Nabors passes sweeping corporate governance changes, including proxy access

Nabors shareholders that have held at least 5 percent of the company for three consecutive years will be eligible to nominate directors

 One of the major rallying cries for activist shareholders in recent days is for a shift in executive compensation to increase shareholder returns. At one major oil company, those cries have come to fruition.

Oilfield services and drilling company Nabors Industries Ltd announced on April 14 that it would institute a number of changes to its board and payment structure. Chief among the changes are the limiting of severance packages to 2.99 times the executive’s yearly salary and bonuses.

Nabors also announced that it would be splitting the chairman and CEO roles once current CEO Anthony Petrello leaves his position. The company will also institute a proxy access policy in which shareholders that have held at least 5 percent of the company for three consecutive years will be eligible to nominate directors to the board.

“These changes reflect the results of our commitment to strengthening our corporate governance and compensation practices, and open the door to an even more focused commitment to the generation of long-term value for shareholders,” Petrello said in a statement.

Of course, this isn’t the first time that Nabors has reshuffled the deck with respect to corporate governance. In 2012, Nabors shareholders adopted a non-binding proxy access resolution, which Reuters claims is the first of its kind to pass at a major company. In addition, Nabors rewrote Petrello’s employment contract in 2013 to limit bonuses and increase shareholder returns.

This type of reshuffling could very well become a trend. In speaking with InsideCounsel in November 2013, Veta Richardson, president and CEO of the Association of Corporate Counsel, said that shareholders are becoming more proactive in seeking change where they believe there is room for improvement.

“Director independence, executive compensation, corporate social responsibility, reliability of financial reporting and transparency of communications are among the key issues that shareholders are urging boards of directors to focus more attention on,” Richardson said.

 

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Assistant Editor

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Zach Warren

Zach Warren is Assistant Editor of InsideCounsel magazine, where he oversees online content submissions and administers InsideCounsel's enewsletters. Zach specializes in new media and multimedia...

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