Fighting an attempted palace coup by major shareholder Carl Icahn, Forest Laboratories management asked investors to reject Icahn’s slate of board nominees in favor of the company’s own candidates. In a letter to investors, chairman and CEO Howard Solomon and director Kenneth Goodman asked shareholders to vote for their 10 board candidates, seven of whom are incumbents.  

Both Icahn and Solomon have gained media attention as of late, stemming from Forest’s $313 million payout to the Department of Justice (DOJ) last year as a result of the company’s distribution of the unapproved drug Levothroid, and the misbranding or off-label promotion of antidepressants Lexapro and Celexa. Though he was not personally accused of wrongdoings on this matter, as a result of the DOJ’s action, this April the US Department of Health and Human Services (HHS) sought to exclude Solomon from participating in federal healthcare programs; the CEO challenged the HHS’s attempt, and the organization subsequently dropped potential action just last week.

The plot thickened, however, when after the news of HHS’s attempted action against Solomon, Icahn-led firm, High River LP – which just purchased 2% of Forest Lab’s stock, adding to the company’s prior 7% ownership, according to a spokesperson for the pharma – sued Forest for access to company records to investigate what the CEO did or did not do to receive such extraordinary action from HHS. The Delaware court where the firm’s complaint was filed has since agreed to allow High River access to the minutes from a Forest Labs board meeting, as well as to messages between the company and feds, correspondence which Icahn may now use in an attempt to unseat Forest directors at the company’s shareholders meeting on August 18.

In the shareholders letter, Forest’s execs attempt to bolster investor views of the current board and management team by emphasizing the company’s “long track record of delivering strong shareholder returns,” and reminding shareholders that Forest’s revenues and earnings over the past decade “have increased at compound annual growth rates of 12.1% and 16.5%, respectively.” Also highlighted is the fact that Forest’s stock price under the current management teams outperformed the S&P 500 index as well as the AMEX Pharmaceutical Index in the short and long terms.

Furthermore, the letter attempts to garner investor patronage of Forest Lab’s board nominees by sharing counsel from three independent proxy advisory firms – Institutional Shareholder Services (ISS), Egan-Jones, and Glass Lewis & Co. – who “announced their strong support” of the pharma’s selections. Proxy firm ISS also commented that Icahn “has not demonstrated a compelling case that change at the Board level is needed.”