By Chris Isidore@CNNMoneyMarch 14, 2013: 1:50 PM ET
NEW YORK (CNNMoney)
An energy company is trying a unique solution to complaints about executive compensation, giving its CEO a $60 million payday upfront, but capping future pay.
Nabors Industries, an oil services company, has had a series of investor complaints about excess executive compensation. A majority of shareholders voted to reject the executive pay packages in non-binding votes for the last two years.
In response, the company gave CEO Anthony Petrello a five-year contract that caps his base pay and bonus at just over $5 million annually, in return for the big payment upfront.
The company says the new employment contract, which gives Petrello $27 million in stock, $18 million in cash, and $15 million in restricted stock, will more closely align his compensation with the interests of shareholders.
Petrello received about $1 million a year in base salary between 2009 and 2011, when he was president and chief operating officer. He became CEO in October 2011. His bonuses,which were uncapped until this year,averaged $9.3 million a year during those three years. His 2012 pay package has yet to be revealed.
Eugene Isenberg, his predecessor as CEO, received base pay of $1.2 million during the same period, and received bonuses averaging $15.1 million annually during the 2009-11 period. He retained the chairman title when he retired as CEO. He was also due to receive a special $100 million payout upon giving up the CEO job, but declined the money after shareholder criticism.
Some of the shareholder resolutions criticizing Nabors' executives pay came from the office of New York City comptroller, which manages the city's pension funds. An office there said they are still studying the announcement and will comment when the 2012 pay levels are released.
"It appears to be a positive step, but this company has a lot of work to do, not only on compensation but on responsiveness to investors," said Michael Garland, an assistant comptroller for New York City. "There's a history of Nabors ignoring shareholder concerns and votes."
Nabors(NBR) stock has gained 15.6% this year but is down 45% over the last five years. Its shares have trailed the performance of most of the other major companies in the oil service business, including Halliburton(HAL), Schlumberger(SLB), Transocean(RIG) and Diamond Offshore(DO).