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  x☒                             Filed by a Party other than the Registrant  ¨☐

Check the appropriate box:

Illumina, Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

April 8, 201614, 2017

Notice of Annual Meeting and Proxy Statement

This year’s annual meeting will be a completely virtual meeting of stockholders.

The agenda for this year’s annual meeting includes the following items:

Stockholders as of the record date of March 21, 2016,April 7, 2017, are entitled to notice of and to vote on the matters listed in the proxy statement.

By Order of the Board of Directors,

CHARLES E. DADSWELL

Senior Vice President, General Counsel and Secretary

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be held on May 18, 2016:30, 2017: The proxy statement and annual report to Stockholders are available atwww.proxyvote.com..

Table of Contents

Illumina, Inc.

20162017 Proxy Statement – Summary

This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information you should consider. You should read the entire proxy statement carefully before voting.

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General Information

This proxy statement is furnished in connection with the solicitation of proxies by ourthe Board of Directors of Illumina, Inc. for the Annual Meeting of Stockholders. This proxy statement and accompanying proxy are being mailed to our stockholders on or about April 8, 2016,20, 2017, concurrently with the mailing of our annual report on Form10-K for the fiscal year ended January 3, 2016.1, 2017.

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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 atwww.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 Internetinternet must be received by 11:59 p.m. (Eastern time) on May 17, 2016. 29, 2017.
				By Telephone.You may vote using a touch-tone telephone by calling1-800-690-6903, 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 May 17, 2016. 29, 2017.
				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 May 17, 2016,29, 2017, 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 Internetinternet are posted atwww.virtualshareholdermeeting.com/ilmn2016ilmn2017.
		If you vote via the Internetinternet or by telephone, your electronic vote authorizes the named proxies in the same manner as if you signed, dated, and returned your proxy card.If you vote via the Internetinternet or by telephone, do not return your proxy card.
		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 Internetinternet voting will depend on the voting process of the broker or nominee. Shares held beneficially may not be voted during our annual meeting.

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Proposal 1: Election of Directors

General

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 nine10 directors, having terms expiring at the respective annual meetings of stockholders noted below:

Election of Three Directors to Hold Office for Three Years until the 20192020 Annual Meeting of Stockholders

Upon the recommendation of the Nominating/Corporate Governance Committee of the Board, the Board of Directors has nominated for election at the annual meeting the following slate of three nominees to hold office for three years until the annual meeting of stockholders in the year 20192020 and until their successors are duly elected and qualified:

Dr. Arnold wasMs. Dorsa and Mr. Schiller were appointed to the Board of Directors in January 2017 and July 2016, respectively, to fill a newly created position.positions. In accordance with our Corporate Governance Guidelines, any new director appointed to fill a newly created position on the Board of Directors will stand for election at the first annual meeting of stockholders following such appointment. In accordance with our certificate of incorporation and bylaws, each director is to be elected for a term expiring at the third succeeding annual meeting of

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stockholders after such election. Accordingly, any new director appointed to fill a newly created position on the Board of Directors is assigned to the class of directors that will stand for election at the first annual meeting of stockholders following such appointment.

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Additional Information

For more information about each nominee and each of the other directors serving on our Board of Directors, please see “Information about Directors” in this proxy statement. Each of the 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 of proxy card attached to this proxy statement intend to vote such proxy “FORFOR” the election of each of the three nominees named above, unless the stockholder validly indicates otherwise on the proxy.

Vote Required for Approval

Our bylaws require that a director nominee will be elected only if he or she receives a majority of the votes cast with respect to his or her election in an uncontested election (that is, the number of shares voted “FOR” that nominee exceeds the number of votes cast “AGAINST” that nominee). Each of our director nominees currently serves on the Board of Directors. If a nominee who currently serves as a director is notre-elected, Delaware law provides that the director would continue to serve on the Board as a “holdover director.” Under our Corporate Governance Guidelines, each director submits an advance, contingent, irrevocable resignation that the Board may accept if stockholders do notre-elect that director. In that situation, our Nominating/Corporate Governance Committee would make a recommendation to the Board about whether to accept or reject the resignation, or whether to take other action.

Recommendation

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH OF THE DIRECTOR NOMINEES SET FORTH ABOVE

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Proposal 2: Ratification of the Appointment of Independent Registered Public Accounting Firm

The Audit Committee has selected Ernst & Young LLP as ourof the Board is directly responsible for the appointment, compensation (including advance approval of the audit fee), retention, and oversight of the independent registered public accounting firm to auditthat audits our consolidated financial statements and our internal control over financial reporting. Ernst & Young LLP has served as Illumina’s independent registered public accounting firm since 1999. The Audit Committee annually reviews Ernst & Young’s independence and performance in deciding whether to retain Ernst & Young or engage a different independent auditor. At the annual meeting, our stockholders are being asked to ratify the appointment of Ernst & Young as Illumina’s independent registered public accounting firm for the fiscal year ending January 1, 2017, 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’s qualifications as independent registered public accountants and concluded that, based on Ernst & Young LLP’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’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 of our stockholders.December 31. 2017.

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.

Fees Paid to Ernst & Young LLP

During the fiscal years ended January 1, 2017, and January 3, 2016, and December 28, 2014, the aggregate fees billed or accrued by Ernst & Young LLP for professional services were as follows:

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 January 1, 2017, and January 3, 2016, and December 28, 2014, audit-related fees were primarily incurred for accounting consultations. Tax fees for the fiscal years ended January 1, 2017, and January 3, 2016, and December 28, 2014, related to services rendered for the preparation of foreign tax filings. For the fiscal years ended January 1, 2017, and January 3, 2016, and December 28, 2014, Ernst & Young LLP did not perform any professional services other than as stated under the captions Audit Fees, Audit-Related Fees, and Tax Fees.

Pre-Approval Policies and Procedures

The Audit Committee, as required by the Securities Exchange Act of 1934 (the “Exchange Act”), requires advance approval of all audit services and permittednon-audit services to be provided by our

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independent registered public accounting firm. The Audit Committee must approve the permitted service before the independent registered public accounting firm is engaged to perform it. The services listed as Audit Fees, Audit-Related Fees, and Tax Fees in the table above werepre-approved by our Audit Committee in accordance with this policy.

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Vote Required for Approval

StockholderAlthough ratification is not required to appoint Ernst & Young LLP asby our independent registered public accounting firm forbylaws or otherwise, the fiscal year ending January 1, 2017, because the Audit Committee has responsibility for the appointment of our independent registered public accounting firm. Nevertheless, our Board of Directors is submitting this proposal as a matter to stockholders in conformance withof good corporate governance practices. No determination has been made as to what action the Board of Directors or the Audit Committee would take ifIf stockholders do not approveratify the appointment of Ernst & Young LLP.LLP, the Audit Committee and the Board of Directors would consider such a negative vote in their consideration of what, if any, action to take. Even if the appointment is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent audit firm at any time during the fiscal year if it is determined that such a change would be in the best interests of the CompanyIllumina and its stockholders. Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm requires the affirmative “FOR” vote of a majority of the shares present in person or represented by proxy and entitled to vote on the proposal.

Recommendation

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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Proposal 3: Advisory Vote to Approve the Compensation of our Named Executive Officers

As required by Section 14A of the Exchange Act, 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 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’s named executive officers, as disclosed pursuant to Item 402 of RegulationS-K, including the Compensation Discussion and Analysis, compensation tables, and narrative discussion, is hereby APPROVED.

We urge stockholders to read the “Compensation Discussion and Analysis” beginning on page 3944 of this proxy statement, which describes in more detail how our executive compensation policies and procedures operate and are designed to achieve our HR and talentbusiness objectives, as well as the Summary Compensation Table and other related compensation tables and narrative, appearing on pages 5862 through 61,65, which provide detailed information on the compensation of our named executive officers. The Board of Directors and the Compensation Committee of the Board believe that the policies and procedures articulated in the “Compensation Discussion and 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 vote is advisory resolution set forth above, commonly referred to as a “say-on-pay” resolution, isand not binding on Illumina, the Board of Directors.Directors, or the Compensation Committee. 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” vote of a majority of the shares present in person or represented by proxy and entitled to vote on the proposal.

Recommendation

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE FOREGOING RESOLUTION TO APPROVE, ON AN ADVISORY BASIS, THE COMPENSATION OF ILLUMINA’S NAMED EXECUTIVE OFFICERS

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Proposal 4: Advisory Vote on the Frequency of Holding an Advisory Vote to Ratify Certain Supermajority Voting Provisions inApprove Compensation of our Certificate of Incorporation and BylawsNamed Executive Officers

IntroductionPursuant to Rule 14a-21(b) of the Exchange Act, we periodically request stockholders vote on whether future advisory votes to approve compensation of our named executive officers should occur every year, every two years, or every three years pursuant to the following advisory resolution:

RESOLVED,that the voting choice of once every year, once every two years, or once every three years that receives the highest number of votes cast in connection with this resolution will be considered to be the frequency preferred by stockholders on an advisory basis for Illumina to hold anon-binding vote to approve the compensation of the named executive officers.

The Board of Directors has determined that, consistent with past practice, holding an advisory vote on executive compensation every year (annually) is seeking stockholder ratificationthe most appropriate policy for Illumina at this time, and recommends that stockholders vote to hold annual advisory votes on executive compensation. In formulating its recommendation, the Board considered that an annual advisory vote on executive compensation will allow our stockholders to provide direct input on our compensation philosophy, policies, and practices as disclosed in our proxy statement every year. Additionally, an annual advisory vote on executive compensation is consistent with our desire to seek input from, and engage in discussions with, our stockholders on corporate governance matters and our executive compensation philosophy, policies, and practices. We understand that our stockholders may have different views as to what is the best approach for Illumina, and we look forward to hearing from our stockholders on this proposal.

Vote Required for Approval

The vote is advisory and not binding on Illumina or the Board of Directors. Although not binding, the Board of Directors will consider the outcome, along with other relevant factors, in determining how often to conduct advisory votes on executive compensation. Notwithstanding the Board’s recommendation and the outcome of the retentionstockholder advisory vote, the Board may in the future decide to conduct advisory votes on a more or less frequent basis and may vary its practice based on factors such as discussions with stockholders and the adoption of certain provisionsmaterial changes to compensation programs. Approval of the Company’sadvisory resolution set forth above with respect to holding an advisory vote once every year, once every two years, or once every three years, as applicable, requires the affirmative vote of a majority of the shares entitled to vote and present in person or represented by proxy for one of the foregoing options. If none of the frequency alternatives (one year, two years, or three years) receive a majority vote, we will consider the frequency that receives the highest number of votes to be the frequency that has been selected by stockholders, on an advisory basis.

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Recommendation

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE, ON AN ADVISORY BASIS, FOR THE ADVISORY VOTE ON COMPENSATION OF NAMED EXECUTIVE OFFICERS TO OCCUR ONCE EVERY YEAR

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Proposal 5: Vote to Approve an Amendment to our Certificate of Incorporation to Remove Certain Supermajority Voting Requirements

Currently, Article XI of Illumina’s certificate of incorporation and bylaws that require arequires an affirmative vote of 66 2/3% of the Company’scompany’s then outstanding stock in ordervoting securities, voting together as a single class, to take certain actionsamend, repeal, or modify the following provisions of the company’s certificate of incorporation and bylaws (the “Supermajority Provisions”). The following is a summary of the Supermajority Provisions::

TheHaving reviewed and considered the results of the company’s 2016 annual meeting, at which stockholders voted not to ratify the Supermajority Provisions pursuant to thenon-binding advisory resolution presented at that meeting, the Board of Directors is submitting these provisionshas approved the following amendment to Article XI:

ARTICLE XI

No action shall be taken by the stockholders for ratification at the annual meeting.

Purpose of the Supermajority Provisions

Require Broad Stockholder Support for Key Actions

The existing requirements are sound corporate governance principles as they require that any significant changes on the topics listed above are made with broad stockholder support. With respect to the most fundamental aspectscorporation except at an annual or special meeting of the Company, these requirements ensure stockholders are not subject tocalled in accordance with the whimsAmended and Restated Bylaws, no special meetings of the stockholders shall be called by stockholders without approval of the Board of Directors, and no action, including the removal of directors without cause shall be taken by stockholders by written consent. The affirmative vote ofsixty-six andtwo-thirds percent (66 2/3%)a few large stockholders. By requiringmajority of the supportthen outstanding voting securities of the corporation, voting together as a supermajority insingle class, shall be required for the amendment, repeal or modification of the provisions of Article IX,

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order to take these actions, any changes to our corporate structure truly reflect the stockholders asArticle X or Article XII of this Amended and Restated Certificate of Incorporation or Sections 2.3 (Special Meeting), 2.4 (Notice of Stockholders’ Meeting), 2.4 (Advanced Notice of Stockholder Nominees and Stockholder Business), 2.8 (Voting), or 2.10 (Stockholder Action by Written Consent Without a group.

This prudent approach to stockholder votes on significant corporate changes is common – many publicly-traded companies require supermajority votes to take crucial actions.

Protect Minority Stockholders

Simple majority votes allow relatively few, large stockholders to dominate more numerous but smaller stockholders. Those large stockholders could act either unwiselyMeeting), or in outright self-interest if they go unchecked by higher vote requirements. Supermajority requirements demand consensus across many stockholders and protect small stockholders from being overwhelmed by large stockholders.

Furthermore, our bylaws require only that the holders3.2 (Number of a majority of stock be present at a meeting in order to transact the businessDirectors) of the Company — without these provisions, a simple majority ofthat majority (i.e., 25.1% of all outstanding shares) could impose radical changes on our corporate structurecorporation’s Amended and functionality.Restated Bylaws.

The Board of Directors has a fiduciary dutyseeks stockholder approval for the amendment to pursueour certificate of incorporation to require the best interestsaffirmative vote of all stockholders. By reserving certain fundamental functions for supermajority votes, these provisions insulate us from self-interested or misguided votes by a minority of stockholders holdingonly a majority of shares present.

Promote Long-Term Corporate Management

Robust vote requirements enable stockholders, the Boardcompany’s then outstanding voting securities, voting as a single class, in order to amend, repeal, or modify the Supermajority Provisions. Exhibit A to this proxy statement sets forth an amended certificate of Directors, and third parties to make long-term plans and investments inincorporation that includes the Company. Although changes to these provisions may be appropriate over time, by requiring a supermajority to make changes we ensure that such changes will not be sudden, nor will they be quickly reversed. Although this permanence is not necessary for all aspectsamendment of our structure and governance, it is beneficial and appropriate for these elements.

Limited Scope

The Board of Directors recognizes that a simple majority vote is appropriate for many stockholder actions. We do not require more than a simple majority unless it is appropriate and necessary to protect the interests of small stockholders. By requiring a supermajority vote only in these limited circumstances, we can empower stockholders to take many actions by a simple majority while ensuring that changes to certain sensitive provisions occur if and only if there is a broad consensus among stockholders that such changes are beneficial. The existing provisions allow stockholders the power to make changes to our governing documents without concentrating that power in the hands of only the largest stockholders.Supermajority Provisions noted above.

The Board of Directors regularly considers corporate governance developments and best practices, and discusses whether changes are appropriate.

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Vote Required for Approval

Approval of the advisory resolutionvote set forth above requires the affirmative “FOR” vote of a majority of the shares present in person or represented by proxy and entitled to vote on the proposal. Although not binding, the Board of Directors will review and consider the voting results when making future decisions regarding our corporate governance practices, including with respect to our certificate of incorporation and bylaws.company’s outstanding shares.

Recommendation

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATIONAPPROVAL OF THE SUPERMAJORITY VOTING PROVISIONS INAMENDMENT TO OUR CERTIFICATE OF INCORPORATION AND BYLAWSTO REMOVE CERTAIN SUPERMAJORITY VOTING REQUIREMENTS

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Information Aboutabout Directors

The following table sets forth the names, ages, committee assignments, and positions of our directors as of April 8, 2016.14, 2017. As announced in February 2017, John W. Thompson will join the Board of Directors effective as of May 3, 2017. 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 a director are described following the table.

Name		Age		Position with the Company		Audit Committee		Compensation Committee		Nominating/ Corporate Governance Committee		Age				Position with the Company		Audit Committee		Compensation Committee		Nominating/ Corporate Governance Committee		Other Public Company Boards
Jay T. Flatley(1)		63		Chairman and CEO									64			Executive Chairman								1
A. Blaine Bowman		69		Lead Independent Director									70			Lead Independent Director								0
Francis A. deSouza		45		President									46			President & CEO								0
Frances Arnold, Ph.D.		59		Director									60			Director								0
Daniel M. Bradbury(1)		54		Director									55			Director								4
Caroline D. Dorsa													57			Director								3
Karin Eastham, CPA		66		Director									67			Director								3
Robert S. Epstein, M.D.		60		Director									61			Director								2
David R. Walt, Ph.D.(2)		63		Director
Roy A. Whitfield		62		Director
Number of Meetings in 2015						11		7		4
Philip W. Schiller													56			Director								0
Roy A. Whitfield (1)													63			Director								1
Number of Meetings in 2016																		11		7		6

    Chair       Member       Audit Committee Financial Expert (for purposes of Section 407 of Sarbanes-Oxley Act)

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The following figures reflect the current independence status and tenure of our Board:

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Board of Directors and Corporate Governance

Board of Directors

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 Dr. Arnold, Mr. Bradbury, Mr. Bowman, Ms. Dorsa, Ms. Eastham, Dr. Epstein, Dr. Walt,Mr. Schiller, and Mr. Whitfield, are independent directors under the rules of The NASDAQ Global Select Market.NASDAQ.

The Board of Directors intends to hold executive sessions of thenon-management directors following each regularly scheduledin-person meeting of the Board of Directors. Executive sessions do not include any employee directors of the Company.company. At its meetings during the fiscal year ended January 3, 20161, 2017 (“fiscal 2015”2016”), the Board of Directors regularly met in executive sessions ofnon-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 under “Corporate Governance.” The Board of Directors meets regularly to review significant developments affecting the Companycompany and to act on matters requiring the Board of Directors’ approval. The Board of Directors held eight formal meetings during fiscal 2015.2016. 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.

Attendance at Meetings

During fiscal 2015,2016, 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. We reimburse the travel expenses of any director who travels to attend the annual meetings. Two members of the Board of Directors attended our 20152016 annual meeting of stockholders.

Corporate Governance

The Board of Directors and our management believe that good corporate governance is an important component in enhancing investor confidence in the Companycompany 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.

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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,Conduct, and charters for each of the committees of the Board of Directors, including the Audit Committee, the

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Compensation Committee, and the Nominating/Corporate Governance Committee. The corporate governance page can be found on our website atwww.illumina.com under “Corporate Governance.”

Board Leadership Structure

Currently, our Board leadership structure consists of a Lead Independent Director, aan Executive Chairman, (who is also our CEO), and strong committee chairs. Our CEO also serves as a director of the Board. This structure allows one personour Executive Chairman, who served as our CEO from 1999 until 2016, to speaklead our Board and continue to be a critical resource for and lead both the Company and the Board,our executive management team, while also providing for effective independent board oversight through a Lead Independent Director. We believe that, in a time of business and leadership growth and transition, Illumina is extraordinarily well served by having our Board led by an Executive Chairman who is intimately familiar with our business, culture, and opportunities, and who liaises regularly with our CEO, acting as a critical link between management and our independent lead director. At a Company growing as rapidly as Illumina and serving increasingly diverse markets, we believe the CEOdirectors. Our Executive Chairman is in the best positionable to focus the independent directors’ attention on the issues of greatest importance to the Companycompany and our stockholders. We also believe that our structure provides independent Board leadership and engagement while providing the benefit of having our CEO, the individual with primary responsibility for managing the Company’s day-to-day operations, chair regular Board meetings as key business and strategic issues are discussed.

Term Limits

In January 2016,Absent special circumstances agreed to by a majority of the Board of Directors adopted a 10-year term limit for (excluding the affected member(s)), nonon-employee directors Board member joining the Board after December 31, 2015.2015, may serve for more than a total of 10 years, and nonon-employee Board member serving as of December 31, 2015, may stand for reelection after serving for more than a total of 10 years as anon-employee director.

Proxy Access

In January 2017, the Board of Directors amended and restated the company’s bylaws to implement a proxy access bylaw that permits a stockholder, or a group of up to 20 stockholders, owning 3% or more of the company’s outstanding capital stock continuously for at least three years, to nominate and include in the company’s proxy materials the greater of two directors or 20% of the number of directors currently serving on the Board, provided that the stockholder(s) and the nominee(s) satisfy the requirements specified in the bylaws.

Board’s Role in Risk Oversight

Risk Oversight Generally

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, security, 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.company.

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Each of the Board’s committees oversees the management of company risks that fall within that committee’s areas of responsibility. In performing this function, each committee has full access to management and may engage advisors. For example, the Nominating/Corporate Governance Committee is responsible for overseeing governance risks facing the company, while the Compensation Committee oversees the company’s executive compensation program and considers the impact of the program and of the incentives created by the compensation awards on the company’s risk profile. Members of the Board also are invited to participate in the Company’s management-led information security working group, which is charged with the protection of intellectual property; confidential and sensitive business data from hostile or malicious attack; the protection of sensitive personal data from unauthorized access; product security; and enterprise technology risk review.

Our senior executives provide the Board of Directors and its committees with regular updates about our strategies and objectives and theassociated 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 about the applicable issues attend Board meetings to provide additional insight into

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items being discussed, including exposures and mitigation strategies with respect to various risks. The Board of Directors believes that the work undertaken by the Audit Committee, together with the work of the full Board and the CEO, enables the Board to effectively oversee our risk management function.

Compensation Programs

The Compensation Committee, together with senior management and external compensation consultants, 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.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 three standing committees to facilitate and assist the Board in the execution of its responsibilities. These committees are currently the Audit Committee, the Compensation Committee, and the Nominating/Corporate Governance Committee. All of the committees are composed solely ofnon-employee, independent directors. Charters for each committee are available on our website atwww.illumina.com under “Committee Composition.”

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Audit Committee

The Audit Committee represents and assists the Board by providing oversight of the Company’s accounting and financial reporting processes and audits of its financial statements on behalf of the Board of Directors and provides advice with respect to the Company’s risk evaluation and mitigation processes. The Audit Committee’s duties and responsibilities under its charter include monitoring and advising the Board on:

The Board of Directors has unanimously determined that all Audit Committee members satisfy the additional independence requirements that apply to Audit Committee members under NASDAQ listing standards, 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.

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Compensation Committee

The primary function of the Compensation Committee is to discharge the Board’s duties and responsibilities relating to compensation of our non-employee directors and executive officers, and oversee the design and management of our equity and other compensation plans. The Compensation Committee’s duties and responsibilities under its charter with respect to the compensation of our directors and executive officers include:

The Compensation Committee’s primary goal under its charter is to align closely the interests of our executive officers with those of our stockholders by its efforts to:senior,non-executive employees

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The Board of Directors has unanimously determined that all Compensation Committee members satisfy the additional independence requirements that apply to Compensation Committee members under NASDAQ listing standards, qualify as“non-employee directors” for the purposes of Section 16 of the Exchange Act, and qualify as “outside directors” for the purposes of Section 162(m) of the Internal Revenue Code of 1986.

The CEO may not participate in or be present during any deliberations or determinations of the Compensation Committee regarding his compensation.

The CEO has been delegated limited authority to grant stock options and restricted stock unitsequity incentive awards to any employee who has a title of or below the rank of “Vice President,” who is not designated as a “Section 16 Officer,” and who does not report directly to him. The CEO may exercise this authority without any further action required by the Compensation Committee; however, the Compensation Committee approves grant ranges based on employee job levels to guide the CEO in the exercise of his authority and sets maximum individual award values that may be granted under this authority. The purpose of this delegation of authority is to enhance the flexibility of equity administration and to facilitate the timely grant of equity awards tonon-management employees, particularly new employees, within the specified limits approved by the Compensation Committee. At least annually, the Compensation Committee reviews this authority and grant guidelines to ensure alignment with market and good governance practices. The CEO reports at least annually to the Compensation Committee on his exercise of this delegated authority. In addition, the Compensation Committee reviews our equity award usage forecast on a quarterly basis as part of its administration duties within our stockholder-approved 2015 Stock and Incentive Plan.

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Nominating/Corporate Governance Committee

The Nominating/Corporate Governance Committee is responsible for overseeing matters of corporate governance, including the evaluation of the performance and practices of the Board of Directors. In particular, the Nominating/Corporate Governance Committee’s duties and responsibilities under its charter include:

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Compensation Committee Interlocks and Insider Participation

No member of the Compensation Committee is, or ever has been, an officer or employee of the Company.company. Furthermore, during fiscal 2015,2016, none of our current executive officers served as a member of a board of directors or compensation committee (or other board committee performing equivalent functions) of another entity where an executive officer of such entity served as a member of our Board of Directors or Compensation Committee.

Code of EthicsConduct

We have adopted a codeCode of ethicsConduct that applies to all of our directors, officers, and employees, including our principal executive officer and principal financial officer. This codeOur Code of ethicsConduct is reviewed by the Nominating/Corporate Governance Committee of our Board of Directors on an annual basis and modified as deemed necessary. Our codeCode of ethicsConduct is available for download from our website,www.illumina.com under “Corporate Governance.” A copy of the Code of EthicsConduct may also be obtained free of charge, from us upon a request directed to Illumina, Inc., 5200 Illumina Way, San Diego, California 92122, Attention: Corporate Secretary. We will disclose within four business days any substantive changes in or waivers of the Code of EthicsConduct 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 aForm 8-K with the SEC.

Director Nominations

Criteria for Board Membership

The Board of Directors has delegated to the Nominating/Corporate Governance Committee the responsibility for reviewing and recommending to the Board nominees for Board membership. In accordance with our Corporate Governance Guidelines, the Nominating/Corporate Governance Committee, in evaluating Board candidates, considers factors such as depth and breadth of

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experience, wisdom, integrity, ability to make independent analytical inquiries, understanding of our business environment, and willingness to devote adequate time to Board duties, all in the context of an assessment of the needs of the Board 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,listing standards, that members of our Audit Committee meet the financial literacy and sophistication requirements under the rules of The NASDAQ Global Select Market,listing standards, 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, the biographies shown above highlight the experiences and qualifications that were viewed as being

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among the most important by the Nominating/Corporate Governance Committee in concluding that the nominee should serve as a director of the Company.director. 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’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.nominees or dispositive in any specific instance.

Process for Identifying and Evaluating Nominees

The Nominating/Corporate Governance Committee believes we are well-servedwell served by our current directors. In the ordinary course, absent special circumstances or a material change in the criteria for Board membership, the Nominating/Corporate Governance Committee willre-nominate incumbent directors who continue to be qualified for Board service and are willing to continue as directors. If an incumbent director is not standing forre-election, or if a vacancy on the Board occurs between annual stockholder meetings, the Nominating/Corporate Governance Committee will seek out potential candidates for Board 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 Board may seek to expand its ranks to bring in new Board members with special skills 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 members of the Nominating/Corporate Governance Committee. Candidates meriting serious consideration will meet with each member 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 Board that this candidate be appointed to fill a current vacancy on the Board or presented for the approval of the stockholders, as appropriate.

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Stockholder Nominees

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:

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Nominations should be submitted in the timeframe described in our bylaws and under the caption “Stockholder Proposals for our 20172018 Annual Meeting” below.

Communications with the Board of Directors

All interested parties who wish to communicate with the Board of Directors or any of thenon-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 ourthe Audit Committee.

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Director and 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 ournon-employee directors, each of our executive officers who is subject to the restrictions of Section 16 of the Exchange Act, and each of our officers having a title of “Senior Vice President” or above. Under the ownership guidelines eachEach individual subject to the guidelines is expected to own and hold shares of our common stock having an aggregate value at least equal to:

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, either as a result of a new hire or promotion. As of the end of fiscal 2016, each individual subject to the guidelines was in compliance with applicable ownership levels.

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Unvested performance stock units (“PSUs”) and unvested stock options do not count towards satisfaction of the ownership guidelines.

During such time as a covered officer or director is not in compliance with his or her applicable ownership guidelines, such officer or director:

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Director Compensation

Our directors play a critical role in guiding our strategic direction and overseeing the management of the Company.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

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company require that we provide adequate incentives for our directors’ continued performance by paying compensation commensurate with our directors’ workload. Ournon-employee directors are compensated based upon their respective levels of Board participation and responsibilities, including service on Board committees. Directors who are members of our employees,management team, such as Messrs.Mr. Flatley and Mr. deSouza, 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 various factors, including then-current competitive practice. The

2016 Compensation Review

For fiscal 2016 compensation purposes, the Compensation Committee typically receives advice and recommendations fromretained an independent compensation consultant with respectfrom Radford, an Aon Hewitt Company, as the Compensation Committee’s advisor, in order to its determinationprovide guidance and recommendations on the Board’snon-employee director compensation matters.

We useprogram and to determine recommendations for policy changes. Radford conducted a combinationcomprehensive formal review and analysis of ournon-employee director compensation and incentive programs relative to certain competitive benchmarks. This review included a benchmarking analysis of ournon-employee director compensation philosophy and practices against prevailing market practices of identified peer group companies and broader industry trends. The analysis included review of the total direct compensation (inclusive of cash retainers and stock-based compensation) of ournon-employee directors as compared with such market benchmarks. It involved an assessment of market trends covering available public information in addition to proprietary data provided by Radford.

For purposes of this benchmarking analysis, the Compensation Committee, in consultation with Radford, identified a list of 19 peer group companies from the Pharmaceutical, Biotech and Tools; Technology Hardware and Equipment; Semiconductor and Semiconductor Equipment; and Software and Software Services sectors to capture companies in a similar sector as well as the broader technical market. The criteria used in developing this list of peer companies included revenue growth, actual revenue (0.5x to 4x Illumina), market capitalization (0.5x to 4x Illumina), research and development expenses as a percent of revenue, and total shareholder return. The Compensation Committee also considered criteria applied by corporate governance groups. In October 2015, when the Compensation Committee reviewed peer benchmarking data in preparation for the adoption of a compensation peer group for fiscal 2016, Illumina was positioned at the 34^th percentile for revenue and the 64^th percentile for market capitalization.

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The following companies made up the director compensation peer group for fiscal 2016:

Use of Benchmarking Data in Setting Compensation

The Compensation Committee reviews director compensation practices and program design at peer group companies to inform its decision-making process so that it can set total compensation levels that it believes are commensurate with the company’s scope and performance. However, the Compensation Committee believes that market data is only one factor in setting compensation. Director compensation determinations are the result of many factors, including the Compensation Committee’s business judgment, which is informed by the experiences of the members of the Compensation Committee, as well as input from, and peer group data provided by, the Compensation Committee’s independent compensation consultant. No one factor is intended to be dispositive in setting compensation.

The consultant to the Compensation Committee gathers market data from the approved peer group and examines a range of pay at the 25^th, 50^th, and 75^th percentiles, and reviews with the Compensation Committee on an annual basis the total direct compensation and each pay element comprising total direct compensation. This provides the Compensation Committee an understanding of the distribution of compensation in the market for directors of peer group companies. The Compensation Committee has set the director total direct compensation target above the 50th percentile as a reflection of the performance and goals of the Company, and in an effort to attract and retainthe most qualified candidatesdirectors to serve on the BoardBoard.

The largest component of Directors.total direct compensation, approximately 85%, is delivered through equity-based awards. This represents a larger percentage of total direct compensation than that of our peer group and serves to retain our directors and align their interests with those of our stockholders. Our equity ownership guidelines also serve to align the compensation of our directors with an emphasis on long-term decision making and company performance.

Cash Compensation

Annual Retainer

During fiscal 2015,2016, each of ournon-employee directors was eligible to receive an annual cash retainer of $55,000 and the Chairman of the Board, if not an employee of the Company,Lead Independent Director was eligible to receive an additional $50,000.$27,500. In addition, in October 2016, the Board appointed Dr. Epstein to serve as the Board’s observer, and an advisor to, the board of directors of GRAIL, Inc., for which he would be compensated $40,000 per year. Dr. Epstein’s service as the Board’s observer of, and an advisor to, GRAIL’s board of directors ended on March 1, 2017.

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Committee Fees

In addition, during fiscal 20152016 each of ournon-employee directors serving on one or more Board committees was eligible to receive the applicable fees set forth below.

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 Board committee fees otherwise payable by the Companycompany 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 Companycompany 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 Companycompany 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).

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Equity Compensation

Annual Awards

In connection with our annual meeting of stockholders, each of ournon-employee directors is eligible to receive a restricted stock unit (RSU) award having an award value of $400,000 (as determined based on the fair market value of the Company’scompany’s common stock on the date of grant), which award is to be made automatically on the date of such annual meeting of stockholders. If $400,000 is not wholly divisible by the fair market value of the company’s common stock on the date of grant, then eachnon-employee director will receive the smallest whole number of shares with a total value above $400,000 as of such date (and no fractional shares will be issued in connection with such RSU award). Such annual RSU awards will vest on the earlier of the first anniversary of the grant date or the day prior to the annual meeting of stockholders immediately following the annual meeting at which the award is granted, in both cases subject to continued service as a board member through the vesting date

Accordingly, in connection with our 20152016 annual meeting of stockholders, on May 27, 2015,18, 2016, each of ournon-employee directors who were serving at the time of the 20152016 annual meeting received an award of 1,9102,853 RSUs (having an award value of $400,088$400,076 based on the closing price of our common

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stock on May 27, 2015,18, 2016, of $209.47)$140.23). The RSUs will vest on the earlier of (i) the one year anniversary of the grant date of the award and (ii) the date immediately preceding the date of the 20162017 annual meeting of stockholders.

Awards Upon First Joining the Board of Directors

During fiscal 2015Through January 28, 2016, eachnon-employee director upon first joining the Board, whether through election by our stockholders or appointment by our Board to fill a vacancy, was eligible to receive aone-time RSU award having an award value of $1,070,000 (as determined based on the fair market value of the Company’scompany’s common stock on the date of grant). An employee director who ceases to be an employee but remains a director will not receive this initial RSU award. Such initial RSU award will vest over a four-year period, with 25% of the RSU vesting onAfter January 28, 2016, each of the first four anniversaries of the grant.

In January 2016, the Board of Directors, acting on the recommendation of the Compensation Committee, determined that each non-employee director upon first joining the Board, after January 28, 2016, whether through election by our stockholders or appointment by our Board to fill a vacancy, would bewas eligible to receive aone-time RSU award having an awarda value of two times the annual RSU award (currently $800,000 based on an annual award value of $400,000), as determined based on the fair market value of the Company’scompany’s common stock on the date of grant. If $800,000 is not wholly divisible by the fair market value of the company’s common stock on the date of grant, then eachnon-employee director will receive the smallest whole number of shares with a total value above $800,000 as of such date (and no fractional shares will be issued in connection with such RSU award). Initial RSU awards vest over a four-year period, with 25% of the RSU vesting on each of the first four anniversaries of the grant. An employee director who ceases to be an employee but remains a director will not receive this initial RSU award.

Additional Benefits

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 addition to the cash and equity compensation described above, we reimburse ournon-employee directors for their expenses incurred in connection with attending Board and committee meetings. We do not provide directors with additional compensation for attending Board or committee meetings.

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Non-EmployeNon-Employeee Director Compensation

The following table summarizes the total compensation paid by the Companycompany to ournon-employee directors for fiscal 2015.2016.

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The following table shows the total number of unvested RSUs and total stock options held by each of ournon-employee directors as of January 3, 2016:1, 2017:

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Stock Ownership and Section 16 Compliance

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 March 21, 2016,April 7, 2017, 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.

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As of March 21, 2016,17, 2017, the following are the only persons known to us to be the beneficial owner of more than five percent of our common stock:

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than 10% of a registered class of the our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company.company. Executive officers, directors, and greater than 10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms that they file.

To the our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required, during the fiscal year ended January 3, 2016 all Section 16(a) filing requirements applicable toeach of our executive officers, directors, and greater than 10% beneficial owners were compliedin compliance with except the following:applicable Section 16(a) filing requirements.

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Executive Officers

The following table sets forth the names, ages, positions, and business experience during the past five years of our executive officers as of March 21, 2016:17, 2017:

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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 CEO are, additionally, subject to approval by the Board of Directors. The Compensation Committee also consults with management and Illumina’s employee compensation and benefits group regarding both executive andnon-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. are:

For fiscal 2015,2016, our named executive officers are:were:

Recent “Say-on-Pay”“Say-on-Pay” Vote

In May 2015,2016, we held a stockholder advisory vote to approve the compensation of our named executive officers, commonly referred to as a “say-on-pay”“say-on-pay” vote. We received favorable consideration, with over 96%98% of stockholder votes cast approving the proposal. As a result, the Compensation Committee decided to retain our general approach in the 20152016 fiscal year. The Compensation Committee will consider the outcome of the annualsay-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 ourday-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

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and reward our executive officers. The Compensation Committee and our management believe that the proportion ofat-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:

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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.

DuringFor fiscal 2015,2016 compensation purposes, the Compensation Committee retained an independent compensation consultant from Radford an Aon Hewitt Company, as the Compensation Committee’s advisor reporting directly to the Chairperson. After considering allChair of the factors required by applicable NASDAQ rules,Compensation Committee. As noted above in the “Director Compensation” section, the Compensation Committee has concluded that no conflict of interest exists that would prevent Radford from serving as an independent consultant to the Compensation Committee. The Compensation Committee maintains sole authority to retain and determine the work to be performed by Radford. With respect to fiscal 20152016 compensation, 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 incentives, 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.

As our product and industry roadmap evolves and diversifies, we compete increasingly with technology sector companies for talent with the experience ofin integrating biology, chemistry, fluidics, and material sciences with hardware and software. This trend led the Compensation Committee to consider broadening the Company’scompany’s peer group to include companies whose talent reflectreflects the next generation of leaders required to support the transformation, at the clinician level, in genomics cloud computing and analysis of real-time data. Also, in light of our significantly increased market capitalization, accelerating growth rate, and evolving business characteristics, in fiscal 2015 the Compensation Committee asked Radford to conduct an analysis to inform the Committee’s consideration of including relevant, high-growth companies as input for the compensation peer group for fiscal 2015. The peer group that was ultimately selected for fiscal 2015 has largely carried forward to fiscal 2016.

The criteria used in the fiscal 2016 review included taking a broaderbroad industry view as well as emphasizing revenue growth, actual revenue (0.5x to 4x Illumina), and market capitalization (0.5x to

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4x Illumina), total shareholder return, and research and development investmentexpenses as a percentagepercent of revenues.revenue, and total shareholder return. The Compensation Committee also considersconsidered criteria applied by corporate governance groups. The revised criteria resulted in Illumina’s placement between the 25^th and 75^th percentiles of peer group companies for both revenue and market capitalization, whereas the previous peer group resulted in Illumina being at the 25^th percentile for revenue growth and above the market 75^th for market capitalization. Radford compiled relevant companies from the Pharmaceutical, Biotech and Tools; Technology Hardware and Equipment; Semiconductor and Semiconductor Equipment; and Software and Software Services sectors. The result was 13 new additionssectors to capture companies in a similar sector as well as the broader technical market. Many of the peer group for fiscal 2015, with

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four of these companies being outside our traditional industry group but whose executive officers manage similar strategic and operating complexities. Many of companies comprising the updated peer group are located in geographic areas in which we compete for talent, which includes high cost-of-livingcost-of-labor areas and therefore impacts rates of pay. In October 2015, when the Compensation Committee reviewed peer benchmarking data to assist in determining executive compensation for fiscal 2016, Illumina was positioned at the 34^th percentile for revenue and the 64^th percentile for market capitalization.

The Compensation Committee reviews compensation practices and program design at peer group companies to inform its decision-making process so it can set total compensation levels that it believes are commensurate with the Company’scompany’s scope and performance. For fiscal 2016, the Compensation Committee determined not to target specific percentiles within a peer group in connection with executive compensation decisions. The Compensation Committee believes that market data is one factor, and its executive compensation determinations are the result of many factors, including an executive’s historical performance, future criticality, retention objectives, the Compensation Committee’s business judgment, which is informed by the experiences of the members of the Compensation Committee, as well as input from, and peer group data provided by, the Compensation Committee’s independent compensation consultant.

Generally, we target our total direct compensation, considering base salary and short- and long-term incentives, for executive officers between the 60th and 75th percentiles of compensation paid to executives within our compensation peer group. The Compensation Committee reviews on an annual basis each pay element, and total direct compensation, in a rangeas compared to compensation market data between the 25th25^th and 75th percentiles.75^th percentile compiled by the independent compensation consultant. This provides the Compensation Committee with an understanding of the distribution of pay in the market assuming similar levels of experience, as well as individual and company performance. We aim to deliver total direct compensation between the 60th and 75th percentiles assuming achievement of our business goals and performance under our long-term incentive plan. We have set this target above the 50th percentile as a reflection of the level of stretch in the business plan as approved by our Board of Directors. Our focus on pay for performance ensures that we then only provide above market pay if we outperform the market.

The largest component of total direct compensation is delivered through equity-based awards, which, at greater than 75%70%, represents a larger percentage of total direct compensation than that of the average of our peer group and serves to retain our executives and align their interests with those of our stockholders such that higher compensation is realized only for exceptional performance. We believe that our targeted compensation percentiles appropriately reflect our position and historical and anticipated growth rates, in each case relative to those in our peer group. 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 byFor fiscal 2016, the Compensation Committee. The Compensation Committee reviewsreviewed the information prepared by management from the Radford assessment, reviewsreviewed each component of an executive’s compensation during the current yearfor fiscal 2016 and prior years, and considersconsidered 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 the market and within Illumina to positions with similar responsibility and impact on operations.

Illumina, Inc. 20162017 Proxy Statement  •  4146

Fiscal 20152016 Compensation Peer Group