Chevron - Independent Board Chair
Independent Board Chair
2019 – Chevron Corp.
RESOLVED: Shareholders request that the Board adopt as policy, and amend the bylaws as necessary, to require the Chair of the Board, whenever possible, to be an independent member of the Board. This policy would be phased in for the next CEO transition.
If the Board determines that a Chair who was independent when selected is no longer independent, within a reasonable amount of time the Board shall select a new Chair who satisfies the requirements of the policy. Compliance with this policy is waived if no independent director is available and willing to serve as Chair.
Supporting Statement: We believe that inadequate Board oversight has led management to mishandle a number of issues, increasing both risk and costs to shareholders.
First: Chevron has mishandled risk related to the ongoing legal effort by communities in Ecuador to enforce a $9.5 billion judgment against our Company for oil pollution. When Chevron acquired Texaco in 2001, it inherited significant legal, financial, and reputational liabilities that stemmed from pollution of the water and lands of communities in the Ecuadorian Amazon. In 2018, Ecuador’s Constitutional Court unanimously confirmed a $9.5 billion judgment against Chevron.
An attempt to collect on the judgment from Chevron in Canada is ongoing. That effort is now before the Supreme Court of Canada on the issue of whether assets held by Chevron’s Canadian subsidiary can be used to satisfy the Ecuadorian judgment.
Chevron has acknowledged the serious risk from enforcement of the $9.5 billion judgment. Deputy Controller Rex Mitchell testified that such seizures of Company assets “would cause significant, irreparable damage to Chevron’s business reputation and business relationships.” However, instead of negotiating an expedient, fair, and comprehensive settlement with the affected communities in Ecuador, management has pursued a costly legal strategy that has lasted more than two decades.
Second: Investors are concerned that Chevron has not adequately addressed climate change – a significant risk that has already manifested and is set to intensify in the long run via regulation, energy price swings, and growing uncertainty around fossil fuel investments. Chevron has published a climate risk scenario report and attempted to reduce capital spending; however, investor concerns remain:
· Climate-related tort claims and similar litigation against Chevron are mounting.
· Chevron’s 2017 climate risk report downplays important factors, like potential competition from low-carbon energy technologies.
· Chevron supports lobbying and trade associations that spread disinformation on climate science/policy, such as the American Legislative Exchange Council and American Petroleum Institute.
Third: Inadequate Board attention could intensify risks and controversies throughout Chevron’s global operations. Examples include: renewed attacks on Chevron’s Nigeria assets, 2016; controversial operations in Myanmar during ethnic cleansing of the Rohingya, 2017; and a landmark 2017 enforcement against Chevron for alleged tax evasion in Australia.
In 2017, 38.7% of shareholders voted FOR this proposal.
An independent Chair would improve oversight as well as bring attention to long-range risks such as those noted above.
THEREFORE: Please vote FOR this common-sense governance reform.