There appears to be a slight tremor in the heretofore unyielding force field of support by the Forest Laboratories board for its octogenarian CEO Howard Solomon.
Just days before its showdown with investor Carl Icahn, the Forest ($FRX) board has agreed to some un-detailed governance changes to settle three shareholder lawsuits that accused it of being too cozy with management and too willing to support the 84-year-old Solomon against the interests of shareholders, The Wall Street Journal reports.
The proposed settlement, mentioned in its quarterly filing Thursday, says the board would undertake "measures related to conflicts of interest regarding board discussions, compensation consultants, and executive compensation policy," as well as paying some legal fees. Among other things, the lawsuits alleged the directors paid Solomon too much, were not forthright about executive pay and supported Solomon when federal regulators wanted to ban him from federal programs after the company settled litigation about overly aggressive marketing. The government backed down in the face of the resistance from the company.
The deal adds fuel to the fire lit by Icahn, who controls 10% of Forest shares and is pushing to load up the board with allies because he thinks Solomon and the board have done a poor job of running the company. The board has been steadfast in opposing Icahn's offers, saying it and Solomon are doing just fine. The board meeting that will decide which side wins is next Wednesday.
- read the Wall Street Journal piece (sub. req.)
- and the SEC filing
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