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Energy Companies Are Exhibit A in Shareholder-Rights Battle

"When we see that type of performance and the compensation awarded to executives, there is a strong disconnect there," Illinois' Atwood says. "As a public fund investor, it's generally our position to be critical of compensation levels in corporate America, but when we have extreme compensation juxtaposed against abysmal stock performance, we just feel duty-bound to raise hell."

The tale of Nabors during the reign of Isenberg hit a crescendo right before his retirement late last year, when he was awarded a $100 million "contingent liability" payment, a retirement check Isenberg ultimately gave back after public outcry. The Nabors board contends in its annual meeting proxy filing that it "negotiated" the termination of Isenberg's retirement payment and has brought down compensation over a period of consecutive years.

Atwood is nonplussed. "It's hard to find a case as egregious as this one," he says. "Shareholders weren't protected by the board. Whatever motivated him Isenberg , shareholders should not have been in that situation in the first place."

For the pension funds, none of these are easy battles to win. Shareholders typically vote their proxies the way the board instructs them to.

A pension official who is involved in both battles said Nabors' recommendations in its annual meeting proxy were, in the least, reasoned attempts to persuade shareholders to reject the proposals. Chesapeake's proxy language, though -- not yet released but by law required to be sent to the shareholders proposing the measure before a proxy is filed with the SEC -- was much "more aggressive and misleading," the pension official said.

The critical voting bloc isn't the pension funds, but the mutual fund giants of the world, like Fidelity Investments and Vanguard Group, which often vote blindly alongside board recommendations. Pension officials believe that even the typically lethargic mutual fund companies will be hard-pressed to be on record -- their votes must be publicly disclosed to shareholders of their funds -- as voting against efforts to change the board composition at these companies, where the headlines have repeatedly shown a too-cozy relationship between the boardroom and CEO.

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