Do the right thing? Naaaa.

Business executives regard this as a gross and unfair exaggeration. It's time for them to prove it.

Nabors Industries Ltd. (NBR), the world’s largest oil-drilling companies, will pay outgoing CEO Gene Isenberg $100 million in cash as a result of provisions in Isenberg’s employment agreement. Isenberg is 81, and has led Nabors since 1987.

Jeff Dietert, an analyst at Simmons & Co., an energy investment bank in Houston, wrote his clients yesterday that “We believe the compensation to Mr. Isenberg is excessive,” noting that handing over $100 million payment “for what we view as essentially retiring will be offensive to some.”

May be excessive? Offensive to some?

Here’s what I would hope would be going through Mr. Isenberg’s mind about now:

“Boy, this looks awful. Here we have a worldwide financial crisis, with soaring unemployment, banks collapsing, homes being lost, lives in tatters, and angry people rallying in cities across the country that the system is rigged to enrich people like me while 99% of the public gets screwed…and I’m taking home a cool $100 million for leaving my job.

I know that it’s not my fault that I cut a good deal for myself, and I’ve played a crucial role in earning billions for this business. Still, I’m ashamed to be taking a payout like this, and my company should be ashamed to pay it. Heck, I’m 81, and I’m already rich as hell! What do I need 100 million for…to build a pyramid?

“I keep thinking of all the good that money could do for people who are having a hard time. I could use it to help college grads pay off their student loans. Maybe I could use it to launch a business, or several businesses, in economically depressed areas. What might really do some good is for me to use the attention focused on this obscene payment to call for an end to absurdly disproportional executive compensation packages. I could challenge other executives to do the same, and call out those who don’t!

“In the final chapter of my life, I could be a catalyst for reforming a corporate compensation system that seems rotted out by conflicts of interest, irresponsibility and greed. I can’t just accept the benefits of that system, knowing that it’s wrong. I have an obligation to try to change it.”

That’s what I hope I’d be thinking, in his position. You never know, however, how $100 million will warp your values.

Is there any chance at all that Gene Isenberg is thinking these things?


[To read an excellent analysis of what is wrong with Isenberg’s bonanza, check out Chris MacDonald’s Business Blog.]

38 thoughts on “Do the right thing? Naaaa.

  1. Maybe he’s signed on to that “Rich people give it to charity thing when you die” pact and he’s really just trying to take money from corporations to give to the poor?

    Fat chance?

  2. Meanwhile, back at the ranch … anyone questioning why the price of oil is so high? Could it be, perchance, that fat-cat execs NEED to be paid $100M to “retire” – so, of course, it follows that the price of oil must be artificially inflated to provide this compensation? Anyone else PO’d?

  3. At that level everyone is making sure that eveyone around them gets as much money as possible. They are are all taking care of each other so when their time comes they get paid that crazy money also.

  4. Why is it when someone in a “frivolous” occupation, such as actor, musician or athlete makes this kind of money in a couple of years, nothing is criticized and in fact celebrated, but someone involved in a core commodity, infrastructure or service, used in the daily lives of everyone, does so over 25 years, they are greedy bastards?

    I’ve always wondered why that is.

    Is it that people feel entitled to the basics of life but patronizing entertainers is voluntary, therefore it’s ok? James Cameron or Jim Carey (both who make Isenberg look like a pauper) are heroes and this guy should be ashamed of himself. Is it because we like Cameron or Carey but this guy is a nameless functionary until something like this happens?

    It can’t just be jealousy that someone else was just “lucky”, since that certainly applies to 90% of actors, etc. Or lottery winners.

    Is it that one field of activity deals with emotion and the other with substance? If so, which field _really_ deserves the big rewards?

    I don’t see Occupy Hollywood in the headlines.

    • People in Hollywood are never paid $100 million for leaving…they are paid 100 million for unique talents that generate more money than they are paid. (Actually, no star is paid 100 million.Some sports stars are paid that over 4-7 years, but again, they deliver unique value. There is no question that Oprah, Paul McCartney, Tom Cruise et al. earn their money in ways the corporate execs cannot. If you want Tom Cruise and only Tom cruise will do, you have to pay his price. Uniqueness has its rewards, and they are just.

      • His compensation was part of his _employment_ agreement, made long ago, to keep him employed over a period of many years, not just handed out as an afterthought. How do you know that he didn’t deliver unique value to his company? Why is it assumed that just anyone can be a CEO?

        Besides, that misses the point: Why is it ethical to complain about compensation for careers involving manufacturing or service but not complain about similar amounts of compensation for careers that matter little to fundamental aspects of people’s lives? Why does Oprah get a pass? Isn’t she just a greedy, and therefor worthy of our righteous indignation, as Isenberg?

        • He delivered unique value, and was paid for it., and well…look at his yearly salary, bonus and stock options. These farewell goodies don’t purchase anything..they are only self-enriching looting of the corporation approved by back-scratching boards as a quid pro quo for their own similar deals.
          There are unique talents in business—the Steve Jobs, Thomas Edisons, Walt Disneys—those who create things nobody else can or will.. A CEO who just runs a tight ship and has a company grow is valuable, but not unique. (I didn’t say “anyone” can be a CEO. Anyone can be on an assembly line. A CEO isn’t like Tom Cruise. A big company CEO is more like Harvey Keitel.) And Jobs, Edison or Disney never got 100 million like this.

          The arts and enjoyment of life are not “fundamental aspects of people’s lives”? Who says? The figures say otherwise, and so do the ancients. Man does not live by bread alone.
          Oprah gets plenty of righteous indignation, but she doesn’t deserve it. She earns money nobody else could, and uses it to start schools, magazines, media entities, launch careers, sell books and help people. She does unique things that earn her a lot of money. I have never seen evidence that earning money is her purpose or objective.

            • A lot. So what? Without them, the movies wouldn’t have been made at all. Half as many people would have bought tickets if they had been made. Stars don’t guarantee success, they just make success more likely.

              • A lot. So what? Without them, the movies wouldn’t have been made at all.

                Those movies were box office failures .

                Why should they have been rewarded for failure?

  5. Something interesting in current events is the story of Steve Jobs. Mr. Jobs was a brilliant man and people have compared him to Edison. However, he was a visionary, not an inventor. He knew how to motivate people to their capacity. He was very shrewd. He was so shrewd that he discontinued the philanthropy that Apple was doing while he was gone. It was his choice and a good one for Apple at that time. He used that money and reinvested in the company. Good idea. What he did that hurt the U.S., was to ship the jobs overseas to build the componets for Apple. He was smart, dedicated and shrewd and he was an American. His birth father was Syrian. Imagine the birthers on that info. if he were to run for President. Occupy Apple?

  6. I’m with you, Fred. And, not that it matters what he does with his own money, but how does anyone know how much of it he may or may not give away to whom? Why is it anyone’s business as long as the money wasn’t acquired through fraud or theft? I couldn’t care less how it “looks” to Jack or anyone else. I try not to waste my time looking into other people’s pockets, or fretting over how much someone’s contribution of skill and talent is worth to someone else,

    • They better pay attention to how it looks! The entire controversy about unequal distribution of wealth is more than 50% perception and optics. Why did the Obamas’ vacations rub so many people the wrong way? Why did the French aristocracy end up getting murdered after they engaged in conspicuous consumption while so many were in abject poverty? When companies aren’t hiring and laying workers off who then can’t pay their mortgages and feed their families, for them to throw away huge amounts like this—and giving 100 million to a rich octogenarian IS throwing it away—is plain stupid, spitting in the dragon’s eye. Yes, he has a right to the money, but when accepting the money makes a precarious social structure more so, fuels the anger of desperate people and strikes so many as intuitively wrong, his conduct threatens to incite bad policy and to risk the freedoms the nation has stood for. It is, in short, reckless, greedy, irresponsible and unpatriotic.

      And stupid.

      • Yes, he has a right to the money, but when accepting the money makes a precarious social structure more so, fuels the anger of desperate people and strikes so many as intuitively wrong, his conduct threatens to incite bad policy and to risk the freedoms the nation has stood for.

        why should we care what desperate people think?

        Are you aware that for women, desperation in men is a turn-off ? Does that not demonstrate that if someone is desperate, there is no value in them?

      • Yes, he has a right to the money, but when accepting the money makes a precarious social structure more so, fuels the anger of desperate people and strikes so many as intuitively wrong, his conduct threatens to incite bad policy and to risk the freedoms the nation has stood for.


        why should we care what desperate people think?

        Are you aware that for women, desperation in men is a turn-off ? If something turns off women, it is a bad quality that should be shunned, and people who have that quality should be shunned and ignored.

  7. I would like to add that the choices you make in public affect society whether you like it or not. Everything you do is an endorsement of the action. By cursing in public you endorse cursing in public. By saving kittens from a tree, you endorse saving kittens. By accepting massive bonuses while others suffer, you endorse uncaring greed. Anybody who says “who cares what people do” is blind to the effect they themselves have on the world around them every day. Not to mention endorsing apathy, which is the last thing anyone needs.

    • By your standard no one should ever accept a paycheck as long as others are without jobs. People have always suffered. Some people always will. We should each do what we can as individuals to alleviate the suffering in whatever way we find appropriate, but not use the law as a proxy to force others to do, against their will, what we think they should do with their earnings. Just who gets to decide how much money constitutes a “massive” amount? You? Do you want the corrupt politicians to pass laws that dictate who’s allowed to make how much for what? (while they take money under the table in exchange for favorable tax treatment for select business owners) I certainly don’t. When I was poor, and I was VERY poor, $20K a year seemed massive to me, yet I never once felt any resentment toward anyone who had more money than I. I don’t understand this malice toward the wealthy simply on account of their money, regardless of how they came to possess it. Don’t think I ever will. Maybe you can help me.

      • But clearly those aren’t my standards, and I haven’t suggested they are. I do admire the (few) sports stars who say, “yes, I know I could get another 20 million or so, but I already make more money than I know what to do with, and if I insist on every last penny, people won’t be able to afford to take their kids to games, and maybe some other players who aren’t stars will make less. I don’t resent anyone for the money they have, and what I have or don’t have is irrelevant—I’ve had fair opportunities, and I’ve made my choices. I’d have another couple hundred thousand bucks or so if I didn’t have a son—I’ll take him, thanks.

        But in America we are both individuals and part of a greater society. I have been at a buffet when it was running out of food, and there was a limited amount of the best dish, with four people behind me. I am entitled to take all of it, and leave none for them, but I don’t have to, and it would be a piggy, selfish thing to do.

        We don’t have to argue over what is a fair amount of compensation or “too much” in the case of the oil drilling exec. 100 million is over the line by so much that it doesn’t matter what the line is. But there IS a line. There is a line for everything.

        • My remarks were a response to Chase’s comment, Jack, not yours. I know you didn’t suggest such a standard. I think you and I agree about what people with massive amounts of wealth *should* do, and I would also admire the sports star, or the oil tycoon, who exhibits charity and humility, but am opposed to any attempt to use the law to force anyone to fork it over, or to set legal limits on salaries and bonuses. I don’t want to live in a place where the central government has that kind of power.

          I’ve heard recently that the wealthiest Americans (I tried just now to find the statistic and failed, but I think it’s either the top 10% or top 1% of income earners) are responsible for some two thirds of all charitable donations. We need those people. Even if they don’t give their money away directly, it makes life better for all of us through the charity, products, services, jobs and investments it provides. Enough of them “give it back” in various ways that the ones who don’t really don’t matter. I understand your fear over how it looks, about the anger of the “masses,” and the spectre of the French Revolution, etc., but we don’t have the same sort of system here of aristocracy and peasants who are forever trapped into their respective positions. Anyone can succeed here. As for “greed,” I sense much more of it in those “Occupy” masses than I do in the corporate executives they vilify, and I would hold the “hate the rich” evangelists and agitators way more responsible for any violent revolution a la the French. I’m reminded again of the WalMart stampedes last Christmas when people were actually killed in the frenzy of folks trying to be the ones to get the holiday bargains. Those people were not of the wealthy corporate class. I imagined the parties responsible for the deaths later sitting at home, watching the news, and whining about those evil, greedy CEOs. Greed is not just for the well-to-do. It seems to be universal. Jealousy is at least as destructive. I still don’t understand either, and I think I’m glad I don’t.

            • Chase, I never said you said anything about the law. I asked you a question about it. You didn’t answer it. If you believe that appearances matter to the extent that “by accepting massive bonuses while others suffer, you endorse uncaring greed,” then you must also believe that by accepting a paycheck while others are jobless, you do the same. You must also believe that one is endorsing uncaring greed by living in a $400K house while there are so many who are homeless, or can only afford to rent a one-room apartment. Wouldn’t a $100K house look better? Or would it only look okay if everyone were homeless?

  8. I have not been nor will I be a part of Occupy Wall Street. Some want the easy way, but only because companies and corporation got a bailout from the same government that you are afraid of making laws to redistribute the wealth. Why should they have received money from the government, even if it was a loan, to bail out companies that later gave executives some sort of a bonus? Then the rumors fly about the execs getting bother perks as well. People weren’t mad because they wanted other people’s money. They want help that the companies received to bail them out. People have home loans, college loans, and other loans for toys they really couldn’t afford. Most of them are angry that they didn’t get the same help. Try telling them that they won’t have a place to live or a job, when the execs on Wall Street get their outragous salaries, huge bonuses, insurance, private jet travel, luxury vacations and other perks paid by the tax payers.

    • One other thing. You don’t want corrupt politicians to make laws that dictate what people should make and for what their profession is? Well I don’t want corrupt politicians to pass laws that give profitable corporations subsidies and tax breaks the common man doesn’t get!

      • You want that oil exploration deduction and oil equipment depreciation, do you? You want an ethanol subsidy? If you can’t get it, does that make it wrong to give to anyone else? So if you don’t give to charity, a corporate foundation shouldn’t get a tax break? Is that right? How about Obama’s proposed tax breaks for hiring veterans, even if they aren’t the best ones for the job? Is that corrupt (oh, that veteran vote!), unfair, compassionate, or dumb?OR do YOU want a tax break if you hire a vet to mow your lawn?

        These things really are a bit more complex than bumper stickers, Michael.

        • I know Jack, because my last job I was partly hired because I was a vet. I filled out the paperwork for the company to get their tax deduction for hiring a vet. Three months later I was let go and they didn’t replace me. I don’t know that they hired and let me go to get the break but it did make me suspicious since they made sure I filled out the paperwork.
          I understand what you are saying about the “too big to fail”. I am just ticked that the execs took that money for their income and at the same time cut staff.

        • You want that oil exploration deduction and oil equipment depreciation, do you?

          I do know that on Schedule C, SE, and E, depreciation can be deducted, which is reflected in personal income tax returns.

    • “Why should they have received money from the government, even if it was a loan, to bail out companies that later gave executives some sort of a bonus?”

      1. IF it is true that the collapse of AIG and other “too big to fail” entities like GM would have thrown the US economy into Great Depression-style nose-dive, then the bail-outs were the best of bad options. IF it is true that the best available expert opinion was that this would happen, it was the right decision EVEN IF IN FACT IT WAS NOT TRUE that the collapse WOULD do this. It was the most responsible choice at the time it was made.

      2. The economy will not collapse if a homeowner defaults, so the countervailing reasons that caused the government to use funds to bail out businesses that deserved to fail doesn’t apply. The complaining of injustice conveniently ignores this fact. If the President needs a liver transplant, he’ll get moved to the head of the line. Does it make sense for those who are jumped over to protest, when they know why they are treated differently, and should acknowledge that there are some valid reasons for it?

      3. I understand the emotional argument—“these guys are rich, and they get a bailout!”—but the argument is still irrational. Neither the companies NOR the homeowners deserve bailouts, but bailing out the companies was a defensible utilitarian call because of its consequences or the risk of them to others.

      • The thing about the bailouts is they should not have happened. We the People were told that bad things would happen. However just what would those BAD things have been?

        I think most of America would have won, at least those that had over valued homes. If the banks holding those loans had failed, then those mortgages would have been sold for pennies on the dollar and there would have been a lot of takers for them. If a bank holding your mortgage is no longer in business can it force a foreclosure? Wouldn’t that mean you were free of making any further payments?

        From what I understand a contract is between two parties, if one is no longer, can the contract be enforced?

        People could then have leverage lower home loans, of leave the mortgage holder with a vacant property earning him nothing. And since he got the mortgages paper for a fraction of it value, he be in a position to do so and still make money. And why wouldn’t he if they were making payments before wouldn’t he still have a good proven borrower?

        Today the banks don’t have to because they make money on those inflated loans; Good people fear the hit on their credit ratings if they default.

        Now would things been somewhat chaotic for a while, sure, but we would have weathered it out and it mostly be over by now. And people would have a way to get things done.

        But no we are still in the same mess that got us here in the first place. With no real signs or hope that it’s getting better.

  9. I hated the bailouts, and don’t think any of those companies deserved to survive, but agree that the loans were probably a necessary evil Very evil. Since we DID bail them out, it is in our best interest for the companies to succeed, which means that they must be able to hire and pay the kind of CEOs that can fix the problems and run a profitable operation. They must be able to provide prospective CEOs with competitive offer packages if they are to secure the best people. There are billions at stake. The people who can do the job don’t come cheap.

    I do have a problem with the ability of politicians to trade favorable tax treatment to businesses in return for campaign help, i.e. votes. What I fail miserably to understand is why anyone thinks the solution to any of the problems with crony capitalism is to hand over more and more power to Washington. How can that possibly help???? I would much rather deprive them of that power. I think the best way to put that power back into the hands of the people is by abolishing the ridiculous income tax code and replacing it with a revenue system that Washington can’t use to control behavior and parcel out favors.

  10. What I have never understood is how the stock holders would vote and approve of such packages in the first place, don’t they have any say in it? How much does that cut into the stock dividends? Which is why they buy into a corp in ght first place.

    And why reward any officer of a corporation if the company does poorly in the long run, but sees short term improvement as good. I.e. Like firing 10% of the work force to make quarterly profits look good. I have never heard of packages that take away $ if the CEO hurts the busines, seems like they are rewarded for it.

    This all seems to me to smack of insider trading where the inside players scam those not on the inside for their own profit.

    Wall St. in reality is a casino where they make bets, and only the insiders who make the rules know the true odds. And they can and do rig the tables on those that can’t fully understand all the rules. And who in D.C. can we trust to understand those rules?

    It’s a lot like cheating at Monopoly as a child, those that showed you the game always won, because they knew the rules better than you did. Not because the game was bad, but the players could be.

    This country used to have 35 banks now there are just 4 how is the good for the country?
    BoA was going to have a fee on Debit cards and only changed? their minds with all the public outcry. ($5 a month? why they spend more on coffee daily than that, and have lost track of the fact that a lot of people can’t afford $5 for coffee any more.) They thought they could get away with it because the people couldn’t just go to another bank that didn’t charge those fees.

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