Gene Isenberg, former chief executive officer of Nabors Industries Ltd., is slated to receive $100 million in cash after making way for a new CEO at the world’s largest land-drilling contractor.
Nabors will record the sum as a contingent liability in the fourth quarter because of provisions in Isenberg’s employment agreement, the Hamilton, Bermuda-based company said in a regulatory filing on Oct. 28. The liability was earlier reported in the Wall Street Journal. Anthony Petrello, Nabors’s president, was promoted to CEO in place of Isenberg, who will remain as chairman.
“We believe the compensation to Mr. Isenberg is excessive,” Jeff Dietert, an analyst at Simmons & Co. in Houston, wrote today in a note to investors. A $100 million payment “for what we view as essentially retiring will be offensive to some.”
Isenberg, 81, has led Nabors since 1987, building it from an Alaska-based driller with 38 rigs into a global operator with more than 1,200 rigs. The company didn’t give a reason for the CEO change. Petrello, 57, has served as president and chief operating officer since 1992, according to the company’s website.
Calls and an e-mail message to Dennis Smith, a Nabors spokesman, weren’t returned.
The company said today in a federal filing after the close of regular trading in New York that it will hold non-binding shareholder votes every year on its executive compensation plans. The company announced June 10 in a filing that 65 percent of votes favored a one-year option instead of every two or three years for a “say on pay” vote.
‘Change in Control’
Potential payments to Isenberg upon termination or a change in control include $100 million and about $26 million in stock and options, according to an SEC filing from April 29. The same filing shows Petrello is eligible to receive payments of $50 million plus $6.6 million in stock upon termination.
In a June 7 non-binding vote by shareholders at the company’s annual meeting, 57 percent of votes were cast against its compensation plan for top executives, the company said in a federal filing on June 10.
The company cut last year’s compensation for Isenberg 81 percent and 62 percent for Petrello from 2008 levels, Nabors said in an April filing.
Isenberg’s retirement will save the company almost $25 million a year, Dietert said in the note.
Nabors fell 3.8 percent to close at $18.33 in New York. The shares, which have 17 buy ratings from analysts, 12 holds and one sell, have declined 22 percent this year.