Jefferson Smurfit shareholders are being asked to approve the sale of a site within the group-owned Kildare Hotel and Country Club (K Club) grounds to a company owned directly by group chairman Dr Michael Smurfit.

The 2.44-acre site, overlooking the first green, has been priced at £425,000 (€539,639) subject to obtaining full planning permission for a house by May 24th, 2002. The consideration would be payable in cash with a 10 per cent deposit on exchange of contracts.

In a letter sent to shareholders with the annual report in advance of next month's a.g.m. on May 24th, the group said the property had been valued by Mr David O'Neill, of estate agents Hamilton Osborne King. "In their opinion, the present open market capital value of the property is not more than the purchase price proposed to be paid in respect of the property," the letter said.

In its valuation Hamilton Osborne King describes the property site as "an attractive irregular shaped wooded site . . . located at the end of a cul-de-sac where there will eventually be 19 other houses . . . It is bounded on the west by the first fairway and woodlands, on the north by the public road and on the east by houses that have been built along the fourth, fifth and sixth fairways and by the open spaces for these houses.

Access to the cul-de-sac is via attractive, electronically-controlled gates located close to the main entrance to the K Club".

The site will be sold freehold. The Smurfit board has been advised by Davy Corporate Finance that the proposed transaction is "fair and reasonable", according to the letter, which is signed by Smurfit director Mr Martin Rafferty. He described himself in the letter as "the senior independent director" and said Dr Smurfit excluded himself from the board consideration of the proposed transaction.

The Smurfit annual report shows Dr Smurfit has been paid €5.509 million (£4.34 million) by the group since the end of 1999 under his long-term incentive plan. It shows the annual bonus, shared between the five executive directors in 1999, was 38 per cent down at €3.285 million. This fall reflected lower profits in Europe and one less executive director during the year following the resignation of Mr Ray Curran. The five executive directors are Dr Michael Smurfit, Dr Alan Smurfit, Dr Dermot Smurfit, Mr Tony Smurfit and Mr Gary McGann.

The average cost to the group per executive director, including pension contributions, was €1.574 million for 1999, down from €2.385 million. The average salary paid per executive director rose to €941,600 from €677,000.

In 1999 some €1.043 million was accrued under the long-term incentive plan for group president and chief operations officer Mr Gary McGann for possible future payment to him.

The report shows the group made a profit before tax of €34.5 million on the sale of Smurfit Paribas. During 1999 there were provisions for impairment of assets of $23 million and reorganisation and restructuring costs of €43 million.