One51 to keep executive pay structure despite concerns
One51 will retain a controversial corporate structure used to pay nine executives roughly €2m in tax-free payments over the past two years, despite concerns being raised about the arrangement by one of its own non-executive directors, Noel Cawley, and its largest shareholders, the UK-based Co-Op.
One51 chief financial officer Alan Walsh said the framework would stay in place and that there had been "very serious allegations" that suggested a "misappropriation of company assets for the benefit of executives", which were false.
The Co-Op owns 6.12pc of One51. The UK firm's representative at yesterday's AGM, Guy Halifax, said it was "uncomfortable with the level of disclosure within the group given that this is a public company".
Investment group One51 owns a company called Protech Technology that developed a technology for a paint tin lid. One51 advanced €4.96m to Protech, which in turn paid the same amount to a company called Chandela in the form of a licence fee, as Chandela now owns the intellectual property developed by Protech. A chunk of the money was subsequently distributed from Chandela to One51 group executives.
While One51 boss Philip Lynch admitted he was one of the recipients of the tax-free payments, he declined to name the other eight.
Mr Walsh said the structure used to make the payments had been approved by the Revenue Commissioners and was a system commonly used by other companies.
He conceded the structure was complex "in order to meet the legal and taxation requirements which are necessary to achieve the objectives which are wholly consistent with the underlying tax reliefs".
Mr Lynch (64) also said that he would have "no issue" in synchronising his stepping back from his chief executive role with a possible liquidity event in a couple of years.
"I have no issue with any of those things. My intentions were that I'd be enjoying myself and having more time off. That's not the case."
One51 confirmed yesterday that it was rebranding its environmental services division as 'ClearCircle' and Mr Lynch estimated the unit is worth €350m. He added the group was committed to a "liquidity event" to return money to hard-pressed shareholders. A flotation of ClearCircle is likely to take place in 2012 in order to do so.
Mr Lynch denied his credibility had been damaged by the campaign waged by the dissident shareholders. He claimed the so-called 'Campaign for Change' initiated by Gerry Killen and fellow rebel investor John Hegarty had been about "resistance to change".