Illumina chief’s pay nearly doubles ahead of clash with Carl Icahn

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103 shares, 164 points

Illumina’s chief executive Francis deSouza was awarded $26.7mn in total pay in 2022, almost double the amount in the previous year, ahead of a proxy fight with activist investor Carl Icahn.

The disclosure in a preliminary proxy filing on Thursday showed the world’s biggest genome sequencing company issued a special grant of stock options worth $12.5mn to deSouza as a retention incentive because of the “highly competitive talent environment”.

DeSouza was paid $14.3mn in 2021. The 86 per cent pay increase for Illumina’s chief executive comes amid a battle with Icahn, who wants to oust deSouza over his alleged mismanagement of the company.

Icahn has accused Illumina of making a disastrous decision to close its acquisition of cancer screening company Grail without regulatory approval and lambasted deSouza’s pay rise. “The market for ‘talented’ executives like Francis is indeed ‘highly competitive.’ In fact, we can probably count on one hand the number of available executives who have incinerated $50bn of shareholder value like Francis did,” Icahn said on Thursday.

The proxy battle follows a tumultuous 18 months for Illumina, whose market capitalisation has slumped from $75bn in August 2021 when it acquired Grail to just over $30bn last month.

EU authorities raised objections with Illumina in September 2020 over its proposed acquisition of Grail and were investigating the deal when the company took the unusual step of closing the transaction. Brussels has since blocked the takeover and is expected to fine Illumina 10 per cent of annual turnover for closing the deal without regulatory approval.

Illumina is running Grail as a subsidiary while it battles the EU order.

In its proxy statement on Thursday Illumina recommended shareholders withhold votes for the three Icahn Group director nominees at the company’s upcoming annual meeting, alleging that the activist investor’s involvement with the company is a threat to its long-term success.

“Mr Icahn is not a long-term Illumina shareholder and made no attempt to engage constructively with the company before demanding board representation,” said Illumina, adding that Icahn and his three board nominees do not understand the company or Grail.

John Thompson, Illumina’s chair, met Icahn and spoke to him on several occasions by phone and offered a compromise — a meeting with two independent candidates identified by the Illumina board for election. Icahn refused, said Illumina.

“Mr Icahn was clear that the purpose of his campaign was to secure the nomination of individuals he could control and thereby exert direct influence over Illumina. In Mr Icahn’s words, he ‘would not even support Jesus Christ as an independent candidate over an Icahn nominee as ‘my guys answer to me’.”

Icahn told the Financial Times deSouza and Thompson’s record in running Illumina was “very troubling” and it was time for both men to be replaced.

“We need to fire these two guys and replace them with people who can really lead this company,” he said.

Icahn has pushed for Illumina’s former chief Jay Flatley — who led the company from 1999 to 2016 and turned it into a leading maker of genome sequencing products — to return and take the reins. Flatley, who served as executive chair from 2016 until 2019 and chair between 2019 and May 2021, declined to comment on whether he would return.

Source: Financial Times

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