Forest Urges Shareholders to Ignore Icahn Board Nominees
Forest also told shareholders the company’s independent directors have hired Spencer Stuart, an executive recruitment company, to help find and evaluate candidates to succeed Chief Executive Officer Howard Solomon, who will turn 85 next month.
Icahn began his second proxy battle in two years with Forest in June when he nominated four directors and accused the company of “conduct to enrich and entrench management to the detriment of the stockholders.” Icahn, 76, is the second-largest stockholder with 9.8 percent of the company’s shares as of June 25, according to a regulatory filing today from Forest. Solomon encouraged investors to reject Icahn’s nominees in a letter that was part of the filing.
“Your board has reviewed Icahn’s candidates and we urge you to vote only for your board’s proposed nominees,” he wrote.
Forest, in a second filing today, said its independent director-led CEO search will consider internal and external candidates, which may include Solomon’s son, David Solomon. Icahn has criticized the company for failing to lay out a clear succession plan.
“As we previously disclosed, the board is engaged in ongoing succession planning,” Forest said in the letter to shareholders. “The independent directors have a deep bench of management talent from which to evaluate potential CEO successors.”
Icahn said he has spoken with Howard Solomon, who the billionaire called “a friendly guy.”
“He says we’d be a disturbance,” Icahn said today in an interview with Bloomberg Television. “We would be, to his plans. His plans, I think, are to swing for the fences and get his son in to be CEO. We would obviously stand up against that. I think that’s why he doesn’t want us on the board.”
Solomon, later today, sent a letter to Icahn responding to several of the complaints including the timing of his stock sales and criticism that David Solomon may be a candidate for chief executive officer.
“I did not anticipate that my son David would be publicly disparaged and caricatured by someone utterly ignorant of even the slightest information about his qualifications or performance,” Solomon wrote, adding that Icahn had promoted his son, Brett, to several executive positions. “David will neither be favored nor handicapped because of his relationship with me. The qualifications of our sons should speak for themselves.”
In his interview, Icahn cited previous successes with investments in drugmakers, including ImClone Systems Inc., which was sold to Eli Lilly & Co. (LLY) in 2008 for $6.5 billion; Genzyme Corp., sold to Sanofi (SAN) for $20.1 billion last year; Amylin Pharmaceuticals Inc., which agreed to be bought by Bristol-Myers Squibb Co. (BMY) for $5.3 billion on June 29; and Biogen Idec Inc. (BIIB), whose stock has more than doubled in the past two years.
“They do know our record is stellar and that we understand what should be done in these cases,” Icahn said. “What harm is it to have representatives of shareholders on the board?”
Forest’s filings question Icahn’s nominees’ objectivity, interest in shareholder value and experience. The drugmaker’s shareholder meeting is scheduled for Aug. 15.
The company’s top-selling antidepressant Lexapro lost patent protection in March, and in April the company forecast a 26 percent decline in fiscal 2013 revenue. Forest joined with Ironwood Pharmaceuticals Inc. (IRWD) on an experimental irritable bowel and constipation drug, linaclotide, which is waiting on regulatory approval.
Forest rose 1.3 percent to close at $35.93 in New York. The stock has gained 19 percent this year.
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