Kevin Pegels
ILLUMINAAbout Kevin Pegels
Kevin Pegels, age 57, is Illumina’s Chief of Global Operations; he joined Illumina in 2015 and has led Global Operations since 2021 after serving as Head of Global Supply Chain (2015–2021) . His 2024 incentive pay was tied to company-wide revenue and non-GAAP operating income; Illumina achieved $4,369M revenue vs $4,461M target (83% achievement) and $1,265M non-GAAP operating income vs $1,261M target (103%), resulting in 93% overall VCP achievement and a 91% of target bonus paid to Pegels . Long-term equity incentives are split between relative TSR vs Nasdaq Biotechnology peers and three-year average operating margin (2024–2026) PSUs, reinforcing operating discipline and shareholder value alignment . Illumina disclosed that five-year TSR (2020–2024) trailed peers, framing a higher bar for PSU vesting and emphasizing pay-for-performance .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Illumina | Head of Global Supply Chain | 2015–2021 | — |
| Illumina | Chief of Global Operations | 2021–Present | — |
External Roles
No external public-company directorships or committee roles disclosed in the 2025 proxy for Pegels. —
Fixed Compensation
| Metric | 2023 | 2024 |
|---|---|---|
| Base Salary ($) | 525,000 | 575,000 (9.52% YoY increase) |
| Target Cash Incentive (% of Base) | — | 65% |
| Actual Cash Incentive Payout (% of Target) | — | 91% |
| Actual Cash Incentive ($) | — | 340,114 |
| All Other Compensation ($) | — | 19,388 |
Performance Compensation
2024 Annual VCP Metrics and Outcomes
| Metric | Weight | Threshold ($mm) | Target ($mm) | Maximum ($mm) | Actual ($mm) | Payout (% of Target) |
|---|---|---|---|---|---|---|
| Core Illumina Revenue | 50% | 4,194 | 4,461 | 4,727 | 4,369 | 83% |
| Core Illumina Non-GAAP Operating Income | 50% | 1,027 | 1,261 | 1,417 | 1,265 | 103% |
| 2024 VCP Achievement (Company) | — | — | — | — | — | 93% |
| Pegels Bonus Mechanics | Target 65% of Base | — | — | — | Paid $340,114 | 91% |
Notes:
- VCP design uses two equally weighted metrics aligned to the annual budget; payouts range from 0–200% based on performance .
Long-Term Equity Awards Granted in 2024 (Pegels)
| Award Type | Grant Date | Target Shares | Metric | Vesting |
|---|---|---|---|---|
| PSU (relative TSR vs Nasdaq Biotech peers) | Mar 5, 2024 | 6,627 | 3-year rTSR | Vests in full Jan 3, 2027; 0–200% earn-out |
| PSU (3-year average operating margin) | Mar 5, 2024 | 6,627 | Operating Margin (FY24–FY26) | Vests in full Jan 3, 2027; 0–200% earn-out |
| RSU (time-vesting) | Mar 5, 2024 | 5,681 | Continued service | 25% annually on grant anniversaries over 4 years |
Program design emphasis:
- No stock options issued in 2024 for NEOs; equity mix focused on PSUs and RSUs .
- PSU outcomes also include prior cycles: 2022–2024 and 2023–2024 EPS PSUs paid 0% (minimum threshold not achieved), consistent with pay-for-performance .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership (as of Mar 26, 2025) | 8,578 shares; <1% of common stock; 0 options exercisable within 60 days |
| Stock Ownership Guidelines | SVP: 2x base salary; Section 16 Officer (if not otherwise covered): 1x base salary; compliance measured over 5 years; unvested RSUs count, unvested PSUs/options do not |
| Trading Restrictions When Non-Compliant | Must retain 100% of net RSU shares; cannot increase sales under 10b5-1 plans |
| Clawback Policy | Amended to comply with SEC/Nasdaq; recovery applies to restatements irrespective of executive fault |
Outstanding Equity Awards at FY2024 Year-End (Pegels)
| Award | Unvested Units (#) | Market Value ($) | Vesting Terms |
|---|---|---|---|
| PSU (rTSR; 2023 grant cycle) | 3,084 | 417,173 (at $135.27) | Vests Dec 28, 2025; 0–175% earn-out |
| PSU (rTSR; 2024 grant cycle) | 6,627 | 896,434 (at $135.27) | Vests Jan 3, 2027; 0–200% earn-out |
| PSU (Operating Margin; 2024 grant cycle) | 6,627 | 896,434 (at $135.27) | Vests Jan 3, 2027; 0–200% earn-out |
| RSU (Nov 5 tranche) | 2,954 | 399,588 (at $135.27) | 25% annually each Nov 5 |
| RSU (Feb 15 tranche) | 5,681 | 768,469 (at $135.27) | 25% annually each Feb 15 |
Option Exercises and Stock Vested (2024)
| Item | Quantity/Amount |
|---|---|
| Options Exercised | 0 |
| Shares Acquired on RSU/PSU Vesting | 1,954 |
| Value Realized on Vesting ($) | 302,792 |
Employment Terms
| Provision | Terms |
|---|---|
| CIC Severance Structure | Double-trigger required (Change in Control + qualifying termination); benefits include cash severance (base + greater of target or last bonus), equity acceleration, health benefits, and outplacement |
| Severance Outside CIC | NEOs generally not entitled to severance absent CIC; CEO exception for make-whole bonus |
| CIC Economics for Pegels (Hypo as of Dec 31, 2024) | Salary severance $575,000; Cash incentive severance $390,000; Earned compensation $340,114; Equity acceleration $3,378,098; Deferred comp (NQDC) $351,992; Perquisites/benefits $60,775; Total $5,095,979 |
| Deferred Compensation (2024) | Executive contribution $100,000; Aggregate earnings $30,888; Year-end balance $351,992 |
Compensation Committee Analysis
- Peer group used for 2024 benchmarking spans device, diagnostics, life science tools, and selected tech names; new adds denoted by “” (e.g., Splunk Inc., The Cooper Companies, Inc., Mettler-Toledo International Inc., West Pharmaceutical Services, Inc*) .
- Committee held 7 meetings in FY2024 and 2 in early 2025; retained Aon as independent consultant; assessed and found no conflicts; Aon fees: $773,681 (committee) and $507,682 (management engagements) .
Investment Implications
- Pay-for-performance alignment: Pegels’ cash bonus is driven entirely by company revenue and non-GAAP operating income; the 2024 payout at 91% of target reflects mixed top-line and stronger operating execution (83% revenue achievement; 103% non-GAAP operating income) .
- Equity incentives create retention gates through 2025 and 2027: Multiple PSU tranches vest on Dec 28, 2025 and Jan 3, 2027, with performance hurdles (rTSR and operating margin), and RSUs vest on Feb 15 and Nov 5 annually—expect periodic tax-related selling pressure around these dates, tempered by ownership retention rules when not in guideline compliance .
- Risk mitigants and governance: No options issued in 2024 (removes option repricing risk); clawback policy compliant with SEC/Nasdaq reduces misstatement incentives; CIC protection is standard double-trigger at 1x base+bonus for Pegels, with equity acceleration—watch for transaction-driven windfalls if a deal coincides with PSU vesting windows .
- Performance headwinds: Company TSR underperformed peers over 2020–2024 and EPS PSUs for recent cycles paid 0%, indicating rigorous hurdles; future equity value realization for Pegels hinges on sustained margin improvement and rTSR outperformance through the 2024–2026 window .