Ousted EMI boss gets £3.6m bonus

The former boss of EMI's music division quit the troubled group with a £3.6m (€5.32m) pay-off, it was revealed today.

EMI's annual report revealed that Alain Levy was handed the multi-million pound cash windfall on top of his £912,000 (€1.35m) salary after he was ousted in January amid plummeting sales and a profits warning.

Mr Levy, who had been chairman and chief executive of EMI Music since October 2001, was handed a £1.1m (€1.6m) bonus and £2.6m (€3.8m) severance package plus pension payments and company benefits for a year after leaving the group, as part of a contractual agreement.

He also received 20 million share options under the group's long-term incentive plan, which he can hold for up to a year after leaving, or for six months if there is a change in ownership.

The drop in value of EMI's share price, however, has left most of the options worthless.

Details of the pay-off come as EMI is rumoured to be facing a fresh takeover attempt from rival Warner Music, which threatens to challenge the group's agreed sale to private equity firm Terra Firma.

The group announced the 265p-a-share deal with Guy Hands' outfit last month, valuing the group at £2.4bn (€3.54bn), as it posted a 61% drop in underlying profits before tax to £62.7m (€92.7m).

But rival Warner Music has not ruled out a counter-bid, with rumours over the weekend suggesting it was planning to step in with a higher £2.5bn (€3.69bn) offer.

EMI, which is home to stars including Lily Allen, Norah Jones and Robbie Williams, reported total profits before tax and adjustments down from £118.1m (€174.5m) last year to a loss of £263.6m (€389.6m).

The firm is tackling the current sales crisis with a £110m (€162.6m) restructuring programme, including savings from the removal of layers of management.

The music publishing division, headed by New York-based president and chief operating officer Roger Faxon, was one of the only operations within the group to report an increase in underlying earnings last year, up 4.2% to £105.6 (€156.1m).

The annual report showed that Mr Faxon received his maximum bonus of 100% of base salary - more than £800,000 - (€1.18m) in the year to March 31 due to the "economic profit achieved".

The music division, meanwhile, has seen sales come under increasing pressure, largely as a result of digital downloading.

French-born Mr Levy had been brought in to replace former EMI music boss Ken Berry in 2001, tasked with halting the sales decline that had already begun to hit the group.

The former global president of PolyGram failed to sustain an improved performance, with EMI's music business seeing a 15% drop in sales in the year to the end of March.

He started his career in the music industry in 1972 and worked at a number of top labels, including CBS International, now Sony BMG.

EMI's annual report also reveals that the group's top executives could scoop seven-figure cash windfalls on the sale of the firm if they are forced out by the new owners.

Both group chief executive Eric Nicoli, who took over from Mr Levy in managing the music arm earlier this year, and Mr Faxon could receive at least £1.7m (€2.5m).

Chief operating officer Martin Stewart would, if sacked, gain a lump sum payment to the tune of around £1.3m (€1.92m).

Mr Nicoli and Mr Faxon would also be entitled to realise share options on sale of EMI, worth around £474,000 (€700,748) and £674,000 (€996,423) respectively, based on the 265p-a-share offer from Terra Firma.

Other performance-related share bonuses may also be handed to the pair in the event of a takeover, although this is yet to be decided by the remuneration committee.