Michael Smurfit paid €6.6m by group

The chairman and chief executive of Jefferson Smurfit, Dr Michael Smurfit, last year received a total remuneration package of €6.6 million (£5.2 million) from the group and its US associate Smurfit Stone, the Smurfit annual report has revealed.

Dr Smurfit's remuneration package is almost five times as much as that paid to Allied Irish Banks chief executive Mr Tom Mulcahy, even though AIB is four times larger than Smurfit in terms of stock market value.

The annual report shows that chief operating officer Mr Gary McGann has a substantially lower basic salary than both Dr Smurfit's two brothers Mr Dermot Smurfit and Mr Alan Smurfit, even though the two Smurfit brothers report directly to Mr McGann in their management of Smurfit's international marketing and Latin American operations respectively.

Overall, the three Smurfit brothers and Dr Michael Smurfit's son, Mr Tony Smurfit, took home almost 90 per cent of the €9.1 million paid to the group's five executive directors. That does not include the €7.2 million in dividends that the Smurfit family members will receive in respect of last year's trading.

Unlike Allied Irish Banks, which gave a full breakdown of directors' 1999 and 2000 remuneration packages, Smurfit has only given details of 2000 remuneration in the annual report, making year-to-year comparisons difficult. But Dr Michael Smurfit took more than half the €9.1 million remuneration paid by the group to its executive directors.

Dr Smurfit had a basic salary last year of €1.37 million, but he also received a bonus of €3.1 million. Other minor benefits brought his total package from the group to €4.6 million. He also received a total of €1.97 million from Smurfit's 29 per cent-owned US associate company Smurfit Stone. Dr Smurfit received more than 60 per cent of the total bonuses of €5 million paid out by the group.

A spokeswoman for Smurfit said basic salaries were based on what was paid to Smurfit's peer group. She said individual bonuses were calculated based on growth in earnings per share against a specified target figure and also based on the profit in the relevant part of the business managed by each director.

Mr McGann received a total of €1.05 million in respect of his 11 months as an executive director. But even when his remuneration package is annualised over a full 12 months, he still received less from the company than two of the three directors who report to him, Mr Dermot Smurfit and Mr Alan Smurfit.

Mr McGann's annualised basic salary of €508,000 was more than 22 per cent lower than Mr Alan Smurfit's basic salary of €656,000 and more than 20 per cent lower than Mr Dermot Smurfit's basic salary of €644,000.

The annual report also shows that Dr Michael Smurfit was allocated 4.86 million shares - currently worth €9.7 million - under the group's "special long-term incentive plan". Mr McGann was allocated 1.86 million shares currently worth €3.7 million.

A spokeswoman for Smurfit said, however, that these shares were awarded to Dr Smurfit, Mr McGann and chief financial offer Mr Ian Curley, only if "very onerous" criteria relating to total shareholder return were met. Even then, they were not awarded until June 2003 and not exercisable until June 2005, she said.

Dr Smurfit's son, Mr Tony Smurfit, is responsible for the group's European operations. He received a total package of €697,000.

Mr Paddy Wright, who was an executive director until he retired in June 2000, received a total of €310,000 for that period. Mr Wright, however, remained a non-executive director for which he received fees of €16,000 and a consultancy fee of €63,000. During the year, Mr Wright also received a payment of €2.5 million under the group's long-term incentive plan.

Another former executive director, Mr Howard Kilroy, received a consultancy fee of €129,000 on top of his €32,000 director's earnings and €47,000 from Smurfit Stone.

Smurfit's non-executive directors include former minister and EU commissioner Mr Ray MacSharry, who received total remuneration of €39,000 and former Taoiseach Mr Albert Reynolds who received a total of €52,000.