Times Online: Shell pays $90m to settle class action: “Shell still faces two other class action claims. One is a shareholder class action that has been consolidated in a New Jersey court. It is believed this claim asserts that share-based savings schemes suffered losses of more than £1 billion. Shell declined to comment on this case this morning. The other action is a derivative claim. Shell said that it was in settlement discussion over this claim but that it would be premature to comment any further.”: Posted Wednesday July 13, 2005
By Miles Costello
Royal Dutch Shell, the oil giant, has agreed to pay more than $90 million to settle one of three class action legal cases levelled against it following its shock overstatement of the level of its proven oil and gas reserves last year.
The proposed settlement - which still has to be ratified by the American courts - comes after Shell found out earlier this month that it would not face criminal charges in connection with the overstatement scandal.
Shell's revelation last January that it had been exaggerating the level of its oil reserves for years sent its stock tumbling and cost the jobs of several of its senior executives, including the chairman, Philip Watts.
Walter van de Vijver, head of Shell's exploration unit, and Judy Boynton, the finance director, also left the group, which last month agreed to end its 100-year old dual board structure and create a single company. The move, designed to make Shell more transparent and its management less unwieldy was in part a response to the reserves scandal.
The oil giant has already been fined record amounts by both British and American regulators, agreeing to pay £17 million to the Financial Services Authority and about $120 million to the US Securities & Exchange Commission. Mr Watts launched a legal action against the FSA after being personally implicated by the regulator.
The class action, which was earlier this year consolidated in a New Jersey court, was launched by members of various Shell pension schemes in America. They claimed that Shell's oil overstatements caused major losses to the value of those schemes.
Shell said today: "An order preliminarily approving the proposed settlement has been entered. If the settlement is finally approved by the court, Shell will pay $90 million which - after certain expenses (including court-approved attorneys' fees) are deducted - will be distributed to eligible participants in the relevant employee savings plans.
"Shell has also agreed to pay up to $1 million of plaintiffs' counsel's out-of-pocket expenses and the costs of providing notices to class members. In addition, as part of the settlement agreement, Shell has agreed to adopt certain new procedures for monitoring and training individuals appointed to fiduciary positions in savings plans that are subject to Erisa [the Employee Retirement Income Security Act of 1974]."
Beat Hess, Shell's legal director, said: "Shell believes that this is a good settlement for plan participants and for the companies. We are hopeful that the court will approve the settlement, which represents an important step toward putting litigation relating to the reserves recategorisations behind us."
Shell still faces two other class action claims. One is a shareholder class action that has been consolidated in a New Jersey court. It is believed this claim asserts that share-based savings schemes suffered losses of more than £1 billion. Shell declined to comment on this case this morning.
The other action is a derivative claim. Shell said that it was in settlement discussion over this claim but that it would be premature to comment any further.
Shell's shares lost 4p to 544.75p in early dealings. The group has a stock market worth of more than £52.6 billion.
http://business.timesonline.co.uk/article/0,,9072-1690669,00.html
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