ICN Pharmaceuticals Inc. has given its controversial chairman, Milan Panic, a three-year extension on his contract.
The move is disclosed in the drug company's proxy statement for its annual shareholders' meeting, scheduled for Nov. 10 at its corporate headquarters here.
The extension should put to rest rumors earlier this year that Panic's contract might not be extended in the wake of insider-trading allegations and a former employee's lawsuit accusing him of sexual harassment. Panic has denied the allegations.
Some critics said Panic's contract renewal reflects a business-as-usual attitude of a company whose directors have staunchly supported him. Robert Back, an analyst with Chicago-based SNC Capital Management Corp., attributed the extension to board "inertia."
"They've been doing [that] routinely since 1967," he said.
But David Watt, ICN's legal counsel, attributed Panic's extended tenure as chairman, chief executive and president to the company's financial performance after four affiliated firms were merged last fall to form ICN.
"Under Mr. Panic's leadership, ICN has delivered outstanding financial results, particularly since the successful merger of our four affiliates," Watt said.
Analyst Back also agreed that the company has performed well financially, noting that he expects ICN to report earnings of $15 million on $100 million in revenue for the recent quarter ended Sept. 30.
Panic remains a target of an SEC investigation into his sale last November of $1.24 million worth of company stock after federal regulators notified the company that ICN's star drug, Virazole, would not be approved as a stand-alone treatment for the liver ailment hepatitis C.
When the company finally disclosed regulators' disapproval in February, ICN stock lost 42% of its value in six days of trading. Shareholder lawsuits ensued. Last spring, ICN's board released a report indicating that the board had exonerated Panic of all wrongdoing in connection with the stock sale.
Rumors had circulated among investors and analysts that ICN might remove its embattled chairman from the limelight by assigning him a lesser role, possibly as an executive in charge of its Eastern European operations.
Panic, who took a leave from his job from July 14, 1992, to March 4, 1993, to serve as prime minister of Yugoslavia, is seen as key to the company's market growth in that region. Watt said he wouldn't comment on whether the company had ever considered such a change.
The proxy also indicates that the company aims to change the way Panic and other top executives earn long-term compensation. Watt explained that ICN intends to begin tying their bonuses, stock options and other incentives to the company's stock value.