Glass Lewis supports Carl Icahn’s push to oust Illumina’s chairman and chair

Influential proxy advisor Glass Lewis urged investors to vote against reappointing the CEO and president of Illumina, the world’s largest gene-sequencing company, saying the couple failed to take responsibility for the acquisition of Grail cancer screening group. .

The recommendation that shareholders withdraw their support for CEO Francis D’Souza and Chairman John Thompson is a boost for activist investor Carl Icahn, who has waged a proxy battle against Illumina’s board over what he describes as his “reckless” purchase of Grail.

Glass Lewis said shareholders should back two board members proposed by Icahn, arguing that Illumina’s board seemed “alarmingly unwilling” to accept any apparent responsibility for the “costly, distracting and nerve-wracking” decision to close the Grail deal against the union’s wishes. European and US antitrust regulators.

The agent’s advisor said his recommendation reflected his discomfort with Illumina’s operational performance, value creation, and the company’s overall governance.

In a report, Glass Lewis Illumina gave the CEO pay program an “F” grade following the board’s decision to nearly double deSouza’s total pay in 2022 despite a drop in its share price.

The proxy battle comes after a turbulent 18 months for Illumina, whose market capitalization has fallen from $75 billion in August 2021 when it acquired Grail to just over $30 billion this month.

Illumina is appealing against orders from the European Union and the US Federal Trade Commission to divest Grail and faces a possible fine from Brussels of 10 percent of its annual revenue for closing the deal without regulatory approval.

Illumina shares rose 7 percent on Wednesday in the wake of the news.

Glass-Lewis said her recommendation on the CEO and president was backed by her concern about the board’s decision to take the rare step of closing the Grill deal in the face of regulators’ objections.

The proxy company said Icahn failed to substantiate some of the assertions it made on governance matters, including that Illumina’s Grail deal is “riddled with related party-style conflicts of interest.” But she said the board’s defense of its decision to name Thompson president of the company was “rather weak,” given his relationship with de Sousa prior to joining Illumina.

Thompson was CEO of Symantec at the time of its February 2006 acquisition of IMlogic, a company founded and led by deSouza. Both men worked together at Symantec for several years after the deal, which provided “significant dividends” for deSouza, according to the report.

Glass-Lewis said the “optics” surrounding de Souza’s historical relationship with Thompson should have contributed to the selection of a relatively qualified replacement candidate untethered by personal or professional ties to the current Illumina CEO.

Illumina said it did not agree with Glass Lewis’ recommendation: “The election of Carl Icahn’s nominees would be devastating to our core business. We recommend that shareholders vote for all of Illumina’s highly qualified candidates.”