NEW YORK--Forest Laboratories Inc. (FRX) shareholders reelected
nine of the ten board members nominated by the drug maker, but gave
the final slot to a nominee by activist investor Carl Icahn.
The pharmaceutical company said preliminary results showed that
Mr. Icahn's nominee Pierre Legault earned a spot on the board,
edging out Forest's Dan Goldwasser, who had been chair of the
compensation committee and had been a board member for 35
years.
Daniel Ninivaggi, president of Icahn Enterprises Inc., told Dow
Jones Newswires that his nomination to win a spot on the board was
narrowly defeated.
Despite only winning one board seat, Mr. Ninivaggi said the vote
was a "great victory for corporate governance." He said Icahn's win
for a board seat would create a more independent board.
A long-running spat between the parties was revived in June when
Mr. Icahn, whose investment affiliates own almost 10% of Forest's
shares, nominated four candidates to Forest's 10-member board and
said he was seeking records of the company's actions. In response,
Forest said Mr. Icahn's nominees have "significant and obvious
conflicts and entanglements that compromise their independence and
ability to represent all Forest shareholders."
One of the main concerns Mr. Icahn has raised is Forest's lack
of a disclosure for a succession plan. Mr. Solomon, who is 84 years
old and has led the company as CEO since 1977, and Forest have
contended that few companies disclose succession plans.
Icahn also complained Forest was inadequately prepared for the
authorized generic version of the antidepressant drug Lexapro that
hit the market following the March loss of the drug's patent
exclusivity.
Lower-than-expected branded Lexapro sales led Forest to trim its
fiscal-year earnings guidance and, in July, the company reported
Lexapro sales were down 81% to $110 million in the fiscal first
quarter ended June 30.
Though Lexapro is facing a huge challenge by the generic
offering, Forest has lauded its drug pipeline as loaded with
potential. Analysts, meanwhile, have said investors have
anticipated income from Lexapro will effectively disappear next
year.
Tuesday, Mr. Icahn aired another complaint, this time
criticizing Forest for failing to disclose its latest warning
letter from the U.S. Food and Drug Administration for a violation
of promotional practices by the company's sales representatives
regarding its drug Daliresp.
Prior to Forest's annual meeting, proxy advisors were split on
which way shareholders should vote. Glass Lewis sided with Forest
while ISS said two of Icahn's four nominees should be elected.
- David Benoit contributed to this article
Write to John Kell at john.kell@dowjones.com
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