Aiming to thwart activist investor Carl Icahn (photo), Forest Laboratories ($FRX) plans to expand its board and bring in three new members. Two current board members--William Candee, who's served since 1959, and George Cohan, who's served since 1977--will not seek re-election at the company's annual meeting, allowing Forest to put forward a slate of three nominees to rival Icahn's four.
Icahn, a veteran of biopharma proxy fights, has been haranguing Forest about CEO Howard Solomon's ongoing troubles with U.S. regulators. Health and Human Services has moved to bar Solomon from doing business with federal healthcare programs, which would require Forest to either absorb hundreds of millions in lost revenue or to say goodbye to its longtime chief. Solomon is fighting the proposed sanctions.
Forest's board proposal includes nominations for Christopher Coughlin, former CFO of Tyco International and Pharmacia; Gerald Lieberman, former president of Alliance Bernstein Holding; and Brenton Saunders, CEO of Bausch & Lomb. Electing these three would expand the board to 10 members from 9. In its letter to shareholders, the company acknowledges impending generic competition for its two biggest products, but touts recent product launches, double-digit growth in sales of two new meds, and anticipated FDA approvals. And it lambastes Icahn's nominees as "hopelessly conflicted" by their service on biotech boards.
"Mr. Icahn has offered no plan or strategy for the company that would justify installing his four hand-picked nominees to our board," the company says. "Instead, he has offered baseless criticism of the board's handling of the federal investigation into the company's marketing practices and its resolution."
Icahn's investment firm has sued Forest in federal court, seeking details about the HHS exclusion action against Solomon, which remains pending.