Sweden’s Skandia Insurance Company Ltd. announced that it has reached a settlement agreement with its former Chairman, Lars Ramqvist, in a dispute over actions he and other board members took in 2000-01.
Under the terms of the agreement, Ramqvist has offered to repay all fees he received as chairman of Skandia’s board, its audit committee and its nominating committee, a total of Sw. Kr. 2,216,667 ($318,840) without an admission of guilt or any wrongdoing.
The announcement noted: “As far as has been learned, neither Ramqvist nor other company directors were aware of or approved the removal of the cap for the Wealthbuilder bonus programme in 2000 by Lars-Eric Petersson, which resulted in higher costs for Skandia than what would have been the case if the Board’s decision had been respected. However, this event took place during Ramqvist’s term as chairman of Skandia’s board. Because of this and in the best interest of the company, Ramqvist is prepared to accept his responsibility in accordance with this agreement.”
The company also noted that the settlement “takes into account the fact that Ramqvist did not have any participating interest in the disputed bonus programmes.” The company also said it was in continuing arbitration with Petersson, who is also a former director. Concerning other directors Skandia indicated that the “legal investigation carried out to date indicates that the prospects for success in such processes are very small. Skandia’s board has therefore chosen to not take any other action against former company directors than that pertaining to Lars Ramqvist.”
Commenting on the decision, Bjorn Bjornsson, Vice Chairman of Skandia’s board, stated: “Many people have asked the question of whether Skandia’s board at that time, and the chairman in particular, had any responsibility for the gigantic bonus payments. The legal investigation that Skandia commissioned in autumn 2004 shows that there are conditions to demand liability for damages from the former chairman. However, along drawn-out legal process would hardly benefit Skandia, which is why a settlement of this kind is good. The settlement that will now be submitted to the Annual General Meeting for approval entails that Lars Ramqvist has accepted his responsibility. The compensation that Lars Ramqvist will pay to Skandia is reasonable given the situation at hand.”
Ramqvist commented: “Both I and other directors on Skandia’s former board trusted the information provided by the former executive management of the company and the information provided by the auditors in their examination of the bonus programmes. In retrospect, this information has proved to be incorrect. Neither I nor the other directors can accept any blame for this. It is therefore contestable that there may be any grounds for liability. However, as chairman of Skandia during the period in question, I am willing to accept my moral responsibility for the events that occurred and have therefore — in the best interest of the company — agreed to this settlement.”
The company said that the “issue of liability for damages for Skandia’s former auditors is being further investigated. Attorney Peter Danowsky is heading the investigation of the Board’s and auditors’ liability. A suit demanding damages against Skandia’s former auditors would require a decision by the Annual General Meeting. The Board will report on its opinion on this matter well in advance of the Annual General Meeting on 14 April 2005.” The agreement with Ramqvist will also be submitted for approval at that meeting.
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