Oil companies do not lose their leadership positions in Fortune 500. For many years, Chevron has been one of the three most successful U.S. companies listed by Fortune. As of today, Chevron is ranked the third in the list of Fortune 500 companies. The company’s CEO, John S. Watson, has been in this position since 2010 (Strassel, 2011). While companies choose their CEOs to represent and strengthen their ethical corporate image in public, the situation with Chevron and its CEO is quite the opposite. Unapologetic and productivity-oriented, Watson finds himself in the midst of a personal and corporate ethical crisis. The $18 billion Ecuador lawsuit has become a good test to Watson’s ethical values, beliefs, and decisions. Unable to curb the growing ethical crisis, Watson is likely to face shareholder rebellion and subsequent resignation (Hinton, 2012).
Modern textbooks on business and corporate behavior teach that a Corporate Executive Officer is the face of every company, a person who is expected to strengthen the company’s ethical public image. CEOs are expected to boost companies’ productivity in ways that do not violate ethical values and meet public expectations of corporate social responsibility. Yet, this is not always the case, and even Fortune 500 companies cannot always cope with their ethical dilemmas. One of the most controversial is the position of John S. Watson. The company that remains among the top three companies in the Fortune 500 list has become the source of the major ethical controversies. While many CEOs seek to illustrate their ethical behaviors, the behaviors which Mr. Watson illustrates are mostly unethical. These decisions and failure to deal with the $18 billion Ecuador lawsuit further impact the company’s productivity and profitability.
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Chevron CEO John Watson is well-known for being short-tempered and unapologetic (Hinton, 2012; Strassel, 2011). Shareholders are deeply dissatisfied with the way Watson is trying to handle the Ecuador situation. The Ecuador lawsuit has already become a buzzword in Chevron’s relationships with shareholders and the rest of society. Apart from the fact that Watson does not recognize the damage caused by Chevron to the population of Ecuador, he persistently denies any possibility to reach a fair settlement on this case (Hinton, 2012). “Chevron shareholders are now tying the enormous and unprecedented Ecuador liability to the company’s flawed corporate governance structure and Watson’s poor management” (Hinton, 2012). All these things will hardly improve Chevron’s ethical image.
Needless to say, the existing ethical controversies and Watson’s behaviors greatly impact Chevron’s profitability and productivity. While the company is spending millions of dollars on the Ecuador lawsuit, it is also facing one of the biggest profit declines over the past years (Fortune, 2012). Chevron continues investing huge resources in the development of oil and gas projects in Africa, Australia, and the Gulf of Mexico, and productivity remains one of its top priorities (Fortune, 2012). Meanwhile, Chevron lawyers are kept busy dealing with the growing number of lawsuits for the damages caused by the company to the natural environments in a number of countries, including Brazil (Fortune, 2012). Watson may not be fully responsible for what happened to Ecuador 19 years ago, but his current behaviors need to be reconsidered. Chevron has inherited the Ecuador case from Texaco in 2001 (Barrett, 2012). Chevron’s official position is that the Ecuador case is a well-developed fraudulent conspiracy between Ecuadorian and American lawyers, government officials, and judges (Barrett, 2012). As a result, apart from the fact that Watson’s attitudes reduce the company’s profitability and productivity, they also deny Chevron’s image of a company that can recognize its ethical dilemmas and resolve them fairly. Watson’s position on the issue, his behaviors, and corporate decisions have profound implications for Chevron’s public accountability and corporate social responsibility. In a highly competitive oil market, where corporate social responsibility is one of the major sources of competitive advantage, a company that lacks such responsibility can hardly sustain its business success in a long-term perspective.