June 10, 2011 / 5:51 PM / in 7 years

UPDATE 2-Nabors shareholders reject execs' pay despite cuts

* 57 pct of shareholders against exec compensation

* Also back annual director elections by majority votes

* CEO bonus, pay, severance already cut sharply in 2009 (Adds votes for other energy companies, background, byline)

By Braden Reddall

SAN FRANCISCO, June 10 (Reuters) - A majority of shareholders of Nabors Industries Ltd (NBR.N) voted against the way the world’s largest land-drilling contractor pays its top management, despite sharp reductions in the past two years.

The vote reflects growing resistance to the lavish pay of oil and gas executives. Chesapeake Energy Corp’s (CHK.N) CEO suffered a similar rebuke on Friday [ID:nN10175875], while Occidental Petroleum Corp (OXY.N) shareholders forced its board to reel in pay for its wealthy retiring boss. [ID:nN06183280]

In an advisory vote, 57 percent of Nabors shareholder votes were against the compensation packages of its executive officers, the Bermuda-based company said on Friday.

Chief Executive and Chairman Gene Isenberg, the 81-year-old who has run Nabors for nearly a quarter-century, earned a total of $13.5 million in 2010, down from $23.3 million in 2009 and $71.9 million the year before that.

Nabors has faced plenty of criticism in the past for its compensation policies, including those of its board directors.

This week’s vote comes more than two years after Nabors cut Isenberg’s potential severance payment to $100 million from $264 million and his bonus rate to 2.25 percent of cash flow above 15 percent of shareholders’ equity, down from 6 percent.

    In a statement ahead of the vote, the company noted these reductions and said Isenberg’s 2010 compensation was in the 71st percentile of other CEOs in his peer group.

    But Nabors shares have lagged the sector, down 47 percent from their peak in 2008, compared with a 29 percent drop in the Philadelphia Stock Exchange oilfield service index .OSX.

    Anthony Petrello, the company’s chief operating officer since 1992, also saw his bonus and severance cut in 2009. He earned about $9 million last year, down slightly from the year before but far below the $23.9 million he collected in 2008.

    At the annual shareholders meeting held in Houston on Tuesday, a majority of Nabors shareholders voted to hold advisory votes on executive compensation every year.

    In votes on two investor proposals, the shareholders also strongly supported both the annual election of directors and a requirement that they get a majority of votes, instead of the current system that requires they only receive the most votes.

    As if to prove the point, Myron “Mickey” Sheinfeld, a board director since 1988, received only 43 percent of their votes.

    Nabors shares, down 2.2 percent at $26.30 on Friday as oil prices dragged the sector down, are now worth 13 times as much as their peak of $1.94 in 1987, the year Isenberg joined. (Reporting by Braden Reddall; editing by Andre Grenon, Bernard Orr)

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