ICN Will Try to Recoup Bonuses
ICN Pharmaceuticals Inc. paid its founder and former Chief Executive Milan Panic a lot of money last year, and now the company wants some of it back.
At ICN’s annual meeting in Costa Mesa on Thursday, Chairman Robert W. O’Leary, Panic’s successor, said the company planned to reclaim the $47.8 million that Panic and other former officers were paid as bonuses for completing a spinoff.
Panic collected $33 million for selling 20% of Ribapharm Inc., an ICN subsidiary, in a public offering a year ago, while former President Adam Jerney got $3 million and former Executive Vice President Alan Charles netted $500,000, ICN said.
Panic was in Athens on Thursday at the World Economic Forum Conference and couldn’t be reached for comment. In an interview with The Times earlier this month, he defended the bonus, noting that ICN made a $250-million profit on the stock sale.
Graef Crystal, an executive compensation analyst, said that maximizing shareholder value and reaping profit for the company is part of any chief executive’s job, and that Panic should not have received such a large bonus for the Ribapharm transaction.
Last year, an ICN shareholder sued Panic and other former company executives in Delaware Chancery Court over the Ribapharm bonus.
O’Leary said in an interview Thursday that it was rare for a company “to pick up one of these shareholder lawsuits and run with it, but we were persuaded that this was the correct course of action.” ICN will try to recoup the bonuses paid to Panic and his executive team either through a settlement or in court, O’Leary said.
Pierce O’Donnell, an attorney representing Panic and Jerney, said, “The lawsuit was frivolous when it was filed by the shareholder, and it is still frivolous.”
Panic resigned under pressure from ICN in June.
ICN had originally planned to spin off the 80% of Ribapharm it still owns, but that plan was put on hold after O’Leary replaced Panic.
Ribapharm’s main product is ribavirin, an antiviral drug used to treat patients with the potentially fatal hepatitis C.
ICN and Ribapharm rely heavily on royalties from the sale of ribavirin, which is sold by Schering-Plough Corp.
Indeed, some analysts have said the drug was the primary reason ICN lately has made money from its operations.
Last winter, ICN and Ribapharm became locked in a bitter feud.
Ribapharm’s management sued ICN, protesting the delay of the proposed spinoff, while ICN countered that Ribapharm’s officers and board had mismanaged the firm.
In January, Ribapharm’s top executives resigned, and ICN since has installed new management.
ICN disclosed in a government filing in April that Panic collected about $27 million in payments and other benefits when he left the company. About $22 million of that was from the accelerated vesting of restricted stock and stock-option awards to Panic, the company said. He also received $500,000 for a partial year’s salary and a $4.5-million cash severance.
Panic, 72, is a native of Serbia and briefly served as prime minister of Yugoslavia.
He founded ICN in 1959 with a $200 investment after fleeing what was then Communist Yugoslavia.
During a four-decade-long business career in the U.S., he fought frequent battles with both federal drug and securities regulators.
In 1998, the Securities and Exchange Commission sought to oust Panic in connection with alleged trading violations involving ICN stock. The Food and Drug Administration recently reprimanded ICN and other pharmaceutical companies for misleading consumers and doctors in promoting their drugs.
In December, ICN said it would plead guilty to securities fraud for misleading investors about ribavirin, and agreed to pay a $5.6-million fine.
ICN’s stock closed Thursday at $12.06, up 26 cents, on the New York Stock Exchange.