SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant ¨ Filed by a Party other than the Registrant x
Check the appropriate box:
¨ | Preliminary Proxy Statement | |||
¨ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |||
¨ | Definitive Proxy Statement | |||
x | Definitive Additional Materials | |||
¨ | Soliciting Material Pursuant to § 240.14a-12 | |||
Forest Laboratories, Inc. | ||||
(Name of Registrant as Specified In Its Charter) | ||||
Carl C. Icahn Dr. Alexander J. Denner Dr. Richard Mulligan Professor Lucian A. Bebchuk Dr. Eric J. Ende Mayu Sris Icahn Partners LP Icahn Partners Master Fund LP Icahn Partners Master Fund II L.P. Icahn Partners Master Fund III L.P. High River Limited Partnership Hopper Investments LLC Barberry Corp. Icahn Onshore LP Icahn Offshore LP Icahn Capital L.P. IPH GP LLC Icahn Enterprises Holdings L.P. Icahn Enterprises G.P. Inc. Beckton Corp. | ||||
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) | ||||
Payment of Filing Fee (check the appropriate box): | ||||
x | No fee required. | |||
¨ | Fee computed on table below per Exchange Act Rule 14a-6(i)(4) and 0-11. | |||
1) | Title of each class of securities to which transaction applies:
| |||
| ||||
2) | Aggregate number of securities to which transaction applies:
| |||
| ||||
3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
| |||
| ||||
4) | Proposed maximum aggregate value of transaction:
| |||
| ||||
5) | Total fee paid: | |||
| ||||
¨ | Fee paid previously with preliminary materials. | |||
¨ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||
1) | Amount Previously Paid:
| |||
| ||||
2) | Form, Schedule or Registration Statement No.:
| |||
| ||||
3) | Filing Party:
| |||
| ||||
4) | Date Filed:
| |||
|
ON JULY 19, 2011, THE PARTICIPANTS (AS DEFINED BELOW) FILED A DEFINITIVE PROXY STATEMENT WITH THE SECURITIES AND EXCHANGE COMMISSION. SECURITY HOLDERS ARE ADVISED TO READ THE DEFINITIVE PROXY STATEMENT AND OTHER DOCUMENTS RELATED TO THE SOLICITATION OF PROXIES BY CARL C. ICAHN, DR. ALEXANDER J. DENNER, DR. RICHARD MULLIGAN, PROFESSOR LUCIAN A. BEBCHUK, DR. ERIC J. ENDE, MAYU SRIS, ICAHN PARTNERS LP, ICAHN PARTNERS MASTER FUND LP, ICAHN PARTNERS MASTER FUND II L.P., ICAHN PARTNERS MASTER FUND III L.P., HIGH RIVER LIMITED PARTNERHIP, HOPPER INVESTMENTS LLC, BARBERRY CORP., ICAHN ENTERPRISES G.P. INC., ICAHN ENTERPRISES HOLDINGS L.P., IPH GP LLC, ICAHN CAPITAL L.P., ICAHN ONSHORE LP, ICAHN OFFSHORE LP, AND BECKTON CORP. (COLLECTIVELY, THE PARTICIPANTS) FROM THE STOCKHOLDERS OF FOREST LABORATORIES, INC. FOR USE AT ITS 2011 ANNUAL MEETING OF STOCKHOLDERS, BECAUSE THEY CONTAIN IMPORTANT INFORMATION, INCLUDING INFORMATION RELATING TO THE PARTICIPANTS. THE DEFINITIVE PROXY STATEMENT AND A FORM OF PROXY IS AVAILABLE TO STOCKHOLDERS OF FOREST LABORATORIES, INC. FROM THE PARTICIPANTS AT NO CHARGE AND IS ALSO AVAILABLE AT NO CHARGE AT THE SECURITIES AND EXCHANGE COMMISSIONS WEBSITE AT HTTP://WWW.SEC.GOV OR BY CONTACTING D.F. KING & CO., INC. BY TELEPHONE AT THE FOLLOWING NUMBERS: STOCKHOLDERS CALL TOLLFREE: (800) 6976975 AND BANKS AND BROKERAGE FIRMS CALL: (212) 2695550.
Consent of the author and publication has not been obtained to use the material filed herewith as proxy soliciting material.
1
Forest Labs board needs change
Two independent proxy advisory firms issued analyses
criticizing Forest Labs on several dimensions
Presiding independent director Goodman oversaw
operations and made decisions leading to civil and
criminal violations, also lacks independence
Compensation not tied to share performance
Icahn Nominees will help drive necessary change,
vote the GOLD card! |
2
ISS and Glass Lewis both criticized Forest
Labs for deeply flawed corporate governance
The image of the CEO sitting in on the ostensibly
independent directors as they discuss whether or not to
support him is uncomfortably close to that of a show
trial: a theatrical demonstration of power, with a
pre-determined outcome, in which those with ostensible
authority must first and foremost demonstrate their
zealous personal loyalty to the one who holds real
.
All the subsequent protestations about personal
integrity and independence ring a little hollow, when
the
right
course
of
action
calling
an
executive
session
to let the unaffiliated outside directors debate the issues
in private, without any undue influence from insiders
was both an obvious and easy choice. That the
meeting appears to have been orchestrated from the
C-suite
the
General
Counsel,
rather
than
the
boards
own outside advisors, apparently prepared and
presented the materials which shaped the discussion
does not help matters.
If there was ever a moment for the independent
directors to take matters into their own hands, this was
it.
That
they
failed
to
do
so
and
perhaps
even
failed
to
recognize
their
own
responsibility
to
do
so
is
We believe that there are various aspects of the
Companys corporate governance that could suggest that
the
.
. . .we believe that Mr. Solomon and other Company
insiders should have recused themselves from the
board deliberations and actual voting on the matter.
. . .we note that the boards primary committees (audit,
compensation, and nominating and governance) have
historically been comprised of the boards longest
tenured directors, which we believe may blunt the
impact
that
can
be
made
by
the
recently-appointed
directors.
. . .the appointment of Mr. Goodman as presiding
director leaves us feeling highly dubious of the boards
ability to enact truly positive corporate governance
reforms and only serves to drive home the Icahn Groups
argument that the Companys board is filled with
.
ISS
Glass Lewis
Source: ISS, Glass Lewis
power
deeply worrisome
board
has
become
entrenched
entrenched directors
. |
3
ISS criticizes appearance of nepotism, in
addition to highlighting corp. gov. concerns
However, the fact that the succession plan involves having a
senior
executive
presumably
a
candidate
for
the
top
job
report
to his own father
who presumably has some influence in the
matter
is another bad omen. SVP Solomon may in fact be the
best candidate for the job, internally or externally: it is hard
to
know, if all his senior level executive experience came at the
firm
his
father
has
been
running
for
four
decades.
At
a
publicly-held company, succession planning should never be
confused, visually or procedurally, with establishing a dynasty.
Unaffiliated shareholders should be concerned about the degree
to which the independent directors are truly independent of the
long-serving Chairman and CEO. Among the red flags are these
directors
apparent unwillingness to exclude the CEO from
high-stakes discussions
such as the companys response to
threatened
regulatory
action
against
him
individually
in
which
he
is clearly conflicted, and their apparently easy acceptance of the
fundamental
conflict
involved
in
making
the
CEOs
own
son
one
of his direct reports.
ISS Proxy Advisory Services, August 2011 |
4
ISS and Glass Lewis also criticized Forest
Labs on other dimensions
Stock price and
operating
performance
. . .it is still clear that the companys
meager
returns
to
shareholders
over
the half decade leading up to the
announcement of this proxy contest have
been
substantially
outpaced
not
just
by the specialty pharma peers, but even
by a blended group of big and specialty
pharma peers.
We find that the Companys stock price
performance was better than that of the Peer
Group over the recent one-year period but has
been
worse
than
the
Peer
Group
over
the
.
. . .we note that the Companys compounded
annual growth rates for revenue and
operating
income
over
the
three-
and
five-year
periods ended December 31, 2010 were
all
below
the
range
of
growth
rates
observed
in the Peer Group. This raises some concerns
that
the
board
and
management
may
not
have
been
proactive
enough
in
facilitating
greater growth for the Company and its
shareholders in recent years.
Compensation
practices
Rated High Concern
Received D
grade
Overall,
the
Company
paid
more
than
its
peers,
but
performed
moderately
worse
than its peers.
ISS
Glass Lewis
Source: ISS, Glass Lewis
longer term |
5
Goodmans poor business judgment and lack
of independence qualify him for removal
Current presiding independent director Goodman was President
and COO, responsible for decisions leading to civil and criminal
pleadings, payment of ~$300M in fines, and higher costs and
administrative burdens from implementation of corporate integrity
agreement
Glass Lewis states:
-Moreover, we note that the board has neither appointed an
independent
chairman
nor
an
independent
presiding
director
.
.
.we
do
not
consider
him
[Goodman]
to
be
independent
from
the
Companys management given that he was employed as an
executive by the Company within the past five years, served as a
Company executive for more than 25 years, and received
approximately $198,000 in retirement benefits from the Company
during fiscal year 2011.
Goodman poor choice for board,
vote the GOLD card!
Source: Submission Behalf of Howard Solomon to the HHS-OIG from Davis Polk & Wardwell;
Glass Lewis |
6
Chairman and CEO Solomon compensation
not tied to share performance
Note: Fiscal year ends March 31
Source: Public documents
While Forest Labs equity value declined by
~65%, Solomon paid ~$60M
0
2
4
6
8
$10M
Chairman & CEO Solomon compensation ($M)
FY
2004FY
$9.0M
2005FY
$7.0M
2006FY
$6.7M
2007FY
$5.4M
2008FY
$6.5M
2009FY
$6.6M
2010FY
$8.3M
2011
Bonus
Salary
Stock
Other
Options
$8.9M |
7
Special note regarding this presentation
This presentation includes information based on data found in filings with the SEC,
independent industry publications
and
other
sources.
Although
we
believe
that
the
data
is
reliable,
we
do
not
guarantee
the
accuracy
or
completeness
of
this
information
and
have
not
independently
verified
any
such
information.
We
have not sought, nor have we received, permission from any third-party to include their
information in this presentation.
Many of the statements in this presentation reflect our subjective belief.
Although we have reviewed and analyzed the information that has informed our opinions,
we do not guarantee the accuracy of any such beliefs.
Sections of this presentation refer to the experience of our nominees for director at
Forest Laboratories during
their
tenure
as
directors
of
Biogen
Idec,
ImClone
Systems
Inc.,
Genzyme
Corporation,
Amylin
Pharmaceuticals,
and
Enzon
Pharmaceuticals.
We
believe
their
experience
at
these
companies
was
a
success and resulted in an increase in shareholder value that benefited all
shareholders. However, their success at these companies is not necessarily
indicative of future results at Forest Laboratories if our nominees
were
to
be
elected
to
the
Forest
Laboratories
Board
of
Directors.
In
addition,
we
acknowledge
that if elected, our nominees will be a minority of the directors and will not alone be able
to adopt resolutions.
All stockholders of Forest Laboratories are advised to read the definitive proxy
statement, the gold proxy card and other documents related to the solicitation of
proxies by the Participants from the stockholders of Forest Laboratories for use at the
2011 annual meeting of stockholders of Forest Laboratories because they contain
important information. The definitive proxy statement and form of proxy along with other relevant
documents are available at no charge on the SEC's website at http://www.sec.gov or by
contacting D.F. King & Co., Inc. by telephone at the following numbers:
Stockholders call toll-free: (800) 697-6975 and
Banks and Brokerage Firms call: (212)
269-5550. In addition, the Participants will provide copies of the
definitive proxy statement without charge upon request. Information relating to the
Participants is contained in the definitive Schedule 14A filed by the Participants with
the SEC on July 19, 2011. |