ICN assumes investor lawsuit

Paul Clinton

ICN Pharmaceuticals Inc. has embraced an investors-led lawsuit

against its former directors, including founder Milan Panic, to

recoup $47.8 million in bonuses paid out last year.

The company, in a nearly unheard of move, took over the suit,

which was filed in the fall of 2002, Chief Executive Robert O’Leary

said at the company’s annual shareholder meeting on Thursday.

O’Leary said the bonuses, which were given to past and present

directors, were paid out in compensation for spinning off 20% of

Ribapharm, a subsidiary that owns the rights to the company’s popular

hepatitis drug.

Panic announced his retirement from ICN in June. A handful of

other top executives have also left the company. O’Leary took over

Panic’s post as chairman and chief executive on June 20.

The bonuses have caused a “significant cash drain” at ICN, O’Leary

said.

Last year, ICN appointed a special litigation committee to look

into the investor suits. Richard Koppes, an attorney at the

Sacramento-based firm Jones, Day, Reavis and Pogue, served as

chairman.

After reviewing the bonuses, the independent committee decided to

take over the suit, which was filed in Delaware, Koppes said. The

company is incorporated in that state.

“We felt the directors did not deserve the bonuses they got,”

Koppes said Tuesday.

Calls to Panic’s attorney were not returned Tuesday. Pierce

O’Donnell, of Los Angeles-based O’Donnell and Shaeffer, represents

the former leader of the Czech Republic.

In April 2002, ICN’s 10-member board approved the bonuses for

themselves and two former directors for the public offering of shares

in Ribapharm.

Shares of ICN are up more than 21% so far this year. The stock

closed Tuesday at $13.22.