Nabors Industries Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

OVERVIEW OF NABORS INDUSTRIES CASE

The Nabors old name was Anglo –Laurato Nitrate corporation, a Chilean company was started by the Guggenheim family, their own business in back 1920s. In 1970s, it was nationalized by the government and renamed, as Anglo company had expertise its resources into the chemicals, electron components, banking, and replacement auto parts industries. In1974, the company entered into the oilfield equipment and services industries when it acquired majority stake in Nabors Drilling Limited of Canada. And in the 1970s, the company had sold all non-energy related resources and focused on the oilfield services and expansion of its business in Canada due to increase in the prices of oil, but later it found that in 1980s the oil prices declined and the company had suffered losses and went into bankruptcy in November 1983.

In January 1987, The Eugene Isenberg took over the position as the chairman and CEO of Anglo Energy, he had successive records from his previous vast experience working at management level in the oil industries for 13 years. The Isenberg’s financial and strategic execution moves to change the shape of the company and save from being bankrupt and improve the financial performances through working on economies of scale and increasing its major stake in the oil industries in the local and International markets (U.S. North Sea, Yemen and Venezuela) where higher demand rises for drilling services, and is achieved through the acquisition of competitor's business and used their resources in those international and local markets.

Isenberg's successive strategies, results significant positive impact on its financial position and this is shown in the historical data that is shown in the case study’s Exhibit # 3. The analysis showed that after joining of Isenberg the financial statement in 1987 revenue from $95.6 million to $3459.9 million in the year 2005 and net income reached at $648.7 million, Long Term Debt decline $154.1 million to $1251.8 million, this is due to huge expansion of business and capital expenditure done through debt notes, Shareholders' Equity is in net loss of -$5.6 million to $ 3758.1 million shows attractive analysis trend in equity, Share price from $0.875 to $75.75 attract the confidence of investors and stake holders in the stock price of company, and Market capitalization increases from $ 2 million to $11945.8 million in the year 2005 which shows the company’s financial strength and market position in the oil industries.

1) Are the 1987 and 1988 remuneration packages appropriate for Mr. Isenberg? Consider all Components of the arrangement including level of total compensation, mix of compensation and any other relevant features in your answer. Is this compensation plan consistent with the Strategy of Nabors Industries?

ANS:

In 1987 and 1988 the Isenberg remuneration packages are the combination of the plenty of incentives such as; the base salary was $ 325000 per year, Annual cash bonus would be paid at 10% of excess net cash flow of the company and taking in consideration in excess of 10% average stockholders’ equity, in addition to cash compensation, can have the option to purchase 441,000 shares at price of $ 0.75 vesting for over 18 months or option to purchase 2.682 million shares at $1.10 vesting over 36 months. Isenberg can claim reimbursement for business and other expenses, including club membership fees, a car with driver if needed, personal tax and financial counseling, a home security system, and use of the company aircraft for business and personal use. After one year Isenberg was granted option in lieu of his first year cash bonus and received restricted shares of 675,000. This remuneration plan is appropriate for Mr. Isenberg however the......................

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