June 01, 2013
Investors Square Off with Chevron CEO at Shareowner Meeting
by Robert Kropp
Shareowner advocate Simon Billenness cites the company's $19 billion legal quagmire in Ecuador in
requesting a lower threshold for calling special meetings while Atossa Soltani of Amazon Watch is
ejected from meeting at request of CEO John Watson.
Much against the wishes of corporate management, Chevron's annual general meetings of recent years
have prominently featured shareowner resolutions and demonstrations by activists addressing the $19
billion judgment against the company for environmental destruction in Ecuador. That the company
continues to mislead investors regarding the risks of enforcement actions to its operations and
business relationships has prompted investors to question the quality of its corporate governance
on a number of fronts.
At this year's meeting, Green Century Capital Management
introduced a first time resolution calling on the company to refrain from political spending
activities. In the aftermath of Citizens United, corporate political expenditures made the 2012
Presidential elections the most expensive in American history, ignoring research indicating that
such expenditures may in fact erode share value.
Chevron gained especial notoriety when,
less than one month before the election, it made a $2.5 million contribution to the Congressional
Leadership Fund, a Republican super PAC. Public Citizen
responded to the contribution by requesting that the Federal Election Commission investigate the
legality of such a contribution by a federal contractor.
"Chevron has not been able or
willing to demonstrate that its use of company funds generates any value to shareholders," Leslie
Samuelrich of Green Century said. "During a time when public opinion for corporate involvement in
politics is plummeting, shareholders are also concerned about the reputational and business risks
that may be associated with Chevron’s highly visible involvement in politics."
percent vote in favor of the resolution raises the question of whether too many mainstream
institutional investors continue to simply push the vote with management button; but as a first
time resolution the proposal gained enough support to return on next year's proxy ballot at
A resolution filed by members of the Interfaith Center on Corporate Responsibility (ICCR), calling for
improved disclosure about the company's hydraulic fracturing activities, continued to gain strong
support, receiving about 30% of the shareowner vote at the meeting.
"By its own admission
Chevron knows what it should do, yet continues to drag its feet on implementation putting the
health of millions of communities at great risk," Sr. Nora Nash of the Sisters of St. Francis of
Philadelphia said before the meeting. "How does a company of its size and status justify this
The real drama centered on Chevron's response to the $19 billion judgment in
Ecuador. A recent report by
attorney Graham Erion cited misleading investors, misrepresenting court records, and continuing to
claim the lawsuit is fraudulent, "despite overwhelming evidence submitted by the company at trial
that pointed to its own guilt."
"The cumulative list represents a stunning portrait of a
company that ignores its obligation to provide full, true and plain disclosure of material facts as
required by law," the report argues. "Given the need to protect the investing public from
securities fraud, any of the above examples should be worthy of investigation by the Securities and
Introducing a resolution on behalf of Investor Voice and Zevin Asset Management, shareowner advocate Simon Billenness
called on the company to lower the threshold for calling a special meeting.
year's AGM, communities in Ecuador—awarded a $19 billion judgment against Chevron for pollution of
their lands and waters—have filed suit in Canada, Brazil, and Argentina to seize company assets,"
Billenness said at the meeting. "In Argentina, a court has frozen $2 billion of Chevron's assets."
"A Chevron lawyer summed up the legal strategy in this case as 'fight till hell freezes
over and then fight it out on the ice,'" Billenness continued. "Just how many shareholders wish to
be dragged to hell by the company's lawyers? This shareholder certainly does not." One-third of
shareowners voted in favor of the proposal.
Atossa Soltani of Am
azon Watch said at the meeting, "The crisis in Ecuador has ballooned into a $19 billion guilty
verdict and the company continues to evade justice. CEO Watson should be fired for his gross abuses
and mismanagement." When Soltani exceeded the two-minute limit for statements from the floor,
Watson had him ejected from the meeting.
As dramatic as much of this year's meeting may
have been, it could be just a preamble for what is to come. Despite Chevron's efforts to avoid having Watson deposed in the lawsuit, a federal
judge recently ruled that he would have to testify. Watson led the merger of Chevron with Texaco in
2002, even though Ecuadorian plaintiffs had already filed the lawsuit.
"There is little
doubt that Mr. Watson has relevant knowledge," said Magistrate James Francis in his ruling.