Faced with a tanking stock price and angry shareholders, Nabors Industries (NYSE: NBR) has taken radical action to preserve shareholder value and mollify concerns about bad corporate governance: Longtime CEO Eugene Isenberg has agreed to accept a bonus of just $100 million in the event of his death.
Before, the death bonus had been pegged at an astounding $264 million. I've complained about this in the past.
While the reduction of ridiculous perks is a good start, it doesn't answer the fundamental problem: Why should a guy who "earned" a $70.8 million bonus in 2008 also receive $100 million in the event of his death, if it comes before March 30, 2013. Mr. Isenberg is 79 years old.
The Wall Street Journal reports (subscription required) that "Shareholder activists are targeting rich death benefits, also known as "golden coffins," as a waste of company assets. Shareholders this year have submitted nonbinding resolutions to curb the benefit at more than a dozen companies; at least one has passed."
The problem with golden coffins is that they are the exact opposite of the pay-for-performance that most companies' compensation committees claim that they support. It's pay-for-not-being-able-to-perform because you're dead.
In its proxy statement, Nabors' compensation committee writes that "Our executive compensation philosophy is to provide our executives and the executives of our operating subsidiaries with appropriate and competitive individual pay opportunities with actual pay outcomes that reward superior corporate and individual performance. The ultimate goal of our program is to increase shareholder value by providing executives with appropriate incentives to achieve our business objectives."
Paying someone a 9-figure bonus for dying pretty clearly doesn't gel with that lofty philosophy.
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Reader Comments (Page 1 of 1)
5-01-2009 @ 5:34PM
chex781391 said...
The more financial news that keeps coming to the surface is amazing. Who dreams up these compensation packages?
Next we will see cash awards for upper management who sink their company..... OOOPPPS Forgot about AIG