Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Nabors' Shareholders Balk at Executive Compensation -- Again

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

It should be three strikes and you're out.

Nabors Industries (NYSE: NBR  ) claims that it listened to shareholder concerns about its executive compensation and used those critiques to reformulate its compensation structure. However, for the third year in a row, it failed to gain majority shareholder support for its executive compensation.

Also, shareholders again voted on a shareholder proposal pushing Nabors to clear future severance agreements above a certain threshold with shareholders. While that proposal didn't pass this year (as in 2012), it received 45.9% shareholder support. In fact, more shares voted in favor of the proposal than against it. However, including broker non-votes and abstentions in the final tally tipped the balance against the proposal's supporters.

The shareholders have spoken -- repeatedly. It remains to be seen, however, whether the board will finally give shareholders what they want.

Outrageous compensation at Nabors
I believe shareholders are right to balk at Nabors' compensation decisions.

For starters, shareholder concerns about severance packages didn't come out of left field. When he left the CEO position, board Chair Eugene Isenberg was granted a $100 million severance. While Isenberg later forfeited the payment, the board defended the initial severance by claiming that its payments are "paid pursuant to binding contractual agreements," giving shareholders reason to worry that the board may make mistakes in the future that require them to make similarly outrageous payouts.

And that's not the only concerning compensation decision approved by Nabors' board. The SEC was suspicious enough of Nabors' decision to allow directors and executives significant personal access to company aircraft that they chose to investigate. And as is observed by corporate-governance expert Nell Minow's organization GMI Ratings, companies with the highest personal jet use costs often display other red flags associated with their compensation and accounting systems, including pay packages that lack sufficient performance requirements.

The Foolish takeaway
I hope shareholders' continued disapproval of Nabors' executive compensation, along with their repeated calls for more control over decisions about compensation, sends a strong message to Nabors' leadership. With the incorporation of two new board members in response to pressure from major shareholder Pamplona Capital Management, there may be more of a push for governance revisions that are more hospitable to shareholders. Without a clear sign that these changes will happen, however, I believe investors would do best to avoid the stock.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2478989, ~/Articles/ArticleHandler.aspx, 9/26/2016 6:56:04 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,094.83 -166.62 -0.91%
S&P 500 2,146.10 -18.59 -0.86%
NASD 5,257.49 -48.26 -0.91%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/26/2016 4:02 PM
NBR $10.30 Up +0.30 +3.00%
Nabors Industries CAPS Rating: ****