Elan shares were trading at around $27.71 (€21.19) yesterday evening.

Mr Geaney claims he was given a remuneration package in November 1989 which included 1.3 million share options in Elan, of which 1.15 million are held at an exercise price of $24. The balance were exercisable at $37.1875.

One analyst said last night that there had not been much movement in the shares over the past couple of weeks and they had been trading within a range of $26 to $28. The analyst said Mr Geaney's court action would have no effect on Elan's share price, as it was minuscule compared to the pharmaceutical company's $10.8 billion market cap.

The former KPMG partner was chairman and chief executive of Elan until July 2002. He had led the company since 1997, when he succeeded company founder Mr Don Panoz as chairman.

He joined the company as executive vice-president with responsibility for strategic planning in 1987, having advised on its Nasdaq flotation in 1984.