May 15, 2001 8:00 PM PDT

Ex-Webvan CEO to collect $375,000 yearly

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Former Webvan Chief Executive George Shaheen will collect $375,000 each year for the rest of his life from the cash-strapped Net grocer, a company spokesman said Tuesday.

Under the terms of his retirement package, Shaheen will receive 50 percent of his base salary and target bonus for the rest of his life. The payments will continue to be sent to Shaheen's wife should he die before her, Webvan spokesman Bud Grebey said.

Shaheen could not be reached for comment.

Webvan paid Shaheen an annual salary of $500,000 and a bonus of $250,000, according to documents filed with the Securities and Exchange Commission.

His tenure with the online grocer was rocky from the start. Almost immediately after Shaheen joined Webvan, the SEC delayed the company's IPO while it looked into reports that Webvan had shared information with analysts that it did not provide in its prospectus.

After the brief delay, the IPO was launched in November 1999 with Webvan selling 25 million shares at $15 each, raising $375 million. The stock opened for public trading at $26, giving the company a market value of $8.45 billion, and the shares climbed as high $34 on their first day.

Since then the stock has plunged, as investors have turned sour on many Web companies and e-tailers. Webvan's shares closed Tuesday at 16 cents.

In an interview with CNET News.com last month, Shaheen defended his stewardship of the company.

"I'm proud of my contributions, and I came in and worked hard on a business model that was difficult to execute," he said.

Shaheen left Webvan with the company facing delisting from the Nasdaq, with only enough money to operate until the end of the year and its auditor expressing doubts that Webvan could survive.

Since his departure, his replacement as CEO, Robert Swan, has begun a massive restructuring plan in a bid to conserve cash. Last month, Webvan shut down its operations in Sacramento, Calif., and Atlanta and laid off more than 800 workers.

By slashing its work force, Webvan can afford to fund operations through the rest of the year, the company said.

The retirement package is not the only benefit Shaheen leaves Webvan with. The company allowed him to repay a $6.7 million loan with $150,000 worth of the now severely depressed Webvan stock.

He got the loan to pay taxes on a Webvan stock purchase, according to documents filed with the SEC.

Webvan needed to offer Shaheen a sweet deal to lure him away from his post as CEO of Andersen Consulting. He had led Andersen since it became an independent unit in 1989, and during his tenure its revenue increased from $1.1 billion to $8.3 billion. For his success, he was paid an annual salary of $4 million.

 

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