Eight years after a noisy falling out between Occidental Petroleum Corp. patriarch Armand Hammer and Los Angeles investor David H. Murdock, a Superior Court judge Friday approved a legal settlement that will pay $3.65 million to a group of Oxy shareholders.
The agreement ends 19 lawsuits filed after Occidental paid Murdock $194 million in 1984 for his 5% stake in the oil company. At issue was the premium paid to Murdock for his stock--42% over the market value at the time--which the plaintiffs termed a waste of corporate assets.
Murdock, then Oxy’s largest shareholder, had been active in the company in the years before a surprise break with Hammer that summer. Indeed, the financier had been seen as the heir apparent to Hammer--or as possible usurper of Hammer’s one-man rule of the Westwood firm.
Hammer himself owned only 1% of Oxy, though he effectively controlled the board of directors.
But the relationship blew up, according to reports at the time, over Hammer’s enthusiasm for oil-shale development and a $600-million Chinese coal mine.
Los Angeles Superior Court Judge Barnet M. Cooperman approved the settlement, which divides the $8.6 million in a settlement escrow account between the class-action shareholders and Occidental. Oxy and Murdock had each placed $3.5 million into the fund in 1989; the remaining $1.6 million reflects interest earned.
Under terms of the settlement, reached in November, attorneys’ fees of $1.3 million will be deducted equally from the sums due Oxy and the shareholders.
The settlement clears Occidental directors of liability for approving the repurchase of Murdock’s stake.
“The major point is that the court . . . made the specific finding that Occidental’s board acted in good faith in approving the buyback of the Murdock shares,” said Larry Steckmest, Occidental’s general counsel.
Attorneys for the shareholders and Murdock could not be reached for comment.
Some of the suits were brought by shareholders as a class to reclaim money that they believed Oxy wasted by paying an above-market price for Murdock’s shares.
Other suits were derivative claims, brought by shareholders for the benefit of the corporation. It is to resolve those suits that Occidental will receive half of the settlement funds.
“The net effect is they balance out, with the exception that Occidental is out the money for the attorneys,” Steckmest said.
Shareholders who sold Occidental stock after July 19, 1984, but before Sept. 12 of that year may be eligible to share in the settlement. So far, about 7,000 claims have been filed, according to the company. The deadline for filing is May 1.