THE STAND-OFF between Denis O’Brien and Independent News Media took a fresh twist yesterday when a non-executive director representing Mr O’Brien started a legal action to have a €1.87 million compensation package paid last Thursday to former INM chief executive Gavin O’Reilly declared unlawful.
In an unprecedented move, Paul Connolly, one of two directors representing Mr O’Brien, who owns 22 per cent of INM, has asked the High Court to intervene in the matter.
Mr Connolly argued that the payment to Mr O’Reilly, which was made on April 19th with “indecent haste”, was unlawful and also unjustified given that he presided over “a period of destruction” of the company’s share value.
It is also claimed by Mr Connolly that because Mr O’Reilly lives in London and did not ordinarily work here, some 70 per cent of his remuneration from INM was paid to a Jersey-registered company.
Mr Connolly and Lucy Gaffney, another representative of Mr O’Brien on the INM board, voted against the exit package offered to Mr O’Reilly, although they did not vote against the appointment of chief operating officer Vincent Crowley as his successor.
Mr O’Reilly resigned as chief executive last week after 19 years with INM. He had been chief executive since 2009. He cited “recent and public shareholder tensions” as “proving an unnecessary distraction” for the company.
The compensation is just over twice the €878,000 Mr O’Reilly is believed to have earned from INM in 2011.
INM’s board will hold a scheduled meeting today to consider motions for its agm in June and to approve the annual report. Mr Connolly’s surprise move provides an interesting backdrop to this meeting.
Mr Justice Peter Kelly gave permission for Mr Connolly’s legal team to apply on Monday to have the proceedings against INM fast-tracked in the Commercial Court.
Mr Connolly is seeking a declaration 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. The proceedings are against INM and not Mr O’Reilly.
An INM spokesman said its lawyers were considering the matter and would respond “accordingly”.
Mr O’Reilly could not be reached for comment yesterday.
On a busy day for INM, Swede Bengt Braun stepped down as a non-executive director, citing increased commitments with Scandinavian media group Bonnier, while Mr Crowley (150,000) and chairman James Osborne (50,000) bought shares in the business.
