Say what you will about Big Oil, its companies and their top execs can teach us a thing or two about facing angry shareholders. In many cases, it's a "what not to do" type of lesson. But in others, like the Chevron (CVX) shareholder meeting held this week, there were some positive takeaways. Chevron CEO John Watson provided a few lessons other chief execs, who find themselves under fire, would be smart to follow.
1. Face the music
A troubling trend has bubbled up within publicly traded companies. Top execs are taking annual meetings on the road to avoid protestors and other ruffians. Among this year's offenders: Marshall & Ilsey Bank (MI), American Airlines parent AMR Corp., Goldman Sachs (GS), and JP Morgan Chase & Co. (JPM), the Associated Press reported.
Chevron held its shareholder meeting at its San Ramon, Calif., headquarters, where it was sure to be greeted by hordes of protestors. The meeting had tight security and protesting throngs, but no one arrested. Last year, several people were arrested at Chevron's annual meeting, which was held in Houston.
Some companies, like General Motors (GM), are coming home to face shareholders after a long absence. For years, the company held its annual shareholder meeting in Delaware. This year GM will hold is first annual meeting since its bankruptcy in Detroit, where its mark and influence can be found everywhere.
2. Hold a question-and-answer session
Top execs probably don't enjoy question-and-answer sessions. Rarely do shareholders ask softball questions like "Why are you so great?" Despite the discomfort, offering a Q&A can go a long way in dousing the fires burning in the hearts of angry shareholders. Chevron typically holds Q&A sessions. This year's Q&A portion lasted longer than it has in the recent past, according to one Chevron PR exec.
That being said, don't follow M&I's example. First, the Wisconsin-based company postponed its meeting and then hastily moved it to New York. Then after executives promised shareholders they would answer questions, they scampered out the back door.
3. Actually, answer questions
Bank of America (BAC) CEO Brian Moynihan failed miserably at this task. The company did hold a Q&A portion during its May 11 shareholder meeting, but Moynihan got evasive, grew impatient with the questions and tried to whip through the 18 or so folks who had lined up to speak to him.
Watson may not be perfect and you may not be a fan of fossil fuels, but the guy was at least congenial and answered questions fairly directly, according to several media reports.
4. Stand your ground and explain why
That's not to say Watson just rolled over. The Chevron CEO answered questions, but he stood his ground on a number of occasions and often disagreed with shareholders. For example, after one Richmond man criticized Chevron's local environmental record, Watson busted out some slides that outlined how the company had cut flaring at its refinery as well as reduced emissions and water usage.
5. Remember you have a captive audience
Several speakers at the meeting urged the Chevron to settle an 18-year-long environmental contamination lawsuit in Ecuador originally brought against Texaco, which the company purchased in 2001. Chevron was ordered in February by an Ecuadorean court to pay up to $8.6 billion -- and an equal amount in punitive damages -- for environmental damage caused by Texaco oil and gas operations. Chevron has always maintained Texaco completed environmental remediation and that the pollution was caused by state-own oil company PetroEcuador, which still operates in the country.
Chevron understood that activist and traditional shareholders would be in attendance. So, the company took advantage of the opportunity and showed two videos. One video shown during the formal presentation centered on the company's investment in Richmond, Calif., where its massive refinery complex is located. The other video was shown in response to a question on the Ecuador litigation that describes the plaintiff's attorneys and the Ecuadorean court system as corrupt.
The point wasn't to convince the activists, but other shareholders who might be on the fence.
6. Listen to your shareholders
A shareholder proposal that asked Chevron to evaluate hydraulic fracturing, a controversial technique used to reach gas trapped in shale, failed. But more than 40 percent voted in favor, a number worth paying attention to.
We'll see if Watson takes this shareholder concern -- which has gained momentum in recent months -- seriously.
Photo from Flickr user Robert Couse-Baker, CC 2.0