ICN Shareholders Reject Plan to Shake Up Board
A major shareholder’s effort to break up ICN Pharmaceuticals Inc.’s aging corporate board failed Wednesday, as stockholders voted down a proposal to require all directors to retire at age 70.
A company spokesman said holders of 36 million shares of the Costa Mesa drug company’s stock voted against the measure, while holders of 9 million shares voted in favor.
If the proposal by Heartland Advisors had passed, six of the company’s 15 directors would have been forced to step down. Milan Panic, ICN’s chairman and chief executive, would have been required to resign in two years.
Heartland President William Nasgovitz said he was disappointed that only 20% of the shareholders voted for the proposal.
“We think the board needs some new young blood and strong independents who can speak for all shareholders,” he said.
Nasgovitz recalled that at the company’s annual meeting last year, one of the board members fell asleep. “That’s an example of the representation public shareholders are getting,” he noted. “For a billion-dollar company to have shareholders represented in that way is just bizarre.”
ICN general counsel David Watt defended the current directors. “We have a very active, very responsive and committed board,” he said. “I don’t think we have anybody who doesn’t give this board full attention when they’re at our board meetings.”
At the annual stockholders’ meeting Wednesday in New York, director Seth Glickenhaus, 86, denounced Nasgovitz’s proposal, according to an ICN spokesman. Glickenhaus, a New York investment manager, said that just because a person reaches a certain age doesn’t mean he isn’t at the top of his game.
To make matters worse for board critics, Dale Hanson, who is widely respected by institutional investors, didn’t seek reelection as an ICN director. Hanson, the former chief executive of California Public Employees Retirement System, was known in the 1980s for being a leader in the shareholder rights movement that rattled corporate boardrooms.
Hanson had indicated recently that much of his time has been taken up by launching his own investment business, Watt said.
Nasgovitz said he regretted Hanson’s departure, adding: “I think he has a public consciousness. It’s unfortunate that he’s not going to be on the board.”
Hanson didn’t return calls seeking comment.
Regardless of the debate over ICN’s board and other controversies surrounding its chairman, the internationally expanding company continues to post record profits and sales. First-quarter earnings jumped 52% to $32 million over the comparable period a year ago as sales shot up 51% to $240 million.
On May 4, its stock closed at an all-time high of $51.13 a share before retreating in recent weeks. It closed Wednesday at $42.56, off $2.31.
