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McGann's €2.6m at Smurfit puts him in top ranks of CEO pay

SALARY and benefits paid to the chief executive of the Smurfit Kappa Group, Gary McGann, have risen by more than 18pc to €2.6m, making him one of the best paid CEOs of a listed company.

McGann was paid a basic salary and fees of €1.2m, plus an annual bonus of €692,000 and a pension of €625,000. With benefits of €61,000, this brought McGann's total remuneration to €2.6m, up from €2.2m a year before.

Tony Smurfit, another executive director, was paid €1.6m, up from €1.3m in the previous year; while Ian Curley, the chief financial officer, was paid €1.4m. In total, the company paid out bonuses of €1.5m.

While the pay and benefits of the executive directors increased, the pay of non-executives was flat on the year, rising barely to €1.13m. Chairman Liam O'Mahony, an ex-director of CRH, was paid €300,000. Fees for most of the other non-executives were flat.

Smurfit has recovered strongly from a troubled patch two years ago amid the economic crisis, when markets grew nervous about its debt levels. The shares of the company have performed well this year, rising by 28pc, while the one-year return is 46.48pc.

Wall Street giant Morgan Stanley recently started covering the bank and gave it an "overweight'' recommendation, meaning its clients are being advised to buy its shares. "Smurfit Kappa becomes our top pick in the sector as the best way to play ongoing strength in corrugated pricing," said Morgan Stanley, in a research note.

It added that it believed the current share price was factoring in an earnings margin -- before interest, tax, depreciation and amortisation (EBITDA) -- of 12.6pc, compared with a range, since 2006, of between 12pc and 15pc.

The bank also noted that Smurfit Kappa's cash flow should be sufficient to reduce debt to the target level of €2.8bn this year.

"We believe corrugated pricing will continue to rise and that the company will realise further cost savings, boosting margins by 210 basis points in 2011 to 15.6pc," explained the note.

"The share price appears to be discounting a decline in margins from current levels, which is too bearish in our view, given what we consider to be a well-supported recovery in corrugated pricing."

The company releases first quarter results in May.

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