AP Photo/Justin Sullivan
Webvan Vice President of Corporate Affairs Bud Grebey pauses for a drink during a news conference in Foster City, Calif. on July 9, 2001. Grebey announced that Webvan, the online grocer, will close its doors immediately and file for bankruptcy.
In 1999, when George Shaheen joined the online start-up Webvan and left behind his $5 million-a-year job running Andersen Consulting (now Accenture), investors read the move as yet another reason to take Internet businesses seriously. Shaheen had left behind one of the most prestigious jobs in the old-school corporate world to help get Webvan's ambitious plan -- to run a U.S.-wide online grocery system -- off the ground. No wonder that Benchmark Capital, Goldman Sachs (GS.N), CBS (CBS.N), Sequoia, and others lined up to sink some cash into the company, which had been founded by Louis Border of Borders (BGP.N) bookstores. By the time the company went public, it was able to raise $375 million.
The problem was that Webvan's vision was too grand, too elaborate, and way too expensive. Instead of starting small, Webvan executives made plans to open high-tech warehouses in stations across America, and quickly hired more than 2,000 employees. Fast-forward to the summer of 2001 and the company's cupboards are empty: Webvan burned through an astonishing $1.2 billion and declared bankruptcy. Its exit plans left shareholders empty-handed but included provisions to honour Shaheen's severance pay contract, which was set at a remarkable $375,000 per year for life.
In 2005, Shaheen was named chief executive of Siebel Systems but left that post in 2006 just after Siebel merged with Oracle (ORCL.O). Since 2004, he's been on the corporate board at NetApp where he's putting his infamous pay-negotiating skills to work as a member of the compensation committee.
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