Down $100 million, but not entirely out at Nabors…

Eugene M. Isenberg is getting a lot of attention — and deservedly so — for giving up the $100 million that his employer, Nabors Industries (NBR), owed him for naming another man chief executive of the company Isenberg had run for a quarter-century.

That give-back is remarkable, as with most things involving Isenberg, Nabors and compensation. But there are a few details that have been mostly overlooked in the coverage, including what could prove to be years of gainful employment for Isenberg and lifetime health-care for him and his wife. It doesn’t begin to add up to what he’s giving up, but it’s instructive nonetheless.

Isenberg, of course, has made a ton of money in his years running Nabors. From 2008 to 2010 alone, his total compensation came to nearly $109 million, almost all of it in cash, according to the company’s most recent proxy, filed in late April. His flat $100-million severance deal — triggered when the company named then-Chief Operating Officer Anthony G. Petrello to replace him as CEO in October, even as he stayed on as chairman — was a replacement for a richer, $264-million arrangement that triggered shareholder objections after it came to light. (The Wall Street Journal’s Mark Maremont laid out the whole scenario in a piece last fall.)

Now, even that scaled-back (but still remarkable) payout is gone, as is $7 million in a “deferred bonus” account. The 8-K that Nabors filed yesterday makes clear that it is being replaced by a kind of $6.6 million posthumous bequest to Isenberg’s heirs — the money will be put in escrow at a healthy 6% fixed interest until the 82-year-old Isenberg’s death. (He also gets that lifetime health-care, plus dental coverage and life insurance.) Another piece from Maremont and colleague Joann Lublin in the WSJ indicates that Isenberg would like the company to give a “substantial portion” of what he surrendered to charity; the company apparently plans to make a donation, but not anything like the full $100 million.

But the new agreement with Isenberg also has another provision that caught our attention: An indefinite post with the company at an estimated $50,000 a year, or more. Here’s the official language from the 8-K, which is simpler than the agreement itself:

“Mr. Isenberg will continue as Chairman of the Board, but will not stand for reelection as a director when his term expires in June 2012; at that time, he will be appointed Chairman Emeritus for a three-year term, which will be extended for additional one-year terms unless terminated by him or by the Company, and receive cash compensation equal to other nonemployee directors…”

Nabors’ most recent proxy shows that directors get a base cash retainer of $50,000 a year, plus extra for chairmen and those in other key roles; total pay for directors, including equity, ranged from $280,000 to more than $526,000 in 2010 — very much on the high end of what we tend to see. The automatic extender means that Isenberg is likely to keep the job until he doesn’t want it any more.

What isn’t said explicitly in the 8-K, but is spelled out in the agreement itself, is that the board could bump that amount up by as much or as little as it sees fit:

“In the sole discretion of the Board of Directors of Nabors Bermuda, for serving as Chairman Emeritus and a goodwill ambassador, Executive may receive additional compensation and benefits.”

Unfortunately, we may never find out what the board sees as appropriate. Once top executives lose their august titles, they tend to disappear from proxy filings, and it isn’t clear whether Isenberg’s “chairman emeritus” title will be a true board seat — in which case his pay will show up with that of other directors — or whether it’s a largely honorary title.

We think it’s unlikely that the board is going to return Isenberg to anything like the eight-figure pay packages he’s been accustomed to. Still, an indefinite contract for an indefinite amount of money is a pretty big question-mark. Given Nabors’ past pay practices — at least until someone kicks up a fuss — it’s one worth keeping an eye on.

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