Forest Laboratories Inc.'s (FRX) board slate was backed by the proxy-advisory firm Institutional Shareholder Services, a day after billionaire activist investor Carl C. Icahn said another firm backed one of his candidates.
Icahn is well known for his efforts to push for change in boardrooms and all of Forest Labs directors are up for re-election. Icahn's High River LP affiliate put forth four nominees: Alexander J. Denner, a managing director of entities that advise Icahn-managed hedge funds; Dr. Richard Mulligan of the Harvard Medical School; Lucian A. Bebchuk, professor of law, economics, and finance and director of the program on corporate governance at Harvard Law School; and Dr. Eric J. Ende.
Yet, the proxy-advisory firm Glass Lewis & Co. only recommended a vote for Mulligan, as he currently serves on the boards of Biogen Idec Inc. (BIIB) and Enzon Pharmaceuticals Inc. (ENZN). The firm said late Tuesday that the share prices of Biogen and Enzon have increased since Mulligan became involved with their boards.
"We respectfully disagree with Glass Lewis's recommendation for Richard Mulligan," said Forest's presiding independent director Kenneth Goodman, claiming Mulligan "has an obvious conflict of interest due to his service on the board of Biogen Idec, which actively competes with Forest for new product licensing and acquisition opportunities in the areas of cardiovascular health, neurology, and infectious diseases."
Institutional Shareholder Services' backing of its entire slate reflects "the high caliber of our director candidates," Goodman added.
Recently, Egan-Jones Proxy Services also recommended shareholders vote for all of the company's nominees.
Last month, Forest Labs reported its fiscal first-quarter earnings more than doubled on fewer charges and lower expenses as revenue rose 8%.
Forest Labs has made headlines recently after it settled a federal probe over misconduct in marketing of its antidepressant Celexa and another drug last year and paid $313 million to resolve the matter. The U.S. government earlier this month dropped efforts to force the company's longtime chief executive, Howard Solomon, to step down over the illegal marketing.
Shares were recently trading down 3.6% at $33.52. The stock has risen 17% over the past year.
-By Melodie Warner, Dow Jones Newswires; 212-416-2283; firstname.lastname@example.org