<PAGE>
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/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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:
------------------------------------------------------------------------
/ / 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.
<PAGE>
FOREST LABORATORIES, INC.
----------------
NOTICE OF 1995 ANNUAL MEETING OF STOCKHOLDERS
--------------------
The Annual Meeting of the Stockholders of Forest Laboratories, Inc. (the
"Company") will be held on August 14, 1995 at 10:30 a.m., at Chemical Bank, 270
Park Avenue, New York, New York for the following purposes:
1. To elect a Board of five 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 as the Company's
independent auditors for the fiscal year ending March 31, 1996 (Proposal 2);
3. To consider a shareholder proposal requesting that the Board of
Directors take the necessary steps to provide for cumulative voting in the
election of directors, which proposal is opposed by the Board of Directors
(Proposal 3); and
4. To transact such other business as may properly be brought before
the Meeting.
Stockholders of record at the close of business on June 23, 1995 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, 1995 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, 1995
New York, New York
<PAGE>
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
14, 1995, 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, 1995.
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 five management nominees for election as directors (Proposal 1), FOR the
ratification of the appointment of BDO Seidman as the Company's independent
auditors (Proposal 2) and AGAINST the shareholder proposal described herein
(Proposal 3).
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 23, 1995, the record date fixed for the determination of
stockholders entitled to notice of and to vote at the Annual Meeting, there were
outstanding 45,247,321 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 one-third of the
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 majority
of the votes cast in person or by proxy is necessary for the election of
directors (Proposal 1). The affirmative vote of a majority of the shares of
Common Stock present in person or by proxy is necessary for the approval of the
ratification of the appointment of independent auditors (Proposal 2) and for the
shareholder proposal (Proposal 3).
Votes at the Annual 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 majority 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
the ratification of the appointment of independent auditors (Proposal 2) and for
the shareholder proposal (Proposal 3), 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 New York 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
1
<PAGE>
are received from beneficial owners with respect to the election of directors
(Proposal 1) and the ratification of the appointment of independent auditors
(Proposal 2), but not with respect to the shareholder proposal (Proposal 3).
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 23, 1995 will
be entitled to vote at the Meeting or any adjournment or adjournments thereof.
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 23, 1995 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.
<TABLE>
<CAPTION>
AMOUNT AND
NAME AND ADDRESS NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- -------------------------------------------------------------- -------------------- ------------
<S> <C> <C>
Howard Solomon ............................................... 2,426,888(1) 5.2%
909 Third Avenue
New York, New York
Brinson Partners, Inc. ....................................... 2,295,200(2) 5.1%
209 South LaSalle Street
Chicago, Illinois
<FN>
- ------------------------
(1) Includes 1,860,164 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 owner-
ship.
(2) Based upon information supplied by Brinson Partners, Inc. ("BTI"), a
registered investment advisor and wholly owned subsidiary of Brinson
Holdings, Inc. Includes 595,800 shares beneficially owned by Brinson Trust
Company, a wholly owned subsidiary of BTI.
</TABLE>
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 five.
Unless otherwise specified, each proxy received will be voted for the
election as directors of the five nominees named below (each of whom was elected
at the 1994 Annual Meeting of Stockholders) to serve until the 1996 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
2
<PAGE>
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:
<TABLE>
<CAPTION>
NAME AND PRINCIPAL HAS BEEN A
OCCUPATION OR POSITION AGE DIRECTOR SINCE
- --------------------------------------------------------------------------------------------- --- ---------------
<S> <C> <C>
Howard Solomon 67 1964
President and Chief Executive Officer of the Company since 1977. Mr. Solomon also serves on
the Board of Governors of the American Stock Exchange.
William J. Candee, III 68 1959
Partner, Rivkin, Radler & Kremer, Attorneys at Law, since May 1989. For more than five years
prior thereto, Mr. Candee served as an Executive Vice President of the Dime Savings Bank,
New York.
George S. Cohan 71 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 55 1977
Partner, Vedder, Price, Kaufman, Kammholz & Day, Attorneys at Law since May 1992. For more
than five years prior thereto, Mr. Goldwasser served as a shareholder, officer and director
of the New York law firm of Solinger Grosz & Goldwasser, P.C.
Joseph M. Schor 66 1980
Dr. Schor is a private investor and consultant. For more than five years prior to January 1,
1995, Dr. Schor served as Vice President-Scientific Affairs of the Company.
</TABLE>
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
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- -------------------------- --- ---------------------------------------------
<S> <C> <C>
Howard Solomon 67 President and Chief Executive Officer
Phillip M. Satow 53 Executive Vice-President -- Marketing
Kenneth E. Goodman 47 Vice-President -- Finance
Ronald F. Albano 52 Vice-President -- Licensing
</TABLE>
See the table of nominees for election as directors for biographical data
with respect to Mr. Solomon.
Phillip M. Satow has served as Executive Vice-President -- Marketing of the
Company since January 1985.
Kenneth E. Goodman has served as Vice-President -- Finance of the Company
since April 1980.
Ronald F. Albano was elected Vice-President -- Licensing in May 1990. From
November 1987 through April 1990 Dr. Albano was Corporate Vice-President --
Worldwide Licensing and Product Acquisitions of Erbamont Inc. For approximately
nine years prior thereto, he was employed by Sterling Drug, Inc. in various
executive capacities.
3
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership of shares of Common
Stock of the Company as of June 23, 1995 of (i) the Chief Executive Officer and
each of the Company's other executive officers at March 31, 1995, (ii) each
director and nominee to serve as a director and (iii) all directors and
executive officers of the Company as a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME OF BENEFICIAL PERCENT OF
BENEFICIAL OWNER OWNERSHIP CLASS
- ----------------------------------------------------------------------- ------------------- -------------
<S> <C> <C>
Howard Solomon......................................................... 2,426,888(1) 5.2%
William J. Candee, III................................................. 17,708(2) *
George S. Cohan........................................................ 22,000(3) *
Dan L. Goldwasser...................................................... 18,370(4) *
Joseph M. Schor........................................................ 46,445 *
Phillip M. Satow....................................................... 501,000(5) 1.1%
Kenneth E. Goodman..................................................... 467,500(6) 1.0%
Ronald F. Albano....................................................... 59,500(7) *
All directors and executive officers as a group........................ 3,559,411(8) 7.4%
<FN>
- ------------------------
* less than 1%
(1) Includes 1,860,164 shares subject to options exercisable within 60 days of
the date hereof.
(2) Includes 16,000 shares subject to options exercisable within 60 days of the
date hereof.
(3) Includes 18,000 shares subject to options exercisable within 60 days of the
date hereof.
(4) Includes 18,000 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 477,000 shares subject to options exercisable within 60 days of
the date hereof. Also includes 17,000 shares held in trusts, of which Mr.
Satow is a trustee, for the benefit of Mr. Satow's children.
(6) Includes 444,778 shares subject to options exercisable within 60 days of
the date hereof.
(7) Comprised of 59,500 shares subject to options exercisable within 60 days of
the date hereof.
(8) Includes 2,893,442 shares subject to options exercisable within 60 days of
the date hereof.
</TABLE>
4
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth, for the fiscal years ended March 31, 1995,
1994 and 1993, compensation paid by the Company to the Chief Executive Officer
and to each of the other executive officers of the Company during fiscal year
1995, including salary, bonuses, stock options and certain other compensation:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION (1)
ANNUAL COMPENSATION AWARDS
------------------------------- ---------------- ALL OTHER
NAME AND SALARY BONUS OPTIONS/ COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) (#) ($)(2)
- ------------------------------------------ --------- --------- --------- ---------------- -------------
<S> <C> <C> <C> <C> <C>
Howard Solomon, 1995 550,644 60,000 100,000 23,728
President and Chief Executive Officer 1994 518,140 60,000 100,000 26,908
1993 482,885 60,000 100,000 5,707
Phillip M. Satow, 1995 391,889 50,000 50,000 23,761
Executive Vice President -- Marketing 1994 368,378 50,000 50,000 25,810
1993 341,875 50,000 50,000 5,707
Kenneth E. Goodman, 1995 362,888 50,000 50,000 23,761
Vice President -- Finance 1994 339,378 50,000 50,000 25,592
1993 312,206 50,000 50,000 5,707
Ronald F. Albano, 1995 217,257 35,000 25,000 21,264
Vice President -- Licensing 1994 201,252 25,000 0 22,916
1993 189,814 25,000 15,000 5,707
Joseph M. Schor, (3) 1995 289,500 50,000 0 20,269
Vice President -- Scientific Affairs 1994 368,378 50,000 50,000 26,249
1993 341,875 50,000 50,000 5,707
<FN>
- ------------------------
(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 solely of 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 in 1995 and 1994 and $80,000 in 1993), 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) Dr. Schor retired as Vice-President -- Scientific Affairs of the Company on
December 31, 1994. Since his retirement as an officer of the Company on
December 31, 1994, Dr. Schor has served as a consultant to the Company at
an annual rate of $50,000.
</TABLE>
5
<PAGE>
OPTIONS GRANTED IN FISCAL 1995
The following information is furnished for the fiscal year ended March 31,
1995 with respect to the Company's Chief Executive Officer and each of the other
executive officers of the Company for stock options granted during such fiscal
year. Stock options were granted without tandem stock appreciation rights.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
% OF TOTAL RATES OF STOCK PRICE
OPTIONS GRANTED APPRECIATION FOR OPTION
OPTIONS TO EMPLOYEES EXERCISE PRICE TERM (2)
GRANTED (1) DURING FISCAL PER SHARE EXPIRATION ------------------------
NAME (#) YEAR ($/S) DATE 5% 10%
- -------------------------- ----------- ----------------- -------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Howard Solomon 100,000 14.13 46.625 12/16/04 2,932,221 7,430,824
Phillip M. Satow 50,000 7.07 46.625 12/16/04 1,466,111 3,715,412
Kenneth E. Goodman 50,000 7.07 46.625 12/16/04 1,466,111 3,715,412
Ronald F. Albano 25,000 3.53 46.625 12/16/04 733,055 1,857,706
Joseph M. Schor -- -- -- -- -- --
<FN>
- ------------------------
(1) All such options granted to such officers have a term of 10 years and were
granted under the Company's 1994 Employee Stock Option Plan. The exercise
price per share of such options was the market value per share on the date
of grant. The options vest six months after the date of grant.
(2) 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 $1,310,484,220 and $3,321,024,312
respectively.
</TABLE>
AGGREGATED OPTION EXERCISES IN FISCAL 1995 AND FISCAL YEAR END OPTION VALUES
The following information is furnished for the fiscal year ended March 31,
1995 with respect to the Company's Chief Executive Officer and each of the other
executive officers of the Company for stock option exercises during such fiscal
year.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN THE
OPTIONS AT 3/31/95 (#) MONEY OPTIONS AT 3/31/95 ($)
SHARES ACQUIRED VALUE ---------------------------- ------------------------------
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE NON-EXERCISABLE EXERCISABLE NON-EXERCISABLE
- -------------------------- --------------- ------------- ----------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Howard Solomon 384,836 16,415,641 1,760,164 255,000 47,767,224 702,500
Phillip M. Satow 103,000 3,937,286 427,000 127,500 11,201,125 351,250
Kenneth E. Goodman 100,000 3,573,228 394,778 127,500 9,961,865 351,250
Ronald F. Albano -- -- 22,500 47,500 519,467 407,405
Joseph M. Schor 509,778 13,533,420 -- -- -- --
</TABLE>
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, Schor, Goodman and Satow 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, Schor, 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
6
<PAGE>
executive. Upon the death of the executive (or other realization by the
executive upon the principal amount of the policy), 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."
Effective September 30, 1994 the Company entered into employment agreements
with each of Messrs. Solomon, Satow and Goodman. 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 1985, 1988, 1990 and 1994 Employee Stock Option Plans (the
"Plans") provide that options may be granted 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, 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 Amended
Directors' Stock Option Plan (the "Directors' Plan") under which an initial
grant of options covering 10,000 shares of Common Stock each were granted to
each of the Company's non-employee directors at an exercise price of $9.90625
per share (being the average price for the Common Stock on the American Stock
Exchange on August 15, 1988, the date of stockholder approval of the Directors'
Plan) and pursuant to which an initial grant of options (having an exercise
price equal to average price of the Common Stock on the date of grant) covering
14,000 shares of Common Stock will automatically be granted to persons who
become non-employee directors from and after the adoption of the Directors'
Plan. The Directors' Plan expires on June 9, 1998 and options granted thereunder
have a term of 10 years (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).
Twenty-five percent of the options granted under the Directors' Plan become
exercisable on the date of grant and on each anniversary of such date until all
such options are exercisable.
The Directors' 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 shareholders. Each such option grant will be at an exercise price
equal to the average price of the Common Stock on the American Stock Exchange on
the date of grant and will become exercisable six months after the date of
option grant. Each such option shall 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).
7
<PAGE>
DIRECTORS' COMPENSATION
In addition to automatic annual option grants under the Directors' Plan,
each non-employee director of the Company received $22,500 for their services as
director during the fiscal year ended March 31, 1995, except for (i) Mr. Candee
who received $25,000 for his services as director and the Company's secretary
and Chairman of the Audit Committee, and (ii) Dr. Schor who does not receive any
compensation for his services as a director.
COMMITTEES; BOARD MEETINGS
The Company has an audit committee composed of Messrs. Candee and
Goldwasser. During the fiscal year ended March 31, 1995, 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 does not have a nominating or compensation committee.
The Board of Directors of the Company held 4 meetings during the fiscal year
ended March 31, 1995 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 STOCK OPTION 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 five members, four of whom are non-employee
directors and one of whom, Mr. Solomon, is the President and Chief Executive
Officer of the Company. In addition, three of the non-employee directors,
Messrs. Goldwasser, Candee and Cohan, serve as a Stock Option Committee which
administers the granting of options under the Company's Employee Stock Option
Plans, including the award of options to the Company's executive officers.
The policy of the Board of Directors 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. Growth in sales and earnings are the primary
factors in consideration of compensation at the senior executive levels.
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.
COMPANY PERFORMANCE AND CEO COMPENSATION
Executive compensation for the fiscal year ended March 31, 1995 consisted of
base salary, an annual bonus and the award of stock options by the Stock Option
Committee as indicated at "Options
8
<PAGE>
Granted in Fiscal 1995." The Board of Directors met in December 1994 to review
executive compensation for the calendar year commencing January 1, 1995. The
Board had requested, and management had prepared, data relating to operating and
financial goals and achievements (and specifically relating to sales growth,
earnings growth, the progress of various clinical development programs and the
in-licensing and acquisition of products and product development opportunities
and the Company's market capitalization). In addition, the Board requested
information concerning proposed increases in compensation of the Company's
employees generally.
The Board noted that, as a result of the continued growth of the Company's
promoted branded products, for the six months ended September 30, 1994, the
Company's sales grew by more than 16% over the comparable period of the prior
year and earnings grew by more than 26% over the earnings for the comparable
period of the prior year. The Board also noted that the growth of sales and
earnings was substantially in excess of those being achieved by the 25 largest
pharmaceutical companies and that the Company expected to achieve above average
results for the remainder of the fiscal year.
The Board further noted the achievement of the following strategic
objectives during calendar year 1994: the filing of New Drug Applications with
the United States Food and Drug Administration for
Monurol-Registered Trademark-, a single dose antibiotic used for the treatment
of uncomplicated urinary tract infections, and for Cervidil-TM-, a prostaglandin
pessary (a product to enhance cervical ripening during childbirth); and the
continued progress of clinical studies for the Company's Synapton-TM- and
Infasurf-Registered Trademark- products. The Board further noted the continued
growth in sales and market share enjoyed by the Company's principal promoted
branded products. Finally, the Board noted the continuing expansion of the
Company's facilities, including the completion of a new product facility in the
Republic of Ireland, the completion of a new office, warehouse and packaging
facility on Long Island and the completion of new corporate headquarters in New
York City.
In addition, the Board noted that the Company's employees generally were
awarded raises ranging from cost of living increases of 3% to merit increases of
up to 6%, with certain special adjustments made to reflect promotions or
prevailing market conditions. The Board then noted that the recommended
increases in compensation proposed for each of the CEO and the other executive
officers of the Company were consistent with the level of increases proposed for
the Company's employees generally, with the 14.8% proposed increase for Ronald
F. Albano, Vice President -- Licensing representing a special adjustment to
reflect his expanded responsibilities and his salary relative to the salaries
paid to the Company's other executive officers.
The Board considered the foregoing factors with particular emphasis upon the
growth in sales and earnings and increases proposed by management for the
Company's employees generally. The Board, therefore, concluded that increases
proposed by management in compensation for each of the CEO and the other
executive officers were justified.
Based upon the foregoing, the Board approved a salary increase for Mr.
Solomon of $33,000, representing an increase in cash compensation of 5.5% over
such compensation for the previous year. The Board also approved a bonus for Mr.
Solomon in the amount of $60,000, representing the same amount of bonus
compensation that Mr. Solomon was awarded for the previous year.
During fiscal 1995, the Stock Option Committee awarded stock options to Mr.
Solomon and the other executive officers named in the table set forth at
"Options Granted in Fiscal 1995" in the amounts set forth therein. The Stock
Option Committee determined 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 awards made were determined based
9
<PAGE>
upon the level of management responsibility of the various executive officers,
their respective 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
Joseph M. Schor
George S. Cohan*
William J. Candee, III*
Dan L. Goldwasser*
- ------------------------
*Stock Option Committee Member.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Howard Solomon, the Company's President and Chief Executive Officer, is a
member of the Board and participated in deliberations concerning executive
compensation. Mr. Solomon abstained from voting with respect to his own
compensation. Joseph M. Schor, formerly Vice President -- Scientific Affairs of
the Company until his retirement on December 31, 1994, is a member of the Board
and participated in deliberations concerning executive 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, 1990, and
the reinvestment of all dividends).
[LOGO]
10
<PAGE>
CERTAIN FILINGS
Rules promulgated by the Securities and Exchange Commission govern the
reporting of securities transactions by directors and officers. While these
rules are complex, the Company is pleased to note that it has complied with such
rules in all transactions in the Company's securities by the Company's directors
and officers except that (i) Phillip M. Satow made two gifts of Common Stock in
December 1993 and June 1994 which were inadvertently not reported until the
filing of an amendment to a Form 4 in June 1995, and (ii) the August 1994 sale
of Common Stock by certain trusts for the benefit of Mr. Satow's children, which
were timely reported by such trusts, was inadvertently not also included in a
report by Mr. Satow as a trustee of such trusts until the filing of an amendment
to a Form 4 in June 1995.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
The firm of BDO Seidman has audited the financial statements of the Company
for each of the three fiscal years ended March 31, 1995. The Board of Directors
desires to continue the services of BDO Seidman for the current fiscal year
ending March 31, 1996. Accordingly, the Board of Directors will recommend to the
Meeting that the stockholders ratify the appointment by the Board of Directors
of the firm of BDO Seidman 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.
PROPOSAL 3
SHAREHOLDER PROPOSAL RELATING TO CUMULATIVE VOTING
The National Electrical Benefit Fund, 1125 15th Street, N.W., Washington
D.C. 2005, a holder of 31,200 shares of the Common Stock, has stated its
intention to present the following proposal for consideration at the Annual
Meeting of Stockholders. The proposal and supporting statement, which the Board
of Directors and the Company oppose, are set forth below.
"BE IT RESOLVED: that the stockholders of the Company, assembled in the
annual meeting in person and by proxy, hereby request that the Board of
Directors to take the steps necessary to provide for cumulative voting in the
election of directors, which means each stockholder shall be entitled to as many
votes as shall equal the number of shares he or she owns, multiplied by the
number of directors to be elected, and he or she may cast all of such votes for
a single candidate, or any two or more candidates as he or she may see fit."
"SUPPORTING STATEMENT:"
"Cumulative voting is one of the few ways stockholders can attempt to elect
members who they believe represent their views."
"Cumulative voting is vitally needed at Forest Laboratories, where the
current Board recommended a stock option plan in 1994, with an overall maximum
dilution of 5.7%. This plan, when added to all other existing plans, created an
overall minimum dilution of 15.5%. In addition, the stock option plan
concentrated past awards to top executives. In fiscal 1994, 58.1% of the options
awarded were granted to the top four executives."
"Cumulative voting maximizes a stockholder's voting power by allowing him or
her to concentrate their votes for a single nominee or combination of nominees.
For example, Forest Laboratories
11
<PAGE>
has 5 directors. Without cumulative voting, the owners of 10% of the company's
stock do not have a realistic chance of electing a director. They would only be
able to cast their 10% for each nominee. However, with cumulative voting, those
same owners would be able to actually elect a nominee by lumping all of their
votes for that nominee."
"Even if dissident stockholders do not have enough votes to elect nominees,
cumulative voting ensures that management and the Board will consider their
views."
"WE URGE YOU TO VOTE FOR THIS PROPOSAL."
BOARD OF DIRECTORS RECOMMENDATION
THE BOARD RECOMMENDS A VOTE AGAINST THIS PROPOSAL FOR THE FOLLOWING REASONS:
Four of the five Board members are independent, non-employee Directors
(including one who is a former executive officer of the Company), and all Board
members are nominated by the Board, which consists of such majority of outside,
independent Directors. Furthermore, the Company's present system, like that of
most major companies, allows all stockholders to vote on the basis of their
share ownership. The Board remains convinced that this approach is the fairest
and the one most likely to produce an effective Board which will represent the
interests of all of the Company's stockholders. In contrast, cumulative voting
is a procedure which could conceivably result in the election of a director
representing a specific stockholder principally seeking to advance its own
interests rather than the interests of all stockholders, e.g. a stockholder that
is a labor union or supplier might seek to elect a director in order to advance
its unique objectives over the interests of stockholders generally. Cumulative
voting also introduces the possibility of partisanship among board members that
could impair their ability to work together, a requirement essential to the
effective functioning of any Board of Directors. The Board is focused on the
successful long-term performance of the Company, has achieved this objective for
many years and believes that the present system of electing Directors should be
retained in the best interest of all stockholders.
Approval of this stockholder proposal requires an affirmative vote of a
majority of the Company's stock represented at the Annual Meeting and entitled
to vote on this matter. The adoption of this proposal would not, in itself,
institute cumulative voting but would simply constitute a recommendation to the
Board. In order to initiate cumulative voting, the Board would have to adopt and
submit a proposed amendment to the Certificate of Incorporation for action by
stockholders at a later meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS SHAREHOLDER PROPOSAL.
MISCELLANEOUS
ANNUAL REPORT
The Company's 1995 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, 1995. REQUESTS SHOULD BE MAILED TO
CORPORATE SECRETARY, FOREST LABORATORIES, INC., 909 THIRD AVENUE, NEW YORK, NEW
YORK 10022.
12
<PAGE>
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 SECURITY HOLDERS
Proposals of security holders to be presented at the 1996 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 2, 1996.
Stockholders are urged to send in their proxies without delay.
WILLIAM J. CANDEE, III,
SECRETARY
Dated: June 30, 1995
13
<PAGE>
FOREST LABORATORIES, INC.
PROXY - FOR THE ANNUAL MEETING OF STOCKHOLDERS - AUGUST __, 1995
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 14, 1995 at
10:30 A.M. at Chemical Bank, 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 and AGAINST proposal 3, all
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 and AGAINST
proposal 3.
(continued on reverse side)
<PAGE>
Please mark
/ / your choices
like this
------------------ --------------------
ACCOUNT NUMBER COMMON
1. Election of five Directors: Howard Solomon, William J. Candee, III,
George S. Cohan, Dan L. Goldwasser and Joseph M. Schor
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.)
2. Ratification of BDO Seidman as Accountants
FOR AGAINST ABSTAIN
/ / / / / /
3. Shareholder proposal regarding cumulative voting
FOR AGAINST ABSTAIN
/ / / / / /
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
