Illumina Urges Shareholders to Reject Carl Icahn’s Board Nominees

Rafael Henrique | Light Rocket | Getty Images

Enlightenment on Thursday urged shareholders to reject Carl Icahn’s three board nominees at this year’s annual meeting because they would “endanger” the progress of the biotech’s core business.

“Carl Icahn’s participation in Illumina puts the company’s long-term success at risk, and its nominee directors do not bring relevant skills to the board,” San Diego-based Illumina said in a preliminary proxy statement filing.

The DNA sequencing company asked shareholders to discard any proxy cards sent by the activist investor or its affiliates. Illumina also urged shareholders to vote for the proposed board of directors and noted that final proxy statement material will be mailed soon.

The company has not announced the date of its annual stockholders meeting at which Icahn intends to nominate its candidates for election.

Illumina said it will provide more information about “the strength of our board and management team, our strategy for creating shareholder value — with innovation at its core — and the potential for Mr. Icahn’s associated nominees to damage that strategy.”

Illumina’s comments are the latest step in a looming proxy fight with Icahn, which owns a 1.4% stake in the company. Icahn is seeking board seats and is urging Illumina to reverse its $7.1 billion acquisition of cancer test developer Grail, which he previously described as “a new low in corporate governance.”

Icahn said in a statement to CNBC, “I would find it funny if it weren’t so reprehensible that ILMN’s stock price has fallen 63% because CEO Francis deSouza made such an absurd and questionable purchase.”

“And what’s really funny is the idea that it’s hard to find good CEOs in this space,” he added. “I reckon it would be hard to find someone who could lose $50 billion in shareholder value in a matter of months but still get 87% more for a grand total of $26.8 million in 2022.”

DeSouza joined Illumina as CEO in 2016. Icahn was referring to its total compensation, which nearly doubled despite a dramatic decline in Illumina’s market value over the past year. The company’s market cap has shrunk to around $35 billion from about $75 billion in August 2021, the month it struck the Grail deal.

Icahn said Wednesday that Illumina should bring back its former CEO, Jay Flatley, to “correct the situation immediately.”

Carl Icahn speaks at Delivering Alpha in New York on September 13, 2016.

David A Grogan | CNBC

On Thursday, Illumina said Icahn had previously said more positive things about deSouza. The company said Icahn “supported” deSouza’s actions as CEO during a meeting earlier this month, but noted that he will not publicly repeat those comments.

Illumina emphasized that Icahn was not a long-term shareholder and had not looked into the company before requesting representation on the board. The company noted that it acted “swiftly and deliberately” to meet with Icahn, interview its nominees in good faith and explore possible alternatives to a proxy fight.

But Icahn is “unwilling to compromise” and insisted the board add its three nominees without input from shareholders, Illumina said. The company also claimed that Icahn said he wanted his nominees on the board because they were not independent and he could control them directly.

“My guys report to me,” Icahn said of his nominees, according to Illumina.

The company said Icahn’s decisions had no relevant healthcare or genomics expertise on paper. After interviewing the nominees, Illumina concluded that they also lacked any “original perspective or detail” about how they would like to see the company differently.

“Each candidate instead recited the same poorly researched and unworkable ideas regarding GRAIL,” Illumina said.

The company added, “It has become abundantly clear that neither Mr. Icahn nor his three associate nominees – Jesse Lynn, Andrew Teno or Vincent Intrieri – understand the Illumina or GRAIL business and the regulatory processes involved.”

Intrieri, Founder and CEO of VDA Capital Management, was previously employed at Icahn. Lynn is general counsel of Icahn Enterprises and Teno is a portfolio manager at Icahn Capital LP, a firm where Icahn manages mutual funds.

Illumina said its board identified two independent candidates and offered Icahn to meet with them. But Icahn refused, saying he “wouldn’t even endorse Jesus Christ” as an independent candidate over his own candidates, Illumina said.

Illumina shares rose 1.5% on Thursday.