Illumina shareholders have voted to oust firm chair John Thompson and approve a nominee supported by Carl Icahn following a bruising proxy battle led by the veteran activist investor.
Andrew Teno, Icahn’s nominee for a board seat on the world’s greatest gene sequencing firm, gained a shareholder vote on the firm’s annual assembly on Thursday, whereas Thompson was unseated.
Nonetheless, two different Icahn nominees failed to draw sufficient votes to win board seats, paving the way in which for Illumina chief govt Francis deSouza and director Robert Epstein to be re-elected.
“We recognize the constructive shareholder suggestions all through this course of and are dedicated to delivering on our plan to speed up shareholder worth creation,” stated Illumina in a press release.
Illumina shares had been down practically 11 per cent at $189.71 following the vote, the bottom stage this yr.
“I see this as solely the primary spherical in a unbroken battle,” stated John Espresso, a Columbia Regulation College professor. “The shareholders could but have the ability to take away the CEO. However clearly the shareholders had been nervous about giving Icahn even three seats on the board.”
In an extra signal of investor frustration with the corporate, Illumina stated shareholders rejected its 2022 pay for senior executives. DeSouza was awarded $26.7mn in complete pay in 2022, virtually double the quantity within the earlier yr. Pay proposals are nonbinding within the US, however massive corporations not often lose these votes.
The vote to oust Thompson, a former Microsoft chair and director, follows a marketing campaign by Icahn that centered on Illumina’s “reckless determination” to shut its $8bn acquisition of most cancers check developer Grail in 2021 in opposition to the desires of EU and US antitrust regulators.
Icahn, who has a 1.4 per cent stake in Illumina, stated it was “inexplicable and unforgivable” that the board led by Thompson went forward with the deal with out ascertaining whether or not it might get clearance from EU regulators. In December, Brussels ordered Illumina to divest Grail and is planning to situation a wonderful price as much as $453mn for “gun leaping”.
The US Federal Commerce Fee has additionally ordered Illumina to divest Grail. Illumina is interesting in opposition to the orders by the EU and US regulators.
The 87-year-old investor additionally alleged the board lacked independence and that the majority administrators had been handpicked by deSouza.
Illumina’s market capitalisation has plunged from $75bn in August 2021, when it purchased Grail, to lower than $30bn as of Wednesday.
The Illumina proxy battle marks one of many greatest shareholder activism campaigns lately. Since 2012, solely seven US fights have gone to a vote at corporations with a market capitalisation of greater than $30bn, in accordance with analytics firm Insightia. Activist campaigns at Disney and Salesforce this yr settled earlier than any shareholder votes.
One shareholder, who was not authorised to talk publicly, advised the Monetary Occasions he voted to exchange Thompson as a result of the Grail deal had not labored out and the board remained “tone deaf” to shareholders.
“They’ll’t appear to confess their mistake, and the vote gave a possibility to ship a robust message,” stated the shareholder.
The vote at Illumina was additionally a check case for voting shareholder guidelines adopted by the US Securities and Trade Fee that Icahn and different activists fought for, which gave shareholders flexibility to choose and select nominees.
Beforehand, shareholders had been compelled to vote for both a full slate of the corporate’s nominees or the activist’s in contested elections. Now, shareholders have the selection of backing particular person nominees from each camps. Solely a handful of activist contests with the brand new “common” voting guidelines have gone to a vote, and all at small corporations.