Carl Icahn lieutenant Andrew Teno won election to Illumina’s board at Thursday’s annual meeting, unseating Chairman John Thompson. Shareholders also voted down the company’s “say on pay” resolution in one of the most heated contests this proxy season.
Although the exact results will not be disclosed for several days, the company announced that Teno, a portfolio manager at Icahn Enterprises, had won more votes than its chairman. CEO Francis deSouza, one of Icahn’s main targets, was re-elected.
The proxy fight is just the seventh since 2012 at a company with a current market cap of over $30 billion, according to Insightia’s Activism module. The dissidents were defeated at the first five, before Trian earned a dead heat at Procter & Gamble and Engine No. 1 won three board seats at Exxon Mobil.
Icahn and Illumina locked horns over the company’s plans for Grail, a cancer detection test maker bought in 2021 for $7.1 billion without the blessing of regulators. Icahn argued Illumina should prepare Grail for divestment, citing costs associated with keeping the business as a separate unit, which the biotech has been forced to do because of opposition from regulators. Icahn also cited the $50 billion market cap loss for Illumina since the closing of the Grail deal.
For its part, Illumina saw Icahn’s suggestions as reckless and believes it should continue the legal fight to secure approval for the Grail deal, while insisting it is also ready to consider other alternatives for the cancer testing company.
The stakes were raised for 87-year-old Icahn when a short seller launched an attack on his holding company in the midst of the contest, forcing him to defend his track record as an investor and admit to mistakes shorting the stock market during a period of low interest rates.
Earlier in May, Hindenburg Research accused Icahn Enterprises of using a “Ponzi-like” economic structure to pay dividends in a short report the crashed the company’s stock. Icahn rejected the allegations and issued a fulsome response to Hindenburg but a big net loss in the first quarter and the disclosure of a request for information from the Department of Justice brought more pain to the shares, which have more than halved since Hindenburg’s report on May 2.
Aside from Teno, who has the backing of proxy voting advisory firms Institutional Shareholder Services (ISS) and Glass Lewis, Icahn had tried to seat Jesse Lynn, general counsel of Icahn Enterprises, and Vincent Intrieri, a former Icahn employee. Illumina rejected all three dissidents, saying they lack relevant skills and experience.
Still, both ISS and Glass Lewis argued Teno would be an adequate replacement for Illumina Chair Thompson, with Glass Lewis also supporting the election of Intrieri and the dismissal of incumbents Thompson and deSouza.
A post from Icahn’s Twitter account attributed to Teno after the vote stated, “Thank you to all of the Illumina shareholders that voted for me. I look forward to serving on behalf of all shareholders and stakeholders. I am happy to say that activism is alive and well at Icahn.”