(Reuters) - Forest Laboratories Inc said on Tuesday it will add a representative of Carl Icahn as an independent member to its board, averting a new proxy battle with the billionaire investor.
The specialty drugmaker said the appointment of Vincent Intrieri, 56, would expand the board's size to eleven from ten directors. Intrieri has worked for various Icahn-related entities since 1998 and sits on a number of boards, including Chesapeake Energy Corp, Forest said.
Icahn is Forest's second largest shareholder, owning about 11.5 percent of the drugmaker's outstanding shares.
"As part of the agreement, Mr. Icahn has agreed to vote the shares that he controls in support of Forest's 11 director nominees and not run a proxy contest" at the annual meeting, Forest said in a release.
Icahn has been highly critical of Forest leadership in recent years, arguing that the company has been badly managed and underperforms industry peers. He claimed the company was ill-prepared for the patent expirations of its top-selling medicines - the antidepressant Lexapro and Alzheimer's treatment Namenda - and for not having a succession planning for longtime Chief Executive Howard Solomon.
Forest said certain standstill restrictions, which limit Icahn's involvement with the company, will remain in effect as long as Intrieri serves on the board.
Icahn and the company have been in discussions over the course of the year, hoping to avoid a third proxy battle in as many years, Reuters reported last week, citing sources.
Just one of Icahn's four proposed directors was voted onto the Forest board following last year's proxy fight.
"We are happy to have been able to avoid the necessity for a distracting fight so that management's energies, as well as our own, can be focused on more productive purposes," Icahn said on Tuesday in a Forest press release.
Forest last month announced that Solomon would retire at the end of this year after running the U.S. drugmaker for more than 35 years, and said an independent board committee was evaluating internal and external candidates.
In the past year the company has launched new medicines and its shares have outperformed the S&P 500, muting some of Icahn's past criticisms.
Forest shares were off 2.7 percent at $39.92 on a down day for the broader market.
(Reporting by Ransdell Pierson and Bill Berkrot; Editing by Jeffrey Benkoe)