The former CFO and CEO of Royal Ahold NV, the Amsterdam-based food retailer, have settled their disputes with the company over its massive accounting scandal earlier this decade.
Ex-CFO Michiel Meurs agreed to pay Ahold $850,000 and waive $2.8 billion in claims he made against the company in an arbitration proceeding. The former CEO, Cees van der Hoeven, will pay $7 million and drop claims of more than $6.4 million. Neither admitted liability under the settlement.
In February 2003, Ahold dropped a bombshell when it announced it had overstated earnings by $500 million at its U.S. Foodservice division and that van der Hoeven and Meurs would leave the company. Ahold’s market cap shriveled by two-thirds on the news.
In October 2004, the Securities and Exchange Commission settled fraud and other charges with the two former executives and the company. The SEC had alleged that Ahold overstated U.S. Foodservice’s net sales by about $30 billion for fiscal years 2000 through 2002 by fraudulently inflating promotional allowances through the improper consolidation of joint ventures, fraudulent side letters, and other accounting errors and irregularities. For fiscal years 2000 and 2001 and the first three quarters of 2002, Ahold overstated operating income by approximately $3.3 billion and net income by roughly $829 million, added the commission.
In 2006, a Dutch criminal court gave Meurs and Van der Hoeven nine-month sentences, suspended for two years, and fined them about $350,000 each. Both have appealed.
Last December, Michael Resnick, former CFO of U.S. Foodservice, was sentenced to six months of home detention and three years of probation. Resnick left the company in 2003 and the following year was charged with conspiracy, securities fraud, and making a false filing with the SEC. He pleaded guilty in September 2006 and had faced up to five years in prison.