Glass Lewis Recommends AGAINST CEO Francis deSouza Glass Lewis Recommends AGAINST Chair John Thompson Glass Lewis Recommends FOR Two Icahn Nominees

$ILMN

Dear Fellow Illumina Shareholders:

Yesterday, proxy advisory firm Glass Lewis released their recommendations for the upcoming Illumina annual meeting. We enthusiastically agree with many of their key points, most importantly that shareholders vote AGAINST CEO Francis deSouza and AGAINST Chair John Thompson. Glass Lewis also recommends that shareholders vote FOR Icahn Nominees Andrew Teno and Vincent Intrieri. Shareholders seem to have agreed with Glass Lewis’ recommendations, sending shares +8% on the day. We encourage the incumbent board of directors to go to a quiet room, read the thoughtful and well-reasoned report and thoroughly question the failed leadership from CEO Francis deSouza and Chair John Thompson. We believe the report speaks for itself:

“[W]e believe Icahn submits more compelling reasoning around a number of other key issues, including the Company’s legacy and guided operating performance under CEO Francis deSouza, questionable aspects of Illumina’s corporate governance architecture, the board’s general oversight efficacy and, ultimately, the Company’s poor shareholder returns profile, particularly in the wake of the GRAIL transaction. In view of these material concerns, we are inclined to suggest investors support two Icahn nominees – and, critically, withhold support from Messrs. deSouza and Thompson – at this time.”

“[W]e believe the overarching dissenting thesis – i.e. that closure of the GRAIL acquisition against the express perspectives and ultimate prohibitions of major US and EU regulators represented a decidedly atypical transactional methodology and a questionable adjudication of risk on behalf of Illumina investors – carries the day here.”

“Against this backdrop, it is important, in our view, to circle back to a fundamental concept underpinning the current contest: the foregoing costs, risks and uncertainties exist entirely because the board took the exceptional step of closing the GRAIL transaction against the express wishes of two powerful antitrust regulators.”

“We further believe Icahn fairly argues that, despite the presence of this self-made boondoggle, the board appears decidedly and disconcertingly disinclined to accept any clear responsibility, laying fault principally with major regulators with which the Company willfully locked horns, while concurrently affording Mr. deSouza what we consider to be substantially misaligned compensation.”

“Separate entirely from the GRAIL quagmire, we would circle back to Illumina’s comparatively poor performance throughout Mr. deSouza’s tenure. That arc notably includes middling revenue growth and deteriorating margins within the Company’s core business, as well as pro forma cost guidance which appears to have inspired little market confidence.”

“Perhaps most concerning – and as discussed further in our analysis of Proposal 3 and within our summary Pay-for-Performance grading commentary – we find Illumina’s pay program has continued to result in a clear decoupling of compensation from operational results and shareholders returns, with the Company receiving P4P grades of D, F and F for FY2020, FY2021 and FY2022, respectively. Furthermore, it is worth noting the F grade associated with the most recent fiscal year not only manages to be worse than Illumina’s objectively poor FY2021 result, it very nearly achieves the worst position possible within our analytical framework.”

“…notwithstanding the relative rarity of such a challenge to key incumbents, we believe investors should contemporaneously withhold votes from Illumina candidates deSouza and Thompson. Our recommendation in this regard certainly reflects unease surrounding Illumina’s operating performance, value creation and overall corporate governance, but is foundationally underpinned by our substantial concerns with GRAIL, up to and including a current tone and tenor which implies the board believes investors should be satisfied with a lengthy, expensive, and potentially still heavily damaging appeals process. Under these conditions, we would reinforce our view that investors have ample cause to hold the incumbent board, including CEO Francis deSouza and board chair John Thompson, directly accountable for the myriad risks, costs and uncertainties which continue to be associated with Illumina’s questionable determination to close the GRAIL transaction.”

We commend Glass Lewis for its decision. In rejecting CEO Francis deSouza and Chairman John Thompson, they urge change. They have rightfully identified two Icahn candidates with the requisite skills to act for the good of ALL Illumina shareholders, employees and customers.

Sincerely yours,

Carl C. Icahn

Source:

https://www.sec.gov/Archives/edgar/data/921669/000153949723000921/exh-1.htm