Eric Nicoli is to leave EMI with a £2.8 million payoff as Terra Firma, the venture capital vehicle of Guy Hands, the entrepreneur, formally takes control of the British music group behind the Rolling Stones and KT Tunstall.

Mr Nicoli, 56, had headed the company for eight years, but he failed to pull off a merger that would have taken EMI into the top tier of recorded music and leaves behind a troubled company.

Martin Stewart, EMI’s finance director, is also out, as Terra Firma brings in three of its own partners, none of whom has experience of the music industry, to shake up a company whose market share is weak during a sharp decline in sales of recorded music.

Chris Roling, who previously had worked at the chemicals group ICI as vice-president of finance, procurement and logistics, becomes chief operating officer and chief financial officer. Effectively chief executive, he will report to Mr Hands, Terra Firma’s boss, who will chair a new supervisory board.

His appointment is a deliberate attempt to bring in outsiders. The venture capital group wants managers who “serve the artists” rather than “hanging out in LA”, although they are willing to bring in new executives with music experience later, if needed.

The new management has given itself until October to devise future strategy, according to an e-mail sent by Mr Hands to all EMI staff, but they are likely to face immediate challenges, with rivals hoping to destabilise key talent with the argument that the new leadership does not understand music.

Terra Firma said that the “initial focus will be to maximise the value of the significant assets in EMI’s publishing business and to realise the digital opportunity in recorded music”. Although vague, the phrase indicates a willingness to keep the recorded music and music publishing divisions.

The venture capital group is also considering whether to allow private equity firms to become minority shareholders.

Mr Nicoli is eligible to receive 12 months’ pay, at £788,000, plus half his annual bonus of £394,000 and a further £471,695 in benefits, totalling £1.65 million. He also holds a further £1.17 million in shares, to be bought out by Terra Firma, and is eligible for a pension worth £230,212 a year.

Ashley Unwin, who used to work at Deloitte Consulting, will help Mr Roling to run EMI as director of business transformation. Mr Unwin’s job will be to asses the quality of EMI’s managers. The third appointment from Terra Firma is Julie Williamson, a long-time associate of Mr Hands, whose job will be to examine the company’s strategic relationships with the likes of Apple. The sole senior survivor from the old regime is Roger Faxon, who remains as chief executive of EMI’s successful music publishing division, which now ranks second in the world, behind Universal. Unlike recorded music, publishing is strong in the United States, where the company owns the Motown catalogue.

EMI will be delisted on September 18. Terra Firma has lined up £4 billion to spend on EMI, £1.5 billion of which is equity. The takeover cost £3.2 billion, leaving £800 million for working capital and bolt-on acquisitions.

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