A non executive director of Independent News and Media has begun a High Court action alleging that a payment of almost €2m to former IN&M CEO, Gavin O'Reilly when he stepped down last week, was unlawful and unjustified.
Paul Connolly, one of two directors on the IN&M board, representing the company's biggest shareholder Denis O'Brien says the payment was made with "indecent haste". He claims Mr O'Reilly presided over a period of destruction of the company's share value.
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.
Lawyers for Mr Connolly got permission from Mr Justice Peter Kelly to apply next Monday to have the proceedings fast tracked in the Commercial division of the Court.
The court was told the case was approved following the resignation of Mr O'Reilly and his replacement as CEO of IN&M by Vincent Crowley.
Barrister, Rossa Fanning, told the judge that Mr Connolly, who is a chartered accountant, a director of Communicorp Group and a non executive director of IN&M since 2009, was one of two directors who voted against the payment of €1.87m.
In court documents, Mr Connolly said he believed the payment should be approved by a general meeting. He said he had communicated that view to the board and told board members he intended to take advice. But he said he was told the board's advice was it could approve the payment.
He said he was later informed the payment would not be referred to a general meeting and had already been made on the 19th of April - the same day it was improved. Mr Fanning said it was Mr Connolly's case that the payment was made with indecent haste. Mr Connolly also believed the payment was unduly generous because Mr O'Reilly's term as CEO was unhappy and involved two profit warnings.
There is an AGM of the company scheduled for June the 18th the court heard. Mr Connolly hoped the payment could be raised at that and wanted the matter addressed urgently in the Commercial Court. If the court ruled the payment was unlawful, Mr Connolly wanted the board to refer the matter to the AGM despite the fact that the payment had already been made.
Mr Connolly also claims that because Mr O'Reilly lives in London, does not ordinarily work here and around 70% of his remuneration from IN&M was paid to a Jersey registered company, there is serious doubt about whether Mr O'Reilly could avail of the protections of the Unfair Dismissals Act. He says the payment was an extremely large sum in circumstances where Mr O'Reilly had no executed contract of employment. Mr Connolly also said a press release issued after the board meeting indicated the board unanimously approved the agreement with Mr O'Reilly but he said that was inaccurate as he and another director opposed it.
