Shell To Pay $90 Million To Settle Suit
July 12, 2005
By Steve Goldstein, MarketWatch
Last update: 10:33 a.m. EDT July 12, 2005
LONDON (MarketWatch) -- Royal Dutch Shell said Tuesday it agreed to pay $90 million to settle charges brought by shareholders after the company overstated proven oil reserves.
Shell said it will pay $90 million to plaintiffs, plus up to $1 million to cover out-of-pocket expenses.
Of the proposed settlement amount, Shell said $25 million is covered by insurance policies.
The lawsuits were filed by current and former Shell employees who owned the shares through the company savings plan. The first suit against Shell on the issue was filed in March 2004.
Jeffrey M. Norton, an attorney at Wechsler Harwood LLP who represented some of the 12,000 employees involved, said they had calculated damages between $110 million and $113 million.
Even though shares have advanced since the reserves scandal, due to rising energy prices, Shell has not performed as strongly as its rivals, Norton said.
"They consistently traded lower than their peers," he said.
For Shell, the settlement represents another step in moving beyond the scandal.
"We are hopeful that the court will approve the settlement, which represents an important step toward putting litigation relating to the reserves recategorizations behind us," said Shell legal director Beat Hess.
Shell in January 2004 said it overstated proven oil reserves by more than 20%, and raised that figure on four different occasions.
Shell was fined by the U.S. Securities and Exchange Commission and the British Financial Services Authority, and the reserves scandal prompted the resignations of executives Philip Watts, Walter van de Vijver and Judy Boynton.
Steve Goldstein is MarketWatch's London bureau chief.