Take Action: Write to Chevron to Protect Shareowner Rights

Chevron’s subpoena of e-mails in this case goes well beyond the individual players and is a threat to the communication rights of all shareowners. Action: Please take 60 seconds right now to send a message similar to the following to Chevron:

I write to protest Chevron’s subpoena seeking emails and communications from Trillium Asset Management and Simon Billenness to hundreds of organizations, investors and individuals active in challenging Chevron on its oil pollution crisis in Ecuador.

Your action is without precedent. Never before have shareowners faced such a legal challenge for merely communicating with each other. This is a brazen attack on shareholder rights. I urge you to reconsider your position and withdraw your subpoena.

I share the following from the Needmor Fund and Zevin Asset Management on behalf of everyone who is concerned with the rights of shareowners and the rights of people:

Chevron has taken the unusual and extraordinary step of filing a legal subpoena seeking emails and communications from Trillium Asset Management and Simon Billenness, to hundreds of organizations, investors and individuals active in challenging Chevron on its oil pollution crisis in Ecuador. In response, two active shareholders, the Needmor Fund and Zevin Asset Management LLC, are challenging Chevron’s new confrontational strategy to force investors to share confidential communications on important environmental, social and governance issues.

The shareholder resolution (see enclosed) urges the Board to review this strategy given the implications for Chevron including risk to its company reputation.

Chevron filed the subpoenas in November 2012. Such an action is without precedent. Corporate governance experts are unaware of any company subpoenaing the correspondence of shareowners related to an Environmental, Social or Governance (ESG) issue over the last 40 years. Both Trillium and Mr. Billenness are contesting the validity of the subpoenas.

Daniel Stranahan, Chair of the Finance Committee of the Needmor Fund, one of the filers of the resolution, stated “For over 10 years, the Needmor Fund has been involved in filing shareholder resolutions on a wide range of issues such as governance reforms, executive compensation, environmental issues and discrimination in employment. We engage in dialogue and file these resolutions using the SEC’s rules so we can advance important issues with top management and the Board. These resolutions are very important tools in stimulating discussion within a Board and management.

Often they result in companies changing their policies or expanding disclosure. On other occasions, they provide a service by bringing a new issue to a company’s attention that stimulates new thinking by the Board and management.

In other instances, resolutions challenge bad ethics, poor governance practices, and environmental irresponsibility or sweatshop conditions in a supply chain, providing an early warning system from investors. Some companies react defensively to such challenges. However, we are shocked that a leading company like Chevron should attack investors whose only “sin” was challenging the company regarding its environmental damages in the Ecuadorian Amazon rainforest and the impact on investors of the $18 billion legal action against Chevron. Talk about using cannon to swat a mosquito.”

Sonia Kowal of Zevin Asset Management, a co-filer of the resolution, stated “We are deeply concerned about the extremely bad precedent this would set if the Courts allowed Chevron to successfully subpoena the documents of individuals or investors simply because they were critical of a company’s conduct and worked with other investors to challenge it.

Chevron’s action would establish a new tool for companies to attack investors raising critical questions.

Simply because investors worked together on strategies to challenge a company, should investors be subpoenaed seeking all communications with other concerned investors?

This is a brazen attack on shareholder rights, thus we filed this shareholder resolution urging the Chevron board to pause and consider the broader implications of allowing management and their law firm, Gibson Dunn, to pursue this strategy.”

For more information on the subpoena and also the Chevron law suit related to Ecuador, see the enclosed articles.

For additional information contact
1. Sonia Kowal, Zevin Asset Management, LLC 617-742-6666×308 ([email protected]) 2. Mary Sobeki, Needmor Fund–419-255-5560 ([email protected])

Enclosures:
1. Copy of Chevron Shareholder Resolution
2. Social Funds story by Robert Krupp, January 5, 2013
3. New York Times story by Gretchen Morgenson, December 8, 2012

Whereas, Chevron Corporation has been embroiled in a significant international lawsuit dealing with massive pollution from drilling and waste products caused by Texaco (now part of Chevron) in the rainforest of Ecuador.

Chevron now faces potential liability of $19.04 Billion because of a decision against them in Ecuador’s courts.

Investors have addressed this issue in meetings and in open letters to Chevron, urging the Board to acknowledge the risk to Chevron’s reputation, as well as the financial risk and their responsibility as a company.

For example, investors with $580 billion in assets under management wrote Chevron’s Board in 2012 urging the company to take a fresh look at its options; Chevron itself has admitted in sworn legal statements that the company risks “irreparable injury to its business judgment and business relationships” from any enforcement of the successful Ecuadoran court judgment.

The company has defended itself vigorously over 20 years of litigation in court and in public debates, but to date has been unsuccessful in several court appeals.

Enforcement actions have commenced in overseas jurisdiction and the Government of Argentina froze Chevron’s Argentina assets worth $2 Billion in fall 2012.

Chevron is proud of its system of corporate governance and its relationship with the institutional investor community. For example, Chevron’s Corporate Secretary had been the co-Chair of the Council of Institutional Investors.

Yet in November 2012 the company launched a visible and controversial attack against shareholder proponents of resolutions.

Chevron and its law firm Gibson Dunn issued a subpoena to various investors demanding that they produce any documents concerning the “Chevron Litigations or Shareholder Actions” related to the Ecuador spill and the court case.

The subpoena goes back to 2005 seeking all documents concerning Chevron shareholder resolutions or investor statements including emails to specific groups of investors and other organizations related to the lawsuit.

We believe this is an unprecedented intrusion into investor communications related to an issue that has a distinct and negative impact on shareholder value. The company seeks access to thousands of private emails as investors share research, discuss statements about the company and the issue and communicate about shareholder resolutions on the topic.

This is seen by many investors as an unwarranted and irresponsible attack on private investor communications and if successful would establish a horrendous precedent opening the door for companies to sue investors who disagreed with them. Resolved: that shareholders request the independent Board members to conduct a review of Chevron’s recent legal initiatives against investors specifically analyzing

  1. The rationale for this new intervention, including subpoenas, a public relations campaign and attacks on New York State, a major institutional investor.
  2. Its impact on long term investor relations and Chevron’s reputation.
  3. The precedent this would set in chilling shareholder communications with any company about key environmental, social and governance issues and their impact on shareholder value. A report summarizing this review, omitting proprietary information, shall be reported to shareholders by September 2013.

Sustainability Investment News, Top Sustainable Investment Stories of 2012, Part 5 by Robert Kropp, 1/5/2013

Chevron Aims at an Activist Shareholder By Gretchen Morgenson, 12/8/2012.

 

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