Another Voice in the Marketplace
Nothing like jumping in with both feet, I suppose. I was going to write about how glad I was to be here, etc, in my inaugural post but will instead talk a bit about FRX. WSJ today notes that the federal government is apparently letting the company know that it may not continue to do business with the feds--unless its CEO steps down.
The Department of Health and Human Services this month notified Howard Solomon of Forest Laboratories Inc. that it intends to exclude him from doing business with the federal government. This, in turn, could prevent Forest from selling its drugs to Medicare, Medicaid and the Veterans Administration. If the government implements its ban, Forest would have to dump Mr. Solomon, now 83 years old, in order to protect its corporate revenue. No drug company, large or small, can afford to lose out on sales to the federal government, a major customer.
This action on the part of HHS is quite troubling, as I understand it. It places the company in question between the proverbial rock and a hard place. Either the company loses its CEO or it loses a non-typical (but absolutely essential) client.
Apparently, while the company has paid a number of fines over the years, Mr. Solomon has never had a criminal complaint lodged against him, which makes the whole thing rather, well, unsettling.
While one may dispute the benefit which a particular CEO brings to a corporation, there is little question that the continuance of a chief executive is a mark of stability for most investors--unless that person is obviously running things into the ground. If the government may single out the CEO for public shaming in this manner, how might such actions reflect inequitably on the employees and shareholders of said company?
***I hold no known position in FRX.***