Influential proxy advisory firm Glass Lewis & Co. recommended shareholders withhold support for Illumina Inc. Chief Executive Officer Francis deSouza’s reappointment to the board, in a win for activist investor Carl Icahn’s campaign at the company.
(Bloomberg) — Influential proxy advisory firm Glass Lewis & Co.
recommended shareholders withhold support for Illumina Inc. Chief Executive Officer Francis deSouza’s reappointment to the board, in a win for activist investor Carl Icahn’s campaign at the company.
Investors should also withhold support for Chairman John Thompson and support the appointment of two of Icahn’s three nominees to the Illumina board, Glass Lewis wrote in a report Wednesday.
Shares of Illumina jumped as much as 7.2% in Wednesday morning trading, the biggest intraday gain in nearly two months.
They were up 7.1% at 10:23 a.m. in New York, giving the company a market value of about $33 billion.
Glass Lewis said it found Icahn “persuasive” when he argued that the company’s push to complete a deal for cancer-detection firm Grail Inc.
has been “a costly, distracting, value-crimping millstone on the company’s already shaky performance and shareholder returns.” Investors have ample cause to hold the chairman and CEO directly accountable, it said.
“Icahn fairly argues that, despite the presence of this self-made boondoggle, the board appears decidedly and disconcertingly disinclined to accept any clear responsibility,” Glass Lewis wrote in the report.
A representative for Illumina said “we disagree with Glass Lewis’s recommendation and believe that the election of Carl Icahn’s nominees would be disruptive to our core business.”
Glass Lewis also pointed to “middling” revenue growth and deteriorating margins in Illumina’s core business under deSouza’s tenure, as well as the CEO’s “substantially misaligned compensation.”
“The appointment of one or more shareholder representatives prepared to ask challenging questions, press for enhanced oversight and review key roles appears worthwhile at this time,” it said.
(Updates with Illumina share movement in third paragraph.)
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