Paddy Cosgrave, the chief executive of Web Summit, may have already accrued legal costs exceeding €7 million in his bitter dispute with two former friends and business partners, with the tech conference company understood to be footing at least some of the bill, the High Court heard on Wednesday.
Mr Cosgrave was also paid a “signing-on bonus” of €1 million upon his return to the company’s helm last year following his resignation in late 2023 after a series of social media posts about Israel and Hamas.
Mr Cosgrave is suing minority shareholder and former Web Summit director David Kelly for alleged breaches of his duties. Mr Kelly and another minority owner, Daire Hickey, are also suing Mr Cosgrave for alleged shareholder oppression and breaches of a profit-sharing agreement between the three men.
Mr Justice Michael Twomey is hearing the five cases together in a High Court civil trial, which began on Tuesday.
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Delivering his opening statement on Wednesday morning, barrister Eoin McCullough SC, for Mr Hickey, said it is understood that Mr Cosgrave’s legal costs may have reached €7 million, according to information provided to Grant Thornton.
Although the “position is unclear” at present, the court will hear evidence that Web Summit’s board “appears to accept that Mr Cosgrave is spending company money to defend himself in both these sets of proceedings” involving Mr Kelly and Mr Hickey, the barrister said.
Mr McCullough detailed several examples of expenditure by Web Summit to advance Mr Cosgrave’s “personal campaigns”, often to the detriment of the company itself and the interests of Mr Hickey, who owns 7 per cent of the shares in Web Summit, and Mr Kelly, who owns 12 per cent.
Mr Cosgrave’s pay packet has also increased to a “drastic” extent in recent years, the court heard. At the same time, Mr Hickey, who resigned as an employee of the company in 2017 and a director in 2019, was denied access to basic financial information, the court heard.
Before Mr Hickey’s departure in 2017, the three co-founders were on a similar salary of around €90,000. However, Mr Cosgrave’s salary has ballooned in the years after Mr Hickey’s departure, Mr McCullough said.
In a 2018 email presented to the court, Mr Cosgrave told Web Summit’s then chief operating officer: “Just a note. I am increasing my salary to €250,000 effective from January. I also want to assign a bonus for last year of €75,000.”
Mr Cosgrave’s salary then almost doubled from €500,000 in 2023 to €950,000 in 2024 and he was paid a “signing-on bonus” of around €1 million, Mr McCullough told the court.
This was the same year in which Mr Cosgrave returned as chief executive of Web Summit after his resignation in October 2023 following backlash to a series of social media posts about Israel and Gaza after the October 7th attacks.
Web Summit Showdown: Why the three co-founders are in court
Mr Cosgrave has also received “substantial personal loans” from Web Summit over the years, the court heard, which he has repaid “from time to time”. However, the loans have been of “significant benefit” to Mr Cosgrave due to their low rates of interest, Mr McCullough said.
All of these payments have been “improper” and made with disregard to the interests of Mr Hickey and Mr Kelly as minority shareholders, the court heard.
The substantial costs associated with the payments also affect the valuation of the company, a central issue in the case because Mr Hickey and Mr Kelly want Mr Cosgrave to buy out their stake Manders Terrace, the trading entity behind Web Summit, Mr McCullough said.
