12:20 pm Friday 7/31
Let's see how long that lasts.
12:20 pm Friday 7/31
Let's see how long that lasts.
Exec Allowed to Resign After Secret Recording
By Stephanie Forshee, Jennifer Williams-Alvarez May 18, 2020
Former Noble Energy general counsel Arnold Johnson cultivated a reputation as a go-to source on ethics. He spoke on panels and authored academic papers on the topic and sat on nonprofit boards.
But there was another side of Johnson, one that led to his quick departure from the Houston-based oil and gas company in late 2017.
In November 2017, a female employee at Noble was called into the then-general counsel’s office for a debriefing on a matter that the company, which was worth $12 billion at the time, had been handling. (Noble’s market cap, as of this publication, is closer to $4 billion.) The employee walked in, greeted him as “Arne,” as he was known to most colleagues, and took a seat across from the company’s top lawyer of more than 13 years. They engaged in a roughly six-minute conversation.
What Johnson didn’t know at the time was that he allegedly had been caught secretly video-recording her lower extremities from below his oval-shaped desk.
Johnson with Noble Energy executives. (Credit: Michael Hart)
An Agenda investigation reveals that the alleged under-the-desk recording led to Johnson’s hasty exit from the company, within days of a credible complaint. Multiple former employees have provided an account of how the board and management allowed him to walk away with upwards of $9 million, unscathed by any reputational damage that a “termination for cause” could have garnered. Rather, investors and most employees at the time were told only that he resigned over a weekend “to pursue personal interests.”
A dozen former employees offered details to Agenda about Noble, five of whom provided information specific to Johnson’s departure. All former employees spoke with Agenda on condition of anonymity because of a desire to preserve professional relationships. The claim about Johnson’s recording under his desk is supported by video evidence viewed by Agenda. Time-stamping, photos and documents corroborate the timing and location of the recording. Details about the culture within the company and about Johnson’s general behavior while at Noble were independently provided by a number of sources.
Johnson did not respond to requests for comment on the matter. An attorney who represents Johnson informed Agenda that Johnson is “bound by confidentiality obligations with Noble Energy” and would not comment for this article.
A little more than two years after his exit from Noble, Johnson emerged, listed as a speaker at a legal event in Colorado. A once-prominent figure on the subject of attorney ideals, Johnson was slated to address junior attorneys in March about their ethical obligations, such as raising concerns with superiors, according to the event brochure.
“This is the last person in the world [who] should be giving an ... ethics presentation,” says one former employee with knowledge of Johnson’s secret recording of at least one employee.
Johnson’s name was removed from the event program as Agenda’s investigation progressed.
In response to numerous questions about Johnson’s departure and the company’s culture, Chris Tucker, a spokesperson for Noble, writes in an e-mail: “The actions that were taken by management back then upon learning of the conduct in question were both swift and decisive, and appropriately sensitive to, and respectful of, the complainant’s desire at the time for anonymity and confidentiality.”
In early 2017, a female former Noble employee began to suspect that Johnson was taking pictures of her while she was in his office for a meeting with other employees, according to a source familiar with the meeting. The sound on Johnson’s phone was on, the source says, and one employee heard the “click” signaling that a photo had been taken.
Sources familiar with the meeting, who learned of the circumstances at different times, found it hard to believe at first that the general counsel, considered a mentor to many, would behave in that way.
Johnson, then a senior vice president, secretary and general counsel, was someone who spoke on panels across the country about ethics and compliance. He’d been honored by the Houston Business Journal as the best general counsel of a large legal department in 2013. His persona around the office was that of a “polished” man, “full of integrity,” another employee recalls.
Johnson was honored by the Houston Business Journal as the best general counsel of a large legal department in 2013. (Houston Business Journal)
It was difficult at first, the former employees say, to reconcile Johnson’s reputation with the conduct of a man who was potentially photographing colleagues without their consent.
Not long after hearing the click, the female employee approached the chief compliance officer, John Sardar, and posed some hypothetical questions: What would happen if a female employee believed a male colleague was taking pictures of her? Would the company be able to thoroughly investigate? Sardar responded that getting access to photos stored on a company phone would have to be approved by the user of the phone, who could delete any incriminating images before access was provided. The circumstances would be even trickier if the photographer had used a personal phone, a source familiar with the matter recalls. Sardar did not respond to requests for comment.
The female employee considered reporting the incident through the company’s anonymous hotline, but such complaints went into the general counsel’s office and to individuals who reported to Johnson, a source familiar with the matter says. The employee also considered writing a letter to board members, according to the source, but she felt that directors likely would have taken the matter to Sardar, the CCO, who reported to Johnson. Without a way to corroborate her claim, she felt there was too much risk in coming forward, the source recalls.
And so developed a “pattern” in which the female employee was summoned into Johnson’s office and he would have his cellphone “geared up” under his desk, according to a source familiar with these circumstances. The female employee began to adapt her behavior in the workplace, checking Johnson’s travel schedule and ensuring she wore pants when he was scheduled to be in the office. But in at least one instance, she ended up in his office, wearing a skirt, on an occasion when she did not believe he’d be at work.
Johnson’s alleged conduct took a noticeable toll on the female employee, recalls a former colleague who was aware of Johnson’s conduct before his departure. She was someone who could handle high-pressure situations well, the source reflects, but pretty quickly it became clear that she was shouldering immense stress.
The situation came to a head the week leading up to Johnson’s departure, when the female employee, short on options, used her phone to record a meeting with him.
The video begins with the individual walking down a hallway in the company’s offices in Houston. She enters Johnson’s office, greets the general counsel by name and takes a seat opposite him, with her phone held beneath the desk, filming.
The recording, reviewed by Agenda, reveals Johnson, already seated, with both hands on his Samsung phone in its black case beneath his desk. The six-minute video shows Johnson checking his phone beneath his desk a handful of times, revealing that the video application is open on his Samsung.
When the person across from him makes movements to adjust her seating, Johnson can be seen noticeably shifting his phone’s position. As she moves, his phone follows.
Johnson’s office was outfitted with a desk unlike other executives’ at Noble, several former employees say. Rather than having a privacy shield along the front, his desk is described as having an oval top that was open on the underside. As shown in the video, the design provides an unobstructed view below the tabletop.
In a meeting later that day that included between five and 10 people, Johnson again used his phone to covertly record or take photos from under a conference room table, a person familiar with the meeting alleges. Two former employees with knowledge of Johnson’s conduct say there seemed to be no legitimate reason to record conversations in the office.
In Texas, it is a crime to photograph or record the “intimate area of another person without their consent in a way that would also invade their … expectation of privacy,” says Dallas criminal defense attorney Michael Lowe, who did not comment on whether Johnson might have committed a crime.
“Some people call that the up-the-skirt law,” says Lowe, a former prosecutor in the Dallas County District Attorney’s Office. The time limit to bring charges for this offense, a state jail felony in Texas, is three years from the date of the incident, Lowe notes.
Whether a person violates this law is a fact-specific determination, says James Luster, a criminal defense attorney in Fort Worth, Texas. Details such as what was captured in the photo or video and what the compromised person was wearing can be critical, explains Luster, a former prosecutor in the Tarrant County District Attorney’s Office.
“If someone attempts to do this [kind of photography or recording] and fails … that would be an attempted invasive visual recording, which would be a misdemeanor offense,” he says. Such a charge must be brought within two years of the date of the offense, adds Luster, who spoke generally.
Johnson’s attorney did not address Agenda’s specific questions, including about the potentially illegal alleged behavior, citing confidentiality obligations to explain that he would not comment. A Noble spokesperson tells Agenda that they are not aware of any confidentiality agreement with Johnson.
Nov. 10, 2017, was a typical work day at Noble’s Houston headquarters. Many employees took advantage of the casual dress code on Fridays, arriving clad in blue jeans. Johnson might be found on Fridays in jeans and cowboy boots, according to a former employee, a departure from his typical attire of a suit with a necktie or bow tie.
After having consulted with an attorney of her own, the female employee felt comfortable handing over the evidence she collected to Sardar, Noble’s chief compliance officer.
The complainant was told the incident would be taken care of, and that she could go home if she wished. The woman was apparently assured that management would keep her informed of what happened to Johnson.
Next, Sardar, along with the then-deputy general counsel, Aaron Carlson, looped in Kenneth Fisher, Noble’s chief financial officer, before notifying Noble CEO David Stover, someone familiar with the meeting said, suggesting that he may have gone to Fisher before Stover because at the time Fisher was considered to be the “least of the insiders.”
As of Saturday, the woman was informed that Johnson would be fired on Monday. However, over the weekend, it appears the company shifted course. A source says a security officer for the company advised it was “too risky” to terminate a senior officer in the office on a Monday morning. So the decision was made to contact Johnson by phone on Sunday and reach an agreement that way.
The woman allegedly recorded by Johnson received a few updates over the course of the weekend from individuals involved in handling the incident, mainly from the then-senior VP of human resources, A. Lee Robison, according to a source familiar with the matter. On Sunday, when the victim received a call from Robison, as planned, a source says she was told that “at the last minute, they decided to let him resign.”
Stover, Fisher and Robison did not respond to requests for comment. Carlson, through a LinkedIn message, declined to comment.
According to a person familiar with the matter, that weekend, Stover, who also chairs the board, contacted Michael Cawley, a board member since 1995 and lead independent director at the time. A company spokesperson says that specifics about the situation with Johnson were widely distributed to Noble board members leading up to the general counsel’s departure, but the spokesperson could not confirm how many directors or the names of the individuals who were made aware. Individual board members did not comment for this story.
May 18, 2020
Boards Beware: Culture Risk Is Intensifying
January 13, 2020
Making Millions Amid Jolting Allegations
A response to questions sent to a general board e-mail address acknowledged Agenda’s “numerous communications to business and private emails [sic] for current and former members of the Noble Board of Directors and Noble management as well as current employees and former employees.” A spokesperson had been authorized to provide commentary, Agenda was advised. Comments received have been reflected in this article.
That Sunday, Nov. 12, Stover and Robison met in person at the office to call Johnson at his home. When told about the evidence, Johnson is said to have been quiet and did not put up a fight.
Johnson’s resignation took effect immediately and he was not allowed back onto the Houston campus, according to sources.
That the company acted quickly is undisputed by the alleged victim, according to a source familiar with her thinking. At least one source believed, however, that there was a resolution that would have been respectful of her desire for fast action and anonymity that did not involve allowing Johnson to resign.
Law firm Thompson & Knight weighed in on the feasibility of a termination, advising that such action could involve a lengthy investigation and potential litigation, which would increase the likelihood that the complainant would be identified, a Noble spokesperson says. Additionally, management, with the advice of the outside firm, according to one source account, determined that Johnson would forfeit unvested equity awards upon his departure, which means he potentially left more than $1 million on the table. Thompson & Knight did not comment for this article.
The board had approved Johnson’s total comp in the amount of nearly $2.5 million for 2017, at least half of which could have been subject to forfeiture. The 2018 proxy statement shows that Johnson was able to keep unused vacation and a bonus from his work on a major energy deal, totaling $100,000.
Between his salary of $450,000 and his vested RSUs, it appears he left the company with close to $1 million in compensation for 2017. The company appears to have been obligated to pay out another $8.3 million in deferred compensation to Johnson, which was 100% vested, according to the 2018 proxy statement. A company spokesperson confirmed that Johnson forfeited $1.6 million in pay in 2017 but did not comment further on the dollar amounts from the proxy statement.
In the four years prior to his departure, Johnson realized upwards of $6.5 million in pay, according to compensation research firm Equilar. (Prior to 2014, he was not a named executive officer, so his compensation was not disclosed.)
In the company’s proxy statements, the energy company’s compensation committee has a policy under which it can recoup incentive-based compensation “under certain circumstances (such as a restatement of financial or reserve reporting or material noncompliance with federal securities laws or the Company’s codes of conduct).” While a company spokesperson touts its swift action and refusal to accelerate any unvested stock after Johnson’s departure, it also did not claw back any pay, relying on advice from outside counsel.
Michael Melbinger, a partner at law firm Winston & Strawn, reviewed Johnson’s compensation package disclosed in the 2018 proxy statement with Agenda. He acknowledges it is common for a board to allow an executive to voluntarily resign rather than be terminated. But when considering that there were secret video-recording allegations made against Johnson, Melbinger says, “I would hope for the sake of the board, there wasn’t evidence. … It’s hard to think of a much clearer — well, embezzlement or maybe shooting someone — but other than that, that’s a pretty clear cause to me.”
Public companies must file an 8-K with the SEC to indicate any material event, such as the departure of a named executive officer, within four business days. Noble notified investors on Thursday, Nov. 16, 2017. At the same time, Noble filed paperwork showing that longtime board member Thomas Edelman sold off roughly $8.3 million in stock, through two transactions, in the days between when the complaint was made against Johnson and when the company disclosed his departure to the public. Related Form 4s do not indicate that the trades were made pursuant to pre-planned trading, or 10b5-1, plans.
“As with all director trades, these transactions were previously disclosed to and pre-cleared by the company, and were part of a larger, year-end financial planning strategy put into motion weeks prior to their eventual execution,” a spokesperson for Noble said in an e-mail. “We can say categorically that they were not in any way relevant to anything else being discussed in this story.” Edelman did not respond to requests for comment on the trades.
Corporate governance professionals are paying more heed to stock sales that occur around the time of MeToo-type allegations against corporate executives. In a January special report, Agenda analyzed sales at 10 public companies that faced claims of workplace s-xual misconduct and found that executives collectively cashed in on millions of dollars during periods when the board and management should have been aware of the allegations. Noble was not included in the previous analysis, but Edelman’s stock sales were flagged by stock sales tracker InsiderScore as an unusual transaction. The market research platform noted that he “deviated behavior by transacting an unusually large sale at $27.83.” The report noted it was his largest non-option sale since 2006.
Outside of the group of individuals who learned of Johnson’s departure during the course of the weekend, most of his colleagues were alerted on that Monday by a terse e-mail from Noble’s CEO to employees. “I need to inform you that Arne Johnson, SVP Corporate Affairs, resigned this weekend for personal reasons,” it read.
One attorney who previously worked for Noble recalls that those in the legal department felt “in the dark” about the reason behind Johnson’s departure, saying “it should have been communicated” by either Stover or Carlson “as to why he left, especially within Legal.” Some, the lawyer says, were “caught off guard” and “angry.”
At least two people recall colleagues speculating that Johnson must have resigned due to an imminent health issue. His alleged victim reportedly sat through conversations with coworkers expressing concern for him.
That Johnson departed because of a misconduct accusation seemed unlikely to at least one former employee, who referred to the ex-GC as being “known as all things ethical at Noble.” Johnson was “all about the letter and doing the right thing,” the former staffer says.
More than two years after his departure, some colleagues still hold him up as a great leader. One former employee, who has spoken to him since his departure, says that he hasn’t divulged any specifics on the reason he left. Another female colleague, whom several former employees mentioned as having a close relationship with Johnson, tells Agenda that she “never felt he crossed the line in any way.”
“He just seemed like a nice but lonely guy to me, really interested in trying to get to know his team,” the former employee says.
Some former employees saw his interest in others at the company through a different lens. “He definitely paid a lot of attention to the pretty girls,” one former employee says. “He tended to gravitate more to the objectively attractive women, more than you would expect for someone to do in a work environment,” recalls another.
There was likely a sense of being “untouchable,” two former employees say of Johnson. They say this created room for his alleged behavior.
In November 2017, many members of the C-suite, including Johnson, had résumés that included various positions at the same three companies: Arco, Vastar Resources and BP America, all oil and gas companies. Johnson was close — a “trusted advisor” — to CEO Stover, one former employee says.
A number of former employees, meanwhile, described Noble as having a “Good Ole Boys” or “clubbish” culture. It was almost a “me and my buddies were talking with one another on the golf course” kind of relationship among some of the executives, a former employee describes.
“Women could only kinda look at the glass ceiling, but not really touch it,” says one former in-house lawyer. While the decision to bring Rachel Clingman in as Johnson’s successor was seen as a positive, the broader sense of a club culture did not change, the attorney says. “I do know there were comments made … about a female being added to the board and how that would help.”
At the time of Johnson’s departure, the board was made up of nine men and two women, regulatory filings show. One of the female board members had joined less than a month before his exit. The current board of nine directors includes three female board members. The average tenure of the current board is roughly eight years, with four directors serving at least 12 years, according to InsiderScore.
These changes notwithstanding, governance remains an issue, according to proxy advisory firms. A QualityScore profile provided by Institutional Shareholder Services, for one, shows the company with a score of 8 — with 10 being the worst ranking — for governance risk. Board structure was given a score of 9, according to the report, which was calculated on May 5. Among the issues flagged by ISS include that, while the board’s composition is 33% female, no woman serves in a board leadership position.
Glass Lewis, meanwhile, has recommended that shareholders vote against the election of board member James Craddock, on account of questions about his independence. In July 2015, Noble merged with Rosetta Resources, of which Craddock was CEO. While acknowledging that the board had reviewed applicable guidance to conclude that Craddock was independent, the proxy advisory firm determined that Craddock’s prior role could result in his not being “unquestionably independent.” Glass Lewis recommended votes against him from 2016 through 2019. In each of those years, at least 25% of shareholder votes came in against his reelection, Glass Lewis reports and SEC filings reveal. Craddock remains on the board and is a member of the governance and compensation committees.
Also, in 2019 and in 2020, Glass Lewis recommended votes against board member Holli Ladhani, who is CEO of Select Energy, an oilfield services company that has received tens of millions of dollars in payments from Noble Energy while Ladhani has been on the Noble board, according to the company’s SEC filings. “We question the need for the Company to engage in business relationships with its directors,” Glass Lewis wrote in its 2020 report. “We view such relationships as potentially creating conflicts for directors, as they may be forced to weigh their own interests in relation to shareholder interests when making board decisions.”
Neither Craddock nor Ladhani responded to requests for comment.
In an April 24 phone call with Agenda, Clingman says the company does not comment on “specific personnel actions.”
“Unequivocally, we have a strong integrity, values and code of conduct and won’t tolerate harassment or discrimination,” adds Clingman, who was named general counsel six months after Johnson’s departure. “And to the extent I have ever investigated current or past events, I found management to have acted very appropriately.”
Leaving the company with his reputation intact has allowed Johnson to continue to sit on nonprofit and alumni advisory boards. Until last week, he served as a director for the World Affairs Council of Greater Houston, a nonprofit board on which Noble’s current general counsel also sits. Following inquiries to the WAC, where two staff members confirmed Johnson’s standing as a current board member as of the morning of May 11, the organization removed him from its website that evening.
In 2017, Johnson established a scholarship fund at his alma mater, Northwest Missouri State University. He is also a board member for Creighton University School of Law and the Northwest Foundation, the latter of which told Agenda this month that it believed he “retired” from Noble Energy.
Johnson resumed his role on the board of the Catholic Charities Archdiocese of Galveston-Houston through October 2018, at which time he assumed an interim role of president and CEO for four months and went on to serve as general counsel for five months, ending in June 2019.
As of publication, Johnson is licensed to practice law in Texas, Nebraska and Colorado.
Early this year, Johnson was slated to speak on a panel at a natural resources law conference in Colorado. At the March event, called the Young Natural Resources Lawyers and Landmen Institute, Johnson was to speak to young attorneys about acting within the bounds of their ethical obligations. He was removed from the event program in late February, as Agenda investigated this story. Event organizers did not comment on why Johnson was taken off of the schedule.
Johnson was removed from the conference program as Agenda's investigation progressed.
The circumstances of Johnson’s departure from Noble Energy spoke volumes about the company, says one former employee who knew the particulars in November 2017.
“Most of [the then-executives] just acted like it never happened,” the former employee recalls. “That type of behavior is what’s wrong with this, you know, corporate culture as a whole ... the unwillingness to engage in it and understand and lean into something that has been done.
“You can’t fix anything, you can’t prevent it in the future ... if you don’t, you know, talk about it,” the former employee adds.
See? That post about AJ didn't last long. The cover-up continues...
Wow. That's serious stuff. I am new to this site and wasn't aware. Totally disturbing and disappointing. This place is a lot worse that I thought it was. Guess we are going to be better off with Chevron. I hope that NBL management behavior doesn't reflect on those of us who do the work, day in and day out because we need jobs to keep our families fed, housed and clothed. Thank you.
To all the Chevron folks:
See what you've gotten yourselves into? Noble management is a real class act.
They do and can block you from future posts. Trust me I know. Just refresh the router address.
There are AI robots trolling all over the web including this site. Don't think all posts are from humans. Anything posted on the web is reviewed by AI programs for certain keywords.
Can someone please tell me what did AJ do?
What do you mean, they are trying to cover up AJ's predatory behavyor? They already have! Haven't they?
NBL execs and HR minions troll this site daily and seek to remove stuff all the time. It's a pure censorship play on their part...they don't want embarrassing stuff published so they appeal to the site hosts. The accomplishments post was k–ler–to bad it was taken down. I also heard TLO will block people from posting in the future if you cross their rules/policies.
They're trying to cover up Arne's predatory behavior.
Apparently the executives learned of those posts and were deeply offended by them but you know truth hurts. When the s-x scandal broke DS got on his podium to do a video to Noble staff clearly upset that scandal was posted on a public forum. Seemed he was more concerned about the public knowing of the scandal than the potential criminal offense
you do realize that this site si about 100s of companies and noble is just one of them so if theya re controling this site they are controling all posts for all companies which is impossible
they (admins/mods) remove posts due to rules violation, i think it's described somewhere in the footer. in short dont do posts with this stuff: