Icahn, the New York-based drugmaker’s second-largest shareholder with 9.9 percent of stock, said he asked Chief Executive Officer Howard Solomon to add Eric Ende and Daniel Ninivaggi to the board before starting this year’s proxy contest, in which he nominated four directors.
“Howard flatly refused, claiming that such shareholder representation on the board would be a ‘distraction,’” Icahn, 76, wrote in a letter today addressed to Forest’s “non-management” directors. “His most recent statement to me was that the dismissal of my request was the will of the board. If you are true in your belief that a prolonged proxy contest would be deleterious to Forest (as I am), how can you be so hastily dismissive?”
The company’s directors have been “fully engaged” in all decision-making on Icahn’s proposals, Forest said today.
“The board is also fully engaged and unanimous in its view that each of Mr. Icahn’s nominees are unqualified, and that his slate has several conflicts that compromise their independence and ability to act in the best interest of all Forest shareholders,” the drugmaker said in an e-mailed statement.
Icahn failed last year to get any of his four nominees elected. He has criticized Forest for what he says was a lack in preparation for the loss of patent protection on its top-selling drug, the antidepressant Lexapro, in March, and said he’s investigating Solomon’s stock sales in the last few years.
Solomon, 84, called Icahn’s arguments “replete with wild and baseless accusations, innuendo and distortion of facts,” in a July 9 letter.
“We have consistently said that we were open to constructive discussions with you regarding how to build value for all of our shareholders,” Solomon wrote to the investor. “However, you have never made an effort to engage with us outside the context of a proxy contest - and your discourse thus far has shown a striking lack of strategic ideas.”
Forest rose less than 1 percent to $35.32 at the close in New York. The shares have dropped 8.5 percent in the past 12 months.
Forest added three new board members last year amid the proxy fight with Icahn and this week said it hired an executive recruitment firm to help evaluate candidates to succeed Solomon, who has been chief executive since 1977.
The drugmaker’s earnings for fiscal year 2013, ending in March, will decline to 65 cents to 80 cents a share, from $3.57 a share in the year ended March 31, Forest said in June. Lexapro, now facing competition from cheaper generic copies, drew $2.1 billion in the last fiscal year, accounting for 48 percent of the company’s sales.
“Howard Solomon continues to assert that all is well at the company, assertions he has been making for the past 10 years as the enterprise value of the company continues its tumble,” Icahn wrote in his letter today. “I know several of you have known Howard Solomon for many, many years. Do not let your personal relationship with Howard Solomon get in the way of what is right for the company and what your fiduciary duties require you to do.”
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