Nabaors Industries CEO Gets $100 Million in Severance Payments for Not Leaving

But He Deserved It – Company Shares Have Underperformed the Market For Years

Every time one thinks that tales of Executive Greed have topped (bottomed?) out along comes a new story.  This one involves a severance payment to a corporate CEO who is not even leaving the company.



Why is This Man Smiling?



Nabors Industries Ltd. is giving its chairman $100 million in cash in a severance-style deal, even though he isn't leaving the company.

That’s right, Eugene M. Isenberg is getting $100 million, because he will be removed as CEO but staying on as Chairman of the company.  But actually this is reduced from an earlier requirement that would have paid him a severance amount of $264 million.  Humanitarians from all over the world were devastated at this news, wondering how Mr. Eisenberg would get by on just a $100 million payment.

Of course, it turns out this is only part of the extravagant payments to this gentleman.

Mr. Isenberg has long been one of the highest-paid executives in the U.S. Not counting the latest sum, he has made almost $750 million since 1992, including the value of his exercised stock options, according to Standard & Poor's ExecuComp. In a Journal ranking, which used a slightly different formula, he was the nation's seventh-highest-paid U.S. executive over the decade ended in 2009, with compensation of $518 million, including salary, bonuses, the vesting of restricted stock and gains on the exercise of stock options.

In earning this money Mr. Isenberg has been in charge of a company that has not even been average.

The stock of Nabors has fallen 19% this year, and has underperformed the S&P 500-stock index for the prior one-year, five-year and 10-year periods. On Friday, the shares were up 1.7% at $19.05 in 4 p.m. trading on the New York Stock Exchange.

But remember, Mr. Isenberg no longer is CEO.  How does that feel?

The change in management at Nabors was decided at a board meeting in Bermuda late last week, according to William T. Comfort, an outside director. Asked how Mr. Isenberg took the news that he would no longer be CEO, Mr. Comfort said: "Just like you would. If this is your life, clearly this is not fun for you."

It’s okay, though The Dismal Political Economist thinks Mr. Eisenberg can be consoled with some of the pleasures $100 million can buy.  And there is the non-monetary pleasure he will get from looking down at the fools who decided to give him this unearned payment, and at the fools who bought the stock, and at the fools who have voted to lower his taxes over the past decade.  The value of that pleasure, priceless.

This is not to say Mr. Eisenberg has not been generous with his undeserved wealth.

Mr. Isenberg is an alumnus of and major donor to the University of Massachusetts, whose Isenberg School of Management is named for him.

It has also been reported that in honor of Mr. Eisenberg the School of Management at U. Mass will initiate a new undergraduate degree, a Bachelor of Science in Greed and a new Master’s program, an MBA with a concentration in Advanced Avarice and Rapaciousness.  Pre requisites will be having been a Senior Executive in Good Standing with compensation independent of performance and at least $1 million in contributions to groups dedicated to lower the taxes on wealthy.