This is in sharp contrast to the fortunes lost by the 500,000 who bought into Eircom when it floated in July 1999. Most investors are down about 30% on their investments while Mr Kane received a golden handshake of €2,807,750 in pension contributions and a further €1,079,277 as compensation “for loss of office”.
Other directors such as former Labour Party leader Dick Spring have earned about €70,000 in payments for work linked to the takeover by the Anthony O’Reilly-led Valentia consortium.
The payments to Mr Kane are among the largest severance packages ever paid to a chief executive for stepping down and will add to the cynicism of ordinary investors who have seen their investment slashed by the downturn in a telecoms market that still shows little sign of recovering.
Dr Tony O’Reilly and his billionaire investor friend George Soros had to make the payments to Mr Kane as they were due under the terms of the contract he signed when the company went public. Valentia, the consortium which borrowed €2.4 billion to buy Eircom, had a very difficult first year.
It took over Eircom in November, 2001, when the company had just four months left to run in its financial year.
Results published yesterday show the company suffered pre-tax losses of €104m in the year ended March 31, 2002, against a profit of 66m the previous year.
Other directors who shared in a separate €1.126m pay-out before the company went private include former chief executive of Bank of Ireland, Pat Molloy, Ray MacSharry the chairman of the company when it went public and Jim Flavin, an Eircom director. Results for the year make unhappy reading for Dr O’Reilly, owner of Independent News & Media and his US investors. They show that Eircom’s share of the phone market has slipped to 38% against 52% for the mobile phone operators.
Eircom has been restricted by the regulator from increasing prices and says it is facing another very difficult year. This lack of an increase cost it €75m in lost sales last year and it would have helped to offset the major loss for the year, said chief executive, Dr Philip Nolan.
See business section for more.