One of the targets of Chevron’s ire is my friend Simon Billenness, an investor consultant who wrote a report (link opens a PDF) criticizing Chevron’s actions. Chevron subpoenaed not only all of Billenness’ documents and emails regarding the Ecuador case but also – astoundingly – the shareholder resolutions that he helped file. Billenness describes Chevron’s behavior as “character assassination to try to silence the legitimate concerns of its own shareholders.”
Burying their heads in the Sand(Ridge)
I recently wrote about how SandRidge Energy Inc. (NYSE:SD)‘s CEO uses his position to profit at shareholders’ expense with the complacent board’s blessing, prompting hedge fund – and SandRidge shareholder – TPG-Axon to launch a campaign to oust the CEO and replace the board of directors.
Institutional Shareholder Services (ISS), a unit of Msci Inc (NYSE:MSCI), has come out in favor of TPG-Axon’s efforts. According to ISS: “The apparent failures of stewardship on this board are legion.” TPG and other critics “have advanced a credible narrative that the company’s abrupt, piecemeal approach to corporate strategy and concomitant lack of capital discipline have increasingly limited the company’s financial flexibility, and engendered a deep distrust in the market.”
SandRidge has gone on the defensive, sending a letter to shareholders asking them to vote against TPG-Axon’s efforts. The letter makes a weak attempt to rebut TPG-Axon’s charges, but fails to do so in any meaningful way. SandRidge continues to waste resources that it could instead deploy to improve shareholder value.
The good guy
Don’t despair. There’s always EOG Resources, Inc. (NYSE:EOG). The company was slated to be a target of a recent series of shareholder resolutions aimed at fracking companies. Von Reusner told me that Green Century – the sponsor – withdrew its resolution after a successful engagement with EOG.
Green Century was originally concerned about EOG’s apparent lack of policies for tracking and responding to community complaints, and for reducing fracking chemical use. EOG responded with a detailed internal process for the former, and provided specific implementation steps and details on the latter. The company aims to make these public within the next few months. Now that’s refreshing.
Additionally, EOG performs at or near the top of its peer group on such management efficiency measures as credit rating, cost of debt, and overhead costs. Coincidence? I think not.
Social license to operate
Paul Bugala, Calvert Investments’ extractives expert, summed this up perfectly. Companies “risk losing their social license to operate if they don’t respect the role local communities and governments must play in decisions that may affect them. Community engagement and governance policies need to grow right along with acreage and reserves. U.S. independent oil and gas developers have to shake the sector’s wildcatter mentality and embrace their responsibilities, or risk losing or delaying leases and other opportunities.”
The article Are Corporate Bullies Bad Investments? originally appeared on Fool.com and is written by Sara E. Murphy.
Sara E. Murphy has no position in any stocks mentioned. Follow her on Twitter at @SMurphSmiles. The Motley Fool recommends Chevron and Range Resources.
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