Dynegy Inc.’s founder and former CEO Chuck Watson last week settled his severance claims with the company for $22 million, according to a filing with the Securities and Exchange Commission. Watson, who had been seeking $28.7 million, resigned in May 2002 following a disastrous merger attempt with Enron Corp. (see NGI, June 3, 2002).

According to Dynegy spokesman John Sousa, the settlement will help to resolve “issues of the past.” In April, Dynegy settled a claim for severance with former President Steve Bergstrom for $10.4 million. Arbitration for a claim by former CFO Rob Doty is set for November; Doty is seeking $3.4 million.

Dynegy also reclassified a 2004 $13 million tax benefit, originally reported within continuing operations but now reported within discontinued operations. The change does not affect its second quarter net income nor full-year 2004 forecast.

The primary impact of the reclassification was to reduce diluted earnings per share from continuing operations from $0.09 to $0.06, offset by a decrease in diluted loss per share from discontinued operations from $(0.07) to $(0.05). As a result, diluted earnings per share decreased from $0.02 to $0.01, although net income did not change.

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