Investors representing a majority of shares in Bermuda-based drilling rig contractor Nabors Industries rejected the company’s executive compensation plan and voted against the re-election of two members of the board of directors at the annual shareholder meeting.
Nabors, however, refused to accept the resignation of directors John Lombardi and John Yearwood, whose re-election bids won only 44 percent and 47 percent of the vote, respectively, in uncontested elections. The company used, in part, withheld votes to explain its actions.
‘After considering the current structure of the board, the company’s strategic needs, shareholders’ expressed reasons for withholding votes and the roles each director played in addressing shareholder concerns by initiating changes in governance and historical compensation practices, the governance & nominating committee recommended that the board not accept the resignations,’ Nabors says in a press statement. ‘The board determined that acceptance of their resignations would not be in the company’s best interests and voted unanimously to reject the resignations.’
The company also rejected a vote in favor of a non-binding proposal that would give some of its larger shareholders the right to nominate directors (proxy access). Although 130.9 mn shares voted in favor of the proposal and 125.6 mn against it, the company counted non-votes as votes against.
The company, which had unsuccessfully petitioned the SEC to exclude the proxy access proposal, also says shareholders rejected the advisory say-on-pay proposal, a proposal to separate the positions of chairman and chief executive officer and other shareholder proposals.
Nabors, which in April reported that net income in the first quarter had plummeted 32 percent, has been the subject of numerous shareholder revolts, in particular over executive compensation. New York City Comptroller John Liu, who introduced the proxy access proposal, has repeatedly complained of poor governance and excessive compensation at Nabors.
‘Expropriating the corporate treasury to fund egregious CEO pay packages at shareholder expense is both a symptom and a consequence of Nabors’ entrenched board,’ Liu said in a press release announcing the proposal. ‘The only way to fix a recalcitrant board is to enable shareholders to elect directors other than those nominated by that same board.’
Earlier this year, the company announced in a filing to the SEC that it would pay $60 mn to chief executive officer Anthony Petrello in compensation for a loss of bonuses related to company cash flow. The payment was also meant to compensate him for a new company regulation that would tie 80 percent of his compensation to performance.
‘We have made a series of changes to our governance practices, which we believe reflects the extensive, productive discussions we have had with shareholders since last year’s meeting,’ Petrello says in a company statement after the shareholder vote. ‘We value our shareholders’ input and look forward to continued productive dialogue aimed at addressing any ongoing concerns.’
