14,500 | | (2)(3) |
| | | | | Disposition | | 14,500 | | (3) |
| | | 5/26/2010 | | Acquisition | | 5,000 | | (2)(3) |
| | | | | Disposition | | 5,000 | | (3) |
| | | 5/25/2010 | | Acquisition | | 9,500 | | (2)(3) |
| | | | | Disposition | | 9,500 | | (3) |
| | | 5/11/2010 | | Acquisition | | 14,500 | | (2)(3) |
| | | | | Disposition | | 14,500 | | (3) |
| | | 4/29/2010 | | Acquisition | | 5,000 | | (2)(3) |
| | | | | Disposition | | 5,000 | | (3) |
| | | 4/13/2010 | | Acquisition | | 9,500 | | (2)(3) |
| | | | | Disposition | | 9,500 | | (3) |
| | | 3/11/2010 | | Acquisition | | 10,000 | | (2)(3) |
| | | | | | | | |
| Name | | Date of
Transaction | | Nature of Transaction | | Number
of Shares | | Transaction
Notes |
| | | | | | | | | |
| | | | | Disposition | | 10,000 | | (3) |
| | | 3/09/2010 | | Acquisition | | 9,500 | | (2)(3) |
| | | | | Disposition | | 9,500 | | (3) |
| | | 2/16/2010 | | Acquisition | | 9,500 | | (2)(3) |
| | | | | Disposition | | 9,500 | | (3) |
Gregory F. Heath | | 2/1/2012 | | Acquisition | | 411 | | |
| | | 1/31/2012 | | Disposition | | 183 | | (5) |
| | | 1/28/2012 | | Disposition | | 770 | | (5) |
| | | 1/27/2012 | | Disposition | | 557 | | (5) |
| | | 6/30/2011 | | Acquisition | | 20,000 | | (2)(3) |
| | | | | Disposition | | 20,000 | | (3) |
| | | 1/31/2011 | | Acquisition | | 3,333 | | (1) |
| | | | | Acquisition | | 30,000 | | (7) |
| | | 1/28/2011 | | Disposition | | 513 | | (5) |
| | | 1/27/2011 | | Disposition | | 419 | | (5) |
| | | 11/3/2010 | | Acquisition | | 6,302 | | (2)(3) |
| | | | | Disposition | | 6,302 | | (3) |
| | | 10/4/2010 | | Acquisition | | 6,302 | | (2)(3) |
| | | | | Disposition | | 6,302 | | (3) |
| | | 09/3/2010 | | Acquisition | | 6,302 | | (2)(3) |
| | | | | Disposition | | 6,302 | | (3) |
| | | 08/3/2010 | | Acquisition | | 6,302 | | (2)(3) |
| | | | | Disposition | | 6,302 | | (3) |
| | | 07/6/2010 | | Acquisition | | 6,302 | | (2)(3) |
| | | | | Disposition | | 6,302 | | (3) |
| | | 6/03/2010 | | Acquisition | | 6,302 | | (2)(3) |
| | | | | Disposition | | 6,302 | | (3) |
| | | 5/03/2010 | | Acquisition | | 6,302 | | (2)(3) |
| | | | | Disposition | | 6,302 | | (3) |
| | | 4/29/2010 | | Acquisition | | 55,000 | | (2)(3) |
| | | | | Disposition | | 55,000 | | (3) |
| | | 4/05/2010 | | Acquisition | | 6,302 | | (2)(3) |
| | | | | | | | |
| Name | | Date of
Transaction | | Nature of Transaction | | Number
of Shares | | Transaction
Notes |
| | | | | | | | | |
| | | | | Disposition | | 6,302 | | (3) |
| | | 3/09/2010 | | Acquisition | | 76,920 | | (2)(3) |
| | | | | Disposition | | 76,920 | | (3) |
| | | | | Disposition | | 584 | | (3) |
| | | 3/05/2010 | | Acquisition | | 6 | | (2)(3) |
| | | | | Disposition | | 6 | | (3) |
Tristan B. Orpin | | 2/1/2012 | | Acquisition | | 93 | | |
| | | 1/31/2012 | | Disposition | | 367 | | (5) |
| | | 1/29/2012 | | Disposition | | 1,176 | | (5) |
| | | 1/28/2012 | | Disposition | | 917 | | (5) |
| | | 1/27/2012 | | Disposition | | 624 | | (5) |
| | | 7/26/2011 | | Acquisition | | 15,000 | | (2)(3) |
| | | | | Disposition | | 15,000 | | (3) |
| | | 7/12/2011 | | Acquisition | | 15,000 | | (2)(3) |
| | | | | Disposition | | 15,000 | | (3) |
| | | 6/28/2011 | | Acquisition | | 15,000 | | (2)(3) |
| | | | | Disposition | | 15,000 | | (3) |
| | | 6/14/2011 | | Acquisition | | 15,000 | | (2)(3) |
| | | | | Disposition | | 15,000 | | (3) |
| | | 5/31/2011 | | Acquisition | | 15,000 | | (2)(3) |
| | | | | Disposition | | 15,000 | | (3) |
| | | 5/17/2011 | | Acquisition | | 15,000 | | (2)(3) |
| | | | | Disposition | | 15,000 | | (3) |
| | | 1/31/2011 | | Acquisition | | 6,667 | | (1) |
| | | | | Acquisition | | 60,000 | | (7) |
| | | | | Disposition | | 1,007 | | (5) |
| | | 1/28/2011 | | Disposition | | 611 | | (5) |
| | | 1/27/2011 | | Disposition | | 412 | | (5) |
| | | 1/04/2011 | | Acquisition | | 1,667 | | (2)(3) |
| | | | | Disposition | | 1,667 | | (3) |
| | | 12/07/2010 | | Acquisition | | 1,666 | | (2)(3) |
| | | | | Disposition | | 1,666 | | (3) |
| | | | | | | | |
| Name | | Date of
Transaction | | Nature of Transaction | | Number
of Shares | | Transaction
Notes |
| | | | | | | | | |
| | | 11/09/2010 | | Acquisition | | 1,667 | | (2)(3) |
| | | | | Disposition | | 1,667 | | (3) |
| | | 10/26/2010 | | Acquisition | | 3,668 | | (2)(3) |
| | | | | Disposition | | 3,668 | | (3) |
| | | 10/19/2010 | | Acquisition | | 10,176 | | (2)(3) |
| | | | | Disposition | | 10,176 | | (3) |
| | | 10/14/2010 | | Acquisition | | 1,011 | | (2)(3) |
| | | | | Disposition | | 1,011 | | (3) |
| | | 10/13/2010 | | Acquisition | | 4,813 | | (2)(3) |
| | | | | Disposition | | 4,813 | | (3) |
| | | 10/12/2010 | | Acquisition | | 8,000 | | (2)(3) |
| | | | | Disposition | | 8,000 | | (3) |
| | | 9/28/2010 | | Acquisition | | 24,000 | | (2)(3) |
| | | | | Disposition | | 24,000 | | (3) |
| | | 9/22/2010 | | Acquisition | | 16,000 | | (2)(3) |
| | | | | Disposition | | 16,000 | | (3) |
| | | 9/14/2010 | | Acquisition | | 8,000 | | (2)(3) |
| | | | | Disposition | | 8,000 | | (3) |
| | | 9/03/2010 | | Acquisition | | 4,000 | | (2)(3) |
| | | | | Disposition | | 4,000 | | (3) |
| | | 8/31/2010 | | Acquisition | | 4,000 | | (2)(3) |
| | | | | Disposition | | 4,000 | | (3) |
| | | 8/17/2010 | | Acquisition | | 8,000 | | (2)(3) |
| | | | | Disposition | | 8,000 | | (3) |
| | | 8/03/2010 | | Acquisition | | 8,000 | | (2)(3) |
| | | | | Disposition | | 8,000 | | (3) |
| | | 7/28/2010 | | Acquisition | | 4,000 | | (2)(3) |
| | | | | Disposition | | 4,000 | | (3) |
| | | 7/13/2010 | | Acquisition | | 4,000 | | (2)(3) |
| | | | | Disposition | | 4,000 | | (3) |
| | | 7/06/2010 | | Acquisition | | 4,000 | | (2)(3) |
| | | | | Disposition | | 4,000 | | (3) |
| | | | | | | | |
| Name | | Date of
Transaction | | Nature of Transaction | | Number
of Shares | | Transaction
Notes |
| | | | | | | | | |
| | | 6/28/2010 | | Acquisition | | 4,000 | | (2)(3) |
| | | | | Disposition | | 4,000 | | (3) |
| | | 6/22/2010 | | Acquisition | | 4,000 | | (2)(3) |
| | | | | Disposition | | 4,000 | | (3) |
| | | 6/11/2010 | | Acquisition | | 4,000 | | (2)(3) |
| | | | | Disposition | | 4,000 | | (3) |
| | | 6/08/2010 | | Acquisition | | 4,000 | | (2)(3) |
| | | | | Disposition | | 4,000 | | (3) |
| | | 5/26/2010 | | Acquisition | | 2,000 | | (2)(3) |
| | | | | Disposition | | 2,000 | | (3) |
| | | 5/25/2010 | | Acquisition | | 2,000 | | (2)(3) |
| | | | | Disposition | | 2,000 | | (3) |
| | | 5/11/2010 | | Acquisition | | 4,000 | | (2)(3) |
| | | | | Disposition | | 4,000 | | (3) |
| | | 4/29/2010 | | Acquisition | | 2,000 | | (2)(3) |
| | | | | Disposition | | 2,000 | | (3) |
| | | 4/27/2010 | | Acquisition | | 2,000 | | (2)(3) |
| | | | | Disposition | | 2,000 | | (3) |
| | | 4/13/2010 | | Acquisition | | 2,000 | | (2)(3) |
| | | | | Disposition | | 2,000 | | (3) |
| | | 3/30/2010 | | Acquisition | | 2,000 | | (2)(3) |
| | | | | Disposition | | 2,000 | | (3) |
| | | 3/16/2010 | | Acquisition | | 4,000 | | (2)(3) |
| | | | | Disposition | | 4,000 | | (3) |
| | | 3/02/2010 | | Acquisition | | 2,000 | | (2)(3) |
| | | | | Disposition | | 2,000 | | (3) |
| | | 2/16/2010 | | Acquisition | | 2,000 | | (2)(3) |
| | | | | Disposition | | 2,000 | | (3) |
| | | 2/02/2010 | | Acquisition | | 2,000 | | (2)(3) |
| | | | | Disposition | | 2,000 | | (3) |
Christian G. Cabou | | 2/1/2012 | | Acquisition | | 130 | | (4) |
| | | 1/28/2012 | | Disposition | | 917 | | (5) |
| | | | | | | | |
| Name | | Date of
Transaction | | Nature of Transaction | | Number
of Shares | | Transaction
Notes |
| | | | | | | | | |
| | | 8/10/2011 | | Acquisition | | 17,000 | | (2)(3) |
| | | | | Disposition | | 17,000 | | (3) |
| | | 7/28/2011 | | Acquisition | | 5,000 | | (2)(3) |
| | | | | Disposition | | 5,000 | | (3) |
| | | 7/20/2011 | | Acquisition | | 8,000 | | (2)(3) |
| | | | | Disposition | | 8,000 | | (3) |
| | | 4/20/2011 | | Acquisition | | 5,000 | | (2)(3) |
| | | | | Disposition | | 5,000 | | (3) |
| | | 4/14/2011 | | Acquisition | | 7,000 | | (2)(3) |
| | | | | Disposition | | 7,000 | | (3) |
| | | 4/13/2011 | | Acquisition | | 10,000 | | (2)(3) |
| | | | | Disposition | | 10,000 | | (3) |
| | | 1/31/11 | | Acquisition | | 6,000 | | (1) |
| | | | | Acquisition | | 54,000 | | (7) |
| | | 1/28/2011 | | Disposition | | 611 | | (5) |
| | | 1/27/2011 | | Disposition | | 412 | | (5) |
| | | 1/12/2011 | | Acquisition | | 19,000 | | (2)(3) |
| | | | | Disposition | | 19,000 | | (3) |
| | | 12/22/2010 | | Acquisition | | 22,000 | | (2)(3) |
| | | | | Disposition | | 22,000 | | (3) |
| | | 10/27/2010 | | Acquisition | | 19,500 | | (2)(3) |
| | | | | Disposition | | 19,500 | | (3) |
| | | 10/20/2010 | | Acquisition | | 10,000 | | (2)(3) |
| | | | | Disposition | | 10,000 | | (3) |
| | | 9/08/2010 | | Acquisition | | 33,465 | | (2)(3) |
| | | | | Disposition | | 33,465 | | (3) |
| | | 9/03/2010 | | Acquisition | | 10,535 | | (2)(3) |
| | | | | Disposition | | 10,535 | | (3) |
| | | 8/11/2010 | | Acquisition | | 7,000 | | (2)(3) |
| | | | | Disposition | | 7,000 | | (3) |
| | | 7/28/2010 | | Acquisition | | 20,000 | | (2)(3) |
| | | | | Disposition | | 20,000 | | (3) |
| | | | | | | | |
| Name | | Date of
Transaction | | Nature of Transaction | | Number
of Shares | | Transaction
Notes |
| | | | | | | | | |
| | | 6/23/2010 | | Acquisition | | 10,000 | | (2)(3) |
| | | | | Disposition | | 10,000 | | (3) |
| | | 4/29/2010 | | Acquisition | | 15,000 | | (2)(3) |
| | | | | Disposition | | 15,000 | | (3) |
| | | 4/28/2010 | | Acquisition | | 15,000 | | (2)(3) |
| | | | | Disposition | | 15,000 | | (3) |
Matthew L. Posard | | 2/1/2012 | | Acquisition | | 388 | | (4) |
| | | 1/31/2012 | | Disposition | | 220 | | (5) |
| | | 1/29/2012 | | Disposition | | 696 | | (5) |
| | | 1/28/2012 | | Disposition | | 616 | | (5) |
| | | 1/27/2012 | | Disposition | | 422 | | (5) |
| | | 9/7/2011 | | Disposition | | 37,767 | | (1) |
| | | 8/31/2011 | | Disposition | | 1,011 | | (1) |
| | | 8/26/2011 | | Disposition | | 21,666 | | (1) |
| | | 8/1/2011 | | Acquisition | | 105 | | (3) |
| | | 5/9/2011 | | Disposition | | 45,000 | | (1) |
| | | 2/11/2011 | | Disposition | | 35,000 | | (1) |
| | | 2/1/2011 | | Acquisition | | 472 | | (3) |
| | | 2/1/2011 | | Disposition | | 1,006 | | (8) |
| | | 1/31/2011 | | Acquisition | | 4,000 | | (1) |
| | | 1/28/2011 | | Disposition | | 280 | | (8) |
| | | 11/9/2010 | | Disposition | | 20,000 | | (1) |
| | | 8/1/2010 | | Acquisition | | 272 | | (3) |
| | | 5/25/2010 | | Disposition | | 25,000 | | (1) |
| | | 5/24/2010 | | Disposition | | 30,000 | | (1) |
| | | 5/24/2010 | | Disposition | | 5,921 | | (3) |
| | | 5/17/2010 | | Disposition | | 10,000 | | (1) |
| | | 2/1/2010 | | Acquisition | | 542 | | (3) |
| | | 2/1/2010 | | Disposition | | 476 | | (8) |
| | | 1/29/2010 | | Disposition | | 372 | | (8) |
| | | 1/27/2010 | | Acquisition | | 5,042 | | (1) |
Nicholas J. Naclerio | | 1/31/2012 | | Disposition | | 392 | | (5) |
| | | | | | | | |
| Name | | Date of
Transaction | | Nature of Transaction | | Number
of Shares | | Transaction
Notes |
| | | | | | | | | |
Mostafa Ronaghi | | 2/1/2012 | | Acquisition | | 411 | | (4) |
| | | 1/31/11 | | Acquisition | | 6000 | | (1) |
| | | | | Acquisition | | 54,000 | | (7) |
| | | 1/28/11 | | Disposition | | 257 | | (5) |
| | | 1/27/11 | | Disposition | | 471 | | (5) |
(2) | Exercise of employee stock options. |
(3) | Exercise and/or sale were effected pursuant to a 10b5-1 trading plan |
(4) | Transaction effected through the ESPP |
(5) | Shares withheld by Illumina to satisfy tax obligations upon RSU vesting |
(8) | Shares sold in open market transaction to satisfy tax obligations upon RSU vesting |
Information Regarding Ownership of our Securities by Participants
The number of shares of our common stock held by our directors and named executive officers as of January 31, 2012 is set forth under the “Stock Ownership of Principal Stockholders and Management” section of the proxy statement. The following table sets forth the number of shares held as of January 31, 2012 by three of our employees who are neither directors nor named executive officers but are deemed Participants.
| | |
Name of Beneficial Owner | | Amount of Shares Held |
Marc A. Stapley
| | 24,500 |
Matthew L. Posard
| | 39,239
|
Mostafa Ronaghi
| | 16,943 |
Miscellaneous Information Concerning Participants
Except as described in this Appendix A or otherwise disclosed in this proxy statement:
no Participant has any substantial interest, direct or indirect, by security holdings or otherwise, in any matter to be acted upon at the 2012 annual meeting of stockholders other than, with respect to each of Illumina’s Board of Directors’ nominees, such nominee’s interest in election to Illumina’s Board of Directors.
no Participant is, or was within the past year, a party to any contract, arrangement or understanding with any person with respect to any securities of Illumina, including, but not limited to joint ventures, loan or option arrangements, puts or calls, guarantees against loss or guarantees of profit, division of losses or profits, or the giving or withholding of proxies;
no Participant or any of his or her associates beneficially owns (within the meaning of Rule 13d-3 under the Exchange Act), directly or indirectly, any securities of Illumina or any of its subsidiaries;
no Participant owns any securities of Illumina of record that such Participant does not own beneficially;
there have been no transactions or series of similar transactions since January 3, 2011, or any currently proposed transaction or series of similar transactions (i) to which Illumina or any of its subsidiaries was or is to be a party, (ii) in which the amount involved exceeds $120,000 and (iii) in which (A) any Participant or any of such persons’ associates, (B) any security holder known to Illumina to own of record or beneficially more than 5% of Illumina voting securities, or (C) any member of the immediate family of any person specified in (A) or (B) had or will have a direct or indirect material interest; and
no Participant or any of their associates has entered into any arrangement or understanding with any person with respect to (i) any future employment with Illumina or its affiliates or (ii) any future transactions to which Illumina or any of its affiliates will or may be a party.
[PRELIMINARY PROXY CARD, SUBJECT TO COMPLETION]
ILLUMINA, INC.
YOUR VOTE IS IMPORTANT
Please take a moment now to vote your shares of Illumina, Inc. common stock
for the 2012 Annual Meeting of Stockholders.
Vote by Telephone – Pleasecall toll-free at 1-866-233-5371 on a touch-tone telephone and follow the simple recorded instructions. Your vote will be confirmed and cast as you directed. (Toll-free telephone voting is available for residents of the U.S. and Canada only. If outside the U.S. or Canada, call1-215-521-1343.)
OR
Vote by Internet—Please accesshttps://www.proxyvotenow.com/ilmnand follow the simple instructions on the screen. Please note you must type an “s” after “http”.
You may vote by telephone or Internet 24 hours a day, 7 days a week. Your telephone or Internet vote authorizes the named proxies to vote your shares in the same manner as if you had executed a proxy card.
OR
Vote by Mail—If you do not have access to a touch-tone telephone or to the Internet, please complete, sign, date and return the proxy card in the envelope provided to: Illumina, Inc., c/o Innisfree M&A Incorporated, FDR Station, P.O. Box 5156, New York, NY 10150-5156.
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| | Control Number: XXX XXXX XXXX | | |
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q
| TO VOTE, MARK BLOCKS BELOW IN BLUE OR BALLACK INK AS FOLLOWS: | M57688-P34086 | KEEP THIS PORTION FOR YOUR RECORDS | |
| | PLEASE DETACHTHIS PROXY CARD HEREIS VALID ONLY WHEN SIGNED AND SIGN, DATEDATED. | DETACH AND RETURN IN THE POSTAGE PAID ENVELOPE PROVIDEDTHIS PORTION ONLY | |
| ILLUMINA, INC. | | qFor ALL | Withhold All | ¨ | | | | | | |
WHITE PROXY CARD
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| | FOR ALL
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Vote on Directors | | ¨ | | | | |
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Illumina’s Board of Directors recommends you voteFOR the following: | | WITHHOLD ALL | | | | |
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1. Election of Directors
| | ¨ | | | | |
(01) A. Blaine Bowman
(02) Karin Eastham
(03) Jay T. Flatley
(04) William H. Rastetter
| | FOR ALL EXCEPT
¨
| For All Except | To withhold yourauthority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | | |
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Vote on Proposals | | FOR | | Against | | Abstain |
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Illumina’sThe Board of Directors recommends you voteFOR the following proposals:following: | | | | | | | | |
| | 1. Election of Directors with Terms Expiring in 2016 | | o | o | o | | | | | |
| | Nominees: | | | | | | | | | |
| | 01) Gerald Möller, Ph.D. | | | | | | | | | |
| | 02) David R. Walt, Ph.D. | | | | | | | | | |
| | Election of Director with Term Expiring in 2014 | | | | | | | | | |
| | Nominee: | | | | | | | | | |
| | 03) Robert S. Epstein, M.D. | | | | | | | | | |
| | | | | | | | | | | |
| | The Board of Directors recommends you vote FOR proposals 2, 3 and 4. | For | Against | Abstain | |
| | 2. To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 30, 201229, 2013 | o | o | o | |
| | ¨ | | ¨ | | ¨ |
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3. To approve, on an advisory basis, the compensation of the named executive officers as disclosed in the Proxy Statement | o | o | o | |
| | ¨ | | ¨ | | ¨ |
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Illumina’s Board of Directors recommends you voteAGAINST4. To approve an amendment to the following proposals: | | For | | AGAINST | | Abstain |
| | | |
4. Roche’s proposal to amend our bylawsIllumina, Inc. 2005 Stock and Incentive Plan to increase the number of directors onshares available for issuance by 5,000,000 shares and to extend the Boardtermination date of Directors
the plan until June 28, 2016 | o | o | o | |
| | ¨ | | ¨ | | ¨ |
| | | |
5. Roche’s proposal to amend our bylaws to require that newly created directorships be filled only by a stockholder vote
| | ¨ | | ¨ | | ¨ |
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6. Roche’s proposal to fill the two newly created directorships with its nominees, if Proposal 4 is approved
| | ¨ | | ¨ | | ¨ |
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7. Roche’s proposal to repeal any bylaw amendments adopted by Illumina’s Board of Directors without stockholder approval after April 22, 2010
| | ¨ | | ¨ | | ¨ |
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NOTE:This proxy card may be voted, in the discretion of the proxy holder, on such Such other business as may properly come before the meeting or any adjournment or postponement thereof.thereof | | | | | | |
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| | Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. | | | | | | |
| | | | | | | | | | | |
| | | | | | | |
| | Signature [PLEASE SIGN WITHIN BOX] | | Date | | | | Signature (Joint Owners) | | Date | | |
NOTE: Please sign exactly as your name or names appear hereon. For joint accounts, each owner must sign. When signing as executor, administrator, attorney, trustee or guardian, etc., please print your full title. Corporations should sign in full name
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
PLEASE VOTE TODAY!The Notice & Proxy Statement and Form 10-K are available at SEE REVERSE SIDE FORwww.proxyvote.com
THREE EASY WAYS TO VOTE..
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| M57689-P34086 | |
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| ILLUMINA, INC. | |
| Annual Meeting of Stockholders [Ÿ], 2012[Ÿ]
| |
| May 29, 2013 10:00 AM[Ÿ] Pacific Time | |
| This proxy is solicited by Illumina’sthe Board of Directors | |
| | |
| The stockholder(s) hereby appoint(s) [Ÿ],[Ÿ]Jay T. Flatley and [Ÿ]Marc A. Stapley as proxies, and each of them with power to act without the other and with power of substitutions, and hereby authorizes them to represent and to vote as designated herein, all of the shares of common stock of ILLUMINA, INC. that the stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholders to be held via live webcast at [Ÿwww.virtualshareholdermeeting.com/ILMN2013] at 10:00 AM [Ÿ]Pacific Time on [Ÿ],[Ÿ], 2012, at [Ÿ]Wednesday, May 29, 2013, and any adjournment or postponement thereof.THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN AND UNLESS OTHERWISE DIRECTED, WILL BE VOTED (I) “FOR” ALL THE DIRECTOR NOMINEES NAMED IN PROPOSAL 1; (II) “FOR” PROPOSALS 2 AND 3; (III) “AGAINST” PROPOSALS 4, 5, 6 AND 7; AND (IV) IN THE DISCRETION OF THE PROXY HOLDERS UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
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| | | YOUR VOTE IS VERY IMPORTANT— PLEASE VOTE TODAY
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| This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors’ recommendations. | |
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| Continued and to be signed on reverse side | |
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