Forest Laboratories, Inc. (NYSE: FRX) (“Forest”) today announced
that its Board of Directors has sent a letter to all Forest
shareholders in connection with the Company’s Annual Meeting on
August 15, 2012. The letter highlights Forest’s qualified slate of
director nominees and states that Carl Icahn’s dissident slate has
significant and obvious conflicts and entanglements that compromise
their independence and ability to represent all Forest
shareholders.
Forest’s Board of Directors recommends that you vote for all 10
of our highly qualified director nominees on the WHITE proxy
card.
For information about Forest’s 2012 Annual Meeting of
Shareholders, please visit:www.FRX2012annualmeeting.com.
The text of the July 16th letter follows:
July 16, 2012
Dear Fellow Forest Shareholders,
We write to ask for your support in advance of this year’s
Annual Meeting of shareholders, which is scheduled for August 15,
2012. This meeting will have a major impact on your investment in
Forest.
Carl Icahn is again attempting to replace four of your directors
with four of his own hand-picked representatives. We find it
curious that Mr. Icahn has again proposed four directors when he
has very publicly stated that what he really wants is for Forest to
agree to place Eric Ende and Daniel Ninivaggi on your board – both
of whom are beholden to Icahn because they are paid directly by
him.
While avoiding a proxy contest may serve the interest of
expediency, in this case it would not serve your interests. The quality of Board nominees
is of paramount importance. Your full Board was fully engaged
in the careful consideration of both Mr. Icahn’s proposals and his
slate of nominees. Your Board is unanimous in its view that Icahn’s nominees are
unqualified.
Although Mr. Icahn has tried to position his candidates as
independent, the fact is that three of
his candidates have significant conflicts and entanglements that we
believe compromise their independence and all of his nominees are far less qualified than
the Company’s candidates. As detailed in Mr. Icahn’s proxy, his
nominees lack relevant experience and – with the exception of Eric
Ende who served as Icahn’s representative on the Genzyme board for
less than 10 months – their prior healthcare board service was at
small, start-up companies that are not remotely comparable to the
size, scale and complexity of Forest. Every member of your Board
believes you should reject Icahn’s designees and support all 10 of
Forest’s candidates, who are committed to delivering value for ALL
shareholders.
ICAHN’S NOMINEES HAVE SIGNIFICANT CONFLICTS
OF INTEREST AND ENTANGLEMENTS THAT WE BELIEVE COMPROMISE THEIR
ABILITY TO REPRESENT THE INTERESTS OF ALL FOREST SHAREHOLDERS
It is ironic that Mr. Icahn – the well-known corporate raider
and self-proclaimed corporate governance guru – would nominate a
slate of individuals with significant and obvious conflicts that we
believe compromise their independence and ability to represent
all Forest shareholders. For
example:
- Eric Ende, a serial Icahn board
nominee who is being paid $65,000 per month to lead Icahn’s proxy
contest, also has an unorthodox profit-sharing arrangement with
Icahn under which he would receive 1% of Mr. Icahn’s profits above
$47.50 per Forest share, but only if achieved within 30 months of
starting Board service. This highly unusual compensation
arrangement, which has already drawn criticism from corporate
governance experts,1 aligns Ende’s interests with the profits of
one shareholder – Carl Icahn – at the
potential expense of all other Forest shareholders. It provides a
powerful incentive for Ende to pursue risky and short-term “swing
for the fences” strategies to the detriment of our long-term
strategy that will create greater overall returns over the long
term. In addition, Ende is subject to highly unusual restrictions
that would prevent him, even if elected a director of Forest, from
speaking on a variety of topics related to Forest or his services
to Carl Icahn without the prior approval of Carl Icahn.2 We believe
these arrangements compromise any true “independence” Mr. Icahn
claims Ende would bring to the Board.
- Like Ende, Daniel Ninivaggi, an
Icahn insider and serial nominee, also has an interest in
representing Icahn’s interests rather than yours. He is a salaried
employee and President of Icahn Enterprises, and as such, you can
fairly question whether he will put your interests above the
financial objectives of Icahn Enterprises.
- Andrew Fromkin is the former CEO
of Clinical Data, which Forest acquired last year. As part of the
transaction, Fromkin received a security called a contingent value
right (CVR) that could be worth millions of dollars to him based on
the sales of just one of our products – Viibryd. Board members must
act in the interest of the company as a whole, but the CVR gives
Fromkin a powerful incentive to favor Viibryd at the expense of
other products in our current portfolio or others we might acquire.
Importantly – and as Mr. Icahn has himself acknowledged – Fromkin
would not be considered an independent director under the New York
Stock Exchange’s Corporate Governance Rules.
We believe it’s clear that the majority of Mr. Icahn’s nominees
do not – and cannot – bring the independence he claims, and that
Mr. Icahn is not really a champion of corporate governance. In
fact, his own public company, Icahn Enterprises, was recently
ranked as having one of the three worst boards in corporate
America!3
ICAHN’S NOMINEES ARE FAR LESS QUALIFIED TO
SERVE ON YOUR BOARD THAN FOREST’S NOMINEES
Icahn’s nominees are far less qualified than the Company’s
nominees and taken together, they lack experience in areas critical
to our business, including operational and management experience
and the understanding of what it takes to bring multiple new drugs
to the market. For example:
- Pierre Legault’s operational
track record is questionable at best. While serving as an Executive
Vice President at The Jean Coutu Group, the company suffered
numerous earnings misses and its integration of Eckerd, an effort
led by Legault, was fraught with missteps.4 Interestingly, Icahn
makes no mention of Legault’s employment or management record at
Jean Coutu in his proxy materials. Legault also was dismissed from
Rite-Aid Corp. in a management shake-up announced at the time of
the company’s fifth straight earnings miss.5
- Daniel Ninivaggi has no
healthcare or other relevant experience whatsoever, and like
Legault and Ende, he has never been directly involved with bringing
a new drug to the market, which is the single most important aspect
of Forest’s business. His previous experience was as a lawyer for
Lear Corporation, a supplier of interior automotive systems. He
currently serves on the boards of five publicly traded companies,
all of which are controlled by Icahn, and to our knowledge,
Ninivaggi has never been elected to a Board of a company that Icahn
does not control. If elected, Ninivaggi would be “over-boarded,”
serving on six public company boards, in addition to his role as
the chief executive at publicly traded Icahn Enterprises.
- Andrew Fromkin became a Forest
employee for about a month following Forest’s acquisition of
Clinical Data in April 2011, and he left the company by mutual
agreement. He now seeks to return to Forest as a director, and
nothing in his background indicates he is qualified to serve on the
Board of a company as large and complex as Forest.
- Eric Ende, whom Icahn is paying
to lead the proxy fight, has spent the vast majority of his career
as a financial analyst and has no previous corporate operating or
management experience of which to speak. More importantly, our
shareholders already rejected him in 2011 by an overwhelming
margin, and we agree that he is ill-suited to create value for
Forest. Other than the 10 months he served as Icahn’s
representative on the Board of Genzyme, he has not served on any
public company boards.
ICAHN’S EFFORTS TO APPEAR REASONABLE ARE
NONSENSE
Mr. Icahn’s recent media interviews and letters touting his
settlement offers in an effort to appear like a reasonable,
constructive shareholder are pure nonsense. Icahn has
never once sought to engage with Forest without the threat of a
proxy contest. In fact, there was utter silence from the Icahn
organization in the nine months that followed last year’s Annual
Meeting. His tirades and baseless criticisms over the past few
weeks have neither demonstrated a need for change nor articulated
any constructive ideas for delivering value to shareholders.
Contrary to media reports, Icahn insisted as a condition of
settlement that Ende and Ninivaggi join your board. Clearly, it was
not reasonable for Mr. Icahn to insist that the Company nominate
Eric Ende – a man who was overwhelmingly rejected by you – our
shareholders – last year and who has significant conflicts and
entanglements this year. Excluding Mr. Icahn’s votes, Ende was
supported by a mere 6% of Forest shareholders last year, the lowest
of any of the fourteen candidates nominated last year. As far as
we’re concerned, our shareholders spoke loud and clear on Ende last
year. We listened. Icahn obviously did not.
Mr. Icahn also insisted that Ninivaggi – his paid employee –
join your board. As detailed above, we simply do not believe that
your interests would be served by nominating a man who lacks the
proper qualifications and who we believe would be inclined to serve
the interests of one shareholder
rather than all shareholders.
We believe corporate boards should be assembled based upon the
leadership qualities, experience and expertise of the directors –
not based upon the obvious self-interest of a single, vocal
shareholder. While we have no interest in an unnecessary proxy
contest, we will not sacrifice our principles for the sake of
expediency. We have to consider the quality of the candidates, and
this year, just like last year, the Icahn nominees simply do not
measure up.
YOUR STRONG AND INDEPENDENT BOARD WILL DRIVE
CONTINUED GROWTH
Our director candidates have diverse and specialized skills that
will help guide Forest through the near-term commercialization of
the Company’s next generation of key products, support our recently
launched products, and drive our strategy for the future.
Our slate of nominees represents an effective balance of
leadership continuity and fresh perspectives. In 2011, three new
highly experienced independent directors were elected to our Board,
adding financial acumen, operational skills, investor perspective
and corporate governance experience. In their first year on our
Board, all three have been extremely active, each serves on two
Board committees – two as committee chairman – and all three serve
on the Board’s Compensation Committee. Our independent directors,
five of whom were elected in the last six years, include a current
CEO, a former CFO, and former COO of major companies, top medical
professionals at leading medical institutions, an attorney, and
experienced healthcare professionals with a track record of
identifying, developing and launching new drugs. We believe that
our Board represents the right mix of new perspectives, continuing
leadership and professional and medical expertise needed to sustain
the momentum we have behind our late-stage pipeline and promising
new products.
PLEASE VOTE THE WHITE CARD TO SUPPORT
FOREST’S HIGHLY QUALIFIED BOARD NOMINEES
Your Board unanimously recommends that you vote for all 10 of
our highly qualified director nominees on the WHITE proxy card.
Your vote is very important, no matter how many shares you own. You
may vote by telephone, Internet, or by signing, dating and
returning the enclosed WHITE proxy card in the postage-paid
envelope. We also urge you to discard any GOLD proxy card sent to
you by Icahn or his affiliates.
On behalf of the Board of Directors, we thank you for your
continued support of our Company.
Sincerely,
/s/ Howard Solomon Chairman of the Board and Chief Executive
Officer /s/ Kenneth E. Goodman Presiding Independent
Director
Forward-Looking Information
Except for the historical information contained herein, this
document contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These
statements involve a number of risks and uncertainties, including
the difficulty of predicting FDA approvals, the acceptance and
demand for new pharmaceutical products, the impact of competitive
products and pricing, the timely development and launch of new
products, and the risk factors listed from time to time in Forest
Laboratories’ Annual Report on Form 10-K, Quarterly Reports on Form
10-Q and any subsequent SEC filings.
Important Additional Information
Forest Laboratories, its directors, director nominees and
certain of its executive officers may be deemed to be participants
in the solicitation of proxies from Forest shareholders in
connection with the matters to be considered at Forest
Laboratories’ 2012 Annual Meeting. Forest Laboratories has filed
its definitive proxy statement (as it may be amended, the “Proxy
Statement”) with the U.S. Securities and Exchange Commission (the
“SEC”) in connection with such solicitation of proxies from Forest
shareholders. FOREST SHAREHOLDERS ARE STRONGLY ENCOURAGED TO READ
THE PROXY STATEMENT AND ACCOMPANYING PROXY CARD AS THEY CONTAIN
IMPORTANT INFORMATION. Information regarding the ownership of
Forest's directors and executive officers in Forest stock,
restricted stock and options is included in their SEC filings on
Forms 3, 4 and 5, which can be found at the Company's website
(www.frx.com ) in the section "Investors." More detailed
information regarding the identity of potential participants, and
their direct or indirect interests, by security holdings or
otherwise, is set forth in the Proxy Statement and other materials
to be filed with the SEC in connection with Forest Laboratories'
2012 Annual Meeting. Information can also be found in Forest's
Annual Report on Form 10-K for the year ended March 31, 2012, filed
with the SEC on May 25, 2012. Shareholders can obtain the Proxy
Statement, any amendments or supplements to the Proxy Statement and
other documents filed by Forest Laboratories with the SEC for no
charge at the SEC's website at www.sec.gov. Copies are also
available at no charge at Forest Laboratories' website at
www.frx.com or by writing to Forest Laboratories at 909 Third
Avenue, New York, New York 10022.
This document contains quotes and excerpts from
certain previously published material. Unless otherwise indicated,
consent of the author and publication has not been obtained to use
the material as proxy soliciting material.
If you have any questions, require
assistance with voting your WHITE proxy card,
or need additional copies of the proxy
materials, please contact:
MACKENZIE
PARTNERS, INC.
105 Madison Avenue
New York, NY 10016
frxproxy@mackenziepartners.com
(212) 929-5500 (Call Collect)
Or
TOLL-FREE (800) 322-2885
About Forest Laboratories
Forest Laboratories' (NYSE: FRX) longstanding global
partnerships and track record developing and marketing
pharmaceutical products in the United States have yielded its
well-established central nervous system and cardiovascular
franchises and innovations in anti-infective, respiratory,
gastrointestinal and pain management medicine. Forest’s pipeline,
the most robust in its history, includes product candidates in all
stages of development across a wide range of therapeutic areas. The
Company is headquartered in New York, NY. To learn more, visit
www.FRX.com.
1 Reuters News, “Icahn dangles bounty for nominee in Forest
fight,” 29 June 2012.
2 Ende’s May 29, 2012 Agreement with Icahn Enterprise Holdings
provides that “Ende will not at anytime on or after the date
hereof, engage in any non-public
communication relating to Forest, the transactions contemplated in
the Agreement, any proxy contest or Services relating to Forest, or
any communication with Icahn Enterprises or Carl Icahn, unless the
matters to be discussed by Ende are first discussed with and
approved by, Icahn Enterprises” (emphasis added).
3 Reuters News, “FACTBOX: Corporate America's best and worst
boards,” 11 July 2012.
4 Reuters News, “Jean Coutu shares sag amid analyst downgrades,”
March 8, 2006.
5 Wall Street Journal, “Rite Aid Sees Wider Loss, Makes
Management Changes,” September 26, 2008.
Forest Road Acquisition (NYSE:FRX)
Historical Stock Chart
From Jul 2024 to Aug 2024
Forest Road Acquisition (NYSE:FRX)
Historical Stock Chart
From Aug 2023 to Aug 2024