With EMI now looking for a new chief executive Mr Fifield will not stay at the group beyond the expiry of his contract next March. He may leave well before then if the company agrees to buy him out.
Mr Fifield, known as "Lucky Jim" because of his lavish remuneration, was the front runner for the position and most observers had expected him to be named as chief executive as Sir Colin Southgate, chairman, had expressed an interest in stepping back to a non-executive role.
But the board could not agree on the way the role would be defined and Sir Colin will now stay on as chairman. Mr Fifield had wanted free rein with Sir Colin having only limited input on a non-executive basis. EMI has denied that the decision was related to boardroom concerns over Mr Fifield's pay demands.
With Mr Fifield ruled out, City analysts now expect the top job to go to an external candidate. Ken Berry, who runs EMI's record labels, was once considered a possibility but he is staying in his current position. He will continue the restructure of the group's operations which have been hit by sluggish sales and the impact of the financial crisis in Asia.
Mr Berry, who was born in the UK but lives in California, has attracted criticism for promoting Nancy, his American wife, from an executive position in charge of "special projects" to the more senior post of vice chairman of Virgin Group Records last September. There have been reports of management unrest at the group with some saying Ms Berry treats subordinates poorly.
Ms Berry, 39, earned her stripes with her part in signing the top-selling Spice Girls for EMI. But things have not gone so well more recently with artists such as Janet Jackson and David Bowie failing to deliver high sales.
There has also been disquiet over Ms Berry's high-octane lifestyle which is said to include lavish parties at the couple's Bel Air mansion and friendships with rock stars. There has been speculation that the Berrys' high-living and high-profile lifestyle was causing tension between Ken Berry and Sir Colin Southgate.
Ms Berry's commitment to attending rock concerts and backstage parties has impressed some of EMI's most high-profile stars who say few other executives of her seniority bother to put in appearances. David Bowie described her as "a real rock'n'roll girl".
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