ILLUMINA INC
For the period ended May 16, 2024. Filed Apr 4, 2024.
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What shareholders are asked to vote on at a company's meeting. It is where to find what directors and top executives are paid, and who owns the most shares.
May 16, 2024 · Filed Apr 4, 2024
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant
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| ☐ | Preliminary Proxy Statement |
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| ☒ | Definitive Proxy Statement |
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| ☐ | Definitive Additional Materials |
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April 4, 2024
Notice of Annual Meeting and Proxy Statement
| Date: | May 16, 2024 |
|---|---|
| Time: | 10:00 a.m. (Pacific time) |
This year’s annual meeting of stockholders will be held completely virtually.
To participate, vote, or submit questions 15 minutes before and during the annual meeting via live webcast, please visit: www.virtualshareholdermeeting.com/ilmn2024. There will not be a physical location for the annual meeting.
The agenda for this year’s annual meeting includes the following items:
| 1. | Elect eleven nominees to our Board of Directors; |
| 2. | Ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 29, 2024; |
| 3. | Hold an advisory vote to approve the compensation provided to the “named executive officers” as disclosed in the accompanying proxy statement; and |
| 4 | Transact such other business as may properly come before the meeting and any adjournment or postponement thereof. |
The Illumina Board of Directors (the “Board of Directors” or the “Board”) unanimously recommends that you vote “FOR” the nominees proposed by the Board of Directors and “FOR” the other proposals recommended by the Board. Only your latest validly executed proxy will count and any proxy may be revoked at any time prior to its exercise at the annual meeting as described in the accompanying proxy statement.
Stockholders as of the record date of March 22, 2024, are entitled to notice of and to vote on the matters listed in the proxy statement.
The proxy statement and accompanying proxy are being mailed to our stockholders on or about April 4, 2024, concurrently with the mailing of our annual report on Form 10-K for the fiscal year ended December 31, 2023.
By Order of the Board of Directors,
CHARLES DADSWELL
General Counsel and Secretary
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be held on May 16, 2024: The proxy statement and Annual Report to Stockholders are available atwww.proxyvote.com.
Voting is easy:
VIA THE INTERNET. You may vote at www.proxyvote.com, 24 hours a day, seven days a week, prior to 11:59 p.m. (Eastern time) on May 15, 2024.
BY TELEPHONE. You may vote using a touch-tone telephone by calling: 1-800-690-6903, 24 hours a day, seven days a week, prior to 11:59 p.m. (Eastern time) on May 15, 2024.
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 to be received no later than May 15, 2024.
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/ilmn2024. We will have technicians ready to assist you with any technical difficulties you may have accessing the virtual meeting. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on the Virtual Shareholder Meeting log in page.
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 through which you hold your shares. You should follow the instructions in the Notice of Internet Availability of Proxy Materials or voting instructions provided by your broker or other nominee in order to instruct your broker or other nominee on how to vote your shares.
Letter from Independent Chair of the Board
Dear Fellow Stockholders,
2023 was an eventful for year for Illumina. As I write this letter, I hope you can see that we have both responded to the challenges and positioned Illumina to be stronger as we progress the Company’s mission to improve human health by unlocking the power of the genome.
During last year’s proxy contest, the Board of Directors had extensive conversations with our stockholders. Three new independent directors joined the Board. The Board then elected me as Chair.
The Nominating/Corporate Governance Committee conducted a thoughtful and comprehensive CEO search. Assisted by a third-party executive search firm, the Committee considered internal and external candidates. That process culminated with the Board’s September appointment of Jacob Thaysen as Illumina’s CEO and as a director of the Board.
Altogether, in 2023 we had six changes to an eleven member board, effectively creating a refreshed Board committed to serving our stockholders. Following these changes, the Board also refreshed the Audit, Nominating/Corporate Governance, and Compensation Committees, and we appointed Sue Siegel as Chair of the Compensation Committee.
These changes to our Board have been accomplished while also incorporating valuable stockholder feedback on executive compensation plans, both for the design of our new CEO’s compensation package and our executive compensation program. Additionally, as we disclosed, the Board is working with management to divest GRAIL as quickly as possible. We have set a goal of finalizing the terms of the divestiture by the end of the second quarter of 2024.
Illumina’s Board is committed to continuous refreshment to ensure it has the appropriate skills, experience, and diversity of perspectives to support the Company’s future. At this 2024 annual meeting of stockholders, we have nominated Anna Richo, an accomplished general counsel and chief compliance officer, as a director. We also have rotated leadership of the Nominating/Corporate Governance Committee to Scott Gottlieb, who was appointed Chair as of March 20, 2024. I have additionally joined as a member of the Nominating/Corporate Governance Committee.
As Illumina moves through 2024, we remain focused on execution to create sustainable stockholder value. We are enhancing our focus on end-to-end workflows to more comprehensively support our customers, and we are working to deliver innovation in applications across multiomics and in modalities like single cell and spatial to address further customer needs.
On behalf of the entire Board, I would like to express our gratitude for your ongoing support. We appreciate we are stewards of an important company that is critical to realizing the significant potential of next-generation sequencing, and to unlocking life-changing benefits for patients and value for our customers and stockholders.
Sincerely,
Stephen P. MacMillan
Independent Chair of the Board
Board Responsiveness to Stockholder Feedback
Our Board values stockholder feedback and is committed to robust stockholder outreach. Feedback received is conveyed to the full Board and respective committees of the Board (the “Board committees”), and informs the Board and Committee discussions and decisions.
| Offered engagement with stockholders owning ~61% of outstanding shares1 | Conducted 25 post-annual meeting engagements with stockholders |
|---|---|
| Held discussions with stockholders owning ~56% of outstanding shares1 | Ensured that independent directors led 100% of the engagements |
| The Illumina Engagement Team included the Board Chair, the Chair of the Compensation Committee, the Chair of the Nominating/Corporate Governance Committee, the Chair of the Audit Committee, and 1 other independent director. All calls included at least 2 independent directors. | |
| (1) | Ownership based on Form 13F filings for the quarter ended September 30, 2023 |
The table below outlines the compensation-related feedback received from stockholders following the 2023 annual meeting, the actions taken by the Board in response, and the impact of these actions.
| Stockholder Feedback“What We Heard” | Responsive Action“What We Did” | Impact of Action“Why It Is Important” |
|---|---|---|
| Overview of New CEO’s Compensation Package | ||
| If necessary, one-time grants should have performance requirements | ✓ 70% of make-whole equity grant contingent on 3-year relative total shareholder return (“TSR”) performance | ✓ Direct response to stockholder feedback ✓ Aligns CEO’s interests with those of long-term stockholders |
| Prevent “pay for failure” upon separation | ✓ Make-whole cash payments subject to 2-year continued employment clawback provisions ✓ Time-based make-whole restricted stock units (“RSUs”) ratably vest over 3 years | ✓ Protects against windfall to CEO upon early termination/resignation ✓ Enhances retention value and stability |
| Compensation structures and policies should encourage equity ownership | ✓ RSU matching for open market purchases, up to $1 million for limited period ✓ Increased CEO stock ownership requirement to 6X ✓ One-year post-vesting holding requirement for annual equity awards | ✓ Aligns CEO’s interests with those of long-term stockholders ✓ Disincentivizes excessive risk taking |
| Stockholder Feedback“What We Heard” | Responsive Action“What We Did” | Impact of Action“Why It Is Important” |
|---|---|---|
| Overview of Executive Compensation Program | ||
| Incentives should be aligned with performance and stockholder value | ✓ On average, 85% of 2023 target compensation for named executive officers (“NEOs”) consisted of at-risk pay elements | ✓ Ensures continued focus on short- and long-term strategy ✓ Aligns NEOs’ interests with those of long-term stockholders |
| Annual cash bonus should be based on 12-month Company performance | ✓ For 2024, annual cash bonus set with a 12-month performance period instead of 2 half-year performance periods | ✓ Direct response to stockholder feedback ✓ NEOs compensated based on full-year performance |
| Performance stock units (“PSUs”) should comprise at least 50% of target equity incentives | ✓ 50% of 2023 annual equity in the form of PSUs ✓ For 2024, increased to 70% of annual equity in the form PSUs | ✓ Direct response to stockholder feedback ✓ Strengthens alignment of NEO’s interests with those of long-term stockholders |
| Equity incentives should have multi-year performance goals | ✓ In 2023, PSUs based on relative TSR had 3-year performance goal and PSUs based on EPS had 2-year performance goal ✓ For 2024, all PSUs will have 3-year performance goals | ✓ Ensures NEO focus on long-term performance ✓ Strengthens alignment of payouts with long-term stockholder value creation |
NEO Pay Structure Aligned with Our Philosophy
At the heart of our executive compensation philosophy is a commitment to variable, incentive-based pay that strives to align stockholder value with the economic interests of our management team.
New CEO Pay Structure Focuses on Performance Incentives
Incentive Design and Practices Align with Executive Compensation Philosophy
| Practice | Pay for Performance | Align Interests | Competitive Rewards | Retention | |||
|---|---|---|---|---|---|---|---|
| Over 85% of executive officer total direct compensation is at risk | ✓ | ✓ | ✓ | ✓ | |||
| Performance incentives require minimum performance against preset goals and are capped to minimize excessive risk taking | ✓ | ✓ | ✓ | ✓ | |||
| Challenging short and long-term goals incentivize exceptional performance | ✓ | ✓ | ✓ | ✓ | |||
| Robust stock ownership, anti-hedging and pledging, and clawback policies strengthen alignment of interests | ✓ | ✓ | |||||
| Comprehensive annual review and analysis of executive compensation ensures internal and external alignment | ✓ | ✓ | ✓ | ✓ | |||
| Stockholder feedback is key input to Board committee discussions | ✓ | ✓ | ✓ | ||||
Annual Meeting & Voting Information
ANNUAL MEETING INFORMATION
Date: May 16, 2024 Time: 10 a.m. (Pacific time) Location: Internet webcast only at: www.virtualshareholdermeeting.com/ilmn2024 There will not be a physical location for the annual meeting. See “How may I attend and participate in the annual meeting?” on page 81. Record Date: March 22, 2024
| ITEMS TO BE VOTED ON | Board Recommendation |
|---|---|
| 1. The election of eleven nominees to our Board of Directors | ✓ For All Nominees |
| 2. Ratification of appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 29, 2024 | ✓ For |
| 3. Advisory vote to approve compensation provided to the “named executive officers” as disclosed in this proxy statement | ✓ For |
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.