San Ramon – An otherwise sedate annual meeting Wednesday of ChevronTexaco Corp. shareholders was enlivened by a civil encounter between activists who accuse the company of walking away from pollution in an Ecuadorian rain forest and executives who defended the company.
Toribio Aguinda, a leader of the tiny Cofan tribe, said that waste from oil operations had poisoned his people’s land, air, water and food supply, and threatened them with extinction within five years. “Do you want the Cofan people to disappear?” he asked Chairman and Chief Executive Dave O’Reilly. “That is my question.”
Rosa Moreno Chalaco, a nurse from the region, said that she spoke. “to reach out to the chairman, to touch his heart.”
Aguinda and Moreno supported a resolution urging San Ramon-based ChevronTexaco’s managers and directors to reconsider their unwillingness to clean up oil waste in a region where a former ChevronTexaco subsidiary drilled wells and pumped oil from 1964 until 1990. A lawsuit now pending in Ecuador seeks as much as $6 billion for a clean-up.
O’Reilly listened as nine speakers pleaded the Ecuadorians’ case, alternately looking out at the speaker and down at the podium at which he stood, only once interrupting to invoke a time limit. In the end, he was unmoved. “The question is what is the cause of all that, and who is responsible,” he said. “Any further remediation is the complete responsibility of Petroecuador,” the state-owned oil company that was once ChevronTexaco’s partner and since 1992 has been the sole owner of the controversial concession, he added.
O’Reilly had harsh words for the company’s erstwhile partner and its owner. “Unfortunately, because of the inept and inadequate government of Ecuador, the lawsuit will not solve the problem,” he said. “We will not accept the blame for something that is not ours.”
A press attache at the Ecuadorian Embassy had no immediate reaction to O’Reilly’s comments.
Activist Bianca Jagger, who has used her celebrity status to bring attention to the Ecuadorians’ demands, said she was disappointed and surprised by O’Reilly’s posture, especially in light of the growing health problems faced by rain forest residents and the danger that ChevronTexaco’s exposure to liability may also be growing. “Time is running out, for (the residents) and for ChevronTexaco,” she said after the meeting.
A preliminary tally showed that only about 9 percent of the 900 million shares voted Wednesday backed the Ecuadorians’ resolution. That showed that the company’s owners “strongly endorse” its handling of the lawsuit, said ChevronTexaco spokesman Chris Gidez.
But Shelley Alpern of Boston-based Trillium Asset Management, which filed the resolution, said that sponsors were “very pleased with the 9 percent” which, she said, would allow the measure to be resubmitted next year.
Four other shareholder proposals were also defeated by similar margins. They included measures calling for election of directors by majority rather than plurality votes, semiannual disclosures of the business rationale for all political contributions, and board reports on renewable energy and the business effects of global AIDS, tuberculosis and malaria pandemics.
About 125 shareholders listened politely as O’Reilly gave an upbeat presentation on the company’s business prospects and brief responses to arguments contained in critical shareholder resolutions. “We are committed to be responsible citizens around the world,” O’Reilly said as he listed his company’s recent awards from government agencies.
The meeting showcased ChevronTexaco’s integrated operations and global reach. Exploration and production chief Peter Robertson talked about a new 225,000-barrel-a-day pipeline to move crude oil from Chad to Cameroon, while refining and marketing boss Patricia Woertz described upgrades to a facility in Pembroke, Wales, that will allow it to process Chadian crude.
But not all operations are equal. In the refining and marketing businesses that are closest to customers, the company aims to trim operating costs by about $500 million by 2005, Woertz said. Most 2004 capital investments will be made in the exploration and production business, where ChevronTexaco sees the “greatest opportunity to grow the company and create value for our shareholders,” O’Reilly said.
Rising crude prices helped boost 2004 profits to $7.2 billion, from $1.1 billion in 2003. That was a tonic for the company’s stock price, which rose 37 percent in the 11 months between annual meetings, to $92.89 from $67.70.
Changes in ChevronTexaco’s corporate governance guidelines instituted in January weren’t mentioned. Carla A. Hills, the U.S. trade representative under President George H.W. Bush, and six other outside directors attended the meeting. But Hills, who in January was elected “lead director,” got no special recognition. Hills’ new job title entails chairing meetings of the company’s non-employee directors and helping O’Reilly prepare agendas for the boards’ eight meetings, according to the company’s proxy.
Rick Jurgens covers the housing, development and energy industries. Reach him at 925-943-8088 or at rjurgens@cctimes.com.
