Chevron CEO John Watson and his Board of Directors seemed terribly out of touch at the company's annual meeting this week where they were once again pounded by the environmental group Amazon Watch and its allies. Watson simply refused to deal with his two key challenges: the $11 billion Ecuador pollution judgment, and climate change.
For shareholders, it was hardly a performance that inspires confidence in the future. Chevron's revenues are down 75% compared to last year and its stock price continues to lag behind its peers. Nobody wants a Luddite running an oil company, but that is what Watson is in danger of becoming.
On Ecuador, Watson arrogantly dismissed the comments of renowned indigenous leader Humberto Piaguaje. A Secoya elder who has seen his village devastated by Chevron's pollution, Piaguaje had traveled from his jungle home to confront Watson directly about the enormous court judgment won by thousands of villagers in 2013. The decision against Chevron has been confirmed by no fewer than 18 appellate judges in Ecuador and Canada.
Yet Watson refuses to pay up, prompting the villagers to try to seize Chevron assets in Canada. Given that Chevron has extremely valuable oil fields and other properties in Canada, it is likely the villagers will collect the entirety of their judgment in that country.
Watson had the gall to suggest to Piaguaje that his thoughts about how Chevron's pollution destroyed the ancestral lands of indigenous groups were not really his own. Surely, Watson said, these thoughts were planted in his head by lawyers. After Piaguaje asserted that Chevron's "blame the victim" strategy in Ecuador is racist, Watson became visibly flustered and turned off the microphone after saying, "I've been trying to answer questions on Ecuador for seven years. I am not going to take any more questions." (For more details, see this account from Amazon Watch and this article by Courthouse News.)
Watson -- who received $22 million in compensation last year -- was even more arrogant on the climate change issue. In contrast to several European-based oil majors, Chevron under Watson's leadership opposed all six resolutions designed to drag the company into the modern world on this most critical of challenges. Watson obviously has no plan to deal with Chevron's stranded asset problem as the world transitions to a clean energy economy. This is a great example of how poor citizenship and flawed decision making combust into a perfect storm of corporate stupidity.
Here are some more signs from the annual meeting that Watson has his head in the sand:
*Watson did not even acknowledge that because of the Ecuador judgment Chevron faces the seizure of billions of dollars of company assets in Canada, where the country's Supreme Court recently ruled for the villagers. Chevron is on the firing line of one of the most important environmental cases in history, yet Watson was mum about what appears to be a threat to the company's business model.
**Also on the Ecuador litigation, Watson was silent on how Chevron's key witness from Ecuador has repudiated his own testimony and admitted lying to get more money from the company. Chevron has paid the witness at least $2 million and moved his entire family to the U.S.; the company's entire defense hinges largely on the testimony of this one witness.
**Watson also completely ignored a whistleblower video that shows Chevron scientists trying to defraud Ecuador's courts by hiding evidence of the company's pollution. The video was given to Amazon Watch by a company insider.
**During the meeting, Watson failed to beat back a shareholder resolution from Newground Social Investment critical of Chevron's mishandling of the Ecuador litigation. The resolution received support from 30% of all shareholders, or a majority of all shares not controlled by the company. This was a stinging rebuke to company management, which has used 60 different law firms to fight the villagers.
**Watson also refused to discuss how Chevron recently dropped a key legal claim against the villagers because the company concluded that its arguments were certain to be rejected by courts.
**Finally, Watson again failed to acknowledge the humanitarian catastrophe in the area of Ecuador where the company operated from 1964 to 1992. Cancer rates have skyrocketed and hundreds if not thousand of people have died from oil-related diseases since Texaco (bought by Chevron in 2002) started to systematically dump toxic waste into the Amazon in the 1960s.
Watson was the Chevron executive who in 2001 fought hard for the merger with Texaco knowing that it had left billions of gallons of toxic waste in its wake. Watson didn't respect the sophistication and determination of indigenous groups at the time; he obviously still doesn't.
Chevron Board members, who are paid around $400,000 per year, remain silent in the face of this fiasco. Most would rather collect their fee by getting along with management when they should focus on exercising their fiduciary duties on behalf of shareholders.
What a sorry commentary on the company and its leaders.