Webvan forgives Shaheen loan
The online grocer takes a financial hit after its outgoing chief executive repays a $6.7 million loan with $150,000 worth of the now severely depressed Webvan stock.
Former Chief Executive George Shaheen, who stepped down as CEO on April 13, got the loan to pay taxes on a Webvan stock purchase, according to documents filed with the Securities and Exchange Commission.
Shaheen used a bonus granted by the company to buy 1.25 million shares of stock, according to the documents. Webvan loaned him the $6.7 million, at an annual interest rate of 6.2 percent, to pay the so-called Alternative Minimum Tax (AMT). The AMT is imposed on people who exercised options to buy stock in 2000 but didn't sell them that year and must pay taxes in 2001 on the shares' value on the date they were purchased--even if the stock has since plummeted, like Webvan's.
The plan was that Shaheen, who was making $500,000 a year according to SEC documents, would pay back the loan using the profits made from the sale of the stock.
But the stock declined, as it has generally since it went public. Webvan climbed as high as $34 on its first day of trading but closed Tuesday at 12 cents.
According to the documents, Shaheen paid off the loan by returning the 1.25 million shares to the company.
On Tuesday, Shaheen joined the board of directors of Tality, an electronic product design company. Tality appeared to play down Shaheen's Webvan experience with a press release headline that read: "Tality Appoints Ex-Andersen Consulting CEO to Board of Directors."
Shaheen joined Webvan in October 1999 from Andersen Consulting, where he led the consulting firm since it became an independent unit in 1989. During his tenure, its revenue increased from $1.1 billion to $8.3 billion.
Shaheen is also a board member of Siebel Systems and on the board of advisers at Northwestern University's Kellogg Graduate School of Business.