(Reuters) - Forest Laboratories Inc FRX.N said on Monday its board had hired executive search firm Spencer Stuart to find a successor to its 84-year-old chief executive, Howard Solomon, and urged shareholders to reject director nominees put forth by activist investor Carl Icahn.
The U.S. drugmaker said its independent directors are leading the search process, which includes the consideration of internal and external candidates. The company said it had a deep management bench, which included David Solomon, who is the son of its long-time CEO and was promoted in November 2010.
The company asked shareholders to vote for its full slate of 10 directors, and reject Icahn’s four nominees, including Eric Ende, who is leading the proxy fight for the billionaire investor.
The activist investor, who is Forest’s second-largest shareholder with a stake of about 10 percent, re-launched a proxy fight against the company in recent months after losing a similar battle for board seats last year.
He has taken issue with the company’s corporate governance, including its succession planning. Icahn has said he fears that the CEO’s “buddy board” could make David Solomon the successor.
Forest plans to hold its annual meeting on August 15. In a letter to shareholder, released along with proxy materials ahead of the meeting, Forest took aim at Icahn’s nominees and criticism of the company.
Forest said Ende, who was also nominated by Icahn last year, had received the fewest number of votes of any of the 14 director nominees in 2011. The company also took aim at Ende’s compensation arrangement with Icahn, saying it gives the nominee “an incentives to favor Icahn’s profits over the interests of the rest of our shareholders.”
Reuters earlier reported the unusual arrangement, where Ende stands to get 1 percent of Icahn’s profits over $47.50 per share of Forest. That means, for example, if Icahn were to sell his Forest shares at $50 apiece, Ende would receive $659,000.
Forest’s shares were up 0.9 percent at $35.79 during afternoon trading on the New York Stock Exchange.
Icahn’s other three nominees are Pierre Legault, who until recently was CEO of biotechnology firm Prosidion Ltd, a unit of Astellas Pharma (4503.T); Daniel Ninivaggi, president of Icahn Enterprises; and Andrew Fromkin, former CEO of Clinical Data Inc, a company Forest bought last year.
Forest said Ninivaggi is a salaried employee of Icahn Enterprises with no pharmaceutical experience, while Fromkin and Legault have limited relevant experience. The company also said it believed Fromkin was conflicted because of a prior association with Clinical Data.
“We believe Mr. Icahn’s 2012 slate is even weaker than last year’s,” Forest said in the letter. (Reporting by Paritosh Bansal; Editing by Steve Orlofsky)