Royal Dutch/Shell Group, the Hague, agreed to settle a federal class-action lawsuit brought by participants in three of the company's U.S. defined contribution plans and pay $90 million to the plaintiffs, said Jeffrey Norton, associate with Wechsler Harwood, one of the law firms representing the participants. The settlement remains subject to court approval. The suit, filed in 2004 by plan participants who invested in the Royal Dutch Stock Fund, alleged that fiduciaries of the Shell Pay Deferral Investment Fund, Shell Pay Deferral Plan, Shell Provident Plan and Shell Trading Savings Plan failed to disclose that the company recategorized its oil and gas reserves, which led to a negative effect on the company stock.
The plaintiffs' claims are estimated between $110 million and $115 million, and the $90 million settlement represents roughly an 80% recovery, "which is remarkable," Mr. Harwood said.
The lawsuit was filed in July 2004 with the U.S. District Court in Newark, N.J. Judge John W. Bissell granted preliminary approval of the settlement Friday and set a hearing for Aug. 22 to consider final approval of the agreement.
The plans' total assets were not available, but Shell Oil, Houston, had $7.8 billion in total defined contribution assets as of Sept. 30, according to Pensions & Investments data.
Royal Dutch/Shell issued a press release today saying the company agreed as part of the settlement to adopt new procedures for monitoring and training plan fiduciaries. Company insurance policies will cover $25 million of the proposed settlement amount, the release said.
Andy Corrigan, Royal Dutch/Shell spokesman, said, "It is in the best interests of the company to put behind it reserves recategorization matters whenever that can be done so reasonably." He noted company officials "believe it is an appropriate settlement at this time."