New row breaks out at INM over Gavin O'Reilly's pay-off

http://www.guardian.co.uk/media/greenslade/2012/may/04/independent-news-and-media-denis-o-brien

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The board of Independent News & Media (INM) is embroiled in yet another row following the recent departure of chief executive Gavin O'Reilly.

INM's biggest shareholder Denis O'Brien - who has increased his holding with a 5% stake - is clearly unhappy with O'Reilly's €1.87m (£1.5m) exit package.

To that end, one of O'Brien's representatives on the board, Paul Connolly, has launched an unprecedented legal action against INM to have O'Reilly's package declared unlawful.

The action prompted INM's chairman, James Osborne, to request Connolly's resignation from the board on the grounds that he had acted against the company's best interests.

When he refused to go, the board voted to recommend to shareholders that Connolly be voted off at the company's annual meeting on 8 June.

But Connolly's position may be secure after all because O'Brien now owns 27% of INM and he can count on the support of another shareholder, Dermot Desmond, who has 6%.

Given that about a third of the shareholders generally don't bother to vote, the 33% of O'Brien and Desmond could well save Connolly.

Anyway, just to confuse matters, Connolly's court case is set to begin on 6 June, two days before the agm.

If O'Brien were to increase his INM holding beyond 29.9% he would, under Irish stock exchange rules, have to make an outright bid for the company.

The O'Reilly family, which effectively controlled INM for 40 years, still owns 13% of INM's shares.

The Irish Times business affairs correspondent, Ciarán Hancock, argues that O'Brien's increasing stake in INM raises difficult questions for the Irish government.

It "clearly puts it up to minister for communications Pat Rabbitte and the government on this contentious issue," he writes.

That's because INM owns Ireland's two best-selling newspapers, the Irish Independent and the Sunday Independent, plus two other nationals, and several regional titles.

And O'Brien owns six radio licences, including those of Ireland's two largest independent radio stations - Today FM and Newstalk.

His domination of Irish media could possibly trigger action from the Dublin government.

<em>Sources:</em> Reuters/Irish Times/Irish Times/Financial Times