Chevron Boxes Itself In With SEC Move

Chevron's decision to ask the SEC to allow it to dropkick shareholder resolutions calling for the duties of Chairman and CEO to be split -- essentially demoting current Chair and CEO John Watson -- has boxed the oil giant into a public relations defeat.

It's a  lose-lose proposition for the multi-national corporation.

The shareholders are concerned about the way Watson and other Chevron executives have handled the $19 billion judgment against the company for massive oil contamination in the Ecuadorian rainforest. Watson and his 2,000 lawyers and legal assistants are spending hundreds of millions of dollars working on a legal attack to stop enforcement of the judgment.

The contamination is obvious. Everyone agrees Chevron's predecessor Texaco put it there. The people suffering are impoverished indigenous tribes and farmers who brought the original lawsuit 20 years ago. As the years have passed, Chevron has suffered from negative publicity casting it as an oil company concerned only about profits.

A growing number of shareholders are saying enough is enough.

Instead of finding a way out of the environmental nightmare, Chevron digs itself deeper into a hole with its SEC request to trounce on its shareholders, by nixing their resolutions and even subpoenaing them in its legal battles.

David Baker in today's San Francisco Chronicle describes the situation, and it's clear from his article that if the SEC rules in Chevron's favor, it will make the company look like the corporate thug that it is. Plus, it won't stop the shareholders from protesting at their annual meeting.

And, if the SEC doesn't, then the shareholders can once again introduce their resolutions and, likely, increase their vote tally, as they have done year after year.

Smart move, Chevron.

Become a follower of  The Chevron Pit.
Also follow us on Twitter at @ChevronPit and like us on Facebook
Visit and watch a video on ChevronToxico.com to find out more.
Support Amazon Watch and Rainforest Action Network.

Read More

New York Times: Chevron Management Attacks Its Own Shareholders

Embattled by a $19 billion judgment in Ecuador, Chevron’s management team -- headed by CEO John Watson and General Counsel R. Hewitt Pate -- seems to be forgetting that shareholders actually own the company where they work. In their increasing arrogance, these fine men seem to ignore this basic truism of the corporate form.

This disturbing phenomenon at Chevron has become even more evident in an article published Sunday by one of the top business writers for The New York Times, Gretchen Morgenson. Morgenson weighed in on Chevron's attempt to intimidate and harass an institutional shareholder for urging the company to take responsibility for one of the world's largest environmental disasters in Ecuador. Chevron has undertaken an aggressive legal strategy against the Ecuadorians who filed the lawsuit and any shareholder who has raised questions over management’s mishandling of the litigation.

Morgenson reports that Trillium Asset Management, which oversees $1 billion in sustainable investments and is a Chevron shareholder, has been subpoenaed by the company in its so-called "extortion" case against the Ecuadorians and their lawyers and consultants. Trillium, as Morgenson points out, has asked the Securities and Exchange Commission to determine if Chevron has "adequately explained" its litigation risk. It also sponsored a shareholder resolution last year requiring Chevron’s Board of Directors to hire an independent expert to analyze its environmental practices. 

Essentially, Morgenson suggested that Watson and his team have an obligation to shareholders to answer their questions and grant them their right to criticize the company without trying to intimidate them into silence.

 She writes, "Trillium's activities do not seem outlandish. Hiring an independent environmental expert to sit on a board is a common shareholder request these days and asking the S.E.C. to review a company’s disclosures is fair game for shareholders. And yet, the receipt of the subpoena seems to indicate that Trillium’s work has drawn the company’s wrath. It is not alone."

Morgenson explains that Chevron also has attacked another large shareholder, the pension fund of New York that owns approximately $800 million of Chevron stock. Chevron has asked for an investigation into State Comptroller Thomas DiNapoli for calling on Chevron to settle the case as a way to mitigate its risk. See here.

Although Morgenson did not touch on it, Watson seems to have created a delusional psychological shell for company management.  When it comes to the Ecuador risk, he continues to mislead shareholders as demonstrated by this chilling report by securities lawyer Graham Erion. His recent comments to the Council on Foreign Relations – where he inserted himself personally into the litigation -- have to be disconcerting to any shareholder.  

In short, given his utter failure to confront the Ecuador reality honestly, shareholders can now reasonably question whether Watson is even fit to lead the company. It is already publicly documented that he suffers from a conflict of interest on the matter, having been a lead Chevron official who never adequately vetted Texaco for the Ecuador liability when Chevron bought the company in 2001.  We note that last year Watson suffered a series of stunning rebukes from shareholders at the company’s annual meeting related to the Ecuador matter. 

Read the entire article in The New York Times here.

Become a follower of  The Chevron Pit.
Also follow us on Twitter at @ChevronPit and like us on Facebook
Visit and watch a video on ChevronToxico.com to find out more.
Support Amazon Watch and Rainforest Action Network.

Read More