EMI Group’s departing music chief, Alain Levy, could leave with a payoff worth up to £7 million, after the company this morning issued a surprise profit warning.

EMI has announced that Levy, a member of the EMI board since October 2001, is stepping down along with David Munns, vice-chairman of EMI Music, in what the company called a "de-layering" of its management structure.

According to EMI’s annual report, on termination of Levy’s contract, he will be paid a base salary of £1 million, pension benefits of more than £550,000 and a bonus, equivalent to a three-year average, totaling £1.4 million.

On top of the £3 million severance package, Levy is also entitled to 20 million share options, however only six million options are trading below this morning’s 245p price.

Based on the six million shares, Levy could net in excess of £3.9 million, bringing his total potential payoff to nearly £7 million.

The annual report states: “If termination is for cause (as defined in the contract), no compensation is payable. If termination is without cause, or Mr Levy terminates the agreement for good reason (for example, breach by EMI), he is entitled to a lump-sum severance payment based on one year’s pay.”

Eric Nicoli, executive chairman at EMI Group since July 2004, has been named as chief executive of the overall company and will take direct responsibility for the management of its recorded music division.

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