JEFFERSON Smurfit Group will have a difficult year in 1996, the chairman and chief executive, Dr Michael Smurfit, told shareholders yesterday.

At the end of a well attended hour long a.g.m. in Dublin, Dr Smurfit warned shareholders that "the sharp fall in demand for most of the products we manufacture will result in a difficult 1996".

But he said he had every intention of remaining as chairman and chief executive of the group.

"I'll be here for a long time, so get used to it. I make no apologies for it. After me, I cannot say," he said.

There were different views from the floor about Dr Smurfit's chairing of the meeting.

One shareholder asked him: "Why are you so aggressive today? I have never seen you like this before".

Another, Mr Tindle, disagreed.

"Having seen how you handle this meeting, I know why the company is so successful."

Dr Smurfit took a strong line with shareholders - insisting they state their names and the number of shares they held before asking questions. On a number of occasions he cut shareholders short, insisting they ask their question: "We are not here for speeches. Let me have your question".

When Mr Sean English declined to disclose the number of shares he held because it was "a private matter", Dr Smurfit explained he wanted shareholders to see that some people were prepared to buy shares so as "to disrupt the meeting and embarrass the company".

After a number of questions on environmental issues, Ms Mary Irvine asked why there was no woman on a board of 17 directors. Dr Smurfit said he was open to suggestions. "Write to me," he said.

A number of shareholders complained about the weak share price and asked about the outlook. Dr Smurfit said he could not comment.

He told a shareholder who asked about the share price and earnings outlook: "If I told you and you acted on the information we'd both go to jail."

Share price movements and the group's performance in relation to its peers are very important to Dr Smurfit, Mr Tom Reynolds, a director, told shareholders.

Answering media comment about compensation arrangements for Dr Smurfit, Mr Reynolds, as chairman of the compensation committee, confirmed the changes to terms set out in the recent annual report.

As reported in The Irish Times on Tuesday, the basis on which the long term bonus can be paid to Dr Smurfit has been extended to include criteria comparing the performance of the group in relation to its peers in the paper and packaging industry.

The original arrangement had concentrated solely on increase in shareholder value over the four year period.

Arrangements to compensate Dr Smurfit for loss of office in a bid situation have been changed to exclude his long term incentive payment. The calculation will not be based on payments made to Dr Smurfit in 1995 - he is estimated to have received between £9 million and £10 million.

The payment will be 4.5 times Dr Smurfit's annual remuneration excluding any long term incentive payment, according to chief finance officer, Mr Ray Curran.

"Michael Smurfit's situation is unique... he has earned the right to be compensated substantially more than others in the group, Mr Reynolds said. The new compensation arrangements represented a decrease and not an increase in annual compensation for Dr Smurfit, he said.

The latest changes follow representations from fund managers who also expressed concern about Dr Smurfit's contract to the year 2000. They were told Dr Smurfit and the group have an enforceable contract which predates the current guidelines - the contract dates from 1990.

They were assured that when this contract expired the group would comply with best practice in any new arrangements.

Mr Curran accepted the group had been "a little slow" in communicating with institutions about the compensation plans.

"Next time we will communicate earlier and avoid crisis management," Mr Reynolds said. But he said total shareholder value is the "acceptable" manner of compensation in the US. "If it was there this year he would have got killed," he said.

Insisting that Smurfit takes best corporate governance seriously, Mr Reynolds told shareholders that "Ray [MacSharry], Peter [Gleeson] and I [the members of the compensation committee] are not lapdogs. We will represent shareholders".

Dr Smurfit thanked Mr Eoin Ryan who was attending his last meeting as a director after 32 years on the board. Mr Albert Reynolds and group finance director Mr Ray Curran attended their first meeting as directors.