Illumina’s shareholders voted Thursday to oust board Chair John Thompson and replace him with a candidate put forward by activist investor Carl Icahn. The remaining eight Illumina directors, including CEO Francis deSouza, will retain their seats.
Andrew Teno, a portfolio manager at Icahn Capital, will join the company’s board in place of Thompson. Illumina will decide on a new board chair in the coming weeks.
Shareholders also disapproved of Illumina's executive compensation in an advisory vote.
“We appreciate the constructive shareholder feedback throughout this process and are committed to delivering on our plan to accelerate shareholder value creation,” Illumina said in a statement, thanking Thompson for his years on the board.
Icahn launched a proxy battle against the San Diego-based DNA sequencing company in March, claiming that the company has lost $50 billion in value since August 2021 because of its “reckless” decision to buy liquid biopsy company Grail for $8 billion against regulators’ wishes. He wants Illumina to spin off Grail into a separate, publicly traded company.
Icahn, whose firm holds less than 1.5% of Illumina’s shares, lobbied for three of his board candidates to replace Illumina CEO Francis deSouza, board chair John Thompson and physician Robert Epstein.
Thursday’s decision could influence Illumina’s path forward as it decides what to do with Grail. Illumina currently faces an order from the Federal Trade Commission to divest Grail, and it may also face a similar requirement from the European Commission, which retroactively blocked the acquisition.
In March, Illumina said it is working on a divestiture ahead of the European Commission’s expected order. It’s also appealing the European Commission’s decision, which could result in fines of up to 10% of its and Grail’s annual revenue.
For Illumina to keep Grail, it would need to win appeals in both the U.S. and the EU. Even if that does happen, it may still choose to divest the firm.
Adding one of Icahn’s candidates “should increase confidence in the certainty of a Grail exit,” and put pressure on Illumina’s board and management, TD Cowen analyst Dan Brennan wrote in a research note.
An election for a new interim chair may be held in the next two to four weeks, Brennan wrote, adding that Illumina’s bylaws give the board of directors “significant leeway” in deciding when to hold that vote. He noted that Illumina will be adding two more people to its board, for a total of 11 seats.
Shares in Illumina fell by 9% in Thursday trading.
Editor’s note: This story has been updated with analyst commentary and Illumina’s share price move.