Forest Labs (FRX) Independent Directors Respond to Icahn; Disappointed in Proxy Contest
Tweet Send to a FriendGet Alerts FRX Hot Sheet
Down)
Trade FRX Now!
The independent directors of Forest Laboratories, Inc. (NYSE: FRX) today sent the following letter to Carl C. Icahn:
July 12, 2012
Dear Mr. Icahn,
The independent directors of Forest Laboratories write to dispel the misimpressions that you are trying to create in your July 12 letter.
We assure you that the rejection of your settlement offer, while communicated by Mr. Solomon, was done with the full knowledge and unanimous support of Forest’s entire Board of Directors. Since you filed your 13-D on May 30 and threatened a “prolonged and contentious proxy fight,” you and Howard Solomon had several conversations concerning your perspectives on the Company and the upcoming annual election. The Board of Directors was briefed on each of these conversations, including the settlement proposal you made, and discussed each at length. We understood that, as a condition of settlement, you insisted that we add to our Board Eric Ende, who was overwhelmingly rejected by our shareholders last year, and Daniel Ninivaggi, a salaried Icahn employee with absolutely no relevant experience. Avoiding a proxy contest by adding these two individuals to the Board may have been expedient, but we must consider the quality of the candidates, and they are woefully inadequate to serve on Forest’s Board. As such, we unanimously determined that it would not be in the best interests of Forest’s shareholders to accept your proposal.
After you announced your slate of four nominees on June 19, our Nominating and Governance Committee carefully reviewed the qualifications of Messrs. Ende, Fromkin, Legault and Ninivaggi and unanimously recommended to the full Board that they be rejected. The Board discussed these candidates at length, including in executive session; unanimously determined that your four nominees are far less qualified than the Company’s nominees; and asked Mr. Solomon to convey the Board’s position to you. Taken together, they have significant conflicts of interest that compromise their independence – including one nominee who you acknowledge is not independent under NYSE standards – and lack experience in areas critical to our business such as operational and management experience and the understanding of what it takes to bring multiple new drugs to the market.
Forest’s Board contains a mix of continuing leadership and new perspectives, including three new independent directors who were added last year and have been fully engaged in this process along with the other independent directors. We are confident that our Board possesses the skills and expertise to sustain the momentum we have behind our late-stage pipeline and promising new products. Forest has one of the strongest pipelines in pharma today, and we believe most analysts and institutional investors share our view that our new products and those in development will more than offset the patent expirations of Lexapro and Namenda over time. In sum, we remain confident in the Company’s prospects, and judging from the size of your investment, we believe you share our view.
We have said repeatedly that Forest welcomes open and constructive dialogue with our shareholders, and it is disappointing that you have chosen to engage with the company only through another proxy contest, which does not serve our shareholders’ interests. We do not believe that any shareholder is entitled to seat unqualified and unsuitable candidates or that a board should accept such candidates merely to avoid a fight. Our view is that our directors must be responsible to all of our shareholders, and cannot be dedicated to the interests of any single shareholder, especially when that shareholder has a self-serving agenda as clear as yours.
Sincerely,
/s/
Nesli Basgoz, M.D.
/s/
Christopher J. Coughlin
/s/
Dan L. Goldwasser
/s/
Kenneth E. Goodman
/s/
Gerald M. Lieberman
/s/
Lester B. Salans, M.D.
/s/
Brenton L. Saunders
/s/
Peter J. Zimetbaum, M.D.
Join StreetInsider.com FREE and get immediately alerted when news breaks on your stocks and other market items - JOIN NOW
*NEW - Download StreetInsider's FREE iPhone and iPad App - Click Here
July 12, 2012
Dear Mr. Icahn,
The independent directors of Forest Laboratories write to dispel the misimpressions that you are trying to create in your July 12 letter.
We assure you that the rejection of your settlement offer, while communicated by Mr. Solomon, was done with the full knowledge and unanimous support of Forest’s entire Board of Directors. Since you filed your 13-D on May 30 and threatened a “prolonged and contentious proxy fight,” you and Howard Solomon had several conversations concerning your perspectives on the Company and the upcoming annual election. The Board of Directors was briefed on each of these conversations, including the settlement proposal you made, and discussed each at length. We understood that, as a condition of settlement, you insisted that we add to our Board Eric Ende, who was overwhelmingly rejected by our shareholders last year, and Daniel Ninivaggi, a salaried Icahn employee with absolutely no relevant experience. Avoiding a proxy contest by adding these two individuals to the Board may have been expedient, but we must consider the quality of the candidates, and they are woefully inadequate to serve on Forest’s Board. As such, we unanimously determined that it would not be in the best interests of Forest’s shareholders to accept your proposal.
After you announced your slate of four nominees on June 19, our Nominating and Governance Committee carefully reviewed the qualifications of Messrs. Ende, Fromkin, Legault and Ninivaggi and unanimously recommended to the full Board that they be rejected. The Board discussed these candidates at length, including in executive session; unanimously determined that your four nominees are far less qualified than the Company’s nominees; and asked Mr. Solomon to convey the Board’s position to you. Taken together, they have significant conflicts of interest that compromise their independence – including one nominee who you acknowledge is not independent under NYSE standards – and lack experience in areas critical to our business such as operational and management experience and the understanding of what it takes to bring multiple new drugs to the market.
Forest’s Board contains a mix of continuing leadership and new perspectives, including three new independent directors who were added last year and have been fully engaged in this process along with the other independent directors. We are confident that our Board possesses the skills and expertise to sustain the momentum we have behind our late-stage pipeline and promising new products. Forest has one of the strongest pipelines in pharma today, and we believe most analysts and institutional investors share our view that our new products and those in development will more than offset the patent expirations of Lexapro and Namenda over time. In sum, we remain confident in the Company’s prospects, and judging from the size of your investment, we believe you share our view.
We have said repeatedly that Forest welcomes open and constructive dialogue with our shareholders, and it is disappointing that you have chosen to engage with the company only through another proxy contest, which does not serve our shareholders’ interests. We do not believe that any shareholder is entitled to seat unqualified and unsuitable candidates or that a board should accept such candidates merely to avoid a fight. Our view is that our directors must be responsible to all of our shareholders, and cannot be dedicated to the interests of any single shareholder, especially when that shareholder has a self-serving agenda as clear as yours.
Sincerely,
/s/
Nesli Basgoz, M.D.
/s/
Christopher J. Coughlin
/s/
Dan L. Goldwasser
/s/
Kenneth E. Goodman
/s/
Gerald M. Lieberman
/s/
Lester B. Salans, M.D.
/s/
Brenton L. Saunders
/s/
Peter J. Zimetbaum, M.D.
Join StreetInsider.com FREE and get immediately alerted when news breaks on your stocks and other market items - JOIN NOW
*NEW - Download StreetInsider's FREE iPhone and iPad App - Click Here
You May Also Be Interested In
- Tessera (TSRA), Starboard Reach Agreement Over Board Composition
- CalPERS Wants JPMorgan (JPM) CEO, Chairman Role Seperated
- Headline, Performance Risk Pressure SAC Capital; May Close to New Investors
Create E-mail Alert Related Categories
Corporate News, Hedge Funds, Management ChangesRelated Entities
Carl Icahn
Login with Facebook
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
