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This CEO has battled billionaire activist Carl Icahn twice — here's his advice to Disney CEO Bob Iger

It's time to get succession at Disney (DIS) right after a bruising boardroom battle with corporate America agitator, Nelson Peltz.

That's just some friendly advice to Bob Iger, from veteran Hologic (HOLX) CEO and Illumina (ILMN) chairman Stephen MacMillan.

"You have got to get serious about succession. To me, that's where the Disney board has failed," MacMillan told me in an exclusive interview for Yahoo Finance.

MacMillan — who has been the CEO of medical device maker Hologic since December 2013 — knows a thing or twelve about mixing it up with high-profile activists.

Billionaire activist investor Carl Icahn came knocking on the door of Hologic in November 2013, taking a 12.63% stake and demanding board representation. He also wanted to discuss ways to unlock shareholder value at the then-bumbling company.

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Hologic proceeded to enact a poison pill, a common move in a potential hostile takeover situation.

By December 2013, the company added two Icahn representatives to its board and booted its CEO in favor of MacMillan, the former CEO of medical device developer Stryker (SYK).

MacMillan moved quickly to transform Hologic's culture, installing a new leadership team and creating better execution on the sales team. He also slashed expenses, much to the delight of return-seeking Icahn.

Icahn exited his Hologic position in May 2016, for an estimated profit of more than 40%.

"We were extremely instrumental in making value-enhancing changes in both Hologic and Illumina. As the CEO of Hologic, I think [MacMillan] did an excellent job," Icahn told me in a phone interview.

Under MacMillan's leadership as CEO, Hologic shares have gained an impressive 235%.

Then there is the ongoing high-stakes drama at biotech firm Illumina.

Icahn disclosed a stake in Illumina in 2023 and continues to hold a small position.

He initially launched a proxy battle in 2021 over the company's $7.1 billion deal for cancer test developer Grail and was a vocal opponent of then-CEO Francis deSouza, who later exited stage left.

Icahn received one board seat at Illumina. MacMillan was named non-executive chairman in early June of last year.

By December 2023, Illumina said it would divest Grail in an effort to remove a cloud over its stock price, and possibly to quiet the rhetoric from Icahn.

Even still, Icahn is pressing on with a lawsuit he filed against the Illumina board of directors last year. In the suit, Icahn accused the board of breaching their fiduciary duty by completing the acquisition of Grail despite regulatory concerns.

"The lawsuit is a lingering nuisance," said MacMillan.

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This is an edited and condensed version of our conversation.

Brian Sozzi: Do you see yourself as the activist whisperer?

Stephen MacMillan: I would not view myself as the activist whisperer. What I've tried to do is think like an activist. And so we try, even our board, to be our own best activist.

I will say it's also listening to them. I think the biggest issue that's happening in corporate America — it's almost like we're becoming like political parties that we view activism as bad as opposed to thinking there's usually a reason activists get involved.

I think a lot of boards' first reaction is to lawyer up. You hire all the defense advisors, and people go to their corners. Whereas my style has been go talk to them and hear where they're coming from.

How do you prepare to meet with an activist investor?

Really by opening my ears ... And I probably don't do nearly the prep. Because I do think frankly, what a lot of people are doing is they're spending all their time with lawyers and bank defense. People prepping, and they're prepping answers, instead of listening.

What I've found is the activists have a theory on the business that's not actually that good. But they have a reason to have got involved, which is an underperformance in some fashion, whether it's capital allocation, stock price, bad acquisition, or mix of businesses.

What has been your approach to dealing with Carl Icahn?

It has always been to talk and listen. In my early days at Hologic, I went to his office a number of times and listened to what he was advocating, and then helped him to understand different things.

For example, at Hologic, he wanted to break the company up. And then he wanted to cut costs. And what I shared with him ultimately was, hey, the businesses were too small to really be broken up ... And cutting costs wasn't the goal because what we really need to do is accelerate the top line.

What's good is he actually believes in great CEOs and supports them, and he's much more reasonable at saying, OK, you know the business. If that's what you think, I'm going to hold you accountable, but I'll support you.

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You are a leader trying to run a business. Do you ever take what an activist such as Carl says personally?

No. What I do think is that egos get way too involved. I think you've got to be objective. I think a lot of boards take it personally. You have to depersonalize it and recognize that maybe you're not as perfect as you think.

Many activists will make the case that boards nowadays are dysfunctional. Do you agree?

I think like anything, it's highly varied. I think there are some really well-functioning boards. I think the Hologic board is an amazing board. But we turned it over a lot. We shrunk it.

So with Carl's guidance early on, it's about getting the right people in the roles. I do think there are a lot of people on boards who might not be as qualified to help [in] these kinds of situations, who are more naive.

Has Carl been good for Illumina?

In this stage, it's hard to say that the shareholders have benefited. I do believe he was a catalyst for the board to look at both the leadership and the Grail decision.

Do you see any resolution coming?

I'm very proud, frankly, that he's not pursued the proxy contest. I think one of the great things that doesn't get the headlines here — but I'm happy that it doesn't — is that we avoided a proxy contest this year. And we're moving forward in all the right ways. The lawsuit is a lingering nuisance.

I am sure you watched the boardroom battle between Disney CEO Bob Iger and activist Nelson Peltz. What advice would you give to Bob Iger now that he has thwarted Peltz?

You have got to get serious about succession. To me, that's where the Disney board has failed. They've kicked it down the road. They chose somebody. It does not feel like that board has been serious. I think he's got to find somebody truly to hand the company over to.

Before I let you go, what is it like to meet with Carl Icahn? Not many people get to do that.

Any time I've been with him, it has been just a very constructive discussion. I actually find him in person even better than on the phone.

And I think he can sometimes talk at you. He has got great anecdotes. He has tremendous experiences. You do have to let him go on a little bit and share those.

You're not going to necessarily agree with everything he says. But we've gotten into a society where it feels like you're either with me or against me, instead of: What can I learn from somebody who's got a different point of view? And he is willing to evolve his positions if a good leader puts forth a good plan.

Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter/X @BrianSozzi, Instagram @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations, or anything else? Email brian.sozzi@yahoofinance.com. Are you a CEO and want to come on Yahoo Finance Live? Email Brian Sozzi.

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