George Shaheen quits as Webvan CEO

Shaheen handed in his resignation to the board of the Foster City, Calif., company Friday, according to company spokesman Bud Grebey. "A different kind of executive is needed to lead the company at this time and as such, it no longer makes sense for me to continue in my role and I will be leaving the company," Shaheen, 57 years old, said in a prepared statement. Shaheen has no plans to join another company, Grebey said.

Grebey said that Webvan's board plans to look for an executive with more operational experience than Shaheen possessed. Chief Operating Officer Robert Swan will lead the company until the board can find a successor. A person close to Webvan said Swan has effectively been running the operations of Webvan for some time and that Shaheen's departure was "more a question of when than why."

Analysts believe it will be difficult to find a seasoned executive to take over the company. "It's not clear who the person is who could steer that ship at this point," said Lauren Cooks Levitan, an analyst at Robertson Stephens.

Once a landmark event
Shaheen's decision to join Webvan in September 1999 was considered a landmark event in the development of the then highflying Internet economy. The former chief executive of Andersen Consulting, now called Accenture, Shaheen left behind a 30-year career at the world's biggest consulting firm, where he oversaw 65,000 employees and made an estimated $3.5 million to $5 million a year. But the prospect of stock-option bonanzas at Internet companies enticed more and more executives to leave secure positions at old-line companies.

When he joined the company, Shaheen received an option to purchase 15 million shares in the company at $8 a share, plus a $13.5 million bonus to purchase an additional 1.25 million shares, according to a proxy filed with securities regulators last year. His salary was $500,000 a year with the possibility of $250,000 bonus.

Grebey said Shaheen didn't have any further comment on his departure, and efforts to reach him at home were unsuccessful. In an interview late last year, Shaheen said he joined Webvan because he was excited about the chance to use technology to make over the grocery industry. "Coming over here was never about getting filthy rich," he said.

Indeed, Shaheen never got wealthy from Webvan, whose stock has been in precipitous decline since an initial public offering in November 1999. Its shares now trade at 12 cents, and it faces the threat that its stock will be delisted by Nasdaq Stock Market unless it meets certain requirements. Webvan's auditors, Deloitte & Touche LLP, have raised questions about whether the company can survive the coming year. Shaheen never exercised any Webvan options; nor do public filings indicate that he sold any of the 1.25 million shares he acquired, Webvan's Grebey says.