By David R. Baker, San Francisco Chronicle
18 March 2013
Chevron Corp. shareholders will not get to vote this year on a proposal to strip CEO John Watson of his other title as chairman of the oil company's board.
The U.S. Securities and Exchange Commission on Friday gave Chevron permission to block the proposal from coming up for a vote at the San Ramon company's annual shareholder meeting. It's one of two shareholder proposals Chevron wants to block, both of them related to the $19 billion pollution lawsuit against the company in Ecuador. (For my earlier story on both, click here.)
Several shareholder activism groups had been pushing to separate the jobs of board chairman and CEO at Chevron. In part, they consider the change a matter of good corporate governance, since many companies keep those positions separate.
Chevron will be able to block one of two proposed shareholder resolutions tied to a $19 billion oil field pollution lawsuit in Ecuador.
But more importantly, the activists say Watson needs an independent board director to rein him in.
Before he became CEO, Watson played an instrumental role in Chevron's 2001 acquisition of Texaco. And that suit landed Chevron in the Ecuador lawsuit, which was originally filed in 1993 against Texaco, not Chevron. Texaco drilled for oil in Ecuador from 1964 to 1992, and residents of the area accused the company of poisoning the land and water.
Ecuadoran courts have ruled against Chevron and ordered the company to pay $19 billion. Chevron considers the suit a shakedown and has vowed not to pay. The activists, including the Unitarian Universalist Association, say Watson is too close to the case and is pursuing a take-no-prisoners legal strategy that could backfire.
Last year, 38 percent of Chevron shareholders voted in favor of a nearly identical proposal. But this year, Chevron asked the SEC for permission to block the proposal, arguing that the language did not adequately define "independent." In a letter sent Friday to Chevron and the Unitarians, the SEC agreed.
The Unitarians had suggested amending the proposal to be more specific. But federal regulators said the changes were submitted after the filing deadline for proxy materials.
"It's disappointing that the SEC would side with Chevron on such a narrow technical ground," said Simon Billenness, who leads the Unitarians' committee on socially responsible investment. "This decision prevents a free debate among Chevron shareholders over whether the board should exercise proper oversight of management and its strategy in the Ecuador case."
Still no word on whether the SEC will allow Chevron to block the second disputed shareholder proposal. That one asks Chevron to explain why the company subpoenaed documents last year from some activist shareholders, including Billenness.