Forest Laboratories, Inc. (NYSE: FRX) (“Forest”) today announced
that its Board of Directors is sending a letter to all Forest
shareholders in connection with the Company’s Annual Meeting on
August 15, 2012. The letter details the strength of Forest’s
strategy, the significant progress it has made over the last year
and why the current Board of Directors is the right team for
Forest.
Forest’s Board of Directors continues to recommend that
shareholders vote for all 10 of the Company’s 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 letter follows:
August 7, 2012
Dear Fellow Shareholders:
Forest Laboratories’ August 15th Annual Meeting is rapidly
approaching and support for your Board is more important than ever.
Carl Icahn is again seeking to replace four of your highly
qualified and experienced directors with hand-picked nominees who
we believe are not as qualified to serve on Forest’s Board.
Forest’s Board and management team have delivered on the promises
we made to our shareholders over the last year and continue to
execute on our strategy. Our team is the
right team for Forest. We urge you to vote the WHITE CARD in
support of all ten of Forest’s highly qualified nominees, who are
committed to serving your best interests and maximizing shareholder
value over the long term.
WHY OUR TEAM IS THE RIGHT TEAM FOR
FOREST
[X] Forest has developed one of the best pipelines in the
biopharma industry and we continue to gain momentum in advancing
our valuable late-stage portfolio.
As promised, we hit the milestones we committed to last year and
our momentum continues. We recently received FDA approval for
aclidinium, which will be launched later this year under the brand
name TUDORZA, and we are expecting FDA approval of linaclotide in
September – powerful proof that our long-term pipeline planning is
bearing fruit. The strength of our platform is well-recognized by
independent third-party analysts.1
[X] Forest is poised to deliver strong returns to
shareholders.
Our stock price is strengthening as the market increasingly
recognizes the value of our products. We are on track to manage
through our patent expirations and project revenues to be $6.0bn by
FY2018, well in excess of historical peak sales of $4.6bn in
FY2012. The success of our efforts is reflected in the recent
upturn in our stock price, which increased by 15.6% in the six
months ended June 30, 2012.
[X] Our strong and independent Board embraces change and
welcomes new perspectives.
We have eight independent directors on our Board, three of whom
were added last year. Our new directors have taken on active roles
on Board committees. All three new independent directors serve on
the Compensation Committee as well as a Board committee that was
formed to oversee succession planning. This Committee of four
independent directors has directly retained Spencer Stuart to
assist with, among other things, the consideration of both our deep
bench of internal candidates and external candidates. In addition,
Chris Coughlin serves as the chairman of the Audit Committee and
Gerald Lieberman serves as chairman of the Nominating and
Governance Committee.
[X] Forest remains committed to strong corporate governance
and has recently enhanced its corporate governance and compensation
policies.
We have recently strengthened our policies by adopting majority
voting standards for uncontested director elections. In addition,
our Compensation Committee, under the chairmanship of Dan
Goldwasser, made the following changes to our compensation
policies:
- Stock ownership guidelines of 6x annual
base salary for the CEO and 3x annual base salary for executive
officers reporting to the CEO, and 3x annual retainer fee for
non-executive directors;
- An anti-hedging policy and no-repricing
policy;
- Minimum vesting requirements of 24
months for options, SARs, and restricted stock awards;
- Performance metrics attached to certain
executive pay packages; and
- Clawback policies on certain
compensation.
We also have committed to meet with an independent corporate
governance expert on an annual basis. Recently, we consulted with
Harvard Dean Robert C. Clark, a leading authority in corporate
governance, to review our practices; in connection with that review
we further enhanced our corporate governance framework. The steps
that we have taken to enhance our corporate governance are detailed
in a white paper, which you can find in the Corporate Governance
section of Forest’s website at:
http://www.frx.com/pdf/Corporate_Governance_Continuing_Priority.pdf.
[X] Forest’s primary care-focused strategy has created strong
operating leverage.
Primary care physicians (PCPs) play a key role in prescribing
medicines, which is likely to increase under President Obama’s
Affordable Care Act. Our close relationships with PCPs have helped
us build new blockbuster products and provide efficiencies for our
sales force who can market multiple products to PCPs. We employ a
data-driven, targeted marketing approach to maximize the return on
each invested promotional dollar.
[X] Forest is managing SG&A prudently to maximize the
potential value of our late-stage pipeline.
Proposing cutbacks to SG&A at this critical time when we are
in the process of launching important new products – particularly
in the form of Icahn’s cookie cutter plan to cut $500 million from
SG&A – is risky, ill-considered, and far more likely to destroy
shareholder value than build it.
[X] Forest’s Board is well–equipped to drive the development
of our valuable portfolio.
Forest's Board is composed of experienced leaders who have been
carefully selected to have the right mix of expertise to lead our
business. It includes successful CEOs, COOs and CFOs; leading
medical professionals; a former senior official of Fidelity
Investments and AllianceBernstein and compliance experts. Our
longer-tenured directors have played an important part in
developing our blockbuster drugs as well as our burgeoning
pipeline, and they are complemented by the five new independent directors that we have added since
2006. Forest’s nominees have greater experience and a proven
track record of launching multiple new products in rapid succession
– the key to building value for our shareholders at this critical
juncture for the Company.
[X] Leading proxy advisory firm Glass Lewis has recommended
that Forest shareholders vote FOR ALL TEN of the Company’s nominees
on the WHITE proxy card and AGAINST all of Icahn’s
nominees.
We believe Glass Lewis’ recommendation to reject all of Icahn’s
nominees reflects the high caliber of our candidates, our
outstanding track record and the strength of our business. In
recommending AGAINST Icahn’s nominees, Glass Lewis raises several
concerns, including lack of independence, potential conflicts of
interest and unorthodox compensation arrangements that could
compromise the abilities of the Icahn nominees to serve in the best
interests of all shareholders. We remain open to welcoming new
directors to our Board, but the quality of Board members is
paramount, and we simply do not believe that Icahn’s nominees are
as qualified to serve on the Forest Board as our current directors.
The bottom line is that they are either conflicted due to
arrangements with Mr. Icahn, or simply lack the same level of
experience launching new products when compared to our Board.
PLEASE VOTE THE WHITE CARD TO SUPPORT
FOREST’S HIGHLY QUALIFIED NOMINEES
Your Board unanimously recommends that you vote for all ten 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. Your Board also urges you to discard any GOLD proxy card
sent to you by Icahn or his affiliates. Any later vote using
Icahn’s GOLD proxy card, even to withhold votes from Icahn’s
nominees, can cancel a previous WHITE proxy submitted by
shareholders voting “FOR” Forest Board’s nominees. If you have
already voted using an Icahn GOLD proxy card, you have every right
to change your vote by executing and returning the enclosed WHITE
proxy card.
On behalf of the Board of Directors, we thank you for your
continued support of our Company.
Sincerely,
/s/Howard SolomonChairman of the Board and Chief Executive
Officer
/s/Kenneth E. GoodmanPresiding 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 Credit Suisse, “1Q FY13 Initial Diagnosis: Moving Along;
Aclidinium & Linaclotide Catalysts Next Focus,” 7/17/2012; Bank
of America Merrill Lynch, “Pipeline Stacks Up,” 6/8/12;
Morningstar, “Reasons for Optimism Exist at Forest Post-Lexapro,”
6/19/2012.
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