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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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[ ] 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 Section 240.14a-12
NABORS INDUSTRIES LTD.
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SEC 1913 (02-02)
[NABORS INDUSTRIES LTD. LOGO]
2ND FLOOR INTERNATIONAL TRADING CENTRE
WARRENS
ST. MICHAEL, BARBADOS
Notice of 2004 Annual General Meeting of Shareholders
Nabors Industries Ltd.
Tuesday, June 1, 2004, 11:00 a.m., CDT
Wyndham Greenspoint Hotel
12400 Greenspoint Drive
Houston, Texas
April 29, 2004
Fellow shareholder:
We cordially invite you to attend Nabors Industries Ltd.'s 2004 annual general
meeting of shareholders to:
1. Elect two Class I directors for a three-year term;
2. Appoint PricewaterhouseCoopers LLP as independent auditors and
authorize the Audit Committee of the Board of Directors to set
the auditors' remuneration;
3. Consider a shareholder proposal, if presented by the
shareholder proponents; and
4. Transact such other business as may properly come before the
annual general meeting.
Our Board of Directors recommends you vote "FOR" the election of directors and
the appointment of auditors and "AGAINST" the shareholder proposal.
The financial statements for the Company will also be presented at the annual
general meeting.
We hope you will read the proxy statement and submit your proxy. On behalf of
the Board of Directors and the management of Nabors, I extend our appreciation
for your continued support.
Sincerely yours,
/s/ EUGENE M. ISENBERG
----------------------
EUGENE M. ISENBERG
Chairman of the Board &
Chief Executive Officer
NABORS INDUSTRIES LTD.
2ND FLOOR INTERNATIONAL TRADING CENTRE
WARRENS, P.O. BOX 905E
ST. MICHAELS, BARBADOS
PROXY STATEMENT
2004 ANNUAL GENERAL MEETING OF SHAREHOLDERS
JUNE 1, 2004
We are sending you this proxy statement in connection with the solicitation
of proxies by the Board of Directors of Nabors Industries Ltd. for the 2004
annual general meeting of shareholders. We are mailing this proxy statement and
the accompanying form of proxy to shareholders on or about May 7, 2004. In this
proxy statement, "Nabors", the "Company", "we", "us" and "our" refer to Nabors
Industries Ltd. or, for information pertaining to periods prior to June 24,
2002, to Nabors Industries, Inc. Where the context requires, such references
also include our subsidiaries.
ANNUAL GENERAL MEETING INFORMATION
DATE AND LOCATION OF THE ANNUAL GENERAL MEETING. We will hold the annual general
meeting at the Wyndham Greenspoint Hotel, 12400 Greenspoint Drive, Houston,
Texas at 11:00 a.m., Central Daylight Time, on Tuesday, June 1, 2004 unless
adjourned or postponed.
ADMISSION TO THE ANNUAL GENERAL MEETING. Only record or beneficial owners of
Nabors common shares may attend the annual general meeting in person. When you
arrive at the annual general meeting, please present photo identification, such
as a driver's license. Beneficial owners must also present evidence of share
ownership, such as a recent brokerage account or bank statement.
VOTING INFORMATION
RECORD DATE AND QUORUM. The record date for the annual general meeting is April
8, 2004. You may vote all common shares of Nabors that you owned as of the close
of business on that date. Each common share entitles you to one vote on each
matter to be voted on at the annual general meeting. On the record date,
148,524,892 common shares of Nabors were outstanding. In addition, the holder of
record of one Special Voting Preferred Share of Nabors is entitled to a number
of votes equal to the number of exchangeable shares of Nabors Exchangeco
(Canada), Inc., a corporation incorporated under the laws of Canada, in
accordance with the instructions received from the holders of such shares. There
were 290,679 exchangeable shares of Nabors Exchangeco (Canada) Inc. outstanding
on the record date. A majority of the common shares outstanding on the record
date present, in person or by proxy, constitutes a quorum to transact business
at the annual general meeting.
SUBMITTING VOTING INSTRUCTIONS FOR SHARES HELD IN YOUR NAME. You may vote at the
meeting by completing, signing and returning the enclosed proxy card. A properly
completed and submitted proxy will be voted in accordance with your
instructions, unless you subsequently revoke your instructions. If you submit a
signed proxy without indicating your vote, the person voting the proxy will vote
your shares according to the Board's recommendation.
SUBMITTING VOTING INSTRUCTIONS FOR SHARES HELD IN STREET NAME. If you hold your
shares through a broker, follow the voting instructions you receive from your
broker. If you want to vote in person, you must obtain a legal proxy from your
broker and bring it to the meeting. If you do not submit voting instructions to
your broker, your broker may still be permitted to vote your shares. American
Stock Exchange member brokers may vote your shares under the following
circumstances:
- DISCRETIONARY ITEMS. The election of directors and appointment of
Nabors' independent auditors are "discretionary" items under the rules
of the American Stock Exchange. Member brokers that do not receive
instructions from beneficial owners may vote on these proposals in
their discretion.
- NON-DISCRETIONARY ITEMS. The shareholder proposal is a
"non-discretionary" item under the rules of the American Stock
Exchange and may not be voted on by member brokers, absent specific
voting instructions from beneficial owners.
If you do not submit voting instructions and your broker does not have
discretion to vote your shares on a matter ("broker non-votes"), your shares
will not be counted in determining the outcome of the vote on that matter at the
annual general meeting. Broker non-votes will, however, be counted for purposes
of establishing a quorum.
REVOKING YOUR PROXY. You may revoke your proxy at any time before it is actually
voted by (1) delivering a written revocation notice prior to the annual general
meeting to Daniel McLachlin, Secretary, Nabors Industries Ltd., 2nd Floor
International Trading Centre, Warrens, St. Michael, Barbados, (2) submitting a
later proxy; or (3) voting in person at the annual general meeting (although
attendance at the annual general meeting will not, by itself, constitute a
revocation of a proxy).
VOTES REQUIRED TO ELECT DIRECTORS AND TO ADOPT OTHER PROPOSALS. Directors are
elected by a plurality of the votes cast. The appointment of
PriceWatershouseCoopers LLP and authorization for the Audit Committee to set the
auditor's remuneration and the approval of the shareholder proposal each
requires the affirmative vote of the holders of a majority of shares present in
person or represented by proxy and entitled to vote thereon.
WITHHOLDING YOUR VOTE OR VOTING TO "ABSTAIN". You can withhold your vote for any
nominee for election for director. Withheld votes will be excluded from the vote
and will have no effect on the outcome. On the other proposals, you can vote to
"abstain". If you vote to "abstain", your shares will be counted as present at
the annual general meeting for purposes of that proposal and your vote will have
the effect of a vote against the proposal. Abstentions and withheld votes will
be counted for purposes of establishing a quorum.
ITEM 1
ELECTION OF DIRECTORS
Our Board proposes, based on the recommendation of the Governance and
Nominating Committee, the election of James Payne and Hans Schmidt as directors
for a term ending at the 2007 annual general meeting. Messrs Payne and Schmidt
are current directors of Nabors. Each nominee has indicated that he will serve
if elected. We do not anticipate that any nominee will be unable or unwilling to
stand for election, but if that happens, your proxy will be voted for another
person nominated by the Board.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF MESSRS. PAYNE AND
SCHMIDT AS CLASS I DIRECTORS FOR A TERM ENDING AT THE 2007 ANNUAL GENERAL
MEETING.
2
CLASS I
NOMINEES FOR ELECTION FOR A THREE-YEAR TERM ENDING IN 2007
DIRECTOR
POSITION WITH NABORS OF NABORS
NAME AGE AND PRIOR BUSINESS EXPERIENCE SINCE
---- --- ----------------------------- -----
James L. Payne........ 67 Chairman of the Governance and Nominating Committee of the Board 1999
since 2002 and a member of the Technical and Safety Committee of
the Board since 1999. Mr. Payne is currently Chairman, Chief
Executive Officer and President of Nuevo Energy Company (a company
engaged in the acquisition, production and exploration of oil and
natural gas properties). He also serves as a Director of BJ
Services and Global Industries. He was a Director of Pool Energy
Services Co. from 1993 until its acquisition by Nabors in November
1999. He retired as Vice Chairman of Devon Corp. in February 2001.
Prior to the merger between Devon Corp. and Santa Fe Snyder Company
in 2000, he had served as Chairman and Chief Executive Officer of
Santa Fe Snyder Company. He was Chairman and Chief Executive
Officer of Santa Fe Energy Company from 1990 to 1999 when it merged
with Snyder Oil Company. 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.... 74 Chairman of the Technical and Safety Committee of the Board since 1993
1998 and a member of the Governance and Nominating Committee of the
Board since 2002. From 1958 to his retirement in 1992, Mr. Schmidt
held a number of positions with C. Deilmann A.G., a diversified
energy company located in Bad Bentheim, Germany, including serving
as a Director from 1982 to 1992. From 1965 to 1992 he served as
Director of a subsidiary of C. Deilmann 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.
3
CLASS II
DIRECTORS CONTINUING IN OFFICE - TERM EXPIRING IN 2005
DIRECTOR
POSITION WITH NABORS OF NABORS
NAME AGE AND PRIOR BUSINESS EXPERIENCE SINCE
---- --- ----------------------------- -----
Anthony G. Petrello.... 49 President and Chief Operating Officer of Nabors since 1992, Deputy 1991
Chairman since 2003, and a 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. 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.... 74 Chairman of the Audit Committee of the Board since 1988, a member 1988
of the Compensation Committee of the Board since 1993 and a member
of the Governance and Nominating Committee of the Board since 2002.
He is Senior Counsel to the law firm Akin, Gump, Strauss, Hauer &
Feld, L.L.P. From 1970 until April 2001 he held various positions
in the law firm Sheinfeld, Maley & Kay P.C., most recently as
counsel to the firm. 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 and business
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 Director and member of The
Houston Chapter of National Association of Corporate Directors and
a member of The National Association of Corporate Directors.
4
Martin J. Whitman..... 79 Member of the Audit Committee of the Board since 1993, a member of 1991
the Governance and Nominating Committee of the Board since 2002,
and a member of the Compensation Committee since 2004. Chief
Executive Officer until June 2002 and a Director of Danielson
Holding Corporation (a holding company for barge transportation,
energy, and insurance businesses) since 1990 (Chairman of the Board
until July 1999); Chairman and Trustee of Third Avenue Trust since
1990 and Chief Executive Officer of Third Avenue Trust from 1990 to
2003; Co-Chief Investment Officer of Third Avenue Management LLC
and its predecessor (the adviser to Third Avenue Trust) since 2003
and Chief Investment Officer of Third Avenue Management LLC and its
predecessor from 1991 to 2003; Director of Tejon Ranch Co. (an
agricultural and land management company) from 1997 to 2001; and,
Director of Stewart Information Services Corp. (a title insurance
and real estate company) from 2000 until 2001. Mr. Whitman was an
Adjunct Lecturer, Adjunct Professor and Distinguished Fellow in
Finance, Yale University School of Management from 1972 to 1984 and
1992 to 1999 and is currently an Adjunct Lecturer in Finance at
Yale University. He was an Adjunct Professor at the Columbia
University Graduate School of Business in 2001. Mr. Whitman is
co-author of The Aggressive Conservative Investor and author of
Value Investing: A Balanced Approach. Mr. Whitman is the Lead
Director for the Company's Board of Directors.
CLASS III
DIRECTORS CONTINUING IN OFFICE - TERMS EXPIRING IN 2006
DIRECTOR
POSITION WITH NABORS OF NABORS
NAME AGE AND PRIOR BUSINESS EXPERIENCE SINCE
---- --- ----------------------------- -----
Eugene M. Isenberg... 74 Chairman of the Board, Chairman of the Executive Committee of the 1987
Board and Chief Executive Officer of Nabors since 1987. Mr.
Isenberg has served as a Director of Danielson Holding Company (a
financial services holding company) since 1990. He has been a
Governor of the National Association of Securities Dealers (NASD)
since 1998 and the American Stock Exchange (AMEX) since 1996. He
has served as a member of the National Petroleum Council since
2000. 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.
5
Jack Wexler............. 78 Chairman of the Compensation Committee of the Board, a member of 1987
the Executive and Audit Committees of the Board since 1987 and a
member of the Governance and Nominating Committee since 2002. 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 until his retirement in 1982.
COMMITTEES AND MEETINGS OF THE BOARD
The Board of Directors met four (4) times during 2003. Each of our
incumbent directors attended at least 75% of the aggregate of the meetings of
the Board and the committees on which he served during 2003, except Mr. Richard
F. Syron who attended fewer than 75% of the aggregate of the meetings of the
Board and the committees on which he served during 2003. The Board has five (5)
committees - the Audit Committee, the Compensation Committee, the Governance and
Nominating Committee, the Technical and Safety Committee and the Executive
Committee. The independent directors of the Board meet in executive sessions
following each Board meeting. Appointments and chairmanships of the committees
are recommended by the Governance and Nominating Committee and are selected by
the Board. All committees report their activities to the Board. The charters of
each of our Audit Committee, Compensation Committee, and Governance and
Nominating Committee are available on our web site at www.nabors.com.
The Board has affirmatively determined that each of the current directors,
with the exception of Messrs. Isenberg and Petrello who are officers of the
Company, has no material relationship with Nabors that would interfere with the
exercise of independent judgment and, therefore, is independent under the
listing standards of the American Stock Exchange ("AMEX").
The Board currently intends to add two (2) new directors to the Board by
the end of 2004, each of whom will be independent under AMEX listing standards.
AUDIT COMMITTEE
The primary purpose of our Audit Committee is to assist the Board in monitoring
(a) the quality and integrity of the financial statements of the Company, (b)
the independent auditors' qualifications and independence; (c) the performance
of the Company's independent auditors; and (d) compliance by the Company with
legal and regulatory requirements. The Audit Committee met four (4) times during
2003. The members of the Audit Committee are Myron M. Sheinfeld (Chairman), Jack
Wexler and Martin J. Whitman. The Board has determined that the Audit
Committee's current composition satisfies the rules of the AMEX that govern
audit committee composition, including the requirement that each member of the
Audit Committee be "independent" as that term is defined under the listing
standards of the AMEX and specified in Rule 10A-3 under the Securities Exchange
Act of 1934. In addition, the Board has determined that Mr. Whitman is an "audit
committee financial expert" as defined under the current rules of the SEC.
COMPENSATION COMMITTEE
The primary purpose of our Compensation Committee is to: (a) discharge the
Board's responsibilities relating to the compensation of our executives,
including overseeing the administration of our compensation programs and setting
the compensation of our key executives; (b) assist the Board in its oversight of
the development, implementation, and effectiveness of our policies and
strategies relating to our human capital function; and (c) prepare any report on
executive compensation required by the rules and regulations of the SEC. The
Compensation Committee met four (4) times during 2003. The members of the
Compensation Committee are Jack Wexler (Chairman), Myron M. Sheinfeld and Martin
J. Whitman each of whom is, as determined by the Board, an independent director
as defined under AMEX listing standards. Mr. Whitman intends to resign from the
Compensation Committee prior to the annual general meeting of shareholders.
6
GOVERNANCE AND NOMINATING COMMITTEE
The primary purpose of the Governance and Nominating Committee is to recommend
individuals to the Board of Directors for nomination, election or appointment as
members of the Board and its committees and to take a leadership role in shaping
our corporate governance, including developing, recommending to the Board and
reviewing on an ongoing basis our corporate governance principles and practices.
The Governance and Nominating Committee will consider nominees recommended by
shareholders. Shareholders who wish to submit nominees for director for
consideration by the Governance and Nominating Committee for election at our
2005 annual general meeting of shareholders may do so by submitting such
nominee's names, in compliance with the procedures and along with the other
information required by our Bye-Laws, to the Company's principal executive
offices no later than January 8, 2005. The Governance and Nominating Committee
met four (4) times during 2003. The members of the Governance and Nominating
Committee are James L. Payne (Chairman), Hans W. Schmidt, Myron M. Sheinfeld,
Jack Wexler and Martin J. Whitman, each of whom is, as determined by the Board,
an independent director as defined under AMEX listing standards.
TECHNICAL AND SAFETY COMMITTEE
The Technical and Safety Committee provides leadership in developing policies,
implementing programs and monitoring performance in the technical and safety
aspects of Nabors' operations. The Technical and Safety Committee met two (2)
times during 2003. The members of the Technical and Safety Committee are Hans W.
Schmidt (Chairman), James L. Payne and Anthony G. Petrello.
EXECUTIVE COMMITTEE
The Executive Committee has the authority to exercise all powers, rights and
authority of the Board as might be necessary from time to time between regularly
scheduled Board meetings, except with respect to certain actions as provided in
Nabors' Bye-Laws or applicable law. The members of the Executive Committee are
Eugene M. Isenberg (Chairman), Anthony G. Petrello and Jack Wexler. The
Executive Committee did not meet during 2003.
Mr. Richard F. Syron resigned from the Board of Directors effective December 31,
2003.
CODE OF ETHICS
The Company has a Code of Business Conduct, which is applicable to all
employees of the Company, including the Company's Chief Executive Officer, Chief
Financial Officer and Controller. The Code of Business Conduct is available on
our web site at www.nabors.com. The Company intends to satisfy any disclosure
requirements regarding amendments to, or waivers from, any provision of the Code
of Business Conduct by posting such information on our web site at
www.nabors.com.
DIRECTOR COMPENSATION
Nabors compensates its directors through a combination of an annual
retainer and stock options. During 2003 directors received an annual retainer of
$28,000 for service on the Board and an additional annual retainer of $3,000 for
serving as chairman of a Board committee. No additional amounts are paid for
attendance at Board or committee meetings. Non-employee directors who serve on
the Executive Committee receive an additional annual retainer of $125,000. In
the event of retirement, permanent and total disability or death of a
non-employee director who served on the Executive Committee, the $125,000 annual
retainer, together with the amount of the annual
7
retainer for serving as a Board member shall continue for an additional five
years following the end of the quarter in which retirement, permanent and total
disability, or death occurs. Beginning April 1, 2004, the annual retainer for
service on the Board was increased to $50,000 per annum and the additional
retainer for service as chairman of a Board committee was eliminated.
Nabors also issues stock options to its non-employee directors to align
their interests with Nabors' shareholders. Option awards are made pursuant to
option plans adopted from time to time for non-employee directors. Each
non-employee director was awarded on February 20, 2004, options to purchase at
least 30,000 shares and certain non-employee directors received additional
awards in recognition of their service as a committee member or committee
chairman. The awards were as follows: Mr. Payne, 40,000 options; Mr. Schmidt,
40,000 options; Mr. Sheinfeld, 45,000 options; Mr. Wexler, 45,000 options; and
Mr. Whitman, 45,000 options. All of the options were granted at a per share
price of $45.91, the closing price of the Company's shares on the date of grant.
The options generally vest in three equal annual installments beginning on the
first anniversary of the date of the grant and are exercisable for ten years
from the date of grant.
SHARE OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table sets forth, as of April 8, 2004, certain information
with respect to the beneficial ownership of Nabors' outstanding common shares by
(a) each current director, (b) each executive officer named in the Summary
Compensation Table appearing elsewhere herein (the "Named Executive Officers"),
(c) all directors and executive officers as a group, and (d) any other person or
entity known by Nabors to be the beneficial owner of more than 5% of Nabors'
common shares:
COMMON SHARES BENEFICIALLY OWNED
-------------------------------------------
BENEFICIAL OWNER (1) NUMBER OF SHARES PERCENT OF TOTAL(2)
-------------------- ---------------- -------------------
DIRECTORS
Eugene M. Isenberg (2) (3)....................................... 12,286,013 7.72%
James L. Payne (2)............................................... 58,216 *
Anthony G. Petrello (2).......................................... 5,579,593 3.62%
Hans W. Schmidt (2).............................................. 130,916 *
Myron M. Sheinfeld (2) (4)....................................... 139,468 *
Jack Wexler (2).................................................. 119,700 *
Martin J. Whitman (2) (5)........................................ 275,366 *
OTHER EXECUTIVE OFFICERS
Bruce P. Koch (2)................................................ 92,850 *
Daniel McLachlin (2)............................................. 6,091 *
All Directors/Executive Officers as a group (9 persons) (2)-(5) 18,688,213 11.31%
OTHER
FMR Corp. (6) 14,909,211 10.04%
---------------
* Less than 1%
8
(1) The address of each of the directors and officers listed is in care of
Nabors Industries Ltd., 2nd Floor International Trading Centre,
Warrens, P.O. Box 905E, St. Michael, Barbados.
(2) As of April 8, 2004, Nabors had 148,524,892 shares outstanding and
entitled to vote. For purposes of this table, "beneficial ownership" is
determined in accordance with Rule 13d-3 under the U.S. Securities
Exchange Act of 1934, pursuant to which a person or group of persons is
deemed to have "beneficial ownership" of any common shares that such
person has the right to acquire within 60 days. We have included in the
table common shares underlying fully vested stock options (without
giving effect to accelerated vesting that might occur in certain
circumstances). For purposes of computing the percentage of outstanding
common shares held by each person or group of persons named above, any
shares which such person or persons has the right to acquire within 60
days (as well as common shares underlying fully vested stock options)
are deemed to be outstanding, but are not deemed to be outstanding for
purposes of computing the percentage ownership of any other person.
The number of common shares underlying fully vested stock options
included in the table are as follows: Mr. Isenberg - 10,611,745; Mr.
Payne - 54,166; Mr. Petrello - 5,478,581; Mr. Schmidt - 128,166; Mr.
Sheinfeld - 122,333; Mr. Wexler - 116,500; Mr. Whitman - 117,500; Mr.
Koch - 92,850; Mr. McLachlin - 6,000, and all directors and Named
Executive Officers as a group - 17,727,741.
(3) 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 386 shares owned directly or held in
trust by Mr. Isenberg's spouse.
(4) The shares listed for Mr. Sheinfeld include 292 shares owned directly
by Mr. Sheinfeld's spouse. Mr. Sheinfeld disclaims beneficial ownership
of these shares.
(5) The shares listed for Mr. Whitman include 157,819 common shares 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 also include 47 shares owned directly by
Mr. Whitman's spouse.
(6) Based solely on the information contained in Schedule 13G of FMR Corp.
filed with the Securities and Exchange Commission on February 16, 2004,
the shares listed include (i) 12,813,372 shares beneficially owned by
Fidelity Management & Research Company, (ii) 1,045,419 shares
beneficially owned by Fidelity Management Trust Company, (iii)
1,050,420 shares beneficially owned by Fidelity International Limited.
FMR Corp. has sole voting power with respect to 1,984,239 shares and
sole dispositive power with respect to 14,909,211 shares. The address
of FMR Corp.'s principal business office is 82 Devonshire Street,
Boston, Massachusetts 02109.
9
OTHER EXECUTIVE OFFICERS
POSITION WITH NABORS
NAME AGE AND PRIOR BUSINESS EXPERIENCE
---- --- ------------------------------------------
Bruce P. Koch........... 44 Vice President and Chief Financial Officer
since February 2003, Vice
President-Finance from January 1996 to
February 2003, and Corporate Controller
of Nabors from March 1990 to 1995. He
was employed with the accounting firm of
Coopers & Lybrand from 1983 to 1990 in a
number of capacities, including Audit
Manager from 1987 until 1990.
Daniel McLachlin.... 66 Vice President-Administration and
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.
10
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 and whose compensation for the year
exceed $100,000 for each of the last three fiscal years.
ANNUAL COMPENSATION AWARDS
-------------------------------------------------------------------------------------------------------------------------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL COMPENSATION AWARD(S) OPTIONS/ COMPENSATION
POSITION PERIOD SALARY($) BONUS($) ($) ($) SARS (1) ($)
-------------------------------------------------------------------------------------------------------------------------
Eugene M. Isenberg 2003 325,000(2) 1,400,000(3) 231,569(4) 0 950,000 248,419(5)
Chairman of the
Board, Director and 2002 325,000 1,400,000 273,270 0 1,900,000 134,012
Chief Executive Officer
2001 325,000 2,000,000 134,748 0 0 119,542
-------------------------------------------------------------------------------------------------------------------------
Anthony G. Petrello 2003 275,000(6) 700,000(7) 85,566(8) 0 475,000 80,684(9)
Director, Deputy
Chairman, President and 2002 275,000 700,000 112,267 0 950,000 88,031
Chief Operating Officer
2001 275,000 1,000,000 127,956 0 0 137,424
-------------------------------------------------------------------------------------------------------------------------
Bruce P. Koch 2003 185,000 45,000 - 0 20,000 7,400(10)
Vice President and
Chief Financial Officer 2002 185,000 40,000 - 0 25,000 8,325(10)
2001 185,000 40,000 - 0 0 7,650
-------------------------------------------------------------------------------------------------------------------------
Daniel McLachlin 2003 99,333 10,000 46,089(11) 0 8,500 3,284(12)
Vice
President-Administration 2002 92,000 10,000 18,636 0 5,000 4,140
and Secretary
2001 92,000 14,000 - 0 0 4,140
=========================================================================================================================
(1) The awards reflected on the table above for 2003 were awards made in
early 2003 relating to performance for 2002. The awards reflected on
the table above for 2002 were awards made in early 2002 relating to
performance for 2001. Each of the Named Executive Officers received the
number of options indicated below, effective February 20, 2004 for
performance during 2003. The exercise price of the options awarded is
$45.91, the closing price per common share on the American Stock
Exchange on the grant date. The options vest in three equal annual
installments beginning on the first anniversary of the date of the
grant for Mr. Isenberg and Mr. Petrello and four equal annual
installments beginning on the first anniversary date of the grant for
Mr. Koch and Mr. McLachlin: Mr. Isenberg - 950,000, Mr. Petrello -
475,000, Mr. Koch - 30,000 and Mr. McLachlin - 4,500.
11
(2) Includes $28,000 paid as director's fees.
(3) Mr. Isenberg is entitled to receive an annual bonus as provided in his
employment agreement. For each of fiscal years 2003, 2002 and 2001, Mr.
Isenberg agreed to accept a bonus that was less than the bonus he was
entitled to receive under his employment agreement.
(4) Includes various club dues; auto allowance; imputed life insurance; tax
preparation fees ($73,618); and gross-up amount for auto allowance and
tax preparation fees ($65,208).
(5) Includes (a) Nabors' matching contributions to a retirement savings
plan and a non-qualified deferred compensation plan of $8,000; and (b)
$240,419 that is the net benefit to Mr. Isenberg of the premiums paid
by Nabors, as projected on an actuarial basis, for a split dollar life
insurance arrangement (Nabors has suspended additional premium payments
under these policies as a result of the adoption of the Sarbanes -
Oxley Act of 2002).
(6) Includes $28,000 paid as director's fees.
(7) Mr. Petrello is entitled to receive an annual bonus as provided in his
employment agreement. For each of fiscal years 2003 and 2001, Mr.
Petrello agreed to accept a bonus that was less than the bonus he was
entitled to receive under his employment agreement.
(8) Includes club dues; auto allowance; imputed life insurance; and
gross-up amounts for auto allowance and imputed interest ($85,566).
(9) Includes (a) Nabors' matching contributions to a retirement savings
plan and a non-qualified deferred compensation plan of $8,000; (b)
$28,895 that is the net benefit to Mr. Petrello of the premiums paid by
Nabors, as projected on an actuarial basis, for a split dollar life
insurance arrangement (Nabors has suspended additional premium payments
under these policies as a result of the adoption of the Sarbanes -
Oxley Act of 2002); and (c) imputed interest of $43,789 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, 2004, and on which no interest has
been paid or charged thereon.
(10) Includes Nabors' matching contributions to a retirement savings plan
and a non-qualified deferred compensation plan of $7,400.
(11) Includes club dues; auto allowance; imputed life insurance; gross-up
amount for FICA, foreign service premium ($9,167); goods & services
differential ($23,265); and a hardship allowance ($4,583).
(12) Includes Nabors' matching contributions to a retirement savings plan
and a non-qualified deferred compensation plan of $3,284.
12
STOCK OPTION/SAR GRANT TABLE
The following table provides information with respect to stock options
granted during the fiscal year ended December 31, 2003 to the Named Executive
Officers. Nabors did not grant any stock appreciation rights to the Named
Executive Officers during the fiscal year ended December 31, 2003.
INDIVIDUAL GRANTS
NUMBER OF % OF TOTAL EXERCISE OR
SECURITIES OPTIONS BASE
UNDERLYING GRANTED TO PRICE GRANT DATE
OPTIONS EMPLOYEES IN ($/SH) EXPIRATION PRESENT
NAME GRANTED FISCAL YEAR DATE VALUE ($)(1)
------------------------------------------------------------------------------------------------------
Eugene M. Isenberg 950,000 (2) 34.87% 38.75 2/20/2013 13,599,345
------------------------------------------------------------------------------------------------------
Anthony G. Petrello 475,000 (2) 17.44% 38.75 2/20/2013 6,799,673
------------------------------------------------------------------------------------------------------
Bruce P. Koch 20,000 (3) .73% 38.75 2/20/2013 286,302
------------------------------------------------------------------------------------------------------
Daniel McLachlin 8,500 (4) .32% 39.23(5) 2/28/2013 122,904
======================================================================================================
(1) All options are granted at an exercise price equal to the closing price
of Nabors' common shares 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 were made for purposes of
calculating the February 20, 2003 grant date present value: (a) the
expected term is assumed to be three and a half years, (b) volatility
of 47.58%, (c) dividend of $0 per share and (d) risk-free rate of
return of 2.23%. The following assumptions were made for purposes of
calculating the February 28, 2003 grant date present value: (a) the
expected term is assumed to be three and a half years, (b) volatility
of 47.58%, (c) dividend of $0 per share and (d) risk-free rate of
return of 2.09%. 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' shares
during the applicable period.
(2) These options were granted on February 20, 2003 and vest in three equal
annual installments beginning on February 20, 2004.
(3) These options were granted on February 20, 2003 and vest in four annual
installments beginning on the date of grant.
(4) These options were granted on February 20, 2003 (4,000 options) and
February 28, 2003 (4,000 options) and vest in four annual installments
beginning on the date of the grant.
(5) The exercise price for the two awards to Mr. McLachlin were $38.75
(4,000 options awarded on February 20, 2003) and $39.65 (4,500 options
awarded on February 28, 2003), respectively.
13
OPTION/EXERCISES DURING 2003 AND YEAR-END OPTION VALUES
The following table provides information with respect to stock options
exercised during 2003 and the value as of December 31, 2003 of unexercised
in-the-money options held by the Named Executive Officers. 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 $41.50 per share at December 31, 2003.
VALUE OF UNEXERCISED
SHARES NUMBER OF SECURITIES UNDERLYING IN-THE-MONEY
ACQUIRED VALUE UNEXERCISED OPTIONS OPTIONS AT
ON REALIZED AT FISCAL YEAR-END FISCAL YEAR-END ($)
NAME EXERCISE ($) EXERCISABLE / UNEXERCISABLE EXERCISABLE / UNEXERCISABLE
------------------------------------------------------------------------------------------------------------------------------
Eugene M. Isenberg 0 0 10,295,079 / 950,000 150,014,710 / 2,612,500
------------------------------------------------------------------------------------------------------------------------------
Anthony G. Petrello 0 0 5,320,248 / 475,000 81,063,767 / 1,306,250
------------------------------------------------------------------------------------------------------------------------------
Bruce P. Koch 0 0 81,600 / 42,500 1,662,163 / 325,937
------------------------------------------------------------------------------------------------------------------------------
Daniel McLachlin 4,650 90,570 3,750 / 13,000 25,125 / 73,513
------------------------------------------------------------------------------------------------------------------------------
EMPLOYMENT CONTRACTS
Mr. Isenberg and Mr. Petrello's employment contracts were amended and
restated effective October 1, 1996 and both contracts currently are set to
expire on September 30, 2008. 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 the
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 6% of Nabors' net cash flow (as defined in the employment
contract) in excess of 15% of the average stockholders' equity for such fiscal
year. Mr. Petrello's salary is subject to annual review for increase at the
discretion of the Board and the 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.
Effective June 24, 2002, Mr. Isenberg's and Mr. Petrello's employment contracts
were amended to reflect a reduction in salary equivalent to the amount of
director's fees to be paid by Nabors as of that date. Pursuant to an Executive
Cost Allocation Agreement, a percentage of Mr. Isenberg's and Mr. Petrello's
salary, bonus, stock options or other compensation payable pursuant to their
employment agreements is paid by Nabors Corporate Services, Inc. for services
performed for that company.
In addition to salary and bonus, each of Mr. Isenberg and Mr. Petrello
receive group life insurance at an amount at least equal to three times their
respective 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 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. Premiums payable under the
split
14
dollar life insurance policies have been suspended as a result of the adoption
of the Sarbanes - Oxley Act of 2002.
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 respective agreements) or is
terminated as a result of or following a Change in Control (as defined in the
respective 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 or three times his then current base salary, whichever is greater;
(b) all annual cash bonuses 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 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 respective agreements) over the exercise price of the options per
common share multiplied by (y) the number of options selected by the individual.
In addition, the terminated individual would be entitled to 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 in
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 bonuses 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
employment agreement.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This section discusses certain direct and indirect relationships and
transactions involving Nabors and any director or Named Executive Officer.
Mr. Petrello has 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 December 31, 2003. The
repayment of the loan was automatically extended an additional year on each
anniversary of his
15
employment agreement. In September 2002 Mr. Petrello signed a waiver
discontinuing the automatic extensions of the loan repayment. The loan is
scheduled to be paid on or before September 30, 2006 and shall not be further
extended.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee for fiscal 2003 was comprised of three
independent directors: Mr. Wexler (Chairman), Mr. Sheinfeld and Mr. Syron (Mr.
Syron resigned from the Board effective December 31, 2003). None of these
directors has ever served as an officer or employee of Nabors or any of its
subsidiaries, nor has any participated in any transaction during the last fiscal
year required to be disclosed pursuant to the federal proxy rules. No executive
officer of Nabors serves on any board of directors of any entity of which
Messrs. Wexler, Sheinfeld or Syron is an employee.
The adult son of one of our directors, Jack Wexler, is an employee of
Nabors Corporate Services, Inc., a subsidiary of Nabors, and has been employed
by Nabors since February 1, 1992. The employee is paid an annual salary of
$108,000 and is eligible to receive cash bonuses and stock options.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
COMPENSATION AND ROLE OF THE COMPENSATION COMMITTEE
The Compensation Committee is responsible for overseeing the administration
of our compensation programs and setting the compensation of our key executives.
The Compensation Committee's charter is available on our website at
www.nabors.com. We discuss below our policies for compensating our executives
and aligning the interests of management with the long-term interests of
shareholders.
COMPENSATION POLICIES
The Compensation Committee's goal is to incentivize and reward superior
executive performance that will create long-term investor value and to attract
and retain executives who deliver that level of performance. The Compensation
Committee is mindful that the oil field services industry, particularly the
contract drilling segment, has been volatile, undergoing severe contractions in
activity forcing many companies to withdraw or be eliminated from the market
place followed by periods of rapid expansion when market conditions improve. The
ability of companies to compete in this market place depends in part on the
ability 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
Compensation 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. The Compensation Committee reviews and approves all of the policies
under which compensation is paid to our senior executive officers. The
Compensation Committee will regularly oversee and evaluate the effectiveness of
the executive compensation programs in hiring, motivating and retaining key
employees.
Nabors' executive compensation program includes base salary and incentive
bonuses as follows:
Base Salary: The Compensation 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
16
generally, and also the compensation levels needed to attract and retain highly
talented executives from outside the industry. For fiscal 2003 the Compensation
Committee noted that the salaries of the Chief Executive Officer and the other
Named Executive Officers were, in most 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, Equipment and Services Index. The salaries of the Chief
Executive Officer and the President have remained the same since 1987 and 1991,
respectively.
Incentive Bonus Program: The Compensation Committee administers annual
review programs to determine rewards to 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 infrastructure 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 nonfinancial criteria include: obtainment of safety goals,
maintaining Nabors' share in its principal geographic markets, enhancing Nabors'
technical capabilities and developing operations in identified strategic
markets. Based on these reviews, the Compensation Committee recommends annual
incentive rewards. 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 Compensation Committee reserves
the right to modify the vesting schedule in its discretion. Annual incentive
bonus awards are not guaranteed except for those provided under contractual
arrangements. The Compensation Committee believes that stock option grants and
share awards are critical in motivating and rewarding the creation of long-term
shareholder value, and the Compensation Committee has established a policy of
awarding stock options from time to time based on the continuing progress of
Nabors and on individual performance.
For 2003 the bonus and stock options granted to the Chief Executive Officer
and the next two most highly compensated executive officers were higher than
those 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, Equipment and Services Index. Mr. Isenberg's and Mr.
Petrello's cash bonuses are determined under a contractual formula based upon
financial results (see "MANAGEMENT COMPENSATION - Employment Contracts").
However, for 2003, Mr. Isenberg voluntarily recommended and the Compensation
Committee concurred to reduce the amount of cash bonus which he was entitled to
receive under his contractual arrangements and awarded Mr. Isenberg $1,400,000.
Similarly, Mr. Petrello agreed to reduce the amount of cash bonus which he was
entitled to receive under his contractual arrangements and the Compensation
committee awarded Mr. Petrello $700,000. On February 20, 2004, the Committee
granted to Mr. Isenberg and Mr. Petrello 950,000 and 475,000 stock options,
respectively, with a per share exercise price of $45.91, the closing price of an
underlying share on the date of grant.
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, nor is 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
and Mr. Petrello 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/Exercises During 2003 and Year-End Options
Values" and "-
17
Employment Contracts"). While Nabors 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
Nabors' 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 was negotiated with the creditors committee in 1987 in connection with the
bankruptcy proceedings of Nabors' predecessor corporation. These arrangements
were subsequently approved by the various constituencies in such bankruptcy
proceedings, including equity and debt holders, and confirmed by the United
States Bankruptcy Court. Mr. Isenberg's base salary has remained constant from
1987 through the end of 2003 and Mr. Petrello's base salary has remained
constant since his employment began in 1991 through the end of 2003. The major
portion of Mr. Isenberg's and Mr. Petrello's cash compensation is the
performance-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 2003 (Isenberg-6%, Petrello-2%) of cash flow in excess of
a 15% return on shareholders' average book equity. Mr. Petrello is entitled to a
minimum annual cash bonus of $700,000. The Compensation Committee believes that
tying the cash bonus to Nabors' cash flow in excess of a return on shareholders'
average equity aligns Mr. Isenberg's and Mr. Petrello's bonuses to the objective
of 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 Compensation 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 their respective bonus
formulae. However, as indicated above, for 2003 the Compensation Committee, upon
the recommendation of Messrs. Isenberg and Petrello reduced the cash bonus award
to which Mr. Isenberg and Mr. Petrello were entitled under the formula
arrangement.
In reviewing Mr. Isenberg's and Mr. Petrello's compensation, the
Compensation Committee noted that Nabors' financial results in 2003 were the
second best in the Company's history at $1.25 per diluted share even though the
Company was just recovering from a severe industry downturn that persisted
throughout 2002 and much of 2003, particularly in our largest business unit,
U.S. Lower 48 Land Drilling. Despite the intense competitive and volatile
conditions prevailing in the industry this year, there were a number of
noteworthy achievements in virtually every operating and business
category/activity that further enhanced the Company's potential as the market
recovers. Financial strength was maintained, and the Company is recognized as a
dynamic, excellently managed organization, well positioned to maintain its
leadership and growth. The senior executive management team in place for many
years has demonstrated its versatility and leadership in forging a stable and
effective organization. The Compensation Committee also noted The Wall Street
Journal's special supplement published on March 10, 2003 ranking the 1,000
largest US companies in 76 industry groups in order of annualized return to
shareholders. The energy industry listing consisted of 46 companies in three
sectors: Major Oil Companies, Secondary Oil Companies and Oil Equipment and
Service Companies. Nabors again was ranked among the top companies in achieving
superior long-term returns to its shareholders with a ten-year compounded return
of 18.6%.
The Compensation Committee believes that the consistent high ranking of
Nabors in such studies throughout the industry's cyclical ups and downs
validates its assertion that the current management team has delivered
consistent superior returns to its shareholders over the long-term. In fact,
Nabors ten-year average return is double that of the S&P 500 (the ten-year
average return for companies in the S&P 500 Index is 9.3% for the ten-year
period ending December 31, 2002) and is well in excess of a significant majority
of its peers in both the energy industry and general US business. The
Compensation Committee believes that these objective,
18
third-party studies validate its assertion that the current management team has
delivered consistent superior returns to its shareholders over the long-term.
The Compensation Committee also believes that retention and financial motivation
of the current management team is vital to sustaining this level of performance.
FINANCIAL HIGHLIGHTS - NABORS INDUSTRIES LTD. AND SUBSIDIARIES
(In millions, except per share amounts)
2003 VERSUS 2002 2003 VERSUS 1998
---------------- ----------------
FISCAL YEAR (1) INCREASE/(DECREASE) INCREASE/(DECREASE)
-------------------------------------------------------------------------------------
FINANCIAL DATA 2003 2002 1998 $ % $ %
-------------------------------------------------------------------------------------
Revenues and earnings from
unconsolidated affiliates....... $ 1,890 $ 1,481 $ 1,008 409 28 882 88
Net income...................... 192.2 121.5 125 70.7 58 67.2 54
Net income per diluted share.... 1.25 .81 1.16 .44 54 .09 8
Stockholders' equity............ 2,490.3 2,158.5 867.5 331.8 15 1,622.8 187
Year end market value of
shares outstanding.......... $6,086.2 $5,047.6 $1,360.7 1,038.6 21 4,725.5 347
(1) The fiscal years ended 2003, 2002 and 1998 are for the period January 1
through December 31.
THE COMPENSATION COMMITTEE
Jack Wexler, Chairman
Myron M. Sheinfeld
Martin J. Whitman (from
February 20, 2004)
19
REPORT OF THE AUDIT COMMITTEE
The Audit Committee is comprised of three independent directors and
operates pursuant to a written Charter that is available on our website at
www.nabors.com. In 2003 the Committee met four (4) times. The primary purposes
of the Audit Committee are to assist the Board in monitoring (a) the quality and
integrity of the financial statements of Nabors; (b) the independent auditors'
qualifications and independence; (c) the performance of Nabors' independent
auditors; and (d) compliance by Nabors with legal and regulatory requirements.
The Board has determined that the Audit Committee's current composition
satisfies the rules of the AMEX that govern audit committee composition,
including the requirement that each member of the Audit Committee be
"independent" as that term is defined under the listing standards of the AMEX
and specified in Rule 10A-3 under the Securities Exchange Act of 1934. In
addition, the Board has determined that Mr. Whitman is an "audit committee
financial expert" as defined under the current rules of the SEC.
Management is responsible for the preparation, presentation and integrity
of Nabors' financial statements, accounting and financial reporting principles
and internal controls and procedures designed to assure compliance with
accounting standards and applicable laws and regulations. The independent
auditors are responsible for performing an independent audit of the financial
statements in accordance with generally accepted auditing standards. The
independent auditors have free access to the Audit Committee to discuss any
matters they deem appropriate.
In performing its oversight role, the Audit Committee has reviewed and
discussed the audited financial statements with management and the independent
auditors. The Audit Committee has also discussed with the independent auditors
the matters required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees, as updated by Statement on Auditing
Standards No. 89, Audit Adjustments, and Statement on Auditing Standards No. 90,
Audit Committee Communications. The Committee has received the written
disclosures and the letter from the independent auditors required by
Independence Standards Board Standard No. 1, Independence Discussions with Audit
Committees, as currently in effect and has discussed with the independent
auditors their independence. The Audit Committee has also considered whether the
provision of certain non-audit services by the independent auditors is
compatible with maintaining the auditors' independence and has enhanced its
pre-approval policies and procedures for services provided by our independent
auditors. The Committee also reviews reports received from the internal auditors
and corrective actions taken by management where warranted.
During fiscal 2003 the Audit Committee performed all of its duties and
responsibilities under the then-applicable Audit Committee Charter. In addition,
based on the review and discussions described in this Report of the Audit
Committee, the Audit Committee recommended to the Board of Directors that the
audited financial statements of Nabors for fiscal 2003 be included in its Annual
Report on Form 10-K for such fiscal year.
THE AUDIT COMMITTEE
Myron M. Sheinfeld, Chairman
Jack Wexler
Martin J. Whitman
PREAPPROVAL OF INDEPENDENT AUDITOR SERVICES. The Audit Committee preapproves all
audit and permitted non-audit services (including the fees and terms thereof) to
be performed for the Company by PricewaterhouseCoopers LLP
("PricewaterhouseCoopers"), the Company's independent auditors. The Chairman of
the Audit Committee may preapprove additional permissible proposed non-audit
services that arise between Committee
20
meetings, provided that the decision to pre-approve the service is presented for
ratification at the next regularly scheduled Committee meeting.
INDEPENDENT AUDITOR FEES
The following table summarizes the aggregate fees for professional services
rendered by PricewaterhouseCoopers. The Audit Committee pre-approved fiscal 2003
services and approved fiscal 2002 services.
2003 2002
---- ----
Audit Fees $ 2,012,778 $ 2,055,854
Audit Related Fees 297,058 273,481
Tax Fees 1,349,954 632,199
All Other Fees - -
----------- ------------
Total $ 3,659,790 $ 2,961,534
=========== ============
The Audit fees for the years ended December 31, 2003 and 2002, respectively,
include professional services rendered for the audits of the consolidated
financial statements of the Company, statutory and subsidiary audits, issuance
of comfort letters, consents, and accounting consultation attendant to the
audit.
The Audit Related fees as of the years ended December 31, 2003 and 2002 include
audits of employee benefit plans, agreed upon procedures engagements and
consultations concerning financial accounting and reporting standards.
Additionally, audit related fees for the year 2003 include work performed in
anticipation of the requirements of Section 404 of the Sarbanes-Oxley Act of
2002, limited to data entry of the Company's policies and procedures into the
project management database for Section 404 compliance, and audit related fees
for the year 2002 include due diligence related to mergers and acquisitions.
Tax fees as of the years ended December 31, 2003 and 2002, respectively, include
services related to tax compliance, including the preparation of tax returns and
claims for refund; and tax planning and tax advice. Additionally, tax fees for
the year 2002 include tax advice related to mergers and acquisitions.
There were no other professional services rendered during 2003 or 2002.
-------------------
* The aggregate fees included in Audit Fees are fees billed for the fiscal years
for the audit of the registrant's annual financial statements and review of
financial statements and statutory and regulatory filings or engagements. The
aggregate fees included in each of the other categories are fees billed in the
fiscal years.
ITEM 2
APPOINTMENT OF INDEPENDENT AUDITORS AND AUTHORIZATION OF THE AUDIT COMMITTEE TO
SET THE AUDITORS REMUNERATION
Under Bermuda law, our shareholders have the responsibility to appoint the
independent auditors of the Company to hold office until the close of the next
annual general meeting and to authorize the Audit Committee of the Board of
Directors to set the auditors' remuneration. At the annual general meeting, the
shareholders will be asked to approve the appointment of PricewaterhouseCoopers
LLP as our independent auditors and to authorize the Audit Committee of the
Board of Directors to set the independent auditors' remuneration.
PricewaterhouseCoopers LLP, or a predecessor, has been our independent auditors
since May 1987.
21
A representative from PricewaterhouseCoopers LLP is expected to be present
at the annual general meeting, will have the opportunity to make a statement if
he or she desires to do so, and will be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT AUDITORS OF THE COMPANY AND TO
AUTHORIZE THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS TO SET THE AUDITORS'
REMUNERATION.
ITEM 3
SHAREHOLDER PROPOSAL TO CHANGE NABORS' JURISDICTION OF INCORPORATION FROM
BERMUDA TO DELAWARE
The Central Laborers' Pension Fund, P.O. Box 1267, Jacksonville, IL 62651,
owner of 953 common shares of the Company, and another filer have notified the
Company that they intend to present the following proposal and related
supporting statement at the Annual General Meeting of Shareholders:
RESOLVED, that the shareholders of Nabors Industries, Ltd. (the Company)
urge Nabors Industries, Ltd.'s Board of Directors to take the measures necessary
to change the Company's jurisdiction of incorporation from Bermuda to Delaware.
SUPPORTING STATEMENT
Nabors Industries, Ltd. and its shareholders would benefit if the company
changed its jurisdiction of incorporation from Bermuda to Delaware. First,
Delaware's corporate laws are updated to meet changing business needs and are
more responsive than Bermuda law to the needs of shareholders. Delaware is the
state of incorporation for 60% of Fortune 500 companies, according to the
Delaware Division of Corporations. We believe that so many companies choose to
incorporate in Delaware because it has an advanced and flexible corporate law,
expert specialized courts dealing with corporate-law issues, a responsive state
legislature and a highly-developed body of case law that allows corporations and
shareholders to understand the consequences of their actions and plan
accordingly. We believe the stability, transparency and predictability of
Delaware's corporate-law framework are superior to Bermuda's and provide
advantages to shareholders.
Second, incorporation in Bermuda makes it more difficult for shareholders
to hold companies, their officers and directors legally accountable in the event
of wrongdoing. Recent events, we think, demonstrate how crucial it is that, in
the event of legal violations by officers or directors, shareholders have the
ability to pursue legal remedies. Unlike both U.S. federal and Delaware law,
class actions are generally not available under Bermuda law. Under Bermuda law,
shareholders have extremely limited ability to sue officers and directors
derivatively, on behalf of the corporation. By contrast, under Delaware law,
shareholders may sue derivatively for, among other things, breach of fiduciary
duty, corporate waste and actions taken in violation of applicable law.
Third, Delaware law affords shareholders rights not provided under Bermuda
law. Unlike Delaware law, Bermuda law does not require shareholder approval for
a corporation to dispose of all or substantially all of its assets. Bermuda law
does not permit action by written consent of fewer than all shareholders, while
Delaware law does.
22
Fourth, incorporation in Bermuda may affect the enforceability of judgments
obtained in a U.S. court. A judgment for money damages based on civil liability
rendered by a U.S. court is not automatically enforceable in Bermuda because the
U.S. and Bermuda do not have a treaty providing for reciprocal enforcement of
judgments in civil matters. A Bermuda court may not recognize a judgment of a
U.S. court if it is deemed contrary to Bermuda public policy, and Bermuda public
policy may differ significantly from U.S. public policy.
DIRECTORS' RECOMMENDATION
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THE SHAREHOLDER
PROPOSAL.
The Board of Directors has carefully considered the shareholder proposal
and believes that the shareholder proposal is not in the best interests of the
Company or its shareholders and therefore unanimously recommends a vote
"AGAINST" the proposal.
At our June 14, 2002 Special Meeting of Shareholders, 83% of the votes cast
were cast in favor of the Agreement and Plan of Merger which effectively changed
the place of incorporation of the Company from Delaware to Bermuda.
Institutional Shareholder Services, Inc., the country's leading independent
proxy advisor, considered Nabors' reasons for its reorganization as a Bermuda
company and recommended that shareholders vote in favor of the reorganization at
the Special Meeting of the Shareholders. We believe that this vote was a clear
recognition by our shareholders that our reorganization as a Bermuda company
offered Nabors strategic advantages that we did not have under our prior
corporate structure.
Expansion of our international business is an important part of our
business strategy. The percentage of our Operating revenues and Earnings from
unconsolidated affiliates that is derived from non-U.S. sources grew from 21% in
2000 to 39% in 2003. The Board of Directors believes that our reorganization in
Bermuda has facilitated and will continue to facilitate the expansion of the
Company's non-U.S. business activities in an increasingly globalized economy. As
a result of our reorganization, we have realized incremental cash flow, we have
reduced our worldwide effective tax rate, and we believe that our company has
become a more attractive investment opportunity for a wider range of investors.
In addition, we have added approximately 2,200 new employees in the United
States since the date of our reorganization.
Prior to our reorganization in 2002, we believe that many of our
competitors held a competitive advantage over Nabors because (unlike Nabors)
they were not subject to extraterritorial taxation by the United States on
income earned outside the United States. Our reorganization as a Bermuda company
put us on a level playing field with our non-U.S. domiciled competitors. We
support those in Congress who would revise the United States tax code to
eliminate the extraterritorial taxation of profits earned by companies organized
in the United States. We believe that the current U.S. tax code penalizes U.S.
companies with foreign operations, makes them less competitive than their
foreign counterparts, provides disadvantages for raising capital investment
(which is critical for long-term success in our industry), exacerbates the U.S.
trade deficit, and leads to a weakened U.S. currency.
The proponents cite perceived differences in Delaware and Bermuda law as
support for their proposal. First, the proponents aver that Delaware has an
"advanced and flexible corporate law" and a highly developed body of case law
that provides certainty for planning purposes. We believe that Bermuda law,
which is based upon the laws of England, is also well developed and flexible.
Since our reorganization, we have not encountered any difficulties under Bermuda
law that have impeded the achievement of our corporate objectives.
23
The proponents next state their opinion that Delaware law is a more
favorable jurisdiction to bring lawsuits against directors and officers, that
Bermuda law would permit us to sell all or substantially all of the company's
assets without shareholder approval, and that judgments rendered in a U.S. court
may be more difficult to enforce in Bermuda, if a Bermuda courts determines the
judgment to be against public policy.
The Board of Directors is committed to sound and effective corporate
governance and is confident that the Company's incorporation in Bermuda is
consistent in every respect with this vital commitment. Bermuda law is based
upon the well-developed and sophisticated corporate law of England and any
assertion that shareholders are unable to hold the Company and its directors
legally accountable in the event of wrongdoing is simply not correct. For
example, appropriate U.S. prosecutorial authorities indicted corporate officers
of Tyco International Ltd., which is a corporation organized under the laws of
Bermuda, in a court in the United States. In addition, and notwithstanding the
Company's incorporation in Bermuda, the Company remains fully subject to the
securities laws of the United States and the requirements of the American Stock
Exchange. As was announced at the time of the reorganization, the Company has
irrevocably agreed to be served with process in the United States with respect
to actions relating to the U.S. securities laws.
We note that the key differences between Bermuda law and Delaware law were
explained in detail in the Company's proxy statement distributed in advance of
the Special Meeting of Stockholders held on June 14, 2002. That our shareholders
overwhelmingly approved the reorganization we believe is an indication that our
shareholders perceive the benefits of the reorganization outweigh any suggested
detriments.
Finally, it is our opinion that the proponent may be advancing this
proposal in furtherance of a personal grievance, rather than on behalf of
shareholders generally. We believe that the Central Laborers Pension Fund may be
using the shareholder proposal process to pressure the Company in connection
with the Alaska State District Council of Laborers (part of the Laborers'
International Union of North America AFL-CIO) unsuccessful efforts to obtain a
collective bargaining agreement with a subsidiary of the Company.
The Board of Directors continues to monitor the Company's business results,
as well as legislative and regulatory developments, in light of the Company's
reorganization in Bermuda and continues to believe that the Company realizes
substantial business, financial and strategic benefits from its Bermuda
incorporation that would be forfeited if the Company were to reorganize as a
company incorporated in Delaware.
Accordingly, the Board of Directors believes that it is not in the best
interests of the Company or its shareholders to approve this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THE SHAREHOLDER
PROPOSAL.
24
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 shares 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 our knowledge, based solely on review of the copies of Forms 3 and 4 and
amendments thereto furnished to us during 2003 and Form 5 and amendments thereto
furnished to us with respect to the year 2003, and written representations that
no other reports were required, all Section 16(a) filings required to be made by
Nabors' officers, directors and greater than 10% beneficial owners with respect
to the fiscal year 2003 were timely filed, except that Mr. Martin Whitman filed
one Form 4 late with respect to a single option exercise that occurred in
September 2003.
SHAREHOLDER MATTERS
Bermuda has exchange controls which apply to residents in respect of the
Bermudian dollar. As an exempt company, Nabors is considered to be nonresident
for such controls; consequently, there are no Bermuda governmental restrictions
on the Company's ability to make transfers and carry out transactions in all
other currencies, including currency of the United States.
There is no reciprocal tax treaty between Bermuda and the United States
regarding withholding taxes. Under existing Bermuda law, there is no Bermuda
income or withholding tax on dividends, if any, paid by Nabors to its
shareholders. Furthermore, no Bermuda tax or other levy is payable on the sale
or other transfer (including by gift or on the death of the shareholder) of
Nabors common shares (other than by shareholders resident in Bermuda).
25
STOCK PERFORMANCE GRAPH
The following graph illustrates comparisons of five-year cumulative total
returns among Nabors Industries Ltd., the S&P 500 Index and the Dow Jones Oil
Drilling, Equipment and Services Index. Total return assumes $100 invested on
December 31, 1998 in shares of Nabors Industries Ltd., the S&P 500 Index, and
the Dow Jones Oil Drilling, Equipment and Services Index. It also assumes
reinvestment of dividends and is calculated at the end of each calendar year,
December 31, 1999 to December 31, 2003.
[PERFORMANCE GRAPH]
1999 2000 2001 2002 2003
---------------------------------------------------------------------------------------------------
NABORS INDUSTRIES LTD. 229 438 254 261 307
---------------------------------------------------------------------------------------------------
S&P 500 Index 121 110 97 76 97
---------------------------------------------------------------------------------------------------
Dow Jones Oil Drilling, Equipment and
Services Index 152 226 156 143 164
---------------------------------------------------------------------------------------------------
26
SHAREHOLDER PROPOSALS
Shareholders who, in accordance with the SEC's Rule 14a-8, wish to present
proposals for inclusion in the proxy materials to be distributed by us in
connection with our 2005 Annual General Meeting of Shareholders must submit
their proposals and their proposals must be received at our principal executive
offices no later than January 8, 2005. As the rules of the SEC make clear,
simply submitting a proposal does not guarantee its inclusion.
In accordance with our Bye-Laws, in order to be properly brought before the
2005 annual general meeting, a shareholder notice of the matter the shareholder
wishes to present must be delivered to the Secretary of Nabors at Nabors
Industries Ltd., 2nd Floor, International Trading Centre, Warrens, St. Michael,
Barbados, not less than sixty (60) nor more than ninety (90) days prior to the
first anniversary of this year's annual general meeting (provided, however, that
if the 2005 annual general meeting is called for a date that is not within
thirty (30) days before or after such anniversary date, notice must be received
not later than the close of business on the tenth (10th) day following the day
on which notice of the date of the annual general meeting is mailed or public
disclosure of the date of the annual general meeting is made, which ever first
occurs). As a result, any notice given by or on behalf of a shareholder pursuant
to these provisions of our Bye-Laws (and not pursuant to the SEC's Rule 14a-8)
generally must be received no earlier than March 3, 2005 and no later than April
2, 2005.
OTHER MATTERS
The Board knows of no other business to come before the annual general
meeting. However, if any other matters are properly brought before the annual
general meeting, the persons named in the accompanying form of proxy, or their
substitutes, will vote in their discretion on such matters.
COSTS OF SOLICITATION. We will pay the expenses of the preparation of the proxy
materials and the solicitation by the Board of your proxy. We have retained
Georgeson Shareholder Communications Inc., 17 State Street, New York, New York
10004 to solicit proxies on behalf of the Board of Directors at an estimated
cost of $12,000 plus reasonable out-of-pocket expenses. Proxies may be solicited
on behalf of the Board of Directors by mail, in person and by telephone. Proxy
materials will also be provided for distribution through brokers, custodians,
and other nominees and fiduciaries. We will reimburse such parties for their
reasonable out-of-pocket expenses for forwarding the proxy materials.
FINANCIAL STATEMENTS. The financial statements for the Company's 2003 fiscal
year will be presented at the annual meeting.
SHAREHOLDER COMMUNICATIONS WITH DIRECTORS. Shareholders may contact any of the
Company's directors, a committee of the Board of Directors, the Board's
independent directors as a group or the Board generally, by writing to them at
Nabors Industries Ltd., 2nd Floor, International Trading Centre, Warrens, St.
Michael, Barbados. Shareholder communications received in this manner will be
handled in accordance with procedures approved by the Board's independent
directors. The Board's Policy Regarding Shareholder Communications with the
Board of Directors is available at www.nabors.com. In addition, the Company
encourages directors to attend the annual general meeting of shareholders. Four
directors attended the 2003 annual general meeting of shareholders.
27
SHAREHOLDER RECOMMENDATIONS FOR DIRECTOR CANDIDATES. The Governance and
Nominating Committee will consider director candidates recommended by
shareholders. The committee's Policy Regarding Director Candidates Recommended
by Shareholders is available at www.nabors.com.
NABORS INDUSTRIES LTD.
/s/ DANIEL MCLACHLIN
--------------------
DANIEL MCLACHLIN
Dated: April 29, 2004 Secretary
28
PROXY
NABORS INDUSTRIES LTD.
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 common
shares of Nabors Industries Ltd. held of record by the undersigned at the close
of business on April 8, 2004 at Nabors' annual general meeting of shareholders
to be held on June 1, 2004 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 (including a motion to adjourn
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 I directors of Nabors to serve
until the 2007 annual general meeting of shareholders or until their
respective successors are elected and qualified.
Nominees: James L. Payne and Hans W. Schmidt
2. APPOINTMENT OF AUDITORS AND AUTHORIZATION OF AUDIT COMMITTEE TO SET
AUDITORS REMUNERATION: Appointment of PricewaterhouseCoopers LLP as
independent auditors and to authorize the Audit Committee of the Board of
Directors to set auditors' remuneration.
3. SHAREHOLDER PROPOSAL: Shareholder Proposal to change Nabors' jurisdiction
of incorporation from Bermuda to Delaware.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICE BY MARKING THE APPROPRIATE BOX ON THE
REVERSE SIDE. IF YOU DO NOT MARK ANY BOX, YOUR SHARES WILL BE VOTED FOR THE
ELECTION OF THE ABOVE-NAMED DIRECTORS, FOR THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS AUDITORS, AND AGAINST THE SHAREHOLDER PROPOSAL IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS.
SEE REVERSE
SIDE
[X] Please mark your votes as in this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1 AND ITEM 2.
1. Election of Directors FOR WITHHELD 2. Appointment of FOR AGAINST ABSTAIN
PricewaterhouseCoopers
James L. Payne [ ] [ ] LLP as independent [ ] [ ] [ ]
Hans W. Schmidt auditors and to
authorize the Audit
Committee of the
For, except vote withheld Board of Directors
from the following nominee to set auditors'
(s): remuneration.
__________________________
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEM 3.
3. Shareholder FOR AGAINST ABSTAIN
Proposal to
change Nabors' [ ] [ ] [ ]
jurisdiction of
incorporation from
Bermuda to Delaware.
In their discretion the proxies are authorized to vote upon such other business
as may properly come before the meeting (including a motion to adjourn the
meeting) and at any adjournment of 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