Suit Over Armand Hammer Museum Settled

A Delaware Chancery Court judge ruled today to accept a proposed settlement that would limit construction and endowment costs for the Armand Hammer Museum in Westwood, as well as control the amount of money Occidental Petroleum can give to charities that Hammer controls.

The proposed settlement, among other things, provides that Occidental’s expenditures for the museum’s construction should not exceed $50 million. The Armand Hammer Museum of Art and Cultural Center under construction adjacent to Occidental’s headquarters in Westwood is scheduled to open Nov. 28 with a special exhibition of the works of Russian artist Kasimir Malevich. Total construction and endowment costs are expected to exceed $90 million.

Three groups of shareholders had protested the settlement proposal, taking the position that the board of directors’ intention to spend more than $100 million of Occidental Petroleum’s money to build and support the construction of a museum for Armand Hammer--the company’s chairman and major stockholder--was an inappropriate expenditure of corporate funds.

While the ruling is perceived to be a victory for Occidental, Vice Chancellor Maurice Hartnett, the judge who presided over the matter, said the settlement “left much to be desired.”

“If the court was a stockholder of Occidental, it might vote for new directors; if it was on the board, it might vote for new management, and if it was a member of the special committee, it might vote against the museum project,” Hartnett wrote in his 20-page opinion. “But it’s options are limited in reviewing a proposed settlement to applying Delaware law. . . .” Though headquartered in Los Angeles, Occidental is incorporated under Delaware law.

Hammer said he is pleased with the court’s decision.

“Judge Hartnett’s ruling ends all shareholder lawsuits relating to the museum,” Hammer said today.

The settlement has been opposed by major shareholder groups, the California Public Employees Retirement System, three other public employee pension programs in Pennsylvania and New York and New York City private investor Alan R. Kahn, who owns 700 shares of Occidental.