See story below: “Richmond, Calif., Mayor Gayle McLaughlin asked O’Reilly to drop a lawsuit the company filed against her city’s new business-license fee, which would cost the refinery millions.”

CEO stands up for Chevron

By DAVID R. BAKER SAN FRANCISCO CHRONICLE

May 27, 2009, 10:27PM

Paul Sakuma AP

Gayle McLaughlin, mayor of Richmond, Calif., and Emergildo Criollo, of Amazon Watch, share the spotlight Wednesday with a sign poking fun at Chevron’s current ad campaign. The company is suing Richmond over a business-license fee, and Criollo is party to a suit against Chevron in Ecuador.

SAN RAMON, CALIF. — Activists took aim at Chevron Corp.’s human rights record Wednesday during the oil company’s annual shareholder meeting — and Chief Executive Officer David O’Reilly fired right back.

In a series of cordial but tense exchanges, critics accused Chevron of fouling the environment, endangering health and supporting repressive governments, while O’Reilly repeatedly came to the company’s defense.

The debate, held inside Chevron’s San Ramon headquarters, jumped from continent to continent, touching on controversies surrounding the company’s actions in Kazakhstan, Nigeria, the Philippines and California.

Several speakers at the meeting urged Chevron to settle a long-running pollution lawsuit in Ecuador that could cost the company $27 billion. Protesters outside echoed that point, waving barrel-shaped signs that read “Clean up, pay up Chevron.”

“We say today that Chevron Corp. must take responsibility for this contamination,” said Emergildo Criollo, one of the Ecuadorans suing the company. He told shareholders that he had lost two children and one aunt to health problems he blames on oil-field contamination.

“We don’t want to keep dying,” he said, speaking through an interpreter. “We want a healthy life.”

O’Reilly told Criollo he was blaming the wrong company for the pollution. Texaco drilled in Ecuador from 1964 to 1992, then turned operations over to Petroecuador, the state-run oil company. Chevron inherited the lawsuit when it bought Texaco in 2001.

“These problems are not the problems of Texaco,” O’Reilly said. “They’re the problems of the government of Ecuador and Petroecuador.”

O’Reilly ran a video clip attacking the credibility of a court-appointed expert who had estimated that Chevron should pay $27 billion in damages and cleanup costs. The video argued that the expert simply used figures suggested by the plaintiffs, and the figures shouldn’t be considered valid.

Chevron’s shareholder meetings have a history of protests and pointed exchanges.

A speaker from Nigeria asked O’Reilly and Chevron’s board to pressure the Nigerian government for a cease-fire in its fight against rebels in the oil-rich Niger Delta.

Richmond, Calif., Mayor Gayle McLaughlin asked O’Reilly to drop a lawsuit the company filed against her city’s new business-license fee, which would cost the refinery millions.

Chevron’s shareholders voted down proposals that would have required the company to adopt a comprehensive human rights policy. Another defeated proposal would have forced Chevron to report on the procedures it uses to assess the adequacy of environmental and health laws in host countries.

Finally, a proposal that would have required Chevron to adopt a long-range plan for cutting greenhouse gas emissions was withdrawn by its proponents after the company agreed to track and report the carbon content of its products.

Chevron annual meeting heats up over Ecuador suit

By JORDAN ROBERTSON AP Business Writer

Posted: 05/27/2009 01:57:12 PM PDT

Updated: 05/27/2009 06:15:04 PM PDT

Click photo to enlarge

Gayle McLaughlin, left, of Richmond, Calif., speaks as Emergilldo... ((AP Photo/Paul Sakuma))

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SAN RAMON, Calif.—In a combative and sometimes colorful annual meeting, Chevron's CEO and chairman exchanged barbs with activists over pollution in the Amazon rain forest and the company's human rights record, twice scolding speakers who addressed executives.

Chief Executive David O'Reilly told one group that its report on Chevron's policies "deserves the trash can."

The nation's second-largest oil company is awaiting a verdict from a judge in Ecuador that could come with a $27 billion price tag, though any such decision would certainly draw an appeal.

Hundreds of protesters rallied outside, at one point blocking the entrance.

Confrontations outside and inside the company headquarters did not change the outcome of three key shareholder proposals, but one of them did garner more support than it had received in the past.

At the core of the protests was the suit in Ecuador. It claims that Texaco, which Chevron bought in 2001, poisoned large swaths of the rain forest by dumping billions of gallons of oil waste, causing cancers and birth defects.

Chevron says Texaco spent $40 million on environmental cleanup there and had been cleared of liability by the Ecuadorean government in power at the time. Chevron said the state oil company PetroEcuador continued to pollute the region after Texaco had left.

A proposal seeking a more detailed human rights policy from Chevron got 28 percent of the vote, which was in line with the level of support from previous years.

A separate proposal for a report on Chevron's criteria for investing or operating in countries with questionable human rights records took 26 percent of the vote. Another measure focused on how Chevron assesses the environmental laws in other countries got less than 7 percent.

In those two areas, similar proposals in the past have never received more than 10 percent of the vote.

When one speaker took the microphone to talk about a report by environmental organizations titled "The True Cost of Chevron," O'Reilly called it "insulting to our employees and I think it deserves the trash can."

The report cites Chevron for the destruction of communities, environmental damage and political oppression.

Chevron's overall finances have taken a hit in recent months as the price of oil and natural gas plunged. Chevron's net income in the first quarter fell 64 percent to $1.84 billion, while sales fell 45 percent to $36.1 billion.

Like many other major corporations, a say-on-pay proposal was also brought up for a vote. The nonbinding advisory proposal was rejected with 42 percent of the vote.

A proposal seeking more clarity on Chevron's plans to help curb climate change and lower its own greenhouse gases was withdrawn at the last minute. The burning of fossil fuels is cited by researchers as a reason for climate change.

Patricia Daly at Sisters of St. Dominic of Caldwell, N.J., a faith-based institutional investor that supported the measure, called greenhouse gases the "profound moral challenge for the day."

The group withdrew its proposal after meeting with Chevron's management, said Daly, who was attending the Exxon Mobil shareholders' meeting in Dallas.

"There was enough in the works so that we, in good faith, had to withdraw our resolution," she said. "In the end, this is really good, good business for the company."

The group did not withdraw the same resolution at Exxon, though that annual meeting was much less acrimonious. Exxon executives were also questioned about environmental issues and executive pay, but shareholders ultimately stood by management and voted down all 11 resolutions presented there.

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AP Business Writer Ernest Scheyder contributed to this story from New York.