<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
ICN Pharmaceuticals, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
ICN Pharmaceuticals, Inc.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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:
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / 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:
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<PAGE> 2
ICN PHARMACEUTICALS, INC.
October 17, 1995
To the Stockholders of
ICN Pharmaceuticals, Inc.:
Dear Stockholder:
You are cordially invited to attend the 1995 Annual Meeting of Stockholders
of ICN Pharmaceuticals, Inc., which will be held on November 10, 1995, at 10:00
a.m. local time 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,
LOGO
MILAN PANIC
Chairman of the Board
<PAGE> 3
ICN PHARMACEUTICALS, INC.
3300 HYLAND AVENUE
COSTA MESA, CALIFORNIA 92626
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 10, 1995
------------------------
To the Stockholders of
ICN Pharmaceuticals, Inc.:
NOTICE IS HEREBY GIVEN that the 1995 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 November 10, 1995, 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 1998 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 postponements or adjournments thereof.
Only stockholders of record at the close of business on October 17, 1995,
will be entitled to notice of and to vote at the meeting and any postponements
or adjournments thereof.
By Order of the Board of Directors,
LOGO
MILAN PANIC
Chairman of the Board
LOGO
DAVID C. WATT
Secretary
Dated: October 17, 1995
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
NOVEMBER 10, 1995
------------------------
This Proxy Statement is being mailed on or about October 17, 1995, 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 November 10, 1995, or any postponements or
adjournments 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, 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, officers and regular 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 October 12, 1995, there were 30,762,895
outstanding shares of the Company's common stock, par value $.01 per share (the
"Shares"), held of record by approximately 4,491 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 stockholders of ICN Pharmaceuticals, Inc. ("Old
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 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 was the acquiring company and as a result, the
Company will report 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 1995 Annual Meeting, each to serve until the 1998 Annual Meeting
of Stockholders and until his successor is elected and qualified. Unless marked
to the contrary, proxies received will be voted for the election of the
following nominees: Dale M. Hanson, Weldon B. Jolley, Ph.D., Thomas Lenagh,
Roberts A. Smith, Ph.D. and Richard W. Starr, 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 matter
since directors are elected by a plurality of the votes cast at the Annual
Meeting.
INFORMATION CONCERNING NOMINEES AND DIRECTORS
The current Board of Directors consists of fifteen members: Messrs. Hanson,
Jolley, Lenagh, Smith and Starr are standing for re-election; Messrs. Barker,
Bayh, Charles, Jerney and Moses are serving until the 1996 Annual Meeting of
Stockholders; and Messrs. Guillemin, Kurz, Manatt, Panic and Smith are serving
until the 1997 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>
DALE M. HANSON (c)................................ 52 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.
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
YEAR
COMMENCED
SERVING AS
DIRECTOR OF OTHER CORPORATE
NAME AND PRINCIPAL OCCUPATION AGE THE COMPANY DIRECTORSHIPS
- -------------------------------------------------- --- ----------- -------------------------
<S> <C> <C> <C>
WELDON B. JOLLEY, PH.D. (d)....................... 69 1960
Dr. Jolley is President of Golden Opportunities,
a private company providing products for senior
citizens 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 1990. 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 physiologist at the
Veterans Hospital in Loma Linda, California.
THOMAS H. LENAGH (b)(c)(f)........................ 76 1979 Adams Express Company;
Mr. Lenagh is an independent financial advisor. U.S. Life Corporation;
He was Chairman of the Board of Greiner SCI Systems, Inc.;
Engineering, Inc. from 1982 to 1985. Mr. Lenagh Gintel Funds; Irvine
served as financial Vice President to the Aspen Sensors, Inc.; CML, Inc.;
Institute from 1978 to 1980, and since then as Clemente Global Funds;
an independent financial consultant. From 1964 Franklin Quest; V Band
to 1978, he was Treasurer of the Ford Corp.; Styles On Video
Foundation.
ROBERTS A. SMITH, PH.D. (d)(e).................... 66 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).............................. 75 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>
DIRECTORS WHOSE TERM EXPIRE IN 1996
<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)......................... 72 1988 Pacific American Income
Mr. Barker is the retired Chairman of the Board Shares, Inc.; Southern
of First Interstate Bank of California and California Edison
Former Vice Chairman of the Board of First Company; TCW Convertible
Interstate Bankcorp. Mr. Barker joined First Securities Fund, Inc.
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.
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
YEAR
COMMENCED
SERVING AS
DIRECTOR OF OTHER CORPORATE
NAME AND PRINCIPAL OCCUPATION AGE THE COMPANY DIRECTORSHIPS
- -------------------------------------------------- --- ----------- -------------------------
<S> <C> <C> <C>
BIRCH E. BAYH, JR., ESQ. (a)...................... 67 1992 Acordia, Inc. and Simon
Mr. Bayh is a partner in the law firm of Bayh, Property Group
Connaughton, Fensterheim & Malone. Mr. Bayh was
previously a partner of the law firm of Bayh,
Tabbert & Capehart from April 1981 through June
1985. From 1963 to 1981, Mr. Bayh served as a
United States Senator from the State of Indiana.
ALAN F. CHARLES (a)(f)............................ 57 1986
Mr. Charles is currently a business consultant.
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.
ADAM JERNEY....................................... 53 1992
Adam Jerney is Chief Operating Officer 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 ICN.
Prior to joining ICN, he spend four years with
F. Hoffman-LaRoche & Company.
STEPHEN D. MOSES (a)(e)(f)........................ 60 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 Communications, Inc.
</TABLE>
4
<PAGE> 8
DIRECTORS WHOSE TERM EXPIRE 1997
<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).................. 71 1989 Prizm Pharmaceuticals,
Dr. Guillemin has been distinguished Scientist Inc.
at the Whittier Institute in La Jolla,
California since March 1989 and was Resident
Fellow and Chairman of the Laboratories for
Neuroendocrinology at the Salk Institute in La
Jolla, California, and Adjunct Professor of
Medicine at Medical School of the University of
California at San Diego. 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. Dr. Guillemin has also
served as President of the American Endocrine
Society.
JEAN-FRANCOIS KURZ (c)............................ 60 1989 Board of Banque Pasche
Mr. Kurz is currently a financial consultant. S.A., Geneva
Mr. Kurz 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 Agreement 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)(g).......................... 58 1992 Federal Express; GTE;
Mr. Manatt is a partner in the law firm of Castle & Cooke Homes
Manatt, Phelps & Phillips, of which he was a
founder in 1964. Mr. Manatt served as Chairman
of the Democratic Party from 1981 to 1985.
MILAN PANIC (e)................................... 65 1960
Mr. Panic, the founder of ICN, has been Chairman
of the Board, Chief Executive Officer and
President of ICN since its inception in 1960;
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), and he may be deemed to be a
"control person" of the Company.
</TABLE>
5
<PAGE> 9
<TABLE>
<CAPTION>
YEAR
COMMENCED
SERVING AS
DIRECTOR OF OTHER CORPORATE
NAME AND PRINCIPAL OCCUPATION AGE THE COMPANY DIRECTORSHIPS
- -------------------------------------------------- --- ----------- -------------------------
<S> <C> <C> <C>
MICHAEL SMITH, PH.D. (d).......................... 62 1994
Dr. Smith is Director of the Biomedical Research
Center, a privately funded research institute at
the University of British Columbia. In 1993, Dr.
Smith received the Nobel Prize in Chemistry. He
has been a career investigator of the Medical
Research Council of Canada since 1979 and is a
member of the American Endocrine Society.
</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
None of the directors are related by blood or marriage to one another or to
an executive officer of the Company.
In May 1991, Old ICN completed a civil settlement with the U.S. Justice
Department regarding a grand jury investigation initiated in September 1988. The
grand jury investigation, in which Old ICN and its subsidiaries were targets,
generally related to compliance by Old ICN and its subsidiaries with applicable
Food and Drug Administration ("FDA") statutes and regulations concerning the
marketing and sale of Virazole(R). In settling the matter, Old ICN entered into
a civil consent decree whereby it neither admitted nor denied any violations of
FDA statutes and regulations. In addition, Old ICN agreed to abide by all FDA
laws and regulations in the future and to pay $400,000 and to reimburse the FDA
$200,000 for administrative costs. 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 the form of a Consent Decree with the SEC, 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 and Corporate Governance Committee but does not have a standing
nominating committee.
The members of the Executive Committee are Messrs. Panic and Moses, and Dr.
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.
Subsequent to the Merger, the Executive Committee did not meet during the year
ended December 31, 1994.
The current members of the Audit Committee, which held one meeting after
the consummation of the Merger and prior to December 31, 1994, are Messrs. Starr
and Lenagh. Its functions include recommending to the Board of Directors the
selection of the Company's independent public accountants and reviewing with
6
<PAGE> 10
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 two meetings after
the consummation of the Merger and prior to December 31, 1994.
The Corporate Governance Committee was formed in July of 1995. The first
organizational meeting of the Committee is scheduled for October, 1995. Mr.
Manatt is serving as Chairman of the Committee. The additional members will be
elected at the Organizational Meeting of the Board immediately following the
Annual Meeting.
The Finance Committee oversees investment and commercial banking issues and
investment guidelines. The current members of this Committee are Messrs. Barker,
Hanson, Kurz, Manatt and Lenagh. This Committee did not meet after the
consummation of the Merger and prior to December 31, 1994.
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, M. Smith, R. Smith, Jolley and Knight. This Committee did not
meet after the consummation of the Merger and prior to December 31, 1994.
A Special Committee (the "Committee") was formed in February, 1995 to
review certain issues of concern to the stockholders of the Company, including
the review of trading by executives of the Company and issues surrounding the
timely disclosure of information received from the FDA regarding the Company's
New Drug Application for the use of Virazole in the treatment of chronic
hepatitis C. The Committee completed its investigation in April, 1995 and upon
completion of its assignment has been dissolved.
After the consummation of the Merger, and prior to December 31, 1994, the
Board of Directors met one time and all of the Board attended except Messrs.
Bayh, Guillemin, Lenagh, Kurz, Manatt, Miscoll, M. Smith and Starr.
Dr. Vernon Knight and Mr. James P. Miscoll resigned from the Board of
Directors during 1995. Mr. Robert H. Finch died on October 10, 1995.
OWNERSHIP OF THE COMPANY'S SECURITIES
PRINCIPAL STOCKHOLDER
As of October 13, 1995, the following stockholder was known to management
to be the beneficial owner of more than 5% of the outstanding shares:
<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) 2,866,457 10.6%
Heartland Group, Inc.
790 North Milwaukee Street
Milwaukee, WI 53202
</TABLE>
- ------------------
(1) Total outstanding Shares for purposes of this table include 27,042,047
shares outstanding on July 15, 1995.
(2) As reported on Form 13G filed with the Securities and Exchange Commission
(the "Commission"), 2,866,457 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 Heartland Advisors (which includes
2,040,000 shares which may also be deemed beneficially owned by Heartland
Group Inc.)
7
<PAGE> 11
OWNERSHIP BY MANAGEMENT
The following table sets forth, as of October 13, 1995, certain information
regarding the beneficial ownership of Shares, including the percent of shares
owned beneficially by each Executive Officer and all directors and executive
officers of ICN as a group:
<TABLE>
<CAPTION>
NUMBER OF SHARES
AND NATURE OF
BENEFICIAL OWNERSHIP PERCENTAGE
IDENTITY OF OWNER OR GROUP OF ICN SHARES(1) OF CLASS
------------------------------------------------------ -------------------- ----------
<S> <C> <C>
Norman Barker, Jr..................................... 33,607(3) (2)
Birch E. Bayh, Jr..................................... 19,474(4) (2)
Alan F. Charles....................................... 9,705(5) (2)
Roger Guillemin, M.D., Ph.D........................... 44,475(6) (2)
Adam Jerney........................................... 490,300(7) 1.59%
Weldon B. Jolley, Ph.D................................ 142,343(8) (2)
Dale M. Hanson........................................ 0
Jean-Francois Kurz.................................... 2,833(9) (2)
Thomas H. Lenagh...................................... 7,099(10) (2)
Charles T. Manatt..................................... 15,544(11) (2)
Stephen D. Moses...................................... 14,532(12) (2)
Milan Panic........................................... 1,245,734(13) 4.04%
Michael Smith, Ph.D................................... 1,363(14) (2)
Roberts A. Smith, Ph.D................................ 141,797(15) (2)
Richard W. Starr...................................... 25,301(16) (2)
John E. Giordani...................................... 77,567(17) (2)
Bill A. MacDonald..................................... 92,426(18) (2)
David C. Watt......................................... 84,677(19) (2)
Jack Sholl............................................ 53,412(20) (2)
John Julian........................................... 19,978(21) (2)
Directors and executive officers of the
Company as a group (20 persons)..................... 2,522,167(22) 8.19%
</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 30,886 Shares which Mr. Barker has the right to acquire upon the
exercise of currently exercisable stock options.
(4) Includes 19,474 Shares which Mr. Bayh has the right to acquire upon the
exercise of currently exercisable stock options.
(5) Includes 8,885 Shares which Mr. Charles has the right to acquire upon the
exercise of currently exercisable stock options.
(6) Includes 43,930 Shares which Dr. Guillemin has the right to acquire upon
the exercise of currently exercisable stock options.
(7) Includes 424,235 Shares which Mr. Jerney has the right to acquire upon the
exercise of currently exercisable stock options.
(8) Includes 110,431 Shares which Dr. Jolley has the right to acquire upon the
exercise of currently exercisable stock options.
8
<PAGE> 12
(9) Includes 2,833 Shares which Mr. Kurz has the right to acquire upon the
exercise of currently exercisable stock options.
(10) Includes 2,833 Shares which Mr. Lenagh has the right to acquire upon the
exercise of currently exercisable stock options.
(11) Includes 14,532 Shares which Mr. Manatt has the right to acquire upon the
exercise of currently exercisable stock options.
(12) Includes 14,532 Shares which Mr. Moses has the right to acquire upon the
exercise of currently exercisable stock options.
(13) Includes 992,946 Shares which Mr. Panic has the right to acquire upon the
exercise of currently exercisable stock options.
(14) Includes 1,363 Shares which Dr. Michael Smith has the right to acquire upon
the exercise of currently exercisable stock options.
(15) Includes 105,230 Shares which Dr. Roberts A. Smith has the right to acquire
upon the exercise of currently exercisable stock options.
(16) Includes 17,730 Shares which Mr. Starr has the right to acquire upon the
exercise of currently exercisable stock options.
(17) Includes 77,566 Shares which Mr. Giordani has the right to acquire upon the
exercise of currently exercisable stock options.
(18) Includes 90,074 Shares which Mr. MacDonald has the right to acquire upon
the exercise of currently exercisable stock options.
(19) Includes 82,706 Shares which Mr. Watt has the right to acquire upon the
exercise of currently exercisable stock options.
(20) Includes 50,326 Shares which Mr. Sholl has the right to acquire upon the
exercise of currently exercisable stock options.
(21) Includes 19,978 Shares which Mr. Julian has the right to acquire upon the
exercise of currently exercisable stock options.
(22) Includes 2,110,490 Shares which certain directors and officers have 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 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 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 1994 all filing requirements
applicable to its officers, directors and ten percent beneficial owners were
timely satisfied.
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 (based upon salary and bonus earned during
1994), for services rendered to the Predecessor Companies and ICN in all
capacities during the twelve months ended December 31, 1994, 1993 and 1992.
9
<PAGE> 13
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AND AWARDS
OTHER -------------
NAME AND ANNUAL SECURITIES ALL OTHER
PRINCIPAL POSITION ANNUAL COMPENSATION UNDERLYING COMPENSATION
WITH THE COMPANY YEAR SALARY($) BONUS ($)(1) OPTIONS (2) ($)(3)
- --------------------------- ----- -------- --------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Milan Panic 1994 535,000 195,626 702,600(4) 70,603(5)
Chairman, President 1993 535,000 -- 60,000(4) 49,245(5)
and Chief Executive
Officer 1992 535,000 5,675,000 900,000(4) 49,041(5)
Adam Jerney 1994 380,000 146,719 212,415(6) 60,741(7)
Executive Vice 1993 380,000 38,100 150,000(6) 18,730(7)
President -- Chief 1992 321,821 370,000(8) 450,000(6) 20,268(7)
Operating Officer
Bill A. MacDonald 1994 200,000 96,671 105,520(9) 16,860
Executive Vice 1993 200,000 -- 125,000(9) 13,496
President Corporate 1992 168,322 90,000(8) 30,000(9) 15,125
Development
John E. Giordani 1994 225,195 96,671 55,000(10) 32,045
Executive Vice 1993 225,195 -- 65,000(10) 38,886
President Chief 1992 210,472 90,000(8) 30,000(10) 25,778
Financial Officer and
Corporate Controller
Nils Johannesson 1994 210,000 101,671 85,520(11) 1,517
Former Executive Vice 1993 193,333 6,667 15,000(11) --
President 1992 120,697 74,480(8) 15,000(11) --
</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 Old ICN
("Old ICN common stock"), common stock of SPI ("SPI common stock")(adjusted
for stock dividend after the grant date and prior to the Merger), common
stock of Viratek ("Viratek common stock") and common stock of Biomedicals
("Biomedicals common stock").
(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 Old ICN
common stock, SPI common stock, Viratek common stock and Biomedicals common
stock.
<TABLE>
<CAPTION>
OLD ICN SPI BIOMEDICALS VIRATEK
------- ------- ----------- -------
<S> <C> <C> <C> <C>
1994................................ 300,000 202,600 200,000 --
1993................................ -- -- -- 60,000
1992................................ -- 400,000 200,000 300,000
</TABLE>
As a result of the Merger, these options represent the right to purchase
465,482 Shares.
(5) In 1994, the $70,603 of "All Other Compensation" consists of the following:
legal $23,835, accounting $34,045, executive medical $6,107 and life
insurance $6,616. All other compensation also includes $70,603, $39,262 and
$38,242 for miscellaneous fringe benefits in 1994, 1993 and 1992,
respectively. For the three years ended December 31, 1994, Mr. Panic
realized $7,498,500, $4,771,220 and $1,461,306 on
10
<PAGE> 14
the exercise of stock options for Old ICN, SPI, and Viratek common stock,
respectively. These stock option gains are not reflected in the "All Other
Compensation" column.
(6) Mr. Jerney was granted options to purchase the following shares of Old ICN
common stock, SPI common stock (adjusted for stock dividend after the grant
date and prior to the Merger), Viratek common stock and Biomedicals common
stock:
<TABLE>
<CAPTION>
ICN SPI BIOMEDICALS VIRATEK
------- ------- ----------- -------
<S> <C> <C> <C> <C>
1994................................ 50,000 50,650 50,000 61,765
1993................................ 50,000 50,000 50,000 --
1992................................ 100,000 150,000 100,000 100,000
</TABLE>
As a result of the Merger, these options represent the right to purchase
115,722 Shares.
(7) In 1994, the $60,741 is further broken out as follows: accounting-tax
$27,871, deferred compensation interest $16,928, executive medical $8,523;
401K employee contribution $4,620, tennis club $415, and life insurance
$2,384. For the three years ended December 31, 1994, Mr. Jerney realized
$372,795 and $894,569 on the exercise of stock option for Old ICN and SPI
common stock, respectively. These stock option gains are not reflected in
the "All Other Compensation" column.
(8) Includes 1991 performance bonus paid in 1992 on the completion of the
acquisition by SPI of its interest in ICN Galenika d. d. (the "Galenika
transaction") and the early payment of the 1992 performance bonus in
anticipation of the increase in federal income tax rates (which bonus would
have ordinarily been paid in 1993).
(9) Mr. MacDonald was granted options to purchase the following shares of Old
ICN common stock, SPI common stock (adjusted for stock dividend after the
grant date and prior to the Merger), Viratek common stock and Biomedicals
common stock:
<TABLE>
<CAPTION>
OLD ICN SPI BIOMEDICALS VIRATEK
------- ------- ----------- -------
<S> <C> <C> <C> <C>
1994................................ 25,000 40,520 10,000 30,000
1993................................ 25,000 40,000 10,000 50,000
1992................................ -- 30,000 -- --
</TABLE>
As a result of the Merger, these options represent the right to purchase
65,552 Shares.
(10) Mr. Giordani was granted options to purchase the following shares of Old
ICN common stock, SPI common stock (adjusted for stock dividend after the
grant date and prior to the Merger), Viratek common stock and Biomedicals
common stock:
<TABLE>
<CAPTION>
OLD ICN SPI BIOMEDICALS VIRATEK
------- ------- ----------- -------
<S> <C> <C> <C> <C>
1994................................ 25,000 -- 10,000 20,000
1993................................ 25,000 -- 10,000 30,000
1992................................ -- 30,000 -- --
</TABLE>
As a result of the Merger, these options represent the right to purchase
22,179 Shares.
(11) Dr. Johannesson has granted options to purchase the following shares of
Old ICN common stock, SPI common stock (adjusted for stock dividend after
the grant date and prior to the Merger), Viratek common stock and
Biomedicals common stock:
<TABLE>
<CAPTION>
OLD ICN SPI BIOMEDICALS VIRATEK
------- ------- ----------- -------
<S> <C> <C> <C> <C>
1994................................ 25,000 40,520 20,000 --
1993................................ -- -- 15,000 --
1992................................ -- 15,000 -- --
</TABLE>
As a result of the Merger, these options represent the right to purchase
64,615 Shares.
- ---------------
Dr. Johannesson resigned from the Company effective December 31, 1995.
11
<PAGE> 15
In January 1995, the Company advanced Milan Panic $1,406,682, in regards to
tax matters 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 having a market
value at the time of $147,183.
In July 1992, Milan Panic, then Chairman of the Board, President and Chief
Executive Officer of Old ICN and also occupying similar positions with SPI,
Viratek and Biomedicals, with the approval of Old ICN's Board of Directors,
became Prime Minister of Yugoslavia and was granted a paid leave of absence
from all duties to Old ICN while retaining his title as Chairman of the
Board. Mr. Panic and Old ICN entered into a Leave of Absence and
Reemployment Agreement which contained mutual obligations, requiring, among
other things, that Old ICN reemploy Mr. Panic and that Mr. Panic return to
his previous positions with Old ICN. Mr. Panic was succeeded as Prime
Minister on March 4, 1993, and pursuant to the Leave of Absence and
Reemployment Agreement, returned to his duties at Old ICN.
In addition to the salaries of Mr. Panic and certain Old ICN employees
assisting him during his leave of absence, Old ICN and Mr. Panic incurred
certain other expenses in connection with Mr. Panic's transition to and
return from his leave of absence. Old ICN retained a then recently retired
member of the California Superior Court to review all such expenses to
determine whether such expenses represented a valid expense of the Company.
The Judge prepared a report for the Audit Committees of Old ICN and SPI
that indicated that these costs represented costs of Old ICN and SPI. Such
report was reviewed and approved by these Audit Committees.
Mr. Panic reimbursed Old ICN certain withholding taxes due as of December
31, 1992, previously advanced by Old ICN, in connection with the exercise
of stock options, in the amount of $1,351,000. Mr. Panic paid these amounts
in 1993, in the form of cash in the amount of $678,000 and Viratek common
stock in the amount of $776,000 valued at fair market value.
On April 1, 1992, the Board of Directors granted Mr. Panic a bonus of
200,000 shares of SPI common stock for his extraordinary efforts in
completing the Galenika transaction. The value of these shares at the date
of grant was $5,375,000. Mr. Panic sold the shares during 1993 for a
realized value of $4,005,223. Additionally, in 1993, Mr. Panic realized
$1,881,250 and $1,853,000 on other sales of shares of Old ICN common stock
and SPI common stock, respectively.
12
<PAGE> 16
OPTION GRANTS
Pre-Merger Option Grant Information
The following table sets forth information with respect to options to
purchase shares of Old ICN common stock, SPI common stock, Viratek common stock
and Biomedicals common stock granted in 1994 (adjusted for stock dividends
occurring following grant and prior to the Merger) to the executive officers
named in the Summary Compensation Table. None of the named executive officers
were granted options to purchase shares following the Consumation of Merger
through December 31, 1994.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBERS OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO GRANT DATE
OPTIONS EMPLOYEES EXERCISE EXPIRATION PRESENT
NAME COMPANY GRANTED IN FISCAL YEAR PRICE DATE(1) VALUE(2)
- ---------------------------- ----------- ----------- -------------- ------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Milan Panic................. Old ICN 300,000 43.1% $ 9.375 4/28/04 $2,181,000
SPI 202,600 24.6% 15.424 4/28/04 2,139,456
Viratek 200,000 38.5% 9.750 4/27/04 1,676,000
Adam Jerney................. Old ICN 50,000 7.2% 9.375 4/28/04 363,300
SPI 50,650 6.1% 15.424 4/28/04 534,864
Viratek 50,000 9.6% 9.750 4/27/04 419,000
Biomedicals 61,765 26.1% 4.250 1/11/04 183,442
Bill A. MacDonald........... Old ICN 25,000 3.6% 9.375 4/28/04 181,750
SPI 40,520 4.9% 15.424 4/28/04 427,891
Viratek 10,000 1.9% 9.750 4/27/04 83,800
Biomedicals 30,000 12.7% 4.250 1/06/04 89,100
John E. Giordani............ Old ICN 25,000 3.6% 9.375 4/28/04 181,750
Viratek 10,000 1.9% 9.750 4/27/04 93,800
Biomedicals 20,000 8.4% 4.250 1/06/04 59,400
Nils Johannesson............ Old ICN 25,000 3.6% 9.375 4/28/04 109,050
SPI 40,520 4.9% 15.424 4/28/04 427,880
Viratek 20,000 3.8% 9.750 4/27/04 167,600
</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.
13
<PAGE> 17
Post Merger Converted Option Grant Information
The following table sets forth information, expressed in Shares, with
respect to options to purchase shares of Old ICN Common Stock, SPI Common Stock,
Viratek Common Stock and Biomedicals Common Stock granted in 1994 (which grants
are described above in the Option Grants in Last Fiscal Year table under the
heading Pre-Merger Options Granted Information), adjusted for a stock dividend
occurring after grant through December 31, 1994:
OPTION GRANTS IN LAST FISCAL YEAR
(EXPRESSED IN SHARES)
<TABLE>
<CAPTION>
PERCENT OF
NUMBERS OF TOTAL OPTIONS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES GRANT DATE
OPTIONS IN FISCAL EXERCISE EXPIRATION PRESENT
NAME COMPANY GRANTED YEAR PRICE DATE(1) VALUE(2)
- -------------------------- ----------- ---------- ------------- -------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Milan Panic............... Old ICN 156,794 43.1% $17.9374 4/28/04 $2,181,000
SPI 206,813 24.6% 15.1102 4/28/04 2,139,456
Viratek 101,875 38.5% 19.1410 4/27/04 1,676,000
======== =========
Total ICN................. 465,482 5,996,456
======== =========
Adam Jerney............... Old ICN 26,131 7.2% 17.9394 4/28/04 363,300
SPI 51,703 6.1% 15.1102 4/28/04 534,864
Viratek 25,468 9.6% 19.1410 4/27/04 419,000
Biomedicals 12,420 26.1% 21.1340 1/11/04 183,442
======== =========
Total ICN................. 115,722 1,500,806
======== =========
Bill A. MacDonald......... Old ICN 13,065 3.6% 17.9374 4/28/04 181,750
SPI 41,362 4.9% 15.1102 4/28/04 427,891
Viratek 5,093 1.9% 19.1410 4/27/04 83,800
Biomedicals 6,032 12.7% 21.1340 1/06/04 89,100
======== =========
Total ICN................. 65,552 782,541
======== =========
John E. Giordani.......... Old ICN 13,065 3.6% 17.9374 4/28/04 181,750
Viratek 5,093 1.9% 19.1410 4/27/04 93,800
Biomedicals 4,021 8.4% 21.1340 1/06/04 59,400
======== =========
Total ICN................. 22,179 334,950
======== =========
Nils Johannesson.......... Old ICN 13,065 3.6% 17.9374 4/28/04 109,050
SPI 41,361 4.9% 15.1102 4/28/04 427,880
Viratek 10,187 3.8% 19.1410 4/27/04 167,600
======== =========
Total ICN................. 64,613 704,530
======== =========
</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.
14
<PAGE> 18
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information regarding (i) stock option
exercises by the executive officers named in the Summary Compensation Table with
respect to options to purchase shares of SPI common stock (no exercises were
made with respect to options to purchase Shares of Old ICN Common Stock, Viratek
common stock or Biomedicals common stock during 1994, and (ii) unexercised stock
options to purchase Shares held by these officers at December 31, 1994:
AGGREGATED OPTION EXERCISES
IN 1994 AND DECEMBER 31, 1994 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES SECURITIES UNDERLYING IN-THE-MONEY OPTIONS AT
ACQUIRED OPTIONS AT 12/31/94 AT 12/31/94(2)
ON VALUE --------------------------- ---------------------------
NAME COMPANY EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------- ------- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Milan Panic ICN -- $ -- 836,184 530,435 $2,715,958 $ 451,298
Adam Jerney ICN -- -- 337,877 344,829 1,526,959 1,131,117
Bill A. MacDonald ICN -- -- 72,124 344,829 1,526,959 324,609
John E. Giordani ICN -- -- 60,287 48,236 150,334 51,687
SPI 7,155 79,329(1) -- -- -- --
Nils Johannesson ICN -- -- 28,678 60,988 7,540 7,539
</TABLE>
- ---------------
(1) Difference between the fair market value of the SPI common stock at the date
of exercise and the exercise price
(2) Difference between the fair market value of the Shares as of the close of
trading on December 31, 1994 and the exercise price.
COMPENSATION OF DIRECTORS OF ICN
Members of the Board of Directors of ICN, other than employees, are paid an
annual fee of $22,000, payable quarterly, plus a fee of $500 for every Board
meeting attended and an additional fee of $500 for every committee meeting
attended, and are reimbursed for their out-of-pocket expenses in attending
meetings. During 1994, Mr. Bayh, or the firm with which he is affiliated,
received legal or consulting fees from ICN (including the Predecessor Companies)
in the amount of $80,688. Dr. Guillemin received $94,000 from SPI for consulting
services rendered. Dr. M. Smith received $28,000 in 1994 from ICN (including the
Predecessor Companies) for consulting services rendered. In addition,
non-employee directors on the first business day following each annual meeting
of stockholders are granted options to purchase 10,000 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 New 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, 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 has an initial term ending March
30, 1996 and is automatically extended 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
15
<PAGE> 19
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 (including a
Change in Control of ICN 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 amounts (based upon
present compensation): Adam Jerney $2,092,623; John Giordani $1,238,277; Bill
MacDonald $1,179,486; David Watt $935,955 and John Julian $900,000. 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.
In connection with the Merger, each of the senior executives executed an
agreement waiving the effect under the Employment Agreements of any Change in
Control which may have been deemed to have arisen as a result of the Merger.
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
Old ICN. Upon consummation of the Merger, the Panic Employment Agreement was
assumed by ICN. The Panic Employment Agreement provides for an annual salary,
currently $535,000, 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 $535,000 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. The Panic Employment
Agreement includes a severance compensation provision in the event of a Change
in Control of ICN. The Panic Employment Agreement
16
<PAGE> 20
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) the Shares 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) $2,675,000.
In connection with the Merger, Mr. Panic executed an agreement waiving the
effect under the Panic Employment Agreement of any Change in Control which may
have been deemed to have arisen as a result of the Merger.
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 his or her unit in relation to the plan. Specific goals and objectives for
each executive are reviewed by the executive and his or her 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 is 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.
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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.
The Committee is in the process of implementing a new Long-Term Incentive
Plan which will provide that incentive compensation for the Chief Executive
Officer and other key senior officers of the Company will be dependent upon the
increase in shareholder volume in excess of the S&P 500 Index. This program,
which is expected to be implemented prior to December 31, 1995, will replace
current stock option and long-term incentive plans.
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 one-time 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.
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Compensation Committee Interlocks and Insider Participation
Bayh Connaughton, Fensterstein & Malone received legal fees in 1994 from
ICN (including the Predecessor Companies) for legal services in the amount of
$80,688. Mr. Birch E. Bayh, Jr. is a partner in the firm.
Compensation and Benefits Committee
Norman Barker, Jr.
Senator Birch Bayh
Alan F. Charles
Stephen D. Moses
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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, 1994. The
graph assumes that the value of the investment of Shares in each index as $100
at December 31, 1989 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, 1989 (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, 1989
<TABLE>
<CAPTION>
CUSTOM
ICN COMPOSITE
MEASUREMENT PERIOD PHARMACEUTI- INDEX (5
(FISCAL YEAR COVERED) CALS INC. S&P 500 STOCKS)
<S> <C> <C> <C>
DEC-89 100 100 100
DEC-90 118 97 129
DEC-91 524 126 272
DEC-92 193 136 208
DEC-93 280 150 158
DEC-94 355 152 196
</TABLE>
The 5-Stock Custom Composite Index includes Allergan Inc., Carter Wallace Inc.,
Amgen Inc., Forest Labs Inc. -- Class A , and Syntex Corp.
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CERTAIN TRANSACTIONS
Under an agreement entered into in 1982 between Old 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 $741,000 for 1994 and
$346,588 for the first six months of 1995.
Certain outside directors have provided legal and other consultation
services to ICN (including the Predecessor Companies), which amounted to
approximately $314,688 during 1994 and $78,000 for the first six months of 1995.
INDEPENDENT PUBLIC ACCOUNTANTS
Coopers & Lybrand was selected as the Company's independent public
accountants for fiscal 1995. A representative of Coopers & Lybrand 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 for inclusion in the proxy
statement for the Company's 1996 Annual Meeting must submit the proposal to the
Company so that it is received by the Company at its principal executive offices
no later than January 30, 1996.
ANNUAL REPORT
The Annual Report to Stockholders for the year ended December 31, 1994
(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,
LOGO
MILAN PANIC
Chairman of the Board
Costa Mesa, California
October 17, 1995
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.
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ICN PHARMACEUTICALS, INC.
3300 Hyland Avenue, Costa Mesa, California 92626
Proxy for Annual Meeting of Stockholders on November 10, 1995
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
October 17, 1995 at the annual meeting of stockholders to be held at 10:00 a.m.
local time on November 10, 1995 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 APPROVAL OF THE NOMINEES TO
THE BOARD OF DIRECTORS LISTED BELOW.
(Continued and to be signed on the reverse side.)
| SEE REVERSE |
| SIDE |
1. Election of nominees listed below to the Board of Directors of the
company.
FOR ALL
NOMINEES
LISTED WITHHOLD
BELOW AUTHORITY to vote for nominees below
[ ] [ ] Nominees: Dale M. Hanson, Thomas Lenagh,
Weldon B. Jolley, Roberts A. Smith,
Richard W. Starr.
(Instruction: To withhold authority to vote for any individual nominee(s),
write the name(s) of such nominee(s) in the following space):
The Board of Directors of the company recommends that you vote "FOR" the
nominees of the board.
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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
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Signature(s) Date
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