* Isenberg transformed the company, earned fortune
* Heir apparent Petrello to take over as CEO
* Shares rise 8 pct after hours
SAN FRANCISCO, Oct 28 (Reuters) - Gene Isenberg is stepping down as chief executive of Nabors Industries Ltd after a transformative quarter-century at the land-drilling contractor that earned the 81-year-old a fortune.
The shares of Nabors, now the world's largest land-rig company, jumped 8 percent after the announcement on Friday that Anthony Petrello, president and chief operating officer, would become CEO with immediate effect. Isenberg will remain as chairman.
Isenberg's pay packages have been a source of controversy for years, culminating in a shareholder rejection of his and Petrello's compensation in an advisory vote in June, despite pay cuts for both over the past few years.
Five years ago, S&P ExecuComp calculated Isenberg's stock-option gains, both realized and unrealized, came to $685 million at the end of 2005. Since then, total compensation from Nabors added up to $173 million, according to company filings.
Yet Isenberg's defenders point out that Nabors was transformed under his leadership, with the stock now worth 10 times as much as its $1.94 peak in 1987, the year he joined.
"The company grew from its emergence from bankruptcy in 1987 into one of the most successful oil service companies in the world," John Yearwood, lead director of Bermuda-based Nabors, said in a statement.
Nabors expanded from an Alaskan drilling contractor with 38 rigs to a fleet of 491 land rigs in 24 countries -- even after retiring more than 100 of them in the past quarter.
Petrello, 56, has been COO since 1991, having previously worked as a corporate lawyer at Baker & McKenzie for 12 years, after studying at Harvard Law and getting a masters in mathematics from Yale.
Nabors shares rose 8 percent to $20.50 in after-hours trading on Friday. The stock had already got a lift this week from rising oil prices and stronger-than-expected results from the company.
The energy industry lost another long-serving and lavishly paid CEO earlier this year, when Occidental Petroleum Corp's Ray Irani stepped down after earning well over $800 million in the past decade alone.