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The oil company also agrees to revise its executive-compensation practices and the composition of its board of directors.
Craig Schneider, CFO.com | US
September 1, 2005
Royal Dutch/Shell Plc. has agreed to pay $9.2 million and make corporate governance reforms to settle four shareholder lawsuits that stemmed from the company's oil-reserves scandal, according to news reports.
The settlement resolves lawsuits that were pending in U.S. federal courts in New York and New Jersey, as well as a state court in New York, against current and former directors of Shell.
Reportedly, Shell agreed to adopt policies and standards in the areas of board composition and qualifications, membership and functions of board committees, director and senior management compensation, financial reporting and controls, and corporate compliance and ethics. The company did not provide further detail on these reforms.
After Shell's January 2004 announcement that it overstated its estimates for oil and gas reserves by about 20 percent, U.S. and British regulators imposed almost $150 million in fines and initiated criminal investigations, noted Reuters.
Earlier this year, the Financial Times reported that U.S. regulators did not plan to charge Shell for overstating reserves for 2002 and prior years. At the time, regulators stated that that they would go easy on the company because Shell self-reported the material misstatements to the public, cooperated with the investigation, and made commitments to spend $5 million on a compliance program, among other concessions.
Regulators also reportedly reasoned that a criminal prosecution of Shell would have had a "negative effect" on the company's "innocent employees and legitimate activities."