Chevron Petitions SEC to Omit Enquiry on Shareholder Subpoenas from AGM Ballot
Firm seeks to block attempt to find out why it has started legal action against investors
By Jan Wagner, Responsible Investor
8 February 2013
US oil giant Chevron has written to the Securities and Exchange Commission (SEC) asking it to exclude a resolution from its annual general meeting (AGM) that seeks to find out why it is pressuring investors to reveal correspondence about its legal trouble with Ecuador. Two years ago, an Ecuadorean court slapped Chevron with a €19bn fine for environmental pollution caused by Texaco, which it acquired in 2001. Chevron refuses to recognise the judgement, saying that it is not enforceable "in any court that observes the rule of law." A group of shareholders including New York State Comptroller Thomas DiNapoli subsequently urged the firm to examine resolving its legal dispute with Ecuador, citing potential reputation and investment risk. The appeal was made just before the firm's AGM in May 2012. Chevron responded by referring DiNapoli, Trustee of the state's $150.3bn (€114bn) retirement fund, to the New York State Joint Commission on Public Ethics, contending that he received campaign contributions from lawyers and consultants seeking settlement in the case. The oil giant also subpoenaed Trillium Asset Management, the Boston-based SRI firm, which has previously filed resolutions on management oversight of the Ecuador case, and Simon Billenness, a Washington-based SRI consultant, who, on behalf of the Unitarian Universalists, the US faith-based group, has urged Chevron to settle the Ecuador fine. Trillium and Mr. Billenness are contesting the validity of the subpoenas.
Chevron accuses the investors of conspiring with the plaintiffs in the Ecuadorian case who would benefit from a settlement. At the end of 2012, two other Chevron shareholders, Zevin Asset Management and The Needmor Fund filed a resolution for Chevron's 2013 AGM demanding that its independent board members provide shareholders with the rationale for the subpoenas. Chevron is now trying to throw out the resolution. In a letter to the SEC dated January 18, the oil giant argued that the issuance of subpoenas was part of its "ordinary business operations," such as litigation strategy and shareholder relations.
Zevin and Needmor, represented by Walden Asset Management, have written their own letter to the SEC, arguing that the resolution is necessary to get to the bottom of the "extraordinary and unprecedented set of actions by Chevron." Zevin and Walden say Chevron's heavy-handed tactics are unwarranted, noting that the shareholders who urged the firm to settle were doing their fiduciary duty: "The company's actions, we believe, could have a direct and negative impact on its reputation and risk, damaging shareholders' long-term financial interest in the company," they said in the letter.
It is understood that the SEC should decide within the next few weeks whether Chevron can strike off the resolution from its AGM ballot. The AGM is scheduled for May 29.