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UPDATE 1-Nabors to split CEO, chairman roles; limits severance pay

* Says shareholders with 5 pct stake for 3 yrs can nominate directors

* Limits severance payments to 2.99 times executive salary and bonus

(Adds details from statement, background)

April 14 (Reuters) - Oilfield services and drilling company Nabors Industries Ltd said it would separate the roles of chairman and chief executive after the tenure of CEO Anthony Petrello ends and limit severance payments for executives.

Nabors said it was putting in place a proxy access policy allowing any shareholder holding 5 percent stake for at least three consecutive years following the 2014 annual general meeting to nominate directors.

Nabors shareholders approved a non-binding proxy access resolution in 2012, in the first instance such a proposal had passed at a major company.

Severance payments for executives will be limited to 2.99 times their salary and bonus, Nabors said in a statement on Monday.

Shareholders California State Teachers' Retirement System and Blue Harbour Group welcomed the steps.

Nabors rewrote Petrello's employment contract last year after pressure from the California Public Employees Retirement System and other pension funds to limit annual bonuses, among other things.

Shareholder activists have vigorously lobbied to overhaul executive compensation and raise shareholder returns in energy companies such as Chesapeake Energy Corp, SandRidge Energy Inc and Occidental Petroleum Corp.

Nabors reached an agreement last year with its largest shareholder, Pamplona Capital Management, to name two independent directors to its board after coming under pressure over the underperformance of its shares.

The company, which has been led by Petrello since 2011, has also started paying dividends, declassified the board and restructured executive compensation to drive up investor returns.

"These changes reflect the results of our commitment to strengthening our corporate governance and compensation practices, and open the door to an even more focused commitment to the generation of long-term value for shareholders," Petrello said.

Nabors shares closed at $23.53 on Friday on the New York Stock Exchange.

(Reporting by Swetha Gopinath in Bangalore; Editing by Prateek Chatterjee)