Ex-Chairman to Repay Valeant $20 Million
Milan Panic, the controversial executive who became a symbol of corporate excess, agreed to pay $20 million to Costa Mesa-based Valeant Pharmaceuticals International to settle charges that he received unwarranted bonuses four years ago as the company’s chairman.
The payment settles all outstanding disputes between Panic and the company he founded, formerly known as ICN Pharmaceuticals Inc., Valeant said Thursday.
Panic, 76, was forced to resign in 2002 shortly after taking more than $33 million in bonuses for his role in the spinoff of a business division. Shareholders sued Panic a year later, alleging that the payout was unwarranted because arranging the spinoff was part of his job.
Valeant later assumed the lawsuit on behalf of its shareholders. The company said Panic would pay $8 million in cash this year and the remainder next year.
Panic, who owns another ICN spinoff, MP Biomedicals in Irvine, declined to be interviewed. Panic still owns a small number of Valeant shares and has said he would like to place his own management team in the company.
In March, he sued the board in Orange County Superior Court, accusing it of greed and mismanagement, charges that harked back to allegations once leveled against him. That lawsuit will be dismissed as part of the settlement, Panic’s spokesman Robert Magnuson said.
Valeant spokeswoman Angie McCabe said the settlement puts a “rough patch behind us and allows us to focus on the future.” She said company executives would not comment.
The company reported Thursday that its second-quarter revenue grew 12% to $230.2 million compared with $205 million for the same period a year earlier but that it continued to lose money. Its net loss totaled $45 million for the quarter, versus a gain of $1.4 million in the year-earlier period. The settlement with Panic will be recorded in the third quarter, the company said.
Investors reacted positively to the news and sent Valeant’s stock up $1.14 to $18.51 in heavy trading Thursday.
Valeant makes drugs for cancer, cardiovascular disease, diabetes and neuromuscular and psychiatric disorders. It had sales of $823 million last year.
The company was founded by Panic in 1959. In the 1990s, Panic served briefly as prime minister of his native Yugoslavia, but in the U.S., ICN and its founder became mired in allegations of corporate excess. The company paid millions of dollars to settle allegations that its executives, including Panic, sexually harassed female employees.
In 2002, Panic helped orchestrate the spinoff of Ribapharm Inc., an ICN division that made a popular hepatitis drug. Panic and a dozen other company executives and directors were paid nearly $50 million in bonuses. Panic had received $1.9 million in compensation the previous year.
In the lawsuit Panic filed in Orange County, he said that ICN had been a profitable company under his leadership but that the new board of directors was looting the firm.
Chairman Robert W. O’Leary and director Randy H. Thurman “unjustifiably reward themselves with generous compensation out of ICN profits,” the lawsuit stated.
Valeant executives did not comment on the suit, but Chief Executive Timothy C. Tyson on Thursday said the company was poised for a turnaround.
