Icahn secures one board seat at Forest Labs

Aug 15, 2012, 1:10 PM EDT

* Preliminary results show Icahn nominee Legault won a seat

* Icahn sought to win four board seats

By Toni Clarke and Soyoung Kim

Aug 15 (Reuters) - Billionaire investor Carl Icahn has secured one of the four board seats he sought at drugmaker Forest Laboratories Inc, according to an early tally of shareholder votes at the company's annual meeting on Wednesday.

Preliminary voting results indicated that Icahn nomineePierre Legault, a former executive at several big drugmakers,has won a seat on the 10-member board following a bitter proxybattle. He would replace current director Dan Goldwasser,chairman of the compensation committee.

"Shareholders are sending the message loud and clear thatthey're fed up," Daniel Ninivaggi, one of the Icahn nominees andpresident of Icahn Enterprises, told reporters after the Forestmeeting in New York.

Ninivaggi said Forest needs to be more open about successionplans for its long-time chief executive, Howard Solomon, andshould adopt basic corporate governance measures.

The outcome falls short of the expectations of Icahn, whohad pushed for at least two board seats, and it remains to beseen if Legault alone can be effective in pushing for theinvestor's agenda.

But Ninivaggi added it is an uphill battle for a dissidentinvestor to win any board representation at all and called theoutcome a "great victory" for corporate governance.

Kenneth Goodman, Forest's president from 1998 to 2006 andcurrently the company's presiding independent director, said theelection of only one of Icahn's four nominees reflectsshareholder confidence in the company's strategy, corporategovernance practices and its product portfolio.

"We look forward to working with him in a constructivemanner to build value for all Forest shareholders over the longterm," Goodman said in a statement, referring to Legault.

Frank Perier, Forest's chief financial offer, reiterated thecompany has a "very strong" succession planning process underway and is continuing to evaluate internal and externalcandidates with help from an outside search firm.

Icahn, in his second proxy fight against Forest in as manyyears, had sought seats for Legualt; Ninivaggi; Eric Ende, aformer analyst at Merrill Lynch, and Andrew Fromkin, formerchief executive of Clinical Data.

Forest argued that Icahn's nominees would not add any valueto its board and that its directors were best qualified togenerate growth for the company as generic competition curtailsrevenue from its two biggest products - the antidepressantLexapro and the Alzheimer's drug Namenda.

Forest had also said Ende and Fromkin had conflicts ofinterest, making them unfit for board positions. Forest rejectedefforts to broker an agreement with Icahn.

Shareholders received conflicting advice from influentialproxy advisers. Institutional Shareholder Services backed thenominations of Legault and Ninivaggi, while Glass Lewis & Corejected Icahn's entire slate.

Forest shares were down 0.2 percent at $33.83 in earlyafternoon trading on Wednesday.

Icahn has attacked Forest on multiple levels. He said Forest is trying to sell products in too many therapeutic areas and its sales force is therefore inefficient, and has recommendedsome products be divested.

He also said that the company has promoted the son of84-year-old CEO Solomon beyond his abilities with the aim ofinstalling him in the top job.

Forest has contended that it has taken multiple measures toimprove its corporate governance and that its strategy is theright one to promote growth.