<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party Other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)
(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
NABORS INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
================================================================================
-----------------------------------------------------------
Notice
of
2000 Annual Meeting
of
Shareholders
and
Proxy Statement
-----------------------------------------------------------
[NABORS INDUSTRIES LOGO]
================================================================================
<PAGE> 3
[NABORS INDUSTRIES, INC. LETTERHEAD]
May 8, 2000
TO OUR SHAREHOLDERS:
You are cordially invited to attend the 2000 Annual Meeting of
Shareholders of Nabors Industries, Inc., which will be held on Tuesday, June 6,
2000, beginning at 11:00 a.m., Central Daylight Time, at the Wyndham Greenspoint
Hotel, 12400 Greenspoint Drive, Houston, Texas 77060.
Information about the annual meeting, including matters on which
shareholders will act, may be found in the notice of annual meeting and proxy
statement accompanying this letter. We look forward to greeting in person as
many of our shareholders as possible.
Whether or not you plan to attend the meeting in person, it is important
that your shares be represented and voted. After reading the enclosed notice of
annual meeting and proxy statement, please sign, date and return the enclosed
proxy in the stamped envelope included with this letter.
Sincerely yours,
/s/ E. M. ISENBERG
EUGENE M. ISENBERG
Chairman of the Board
<PAGE> 4
[NABORS INDUSTRIES, INC. LETTERHEAD]
---------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 6, 2000
---------------
The 2000 Annual Meeting of Shareholders of Nabors Industries, Inc. will be
held at the Wyndham Greenspoint Hotel, 12400 Greenspoint Drive, Houston, Texas
77060 on Tuesday, June 6, 2000 at 11:00 a.m., Central Daylight Time, to consider
and act upon the following matters:
1. The election of two Class III directors for terms expiring in 2003.
2. Approval to amend Nabors Restated Certificate of Incorporation to
increase the authorized common stock to 400,000,000 shares.
3. Such other business as may properly come before the annual meeting.
The Board of Directors has fixed the close of business on April 14, 2000 as
the record date for determining the shareholders who are entitled to vote at the
annual meeting and any adjournment or postponement of the meeting.
By Order of the Board of Directors,
/s/ D. MCLACHLIN
DANIEL MCLACHLIN
Corporate Secretary
Dated: May 8, 2000
Please date and sign the enclosed proxy, and return it at your earliest
convenience in the enclosed stamped envelope, so that, if you are unable to
attend the annual meeting, your shares may be voted.
<PAGE> 5
NABORS INDUSTRIES, INC.
---------------
PROXY STATEMENT
---------------
2000 ANNUAL MEETING OF SHAREHOLDERS
JUNE 6, 2000
The Board of Directors of Nabors Industries, Inc., a Delaware
corporation, prepared this proxy statement for the purpose of soliciting proxies
for the 2000 Annual Meeting of Shareholders. Our annual meeting will be held at
the Wyndham Greenspoint Hotel, 12400 Greenspoint Drive, Houston, Texas 77060 at
11:00 a.m., Central Daylight Time, on Tuesday, June 6, 2000, unless adjourned or
postponed. The Board is making this solicitation by mail, and Nabors will pay
all costs associated with this solicitation.
This proxy statement and accompanying notice of annual meeting and
proxy are first being mailed to shareholders on or about May 8, 2000.
At the annual meeting, each share of Nabors common stock will be
entitled to one vote. The common stock is the only outstanding class of voting
securities of Nabors. Only shareholders of record on Nabors' books at the close
of business on April 14, 2000 will be entitled to vote at the annual meeting. A
quorum is necessary to transact business at the annual meeting. The presence at
the annual meeting, in person or by proxy, of holders of a majority of the
shares outstanding on April 14, 2000, constitutes a quorum. On April 14, 2000,
there were 145,469,597 shares outstanding and entitled to vote.
Proxies received will be voted in accordance with the shareholders'
directions given in the proxies. In the absence of directions, shares will be
voted FOR the nominees for election as directors named in this proxy statement
and FOR the amendment to Nabors' restated certificate of incorporation to
increase the number of authorized shares of common stock to 400,000,000. You may
revoke your proxy at any time before it is actually voted by:
o filing with the Corporate Secretary of Nabors, at or before
the annual meeting and prior to the vote, a written notice of
revocation bearing a date later than the proxy being revoked;
o duly signing and delivering, prior to the annual meeting, a
subsequent proxy relating to the annual meeting; or
o voting in person at the annual meeting (although attendance at
the annual meeting will not, by itself, constitute a
revocation of a proxy).
You must send any written notice revoking your proxy to the Corporate Secretary
at our executive offices, 515 West Greens Road, Suite 1200, Houston, Texas
77067.
Nabors' restated certificate of incorporation provides that the
affirmative vote of a plurality of the votes cast at a meeting at which a quorum
is present is required for the election of directors. The affirmative vote of
the majority of the voting power of the Company entitled to vote is required to
amend the restated certificate of incorporation. If any other matter should be
presented at the annual meeting upon which a vote may be taken, shares
represented by proxies in the accompanying form will be voted in accordance with
the judgment of Eugene M. Isenberg or Anthony G. Petrello, who have been
designated as proxies to vote the shares solicited by this proxy statement.
Abstentions are votes withheld by shareholders who are present at a
meeting and entitled to vote. Abstentions will be counted for purposes of
establishing a quorum. They also will be counted in the vote with respect to
amendment of Nabors' restated certificate of incorporation, where they will have
the effect of a vote against the proposal. Abstentions are not considered votes
cast on a matter. As such, they will not be counted in the vote with respect to
election of directors.
<PAGE> 6
Broker non-votes occur when the person, usually a broker, holding the
certificate in street name does not have discretionary authority to vote on a
matter, and has not received instructions on how to vote from the beneficial
owner of the shares. Broker non-votes will be counted for purposes of
establishing a quorum, but will not be counted as votes cast or entitled to vote
on any proposals at the meeting. This will have the effect of reducing the
absolute number of shares required to approve a matter to be voted on at the
meeting.
In December 1997, Nabors changed the fiscal year from a year beginning
October 1 and ending September 30 to a year beginning January 1 and ending
December 31. References in this document to a transition period are to the
three-month period beginning October 1, 1997 and ending December 31, 1997.
ELECTION OF DIRECTORS
The restated certificate of incorporation authorizes the Board to fix
the number of directors from time to time, but at no less than five nor more
than eleven. The number of directors currently is established at eight. The
restated certificate of incorporation also provides for three classes of
directors, designated Class I, Class II and Class III, each currently having
three-year terms of office. Each class of directors is to consist of, as nearly
as possible, one-third of the total number of directors constituting the entire
Board. Except for directors elected to fill vacancies (whether created by death,
resignation, removal or expansion of the Board), the directors of each class
will be elected for a term of three years or until their successors have been
elected and qualified. At the annual meeting, two Class III directors, Eugene M.
Isenberg and Jack Wexler, are nominated for election to the Board to serve for a
three-year term.
On November 24, 1999, pursuant to the merger with Pool Energy Services
Co., James L. Payne was elected a Class I director of Nabors Industries, Inc. by
vote of the Board of Directors.
If the enclosed proxy is signed and returned, it will be voted FOR the
election of Mr. Isenberg and Mr. Wexler as Class III directors, to serve until
the 2003 annual meeting of shareholders or until their successors have been duly
elected and qualified, unless contrary directions are given in your proxy.
However, should any nominee become unavailable or prove unable to serve for any
reason, the proxy will be voted for the election of such other person as the
Board may select to replace such nominee, unless the Board instead fixes the
number of directors at less than eight. The Board has no reason to believe that
the nominees will not be available or will prove unable to serve.
The following tables set forth certain information concerning each
Class III director nominee, the continuing Class I and Class II directors and
executive officers of Nabors who are neither directors nor nominees for election
as directors. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE
CLASS III DIRECTOR NOMINEES IDENTIFIED BELOW.
2
<PAGE> 7
CLASS III DIRECTOR NOMINEES -- TERMS EXPIRING IN 2000
<TABLE>
<CAPTION>
DIRECTOR
POSITION WITH NABORS OF NABORS
NAME AGE AND PRIOR BUSINESS EXPERIENCE SINCE
---- --- ----------------------------- ---------
<S> <C> <C> <C>
Eugene M. Isenberg...... 70 Chairman of the Board, Chairman of the Executive Committee of 1987
the Board and Chief Executive Officer of Nabors since 1987.
He has been a Director of Danielson Holding Corporation (a
financial services holding company) since 1990. He has been
a Governor of the National Association of Securities Dealers
(NASD) since 1998, the National Association of Securities
Dealers Automated Quotation (NASDAQ) since 1998 and the
American Stock Exchange (AMEX) since 1996. From 1969 to
1982, Mr. Isenberg was Chairman of the Board and principal
shareholder of Genimar, Inc. (a steel trading and building
products manufacturing company), which was sold in 1982.
From 1955 to 1968, Mr. Isenberg was employed in various
management capacities with Exxon Corporation.
Jack Wexler............. 74 Chairman of the Compensation Committee of the Board and a 1987
member of the Executive and Audit Committees of the Board
since 1987. He is an international business consultant and
has acted as a consultant to exporting and petroleum service
companies since 1983. Prior to 1983, Mr. Wexler was
employed by Exxon Corporation and its affiliates, serving in
senior staff and operating management positions in the
United States and the Far East.
</TABLE>
3
<PAGE> 8
CLASS I CONTINUING DIRECTORS - TERMS EXPIRING IN 2001
<TABLE>
<CAPTION>
DIRECTOR
POSITION WITH NABORS OF NABORS
NAME AGE AND PRIOR BUSINESS EXPERIENCE SINCE
---- --- ----------------------------- ---------
<S> <C> <C> <C>
James L. Payne......... 63 Member of the Technical and Safety Committee of the Board 1999
since 1999. Mr. Payne is currently Chief Executive Officer
of Santa Fe Snyder Corporation and a Director of BJ
Services since 1999. He was a Director of Pool Energy
Services Co. from 1993 until its acquisition by Nabors in
November 1999. He was the Chairman, and Chief Executive
Officer of Santa Fe Energy Resources from 1990 until 1999
when it merged with Snyder Oil Corporation. He joined Santa
Fe's predecessor company, Santa Fe Energy Company, a
subsidiary of the Santa Fe Pacific Corporation, in 1982 as
the Senior Vice President-Exploration and Land, and was
appointed President in 1986. Mr. Payne is a graduate of the
Colorado School of Mines where he was named a Distinguished
Achievement Medalist in 1993. He holds an MBA degree from
Golden Gate University and has completed the Stanford
Executive Program.
Hans W. Schmidt........ 70 Chairman of the Technical and Safety Committee of the Board 1993
since 1998. From 1958 to 1992, Mr. Schmidt held a number
of positions with C. Deilman A.G., a diversified energy
company located in Bad Bentheim, Germany, including
serving as a Director from 1982 to 1992. He also served
from 1965 to 1992 as Director of a subsidiary of C.
Deilman A.G., Deutag Drilling, a company with worldwide
drilling operations. From 1988 to 1991, Mr. Schmidt
served as President of Transocean Drilling Company, a
company of which he was also a director from 1981 until
1991.
Richard A. Stratton.... 53 Vice Chairman of the Board since 1992, a member of the 1986
Executive Committee of the Board since 1992 and a member
of the Technical and Safety Committee of the Board since
1998. Mr. Stratton served Nabors as President and Chief
Operating Officer from 1986 to 1992, as Vice President
from 1981 to 1986 and as Corporate Controller from 1979
to 1981. From 1970 to 1979, Mr. Stratton, a certified
public accountant, was associated with the accounting
firm Price Waterhouse.
</TABLE>
4
<PAGE> 9
CLASS II CONTINUING DIRECTORS -- TERMS EXPIRING IN 2002
<TABLE>
<CAPTION>
DIRECTOR
POSITION WITH NABORS OF NABORS
NAME AGE AND PRIOR BUSINESS EXPERIENCE SINCE
---- --- ----------------------------- ---------
<S> <C> <C> <C>
Anthony G. Petrello.... 45 President and Chief Operating Officer of Nabors since 1992 and a 1991
member of the Executive Committee of the Board since 1991.
From 1979 to 1991, Mr. Petrello was with the law firm Baker &
McKenzie, where he had been Managing Partner of its New York
Office from 1986 until his resignation in 1991. He continues
as Of Counsel to the firm and the firm continues to provide
legal services to Nabors. Mr. Petrello holds a J.D. degree
from Harvard Law School and B.S. and M.S. degrees in
Mathematics from Yale University.
Myron M. Sheinfeld..... 70 Chairman of the Audit Committee of the Board since 1988 and a 1988
member of the Compensation Committee since 1993. He is
counsel to the law firm Sheinfeld, Maley & Kay, a professional
corporation located in Houston, Texas with which he has been
affiliated for over 31 years. Mr. Sheinfeld was an adjunct
professor of law at the University of Texas, School of Law
from 1975 to 1991, and has been a contributing author to
numerous legal publications, and a contributor, co-editor and
co-author of Collier On Bankruptcy, and a co-author of Collier
On Bankruptcy Tax for Matthew Bender & Co., Inc. He is a
member of the Board of Editors of "The Practical Lawyer," a
member of the Board of Trustees of Third Avenue Trust (a
registered investment company) and a Director of Anchor Glass
Container Corporation and Repap Enterprises, Inc.
Martin J. Whitman...... 75 Member of the Audit Committee of the Board since 1993. Chairman 1991
of M. J. Whitman, Inc., and its predecessors (a broker-dealer),
since 1974 (Chief Executive Officer until July 1999); Chief
Executive Officer and a Director of Danielson Holding
Corporation since 1990 (Chairman of the Board until July 1999);
Chairman, Chief Executive Officer and Director of Third Avenue
Trust and its predecessor and EQSF Advisers, Inc. (the adviser
to Third Avenue Trust) since 1990; Director of Tejon Ranch Co.
(an agricultural and land management company) since 1997; and
Director from March 1993 to February 1996 of Herman's Sporting
Good's, Inc. (a retail sporting goods chain) which filed a
voluntary petition under Chapter 11 of the United States
Bankruptcy Code in April 1996. Mr. Whitman is an Adjunct
Lecturer, Adjunct Professor and Distinguished Fellow in Finance,
Yale University School of Management from 1972 to 1984 and 1992
to present. Mr. Whitman is co-author of The Aggressive
Conservative Investor and author of Value Investing: A Balanced
Approach.
</TABLE>
5
<PAGE> 10
OTHER EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
POSITION WITH NABORS
NAME AGE AND PRIOR BUSINESS EXPERIENCE
---- --- -----------------------------
<S> <C> <C>
Bruce P. Koch........... 40 Vice President-Finance, since January 1996, and Controller of Nabors March
1990 to 1995. He was associated with the accounting firm of Coopers &
Lybrand from 1983 to 1990 in a number of capacities including Audit
Manager. Mr. Koch has been a Certified Public Accountant since 1982.
Daniel McLachlin........ 62 Vice President-Administration and Corporate Secretary of Nabors since
1986. He was Manager, Administration of Nabors from 1984 to 1986. From
1979 to 1984, he was the Vice President, Human Resources of Nabors
Drilling Limited, a subsidiary of Nabors.
</TABLE>
COMMITTEES OF THE BOARD
The Board has four committees - the Executive Committee, the
Compensation Committee, the Audit Committee and the Technical and Safety
Committee. The Board does not have a standing nominating committee. A
shareholder who wishes to nominate a candidate for election to the Board should
forward the candidate's name and detailed description of the candidate's
qualifications to Nabors' Corporate Secretary at 515 West Greens Road, Suite
1200, Houston, Texas 77067. Nabors bylaws require notice of nominations by
shareholders of persons for election as directors at the 2001 annual meeting of
shareholders to be held on June 5, 2001 to be delivered to Nabors on or prior to
January 2, 2001.
The membership, number of meetings and responsibilities of each committee of the
Board are noted below.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
NUMBER OF
MEETINGS IN
COMMITTEE MEMBERS 1999 RESPONSIBILITIES
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
EXECUTIVE COMMITTEE Eugene M. Isenberg* 10 Exercises all powers, rights and authority of the
Anthony G. Petrello Board, except with respect to certain actions as
Richard A. Stratton provided in Nabors' bylaws or applicable law.
Jack Wexler
- ---------------------------------------------------------------------------------------------------------------------
COMPENSATION COMMITTEE Jack Wexler* 2 Reviews and makes recommendations with respect to
Myron M. Sheinfeld the objectives, structure, cost and administration
of Nabors; compensation programs, including but
not limited to review of employment agreements,
salaries, bonuses, stock options and employee
benefit plans for officers and other key employees
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 11
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
NUMBER OF
MEETINGS IN
COMMITTEE MEMBERS 1999 RESPONSIBILITIES
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AUDIT COMMITTEE Myron M. Sheinfeld* 4 Reviews and approves the scope of audit and
Jack Wexler non-audit services, the results of the audit, the
Martin J. Whitman adequacy of internal controls and fee estimates
for audit and certain non-audit services
- ---------------------------------------------------------------------------------------------------------------------
TECHNICAL AND SAFETY Hans Schmidt* 4 Provides leadership in developing policies,
COMMITTEE James L. Payne implementing programs and monitoring performance
Richard A. Stratton in the technical and safety aspects of Nabors'
operations
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
* Committee Chairman
The Board of Directors met six times during 1999. No incumbent director
attended fewer than 75% of the aggregate of the meetings of the Board and
meetings of all committees on which he served, except for Mr. Stratton who
attended 60%.
DIRECTOR COMPENSATION
Directors who are not employees of Nabors receive $28,000 per year and
an additional $3,000 per year for serving as chairman of a Board committee.
Nabors does not pay additional fees for attendance at meetings of the Board or
of Board committees, except that non-employee directors who serve on the
Executive Committee are paid $2,000 per meeting for attendance at meetings of
the Executive Committee.
Nabors also issues stock options to its non-employee directors to
provide an incentive to retain their services. Nabors' goal in thus encouraging
the continuity of its non-employee directors is to enhance shareholder value.
Option grants are made under option plans adopted from time to time for
non-employee directors and are determined by a committee comprised of employee
directors of the Board of Directors. On December 7, 1999, each non-employee
director received option grants for service during the year 2000 based on his
serving as a Board member, a committee member and/or as a committee chairman, as
follows: Mr. Payne, 17,500 shares; Mr. Schmidt, 21,500 shares; Mr. Sheinfeld,
26,500 shares; Mr. Wexler, 31,500 shares; and Mr. Whitman, 17,500 shares. Mr.
Payne also received an option grant for 12,500 shares upon his election to the
Board. All of the options were granted at a per share price of $24.75, become
fully vested on December 7, 2000 and are exercisable for ten years from the date
of grant.
CERTAIN RELATIONSHIPS
For additional disclosure regarding relationships between members of
the Board and Nabors, see "Compensation Committee Interlocks & Insider
Participation".
SHARE OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table sets forth, as of April 14, 2000, information with
respect to the beneficial ownership of Nabors' outstanding shares of common
stock by (a) each Director and nominee for election as a Director, (b) executive
officers who are not directors or nominees for election as directors, (c) all
directors and executive officers as a group, (d) any other person or entity
known by Nabors to be the beneficial owner of more than 5% of the shares, of
common stock, which is Nabors' only outstanding class of voting securities:
7
<PAGE> 12
<TABLE>
<CAPTION>
COMMON STOCK BENEFICIALLY OWNED
--------------------------------------
BENEFICIAL OWNER(2) NUMBER OF SHARES PERCENT OF TOTAL(1)
- ------------------- ---------------- -------------------
<S> <C> <C>
DIRECTORS
Eugene M. Isenberg(3) ............................................... 7,097,521 4.65
James L. Payne ...................................................... 6,150 *
Anthony G. Petrello(4) .............................................. 2,871,935 1.94
Hans W. Schmidt(5) .................................................. 73,000 *
Myron M. Sheinfeld(6) ............................................... 54,635 *
Richard A. Stratton(7) .............................................. 1,046,097 *
Jack Wexler(8) ...................................................... 25,000 *
Martin J. Whitman(9) ................................................ 956,073 *
OTHER EXECUTIVE OFFICERS
Bruce P. Koch(10) ................................................... 19,712 *
Daniel McLachlin(11) ................................................ 1,991 *
All Directors/Executive Officers as a group (10 persons)(3)-(11) .... 12,152,114 7.71
</TABLE>
- ---------------
* Less than 1%
(1) As of April 14, 2000, Nabors had outstanding and entitled to vote
145,469,597 shares.
(2) The address of each of the persons listed is in care of Nabors
Industries, Inc., 515 West Greens Road, Suite 1200, Houston, Texas
77067.
(3) The shares listed for Mr. Isenberg include 5,962,119 shares which may
be acquired pursuant to the exercise of options within 60 days of April
14, 2000. The shares listed for Mr. Isenberg are held directly or
indirectly through certain trusts, defined benefit plans and individual
retirement accounts of which Mr. Isenberg is a grantor, trustee or
beneficiary. Not included in the table are 190,543 shares owned
directly or held in trust by Mr. Isenberg's spouse as to which Mr.
Isenberg disclaims beneficial ownership.
(4) The shares listed for Mr. Petrello include 2,720,923 shares which may
be acquired pursuant to the exercise of options within 60 days of April
14, 2000. The shares listed for Mr. Petrello are held directly or
indirectly through certain trusts of which Mr. Petrello is grantor,
trustee or beneficiary.
(5) The shares listed for Mr. Schmidt include 70,000 shares which may be
acquired pursuant to the exercise of options within 60 days of April
14, 2000.
(6) The shares listed for Mr. Sheinfeld include 37,500 shares which may be
acquired pursuant to the exercise of options within 60 days of April
14, 2000.
(7) The shares listed for Mr. Stratton include 1,017,291 shares which may
be acquired pursuant to the exercise of options within 60 days of April
14, 2000.
(8) The shares listed for Mr. Wexler include 25,000 shares which may be
acquired pursuant to the exercise of options within 60 days of April
14, 2000.
(9) The shares listed for Mr. Whitman include 57,500 shares which may be
acquired pursuant to the exercise of options within 60 days of April
14, 2000. The shares listed for Mr. Whitman also include 474,808 shares
of Nabors common stock owned by M. J. Whitman & Co., Inc. Because Mr.
Whitman is a majority stockholder in M.J. Whitman & Co, Inc., he may be
deemed to have beneficial ownership of the Nabors shares owned by that
company. The shares listed for Mr. Whitman exclude 2,805 shares owned
directly by Mr. Whitman's spouse as to which Mr. Whitman disclaims
beneficial ownership.
8
<PAGE> 13
(10) The shares listed for Mr. Koch include 19,712 shares which may be
acquired pursuant to the exercise of options within 60 days of April
14, 2000.
(11) The shares listed for Mr. McLachlin include 1,900 shares which may be
acquired pursuant to the exercise of options within 60 days of April
14, 2000.
MANAGEMENT COMPENSATION
SUMMARY COMPENSATION TABLE
The table below sets forth all reportable compensation awarded to,
earned by or paid to the named executive officers for services rendered in all
capacities to Nabors and its subsidiaries whose compensation for the year exceed
$100,000 for each of the last three fiscal years and the transition period.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG TERM COMPENSATION
-----------------------------------
AWARDS PAYOUTS
-----------------------------------------------------------------------------------------------------------------------------------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL COMPENSATION AWARD(S) OPTIONS/ PAYOUTS COMPENSATION
POSITION PERIOD(1) SALARY($) BONUS($) ($) ($) SARS (#) ($) ($)
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Eugene M. Isenberg 1999 325,000 0 50,217(2) 0 1,500,000 0 212,502(3)
Chairman of the
Board, Director and 1998 325,000 1,000,000 0 8,249,119 0 114,648
Chief Executive Officer
Transition 81,250 250,000 0 0 0 30,647
Period
1997 325,000 1,350,000 0 6,012,500 0 141,453
-----------------------------------------------------------------------------------------------------------------------------------
Anthony G. Petrello 1999 275,000 0 209,041(4) 0 750,000 0 289,118(5)
Director, President and
Chief Operating Officer 1998 275,000 200,000 0 3,905,423 0 295,041
Transition 68,750 50,000 0 0 0 62,704
Period
1997 275,000 300,000 0 3,437,000 0 409,943
-----------------------------------------------------------------------------------------------------------------------------------
Richard A. Stratton 1999 275,000 0 35,771(6) 0 337,500 0 15,149(7)
Vice Chairman of the
Board and Director 1998 275,000 180,000 0 1,363,125 0 14,539
Transition 68,750 45,000 0 0 0 5,719
Period
1997 275,000 300,000 0 1,287,500 0 19,315
-----------------------------------------------------------------------------------------------------------------------------------
Bruce P. Koch 1999 160,000 15,000 (8) 0 50,600 0 7,200(9)
Vice President-Finance
1998 130,000 11,200 0 21,000 0 5,850
Transition 32,500 2,800 0 0 0 1,463
Period
1997 126,250 26,000 0 15,000 0 5,681
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 14
(1) The information for 1999 and 1998 is for the period from January 1 to
December 31, the information for the transition period is for the
period from October 1, 1997 to December 31, 1997 and the information
for 1997 is for the period from October 1, 1996 to September 30, 1997.
(2) Includes (a) various club dues of $19,919; (b) auto allowance of
$23,400; and (c) imputed life insurance of $6,898.
(3) Includes (a) Nabors' matching contributions to a retirement savings
plan and a non-qualified deferred compensation plan of $7,200 and (b)
$205,302 that is the benefit to Mr. Isenberg of the premiums paid by
Nabors, as projected on an actuarial basis, for a split dollar life
insurance arrangement.
(4) Includes (a) club dues of $2,748; (b) auto allowance of $16,927; (c)
imputed life insurance of $1,305; and (d) gross-up amounts for auto
allowance, certain traveling and other expenses and imputed interest of
$188,061.
(5) Includes (a) Nabors' matching contributions to a retirement savings
plan and a non-qualified deferred compensation plan of $7,200; (b)
$10,358 that is the benefit to Mr. Petrello of the premiums paid by
Nabors, as projected on an actuarial basis, for a split dollar life
insurance arrangement; (c) imputed interest of $146,542 on a loan from
Nabors in the maximum amount of $2,881,915 pursuant to his employment
agreement in connection with his relocation to Houston, the balance of
which was $2,881,915 as of March 31, 2000 and no interest has been paid
or charged thereon; and (d) reimbursement of certain traveling and
other expenses of $125,018.
(6) Includes (a) club dues of $11,765; (b) auto allowance of $11,945; (c)
imputed life insurance of $621; and (d) gross-up amounts for auto
allowance and imputed interest of $11,440.
(7) Includes (a) Nabors' matching contributions to a retirement savings
plan and non-qualified deferred compensation plan of $7,200; (b) $2,642
that is the benefit to Mr. Stratton of the premiums paid by Nabors, as
projected on an actuarial basis, for a split dollar life insurance
arrangement; and (c) imputed interest of $5,307 on a loan from Nabors
in the maximum amount of $104,375 in connection with his relocation to
Houston, the balance of which was $104,375 as of March 31, 2000 and no
interest has been paid or charged thereon.
(8) The aggregate amount of perquisites and other personal benefits did not
exceed the lesser of $50,000 or 10% of the salary and bonus.
(9) Includes Nabors' matching contributions to a retirement savings plan
and a non-qualified deferred compensation plan of $7,200.
10
<PAGE> 15
STOCK OPTION/SAR GRANT TABLE
The following table provides information with respect to stock options
granted during the fiscal year ended December 31, 1999 to the named executive
officers.
OPTION GRANTS IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
======================================================================================================
INDIVIDUAL GRANTS
- ------------------------------------------------------------------------------------------------------
NUMBER OF % OF TOTAL EXERCISE
SECURITIES OPTIONS OR
UNDERLYING GRANTED TO BASE GRANT DATE
OPTIONS EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED FISCAL YEAR ($/SH) DATE VALUE($)(6)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Eugene M. Isenberg 1,500,000(1) 27.81% 24.7500 12/07/2009 10,358,400
- ------------------------------------------------------------------------------------------------------
Anthony G. Petrello 750,000(1) 13.90% 24.7500 12/07/2009 5,179,200
- ------------------------------------------------------------------------------------------------------
Richard A. Stratton 14,000(2) 0.26% 28.1250 08/23/2009 109,224
- ------------------------------------------------------------------------------------------------------
Richard A. Stratton 23,400(2) 0.43% 28.1875 08/23/2009 182,965
- ------------------------------------------------------------------------------------------------------
Richard A. Stratton 50,100(2) 0.93% 28.2500 08/23/2009 392,599
- ------------------------------------------------------------------------------------------------------
Richard A. Stratton 250,000(3) 4.63% 24.7500 12/07/2009 2,153,700
- ------------------------------------------------------------------------------------------------------
Bruce P. Koch 25,600(4) 0.47% 11.5000 02/26/2009 116,706
- ------------------------------------------------------------------------------------------------------
Bruce P. Koch 25,000(5) 0.46% 24.7500 12/07/2009 251,983
======================================================================================================
</TABLE>
(1) These options were granted on December 7, 1999 and vested immediately.
(2) These options were granted to the executive in a number equal to the
number of options exercised pursuant to the terms of previous
agreements. The options vested immediately.
(3) These options were granted on December 7, 1999 and vest in three equal
annual installments beginning December 7, 2000, subject to accelerated
vesting as follows. If Nabors' common stock trades for 20 consecutive
days at an average price that is 15% or greater than the price per
share on the date of grant, the first installment will vest; if the
stock trades at 32.3% or more, the second installment will vest; and if
the stock trades at 52.1% or more, the third installment will vest.
(4) The options were granted on February 26, 1999 and vest in four annual
installments beginning on February 26, 2000.
(5) The options were granted on December 7, 1999 and vest in four annual
installments beginning on December 7, 2000.
(6) All options are granted at an exercise price equal to the market value
of Nabors' common stock on the date of grant. Therefore, if there is no
appreciation in the market value, no value will be realizable. In
accordance with Securities and Exchange Commission rules, the
Black-Scholes option pricing model was chosen to estimate the grant
date present value of the options set forth in this table. Nabors' use
of this model should not be construed as an endorsement of its accuracy
at valuing options. All stock option valuation models, including the
Black-Scholes model, require a prediction about the future movement of
the stock price. The following assumptions
11
<PAGE> 16
were made for purposes of calculating the grant date present value: (a)
for options that vested immediately, the expected term is assumed to be
two years, volatility of 42.0158%, dividend of $0 per share and risk
free rates of return of 5.68% to 5.89%; (b) for options that vested in
three years, the expected term is assumed to be three years, volatility
of 42.0158%, dividend of $0 per share and risk free rate of return of
5.95%, and (c) for all other options, the expected term is assumed to
be four years, volatility of 42.0158%, dividends of $0 per share and
risk free rates of return of 5.26% to 6.08%. The figures given are not
intended to forecast future price appreciation of the shares. The real
value of the options in this table depends solely upon the actual
performance of the Nabors' stock during the applicable period.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table provides information with respect to the stock
options exercised during fiscal 1999 and the value as of December 31, 1999 of
unexercised in-the-money options held by the named executive officers. Nabors
did not grant any stock appreciation rights to these officers during 1999. The
value realized on the exercise of options is calculated using the difference
between the per share option exercise price and the market value of a share on
the date of the exercise. The value of unexercised in-the-money options at
fiscal year end is calculated using the difference between the per share option
exercise price and the market value of $30.9375 per share at December 31, 1999.
<TABLE>
<CAPTION>
======================================================================================================================
NAME SHARES VALUE SECURITIES UNDERLYING VALUE OF UNEXERCISED
ACQUIRED REALIZED UNEXERCISED OPTIONS/SARS IN-THE-MONEY
ON $ AT FY-END OPTIONS AT FY-END
EXERCISE EXERCISABLE / UNEXERCISABLE
EXERCISABLE / UNEXERCISABLE $ $
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Eugene M. Isenberg 0 0 10,549,619 / 0 178,210,069 / 0
- ----------------------------------------------------------------------------------------------------------------------
Anthony G. Petrello 0 0 4,839,923 / 0 80,478,049 / 0
- ----------------------------------------------------------------------------------------------------------------------
Richard A. Stratton 262,500 4,592,281 1,450,625 / 250,000 25,333,486 / 1,546,875
- ----------------------------------------------------------------------------------------------------------------------
Bruce P. Koch 25,000 538,125 23,062 / 68,538 457,081 / 993,644
======================================================================================================================
</TABLE>
EMPLOYMENT CONTRACTS
Mr. Isenberg's and Mr. Petrello's employment contracts were amended and
restated effective October 1, 1996 and both contracts had an expiration date of
September 30, 2001. The expiration date automatically extends for an additional
one-year term on each anniversary date, unless Nabors provides notice to the
contrary ten days prior to such anniversary. Mr. Isenberg's salary is subject to
annual review for increase at the discretion of the Board and its Compensation
Committee. The formula for the calculation of his cash bonus remained as it had
been under the prior version, a shareholder approved contract, which provided
that Mr. Isenberg is entitled to receive an annual cash bonus equal to 7% (6%
for fiscal years commencing on or after October 1, 1999) of Nabors' net cash
flow (as defined in the employment contract) in excess of 15% of the average
stockholder's equity for such fiscal year. Mr. Petrello's salary is subject to
annual review for increase at the discretion of the Board and its Compensation
Committee. His annual bonus remained as it had been at the greater of $700,000
or 2% of the net cash flow (as defined in the employment contract) in excess of
15% of the average stockholders equity in such year. Mr. Isenberg and Mr.
Petrello are eligible for stock options and grants, may participate in annual
long-term incentive programs, and pension and welfare plans, on the same basis
as other executives; and may receive special bonuses from time to time as
determined by the Board.
In addition to salary and bonus each of Mr. Isenberg and Mr. Petrello
is entitled to: group life insurance at an amount at least equal to three times
their base salaries; various split-dollar life insurance policies, reimbursement
of expenses, various perquisites and a personal umbrella policy in the amount of
$5 million. Further, if Mr. Isenberg or
12
<PAGE> 17
Mr. Petrello is subject to the tax imposed by Section 4999 of the Internal
Revenue Code, Nabors has agreed to reimburse them for such tax on an after-tax
basis.
In the event that either Mr. Isenberg's or Mr. Petrello's employment
contract is terminated by Nabors by reason of death, disability, or any reason
other than for cause, or is terminated by either individual for Constructive
Termination Without Cause (as defined in the agreements) or is terminated as a
result of or following a Change of Control (as defined in the agreements), the
terminated individual will be entitled to receive: (a) all base salary which
would have been payable through the expiration date of the contract (currently,
September 30, 2004) or three times his then current base salary, whichever is
greater; (b) all annual cash bonus which would have been payable through the
expiration date, or three times the highest bonus, (including the imputed value
of grants of stock awards and stock options), paid or payable during the last
three fiscal years prior to termination, whichever is greater; (c) any
restricted stock outstanding, which shall immediately and fully vest; (d) any
outstanding stock options, which shall immediately and fully vest; (e) any
amounts earned, accrued or owing to the executive but not yet paid (including
executive benefits, life insurance, disability benefits and reimbursement of
expenses and perquisites) shall be continued through the later of the expiration
date or three years after the termination date; (f) continued participation in
medical, dental and life insurance coverage until the executive receives
equivalent benefits or coverage through a subsequent employer or until the death
of the executive or his spouse, whichever is later; and (g) any other or
additional benefits in accordance with applicable plans and program of Nabors.
In the event that either Mr. Isenberg's or Mr. Petrello's termination is related
to a Change in Control, the terminated individual, at his election, would be
entitled to receive a cash amount equal to one dollar less than the amount that
would constitute an "excess parachute payment" as defined in Section 280G of the
Internal Revenue Code, in place of the salary and bonus referred to in (a) and
(b) above. In addition, the terminated individual would be entitled, at his
election, to terminate his employment because of such Change in Control, and to
receive instead of any such number of outstanding options, as selected by the
individual, an amount of cash in exchange therefor equal to (x) the excess of
the Change in Control Price (as defined in the agreements) over the exercise
price of the options per share of common stock multiplied by (y) the number of
options selected by the individual. In addition, the terminated individual would
be entitled a grant of additional vested options exercisable for five years, at
a price equal to the average closing price per share during the 20 days prior to
the Change of Control in an amount equal to the highest number of options
granted during any fiscal year during the period comprising the then current
fiscal year and the three fiscal years preceding the Change in Control. In the
event that either Mr. Isenberg's or Mr. Petrello's employment contract is
terminated for cause or as a result of resignation (other than as described
above), the terminated individual will be entitled to receive: (1) base salary
through the date of termination; (2) all annual cash bonus which would have been
payable through the date of termination; (3) all restricted stock that has
vested on or prior to the date of termination; (4) any outstanding stock options
vested on or prior to the date of termination; (5) any amounts earned, accrued
or owing to the executive but not yet paid (including executive benefits, life
insurance, disability benefits and reimbursement of expenses and perquisites if
to be performed following termination); and (6) other or additional benefits in
accordance with applicable plans and program of Nabors. If Mr. Petrello's
employment is terminated for any reason, he also is entitled to certain
relocation benefits as set forth in his agreement.
Mr. Stratton entered into a new employment contract effective October
1, 1996, with an expiration date of September 30, 2001. The expiration date
automatically extends for an additional one-year term on each anniversary date,
unless Nabors provides notice to the executive to the contrary ten days prior to
such anniversary. Mr. Stratton's salary is subject to annual review for increase
at the discretion of the Board and its Compensation Committee. Mr. Stratton is
also entitled to vacation, reimbursement of expenses, comprehensive medical,
disability and life insurance protection, a split-dollar life insurance
agreement in an amount of not less than $2 million, other perquisites and a
personal umbrella policy in the amount of $5 million. Mr. Stratton's term of
employment continues until the earliest of the expiration date of the contract
(currently September 30, 2004), his death, permanent and total disability,
temporary partial or permanent disability, voluntary resignation or discharge
for cause as defined in the employment agreement. In the event Mr. Stratton's
employment is terminated by Nabors for any reason other than cause or by Mr.
Stratton's voluntary resignation or is terminated by Mr. Stratton following a
Change of Control (as defined in his agreement), Mr. Stratton would be entitled
to: (a) all base salary which would have been payable for the period from the
termination date until the expiration date; (b) all deemed bonus which would
have been payable for the period
13
<PAGE> 18
from the termination date until the expiration date (for this purpose, deemed
bonus for each fiscal year shall equal the highest cash bonus paid to Mr.
Stratton during the last three fiscal years prior to the termination date); (c)
any restricted stock outstanding, which shall become immediately and fully
vested; (d) any outstanding stock options, which shall become immediately and
fully vested; (e) any amounts then earned, accrued or owing to Mr. Stratton but
not yet paid (including obligations to be performed following termination); and
(f) certain other benefits including vacation, life insurance and medical
benefits will be continued through the later of the expiration date or three
years following the date of termination. In the event Mr. Stratton is terminated
for cause or voluntarily resigns, he would be entitled to receive or retain his
salary through the termination date and any of his outstanding stock options
which have then vested. Mr. Stratton may elect to treat any breach of his
employment contract by Nabors or its successor, in the event of a merger,
consolidation or sale of substantially all of the assets of Nabors, as a
discharge without cause.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee for fiscal 1999 was comprised of two
non-employee directors: Mr. Wexler (Chairman) and Mr. Sheinfeld. Neither Mr.
Wexler nor Mr. Sheinfeld has ever served as an officer or employee of Nabors or
any of its subsidiaries, nor has either participated in any transaction during
the last fiscal year required to be disclosed pursuant to the federal proxy
rules.
During fiscal 1999 Nabors provided drilling and logistical services to
Santa Fe Snyder Corporation, of which Mr. James L. Payne, serves as the Chief
Executive Officer. The drilling and logistical services were provided by Nabors
to Santa Fe Snyder, at prevailing market rates. Amounts received for such
services represented approximately 0.6% of Nabors' consolidated gross revenue.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
COMPOSITION AND ROLE OF THE COMPENSATION COMMITTEE
The Compensation Committee meets periodically to review and recommend
to the Board, for its approval, policies and procedures relating to employment
agreements, salaries, bonuses, stock grants, stock options and employee benefit
plans for officers and employees. In particular, the committee is responsible
for recommendations with regard to:
o Salary, cash bonuses, stock awards and stock option grants to
management and other key employees;
o Policies and practices in regards to employment agreements;
and
o Stock-based compensation plan, other benefit programs
including shareholder-approved stock option plans and defined
contribution plans.
The committee conducts periodic meetings throughout the year,
culminating in an extended session, following the close of the fiscal year, to
consider salary adjustments, incentive compensation and related issues.
COMPENSATION POLICIES
The committee's goal is to establish compensation policies and programs
designed to attract and retain a qualified executive staff for the purpose of
enhancing shareholder value. The committee is mindful that, over the past
decade, the oil field services industry, particularly drilling contractors, have
undergone severe contractions in activity forcing many companies to withdraw or
be eliminated from the market place. The ability of companies to compete in
14
<PAGE> 19
this marketplace depends in part on the need to attract and retain executives
with the necessary industry knowledge and management and financial skills to
preserve and enhance Nabors' position, notwithstanding the industry's
characteristics. For this reason, the committee also is of the view that
attracting executive talent from both inside and outside the industry is
important to the continued enhancement of Nabors. Consistent with these goals,
the committee seeks to:
o Attract and retain high quality executives needed to manage
Nabors and maintain its competitive position;
o Reward effective ongoing management performance that achieved
Nabors' operating, financial and strategic goals established
each year;
o Focus executive attention on enhancing long-term shareholder
value through stock-based compensation programs; and
o Reward key employees for exceptional performance with regard
to Nabors' success.
Nabors' executive compensation program includes base salary and
incentive bonuses as follows:
Base Salary: The committee reviews the performance of each senior
executive officer individually with the Chief Executive Officer and determines
an appropriate salary level for each senior executive officer based primarily on
individual performance and competitive factors. These competitive factors
include as a reference the base salary of other top executives of drilling
contractors and the oil service sector generally, and also the compensation
levels needed to attract and retain highly talented executives from outside the
industry. For fiscal 1999, the committee noted that the salaries of the Chief
Executive Officer and the other named executive officers were, in cases, below
the mean of the salaries for the same categories of Nabors' competitors, as
reported in the latest available proxy statements of the five companies other
than Nabors that comprise the Dow Jones Oil Drilling Index. The salaries of the
Chief Executive Officer and the President have remained the same since 1987 and
1992, respectively.
Incentive Bonus Program: The committee administers annual review
programs to determine to what extent to reward senior executive officers and key
employees based upon Nabors' performance in relation to performance goals.
Financial performance goals for the Chief Executive Officer and President are
set forth in the contractual bonus formulae described above under "Management
Compensation-Employment Contracts". With respect to other senior executive
officers, the performance goals include both financial and non-financial
objectives, including achieving certain financial targets in relation to
internal budgets, developing internal infra-structure and enhancing positions in
certain markets. The financial criteria include, among other things, increasing
revenues, controlling direct and overhead expenses and increasing cash flow from
operations. The non-financial criteria include: maintaining Nabors' share in its
principal geographic markets, enhancing Nabors' technical capabilities and
developing operations in identified strategic markets. Based on these reviews,
the Committee recommends annual incentive rewards to the Board. Annual incentive
awards include cash, options or shares, or a combination thereof. Share awards
or stock option grants typically have been issued on a four-year vesting
schedule, but the committee reserves the right to modify the vesting schedule in
its discretion, particularly where options are given in lieu of cash bonuses.
Annual incentive bonus awards are not guaranteed except for those provided under
contractual arrangements. The committee believes that stock option grants and
share awards are critical in motivating and rewarding the creation of long-term
shareholder value, and the committee has established a policy of awarding stock
options from time to time based on continuing progress of Nabors and on
individual performance. For fiscal 1999, no cash bonuses were awarded to Mr.
Isenberg, Mr. Petrello or Mr. Stratton due to the protracted downturn in Nabors'
business throughout the year. However, the stock options granted to the Chief
Executive Officer and the next two named executive officers were higher than
those for the same officer categories of Nabors' competitors, as reported in the
latest available proxy statements of the five companies other than Nabors that
comprise the Dow Jones Oil Drilling Index.
15
<PAGE> 20
Section 162(m) of the Internal Revenue Code of 1986, as amended, limits
to $1,000,000 the amount of compensation that may be deducted by Nabors in any
year with respect to certain of Nabors' highest paid executives. Certain
performance-based compensation that has been approved by shareholders is not
subject to the $1,000,000 limit, as well as compensation paid pursuant to
employment contracts in existence prior to the adoption of Section 162(m) in
1993. Section 162(m) applied to Nabors for the first time in fiscal 1995.
Although the contractual bonus arrangements remained the same from their
previous contracts, certain bonus compensation, as well as the share options
granted to Mr. Isenberg, Mr. Petrello and Mr. Stratton pursuant to the new and
amended employment contracts entered into in 1996, may not be exempt from
Section 162(m). Consequently, Nabors may not be able to deduct that portion of
such compensation that exceeds $1,000,000 (see "Management
Compensation-Option/SAR Grants in the Last Fiscal Year" and "- Employment
Contracts"). While the committee intends to take reasonable steps to obtain
deductibility of compensation, it reserves the right not to do so in its
judgment, particularly with respect to retaining the service of its principal
executive officers.
CHIEF EXECUTIVE OFFICER AND PRESIDENT
The committee's arrangements with its Chief Executive Officer and
President have been designed from the outset to align compensation to enhancing
shareholder value. Mr. Isenberg's compensation is made pursuant to a contractual
formula that originated with several of Nabors' major shareholders in 1987
following Nabors' bankruptcy proceedings. These arrangements were subsequently
approved by the various constituencies in Nabors' bankruptcy proceedings,
including equity and debt holders, and confirmed by the United States Bankruptcy
Court. Mr. Isenberg's base salary has remained constant since 1987, and Mr.
Petrello's has not changed since his employment began in 1991. The major portion
of Mr. Isenberg's and Mr. Petrello's cash compensation is the performanced-based
bonus compensation. Under their agreements, Mr. Isenberg and Mr. Petrello are
entitled to receive a cash bonus according to a formula based on a percentage
during 1999, (Isenberg-7%, Petrello-2%) of cash flow in excess of a 15% return
on shareholders' average book equity. Mr. Petrello is also entitled to a minimum
annual cash bonus of $700,000 (which he waived in 1999). The committee believes
that tying the cash bonus to cash flow in excess of a return on shareholders'
average equity aligns Mr. Isenberg's and Mr. Petrello's bonus' to achieving
superior financial results that should enhance shareholder value. In order to
ensure that Mr. Isenberg and Mr. Petrello would continue to be available to
Nabors, the committee amended and restated their employment contracts effective
October 1, 1996 for additional five-year terms that renew annually absent notice
to the contrary (see "Management Compensation - Employment Contracts"). Mr.
Isenberg's contractual bonus (as well as Mr. Petrello's) provides for the
mandatory application of the bonus formula.
In reviewing Mr. Isenberg's compensation, the committee took into
account the long-term shareholder value which he helped create since becoming
Nabors' Chief Executive Officer in 1987. The committee also took note of Nabors'
expansion of its U.S. and international operations with the acquisitions of
Bayard Drilling Technologies, Inc. and Pool Energy Services Co. completed in
1999, which have enhanced Nabors' operating leverage in the global drilling
market. The result of this effort is reflected in the chart below.
As a result of the Company's financial results that declined in fiscal
1999 as compared to 1998, Mr. Isenberg, Mr. Petrello and Mr. Stratton agreed to
waive any cash bonus for 1999. This compares to cash bonuses of $1,000,000,
$200,000 and $180,000, respectively, that they received for 1998. In addition,
Mr. Isenberg, Mr. Petrello and Mr. Stratton will not receive any salary
adjustments for 2000. In 1999, Mr. Isenberg, Mr. Petrello and Mr. Stratton were
granted stock options to acquire 1,500,000 shares, 750,000 shares and 250,000
shares of Nabors common stock, respectively, a decrease from the options to
acquire 2,200,000 shares, 900,000 shares and 300,000 shares of Nabors common
stock, respectively, they were granted in 1998.
16
<PAGE> 21
FINANCIAL HIGHLIGHTS
NABORS INDUSTRIES, INC. AND SUBSIDIARIES
(In millions, except per share amounts)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
1999 VERSUS 1998 1999 VERSUS 1994
---------------------------------------------------
FISCAL YEAR (1) INCREASE/(DECREASE) INCREASE/(DECREASE)
------------------------------------------------------------------------------------------
FINANCIAL DATA 1999 1998 1994 (2) $ % $ %
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues ........................ $ 642.3 $ 968.2 $ 484.3 (325.9) (34) 158.0 33
------------------------------------------------------------------------------------------
Net income ...................... 27.7 125.0 1.4 (97.3) (78) 26.3 1,879
------------------------------------------------------------------------------------------
Net income per diluted share .... 0.23 1.16 .02 (0.93 (80) .21 1,050
------------------------------------------------------------------------------------------
Stockholders' equity ............ 1,470.1 867.5 317.4 602.6 69 1,152.7 363
------------------------------------------------------------------------------------------
Year end market value of
shares outstanding .......... $ 4,156.3 $ 1,304.0 $ 513.6 2,852.3 219 3,642.7 709
==========================================================================================
</TABLE>
(1) The fiscal years ended 1999 and 1998 are for the period January 1
through December 31 and the fiscal year ended 1994 is for the period
October 1 through September 30.
(2) The financial data for 1994 was restated to include Sundowner Offshore
Services, Inc., which was acquired on October 27, 1994.
THE COMPENSATION COMMITTEE
Jack Wexler, Chairman
Myron M. Sheinfeld
17
<PAGE> 22
REPORT OF THE AUDIT COMMITTEE
COMPOSITION AND ROLE OF THE AUDIT COMMITTEE
The Audit Committee is comprised of three members, Mr. Sheinfeld
(Chairman), Mr. Wexler and Mr. Whitman. In 1999 the Committee met four times.
The Audit Committee is governed by a charter which it has adopted, which is
attached to this Proxy Statement as Appendix A. Nabors' securities are listed on
the American Stock Exchange and are governed by its listing standards. All
members of the Audit Committee meet the independence standards of Section
303.01(B)(2)(a) of Regulation S-K and of the American Stock Exchange.
AUDIT COMMITTEE REPORT
March 30, 2000
To the Board of Directors of Nabors Industries, Inc.:
Our Committee has reviewed and discussed the audited financial
statements of the Company for the year ended December 31, 1999 (the "Audited
Financial Statements"). In addition, we have discussed with
PricewaterhouseCoopers LLP, the independent auditing firm for the Company, the
matters required by Codification of Statements on Auditing Standards No. 61 (SAS
61).
The Committee also has received the written report, disclosure and the
letter from PricewaterhouseCoopers, LLP required by Independence Standards Board
("ISB") Statement No. 1, and we have reviewed, evaluated and discussed the
written report with that firm and its independence from the Company. We also
have discussed with management of the Company and the auditing firm such other
matters and received such assurances from them as we deemed appropriate.
Based on the foregoing review and discussions and relying thereon, we
have recommended to the Company's Board of Directors the inclusion of the
Audited Financial Statements in the Company's Annual Report for the year ended
December 31, 1999 on Form 10-K, to be filed with the Securities and Exchange
Commission.
THE AUDIT COMMITTEE
Myron M. Sheinfeld, Chairman
Jack Wexler
Martin J. Whitman
18
<PAGE> 23
STOCK PERFORMANCE GRAPH
The following graph illustrates comparisons of five-year cumulative
total returns among Nabors Industries, Inc., the S&P Midcap Index and the Dow
Jones Oil Drilling Index. Total returns assumes $100 invested on December 31,
1994 in shares of Nabors Industries, Inc., the S&P Midcap Index, and the Dow
Jones Oil Drilling Index. It also assumes reinvestment of dividends and is
calculated at the end of each calendar year, December 31, 1994 to December 31,
1999.
[GRAPH]
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
1995 1996 1997 1998 1999
----------------------------------------------
<S> <C> <C> <C> <C> <C>
Nabors Industries, Inc. 173 296 487 208 476
----------------------------------------------------------------------------------------
S&P Midcap Index 131 156 206 246 282
----------------------------------------------------------------------------------------
Dow Jones Oil Drilling Index 143 211 321 171 245
----------------------------------------------------------------------------------------
</TABLE>
19
<PAGE> 24
AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION TO
INCREASE THE AUTHORIZED SHARES OF COMMON STOCK
On April 20, 2000, the Board unanimously approved an amendment to
Article Fourth (a) to the Restated Certificate of Incorporation which would
increase the number of authorized shares of common stock by two-hundred million
shares to 400,000,000 shares, subject to shareholder approval of the amendment.
As of April 14, 2000 Nabors had outstanding a total of 145,469,597
shares of common stock and had reserved for issuance 27,440,343 shares of common
stock. Nabors is currently authorized to issue 200,000,000 shares of common
stock, 8,000,000 shares of Class B stock, and 10,000,000 shares of preferred
stock. If this amendment is approved by shareholders, Nabors will be authorized
to issue an additional 200,000,000 shares of common stock.
The Board of Directors believes that it is desirable to have the
additional authorized shares of common stock available for possible future
financing and acquisition transactions, employee benefit plans and other general
corporate purposes. While the Board does not have any specific plans,
arrangements, understandings, agreements, negotiations or commitments for the
issuance of additional shares, based on our history of expanding through
acquisitions and asset purchases, it is probable that Nabors will require
additional common shares for similar transactions in the future. Having
additional authorized shares of common stock available for issuance provides us
with greater flexibility, should opportunities arise that require prompt action
and may allow such shares to be issued without the delay and expense of seeking
shareholder approval at the time which could deprive Nabors and its shareholders
of the ability to effectively benefit from the opportunity. All authorized but
unissued common and preferred stock, including the additional shares of common
stock authorized by this amendment, will be available for issuance without
further action by the shareholders, unless such action is required by applicable
law or is required by the American Stock Exchange. In accordance with American
Stock Exchange rules, shareholder approval will be required in connection with
the issuance of shares: (A) in connection with an acquisition (1) which could
result in an increase in outstanding shares of 20% or more or (2) which could
result in an increase in the outstanding shares of 5% or more where officers,
directors or a substantial holder have an interest above certain thresholds in
the entity to be acquired; or (B) in connection with a sale of stock equal to
20% or more of the then outstanding shares below the greater of book or market
value.
The issuance of additional shares could result in loss of voting
control of existing shareholders and, depending on the sales price of such
shares, could cause dilution. In addition, the proposed amendment also could
have certain anti-takeover effects. For example, although Nabors has no present
intent to do so, shares of common stock could be issued by private placement or
public offering, or rights to purchase such shares could be issued, to create
voting impediments to or to frustrate persons seeking to effect a takeover or
otherwise to gain control of Nabors, thereby continuing incumbent management. In
addition, this proposed amendment could discourage an attempt by a person to
acquire control of Nabors by a tender offer or other means. It could therefore
deprive shareholders of benefits that could result from such an attempt, such as
the realization of a premium over the market price of their shares in a tender
offer or the temporary increase in market price that such an attempt could
cause. The Board is not aware of any present effort to gain control of Nabors.
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The Board believes that this amendment would be in Nabors' best
interests. A copy of the amendment is attached hereto as Appendix B. The
information contained in this proxy statement is qualified in its entirety by
reference to the complete text of the amendment.
A majority of the voting power, voted in person or by proxy, is
required for the approval of the proposed amendment to our restated certificate
of incorporation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT TO THE RESTATED
CERTIFICATE OF INCORPORATION.
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ACCOUNTANTS
PricewaterhouseCoopers LLP, independent accountants, have been selected
to serve as Nabors' accountants for the current fiscal year. They, or a
predecessor, have been our accountants since May 1987.
A representative from PricewaterhouseCoopers is expected to be present
at the annual meeting. This representative will have an opportunity to make a
statement and will be available to respond to appropriate questions.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Nabors'
directors and executive officers, and persons who own more than 10% of a
registered class of Nabors' equity securities, to file with the Securities and
Exchange Commission and the American Stock Exchange initial reports of ownership
and reports of changes in ownership of common stock and other equity securities
of Nabors. Officers, directors and greater than 10% shareholders are required by
SEC regulation to furnish Nabors with all Section 16(a) forms which they file.
To Nabors' knowledge, based solely on review of the copies of such
reports furnished to Nabors and written representation that no other reports
were required during the fiscal year ended December 31, 1999, all Section 16(a)
filing requirements applicable to its officers, directors and greater than
ten-percent beneficial owners were complied with on a timely basis.
OTHER MATTERS
The Board knows of no other business to come before the annual meeting.
However, if any other matters are properly brought before the annual meeting,
the persons named in the accompanying form of proxy, or their substitutes, will
vote in their discretion on such matters.
SHAREHOLDERS' PROPOSALS FOR PRESENTATION
AT 2001 ANNUAL MEETING
If a shareholder of Nabors wishes to present a proposal for
consideration at the 2001 Annual Meeting of Shareholders, the proposal must be
received at the executive offices of Nabors no later than January 2, 2001 to be
considered for inclusion in Nabors' proxy statement and form of proxy for that
annual meeting.
NABORS INDUSTRIES, INC.
/s/ D. MCLACHLIN
DANIEL MCLACHLIN
Dated: May 8, 2000 Corporate Secretary
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APPENDIX A
NABORS INDUSTRIES, INC. AUDIT COMMITTEE CHARTER
ORGANIZATION
There shall be a committee of the Board of Directors to be known as the Audit
Committee. The Audit Committee shall consist of at least three independent
members of the Board of Directors, who serve at the pleasure of the board. The
Board of Directors shall designate the Audit Committee members and the committee
chair. The Audit Committee shall be composed of directors who are independent of
the management of the corporation and are free of any relationship that, in the
opinion of the Board of Directors, would interfere with their exercise of
independent judgment as committee members.
Members of the Audit Committee should be considered independent if they have no
relationship to the corporation which may interfere with the exercise of their
independence from management and the corporation. If a director has a
relationship which could interfere with the exercise of their independence from
management and the corporation, such a director who has one or more of these
relationships may be appointed to the Audit Committee, if the Board under
exceptional and limited circumstances determines that membership on the
committee by the individual is required by the best interest of the corporation
and its shareholders, and the Board discloses in the next annual proxy statement
subsequent to such determination, the nature of the relationship and the reasons
for that determination.
MEETINGS
The Audit Committee should meet at least four times annually or more frequently
as circumstances may require. The Audit Committee should meet at least annually
with management, independent accountants and internal auditors, in separate
executive sessions to discuss any matters that the Audit Committee or each of
the entities believe should be discussed privately.
DIRECTOR QUALIFICATIONS
The Audit Committee members should be experienced in reviewing and evaluating
financial matters with at least one member having accounting or related
financial management expertise.
STATEMENT OF POLICY - PURPOSE
The Audit Committee shall assist the Board of Directors in fulfilling their
responsibility to the shareholders, potential shareholders, investment
community, the public and any governmental body relating to corporate
accounting, reporting practices of the corporation, the quality and integrity of
the financial reports, legal compliance and ethics that management of the
corporation and the board have established. It is the responsibility of the
Audit Committee to maintain free and open communication between the directors,
the independent auditors, the internal auditors and the financial management of
the corporation to encourage continuous improvement of and adherence to the
corporation's policies, procedures and practices.
RESPONSIBILITIES AND DUTIES
In carrying out its responsibilities, the Audit Committee believes its policies
and procedures should remain flexible, to best react to changing conditions and
ensure the directors and shareholders that corporate accounting and reporting
practices of the corporation are in accordance with all legal requirements and
are of the highest quality.
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In carrying out these responsibilities, the Audit Committee will:
o Review and update this charter periodically, as conditions
require.
o Review and recommend to the Board of Directors the selection
of independent accountants to audit the financial statements
of the corporation, its divisions and subsidiaries.
o Review and approve fees and other compensation to be paid to
the independent accountants.
o Review and discuss with the independent accountants all
significant relationships the accountants have with the
corporation to verify the accountants' independence.
o Review the performance of the independent accountants and
approve any discharge of the independent accounts when
circumstances so warrant.
o Meet with the independent accountants and financial management
of the corporation to review the scope of the proposed audit
for the current year and the audit procedures to be utilized.
o At the conclusion of the audit, meet with the independent
accountants to review the audit, their comments and
recommendations.
o Review with the independent accountants, the corporation's
internal auditor, and financial and accounting personnel, the
integrity, adequacy and effectiveness of the accounting and
financial controls of the corporation, and its internal and
external financial reporting practices and processes and
receive and review any recommendations for the improvement of
such internal control procedures, reporting practices and
processes or areas where new or more detailed controls or
procedures are desirable.
o Review the internal audit function of the corporation
including the internal auditor, independence and authority of
its reporting obligations, the proposed audit plans for the
coming year, and the coordination of such plans with the
independent auditors.
o Receive and review a summary of findings from completed
internal audits.
o Review and meet separately with management, independent
accountants, and internal auditors to discuss any significant
difficulties encountered during the course of the audits,
including but not limited to restrictions on scope of work,
access to information, disagreements among management,
independent accountants and internal auditors in connection
with preparation of financial statements, and any change in
accounting principles.
o Meet separately with internal auditors and independent
accountants, without members of management present to discuss
independent accountants' or internal auditors' evaluation of
the corporation's financial, accounting and auditing
personnel, cooperation received during the audit, and any
matters which may be brought to the attention of the Audit
Committee.
o Review with financial management of the corporation and the
independent auditor their qualitative judgments about the
appropriateness of the accounting principles and financial
disclosure practices used or proposed to be adopted by the
AICPA about the degree of aggressiveness or conservatism of
its accounting principles and underlining estimates.
o Review the financial statements contained in the annual report
to shareholders with management and the independent
accountants to determine that the independent accountants are
satisfied with the disclosure and content of the financial
statements to be presented to shareholders.
o Review accounting and financial human resources and succession
planning within the corporation.
o Establish, review and update a code of ethical conduct and
ensure management has established a system to enforce such
code.
o Review management's monitoring of the corporation's compliance
with such code of ethical conduct and ensure that a proper
review system is in place to satisfy legal reporting
requirements.
o Review with corporation's legal counsel any compliance matter,
including corporate securities trading, or any legal matter
which could have significant impact on the corporation's
financial statements.
o Submit the minutes of all meetings of the Audit Committee to,
or discuss the matters discussed at each committee meeting
with, the Board of Directors.
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o Investigate any matter brought to the attention of the Audit
Committee within the scope of its duties, with the power to
retain outside independent counsel, accountants, or others for
this purpose if, in its judgment, that is appropriate.
o Perform any other activities consistent with this charter, the
corporation's by-laws and governing law, as the Audit
Committee or the Board of Directors deems necessary or
appropriate.
ADDENDUM 1
The following are examples of relationships which members of the Audit Committee
may have which may interfere with the exercise of their independence from
management and the corporation:
1. A director being employed by the corporation or any of its affiliates
for the current year or any of the past five years;
2. A director accepting any compensation from the corporation or any of
its affiliates other than compensation for board service or benefits
under tax qualified retirement plans;
3. A director being a member of immediate family of an individual who is,
or has been in any of the past five years, employed by the corporation
or any of its affiliates as an executive officer;
4. A director being a partner in, or a controlling shareholder or an
executive officer of, any for profit business organization to which the
corporation made, or from the which the corporation received payments
that are or have been significant to the corporation or business
organization in any of the past five years;
5. A director being employed as an executive of another company where any
of the corporation's executives serve on that company's compensation
committee.
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APPENDIX B
NABORS INDUSTRIES, INC.
AMENDMENT TO THE RESTATED
CERTIFICATE OF INCORPORATION
TO INCREASE THE AUTHORIZED COMMON STOCK
RESOLVED, that Article Fourth (a) of the Corporation's Restated Certificate of
Incorporation which reads as follows:
Fourth: (a) The total number of shares which the Corporation
shall have the authority to issue is two hundred and eighteen million
(218,000,000) shares, of which two hundred eight million (208,000,000) shares
will consist of Capital Stock having a par value of ten cents ($.10) and ten
million (10,000,000) shares will consist of Preferred Stock having a par value
of ten cents ($.10) per share. The Capital Stock will consist of two hundred
million (200,000,000) shares of Common Stock, and eight million (8,000,000)
shares of Class B Stock. All shares of capital stock will be identical and will
entitle the holders thereof to the same rights and privileges except as
otherwise provided in this Restated Certificate of Incorporation.
be and hereby is amended by striking out said Article Fourth (a) and inserting
in lieu thereof the following:
Fourth: (a) The total number of shares which the Corporation
shall have the authority to issue is four hundred and eighteen million
(418,000,000) shares, of which four hundred eight million (408,000,000) shares
will consist of Capital Stock having a par value of ten cents ($.10) and ten
million (10,000,000) shares will consist of Preferred Stock having a par value
of ten cents ($.10) per share. The Capital Stock will consist of four hundred
million (400,000,000) shares of Common Stock, and eight million (8,000,000)
shares of Class B Stock. All shares of capital stock will be identical and will
entitle the holders thereof to the same rights and privileges except as
otherwise provided in this Restated Certificate of Incorporation.
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[X] Please mark your votes as in this example.
THIS PROXY, WHEN PROPERLY SIGNED, WILL BE VOTED IN THE MANNER DIRECTED
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ELECTION OF EACH NOMINEE FOR DIRECTOR AND FOR THE APPROVAL TO AMEND
NABORS' RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED COMMON
STOCK.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
- --------------------------------------------------------------------------------
FOR [ ] WITHHELD [ ]
1. Election of Directors. (see reverse)
For, except vote withheld from the following nominee(s):
----------------------------------------------
- --------------------------------------------------------------------------------
FOR [ ] WITHHELD [ ] ABSTAIN [ ]
2. Approval to amend the Nabors' Restated Certificate of Incorporation to
increase the authorized common stock from 200,000,000 shares to
400,000,000 shares.
- --------------------------------------------------------------------------------
In their discretion the proxies are authorized to vote upon such other business
as may properly come before the meeting.
NOTE: Please mark the proxy, sign exactly as your name appears below, and return
it promptly in the enclosed addressed envelope. When shares are held by joint
tenants, both parties should sign. When signing as an attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by the President or other
authorized person. If a partnership, please sign in full partnership name by an
authorized person.
- ------------------------------------------
Signature Date
- ------------------------------------------
Signature Date
<PAGE> 32
PROXY
NABORS INDUSTRIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The person signing on the reverse by this proxy appoints Eugene M. Isenberg and
Anthony G. Petrello, and each of them (with full power to designate
substitutes), proxies to represent, vote and act with respect to all shares of
common stock of Nabors Industries, Inc. held of record by the undersigned at the
close of business on April 14, 2000 at Nabors' annual meeting of shareholders to
be held on June 6, 2000 and at any adjournments or postponements thereof. The
proxies may vote and act upon the matters designated below and upon such other
matters as may properly come before the meeting, according to the number of
votes the undersigned might cast and with all powers the undersigned would
possess if personally present.
1. ELECTION OF DIRECTORS: Election of two Class III directors of Nabors to
serve until the 2003 annual meeting of shareholders or until their
successors are elected and qualified.
Nominees: Eugene M. Isenberg and Jack Wexler
2. APPROVAL TO AMEND NABORS' RESTATED CERTIFICATE OF INCORPORATION TO
INCREASE THE AUTHORIZED COMMON STOCK FROM 200,000,000 SHARES TO
400,000,000 SHARES.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICE BY MARKING THE APPROPRIATE BOX ON THE
REVERSE SIDE. YOU DO NOT NEED TO MARK ANY BOX IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS.
SEE REVERSE
SIDE
