<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
</TABLE>
ICN PHARMACEUTICALS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] Fee not required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
ICN PHARMACEUTICALS, INC.
April 21, 1997
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 28, 1997, at 10:00 a.m. at
the corporate headquarters of the Company, 3300 Hyland Avenue, Costa Mesa,
California. Official Notice of the Meeting, a Proxy Statement and a form of
proxy accompany this letter.
The Company's Annual Report to Stockholders, including audited financial
statements, accompanies this Proxy Statement.
Please mark, date, sign and return the proxy in the enclosed envelope so
that your shares may be represented. This will not prevent you from voting in
person should you so desire, but will help secure a quorum necessary for the
transaction of business.
By Order of the Board of Directors,
/s/ MILAN PANIC
MILAN PANIC
Chairman of the Board
<PAGE> 3
ICN PHARMACEUTICALS, INC.
3300 HYLAND AVENUE
COSTA MESA, CALIFORNIA 92626
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 28, 1997
------------------------
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
the corporate headquarters of the Company, 3300 Hyland Avenue, Costa Mesa,
California, on May 28, 1997, at 10:00 a.m., local time, for the purpose of
considering and acting upon the following:
1. The election of five directors, to hold office until the 2000
Annual Meeting of Stockholders and thereafter until their successors are
elected and qualified.
2. The transaction of such other business as may properly come before
the meeting or any adjournments thereof.
Only stockholders of record at the close of business on April 11, 1997,
will be entitled to notice of and to vote at the meeting and any adjournments
thereof.
By Order of the Board of Directors,
/s/ MILAN PANIC
MILAN PANIC
Chairman of the Board
/s/ DAVID C. WATT
DAVID C. WATT
Secretary
Dated: April 21, 1997
PLEASE MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING
ENVELOPE, WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
<PAGE> 4
ICN PHARMACEUTICALS, INC.
3300 HYLAND AVENUE
COSTA MESA, CALIFORNIA 92626
--------------------------
PROXY STATEMENT
--------------------------
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
MAY 28, 1997
------------------------
This Proxy Statement is being mailed on or about April 21,1997, to
stockholders of ICN Pharmaceuticals, Inc. (the "Company" or "ICN") in connection
with the solicitation of proxies by the Board of Directors for use at the Annual
Meeting of Stockholders to be held on May 28, 1997, or adjournments thereof, 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, or by revoking it in person at 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.
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 and by telephone or telegraph. The Company has retained
Georgeson & Company Inc. to assist in the solicitation of proxies. The Company
will pay fees estimated at $14,000, plus reasonable out-of-pocket expenses
incurred by them. 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.
VOTING SECURITIES
As of the close of business on April 11, 1997, there were outstanding
34,483,386 shares of the Company's common stock, par value $.01 per share, (the
"Common Stock") held of record by approximately 6,513 stockholders, each of
which shares is entitled to one vote at the Annual Meeting. The Company has no
other class of voting securities outstanding.
MERGER
On November 1, 1994, the shareholders of ICN Pharmaceuticals, Inc. ("ICN"),
SPI Pharmaceuticals, Inc. ("SPI"), Viratek, Inc. ("Viratek"), and ICN
Biomedicals, Inc. ("Biomedicals") (collectively, the "Predecessor Companies")
approved a business combination involving the Predecessor Companies ("the
Merger"). On November 10, 1994, SPI, Old ICN and Viratek merged into ICN Merger
Corp. (then a wholly owned subsidiary of SPI), and Biomedicals merged into ICN
Subsidiary Corp., a wholly-owned subsidiary of ICN Merger Corp. In the Merger,
all of the stockholders of the Predecessor Companies (other than Old ICN)
received shares of Common Stock in exchange for the shares of common stock of
the predecessor companies at specified exchange rates for each of the
Predecessor Companies. In conjunction with the Merger, ICN Merger Corp. was
renamed ICN Pharmaceuticals, Inc. For accounting purposes, SPI is the acquiring
company and as a result, the Company reports the historical financial data of
SPI in its financial results.
<PAGE> 5
ELECTION OF DIRECTORS
The Certificate of Incorporation of the Company provides that the Board of
Directors be divided into three classes of directors. Five directors are to be
elected at the 1997 Annual Meeting, each to serve until the 2000 Annual Meeting
of Stockholders and until his successor is elected and qualified. The nominees
are Roger Guillemin, M.D., Ph.D., Jean-Francois Kurz, Charles T. Manatt, Milan
Panic and Michael Smith, Ph.D., all of whom currently serve as directors 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.
The Board of Directors of the Company recommends that the stockholders vote
FOR the election of the five nominees for director named in this Proxy
Statement.
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 the five nominees listed above. If any other matters are properly
presented at the Meeting for action, which is not presently contemplated, the
proxy holder 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
Shares 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 Shares present, in
person or represented by proxy, at the Annual Meeting and entitled to vote their
Shares 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.
2
<PAGE> 6
INFORMATION CONCERNING NOMINEES AND DIRECTORS
The current Board of Directors consists of fifteen members: Messrs.
Guillemin, Kurz, Manatt, Panic and M. Smith are standing for re-election;
Messrs. Hanson, Jolley, Lenagh, R. Smith and Starr are serving until the 1998
Annual Meeting of Stockholders; and Messrs. Barker, Bayh, Charles, Jerney and
Moses will serve until the 1999 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 (reference to ICN below
includes service to Old ICN as applicable).
DIRECTORS NOMINATED FOR ELECTION
<TABLE>
<CAPTION>
YEAR
COMMENCED
SERVING AS
DIRECTOR OF OTHER CORPORATE
NAME AND PRINCIPAL OCCUPATION AGE THE COMPANY DIRECTORSHIPS
- ------------------------------------------------------- --- ------------ ----------------------------
<S> <C> <C> <C>
ROGER GUILLEMIN, M.D., PH.D. (d) 73 1989 Prizm Pharmaceuticals, Inc.
Dr. Guillemin has been an Adjunct Professor of
Medicine at the University of California College of
Medicine in San Diego since 1970. Prior to this, he
was a distinguished Scientist at the Whittier
Institute in La Jolla, California from March 1989 to
1995 and was Resident Fellow and Chairman of the
Laboratories for Neuroendocrinology at the Salk
Institute in La Jolla, California. Dr. Guillemin was
awarded the Nobel Prize in Medicine in 1977 and, in
the same year, was presented the National Medal of
Science by the President of the United States. He was
affiliated with the Department of Physiology at
Baylor College of Medicine in Houston, Texas from
1952 to 1970. Dr. Guillemin is a member of the
National Academy of Sciences, and a Fellow of the
American Association for the Advancement of Science.
He has also served as President of the American
Endocrine Society.
JEAN-FRANCOIS KURZ (c)(e) 62 1989 Board of Banque Pasche S.A.,
Mr. Kurz was a member of the Board of Directors and Geneva
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. Mr. Kurz is also Chairman of the
Board of Banque Pasche S.A., Geneva.
CHARLES T. MANATT (c)(h) 60 1992 Federal Express; Comsat
Mr. Manatt is a partner in the law firm of Manatt,
Phelps & Phillips, of which he was a founder in 1965.
Mr. Manatt served as Chairman of the Democratic
Party.
MILAN PANIC (e) 67 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; 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. Mr. Panic served as
Chairman of the Board and Chief Executive Officer of
SPI, Viratek and Biomedicals from their respective
inceptions (except for such leaves of absence) prior
to the Merger, and he may be deemed to be a "control
person" of the Company.
MICHAEL SMITH, PH.D. (d) 64 1994
Dr. Smith is Director of the Biotechnology
Laboratory, an interdisciplinary unit, at the
University of British Columbia. He is Peter Wall
Distinguished Professor of Biotechnology and
University Professor at the University. He has been a
Career Investigator of the Medical Research Council
of Canada since 1966 and was awarded the Nobel Prize
in Chemistry in 1993 for the development of
site-directed mutagenesis.
</TABLE>
3
<PAGE> 7
DIRECTORS WHOSE TERM EXPIRE IN 1998
<TABLE>
<CAPTION>
YEAR
COMMENCED
SERVING AS
DIRECTOR OF OTHER CORPORATE
NAME AND PRINCIPAL OCCUPATION AGE THE COMPANY DIRECTORSHIPS
- ------------------------------------------------------- --- ------------ ----------------------------
<S> <C> <C> <C>
DALE M. HANSON (c)(f)(g) 54 1995
Mr. Hanson is the Chief Executive Officer of American
Partner's Capital Group, a provider of financial
services to institutional investors. From 1987 to
1994, Mr. Hanson was Chief Executive Officer of the
California Public Employees Retirement System (Cal
PERS). From 1981 to 1987, Mr. Hanson served as Chief
Operating Officer of the Wisconsin Retirement System.
WELDON B. JOLLEY, PH.D. (d)(e) 70 1960
Dr. Jolley is President of Golden Opportunities and
was President of the Nucleic Acid Research Institute,
a former division of ICN, from 1985 to 1989. Dr.
Jolley was a Vice President of ICN until 1991. Prior
to that, he was, for eleven years, Professor of
Surgery at the Loma Linda University School of
Medicine in Loma Linda, California and a physiolo-
gist at the Veterans Hospital in Loma Linda,
California.
THOMAS H. LENAGH (b)(c)(f) 74 1979 Adams Express Company; U.S.
Mr. Lenagh is an independent financial advisor. He Life Corporation; SCI
was Chairman of the Board of Greiner Engineering, Systems, Inc.; Gintel Funds;
Inc. from 1982 to 1985. Mr. Lenagh served as Irvine Sensors, Inc.; CML,
Financial Vice President to the Aspen Institute from Inc.; Clemente Global Funds;
1978 to 1980, and since then as an independent Franklin Quest; V Band Corp.
financial consultant. From 1964 to 1978, he was
Treasurer of the Ford Foundation.
ROBERTS A. SMITH, PH.D. (d)(e) 68 1960 Nucleic Acid Research
Dr. Smith was President of Viratek and Vice Institute; PLC Systems
President -- Research and Development of SPI through
1992. For more than eleven years, Dr. Smith was
Professor of Chemistry and Biochemistry at the
University of California at Los Angeles.
RICHARD W. STARR (b)(c) 76 1983
Mr. Starr is the retired Executive Vice President and
Chief Credit Officer Worldwide of First Interstate
Bank of California. Mr. Starr spent 31 years with
First Interstate before retiring in 1983 and has over
44 years of experience in commercial banking.
</TABLE>
4
<PAGE> 8
DIRECTORS WHOSE TERM EXPIRE IN 1999
<TABLE>
<CAPTION>
YEAR
COMMENCED
SERVING AS
DIRECTOR OF OTHER CORPORATE
NAME AND PRINCIPAL OCCUPATION AGE THE COMPANY DIRECTORSHIPS
- ------------------------------------------------------- --- ------------ ----------------------------
<S> <C> <C> <C>
NORMAN BARKER, JR. (a)(c)(g) 74 1988 American Health Properties,
Mr. Barker is the retired Chairman of the Board of Inc.; Fidelity Federal Bank,
First Interstate Bank of California and Former Vice Chairman; Pacific American
Chairman of the Board of First Interstate Bankcorp. Income Shares, Inc.,
Mr. Barker joined First Interstate Bank of California Chairman; TCW Convertible
in 1957 and was elected President and Director in Securities Fund, Inc.
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.
BIRCH E. BAYH, JR., ESQ. (a)(g) 69 1992 Acordia, Inc. and Simon
Mr. Bayh is the senior partner in the Washington, Property Group
D.C. law firm of Bayh, Connaughton & Malone, P.C.
(1991-present). He previously was head of the
Washington office of Rivkin, Radler, Bayh, Hart &
Kremer (1985-1991), and partner in the Indianapolis,
Indiana and Washington, D.C. law firm of Bayh,
Tabbert & Capehart (1981-1985). Mr. Bayh served as a
United States Senator from the state of Indiana from
1963-1981.
ALAN F. CHARLES (a)(f) 59 1986
Mr. Charles was Vice Chancellor of University
Relations at the University of California, Los
Angeles from 1980 to 1993 and served in various
administrative capacities at that University since
1972. He is now an independent consultant in higher
education management.
ADAM JERNEY 55 1992
Mr. Jerney is Chief Operation Officer and President
of ICN. He served as Chairman of the Board and Chief
Executive Officer of ICN, SPI, Viratek and
Biomedicals 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 Manager
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. He
became President of the Company in 1997. Prior to
joining ICN, he spent four years with F.
Hoffmann-LaRoche & Company.
STEPHEN D. MOSES (a)(b)(f) 62 1988
Mr. Moses is Chairman of the Board of Stephen Moses
Interests. He was formerly Chairman of the Board of
National Investment Development Corporation and
Brentwood Bank in Los Angeles, California and a
member of the National Advisory Board of the Center
for National Policy. Mr. Moses serves on the Board of
Visitors of Hebrew Union College, as well as the
Board of Trustees of Franklin and Marshall College
and the UCLA Foundation. From 1967 to 1971, Mr. Moses
was an executive of the Boise Cascade Corporation,
serving in several capacities, including President of
Boise Cascade Home and Land Corporation. In the early
1970's, Mr. Moses was President of Flagg Communities,
Inc.
</TABLE>
- ---------------
(a) Member of the Compensation and Benefits Committee
(b) Member of the Audit Committee
(c) Member of the Finance Committee
(d) Member of the Science and Technology Committee
(e) Member of the Executive Committee
(f) Member of the Communications Committee
(g) Member of the Corporate Governance Committee
5
<PAGE> 9
None of the directors are related by blood or marriage to one another or to
an executive officer of the Company.
On October 7, 1991, Old ICN, Viratek, Milan Panic, as Chairman of the
Board, President and Chief Executive Officer of Old ICN and Dr. Weldon B.
Jolley, a director of Old ICN, entered into a settlement agreement in a form of
a Consent Decree with the Securities and Exchange Commission (the "Commission"),
ending the investigation of Old ICN and its subsidiaries which began in 1987 and
generally concerned Old ICN disclosures in 1986 and 1987 relating to the safety
and efficacy of Virazole(R) in treating certain AIDS-related conditions. Without
admitting or denying any violations of the securities laws, Old ICN, Viratek and
the individuals agreed not to violate securities laws in the future (which
obligations were assumed by ICN in the Merger).
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 Committee and Corporate Governance Committee, but does
not have a standing nominating committee.
The current members of the Executive Committee are Messrs. Panic, Jolley,
Kurz and R. Smith. 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 no meetings during the year ended December 31,
1996.
The current members of the Audit Committee, which held five meetings during
the year ended December 31, 1996, are Messrs. Starr, Lenagh and Moses. 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.
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, Bayh, Charles and Moses. This Committee held eight meetings
during the year ended December 31, 1996.
The Finance Committee oversees investment and commercial banking issues and
investment guidelines. The current members of this Committee are Messrs. Barker,
Hanson, Kurz, Lenagh, Manatt and Starr. This Committee held five meetings during
the year ended December 31, 1996.
The Science and Technology Committee formulates and oversees the scientific
and technology policy of the Company. The current members of this Committee are
Drs. Guillemin, Jolley, M. Smith and R. Smith. This Committee held two meetings
during the year ended December 31, 1996.
The Communications Committee oversees the development of external
communications policy for the Company in both the public relations and investor
relations disciplines. The current members of the Communications Committee are
Messrs. Charles, Hanson, Lenagh and Moses. This Committee met nine times during
the year ended December 31, 1996.
The Corporate Governance Committee was formed in July of 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. The current members of this Committee are Messrs. Manatt, Barker,
Bayh and Hanson. This Committee met four times during the year ended December
31, 1996.
The Board of Directors met eleven times during 1996 and all of the
directors attended at least 75% of the meetings, except for Dr. Guillemin, Mr.
Hanson, Dr. Jolley, Mr. Kurz and Dr. M. Smith who attended 64%, 73%, 73%, 18%
and 45%, respectively.
6
<PAGE> 10
OWNERSHIP OF THE COMPANY'S SECURITIES
PRINCIPAL STOCKHOLDER
As of February 12, 1997, the following stockholders were known to
management to be beneficial owners of more than 5% of the outstanding shares of
the Common Stock:
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES PERCENT OF CLASS
OF BENEFICIAL OWNER BENEFICIALLY OWNED OUTSTANDING(1)
--------------------------------------------- ------------------ ----------------
<S> <C> <C>
Heartland Advisors, Inc.(2).................. 4,966,541 14.8%
Heartland Value Fund
790 North Milwaukee Street
Milwaukee, WI 53202
AIM Management Group Inc.(3)................. 2,956,224 8.8%
11 Greenway Plaza, Suite 1919
Houston, Texas 77046
</TABLE>
- ---------------
(1) Total outstanding shares of Common Stock for purposes of this table include
33,423,882 shares outstanding on December 31, 1996.
(2) As reported on Form 13G filed with the Securities and Exchange Commission
(the "Commission") 4,966,541 Shares may be deemed beneficially owned within
the meaning of Rule 13d-3 of the Securities Act of 1934 by Heartland
Advisors which includes 108,816 shares of common stock resulting from the
assumed conversion of 2,407,000 of 8.5% Subordinated Convertible Debentures
due November 15, 1999, which may also be deemed beneficially owned by
Heartland Group. The interests of Heartland Group, Inc., a services
investment company for which Heartland Advisors serves as investment
advisor, relates to more than 5% of the class.
(3) As reported on Form 13G filed with the Securities and Exchange Commission
(the "Commission"), 2,956,224 Shares may be deemed beneficially owned within
the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as
amended, (the "Exchange Act") by Aim Management.
7
<PAGE> 11
OWNERSHIP BY MANAGEMENT
The following table sets forth, as of March 31, 1997, certain information
regarding the beneficial ownership of New ICN common stock and the percent of
shares owned beneficially by each Named Executive Officer and all directors and
executive officers of New ICN as a group:
<TABLE>
<CAPTION>
NUMBER OF SHARES
AND NATURE OF
BENEFICIAL
OWNERSHIP
OF ICN PERCENTAGE
IDENTITY OF OWNER OR GROUP COMMON STOCK(1) OF CLASS
--------------------------------------------- ------------------- ----------
<S> <C> <C>
Norman Barker, Jr............................ 51,350(3) (2)
Birch E. Bayh, Jr............................ 42,115(4) (2)
Alan F. Charles.............................. 30,643(5) (2)
Roger Guillemin, M.D., Ph.D.................. 78,976(6) (2)
Dale Hanson.................................. 3,750(7) (2)
Adam Jerney.................................. 667,872(8) 1.9%
Weldon B. Jolley, Ph.D....................... 124,833(9) (2)
Jean-Francois Kurz........................... 23,036(10) (2)
Thomas H. Lenagh............................. 27,423(11) (2)
Charles T. Manatt............................ 44,095(12) (2)
Stephen D. Moses............................. 37,273(13) (2)
Milan Panic.................................. 1,492,358(14) 4.2%
Michael Smith, Ph.D.......................... 23,778(15) (2)
Roberts A. Smith, Ph.D....................... 182,925(16) (2)
Richard W. Starr............................. 45,685(17) (2)
John E. Giordani............................. 96,232(18) (2)
Bill A. MacDonald............................ 161,502(19) (2)
David Watt................................... 126,923(20) (2)
Jack Sholl................................... 76,828(21) (2)
John Julian.................................. 20,456(22) (2)
Devron Averett............................... 12,688(23) (2)
Directors and executive officers of the
Company
as a group (21 persons).................... 3,370,741(24) 9.1%
</TABLE>
- ---------------
(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) Less than 1%.
(3) Includes 48,595 shares of ICN common stock which Mr. Barker has the right
to acquire upon the exercise of currently exercisable stock options.
(4) Includes 36,463 shares of ICN common stock which Mr. Bayh has the right to
acquire upon the exercise of currently exercisable stock options.
(5) Includes 30,597 shares of ICN common stock which Mr. Charles has the right
to acquire upon the exercise of currently exercisable stock options.
(6) Includes 78,424 shares of ICN common stock which Dr. Guillemin has the
right to acquire upon the exercise of currently exercisable stock options.
(7) Includes 3,750 shares of ICN common stock which Mr. Hanson has the right to
acquire upon the exercise of currently exercisable stock options.
8
<PAGE> 12
(8) Includes 627,872 shares of ICN common stock which Mr. Jerney has the right
to acquire upon the exercise of currently exercisable stock options.
(9) Includes 91,035 shares of ICN common stock which Dr. Jolley has the right
to acquire upon the exercise of currently exercisable stock options.
(10) Includes 23,036 shares of ICN common stock which Mr. Kurz has the right to
acquire upon the exercise of currently exercisable stock options.
(11) Includes 23,036 shares of ICN common stock which Mr. Lenagh has the right
to acquire upon the exercise of currently exercisable stock options.
(12) Includes 43,071 shares of ICN common stock which Mr. Manatt has the right
to acquire upon the exercise of currently exercisable stock options.
(13) Includes 37,071 shares of ICN common stock which Mr. Moses has the right to
acquire upon the exercise of currently exercisable stock options.
(14) Includes 1,171,195 shares of ICN common stock which Mr. Panic has the right
to acquire upon the exercise of currently exercisable stock options.
(15) Includes 23,778 shares of ICN common stock which Dr. Michael Smith has the
right to acquire upon the exercise of currently exercisable stock options.
(16) Includes 145,900 shares of ICN common stock which Dr. Roberts A. Smith has
the right to acquire upon the exercise of currently exercisable stock
options.
(17) Includes 30,683 shares of ICN common stock which Mr. Starr has the right to
acquire upon the exercise of currently exercisable stock options.
(18) Includes 96,232 shares of ICN common stock which Mr. Giordani has the right
to acquire upon the exercise of currently exercisable stock options.
(19) Includes 157,379 shares of ICN common stock which Mr. MacDonald has the
right to acquire upon the exercise of currently exercisable stock options.
(20) Includes 124,928 shares of ICN common stock which Mr. Watt has the right to
acquire upon the exercise of currently exercisable stock options.
(21) Includes 73,703 shares of ICN common stock which Mr. Sholl has the right to
acquire upon the exercise of currently exercisable stock options.
(22) Includes 20,456 shares of ICN common stock which Mr. Julian has the right
to acquire upon the exercise of currently exercisable stock options.
(23) Includes 12,500 shares of ICN common stock which Dr. Averett has the right
to acquire upon the exercise of currently exercisable stock options.
(21) Includes 2,899,704 shares of ICN common stock which directors and certain
officers has the right to acquire upon the exercise of currently
exercisable stock options.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of 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 shareholders 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 1996 all filing requirements
applicable to its executive officers, directors and ten percent beneficial
owners were timely satisfied.
9
<PAGE> 13
EXECUTIVE COMPENSATION AND RELATED MATTERS
SUMMARY COMPENSATION TABLE
The following table sets forth the annual and long-term compensation
awarded to, earned by, or paid to the Chief Executive Officer and the four most
highly paid executive officers of ICN (the "Named Executive Officers"), for
services rendered to the Predecessor Companies and ICN in all capacities during
the twelve months ended December 31, 1996, 1995 and 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
OTHER
ANNUAL COMPENSATION ANNUAL AWARDS ALL OTHER
NAME AND --------------------------- COMPENSATION ------------ COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) OPTIONS(#)(2) ($)(3)
- --------------------------------- ---- --------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Milan Panic...................... 1996 612,500 750,000 100,000(4) 73,893(5)
Chairman and Chief 1995 572,500 275,000 -- 92,500(5)
Executive Officer 1994 535,000 195,600 702,600(4) 70,600(5)
Adam Jerney...................... 1996 380,000 160,000 -- 22,400(7)
President and Chief 1995 380,000 200,000 -- 66,400(7)
Operating Officer 1994 380,000 146,719 212,415(6) 60,700(7)
John E. Giordani................. 1996 278,000 127,000 -- 16,300
Executive Vice President, 1995 238,707 100,000 -- 30,187
Chief Financial Officer 1994 225,195 96,671 95,000(8) 32,045
and Corporate Controller
Bill A. MacDonald................ 1996 200,000 141,000 -- 15,600
Executive Vice President, 1995 200,000 100,000 -- 3,067
Corporate Development 1994 200,000 96,671 105,520(9) 16,860
David Watt....................... 1996 200,000 269,000 -- 3,000
Executive Vice President, 1995 200,000 100,000 -- 2,607
General Counsel, 1994 180,000 96,671 75,520(10) 2,448
Corporate Secretary
</TABLE>
- ---------------
(1) Unless otherwise indicated, with respect to any individual named in the
above table, the aggregate amount of perquisites and other personal
benefits, securities or property was less than either $50,000 or 10% of the
total annual salary and bonus reported for the named executive officer.
(2) Includes grants of options to purchase shares of common stock of ICN.
(3) Except where otherwise indicated, the amounts in this column represent
matching contributions to ICN's 401(K) plan, amounts accrued under an
executive deferral plan and medical benefits and medical and life insurance
premiums.
(4) Mr. Panic was granted options to purchase the following shares of ICN common
stock (Post Merger), ICN common stock (Pre-Merger), SPI common stock,
Viratek common stock and Biomedicals common stock.
POST MERGER:
<TABLE>
<CAPTION>
ICN (NEW)
---------
<S> <C>
1996............................... 100,000
1995............................... --
</TABLE>
PRE-MERGER:
<TABLE>
<CAPTION>
ICN SPI VIRATEK BIOMEDICALS
--------- ------- ------- -----------
<S> <C> <C> <C> <C>
1994............................... 300,000 202,600 200,000 --
</TABLE>
10
<PAGE> 14
(5) In 1996, the $73,893 of "All Other Compensation" consists of the following:
executive medical $7,600, life insurance $5,900, and $60,392.93 on interest
paid pursuant to a collateral agreement. In 1995, the $92,500 of "All Other
Compensation" consists of the following: legal $79,000, executive medical
$5,300 and life insurance $8,200. In 1994, the $70,600 consists of the
following: legal $23,800, accounting $34,100, executive medical $6,100 and
life insurance $6,600.
(6) Mr. Jerney was granted options to purchase the following shares of ICN
common stock (Post Merger), ICN common stock (Pre-Merger), SPI common stock
(adjusted for stock dividend after the grant date and prior to the Merger),
Viratek common stock and Biomedicals common stock:
POST MERGER:
<TABLE>
<CAPTION>
ICN (NEW)
---------
<S> <C>
1996................................. --
1995................................. --
</TABLE>
PRE-MERGER:
<TABLE>
<CAPTION>
ICN SPI VIRATEK BIOMEDICALS
--------- ------ ------- -----------
<S> <C> <C> <C> <C>
1994................................. 50,000 50,650 50,000 61,765
</TABLE>
(7) In 1996, the $22,400 of "All Other Compensation" consists of the following:
accounting-tax $11,100, executive medical $7,900, tennis club $400 and life
insurance $3,000.
In 1995, the $66,400 of "All Other Compensation" consists of the following:
accounting-tax $41,900, legal expense $12,600, executive medical $7,600,
tennis club $400 and life insurance $3,900. In 1994, the $60,700 is broken
out as follows: accounting-tax $27,900, deferred compensation interest
$16,900, executive medical $8,500; 401(k) employee contribution $4,600,
tennis club $400, and life insurance $2,400.
(8) Mr. Giordani was granted options to purchase the following shares of ICN
common stock (Post Merger), ICN common stock (Pre-Merger), SPI common stock
(adjusted for stock dividend after the grant date and prior to the Merger),
Viratek common stock and Biomedicals common stock:
POST MERGER:
<TABLE>
<CAPTION>
ICN (NEW)
---------
<S> <C>
1996................................. --
1995................................. 40,000
</TABLE>
PRE-MERGER:
<TABLE>
<CAPTION>
ICN SPI VIRATEK BIOMEDICALS
--------- ------ ------- -----------
<S> <C> <C> <C> <C>
1994................................. 25,000 40,000 10,000 20,000
</TABLE>
(9) Mr. MacDonald was granted options to purchase the following shares of
Common Stock (Post Merger), ICN common stock (Pre-Merger), SPI common stock
(adjusted for stock dividend after the grant date and prior to the Merger),
Viratek common stock and Biomedicals common stock:
POST MERGER:
<TABLE>
<CAPTION>
ICN (NEW)
---------
<S> <C>
1996................................. --
1995................................. --
</TABLE>
PRE-MERGER:
<TABLE>
<CAPTION>
ICN SPI VIRATEK BIOMEDICALS
--------- ------ ------- -----------
<S> <C> <C> <C> <C>
1994................................. 25,000 40,520 10,000 30,000
</TABLE>
11
<PAGE> 15
(10) Mr. Watt was granted options to purchase the following shares of ICN common
stock (Post Merger), ICN common stock (Pre-Merger), SPI common stock
(adjusted for stock dividend after the grant date and prior to the Merger),
Viratek common stock and Biomedicals common stock:
POST MERGER:
<TABLE>
<CAPTION>
ICN (NEW)
---------
<S> <C>
1996................................. --
1995................................. --
</TABLE>
PRE-MERGER:
<TABLE>
<CAPTION>
ICN SPI VIRATEK BIOMEDICALS
--------- ------ ------- -----------
<S> <C> <C> <C> <C>
1994................................. 25,000 40,520 10,000 --
</TABLE>
In August 1996, the Company loaned the Chairman and CEO $428,000 in regards
to tax matters relating to the exercise of stock options. This loan along with
accrued interest was repaid in November 1996.
In June 1996, the Company made a short-term loan to the Chairman and CEO in
the amount of $3,500,000 for certain personal obligations. During August 1996,
this amount was repaid to the Company. In connection with this transaction, the
Company guaranteed $3,600,000 of debt of the Chairman with a third party bank.
In addition to the guarantee, the Company deposited $3,600,000 with this bank as
collateral to the Chairman's debt. This deposit is recorded as a long-term asset
on the balance sheet. The Chairman has provided collateral to the Company's
guarantee in the form of a right to the proceeds of the exercise of stock
options in the amount of 100,000 options with an exercise price of $22.75 and
the rights to a $4,000,000 life insurance policy provided by the Company. 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 July 1995, the Company loaned the Chief Operating Officer $93,000 for
the exercise of stock options which was repaid in March 1996.
In January 1995, the Company advanced Milan Panic $1,406,682, in regards to
tax matter relating to the exercise of stock options. The advance, plus accrued
interest at Bank of America's Reference Rate thereon, was fully paid by March,
1995 with cash of $1,271,013 and shares of the Common Stock having a market
value at the time of $147,183.
On May 29, 1996, at the Company's 1996 Annual Meeting of Stockholders, the
stockholders approved a Long Term Incentive Plan for certain key officers and
managers. As of March 31, 1997, no awards have been earned or distributed
pursuant to this Plan.
12
<PAGE> 16
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 1996.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION GRANT DATE
NAME GRANTED(1) FISCAL YEAR PRICE DATE PRESENT VALUE(2)
- ----------------------------------- --------- ------------- -------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Milan Panic........................ 100,000 19% $22.75 7/22/06 $1,126,000
Adam Jerney........................ 0 0% $ .00 0/00/00 $ 000.
John E. Giordani................... 0 0% $ .00 0/00/00 $ 000.
Bill A. MacDonald.................. 0 0% $ .00 0/00/00 $ 000.
David C. Watt...................... 0 0% $ .00 0/00/00 $ 000.
</TABLE>
- ---------------
(1) The options granted have ten year terms. The options vest 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. The options were granted with an exercise price equal to the fair
market value of the underlying shares on the date of grant.
(2) 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 over the exercise price on the
date the option is exercised, so that 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
arbitrary assumptions as to variables such as interest rates, stock price
volatility and future dividend yield.
(3) A total of 532,000 options were granted to employees including executive
officers during fiscal 1996.
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 1996 and (ii) unexercised stock
options held by the Named Executive Officers at December 31, 1996:
AGGREGATED OPTION EXERCISES
IN 1996 AND MARCH 31, 1997 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY OPTIONS
SHARES OPTIONS AT 03/31/97 AT 03/31/97(2)
ACQUIRED VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- --------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Milan Panic................. 128,600 $ 2,184,900 1,171,195 122,990 $ 3,391,800 $ 703,139
Adam Jerney................. 45,000 505,100 627,872 27,295 4,947,600 159,291
John E. Giordani............ 37,800 441,700 96,232 16,788 315,100 104,541
Bill A. MacDonald........... 16,500 263,100 157,379 17,321 933,200 105,633
David Watt.................. 18,000 312,200 124,928 15,727 832,700 102,845
</TABLE>
- ---------------
(1) Difference between the fair market value of the shares of common stock of
the Company at the date of exercise and the exercise price.
(2) Difference between the fair market value of the shares of common stock of
the Company on December 31, 1996 and the exercise price.
13
<PAGE> 17
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 attended and an additional fee of $1,000 for every committee
meeting attended, and were reimbursed for their out-of-pocket expenses in
attending meetings. During 1996, Mr. Bayh, or the law firm with which he is
affiliated, received legal or consulting fees from ICN in the amount of $23,140.
In addition, Drs. Guillemin, M. Smith and R. Smith and Messrs. Charles and Moses
received $75,000, $50,000, $12,000, $48,000 and $36,000, respectively, in 1996
from ICN for consulting services rendered. In addition, non-employee directors
on each April 18th are granted options to purchase 15,000 Shares.
CERTAIN EMPLOYMENT AGREEMENTS
On March 18, 1993, the Board of Directors of Old ICN adopted Employment
Agreements ("Employment Agreements") which contained "Change in Control"
benefits for six then current key senior executive officers of Old ICN. The
executives include Messrs. Jerney, Giordani, MacDonald and Watt, then officers
of Old ICN, and Messrs. Phillips and Sholl, then officers of SPI. The Employment
Agreements were assumed by ICN in connection with the Merger. Mr. Phillips
retired from the Company in May, 1995 and his contract terminated. In addition,
the Company entered into an Employment Contract in May, 1995 with John Julian,
Senior Vice President and with Dr. Devron Averett dated June 14, 1996,
containing identical provisions to 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 agreement with Messrs. Jerney, Giordani,
MacDonald, Watt and Sholl had an initial term which ended March 30, 1996 and
have been extended through March 30, 1998. The Agreements with Mr. Julian and
Dr. Averett have initial terms extending through May 30, 1996 and June 30, 1997,
respectively. The Employment Agreements automatically extend for one year terms
each year thereafter unless either the executive or ICN elects not to extend it
(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 any 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 a 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" means any
of the following events: (i) the acquisition (other than from ICN) by any
person, subject to certain exceptions, of beneficial ownership, directly or
indirectly, of 20% or more of the combined voting power of ICN's then
outstanding voting securities; (ii) the existing Board of Directors cease for
any reason to constitute at least two-thirds of the Board, unless the election,
or nomination for election by ICN's stockholders, of any new director was
approved by a vote of at least two-thirds of the existing Board of Directors; or
(iii) approval by stockholders of ICN of (a) a merger or consolidation involving
ICN if the stockholders of ICN, immediately before such merger or consolidation,
do not, as a result of such merger or consolidation, own, directly or
indirectly, more than 80% of the combined voting power of the then outstanding
voting securities of the corporation resulting from such merger or consolidation
in substantially the same proportion as their ownership of the combined voting
power of the voting securities of ICN outstanding immediately before such merger
or consolidation, or (b) a complete liquidation or dissolution of ICN or an
agreement for the sale or other disposition of all or substantially all of the
assets of ICN. Removal of ICN's Board of Directors would also constitute a
Change in Control under the Employment Agreements. If the employment of such key
senior executives is terminated under any of the circumstances described above
the executives would be entitled to receive the following approximate amounts
(based upon present compensation): Adam Jerney $1,705,200; John Giordani
$1,263,900; Bill MacDonald $1,069,800; David Watt $1,416,000; Jack Sholl
$865,617; John Julian
14
<PAGE> 18
$1,074,861; and Devron Averett $566,859. In addition, the vesting of certain
options granted to the executives would be accelerated. The value of the
accelerated options would depend upon the market price of the shares at that
time.
PANIC EMPLOYMENT AGREEMENT
Old ICN and Milan Panic entered into an Employment Agreement effective
October 1, 1988, which, as amended and extended, terminates on September 30,
1998 (the "Panic Employment Agreement"). The base amount of salary for Mr. Panic
was determined by the Compensation Committee of the Board of Directors of Old
ICN 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
Committee's desire to retain Mr. Panic's services, given his role as founder of
ICN. Upon consummation of the merger, the Panic Employment Agreement was assumed
by ICN. The Panic Employment Agreement provides for an annual salary, currently
$612,500, with an annual 7% increase payable under certain circumstances. 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. Under the Panic Employment Agreement, Mr.
Panic agreed to waive and eliminate retirement benefits contained in his prior
employment contract with ICN. Instead, Mr. Panic may, at his option, retire upon
termination of the Panic Employment Agreement.
Upon retirement, Mr. Panic has agreed to provide consulting services to ICN
for $120,000 per year, which amount is subject to annual cost-of-living
adjustments from the base year of 1967 until the date of retirement not to
exceed his salary at the date of retirement (currently estimated to be in excess
of $575,000 per year, as adjusted). Mr. Panic's agreement to provide consulting
services to ICN is a lifetime agreement. 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. Mr. Panic is
entitled to participate in the Company's medical and dental plans when serving
as a consultant. The Panic Employment Agreement includes a severance
compensation provision in the event of a Change in Control of ICN. The Panic
Employment Agreement provides that if within two years after a Change in Control
of ICN, Mr. Panic's employment with ICN is terminated, except as a result of
death, disability or illness, or if Mr. Panic leaves the employ of ICN within
such two-year period, then Mr. Panic will receive as severance compensation,
five times his annual salary, as adjusted, 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. A Change in Control of
ICN would occur, for purposes of the Panic Employment Agreement, if (i) a Change
in Control shall occur of a nature which would be required to be reported in
response to Item 6(e) of Schedule 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 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 of 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) $3,062,500.
15
<PAGE> 19
COMPENSATION REPORT
The Compensation and Benefits Committee ("Committee") is composed of
Messrs. Barker, Bayh, Charles and Moses each of whom are an independent
non-employee director.
The following statement made by the members of the Committee shall not be
deemed incorporated by reference into any filing under the Securities Act of
1933 or under the Securities Exchange Act of 1934 and shall not otherwise be
deemed filed under such Acts.
Compensation Philosophy
The Board of Directors adopts an annual budget and financial plan which
incorporates the goals and objectives to be achieved by the Company and the
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
fiscal year. Eligibility for bonus awards was based on the pre-set performance
guidelines and growth in operating income and earnings per share. However,
bonuses may be paid even when these 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. Stock options are granted based on a program developed for the Company
by Towers Perrin, a compensation consulting company. Each individual's base
number of options is derived from a formula which ties to their base salary. The
Committee may then consider the achievement of individual as well as corporate
performance goals in determining the ultimate number of options granted.
The compensation of executives consists of salary, a bonus plan to reward
performance and a long-term incentive stock option program.
Base Salary
Salaries are paid within certain grades which are established by the Human
Resources Department reviewing data of other like companies in the same
industry. The Company reviewed salary surveys prepared by Towers Perrin. These
surveys did not state which companies participated in the surveys. The salary
levels were in the median of compensation for similar positions. Grades are
updated to reflect changes in the marketplace. The salaries of executives are
reviewed on an annual basis by supervisory managers and the Committee.
Bonus Plan
The Company has adopted an Incentive Bonus Plan which is based on target
goals of growth in both operating income and earnings per share. Individual
performance goals are compared against the target goals established.
Recommendations are made by individual supervisors and approved by the
Committee.
Long Term Stock Incentive Plans
Stock options are granted as long range incentives to executives. Options
vest over a ten year period. Options are granted at fair market value. The
amount of options granted is tied to salary and performance and each grant is
evaluated. No grant to executives is automatic. 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. Eligibility for
awards under the LTIP require that the Company's stock performance exceeds that
of the Standard and Poor 500 index.
16
<PAGE> 20
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
based on an employment agreement with ICN (see "Executive Compensation")
comprised of a base salary and a bonus based on the Company's performance.
Special onetime bonuses will be paid, at the Committee's discretion, based on
special contributions made to the Company. Substantial bonuses are approved by
the Board of Directors.
Internal Revenue Code Section 162(m)
Section 162(m) of 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 million 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 federal income tax liability of
ICN.
Compensation Committee Interlocks and Insider Participation
Bayh, Connaughton & Malone, P.C. received fees in 1996 from ICN for legal
services in the amount of $23,140. Mr. Birch E. Bayh, Jr. is a senior partner in
the firm.
Compensation and Benefits Committee
Norman Barker, Jr.
Senator Birch Bayh
Alan F. Charles
Stephen D. Moses
17
<PAGE> 21
PERFORMANCE GRAPH
The following compares ICN's cumulative total stock return on the shares
with the cumulative return on the Standard & Poor's 500 Stock Index and the
5-Stock Custom Composite Index for the five years ended December 31, 1996. The
graph assumes that the value of the investment of the ICN Common Stock in each
index as $100 at December 31, 1991 and that all dividends were reinvested. The
cumulative total return for the Company is based on an initial investment in SPI
(the predecessor for accounting purposes to the Company) on December 31, 1991
(and taking into account the conversion of shares of SPI common stock into
Shares in the Merger on November 11, 1994 on a one for one basis).
CUMULATIVE TOTAL RETURN
BASED ON REINVESTMENT OF $100 BEGINNING DECEMBER 31, 1991
<TABLE>
<CAPTION>
ICN
MEASUREMENT PERIOD PHARMACEUTICALS CUSTOM COMPOSITE
(FISCAL YEAR COVERED) INC. S&P 500 INDEX (5 STOCKS)
--------------------- --------------- ------- ----------------
<S> <C> <C> <C>
DEC-91 100 100 100
DEC-92 37 108 76
DEC-93 53 118 58
DEC-94 68 120 72
DEC-95 81 165 119
DEC-96 84 203 111
</TABLE>
The 5-Stock Custom Composite Index consists of Allergan Inc., Amgen Inc.,
Carter Wallace Inc., Forest Laboratories -- Class A, and Syntex Corp.
Performance for Syntex calculated through September, 1994 after which the
company was acquired.
18
<PAGE> 22
CERTAIN TRANSACTIONS
Under an agreement entered into in 1982 between ICN and Baylor College of
Medicine ("Baylor"), the employer of Dr. Vernon Knight, a former director of
ICN, the Company is required to pay a 2% royalty to Baylor on all sales of
Virazole(R) in aerosolized form. Such royalties include $234,105 for 1996.
In July 1995 and February 1996 the Company loaned the Chief Operating
Officer of the Company $93,000 and $389,000, respectively, for the exercise of
stock options. These amounts were subsequently repaid with interest.
Certain outside directors have provided legal and other consultation
services to ICN (including the Predecessor Companies), which amounted to
approximately $244,140 during 1996.
INDEPENDENT PUBLIC ACCOUNTANTS
Coopers & Lybrand LLP was selected as the Company's independent public
accountants for fiscal 1996. Coopers & Lybrand 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.
STOCKHOLDER PROPOSALS
Any stockholder wishing to submit a proposal to be presented to all
stockholders at the Company's 1997 Annual Meeting must submit his proposal to
the Company so that it is received by the Company at its principal executive
offices no later than January 30, 1998.
ANNUAL REPORT
The Annual Report to Stockholders for the year ended December 31, 1996
(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.
MISCELLANEOUS
The Board of Directors knows of no other matters which are likely to come
before the 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,
/s/ MILAN PANIC
MILAN PANIC
Chairman of the Board
Costa Mesa, California
April 21, 1997
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.
19
<PAGE> 23
ICN PHARMACEUTICALS, INC.
3300 HYLAND AVENUE, COSTA MESA, CALIFORNIA 92626
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS ON MAY 28, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
ICN PHARMACEUTICALS, INC.
The undersigned hereby appoints Milan Panic and David C. Watt 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 11, 1997 at the annual meeting of stockholders to be held at 10:00
a.m. local time on May 28, 1997 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" PROPOSAL 1.
(Continued and to be signed on the reverse side.)
<PAGE> 24
[X] Please mark your vote as in this example.
The Board of Directors of the company recommends a vote "FOR" proposal 1.
FOR ALL NOMINEES LISTED BELOW WITHHOLD AUTHORITY
[ ] [ ]
1. Election of nominees listed below to the Board of Directors of the company.
Nominees: Roger Guillemin, M.D., Ph.D., Jean-Francois Kurz, Charles T.
Manatt, Milan Panic, Michael Smith, Ph.D.
(Instruction: To withhold authority to vote for any individual nominee(s), write
the name(s) of such nominee(s) in the following space)
_______________________________________________________________________________
The undersigned acknowledges receipt of the
copy of the Notice of Annual Meeting and
Proxy Statement (with all enclosures and
attachments) relating to the meeting.
THE BOARD OF DIRECTORS OF THE COMPANY
RECOMMENDS THAT YOU SIGN, DATE AND MAIL THE
PROXY CARD TODAY.
_______________________________ _____________
Signature(s) Date
_______________________________ _____________
Signature(s) Date
