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Paul Scally hailed the “fantastic job” Peter Taylor did at Gills during the past season.
Boss Taylor took over as manager of Gillingham in October and ensured the club survived in League 1.
The reward for Taylor is a new two year deal at Priestfield.
Mr Scally said: “I asked him (Taylor) to keep us in this division and he did that. He did a fantastic job and I am very proud of the job he did.
“I am delighted to say we have agreed a new contract for him to stay with the club for a further two years.”
Mr Scally made the bold decision to axe former boss Martin Allen just three months into the 2013/14 season, having watched the Gills struggle for points.
“By October 13 I was sufficiently alarmed to believe that if we didn’t make changes then we could possibly have had a different fate,” he said.
“We made the change. Some may say it was rash but it was well thought through. I genuinely believe it was a change that was necessary.
“Had we not made that change we possibly wouldn’t be playing League 1 football next season.”
Mr Scally turned to Taylor – a man who in 2000 guided the Gills to the Championship after a play-off win at Wembley.
The Gills chairman said: “I asked him if he could come in to help us stay in this division and with his ability, with his team around him and a decent group of players, who gave their all for the cause, we have managed to achieve it.
“Peter and the team have managed to pull enough out of the bag to enable us to stay in this league and we will be playing in League 1 next year.”
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