• 4 minutes Ten Years of Plunging Solar Prices
  • 7 minutes Hydrogen Capable Natural Gas Turbines
  • 10 minutes World looks on in horror as Trump flails over pandemic despite claims US leads way
  • 13 minutes Large gas belt discovered in China
  • 2 hours Would bashing China solve all the problems of the United States
  • 25 mins Yale University Epidemiologist Publishes Paper on Major Benefits of Hydroxchloroquine for High-risk Outpatients. Quacksalvers like Fauci should put lives ahead of Politics
  • 18 mins Model 3 cheaper to buy than BMW 3 series.
  • 3 mins Thugs in Trumpistan
  • 4 hours Pompeo's Hong Kong
  • 1 day China to Impose Dictatorship on Hong Kong
  • 15 hours COVID 19 May Be Less Deadly Than Flu Study Finds
  • 4 mins China To Boost Oil & Gas Exploration, As EU Prepares To Commit Suicide
  • 9 hours China’s Oil Thirst Draws an Armada of Tankers
  • 4 hours Income report showing potential future spending and economic growth
  • 2 days Iran's first oil tanker has arrived near Venezuela
  • 5 hours US-China tech competition accelerates: on Friday 05/15 new sanctions on Huawei, on Monday 05/18 Samsung chief visits China
  • 6 hours The CDC confirms remarkably low coronavirus death rate. Where is the media?
  • 1 day 60 mph electric mopeds
  • 2 days Let’s Try This....
Deja Vu: OPEC's Recurring Oil Production Dilemma

Deja Vu: OPEC's Recurring Oil Production Dilemma

Saudi Arabia, OPEC’s largest producer…

Oil Slides As Russia Plans To Raise Production

Oil Slides As Russia Plans To Raise Production

Reports that Russia plans to…

Will There Be Another Oil Price War?

Will There Be Another Oil Price War?

The brief oil price war…

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

Premium Content

Oil Companies Ignoring Investors

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:


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




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