O’Brien launches legal bid to halt O’Reilly’s €1.87m pay-off

Telecoms and publishing billionaire Denis O’Brien wants to stop an “unduly generous” €1.87m severance payment being made to the man he ousted from the post of chief executive of Independent News and Media (INM) — Gavin O’Reilly.

In an unprecedented move, Paul Connolly, one of two directors on the INM board representing Mr O’Brien, the company’s biggest shareholder, yesterday told the High Court the payment of €1.87m to Mr O’Reilly was made with “indecent haste” and was “unduly generous”. The O’Brien directors failed last week to block the €1.87m payment at board level.

Mr Connolly has brought proceedings seeking declarations that the payment breached section 186 of the Companies Act because it was approved by the board without being put before the company’s shareholders at a general meeting.

Yesterday his counsel, Rossa Fanning, was given permission in the High Court by Mr Justice Peter Kelly to apply next Monday to have the proceedings — which are against INM only — fast-tracked in the Commercial Court.

A spokesperson for INM said that, as the application to the High Court was ex-parte with only one side in court, INM’s lawyers had just begun examining the documentation and the company would not be commenting on the action brought by Mr Connolly.

Mr Connolly’s court strategy will heighten tensions at an IMN board meeting scheduled for today, called to approve the company’s accounts in advance of the June 8 annual general meeting of shareholders. Last year, the O’Brien directors voted against approving the accounts.

Yesterday’s resignation by Bengt Braun from the board, after almost two years as a non-executive director, is expected to be followed by more resignations or declarations by board members, appointed in the O’Reilly era, that they will not seek re-election at the AGM.

The legal move by Mr Connolly revealing the €1.87m payment to Mr O’Reilly also made public some of the details of what is understood to have been a confidential severance agreement between Mr O’Reilly and INM. The former chief executive’s 2011 pay package was €1.036m, and the €1.87m payment is understood to represent 23 months’ pay.

Mr Connolly said the payment to Mr O’Reilly was unlawful and unjustified as he presided over “a period of destruction” of the company’s share value.