Thursday, May 26, 2016
Chevron CEO John Watson and his Board of Directors seemed terribly out of touch at the company's annual meeting this week where they were once again pounded by the environmental group Amazon Watch and its allies. Watson simply refused to deal with his two key challenges: the $11 billion Ecuador pollution judgment, and climate change.
For shareholders, it was hardly a performance that inspires confidence in the future. Chevron's revenues are down 75% compared to last year and its stock price continues to lag behind other oil majors. Nobody wants a Luddite running an oil company, but that is what Watson is in danger of becoming.
On Ecuador, Watson arrogantly dismissed renowned indigenous leader Humberto Piaguaje. A Secoya elder who has seen his village devastated by Chevron's pollution, Piaguaje had traveled from his jungle home to company headquarters to confront Watson directly about the enormous court judgment won by thousands of villagers in 2013. The decision against Chevron has been confirmed by no fewer than 18 appellate judges in Ecuador and Canada. Yet Watson refuses to pay up, prompting the villagers to try to seize company assets in Canada .
After Piaguaje asserted that Chevron's "blame the victim" strategy in Ecuador was racist, Watson became visibly flustered and turned off the microphone after saying, "I've been trying to answer questions on Ecuador for seven years. I am not going to take any more questions." (For more details, see this account from Amazon Watch and this article by Courthouse News.)
Watson -- who received $22 million in compensation last year -- was even more arrogant on the climate change issue. In contrast to several European-based oil majors, Chevron under Watson's leadership opposed all six resolutions designed to drag the company into the modern world on the issue. The company seems incapable of dealing with its stranded asset problem as the world transitions to clean energy. That's how poor corporate citizenship and flawed business decision making combust into a perfect storm of stupidity.
Here are some more signs from the annual meeting that Watson has his head in the sand:
**He did not acknowledge that Chevron faces the seizure of billions of dollars of company assets in Canada, where the country's Supreme Court recently ruled for the villagers. Chevron is on the firing line of one of the most important environmental cases in history, yet Watson was mum about what appears to be a very serious threat to the company's business model.
**Watson was silent on how Chevron's key witness from Ecuador has repudiated his own testimony and admitted lying to get more money from the company. Chevron has paid the witness at least $2 million and moved his entire family to the U.S.
**Watson completely ignored a whistleblower video that shows Chevron scientists trying to defraud Ecuador's courts by hiding evidence of the company's pollution.
**Watson failed to beat back a shareholder resolution from Newground Social Investment critical of Chevron's mishandling of the Ecuador litigation. The resolution received support from 30% of all shareholders -- a biting rebuke to company management, which has spent an estimated $2 billion and used 60 law firms to fight the villagers.
**Watson also refused to discuss how the company recently dropped a key legal claim against the villagers because its arguments were certain to be rejected by courts.
**Finally, Watson again failed to acknowledge the humanitarian catastrophe in the area of Ecuador where the company operated from 1964 to 1992. Cancer rates have skyrocketed and hundreds if not thousand of people have died from oil-related diseases since Texaco (bought by Chevron in 2002) started systematically dumping toxic waste into the Amazon in the 1960s.
Watson was the Chevron executive who in 2001 fought hard for the merger with Texaco knowing that it had left billions of gallons of toxic waste in its wake. Watson didn't respect the sophistication and determination of indigenous groups at the time; he obviously still doesn't.
Chevron Board members who are paid around $400,000 per year remain silent in the face of this fiasco.
What a sorry commentary on the company and its leaders.
Tuesday, May 24, 2016
Reposted from Eye on the Amazon
[Of course, we don't have access to Chevron's internal communications. But if we did, this "memo" is what we imagine we might see. It's hard to peek into the mind of someone who is responsible for massive environmental destruction and human rights violations, but based on John Watson's actions as Chevron CEO this should be about right.]
Chevron CEO John Watson is getting roughed up in the days leading up to the company's annual shareholder meeting this week as risk related to his historic $11 billion environmental liability in Ecuador continues to increase. The judgment has now been confirmed unanimously by Ecuador's Supreme Court while Canada's Supreme Court has ruled the affected communities can try to seize some of the company's $15 billion worth of assets to pay for a clean-up.
(For background, see this press release put out by the environmental group Amazon Watch.)
In all, 18 consecutive appellate judges in Ecuador and Canada have rejected Chevron's arguments and ruled in favor of indigenous and farmer villagers from the Amazon who first brought suit in 1993. Chevron's global game of forum shopping is running out of steam -- the company is facing a true litigation catastrophe in Canada -- and Watson no doubt will be called out by shareholders at the meeting for his abhorrent and irresponsible mistreatment of indigenous groups in the Amazon.
The annual meeting, at company headquarters in San Ramon, will be highlighted by a face-to-face showdown between Watson and renowned Ecuadorian indigenous leader Humberto Piaguaje. Piaguaje, a Secoya elder, has traveled from his jungle home to attend the meeting. He is being hosted by Amazon Watch, an environmental group that is organizing a major protest outside during the meeting.
Watson and Chevron's Board will be on the hot seat over a number of issues:
**The company's Ecuador liability -- originally $9.5 billion -- is getting worse by the day as statutory interest in Canada (where the villagers are trying to enforce their judgment against Chevron's assets) has pushed up the amount to roughly $11 billion. Just last week, two top Chevron executives were forced to answer questions under oath in a deposition in Canada; a critical court hearing is scheduled for September that has the chance of knocking out all of the oil giant's defenses.
**Under Watson's leadership, Chevron is flailing not only over the Ecuador issue but over its core business. The company recently reported its first quarterly loss in 13 years; revenue is down 75%; and climate change threatens to leave shareholders with billions of dollars of "stranded assets" as the world moves away from fossil fuels.
**A major Chevron shareholder, Newground Social Investment, has filed a resolution that asserts that Watson's management team "has mishandled a number of issues in ways that significantly increase both risks and costs to shareholders. The most pressing of these issues is the ongoing legal effort by communities in Ecuador to enforce a $9.5 billion Ecuadorian judgment for oil pollution." The resolution follows a complaint to the SEC by a U.S. Congresswoman that suggests the company is trying to downplay its Ecuador liability to shareholders.
**It is increasingly clear that Chevron is responsible for one of the world's most dire humanitarian catastrophes in Ecuador. Numerous independent studies confirm that cancer rates in the region where Chevron operated have skyrocketed; thousands of indigenous peoples and farmers have died of cancer and other oil-related diseases. Yet at great cost, Watson continues to pay 2,000 lawyers from 60 law firms to fight some of the most vulnerable people on the planet.
In the press release put out by Amazon Watch, Piaguaje said
Our leaders plan to confront Mr. Watson with judgments from multiple courts mandating that the company pay its pollution bill to the people of Ecuador. Mr. Watson needs to accept responsibility for Chevron's environmental crimes in Ecuador, apologize to the company's victims, and abide by court orders that compensation be paid. Until he abides by the rule of law, Mr. Watson and Chevron's Board members will be considered by us to fugitives from justice subject to arrest for crimes against humanity under principles of universal jurisdiction.Well said, Humberto. Perhaps you should consider making a citizen's arrest of Watson at the meeting.
In previous shareholder meetings, Watson has suffered a series of biting rebukes over the Ecuador liability. One resolution critical of Watson's mishandling of the case received a whopping 38% support from shareholders.
In addition, in 2011 several of Chevron's institutional shareholders with more than $580 billion in assets under management sent Watson a letter urging settlement of the Ecuador case. Amazon Watch also sent a letter to Chevron signed by 43 corporate accountability and human rights groups blasting the company for trying to silence its critics.
Chevron's shareholders should use the annual meeting to re-assess whether the conflicted Watson -- who made $22 million in compensation last year from a Board that he controls -- has the vision to fully grasp what it means to serve shareholder interests.