Shareholders Keep Pressure on Chevron
Resolutions to highlight corporate governance failure and mismanagement of $19 billion Ecuador liability
Shareholders plan to keep the pressure on Chevron over its poor corporate governance and mismanagement of its legal liability for pollution in Ecuador, now totaling over $19 billion.
A group of institutional investors and asset management firms plan to re-file three separate resolutions at Chevron. All three resolutions came to a vote at the 2012 Chevron annual shareholder meeting, winning significantly high support.
Over the past year, Chevron has faced growing pressure and scrutiny from its own shareholders. Last May, a financial analysis by social investment analyst Simon Billenness found that Chevron's $18 billion Ecuador environmental liability posed a threat of "irreparable damage" to the oil major's global operations as the plaintiffs made good on their promise to launch legal actions to enforce the judgment in countries where Chevron has billions of dollars in assets.
Also in May 2012, a group of Chevron shareholders – Newground Social Investments, Unitarian Universalist Association, and Zevin Asset Management – publicly called on the Securities and Exchange Commission (SEC) to investigate whether Chevron had fully disclosed these risks to investors. The shareholders cited a report by securities lawyer Graham Erion which provided evidence and analysis "that Chevron's management is publishing false or materially misleading information regarding its $18.1 billion adverse judgment in Ecuador."
More recently, the UK-based responsible investment group FairPensions has published a briefing and set of resources for investors further analyzing the risk to Chevron from the $19 billion judgment and recommending ways in which investors can press the company to change its course and address this crisis.
Shareholders intend to re-file three resolutions at Chevron for a vote at the May 2013 annual shareholder meeting. The deadline for co-filing is December 13, 2012.
- Separate the Positions of Board Chair and CEO
Chevron's CEO John Watson is also chair of the Board of Directors. This example of poor corporate governance may have contributed to poor board oversight of management's handling of the court case in Ecuador. The resolution is a standard proposal asking for an independent board chair. The lead filer is the Unitarian Universalist Association through its Common Endowment Fund.
- Add Member to Board of Directors with Environmental Expertise
Adding a member of the board of directors with expertise in environmental liability would assist Chevron's board in its oversight of the Ecuador litigation and other potentially materially significant environmental liabilities. This is a re-filing of the resolution filed in the last few years. The lead filer is the New York State Common Fund.
- Lower Threshold to Call a Special Shareholder Meeting
This resolution seeks to make it easier for shareholders to call special shareholder meetings to discuss serious threats to long-term shareholder value. This resolution is lead filed by Investor Voice.
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