Zombie Directors

Investors in Nabors Industries Ltd. have a few concerns about how the world’s largest land drilling contractor is run, but they don’t seem to be able to do much about it. Complaints range from how Nabors pays executives, to a lack of diversity on its board of directors, to how it communicates with owners, according to the company’s own autopsy, filed Monday. In a signal of disapproval, a majority of shareholders voted to oust three directors in a June 7 election, and the directors tendered their resignations. They’ll be keeping their jobs. So-called “zombie directors,” a reference to shambling undead monsters, are fairly common in instances where investors try to oust board members without offering replacements, according to the Council of Institutional Investors. While only 43 directors of companies in the Russell 3000 Index failed to win majorities last year, 38 of them stuck around, the nonprofit’s data show. Most companies typically make changes after a majority of owners signal disapproval. Nabors is among a small subset of companies that have done little to assuage shareholders over the course of years on issues ranging from directors to executive pay. In many cases, investors will vote against directors because of broader concerns that aren’t necessarily about that person, and votes for those directors can change if underlying governance issues are addressed.

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