May 31, 2014
Activist Shareowners Make Their Way to Texas to Confront Chevron
by Robert Kropp
Simon Billenness of the Unitarian Universalist Association talks with SocialFunds.com about
Chevron's ongoing legal quagmire in Ecuador and his efforts to have the oil and gas company appoint
an independent Chair.
The Permian Basin in Texas is one of the largest oil and gas producing regions in North America.
Its name derives from the thick deposit of rocks there dating back to the Permian era. While it may
have made traveling easier for shareowner advocates has Chevron held its annual general meeting in
California, the oil and gas company decided to locate it at its Permian Basin Petroleum Museum in
Midland, Texas, instead.
Ironically, scientists now believe that the end-Permian
extinction, the largest mass extinction event in the planet's history thus far, was caused at least
in part by ocean acidification, one of the driving factors in the anthropogenic sixth mass
extinction now underway. Climate change, due largely to the indiscriminate burning of fossil fuels,
is the primary cause of ocean acidification as well as abrupt changes in habitat that contribute
further to the current mass extinction of species.
Enough shareowner advocates made their
way to Midland anyway, to challenge Chevron on a number of environmental, social, and corporate
governance (ESG) issues. According to the 2014 Proxy Preview of As You Sow, seven ESG related resolutions were filed with
Chevron, more than any other company except ExxonMobil, which had the same number. All seven made
it onto Chevron's proxy ballot this year, which strongly suggests that the trend toward more
positive corporate engagement noted recently by many sustainable investors does not extend to this
The major issue confronting Chevron and its shareowners—the ongoing
legal battles over a multibillion dollar judgment against it for environmental destruction in
Ecuador—was not addressed directly by a shareowner resolution, although three governance related
proposals referred to it. Also, Chevron took the unusual step of including a statement on the issue
in its proxy statement, in which it continued to describe the legal action as “illegitimate” and
“the product of fraud.”
In a blog post written on the eve of
the meeting, Simon Billenness, shareowner advocate for the Unitarian Universalist Association (UUA),
wrote, “Chevron management’s mishandling of the case in Ecuador demonstrates a failure of corporate
governance at the company. As a result, shareholders have proposed overhauls of the company’s
“In response, Chevron’s management has largely ignored these
shareholder concerns and even retaliated against its shareholder critics,” Billenness continued.
Billenness talked with SocialFunds.com about Chevron and the Ecuadorian judgment.
“Chevron is using Judge Kaplan's ruling for everything they can get out of it,” he said,
referring to a recent court ruling which, according to Burt Neuborne, the Founding Legal Director
of the Brennan Center for Justice at the New York University School of Law, sends “an unmistakable
message of American judicial arrogance to the rest of the world that can only result in increased
levels of reciprocal judicial suspicion and hostility, with negative consequences for the
transnational rule of law.”
Despite the ruling, however, a Canadian appeals court has
ruled that the Ecuadorian plaintiffs can seek enforcement of a $9.5 billion judgment against
Chevron by taking action against the assets held by Chevron in Canada.
ruling will be tested in a US appeals court, Billenness said, which has already struck down one of
his earlier rulings favoring Chevron. Furthermore, he added, “The plaintiffs don't even have to go
to the US to get the judgment satisfied.”
In his role as shareowner advocate for UUA,
Billenness moved the resolution calling on Chevron's board to separate the positions of CEO and
Board Chair, both of which are currently held by John Watson.
Referring directly to the
ongoing legal battle, Billenness stated at the meeting, “In sworn testimony, an officer of this
company has stated that any enforcement of that judgment 'unless stopped...is likely to cause
irreparable injury to Chevron’s business reputation and business relationships.'”
that sworn statement was made, the board of directors has signed off – not once, but three times –
on financial statements that fail to disclose management’s assessment of this clearly material
risk,” he continued. “Did the board sign off on false and misleading financial statements? Or did
the sworn testimony represent perjury? I don’t know but the board needs to set the record straight
Billenness also moved a second proposal, “to give holders of 10% of outstanding
common stock the power to call a special shareowners meeting.”The resolution also refers directly
to Ecuador, and states, “We believe that management has mishandled a number of issues in ways that
significantly increase risk to shareholders. Therefore, shareholders would benefit from greater
access to special meetings as circumstances require.”
A third resolution, filed by New
York State Comptroller Thomas DiNapoli, calls for the appointment of a board member with
environmental expertise, and states, “Chevron has been repeatedly cited for allegedly harmful
Another resolution calls on the company to report on risks
associated with hydraulic fracturing. Two more address corporate political and lobbying
expenditures, and one addresses country selection criteria with specific reference to Burma.
Chevron's board opposed all seven resolutions, but all received votes in favor substantial
enough to allow for their return to the company's proxy ballot next year in accordance with
Securities and Exchange Commission (SEC) guidelines. And unless the company gets much more serious
about its dialogues, Billenness and other sustainable investors will surely be in attendance, no
matter where the meeting is held.