Activist investor Carl Icahn’s proxy battle against Illumina reached its conclusion Thursday with wins and losses on both sides.
Icahn spent the last several weeks attempting to rally support for an overhaul of Illumina’s board of directors, citing what he described as their “ill-advised (and frankly inexplicable)” decision to plow ahead in the $8 billion acquisition of Grail despite ongoing investigations by regulators in the U.S. and Europe.
Illumina is currently facing potential fines of up to 10% of its annual revenues for defying the EU regulators, and the U.S. Federal Trade Commission ruled last month that Illumina must divest Grail within six months, though Illumina is in the process of appealing that decision.
The proposed overhaul saw Icahn put forth three of his own associates as potential additions to the board. Before the proxy fight went public, according to Securities and Exchange Commission filings, Illumina had countered with an offer to support one Icahn nominee and another nominee that they’d mutually agreed upon, but Icahn remained set on his trio of nominees.
The activist investor suggested that his associates replace Illumina CEO Francis deSouza, current board chair John Thompson and Robert Epstein, chair of the company’s governance committee, on the board. He further proposed (PDF) that deSouza be replaced as chief executive, too, proffering former Illumina CEO Jay Flatley “(or similar individual)” to take the top spot.
The board decision went to Illumina’s shareholders in their annual meeting Thursday. According to the company, the unaudited results of the vote show that while the shareholders voted to retain eight of Illumina’s nine existing board members—including deSouza—they did opt to vote in Andrew Teno, a portfolio manager at Icahn Enterprises, while Thompson lost his spot on the board.
In a statement issued Thursday, Illumina welcomed Teno, adding that it’s “[looking] forward to productive and collaborative engagement.” The company also thanked Thompson for his tenure leading the board; the IBM and Symantec alum and former Microsoft chair was named an Illumina director in 2017 and became chairman of the board in 2021.
Thompson’s replacement at the helm of the board will be chosen within the next few weeks.
In additional votes taken at the annual meeting, the shareholders sided with Illumina on several other points, including the ratification of auditors, the approval of a proposed stock incentive plan and the implementation of an annual schedule for voting on executive compensation.
On the question of the contents of those pay packages, however, the shareholders disagreed, rejecting the proposed executive compensation. “Say-on-pay” votes like this typically aren’t binding but are cast on an advisory basis, giving companies an idea of how shareholders feel about their executives’ performance.
“Illumina thanks shareholders for their continued support of the company, which remains committed to its mission of improving human health by unlocking the power of the genome,” the company said in a statement about Thursday’s results. “We appreciate the constructive shareholder feedback throughout this process and are committed to delivering on our plan to accelerate shareholder value creation. We will continue to provide transparent and effective communication as we move forward together.”