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Illumina Shares Slide 12 Percent on New Severance Deals; Bank Downgrades Stock

NEW YORK (GenomeWeb News) – Shares in Illumina were down 12.19 percent, or 3.36, at $31.40 in mid-afternoon trading after the company disclosed changes to the severance packages of six company officials.
Separately today, investment bank Leerink Swann downgraded the company's stock to "Market Perform" from "Outperform."
In an SEC filing released early this morning, Illumina said that on Monday it changed its severance agreements with CEO Jay Flatley; CFO Christian Henry; Tristan Orpin, vice president of worldwide sales; John Stuelpnagel, senior vice president and COO; Arthur Holden, senior vice president of corporate and market development; and Christian Cabou, senior vice president and general counsel.
The new agreements say that if these executives are let go in a "covered termination" in connection with a "change in control" of the company, then the executive officer “is generally entitled” to the following benefits:
“A severance payment equal to the executive officer's annual base salary (or, in the case of  Flatley, twice the annual base salary) plus either the officer's then-current annual target bonus or other target incentive amount or the annual bonus or other incentive paid or payable to the officer for the most recently completed fiscal year, whichever is greatest; a lump-sum payment of the officer's earned but unpaid compensation; a continuance, for 12 months (or, in the case of Flatley, 24 months) following termination, of certain medical and other benefits and executive perquisites; a continuance of the executive officer's indemnification rights and liability insurance; an automatic vesting of the executive officer's unvested stock options and equity or equity-based awards; and certain professional outplacement services.”
Illumina said a "covered termination" generally includes termination by the for reasons other than for "cause" or termination by the executive officer for "good reason." To constitute a "covered termination," the move must occur within two years following the change in control or, in certain circumstances, may occur after a definitive agreement to effect a change in control is entered into but before the change in control is effected.

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