• 15 mins Kuwait Greenlights Game-Changing Gas Fields Project After Years of Delay
  • 45 mins Minnesota Begins Public Hearings On Enbridge Line 3 Project
  • 1 hour China Looks To Create National Natural Gas Pipeline Firm
  • 2 hours Total Not In A Rush To Sell Canadian Oil Sands Assets
  • 2 hours DOE Seeks To Boost Usage Of Carbon Capture Tech
  • 3 hours Taxpayers Likely To Pick Up The Growing Tab For DAPL Protests
  • 6 hours WTI At 7-Month High On Supply Optimism, Kurdistan Referendum
  • 12 hours Permian Still Holds 60-70 Billion Barrels Of Recoverable Oil
  • 17 hours Petrobras Creditors Agree To $6.22 Billion Debt Swap
  • 21 hours Cracks Emerge In OPEC-Russia Oil Output Cut Pact
  • 1 day Iran Calls On OPEC To Sway Libya, Nigeria To Join Cut
  • 1 day Chevron To Invest $4B In Permian Production
  • 1 day U.S.-Backed Forces Retake Syrian Conoco Gas Plant From ISIS
  • 1 day Iraq Says Shell May Not Quit Majnoon Oilfield
  • 4 days Nigerian Oil Output Below 1.8 Million BPD Quota
  • 4 days Colorado Landfills Contain Radioactive Substances From Oil Sector
  • 4 days Phillips 66 Partners To Buy Phillips 66 Assets In $2.4B Deal
  • 4 days Japan Court Slams Tepco With Fukushima Damages Bill
  • 4 days Oil Spills From Pipeline After Syria Army Retakes Oil Field From ISIS
  • 4 days Total Joins Chevron In Gulf Of Mexico Development
  • 4 days Goldman Chief Urges Riyadh To Get Vision 2030 Going
  • 4 days OPEC Talks End Without Recommendation On Output Cut Extension
  • 5 days Jamaican Refinery Expansion Stalls Due To Venezuela’s Financial Woes
  • 5 days India In Talks to Acquire 20 Percent Of UAE Oilfield
  • 5 days The Real Cause Of Peak Gasoline Demand
  • 5 days Hundreds Of Vertical Oil Wells Damaged By Horizontal Fracking
  • 5 days Oil Exempt In Fresh Sanctions On North Korea
  • 5 days Sudan, South Sudan Sign Deal To Boost Oil Output
  • 5 days Peruvian Villagers Shut Down 50 Oil Wells In Protest
  • 5 days Bay Area Sues Big Oil For Billions
  • 6 days Lukoil Looks To Sell Italian Refinery As Crimea Sanctions Intensify
  • 6 days Kurdistan’s Biggest Source Of Oil Funds
  • 6 days Oil Prices On Track For Largest Q3 Gain Since 2004
  • 6 days Reliance Plans To Boost Capacity Of World’s Biggest Oil Refinery
  • 6 days Saudi Aramco May Unveil Financials In Early 2018
  • 6 days Has The EIA Been Overestimating Oil Production?
  • 6 days Taiwan Cuts Off Fossil Fuels To North Korea
  • 6 days Clash In Oil-Rich South Sudan Region Kills At Least 25
  • 6 days Lebanon Passes Oil Taxation Law Ahead Of First Licensing Auction
  • 7 days India’s Oil Majors To Lift Borrowing To Cover Dividends, Capex
Alt Text

OPEC's Strategy To Clamp Down On Cheating

OPEC is considering new measures…

Alt Text

BP And Azerbaijan Lock In Caspian Sea Oil Deal

Azerbaijan has announced that it…

Alt Text

OPEC Production Falls Despite A Dip In Compliance

As stated in OPEC’s Monthly…

Michael McDonald

Michael McDonald

Michael is an assistant professor of finance and a frequent consultant to companies regarding capital structure decisions and investments. He holds a PhD in finance…

More Info

Oil Companies Ignoring Investors

Oil Rig

One unexpected casualty of the oil price downturn is the self-respect of some energy investors. Equity investors are the owners of publicly traded companies and companies’ sole purpose is to act in the best long-term interests of their owners – at least in theory. That dynamic seems to have broken down at one major OFS firm though.

Take Nabors Industries for example. Investors at the company are concerned about a host of issues from board composition and shareholder communication to the firm paying its executives too much at the expense of shareholders. In a sign of that dissatisfaction, investors voted to oust 3 of the directors from the board in the June 7th election. Those directors tendered their resignations, but all three will be keeping their jobs.

Lead director of Nabors, John Yearwood failed to get a majority of shareholder votes at the last four annual meetings – a remarkable feat given that board elections are usually more of a formality than anything. The responsibility to accept Yearwood’s resignation lies with Nabor’s governance and nominating committee. That committee is headed by Yearwood. The other two members of the committee are Michael Lin and Howard Wolf, both of whom were voted out in this year’s election. Nabor’s decided that it would not be fair to have the three directors decide their own fate, so the company appointed a special committee of independent directors to decide what to do. The newly appointed independent committee decided that Lin, Yearwood, and Wolf should all keep their posts regardless of the shareholder vote. This marks the fourth year in a row that a similar situation has played out at Nabors. Nabor’s bylaws give the company the right to ignore shareholder votes because under the bylaws such votes are considered advisory.

Nabor’s is not the only company to take this approach. Of the 2,000 companies on the Russell 3000 index, only 43 directors failed to win majority votes in shareholder elections last year. Yet of those 43 who were voted out, 38 ended up sticking around anyway according to Bloomberg. Related: What Will You Do When The Lights Go Out? The Inevitable Failure Of The US Grid

Nabors is not the only company in a dispute with some of its shareholders, but it may be the firm with the most acrimonious dispute. In six votes held recently on executive compensation, Nabor’s shareholders have voted down executive compensation plans five of the six times with little effect. Only one of the last six plans has been approved by shareholders – the 2015 pay package which cut compensation for Anthony Petrello, Nabor’s CEO, versus previous levels. In the June 7th vote this year, Nabor’s shareholders voted against the CEO’s pay package. Petrello’s pay package this year almost doubled to $27.7 million from $14.8M last year thanks in part to a merger related bonus.

Given the circumstances at Nabor’s it’s unclear if shareholders have any power to directly impact significant change. In most circumstances, the board is supposed to act as advocates of shareholders, but that approach has run into some roadblocks at the company. Nabor’s stock market value today stands at roughly a third of what it was a few years ago, likely due to a combination of investor dissatisfaction and of course the sharp plunge in crude prices. Given that, disaffected shareholders should be hoping for the alternative mechanism to enforce proper corporate governance – a takeover of the company.

By Michael McDonald of Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News