SCHEDULE 14A INFORMATION
Proxy Statement Pursuant To Section 14(a) Of
The Securities Exchange Act Of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
ICN Pharmaceuticals, Inc.
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(Name of Registrant as Specified in its Charter)
N/A
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
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paid previously. Identify the previous filing by registration statement
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PRELIMINARY PROXY MATERIALS
DATED APRIL 19, 2002
SUBJECT TO COMPLETION
ICN PHARMACEUTICALS, INC.
April _, 2002
To the Stockholders of
ICN Pharmaceuticals, Inc.:
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of ICN Pharmaceuticals, Inc., which will be held on May 29, 2002, at 10:00
a.m. P.D.T. at ICN Pharmaceuticals, Inc., 3300 Hyland Avenue, Costa Mesa,
California 92626. Official Notice of the Meeting, a Proxy Statement and a
form of proxy accompany this letter.
The Company's 2001 Annual Report accompanies this Proxy Statement.
NOTICE
Franklin Mutual Advisors, LLC, Iridian Asset Management LLC and
certain of their affiliates (the "Dissident Stockholders") have filed
preliminary proxy materials and commenced a proxy contest in opposition to
two of the director nominees selected by your Board of Directors. The
Dissident Stockholders will also be seeking your support to elect two
additional nominees who would replace the highly qualified and experienced
nominees proposed for election by your Board of Directors. One of the
nominees proposed by the Dissident Stockholders, Richard H. Koppes, is also
being nominated by your Board of Directors.
Notwithstanding the allegations made by the Dissident Stockholders,
ICN has been proceeding diligently to implement its restructuring plan and
to update and revise its corporate governance policies. The initial public
offering of our subsidiary Ribapharm Inc., a major component of this
restructuring plan, has now been completed. The Board of ICN is taking
further steps to implement the restructuring which it believes to be in the
best interests of and for the long term benefit of its stockholders.
We urge you to reject the two nominees of the Dissident Stockholders
who your Board of Directors has not nominated -- do not sign any proxy card
they may send you. Please be assured that your Board of Directors will
continue to act in the best interest of all ICN stockholders.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. ON
BEHALF OF YOUR BOARD OF DIRECTORS, WE URGE YOU TO SIGN, DATE AND MAIL THE
ENCLOSED GOLD PROXY CARD AS SOON AS POSSIBLE EVEN IF YOU CURRENTLY PLAN TO
ATTEND THE ANNUAL MEETING. This will not prevent you from voting in person
but will assure that your vote is counted if you are unable to attend the
meeting.
By Order of the Board of Directors,
Milan Panic
Chairman of the Board
ICN PHARMACEUTICALS, INC.
3300 Hyland Avenue
Costa Mesa, California 92626
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 29, 2002
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To the Stockholders of
ICN Pharmaceuticals, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of ICN
Pharmaceuticals, Inc., a Delaware corporation (the "Company"), will be held
at ICN Pharmaceuticals, Inc., 3300 Hyland Avenue, Costa Mesa, California
92626, on May 29, 2002, at 10:00 a.m., local time, for the following
purposes:
1. To elect three directors, to hold office until the 2005 Annual Meeting
of Stockholders and thereafter until their successors are elected and
qualified.
2. To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
Only stockholders of record at the close of business on April 9, 2002
will be entitled to notice of and to vote at the meeting and any
adjournments or postponements thereof.
By Order of the Board of Directors,
Milan Panic
Chairman of the Board
Gregory Keever
Secretary
Dated: April __, 2002
PLEASE MARK, DATE, SIGN AND RETURN THE ENCLOSED GOLD PROXY IN THE
ACCOMPANYING ENVELOPE, WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. YOUR BOARD ALSO URGES
YOU NOT TO SIGN ANY PROXY CARDS SENT TO YOU BY THE DISSIDENT STOCKHOLDERS.
EVEN IF YOU HAVE PREVIOUSLY SIGNED A PROXY CARD SENT TO YOU BY MUTUAL
SHARES FUND, YOU CAN REVOKE IT BY SIGNING, DATING AND MAILING THE ENCLOSED
GOLD PROXY CARD IN THE ACCOMPANYING ENVELOPE.
ICN PHARMACEUTICALS, INC.
3300 Hyland Avenue
Costa Mesa, California 92626
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PROXY STATEMENT
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ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
MAY 29, 2002
This Proxy Statement is being mailed on or about April [ ], 2002, to
stockholders of ICN Pharmaceuticals, Inc. (the "Company" or "ICN") in
connection with the solicitation of proxies by the ICN Board of Directors
for use at the Annual Meeting of Stockholders to be held on May 29, 2002,
or any adjournments or postponements thereof (the "Annual Meeting"), for
the purposes set forth in this Proxy Statement and in the accompanying
Notice of Annual Meeting of Stockholders.
When a proxy in the form enclosed with this Proxy Statement is
returned properly executed, the shares represented thereby will be voted at
the Annual Meeting in accordance with the directions indicated thereon or,
if no direction is indicated, the shares will be voted in accordance with
the recommendations of the Board of Directors. A stockholder who executes
and returns the enclosed proxy may revoke it at any time prior to its
exercise by giving written notice of such revocation to the Chairman of the
Board of the Company, at the address of the Company, by revoking it in
person at the Annual Meeting or by voting at the Annual Meeting.
Stockholders may also revoke a prior proxy by executing a later-dated proxy
and submitting it to any person; provided that such person ultimately
delivers such later dated proxy to the Secretary of the Annual Meeting.
Attendance at the Annual Meeting by a stockholder who has executed and
returned the enclosed proxy does not alone revoke the proxy. If shares are
held by a broker or other intermediary, a properly executed proxy from the
record holder of such shares must be presented in order to vote such shares
at the Annual Meeting.
VOTING SECURITIES
Only stockholders of record at the close of business on April 9, 2002
will be entitled to notice of and to vote at the Annual Meeting. As of the
close of business on April 9, 2002, there were outstanding 83,816,672
shares of the Company's common stock, par value $.01 per share (the "Common
Stock"), held of record by approximately 6,872 stockholders, each of which
shares is entitled to one vote at the Annual Meeting.
ELECTION OF DIRECTORS
The Amended and Restated Certificate of Incorporation of the Company
provides that the Board of Directors be divided into three classes of
directors. Three directors are to be elected at the 2002 Annual Meeting,
each to serve until the 2005 Annual Meeting of Stockholders and until his
successor is elected and qualified. The nominees of the Board of Directors
are Senator Birch E. Bayh, Jr., Abraham E. Cohen and Richard H. Koppes.
Senator Bayh has been a director of ICN (or its predecessor company) since
1992. Mr. Cohen was appointed to the Board of Directors on April 10, 2002,
upon the resignation of Alan Charles from the Board of Directors. Mr.
Koppes would be a new director of the Company. If for any reason any
nominee should not be available for election or be unable to serve as a
director, the accompanying proxy will be voted for the election of such
other person, if any, as the Board of Directors may designate. The Board of
Directors has no reason to believe that any nominee will be unavailable for
election or unable to serve.
When a proxy in the form enclosed with this Proxy Statement is
returned properly executed, unless marked to the contrary, such proxy will
be voted in favor of our three nominees listed above. If any other matters
are properly presented at the Annual Meeting for action, which is not
presently contemplated, the proxy holders will vote the proxies (which
confer discretionary authority upon such holder to vote on such matters) in
accordance with their best judgment.
The presence, in person or by proxy, of the holders of a majority of
the Common Stock entitled to vote at the Annual Meeting is necessary to
constitute a quorum for the transaction of business at the Annual Meeting.
The affirmative vote of a plurality of the votes cast by the holders of the
Common Stock present, in person or represented by proxy at the Annual
Meeting and entitled to vote their Common Stock, is required to elect
directors. Abstentions and broker non-votes in connection with the election
of directors shall have no effect on such matters since directors are
elected by a plurality of the votes cast at the Annual Meeting.
The Board of Directors of the Company recommends that the stockholders
vote FOR the election of the three nominees for director proposed by your
Board named in this Proxy Statement. Franklin Mutual Advisors, LLC, Iridian
Asset Management LLC and certain of their affiliates (the "Dissident
Stockholders") are seeking to elect the following persons to the Board:
Richard H. Koppes, Robert W. O'Leary and Randy H. Thurman. The nominations
of Mr. O'Leary and Mr. Thurman are in opposition to the nominations of
Senator Bayh and Mr. Cohen proposed by your Board. Your Board supports the
election of Mr. Koppes. YOUR BOARD BELIEVES THAT THE ELECTION OF MR.
O'LEARY AND MR. THURMAN WOULD NOT BE IN YOUR BEST INTEREST.
INFORMATION CONCERNING NOMINEES AND DIRECTORS
The Board of Directors currently consists of twelve members and will
consist of nine members after this election: Senator Bayh and Messrs. Cohen
and Koppes are standing for election for terms expiring in 2005. Messrs.
Jean-Francois Kurz, Milan Panic and Roderick M. Hills are serving until the
2003 Annual Meeting of Stockholders. Messrs. Edward A. Burkhardt and Steven
J. Lee and General Ronald R. Fogleman are serving until the 2004 Annual
Meeting of Stockholders. Set forth below with respect to each director is
certain personal information, including the present principal occupation
and recent business experience, age, year commenced service as a director
of the Company (including service as a director of a predecessor company)
and other corporate directorships.
Mr. Alan F. Charles, a director of the Company since 1986, resigned
from the Board of Directors of the Company on April 10, 2002. He remains as
Executive Vice President, Corporate Relations of the Company, a position he
assumed in December 2001. Mr. Charles' resignation was consistent with the
Company's long standing policy to limit the number of Company employees on
the Board. Mr. Cohen became a director upon Mr. Charles' resignation. Dr.
Roger Guillemin, a director of the Company since 1989, resigned from the
Board of Directors of the Company and became a member of the board of
directors of Ribapharm Inc. ("Ribapharm"), a majority owned subsidiary of
the Company, upon completion of the initial public offering of the common
stock of Ribapharm on April 17, 2002 (the "Ribapharm Offering"). Dr.
Guillemin's resignation was consistent with the Company's intention that no
person would serve as a director of both the Company and Ribapharm. Mr.
Hills' appointment by the Board as a director became effective upon Dr.
Guillemin's resignation.
Messrs. Norman Barker, Jr., Adam Jerney and Stephen D. Moses, and Ms.
Rosemary Tomich, whose terms expire in 2002, are not seeking re-election.
On October 19, 2000, the Company entered into an agreement with
Special Situations Partners, Inc. ("SSP") pursuant to which the Company
agreed to hold the 2001 Annual Meeting of Stockholders no later than May
30, 2001 and the 2002 Annual Meeting of Stockholders no later than May 29,
2002. The agreement also provides that the Company will cause the size of
the Board to be reduced to nine (9) members by no later than the 2002
Annual Meeting of Stockholders. The agreement provides that this reduction
is to be accomplished by reducing to three the number of directors to be
elected at each annual meeting of stockholders beginning with the 2000
Annual Meeting of Stockholders and that the number of directors elected at
the 2001 and 2002 Annual Meetings in no event constitute less than
two-thirds of the Board; and the Company would not impede or prevent any
qualified person from soliciting proxies, making stockholder proposals or
nominating directors at the 2001 and 2002 Annual Meetings. In accordance
with the agreement with SSP, the Company has amended its By-laws to
incorporate the provisions specified above.
On October 19, 2000, the Company and Relational Investors LLC, on its
own behalf and on behalf of each of its affiliates (collectively,
"Relational"), entered into an agreement in which Relational agreed to
withdraw nominees for election at the 2000 Annual Meeting. The Company and
Relational further agreed that David H. Batchelder would resign as a
director of the Company if the Company requested him to do so prior to the
2000 Annual Meeting. If Relational determined that the Company had not made
sufficient progress in executing its restructuring, then Relational had the
right to request that the Company cause a nominee designated by Relational
to be appointed to, as well as nominated for election to, the class of
directors with a term expiring at the 2004 Annual Meeting, and if that
nominee is not elected as a director at the 2001 Annual Meeting, then the
Company would appoint that nominee to the Board of Directors. Mr.
Batchelder resigned from the Board of Directors on October 25, 2000. On
March 1, 2001, Relational requested that the Company nominate Mr.
Batchelder for election at the 2001 Annual Meeting. On April 6, 2001, the
Company advised Relational that it did not believe Relational was entitled
to any right to board membership for two primary reasons. First, the
correspondence received by the Company from Relational Investors LLC did
not indicate that affiliates of Relational Investors LLC had made the
determination for nominee designation as required by the terms of the
agreement. Because the agreement was entered into by Relational Investors
LLC on its own behalf and on behalf of each of its affiliates, a request
for appointment of a nominee to the Board of Directors was not valid, in
the Company's view, unless all of Relational Investors LLC's affiliates
jointly requested the appointment. The Company was, therefore, unable to
determine whether the conditions to Relational's rights under the agreement
had been satisfied. Second, at the time the Company negotiated the
agreement, it was the Company's opinion that Relational's desire to obtain
a Board seat was based upon the fact that Relational was a significant
stockholder of the Company. At that time, it was also implied to the
Company that Relational would continue to remain a significant stockholder.
However, based upon public filings, it was the Company's understanding that
Relational had sold all but 100 shares of its Common Stock by that time.
Based upon public filings, the Company does not believe that Relational
owns any shares of Common Stock at this time. The Company, therefore, may
have entered into the agreement based on misleading information concerning
Relational's intentions. On April 19, 2001, Mr. Batchelder advised the
Company that Relational disagreed with the Company's position and reserved
all of its rights under the agreement, including, without limitation, those
relating to specific performance. No further correspondence has been
received by the Company from Relational on these issues. If it is
ultimately determined by a court of competent jurisdiction that Relational
is entitled to designate a nominee to be appointed to the Board of
Directors, the Company will appoint such nominee to the Board of Directors.
It is the Company's position that in this event the Board of Directors
would have the right to determine the class of directors to which the
Relational nominee would be appointed (however, the Company's right to do
so may not be free from doubt). Under the Company's By-laws (as amended in
accordance with the terms of the agreement with SSP), there will be no
position available in the classes of directors whose terms expire at the
2003, 2004 or 2005 Annual Meeting of Stockholders, unless there is a
vacancy, by resignation or otherwise, or the Board of Directors unanimously
agrees to amend the By-laws (or is compelled by a court of competent
jurisdiction to amend the By-laws).
Messrs. Burkhardt and Lee and General Fogleman were elected to the
Board of Directors at the 2001 Annual Meeting of Stockholders for terms
expiring at the 2004 Annual Meeting of Stockholders. These directors were
nominated by the ICN Committee to Maximize Shareholder Value and were
opposed by nominees selected by the Board of Directors. The members of the
ICN Committee to Maximize Shareholder Value were these three directors, SSP
and Providence Capital, Inc. ("Providence"). Providence is presently acting
as financial advisor to the Dissident Stockholders.
On March 13, 2002, the Board appointed a Nominating Committee to
consider the qualifications of potential candidates for election to the
Board and to recommend candidates to the Board of Directors. The members of
the Nominating Committee are General Fogleman, and Messrs. Burkhardt and
Barker. General Fogleman and Mr. Burkhardt are stockholder nominated
directors elected at the 2001 Annual Meeting. The Nominating Committee
considered potential candidates to fill Dr. Guillemin's position (due to
his then pending resignation upon completion of the Ribapharm Offering),
Mr. Charles' position (due to his then pending resignation due to his
appointment as an executive officer of the Company), and the three
positions to be filled at the Annual Meeting. The Nominating Committee
interviewed and reviewed the background and qualifications of, various
candidates for election to the Board of Directors, including Senator Bayh
and Messrs. Cohen, Koppes, O'Leary, Thurman and Hills, as well as each of
the members of the Board of Directors whose terms is expiring at the Annual
Meeting. The Nominating Committee made various interim reports to the Board
and on April 2, 2002, as a result of recommendations by the Nominating
Committee, the full Board appointed Mr. Hills a director of the Company,
with such appointment becoming effective upon Dr. Guillemin's resignation
at the time of the completion of the Ribapharm Offering.
The Nominating Committee made its final report to the Board on April
10, 2002. That report concluded that each of the aforementioned candidates
interviewed by the Committee were qualified to serve as a director of the
Board. Following that report, the Board unanimously determined that it
would be in the best interests of ICN to nominate a slate of directors at
the Annual Meeting consisting of: Senator Bayh and Messrs. Cohen and Koppes
(the "ICN Nominees"). At the same time, due to the resignation of Alan
Charles from the Board, the Board appointed Mr. Cohen to fill the remainder
of Mr. Charles' term, which expires at the Annual Meeting.
The Company believes that the addition of Mr. Hills and the ICN
Nominees to the Board will bring diversified skills and professional
experience to the Board that will complement the skills and professional
experience of the remaining Board members.
o Mr. Hills is the former Chairman of the SEC and was a
Distinguished Faculty Fellow and lecturer in international
finance at Yale University.
o Senator Bayh served as a United States Senator from the
State of Indiana for 18 years and has served on ICN's board
since 1992.
o Mr. Cohen has significant experience in the pharmaceutical
industry, particularly in international markets where the
Company has significant operations.
o Mr. Koppes is an advocate of corporate governance and will
facilitate the Company's implementation of recently adopted
corporate governance guidelines.
When combined with the election of the three stockholder nominated
directors at the 2001 annual meeting, the election of the ICN Nominees at
the Annual Meeting would result in six of the nine ICN directors having
served on the Board for one year or less. All six of these directors would
have had no relationship with the Company prior to being elected or
appointed to the Board. Among these six new directors, four would be
stockholder nominated directors.
After being notified of the Board's decision to nominate him, Mr.
Koppes sent the following letter to the Company:
"I understand from our telephone conversation last Thursday night
that ICN is considering including me as part of the company's
slate of nominees for election to the board at the upcoming
annual meeting. I am honored that the company is considering such
a nomination.
"As you know, however, I have already agreed to be nominated, and
I fully expect and intend to be nominated and supported, by
Franklin Mutual Advisers and Iridian Asset Management, together
with two other well-qualified gentlemen, Mr. Randy Thurman and
Mr. Robert O'Leary.
"While neither I nor FMA or Iridian can object if ICN chooses not
to oppose my candidacy, I should make my position clear. I have
agreed to be nominated by FMA and Iridian because I share the
concerns they have raised and believe in the positions they have
advocated in their proxy materials and other communications with
ICN. I intend to participate in the solicitation process in
support of these positions and in favor of the election of the
entire slate of FMA and Iridian's nominees (including myself) and
thus against the election of any other persons.
"Moreover, since I will not be supporting the company's nominees
or its efforts to defeat the candidacies of FMA and Iridian's
nominees, I cannot and will not permit ICN to suggest otherwise
or to associate my name with any of its proxy solicitation
materials or efforts to that effect.
"Thank you in any event for your personal consideration. I look
forward to serving on the ICN board with you."
On April 18, 2002, the Company sent the following letter to Mr.
Koppes:
"We were surprised by your letter to General Fogleman dated April
16, 2002.
"When you met with our Nominating Committee in Chicago on April
2, 2002, we understood that the purpose of the meeting was to
provide an opportunity for the Committee to meet you and
determine whether you were qualified to serve as an ICN director
and to report its findings to the ICN Board in connection with
the selection by the ICN Board of its nominees for election to
the Board at the May 2002 annual meeting. Thus your meeting with
the Committee for purposes of potentially being nominated by the
Board constituted consent to being nominated by the Company's
Board of Directors for election at the May 2002 annual meeting.
For you now not to agree to serve on the Company's slate casts in
question the validity of your nomination by Iridian Asset
Management and Franklin Management since no stockholder nominee
is eligible for election as a director of ICN unless nominated in
accordance with Article Ninth. We note that it is now too late
for Iridian and Franklin to nominate under Article Ninth a
replacement for you if you determine not to serve.
"For your information, the Nominating Committee reported to the
full ICN Board of Directors that you had advised them that you
were willing to serve as an ICN director and have your name put
to the Board for consideration by the Board for its slate and, if
elected, you would be an independent director and you would act
in the best interests of ALL stockholders, with no allegiance or
understandings with any stockholder including Iridian or
Franklin. Based in large part upon this representation from you
as well as your credentials as a corporate governance advocate,
the Board determined to nominate you for election as a director.
"By nominating you as a director, we are not asking you to
support any of our other nominees or agree in advance with any
objectives of our Board or management. We would only be asking
you to keep an open mind as to each issue presented to the Board
of Directors and to vote on each matter in a manner that you
believe to be in the best interests of the Company and its
stockholders.
"We do not believe that directors are elected to Board of
Directors as a "slate". In fact, under SEC rules, stockholders
have the right to withhold their votes from one or more of the
nominees. By including you in the ICN proxy statement as an ICN
Board nominee, you will not be prevented from advocating the
candidacy of Messrs. Thurman and O'Leary. In fact, ICN will
disclose your intention in this regard in the ICN proxy statement
so that no stockholder will be confused. However, we do urge you
to keep an open mind, as you assured our Nominating Committee you
would, before deciding which positions you will take.
"We strongly believe that, subject to the establishment of fair
and reasonable procedures such as those contained in our Restated
Certificate of Incorporation, stockholders have the right to
propose nominees for our Board of Directors. In fact, we welcome
such nominations. However, we do not believe it appropriate for
any stockholder (including stockholders owning less than 10% of
our stock) to demand that we either nominate ALL of their
nominees or reject them ALL. We believe that the Board should
have the ability to selectively choose one or more qualified
stockholder nominees. Our board members have a fiduciary duty to
all of our stockholder and not just the stockholders who propose
nominees to the Board. For example, if more than one stockholder
were to nominate candidates, a "take it or leave it" approach
would not permit the Board to select candidates from among the
various stockholder recommended slates.
"We continue to believe that you would make an excellent addition
to our Board. We also believe that the experience you bring to
the Board would complement the experiences of our other
directors. Furthermore, a majority of our directors would have
been directors for one year or less and none of our new directors
will have had any prior relationship with ICN.
"Most importantly we trust that you will keep your promises to
the Nominating Committee, that you will keep an open mind, that
you have no agreements or understandings with Iridian or
Franklin, and that if elected as a director will act in the best
interests of all stockholders. Based on your consent delivered to
the Company, your meeting with and respresentations to our
Nominating Committee, and your continuing willingness to serve as
a director of ICN if elected, ICN will put your name on its proxy
card, solicit its stockholders vote for you and, if elected, will
welcome you as a Board member. If you would like to meet with me
or any of the current members of the Board, I would be happy to
arrange such a meeting."
STOCKHOLDERS ARE ADVISED THAT MR. KOPPES HAS STATED, AS SET FORTH IN HIS
LETTER, THAT HE PRESENTLY INTENDS TO SOLICIT PROXIES ON BEHALF OF THE
DISSIDENT STOCKHOLDERS' OTHER TWO CANDIDATES, MESSRS. O'LEARY AND THURMAN.
MR. KOPPES' INCLUSION ON ICN'S PROXY CARD AND IN ICN'S PROXY MATERIALS
SHOULD NOT BE TAKEN AS IMPLYING IN ANY WAY THAT HE IS SUPPORTING OR
SOLICITING SHAREHOLDERS TO VOTE FOR THE BOARD'S OTHER TWO CANDIDATES,
SENATOR BAYH OR MR. COHEN.
ICN's decision to place Mr. Koppes' name on ICN's proxy card was based,
among other things, on the fact that Mr. Koppes met with the Board's
Nominating Committee with the express understanding that, if the Nominating
Committee found him to be qualified to serve as a director, his name would
be submitted to the Board for inclusion on the Board's slate of director
nominees, and if elected on that slate he would serve as a director. Mr.
Koppes has not in any way indicated that, if he is elected by stockholders,
he will not serve as a director.
The Board continues to believe that Mr. Koppes is well qualified to serve
as a director of ICN. ICN respects Mr. Koppes' right to support the
Dissident Stockholders' other candidates. Based on Mr. Koppes' reputation
and representations to the Nominating Committee, the Board continues to
believe that, if he is elected, he will come to the Board with an open
mind, no prior commitments to any particular stockholders, including the
Dissident Stockholders, and that he will act in the best interests of all
ICN stockholders.
YEAR COMMENCED
SERVING AS
DIRECTOR OF THE
NAME AND PRINCIPAL OCCUPATION AGE COMPANY OTHER CORPORATE DIRECTORSHIPS
----------------------------- --- ------- -----------------------------
NOMINEES FOR ELECTION
BIRCH E. BAYH, JR., ESQ. (a)(b) 74 1992 Simon Property Group
Senator Bayh has been a partner in the
Washington, D.C. law firm of Venable, Baetjer
and Howard LLP since May 2001. He was
previously a senior partner in the Washington
D.C. office of Oppenheimer, Wolff & Donnelly
LLP from 1997 until May 2001, head of the
Washington office of Bayh, Connaughton &
Stewart, L.L.P. from 1991 until 1997 and
Rivkin, Radler, Bayh, Hart & Kremer from 1985
until 1991, and a partner in the Indianapolis,
Indiana and Washington, D.C. law firm of Bayh,
Tabbert & Capehart from 1981 until 1985.
Senator Bayh served as a United States Senator
from the State of Indiana from 1963 until 1981.
ABRAHAM E. COHEN 66 2002 Akzo Corporation; Teva Pharmaceutical
Mr. Cohen is the retired Senior Vice President of Industries Ltd.; Vasomedical Inc.; NESS
Merck & Co. and President of the Merck Sharp & Corporation; Neurobiological Technologies,
Dohme International Division (MSDI). He joined Inc.; Chugai Pharmaceuticals; Japan; Smith
MSDI in 1957 and served in various capacities. Barney (WorldFunds); Pharmaceutical Product
He became the First Managing Director for Development, Inc.; Axonyx, Inc; Viragen, Inc
Pakistan in 1962 and Regional Director for
South Asia in 1964. He became Regional
Director for Northern Europe in 1967 and was
elected MSDI's Vice President for Europe in
1969. Mr. Cohen was elected Executive Vice
President of MSDI's headquarters division in
Rahway, New Jersey in 1974 and became President
of the division in 1977. He was named to serve
concurrently as a corporate Senior Vice
President in 1982.
RICHARD H. KOPPES (c) 55 Apria Health Group Inc.
Mr. Koppes has been Of Counsel to the law firm of
Jones, Day, Reavis & Pogue since 1996, and is
a consulting professor of law and Co-Director
of Executive Education Programs at Stanford
University School of Law. Mr. Koppes
served as a principal of American Partners
Capital Group, Inc., a venture capital and
consulting firm, from August 1996 to December
1998. From May 1986 through July 1996, Mr.
Koppes held several positions with the
California Public Employees' Retirement System
(CalPERS) including General Counsel, Interim
Chief Executive Officer and Deputy Executive
Officer.
DIRECTORS WHOSE TERMS EXPIRE IN 2003
MILAN PANIC (d) 72 1960
Mr. Panic, the founder of ICN, has been Chairman
of the Board and Chief Executive Officer of ICN
since its inception in 1960 and served as
President until 1997. He was on a leave of
absence from July 14, 1992 to March 4, 1993
while he was serving as Prime Minister of
Yugoslavia and a leave of absence from October
1979 to June 1980.
RODERICK M. HILLS (a)(e) 68 2002 Orbital Sciences Corporation;
Mr. Hills has been a partner of the law firm of Regional Marked Makers,
Hills & Stern since 1996 and Chairman of Hills Inc.;
Enterprises, Ltd., an international Chiquita Brands International, Inc.
merchant-banking firm, since 1984. He was a
consultant to Mudge, Rose, Guthrie, Alexander
& Ferdon, Shea & Gould and Donovan,
Leisure, Rogovin, Huge & Schiller at various
dates between 1989 and 1995. He was a
Distinguished Faculty Fellow and Lecturer
in International Finance at Yale University
School of Organization and Management from 1985
until 1987. He was Chairman, Sears World Trade,
Inc. from 1982 until 1984. He was a partner of
Latham, Watkins & Hills from 1978 until 1982. He
was Chairman and Chief Executive Officer of
Peabody Coal Company from 1977 until 1979. He
was Chairman of the U.S. Securities and Exchange
Commission from 1975 until 1977. He was
Counsel to President Gerald Ford in 1975. He
was Chairman and Chief Executive Officer of
Republic Corporation from 1972 until 1975. He
was a founder and partner of Munger, Tolles &
Hills from 1962 until 1975. He was a professor
at Harvard University School of Law and Harvard
University School of Business from 1969 until
1970 and a visiting lecturer in law at Stanford
University School of Law from 1960 until 1970.
JEAN-FRANCOIS KURZ (d)(f) 67 1989 Board of Banque Pasche S.A., Geneva
Mr. Kurz is Chairman of the Board of Banque
Pasche S.A., Geneva. He was a member of the
Board of Directors and the Executive Committee
of the Board of DG Bank Switzerland Ltd. from
1990 to 1992. In 1988 and 1989, Mr. Kurz served
as a General Manager of TDB American Express
Bank of Geneva and from 1969 to 1988, he was
Chief Executive Officer of Banque Gutzweiler,
Kurz, Bungener in Geneva.
DIRECTORS WHOSE TERMS EXPIRE IN 2004
EDWARD A. BURKHARDT (e)(g)(h) 63 2001 Baltic Rail Services OU; Eesti Raudtee
Mr. Burkhardt has been the President of Rail (Estonian Railways); Wheeling & Lake
World, Inc., since August 1999. From 1987 Erie Railway
through August 1999, Mr. Burkhardt held a
number of positions with Wisconsin Central
Transportation Corporation, including Chairman,
President and Chief Executive Officer.
RONALD R. FOGLEMAN (a)(g)(h) 60 2001
General Fogleman, United States Air Force North American Airlines, a feeder
(Retired), has been the President and Chief airline for El Al; Rolls Royce of North
Executive Officer of Durango Aerospace, Inc., America; International Airline Support
since 1998. Prior to joining Durango Group, Inc.; Mesa Air Group, Inc.;
Aerospace, General Fogleman, who retired from World Airways, Inc.; AAR Corp.; Derco
the United States Air Force in September 1997, Aerospace Inc.; East Inc.; MITRE
served as Chief of Staff to the United States Corporation; Thales-Raytheon Systems
Air Force from 1994 until 1997 and as
Commander-in-Chief of the United States
Transportation Command from 1992 until 1994.
STEVEN J. LEE (f)(g) 54 2001 Kensey Nash Corporation; Fibersense
Mr. Lee has been Chairman and Chief Executive Technology Corporation
Officer of PolyMedica Corporation since June
1996. From 1990 to 1996, he was President and
Chief Executive Officer of PolyMedica
Corporation.
DIRECTORS NOT STANDING FOR RE-ELECTION
NORMAN BARKER, JR.(d)(f)(h)(i) 79 1988 Bank Plus, Inc.; TCW Convertible
Mr. Barker is the retired Chairman of the Board Securities, Inc.
of First Interstate Bank of California and
Former Vice Chairman of the Board of First
Interstate Bancorp. Mr. Barker joined First
Interstate Bank of California in 1957 and was
elected President and Director in 1968, Chief
Executive Officer in 1971 and Chairman of the
Board in 1973. He retired as Chairman of the
Board at the end of 1985.
ADAM JERNEY 60 1962
Mr. Jerney has been Chief Operating Officer since
September 1994 and President of ICN since
January 1997. He served as Chairman of the
Board and Chief Executive Officer of ICN from
July 14, 1992 to March 4, 1993 during Milan
Panic's leave of absence. Mr. Jerney joined
ICN in 1973 as Director of Marketing Research
in Europe and assumed the position of General
Manger of ICN Netherlands in 1975. In 1981,
he was elected Vice President, Operations and
in 1987 he became President and Chief Operating
Officer of SPI Pharmaceuticals, Inc., then a
subsidiary of the Company. He became President
of the Company in 1997. Prior to joining ICN,
he spent four years with F. Hoffmann-La Roche &
Company.
STEPHEN D. MOSES (e)(g)(i) 67 1988 The Central Asian-American Enterprise
Mr. Moses is Chairman of Stephen Moses Interests Fund; Steadfast Ventures, Inc.
and a member of the Board of Directors of
Central Asian American Enterprise Fund,
pursuant to appointment by the President of the
United States. Formerly Chairman of the Board
of Brentwood Bank, Los Angeles, California, and
Chairman, President and C.E.O. of National
Investment Development Corporation. He also
serves on the Board of Councilors of the UCLA
Foundation and is a Trustees emeritus of
Franklin and Marshall College.
ROSEMARY TOMICH (a)(e)(i) 64 2001 Occidental Petroleum Corporation
Ms. Tomich has been owner of the Hope Cattle
Company since 1958 and the A. S. Tomich
Construction Company since 1970. She is also
Chairman of the Board of Directors and Chief
Executive Officer, Livestock Clearing, Inc. and
was a founding director of the Palm Springs
Savings Bank. Ms. Tomich is also a member of
the Advisory Board of the University of
Southern California School of Business
Administration and on the Board of Councilors
of the UCLA Foundation.
---------------
(a) Member of the Corporate Governance Committee
(b) Member of the Science and Technology Committee
(c) Information contained in this Proxy Statement concerning Richard H.
Koppes has been obtained from a letter dated March 21, 2002 from
Mutual Shares Fund sent to the Company pursuant to which Mr. Koppes
was nominated to serve as a director of the Company.
(d) Member of the Executive Committee
(e) Member of the Audit Committee
(f) Member of the Finance Committee
(g) Member of the Communications and Compliance Committee
(h) Member of the Nominating Committee
(i) Member of the Compensation and Benefits Committee
None of the directors are related by blood or marriage to one another
or to an executive officer of the Company.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors has a standing Executive Committee, Audit
Committee, Finance Committee, Science and Technology Committee,
Compensation and Benefits Committee, Communications and Compliance
Committee, Corporate Governance Committee, and Nominating Committee.
The current members of the Executive Committee are Messrs. Panic, Kurz
and Barker. This Committee is empowered to act upon any matter for the
Board of Directors, other than matters which may not be delegated under
Delaware law. The Executive Committee held 4 meetings during the year ended
December 31, 2001.
The current members of the Audit Committee, which held 10 meetings
during the year ended December 31, 2001, include Messrs. Burkhardt, and
Moses and Ms. Tomich. In addition, Mr. Hills became a member of this
Committee when he was appointed to the Board. Its functions include
recommending to the Board of Directors the selection of the Company's
independent public accountants and reviewing with such accountants the plan
and results of their audit, the scope and results of the Company's internal
audit procedures and the adequacy of the Company's systems of internal
accounting controls. In addition, the Audit Committee reviews the
independence of the independent public accountants and reviews the fees for
audit and non-audit services rendered to the Company by its independent
public accountants. All members of the Audit Committee are independent,
financially literate, and at least one member has accounting and financial
management expertise.
The Compensation and Benefits Committee recommends to the Board of
Directors the compensation and benefits for senior management and
directors, including the grant of stock options. The current members of
this Committee are Messrs. Barker and Moses and Ms. Tomich. This Committee
held 10 meetings during the year ended December 31, 2001.
The Finance Committee oversees investment and commercial banking
issues and investment guidelines. The current members of this Committee are
Messrs. Barker, Kurz and Lee. This Committee held 2 meetings during the
year ended December 31, 2001.
The Science and Technology Committee formulates and oversees the
scientific and technology policy of the Company. Senator Bayh is currently
the only member of this Committee. Dr. Guillemin, formerly a member of this
Committee, resigned from the Board of Directors upon completion of the
Ribapharm Offering. This Committee held 2 meetings during the year ended
December 31, 2001.
The Communications and Compliance Committee oversees the development
of external communications policy for the Company in both the public
relations and investor relations disciplines. In 2002, this Committee took
on the added responsibility of overseeing the Company's compliance with the
terms of a compliance program adopted by the Company in connection with a
plea agreement with the United States Attorney for the Central District of
California. See "Certain Legal Proceedings." The current members of the
Communications and Compliance Committee are Messrs. Charles, Burkhardt, Lee
and Moses and General Fogleman. This Committee held 1 meeting during the
year ended December 31, 2001.
The Corporate Governance Committee was formed in July 1995 and
oversees the development of the Company's policies and procedures to insure
the Company's adherence to good corporate governance for the benefit of the
stockholders of the Company. In March 2002 the Board of Directors adopted
corporate governance guidelines recommended by this Committee. The
guidelines are attached as Annex B to this Proxy Statement. The current
members of this Committee are Mr. Lee, Senator Bayh, General Fogleman and
Ms. Tomich. In addition, Mr. Hills became a member of this Committee when
he was appointed to the Board. This Committee did not meet during the year
ended December 31, 2001.
The Nominating Committee was formed on March 13, 2002. The Nominating
Committee considers potential candidates for election to the Board of
Directors, including nominees recommended by stockholders in accordance
with the Company's Amended and Restated Certificate of Incorporation, and
recommends candidates to the Board of Directors. The current members of the
Nominating Committee are Messrs. Barker and Burkhardt and General Fogleman.
The Board of Directors met 9 times during 2001 and all of the
directors attended at least 75% of the meetings (including meetings of
committees on which they serve).
EXECUTIVE OFFICERS
The executive officers of the Company and subsidiaries are as follows:
NAME AGE TITLE
---- --- -----
Milan Panic 72 Chairman of the Board and Chief Executive Officer
Adam Jerney 60 Director, President and Chief Operating Officer
Alan F. Charles 64 Executive Vice President, Corporate Relations
John E. Giordani 59 Executive Vice President and Chief Financial Officer
Gregory Keever 53 Executive Vice President, General Counsel and Corporate Secretary
Bill A. MacDonald 54 Executive Vice President, Strategic Planning
James G. McCoy 61 Executive Vice President, Human Resources
David C. Watt 49 Executive Vice President, Biomedicals
Johnson Y.N. Lau 41 President and Chief Executive Officer, Ribapharm Inc.
MILAN PANIC, the founder of ICN, has been Chairman of the Board and
Chief Executive Officer of the Company since its inception in 1960 and
President until 1997, except for a leave of absence from July 14, 1992 to
March 4, 1993 while he was serving as Prime Minister of Yugoslavia and a
leave of absence from October 1979 to June 1980.
ADAM JERNEY has been our Chief Operating Officer since September 1994
and our President since January 1997. He has served as a director of ICN
since 1992. He served as Chairman of the Board and Chief Executive Officer
of ICN from July 14, 1992 to March 4, 1993 during Milan Panic's leave of
absence (as discussed above). Mr. Jerney joined ICN in 1973 as Director of
Marketing Research in Europe and assumed the position of General Manager of
ICN Netherlands in 1975. In 1981, he was elected Vice President,
Operations. Prior to joining ICN, he spent four years with F. Hoffmann-La
Roche & Company.
ALAN F. CHARLES has been our Executive Vice President of Corporate
Relations since December 2001 and Compliance Coordinator since February
2002. From 1986 until April 2002, he was a director of ICN. From 1993 until
December 2001, he was an independent consultant in higher education
management. From 1980 to 1993, he was Vice Chancellor of University
Relations at the University of California, Los Angeles and served in
various administrative capacities at that university since 1972.
JOHN E. GIORDANI has been our Executive Vice President and Chief
Financial Officer since November, 2001. From January 2000 until November
2001, he was an Executive Vice President of the Company. He served as ICN's
Executive Vice President and Chief Financial Officer from 1992 to January
2000. From June of 1986 until 1992, he was ICN's Senior Vice President and
Chief Financial Officer. Prior to joining ICN, Mr. Giordani served as Vice
President and Corporate Controller of Revlon, Inc. in New York from 1982
through 1986, and Deputy and Assistant Corporate Controller with Revlon
from 1978 through 1982. He was with the public accounting firm of Peat,
Marwick, Mitchell & Co. (now known as "KPMG LLP") from 1969 to 1978.
GREGORY KEEVER joined ICN in July 2001 as our Executive Vice
President, General Counsel and Secretary. Mr. Keever has also been a
partner at the law firm of Coudert Brothers since 1997. Prior thereto, he
was a partner at the law firm of Buchalter, Nemer, Fields and Younger, in
Los Angeles, California, since 1995.
BILL A. MACDONALD has been our Executive Vice President, Strategic
Planning since 1992. From 1987 until 1992, he was ICN's Senior Vice
President, Taxes and Corporate Development. From 1983 until 1987, he was
ICN's Vice President, Taxes and Corporate Development. From 1982 until
1983, he was ICN's Director of Taxes. From 1980 until 1982, he served as
the Tax Manager of Petec Computer Corporation. From 1973 to 1980, he was
Tax Manager and Assistant Treasurer of Republic Corporation.
JAMES G. MCCOY joined ICN in August 2000 as Executive Vice President,
Human Resources. From 1979 to June 2000, he was with Coopers &
Lybrand/PricewaterhouseCoopers LLP. He was the managing partner for the
financial cost management and middle market partners on the West Coast.
Previously, he was Director of Human Resources, Strategic Planning and
Accounting for Warner Elektra Atlantic Distribution Company, a subsidiary
of Warner Communications. Prior to that time, he was with the public
accounting firm Ernst & Ernst (now Ernst & Young) and Litton Industries,
Inc.
DAVID C. WATT has been our Executive Vice President, Biomedicals since
July 2001. From February 1994 until July 2001 he was Executive Vice
President, General Counsel and Secretary of ICN. From 1992 until 1994, he
was Senior Vice President, Law and Secretary of ICN. From December 1988
until January 1992, he was Vice President, Law and Secretary of ICN. From
March 1988 until December 1988, he was Assistant General Counsel and
Secretary. From 1986 to 1987, he was President and Chief Executive Officer
of Unitel Corporation. He also served as Executive Vice President and
General Counsel and Secretary of Unitel Corporation during 1986. From 1983
to 1986, he served with ICA Mortgage Corporation as Vice President, General
Counsel and Corporate Secretary. Prior to that time, he served with Central
Savings Association as Assistant Vice President and Associate Counsel from
1981 to 1983, and as Assistant Vice President from 1980 to 1981.
JOHNSON Y.N. LAU M.D., PH.D., became the President and Chief Executive
Officer of Ribapharm upon the completion of the Ribapharm Offering on April
17, 2002. From March 2000 until April 2002, he was Senior Vice President,
Research and Development of ICN. Before joining ICN, he was a Senior
Director in Antiviral Research at the Schering-Plough Research Institute
from 1997 until March 2000. He served as a faculty member at the University
of Florida from 1992 to 1997. From 1989 to 1991, he served as a faculty
member at the Institute of Liver Studies, King's College Hospital School of
Medicine and Dentistry, University of London.
CERTAIN LEGAL PROCEEDINGS
On August 11, 1999, the United States Securities and Exchange
Commission (the "Commission" or the "SEC") filed a complaint in the United
States District Court for the Central District of California captioned
Securities and Exchange Commission v. ICN Pharmaceuticals, Inc., Milan
Panic, Nils O. Johannesson, and David C. Watt, Civil Action No. SACV
99-1016 DOC (ANx) (the "SEC Complaint"). The SEC Complaint alleges that the
Company and the individually named defendants made untrue statements of
material fact or omitted to state material facts necessary in order to make
the statements made, in the light of the circumstances under which they
were made, not misleading and engaged in acts, practices, and courses of
business which operated as a fraud and deceit upon other persons in
violation of Section 10(b) of the Securities Exchange Act of 1934 (the
"Exchange Act") and Rule 10b-5 promulgated thereunder. The SEC Complaint
concerns public disclosures made by the Company with respect to the status
and disposition of the Company's 1994 New Drug Application for ribavirin as
a monotherapy treatment for chronic hepatitis C (the "NDA"). The FDA did
not approve this new drug application. The SEC Complaint seeks injunctive
relief, unspecified civil penalties, and an order barring Mr. Panic from
acting as an officer or director of any publicly-traded company. A
pre-trial schedule has been set which requires the end of discovery by
August 1, 2002, and the commencement of trial on May 6, 2003. The Company
and the SEC appeared before a settlement judge, for the purpose of
settlement negotiations. Pending completion of these negotiations, the
courts have stayed discovery for 90 days. There can be no assurance that
the SEC litigation will be settled by mutual agreement or what the amount
of any settlement may ultimately be. In the event a settlement is not
reached, the Company will vigorously defend any litigation.
On December 17, 2001, the Company pleaded guilty in the United States
District Court for the Central District of California to a single felony
count for securities fraud for omitting to disclose until February 17,
1995, the existence and content of a letter received from the FDA in late
1994 regarding the unapprovable status of the Company's 1994 NDA for
ribavirin as a monotherapy treatment for chronic hepatitis C. This guilty
plea was entered pursuant to a plea agreement with the United States
Attorney for the Central District of California to settle a six-year
investigation. The Company paid a fine of $5,600,000 and became subject to
a three-year term of probation. The plea agreement provides that the Office
will not further prosecute the Company and will not bring any further
criminal charges against the Company or any individuals, except one
non-officer employee of the Company, relating to any matters that have been
the subject of the investigation and will close its investigation of these
matters. The conditions of the probation require the Company to create a
compliance program to ensure no future violations of the federal securities
laws and to pre-clear with the FDA any public communication by the Company
concerning any matter subject to FDA regulation. The terms of the
compliance program include the Company retaining an expert to review its
procedures for public communications regarding FDA matters and to develop
written procedures for these communications. The compliance program also
requires preparation of an annual report by the expert on the Company's
compliance with the written procedures and annual certification by the
Company's management that the Company is complying with the expert's
recommendations.
In April 2001, Mr. Panic was advised that a "private criminal
proceeding" was instituted against him in Switzerland by Tito Tettamanti
alleging defamation. In Switzerland, a "private criminal action proceeding"
is prosecuted by an aggrieved party who must himself bring charges against
the accused. A district attorney or other government prosecutor is not
involved in this proceeding. No further correspondence concerning this
proceeding has been received by the Company.
OWNERSHIP OF THE COMPANY'S SECURITIES
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of the Common Stock and the percent of shares owned
beneficially by beneficial owners of more than 5% of the outstanding shares
of the Common Stock:
NUMBER OF SHARES AND NATURE OF
BENEFICIAL OWNERSHIP OF ICN PERCENTAGE
IDENTITY OF OWNER OR GROUP COMMON STOCK OF CLASS
-------------------------- ------------ --------
Salomon Smith Barney Holdings Inc. and Citigroup Inc.(1) 7,879,870(1) 9.6%
Iridian Asset Management, LLC and Franklin Mutual Advisers LLC(2) 8,450,530(2) 10.22%
------------
(1) This information is obtained from a Schedule 13G, dated February
13, 2002, filed with the SEC by Salomon Smith Barney Holdings Inc.
("SSB Holdings") and Citigroup Inc. ("Citigroup"), the parent
holding company of SSB Holdings. SSB Holdings reports shared
voting power and shared dispositive power over 7,760,193 shares.
Citigroup reports shared voting power and shared dispositive power
over 7,879,870 shares. SSB Holdings' principal business address is
388 Greenwich Street, New York, NY 10013. Citigroup's principal
business address is 399 Park Avenue, New York, NY 10043.
(2) This information is obtained from a Schedule 13D, as amended
through April 9, 2002, filed with the SEC by the following
entities: Iridian Asset Management LLC ("Iridian") an investment
advisor; LC Capital Management, LLC ("LC Capital"), the controlling
member of Iridian; CL Investors, Inc. ("CL Investors"), the
controlling member of LC Capital; COLE Partners LLC ("COLE");
Iridian Private Business Value Equity Fund, L.P. ("Iridian Private
Business"); David L. Cohen and Harold J. Levy, controlling
stockholders of CL Investors; and Franklin Mutual Advisors LLC
("FMA"), an investment advisor and indirect wholly owned subsidiary
of Franklin Resources, Inc. ("FRI"). The Schedule 13D states that
Iridian and FMA filed the Schedule 13D jointly because on March 8,
2002 they reached an agreement to consult with each other in
connection with their respective investment in the Common Stock
(including in connection with the acquisition, disposition and
voting of the Common Stock) and with respect to ICN generally and
also to share certain expenses incurred by them in connection with
their respective investments in the Common Stock and their joint
efforts to maximize the value thereof. The information also
reflects disclosure made by the Dissident Stockholders in a
Schedule 14A filed with the SEC on April 18, 2002.
According to the Schedule 14A, Iridian reports beneficial ownership
of 4,996,357 shares of Common Stock and may also be deemed to
beneficially own all shares of Common Stock owned beneficially by
David L. Cohen, Harold J. Levy or FMA. According to the Schedule
13D, each of LC Capital and CL Investors report shared voting power
and shared dispositive power over 4,714,557 shares and disclaims
beneficial ownership of Common Stock held by FMA, FRI or
Providence. According to the Schedule 13D, each of COLE and Iridian
Private Business report shared voting power and shared dispositive
power over 108,500 shares and disclaims beneficial ownership of
Common Stock held by FMA, FRI or Providence. According to the
Schedule 14A, each of Messrs. Cohen and Levy report beneficial
ownership of 5,089,357 shares of Common Stock and may also be
deemed to beneficially own all shares of Common Stock owned
beneficially by Iridian or FMA. According to the Schedule 13D, each
of Messrs. Cohen and Levy also report shared voting power and
shared dispositive power over 93,000 shares held by First Eagle
Fund of America pursuant to their employment with Arnhold & S.
Bleichroeder Advisors, Inc. ("A&SB"), an investment adviser, and an
investment advisory agreement between A&SB and First Eagle Fund of
America. According to the Schedule 14A, FMA reports sole voting
power and sole dispositive power over 3,360,673 shares and may also
be deemed to beneficially own all shares of Common Stock owned
beneficially by Iridian, David L. Cohen or Harold J. Levy. The
principal business address of Iridian is 276 Post Road West,
Westport, CT 06880-4704. The principal business address of FMA is
51 John F. Kennedy Parkway, Short Hills, NJ 07078.
OWNERSHIP BY MANAGEMENT
The following table sets forth, as of March 31, 2002, certain
information regarding the beneficial ownership of the Common Stock and the
percent of shares owned beneficially by each current director, each
director nominee nominated by the Board of Directors and each Named
Executive Officer (as defined below) and all directors and executive
officers of the Company as a group:
NUMBER OF SHARES AND
NATURE OF BENEFICIAL
OWNERSHIP OF ICN PERCENTAGE
IDENTITY OF OWNER OR GROUP COMMON STOCK(1) OF CLASS
-------------------------- -------------------- -----------
Norman Barker, Jr............................................... 165,567 (2) *
Birch E. Bayh, Jr............................................... 112,295 (3) *
Edward A. Burkhardt............................................. 250,000 *
Abraham E. Cohen................................................ -- --
Ronald R. Fogleman.............................................. 1,000 *
Roderick M. Hills............................................... -- --
Adam Jerney..................................................... 1,077,184 (4) 1.3%
Richard H. Koppes............................................... -- --
Jean-Francois Kurz.............................................. 143,278 (5) *
Steven J. Lee................................................... 25,000 *
Stephen D. Moses................................................ 94,562 (6) *
Milan Panic..................................................... 2,568,051 (7) 3.1%
Rosemary Tomich................................................. 3,750 (8) (2)
Bill A. MacDonald............................................... 85,032 (9) *
Richard A. Meier................................................ 436,750 (10) *
David C. Watt................................................... 93,650 (11) *
Directors and executive officers of the Company
as a group (21 persons)...................................... 5,367,147 (12) 6.2%
------------
* Less than 1% of the outstanding Common Stock.
(1) Except as indicated otherwise in the following notes, shares shown as
beneficially owned are those as to which the named persons possess
sole voting and investment power. However, under the laws of
California and certain other states, personal property owned by a
married person may be community property which either spouse may
manage and control, and the Company has no information as to whether
any shares shown in this table are subject to community property laws.
(2) Includes 160,438 shares of ICN common stock which Mr. Barker has the
right to acquire within 60 days upon the exercise of stock options.
(3) Includes 107,538 shares of ICN common stock which Sen. Bayh has the
right to acquire within 60 days upon the exercise of stock options.
(4) Includes 575,615 shares of ICN common stock which Mr. Jerney has the
right to acquire within 60 days upon the exercise of stock options.
(5) Includes 143,278 shares of ICN common stock which Mr. Kurz has the
right to acquire within 60 days upon the exercise of stock options.
(6) Includes 90,391 shares of ICN common stock which Mr. Moses has the
right to acquire within 60 days upon the exercise of stock options.
(7) Includes 1,624,912 shares of ICN common stock which Mr. Panic has the
right to acquire within 60 days upon the exercise of stock options.
(8) Includes 3,750 shares of ICN common stock which Ms. Tomich has the
right to acquire within 60 days upon the exercise of stock options.
(9) Includes 83,000 shares of ICN common stock which Mr. MacDonald has the
right to acquire within 60 days upon the exercise of stock options.
(10) Includes 426,745 shares of ICN common stock which Mr. Meier has the
right to acquire within 60 days upon the exercise of stock options.
(11) Includes 91,576 shares of ICN common stock which Mr. Watt has the
right to acquire within 60 days upon the exercise of stock options.
(12) Includes 3,613,390 shares of ICN common stock which directors and
executive officers as a group have the right to acquire within 60 days
upon the exercise of stock options.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires ICN's executive officers and directors, and
persons who own more than ten percent of a registered class of ICN's equity
securities, to file reports of ownership and changes in ownership with the
Commission and the New York Stock Exchange. Such executive officers,
directors and stockholders are required by Commission regulation to furnish
ICN with copies of all Section 16(a) forms they file.
Based on its review of the copies of such forms received by ICN, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, ICN believes that during fiscal year 2001 all
filing requirements applicable to its executive officers, directors and ten
percent beneficial owners were timely satisfied with the exception of Adam
Jerney, who filed a late Form 4.
EXECUTIVE COMPENSATION AND RELATED MATTERS
Summary Compensation Table
The following table sets forth the annual and long-term compensation
awarded to or paid to the Chief Executive Officer and the four most highly paid
executive officers of the Company (the "Named Executive Officers"), for services
rendered to the Company in all capacities during the years ended December 31,
2001, 2000 and 1999.
ANNUAL COMPENSATION LONG-TERM COMPENSATION (1)
------------------------------- --------------------------
SECURITIES UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#) (2) COMPENSATION ($)
--------------------------- ---- ---------- --------- -------------------------- ----------------
Milan Panic 2001 901,446 1,009,612 300,000 186,053(3)
Chairman and 2000 750,366 478,700 -- 235,053
Chief Executive Officer 1999 701,277 413,821 100,000 304,157
Adam Jerney 2001 587,586 287,200 110,000 13,739(4)
President and 2000 452,572 253,400 -- 24,802
Chief Operating Officer 1999 422,940 450,000 30,000 28,797
Richard A. Meier(5) 2001 427,793 380,300 80,000 36,992(6)
Executive Vice President 2000 320,000 163,000 -- 9,700
1999 246,128 155,000 150,000 10,590
David C. Watt 2001 368,000 300,300 80,000 15,996(7)
Executive Vice President 2000 320,000 163,000 -- 7,752
Biomedicals 1999 224,700 150,000 30,000 7,363
Bill MacDonald 2001 368,000 225,300 80,000 15,287(8)
Executive Vice President 2000 320,000 163,000 -- 11,352
Strategic Planning 1999 222,600 96,433 30,000 7,778
--------------
(1) In addition to stock options, certain Named Executive Officers hold
restricted shares pursuant to the Company's Long Term Incentive Plan
(the "LTIP"). The restricted shares were granted in 1998 and vest 25%
per year, starting one year from the date of grant. At December 31,
2001, 25% of the 1998 grants had not vested. The aggregate number of
these unvested shares of restricted stock held by the Named Executive
Officers and the value thereof (based upon the closing price of Common
Stock on the New York Stock Exchange of $33.50 on December 31, 2001)
were: Mr. Panic, 30,564 shares, $1,023,894; Mr. Jerney, 9,169 shares,
$307,162; Mr. Watt, 6,113 shares, $204,786 and Mr. MacDonald, 6,113
shares, $204,786. Dividends are paid on the restricted shares to the
same extent paid on the Common Stock, and are held in escrow until the
related shares are vested.
(2) Includes grants of options to purchase shares of Common Stock during
the year indicated.
(3) Consisted of the following: Company-paid premiums for executive
medical ($4,334) and life insurance ($9,552), interest in respect of a
company provided loan ($150,755) and legal expenses ($21,412). Mr.
Panic is also indemnified by the Company for legal expenses in
connection with the SEC Complaint. See "Certain Legal Proceedings." In
1996, the Company entered into a split dollar life insurance
arrangement, pursuant to which the Company pays the premiums on a life
insurance contract owned by Mr. Panic. In 2001, the Company did not
pay any premiums on this split dollar life insurance.
(4) Consisted of the following: Company-paid premiums for executive
medical ($4,083) and life insurance ($4,472), executive membership
($792), and matching contributions to the Company's 401(k) plan
($4,392).
(5) Mr. Meier resigned as Executive Vice President of the Company effective
April 1, 2002.
(6) Consisted of the following: Company-paid premiums for executive
medical ($6,423) and life insurance ($854), vacation payout ($24,615)
and matching contributions to the Company's 401(k) plan ($5,100).
(7) Consisted of the following: Company-paid premiums for executive
medical ($9,300) and life insurance ($1,596), and matching
contributions to the Company's 401(k) plan ($5,100). Mr. Watt is also
indemnified by the Company for legal expenses in connection with a SEC
COMPLAINT. See "Certain Legal Proceedings."
(8) Consisted of the following: Company-paid premiums for executive
medical ($7,539) and life insurance ($2,648), and matching
contributions to the Company's 401(k) plan ($5,100).
In June 1996, the Company made a short-term loan to Mr. Panic, the
Company's Chairman and CEO, in the amount of $3,500,000 for obligations
arising from the settlement by the Company and Mr. Panic of a litigation to
which Mr. Panic and the Company were parties. This litigation involved a
claim by a former employee of the Company of alleged sexual harassment
against her by Mr. Panic and the Company. During August 1996, this amount
was repaid to the Company. In connection with this transaction, the Company
guaranteed $3,600,000 of demand debt of Mr. Panic with a third party bank,
which is renewable by Mr. Panic annually until repaid. In addition to the
guarantee, the Company deposited $3,600,000 with this bank as collateral to
Mr. Panic's debt, which will remain in place until such time as Mr. Panic
repays his obligation to the bank. This deposit is recorded as a long-term
asset on the Company's consolidated balance sheet. The Company is not aware
of the time frame in which Mr. Panic expects to repay this obligation.
Interest paid by the Company on behalf of Mr. Panic was charged to Mr.
Panic as compensation expense and amounted to $150,755, $160,916 and
$163,166 for the years ended December 31, 2001, 2000 and 1999,
respectively. The Company recognized interest income on the deposit of
$109,511, $124,330 and $126,097 for the years ended December 31, 2001, 2000
and 1999, respectively. Mr. Panic has provided collateral to the Company's
guarantee in the form of a right to the proceeds of the exercise of options
to acquire 150,000 shares with an exercise price of $15.17 and the rights
to a $6,400,000 life insurance policy provided by the Company pursuant to a
split dollar insurance agreement between the Company and Mr. Panic. In the
event of any default on the debt to the bank, the Company has recourse that
is limited to the collateral described above. Both the transaction and the
sufficiency of the collateral for the guarantee were approved by the Board
of Directors.
In January 2001, the Company made a loan to Mr. Adam Jerney, President
and Chief Operating Officer of the Company, of $1,197,864 as part of a
program adopted by the Board of Directors of the Company to encourage
directors and officers of the Company to exercise stock options (the "Stock
Option Program"). The loan was collateralized by 41,427 shares of Common
Stock and due in January 2003. This loan was repaid in full in April 2002.
This loan had an interest rate of 5.61% per annum and was non-recourse with
respect to principal and full recourse to Mr. Jerney with respect to
interest. In April 2001, the Company made a loan to Mr. Panic of $2,731,519
as part of the Stock Option Program. The loan is collateralized by 286,879
shares of Common Stock and is due in April 2004. This loan bears interest
at a rate of 4.63% per annum compounded annually. Interest is payable
annually. This loan is non-recourse with respect to principal and full
recourse to Mr. Panic with respect to interest.
In January 2002, Mr. Panic exchanged 197,409 stock options with an
exercise price of $17.99 and 169,578 stock options with an exercise price
of $26.24 for 99,291 shares of Common Stock. The Company will record a
compensation expense of $3,000,000 in the first quarter of 2002 as a result
of these exchanges. The Company made a short-term loan to Mr. Panic in
connection with the exchange of options and LTIP award equal to $1,335,833.
This loan was repaid in full in April 2002. This loan had an interest rate
of 2.8% per annum payable annually. In addition, in January 2002 Mr. Panic
exercised options to purchase 522,407 shares at $17.99 by the exchange of
314,423 shares of Common Stock owned by him (based upon the then market
price of the Common Stock of $29.89). In March 2002, Mr. Panic exercised
options to acquire 95,640 shares at $21.96, all of which he sold in open
market transactions at $29.68 per share.
On April 10, 2002, after considering the recommendation of the
Compensation and Benefits Committee (which recommendation took into account
a report prepared by Towers-Perrin), the Board of Directors approved the
payment of cash bonuses aggregating $50,000,000 to ICN directors, officers
and employees upon completion of the Ribapharm Offering. The Board had
previously considered paying bonuses in the form of options to acquire
Ribapharm common stock upon completion of the Ribapharm Offering. However
after taking various factors into consideration, including adverse
reactions from various stockholders that included the Dissident
Stockholders, the Board decided to pay these bonuses in the form of cash.
These bonuses were paid to recognize and reward the diligence and
perseverance of ICN's officers, directors and employees in developing the
business that became Ribapharm as well as facilitating the completion of
the Ribapharm Offering.
OPTION GRANT INFORMATION
The following table sets forth information with respect to options to
purchase shares of Common Stock granted to Named Executive Officers in
2001.
OPTION GRANTS IN LAST FISCAL YEAR
NUMBER OF PERCENT OF TOTAL
SERCURITIES OPTIONS GRANTED
UNDERLYING TO EMPLOYEES GRANT
OPTIONS IN FISCAL EXERCISE DATE PRESENT
NAME GRANTED(1) YEAR(2) PRICE EXPIRATION DATE VALUE(3)
----------- -------------- ------------------- ----------- --------------- -------------
Milan Panic............. 100,000 3.3% $23.4375 1/19/11 $1,048,740
Milan Panic............. 200,000 6.6% $21.6000 3/22/11 $1,933,040
Adam Jerney............. 50,000 1.7% $23.4375 1/19/11 $ 524,370
Adam Jerney............. 60,000 2.0% $21.6000 3/22/11 $ 579,912
Richard A. Meier........ 30,000 1.0% $23.4375 1/19/11 $ 314,622
Richard A. Meier........ 50,000 1.7% $21.6000 3/22/11 $ 483,260
David C. Watt........... 30,000 1.0% $23.4375 1/19/11 $ 314,622
David C. Watt........... 50,000 1.7% $21.6000 3/22/11 $ 483,260
Bill MacDonald.......... 30,000 1.0% $23.4375 1/19/11 $ 314,622
Bill MacDonald.......... 50,000 1.7% $21.6000 3/22/11 $ 483,260
----------------------------------
(1) The options granted have ten-year terms. The options granted to the
executive officers (excluding Mr. Panic) vest and become exercisable
according to the following schedule: 25% on the first anniversary of
the date of grant and 25% on each of the next succeeding three
anniversary dates of the grant date. Upon a "change in control" of ICN
(as such term is defined under the Company's 1998 Stock Option Plan
(the "Option Plan")), these options will vest immediately and become
fully exercisable and may be surrendered for cancellation within 60
days after the change in control for a cash payment generally equal to
the excess of the fair market value of the aggregate Common Stock
subject to any outstanding option over the aggregate purchase price
for such stock. Upon a termination of a holder's employment following
a change in control, any outstanding options will generally remain
exercisable for one year after the date of termination. The grants
received by Mr. Panic were vested as of the date of grant. All options
were granted with an exercise price equal to the fair market value of
the underlying shares on the date of grant.
(2) A total of 3,009,685 options were granted to employees, including the
Named Executive Officers (but excluding non-employee directors),
during 2001.
(3) Based on the Black-Scholes option pricing model adapted for use in
valuing executive stock options. The actual value, if any, an
executive may realize will depend on the excess of the stock price on
the date the option is exercised over the exercise price. There is no
assurance the value realized by an executive will be at or near the
value estimated by the Black-Scholes model. The estimated values under
that model are based on assumptions as to variables such as interest
rates, stock price volatility and future dividend yield.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information regarding (i) stock option
exercises by the Named Executive Officers during 2001 and (ii) unexercised
stock options held by the Named Executive Officers at December 31, 2001:
AGGREGATED OPTION EXERCISES
IN 2001 AND DECEMBER 31, 2001 OPTION VALUES
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY OPTIONS
OPTIONS AT DECEMBER 31, 2001 (#) AT DECEMBER 31, 2001 ($)(1)
-------------------------------- ---------------------------
SHARES
ACQUIRED VALUE
NAME ON EXERCISE REALIZED (2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------ ----------- ------------- ----------- -------------
Milan Panic 336,146 $4,879,006 2,384,946 -- $ 35,067,713 $ --
Adam Jerney 264,944 5,243,689 619,091 137,500 12,412,852 1,316,500
Richard A. Meier 10,005 132,895 121,745 180,000 1,887,922 2,378,437
David C. Watt 99,387 2,107,493 88,816 106,250 857,390 996,250
Bill MacDonald -- -- 44,250 106,250 69,574 996,250
(1) Based upon the fair market value of the shares of Common Stock on
December 31, 2001 ($33.50) less the exercise price payable per share.
(2) Based upon the fair market value of the shares of Common Stock at the
date of exercise less the exercise price paid for such shares.
COMPENSATION OF DIRECTORS OF ICN
Members of the Board of Directors of ICN, other than employees, were
paid an annual fee of $30,000, payable quarterly, plus a fee of $1,000 for
every Board meeting and committee meeting attended. These directors are
also reimbursed for their out-of-pocket expenses in attending meetings. In
addition, non-employee directors on each April 18th are granted options to
purchase 15,000 shares, pursuant to the terms of the Option Plan, at an
exercise price equal to the fair market value on the date of grant.
CERTAIN EMPLOYMENT AGREEMENTS
On March 18, 1993, the Board of Directors of ICN adopted employment
agreements which contained "change in control" benefits for five then
current key senior executive officers of ICN and its affiliates. The
executives included the following Named Executive Officers: Messrs. Jerney,
Watt and MacDonald. In addition, the Company entered into an employment
agreement with Mr. Meier, former Executive Vice President, on December 31,
1998, containing substantially identical provisions to the agreements with
Messrs. Jerney, Watt and MacDonald. As noted above, Mr. Meier resigned as
Executive Vice President of the Company, effective April 1, 2002. ICN also
has similar employment agreements with five other key executives who are
not Named Executive Officers. The employment agreements with the Named
Executive Officers and those with the five other key executives are
collectively referred to as the Employment Agreements.
The Employment Agreements are intended to retain the services of these
executives and provide for continuity of management in the event of any
actual or threatened "change in control." Each Employment Agreement with
Messrs. Jerney, Watt and MacDonald had an initial term which ended March
30, 1996. The Employment Agreement with Mr. Meier had an initial term
extending through December 31, 2000. The Employment Agreements
automatically extend for one year terms each year thereafter unless either
the executive or ICN elects not to extend it by providing ninety days
advanced notice to the other (provided that any notice by ICN not to extend
the agreement cannot cause the agreement to be terminated prior to the
expiration of the third anniversary of the date of a change in control).
These Employment Agreements provide that each executive shall receive
severance benefits equal to three times salary and bonus (and certain other
benefits) if the executive's employment is terminated without cause, if the
executive terminates employment for certain enumerated reasons following a
change in control of ICN (including a significant reduction in the
executive's compensation, duties, title or reporting responsibilities or a
change in the executive's job location), or the executive leaves ICN for
any reason or without reason during the sixty day period commencing six
months after the change in control. The executive is under no obligation to
mitigate amounts payable under the Employment Agreements.
For purposes of the Employment Agreements, a "change in control" generally
means any of the following events:
o the acquisition by any person of beneficial ownership of more than 25%
of the combined voting power of our outstanding voting securities
other than an acquisition directly from ICN or any of its
subsidiaries;
o the individuals serving on the existing board of directors of ICN as
of May 1, 2001 ceases for any reason to constitute at least a majority
of that board of directors, unless the election or nomination for
election of any new director was approved or recommended by a vote of
at least two thirds of the then existing board of directors;
o the consummation of a merger or consolidation involving ICN or any of
its direct or indirect subsidiaries if the stockholders of ICN
immediately before the merger or consolidation do not, as a result of
the merger or consolidation, own, directly or indirectly, at least 50%
of the combined voting power of the then outstanding voting securities
of ICN, the corporation resulting from the merger or consolidation or
the ultimate controlling person of that entity; or
o the approval by the shareholders of ICN of a complete liquidation or
dissolution of ICN, or the consummation of an agreement for the sale
or other disposition of all or substantially all of the assets of ICN.
In April 2002, after several months of consideration, the Compensation
and Benefits Committee of the Board amended the Employment Agreements to
make the change in control definition uniform in substantially all of the
Company's benefit plans and agreements. The Panic Employment Agreement (as
defined below) was not amended to reflect this changed definition. The
amended Employment Agreements acknowledge that the Ribapharm Offering and
the contemplated spin-off by the Company of its remaining interest in
Ribapharm (the "Spin-Off") will not, taken alone, constitute a sale of all
or substantially all the assets of the Company for purposes of the
definition of change in control. The Compensation and Benefits Committee
has also taken action to provide a similar acknowledgement under the change
in control definitions under the Option Plan and the LTIP.
Each Named Executive Officer would be entitled to receive the
following amount if his employment agreement with the Company was
terminated by the Company without cause, or by the executive with good
reason following a change in control or voluntarily by the executive during
the sixty day period commencing 8 months following a change in control
(based upon present compensation): Adam Jerney $3,112,758; David C. Watt
$2,004,900 and Bill MacDonald $1,779,900. If all of the Company's key
senior executives were terminated following a change in control, the
Company's aggregate severance obligation under the Employment Agreements
(based upon present compensation ) would be $15,921,431. This amount does
not include severance amounts related to Mr. Meier since he resigned from
the Company on April 1, 2002.
If any of these payments, along with any other benefits payable to the
executives in connection with their termination, are subject to the excise
tax imposed under Section 4999 of the Internal Revenue Code (relating to
golden parachute payments), the executives will be entitled to receive an
additional payment sufficient to cover all taxes (including the Section
4999 excise tax) imposed on the payment. This gross up provision was added
to the Employment Agreements at the same time the change in control
provisions were modified.
In addition, upon a change in control, the vesting of certain options
and restricted stock granted to the executives would be accelerated. The
value of the accelerated options and restricted shares would depend upon
the market price of the shares of Common Stock at that time. If the vesting
of any options or awards of restricted stock subject an executive to the
excise tax imposed under Section 4999 of the Internal Revenue Code, the
executives will be entitled to receive an additional payment sufficient to
cover all taxes (including the excise tax) imposed on the payment. In
addition, whether or not a change of control has occurred the executives
may also be awarded a tax bonus, payable upon exercise of any option. The
Compensation and Benefits Committee has full authority to determine the
amount of any such tax bonus and the terms and conditions affecting the
vesting and payment of any such bonus.
In addition, three executive officers of Ribapharm have employment
agreements with Ribapharm. These agreements contain change in control
provisions similar to the change in control definition in the Employment
Agreements. These provisions will apply if there is a change in control in
ICN prior to the spin off or a change in control of Ribapharm (other than
as a result of the spin off). If these executive officers were terminated
by Ribapharm without cause, or by the executive for good reason following a
change in control of Ribapharm, Ribapharm's aggregate severance obligation
under these employment agreements (based upon present compensation) would
be approximately $3,072,000.
CHAIRMAN EMPLOYMENT AGREEMENT
Milan Panic, the Company's Chairman of the Board and Chief Executive
Officer, is employed under a contract (the "Panic Employment Agreement")
that provides for, among other things, certain health and retirement
benefits. The contract is automatically extended at the end of each month
(the most recent of that date being the "Renewal Date"), such that the
contract will only terminate four years from such Renewal Date. The Company
or Mr. Panic may cease the automatic renewal of the contract upon
sixty-days prior written notice, in which case the agreement will terminate
four years after the end of the sixty-day notice period. Mr. Panic, at his
option, may provide consulting services upon his retirement and will be
entitled, when serving as a consultant, to participate in the Company's
medical and dental plans. The consulting fee shall not at any time exceed
the base salary, as adjusted, paid to Mr. Panic prior to his retirement.
Upon Mr. Panic's retirement, the consulting fee shall not be subject to
further cost-of-living adjustments.
The base amount of salary for Mr. Panic was initially determined by
the Compensation and Benefits Committee of the Board of Directors in 1988.
In setting the base amount, the Compensation Committee took into
consideration Mr. Panic's then-current base salary, the base salaries of
chief executives of companies of similar scope and complexity and the
Compensation and Benefits Committee's desire to retain Mr. Panic's
services, given his role as founder of ICN. The Panic Employment Agreement
provides that the annual salary, currently $1,000,000, is to be increased
by an amount equal to not less than 7% annually. No increase would be paid,
however, if in the previous fiscal year ICN's earnings per share, as
certified by ICN's independent accountants, either (i) decrease by an
amount equal to or greater than fifty percent (50%) of the annual earnings
per share earned in the preceding fiscal year or (ii) reveal a loss, unless
otherwise determined by the Board of Directors. The Panic Employment
Agreement provides that during the period of his employment, Mr. Panic will
not engage in businesses competitive with ICN without the approval of the
Board of Directors. Mr. Panic may retire upon expiration of the term of the
Panic Employment Agreement.
Upon retirement, Mr. Panic may, at his option, serve as a consultant
to ICN for life for which he would be compensated at the rate of $120,000
per year. This amount is subject to annual cost-of-living adjustments from
the base year of 1967 until the date of retirement (currently estimated to
be in excess of $577,000 per year, as adjusted). The consulting fee shall
not at any time exceed the highest annual compensation, as adjusted, paid
to Mr. Panic during his employment by ICN. Upon Mr. Panic's retirement, the
consulting fee shall not be subject to further cost-of-living adjustments.
The Panic Employment Agreement includes a severance compensation provision
in the event of a "change in control" of ICN (as defined below). The Panic
Employment Agreement provides that if within two years after a change in
control of ICN, Mr. Panic's employment is terminated by ICN (other than by
reason of Mr. Panic's illness or incapacity), or if Mr. Panic leaves the
employ of ICN (other than by reason of Mr. Panic's death, disability, or
illness), then Mr. Panic will receive as severance compensation an amount
equal to five times his annual salary, as adjusted, but only to the extent
that ICN determines that such amount will not constitute a "parachute
payment" as defined in Section 280G of the Internal Revenue Code, and Mr.
Panic will be deemed to have retired and will receive the same consulting
fees to which he would otherwise have been entitled under the Panic
Employment Agreement for life. In addition, (i) Mr. Panic will be entitled
to continue life insurance, disability, medical, dental and hospitalization
coverage, (ii) all restrictions on outstanding awards granted to Mr. Panic
will lapse, and all stock options and stock appreciation rights granted to
Mr. Panic will become fully vested and exercisable, and (iii) Mr. Panic
will also be entitled to receive a cash payment equal to the excess of the
actuarial equivalent of his aggregate retirement benefits had he remained
employed by ICN for an additional three years over the actuarial equivalent
of his actual aggregate retirement benefit. A "change in control" of ICN
will occur, for purposes of the Panic Employment Agreement, if (i) a change
in control occurs of a nature which would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A under the Exchange
Act (for purposes of that Item, "control" is defined as the power to direct
or cause the direction of the management and policies of ICN, whether
through the ownership of voting securities, by contract, or otherwise)
unless two-thirds of the Existing Board of Directors, as defined below,
decide in their discretion that no "change in control" has occurred for
purposes of the agreement; (ii) any person is or becomes the beneficial
owner, directly or indirectly, of securities of ICN representing 15% or
more of the combined voting power of ICN's then outstanding securities;
(iii) the persons constituting the Existing Board of Directors, as defined
below, cease for any reason to constitute at least a majority of ICN's
Board of Directors; or (iv) shares of ICN Common Stock cease to be
registered under the Exchange Act. "Existing Board of Directors" is defined
in the Panic Employment Agreement as those persons constituting the Board
of Directors at the date of the Panic Employment Agreement, together with
each new director whose election or nomination for election by ICN's
stockholders was previously approved, or is approved within thirty days
after such election or nomination, by a vote of at least two-thirds of the
directors in office prior to such person's election as a director. If Mr.
Panic's employment is terminated under any of the circumstances described
above following such a change in control, in addition to the consulting fee
as described above, Mr. Panic would be entitled to receive (based upon
present compensation) $9,555,290.
In addition, in 1996 the Company entered into a split dollar agreement
with Mr. Panic, pursuant to which the Company pays the premiums on a life
insurance policy owned by Mr. Panic. Under this agreement, the life
insurance policy has been assigned to the Company as collateral for a
Company-provided guarantee on a third party loan made to Mr. Panic in
August 1996 and for the repayment of the premiums paid on the policy by the
Company. See "Compensation and Related Matters - Summary Compensation
Table." Upon Mr. Panic's death or the termination of the agreement (which
generally has a ten-year term), the Company is entitled to a payment, out
of the life insurance death benefit or the policy's cash surrender value,
in an amount equal to the sum of the premiums it has paid on the policy
plus the amount the Company has paid the lender under its guarantee of the
loan, plus the unpaid principal and interest on the loan. In addition, the
Company pays the taxes (on a grossed-up basis) incurred by Mr. Panic in
connection with the payment by the Company of the premiums on the life
insurance policy. In February 2002, the Company prepaid premiums of
approximately $1,800,000 on the life insurance policy. The policy currently
has a cash surrender value of approximately $1,800,000 and a death benefit
of approximately $6,400,000.
In April 2002, the Company expects to finalize an additional split
dollar agreement with Mr. Panic on substantially identical terms as in the
1996 agreement described above. The new life insurance policy pursuant to
this split dollar agreement has a death benefit of $3,400,000. An initial
premium of $85,000 has been paid on this policy.
COMPENSATION COMMITTEE REPORT
The following statement made by the members of the Compensation and
Benefits Committee (the "Committee") shall not be deemed incorporated by
reference into any filing under the Securities Act of 1933, as amended, or
under the Securities Exchange Act of 1934, as amended, and shall not
otherwise be deemed filed under such Acts. The Committee is composed of
Messrs. Barker and Moses, and Ms. Tomich, each of whom is a non-employee
director for purposes of Rule 16-b3 of the Exchange Act.
The Committee considers and recommends to the Board of Directors the
base salary to be paid to the Chief Executive Officer, assists in the
determination of the base salary for all other executive officers, makes
recommendations to the Board of Directors with respect to the Company's
overall compensation policies, administers and grants options and awards
under the Amended and Restated 1998 Stock Option Plan and the Long-Term
Incentive Plan with respect to executive officers, and performs such duties
as the Board of Directors may from time to time request.
In establishing and administering the Company's compensation policies
and programs, the Committee considered the compensation plans and
arrangements of a peer group of companies with which the Company competes
for customers and executive talent, including the levels of individual
compensation for similarly situated executives of the peer group, as well
as factors specifically relevant to the Company. The basic objective of the
Committee is to formulate compensation policies and programs intended to
attract, retain, and motivate highly qualified key employees, including
executive officers. Compensation of executive officers and other key
employees, including each of the Named Executive Officers, is comprised of
three principal elements: (i) base salary, (ii) annual bonus and (iii)
stock ownership.
Base Salary
The Committee believes that it is important to pay reasonable and
competitive salaries. Generally, salaries are paid within certain grades
which are established by the Human Resources Department of the Company
after reviewing data of comparable companies in the same industry (prepared
by Towers-Perrin, a compensation consulting company). The Company's salary
levels are in the median of compensation paid for similar positions in
comparable companies. Grades are updated to reflect changes in the
marketplace. The salary of an executive generally reflects his level of
responsibility and position in the Company and is reviewed on an annual
basis by a supervisory manager(s) and the Committee. To determine the grade
level of an employee, the Board of Directors adopts an annual budget and
financial plan which incorporates the goals and objectives to be achieved
by the Company and its specific operating units. The goals focus on growth
in operating income and growth in earnings per share. Each executive is
responsible for the performance of their unit in relation to the plan.
Specific goals and objectives for each executive are reviewed by the
executive and their supervisor. In reviewing the annual performance which
will determine the executive's compensation, the supervisor assesses a
performance grade based on the pre-set performance objectives. This
assessment is used to determine base salary for the following year.
During 2001, each of the Named Executive Officers received base salary
increases. These increases for the named Executive Officers (other than Mr.
Panic) were based upon each officer's individual services rendered, level
and scope of responsibility and experience. Also taken into account was the
relationship of the compensation of such officers to the compensation of
officers occupying comparable positions in other organizations. Mr. Panic's
2001 base salary increase is discussed in the "Chairman Employment
Agreement" portion of the "Executive Compensation and Related Matters"
section hereof.
Bonus Plan
The Company has adopted an Incentive Bonus Plan which is intended to
provide a means of annually rewarding certain key employees, including each
of the Named Executive Officers, based on the performance of the Company.
The plan is based on target goals of growth in both operating income and
earnings per share, and individual performance goals are compared against
the target goals established. Recommendations are made by individual
supervisors and approved by the Committee. Bonuses may be paid even when
the objective standards are not met if specific contributions by an
employee merit a bonus or the reasons for failure to meet the objective
standards are beyond the control of the Company and/or the employee.
The Committee believes that this compensation approach allows
management to focus on key business objectives in the short-term, and to
support long-term performance through stock ownership (described below).
Under the Incentive Bonus Plan, in 2001 management recommended for each
executive officer a bonus based on the performance of regional divisions.
The regional divisions are measured by performance as compared to the
Company's business plan for the year. The target award percentage for Named
Executive Officers (other than Mr. Panic) for 2001 ranged from 40% to 45%
of salary, subject to adjustment. Mr. Panic's 2001 bonus is discussed in
the "Chief Executive Officer Compensation" section below.
Equity Programs
The Committee believes that executive officers and other significant
employees, who are in a position to make a substantial contribution to the
long-term success of the Company and to build stockholder value, should
have a significant stake in the Company's on-going success. This focuses
attention on managing the Company as an owner with an equity position in
the business and seeks to align these employees' interests with the
long-term interests of stockholders. Accordingly, on May 27, 1998, at the
Company's 1998 Annual Meeting of Stockholders, the stockholders approved
the 1998 Stock Option Plan (a program developed for the Company by
Towers-Perrin) under which stock options are granted as long-range
incentives to executives. The amount of options granted to any executive is
tied to salary and performance, and no grant to an executive is automatic.
Management recommends to the Committee those executives to whom options
should be granted and the number of options to be granted to them.
Generally, the number of options granted to an executive reflects his or
her level of responsibility and position in the Company. To encourage
executives to remain in the employ of the Company, options generally vest
and become exercisable at an annual rate of 25% on the expiration of each
of the first, second, third and fourth anniversaries of the date of grant.
Each option generally has a term of ten years and is granted with an
exercise price equal to the fair market value of the underlying shares of
common stock on the date of grant. The Committee recommended and, on
January 19, 2001 and March 22, 2001, the Company awarded options under the
1998 Stock Option Plan to purchase an aggregate of 350,000 shares of common
stock to the Named Executive Officers (other than Mr. Panic).
Furthermore, on May 29, 1996, at the Company's 1996 Annual Meeting of
Stockholders, the stockholders approved a Long Term Incentive Plan ("LTIP")
which provides for restricted stock awards to be granted to certain key
officers and employees of the Company. Awards under the LTIP are made in
the form of the annual grant of fair market value stock options pursuant to
the ICN 1994 Stock Option Plan and then in restricted stock awarded upon
conclusion of a three-year performance period. Participants are eligible
for awards of restricted stock based on the Company's "excess market value"
which is defined as the Company's three year average total shareholder
return in excess of the Standard and Poor's 500 three year average total
shareholder return. Total shareholder return is defined as the appreciation
of the stock price assuming all dividends were reinvested in the Company's
stock. A pool will be created in the amount of six percent (6%) of the
"excess market value" which will be granted in the form of restricted stock
at the market value at the date of grant. No award will be granted if the
Company's three year average total shareholder return does not exceed the
three year average S&P 500 total shareholder return. Any restricted stock
awarded under the LTIP vests at a rate of 25% per year starting one year
after the date of grant. Only senior executives of ICN holding the
positions of Chief Executive Officer, Executive Vice President, Senior Vice
President and Regional Manager are eligible to participate in the LTIP. No
grants of restricted stock were made to any Named Executive Officer in
2001.
Chief Executive Officer Compensation
The Committee determines the compensation of the Chief Executive
Officer based on a number of factors. The goal of the Committee is to grant
compensation consistent with compensation granted to other chief executive
officers of companies in the same industry. The Chief Executive Officer's
compensation is set forth in an employment agreement with the Company. The
Committee's bases for such compensation is described in the "Chairman
Employment Agreement" portion of the "Executive Compensation and Related
Matters" section hereof. Special one-time bonuses will be paid, at the
Committee's discretion, based on special contributions to the Company.
Substantial bonuses are approved by the Board of Directors. In 2001, Mr.
Panic received bonuses totaling $1,009,612, based on the Company's
performance in 2001. This amount was approved by this Committee. In
addition, the Committee recommended and, on January 19, 2001, Mr. Panic was
granted an option to purchase 100,000 shares of Common Stock with a per
share exercise price of $23.44. The Committee also recommended, and on
March 22, 2001, Mr. Panic was granted an option to purchase 200,000 shares
of Common Stock with a per share exercise price of $21.60. The exercise
prices each represent the fair market value of the Common Stock on the date
of grant. These grants were determined by the Committee based on factors
such as the Company's overall performance, Mr. Panic's individual
performance and the compensation of similarly situated executives at
comparable corporations.
Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code (the "Code"), which was
enacted in 1993, generally disallows a federal income tax deduction to any
publicly-held corporation for compensation paid in excess of $1,000,000 in
any taxable year beginning after January 1, 1994 to the chief executive
officer and any of the four other most highly compensated executive
officers who are employed by ICN on the last day of the taxable year.
Section 162(m), however, does not disallow a federal income tax deduction
for qualified "performance-based compensation," the material terms of which
are disclosed to and approved by the stockholders. The application of
Section 162(m) is not expected to have a material impact on the Company.
Respectfully submitted,
Compensation and Benefits Committee
Norman Barker, Jr., Chairman
Stephen D. Moses
Rosemary Tomich
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors is providing this report
to enable stockholders to understand how it monitors and oversees the
Company's financial reporting process. The Audit Committee operates
pursuant to an Audit Committee Charter that is reviewed and approved
annually by the Board of Directors. A copy of the Audit Committee Charter,
approved August 12, 1999, was included as Annex B to the Company's 2001
Proxy Statement.
This report confirms that the Audit Committee has: (i) reviewed and
discussed the audited financial statements for the year ended December 31,
2001 with management and the Company's independent public accountants; (ii)
discussed with the Company's independent public accountants the matters
required to be reviewed pursuant to the Statement on Auditing Standards No.
61 (Communications with Audit Committees); (iii) reviewed the written
disclosures letter from the Company's independent public accountants as
required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees); and (iv) discussed with the Company's
independent public accountants their independence from the Company.
Based upon the above review and discussions, the Audit Committee
recommended to the Board of Directors that the audited financial statements
for the year ended December 31, 2001 be included in the Company's Annual
Report on Form 10-K for filing with the Commission.
Respectfully submitted,
Audit Committee
Stephen Moses, Chairman
Edward Burkhardt
Rosemary Tomich
PERFORMANCE GRAPH
The following graph compares ICN's cumulative total stock return on
the Common Stock with the cumulative return on the Standard & Poor's Mid
Cap 400 Index ("S&P Mid Cap 400 Index"), Standard and Poor's 500 Index (the
"S&P 500") and the 5-Stock Custom Composite Index ("Composite Index") for
the five years ended December 31, 2001. In prior years, the Company's stock
performance graph compared the Company's stock performance with the S&P 500
Index. Because the Company is a component of the S&P Mid Cap 400 Index, the
company will substitute the S&P Mid Cap 400 Index for the S&P 500 Index in
subsequent years. The comparison of the Company's stock performance to the
S&P 500 Index is included for historical purposes only and will not be
included next year. The Composite Index consists of Allergan Inc., Elan
Corporation plc, Forest Laboratories, Inc. -- Class A, Mylan Laboratories
Inc. and Watson Pharmaceuticals Inc. In prior years, the Composite Index
included ALZA Corporation rather than Elan Corporation plc. Since Johnson &
Johnson acquired ALZA Corporation in 2001, ALZA Corporation has been
removed from the Composite Index and replaced with Elan Corporation plc.
Factors used in deciding to include Elan Corporation plc in the Composite
Index included similarity of market capitalization, international presence
and existence of branded products. The graph assumes an initial investment
of $100 on December 31, 1996 and that all dividends were reinvested.
CUMULATIVE TOTAL RETURN
[LINE GRAPH]
Based on reinvestment of $100 beginning December 31, 1996
----------------------------------------------------------------------------------------------------------------------
Dec 96 Dec 97 Dec 98 Dec 99 Dec 00 Dec 01
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
ICN Pharmaceuticals, Inc. $100 $252 $176 $199 $244 $270
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
S&P Mid Cap 400 Index $100 $130 $153 $174 $202 $199
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
Custom Composite Index (5 Stocks) $100 $134 $239 $232 $410 $418
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
S&P 500 $100 $131 $166 $198 $178 $155
----------------------------------------------------------------------------------------------------------------------
CERTAIN TRANSACTIONS
See "Executive Compensation and Related Matters" for information
concerning outstanding loans to executive officers of the Company.
Venable, Baetjer and Howard LLP, a law firm with which Senator Bayh is
currently affiliated, billed the Company for legal fees of approximately
$119,481 in 2001. Oppenheimer, Wolff & Donnelly LLP, a law firm with which
Senator Bayh was affiliated until May 2001, billed the Company for legal
fees of approximately $126,679 in 2001.
Coudert Brothers, LLP, a law firm of which our Executive Vice
President, General Counsel and Corporate Secretary, Gregory Keever, is a
member, billed the Company for legal fees of approximately $3,677,703 in
2001.
INDEPENDENT PUBLIC ACCOUNTANTS
PricewaterhouseCoopers LLP was selected as the Company's independent
public accountants for calendar year 2001. PricewaterhouseCoopers LLP will
be present at the Annual Meeting and such representative will have an
opportunity to make a statement if desired. Further, such representative
will be available to respond to appropriate stockholder questions directed
to him or her.
AUDIT FEES
The aggregate fees for professional services rendered by
PricewaterhouseCoopers LLP for the audit of the Company's consolidated
annual financial statements and the reviews of the financial statements
included in the Company's Forms 10-Q for the year ended December 31, 2001
amounted to approximately $2,191,000, of which an aggregate amount of
approximately $987,000 has been billed through December 31, 2001.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
The aggregate fees billed for professional services rendered by
PricewaterhouseCoopers LLP for financial information systems and design or
implementation for the year ended December 31, 2001 amounted to
approximately $128,000.
ALL OTHER FEES
In addition to the fees described above, aggregate fees of $8,772,000
were billed by PricewaterhouseCoopers during the year ended December 31,
2001, primarily for the following professional services:
Audit -related services (a) $6,293,000
Income tax compliance and related tax services $2,372,000
Other (b) $107,000
(a) Audit related fees include fees for assistance with the following:
the Ribapharm Offering, Ribapharm Inc. and ICN International AG,
the filing of a Form S-4 related to the exchange offer for the
Company's 8 3/4% Senior Notes due 2008, the private placement and
subsequent registration of the Company's 6 1/2% Convertible
Subordinated Notes due 2008, various mergers and acquisition
activities, the review of the Company's global cost accounting
structure, the audit of the Schering-Plough license agreement
royalty and the issuance of consents and comfort letters.
(b) Other fees include fees for miscellaneous research items and other
services performed.
The Audit Committee of the Company's Board of Directors has considered
whether the provision of non-audit professional services rendered by
PricewaterhouseCoopers LLP is compatible with maintaining their
independence, and believes that the provision of such services is so
compatible.
STOCKHOLDER PROPOSALS
The Company's Amended and Restated Certificate of Incorporation
provides that stockholders seeking to bring business before an annual
meeting of stockholders, or to nominate candidates for election as
directors at an annual meeting of stockholders, must provide timely notice
thereof in writing. To be timely, a stockholder's notice generally must be
delivered to or mailed and received at our principal executive offices not
less than 60 days or more than 90 days prior to the scheduled date of the
annual meeting, regardless of any postponement, deferral or adjournment of
that meeting. However, if less than 70 days notice or prior public
disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be given not later than the
close of business on the 10th day following the earlier of (i) the day on
which the notice of the date of the meeting was mailed, or (ii) the day on
which such public disclosure was made.
Any stockholder wishing to submit a proposal to be included in the
proxy materials relating to the Company's 2003 Annual Meeting must submit
such proposal to the Company so that it is received by the Company at its
principal executive offices no later than [ ] 2003.
ANNUAL REPORT
The Annual Report to Stockholders for the year ended December 31, 2001
(including audited financial statements) is being mailed to stockholders
with this Proxy Statement. The Annual Report does not form part of the
material for the solicitation of proxies.
PROXY SOLICITATION
The costs of preparing and mailing this Notice and Proxy Statement and
the enclosed form of proxy will be paid by the Company. In addition to
soliciting proxies by mail, employees of the Company may, at the Company's
expense, solicit proxies in person, by telephone, telegraph, courier
service, advertisement, telecopier or other electronic means. The Company
has retained Morrow & Company Inc. ("Morrow") to assist in the solicitation
of proxies. The Company will pay fees to Morrow not to exceed $650,000,
plus reasonable out-of-pocket expenses incurred by them. Morrow will employ
up to approximately [ ] people to solicit proxies from the Company's
stockholders. The Company will pay brokers, nominees, fiduciaries and other
custodians their reasonable fees and expenses for forwarding solicitation
material to principals and for obtaining their instructions.
The Company has agreed to pay $1,000,000 to UBS Warburg LLC ("UBS
Warburg") to act as exclusive financial advisor in connection with the
Annual Meeting. The Company has also agreed to pay an advisory fee payable
promtply within two business days following the date of the Annual Meeting.
The precise amount of the advisory fee will be mutually agreed upon in good
faith by the Company and UBS Warburg. Annex C sets forth certain
information relating to UBS Warburg.
In addition to the engagement of Morrow and UBS Warburg described
above, expenses related to the solicitation of stockholders in excess of
those normally spent for an annual meeting and excluding the costs of
potential litigation, are expected to aggregate approximately $[ ], of
which approximately $[ ] has been spent to date. ANNEX A SETS FORTH CERTAIN
INFORMATION RELATING TO THE COMPANY'S DIRECTORS, NOMINEES AND EXECUTIVE
OFFICERS OF THE COMPANY WHO MAY BE SOLICITING PROXIES ON THE COMPANY'S
BEHALF.
MISCELLANEOUS
The Board of Directors knows of no other matters which are likely to
come before the Annual Meeting. If any other matters, of which the Board is
not now aware, should properly come before the Annual Meeting, it is
intended that the person named in the accompanying form of proxy will vote
such proxy in accordance with his best judgment on such matters.
By Order of the Board of Directors,
Milan Panic
Chairman of the Board
Costa Mesa, California
April __, 2002
THE COMPANY WILL MAIL WITHOUT CHARGE UPON WRITTEN REQUEST A COPY OF
ITS MOST RECENT ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL
STATEMENTS, SCHEDULES AND A LIST OF EXHIBITS. REQUESTS SHOULD BE SENT TO:
SECRETARY, ICN PHARMACEUTICALS, INC., 3300 HYLAND AVENUE, COSTA MESA,
CALIFORNIA 92626.
ANNEX A
INFORMATION CONCERNING THE DIRECTORS, DIRECTOR NOMINEES AND CERTAIN OFFICERS
OF THE COMPANY WHO ALSO MAY SOLICIT PROXIES
The following table sets forth certain information relating to the
directors, nominees and executive officers of ICN Pharmaceuticals, Inc.
(the "Company") who also may solicit proxies from the Company's
stockholders ("Participants").
DIRECTORS
The principal occupations of the Company's directors and nominees for
directors who are deemed Participants in the solicitation are set forth
under the "Election of Directors" section of this Proxy Statement. The
names and addresses of these persons are set forth below. For additional
information concerning these persons see the "Information Concerning
Nominees and Directors" section of this Proxy Statement.
NAME ADDRESS
---- -------
Norman Barker, Jr. 9601 Wilshire Blvd., Suite 623
Beverly Hills, CA 90210
Birch E. Bayh, Jr. Venable, Baetjer and Howard LLP
1201 New York Avenue, N.W.
Washington, D.C. 20005
Edward A. Burkhardt Rail World, Inc.
8600 W. Bryn Mawr Ave., Suite 500N
Chicago, IL 60631
Abraham E. Cohen 100 United Nations Plaza
New York, NY 10017
Roger R. Fogleman Durango Aerospace, Inc.
406 Snowcap Lane
Durango, CO 81303
Roderick M. Hills Hills Enterprise Ltd.
1200 19th Street, NW
Suite 201
Washington, D.C. 20036
Adam Jerney *
Richard H. Koppes 2150 River Plaza Drive
Suite 170
Sacramento, CA 95833
Jean-Francois Kurz Rue de l'Eglise
CH-1261 Trelex
Switzerland
Steven J. Lee PolyMedica Corporation
11 State Street
Woburn, MA 01801
Stephen Moses Stephen Moses Interests
1801 Avenue of the Stars, Suite 1150
Los Angeles, CA 90067
Milan Panic *
Rosemary Tomich 611 Landor Lane
Pasadena, CA 91106
---------------------
* Unless otherwise indicated, the Directors' address is ICN
Pharmaceuticals, Inc. 3300 Hyland Avenue, Costa Mesa, California
92626.
EXECUTIVE OFFICERS
The Principal occupations of executive officers of the Company who may
be deemed Participants are set forth under the "Executive Officers" section
of this Proxy Statement. The principal business address of each such person
is that of the Company, 3300 Hyland Avenue, Costa Mesa, California 92626.
INFORMATION REGARDING OWNERSHIP OF THE COMPANY'S SECURITIES BY PARTICIPANTS
The number of shares of Common Stock held by directors and the
executive officers is set forth under the "Beneficial Ownership of Stock"
section of this Proxy Statement.
INFORMATION REGARDING TRANSACTIONS IN THE COMPANY'S SECURITIES BY PARTICIPANTS
The following table sets forth purchases and sales of the Company's
securities by the Participants listed below since January 1, 2000. All
transactions are in Common Stock.
NUMBER OF SHARES
COMMON STOCK
PURCHASED OR
NAME DATE (SOLD/EXCHANGED) FOOTNOTE
---- ---- ---------------- --------
Norman Barker, Jr...................................... --
Birch E. Bayh, Jr...................................... 03/15/02 8,478 (1)
03/15/02 (3,721) (2)
Edward A. Burkhardt.................................... 03/21/01 100,000 (3)
02/23/01 10,000 (3)
02/22/01 40,000 (3)
02/12/01 100,000 (3)
Alan F. Charles........................................ 03/15/02 17,535 (1)
03/15/02 (17,535) (2)
Abraham E. Cohen....................................... --
Ronald R. Fogleman..................................... 03/28/01 1,000 (3)
Roderick M. Hills...................................... --
Adam Jerney............................................ 09/26/01 (4,829) (4)
09/20/01 27,000 (3)
07/03/01 (26,151) (4)
06/15/01 116,407 (1)
01/22/01 16,571 (1)
01/22/01 51,736 (1)
01/22/01 38,803 (1)
01/22/01 41,427 (1)
07/13/00 179,953 (1)
07/13/00 82,855 (1)
Richard H. Koppes(5).................................... --
Jean-Francois Kurz..................................... 03/04/02 3,188 (1)
03/04/02 (3,188) (2)
03/06/00 1,912 (1)
03/06/00 (1,912) (2)
Steven Lee............................................. 03/14/01 10,000 (3)
03/13/01 15,000 (3)
Stephen D. Moses....................................... 03/19/02 3,868 (1)
03/15/02 8,997 (1)
03/15/02 (8,997) (2)
Milan Panic............................................ 03/15/02 95,640 (1)
03/15/02 (95,640) (2)
01/18/02 (169,578) (7)
01/18/02 20,701 (1)
01/18/02 (197,409) (1)
01/18/02 (78,590) (7)
01/18/02 522,407 (1)
01/18/02 (314,423) (6)
04/23/01 336,146 (1)
04/05/01 (100,000) (2)
12/29/00 (20,900) (8)
Rosemary Tomich........................................ --
John E. Giordani....................................... 11/20/01 5,188 (1)
11/20/01 (5,188) (2)
06/08/01 19,750 (1)
06/08/01 (19,750) (2)
06/08/01 1,594 (1)
06/08/01 (1,594) (2)
06/08/01 2,071 (1)
06/08/01 (2,071) (2)
12/17/00 (2,908) (2)
12/11/00 6,100 (1)
12/11/00 (6,100) (2)
12/11/00 12,500 (1)
12/11/00 (12,500) (2)
12/08/00 20,000 (1)
12/08/00 (20,000) (2)
12/07/00 4,800 (1)
12/07/00 (4,800) (2)
12/05/00 6,600 (1)
12/05/00 (6,600) (2)
02/28/00 6,376 (1)
02/28/00 (6,376) (2)
Gregory Keever.......................................... --
Bill A. MacDonald...................................... 11/19/01 (2,794) (2)
06/06/01 (3,000) (2)
11/29/00 (3,000) (2)
11/17/00 16,124 (1)
11/17/00 (16,124) (2)
11/17/00 9,375 (1)
11/17/00 (9,375) (2)
11/17/00 3,720 (1)
11/17/00 (3,720) (2)
11/17/00 781 (1)
11/17/00 (781) (2)
Johnson Y.N. Lau M.D., Ph.D............................. --
James McCoy............................................. --
David C. Watt.......................................... 03/12/02 (2,954) (2)
03/12/02 35,990 (1)
03/12/02 (35,990) (2)
12/14/01 8,478 (1)
12/14/01 (8,478) (2)
12/14/01 4,000 (1)
12/14/01 (4,000) (2)
06/15/01 18,750 (1)
06/15/01 (18,750) (2)
06/15/01 32,250 (1)
06/15/01 (32,250) (2)
06/15/01 (2,862) (2)
06/13/01 23,481 (1)
06/13/01 (23,481) (2)
06/13/01 12,428 (1)
06/13/01 (12,428) (2)
12/04/00 (23,934) (2)
08/07/00 5,184 (1)
08/07/00 18,750 (1)
03/15/00 (3,806) (2)
-----------------
(1) Exercise of stock options.
(2) Open market sale.
(3) Open market purchase.
(4) Shares remitted to ICN as payment on a loan made by ICN.
(5) Information contained in the Proxy Statement and this Annex A
concerning Richard H. Koppes has been obtained from a letter dated March
21, 2002 from Mutual Shares Fund sent to the Company pursuant to which
Mr. Koppes was nominated to serve as a director of the Company.
(6) Shares exchanged in connection with exercise of options.
(7) Surrender of stock options in connection with exercise of stock options.
(8) Gift given.
INFORMATION REGARDING TRANSACTIONS IN SECURITIES OF THE COMPANY'S
SUBSIDIARIES BY PARTICIPANTS
The following table sets forth purchases and sales of the common stock
of Ribapharm Inc. ("Ribapharm"), a majority owned subsidiary of the
Company, by the Participants listed below since January 1, 2000. No other
purchases, sales or exchanges in securities of other subsidiaries of the
Company have been made.
NUMBER OF SHARES
OF COMMON STOCK
PURCHASED OR
NAME DATE (SOLD/EXCHANGED) FOOTNOTE
---- ---- ---------------- --------
Norman Barker, Jr...........................
Birch E. Bayh, Jr...........................
Edward A. Burkhardt.........................
Alan F. Charles.............................
Abraham E. Cohen............................
Ronald R. Fogleman..........................
Roderick M. Hills...........................
Adam Jerney................................. [TO COME]
Richard H. Koppes...........................
Jean-Francois Kurz..........................
Steven Lee..................................
Stephen D. Moses............................
Milan Panic.................................
Rosemary Tomich.............................
John E. Giordani............................
Gregory Keever..............................
Bill A. MacDonald...........................
Johnson Y.N. Lau M.D., Ph.D.................
James McCoy.................................
David C. Watt...............................
----------------------------
In addition, Dr. Lau received a grant of options to acquire $1,200,000
shares of Ribapharm common stock. This grant was made at the time of
completion of the Ribapharm initial public offering. These options have an
exercise price of $10.00 per share, a term of 10 years and a vesting
schedule of 25% each year, commencing on the first anniversary of grant.
However, these options, even when vested, will not be exercisable until the
earlier of the completion of the tax free distribution by the Company of
its shares of Ribapharm common stock or September 30, 2003.
MISCELLANEOUS INFORMATION CONCERNING PARTICIPANTS
Except as described in this Annex A or in this Proxy Statement, none
of the Participants nor any of their respective affiliates or associates
(together, the "Participant Affiliates"), (i) directly beneficially owns
any shares of Common Stock or any securities of any subsidiary of the
Company or (ii) has had any relationship with the Company in any capacity
other than as a shareholder, employee, officer or director. Furthermore,
except as described in this Annex A or in this Proxy Statement, no
Participant or Participant Affiliate is either a party to any transaction
or series of transactions since January 1, 2000, or has knowledge of any
currently proposed transaction or series of transactions, (i) to which the
Company or any of its subsidiaries was or is to be a party, (ii) in which
the amount involved exceeds $60,000, and (iii) in which any Participant or
Participant Affiliate had or will have, a direct or indirect material
interest. Except as described in this Annex A or in this Proxy Statement,
no Participant or Participant Affiliate has any arrangement or
understanding with any person (i) with respect to any future employment by
the Company or its affiliates; or (ii) with respect to any future
transactions to which the Company or any of its affiliates will or may be a
party.
ANNEX B
ICN PHARMACEUTICALS, INC. CORPORATE GOVERNANCE GUIDELINES
SELECTION AND COMPOSITION OF THE BOARD
I NOMINATING COMMITTEE
There is a nominating committee responsible for reviewing the Board for the
appropriate skills and characteristics required of the Board members in the
context of the current make-up of the Board. This assessment should include
issues of judgment, diversity, age, and skills such as understanding of the
business, international background--all in the context of an assessment of
the perceived needs of the Board at that point in time.
II SELECTION AND ORIENTATION OF NEW DIRECTORS
The Board should be responsible for selecting its own members and in
recommending them for election by the stockholders. The Board delegates the
screening process involved to the Nominating Committee with the direct
input from the Chairman of the Board and the Chief Executive Officer. The
Board and the Company have a complete orientation process for new Directors
that includes background material, meetings with senior management and
visits to Company facilities.
III EXTENDING THE INVITATION TO A POTENTIAL DIRECTOR TO JOIN THE BOARD
The invitation to join the Board should be extended by the Board itself via
the Chairman of the Board and Chief Executive Officer of the Company,
together with an independent director, when appropriate.
IV NOMINATING COMMITTEE REVIEW OF BOARD
The Nominating Committee in conjunction with the Chief Executive Officer
will formally review each director's continuation on the Board every three
years, preceding renomination. The Nominating Committee will give annually
to the Board an assessment of the Board's performance as soon as
practicable after the close of the fiscal year.
BOARD LEADERSHIP
V SELECTION OF THE CHAIRMAN AND CEO
The Board should be free to make this choice any way that seems best for
the Company at a given point in time.
VI CHAIRMAN OF THE COMMITTEE ON CORPORATE GOVERNANCE
The Chairman of the Committee on Corporate Governance will be an
independent Director. The Chairman of the Committee, together with the
members of that Committee, will develop the agenda for those regular
sessions and periodically review the Board's governance procedures.
VII MIX OF MANAGEMENT AND INDEPENDENT DIRECTORS
The Board believes that as a matter of policy, there should be a majority
of Independent Directors.
BOARD COMPOSITION AND PERFORMANCE
VIII BOARD DEFINITION OF WHAT CONSTITUTES INDEPENDENCE FOR DIRECTORS
Independent directors are persons who are not employees, paid consultants
or contractors for the company, or any persons related within two degrees
of consanguinity to such ineligible persons. Directors are encouraged to
own stock in the company.
IX FORMER CHAIRMAN/CHIEF EXECUTIVE OFFICER'S BOARD MEMBERSHIP
The Board believes this is a matter to be decided in each individual
instance. It is assumed that when the Chairman or CEO resigns from that
position, he/she should submit his/her resignation from the Board at the
same time. Whether the individual continues to serve on the Board is a
matter for discussion at that time with the new Chairman or CEO and the
Board.
X RETIREMENT AGE
Retirement age is 70 for directors first appointed after July 1, 2002.
XI BOARD COMPENSATION
It is appropriate for the staff of the Company to report once a year to the
Compensation Committee on the status of Board compensation in relation to
other companies. As part of a Director's total compensation and to create a
direct linkage with corporate performance, the Board believes that a
meaningful portion of a Director's compensation should be provided and held
in common stock units. Changes in Board compensation, if any, should come
at the suggestion of the Compensation Committee, but with concurrence by
the Board.
XII BOARD'S INTERACTION WITH INVESTORS, MEDIA AND THE PUBLIC
The Board believes that the Management speaks for ICN Pharmaceuticals, Inc.
Individual Board members may, from time to time at the request of the
Management, meet or otherwise communicate with various constituencies.
Comments from the Board are appropriate, in compliance with the company's
existing policy relating to disclosure of corporate information; however,
comments should, in most circumstances, come from the Chairman.
BOARD RELATIONSHIP TO SENIOR MANAGEMENT
XIII REGULAR ATTENDANCE OF NON-DIRECTORS AT BOARD MEETINGS
The Board welcomes the regular attendance at each Board meeting of
non-Board members who are in the most senior management positions of the
company.
XIV BOARD ACCESS TO SENIOR MANAGEMENT
Board members have complete access to ICN's management. It is assumed that
Board members will use judgment to be sure that this contact is not
distracting to the business operation of the Company. Furthermore, the
Board encourages the Management to bring managers into Board meetings who:
(a) can provide additional insight into the items being discussed because
of personal involvement in these areas and/or, (b) are managers with future
potential that the senior management believes should be given exposure to
the Board.
XV SELECTION OF AGENDA ITEMS FOR BOARD MEETINGS
The Chairman of the Board/Chief Executive Officer will establish the agenda
for each board meeting. Each board member is free to suggest the inclusion
of item(s) on the agenda.
XVI BOARD MATERIALS DISTRIBUTED IN ADVANCE
Information and data that is important to the Board's understanding of the
business will be distributed in writing to the Board before the Board
meets. The Management will make every attempt to see that this material is
as brief as possible while still providing the desired information.
XVII BOARD PRESENTATIONS
Presentations on specific subjects should be sent to the Board members in
advance so that Board meeting time may be conserved and discussion time
focused on questions that the Board has about the material.
COMMITTEE MATTERS
XVIII NUMBER, STRUCTURE AND INDEPENDENCE OF COMMITTEES
From time to time, the Board may want to form a new committee or disband a
current committee depending upon the circumstances. The current committees
are Nominating, Corporate Governance, Executive, Finance, Audit,
Compensation, Science and Technology, and Communications. Committee
membership will consist only of Independent Directors, although the
Chairman and Chief Executive Officer is a member of the Executive Committee
and an ex-officio member of all other committees except Audit and
Compensation.
XIX ASSIGNMENT AND ROTATION OF COMMITTEE MEMBERS
The Chairman and Chief Executive Officer shall consider the assignment of
committee membership and submit its nominees to the full Board for
approval.
XX FREQUENCY AND LENGTH OF COMMITTEE MEETINGS
The Committee Chairman, in consultation with committee members, will
determine the frequency and length of the meetings of the Committee.
Meetings will be called and meeting arrangements made by the Corporate
Secretary.
XXI AUDIT COMMITTEE INDEPENDENCE
The Audit Committee consists entirely of independent directors. It shall
dedicate a portion of each meeting to an executive session with the
Company's outside auditors with no management present.
XXII COMMITTEE AGENDA
The Chairman of the Committee, in consultation with the appropriate members
of the Committee and management, will develop the Committee's agenda.
LEADERSHIP DEVELOPMENT
XXIII FORMAL EVALUATION OF THE CHAIRMAN AND THE CHIEF EXECUTIVE OFFICER
The independent Directors shall, as a committee, evaluate the performance
of the Chief Executive Officer annually, and, as appropriate, communicate
its conclusions to the Nominating Committee as well as the Chairman and
Chief Executive Officer. The evaluation should be based on objective
criteria including performance of the business, accomplishment of long-term
strategic objectives, development of management, etc. The evaluation will
be used by the Compensation Committee in the course of its deliberations
when considering the compensation of the Chairman and Chief Executive
Officer.
XXIV SUCCESSION PLANNING
There should also be available, on a continuing basis, the Chief Executive
Officer's recommendation of a successor should he/she be unexpectedly
unable to serve, and the Chief Executive Officer should report to the Board
annually on succession planning.
ANNEX C
INFORMATION CONCERNING UBS WARBURG LLC
In connection with the engagement of UBS Warburg LLC ("UBS Warburg")
as financial advisor, the Company anticipates that employees of UBS Warburg
may communicate in person, by telephone or otherwise with certain
institutions, brokers or other persons who are shareholders for the purpose
of assisting in the solicitation of proxies. Although UBS Warburg does not
admit that it or any of its directors, officers, employees or affiliates is
a "participant," as defined in Schedule 14A promulgated under the
Securities Exchange Act of 1934, as amended, or that Schedule 14A requires
the disclosure of certain information concerning UBS Warburg, the following
persons: [ ] (collectively, the "Financial Advisor Participants") may
assist the Company in the solicitation of proxies for the Annual Meeting.
The principal business address of Messrs. [ ] is 299 Park Avenue, New York,
NY 10171.
UBS Warburg has provided financial advisory and investment banking
services to the Company from time to time for which they have received
customary compensation. USB Warburg engages in a full range of investment
banking, securities trading, market-making and brokerage services for
institutional and individual clients. In the ordinary course of its
business, UBS Warburg may actively trade securities of the Company for its
own account and the account of its customers and, accordingly, may at any
time hold a long or short position in such securities. UBS Warburg has
advised the Company that as of April __, 2002, UBS Warburg held a net long
position of approximately [ ] shares of Common Stock. Except as set forth
above, to the Company's knowledge, none of UBS Warburg, or any of the
Financial Advisor Participants, has any interest, direct or indirect, by
security holdings or otherwise, in the Company.
Gold Proxy Card
[ICN LOGO]
ICN PHARMACEUTICALS, INC.
3300 HYLAND AVENUE, COSTA MESA, CALIFORNIA 92626
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS ON MAY 29, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
ICN PHARMACEUTICALS, INC.
The undersigned hereby appoints Milan Panic and Gregory Keever as
Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated below, all the
shares of common stock of ICN Pharmaceuticals, Inc. (the "Company") held of
record by the undersigned on April 9, 2002 at the annual meeting of
stockholders to be held at 10:00 a.m. P.D.T. on May 29, 2002 or any
adjournments or postponements thereof.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no instructions are indicated
herein, this proxy will be treated as a grant of authority to vote "FOR"
the nominees to the Board of Directors listed on the reverse side of this
proxy card.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE COMPANY'S DIRECTOR NOMINEES.
(Continued and to be signed on the reverse side.)
(Continued from other side)
Gold Proxy Card
[X] Please mark your vote as in this example.
The Board of Directors of the Company recommends a vote "FOR" Birch E.
Bayh, Jr., Abraham E. Cohen and Richard H. Koppes as directors of the
Company.
[ ] FOR ALL NOMINEES LISTED [ ] WITHHOLD AUTHORITY FOR ALL NOMINEES LISTED
(Instruction: To withhold authority to vote for any individual nominee(s),
write the name(s) of such nominee(s) in the following space.)
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At their discretion, the Proxies are authorized to vote upon any other
matter as may come before the Annual Meeting.
This Proxy revokes all prior proxies given by the undersigned with respect
to matters covered by this proxy and the voting of shares of common stock at
the 2002 Annual Meeting.
The undersigned acknowledges receipt
of the copy of the Notice of Annual
Meeting and Proxy Statement of the
Company relating to the Annual
Meeting.
THE BOARD OF DIRECTORS OF THE COMPANY
RECOMMENDS THAT YOU SIGN, DATE AND
MAIL THIS PROXY CARD TODAY.
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SIGNATURE DATE
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SIGNATURE DATE
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TITLE OR AUTHORITY
Please date this Proxy and sign
exactly as your name appears herein.
When there is more than one owner, all
must sign, when signing as an
attorney, executor, administrator,
trustee, guardian, corporate officer
or partner, sign full title as such.
If a corporation, please sign in full
corporate name by duly authorized
officer. If a partnership, please sign
in partnership name by a duly
authorized person.