On Thursday, May 17, 2012 at 3 PM EST, Glass Lewis held a Proxy Talk conference call to discuss a shareholder proposal seeking to repeal Chevron Corporation’s exclusive forum bylaw which generally requires shareholders to bring certain types of legal actions only in Delaware. We heard from representatives of Chevron regarding the purpose and benefits of the exclusive forum bylaw and why they think shareholders should vote against the shareholder proposal.
DESCRIPTION:
In September 30, 2010, Chevron adopted a bylaw requiring that unless the Company consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain legal actions. Amalgamated Bank’s LongView Funds have filed a shareholder proposal seeking to repeal the bylaw. The Company notes that the bylaw was amended in 2012 to adopt new protective provisions as a result of discussions with Amalgamated Bank.
Amalgamated believes the bylaw deprives Chevron investors of their statutory right to choose the forum in which to bring a suit to seek recourse for corporate malfeasance. It also believes the bylaw, despite the amendment, is overbroad because it covers investor suits where no need for this legal restriction has been demonstrated.
Chevron cites many reasons for adopting the bylaw including the Company’s incorporation in Delaware, that Delaware law governs the relationships among the Company’s directors, officers and its shareholders and that Delaware courts have special expertise in deciding issues of Delaware law. Further, Chevron notes that companies are facing multiple, virtually identical lawsuits in multiple states and bear the risk of inconsistent rulings as well as increased litigation costs.
Glass Lewis will ask the company representatives about the bylaw, why they believe it prevents economic harm to shareholders associated with defending duplicative legislation and why they believe shareholders should vote against shareholder proposal. The Chevron annual meeting is May 30, 2012.
To download a recording of this Proxy Talk, click here.