Shareholder Group Gets SEC Approval for Governance Proposal at Chevron

Motion gets onto ballot amid "campaign of shareholder intimidation"

By Daniel Brooksbank, Responsible Investor
14 March 2013

A group of shareholders has won approval from the SEC to put a key corporate governance proposal onto the agenda for Chevron's forthcoming annual general meeting.

The motion was tabled by Investor Voice, the Seattle-based shareholder advocacy group linked to socially responsible investment house Newground, on behalf of private investor Eric C. Rehm. It was co-field by Zevin Asset Management on behalf of the Amy Flanagan Trust ahead of the oil giant's AGM later this year.

The proposal calls on Chevron to amend its bylaws to give shareholders with a 10% stake the power to call special shareholder meetings to allow them to consider important matters that crop up between AGMs.

The investors are seeking a way to voice their concerns about the company's controversial Ecuador litigation – and what they call its current "campaign of shareholder intimidation."

"When shareholders have legitimate concern over management action like these, which have led to such tremendously large liabilities, requesting a reasonable threshold to be able to call a special meeting represents a fundamentally logical response," wrote Investor Voice CEO Bruce Herbert in a letter to the SEC last month.

Herbert is also the founder and CEO at Newground Social Investment.

The oil major had sought approval from the SEC to exclude the investors' supporting statement for the proposal on the grounds that it was "materially false and misleading". But the SEC disagreed with this.

The nine-paragraph statement details some of the issues Chevron has faced since it bought Texaco in 2001 and concludes: "Chevron shareowners face critical issues. Please vote FOR this common-sense corporate governance reform to allow special meetings as needed."

Herbert's letter to the SEC argued that Chevron is currently "harassing shareholders" via subpoenas and a lawsuit relating to their questions over the $19bn impact of the Ecuador case.

A similar proposal gained 30.8% approval – and a recommendation from proxy advisory firm ISS – at the oil major's AGM in 2012, when Chevron did not seek to block it from the AGM agenda.

Investor Voice was incorporated in 2009 and last year, for example, filed a resolution at USfood group JM Smucker calling for "fair and transparent" vote-counting.