£40m cost of big shake-out at EMI

Nick Goodway12 April 2012

EMBATTLED music giant EMI has spent more than £40m of shareholders' money extricating itself from contracts that have been less than successful over the past four years.

Chairman Eric Nicoli faced renewed calls today to get a grip or go after Tuesday's second shock profits warning in six months. His departure is said to be highly unlikely but he can take comfort from the fact that if he goes, all the precedents suggest he would depart far from empty-handed. A music star, not a director, was top of EMI's pay-off charts by a mile. US diva Mariah Carey's album Glitter, her first on the Virgin label since EMI took it over, sold just 2m copies.

Variety magazine reported just after Christmas that EMI had struck a multi-million-dollar deal to get rid of Carey. The company denied the story. But barely two weeks later it said it was paying her $28m (£19.6m) to terminate her rumoured five-year contract and taking a hit of £18.5m hit for write-offs on money already spent on promoting her.

The second largest pay-off went to 'Lucky' Jim Fifield, who was seen by former chairman Sir Colin Southgate as his heir-apparent, becoming chief executive when Southgate went to run the Royal Opera House. The non-executive directors disagreed with his succession plan at a lively board meeting in February 1998. Fifield left with £12.5m.

Southgate, who had been forced to accept that he should drop from executive to non-executive chairman, still managed to collect £812,000 in 'compensation for loss of office' as part of his final £1.4m remuneration package when he retired in 1999. It is still unclear why a planned retirement should attract such a gift.

Number three in the pay-off charts is Ken Berry, the boss of recorded music who is reckoned to have counted the cost of failure at some £5m. The figure will not, however, be confirmed until this year's annual report is published in July. Berry was behind the failed merger with Warner Music and involved with the same plan with Bertelsmann. His eye also appeared to be off the discs, particularly in the key US market.

His departure last October was followed rapidly by that of his former wife Nancy, who headed Virgin Music. Her 16-year career ended amid allegations of nepotism and affairs with rock stars. Her pay-off will not have to be revealed as she was not on the main board of EMI.

Finance director Tony Bates, whose departure was announced yesterday, stands to collect twice his salary and bonus, worth up to £2m.

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