Bord na Móna managing director John Hourican will receive close to €1 million after agreeing to settle a High Court case against the State company.

Mr Hourican is retiring in December after seven years. He was in dispute with the company over his severance package. Following day-long talks between lawyers for both sides yesterday, Roddy Horan SC, for Mr Hourican, told the High Court that the issue had been settled and could be struck out.

The terms of the deal are confidential and neither side was prepared to reveal its value last night. However, it is understood to be in the region of €1 million, close to the figure Mr Hourican originally sought.

Mr Hourican, who received €365,000 last year in pay and benefits, has worked for the board for the past 18 years. He was employed first as financial controller, then as managing director.

State company managing directors retire after seven years, as do government department secretaries-general. The company employed Mr Hourican on yearly fixed-term contracts rather than for a seven-year term, an option sometimes taken by such executives. However, under a law passed in 2003, workers who are employed on more than three successive fixed-term contracts are treated as permanent.

Mr Hourican wrote to Bord na Móna earlier this year pointing out this fact. As he is 61, he sought compensation for the fact that he would be retiring almost four years early, thus losing the bulk of four years' pay. His basic salary last year was €229,000.

In a statement yesterday he said that all outstanding issues had been agreed to his "satisfaction" and he was withdrawing the proceedings.

A dispute over whether the High Court had the jurisdiction to deal with the central point in the case - whether Mr Hourican was a permanent employee or a contractor - prevented it from going to trial.

In its statement, Bord na Móna said that it would honour the terms of Mr Hourican's existing contract. It added that it was continuing the search for a replacement.

Since Mr Hourican took over Bord na Móna has broadened its focus from managing and exploiting the State's peat bogs and has gone into energy and environmental services. It made profits of €29 million in the year to March 31st. It paid the State a €3.9 million dividend from its profits, the first such payment the company has made in its 31-year history.