UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment
No. )
Filed by
Registrant
x
Filed by
a Party other than the Registrant
o
Check the
appropriate box:
o
Preliminary
Proxy Statement
x
Definitive Proxy Statement
o
Definitive
Additional Materials
o
Soliciting Material Pursuant to §240.14a-12
Forest
Laboratories,
Inc.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment
of filing fee (Check the appropriate box):
x
No fee
required.
o
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
1) Title
of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
o
Fee
paid previously with preliminary materials:
o
Check
box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its
filing.
1) Amount
previously paid:
2) Form, Schedule or Registration Statement No.:
FOREST
LABORATORIES, INC.
NOTICE
OF 2009 ANNUAL MEETING OF STOCKHOLDERS
The
Annual Meeting of the Stockholders of Forest Laboratories, Inc. will be held on
August 10, 2009 at 10:00 a.m., at JP Morgan Chase & Co. Corporate
Headquarters, 277 Park Avenue, New
York,
New York
10017. We are holding this meeting to:
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1.
|
Elect
the eight directors named in this Proxy Statement (Proposal
1);
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2.
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Seek
an advisory vote on the Company’s executive compensation program (Proposal
2);
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3.
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Ratify
the selection of BDO Seidman, LLP as our independent registered public
accounting firm for the fiscal year ending March 31, 2010 (Proposal 3);
and
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4.
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Transact
such other business as may properly be brought before the
meeting.
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The
record date for the Annual Meeting is June 19,
2009.
Only Forest
stockholders of record at the close of business on that date may vote at the
meeting or any adjournment of the meeting. A copy of the Annual
Report for the fiscal year ended March 31, 2009 is being mailed with this Proxy
Statement.
You
are invited to attend the meeting. Whether or not you plan to attend
the meeting, please vote by mail, by telephone, or via the Internet in order to
be certain your shares are represented at the meeting.
By Order
of the Board of Directors
WILLIAM
J. CANDEE, III,
Secretary
New York,
New York
FOREST
LABORATORIES, INC.
909
THIRD AVENUE
NEW
YORK, NEW YORK 10022
PROXY
STATEMENT
This
Proxy Statement contains information related to our Annual Meeting of
Stockholders to be held on Monday,
August 10, 2009,
beginning at 10:00 a.m. at JP Morgan Chase & Co. Corporate Headquarters, 277
Park Avenue, New York, New York 10017, and at any adjournments
thereof. This Proxy Statement is being sent to stockholders on or
about
June
30
,
2009. You should review this information together with our 2009
Annual Report to Stockholders, which accompanies this Proxy
Statement.
Information
about the Meeting
Q:
Why did you send me this Proxy Statement?
A: We
sent you this Proxy Statement and the enclosed proxy card because the Board of
Directors (the Board) of Forest Laboratories, Inc. (we or Forest or the Company)
is soliciting your proxy to vote at our 2009 Annual Meeting of Stockholders (the
meeting) to be held on Monday, August 10, 2009 and at any adjournments of the
meeting. This Proxy Statement summarizes information that is intended
to assist you in making an informed vote on the proposals described in this
Proxy Statement.
Q:
Who can vote at the Annual Meeting?
A: Only
stockholders of record as of the close of business on June 19, 2009 are entitled
to vote at the meeting. On that date, there were
301,676,514
shares of our
common stock (each, a share) outstanding and entitled to vote.
Q:
How many shares must be present to conduct the Annual Meeting?
A: We
must have a “quorum” present in person or by proxy to hold the Annual
Meeting. A quorum is a majority of the outstanding shares entitled to
vote. Abstentions and broker non-votes (defined below) will be
counted for the purpose of determining the existence of a quorum.
Q:
What matters are to be voted upon at the Annual Meeting?
A: Three
proposals are scheduled for a vote:
·
|
Election
of the eight directors named in this Proxy
Statement;
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·
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Approval,
on an advisory basis, of the Company’s executive compensation philosophy,
policies and procedures; and
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·
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Ratification
of the selection of BDO Seidman, LLP as our independent registered public
accounting firm for the fiscal year ending March 31,
2010.
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As of the
date of this Proxy Statement, these three proposals are the only matters which
our Board of Directors intends to present at the meeting. Our Board
does not know of any other business to be presented at the
meeting. If other business is properly brought before the meeting,
the persons named on the enclosed proxy card will vote on these other matters in
their discretion.
Q:
How does the Board recommend that I vote?
A: The
Board recommends that you vote FOR the election of each of the nominees for
director; FOR the proposal to approve (on an advisory basis) the Company’s
executive compensation philosophy, policies and procedures; and FOR the proposal
to ratify the selection of BDO Seidman, LLP as our independent registered public
accounting firm for the fiscal year ending March 31, 2010.
Q:
How do I vote before the meeting?
A: You
may vote your shares by mail by filling in, signing and returning the enclosed
proxy card. Most of our stockholders may also vote their shares by
telephone or via the Internet. The instructions for voting by
telephone or via the Internet can be found with your proxy
card.
If you vote by
telephone or via the Internet, you do not need to return your proxy
card.
With respect to the election of each Director nominee,
the proposal to approve, on an advisory basis, the Company’s executive
compensation philosophy, policies and procedures, and the ratification of the
selection of BDO Seidman, LLP as Forest’s independent registered public
accounting firm for the fiscal year ending March 31, 2010, you may vote “For” or
“Against” or abstain from voting.
Q:
May I vote at the meeting?
A: Yes,
you may vote your shares at the meeting if you attend in
person.
Even if you
plan to attend the meeting, we recommend that you also submit your proxy or
voting instructions as described above so that your vote will be counted if you
later decide not to attend the meeting.
Q:
How do I vote if my broker holds my shares in “street name”?
A: If you
hold shares beneficially in street name, you may vote by submitting voting
instructions to your broker. For directions on how to vote shares
held beneficially in street name, please refer to the voting instruction card
provided by your broker.
Q:
What should I do if I receive more than one set of proxy materials?
A: You
may receive more than one set of these proxy materials, including multiple
copies of this Proxy Statement and multiple proxy cards or voting instruction
cards. For example, if you hold your shares in more than one
brokerage account, you may receive a separate voting instruction card for each
brokerage account in which you hold shares. If you are a stockholder
of record and your shares are registered in more than one name, you will receive
more than one proxy card. Please complete, sign, date and return
each
proxy card and
voting instruction card that you receive to ensure that all your shares are
voted.
Q:
How many votes do I have?
A: Each
share of common stock that you own as of the close of business on June 19, 2009
entitles you to one vote on each matter voted upon at the Annual
Meeting. As of the close of business on June 19, 2009, there were
301,676,514 shares of our common stock outstanding.
Q:
May I change my vote?
A: Yes,
you may change your vote or revoke your proxy at any time before the vote at the
meeting. You may change your vote prior to the meeting by executing a
valid proxy bearing a later date and delivering it to us prior to the meeting at
Forest Laboratories, Inc., Attention: Corporate Secretary, 909 Third Avenue, New
York, New York 10022. You may withdraw your vote at the meeting and
vote in person by giving written notice to our Corporate
Secretary. You may also revoke your vote without voting by sending
written notice of revocation to our Corporate Secretary at the above
address.
Q:
How are my shares voted if I submit a proxy but do not specify how I want to
vote?
A: If you
submit a properly executed proxy card but do not specify how you want to vote,
your shares will be voted “FOR” the election of each of the nominees for
director, “FOR” the proposal to approve, on an advisory basis, the Company’s
executive compensation philosophy, policies and procedures, and “FOR” the
ratification of the selection of BDO Seidman, LLP as our independent registered
public accounting firm for the fiscal year ending March 31, 2010, and in the
discretion of the persons named as proxies on all other matters that are
properly brought before the meeting.
Q:
What vote is required to elect Directors?
A: As
described in the Company’s Corporate Governance Guidelines, in an uncontested
election, a director will be elected by a vote of the majority of the votes
cast. A majority of votes cast means that the number of shares cast
“FOR” a director’s election exceeds the number of votes cast “AGAINST” such
director’s election. In a contested election the directors will be
elected by the vote of a plurality of the votes cast. A contested
election will occur if a stockholder has timely and properly nominated a person
for election to the Board and has not timely withdrawn such
nomination. In either case, abstentions and broker non-votes will
have no effect on the outcome of the election.
Q:
What happens if a Director does not receive a majority of the votes
cast?
A:
Pursuant to our By-Laws and Corporate Governance Guidelines, the Board expects
an incumbent director to tender his or her irrevocable resignation if he or she
fails to receive the required number of votes cast for his or her
re-election. In order to ensure that the Company always has a fully
functioning Board, if an incumbent director fails to receive the required number
of votes cast, he or she continues as a holdover director. The
Corporate Governance Committee will act on an expedited basis to determine
whether to accept or reject the director’s resignation and will submit such
recommendation to the Board for prompt consideration. The Corporate
Governance Committee and the Board may consider any factors they deem relevant
in deciding whether to accept a director’s resignation. The Board
will make its decision public as soon as practicable following the
meeting.
Q:
What vote is required to approve the stockholder advisory vote on the Company’s
executive compensation program?
A: For
approval of this proposal, the proposal must receive the “FOR” vote of a
majority of the shares present in person or by proxy and entitled to vote on the
matter. Abstentions will have the same effect as a vote against the
proposal.
Q:
What vote is required to ratify the selection of BDO Seidman, LLP as Forest’s
independent registered public accounting firm for the fiscal year ending March
31, 2010?
A: For
approval of this proposal, the proposal must receive the “FOR” vote of a
majority of the shares present in person or by proxy and entitled to vote on the
matter. Abstentions will have the same effect as a vote against the
proposal.
Q:
What is a broker non-vote?
A: When
shares are held in “street name”, a broker non-vote may occur when a bank or
brokerage firm does not vote on a proposal because it does not have
discretionary voting power and has not received instructions from the beneficial
owner of the shares. A broker non-vote is counted for the purpose of
determining whether a quorum is present. Under the current rules of
the New York Stock Exchange (NYSE), your broker is permitted to vote your shares
on certain routine matters, such as the election of directors, the advisory vote
on the Company’s executive compensation program, and the ratification of the
selection of BDO Seidman, LLP as our independent registered public accounting
firm for the fiscal year ending March 31, 2010, even if you do not instruct the
broker how to vote.
Q:
Who will count the votes?
A: Votes
will be counted by two independent inspectors of election appointed for the
meeting.
Q:
Who pays for the solicitation of proxies?
A: We
will pay for the entire cost of soliciting proxies. We will also
reimburse brokerage firms, banks and other agents for the cost of forwarding
proxy materials to beneficial owners. In addition, our directors and
employees may solicit proxies in person, by telephone, via the Internet, or by
other means of communication. Directors and employees will not be
paid any additional compensation for soliciting proxies, but The Proxy Advisory
Group, LLC, our third party proxy solicitor, will be paid its customary fee,
estimated to be about $12,000, if it renders solicitation services.
Q:
How can I find out the results of the voting at the Annual Meeting?
A:
Preliminary voting results will be announced at the Annual
Meeting. Final voting results will be published in our Quarterly
Report on Form 10-Q for the period ending September 30, 2009.
SECURITY
OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The
following table sets forth, as of June 19, 2009, the number of shares of common
stock owned beneficially by any persons we know to be beneficial owners of more
than five percent of our outstanding shares, each of our directors and each of
our executive officers named in the Summary Compensation Table below and all of
our directors and executive officers as a group:
Name and Address of Beneficial
Owner
|
Amount
and Nature of
Beneficial
Ownership
|
Percent
of Class
|
5% Stockholders
(1)
|
|
|
Wellington
Management Company, LLP
75
State Street
Boston,
MA 02109
|
42,044,790
|
13.94%
|
Vanguard
Specialized Funds – Vanguard
Health
Care Fund
100
Vanguard Blvd.
Malvern,
PA 19355
|
30,133,000
|
9.99%
|
ClearBridge
Advisors, LLC
620
8
th
Avenue
New
York, NY 10018
|
24,078,462
|
7.98%
|
Barclays
Global Investors, NA.
45
Fremont Street
San
Francisco, CA 94105
|
21,912,673
|
7.26%
|
Fairholme
Capital Management, LLC
4400
Biscayne Blvd., 9th Floor
Miami,
FL 33137
|
20,437,332
|
6.77%
|
Named Executive Officers and
Directors
|
|
|
|
|
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Howard
Solomon
|
6,202,945
(2)
|
2.06%
|
|
|
|
Lawrence
S. Olanoff, M.D., Ph.D.
|
577,281
(3)
|
*
|
|
|
|
Nesli
Basgoz, M.D.
|
24,500
(4)
|
*
|
|
|
|
William
J. Candee, III
|
52,183
(5)
|
*
|
|
|
|
George
S. Cohan
|
83,000
(6)
|
*
|
|
|
|
Dan
L. Goldwasser
|
51,030
(7)
|
*
|
|
|
|
Kenneth
E. Goodman
|
209,750
(8)
|
*
|
|
|
|
Lester
B. Salans, M.D.
|
45,000
(9)
|
*
|
|
|
|
Elaine
Hochberg
|
660,899
(10)
|
*
|
|
|
|
Francis
I. Perier, Jr.
|
170,682
(11)
|
*
|
|
|
|
Marco
Taglietti, M.D.
|
54,250
(12)
|
*
|
|
|
|
All
directors and executive officers as a group
|
8,499,112
(13)
|
2.82%
|
|
|
|
|
*
Less than 1%
|
|
|
|
(1)
|
Based
upon information set forth in an Information Statement on Schedule 13G
filed by the beneficial owner with the Securities and Exchange Commission
(SEC).
|
|
(2)
|
Includes
120,000
shares of stock
that are subject to a risk of forfeiture and includes 5,250,000 shares
issuable pursuant to options that were exercisable on the record date or
which become exercisable within 60 days of the record
date.
|
|
(3)
|
Includes
80,000 shares of stock that are subject to a risk of forfeiture and
includes 225,000 shares issuable pursuant to options that were exercisable
on the record date or which become exercisable within 60 days of the
record date.
|
|
(4)
|
Includes
1,250 shares of stock that are subject to a risk of forfeiture and
includes 22,500 shares issuable pursuant to options that were exercisable
on the record date or which become exercisable within 60 days of the
record date.
|
|
(5)
|
Includes
1,250 shares of stock that are subject to a risk of forfeiture and
includes 38,000 shares issuable pursuant to options that were exercisable
on the record date or which become exercisable within 60 days of the
record date.
|
|
(6)
|
Includes
1,250 shares of stock that are subject to a risk of forfeiture and
includes 38,000 shares issuable pursuant to options that were exercisable
on the record date or which become exercisable within 60 days of the
record date.
|
|
(7)
|
Includes
1,250 shares of stock that are subject to a risk of forfeiture and
includes 38,000 shares issuable pursuant to options that were exercisable
on the record date or which become exercisable within 60 days of the
record date. Does not include 21,680
shares owned by
Mr. Goldwasser’s wife of which Mr. Goldwasser disclaims beneficial
ownership.
|
|
(8)
|
Includes
1,250 shares of stock that are subject to a risk of forfeiture and
includes 8,000 shares issuable pursuant to options that were exercisable
on the record date or which become exercisable within 60 days of the
record date.
|
|
(9)
|
Includes
1,250 shares of stock that are subject to a risk of forfeiture and
includes 26,000 shares issuable pursuant to options that were exercisable
on the record date or which become exercisable within 60 days of the
record date.
|
|
(10)
|
Includes
56,250 shares of stock that are subject to a risk of forfeiture and
includes 569,512 shares issuable pursuant to options that were exercisable
on the record date or which become exercisable within 60 days of the
record date and 24,560 shares which are pledged as
security.
|
|
(11)
|
Includes
55,000 shares of stock that are subject to a risk of forfeiture and
includes 112,500 shares issuable pursuant to options that were exercisable
on the record date or which become exercisable within 60 days of the
record date.
|
|
(12)
|
Includes
34,687 shares of stock that are subject to a risk of forfeiture and
includes 18,000 shares issuable pursuant to options that were exercisable
on the record date or which become exercisable within 60 days of the
record date.
|
|
(13)
|
Includes
461,187 shares of stock that are subject to a risk of forfeiture and
includes 6,494,412 shares issuable pursuant to options that were
exercisable on the record date or which become exercisable within 60 days
of the record date.
|
Section
16(a) Beneficial Ownership Reporting Compliance
Federal
securities laws require our executive officers and directors and persons owning
more than 10% of our common stock to file certain reports on ownership and
changes in ownership with the Securities and Exchange Commission
(SEC). Based on a review of our records and other information, we
believe that during fiscal year 2009, our executive officers and directors and
all persons holding more than 10% of our common stock timely filed all such
Section 16(a) reports except for reports on Form 4 reporting the delivery of
shares to the Company by each of Howard Solomon on June 6, 2008 and Dr. Lawrence
Olanoff on June 6, 2008 in satisfaction of the reporting person’s tax
obligations upon the vesting of restricted stock awards which were inadvertently
filed late.
PROPOSAL
1
ELECTION
OF DIRECTORS
Our
entire Board of Directors is elected each year at the Annual Meeting of
Stockholders. The Board is currently comprised of eight
members. Each of the nominees listed below is an incumbent director
whose nomination to serve for a one-year term was recommended by our Nominating
and Governance Committee and approved by the Board. The eight
nominees include five independent directors as defined in the NYSE rules and
regulations.
Each
nominee elected as a director will continue in office until the next annual
meeting of stockholders or until his or her successor has been elected or
appointed. Each person nominated has agreed to serve if
elected.
The
persons named as proxies intend to vote the proxies
FOR
the election of each of
the nominees unless you indicate on the proxy card a vote against or an
abstention with respect to any of the nominees. If for some reason
any director nominee is unable to serve, the persons named as proxies may vote
for a substitute nominee recommended by the Board, and unless you indicate
otherwise on the proxy card, the proxies will be voted in favor of the remaining
nominees.
The
following persons have been nominated as directors:
Name and Principal Occupation or
Position
|
Age
|
Has
Been a
Director
Since
|
Howard
Solomon
Chairman
of the Board and Chief Executive Officer.
Mr.
Solomon has served as our Chief Executive Officer since 1977.
|
81
|
1964
|
Lawrence
S. Olanoff, M.D., Ph.D.
President
and Chief Operating Officer since October 2006. President and
Chief Executive Officer at Celsion Corporation from July 2005 to October
2006. For the ten years prior to July 2005, Dr. Olanoff served
as Executive Vice President – Chief Science Officer at
Forest.
|
57
|
2006
|
Nesli
Basgoz, M.D.
Associate
Chief for Clinical Affairs, Division of Infectious Diseases, Massachusetts
General Hospital (MGH). Dr. Basgoz previously served as
Clinical Director, Infectious Diseases Division of MGH and serves as
Associate Professor of Medicine, Harvard Medical School.
|
51
|
2006
|
William
J. Candee, III
Co-Chairman
of the Board of Directors and a principal of TXX Services, LLC, a
transportation company with operations in New York, New Jersey and
Connecticut. For more than five years prior to June 2004, Mr.
Candee was a member of or of counsel to the law firm of Rivkin Radler,
LLP.
|
82
|
1959
|
George
S. Cohan
President,
The George Cohan Company, Inc., consultants, since June 1989.
|
85
|
1977
|
Dan
L. Goldwasser
Shareholder,
Vedder Price, P.C., Attorneys at Law, since May 1992.
|
69
|
1977
|
Kenneth
E. Goodman
Former
President and Chief Operating Officer of Forest (December 1998 to
September 2006). For eighteen years prior thereto, Mr. Goodman
served as Forest’s Vice President – Finance and Chief Financial Officer
and in addition served as Executive Vice President – Operations since
February 1998.
|
61
|
1998
|
Lester
B. Salans, M.D.
Clinical
Professor and member of the Clinical Attending Staff Internal Medicine,
Mount Sinai Medical School. Prior thereto Dr. Salans was Vice
President – Research at Sandoz Pharmaceutical Corporation.
|
73
|
1998
|
CORPORATE
GOVERNANCE
We seek
to follow best practices in corporate governance in a manner that is in the best
interests of our business and our stockholders. We are in compliance
with the corporate governance requirements imposed by the Sarbanes-Oxley Act,
the SEC and the NYSE and will continue to review our policies and practices to
meet ongoing developments in this area.
Code
of Business Conduct and Ethics
All of
our employees, including our Chief Executive Officer (CEO), Chief Financial
Officer (CFO), all other senior financial officers and all other executive
officers, are required to comply with our Code of Business Conduct and
Ethics. You can access our Code of Business Conduct and Ethics by
clicking on the “Corporate Governance” link in the “Investors” section of our
website at
www.frx.com
. The
Code of Business Conduct and Ethics is also available in print to any requesting
stockholder. We will post any amendments to or waivers of our Code of
Business Conduct and Ethics on our website.
Corporate
Governance Guidelines
Our
Corporate Governance Guidelines reflect the principles by which we
operate. From time to time, the Nominating and Governance Committee
and the Board review and revise our Corporate Governance Guidelines in response
to regulatory requirements and evolving best practices. This past
year the Board amended the Corporate Governance Guidelines to provide, among
other things, for majority voting for the election of the Company’s directors
and to include a clawback policy applicable to executive bonuses paid based on
our financial statements. You can access our Corporate Governance
Guidelines by clicking on the “Corporate Governance” link in the “Investors”
section of our website at
www.frx.com
. The
Corporate Governance Guidelines are also available in print to any requesting
stockholder.
Disclosure,
Legal Compliance and Risk Management Committee
The
Disclosure, Legal Compliance and Risk Management Committee (the Disclosure
Committee) is made up of the following members of senior management: Chief
Operating Officer (COO), CFO, Chief Commercial Officer, and Vice President –
General Counsel. The primary purpose of the Disclosure Committee is to review
and evaluate our disclosure documents, to develop and monitor a program of risk
assessment and management and to evaluate legal compliance and compliance with
our Code of Business Conduct and Ethics. The Disclosure Committee met
four times during the fiscal year ended March 31, 2009. The
Disclosure Committee does not have oversight responsibility for financial
matters, including financial statements and systems of internal control over
financial reporting, which are monitored by the Company’s Audit
Committee.
Compliance
Committee
We have
established a Compliance Committee chaired by our President and
COO. Our Compliance Committee is responsible for overseeing our
program for compliance with applicable laws and regulations specific to the
pharmaceutical industry. The Compliance Committee includes senior management and
senior departmental personnel from various corporate divisions (marketing,
contract-customer operations, medical and scientific affairs, sample policy
compliance, operations, corporate quality management, internal audit and legal
counsel). Other personnel are invited to participate from time to
time as specific issues warrant. The Committee meets approximately
every six weeks to review issues related to our Comprehensive Compliance
Program, establish and approve compliance policies and provide support, guidance
and advice to our Senior Director of Compliance regarding the compliance
program.
Certain
Relationships and Related Persons Transactions
The
Company’s written Code of Business Conduct and Ethics provides that all
conflicts of interest, including transactions with Related Persons (as defined
in Item 404 of Regulation S-K), are prohibited unless approved by the Company’s
Board of Directors or a Committee of the Board. In addition, all
directors and executive officers are required to annually complete a
questionnaire to identify their related interests and are required to notify the
Company of changes in that information. These reports are reviewed in
the first instance by the Company’s outside counsel. If members of
management or the Board become aware of a related party transaction, then with
respect to
matters
other than executive officer compensation, the Audit Committee is responsible
for reviewing and approving or ratifying any transaction or series of
transactions in which the Company or a subsidiary is a participant, the amount
involved exceeds $120,000 and a Related Person has a direct or indirect material
interest. The Compensation Committee is responsible for annually
reviewing and approving compensation arrangements with executive officers of the
Company whose annual compensation exceeds $120,000. All transactions
reported herein were approved in accordance with these policies and
procedures.
David
Solomon, our CEO’s son, has been employed by Forest since March 26,
2001. Mr. Solomon’s position is Vice President – Business Development
and Strategic Planning. During the 2009 fiscal year, Mr. Solomon’s
total compensation was approximately $508,652 and he was awarded options
covering 25,000 shares and a restricted stock award of 30,000 shares under the
2007 Equity Incentive Plan in connection with his employment with
Forest.
BOARD
MEETINGS; COMMITTEES
Board
of Directors Meetings and Attendance of Directors
The Board
held six meetings during the fiscal year ended March 31, 2009. During
fiscal year 2009, each of the directors attended 75% or more of the combined
total meetings of the Board and the respective committees on which he or she
served. Directors are required to make every reasonable effort to
attend the Annual Meeting of Stockholders. All members of the Board
except Dr. Salans attended our 2008 Annual Meeting of Stockholders.
Director
Independence
The Board
has affirmatively determined that the following directors have no material
relationship with us and are independent within the meaning of Securities
Exchange Act Rule 10A-3 and within the NYSE definition of
“independence”: Nesli Basgoz, M.D., William J. Candee, III, George S.
Cohan, Dan L. Goldwasser and Lester B. Salans, M.D. To assist in
making the independence determination, the Board has adopted Director
Qualification Standards as part of our Corporate Governance
Guidelines. The Director Qualification Standards satisfy the NYSE
independence requirements. A copy of these standards is attached to
this Proxy Statement at Appendix A. Independent directors receive no
compensation from us for service on the Board or the Committees other than
directors’ fees and non-discretionary grants under our 2007 Equity Incentive
Plan.
Executive
Sessions; Presiding Director
As
required by the NYSE listing standards, our non-management directors meet in
executive session at which only non-management directors are present on a
regularly scheduled basis. Historically, our non-management directors
choose the presiding director for each meeting in executive session by majority
vote on a meeting by meeting basis.
In
accordance with our recently adopted amendments to our Corporate Governance
Guidelines, the Board is in the process of selecting a presiding director from
among the Company’s “independent directors” within the meaning of the applicable
rules of the SEC and the NYSE. The presiding director will be
responsible for, among other things, presiding at all meetings at which the
Chairman is not present, including executive sessions of the independent
directors, and apprising the Chairman of the issues considered at such meetings,
and, in consultation with the other independent directors, advising the Chairman
as to an appropriate schedule of board meetings and reviewing and providing the
Chairman with input regarding the agenda for board meetings.
Communications
with Directors
You may
contact the entire Board of Directors, any Committee, the non-management
directors as a group or any individual director by calling our Audit Committee
Hotline at 1-800-461-0825. An outside vendor collects all reports or
complaints and delivers them to the Audit Committee. The Audit
Committee will forward all correspondence to the appropriate director or group
of directors. You are also welcome to communicate directly with the
Board at the Annual Meeting of Stockholders.
Board
Committees
The Board
has three standing committees: the Audit Committee, the Compensation Committee
and the Nominating and Governance Committee. All of the members of
the Audit Committee, the Compensation Committee and the Nominating and
Governance Committee are independent directors within the meaning of the NYSE
Listing Standards Securities and Exchange Act of 1934 Rule 10A-3. Each of the
Committees has the authority to retain independent advisors and consultants,
with all fees and expenses to be paid by Forest. The Board-approved
charters of the Committees are available on our website under the “Investors”
link at
www.frx.com
. The
charters are also available in print to any requesting stockholder.
Audit
Committee
. For the fiscal year ended March 31, 2009, the Audit
Committee consisted of William J. Candee, III (the Chairman), Dan L. Goldwasser
and Lester B. Salans, M.D. The Board has determined that Dan L.
Goldwasser qualifies as an “audit committee financial expert” for purposes of
the federal securities laws.
The Audit
Committee’s primary responsibilities are to: (i) oversee our financial reporting
principles and policies and internal control systems, including review of our
quarterly and annual financial statements; (ii) review and monitor the
performance and independence of our independent registered public accounting
firm and the performance of the internal auditing department; (iii) provide an
open avenue of communication among the independent registered public accounting
firm, financial and senior management, the internal audit department and the
Board; and (iv) appoint (subject to stockholder ratification), evaluate,
compensate and where appropriate, terminate and replace our independent
registered public accounting firm. The Audit Committee held seven
meetings during fiscal year 2009.
Compensation
Committee
. The Compensation Committee is composed of Messrs.
Candee, Cohan, Goldwasser (the Chairman) and Dr. Salans. Pursuant to
the Compensation Committee Charter, the Committee is responsible for (i)
discharging the Board’s responsibilities relating to compensation of our
executive officers and (ii) producing an annual report on executive compensation
for inclusion in our Proxy Statement in accordance with applicable rules and
regulations. During the fiscal year ended March 31, 2009, the
Compensation Committee held one meeting at which the Committee made
recommendations concerning compensation for our executive officers for the 2009
calendar year and granted stock options and stock awards under the 2007 Equity
Incentive Plan. The Committee approved all other equity awards
granted during the year at regularly scheduled Board meetings.
Nominating and Governance
Committee
. The Nominating and Governance Committee is composed
of Messrs. Candee (the Chairman), Cohan, Goldwasser and Dr.
Salans. The Committee’s responsibilities include (i) identifying
individuals qualified to become Board members consistent with criteria approved
by the Board and recommending that the Board select the director nominees for
the next Annual Meeting of Stockholders; (ii) developing and recommending to the
Board the Corporate Governance Guidelines; and (iii) overseeing evaluation of
the Board and management. The Nominating Committee held one
meeting during fiscal
year 2009.
The
Nominating Committee has established a process for identifying and evaluating
nominees for director. Although the Nominating Committee will
consider nominees recommended by stockholders, the Nominating Committee believes
that its process for identifying and evaluating nominees is designed to produce
nominees that possess the educational, professional, business and personal
attributes that are best suited to further Forest’s purposes. Any
interested person may recommend a nominee by submitting the nomination, together
with appropriate biographical information, to the Nominating and Governance
Committee, c/o the Corporate Secretary, Forest Laboratories, Inc., 909 Third
Avenue, New York, New York 10022. All recommended candidates will be
considered using the criteria set forth in our Corporate Governance
Guidelines.
The
Nominating Committee will consider, among other factors, the following to
evaluate recommended nominees:
·
|
The
Board’s current composition, including expertise, diversity, balance of
management and non-management
directors;
|
·
|
Independence
and other qualifications required or recommended by applicable laws, rules
and regulations (including NYSE requirements) and Forest’s policies and
procedures; and
|
·
|
The
general qualifications of potential nominees, including, but not limited
to: personal integrity, loyalty to Forest and concern for its success and
welfare; experience at strategy and policy setting, high-level leadership
experience in business; breadth of knowledge about issues affecting
Forest; an ability to work effectively with others; sufficient time to
devote to Forest; and freedom from conflicts of
interest.
|
Named
Executive Officers of Forest
|
Name
|
Age
|
Position with Forest
|
|
|
|
Howard
Solomon
|
81
|
Chairman
of the Board and Chief Executive Officer
|
|
|
|
Lawrence
S. Olanoff, M.D., Ph.D.
|
57
|
President
and Chief Operating Officer
|
|
|
|
Elaine
Hochberg
|
52
|
Senior
Vice President – Marketing and Chief Commercial Officer
|
|
|
|
Francis
I. Perier, Jr.
|
49
|
Senior
Vice President – Finance and Chief Financial Officer
|
|
|
|
Marco
Taglietti, M.D.
|
49
|
Vice
President – Research and
Development
|
Set forth
below is certain biographical information concerning our executive officers who
are not also directors:
Elaine
Hochberg is our Senior Vice President – Marketing since December 1999 and Chief
Commercial Officer since December 2007. Ms. Hochberg joined us in
June 1997 as Vice President – Marketing of our wholly-owned subsidiary Forest
Pharmaceuticals, Inc. In February 1998, she was promoted to Vice
President – Marketing. Prior to joining us in 1997, Ms. Hochberg was
Assistant Vice President – Marketing at Wyeth-Lederle Laboratories.
Francis
I. Perier, Jr. is our Senior Vice President – Finance and Chief Financial
Officer since September 2004. From March 2004 until joining us in
September 2004, Mr. Perier was Vice President – Finance – Operations Planning –
Americas Medicines at Bristol-Myers Squibb. For eight years prior to
March 2004, Mr. Perier served in senior financial positions at Bristol-Myers
Squibb including four years as Vice President – Finance, Planning, Business
Development and Information Technology at its ConvaTec
Division. Prior to that, Mr. Perier had been a partner at Deloitte
& Touche, LLP.
Marco
Taglietti, M.D. is our Vice President – Research and Development since December
2008. Dr. Taglietti joined Forest in August 2007 as Executive Vice
President – Development and Chief Medical Officer of our wholly-owned subsidiary
Forest Research Institute, Inc. Prior to joining us, Dr. Taglietti
was Senior Vice President and Head of Global Research and Development at Stiefel
Laboratories for three years. Prior to that, Dr. Taglietti was at
Schering-Plough for twelve years in positions of increasing responsibilities
including Vice President – Worldwide Clinical Research for Anti-Infectives,
Oncology, CNS, Endocrinology and Dermatology.
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
The
Compensation Committee of the Board of Directors (the Committee) is responsible
for setting and administering the policies that govern executive salaries, cash
bonus awards and equity incentive awards. The Committee reviews and
approves, or in some cases recommends for the approval of the full Board of
Directors, the annual compensation, including equity grants, for Forest’s
executive officers, including the Chairman of the Board and Chief Executive
Officer (CEO), the President and Chief Operating Officer (COO), the Senior Vice
President – Marketing and Chief Commercial Officer, the Senior Vice President –
Finance and Chief Financial Officer (CFO) and the Vice President – Research
and Development (collectively, the Named Executive Officers). The
Committee operates pursuant to a charter that further outlines the Committee’s
specific authority, duties and responsibilities.
Objectives
of the Compensation Program
The
Company’s compensation program, including its executive compensation program, is
designed to provide a compensation package that attracts, motivates and retains
outstanding executive personnel. The Committee follows several
overall principles in structuring compensation packages which principles are
intended as general guidelines which can be adapted to address the different
circumstances of the Company from year to year, as follows:
·
|
the
total compensation program should be competitive with companies with which
the Company competes for executive talent in order to attract, motivate
and retain outstanding personnel as the Committee believes that doing so
is a key element in supporting Forest’s long-term performance and creating
stockholder value;
|
·
|
the
compensation program should be simple and transparent so that it can be
easily understood by the Company’s employees and
investors;
|
·
|
the
compensation program should be flexible, capable of year-to-year
adjustments in order to reflect current compensation
trends;
|
·
|
compensation
should be established based on a “bottom-up” approach since comparable
compensation information with respect to lower level and mid-tier
executives is more current and more accurately reflects market rates due
to the higher turnover rate of personnel in such tiers as compared to the
turnover of senior level
executives;
|
·
|
compensation
should be structured in a rational pattern; that is, as an executive’s
responsibilities increase, his or her total compensation should increase,
and specifically, the portion of his or her total compensation which
consists of incentive and discretionary compensation should
increase;
|
·
|
compensation
should include a mix of cash and equity, and should include long-term
incentive compensation that fosters the continued loyalty and productivity
of the executive and aligns the executive’s interests with those of the
Company’s stockholders;
|
·
|
a
significant portion of executive compensation should be at risk by linking
such compensation to the executive’s contributions to the future
performance of the Company;
|
·
|
compensation
programs should be egalitarian to promote stockholder confidence and
maintain employee morale; that is cash merit raises to executives should
be commensurate with merit raises to non-executive employees;
and
|
·
|
reviews
of executive performance should not be limited to objective criteria drawn
from historical data which reflect only short-term achievements , but
should include subjective criteria which focus on the executive’s
contributions to the long-term performance of the
Company.
|
What
the Compensation Program is Designed to Reward
The
compensation program for the Company’s executives is designed to reward their
contributions to Forest’s achievements aimed at long-term strategic management
and enhancement of stockholder value. In order to measure the
contributions of the executive officers, the Committee reviews reports relating
to various corporate achievements and disappointments during the prior fiscal
year as well as financial information, including changes in revenues and
earnings per share during the prior fiscal years. The Chairman of the
Committee facilitates this review by preparing and reviewing with the Committee:
(i) a summary of management’s achievements and disappointments over the past
year; (ii) a comparative analysis of the Company’s compensation practices with
those of other companies within its peer group; and (iii) comparisons of
compensation increases as between executive and non-executive employees and new
hires and continuing employees.
Peer
Group Review
As noted
above, as part of its overall review of executive compensation, the Committee
conducts a comparative analysis of compensation levels paid by a peer group of
pharmaceutical companies to evaluate the competitive strength of the Company’s
compensation program. The Chairman of the Committee selected the peer
group based upon proxy materials of comparable companies (including those
provided by management as well as those selected independently) and a survey of
compensation practices in the pharmaceutical industry prepared by Towers Perrin,
a consulting firm specializing in compensation issues. The companies
which made up the Company’s peer group for fiscal year 2009
were: Allergan, Inc., Amgen Inc., Cephalon, Inc., Genentech Inc.,
Genzyme Corporation, Gilead Sciences Inc., King Pharmaceuticals, Inc., Schering
Plough Corp., Sepracor, Inc. and Celgene Corporation. In addition to
the above companies which were selected based on their comparable annual sales,
the Committee also reviewed compensation at certain larger pharmaceutical
companies (Bristol-Meyers Squibb Co., Merck & Co. Inc., Pfizer Inc., Abbott
Laboratories, Johnson & Johnson and Eli Lilly and Company) with which Forest
competes for executive talent.
Elements
of the Compensation Plan, Why Each
Element
is Chosen and How it Relates to the Company’s Objectives
The two principal elements comprising executive
compensation are cash and equity. The cash element is divided into
base salary and annual bonus and the equity element is divided into grants of
stock options and restricted stock awards which are subject to a risk of
forfeiture (stock awards). These elements complement each other and
give the Committee flexibility to create compensation packages that provide
short and long-term incentives and are competitive, yet in line with Forest’s
approach to compensation. Such approach allows the executive
sufficient cash to be competitive with other employment opportunities, while at
the same time providing the executive with a strong incentive to build
stockholder value by aligning the executive’s interests with those of our
stockholders.
Cash
Compensation:
Base Salary.
Base
salary is the primary fixed element in the Company’s compensation
program. Base salary is intended to provide an element of certainty
and security to the executive officers on an ongoing basis. Executive
salaries are reviewed on an annual basis (with adjustments generally taking
effect on January 1 of each year), as
well as
at the time of a promotion or other material change in
responsibilities. Increases in salary are based on an evaluation of
the individual’s performance and level of pay compared to the salaries paid to
persons in similar positions by pharmaceutical companies in this year’s peer
group, and have generally been in the lower range of such benchmark
data. The Committee also takes into account the percentages used by
management to determine annual base salary increases for the Company’s
non-executive employees when determining the appropriate percentage increases to
be paid to its executives.
Bonus.
The annual
cash bonus program is “at risk” compensation designed to reward the Company’s
executive officers for achievement of key operational goals that the Committee
believes will provide the foundation for creating long-term stockholder
value. The Committee does not use a formula to determine bonuses but
rather reviews performance during the year, taking into account significant
accomplishments, revenues and changes in the Company’s earnings per
share. In addition to the foregoing, as is the practice in the
context of salary reviews, the Committee also reviews bonus payments to
executive officers of companies in the Company’s peer group.
Equity
Awards:
Given the
long-term nature of the achievement of key objectives in the pharmaceutical
business, the Company believes that incentivizing executives to focus on
long-term performance is of particular importance. The Company
believes that one of the most effective ways to accomplish this objective is to
provide executive officers with equity awards. Equity ownership also
aligns the interests of executive officers with those of their fellow
stockholders since its value is dependent on the value of the Company’s
stock. Equity awards are typically subject to vesting or forfeiture
provisions which operate to help encourage employees to maintain their
employment with Forest. For these reasons, equity compensation is
typically the largest element of the total annual compensation of the Named
Executive Officers.
Stock
Options.
Stock options are granted to executives as an
incentive to create long-term stockholder value. The award of stock
options achieves this purpose since the options only provide value to the
executive over time as and if there is growth in the market price of the
Company’s shares.
Stock Awards.
In
addition to stock options, the Committee issues stock awards to encourage
achievement of long-term performance goals and to serve as a retention
tool. Since the present value of a share of a stock award is greater
than the present value of a stock option covering an equal number of shares
determined in accordance with the Black-Scholes method, the Committee can grant
stock awards covering fewer shares while preserving a comparable value of the
total equity awards to employees.
Equity
awards granted to the Company’s CEO, COO and Senior Vice President – Marketing
vest as follows: options vest in full on the six-month anniversary of the grant
date, and the restrictions applicable to stock awards lapse as to 25% of the
shares covered by the award on the six-month anniversary of the grant date, as
to 50% of the shares covered by the award on the first anniversary of the grant
date and as to the remaining 25% of the shares covered by the award on the
second anniversary of the grant date.
Stock
options awarded to other executive officers generally vest as follows: 15% of
the shares underlying the option vests on each of the first four
anniversaries of the date of the grant and the remaining 40% vests on the fifth
anniversary. Stock awards to such officers generally vest as to 25%
of the shares on each of the first four anniversaries of the date of the
grant. The Committee believes these vesting schedules contribute
significantly to the retention of the Company’s executives, because they must
remain employed with the Company for a specific period of time before they can
realize value from the equity awards.
All
equity grants to executive officers are approved by the Committee, and except
for equity grants which are approved by the Committee at special meetings held
in connection with a newly hired officer, such equity grants are approved at the
Committee’s December meeting (which meeting is scheduled at the beginning of
each fiscal year). The exercise price of each stock option awarded is
the average of the high and low prices of a share of Forest’s common stock on
the NYSE on the date of the option grant. The Committee does not
backdate stock options, grant options retroactively, reprice options, or grant
options with regard to the announcement of favorable or unfavorable
information. The Company does not currently have guidelines or
requirements relating to ownership of its stock by executive officers because it
believes that the equity awards included in compensation provide sufficient
ability and encouragement to own its stock.
How
the Committee Chose Amounts: Evaluation
of
Forest’s Performance and Basis for 2009 Compensation
The
Committee meets annually in December to determine compensation levels for the
next calendar year and to award bonuses for performance during the concluding
year. In determining and making recommendations regarding
compensation, the Committee evaluates the performance achievements of the
individual and of Forest during the year from the perspectives of both long-term
growth and current results. In addition, the Committee reviews
management’s recommendation for compensation of the executive officers other
than the CEO and COO.
In
November 2008, the Chairman of the Committee circulated to the members of the
Committee a report highlighting some of the factors he considered relevant to
the Committee’s determination of executive officer compensation for the calendar
year 2009. As described above it included data from a survey of
executive compensation in the pharmaceutical industry prepared by Towers Perrin
compensation consultants and a report from management regarding Forest’s
principal achievements during calendar year 2008.
The
Committee specifically reviewed and discussed the findings set forth in the
Chairman’s report and took note of the accomplishments of Forest during calendar
2008, especially the sales and marketing effort that resulted in the continued
growth in sales of the Company’s promoted products, in particular increased
sales of Lexapro® and Namenda®. The Committee also took note of the
successful launch in calendar 2008 of the Company’s newest product, Bystolic®,
as well as the anticipated FDA approval of milnacipran. Reviewing
management’s further development of the Company’s product pipeline, the
Committee noted the successful completion of two license agreements during the
year, specifically, the in-license of NXL104 from Novexel, S.A. for use in
combination with the Company’s ceftaroline compound and the in-license of
dutogliptin from Phenomix Corporation, a compound in late stage clinical
development for the treatment of Type 2 diabetes. The Committee also
reviewed the status of various other products in the clinical development or
trial stages (noting that several of these products had achieved encouraging
results).
The
Committee acknowledged the decline of the Company’s share price from
approximately $36 per share early in 2008 to approximately $22 as of the time of
the report, but noted that the decline occurred when all stock market indices
had fallen, noting that there was a smaller percentage decline in the Company’s
share price than in the S&P 500 generally. Recognizing the issues
facing the economic markets generally, the Committee placed greater weight on
management’s performance, specifically the continued development of the
Company’s product pipeline, in evaluating and determining compensation levels
for the executive officers.
The
Committee also considered compensation information from the Towers Perrin survey
and from proxy statements of companies in the Company’s peer group along with
recommendations from management. With respect to the Named Executive
Officers, the Committee used the Towers Perrin survey as a general reference to
determine whether compensation to the Named Executive Officers was
competitive. The data contained in the survey indicated that the
Company’s revenues and earnings placed it in the middle to high range of the
pharmaceutical companies surveyed, and that the compensation levels were below
the average level paid by such similarly sized pharmaceutical companies to
officers holding comparable positions. The Committee also reviewed
compensation to executive officers within the peer group selected by the
Chairman of the Committee which was divided into two groups, the first of which
contained companies with earnings and revenues similar to the Company, and the
second group which consisted of companies with which the Company competes for
executive talent. As compared to each of these subsets of pharmaceutical
companies as well, the Company was in the lower range of compensation for
executive officers.
In
preparing its recommendations as to equity awards to be awarded for fiscal year
2009, the Committee recognized that Forest’s business model is to identify,
evaluate, acquire, develop and market pharmaceutical products. In
light of the growth of the Company’s business and increased competition in the
industry for new product opportunities, Forest is required to seek products at
an earlier stage in their development and products with a larger market
potential. Accordingly, the Company needs to attract and maintain
executives with a level of skills suited to these
challenges. Historically, Forest has hired a significant majority of
its executives from major pharmaceutical companies. To maintain this
practice and induce such executives to join Forest and to decrease the
attractiveness of the major pharmaceutical companies for Forest’s current
executives, it is important that the Company’s compensation program be
commensurate with that of the major pharmaceutical companies. In
order to close the gap in total compensation paid to the Company’s executive
officers as compared to similarly situated executive officers of comparable
companies in the Company’s peer group and to foster the Company’s goals of
executive
retention and motivation, the Committee decided to increase the stock award
portion of the executive officer compensation. Accordingly, the
Committee recommended that the number of stock awards granted to each executive
officer be approximately twice the number granted to such officer for the 2008
fiscal year.
With
respect to the stock option portion of equity compensation, the Committee
concluded that the number of shares subject to option awards granted should be
based on the executive’s position as opposed to being based on specific
achievements each year, and accordingly recommended that, with few minor
exceptions, the aggregate amount of stock options granted to each Named
Executive Officer remain unchanged from the amount awarded to such officer for
the 2008 fiscal year.
In
addition to the above factors, the Committee considered the following in setting
the amounts of compensation of the Named Executive Officers: (i) the maintenance
of a rational program of compensation for Forest’s executives, (ii) the need to
make sure that any salary increases granted to the Company’s executive officers
are in line with salary increases granted to non-executive officers and (iii)
the need to make the compensation competitive enough to discourage executive
officers from seeking employment at other major pharmaceutical
companies. This last factor was considered more significant in
connection with determining the compensation of the Named Executive Officers
other than the CEO and COO.
Named
Executive Officer Compensation
Chief Executive
Officer.
Following its discussion and analysis of the above
factors, and specifically taking note of Mr. Solomon’s contribution toward
achievement of the Company’s objectives relating to long-term growth strategies
during the year, specifically including the augmentation of the Company’s
pipeline of products, and the compensation paid to CEOs from the peer group, the
Committee approved the following compensation for Mr. Solomon: an increase in
base salary for calendar 2009 of approximately 6% to $1,270,000 and a 2008 cash
bonus of $700,000, approximately 58% of his base salary. With respect
to long-term incentive compensation, the Committee granted Mr. Solomon stock
options covering 125,000 shares and stock awards covering 120,000
shares.
Chief Operating
Officer.
Based on the Committee’s discussion and analysis of
the above factors and specifically reviewing the roles of the President and COO,
taking note of the fact that Dr. Olanoff participated in most decisions
affecting the Company and spent a large portion of his time in the medical and
clinical area during 2008 in addition to his duties overseeing the Company’s
operations, and compensation paid to COOs from the Company’s peer group, the
Committee approved the following compensation for Dr. Olanoff: an increase in
base salary for calendar 2009 of approximately 7% to $840,000 and a 2008 cash
bonus of $440,000, approximately 55% of his base salary. With respect
to long-term incentive compensation, the Committee granted Dr. Olanoff stock
options covering 75,000 shares and stock awards covering 80,000
shares.
Other Named Executive
Officers.
Following the Committee’s discussion and analysis of
the above factors, and specifically taking note of management’s recommendations,
the Committee reviewed and recommended the following compensation with respect
to Ms. Hochberg, Mr. Perier and Dr. Taglietti: (i) Ms. Hochberg received an
increase in base salary for calendar 2009 of 5.5% to $616,750 and a 2008 cash
bonus of $300,000, equaling 51.3% of her base salary; with respect to long-term
incentive compensation, Ms. Hochberg was granted stock options covering 50,000
shares and stock awards covering 50,000 shares; (ii) Mr. Perier received an
increase in base salary for calendar 2009 of 6% to $573,500 and a 2008 cash
bonus equaling 50.8% of his base salary, or $275,000; with respect to long-term
incentive compensation, Mr. Perier was granted stock options covering 50,000
shares and stock awards covering 40,000 shares; and (iii) Dr. Taglietti, who was
promoted on December 8, 2008 to the position of Vice President – Research and
Development, received an increase in base salary for calendar 2009 of
approximately 7% to $520,000 and a 2008 cash bonus of $220,000, equaling 45.3%
of his base salary; with respect to long-term incentive compensation, Dr.
Taglietti was granted stock options covering 25,000 shares and stock awards
covering 30,000 shares.
The
Committee concluded that the above figures were reasonable given the successful
operations, the strong marketing performance, the completion of product
acquisitions by Forest during the concluding year and the progress of the
Company’s research and development activities during the year and the comparable
figures for the equivalent executive officers at the companies included in the
Towers Perrin survey and the peer group selected by the Chairman of the
Compensation Committee. The compensation approved for each Named
Executive Officer is more specifically set forth in the Summary Compensation
Table on Page 18 of this Proxy Statement.
Other Executive
Officers.
The Committee, along with Mr. Solomon and Dr.
Olanoff, also reviewed and approved merit increases to base salary, cash bonuses
and equity awards for the other executive officers based on the criteria and
pursuant to the process described above. Specifically, they focused
on each proposal for base salary, bonus and equity award grants.
Post-Termination
and Other Benefits
Each of
the benefits described below was chosen to support the Company’s objective of
providing a competitive pay package. The Company does not offer
guaranteed retirement or pension plan benefits. Instead, it provides
its executive officers with the opportunity to accumulate sufficient wealth to
provide for their own retirement income through the equity awards they are
granted and the post retirement benefits described below. The post
retirement benefits described in this Section, other than benefits offered under
the deferred compensation plan, have been historically provided by the Company
pursuant to contractual obligations between the Company and certain employees,
and the substantive terms and conditions of these arrangements have continued
materially unchanged over the years. Other than revisions to the
Change in Control Agreements in connection with the amendments to Section 409A
of the Internal Revenue Code, which were required to be documented by the end of
the 2008 calendar year, the benefits described in this section are all provided
pursuant to long-standing agreements with the Company’s executive
officers. None of these benefits was materially changed by the
Committee during the 2009 fiscal year.
Severance
Payments
. The Company may terminate each of its Named
Executive Officer’s employment at any time with or without cause, or by reason
of death or disability. Additionally, each Named Executive Officer
may resign at any time without good cause. In order to attract
talented executive personnel and be consistent with peer company norms, Forest
currently has offer letters with several executive officers, including Dr.
Olanoff, Mr. Perier and Dr. Taglietti. These letters provide for a
severance guarantee for the three year period commencing as of the executive’s
start date, or if longer, for a one year period following termination of
employment. The Committee believes that the initial three year period
is appropriate to provide security to new officers who are leaving other
employment to join the Company. The guaranty is triggered if the
executive is terminated by the Company without Cause or resigns for Good Reason
(each as defined in the offer letter). A more detailed description of
the severance arrangements with the Company’s Named Executive Officers
(including the amounts payable thereunder) can be found under the heading
“Post-Termination Benefits and Change in Control” on Page 24 of this Proxy
Statement.
Deferred
Compensation
. The Company maintains a nonqualified Deferred
Compensation Plan for the benefit of certain highly compensated employees,
including its Named Executive Officers. Such plans are common within
the Company’s competitive peer group. Under this plan, full time salaried
employees who have an annual base salary of at least $150,000 may defer up to
50% of their annual base salary and up to 100% of their annual
bonuses. Deferred amounts may be invested among several investment
programs at the participant’s option. Deferred amounts are not
subject to federal or state income tax until a participant withdraws amounts
from the plan. The Company does not match any of these
funds. Further information on the deferred compensation payable to
its Named Executive Officers can be found under the heading “Nonqualified
Deferred Compensation” on Page 23 of this Proxy Statement.
Retiree Medical
Benefits
. On December 1, 1989 the Board authorized the grant
of certain lifetime medical benefits to certain senior executive officers and
their spouses upon the completion of ten years of service by such
officers. The benefit was subsequently discontinued and the only
executive officer currently employed by Forest eligible for such benefit is Mr.
Solomon. This benefit is further described under the heading
“Benefits Continuation Agreements” on Page 25 of this Proxy
Statement.
Change in Control
Agreements
. The Company has entered into change in control
agreements with several key employees, including each of its Named Executive
Officers. Each individual covered by such an agreement has made a
significant contribution to Forest and has knowledge and understanding of Forest
and its operations which would be important to maintaining continuity of
operations in the event of a change in control. Each agreement
becomes effective only upon the occurrence of a defined change in
control. Each agreement provides that the executive is entitled to
his or her salary, a non-discretionary bonus and benefits for a three year
period following a change in control if the executive’s employment is terminated
in connection with the change in control or during such three year period by the
Company without Cause or by the executive for Good Reason or Adequate Reason (as
such terms are defined in the agreement).
The
agreements serve to align the executive officers interests with those of the
stockholders during a potential change in control, by eliminating potential
distraction arising from personal concerns regarding job security. In
addition, the Company believes that these agreements encourage continued
dedication to assigned duties during periods involving a possible change in
control of Forest and protect the earned benefits of the officer against adverse
changes resulting from a change in control. In calendar 2008, these
agreements were formally amended with the intention that they would comply with
Section 409A of the Internal Revenue Code which may impose additional taxes on
executive officers for certain types of deferred compensation that are not in
compliance with Section 409A. These agreements are described in
further detail under the heading “Change in Control” on Page 25 of this
Proxy Statement.
Perquisites
. The
Company provides certain executive officers, including the Named Executive
Officers, with certain perquisites that the Committee believes are reasonable
and consistent with Forest’s overall compensation program. The cost
of the perquisites to the Company for the fiscal year ended March 31, 2009
is set forth in the “Summary Compensation Table” on Page 18 of this
Proxy Statement under the heading “All Other Compensation” and are described
further in footnote 3 to the table. The Committee does not believe
that the perquisites provided to executive officers form a material part of
their compensation. The Company does not provide loans to executive
officers. The Committee periodically reviews the levels of
perquisites and other personal benefits provided to the executive
officers.
Certain
Tax and Accounting Considerations: Deductibility
of
Executive Compensation
Section
162(m) of the Internal Revenue Code generally limits the deductibility of
compensation (other than qualified performance-based compensation) in excess of
$1,000,000 paid in a taxable year to a company’s chief executive officer and the
four other most highly compensated executive officers. The Company
considers the impact of this deductibility limitation on its compensation
program, but recognizes that there may be cases in which authorized compensation
exceeds the limits contemplated in Code Section 162(m).
Current
accounting rules, including Statement of Financial Accounting Standards No.
123(R) (SFAS 123R), “Share-Based Payment,” require the Company to record as an
expense the estimated fair market value of stock option grants and stock awards,
which reduces the Company’s reported profits. The Committee considers
this expense when determining the types and values of equity awards to be
granted to employees, including Named Executive Officers.
Compensation
Committee Report (1)
We have
reviewed and discussed with management the Compensation Discussion and Analysis
to be included in the Company’s 2009 Stockholder Meeting Schedule 14A Proxy
Statement, filed pursuant to Section 14(a) of the Securities Exchange Act of
1934 (the Proxy). Based on the reviews and discussions referred to
above, we have recommended to the Board of Directors that the Compensation
Discussion and Analysis referred to above be included in Forest’s
Proxy.
Compensation Committee
Dan L. Goldwasser
(Chairman)
William J. Candee, III
George S. Cohan
Lester B. Salans, M.D.
___________________
(1) Notwithstanding
anything to the contrary set forth in any of Forest’s previous or future filings
under the Securities Act of 1933 or the 1934 Act, the Report on Executive
Compensation by the Compensation Committee shall not be incorporated by
reference in any such filings.
EXECUTIVE
COMPENSATION
The
following table sets forth compensation for our CEO, CFO and each of our other
three most highly compensated executive officers (our Named Executive Officers)
for the fiscal years ended March 31, 2009, 2008 and 2007:
SUMMARY
COMPENSATION TABLE
Name and Principal Position
|
Year
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
|
|
|
All
Other Compensation
($)
|
|
|
Total
($) (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Howard
Solomon, Chairman
|
2009
|
|
|
1,217,500
|
|
|
|
700,000
|
|
|
|
1,066,700
|
(2)
|
|
|
2,039,231
|
(2)
|
|
|
94,568
|
(3)
|
|
|
5,117,999
|
|
and
Chief Executive Officer
|
2008
|
|
|
1,162,500
|
|
|
|
635,000
|
|
|
|
217,321
|
(4)
|
|
|
2,939,421
|
(4)
|
|
|
97,258
|
(5)
|
|
|
5,051,500
|
|
|
2007
|
|
|
1,105,000
|
|
|
|
600,000
|
|
|
|
-
-
|
|
|
|
3,616,690
|
(6)
|
|
|
62,686
|
(7)
|
|
|
5,384,376
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lawrence
S. Olanoff, M.D.,
|
2009
|
|
|
798,750
|
|
|
|
440,000
|
|
|
|
711,133
|
(2)
|
|
|
2,089,259
|
(2)
|
|
|
138,104
|
(3)
|
|
|
4,177,246
|
|
Ph.D.,
President and Chief
|
2008
|
|
|
758,750
|
|
|
|
400,000
|
|
|
|
144,881
|
(4)
|
|
|
1,590,509
|
(4)
|
|
|
84,138
|
(5)
|
|
|
2,978,278
|
|
Operating
Officer (8)
|
2007
|
|
|
317,708
|
|
|
|
100,000
|
|
|
|
-
-
|
|
|
|
360,717
|
(6)
|
|
|
31,154
|
(7)
|
|
|
809,579
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Elaine
Hochberg, Senior
|
2009
|
|
|
592,563
|
|
|
|
300,000
|
|
|
|
366,844
|
(2)
|
|
|
1,330,732
|
(2)
|
|
|
43,856
|
(3)
|
|
|
2,633,995
|
|
Vice
President
–
Marketing
|
2008
|
|
|
563,500
|
|
|
|
280,000
|
|
|
|
67,913
|
(4)
|
|
|
1,317,342
|
(4)
|
|
|
46,222
|
(5)
|
|
|
2,274,977
|
|
and
Chief Commercial Officer
|
2007
|
|
|
536,625
|
|
|
|
250,000
|
|
|
|
-
-
|
|
|
|
1,803,394
|
(6)
|
|
|
41,034
|
(7)
|
|
|
2,631,053
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Francis
I. Perier, Jr., Senior
|
2009
|
|
|
549,125
|
|
|
|
275,000
|
|
|
|
266,675
|
(2)
|
|
|
1,056,342
|
(2)
|
|
|
44,087
|
(3)
|
|
|
2,191,229
|
|
Vice
President
–
Finance
|
2008
|
|
|
525,250
|
|
|
|
240,000
|
|
|
|
54,330
|
(4)
|
|
|
913,113
|
(4)
|
|
|
47,860
|
(5)
|
|
|
1,780,553
|
|
and
Chief Financial Officer
|
2007
|
|
|
501,250
|
|
|
|
235,000
|
|
|
|
-
-
|
|
|
|
684,830
|
(6)
|
|
|
45,926
|
(7)
|
|
|
1,467,006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marco
Taglietti, M.D., Vice
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President
– Research and
|
2009
|
|
|
494,891
|
|
|
|
220,000
|
|
|
|
60,300
|
(2)
|
|
|
17,800
|
(2)
|
|
|
11,165
|
(3)
|
|
|
804,156
|
|
Development
(9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
There
are no above-market or preferential earnings on deferred
compensation. Consequently, the Summary Compensation Table does
not include earnings on deferred amounts. In addition, none of
the Named Executive Officers is eligible for pension benefits because
Forest does not have a defined benefit retirement
program.
|
(2)
|
Represents
the amount of compensation cost recognized by us in fiscal year 2009
related to stock awards and stock options granted in fiscal year 2009 and
prior years, as described in SFAS 123R. For a discussion of
valuation assumptions with respect to the 2009 fiscal year, see Note 1 to
our 2009 Consolidated Financial Statements included in our Annual Report
on Form 10-K for the year ended March 31, 2009. Please see the
“Grants of Plan-Based Awards” table on Page 19 of this Proxy
Statement for more information regarding stock awards granted in fiscal
year 2009.
|
(3)
|
This
amount includes the cost of group term life insurance and compensation
credited to the Named Executive Officers pursuant to our Savings and
Profit Sharing Plan. This Plan covers our employees and the
employees of certain of our subsidiaries. These employees
become participants in the Plan if they are employed for at least
six-months prior to the plan year-end. The Company makes
contributions to the Plan at the Board’s discretion. However
the contribution base may not exceed 25 percent of the individual plan
participant’s gross salary (up to a maximum salary of $230,000), including
allocated forfeitures for the plan year. Plan participants vest
over a period of one to five years of credited service. This
amount also includes perquisites provided to our Named Executive Officers
which have an aggregate value exceeding $10,000, including costs
associated with company cars (including insurance), company provided
lunches and membership dues. With respect to Dr. Olanoff, this
amount also includes costs associated with car service which totaled
$46,500 for fiscal year 2009 and with respect to Mr. Solomon this amount
includes $28,000 of medical expenses provided to Mr. Solomon under a
supplemental medical plan.
|
(4)
|
Represents
the amount of compensation cost recognized by us in fiscal year 2008
related to stock awards and stock options granted in fiscal year 2008 and
prior years, as described in SFAS 123R. For a discussion of
valuation assumptions with respect to the 2008 fiscal year, see Note 1 to
our 2008 Consolidated Financial Statements included in our Annual Report
on Form 10-K for the year ended March 31,
2008.
|
(5)
|
This
amount includes the cost of group term life insurance and compensation
credited to the Named Executive Officers pursuant to our Savings and
Profit Sharing Plan described under footnote 3 above. For
fiscal year 2008, the contribution base was capped at 25 percent of the
individual plan participant’s gross salary (up to a maximum salary of
$225,000), including allocated forfeitures for the plan
year. Plan participants vest over a period of one to five years
of credited service. This amount also includes perquisites
provided to our Named Executive Officers which have an aggregate value
exceeding $10,000, including costs associated with company cars (including
insurance), company provided lunches and membership dues. With
respect to Dr. Olanoff, this amount also includes costs associated with
car service which totaled $47,700 for fiscal year 2008 and with respect to
Mr. Solomon this amount includes $25,000 of medical expenses provided to
Mr. Solomon under a supplemental medical
plan.
|
(6)
|
Represents
the amount of compensation cost recognized by us in fiscal year 2007
related to stock options granted in fiscal year 2007 and prior years, as
described in SFAS 123R. For a discussion of valuation assumptions with
respect to the 2007 fiscal year, see Note 1 to our 2007 Consolidated
Financial Statements included in our Annual Report on Form 10-K for the
year ended March 31, 2007.
|
(7)
|
This
amount includes the cost of group term life insurance and compensation
credited to the Named Executive Officers pursuant to our Savings and
Profit Sharing Plan described under footnote 3 above. For
fiscal year 2007, the contribution base was capped at 25 percent of the
individual plan participant’s gross salary (up to a maximum salary of
$220,000), including allocated forfeitures for the plan
year. Plan participants vest over a period of one to five years
of credited service. This amount also includes perquisites provided
to our Named Executive Officers which have an aggregate value exceeding
$10,000, including costs associated with company cars (including
insurance), company provided lunches, membership dues and car service for
Dr. Olanoff.
|
(8)
|
Dr.
Olanoff commenced his employment as our Chief Operating Officer effective
October 30, 2006.
|
(9)
|
Dr.
Taglietti became Vice President
–
Research and Development
effective December 2008.
|
GRANTS
OF PLAN-BASED AWARDS
The
following table sets forth certain additional information regarding grants of
plan-based awards to our Named Executive Officers for the fiscal year ended
March 31, 2009:
Name
|
Grant
Date
|
|
All
Other Stock Awards: Number of Shares of Stock or Units
(#)
|
|
|
All
Other Option Awards: Number of Securities Underlying Options
(#)
|
|
|
Exercise
or Base Price of Option Awards
($)
|
|
|
Grant
Date Fair Value of Stock and Option Awards
($) (5)
|
|
Howard
Solomon
|
12/08/08
|
|
|
120,000
|
(1)
|
|
|
125,000
|
(2)
|
|
|
24.1200
|
|
|
|
4,556,900
|
|
Lawrence
S. Olanoff, M.D., Ph.D.
|
12/08/08
|
|
|
80,000
|
(1)
|
|
|
75,000
|
(2)
|
|
|
24.1200
|
|
|
|
2,927,100
|
|
Elaine
Hochberg
|
12/08/08
|
|
|
50,000
|
(1)
|
|
|
50,000
|
(2)
|
|
|
24.1200
|
|
|
|
1,871,000
|
|
Francis
I. Perier, Jr.
|
12/08/08
|
|
|
40,000
|
(3)
|
|
|
50,000
|
(4)
|
|
|
24.1200
|
|
|
|
1,498,800
|
|
Marco
Taglietti, M.D.
|
12/08/08
|
|
|
30,000
|
(3)
|
|
|
25,000
|
(4)
|
|
|
24.1200
|
|
|
|
990,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The
stock award is subject to a risk of forfeiture which lapses as to 25% of
the shares covered by the award on the six-month anniversary of the grant
date, 50% of the shares on the first anniversary and 25% of the shares on
the second anniversary of the grant
date.
|
(2)
|
The
stock option has a term of ten years and becomes exercisable as to all of
the shares covered by the option on the six-month anniversary of the grant
date.
|
(3)
|
The
stock award is subject to a risk of forfeiture which lapses as to 25% of
the shares covered by the award on each of the first four anniversaries of
the grant date.
|
(4)
|
The
stock option has a term of ten years and becomes exercisable as to 15% of
the shares covered by the option on each of the first four anniversaries
of the grant date and as to the remaining 40% of the shares covered by the
option on the fifth anniversary of the grant
date.
|
(5)
|
Represents
the value estimated by the Company for reporting purposes only in
accordance with SFAS 123R for restricted stock awards and does not
reflect whether the recipient has actually realized a financial benefit
from the awards. For additional information regarding the
valuation methodology used by the Company, see Note 1 to our 2009
Consolidated Financial Statements included in our Annual Report on Form
10-K for the year ended March 31,
2009.
|
Narrative
Addendum to the Summary Compensation
Table and Grants of
Plan-Based Awards
Equity
Plans
The only
long-term incentive compensation plan pursuant to which we presently grant
equity awards is our 2007 Equity Incentive Plan (the Equity
Plan). Pursuant to the Equity Plan, employees, including the Named
Executive Officers, may be granted options to purchase shares of common stock,
stock awards, stock appreciation rights and stock equivalent units (the
Awards). The exercise price of all options, including Incentive Stock
Options (ISOs) as defined by Section 422 of the Internal Revenue Code of 1986
(the Code), is the fair market value on the date of the grant. In
fiscal 2009, we granted only restricted stock awards and stock
options. All of our employees, our subsidiaries’ employees and our
non-employee directors are eligible to receive Awards under the Equity
Plan. The Equity Plan provides that the Compensation Committee may
determine which employees are granted Awards and the number of shares subject to
each Award. The non-employee directors are eligible for automatic
grants of stock awards and stock options as further described in the narrative
following the Directors Compensation Table on Page 26
of this Proxy Statement
under the heading “Director Compensation”.
We have
historically granted options to our employees and directors under our 1998 Stock
Option Plan, our 2000 Stock Option Plan and our 2004 Stock Option Plan (the
Prior Option Plans). Following the adoption of the Equity Plan, we
ceased issuing options under the Prior Option Plans, however all options
previously issued under the Prior Option Plans which remain outstanding continue
to be governed by the terms of such Prior Option Plans.
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
The
following table sets forth information regarding each unexercised option and
unvested stock award held by each of our Named Executive Officers as of March
31, 2009:
|
Option
Awards
|
Stock
Awards
|
Name
|
Number
of Securities Underlying Unexercised Options (#)
Exercisable
|
Number
of Securities Underlying Unexercised Options (#)
Unexercisable
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of Shares or Units of Stock That Have Not
Vested
(#)
|
Market
Value
of
Shares or
Units
of Stock
That
Have Not
Vested ($)
|
|
|
|
|
|
|
|
Howard
Solomon
|
-
-
|
125,000
(1)
|
24.1200
|
12/07/2018
|
120,000
(2)
|
2,635,200
|
|
125,000
|
-
-
|
37.2550
|
12/06/2017
|
30,000
(3)
|
658,800
|
|
200,000
|
-
-
|
51.5350
|
12/08/2016
|
-
-
|
-
-
|
|
200,000
|
-
-
|
40.2900
|
12/09/2015
|
-
-
|
-
-
|
|
200,000
|
-
-
|
42.5350
|
12/13/2014
|
-
-
|
-
-
|
|
200,000
|
-
-
|
59.0500
|
12/12/2013
|
-
-
|
-
-
|
|
400,000
|
-
-
|
48.3400
|
12/13/2012
|
-
-
|
-
-
|
|
600,000
|
-
-
|
38.1450
|
12/14/2011
|
-
-
|
-
-
|
|
2,000,000
|
-
-
|
33.4532
|
12/15/2010
|
-
-
|
-
-
|
|
1,200,000
|
-
-
|
13.1485
|
12/17/2009
|
-
-
|
-
-
|
Lawrence
S. Olanoff, M.D., Ph.D.
|
-
-
|
75,000
(1)
|
24.1200
|
12/07/2018
|
80,000
(2)
|
1,756,800
|
|
75,000
|
-
-
|
37.2550
|
12/06/2017
|
20,000
(3)
|
439,200
|
|
75,000
|
175,000
(5)
|
48.4850
|
10/30/2016
|
-
-
|
-
-
|
Elaine
Hochberg
|
-
-
|
50,000
(1)
|
24.1200
|
12/07/2018
|
50,000
(2)
|
1,098,000
|
|
7,500
|
42,500
(6)
|
37.2550
|
12/06/2017
|
18,750
(4)
|
411,750
|
|
22,500
|
52,500 (7)
|
51.5350
|
12/08/2016
|
-
-
|
-
-
|
|
22,500
|
27,500 (8)
|
40.2900
|
12/09/2015
|
-
-
|
-
-
|
|
30,000
|
20,000
(9)
|
42.5350
|
12/13/2014
|
-
-
|
-
-
|
|
50,000
|
-
-
|
59.0500
|
12/12/2013
|
-
-
|
-
-
|
|
100,000
|
-
-
|
48.3400
|
12/13/2012
|
-
-
|
-
-
|
|
150,000
|
-
-
|
38.1450
|
12/14/2011
|
-
-
|
-
-
|
|
137,012
|
-
-
|
33.4532
|
12/15/2010
|
-
-
|
-
-
|
Francis
I. Perier, Jr.
|
-
-
|
50,000
(10)
|
24.1200
|
12/07/2018
|
40,000
(11)
|
878,400
|
|
7,500
|
42,500 (6)
|
37.2550
|
12/06/2017
|
15,000
(4)
|
329,400
|
|
22,500
|
52,500 (7)
|
51.5350
|
12/08/2016
|
-
-
|
-
-
|
|
22,500
|
27,500 (8)
|
40.2900
|
12/09/2015
|
-
-
|
-
-
|
|
60,000
|
40,000
(12)
|
44.7400
|
09/30/2014
|
-
-
|
-
-
|
Marco
Taglietti, M.D.
|
-
-
|
25,000
(10)
|
24.1200
|
12/07/2018
|
30,000
(11)
|
658,800
|
|
|
|
|
|
|
|
(1)
|
The
option was granted on December 8, 2008 and has a term of ten
years. The option vests and is fully exercisable on the
six-month anniversary of the grant
date.
|
(2)
|
The
stock award was granted on December 8, 2008. The stock award is
subject to a risk of forfeiture which lapses as to 25% of the shares
covered by the award on the six-month anniversary of the grant date, 50%
of the shares on the first anniversary and 25% on the second anniversary
of the grant date.
|
(3)
|
The
stock award was granted on December 6, 2007. The stock award is
subject to a risk of forfeiture which lapses as to 25% of the shares
covered by the award on the six-month anniversary of the grant date and as
to 25% of the shares on the first three anniversaries of the grant
date.
|
(4)
|
The
stock award was granted on December 6, 2007. The stock award is
subject to a risk of forfeiture which lapses as to 25% of the shares
covered by the award on each of the first four anniversaries of the grant
date.
|
(5)
|
The
option was granted on October 30, 2006 and has a term of ten
years. The option vests and is exercisable as to 15% of the
shares underlying the option on each of the first four anniversaries of
the grant date and as to the remaining 40% on the fifth anniversary of the
grant date.
|
(6)
|
The
option was granted on December 6, 2007 and has a term of ten
years. The option vests and is exercisable as to 15% of the
shares underlying the option on each of the first four anniversaries
of the grant date and as to the remaining 40% on the fifth anniversary of
the grant date.
|
(7)
|
The
option was granted on December 8, 2006 and has a term of ten
years. The option vests and is exercisable as to 15% of the
shares underlying the option on each of the first four anniversaries of
the grant date and as to the remaining 40% on the fifth anniversary of the
grant date.
|
(8)
|
The
option was granted on December 9, 2005 and has a term of ten
years. The option vests and is exercisable as to 15% of the
shares underlying the option on each of the first four anniversaries of
the grant date and as to the remaining 40% on the fifth anniversary of the
grant date.
|
(9)
|
The
option was granted on December 13, 2004 and has a term of ten
years. The option vests and is exercisable as to 15% of the
shares underlying the option on each of the first four anniversaries of
the grant date and as to the remaining 40% on the fifth anniversary of the
grant date.
|
(10)
|
The
option was granted on December 8, 2008 and has a term of ten
years. The option vests and is exercisable as to 15% of the
shares underlying the option on each of the first four anniversaries of
the grant date and as to the remaining 40% on the fifth anniversary of the
grant date.
|
(11)
|
The
stock award was granted on December 8, 2008. The stock award is
subject to a risk of forfeiture which lapses as to 25% of the shares
covered by the award on each of the first four anniversaries of the grant
date.
|
(12)
|
The
option was granted on September 30, 2004 and has a term of ten
years. The option vests and is exercisable as to 15% of the
shares underlying the option on each of the first four anniversaries of
the grant date and as to the remaining 40% on the fifth anniversary of the
grant date.
|
OPTION
EXERCISES AND STOCK VESTED
The
following table provides information on stock option exercises and vesting of
restricted stock
during the 2009 fiscal
year:
Name
|
Option
Awards
|
Stock
Awards
|
Number
of Shares Acquired on
Exercise
(#)
|
Value
Realized
on
Exercise ($)
|
Number
of Shares Acquired on
Vesting
(#)
|
Value
Realized
on
Vesting ($)
|
Howard
Solomon
|
600,000
|
7,316,359
|
30,000
|
867,150
|
Lawrence
S. Olanoff, M.D., Ph.D.
|
-
-
|
-
-
|
20,000
|
578,100
|
Elaine
Hochberg
|
-
-
|
-
-
|
6,250
|
143,500
|
Francis
I. Perier, Jr.
|
-
-
|
-
-
|
5,000
|
114,800
|
Marco
Taglietti, M.D.
|
-
-
|
-
-
|
1,563
|
35,886
|
NONQUALIFIED
DEFERRED COMPENSATION
The
following table shows the executive contributions, earnings and account balances
for all Named Executive Officers who participate in our Deferred Compensation
Plan. The Deferred Compensation Plan allows full time salaried
employees who have an annual base salary of at least $150,000, including the
Named Executive Officers listed below, to defer up to 50% of their annual base
salary and up to 100% of their annual bonuses. Deferred amounts are
not subject to federal or state income tax until a participant withdraws amounts
from the Plan. We do not match any of these funds.
Employees
who participate in the Deferred Compensation Plan may at their option invest
deferred monies in a range of investment vehicles that generally mirror the
choices available to all employees in the Company’s 401(k) Plan. The investment
options in the Deferred Compensation Plan have returns that would be the same as
those earned on the same options in the Company’s 401(k) Plan for the 2009
fiscal year. The rates of return for funds in the Deferred
Compensation Plan ranged from:
-48.58
% to 3.13%.
Name
|
Executive
Contributions in Last Fiscal
Year
($) (1)
|
Aggregate Earnings
in Last
Fiscal
Year
($)
|
Aggregate
Withdrawals/
Distributions
($)
|
Aggregate
Balance at Last
Fiscal
Year End
($)
|
|
|
|
|
|
Lawrence
S. Olanoff, M.D., Ph.D.
|
220,000
|
(243,349)
|
-
-
|
441,110(2)
|
|
|
|
|
|
Elaine
Hochberg
|
30,000
|
(43,859)
|
-
-
|
111,082(3)
|
|
|
|
|
|
(1)
|
The
amounts set forth in this column have also been reported as “Salary” for
the fiscal year 2009 in the Summary Compensation Table on Page 18 of
this Proxy Statement.
|
(2)
|
$279,334
and $50,000 of this amount were reported as “Salary” for the fiscal years
2008 and 2007, respectively, in the Summary Compensation Table on
Page 18 of this Proxy
Statement.
|
(3)
|
$28,000
and $25,000 of this amount were reported as “Salary” for the fiscal years
2008 and 2007, respectively, in the Summary Compensation Table on
Page 18 of this Proxy
Statement.
|
POST-TERMINATION
BENEFITS AND CHANGE IN CONTROL
Severance
Arrangements
The offer
letters pursuant to which certain executive officers joined Forest, including
certain of the Named Executive Officers, include a severance guarantee for the
three year period commencing as of the executive’s start date (Initial Guarantee
Period), or if longer, a one year severance period following his termination of
employment, limited to severance and certain benefits in the event of a
termination of his employment by us without Cause or the employee’s termination
of employment for Good Reason, each as defined in the agreement (a Qualifying
Termination). The offer letters also provide for continued health coverage
during the severance period. Drs. Olanoff and Taglietti and Mr.
Perier are the only Named Executive Officers who are entitled to severance
benefits pursuant to such offer letters.
Upon a
Qualifying Termination, each such officer is entitled to receive base salary
payments for the Initial Guarantee Period, or if longer, the one year severance
period following his termination, plus one bonus payment based on the target
bonus described in the agreement, plus continued medical coverage for the
employee and his family for the same period during which he is eligible to
receive salary. In calendar 2008, these offer letters were formally
amended with the intention that they would comply with Section 409A of the
Internal Revenue Code which may impose additional taxes on executive officers
for certain types of deferred compensation that are not in compliance with
Section 409A. The potential amounts payable to Drs. Olanoff and
Taglietti and Mr. Perier pursuant to the severance obligations assuming a
termination date of March 31, 2009 are set forth in the below
table:
Name
|
Salary ($)
|
Bonus ($)
|
Continued
Health
Care Benefits ($)
(1)
|
Lawrence
S. Olanoff, M.D., Ph.D.
|
840,000
(2)
|
440,000
(3)
|
12,831
|
Francis
I. Perier, Jr.
|
573,500
(4)
|
275,000
(5)
|
19,281
|
Marco
Taglietti, M.D.
|
696,667
(6)
|
220,000
(7)
|
25,709
(8)
|
|
|
|
|
(1)
|
Includes
amounts payable for health care coverage (medical and dental) for employee
and employee’s eligible family
members.
|
(2)
|
Dr.
Olanoff is entitled to 12 months of
salary.
|
(3)
|
This
amount is the higher of last annual bonus or 50% of base
salary.
|
(4)
|
Mr.
Perier is entitled to 12 months of
salary.
|
(5)
|
This
amount is the higher of last annual bonus or 40% of base
salary.
|
(6)
|
Dr.
Taglietti is entitled to 16
months of salary
(the remaining period in the Initial Guarantee Period as of
March 31,
2009).
|
(7)
|
This
amount is the higher of last annual bonus or
30% of base
salary.
|
(8)
|
Dr.
Taglietti is entitled to 16 months of continued health care benefits (the
remaining period in the Initial Guarantee Period as of March 31,
2009).
|
Benefits
Continuation Agreements
On
December 1, 1989 the Board authorized the grant of certain medical insurance
benefits to certain senior executive officers and their spouses upon the
completion of ten years of service by such officers. The benefit is
provided to these executives and their spouses for their lifetimes following
termination of the executive’s employment with Forest. The benefit is
equivalent to the medical insurance benefits provided to the executives as of
the date of their termination or as of December 1, 1989, if more favorable,
together with payment of reasonable health care related costs. The
benefit need not be provided to the extent and for any time that the executive
obtains comparable coverage from a subsequent employer. Mr. Solomon is currently
the only executive officer who is entitled to these benefits. The
amounts payable on behalf of Mr. Solomon, assuming he had terminated his
employment as of March 31, 2009, are reasonably estimated to be equal to
$64,000
annually.
Change
in Control
The Board
has determined that it is in both our best interests and the best interests of
our stockholders to assure that we will have the continued dedication of our
executive officers, notwithstanding the possibility of a Change in
Control. The Board believes it is imperative to diminish the
inevitable distraction to the executive officers by virtue of the personal
uncertainties and risks created by a pending or threatened Change in Control and
to encourage the executive officers’ full attention and dedication to us
currently and in the event of any threatened or pending Change in Control, and
to provide the executive officers with compensation and benefits arrangements
upon a Change in Control which ensure that the compensation and benefits
expectations of the executive officers be satisfied and which are competitive
with those within our peer group. In order to accomplish these
objectives, the Board has entered into Change in Control agreements with several
key employees, including the Named Executive Officers.
Each
agreement becomes effective only upon the occurrence of a Change in Control and
provides that the executive is entitled to salary, bonus and benefits for a
three year period following a Change in Control if the executive’s employment is
terminated as a result of such Change in Control or during such three year
period by the Company without Cause or by the employee for Good Reason or for
Adequate Reason (a Qualifying Termination), each as defined in the
agreement. Subject to certain exceptions, a Change in Control is (i)
an acquisition of more than 50% of our common stock or voting securities by a
person or group not acquiring their shares directly from us, (ii) an acquisition
during any 12-month period of 30% or more of our common stock by a person or
group not acquiring their shares directly from us, (iii) a change in the
majority of the current Board or their designated successors not consented to by
such current Board or designated successors, or (iv) a merger, consolidation or
sale of all or substantially all of our assets which involves a 50% or greater
change in our stockholders or the replacement of a majority of the current Board
or their designated successors or the acquisition by a person or group of more
than 30% of our voting securities.
Upon such
Qualifying Termination, executives subject to these agreements are eligible for
the following amounts: (i) the amount of any accrued compensation obligations to
the executive through the termination date, consisting of unpaid base salary, a
pro-rated bonus and other accrued compensation through the termination date,
plus (ii) an amount equal to three times the executive’s base salary and highest
annual bonus, plus (iii) the actuarial equivalent of the employee’s benefit
under any retirement plans in which the executive participates, assuming
continued participation for a three year period following the termination
date. In addition, the executive will receive continued medical
benefits for a three year period for both the executive and his or her family,
provided however that such coverage will be secondary to any coverage the
executive obtains from a subsequent employer. Lastly, the employee
will be provided with outplacement services and any other amounts or benefits
required to be paid or
provided
under any plan or program. In calendar 2008, these agreements were
formally amended with the intention that they would comply with Section 409A of
the Internal Revenue Code which may impose additional taxes on executive
officers for certain types of deferred compensation that are not in compliance
with Section 409A.
The
following table sets forth our reasonable estimate of the potential payments to
each of our Named Executive Officers under our Change in Control Agreements if a
Change in Control occurred as of March 31, 2009:
Name
|
Salary($)
(1)
|
Bonus ($)
(2)
|
Continuation
of Benefits under Retirement
Plans ($)
(3)
|
Continuation
of
Welfare
Benefits
($) (4)
|
Howard
Solomon
|
3,810,000
|
2,275,000
|
80,214
|
85,343
|
Lawrence
S. Olanoff, M.D., Ph.D.
|
2,520,000
|
1,430,000
|
84,714
|
47,399
|
Elaine
Hochberg
|
1,850,256
|
975,000
|
81,051
|
107,315
|
Francis
I. Perier, Jr.
|
1,720,500
|
893,750
|
78,516
|
61,639
|
Marco
Taglietti, M.D.
|
1,567,500
|
715,000
|
88,800
|
59,803
|
|
|
|
|
|
|
(1)
|
This
amount is equal to three times the respective executive officer’s annual
base salary in effect at March 31,
2009.
|
|
(2)
|
This
amount is equal to 25% of the 2009 bonus which had accrued as of March 31,
2009, plus three times the highest bonus awarded during the last three
fiscal years.
|
|
(3)
|
Amounts
set forth represent payments in connection with our 401(k) Plan and our
profit sharing plan for a three year
period.
|
|
(4)
|
This
amount represents payments under welfare benefits plans including medical,
dental and life insurance for a three year period. The amounts
payable do not include amounts payable in connection with Benefits
Continuation Agreements described
above.
|
DIRECTOR
COMPENSATION
The table
below summarizes the compensation for our non-employee directors for the fiscal
year ended March 31, 2009:
Name
|
Fees
Earned or
Paid
in Cash ($)
|
Stock
Awards
($) (1)
|
Option
Awards
($) (1)
|
All
Other
Compensation
($)
|
Total ($)
|
Nesli
Basgoz, M.D.
|
43,000
|
21,279
|
80,000
|
-
-
|
144,279
|
William
J. Candee, III
|
65,000
|
21,279
|
80,000
|
-
-
|
166,279
|
George
S. Cohan
|
42,500
|
21,279
|
80,000
|
-
-
|
143,779
|
Dan
L. Goldwasser
|
59,500
|
21,279
|
80,000
|
-
-
|
160,779
|
Kenneth
E. Goodman
|
43,000
|
21,279
|
80,000
|
34,177
(2)
|
178,456
|
Lester
B. Salans, M.D.
|
55,000
|
21,279
|
80,000
|
-
-
|
156,279
|
|
|
|
|
|
|
(1)
|
Represents
the amount of compensation cost recognized by us in fiscal year 2009
related to stock awards and stock options granted in fiscal year 2009 and
prior years, as described in SFAS 123R. For a discussion of the
valuation assumptions with respect to the 2009 fiscal year, see Note 1 to
our 2009 Consolidated Financial Statements included in our Annual Report
on Form 10-K for the year ended March 31,
2009.
|
(2)
|
This
amount reflects payments made to or on behalf of Mr. Goodman pursuant to
his Benefits Continuation Agreement, a benefit to which Mr. Goodman is
entitled as a result of his prior service as President and Chief Operating
Officer of Forest. The provisions of the Benefits Continuation
Agreement are described on Page 25 of this Proxy Statement under the
heading “Benefits Continuation
Agreements.”
|
Director
Fees
During
the first three quarters of the fiscal year ended March 31, 2009, we had the
following standard compensation arrangements with our non-employee directors:
$30,000 annually for services as a director, a fee of $2,000 for each Board of
Directors meeting attended, a fee of $1,500 for attendance at a Committee
meeting and a fee of $1,000 for each Committee Chairman for each Committee
meeting attended provided the Committee meeting was not held in conjunction with
a Board of Directors meeting. Effective as of January 1, 2009, we
increased these fees as follows: $40,000 annually for services as a director
plus a fee of $2,500 for each Board of Directors meeting attended, and the
$1,500 fee for attendance at a Committee meeting was continued. Also
effective January 1, 2009, the $1,000 fee payable to each Committee Chairman for
each Committee meeting was discontinued, the Audit Committee Chairperson was
granted a $12,000 annual retainer fee and the Compensation Committee Chairperson
was granted a $6,000 annual retainer fee. In addition, we pay $1,000
to any out-of-town non-employee director who is required to come to New York
City for a meeting. Mr. Candee received a fee of $5,000 in addition
to other director fees in consideration of his services as secretary of meetings
of the Board of Directors and of Committees of which he is a
member. Out-of-town non-employee directors are also reimbursed for
travel expenses incurred in connection with meetings.
Automatic
Equity Grants
In
addition, our non-employee directors participate in the 2007 Equity Incentive
Plan (the Equity Plan). Under the Equity Plan, an initial grant of
options covering 20,000 shares of common stock is automatically granted to
non-employee directors upon appointment to the Board. Each such
option grant is at an exercise price equal to the average of the high and low
prices of our common stock on the NYSE on the grant date. The options
become exercisable (assuming the non-employee director is then serving on the
Board) as to 25% of the shares covered by the options on the six-month
anniversary of the grant date and on each anniversary of the grant date until
all such options are exercisable. No new directors were appointed
during fiscal year 2009, and accordingly, no directors were eligible for this
grant during fiscal year 2009.
The
Equity Plan further provides for the automatic annual grant to each of our
non-employee directors of options covering 4,000 shares of common stock on the
date of their annual election or re-election by our
stockholders. Each such option grant is at an exercise price equal to
the average price of the high and low prices of our common stock on the NYSE on
the grant date and becomes fully exercisable (provided the non-employee director
is then serving on the Board) on the six-month anniversary of the grant
date. All options granted under the Equity Plan to non-employee
directors have a term of ten years from the grant date.
Lastly,
the Equity Plan also provides for the automatic annual grant to each of our
non-employee directors of 1,000 shares of our common stock. The
annual stock award is subject to a risk of forfeiture which lapses (assuming the
non-employee director is then serving on the Board) as to 25% of the shares
covered by the award on the six-month anniversary of the grant date and on each
of the first, second and third anniversaries of the grant date, except that such
risk of forfeiture will automatically lapse in the case of a non-employee
director who dies while serving on the Board and who has served on the Board for
at least one year following receipt of the stock grant.
AUDIT
COMMITTEE REPORT (1)
For the
fiscal year ended March 31, 2009, the Audit Committee consisted of William J.
Candee, III (the Chairman), Dan L. Goldwasser and Lester B. Salans,
M.D. The Board has affirmatively determined that Messrs. Candee and
Goldwasser and Dr. Salans are independent as defined under the NYSE listing
standards and Rule 10A-3 of the Securities and Exchange Act of
1934. The Committee operates under a written charter adopted by the
Board of Directors.
The
Committee recommends to the Board, subject to stockholder ratification, the
selection of our independent registered public accounting
firm. Management is responsible for our internal controls and the
financial reporting process. The independent registered public
accounting firm is responsible for performing an independent audit of
consolidated financial statements in accordance with auditing standards of the
Public Company Accounting Oversight Board and for issuing a report
thereon. The Committee monitors and oversees these
processes.
In this
context, the Committee has met and held discussions with management, the
internal auditor and BDO Seidman, LLP (BDO), our independent registered public
accounting firm. Management represented that the consolidated
financial statements were prepared in accordance with accounting principles
generally accepted in the United States of America. The Committee
reviewed and discussed the audited consolidated financial statements, as well as
the unaudited financial statements included in Quarterly Reports on Form 10-Q
for each of the first three quarters of the fiscal year, with management and
BDO. The Committee discussed with BDO matters required to be
discussed by the Statement of Auditing Standards No. 61 (Communication with
Audit Committees). The Committee has also received the written
disclosures and the letter from the independent accountant required by
applicable requirements of the Public Company Accounting Oversight Board
regarding the independent accountant’s communications with the audit committee
concerning independence, and has discussed with the independent accountant the
independent accountant’s independence.
In
reliance on the reviews and discussions referred to above, the Audit Committee
recommended to the Board that the audited financial statements be included or
incorporated by reference in the Annual Report on Form 10-K for the fiscal year
ended March 31, 2009 for filing with the Securities and Exchange
Commission. The Board has adopted this recommendation.
Audit
Committee
William
J. Candee, III
Dan L.
Goldwasser
Lester B.
Salans, M.D.
(1)
|
Notwithstanding
anything to the contrary set forth in any of Forest’s previous or future
filings under the Securities Act of 1933 or the 1934 Act, the Audit
Committee Report shall not be incorporated by reference in any such
filings.
|
PROPOSAL
2
Advisory
Vote on Executive Compensation
The Board
of Directors recognizes that stockholders have a legitimate interest in
executive compensation matters and recognizes the growing interest of our
stockholders in having the ability to voice their views on the Company’s
policies with respect to such matters.
In 2009,
the Board amended its Corporate Governance Guidelines to provide for the
annual submission to stockholders of a proposal giving the stockholders the
opportunity to approve or disapprove the Company’s executive compensation
philosophy, policies and procedures as described in the “Compensation Discussion
and Analysis” section regarding named executive officer compensation in this
Proxy Statement.
Because
the vote is advisory, it will not be binding on the Board. However,
the Board and the Compensation Committee will review the voting results and take
into account the outcome when considering future executive compensation
arrangements. The Board and Management are committed to our
stockholders and understand that it is useful and appropriate to obtain the
views of our stockholders when considering the design and initiation of
executive compensation programs.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE EXECUTIVE COMPENSATION
PHILOSOPHY, POLICIES AND PROCEDURES AS DESCRIBED IN THE “COMPENSATION DISCUSSION
AND ANALYSIS” SECTION IN THIS PROXY STATEMENT.
PROPOSAL
3
RATIFICATION
OF SELECTION OF INDEPENDENT
REGISTERED
PUBLIC ACCOUNTING FIRM
The firm
of BDO Seidman, LLP (BDO) has audited our consolidated financial statements for
each of the three fiscal years ended March 31, 2009. In addition to
retaining BDO to audit our consolidated financial statements for fiscal year
2009, we and our affiliates retained BDO, as well as other accounting and
consulting firms, to provide various consulting and other services in fiscal
year 2009 and expect to continue to do so in the future.
The
following table presents fees for professional audit services rendered by BDO
for the audit of our annual financial statements and review of financial
statements included in our Quarterly Reports on Form 10-Q (Audit Fees) for
fiscal years 2009 and 2008, and fees billed for other services rendered by
BDO:
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2009
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2008
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Audit
Fees
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$1,541,861
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$1,428,398
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Audit
Related Fees (1)
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35,000
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(2)
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92,287
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(3)
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Tax
Fees (1)
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14,662
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$1,591,523
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$1,520,685
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(1)
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The
Audit Committee has considered the non-audit services performed for us by
BDO in the Committee’s evaluation of BDO’s
independence.
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(2)
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Audit
related fees were principally related to services rendered in connection
with the audit of our benefit plan.
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(3)
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Audit
related fees were principally related to services rendered in connection
with the acquisition of Cerexa and the audit of our benefit plan.
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The Audit
Committee’s policy is to pre-approve all audit services and all non-audit
services that our independent registered public accounting firm is permitted to
perform for us under applicable federal securities regulations. While
the general policy of the Audit Committee is to make such determinations at full
Audit Committee meetings, the Audit Committee may delegate its pre-approval
authority to one or more members of the Audit Committee, provided that all such
decisions are presented to the full Audit Committee at its next regularly
scheduled meeting.
The Board
desires to continue the services of BDO for the current fiscal year ending March
31, 2010. Accordingly, the Board recommends that you ratify the
selection by the Board of BDO to audit the financial statements of Forest for
the current fiscal year. Representatives of BDO are expected to be
present at the Annual Meeting, will have the opportunity to make a statement if
they desire to do so and will be available to respond to appropriate questions
from the stockholders.
THE
BOARD RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF THE SELECTION OF BDO
SEIDMAN, LLP.
MISCELLANEOUS
Annual
Report
Forest’s
2009 Annual Report is being mailed to stockholders contemporaneously with this
Proxy Statement.
Form
10-K
AT YOUR
WRITTEN REQUEST, WE WILL PROVIDE WITHOUT CHARGE A COPY OF OUR ANNUAL REPORT ON
FORM 10-K AS FILED WITH THE SEC FOR THE FISCAL YEAR ENDED MARCH 31,
2009. PLEASE MAIL YOUR REQUEST TO CORPORATE SECRETARY, FOREST
LABORATORIES, INC., 909 THIRD AVENUE, NEW YORK, NEW YORK 10022. YOU
MAY ALSO ACCESS OUR FORM 10-K UNDER THE “INVESTORS” LINK ON OUR WEBSITE AT
WWW.FRX.COM.
Proposals
of Stockholders
If you
wish to submit a proposal for consideration at our 2010 Annual Meeting of
Stockholders, you should submit the proposal in writing to us at the address set
forth on Page 1 of this Proxy Statement. Proposals must be received
by us on or before March 2
,
2010, for inclusion in
next year’s proxy materials. If you submit a proposal you must, in
all other respects, comply with Rule 14a-8 under the Securities Exchange Act of
1934. If you intend to present a proposal at our 2010 Annual Meeting
of Stockholders without inclusion of the proposal in our proxy materials, you
are required to provide notice of the presenting proposal to us in accordance
with our By-laws no later than June 11, 2010 and no earlier than May 12,
2010.
If a
properly submitted stockholder proposal is received after May 12, 2010,
we
may
vote
in
our
discretion as to that proposal all of the
shares for which we have received proxies for the 2010 Annual Meeting of
Stockholders.
Your
vote is important. We urge you to vote by mail, by telephone, or via
the Internet without delay.
WILLIAM
J. CANDEE, III,
Secretary
Dated:
June
30
, 2009
APPENDIX
A
DIRECTOR
QUALIFICATION STANDARDS
·
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No
Director who is an employee or a former employee of Forest will be
considered “independent” until three years after the employment has
ended.
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·
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No
Director who receives more than $100,000 per year in direct compensation
from Forest, other than director and committee fees and pension or other
form of deferred compensation for prior service (provided such
compensation is not contingent in any way on continued service) until
three years after he or she ceases to receive more than $100,000 per year
in such compensation will be considered
“independent.”
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·
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No
Director who is, or in the past three years has been, part of an
interlocking directorate in which an executive officer of Forest serves on
the compensation committee of another company that currently employs the
Director will be considered
“independent.”
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·
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No
Director who during the prior three years, was an executive officer or an
employee, or whose immediate family member was an executive officer, of a
company that made payments to, or received payments from Forest for
property or services in an amount which, in any single fiscal year,
exceeded the greater of $1 million or 2% of such other company’s
consolidated gross assets will be considered
“independent.”
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Important
Notice Regarding Internet Availability of Proxy Materials for the Annual
Meeting:
The
Notice and Proxy Statement and Annual Report are available at
www.proxyvote.com
.
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FOREST
LABORATORIES, INC.
Proxy
- For the Annual Meeting of Stockholders – August 10, 2009
I
appoint Howard Solomon and Lawrence S. Olanoff, M.D., Ph.D., or either of
them, as my proxies, with full power of substitution, to vote all shares
of Common Stock of FOREST LABORATORIES, INC. which I am entitled to vote
at the Annual Meeting of Stockholders to be held on August 10, 2009 at
10:00 A.M. at JP Morgan Chase & Co. Corporate Headquarters, 277 Park
Avenue, New York, New York, 10017
and at any
adjournments of the meeting on all matters coming before said
meeting.
My
proxies will vote the shares represented by this proxy as directed on the
other side of this card, but in the absence of any instructions from me,
my proxies will vote “FOR” the election of all the nominees listed under
Proposal 1, “FOR” Proposal 2 and “FOR” Proposal 3. My proxies
may vote according to their discretion on any other matter which may
properly come before the meeting. I may revoke this proxy prior
to its exercise.
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The
Board of Directors Recommends a Vote
FOR
Proposals 1, 2 and
3.
(continued
on reverse side)
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FOREST
LABORATORIES, INC.
909 THIRD
A
VENUE
24th
FLOOR
NEW
YORK, NY 10022
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VOTE
VIA INTERNET -
www.proxyvote.com
Use
the Internet to transmit your voting instructions and for electronic
delivery of information up until 11:59 P.M. Eastern Time the day before
the cut-off date or meeting date. Have your proxy card in hand when you
access the web site and follow the instructions to obtain your records and
to create an electronic voting instruction form.
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ELECTRONIC
DELIVERY OF FUTURE STOCKHOLDER COMMUNICATIONS
If
you would like to reduce the costs incurred by Forest Laboratories, Inc.
in mailing proxy materials, you can consent to receiving all future proxy
statements, proxy cards and annual reports electronically via e-mail or
the Internet. To sign up for electronic delivery, please follow the
instructions above to vote using the Internet and, when prompted, indicate
that you agree to receive or access stockholder communications
electronically in future years.
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VOTE
BY PHONE -1-800-690-6903
Use
any touch-tone telephone to transmit your voting instructions up until
11:59 P.M. Eastern Time the day before the cut-off date or meeting
date. Have your proxy card in hand when you call and then follow the
instructions.
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VOTE
BY MAIL
Mark,
sign and date your proxy card and return it in the postage-paid envelope
we have provided or return it to Forest Laboratories, Inc., c/o
Broadridge, 51
Mercedes Way, Edgewood, NY
11717.
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TO
VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK.
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KEEP
THIS PORTION FOR YOUR RECORDS
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DETACH
AND RETURN THIS PORTION ONLY
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THIS
PROXY CARD IS VALID ONLY WHEN SIGNED AND
DATED.
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FOREST
LABORATORIES, INC.
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Vote
On Directors
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1. Election
of eight Directors:
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Nominees:
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For
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Against
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Abstain
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01) Howard
Solomon
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02) Lawrence
S. Olanoff, M.D., Ph.D.
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03) Nesli
Basgoz, M.D.
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04) William
J. Candee, III
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05) George
S. Cohan
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06) Dan
L. Goldwasser
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07) Kenneth
E. Goodman
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08) Lester
B. Salans, M.D.
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Vote
On Proposals
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For
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Against
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Abstain
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2. Approval
of the Company’s executive compensation philosophy, policies and
procedures as described in the “Compensation Discussion and
Analysis”.
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3. Ratification
of the selection of BDO Seidman, LLP as Independent Registered Public
Accounting Firm for the fiscal year ending March 31, 2010.
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Please
sign here exactly as your name(s) appear(s) on this proxy. If
signing for an estate, trust or corporation, title or capacity should be
stated. If shares are held jointly, each holder should
sign. If a partnership, sign in partnership name by authorized
person.
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PLEASE
SIGN, DATE AND MAIL IN THE ENVELOPE PROVIDED.
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Signature
[PLEASE SIGN WITHIN BOX]
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Date
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Signature
(Joint Owners)
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Date
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