EMI has announced in its annual report that it has moved to increase the compensation of Alain Levy, the company’s recorded music chief, giving him a new five-year deal.

Levy’s new contract, which keeps him with EMI through 2009, increases his base salary from £700,400 ($1.29m) to £1m ($1.84m). His performance-based annual bonus, which had been set at a maximum of twice his base salary, now tops out at three times salary. The additional bonus money will be tied to EMI’s revenue versus the recorded music market as a whole. Levy took home a £854,500 ($1.57m) bonus for EMI’s last fiscal year, ended March 31.

The former PolyGram chief executive, who has run EMI since 2001, could also be granted options for EMI shares valued at up to three times this base salary (compared to two times salary for both Group Chairman Eric Nicoli and CFO Roger Faxon). He could also be awarded shares directly worth 1.5 times his salary (compared to 1.0 times salary for Nicoli and Faxon). Both option and share awards are performance based and require that EMI’s earnings be in the Top 20 of companies in the London Exchange's FTSE 250 index.

In return for the boost in pay, Levy has given up a clause in his contract that would have required EMI to pay him two years’ salary if the company were sold or merged. Levy, Nicoli and Faxon now each have provisions for one-year payouts if another entity takes control of EMI.

Investors have been pleased with EMI’s progress since Levy took over in 2001, seeing the company’s share price improve dramatically. EMI shares are currently trading at around 225 pence on the London exchange. At least one analyst has said Levy is “the best thing that has happened to EMI for years,” according to the Financial Times.

By way of explaining the move to retain Levy, an EMI spokesperson told the FT, “Despite the relative outperformance of EMI's recorded music business, and particularly in light of the competition in the industry for executives of his calibre, [Levy’s] total package...has not proved to be competitive.” EMI considers “the retention and effective incentivisation” of Levy to be “of the utmost importance to the company and its shareholders,” the spokesperson added.

Nevertheless, EMI in careful to point out that Levy’s new deal “remains the lowest salary in the industry for the chairman and chief executive of a global recorded music business.”

For EMI’s last fiscal year, Nicoli was paid a total of £1.38m ($1.57m), which included a base salary of £695,300, benefits valued at £99,500 and bonuses totaling £583,700, compared to Levy’s £700,400 salary, £40,900 in benefits and £854,500 bonus for a total of £1.6m—a 33% increase compared to the previous year.

By contrast, EMI Music Publishing chief Martin Bandier received a total of £3.32m for the year, including salary of £1.82m, benefits valued at £44,200 and bonuses totaling £1.45m—a 6% decrease compared to the previous year.