Is that the programs original icon? I would delete the shortcut (I am assuming it is a shortcut?), and create a new one. It appears that somehow the icon is displaying as if it were wider, although it doesn't move the icons around it out of the way. You might try right clicking the desktop, choose View and change the icon size around, then back to desired, and see if it helps (it may change the spacing and you'll have to move them back). First I'd try rebuilding the icon cache.
Icon Cache - Rebuild
A Guy