Martin Stewart, EMI’s former finance director, missed out on a payoff worth £1 million when he left the British music company after its £2.4 billion acquisition by Terra Firma, the private equity firm.

The fate of Mr Stewart contrasts with that of Eric Nicoli, his chief executive, who was entitled to an £2.8 million severance when his contract was terminated by Guy Hands, Terra Firma’s owner. Both left the company this month.

It is not clear why Mr Stewart did not get any cash. EMI said that he had resigned and therefore was not entitled to a payout, whereas Mr Nicoli was asked to leave. However, it is unusual for an executive who knows that he may be dismissed to risk losing the opportunity to receive severance.

Martin Stewart earned £764,300 last year, which included a base salary of £551,200 and a £192,900 bonus. The company’s most recent annual report states that his contract could be terminated “on one year’s notice” – the only exceptions being resignation or “gross misconduct or other circumstances justifying summary dismissal”.

Payments due to Mr Stewart for a routine termination of employment would comprise £551,200 of base salary, benefits worth £229,405 and half his maximum annual bonus, £275,600. The total sum due would have been £1.05 million.

Mr Stewart joined EMI in January 2005 and as recently as January of this year was given the task of restructuring the finances of the company’s struggling recorded music unit. He previously had held the same position at BSkyB, the satellite broadcaster 39.1 per cent owned by News Corporation, parent company of The Times, but left after he lost out in a battle with James Murdoch for the chief executive’s job.

Terra Firma took control of EMI at the beginning of September and has brought in its own team of managers to try to rescue EMI Music. The only executive director to survive the cull was Roger Faxon, who runs the company’s market-leading music publishing division – the half of the business that manages songwriter copyrights.

EMI is now run by a team reporting to Mr Hands, who is the chairman of a holding company that sits on top of EMI. The day-to-day responsibilities of both Mr Nicoli and Mr Stewart are being undertaken by Chris Roling, who is both chief operating officer and chief financial officer.

A group of other executives from Terra Firma are working alongside Mr Roling, who has no experience of the music industry but has worked at ICI in logistics.

This month, Lord Birt, the former strategy adviser to Tony Blair (when he was prime minister) and director-general of the BBC, joined the supervisory board at EMI. Lord Birt has been working for Terra Firma on a variety of portfolios since leaving his political advisory position in 2005.

Terra Firma’s purchase of EMI came after seven years of EMI and Warner Music circling each other. A deal between EMI and Warner would have created the second-largest music company, after Vivendi’s Universal Music Group.

Mr Hands said at a media convention this month in Cambridge that Terra Firma planned to retain EMI’s recorded-music unit. Mr Hands was speaking for the first time since Terra Firma’s takeover was accepted. He said that EMI was not focusing enough on smaller artists and was too dependent on hits. EMI artists include Robbie Williams, Janet Jackson, Joss Stone and Norah Jones.

Addressing the convention, Mr Hands had joked that he hoped EMI was “as bad as we think it is”, so that Terra Firma could help to turn the struggling company around.

Martin Stewart, Terra Firma and EMI declined to comment.

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