Exhibit 1
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August 6 Letter
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I.
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Howard Solomon: A Man In “Total Control” At Forest.
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II.
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The Presiding "Independent" Director, Kenneth Goodman lacks true independence, yet he still remains in this important role.
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III.
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Dan Goldwasser, Chair of the Compensation Committee, has overseen flawed compensation policies for decades and has been a Board member for 35 years.
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Compensating Howard Solomon with over $60 million in cash, equity and other compensation over the last 8 years, even though the Forest Labs stock price declined by over 50% during that period.
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Vesting schedules of equity awards were too short, not linked to performance and favored the CEO.
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The Compensation Committee had not previously engaged an independent compensation consultant.
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The Chair of the Committee chose the peer group for comparison purposes.
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The Chair of the Committee circulated a report of factors he believed were relevant to determining compensation including a report prepared directly by management.
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Compensation was not linked to pre-determined performance measures.
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There were no stock ownership requirements.
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IV.
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Lester Salans, long-tenured board member and Chairman of Compliance Committee, has no background in compliance.
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$313 million in penalties related to doctor kickbacks, off-label promotion for children and obstructing an agency proceeding.
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$65 million in penalties related to making false and misleading statements with respect to anti-depression drugs.
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$25 million in penalties for securities claims against Forest and certain officers.
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$20 million in penalties for a patent infringement suit related to Lexapro.
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$100 million gender discrimination class action filed recently.
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V.
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Lawrence Olanoff is not independent by NYSE or Forest’s own standards.
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“Succession planning has become an issue for shareholders not just because the current CEO is 84, but because the board has allowed his son David, currently head of Strategic Development, to report directly to his father, presumably, as one equity analyst has noted, because he is “being groomed to take over as CEO.””
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“Given the unusual situation of the long-serving CEO’s son reporting directly to his father, there is an explicit risk that any succession planning process run behind closed doors might turn out to be simply another dynasty building process.”
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“Forest’s board, which includes three current and former executives, is uncommon for non-controlled U.S. corporations. By comparison, none of its self-selected U.S. peers (LLY, MRK, PFE, and WCRX) have a former executive on the board. Though one former executive may in fact be independent under exchange standards, the practice of appointing directors who owe much of their careers to the CEO they will now “oversee” clearly raises practical concerns about de facto independence and the potential conflicts for those directors.”
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“These operating issues may be exacerbated by lingering concerns, which [Icahn] has foregrounded, about the board’s de facto independence from, and willingness to challenge, its long-time Chairman and CEO. These concerns persist despite the election last year of three new, demonstrably unaffiliated directors, and their subsequent appointment to leadership positions within the board, perhaps because the company has not addressed directly numerous issues—such as the CEO’s son reporting directly to the CEO, or former executives being appointed to oversee the CEO to whom they reported for decades.”
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