More pressure on Forest Laboratories CEO Howard Solomon. In response to a move to exclude Solomon from doing business with the federal government, shareholder AFL-CIO is calling for the CEO's head, Pharmalot reports.
Forest subsidiary Forest Pharmaceuticals has pleaded guilty to several federal charges, including obstruction of justice and off-label marketing. To settle with the Justice Department, Forest agreed to pay $313 million, more than half of that in criminal penalties. Since then, the Department of Health and Human Services has gone after Solomon personally with the exclusion threat.
The union has suggested to the company's board that Solomon should resign. Its reasoning sounds quite similar to the FDA's pledge to hold executives accountable for company misconduct, whether they were directly involved or not. "While we recognize that Mr. Solomon was not personally accused of wrongdoing, we believe that the chairman and CEO should be held accountable for major regulatory compliance failures by company subsidiaries," the union wrote. "Part of the job of chairman and CEO is to manage the company and its subsidiaries to prevent wrongdoing."
As Pharmalot notes, the AFL-CIO Reserve Fund owns 208 shares of Forest Labs. Not exactly a huge stake; the Wall Street Journal Health Blog calculates its worth to be about $7,000. But as a shareholder, it has a right to express its opinion. And as AFL-CIO's investment office counsel Robert McGarrah told Pharmalot, shareholders in general should demand good corporate governance. "[C]ircling the wagons around Mr. Solomon, as the Board now appears to be doing, protects no one but Mr. Solomon," McGarrah said.