THE CHIEF executive of One51 Philip Lynch was paid €1.4 million in 2009, he told the investment group’s agm in Dublin yesterday.

The group recorded a loss of €10.9 million in 2009 and booked €44.4 million in exceptional costs relating to write downs.

It emerged at the meeting that the board was not aware until recently of the details of a controversial bonus scheme involving patent income that benefits from tax relief.

Mr Lynch made his disclosure during an at times heated and emotional meeting where some shareholders were demanding greater transparency about senior executives’ earnings.

However, the meeting was not told the names of nine executives who received payments from the tax-free patent income which the group routed through a series of companies, including companies that were outside the group.

Of the €4.96 million that was so routed, approximately €2 million was paid out to the nine executives in 2008 and 2009. Chief financial officer Alan Walsh said the scheme incorporated what was in essence a bonus scheme and that he had put it in place.

He said individual directors’ remuneration would be disclosed in the 2010 annual report. He said a cap on directors’ fees of €500,000 referred to in the company’s articles did not apply to executive directors who were paid as employees.

The payment arose from a paint bucket lid patent. The price is just below the €5 million limit which is the statutory limit for tax exemption on such payments.

He said the structure reduced the overall tax charge for the group and so was of benefit to shareholders. It was a common structure availed of by many Irish companies and groups and did not constitute aggressive tax planning. It will remain in place, he said.

The structure allowed “tax efficient dividends” to be paid to individuals, he said. “These amounts are and have been included in the directors remuneration included in note 6 to the annual report. Approximately €2 million has been received in patent dividends by executives and other employees in the group in the past two years.”

An attempt by some shareholders to have new directors appointed to the board did not win shareholder approval.

Independent director Noel Cawley, a member of the board’s audit committee, addressed the meeting from the floor. He said he could not understand how bonuses could be paid to executive directors in the context of the group’s 2009 performance. It was only in recent days that he got a full understanding of the matter, he said.

The “quantum” involved was “over the top” and the share out being the executives involved was “not appropriate”. Arrangements already in place may have to be honoured, he added. “The board was not aware of these arrangements,” he said.

He said he had told Mr Lynch he had an “old-style attitude” to corporate governance.

However the board remained united, he said.