Nabors raises the bar — again — on rewarding failure

Nabors’ workers inspect a new rig in 2009. Lately, many shareholders feel it’s the company’s executive pay scheme that’s rigged. (File photo)

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In keeping with its long-standing history of grossly overpaying top executives, Nabors Industries has agreed to shower CEO Anthony Petrello with $60 million for doing something he should have done anyway.

In the name of reining in its runaway pay practices, the oil field services company said in a regulatory filing this week that the payment – $27 million in stock, $18 million in cash and $15 million in restricted shares – essentially would buy out the remaining four years on Petrello’s contract, which could have paid him much bigger bonuses.

In exchange, Nabors vowed to bring its pay practices into the 21st century by tying Petrello’s future compensation more closely to the company’s financial performance.

“It was important to Tony and the rest of the board that his compensation structure be based on the same principles that are in place for the rest of our employees and that his compensation be solidly aligned with our shareholders’ interests,” Nabors lead director, John Yearwood, said in a recent statement.

If Nabors and Petrello are serious about shedding the company’s history as an executive ATM, this isn’t the way to do it. After all, if there’s really a commitment to aligning executive interests with those of shareholders, everyone, including Petrello, should have been in agreement.