Delaware Court Upholds $37 Million Award to Shell Stockholders
WILMINGTON, Del. (AP) _ The Delaware Supreme Court has ruled that 20,000 former Shell Oil Co. stockholders should be given some $37 million because Shell failed to disclose fully more than $1 billion in oil and gas reserves.
The court on Thursday upheld a November 1990 ruling by Delaware Vice Chancellor Maurice Hartnett III that Shell owed the former stockholders for failing to disclose the reserves fully during a 1985 merger.
The award gives the former Shell stockholders an additional $2 per share for more than 14 million shares they relinquished in the merger deal nearly seven years ago.
Plaintiffs’ attorney Ken McNeil calculated the amount of the award at about $37 million, including interest from 1989.
Houston-based Shell Oil Co., the nation’s seventh-largest oil company, became a wholly owned subsidiary of the giant Royal Dutch-Shell Group in June 1985, completing a $5.7 billion merger launched nearly 18 months earlier.
As part of the merger, the shareholders - many of them Shell employees - either could accept $60 per share or seek a court appraisal of stock value, said McNeil.
Some shareholders later filed suit claiming the stock was worth more because of the undisclosed energy reserves.
Hartnett ruled that the material mailed to shareholders failed ″to disclose the existence of oil and gas reserves having a value of approximately $1 billion.″
″We cannot agree that a billion dollar understatement of the value of Shell’s reserves would have been anything but highly relevant and material to a reasonable stockholder,″ Thursday’s Supreme Court ruling, written by Justice Andrew G.T. Moore, said. ″We agree that the misstatements were material and that (Shell) must bear responsibility for them.″
Shell spokeswoman Eydie Pengelly said late Thursday that the company was not yet prepared to respond to the ruling. ″We really don’t have any official comment on it at this time,″ she said.
McNeil said the case will return to the chancery court for award of the lawyers’ fees and distribution of the money.
″We are extremely happy that this matter is now concluded,″ he said.
Still pending before the Delaware Supreme Court is a separate issue for approximately 1,000 former holders of some 1 million Shell shares who asked for the appraisal.
In December 1990, Hartnett awarded $71.20 per share for their stock. Plaintiffs’ attorneys maintained the fair value was $89 per share, while experts for Shell said the value was $55 a share.
With 10 percent interest added from June 1985, the amount totaled about $110 million. Shell appealed the award.