ICN Pharmaceu-ticals is trying to get back $47.8 million in bonuses paid to its own executives, including Milan Panic, who resigned last year, through the courts. This unconventional decision was made by a special commission formed by the corporation's board of directors after studying the problem for six months.

In April 2002, ICN's board of directors approved substantial bonuses (aka bonuses) for itself, two former directors, and a number of other executives. The reason for this was the initial public offering of 20% of the shares of one of the corporation's divisions, Ribapharm. The corporation's founder, Milan Panic, who was then chairman of the board of directors, received a $33 million bonus, and outside directors $330,500 each.

The commission found that the bonuses were ill-considered and "contrary to the interests of ICN." The commission concluded that "the directors should not have received the bonuses in question" because the IPO was "part of their ongoing responsibilities," said Richard Copps, the commission's chairman and a counsel at Jones, Day, Reavis & Pogue, one of the world's largest law firms.

Plaintiffs' attorneys have filed lawsuits on behalf of shareholders against ICN's directors in the Delaware Equity Court, where the corporation is headquartered, and in California's General Trial Court. ICN says it intends to pursue the lawsuit to the end of its term and seek full reimbursement of the awards, as well as damages from Panitch and the other directors who voted to award the bonuses.

Pierce O'Donnell, Panich's lawyer, called ICN's claim "frivolous" and said the investigation was "biased and seriously flawed."

Panich resigned as ICN's chairman and CEO last June and was not nominated for another term on the board at ICN's annual meeting last Thursday. However, three of the 10 people implicated in the bonus scandal remain on the board. (WSJ, 05/23/2003, Maria Grechaninova)

Panich is being asked for $33 million