Nabors Industries

Annual Meeting:              June 2, 2015

In our report last year, Nabors Industries CEO Anthony Petrello was the most overpaid. The regression analysis found that Petrello’s pay of $68,246,187 was over $57 million in excess of what would have been appropriate. This year Nabors won’t be on our list. The market capitalization has declined to the extent that it was removed from the S&P 500.

If something goes from flat out horrific to just very bad, is that improvement enough to make the behavior acceptable? That’s essentially the question facing Nabors’ shareholders on CEO pay.  Nabors has the distinction of being the only S&P 500 company to have received votes against compensation four years in a row. Petrello’s total compensation of $14,794,703 is reduced but remains excessive.

  • The company’s stock performance has been abysmal. Nabors 1-year TSR as of April 2015, was -33.7%. There are only 65 companies in the S&P 1500 with one year TSR even lower than what Nabors Industries shareholders suffered. Their CEOs (other than two cases), are paid considerably less than Petrello, however. More than half received $5 million or less in compensation.
  • The company includes Freeport McMoran, a producer of copper and gold, in its peer group. The major thing the company appears to have in common with Nabors is its excessively generous compensation practices. Freeport was number 4 on our list of overpaid CEOs last year.
  • Petrello came to Nabors in 1991, an attorney with a specialization in avoiding corporate taxes. He was instrumental in moving the company incorporation to Bermuda, where shareholders have fewer rights. By the time he signed his employment contract for the CEO position in 2011, his collegial relationship with board members may have contributed to the excessive promotion package. While the contract was renegotiated in 2013, the $21.2 million in cash he received before the stock price plummeted (in addition to large equity grants), continues to offend shareholders.
  • The company does not disclose a clawback policy in its proxy statement.