ICN Chief Panic Gets $1.8-Million Annual Bonus
ICN Pharmaceuticals disclosed Monday that Chairman Milan Panic, who is under investigation for alleged insider trading, received a $1.79-million bonus last year, more than double the $750,000 he got in 1996.
The Costa Mesa drug maker apparently based the bonus on big increases in its profits and stock price, which rose 31% and 150%, respectively. Members of ICN’s compensation committee couldn’t be reached for comment.
Panic, 68, got the bonus as the Securities and Exchange Commission staff is seeking to bar him from serving as an officer of a public company.
The commission’s staff is recommending that Panic be charged in connection with alleged insider trading before a 1994 announcement that suggested ICN might fail to get regulatory approval for Virazole in the treatment of chronic hepatitis C.
ICN’s board has investigated the case and determined that Panic has done nothing wrong, said Ben Lap, the company’s vice president of investor relations. “We believe in the long run he will be vindicated,” Lap said.
Panic settled SEC charges in 1991, without admitting or denying guilt, tied to disclosures several years earlier involving the safety and efficacy of Virazole for certain AIDS-related conditions.
The company’s preliminary proxy statement, filed Monday with the SEC, showed that Panic took home $2.6 million last year including salary and other benefits, up 85% from 1996.
The proxy also noted that Heartland Advisors Inc., ICN’s largest shareholder, has proposed an age limit of 70 for directors that would effectively require Panic to resign within two years.
The proposed retirement age of 70 “was not some pie-in-the-sky number,” said Robert Wasserman, a drug analyst for Southeast Research Partners. “What Heartland was trying to do was create a reasonable” period in which Panic “could ease himself out.”
The proposal could have a big effect on ICN’s board, where six of the 15 directors are age 70 or older. That includes 70-year-old Birch Bayh, the former U.S. senator from Indiana, and 75-year-old Norman Barker Jr., retired chairman of First Interstate Bank of California.
Heartland, a Milwaukee-based money manager that last reported holding 8.5% of ICN’s common stock, declined comment on its proposal.
ICN opposes the proposal because the company doesn’t believe it is in the best interests of shareholders to bar qualified people from the board because of arbitrary age-related criteria, Lap said.
ICN shareholders would have a hard time complaining about the company’s financial performance under the current board.
The company reported record net income of $114 million for 1997, up 31% from $87 million in 1996. The price of company shares more than doubled during the year, rising to $32.67 from $13.08, the top-ranking performance among pharmaceutical stocks, Lap said.
“They had another excellent year,” said Eugene Melnitchenko, a drug analyst in the Los Angeles office of Sutro & Co.
ICN shares continued their upward march Monday, gaining another $2.75, to $49.
The company bases its annual bonus payments on profit margins, rate of return and stock price appreciation, Melnitchenko said. Wasserman also said he believes ICN bonuses are tied to its stock price.
If so, this suggests that Panic’s bonus may be determined by a formula rather than the ICN board’s discretion. The company said in the proxy statement that eligibility for bonuses is based on preset performance guidelines and growth in operating income and earnings per share.
Panic was not the only ICN officer to get a big increase in his bonus. Adam Jerney, the company’s president and chief operating officer, saw his annual bonus rise to $669,200 from $160,000.