Chevron in Ecuador

The archive of the Clean Up Ecuador campaign website

Under Fire from Critics, Chevron CEO Quietly Moves Annual Shareholder Meeting to Remote Town in Texas

Gowen Group Law Office
Contact: Karen Hinton at +1.703.798.3109

San Francisco, CA – Under fire from shareholders and rainforest villagers over a $9.5 billion court judgment, Chevron CEO John Watson has made elaborate plans to move his annual meeting to a remote Texas town in the heart of oil country as a way to avoid his critics, according to a posting on the Chevron website and analysis by advocacy groups.

Watson scheduled the May 28 meeting in the isolated town of Midland, which was founded as a train depo halfway between Ft.Worth and El Paso and is a five-hour drive from the nearest metropolitan area. Details on the move can be found on The Chevron Pit, the blog maintained by the legal team for the affected Ecuadorian communities.

Watson, who in 2010 had five dissident shareholders forcibly removed and arrested at an annual meeting, appears to believe that few of his critics will bother to show up in Midland. For the last decade, Chevron almost always held its annual meeting at company headquarters near San Francisco, which allowed the Ecuadorians to enter via proxies and confront Watson directly about the company's pollution.

“By moving the annual meeting to a remote location, Watson appears to be trying to drown out the voices of his shareholder critics by increasing the hassle factor involved in confronting him face to face,” said Chris Gowen, a professor of ethics at the Washington College of Law and a member of the trial team defending the villagers in the oil giant's retaliatory RICO case. “Public shareholder meetings are required by law. Any move that has the effect of diminishing the rights of shareholders to question management is highly questionable.”

A director at the environmental group Amazon Watch, which has organized several protests against Chevron over its refusal to meet its legal obligations in Ecuador, was more blunt.

“Watson is squandering shareholder resources and leaving a huge carbon footprint by flying on a corporate jet to the hinterlands to avoid being confronted about his disastrous policies that violate human rights, most notably in Ecuador,” said Paul Paz y Miño, Online Director with the advocacy group.

Midland's small airport has a runway long enough to accommodate corporate jets that will fly in Chevron's top management team and Board members. Now located near several major oil fields, the town has an industry-funded petroleum museum which Chevron has rented for the annual meeting.

Among Watson's numerous Ecuador-related problems that are certain to be front and center during his stay in Midland:

  • Enforcement actions filed by the Ecuadorian villagers targeting billions of dollars of Chevron assets are advancing in Canada, Brazil, and Argentina. Last week, Canada's Supreme Court said it would hear argument on a narrow Chevron technical appeal on November 7. If the court rejects Chevron's appeal, as is expected, there will be a trial to determine whether the villagers can seize some of Chevron's $15 billion worth of assets in the country to pay for the entirety of their judgment.
  • Chevron shareholders are voting on three resolutions that criticize Watson and his team for their mishandling of the Ecuador litigation. One resolution takes direct aim at Watson by trying to split his dual roles of CEO and Chairman, long considered an outdated corporate governance practice. Two years ago, that resolution received a whopping 38% favorable vote from all Chevron shares.
  • Among the prominent Chevron shareholders backing the shareholder resolutions related to Ecuador are the New York State Common Retirement Fund, Trillium Asset Management, Amnesty International, the Unitarian Universalist Association, and the Swedish insurer Folksam, which has $32 billion under management.
  • Watson also must face the fact that several high-profile celebrities have sided with the villagers and are urging the company to pay for a clean-up in Ecuador. Among them are Sting, Trudie Styler, Roger Waters, Danny Glover, Mia Farrow, Brad Pitt, Jada Pinkett Smith, and Cher.
  • In the meantime, Ecuador President Rafael Correa has launched a global diplomatic offensive against Chevron to force it to comply with a unanimous ruling of Ecuador's Supreme Court that it pay for a clean-up of the rainforest. Just last week, communities from five countries called for a boycott of all Chevron products to take place on May 21 of this year – an action that could spread around the world and become permanent, according to observers.

It is not surprising that Watson would prefer to conduct the meeting in Midland given his history of grappling with his critics and coming out bruised, said Paz y Miño.

In 2010, during his first annual meeting as CEO and Chairman, Watson famously cut off the microphone when villagers from Ecuador's rainforest tried to confront him with evidence of the company's environmental crimes in their home country. He later became so infuriated that he had the Houston police arrest five well-known critics of the company, including Han Shan (a U.S. spokesperson for the villagers) and Antonia Juhasz, the author of The True Cost of Chevron documenting the company's environmental abuses around the world.

Watson also has been under criticism for his compensation package – he made more than $30 million in 2012 and $24 million last year – and for his conflicts of interest on the Ecuador matter. Watson was the Chevron executive who engineered the company's takeover of Texaco (which operated in Ecuador from 1964 to 1992), apparently without adequately vetting it for its liability despite the pending litigation.

In the last two years alone, Watson's personal compensation was far higher than the total amount Chevron claimed to have spent in the mid 1990s engaging in a remediation of its environmental problems in Ecuador, which the court there found to be fraudulent. Watson's yearly compensation is roughly the equivalent of the combined annual incomes of all 30,000 rainforest residents who originally sued the company, said Paz y Mino.

Several reports (see here and here) by a Canadian securities lawyer demonstrate Watson failed to adequately disclose the Ecuador risk to the public markets, leading to calls by shareholders and a U.S. Congresswoman for an SEC investigation of the company. That issue will also be on the table during the annual meeting in Midland, said Paz y Mino.


Background on Ecuador Litigation

The indigenous and farmer communities in Ecuador originally filed their claims in a New York federal court in 1993, but Chevron successfully fought to have the matter shifted to Ecuador where it promised to abide by any adverse judgment. Chevron at the time filed 14 sworn affidavits praising Ecuador's court system.

Once the Ecuador trial began in 2003 and evidence against Chevron mounted, the company began to attack Ecuador's courts and the lawyers who represented the villagers. Two Ecuadorian appellate courts – including Ecuador's highest court, the National Court of Justice -- have unanimously affirmed the trial court decision against the company. The trial court decision was based on eight years of litigation, 220,000 pages of evidence, and 105 technical reports. The trial court also imposed a punitive penalty after Chevron lawyers threatened judges with jail time and tried to sabotage the proceedings by filing duplicative motions, including 39 in one 50-minute period.

As part of its scorched-earth retaliation campaign, Chevron sued five different lawyers who have represented the Ecuadorian communities, three funders of the lawsuit, the scientific consultancy that advised the legal team, and all 47 rainforest villagers named on the lawsuit. The company named numerous other environmental advocacy groups and individuals as "non-party co-conspirators" (a public relations term with no legal effect) in an attempt to intimidate people into abandoning the cause of the rainforest communities, said Paz y Miño.

For background on the overwhelming evidence against Chevron relied on by the Ecuador court, see this document and this video.

For evidence of Chevron's long-term strategy to demonize the Ecuadorian communities and their lawyers, see this internal memo from the company's public relations consultant, Sam Singer.

For a letter signed by 43 U.S. civil advocacy groups criticizing Chevron for targeting its critics, see here.

For background on Chevron's retaliatory RICO case, see this summary document and these legal petitions.