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His meeting with Lester Coleman, then general counsel of Halliburton Co., took only a few moments. But Rogge Dunn recalls it vividly now. “He stood up, and said, ‘I’m Les Coleman, and I’ve got to go,’” Dunn says of the March 1999 meeting. Dunn, a board certified labor and employment specialist at Dallas’ Clouse Dunn Hirsch, represents three former Halliburton executives who sued the company and its wholly owned subsidiary, Dresser Industries Inc., for allegedly violating their retention-severance agreements — specifically as they pertain to their stock options. Two of those clients settled. Dunn also represents three other former executives who threatened to sue but settled under terms the lawyer declines to disclose because of confidentiality agreements. At that abrupt meeting with Coleman, Dunn had brought one of his clients, Ed Spatz, a former divisional president at Dresser who lost his job a few months after the company merged with Halliburton in January 1998. Dunn says he and Spatz were doubly disappointed when Coleman didn’t stay. First, Dunn says, they didn’t get to meet with a four-member management committee — including then-Halliburton Chairman Dick Cheney — to discuss Spatz’s dispute, as the former executive’s written retention-severance agreement had promised. Second, Dunn alleges the committee’s appointed representative, Coleman, left Dunn and Spatz to talk with Cheney’s executive assistant instead. Not wanting to resort to litigation, Dunn says his client waited nearly two years after that meeting before filing Ed Spatz v. Dresser Industries Inc. and Halliburton Co., which is pending in the 134th District Court in Dallas before Judge Anne Ashby. But these days, with almost weekly news bulletins about Dallas-based Halliburton’s mounting asbestos litigation and the Securities and Exchange Commission’s investigation into the company’s accounting practices, Dunn and his client with a claim remaining against Halliburton, Spatz, are watching events carefully. They took careful note in May, for instance, when Coleman, 60, announced his retirement from Halliburton. At the end of the year, Coleman, who has taken on the title of chief legal officer but kept his rank as executive vice president, will leave Halliburton, which allows early retirement after age 55, says Wendy Hall, a spokeswoman for the company. Assistant General Counsel Bert Cornelison Jr. took over as GC in May 2002. For Dunn, Coleman’s pending exit shows how generous the company can be with certain departing executives. Coleman’s agreement, according to Halliburton’s proxy statement filed with the SEC in April 2002, calls for him to receive his $950,000 annual salary for the next two years and about $750,000 in restricted shares of stock. In 2000, Coleman’s compensation totaled $2,482,975, including stock options with a present value of $954,330, according to the company’s 2001 proxy statement. Dunn’s clients — most of them, like Spatz, were divisional presidents at the time they left Halliburton — did not depart on such congenial terms. Instead, Spatz alleges the company operated a “bait and switch policy”; specifically that Halliburton “made false representations.” At his deposition on Dec. 13, 2001, Coleman agreed with Dunn that the company had presented the merger of Dresser and Halliburton, finalized in January 1998, as a pairing of equals or a pooling of interests. Coleman said that because Halliburton was so much larger than Dresser, however, the company offered Dresser executives, including Dunn’s clients, the security of golden parachutes. Before the merger, Dresser, with Halliburton’s blessing, offered its executives written contracts that promised three years’ pay and benefits if their employment was involuntarily terminated or their positions significantly changed, Coleman testified. But two months after the merger, Spatz alleges, Halliburton asked the former Dresser executives to sign what Dunn describes as “the lead balloon.” Halliburton management asked the executives to sign a replacement written retention-severance contract that offered one year of benefits if someone was involuntarily terminated, according to the written contract. Spatz and others who refused to sign were terminated. Even though Halliburton told the terminated executives it would honor the three-year contracts, Spatz alleges the company tried to shortchange him by denying him his full stock-option benefits. Specifically, Spatz alleges, the company wanted to deny him what he believes was his right to a three-year window to execute his options. But according to Coleman’s deposition testimony, Spatz’s stock options were not covered under the three-year contract. “I could see it wasn’t a merger of equals,” says Spatz, who had been president of Security DBS, a wholly owned Halliburton subsidiary that manufactures diamond drill bits. Spatz recalls that he was pulled out of a meeting and handed an envelope; inside was the replacement contract he was asked to sign. Spatz alleges he noticed that the introductory letter in front of the replacement contract was dated about the time of the merger. “This convinced me that they had planned this all along,” Spatz says. ASBESTOS WOES Through spokeswoman Hall, Coleman and Cornelison declined three requests for interviews. Mark Vogel, a partner in New York’s Weil, Gotshal & Manges who represented Dresser during the merger, declines to comment. And Eric Ostermayer, a partner in the Dallas office of Vinson & Elkins who represents Halliburton in the Spatz litigation, did not return a phone call seeking comment. In his December 2001 deposition, Coleman testified, “We wanted the Dresser executives to stay in place during the time when we were — from the time they were aware the negotiations were going on…. We were hoping that a number of them at least would stay on through after that.” Coleman also testified that at the time of the proposed merger he had told Cheney — now vice president of the United States — that the original Dresser retention-severance contracts could cost the company some $50 million if they were all executed. Cheney’s lawyer, Terrence O’Donnell, a partner in Washington, D.C.’s Williams & Connolly, did not return a phone call seeking comment. Asked during his deposition if an executive would be better or worse off with the replacement contract, Coleman said, “It would depend on each individual situation. As the reorganization plans came together and it became more apparent where specific executives who had such a contract would fit into the organization or not, then we dealt with them individually.” At the meeting with Spatz, after Coleman departed, Dunn says he continued to talk with an assistant to Cheney, who has since left Halliburton. But Spatz says he decided to file suit after Cheney announced he would run for vice president and take early retirement instead of simply leaving Halliburton, thereby greatly increasing the size of his financial package. The money value of Cheney’s retirement package — $35 million — triggered headlines at the time, with critics noting that he had been at Halliburton for only five years. Coleman, on the other hand, has worked at Halliburton since 1983. A graduate of Kalamazoo College and the University of Michigan Law School, Coleman began his career as outside counsel at a Cleveland firm that was acquired by Arter & Hadden. He started at Halliburton as vice president of corporate development. He later moved to the finance department and became general counsel in 1993. Since the merger with Dresser, Coleman has faced a steady rise in his company’s litigation docket, most notably because of asbestos claims. In its proxy, the company stated that the “common stock declined dramatically due to investors’ concerns about Halliburton’s asbestos exposure.” The company stated that for that reason, and because executives had achieved performance goals, they had received equity grants throughout the year for retention purposes. Hall says there are 312,000 pending asbestos-related claims against Halliburton. Andrew Thorburn, a Halliburton investor analyst, says an econometric report, paid for by the company, estimates Halliburton’s potential gross liabilities related to asbestos at $2.2 billion.

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