Cash-strapped online grocer Webvan Group Inc. will pay former chief executive George Shaheen $375,000 every year for the rest of his life.
Shaheen, 58, negotiated the retirement benefits after stepping down last month.
Under the retirement package, Shaheen will receive 50 percent of his base salary and target bonus. The payments will continue to be sent to Shaheen's wife should he die before she does.
Webvan, Foster City, CA, reportedly paid Shaheen an annual salary of $500,000 with a bonus of $250,000.
The Internet standalone has been hit hard by industry criticisms about its grocery-delivery business model, and it needs to round up at least $20 million to make it into 2002. Webvan this year has left Atlanta, Dallas and Sacramento, CA, and abandoned plans to enter the New Jersey-New York market after building a $30 million distribution center in North Bergen, NJ.
These factors, along with the Nasdaq seeming primed to delist Webvan as its stock price has recently sunk below 20 cents a share, have many analysts predicting its demise.
If Webvan shuts, said Marc Roth, Internet lawyer for Brown Raysman Millstein Felder & Steiner, New York, it's difficult to tell whether the grocer will have to pay Shaheen, anyway.
“If the company goes out of business or into bankruptcy,” he said, “Shaheen's rights to receive money from the company may be inferior to those of the company's secured creditors, who would have superior rights.”
