-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ii5F0fiUOJJTv5fC6FYEsW9N5h41lDe589ZmOTgMZlg/8okcaTDUdVkKbiDWy1xf YoeNtnCEhmjy7eXyc4iGew== 0001047469-99-025812.txt : 19990630 0001047469-99-025812.hdr.sgml : 19990630 ACCESSION NUMBER: 0001047469-99-025812 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990816 FILED AS OF DATE: 19990629 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FOREST LABORATORIES INC CENTRAL INDEX KEY: 0000038074 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 111798614 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 001-05438 FILM NUMBER: 99655240 BUSINESS ADDRESS: STREET 1: 909 THIRD AVENUE CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2124217850 MAIL ADDRESS: STREET 1: 909 THIRD AVENUE CITY: NEW YORK STATE: NY ZIP: 10022 DEF 14A 1 DEF 14A SCHEDULE 14A (RULE 14A-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by registrant [X] Filed by a party other than the registrant [ ] Check the appropriate box: [ ] Preliminary proxy statement [X] Definitive proxy statement [ ] Definitive additional materials [ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12 Forest Laboratories, Inc. - -------------------------------------------------------------------------------- (Name of Registrant as Specified in its Charter) Forest Laboratories, Inc. - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement) Payment of filing fee (Check the appropriate box): [X] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. 1) Title of each class of securities to which transaction applies: - -------------------------------------------------------------------------------- 2) Aggregate number of securities to which transaction applies: - -------------------------------------------------------------------------------- 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11:(1) - -------------------------------------------------------------------------------- 4) Proposed maximum aggregate value of transaction: - -------------------------------------------------------------------------------- 5) Total fee paid: - -------------------------------------------------------------------------------- [ ] Fee paid previously with preliminary materials: - -------------------------------------------------------------------------------- [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. - -------------------------------------------------------------------------------- 1) Amount previously paid: - -------------------------------------------------------------------------------- 2) Form, schedule or registration statement No.: - -------------------------------------------------------------------------------- 3) Filing party: - -------------------------------------------------------------------------------- 4) Date filed: - ------------------------ (1) Set forth the amount on which the filing fee is calculated and state how it was determined. FOREST LABORATORIES, INC. NOTICE OF 1999 ANNUAL MEETING OF STOCKHOLDERS The Annual Meeting of the Stockholders of Forest Laboratories, Inc. (the "Company") will be held on August 16, 1999 at 10:00 a.m., at Chase Manhattan Corporate Headquarters, 270 Park Avenue, New York, New York for the following purposes: 1. To elect a Board of seven Directors to serve until the next Annual Meeting of Stockholders and until their successors are duly elected and qualified (Proposal 1); 2. To ratify the appointment of BDO Seidman, LLP as the Company's independent auditors for the fiscal year ending March 31, 2000 (Proposal 2); and 3. To transact such other business as may properly be brought before the Meeting. Stockholders of record at the close of business on June 21, 1999 shall be entitled to notice of and to vote at the Meeting. A copy of the Annual Report for the fiscal year ended March 31, 1999 is being mailed to stockholders simultaneously herewith. YOU ARE INVITED TO ATTEND THE MEETING. WHETHER OR NOT YOU PLAN TO BE PRESENT, KINDLY FILL IN AND SIGN THE ENCLOSED PROXY EXACTLY AS YOUR NAME APPEARS ON YOUR STOCK CERTIFICATES, AND MAIL IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE IN ORDER THAT YOUR VOTE CAN BE RECORDED. THIS MAY SAVE THE COMPANY THE EXPENSE OF FURTHER PROXY SOLICITATION. By Order of the Board of Directors WILLIAM J. CANDEE, III, SECRETARY June 30, 1999 New York, New York FOREST LABORATORIES, INC. 909 THIRD AVENUE NEW YORK, NEW YORK 10022 PROXY STATEMENT Your proxy is solicited by the Board of Directors of the Company for use at the Annual Meeting (the "Meeting") of Stockholders to be held on Monday, August 16, 1999, or any adjournment or adjournments thereof, for the purposes set forth in the attached Notice of Meeting. This Proxy Statement and form of proxy are being mailed to stockholders on or about June 30, 1999. Any stockholder giving a proxy may revoke it at any time prior to its use at the Meeting by giving written notice of revocation to the Secretary of the Company; mere attendance at the Meeting, without such notice, will not revoke the proxy. Properly executed proxies will be voted in the manner directed by a stockholder and, if no direction is made, will be voted for the election of each of the seven nominees for election as directors and in favor of the other proposals described herein. The Board of Directors does not intend to present at the Annual Meeting any matters other than those set forth in this Proxy Statement, nor does the Board of Directors know of any other matters which may come before the Meeting. However, if any other matters properly come before the Meeting, it is the intention of the persons named in the enclosed proxy to vote it in accordance with their judgment. As of June 21, 1999, the record date fixed for the determination of stockholders entitled to notice of and to vote at the Annual Meeting, there were outstanding 83,301,658 shares of the Company's common stock, par value $.10 per share (the "Common Stock") which is the only outstanding class of voting securities of the Company. Each outstanding share of Common Stock is entitled to one vote on each matter to be voted upon. The Company's by-laws provide that stockholders holding a majority of the outstanding shares of Common Stock shall constitute a quorum at meetings of the stockholders. Shares represented in person or by proxy as to any matter will be counted toward the fulfillment of a quorum. The affirmative vote of a plurality of the votes cast in person or by proxy is necessary for the election of directors. The affirmative vote of a majority of the shares of Common Stock present in person or by proxy is necessary for the approval of Proposal 2. Votes at the Meeting will be tabulated by two independent inspectors of election appointed by the Company or the Company's transfer agent. As the affirmative vote of a plurality of votes cast is required for the election of directors, abstentions and "broker non-votes" will have no effect on the outcome of such election. As the affirmative vote of a majority of shares of Common Stock present in person or represented by proxy is necessary for the approval of Proposal 2, an abstention will have the same effect as a negative vote, but "broker non-votes" will have no effect on the outcome of the vote. Brokers holding shares for beneficial owners must vote those shares according to the specific instructions they receive from beneficial owners. If specific instructions are not received, brokers may vote those shares in their discretion, depending on the type of proposal involved. The Company believes that, in accordance with American Stock Exchange rules applicable to such voting by brokers, brokers will have discretionary authority to vote with respect to any shares as to which no instructions are received from beneficial owners with respect to the election of directors and Proposal 2. Shares as to which brokers have not exercised such discretionary authority or received instructions from beneficial owners are considered "broker non-votes." Only stockholders of record at the close of business on June 21, 1999 will be entitled to vote at the Meeting or any adjournment or adjournments thereof. 1 IT IS DESIRABLE THAT AS LARGE A PROPORTION AS POSSIBLE OF THE STOCKHOLDERS' INTERESTS BE REPRESENTED AT THE MEETING. THEREFORE, EVEN IF YOU INTEND TO BE PRESENT AT THE MEETING, YOU ARE REQUESTED TO SIGN AND RETURN THE ENCLOSED PROXY TO INSURE THAT YOUR STOCK WILL BE REPRESENTED. IF YOU ARE PRESENT AT THE MEETING AND DESIRE TO DO SO, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON BY GIVING WRITTEN NOTICE TO THE SECRETARY OF THE COMPANY. PLEASE RETURN YOUR EXECUTED PROXY PROMPTLY. PRINCIPAL STOCKHOLDERS The following table sets forth as of June 21, 1999 the name, address and holdings as to each person (including any "group" as defined in Section 13(d) of the Securities Exchange Act of 1934) known by the Company to be the beneficial owner of more than five percent of the Common Stock.
AMOUNT AND NATURE OF NAME AND ADDRESS BENEFICIAL PERCENT OF BENEFICIAL OWNER OWNERSHIP OF CLASS - ---------------------------------------------------------------------------------------- ------------ ----------- Howard Solomon 5,072,306(1) 6.09% 909 Third Avenue New York, New York, 10022 J.P. Morgan & Co., Incorporated 10,732,792(2) 12.88% 60 Wall Street New York, New York, 10260 FMR Corp. 8,090,570(3) 9.71% 82 Devonshire Street Boston, Massachusetts 02109
- ------------------------ (1) Includes 3,550,000 shares subject to options exercisable by Mr. Solomon within 60 days from the date hereof, which shares are deemed to be outstanding for purposes of calculating Mr. Solomon's percentage ownership, but not for purposes of calculating any other person's percentage ownership. (2) Based upon information set forth in an Information Statement on Schedule 13G filed by J.P. Morgan & Co, Incorporated ("J.P. Morgan") with the SEC with respect to accounts maintained by third persons at J.P. Morgan. (3) Based upon information set forth in an Information Statement on Schedule 13G filed by FMR Corp. with the SEC with respect to accounts maintained by third persons at FMR Corp. 2 PROPOSAL 1 ELECTION OF DIRECTORS The by-laws of the Company provide that there shall be three to eleven directors, with such number to be fixed by the Board of Directors. Effective at the time and for the purposes of the Meeting, the number of directors of the Company, as fixed by the Board of Directors pursuant to the by-laws of the Company, is seven. Unless otherwise specified, each proxy received will be voted for the election as directors of the seven nominees named below (each of whom was elected at the 1998 Annual Meeting of Stockholders) to serve until the 2000 Annual Meeting of Stockholders and until his successor shall be duly elected and qualified. Each of the nominees has consented to be named a nominee in the Proxy Statement and to serve as a director if elected. Should any nominee become unable or unwilling to accept a nomination or election, the persons named in the enclosed proxy will vote for the election of a nominee designated by the Board of Directors or will vote for such lesser number of directors as may be prescribed by the Board of Directors in accordance with the Company's by-laws. The following persons have been nominated as directors:
HAS BEEN NAME AND PRINCIPAL A DIRECTOR OCCUPATION OR POSITION AGE SINCE - ------------------------------------------------------------------------------------------------ --- ----------- Howard Solomon 71 1964 Chairman of the Board and Chief Executive Officer. Mr. Solomon has served as Chief Executive Officer of the Company since 1977. William J. Candee, III 72 1959 Of Counsel, Rivkin, Radler & Kremer, Attorneys at Law, where Mr. Candee had been a partner since May 1989. George S. Cohan 75 1977 President, The George Cohan Company, Inc. consultants, since June 1989. For more than five years prior thereto, Mr. Cohan served as President of Doremus & Co., Inc. and its predecessors, an advertising and public relations firm. Dan L. Goldwasser 59 1977 Partner, Vedder, Price, Kaufman, Kammholz & Day, Attorneys at Law, since May 1992. Kenneth E. Goodman 51 1998 President and Chief Operating Officer of the Company since December 1998. For eighteen years prior thereto, Mr. Goodman served as Vice President-Finance and Chief Financial Officer of the Company and in addition served as Executive Vice President-Operations since February 1998. Lester B. Salans, M.D. 63 1998 Clinical Professor and member of the Clinical Attending Staff Internal Medicine, Mount Sinai Medical School and member of the Adjunct faculty, Rockefeller University for more than the past five years. Dr. Salans was formerly Vice President, Academic and Scientific Affairs and Vice President, Preclinical Research at Sandoz Pharmaceutical Corporation. Phillip M. Satow 58 1998 Independent Consultant. Prior to his resignation in December 1998, Mr. Satow served as Executive Vice President of the Company since February 1998. Prior thereto, Mr. Satow served as Executive Vice President-Marketing since 1985.
3 Certain information regarding the beneficial ownership of Common Stock by each such director and nominee is set forth below at "Security Ownership of Management." EXECUTIVE OFFICERS OF THE COMPANY
NAME AGE POSITION WITH THE COMPANY - ----------------------------------------------------- --- ----------------------------------------------------- Howard Solomon 71 Chairman of the Board and Chief Executive Officer Kenneth E. Goodman 51 President and Chief Operating Officer Raymond Stafford 50 Executive Vice President-Global Marketing Lawrence S. Olanoff, M.D., Ph.D. 47 Executive Vice President-Scientific Affairs Elaine Hochberg 42 Vice President-Marketing
See the table of nominees for election as directors for biographical data with respect to Messrs. Solomon and Goodman. Raymond Stafford was elected Executive Vice President-Global Marketing effective December 1998. For more than 5 years prior thereto, Mr. Stafford served as Vice President-Europe and was based in Dublin, Ireland. Dr. Lawrence S. Olanoff was elected Executive Vice President-Scientific Affairs of the Company in December 1998. From October 1995 through February 1998, Dr. Olanoff served as Vice President-Scientific Affairs and served as Senior Vice President-Scientific Affairs from and after February 1998. From 1993 until he joined the Company in 1995, Dr. Olanoff was Senior Vice President, Clinical Research and Development at Sandoz Pharmaceutical Corporation. For nine years prior thereto, Dr. Olanoff was employed by The Upjohn Company, where his last position was Corporate Vice President, Clinical Development and Medical Affairs. Elaine Hochberg was elected Vice President-Marketing of the Company in February 1998. From June 1997 through February 1998, Ms. Hochberg served as Vice President-Marketing of Forest Pharmaceuticals, Inc., a wholly-owned subsidiary of Forest. Prior to joining Forest in 1997, Ms. Hochberg was Assistant Vice President-Marketing at Wyeth-Lederle Laboratories. 4 SECURITY OWNERSHIP OF MANAGEMENT The following table sets forth the beneficial ownership of shares of Common Stock of the Company as of June 21, 1999 of (i) the Chief Executive Officer and each of the Company's other executive officers at March 31, 1999, (ii) each director and nominee to serve as a director and (iii) all directors and executive officers of the Company as a group:
NAME OF AMOUNT AND NATURE OF PERCENT OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS - -------------------------------------------------------------------------------- -------------------- ------------- Howard Solomon 5,072,306(1) 6.09 % William J. Candee, III 33,416(2) * George S. Cohan 37,000(3) * Dan L. Goldwasser 38,340(4) * Kenneth E. Goodman 1,218,400(5) 1.46 % Lester B. Salans, M.D. 16,000(6) * Phillip M. Satow 52,430(7) * Raymond Stafford 0 * Dr. Lawrence S. Olanoff 14,392 * Elaine Hochberg 12,000(8) * All directors and executive officers as a group 6,494,284(9) 7.80 %
- ------------------------ * less than 1% (1) Includes 3,550,000 shares subject to options exercisable within 60 days of the date hereof. (2) Includes 30,000 shares subject to options exercisable within 60 days of the date hereof. (3) Includes 30,000 shares subject to options exercisable within 60 days of the date hereof. (4) Includes 30,000 shares subject to options exercisable within 60 days of the date hereof. Does not include 1,300 shares owned by Mr. Goldwasser's wife as to which shares Mr. Goldwasser disclaims beneficial ownership. (5) Includes 1,175,000 shares subject to options exercisable within 60 days of the date hereof. (6) Includes 16,000 shares subject to options exercisable within 60 days of the date hereof. Does not include 800 shares owned by Dr. Salans' wife as to which shares Dr. Salans disclaims beneficial ownership. (7) Includes 6,480 shares held in trusts, of which Mr. Satow is a trustee, for the benefit of Mr. Satow's children. (8) Includes 12,000 shares subject to options exercisable within 60 days of the date hereof. (9) Includes 4,843,000 shares subject to options exercisable within 60 days of the date hereof. 5 SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Federal securities laws require that the individuals and groups listed in the preceding table must report to the SEC and the Company, within certain periods, how many shares of the Company's equity securities they own and if they conducted certain transfers in such securities. Based upon information furnished by these stockholders, the Company believes that all required filings for the most recent fiscal year and prior fiscal years have been made. EXECUTIVE COMPENSATION The following table sets forth, for the fiscal years ended March 31, 1999, 1998 and 1997, compensation paid by the Company to the Chief Executive Officer and to each of the four most highly compensated executive officers of the Company other than the Chief Executive Officer during fiscal year 1999 who were serving at the end of such fiscal year, including salary, bonuses, stock options and certain other compensation: 6 SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION AWARDS(1) -------------------- ------------------------ ALL OTHER SALARY BONUS OPTIONS COMPENSATION NAME AND PRINCIPAL POSITION YEAR ($) ($) (#) ($)(2) - ------------------------------------------------------ --------- --------- --------- --------- ------------- Howard Solomon, 1999 667,521 100,000 150,000 29,191 Chairman and Chief 1998 621,271 60,000 200,000 28,987 Executive Officer 1997 610,021 0 0 20,803 Kenneth E. Goodman, 1999 444,264 75,000 75,000 22,936 President and Chief 1998 413,014 50,000 100,000 18,780 Operating Officer 1997 405,514 0 0 14,852 Raymond Stafford, 1999(3) 117,629 0 75,000 0 Executive Vice President- Global Marketing Dr. Lawrence S. Olanoff, 1999 413,750 75,000 75,000 20,109 Executive Vice President- 1998 382,500 50,000 40,000 17,903 Scientific Affairs 1997 356,250 35,000 60,000 5,509 Elaine Hochberg, 1999 257,000 40,000 20,000 18,929 Vice President-Marketing 1998(4) 187,615 20,000 80,000 3,887
- ------------------------ (1) The Company has no long term incentive compensation plan other than its several Employee Stock Option Plans described herein and various individually granted options. The Company does not award stock appreciation rights, restricted stock awards or long term incentive plan pay-outs. (2) Consists of group term life insurance and compensation credited to such executive officers pursuant to the Forest Laboratories, Inc. Savings and Profit Sharing Plan (the "Plan"), which covers employees of the Company and certain of its subsidiaries. Under the Plan, all regular employees of the Company and certain subsidiaries who are employed for at least six months prior to the Plan year end become participants of the Plan. Contributions, which are made at the discretion of the Company's Board of Directors, may not exceed 25 percent of the individual Plan participant's gross salary (up to a maximum salary of $150,000), including allocated forfeitures for the Plan year. Plan participants vest over a period of 3 to 7 years of credited service. The Company did not pay or provide other forms of annual compensation (such as perquisites) to any of the named executive officers having a value exceeding the lesser of $50,000 or 10% of the total annual salary and bonus reported for such officers. (3) Reflects compensation from the date Mr. Stafford was appointed as an Executive Officer of the Company. (4) Reflects compensation from the date Ms. Hochberg joined the Company. OPTIONS GRANTED IN FISCAL 1999 The following information is furnished for the fiscal year ended March 31, 1999 with respect to the Company's Chief Executive Officer and the other executive officers of the Company named in the Compensation Table above, for stock options granted during such fiscal year. Stock options were granted without tandem stock appreciation rights. 7
POTENTIAL REALIZABLE VALUE AT ASSUMED ANNUAL RATES OF STOCK PRICE APPRECIATION % OF TOTAL FOR OPTIONS OPTIONS GRANTED EXERCISE PRICE OPTION TERM($)(1) GRANTED TO EMPLOYEES PER SHARE EXPIRATION ------------------------ NAME (#) DURING FISCAL YEAR ($/S) DATE 5% 10% - ----------------------------- --------- ------------------- -------------- ------------ ---------- ------------ Howard Solomon 150,000 13.26% 48.3438 12/18/2008 4,560,473 11,557,135 Kenneth E. Goodman 75,000 6.63% 48.3438 12/18/2008 2,280,237 5,778,568 Raymond Stafford 75,000 6.63% 48.3438 12/18/2008 2,280,237 5,778,568 Dr. Lawrence S. Olanoff 75,000 6.63% 48.3438 12/18/2008 2,280,237 5,778,568 Elaine Hochberg 20,000 1.77% 48.3438 12/18/2008 608,063 1,540,951
- ------------------------ (1) Represents the potential value of the options granted at assumed 5% and 10% rates of compounded annual stock price appreciation from the date of grant of such options. The increase in shareholders' equity to all shareholders of the Company measured over the same period at the same assumed rates of appreciation and based upon the market price for the Common Stock on the date such options were granted would be $2,531,693,212 and $6,415,807,667, respectively. AGGREGATED OPTION EXERCISES IN FISCAL 1999 AND FISCAL YEAR END OPTION VALUES The following information is furnished for the fiscal year ended March 31, 1999 with respect to the Company's Chief Executive Officer and the other executive officers of the Company named in the Compensation Table above, for stock option exercises during such fiscal year.
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN THE SHARES OPTIONS AT 3/31/99 (#) MONEY OPTIONS AT 3/31/99 ($) ACQUIRED VALUE --------------------------- ------------------------------ NAME ON EXERCISE(#) REALIZED($) EXERCISABLE NON-EXERCISABLE EXERCISABLE NON-EXERCISABLE - ---------------------------- -------------- ------------ ---------- --------------- ------------- --------------- Howard Solomon 716,748 23,086,827 3,400,000 150,000 141,274,960 1,223,430 Kenneth E. Goodman 0 0 1,100,000 75,000 44,012,480 611,715 Raymond Stafford 49,500 1,453,124 0 170,500 0 3,935,871 Dr. Lawrence S. Olanoff 90,000 2,765,108 0 205,000 0 5,455,460 Elaine Hochberg 12,000 342,750 0 88,000 0 2,538,874
BENEFITS AGREEMENTS On December 1, 1989 the Board of Directors adopted a policy of granting certain medical insurance benefits to senior corporate executive officers and their spouses upon the completion of 10 years of service by such senior officers. The benefit would be provided to such executives and their spouses for their lifetimes following the termination of such executive's employment with the Company, and would be equivalent to the medical insurance benefits provided to such executives as of the date of their termination or as of December 1, 1989, if more favorable. The benefit need not be provided to the extent and for any time that the executive obtained comparable insurance from a subsequent employer. The Company has entered into formal written benefits agreements with each of Messrs. Solomon, Goodman and Satow (who retired in December 1998) granting the 10 year service benefit. Effective March 31, 1994, the Company entered into "split dollar" life insurance benefit agreements with each of Messrs. Solomon, Satow and Goodman. Each of these agreements provides that the Company will pay the premiums on a life insurance policy owned by and for the benefit of the executive. Upon the death of the executive (or other realization by the executive upon the principal amount of the policy), 8 proceeds of the life insurance policy will be applied to repay the Company for all premiums paid on behalf of the executive. The Company is obligated to continue to pay premiums under these agreements until the covered life insurance policies are paid in full, notwithstanding the termination of the executive's employment with the Company. The Company is further obligated to pay all such premiums in a lump sum in the event the Company undergoes a "change in control." The Company has entered into employment agreements with several key employees, including each of Messrs. Solomon, Goodman, Dr. Olanoff, Mr. Stafford, and Ms. Hochberg. Each of these agreements becomes effective only upon the occurrence of a "change in control" and provides that the executive is entitled to salary, bonus and benefits for a three year period following a "change in control" of the Company if the executive's employment terminates during such period without cause or for good reason. Subject to certain exceptions, a "change in control" is (i) an acquisition of 20% or more of the Common Stock or voting securities of the Company by a person or group not acquiring their shares directly from the Company, (ii) a change in the majority of the current Board of Directors or their designated successors not consented to by such current Board of Directors or designated successors, and (iii) a liquidation or dissolution of the Company or merger, consolidation or sale of all or substantially all of the Company's assets which involves a greater than 50% change in the shareholders of the Company or the replacement of a majority of the current Board of Directors or their designated successors. STOCK OPTIONS The Company's 1990 and 1994 Employee Stock Option Plans and the 1998 Stock Option Plan (the "Plans") provide that options may be granted to employees, including executive officers, to purchase shares of Common Stock at a price per share fixed by the Board of Directors, provided that, in the case of Incentive Stock Options ("ISO's"), as defined by Section 422 of the Internal Revenue Code of 1986 (the "Code"), such price may not be less than fair market value on the date of the option grant. All employees of the Company and its subsidiaries are eligible to receive options under the Plans. The Plans provide that the Board of Directors may determine the employees to whom options are to be granted and the number of shares subject to each option. The purchase price for shares must be paid in cash or by the tender of shares of Common Stock having a fair market value, as determined by the Board, equal to the option exercise price. The non-employee directors of the Company participate in the 1998 Stock Option Plan (the "1998 Plan"). Under the 1998 Plan an initial grant of options covering 14,000 shares of Common Stock are automatically granted to persons who become non-employee directors from and after the adoption of the 1998 Plan. Twenty-five percent of the foregoing options become exercisable on the date of grant and on each anniversary of such date until all such options are exercisable. The 1998 Plan further provides for the automatic annual grant to each of the Company's non-employee directors of options to purchase 2,000 shares of Common Stock on the date of their annual election or re-election by the Company's stockholders. Each such option grant is at an exercise price equal to the average price of the Common Stock on the American Stock Exchange on the date of grant and become exercisable six months after the date of option grant. All options granted under the 1998 Plan to non-employee directors have a term of 10 years from the date of grant (but in no event more than three months following the optionee's ceasing to serve as a member of the Company's Board of Directors). DIRECTORS' COMPENSATION In addition to automatic annual option grants under the 1998 Plan, each non-employee director of the Company received $22,500 for his services as director during the fiscal year ended March 31, 1999, except for Mr. Candee who received $25,000 for his services as director and the Company's secretary and Chairman of the Audit Committee. 9 COMMITTEES; BOARD MEETINGS The Company has an audit committee composed of Messrs. Candee and Goldwasser. During the fiscal year ended March 31, 1999, the audit committee met on two occasions for the purpose of (i) approving the selection of the Company's independent auditors; (ii) reviewing the arrangements and scope of the audit; and (iii) reviewing the Company's internal accounting procedures and controls and recommendations of the Company's auditors. The Company has a compensation committee composed of Messrs. Candee, Cohan, Goldwasser and Dr. Salans, each of whom are non-employee directors of the Company. During the fiscal year ended March 31, 1999, the compensation committee met on one occasion to make recommendations concerning salary and bonus for the Company's executive officers for the 1999 year and to make recommendations as to the grant of stock options to such executive officers. The Company does not have a nominating committee. The Board of Directors of the Company held three meetings during the fiscal year ended March 31, 1999 and no incumbent director attended fewer than 75% of the aggregate of such meetings and the number of meetings of each committee of which he is a member. REPORT ON EXECUTIVE COMPENSATION BY THE BOARD OF DIRECTORS AND THE COMPENSATION COMMITTEE COMPENSATION POLICY The Company's Board of Directors (the "Board") is responsible for setting and administering the policies which govern annual executive salaries, raises and bonuses and the award of stock options (in the case of options to be granted under the Company's Employee Stock Option Plans, such responsibility is limited to the recommendation of awards to the Company's Stock Option Committee). The Board is currently composed of seven members, five of whom are non-employee directors and two of whom, Messrs. Solomon and Goodman, are, respectively, the Chairman and Chief Executive Officer, and President and Chief Operating Officer, of the Company. In addition, four of the non-employee directors, Messrs. Goldwasser, Candee, Cohan and Dr. Salans, serve as a Compensation Committee and Stock Option Committee which recommends salary increases and bonuses to the Board and administers the granting of options under the Company's Stock Option Plans, including the award of options to the Company's executive officers. The policy of the Board is to provide compensation to the Chief Executive Officer and the Company's other executive officers reflecting the contribution of such executives to the Company's growth in sales and earnings, the implementation of strategic plans consistent with the long term growth objectives of the Company and the enhancement of shareholder value as reflected in the growth of the Company's market capitalization. Contributions to specific Company objectives, including the development and acquisition of new product opportunities, the progress of clinical and other studies and development activities required to bring new ethical pharmaceutical products to market and the successful marketing of the Company's principal products are evaluated in setting compensation policy. Executive compensation decisions have traditionally been made on a calendar year basis. Long term incentive compensation policy consists exclusively of the award of stock options under the Company's Employee Stock Option Plans and individual option grants, which serve to identify the reward for executive performance with increases in value created for shareholders. 10 COMPANY PERFORMANCE AND CEO COMPENSATION Executive compensation for the fiscal year ended March 31, 1999 consisted of base salary, an annual bonus and the award of stock options by the Stock Option Committee as indicated at "Options Granted in Fiscal 1999." The Board met in December 1998 to review executive compensation for the calendar year commencing January 1, 1999. The Board reviewed data relating to operating and financial goals and achievements (and specifically relating to the launch of Celexa-TM- (citalopram HBr), the Company's selective serotonin reuptake inhibitor ("SSRI") for the treatment of depression, and related transactional and infra-structure developments, and the in-licensing and acquisition of products and product development opportunities), the recent history of the compensation granted by the Board to the Company's highest paid executive officers, the compensation policy of the Board and rules of the SEC with respect to disclosure of the compensation and compensation policies applicable to executive officers of the Company. The Compensation Committee and the Board noted the achievement of the successful launch of Celexa and related achievements: the implementation of a co-promotion arrangement with the Parke-Davis division of the Warner-Lambert Company, the completion of the expansion and training of Forest's salesforce, the success of Forest's scientific team in achieving Food and Drug Administration approval for Celexa, the successful scale up of manufacturing and distribution capacity to assure adequate and timely supplies of samples and trade product, and the achievement of a significant and growing market share by Celexa in the SSRI category during the initial marketing period. The Compensation Committee and the Board also considered the future product opportunities provided by license and joint venture arrangements with H. Lundbeck A/S, the Company's licensor of Celexa. The Compensation Committee and the Board considered several key factors in determining the executive compensation of the highest paid officers, including, the accomplishment of strategic objectives during the past year described above, and the fact that the compensation of the Company's executive officers was below or within the range of compensation paid to officers in other pharmaceutical companies, based on a survey presented to the Board in connection with the prior year's compensation review. Accordingly, the Board approved an increase in base compensation and granted bonus and stock options for the Company's senior executive officers, including the Chief Executive Officer. During fiscal 1999, the Stock Option Committee awarded stock options to Howard Solomon, Chairman and Chief Executive Officer, Kenneth E. Goodman, President and Chief Operating Officer, Dr. Lawrence Olanoff, Executive Vice President-Scientific Affairs, Raymond Stafford, Executive Vice President-Global Marketing and Elaine Hochberg, Vice President-Marketing as set forth in the table set forth at "Options Granted in Fiscal 1999" in the amounts set forth therein. The Stock Option Committee resolved to continue the Company's long-standing policy of utilizing the award of stock options (which provide value to the executive over time as growth in the market price of the Company's shares reflects the successful achievement of the Company's business objectives) to identify the success of the Company's executives with the growth in equity value to the Company's shareholders. The size of the award made was determined based upon such officer's contribution to the achievement of the performance objectives described above and the Committee's view of an appropriate equity position to be maintained by the Company's executive officers in light of the Company's market capitalization. Each of these factors was equally considered. THE BOARD OF DIRECTORS Howard Solomon George S. Cohan(1) William J. Candee, III(1) Dan L. Goldwasser(1) Kenneth E. Goodman Dr. Lester B. Salans(1) Phillip M. Satow - ------------------------ (1) Compensation Committee and Stock Option Committee Member. 11 COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION Howard Solomon, the Company's Chairman and Chief Executive Officer, and Kenneth E. Goodman, the Company's President and Chief Operating Officer, are members of the Board and participated in deliberations concerning executive compensation. Each of such executive officers abstained from voting with respect to his own compensation. PERFORMANCE GRAPH The graph below compares the cumulative total shareholder return on the Common Stock for the last five fiscal years with the cumulative total return on the Standard & Poors Health Care Drugs Index and the Standard & Poors MIDCAP 400 Index over the same period (assuming the investment of $100 in the Common Stock, the S&P Health Care Drugs Index and the S&P MIDCAP 400 on March 31, 1994, and the reinvestment of all dividends). COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* AMONG FOREST LABORATORIES, INC., THE S & P MIDCAP 400 INDEX AND THE S & P HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS) INDEX EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
FOREST LABS INC (FRX) Cumulative Total Return 3/94 3/95 3/96 3/97 FOREST LABORATORIES, INC. NA NA NA NA S & P MIDCAP 400 100 108 139 154 S & P HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS) 100 152 242 311 FOREST LABS INC (FRX) 3/98 3/99 FOREST LABORATORIES, INC. NA NA S & P MIDCAP 400 230 222 S & P HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS) 552 750 FOREST LABS INC (FRX) 750 750 100 FOREST LABORATORIES, INC. S & P MIDCAP 400 S & P HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)
*$100 INVESTED ON 3/31/94 IN STOCK OR INDEX- INCLUDING REINVESTMENT OF DIVIDENDS, FISCAL YEAR ENDED MARCH 31. 12 PROPOSAL 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS The firm of BDO Seidman, LLP has audited the financial statements of the Company for each of the three fiscal years ended March 31, 1999. The Board of Directors desires to continue the services of BDO Seidman, LLP for the current fiscal year ending March 31, 2000. Accordingly, the Board of Directors will recommend at the Meeting that the stockholders ratify the appointment by the Board of Directors of the firm of BDO Seidman, LLP to audit the financial statements of the Company for the current fiscal year. Representatives of that firm are expected to be present at the Meeting, shall have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions. THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF THE APPOINTMENT OF BDO SEIDMAN, LLP 13 MISCELLANEOUS ANNUAL REPORT The Company's 1999 Annual Report is being mailed to stockholders contemporaneously with this Proxy Statement. FORM 10-K UPON THE WRITTEN REQUEST OF A RECORD HOLDER OR BENEFICIAL OWNER OF COMMON STOCK ENTITLED TO VOTE AT THE MEETING, THE COMPANY WILL PROVIDE WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON FORM 10-K FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE YEAR ENDED MARCH 31, 1999. REQUESTS SHOULD BE MAILED TO CORPORATE SECRETARY, FOREST LABORATORIES, INC., 909 THIRD AVENUE, NEW YORK, NEW YORK 10022. COST OF SOLICITATION The cost of soliciting proxies in the accompanying form has been or will be paid by the Company. In addition to solicitation by mail, arrangements will be made with brokerage houses and other custodians, nominees and fiduciaries to send proxy material to beneficial owners, and the Company will, upon request, reimburse them for their reasonable expenses in doing so. To the extent necessary in order to assure sufficient representation, officers and regular employees of the Company and a commercial proxy solicitation firm may be engaged to assist in the solicitation of proxies. Whether either measure will be necessary depends entirely upon how promptly proxies are received. No outside proxy solicitation firm has been selected or employed by the Company in respect of the Meeting as of the date of this Proxy Statement, and the Company is unable to estimate the costs to it of any such services. PROPOSALS OF STOCKHOLDERS; STOCKHOLDER BUSINESS Proposals of stockholders to be presented at the 2000 Annual Meeting must be received by the Company for inclusion in the Company's proxy statement and form of proxy relating to that meeting no later than March 3, 2000. In order to comply with applicable provisions of the Company's By-Laws, stockholders intending to present proposals at the 2000 Annual Meeting must give notice thereof in writing to the Secretary of the Company not later than the close of business on June 16, 2000 nor earlier than the close of business on May 16, 2000. In addition, in accordance with applicable rules of the Securities and Exchange Commission, proxies submitted in connection with the 2000 Annual Meeting may confer discretionary authority on individuals designated by the Company to vote in respect of any matter to come before such meeting as to which the Company has not received notice by May 15, 2000. Stockholders are urged to send in their proxies without delay. WILLIAM J. CANDEE, III, SECRETARY Dated: June 30, 1999 14 FOREST LABORATORIES, INC. PROXY - FOR THE ANNUAL MEETING OF STOCKHOLDERS - AUGUST 16, 1999 The undersigned stockholder of FOREST LABORATORIES, INC., revoking any previous proxy for such stock, hereby appoints Howard Solomon and Kenneth E. Goodman, or either of them, the attorneys and proxies of the undersigned, with full power of substitution, and hereby authorizes them to vote all shares of Common Stock of FOREST LABORATORIES, INC. which the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held on August 16, 1999 at 10:00 A.M. at Chase Manhattan Corporate Headquarters, 270 Park Avenue, New York, New York, and any adjournments thereof on all matters coming before said meeting. In the event no contrary instructions are indicated by the undersigned stockholder, the proxies designated hereby are authorized to vote the shares as to which this proxy is given FOR proposals 1 and 2, each of which are set forth on this card. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The Board of Directors Recommends a Vote FOR proposals 1 and 2. (continued on reverse side) - -------------------------------------------------------------------------------- - FOLD AND DETACH HERE - Please mark your choices like this /X/ - -------------- ACCOUNT NUMBER COMMON 1. Election of seven Directors: Howard Solomon, William J. Candee, III, George S. Cohan, Dan L. Goldwasser, Lester B. Salans, Kenneth E. Goodman, Phillip M. Satow. FOR all WITHHOLD nominees AUTHORITY / / / / - ------------------------------ (INSTRUCTION: To withhold authority to vote for any individual nominee, write the nominee's name on the line provided above.) FOR AGAINST ABSTAIN 2. Ratification of BDO Seidman, LLP as Accountants / / / / / / Please sign here exactly as your name(s) appear(s) on this proxy. If signing for an estate, trust or corporation, title or capacity should be stated. If shares are held jointly, each holder should sign. If a partnership, sign in partnership name by authorized person. Dated ----------------------------------- - ----------------------------------------- (Signature) - ----------------------------------------- (Signature) PLEASE MARK BOXES IN BLUE OR BLACK INK PLEASE SIGN, DATE AND MAIL IN THE ENVELOPE PROVIDED - -------------------------------------------------------------------------------- - FOLD AND DETACH HERE - -----END PRIVACY-ENHANCED MESSAGE-----