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June 01, 2012
Shareowners Voice Support for Environmental and Governance Resolutions at Chevron
    by Robert Kropp

A call for the separation of the positions of CEO and Board Chair gains more than 38% of shareowner support, while 27% vote in favor of improved disclosure of risks associated with hydraulic fracturing.

Chevron held its annual general meeting this week, and as protestors convened outside the meeting shareowners voiced their concerns over numerous instances of poor corporate governance.

A resolution filed with the company this year, calling for the separation of the positions of Chair and CEO, gained over 38% of support from shareowners. Widely considered to be an essential corporate governance reform, support for the resolution may have gained strength by remarks made at the meeting by John Watson, the Chevron executive who holds both positions.

Ignoring recent court decisions both in Ecuador and the US upholding the company's $18 billion liability for environmental damage in Ecuador, Watson persisted in describing the court decision as "a fraud being perpetrated on our company." And while he expressed regret for a recent spill of 2,400 barrels of oil in Brazil, Watson said, "There was no damage to the environment."

When a similar resolution was voted on at Chevron's annual meeting in 2008, it attracted 14% of shareowner support.

The filing of this year's resolution was led by the Unitarian Universalist Association (UUA). Simon Billenness of UUA said, "By serving as CEO and Board Chair, Mr. John Watson is in effect his own boss. That's not good for Chevron shareholders."

"For Watson to lose a vote to this degree shows a shocking degree of anger by shareholders over the Ecuador liability and his role in failing to fully disclose material risks to investors," Billenness continued.

Also at the meeting, 27% of shareowners voted in support of a resolution requesting that Chevron disclose the risks associated with the controversial practice of hydraulic fracturing, or fracking. A similar proposal at ExxonMobil was supported by 30% of shareowners.

"While other companies are becoming more transparent in how they are managing the risks associated with fracking, ExxonMobil and Chevron are industry laggards when it comes to disclosure," said Michael Passoff, Senior Strategist at As You Sow. "It is time for these major oil and gas companies to take a hard look at how they are going to manage the inherent financial and environmental risks of their fracking practices."

The proposals at ExxonMobil and Chevron were part of an investor effort coordinated by Green Century Capital Management. Seven of the ten resolutions filed this year were withdrawn by investors following successful engagement.

"Shareholders not only have the right, but the responsibility to press companies on how this increasingly controversial practice will affect their bottom lines," said Larisa Ruoff, Director of Shareholder Advocacy for Green Century. "Today's votes should send a clear message to Chevron and ExxonMobil that their existing transparency fails to meet investor and community concerns, and it is time for them to respond."


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