Shareholders Still Dealing With Troublesome Nabors Industries Ltd. (NBR)

Even if a company does get rid of directors who fail to receive majority support in uncontested elections, shareholders have to trust the board to select new board members that will better represent their interests.

In short, without proxy access, shareholders have a limited ability to hold directors accountable for underperformance.

The Foolish takeaway
The procedural concerns associated with shareholders’ limited ability to nominate director candidates becomes especially significant at companies where leadership compromises our trust, as I believe Nabors Industries Ltd. (NYSE:NBR)’s leadership has repeatedly done. If the proposal passes again, and Nabors actually implements it, then I think we may see some positive changes. As it is, I think investors should be reluctant to own the stock until the company’s management and board begin to make decisions that better reflect shareholders’ interests.

The article Shareholders Still Dealing With Troublesome Nabors originally appeared on Fool.com and is written by M. Joy Hayes, Ph.D.

Fool contributor M. Joy Hayes, Ph.D., is the Principal at ethics consulting firm Courageous Ethics. She has no position in any stocks mentioned. Follow @JoyofEthics on Twitter. The Motley Fool recommends The Western Union Company (NYSE:WU) and has options on Chesapeake Energy Corporation (NYSE:CHK).

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