An extraordinary pay package worth at least £4.6m that was handed to Alain Levy, the former EMI head of music who was forced to leave after a dire profits warning, has been laid bare in the company's annual report to shareholders.

Mr Levy was given "compensation" for loss of office of £2.5m and a £1.1m "incentive remuneration" alongside his basic salary of £912,100, and his benefits have continued beyond him leaving the embattled company on January 11.

The annual report says: "Mr Levy is entitled to continue to receive for one year from termination the value of retirement benefits and benefits in kind provided to him under his employment agreement."

A tough music market has hit EMI particularly hard and it has already issued two profit warnings since the start of 2007. At the time of the first, which followed disappointing Christmas sales for Robbie Williams' new album, it axed Mr Levy as part of the latest in a string of restructurings and cost cuts.

Mr Levy, who joined EMI in 2001, had been one of Britain's highest paid executives, enjoying access to a company pool car, driver and private healthcare.

Last year's extra £1.1m bonus - when fellow executives missed out on performance-related awards - is explained to shareholders as part of his contract, which states that "in the event of his termination without cause he would be entitled to a bonus in respect of the financial year in which the termination occurred, pro-rated down to the date of his termination, with the bonus being based on the average bonus achieved in the prior three years".

The terms of Mr Levy's severance package had been provided to shareholders but the annual report reveals the full extent of the payout in an industry that has been in decline for years.

Two years ago EMI brushed aside criticism to press ahead with a controversial pay scheme for Mr Levy which raised his salary by 43% to more than £1m. The company said it needed to pay Mr Levy well to prevent him being poached by a rival and wanted to keep him at least until 2009.

But as his confidence in the Christmas season failed to transform into the expected bumper takings, the French-born music executive and his deputy, David Munns, were pushed out. Perhaps unsurprisingly, the annual report reveals that Eric Nicoli, the chairman, did not receive any bonus. His basic salary at £778,600 was also lower than Mr Levy's.

Troubles at the recording home of Kylie Minogue have helped make the group a takeover target. Last month it accepted a 265p-a-share bid from Guy Hands and his Terra Firma private equity firm. Shareholders, who have seen their holdings pick up by 10% after Mr Levy's departure and talk of other potential buyers, are waiting to see if EMI's American rival Warner will come in with a counterbid.