Elan chief executive agrees new open-ended contract

Elan has signed a new employment contract with chief executive Kelly Martin, whose initial three-year deal with the company expires at the end of the year.

In a move described by company sources as a positive signal of its confidence in Mr Martin and his ability to oversee the company's expected relaunch of its breakthrough multiple sclerosis treatment Tysabri, the company has agreed an open-ended contract with its CEO.

The "initial" basic salary under the new deal, details of which were posted by the company on the website of the Securities and Exchange Commission yesterday, remains at $798,000 (€681,000) - the same as under his existing terms.

Mr Martin will also be in line for a bonus under the company scheme.

Elan has awarded the chief executive options over 750,000 shares which he will be able to exercise in three equal instalments at the end of 2006, 2007 and 2008. The options are exercisable at $12.02, the closing price of the company's stock on the New York Stock Exchange last night.

Mr Martin currently holds options over 2.34 million Elan shares at an average price of $5.22.

He was awarded options over 280,000 shares last March at a strike price of $7.47. Of these, options over 200,000 shares (worth $900,000) were awarded in lieu of a cash bonus for 2004 when Mr Martin earned $834,831 in salary and fees.

The terms of the new contract are largely the same as the existing ones. The one notable exception is that, in the event of losing his job following a takeover of Elan, Mr Martin will be able to exercise his rights over shares for three years rather than the two years under the existing contract.

Amended severance terms filed earlier this year increased Mr Martin's severance pay from two to three years.