UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The
Securities Exchange Act Of 1934
Date of report (Date of earliest event reported): March 8, 2012
ILLUMINA, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-35406 | 33-0804655 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 5200 Illumina Way, San Diego, CA | 92122 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (858) 202-4500
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On March 8, 2012, the Compensation Committee (the “Committee”) of the Board of Directors of Illumina, Inc. (the “Company”) approved changes to the long-term equity incentive compensation program for the Company’s executive officers for 2012 that places greater emphasis on performance-based long-term incentives.
For the past several years, the Committee has awarded long-term equity incentive compensation awards to the Company’s executive officers in the form of stock options and, more recently, time-based vesting restricted stock units (“RSUs”). Beginning with the 2012 annual grant, long-term equity incentive compensation will be delivered through a combination of:
| • | 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 (75% of the total value of the 2012 long-term equity incentive compensation award granted to each executive officer); and |
| • | time-based vesting RSUs that vest over a four-year period, with 25% of the RSU vesting on each of the first four anniversaries of the grant (25% of the total value of long-term equity incentive compensation award granted to each executive officer). |
The PSUs are intended to reward the achievement of specific earnings per share objectives as measured at the end of the three-year performance period commencing January 2, 2012 and ending December 28, 2014. The Committee selected earnings per share as the appropriate financial metric because it believes this is a key driver to enhancing long-term stockholder value and that it is in the best interests of stockholders to hold the Company’s senior management accountable for achieving sustained growth in earnings per share over a long-period of time. Following the completion of the three-year performance period, the Committee will certify the Company’s performance relative to the financial objectives for such performance period. The number of shares issuable at the end of the three-year performance period will range from 50% to 150% of the number of shares specified in the PSU award, based on performance relative to the financial objectives. Shares of common stock will be issued as soon as practicable following the Committee’s certification. The PSUs will be granted under the Company’s 2005 Stock and Incentive Plan and are intended to be qualified as performance-based compensation for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended.
The PSU awards are intended to be an ongoing part of the Company’s long-term equity incentive compensation program. It is anticipated that the 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 Committee is not obligated to grant PSUs or any other equity incentive awards each year.
The foregoing provides only a brief description of the terms and conditions of the PSUs, does not purport to be a complete description of the rights and obligations of the parties thereunder, and is qualified in its entirety by reference to the form of the PSU award agreement, a copy of which is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated by reference into this Item 5.02, and the Company’s 2005 Stock and Incentive Plan.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits. The following exhibit is filed with this Form 8-K:
| Exhibit No. |
Description | |
| 10.1 | Form of performance stock unit award agreement under Illumina, Inc.’s 2005 Stock and Incentive Plan | |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Illumina, Inc. | ||
| By: | /s/ CHRISTIAN G. CABOU | |
| Christian G. Cabou | ||
| Senior Vice President and General Counsel | ||
Date: March 12, 2012
EXHIBIT INDEX
| Exhibit No. |
Description | |
| 10.1 | Form of performance stock unit award agreement under Illumina, Inc.’s 2005 Stock and Incentive Plan | |
Exhibit 10.1
ILLUMINA, INC.
2005 STOCK AND INCENTIVE PLAN
PERFORMANCE STOCK UNIT AGREEMENT FOR EMPLOYEES
This PERFORMANCE STOCK UNIT AGREEMENT (this “Agreement”) made as of this day of , 2012, between Illumina, Inc., a Delaware corporation (the “Company”), and (the “Participant”), is made pursuant to the terms of the Company’s 2005 Stock and Incentive Plan (the “Plan).
Section 1. Definitions. Capitalized terms used in this Agreement (including Appendices A and B for non-U.S. employees) but not defined herein shall have the meanings set forth in the Plan.
Section 2. Performance Stock Unit Award. The Company hereby confirms the grant to the Participant of an award (the “Award”) of Performance Stock Units (the “PSUs”). The PSUs are notional, non-voting units of measurement based on the Fair Market Value of the Common Stock, which will entitle the Participant to receive a payment, subject to the terms of the Plan and this Agreement (including, if applicable, Appendices A and B), in Common Stock.
The number of PSUs subject to this Award and the effective date of such grant are as follows:
| Number of PSUs Granted (the “PSU Amount”): |
||
| Date of Grant: |
Section 3. Vesting Requirements. The Award will vest in its entirety, if not previously forfeited, on December 28, 2014 in the amount set forth below, subject to the Participant’s continued employment with the Company or any of its Subsidiaries through such date (the “Vesting Date”).
| • | If the Company’s EPS (as defined below) for the fiscal year ending on December 28, 2014 is equal to or less than the low EPS performance target as approved by the Compensation Committee of the Board of Directors on March 8, 2012, then the number of shares of Common Stock that will be received by the Participant will be equal to 50% of the PSU Amount; or |
| • | If the Company’s EPS for the fiscal year ending on December 28, 2014 is equal to or greater than the high EPS performance target as approved by the Compensation Committee of the Board of Directors on March 8, 2012, then the number of shares of Common Stock that will be received by the Participant will be equal to 150% of the PSU Amount; or |
| • | If the Company’s EPS for the fiscal year ending on December 28, 2014 is less than the high EPS performance target and greater than the low EPS performance target, in each case as approved by the Compensation Committee of the Board of Directors on March 8, 2012, then the number of shares of Common Stock that will be received by the Participant will be equal to a number between 50% and 150% of the PSU Amount as determined by linear interpolation for EPS figures between the low and the high EPS performance targets. |
For purposes of this Agreement, “EPS” shall mean the Company’s non-GAAP earnings per share as reported for its fiscal year ending on December 28, 2014, with such changes or adjustments that are approved by the Board of Directors or the Compensation Committee of the Board of Directors.
Section 4. Termination of Employment.
(a) General. In the event of the termination of the Participant’s employment with the Company or any of its Subsidiaries for any reason, any unvested portion of any Award shall be immediately forfeited and automatically cancelled without further action of the Company. No Shares shall be issued or issuable with respect to any portion of the Award that terminates unvested and is forfeited.
(b) [IF THE PARTICIPANT HAS A CHANGE IN CONTROL SEVERANCE AGREEMENT] Corporate Transaction. For purposes of that certain Change in Control Severance Agreement between the Participant and the Company (as the same may be amended or replaced), if in effect and applicable at the time of the termination of the Participant’s employment with the Company, “fully vested” with respect to any acceleration of vesting shall mean an amount equal to 100% of the PSU Amount.
Section 5. Payment of PSUs.
(a) General. Payment in respect of the PSUs hereunder shall be made in Common Stock as soon as practicable following the date that the Board of Directors or the Compensation Committee of the Board of Directors definitively determines the actual EPS for the Company’s fiscal year ending on December 28, 2014. The number of Shares to be distributed in respect of the PSUs will be determined in accordance with the terms of this Agreement and the Plan, including, if applicable, Appendices A and B.
(b) Withholding. The Participant hereby authorizes the Company to satisfy the obligations with regard to all income or withholding taxes (including federal, state and local tax) (the “Tax-Related Items”) by withholding otherwise deliverable Shares with respect to PSUs, provided, however, that (i) the Company shall only
withhold the amount of Shares necessary to satisfy the minimum withholding amount or such other amount determined by the Company as not resulting in negative accounting consequences for the Company, and (ii) no fraction of a Share shall be withheld to satisfy such Tax-Related Items. Subject to the provisions of this Section 5(b), the Participant will be deemed to have been issued the full number of Shares subject to the vested Award, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the Award. If Shares are withheld pursuant to the foregoing provisions of this Section 5(b), then the amount of the Tax-Related Items equal to the value of a fraction of a Share shall be satisfied either by (i) the Participant through a payment to the Company by way of cash, check or other cash equivalent acceptable to the Company equal in value to such fraction of a Share, or (ii) express authorization from the Participant to the Company to deduct such amount equal to such value from any amount then or thereafter payable by the Company to the Participant. Notwithstanding the foregoing, the Compensation Committee of the Board of Directors that administers the Plan and the PSUs may, in its sole discretion and without any further authorization by the Participant, elect to satisfy the obligations with regard to the Tax Related Items by requiring that the Participant pay in whole or in part, by way of cash, check or other cash equivalent acceptable to the Company any amount of the Tax Related Items. If the Participant shall fail to advance any payment under this Section 5 after a request by the Company, the Company is hereby expressly authorized by the Participant to deduct, in the Company’s discretion, any required payment for the Tax Related Items from any amount then or thereafter payable by the Company to the Participant.
Section 6. Restrictions on Transfer. No portion of the Award may be sold, assigned, transferred, encumbered, hypothecated or pledged in any way by the Participant, other than to the Company as a result of forfeiture of the Award as provided herein, unless and until the payment of the PSUs in accordance with Section 5(a) hereof.
Section 7. Limitation of Rights. The Participant shall not have any privileges of a shareholder of the Company with respect to the Common Stock payable hereunder, including without limitation any right to vote such Common Stock or to receive dividends or other distributions in respect thereof, until the date of the issuance to the Participant of a share certificate evidencing such Common Stock.
Section 8. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.
Section 9. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the legatees, distributees, and personal representatives of the Participant and the successors of the Company.
Section 10. Entire Agreement. The Plan and this Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Participant with respect to the subject matter hereof, and may not be modified adversely to the Participant’s interest except by means of a writing signed by the Company and Participant.
Section 11. Severability. The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.
Section 12. Electronic Delivery. The Company has complete discretion to deliver by electronic means any documents related to current or future PSUs that may be granted under the Plan and to request the Participant’s consent to participate in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and, if requested, to agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
Section 13. Non-U.S. Employees. Notwithstanding any provisions in this Agreement or the Plan, if the Participant resides in country outside the United States or is otherwise subject to the law of country other than the United States, the PSU grant shall be subject to the additional terms and conditions set forth in Appendix A to this Agreement and to any special terms and conditions set forth in Appendix B to this Agreement for the Participant’s country of residence, if any. Moreover, if the Participant relocates to one of the countries included in Appendix B, the special terms and conditions for such country will apply to the Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate the administration of the Plan. The Appendices A and B constitute part of this Agreement.
In addition, the Company reserves the right to impose other requirements on the PSUs and any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Plan, and to require the Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
By the Participant’s signature and the signature of the Company’s representative below, the Participant and the Company agree that this Award is granted under and governed by the terms and conditions of the Plan and this Agreement, including, if applicable, Appendices A and B. The Participant has reviewed the Plan and this Agreement, including, if applicable, Appendices A and B, in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Agreement and fully understands all provisions of the Plan and this Agreement. The Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Compensation Committee of the Board of Directors of the Company upon any questions relating to the Plan and this Agreement, including, if applicable, Appendices A and B. The Participant further agrees to notify the head of the Company’s Human Resources
Department at [ ] in writing upon any change in the residence address indicated below.
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